Kukje Corporation Files Suit against Korea Exchange

The Kukje Corporation will file a disposition application for permission to resume the trade of stocks before the Supreme Court decides the case pending between itself and the Korea Exchange on the issue of listing.

Kukje Corporation announced on May 29 that it plans “to file an application for revoking the injunction on stock trading on it to the Seoul Southern District Court.”

Kukje Corporation, which was under legal management in March 2005, became one of the targets to be de-listed based on the Exchange regulation that says, “A corporation which is taking steps to be liquidated does not qualify to be listed.”

It immediately filed suit to ‘nullify the de-listing and the suspension of stock trading. Its status as a listed corporation was maintained as the first circuit judgment turned out favorable for it, but stock trading was suspended anyway.

The corporation completed legal management proceedings after being underwritten by E1 in January this year, and the decision to appeal in April rendered “both the de-listing and the suspension of stock trade” null.

But the exchange appealed to the Supreme Court on May 16, leading the corporation to file a disposition application saying that, “If trading is suspended for a year or two until the Supreme Court gives a judgment, the interests of shareholders will be damaged.”

“There hasn’t been a final decision by the Supreme Court yet, but we need to resume stock trading in order to protect the property rights of the shareholders,” an insider of Kukje Corporation explained.

This application is noteworthy in that if it is accepted by the court, many other companies in similar situations will file similar lawsuits.

“The exchange is adhering to the rule of principle despite the fact that the requirements for de-listing were not met, and that the court ruled for the resumption of stock trade,” the Kukje Corporation argued.

Regarding this, the Korea Exchange said, “The stipulation on de-listing aims to protect investors from insolvent companies. Though the cause of de-listing was solved, stock trading cannot resume immediately.”

93.5% of the stocks of Kukje Corporation are owned by E1, and the rest by minor shareholders. Kukje Corporation raised profits of 214.3 billion won and revenues of 35.7 billion won last year.

swon@donga.com larosa@donga.com