The KOSDAQ market's "delisting blacklist" was unveiled on July 1, marking a significant shift as stocks priced below 1,000 won and those with market capitalizations under 20 billion won face delisting reviews. Full enforcement of these measures is expected to begin in October. The Korea Exchange anticipates that 88 companies will be delisted this year, but market analysts predict that the actual number could be much higher. In response, companies are making significant efforts to avoid delisting, with stock mergers increasing approximately 24 times compared to last year, alongside a surge in leadership changes and contract disclosures.
According to the Financial Supervisory Service's electronic disclosure system, since the announcement of stricter delisting criteria on February 12, there has been a notable rise in leadership changes, stock mergers, and supply contract disclosures among KOSDAQ-listed companies. Stock mergers jumped from eight last year to 188 in the first half of this year, a staggering increase of 23.5 times. This trend is primarily driven by companies attempting to artificially inflate their stock prices to meet the new delisting criteria.
Leadership changes have also surged, with disclosures rising from 231 last year to 260 this year, a 12.6% increase. Disclosures related to single sales and supply contracts, typically seen as positive news, rose from 399 to 631, marking a 58.1% increase. Notably, voluntary disclosures of single sales and supply contracts by companies not required to disclose (those with sales below 10% of total revenue) surged from 59 last year to 139 in the first half of this year, a 135.6% increase.
Market analysts believe that the increase in leadership change and contract disclosures is closely linked to the tightening of delisting criteria, as such disclosures are often perceived by investors as positive indicators that could boost stock prices. Jeong Ji-soo, a senior researcher at the Capital Market Research Institute, warned that there is a growing risk of illegal activities by struggling companies exposed to delisting risks, highlighting the need for detailed management and investor protection systems.
Despite these corporate maneuvers, a wave of delistings is expected to begin in the fourth quarter of this year. The Korea Exchange predicts that the number of KOSDAQ companies facing delisting will rise from 38 last year to 88 this year, but the actual number of companies under review is likely to be much higher. As of June 30, there were 80 companies designated as management issues on the KOSDAQ. Additionally, there are 156 stocks priced below 1,000 won and 159 companies with market capitalizations below 20 billion won (including SPACs). Even accounting for overlaps, analysts estimate that over 200 companies are at risk of delisting.
* This article has been translated by AI.
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