Key points
- A Seoul court froze two delistings
- Judges called the exchange's rule invalid
- Two more stocks halted mid-session
A Seoul court on Friday suspended the delistings of two Korean companies, Jooyontech (주연테크, 044380) and KM Pharmaceutical (케이엠제약, 225430), and found that the Korea Exchange's rule for removing companies with a small market value is invalid. The temporary injunctions keep both stocks listed until a full lawsuit against the exchange is decided.
Within hours, the exchange halted trading in two other Kosdaq stocks already in their final trading period before delisting, while it reviews whether the rule can still be applied.
What the court decided
The Seoul Southern District Court's Civil Division 51, led by Chief Judge Kwon Seong-su (권성수), granted injunctions to both companies. The exchange can't go ahead with the delistings or hold that trading period until the main case is settled, according to Jooyontech's filing and KM Pharmaceutical's filing on Korea's disclosure system.
"The provision setting the delisting requirement for falling short on market value, and the supplementary provision that moved up when the threshold applies, both clearly violate the principle of proportionality and run against the idea of justice, so they are illegal and void," the court said, as quoted by MTN (머니투데이방송).
The judges didn't object to a higher minimum itself. Their problem was the process. A shortfall in market value counts as an automatic delisting reason in Korea, with no right to object, and the court said raising the bar that much without giving companies a chance to explain themselves went too far, Chosun Biz (조선비즈) reported.
The court also faulted two other changes. The exchange made it harder to get off its watch list, replacing a test of 30 days out of 90 (including 10 in a row) with 45 trading days in a row above the minimum. The judges said the exchange presented no evidence of having studied whether the tougher test was justified. Regulators had also pulled the higher minimums forward to July 2026 from January 2027, and the court said the exchange gave no concrete reason for the rush beyond the general goal of removing weak companies on time.
The minimums are now 20 billion won ($14.9M) on the Kosdaq and 30 billion won ($22.3M) on the main Kospi market. The Kosdaq floor was 4 billion won until early this year.
The two companies
Jooyontech is a computer maker founded in 1988 that has been listed on the Kospi since 2006. At the time of its listing, the company was Korea's second-largest maker of home desktop PCs, Segye Ilbo (세계일보) reported. The company has posted operating losses every year since 2021.
The exchange put Jooyontech on its watch list on July 21 and decided on September 28 to delist the stock. Its shares last traded at 436 won, leaving the company worth about 6.1 billion won ($4.5M). That's below even the old 20 billion won Kospi minimum. The court only partly sided with Jooyontech. The judges froze the delisting but rejected the request to undo the July watch-list designation.
KM Pharmaceutical makes oral care products for babies and young children, best known for its Pororo toothpaste, along with skin care products. KM Pharmaceutical was the first drug or biotech company to face delisting under the tougher rules, Edaily (이데일리) reported in September. The company went on the watch list on July 9, and the exchange decided on September 14 to delist the stock.
The company's business had been improving. First-half sales rose about 13 percent from a year earlier to 8.3 billion won ($6.2M). The company tried a share consolidation, a share sale its CEO bought into, and a stock buyback, but its market value kept falling. Its shares last traded at 698 won on September 14, the day of the delisting decision, a value of about 4.5 billion won ($3.4M).
Other companies stop trading
At 2:06 p.m. on Friday, the exchange halted Sejin TS (세진티에스, 067770) and AFW (에이에프더블류, 312610), two Kosdaq companies already in that trading period. AFW was set to finish on October 6 and Sejin TS on October 8.
"Since an injunction has been granted in a case over the validity of the market-value delisting rule, we are suspending final sales to review whether the provision applies," the exchange said, according to MTN. The exchange said it will announce later whether trading will resume.
Two more companies are waiting on their own cases. Pintel (핀텔, 291810) and Medicox (메디콕스, 054180) were both ordered delisted on September 30 and filed for injunctions on October 1. The final trading periods for both stocks were put on hold. Pintel's had been due to start Friday.
Friday's ruling is a sharp turn. Of 86 delisting injunction cases decided from 2022 through September, courts granted only two, Hankook Ilbo (한국일보) reported earlier this week.
What comes next
This isn't the final word. An injunction only pauses the delisting while the main lawsuit continues, and the court hasn't canceled either decision.
Still, the ruling goes beyond two companies, because the court said the rule itself was flawed. By the exchange's own count, 94 Kosdaq companies could be removed under the higher minimums, and financial regulators met on Friday to discuss a response, Seoul Economic Daily (서울경제) reported. The newspaper said a rule change that adds a way for companies to object is one possible outcome, and that a separate plan to remove stocks trading under 1,000 won could be slowed as well.
The exchange had already eased the rules once. Last month, it pushed back the next increase, to 30 billion won on the Kosdaq, by six months to July 2027. The exchange also let some companies that miss the minimum move to the Konex, Korea's smaller third market, without going through that trading period. Seoul Economic Daily reported that companies with an injunction in hand may now prefer to stay put and wait for the courts.
"Excluding a normal company from listing based only on one short-term market-value figure calls for caution, for the healthy development of the capital market," said the team from Lin (법무법인 린), the law firm that represented Jooyontech, Bizwatch (비즈워치) reported. In July, about 307 Kosdaq companies sat below the price or market-value levels that can start the delisting process.
The court's and the exchange's statements and the law firm's comments are translated from Korean. Won figures are converted at 1,344.28 won to the dollar, the Yahoo Finance rate on October 2, 2026.
