Korea Exchange halts delisting procedures after court rulings

Korea Exchange said it will suspend follow-up delisting procedures for now against companies that had been subject to delisting for falling short of market capitalization requirements.

The move follows court rulings granting injunctions sought by companies that had challenged the procedural legitimacy of the tightened delisting standards.

According to Korea Exchange on Wednesday, the Seoul Southern District Court recently accepted applications by Jooyontech (case no. 2026Kahap1541) and KM Pharmaceutical (case no. 2026Kahap1532) to suspend the effect of their delisting decisions.

In its ruling, the court said it could not easily conclude that Korea Exchange's market capitalization criteria were "unjustified in purpose, inappropriate in method, or excessive in the threshold amount."

However, the court pointed to shortcomings in guaranteeing the listed companies' "right to procedural participation" — including the right to file objections — and raised concerns about the early application of the new standards.

The court also rejected the companies' separate request to suspend the designation of their shares as issues under administrative watch, limiting the injunction to the delisting decisions only.

In response, Korea Exchange said it "respects the court's decision and will faithfully present its position in the course of the objection process and any subsequent litigation."

In addition, Korea Exchange said that since Friday it has stopped advancing delisting procedures following the administrative-watch designation, in order to prevent market uncertainty from spreading amid similar disputes.

However, the measure designating companies as issues under administrative watch for falling below the market capitalization threshold — which took effect July 1 — will remain in place as is.

Korea Exchange also said it will maintain trading halts on eight listed companies whose delisting had already been decided before Friday due to insufficient market capitalization.

The eight companies with continuing trading halts include five suspended before the start of liquidation trading — Jooyontech on the Kospi, and Silla SG, Gold&S, KM Pharmaceutical and Pintel on the Kosdaq — and three suspended while liquidation trading was already under way: SHD on the Kospi, and Sejin T.S. and A.F.W. on the Kosdaq.