South Korea rolls out low PBR company rules; the first list will be published in November, and long-term undervalued companies will be “tagged.”

Deep Tide TechFlow message: On July 28, according to a report by the Korean media outlet NATE, the Financial Services Commission of Korea and the Korean Exchange have released detailed rules for the disclosure system for low price-to-book (PBR) companies. The plan is to include, for public disclosure, companies listed on the main board (KOSPI) that fall in the bottom 25% of PBR rankings within each industry, and companies on the junior board (KOSDAQ) that fall in the bottom 10%. The move is intended to encourage companies to increase shareholder value. Under the scheme, after disclosing a corporate value enhancement plan that includes measures to improve low PBR, companies may obtain a one-year disclosure exemption; however, companies that remain in the low PBR range for six consecutive years will be added to the list even if they have already disclosed improvement plans.

The Korean Exchange expects the final number of companies to be subject to disclosure to be about 220, representing 5% to 10% of the total number of listed companies across the two major markets. Of these, about 120 companies that have long been in the low PBR category will not be able to enjoy the exemption. The first batch of low PBR company lists is scheduled to be published on November 2, and the exchange will mark them with a “low PBR” label on its announcement website and in securities firm trading systems.