SEOUL, May 11 (Korea Bizwire) – A rising number of Korean companies are voluntarily delisting. The simple logic: there’s more harm than good for companies that remain public.
According to the Korea Exchange (KRX), Kyungnam Energy will go through liquidation proceedings and be delisted on May 19. The company’s biggest shareholder, Kyungnam Tech, requested the voluntary delisting, which was subsequently approved by the KRX.
It’s the first delisting in 16 months for a KOSPI-listed company, since SBI Mortgage in 2015. Kyungnam pointed to various burdens such as disclosure requirements as the leading cause for its decision.
AtlasBX, a KOSDAQ-listed battery company, also hopes to delist, and like Kyungnam is in the middle of liquidation proceedings. Last March, it failed to meet delisting requirements. In order to delist a company, major stockholders must acquire over 95 percent of the shares.
Last year, Toray Chemical and Dongil Paper also tried to voluntarily delist but were unsuccessful. The two companies’ sought to boost management flexibility and quicken decision-making processes.
“Major shareholders will have less outside interference. Companies seem to be believe that the benefits of going public, such as financing or improving corporate image, are of lesser value than the costs related to the various requirements that public companies must meet,” said a KCMI (Korea Capital Market Institute) official.
Financial authorities are taking measures to remove some of the burdens that public companies bear.
However, some say that strict disclosure requirements and the mandatory employment of compliance officers are necessary for the companies’ sustainability.
“Strict disclosure requirements can play a positive role in a company in terms of perpetuity. Corporations should actively contribute more to our society,” said a KCMI official.
By Kevin Lee (firstname.lastname@example.org)