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Startup, venture entry to Kosdaq eased from April 9

According to Pulse by Maeil Business News Korea,

Startups and venture companies will be exempted from the usual income and capital requirements to join the secondary Kosdaq market starting Monday.

The Financial Services Commission’s amendments to the IPO rule for companies with high growth potential go into effect on April 9. Such candidates won’t be required to prove consecutive profits and capital base for membership on the secondary market.

The measure has been part of a government campaign to vitalize the Kosdaq market that had lagged behind the main bourse and facilitate up-scaling of small and mid-sized enterprises.

The Kosdaq index closed Thursday up 0.74 percent at 868.93.

An IPO will be licensed to such category upon meeting any one of the four criteria: net profit from continuing operation to be 2 billion won ($1.9 million) or above before tax with market capitalization amounting more than 9 billion or equity capital totaling 3 billion or more. A company will be cleared for IPO if it can demonstrate the market value of minimum 20 billion won and generate 10 billion won or more in sales or profit of more than 5 billion won.

Previously, an aspiring firm needed a net profit of 2 billion won or more and market value of at least 30 billion won.

The FSC also made it easier for members on the third-tier Konex (Korea New Exchange) devoted to startups and small and mid-sized entities to move onto the secondary Kosdaq. Any Konex company whose sales have grown by 20 percent or more and makes an operating profit of 1 billion won or more can choose to shift to the Kosdaq.

While easing the IPO rules for Kosdaq, authorities will strengthen administrative watch to ensure credibility and protect investors as the bulk of investors in the secondary market are individuals. The largest shareholder would be penalized upon a breach of voluntary deposit guidelines.

In follow-up measures, state institutions will launch a 300 billion won ($281 million) fund by the end of this month to invest in undervalued Kosdaq-listed companies to draw more active participation from institutional investors.

By Jin Young-tae and Cho Jeehyun

Copyrights Pulse by Maeil Business News Korea. All Rights Reserved.

Source: Pulse by Maeil Business News Korea (Apr. 05, 2018)

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