Korea Exchange tightens rules for Kosdaq fast-track listings to restore market trust

Korea Exchange said Thursday it will tighten oversight of companies that entered Kosdaq through fast-track listing schemes, as the bourse operator moves to strengthen market credibility and improve the quality of listed firms. The announcement coincided with the 30th anniversary of the Kosdaq market.

The exchange has long granted fast-track listing companies — those admitted to Kosdaq based on their technology or growth potential rather than current earnings — a grace period exempting them from delisting requirements tied to insufficient sales or large losses. Korea Exchange said Thursday it will now make that regime more stringent, limiting the delisting exemption to fast-track companies that have publicly disclosed a corporate value-enhancement plan. The move follows the government's "Kosdaq Trust and Innovation Improvement Plan."

Fast-track listing companies have been exempt from sales-based and large-loss delisting requirements for a set period of three to five years, given that their listings are premised on future growth potential rather than current earnings.

The change comes after repeated criticism that fast-track companies disclose too little, leaving investors poorly informed.

As of June 15, only 10 of the 389 value-enhancement disclosures filed by all Kosdaq-listed companies had come from fast-track listing firms.

In addition, technology fast-track companies that change their primary business purpose within five years of listing will be added to the list of firms subject to a substantive delisting review. The exchange said such a review is warranted because a change in core business effectively means the technology and growth potential that justified the original listing can no longer be recognized.

These measures will apply to companies that file a preliminary listing review application on or after Thursday, the effective date.

Korea Exchange will also expand tailored qualitative review criteria for innovative companies. Beyond the existing categories of biotech, AI, space and energy, new customized standards will be introduced for advanced robotics, K-content and cybersecurity.

A framework for publicly identifying low price-to-book ratio companies will also be established for both the Kospi and Kosdaq markets. Detailed guidelines will be announced separately this month.

Korea Exchange will post a list of low-PBR companies on the KRX Value-up website on an ongoing basis and attach tags to the relevant tickers as part of a naming-and-shaming initiative. Companies that have filed a corporate value-enhancement disclosure will be exempt from the public posting and tagging for a set period.

The exchange will also revamp rules related to multiple-voting shares — a mechanism that allows founders to retain effective control even as their ownership stake is diluted through outside investment, by granting more than one vote per share.

Korea Exchange will permit the listing of common shares issued by companies that have issued multiple-voting shares. Multiple-voting shares themselves will be excluded from listing, given their legal nature of converting into common shares upon transfer.

Separately, the exchange will introduce the concept of a "largest voting rights holder" — defined by number of votes rather than number of shares — alongside the existing "largest shareholder" designation based on share count. When the two differ, the largest voting rights holder will be included among those subject to mandatory holding requirements. The preliminary listing review process will also be updated to assess whether the issuance of multiple-voting shares is appropriate and whether adequate safeguards against voting rights abuse are in place.

Korea Exchange said the revised delisting reform regulations it amended in May took effect Wednesday in both the Kospi and Kosdaq markets. The changes include raising the market cap threshold, introducing new requirements related to penny stocks and half-year capital impairment, and tightening the penalty point criteria for disclosure violations.