Chairman Choi Jong-gu of the Financial Services Commission (FSC) said the organization is set to draw up measures to require listed firms to disclose their management structures to the public. The FSC chairman made the announcement at the ‘2017 Accounting Reform IR event held in Yeouido, Seoul, recently. He said the management structures should be unveiled just like any other information such as those on accounting by the listed firms to make their operations clearer to win the public trust.
The chairman also said the FSC will reform the standards for the evaluation of the auditing committee, crisis management and others at the Yeouido event, which was attended by a number of the biggest asset management firms including Black Rock.
FSC wanted to make the listing of the management structures of the listed firms mandatory because not many listed firms came forward with making their management structures public. Only 70(9.36 percent) of the 784 listed firms joined the voluntary moves as of Nov. 1 this year.
FSC will consult with the Korea Exchange and the Korea Listed Companies Council before finalizing the measure which will require the big firms traded on the stock market first and then move on to the smaller firms on Kosdaq market to go by the initial plan.
The firms with the stewardship code(the institutional investors decision making process) may get an incentive. The FSC chairman said the burden of announcing the stakes being held by the institutional investors for investment purposes like the National Pension Service may be eased to vitalize the shareholders rights.
An institutional investor who holds a five percent stake in a listed firm just for investment can be termed in violation of the listed companies regulations if it steps up its moves as a shareholder and participate in the management of the company under the current regulations.
FSC is inclined to push the measure to go easy on the institutional investors and make the public reports simple for them if they satisfy the major part of the measure.
Chairman Choi said NPS has been studying the stewardship code in detail to see if it can join the code and still fully exercise its rights as shareholders.
He said many listed institutional investors would follow the NPS lead to join the stewardship code. The Financial Services Commission is a government agency with statutory authority over financial policy and regulatory supervision. The FSC’s functional responsibilities are shared among the Securities and Futures Commission (SFC) and subordinate bureaus.
Korea’s financial supervisory structure underwent major changes following the Asian financial crisis in 1997. To ensure effective and efficient supervision of all financial sectors, the Financial Supervisory Commission was established in April 2008 as an integrated supervisory agency with consolidating financial supervisory authorities across all financial sectors.
The Financial Supervisory Commission was reorganized into the current Financial Services Commission on Feb. 29, 2008 with the integration of the Financial Policy Bureau of the former Ministry of Finance and Economy. The FSC thus has the statutory authority to draft and amend financial laws and regulations and issue regulatory licenses to financial institutions.
In addition, the FSC oversees cross-border matters such as supervising foreign exchange transactions conducted by financial institutions to ensure their financial soundness. Korea Financial Intelligence Unit (KoFIU), which was also integrated into the FSC as part of the reorganization, leads the government’s anti-money laundering and counter-terrorism financial efforts.
