Securities litigation in Taiwan: the Securities and Futures Investors Protection Center

The Securities Investors and Futures Traders Protection Act (the Act) took effect in January 2003.

The Securities and Futures Investors Protection Center (the Center) was established in January 2003.

Taiwan’s stock and futures exchanges and other related institutions contributed NT$1 billion (c. US$33 million) to the Center’s initial endowment. These organizations continue to fund the Center based on transaction volume. The Center can also invest up to 30% of its funds. Currently, the Center has NT$5.8 billion (c US$193.3 million) in funds.

Class Action Litigation

The Center is authorized to file class actions on behalf of at least 20 investors who have a securities claim. It is important to note that only institutions authorized by law can file class actions; the investors cannot file a class action on their own. In addition, the Center is exempt from paying courts costs of 1% of the claim (> US$1 million) for the first instance unlike ordinary plaintiffs. This is a significant barrier to litigation over large claims and further costs apply to appeals.

By the end of 2010, the Center had filed 137 class action lawsuits for more than 93,000 investors seeking total damages of over NT$38.5 billion (c. US$ 1.3 billion).

The Center has prevailed in 17 final cases. It has won 13 cases on the first or second instance. Eighty nine cases are pending. The Center has collected and distributed NT$1.4 billion (c. US$4.6 million) to investors.

The first instance of a class action suit usually takes at least one year. Appeals can drag on for years, especially if there is also a criminal action involved.

Shareholder Derivative Actions

Taiwan’s Legislature amended the Act in 2009 to give the Center the power to file derivative shareholder actions (against the wrongdoing directors/supervisors) on behalf of companies. These same amendments also authorized the Center to petition the courts for orders discharging directors and corporate supervisors (similar to members of an audit committee).
By 2010, the Center had filed six derivative actions and three petitions for discharge orders.


The Center also mediates small claims relating to securities transactions of up to NT$1 million.

By the end of 2010, the Center had mediated 258 cases. Thirty two mediations resulted in court-approved settlements and 25 were settled by the parties before mediation.


The Center also enforces lockup periods for securities trading by directors and other corporate insiders by checking short-swing trading reports provided by the Taiwan Stock Exchange and the GreTai Securities Market to identify. When the Center discovers a trade by an insider during a lockup period, it orders the insider to disgorge any profits.

By the end of 2010, the Center had processed 5,803 disgorgement cases and has initiated legal proceedings in 18 cases to enforce its disgorgement orders.