Kyung Nam Pharm Co., one of South Korea’s oldest drug makers, avoided being kicked out of the secondary Kosdaq market after the local stock exchange operator gave the pharmaceutical company an additional one-year grace period to improve governance.

The Kosdaq Market Committee of the Korea Exchange (KRX) on Tuesday said it made the decision after seeing efforts of progress from Kyung Nam Pharm’s chief executive and Milestone KN Fund, the drug maker’s biggest shareholder with a 12.5 percent stake.

Kyung Nam Pharm would need to submit by early next year documents detailing its compliance improvement plans endorsed by an outside auditor. The KRX would then make the final decision on whether to delist the firm or not from the country’s stock market.

The company shares would remain suspended during the one-year period.

Last March, trading of the 61-year-old drug maker famous for its vitamin supplement brand Lemona came to a halt after it was charged with misstating revenue worth a combined 5 billion won ($4.46 million). It was fined 40 million won and given a six-month grace period from May.

In response to the KRX’s call for better transparency, the company set up an audit office late last year and accepted the resignations of two managers and four inside directors. It also vowed to work toward other KRX demands, such as adjusting the stake of the major shareholder, reforming its flawed management system and excluding executives suspected of implication with speculative investment.

By Chung Seung-hwan and Kim Hyo-jin

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