Major bio companies, which have been doing well with the market’s attention with strong performance over the past year, are suffering from sudden organizational backlash from shareholders. As factors such as violation of accounting standards and failure to invest in funds overlap and the stock price plummets, shareholders are demanding not only stimulus for share prices through repurchase of treasury stocks and reinforcement of corporate briefing sessions (IR), but also management replacement, and bio companies are driven into a perplexing situation.
According to industry sources on the 10th, Seegen’s minority shareholders’ association has been holding a single truck demonstration in front of Seegen’s head office in Songpa-gu, Seoul, from the 2nd of the past. This is because Seegene’s stock price plunged due to neglect of IR activities, such as not disclosing major management activities, even though Seegene joined the ‘1 trillion in sales club’ last year and made an operating profit of 670 billion won.
The Federation said, “Even while the company was making tremendous good results, the management did not disclose the approval of the US Food and Drug Administration (FDA) and the approval for use in Europe (CE-IVD), etc. for export items because it is not mandatory, and the export contract is also a foreign branch. I did not disclose,” he complained. He also pointed out that “even though minority shareholders made numerous requests to the management, they did not conduct shareholder-friendly IR activities at all.” The association argues that even in the situation where short selling is prohibited due to such unfavorable attitude and response to shareholders, the’market maker’ has become the No. 1 short selling item in the KOSDAQ market, increasing pressure on the stock price downward. In fact, Seegene’s stock price rose to 322,200 won in August last year, but it has been pushed to the 130,000 won mark this month. It is close to a third of the peak.
As it was revealed that the Financial Services Commission had been imposed a penalty of 2.514.5 billion won for violating accounting standards, minority shareholders are demanding the resignation of Chun Jong-yoon, CEO of Seegene, and the recruitment of a professional manager. In addition, in order to prevent illegal short selling and improve stock prices, the company is demanding quarterly dividend payments, a large-scale free increase, listing before the KOSPI, and disclosure of a plan to use retained earnings. Considering that foreign ownership is 21%, it is insisting on large-scale treasury stock purchases to protect against hostile mergers and acquisitions (M&As), while also insisting on active publicity, shareholder-friendly IR activities, and establishment of direct communication channels with shareholders. Surprised by the strong opposition of minority shareholders, Seegene purchased a total of 30 billion won worth of treasury stock from the 29th and introduced a quarterly dividend system to allow shareholders to receive dividends more than twice a year at the regular shareholders’ meeting on the 26th. It announced that it was resolved and set out to appease shareholders. The agenda for amendment of the articles of incorporation that will increase the total number of shares to be issued from 50 million shares to 300 million shares raised expectations for a free capital increase.
Helixsmith, a biotech company that develops gene therapy products, also faced fierce backlash from shareholders. The main reason that the dispute with minority shareholders was triggered by the fact that the stock price plunged due to the fact that CEO Kim Sun-young, the largest shareholder, did not participate in the paid-in capital increase that was implemented in November last year, and incurred some losses by investing 250 billion won in high-risk private equity funds. It is a factor. To make matters worse, the stock price of Helixmith fell to the current 23,000 won range from its peak in March 2019 (318,000 won), falling 93% due to the failure to produce satisfactory results in the clinical trial of the diabetic neuropathy drug Engensys (VM202). Reaches. The Helix Miss shareholders’ meeting, angry with the stock price plunge, opened a café and is in a state of skill event demanding the holding of an extraordinary shareholders’ meeting in which all executives are dismissed and replaced with professional executives composed of clinical and financial experts. In this regard, five minority shareholders filed an application for provisional disposition for reading and copying the shareholders’ list in the Seoul Southern District Act in order to secure a power of attorney for shareholder voting rights for management replacement, and the court accepted it.
An official from Helix Miss said, “We are recruiting professional managers to secure trust in financial soundness and to reorganize to strengthen IR. We are sending monthly newsletters to our shareholders since January this year, and responding to inquiries from shareholders. “We are also focusing on strengthening communication with shareholders, such as responding sequentially,” he said.
Macrogen shareholders, whose stock prices plummeted as they were designated as an investment stimulus item, also appointed directors representing minority shareholders in September of last year and applied for a temporary shareholders’ meeting to amend the articles of incorporation to the Seoul Southern District Act to derive convocation permission. Accordingly, the company proposes to deal with the agenda at the regular shareholders’ meeting, and plans to vote on agendas such as the appointment of directors proposed by minority shareholders at the regular shareholders’ meeting held at the end of March. Macrogen set out to appease minority shareholders by deciding a cash dividend of 3 billion won for the first time since its inception on the 4th ahead of the regular shareholders’ meeting. Macrogen officials said, “We will respect the court’s decision and faithfully fulfill the obligations and cooperation matters according to the purpose of the decision according to the procedure.” “He said.
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