KOSDAQ Delisting Requirements Strengthened: Is Your Stock Safe? (Core Checklist)
The Korea Exchange is significantly strengthening KOSDAQ delisting requirements to weed out failing companies ahead of the Value-up system launch. We analyze the market impact of the new market cap and capital impairment standards.
Ahead of the launch of the 'Corporate Value-up System' next month, the Korea Exchange has significantly strengthened KOSDAQ delisting requirements. This reflects the government's strong commitment to improving the capital market's constitution by quickly phasing out so-called 'zombie companies'.
What's Changing in KOSDAQ Delisting Rules?
The core of this systemic overhaul is reducing the time failing companies can remain in the market and raising the exit barrier to be stricter than the entry barrier. Here are three key changes retail investors must check:
- Accelerated Market Cap Requirements: The market capitalization requirement, which used to be raised annually, will now be applied 'semi-annually'. Starting in July 2026, companies with a market cap under 20 billion KRW risk being designated as administrative issues, and the threshold will rise to 30 billion KRW in 2027.
- New 'Penny Stock' Exit Rule: Stocks that persistently trade below 1,000 KRW (penny stocks) will be subject to delisting. If a stock stays below 1,000 KRW for 30 consecutive trading days, it becomes an administrative issue; failure to recover within a set period will lead to expulsion from the market.
- Semi-Annual Capital Impairment Review: The 'complete capital impairment' exit criterion, previously applied only during year-end settlements, will now apply to semi-annual reports. This puts the brakes on the practice of financially distressed companies surviving through temporary paid-in capital increases.
Market Impact and Investor Strategy
Experts predict this measure will kick off a full-scale sorting process in the KOSDAQ market. Coupled with the Value-up program, capital concentration in blue-chip companies will likely intensify, while marginal companies face the risk of stock price plunges. Investors must prioritize checking their holdings for capital impairment in recent semi-annual reports and whether the market cap falls below 20 billion KRW.
Frequently Asked Questions (FAQ)
Q. What happens if a stock I own is designated as an administrative issue?
If designated as an administrative issue, margin trading is restricted, and mechanical sell-offs from institutional investors can cause significant price drops. Since further review by the exchange could lead to delisting, quickly reducing your position is highly recommended.
Q. Is it safe if a company uses a reverse stock split to avoid the penny stock delisting?
The revised plan includes anti-circumvention measures to prevent such tricks. Even if a temporary reverse stock split artificially pushes the price above 1,000 KRW, the company can still face a substantive review if there is no actual improvement in corporate value.