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A Listed Company Shall Convene its General Shareholders’ Meeting in Accordance with the Laws and Regulations; the Stock Exchange Imposes a Penalty on D-Link Corporation for Violation of the Law and Requires Improvements before a Deadline
D-Link Corporation announced on May 25, 2020 that its board of directors’ meeting had changed the date of its general shareholders’ meeting to June 29, 2020. The Stock Exchange expressed that the information announced by the company is in violation of sub-paragraph 4, paragraph 1, Article 15 of the “Taiwan Stock Exchange Corporation Procedures for Verification and Disclosure of Material Information on Companies with Listed Securities” that “the information published does not conform to the principles for corporate governance in Article 2 of the Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies, and it affects shareholders’ rights.” The Stock Exchange therefore imposed a penalty of NT$300,000 on the company and requested improvement before a deadline. If the company fails to make improvements before the deadline, the Stock Exchange will impose further penalties according to the number of violations or list its securities under an altered trading method in accordance with Article 49 of the “Operating Rules of the Taiwan Stock Exchange Corporation.”
The Stock Exchange also said that a listed company shall, in accordance with Article 46 of the “Operating Rules of the Taiwan Stock Exchange Corporation,” enter on the website reporting system designated by the TWSE the items to be announced and declared at the shareholders' meeting at least 12 business days prior to the date of suspension of changes to the shareholders’ register, so as to ensure that the shareholders are fully aware of the information and may assess whether to participate in the shareholders' meeting.
Regarding the board of directors’ meeting of D-Link Corporation to decide to change the date of its general shareholders’ meeting from June 15, 2020 to June 29, 2020 and the company’s claim that the book-close period will still be from April 17, 2020 to June 15, 2020, as the changes to its shareholders’ register are not suspended from June 16 to June 29, it is obviously in violation of paragraph 3, Article 165 of the Company Act that “the entries in the shareholders’ register shall not be altered within 60 days prior to the convening date of a general shareholders' meeting” and the requirement that “the calculation of the book-close period of the shareholders’ register shall include the date of the meeting” in the letter of the Ministry of Economic Affairs dated March 4, 1991 referenced Jing-Shang No. 203119.
In addition, regarding the resolution of the board of directors of the company to change the date of its general shareholders’ meeting to June 29, 2020, this date is only a little more than 30 days before the date of the resolution; even if the convening procedure are to be re-started, the company is obviously unable to comply with the Company Act and the relevant reporting requirements of the Stock Exchange. The company also failed to fully explain how to ensure the rights of the shareholders to participate in the general shareholders’ meeting, and the information released is not in line with the principles of corporate governance.