South Korea’s financial regulator said Sunday it will ease rules for foreign companies wishing to be listed on the local bourse as part of a broader move to boost the stock market.
The Financial Services Commission (FSC) will exempt overseas firms from listing evaluation if they meet certain criteria that qualifies them to be considered as blue-chip companies.
Under the envisioned measures, candidates that have been listed for more than five years in offshore markets under an exchange agreement with the Seoul financial authorities will be exempted from listing evaluation.
They will need to have a market cap of 2 trillion won (US$1.84 billion) or more, with an annual net profit of at least 3 billion won, the FSC said.
“Companies from countries that have a similar listing policy to ours will likely get the benefits. We have exchange deals with many developed markets ― the U.S. NASDAQ, the London Stock Exchange, the Tokyo Stock Exchange and a few others,” Kim Yong-beom, the FSC chief for the capital market bureau, told reporters.
The FSC’s decision came as South Korea’s stock market has seen a slump with few companies being able to secure capital amid the protracted downturn.
The country’s corporate financing via share sales hit a four-year low last year, with the number of initial public offerings (IPOs) and rights offerings declining steeply, which has prompted the regulator to come up with measures to boost the market.
The FSC also plans to allow a company seeking listing on the KOSPI, the main Seoul bourse, to change its controlling shareholder one year before the listing, which has so far been strictly banned by the regulator.
“We’ll examine the company on a case by case basis even if there’s been changes in the controlling shareholder,” Kim said.
It will also let companies wanting to be listed on the secondary KOSDAQ market raise unlimited money through rights offerings just before and after they go public.
Upon the FSC’s decision, the Korea Exchange, the local bourse operator, will open a new stock market, named the Korea New Exchange (KONEX) by the first half to better support smaller firms in raising capital and selling shares.
The revised rules are to gradually take effect from Feb. 28, according to the regulator. (Yonhap News)
