The Korea Exchange has temporarily suspended delisting procedures for companies with insufficient market capitalization, but the threat of delisting remains for so-called 'penny stocks' trading below 1,000 won. On October 15, amid a sharp decline in the domestic stock market, all six KOSDAQ-listed companies that received warnings about potential delisting due to stock price deficiencies were trading below the 1,000 won mark. While the suspension of delisting based on market capitalization has eased some concerns, the rules regarding stock price deficiencies remain in effect, increasing the burden on struggling companies.
According to the Korea Exchange and financial investment industry on October 16, based on the previous day's closing prices, Newintech (780 won), Barunson E&A (739 won), Icecream Edu (750 won), JM-I (749 won), TKG E&C (801 won), and Hyungji Global (382 won) all had stock prices below 1,000 won. These companies were among the eight that the exchange warned about potential delisting due to stock price deficiencies on October 7.
Among these, four companies saw their stock prices decline on October 15. Hyungji Global dropped 19.75% to close at 382 won. Icecream Edu (-3.10%), JM-I (-3.23%), and TKG E&C (-2.44%) also showed weakness. Notably, Hyungji Global would need to increase its stock price by approximately 162% to reach the 1,000 won threshold.
In contrast, Newintech recorded a limit-up for three consecutive trading days, rising to 780 won. This represents a 119.1% increase compared to its closing price of 356 won on October 12, but it still falls short of the 1,000 won mark. Barunson E&A also closed at 739 won, up 2.35%, failing to recover to the benchmark.
The issue is that the recent suspension of delisting procedures by the exchange does not apply to companies with stock price deficiencies. Earlier, the Seoul Southern District Court granted a provisional injunction on October 2, halting the delisting decisions for Joyun Tech and KM Pharmaceutical. Consequently, the exchange announced on October 7 that it would temporarily suspend subsequent delisting procedures based on market capitalization deficiencies. However, it plans to proceed with delisting procedures for companies trading below 1,000 won as scheduled.
Particularly, Newintech, Hyungji Global, and Icecream Edu are companies facing both market capitalization and stock price deficiencies. While the suspension of delisting procedures based on market capitalization has provided some relief, the risk of delisting due to low stock prices remains unresolved. Following the suspension announcement, related stocks surged, reflecting investor optimism, but they still do not meet the requirements for maintaining their listings.
According to the penny stock delisting regulations introduced in July, if a company's stock price remains below 1,000 won for 30 consecutive trading days, it will be designated as a management issue. If it fails to maintain a stock price above 1,000 won for 45 consecutive trading days within 90 trading days, it will face delisting. On October 15, the exchange also warned Newintech and others about potential delisting due to stock price deficiencies. Observers suggest that companies may begin to face actual delisting issues as early as late this month.
A securities industry official stated, "Even though the delisting procedures based on market capitalization have been suspended, the reasons for stock price deficiencies are still applicable. Therefore, investors should carefully distinguish between the reasons for management designation and delisting requirements for each company."
* This article has been translated by AI.
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