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Forecasts to be made voluntary for listed companies

Listed companies which are required to make annual forecasts by the nation's financial authorities may no longer have to do so. The mandatory system is scheduled to be replaced by a voluntary mechanism at the beginning of next year, the Financial Supervisory Com-mission said at a press conference yesterday.

"We have seen more disadvantages than benefits under the current mandatory financial forecast system," the commission's vice chairperson Susan Chang (張秀蓮) said.

Chang said that frequent amend-ments to inaccurate financial forecasts by companies had made the local bourse more volatile, putting investors at a disadvantage. In addition, a compulsory forecasting system is rarely adopted by foreign countries.

At present, listed companies are required to make public their financial forecasts in some circumstances, such as during their first three years after listing, when increasing capitalization or following major changes to their board of directors.

The implementation of the new system could help address illegal activities, such as insider trading or market manipulation through inaccurate forecasts, commissioner Lu Tung-ying (呂東英) said.

However, listed companies may still be asked by the Taiwan Stock Exchange to undertake financial forecasts if rumors are substantially impacting their share price, Lu said. Securities houses would be encouraged to make more market analyses or financial forecasts about listed companies for investors' reference, he said.

Investors will still be able to refer to companies monthly financial statements about their investment activities, he said.
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