8 lawmakers to scrutinize Kosdaq reform plan

Controversy over tightened Kosdaq delisting standards and a proposed market segmentation policy is set to spill into legislative debate at the National Assembly. As financial regulators push to weed out insolvent companies and cultivate high-quality listings, the venture industry is pushing back, arguing that a uniform market-cap-based standard could stifle the growth of innovative companies.

The Korea Venture Business Association and law firm LKB Pyeongsan's Financial Law Center announced Monday they will jointly host a symposium titled "Legislative Measures for Kosdaq Revitalization" at 9:30 a.m. on Nov. 20 in Conference Room 4 of the National Assembly Members' Office Building.

The event is co-hosted by eight lawmakers from both parties — Kwon Chil-seung, Min Byeong-deok, Kim Han-gyu, Park Hee-seung and Park Min-gyu of the Democratic Party of Korea, and Yoon Sang-hyun, Im Jong-deuk and Woo Jae-jun of the People Power Party. Legal and academic circles will also participate, including the Korean Academy of Law, the Seoul Bar Association, the Korean Commercial Law Association and the Banking Law Association.

The central issues are the tightening of Kosdaq delisting criteria and the introduction of a segment system. Financial regulators have moved to gradually raise the market cap threshold for continued listing and added new delisting requirements for so-called penny stocks — shares trading below 1,000 won. A 30 billion won ($22.1 million) market cap standard originally set to take effect in January 2027 has been pushed back six months to July of that year, following pushback from the venture industry.

Also drawing controversy is a proposed segment system that would divide Kosdaq-listed companies into tiers — blue-chip, general and watchlist groups. Regulators envision the system expanding institutional investor participation in top-tier firms and boosting the market's competitiveness, but the venture industry warns it could concentrate investment capital in a handful of large companies while stigmatizing the rest.

The venture industry broadly agrees on the need to remove insolvent companies but contends that judging a firm's viability solely on point-in-time quantitative indicators such as market cap and share price is problematic. It argues particularly that the characteristics of technology companies in biotech and AI — which typically have long research-and-development cycles and low early-stage profitability — must be taken into account.

Korea Venture Business Association President Song Byeong-jun said any reform of Kosdaq must be grounded in a thorough understanding of the market's unique characteristics and must ensure legal and institutional legitimacy as well as policy predictability. "It is meaningful that ruling and opposition lawmakers, along with legal and academic experts, are examining the purpose, criteria and procedures of the system on principled grounds," Song said.