The Financial Supervisory Commission yesterday demanded that China Development Financial Holding Corp (中華開發金控) dismiss Daniel Wu (吳春台) from its board of directors and the boards of its affiliates within one month, as Wu failed to avoid a conflict of interest during the company's hostile takeover bid for Taiwan International Securities Corp (金鼎證券).
The commission's ruling disallows Wu from serving as both board director and chairman at China Development Industrial Bank & Partners Investment Holding Corp (開發國際), and as a board member at China Development Industrial Bank (中華開發工銀).
China Development Financial was also required to review whether it was appropriate to hire Wu as the group's managing director, since his behavior had clearly breached corporate governance requirements, the commission said.
Wu, who was on the boards of all three companies, was accused of failing to disclose that China Development Industrial Bank & Partners would dump its shareholding in Taiwan International Securities, while its parent financial group decided to hold a tender offer in February to acquire more shares of the smaller brokerage.
The commission also backed the decisions of Cyrus Chu (朱敬一) and Chen Tien-jy (陳添枝), who resigned as China Development Financial's independent director and supervisor to voice their disapproval of the hostile takeover bid, saying that they had the right to leave and the resignations would take effect as soon as they were received.
When asked why no penalties had been imposed upon Angelo Koo (辜仲瑩), president of China Development Financial, who was said to be the mastermind of the takeover plan, the commission said they had decided to punish the executor.
The commission yesterday also decided to suspend Chen Shu-chu (陳淑珠), the chairperson of Taiwan International Securities, for one year.
The commission said Chen's punishment was because she had used company funds
to help the incumbent management fend off its rival's hostile takeover,
which had damaged the rights and interests of shareholders.
But Taiwan International Securities strongly objected to this decision and
said in a statement that its chairperson had done nothing wrong in helping
to stabilize and continue the company's operation.
The company added that it would appeal against the commission's ruling
through judicial avenues.