Exchange Delays Subsequent Delisting Procedures Following Court's Brake on Market Cap Delistings

Following a court decision that put the brakes on delistings triggered by tightened market capitalization criteria, the Korea Exchange has decided to temporarily suspend delisting procedures for stocks designated as administrative issues for the same reason.

In a press release issued today (October 7), the Korea Exchange stated, "The exchange plans to clarify and defend its position through an objection process regarding the court's injunction decision and the filed lawsuit."

The exchange explained, "Considering the intent of the court's ruling, we will maintain the current designation of administrative issues for failing to meet market capitalization criteria implemented on July 1, 2026. However, taking into account the potential increase in uncertainty for companies and investors due to the spread of similar disputes, we have not proceeded with subsequent delisting procedures following administrative issue designations since the 2nd of this month, and plan to continue this suspension going forward."

This means that trading will continue to take place in the market.

However, the exchange added, "For corporations whose delisting due to a shortfall in market capitalization was decided prior to October 2, 2026, and whose trading is currently suspended, trading suspension will remain in effect."

The eight affected corporations are ShillaSG, Gold&S, KM Pharmaceutical, Fintel, Jooyontech, Sejin TS, AFW, and SHD.

Previously, Civil Division 51 of the Seoul Southern District Court granted the injunction applications filed by Jooyontech and KM Pharmaceutical on the 2nd against the Korea Exchange to suspend the effect of their delisting decisions.

The court reportedly pointed out issues with provisions such as the rule mandating delisting if a company designated as an administrative issue for low market capitalization fails to exceed the market cap threshold for 45 out of 90 trading days consecutively.

In particular, the court judged that moving up the implementation date of the raised market cap thresholds—from the originally planned January of next year to July of this year (30 billion won for KOSPI and 20 billion won for KOSDAQ)—violated the principle of proportionality and undermined predictability.

Due to the court's decision to grant the injunction, the effect of the delisting decisions for Jooyontech and KM Pharmaceutical has been suspended until a final ruling on the merits is made, halting their expedited delisting stock liquidation procedures as well.

In response, the Korea Exchange suspended trading for AFW and Sejin TS, whose liquidation procedures had been underway since September 23 and 29 respectively following delisting decisions for the same reason, as of the 2nd, and put all related delisting procedures on hold.

(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.