South Korea's Financial Supervisory Service said on April 19 it will track to the end and respond strictly to illegal acts aimed at avoiding delisting.

The watchdog will set up a joint response system involving its investigation, disclosure and accounting departments. It will intensively monitor unfair trading and accounting fraud that delay the exit of troubled companies from the stock market. The move follows delisting reform measures designed to remove troubled firms quickly and strictly.

The FSS cited 4 major types of illegal conduct related to avoiding delisting.

Targets include taking part in a rights offering with embezzled funds to falsely bolster equity capital, and overstating revenue or equity capital to meet listing maintenance requirements.

It will also intensively crack down on using undisclosed negative information, such as selling shares before a disclosure of violations of accounting standards to avoid losses, and short-term price manipulation to evade minimum trading volume requirements.

The FSS plans to promptly share suspected illegal acts detected during disclosure review and accounting inspection with its investigation department.

It will also check accounting and disclosure issues confirmed during unfair trading investigations to gain a multidimensional view of attempts to avoid delisting.

Delisting requirements for the KOSPI and KOSDAQ markets will be substantially tightened from July.

The market capitalisation threshold will rise to 30 billion won from 20 billion won for KOSPI and to 20 billion won from 15 billion won for KOSDAQ. In January 2027, it will increase further to 50 billion won for KOSPI and 30 billion won for KOSDAQ.

New delisting requirements will be introduced for penny stocks, and the full capital impairment requirement will also apply on a half-year basis.

Delisting standards for disclosure violations will be lowered to 10 cumulative penalty points from 15 points, and serious and intentional violations will be added to the requirements.

An FSS official said it will intensively monitor illegal acts, including those aimed at avoiding delisting, through joint work by its investigation, disclosure and accounting departments. The official said the FSS will respond strictly to boost trust in the stock market and protect investors.