The Kosdaq market, marking its 30th anniversary, is overhauling its structure by tightening the delisting of troubled companies while expanding listings for innovative firms. The Korea Exchange projected that around 50 Kosdaq-listed companies could be removed from the market within the year based on market capitalization criteria alone, following the implementation of a strengthened delisting system.
At an event commemorating the 30th anniversary of the Kosdaq market held at the Korea Exchange in Yeouido, Seoul, on the 2nd, Kim Seong-cheon, head of the disclosure system team at the Exchange's disclosure department, said, "As penny-stock and market-cap requirements are tightened from the second half of the year, formal delistings will increase significantly," adding, "We expect about 50 companies to be subject to delisting within the year based on market-cap criteria alone." As of the 30th of last month, a total of 13 companies were finally delisted from the Kosdaq this year — nine through formal delisting and four through substantive review.
Kim said, "There is a possibility that the first case of a company being designated as an administrative issue due to insufficient market cap could emerge as early as next month," emphasizing, "The requirement for administrative issue designation itself remains 30 consecutive days of falling short, so the entry threshold stays the same, but the requirements for exiting have become much stricter." He continued, "Since a company must maintain levels above the standard for 45 consecutive days out of 90, we expect that many firms that fail to make self-rescue efforts will struggle to escape the market-cap requirement."
The Exchange implemented the strengthened delisting system starting the 1st. For the Kosdaq, if a company fails to meet the market-cap (20 billion won) and share-price (1,000 won) criteria for a certain period, it is designated as an administrative issue and then undergoes delisting procedures. The market-cap standard will be raised in phases, rising to 30 billion won for the Kosdaq from January next year. Both measures are being implemented six months and one year earlier than originally planned, respectively.
The Exchange also shortened the substantive review process for delisting. Oh Jae-hwa, head of the listing management department team, explained, "We reduced the existing three-tier review system to two tiers and shortened the improvement period granted to companies from a maximum of two years to one year." The disclosure violation penalty-point threshold was also tightened from 15 points to 10 points, and "intentional and serious violation of disclosure obligations" was added as a new review ground.
Instead of raising the threshold for delisting troubled companies, the Exchange is expanding listing opportunities for innovative firms. From the 1st, the Exchange introduced industry-tailored technology special-listing review criteria in the fields of advanced robotics, cybersecurity, and K-content. For advanced robotics, commercialization and mass-production capabilities are key; for cybersecurity, certifications and securing of major clients; and for K-content, content competitiveness and intellectual property (IP) scalability are evaluated as priorities.
Lee Seok-woo, head of the technology company listing department team, said, "We will establish review criteria suited to industry characteristics to enhance predictability for companies preparing for listing and underwriters, and support the financing of innovative firms," adding, "In the second half, we plan to expand the applicable fields to include areas such as defense."
