The Advance Notice Procedure for the Draft Amendment to Some Articles and Table 1 of the “Regulations Governing Information to Be Published in Annual Reports of Public Companies” Has Been Completed and Will Be Released Soon
2024-07-09
To comply with the release of the “Roadmap for Taiwan’s Compliance with Sustainability Disclosure Standards of International Financial Reporting Standards (IFRS)” by the Financial Supervisory Commission (hereinafter referred to as the FSC) on August 17, 2023, the FSC plans to simplify the content of the annual report to assist companies in their smooth transition to the IFRS sustainability disclosure standards and early filing of their annual reports; in addition, to promote gender diversity among directors of TWSE- and TPEx-listed companies, the FSC made amendments to some articles and Table 1 of the “Regulations Governing Information to Be Published in Annual Reports of Public Companies” (hereinafter referred to as the Annual Report Standards) in accordance with the “Sustainable Development Action Plans for TWSE- and TPEx-Listed Companies” released by the FSC on March 28, 2023. As the advance notice period has expired, relevant amendments will be released and implemented in the near future. The key points of this amendment are as follows:
I. Simplifying the content and preparation of annual reports:
(I) Simplify and delete the items to be disclosed in the annual report: The relevance of information is carefully evaluated and the accessibility of information is examined after the collection of relevant regulations and practices of major foreign securities markets and countries on the disclosure of annual reports. The deleted items include: in Article 9: a brief history of the company; in Article 10: the summary tables of the query method for the organizational system and corporate governance rules and regulations, the penalties imposed on the company and its internal personnel, and the resignations and dismissals of the chairman, president, and financial and accounting supervisors in the corporate governance report; in Article 11: Information on shareholder structure, diffusion of ownership, and market price, net worth, earnings, and dividends per share for the past two years; in Article 18: the tables of production and sales values for the past two years in the operating overview; in Article 19: financial overview; in Article 21: holding or disposal of shares in the company by the company’s subsidiaries. The simplified and deleted information mentioned above can still be obtained by investors through the company’s website, the Market Observation Post System, and the financial reports.
(II) The cross reference of disclosure is allowed to simplify the preparation of annual reports: As some annual report information has already been publicly announced and disclosed on the FSC’s designated information declaration website (i.e. the Market Observation Post System), such as the internal control system statements, CPA’s special audit report on the internal control system, equity transfers and changes in pledges by directors, supervisors, managers, and shareholders with shareholding ratios exceeding 10%, and the execution of fund utilization plans for issuance or private placement of securities, the reference for querying such information may be recorded in the annual report to simplify the preparation of annual reports. In addition, Article 22-1 stipulates that if the items to be recorded in the annual report are added in the aforementioned manner, they may be disclosed through cross reference, and the information announced and disclosed shall be deemed as the recorded items in the annual report.
II. Promote gender diversity of directors in TWSE- and TPEx-listed companies: The “Sustainable Development Action Plans for TWSE- and TPEx-Listed Companies” of the FSC requires TWSE- and TPEx-listed companies to disclose in their annual reports, starting from 2025, if the number of directors of any gender is less than one-third. Therefore, in accordance with the explanation in Table 1, Article 10 of the revised annual report standards regarding the diversity and independence of the board of directors, it is added that “if the number of directors of a gender in the board of directors of TWSE- and TPEx-listed companies is less than one-third, explain the reasons and measures to enhance director gender diversity.”
The FSC stated that for the plan to simplify the annual report, international were carefully referred to in order to align with them, and the domestic practice in annual report preparation was studied to formulate the principle of simplification. As a result, 16 items to be recorded are deleted and 6 indices items are allowed by cross reference, with a total of 22 items simplified, which can reduce the length of the annual report by nearly one-third and help reduce the workload of annual report preparation. After the completion of the amendment, the simplified annual report format will apply to the 2024 annual report which shall be filed in 2025.
As the annual report content involves collecting and consolidating cross-department information, the FSC advises companies to engage in internal cross-department communication, coordinate work division as soon as possible, revise and prepare operating procedures, and strive for integration with IFRS sustainability information disclosure standards and early filing of annual reports. Additionally, since all TWSE-listed companies and TPEx-listed companies with paid-in capital exceeding NT$600 million must submit an English version of their annual reports, the FSC reminds TWSE-and TPEx-listed companies to include the English version in their preparation schedule for the convenience of foreign investors’ review.
