{"content_id":"pxlzx2vxpm","slug":"korea-delisting-rules-july-krx","locale":"en","schema_type":"Article","category":"report","category_name":"Report","title":"Summary of the KOSPI and KOSDAQ Delisting Requirements Taking Effect in July","summary":"Starting in July, delisting criteria for companies listed on the KOSPI and KOSDAQ—related to disclosure violations, market capitalization, low stock prices, and complete capital impairment—will be tightened. Investors should regularly check the history of non-compliant disclosures, market capitalization, stock price levels, and whether their holdings are in a state of capital impairment.","author":{"name":"Injoys Editorial Team","url":"https://injoys.com/ko/about"},"key_points":["A company may be subject to a substantive review for delisting if it accumulates 10 points—not 15 points—for disclosure violations over the past year.","The market capitalization thresholds will be raised to 30 billion won for the KOSPI and 20 billion won for the KOSDAQ, and companies will undergo a monitoring period after being designated as “under observation.”","Separate delisting criteria will also be introduced for so-called “penny stocks,” or stocks priced below 1,000 won.","Whether a company is fully capital-impaired is taken into account in delisting decisions not only at the end of the fiscal year but also as of the end of the first half of the year.","To assess the risk of delisting, you must review the disclosures and financial information available on the Korea Exchange’s KIND and the Financial Supervisory Service’s DART."],"content_markdown":"## Overview\n\nWith financial authorities approving revisions to the Korea Exchange’s listing regulations for the KOSPI and KOSDAQ markets, delisting criteria for listed companies will become stricter starting in July. Key changes include lowering the penalty threshold for disclosure violations, raising the minimum market capitalization threshold, introducing criteria for low-priced stocks trading below 1,000 won, and expanding the timeframe for determining full capital impairment.\n\nDelisting does not simply mean that a stock’s price has fallen; it means that a company may be removed from the market for failing to meet the listing maintenance requirements set by the exchange. Investors need to check whether the stocks they hold are close to meeting the new criteria, whether there is a history of non-compliant disclosures, and whether their financial structure is deteriorating.\n\n## Key Strengthened Delisting Requirements at a Glance\n\n| Category | Previous or Current Criteria | Strengthening Measures Effective July | Key Indicators for Investors |\n|---|---:|---:|---|\n| Disclosure Violations | Subject to substantive review for delisting upon accumulating 15 penalty points in the past year | Subject to substantive review upon accumulating 10 penalty points in the past year | Designation under the Act on the Prevention of Inaccurate Disclosure, penalty points, history of retracted or amended disclosures |\n| Market Capitalization | Relatively low thresholds applied | Risk of delisting if below 30 billion won on KOSPI or below 20 billion won on KOSDAQ | Market capitalization based on closing price; designation as a “monitored stock” |\n| Low Stock Price | Separate, limited criteria for penny stocks | If the stock price remains below 1,000 won for a certain period, the stock may be designated as a “monitored stock” or delisted | Closing price, changes to par value, and disclosures regarding stock price stabilization |\n| Full Capital Erosion | Primarily assessed as of the end of the fiscal year | Full capital erosion as of the first half of the year is also factored into delisting decisions | Semi-annual reports, total capital, paid-in capital, and audit or review opinions |\n\n## 1. The penalty point threshold for disclosure violations will be lowered from 15 to 10 points\n\n### What’s Changing\n\nIf a listed company fails to disclose material information in a timely manner, makes incorrect disclosures, or significantly revises or changes previous disclosures, the Korea Exchange (KRX) may, depending on the circumstances, designate the company as a “non-compliant discloser” and impose penalty points.\n\nPreviously, a company could become subject to a substantive delisting review if it accumulated 15 penalty points for disclosure violations over the past year; however, starting in July, accumulation of just 10 points will trigger such a review. In other words, even the same disclosure violation will have a greater impact on maintaining the company’s listing status.\n\n### Previously Accumulated Penalty Points Will Also Be Partially Reflected\n\nPenalty points imposed before the revised standards take effect will not be completely wiped out. It is understood that existing penalty points will be converted to two-thirds of their original value and carried forward under the standards effective July 1. Consequently, companies with a history of penalty points may come close to being subject to a substantive review if they commit even a single additional disclosure violation after July.