A unilateral decision by Chang Hwa Bank’s (CHB, 彰化銀行) biggest shareholder, Taishin Financial Holding Co (台新金控), to cut the bank’s board from 15 seats to nine met with strong opposition from other shareholders and bank employees yesterday.
Calling Taishin Financial chairman Thomas Wu’s (吳東亮) decision “arbitrary,” the union at the previously state-owned bank yesterday urged small shareholders’ to attend a shareholders meeting scheduled for June 13 to voice their opposition in person.
“We will do whatever we can to boycott the latest board decision,” CHB Industrial Union (彰銀產業工會) president Tsao Bing-kung (曹炳坤) said yesterday over the telephone. “If the government fails to take action to block this decision, we are not ruling out the possibility of further mobilizing shareholders and employees to disrupt the next board reshuffle at the end of the year.”
Chinese Nationalist Party (KMT) Legislator Chiu Yi (邱毅), who also serves as a CHB board member representing a private shareholder with a 3 percent stake, filed a lawsuit yesterday against eight other members of the board, including CHB chairman Lee Yung-san (李庸三), who represents Taishin Financial. In the lawsuit, Chiu accuses the members of breach of trust and a provisional disposition.
Chiu accused Taishin Financial of misusing its majority on the CHB board to pursue a merger.
Chiu and five other board members voted on Tuesday against Taishin Financial’s proposal to cut board seats, which passed by an 8-6 vote.
Accusing Taishin Financial of seeking to devour Chang Hwa, Chiu asked whether Taishin Financial had the right to propose a motion at the CHB board meeting since CHB had previously stipulated that Taishin’s 22.5 percent stake was to be a special holding that granted it only the right to vote.
The limitation of Taishin’s activities on the board may, however, be a violation of the Corporation Law (公司法), an issue that is under review by the Ministry of Economic Affairs.
Article 172.1 of the law stipulates that a shareholder in a company with a stake of at least 1 percent has the right to put forth motions at board meetings regardless of whether they have a seat on the board. Taishin Financial put forth the motion on Tuesday, citing the Article.
Four of the six board members who voted against the proposal represented the Ministry of Finance, which is the second largest shareholder, with a 15 percent stake.
The director-general of the National Treasury Agency, Su Le-ming (蘇樂明), a government-appointed CHB board member, told reporters on Tuesday that the government was unsure of Taishin Financial’s right to put forth a motion, but would wait for a final ruling by the economics ministry.
If the economics ministry does not block the board decision, the finance ministry will try to secure three seats on the bank’s new nine-member board. Taishin Financial has said it would seek to control six seats, Su said, adding that the ministry hasn’t decided whether to solicit proxy votes to maximize its board seats.
In response to the criticism, Taishin Financial stood by its strategy yesterday, saying the board decision was lawful.
“Before the vote, we consulted with lawyers, who assured us of our right to bring up such a motion,” Taishin Financial president Lin Keh-hsiao (林克孝) said. “We’re confident and ready for any consequences.”