Kyusung Lee Attorney at Law

A practical guide for foreign investors and institutions on Korea’s “Corporate Value-Up Plan” disclosure regime, with two benchmark cases — By Kyusung Lee, Attorney at Law

Foreign investors tracking Korean equities have likely noticed a new filing category appearing on KIND, Korea Exchange’s disclosure system: the “Corporate Value-Up Plan” (기업가치 제고 계획). At first glance it can look like a dividend announcement. It is not. It is a voluntary disclosure through which a listed Korean company diagnoses the causes of its own undervaluation and explains, in a structured way, how it intends to run a management cycle that improves profitability and capital allocation over the medium to long term. For investors weighing Korean names against the so-called “Korea Discount,” understanding this disclosure — and how to tell a substantive one from a box-ticking one — is now a genuinely useful part of due diligence. This guide walks through the regime, the drafting requirements, and what the Hyundai Motor and KB Financial Group cases each illustrate.

Key Takeaways · The Value-Up disclosure is not a pledge to raise dividends. It is a framework through which a company explains to the market how it will generate returns above its cost of capital and allocate capital efficiently. · A credible plan is distinguished less by how ambitious its targets are and more by whether diagnosis, targets, execution measures, and follow-up evaluation are logically connected, whether the board is genuinely involved, and whether progress is verifiable year over year. · Hyundai Motor represents the industrial-company model, integrating profitability, growth investment, and shareholder returns into one long-term strategy. KB Financial represents the financial-holding-company model, tying its capital return budget mechanically to its regulatory capital ratio.

1. What Is the Corporate Value-Up Disclosure?

1.1 Origins and Official Name

What is commonly called the “Value-Up disclosure” is officially the “Corporate Value-Up Plan” disclosure. It was introduced in 2024 by the Korean government and Korea Exchange (KRX) as the central instrument of the Corporate Value-Up Program, designed to push listed companies to treat value creation not as a one-off event but as an ongoing management discipline.

The so-called “Korea Discount” is not explained by low profitability alone. It reflects a combination of inefficient capital allocation, unpredictable shareholder returns, governance concerns, and thin communication with the market. The Value-Up disclosure is designed so that each company diagnoses these causes for itself and shares that diagnosis with investors.

1.2 It Is Voluntary — and That Matters for How You Read It

The first thing foreign investors should understand is that this is not a mandatory filing. Under KRX disclosure rules it is a voluntary disclosure, and there is no eligibility threshold based on PBR below 1x or any particular ROE level. A company already trading at a premium can still file a Value-Up plan. Because it is voluntary, the quality and rigor of a given company’s plan varies significantly — which is precisely why investors should read these filings critically rather than assume uniform standards. That said, once filed, the content can influence investment decisions, so companies remain exposed to liability for false or exaggerated statements or material omissions.

1.3 How It Differs from Other Korean Disclosures

Disclosure Type	Primary Content	Difference from the Value-Up Plan
Annual Business Report	Statutory periodic disclosure of past-year financial, business, and governance information	The Value-Up Plan is forward-looking and freely structured around targets, execution, and follow-up evaluation
Corporate Governance Report	Compliance status against core governance principles, with explanations for non-compliance	The Value-Up Plan may reference governance but selects only the items material to value creation
Mid/Long-Term Shareholder Return Policy	Focused on dividend and buyback policy	The Value-Up Plan connects profitability, growth investment, capital efficiency, governance, and shareholder returns together
IR Materials	Relatively unconstrained investor communication	Filed through KIND as a formal disclosure, so fair-disclosure and simultaneous-access obligations apply more strictly

2. Filing Requirements

2.1 Procedural Requirements

Item	Requirement / Guidance
Eligible Filers	Any company listed on KOSPI or KOSDAQ — in principle, all listed companies
Disclosure Category	Filed as a “voluntary disclosure” under KRX disclosure rules
Filing Channel	Submitted to KIND through KRX’s listed-company disclosure system
Attachment	A Value-Up Plan document must be attached; the filing summary and the attachment must be consistent
Sequencing of Information	No selective early disclosure to specific investors before KIND filing; if paired with an IR event, the filing should precede or coincide with it
Advance Notice Filing	Companies still preparing a plan may file a “Value-Up Plan Advance Notice”
Amendments	Material changes to assumptions or targets require a corrective or follow-up filing explaining the reason and impact
Periodic Filing	Not mandatory, but annual follow-up filings are recommended; for December fiscal-year-end companies, a first-half filing after the annual report is typical

2.2 The Five-Part Structure Investors Should Look For

KRX guidance does not mandate a rigid template, but a filing that lacks the following logical structure falls short of what the disclosure is meant to accomplish.

