Newsletter
Amendments to the Securities and Exchange Act
The Legislative Yuan after its third reading passed amendments to Articles 20-1, 155 and 156 of the Securities and Exchange Act (the "Securities Act") on June 15 and 16, 2015 and the amendments will take effect upon promulgation by the President. The following is a summary of the major revisions:
1. According to the amended Article 20-1 of the Securities Act, when the essential content of the financial reports or financial or business documents filed or publicly disclosed pursuant to the Securities Act or financial reports filed or publicly disclosed pursuant to Paragraph 1 of Article 36 of the Securities Act contains misrepresentations or omission, the issuer and its responsible person, and employees of the issuer who placed their signatures or seals on any of the financial reports or the financial or business documents in question shall be liable for damages suffered by the bona fide purchasers, sellers, or holders of securities. Except for the issuer, any person referred to in the preceding sentence can be exempted from liabilities when he or she can prove that he or she has exercised the duty of care and had legitimate cause to believe that the reports or documents contained no misrepresentations or omission. Before the amendment, the issuer, the issuer's chairman of the board and general manager all bear absolute liability. After the amendment, the issuer's chairman of the board and general manager will no longer bear absolute liability and instead will bear presumed liability and can be exempted from the liabilities by providing evidence in court of having the exempted cause.
2. According to the amended Article 155 of the Securities Act, with regard to securities publicly listed on a stock exchange, one shall not "continuously buy at high prices or sell at low prices designated securities for his own account or under the names of other parties with the intent to inflate or deflate the trading prices of said securities traded on a centralized securities exchange market, where such action may affect market prices or market order." Before the amendment, whether the action would possibly affect the market prices or market order is not one of the conditions for triggering the violation under this Article 155. After the amendment, the Securities Act will prohibit any such action only when such action could affect market prices or market order and the wrongdoer will then bear liability for damages suffered by the bona fide purchasers or sellers.
3. According to the amended Article 156 of the Securities Act, it was newly added that, the competent authority may order the partial or full suspension of trading of securities or may set volume limit for brokers and dealers trading securities of any listed company involved in a material public nuisance, food or drug safety incident that could affect the market order or be prejudicial to the public interest.