Welcoming mandatory value-up disclosure for listed companies with PBR below 1X driven by ruling party
We strongly oppose FSC and KRX’s lenient stance on value-up for “high-dividend companies”
- Welcoming MP Kim Hyun Jung’s amendment to the Capital Markets Act
- The 'simplified' Value-up disclosure policy by FSC and KRX is not acceptable
- No matter how challenging it might be, stick to the gold standard of 'value-up' based on awareness of capital costs and transparent capital allocation policy, like KB Financial and Meritz Financial have achieved
- No matter how challenging it might be, stick to the gold standard of 'value-up' based on awareness of capital costs and transparent capital allocation policy, like KB Financial and Meritz Financial have achieved
On March 6th, MP Kim Hyun Jung of the 'Korea Premium K-Capital Market Special Committee' proposed an amendment to the Capital Markets Act. The bill mandates that listed companies maintaining a PBR of less than 1X for more than two consecutive years must disclose a value-up plan. We fully support this amendment (but the bill needs to pass the Subcommittee and the main National Assembly session which may take several months and may be subject to revisions)
The amendment requires company with PBR below 1x to disclose how it could narrow valuation discounts. Disclosure should include plans for dividends, share buyback and cancellation, and business restructuring plans among other things. Listed companies with a PBR below 1X for two consecutive years that fail to submit this plan will be subject to a financial penalty of up to W100million.
At the Forum's seminar on “How to enhance disclosure rule when there’s a serious M&A offer”' held on March 4th, Lee Yong-woo, former MP with the ruling party and a key figure in its CG strategy, highlighted that 69% of KOSPI-listed companies traded at PBR below 1X as of last September. Korea is a manufacturing powerhouse defined by high capital requirements. The market imposes a 'valuation penalty' on capital-intensive firms such as semiconductors and automobiles primarily due to their volatile earnings and poor visibility. Consequently, boards of directors have an even greater mandate to safeguard shareholder interests by formulating and executing robust, granular plans for enhancing shareholder value.
On February 24th, FSC and the Korea Exchange (KRX) announced the Cabinet's approval of the enforcement decree amendment for the Restriction of Special Taxation Act, while unveiling support measures and disclosure requirements for the 'Corporate Value-up Plan' targeting companies eligible for dividend income tax incentives. Effective immediately, “high-dividend companies” must disclose their 'Corporate Value-up Plan' by the day after their AGM resolves on profit distributions. Considering that this is the inaugural year for such disclosures, the authorities will permit 'simplified', lenient versions of filings to our disappointment . These allow companies to provide very limited information - such as proof of eligibility for dividend tax incentives (payout ratios, dividend amounts, etc.) and targets for ROE, dividend payouts, and capex- making them far less rigorous than standard Value-up plans. Furthermore, while this applies to all KOSPI and KOSDAQ companies, the authorities emphasized that reporting to, or seeking deliberation and approval from, the Board of Directors is merely 'recommended' rather than mandatory. This is deeply disappointing as directors should drive the value-up process.
We are strongly against the government’s attempt to boost 'value-up' participation through simplified reporting and tax perks as a shortcut for the sake of bureaucratic convenience. We argue that allowing these 'short-form' disclosures ignores the detailed template set by the May 2024 KRX guidelines. True 'value-up' requires the Board to take center stage. It involves understanding core metrics - such as cost of capital, return on capital, valuation multiples, TSR, and capital returns - to establish a predictable and actionable capital allocation plan from a mid-to-long-term perspective. Meritz Financial has already demonstrated a robust capital allocation methodology under Vice Chairman Kim YB’s leadership, while KB Financial set a model case for independent board oversight led by former Board Chair Kwon Seon-joo.
All eyes are on Samsung Electronics’ March 18th AGM. After delaying its rollout, Samsung Electronics is anticipated to unveil its 'value-up’ plan on March 19th, to qualify for dividend tax incentives. The market is questioning if this will be a rigorous, authentic filing or just a lenient disclosure. Investors are waiting to see if Samsung Electronics' nine directors have truly grasped the principles of capital allocation and cost of capital - benchmarking leaders such as KB Financial - in their upcoming proposal.
