The financial regulator recently lifted the designation of the administrative issue for JW Life Science, almost one year after imposing it.
The administrative issue has been a negative factor for the company’s stock price, and whether the lifting of the designation will recover the stock price is drawing attention.
On Friday, JW Life Science announced that the administrative issue designation would be lifted from Feb. 28, as it received an unqualified opinion in the 2020 audit report.
In April 2021, JW Life Science was designated from the Korea Exchange as an administrative issue, along with JW Holdings, because the company received a qualified opinion in an external audit.
In late 2020, JW Life Science incorporated JW Bioscience, a company specializing in diagnostic reagents within the JW Group, from the existing JW Medical subsidiary to its subsidiary. However, JW Life Science and accounting firm Samjong KPMG had different opinions during the process.
“As of the audit report date, it was not possible to obtain sufficient and appropriate audit evidence for the evaluation of the derivatives and investment stocks of the affiliated company because reliable financial information of JW Bioscience was not available,” Samjong said in the audit report at the time, explaining why it gave the qualified opinion.
The administrative issue is considered a negative factor for a listed company because the regulator designates it when the company is at the risk of being reviewed for delisting due to insufficient liquidity or worsening business performance.
So far, JW Life Science and JW Holdings have said they were resolving the issue by communicating with the accounting firm actively. JW Life Science chose to get a re-audit on the 2020 business year financial statements and earned an unqualified opinion in the re-audited report.
With the administrative issue designation lifted for JW Life Science, industry officials are paying attention to whether JW Holdings will get the lifting, too.
Some pharmaceutical industry officials said JW Holdings could win the lifting of the administrative issue designation because the JW Life Science issue has been resolved.
JW Holdings has yet to announce whether it will get a re-audit on the 2020 business year financial statements, but the company will hold a general shareholders’ meeting on March 29. At the meeting, the company plans to report the operating status of the internal accounting management system.