1. Partial Amendment Issued to the Regulations Governing the Acquisition and Disposal of Assets by Public Companies
To meet practical needs and enhance the quality of information disclosures, the Financial Supervisory Commission (FSC) on 9 February 2017 issued a partial amendment to the Regulations Governing the Acquisition and Disposal of Assets by Public Companies. The amendment exempts the requirement of obtaining an expert opinion in cases of mergers between parent company and its wholly owned subsidiaries and in cases of mergers between subsidiaries wholly-owned by the same parent company. The amendment also raises the threshold triggering public announcement and reporting requirements from NT$500 million per transaction to NT$1 billion in cases when a public company with paid-in capital of NT$10 billion or more engages in a transaction involving equipment for business use with an unrelated party. It also exempts public announcement and reporting requirements in cases involving investment professionals subscribing to straight corporate bonds and non-equity financial bonds in the domestic primary market, and in cases of securities firms subscribing to securities for the purposes of underwriting business or fulfilling their roles as advisory recommending securities firms for Emerging Stock companies. The amendment additionally makes a number of editorial revisions for clarity.
2. Partial Amendments Issued to the Regulations Governing Information to be Published in Public Offering and Issuance Prospectuses and the Regulations Governing Information to be Published in Annual Reports of Public Companies
To accommodate operational needs of public companies and harmonize with amendments to the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies, the FSC issued amendments to the captioned Regulations and their ancillary forms on 9 February 2017. Below are some key points of the amendments:
(1) The amendments to the Regulations Governing Information to be Published in Public Offering and Issuance Prospectuses simplify the information required to be included in prospectuses for the issuance of straight corporate bonds.
(2) To facilitate earlier planning and holding of companies’ annual general meetings of shareholders, the amendments to the Regulations Governing Information to be Published in Annual Reports of Public Companies provide that the financial information required to be disclosed for the most recent period in annual reports is limited solely to the financial information audited and attested or reviewed by the CPAs.
(3) The amendments strengthen information disclosure requirements in the area of corporate governance operations, including information on the gender of directors, supervisors, and managerial officers, information on the content of motions for resolution by the board of directors and the audit committee, the status of communications between the independent directors and the chief internal auditor and external auditors regarding important matters relating to the company’s financial and business condition, the status of appointment of dedicated (or concurrently serving) units and personnel responsible for corporate governance affairs, as well as the status of improvements needed based on the findings of corporate governance evaluations.
3. TWSE and TPEx Listed Companies Required to Make Electronic Voting Available for Shareholder Meetings From 2018
To facilitate the exercise of voting rights by shareholders so as to give free rein to shareholder activism, and to support ongoing efforts to enhance corporate governance, the FSC, as authorized by Article 177-1 of the Company Act, issued an order on 18 January 2017 requiring all TWSE and TPEx listed companies to make electronic voting available as one of the means for exercising voting rights at shareholder meetings beginning from 2018.
4. Order Issued Amending Provisions Regarding Futures Dealers Serving as Market Makers for Equity Options or Equity Futures
To allow more flexible use of underlying securities for hedging purposes by market makers of equity options and equity futures listed on the Taiwan Futures Exchange (TAIFEX) and to raise their willingness to actively engage in market making to enhance liquidity in those markets, the FSC on 10 January 2017 issued an order amending provisions regarding such market makers opening securities trading accounts and engaging in securities trading based on their hedging needs for trading of equity options and equity futures. Among key points, the amendment adopts a similar method for the administration of such trading as that adopted for hedging of warrants: trading of the underlying securities may be used for hedging purposes limited to the amount of the price risk of the equity options or equity futures held, with the market makers assuming responsibility for controlling their own compliance, under the administration of the TAIFEX. The FSC order also provides that the strategies for engaging in hedge trades through the securities account must receive approval from supervisory personnel at an appropriate level of authority within the market makers. Those hedging strategies must be taken as the basis for making trading decisions, and must be reviewed and analyzed on a regular basis, and records must be kept of such analysis. Meanwhile, the operational principles of limits on the amounts traded through the securities trading account and the authorization level for the supervisory personnel must be approved by their board of directors, and scrupulously implemented.
5. The FSC Issued Order Regarding the Checking List of the Financial Reports and the Index of the Financial Reports
In response to the IFRSs as endorsed in 2017 and the post-implementation review of IFRSs, the FSC published the amendment of the Regulations Governing the Preparation of Financial Reports by Securities Issuers on 19 December 2016. In concert with the amendment of the Regulations and with the application of Auditing Standard No. 57 “Forming an Opinion and Reporting on Financial Statements” for public companies in a two-phased process, the FSC on 26 January 2017 published ordinance regarding checking list of the annual and quarterly financial reports, which should be applicable to the filing of annual financial reports starting from 2016.
6. Provisions Relaxed Regarding Personnel of SITEs and SICEs Concurrently Serving in Subsidiaries
To enable SITEs and SICEs to effectively oversee the business operations of their subsidiaries, the FSC on 3 January 2017 issued orders relaxing relevant provisions and allowing personnel of SITEs and SICEs to serve concurrently in certain positions in their subsidiaries that are domestic financial technology enterprises, domestic insurance agents or insurance brokers, domestic venture capital enterprises, or venture capital management consulting enterprises.
7. Order Permits Associated Persons of a Bank Concurrently Operating Foreign Bond Trading Agency Business to Concurrently Handle Offshore Derivatives Information and Consulting Services Offered by the Bank
To enhance customer service efficiency, the FSC on 9 January 2017 issued Order No. Financial-Supervisory-Securities-Firms-1050050072. Under the FSC order, if a bank operates foreign bond trading agency business, its associated persons may concurrently handle offshore derivatives information and consulting services offered by the bank. Also under this FSC order, if a bank operates securities business has allocated the amount of operating capital as required under Article 15, paragraph 1 of the Standards Governing the Establishment of Securities Firms, it may be exempted from application of provisions regarding the minimum number of associated person.