{"id":17961,"date":"2023-09-01T13:04:16","date_gmt":"2023-09-01T05:04:16","guid":{"rendered":"https:\/\/www.tejwin.com\/?post_type=insight&#038;p=17961"},"modified":"2024-06-14T13:58:36","modified_gmt":"2024-06-14T05:58:36","slug":"chung-fu-delisting-crisis-2","status":"publish","type":"insight","link":"https:\/\/www.tejwin.com\/en\/insight\/chung-fu-delisting-crisis-2\/","title":{"rendered":"Chung Fu\u2019s Delisting Crisis II: Skyrocketing Asset Values and Escalating Ownership Dispute!"},"content":{"rendered":"\n<figure class=\"wp-block-image is-resized\"><img fetchpriority=\"high\" decoding=\"async\" width=\"1200\" height=\"675\" src=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/image-285.png\" alt=\"\" class=\"wp-image-18024\" style=\"width:840px;height:472px\" srcset=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/image-285.png 1200w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-285-300x169.png 300w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-285-1024x576.png 1024w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-285-150x84.png 150w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-285-768x432.png 768w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><\/figure>\n\n\n\n<div style=\"height:37px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_81 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69f0e5dc49154\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"ez-toc-cssicon\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69f0e5dc49154\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.tejwin.com\/en\/insight\/chung-fu-delisting-crisis-2\/#Preface\" >Preface<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.tejwin.com\/en\/insight\/chung-fu-delisting-crisis-2\/#The_Spark_and_Prelude_to_the_Ownership_Battle\" >The Spark and Prelude to the Ownership Battle<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.tejwin.com\/en\/insight\/chung-fu-delisting-crisis-2\/#Market_Party_Acquires_Shares_as_Preparation_for_Upcoming_Battle\" >Market Party Acquires Shares as Preparation for Upcoming&nbsp;Battle<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.tejwin.com\/en\/insight\/chung-fu-delisting-crisis-2\/#Company_Party_Strengthens_Its_Position_to_Counterbalance_Market_Party\" >Company Party Strengthens Its Position to Counterbalance Market&nbsp;Party<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.tejwin.com\/en\/insight\/chung-fu-delisting-crisis-2\/#LiZhong_Huang_Shifts_Shares_to_Gain_More_Voting_Power\" >LiZhong Huang Shifts Shares to Gain More Voting&nbsp;Power<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.tejwin.com\/en\/insight\/chung-fu-delisting-crisis-2\/#Key_Move_by_Independent_Director_Leads_to_Ownership_Change\" >Key Move by Independent Director Leads to Ownership Change<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.tejwin.com\/en\/insight\/chung-fu-delisting-crisis-2\/#Are_Independent_Directors_Truly_%E2%80%98Independent\" >Are Independent Directors Truly \u2018Independent\u2019?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.tejwin.com\/en\/insight\/chung-fu-delisting-crisis-2\/#Double_Showdown_of_Shareholder_Extraordinary_Meeting_the_Market_Party_Ultimately_Seizing_Control\" >Double Showdown of Shareholder Extraordinary Meeting, the Market Party Ultimately Seizing&nbsp;Control!<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.tejwin.com\/en\/insight\/chung-fu-delisting-crisis-2\/#Inadequate_Handover_Poses_a_New_Challenge\" >Inadequate Handover Poses a New Challenge<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.tejwin.com\/en\/insight\/chung-fu-delisting-crisis-2\/#The_Warning_of_Unstable_Ownership_of_Chung_Fu\" >The Warning of Unstable Ownership of Chung Fu<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Preface\"><\/span>Preface<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In the <a href=\"https:\/\/www.tejwin.com\/en\/insight\/chung-fus-delisting-crisis-1\/\" target=\"_blank\" aria-label=\" (opens in a new tab)\" rel=\"noreferrer noopener\" class=\"ek-link\">previous article<\/a>, we delved into the undisclosed financial reporting issues at Chung Fu, providing readers with a basic understanding of the company. At its core, this event stems from an internal struggle for control, a <a href=\"https:\/\/www.tejwin.com\/en\/insight\/the-battle-for-control-taishan-shin-kong\/\" target=\"_blank\" rel=\"noreferrer noopener\" class=\"ek-link\">common battle<\/a> between the company\u2019s management and market factions. In fact, the ownership dispute at Chung Fu had its origins several years ago. Back then, the company\u2019s management failed to actively utilize its assets and pursue growth, prompting the market faction to embark on a reform mission at Chung Fu. They successfully gained control of the company through a shareholder vote in 2022.