3 weeks ago
September 28, 2020
Korea Stock Exchange Begins Translating Regulatory Documents Into English
On September 28, 2020, the South Korea Exchange (KRX) started to offer English translation services for the regulatory filings of 54 eligible companies, including Naver, Samsung Biologics, LG UPlus (formerly LG Telecom), and Hanjin Heavy Industries, among others.
There are over 2,300 companies listed on the KRX, South Korea’s sole bourse. The 54 eligible companies are all listed on the main board of the KRX, the Korea Composite Stock Price Index or Kospi. The KRX has four markets in total; the other three being the Kosdaq (electronic stock market, similar to the Nasdaq), the Konex (focused on SMEs), and the derivatives market.
Each time an eligible company files a public disclosure in Korean, the KRX will designate a language service provider (LSP) to translate the filing into English. The KRX will shoulder the LSP’s fees.
The KRX decided to provide English translation services as the value of foreign-held shares reached 35% of overall market capitalization on the [Kospi], the Yonhap News Agency quoted the KRX as saying. According to the same report, only 5.9% of Korean regulatory filings in 2019 were translated into English for foreign investors.
The KRX began taking applications in August 2020 from companies interested in using the translation service, the Korean Herald reported, adding that the Kospi has been trying to mitigate the so-called “Korea Discount,” or the lower valuations made by foreign investors for local stocks.
The Herald also quoted a KRX official as saying, “We will improve foreign investors’ accessibility to the local stock market by offering English translations of Korean companies’ disclosures. We hope the market expands and becomes globalized.”
A visit to DART, the Repository of Korea’s Corporate Filings launched by the government’s Financial Supervisory Commission (FSS) in 2007, already showed dozens of filings in English at press time. (Some older documents had a number of words still in Korean.)
The DART page also displayed this disclaimer: “The FSS neither affirms nor certifies the accuracy or the correctness of disclosures posted on the FSS English DART and assumes no responsibility for the use of information expressed or implied therein. Because disclosures in English are made voluntarily with no legal effect and may not correspond to the original disclosures in Korean due to mistranslation, the user is advised to refer to the original filings in Korean for specific details.”
Back in 2015, Slator reported on a similar initiative from the Japanese government. Making available English translations of documents, particularly at general shareholder meetings, is a key provision of the Japanese Corporate Governance Code, which aims to improve investor relations and make Japan more conducive to foreign investment. Similarly, in Hong Kong, the requirement for bilingual filing of stock market information has created a vibrant niche market for translation services.