1.Amended 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 promote implementation of the key measures set out in the “Corporate Governance Roadmap (2018-2020)”, the FSC made amendments to the 2 aforementioned Regulations in reference to the regulations issued by leading securities exchanges from around the world and the recommendations set out in “CG Watch 2018”. The amendments were issued on January 22, 2020, and include the following key points:

(1) When the positions of chairman and CEO (or equivalent positions) of a company are concurrently taken by a same single person, a marital couple or first-degree relatives, the company must explain the reason for the situation, why it is reasonable and necessary, and the measures it has taken in response. The FSC has also amended attachments that a company is required to fill out to show the state of its corporate governance, its adherence to ethical business practices, and any resignation or dismissal of its chief corporate governance officer. 

(2) To bring about greater transparency in the remuneration of directors, supervisors, and senior executive officers, and to ensure that such remuneration is set in a reasonable manner, a company is required to disclose the remuneration paid to its individual directors and supervisors if: (a) the company has posted after-tax deficits in a parent-company-only financial report or an individual financial report within the three most recent fiscal years; (b) it is a TWSE-listed or TPEx-listed company that has had poor corporate governance evaluation performance; or (c) it is a TWSE-listed or TPEx-listed company where the average salary of non-managerial full-time employees has been relatively low. In addition, a company must also individually disclose the remuneration received by the five most highly compensated executive officers if: (1) it is a TWSE-listed or TPEx-listed company that has posted after-tax deficits in a parent-company-only financial report or an individual financial report within the three most recent fiscal years; or (2) it has had poor corporate governance evaluation performance. 

(3) To improve the quality of companies’ non-financial disclosures, the FSC, making reference to important international trends, has amended the items related to corporate social responsibility that must be disclosed. Also, in order to strengthen disclosure of information on CPA professional fees, amended provisions will require annual reports to note any audit fee reduction of 10% or more, down from the previous threshold of 15%. 

 

2.Amended the “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies” and Related Interpretations; the “Regulations Governing the Exercise of Powers by Audit Committees of 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;” and the “Regulations Governing Procedure for Board of Directors Meetings of Public Companies”

To facilitate the operations of listed companies, complement pending amendments to the Company Act, and strengthen independence standards for independent directors and compensation committee members, the FSC amended the aforesaid regulations and interpretations on 15 January 2020. The key changes are as follows: 

(1)“Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies”: i. Added independence standards of Independent Driectors: (A).the companies whose directors, supervisors, and employees are prohibited to act as independent directors in the events that the companies appointed as representatives of the company''s directors or supervisors, the companies under the common control, the companies whose chairman or general manager are the same person or spouse of the company; (B). set materiality standards for employee job grades and for providing commercial, legal, financial and accounting servies; (C). broadened the conditions under which a person may concurrently serve as an independent director of a parent company and of a subsidiary of that company, or of subsidiary companies of the same parent company; ii. amended the documents that a person nominated to be an independent director must attach. Also, announce interpretation to regulate that full-time faculty members from public colleges and universities shall first obtain schools'' approval before serving the position of independent director.; iii. added explanation regarding  the method used to calculate the concurrent number of independent directors at financial holding companies (and investment holding companies); iv. Added the buffer period for the current term of  independent directors .  

(2)“Regulations Governing the Exercise of Powers by Audit Committees of Public Companies”: Added a provision stating that if the spouse, or relative to the second degree of kinship, of an independent director is an interested party with regard to the issues to be discussed at the  audit committee meeting, , the independent director shall be deemed as an interested party. 

(3)“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”: i. amended the independence standards of remuneration committee members with reference to the independent director standards, and added the buffer period for remuneration committee members; ii. added a provision that non-voting members of the remuneration committee shall not be present during discussion and decision-making; iii. added a rule regarding, when members of the remuneration committee discuss matters involving the members’ own remuneration at the committee, it shall be considered a conflict of interest and detailed records of the discussion shall be made. 

(4)“Regulations Governing Procedure for Board of Directors Meetings of Public Companies”: i. added a provision that for board meetings convened by more than half of the directors, the directors shall mutually choose a chairperson for the meeting; ii. added a provision that when a director’s spouse, relative to the second degree of kinship, or company with which the director has a controlling or subordinate relationship, is an interested party with regard  to the issues to be discussed at the board meeting, the director shall be deemed as an interested party.

 

3.Promulgated Orders Related to “The Information That Public Companies Are Required to Announce and Report Under the Laws and Regulations, and, Having Reported or Transmitted Such Information to the Market Observation Post System, Are Deemed to Have Legally Announced and Reported the Information”

To provide flexibility to enterprises and facilitate compliance by public companies, on 13 January 2020 the FSC acted under the authorization of Article 28 Paragraph 3 of the “Company Act” by promulgating orders related to “The Information That Public Companies Are Required to Announce and Report Under the Laws and Regulations, and, Having Reported or Transmitted Such Information to the Market Observation Post System, Are Deemed to Have Legally Announced and Reported the Information,” expanding the scope of application to include the reporting methods regulated in Article 28 of the “Company Act”.

 

4.To Address New Forms of Investment and Trading Resulting From FinTech Innovation, and Bring Virtual currencies that have the nature of securities Offerings of Less Than NT$30 Million Under Oversight, Amended the Following Regulations on 15 January 2020:

(1)Amended Articles 3 and 11 of the “Standards Governing the Establishment of Securities Firms,” stipulating that the minimum paid-in capital for securities dealers engaging exclusively in proprietary trading of virtual currencies that have the nature of securities shall be NT$100 million, and that the internal control systems of such firms shall comply with the rules and regulations of the Taipei Exchange. 

(2)Amended Article 45-1 of the “Regulations Governing Securities Firms,” stipulating that securities dealers engaging exclusively in proprietary trading of virtual currencies that have the nature of securities are not subject to the provisions of Article 2 on internal controls, Article 5 on the production and broadcasting of advertisements, Article 6 on the installation of internal auditors, Article 13 on total debts, Article 14 on the special reserve, Article 18 on the use of funds, Article 18-1 on equities investment in other firms, Article 21 on financial reporting and monthly accounting summaries, Chapter 5 on investment in foreign and mainland Chinese enterprises, and Chapter 6 on management of regulatory capital; and authorizing the Taipei Exchange to set the relevant rules.  

(3)Amended Article 21-1 of the “Regulations Governing Responsible Persons and Associated Persons of Securities Firms,” stipulating that the responsible persons and associated persons of securities dealers engaging exclusively in proprietary trading of virtual currencies that have the nature of securities shall possess the qualifications of an associated person and the registration of a person carrying out operations as described in the regulations; establishing that the rules in the regulations concerning managerial officers and personnel training shall not apply; and authorizing the Taipei Exchange to set rules on personnel.

(4)Amended Articles 2 and 3 of the “Regulations Governing Centralized Securities Depository Enterprises,” stipulating that securities firms approved by the FSC to transfer virtual currencies that have the nature of securities and perform custodial duties for virtual currencies that have the nature of securities are not central depositories, and revising the relevant wording.