<\/p>\n\n\n\n<p>Unfortunately, despite the market\u2019s high hopes for the company\u2019s prospects, Chung Fu\u2019s operations failed to show any signs of improvement. The new management became embroiled in a power struggle with the former chairman, diverting their focus away from running the company. This even led to a suspension of trading due to delayed financial report filings. With the change in ownership, the back-and-forth battles between the two sides only added to the confusion. As various narratives emerged, the truth became increasingly elusive. What were the underlying causes of the internal issues at Chung Fu? This article will provide a detailed account of the ownership dispute at Chung Fu, the clashes between the company and market factions, and ultimately, the implications of the Chung Fu crisis on us as investors.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_Spark_and_Prelude_to_the_Ownership_Battle\"><\/span>The Spark and Prelude to the Ownership Battle<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In 2020, a surprising surge in ChungFu\u2019s stock prices captured the market\u2019s imagination, with 2022 seeing repeated upper Limit breaks. How did this long-standing company with an average monthly revenue of just 1 million NT Dollars transform into a market sensation so quickly? What\u2019s fueling the stock surge, given no apparent turnaround in operations?<\/p>\n\n\n\n<p>The market\u2019s fascination with Chung Fu primarily stems from its valuable land assets, notably a 21,000-square-meter plot in Zhongli, Taoyuan, and an office building in Zhonghe, New Taipei City. These holdings are highly prized, with the Zhongli plot alone estimated at 3 to 4 billion NT Dollars. This has turned Chung Fu into a coveted asset stock, attracting investors and market attention. Before the current ownership dispute, 2020 saw concerns over weak corporate governance, leading to a board election contest between the company and market factions.<\/p>\n\n\n\n<p>A year later, the battle for control resurfaced, shining a spotlight not only on Chung Fu\u2019s land assets but also symbolizing new players entering the scene. The market\u2019s expectation of asset revitalization under fresh management has been revived.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Market_Party_Acquires_Shares_as_Preparation_for_Upcoming_Battle\"><\/span>Market Party Acquires Shares as Preparation for Upcoming&nbsp;Battle<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>According to TEJ Group\u2019s Credit Risk Observer statistics, starting from April 2020, the market party, led by Giant Trading, began acquiring shares of Chung Fu. Initially, individuals like HongLin Weng, ZhiHong Huang, and JiaWen Huang (spouse of Chen Jian) were involved. Next year, current Chairman Jian Chen, ZhuMei Xu, and ZhenChang Huang, among others, also began purchasing Chung Fu shares in the market. This indicates that the market party has been gearing up for the ownership battle.<\/p>\n\n\n\n<figure class=\"wp-block-image alignfull caption-align-center\"><img decoding=\"async\" width=\"1200\" height=\"675\" src=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/image-282.png\" alt=\"\" class=\"wp-image-18018\" srcset=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/image-282.png 1200w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-282-300x169.png 300w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-282-1024x576.png 1024w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-282-150x84.png 150w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-282-768x432.png 768w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><figcaption class=\"wp-element-caption\">Chung Fu Shareholding Changes_ Market Party. Source: TEJ&nbsp;GCRI<\/figcaption><\/figure>\n\n\n\n<p>From the chart above, we can see that Giant Trading and the broader market faction collectively held only 9.62% of shares in 2020. However, in 2021, they significantly increased their holdings to 25.22%. In August of the same year, they successfully secured a board seat for Giant Trading\u2019s representative, HongLin Weng. Before the change in ownership, the market faction and the broader market faction held a combined 28.99% of shares, gradually closing in on the company faction\u2019s 42.48% ownership. If the majority of the remaining shareholders support the new reformist group, winning control of the company is indeed a possibility.<\/p>\n\n\n\n<p>Furthermore, of note is the intriguing connection to a suspected insider trading incident involving HappyTuk (7584) in March 2023. Chung Fu\u2019s market faction members, Jian Chen and ZhuMei Xu, along with independent directors HongLin Weng and RongZhi Gao, are linked to HappyTuk. The controversy surrounding the new management is not unique, and upon closer examination, the market party\u2019s acquisition of Chung Fu\u2019s share may be related to realizing the value of Chung Fu\u2019s land assets.