Important Measure January 2023
2023-03-21
1. FSC Reminds TWSE and TPEx Listed and Emerging Stock Companies to Take Early Measures to Meet Corporate Governance Regulatory Requirements Implemented This Year
To deepen Taiwan's corporate governance, enhance sustainable corporate development, and strengthen the international competitiveness of Taiwan's capital markets, the FSC issued Corporate Governance 3.0 - Sustainable Development Roadmap in August 2020. Related measures that will be launched in 2023 include the following:
(1) A company whose chairperson and general manager are the same person shall appoint independent directors: In the case of TWSE listed companies, and of TPEx listed companies with paid-in capital of NT$600 million or more, if the board chairperson and the general manager or a person holding an equivalent position are the same person or are spouses or relatives within the first degree of kinship, the company shall appoint not less than 4 independent directors by 31 December 2023. However, if the number of board seats exceeds 15, the number of independent directors shall be not than less than 5, and a majority of the directors may not serve concurrently as an employee or managerial officer.
(2) Appointment of a chief corporate governance officer: All TWSE/TPEx-listed companies are required to have appointed a chief corporate governance officer by 30 June 2023.
(3) Information disclosures in English: All TWSE listed companies, and TPEx listed companies with paid-in capital of NT$600 million or more, are required to provide English versions of information including their shareholder meeting agenda handbook, annual report, and annual financial report beginning from 2023.
(4) In line with international guidance by the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-Related Financial Disclosures (TCFD), TWSE and TPEx listed companies with paid-in capital of NT$2 billion or more will, from 2023, be required to prepare and file sustainability reports, and to disclose industry-specific sustainability metrics and climate related information.
(5) Financial disclosures: TWSE and TPEx listed companies with paid-in capital of NT$10 billion or more are required to publish their annual financial reports within 75 days after the end of the fiscal year. TWSE and TPEx listed companies with paid-in capital of NT$2 billion or more will be required to file their unaudited financial information within 75 days after the end of the fiscal year.
(6) Beginning from 2023, Emerging Stock companies required to include e-voting as one of the channels for exercising voting rights at shareholders meetings.
The FSC urges all companies subject to the above requirements to take the necessary steps for compliance as early as possible.
2. FSC Reminds TWSE and TPEx Listed Companies to Plan Early to Meet Cyber Security Manpower Requirements by the End of 2023
To strengthen the information security (cyber security) management mechanisms of public companies, the FSC on 28 December 2021 amended the Regulations Governing Establishment of Internal Control Systems by Public Companies and issued an interpretive order to require that any TWSE or TPEx listed company that has paid-in capital of NT$10 billion or more, was a component of the FTSE TWSE Taiwan 50 Index in the preceding fiscal year, or is principally engaged in the sale of products or services via e-commerce, must appoint a chief information security officer and establish a dedicated information security unit (including a dedicated information unit head and at least two dedicated information security personnel) by the end of 2022. Other TWSE and TPEx listed companies, except those whose income before tax has been negative in the most recent 3 consecutive years, or whose net worth per share was lower than par value in the most recent fiscal year, must appoint a dedicated information security unit head and at least one information security personnel member by the end of 2023.
The FSC reminds all TWSE and TPEx listed companies subject to the above requirements in 2023 that they should properly assess their information security risks and requirements and begin planning as early as possible to procure the necessary equipment and resources and appoint the required cyber security specialists. If there is a need to adjust their internal organization or job duties, they should make corresponding changes to their internal control systems and implement the changes after they have been approved by the board of directors, so that the companies can complete information security personnel appointments within the prescribed timeframes, to improve the companies' cyber defense capabilities.