\n\n### What Investors Should Check\n\nInvestors should verify the following items regarding the stocks they hold or are interested in:\n\n- History of designations under the Act on the Prevention of Unfaithful Disclosure over the past year\n- Whether penalty points have been imposed and whether fines have been levied\n- Whether there have been reversals or changes to important disclosures, such as the termination of a single sales or supply contract, a change in the largest shareholder, or the withdrawal of a capital increase through paid-in capital\n- Whether there have been frequent corrections or delays in disclosures\n\nPenalty points for disclosure violations are not permanent sanctions that remain indefinitely; they are typically assessed on a rolling one-year basis. However, since adjustments may be applied to points accrued before and after the amendment takes effect, companies with past penalty points should be viewed with greater caution.\n\n## 2. Market capitalization thresholds are being raised to 30 billion won for KOSPI and 20 billion won for KOSDAQ\n\n### New Criteria\n\nGoing forward, companies whose market capitalization falls below the following thresholds will face a higher risk of delisting.\n\n| Market | Strengthened Threshold |\n|---|---:|\n| KOSPI | Market capitalization below 30 billion won |\n| KOSDAQ | Market capitalization below 20 billion won |\n\nFalling below these thresholds does not result in immediate delisting. Companies will first be designated as “monitored stocks,” and their compliance with the criteria will be monitored for the next 90 trading days. If a company fails to meet the minimum market capitalization threshold for 45 consecutive trading days during this period, it may face final delisting proceedings.\n\n### Why the Tightening?\n\nThe market capitalization threshold is a quantitative indicator used to assess whether a listed company maintains a certain level of market performance and investor base. The purpose is to ensure that companies consistently exceed the threshold over a specific period, thereby preventing them from temporarily inflating their stock prices in the short term to avoid delisting.\n\n### Opportunities for appeal may be limited\n\nFalling below the market capitalization threshold is a quantitative requirement calculated based on market price, rather than a reason heavily influenced by subjective factors such as accounting judgments or the potential for business normalization. Therefore, once it is confirmed that the threshold has not been met, there may be less room for appeals or exceptions compared to other grounds for delisting.\n\n## 3. A “penny stock” criterion for shares priced below 1,000 won will be introduced\n\n### Significance of the Penny Stock Criterion\n\n“Penny stock” is a term generally used to refer to stocks with very low share prices. Under the revised criteria, whether a share price remains below 1,000 won for a certain period will be factored into the decision on maintaining listing status.\n\n### Application Structure\n\n- If the stock price remains below 1,000 won for 30 consecutive trading days, the stock may be designated as a “monitored stock.”\n- The stock is then observed for the following 90 trading days.\n- If the stock price fails to exceed 1,000 won for 45 consecutive trading days during the observation period, it may lead to delisting.\n\nThese criteria can be viewed as a mechanism to filter out companies with persistently low stock prices from the market and to strengthen investor protection.\n\n### Points to Note\n\nOne cannot conclude that a company has no value simply because its stock price is below 1,000 won. Factors such as par value, the number of shares, the possibility of a stock split or reverse stock split, financial condition, and business sustainability must all be considered together. However, under the new criteria, the regulatory risk increases for stocks that remain below 1,000 won for an extended period.\n\n## 4. The assessment of total capital impairment will be expanded to include the first half of the year\n\n### What Is Total Capital Impairment?\n\nTotal capital impairment refers to a state in which a company’s total capital falls below zero. Simply put, it is a state in which accumulated losses have grown so large that they have completely eroded the paid-in capital. This is a sign that the company’s financial stability has been significantly compromised.\n\n| Concept | Description |\n|---|---|\n| Paid-in Capital | Amount contributed by shareholders that constitutes statutory capital |\n| Total Capital | Amount representing net assets, calculated by subtracting liabilities from assets |\n| Capital Erosion | A state in which total capital falls below paid-in capital due to factors such as increasing accumulated losses |\n| Total Capital Erosion | A state in which total capital becomes negative |\n\n### What Has Changed\n\nPreviously, the presence of capital erosion was primarily determined based on financial statements at the end of the fiscal year. After the amendment, if a company is in a state of total capital impairment as of the end of the first half of the year, delisting will be considered. Therefore, even before the year-end closing, companies whose total capital is confirmed to be negative in their semi-annual reports may face a higher risk of delisting.