Introduction of the K-OTC Market

The below summary captures the essence and operational details of the K-OTC Market, highlighting its strategic importance in enhancing the financial infrastructure for unlisted companies in Korea.

1. Overview of the K-OTC Market:

- Definition: The K-OTC (Korea Over-The-Counter) market is an institutionalized, organized market for trading unlisted stocks, established and operated by the Korea Financial Investment Association under the Act on Capital Market and Financial Investment Business.

2. Background of the K-OTC Market

- Origins: Since July 2005, the Korea Financial Investment Association managed the Freeboard to facilitate direct financing for unlisted SMEs and venture firms.

- Evolution: The role of Freeboard diminished as its operations were limited to a small number of SMEs, and it faced ambiguities with the launch of the Konex Market in July 2013, a stock market for SMEs.

- Reform: To enhance the effectiveness of the market, the operational approach was revised to focus on providing a transparent and efficient trading platform for all unlisted corporations, thereby supporting broader financing needs and improving the infrastructure for domestic stock trading.

3. Features of the K-OTC Market

- Inclusion of Unlisted Companies: The market has expanded to include actively traded stocks of unlisted large and medium-sized companies, especially those with public offering records.

- Investment Opportunities: The K-OTC market offers new investment avenues for those seeking high-risk, high-return opportunities in unlisted companies with growth potential.

- Trading Convenience and Security: Offers a platform where investors can trade unlisted stocks conveniently, with access to transparent quote and market price information and secure settlement processes.

- Investor Responsibility: Emphasizes the principle of investor self-responsibility due to minimal regulation. Investors are advised to perform due diligence on company details and investment risks and to invest based on personal judgment and responsibility.

- Market Operation: Managed by the Korea Financial Investment Association, leveraging its experience from developing the KOSDAQ market.

4. History of the K-OTC Market

2. Rules and Regulations

The K-OTC Market outlines specific categories and requirements for companies dealing with unlisted stocks. Here's a clearer organization of the given information:

2.1 K-OTC Market Entity Classification

A. Registered Company Department

- Definition: Companies that have unlisted stocks, registered by the association upon the company's request for trading.

B. Designated Companies

- Definition: Companies with unlisted stocks selected by the association for trading without a company application, known as the non-application designation system.

- Disclosure: These companies are not listed on the K-OTC market. Their information is available on the Financial Supervisory Service's electronic disclosure system and other securities portals.

2.2 Requirements for New Registration on the K-OTC Market

- Capitalization: The company must not be fully capitalized; considerations include recent capital increases and asset revaluation.

- Revenue: Minimum revenue is KRW 500 million (KRW 300 million for crowdfunding exemption candidates), as verified by the latest auditor's report.

- Audit Opinion: Must have an unqualified audit opinion from the recent year's financial statements.

- Stock Requirements: Stocks must either be standard securities or electronically registered under relevant regulations.

- Transfer Agency Contract: Appointment of a transfer agent (e.g., Korea Securities Depository, Kookmin Bank, Hana Bank) is required for managing shareholder lists and rights.

2.3 Conditions for the Transfer of Shares

- No Restrictions: The company’s articles of incorporation should not restrict share transfers to enable smooth trading on the K-OTC market.

2.4 Exclusions from New Registration

- Impact on Public Trading: Registration should not facilitate trading of equities from a delisted corporation.

- Investor Protection: Must not jeopardize the health of the K-OTC market or harm investor interests.

- Misrepresentation: No false or omitted significant information in the registration documents; no factors threatening the company’s operational or financial stability.

2.5 Requirements for New Designation

- Business Report: Must have submitted the latest business report to the Financial Services Commission.

- Securities Report: Requires a securities report related to past subscriptions or sales performance, or agreement to designate the K-OTC market.

- Listing Status: Shares must not be listed on any other securities market.

2.6 Other Considerations

- Re-registration and Re-designation Restrictions: Includes penalties for non-disclosure and other compliance failures.

2.7 Comparison of New Registration and New Designation Requirements

- Core Differences: Centers on the nature of disclosure, documentation, and market impact considerations.

This revised structure provides a clearer view of the regulations and classifications within the K-OTC Market, aiding in easier understanding and compliance.

3. Trading System Overview

3.1 Market Operations

- Trading Hours: The market operates from 09:00 to 15:30, without simultaneous or after-hours trading.

- Closing Days: The market remains closed on Saturdays, public holidays, Labor Day, the first day of the year, and other necessary closures as decided by the Association.

3.2 Quotation and Pricing

- Quotation Quantity Unit: The minimum unit for trading quotations is one share.

- Ask and Bid Price Units:

• Under KRW 2,000: 1 KRW increment
• KRW 2,000 to under KRW 5,000: 5 KRW increment
• KRW 5,000 to under KRW 20,000: 10 KRW increment
• KRW 20,000 to under KRW 50,000: 50 KRW increment
• KRW 50,000 to under KRW 200,000: 100 KRW increment
• KRW 200,000 to under KRW 500,000: 500 KRW increment
• Over KRW 500,000: 1,000 KRW increment

- Price Limit:

- Daily price fluctuation is limited to ±30% of the reference price.

- For new stocks on their opening day, quotes can range from 30% to 500% of the reference price, adjusted to the nearest quotation unit if necessary.

3.3 Reference Pricing

- First Trading Day: The reference price is set at the net asset value per share.

- Subsequent Days:

• If traded the previous day: The reference price is the volume-weighted average share price.
• If not traded the previous day: The price remains at the previous day’s reference or applies the momentum price if there was significant price movement.
• Other scenarios: The price is determined by the Association based on set criteria.

3.4 Momentum System

- Purpose: To reflect market conditions in the stock price, especially in a low liquidity environment, adjusting for potential large price movements and preventing unfair trading practices.

- Method:

• The momentum price is typically the quantity-weighted average price of the bids and asks.
• Limits are set to a maximum of ±15% of the base price, but within a broader range of 50% to 300% on the trading day.
• If the highest bid is greater than the quantity-weighted average or there’s a lower ask than the reference price, these are used as the momentum.
• Momentum calculations exclude any quotes not valid until market close and consider only those received up to 10 minutes before closing.

4. Overview of the Disclosure System

4.1 Significance of the Disclosure System

The disclosure system plays an important role in maintaining the fairness of securities transactions and protecting investors by requiring companies to promptly and accurately disclose key corporate information to investors so that investors can accurately grasp the true nature of the company and make investment decisions based on their own judgment and responsibility.

4.2 Overview of the K-OTC Market Disclosure System

K-OTC Market registered entities are obligated to make regular disclosures, periodic disclosures, and inquiry disclosures on the K-OTC Market.

K-OTC Market-designated entities are not obligated to make disclosures on the K-OTC Market. However, designated entities are obligated to submit business reports, semi-annual reports, quarterly reports, and major matters reports through the Financial Supervisory Service's electronic disclosure system in accordance with the Capital Market Act.

4.3 Subject and method of disclosure of registered corporations

Subject of disclosure

The subject of disclosure is the registered corporation. The registered corporation must designate one person in charge of disclosure and one person in charge of disclosure, and recognize that they are the official channel connecting the registered corporation, the K-OTC market, and investors in operating the disclosure system.

Disclosure Method

Disclosure on the K-OTC market shall be made by electronic disclosure (direct disclosure by the issuer through the K-OTC disclosure system), and the registered entity shall report the disclosure through the K-OTC market disclosure system in electronic documents. The Association (TEL: 02-2003-9141~3, 9151~7 / FAX: 782-6917) receives and distributes the disclosures through the Coscom computer network.

Investors can check the K-OTC market disclosures through the Coscom computer network, HTS of financial investment companies, and the K-OTC website (www.k-otc.or.kr).

5. K-OTC Market Regulations

Chapter 1 General Rules

Article 1 (Purpose) These Regulations are adopted by the Korea Financial Investment Association (hereinafter referred to as the "Association") in accordance with Article 286, Paragraph 1, Item 5 of the Act on Capital Market and Financial Investment Business (hereinafter referred to as the "Act"), Article 178, Paragraph 1 of the Enforcement Decree of the Act on Capital Market and Financial Investment Business (hereinafter referred to as the "Enforcement Decree"), Article 307, Paragraph 2, Item 6 of the Act, and Article 307, Paragraph 2, Item 6 of the Financial Services Commission's Financial Investment Business Regulations, Article 307(2)(6), and Articles 5-2 through 5-2(2) of the Financial Investment Business Regulations of the Financial Services Commission (hereinafter referred to as the "Financial Investment Business Regulations"), to establish the business standards required when conducting business related to over-the-counter trading of equity securities not listed on the securities market.

Article 2 (Definitions) ① The definitions of terms used in these Regulations are as follows.

1. "K-OTC Market" means the financial investment product market operated by the Association for OTC trading of equity securities not listed on the securities market.

2. "Electronic Registration" refers to the electronic recording of information on the creation, change, and disappearance of rights to shares in the electronic registration account in accordance with the Act on Electronic Registration of Stocks, Bonds, etc. (hereinafter referred to as the "Electronic Securities Act"). <New 2019.9.9.> 2.

