SOUTH KOREA Law and Practice Contributed by: Ho Joon Moon, Sung Min Kim, Allen Hyungi Ryu and Joon Sung Hong, Lee & Ko
3.5 Listed Companies and Market Disclosure Rules Disclosure Requirements (Korea Exchange Disclosure Regulations) According to the KRX Disclosure Rules, an investment must be disclosed on the date of the decision to par - ticipate in the JV when: • a KOSPI-listed company, as a participant in a JV, invests an amount exceeding 5% of its equity (or 2.5% for large corporations with total assets of KRW2 trillion or more (“Large Corporations”)); or • a KOSDAQ-listed company invests an amount exceeding 10% of its equity (5% for Large Corpo - rations). Additionally, if certain significant events occur in the subsidiary of the listed company (suspension of busi - ness operations, commencement of rehabilitation/ bankruptcy proceeding, merger, division, significant transfer of business, change in capital, etc), the listed company – which is the parent company of the sub - sidiary – must also disclose the information about the subsidiary. Therefore, where a JV is a subsidiary of a listed company, any significant event occurring at the level of the JV will need to be disclosed as part of the listed company’s disclosure. Transactions With Specially Related Parties According to the KCC, a listed company is generally prohibited from engaging in lending, providing guar - antees or extending credit to or for the benefit of its “specially related parties”. Furthermore, a listed com - pany’s transaction with its specially related party must be approved by the board of directors if (i) the value of a single transaction equals or exceeds 1% of the com - pany’s total assets or total sales as of the end of the most recent fiscal year, or (ii) the aggregate amount of transactions with a particular counterparty during the fiscal year, including the relevant transaction, equals or exceeds 5% of the company’s total assets or total sales as of the end of the most recent fiscal year. 3.6 Transparency and Ownership Disclosure In the case of a company belonging to a business group subject to public disclosure under the MRFTA (ie, with total assets of KRW5 trillion or more), the shareholding of the member by the other members of
the company group must be disclosed. Where a mem - ber of such company group participates in a JV, and the JV becomes a member of the company group, the person of significant control (PSC)/ultimate beneficial owner (UBO) of the JV may also need to be disclosed. Furthermore, although not a public disclosure, the PSC/UBO may be submitted to a foreign investment authority in South Korea as part of the application for foreign investment filings (under the FIPA or FETA, as the case may be). In addition, the amendment to the Capital Markets Act in 2024 introduced a prior disclosure requirement of share transfers by officers or major shareholders (holder of 10% or more of the total equity securities with voting rights or person who has a de facto influ - ence over management of the company) of a listed company. Per this amendment, major shareholders and officers intending to trade securities issued by a listed company in excess of a certain threshold vol - ume (the aggregate volume and amount of securities traded over the past six months is less than 1% of the total issued and outstanding shares and less than KRW5 billion) are required to disclose relevant infor - mation, such as the purpose of trade, price, quantity and transaction period, prior to the expected trade date. 4. Legal Developments 4.1 Notable Recent Decisions or Statutory Developments Amendment of the KCC The key provisions of the KCC amendments passed by the National Assembly in a plenary session on 3 July 2025 and promulgated on 22 July 2025, are as follows: • Expansion of fiduciary duties of directors (effective from 22 July 2025) – previously, under the KCC, a director owed their fiduciary duties to the company. The recent amendment expands the scope of this duty to the company and its shareholders. As a result, directors of a JV must also take into account the interests of the shareholders – not only those of the shareholder that nominated them.
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