February 2019
The FSC's directives to expand the scope of installation of independent directors and an audit committee (Taiwan)
2018.12.19
Grace Chiang
The Financial Supervisory Commission (hereinafter, the "FSC") issued the Jin-Guan-Zheng-Fa-107345233 Directive and the Jin-Guan-Zheng-Fa-10703452331 Directive on December 19, 2018 to expand the scope of companies required to set up independent directors and an audit committee.
First of all, with respect to independent directors, financial holding companies, banks, bills finance companies, insurance companies, securities investment trust enterprises, integrated securities firms, listed/OTC-traded futures commission merchants, and listed/OTC-traded non-financial companies which have issued stocks are required to provide for the installation of independent directors in their articles of incorporation. And non-financial companies traded in the emerging stock market are required to, beginning with January 1, 2020, provide for the installation of independent directors in their articles of incorporation in their articles of incorporation. In addition, the independent directors shall not be less than two, and shall not account for less than one fifth of the directors.
Second, with respect to an audit committee, financial holding companies, banks, bills finance companies, insurance companies, securities investment trust enterprises, integrated securities firms, listed/OTC-traded futures commission merchants, and listed/OTC-traded non-financial companies (with a paid-in capital not less than NT$2 billion) which have issued stocks are required to set up an audit committee in place of supervisors. And listed/OTC-traded non-financial companies with a paid-in capital less than NT$2 billion shall, beginning with January 1, 2020, set up an audit committee. However, if a financial enterprise whose total outstanding shares are held by a financial holding company, it can choose to set up either an audit committee or supervisors.
Grace Chiang
The Financial Supervisory Commission (hereinafter, the "FSC") issued the Jin-Guan-Zheng-Fa-107345233 Directive and the Jin-Guan-Zheng-Fa-10703452331 Directive on December 19, 2018 to expand the scope of companies required to set up independent directors and an audit committee.
First of all, with respect to independent directors, financial holding companies, banks, bills finance companies, insurance companies, securities investment trust enterprises, integrated securities firms, listed/OTC-traded futures commission merchants, and listed/OTC-traded non-financial companies which have issued stocks are required to provide for the installation of independent directors in their articles of incorporation. And non-financial companies traded in the emerging stock market are required to, beginning with January 1, 2020, provide for the installation of independent directors in their articles of incorporation in their articles of incorporation. In addition, the independent directors shall not be less than two, and shall not account for less than one fifth of the directors.
Second, with respect to an audit committee, financial holding companies, banks, bills finance companies, insurance companies, securities investment trust enterprises, integrated securities firms, listed/OTC-traded futures commission merchants, and listed/OTC-traded non-financial companies (with a paid-in capital not less than NT$2 billion) which have issued stocks are required to set up an audit committee in place of supervisors. And listed/OTC-traded non-financial companies with a paid-in capital less than NT$2 billion shall, beginning with January 1, 2020, set up an audit committee. However, if a financial enterprise whose total outstanding shares are held by a financial holding company, it can choose to set up either an audit committee or supervisors.
