Seoul to have shareholders to specify purpose for owning 5% or more in Korea Inc.

[Photo by Yonhap]

Shareholders holding 5 or more stake in listed companies in South Korea would be required to specify the purpose of stake ownership to clarify if management influence is one of the goals under revisions sought by the local financial authority.

Financial Services Commission (FSC) said Wednesday it will modify the so-called 5% rule, which requires a shareholder to report with the Financial Supervisory Service (FSS) for owning 5 percent or more common shares with voting rights of a publicly traded company. Such shareholders must also report within five days when there is a change of more than 1 percent in their holdings.

The FSC will modify the regulatory filing form and manual to require details on purchasing large shares. If such large shareholder is unable to specify influence in management immediately, the shareholder will be required to disclose once detailed plan is made ready.

The change is to provide ordinary investors with more information about companies and their management practices, said the FSC.

The financial authority plans to release the new reporting form by the end of September and revised reporting guideline in December.

If deemed necessary, the FSC will seek an amendment in the Capital Market Act to legally mandate disclosing the specific purpose of holding 5 or more in a Korean company.

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