Hearing on injunctions against delisting over market-cap shortfalls to conclude on 27th; ruling possible as early as month-end

[Financial News] The Korea Exchange’s hearing on its objections to injunctions suspending the effect of its decisions to delist Juyeon Tech and KM Pharmaceutical will conclude on the 27th. After reviewing additional written submissions from both sides, the court plans to decide whether to uphold the injunctions as early as the end of this month.
The 51st Civil Division of Seoul Southern District Court (Chief Presiding Judge Kwon Sung-soo) held its first hearing on the exchange’s two objections on the 12th. The court ordered the exchange and the two companies to submit additional arguments and supporting materials by the 27th, and set that date for the close of proceedings. It said it intended to issue a decision within this month if possible, and to reach a conclusion no later than the first week of December.
The court had previously granted separate injunction applications by Juyeon Tech and KM Pharmaceutical on the 2nd of last month. It suspended the effect of the exchange’s delisting decisions until the final rulings in the main cases and barred liquidation trading in shares of the two companies. On the 15th of the same month, the exchange filed objections seeking to overturn the injunction rulings and have the companies’ applications dismissed. On the 11th, the day before the hearing, it submitted preparatory briefs and supporting materials in both cases.
At the hearing, the exchange argued that there was no longer a need to maintain the injunctions because it had deferred the follow-up delisting procedures for failure to meet the market-capitalization threshold. KM Pharmaceutical said it would submit an additional brief, warning that the delisting process could resume if the injunction were lifted. The court asked the exchange to provide further legal grounds for whether it could continue the deferral under the current implementation rules even after the injunction was lifted.
The court again raised the opportunity for companies facing delisting to present their case, as well as the issue of bringing forward implementation of the market-capitalization criteria—both of which it had flagged in its earlier injunction rulings. Referring to overseas exchange examples submitted by the exchange, the court noted that some jurisdictions have hearings or re-examination procedures. It also asked the exchange to submit any empirical data supporting the need to implement the tightened market-capitalization criteria six months ahead of the original schedule.
Since July, the exchange has designated companies as stocks under administrative supervision if their market capitalization remains below 30 billion won for KOSPI-listed companies or 20 billion won for KOSDAQ-listed companies for 30 consecutive trading days. If a company fails to meet the market-capitalization threshold for 45 consecutive trading days within 90 trading days of its designation, that constitutes grounds for delisting. Under these criteria, the exchange decided to delist KM Pharmaceutical on September 14 and Juyeon Tech on the 28th of the same month.
On the 7th of last month, after the injunctions were granted, the exchange said it would maintain the administrative-supervision designations for companies below the market-capitalization threshold while deferring the subsequent delisting procedures. At the time of the announcement, excluding stocks whose trading was halted, 19 KOSPI-listed companies and 40 KOSDAQ-listed companies were under administrative supervision for falling short of the market-capitalization threshold. The exchange said it would keep trading suspended for eight companies, including Juyeon Tech and KM Pharmaceutical, which had already been marked for delisting.
[email protected] Lee Jeong-hwa Reporter