It seems that Kumyang, which received an opinion refusal in last year's audit report, will also need to undergo substantial listing eligibility review this year, even if it receives a favorable opinion. This is because the Korea Exchange has strengthened the delisting criteria for listed companies in the securities market early this year. Initially, if a favorable opinion was received after an opinion refusal, the transaction was immediately resumed.
According to the Korea Exchange on the 30th, following the amendment of the listing regulations for the securities market on the 9th, there is a high possibility that Kumyang will be subject to the substantial listing eligibility review even if it re-submits the favorable opinion audit report.
In the past, even if a listed company in the securities market received an inadequate audit opinion and was subject to delisting, if they received a favorable audit opinion the following year and resolved the issues, the stock transaction was immediately resumed.
However, the situation has changed as the exchange amended the rules to classify a change in the audit opinion itself as a reason for substantial listing eligibility review.
This means that a listed company in the securities market that received an inadequate audit opinion will not immediately resume stock transactions, even if it receives a favorable audit opinion in the following year's audit report, unlike in the past. Due to the change in the audit opinion, a substantial review reason arises which will be subjected to review by the exchange, and if deemed necessary, it will undergo a substantial review.
The exchange noted, "There have been cases where some corporations listed in the securities market intentionally received inadequate audit opinions by omitting some financial information to avoid delisting," and added, "We have strengthened the delisting criteria to expedite the exit of marginal companies."
For example, a listed corporation in the securities market that experiences capital impairment is subject to formal delisting requirements and is delisted immediately without a grace period for improvement. According to the exchange, there are often cases where financial statements are prepared in such a way as to deliberately receive inadequate audit opinions to avoid immediate delisting. The securities market regulations state that if a company receives an inadequate audit opinion leading to delisting reasons and files an objection, it is often abused to obtain approximately one year of improvement time.
The exchange explained that "when an inadequate audit opinion is received, there is a high possibility of issues with financial or management transparency, thus we will strengthen the verification to reassess listing eligibility before resuming stock transactions."
Accordingly, all listed companies in the securities market that received inadequate audit opinions on their financial statements for the previous fiscal year are expected to apply the amended regulations. Kumyang, which once had a market capitalization exceeding 10 trillion won, is a prime example.
In March of last year, Kumyang's stock trading was suspended after it received an "opinion refusal" from an external auditor regarding last year's financial statements. At that time, its auditor, Hanul Accounting Corporation, assessed that "there is significant uncertainty that raises questions about the company's ability to continue as a going concern."
Last year, Kumyang's revenue was 134.5 billion won, a 1% decrease compared to the previous year, while during the same period the net loss increased from 65.8 billion won to 132.9 billion won. Kumyang has had multiple instances of reversing its disclosures and was designated as a management item. There are analyses suggesting that due to growing skepticism about the funding plan presented by Kumyang, there is a high possibility of it becoming subject to substantial review.
Meanwhile, Kumyang announced a capital increase plan worth 405 billion won. All of the new shares to be issued in this capital increase plan will be allocated to the Saudi Arabian corporation "Skyve Trading & Investment," with the payment date set for the 2nd of next month. The new share issuance price is set at 15,000 won, which is 51.5% higher than Kumyang's last stock price of 9,900 won.