KONEX

KONEX (Korea New Exchange, 코넥스) is an securities exchange exlusively for small and medium-sized enterprises (SMEs) and venture companies. KONEX was established to facilitate SME and venture capitalists to raise fund or collect investments, and started its operations on July 1, 2013.

At present, KONEX has its portal at i-KONEX only in Korean. As of August 14, 22 companies including Daejoo E&T are listed on KONEX.

Key words
Korea Exchange, KOSDAQ, KONEX, listing, designated advisor

What's the difference?
In Korea, there are three official securities exchanges: Korea Exchange (KRX), KOSDAQ (Korea Securities Dealers Automated Quotation) and KONEX.

KONEX is quite different from other exchanges as follows:

Listing requirements
Any SME is eligible for listing on KONEX by satisfying the following conditions:
 * To meet one of the financial status: i) at least 500 million won of paid-in capital, ii) total annual sales of one billion won or more, or iii) at least 300 million won of net profit per year;
 * To obtain the auditor's opinion of "adequacy";
 * To find no 'non-conveyance of stocks' in the articles of incorporation;
 * To have the settlement of accounts confirmed after any merger or transfer of business;
 * To elect a "desiganted advisor"; and
 * To find no inadequate matters or hindrance to the public interest and investor protection.

In general, it usually takes 15 days for an SME to be listed since the new listing process has been streamlined, compared to around 100 days in case of KOSDAQ.

Roles of Designated Advisor
At present, for the purpose of facilitating KONEX listing, maintaining market soundness and enhancing investor protection, 11 securities companies are conducting the following services to KONEX-listed SMEs as a designated advisor:
 * To advise the compliance of the Capital Markets Act and related regulations;
 * To make an arrangement of any disclosure or reporting subject to the relevant laws;
 * To produce any necessary corporate data and information;
 * To supply and maintain the liquidity of stocks;
 * To assess the adequacy and eligibility of and applicant for KONEX listing;
 * To make a decision of survival or exit of insolvent companies; and
 * To hold two or more Investor Relations meetings, and submit a status quo business report (기업현황보고서).

Other benefits
KONEX-listed SMEs are required to disclose 29 items compared to 64 items for KOSDAQ-listed companies. A KONEX-listed SME may select a securities company as its Designated Advisor (지정자문인).

By the amendment to relevant laws, KONEX-listed SMEs have been exempted from
 * designating an independent accountant;
 * adopting K-IFRS, outside directors and standing auditor; and
 * submitting quarterly/bi-annual business report.
 * submitting the securities registration statement (유가증권신고서) in case where investors are less than 50;
 * preserving a lockup system (safeguard deposit of stocks, 보호예수) for the largest shareholder and venture capital.

KONEX Trading
KONEX-listed stocks may be bought with a basic deposit of at least 300 million won, and traded by 100-unit.

The home trading systems (HTS) provided by some securities companies may seek KONEX-listed stocks not at the "Current Prices" window, but from a separate "Order to KONEX" window. Such trading is conducted by every 30-minute with a competitive single price (30분 단위의 단일가 경쟁 매매 방식).

Wider fluctuation of stock prices up to four times of the IPO price is allowed on the first day of listing. On the contrary, the closing price of the IPO stocks is allowed to fall within 90 percent of the initial price on the first day of listing.

And it is noted that there is no index at KONEX. It's because KONEX is a sub-division of KOSDAQ. As soon as KONEX functions as a securities exchange representing actively SMEs and venture capital, KONEX could be publicized by the Korean Exchange.