In order to improve the flexibility of enterprises' issuance of employee reward instruments to attract or retain talents through the issuance of such instruments in a timely manner, the FSC will relax the issuance period of employee reward instruments of enterprises. In addition, in order to implement corporate governance to enable the issuer to have a basis for issuing employee reward instruments to employees, handle the process in accordance with relevant review procedures, and strengthen information disclosure, the FSC planned to amend the four sets of regulations, namely the “Regulations Governing the Offering and Issuance of Securities by Securities Issuers”, the “Regulations Governing Share Repurchase by Exchange-Listed and OTC-Listed Companies”, the “Regulations Governing Information to be Published in Annual Reports of Public Companies”, and the “Regulations Governing Information to be Published in Public Offering and Issuance Prospectuses”, with the key amendments as follows:
I.    Relaxing the issuance period of employee reward instruments, which takes effect upon the declaration to the FSC: With reference to the practices of foreign employee reward plans, the issuance period of new shares which takes effect upon the declaration to the FSC is extended from one year to two years.
II.    Standardizing factors of consideration and review procedures for the issuance of employee reward instruments: It is clearly stipulated that the issuer shall include into the issuance or transfer measures the reference basis for the issuance of employee stock options, new shares with restricted employee rights, and the transfer of repurchased shares to employees in accordance with subparagraph 1, paragraph 1, Article 28-2 of the Securities and Exchange Act, as well as the relevant review procedures into the issuance or transfer measures.
III.    Strengthening information disclosure on employee reward instruments: With reference to foreign practices, the disclosure of issuance information is added in the annual report and prospectus.
The FSC said that reward instruments are an important mechanism to motivate employees. After the promulgation of the regulations, enterprises may issue employee reward instruments within a two-year period, which can not only improve the flexibility of enterprises to issue employee reward instruments within the specified period, but also reduce the costs of relevant operating procedures such as holding shareholders' meetings for re-issuance. For companies in high-tech and related industries, they may timely issue employee reward instruments in response to the needs of the industrial development to attract or retain talents and enhance their competitiveness. In addition, the matters that enterprises should consider in the issuance of employee reward instruments are standardized, and the review procedures of the remuneration committee and the audit committee are incorporate into the relevant issuance measures; these can not only have the functions of the functional committees performed, but can also serve as a reference basis for issuing employee reward instruments and urge enterprises to review and handle the process according to the relevant procedures, so as to have corporate governance implemented. At the same time, a full disclosure of relevant issuance information is required for investors’ full awareness and the performance of market supervision.

Contact unit:    Section Chief Kao-Cheng Pei, Corporate Finance Division, Securities and Futures Bureau
Tel: 02-2774-7342
For questions, write to:FSCmail