'14 Places, 900 Million Invested' Revive the Fading KOSDAQ Spark... Full Support for Listing and Maintenance This Year

[Asia Economy Reporter Lee Seon-ae] The Korea Exchange and the KONEX Association have rolled up their sleeves again this year to revitalize the KONEX market, which is dedicated to small and medium-sized enterprises (SMEs). In consultation with financial authorities, they plan to continue supporting the costs of listing and maintaining KONEX this year and will make every effort to abolish various regulations.

According to the KONEX Association on the 9th, a total of 14 companies benefited from the "KONEX Market Revitalization Support Project" last year. The project aims to support early-stage innovative companies with high future growth potential to grow through the capital market by partially subsidizing the costs required for listing and maintaining on the KONEX market using government funds. The support targets newly listed KONEX companies engaged in three key growth industries?bio, future cars, and non-memory semiconductors?or venture companies. Within a total budget limit of 1.235 billion KRW (up to 65 million KRW per company), companies were selected on a first-come, first-served basis, and 50% of the fees paid for external auditor audit fees, designated advisor listing support fees, and designated advisor listing maintenance support fees were subsidized.

The beneficiaries included eight companies listed in 2020 (Innojin, Dandi Bio, Mujin Medi, Bioinfra Life Science, CNT Dream, Rootlock, Bern (formerly Ace Camper), Nowcos) and six companies listed in 2021 (Lee Sung CNI, Time Technology, Tomato System, Gem, Kels, Yespeech), with approximately 900 million KRW in costs paid.

The KONEX market is a market exclusively for SMEs, established to support the growth of early-stage small and venture companies and to build a virtuous cycle of venture capital. Since most SMEs raise funds through bank loans, the original goal was to serve as a listing ladder that allows them to break away from this and enter the KOSDAQ market. However, as various paths to directly enter the KOSDAQ market without going through KONEX have increased, interest has waned.

Since the KONEX market opened in July 2013, the number of newly listed companies was 45 initially, then 34 in 2014, 49 in 2015, 50 in 2016, 29 in 2017, 21 in 2018, 17 in 2019, 12 in 2020, and 7 in 2021, showing a decline every year. Currently, the total number of listed corporations is 131.

In response, the Financial Services Commission, Korea Exchange, and KONEX Association are pulling out various measures to revitalize the KONEX market. The KONEX Association is currently negotiating to support part of the costs required for listing and maintenance for newly listed KONEX companies this year using government budget (national subsidies). The KONEX Association stated, "We are positively negotiating with the Financial Services Commission regarding cost support measures."

The Korea Exchange is also coordinating with financial authorities. The financial authorities are pushing for the abolition of the basic deposit requirement and the small investment dedicated account system to revitalize KONEX.

Previously, to invest in KONEX, investors had to present a basic deposit of over 30 million KRW or use a small investment dedicated account (annual limit of 30 million KRW, one account per person), which was cumbersome. These regulations will be abolished, but investors starting to trade will be pre-informed of the investment precautions to fully recognize the investment risks of the KONEX market. KONEX will also be searchable and tradable on online trading systems (HTS·MTS) like KOSPI and KOSDAQ stocks, and investment information through portals will be increased.

The Financial Services Commission and the Korea Exchange plan to implement measures that can be enacted solely by revising exchange regulations in the first quarter of this year, while tasks requiring consultation with securities firms and others will be implemented in the first half of the year. The Financial Services Commission stated, "We will induce new listings of SMEs and provide productive and stable new investment instruments to general investors so that the KONEX market can function as a core platform connecting SMEs and the capital market."

Additionally, measures to reduce accounting and disclosure burdens, such as exempting internal accounting control audits for KONEX-listed companies below a certain scale, and reducing fee burdens by shortening the liquidity supply and disclosure agency periods of designated advisors, are also being pursued.

This content was produced with the assistance of AI translation services.