FSC steps in to safeguard interests of investors in TISC

The FSC issued the announcement to show its determination to settle the worsening stake ownership disputes between China Development Financial Holdings and the existing management of the TISC.

During the June 30 shareholders meeting, both the TISC and China Development Financial each announced their respective versions of the securities firm's new board, with TISC claiming six director seats and two supervisor seats, and China Development claiming seven director seats and one supervisor seat.

The center of the dispute was that although China Development has managed to secure a 54 percent stake in TISC, the securities firm's management headed by Chairman Chang Ping-chao has repeatedly run ads claiming that China Development illegally obtained a 42.9 percent of stake in TISC, and therefore sealed off the votes cast by 42.9 percent of shareholders representing China Development at the meeting and sent them to the court for validity checking.

This made China Development only have about 11 percent of its votes counted, translating into about just one director seat, based on TISC's board structure of nine director seats and two supervisor seats.

FSC also held an emergency meeting yesterday morning seeking to work out effective measures against the disputes. Besides dispatching representatives from its Securities and Futures Bureau as well as from the Taiwan Stock Exchange Corp. and the SFIPC to inspect the operations of TISC yesterday morning, the FSC stressed that it will not rule out asking the SFIPC to apply to the court to form a provisional management team in accordance with Article 208-1 of the Company Law, so as to maintain normal operations of TISC and safeguard the benefits of investors.

The FSC also called for both sides in question to rationally and legally deal with their disputes over the right to manage TISC's operations, so that the disputes won't undermine the benefits of shareholders.

Meanwhile, both TISC and China Development applied to the Commerce Department under the Ministry of Economic Affairs yesterday morning for the changing of members on the board of directors and supervisors of the TISC, but officials with the Commerce Department said both sides failed to submit written records of proposals raised and conclusions reached at the annual shareholders meeting.

Accordingly, the Commerce Department has asked TISC and China Development to offer additional written documents and will move to screen their applications soon after receiving the documents.

Market observers said that China Development's attempt to take control over TISC represents the ambition of Koo Chung-ying, second son of Chinatrust head Jeffrey Koo, Sr., to enlarge his securities brokerage empire. Koo was the former head of China Development and still has influence over it.

KGI Securities Co., part of the Chinatrust conglomerate, recently announced it will acquire the brokerage operations of Taishin Financial Holdings Co. for NT$29 billion. The acquisition will more than double KGI's share of a market that has more than 150 brokerages, according to data from the Taiwan Securities Association.

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