The market calmed Tuesday after panicky selloff in Samsung BioLogics amid fear of its expulsion from the bourse upon final ruling on its accounting irregularities due on Wednesday.

Shinhan Investment Corp. said in a report on Tuesday that given precedents, Samsung BioLogics is unlikely to be delisted from the main Kospi market or the Kospi 200 index even if the Securities and Futures Commission (SFC), the auditing and decision-assisting arm of the Financial Services Commission (FSC), on Wednesday concludes that the company intentionally breached accounting rules as there is no rule to delist firms committing accounting fraud.

The biopharmaceutical unit of Samsung Group can’t be delisted just for breaching accounting standards, according to Shinhan Investment, citing the precedent cases for Daewoo Shipbuilding & Marine Engineering (DSME) or Korea Aerospace Industries who maintained their presence on the market even after the ruling on accounting fraud.

The fear of possible delisting caused Samsung BioLogics to lose 5.4 trillion won ($4.77 billion) in market value on Monday as shares once touched a 52-week low of 281,000 won. They rebounded and closed Tuesday 9.8 percent higher at 313,500 won.

Samsung BioLogics - founded in 2011 - is suspected of violating accounting standards in 2015 to inflate its net profit ahead of going public. Its valuation of Samsung Bioepis, a joint venture it set up with U.S. biotech Biogen, jumped 18 times in 2015 as a result of accounting changes and Samsung BioLogics that had logged losses since its founding suddenly swung to a net profit of 1.9 trillion won following the changes.

The SFC in July withheld judgment on fraudulent accounting practices as claimed by the Financial Supervisory Service (FSS) and ordered the financial watchdog to take a second look. After the second review, FSS maintained its initial position and issued a preliminary notice to Samsung BioLogics last month. In the preliminary notice, FSS is said to have recommended referring the case to prosecutors for further investigation and slap heavy penalties of sacking the company’s CEO and fining up to 6 billion won. Based on the FSS recommendation, SFC on Wednesday will determine its punishment, which will be finalized by the FSC in December.

If the SFC conforms to the FSS’s final finding that Samsung BioLogics was purposely behind the alleged wrongdoing, the company’s stock trading will be discontinued for 20 days while Korea Exchange will be determining whether it has to review the eligibility of the company’s listing. As of the end of December, individual shareholders reached 8 million holding 5 trillion won worth in the company, a factor the exchange must take into consideration.

By Cho Hee-young and Choi Mira

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