The Taiwan Monthly

Jan. 2022

Corporate Governance

The TWSE amends the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies"

In response to the international trend of corporate governance and the "Corporate Governance 3.0-Sustainable Development Roadmap" released by the Financial Supervisory Commission (the “FSC”), the TWSE amended the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies." Four articles were amended, and one new article was added, highlighted as follows.

  1. The TWSE amended Article 10 to prevent insider trading. This amendment considers the provisions of the Hong Kong Stock Exchange Listing Rules, which prohibit directors from trading in shares before the release of financial results. 
  1. To promote the reasonable remuneration of directors of listed companies, the TWSE added Article 10-1 to encourage listed companies to report directors' remuneration at shareholders' meetings. This article was amended in reference to the Say-on-pay system under the EU shareholder rights directive II and to strengthen the mechanism of reporting directors' remuneration to shareholders' meetings. Companies are encouraged to set reasonable remuneration for directors through the monitoring mechanism of investors and shareholders. 
  1. In accordance with the "Corporate Governance 3.0-Sustainable Development Roadmap," the TWSE amended Article 24 to promote that the number of independent directors shall be no less than one-third of board seats to further strengthen the supervisory function of the Board of Directors. Also, to enhance the independent autonomy of the Board of Directors, independent directors of a listed company shall not serve more than three consecutive terms of office.  In addition, Article 20 was amended to propose that the proportion of women directors should reach one-third of the seats on the board to promote diversity in the composition of the Board of Directors and reflect international trends. 
  1. To optimize the disclosure of corporate governance information on company websites, the TWSE amended Article 59 by integrating the original article and items that should be disclosed according to the relevant laws and regulations in accordance with the “Corporate Governance 3.0-Sustainable Development Roadmap.” The proposed article amendment specifies that a company's website should set up a designated section to disclose corporate governance-related information for the convenience of shareholders and stakeholders. 

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