Revised Guidelines on Corporate Governance DisclosureOct 19, 2023

I. Overview and Progress of the System


Corporate governance disclosure was introduced to encourage listed companies to voluntarily enhance their corporate transparency. Companies are required to disclose their compliance with the core principles of corporate governance and explain* the reasons for non-compliance based on a “Comply or Explain“ approach.


* The guidelines present a generally recommended corporate governance structure, such as those in the G20/OECD Corporate Governance Principles, allowing companies the discretion to select a governance structure that suits them, while requiring them to provide explanations for non-compliance (10 core principles, 28 detailed principles).


Corporate governance disclosure was voluntary when it was first introduced in Korea by the Korea Exchange (KRX) in 2017. In 2019, it became mandatory for KOSPI-listed companies with total assets of KRW2 trillion or more, and in 2022, the scope of companies subject to mandatory filing was expanded to KOSPI-listed companies with total assets of KRW1 trillion or more.


* A review at the end of 2022 showed that the average compliance rate for key indicators among companies with assets of KRW2 trillion or more significantly improved from 63.5% in 2021 to 66.7% in 2022. This was evaluated as a positive contribution to enhancing corporate transparency.

** [Schedule] (2019) Total assets of KRW2 trillion or more → (2022) KRW1 trillion or more → (2024) KRW500 billion or more → (2026) All KOSPI-listed companies


In 2019, the KRX established the guidelines on corporate governance disclosure, providing core principles of corporate governance and detailed reporting standards to ensure that companies provide faithful and comparable information in their disclosures. The guidelines were revised in 2020 and 2022 to reflect market conditions.


II. Background and Key Details of the Revision


The revision of the guidelines incorporates feedback received during the implementation of corporate governance disclosure in line with the expansion of mandatory disclosures in 2024. Particularly, taking into account the upcoming expansion of the mandatory disclosure to include companies with assets of KRW500 billion or more, the revisions were promptly released to hold preliminary education sessions and provide companies with sufficient time to prepare for the changes.


The revised guidelines reflect the government’s regulatory reforms, including measures announced in January to improve companies’ dividend payout procedure, as well as recent developments in domestic and international corporate governance principles, such as the G20/OECD Corporate Governance Principles (revised in 2023) and the Code of Best Practices for Corporate Governance (effective from 2022) published by the Korea Institute of Corporate Governance and Sustainability (KCGS). The revised guidelines incorporate the needs of market participants, demands from companies for revisions, and reorganization of the reporting system.


a) As a follow-up to the improvements in dividend distribution procedure (January 2023), companies are required to disclose whether they have enhanced their dividend policies to ensure that investors know the dividend amount before making investment decisions.


b) In light of the increased emphasis on active engagement with minority shareholders and foreign investors, companies are required to disclose records of communication between management and minority shareholders/foreign investors, whether communication channels for foreign shareholders are in place, and the percentage of disclosures in English.


c) In consideration of the cases in which the stock value of existing shareholders was diluted during capital raising, companies are required to describe the current status of capital raising that may result in a conflict of interest between shareholders, and disclose whether the company’s board considered the interests of minority shareholders during the decision-making process.


d) Reflecting the revised G20/OECD Corporate Governance Principles, which emphasize board diversity, the guidelines highlight the importance of having a balanced board in terms of gender, age, and experience. Companies are required to provide explanations if they did not achieve diversity on the Board.


e) To support directors to faithfully perform their roles, the guidelines require companies to disclose whether directors’ efforts are appropriately reflected in determining their compensation and whether the company utilizes the directors and officers liability insurance policy to support directors.


f) To prevent the appointment of persons who have damaged corporate value as executives, the scope of executives’ violations of the law subject to disclosure has been expanded,* while the period** of disclosure has been adjusted from an indefinite period to a reasonable time frame.


* (Before) Embezzlement, malpractice, unfair transaction (Financial Investment Services and Capital Markets Act) → (Revised) Expanded to include undue benefits, unfair assistance (Monopoly Regulation and Fair Trade Act), violations of accounting standards (Act on External Audit of Stock Companies)

** (Before) From final ruling to an indefinite period → (Revised) From the government’s judgment (including indictment and administrative dispositions) to five years from the end of the execution (or exemption) of a sentence


III. Schedule and Plans to Reform the Review System


The KRX plans to reorganize the corporate governance review system as well, starting from next year. It will disclose the priority review areas and key review items for each area at the beginning of each year to ensure companies are thoroughly prepared from the report preparation stage. This will allow prompt error checks and corrections, helping companies to provide investors with accurate and timely information.


Furthermore, companies that are required to make corrective disclosures for submitting inadequate disclosures will be asked to participate in supplementary education. For companies that repeatedly file inadequate disclosures despite continuous demand for improvement, the KRX is planning to disclose their names and specific details from 2025.


The newly revised guidelines will come into effect for reports submitted in 2024, based on the 2023 performance (submission deadline is the end of May 2024). The KRX will provide support for companies—including a series of five nationwide preliminary education sessions in October for those subject to the mandatory filing—to enhance their understanding of and ensure faithful disclosures in line with the latest revisions.

* Please refer to the attached file for details.