10/30/2015

Korea New Exchange (KONEX) Basics

The Korean Exchange (KRX) established, on July 1, 2013, an SME only-listed securities market with the, facial, purpose of providing a new avenue for SMEs in obtaining assets for investments.  A KONEX-listed firm with capabilities to list, at a later date, on the KOSDAQ or KOSPI may, also, benefit from a stream-lined procedure to list on the KOSDAQ or KOSPI.  

Korea's capital markets have been, strongly, criticized for not providing adequate funding sources for small companies.  Most funding for companies either comes from the banks or via modest government grants and loans.  With the banks becoming more conservative in funding ventures, because of the recent Korean banking crisis, the KRX launched the KRX, partially, to assist in resolving this issue.  

The listing of a company on the Korea New Exchange (KONEX) is much easier than on the KOSPI or KOSDAQ.

However, investing on the exchange may be difficult for some individual investors.  Direct investments may, only, be made on the KONEX by individual investors with deposited liquid assets of over KRW 300,000,000 or professional institutional investors.  Thus, a large part of the population is unable to, directly, invest in the Korea New Exchange out of fear of the investors not having the adequate skills and resources to weigh and mitigate risks.

We will update the reader when interesting issues occur with regard to the Korea New Exchange.
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Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw.