KOSDAQ-listed companies are responding to stricter delisting criteria through stock consolidation, mergers, and capital increases this year. The Korea Exchange implemented new rules this month requiring stocks trading below 1,000 won for 30 consecutive days to be designated as watchlist stocks, with final delisting if they fail to stay above 1,000 won for 45 of the following 90 days. The market capitalization threshold for maintaining listing status was raised from 15 billion won to 20 billion won, affecting 216 KOSDAQ firms currently below this level. These regulatory changes aim to remove underperforming companies as KOSDAQ marks its 30th anniversary and seeks to shed its reputation as a retail investor trap.
Korea Exchange Tightens KOSDAQ Delisting Thresholds
According to the Financial Supervisory Service's electronic disclosure system on the 12th, 256 KOSPI and KOSDAQ-listed companies decided on stock consolidation this year, a 15-fold increase from 17 companies last year. KOSDAQ firms accounted for 203 of these cases, representing approximately 80% of the total. The surge followed the delisting reform plan announced in May, which designated stocks trading below 1,000 won as potential delisting targets. Under the new criteria, stocks that remain below 1,000 won for 30 consecutive trading days are placed on a watchlist, and if they fail to trade above 1,000 won for 45 of the subsequent 90 days, they face final delisting. The market capitalization requirement for maintaining listing status was raised from 15 billion won to 20 billion won. As of the previous trading day, 216 KOSDAQ companies fell below this threshold.
Kim Sung-cheon, head of the Korea Exchange's disclosure system team, stated at a KOSDAQ 30th anniversary event on the 2nd that delistings will increase as the penny stock and market cap requirements are strengthened this month. He noted that while no KOSDAQ stocks have yet been delisted under the stricter standards, the first cases may emerge next month. Kim projected that approximately 50 KOSDAQ stocks will be delisted this year due to market cap shortfalls.
KOSDAQ Companies Pursue Stock Consolidation and Survival Mergers
Facing elevated listing maintenance standards, some companies have initiated survival-oriented mergers and acquisitions. Set-top box manufacturer Humax is pursuing an absorption merger with its holding company Humax Holdings, which currently has a market capitalization of approximately 14.8 billion won, positioning the move as a response to delisting risk. Content production company NP, with a market cap of 18.8 billion won, decided to merge with Whiziwig Studios and is proceeding with related procedures.
Other firms are attempting to boost market capitalization through capital increases. Entertainment company Fantasio and stainless steel pipe manufacturer Erem decided on paid-in capital increases to escape low market cap status.
Analysts Warn Against Cosmetic Listing-Maintenance Measures
Experts caution that stock consolidation or capital increases without fundamental business improvement may fail to address underlying problems. KOSPI-listed company Woongjin Thinkbig conducted a stock consolidation in March to address low stock price risk, but its market capitalization declined from over 130 billion won before the consolidation to approximately 68.8 billion won currently. This case illustrates how stock consolidation without substantive operational improvements can reinforce perceptions of a company as a delisting risk.
Eom Soo-jin, a researcher at Hanwha Investment & Securities, stated that while it is reasonable for listed companies to employ various legal measures to overcome delisting crises, KOSDAQ firms with limited human and financial resources should avoid focusing solely on listing maintenance at the expense of core business competitiveness. Eom added that companies should refrain from suddenly pursuing stock consolidation, mergers between affiliates with low market caps, third-party capital increases, or convertible bond issuances instead of investing in tangible assets, R&D expansion, or employee training. She also warned against relying on token treasury stock purchases, adding new business lines to articles of incorporation, or issuing frequent positive disclosures solely to temporarily prop up stock prices.
FAQ
What are the new KOSDAQ delisting criteria implemented this month?
Stocks trading below 1,000 won for 30 consecutive days are designated as watchlist stocks, and if they fail to stay above 1,000 won for 45 of the following 90 days, they face final delisting. The market capitalization threshold for maintaining listing status was raised from 15 billion won to 20 billion won.
How many KOSDAQ companies conducted stock consolidation this year?
According to the Financial Supervisory Service's electronic disclosure system on the 12th, 203 KOSDAQ companies decided on stock consolidation this year, accounting for approximately 80% of the 256 total KOSPI and KOSDAQ firms that made such decisions.
What did analysts warn about KOSDAQ companies' delisting-avoidance measures?
Eom Soo-jin of Hanwha Investment & Securities stated that KOSDAQ firms should avoid prioritizing listing maintenance over core business competitiveness, warning against relying on stock consolidation, survival mergers, or capital increases without fundamental operational improvements such as R&D expansion and tangible asset investment.
