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Revisions to seven articles in the Securities and Exchange Act ("SEA") were promulgated per Presi-dential Order on 2 June 2010. This article will highlight the important changes.
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Enhancing cross-border supervision (Article 21-1)
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Article 21-1 of the SEA provided that "the ROC government and agencies (or institutions) author-ized by it may, based on the principle of reciprocity, enter into a cooperative treaty or agreement with a foreign government or agency (institution), or with an international organization, to facilitate matters such as information exchange, technical cooperation, and investigation assistance." The amendment further authorizes the competent authority to require, pursuant to the aforementioned cooperative treaty or agreement, agencies or institutions, legal persons, groups, or natural persons to provide information to foreign governments, agencies or institutions, or international organizations. The competent authority has authority to enforce this provision through administrative penalties. This revision will help Taiwan's securities regulation authorities to better cooperate with their counterparts in other countries, as well as international organizations.
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Changing disclosure deadlines (Article 36, Items 1-4)
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Beginning on January 1, 2012 (i.e. fiscal year-end 2011), public companies will be required to dis-close and register their annual financial reports with the competent authority within three months after the end of their fiscal years.
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Improving shareholder meeting procedures (Article 36, Items 6 and 7)
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Amended Article 36, Item 6 requires all companies whose stocks are listed on a stock exchange or traded on the OTC market to hold their regular meetings of shareholders within six months after the end of their fiscal years. No delays will be excused.
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If a company whose stocks are listed on a stock exchange or traded on the OTC market fails to hold a regular meeting of shareholders to reelect a director or supervisor in the year that his term expires, amended Article 36, Item 7 allows the competent authority to impose a deadline for the reelection. If the company still fails to comply within the deadline, all of its directors and supervisors shall be automatically discharged on the date that prescribed period expires.
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Improving insider trading regulations (Article 157-1)
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The blackout period for the disclosure of material information is extended to 18 hours.
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The SEA previously prohibited insiders from trading within 12 hours after the public disclosure of material information. This blackout period is now extended to 18 hours. This revision to Ar-ticle 157-1 accounts for the fact that companies may release material information at night and investors will not have enough time to properly absorb the information before the market opens the next day.
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Insider trading regulations now cover trading of corporate bonds
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The SEA previously covered only stocks or other equity-type securities. However, the trading of corporate bonds based on insider information that is material to a company's ability to pay its debts also impairs the fairness of the market. The amendment to Article 157-1 expands the in-sider trading regulations to cover the trading of corporate bonds.
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