2. "Registered corporation" refers to a corporation that has issued shares (hereinafter referred to as "registered shares") registered with the Registrar of Companies as stipulated in these Regulations.

3. "Designated corporation" means a corporation that has issued shares (hereinafter referred to as "designated shares") designated by the Department of Designated Companies as stipulated in these regulations.

4. "New registration" means the registration of securities issued by a legal entity that is not a registered legal entity and a designated legal entity with the Registrar of Companies.

5. "New Designation" refers to the designation of securities issued by legal entities other than registered legal entities and designated legal entities to the Designated Companies Division.

6. "Applicant" means a company that applies for new registration with the Association.

7. "Venture company" means a company falling under Article 2, Paragraph 2, Item 1 of the Act on Special Measures for the Promotion of Venture Companies (hereinafter referred to as the "Venture Company Act"). <Amended 2020.10.20.> 8.

8. "SME" means a small and medium-sized enterprise under Article 2 of the Basic Act on Small and Medium-sized Enterprises. <New 2018.2.8.> 9.

9. "Medium-sized enterprise" means an enterprise falling under Article 6, Paragraph 4, Article 1 of the Enforcement Decree of the Tax Special Exception Limitation Act. <Revised 2020.3.11., 2022.10.18.> 10.

10. "Fully capitalized" means that the equity capital is zero or negative.

11. "Common Stock" refers to the outstanding shares of stock, excluding classified stock pursuant to Article 344 of the Commercial Code (hereinafter referred to as "Classified Stock").

12. "Minority Shareholder" means a person who owns less than one hundredth of the total number of issued shares.

13. "Quotation" means an expression of intent to sell or buy that a financial investment company (limited to a financial investment company authorized by the Financial Services Commission to engage in investment trading or investment brokerage in equity securities pursuant to Article 12(1) of the Act (hereinafter referred to as "Financial Investment Company") makes in accordance with the requirements for buying and selling, such as the type (including both registered and designated securities, hereinafter referred to as "securities"), quantity, and price, in order to conduct trading on the K-OTC market.

14. "Price brokerage" means the act of brokering quotes received by the Association from financial investment companies and concluding sales and purchases.

15. "Business Day" means a day other than the day specified in each subparagraph of Article 19.1.

16. "Price Brokerage System" means the computerized system installed by the Association to perform brokerage business in the K-OTC market.

17. "Periodic Disclosure Document" means the periodic disclosure document (in the case of a corporation subject to submission of business report, it refers to the business report required to be submitted to the Financial Services Commission pursuant to Article 159 (1) of the Act, and includes the audit report) required to be submitted to the Association after each fiscal period pursuant to Article 46. <Amended 2024.2.20.> 18.

18. "Semi-annual periodic disclosure document" means the periodic disclosure document required to be submitted to the Association after the end of each semi-annual period pursuant to Article 46 (in the case of a corporation subject to business report submission, the semi-annual report required to be submitted to the Financial Services Commission pursuant to Article 160 of the Act, including the semi-annual review report). <Amended 2024.2.20.> 19.

19. "Inquiry disclosure" means that the Association requests disclosure of corporate information from a registered corporation and the registered corporation reports it to the Association.

20. "Crowdfunding company" means a person who issues securities by the method of online small investment brokerage (hereinafter referred to as "crowdfunding") pursuant to Article 9 (27) (1) et seq. of the Act. <New 2020.10.20.>.

Terms not defined in these Regulations shall be defined in accordance with relevant laws and regulations.

Article 3 (Applicable Standards) ① The audit report applied in this regulation refers to the audit report prepared by an auditor (hereinafter referred to as the "auditor") pursuant to Article 2, Paragraph 7 of the Act on External Audit of Joint Stock Companies (hereinafter referred to as the "External Audit Act"). <Amended 2018.12.11., 2020.10.20.> (Revised 2018.12.11., 2020.10.20.>)

② The financial details applied in this regulation shall be based on the financial statements attached to the audit report pursuant to paragraph (1) (financial statements pursuant to Article 2 (2) of the External Audit Act), but shall be based on the financial statements reflecting any amendments to the audit report, if any. <Revised 2018.12.11., 2020.10.20.>.

Article 4 (Division of Departments) ① The Association shall operate the K-OTC Market by dividing it into the following departments.

1. Registered Company Department: The department to which the registered corporation belongs <Revision 2020.10.20.> 2.

2. Designated Company Department: The department to which the designated corporation belongs <Revised 2020.10.20>.

② If a designated corporation wishes to change its affiliation to the registered enterprise department, the provisions of Articles 5 through 7 shall be applied. <Revised 2020.10.20> <Revised 2020.10.20

Chapter 2 Registration and Designation

Section 1 Registration and Deregistration

Article 5 (Requirements for New Registration) An entity that wishes to apply for new registration with the Association must meet all of the following requirements.

1. not be fully capitalized as of the end of the most recent business year (reflecting the amount of capital increase from the end of the most recent business year to the date of application for registration and the amount to be transferred to capital by revaluation of assets)

2. Sales for the most recent business year (refers to the sum of the sales of goods and the provision of services, as follows) is 500 million won or more. However, as of the date of application for new registration, the amount of shares issued by means of crowdfunding [refers to shares of common stock (including shares of shares converted into common stock prior to application for new registration)] (hereinafter referred to as "crowdfunding amount") is more than 200 million won, and in the case of a crowdfunding company that has received a recommendation for new registration on the K-OTC market from an online small investment intermediary (hereinafter referred to as "crowdfunding intermediary") pursuant to Article 9 (27) (1) et seq. of the Act, the turnover of the latest business year shall be more than 300 million won. <Revised 2020.10.20.> 3.

3. the auditor's audit opinion on the financial statements of the most recent business year is appropriate

4. the shares must be stock or electronically registered by the Korea Securities Depository and Clearing Corporation (hereinafter referred to as the "Depository and Clearing Corporation") established pursuant to Article 294 of the Act, in accordance with the Regulations on the Handling of Securities, etc. prescribed pursuant to Article 322 of the Act <Revised 2019.9.9> <Revised 2019.9.9>.

5. have a transfer agency contract with a transfer agency company pursuant to Article 365 of the Act

6. There are no restrictions on the transfer of shares in the articles of incorporation, etc. However, this shall not apply if the transfer of shares is restricted in accordance with other laws and regulations and the restriction is deemed not to impair trading on the K-OTC market.

7. Not falling under the grounds for deregistration under Article 9 (1) (1), (2), (6) through (9), and (17) <New 2018.12.11., Revised 2022.10.18.>.

8. If the new registration has the effect of trading equity securities of a listed corporation that is suspended from trading on the listed market for delisting reasons, it does not fall under the requirements prescribed by the president of the Association <New 2022.10.18.> <New 2022.10.18.> <New

9. There is no reason why registering the ownership of the entity is inappropriate for the health of the K-OTC market and investor protection <New 2022.10.18>.

Article 6 (Application for New Registration) ① A corporation that intends to apply for new registration with the Association shall submit the following documents to the Association. In this case, the applicant company may apply for new registration through a financial investment company that conducts the business of underwriting equity securities (excluding collective investment securities).

1. 2 copies of the registration application form (the form shall be prescribed by the President of the Association)

2. 2 copies of the articles of association

3. 2 copies of the corporate register

4. 2 copies of any of the following documents related to the sale of sovereign shares on the K-OTC market

A. If the applicant company is required to submit a securities report to the Financial Services Commission pursuant to Article 119 of the Act, the report

b. if the applicant is required to file a document with the Commission pursuant to section 130 of the Act and section 137(1)(a) of the Act, the document

C. Disclosure documents if the applicant company is required to disclose in the manner prescribed by the Financial Services Commission pursuant to Article 130 of the Act and Article 137 (3) (3) of the FSC

5. two copies of the auditor's audit report for the most recent business year (if the semi-annual closing date has passed since the most recent business year, the semi-annual review report shall be included)

6. 2 copies of each type of issued share certificate or 2 copies of the document provided by the transfer agent (in the case of electronically registered shares, it refers to an electronic registration institution such as a depository or settlement center) to prove the matters related to the issuance of share certificates <Revised 2019.9.9>.

7. 2 copies of a document confirming that a contract for entrusting the share transfer service has been concluded

8. In the case of a corporation that is a venture company, a venture company confirmation certificate (hereinafter referred to as "venture company confirmation certificate") pursuant to Article 25 of the Venture Company Act (hereinafter referred to as "Venture Company Confirmation Certificate") in 2 copies <Revised 2020.10.20> <Revised 2020.10.20

9. In the case of a crowdfunding company pursuant to Article 5 (2), the following documents <New 2020.10.20> <New 2020.10.20> A.

A. 2 copies of the document confirming the amount of crowdfunding issued by the central record management organization pursuant to Article 117 (13) (1) of the Act, which confirms the crowdfunding amount of the company

B. 2 copies of the K-OTC market registration recommendation letter issued by the crowdfunding intermediary (the form shall be determined by the president of the association)

10. other documents prescribed by the president of the association <Revised 2020.10.20>.

