The Taiwan Monthly
Important Announcement
Taiwan’s new threshold for declaration and public disclosure of substantial shareholding under the "Article 43-1, Paragraph 1 of the Securities and Exchange Act" will come into effect on May 10, 2024
For the purpose of enhancing the transparency of significant changes in company shareholding, enabling investors and regulatory authorities to understand the reasons and trends behind major changes in share ownership, thereby gaining insight into potential changes in corporate control and stock prices, Taiwan’s Legislative Yuan passed the amendment to the Article 43-1, Paragraph 1 of the Securities and Exchange Act on April 21, 2023. Following the amendments and the presidential decree announced on May 10, 2023, the threshold for declaration and public disclosure of substantial shareholding is lowered from 10% to 5% with a 1-year buffer period prior to the effective date.
In coordination with the amendments, the Securities and Future Bureau (SFB) announced the amended "Regulations Governing the Declaration of Acquisition of Shares in Accordance with Article 43-1, Paragraph 1 of the Securities and Exchange Act" (hereinafter referred to as the "Regulations") on January 30, 2024. Related measures were adjusted to improve reporting efficiency and supervision performance, which will come into effect on May 10, 2024. Key points of the amendments are as follows:
I. The threshold for declaration and public disclosure of substantial shareholding is lowered from 10% to 5%.
II. The acquirer is currently required to make a public disclosure on the Market Observation Post System (MOPS) and submit a written declaration form to the Competent Authority. To implement energy conservation and carbon reduction and improve reporting efficiency, the SFB maintains the current public disclosure method and requires acquirers to upload a file of the declaration form to the MOPS instead of sending written declaration form. The MOPS will then send emails to notify the acquiree company, the Taiwan Stock Exchange Corporation (TWSE), or the Taipei Exchange (TPEx) automatically.
III. If the acquirer is a pension or insurance fund managed by the government, shouldering the related policy missions and being highly related to public welfare, the special reporting system of filing a declaration and making a public disclosure periodically every six months is applied as of June 30 and December 31 each year. In addition, the matters to be specified in the declaration are also simplified.
IV. To improve supervision efficiency and the quality of information disclosure, the amendments specify that the SFB may commission the TWSE and the TPEx to screen the declaration and public disclosure in accordance with the Regulations.
V. To ensure the transparency of company shareholdings, the amendments specify that if an acquirer (including pension and insurance funds managed by the government) acquires more than 5% but less than 10% of any public company's outstanding shares before the amendments come into force and continue to hold the shares until the amendments effective date, the acquirer shall file an initial declaration and make a public disclosure within 10 days after the amendments come into force. Considering the burden of declaration and the benefits of disclosing shareholding information, the matters to be specified in the initial declaration and public disclosure are simplified.
After the implementation of the new threshold under the "Article 43-1, Paragraph 1 of the Securities and Exchange Act" on May 10, 2024, acquirers should report according to the circumstances of their share acquisition before or after the public listing of the acquired company, as well as any changes in shareholding. There are 3 reporting modes available: exemption from reporting (supporting documentation is required), simplified reporting, and general reporting. Acquirers should follow the corresponding reporting mode according to their circumstances in compliance with the Regulations.
Since the SFB commissioned the TWSE to screen the declaration and public disclosure in accordance with the Regulations, the TWSE has devoted significant manpower, time, and resources to continuously carry out various preparatory tasks. These include amendments to relevant regulations, formulation of internal operating documents, establishment of examination operation systems, and implementation of diversified promotional activities (e.g. hosting online live broadcasts on the "Promotion Seminar for the new system for declaration and public disclosure of substantial shareholding under the Article 43-1, Paragraph 1 of the Securities and Exchange Act", issuing press releases, strengthening promotion for newly listed companies, and establishing a new "Substantial Shareholding Reporting Promotion" section on the TWSE's official website.), aiming to fulfill the mission entrusted by the competent authority, serve the securities market, and contribute to the market's well-being.