Grace Chou and Hannah Kuo
In order to strengthen the promotion of sustainable development by companies, encourage companies to pay attention to the disclosure of information on the environmental, social, and governance (ESG) issues, implement corporate governance, strengthen the disclosure of information on cyber security management and to accommodate the adoption of shelf registration by companies for the issuance of new shares, on January 26, 2022, the Financial Supervisory Commission (hereinafter, the “FSC”) announced the partial amendments and the related tables to the Regulations Governing Information to be Published in Public Offering and Issuance Prospectuses (hereinafter, the “Regulations”), which are highlighted below:
1. Enhancing disclosure of information on sustainable development
(1) The Tables to the Regulations as amended contain an additional guide for the disclosure of information on the implementation status of sustainable development promoted by companies to facilitate their disclosure of more specific, clear, and quantified details about the environmental and social issues.
(2) The Regulations as amended additionally require that companies shall disclose the ages of their directors and supervisors to prompt the companies to pay attention to their succession planning, and specifically provide that companies shall specifically indicate the diversity policy for their board of directors, specific management objectives, and their fulfillment status, as well as the professional qualifications and experiences of their individual directors and supervisors, to promote the sound development of the composition and structure of their board of directors. In addition, to enhance the disclosure of information on the independence of board members, companies are required to specify the ratio of the independent directors in the board along with an explanation about the independence of the board and the satisfaction with the independence requirements by the independent directors.
(3) The Regulations as amended require that companies shall, in the information on the operation of the audit committee, disclose the objections and reservations of independent directors and the content of their major recommendation items. In addition, it is specifically provided that companies shall specify the professional qualifications of the members of the compensation committee and their satisfaction with the independence requirement. In addition, if a company has set up a nomination committee, its composition and operation shall be disclosed.
2. Enhancing disclosure of information on cyber security management:
The Regulations as amended specifically require that companies shall describe the cyber security policies, concrete management programs, and the resources committed to cyber security management, and further specifically require that companies shall disclose the impact of cyber security risks on their financial operation and the measures being or to be taken in response thereto, as well as any losses suffered by the companies due to significant cyber security incidents, the possible impacts therefrom, and measures being or to be taken in response thereto.
3. Disclosure items to accommodate the adoption of shelf registration method for the issuance of new shares
To accommodate the FSC’s amendments to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers in January this year to allow enterprises in Taiwan to adopt shelf registration for the issuance of new shares, the Regulations as amended require that enterprises adopting shelf registration method for issuance of new shares shall specify such in a conspicuous font on the cover of the prospectus, and disclose relevant information concerning the projected total issue amount, the already issued total amount, and the balance amount for the shelf registration in the “capital stock and capital matter” section of the prospectus.
In addition, to facilitate investors to grasp the relevant financial and business information, when the issuer supplements the issuance of new shares, to assess whether to participate in the subscription, the Regulations specifically provide that the prospectus for the supplementary issuance of new shares shall be uploaded to the information reporting website designated by the FSC within 30 days after the concluding opinion of the securities underwriter‘s evaluation report is issued.