Democratic Progressive Party (DPP) lawmakers are proposing amendments that would allow the government to seize shares of public or private firms from “frozen shareholders” in China.
When the Chinese Nationalist Party (KMT) regime fled into exile in Taiwan in 1949 following its loss to the Chinese Communist Party (CCP) in the Chinese Civil War, many Chinese firms — including large bookstores, insurance firms, banks, travel agencies and food manufacturers — relocated to Taiwan, the lawmakers said.
While many of the companies resumed business in Taiwan, some of their original shareholders were “trapped in areas fallen into the hands of communist bandits” — as the then-KMT government described the CCP-ruled China.
In 1964, legislation allowed shareholders in the “occupied zone” to continue to be allocated interest and to regain their seed capital with interest once the government “retakes the mainland.”
In 1992, the law was amended, with terms such as “occupied zone” and “retake the mainland” changed to “mainland” and “unification of the nation,” but the rights of shareholders in China were retained.
While the original shareholders are still allocated interest annually, they cannot actually access the funds, and the funds cannot be transferred or inherited, making these funds de facto bad debts.
Nine major companies, including Mega International Commercial Bank (MICB), Shanghai Commercial and Savings Bank (SCSB) and Taiwan Sugar Co (Taisugar), still have “frozen Chinese shareholders” on their books with whom they have lost contact.
KMT Central Policy Committee director Alex Tsai (蔡正元), when he was a lawmaker, had proposed amendments to enable the government to seize such shareholder funds once they remained unclaimed for more than 50 years, but his proposal did not pass.
DPP legislators Chen Ying (陳瑩) and Wang Ting-yu (王定宇) recently made similar proposals.
Using Taisugar as an example, Chen said that the firm has Chinese shareholders because the government sold much of its Taisugar shares in Shanghai to raise funds for the civil war, but the company’s assets mostly came from former Japanese sugar firms in Taiwan.
Taisugar therefore belongs to the Taiwanese, and it would be unfair to allocate money from its operations and sales of assets to shareholders in China, Chen said.
The government should seize these shares so that the Treasury can gain billions of New Taiwan dollars in cash, and the government might win more control over these companies, she said.
Wang said that Chinese shareholders own 11 percent of MICB’s shares, 14 percent of SCSB’s shares and 0.93 percent of Taisugar’s, which means that they could be entitled to NT$1.96 billion (US$60.25 million) in interest from MICB, nearly NT$800 million from SCSB and NT$40 million from Taisugar for this year alone.
Wang said that these shares should be seized by the government, adding that such a move could also prevent Chinese shareholders from applying to access the shares, which could allow them to gain control over the firms.
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