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Company_Party_Strengthens_Its_Position_to_Counterbalance_Market_Party\"><\/span>Company Party Strengthens Its Position to Counterbalance Market&nbsp;Party<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Faced with the market faction\u2019s strategic moves, Chairman Huang Lizhong, representing the company faction, did not remain passive. On December 16, 2020, he transferred the 51% ownership of Fu Hsing Investment, a subsidiary of Chung Fu, to his private company, Chung Fu Integrated Marketing. The question arises: both Fu Hsing Investment and Chung Fu Integrated Marketing are controlled by members of the company faction. So why did he shift ownership from his left hand to his right hand?<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"LiZhong_Huang_Shifts_Shares_to_Gain_More_Voting_Power\"><\/span>LiZhong Huang Shifts Shares to Gain More Voting&nbsp;Power<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The above question can be answered through the cross-shareholding between Chung Fu and Fu Hsing Investment. According to TEJ Group\u2019s Credit Risk Observer, Chung Fu holds 99.99% of Fu Hsing\u2019s shares, which is over 51%, making Fu Hsing a subsidiary of Chung Fu. How does this affect the company faction? It has a significant impact. Under IFRS accounting rules, when a subsidiary holds shares of its parent company, those shares are treated as treasury stock. Therefore, Fu Hsing\u2019s 10.32% ownership of Chung Fu was considered treasury stock, and treasury stock does not have voting rights.<\/p>\n\n\n\n<figure class=\"wp-block-image alignfull caption-align-center\"><img decoding=\"async\" width=\"1200\" height=\"675\" src=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/image-284.png\" alt=\"\" class=\"wp-image-18022\" srcset=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/image-284.png 1200w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-284-300x169.png 300w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-284-1024x576.png 1024w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-284-150x84.png 150w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-284-768x432.png 768w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><figcaption class=\"wp-element-caption\">Why and How Li Zhong Huang Sold Its Shareholding From Left to Right&nbsp;Hand.<\/figcaption><\/figure>\n\n\n\n<p>From LiZhong Huang\u2019s perspective, countering the market faction\u2019s preparations became paramount. He wisely sold Fu Hsing Investment\u2019s 51% ownership to Chung Fu Integrated Marketing at 7.03 NT Dollars per share, severing the subsidiary relationship and granting voting rights. Subsequently, he acquired more Chung Fu shares through Fu Hsing, amassing an 11.3% stake in the company.<\/p>\n\n\n\n<figure class=\"wp-block-image alignfull caption-align-center\"><img loading=\"lazy\" decoding=\"async\" width=\"1200\" height=\"675\" src=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/image-281.png\" alt=\"\" class=\"wp-image-18016\" srcset=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/image-281.png 1200w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-281-300x169.png 300w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-281-1024x576.png 1024w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-281-150x84.png 150w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-281-768x432.png 768w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><figcaption class=\"wp-element-caption\">Chung Fu Shareholding Changes_ Company Party. Source: TEJ&nbsp;GCRI<\/figcaption><\/figure>\n\n\n\n<p>LiZhong Huang\u2019s actions may appear reasonable and legal. However, the issue lies in the fact that he sold his ownership on December 11, 2020, but didn\u2019t disclose this significant information until February of the following year. Additionally, the price of 7.03 NT Dollars per share has raised doubts among the market faction, who suspect questionable valuation standards and the possibility of undervaluing assets.<\/p>\n\n\n\n<div style=\"border: 1px black; border-style: solid none; text-align: center; border-color: #296580; padding: 24px; margin-top: 24px; margin-bottom: 24px;\">\n<p style=\"margin: 0px; font-size: 24px; font-weight: bold; line-height: 1.5;\">Want to Learn More?<br \/>Check Out Our Comprehensive data on Corporate Governance!