April 26, 2024

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[THE INVESTOR] Korea’s bourse operator said on Aug. 24 it has adopted a revised format of regulatory filing for KOSDAQ market-listed firms in a bid to avoid potential confusion and give more precise information to investors.

Since late last month, the Korea Exchange has introduced a new type of reporting document that requires a company listed on the country‘s tech-laden KOSDAQ market to clarify the type of payment it is receiving from a contract.

Under the change, a firm needs to elaborate on whether the value they disclose is a fixed sum or if it is a so-called milestone payment that can only be received if various conditions are met.

The previous version of the regulatory filing scheme was not very clear on this, which could cause misunderstanding by the market.

“There have been concerns that investors could mistakenly digest the information about corporate contracts and payment they are due, leading to faulty investment decisions,” said an official at the KOSDAQ market division under the KRX.

“The new format is expected to generally affect pharmaceuticals and bio firms the most, as many strings are attached to their contracts in general and payments are made in stages,” he added.

Pharmaceutical deals involve upfront, transfer and milestone payment schemes and royalty fees when everything is settled.

Milestone fees are only given after a product passes critical clinical tests and if the drug gets approval from regulators.

By Song Seung-hyun and newswires (ssh@heraldcorp.com)