The government's investment in the cash-thirsty Taiwan High Speed Rail Corp (THSRC,
"The court can only rule on the application for amendment to the regulations from a legal perspective, not on whether the investment is legal or not," Liu Shou-sung (
The government-backed China Aviation Development Foundation (
The foundation is the biggest shareholder of China Airlines Ltd (
According to the foundation's constitution, it was established to help develop the nation's aviation industry only.
To legitimize the THSRC investment, the foundation held a provisional board meeting and passed a constitutional amendment allowing investments in "major public construction projects," and filed an application with the Taipei District Court for the change.
The application, however, was overruled in January with the court declaring the calling of the board meeting last September an illegal procedure.
According to ministry regulations, the board meeting should have been convened and chaired by the then-chairman Lin Ling-san (
Furthermore, the board directors did not receive the notification and agenda 10 days prior to the meeting, as regulated by law. As the foundation did not appeal, the ruling is therefore irreversible, according to the Taipei District Court.
However, the court's decree then is not an indication that the investment in THSRC is illegal, Liu said.
The legitimacy of the investment should be determined by the court, which cannot rule on the case until a lawsuit is filed, he said.
Arthur Chiang (江金山), vice president of THSRC's administration division, said the NT$4.5 billion investment through purchase of THSRC preferred shares is legal, as the transaction has already been completed and was confirmed by a certified accountant last September.
As to the foundation's constitution, Chiang said the company cannot comment on the issue since it has no understanding of the foundation's internal operation.
"Our priority is to finish the construction and launch the high-speed railway service in October this year," Chiang said.
THSRC has postponed delivering the project for a year. As of January, the company has completed 93.49 percent of the construction, the company said.
Shares of THSRC advanced 1.21 percent to close at NT$7.53 on the Emerging Stock Market (
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