FSC gets specific about relaxing rules for IPOs

The Financial Services Commission yesterday came up with more detailed deregulation measures for businesses planning to go public.

The measures are part of the financial authority’s efforts to jibe with the government’s deregulation initiative, which is aimed at removing barriers and facilitating easier access to credit.

According to the FSC, only three new companies were listed on the Kospi stock exchange last year, adding about 660 billion won ($634 million) to market capitalization. The figure decreased steadily since 22 companies joined the market in 2010.

The secondary tech-heavy Kosdaq also saw a falling number of initial public offerings (IPOs) last year, to 37 from an annual average of 46 in 2008 and 2009.

“Contraction in IPOs might affect the national economy in a negative way, causing another recession,” said Lee Hyun-cheol, director of the capital market bureau at the FSC.

To be listed on the Kosdaq, companies that possess certified technology will need 1 billion won of their own capital instead of 1.5 billion won. Those recognized with outstanding technologies also will be able to go public even if they are at risk of capital erosion.

The government’s evaluation of listed Kosdaq companies also will be eased.

Currently, they are being assessed according to 55 standards, including sustainability, transparency, stability and investor protection. That number will be reduced to 25.

The largest shareholders of listed companies will be able to sell shares after six months, instead of a year.

The FSC also unveiled eased standards for companies to be listed on the newest Konex market.

The market, designed as a stepping-stone to bigger markets, opened last year to help IT start-ups raise capital.

Currently, Konex companies with more than 20 billion won in sales and 30 billion won in market capitalization can be listed on the Kosdaq if they have been on the market for more than a year.

But critics have said the rule is too tough for start-ups.

The FSC will allow one-year Konex companies with more than 10 billion won in sales to move onto the Kosdaq.

Entry requirements also will be eased from 500 million won in capital, 1 billion in sales and 300 million in net profit, to 300 million won in capital, 500 million in sales and 200 million in net profit.

For the benchmark Kospi, the authority loosened the current rule that requires listed companies to have at least 1,000 shareholders, not including the largest shareholder and those with special interests, That requirement will be reduced to at least 700 shareholders.

For the Kospi and Kosdaq, the government also will give second chances to delisted companies if they can meet certain standards.

“With the measures, the government aims to have more than 100 start-ups go public on the Konex and increase the amount of IPOs to the pre-crisis levels in 2008 and 2009,” Lee said.

By song su-hyun [ssh@joongang.co.kr]