The Financial Supervisory Commission on Thursday unveiled a proposal that would ban top executives of financial holding companies from taking on similar roles in other companies, in a bid to improve corporate governance and ensure regulatory compliance in the financial sector.
The proposal stipulates that presidents and chairpeople of financial holding companies cannot hold similar positions in non-financial companies, the commission said.
They would also be prohibited from taking on roles — such as consultant, board director or general manager — which allow them to wield an influence over business decisions, the commission said.
The change is widely regarded as a move to shore up regulations following a series of irregular loans made to fund a real-estate investment in Shanghai were discovered at SinoPac Financial Holdings Co (永豐金控).
Former SinoPac Financial chairman Ho Shou-chuan (何壽川) was indicted last month for allegedly authorizing a number of irregular loans between SinoPac Leasing Corp (永豐金租賃) and YFY Global Investment BVI Corp, a subsidiary of YFY Inc (永豐餘控股).
YFY Inc is a papermaking conglomerate that is also controlled by Ho’s family.
Ho was allegedly the sole member of YFY Global Investment’s board of directors and had approved the questionable loans, according to local media reports.
Ho was indicted by the Taipei City District Prosecutors’ Office for violating the Securities Exchange Act (證券交易法) and the Banking Act (銀行法).
Prosecutors are seeking a 12-year prison sentence for Ho, as well as a NT$360 million (US$11.92 million) fine and the confiscation of US$12 million in alleged illegal profits.
The commission said the proposed rule would extend the level of control on executives and responsible persons at banks to financial holding companies
The change is aimed at limiting contagion risk between financial and non-financial companies, as well as establishing a governance structure that defines the boundaries separating a corporation’s owners and managers.
The proposal is set to be reviewed by the public for 60 days and is expected to be implemented in December, the commission said.
Executives at financial holding companies are advised to review their roles and tender their resignation where necessary, the commission said, adding that it might grant time extensions on a case-by-case basis.
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