Business leaders are still troubled by delisting plan

Business leaders yesterday remained concerned over the Finan-cial Supervisory Commission's plan to initiate a mechanism to oust defaulting companies from the local bourses, hoping the proposed measure could help grow, not rattle, the stock markets.

"Other than share prices and transaction turnover, the commission should apply more prudential standards on whether companies should be delisted from the stock markets," said Theodore Huang (黃茂雄), chairman of the Chinese National Association of Industry and Commerce (工商協進會).

The commission should also consider a company's financial portfolio and corporate governance before making any decision, Huang told the press following a breakfast meeting with economic and financial ministers yesterday morning.

Jerry Huang (黃顯華), a commission member, said on Aug. 16 that the financial authorities were studying measures to oust penny stocks that show low transaction volume for a certain period of time.

That remark seriously panicked investors and caused 53 companies' shares to plummet that day, according to Theodore Huang.

The government has proposed to delist illiquid stocks or listed companies whose stocks consistently trade below their par value of NT$10. But Theodore Huang said the proposed criteria appeared to be too rigid since political instability and poor macroeconomic performance could also negatively impact companies' trading prices and transaction volumes.

The association yesterday suggested that the commission should manage a buffer for ill-performing companies to exit the share marketplace gradually, for fear of irrational stock fluctuations.

In response, the commission's chairman Kong Jaw-sheng (龔照勝) yesterday said that the proposed mechanism is aimed at helping turn around defaulting companies first, before ousting them from the local bourses.

The commission said in August that the concrete measures of the mechanism will be put forth in mid or late next month.