Shares of Lab Genomics, a KOSDAQ-listed company, were priced at 2,560 won last August. However, the stock has plummeted to the 600 won range this month due to poor performance. As a result, the company was designated as a managed stock on the 12th due to its low stock price. If the stock price does not exceed 1,000 won for more than 45 trading days within the next 90 days, it faces delisting. To avoid this, the company will hold an extraordinary general meeting on the 18th to propose a 5-for-1 stock consolidation and has added real estate leasing to its business scope through a charter amendment.
Following stricter delisting criteria, 36 companies with low stock prices and market capitalization were designated as managed stocks, leading to a sharp decline in their stock prices on the 13th. Analysts attribute this to the stigma effect of being labeled as a managed stock, which has impacted investor sentiment. Companies facing immediate pressure are preparing last-ditch efforts to escape delisting.
Stocks at Risk of Delisting Plunge Up to 28%
According to the Korea Exchange, a total of 36 companies were designated as managed stocks due to failing to meet stock price and market capitalization criteria as of the previous day (12th). This includes nine from the KOSPI and 27 from the KOSDAQ. The stock prices of these companies dropped sharply as trading began on the 13th.
Among the 27 KOSDAQ-listed companies designated as managed stocks, 23 saw their stock prices decline compared to the previous day, with an average drop of 8.1%. As concerns over delisting became a reality, investor sentiment quickly froze. The nine companies on the KOSPI have already halted trading.
The largest drop was recorded by Noeul, whose stock price fell from 656 won on the 12th to 469 won, a decrease of 28.51%. E8 also dropped 21.95%, from 706 won to 551 won, while SDN fell 19.91%, from 693 won to 555 won. Other companies, including Woori Enterprise (-18.87%), East Aid (-14.67%), and Chaperon (-14.66%), also experienced double-digit declines.
In contrast, only four companies saw their stock prices rise. CMG Pharmaceutical closed up 10.18% at 671 won, while Hantop (5.72%), Fashion Platform (3.19%), and Ice Cream Edu (0.11%) also posted slight gains.
Responses Vary: Stock Consolidation, Legal Action, and More
Being designated as a managed stock does not immediately mean delisting. However, for penny stocks, they must raise their prices above 1,000 won for 45 trading days within the next 90 days to avoid delisting, a challenging requirement.
Consequently, companies designated as managed stocks are taking various measures to escape delisting. A common strategy is stock consolidation. JM-I and BK Holdings both decided on a 5-for-1 stock consolidation, while Lab Genomics plans to implement its consolidation on the 18th. Among the 36 companies designated as managed stocks, 20 have decided or implemented stock consolidations or buybacks. Four companies, including JM-I, SDN, Omni System, and Fashion Platform, have opted for both stock consolidation and buybacks.
More companies are expected to pursue legal action. Some have already filed injunctions related to their designation as managed stocks. The Korea Exchange is also considering strengthening its internal organization to prepare for potential legal responses from companies.
The push for legal action stems from concerns over shareholder lawsuits against management due to the revised Commercial Act's 'duty of loyalty' for directors. If a company designated as a managed stock subsequently faces delisting, minority shareholders are likely to sue the management.
Lee Hyung-jin, a lawyer at Barun Law LLC's delisting response team, stated, "As the criteria for market capitalization are raised, companies at risk of being designated as managed stocks are also ramping up their responses. For companies struggling to meet stock price and market capitalization requirements, it is becoming more common to consider legal actions such as injunctions from the stage of being designated as managed stocks."
* This article has been translated by AI.
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