<\/p>\n<div style=\"margin-top: 32px;\"><a style=\"border: none; border-radius: 4px; background-color: #296580; color: white; font-size: 20px; width: fit-content; text-decoration: none; padding: 12px 30px 12px 30px;\" href=\"https:\/\/www.tejwin.com\/en\/solution\/credit-risk-solution\/\">Credit Risk Solution<\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Key_Move_by_Independent_Director_Leads_to_Ownership_Change\"><\/span>Key Move by Independent Director Leads to Ownership Change<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Both company and market factions are ready for this ownership battle. The market faction\u2019s major shareholders collectively hold nearly 30% of the shares, while the company faction holds slightly over 40%. The next critical step is to hold an extraordinary shareholder meeting to propose the removal of opposing directors and the election of new ones. But who can call this meeting? It can be initiated by shareholders with over half of the shares or those who have held shares for three months. Another party with the authority to convene, acting as a third-party overseeing corporate governance, <strong>is the independent directors in this ownership dispute.<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Are_Independent_Directors_Truly_%E2%80%98Independent\"><\/span>Are Independent Directors Truly \u2018Independent\u2019?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Chung Fu has three independent directors, namely JunTing Lin, who is an accountant, JinCheng Wu, and RongZhi Gao, both of whom are lawyers. According to the nomination list for the extraordinary shareholder meeting held on August 17, 2022, JunTing Lin was nominated by the company faction as an independent director, while JinCheng Wu and RongZhi Gao were nominated by the market faction as independent directors. In analyzing this ownership battle, understanding the positions of these three independent directors is crucial, with RongZhi Gao, who is more directly linked to the delayed financial reporting, being particularly significant.<\/p>\n\n\n\n<p>Do you still recall the earlier mentioned incident of delayed financial reporting? Initially, it occurred because Independent Director RongZhi Gao didn\u2019t attend audit committee meetings, causing the reporting delay. Why he missed those meetings and his connection to the whole situation are crucial questions. Since becoming an independent director in 2021, RongZhi Gao has been a vocal critic of the company faction\u2019s management practices. A significant moment was his letter titled \u201cShareholder <strong><em>Activism Begins with Voting<\/em><\/strong>,\u201d sent before the August 2022 extraordinary shareholder meeting. Later, he also confronted the company faction, highlighting three major issues with the former management team: <strong>(1) illegal land sales, (2) the Fu Hsing case involving related-party transactions, and (3) undermining the authority of the audit committee.<\/strong><\/p>\n\n\n\n<p>Of course, the company party has countered by arguing that although RongZhi Gao claims to \u201cstrengthen corporate governance,\u201d his actions, such as <strong>(1) not attending audit committee meetings, (2) removing the former auditor, and (3) raising the threshold for the new auditing firm<\/strong>, have contributed to the subsequent delays in financial reporting and do not prioritize the company\u2019s best interests.<\/p>\n\n\n\n<p>During that time, doubts emerged regarding the independence of independent directors, as their roles seemed to be used as tools in the power struggle between factions. Independent directors should prioritize overseeing corporate governance in the company\u2019s best interests. When they get embroiled in ownership disputes, even causing operational issues, shareholders like us should question whether they still uphold an unbiased, third-party stance. In fact, if it becomes evident which faction an independent director aligns with, it underscores the issue of their insufficient independence in their role.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Double_Showdown_of_Shareholder_Extraordinary_Meeting_the_Market_Party_Ultimately_Seizing_Control\"><\/span>Double Showdown of Shareholder Extraordinary Meeting, the Market Party Ultimately Seizing&nbsp;Control!<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Under the pressure of increased market faction shareholding and multiple allegations by RongZhi Gao, the battle for ownership reached its most intense moment. Chung Fu\u2019s company faction initially held a shareholder meeting on June 30, 2022. However, due to attendance falling short of the majority, the planned resolutions for board elections and removals could not be carried out. On that day, both sides\u2019 independent directors, JunTing Lin (company faction) and RongZhi Gao and JinCheng Wu (market faction), simultaneously announced an extraordinary shareholder meeting scheduled for August 17. This left shareholders in a dilemma, unsure which meeting to attend and which faction to support. Fortunately, JunTing Lin\u2019s convened extraordinary meeting eventually adjourned due to insufficient attendance, putting an end to the chaotic situation of dual meetings.