\n\n## How Investors Can Actually Verify This\n\n### Step 1: Check the History of Non-Compliant Disclosures on the Korea Exchange’s KIND\n\nSearch for the company name on the Korea Exchange’s electronic disclosure system, KIND, and review disclosures related to designations under the Non-Compliant Disclosure Act. Check the following items: reason for designation, penalty points imposed, fines, and whether the violations are cumulative over the past year.\n\n### Step 2: Check Regular Reports on the Financial Supervisory Service’s DART\n\nCheck annual reports, semi-annual reports, and quarterly reports on the Financial Supervisory Service’s electronic disclosure system, DART. You should review the total equity, paid-in capital, accumulated deficit, and the auditor’s opinion or review opinion on the balance sheet.\n\n### Step 3: Track Market Capitalization and Closing Price\n\nMarket capitalization fluctuates based on the stock price and the number of shares outstanding. For stocks approaching the KOSPI threshold of 30 billion won or the KOSDAQ threshold of 20 billion won, do not focus solely on short-term price fluctuations; instead, verify whether the stock consistently exceeds these thresholds over a certain period.\n\n### Step 4: Verify Whether the Stock Price Remains Below 1,000 Won\n\nYou must distinguish whether a low-priced stock has temporarily fallen below 1,000 won or is in a structurally low-priced state that has persisted for 30 trading days or more. After a stock is designated as a “monitored stock,” you should pay particular attention to the 90-trading-day observation period and the 45-trading-day consecutive threshold.\n\n## Precautions When Making Investment Decisions\n\nThe tightening of delisting criteria is a regulatory change aimed at removing insolvent companies and restoring market confidence. However, not all stocks at risk of delisting are immediately removed; procedures such as designation as a “monitored stock,” substantive review, and the granting of a grace period may be applied differently depending on the specific circumstances.\n\nInvestors are advised to avoid the following:\n\n- Buying stocks at low prices simply because their share prices have fallen significantly\n- Investing based solely on thematic catalysts without verifying a company’s history of non-compliant disclosures\n- Buying stocks that are close to the market capitalization threshold based solely on expectations of a short-term rebound\n- Investing without reviewing semi-annual reports and audit opinions\n\n## Key Takeaways\n\nThe key to the strengthened delisting requirements effective July is the stricter application of quantitative criteria over qualitative judgments. Companies with low disclosure reliability, an excessively small market size, a stock price that has remained below 1,000 won for an extended period, or those in a state of complete capital impairment face a higher risk of delisting. Investors should proactively identify warning signs by reviewing exchange disclosures and regular reports from the Financial Supervisory Service.","content_html":"\u003ch2\u003e\u003ca href=\"#overview\" class=\"anchor\" id=\"overview\"\u003e\u003c/a\u003eOverview\u003c/h2\u003e\n\u003cp\u003eWith financial authorities approving revisions to the Korea Exchange’s listing regulations for the KOSPI and KOSDAQ markets, delisting criteria for listed companies will become stricter starting in July. Key changes include lowering the penalty threshold for disclosure violations, raising the minimum market capitalization threshold, introducing criteria for low-priced stocks trading below 1,000 won, and expanding the timeframe for determining full capital impairment.\u003c/p\u003e\n\u003cp\u003eDelisting does not simply mean that a stock’s price has fallen; it means that a company may be removed from the market for failing to meet the listing maintenance requirements set by the exchange. Investors need to check whether the stocks they hold are close to meeting the new criteria, whether there is a history of non-compliant disclosures, and whether their financial structure is deteriorating.