As the government and the Korea Exchange (KRX) have moved to swiftly remove insolvent corporations and tightened delisting requirements, the government adjusted parts of the system after a recent deterioration in KOSDAQ conditions pushed a slew of listed companies to the brink of delisting.
First, corporations that meet certain requirements will be allowed to transfer list on KONEX. In addition, the planned further increase to the market capitalization standard set to take effect on Jan. 1 next year will be deferred for six months.
On the 4th, Koo Yun-cheol, Deputy Prime Minister and Minister of Economy and Finance, held a joint market situation review meeting with related agencies at the Korea Federation of Banks. The meeting reviewed recent KOSDAQ delisting trends and discussed directions for future system operations.
As the government and the Korea Exchange (KRX) have begun the strict removal of insolvent corporations, strengthened delisting requirements, including the expulsion of penny stocks (share price under 1,000 won) and the raising of the market capitalization threshold, have been in effect since July.
The government said it decided to make partial adjustments to the system, taking into account that the corporate sector recently raised the view that improvements are needed in light of the deterioration in KOSDAQ conditions.
First, corporations that meet certain financial requirements will be allowed to transfer list to the KONEX market without settlement-only trading, as a measure to mitigate the shock of delisting.
Corporations eligible for transfer listing are those designated as under administrative review due to insufficient market capitalization on or after July 1 this year, and must have operating profits in two of the most recent three years, or operating profit in one of the most recent three years with shareholders' equity of at least 20 billion won (considering loss-absorption capacity).
If a corporation meeting this requirement wishes to transfer list to KONEX and applies to the exchange, it may transfer list. Upon transfer, it will be listed on the KONEX market at the existing price without settlement-only trading.
In addition, the requirement to appoint a designated advisor for KONEX listing will be deferred for a certain period to expedite the transfer.
Furthermore, the planned additional increase in the market capitalization standard to maintain listing (20 billion won → 30 billion won), which was scheduled for Jan. 1 next year, will be deferred for six months and implemented from July next year.
It also said that, in consideration of fairness, the stock market will likewise pursue a transfer listing to KONEX and a deferral of the market capitalization increase.