② A company applying for registration cannot apply for registration of only a part of the shares already issued. However, in the case of classified stocks, registration applications may not be made for each type of stock. <Amended 2020.10.20.> (Revised 2020.10.20.>)

Article 7 (Registration Decision, etc.) ① If the Association receives a new registration application from the applicant company, the Association shall decide whether to register within 10 business days from the day after the date of registration application and notify the applicant company in writing of the result. However, if it is necessary to correct or supplement the required documents or other unavoidable reasons arise, the registration decision may be postponed and the reason shall be notified in writing to the applicant company. <Revised 2018.12.11.>.

② When registration is decided, the Association shall upload the prescribed registration details to the stock ledger and notify the relevant registered corporation (including financial investment companies pursuant to the latter part of each subparagraph of Article 6.1) and the depository settlement system without delay and disclose the registration details to the K-OTC market.

Article 7.2 (Appeal) ① If there is an objection to the outcome of a new registration application pursuant to Article 7, the applicant company may file an appeal within 7 days from the date of receipt of the Association's notification.

② The applicant company shall attach the following documents to the appeal.

1. a statement of reasons for appealing the Association's decision and supporting documents

2. any other documents deemed necessary by the Association in connection with the appeal.

③ If there is an appeal, the Association shall make a decision on the appeal after deliberation by the K-OTC Market Committee pursuant to Article 54.2 within 30 days from the date of such application, and in this case, the Association shall notify the company of the result in writing.

[Amended 2018.12.11].

Article 8 (Changes and Additional Registration) ① A registered corporation shall submit the following documents to the Association within one month from the date of the occurrence of the relevant reason if there is a change (addition) in the type, denomination, par value, type or quantity of registered securities. In this case, Article 6.2 shall apply.

1. 2 copies of the change (addition) registration application form (the form shall be determined by the President of the Association)

2. 2 copies of the corporate register

3. two (2) specimens of each class of issued shares or two (2) documents provided by the share transfer agency (in the case of electronically registered shares, an electronic registration institution such as a depository or settlement house) to prove the matters related to the issuance of shares <Revised 2019.9.9> 4.

4. other documents deemed necessary by the Association

② The Association shall apply Article 7 to any application for change (additional) registration under Paragraph 1 in accordance with Article 7. However, in this case, the 10 business days in Article 7, Paragraph 1 shall be 5 business days. <Revised 2020.10.20.>.

Article 9 (Deregistration) ① The Association shall deregister a registered organization if it is confirmed that the registered organization falls under any of the following items. However, when applying Clause 3 and Clause 10, if the Association recognizes that it is impossible to submit periodic disclosure documents within the deadline due to natural disasters or similar unavoidable reasons, the Association may suspend the deregistration until the deadline set by the Association. <Revised 2020.3.11.> 1.

1. if the misrepresentation or omission of material facts in the registration application and accompanying documents is deemed to be important for the protection of investors

2. the note or check issued is finally determined to be in default by the bank or the transaction with the bank is suspended

3. the company is fully capitalized as of the end of the most recent business year. However, it shall be excluded if it is confirmed that the capital is fully impaired by the deadline for submission of the periodic disclosure document for the fiscal year by the president of the association.

4. If the sales in the most recent business year is less than 100 million won or the sales in the last two consecutive business years is less than 500 million won (300 million won in the case of crowdfunding companies registered under Article 5 (2)) <Revised 2018.12.11., Revised 2020.10.20.>.

5. the auditor's audit opinion on the financial statements of the most recent business year is unqualified, disclaimer of opinion, or limited in scope for the last two consecutive business years

6. If the main business has been suspended for more than six months and it is difficult to operate substantial business with only the remaining business segment or if all of the business is transferred <Amended 2018.12.11.> 7.

7. if the court has dismissed the application for initiation of rehabilitation proceedings, canceled the decision to initiate rehabilitation proceedings, disapproved the rehabilitation plan, or abolished the rehabilitation proceedings pursuant to the Act on Debtor Rehabilitation and Bankruptcy. However, this shall not apply in the case of abolition of rehabilitation proceedings pursuant to Article 287 of the Act on Debtor Rehabilitation and Bankruptcy.

8. in case of absorption merger with another corporation

9. in the event of dissolution under the law

10. in the event that any of the following applies to the submission of periodic disclosure documents

A. Failure to submit the periodic disclosure document for the fiscal year-end period by the deadline and then failing to submit it within 30 days from the next day after the deadline

b. an entity that has failed to submit its semi-annual periodic disclosure documents by the due date for at least one of the last four business years fails to submit its semi-annual periodic disclosure documents by the due date for the most recent semi-annual period and then fails to submit them within 15 days after the due date.

11. If a corporation is designated as a non-disclosure entity pursuant to Article 49 (1) and has been designated as a non-disclosure entity six or more times within the past two years retroactively from the date of such designation.

12. as of the end of the most recent business year [in the case of closing the shareholder register after the end of the most recent business year, the shareholder register as of the time of closure and the list of beneficial shareholders pursuant to Article 16(1) of the Act (in the case of electronically registered shares, the list of owners pursuant to Article 37(1) of the Electronic Securities Act; collectively, the above list of beneficial shareholders and the list of owners shall be referred to hereinafter as the "list of beneficial shareholders, etc."), but only if such documents have been submitted to the Association in accordance with Paragraph 2], the shareholding ratio does not meet any of the following criteria. In this case, it shall be applied from the end of the fiscal year following the fiscal year to which the new registration date (or the date of change of affiliation in the case of a change of affiliation pursuant to Article 4, Paragraph 2) belongs. <Revised 2019.9.9.> A.

A. The number of minority shareholders of common shares is less than 50

B. the total number of common shares owned by minority shareholders is less than one hundredth of the total number of common shares issued by the entity; or

13. when a registered corporation applies for deregistration of the corporation or class of shares <Amended 2020.3.11.> 14. when the corporation is listed on a securities market

14. is listed on a securities market

15. fails to fulfill the requirements of Article 5 (4) through (6)

16. In the event that allegations of embezzlement or embezzlement of employees (including retired or resigned employees, as follows) are confirmed to be true through the publication of relevant litigation results. However, this is limited to cases where the amount of embezzlement or embezzlement is greater than or equal to the amount determined by the president of the association. <New 2022.10.18.> 17.

17. If the Association recognizes that it is necessary for the continuity of the company, the health of the K-OTC market, or other investor protection for reasons falling under each of the subparagraphs of Paragraph 1. However, a company that objects to such action may file an appeal against the reason for deregistration within 7 days from the date of receipt of the notice, and in this case, Article 7.2 Paragraphs 2 and 3 shall be applied. <Amended 2016.12.13., 2018.12.11., 2022.10.18> <Revised 2016.12.13.

② In applying Paragraph (1), Item 12, the registered corporation shall submit a summary table of the shareholder list of common stocks (the form of which shall be determined by the chairman of the Association), a list of beneficial shareholders (including a computerized file), and other documents deemed necessary by the Association (hereinafter referred to as "shareholder list summary table") within five business days from the day after the deadline for submission of the periodic disclosure documents for the fiscal year ending period, and in this case, the Association shall decide whether to deregister the registered corporation within 15 business days from the day after the deadline for submission of the periodic disclosure documents for the fiscal year ending period. However, the Association may extend the period for determining whether to deregister if the registered corporation submits the summary of shareholders' list after the applicable submission deadline has passed, or if it is necessary to correct or supplement the summary of shareholders' list submitted by the registered corporation, or if other unavoidable reasons arise. <Amended 2019.9.9., 2020.10.20.> ③ A registered corporation may extend the period for determining whether to deregister.

③ A registered corporation shall be deemed to fall under the requirements of Paragraph (1) (12) if it fails to submit a summary table of shareholders' list within 30 days from the day following the deadline for submission of periodic disclosure documents for the fiscal year-end period. However, if the Association recognizes that it is impossible to submit the periodic disclosure documents within the deadline due to natural disasters or similar unavoidable reasons, the Association may suspend the deregistration until the deadline set by the Association. <Revised 2020.3.11.>.

④ If the Association decides to deregister pursuant to Paragraph (1), the Association shall delete the registered species from the list of registered species and process the notification of deregistration in accordance with Article 7, Paragraph 2. <Revised 2020.10.20.> ⑤ The Association shall notify the registered species in accordance with Article 7.2.

Article 10 (Application for Deregistration) ① If a registered entity wishes to apply for deregistration of a registered sport, it must submit the following documents to the Association. <Amended 2020.10.20.> 1.

1. Application for deregistration (the form shall be determined by the President of the Association) in 2 copies

2. 2 copies of the minutes of the shareholders' meeting that resolved to deregister (in the case of applying for deregistration of only class shares, the minutes of the shareholders' meeting of class shares)

3. other documents deemed necessary by the association

② Notwithstanding Paragraph 1, the Association may refuse to deregister if it is deemed necessary for the protection of investors. <Revised 2020.10.20.>.

Article 11 (Allowance of trading of deregistered shares) The Association may allow trading of shares that are deregistered pursuant to Article 9 for a separate period not exceeding 10 business days.

