Newsletter
Mechanism for Suspending and Resuming Trading Introduced by TWSE and TPEx
"Taiwan Stock Exchange Corporation Procedures for Verification and Disclosure of Material Information of Companies with Listed Securities" and "Taipei Exchange Procedures for Verification and Disclosure of Material Information of Companies with TPEx Listed Securities" (together "Procedures for Verification and Disclosure of Material Information") respectively added new provisions relating to the suspending and resuming trading mechanism and this new mechanism will be implemented on 15 January 2016.
The establishment of the suspending and resuming trading mechanism by the Taiwan Stock Exchange Corporation ("TWSE") and Taipei Exchange ("TPEx") aims to provide sufficient time for real-time information and material announcements released during trading hours to be widely available to investors so as to reduce information asymmetry and allow investors time to digest the information.
As for trading suspension, the Procedures for Verification and Disclosure of Material Information require companies listed on the TWSE or TPEx to apply to the TWSE (TPEx) for trading suspension if the listed company announces or a board meeting of the listed company is held to pass any resolution relating to any of the following events:
1. serious decrease in production or complete stoppage of work;
2. events provided in Article 185 of the Company Act, except for those not materially affecting the rights of shareholders or the price of the securities;
3. filing for bankruptcy or reorganization;
4. merger or consolidation, division, acquisition, exchange or conversion of shares or transfer of shares from another, or revocation of a merger or consolidation, except for those not requiring shareholders' resolution pursuant to the Business Mergers and Acquisitions Act or not materially affecting the rights of shareholders or the price of the securities;
5. success in development of new products, trial products going into mass production or important progress in new products or technology, except for those not materially affecting the rights of shareholders or the price of the securities, and
6. events that materially affect the rights of shareholders or the price of securities.
In addition to the abovementioned events, companies listed on the TWSE are obliged to apply to the TWSE for trading suspension when the companies discover news in the media or other information that materially affects the rights of shareholders or the price of the securities and the companies are not able to clarify on the day of discovery.
Furthermore, while companies listed on the TWSE or TPEx may apply for trading suspension, the TWSE (TPEx) may order suspension or continuous suspension when (1) news in the media materially affects the rights of shareholders or the price of the securities, or (2) companies with TWSE (TPEx) listed securities fail to clarify suspension events.
With regard to resuming trading, companies listed on the TWSE or TPEx may resume trading following their applications or orders from the TWSE (TPEx) upon clarification or change of circumstances.
In order to accommodate the new mechanism, under the Procedures for Verification and Disclosure of Material Information, the TWSE (TPEx) requires companies listed on the TWSE or TPEx to issue and implement their own internal procedures to handle matters relating to suspending and resuming trading and such internal procedures shall be approved by the board of directors.