▲ Dealers at the dealing room of Hana Bank headquarters in Seoul. (The photo above is not related to the article content.)
Following the implementation of tightened delisting requirements to weed out insolvent companies, a series of companies are being designated as administrative issues due to their share prices falling below 1,000 won (so-called "penny stocks") or failing to meet market capitalization criteria.
According to the financial investment industry, 36 stocks in the domestic stock market were designated as administrative issues for the first time on the 12th due to being penny stocks or falling short of market capitalization, and the number of companies facing the same fate is growing.
On the 13th, KOSDAQ-listed Inzi Display and KOSPI-listed ANP were publicly disclosed as administrative issues because their share prices had remained below 1,000 won for the past 30 trading days.
Inzi Display received a new designation, while ANP had the designation reason added while already being an administrative issue.
Then, on the 14th, KOSDAQ-listed Clean & Science became an administrative issue as it continuously fell short of the market capitalization threshold of 30 billion won for KOSPI and 20 billion won for KOSDAQ.
As a result, the total number of domestic listed stocks designated as administrative issues due to being penny stocks or lacking market capitalization has increased to 39.
During the past week (from the 10th to the 15th), eight listed companies—including JK Synaps, Cespio, Ilshin Bio, Silla Fiber, Moadata, BenotinR, Daedong Metal, and BitoN—were also publicly disclosed as stocks at risk of administrative issue designation because their share prices were below 1,000 won or they fell below the market cap criteria required to maintain listing for 25 trading days or more.
This means that the upward trend in administrative issues is highly likely to continue this week as well.
The designation of penny stocks and low market cap stocks as administrative issues is a measure following the revised listing regulations that took effect on July 1st.
The revised listing regulations stipulate that if a stock price stays below 1,000 won for 30 consecutive trading days or falls below the market capitalization criteria, it will be designated as an administrative issue, and if it fails to exceed the criteria for "45 consecutive trading days" or more out of the subsequent 90 trading days, it will be finally delisted.
Consequently, administrative issue designations have continued since the 12th, which marked 30 trading days since the revision took effect, and actual delisting cases are projected to emerge as early as October.
The industry estimates that around 100 companies could be delisted within the year.
Listed companies caught in the penny stock requirements are announcing resolutions for shareholders' meetings on face-value consolidation or capital reduction in order to boost their stock prices, and a number of companies have proactively pursued face-value consolidation since early this year.
According to data from Hanwha Investment & Securities, between February 12th of this year—when the Financial Services Commission and the Korea Exchange announced the delisting reform plan to weed out insolvent companies—and August 12th, when the first administrative issue designations were made, as many as 276 cases of face-value consolidation (57 on KOSPI, 219 on KOSDAQ) were pursued in the domestic stock market.
This is a skyrocketing surge incomparable to the number of face-value consolidations during the same period in 2024 (5 cases) and 2025 (12 cases).
However, predictions are emerging from securities circles that there will be limits to improving the situation through mere face-value consolidation.
This is because it can foster the perception that these are companies finding it difficult to enhance corporate value through normal methods such as improving earnings.
This means that even if they temporarily escape being penny stocks, their stock prices could decline again.
Hanwha Investment & Securities reported that out of 156 cases that resolved stock consolidation and completed the listing of consolidated new shares between February 12th and July 15th of this year, 130 cases (83.3%) saw their stock prices drop as of July 15th compared to the listing date of the consolidated new shares.
(Photo: Yonhap News)
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