SEOUL, Jan. 11 (Korea Bizwire) — The government will give tax breaks to individuals that invest in mutual funds for startups and soften some listing rules for the junior KOSDAQ stock market, officials said Thursday.
The move is part of a new policy move to boost the KOSDAQ market and help smaller firms raise funds through the stock market, the Financial Services Commission (FSC) said in a statement.
Finance Minister Kim Dong-yeon said at a meeting of economy-related ministers that the government will “support innovative growth by reinvigorating the KOSDAQ market.”
“The KOSDAQ, as a key foundation to promote start-ups, will be strengthened as a healthy and trusted market,” Kim said.
Under the measures, the government will ease rules for tax incentives for individuals who invest in mutual funds for startups.
Currently, individual investors can receive a tax incentive worth as much as 3 million won (US$2,803) if they invest more than half of their fund assets in new shares issued by a startup firm.
The new measure, however, will allow individual investors to receive the maximum tax incentive if they invest just 15 percent of their fund assets in new shares of a startup firm.
The KOSDAQ market will also ease some of its listing rules.
At present, a company must meet requirements in three areas — profits, market capitalization and paid-in capital — when the company applies to be listed on the market.
But the new rules will allow a company to list on the market if it meets requirements in just one area.
Separately, the government will set up a 300 billion-won fund to invest in KOSDAQ-listed firms, which have a relatively low value of stocks, the FSC said.
Also, the KOSDAQ market plans will introduce a new index comprising some members of both the benchmark KOSPI and the secondary market in a bid to attract institutional investors.
The new index, named KRX 300, will be comprised of 232 KOSPI-listed firms and 68 KOSDAQ-listed firms, officials said. It will be debuted on Feb. 5.
Institutional investors have generally shunned the KOSDAQ market because of low appetite for the listed stocks and the opaque accounting of some firms.
It has also been struggling with a string of accounting scandals and a defection of large-cap stocks to the main KOSPI market.