[Edaily Reporter Kim Eung-tae] Mid-sized and small domestic companies have begun full-scale efforts to boost their stock prices in response to stricter delisting requirements set to take effect this July. Not only are companies buying back and canceling their own shares, but executives and the owners’ families are also participating in the share purchases. As the government has decided to gradually raise delisting requirements to weed out underperforming listed companies, the number of firms taking steps to boost their stock prices is expected to increase.

According to the Financial Supervisory Service on the 18th, #Shinil Electronics decided the previous day to cancel 1.5 million common shares. The estimated value of the shares to be canceled is 2.1 billion won, and the cancellation is scheduled for the 24th. Shinil Electronics also decided on the same day to repurchase its own shares. The company plans to purchase 1,651,000 shares worth 2 billion won on the open market. The share repurchase period runs from today through September 17.

The family of the owner of #Hanse MK, a fashion subsidiary of the Hanse Yes24 Group, has also begun purchasing the company’s shares. Cho Young-soo, Honorary Chairwoman of the Hanse Yes24 Cultural Foundation—who is the spouse of Hanse Yes24 Group founder Chairman Kim Dong-nyeong and the mother of Hanse MK CEO Kim Ji-won—announced her intention to purchase Hanse MK shares. She plans to purchase 279,330 shares of Hanse MK common stock, valued at approximately 300 million won, on the open market from the 20th of next month through August 18. The company explained the purpose of the transaction as “enhancing corporate value through the direct acquisition of company shares.”

#Wellcron’s owner family and executives also made several stock purchases this month. Shin Jeong-jae, President of Wellcron and spouse of Wellcron Group Chairman Lee Young-kyu, purchased a total of 225,200 shares on the open market in five separate transactions between the 11th and 17th. As a result, her shareholding increased from approximately 480,000 shares to 510,000 shares. Jeong Seong-sik, Vice President of Welkron, also purchased a total of approximately 28,000 shares in three separate transactions between the 10th and the 16th, bringing his total holdings to nearly 48,000 shares.

The proactive efforts by these companies and their executives to boost the stock price are interpreted as a move in anticipation of the revised delisting regulations set to take effect this coming July. The Financial Services Commission and the Korea Exchange have decided to establish new delisting requirements for “penny stocks” (stocks trading below 1,000 won) next month to facilitate the swift removal of insolvent companies. Going forward, if a stock’s price remains below 1,000 won for 30 consecutive trading days, it will be designated as a “monitored stock”; if it fails to rise above the penny stock threshold for 45 out of the subsequent 90 trading days, it will be delisted. Based on the previous day’s closing prices, Shinil Electronics’ stock price was 1,270 won and Welkron’s was 1,115 won—both barely exceeding 1,000 won—while Hanse MK’s stock price was 993 won, remaining below 1,000 won.

Measures to boost the stock prices of mid-sized and small companies are expected to continue expanding. The government has decided to gradually tighten delisting requirements not only regarding individual stock prices but also market capitalization. Starting on the 1st of next month, KOSPI and KOSDAQ-listed companies with market capitalizations below 30 billion won and 20 billion won, respectively, will meet the delisting criteria. Beginning January 1 of next year, listed companies with market capitalizations below 50 billion won on the KOSPI and 30 billion won on the KOSDAQ will also be classified as subject to delisting. Furthermore, since companies that meet the criteria for full capital impairment on a semi-annual basis will be subject to delisting starting next month, reviews related to delisting are expected to begin in earnest starting with the submission of semi-annual reports for the first half of this year.

Since improving profitability is key to avoiding delisting, companies are expected to focus on growing their earnings. An official from the mid-sized business sector stated, “We will enhance product competitiveness while establishing a foundation for sustainable growth.”