3. Continued Refinement of the New Innovative Stock Board Mechanisms to Foster Six Core Strategic Industries
In tandem with the Asia Silicon Valley Development Plan 2.0 and the policy of fostering six core strategic and innovative industries including green and renewable energy, the FSC oversaw the launching by the Taiwan Stock Exchange (TWSE) and the Taipei Exchange (TPEx), respectively, of the Taiwan Innovation Board (TIB) and the Pioneer Stock Board (PSB) under Taiwan's existing tiered capital market framework. The new boards officially began operation on 20 July 2021. From that time to the end of December 2022, 18 companies had registered and listed on the PSB and 10 companies had applied for listing on the TIB, of which 1 had already completed the listing procedures and 2 had been approved for and were pending listing.
To continue to create a more conducive environment for startups to list and raise capital, the FSC supervised the TWSE in introducing, from August to November of 2022, successive measures to relax the application requirements for listing on the TIB. These included shortening the required underwriter guidance period prior to application, easing the requirements for the time of listing applications (reducing the required market cap from NT$1.5 billion to NT$1.0 billion and the required operating revenue from NT$150 million to NT$100 million for Category 1 enterprises, and reducing the required market cap from NT$3 billion to NT$2 billion for Category 2 enterprises), shortening the minimum TIB listing period before a company may apply to transfer to a listing on the main board (from 2 years to 1 year), and shortening the required underwriter sponsorship period (shortened from sponsorship in perpetuity to a period of 3 years following the fiscal year of listing). Meanwhile, the criteria for qualified investors were also relaxed (those for juristic person investors were relaxed to include professional institutional investors and juristic persons with 2 years or more of experience in securities trading and investment; those for natural persons were relaxed from proof of financial capacity of NT$10 million to NT$5 million). Finally, a market maker system was introduced, enabling securities firms to voluntarily serve as market makers to provide trading quotes in the market. The market maker system will increase liquidity on the TIB, enliven trading, and attract more innovative enterprises to enter the capital market to raise funds for growth. All of this will aid industrial upgrading and transition, form industrial clusters in green and energy and other strategic industries, and attract capital investment to Taiwan.
In the coming year, the FSC will continue to collect information on the newest systems in international markets and listen to suggestions from all quarters, refine the innovative board mechanisms, and support the six core strategic industries. It will supervise the TWSE and TPEx to continue coordinating with intermediaries (underwriters and CPAs) and relevant ministries to actively conduct domestic and overseas publicity and investment promotion activities, physically and online, and strive to attract high-quality domestic and overseas enterprises to list and raise capital. This will assist enterprises to further upgrade and develop, expand the scale of Taiwan's capital market, and enhance international competitiveness.
4. Securities Market Shortened the Matching Interval of Intraday Odd-Lot Trading on 19 December 2022 to Optimize Transaction Opportunities and Efficiency
On 13 September 2022, the FSC announced that from 19 December 2022, the matching interval of intraday odd-lot trading would be shortened from three minutes to one minute. This measure helps to enhance the efficiency of intraday odd-lot market trading, increases transaction opportunities, and promotes financial inclusion.
To ensure the change could be smoothly launched through the online information systems of securities firms and information vendors, the FSC supervised the TWSE to conduct a market test on 18 December 2022. The test results were all normal, and the intraday odd-lot trading matching interval was officially shortened on 19 December 2022 from the former three minutes to one minute.
About 1.09 million new securities accounts were opened in 2022 as of December, of which customers under the age of 30 accounted for around 42.7% and those from the age of 31 to 40 accounted for 23.5%. This indicates that young people are quite interested in developments in the securities market. Also. as of December in 2022, the average daily trading value of odd lots on the TWSE was NT$1.891 billion (0.78%), which is significantly higher than the 0.49% of daily trading value during the same period of the preceding year.
The FSC stated that the intraday odd-lot trading system has undergone gradual refinements and optimization. The recent shortening of the matching interval improves the efficiency of intraday odd-lot trading and increases the likelihood of successful execution of the trading orders placed by investors. If investors have any related questions, they can feel free to contact the TWSE, TPEx, or their securities firms. The FSC will continue to supervise the TWSE and TPEx and enhance publicity to securities firms and investors. The FSC also reminds investors, however, that before investing they should always carefully evaluate the transaction costs and their own financial situation, understand the target companies' financial and business fundamentals, and pay attention to relevant investment risks.
