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Apr 04, 2018
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Mar 23, 2018
- Mandatory Disclosure of Corporate Governance to be Phased in from 2019
- The FSC and KRX plan to introduce mandatory disclosure of corporate governance into Kospi-listed companies with total asset value of more than KRW 2 trillion, starting from 2019, and phase it into all Kospi-listed companies over the next two years.BackgroundKorea introduced the “comply or explain” approach for corporate governance disclosure in March 2017, in which, on a voluntary basis, companies either comply with corporate governance principles, or explain publicly why if they do not comply.However, the voluntary disclosure has revealed some limitations including low participation of companies and poor quality of disclosed information, making it difficult to provide market participants with sufficient information about corporate governance such as a company’s decision-making structure and internal controls.Against this backdrop, the FSC came up with its plan to improve listed companies’ disclosure of corporate governance, based on discussions with relevant institutions including the KRX and the results of a survey conducted on listed companies.Key changes1. Mandatory disclosure of corporate governanceStarting from 2019, Kospi-listed companies with total asset value of more than KRW 2 trillion will be required to mandatorily disclose their corporate governance. The FSC considers expanding the mandatory disclosure to all Kospi-listed companies starting from 2021.※ The FSC is also considering introducing mandatory disclosure of corporate governance toKosdaq-listed companies. Details including the timing of introduction are left for further discussions.2. Guidelines on corporate governance disclosureTo improve the quality of disclosed information, guidelines will be provided to specify details of corporate governance principles that corporate governance reports must entail. That will enable investors to compare corporate governance information among listed companies and provide stakeholders with more useful information.※ The guidelines will be set out by
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Mar 15, 2018
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Feb 01, 2018
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Jan 23, 2018
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Jan 15, 2018
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Jan 11, 2018
- Measures to Vitalize Kosdaq Market
- The FSC announced measures for vitalizing the Kosdaq market to support the growth of start-ups and venture businesses. The measures are aimed at overhauling KOSDAQ listing requirements, strengthening Kosdaq’s competitiveness to compete with the KOSPI market, and improving market soundness and investor trust in Kosdaq.Key Measures1. Incentives to attract institutional investors▪ A new fund of KRW 300 billion, named ‘Kosdaq Scale-up Fund’ will be created with investments by the Korea Exchange (KRX), Korea Securities Deposit and relevant securities industry organizations to invest in Kosdaq-listed companies. 1st half of 2018▪ A new market index, named ‘KRX300,’ that incorporates Kospi and Kosdaq-listed companies will be introduced. Feb. 20182. Overhaul of Kosdaq listing requirementsKosdaq listing requirements will be revised in a way that puts more focus on a company’s growth potential. 1st half of 2018▪ Some requirements that hinder listings of start-ups will be abolished. To get listed on Kosdaq under the current rules, a company must generate profits from continuing operations and shall not be in a condition of capital impairment. Such requirements actually act as obstacles to listings of start-ups. It usually takes a considerable period of time for start-ups to generate profits; and some may undergo even capital erosion in the early stage of their business.▪ Listing requirements will be eased to allow Kosdaq listing of a company if the company meets certain threshold requirements in one of three criteria: pre-tax profit, market capitalization and equity capital.▪ To facilitate more listings under the so-called ‘Tesla standard,’1 underwriters with a track record of such listings will be exempted from the rules that oblige them to buy back shares for 90% of their IPO price if retail investors exercise their put-back options within a certain period of time, from one to six months, following the IPO.3. Kosdaq’s autonomy and independenceThe K
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Jan 08, 2018
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Nov 21, 2017
- The 4th UK-Korea Financial Cooperation Forum Held in Seoul
- The Korean Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) hosted the fourth UK-Korea Financial Forum in Seoul today with the UK Treasury, the Financial Conduct Agency (FCA) and the British Embassy. The annual event, which took place alternately in London and Seoul since 2014, has served as an occasion to deepen cooperation between the UK and Korean financial regulators and expand business opportunities for both countries’ financial companies.This year’s forum focused on new challenges facing financial services sectors in both countries: falling fertility rates, ageing population and evolving technology. These changes will bring opportunities as well as threats to the financial sector. In this context, topics of this year’s forum included “the Future of the Insurance and Pension Industries” and “How to Promote Innovation in Financial Services.” The forum was attended by Korean and UK officials, financial companies and fintech businesses.In his opening speech, Choi JongKu, Chairman of the FSC said, “The UK has traditionally been a leader in finance and continues to lead in recent trends including fintech, which provides useful policy implications for Korea.” He also stressed the importance of continued cooperation in dealing with new risks that might come from the development of digital finance.In the following session, Andrew Bailey, Chief Executive Officer of the FCA delivered a speech titled “Public Policy Challenges for Consumer Protection Regulators.” In his speech, Mr. Bailey shared the findings and policy implications from the Ageing Population Project, which the FCA launched in February in 2016 to explore how the ageing population would impact the financial services industry. He emphasized the role of financial regulators needs to evolve, corresponding to changes in financial services with ageing population.On the sidelines of the forum, FSC Chairman Choi JongKu held a meeting with UK officials including K
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Oct 24, 2017
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Sep 28, 2017
