The drawn-out boardroom tussle at China Development Financial Holding Co (中華開發金控) reached a climax yesterday, with the Koo family coming out on top over the government to control two-thirds of the seats on the board at its annual general meeting.
The Ministry of Finance expressed regret over the result, in which the government's camp only secured one-third of the seats, leaving it with no balancing power over the operations of the firm.
The Koo family and its supporters, led by Angelo Koo (辜仲瑩), the incumbent president of China Development, secured 10 seats, including two independent director and two supervisor spots.
In comparison, the Ministry of Finance and its supporting camp obtained five seats on the board, including one independent director and one supervisor spot.
"We are satisfied with the result," said Lawrence Liu (劉紹樑), chief strategy officer at China Development, the nation's 12th largest financial group by assets.
The attendance rate was 91.42 percent and the voting rate exceeded 80 percent because of the cutthroat management battle.
Government-appointed director Lin Cheng-yi (林誠一) will continue to chair the company as agreed in a board meeting that was held immediately after the annual general meeting had finished.
Before that board meeting, Minister of Finance Ho Chih-chin (何志欽) told reporters that because the number of government appointed directors was not sufficient to support its candidate for chairman, "the government will not nominate its candidate for chairman of the company."
Ho said that the ministry would respect the decision made by the board to elect Lin to stay on as chairman.
The Koo family, which also owns Chinatrust Financial Holding Co (中信金控), the nation's seventh largest financial holding firm, won the landslide victory after negotiations with the finance ministry had collapsed the previous day. The ministry would not accept Koo's proposal that his group control nine of 15 seats on the board while the government would take the remainder.
The Koo camp were said to control proxy votes representing more than a 30 percent stake on the top of its own 17 percent holding in China Development.
The government obtained the support of more than 21 percent of the company's shareholders yesterday, including the 11.16 percent stake the government controls via other state-run banks, 8.1 percent in proxy votes it solicited ahead of the meeting and between 2 percent and 3 percent of shares held by foreign shareholders.
Ho said yesterday evening that the existing regulations governing the solicitation of proxy votes should be amended to facilitate fair competition.
The government had difficulty soliciting minor shareholders' proxy votes because, under current regulations, it was forbidden from obtaining a list of shareholders' names.
“We accept the election result, but hope the system can be improved,” Ho
said.
The government's defeat in the boardroom battle provoked criticism of the
government-appointed directors. Ho said the ministry would conduct a review
of their performance, without giving a time frame.
Meanwhile, the finance ministry retained its control of Hua Nan Financial
Holding Co (華南金控), the nation's sixth largest financial group by assets,
grabbing eight seats on the board, two independent director spots and three
supervisor seats as planned yesterday.
Current chairman Lin Ming-cheng (林明成) — who represented private
shareholders — secured the remaining seven seats, one independent director
and two supervisor spots.
Commenting on this result, Ho said the government has done its best in
pursuit of the public’s maximum benefits.
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