Three months have passed since financial authorities tightened the criteria for delisting companies. As of July 1, the minimum market capitalization for maintaining a listing was raised to 30 billion won for KOSPI and 20 billion won for KOSDAQ, with stricter measures against so-called penny stocks. Following these changes, over 60 listed companies have been designated as management issues, with eight receiving delisting decisions, and three confirmed to have been delisted.
Three Companies Delisted, Over 60 Designated as Management Issues
According to the Korea Exchange on October 5, a total of 16 companies (15 from KOSDAQ and one from KOSPI) were delisted between July 1 and October 2. Among these, three KOSDAQ companies—Koiz, Wonpung Mulsan, and Susung Webtoon—were delisted due to the new criteria for market capitalization. Koiz was delisted on September 14, followed by Wonpung Mulsan on September 21, and Susung Webtoon on October 1.
Since July, financial authorities have raised the market capitalization maintenance criteria to 30 billion won for KOSPI and 20 billion won for KOSDAQ, while also introducing a new standard for penny stocks, which states that companies whose stock prices fall below 1,000 won for 30 consecutive trading days will face stricter delisting requirements. Following the introduction of these criteria, the number of companies designated as management issues surged. In July, companies such as Wonpung Mulsan, Shilla SG, KM Pharmaceutical, and Susung Webtoon were flagged for failing to meet market capitalization requirements.
In August, the designation of management issues accelerated, with 36 companies being flagged on a single day, August 12, due to market capitalization and stock price failures.
After September, the situation escalated from management issues to actual delisting. As of September 25, eight KOSDAQ companies had received delisting decisions due to market capitalization failures, including Koiz, Wonpung Mulsan, Shilla SG, KM Pharmaceutical, Gold & S, Susung Webtoon, AFW, and Sejin TS.
Among these, Koiz, Wonpung Mulsan, and Susung Webtoon were delisted. Shilla SG transferred its listing to KONEX, benefiting from an exception that allows companies meeting certain financial criteria to transfer without undergoing liquidation due to market capitalization failures. In contrast, some companies, including Gold & S and KM Pharmaceutical, have sought legal action against the exchange's decisions.
118 Companies at Risk with Market Caps Below 20 Billion Won
Market analysts believe that the delisting of underperforming companies is just beginning, as many potential risks remain. As of October 2, an analysis of KOSDAQ-listed companies revealed that 118 companies had market capitalizations below 20 billion won, with 62 of these designated as management issues.
In terms of stock prices, there are also significant risks. There are 82 companies on KOSDAQ with stock prices below 1,000 won, and 56 of these are classified as management issues. Notably, 40 companies have both market capitalizations below 20 billion won and stock prices below 1,000 won, with 31 already designated as management issues.
Looking ahead, the tightening of criteria poses additional challenges. Financial authorities initially planned to raise the KOSDAQ market capitalization maintenance standard from 20 billion won to 30 billion won starting in January 2024, but this has been postponed to July 2024 due to market conditions and corporate burdens. As of October 2, there are 219 KOSDAQ companies that currently exceed 20 billion won but fall short of 30 billion won. If current market conditions persist, these companies will fall under the new criteria starting in July.
In total, combining the 118 companies currently below the existing criteria and the 219 companies in the 20 billion to 30 billion won range, there are 337 companies with market capitalizations below 30 billion won. The current market capitalization standard for KOSPI, which is 30 billion won, is set to increase to 50 billion won in July 2024. As of October 2, four companies, including Woosung Materials at 49.3 billion won, Woojin Flame at 39.1 billion won, Seou Global at 34.2 billion won, and Woojin INS at 31.9 billion won, fall within the 30 billion to 50 billion won range.
* This article has been translated by AI.
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