\u003c/p\u003e\n\u003ch2\u003e\u003ca href=\"#key-strengthened-delisting-requirements-at-a-glance\" class=\"anchor\" id=\"key-strengthened-delisting-requirements-at-a-glance\"\u003e\u003c/a\u003eKey Strengthened Delisting Requirements at a Glance\u003c/h2\u003e\n\u003cdiv class=\"overflow-x-auto\"\u003e\u003ctable\u003e\n\u003cthead\u003e\n\u003ctr\u003e\n\u003cth\u003eCategory\u003c/th\u003e\n\u003cth\u003ePrevious or Current Criteria\u003c/th\u003e\n\u003cth\u003eStrengthening Measures Effective July\u003c/th\u003e\n\u003cth\u003eKey Indicators for Investors\u003c/th\u003e\n\u003c/tr\u003e\n\u003c/thead\u003e\n\u003ctbody\u003e\n\u003ctr\u003e\n\u003ctd\u003eDisclosure Violations\u003c/td\u003e\n\u003ctd\u003eSubject to substantive review for delisting upon accumulating 15 penalty points in the past year\u003c/td\u003e\n\u003ctd\u003eSubject to substantive review upon accumulating 10 penalty points in the past year\u003c/td\u003e\n\u003ctd\u003eDesignation under the Act on the Prevention of Inaccurate Disclosure, penalty points, history of retracted or amended disclosures\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd\u003eMarket Capitalization\u003c/td\u003e\n\u003ctd\u003eRelatively low thresholds applied\u003c/td\u003e\n\u003ctd\u003eRisk of delisting if below 30 billion won on KOSPI or below 20 billion won on KOSDAQ\u003c/td\u003e\n\u003ctd\u003eMarket capitalization based on closing price; designation as a “monitored stock”\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd\u003eLow Stock Price\u003c/td\u003e\n\u003ctd\u003eSeparate, limited criteria for penny stocks\u003c/td\u003e\n\u003ctd\u003eIf the stock price remains below 1,000 won for a certain period, the stock may be designated as a “monitored stock” or delisted\u003c/td\u003e\n\u003ctd\u003eClosing price, changes to par value, and disclosures regarding stock price stabilization\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd\u003eFull Capital Erosion\u003c/td\u003e\n\u003ctd\u003ePrimarily assessed as of the end of the fiscal year\u003c/td\u003e\n\u003ctd\u003eFull capital erosion as of the first half of the year is also factored into delisting decisions\u003c/td\u003e\n\u003ctd\u003eSemi-annual reports, total capital, paid-in capital, and audit or review opinions\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tbody\u003e\n\u003c/table\u003e\u003c/div\u003e\n\u003ch2\u003e\u003ca href=\"#1-the-penalty-point-threshold-for-disclosure-violations-will-be-lowered-from-15-to-10-points\" class=\"anchor\" id=\"1-the-penalty-point-threshold-for-disclosure-violations-will-be-lowered-from-15-to-10-points\"\u003e\u003c/a\u003e1. The penalty point threshold for disclosure violations will be lowered from 15 to 10 points\u003c/h2\u003e\n\u003ch3\u003e\u003ca href=\"#whats-changing\" class=\"anchor\" id=\"whats-changing\"\u003e\u003c/a\u003eWhat’s Changing\u003c/h3\u003e\n\u003cp\u003eIf a listed company fails to disclose material information in a timely manner, makes incorrect disclosures, or significantly revises or changes previous disclosures, the Korea Exchange (KRX) may, depending on the circumstances, designate the company as a “non-compliant discloser” and impose penalty points.\u003c/p\u003e\n\u003cp\u003ePreviously, a company could become subject to a substantive delisting review if it accumulated 15 penalty points for disclosure violations over the past year; however, starting in July, accumulation of just 10 points will trigger such a review. In other words, even the same disclosure violation will have a greater impact on maintaining the company’s listing status.\u003c/p\u003e\n\u003ch3\u003e\u003ca href=\"#previously-accumulated-penalty-points-will-also-be-partially-reflected\" class=\"anchor\" id=\"previously-accumulated-penalty-points-will-also-be-partially-reflected\"\u003e\u003c/a\u003ePreviously Accumulated Penalty Points Will Also Be Partially Reflected\u003c/h3\u003e\n\u003cp\u003ePenalty points imposed before the revised standards take effect will not be completely wiped out. It is understood that existing penalty points will be converted to two-thirds of their original value and carried forward under the standards effective July 1. Consequently, companies with a history of penalty points may come close to being subject to a substantive review if they commit even a single additional disclosure violation after July.\u003c/p\u003e\n\u003ch3\u003e\u003ca href=\"#what-investors-should-check\" class=\"anchor\" id=\"what-investors-should-check\"\u003e\u003c/a\u003eWhat Investors Should Check\u003c/h3\u003e\n\u003cp\u003eInvestors should verify the following items regarding the stocks they hold or are interested in:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eHistory of designations under the Act on the Prevention of Unfaithful Disclosure over the past year\u003c/li\u003e\n\u003cli\u003eWhether penalty points have been imposed and whether fines have been levied\u003c/li\u003e\n\u003cli\u003eWhether there have been reversals or changes to important disclosures, such as the termination of a single sales or supply contract, a change in the largest shareholder, or the withdrawal of a capital increase through paid-in capital\u003c/li\u003e\n\u003cli\u003eWhether there have been frequent corrections or delays in disclosures\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003ePenalty points for disclosure violations are not permanent sanctions that remain indefinitely; they are typically assessed on a rolling one-year basis. However, since adjustments may be applied to points accrued before and after the amendment takes effect, companies with past penalty points should be viewed with greater caution.