Revived GammaNu to Resume Trading on the 18th... Investors Prepare Lawsuit Against Exchange

Discussion Underway on Base Price for Resumption Date... 7,324 Minority Shareholders

[Asia Economy Reporter Kum Boryeong] GammaNu, a KOSDAQ-listed company that had undergone delisting and even conducted liquidation trading, has been revived. This is because the delisting decision made by the Korea Exchange (KRX) was canceled for the first time in history. From the 18th, trading of GammaNu shares will resume.

According to the financial investment industry on the 14th, the Supreme Court yesterday dismissed the appeal in the final trial regarding the invalidation of GammaNu's delisting decision filed by the Exchange. Summary dismissal is a system where the appeal is dismissed without substantive review if there is no special reason such as a legal violation. Ultimately, the original ruling accepting GammaNu's claim was confirmed.

Accordingly, the Exchange announced the "lifting of suspension of securities trading following the Supreme Court's ruling invalidating the delisting decision." The lifting date is the 18th. Separate guidance will be provided regarding the calculation of the reference price on the trading resumption day. GammaNu, which was removed from the management item list, will have its affiliated department changed to the Mid-sized Enterprise Division from that day.

GammaNu announced on March 22, 2018, through its audit report, that it received a refusal of audit opinion from Samil Accounting Corporation, which conducted the audit. The Exchange suspended GammaNu's securities trading, citing it as a delisting reason under Article 38 of the KOSDAQ Market Listing Regulations. On April 2 of the same year, GammaNu submitted an objection to the delisting. The Exchange granted an improvement period until July 31 through the Corporate Evaluation Committee review on April 23.

The problem arose here. After the improvement period ended, GammaNu was required to submit an implementation report of the improvement plan and a confirmation from an expert on the implementation results within seven trading days to the Exchange, but it failed to submit a re-audit report with an "appropriate" opinion. This was because the re-audit period took longer than initially expected. GammaNu requested the Exchange several times to extend the deadline for submitting the re-audit report, but this was not accepted.

In September 2018, the Exchange decided to delist GammaNu and began the liquidation trading process. GammaNu eventually filed a provisional injunction to suspend the effect of the delisting decision against the Exchange at the Seoul Southern District Court, and the court accepted GammaNu's application.

In January last year, GammaNu received an "appropriate" re-audit report for the 2017 fiscal year from Samil Accounting Corporation. GammaNu argued that since the delisting reason no longer existed, the delisting should be canceled and securities trading resumed. The first trial was a victory for GammaNu, but the Exchange appealed, stating it was unacceptable. GammaNu won consecutively in the second and third trials, resolving the legal issue in this case.

The remaining issue is the calculation of the reference price on the trading resumption day. An Exchange official explained, "This is the first time that trading has resumed for a company that underwent liquidation trading, so discussions are underway. Since trading must occur on the next trading day, a conclusion will be reached within the day." GammaNu's stock price was 6,170 KRW on March 22, 2018. After the delisting decision and the start of liquidation trading on September 28, 2018, it plummeted to 426 KRW, and closed at 408 KRW on October 5, four trading days later.

Those who sold shares during liquidation trading and those who still hold shares are preparing damage compensation lawsuits against the Exchange, claiming they suffered losses due to the Exchange's erroneous decision. According to GammaNu's audit report, as of June 30, there are 7,324 minority shareholders. They hold 8,743,164 shares, accounting for 36.7% of the total issued shares. An Exchange official said, "We are preparing for the possibility of lawsuits and will follow the court's decision."