One month after tightened delisting requirements took effect, one in six KOSDAQ-listed companies has entered the delisting danger zone. The recent sharp drop in the KOSDAQ index has reduced the market capitalization not only of zombie firms but also of profitable, growing companies, prompting an urgent search for self-rescue measures to maintain their listings.
According to the Korea Exchange (KRX) on the 3rd, among 1,820 KOSDAQ-listed companies, 149 firms had share prices below 1,000 won and 214 firms had market capitalizations below 20 billion won as of that day. Excluding the 47 firms that fell below both standards, a total of 316 companies, or 17.36% of the total, sit below the tightened delisting threshold.
Financial authorities and the exchange introduced a new delisting requirement for share prices below 1,000 won starting on the 1st of last month and also raised the market capitalization standard from 4 billion won to 20 billion won. A company that fails to meet the standards for 30 consecutive trading days is designated as a management item, and if it fails to recover for 45 consecutive trading days over the subsequent 90 trading days, it is removed from the market. Accordingly, observers say that management item designations for firms falling below the price and market capitalization standards could follow one after another from the 11th of this month, which marks the 30th trading day.
The problem is that even companies with improving earnings are being driven to the brink of delisting across the board. For example, Company A, a KOSDAQ display firm, posted operating profit of 3.5 billion won in the first quarter of this year, exceeding its full-year 2025 operating profit of 1.3 billion won in just one quarter, yet its market capitalization stood at only about 17.6 billion won as of that day.
The KOSDAQ index rose 2.44% on the day, with a buy-side sidecar also triggered, but it remained around the 730 level, still 39.87% below its peak. Analysts say that as funds flowed into large-cap semiconductor stocks and single-stock leverage products, small- and mid-cap stocks suffered larger declines regardless of their individual earnings. Contrary to the policy's intent of raising market confidence by clearing out troubled firms, the direction of market supply and demand is now dictating survival.
As a result, demand for legal and financial advisory services is rising as firms seek to review delisting responses, corporate value enhancement, and merger and acquisition (M&A) possibilities. "As listing policy has changed, the number of KOSDAQ companies weighing response measures appears to reach as many as 200 to 300," said An Hyo-seop, head of the Corporate Governance Research Institute at Shin & Kim.
