Easier IPOs
The Korean government will announce a plan to ease special listing requirements for excellent companies with cutting-edge technologies in the semiconductor, bio, artificial intelligence, and secondary battery sectors in July.
The Financial Services Commission (FSC) will map out the plan by forming a task force with the Financial Supervisory Service; the Korea Exchange; the Ministry of Trade, Industry and Energy; the Ministry of Science and ICT; the Capital Market Research Institute; the Korea Venture Capital Association; and the Korea Biotechnology Industry Organization by July.
The special technology company listing system was introduced in 2005 to help list innovative companies on the KOSDAQ. Unlike the listing of general companies that must meet financial requirements, special technology listing companies are examined mainly in terms of qualitative requirements when there are technology evaluations by multiple professional evaluation agencies or growth potential evaluations by securities companies that are lead managers.
The Korean government has decided to consider implementing a plan to allow only blue-chip companies with advanced technologies that need to be fostered nationally to receive only one technical evaluation, as it was pointed out that receiving multiple technical evaluations for special listings requires a lot of time and money. Criteria for advanced technologies are expected to be set by comparing target technologies to national strategic technologies such as semiconductors and secondary batteries.
The FSC will expand the participation of experts with a strong understanding of technologies and industries in technology assessments and listing reviews, and improve key performance indicators (KPIs) used by the Korea Exchange in order to evaluate companies. It will also flesh out measures to support companies that failed to get listed in the stock market so that they will try again by telling them why they failed. After their listings, the FSC will examine the disclosure of the technology companies’ performances and technology development status to protect investors. Lead managers that arrange technology company listings will also be required to thoroughly disclose their past activities and achievements. At the same time, the FSC will strengthen lead managers’ qualifications and requirements.
“Our plan does not mean that we are going to allow unqualified companies to be listed,” an FSC official said in response to criticism that the FSC plan will significantly lower the bar against special listings.
According to the FSC, venture startup investment amounted to 900 billion won (US$697 million) in Korea in the first quarter of this year, down 60.3 percent from the same period of 2022. Venture fund establishments also fell 78.6 percent to total only 600 billion won (US$465 million).