FSC to enhance measures to protect ordinary shareholders

Financial Services Commission (FSC) Vice Chairman Kim So-young speaks during a press conference held at the government complex in Seoul, Thursday. Courtesy of FSC

Vice chief announces policy goals for H2

By Anna J. Park

The Financial Services Commission (FSC) plans to come up with measures to improve the share buyback systems of listed companies by the end of this year.

The measures are aimed at preventing corporate stock repurchases from being abused by some major shareholders to strengthen their management control, instead of their original purpose of returning value to all shareholders. Convertible bond issuance rules for businesses will also be revised with more focus on protecting investors.

These are part of the top financial regulator's policy direction for the second half of this year, as announced by FSC Vice Chairman Kim So-young during a press conference on Thursday. Kim spearheads the financial authorities' moves in the realm of the capital market system.

“The FSC will continue to take on necessary steps to protect the rights of ordinary shareholders by strictly punishing illegal and unfair market activities, while enforcing fair trading practices and restore investor confidence,” the FSC vice chairman said during the press conference held at the government complex in Seoul.

The FSC's policy direction for the second half of this year is centered around three main pillars: restoring investor trust, strengthening the structure of the capital market, and ensuring financial stability and managing risks facing the Korean economy.

The government aims to restore investor trust by combating increasingly sophisticated financial crimes and fraud. Concerted efforts will be made by related ministries and organizations to bring about revised response measures to counter unfair trading practices. The measures are slated to be announced during the third quarter of this year.

The financial authorities also plan to reduce damage caused by meme stock fever by strengthening corporate disclosure requirements, while cracking down on market-distorting activities, such as spreading groundless rumors online, and imposing much heavier penalties on offenders.

“The FSC will restore investor confidence in the stock market, which should soundly reflect investors' expectations of corporate performance and prospects, by managing feverish thematic stock phenomena, as shown recently by the hype caused by secondary battery and superconductor stocks,” the vice chief of the FSC stressed.

While strictly enforcing market rules, Kim vowed to ensure that the local stock market serves its role of being a conduit for necessary capital flowing into innovative corporations. Calling such innovative venture start-ups as the growth engines of the economy, the FSC plans to complete follow-up measures to enhance a special listing track available for technologically-innovative companies by the end of this year.

“The FSC will support companies with core advanced technologies, such as deep tech, to raise funds through IPOs and achieve substantial growth in a speedier way,” Kim said.

The vice chairman emphasized that the government's move to raise the bar for local capital market systems to meet global standards to facilitate foreign investors' access to the markets. Since early this year, the financial authorities have undertaken a slew of measures, including requiring companies to publish English-language disclosures, streamlining the dividend payout systems of listed companies, as well as abolishing a decades-long identification obligation imposed only on foreign investors, among others.

“One of the core goals of the government is transform local capital rules into an advanced market system that meets global standards, in order to attract more foreign capital and investments into the economy,” Kim told The Korea Times during the press conference, adding that the financial authorities have been frequently listening to feedback from foreign investors.

Meanwhile, a revision bill on the Corporate Governance Act, aiming at strengthening companies' responsibilities in internal controls and transparency, is expected to be submitted to the National Assembly during the second half of this year. It could be ratified by parliament as early as the end of this year, or early 2024.