Starting Next Month, KONEX Market Entry Barrier Removed... 30 Million Won Deposit Requirement Abolished

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[Asia Economy Reporter Ji Yeon-jin] The barrier to the KONEX market, a dedicated market for small and medium-sized enterprises (SMEs) that was difficult for individual investors to access, will disappear starting next month.

On the 27th, the Financial Services Commission held a regular meeting and announced that it had approved amendments to the 'KONEX Market Business, Disclosure, and Listing Regulations' and the 'KOSDAQ Market Listing Regulations.' This amendment is a follow-up measure to the 'KONEX Market Revitalization Plan' prepared by the Financial Services Commission in January to support the growth of SMEs through the capital market.

The KONEX market, established in July 2013 as a dedicated market for SMEs and venture companies, allows listing regardless of external conditions such as financial status, based on the audit opinion of an external auditor and the listing eligibility review by a designated advisor, with minimal disclosure burden.

Because of this, the threshold was high, restricting investors to those who deposited more than 30 million KRW or invested through a small investment-only account (with a 30 million KRW limit).

The amendment abolishes the 30 million KRW basic deposit regulation and the small investment-only account system that applied when individual investors invested in the KONEX market, allowing anyone to invest freely. However, since the KONEX market is a market with minimized regulations such as listing review and disclosure, securities companies are required to inform investors investing in the KONEX market for the first time of investment precautions.

Additionally, to facilitate SMEs listed on the KONEX market to transfer to the KOSDAQ market after a preparation period, the current financial requirements of the expedited transfer listing system have been partially relaxed, and a new route has been established that allows transfer listing based on market capitalization and liquidity evaluation without evaluating financial requirements such as sales and operating profit.

Furthermore, to reduce the burden of maintaining listings for KONEX companies and to activate trading in the KONEX market, the continuous disclosure agency period by designated advisors after listing has been shortened to one year, reducing the annual designated advisor fee burden for KONEX companies to around 40 to 50 million KRW, and if the share dispersion exceeds 10%, the liquidity supply obligation of the designated advisor is exempted to encourage voluntary share dispersion by KONEX companies.

The reform of the transfer listing system and the provision of share dispersion incentives will be implemented from the 2nd of next month, while the abolition of the basic deposit and small investment-only account system and the shortening of the designated advisor disclosure agency obligation period will be implemented from the 30th of next month, considering the preparation time for KONEX companies and securities firms.

A Financial Services Commission official stated, "We plan to review a comprehensive market development strategy, including an evaluation of the entire market structure so that startup and venture companies can effectively utilize share trading markets suitable for their growth stages, efficiently redistribute and redesign functions and regulations between markets, and strengthen inter-market linkage."

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