- Submission of an Audit Report and a Review Report
When filing the application for preliminary review on listing eligibility and the securities registration statement, the foreign applicant must submit the auditor's report on the financial statements of the recent three fiscal years (the latest fiscal year in case of the KOSDAQ market). Furthermore, if necessary, the review report on the latest semi-annual financial statement will also be submitted.
In addition, a foreign applicant must establish an internal accounting control system in the same way as a local applicant is required in Korea, and ensure that the review report on its operation is attached to the auditor's report.
A foreign applicant should submit a certificate of an external auditor verifying consistency between the auditor's report and the financial information that is stated in the application for preliminary review on listing eligibility review and the securities registration statement.
- Establishment of Internal Accounting Control System
Any foreign applicant seeking to list its shares on the Korean stock market should establish an internal accounting system and operate it for at least 3 months in the same way as any local applicant is required in Korea. Accordingly, a foreign applicant should prepare the internal accounting control regulations, arrange an internal team overseeing the operation of the aforesaid regulation and designate an internal accounting manager (full-time executive). Such an internal accounting manager must evaluate the operation status of the internal accounting control system; report the results to the board of directors and audit committee (or statutory auditor) on a regular basis.
The following list sums up the points that the foreign applicant should prepare in relation to internal accounting control system before filing the application for listing eligibility review.
- Preparation for Internal Accounting Control System
- (1) Prepare the internal accounting control regulation and arrange an internal team overseeing the operation of the regulation;
- (2) Prepare the internal accounting manager's report on the internal accounting control system, which have been submitted to the board and the audit committee (or statutory auditor);
- (3) Prepare the audit committee's (or statutory auditor's) statement evaluating the internal accounting manager's report, which have been submitted to the board
Based on the prepared documents as above, the external auditors should objectively review the internal accounting control system, and publish its review report.
The financial statements of a foreign applicant should be prepared in accordance with any one of the following: (ⅰ) the International Financial Reporting Standards (the “IFRS”) adopted in the Republic of Korea, (ⅱ) the GAAP in the United States of America, or (ⅲ) IFRS. Once selected, the accounting standard may not be changed after listing.