CONTENTS
- 1. Listed Company Advisory | The Concept of Listing
- - Basic Principles of Listing
- 2. Listed Company Advisory | The Structure and Procedure of Share Listing
- - Structure by Market
- - The Share Listing Procedure
- 3. Listed Company Advisory | Key Requirements for Listing on the Securities Market
- - Size and Distribution Requirements
- - Business Performance Requirements (Selective Structure)
- - Stability and Soundness Requirements
- 4. Listed Company Advisory | Key Requirements for Listing on the KOSDAQ Market
- - Basic Structure of KOSDAQ Listing
- - Share Distribution Requirements
- - Business Performance and Market Valuation Standards (Choose One)
- - Technology Special and Business Model Tracks
- - Transfer Listing from KONEX (Separate Track)
- 5. Listed Company Advisory | Key Requirements for Listing on the KONEX Market
- - Formal Requirements (Entry Requirements)
- - Qualitative Requirements (Eligibility Review)
- 6. Listed Company Advisory | Benefits and Effects of Listing
- - From the Company's Perspective
- - From the Investor's Perspective
- 7. Listed Company Advisory | Key Legal Risks
- - Disclosure and Trading Risks
- - Management and Internal Company Risks
- - Shareholder and Listing Maintenance Risks
- 8. Listed Company Advisory | Daeryun Law Firm's Response Strategy
- - Listed Company Advisory, How Daeryun Can Help
1. Listed Company Advisory | The Concept of Listing
Listing means granting a company that meets the requirements set by the Korea Exchange permission to trade its issued shares on the securities market.
It takes place under the framework of the "Financial Investment Services and Capital Markets Act," and its purpose is to secure a fair trading order through the Exchange's review.
Listing is not, however, a system that guarantees a company's value or the safety of an investment.
The Korea Exchange only reviews eligibility for listing against set criteria, and investment decisions remain the responsibility of the investor.
Basic Principles of Listing
• The principle of listing all issued shares
• Fair price formation and investor protection
2. Listed Company Advisory | The Structure and Procedure of Share Listing
In listed company advisory, the listing typically at issue is the listing of shares, that is, a stock listing.
Share listings are classified by market as follows.
Structure by Market
Category | Characteristics | Primary Targets |
Securities Market (KOSPI) | Stability-focused | Large and mid-sized companies |
KOSDAQ Market | Growth-focused | Venture and technology companies |
KONEX Market | Relaxed entry requirements | Early-stage small and medium enterprises |
All three markets fall within the same listing system, but the requirements and review criteria differ, and a company selects a market according to its stage of growth.
The Share Listing Procedure
During this process, the company reviews and puts in order its financial structure, disclosure system, and level of internal control across the board.
3. Listed Company Advisory | Key Requirements for Listing on the Securities Market
Listing on the securities market is reviewed with a focus on stability and financial soundness, and a company must meet the requirements within a set structure.
The listing requirements are broadly divided into size, distribution, business performance, and stability requirements.
Size and Distribution Requirements
Listing on the securities market calls for a company of a certain size and a certain level of share distribution.
• At least 1 million listed shares
• At least about 500 general shareholders
• Satisfaction of the general-shareholder ownership ratio or the public offering ratio
For the distribution requirement in particular, a company must secure a certain level of freely tradable shares, measured by the general-shareholder ownership ratio or the public offering ratio.
This requirement serves to ensure liquidity in the market.
Business Performance Requirements (Selective Structure)
The securities market does not apply a single standard; a company may satisfy one of several business performance criteria.
The main criteria are as follows.
• Market capitalization and profit standard
• Market capitalization and shareholders' equity standard
For example, a company may meet recent revenue of 100 billion won or more together with a certain level of profitability, or a market capitalization of 200 billion won or more together with the profit requirement.
With these various tracks available, a company can choose the path that fits its situation.
Stability and Soundness Requirements
Listing turns not only on financial performance but also on a company's sustainability and the reliability of its accounting.
• An unqualified audit opinion for the most recent fiscal year
• A lock-up on the largest shareholder's stake (a restriction on sale for a set period)
These requirements serve as standards for protecting investors and securing market confidence.
4. Listed Company Advisory | Key Requirements for Listing on the KOSDAQ Market
Unlike the securities market, the KOSDAQ market is assessed with a focus on growth potential and technological strength, and it is distinctive in that listing proceeds through a variety of tracks rather than a single standard.
Regardless of the track, however, a company must have an unqualified audit opinion for the most recent fiscal year, satisfy governance requirements such as outside directors and auditors, and have no restrictions on the transfer of its shares.
The company's growth potential, sustainability, management transparency, and investor protection factors are also considered together.
Basic Structure of KOSDAQ Listing
Listing on the KOSDAQ market follows several different paths depending on a company's characteristics and stage of growth.
• Listing based on market valuation and growth potential
• Technology special listing
• Business model based listing
Because multiple tracks are available, a company can choose the path that best fits its financial condition or growth prospects.
Share Distribution Requirements
To support market liquidity and protect investors, the KOSDAQ market requires a certain level of share distribution.
As a rule, a company applying to list must secure at least 500 minority shareholders and satisfy distribution requirements such as the public offering ratio and the number of shares offered.
These standards work to prevent excessive concentration of ownership and to foster a smooth trading environment.
