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Taishin Financial Holdings (2887.TW)

Press Release May 24, 2018

May 24 2018

Press Release                                                                                          May 24, 2018

Institutional Shareholder Services (ISS) has published their voting recommendations for Taishin Financial Holding’s upcoming AGM on June 8th (2887 TT). ISS’s proxy research reports are consulted by many global institutional investors when making voting decisions at annual shareholder meetings. In their report they recommend voting FOR Lin Jin-Tsong as an independent director stating that “Lin’s expertise in corporate banking as well as risk control is deemed valuable and will add diversification to the current board’s skill set”. The report recommends voting AGAINST independent director candidate Chang Minyu citing “concerns over her independence and objectivity”. The report also highlights that Chang has a “lack of banking executive and directorship experiences as compared to the other independent director nominee Lin Jin-Tsong who has many years of experience in the banking industry … with an expertise in risk control”.

The report also offers an explanation from Taishin management on why they decided to reduce the board seats from 9 to 7 writing that the company stated “such decision was made due to the sudden resignation of two non-independent directors and two independent directors for health and retirement arrangements, leaving the company with little time sourcing suitable candidates.” This interesting explanation raises concerns on board dynamics if 4 out of 9 directors suddenly decided to resign from the board. On the other hand, it would have been a good opportunity to accept at least one qualified nominee from their largest shareholder, PJ Asset Management.

ISS recommends supporting Taishin’s 4 non-executive director nominees noting that although Taishin’s P/B ratio stands below that of its peer average and it is not a top performer amongst the financial institutions, it has seen stable performance overall and is not financially deteriorating under current leadership. Although ISS’s analysis suggests that the four Taishin-nominated candidates have more relevant experience in the financial industry than PJ Asset Management’s nominees, this conclusion is unconvincing when you compare the financial background and expertise of WU Cheng-Ching and WU Su Chiu. It is very clear that Wu Su Chiu’s professional background would be a strong asset to the board and as a director she would significantly improve overall diversity. This week, the Financial Supervisory Commission (FSC) was alerted to Wu Cheng-Ching’s conflict of interest by holding a non-executive director role in Taishin FHC and CHB and also being chairman of several petrochemical companies. FSC Commissioner Koo reiterated his concern over “separation among financial institutions and the manufacturing industry”, and requested that any incumbent directors under the new modified law shall choose between the conflicting roles before the new law takes effect in July 2019.

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