The Financial Services Commission announced on June 20 that the government will make all out efforts to facilitate innovative tech companies to raise funds through capital markets. To this end, the government plans to make changes to tech companies’ special listing rules and facilitate fundraising through M&As (mergers and acquisitions) and venture capital investment.
First, in an inter-ministerial collaborative effort, the government plans to go on a series of roadshow in search for deep tech businesses to help cultivate their growth and listing on the stock exchange for about a month starting from June 21. Also, authorities will revamp the special listing system for tech companies and announce the improvement measures in July. Since 2005, the Korea Exchange has been operating various special KOSDAQ listing tracks for technologically innovative businesses or those with growth potential even when they are making no profit or have no sales record. So far, 184 companies made the listing on KOSDAQ through special listing tracks but still there are many startups and SMEs that are unaware of their eligibility or that lack relevant information. Thus, a month-long tech special listing roadshow will provide opportunities for tech companies to get information about the listing procedure and necessary preparatory work.
Second, the FSC, the FSS and the KRX will set up a taskforce with relevant government ministries and other research and industry organizations with an aim to draw up measures to improve the rules and operation of special listing tracks for tech companies. The taskforce will look into the problem of having to go through a time-consuming and costly tech evaluation process for tech companies. Despite growing significance of open innovation where a startup company and a mid-sized company can make joint investment, the current regulations are restrictive for promising tech startups to scale up and commercialize their technology due to certain restrictions in the tech special listing process which restrict mid-sized or large companies from becoming a parent company. Along with these issues, authorities also plan to seek an expanded participation by tech experts in evaluation procedures and ways to strengthen post-listing management.
Meanwhile, the taskforce will swiftly review additional measures for improvement such as introducing business development companies (BDCs), establishing secondary funds, promoting M&A activities, encouraging venture capital investment and so on.
* Please refer to the attached file for details.