Exchange to Maintain Administrative-Issue Designations for Companies Below Market Cap Threshold... Postpone Delisting Procedures
The Korea Exchange said that, in connection with a court’s granting of injunctions sought by Jooyontech and KM Pharmaceutical to suspend the effect of delisting decisions, it plans to maintain the current designation of stocks as administrative issues when they fall below the market capitalization threshold, while postponing subsequent delisting procedures.
In a press release on October 7, the exchange said, “We will present our case during the process of filing objections to the court’s injunction rulings and the lawsuits brought against us.” It added, “We plan to keep trading suspended for the eight companies whose delisting for falling below the market capitalization threshold was decided before October 2 and whose shares are currently suspended from trading.”
The exchange explained, “The court said it would be difficult to readily conclude that the market capitalization threshold itself has an improper purpose, that the means are unsuitable, or that the threshold is excessive. The court’s main concerns were not with the tighter criteria, but with the failure to guarantee listed companies’ procedural rights to participate, including the right to file objections, and with the earlier implementation date.” It added, “The court denied the request to suspend the effect of the decision to designate the companies as administrative issues and granted only the request to suspend the effect of the delisting decisions.”
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On October 2, the Seoul Southern District Court’s Civil Division 51 granted injunctions sought by Jooyontech and KM Pharmaceutical to suspend the effect of delisting decisions made by the exchange. The court reportedly took issue with a provision requiring a company designated as an administrative issue for falling below the market capitalization threshold to be delisted if it failed to exceed the threshold for 45 consecutive trading days within a 90-trading-day period. The court found that moving up the implementation date for the higher market capitalization thresholds—KRW 30 billion for KOSPI and KRW 20 billion for KOSDAQ—from January 2027 to July 2026 undermined the principles of proportionality and predictability.
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