Korean court suspends market-cap delisting decisions; exchange halts two more exits
Version 2: Later reporting added outlets beyond the first-day coverage, including a lawyer's account that inquiries from at-risk companies have surged, the rarity of granted injunctions and details of Joo Yeon Tech's share decline, plus the exchange's statement that follow-up measures are being prepared; the underlying facts of the Oct 2 injunctions and the suspension of two other delisting procedures were unchanged.
In short
Seoul Southern District Court Civil Division 51 granted injunctions on Oct 2 suspending the Korea Exchange's delisting decisions against KOSPI-listed Joo Yeon Tech and KOSDAQ-listed KM Pharma until a main ruling. The court questioned the 45-consecutive-trading-day recovery requirement and the lack of a chance for companies to object, and criticised moving the higher market-cap thresholds forward to July this year. The exchange has halted trading and delisting procedures for two other companies that were already in liquidation trading.
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A Seoul court has suspended the Korea Exchange's delisting decisions against two listed companies. Seoul Southern District Court Civil Division 51 granted injunctions on Oct 2 filed by KOSPI-listed Joo Yeon Tech and KOSDAQ-listed KM Pharma, according to Yonhap and other outlets; the companies disclosed the decisions are suspended until a main ruling is finalised and that liquidation trading will not proceed. [ 1 , 4 , 5 , 6 , 7 , 8 , 9 ]
The court took issue with how the rules were applied rather than with the higher market-cap bar itself. Yonhap reported the court found that moving the start of the higher thresholds from January next year to July this year undermined the principles of proportionality and predictability, and that affected companies were not given enough opportunity to state their views or object. Kyunghyang reported the court judged the measures procedurally unlawful and invalid, and that no route or exception was provided for companies that met listing eligibility on other grounds. [ 1 , 4 , 7 ]
Under the rules, a company designated as an administrative issue over a market-cap shortfall must hold market value above 30 billion won on the KOSPI and 20 billion won on the KOSDAQ for 45 consecutive trading days inside a 90-trading-day window; going below the line once resets the count. Yonhap reported the lower thresholds of 20 billion won on the KOSPI and 15 billion won on the KOSDAQ applied from Jan 1, 2026 and were raised in July, ahead of a schedule that had foreseen increases in 2027 and 2028, while the recovery criteria changed from 10 consecutive and 30 cumulative trading days to 45 consecutive days within 90. [ 1 , 4 ]
The decision quickly reached other companies. The exchange said it halted trading in and suspended delisting procedures for KOSDAQ-listed AFW and Sejin T&S, which were already in liquidation trading, to review whether the clause applies, according to Kyunghyang and Yonhap. Yonhap reported procedures for other companies facing exit over market-cap shortfalls or penny-stock prices are likely to be delayed. Hankook Ilbo reported exchange official Kim Sung-chun said follow-up measures on the court decision were being pursued. [ 4 , 7 , 9 ]
The exchange and financial authorities have said the tightening was meant to bring the domestic market in line with global standards and to reduce cases of companies escaping delisting through temporary share-price support, with the stricter recovery requirement aimed at preventing workarounds. Yonhap reported the exchange will examine the situation and consult financial authorities before deciding its response. Kim Young-hoon, a lawyer representing Joo Yeon Tech, told Hankook Ilbo that inquiries from companies at risk of delisting had surged and that lawsuits could rise sharply if the current rules stand. [ 1 , 4 , 9 ]
Maeil Business noted that major overseas exchanges set a separate improvement period, citing Nasdaq, which notifies a company that fails some continued-listing requirements for 30 consecutive trading days and normally gives it 180 days. Hankook Ilbo reported Joo Yeon Tech's share price fell from around 2,500 won in October last year to around 1,600 won by late May, when the financial regulator approved the higher thresholds, with market value dropping from about 330 billion won to about 210 billion won. [ 1 , 9 ]
Kyunghyang reported that, according to the Capital Market Research Institute, 60 KOSDAQ-listed companies were designated as administrative issues between July and Sept 4 under the strengthened criteria, and that institute senior research fellow Ahn Yu-mi said some companies that fell short had relatively sound finances. [ 7 ]
Why it matters
The injunctions stop the delisting of the two companies until a main court decision and, according to Yonhap, are likely to delay exit procedures for other firms facing removal over market-cap shortfalls or penny-stock prices, leaving the timing of the exchange's market clean-up uncertain. The ruling also opens the question of whether the recovery-period rules and the procedure for companies to object will be revised, after the exchange presented the tightening as bringing the market in line with global standards. Coverage treats the dispute as one over regulatory procedure rather than over whether weak companies should leave the market.
