A court has halted delisting procedures based on companies failing to meet market-capitalisation thresholds, and the Korea Exchange has decided to temporarily suspend related follow-up delisting steps. The market-cap criteria and the system for designating issues for administration will remain in place.

The Korea Exchange said on Tuesday that the Seoul Southern District Court on Oct. 2 granted an application for an injunction filed by JooYeon Tech and KM Pharmaceutical seeking a suspension of the effect of the delisting decision.

The court said it was difficult to readily conclude that the market-cap delisting criteria itself had an improper purpose or means, or that the threshold amount was excessive.

Instead, it pointed to key issues including whether listed companies were sufficiently guaranteed participation rights in procedures such as filing objections and the part where the timing of applying the tightened criteria was brought forward.

The court, in particular, did not accept a request to suspend the effect of the decision to designate the companies as issues for administration. It granted the injunction only for the part suspending the effect of the delisting decision.

In response, the exchange decided to keep as is the designation as issues for administration due to falling short of market-cap criteria, which has been in effect since July 1, reflecting the intent of the court decision.

But with similar disputes spreading and the possibility that uncertainty for companies and investors could grow, it halted follow-up delisting procedures that proceed after a designation as an issue for administration from Oct. 2. It plans to continue market trading in the affected issues by deferring related procedures going forward as well.

Companies whose delisting was already decided due to insufficient market capitalisation and whose trading has been halted will remain in their current status.

A total of 8 companies are affected. Trading was halted before the start of liquidation trading for 5 companies: Silla SG, Gold&S, KM Pharmaceutical and Pintec on the KOSDAQ market, and JooYeon Tech on the KOSPI market.

Trading was halted during the liquidation trading process for 3 companies: Sejin TS and AFW on the KOSDAQ market, and SHD on the KOSPI market. Trading suspensions for these companies will continue.

The exchange plans to file an objection to the court's injunction decision and explain the necessity and procedures of the market-cap delisting system.

The court decision does not mean the delisting system using market-cap criteria itself has been suspended. While designation as an issue for administration will continue to apply, follow-up procedures leading to an actual delisting will stop for the time being, and future court 판단 and whether the exchange supplements the system are expected to emerge as variables.