Step	What It Should Contain
1. Diagnosis	Business model, market environment, financial performance, cost of capital, ROE/ROIC/PBR/PER, cash flow, shareholder returns, and governance, benchmarked against peers
2. Target Setting	Financial and non-financial targets (market share, new business mix, governance, ESG), which may be quantitative, qualitative, or a mix
3. Execution Plan	Growth strategy by business segment, profitability improvement, cost efficiency, asset restructuring, investment/M&A, debt and cash management, dividends/buybacks, governance improvements
4. Follow-Up Evaluation	In subsequent filings, an honest assessment of whether prior targets were met, what was actually executed, and — if targets were missed — why, plus a revised plan
5. Communication	Ongoing explanation to domestic and international investors via IR, shareholder meetings, the company website, and, where relevant, English-language disclosure

2.3 Targets Don’t Have to Be a Single Hard Number

• Quantitative targets are useful but not mandatory for every item; qualitative targets are acceptable where quantification is genuinely difficult.
• Targets can be expressed as ranges rather than single figures — e.g., “ROE of 10–12% by 2027” or “TSR of 35% or higher over the medium term.”
• Target horizons should match the company’s business cycle and investment payback period, ideally paired with annual KPIs or interim milestones to make progress verifiable.
• PBR itself can be used as a headline target, but because share price is heavily influenced by external factors, companies are encouraged to disclose the controllable underlying drivers — ROE, cost of capital, growth rate, cash flow, and shareholder return policy — alongside it.
• If a target is likely to change, the company should explain in advance the conditions and key assumptions under which it might, and disclose the reason transparently if it actually does.

2.4 Is Board Approval Required?

KRX guidance does not impose a uniform board-resolution requirement for standard Value-Up disclosures. But because the plan typically covers matters squarely within board authority — long-term strategy, investment, capital allocation, dividends, and buybacks — the following level of board involvement is strongly recommended in practice, and foreign investors should treat its presence or absence as a signal of the plan’s credibility.

• Board or committee briefing on the draft plan
• Deliberation or resolution on core targets, capital allocation, and shareholder return policy
• Quarterly or semi-annual monitoring of implementation
• Board review of target achievement and the need for revisions before each follow-up filing
• Disclosure of board meeting dates, topics discussed, and approval process within the filing itself

2.5 Not the Same as the High-Dividend Tax Incentive Filing

Starting in 2026, Korea linked its dividend-income tax incentive regime to the Value-Up Plan disclosure. This did not impose new dividend requirements on Value-Up disclosures generally. A standard voluntary filing still carries no financial eligibility threshold; only companies seeking recognition as a tax-incentive-eligible “high-dividend company” need to separately satisfy the requirements, deadlines, and disclosure items under Korea’s Restriction of Special Taxation Act.

3. Two Benchmark Cases: What Hyundai Motor and KB Financial Show

3.1 Case One — Hyundai Motor’s Value-Up Plan

Item	Detail
Company	Hyundai Motor Company (KRX: 005380)
Filing Date	August 28, 2024 (linked to the 2024 CEO Investor Day)
Plan Horizon	Core shareholder-return targets cover 2025–2027
Case Type	Industrial-company model integrating strategy, profitability, investment, and capital allocation

Metric / Policy	Disclosed Commitment
Total Shareholder Return (TSR)	TSR of 35% or higher over 2025–2027, combining dividends with share buybacks and cancellations
ROE	3-year average ROE target of 11–12% over the plan period
Dividends	Introduction of a minimum annual dividend of KRW 10,000 per common share; enhanced predictability of quarterly dividends
Share Buybacks	KRW 4 trillion in aggregate buybacks over 2025–2027, with cancellation to lift per-share value
Growth Strategy	Long-term investment under the “Hyundai Way” strategy spanning EVs, hybrids, software-defined vehicles, and hydrogen/energy

What makes this a well-regarded case is that Hyundai did not present shareholder returns in isolation — it tied them to an ROE target, a long-term growth investment program, and an explicit capital allocation principle. It set trackable quantitative targets (TSR 35%+, ROE 11–12%, a minimum dividend floor, and a KRW 4 trillion buyback envelope), and in May 2026 it filed a follow-up disclosure reporting actual 2025 implementation results — a meaningful signal that the plan was not a one-time announcement.

