The Korea Corporate Governance Forum, led by Chairman Lee Nam-woo, has welcomed a legislative proposal that mandates value-up disclosures for publicly listed companies with a price-to-book ratio (PBR) of less than one. This initiative comes in response to concerns regarding companies whose market capitalization falls below their book value and seeks to improve transparency and accountability in the corporate sector. The bill, proposed by lawmaker Kim Hyun-jung from the Democratic Party’s Special Committee on the Korea Premium K Capital Market, outlines specific requirements for value-up plans, which must include strategies such as profit distribution, stock buybacks, and business restructuring to enhance corporate value.

According to former lawmaker Lee Yong-woo, as of September 2022, 69% of KOSPI-listed companies had a PBR under one. The rising index, which has increased significantly over the past year, might have reduced this percentage, yet the proportion of companies with low PBR remains concerning compared to developed markets. The governance forum has emphasized the need for boards of directors to prioritize shareholder rights and create actionable plans to boost shareholder value, particularly in light of challenges faced by key industries such as semiconductors and automotive, where high fixed costs and fluctuating product prices complicate profit forecasting.

In addition to the new mandates proposed, financial supervisory authorities and the stock exchange have recently updated their policies to facilitate value-up disclosures for high-dividend companies. Under these revised rules, such firms must officially release their value-enhancing plans following annual shareholder meetings. However, during this initial year of implementation, firms are allowed to provide a simplified overview focusing on essential metrics like dividend payout ratios and return on equity (ROE). This reflects an effort to balance the need for transparency while allowing companies time to adjust to the new requirements.