Operating Delisting Focus Management Team…Establishing Review Team and Strengthening Criteria
The Korea Exchange is accelerating the delisting of underperforming KOSDAQ companies by operating a ‘Delisting Focus Management Team’ and expanding the scope of its reviews.
On the 19th, the exchange announced this plan to expedite the removal of failing companies from the KOSDAQ.
Last year, 23 entities were delisted from the KOSDAQ through practical examinations, marking the highest number since 2010 (28 entities). The average duration for delisting has also decreased to 384 days from the previous year’s 476 days.
However, to restore investor confidence, the urgent removal of unviable companies is deemed necessary, and the period from this month to June next year has been set as a management focus period. Additionally, a ‘Delisting Focus Management Team’ led by the KOSDAQ headquarters director has been established to directly oversee the delisting process and collect opinions on the delisting system.
On the 9th, a planning review team was established in the KOSDAQ delisting department to strengthen review expertise and execution capability. To prevent review delays due to an increase in companies subject to practical examination, and if multiple companies with the same controlling shareholder face examination, the process will be integrated for effective and rapid removal.
The scope of practical examination will also be expanded. The capital depletion standard will be shortened from annually to semi-annually, and the criteria for insincere disclosures will lower from 15 cumulative demerit points in a year to 10 points. Additional severe and deliberate instances of insincere disclosure violations will also be addressed.
Additionally, the improvement period, which could be up to 1 year and 6 months, will be shortened to 1 year. Monitoring of the implementation of improvement plans for companies under examination during this period will be reinforced. If it is determined that the improvement plans are not being executed or the business continuity and ability to remain a going concern are lost, the decision on whether to delist can be made before the end of the improvement period.
A spokesperson from the exchange stated, “We plan to concentrate our efforts on identifying underperforming companies in the KOSDAQ and rapidly removing borderline companies with significantly low prospects of regaining listing qualifications,” expressing confidence that “establishing a strict and prompt framework for removing failing companies will allow the market to earn investor trust.”