The Taiwan Stock Exchange Corp (TSE) ruled yesterday that shares of Abit Computer Corp (
This means that Abit's shares cannot be traded on margin or sold short, said Su Song-chin (
This means the shares are restricted to cash-only transactions.
"Abit on Tuesday failed to provide reasonable explanations to clear up eight points in its financial documents," Su said.
Su said the company can rebut the exchange's decision by providing valid documents, otherwise, the company could be ousted from the bourse "in a year or so."
According to the exchange, financial irregularities were found in Abit's business transactions and re-investments which may have infringed rights of shareholders and increased risk for investors.
The company was found to have closed huge electronic-parts deals with seven Hong Kong-based companies -- although those firms were all registered at the same address and only had working capital of HK$200 million (US$12.8 million) each.
The exchange suspects Abit may have faked deals to boost its sales and that the Hong Kong associates may be subsidiaries from the same group, or just paper companies.
The exchange also found Abit's issuance of an European convertible bond in 1992 problematic and suspects that insider trading might have been involved.
According to Su, Abit told the stock exchange last Tuesday that its NT$4.1 billion-worth of deals didn't have invoices because the shipments were not transported back to Taiwan. The TSE said that the explanation did not clear up its concerns.
Abit chairman Lu Yi-tsun (
Lu couldn't be reached yesterday for comment.
Other prominent people associated with the company were also unavailable for comment yesterday, including corporate governance expert Ko Chen-en (
Ko is chairman of the Corporate Governance Association (
Another corporate governance advocate, Joseph Lee (
The TSE has been taking a more aggressive stance toward companies with problematic books.
Chipmaker Procomp Informatics Co (
Summit Computer Technology (