To deepen Taiwan's corporate governance, enhance sustainable corporate development, and strengthen the international competitiveness of Taiwan's capital markets, the FSC issued Corporate Governance 3.0 - Sustainable Development Roadmap in August 2020. Related measures that will be launched in 2023 include the following:
(1) A company whose chairperson and general manager are the same person shall appoint independent directors: In the case of TWSE listed companies, and of TPEx listed companies with paid-in capital of NT$600 million or more, if the board chairperson and the general manager or a person holding an equivalent position are the same person or are spouses or relatives within the first degree of kinship, the company shall appoint not less than 4 independent directors by 31 December 2023. However, if the number of board seats exceeds 15, the number of independent directors shall be not than less than 5, and a majority of the directors may not serve concurrently as an employee or managerial officer.
(2) Appointment of a chief corporate governance officer: All TWSE/TPEx-listed companies are required to have appointed a chief corporate governance officer by 30 June 2023.
(3) Information disclosures in English: All TWSE listed companies, and TPEx listed companies with paid-in capital of NT$600 million or more, are required to provide English versions of information including their shareholder meeting agenda handbook, annual report, and annual financial report beginning from 2023.
(4) In line with international guidance by the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-Related Financial Disclosures (TCFD), TWSE and TPEx listed companies with paid-in capital of NT$2 billion or more will, from 2023, be required to prepare and file sustainability reports, and to disclose industry-specific sustainability metrics and climate related information.
(5) Financial disclosures: TWSE and TPEx listed companies with paid-in capital of NT$10 billion or more are required to publish their annual financial reports within 75 days after the end of the fiscal year. TWSE and TPEx listed companies with paid-in capital of NT$2 billion or more will be required to file their unaudited financial information within 75 days after the end of the fiscal year.
(6) Beginning from 2023, Emerging Stock companies required to include e-voting as one of the channels for exercising voting rights at shareholders meetings.
The FSC urges all companies subject to the above requirements to take the necessary steps for compliance as early as possible.
2. FSC Reminds TWSE and TPEx Listed Companies to Plan Early to Meet Cyber Security Manpower Requirements by the End of 2023
To strengthen the information security (cyber security) management mechanisms of public companies, the FSC on 28 December 2021 amended the Regulations Governing Establishment of Internal Control Systems by Public Companies and issued an interpretive order to require that any TWSE or TPEx listed company that has paid-in capital of NT$10 billion or more, was a component of the FTSE TWSE Taiwan 50 Index in the preceding fiscal year, or is principally engaged in the sale of products or services via e-commerce, must appoint a chief information security officer and establish a dedicated information security unit (including a dedicated information unit head and at least two dedicated information security personnel) by the end of 2022. Other TWSE and TPEx listed companies, except those whose income before tax has been negative in the most recent 3 consecutive years, or whose net worth per share was lower than par value in the most recent fiscal year, must appoint a dedicated information security unit head and at least one information security personnel member by the end of 2023.
The FSC reminds all TWSE and TPEx listed companies subject to the above requirements in 2023 that they should properly assess their information security risks and requirements and begin planning as early as possible to procure the necessary equipment and resources and appoint the required cyber security specialists. If there is a need to adjust their internal organization or job duties, they should make corresponding changes to their internal control systems and implement the changes after they have been approved by the board of directors, so that the companies can complete information security personnel appointments within the prescribed timeframes, to improve the companies' cyber defense capabilities.
3. Continued Refinement of the New Innovative Stock Board Mechanisms to Foster Six Core Strategic Industries
In tandem with the Asia Silicon Valley Development Plan 2.0 and the policy of fostering six core strategic and innovative industries including green and renewable energy, the FSC oversaw the launching by the Taiwan Stock Exchange (TWSE) and the Taipei Exchange (TPEx), respectively, of the Taiwan Innovation Board (TIB) and the Pioneer Stock Board (PSB) under Taiwan's existing tiered capital market framework. The new boards officially began operation on 20 July 2021. From that time to the end of December 2022, 18 companies had registered and listed on the PSB and 10 companies had applied for listing on the TIB, of which 1 had already completed the listing procedures and 2 had been approved for and were pending listing.
