The Advance Notice Procedure of the Draft Amendment to Some of the Articles of the “Regulations Governing the Acquisition and Disposal of Assets by Public Companies” has been Completed and the Amendment will be Published Soon
2022-01-25
In order to comply with the practical operation and strengthen the management of related-party transactions, the FSC amended the “Regulations Governing the Acquisition and Disposal of Assets by Public Companies” after taking into account the norms of major international securities markets and suggestions from external parties. As the advance notice period of the draft amendment has expired, the FSC will release the amendment for implementation soon and the key points of the amendment are as follows:
I. Strengthening the management of related-party transactions: After taking into account the norms of major international securities markets, the FSC will stipulate that, for the acquisition or disposal of assets with a related party by a public company or its subsidiary that is not a domestic public company, if the transaction amount reaches 10% of the total assets of the public company, the public company shall submit relevant materials to the shareholders' meeting for approval before proceeding in order to protect shareholders' rights and interests. However, for the dealing of a public company with its parent company or subsidiary, or the dealing between its subsidiaries, the transaction is exempted from the resolution of the shareholders' meeting.
II. Improve the quality of opinions issued by external experts:
(I) As the associations of external experts have their respective self-regulatory rules on the handling of relevant businesses, in order to clarify the procedures to be followed by external experts, the FSC will stipulate that when professional appraisers and their appraising officers, certified public accountants, attorneys or securities underwriters issue appraisal reports or opinions, in addition to handling relevant operations required when undertaking and executing cases, they shall follow the self-regulatory rules of the respective associations.
(II) For a construction enterprise which cannot obtain the appraisal report immediately due to legitimate reasons, after obtaining the appraisal report within two weeks from the date of the fact, if the difference between the appraisal result and the transaction price reaches a certain proportion, then a CPA’s opinion is required. Considering the practical operation time required, the FSC will relax the time period for a construction enterprise to obtain the aforementioned CPA's opinion to two weeks from the date of obtaining the appraisal report.
III. Relax information disclosure requirements on some transactions:
(I) Considering that the public companies were exempted from public announcements and reporting on the trading of domestic government bonds, similar to the regulation for the trading of domestic government bonds, the FSC will make the relaxation that the trading of foreign government bonds with a credit rating not lower than the sovereign rating of Taiwan is exempt from making a public announcement.
(II) Considering that the nature of foreign government bonds is simple and their credit ratings are usually better than those of ordinary foreign corporate bonds, and that the product nature of exchange traded notes (ETNs) is similar to that of exchange traded funds (ETFs), the FSC will make the relaxation that professional investors are exempt from making an announcement for their subscription to foreign government bonds and their subscription to or redemption of ETNs in the primary market.
The FSC said that the amendment will further protect the rights of minority shareholders to express their opinions on related-party transactions, strengthen the quality of opinions issued by external experts, and enhance the relevance between information disclosure and corporate risks, so as to serve as a reference for investment decision making by investors. The amended regulations will come into force from the date of publication.
In addition, in order to continuously promote and strengthen the management of related-party transactions, the FSC will gradually adopt the following specific measures:
(I) Release of "Guidelines for Related-Party Transactions": The FSC has requested the Taiwan Stock Exchange Co., Ltd. (TWSE) and the Taipei Exchange to issue the "Guidelines for Related-party Transactions" in the first quarter of 2022, in order to provide the companies with the key points and an overview of the regulations related to various types of related-party transactions.
(II) Plan on strengthening the information submitted to the shareholders' meeting: According to the provisions of this draft amendment, the major asset transactions of related parties of a company shall be submitted to the shareholders' meeting for approval. In the near future, the FSC will further refer to international norms, and has requested the TWSE to entrust experts to complete in the second quarter of 2022 the research on the feasibility of topics including reporting to or obtaining the approval from the shareholders' meeting on other types of related-party transactions, such as the purchase and sale of goods or loans and endorsements / guarantees, and the strengthening of disclosure of relevant information submitted to the shareholders' meeting. It is expected that the corresponding amendments to the Corporate Governance Best Practice Principles and Corporate Governance Evaluation Indicators will be studied in the third and fourth quarters of 2022, and subsequent adjustments to relevant regulations will be studied between 2023 and 2024.
