Korea Exchange Tightens Grip on Delisting Troubled Firms; 23 Companies Under Review Including Fadu

As KOSDAQ reclaimed the 1,000-point level for the first time in four years, financial authorities are tightening oversight to enhance market integrity. The delisting of troubled companies from KOSDAQ is expected to accelerate, particularly after President Lee Jae-myung recently emphasized the need to boost market credibility through decisive "product cleanup."

According to Korea Exchange (KRX) on July 1, two KOSDAQ-listed companies—NKMax and Kainos Medicine—were delisted last month following substantive review proceedings. A total of 23 KOSDAQ-listed companies are currently under delisting review by the exchange. These include firms being evaluated for substantive review designation and those awaiting final delisting decisions after being granted improvement periods.

Among the 23 companies is Fadu (440110.KQ), a semiconductor design firm embroiled in an "inflated IPO" controversy over allegations that management deliberately omitted material information during the listing process. KRX is expected to decide soon whether Fadu qualifies for substantive delisting review. Samchuly Bicycle (024950.KQ) and DMS (068790.KQ) are also undergoing similar procedures.

Meanwhile, following reforms to the delisting system last year, the market capitalization threshold for delisting was raised from 4 billion won to 15 billion won ($11 million) starting this year. Additionally, KRX reportedly plans to establish a new team within its KOSDAQ delisting division before the Lunar New Year holiday this month to expedite reviews and delistings of troubled companies.

President Lee's direct comments on troubled companies are also expected to accelerate the pace of market exits. On June 29, the president compared the stock market to a department store on X (formerly Twitter), asking: "Who would shop there if it's full of rotten goods with no value or counterfeit products?" He added: "The top priority is to clean up products first, swiftly introduce good new products, and restore customer trust. Of course, we must also crack down thoroughly on pickpockets."

Eradication of unfair trading practices—what President Lee likened to "pickpockets"—is also expected to proceed rapidly. Financial authorities plan to expand the joint stock manipulation task force, comprising the Financial Services Commission, Financial Supervisory Service, and KRX, from one team to two teams.