The Securities and Exchange Law was amended by a Presidential directive to allow an independent director to hire experts to provide assistance (Taiwan)

Oli Wong

The President promulgated Articles 14-2 and 178 of the Securities and Exchange Law (hereinafter, the “Law”) as amended via the President-Hua-Zhong-One-Yi-Zi 10700042151 Directive of April 25, 2018 so that when executing business, an independent director who deems necessary may hire an expert to provide assistance with relevant expenses assumed by the company.

Although it is specifically stipulated in the current Securities and Exchange Law that an independent director shall have expertise, still the knowledge of an independent director has its limit, and it is difficult to be equipped with full expertise in the face of complex accounting, law and corporate governance.  In reference to past court practices, independent directors were personally required to have an expertise that transcends the expertise of a certified public accountant and a licensed lawyer. Under actual circumstances, their authority was not consistent with their responsibilities.  To address the issue of corporate governance accountability, it is preferable to provide other professional assessments and opinions for the reference of independent directors so that they can make independent and impartial determination of professional matters of the company.  To avoid the inability of an independent director to seek professional opinions due to cost constraints, Article 7 of the Reference Examples for the Rules for the Scope of Duties of Independent Directors of XX Company Limited by Shares was referenced to add Article 14-2, Paragraph 3 of this Law to promote sound corporate governance and carry out the duties and functions of independent directors to make independent determination and provide objective opinions concerning corporate matters.

Therefore, Article 14-2, Paragraph 3 is amended to stipulate that a company shall not impede, refuse or evade the business execution of an independent director.   If an independent director deems necessary, the board of director may be requested to assign relevant personnel or the independent director may hire an expert on his/her own to provide assistance with relevant costs and expenses assumed by the company.  The penal provision in Article 178, Paragraph 1, Subparagraph 2 of the Law is also revised to stipulate that a company in violation may be subject to a fine of NT$240,000 to NT$2,400,000.