KOSPI and KOSDAQ-listed companies that become delisting candidates for falling short of market capitalisation requirements will be able to continue trading by moving to KONEX if they meet certain financial requirements.

Korea Exchange said it will implement from Sept. 23 revisions to the "KONEX Market Listing Rules" to allow KOSPI and KOSDAQ companies designated as issues under administration for failing to meet market capitalisation requirements to transfer-list on KONEX.

The revision reflects a KONEX transfer-listing plan for companies delisted for failing to meet market capitalisation thresholds that was announced at a joint meeting of related agencies on Sept. 4 to assess market conditions.

Under the revised rules, KOSPI and KOSDAQ companies designated as issues under administration solely for failing to meet market capitalisation requirements may apply to transfer-list on KONEX if they satisfy certain financial requirements.

Companies must meet 1 of 2 financial requirements. They must either record operating profit in at least 2 of the most recent 3 fiscal years, or record operating profit in 1 of the most recent 3 fiscal years and have total equity of at least 20 billion won. In both cases, they must have no capital impairment.

If the transfer listing takes place, shares delisted from the KOSPI or KOSDAQ market for failing to meet market capitalisation requirements will be listed on KONEX and continue trading.

The deadline to apply for prior consultation for a KONEX transfer is within 40 trading days from the date the company is designated as an issue under administration for failing to meet market capitalisation requirements in its existing market. An application for a new listing must be filed within 3 business days from the date the delisting reason occurs.

Korea Exchange said it aims to reduce market shocks that may arise during the process of strengthening delisting requirements, including market capitalisation standards, while giving companies with a certain level of financial soundness a chance to resume trading on KONEX.

A Korea Exchange official said, "We will ease market shocks from tougher delisting requirements for failing to meet market capitalisation thresholds and actively support the relevant companies so they can use a KONEX transfer as an opportunity to leap forward by preparing support measures for companies transferring to KONEX."