\u003c/p\u003e\n\u003ch2\u003e\u003ca href=\"#2-market-capitalization-thresholds-are-being-raised-to-30-billion-won-for-kospi-and-20-billion-won-for-kosdaq\" class=\"anchor\" id=\"2-market-capitalization-thresholds-are-being-raised-to-30-billion-won-for-kospi-and-20-billion-won-for-kosdaq\"\u003e\u003c/a\u003e2. Market capitalization thresholds are being raised to 30 billion won for KOSPI and 20 billion won for KOSDAQ\u003c/h2\u003e\n\u003ch3\u003e\u003ca href=\"#new-criteria\" class=\"anchor\" id=\"new-criteria\"\u003e\u003c/a\u003eNew Criteria\u003c/h3\u003e\n\u003cp\u003eGoing forward, companies whose market capitalization falls below the following thresholds will face a higher risk of delisting.\u003c/p\u003e\n\u003cdiv class=\"overflow-x-auto\"\u003e\u003ctable\u003e\n\u003cthead\u003e\n\u003ctr\u003e\n\u003cth\u003eMarket\u003c/th\u003e\n\u003cth\u003eStrengthened Threshold\u003c/th\u003e\n\u003c/tr\u003e\n\u003c/thead\u003e\n\u003ctbody\u003e\n\u003ctr\u003e\n\u003ctd\u003eKOSPI\u003c/td\u003e\n\u003ctd\u003eMarket capitalization below 30 billion won\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd\u003eKOSDAQ\u003c/td\u003e\n\u003ctd\u003eMarket capitalization below 20 billion won\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tbody\u003e\n\u003c/table\u003e\u003c/div\u003e\n\u003cp\u003eFalling below these thresholds does not result in immediate delisting. Companies will first be designated as “monitored stocks,” and their compliance with the criteria will be monitored for the next 90 trading days. If a company fails to meet the minimum market capitalization threshold for 45 consecutive trading days during this period, it may face final delisting proceedings.\u003c/p\u003e\n\u003ch3\u003e\u003ca href=\"#why-the-tightening\" class=\"anchor\" id=\"why-the-tightening\"\u003e\u003c/a\u003eWhy the Tightening?\u003c/h3\u003e\n\u003cp\u003eThe market capitalization threshold is a quantitative indicator used to assess whether a listed company maintains a certain level of market performance and investor base. The purpose is to ensure that companies consistently exceed the threshold over a specific period, thereby preventing them from temporarily inflating their stock prices in the short term to avoid delisting.\u003c/p\u003e\n\u003ch3\u003e\u003ca href=\"#opportunities-for-appeal-may-be-limited\" class=\"anchor\" id=\"opportunities-for-appeal-may-be-limited\"\u003e\u003c/a\u003eOpportunities for appeal may be limited\u003c/h3\u003e\n\u003cp\u003eFalling below the market capitalization threshold is a quantitative requirement calculated based on market price, rather than a reason heavily influenced by subjective factors such as accounting judgments or the potential for business normalization. Therefore, once it is confirmed that the threshold has not been met, there may be less room for appeals or exceptions compared to other grounds for delisting.\u003c/p\u003e\n\u003ch2\u003e\u003ca href=\"#3-a-penny-stock-criterion-for-shares-priced-below-1000-won-will-be-introduced\" class=\"anchor\" id=\"3-a-penny-stock-criterion-for-shares-priced-below-1000-won-will-be-introduced\"\u003e\u003c/a\u003e3. A “penny stock” criterion for shares priced below 1,000 won will be introduced\u003c/h2\u003e\n\u003ch3\u003e\u003ca href=\"#significance-of-the-penny-stock-criterion\" class=\"anchor\" id=\"significance-of-the-penny-stock-criterion\"\u003e\u003c/a\u003eSignificance of the Penny Stock Criterion\u003c/h3\u003e\n\u003cp\u003e“Penny stock” is a term generally used to refer to stocks with very low share prices. Under the revised criteria, whether a share price remains below 1,000 won for a certain period will be factored into the decision on maintaining listing status.\u003c/p\u003e\n\u003ch3\u003e\u003ca href=\"#application-structure\" class=\"anchor\" id=\"application-structure\"\u003e\u003c/a\u003eApplication Structure\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003eIf the stock price remains below 1,000 won for 30 consecutive trading days, the stock may be designated as a “monitored stock.”\u003c/li\u003e\n\u003cli\u003eThe stock is then observed for the following 90 trading days.\u003c/li\u003e\n\u003cli\u003eIf the stock price fails to exceed 1,000 won for 45 consecutive trading days during the observation period, it may lead to delisting.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThese criteria can be viewed as a mechanism to filter out companies with persistently low stock prices from the market and to strengthen investor protection.