Sea Passion Chairman and CEO Chiu Hung-Chao, through his attorneys, moved to intervene in the public sale of 42% of Sea Passion shares saying that his family is the sole owner of Sea Passion Corporation.
On Wednesday, Sea Passion Chairman Hung-Chao also filed Temporary Restraining Order (TRO) and Preliminary Injunction to stop the public sale of shares of Sea Passion.
Public auction of 42% of Sea Passion shares is slated for June 5th as part of the court order to satisfy Default Judgment of the Civil Action 18-098 issued against the six former shareholders of Sea Passion, Wang Yung Chen, Yang Kuo Hung, Chang Pi Chu, Tsai Hsin Ching, Wi Chin Te and Chou Chu Sheng.
Mr. Chiu Hung-Chao, Intervenor in this case, provided affidavits with Expedited Motion for Intervention to show that he had purchased all remaining shares from shareholders who are currently being sued by former shareholder and incorporator of Sea Passion Mr. Chang Sui-lang.
Mr. Chiu Hung-Chao purchased the initial 40% of the shares of the Sea Passion Corporation in 2012 from 10 shareholders who sold their shares to pay Sea Passion’s external debts.
Those 10 former shareholders led by former incorporator Mr. Chang Sui-lang sued the remaining seven shareholders for failing to fulfill an agreement to repay them back via shares for paying the corporation debt in a Civil Action 18-089.
Mr. Chiu Hung-Chao in his Expedited Motion for Intervention said that he had purchased the stocks from the remaining 7 shareholders in 2016 and now himself, his wife and his son own all of Sea Passion shares and therefore, the entire corporation.
Plaintiffs of the Civil Action 18-089 filed Opposition to the Motion for Intervention saying that Mr. Chiu Hung-Chao’s claim of ownership of Sea Passion shares are “fantastical” or made up because there are no government documents to support that claim.
Plaintiffs argue that Foreign Investment Act requires that any sale or transfer of shares require FIB consent and no such record of Mr. Hung-Chao’s purchase exist. According to Plaintiffs, no record of such change exist at the Corporate Registrar which is an entity to “issue, receive, and hold as custodian all certificates, papers, statements or other records required…”
Furthermore, Plaintiff argued that the Motion to Intervene was “untimely” and that the case was filed over 10 months ago with no intervention by Mr. Hung-Chao.
Mr. Chiu Hung-Chao’s responded to the Opposition to his Motion for Intervention calling it “fraud”.
Mr. Chiu Hung-Chao argued that the Plaintiffs knew based on the discoveries from another civil case between the Plaintiff Mr. Chiang Shui-lang and Sea Passion that Mr. Chiu Hung-Chao had purchased the remaining shares of Sea Passion.
Responding to Opposition, Mr. Hung-Chao expressed that the Plaintiffs “concealed their knowledge” from the court and submitted corporate report which they say was out of date. He asserts that this was “fraud on the Court”.
Moreover, in Mr. Hung-Chao’s Motion for Intervention, it states that the FIB regulations in 2010 removed the requirement to obtain FIB’s prior consent for sale of shares and that the new regulations will not apply retroactively.
“To suggest that the Foreign Investment Board would undo Intervenors’ purchase, in Taiwan of shares of Sea Passion Corporation such that those share would somehow default back to the former shareholders for their ultimate seizure by Plaintiffs is preposterous” stated Intervention motion.
Intervenors further argued that the Plaintiff “misled” the Court to believe that prior consent of the Registrar of Corporations is required for purchase of remaining 60% of the shares of Sea Passion.
Intervenors further alleged that the suit is “frivolous” and “deserving of sanctions”.
The Plaintiffs called the Motion for Intervention as “rabbit out of the hat” trick to further delay justice.
They continue to assert that the Intervenor Mr. Chiu Hung-Chao will not be affected the default judgment and writ of execution because he does not own the remaining 60% of the Sea Passion Corporation shares.
Foreign Investment Act require corporations to obtain “statement of non-objection” from Foreign Investment Board (FIB) before new shareholders come one board as well as providing comprehensive quarterly reports to FIB and Corporate of Registrar.
According to Foreign Investment Board office, this policy was lifted by then President Toribiong in 2009 but was reinstated by President Remengesau in 2013. Currently all FIAC holder must provide quarterly report or pay a $25-dollar late filing fee. Yesterday was deadline for last quarter report. (By L.N. Reklai)