<\/p>\n\n\n\n<p>Finally, on August 17, 2022, with the market faction and RongZhi Gao gaining control of the extraordinary shareholder meeting, the market faction secured a majority of the votes to remove three incumbent directors from the company faction and elected two new directors, RongMu Lu and JiaZhen Lin. Together with the existing director HongLin Weng and independent directors RongZhi Gao and JinCheng Wu, the market faction now holds 5 out of 7 board seats, marking the change of ownership!<\/p>\n\n\n\n<figure class=\"wp-block-image alignfull caption-align-center\"><img loading=\"lazy\" decoding=\"async\" width=\"1200\" height=\"675\" src=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/image-283.png\" alt=\"\" class=\"wp-image-18020\" srcset=\"https:\/\/www.tejwin.com\/wp-content\/uploads\/image-283.png 1200w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-283-300x169.png 300w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-283-1024x576.png 1024w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-283-150x84.png 150w, https:\/\/www.tejwin.com\/wp-content\/uploads\/image-283-768x432.png 768w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><figcaption class=\"wp-element-caption\">Agenda for Chung Fu\u2019s 2022 Annual and Extraordinary Shareholder Meetings. Source: TEJ&nbsp;Database<\/figcaption><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Inadequate_Handover_Poses_a_New_Challenge\"><\/span>Inadequate Handover Poses a New Challenge<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>While the market hoped for improved governance under the new management, Chung Fu\u2019s ownership remained unstable. The new management accuses former chairman LiZhong Huang of causing leadership issues, while Huang argues that employees left voluntarily due to dissatisfaction with the new team. Property rights for valuable assets like the factory and office space haven\u2019t been transferred, making it difficult to manage or lease them. Amidst these challenges, management is focused on the battle with former directors, impacting the company\u2019s operations and leaving uncertainty about when stability will return.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_Warning_of_Unstable_Ownership_of_Chung_Fu\"><\/span>The Warning of Unstable Ownership of Chung Fu<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In summary, <strong><span style=\"text-decoration: underline;\" class=\"ek-underline\">Chung Fu\u2019s ownership instability lies at the heart of its delayed financial reporting, <\/span><\/strong>putting the company\u2019s operations at risk and pushing it toward potential delisting. Although LiZhong Huang and Jian Chen claim to act in the company\u2019s best interest, their actions have compromised corporate governance\u2026<\/p>\n\n\n\n<p>As investors, how can we avoid companies going through such contentious ownership disputes as seen in the Chung Fu case? Here are some key takeaways from this situation:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\">Watch for shifts in share &amp; ownership:<\/mark><\/strong> Be alert to significant ownership changes between the company\u2019s management and shareholders, as it may indicate governance issues and brewing ownership conflicts.<\/li>\n\n\n\n<li><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\">Scrutinize independent directors:<\/mark><\/strong> While independent directors are supposed to oversee corporate operations, their independence can be compromised during ownership battles. Carefully assess their motivations.<\/li>\n\n\n\n<li><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\"><strong>Double shareholder meetings:<\/strong> <\/mark>When two extraordinary shareholder meetings are called on the same day, it may signal an intensifying ownership dispute, leading to increased uncertainty for the company and shareholders.<\/li>\n<\/ol>\n\n\n\n<p>In conclusion, while the Chung Fu ownership battle has reached a certain conclusion, ongoing disputes and legal actions are likely. With less than three months until the expected delisting date, staying vigilant regarding corporate governance events, making prudent decisions, selling when necessary, and avoiding losses due to malicious competition is essential for investors!<\/p>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button has-custom-width wp-block-button__width-100 has-custom-font-size\" style=\"font-size:23px\"><a class=\"wp-block-button__link has-background wp-element-button\" href=\"https:\/\/www.tejwin.com\/en\/solution\/credit-risk-solution\/\" style=\"border-radius:13px;background:linear-gradient(135deg,rgb(236,211,111) 0%,rgb(85,188,153) 55%,rgb(36,105,155) 100%)\"><strong>Want to Learn More? <br>Check Out Our Comprehensive data on Corporate Governance!