A Research On The Legal Regulation Of Overseas Enterprises Listing On Taiwan Securities Market

Since the late 1970s,the capital markets of various countries have begun to move towards financial internationalization and liberalization,and a series of economies,including developing countries,have carried out financial reform practices.Riding on the tide of the times,our Taiwan region established the goal of building an"international financial center" and started the process of opening up the financing market in the early 1990s,and related legal regulations have gradually taken shape.Taiwan’s securities market is relatively small and investors are mostly retail investors.How to maintain the balance of interest between attracting foreign companies and protecting domestic investors?For Taiwan,and even every open financing market,it is a stable supply-demand relationship,the key to market development.However,to be invincible in the global resource competition for cross-border listings,the countries and regions tend to have a tendency,which is directly reflected in the legal and regulatory stance of the opening of the financing market.These system practices,whether it is a successful experience or failure lesson,are valuable for studying and exploring the mainland to build a domestic listing system for overseas companies.The cross-strait securities market has certain similarities in the development process and investor structure,and the same cultural tradition has formed a common value concept.Therefore,the institutional experience of the Taiwan region can provide a certain reference for the mainland.Also,researching on the legal system in the Taiwan region has always had its specific practical significance.The establishment of the new goal of creating a "cross-strait common market" also puts forward higher requirements for the coordination of various market systems across the strait.Given this,the dissertation focuses on the legal regulation of foreign companies’ listing in Taiwan,from three perspectives,e.g.,the macro path to the microsystem,the direct regulation of foreign companies to the protection of domestic investors,and the unilateral supervision to cross-border supervision cooperation.Relevant legal regulations in the Taiwan region are intended to provide ideas for the mainland’s system construction and to further enrich the research on cross-strait legal systems.In addition to the "Introduction" and "Conclusion",the main text includes five parts,mainly focuses on the issues involved in the listing of overseas companies in Taiwan,i.e.,the practical approach to the opening of the listing,the entry regulations,and information supervision of the listing,the investor protection and cross-border supervision issues.The first chapter comprehensively examines the promotion of policies related to the opening of the listing of overseas companies in Taiwan and the construction of the legal system and discusses the mode of financing opening of Taiwan’s securities market.First of all,the Taiwan authorities’ policy of opening up foreign companies’ listings sprouted in the context of financial globalization and liberalization,and gradually established in the trend of internationalization of the securities market.Eventually,they were further adjusted with the transformation of cross-strait relations and formed the current situation.In short,there is a two-step trend from indirect listing to direct listing,from opening up foreign companies to issue depositary receipts in Taiwan to opening up foreign companies to issue ordinary shares in Taiwan.In terms of policy objectives,in addition to market development and legal improvement,it also reflects the pursuit of improving international financial status.Secondly,the legislative process for the opening of the listing of overseas companies in Taiwan is roughly parallel to the promotion of related policies.In terms of legislation,it belongs to the securities exchange legal system.The legal aspect is based on the "Securities and Exchange Law"as the core,and more detailed regulations are mainly based on "Criteria Governing the Offering and Issuance of Securities by Foreign Issuers",supplemented by other supporting rules.Although Taiwan has implemented a unified financial supervision reform,it still retains the internal form of separate supervision in essence.Its securities supervision system is based on the US model and is government-led supervision,with securities authorities and stock exchanges as the main supervision mechanism.Finally,combined with the study of international theories and general models,the opening system of Taiwan’s securities market adopts a gradual and limited opening model and presents the characteristics of the government’s absolute dominance of financial development and strict capital control.The second chapter systematically analyzes the entry regulations for foreign companies to list in Taiwan.The main purpose is to analyze the entry threshold for foreign companies to list in Taiwan and the application of law from the two aspects of procedural requirements and substantive conditions.In terms of procedures,because the issuances of ordinary shares and of Taiwan Depository Receipts have different listing arrangements,they also have different procedural requirements;although the securities legislation in Taiwan has completed the transition from an approval system to a registration system.In practice,there is a parallel phenomenon