Newsletter
NEW INSIDER TRADING RULES
To encourage timely disclosure and filing of financial information of companies, and to better control insider trading, the Executive Yuan submitted proposed amendments to the Securities and Exchange Act to the Legislative Yuan on 5 November 2007.
The proposed amendments that deal with the insider trading issue under Article 157-1 are summarized below:
．If a company discloses material information in the evening and investors have no access to such information until the following trading day, they will not be able to react in a timely manner. In view of this, it is proposed that the cooling-off period for material information be extended from the original 12 hours to 18 hours.
．It is also proposed that persons trading in another's name be subject to the insider trading restrictions.
．Non-equity corporate bonds will also be covered. The principle of fairness in securities trading is violated if a company insider who learns that the issuing company will have difficulty in paying the principal or interest for such bonds can sell such bonds before the information is made public or within 18 hours after it is made public.
．The amendments will also empower the Financial Supervisory Commission to set up regulations defining the scope of information that may materially affect a company's ability to pay debt and the manner of disclosure.
．On the other hand, a new exemption provision is introduced, whereby a company insider will not be deemed to have committed insider trading if he can prove that he has, in the same name, for a continuous period of not less than six months prior to the public announcement of material information, regularly entered into transactions of fixed amount, or transactions with an identical content that is determined according to a fixed formula.