Yeouido financial district in Seoul. Yonhap News
Tighter listing rules aligned with the government-led stock market value-up policy have passed the one-month mark, and the market exit process for so-called “marginal companies” that fail to meet share price and market capitalization standards is now in full swing. Within three days, some 50 companies filed disclosures warning of potential designation as administrative issues due to failing to meet the share price standard, while listed firms facing delisting over insufficient market capitalization amount to 10% of all KOSDAQ stocks.
According to the Korea Exchange (KRX) and the Financial Supervisory Service (FSS) on the 9th, as of the 7th, a total of 48 listed companies filed disclosures warning of potential administrative issue designation over share prices below 1,000 won—38 on KOSDAQ and 10 on KOSPI (excluding preferred shares). The move follows the Korea Exchange’s introduction of a new requirement on July 1, under which a company is designated an administrative issue if its share price stays below 1,000 won for 30 consecutive trading days.
On the 5th alone, the 25th trading day after the system took effect, 43 companies poured out disclosures, with three more added on the 6th and two on the 7th. If these companies fail to recover the 1,000 won level by the 12th, they will be collectively placed on the administrative issue list on the 13th. Once designated an administrative issue, a company can shed the label only by maintaining a price of 1,000 won or higher for 45 consecutive trading days within a 90-trading-day period. Failure to do so leads immediately to delisting procedures. Including companies that have filed warning disclosures, the total number of listed firms with share prices below 1,000 won reaches 131 on KOSDAQ and 32 on KOSPI.
There are also numerous stocks facing delisting risk due to the tightened market capitalization requirement. The market cap threshold was raised from 20 billion won to 30 billion won for KOSPI, and from 15 billion won to 20 billion won for KOSDAQ. Since July 1, a total of 56 listed companies (44 on KOSDAQ and 12 on KOSPI) have filed disclosures warning of insufficient market capitalization. Half of them, 28 companies, have already been placed on the administrative issue list. As of the 7th, listed companies that failed to meet the revised market capitalization standard numbered 41 on KOSPI (excluding preferred shares) and 194 on KOSDAQ. This means 10.6% of KOSDAQ’s 1,820 listed companies are within sight of being pushed out. These companies, too, will be ejected from the market if they fail to exceed the standard for 45 consecutive trading days within a 90-trading-day period after being designated administrative issues.
Listed companies driven to the edge are struggling to devise remedies, but only a few can implement practical solutions. KOSPI-listed Juyoung Tech and Ascendio carried out paid-in capital increases. SH Energy & Chemical pulled out the card of executives buying treasury shares. KOSDAQ-listed companies including Sejin T&S, Yukil C&S, and KM Pharmaceutical also announced plans to acquire treasury shares. Options such as par value consolidation or mergers and acquisitions (M&A) are being discussed, but analysts say these are unlikely to serve as clear breakthroughs for small companies.
