As three months have passed since the strengthening of delisting requirements, the fortunes of companies have diverged. Some firms that fell short of market capitalization and stock price criteria when the system was implemented in July have been delisted, while others are seeking to survive by recovering standards or transferring to KONEX and pursuing legal action.
According to the Korea Exchange, from July 1 to October 2, a total of 16 companies (excluding SPACs) were delisted from the KOSPI and KOSDAQ markets. Of these, 15 were from KOSDAQ and one from KOSPI.
Among them, the companies that were directly delisted due to failing to meet market capitalization requirements are KoiZ, Wonpung Industrial, and Susung Webtoon, all from KOSDAQ. KoiZ was delisted on September 14, followed by Wonpung Industrial on September 21, and Susung Webtoon on October 1.
Since the implementation of the new regulations in July, the situation has changed significantly.
The financial authorities raised the market capitalization maintenance criteria to 30 billion won for KOSPI and 20 billion won for KOSDAQ starting in July. They also introduced a new standard for 'penny stocks,' which states that stocks must not fall below 1,000 won for 30 consecutive trading days.
At that time, there were concerns that many companies falling below the strengthened criteria could be designated as management stocks. Indeed, companies like Wonpung Industrial, Shilla SG, KM Pharmaceutical, and Susung Webtoon were designated as management stocks in July due to failing to meet market capitalization requirements, signaling the first warning.
From August, the designation of management stocks became more pronounced. On August 12 alone, 36 stocks were designated as management stocks or had additional reasons for designation due to failing to meet market capitalization and stock price criteria. Of these, 24 were due to stock price issues, nine due to market capitalization, and three companies fell under both criteria.
After September, the warning of 'management stocks' led to actual delistings. As of September 25, the number of KOSDAQ-listed companies that received delisting decisions due to market capitalization failures rose to eight, including KoiZ, Wonpung Industrial, Shilla SG, KM Pharmaceutical, Gold & S, Susung Webtoon, AFW, and Sejin TS.
While only KoiZ and Wonpung Industrial were actually delisted at that time, Susung Webtoon was also delisted later, bringing the total number of companies delisted due to market capitalization failures to three as of October 2.
Conversely, not all companies disappeared from the market immediately.
The financial authorities have amended the system to allow companies that meet certain financial requirements to transfer to KONEX without a trading suspension if they are delisted solely due to market capitalization failures. This applies to companies that have positive operating profits in two out of the last three years or have one year of profit with equity exceeding 20 billion won.
Shilla SG is pursuing a transfer listing to KONEX using this system. This means that companies with a certain level of profitability and capital strength can remain in the market even after being delisted from KOSDAQ.
Some companies have opted for legal action. Gold & S and KM Pharmaceutical have filed for injunctions against the exchange's decisions, contesting the delisting process.
Meanwhile, some companies have managed to raise their market capitalization or stock prices to resolve their management stock status. OSP, for instance, resolved its market capitalization failure on September 29 and exited the management stock designation.
New entries into management stocks continue. In September, companies like Fintek, KS Industry, SJ Group, Genitics, Hanju ART, Kookyoung G&M, and FromBio were designated as management stocks due to market capitalization failures, and in October, EnGen Bio and Benoti & R were newly added.
In this context, authorities have postponed the timeline for further tightening of criteria. Initially, the plan was to raise the market capitalization maintenance criteria to 50 billion won for KOSPI and 30 billion won for KOSDAQ starting in January next year, but this has been delayed by six months to July next year.
As warnings of 'delisting possibilities' that existed until July have materialized into actual delistings within three months, the next point of interest will be how the remaining management stocks recover their standards and survive.
* This article has been translated by AI.
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