The Financial Services Commission and the Korea Exchange introduced a draft of detailed standards for the listing up (“naming and shaming”) of companies that have low price-to-book ratios on July 28. This is part of a broader set of measures introduced earlier in March this year that are intended to bring about fundamental improvements to the Korean capital markets. Under the “naming and shaming” policy, low PBR companies that are making no particular effort to improve shareholder value and are instead leaving their stock prices depressed and pinned at low levels will be listed up for publication.
Key Details
Listing up low PBR companies
Based on the Global Industry Classification Standard (GICS), which is widely adopted for stock indexes around the world, companies in 11 key economic sectors and sub-industry groups will be ranked in the order of high to low PBRs. The listing up of stock companies in the order of high to low PBRs will take place twice yearly (on the first trading day of May and November every year). In the KOSPI market, companies that fall in the bottom 25 percent for three straight years (six consecutive times) will be listed up for publication. In the KOSDAQ market, companies that fall in the bottom 10 percent for three straight years (six consecutive times) will be listed up for publication. An exemption will be granted to companies that disclose their corporate value enhancement plans (including specific plans to improve their PBRs) to allow them to stay away from the list of low PBR companies for one year (two consecutive times). This exemption will not be provided to companies that fall under the bottom 25 percent (bottom 10 percent for KOSDAQ companies) for six straight years (12 consecutive times) even if they disclose corporate value enhancement plans. According to a brief simulation conducted by the KRX, the number of companies that are expected to go on the list of low PBR companies (as of May 2026) will range between 120 (80 KOSPI and 40 KOSDAQ companies) and 220 (130 KOSPI and 90 KOSDAQ companies).
Period and method of publication
On the first trading day of May and November every year, a list of low PBR companies will be published on the KRX disclosure website (kind.krx.co.kr). On the mobile trading system or home trading system provided by individual securities companies, low PBR items will demonstrate a tag showing “low PBR” to help investors better identify low PBR companies.
Assistance for low PBR companies
The KRX plans to provide various types of advising and consultation services to the companies listed on the low PBR companies’ list. The FSC and the KRX also plan to consider ways to factor in PBR into the delisting review process and the stewardship code guidelines for institutional investors.
Further Schedule
A revision to the KRX rules will be put up for comment from August 5 to 24 before going through a successive approval process in September. After that, the first publication of low PBR companies is expected to take place on November 2 this year.
* Please refer to the attached PDF for details.