The Financial Services Commission stated its position that it will continue to push forward its policy of swiftly and strictly exiting underperforming companies, in response to a court's preliminary injunction suspending the Korea Exchange's delisting decision regarding companies failing to meet market capitalization criteria. Although the Korea Exchange has temporarily suspended its delisting decisions for companies failing to meet market capitalization criteria, the designation of such stocks as monitored remains unchanged. The financial authorities stated that they may resume the delisting process or supplement certain procedures in the future, depending on court rulings and other factors.
On the 9th, the Financial Services Commission stated, "There is no change in our policy direction to enhance trust in the capital market through the swift and strict exit of underperforming companies." Previously, the Seoul Southern District Court granted preliminary injunction applications filed by Juyeon Tech and KM Pharmaceutical against the exchange on the 2nd, seeking to suspend the delisting decisions. The court raised issues such as the need to guarantee procedural rights, including opportunities for listed companies to file objections, and the advancement of the implementation schedule, rather than the strengthening of market capitalization criteria itself.
The Financial Services Commission stated that the raising of market capitalization delisting criteria was pursued after preliminary reviews, including research commissions and investigations into overseas cases. It explained that after announcing a plan in January last year to gradually raise the market capitalization threshold for KOSDAQ listing from 15 billion won to 20 billion won, and then to 30 billion won, it moved up the implementation schedule this February, considering the urgency of exiting underperforming companies and the need to restore market trust.
The Financial Services Commission stated that the court also determined regarding the raising of market capitalization criteria that "it is difficult to easily conclude that its purpose is improper in itself, or that the means are inappropriate, or that the threshold amount is excessively high."
The exchange plans to file an objection to this preliminary injunction decision to explain the intent and necessity of the system. While the court's decision only has effect for the companies that applied for the preliminary injunction, the exchange decided to temporarily suspend delisting decisions for other companies as well, in order to prevent uncertainty for companies and investors due to the spread of similar disputes.
However, the designation of stocks as monitored due to failing to meet market capitalization criteria remains applied as before. The Financial Services Commission urged investors to fully consider this in their investment decisions, and called on companies to continue efforts to improve corporate valuation.
The Financial Services Commission stated that it may resume the delisting process or implement it with some procedures supplemented, depending on future court rulings and other factors.
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