Newsletter
Amendments to "Article 43-1 of the Securities and Exchange Act"
Amendments to "Article 43-1 of the Securities and Exchange Act"
The Legislative Yuan amended Article 43-1, Paragraph 2 of the Securities and Exchange Act on November 18, 2016 to state that a tender offeror may not undertake tender offer before it submits proof that it has the ability to settle the consideration for the tender offer, reports to the competent authority and makes announcement regarding the prescribed matters.
Twenty-one legislators, including Mr. Shyh-Bao Lai, deemed that the Securities and Exchange Act does not have sufficient mechanism to prevent fraud in tender offers, and that compared to the U.S., both the depth and width of the requirement on the information disclosure and transparency under the Regulations Governing Tender Offers need to be strengthened, among which the source of the funding of a tender offeror is particularly important. The legislators also opined that it should be confirmed and verified whether the tender offeror's funding comes from its own capital, whether the tender offeror borrows any loan from financial institutions, what the leverage percentage is and whether the tender offeror provides any guaranty. The legislators proposed that the tender offeror should also submit relevant written proof about its source of funding, and further recommended that the financial institutions or other third parties should issue a confirmation or proof certificate on the tender offeror's source of funding.
The Financial Supervisory Commission on the same date promulgated the amendments to the "Regulations Governing Tender Offers for Securities of Public Companies" and the "Regulations Governing Information to be Published in Tender Offer Prospectuses". Lee and Li will prepare a summary on such amendments separately in due course.