Article 12 (Restrictions on New Registration of Deregistered Sovereigns, etc.) If a sovereign is deregistered or designated under the requirements of Article 9(1)(10) through (13) (including the application of Article 16(1) to Article 9(1)(10)), the entity may not apply for new registration of such sovereign before the expiration of one year from the date of such deregistration.

Article 13 (Declaration of Small and Medium Enterprise Status) ① A registered entity shall declare to the Association whether it is a small or medium-sized enterprise for each business year. <Revised 2020.10.20.>.

② The deadline for reporting under Paragraph (1) and details such as documents to be submitted shall be determined by the President of the Association. <Revised 2018.2.8

Section 2 Designation and De-designation

Article 14 (New Designation) ① The Association may designate a stock issued by a corporation that meets all of the requirements of each of the following subparagraphs. In this case, the Association shall confirm whether the requirements of the following items are met through public information on the electronic disclosure system of the Financial Supervisory Service and securities information published by the Securities Depository and Clearing House.

1. as a corporation subject to submission of business reports pursuant to Article 159 (1) of the Act, the business report of the most recent business year (including the semi-annual report of the most recent half-year if six months have elapsed from the start of the business year) has been submitted to the Financial Services Commission and disclosed

2. falls under any of the following headings with respect to its sovereign

a. Have a track record of offering or selling securities

b. has filed with the Commission a securities return under section 119 of the Act or a document under section 130 of the Act and section 137(1)(a)(1) of the O.C.G.

C. The entity has submitted a K-OTC market designation agreement (the form of which shall be determined by the president of the Association) to the Association <New 2014.12.16> 3.

3. meet all the requirements of Article 5 (1) through (6). In this case, "until the date of application for registration" shall be deemed to be "until 10 business days before the date of designation decision". <Revised 2020.10.20.> 2.

② Notwithstanding Paragraph 1, the Association may not designate the sovereign if it is deemed necessary for the protection of investors. <Revised 2020.10.20>.

③ If the Association decides to designate, the Association shall post the designation on the stock ledger, notify the depository without delay, and disclose the designation to the K-OTC market.

Article 15 (Change and Additional Designation) ① The Association may make a change (additional designation) if it is confirmed that the type, denomination, par value, type, or quantity of designated securities has changed (added). In this case, the Association shall confirm the change (addition) of the designated item through the information at the end of the part other than each subparagraph of Article 14.1.

② If the Association makes a change (addition) pursuant to Paragraph 1, Article 14.3 shall apply.

Article 16 (De-designation) ① The Association shall de-designate a designated item if it falls under any of the following items. <Revision 2020.3.11., 2022.10.18.> 1.

1. If it is confirmed that the business report of the designated company that was the basis for the new designation and the contents of the attached documents are misrepresented or omitted, and the requirements for the new designation are not met if the misrepresentation or omission is corrected and reflected in the business report.

2. If any of the requirements of Article 9 (1) (2) through (10), (14), (15), or (17) are met. However, when applying Article 9 (1) (3) and (10), if the Association recognizes that it is impossible to submit the periodic disclosure documents within the deadline due to natural disasters or other unavoidable reasons, the Association may suspend the de-designation until the deadline set by the Association.

3. If the facts falling under Article 159, Paragraph 1, Clause 1 of the Act are confirmed

When applying Paragraph ② (1), "the last four fiscal years" shall be deemed to be "the last four fiscal years (starting from the fiscal year in which the date of new designation falls)" and "registration" shall be deemed to be "designation". <New 2020.3.11.> ③ The Association shall use the Financial Supervisory Service's electronic system.

③ The Association shall check whether the requirements of Paragraph (1) apply through public information on the electronic disclosure system of the Financial Supervisory Service, securities information published by the Securities Depository and Settlement Service, court announcements, and bank overdraft suspension information disclosed by an organization designated as a bill exchange under Article 38 of the Bills of Exchange Act and Article 31 of the Checks Act.

④ If the Association decides to de-designate pursuant to Paragraph (1), the Association shall delete the designation from the stock ledger and process the notification of de-designation in accordance with Article 14.3.

Article 16.2 (Allowance of trading of de-designated shares) The Association may allow trading of shares de-designated pursuant to Article 16 for a separate period not exceeding 10 business days.

[Revised March 11, 2020].

Article 17 (Restrictions on New Designations of De-designated Sovereigns, etc.) The Association may not make a new designation of a sovereign that has been de-registered or de-designated in accordance with the requirements of Article 9(1)(10) through (13) (including the application of Article 16(1) to Article 9(1)(10)) before the expiration of one year from the date of such de-designation.

Chapter 3 Trading

Section 1 Operation of the K-OTC Market

Article 18 (Trading Hours) ① The trading hours of K-OTC Market shall be from 9:00 a.m. to 3:30 p.m. <Revised 2016.6.21.>.

② The Association may temporarily change the trading hours of Paragraph 1 in any of the following cases.

1. in the event of a failure of the price intermediary system

2. in the case of the opening day of the year or the closing day of the year

3. in other cases where the Association deems it necessary to change the trading hours.

Article 19 (Closure) ① The Association shall close the K-OTC Market on any of the following days.

1. Saturdays

2. Holidays in accordance with the 「Regulations on Public Holidays of Government Offices」.

3. Workers' Day in accordance with the Act on the Establishment of Workers' Day

4. one day at the end of the year (in this case, Saturdays and public holidays shall not be counted when calculating the number of days)

5. any other day deemed necessary by the Association.

Notwithstanding Paragraph 1, the Association may open the K-OTC Market if it deems it necessary for the public interest and investor protection.

Article 20 (Brokerage of Sales and Purchase) The Association shall be responsible for the brokerage of sales and purchase transactions between financial investment companies in the K-OTC Market.

Section 2 Custody of Trading Transactions

Article 21 (Establishment of Account, etc.) ① When a financial investment company receives an order from a custodian for a stock and intends to process it, it shall establish a trading account with the custodian in advance. However, if the Custodian has already opened a custodian account or the like, the Custodian may use such account for trading.

② When a financial investment company intends to set up a trading account for a consignee, it shall obtain confirmation of the following items from the consignee and record and maintain them.

1. name or designation and the number of identification means (hereinafter referred to as "foreigner identification means") pursuant to Article 6-1, paragraph 14 of the Financial Investment Business Regulations (hereinafter referred to as "foreigner identification means") in the case of a foreigner [in the case of an alien treated as a national pursuant to Article 6-1, paragraph 2 of the Financial Investment Business Regulations (hereinafter referred to as "alien treated as a national"), the number of passport number, business registration number, or tax identification number], etc.

2. address (including e-mail address) and telephone number

3. password

4. in the case of a financial investment company that does not access the quotation brokerage system, the type of account (custody or self-trading)

5. for foreigners, nationality (or permanent residence) and domestic residence <Revised 2024.2.20.> 6.

6. investor classification code (as determined by the president of the Association)

7. in the case of appointing a representative, the name (or name) of the representative, the number that can confirm the real name, such as the resident registration number or business license number, the relationship with the principal, the address, and the scope of the representative's authority.

③ A financial investment company shall enter into a trading account establishment contract with a consignee who intends to establish a trading account pursuant to Paragraph 1 after fully explaining the following items.

1. Matters concerning the method of placing orders

2. Matters relating to the payment of custodial margin

3. Matters concerning the commission fee

4. other important contents of the trading account establishment agreement, etc.

④ A financial investment company may establish a joint trading account only in cases where it is unavoidable, such as when a custodian requests the establishment of an account for the sole purpose of disposing of securities owned by the company.

Article 22 (Notification of Investor Precautions) Before receiving the first order for trading transactions from a custodian (excluding professional investors pursuant to Article 9 (5) of the Act), a financial investment company shall notify the custodian of the matters prescribed by the Chairman of the Association, such as the characteristics of the K-OTC market system and the investment risk of unlisted stocks, by any of the methods in Article 24 (1), and obtain confirmation.

Article 23 (Order Entrustment Matters) When a financial investment company receives an order for a trading transaction from a custodian, it shall fill out an order form with the following items.

1. stock name

2. In the case of order processing, the division of each of the following items

A. New orders

B. Correction of a previously submitted order

C. Cancellation of a previously submitted order

3. classification of sell or buy

4. quantity and price

5. time of receipt of the order

Article 24 (Methods of Entrustment) ① A financial investment company may receive entrustment of trading transactions from a custodian in any of the following ways

1. in writing

2. by telephone, telegram, facsimile transmission (FAX), etc.

3. computer and other similar electronic communication methods

(2) When a trading transaction is executed in response to the order of a consignor, the financial investment company shall notify the consignor without delay of the details of the trading transaction, including the name of the security, the date of execution, the quantity and price of the transaction, and the division of the sale or purchase, by any of the following methods.

1. by the method of Paragraph 1, Item 2 or Item 3

2. by mail, delivery of a sales report, etc.

Article 25 (Refusal of Custody) A financial investment company shall refuse to custody a trading transaction if it determines that the order of the custodian falls under any of the following subparagraphs. In this case, the reason shall be written on the order sheet, etc. and the fact shall be notified to the custodian.

