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Samsung BioLogics stays listed

Trading resumes today but controversy is not fully behind the group  PLAY AUDIO

Dec 11,2018
Samsung BioLogics will remain on the main Kospi bourse and trading of its shares resumes today.

On Monday, the Korea Exchange held a review to determine whether to delist Samsung’s biopharmaceutical affiliate in the wake of an accounting fraud scandal.

“A committee concluded that Samsung BioLogics’ trading be resumed for investors’ protection and to sustain the company,” said a spokesperson for the Korea Exchange.

Shares of BioLogics will be traded again starting today. The Korea Exchange suspended trading on Nov. 14 following the Financial Services Commission’s (FSC) ruling on the bio unit’s accounting practices.

At the time, the country’s financial regulator ruled that Samsung BioLogics deliberately violated accounting rules to inflate its value in 2015 ahead of a planned public listing in 2016 and recommended prosecution. The regulator also asked the Korea Exchange to check whether the unit’s listing process complied with capital market laws.

The decision to keep BioLogics on the Kospi was widely expected and even hinted at by a high-ranking official from the FSC.

Kim Yong-beom, vice chairman of the FSC, indicated that the chances of delisting were slim during the announcement of its ruling last month.

“So far, 16 companies were placed under screening, but none of them were forced to delist,” Kim said.

Along with a trading suspension, the FSC fined the company 8 billion won ($7.1 million).

The company welcomed the decision, vowing to strengthen internal controls and compliance.

“Samsung BioLogics is relieved to learn that the Korea Exchange decided to resume trading,” the company said in a statement.

In a list of improvements, the unit promised to establish a new unit to verify accounting standards within the first quarter of 2019.

It will also invite an outside agency to enhance audits of the company while expanding a department overseeing compliance issues. The compliance team will be directly managed by the chief executive officer.

The company, however, refrained from mentioning the ongoing legal battle concerning the FSC ruling.

Samsung BioLogics filed an administrative suit with the Seoul Administrative Court last month asking for the lifting of a set of measures taken by the country’s regulators.

But the resumption of trading doesn’t necessarily mean the end of the controversy since a probe could widen to examine Samsung’s leadership transition.

FSC Vice Chairman Kim told reporters that the commission will “closely analyze the need for an audit of Samsung C&T,” adding that the National Assembly had already brought up the question.

Suspicion has arisen that accounting fraud played a role in a highly controversial merger in 2015 of Samsung C&T and Cheil Industries. The merger in 2015 was considered a maneuver to facilitate a leadership transition at Samsung Group, and some civic groups and lawmakers accused Samsung of accounting fraud to inflate the value of Cheil Industries ahead of the merger.

Meanwhile, a seven-member committee including outside experts from different fields held the review session from 2 p.m. on Monday and the result came out around 7 p.m.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]


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