The Financial Supervisory Commission (FSC) has reported Tatung Co (大同) chairwoman Lin Kuo Wen-yen (林郭文艷) to prosecutors for breach of trust, after a controversial shareholders’ meeting last week that led to impairment losses, the commission said yesterday.
The move is the financial regulator’s latest to address the fallout from Lin Kuo on Tuesday last week canceling the voting rights of 27 shareholders who own 53 percent of Tatung at its shareholders’ meeting.
After a week of review, the FSC has concluded that Lin Kuo and the company’s high-ranking executives breached Article 171 of the Securities and Exchange Act (證交法), as they allegedly caused at least NT$5 million (US$169,027) in damages to Tatung with the intent to benefit themselves, commission Chairman Thomas Huang (黃天牧) told a news conference.
Photo: Wang Meng-lun, Taipei Times
The FSC has collected evidence that indicates that Lin Kuo’s actions resulted in damages and delivered the files to prosecutors earlier this week, Securities and Futures Bureau Deputy Director Sam Chang (張振山) said.
The damages include funds that Tatung allegedly spent on arranging the shareholders’ meeting, which was too contentious to be accepted by government agencies, as well as the decline in Tatung’s share price as a result of the meeting, an FSC official said by telephone on the condition of anonymity.
Minority shareholders who objected to the actions of Tatung executives have applied to the Ministry of Economic Affairs (MOEA) to allow a new shareholders’ meeting to elect a new board directors, the official said.
If the MOEA accepts their application, Tatung would need to pay for the meeting, which would increase the damages, the official said.
It was the first time that the FSC had reported to a prosecutors’ office a publicly listed company for breach of trust due to a firm’s malpractice in shareholder services, Huang said.
The commission has previously targeted companies whose board members misappropriated corporate funds, Huang added.
Taiwan Depository and Clearing Corp’s (台灣集中保管結算所) investigation of the Tatung shareholders’ meeting is still ongoing, as it is still waiting for a response from Tatung, but the firm is expected to announce whether to bar the company from conducting shareholders’ services next week, Huang said.
“We understand that the public hopes that we can quickly solve the situation, but the Securities and Exchange Act does not offer us enough tools to do that,” Huang said.
However, the commission is considering amending rules to bar persons who severely breach corporate governance regulations from serving as chairpersons of companies that conduct initial public offerings on the main exchanges and to increase the transparency of the shareholder electronic voting system, so that shareholders can see voting results sooner, Huang said.
The FSC in the next three months is to consult with law experts to decide whether to amend the Securities and Exchange Act to give the commission more tools to punish firms for similar actions, Huang said.
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