Korea's Corporate Value-up Program explained: what it asks of listed companies

What does Korea’s Corporate Value-up Program ask a listed company to do? It encourages listed companies to disclose medium- to long-term plans for improving corporate value and report on implementation.

The framework addresses the “Korea discount”, the tendency for Korean equities to trade at lower valuations than comparable overseas equities. It encourages companies to use capital more efficiently and explain their choices to shareholders. The Korea Exchange (KRX) sets out the framework in its guidelines.

What is voluntary, and what is required?

Under the general framework, companies choose whether to participate, which indicators to use and how far ahead to plan. The guidelines do not prescribe a uniform dividend increase or buyback: investment, profitability and growth can also support a company’s plan. KRX’s FAQ says companies should explain why they chose investment or shareholder returns.

Separate rules create specific disclosure obligations. High-dividend companies qualifying for special dividend-income tax treatment must disclose their eligibility through a Value-up filing by the day after their annual shareholders’ meeting approves dividends, according to the Financial Services Commission.

The guidelines also link Value-up filings to exclusion from KRX’s published low-price-to-book list and to limited exemptions from KOSDAQ’s criteria for designating stocks as issues under administration. The latter concern revenue shortfalls and pre-tax losses from continuing operations at eligible technology-growth companies and companies listed before turning a profit. Both arrangements have additional eligibility and filing requirements; general participation alone does not establish eligibility. KRX guidelines

What should a company plan contain?

KRX suggests six sections, while allowing companies to tailor the contents to their circumstances:

1. Company overview. Describe the business, products, services and financial performance so the document can be understood on its own.
2. Current position. Assess the business model, competition and risks, then select relevant financial and non-financial indicators. Compare their history with industry averages or competitors.
3. Goals. State medium- to long-term objectives. Numerical targets are encouraged, but ranges and qualitative descriptions are allowed where precise figures are difficult to provide.
4. Actions. Explain how management intends to reach those goals. Examples include research spending, business restructuring, asset disposals, dividends and treasury-share cancellations.
5. Implementation review. Describe progress against the previous plan, including what worked and what needs improvement.
6. Communication. Explain engagement with shareholders and how their feedback enters management decisions.

These sections follow the KRX guidelines and accompanying manual.

The price-to-book ratio compares market value with book equity. Return on equity measures profit relative to shareholders’ equity. The manual’s capital-efficiency analysis also compares returns with the cost of capital. Governance indicators can cover shareholder rights, board accountability and auditor independence. Companies select measures relevant to their business. KRX manual

Who oversees the plan and where is it filed?

KRX recommends preparation by the strategy or finance function, with board oversight of management’s preparation and implementation. Formal board approval is not universally required by the Value-up framework. Where the board participates, the plan can identify meeting dates and matters discussed. KRX FAQ

Companies submit plans through KIND, KRX’s disclosure system, before publishing them on their websites or selectively providing the information. KRX recommends regular reporting, for example once a year, and disclosure in English for foreign investors. Its guidelines and FAQ explain these filing procedures.

How can readers check progress?

Start with the filed plan and its attachments. Identify the chosen measures, target period and proposed actions, then compare them with the next implementation review. KRX recommends an assessment of achievements and shortcomings, rather than a list of spending or activities. KRX manual

Missing a target alone does not make a company an unfaithful discloser, but false-disclosure rules still apply. For forecasts to qualify for an exception under the disclosure rules, the FAQ requires explicit identification as forward-looking information, stated assumptions or grounds for judgment, good-faith preparation on a reasonable basis, and a warning that actual results may differ. Companies must file a correction when they decide to change information material to investment decisions, explaining what changed and why. KRX FAQ