1.Amended the “Regulations Governing Securities Firms” 

The Financial Supervisory Commission (FSC) amended the “Regulations Governing Securities Firms” and related interpretations on 3 February 2020 to increase the operational flexibility of securities firms, expand the range of securities dealers’ trading businesses, and meet the needs of domestic investors. The key changes included: 

(1)To enable firms that issue exchange-traded notes (ETNs) to hedge with greater flexibility, the FSC relaxed restrictions on hedging by such securities firms. Taking the current standards for securities firms to operate warrants and derivatives businesses as a reference, the FSC made ETNs no longer subject to total cost limits on holding equities issued by related parties. 

(2)To provide securities dealers with greater flexibility when trading, the FSC permitted securities dealers: to trade foreign bonds and derivative products for their own accounts under Article 19-1 Paragraph 1 and Article 31-1 of the regulations; to engage in transactions and trading with overseas affiliated enterprises, to set internal operating rules for such trades and transactions, and to authorize the terms under which management will handle these matters, and the limits on the amounts involved, provided that three-quarters of the directors present at a directors’ meeting attended by at least two-thirds of all directors agree. 

 

2.Published Amendments to Articles 28 and 31 of the “Regulations Governing the Preparation of Financial Reports by Securities Firms,” and to “the Format of the Financial Reports of Securities Firms”

To improve the reasonable setting of remuneration for directors, supervisors, upper management and consultants, to strengthen non-financial information disclosures, and to maintain appropriate oversight by carrying out a critical review of current regulations, The FSC announced amendments to the “Regulations Governing the Preparation of Financial Reports by Securities Firms” on 11 February 2020. In conjunction with these amendments, on 19 February 2020, the FSC also issued a new order to amend the relevant supplementary schedules and abolished FSC Order No. Financial-Supervisory-Securities-10703332991 of 21 September 2018. The key amendments are as follows:

(1)Revised and added additional provisions about disclosing the remuneration paid to individual directors, supervisors, presidents, vice presidents, and advisors under certain conditions, including：(a) the securities firm 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 securities firm that has had poor corporate governance evaluation performance; or (c) it is a TWSE-listed or TPEx-listed securities firm where the average salary of non-managerial full-time employees has been relatively low. In addition, a TWSE-listed or TPEx-listed securities firm is required to individually disclose the remuneration received by the five most highly compensated executive officers if: (1) it 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

(2)Strengthened the quality of non-financial disclosures: to improve disclosure of CPA professional fees, amended the reporting threshold for the reduction of CPA audit fee from 15% to 10%.

 

3.Amended the “Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies” to Make Proxy Rules More Robust

Given the large capital requirements for financial holding companies delineated in the "Financial Holding Company Act," and for banks in the “Banking Act,” and for insurance companies in the “Insurance Act”（hereinafter, "financial institutions"）, as well as the large disparities in capital stock, and in consideration of the fact that any shareholder possessed of given criteria has the right to act as a proxy solicitor and contend for a seat on the board of directors or supervisors at financial institutions of different sizes that are convening shareholder meetings with director or supervisory elections on the agenda, the FSC on 27 February 2020 facilitated shareholder activism, conformed to the principle of equity of shareholdings, and encouraged sound corporate governance by amending Article 5, Paragraph 1,Subparagraph 1 of the “Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies,” adding a requirement that an individual shareholder intending to act as a proxy solicitor must hold at least 2 million shares issued by the financial institution.