(Seoul = Yonhap News) Reporter Hwang Cheol-hwan = The court has put the brakes on the movement of the financial authorities and the Korea Exchange, which have been pushing for the rapid exit of KOSPI and KOSDAQ listed companies by strengthening market capitalization requirements.
According to the financial investment industry and the legal community on the 4th, the 51st Civil Affairs Division of the Seoul Southern District Court cited the application for a temporary injunction to suspend the delisting decision filed against the Korea Exchange by KOSPI-listed company Juyeon Tech [044380] and KOSDAQ-listed company KM Pharmaceutical [225430] on the 2nd.
The court is said to have pointed out as a problem the provision that a company designated as a management stock due to an insufficient market capitalization would be delisted if it failed to exceed the market capitalization threshold for 45 consecutive trading days within 90 trading days.
In particular, it is said that it was judged that the principle of proportionality and predictability were undermined in the case of advancing the implementation period of raising the market capitalization standards of KOSPI 30 billion won and KOSDAQ 20 billion won, which were originally scheduled to be applied in January next year, to July this year.
The Financial Services Commission and the Korea Exchange have been applying the market capitalization standard of 20 billion won for KOSPI and 15 billion won for KOSDAQ from January 1, 2026.
The original plan was to gradually increase it every year to KRW 30 billion for KOSPI and KRW 20 billion for KOSDAQ in 2027, and KRW 50 billion for KOSPI and KRW 30 billion for KOSDAQ in 2028. However, it was later decided to advance the plan on a semi-annual basis and the standards were immediately raised to KRW 30 billion for KOSPI and KRW 20 billion for KOSDAQ starting last July.
The standard for exiting managed items was also significantly strengthened from '10 consecutive trading days and 30 cumulative trading days' to exceeding the standard of '45 consecutive trading days' for 90 trading days.
The court is known to have judged that even though the standards for maintaining listing were raised, relevant companies were not given sufficient opportunities to express their opinions or raise objections, and sufficient grounds were not provided for raising the standards for exiting managed stocks.
Juyeon Tech and KM Pharmaceutical announced that following the court's decision to uphold the injunction, the effect of the delisting decision will be suspended until the main judgment is confirmed, and the liquidation sale process will not proceed.
Accordingly, the Korea Exchange decided to delist for the same reason and suspended trading of APW [312610] and Sejin TS [067770], which had been undergoing liquidation sales since the 23rd and 29th of last month, respectively, and put on hold the procedures related to delisting.
There is also a high possibility that the delisting process for other companies that are at risk of expulsion due to failing to meet the market capitalization standard and being coin stocks with a stock price of less than 1,000 won will also be delayed.
The Korea Exchange plans to closely review the situation and consult with financial authorities to determine future response directions.
The industry does not seem to be ruling out the possibility of starting discussions to reform the system, as questions have been raised about the effectiveness of the regulations related to delisting of companies with insufficient market capitalization.
