Kosdaq Tightens Steps To Get a Board Listing

Firms seeking a Kosdaq listing will have to meet tougher conditions once the market's evaluation committee sets up screening standards by the end of this month. The committee said that the bids of probably about half of the 400 companies expected to shoot for listings this year will be rejected.

Six criteria will make up the new test: liabilities must not exceed assets; the company must not show a net loss in its most recent reporting year; earnings before interest, depreciation and amortization must be positive; the ratio of current liabilities to equity must be below 400 percent; the ratio of interest expense to operating profit must be below 150 percent; and the ratio of loans to affiliates to equity must be below 40 percent. Exceptions will be granted to companies that possess promising technologies, the committee said.

After talks with the finance ministry and the Financial Supervisory Commission, the committee will announce the precise criteria later this month.

The committee now determines whether to give a listing after considering factors such as the company's stability and profit potential without any set benchmarks.

"Like the U.S. Nasdaq, the Kosdaq needs to do fair and thorough evaluations using standards to determine listing eligibility," a committee official said.

by Chung Sun-gu