\u003c/p\u003e\n\u003ch3\u003e\u003ca href=\"#points-to-note\" class=\"anchor\" id=\"points-to-note\"\u003e\u003c/a\u003ePoints to Note\u003c/h3\u003e\n\u003cp\u003eOne cannot conclude that a company has no value simply because its stock price is below 1,000 won. Factors such as par value, the number of shares, the possibility of a stock split or reverse stock split, financial condition, and business sustainability must all be considered together. However, under the new criteria, the regulatory risk increases for stocks that remain below 1,000 won for an extended period.\u003c/p\u003e\n\u003ch2\u003e\u003ca href=\"#4-the-assessment-of-total-capital-impairment-will-be-expanded-to-include-the-first-half-of-the-year\" class=\"anchor\" id=\"4-the-assessment-of-total-capital-impairment-will-be-expanded-to-include-the-first-half-of-the-year\"\u003e\u003c/a\u003e4. The assessment of total capital impairment will be expanded to include the first half of the year\u003c/h2\u003e\n\u003ch3\u003e\u003ca href=\"#what-is-total-capital-impairment\" class=\"anchor\" id=\"what-is-total-capital-impairment\"\u003e\u003c/a\u003eWhat Is Total Capital Impairment?\u003c/h3\u003e\n\u003cp\u003eTotal capital impairment refers to a state in which a company’s total capital falls below zero. Simply put, it is a state in which accumulated losses have grown so large that they have completely eroded the paid-in capital. This is a sign that the company’s financial stability has been significantly compromised.\u003c/p\u003e\n\u003cdiv class=\"overflow-x-auto\"\u003e\u003ctable\u003e\n\u003cthead\u003e\n\u003ctr\u003e\n\u003cth\u003eConcept\u003c/th\u003e\n\u003cth\u003eDescription\u003c/th\u003e\n\u003c/tr\u003e\n\u003c/thead\u003e\n\u003ctbody\u003e\n\u003ctr\u003e\n\u003ctd\u003ePaid-in Capital\u003c/td\u003e\n\u003ctd\u003eAmount contributed by shareholders that constitutes statutory capital\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd\u003eTotal Capital\u003c/td\u003e\n\u003ctd\u003eAmount representing net assets, calculated by subtracting liabilities from assets\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd\u003eCapital Erosion\u003c/td\u003e\n\u003ctd\u003eA state in which total capital falls below paid-in capital due to factors such as increasing accumulated losses\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd\u003eTotal Capital Erosion\u003c/td\u003e\n\u003ctd\u003eA state in which total capital becomes negative\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tbody\u003e\n\u003c/table\u003e\u003c/div\u003e\n\u003ch3\u003e\u003ca href=\"#what-has-changed\" class=\"anchor\" id=\"what-has-changed\"\u003e\u003c/a\u003eWhat Has Changed\u003c/h3\u003e\n\u003cp\u003ePreviously, the presence of capital erosion was primarily determined based on financial statements at the end of the fiscal year. After the amendment, if a company is in a state of total capital impairment as of the end of the first half of the year, delisting will be considered. Therefore, even before the year-end closing, companies whose total capital is confirmed to be negative in their semi-annual reports may face a higher risk of delisting.\u003c/p\u003e\n\u003ch2\u003e\u003ca href=\"#how-investors-can-actually-verify-this\" class=\"anchor\" id=\"how-investors-can-actually-verify-this\"\u003e\u003c/a\u003eHow Investors Can Actually Verify This\u003c/h2\u003e\n\u003ch3\u003e\u003ca href=\"#step-1-check-the-history-of-non-compliant-disclosures-on-the-korea-exchanges-kind\" class=\"anchor\" id=\"step-1-check-the-history-of-non-compliant-disclosures-on-the-korea-exchanges-kind\"\u003e\u003c/a\u003eStep 1: Check the History of Non-Compliant Disclosures on the Korea Exchange’s KIND\u003c/h3\u003e\n\u003cp\u003eSearch for the company name on the Korea Exchange’s electronic disclosure system, KIND, and review disclosures related to designations under the Non-Compliant Disclosure Act. Check the following items: reason for designation, penalty points imposed, fines, and whether the violations are cumulative over the past year.\u003c/p\u003e\n\u003ch3\u003e\u003ca href=\"#step-2-check-regular-reports-on-the-financial-supervisory-services-dart\" class=\"anchor\" id=\"step-2-check-regular-reports-on-the-financial-supervisory-services-dart\"\u003e\u003c/a\u003eStep 2: Check Regular Reports on the Financial Supervisory Service’s DART\u003c/h3\u003e\n\u003cp\u003eCheck annual reports, semi-annual reports, and quarterly reports on the Financial Supervisory Service’s electronic disclosure system, DART. You should review the total equity, paid-in capital, accumulated deficit, and the auditor’s opinion or review opinion on the balance sheet.\u003c/p\u003e\n\u003ch3\u003e\u003ca href=\"#step-3-track-market-capitalization-and-closing-price\" class=\"anchor\" id=\"step-3-track-market-capitalization-and-closing-price\"\u003e\u003c/a\u003eStep 3: Track Market Capitalization and Closing Price\u003c/h3\u003e\n\u003cp\u003eMarket capitalization fluctuates based on the stock price and the number of shares outstanding. For stocks approaching the KOSPI threshold of 30 billion won or the KOSDAQ threshold of 20 billion won, do not focus solely on short-term price fluctuations; instead, verify whether the stock consistently exceeds these thresholds over a certain period.