Disclosure Requirements – Taiwan

26.03.2024

Disclosure Category: 1

Markets where disclosure by Clearstream Banking S.A. (Clearstream Banking) to issuers and/or to regulators or market authorities is mandatory under applicable law.

In the case of holdings in Taiwanese international bonds, Clearstream Banking may fall under a legal obligation to disclose the identity and/or holdings of its clients.

Consent

In order to comply with the legislation as mentioned below, clients entering into transactions in the Taiwanese international bonds market consent and are hereby deemed to consent to disclosure and to the appointment of the requestor (for example, the Financial Supervisory Commission (FSC), the listed company or its agent) as their attorney-in-fact, under power of attorney to collect from Clearstream Banking such information as is required to be disclosed.

Clients not willing to give this consent cannot hold such securities and/or financial instruments in their account with Clearstream Banking.

Disclosure requirements

Any investor holding 10% (to be 5% with effect from 10 May 2024) or more of a listed company is deemed as a major shareholder and must report to the regulators. Subsequent increasing/decreasing of shares of the company can also be subject to prior announcement and reporting.

According to the Securities and Exchange Act, if the acquiring investor is not a Taiwan listed company (for example, FINIs), the investor shall report the required items listed below to the invested company within 8 calendar days upon acquisition, and the invested company shall make public announcement on the Market Observation Post System (MOPS) within 2 calendar days after receipt of the report from the investor:

  • Name and ID of the investor;
  • Original shareholding in the company and the total number of shares acquired;
  • Acquisition method and date;
  • Purpose of acquiring the shares;
  • Sources of funds;
  • Transaction records during the six months prior to the acquisition of more than 10% of the shares;
  • Estimated number of shares to be further acquired within one year;
  • Plans to call extraordinary general meetings, elect boards of directors/supervisors, dispose of assets or change the financial/operational plans of the company, if any;
  • Other information as required by the regulators.

Likewise, if there is any subsequent change (such as more than 1% increase or decrease in the shareholding ratio, change of acquisition purpose or funding source etc.) that requires to be reported, the investor shall report the required items to the invested company within 2 calendar days, and the invested company shall make public announcement on MOPS on the day after receipt of the report from the investor. The investor shall also send a copy to its listing exchange, the Taiwan Stock Exchange (TWSE) or the Taipei Exchange (TPEX).

If the major shareholder wants to sell stocks after holding the shares for 6 months consecutively, the shareholder has to send a disclosure report to the company at least three calendar days before the actual sales, unless the number of shares to be sold is less than 10,000 shares per day or if they are to be sold to a designated person1. The major shareholder may still buy additional shares of the underlying stock during this period. After the six-month blocking period, the major shareholder may sell the shares; however, if the shareholder executes a buy/sell transaction within six months of a previous buy/sell transaction, any relevant capital gains derived from the transaction will belong to the issuing company.

If the shareholders fails to file a disclosure report to the company (incl. (1) the initial disclosure when shareholding reaches 10% threshold within 10 calendar days of TD, (2) subsequent disclosures when any change in holdings of 1% or more within two calendar days, (3) disclosure reports at least three calendar days before the selling more than or equivalent to 10,000 shares per day, and (4) monthly shareholding reporting by the fifth calendar day of each month), a fine of TWD 240,000 to TWD 2.4 million will be imposed. For failure of filing any disclosure report within the specified period, the Securities and Futures Bureau (SFB) may order a new period for compliance and impose an additional administrative fine in the range of TWD 480,000 to TWD 4.8 million on the shareholders until corrective action is taken.

In addition, according to the Banking Act, Financial Holding Company Law, and Insurance Law, a single person or a single entity, who has individually, or jointly under agreement with other investors, acquired plus any shareholding acquired by a third party under trust relationship, agreement or any legal contract with the said investor more than 5% of a bank’s, financial holding company's or insurance company’s total outstanding shares, shall report to the competent authority within 10 calendar days upon acquisition. Subsequent reporting shall be made within 10 calendar days once the accumulative increasing/decreasing of shares in the bank, financing holding company, or insurance company by the investor exceeds 1% and the change of the shareholder’s total holdings percentage exceeds 1%.

However, for a single person or a single entity who has individually, or jointly under agreement with other investors, intended to hold more than 10%, 25% or 50% of a bank’s, financial holding company’s or insurance company’s total outstanding shares, pre-approval shall be obtained from the competent authority respectively.

If a person or entity that failed to complete the aforementioned reporting or does not obtain the required pre-approval from the competent authority, the person or entity will have no voting rights on the part of shareholdings that lack of reporting or approval.

1. Qualified designated persons stipulated in several ruling letters are:

  • For a company which is not listed on TWSE, TPEx or Emerging Stocks, the designated persons are those individuals or entities who have the financial capacity to acquire and know business and financial condition of the underlying company.
  • For a company which is either listed on TPEX or on Emerging Stocks, the designated persons are securities dealers or employees of the underlying company. For selling to employee(s) of the underlying company, the selling price must be identical.
  • For a company listed on TWSE, the designated persons are employees of the underlying company. For selling to employee(s) of the underlying company, the selling price must be identical.
  • If the sale is based on the “Act of Privatization of Government-Owned Enterprises”, the designated persons include individuals or entities mentioned in the above three items and also the individual or entity which is selected by the competent authority through public invitation authority after proposing and obtaining an approval from the Executive Yuan.
  • Foreign investors or Overseas Chinese investors approved by the Ministry of Economic Affairs (MOEA) or its authorised agents based on related laws or regulations.
  • The individual or entity who files a Tender Offer to the underlying company.
  • Due to the exercise of stock warrants, the designated person is the warrant issuer; due to the exercise of stock options, the designated person is the counterpart appointed by Taiwan Futures Exchange for the receipt of shares.
  • The individual or entity approved by the Executive Yuan and the sale proceeds will be donated to the Government as a consequence of non-compliance with disclosure requirements.
  • The new company which receives shares as paid-in capital based on Article 131 of Company Act.

Monthly report

Clearstream Banking will disclose to the Taiwan Depository & Clearing Corporation (TDCC), at the Clearstream Banking account level at TDCC, the aggregated holdings of residents and non-residents of Taiwan (at security level) based on the declaration provided in the client's settlement instructions, as indicated on the Market Link Guide – Taiwan. TDCC will then disclose these holdings to the Central Bank of the Republic of China (Taiwan) (CBC).

The identity of the final beneficial owner is not disclosed in the monthly report.

Ad hoc report

The FSC may also request, on an ad hoc basis, the disclosure of additional details, including but not limited to those listed in Article 23 of the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals.

Such request for disclosure will typically be issued by the FSC to Clearstream Banking, who will in turn request the required information from clients and their final beneficial owners.

Background and legal basis

In accordance with Article 4.1 of the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals dated 11 February 2014 issued by the Financial Supervisory Commission (FSC) (the “Regulations”). 

CBC requires that TDCC disclose information pertaining to the international central securities depository participants and to provide this information to the CBC (CBC memo 1060036967 dated 5 September 2017).

In addition, the CBC requires TDCC to submit to the CBC, by the 10th of the following month, a report (at security level) containing the aggregated holdings in Clearstream Banking (as holder of the TDCC’s account) of Taiwanese international bonds by residents and non-residents of Taiwan.

Sanctions

Article 38 of the Regulations states that:

“Overseas Chinese and foreign nationals found in violation of these Regulations or other relevant acts and regulations shall be punished in accordance with applicable acts and regulations.”

These sanctions include but are not limited to administrative sanctions.

Obligation to report threshold crossings

Please refer to the above information under “Disclosure Requirements”.