The Ministry of Economic Affairs issued the Jing-Shang-10502421440 Circular of July 22, 2016 (hereinafter, the “Circular”) to communicate that the record date for a company’s declaration of dividends should not be set within the period in which dissenting shareholders may request buyback under Article 12, Paragraph 2 of the Business Mergers and Acquisitions Law.
The Circular first points out that under Article 12, Paragraphs 2 and 3 of the Business Mergers and Acquisitions Law, dissenting shareholders requesting the company to purchase their shares shall deposit their shares first. Therefore, the transfer of the shares becomes effective when dissenting shareholders deposit their share certificates at an institution entrusted by the company to handle its stock affairs.
This Circular further points out that since Article 165, Paragraph 2 of the Company Law provides: “The entries in the shareholders’ roster referred to in the preceding paragraph shall not be altered within 30 days prior to the convening date of a regular shareholders’ meeting, or within 15 days prior to the convening date of a special shareholders’ meeting, or within 5 days prior to the record date fixed by the issuing company for declaration of dividends, bonuses or other benefits,” shareholders included in the shareholders’ roster during the period where no share transfer may be conducted can certainly enjoy the declaration of dividends, bonuses or other benefits. Therefore, if the period in which dissenting shareholders may request buyback of their shares under Article 12, Paragraph of the Business Mergers and Acquisition Law (i.e., within 20 days after the resolution is adopted during a shareholders’ meeting) can be avoided in setting the record date for the company’s declaration of dividends in practice, this is certainly more appropriate since no operational inconveniences will take place.