Exchange Faces Delisting Risk as 49 Companies Receive Adverse Audit Opinions

Delisting Procedures Underway for 8 Companies on the KOSPI and 41 Companies on the KOSDAQ Market

[Asia Economy Reporter Gong Byung-sun] Among companies listed on the Korea Composite Stock Price Index (KOSPI) and KOSDAQ, 49 companies received adverse audit opinions and are facing delisting risks.

On the 1st, the Korea Exchange announced the market action status for companies with December fiscal year-end for the 2020 business year. The review targets were 767 out of 770 KOSPI-listed companies with December fiscal year-end and 1,441 out of 1,464 KOSDAQ-listed companies.

There are 8 companies undergoing delisting procedures in the KOSPI market. Among them, five companies that newly received audit opinion rejections in 2020 ? Seongan, Sewoo Global, Ssangyong Motor, Selma Therapeutics, and Central Insight ? will have the Korea Exchange decide whether to grant an improvement period upon receiving their objection requests. For three companies ? Heungihe Shipping, Polus Biopharm, and Zico ? that received audit opinion rejections for two consecutive years in the KOSPI market, the delisting decision will be made after review by the Listing Disclosure Committee. The Listing Disclosure Committee meeting will be held after the improvement period ends on the 12th.

In the KOSDAQ market, 41 companies are undergoing delisting procedures. Similarly, 21 companies that newly triggered delisting reasons can file objections within 15 business days from the notification date. For 20 companies such as Gsmart Global, Jenax, and Fortis that received adverse audit opinions for two consecutive years in KOSDAQ, the Corporate Evaluation Committee will review and decide on delisting. Mirae SCI qualifies for delisting due to adverse audit opinions and failure to submit business reports.

Three companies in the KOSPI market were designated as management stocks. Sekisangsa, which recorded sales below 5 billion KRW, and JW Life Science and JW Holdings, which had audit scope limitations, were designated. In the KOSDAQ market, 21 companies including Images, Kolon Life Science, and Dongbang Sunki were newly designated as management stocks.

Some companies resolved the reasons for management stock designation and were released from the designation. In the KOSPI market, Kiwi Media Group was released from management stock designation after resolving capital erosion exceeding 50%. In the KOSDAQ market, 14 companies including Action Square, YOM, Alton Sports, and Kooksoondang resolved the reasons and were released from management stock designation.

In the KOSDAQ market, 28 companies including Myungsung TNS, U-Tech, and Wonpoong Mulsan were newly designated as investment caution stocks due to adverse internal accounting control opinions. Conversely, 21 companies including Kona I, Seohee Construction, and YOM resolved the adverse internal accounting control issues and were released from investment caution stock designation.