To continue to create a more conducive environment for startups to list and raise capital, the FSC supervised the TWSE in introducing, from August to November of 2022, successive measures to relax the application requirements for listing on the TIB. These included shortening the required underwriter guidance period prior to application, easing the requirements for the time of listing applications (reducing the required market cap from NT$1.5 billion to NT$1.0 billion and the required operating revenue from NT$150 million to NT$100 million for Category 1 enterprises, and reducing the required market cap from NT$3 billion to NT$2 billion for Category 2 enterprises), shortening the minimum TIB listing period before a company may apply to transfer to a listing on the main board (from 2 years to 1 year), and shortening the required underwriter sponsorship period (shortened from sponsorship in perpetuity to a period of 3 years following the fiscal year of listing). Meanwhile, the criteria for qualified investors were also relaxed (those for juristic person investors were relaxed to include professional institutional investors and juristic persons with 2 years or more of experience in securities trading and investment; those for natural persons were relaxed from proof of financial capacity of NT$10 million to NT$5 million). Finally, a market maker system was introduced, enabling securities firms to voluntarily serve as market makers to provide trading quotes in the market. The market maker system will increase liquidity on the TIB, enliven trading, and attract more innovative enterprises to enter the capital market to raise funds for growth. All of this will aid industrial upgrading and transition, form industrial clusters in green and energy and other strategic industries, and attract capital investment to Taiwan.
In the coming year, the FSC will continue to collect information on the newest systems in international markets and listen to suggestions from all quarters, refine the innovative board mechanisms, and support the six core strategic industries. It will supervise the TWSE and TPEx to continue coordinating with intermediaries (underwriters and CPAs) and relevant ministries to actively conduct domestic and overseas publicity and investment promotion activities, physically and online, and strive to attract high-quality domestic and overseas enterprises to list and raise capital. This will assist enterprises to further upgrade and develop, expand the scale of Taiwan's capital market, and enhance international competitiveness.
4. Securities Market Shortened the Matching Interval of Intraday Odd-Lot Trading on 19 December 2022 to Optimize Transaction Opportunities and Efficiency
On 13 September 2022, the FSC announced that from 19 December 2022, the matching interval of intraday odd-lot trading would be shortened from three minutes to one minute. This measure helps to enhance the efficiency of intraday odd-lot market trading, increases transaction opportunities, and promotes financial inclusion.
To ensure the change could be smoothly launched through the online information systems of securities firms and information vendors, the FSC supervised the TWSE to conduct a market test on 18 December 2022. The test results were all normal, and the intraday odd-lot trading matching interval was officially shortened on 19 December 2022 from the former three minutes to one minute.
About 1.09 million new securities accounts were opened in 2022 as of December, of which customers under the age of 30 accounted for around 42.7% and those from the age of 31 to 40 accounted for 23.5%. This indicates that young people are quite interested in developments in the securities market. Also. as of December in 2022, the average daily trading value of odd lots on the TWSE was NT$1.891 billion (0.78%), which is significantly higher than the 0.49% of daily trading value during the same period of the preceding year.
The FSC stated that the intraday odd-lot trading system has undergone gradual refinements and optimization. The recent shortening of the matching interval improves the efficiency of intraday odd-lot trading and increases the likelihood of successful execution of the trading orders placed by investors. If investors have any related questions, they can feel free to contact the TWSE, TPEx, or their securities firms. The FSC will continue to supervise the TWSE and TPEx and enhance publicity to securities firms and investors. The FSC also reminds investors, however, that before investing they should always carefully evaluate the transaction costs and their own financial situation, understand the target companies' financial and business fundamentals, and pay attention to relevant investment risks.
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Update：
2023-03-21