Since the Financial Supervisory Commission (hereinafter referred to as the FSC orthe Competent Authority) established Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies in 1982, several amendments have been made in response to changes in the securities market. For instance, in 1996, there were several instances of proxy acquisition from shareholders by means of money or any other form of interest, so the Competent Authority immediately amended the regulations regarding proxies, banning any purchases of proxies from shareholders by means of money or any other form of interest. Following that, the incidents of proxy purchases declined steadily. In 1995, disputes on proxy verification occurred, and the Competent Authority amended the regulations again on tallying, verification, and the contents of verification to rectify and manage the use of proxies.
In recent years, there have been individual cases of contests for corporate control in a small number of companies in the securities market. The two parties in a company held frequent shareholder meetings, questioning the unfair measures through which one of the parties monopolized the companies mandated to handle solicitation matters (i.e. solicitation agents). There were even hearsay, news coverage, and reports regarding purchases of proxies by means of money or any other form of interest. In 2021, to maintain the order of the securities market, the Competent Authority mandated TDCC to collect opinions and put forward constructive measures on issues regarding proxy solicitation and use as the reference for management and regulation amendment. From the middle of December 2021, TDCC has invited Taiwan Stock Affairs Association, Taiwan Securities Association, shareholder services agents, and solicitation agents to forums many times to assist the Competent Authority in modifying the regulations and acquiring outside opinions. At the forums, TDCC explained the directions of amendments and gained these organizations’ opinions, feedback, and advice, which the company reported back to the Competent Authority.
According to the FSC Chairman, Tien-mu Huang, the amendments to regulations should protect the rights and benefits of the agents and solicitors. TDCC advised the Competent Authority to moderately adjust proxy regulation amendments before the imposition to dispel the agents’ doubts. Besides, regarding the attribution of responsibility for future violations, items specified in the content of the solicitation contracts, and justifiability, TDCC once again exchanged opinions with the agents and put forward instances as explanations to achieve effective communication with them. TDCC also appealed to the agents to enhance employee training and perform adequate supervision duties to dissolve doubts and offer support for the amendments from the Competent Authority.
The emphasis of this proxy regulation amendment covers two aspects, which are legal and managerial. This is to enhance the justifiability and supervisory information of the solicitation contracts, elevate the qualifications and professional competencies of solicitation agents, and strengthen the legal compliance of solicitation affairs that solicitors and solicitation agents deal with. Especially for legal compliance, those who violate four major limitations of use in poxy regulations or those whose solicitation qualification requirements incur punishments by the Competent Authority will be restricted in their roles as solicitors or solicitation agents. Besides, the proxies they solicit cannot be counted for voting rights.
On August 17, 2022, the Competent Authority officially released and implemented the amendment. To allow solicitation agents sufficient time to adjust their corporate operation to the amendment, the Competent Authority also set a buffer period until December 31 of the same year to assist the agents in responding to the change. According to the Securities and Futures Investors Protection Center, Taiwan Stock Affairs Association, experts, and scholars, this proxy regulation amendment strengthens the management of solicitation agents and improves the compliance of the solicitation process. This can effectively prevent the disorder in proxy solicitation, help elevate corporate governance, and stabilize securities market order.
