TAIWAN Law and Practice Contributed by: Ken-Ying Tseng, Vivian Cheng, Julia Kuei-Fang Yung and Gail Chang, Lee and Li Attorneys-at-Law
to Takeover Law , and potential insider trading viola - tion concerns. Insiders must not trade in shares based on non-public information that materially affects share price move - ment before the publication of this information or within 18 hours after publication of the information. Insiders include: • directors, supervisors, managers and their spous - es, minor children and nominees, and shareholders who (together with their spouses, minor children and nominees) hold more than 10% of the issuing company’s shares; • any individual designated by a governmental or corporate director or supervisor to act on behalf of the government or corporation; • any person who has acquired material non-public information due to an occupational or controlling relationship with the issuing company; • any person who has been discharged from the status or position in the three bullet points above for not more than six months; and • any person who has learned material non-public information from any of the above. A tender offer is material inside information so it is possible that the bidder could violate the insider trad - ing rule if it purchases the target company’s shares on the market. On a separate note, the bidder can still exercise its voting power with respect to the existing shares in the target company it already acquired before the offer. 4.2 Material Shareholding Disclosure Threshold Any person who acquires, either individually or jointly with other persons, more than 5% of a public com - pany’s total issued shares must file a statement with the FSC within ten days of the acquisition. They must state the acquisition’s purpose and sources of funds and any other information required by the FSC. Timely amendments must be filed when there are any changes to the information reported. In addition, a shareholder holding more than 10% of the issued shares of a public company must report the status of their shareholding to the company by the fifth of each
month. The company must file a report on its direc - tors, supervisors, officers and shareholders who hold more than 10% of the company’s issued shares with
the FSC by the 15th of each month. 4.3 Hurdles to Stakebuilding
Except for those allowed or required under the law, a company cannot introduce different rules to create additional restrictions to stakebuilding in Taiwan. 4.4 Dealings in Derivatives Dealings in derivatives are generally allowed in Taiwan subject to the relevant laws and regulations such as the Securities and Exchange Act and the Future Trad - ing Act. 4.5 Filing/Reporting Obligations Please refer to 4.2 Material Shareholding Disclosure Threshold with regard to the applicable filing/report - ing obligations, save that such obligations do not apply to derivatives since they are not in the form of issued shares that have been acquired and owned by the person concerned. This is the case even where the holder of derivatives can elect to physically settle, since the disclosure regime is concerned with disclo - sure of holdings of issued shares that have been actu - ally acquired and owned by the person concerned. Notwithstanding the foregoing, handling of derivatives and related matters shall be subject to the applicable requirements under the Securities and Exchange Act and the Futures Trading Act. 4.6 Transparency As mentioned in 4.2 Material Shareholding Disclo- sure Threshold , any person who acquires, either indi - vidually or jointly with other persons, more than 5% of a public company’s total issued shares, must file a statement with the FSC within ten days of the acquisi - tion on such information as the acquisition’s purpose, sources of funds and any other information required by the FSC. However, in practice, a major shareholder usually would not disclose a specific purpose in such filing unless there was a concrete plan in connection therewith.
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