- Revision to the Act on External Audit of Stock Companies
- I. BackgroundThe Act on External Audit of Stock Companies (hereinafter referred as “the Act”) has gone through major improvements since the bill was enacted in 1981. Among them, the latest revision, passed by the National Assembly on September 28, 2017, is the most far-reaching reform of Korea’s accounting and audit practices, compared to a Korean version of the Sarbanes-Oxley Act. To deter a repeat of major accounting scandals in recent years, the revised bill contains fundamental changes in a wide range of issues, including external auditor independence, corporate accountability, and penalties against wrongful acts. Those changes will set higher standards for all stakeholders in their role, including companies, auditors and financial regulators, to further advance Korea’s accounting reform efforts. The revised bill will take effect November 1, 2018, one year after the date of its promulgation.II. Key ProvisionsCompanies, greater accountability and stronger internal control1. The scope of companies subject to external audit, currently limited to ‘stock companies’ under the Act, will be expanded to include ‘limited liability companies (LLCs).’* Specifics about companies subject to external audit and the scope of disclosure of audit reports will be delegated to the subordinate Enforcement Decree of the Act.2. The right to appoint an external auditor, currently exercised by the company’s management, will be transferred to internal audit organizations such as the ‘statutory auditor’ or the ‘audit committee.’3. Companies will be held more accountable for preparation of their financial statements.► A company shall not require an external auditor to prepare financial statements on its behalf.► If a company fails to submit financial statements to the external auditor and the Securities and Futures Commission (SFC) within the statutory deadline, six weeks before the general meeting of shareholders, the company’s representative director shall
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Aug 24, 2017
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Aug 02, 2017
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Jul 27, 2017
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Jul 26, 2017
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Jun 28, 2017
- FSC Identifies D-SIBs for 2018
- The FSC identified on June 28, 2017, four bank holding companies and one bank as domestic systemically important banks (D-SIBs) for 2018: Shinhan Financial Group, Hana Financial Group, KB Financial Group, NH Financial Group and Woori Bank.Under the D-SIB framework of the Basel Committee on Banking Supervision (BCBS), the D-SIB higher loss absorbency requirement is phased in by 0.25% per year from 2016 to 2019. Therefore, those identified as D-SIBs for 2018 are required to set aside an additional common equity capital of 0.75%, and the higher loss absorbency requirement will take effect on January 1, 2018.The BIS ratio for the identified D-SIBs at the end of March 2017 exceeds the minimum capital adequacy ratio1. Therefore, there is no actual burden at present for the identified D-SIBs to set aside additional capital.The FSC will identify D-SIBs every year in accordance with assessment criteria recommended by the BCBS.*Please read the attached file for details.
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Jun 21, 2017
- FSC Held Market Monitoring Meeting on Results of MSCI 2017 Market Classification Review
- FSC Vice Chairman Jeong Eun-bo held a meeting on June 21 with officials from relevant agencies to discuss the impact of the MSCI’s 2017 Market Classification Review and the government’s responses.INCLUSION OF CHINA A-SHARES INTO MSCI EMERGING MARKET INDEXIn its annual market review, MSCI decided to include China A-shares, 222 large-cap stocks of Chinese companies listed in either Shanghai or Shenzhen, into the MSCI Emerging Market (EM) Index.IMPACT ON KOREA’S FINANCIAL MARKETAs the inclusion of China A-shares increases China’s weighting in the MSCI Emerging Market Index, Korea’s weight in the same index is expected to decrease by 0.23 %p from its current 15.5%. Given the amount of funds tracking MSCI EM Index, which ranges between KRW 250 trillion (USD 230 billion) and KRW 1,900 trillion (USD 1.8 trillion), Korea may experience possible outflow of KRW 600 billion to KRW 4.3 trillion from the equity market.The FSC, however, sees MSCI’s decision will have a limited impact on the Korean stock market for the following reasons:▪ The change will be actually reflected in the MSCI EM Index in a year, from June 2018.▪ The amount of global funds investing in emerging markets continues to increase, recording a net inflow of USD 18.1 billion into emerging markets from April to May 2017.▪ Given that the Korean stock market attracted a net foreign capital inflow of KRW 9 trillionin the first five months this year alone, the amount of possible outflows (max. KRW 4.3 trillion) is not so significant.GOVERNMENT’S RESPONSESThe government will keep monitoring the impact of the MSCI’s decision to include China A-shares into its emerging market index on the Korean equity market. We will also continue our policy efforts to improve global competitiveness and attractiveness of our capital markets, and consultation with MSCI in regard with the inclusion of Korea on the list for potential reclassification to the MSCI Developed Market Index.* Please read the attached file
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Jun 14, 2017
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Apr 13, 2017
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Apr 03, 2017
- Korea's 1st Internet-only Bank Open for Service
- ‘K bank’, Korea’s first internet-only bank is officially launched on April 3 for service.At the opening ceremony, Financial Services Commission Chairman Yim Jong-Yong emphasized three significant meanings of the launch of K bank. First, K bank has already brought about a new wave of competition in the banking sector. Second, financial consumers will be able to enjoy numerous benefits including lower banking transaction cost, more convenient banking services, and easier access to loans compared to those provided by commercial banks. Third, more descent quality jobs will be created in the banking, IT, and fintech sectors.K bank will supply mid-interest rate loans worth KRW 500 billion for the next three years. It will start with providing retail banking services and its business scope will be widened to include mortgage loan, payment services, foreign exchange, and fund sales in time.K bank acquired preliminary approval for banking business in November 2015, and final approval in December 2016.*Please refer tothe attachedPDF for details.