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Violations of corporate disclosure rules double in 2015

All News 13:36 January 18, 2016

Seoul, Jan. 18 (Yonhap) -- Violations of regulations on public disclosures by business firms have been rising rapidly since 2013 with the number doubling last year, the financial watchdog said Monday.

The Financial Supervisory Service (FSS) said it uncovered 126 cases of various violations committed by 98 companies last year, twice the 63 cases in 2014. In 2013, 45 cases of corporate disclosure violations were detected.

Of the 126 cases, the FSS imposed sizable surcharges on 26 cases that violated the rules heavily and fines for five with less severe violations. For 17 cases, the watchdog restricted the issuance of securities, while 78 cases of minor violations received warnings or cautions.

Violations of important notices were the most common at 69 cases. There were 34 violations regarding regular corporate disclosures and seven violations of securities issuance disclosures.

A total of 55 corporate violators were listed on the tech-heavy KOSDAQ market, while nonlisted companies that are obliged to make disclosures numbered 26. Seventeen companies were listed on the main stock market. Most stock market-listed companies failed to make proper disclosures of their decisions to delist.

The FSS said the sharp growth of corporate disclosure violations last year was attributable to the strengthening of its market monitoring with an increased number of watchdog officials.

The financial watchdog plans to make a list of companies that violate public disclosure regulations habitually and closely monitor them.

An FSS official said it is very likely that such violations will greatly increase this year with brisk restructuring of the so-called zombie companies that need constant bailouts in order to operate.

"The FSS will help companies improve their ability to make public disclosures," said Chang Joon-kyeong, the FSS head of the corporate disclosure department. "Any companies that violate regulations continuously and repeatedly will be punished sternly."
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