Tatung Co (大同) shares yesterday plunged by the maximum daily limit of 10 percent to NT$18.90, the lowest in three months, after the Taiwan Stock Exchange (TWSE) on Tuesday evening changed the company’s classification to a full-delivery stock effective tomorrow.
The TWSE’s move follows the company’s failure to give a clear and satisfactory explanation of why it deprived dozens of shareholders of their voting rights during a board election at the annual shareholders’ meeting on Tuesday morning.
Under the exchange’s regulations, investors are not allowed to engage in margin trading of a full-delivery stock, TWSE spokeswoman Rebecca Chen (陳麗卿) told the Taipei Times by telephone.
Photo: Kelson Wang, Taipei Times
Chen dismissed speculation that the punishment would benefit Tatung management as minority shareholders would find it more difficult to buy the shares.
She said it is a warning to investors that this is a company with high governance risks and they should think twice before buying its shares.
“We demanded that Tatung clarify the dispute at its shareholders’ meeting, but it failed to give a satisfactory answer,” Chen said. “Tatung spent more time explaining its decision to block some shareholders’ voting rights, but the company ignored the fact that it is not a judge nor a government agency.”
“Tatung has set a wrong example of corporate governance,” she added.
Categorizing a company’s stock as full-delivery shares is the third-most severe form of punishment from the TWSE, after suspension of trading and delisting, according to the exchange’s regulations.
Such a punishment is usually meted out to companies with a per-share book value of less than NT$5 or have problematic financial statements, Chen said.
The punishment for Tatung reflects the exchange’s observation that it had seriously breached shareholders’ rights, she said.
TWSE would not relax its punishment until the company clarifies the dispute around the controversial board election, Chen said.
Vivian Tsai (蔡玉真), a Tatung shareholder and a media personality, led a group of 30 Tatung shareholders at a rally outside the Securities and Futures Bureau yesterday.
The group was petitioning the Financial Supervisory Commission to order Tatung to hold a new board election.
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