Thu, Feb 21, 2019 - Page 12 News List

Koo asks finance families to reveal share structure

LOOPHOLE:The FSC said Shin Kong Life Insurance sold its shares at Shinkong Spinning to a company owned by the Wu family to increase its control over the firm

By Kao Shih-ching  /  Staff reporter

Financial Supervisory Commission (FSC) Chairman Wellington Koo (顧立雄) yesterday said that he has been talking with families who control financial groups about revealing their share structure.

The commission encourages the families to disclose more information on the share structures of the conglomerates’ affiliated companies and real beneficiaries by July, Koo told reporters on the sidelines of an event in Taipei.

Koo declined to reveal how many families he had met with or their names, saying only that he has been visiting them one by one.

Three families are known to dominate the nation’s largest financial groups, the Tsai family of Fubon Financial Holding Co (富邦金控) and Cathay Financial Holding Co (國泰金控); the Koo family of CTBC Financial Holding Co (中國信託金控) and China Development Financial Holding (中華開發金控); and the Wu family of Shin Kong Financial Holding Co (新光金控) and Taishin Financial Holding Co (台新金控).

“In principle, the families have all agreed to reveal more information on company structure, as they have also been offered an incentive in the form of a new regulation, which would save them trouble on the use of proxies,” Koo said.

The commission last year amended the Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies (公開發行公司出席股東會使用委託書規則), which is to take effect in July, he said.

Under the revised rules, shareholders and related parties must have at least a 10 percent stake to mandate a trust enterprise or shareholder services agent to act as solicitor at a shareholders’ meeting, Koo said.

The families should disclose all family-controlled firms, regardless of whether the families’ foundations or charity trusts have invested in them, as well as the people with real decisionmaking power, he said.

In the absence of an enabling law, the commission would ask the families to deliver the information only to the commission rather than make it public, Koo said, but added that the commission is considering revising the law to allow public disclosure.

The move aims to improve transparency after the commission last month found that Shin Kong Life Insurance Co (新光人壽), Shin Kong Financial Holding Co’s (新光金控) main subsidiary, had sold its shares of Shinkong Spinning Co (新光紡織) to two interested parties without its board’s approval between July 2016 and March 2017.

Given that insurance firms may not vote in board elections at companies in which they are investing, the commission said it believes that Shin Kong Financial used a loophole to transfer the insurer’s shares to another family-controlled company to increase its real control over Shinkong Spinning.

“Financial conglomerates should know that using such loopholes is not right and I will ask them to provide transparent ownership structures to curb such breaches,” Koo said at the time.

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