1. Partial Amendments to the Regulations Governing the Exercise of Powers by Audit Committees of Public Companies, the Regulations Governing Procedure for Board of Directors Meetings of Public Companies, and the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies
The FSC amended and issued on July 28th, 2017 some provisions of the above three regulations. Key points of the amendments include:
(1) Strengthening the duties and functions of the audit committee, and increasing the transparency of its meetings: the audit committee may resolve to invite relevant persons to attend meetings as non-voting participants; if an audit committee member has any possible conflict of interest in a matter to be discussed at a meeting, the member shall specify the key content of its interest, and shall recuse if there is any likelihood of adverse impact on the company''s interests, and the circumstance shall be recorded in the meeting minutes; meetings shall be recorded in their entirety in audio or video and shall be well preserved.
(2) Enhancing independent directors'' participation in the operations of the board: at least one independent director shall attend board meetings in person, in order to enhance the independent director''s understanding of the company''s operations.
(3) Enhancing disclosure of nomination of independent directors that have served for three terms or more: taking into reference similar regulations abroad, the amendment provides that a public company shall, when nominating for the company''s independent directors any person that has already served as an independent director for three consecutive terms, announce the reasons why the company continues to nominate the same person to serve as an independent directors at the same time as it announces the results of the review of the nominees, and shall present the aforementioned reasons to the shareholders at the time of the independent director election at the shareholders meeting.
(4) Members of the special committees on public tender offer reviews or on mergers and acquisitions are also allowed to serve as independent directors: the members of the abovementioned committees duly providing business, legal, financial and accounting services or consultations to the company with respect to public tender offers and mergers and acquisitions, may be exempted, as members of the remuneration committee currently are, from the application of the provisions not allowing such persons to act as an independent director in Article 3, paragraph 1, subparagraph 7 of the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies.
2. FSC Issues Order Defining the IFRSs, IAS, IFRIC, and SIC, as Endorsed by the FSC, as Referred to in Article 3, Paragraph 2 of the Regulations Governing the Preparation of Financial Reports by Securities Issuers
Starting from 2017, the FSC implements new policy for endorsing new accounting standards. On July 14th, 2017, the FSC issued Order No. Financial-Supervisory-Securities-Auditing-1060025773, specifying that the International Financial Reporting Standards (IFRSs), International Accounting Standards (IAS), and Interpretations developed by the International Financial Reporting Interpretations Committee (IFRIC) or the former Standing Interpretations Committee (SIC) as endorsed by the FSC under Article 3, paragraph 2 of the Regulations Governing the Preparation of Financial Reports by Securities Issuers are referred to the IFRSs applicable for use from 2018 as announced on the IFRSs Portal on the website of the Securities and Futures Bureau, FSC. Public companies that have already issued, or have already filed with the FSC for registration to issue, overseas depositary receipts, may adopt all effective IFRSs as published by the International Accounting Standards Board.
3. Securities Investment Trust Enterprises (SITEs) Allowed to Use Their Own Capital as "Seed Money" for Investment in Funds
To raise the competitiveness of SITEs and to harmonize with international standards, the FSC, taking into reference overseas practice for funds, issued amendments on June 30th, 2017 to allow SITEs to adopt a "seed money" mechanism for purposes such as marketing of funds or testing of new investment strategies. A SITE that has applied to and been approved by the FSC to use its own capital to invest in a publicly offered securities investment trust fund issued and managed by that SITE, or in an offshore fund which that SITE has been entrusted to manage, may be exempted from the restrictions that the amount of investment in a single fund may not exceed 5% of the SITE''s net worth and 5% of the given fund''s net asset value as of one day prior to the date of the investment; provided that the total amount of the capital invested by the SITE in all funds may not exceed 40% of the SITE''s net worth.
4. Partial Amendments to the Regulations Governing Public Tender Offers for Real Estate Investment Trust Beneficiary Securities, to Enhance the Management of Public Tender Offers for Real Estate Investment Trust Beneficiary Securities
To enhance the management of public tender offers for real estate investment trust beneficiary securities, the FSC on August 11th, 2017 issued amendments to some provisions of the Regulations Governing Public Tender Offers for Real Estate Investment Trust Beneficiary Securities. Key amendments include:
(1) In principle, the public tender offeror may not change the time, manner or place for payment of tender offer consideration.
(2) The public tender offeror shall provide proof that it is capable of paying the tender offer consideration, including a performance guarantee issued by a financial institution, or a confirmation letter issued by a financial consultant or a CPA stating that the public tender offeror is capable of paying the tender offer consideration.
(3) If the public tender offeror does not complete the payment by the time at which the tender offer consideration shall be paid, as stated in the public tender offer prospectus, the tenderer may rescind the contract without prior notice.
(4) Matters of special note have beed added; external expert''s assessments or opinions cited in the public tender offer prospectus have to be disclosed for the reference by investors.
(5) If the public tender offeror adopts a multilevel acquisition, the public tender offeror shall disclose the identities of the ultimate fund providers, the funding arrangement, and other relevant important information.