LIN Blocks Jooyeon Tech's Delisting... Court Says Early Application of Market-Cap Threshold Was Excessive

[Financial News] LIN represented Jooyeon Tech and halted the Korea Exchange's (KRX) delisting decision. The court suspended the effect of the decision, finding that KRX had not given the company sufficient opportunity to respond while applying its strengthened market-capitalization threshold.
LIN said on the 2nd that the Seoul Southern District Court had granted Jooyeon Tech's application for an injunction suspending the effect of the delisting decision against KRX. As a result, the delisting decision issued on the 28th of last month was suspended, and liquidation trading could not proceed.
The central issue in the case was whether KRX had appropriately applied its strengthened market-capitalization threshold for maintaining a listing to Jooyeon Tech.
KRX amended its listing rules to gradually raise the market-capitalization delisting threshold to between KRW 30 billion and KRW 50 billion. In particular, it moved up the implementation date for the KRW 30 billion threshold by six months, from January 1, 2027, to July 1, 2026.
Jooyeon Tech was designated as a managed issue on July 21, after the new threshold took effect. It subsequently failed to meet the market-capitalization recovery requirement, received a delisting decision on September 28, and was awaiting liquidation trading.
LIN argued that KRX's regulations operated excessively to the company's disadvantage in this process.
Specifically, it challenged the failure to give the company sufficient opportunities to file objections and provide explanations while determining delisting eligibility based solely on market capitalization; the strengthening of the market-capitalization recovery requirement to maintaining the threshold for 45 consecutive days; and the lack of sufficient preparation time after the implementation date for the KRW 30 billion threshold was moved up by six months.
The court largely accepted these arguments.
The court found it problematic to limit a company's opportunities to file objections and provide explanations solely because it failed to meet the market-capitalization threshold. It also determined that the transitional measure moving up the implementation date for the KRW 30 billion threshold did not give the company sufficient time to prepare normalization measures, such as raising capital or improving its performance.
The court was also reported to have found that these measures imposed an excessive burden on the company and violated the principle of proportionality.
As the court's decision reflected the key issues raised by LIN, Jooyeon Tech was able to avoid delisting and liquidation trading for the time being.
Founded in 1988 and listed on the Korea Exchange Main Board in 2006, Jooyeon Tech is a computer manufacturing and sales company. The company says it had been working to restore its market capitalization through improved performance and other measures. However, after it was designated as a managed issue, its share price fell and investor sentiment weakened, making it difficult to meet the threshold in the short term.
The decision is drawing attention because it could serve as a reference for other companies that have been designated as managed issues or are undergoing delisting procedures under the same market-capitalization threshold. Whether sufficient grace periods and opportunities to provide explanations were guaranteed when KRX applied its strengthened delisting criteria could become a key issue in similar cases.
Nam Gwang-min, an accountant, and Young Hoon KIM, an attorney, from LIN's Listed Companies Support Task Force, which led the lawsuit, said, "It is necessary to exercise caution before excluding a viable company's eligibility to remain listed based solely on a single short-term market-capitalization metric. Since it becomes difficult to respond once liquidation trading begins after a delisting decision, it is important to promptly review the relevant rules and procedures immediately after the decision."
However, this decision was not a final ruling declaring the delisting itself invalid. It was an injunction temporarily suspending the delisting decision and liquidation trading until the outcome of the main lawsuit.
[email protected] Yoo Sun-jun Reporter