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<div style=\"height:17px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity is-style-dots\"\/>\n\n\n\n<div style=\"height:16px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p style=\"font-size:24px\"><strong>Read More<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-embed alignleft is-type-wp-embed is-provider-tej wp-block-embed-tej\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"wp-embedded-content\" data-secret=\"CUGVUx0AoZ\"><a href=\"https:\/\/www.tejwin.com\/en\/insight\/abocom-2444-tw-ownership-change\/\">AboCom (2444.TW): Pioneering Transformation through Multiple Generations of Leadership<\/a><\/blockquote><iframe class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; clip: rect(1px, 1px, 1px, 1px);\" title=\"&#8220;AboCom (2444.TW): Pioneering Transformation through Multiple Generations of Leadership&#8221; &#8212; TEJ\" src=\"https:\/\/www.tejwin.com\/en\/insight\/abocom-2444-tw-ownership-change\/embed\/#?secret=yJ88AfEQNn#?secret=CUGVUx0AoZ\" data-secret=\"CUGVUx0AoZ\" width=\"600\" height=\"338\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe>\n<\/div><\/figure>\n\n\n\n<div style=\"height:24px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p style=\"font-size:24px\"><strong><strong>Get Access to Our Ultimate Database!<\/strong><\/strong><\/p>\n\n\n\n<div class=\"wp-block-group is-content-justification-center is-nowrap is-layout-flex wp-container-core-group-is-layout-9193781b wp-block-group-is-layout-flex\">\n<div class=\"wp-block-group is-nowrap is-layout-flex wp-container-core-group-is-layout-6c531013 wp-block-group-is-layout-flex\">\n<div class=\"wp-block-group is-vertical is-layout-flex wp-container-core-group-is-layout-fe9cc265 wp-block-group-is-layout-flex\">\n<p class=\"has-text-align-left has-text-color\" style=\"color:#328ec4;font-size:18px\">TEJ, with nearly 20 years of experience in corporate governance recognition, provides a consistent and verifiable basis for identifying the ultimate controllers of groups. By incorporating the TCRI (Taiwan Corporate Credit Rating Index), which has nearly 30 years of company credit rating data, TEJ introduces a quantified model to unveil the credit risk levels of these groups.&nbsp;<\/p>\n\n\n\n<p class=\"has-text-align-left has-text-color\" style=\"color:#328ec4;font-size:18px\">Through TEJ GCRI Index, you can access information about the affiliation of each company to its respective group, inclusion and withdrawal dates, and reasons for such actions. Additionally, comprehensive annual financial data and group credit risk levels (GCRI) are available for each group.&nbsp;<br><mark style=\"background-color:#f9e4ab\" class=\"has-inline-color\"><strong>For more information, please refer to <\/strong><span style=\"background-color:#00000000\" class=\"has-inline-background\"><a href=\"https:\/\/www.tejwin.com\/en\/solution\/credit-risk-solution\/\" target=\"_blank\" rel=\"noreferrer noopener\" class=\"ek-link\"><strong>TEJ Credit Risk Solution<\/strong><\/a>!<\/span><\/mark><\/p>\n<\/div>\n<\/div>\n<\/div>\n\n\n\n<p>If you have any questions about this article or want to obtain further access to the TEJ database, please feel free to leave a comment, call, or mail us.<\/p>\n\n\n\n<p style=\"font-size:23px\"><strong>About us<\/strong><\/p>\n\n\n\n<p>\u2b50\ufe0f <a href=\"https:\/\/www.tejwin.com\/en\/\" target=\"_blank\" aria-label=\" (opens in a new tab)\" rel=\"noreferrer noopener\" class=\"ek-link\">TEJ Website<\/a><br>\u2b50\ufe0f <a href=\"https:\/\/www.linkedin.com\/company\/taiwan-economic-journal-co-ltd-\/\" target=\"_blank\" rel=\"noreferrer noopener\">LinkedIn<\/a><\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u2709\ufe0f E-mail\uff1a <a href=\"mailto:%20tej@tej.com.tw\" target=\"_blank\" rel=\"noreferrer noopener\">tej@tej.com.tw<\/a><br>\u260e\ufe0f Phone\uff1a +886-2-87681088<\/p>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>Chung Fu has recently been embroiled in multiple governance issues. What secrets lie behind these incidents?<\/p>\n","protected":false},"featured_media":17962,"template":"","tags":[2911,2913,2352],"insight-category":[689],"class_list":["post-17961","insight","type-insight","status-publish","has-post-thumbnail","hentry","tag-company-control","tag-corporate-governance","tag-esg","insight-category-market-research"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/insight\/17961","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/insight"}],"about":[{"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/types\/insight"}],"version-history":[{"count":3,"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/insight\/17961\/revisions"}],"predecessor-version":[{"id":24195,"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/insight\/17961\/revisions\/24195"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/media\/17962"}],"wp:attachment":[{"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/media?parent=17961"}],"wp:term":[{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/tags?post=17961"},{"taxonomy":"insight-category","embeddable":true,"href":"https:\/\/www.tejwin.com\/en\/wp-json\/wp\/v2\/insight-category?post=17961"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}