1. if you know that you are entrusting a trading transaction that violates or is likely to violate Article 178 of the Act

2. in other cases where it is deemed necessary to reject the order for the public interest, investor protection, or to stabilize the sound trading order of the K-OTC market.

Article 26 (Custodial Deposit) A financial investment company shall collect the full amount of the purchase price in the case of purchase and the full amount of the securities in the case of sale as custodial deposit when entrusted with a purchase transaction by a custodian. However, this is not the case if the financial investment company submits a confirmation letter to the Association that it will be responsible for the payment default of the transaction. <Revised 2022.2.22.>.

Article 27 (Records in the Account) A financial investment company shall record matters related to trading transactions, such as the receipt, deposit, return, delivery, and payment of custodial margin, purchase price, and securities sold, in the trading account.

Article 28 (Consignment Fee) A financial investment company may collect a consignment fee as prescribed by the financial investment company at the time of settlement from a consignor when a sale or purchase is consigned by the consignor.

Section 3 Quotation and Trading Methods, etc.

Article 29 (Trading Commencement Date) Trading of registered and designated stocks shall commence on the second business day following the date of approval of new registration (new designation decision date) or approval of change (additional) registration [change (additional) designation decision date]. However, if there is a change in the share issuance schedule, such as a change in the date of issuance of new shares, the Association may set a different date for the commencement of trading. <Amended 2014.12.16.> (Revised 2014.12.16.>)

Article 30 (Submission of Quotations, etc.) ① If a financial investment company intends to engage in trading transactions through the K-OTC market, it shall submit quotations within the time limit pursuant to Article 18.

② When a financial investment company submits a quote pursuant to Paragraph (1), it shall contain the following items

1. the name of the financial investment company or the financial investment company number

2. instrument

3. price

4. quantity

5. classification of sale or purchase

6. classification of consignment or self-dealing

7. branch name or branch number

8. processing classification (normal, corrected, canceled)

9. order number (original order number in case of correction or cancellation)

10. account number

11. investor classification code

12. in the case of foreigners, whether or not they reside in Korea pursuant to Article 21 (2) (5) and whether or not they have a means of identifying themselves as foreigners. However, in the case of a foreigner who is treated as a national, the foreigner shall be classified as having no means of identification. <Revised 2024.2.20.> 13.

13. information of each of the following categories that can identify the order entry medium

A. IP address and MAC address in the case of home trading systems and via the Internet

B. Mobile phone number and device unique number in case of personal mobile devices and wireless internet phones

C. Unique device number in case of stock order only devices

D. Private IP address and MAC address in case of using the internal communication network of a financial investment company or Korea Securities Corporation

E. Any other information that can identify the order entry medium of the consignor.

③ A financial investment company may submit the selling price in the case of a purchase before the settlement date and the buying price in the case of a sale before the settlement date for the securities for which a purchase and sale contract has been concluded.

Article 31 (Effectiveness of Quotations, etc.) ① Quotations pursuant to Article 30 (1) shall be effective from the time of receipt of the quotation on the day of submission of the quotation until the purchase and sale transaction is established. However, if the trading transaction is suspended pursuant to Article 18.2, the quotations (excluding canceled quotations) entered during the suspension period shall not be recognized as effective.

② Cancellation and correction of quotations pursuant to Article 30.1 shall be made only if no trading transaction is established among the quotations received, and shall be processed in the order of receipt of corrected and canceled quotations.

Article 32 (Price Limit of Quotation) ① The quoted price of an item shall not be higher than the reference price plus the price limit or lower than the reference price minus the price limit.

(②) The price limit specified in Paragraph (1) shall be the amount calculated by multiplying the base price by 30/100, and the necessary matters related to the price limit shall be determined by the president of the Association.

③ Notwithstanding Paragraph (2), the price limit for the opening day of trading of a stock determined by the head of the Association may be determined differently by the head of the Association.

Article 33 (Quotation Unit) The quotation quantity unit of a stock shall be 1 share, and the quotation price unit shall be as determined by the chairman of the association.

Article 34 (Receipt of Quotations) ① The Association shall receive quotations through the quotation brokerage system.

② The Association may refuse to accept quotes that fall under any of the following items.

1. the highest bid price at the time of quotation submission is lower than the lowest ask price by more than the price unit determined by the president of the Association

2. a bid price that is higher than the lowest ask price at the time of submission and exceeds the price unit determined by the chairman of the association.

Article 35 (Trading Method) ① Trading transactions in the K-OTC market shall be concluded at the price if the bid and ask prices match between the parties.

② When concluding a purchase and sale transaction pursuant to Paragraph 1, the first price received shall take precedence over the second price received.

Article 36 (Notification and Confirmation of Trading Transactions) ① When a trading transaction is concluded, the Association shall immediately notify the financial investment company of the contents through the price intermediation system, and the financial investment company shall be deemed to have confirmed the contents when it receives the notification.

② The confirmation of the purchase and sale transaction pursuant to Paragraph 1 shall include the following items. <Amended 2020.10.20.> 1.

1. classification of sale or purchase

2. stock name

3. price and quantity

4. classification of consignment or self-dealing

5. name of financial investment company or financial investment company number

Article 37 (Suspension and Resumption of Trading) ① The Association may suspend the trading of a security if it is confirmed that the security falls under any of the following subparagraphs. However, when applying items 1 to 3, if the Association recognizes that it is impossible to submit periodic disclosure documents within the deadline due to natural disasters or similar unavoidable reasons, the Association may suspend the suspension of trading until the deadline set by the Association. <Amended 2020.3.11., 2020.10.20.> 1.

1. In the event of an untrue disclosure as specified in Article 49 or the designated entity fails to submit the semi-annual report by the statutory deadline (except for cases falling under items 2, 3 and 4): 1 business day <Revised 2024.2.20.> 2.

2. If any of the following items apply in relation to the submission of periodic disclosure documents

A. Failure to submit the financial year-end periodic disclosure documents within the deadline: from the day after the deadline to the day of submission

B. If a registered corporation or designated corporation that has failed to submit semi-annual periodic disclosure documents by the deadline at least once in the last four business years (in the case of a designated corporation, it shall apply from the business year in which the date of new designation falls) has failed to submit semi-annual periodic disclosure documents by the deadline for the most recent half-year: from the day after the deadline to the day of submission

3. When a reason for deregistration (except in the case of Article 9 (1) (8) and (14)) or a reason for designation (except in the case of Article 16 (1), which applies to Article 9 (1) (8) and (14)) occurs: The date of confirmation of the reason and the following three business days. However, in the case of Article 9.1.3 (including cases covered by Article 16.1.1), the period shall be from the date of confirmation of the total capital impairment status in the periodic disclosure document for the fiscal year ending period to the third business day after the deadline for submission of the periodic disclosure document for the fiscal year ending period (or, if it is confirmed that the total capital impairment status has been resolved by the deadline for submission of the periodic disclosure document for the fiscal year ending period, the date of such confirmation). <Amended 2016.12.13.>.

3 2. Notwithstanding Paragraph 3, if Article 9 (1) (8) of the reason for deregistration occurs: the next business day after the confirmation date <New 2016.12.13.> 4.

4. If the registered corporation does not disclose the inquiry disclosure requested under Article 47 by the deadline for submission: From the day after the deadline for submission to the day the result of the inquiry disclosure is disclosed. However, if the inquiry disclosure is requested for the contents corresponding to the reason for deregistration, it shall be from the time the inquiry disclosure is requested to the day the result of the inquiry disclosure is disclosed. <Amended 2024.2.20.> 5.

5. In the case of any of the following items related to the rehabilitation procedure under the Act on Debtor Rehabilitation and Bankruptcy

A. Application for initiation of rehabilitation proceedings: From the date of confirmation of the relevant reason to the date of confirmation of the court's decision to initiate rehabilitation proceedings

B. When a meeting of creditors is convened to approve a rehabilitation plan: from two business days before the date of the meeting to the date the result of the meeting is confirmed. However, in the case of a written resolution pursuant to Article 240 of the Act on the Rehabilitation and Bankruptcy of Debtors, the period shall be from the next business day following the day on which the court's decision on the purpose of the written resolution is confirmed to the day on which the result of the written resolution is confirmed.

C. Notwithstanding paragraphs (a) and (b), the Association may extend the suspension period if necessary for the protection of investors and market management.

6. When submission of share certificates is required for stock split, stock merger, or mutual conversion of par value shares and no-par value shares, or the equivalent in relation to electronically registered shares: Until the reason for suspension of trading is recognized as resolved <Revised 2019.9.9>.

7. If there is a concern that the entire quotation brokerage system may fail due to unavoidable reasons such as a price explosion: Until it is recognized that the reason for the suspension of trading transactions has been resolved.

8. If a suspicion falling under Article 45.1, Paragraph 17 is confirmed through public disclosure: The date of confirmation of the suspicion and the next business day thereafter <New 2022.10.18>.