with the approval system,and it is more inclined to the US review and registration system.In terms of substantive conditions,the requirements for the issuance of ordinary shares are more complicated and strict than the issuance of Taiwan Depository Receipts.The reason is that the underlying stocks commending Taiwan Depository Receipts have been listed on overseas securities markets,and overseas companies have been subject to the regulatory authority of the securities authorities in the place of listing Supervision.Regarding the application of the law,the "Securities and Exchange Law" in Taiwan adopts a compromise model.First,the law of the place of listing clarifies the provisions applicable to overseas companies,and in the event of a legal conflict,it is resolved to utilize project exemption.Generally speaking,the entry barriers for listing in Taiwan are higher than those of its main competitors,and the lack of diversified listing standards is likely to lose its appeal to overseas companies due to insufficient market inclusiveness.The third chapter focuses on the information supervision issues of overseas companies listing in Taiwan,and the main purpose is to examine the regulatory effects of overseas companies’ information disclosure obligations and information violation responsibilities.In terms of information disclosure requirements,the issuance of ordinary shares is more diverse than the issuance of Taiwan Depositary Receipts,and the standard is higher.The reason is that overseas companies issuing depositary Taiwan Depositary Receipts have been subject to the information supervision of the place where the underlying stocks are listed.In addition to requiring overseas companies to perform statutory information disclosure obligations,another aspect of Taiwan’s information supervision lies in the prohibitive provisions in the securities legal system,which mainly include the prohibition of securities fraud,the prohibition of insider trading,and the prohibition of market manipulation.The behavior constitution and responsibility in the above provisions are relatively clear.Also,regarding the identification of the responsible subject,in the context of the listing of overseas companies,it will be further identified by substantive standards in individual cases.Regarding the application of the law of liability for illegal acts,whether following the provisions of the application of foreign-related civil and criminal laws in the Taiwan region or in accordance with the listing agreement,the courts in the Taiwan region can be governed while the laws of the Taiwan region is the applicable law.In general,the information disclosure system in Taiwan is converging with the information disclosure rules issued by representative international organizations.However,in practice,the problem of information asymmetry that has increased in cross-border listings has not been well resolved.At the same time,the lack of mutual legal assistance in Taiwan will also aggravate the difficulties of cross-border prosecution of securities violations.The fourth chapter deeply analyzes the issue of shareholder rights protection in the process of listing of foreign companies in Taiwan area.The main purpose is to examine the deficiencies in the regulatory measures for the protection of shareholder rights and judicial remedies for damage to shareholder rights.First,the protection of shareholders’investment rights and interests basically follows the relevant provisions of Taiwan’s securities exchange legal system.Secondly,the "Checklist for the Protection of Shareholders’ Rights and Interests" is used to reconcile the level of shareholder rights protection between the place of listing and the place of registration.Finally,a special investor protection agencies assist in judicial remedies when shareholder rights are damaged by way of group litigation.In general,the above measures to protect the rights and interests of shareholders have achieved certain results,but there are also shortcomings:one is the inflexibility of the evaluation method of the "Checklist for the Protection of Shareholders’ Rights and Interests".The choice of compensation channels is not flexible enough.Moreover,there are deficiencies in the construction of a crossborder recovery system for shareholder damages.The fifth chapter focuses on the cross-border supervision of the listing of foreign companies in Taiwan.The main purpose is to clarify the contradiction between the ideal and reality of Taiwan’s participation in international cross-border supervision cooperation and try to put forward ideas to solve the dilemma.In theory,since the Taiwan region has become a full member of the "International Organization of Securities Commissions",all members of the organization can be assisted in crossborder supervision under the multilateral cooperation mechanism.But in reality,on the one hand,Taiwan’s international status makes it difficult to carry out some cooperation matters.On the other hand,the authority of the regulatory authorities restricts its role in cross-border cooperation.In this regard,the Taiwan region can seek solutions to the dilemma from three aspects,e.g.,to participate in cross-border regulatory cooperation with an appropriate international status,to leverage the mainland to develop crossborder regulatory cooperation under cross-strait relations,and to broaden the ideas and channels for participating in cross-border regulatory cooperation.