A Study on the Securities Fraud Liability for the Issuer of Taiwan Depositary Receipts - Focus on the Depositary Bank

• Main Authors: HSIEH, HUNG-PIN, 謝鴻濱
• Other Authors: CHUANG, YUNG-CHENG
• Format: Others
• Language: zh-TW
• Published: 2016
• Online Access: http://ndltd.ncl.edu.tw/handle/fgu2sc

碩士 === 東吳大學 === 法律學系 === 104 === A depositary receipt is issued by depositary bank to represent a foreign company’s publicly traded securities. The initial development purpose is used to meet the demand for overseas securities holders and domestic investors. Through the intermediary, the depositary and custodian banks, depositary receipt is a cross-border financial production. In accordance with the Securities and Exchange Act, depositary bank is the issuer of Taiwan Depositary Receipts (TDRs). In the event of securities fraud on the primary market, especially if the prospectus contains false information or omissions in its material contents, the issuer has no exceptions from its liability. However, after reviewing the path of development and referring to the regulatory frameworks for the American Depositary Receipts (ADRs), the Securities and Exchange Commission (SEC) has the authority to optimize the procedures or documents for the registration of ADRs. The issuer of ADRs is the “legal entity” created by the agreement for the issuance of ADRs instead of the depositary bank. The depositary may sign on behalf of such entity, but the depositary for the issuance of ADRs itself shall not be deemed to be an issuer, a person signing the registration statement, or a person controlling such issuer. The depositary bank has been excluded from the liability of the issuer. The Financial Supervisory Commission (FSC) is well aware the difficulty for the depositary bank to bear the liability as the issuer. The competent authority has transfer the responsibility and liability of the issuer from the depositary bank to the foreign company. However, according to currently Securities and Exchange Act the depositary bank is deemed as the issuer. This Article recommends to clarify the definition of the Issuer on Securities and Exchange Act. The competent authority should express the status of the depositary bank by rules, regulations, or explanations. In case of the securities fraud, the depositary has no exceptions from the liability of the issuer. This situation may cause the depositary bank no reasons be a part of the issuance of TDRs on the primary market.