9. If a violation of the accounting standards falling under Article 45 (1) (18) (hereinafter referred to as the accounting standards of Article 5 (3) of the External Audit Act) is confirmed through public disclosure: From the date of confirmation of the fact to the date of submission of the audit report in which the auditor's audit opinion is appropriate <New 2022.10.18.> <New 2022.10.18.> <New

10. If it is deemed necessary for market management pursuant to Article 55 (2) (4): The next business day after the date of the cause <New 2024.2.20>.

11. In other cases deemed necessary by the Association for the protection of investors: 1 business day <Revised 2022.10.18., 2024.2.20>.

② Notwithstanding Paragraph 1, the Association may extend the trading suspension period if the Association deems it necessary for the smooth operation of the K-OTC market and investor protection.

③ The Association shall confirm whether a designated item falls under any of Paragraph 1 (1) (1) (1) through (6), (8), (9), and (11) through information pursuant to Article 16 (3). <New 2020.10.20., Revised 2024.2.20> <New 2020.10.20.

④ The provisions of Paragraph (1) shall not apply during the period of trading transactions pursuant to Articles 11 and 16.2. <New 2024.2.20.> ④ The provisions of Paragraph (1) shall not apply during the period of purchase and sale transactions pursuant to Articles 11 and 16.2.

Article 38 (Correction of Erroneous Transactions) ① If a financial investment company makes an error in the process of submitting quotations to the K-OTC market or in the process of confirming the result of the execution of a purchase and sale contract, it may correct the execution of the purchase and sale contract by submitting an application for correction of erroneous transactions (the form of which shall be determined by the chairman of the association) to the association.

② Correction of mistaken transactions pursuant to Paragraph 1 shall be made in the form of securities or cash of the relevant financial investment company.

Section 4 Settlement of Purchase and Sale Transactions

Article 39 (Settlement Organization) ① The settlement organization of the K-OTC Market shall be a depository settlement source.

② Settlement of purchase and sale transactions shall be made through the settlement organization in Paragraph 1.

Article 40 (Payment Method) ① The Association shall immediately notify the Depository of the details of the transaction through the quotation brokerage system when the transaction is concluded.

② Trading transactions through the K-OTC market shall be settled on the third business day starting from the date of execution.

Article 41 (Prohibition of Delegation of Settlement) A financial investment company may not delegate the settlement of a purchase and sale transaction pursuant to Article 39 to a third party.

Article 42 (Settlement-related Regulations) ① The notification of trading data, correction of trading data, preparation of settlement data, and other necessary matters related to settlement shall be determined by the depository settlement center.

② If the Securities Depository and Clearing House enacts, amends or abolishes the regulations pursuant to Paragraph 1, it shall notify the Association.

Chapter 4 Disclosure of Registered Entities

Article 43 (Scope of Application) This Chapter shall apply only to registered corporations. <Revised 2020.10.20.>.

Article 44 (Sincere fulfillment of disclosure obligations and responsibilities) ① A registered corporation shall voluntarily and sincerely disclose the disclosure obligations set forth in these regulations and other matters related to corporate contents that may affect the stock price.

(②) A registered corporation shall ensure that the contents are not leaked or disseminated through rumors or reports before disclosing the contents pursuant to Paragraph (1).

③ A registered corporation shall be responsible for any matters arising from a violation of Paragraphs 1 or 2.

Article 45 (Report of Major Management Matters) ① A registered corporation shall report the contents of the facts or decisions to the Association in writing, electronically, or by facsimile transmission (FAX) (hereinafter referred to as "electronic documents, etc.") without delay if any of the following items apply. <Amended 2020.10.20., 2022.10.18> 1.

1. when a note or check issued by the Bank becomes dishonored or when transactions with the Bank are suspended or prohibited, and when transactions with the Bank are resumed

2. when the main business activity is suspended

3. when there are facts or court decisions falling under any of the following headings under the Act on Debtor Recovery and Bankruptcy

A. Application for initiation of rehabilitation proceedings, dismissal of application for initiation, decision on initiation, revocation of decision on initiation

B. The convening of a meeting of creditors to approve a rehabilitation plan and the results of the meeting of creditors

C. Approval or disapproval of the rehabilitation plan

D. Application for termination of rehabilitation proceedings, decision on termination, application for abolition, decision on abolition

E. Bankruptcy application, bankruptcy application dismissal, bankruptcy declaration

4. Decision to change the location of the headquarters, CEO (in the case of a company with an executive officer, it refers to the representative executive officer), name or business purpose

5. when there is a decision or a resolution of the board of directors regarding a merger with another corporation, transfer or transfer of important business, corporate division or split merger

6. when the reason for dissolution occurs in accordance with relevant laws, etc.

7. when there is a decision on capital increase or reduction

8. when a decision is made regarding stock split, stock merger or mutual conversion of par value shares and no-par value shares

9. when a decision is made to issue corporate bonds (including convertible bonds, warrants, subscription bonds, etc.)

10. a decision to acquire, transfer or assign patent rights on new substances or new technologies that will have a significant impact on the management and property of the registered corporation

11. when a decision is made to apply for deregistration pursuant to Article 10 (1) (a)

12. When the Board of Directors resolves on stock dividends

13. when the Board of Directors resolves to pay interim dividends

14. when the Board of Directors resolves to hold a shareholders' meeting and when the shareholders' meeting in connection therewith is concluded

15. the largest shareholder [refers to the largest shareholder pursuant to Article 2, Item 6 of the Act on the Governance of Financial Companies. In this case, "financial company" shall be deemed to be a "corporation" and "issued shares (including equity interests)" shall be deemed to be "issued shares"] when the change is made <Amended 2018.12.11.> 16.

16. When matters prescribed by the President of the Association occur in relation to the acquisition or loss of the status of small and medium-sized enterprises, medium-sized enterprises, and venture companies <Revision 2018.2.8> 17.

17. When an allegation of embezzlement or embezzlement by an employee is confirmed, and when the progress of repayment of the amount of embezzlement or embezzlement (including the withdrawal of a lawsuit) is confirmed or the fact of the allegation of embezzlement or embezzlement is confirmed. However, in the case of employees who are not executives, the amount of embezzlement or embezzlement shall be limited to the amount of the embezzlement or embezzlement that is greater than or equal to the amount determined by the President of the Association. <New 2022.10.18.> 18.

18. When a registered corporation or its employees (including retired or retired executives and employees) are prosecuted or notified by the Securities and Futures Commission in accordance with the Financial Services Commission's "Regulations on External Audit and Accounting, etc." or prosecuted by a public prosecutor for violation of accounting standards, or when the facts or results of such prosecution are confirmed <New 2022.10.18> <New 2022.10.18> 19.

19. When a matter that may have a significant impact on an investor's investment judgment in accordance with the provisions of items 1 through 18 occurs or is determined <Revised 2014.12.16., 2022.10.18> <New 2022.10.18>.

② Detailed disclosure guidelines such as the timing, contents, and documents of the disclosure matters specified in each subparagraph of Paragraph 1 shall be determined by the president of the Association.

Article 46 (Submission of Periodic Disclosure Documents) A registered corporation shall submit two copies of documents stating matters concerning the issuer pursuant to Article 2-18, Paragraph 1, Item 1 of the Regulations on Issuance and Disclosure of Securities set forth by the Financial Services Commission to the Association within 90 days after the end of each fiscal year and within 45 days after the end of each semi-annual period. In this case, the audit report and semi-annual review report shall be attached respectively. However, in the case of a corporation subject to submission of a business report, the business report pursuant to Article 159 (1) of the Act may be replaced with an audit report and the semi-annual report pursuant to Article 160 may be replaced with a semi-annual review report and submitted to the Association within the respective statutory deadlines. <Amended 2024.2.20

Article 47 (Inquiry Disclosure) ① The Association may request an inquiry disclosure from a registered corporation if any of the following items apply.

1. When it is necessary to confirm the facts of rumors or reports on the matters specified in Article 45 (1) or similar matters.

2. When it is necessary to verify the existence of important information, such as the stock price of the registered item, etc. that falls under the criteria separately determined by the Association.

The Association shall request the inquiry disclosure pursuant to Paragraph (1) by electronic document or other method, and shall disclose the fact of such request and its contents through the price brokerage system. <Revised 2022.10.18.>.

③ A registered corporation that is requested to make inquiry disclosure pursuant to Paragraph (1) shall make a written disclosure of the contents of the disclosure within one day from the date of the request and report it to the Association by electronic document or other method. <Amended 2022.10.18.> ③ The registered entity shall report the disclosure information to the Association in writing or electronically.

Article 48 (Calculation of the disclosure period, etc.) ① The calculation of the period related to the disclosure shall be in accordance with the following methods.

1. The first day of the period shall not be counted.

2. The disclosure periods in Articles 45 and 47 shall be calculated in business days (including holidays pursuant to Article 19 (1) (4) (hereinafter referred to as the same in this Article).

3. The disclosure period in Article 46 shall be calculated by including the day of closure pursuant to Article 19.1. In this case, if the last day of the disclosure period falls on a Saturday or public holiday, the disclosure period shall expire on the next day.

② The disclosure period shall be from 9:00 a.m. to 6:00 p.m. on business days (or, if the trading hours are changed pursuant to Article 18.2, at the beginning of the trading hours).

