Deliberation on ShillaJen's Delisting Resumes... 170,000 Anxious Shareholders Await

[Image source=Yonhap News]

[Asia Economy Reporter Park Jihwan] The Korea Exchange (KRX) has failed to decide on the delisting of SillaJen and ultimately decided to hold a reconsideration. Attention is focused on whether SillaJen, which once rose to the second largest market capitalization on KOSDAQ due to expectations of new drug development, will be able to resume trading in the future. The 170,000 small shareholders will have to endure another anxious period until after September.

The KRX Corporate Evaluation Committee reviewed the possibility of delisting SillaJen on the 6th and decided to continue the deliberation. Despite holding a meeting that lasted over five hours, the committee could not reach a conclusion on delisting. The schedule for the next committee meeting has not been set.

The committee's difficulty in making a decision appears to be due to SillaJen's internal willingness to improve management and the 170,000 small shareholders. Since former CEO Moon Eun-sang resigned in June, and Vice President Yang Kyung-mi, the only inside director, also left, the company has been focusing on normalizing management.

The Exchange is expected to assess the sustainability of management, including the new management's policies, profitability, and financial soundness, after the extraordinary general meeting scheduled for early next month.

Additionally, the burden of the fact that if delisting occurs, the equity value of 170,000 small shareholders would instantly become worthless also played a role. As of the end of last year, SillaJen had 168,778 small shareholders, who hold 87.68% of the shares.

Small shareholders held rallies daily after the Exchange decided last month to subject SillaJen to a substantial review and urged the resumption of trading. They claimed, "The Exchange's suspension of SillaJen's trading and decision to conduct a substantial review of listing eligibility due to allegations of breach of trust by former and current management before listing is an unfair act infringing on the property rights of 170,000 small shareholders."

In a plea released on the 5th, they added, "The reasons and timing for the suspension of SillaJen's stock trading relate to allegations that occurred before listing, between 2013 and March 2016, and no facts have been confirmed. The Exchange's broad and abstract interpretation and the resulting consequences inevitably fall on individual investors. Please remedy the damages suffered by the 170,000 shareholders."

Earlier in June, the Exchange decided to subject SillaJen to a substantial review of listing eligibility due to allegations of embezzlement and breach of trust by former CEO Moon Eun-sang and other executives. The embezzlement amount by the former management reached 194.7 billion KRW, approximately 344% of the company's equity capital. Trading of SillaJen shares has been suspended since early May, when the substantial review reasons arose. SillaJen announced at the end of last month that it will hold a shareholders' meeting on the 7th of next month to address agenda items including partial amendments to the articles of incorporation and the appointment of directors.