Starting in July, stocks priced at 100 won will become candidates for delisting, with an estimated 150 companies expected to be removed from the KOSDAQ exchange.
From July 1, stocks with prices in the 100-won unit range, commonly referred to as 'penny stocks', will be subject to delisting under new regulations announced by the Financial Services Commission. This reform aims to enhance market integrity and protect investors, addressing long-standing concerns about the presence of unprofitable companies, which have eroded investor confidence over the years. In the past 20 years, while 1,353 companies have entered the KOSDAQ market, only 415 have been delisted, underlining the necessity for stricter measures.
The new criteria will designate any stock trading below 1,000 won for over 30 consecutive trading days as a management stock. If it fails to recover to above 1,000 won for at least 45 days within a subsequent 90-day period, it will face delisting. Additional provisions will prevent companies from circumventing these rules through means such as stock consolidations where the face value falls below the threshold after such actions are taken.
Moreover, the minimum market capitalization for delisting has been accelerated. The limit for KOSDAQ delisting has already been raised from 40 billion won to 150 billion won this year, and it will continue to tighten further, establishing new thresholds of 200 billion won by July 2026 and 300 billion won by January 2027. Other indicators for delisting due to complete capital impairment and disclosure violations are also being tightened, with amendments aimed at further decreasing the threshold of disclosure penalties and refining the processes surrounding serious violations. This reform reflects an urgent need to clear the market of unviable enterprises to better protect investors and bolster overall market health.
