Hot Keywords: compensation / Annual Report /
Cases
Company continues to deliver goods without collecting receivables on schedule and its shortage in bad loan reserves is alleged against the Securities

【Background】:
1. As a DRAM module manufacturer, the Company reported an EPS (earnings per share) of NT$0.21 for the third quarter of 2007 even though all major the companies suffered serious losses during the second half of the same year.
2. The Company’s check was bounced on March 7, 2008 and has encountered a series of financial problems, with a total of 22 checks, worth NT$70.65 million, bounced as of July 2008. On April 1, 2008, the Company received the court’s order to suspend operations right away. Meanwhile, the Company’s chairman was subject to a pecuniary penalty due to the Company’s failure to submit its financial reports for 2007 and the first quarter of 2008 as required by the Securities and Exchange Law.
3. After its checks bounced, the Company’s shares were suspended from trading on the GreTai Securities Market (GTSM). Meanwhile, the Competent Authority found many doubtful points about this case during its investigation and then reported this case to the Banciao District Prosecutors Office which, after making an further investigation, found the Company continue to make delivery of goods despite a large amount of its receivables remained uncollected, leading to a fund shortage of NT$503 million. The Company’s shares were finally removed from the GTSM due to the Company’s financial problems, and the Banciao District Prosecutors Office filed a lawsuit against the Company’s Chairman Wang and President Chen for violating the Securities and Exchange Law on July 14, 2008.
【Reactive actions】:
1. Since the Company’s checks bounced, the Center has constantly received complaints from the Company’s shareholders. The Center wrote to the Company twice during March-June 2008, requesting it to explain how it would deal with the relatively low ratio of its reserved funds for dealing with losses resulted from the falling inventory prices, shortage in bad loan reserves, the consequent bounced checks, as well as the Company’s operational plan for the future during its shareholders’ meeting. The center also sent copies of the request letter to related regulatory agencies.
2. The Center received a reply from the Company in April 2008, but found it fail to give full explanation for the doubtful issues. The Center, therefore, wrote another letter to the Company, requiring it to clarify the following doubtful points during its shareholders’ meeting: why it’s unable to honor its checks only a few weeks after it reported an EPS of NT$0.21 for the third quarter of 2008, why the Company, which was found by the prosecutors to have been engaged on long-term cooperation with four foreign partners, still made delivery of goods to its foreign partners even though it had not collected payments of the receivables from these foreign partners, how’s the business cooperation between the Company and its foreign partners, how much is the amount of the overdue receivables, and how the Company will handle all of these issues in the future. The Center also dispatched representatives to attend the Company’s shareholders’ meeting and raised questions about these doubtful matters at the meeting.
【Follow-ups】:
1. In regard of investor’ complaints as well as the Company’s financial problems, the Center made suggestion to the regulatory agency that it should not approve the Company’s application for withdrawing its public-traded securities otherwise the Company will be able to escape supervision by the Competent Authority.
2. The Banciao District Prosecutors Office filed a lawsuit against the Company’s Chairman Wang and President Chen for violating the Securities and Exchange Law on July 14, 2008, and the Center acquired a copy of the lawsuit from the Banciao District Prosecutors Office for its reference on July 15, 2008. The Center will continue to examine if the case would be involved with any other illegal situations which may cause other damages to the interest of its shareholders. If the company have any illegal situations, the Center will file class-action litigation and deal with investors’ request for compensation.  

Top
Update Date:2015/12/27 12:56