Korea Exchange defers delisting procedures for companies below market-cap threshold, keeps administrative-issue designations in place

[Financial News] The Korea Exchange will defer follow-up delisting procedures for companies that fall short of the market capitalization threshold. The move follows a court’s granting of a related injunction request. However, it will maintain their administrative-issue designations under current rules, and trading suspensions will continue for the eight companies whose delistings have already been decided and whose shares have been halted.
On the 7th, the exchange said in a statement that it would take this action, adding, “We plan to present our case during the objection process concerning the court’s injunction ruling and the lawsuits that have been filed.”
Earlier, on the 2nd, the Seoul Southern District Court partially granted injunction requests filed by JooYoun Tech and KM Pharmaceutical, including requests to suspend the effect of their delisting decisions. It rejected the request to suspend the effect of the decision to designate them as administrative issues, granting only the request to suspend the effect of the delisting decision.
According to the exchange, the court said of the market capitalization threshold itself that “it is difficult to readily conclude that the purpose is improper, the means unsuitable, or the threshold amount excessive.” The exchange said the court focused mainly on issues related to guaranteeing listed companies’ right to participate in the process, including filing objections, and problems caused by the earlier timing of the rule’s application, rather than on the stricter criteria themselves.
Taking the court’s decision into account, the exchange will maintain the administrative-issue designations for companies below the market capitalization threshold, which took effect on July 1. However, given the possibility that similar disputes could spread and increase uncertainty for companies and investors, it will defer delisting procedures after a company is designated an administrative issue.
Those follow-up procedures have not been carried out since the 2nd, and the exchange plans to keep them on hold going forward so that trading can continue in the market.
This measure will not resume trading in companies whose shares are already suspended. The eight companies whose delistings were decided before the 2nd for falling below the market capitalization threshold will remain suspended from trading.
Five companies had their shares suspended before the delisting liquidation period: KOSDAQ-listed Shilla SG, Gold&S, KM Pharmaceutical and Pintel, and KOSPI-listed JooYoun Tech. Three companies had their shares suspended during the liquidation period: KOSDAQ-listed Sejin TS and AFW, and KOSPI-listed SHD.
[email protected] Joo Won-gyu Reporter