The FSC stated that this amendment is carefully evaluated with external opinions taken into account. In the future, it will continue to make prudent adjustments to relevant regulations based on the status of alignment with IFRS sustainability disclosure standards, international development trends and practical implementation, in order to promote the sound and sustainable development of the capital market.
Contact unit: Section Chief Yang, Corporate Finance Division, Securities and Futures Bureau
Tel: (02)2774-7232
If you have any questions, please write to:FSCmail
I. Simplifying the content and preparation of annual reports:
(I) Simplify and delete the items to be disclosed in the annual report: The relevance of information is carefully evaluated and the accessibility of information is examined after the collection of relevant regulations and practices of major foreign securities markets and countries on the disclosure of annual reports. The deleted items include: in Article 9: a brief history of the company; in Article 10: the summary tables of the query method for the organizational system and corporate governance rules and regulations, the penalties imposed on the company and its internal personnel, and the resignations and dismissals of the chairman, president, and financial and accounting supervisors in the corporate governance report; in Article 11: Information on shareholder structure, diffusion of ownership, and market price, net worth, earnings, and dividends per share for the past two years; in Article 18: the tables of production and sales values for the past two years in the operating overview; in Article 19: financial overview; in Article 21: holding or disposal of shares in the company by the company’s subsidiaries. The simplified and deleted information mentioned above can still be obtained by investors through the company’s website, the Market Observation Post System, and the financial reports.
(II) The cross reference of disclosure is allowed to simplify the preparation of annual reports: As some annual report information has already been publicly announced and disclosed on the FSC’s designated information declaration website (i.e. the Market Observation Post System), such as the internal control system statements, CPA’s special audit report on the internal control system, equity transfers and changes in pledges by directors, supervisors, managers, and shareholders with shareholding ratios exceeding 10%, and the execution of fund utilization plans for issuance or private placement of securities, the reference for querying such information may be recorded in the annual report to simplify the preparation of annual reports. In addition, Article 22-1 stipulates that if the items to be recorded in the annual report are added in the aforementioned manner, they may be disclosed through cross reference, and the information announced and disclosed shall be deemed as the recorded items in the annual report.
II. Promote gender diversity of directors in TWSE- and TPEx-listed companies: The “Sustainable Development Action Plans for TWSE- and TPEx-Listed Companies” of the FSC requires TWSE- and TPEx-listed companies to disclose in their annual reports, starting from 2025, if the number of directors of any gender is less than one-third. Therefore, in accordance with the explanation in Table 1, Article 10 of the revised annual report standards regarding the diversity and independence of the board of directors, it is added that “if the number of directors of a gender in the board of directors of TWSE- and TPEx-listed companies is less than one-third, explain the reasons and measures to enhance director gender diversity.”
The FSC stated that for the plan to simplify the annual report, international were carefully referred to in order to align with them, and the domestic practice in annual report preparation was studied to formulate the principle of simplification. As a result, 16 items to be recorded are deleted and 6 indices items are allowed by cross reference, with a total of 22 items simplified, which can reduce the length of the annual report by nearly one-third and help reduce the workload of annual report preparation. After the completion of the amendment, the simplified annual report format will apply to the 2024 annual report which shall be filed in 2025.
As the annual report content involves collecting and consolidating cross-department information, the FSC advises companies to engage in internal cross-department communication, coordinate work division as soon as possible, revise and prepare operating procedures, and strive for integration with IFRS sustainability information disclosure standards and early filing of annual reports. Additionally, since all TWSE-listed companies and TPEx-listed companies with paid-in capital exceeding NT$600 million must submit an English version of their annual reports, the FSC reminds TWSE-and TPEx-listed companies to include the English version in their preparation schedule for the convenience of foreign investors’ review.
The FSC stated that this amendment is carefully evaluated with external opinions taken into account. In the future, it will continue to make prudent adjustments to relevant regulations based on the status of alignment with IFRS sustainability disclosure standards, international development trends and practical implementation, in order to promote the sound and sustainable development of the capital market.
Contact unit: Section Chief Yang, Corporate Finance Division, Securities and Futures Bureau
Tel: (02)2774-7232
If you have any questions, please write to:FSCmail
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Update:
2024-08-19