Hot Keywords: compensation / Annual Report /
Big Small Print
Cases
Company allegedly exaggerates company’s revenue and makes misleading financial reports

【Background】:
1. The Company Industrial Co., which was originally focused on printed circuit board (PCB) production, claimed that it had maintained steady revenue growth since its first IPO (initial public offer) in 2000, with its core business gradually diversified into LED and other newly emerging electronics fields at the same time.
2. The Company held a press conference to publish significant company news in April 2007, during which it attributed the Company’s swelling annual revenue, after-tax profit, and after-tax earnings per share (EPS) of 2006 to the upgrading of the Company’s computer system in September 2006 as well as accounting negligence and adjustments in transaction requirements. Later, the Taiwan Stock Exchange Corporation(TWSE) altered the transaction method of the Company’s shares and finally suspended transaction of the Company’s shares on May 7, 2007 due to the Company’s failure to publish its revised financial report within the designated period of time.
3. The Company and its creditor banks applied to the court for reorganization and some disposal to preserve the Company’s properties in May and August 2007, respectively. The court approved the application in November of the same year and at the same time assigned a team composed of the Company’s creditor banks to take charge of the reorganization.
【Reactive actions】:
1. The Center, before the Company convened a shareholders’ meeting in June 2007, wrote to the Company to request it to give details about its overstated revenue, after-tax profit, and EPS as well as to explain how its large amount of bank deposit had been used, what caused the huge amount of account payables of its related persons and how the Company would deal with it, and how the Company would execute its reorganization plan. The Center also raised several related questions during the shareholders’ meeting.
2. The Center, before the court rendered a ruling for reorganization applied by the Company, suggested the court in July 2007 that it should clarify the Company’s financial condition at first and vigilantly rule out the Company-recommended candidates for restructure team members on concerns that the Company’s top executives failed to fulfill their responsibilities and were allegedly against the law. In order to help the court gain a full understanding of the Company’s financial condition at an earlier time, the Center suggested that the inspectors should regularly report to the court about the current status and proceeding of their inspection.
3. After rendering a ruling of the Company’s reorganization by court in November 2007, the Center, on concerns that investors might not be able to get compensation during the course of the Company’s reorganization, helped approximately 18,000 investors(creditors) declaring their rights to the reorganization supervisor and the declared amount totaled NT$7.5 billion. Later, the Center on behalf of the Company’s creditors has attended the meetings of concerned persons for several times.
【Follow-ups】:
1. The court rendered a ruling on adding the Center-declared NT$7.5 billion to the creditor rights for the Company under reorganization. The Company appealed against the ruling. The Center has thus made replies in defense against it.
2. During the course of the court’s investigation on the Company’s reorganization application, the Center raised some questions concerning whether the court’s investigation procedure, feasibility of the reorganization plan, and the Company’s financial reports should be accepted by the competent authority. In case the Company’s reorganization application is approved by court, the Center would continue to express its opinions about investors’ rights in this case during the course of the Company’s reorganization.
3. The Center has accepted the applications of filing class-action litigation by investors who hold the Company shares in August 2008 and will file the litigation before March 2009.  

Top
Update Date:2015/12/27 12:53