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The Company raises funds through private placement of convertible bonds, allegedly harmful to shareholders’ interest

Regarding that the move of The Company to convert its convertible bonds into common shares and alter its registered share capital as well as the Company’s negligence during the course of issuing privately-placed convertible bonds and the considerable gap between the CB’s yield rate and the interest rate of the Company’s long-term debts would be harmful to the interest of the Company’s shareholders, the Center wrote a letter in May 2008 to request the Company to behave in accordance with the law so as to protect shareholder’s interest, with copies sent to the Company’s supervisors, the Taiwan Stock Exchange (TSE), and the Center itself.
【Reactive actions】:
1. After receiving instruction from the Financial Supervisory Commission (FSC), the Center wrote a letter to require the Company to explain its CB price-setting procedure, the criteria for selecting target investors, and other related matters. Meanwhile, it wrote letters to the Company’s supervisors to request them to fulfill their responsibilities for supervising the Company’s operations so as to protect shareholders’ interest.
2. The company made a reply to the Center at the end of May in 2008, but failed to fully clarify all the doubtful points. Later, the Center dispatched representatives to attend the Company’s annual shareholders’ meeting for 2008, during which they required the Company to give details about the following issues—the necessity and suitability for the Company to raise CB through private placement, the legal base and rationality for issuing the CB through private placement, the reasons behind the significant gap between the CB’s yield rate and the interest rate of the company’s long-term debts, the criteria for selecting particular investors, and the legitimacy for Company’s inside persons to subscribe the CB. They requested the Company to make records of its answers to all these questions in its meeting proceedings.
3. The company’s chairman answered all these questions during the meeting, and promised to allow CB holders to convert their CBs to common shares within two years so that it would help the Company avoid considerable interest payment if CB holders require redemption at the expiration date. Meanwhile, The company also made a written copy of its answers to all these questions for the Center.
4. The company’s supervisors made a reply to the Center, saying that the Company hasn’t done anything harmful to the interest of the shareholders, and will continue to watch closely how the Company would convert its CBs to common shares and will require The company to provide sufficient related documents to the supervisors for their monitoring and control of the case.
1. The Center forwarded The company supervisors’ reply letter to the regulatory agency as its reference when they deal with The company’s application for converting its privately-placed CBs into publicly-traded common shares.
2. The Center continues to watch how The company would convert its CBs into common shares and would take follow-up actions in case of anything harmful to the interest of the Company’s shareholders. 

Update Date:2015/12/27 12:55