The amount of English information submitted by KOSPI companies is somewhat limited — perhaps unsurprisingly since the filing of English disclosures is currently voluntary. Just 14% of filings were in English as of February 2022 (although this number increased from less than 6% in 2019).
Rewards for Outstanding Translations
To increase the number of English filings, the FSC plans to make filing English disclosures mandatory in stages. From 2024, in the first phase, the FSC will require KOSPI companies with KRW 10 trillion (USD 7.7bn) or more in assets to provide key market information in English.
The requirement will also apply to KOSPI companies with more than KRW 2 trillion (USD 1.5bn) in assets, but only if 30% or more of their shares are owned by foreign investors, while companies in which foreign investment is less than 5% will be exempt.
Companies will have just three business days from the date of filing disclosures in Korean to submit the accompanying English versions.
From 2026, in the second stage, the scope of the requirement will be extended to all KOSPI companies with KRW 2 trillion or more in assets. The requirement will also be expanded to a wider range of documentation. In addition, the FSC said it is “in principle” considering requiring English materials to be filed at the same time as Korean filings.
To improve the quality of English translations and help companies manage the transition, the FSC will introduce a number of measures including granting special benefits “to those that submit outstanding English disclosures.”
Other support measures will include:
- Increasing the translation support available from language service providers
- Improving training courses relating to English disclosures
- Expanding the automated MT service
- Providing an English search function for Korean statutory disclosures
- Improving translation quality using AI-based MT
More English, More Investment?
This is not South Korea’s first push to increase the amount of English information available for its listed companies. An initial scheme, launched in 2020, saw the KRX begin to offer English translation services for the regulatory filings of 54 eligible companies listed on the KOSPI.
The previous year, in 2019, the value of foreign-held shares was around 35% of the overall market capitalization of the KOPSI. Fast forward to February 2022, roughly two years into the translation pilot, and the percentage value held by foreign investors in the KOPSI had climbed to 37%. So it seems to be working.
As of March 6, 2023, a similar scheme is now being extended to 51 companies listed on South Korea’s KOSDAQ — an electronic stock market, similar to the Nasdaq, as Korean news outlet, The Korea Bizwire, reported.
South Korea is not alone in encouraging — or even mandating — companies to file their regulatory documents in English. For example, a similar initiative was launched in Japan as far back as 2015 with the aim of improving investor relations and making Japan a more enticing location for foreign investors.
