The amendment to the Commercial Act, which includes an expansion of directors' fiduciary duties and the separate election of audit committee members, has been analyzed to lead to a 12.8% average increase in the listing maintenance costs of listed companies.
According to the results of a survey on the listing maintenance costs of major domestic corporations conducted by the Federation of Korean Industries (FKI) and the Korea Listed Companies Association, in partnership with the specialized research firm Monoresearch, corporations expect that their listing maintenance costs will rise by an average of 12.8% due to the amendment of the Commercial Act. By market, KOSPI-listed corporations are expected to see an average increase of 15.8%, while KOSDAQ-listed corporations will see an increase of 9.8%.
Corporations were primarily reviewing internal process improvements (49.0%) and expense reductions (38.0%) in response to the increasing costs. Some companies even considered workforce reductions (5.0%), reducing the number of directors (2.0%), and even delisting (1.0%).
Corporations indicated that the government and the National Assembly should first implement measures to alleviate disclosure obligations (29.0%) and support listing maintenance fees (27.0%) to reduce listing maintenance costs. Additionally, they pointed out the need to halt the amendment of the Commercial Act (24.0%), improve accounting systems (14.0%), and reduce the burden of securities class action lawsuits (4.0%).
Corporations that participated in the survey responded that, compared to the time of listing, their current listing maintenance costs have increased by an average of 11.7%. Companies listed on the securities market increased by 17.8%, while KOSDAQ-listed companies rose by 6.0%. The FKI explained that the burden of costs in the securities market has grown due to strengthened regulations on large listed companies under the Commercial Act and the Capital Markets Act.
Regarding whether the increase in listing maintenance costs will continue in the future, the majority, at 46.7%, responded that they will "increase." The main reasons cited for the increase in listing maintenance costs included rising accounting and audit costs (37.1%), expanded disclosure obligations (23.8%), tightened governance regulations (17.2%), and shareholder response costs (15.2%).
Lee Sang-ho, head of the economic and industrial division at FKI, said, "Premature strengthening of governance regulations not only adds to the management burden of corporations but also weakens the need for listing," and noted, "As this leads to a decline in stock market valuations, discussions on the amendment of the Commercial Act should be halted, and efforts should be made to enhance corporate competitiveness and support the recovery of the people's economy."