Samsung BioLogics, the pharmaceutical affiliate of Samsung Group that came under fire for a past accounting breach, is unlikely to be delisted despite the financial regulator’s latest sanction, a securities report said Friday.

“The Securities and Futures Commission (of the Financial Services Commission) has reserved its final judgement on the change of accounting standards, which is the core issue of controversy in the Samsung BioLogics accounting dispute,” said Jin Heung-kook, an analyst at Korea Invest & Securities.

“The corresponding issue thus remains pending, but considering similar cases in the past, the possibility is very limited that Samsung BioLogics may face delisting.”

On the previous day, the financial regulator FSC announced that the pharmaceutical company’s past omission of key governance information was intentional, referring the company to the prosecution and recommending that the executive member in charge be dismissed.
 

After establishing the joint venture Samsung Bioepis with US-based Biogen in 2012, BioLogics is accused of having concealed for years the fact that the US company held the right to a call option to raise its stake.

In 2015, upon revealing the call option, BioLogics changed its accounting standards to view Bioepis as an affiliate, no longer a subsidiary. After the dubious accounting shift, the company logged a one-time net profit of 1.9 trillion won ($1.68 billion), just ahead of its initial public offering in the following year.

The FSC panel, however, held off its decision on whether the rule change itself constituted a breach of accounting rules, citing the lack of grounds and demanding the market watchdog Financial Supervisory Service’s further inspection.

“The (stock market operator) Korea Exchange, when screening a company for delisting, would consider a number of factors such as the company’s sustainability, management transparency, investors interests and other public reasons,” Jin said.

Even if BioLogics were to be announced to have committed an accounting fraud, that alone may not lead to delisting, he added, citing the cases of Daewoo Shipbuilding & Marine Engineering and Korea Aerospace Industries, which were involved in alleged accounting fraud but survived in the market.

By Bae Hyun-jung (tellme@heraldcorp.com)