Celltrion Pharm is at risk of being designated as a business corporation unfaithful in public disclosure for failing to make public its planned merger with Celltrion Group.
The Korea Exchange on Wednesday said it would review designating Celltrion Pharm as an unfaithful public announcement corporation. Accordingly, the exchange plans to decide whether to designate the company as a non-disclosing entity by Oct. 30.
The exchange took issue with Celltrion Pharm's Aug. 17 disclosure. The company issued an inquiry disclosure regarding its merger with the Celltrion Group on that date. This was in response to media reports on July 12 that Celltrion Group had begun the merger process.
"This company has been considered a partner for the Celltrion Group's corporate integration to become a global integrated biotechnology company. However, the company confirms that it is not a target of the business combination announced today by the Celltrion Group," Celltrion Pharm said in the disclosure.
On the same day, the Celltrion Group announced its decision to initiate the merger process for Celltrion and Celltrion Healthcare. Celltrion Group Chairman Seo Jung-jin explained the group's merger plan through an online conference, announcing that he would also pursue a second merger of Celltrion and Celltrion Pharm.
Based on Articles 27 and 32 of the Kosdaq Market Disclosure Regulations, the exchange determined that Celltrion Pharm's disclosure constituted a disclosure of insincerity due to failure to disclose important matters in response to an inquiry. Among the types of dishonest disclosures, it was determined that they were made falsely or incorrectly or without disclosing important matters.
If a company is designated as an insincere disclosure entity, it may be suspended from trading for one day if the number of penalty points imposed is eight or more. In addition, if the cumulative penalty points for the past year, including those in this case, are 15 points or more, the company may be subject to a substantive review of its listing eligibility. Celltrion Pharm has had zero points for the past year.
A business corporation notified of a prospective designation as an unreliable disclosure entity may appeal to the exchange within seven days of receiving the notice.