FSC’s Shin promises major changes at Kosdaq

Financial Services Commission Chairman Shin Je-yoon said the watchdog body will overhaul the governance structure of the nation’s tech-heavy Kosdaq market in order to improve companies’ access to finance.

“The government needs to make the capital market play a proactive role in economic growth,” Shin said at a press conference yesterday, “considering the growing reliance on it due to environmental changes, including low interest rates and an aging society.”

The first goal is to restructure the Kosdaq market in favor of small businesses wary of going public due to financial risks, Shin said.

“Within this year, the FSC will come up with a comprehensive plan to encourage companies to go public by addressing obstacles that make them hesitate,” he said.

The Kosdaq was set up in 1996 to help small businesses that failed to meet the stringent capital and profit qualifications on Seoul’s main bourse, the Kospi.

It has 993 listed companies with a total of 118 trillion won ($106.2 billion) market capitalization.

Companies are required to have operated for more than 10 years and have 40 to 60 billion won in annual sales to list on the Kosdaq.

The bourse has been criticized as a second-tier market for companies not good enough to be on the Kospi.

In the first six months of the year, trading of 24 companies on the Kosdaq was suspended due to problems with fraud, embezzlement and unstable financial conditions.

The FSC recently announced that it would form a seven-member committee to watch the Kosdaq in a bid to enhance monitoring, adding two members to the current committee.

Shin also said the authority will continue its efforts to make the new Konex a channel of direct financing for start-up companies.

The country’s third bourse, launched on July 1, is supposed to serve as a foundation for a more creative economy by allowing start-ups to grow at an early stage.

Twenty-one companies from a variety of sectors, including bio-technology, semiconductors and software development, are now listed on the Konex market.

While retail investors are allowed to invest in companies on the Kospi and Kosdaq, only professional investors, venture capitalists and high-asset holders are allowed to make investments on the more risky Konex companies.

Shin also talked about “crowdfunding” as a way to help creative business people attract investments. Crowdfunding is also called crowd financing, equity crowdfunding and crowd-sourced fundraising.

BY SONG SU-HYUN [ssh@joongang.co.kr]