Taishin Financial Holding Co (台新金控) must maintain compliance as it moves to reduce the number of seats on its board of directors to fend off a rumored proxy fight, the Financial Supervisory Commission (FSC) said yesterday.
The commission is concerned whether the autonomy of independent directors and their ability to fulfill oversight responsibilities might be compromised, FSC Chairman Wellington Koo (顧立雄) said on the sidelines of an awards event in Taipei.
Koo declined to comment further on specific companies and said the commission is monitoring developments.
Taishin Financial said in a Taiwan Stock Exchange filing on Tuesday that it plans to cut the number of seats on its board of directors from nine to seven.
It will maintain three independent directors, the company said, adding that it expects the change to help improve the board’s diversity and supervisory function.
However, market observers perceive the change as a defense against Pau Jar Group (寶佳機構), a New Taipei City-based residential property developer that has been amassing shares in Taishin Financial with the aim of gaining board representation.
Fewer board seats would pose a greater obstacle for Pau Jar Group, as the company would need to secure significantly more voting shares to be able to appoint a director at Taishin Financial, observers have said.
In related news, the commission is expected to publish its draft amendment to the Banking Act (銀行法) to bolster board-level oversight at major financial institutions whose market capitalization exceed NT$1 trillion (US$34.26 billion).
The requirement would mean that 15 financial holding companies and a number of large state-run banks would be subject to the change.
The change also stipulates that for every five board seats, two must be reserved for professionals who are natural persons, and not a legal representative appointed by a company or a juristic person.
That would make it more difficult for companies to change their board appointees at investee financial companies.
The change also aims to separate the influence of financial companies that invest in their peers by prohibiting investors from appointing a member of its own management team as a board director at the investee.
Most notably, the changes could affect a board election in 2020 at state-run Chang Hwa Bank (彰化銀行), which has been embroiled in a decade-long dispute over managing rights with Taishin Financial.
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