At an event marking the 30th anniversary of the Kosdaq market held at the Korea Exchange conference hall on the 2nd, Lee Seok-woo, team leader of the Exchange’s Technology Company Listing Department, explains the substantive review process. Reporter Byun Su-yeon
The KOSDAQ market, marking its 30th anniversary, is pursuing structural reform aimed at strengthening the removal of troubled companies while expanding listings for innovative firms. The Korea Exchange (KRX) forecast that under its strengthened delisting rules, around 50 KOSDAQ-listed companies could be removed from the market this year based on failing to meet market capitalization requirements alone.
At an event held Wednesday at the Korea Exchange in Yeouido, Seoul, to mark the 30th anniversary of the KOSDAQ market’s establishment, Kim Sung-cheon, head of the disclosure system team at the exchange’s disclosure department, said, “As requirements for penny stocks and market capitalization are strengthened from the second half of the year, formal delistings will increase significantly.” He added, “We expect about 50 companies to become subject to delisting this year based on the market capitalization criteria alone.” He continued, “There is a possibility that the first case of a watch-list designation due to failing market cap requirements could emerge as early as next month.”
As of June 30, a total of 13 companies were ultimately delisted from KOSDAQ this year, comprising nine formal delistings and four delistings following substantive review.
The exchange implemented its strengthened delisting rules starting Tuesday. For KOSDAQ, companies that fail to meet market capitalization (20 billion won) and share price (1,000 won) criteria for a certain period are designated as watch-list issues before undergoing delisting procedures. The market capitalization criterion will be strengthened in stages, rising to 30 billion won for KOSDAQ from January next year. Both measures are being implemented six months and one year ahead of the original schedule, respectively.
The exchange also shortened its substantive delisting review procedures. Oh Jae-hwa, head of a team at the listing management department, explained, “We have reduced the existing three-tier review system to two tiers and shortened the improvement period granted to companies from a maximum of two years to one year.” The penalty point threshold for disclosure violations was also strengthened from 15 points to 10 points, and “intentional serious violation of disclosure obligations” was added as a new review ground.
Instead of raising the threshold for removing troubled companies, the exchange is expanding listing opportunities for innovative firms. Starting Tuesday, the exchange introduced industry-specific technology special listing review criteria for the advanced robotics, cybersecurity, and K-content sectors. For advanced robotics, it focuses on commercialization and mass-production capabilities; for cybersecurity, on certifications and securing major clients; and for K-content, on content competitiveness and intellectual property (IP) scalability.
Lee Seok-woo, head of a team at the technology company listing department, said, “By establishing review criteria suited to industry characteristics, we will enhance predictability for companies preparing to list and their underwriters, and support financing for innovative firms.” He added, “In the second half, we plan to expand the applicable sectors to include areas such as defense.”