New Protection Mechanism for Securities and Futures Investors Kicked Off on 1 August 2009. Securities & Futures Investors Protection Center Will Be Authorized to Sue in the Capacity as Shareholders’ Representative.

The Executive Yuan announced on 27 July 2009 to implement on 1 August 2009 the amendment to the Securities Investors And Futures Traders Protection Act (2003) proposed on 20 May 2009.  Under the amendment, the investors protection agency may act in the capacity as the shareholders’ representative to initiate actions against the management, seek the court order to remove unfit managerial officers of the company, request for mediation of small-value shareholders’ claims (not more than TWD1M).  Also, the relevant court fees charged on the shareholders’ class action initiated by the investors protection agency is reduced.  

In addition to modifying the basis of investors protection agency’s practice of initiating shareholders class actions, the amendment vests upon the investors protection agency the power to represent the shareholders to seek the court order to remove directors and/or supervisors who have acted to the detriment of the company in line with the corporate governance requirements and the shareholder’s right to act to protect their investment.

The mediation of small-value shareholder’s claim (not more than TWD1M) is a new dispute resolution mechanism under the above Act.  If the party fails to appear at the mediation hearing without giving a good reason, the mediator may propose a resolution to conclude the mediation which will be considered successful if no party to the mediation opposes the resolution proposed in due course or the relevant party again fails to appear at the re-scheduled mediation hearing, if any.

Further, in order to reduce the financial burden of the investors protection agency arising from initiating shareholders class action, currently the investors protection agency is exempt from the court fees assessed on the part of the value of claim in excess of TWD100M.  The investors protection agency will be temporarily exempt from the court fees assessed on the part of the value of claim in excess of TWD30M for an action initiated or appeal taken under Article 28 of the Act, in which case, the trial court shall collect the outstanding court fees from the party ordered to bear the litigation expenses under the final judgment with binding effects, provided that the investors protection agency shall be exempt from paying the court fees assessed on the part of the value of claim in excess of TWD30M.  Also, the investors protection agency may be exempt from the execution fees assessed on the part of the value (or price) of the object of the ruling for compulsory execution sought for pursuant to Article 28 of the Act.  (2009.07)
/EMA