China Development Financial Holding Corp (中華開發金控) Chair-woman Diana Chen (陳敏薰) yesterday said she would no longer back a government proposal aimed at resolving the board-reshuffling row at the financial service company.
The proposal, initiated by the Ministry of Finance on Sunday, aims to allocate seats on the company's board in accordance with the size of shareholders' stakes. But Chen yesterday morning told the ministry that she would not participate in the joint effort to collect letters of proxy, which would allow her to vote in a shareholder's stead, from major investors.
"Chen decided to retract her endorsement of Sunday's proposal, nullifying the verbal agreement," Minister of Finance Lin Chuan (林全) told a press conference yesterday after a private meeting with Chen and other major shareholders.
Lin said he regretted the breakdown of Sunday's consensus, which he believes is a better way to maintain market order, since too many shareholders conducting the proxy solicitation at the same time may create chaos and cause the vote to be aborted during the April 5 shareholder's meeting.
"The ministry has done its best to facilitate a happy ending, but it turns out that the joint proxy solicitation idea didn't work," Lin said.
On Sunday, the ministry called for a meeting and helped facilitate a consensus among the company's major shareholders to jointly conduct a proxy solicitation while also finalizing the new 21-member board's makeup.
Under the ministry's proposal, KGI Securities Co (中信證券) and affiliated companies will get eight of 21 seats on the new board, while Chen would have only one seat. The government will get eight seats and four other companies will each get one, Lin said.
But Chen criticized the ministry for interfering with her company's board makeup and management composition on Monday. After yesterday's meeting, Chen, KGI Securities and other shareholders have resumed the fight by taking their previous position of individually undertaking proxy solicitation in order to win the board election for the April 5 vote.
It takes a minimum 8 percent stake for an individual shareholder to initiate proxy solicitation beginning March 5. Currently, Chen's Lilontex Corp (理隆纖維) owns a less than 1 percent stake while KGI Securities, which owns a 6 percent stake, may have garnered a stake of up to 10 percent in its support.
Government-owned shares in the company total over 7 percent if shares owned by the National Security Fund are included, an issue which will play an influential role in the board election.
Lin refused to reveal which shareholder the finance ministry, which owns a 5.86 percent stake, would now side with, saying "[state-owned] International Commercial Bank of China [ICBC, 國際商銀] and Bank of Taiwan [台銀] will take care of the matter with the aim of maximizing the number of government-owned seats on the board."
According to Lin, Chen promised to ensure a fair vote in April by giving incentives to individual shareholders. China Development plans to give away coffeemakers worth NT$1,200 to shareholders, which is viewed as a bribe to vote for the incumbent Chen.
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