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International legal battle brewing over SOGO management in Taiwan

Singaporean company with newly purchased shares to challenge current management according to FTA rules

SOGO department store (social media photo)

SOGO department store (social media photo)

TAIPEI (Taiwan News) — Following the purchase of shareholder rights of SOGO department store locations in Taiwan by a Singaporean company, a dispute over store management rights may be brewing.

The Sankei Shimbun reported on Thursday (Oct. 3) that the Singaporean shareholder is likely to request the intervention of the Singaporean government to address the issue according to the rules of the free trade agreement (FTA) between Taiwan and Singapore. Some analysts predict the dispute may become an international issue and a test for the Tsai administration.

Reports state that the founder of the Singaporean company BreadTalk, George Quek Meng Tong (郭明忠), has invested substantially in the SOGO chain in Taiwan under the company name of Clover Private Limited. Despite his new shareholder rights, the current manager of Taiwan’s SOGO locations has refused to allow Quek to take over the management rights of the stores.

The Pacific Distribution Investment Company claims that Quek’s stake in the company, purchased from its former CEO Lee Heng-lung (李恆隆), is not sufficient in terms of the company’s total assets to merit a change in management at the department stores. Currently, Taiwan’s Far Eastern Group owns the controlling stake of SOGO operations in Taiwan, and according to their agreement, Pacific Distribution maintains the right to manage the store.

However, Quek, who asserts that his stake should include management rights, intends to seek government intervention according to the rules of the ASTEP (the Agreement between Singapore and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Partnership). Singapore is the only country in the region to have signed an FTA with Taiwan.

A report from the Business Times suggests that Quek may have misunderstood his rights when he purchased the shares from Lee. Pacific Distribution has stated that it will cooperate with any legal case brought forward under the ASTEP framework, but it also maintains that Clover Private Limited has not “notified [Pacific Distribution] of its equity transfer, and is thus not reflected as a shareholder in the company data.”