Fri, Nov 02, 2007 - Page 3 News List

Court invalidates CMPC move on Bank of Taiwan

By Liu Chih-yuan and Wang Yu-chung  /  STAFF REPORTERS

In a verdict issued on Wednesday, the Taipei District Court invalidated the Central Motion Pictures Corp's (CMPC, 中影公司) decision to remove the Bank of Taiwan (臺灣銀行), which represents the government's shareholdings, from the company.

Following the sale of CMPC, owned by the Chinese Nationalist Party (KMT), the firm had tried to buy out the Bank of Taiwan's stake.

A shareholders meeting in June last year decided to buy the bank's 3 million shares for NT$30 million (US$925,000). In order to protect the government's shareholding rights, the bank filed a lawsuit.

After reviewing the case, the Taipei District Court was of the opinion that the shares owned by the Bank of Taiwan had a market value of between NT$148.8 million and NT$195 million and that CMPC's decision was unreasonable and infringed on the rights of the Bank of Taiwan.

In response to the verdict, former CMPC chairman and KMT Legislator Alex Tsai (蔡正元) said that he was no longer the company's chairman nor involved in running the company.

A CMPC representative said they wanted to study the verdict before issuing a statement.

The shareholder meeting in June last year also decided to increase capital by issuing 3 million regular shares and withdrawing 3 million preferential shares. It was also decided that the chairman should be authorized to manage the issuance of the new shares and the conditions for the issue by soliciting investments from private investors, and that an extraordinary shareholders meeting should be held within one month.

The Bank of Taiwan says CMPC is trying to buy its 3 million preferential shares at an unfair price before issuing new regular shares.

If it does so, the bank would lose all its shares in CMPC and would not be able to participate in the new share issue, which is to be handled privately.

The bank says this is a violation of the Company Act (公司法) and infringes its rights.

According to the Taipei District Court review, CMPC had assets of NT$6.97 billion last year, which amounted to NT$49.6 after deducting debt.

At the same time, Central Investment Holding Co (中央投資公司), another CMPC shareholder, sold its shares at NT$65 per share, thus proving the decision to buy the Bank of Taiwan's shares at the nominal value of NT$10 per share was unfair.

The court said this violated the law and invalidated CMPC's actions.

Regarding the decision to authorize the CMPC chairman to handle the soliciting of new investors at his own discretion, the judge said that when issuing new shares, a company should set aside 10 percent to 15 percent of the new shares for the staff, make a public announcement and inform its shareholders to give them the option of buying some of the new shares.

The court invalidated CMPC's decision to authorize the chairman to handle the issue at his own discretion, which the court said was a violation of the law.

Regarding the decision to hold an extraordinary meeting within a month, the court said that a shareholders meeting could not make the decision to call another shareholders meeting.

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