152 Companies Delisted Over 5 Years... Majority Due to "Adverse Audit Opinions"

[Asia Economy Reporter Kwon Jae-hee] Among the 152 companies delisted over the past five years (2017-2021), approximately 30% were delisted due to settlement-related reasons.

On the 9th, the Korea Exchange announced that an analysis of delisted companies over the past five years revealed that a total of 45 companies (29.6%) were delisted for settlement-related reasons. This includes 5 companies from the KOSPI market and 40 companies from the KOSDAQ market.

In particular, among the reasons for delisting related to settlement, "adverse audit opinion" accounted for the largest proportion at 86.7% (39 companies). This was followed by "non-submission of business reports" at 8.9% (4 companies), "capital erosion" at 4.4% (2 companies), and "large-scale losses" at 2.2% (1 company).

Twenty-six companies (4 from the KOSPI market and 22 from the KOSDAQ market) that had their delisting deferred in 2020 due to adverse audit opinions are scheduled to have their delisting status determined based on the 2021 audit opinions.

The Korea Exchange urged, "As the 2021 settlement period approaches, major market measures such as designation as a management item, delisting, and suspension of trading may be implemented depending on the settlement details, so both listed companies and investors need to exercise special caution."

Accordingly, listed companies must disclose the audit report immediately upon receiving it from an external auditor. In particular, they must submit the audit report and business report to the Exchange and the Financial Services Commission at least one week before the regular shareholders' meeting and provide them to shareholders.

The Exchange advised, "Investors need to exercise special caution when investing in companies with insufficient management stability or poor financial conditions," as important investment-related information is concentrated during the settlement season and unexpected investment losses may occur.

The submission status of audit reports by listed companies can be checked on the Exchange’s website or the electronic disclosure system.

A Korea Exchange official stated, "We plan to establish a cooperative system with external auditors regarding the submission of audit reports to promote prompt disclosure of audit reports and take timely market measures against companies with adverse audit opinions."

This content was produced with the assistance of AI translation services.