Habitual Disclosure Violators Face Delisting
By Park Hyong-ki
Staff Reporter
Listed companies that habitually break rules on corporate disclosure will be immediately kicked out of the stock market, financial authorities said.
The Financial Services Commission and the Korea Exchange will implement stronger delisting measures from January to maintain credibility and reliability of the equities markets.
``Such measures will be taken against companies that regularly and viciously release false information, and not only hurt investors but also undermine the credibility of the stock market,'' the commission said.
The regulator said current rules on disclosure have been relatively soft on firms, and will hold a public hearing on toughening the system.
The three-strike system could also be revived in which regulators de-list companies that violate disclosure rules three times.
The system was abolished three years ago after being ruled too harsh and not implemented according to the degree of illicit disclosure.
The commission and the exchange have punished offenders by suspending trading of their shares for one day.
Habitual violators are only kept under the radar for a certain period of time until they rectified their wrongdoings.
In the first six months of this year, the number of false disclosures was 64, up 68 percent from the same period a year ago, the exchange said. The regulator has put 55 firms on its watch list.
The rise in illicit disclosures was blamed on lenient regulatory measures.
To this end, the regulator will also crack down harder on companies on the watch list by giving them higher black marks for possible de-listing.