Korea Exchange (KRX) has decided to put the listing eligibility of Samsung BioLogics Co. under deliberation of the Corporate Evaluation Committee. As a result, the trading suspension of the company's shares will be prolonged.
KRX announced on Nov. 30 that it would form the committee within 20 business days by Dec. 31. This means trading of the company's stock will not be resumed until then.
The committee, which will conisist of six external specialists and one KRX official member, will decide on the company’s eligibility to remain as a KOSPI-listed company. It will also deliberate on whether to impose "a period of improvement" on the company. During this period, which could last up to a year, Samsung BioLogics is supposed to rectify its accounting malpractices. Trading of its shares would remain suspended throughout this period.
After the Securities and Futures Commission (SFC) under the Financial Services Commission (FSC) ruled on Nov. 14 that Samsung BioLogics had committed accounting fraud in 2015 to inflate its value ahead of an initial public offering in 2016, trading of Samsung BioLogics shares has been suspended.
As the company has become the subject of review by the Corporate Evaluation Committee, the resumption of trading has been deferred for a longer period of time.
The committee members can extend the deliberation period by up to one month if needed. As the committee relies on unanimous decision-making, the deliberation process is likely to be prolonged.
Accordingly, there are growing concerns among investors. In the worst case, the company could be given a grace period of improvement, just like Daewoo Shipbuilding & Marine Engineering Co. (DSME) in the past. Trading of DSME shares had been suspended for 15 months from 2016 to 2017 due to the procedure of the Corporate Evaluation Committee and one year of the improvement period.
However, the securities industry thinks that Samsung BioLogics is less likely to be delisted.