The Financial Supervisory Commission (FSC) yesterday revised amendments on rules governing public tender offers that were set to take effect next week.
The commission in September proposed allowing investors to pull their shares out of a tender offer, but the change was removed from the latest revision.
“Industry experts have said that tender offers would face additional uncertainties if investors are allowed to pull out their shares after the minimum or maximum number of shares have been tendered,” Securities and Futures Bureau Deputy Director-General Chou Hui-mei (周惠美) told a news conference.
The success of a tender offer might be compromised if enough investors pull out of the deal, Chou added.
The revised rules also stipulate that in the event of non-payment by buyers, shares locked in a depository bank must be returned to participating investors on the business day following the end of the tender offer period, as the tender contract is effectively void.
Currently, each investor must file a public summons separately to have their shares returned from the depository bank.
In addition, the commission would bar financial institutions that have been penalized for infractions from making tender offers for one year.
While the commission still does not allow the tender offer period to be extended, the maximum number of days to process an acquisition has been increased from 30 days to 50 days in consideration of companies’ need to minimize exposure to foreign exchange risks.
The new rules were proposed in the wake of a botched NT$4.86 billion (US$154.44 million) tender offer to acquire a 25.71 percent stake in XPEC Entertainment Inc (樂陞科技) that led to massive losses for investors as the video game developer’s share price tanked.
CTBC Bank Co (中國信託銀行), which served as the depository bank for the deal and its affiliate, CTBC Securities Co (中國信託證券), which provided financial consultation and shareholders services for XPEC, have been fined and banned from handling consultation and planning services for tender offers.
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