Exchange to Implement Greatly Relaxed Delisting Rules for Listed Companies Starting Early Next Month

[Asia Economy Reporter Kwon Jae-hee] The government’s plan to rationalize the delisting criteria for listed companies, pursued as a national agenda to reduce corporate burdens and protect investors, will be applied starting early next month.

On the 15th, the Korea Exchange announced revisions to the listing regulations for the KOSPI and KOSDAQ markets through its regulatory service website.

Previously, companies facing financial delisting reasons were subject to automatic delisting, but now they will have an opportunity for relief if they pass a substantive review confirming their listing eligibility.

The revised delisting criteria subject to substantive listing eligibility review for the KOSPI market are: ▲ capital erosion rate of 50% or more for two consecutive years ▲ sales below 5 billion KRW for two consecutive years.

For the KOSDAQ market, the four criteria are: ▲ capital erosion rate of 50% or more for two consecutive occurrences ▲ net capital below 1 billion KRW for two consecutive occurrences ▲ sales below 3 billion KRW for two consecutive years ▲ pre-tax losses exceeding 50% of net capital for two consecutive occurrences.

If any of these occur twice within the past three years, the company will be designated as a management item, and if it occurs again after designation, it will be delisted.

In cases of delisting due to failure to submit regular reports (KOSPI and KOSDAQ) or insufficient trading volume (KOSPI), companies will be allowed to file objections and given opportunities to resolve the issues.

Additionally, the price below requirement, which was a formal delisting reason in the KOSPI market, will be removed, and in the KOSDAQ market, the substantive review reasons of operating losses and adverse opinions on internal accounting control systems will be abolished.

The criteria for designation as a management item and delisting due to capital erosion in the KOSDAQ market will change from semiannual to annual basis.

The Korea Exchange stated, "We will collect opinions from stakeholders and market participants, and after approval from the Financial Services Commission, the revised regulations will be implemented."

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