The Financial Supervisory Commission (FSC) yesterday fined Shin Kong Life Insurance Co (新光人壽) NT$6 million (US$194,736) for breaching the Insurance Act (保險法) and regulations governing transactions between insurers and interested parties.
Shin Kong Financial Holding Co’s (新光金控) main subsidiary was found to have sold its shares of Shinkong Spinning Co (新光紡織) to two interested parties, including the conglomerate’s Shinkong Wu Ho-su Memorial Hospital, without the board’s approval from July 2016 to March 2017, the commission said.
The commission fined the firm NT$1.8 million for the sale, Insurance Bureau Deputy Director-General Thomas Y.H. Chang (張玉煇) told a news conference.
It was strange that the insurer sold the shares to the hospital before Shinkong Spinning held elections for a new board of directors in May 2017, but bought the shares back afterward, Chang said.
Given that the regulations bar insurance firms from voting in elections held by the company in which it is investing, the commission believes that Shin Kong Financial used a loophole and transferred the insurer’s shares to the hospital to increase its real control over the spinning company, Chang said.
“Financial conglomerates should know that using such a loophole is not right, and I will ask them to provide transparent ownership structures to curb such breaches,” FSC Chairman Wellington Koo (顧立雄) told reporters on the sidelines of a Hua Nan Financial Holding Co (華南金控) event in Taipei.
Shin Kong Financial chairman Eugene Wu (吳東進) also served as the hospital’s chairman, company data showed.
The insurer has been banned from trading securities of its interested parties in after-hours trading or in block trading for two years, Chang said.
The firm was also fined for failing to observe its internal controls on some procurements, poor control over irregular securities trading and failure to check the authenticity of credit card client data, Chang added.
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