Proposed Treasury Share Disclosure Rules Change

Press Releases

Capital Market Rules Change Proposed to Strengthen Regulations on Disclosure of Treasury Share Holding Status Mar 30, 2026
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The Financial Services Commission proposed capital market rules change on March 30 intended to promote the use of treasury shares by listed companies as a means to boost shareholder value in line with the mandatory cancellation of treasury shares promulgated under the recently revised Commercial Act.

Under the revised Commercial Act, listed companies are required to cancel treasury shares within one year in principle (within one year and six months for treasury shares acquired prior to the revised law taking effect). For exceptional cases when the retention of treasury shares is deemed to be necessary for employee compensation or other management purposes, listed companies are required to obtain an approval for their retention/disposal plan from the general shareholders’ meeting.

In this regard, the FSC proposes the following rules change to make sure a seamless implementation of the mandatory treasury cancellation requirement under the revised Commercial Act. First, all listed companies will be required to disclose their treasury stock retention status and disposal plans. Second, there will be regulatory reforms regarding the disposal of treasury shares by trust businesses, the issuance of exchangeable bonds backed by treasury shares, and the sale of treasury shares.

First, the rules change is proposed to enhance transparency in the disclosure of listed companies’ treasury share retention and disposal plans and their actual implementation status, and to expand the application of the treasury share disclosure rule to all listed companies.

Under the revised Commercial Act, companies are required to indicate in their treasury share retention and disposal plans the purpose of retention and/or disposal, retention status, retention period, and time for disposal. However, if a specific time for disposal is yet to be decided at the time of shareholders’ approval, it remains difficult for investors and ordinary shareholders to clearly understand the company’s treasury share disposal status.

Thus, an upgrade to capital market rules and disclosure forms is proposed to expand the scope of listed companies being subject to the treasury share disclosure rule from those holding one percent or more in treasury shares previously to all listed companies. The disclosure of treasury share retention status and disposal plan and their actual implementation status by all listed companies will take place twice annually, which will help to boost transparency in the provision of disclosure information for investors and ordinary shareholders.

This will help to make relevant rules and requirements on treasury shares more consistent and complementary between the Commercial Act and the Financial Investment Services and Capital Markets Act (FSCMA).

When there exists a disparity in the actual disposal of treasury shares from an original plan, it is not considered as a violation of the disclosure duty. However, false disclosure of information may be subject to administrative sanctions under the FSCMA and/or criminal penalties.

Second, relevant rules on trust business will be strengthened to make them more congruent with the revised Commercial Act, and there will be regulatory reforms on the issuance of exchangeable bonds backed by treasury shares and the sales of treasury shares.

Under the revised Commercial Act, trust businesses are prohibited from disposing of treasury shares during the period of a trust agreement and required to immediately return to beneficiaries upon termination and/or cancellation of a trust agreement. Also, the issuance of exchangeable bonds backed by treasury shares is not permitted, and the disposal of treasury shares to an unspecified group of people is not allowed.

As such, an upgrade to relevant capital market regulations is proposed to ban trust businesses from disposing of treasury shares during the period of a trust agreement and to remove the regulation on the issuance of exchangeable bonds backed by treasury shares. The disposal of treasury shares to an unspecified group of people will be prohibited under the revised capital market regulations. However, block deals will continue to be allowed for the sale of treasury shares.

With regard to the disposal of treasury shares which have been acquired through exercising stock options, the capital market regulation will be updated to make sure that it remains consistent with the revised Commercial Act.

With the revised rules in place, it is expected that there will be more trust in the market concerning listed companies’ use of treasury stocks—not as a means for short-term management of stock prices—but as a means to boost corporate value on a medium- to long-term.

The revision proposal will enter a comment period from March 31 to May 11, 2026. The upgraded rules will go through a successive legislative review and approval process before taking effect.

• Please refer to the attached PDF for details.

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