Financial Supervisory Commission Chairman Sean Chen (陳冲) yesterday told the legislature that his commission saw a draft regulation that would govern potentially irregular banking mergers and acquisitions (M&As) as “inappropriate.”
“It requires court rulings to determine whether any of the M&As, closed during the second-stage financial reform, are illegal,” Chen told the legislature’s Finance Committee, saying that “it is inappropriate to allow the regulator to step into any M&A disputes before the court finds them illegal.”
Based on court rulings, the commission would then be entitled to impose administrative punishments on bank executives who are found guilty, he said.
Since the nation’s judicial system and administrative body already have a mechanism for victims to press charges and seek compensation in the case of irregularities associated with M&A deals, Chen said there were concerns over the necessity of the draft regulation.
“The draft regulation [if approved,] may trigger a constitutional dispute,” he said.
Chen also said the feasibility of any mandatory restoration of completed stake acquisitions is minimal, with any such stake restoration causing share price fluctuations, hurting the rights of incumbent shareholders. After Chen’s report, the Finance Committee decided to shelve review of the draft regulation, initiated by Chinese Nationalist Party (KMT) legislators Chiu Yi (邱毅) and Hsieh Kuo-liang (謝國樑) to address alleged problematic M&As that took place during former president Chen Shui-bian’s (陳水扁) second term in office.
Chiu earlier said problematic M&As include the deal between Taishin Financial Holdings Co (台新金控) and Chang Hwa Commercial Bank (彰化銀行) in 2005, China Development Financial Holding Corp (中華開發金控) raising its stake in Taiwan International Securities (金鼎證券), the board directors re-election in Mega Financial Holding Co (兆豐金控) in 2006 and two board re-elections in China Development Financial and Hua Nan Financial Holdings Co (華南金控) in 2007.
Chiu yesterday disagreed with Sean Chen, saying the commission should come up with administrative measures to address controversial M&As before legal action is necessary. In a resolution supported by his KMT peers, Chiu requested that the commission hammer out such measures within one month.