IR

IR stands for Investor Relations and refers to a company's activities for conveying corporate information to investors and capital market participants and building relationships with them.

Through IR, a company explains its financial information, business strategy, growth potential, and management direction to investors, thereby communicating its corporate value to the market and earning investor trust.

IR is regarded as an important strategic activity in corporate management.

When a company does not provide sufficient information, the market struggles to assess its value accurately. Conversely, disclosing material nonpublic information or conveying inaccurate information can lead to a disclosure violation or an investor dispute.

For listed companies in particular, IR serves the following functions.

IR activity goes beyond explaining corporate information; it directly affects a company's ability to raise capital and the market's assessment of it, making it an important management function.

Recently, the scope of IR has expanded further as it has come to encompass a wider range of information, including ESG management, sustainability reporting, and explanations of corporate governance.

Although IR is a corporate communication activity, in practice it is an area governed by capital market regulation and the disclosure system.

Information that a company provides to investors may be subject to the Financial Investment Services and Capital Markets Act and the disclosure rules, and in certain situations it can give rise to criminal liability or administrative sanctions.

The principal laws directly related to IR are as follows.

If information a company provides during IR reaches a particular investor before disclosure, a fair disclosure violation can arise.

If a company's executives or IR staff trade in its shares using material nonpublic information, this can amount to insider trading under the Financial Investment Services and Capital Markets Act, and providing that information to a particular investor first can give rise to a fair disclosure violation.

For this reason, IR is regarded not as the sole province of a company's public relations department but as an area that the disclosure department, the legal department, and management must manage together.

IR takes many forms, and the way it is conducted varies with a company's circumstances and the capital market environment.

The principal IR activities are as follows.

IR is a process of communication between a company and its investors, but because it is also an area governed by capital market regulation and the disclosure system, it can give rise to a range of legal risks.

Information provided during IR can influence investors' investment decisions, so depending on how and when it is provided, it can lead to administrative sanctions, criminal liability, or investor disputes.

The principal legal risks that may arise as a company conducts IR activities, and the resulting legal consequences, are as follows.

In particular, where the business outlook or management plans presented in IR materials diverge significantly from actual results, investors may bring damages claims against the company.

There is also the possibility of insider trading where company officers or employees who learn material nonpublic information during IR then trade in the company's shares.

A company should therefore approach IR not as a mere matter of investor briefings or public relations but as a function calling for an information management system that accounts for the disclosure rules and the Financial Investment Services and Capital Markets Act.

In particular, the IR department, the disclosure department, and the legal department should work together to set an investor response strategy and the standards for disclosing information in advance.

IR plays an important role in a company's investment fundraising and corporate value management, but it is also an area where capital market regulation and disclosure obligations converge.

Because information provided during IR meetings, investor meetings, and analyst engagements can lead to violations of the disclosure rules or the Financial Investment Services and Capital Markets Act, a prior legal review is needed.

In developing an IR strategy, a company should review the following points.

When a company conducts IR activities on its own, it often finds it difficult to review the disclosure rules and the Financial Investment Services and Capital Markets Act at the same time.

It is therefore important to obtain advice from a legal professional from the IR strategy stage onward.