\u003c/p\u003e\n\u003ch3\u003e\u003ca href=\"#step-4-verify-whether-the-stock-price-remains-below-1000-won\" class=\"anchor\" id=\"step-4-verify-whether-the-stock-price-remains-below-1000-won\"\u003e\u003c/a\u003eStep 4: Verify Whether the Stock Price Remains Below 1,000 Won\u003c/h3\u003e\n\u003cp\u003eYou must distinguish whether a low-priced stock has temporarily fallen below 1,000 won or is in a structurally low-priced state that has persisted for 30 trading days or more. After a stock is designated as a “monitored stock,” you should pay particular attention to the 90-trading-day observation period and the 45-trading-day consecutive threshold.\u003c/p\u003e\n\u003ch2\u003e\u003ca href=\"#precautions-when-making-investment-decisions\" class=\"anchor\" id=\"precautions-when-making-investment-decisions\"\u003e\u003c/a\u003ePrecautions When Making Investment Decisions\u003c/h2\u003e\n\u003cp\u003eThe tightening of delisting criteria is a regulatory change aimed at removing insolvent companies and restoring market confidence. However, not all stocks at risk of delisting are immediately removed; procedures such as designation as a “monitored stock,” substantive review, and the granting of a grace period may be applied differently depending on the specific circumstances.\u003c/p\u003e\n\u003cp\u003eInvestors are advised to avoid the following:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eBuying stocks at low prices simply because their share prices have fallen significantly\u003c/li\u003e\n\u003cli\u003eInvesting based solely on thematic catalysts without verifying a company’s history of non-compliant disclosures\u003c/li\u003e\n\u003cli\u003eBuying stocks that are close to the market capitalization threshold based solely on expectations of a short-term rebound\u003c/li\u003e\n\u003cli\u003eInvesting without reviewing semi-annual reports and audit opinions\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch2\u003e\u003ca href=\"#key-takeaways\" class=\"anchor\" id=\"key-takeaways\"\u003e\u003c/a\u003eKey Takeaways\u003c/h2\u003e\n\u003cp\u003eThe key to the strengthened delisting requirements effective July is the stricter application of quantitative criteria over qualitative judgments. Companies with low disclosure reliability, an excessively small market size, a stock price that has remained below 1,000 won for an extended period, or those in a state of complete capital impairment face a higher risk of delisting. Investors should proactively identify warning signs by reviewing exchange disclosures and regular reports from the Financial Supervisory Service.\u003c/p\u003e\n","tags":["Delisting","Korea Exchange","Disclosure violation","Market capitalization","Penny stocks","Capital impairment"],"faqs":[{"question":"Why are the delisting criteria being tightened starting in July?","answer":"The aim is to impose stricter oversight on companies with low disclosure reliability, excessively weak market prospects, or financial instability, in order to enhance investor protection and market confidence."},{"question":"How are the penalty point standards for disclosure violations changing?","answer":"The cumulative penalty point threshold for the past year has been lowered from 15 to 10 points, meaning that a company can be subject to a substantive review for delisting once it accumulates just 10 points."},{"question":"Will penalty points already received for disclosure violations be reflected under the new standards?","answer":"Yes. It is understood that penalty points already accumulated before the new policy takes effect will be converted to two-thirds of their original value and carried over under the new standards."},{"question":"Where can I check a company’s history of being designated under the Act on the Disclosure of Unfaithful Information?","answer":"Simply search for the company name on KIND, the Korea Exchange’s electronic disclosure system, and check for any disclosures regarding designation under the Act on Unfaithful Disclosure. You can also view major disclosures and periodic reports on DART, the Financial Supervisory Service’s disclosure system."},{"question":"By how much will the market capitalization threshold be raised?","answer":"If a company’s market capitalization falls below 30 billion won on the KOSPI or below 20 billion won on the KOSDAQ, it faces a heightened risk of delisting. The company is first designated as a “monitored stock,” and its compliance with the criteria is monitored for a certain period."},{"question":"If a company falls short of the market capitalization requirement for even just one day, is it immediately delisted?","answer":"No. If a company fails to meet the criteria, it is designated as a “monitored stock,” and the market then monitors whether it fails to exceed the specified market capitalization for 45 consecutive trading days out of the following 90 trading days."