Like settlement of account dividends, quarterly dividends will also allow for 'deciding the advance dividends amount first and investing later.'
The Financial Services Commission noted that the amendment to the Capital Markets Act, which includes improvements to the dividend process and corporate disclosures, passed the National Assembly's plenary session on the 27th.
The quarterly dividends process has been improved. Previously, settlement of account dividends was allowed to separate the voting rights record date and the dividend record date through interpretation of the Commercial Act. This means that after the settlement of account dividends have been confirmed, the dividend record date can now be set after the board meeting instead of at the end of the year.
The issue is that for quarterly dividends, the Capital Markets Act specified the dividend record date as the end of March, June, and September. Unlike settlement of account dividends, quarterly dividends could not be invested after confirming the dividend amount. Therefore, the amendment to the Capital Markets Act removed the specification that the dividend record date be the end of March, June, and September, allowing each corporation to designate the dividend record date after determining the dividend amount through board resolution or bylaws.
In the future, dividends will be decided at board meetings held within 45 days from the end of the quarter, and investors will be able to determine whether to buy or sell stocks until the designated dividend record date thereafter.
The provisions related to the quarterly dividends process in the amendment to the Capital Markets Act will take effect immediately upon promulgation. The financial authorities plan to support corporations in revising their bylaws related to quarterly dividends and improving practices in collaboration with relevant institutions.
A Financial Services Commission official said, 'Since corporations that pay quarterly dividends often show a high dividend payout ratio, it is anticipated that the advancement of the quarterly dividend process will positively impact the activation of medium- to long-term investments for dividends.'
The amendment to the Capital Markets Act also contains provisions to strengthen disclosure obligations. First, newly listed companies are now required to disclose not only their previous business reports but also their previous quarterly or semiannual reports. This measure is aimed at preventing 'inflated listings' that only become apparent after a newly listed company reveals performance below the expected results presented during the listing process.
The issuance disclosures for convertible bonds (CB) and warrants attached to bonds will also be strengthened. When issuing private convertible bonds, the major matters report must now be disclosed at least one week prior to the minimum payment date.
The regulations regarding penalty surcharges for failing to disclose significant holdings exceeding 5% have also been revised. The penalty surcharge limit has been increased from 1/100,000 of market capitalization to 1/10,000. The penalty surcharge limit criteria for listed companies have also been strengthened to a minimum of 1 billion won, including small listed corporations.
The provisions related to corporate disclosure improvements will take effect six months after the promulgation of the amended Capital Markets Act. The Financial Services Commission plans to amend subordinate regulations before the law takes effect and to inform relevant institutions of the changes to ensure the system is established.