[THE INVESTOR] South Korea’s financial regulator said Monday it will revise the stock market listing requirements to allow unprofitable but promising companies to go public.

Calling it the “Tesla qualification,” Yim Jong-yong, chairman of the Financial Services Commission, said the regulator will add a new qualification gauging the growth potential of unlisted firms, besides looking at existing financial qualifications including sales and profits.

“The global electric vehicle maker Tesla could finance funds through a public offering on the Nasdaq, even if it was in the red,” Yim said at a monthly press conference at the Korea Press Center in Gwanghwamun, central Seoul. “If Tesla were a Korean firm, it would have been difficult to go public on the Kosdaq.”

The regulator noted that the average returns on the assets of companies listed on the New York Stock Exchange and Nasdaq stands at minus 10.6 percent, which means the listing of money-losing businesses is common.

“The regulator sees the need to allow some firms that have potential for growth to be listed on stock markets, even if they have deficits incurred during the R&D and production facility construction process,” Yim said. “Within this month, we will come up with a set of measures to revise the qualifications for listing, including the new qualification for firms in the red.”

The measures will not be focused on “easing current regulations,” but “adding a new qualification” to gauge firms’ growth potential, he added.

“The listing of those firms will be carried out based on transparent and objective valuations, and (with the) responsibility of overseers to protect investors,” the chairman said.

The FSC will also grant greater autonomy to overseers, letting them use a variety of tools to measure the values of those firms more accurately. At the same time, overseers will have to take greater responsibility to protect investors and maintain market trust, the commission said. 

By Song Su-hyun/ The Korea Herald (song@heraldcorp.com)