Amendments to the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies, the Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Stock Exchange or Traded Over the Counter, the Regulations Governing Procedure for Board of Directors Meetings of Public Companies and the Regulations Governing the Exercise of Powers by Audit Committees of Public Companies

 

The Financial Supervisory Commission proposes to amend the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies, the Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Stock Exchange or Traded Over the Counter, the Regulations Governing Procedure for Board of Directors Meetings of Public Companies and the Regulations Governing the Exercise of Powers by Audit Committees of Public Companies in order to facilitate the proper operation of publicly traded companies, respond to the recent amendment of the Company Act and reinforce the independence standards of independent directors. The advance notice for the proposal has been completed.

The amendment draft of the abovementioned policies has been revised based on the opinions of external experts during the period of advance notice, and the key points of the amendments are as follows:

I. Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies: 

1. Amendment to the independence standards for independent directors (Article 3):

(1) The employees at the managerial level whose spouse and kinship relatives shall not be independent directors of the company. In addition, independent directors shall not provide audit-related services. The materiality standard for providing commercial, legal, financial and accounting services is NT$500,000 over two years. (Amend Subparagraph 4 and 9, Paragraph 1 of Article 3)

(2) In order to reinforce the standards for interested persons in response to actual market case studies, in the event that legal persons appointed as representatives of the company''s directors or supervisors, other companies with the board seats or more than half of the voting shares under control of one person or other companies whose chairman or general manager are the same person or spouse of the company, the legal person shareholders and director, supervisor or employee of the other companies shall not be the independent director of the company. (Amend Subparagraph 5 to 7 of Paragraph 1)

(3) Add that in the event that the parent company, subsidiary and other subsidiaries under the same parent company are as described in Subparagraph 5 to 7 above, the positions of independent directors may be held concurrently. (Amend Subparagraph 2 of Article 3)

2. The explanation for the number of concurrent positions allowed for independent directors at financial holding companies and publicly traded and OTC investment holding companies will be provided in this Regulation. (Amend Article 4)

3. When the recommended list for independent directors is provided at the shareholders meeting or the board meeting, documents such as nominee''s professional qualifications, independence and concurrent positions held shall also be attached. In response to the Company Act in simplifying the nomination procedures for directors, requirements such as the attachments of nominee''s name, education background, experience, commitment to being willing to serve as an independent director once elected and declaration on not being involved in the circumstances as described in Article 30 of the Company Act are removed. (Amend Article 5)

4. In order to prevent the impact of independent standards on publicly traded companies and independent directors, the buffer period is set to the term expiration of the current term of independent directors, so that the publicly traded companies will have time to take necessary measures for adjustment. (Amend Paragraph 2 of Article 9)

5. Additional announcement to regulate that full-time faculty members from public colleges and universities shall first obtain schools'' approval before serving the position of independent director.

II. Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Stock Exchange or Traded Over the Counter:

1. Amend relevant regulations to remuneration committee and add requirements of the buffer period in response to the independence standards amended for the abovementioned the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies. (Amend Article 6 and 13-1)

2. Add the requirements that other attendees of remuneration meetings shall take the recusal measures when the remuneration committee engages in discussion and voting, with reference to the standards for audit committee. (Amend Article 8)

3. The remuneration committee members shall not participate in the discussion or voting for issues involving their own remuneration if it may present a conflict of interest with the company. They shall recuse themselves from the discussion or voting and shall not vote on behalf of other remuneration committee members. Add that the meeting proceedings shall record the abovementioned issues in detail. (Amend Article 9-1 and 10)

III. Regulations Governing Procedure for Board of Directors Meetings of Public Companies:

1. Update that if the board meeting is convened by more than half of the directors (including when the first board meeting of each term is convened by more than half of the elected directors), the directors will select one person as the meeting chair. (Amend Article 10)

2. Add that if the spouse, blood relatives within the second-degree or the companies with which the director has a controlling or affiliation relationship are considered interested with the issues to be discussed at the board meeting, the director is also considered to be interested. (Amend Article 16)

IV. Regulations Governing the Exercise of Powers by Audit Committees of Public Companies: Add that if the spouse or blood relatives within the second-degree are considered interested with the issues to be discussed at the audit committee meeting, the independent director is also considered to be interested. (Amend Article 9)

Corporate Finance Division of the Securities and Futures Bureau

Contact Peron: Division Chief Lin  Telephone: 02-27747311

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