The increasing frequency with which Taiwan Public Companies are attempting to delist has caught the attention of the Taiwan Stock Exchange Corporation (TWSE), as such delisting often results in the transformation into overseas public companies.
With the goal of protecting shareholders’ rights, TWSE has announced an amendment to the procedure for “Voluntary Delisting”, which procedure must satisfy the following four requirements in order to be valid: 1. there must be a resolution of the board of directors passed; 2. A special committee
must be established; 3. An independent expert must be commissioned; and 4. a resolution must be passed at a shareholders’ meeting. The amendment is effective immediately, and all domestic and foreign TWSE-listed issuers are subject to these amended provisions.
TWSE has indicated that the amendment of the procedures for voluntary delisting refer to regulations of regional stock exchange markets, and to the Taiwan Business Mergers and Acquisition Act. With the implementation of three key elements, minority shareholders may now have a say in a determination regarding a proposed voluntary delisting. Firstly, a special committee is responsible for reviewing the reasonability of the delisting plan. Secondly, the independent experts will evaluate the repurchase price of issued stock, the delisting plan, and the influence of the same on the rights of the shareholders. Lastly, pursuant to the resolution adopted by a majority vote of the meeting of the board of directors, said resolution can only be adopted by a substantial majority representing two-thirds of the total number of issued shares at a shareholders’ meeting.
TWSE further noted that for a public company that has established an audit committee in accordance with Security Exchange Act, the review could be conducted by said committee without the need to establish another committee. Nevertheless, the other aforesaid requirements must still be implemented.
As to Taipei Exchange-listed companies (TPEx), the voluntary delisting procedure will be the same as that adopted by TWSE, and will follow the above-said three key elements. Whether this amendment will ultimately prevent domestic companies from using voluntary delisting as way to be listed on overseas stock exchanges remains to be seen.
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