The financial authorities have detected over 80 companies that violated disclosure obligations during last year’s Initial Public Offering (IPO) processes.
The Financial Supervisory Service (FSS) announced today (19th) that it has imposed sanctions for 143 disclosure violations involving 88 companies.
Out of these, 31 are listed companies (35.2%) and 57 are unlisted companies (64.8%), indicating more violations by unlisted companies that have less experience with disclosures.
The most common type of violation, totaling 98 cases, involved the failure to submit securities registration statements.
When unlisted companies prepare for an IPO, the underwriter usually conducts due diligence on past stock issuance history, during which past failures to submit securities registration statements are often found.
For listed companies, 35 disclosure violations were addressed, with 30 of these involving violations by KOSDAQ-listed companies.
Although there were only 2 violations related to securities registration statements, there were 12 violations related to small public offering documentation, 11 regarding regular reports, and 10 regarding major issue reports.
In response to these violations, 79 cases were met with severe actions (fines, restrictions on securities issuance, penalties), while 64 cases received moderate actions (warnings, cautions), depending on the impact on the market.
To prevent disclosure violations, the FSS has urged companies to check whether they need to submit securities registration statements, regular reports, major issue reports, and whether they fulfill disclosure obligations when acquiring or disposing of treasury stock.
For unlisted companies experiencing challenges due to lack of disclosure experience, know-how, or dedicated personnel, the FSS plans to continuously strengthen guidance on repeated types of disclosure violations.
Additionally, the FSS intends to focus its disclosure review and investigation capabilities on cases with significant market impact, such as false statements on securities registration statements or failure to meet submission obligations for large-scale fundraising activities.