The nation's financial regulator is investigating China Development Financial Holding Co's (
"We are investigating [all involved transactions] and will ask for the prosecutors' cooperation in this case," commission chairman Kong Jaw-sheng (龔照勝) told lawmakers at the Legislative Yuan's Financial Committee meeting yesterday.
But he didn't elaborate on the current progress and when the financial regulator would reveal the results of their probe.
Kong made the remarks in response to lawmakers' questions about whether China Development, the nation's 13th biggest financial group, may have been involved in illegitimate transactions as it worked to acquire Taiwan International in the nation's first hostile takeover attempt.
During its 11-day tender offer between Feb. 19 and March 1 to buy Taiwan International's shares at NT$14 per share, China Development acquired a 2.62 percent stake in the smaller brokerage from its affiliate China Development Industrial Bank & Partners Investment Holding Corp (CDIB & Partners,
Questions raised
Lawmakers questioned whether, since China Development had included its affiliate's shareholding when reporting its shareholding of Taiwan International to authorities, there was a need for the financial holding firm to spend money purchasing shares from CDIB & Partners.
China Development's management may have been involved in hollowing out the company and benefiting certain parties, since its affiliate could reap profits exceeding NT$100 million (US$3 million), Democratic Progressive Party (DPP) legislator Lin Chung-mo (
Legitimate move
In response, China Development said yesterday that they conducted the tender offer through a legal process and with a legitimate purpose, and that any Taiwan International shareholders are eligible to respond to the financial holding firm's offer and sell their shares.
Also, the company's board decided on Feb 17 that they will give related party sellers transaction terms "no better" than others in compliance with Article 45 of the Financial Holding Company Act (
DPP legislator Julian Kuo (
Lawmakers together blasted the government-appointed board directors for failing in their duty to guard shareholders' rights and interests when the company decided pursue these controversial transactions.
The government reportedly controlled about a 6-percent stake in China
Development and occupied one-third of the company's 21 board seats.
In response, the company's chairman Chen Mu-tsai (陳木在), also a
government-appointed board director, said that all government
representatives agreed with the tender offer bid and the proposed offer
price of NT$14 in consideration of the company's long-term development.
But Chen admitted that they did not have advance notice that the affiliate
CDIB & Partners would respond to the tender offer.
Echoing the public concerns over the dominance of the nation's financial
resources by a few rich families, lawmakers yesterday said they will bring
up motions today to ban China Development from making any mergers and
acquisitions before Koo boosts his shareholding to the required 15 percent.
In addition, lawmakers said they will work to restrict government-appointed
board directors from supporting any hostile takeover bids by the financial
holding firm.
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