The Taiwan Monthly

Mar. 2019

ESG

Appointment of a company secretary and other board related measures taking effect in 2019

In response to the official launch of the New Corporate Governance Roadmap ("new roadmap") on April 24, 2018 and following recent amendments to the Securities and Exchange Act and the Company Act as well as related regulations from the competent authority, the TWSE  revised  the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” on December 12. This provides continuing support for the new roadmap, and modifies the “Regulations Governing the Appointment and Exercise of Powers by the Board of Directors of TWSE Listed Companies” to establish sanctions based on extensive research plus comprehensive standardized rules regarding the functions of a board of directors. New measures include: more than half of the remuneration committee is to be composed of independent directors; implementation of standard operational procedures for handling requests from directors; appointment of a company secretary; purchase of director/supervisor liability insurance; and, implementation of self-assessments or peer reviews among board members.

 

The new roadmap highlights five projects, the second of which is, "an effective board of directors", and it clearly states a number of measures related to board organization and functions with which TWSE-listed companies are required to comply as are requisite by the competent authority and the TWSE. Furthermore, not only independent directors, but also the rest of board members must abide by the same measures. Hence, the TWSE has renamed the "Operation Directions for the Appointment of Independent Directors by TWSE Listed Companies" to the "Regulations Governing the Appointment and Exercise of Powers by the Board of Directors of TWSE Listed Companies" and expanded the content so that these regulations encompass board related corporate governance regulations. The deadline for TWSE-listed companies to implement these has been specified.

 

Items to be implemented by June 30, 2019:

  • More than half of the members of the remuneration committee must be independent directors to further strengthen the independence of the committee.
  • Standard operational procedures for handling requests from directors must be enacted to enable a company to be consistent in responding to its directors' requests for information or other forms of assistance in order to avoid any adverse effect on a director's performance of his/her duties or damage investor rights.
  • Liability insurance must be purchased to cover all directors and supervisors to allow them to best perform their duties in the best interest of the company and ­­­­maximize shareholder interests.
  • TWSE-listed companies with paid-in capital of NT$10 billion or more and those in the financial industry shall appoint acompany secretary.

 

Regular self-assessments or peer reviews for the board and individual directors must be conducted every year starting in 2020, and results must be filed by the end of the first quarter of the following year.

Additionally, the TWSE evaluated its existing listing rules and enhanced them according to the new roadmap then formulated a model similar to that of the NYSE, Hong Kong Stock Exchange and Singapore Stock Exchange. A variety of sanctions for violation of the "Regulations Governing the Appointment and Exercise of Powers by the Board of Directors of TWSE Listed Companies" include imposing fines, giving improvement notices with deadlines, changing trading methods, trading suspension, delisting, and disclosure of enforcement records.

 

For further inquiries, please contact Ms. Chen at 0778@twse.com.tw .