Tatung Co’s (大同) current and previous chairpersons have been charged with hiding information about an investment in China by the company’s now-bankrupt flat-panel subsidiary, prosecutors said on Friday.
The Taipei District Prosecutors’ Office said that Tatung chairwoman Lin Kuo Wen-yen (林郭文艷) and her husband, former Tatung chairman Lin Wei-shan (林蔚山), along with three executives of the subsidiary, Chunghwa Picture Tubes Ltd (CPT, 中華映管), hid material information about the flat-panel unit’s investments in China.
The prosecutors accused Lin Kuo, Lin and former CPT president Lin Sheng-chang (林盛昌), as well as former chief financial officers Chien Yung-chung (簡永忠) and Wang Chih-cheng (汪志成), of contravening the Securities and Exchange Act (證券交易法) by withholding information from investors in the hope that it would influence their investment decisions.
CPT had been planning to list its shares on the Shenzhen Stock Exchange as early as 2001, but the plan failed to materialize in the following years, the prosecutors said.
The flat-panel supplier in 2006 and 2007 sought to acquire a 75 percent stake in Fujian-based Mindong Electric Corp (閩東電機) through its units to push for a backdoor listing, they said.
CPT provided 19 guarantees for its investment in the Chinese entity to obtain the China Securities Regulatory Commission’s approval for the share purchase, the prosecutors said.
Following the acquisition, which was completed in January 2010, CPT renamed Mindong Electric to CPT Technology (Group) Co (華映科技), they said.
One of the guarantees that CPT had provided was a promise not to reduce its holdings in CPT Technology before the new unit started producing large screens, the prosecutors said.
The company also promised to maintain CPT Technology’s earnings at certain levels between 2009 and 2011, and agreed that CPT and Tatung would jointly shoulder any liability faced by CPT Technology, they said.
The guarantees would have been important enough to influence investors’ decisions when trading the shares of CPT and Tatung listed on the Taiwan Stock Exchange (TWSE), but they were not disclosed in the companies’ financial statements, the prosecutors said.
Following the indictment, Tatung said that it had disclosed its investments in Mindong Electric in accordance with international accounting rules.
It cannot understand why Lin Kuo has been charged, as she was only a CPT board member at the time of the acquisition, it said.
Tatung said it would fight the charges once it receives the official documentation from the court.
Lin Kuo has served as Tatung chairman since Feb. 1, 2018. Her husband headed the company from 2006 to 2018.
In September last year, CPT filed for bankruptcy, saying that its assets were not sufficient to pay its debts, as some of its land, factories and equipment had been seized at the request of some of its creditors.
The company was delisted from the TWSE in May last year.
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