The Financial Supervisory Commission (FSC) is to tighten its review of listed companies’ capital reduction plans after dozens of firms announced reductions in the first quarter, the commission said yesterday.
The commission requires certified public accountants to justify the necessity of a capital reduction and its effects on a company’s financial structure if it plans to cut capital by more than 50 percent.
Given a rise in the number of local companies that have applied to reduce capital, the commission has asked the Securities and Futures Investors Protection Center to help review the plans on a case-by-case basis, Securities and Futures Bureau Director-General Sam Chang (張振山) told a meeting of the legislature’s Finance Committee in Taipei yesterday.
Photo: Tu Chien-jung, Taipei Times
The FSC expects to announce the results of its review in two weeks, Chang said.
The change comes after Chinese Nationalist Party (KMT) Legislator Alex Fai (費鴻泰) asked the commission whether it was suspicious that more companies announced capital reductions in the first quarter.
Eighteen listed firms announced capital reductions totaling NT$57.48 billion (US$1.98 billion) as of the end of last month, nearly as high as for the whole of 2018, Fai said.
Unlike companies’ previous capital reductions, which mostly correlated with rising share prices, the announcements in the first quarter constrained share prices, as in most cases the companies’ share prices fell the next day, Fai added.
Rumors had circulated that some companies aimed to reduce capital to dilute stakes held by minor shareholders, a move that would help certain players gain boardroom control, he said.
Such moves could be possible, and the commission would keep a lookout for this behavior in its review, Chang said.
A capital reduction is just one tool that companies can use to adjust their capital structure, and does not necessarily mean anything more, Chang said, adding that whether such an announcement results in a company’s share price rising or falling depends on how investors interpret the move.
The commission bars companies from conducting capital injections for one year following a capital reduction, Chang said.
Some lawmakers had recommended that the FSC should lengthen the period to three years, but it might be inappropriate as corporate management requires flexibility, Chang said.
STRONG INTEREST: Analysts have pointed to optimism in TSMC’s growth prospects in the artificial intelligence era as the cause of the rising number of shareholders The number of people holding shares of chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) hit a new high last week despite a decline in its stock price, the Taiwan Depository and Clearing Corp (TDCC, 台灣集保) said. The number of TSMC shareholders rose to 2.46 million as of Friday, up 75,536 from a week earlier, TDCC data showed. The stock price fell 1.34 percent during the same week to close at NT$1,840 (US$57.55). The decline in TSMC’s share price resulted from volatility in global tech stocks, driven by rising international crude oil prices as the war against Iran continues. Dealers said
PRICE HIKES: The war in the Middle East would not significantly disrupt supply in the short term, but semiconductor companies are facing price surges for materials Taiwan’s semiconductor companies are not facing imminent supply disruptions of essential chemicals or raw materials due to the war in the Middle East, but surges in material costs loom large, industry association SEMI Taiwan said yesterday. The association’s comments came amid growing concerns that supplies of helium and other key raw materials used in semiconductor production could become a choke point after Qatar shut down its liquefied natural gas (LNG) production and helium output earlier this month due to the conflict. Qatar is the second-largest LNG supplier in the world and accounts for about 33 percent of global helium output. Helium is
Taiwan’s natural gas supply remains stable through the end of May, despite rising concerns about potential disruptions to Qatari liquefied natural gas (LNG) supplies due to escalating conflicts in the Middle East, the Ministry of Economic Affairs said yesterday. The ministry in a statement said that Taiwan has completed preparations for natural gas supply and shipping schedules through the end of May. It has also made plans to increase natural gas imports from regions outside the Middle East in June to ensure a stable supply, it added. Taiwan sources natural gas from 14 countries and is not solely dependent on the Middle East,
China is clamping down on fertilizer exports to protect its domestic market, industry sources said, putting an additional strain on global markets that were already grappling with shortages caused by the US-Israeli war on Iran. China is among the largest fertilizer exporters — shipping more than US$13 billion of it last year — and it has a history of controlling exports to keep prices low for farmers. Shipments through the war-blocked Strait of Hormuz account for about one-third of the sea-borne supply. This month, Beijing banned exports of nitrogen-potassium fertilizer blends and certain phosphate varieties, sources said. The ban, which has not
RSS