Eight companies have recently been delisted from the KOSDAQ market due to failure to meet the minimum market capitalization requirements.
These requirements were strengthened in July, raising the threshold, which raises concerns that dozens more companies could be removed from the stock market or transferred to KONEX by mid-October if their market caps fall below 20 billion won.
According to the Korea Exchange on September 25, the KOSDAQ companies that have been delisted this year due to insufficient market capitalization (excluding SPACs) include Koiz, Wonpung Mulsan, Silla SG, KM Pharmaceutical, Gold & S, Susung Webtoon, AFW, and Sejin T&S.
In the first half of the year, there were no delistings due to market cap deficiencies on the KOSDAQ, but the domestic stock market has experienced significant volatility and a concentration of large-cap stocks, leading to an increase in delistings in the second half.
Since the beginning of the year, the authorities have raised the minimum market cap requirement for KOSDAQ listings from 4 billion won to 15 billion won. The companies that were delisted failed to meet this new standard.
With the threshold set to increase to 20 billion won in July, companies with market caps between 15 billion and 20 billion won are also expected to face delisting risks starting mid-October.
According to regulations, if a company's market cap falls below 20 billion won for 30 consecutive trading days, it is designated as a management issue. If it fails to exceed the market cap requirement for 45 out of the following 90 trading days, it faces delisting. The assessment of whether a company meets this 45-day requirement will first occur in mid-October.
As of now, a total of 17 KOSDAQ-listed companies have been designated as management issues due to market cap deficiencies since the 30-day mark was reached on August 12.
The Korea Exchange anticipates that around 50 companies will be delisted from the KOSDAQ due to the strengthened market cap criteria in the second half of the year.
In the KOSPI, one company was delisted in the first half due to market cap deficiencies, and on September 23, SHD was also delisted. Currently, 13 companies have been designated as management issues due to the strengthened criteria.
Gold & S, KM Pharmaceutical, and recently designated management issues Juyun Tech and CS have filed for a suspension of the management issue designation, contesting the decision with the exchange and the courts.
A new regulation to delist 'penny stocks' with prices below 1,000 won was also implemented in July, resulting in 15 KOSPI companies and 30 KOSDAQ companies being designated as management issues. These companies will also face delisting decisions in mid-October if they fail to maintain prices above 1,000 won for 45 consecutive trading days.
Previously, companies facing delisting solely due to market cap deficiencies would have been removed from the stock market immediately. However, financial authorities have allowed certain companies that meet specific conditions to transfer to KONEX without undergoing liquidation trading. This measure was introduced in response to concerns about profitable companies being delisted simply for falling below market cap thresholds.
Companies that have reported operating profits in two out of the last three years, or have reported an operating profit in one year with equity exceeding 2 billion won, may be eligible for transfer to KONEX.
Among the KOSDAQ companies that have been confirmed for delisting, Koiz and Wonpung Mulsan have already completed liquidation trading and were removed on September 14 and 21, respectively. The remaining companies are expected to review their eligibility for transfer to KONEX based on whether they meet the conditions. Silla SG has already announced its intention to transfer to KONEX on September 11.
* This article has been translated by AI.
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