Mandatory Disclosure of Executives' Financial Crime Histories in Listed Companies' Business Reports

Kim Hyunjung of the Democratic Party Proposes Bill

A bill has been proposed that would require listed companies to disclose the financial and economic crime histories of their executives in their business reports.

On January 14, Kim Hyunjung, a member of the National Assembly's Political Affairs Committee from the Democratic Party of Korea, announced that she had sponsored an amendment to the Act on Capital Markets and Financial Investment Business containing this provision. The amendment stipulates that if an executive of a listed company has been sentenced to a fine or greater penalty for violating financial laws and less than three years have passed since the execution or exemption of that sentence, the relevant details and other necessary information must be newly included as items in the business report.

This move comes in response to a recent series of incidents involving embezzlement, breach of trust, and unfair trading at listed companies, which have undermined market trust. According to data compiled by Kim Hyunjung's office from media reports, there were 96 public disclosures related to embezzlement and breach of trust by listed companies across 48 firms in the first half of 2025, an increase from the same period last year. The number of indictments for occupational embezzlement also rose to 4,644 cases, up from 4,066 the previous year.

The current Capital Markets Act seeks to help investors make informed decisions by ensuring transparent disclosure of important corporate information through business reports and other public filings. However, disclosures related to executives are mainly focused on items such as executive compensation. As a result, despite the repeated occurrence of market-disrupting crimes such as embezzlement and breach of trust by executives and employees, there has been ongoing criticism that the 'criminal history of executives,' which investors need to verify, is not clearly established as a mandatory disclosure by law.

Kim Hyunjung stated, "Disclosure is the starting point of investment, yet the 'trustworthiness and accountability of management,' which investors are most curious about, has been in a blind spot of disclosure. By transparently releasing the financial crime records of listed company executives, we will guarantee investors' right to know and establish a minimum safeguard to protect the capital market from recurring owner and management risks."