May 2024
Teresa Huang and Lilian Hsu
Amendment to Article 43-1, Paragraph 1 of the Securities and Exchange Act, has reduced the threshold for reporting the shareholding of major shareholders of public companies from 10% to 5%. The new regulations have been effective on May 10, 2024 (the “Effective Date”). According to the revised regulations, when any person, alone or jointly with others, acquires more than 5% of the total issued shares of any public company (the “Acquisition Date”), the person who alone or jointly acquires the shares (the “Acquirer”) should follow the instructions below to make a report.
1. Items to be reported by major shareholders (Article 6, Paragraph 1 of the Shareholding Reporting Regulations under Article 43-1, Paragraph 1 of the Securities and Exchange Act)
(1) Information of the Acquirer.
(2) The total number of shares acquired and the percentage of the total shares issued at the time of reporting.
(3) The method and date of acquisition.
(4) The purpose of acquisition.
(5) Details of the source of funds for acquisition.
(6) Transaction records for the six months prior to the Acquisition Date.
(7) The amount of shares expected to be acquired within one year.
(8) Is there any plan for exercising the following rights? If so, please provide the contents of the plan:
a. Plans to convene extraordinary shareholders’ meetings independently or jointly with others.
b. Plans to stand for election as directors or supervisors independently or in support of others.
c. Plans to dispose of assets or change financial or business plans of the company from which the shares have been acquired.
2. Deadline for reporting by major shareholders (Article 6, Paragraph 2 of the Shareholding Reporting Regulations under Article 43-1, Paragraph 1 of the Securities and Exchange Act)
If the Acquirer is a public company, it must transmit the aforementioned reporting items to the Market Observation Post System within ten days from the Acquisition Date to complete the reporting and announcement. If the Acquirer is not a public company, it must deliver the aforementioned reporting items to the company whose shares have been acquired within eight days from the Acquisition Date. The company whose shares have been acquired shall transmit the reporting items to the Market Observation Post System within two days from the delivery date.
3. Transitional provision (Article 11 of the Shareholding Reporting Regulations under Article 43-1, Paragraph 1 of the Securities and Exchange Act)
If the Acquirer has acquired more than 5% but not more than 10% of the total issued shares of any public company before the Effective Date and continues to hold them until the Effective Date, the Acquirer must, within ten days from the Effective Date, proceed with reporting and announcement as outlined in the aforementioned Part Two and the reporting should include the items (1), (2), and (4) mentioned in Part One.
Violation of the aforementioned regulations may incur a fine ranging from NT$240,000 to NT$4,800,000. The Financial Supervisory Commission may also order the violators to make improvements within a time limit; those who fail to make improvements within the time limit may be punished consecutively(Article 178, Paragraph 1, Sub-paragraph 2 of the Securities and Exchange Act). Major shareholders are advised to pay attention to and review their shareholding proportions in public companies and related reporting obligations to avoid being punished.
The contents of all materials (Content) available on the website belong to and remain with Lee, Tsai & Partners. All rights are reserved by Lee, Tsai & Partners, and the Content may not be reproduced, downloaded, disseminated, published, or transferred in any form or by any means, except with the prior permission of Lee, Tsai & Partners.
The Content is for informational purposes only and is not offered as legal or professional advice on any particular issue or case. The Content may not reflect the most current legal and regulatory developments. Lee, Tsai & Partners and the editors do not guarantee the accuracy of the Content and expressly disclaim any and all liability to any person in respect of the consequences of anything done or permitted to be done or omitted to be done wholly or partly in reliance upon the whole or any part of the Content. The contributing authors’ opinions do not represent the position of Lee, Tsai & Partners. If the reader has any suggestions or questions, please do not hesitate to contact Lee, Tsai & Partners.