South Korean dental implant maker Osstem Implant will be delisted from Korea's secondary tech-laden bourse Kosdaq starting Aug. 14, according to the company, Wednesday.
The final stock trading period for Osstem Implant, which has a market capitalization with 2.93 trillion won ($2.26 billion), takes place from Thursday to Aug. 11.
Investors who sell Osstem Implant's shares on the market during the final stock trading period will only have to pay for the securities transaction tax, which is 0.2 percent of the transfer value of share certificates, but the investors who trade the firm's shares after the final stock trading period will be required to pay for the securities transaction tax -- which will be 0.35 percent of the shares' value -- as well as be subjected to capital gains tax and local income taxes when trading Osstem Implant's stocks, as additional taxes are levied when trading stocks in the over-the-counter market.
The delisting comes after Osstem Implant applied to bourse operator Korea Exchange for a voluntary delisting from Kosdaq via an extraordinary shareholder's meeting on June 28.
According to Korea Exchange regulations, the dominant shareholder must acquire at least 95 percent of the shares to opt for delisting from the stock market.
As such, Dentistry Investment, a consortium of two private equity firms and the biggest shareholder of Osstem Implant, has been gradually ramping up its stake in Osstem Implant via public tender offerings and a ten-for-one reverse stock split.
Reverse stock splits are measures taken by a company to reduce its number of outstanding shares in the market. If a company performs a 10-for-one reverse stock split, the stocks are merged into multiples of 10 shares and redistributed to shareholders, and the rest of the stocks are liquidated in cash in proportion to the current market price. In other words, with the move, minor shareholders' shares that are not in multiples of 10 are liquidated.
Currently, Dentistry Investment's stake in Osstem Implant stands at 96.2 percent, while minor stakeholders' stakes stand at 3.8 percent.
Dentistry Investment added via a regulatory filing Wednesday that it is planning on additionally buying shares of Osstem Implant's minor shareholders at 1.9 million won ($1,488) per share for the next six months through over-the-counter trades, to further protect minor shareholder's profits.
"There are many reasons why a company would vie for a voluntary delisting from Kosdaq," said an industry official on the condition of anonymity.
"Being listed comes with a lot of obligations, such as posting disclosures and having to regularly hold shareholders' meetings for minor shareholders. Also, once a company is listed, minority shareholders tend to interfere frequently with management. In this respect, delisting allows for a faster decision-making process," he added.
