The Securities and Futures Commission (SFC) said Thursday it has concluded that Samsung BioLogics’ breach of accounting rule in 2015 was intentional, by making omission in its regulatory filing.
“Samsung BioLogics has failed to notify investors of crucial information related to its joint-venture agreement with Biogen,” SFC Chairman Kim Yong-bum said. “The missing information affected the evaluation of Samsung Bioepis.”
The agreement in question refers to Biogen’s call option right to secure just below 50 percent shares in Samsung Bioepis.
The ruling by the SFC is likely to deal a considerable blow to Samsung BioLogics, which had vehemently denied allegations of accounting breach.
In May, the financial authorities gave prior notice to Samsung BioLogics that it broke accounting rules in 2015. The regulatory probe centers on questions concerning the biopharmaceutical company’s sudden profits that year after recording losses for years. Samsung Biologics reported a net profit of 1.9 trillion won ($1.72 billion) in 2015 after changing the method used to calculate the value of its affiliate, Samsung Bioepsis.
Kim said, however, the SFC stopped short of reaching a conclusion on the allegations of Samsung BioLogics unduly changing its control over Samsung Bioepis, requesting the Financial Supervisory Service (FSS) to reexamine the case.
Samsung BioLogics immediately released a statement, expressing its disappointment with the SFC’s decision.
“Samsung BioLogics has been faithfully undergoing all procedures related to the procedure and has been doing its best to convince that it did not break any accounting regulations,” the company said. “Samsung BioLogics had legally fulfilled all accounting procedures under IFRS (International Financial Reporting Standards).”
To protect the interests of stakeholders, including investors, the company will seek legal remedies, such as administrative litigation, it added.
The financial authorities plan to tell the company to dismiss responsible executives and designate an auditor for three years. The Financial Services Commission also intends to file a complaint with the prosecutor against the company.