},{"question":"What is the standard for coin-operated machines?","answer":"If a stock’s price remains below 1,000 won for 30 consecutive trading days, it may be designated as a “monitored stock”; if it continues to fail to exceed 1,000 won for a certain period thereafter, this may lead to delisting."},{"question":"Why is total capital impairment dangerous?","answer":"Total capital impairment refers to a situation where total capital has turned negative, meaning the company’s net assets have effectively been eroded. This is a significant warning sign regarding the company’s ability to continue as a going concern and maintain its listing status."},{"question":"Is being fully capital-impaired in the first half of the year grounds for delisting?","answer":"Following the amendment, a company’s status as fully capital-impaired can be determined not only at the end of the fiscal year but also as of the end of the first half of the year. Therefore, it is essential to check the total equity figure in the semi-annual report."},{"question":"Should I always sell stocks at risk of delisting?","answer":"This article is not investment advice. However, violations of disclosure requirements, failure to meet minimum market capitalization requirements, prolonged periods of low stock prices, and complete capital impairment are significant warning signs; therefore, you should review individual disclosures and financial statements before making a careful decision."}],"sources":[{"url":"https://kind.krx.co.kr/","title":"KIND, the Korea Exchange's Electronic Disclosure System","type":"source"},{"url":"https://dart.fss.or.kr/","title":"Financial Supervisory Service's Electronic Disclosure System (DART)","type":"source"},{"url":"https://www.krx.co.kr/","title":"Korea Exchange","type":"source"},{"url":"https://www.fsc.go.kr/","title":"Financial Services Commission","type":"source"}],"images":[{"id":132,"url":"https://injoys.com/rails/active_storage/blobs/redirect/eyJfcmFpbHMiOnsiZGF0YSI6MTI3MSwicHVyIjoiYmxvYl9pZCJ9fQ==--045bcd8d1c80bca390f8bcd9b18ddf0670a35498/ai-3d3f619f.webp","is_representative":true,"generation_method":"ai_image","license":"ai_generated","mime_type":"image/webp","translations":{"ko":{"alt":"거래소 건물, 하락 차트, 경고 표시가 있는 기업 심사 일러스트","caption":"상장폐지 요건 강화로 기업 심사가 엄격해지는 상황을 나타낸다.","description":null},"en":{"alt":"Exchange building, falling chart, and company screening with warning signs","caption":"The illustration depicts stricter review of listed companies under tougher delisting rules.","description":null},"ja":{"alt":"取引所の建物、下落チャート、警告付きの企業審査のイラスト","caption":"上場廃止基準の強化により企業審査が厳しくなる状況を示している。","description":null},"es":{"alt":"Edificio bursátil, gráfico descendente y revisión de empresas con alertas","caption":"La ilustración muestra una revisión más estricta de empresas cotizadas ante nuevas reglas de exclusión.","description":null},"id":{"alt":"Gedung bursa, grafik menurun, dan penyaringan perusahaan dengan tanda peringatan","caption":"Ilustrasi ini menggambarkan pengetatan pemeriksaan emiten seiring aturan delisting yang lebih ketat.","description":null},"pt":{"alt":"Prédio da bolsa, gráfico em queda e triagem de empresas com alertas","caption":"A ilustração mostra uma análise mais rigorosa de empresas listadas com regras de deslistagem mais duras.","description":null},"zh-hant":{"alt":"交易所建築、下跌圖表與帶警示標誌的企業審查插畫","caption":"插畫呈現退市規定加嚴下，上市公司審查變得更嚴格的情境。","description":null}}},{"id":133,"url":"https://injoys.com/rails/active_storage/blobs/redirect/eyJfcmFpbHMiOnsiZGF0YSI6MTI3NywicHVyIjoiYmxvYl9pZCJ9fQ==--a47f327fc3aca3447b62e2037e86234ca7947792/ai-ccd54232.webp","is_representative":false,"generation_method":"ai_image","license":"ai_generated","mime_type":"image/webp","translations":{"ko":{"alt":"상장폐지 위험 지표가 표시된 화면을 보는 투자자 일러스트","caption":"투자자가 강화된 상장폐지 요건을 나타내는 경고 지표들을 확인하고 있다.","description":null},"en":{"alt":"Investor viewing warning panels for delisting risk indicators","caption":"An investor reviews warning signs related to stricter stock delisting requirements.","description":null},"ja":{"alt":"上場廃止リスクの警告パネルを見る投資家のイラスト","caption":"投資家が厳格化される上場廃止基準に関する警告指標を確認している。","description":null},"es":{"alt":"Inversor mirando paneles de alerta sobre riesgos de exclusión bursátil","caption":"Un inversor revisa señales de advertencia vinculadas a requisitos más estrictos de exclusión bursátil.","description":null},"id":{"alt":"Investor melihat panel peringatan indikator risiko delisting","caption":"Seorang investor meninjau tanda peringatan terkait aturan delisting saham yang lebih ketat.","description":null},"pt":{"alt":"Investidor observando painéis de alerta sobre risco de deslistagem","caption":"Um investidor analisa sinais de alerta ligados a regras mais rígidas de deslistagem de ações.","description":null},"zh-hant":{"alt":"投資人查看退市風險警示指標的插圖","caption":"投資人正在檢視與更嚴格退市條件相關的警示訊號。","description":null}}}],"published_at":"2026-07-11T08:09:59+09:00","updated_at":"2026-07-11T08:09:59+09:00","license":"cc_by","translation_status":"reviewed","available_locales":["ko","en","ja","es"],"data_locales":["ko","en","ja","es","id","pt","zh-hant"],"url":"https://injoys.com/en/articles/korea-delisting-rules-july-krx"}