Kumyang was designated as a company with incomplete disclosure after withdrawing a capital increase of 450 billion won due to a restraint from the Financial Supervisory Service. Kumyang received a cumulative penalty point total of 17 points over the past year, resulting in management designation actions from the Korea Exchange.
According to the electronic disclosure system of the Financial Supervisory Service on the 5th, the Korea Exchange announced that it would designate Kumyang as a company with incomplete disclosure on the previous day (4th). Kumyang announced it would pursue a capital increase allocated to shareholders worth 450 billion won last year but decided to withdraw the plan after strong pushback from minority shareholders, which fell under one of the types of incomplete disclosures: changing the announcement.
The Korea Exchange designated Kumyang as a company with incomplete disclosure this time, imposing 7 penalty points and a penalty of 70 million won for the disclosure violation. As a result, Kumyang's cumulative penalty points increased from 10 to 17 points. Last October, Kumyang had already received 10 penalty points for a violation of disclosure obligations related to a mining development project in Mongolia.
With cumulative penalty points exceeding 15, Kumyang faced management designation actions from the Korea Exchange. According to the securities market disclosure rules, if penalty points imposed for disclosure obligation violations exceed 15, the company is designated as a management stock. Kumyang was automatically disqualified from the KOSPI 200. Additionally, trading activity would be suspended for a certain period, it would be excluded from credit transaction targets, and margin trading would no longer be possible.
Earlier, Kumyang announced its plan for a capital increase allocated to shareholders worth 450 billion won in September of last year. Capital increases are typically perceived as negative events due to stock dilution, resulting in strong opposition from shareholders. Consequently, the Financial Supervisory Service required Kumyang to submit a corrected report on its securities registration statement. To proceed with a capital increase, corporations must submit a securities registration statement to financial authorities and receive approval from the Financial Supervisory Service. Kumyang withdrew its capital increase plan last January.
Meanwhile, Kumyang's stock, which faced concerns over designation as a management stock, closed at 17,770 won, down 21.02% from the previous trading day in the securities market.