Taiwan Depository & Clearing Corporation

To strengthen the management of the use of proxies at shareholder meetings, the Financial Supervisory Commission (FSC) will shortly announce and amend some provisions of the Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies. It is believed that the main purpose of the amendment is to improve compliance with regard to solicitors and solicitation entities. Some new rules will also be added, including the penalties of solicitation qualification violations, the enhanced qualification of people handling solicitation activities, and the reasonableness of articles in solicitation contracts.

To gather feedback from the industry, FSC asked the Taiwan Depository Clearing Corporation (TDCC) to invite the Taiwan Stock Affairs Association (TWSAA) and other businesses associated with solicitation to attend multiple public hearings. In those hearings, all stakeholders had thorough discussions about the proxy provisions that will be amended. In other words, FSC has incorporated the industry’s feedback and mulled over the practical situation of shareholder services before they will amend relevant regulations. The goal is to increase the management efficiency and effectiveness of proxy matters.

TWSAA Chair Chu-Ling Chang (張鉅靈), who has attended all discussion sessions on the amendment, stated that in recent years, some publicly traded companies have been excessively aggressive when dealing with proxy solicitation because they were trying to consolidate or obtain power in takeover contests where disputes and controversies arose. As the competent authority, FSC is planning to amend the regulations because they hope to have firmer management of companies mandated to handle solicitation matters, and take solicitation compliance to a higher level. This amendment aims to put the proxy regime on the right track, and help Taiwan create a healthier capital market with better corporate governance.

According to the Securities and Futures Investors Protection Center (SFIPC), the amendment agenda of proxy rules is based on enhanced compliance of solicitors and companies mandated to handle solicitation matters. As the management measures are strengthened, uncontrollable solicitation activities may decrease. Once the professionalism of the personnel in the companies mandated to handle solicitation matters is improved, as well as the knowledge and occupational competency of the personnel at the proxy solicitation sites are also enhanced, they can effectively help investors know how to correctly use their shareholder meeting proxies and protect their right. With efforts centered on compliance obligations, FSC is facilitating the amendment of proxy rules to substantially improve corporate governance and stability of the securities market.