The clock is ticking on penny-stock delistings... 39 stocks now under watch

[Financial News] The number of listed companies tagged as monitored stocks because their share prices fell below 1,000 won or they failed to meet market capitalization requirements has risen to 39. Another eight companies were newly added to the “watch list” for possible designation within just one week. In an effort to clear the threshold, 276 companies carried out reverse stock splits in the first half of the year. Yet 83.3% of them saw their share prices decline after the new shares were listed.
According to the financial investment industry on the 16th, 36 stocks were mass-designated as monitored stocks on the 12th, when the tightened delisting rules were applied for the first time. Since then, companies falling under the same criteria have continued to emerge almost daily.
A case tied to the market capitalization rule emerged on the 14th. KOSDAQ-listed Clean & Science became a monitored stock after remaining below the market cap threshold of 30 billion won for KOSPI and 20 billion won for KOSDAQ. One day earlier, on the 13th, KOSDAQ-listed INZI DISPLAY and KOSPI-listed A&P were placed under disclosure requirements after failing to recover above the 1,000-won level for 30 consecutive trading days. INZI DISPLAY was newly designated, while A&P received an additional reason for its existing monitored-stock status.
Companies pre-notified as potential monitored stocks are also piling up. During the week of the 10th to the 15th, eight listed companies were disclosed for trading below 1,000 won or for staying under the market cap threshold required to maintain listing for more than 25 trading days. They were JK Synapse, Kespion, ilShinbiobase, Silla Fiber, Moa Data, BENO TNR, DaedongMetal, and B2EN. That suggests the list is likely to grow even longer this week.
This wave of designations is the result of revised listing rules that took effect on the 1st of last month. Under the new rules, companies are classified as monitored stocks if their share price stays below 1,000 won for 30 consecutive trading days or if they fall short of the market cap requirement. If they then fail to recover above the threshold for at least 45 consecutive trading days within the following 90 trading days, they are delisted immediately. The 12th was the 30th trading day since the rules took effect. Industry observers say actual delistings could begin as early as October, and around 100 companies may leave the market by year-end.
The regulatory bar does not stop there. According to the revised listing rules approved by the Financial Services Commission in May, the market cap threshold will rise again on January 1, 2027, to 50 billion won for KOSPI and 30 billion won for KOSDAQ. The government is operating a concentrated management period for distressed companies from February 2026 through June 2027. Korea Exchange has estimated that, if the reform measures are reflected, the number of delisting candidates on KOSDAQ alone this year could reach around 150 companies, about 100 more than the original forecast of 50.
Companies feeling the pressure are rushing to announce reverse stock splits or capital reductions in an effort to lift their share prices. Many have moved early since the beginning of the year. According to data from Hanwha Investment & Securities, reverse stock splits carried out in the domestic market from February 12, when the Financial Services Commission and Korea Exchange unveiled the delisting reform plan, to August 12, when the first monitored-stock designations were made, totaled 276 cases, including 57 on KOSPI and 219 on KOSDAQ. That is far above the five cases seen in the same period in 2024 and 12 in 2025.
The market is skeptical. Such moves can be read as a sign that a company is struggling to raise its value through normal means such as earnings improvement. Even if a stock temporarily escapes penny-stock status, it may fall back again. In fact, of the 156 reverse stock splits approved and completed with new share listings between February 12 and July 15 this year, 130 cases, or 83.3%, saw share prices fall as of July 15 compared with the listing date of the new shares, Hanwha Investment & Securities said.
The escape routes are narrowing as well. The revised rules prohibit companies that carried out a stock split or capital reduction within the past year from making additional splits or reductions for 90 trading days after being designated as monitored stocks for penny-stock reasons. They also ban splits or reductions exceeding a 10-for-1 ratio during the 90 trading days after designation. The grace period is shorter than overseas standards. The New York Stock Exchange gives six months after notice of a share price below $1, while Nasdaq allows 180 days. In Korea, however, companies must recover the standard for 45 consecutive trading days within 90 trading days.

The background to the rule overhaul lies in a structure of “many births, few deaths.” According to the Korea Capital Market Institute, 1,353 companies entered the KOSDAQ market over the past 20 years, while only 415 were delisted, excluding voluntary delistings and transfers to other markets. During the same period, KOSDAQ’s market capitalization grew 8.6 times, but the index rose only 1.6 times. By comparison, KOSPI’s market capitalization increased 6.7 times and its index 3.8 times. As of June 19, there were 219 stocks trading below 1,000 won, with a combined market capitalization of about 8 trillion won.

[email protected] Reporter Ahn Seung-hyun Reporter