③ Notwithstanding Paragraph 2, if the Association deems it unavoidable in consideration of the disclosure processing time, it may extend the disclosure reporting deadline.

Article 49 (Designation of Insincere Disclosure Entity, etc.) ① The Association shall designate a registered corporation as an insincere disclosure entity if the registered corporation fails to report the disclosures pursuant to Articles 45 through 47 by the applicable disclosure reporting deadline, or if the registered corporation has repeatedly or falsely disclosed the disclosures.

② If the Association designates a registered entity as a non-disclosing entity, it shall disclose the fact through the price intermediation system without delay and notify the registered entity.

③ Notwithstanding Paragraph 1, a registered entity shall not be designated as a non-disclosure entity if any of the following applies.

1. If it is inevitable under other laws, regulations, etc. <Revised 2020.10.20> 2.

2. in the event of a natural disaster, rapid fluctuation in economic conditions, or other equivalent events

3. When deemed necessary for the public interest or investor protection

4. In other cases where the registered entity proves that it is not at fault or the Association recognizes that the matter is minor and does not have a significant impact on the stock price.

Article 50 (Disclosure by the Association) ① The Association shall place the registration application and accompanying documents in a designated place and make them available for public inspection for three years from the date of receipt.

② The association shall place the documents pursuant to Article 46 in a certain place and make them available for public inspection for three years from the date of receipt.

Article 51 (Report of Disclosure Officer) ① The disclosure under this Article shall be made by the disclosure officer of the registered corporation.

② A registered corporation shall designate one person in charge of disclosure and one person in charge of disclosure and report the same to the Association (the form shall be determined by the President of the Association), even if the person in charge of disclosure and the person in charge of disclosure are changed.

Chapter 5 Management of K-OTC Market

Article 52 (Publication of Quotations) ① The Association shall publish the quotations deemed necessary in connection with the purchase and sale transactions of stocks, such as prices and quotations formed in the K-OTC market, through the quotation brokerage system.

② The market price announcement pursuant to Paragraph (1) shall include any of the following items.

1. the reference price of the day

2. the day's trading price [current price, previous day's price (current price compared to the reference price), high price, low price, volume-weighted average price].

3. trading volume and transaction value

4. Quotation and number of quotations of a security

③ The Association may disclose information that may serve as a reference for investment judgment in order to protect investors.

Article 53 (Disclosure of Information) ① The Association shall disclose any of the following items without delay through the quotation brokerage system.

1. Change of affiliation

2. Newly registered (designated), changed (added), registered (designated), and deregistered (deregistered) stocks, and matters related to suspension and resumption of trading pursuant to Article 37

3. Temporary closure, temporary suspension of the market and change of trading hours

4. If the Association recognizes that it is impossible to submit the periodic disclosure documents within the deadline due to natural disasters or other unavoidable reasons, the name of the stock and the details and reasons for the delay <revised 2020.3.11> <revised 2020.3.11>.

5. Other matters deemed necessary by the Association

If the Association confirms that a registered corporation or designated corporation falls under any of the following items, it shall disclose it as an investment intention through the price brokerage system. However, when applying Paragraph 5, if the Association recognizes that it is impossible to submit the periodic disclosure documents within the deadline due to natural disasters or similar unavoidable reasons, the Association may suspend the disclosure until the deadline set by the Association. <Revised 2020.3.11.> 1.

1. as of the end of the most recent business year, the company is undercapitalized [equity minus capital is negative].

2. If the revenue of the most recent business year is less than KRW 500 million (KRW 300 million for crowdfunding companies registered under Article 5 (2)) <Revised 2020.10.20> 3.

3. If the auditor's audit opinion on the financial statements of the most recent business year is unqualified, disclaimer of opinion, or limited <Revised 2020.10.20., 2022.10.18>.

4. if the Company has applied to the court for the initiation of rehabilitation proceedings pursuant to the Act on Debtor Rehabilitation and Bankruptcy, if the rehabilitation case is ongoing, or if any reason falling under Article 9 (1) (7) of the Act has occurred

5. If any of the following applies to the submission of periodic disclosure documents

A. Failure to submit the periodic disclosure documents for the most recent fiscal year by the deadline. However, if the periodic disclosure document is submitted within 30 days from the day after the deadline, the reason for disclosure of investment matters shall be deemed to be resolved. <Revised 2024.2.20.> (Revised 2024.2.20.>)

B. Failure to submit semi-annual periodic disclosure documents by the deadline at least once in the last four business years (in the case of a designated entity, it shall be applied from the business year falling on the date of new designation).

6. the registered entity has been designated as a non-disclosing entity four or more times in the last two years

7. a registered corporation fails to meet the share distribution standard under Article 9 (1) (12) (applicable including the end of the business year to which the date of new registration or change of affiliation belongs). In this case, the Association shall disclose it as an investment intention in accordance with Article 9 (2) and (3).

8. If allegations falling under Article 45 (1) (17) are confirmed through the disclosure of the registered corporation. In this case, the Association shall disclose it as an investment decision until the fact of the allegations is confirmed through the disclosure of the outcome of the lawsuit. <New 2022.10.18.> 9.

9. In other cases deemed necessary by the Association for the protection of investors <Revised 2022.10.18.> <New 2022.10.18.>

③ The Association shall confirm whether the designated entity falls under any of the subparagraphs of Paragraph 2 through information pursuant to Article 16.3. <New 2020.3.11> ③ The Association shall verify whether the Designated Entity falls under subparagraph (2).

Article 54 (Right Lock Measures) ① If a fact that requires right lock measures is confirmed in connection with the purchase and sale transaction of a registered item, the date of such measures shall be as follows.

1. The trading day immediately preceding the reference day. However, if the reference date is a closing day or a suspension period, the trading day immediately preceding the first closing day or the start of the suspension period <Revised 2020.10.20> 2.

2. If the reference date is during the suspension period (excluding the initial suspension date), the date of release of the suspension <revised 2020.10.20>.

② Notwithstanding Paragraph 1, the Association may set a separate action date if it deems it necessary for the management of the K-OTC market.

Article 54.2 (Establishment of K-OTC Market Committee) The Association shall establish the 'K-OTC Market Committee' (hereinafter referred to as the "Committee" in this chapter) for the public interest, investor protection, and sound trading order of the K-OTC market.

[Adopted on December 11, 2018].

Article 54.3 (Composition of the Committee, etc.) ① The Committee shall consist of no more than five members, including one chairperson, and the chairperson and members shall be experts related to the K-OTC market appointed by the president of the Association.

② The chairperson shall represent the committee and preside over the meetings of the committee. However, if the chairperson is unable to fulfill his/her duties due to unavoidable reasons, a member designated by the chairperson from among the members organized under Paragraph 1 shall assume the duties of the chairperson.

③ The term of office of a committee member shall be two years and may be reappointed for consecutive terms. However, if a vacancy occurs and a new member is appointed, the term of the member shall be the remaining term of the predecessor.

④ The secretary of the committee shall be the head of the K-OTC department of the association.

[Amended 2018.12.11].

Article 54.4 (Deliberation of the Committee) ① The Association shall decide whether to register or deregister the K-OTC after deliberation by the Committee on the following matters.

1. Appeal pursuant to Article 7.2

2. Appeals pursuant to Article 9 (1) (17) (b) <Revised 2022.10.18>.

The Association may receive advice from the Committee if necessary for the public interest, investor protection, operation of the K-OTC market and sound trading order, etc.

[Amended 2018.12.11.].

Article 54.5 (Convening of the Committee) ① The Committee shall be convened by the Chairperson at the request of a member or an association or as deemed necessary by the Chairperson.

② The Committee may deliberate or advise in writing on any matter that the Chairperson recognizes as urgent or simple in relation to Article 54.4 due to unavoidable circumstances.

The Association may pay allowances and other necessary expenses to members attending the Committee within the scope determined by the Chairperson.

④ The secretary shall keep minutes of the committee's meetings. <Revised 2020.10.20.> (Revised 2020.10.20.>)

[Revised 2018.12.11.].

Chapter 6 Prevention of Unfair Trade Activities

Article 55 (Prevention of Unfair Trade Activities) ① If the Association deems it necessary to prevent unfair trade activities that harm the fair trading order in the K-OTC market, it may request preventive measures from financial investment companies related to accounts that may be subject to unfair trade activities, and the financial investment company that is requested to take preventive measures shall take appropriate measures to prevent unfair trade activities, such as warning the relevant custodian and refusing to accept orders.

② A financial investment company shall notify the Association by the 10th day of the following month after the end of each quarter if it has taken preventive measures to prevent illegal transactions in accordance with the internal regulations related to the prevention of illegal transactions or the Association's request for preventive measures pursuant to Paragraph 1. However, if the financial investment company refuses to accept the consignee's order, it shall notify the Association by the next business day of the day (including the closing day pursuant to Article 19 (1) (4)).

③ Detailed guidelines related to the prevention of illegal transactions, such as the selection criteria for accounts that may be subject to illegal transactions pursuant to Paragraphs 1 and 2, the criteria for requiring preventive measures, and the procedure for requiring preventive measures, shall be separately established by the Association.

