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Photo courtesy of Kwangdong Pharmaceutical |
[Alpha Biz= Kim Jisun] SEOUL, October 28, 2025 — Kwangdong Pharmaceutical Co., Ltd. announced on Monday that it has withdrawn its planned issuance of KRW 25 billion (approx. US$18 million) in exchangeable bonds (EBs) backed by treasury shares, following a ruling from South Korea’s Financial Supervisory Service (FSS) that the company’s disclosure contained misleading information.
According to a filing with the Financial Supervisory Service’s DART electronic disclosure system, Kwangdong stated that it had “decided to cancel the exchangeable bond issuance after consultations with charitable organizations,” and that it plans to secure funding through alternative means to support a capital increase in one of its affiliates.
The decision comes after the FSS ordered the company to correct two major reports — the “Treasury Share Disposal Decision” and the “Exchangeable Bond Issuance Decision” — citing material inaccuracies in the original disclosure.
Kwangdong had initially announced on October 20 that it would issue KRW 25 billion in exchangeable bonds, fully underwritten by Daishin Securities, claiming there would be no resale plans for the underlying treasury shares.
However, the FSS found that Daishin Securities in fact planned to immediately dispose of the acquired shares, and that the final buyers were not identified in the filing. The regulator concluded that investors “could have been misled into believing Daishin would retain the shares,” which would have significant implications for shareholder voting rights and corporate governance.
The move marks the first enforcement action since the FSS introduced stricter disclosure rules for exchangeable bond issuances on October 20. Under the new standard, companies must provide clear details on the ultimate ownership and transfer of treasury shares, as these can reactivate voting rights and potentially alter control dynamics within the company.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
