This article was displayed on the ChosunBiz MoneyMove (MM) site at 10:27 a.m. on June 22, 2026.
As the government decided to bring forward to July the enforcement of tougher delisting standards with the goal of removing "marginal corporations," some say a fix is needed because certain corporations are facing delisting risk even while turning a profit. Many corporations have not been able to prepare, and critics say only investors will be harmed as a result.
According to the capital market industry on the 22nd, it was found that five listed companies that carried out reverse stock splits to clear the penny stock (share price under 1,000 won) label fall under the delisting standards even though they are profitable.
The Financial Services Commission announced in February a "delisting reform plan for the swift and strict exit of insolvent corporations" and said it would bring forward to July the enforcement of delisting requirements that were to be introduced. The core is to introduce in July the market cap thresholds for delisting—300 billion won on the KOSPI and 200 billion won on the KOSDAQ—that were slated to take effect in January next year, and to add exit requirements for penny stocks. The intent is to swiftly remove marginal corporations that have relied only on external funding without proper business operations to achieve a stock market value-up.
The problem is that in this process, some corporations with business results but undervalued share prices meet the delisting standards, putting investors at risk of losses. A prime case is education company GOLD&S. GOLD&S posted sales of 7.7 billion won and net profit of 700 million won in the first quarter, successfully turning to profit. In January, it acquired the SiwonSchool education business and expanded, and also carried out a 5-to-1 reverse stock split to clear the penny stock criterion.
However, the share price trend remains weak. Since the reverse split on the 29th of last month, GOLD&S shares have fallen about 18%, and its current market cap remains around 12 billion won.
In addition, JOYWORKS&Co recorded first-quarter sales of 21.2 billion won and net profit of 2.6 billion won, yet its market cap remains around 7.5 billion won. TS Trillion also carried out a 5-to-1 reverse split after posting sales of 10.1 billion won and net profit of 900 million won, but the share price fell into the 900-won range, putting it at risk of delisting. Wing Yip Food Holdings has seen its share price continue to fall after the reverse split, with its market cap reaching the 20 billion won range, while KOSPI-listed JOOYONTECH has a market cap in the 16 billion won range. The two companies recorded first-quarter net profits of 700 million won and 600 million won, respectively.
The current phenomenon of smaller-market-cap corporations falling further stems from two reasons. First is the recent structural trend in the stock market. As concentration on certain themes such as semiconductors and artificial intelligence (AI), and on large caps, has intensified, there are claims that small and mid caps are not drawing buying interest regardless of their results.
On top of that, with the government tightening delisting rules, individual investors are increasingly shunning small and mid caps with low market caps. A KOSDAQ industry official said, "For penny stock corporations, even after a reverse split, individual investors keep selling out of just-in-case risk, causing a disconnect between corporate value and the share price."
Some investors are pushing back against the government's sudden move to bring forward the delisting standards. According to the National Assembly online petition website, a petition opposing the early enforcement of delisting requirements began on the 19th.
The petitioner said, "Despite announcing a three-stage implementation in July 2025, a revision unilaterally moving up the schedule was released in February this year," adding, "This unilaterally breaks the institutional promise that market participants have trusted and exposes the property rights of small and mid-sized, mid-tier corporations with sound business results and asset, and of millions of retail shareholders, to risk."
The petitioner also added, "Among corporations that fall short of the final delisting criteria, 231 have operating profits in the black," and "These are not zombie corporations but normal corporations engaged in substantive business."