As interest grows in the effectiveness of delisting regulations following a recent court ruling, the Korea Exchange announced it will soon disclose follow-up measures regarding formal delisting criteria, including market capitalization and penny stocks.
Kim Sung-cheon, head of the disclosure system team at the KOSDAQ market division, addressed related questions during the 'KOSDAQ Day' event held at the Korea Exchange in Yeouido, Seoul, on October 6. He stated, "There has been a recent court decision, and we are pursuing follow-up measures in the listing department. While I cannot provide specific details as we are currently in internal discussions, we will have an explanation soon."
Delisting in the KOSDAQ market is primarily divided into two categories: formal review-based delisting and substantive review-based delisting. The formal review process involves the removal of companies that do not meet the criteria set forth in the listing regulations.
If a listed company fails to meet requirements such as trading volume or stock distribution, it may be designated as a management issue, leading to delisting procedures. If problems persist after a designated improvement period, delisting may be decided. In cases of bankruptcy or issues related to audit opinions, delisting can occur without a separate improvement process.
Recently, the formal delisting criteria have been tightened. Since July, the exchange has applied a market capitalization threshold of 30 billion won for KOSPI and 20 billion won for KOSDAQ. Additionally, new criteria for so-called penny stocks, defined as companies with stock prices below 1,000 won, have been introduced. This change aims to prevent companies that do not meet minimum requirements from remaining in the market for extended periods, which could undermine investor confidence.
However, the recent court ruling has introduced variables into the delisting process. On October 2, the 51st Civil Division of the Seoul Southern District Court granted a provisional injunction against the delisting decisions of KOSPI-listed Juyun Tech and KOSDAQ-listed KM Pharmaceutical, which had been filed against the Korea Exchange.
The court reportedly pointed out issues with provisions that mandate delisting if a company designated as a management issue fails to exceed the market capitalization threshold for 45 out of 90 trading days. It also criticized the decision to advance the implementation date of the increased market capitalization thresholds from January of next year to July of this year, stating it violated the principles of proportionality and predictability.
In response, the Korea Exchange has indicated it is reviewing follow-up measures in light of the court's decision. This could impact the delisting procedures for companies facing removal from the market, and the exchange is expected to formulate specific response strategies.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.