Yuanta Financial Holdings Approves Share Swap; Yuanta Funds Minority Shareholders Raise 3 Concerns

(CNA Reporter Tseng Jen-kai, Taipei, 12th) Yuanta Financial Holdings held a shareholders' meeting today and approved a share swap plan, making Yuanta Securities Investment Trust (Yuanta Funds) a 100% owned subsidiary of Yuanta Financial Holdings. After the meeting, minority shareholders of Yuanta Funds raised three points of contention.

Shi Yun-ting, a lawyer appointed by the minority shareholders of Yuanta Funds, called on the Financial Supervisory Commission (FSC) to conduct a substantive review of the case to maintain fair financial order and minority shareholder rights.

The three questions raised by Yuanta Funds minority shareholders today include the fact that Yuanta Funds set up a special merger committee for the share swap plan and submitted a review result report, but did not disclose the composition of the committee members. They questioned how it can be determined that the committee made a decision based on a fair and objective perspective. In addition, the review result report, with only a little over a hundred words, concluded that the share swap conditions involving tens of billions are reasonable, making it truly difficult for minority shareholders to believe that their rights and interests are protected.

Secondly, Yuanta Funds' revenue in April this year was NT$1.785 billion, an annual increase of 35.6%; after-tax net profit was NT$494 million, an annual increase of 53.4%. However, Yuanta Funds estimated that its annual revenue and profit growth rate will drop to 2% from next year, and used this benchmark to calculate the share swap ratio, which is obviously unfair. It is reasonable to suspect that Yuanta Financial Holdings used an undervalued price to acquire the highly profitable Yuanta Funds, excluding the rights and interests of minority shareholders.

Minority shareholders of Yuanta Funds believe that after the completion of this share swap deal, Yuanta Financial Holdings will obtain full control of Yuanta Funds, but ignore the minority shareholders who, based on their assessment of Yuanta Funds' prospects, are unwilling to participate in the share swap or sell their shares. Minority shareholders are forced to either transfer their economic interests to Yuanta Financial Holdings or bear the future investment decisions and risks of Yuanta Financial Holdings, leaving them with no other choice.

Lawyer Shi Yun-ting appealed to the FSC that according to Article 36 of the Financial Holding Company Act, when a financial holding company conducts relevant investments or organizational restructuring, it must apply to the competent authority for approval. In addition to confirming whether the documents are complete, a substantive review of this case should also deeply examine the rationality and fairness of the overall transaction to safeguard the rights and interests of minority shareholders. (Editor: Chang Liang-chih) 1150612

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