A court judgement in Taiwan upheld a FSC penalty for non-disclosure of a substantial shareholding position, stating that – “Shares Held under the Names of Third Parties“ are under the obligation to disclose shareholding under the Securities and Exchange Act. The bottom line: even third parties need to disclose as well!
The courts determined regardless of whether someone has shares held under the names of third parties, one needs to observe the economic substance instead of the legal form or structural relationship. Hence, even though forming such an arrangement between an internal party and a third party is due to either the Company Act or other legal relationships, the internal party’s statutory obligation to register the transaction cannot be waived.
The Appellant failed to cause the Holding Company to register Company A’s transfer of Company B stocks, violating Paragraph 3 of Article 22-2 of the Securities and Exchange Act as the court would also consider the economic substance observed as a basis for its judgment.
With company legal structures becoming more complicated, software is needed to determine the beneficial ownership position and to automatically alert for disclosure, which has been a constant request from our clients. We now have the capability to navigate complex entity trees and structures, and perform position look-throughs to determine the correct position holdings for all of a client’s entities to determine the disclosure requirements.
Talk to us today to find out how AG can help your shareholding disclosures.
The Determination of “Shares Held under the Names of Third Parties” for the Obligation to Register Shareholding under the Securities and Exchange Act – Administrative Supreme Court Judgment 108-Shang- – Lexolog