The Taiwan Stock Exchange (TWSE) plans to require listed companies to disclose all information related to their subsidiaries’ initial public offerings (IPOs) in overseas markets, TWSE spokeswoman Rebecca Chen (陳麗卿) said on Wednesday.
While subsidiaries usually offer their guidance for financial performance, expected returns for shareholders and business plans for the following years in their prospectuses, shareholders of parent companies have mostly been kept in the dark, Chen told the Taipei Times by telephone.
The move aims to increase transparency and protect the interests of listed companies’ shareholders, she said.
TWSE’s board of directors on Tuesday approved amendments to regulations on listed companies, Chen said.
The new regulations are to take effect once they are approved by the Financial Supervisory Commission, she said.
Chen did not name any company, but the changes came after LCD maker Chunghwa Picture Tubes Ltd’s (CPT, 中華映管) Chinese subsidiary said in its 2010 IPO prospectus to the Shenzhen Stock Exchange that it would pay investors 10 percent returns and CPT would compensate if the subsidiary made losses.
However, CPT shareholders were mostly uninformed about the arrangement, New Power Party Legislator Huang Kuo-chang (黃國昌) has said.
“Companies are free to make any promise in any market, but it matters if their actions affect their parent company’s profitability. We [the TWSE] should strengthen our oversight,” Chen said.
Under the planned changes, publicly traded companies would also be required to establish a special committee to review such promises, report to the board of directors, disclose information on the TWSE’s Web site and inform shareholders, she said.
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