Business Performance and Market Valuation Standards (Choose One)
Rather than applying a single test, the KOSDAQ market allows a company to list by meeting any one of several business performance and market valuation standards.
Category |
|---|
Profit standard (continuing-operations profit, etc.) |
Market capitalization standard |
Revenue standard |
Capital standard |
Growth indicator (revenue growth rate, etc.) |
Because these standards operate in parallel, the listing path open to a company varies with its financial structure and growth profile.
Technology Special and Business Model Tracks
The KOSDAQ market also permits special listing based on a company's technology or business model.
• Evaluation and recommendation of the business model by the listing underwriter
Through these tracks, even an early-stage company that has not yet turned a profit can list where its technology or business viability is recognized.
Transfer Listing from KONEX (Separate Track)
The KOSDAQ market operates a separate transfer listing program for companies already listed on KONEX.
In this case, the following track applies separately from the general listing requirements.
• Recommendation by a designated advisor or listing underwriter
• The company meets a business performance or market capitalization standard
A range of standards is also provided, from Track 1 through Track 6, so the applicable track can be selected according to the company's situation.
This transfer listing program is designed so that an early-stage company can move into the KOSDAQ market in stages by way of the KONEX market.
5. Listed Company Advisory | Key Requirements for Listing on the KONEX Market
To help early-stage small and medium-sized and venture companies whose results have not yet fully materialized enter the capital market, the KONEX market relaxes its financial requirements and conducts its listing review around minimal formal requirements and qualitative requirements.
Formal Requirements (Entry Requirements)
Rather than imposing financial requirements such as revenue or net income, the KONEX market requires a company to meet the following basic formal requirements.
Category | Details | Remarks |
SME status | The company qualifies as a small or medium-sized enterprise under Article 2 of the Framework Act on Small and Medium Enterprises |
|
Designated advisor | The company has entered into an engagement contract with one designated advisor | Special listing excluded |
Share transfer restrictions | There are no restrictions on the transfer of shares * However, where a restriction is imposed by statute or the articles of incorporation and that restriction is found not to hinder trading on the KONEX market, an exception applies |
|
Audit opinion | The audit opinion for the most recent business year is unqualified |
|
Par value | The par value is one of the following: 100 won, 200 won, 500 won, 1,000 won, 2,500 won, or 5,000 won | Par-value shares only |
Qualitative Requirements (Eligibility Review)
On the KONEX market, the designated advisor reviews the eligibility of the applicant company in advance, and the Korea Exchange examines whether listing the company is consistent with the public interest and investor protection.
This review takes into account the credibility of management, the transparency of management and accounting, and investment risk on an overall basis.
6. Listed Company Advisory | Benefits and Effects of Listing
Listing offers the following benefits to companies and investors alike.
From the Company's Perspective
• Greater corporate recognition and credibility
• Easier restructuring (mergers, spin-offs, and the like)
In particular, under Article 165-6 of the Financial Investment Services and Capital Markets Act, a listed corporation may offer new shares to general investors by resolution of its board of directors, which expands its financing flexibility.
Under Article 165-13 of the same Act, the scope of stock dividends is also expanded, and Article 165-15 recognizes special provisions concerning the issuance of non-voting shares.
From the Investor's Perspective
• Tax benefits
• Fair valuation based on market price
For example, under Article 94 of the Income Tax Act, listed shares are exempt from capital gains tax when certain requirements are met, and under the Securities Transaction Tax Act, the transaction tax rate is lower than the rate applied to unlisted shares.
7. Listed Company Advisory | Key Legal Risks
Listed companies are subject to a range of legal regulations, including disclosure obligations and internal controls, and a violation can lead not only to administrative sanctions but also to civil and criminal liability.
Disclosure and Trading Risks
Category | Details |
Disclosure violations | False disclosure, delayed disclosure, omission of material information |
Insider trading | Share trading using undisclosed information |
Market disruption | Unfair trading such as market manipulation |
Management and Internal Company Risks
Category | Details |
Embezzlement and breach of trust | Misappropriation of company funds, improper transactions |
Accounting problems | Disclaimer of audit opinion, distortion of financial information |
Inadequate internal controls | Legal violations stemming from a weak management system |
Shareholder and Listing Maintenance Risks
Category | Details |
Shareholder disputes | Exercise of minority shareholder rights, disputes over management control |
Failure to meet listing maintenance requirements | Capital impairment, deteriorating finances |
Risk of delisting | Occurrence of serious grounds such as disclosure violations or embezzlement |
8. Listed Company Advisory | Daeryun Law Firm's Response Strategy
A company preparing to list must satisfy a range of requirements, including reorganizing its financial structure, building a disclosure system, and improving its governance, and it must also review the regulations under the Financial Investment Services and Capital Markets Act and the Commercial Act in the process.
Because the review focuses on the disclosure system, financial condition, and governance, a company needs to check these elements against the applicable standards in advance.
Listed Company Advisory, How Daeryun Can Help
▶ Supporting market selection, such as KOSPI or KOSDAQ, and strategy development tailored to the chosen listing track
▶ Checking the disclosure and internal management systems required during the listing review
▶ Reviewing in advance the documents and legal issues required during the Korea Exchange review
▶ Reorganizing the company's structure to meet listing requirements such as share distribution, lock-up, and shareholder composition
If you need listed company advisory, you can confirm a specific course of action through 🔗a corporate attorney legal consultation booking.
