September 2018
Whether serving as an independent director and a member of the audit committee translates into a fulfillment of professionalism is an issue concerning whether there is any violation or negligence in handling mandated affairs and has no bearing on qualifications and the existence of a relationship of mandate with the company (Taiwan)
2018.7.10
Yi-Shan Cheng
The Taiwan High Court rendered the 107-Shang-285 Civil Decision of July 10, 2018 (hereinafter, the "Decision"), holding that whether serving as an independent director and a member of the audit committee translates into a fulfillment of professionalism is an issue concerning whether there is any violation or negligence in handling mandated affairs and has no bearing on qualifications and the existence of a relationship of mandate with the company.
According to the facts underlying this Decision, the Plaintiff asserted that the Defendant company had had the shareholders' meeting at issue appoint Defendants A, B and C as independent directors and constitute the audit committee through the resolution at issue. However, none of these three individuals had the "accounting or financial specialties" under Article 14-4, Paragraph 2 of the Securities and Exchange Law. Therefore, a complaint was filed to confirm that a relationship of mandate did not exist between the defendant company and Defendants A, B, and C. The original trial court ruled against the Plaintiff. Dissatisfied, the Plaintiff appealed.
According to the Decision, whether the qualifications under Article 14-2, Paragraph 2 of the Securities and Exchange Law are satisfied should be determined by rules associated with independent directors; and whether the "accounting or financial specialties" under Article 14-4, Paragraph 2 of the Securities and Exchange Law are satisfied depends on whether professional qualifications for independent directors under rules associated with independent directors are obtained along with work experience as a financial supervisor, accounting supervisor, accountant-in-charge, or internal audit supervisor of a publicly offered company or as a supervisor for any of the above positions.
It was further concluded, according to the above legal opinion, in this Decision that Defendants A, B and C had the qualifications under Article 14-4, Paragraph 2 of the Securities and Exchange Law. It was further pointed out that with respect to the management, governance or all kinds of business and proposals of a company's board of directors, whether independent directors have fulfilled their professionalism and thoroughly carried out their duties as independent directors pertains to the issue of whether there is any violation or negligence in their handling of mandated affairs, whether they are qualified independent directors and whether they can organize the audit committee but has no bearing on whether a relationship of mandate exists with the company. Therefore, the Plaintiff's complaint was rejected and the original decision against the Plaintiff was upheld.
Yi-Shan Cheng
The Taiwan High Court rendered the 107-Shang-285 Civil Decision of July 10, 2018 (hereinafter, the "Decision"), holding that whether serving as an independent director and a member of the audit committee translates into a fulfillment of professionalism is an issue concerning whether there is any violation or negligence in handling mandated affairs and has no bearing on qualifications and the existence of a relationship of mandate with the company.
According to the facts underlying this Decision, the Plaintiff asserted that the Defendant company had had the shareholders' meeting at issue appoint Defendants A, B and C as independent directors and constitute the audit committee through the resolution at issue. However, none of these three individuals had the "accounting or financial specialties" under Article 14-4, Paragraph 2 of the Securities and Exchange Law. Therefore, a complaint was filed to confirm that a relationship of mandate did not exist between the defendant company and Defendants A, B, and C. The original trial court ruled against the Plaintiff. Dissatisfied, the Plaintiff appealed.
According to the Decision, whether the qualifications under Article 14-2, Paragraph 2 of the Securities and Exchange Law are satisfied should be determined by rules associated with independent directors; and whether the "accounting or financial specialties" under Article 14-4, Paragraph 2 of the Securities and Exchange Law are satisfied depends on whether professional qualifications for independent directors under rules associated with independent directors are obtained along with work experience as a financial supervisor, accounting supervisor, accountant-in-charge, or internal audit supervisor of a publicly offered company or as a supervisor for any of the above positions.
It was further concluded, according to the above legal opinion, in this Decision that Defendants A, B and C had the qualifications under Article 14-4, Paragraph 2 of the Securities and Exchange Law. It was further pointed out that with respect to the management, governance or all kinds of business and proposals of a company's board of directors, whether independent directors have fulfilled their professionalism and thoroughly carried out their duties as independent directors pertains to the issue of whether there is any violation or negligence in their handling of mandated affairs, whether they are qualified independent directors and whether they can organize the audit committee but has no bearing on whether a relationship of mandate exists with the company. Therefore, the Plaintiff's complaint was rejected and the original decision against the Plaintiff was upheld.
