Newintech (012340) and Hyungji Global (308100), the first companies ordered delisted under rules targeting so-called penny stocks trading below 1,000 won, have asked a court to suspend the delisting decisions. The Korea Exchange said it will also hold off on liquidation trading for the three other companies facing delisting on the same grounds.
Newintech and Hyungji Global filed for an injunction with the Seoul Southern District Court on the 23rd seeking to suspend the delisting decisions tied to the share-price shortfall, according to the Korea Exchange. The exchange said it will suspend liquidation trading procedures for the two companies to protect investors and will respond to the injunction case.
TKG Aegang (022220), Barunson E&A (035620) and iScreamEdu (289010), which did not seek injunctions, were also included in the suspension of liquidation trading. The exchange will maintain the delisting decisions for the companies that fell short of the share-price standard but will not proceed with liquidation trading until circumstances change, such as a court ruling.
The litigation arose as the share-price delisting rule, introduced on July 1, was applied for the first time. The five companies were designated as administrative issues on Aug. 13 for failing to meet the share-price standard and became subject to delisting after failing to satisfy recovery requirements. Under the tightened rules, a company must keep its share price at or above 1,000 won for 45 consecutive trading days within 90 trading days of the designation to avoid delisting. With their shares still below 1,000 won on the 23rd, the 46th trading day since designation, meeting the 45-consecutive-day requirement in the remaining period became impossible.
As companies facing delisting file one injunction after another, the exchange's policy of swiftly removing troubled companies is being fought out in court. Jooyontech (044380) and Kmpharmaceutical (225430), which were ordered delisted for falling short of the market-capitalization standard, had already taken legal action, and now the first delistings based on the share-price standard will also be reviewed by the court.
The exchange's response this time differs from its earlier approach. In the market-cap cases, the Seoul Southern District Court granted the two companies' injunction requests on the 2nd of this month, after which the exchange deferred follow-up delisting procedures for related administrative issues. This time, however, it preemptively suspended liquidation trading for all five companies ordered delisted on the same share-price grounds before any court ruling.