United Microelectronics Corp. (UMC), the world's second largest contract chip maker, received an NT$50,000 (US$1,510) fine from the Taiwan Stock Exchange (TSE) for its failure to report accounting errors in a timely manner to shareholders.
Early last week, UMC said a request from the U.S. Securities and Exchange Commission prompted it to restate full year earnings for 2002 through 2004 because they didn't conform to U.S. accounting regulations. The planned revisions showed a dramatic difference from previously stated earnings, with last year's full year loss nearly tripling to NT$14.24 billion from a loss originally pegged at just NT$4.75 billion.
The TSE fined UMC for failing to notify local stock holders of the planned earnings revisions until 10:33 am on Wednesday morning, over an hour and a half after the local stock exchange opened. UMC had filed a statement in the U.S. around 5:00 pm on Tuesday. The company's shares are listed in the U.S. and in Taiwan.
Statements issued to stock holders through the TSE's filing system are written in Chinese, while the statement in the U.S. was in English.
The earnings revision hit UMC's Taiwan-listed stock hard on Wednesday. UMC shares ended the day down 4.3 percent at NT$17.9.
UMC said it did not need to restate results based on accounting rules in Taiwan, and the fine highlights the trouble international companies that have shares listed in the U.S. face when conforming to different sets of accounting standards.
It is also the second stock market related fine UMC has faced so far this year. In April, Taiwanese financial regulators fined the head of UMC NT$3 million for failing to keep shareholders informed of the company's aid in the development of Chinese contract chip maker He Jian Technology (Suzhou), and also said the company waited too long before notifying shareholders of important decisions regarding its relationship with He Jian.
Taiwan law makes the chairman responsible for company activity, and the first to face fines or jail time over violations.