The Supreme Court rendered the 105-Tai-Shang-1380 Civil Decision of August 17, 2016 (hereinafter, the “Decision”), holding that litigation rights granted to the Securities and Futures Investors Protection Center (hereinafter, the “Protection Center”) apply only when investors or traders are injured due to unlawful transactions.
According to the facts underlying this Decision, the Appellants of this case asserted as follows. The Appellee announced that the declaration of dividends which had been approved by the shareholders’ meeting would be suspended pursuant to a resolution adopted by the board of directors. As a result, the shareholders of the company granted the Protection Center with litigation rights in accordance with Article 28 of the Securities Investor and Futures Trader Protection Law (hereinafter, the “Law”) so that the Protection Center may file a complaint in its own name to seek dividend payment to the shareholders.
According to the Decision, Article 28 of the Law stipulates that securities investors or futures traders may grant litigation rights to the protection agency (the Appellant or the Protection Center) over a securities or futures matter for which they are injured and which is caused by the same reason in order to protect disadvantaged investors and strike a balance between public interest and the promotion of the sound development of securities and futures markets. Therefore, the scope of litigation rights granted to the Protection Center should be limited to the objectives and scope set forth in its by-laws and litigation rights apply only when a listed (OTC-traded) company, securities firm or commissioned futures merchant engages in illegal transactions or acts such as false financial statements, hollowing out of companies or insider trading to the extent that the investors or traders are injured.
As a result, it was held in the Decision that since the matter in which Appellants sought dividend and damages for failure to receive dividends in the capacity of shareholders was not a matter that allows litigation rights to be granted under Article 28 of the Law, the Appellants were not an appropriate party to this case. Since the original decision was not erroneous, the appeal was dismissed.