Draft legislation proposed by the Financial Supervisory Commission (FSC) to curb major shareholders from improperly interfering in the operations of financial holding companies and banks would limit penalties on offenders to just fines, local media reported, citing commission officials.
The bill would also remove fines on persons in charge of financial holding companies and banks should improper interference by major shareholders occur, while retaining sanctions such as salary cuts, suspensions and dismissals, the officials said.
The FSC submitted the draft amendments to the Financial Holding Company Act (金融控股公司法) and the Banking Act (銀行法) to the Executive Yuan for review this month, they said.
Photo: Kelson Wang, Taipei Times
The commission expects the draft legislation to be considered among the priority bills that could be deliberated in the Legislative Yuan in the coming months, they said.
In a previous draft seen in April, the regulator proposed penalties against major shareholders who improperly interfered in the operations of a holding company or bank in the form of fines of up to NT$50 million (US$1.55 million), restrictions on their voting rights or requirements that they sell their shares.
The bill comes as several financial holding firms’ major shareholders were found to have improperly intervened in company operations by receiving information directly from management rather than from their representatives on the board, or by holding meetings outside the office with responsible executives.
Since last year, the commission has imposed sanctions on Shin Kong Financial Holding Co (新光金控), China Development Financial Holding Corp (中華開發金控) and CTBC Financial Holding Co (中信金控) for failing to comply with corporate governance requirements and keep those in power to behave properly.
The commission’s previous draft faced strong objections from the financial industry, with major shareholders criticizing the equity divestment penalties as infringing on their property rights, while executives of financial companies demanded that the principle of proportionality be observed regarding the fines of up to NT$50 million.
After discussions with legal experts and financial professionals over the past few months, the commission adjusted the scope of the penalties to ensure the legislation would pass smoothly, the officials said.
FSC Chairman Thomas Huang (黃天牧) has said that the commission hoped to receive public support by achieving its policy goal in stages.
It remains to be seen whether a fine of as high as NT$50 million can effectively constrain the conduct of major shareholders who seem to care less about money than power, analysts said.
What matters more are harsher penalties like voting rights restrictions and equity divestment requirements, they said.
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