2019-07-22

FSC Proposes Amendment of the Securities Investor and Futures Trader Protection Act

Taiwan's Financial Supervisory Commission (FSC) announced its proposed amendment of the Securities Investor and Futures Trader Protection Act (Act) on July 3, which will substantially change the Act. The following are key points of the proposed amendment:
 
  1. The causes for which the Securities and Futures Investors Protection Center (SFIPC) may file derivative lawsuits or discharge lawsuits against directors or supervisors are expanded from conducts of business operations (執行業務行為) to conducts of non-business operations (非執行業務行為).  Per the proposed amendment, insider trading and manipulation of prices may be causes on which claims for compensation may be based.
  2. The directors and supervisors of emerging stock companies can be the targets of the SFIPC in derivative lawsuits or discharge lawsuits in addition to listed companies and OTC companies.
  3. The indemnifying party in derivative lawsuits filed by the SFIPC is expanded from directors and supervisors to managers based on the same factual grounds (同一基礎事實).  Furthermore, even if directors, supervisors, or managers are no longer in these positions (已卸任該職), the SFIPC may file derivative lawsuits against them.
  4. The causes for filing a discharge lawsuit will no longer be limited to those arising during the current term of directors or supervisors.  That is, the SFIPC can file a discharge lawsuit against directors or supervisors due to causes that arose during a past term.
  5. The directors and supervisors removed by discharge lawsuits filed by the SFIPC cannot serve as directors and supervisors of listed companies, OTC companies, or emerging stock companies within three years after being removed from their positions; likewise, they will not be permitted to serve as the representatives of legal persons as corporate directors or supervisors.
  6. The above provisions also apply to foreign companies as defined in the Securities and Exchange Act §156-1.
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