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Amendments to Taiwan’s Securities and Exchange Act

Chun-yih Cheng

In order to, among other things, strengthen the supervision of listings by foreign companies in Taiwan, accord minority shareholders a right to apply for inspection, and ease general listing procedure, the country's Securities and Exchange Act was amended on December 12 2011:

The Securities and Exchange Act will apply mutatis mutandis to foreign companies of which shares are listed in Taiwan either in the form of first listing or second (TDR) listing. Therefore: (i) the prohibition of market manipulation, short-swing trading and insider trading will apply; (ii) the disgorgement of short-swing trading profits will apply; (iii) the compensation to losses of opposite trades will apply; and (iv) foreign companies' directors, officers and employees will be subject to sanctions for breaches of the Securities and Exchange Act.

Secondly, any shareholder of a listing company who continuously holds at least 3% shares for at least one year may apply to the competent authority (the Financial Supervisory Commission) to inspect the listing company if such shareholder considers that a certain specific matter has caused material damage to the listing company. If the Financial Supervisory Commission deems it necessary, it may, at the cost and expense of the inspected listing company, retain certified public accountants, lawyers, engineers or other professionals to inspect financial and business conditions as well as books and records of the listing company.

Finally, to ease the listing procedure and to be in conformity with practice, all listing matters will be primarily dealt with by the stock exchange and the listing company. No approval from the Financial Supervisory Commission is required; instead, ex post facto notification to it will be sufficient.

Chun-yih Cheng

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