As the government and the ruling party, which have put forward the goal of achieving "KOSDAQ 3,000 points," raise their voices for expelling weak KOSDAQ-listed companies, the Korea Exchange (KRX) is discussing ways to further tighten KOSDAQ listing requirements.
The KOSDAQ Market Division of the Korea Exchange (KRX) is reviewing measures to delist weak listings more quickly. This is separate from last year's move, released with the Financial Services Commission, to tighten listing criteria such as market capitalization and revenue. An exchange official said, "We are reviewing a direction to tighten listing requirements to expel more weak corporations," and added, "For now, we are drafting measures internally at the exchange."
This is seen as a follow-up to last year's plan by the Financial Services Commission (FSC) to swiftly expel weak corporations from the KOSDAQ market and shift to a "high birth and high death (多産多死)" structure in which the number of listings increases and venture and innovation corporations can raise funds more easily.
President Lee Jae-myung said on his social media on the 29th, "The stock exchange is a kind of department store," adding, "If there are many rotten products and fake products with no product value, who would go?" He went on, "The top priority is to thoroughly clear out products first and swiftly introduce good new products to restore customer trust," stressing the importance of expelling weak corporations.
The exchange is already moving faster to expel weak corporations from KOSDAQ. According to the Korea Exchange (KRX) disclosure system on the 3rd, this year alone six KOSDAQ corporations—KH Mirae Corporation, JangWonTech, KH Construction, Green pine tree, IntroMedic, and PharmAbcine—have been delisted. Compared with the same period last year, when one corporation was delisted, the number of delistings has increased significantly. NKMAX and Kainos Medicine were decided for delisting after substantive review.
The number of KOSDAQ corporations to be delisted is expected to continue to rise. So far, 21 companies are at the substantive review stage for listing eligibility or have been granted an improvement period. With audit report filing season returning, the number of KOSDAQ corporations that fail to meet formal delisting requirements is likely to grow further. Formal delisting is a system under which a company is immediately expelled if reasons arise such as final default, market capitalization below 4 billion won, or full capital impairment.
The stricter KOSDAQ delisting review standards introduced by the Financial Services Commission (FSC) last year are also set to apply from this year. Previously, listings could be maintained with market capitalization of at least 4 billion won, but starting this year they must have at least 15 billion won to remain listed. As of the 30th, 15 KOSDAQ corporations (excluding SPACs) had a listed market capitalization below 15 billion won.
However, even if the exchange quickly decides to delist a KOSDAQ corporation, it often takes a long time to the actual delisting because corporations file for injunctions with the court. In most cases, courts do not grant the injunctions, but it typically takes about six months for a ruling.