(Photo= Yonhap news)

 

[Alpha Biz= Reporter Kim Minyoung] KT has failed to register the cancellation of $500 million (approximately 696 billion KRW) worth of Bonds with Warrants (BWs) issued to Microsoft (MS) after completing their repayment in 2005. Under Korean commercial law, the responsibility for failing to register corporate details lies with the company's CEO, raising the possibility of penalties for the CEO at the time.

On the 21st, it was revealed that KT had belatedly completed the cancellation registration for the MS BWs on the corporate registry on the 19th. This action followed an inquiry by the press regarding the repayment status of the bonds, prompting KT to recognize the oversight and take corrective measures. A KT representative stated, "Given the long time that has passed, we were unaware of the registration omission or its background, but we acknowledged the issue and proceeded with the cancellation registration as soon as we identified the problem."

The $500 million BWs in question were issued in 2002 during KT's privatization process. At that time, KT issued exchangeable bonds and BWs to attract investment from foreign investors and change its shareholder composition. Microsoft did not convert the BWs into stock by their maturity, leading KT to fully repay the bonds in cash in January 2005.

Legally, once BWs are repaid, the company must register the cancellation of the BWs on the corporate registry within two to three weeks of the occurrence. Since BWs, like capital, are essential for understanding the company's financial status, their accurate registration is crucial. Article 635 of the Commercial Act stipulates fines and other penalties for failing to register such information in a timely manner.

 

 

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