As a reason for delisting occurs for a company listed on the securities market, it is expected that it will be difficult to receive a simplified review in the future. This is because the 'sound company criteria' for receiving a simplified review are significantly strengthened.
Until now, if a listed company had sales and equity exceeding 30 billion won each and made a net profit, it could receive a simplified review. However, in the future, these criteria will be raised to over 700 billion won and 400 billion won, respectively.
The exchange explained that the criteria for receiving a simplified review were too low and became realistic. A simplified review is a system that allows for a rapid examination of the eligibility for listing of companies that have experienced reasons for delisting. It was introduced to minimize situations where investors suffer due to prolonged trading suspensions when unexpected reasons for delisting occur, even for sound companies. However, the criteria were too low and many corporations were affected.
According to the exchange on the 8th, starting from the 11th, the revised guidelines for the eligibility review for the securities market will be implemented, and the requirements for simplified review will also be strengthened.
Until now, if a corporation had sales of over 30 billion won and equity of over 30 billion won in the most recent fiscal year's financial statements and made a net profit, it was eligible for a simplified review. However, receiving a simplified review is not guaranteed just by fulfilling these criteria, as the exchange decides the eligibility for a simplified review based on qualitative judgments. However, since these requirements were too low, even corporations that were not sound received simplified reviews in some cases.
As a result, the exchange has strengthened the guidelines so that corporations must meet sales of over 700 billion won and equity of over 400 billion won to be eligible for a simplified review. In the securities market, the proportion of corporations with sales over 700 billion won was 49%, based on last year's figures, and the proportion of listed companies meeting the equity requirement was about 41%. In contrast, 97% of companies listed on the securities market had sales exceeding 30 billion won.
The simplified review, introduced in 2012, allows sound companies to undergo a simplified review concerning operating and financial aspects when substantial reasons for delisting arise, focusing primarily on business transparency regarding issues like embezzlement or accounting fraud by executives.
This time, only the guidelines for the securities market have been revised, but it is expected that the guidelines for the KOSDAQ market will also need to be amended in the future. Although there are provisions for receiving a simplified review in the KOSDAQ market, they are less clear than those in the securities market.
Meanwhile, the exchange amended the substantial review guidelines to improve the delisting system and update the raised sales standards. Earlier, financial authorities and the exchange announced measures to improve the delisting system, strengthening the delisting requirements. In the case of the securities market, previously, if the market capitalization and sales exceeded 5 billion won each, a delisting was not required, but this will be gradually strengthened to 50 billion won and 30 billion won, respectively.