Investment Attention Issues
A system for designating an "issue that needs to be brought to investors' attention"
  • Overview: Corporations that require investors' attention regarding business continuity and management transparency are designated as the "investment attention issue" after periodic and occasional reviews to ensure that investors recognize such corporations before making investment decisions.
  • Procedures for designation
    • Periodic Review : To review pursuant to the "Selection Criteria for Insolvency of Company" (Note 1) by taking into consideration the matters related to financial conditions and management transparency of listed corporations
    • Note 1: Annex 3 of the Enforcement Rules of the KOSDAQ Market Listing Regulation
    • Occasional Review : To designate when particular types (Note 2) occur
    • Note 2: Internal Accounting Control System is inappropriate, the duty of safe custody is not complied with, and the capital increase with consideration allotted to a third party is conducted without any actual funding effect.
  • Time Period for Designation and Release
    • Periodic Review
    • Designation and Release: The first trading day in May every year
    • Occasional Review
    • Designation: The day that comes right after the day when the relevant reason has been identified
    • Release: :
      • ⅰ) Case for internal accounting system being inappropriate: The day that comes right after the submission date of the next audit report
      • ⅱ) Case for lock-up duty not complied with: The day that comes right after the termination date of the sale restriction period
      • ⅲ) Case for capital increase with consideration allotted to a third party without any actual funding effect: 1 year from the designation date
  • Measures Taken for the Investment Attention Issue
    • An issue corresponding to any of the following items will be subject to the listing maintenance review:
      • ⊙ When the management control in a company designated as the investment attention issue has been changed due to the change of major shareholder, the conclusion of management control transfer agreement, etc;
      • ⊙ When a company designated as investment attention issue repays the money (money lending, capital contribution, etc.) to a person who has acquired new shares within 6 months from the date when the company conducted the capital increase with consideration by the 3rd party allotment;
      • ⊙ When a company has received from the Financial Services Commission and the Securities and Futures Commission the measure of fine imposition due to the breach of accounting regulations.
    • Case for the capital increase with consideration by the 3rd party allotment, the duty of lock-up for a period of 6 months is imposed.
    • The company concerned is excluded from the target companies to be selected for the assignment of a new section (To be separately managed)
    • The fact of designation as an "investment attention issue" is announced through information system and the Stock Market Magazine.
Procedures for Periodic Review of the Investment Attention Issue
  • Selection of variables that affect a material impact on business continuity and management transparency
    • Analysis target: Normal companies* and risky companies** during the recent 5 years
      * Normal companies: Companies that are neither delisted nor administrative issues
      ** Risky companies: Companies that are delisted or administrative issues
    • Selection of variables: Key variables that have a material impact on business continuity and management transparency are selected by conducting statistical analysis (t-validation and Logit analysis, etc.) on the representative variables for stability, profitability, operation, growth and soundness.
  • Deriving a forecast model for companies of which business continuity and management transparency require caution
    • Calculation of Risk Probability: The risk probability of both quantitative and qualitative variables of listed corporations is calculated by applying the probability model* to the selected variables.
      * Quantitative Variable Model= f (stability variable, profitability variable, activity variable, growth variable)
    • Qualitative Variable Model= f (soundness variable)
    • Weighting: The weighted average probability for companies is calculated by giving an appropriate weight to the probabilities derived from the quantitative and qualitative models.
    • Setting a cut-line: A cut-line is set for companies of which business continuity and management transparency require caution.
Designation as the Investment Attention Issue
  • A statistical decision is made on the number of companies to be designated as investment attention issue, and then the final selection of such an issue is conducted after undergoing the deliberation by the Selection Committee for the investment attention issue.

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