This article was published on April 21, 2025, at 3:42 p.m. on the ChosunBiz MoneyMove site.
S-UNP, a Kosdaq-listed venture capital (VC) company formerly known as M-Venture Investment, has pushed back against the Korea Exchange's decision to delist it and is taking legal action. It has filed for a suspension of the delisting decision in court. This is seen as S-UNP's last card after undergoing a second review by the market committee.
According to the financial investment industry on the 21st, S-UNP filed for a suspension of the 'delisting decision' at the Seoul Southern District Court at the end of last month. This move is in response to the Korea Exchange Kosdaq Market Committee's decision to delist on the 19th, and procedures for delisting, including liquidation trading, are currently suspended.
S-UNP, a first-generation startup investment company based on Shin Young Technology Finance, was listed on the Kosdaq market in 1989. It recorded returns exceeding 800% by investing in companies like Com2uS and WEBZEN, but faced a crisis when trading was halted due to a rejected audit opinion in March of last year, leading to a review of its listing eligibility.
The rejected audit opinion was due to the limitation of the fair value audit scope for GCT Semiconductor, an investment target of S-UNP. While S-UNP received an appropriate opinion in a re-audit, the Korea Exchange resolved to delist after two market committee reviews, citing 'the existing disruption to major shareholders and instability in operations,' among other reasons.
S-UNP noted in its submitted application for a provisional injunction that the Korea Exchange abused its discretionary authority. It argued that although it submitted a management improvement plan ahead of the first review and resolution by the Kosdaq Market Committee in December last year, it was not even given the opportunity to be granted a period for improvement.
S-UNP stated, "There are no cases where a decision for delisting was made within a year after a rejected audit opinion in March of last year," and emphasized that "the decision to delist without even granting an opportunity for a period of improvement, despite receiving an appropriate audit opinion in the re-audit, was an abuse of discretion."
Additionally, S-UNP believes there could be a different outcome in court, as it improved the issues consistently pointed out by the Korea Exchange regarding the disruption to major shareholders and the instability in operations in the corporate review committee and during the second and first Kosdaq Market Committee reviews held in January and March of last year.
For instance, S-UNP completed the disruption with major shareholder Hong Seong-hyeok, the former representative, which the Korea Exchange pointed out as something that must be implemented in the first market committee. Under the lead of major shareholder SU&Partners, an extraordinary shareholders' meeting was held in February, and although Hong was dismissed, he still held the position of internal director after the sale of management rights.
The Korea Exchange evaluated that Hong's concentrated investment in GCT Semiconductor limited the company's growth. There was also a deficit due to evaluation losses from GCT Semiconductor. S-UNP reduced its capital by 67% through a free capital reduction, effectively addressing the accounting deficit.
S-UNP claims to have expanded its business scope through private equity investments and has established a sustainability in operations. It invested 52 billion won in the Korea Gold Exchange, the largest gold trading exchange in the country, becoming a major shareholder, and plans to acquire semiconductor materials and parts company Bright Korea to secure a revenue base of 19 billion won annually.
The Korea Exchange is expected to submit an opinion to the court ahead of the scheduled hearing date this month. It is believed that the submission will indicate that the inability to assure revenue growth after the merger was the reason for the delisting decision.
The Korea Exchange has reportedly set a standard similar to that of an initial listing review for companies that come under substantive review after trading halts. Even if S-UNP secures a revenue base through the acquisition of Bright Korea, it believes that this must exceed at least 20 billion won.
In the market, the poor stock price movements of listed VCs are also seen as a reason for the Korea Exchange's delisting. This is because the funds became less appealing to investors as they became stingy on shareholder returns after going public. Additionally, dramatic fluctuations in stock prices according to themes have significantly burdened investors.
Meanwhile, the court is expected to hold a hearing regarding S-UNP's application for a provisional injunction to suspend the delisting decision this month and is likely to deliver a final decision next month. If the court grants the provisional injunction, S-UNP may receive a period for improvement after the market committee's review.