Going forward, foreign corporations that list on Korea's stock market and KOSDAQ will also be required to appoint a domestic accounting firm registered with the Financial Services Commission (FSC) as their external auditor. Until now, different listing rules applied to foreign corporations, leading to criticism that a blind spot existed in auditing foreign corporations raising capital in Korea.
In response, the Korea Exchange (KRX) decided to introduce new eligibility requirements for external auditors of foreign corporations. The move is intended to enhance accounting transparency even before foreign corporations list on the domestic stock market and to bolster investor confidence.
According to the financial investment industry on the 13th, the exchange plans to add eligibility requirements for external auditors of foreign corporations to the detailed enforcement rules of the KOSDAQ market listing regulations and put them into effect at the end of this month. On the 12th, it gave prior notice of the proposal to establish and revise the relevant agenda items and will receive feedback from stakeholders until the 19th.
Earlier, the exchange also revised related provisions in the detailed enforcement rules of the stock market listing regulations. Previously, only domestic corporations were subject to the registered auditor system for listed companies, but this standard has now been expanded to overseas corporations.
The registered auditor system for listed companies is a framework introduced by the Financial Services Commission (FSC) in 2019 that, at its core, grants eligibility to conduct external audits of listed companies only to accounting firms that meet certain thresholds for personnel and physical infrastructure. Newly listed corporations receive audits for three years after listing from the auditor designated at the time of listing.
If the new rules are revised in November, semiconductor inspection equipment corporation "TeraView," which is set to become the first U.K. corporation to list on KOSDAQ this year, will be subject to the detailed rules.
The exchange is actively attracting foreign corporations to list in Korea. In particular, it is vigorously courting listings from corporations with strong growth potential, such as in bio and semiconductors. The aim is to expand the size of the domestic stock market and offer opportunities to invest in a diverse range of corporations.
TeraView is also a corporation that the exchange attracted through KOSDAQ promotion activities conducted locally in Sweden and the United Kingdom in November last year.
A Korea Exchange (KRX) official said, "When foreign corporations pursue listings, most designate large domestic accounting firms, so there have been no related cases yet," adding, "However, the absence of relevant provisions in the regulations is a concern, so we refined the detailed rules."