萬國法律事務所

The Taiwan Stock Exchange Corporation (TSE) and some legal experts had been urging the Taiwan Government to review the regulations regarding insider trading and to formulate clear and more appropriate laws because TSE has handed a number of suspected insider trading cases over to prosecutors, but in most of those cases the accused were cleared of any wrongdoing.  It had been argued that this situation illustrated to some extent the ambiguity and inappropriateness of the current insider trading regulations, and demonstrates that the current regulations might be too strict.

The proposed insider trading regulations provide that insiders, including company directors, supervisors, managers, shareholders holding more than ten (10%) percent of the shares of a company, CPAs, lawyers, and their close relatives who obtain material nonpublic information before such information enters the public domain, will not be deemed insider trading if they are able to prove that they invested in the shares of the company without being affected by the material information, such as, for instance, they purchase or sell shares of a company regularly at some certain time and in some regular amount, and are able to provide relevant transaction history information as evidence.

Additionally, the current Securities and Exchange Act only precludes insiders from buying or selling shares of a company that are listed on an exchange or on an over-the-counter market, or other equity-type securities of the company.  In order to clearly restrict the company from selling its bonds or convertible bonds in the event the company becomes insolvent and in default to its creditors, the amendment also subsumes bonds and convertible bonds of the company into the restricted transaction items.

The president of Taiwan’s Execu-tive Yuan pointed out that the amendment would clarify the elements of insider trading, reduce the cost of supervision, and provide enhanced protection to investors and consumers.