Korea insider buying: ownership reports, trading plans and DART filings

How can you check whether an executive or major shareholder bought shares in a Korean listed company? Look for an insider ownership report on DART, the Financial Supervisory Service’s disclosure system.

Larger transactions can also require an advance trading plan. These filings serve different purposes: one records ownership and changes in it; the other sets out proposed transactions. Neither replaces the prohibition on trading using material nonpublic information.

Who must report a purchase

The ownership-reporting obligation covers directors, including outside directors, statutory auditors and people acting as executives. Major shareholders include holders of at least 10% of outstanding voting shares and shareholders who exercise actual influence over important management decisions.

Initial ownership reports are generally due within five business days of becoming an executive or major shareholder. Subsequent ownership changes generally have the same deadline, subject to exemptions and special reporting schedules. For an exchange purchase, the reporting clock starts from settlement rather than the trade date.

Small changes are exempt when both the quantity is below 1,000 shares and the acquisition or disposal value is below 10 million won. Changes since the previous report accumulate toward those thresholds. The small-change exemption does not apply to initial reports. The FSS ownership-reporting guide sets out the requirements.

When advance notice is required

For trades solely in shares, add the plan’s transactions to non-exempt purchases and sales in the six months before the plan’s start date. The small-transaction exemption requires totals below both 1% of the issuer’s total issued shares and 5 billion won. Purchases and sales are added rather than netted. Other covered securities require the statutory share-equivalent calculation, rather than treating every instrument as one share.

Reaching either threshold removes the small-transaction exemption; other exemptions may still apply. The FSS trading-plan guide explains the aggregation and calculation rules.

A reportable plan must be disclosed at least 30 calendar days before the first expected settlement date in its trading period. If the filing deadline falls on a Saturday, public holiday or May 1, the report is due on the preceding business day, according to the FSS guide. The trading period must not exceed 30 days. The plan specifies the expected price, quantity and trading period.

Where necessary to reflect market conditions at the time of trading, the actual transaction amount may range from 70% to 130% of the reported planned amount under Article 173-3 of the capital markets law.

Withdrawal is permitted in specified circumstances, including death, bankruptcy, delisting, trading suspension or qualifying excessive market volatility. For statutory grounds other than the reporting person’s death, a withdrawal report must be submitted within the prescribed deadline. Article 200-3 of the enforcement decree sets out the withdrawal procedure. A plan does not establish that the purchase occurred.

Exemptions cover specified financial investors, including qualifying foreign equivalents, and certain transactions such as tender offers and merger-related acquisitions. The decree sets out the requirements and exemptions; the Financial Services Commission’s implementation guidance describes the framework.

How the separate 5% rule works

The 5% threshold combines holdings of the investor and legally defined related parties, including joint holders. Reporting is generally required when their combined holdings reach 5%, when the reported holding ratio subsequently changes by at least one percentage point, or when the holding purpose changes. Changes to prescribed material matters, including major agreements concerning the holdings, can also trigger a report under Article 147 of the capital markets law.

The standard deadline is five business days, excluding Saturdays, public holidays and May 1, under Article 147 and Article 153 of its enforcement decree. Eased procedures and longer deadlines apply in specified cases, including certain holdings without a management-influence purpose, as the FSC’s explanation describes.

For an exchange purchase, the 5% reporting clock starts on the trade date, rather than the settlement date used for insider ownership reports. A large-shareholding report does not replace a separately required insider ownership report.

How to find and read the filings

On DART’s English search page, search by company name or code and select a filing-date range. Under Equity Disclosure, look for “Report on Status of Specific Securities, etc. Owned by Executives and Major Shareholders” for ownership reports, or “Report on Trading Plans of Specific Securities, etc. Owned by Executives and Major Shareholders” for proposed trades.

The search date range concerns filing dates. In the ownership report, check the dated changes and transaction reasons to distinguish purchases from gifts, inheritance, stock dividends and option exercises.

DART lists company acquisitions and disposals of treasury stock under Miscellaneous Disclosures, separately from executive and major-shareholder ownership reports.