This article was displayed on the ChosunBiz MoneyMove (MM) site at 10:27 a.m. on Jun. 22, 2026.
As the government decided to bring forward to July the tougher delisting standards aimed at removing "marginal corporations," some say a supplement is needed because certain corporations are facing delisting risks even while turning a profit. Many were unprepared, they note, and this could leave only investors bearing the losses.
According to the capital market industry on the 22nd, among listed companies that conducted reverse stock splits to clear the penny stock (share price under 1,000 won) label, five were found to meet the delisting criteria despite being in the black.
The Financial Services Commission announced in Feb. the "delisting reform plan for swift and stern removal of insolvent corporations" and said it would bring forward implementation of the previously adopted delisting requirements to July. The gist is to introduce in July the market cap thresholds that were set to apply in Jan. next year—300 billion won for the KOSPI market and 200 billion won for the KOSDAQ market—and to establish criteria to remove penny stocks. The intention is to swiftly weed out marginal corporations that have relied only on external funding without proper business operations and achieve a valuation uplift in the stock market.
The problem is that in this process some corporations with operating results are undervalued, putting them under delisting standards and potentially harming investors. A representative case is education company GOLD&S. GOLD&S posted first-quarter sales of 7.7 billion won and net profit of 700 million won, successfully turning to profit. In Jan., it expanded by acquiring the Siwon School education business, and it also carried out a 5-to-1 reverse stock split to clear the penny stock criterion.
Still, the share price trend remains sluggish. GOLD&S saw its share price fall about 18% after the reverse split on the 29th of last month, leaving its current market cap 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 executed 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 decline after the reverse split, with market cap reaching the 20 billion won range, while KOSPI-listed JOOYONTECH stands 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 of the stock market. With themes such as semiconductors and artificial intelligence (AI) and a tilt toward large caps intensifying, there are claims that small and mid caps are not attracting buying interest regardless of results.
On top of that, tougher government delisting rules are making retail investors avoid small and mid caps with low market caps even more. A KOSDAQ industry official said, "For penny stock corporations, even after a reverse split, retail investors keep selling on 'just-in-case' risks, and we're seeing a disconnect between corporate value and share price."
Some investors are pushing back against the government's sudden move to bring forward the tougher delisting standards. According to the National Assembly e-petition website, a petition opposing early implementation of the delisting requirements began on the 19th.
The petitioner said, "Even after announcing a three-stage rollout for Jul. 2025, an amendment unilaterally moving up the schedule was released in Feb. this year," and added, "This unilaterally breaks the institutional promise trusted by market participants and exposes the property rights of small and midsize corporations with sound operating results and assets, as well as those of millions of small shareholders, to risk."
The petitioner also added, "Among corporations falling short of the final delisting criteria, 231 have operating profit in the black," and said, "These are not zombie corporations but normal corporations engaged in substantive business."