The government expects to improve the governance of the KOSDAQ market and implement its effective action plan. Even though the KOSAQ market has consistently grown since its opening in 1996 in terms of number of listed companies, it seems that entry barrier for new comers is high. According to the recent press release from the FSC, the number of listed companies has tripled and market capitalization grew to 118 trillion won as of June 2013. However, the number of new comers such as small, technology intensive companies has decreased while the currently listed companies are becoming old and over-sized.
To bolster market activities in the KOSDAQ, the government laid out a plan to improve governance as below;
1) Make KOSDAQ market committee independent from the current hierarchy system
The KOSDAQ market committee expects to be detached from the current hierarchy, which is under the influence of the KOSPI market. To ensure its independence, the committee will be established under the KOSDAQ market HQ as a separate decision-making entity. Also 2/3 members of the committee should be consisted of outsiders, not from insiders.
2) Reinforce technological specialties by re-shuffling members of the KOSDAQ market committee
Number of the members will be increased to 7 from 5 and the committee will be formed with experts of various experiences and careers. At least 5 out of 7 members will be selected from the financial market, legal circle, SMEs, board member of KOSDAQs, a venture capitalist from VCs(recommendation base).
3) Revise the current pool system of KOSDAQ listing evaluation committee
The current pool system of KOSDAQ listing evaluation committee will be eliminated and each member should be appointed based on 2 years contract with no renewal in order to raise its consistency and specialization on listing evaluation process.
The plan expects to reinforce the specialization of listing evaluation committee and lower the entry requirement for tech and growth oriented SMEs. Most of all, independent committee should be able to make its own decision-s under well experienced members from industries and financial sectors. This makes KOSDAQ market more unique and technology concentrated capital market, which differentiated itself from KOSPI market. Also, as small but unique technology venture companies lead new growth in KOSDAQ market, more activities are significantly expected.
by Kim Jin Mok