The Financial Supervisory Commission amended part of the provisions of the Regulations Governing Exercise of Authority by the Audit Committee of Publicly Offered Companies, the Regulations Governing the Procedure for Board of Directors Meeting of Publicly Offered Companies, and the Regulations Governing Appointment of Independent Directors and Compliance Matters for Publicly Offered Companies at the same time on July 28, 2017 to strengthen corporate governance mechanisms. These amendments are highlighted as follows.
I. Public disclosure of the reasons when an independent director who has served three consecutive terms of independent directorship has been nominated as a candidate for an independent director
Pursuant to Article 5 of the Regulations Governing Appointment of Independent Directors and Compliance Matters for Publicly Offered Companies as amended, when a candidate who has served three terms of independent directorship in a publicly offered company is nominated by the company, the reasons for continued nomination of the candidate for an independent director shall be announced when the results of the examination of the nominees are announced with such reasons publicly disclosed to the shareholders when the election takes place during a shareholders’ meeting.
II. Enhanced participation of independent directors in resolutions adopted during a company’s board meetings
Article 7, Paragraph 5 of the Regulations Gonverning the Procedure for Board of Directors Meeting of Publicly Offered Companies specifically provides that if a company has set up independent directors, at least one independent director shall attend board meetings in person. With respect to matters which shall be resolved by the board of directors meeting under Paragraph 1 of the same article, all independent directors shall attend the board meeting. If any independent director cannot attend in person, another independent director shall be requested to attend on his/her behalf. The objection or reservation, if any, of an independent director shall be recorded in the minutes of the board meeting. If an independent director cannot attend the board meeting in person to state the objection or reservation, except for justifiable reasons, a written opinion shall be issued in advance and be specified in the minutes of the board meeting.
III. Audio or video recording required for an entire audit committee meeting with five-year retention
Article 10-1 of the Regulations Governing Exercise of Authority by the Audit Committee of Publicly Offered Companies as amended requires that the entire audit committee meetings shall be audio or video recorded for reference with such recordings retained for at least five years. The recordings may be preserved electronically. In the event of any litigation involving relevant resolutions adopted by the audit committee before the retention period expires, audio or video materials preserved for reference shall be retained until the end of the litigation.