South Korea's Financial Supervisory Service said on Feb. 19 it took a total of 143 actions against 88 companies last year for violating disclosure obligations under the Capital Markets Act.

That was an increase of 13 cases from a year earlier.

Of the companies that breached the rules, 31 were listed firms, or 35.2 percent, and 57 were unlisted firms, or 64.8 percent. Unlisted firms, which have less experience with disclosure, accounted for more violations.

The most frequent type of breach was issuance disclosure violations, including failure to file securities registration statements, or small public offering disclosure documents for public offerings of 1 billion won or less. These accounted for 98 cases.

That was up 180 percent from a year earlier, when there were 35 cases. Issuance disclosure violations by unlisted firms accounted for most of the total, at 84 cases.

The FSS said, "As the stock market rose, the number of unlisted firms planning initial public offerings increased, and many disclosure violations such as past failures to file securities registration statements were confirmed during the listing preparation process."

By type of action, heavier measures such as penalty surcharges, limits on securities issuance and administrative fines totaled 79 cases, or 55.2 percent. That compared with 64 cases, or 44.8 percent, for lighter measures such as warnings and cautions.

That contrasts with the past three years from 2021 to 2023, when the share of lighter measures was around 70 to 80 percent.

The FSS urged unlisted firms preparing for IPOs to understand obligations such as filing securities registration statements when they issue securities to raise funds from many investors.

It also said it plans to focus disclosure review and investigative capacity on cases with a large market impact, such as false statements in securities registration statements related to large-scale fundraising and breaches of filing obligations in the future.

[Yonhap]