Fuhwa shareholders back reshuffle

Fuhwa Financial Holding Co (復華金控), the nation's 11th-largest financial holding firm, decided yesterday to hold an ad hoc meeting within the next three months to vote on a plan to shake up the board of directors.

The company's nine-seat board was re-elected last June. Its three-year term expires in 2008. The decision was made in a general meeting yesterday.

However, drawn-out merger talks between Fuhwa Financial and Yuanta Group (元大集團) have prompted the financial holding firm's minor shareholders to propose reshuffling the board ahead of schedule, in the hope of expelling dissident directors and facilitating the deal.

The merger was postponed from the end of last year to the end of this year because the Chinese Nationalist Party (KMT), which holds a stake of around 22 percent and controls three seats in the firm through the Central Investment Holding Co (中央投資公司), disagreed with the terms that Yuanta Group had offered.

Yuanta Group, which owns the nation's largest securities brokerage, Yuanta Core Pacific Securities Co (元大京華證券), has boosted its stake in the firm to more than 55 percent from 30 percent last year, when it secured four seats.

The government controls two seats, with a 14 percent stake in the firm.

In an effort to prevent shareholders from discussing the possible reshuffle, Central Investment last week applied for an injunction with Taipei District Court, which issued the document to Fuhwa Financial last Friday.

But a minor shareholder yesterday bypassed the court and submitted a temporary motion for an ad hoc meeting to be convened by Sept. 12 to discuss whether to reselect the board on the same day.

After being put to a vote, the motion garnered 55.14 percent support, despite opposition by Central Investment and government representatives.

"We have tried our best but we respect the market mechanism," said Liu Teng-cheng (劉燈城), the director general of the Ministry of Finance's National Treasury Agency.

The ministry, which manages state shareholdings in financial institutions, does not support the board reselection plan as it fears it might jeopardize the government's rights and interests.

Once the board is reshuffled, the government could lose one seat as at least a 9 percent shareholding will likely be needed to secure a seat.

Asked whether the ministry would cooperate with private shareholders to maintain its influence on the board, Liu shook his head, saying legislative resolutions had banned the government from doing so.

Yuanta Group is expected to win two-thirds of the seats on the board when the next re-election is held.