February 2022
Oli Wong and Jiselle Ong
To accommodate technological advancement and cope with force majeure such as epidemics, the Legislative Yuan adopted the Amendments to Article 172-2 and Article 356-8 of the Taiwan Company Act in December 2021. The Taiwan Financial Supervisory Commission (hereinafter, the “FSC”) also preannounced the draft amendments to the Regulations Governing the Administration of Shareholder Services of Public Companies and the Regulations Governing Content and Compliance Requirements for Shareholders’ Meeting Agenda Handbooks of Public Companies accordingly in January 2022, and made a 30-day announcement (before February 14, 2022) pursuant to the Administrative Procedure Act to solicit public opinions and answer inquiries in order to facilitate companies to plan their shareholders’ meetings in advance. The above-mentioned amendments are highlighted below:
I. Highlights of the amendments to the Taiwan Company Act:
1. For the shareholders’ meetings of companies and close companies, due to force majeure incidents such as natural disasters, the central competent authority may announce that, the aforementioned companies may hold meetings by video conference or in another manner set forth in the announcement within a certain period and without a stipulation in the Articles of Incorporation, thus increasing the flexibility of adopting virtual shareholders’ meetings. (Proviso of Article 172-2, Paragraph 1 and Proviso of Article 356-8, Paragraph 1 of the Taiwan Company Act).
2. Public companies may also conduct a virtual shareholders’ meeting. The conditions, operating procedures, and other matters to be complied with shall be governed by the sub-laws prescribed by securities authorities on a prioritized basis (Article 172-2, Paragraph 3 of the Taiwan Company Act).
II. Highlights of the draft amendments to the Regulations Governing the Administration of Shareholder Services of Public Companies and the Regulations Governing Content and Compliance Requirements for Shareholders’ Meeting Agenda Handbooks of Public Companies:
1. The video-assisted type (i.e. physical shareholders’ meetings with video assistance) and pure virtual type (i.e. no physical shareholders’ meetings but only virtual meetings) of shareholders’ meetings are permitted. The conditions the companies shall apply and the relevant formulation of the Articles of Incorporation are also specified in the draft amendment to the Regulations Governing the Administration of Shareholder Services of Public Companies. In addition, it is specifically provided that, subject to an announcement of the Ministry of Economic Affairs, a company may conduct a shareholders’ meeting in the aforementioned manners without a stipulation in the Articles of Incorporation. (Articles 44-9 and 44-11 of the draft amendments to the Regulations Governing the Administration of Shareholder Services of Public Companies)
2. The draft amendments to the Regulations Governing the Administration of Shareholder Services of Public Companies specifically stipulate that the information that should be disclosed and notified before and during the virtual meeting, the approach against the failure of continuing the virtual meeting, the matters to be recorded in the minutes of the shareholders’ meeting, the uploading and retention of the results of the meeting, the requirement that the chairman and the minute-taker should be located in the same location, and the requirement that the continuous audio and video recording throughout the meeting. (Articles 44-15, 44-17, 44-19, 44-20, 44-21, and 44-22 of the draft amendments to the Regulations Governing the Administration of Shareholder Services of Public Companies)
3. It is specifically stipulated that virtual meetings should be outsourced. Furthermore, the qualifications of the entrusted operators, the reporting procedure, the requirement that an application should be filed annually for cybersecurity certification and audit, the matters that should not be handled concurrently, and the requirement that the entrusted operator shall retain the virtual meeting materials and meeting audio and video recording files for the statutory retention period are also specifically stipulated. (Articles 44-10 and 44-22 of the draft amendments to the Regulations Governing the Administration of Shareholder Services of Public Companies)
4. The procedural requirements related to the registration of shareholders, proxy solicitors, or proxies for virtual meetings, the transition between virtual and physical participation, the exercise of voting rights, the delivery of intention, and the rights of the aforementioned persons in the virtual meetings are specifically stipulated. (Articles 44-12 through 44-14, 44-16, and 44-18 of the draft amendments to the Regulations Governing the Administration of Shareholder Services of Public Companies)
5. The matters to be included in the shareholders’ meeting handbook are revised and added “the convening method” and “the venue.” Moreover, it is specifically stipulated that the meeting handbook and the supplemental meeting materials shall be distributed on-site or uploaded to the virtual meeting platform, depending on the convening method. (Articles 3 and 6 of the draft amendments to the Regulations Governing Content and Compliance Requirements for Shareholders’ Meeting Agenda Handbooks of Public Companies)
The above-mentioned regulations and draft amendments will allow companies to hold shareholders’ meetings more flexibly. For public companies that seek to conduct their shareholders’ meetings remotely in the future, they may also take into account the current amendments to the regulations and plan their shareholders’ meetings in advance.