Member Article

Shareholders with a substantial interest in a listed company are required to disclose their shareholdings in order to improve market transparency, prevent insider trading, and facilitate informed investment decisions. In most countries in Asia, initial disclosure is required once a shareholder acquires an interest in 5% of a listed company’s voting shares. In Taiwan and Sri Lanka it is 10%. For movements above the initial threshold, disclosures are required in Hong Kong when the shareholding moves through a whole percentage number. In Malaysia, by contrast, disclosures are required for every subsequent change, whereas in China, it is any 5% increase or decrease in shareholding since the last disclosure (for A Shares). In Taiwan, substantial shareholders must also file monthly reports. The time limit for disclosure varies (from one business day in Thailand, to 10 calendar days in Indonesia), as do the types of interest that must be disclosed (such as derivatives and discretionary interests) and the rules for aggregation of interests within a group structure or by parties acting in concert. Breaches of disclosure requirements are inevitable, given their complexity, yet can result in severe consequences, including criminal prosecution.