3.2 Case Two — KB Financial Group’s Value-Up Plan

Item	Detail
Company	KB Financial Group Inc. (KRX: 105560)
Advance Notice	May 27, 2024, announcing a formal Q4 2024 filing
Formal Filing	October 24, 2024
Plan Title	2024 KB Financial Group Sustainable Value-Up Plan
Case Type	Financial-holding-company model — a formula-driven capital management framework

Metric / Policy	Disclosed Commitment
Target ROE	10% or higher (double digit), supported by improved RoRWA and core earnings capacity
Target CET1	13% or higher, managed through the year in the mid-13% range alongside risk-weighted-asset growth
First-Tier Return	Capital in excess of a 13% year-end CET1 ratio funds the following year’s returns, via equal quarterly cash dividends and first-half buybacks/cancellations
Second-Tier Return	Capital in excess of a 13.5% second-half CET1 ratio funds additional buybacks and cancellations
Predictability	Ties returns to a publicly observable metric — the capital ratio — so the market can estimate future distributions

The significance of the KB Financial case is not any single payout percentage — it is that KB built a repeatable decision rule tied to its regulatory capital ratio. Banks must hold sufficient regulatory capital, so they cannot return excess cash on a simple formula the way an industrial company can. KB set its CET1 ratio as the safety threshold and tied capital above that threshold directly to its return budget, preserving financial soundness while giving the market a basis to estimate future distributions. Since the formal filing, KB has repeatedly executed dividends and buyback-and-cancellation programs consistent with the framework, including a KRW 600 billion buyback-and-cancellation decision disclosed in February 2026.

4. Legal and Disclosure Risk Points

Issues We Flag for Clients · Forward-looking statements — assumptions, formulas, and risk factors behind targets should be stated explicitly, and definitive language should be avoided; unsupported aggressive targets risk misleading investors. · Selective disclosure — companies should not preview material content to institutional investors or at IR events before or ahead of the KIND filing. · Cross-filing consistency — figures and assumptions must match across the Value-Up plan, the annual business report, IR materials, board minutes, and dividend/buyback filings. · Target revisions — changes are permitted given changing conditions, but the reason, impact, and revised plan must be explained promptly and specifically. · Director duties — long-term strategy and capital allocation calls fall within business judgment, but require a documented, good-faith, well-informed decision-making process. · Promotional overstatement — language implying guaranteed achievement or guaranteed share-price outcomes should be avoided; a Value-Up plan is not a share-price guarantee.

Conclusion: The Filing Is Only the Starting Point

“The credibility of a Value-Up plan is not established by the first filing — it is established by next year’s follow-up disclosure.”

The Corporate Value-Up disclosure is not a niche instrument for undervalued companies — it is a voluntary framework available to every KOSPI- and KOSDAQ-listed company to explain its value-management discipline to the market. Reclaiming a PBR of 1x can be a headline goal, but a genuinely well-constructed plan manages the underlying drivers — ROE, growth, cost of capital, and capital allocation — rather than the PBR outcome itself. Hyundai Motor integrated growth investment with shareholder returns; KB Financial converted a regulatory capital ratio into a shareholder-return formula. What both share is a clear methodology and time horizon for their targets, real board involvement, and a willingness to let next year’s follow-up filing test the credibility of this year’s promises.

For foreign investors and companies operating in the Korean market, we advise on evaluating Value-Up disclosures as part of investment due diligence, on drafting and reviewing Value-Up plans and board materials, on forward-looking-statement risk, and on shareholder-activism strategy for investors seeking to hold Korean issuers to the commitments in their own filings. If you are evaluating a Korean issuer’s Value-Up plan or preparing one, feel free to reach out using the contact details below.

About the Attorney
Education	B.A. in Economics, Brown University · J.D., Yonsei University School of Law
Experience	Samsung C&T (International Contracts, Legal Team) · Equity Research, BofA Merrill Lynch
Credentials	Member, Korean Bar Association · CAMS (Certified Anti-Money Laundering Specialist)
Practice Areas	Corporate Governance · Shareholder Activism · Foreign Investment Advisory · Cross-Border Contracts · Startup Law

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Kyusung Lee, Attorney at Law Corporate Governance · Shareholder Activism · Foreign Investment · Cross-Border Transactions Phone  02-6264-7604    Email  kyusungii@gmail.com Website  http://www.kyusunglee.com    Naver Blog  blog.naver.com/hotchkiss777