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Gov't to give tax breaks, ease listing rules to boost KOSDAQ market

All News 10:00 January 11, 2018

SEOUL, Jan. 11 (Yonhap) -- 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.

The measures are "aimed at helping the KOSDAQ market become a trusted market that supplies funds to innovative firms," the FSC 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.

Gov't to give tax breaks, ease listing rules to boost KOSDAQ market - 1

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.

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.

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