Will Samsung BioLogics be delisted?

By Lee Kyung-min

The Korea Exchange (KRX) will soon determine whether to refer a review on delisting of Samsung BioLogics to its subcommittee.

This is the latest development of Samsung Group's scandal-ridden biopharmaceutical arm whose stocks remain suspended from transaction since Nov. 14 upon the ruling from the Securities and Futures Commission (SFC) under the Financial Services Commission that concluded the firm intentionally cooked accounting books in 2015.

The KRX will determine no later than Dec. 5 whether the case requires an in-depth review by the Listing Maintenance Review (LMR) over three standards ― transparency, continuity and protection of interest of both the public and investors.

If put forth, the commission will carry out a 20-day review to determine whether the firm should be delisted, have its stock trading resumed or be given a grace period until further review.

If KRX decides against the referral, Samsung BioLogics shares will resume trading the following business day.

The KRX has been looking into the issue since Nov. 14, and the decision will be made as scheduled unless disputed by Samsung.

Precedents showed that issues of this sort take no more than 15 business days since the suspension of stock transaction.

Of 16 companies that had been subject to KRX delisting review over accounting irregularities thus far, the decision on referral was made all within 15 days except in cases where the firms requested submission of relevant documents.

The procedure is expected to pick up speed following remarks from Financial Services Commission Vice Chairman Kim Yong-beom, who doubles as SFC chief.

Kim told the National Assembly committee on political affairs Nov. 22 that he had made it clear with KRX that the market uncertainties “should not be prolonged,” adding the stock operator's review is ongoing at a “speedy pace.”

Upon referral, the commission comprised of seven outside experts including lawyers and professors will deliberate on whether the three standards are met.

Transparency will be the top criterion in the review given the firm sees no major setbacks meeting the remaining two standards.

As for corporate continuity, Kim said the firm has enough capital as of 2017 for stable operation, dismissing concerns that the readjustment of 4.5 trillion won ($3.9 billion) in the suspected cooked accounting numbers will put the firm's financial status into impaired capital.

Impaired capital is a balance sheet condition where a company's total capital becomes less than the par value of its capital stock, an indication of poor financial management.

The firm will also avoid scrutiny concerning protection of investors' and public interests given its 22 trillion won in stocks with substantial portion held by individual investors.

“The LMR, if it does go over the issue, will need a comprehensive review before reaching a decision. We cannot comment further on the ongoing matter,” a KRX official said.

While the focus is expected to concern corporate transparency, officials will have to navigate through the process carefully given the disputable nature of the term under the law.