Director, supervisor nomination system urged for better corporate governance
 
Publish Date︰2012-11-12 15:48
 
Director, supervisor nomination system urged for better corporate governance

 

    Article 177-1 of the Company Act stipulates that shareholders of a company may exercise their voting rights in shareholder meetings by issuing written statements or casting their ballots through electronic transmissions.

 

    By taking cues from the Company Act, the Financial Supervisory Commission (FSC) issued follow-up rules on Feb. 20 2012 to clearly point out“what are the companies which should adopt electronic voting.”

 

    The FSC said the request for electronic voting was made after the Commission took into account a listed company’s paid-in capital and the number of its shareholders.

 

    The FSC’s rules request a listed company on the Taiwan Stock Exchange (TWSE) and the over-the-counter market whose paid-in capital reaches NT$10 billion and has more than 10,000 shareholders to adopt electronic voting at its shareholder meeting.

 

    The FSC said the electronic voting is expected to facilitate the establishment of a mechanism by listed companies to nominate directors and supervisors before the shareholder meetings are held.

 

    For the listed companies which would hold director and supervisor elections or by-elections and planned to revise their company charters to set up the nomination mechanism in their 2012 annual general meetings, the FSC has allowed them a grace period to adopt electronic voting until their next shareholder meetings.

 

    The grace period is expected to give these companies some leeway to better adopt the new voting way and then complete revision of their charters for the establishment of the nomination, the Commission said.

 

    According to statistics, a total of six TWSE listed companies, which abided by the FSC’s rules to adopt electronic voting in their 2012 shareholder meetings, held elections of directors and supervisors in the meetings but have not revised their charters to set up a nomination mechanism.

 

    The six are Far Eastern New Century Corp., TECO Electric and Machinery Co. Ltd., Advanced Semiconductor Engineering Inc., Far Eastern International Bank, Far Eastern Department Stores Ltd., and Far EasTone Telecommunications Co. Ltd.

 

    A total of 11 listed companies, which followed the FSC rules to adopt electronic voting in their 2012 shareholder meetings, have not revised their charters yet to adopt director and supervisor nomination mechanism but will hold director and supervisor elections through electronic voting in their 2013 shareholder meetings.

 

    The 11 firms are China Man-Made Fiber Corp., Cheng Loong Corp., Lite-On Technology Corp., Kinpo Electronics Inc., Ta Chong Bank, EnTie Commercial Bank, MasterLink Securities Corp., Cathay Financial Holdings, Taishin Financial Holdings, Capital Securities Corp., and Pou Chen Corp.

 

    Through a director and supervisor nomination system, shareholders will have a clear election process to follow, which is expected to boost their participation in voting, the TWSE said.

 

    In addition, as the nomination system will disclose all candidates ahead of the elections, the election process is expected to become more transparent to shareholders, the exchange said.

 

    The TWSE said it has encouraged listed companies to revise their charters to adopt such a nomination system for director and supervisor elections in a bid to strengthen corporate governance in Taiwan and help the local business sector meet international standards.