View of Korea Exchange Headquarters (Yonhap)
SEOUL, Nov. 19 (Korea Bizwire) – A survey reveals that over half of the companies listed as intending to venture into new businesses such as secondary batteries and artificial intelligence (AI) had no track record of actually promoting such initiatives.
The Financial Supervisory Service (FSS) released a report on Sunday titled ‘Follow-up on the Results of the Actual Analysis of New Business Promotion Status,’ which included 233 companies spanning seven major thematic industries over the past three years.
These industries include the metaverse, cryptocurrencies, non-fungible tokens (NFTs), secondary batteries, AI, robots, new and renewable energy, and corona.
Out of these, 55 percent (129 companies) had no history of actively promoting related businesses. Shockingly, some companies disclosed that their major shareholders sold their stakes after the stock prices surged following the announcement of new business purposes.
One notable case involved Company A, which publicized its involvement in a specific new business through the media after a change in its largest shareholder. It subsequently amended its articles of incorporation, invested in Company B associated with the business, leading to a rapid stock price increase.
Shockingly, some companies disclosed that their major shareholders sold their stakes after the stock prices surged following the announcement of new business purposes. (Yonhap)
However, Company A later sold all its shares in Company B within a few months, stating in its semi-annual report that it was no longer operating the business.
The FSS decided to investigate potential additional unfair trade links in response to these findings.
Among the companies announcing new business initiatives, 74 percent (95 companies) raised external funds through capital increases and convertible bond (CB) issuances. On average, they secured 49.6 billion won in funding through four rounds, surpassing the average for all listed companies (25.4 billion won and 0.9 times).
The Korea Fair Trade Commission (FTC) expressed concern that funds raised might be diverted for other purposes or misappropriated privately, even if no actual business was pursued.
FTC is scrutinizing 14 companies that did not pursue new business initiatives for possible supervisory conversion after an active examination. Additionally, four more companies were selected for audit considering accounting and analysis risks.
An official from FTC emphasized their commitment to sternly addressing actions that deceive investors and yield unfair profits under the guise of entering new businesses when there is no intention or capability to do so.
M. H. Lee (mhlee@koreabizwire.com)
