In a rare example of shareholder activism in Taiwan, a group of domestic investors is appealing to international fund managers to help it wrest control of a $2bn petrochemicals company from its chairman.
James Kuo, chairman of Lea Lea Group, a Taiwanese textiles and construction conglomerate, and two other investors are trying to unseat Shen Chin-jing, chairman of China Petrochemical Development Corporation, which has a $2bn market capitalisation on the Taiwan stock exchange.
台湾纺织及建筑综合企业力丽集团(Lea Lea Group)董事长郭绍仪(James Kuo)与其他两名投资者正试图罢免中国石油化学工业开发股份有限公司（China Petrochemical Development Corporation，简称CPDC）董事长沈庆京。CPDC在台湾证交所上市，市值达20亿美元。
“Shen’s likely violations of fiduciary duties and total disregard of corporate governance have caused shareholders serious concerns,” Mr Kuo wrote in a letter to other shareholders ahead of CPDC’s annual meeting, scheduled for June 27.
Foreign funds including Vanguard, HSBC, BlackRock and Dimensional hold about 25 per cent of CPDC’s shares, and are the swing votes that will decide the fate of the company, which is one of the world’s five biggest producers of chemicals used to make nylon.
The action is one of the first cases of shareholder activism in Taiwan, home to Asia’s seventh-biggest exchange by value of shares traded. It is also Taiwan’s most public battle over corporate governance, with both sides placing advertisements in local newspapers to argue their point.
While some international funds have agitated for corporate governance improvements in Japan and Hong Kong in recent years shareholders tend to be passive in Taiwan , according to Jamie Allen, head of the Asian Corporate Governance Association. “The number of issues here are wider . . . and it is quite important [that the activism] is not coming from foreign funds,” he said.
亚洲公司治理协会(Asian Corporate Governance Association)秘书长艾哲明(Jamie Allen)指出，在一些海外基金的激励下，近年来，日本和香港的公司治理都得到了改善，而台湾的股东则往往比较消极。他说，“这里的问题更多……发起此次维权行动的并不是海外基金，这一点十分重要。”
However, he cautioned against generalising from one case. “We have yet to see a lot of other activists step up to the plate in Taiwan,” he said.
According to Mr Kuo, his consortium, which has a 32.5 per cent stake in CPDC, is under-represented on its board, and Mr Shen controls six of the nine board seats even though his stake is less than 10 per cent. Mr Shen was appointed CPDC chairman last June.
Mr Kuo criticised Mr Shen’s “controversial and suspicious” plan to invest $1.1bn in China for being too big for the group’s $500m cash reserves. “CPDC is a good company and we are doing this so that a good apple doesn’t become a bad apple,” Mr Kuo said.
Mr Shen has hit back vehemently at Mr Kuo’s allegations. CPDC generated record profits of T$10.9bn ($372m) last year. “It is because of this good management that shareholders have supported the current board of directors,” CPDC said on behalf of Mr Shen.
CPDC would finance a third of the China investment, but two-thirds would come from project financing from mainland Chinese banks, Mr Shen said. “This project will not affect CPDC’s financial structure,” he added.