Article 55.2 (Designation and publication of investment caution items, investment warning items, investment risk items, etc.) ① The Association may designate and publicize stocks that require investors' attention as investment caution items in order to prevent unfair transactions and protect investors.

② The Association may designate and announce stocks whose stock price is rapidly increasing for a certain period of time as investment warning stocks in order to prevent unfair trade and protect investors.

③ The Association may designate and announce a stock as a risky investment if the stock price increases rapidly within a certain period of time even after being designated as an investment warning stock.

④ The Association may suspend the trading of a stock for a certain period of time if any of the following items apply.

1. If the stock price rises sharply even after being designated as an investment warning item

2. the stock is designated as a risky investment

3. if the stock price increases rapidly even after being designated as a risky investment.

⑤ Notwithstanding the provisions of Paragraphs 2 through 4, the Association may not designate or suspend the trading of an investment warning item or investment risk item if it is deemed to be significantly inappropriate.

⑥ The President of the Association shall determine the necessary matters regarding the designation, exemption from designation, and publication of investment caution items.

⑦ The president of the association shall determine the necessary matters regarding the designation, exclusion, de-designation, publication, and suspension of trading of investment warning items and investment risk items.

[Article 2024.2.20].

Chapter 7 Bylaws

Article 56 (Trading Qualifications) ① A person who can participate in buying and selling transactions on the K-OTC market shall be a financial investment company that is a member of the Association.

② If a financial investment company pursuant to Paragraph (1) intends to newly participate in or discontinue trading in the K-OTC market, it shall notify the Association in advance.

Article 56.2 (Electronic Documents) ① If a registered corporation submits the disclosures and various documents (hereinafter referred to as "documents, etc.") required to be submitted or reported to the Association pursuant to this Regulation by means of electronic documents, it shall be deemed to have fulfilled the number of submissions specified in this Regulation.

The Association may refuse to accept the documents submitted or reported by the registered entity if they need to be corrected or supplemented or if other unavoidable reasons arise.

[Amended 2022.10.18].

Article 57 (Operation of Price Bulletin Board) ① If a financial investment company intends to broker over-the-counter transactions in sovereign securities in accordance with Article 177 of the Act, the Association may, upon the application of the financial investment company, publish the relevant quotations and purchase and sale prices.

② The details of the publication of quotations and purchase and sale prices of OTC transactions pursuant to Paragraph (1) shall be determined by the President of the Association.

Article 57.2 (Operation of K-OTC PRO) ① The Association may separately operate a computerized system (hereinafter referred to as the "K-OTC PRO System") that enables a person who falls under any of the subparagraphs of Article 11.2 of the Act and a person recognized by the Association (hereinafter referred to as a "K-OTC PRO Member"), including a professional investor, to post the quotations and purchase and sale prices of equity securities in accordance with Article 178.1 (1) (2) and Article 5-2 (2) of the Financial Investment Business Regulations, upon the application of a K-OTC PRO Member.

② The details of the operation of the K-OTC PRO System, including the qualification of K-OTC PRO members pursuant to Paragraph 1, and the posting of quotations and sale prices, shall be determined by the President of the Association. <Revised 2017.06.20.> <Revised 2017.06.20.>.

Article 58 (Transaction Fee) ① The Association may collect a transaction fee from a financial investment company within the range of one-tenth of 10,000th of the purchase and sale contract price when the financial investment company concludes a purchase and sale through the K-OTC market or the price bulletin board pursuant to Article 57 (1).

② The details of the collection of transaction fees pursuant to Paragraph (1) shall be prescribed by the President of the Association.

Article 59 (Details) The details and necessary forms for the implementation of this regulation may be prescribed by the president of the association.

Supplementary Rules (2014.6.17)

Article 1 (Effective Date) These Regulations shall take effect on the date determined by the President of the Association in 2014.

Article 2 (Amendment and Abolition of Other Regulations) ① In Article 5, Paragraph 2, Item 2 of the Board of Directors' Operating Regulations, "Regulations on Quotation Brokerage of OTC Stocks" shall be amended to "K-OTC Market Operating Regulations".

② The "Regulations on Quotation Brokerage of OTC Stocks" (hereinafter referred to as the "Previous Regulations") shall be abolished.

Article 3 (Application to New Registrations) ① Article 5 shall apply to entities that apply for new registration for the first time after the enforcement of these Regulations.

② An organization that applied for a new designation under the previous regulations at the time of the enforcement of these Regulations shall be deemed to have applied for a new registration under Article 6. However, in this case, the requirements under Article 3 of the previous regulations shall be applied to determine whether or not to register.

Article 4 (Application of Deregistration, etc.) ① At the time of the enforcement of these Regulations, designated corporations under the previous regulations and corporations registered pursuant to Article 3, Paragraph 2 of the Supplementary Regulations (hereinafter referred to as "existing corporations") shall be subject to Article 9, Paragraph 1, Items 3 through 5, Subparagraph 6 (excluding matters relating to semi-annual sales), and Article 12, beginning with the 2016 fiscal year (the fiscal year ending on December 31, 2016, as follows) of such corporations.

② For existing corporations, Article 9 (1) (3) through (5), subparagraph (6) (excluding matters relating to semi-annual sales), subparagraph (10) of the same paragraph, and subparagraph (2) of Article 37 (1) shall apply from the first half of the next fiscal year following fiscal year 2016.

③ Prior to the application of Article 9 (1) (5) pursuant to Paragraph 1, the requirements under Article 7 (1) (5) of the previous Regulations shall apply to existing corporations.

Article 5 (Example of Application Regarding Investment Matters) Article 53 (2) (5) and (7) shall be applied to existing corporations from the end of the business year that falls on the date of enforcement of this Regulation, and subparagraph (5) of the same paragraph shall be applied from the first semi-annual period following the enforcement of this Regulation.

Article 6 (Application of Transaction Fee) The transaction fee pursuant to Article 58 shall apply to transactions executed through the K-OTC Market or the price board pursuant to Article 57 (1) after the enforcement of this Regulation.

Article 7 (General Transitional Measures) Acts under the existing regulations at the time of the enforcement of these Regulations shall be deemed to be acts under these Regulations.

Article 8 (Transitional Measures for Designated Securities under the Previous Regulations) Securities designated under the previous regulations at the time of the implementation of these Regulations shall be deemed to be registered under these Regulations.

Article 9 (Transitional Measures for Affiliation) A designated entity under the previous regulations at the time of the enforcement of these Regulations shall change its affiliation to the Department of Registered Companies pursuant to Article 4, Paragraph 1, Item 1 on the effective date of these Regulations.

Article 10 (Transitional Measures for Participation in Trading Transactions) A financial investment company that is participating in trading transactions on the free board under the previous regulations at the time of the enforcement of this regulation shall be deemed to be participating in trading transactions on the K-OTC market in accordance with Article 56.

Supplementary Regulation (2016.6.21)

These Regulations shall take effect on August 1, 2016.

Supplementary Regulation (December 13, 2016)

This rule is effective as of December 14, 2016.

Addendum (April 18, 2017)

This rule is effective as of April 18, 2017.

Addendum (June 20, 2017)

This rule is effective as of June 20, 2017.

Addendum (2.8.2018)

This rule is effective as of February 8, 2018.

Addendum (December 11, 2018)

This Rule is effective as of December 11, 2018. However, the amendments to Article 5 shall apply to the first entity to apply for registration after the enforcement of these Regulations.

Supplementary Regulations (June 11, 2019)

These Regulations shall take effect from the effective date of the legislative notice (Financial Services Commission Notice No. 2018-302) entitled "Proposed Ordinance for Partial Amendments to the Enforcement Decree of the Act on Capital Market and Financial Investment Business" and the regulatory change notice (Financial Services Commission Notice No. 2018-304) entitled "Proposed Regulations for Partial Amendments to the Financial Investment Business Regulations".

Supplementary Regulations (September 9, 2019)

These Regulations shall take effect on September 16, 2019, the effective date of the Act on Electronic Registration of Stocks, Bonds, etc. (Act No. 14096 of March 22, 2016).

Supplementary Regulations (2020.3.11)

These Regulations shall enter into force on March 12, 2020.

Addendum (2020.10.20)

This rule is effective as of October 21, 2020.

Addendum (Feb 22, 2022)

This rule is effective as of February 23, 2022. However, the amendments to Article 26 shall be effective for a period of time determined by the President of the Association.

Addendum (May 18, 2022)

These Regulations shall take effect from May 19, 2022.

Addendum (2022.10.18.)

These Rules shall take effect on October 19, 2022. However, the amendments to Article 5, Article 9 (1), Article 16 (1), Article 37 (1), Article 45 (1) (17 through 19), Article 53 (2), and Article 54 (4) (1) (2) shall take effect on January 19, 2023.

Supplementary Regulations (2024.2.20.)

Article 1 (Effective Date) These Regulations shall take effect on July 1, 2024. However, Article 37, Paragraph 1, Item 10 and Article 55, Paragraph 2 shall be enforced from the date determined by the bylaws within a range not exceeding one year from the date of amendment.