KRX Strengthens Oversight of Technology Special Listing Companies

 
The Korea Exchange (KRX) is set to enhance its oversight of companies listed under the technology special listing program. This decision comes in response to a series of cases where companies have struggled with poor performance or have expanded into unrelated new businesses after entering the market based on their promised growth and technological capabilities.
 
According to the financial investment industry on June 10, the KRX is moving forward with amendments to the rules governing the KOSDAQ market to strengthen the management system for technology special listing companies.
 
Under the proposed amendments, technology special listing companies that fail to meet revenue standards or incur business losses will only be exempt from being designated as management category companies if they establish and disclose a 'business value enhancement plan.' Previously, these companies enjoyed certain exemptions from the management category designation requirements compared to regular companies.
 
Industry insiders believe this measure is closely related to the low performance achievement rates among technology special listing companies. According to data released by the Financial Supervisory Service last year, 105 KOSDAQ-listed companies used estimated performance figures to set their public offering prices from 2022 to 2024. Among these, 93 companies (88.6%) were technology and growth special listing companies.
 
However, only six companies (5.7%) achieved their estimated performance figures in the year they were listed. Sixteen companies (15.2%) met only some indicators, while 83 companies (79.1%) fell short of estimates for revenue, operating profit, and net profit.

The exchange will also intensify monitoring of business direction changes among technology growth companies. Technology special listing companies will be required to disclose any amendments to their articles of incorporation related to the addition or change of business purposes during the special listing period. Furthermore, if a technology growth company discloses changes to its business purposes through amendments to its articles, this will be included as a reason for substantive review of listing eligibility. This provides the exchange with a basis to assess the appropriateness of maintaining a listing if a company expands into areas unrelated to the core technology and business recognized at the time of listing.

Previously, financial authorities indicated last December that if a technology special listing company changes its main business to an area unrelated to the technology and business evaluated during the listing review within the five-year grace period for delisting criteria, it would be subject to delisting review. The proposed regulatory changes are seen as a way to establish a management system that allows the exchange to monitor the addition of business purposes.
 
Some special listing companies have expanded their business purposes into high-interest areas such as artificial intelligence (AI), robotics, and secondary batteries, while failing to meet performance expectations after going public. Concerns have been raised that these companies may be relying on thematic new businesses to bolster their corporate value instead of leveraging the technological capabilities and business competitiveness assessed during the special listing process. The exchange's decision to include changes in business purposes as a reason for substantive review reflects this concern.