[Edaily Reporter Shin Ha-yeon ] Following the government’s tightening of delisting requirements, the first round of designations as “monitored stocks”—so-called “penny stocks” with share prices below 1,000 won—is imminent. With 48 companies alone having issued warnings over the past three days regarding the risk of being designated as monitored stocks due to falling share prices, the likelihood of a wave of companies being designated as monitored stocks starting on the 13th is growing.

According to the Financial Supervisory Service’s Electronic Disclosure System (DART) on the 9th, as of the 7th, a total of 48 listed companies—38 on KOSDAQ and 10 on KOSPI—had issued public notices expressing concerns about being designated as “monitored stocks” due to share prices below 1,000 won. This figure excludes preferred shares.

Of these, 43 companies issued disclosure notices regarding the risk of designation all at once on the 5th, with three and two additional companies adding their notices on the 6th and 7th, respectively. These companies are those whose stock prices have remained below 1,000 won for 25 consecutive trading days.

The Korea Exchange (KRX) implemented new delisting requirements for low-priced stocks starting on the 1st of last month. If a stock’s price remains below 1,000 won for 30 consecutive trading days, it is designated as a “monitored stock” starting the next trading day. Prior to this, companies must disclose a warning regarding potential designation as a monitored stock if their share price falls below the threshold for 25 consecutive trading days.

The 5th marked the first day since the new system took effect on which the 25-trading-day criterion was met. Accordingly, if these companies fail to recover to 1,000 won even once by the 12th, they are expected to be designated as “monitored stocks” starting on the 13th.

It is also difficult to recover from this designation once a company is classified as a “monitored stock.” If, within 90 trading days of being designated as a monitored stock, the stock price fails to remain at or above 1,000 won for 45 consecutive trading days, the company will enter delisting proceedings. As of the closing price on the 7th, there were 131 companies on KOSDAQ and 32 on KOSPI—a total of 163—whose stock prices were below 1,000 won.

The number of companies designated as “monitored stocks” is rising rapidly as the delisting criteria related to falling short of the minimum market capitalization threshold have also been tightened. Starting last month, the market capitalization thresholds were raised from 20 billion won to 30 billion won for the KOSPI and from 15 billion won to 20 billion won for the KOSDAQ.

Since the 1st of last month, a total of 56 companies—44 on KOSDAQ and 12 on KOSPI—have issued public notices expressing concerns about being designated as “monitored stocks” due to failing to meet market capitalization requirements. Of these, 28—half the total—have already been designated as monitored stocks.

Under the market capitalization criteria, a company becomes subject to delisting if it fails to exceed the threshold for 45 consecutive trading days out of the 90 trading days following its designation as a “monitored stock.” As of the 7th, 41 KOSPI-listed companies and 194 KOSDAQ-listed companies were found to fall short of the market capitalization threshold. On the KOSDAQ market in particular, 10.6% of the 1,820 listed companies have a market capitalization below 20 billion won.

As the risk of delisting becomes a reality, some companies are taking proactive measures, such as conducting paid-in capital increases or buying back their own shares.

KOSPI-listed companies JOOYONTECH(044380)and Ascendio(012170)are pursuing capital increases, while SH ENERGY & CHEMICAL(002360)has initiated a share buyback program led by its executives. KOSDAQ-listed companies SEJIN T.S CO., LTD.(067770), RYUK-IL C&S., Ltd(191410), and KMPHARMACEUTICAL Co.,Ltd.(225430) have also announced plans to acquire their own shares.

Stock splits and mergers and acquisitions (M&A) are also being discussed as potential measures to boost stock prices and market capitalization. However, some point out that for small-scale listed companies with limited financial resources, the actual feasible options are limited.

An official in the financial investment industry stated, “As listing maintenance standards have been tightened, it has become difficult to respond with merely a stock split or temporary measures to prop up the stock price,” adding, “Ultimately, unless these actions are accompanied by fundamental changes that the market finds convincing—such as improved earnings or business normalization—it will be difficult to avoid the risk of being designated as a ‘monitored stock’ or delisted.”