The Ministry of Economic Affairs (MOEA) yesterday rejected Tatung Co’s (大同) attempt to register new board directors, saying that the company has misapplied the law to block some shareholders from voting during its annual general meeting held on Tuesday last week.
“We don’t consider [the meeting] valid,” Minister of Economic Affairs Wang Mei-hua (王美花) told reporters, calling for the two warring factions to step up and resolve the situation as soon as possible.
“Either the firm can hold a legitimate shareholder’s meeting or the minority stakeholders can organize their own under Article 173 of the Company Act (公司法),” she said.
Photo: Chien Li-chung, Taipei Times
The ministry could intervene under Article 195 of the act if the situation remained in limbo, as the current directors’ terms are ending, but only as a last resort, she said.
“Companies should govern themselves,” she added.
The home appliance maker has been embroiled in boardroom drama and corporate scandal for almost a decade.
Former Tatung chairman Lin Wei-shan (林蔚山) is serving an eight-year prison sentence for embezzling corporate funds.
His wife, Lin Kuo, is the leader of the “company faction” that has been at a war over ownership of the firm with the “market faction,” which is composed of institutional and individual investors.
The investors collectively own 53 percent of the firm’s shares, but Lin Kuo denied them the right to vote at the shareholders’ meeting, saying that they had contravened the Business Mergers and Acquisitions Act (企業併購法) and the Act Governing Relations Between the People of the Taiwan Area and the Mainland Area (兩岸人民關係條例).
Those siding with Lin Kuo then proceeded to elect a new nine-seat board, with Lin Kuo elected to serve as chairwoman.
Tatung misapplied the law to prevent some shareholders from voting, the ministry said in a statement, adding that as those votes remain valid, Tatung failed to reach the 50 percent shareholders’ participation threshold required to convene a shareholders’ meeting under the Company Act.
An investigation of the incident by the Financial Supervisory Commission is ongoing, it added.
Securities and Futures Investors Protection Center spokesman Chao Shun-sheng (趙順生) said that he is happy with the MOEA’s decision.
“The MOEA did what it could within its jurisdiction,” he said.
The center filed a lawsuit against Lin Kuo on behalf of the Tatung shareholders.
“This is a particularly egregious case of management infringing on the rights of shareholders,” Chao said, adding that this is the first time that the two acts have been weaponized in a shareholder power struggle.
Shanyuan Group (三圓建設) chairman Wang Kuang-hsiang (王光祥), who leads a group of minority shareholders, said that he would seek the ministry’s approval to hold an extraordinary shareholders’ meeting, as Tatung management had falsified the shareholders’ meeting resolution.
Separately yesterday, the Financial Supervisory Commission said that Lin Kuo committed a breach of trust by preventing shareholders from voting at the company’s annual meeting last week.
The commission said it has reported Lin Kuo’s wrongdoing to investigators to be probed further.
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