Key facts
- Seoul Southern District Court Civil Division 51 granted injunctions on Oct 2 suspending the Korea Exchange's delisting decisions against KOSPI-listed Joo Yeon Tech and KOSDAQ-listed KM Pharma until a main ruling is finalised, with liquidation trading halted. [ 1 , 4 , 5 , 6 , 7 , 8 , 9 ]
- The court criticised the requirement to stay above the market-cap threshold for 45 consecutive trading days within a 90-trading-day recovery period, the lack of an adequate chance for companies to object or explain, and the decision to move the higher thresholds forward to July this year. [ 1 , 4 , 7 ]
- Under the rules, a company designated as an administrative issue for a market-cap shortfall must hold market value above 30 billion won on the KOSPI and 20 billion won on the KOSDAQ for 45 consecutive trading days within 90 trading days, with the count resetting if the threshold is breached once. [ 1 , 4 , 7 ]
- The Korea Exchange said it halted trading in and suspended delisting procedures for KOSDAQ-listed AFW and Sejin T&S, which had been in liquidation trading. [ 4 , 7 , 9 ]
- The exchange said the tightening was meant to reshape the domestic market along global standards and to reduce cases of companies escaping delisting through temporary share-price support, and that the stricter recovery requirement was intended to prevent workarounds. [ 1 , 4 ]
- Hankook Ilbo reported that only two of 86 court rulings on delisting-related injunctions in the past five years had granted the request, citing a lawyer representing Joo Yeon Tech. [ 9 ]
- Kyunghyang Shinmun reported that, according to the Capital Market Research Institute, 60 KOSDAQ-listed companies were designated as administrative issues between July and Sept 4 under the strengthened market-cap and share-price criteria. [ 7 ]
Confirmed by several sources
- Seoul Southern District Court Civil Division 51 granted injunctions on Oct 2 suspending the delisting decisions against KOSPI-listed Joo Yeon Tech and KOSDAQ-listed KM Pharma until a main ruling, with liquidation trading also halted. [ 1 , 4 , 5 , 6 , 7 , 8 , 9 ]
- The court's objections centred on procedure and on the 45-consecutive-trading-day recovery requirement rather than on the higher market-cap threshold itself. [ 1 , 4 , 7 ]
- The current thresholds for companies designated as administrative issues over market-cap shortfalls are 30 billion won on the KOSPI and 20 billion won on the KOSDAQ. [ 1 , 4 ]
- The Korea Exchange halted trading and suspended delisting procedures for AFW and Sejin T&S, which were already in liquidation trading. [ 4 , 7 , 9 ]
- The Korea Exchange said it is reviewing the court decision and preparing follow-up measures, and will consult financial authorities on its response. [ 1 , 4 , 9 ]
Still unclear
- Whether Sejin T&S entered liquidation trading on Sept 23 or Sept 29. Maeil Business says the company began delisting procedures on Sept 23, while Yonhap dates its liquidation trading to Sept 29 and assigns the Sept 23 start to AFW.
- Whether the market-cap thresholds, the recovery period or the objection procedure will be revised, and how many other companies' delisting procedures will be delayed. Yonhap reports that the exchange will consult the financial authorities and that industry expects reform discussions, but no decision has been reported and no total number of affected companies is given.
- Whether the Korea Exchange will appeal the injunction rulings. No document mentions an appeal; the exchange said only that it is examining the decision and preparing follow-up measures.
- How unusual the court's intervention is in delisting cases. The figure that two of 86 rulings in five years granted injunctions comes from a single outlet, Hankook Ilbo, citing a lawyer, and is not corroborated elsewhere.
- How the threshold increases were scheduled. Yonhap describes the 2027 step being moved to July 2026 within a shift to half-yearly stages, while Hankook Ilbo says implementation was moved forward to July this year and January next year.
What local media are saying
Timeline, local time
- Maeil Business publishes a detailed report on the Seoul Southern District Court's Oct 2 injunctions, the 45-consecutive-day recovery requirement and the Sejin T&S case. [ 1 ]
- Maeil Business publishes a second item summarising the same court decision. [ 2 ]
- Yonhap reports the court's proportionality finding, the schedule of rule changes and the exchange's suspension of trading in AFW and Sejin T&S. [ 4 ]
- Dong-A Ilbo reports the injunction and says the drive to remove weak companies from the market will be disrupted. [ 5 ]
- Kyunghyang Shinmun reports the court judged the procedures unlawful and that the exchange suspended liquidation trading for AFW and Sejin T&S to review whether the clause applies. [ 7 ]
- Hankook Ilbo reports lawyers expect litigation to rise, that two of 86 delisting injunction cases in five years were granted, and details Joo Yeon Tech's share decline. [ 9 ]
- Newsis publishes an item on the ruling. [ 10 ]