Shinrajen Faces Heightened Tension Ahead of Listing Eligibility Review

Expectations for Turning Point Amid Moon Eun-sang's Resignation, Facing KOSDAQ Delisting Crossroads

[Asia Economy Reporter Oh Ju-yeon] ShillaJen, which emerged like a comet in the domestic bio industry in 2017 and showed rapid growth, is now at a crossroads facing delisting from the KOSDAQ market. Although the recent resignation of CEO Moon Eun-sang has raised the possibility of resuming trading, it is difficult to make a premature judgment as the decision will be made after comprehensively evaluating the company's financial situation, governance structure, embezzlement and breach of trust issues, and their impacts.

According to the Korea Exchange on the 18th, it will be decided on the 19th whether ShillaJen will be subject to a substantive review of listing eligibility. The substantive review of listing eligibility is a process to determine whether a listed company has issues maintaining its listing.

ShillaJen's stock trading has been suspended due to the occurrence of reasons for substantive review of listing eligibility caused by embezzlement and breach of trust allegations against current and former executives. If decided to be subject to the substantive review, the company will be designated as a management item, and the listed company must submit an improvement plan within 15 days. Within 20 days from the submission date, the Corporate Delisting Committee will deliberate and decide whether to delist or grant an improvement period. The improvement period is granted within one year, and after the improvement period ends, the company must submit a report on the implementation of the improvement plan within 7 days, after which the Corporate Delisting Committee will again decide on delisting.

In this way, a total of 16 detailed procedures are followed until delisting. ShillaJen, which has just now encountered reasons for substantive review, is currently in the relatively early third stage of the process. It is still too early to be anxious about delisting. However, since trading is impossible while this procedure is ongoing, shareholders holding ShillaJen stocks are anxious.

Last month, ShillaJen disclosed embezzlement and breach of trust by former executives amounting to 194.748 billion KRW, and this month additionally disclosed embezzlement and breach of trust by current executives amounting to 220.634 billion KRW. With these additional reasons for substantive review of listing eligibility, investors have expressed their frustration.

As of the end of last year, ShillaJen had 170,000 minority shareholders, whose stock holdings are valued at approximately 750 billion KRW. Among ShillaJen shareholders, it is common for losses to reach tens of billions of KRW. One investor lamented that after investing 100 million KRW, only 15 million KRW remains. He started investing when the stock price was in the 100,000 KRW range, but the current stock price has plummeted to one-tenth of that. He said, "I did not invest in ShillaJen and Pexaver for short-term trading, so I kept buying more whenever the price dropped," adding, "This issue is due to the CEO's embezzlement and breach of trust, but my belief in the value of Pexaver remains unchanged." They also attach significance to recent reports that a Hong Kong pharmaceutical company has conducted clinical trials involving combination therapy with Pexaver.

CEO Moon's resignation is also expected to suggest a positive direction for turning the situation around. There are voices suggesting that a decision to resume trading might be possible. However, the Korea Exchange explained that while Moon's resignation may have some influence on the decision regarding substantive review eligibility, it is not a decisive factor. A Korea Exchange official said, "When deciding whether to include a company in the substantive review, we consider the overall situation including the company's financial status, governance structure, and embezzlement and breach of trust issues, so it is not decided by a single issue."

This content was produced with the assistance of AI translation services.