60 companies face delisting from Korean stock market

The Korea Times

The Korea Times

Finance

Thu, November 30, 2023 | 01:17

Markets

60 companies face delisting from Korean stock market

Posted : 2023-03-05 15:43

Updated : 2023-03-06 09:08

Hana Bank staff work at a dealing room in Seoul, Friday. Yonhap

By Lee Min-hyung

A total of 60 companies face being delisted from the Korean stock market as watchdogs could strip their listing qualification following a review based on their 2022 audit reports.

According to the Korea Exchange, a group of six companies listed on the benchmark KOSPI is at risk of being delisted once they submit their annual audit reports to the exchange operator and the Financial Supervisory Service (FSS) by the end of March. The stock trading of others in the secondary Kosdaq may also be halted if external auditors issue negative opinions about them continuing to be listed on the bourse. The stock trading of most of these companies has already been suspended.

The six KOSPI-listed companies are Il Jeong Industrial, BK Tops, Seondo Electric, Thelma Therapeutics, Hitron and SsangYong Motor.

Kolon Life Science and Kolon TissueGene are the most famous companies to be designated on a watch list in the Kosdaq, for having reported losses for two of the past three business years. Other Kosdaq-listed firms also face delisting after having been classified into a group required to receive screening on their listing qualifications for diverse reasons such as embezzlement, business malpractice and continuous operating losses.

The fate of those facing deficits will be particularly affected hard by the audit report.

Data from the exchange shows that almost three out of ten delisted companies were booted from the stock market due to the annual audit result, during the past five years. More than 90 percent of a total of 171 delisted firms lost their qualification after receiving "inappropriate" opinions from external auditors. About 8 percent of them were also delisted for not submitting their business reports.

Under the capital market act, all listed companies should submit their annual business and audit reports to the exchange and the FSS by March 31.

However, not all the companies designated as a group for delisting are immediately expelled from the stock market, as the exchange operator gives a second chance for their revival by allowing a formal objection. Last year, the exchange eased rules on delisting, as part of efforts to alleviate the burden on small- to medium-sized enterprises here, suffering financial difficulties amid steep rate hikes.

After the exchange notifies them of the delisting, the companies can raise an appeal for the next 15 days. The exchange then carries out an internal review and determines whether to reject the objection or grant a one-year period for them to improve their business practices.

mhlee@koreatimes.co.kr