Thu, Apr 11, 2019 - Page 12 News List

FSC to check independent directors’ qualifications

By Kao Shih-ching  /  Staff reporter

The Financial Supervisory Commission (FSC) yesterday said that it would check the qualifications of listed companies’ independent directors following a scandal at Oceanic Beverages Co (大西洋飲料).

The Taiwan Stock Exchange (TWSE) on Monday suspended the company from trading on the local bourse after it failed to provide an audited financial report.

Oceanic Beverages is the nation’s first listed beverage company, known for the Apple Sidra drink.

PricewaterhouseCoopers (PwC) accountants hired by the company said that the beverage maker could not clarify its financial records related to three property deals.

Oceanic Beverages said that its debtor, Cathay Beverages Co (國信食品), used a plot in New Taipei City’s Xindian District (新店) as collateral to process a bank loan.

However, PwC Taiwan in a report said that Oceanic Beverages failed to explain why it required Cathay Beverages to repay only NT$400,000 (US$12,968) per month for the NT$155 million loan, which would translate into a repayment period of more than 32 years, Oceanic Beverages said in a filing with the TWSE.

Furthermore, two independent board directors at the company, surnamed Lin (林) and Su (蘇), were found to be Cathay Beverages employees, New Power Party Executive Chairman Huang Kuo-chang (黃國昌) told a meeting at the Taiwan Futures Exchange yesterday.

The appointments raised the possibility that the company might have breached the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies (公開發行公司獨立董事設置及應遵循事項辦法), Huang said.

“The independent director system has become a joke,” Huang said, questioning why the TWSE has failed to detect the breach since 2016, when the two directors were appointed.

“In the fourth quarter of last year, we found that the firm did not fully disclose the transactions between itself and Cathay Beverages. However, we could not discover the problem with the independent board director appointments, as we cannot review each firm’s appointments in depth,” TWSE president Chien Lih-chung (簡立忠) said.

Huang said that the exchange should review the documents carefully and regulate listed firms more effectively.

FSC Chairman Wellington Koo (顧立雄), who also attended the meeting, said that Cathay Beverages was not Oceanic Beverages’ affiliate, as the latter only held a 0.49 percent stake in the former.

However, the appointment of the directors might still be problematic, as Cathay Beverages had a business relationship with Oceanic Beverages, which prohibits its directors, supervisors, managers and shareholders with more than 5 percent of shares from serving as independent directors at Oceanic Beverages, he said.

“We will discuss with the exchange to improve the way we check the qualifications of all listed companies’ independent directors in Taiwan, hoping to set up a more effective method,” Koo told reporters.

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