Immediate Withdrawal from Stock Market

When the registered and listed firm files for a court receivership or composition, or when the listed firm is finally bankrupted, it will be withdrawn from the stock market.

Also, when the minimum stock price is less than 20∼30% of par value or short of a certain scale, the listing or registration will be abolished.

Financial Supervisory Commission (FSC) announced a plan of stock market withdrawal base and KOSDAQ market service recovery containing these substances on December 9.

According to the plan, when the listed and registered firms file for the court receivership or composition, they will be withdrawn immediately from the stock market from next year,

The existing system which the stocks listing can be maintained when the company cancels the bankruptcy within one year, will be changed into the immediate listing abolition after the final bankruptcy.

When the stock price is kept at less 20% of par value for 30 days, the stock is specified as an issue for administration. After that, when the stock price is kept at less 20% of the par value for consecutive 10 days or over 20 days out of 60 days, the maximum stock price is newly made for the withdrawal.

However, firms which have over 500 billion won of total stock prices, will be exceptional, considering that there are significant liquidity.

When the total stock prices are less than 2.5 billion won for 30 days, the stock is specified as an issue for administration. After that, when the stock price is kept at less 20% of the par value for consecutive 10 days or over 20 days out of 60 days, the maximum stock price is newly made for the withdrawal. This policy will be enforced from next July.

As the KOSDAQ market has strengthened the base, the base of the minimum stock price is less than 30% of par value and total minimum stock prices are less than 1 billion won.

As of the end of last month, firms subject to the withdrawal base of the minimum stock price are 13 companies for the withdrawal and 2 companies for the issue for administration in the Exchange market, and 3 companies for the withdrawal and 10 companies for the issue for administration in KOSDAQ market.

Lee Du-Hyeong, director of the supervision policy bureau 2, FSC said, “When the market situation is suddenly aggravated like 9·11 terror, the minimum stock price and total amount system will exceptionally be applied.”

Dong-Won Kim daviskim@donga.com