[Edaily Reporter KIM SAE-MI ] Korean biotech materials, parts, and equipment company Micro Digital Co., Ltd.(305090)has been selected for a substantive eligibility review by the Korea Exchange. Following a change in its largest shareholder, the company was designated as a firm with inadequate disclosure practices due to its failure to disclose a stock pledge agreement, adding to the grounds for the substantive review.

The KOSDAQ Market Division of the Korea Exchange announced on the 21st that it had decided to subject Micro Digital Co., Ltd. to a substantive review of its listing eligibility.

Previously, on September 3, Micro Digital Co., Ltd. triggered grounds for a substantive review of its listing eligibility due to a change in its largest shareholder. At the time, while the company was designated as a “stock under investment caution,” the largest shareholder changed as a result of a forced sale of shares used as collateral for a stock-backed loan. Consequently, trading in the company’s shares was suspended starting at 5:12 p.m. that same day.

The exchange also announced on the same day that it had designated Micro Digital Co., Ltd. as a company with inadequate disclosure practices, stating that this constituted an additional ground for a substantive review of its listing eligibility. The designation as a company with inadequate disclosure practices will take effect on the 22nd.

The reason for the designation as a company with inadequate disclosure is the failure to disclose the execution of a stock pledge agreement that resulted in a change of the largest shareholder. The date the violation occurred was September 2, and 7.5 penalty points were imposed. The company’s cumulative penalty points over the past year also total 7.5 points.

According to KOSDAQ listing regulations, a company is subject to a substantive review of its listing eligibility if its cumulative penalty points over the past year reach 10 or more, or if the violation was intentional and of a serious nature. Although Micro Digital Co., Ltd.’s cumulative penalty points have not reached 10, an additional ground for the substantive review was established based on the requirements regarding the intentionality and seriousness of the disclosure violation.

The exchange plans to decide by the 18th of next month, following deliberation and a resolution by the Corporate Review Committee, whether to delist Micro Digital Co., Ltd. or grant it a period for improvement. However, if the company submits a business improvement plan by the 11th of next month, deliberation and a resolution will take place within 20 business days from the date of submission.

Accordingly, the trading suspension on Micro Digital Co., Ltd.’s shares will continue. The exchange has extended the suspension period—which had previously been set to last until the date of the decision on whether the company was subject to a substantive review of its listing eligibility—to last until the date of the decision on whether grounds for delisting exist.