Teresa Huang and Eddie Shih
To enhance the administration of the use of proxies, the Financial Supervisory Commission (hereinafter, the “FSC”) pre-announced the draft Partial Amendments (hereinafter, the “Draft”) to Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies (hereinafter, the “Regulations”). The pre-announcement period was from April 6, 2002 to June 6, 2022. The Draft is highlighted below:
(1) Enhancement of legal compliance
Those who have been penalized by the FSC for violation of the material restrictions on the use of proxies under Article 11, Paragraph 1 of the Regulations or for violation of the solicitor qualifications under Articles 5 and 6 of the Regulations shall not act as solicitors or handle solicitation matters mandated by other solicitors in one year. If this requirement is violated, the represented votes shall not be counted. (Articles 5, 7-1, and 22 of the Draft)
(2) Enhancement of professionalism
For those companies mandated to handle solicitation matters for others, one of the supervisors that handle solicitation matters shall have at least five-year experience in related practices, and the personnel that handle solicitation matters are required to participate in education training related to shareholder services (Article 7-1 of the Draft).
For personnel at the place of solicitation, the functional tests related to the rules establishing standards for the internal control systems of shareholder service units shall be passed to be eligible for handling solicitation matters (Article 7-2 of the Draft).
(3) Enhanced reasonableness of contracts related to solicitation matters
Those who are mandated by shareholders to serve as solicitors or mandated by solicitors to handle solicitation matters shall specifically indicate the remuneration in the commission contract, thoroughly carry out the know-your-customer operation, periodically review the reasonableness of the contents of the contract and enter into a new contract every year (Article 7-3 of the Draft).
To reserve sufficient time to accommodate the requirements above, a grace period is specifically designed. The amendments are planned to go into effect on January 1, 2023 (Article 24 of the Draft). Public companies, solicitors, and companies mandated to handle solicitation matters for others should prepare themselves ahead of time based on the contents of the above Draft.