The financial authorities decided to disclose a list of "low PBR" corporations with low price-to-book ratios (PBR) to induce improvements in corporate value. Generally, corporations with a PBR of less than 1, calculated by dividing market capitalization by equity capital, are viewed as "low PBR" corporations, and a PBR of less than 1 means the corporation's market value is lower than its asset value in a liquidation scenario.
The authorities will also, in principle, block dual listings and reorganize the KOSDAQ market into a two-league structure by dividing it into mature corporations and growth corporations.
On the 18th, Lee Eog-weon, Chairperson of the Financial Services Commission (FSC), announced these structural improvement measures at a "capital market stabilization and normalization meeting" presided over by President Lee Jae-myung at the Blue House.
The Chairperson first said the list of low PBR corporations will be made public using a "NAMING. and shaming" approach. For example, the names of listed companies that rank in the bottom 20% of PBR within the same industry for two consecutive half-years would be disclosed every half-year.
However, if the corporation diagnoses its PBR status through a corporate value enhancement plan and discloses its targets and execution plan, disclosure of the list will be waived for a certain period to encourage efforts to boost corporate value.
A disclosure of asset value under revaluation standards will also be introduced. Even if a corporation's asset value rises, when assets are booked at cost rather than market price, a distortion may occur in which corporate value is undervalued on the accounting books. To minimize this, it will be mandatory to disclose in the notes the difference between book value (cost) and fair value.
Dual listings will be prohibited in principle. Only when clear criteria are met—based on a comprehensive review of listing necessity, shareholder communication and protection, and managerial and operational independence—will exceptions be allowed.
Also, while current regulation of dual listings—so-called "split listings" after partitions—relies only on the abstract standard that "shareholder protection efforts must be faithfully carried out," going forward, not only partitions but also acquisitions and newly established subsidiaries will be subject to review as types of dual listings if there is substantive control.
A revamp will also be prepared to attract more investment funds into the KOSDAQ market. The market will be reorganized into a two-league system by classifying "mature innovative corporations" (tentatively premium) and "growing corporations" (tentatively standard), and a promotion and relegation system (promotion and demotion) will be operated.
The Financial Services Commission (FSC) said it plans to newly develop an index centered on top-tier representative companies within the premium segment and support the expansion of the investment base by introducing linked exchange-traded funds (ETFs).