1. Amendments to Regulations Governing Public Tender Offers for Securities of Public Companies and Regulations Governing Information to be Published in Public Tender Offer Prospectuses to enhance the public tender offer system
On 18 November 2016, the FSC introduced amendments of these two regulations in order to enhance the public tender offer system. The key amendments are as follows:
(1) Amendments to some articles of Regulations Governing Public Tender Offers for Securities of Public Companies:
(i) The offeror shall provide a supporting document prepared by an independent third party (a financial consultant having the qualification of a securities underwriter or a CPA who certifies public company financial statement audits) to prove the offeror’s financial capacity for paying the purchase consideration of the tender offer or have a financial institution provide performance guarantee.
(ii) The time, manner and place for payment of the purchase consideration shall not be changed.
(iii) If the offeror fails to pay the purchase consideration at the time specified in the public tender offer prospectus, the mandated institution shall return the securities deposited by the tenderer to the tenderer on the next business day. However, if the prospectus has specified that the securities shall be returned to the original tenderer before the purchase consideration payment date, this clause shall apply. This requirement will help the mandated institution urge the offeror to wire the payment before the purchase consideration payment date.
(iv) The FSC has increased information disclosure requirements for public tender offers. 1. Information regarding obtaining the documents for the approval/disapproval of other competent authority for the transaction before the conditions of the public tender offer are achieved shall be disclosed. 2. Information regarding purchase consideration payment shall be disclosed. 3. When the quantity tendered reaches the maximum amount of projected shares to be acquired after the conditions of the public tender offer are achieved, such information shall be announced and reported for shareholder reference when they make their decisions about the transaction.
(2) Amendments to some articles of Regulations Governing Information to be Published in Public Tender Offer Prospectuses:
(i) A special note has been added; external expert’s evaluation or opinions cited in the public tender offer prospectus have to be disclosed for investors’ reference.
(ii) If consideration is paid in cash, such as multi-level acquisition, important information like the identity of the party financing the acquisition and related funding arrangements shall be disclosed. When the offeror is a company and uses its proprietary capital to fund the acquisition, the offeror shall explain the legitimacy of the source of funding for the acquisition based on financial statements of recent two years before the public tender offer announcement. The offeror shall also present the letter of undertaking specifying the obligation of paying purchase consideration as well as the documents for all agreements or commitments for funding arrangements. The aforementioned documents shall be disclosed along with the prospectus.
(iii) The offeror is required to disclose the plan for acquiring important assets of the acquired company after the acquisition is completed.
2. Expansion of the Scope of Securities Eligible for Day Trading
To facilitate the use of trading strategies by investors, the FSC announced that it would expand the scope of securities that may be traded in day trading, with a scheduled implementation date of 21 November 2016. In addition to the currently available component stocks of the Taiwan 50 Index, Taiwan Mid-Cap 100 Index, and TPEx 50 Index, securities that are eligible to underlie call (put) warrant issues, and securities eligible for margin purchases and short sales, the new rule additionally allows day trading of securities eligible for securities borrowing and lending transactions.
3. Amendments Promulgated to Provisions of the Futures Trading Act Regarding the Prohibition of Insider Trading of Futures and Relevant Criminal Liability
Amendments to Articles 107 and 112 of the Futures Trading Act passed the third and final reading in the Legislative Yuan on 21 October 2016, and were promulgated by the president on 9 November 2016. Key content of the amendments includes the extension of the trading prohibition period to 18 hours after the public disclosure of material information, additional regulations on insiders, and increased criminal liability with respect to insider trading, manipulation, and fraud. The passage of these amendments creates a sounder regulatory framework for the prevention of insider futures trading, and should have positive effects for orderly trading in the futures market.
4. Partial Amendment to the Regulations Governing Securities Investment Trust Funds Aimed at Enabling Funds to Operate More Flexibly
To facilitate the offering and issuance of new fund products by securities investment trust enterprises, and to enable more flexible operation of securities investment trust funds, the FSC amended and issued on 24 November 2016 specific provisions of the Regulations Governing Securities Investment Trust Funds. Key amendments include the addition of multi-asset funds and the substantial easing of restrictions on fund investments, which will help securities investment trust enterprises to launch fund products that meet investors'' needs for retirement planning.
5. Amendments to the Eligibility Criteria of Some of the Evaluation Indicators in the Plan to Encourage Stronger Business Ties in Taiwan for Offshore Funds
To encourage offshore fund institutions to make more contributions in Taiwan, the FSC on 17 October 2016 amended the Plan to Encourage Stronger Business Ties in Taiwan for Offshore Funds, by relaxing the eligibility criteria for some of the evaluation indicators to make it easier for master agents to guide offshore fund institutions to participate in the Plan.
6. Amendments to Some of the Evaluation Indicators in the Plan to Advance Excellence for SITEs
The FSC on 26 October 2016 amended the Plan to Advance Excellence for Securities Investment Trust Enterprises (SITEs). The Plan was first adopted and issued on 1 June 2015, and is designed to provide preferential treatment, such as easing of regulatory restrictions, to SITEs that meet certain qualifications and criteria and that have been reviewed and recognized by the FSC. Now, in response to industry comments and the FSC''s own reviewing experience, the FSC has made amendments to the evaluation indicators in the Plan and to the corresponding Q&A sections. The amendments relax the criteria for some of the quantitative indicators, and provide more explicit determination principles for the qualitative indicators, to raise the willingness of SITEs to participate in the program.