Korea Exchange halts market-cap delistings for eight small caps after a court injunction

Read literally, the clock the court objected to is shorter than it looks. A company flagged for low market capitalization is removed if it fails to meet the threshold for 45 consecutive trading days out of 90, according to Seoul Economic Daily's account of the ruling ^[6]. That puts the last day a qualifying run can begin at day 46, because a run starting on day 47 would end on day 91, outside the window ^[15]. The run must also be unbroken, so a single day back under the line starts the count again ^[15].

The two winners were KM Pharmaceutical and Jooyon, as Korea JoongAng Daily's Yonhap report names them, and the Seoul Southern District Court ruled for them ^[2]. Seoul Economic Daily spells the names Kmpharmaceutical and Jooyontech and dates the ruling Oct. 2 ^[3]. Six other small caps had faced delisting alongside the pair ^[4]. The exchange said their delisting procedures have been on hold since that Friday ^[7].

A market-cap test, like the 1,000-won penny-stock line, is a listing standard the share price can meet by itself ^[10]. Seoul Economic Daily, while calling for the rule to be fixed, also tells regulators to respond strictly to troubled companies that avoid removal through artificial share-price support ^[13]. I think the limit-up moves on Oct. 8 priced time, or rather the hope that the pause ends in a gentler test ^[9]. The only change the sources report between Oct. 7 and Oct. 8 is the paused deadline ^[1][9].

Regulators have a few ways out. They can keep market cap as the test and add the grace period and the chance to object and present explanations that Seoul Economic Daily asks for ^[12]. They can widen the test to revenue, profitability, financial soundness and growth potential, as the same editorial also proposes ^[12]. Or the courts can keep ruling company by company, as this one did for two ^[2]. The Oct. 8 buyers need the first or the third ^[9]. A fundamentals test is one a rally cannot pass, and its adoption would prove that bet wrong.

The rule was built for speed. Regulators sharply tightened the market-cap and penny-stock criteria this year to remove troubled companies quickly ^[8]. The eight already decided are about 3% of the 238 companies that Rep. Park Min-kyu's data placed below one line or the other in late August ^[10][16]. The editorial's worry is that technology-exception listings with growth potential get pushed out with the rest ^[19]. Minister of SMEs and Startups Lee So-young said at a parliamentary audit on Oct. 7 that "judging by the single criterion of market capitalization can produce unfair results" ^[11].