Recommendation 1 Recommendation 2 Recommendation 3 Recommendation 4

Recommendation 5 Recommendation 6 Recommendation 7 Recommendation 8

Market selection

Recommendation 4

Each market must have clear rules assuring investor protection by safeguarding participants from the financial risks of failed settlement and ensuring that listed companies are required to follow sound policies on corporate governance, transfer of economic benefits and shareholder rights.

1.	Does the depository or the market have securities lending and borrowing schemes in place, and are these open to all market participants and their settlement agents?	Yes. However, non-residents can borrow only upto KRW1billion (Eq. USD770,000) from residents.
2.	Does the settlement system mark fail trades to market and collect margin from the failing counterparty to protect the innocent counterpart's interest?	Yes
3.	Does the market operate a guarantee fund or have an equivalent procedure to protect against the cost of failed transactions; and which sectors of the market does it cover?	Yes. Korea Stock Exchange for KSE trades and Korea Securities Dealers Association for KOSDAQ trades.
4.	Are the stock transfer agents (share registrars) linked electronically to the depository?	No. It is not necessary because stocks can be transferred without changing ownership (There is no difference between bearer stock and registered stock in this respect) as the stocks are registered under KSD nominee name.
5.	Is there a legal maximum time period to complete ownership transfers in the books of the issuer? If so, does market practice adhere to the deadline?	No. It is not needed. (Refer to 4.)
6.	Are investors entitled to all benefits arising on a security from the point of purchase; and how are any rules enforced?	Yes. According to the Korean Commercial Code and the Securities & Exchange Act (SEA), book-entry delivery must have the same effect with physical transfer of stock certificate and the holder is regarded as rightful owner. Entitlement is based on actual settlement date, not contractual settlement date.
7.	Is proxy voting permissible in the market and can such proxies be lodged by post or other remote delivery method?	Yes. Proxy voting is permissible by mail or physical attendance.
8.	Are there binding rules in the market stating the minimum and maximum lapsed time between the announcement and completion of key events, including registration, the calling of shareholder meetings, the payment of dividends or interest, rights issues, tender offers and other voluntary corporate actions?	Yes. The lapsed time varies by types of corporate action. Time frames range from one to four months.
9.	Are all voluntary corporate actions advised through a central mechanism assuring consistent information to all investors?	Yes. Corporate actions are advised through the Daily KSE Market Bulletin or Daily KOSDAQ Market Bulletin. Both are published in Korean only.
10.	Is information on corporate actions available electronically, and is the minimum lapsed time for responding to such actions sufficient to enable all domestic and foreign investors to respond in a timely and considered fashion?	Yes, through the KSD and KSE web-sites (www.ksd.or.kr / www.kse.or.kr). However not all corporate actions for KSE & KOSDAQ companies are covered.