English disclosures, e-AGMs, tighter rules — Kosdaq IR teams are drowning in work

"Shareholders keep changing, but we're told to communicate more."

The government is pressing listed companies to step up shareholder engagement as part of its corporate value-up and shareholder rights agenda — but on the ground, investor relations officers say they are struggling to keep up. Expanded English-language disclosures, mandatory reporting of shareholder meeting vote results, tighter executive compensation disclosure rules and preparations for the rollout of electronic general meetings in 2027 are all piling onto IR teams at once.

The problem is compounded by the structure of the Kosdaq market, where the shareholder base turns over roughly every two months. Despite the policy goal of fostering a long-term investment culture, the actual audience for shareholder communication is in constant flux. The recent introduction of a fiduciary duty for directors has added litigation risk to the mix, and practitioners say the refrain on the ground is the same: more to do, not enough people to do it.

The Financial Services Commission and the Korea Exchange said Monday that the government is pursuing a broad overhaul of the corporate disclosure regime to modernize capital markets and address the so-called Korea discount — the chronic undervaluation of Korean equities.

Starting next year, companies will be required to disclose vote results for each agenda item at shareholder meetings, and executive pay disclosure rules will be significantly tightened. A plan is also under way to extend English-language disclosure requirements — currently mandatory for Kospi-listed companies with assets of 2 trillion won ($1.32 billion) or more — to large Kosdaq-listed companies by 2028.

The policy rationale is to give investors more information and strengthen the rights of ordinary shareholders. By expanding English disclosures and tightening shareholder meeting reporting, the government aims to improve access for global investors and ensure they have the information needed to exercise their rights.

The challenge is that the staffing and organizational capacity to carry out these requirements often does not exist. Smaller and mid-sized Kosdaq companies in particular frequently lack a dedicated IR function. Unlike large-cap firms that run full IR teams, many smaller Kosdaq companies have a single person handling human resources, general affairs and management support — with IR added on top.

"Companies with a market capitalization of around 100 billion won ($72 million) often cannot afford a dedicated IR team," said an official at one Kosdaq-listed company. "There are plenty of cases where someone handling HR or general affairs also takes on IR duties. With English disclosure requirements expanding and shareholder inquiries increasing, the burden on the ground is considerable."

The growing assertiveness of activist funds and the rising influence of retail shareholder platforms are adding further pressure. Where IR work once centered on earnings releases and disclosure filings, practitioners say it now increasingly involves responding to shareholder proposals, securing proxy votes and explaining dividend policy — a significant shift in the nature of the job.

What companies find particularly difficult is the gap between the growing demand for shareholder communication and the realities of the market. At a recent roundtable for IR and disclosure officers at listed companies, the Kosdaq Listed Companies Association summed up the frustration: "Shareholders keep changing, but we're told to communicate more. In practice, that is not easy."

Korea Exchange data show that the share turnover ratio for the Kosdaq market — measured by trading value as a proportion of market capitalization — stood at 439.68 percent last year, roughly four times the Kospi's 117.03 percent. The higher the ratio, the more frequently the investor base turns over.

Kosdaq's turnover ratio was 710.55 percent in 2021, 461.19 percent in 2022, 607.92 percent in 2023, 522.30 percent in 2024 and 439.68 percent last year. The five-year average comes to 548.33 percent — implying that, on a simple calculation, the shareholder base turns over an average of 5.4 times a year.

The Kosdaq Listed Companies Association described the market as one "where shareholders change hands roughly every two months," adding: "Companies have to secure proxy votes for general meetings and handle dividend inquiries, all while the shareholder base keeps shifting. The demand for expanded shareholder communication keeps growing, but the gap with reality is significant."

The phenomenon reflects the structural dominance of retail investors in the Kosdaq market. As of June 10, foreign investors held just 11.63 percent of Kosdaq's total market capitalization, compared with 40.32 percent on the Kospi.

The recently introduced fiduciary duty for directors is another pressure point. The association warned that minority shareholders are likely to raise more objections and file more lawsuits. "Where disclosure and IR used to be the core concern, practitioners now have to think about legal risk and litigation response as well," it said.

"We support the intent behind shareholder-friendly policies, but the workload on the ground keeps growing," said an official at another Kosdaq-listed company. "With the shareholder base constantly changing, we are also grappling with what form of communication is actually effective."