[Edaily Reporter Kwon Oh Seok ] In accordance with the policy on stricter delisting requirements, 36 listed companies—including “penny stocks” with share prices below 1,000 won and those with market capitalizations below the threshold—will be designated as “monitored stocks” en masse starting on the 13th. “Monitored stocks” are securities designated and announced by the Korea Exchange (KRX) that are at risk of meeting delisting criteria due to deteriorating operating performance or weak financial structures.

According to the Korea Exchange on the 12th, among penny stocks, a total of four companies on the KOSPI— DaeyoungPackaging(014160), HYUNGJI ELITE(093240), IlshinStone(007110), and Kukdong(005320) —have been designated for Daesang. On the KOSDAQ, a total of 17 companies— NUIN TEK CO., LTD(012340), Noul Co., Ltd.(376930), S-Energy CO., LTD.(095910), LabGenomics. Co., Ltd.(084650), ESTaid(239340), Omnisystem Co., Ltd(057540), SDN Company Ltd.(099220), GOOD PEOPLE CO., LTD.(033340), JEONGMOON INFORMATION CO.,LTD.(033050), Shaperon Inc.(378800), E8IGHT Co., Ltd(418620), CMG Pharmaceutical Co., Ltd.(058820), INNO INSTRUMENT(215790), WOOREE ENTERPRISE(037400), ABION Inc.(203400), TKG AIKANG(022220), and Castelbajac Co., Ltd.(308100) —have been designated.
Designation as a “monitored stock” serves as a warning prior to delisting. 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 be delisted. There is no right to appeal a delisting based on penny stock status. Consequently, the first delistings could occur as early as this coming October.
Earlier this May, the Financial Services Commission approved amendments to the Korea Exchange’s listing regulations to implement delisting reform measures. The amendments focus on strengthening the four major delisting criteria to ensure the swift and strict removal of underperforming companies. First, regarding the delisting criteria for penny stocks, if the stock price falls below 1,000 won for 30 consecutive days, the company is designated as a “monitored stock”; if, over the subsequent 90 trading days, the price fails to reach 1,000 won or more for 45 consecutive trading days, the company is ultimately delisted.
In response, some listed companies immediately undertook stock consolidations to boost their per-share value; however, the authorities have also put in place measures to prevent loopholes such as repetitive or excessive stock consolidations and capital reductions. Accordingly, if a company is designated as a penny stock under supervision, stock consolidations or capital reductions exceeding a 10-to-1 ratio are prohibited for 90 trading days. Furthermore, if a company has conducted a stock consolidation or capital reduction within the past year, additional consolidations or reductions are restricted following designation as a penny stock under observation.
The schedule for raising market capitalization thresholds will also be accelerated from annually to semi-annually. The KOSDAQ delisting threshold, currently set at 15 billion won, will be raised to 20 billion won starting in July and to 30 billion won starting in January of next year. For the KOSPI, the threshold will be raised from 20 billion won to 30 billion won starting in July and to 50 billion won next year.
Going forward, the number of spin-offs is also expected to decrease. In the case of spin-offs—where business units are split off to form separate legal entities for purposes such as improving management efficiency and addressing undervaluation—the share price may drop upon relisting after the split, creating a risk of the stock becoming a penny stock.
In addition, the list of listed companies designated as “monitored stocks” due to falling below the market capitalization threshold was finalized on the same day. On the KOSPI, ONTIDE—which was designated as a penny stock—along with #SUN&L, KEC HOLDINGS(006200), TaewonMulsan(001420), DaewonChemical(024890), and Namsung(004270)were added to the monitored stock list for falling below the 30 billion won market capitalization threshold. On the KOSDAQ market, companies with a market capitalization below 20 billion won—including KUKIL METAL CO., LTD(060480), Hantop Inc.(002680), Fashion Platform Co.,Ltd.(225590), and S&W Corporation(103230)—were included, along with Hyungji Global and E8, which are classified as penny stocks under special monitoring.
BK Holdings(050090), i-Scream Edu Co., Ltd.(289010), WonpungMulsan(008290), Barunson Entertainment & Arts Corporation(035620), Soosung Webtoon(084180), and A.F.W Co., Ltd(312610)—which were already on the watch list—are penny stocks and have been re-designated as watch list stocks.