KM Pharmaceutical delisting suspended over market-cap requirements
A Seoul court has suspended the delisting of KM Pharmaceutical, ruling that the Korea Exchange’s minimum market capitalization rules were unlawful and invalid.
The Seoul Southern District Court on Friday granted the company’s request to suspend the effect of its Sept. 14 delisting decision until a final ruling in the main case. It also barred the exchange from proceeding with liquidation trading.
The court said the exchange had excessively restricted listed companies’ procedural rights by raising the market-capitalization threshold earlier than planned without giving affected companies sufficient opportunities to state their positions or file objections.
The court also questioned the exchange’s decision to tighten the recovery requirement from maintaining the threshold for a cumulative 30 days and consecutive 10 days within 90 trading days to 45 consecutive days, saying the exchange had failed to provide sufficient evidence to support the change.
KM Pharmaceutical was designated a management-watch company in July after its market capitalization stayed below the required level for 30 consecutive trading days. It was later ordered to delist after failing to meet the recovery requirement.
The Kosdaq market-capitalization threshold was raised to 20 billion won from 4 billion won earlier in the year and had originally been scheduled to rise to that level in 2027. The court said bringing forward the new threshold by six months to July lacked sufficient justification beyond the need to remove financially weak companies from the market.
The ruling has also affected Sejin TS, another Kosdaq-listed company undergoing liquidation trading after being ordered to delist for failing to meet the market-capitalization requirement.
The exchange suspended trading in Sejin TS on Friday to review whether the delisting rules should apply in light of the court ruling. It will separately announce whether liquidation trading will resume.
ch0221@heraldcorp.com