Designations of unfaithful disclosure corporations continue to mount despite the buoyant Korean stock market, with cases involving large-cap companies on the main board on the rise, prompting investor caution.
According to the Korea Exchange (KRX) on Tuesday, the number of unfaithful disclosure corporation designations on the KOSPI and KOSDAQ markets reached 20 and 36, respectively, between the start of this year and the 29th of last month. Notably, designations among KOSPI-listed companies increased, rising by two from 18 in the same period last year, while KOSDAQ cases fell by seven, from 43 to 36.
Designation notices for unfaithful disclosure corporations are also trending upward. Total notices this year reached 76, up six from 70 in the same period last year. By market, notices on the KOSPI rose from 20 to 21, while those on the KOSDAQ increased from 50 to 55. The KRX issues designation notices to listed companies that fail to faithfully fulfill their disclosure obligations. After deliberation, the exchange designates the firms as unfaithful disclosure corporations, with sanctions such as trading suspensions varying based on penalty points.
Among KOSPI-listed firms, many designations stemmed from delayed disclosures. STX Green Logis, designated last month, was cited for a delayed disclosure of its decision to provide debt guarantees for a third party, while Nexen was designated for a delayed March disclosure regarding its inclusion as a subsidiary of a holding company. Among KOSDAQ-listed firms, designations frequently resulted from disclosure reversals (17 cases, including duplicates) and failures to disclose (17 cases).
Market watchers say that with designation notices on the KOSDAQ market rising in the first half of this year, the number of unfaithful disclosure corporations could increase further in the second half. According to the Korea Capital Market Institute, KOSDAQ-listed companies have accounted for about 70 percent of all unfaithful disclosure corporation designations on average over the past three years. Analysts note that since the KOSDAQ market has a high proportion of small- and mid-cap firms and biotech companies, disclosure reversals such as the withdrawal of new business plans are inevitably frequent due to external variables.
