1.    Amendment to the Regulations Governing Information to be Published in Annual Reports of Public Companies
In line with the Roadmap for Taiwan Listed Companies to Align with IFRS Sustainability Disclosure Standards released by the Financial Supervisory Commission (FSC) on 17 August 2023, the FSC plans to simplify the content of the annual report to assist companies in their smooth transition to the IFRS sustainability disclosure standards and early filing of their annual reports. For this purpose, and to promote gender diversity among the directors of TWSE and TPEx listed companies in accordance with the Sustainable Development Action Plan for TWSE and TPEx Listed Companies released by the FSC on 28 March 2023, the FSC amended some articles and Table 1 of the Regulations Governing Information to be published in Annual Reports of Public Companies (hereinafter, the “Annual Report Regulations”). As the advance notice period of the draft amendment has expired, the amendment will be released and implemented in the near future. Key points of the amendment are as follows:
1.    Simplifying the content and preparation of annual reports:
(1) Simplifying and paring down of items required to be disclosed in the annual report: In formulating the draft amendment, the FSC collected annual report disclosure regulations and practices of major foreign securities markets and countries for reference, and carefully considered factors such as the relevance and accessibility of information. The amendment deletes numerous items that are currently required to be disclosed, including the following: in Article 9 of the Annual Report Regulations, the brief history of the company; in Article 10, various content of the corporate governance report, including the company organizational system, the query method for the company's corporate governance best-practice principles or bylaws, information on penalties imposed on the company and its internal personnel, and the summary of resignations and dismissals of the company's chairperson, general manager, and chief financial and accounting officers; in Article 11, information on shareholder structure, ownership dispersion and, for the past 2 fiscal years, the market price, net worth, earnings, and dividends per share; in Article 18: the tables of production and sales volumes and values for the past 2 fiscal years in the business operations overview; in Article 19, the financial overview; in Article 21, holding or disposal of shares in the company by the company’s subsidiaries. The information mentioned above that is to be simplified or deleted in the annual report can still be obtained by investors through the company’s website, the Market Observation Post System, and the company’s financial reports.
(2) The cross-referencing of disclosures is allowed to simplify the preparation of annual reports: Some annual report information will already have been publicly announced and disclosed on the FSC’s designated information reporting website (i.e., the Market Observation Post System), such as internal control system statement, the CPA’s special audit report on the internal control system, equity transfers and changes in share pledges by directors, supervisors, managers, and shareholders with shareholding ratios exceeding 10%, and the execution of fund utilization plans for issuance or private placement of securities. To ease the preparation of the annual report, such information may now by presented simply by cross-referencing to the other disclosure source where the information can be found. In addition, Article 22-1, which is newly added in the amendment, expressly provides that items that are allowed to be presented in the annual report by means of cross-referencing to other duly reported and publicly announced information disclosures shall be deemed effective content of the annual report upon such cross-referencing.
2.    Promoting gender diversity of directors in TWSE and TPEx listed companies: The FSC's Sustainable Development Action Plan for TWSE and TPEx Listed Companies requires the listed companies to make a disclosure in their annual reports, starting from 2025, if the number of directors of either gender is less than one-third of the total directors. Therefore, in the explanation in Table 1 under Article 10 of the revised Annual Report Regulations regarding the diversity and independence of the board of directors, it is added that “if the number of directors of either gender on the board of directors of a TWSE or TPEx listed companies is less than one-third, explain the reasons and the planned measures to enhance director gender diversity.”
The FSC stated that when formulating the plan to simplify the annual report, it carefully considered international norms to align with international practices, and also studied practical demands encountered in annual report preparation in Taiwan. The simplifying measures affect a total of 22 disclosure items, including 16 that are deleted, and 6 that may now be disclosed by cross-referencing. This is expected to reduce the length of annual reports by nearly one-third and help reduce the workload of annual report preparation. When the amendment comes into force, the simplified annual report format will apply to the 2024 annual report required to be filed in 2025.
As the annual report content involves collecting and consolidating cross-department information, the FSC advises companies to engage in internal cross-department communication, coordinate work division as soon as possible, revise and prepare relevant operating procedures, and strive toward alignment with the IFRS sustainability disclosure standards and early filing of annual reports. Additionally, since all TWSE listed companies and TPEx listed companies with paid-in capital of NT$600 million or more must submit an English version of their annual reports, the FSC reminds the companies to include the English version in their preparation schedule, for convenient review by investors.