April 2023
Pei-Ching Ji and Sean Tang
After the amendments to Article 172-2 of the Company Act cleared through three readings at the Legislative Yuan in December 2021 and Taiwan Financial Supervisory Commission (hereinafter, the “FSC”) released the amendments to part of the provisions of the Regulations Governing the Administration of Shareholder Services of Public Companies (hereinafter, the “Shareholder Services Regulations”) and Articles 3 and 6 of the Regulations Governing Content and Compliance Requirements for Shareholders’ Meeting Agenda Handbooks of Public Companies, a new chapter for virtual shareholders’ meetings conducted by public companies has officially begun (for details of the amendments to the above provisions, please refer to our Newsletter published in February 2022 and titled The Amendment to the Taiwan Company Act for the Companies to Conduct a Virtual Shareholders’ Meeting Without Amending the Articles of Incorporation, and the Draft Amendments to Sub-Laws Related to Public Companies Have Also Been Introduced and the Newsletter published in April 2022 and titled Taiwan FSC Promulgated Relevant Requirements for Virtual Shareholders’ Meetings of Public Companies). Recently on March 6, 2023, in order to strengthen the protection of shareholders’ rights and interests, the FSC issued the Amendments to Article 44-9 and Article 44-21 of the Shareholder Services Regulations, which are highlighted below:
1. A company seeking to conduct a virtual shareholders’ meeting shall obtain a special resolution adopted by the board of directors:
Since the shareholders can only participate in a virtual-only shareholders’ meeting conducted by the company via video conferencing with more restrictions on their rights and interests, the latter part of Article 44-9, Paragraph 3 of the Shareholder Services Regulations is added to specifically provide that a company seeking to conduct a virtual shareholders’ meeting shall obtain a resolution of the board of directorswith the attendance of at least two-thirds of the directors and the approval of the majority of the directors present (i.e., a special resolution).
2. In case of the special circumstances under the proviso of Article 172-2, Paragraph 1 of the Company Act and Article 44-9, Paragraph 5 of the Shareholder Service Regulations, a company may accommodate by handling relevant matters:
To accommodate the Proviso of Article 172-2, Paragraph 1 of the Company Act as amended on December 29, 2021 and Article 44-9, Paragraph 5 of the Shareholder Services Regulations as amended on March 4, 2022, which provide that in the event of special circumstances such as natural disasters, incidents, or other force majeure situations, the Ministry of Economic Affairs may announce that the company may, within a certain period, conduct a meeting via video conference or a method announced by it without specifying this in its articles of incorporation, Article 44-9, Paragraph 6 of the Shareholder Services Regulations is added to stipulate the relevant matters that a company may handle in such circumstances, including: (1) the company may announce the change of the manner in which a shareholders’ meeting is convened on the information reporting website designated by the FSC; (2) if there is any alternative measure of exercising voting rights in writing for shareholders who have difficulties in attending the shareholders’ meeting via video conferencing, the shareholders shall first apply to the company before it sends relevant materials to the shareholders; and (3) any other necessary emergency measure required by the FSC.
3. For shareholders having difficulties in attending a shareholders’ meeting via video conferencing, a company that conducts a virtual shareholders’ meeting shall at least provide such shareholders with connectivity equipment and necessary assistance:
To provide appropriate alternative measures for shareholders who have difficulties in participating in shareholders’ meetings via video conferencing, a new latter part is added to Article 44-21, Subparagraph 3 of the Shareholder Services Regulations to stipulate that except for the circumstances specified in Article 44-9, Paragraph 6, the company shall provide at least the connectivity equipment and necessary assistance to such shareholders to participate in the meeting, and shall specify in the notice of the shareholders’ meeting the period during which the shareholders may apply to the company as well as other relevant points to note.
Although the amendments are minor, still they are important procedures and related matters that should be followed by public companies in conducting shareholders’ meetings via video conferencing. It is additionally cautioned that since the “one-year” period under Article 44-9, Paragraph 4 of the Shareholder Services Regulations is over, whether a public company wishes to conduct a hybrid shareholders’ meeting or a virtual-only shareholders’ meeting, it should be specifically stipulated in the articles of incorporation that the company may conduct a virtual shareholders’ meeting, and the board of directors shall resolve to do so.
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