Contact unit: Section Chief Huang-Chun Tseng, Corporate Finance Division, Securities and Futures Bureau
Tel: (02) 2774-7401
For questions, please write to: FSCMAIL
I. Strengthening the management of related-party transactions: After taking into account the norms of major international securities markets, the FSC will stipulate that, for the acquisition or disposal of assets with a related party by a public company or its subsidiary that is not a domestic public company, if the transaction amount reaches 10% of the total assets of the public company, the public company shall submit relevant materials to the shareholders' meeting for approval before proceeding in order to protect shareholders' rights and interests. However, for the dealing of a public company with its parent company or subsidiary, or the dealing between its subsidiaries, the transaction is exempted from the resolution of the shareholders' meeting.
II. Improve the quality of opinions issued by external experts:
(I) As the associations of external experts have their respective self-regulatory rules on the handling of relevant businesses, in order to clarify the procedures to be followed by external experts, the FSC will stipulate that when professional appraisers and their appraising officers, certified public accountants, attorneys or securities underwriters issue appraisal reports or opinions, in addition to handling relevant operations required when undertaking and executing cases, they shall follow the self-regulatory rules of the respective associations.
(II) For a construction enterprise which cannot obtain the appraisal report immediately due to legitimate reasons, after obtaining the appraisal report within two weeks from the date of the fact, if the difference between the appraisal result and the transaction price reaches a certain proportion, then a CPA’s opinion is required. Considering the practical operation time required, the FSC will relax the time period for a construction enterprise to obtain the aforementioned CPA's opinion to two weeks from the date of obtaining the appraisal report.
III. Relax information disclosure requirements on some transactions:
(I) Considering that the public companies were exempted from public announcements and reporting on the trading of domestic government bonds, similar to the regulation for the trading of domestic government bonds, the FSC will make the relaxation that the trading of foreign government bonds with a credit rating not lower than the sovereign rating of Taiwan is exempt from making a public announcement.
(II) Considering that the nature of foreign government bonds is simple and their credit ratings are usually better than those of ordinary foreign corporate bonds, and that the product nature of exchange traded notes (ETNs) is similar to that of exchange traded funds (ETFs), the FSC will make the relaxation that professional investors are exempt from making an announcement for their subscription to foreign government bonds and their subscription to or redemption of ETNs in the primary market.
The FSC said that the amendment will further protect the rights of minority shareholders to express their opinions on related-party transactions, strengthen the quality of opinions issued by external experts, and enhance the relevance between information disclosure and corporate risks, so as to serve as a reference for investment decision making by investors. The amended regulations will come into force from the date of publication.
In addition, in order to continuously promote and strengthen the management of related-party transactions, the FSC will gradually adopt the following specific measures:
(I) Release of "Guidelines for Related-Party Transactions": The FSC has requested the Taiwan Stock Exchange Co., Ltd. (TWSE) and the Taipei Exchange to issue the "Guidelines for Related-party Transactions" in the first quarter of 2022, in order to provide the companies with the key points and an overview of the regulations related to various types of related-party transactions.
(II) Plan on strengthening the information submitted to the shareholders' meeting: According to the provisions of this draft amendment, the major asset transactions of related parties of a company shall be submitted to the shareholders' meeting for approval. In the near future, the FSC will further refer to international norms, and has requested the TWSE to entrust experts to complete in the second quarter of 2022 the research on the feasibility of topics including reporting to or obtaining the approval from the shareholders' meeting on other types of related-party transactions, such as the purchase and sale of goods or loans and endorsements / guarantees, and the strengthening of disclosure of relevant information submitted to the shareholders' meeting. It is expected that the corresponding amendments to the Corporate Governance Best Practice Principles and Corporate Governance Evaluation Indicators will be studied in the third and fourth quarters of 2022, and subsequent adjustments to relevant regulations will be studied between 2023 and 2024.
Contact unit: Section Chief Huang-Chun Tseng, Corporate Finance Division, Securities and Futures Bureau
Tel: (02) 2774-7401
For questions, please write to: FSCMAIL
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Update：
2022-02-10