April 27, 2024

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[THE INVESTOR] Eleven companies facing delisting on the secondary KOSDAQ are poised to file a legal suit against their auditors, according to sources on Oct. 1.

Last week, the Korea Exchange, the country’s stock market operator, said the firms failed to obtain proper audit opinion resulting in their delisting.

“We will launch a civil lawsuit against Samjong KPMG which conducted the audit and will ask them to take responsibility,” said PATI Games CEO Park Gil-woo. 

Shareholders of 11 KOSDAQ-listed firms facing delisting stage a protest in front of the Korea Exchange on Sept. 28.

Samjong issued a disclaimer opinion for PATI Games which was ordered a re-audit by the KRX earlier this year. But the company along with other 10 firms failed to receive a proper audit opinion by the Sept. 21 deadline.

Investors holding shares of PATI Games and the 10 other companies have been given seven trading days until Oct. 10 before the companies are kicked out from the tech-heavy bourse.

Meanwhile, the companies are seeking an injunction to stop the delisting. Companies including Gamma Nu and Winergys said that they are also mulling a legal suit but will wait until a court decides on the injunction request.

The firms alleged that the auditors did not fulfill their responsibilities despite charging huge fees. PATI Games said it paid 2.5 billion won (US$2.25 million) to Samjong for its re-audit, including the first-ever digital forensic costs of 700 million won.

“The problem is the company failed to provide verifiable documents to us,” an accounting company official said on the condition of anonymity. “Besides, the (higher) cost of re-audit is inevitable as it takes up more time and human resources.”

By Park Ga-young (gypark@heraldcorp.com)