FSS Intensifies Crackdown on Illegal Acts to Avoid Delisting, Encouraging Exit for Troubled Firms

The Financial Supervisory Service (FSS) announced it will take stern action against illegal activities aimed at evading delisting from the stock market. It will establish a joint response system involving its investigation, disclosure, and accounting departments to closely monitor unfair trading and accounting fraud that delay the delisting of troubled companies.

Key targets of the crackdown include increasing own capital through paid-in capital increases using embezzled funds, overstating sales or equity, using non-public adverse information, and short-term market manipulation to avoid meeting trading volume requirements. This initiative is a follow-up measure to the reform plan set to raise the delisting market capitalization requirements for the KOSPI and KOSDAQ markets starting July 2026. The FSS stated that by sternly responding to illegal acts intended to avoid delisting, it aims to enhance the credibility of the stock market and protect investors.