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Official launch of the assessment of the board of directors of listed companies and other new corporate governance measures starting from 2020

Publish time:2020-01-17

According to the "Taiwan Stock Exchange Operation Directions for Compliance with the Establishment of Board of Directors by TWSE Listed Companies and the Board's Exercise of Powers" promulgated by the Taiwan Stock Exchange on December 27, 2018, listed companies are required to conduct evaluations of the board and self-assessments or peer reviews for individual directors every year starting in 2020, and results must be filed by the end of the first quarter of the following year. To continue to strengthen the functions of the board of directors and protect the rights and interests of shareholders, the Taiwan Stock Exchange announced the amendment of three regulations including the "Taiwan Stock Exchange Operation Directions for Compliance with the Establishment of Board of Directors by TWSE Listed Companies and the Board's Exercise of Powers", "Taiwan Stock Exchange Rules Governing Information Filing by Companies with TWSE Listed Securities and Offshore Fund Institutions with TWSE Listed Offshore Exchange-Traded Funds", and "XXX Co., Ltd. Rules of Procedure for Shareholders Meetings" on January 2, 2020. Related corporate governance measures will continue to be implemented.

In compliance with plans for the "New Corporate Governance Roadmap (2018-2020)", the TWSE considered the actual operations of corporate governance as well as related regulations of the competent authorities for the amendment of the "Taiwan Stock Exchange Operation Directions for Compliance with the Establishment of Board of Directors by TWSE Listed Companies and the Board's Exercise of Powers" and "Taiwan Stock Exchange Rules Governing Information Filing by Companies with TWSE Listed Securities and Offshore Fund Institutions with TWSE Listed Offshore Exchange-Traded Funds" which include the following main items:

  1. Where the chairperson of the board and general manager (or the individual holding an equivalent position) of a listed company are the same individual, spouses, or relatives within the first degree of kinship, the company must complete the appointment of additional independent directors before December 31, 2023 and more than half of the directors must not be employees or managerial officers. Listed companies are required to report related information of the chairperson of the board, general manager (or the individual holding an equivalent position), and directors.  For the proceeding disclosure, the TWSE is in the process of establishing a specific MOPS’ section available later this year.
  2. Listed companies with a paid-in capital of NT$2 billion or more and less than NT$10 billion must complete the appointment of a corporate governance officer before June 30, 2021.
  3. Individuals who have served in management roles for legal compliance and internal audit in securities, finance, futures, or related institutions for more than three years meet qualifications for service as the corporate governance officer.
  4. Listed companies must conduct evaluations of the board and self-assessments or peer reviews for individual directors every year starting in 2020, and results must be filed by the end of the first quarter of the following year. For the proceeding disclosure, the TWSE is in the process of establishing a specific MOPS’ section available later this year.

The "Sample Template for XXX Co., Ltd. Rules of Procedure for Shareholders Meetings" is amended in accordance with the Company Act, Interpretation Letters from the Ministry of Economic Affairs, and related international regulations and practices. The main points of the amendment include: Listed companies are required to specify the main contents in the notice of the reasons for convening the shareholders meeting. They may not use extraordinary motions or other methods in the same shareholders' meeting for the election of directors and supervisors to change the date they take office. They must adopt poll voting in shareholders’ meetings, and they must disclose the number of votes obtained by each director or supervisor candidate.

The amended article, please refer to:

1. Taiwan Stock Exchange Corporation Operation Directions for Compliance with the Establishment of Board of
Directors by TWSE Listed Companies and the Board's Exercise of Powers