March 10th, 2026
Korean Corporate Governance Forum
Chairman, Namuh Rhee
Welcoming mandatory value-up disclosure for listed companies with PBR below 1X driven by ruling party
We strongly oppose FSC and KRX’s lenient stance on value-up for “high-dividend companies”
On March 6th, MP Kim Hyun Jung of the 'Korea Premium K-Capital Market Special Committee' proposed an amendment to the Capital Markets Act. The bill mandates that listed companies maintaining a PBR of less than 1X for more than two consecutive years must disclose a value-up plan. We fully support this amendment (but the bill needs to pass the Subcommittee and the main National Assembly session which may take several months and may be subject to revisions)
The amendment requires company with PBR below 1x to disclose how it could narrow valuation discounts. Disclosure should include plans for dividends, share buyback and cancellation, and business restructuring plans among other things. Listed companies with a PBR below 1X for two consecutive years that fail to submit this plan will be subject to a financial penalty of up to W100million.
At the Forum's seminar on “How to enhance disclosure rule when there’s a serious M&A offer”' held on March 4th, Lee Yong-woo, former MP with the ruling party and a key figure in its CG strategy, highlighted that 69% of KOSPI-listed companies traded at PBR below 1X as of last September. Korea is a manufacturing powerhouse defined by high capital requirements. The market imposes a 'valuation penalty' on capital-intensive firms such as semiconductors and automobiles primarily due to their volatile earnings and poor visibility. Consequently, boards of directors have an even greater mandate to safeguard shareholder interests by formulating and executing robust, granular plans for enhancing shareholder value.
On February 24th, FSC and the Korea Exchange (KRX) announced the Cabinet's approval of the enforcement decree amendment for the Restriction of Special Taxation Act, while unveiling support measures and disclosure requirements for the 'Corporate Value-up Plan' targeting companies eligible for dividend income tax incentives. Effective immediately, “high-dividend companies” must disclose their 'Corporate Value-up Plan' by the day after their AGM resolves on profit distributions. Considering that this is the inaugural year for such disclosures, the authorities will permit 'simplified', lenient versions of filings to our disappointment . These allow companies to provide very limited information - such as proof of eligibility for dividend tax incentives (payout ratios, dividend amounts, etc.) and targets for ROE, dividend payouts, and capex- making them far less rigorous than standard Value-up plans. Furthermore, while this applies to all KOSPI and KOSDAQ companies, the authorities emphasized that reporting to, or seeking deliberation and approval from, the Board of Directors is merely 'recommended' rather than mandatory. This is deeply disappointing as directors should drive the value-up process.
We are strongly against the government’s attempt to boost 'value-up' participation through simplified reporting and tax perks as a shortcut for the sake of bureaucratic convenience. We argue that allowing these 'short-form' disclosures ignores the detailed template set by the May 2024 KRX guidelines. True 'value-up' requires the Board to take center stage. It involves understanding core metrics - such as cost of capital, return on capital, valuation multiples, TSR, and capital returns - to establish a predictable and actionable capital allocation plan from a mid-to-long-term perspective. Meritz Financial has already demonstrated a robust capital allocation methodology under Vice Chairman Kim YB’s leadership, while KB Financial set a model case for independent board oversight led by former Board Chair Kwon Seon-joo.
All eyes are on Samsung Electronics’ March 18th AGM. After delaying its rollout, Samsung Electronics is anticipated to unveil its 'value-up’ plan on March 19th, to qualify for dividend tax incentives. The market is questioning if this will be a rigorous, authentic filing or just a lenient disclosure. Investors are waiting to see if Samsung Electronics' nine directors have truly grasped the principles of capital allocation and cost of capital - benchmarking leaders such as KB Financial - in their upcoming proposal.
March 10th, 2026
Korean Corporate Governance Forum
Chairman, Namuh Rhee