KRX announces revised delisting rules for penny stocks

Jeong Eun-bo, chairman of the Korea Exchange, speaks at an event to celebrate the 70th anniversary of the local stock market, March 3. Yonhap

The Korea Exchange (KRX) said Friday it has changed some of the rules related to penny stocks subject to potential delisting under its tightened delisting rules set to take effect this year.

The change includes a ban on companies conducting a reverse stock split or a capital reduction within 90 trading sessions after being designated for possible removal from the stock market, the bourse operator said.

The improvements were made as the previous criteria were unable to prevent firms from trying to avoid penny stock status by issuing shares without par value, or through a capital reduction, the bourse operator added.

Penny stocks refer to companies whose share price is less than 1,000 won ($0.67).

Measures to kick out penny stock companies were newly created in a set of tightened delisting rules announced by the KRX in February, a move aimed at accelerating the removal of ailing companies, long seen as a drag on the local stock market.

The proposed amendments will be implemented starting July 1, after approval from the Financial Services Commission, the KRX said.