S. Korean firms pressed to disclose dividend payout plans

South Korea's financial watchdog is seeking to revise corporate disclosure rules to require publicly-traded firms to reveal their dividend payout plans and the maximum dividend amount, industry sources said Friday.

The government in July had unveiled plans aimed at encouraging companies to distribute more of their profits in wages and dividends, blaming them for holding on to too much cash, cutting the money flow to households and in turn weakening their spending.

The new economic team led by Finance Minister Choi Kyung-hwan has been pushing hard to stimulate domestic demand, increasing budget spending and easing mortgage rules.

According to the sources, the Financial Supervisory Service (FSS) is gathering opinions from related agencies as it reviews such a move.

Under the scheme under review by the Financial Supervisory Service (FSS), a listed firm would have to disclose its plan for dividend payouts and the maximum amount of dividends to be paid to shareholders in its annual report.

"We are looking at various options (for that)," said an official at the FSS. "But nothing has been determined yet."

The watchdog is reportedly seeking to implement the scheme next year.

Previous data shows that South Korea's large-cap firms are likely to raise their dividend payouts to investors by up to 28 percent under a new tax scheme that pushes local companies increase their returns to shareholders, capital spending and salaries for their workers.

Under the new tax plan to be effective for three years starting next year, local firms will be levied a 10 percent tax on their net profit after payments for investments, salaries and dividends if they do not meet government-set targets against excessive cash reserves.

According to the data compiled by Daishin Securities, firms with a market capitalization of 1 trillion won or more may pay an additional 3.4 trillion won (US$3.25 billion) in dividends if they raise their cash dividend payout ratio to more than 20 percent.

The estimate is up 28.2 percent from 12.13 trillion won in dividends paid to investors last year, when the country's listed firms paid some 16.4 percent of their net profit to shareholders. (Yonhap)