Wednesday, September 18, 2019
KOSDAQ Listing Rules Eased for Biotech, Fourth Industrial Revolution Firms
Move Aims to Activate Listing of Technology Firms
KOSDAQ Listing Rules Eased for Biotech, Fourth Industrial Revolution Firms
  • By Yoon Young-sil
  • June 27, 2019, 10:08
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The Financial Services Commission has revised the listing rules to encourage technology companies to go public.

Biotech and Fourth Industrial Revolution companies will be reviewed on a basis of future innovation, rather than past performance, when they apply for listing on the secondary KOSDAQ market. Moreover, a biotech firm listed on the KOSDAQ under special rules for its technological excellence will not be designated as an issue for administration as long as its total sales exceed 9 billion won (US$7.78 million) over the past three years even through sales of the previous year fall short of 3 billion won (US$2.59 million). Companies which show more than 20 percent of an average sales growth rate in the past two years will be able to go public on the KOSDAQ through special technology listing.

The Financial Services Commission announced on June 26 that it has revised the provisions on securities listing on the KOSPI and KOSDAQ markets to ease listing requirements for innovative firms and activate the listing of excellent technology companies.

Until now, the focus of listing evaluation for Fourth Industrial Revolution companies has been put on their business sustainability. However, the focus will now shift to their creativity and originality. Companies that can benefit from this change are those engaged in production of the 152 strategic items in 20 sectors categorized by the Ministry of SMEs and Startups as the Fourth Industrial Revolution industries.

For biotech firms, the government will check whether they have original technology and track record in technology transfer, secure multiple pipelines, have started clinical trials, and have the results and plans of joint research development with partners and the past R&D results of key researchers. They have been reviewed on whether they own intellectual property rights, have a high degree of technology completion and differentiation, have a high level of R&D and a large size of investment, and have a high level of expertise of researchers so far.

Under the new provision, the government will not designate bio companies listed with a special treatment in technology as an administrative issue when their sales over the past three years surpass 9 billion won (US$7.78 million), even if their sales of the previous year fall short of 3 billion won (US$2.59 million). Innovative pharmaceutical firms chosen by the Ministry of Health and Welfare and companies which has over 400 billion won (US$345.87 million) of a daily average market cap will be exempt from the minimum sales requirements.

In addition, the government will also promote the listing of firms with excellent technologies on the KOSDAQ through a special treatment in technology. Companies which have more than 20 percent of an annual growth in sales in the past two years will be able to be listed. Those which receive good results in technical evaluation will also be exempt from technology evaluation by Korea Exchange.