Korea Exchange (KRX) announced on July 2 that it has revised the KOSDAQ listing rules. Companies that have been listed through the technology special procedure will be subject to substantive delisting review if they change their main business purpose within five years of the IPO. This move aims to close regulatory loopholes where firms exploit the special listing mechanism to transition into areas such as virtual asset (digital asset) treasury management.
Conditions Triggering Delisting Review for Technology Special Stocks: Five-Year Post-IPO Period and the Definitional Boundary of "Change in Main Business Purpose"
Under the new KRX rules, companies listed via the technology special procedure that supplement or amend their articles of incorporation to change their main business purpose within five years of the IPO will trigger a substantive delisting review. An exception clause clarifies that changes to business categories similar to the original main business purpose, or changes of an ancillary nature, are not subject to review.
The background of the KRX revision is that some companies, after obtaining technology special listing eligibility, bypassed regulatory constraints of the original listing conditions by changing their business purpose, particularly transitioning into businesses involving virtual asset treasury management or digital asset investment.
Specific KRX Case: Delisting Review Rationale for a Biotech Company Transitioning into a Digital Asset Investment Company
In its explanation of the revision, KRX cited a specific case: a biotech company listed on KOSDAQ last year under special listing rules transferred its management rights to an overseas digital asset-related company after listing and changed its main business to a digital asset investment company.
KRX stated that such a transition invalidates the technical capability recognition and main business growth potential assessment that originally justified the technology special listing, making it necessary to initiate a substantive delisting review in accordance with regulations. This case forms the core policy background for the KRX rule revision and is the direct legislative motivation behind the new provision that "a change in business purpose within five years triggers a delisting review."
Reform of the Delisting Exemption System: Three-to-Five-Year Exemption Period Converted to a Conditional Disclosure Mechanism
Under the current system, technology special listed companies enjoy a three-to-five-year exemption period from delisting requirements, during which conditions such as "failure to meet revenue targets" or "massive losses" are temporarily suspended, based on the reasoning that technology special listings rely on future growth potential.
This reform changes the above exemption system from unconditional to conditional: companies must disclose specific plans to enhance corporate value during the exemption period, conveying their future growth potential to investors. KRX stated that this measure aims to ensure that special listed companies maintain their obligation of information transparency to investors while enjoying the exemption period.
Concurrent Reform Measures in This KOSDAQ Revision: Four Supporting Rules
The concurrent reforms accompanying this KOSDAQ rule revision by KRX include:
Expansion of Evaluation Criteria for Innovative Companies: Customized qualitative evaluation indicators are expanded to cover a broader range of innovative companies' listing needs.
Establishment of a Basis for Information Disclosure by Low-PBR Companies: An information disclosure framework is created for listed companies with low price-to-book ratios, enhancing investor understanding of corporate valuations.
Comprehensive Reform of the Multiple Voting Rights Share System: Systematic rectification of the system related to listed issuers holding multiple voting rights shares.
Overarching Reform Framework: All measures are part of KRX's policy direction to "enhance trust and innovation in KOSDAQ and improve the basic structure of the capital market."
Frequently Asked Questions
What specific impact does Korea's new KRX rule have on companies listed via the technology special procedure?
According to the new rule announced by KRX on July 2, 2026, companies listed via the technology special procedure that change their main business purpose (by amending their articles of incorporation) within five years of the IPO will trigger a substantive delisting review; changes similar to the original main business or of an ancillary nature are not subject to this restriction. The specific scope of application and review procedures are subject to the official KRX rule text.
What is the policy background of this new rule, and why is it specifically targeting virtual asset transitions?
KRX pointed out in its rule explanation that there have been specific cases where technology special listed companies, after obtaining listing eligibility, transitioned their business into digital asset investment companies, invalidating the originally recognized technical capabilities and main business growth potential; the new rule aims to prevent companies from exploiting the special listing mechanism to shift into areas such as virtual asset treasury management, closing regulatory loopholes.
What adjustments have been made to the delisting exemption system for technology special listed companies?
KRX changed the original three-to-five-year unconditional delisting exemption period into a conditional system, requiring companies to disclose specific plans to enhance corporate value during the exemption period to convey future growth potential to investors; the specific disclosure content and review requirements are subject to the official KRX implementation rules.
