Newsletter
Announcement of the Proposed Amendment to the Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies
On January 5, 2018, the Financial Supervisory Commission (FSC) announced a proposed amendment ("Proposed Amendment") to the Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies ("Proxy Rules"). The Proposed Amendment aims to achieve two purposes, the first purpose is to prevent the proxy solicitors obtaining the proxies from failing to attend the shareholders' meeting, thereby infringing the shareholders' rights to attend the shareholders' meeting by way of proxy, and the second purpose is to maintain the fairness of the solicitation of proxies.
The focus of the Proposed Amendment is the addition of Article 10-1 of the Proxy Rules. Paragraph 1, Article 10-1 stipulates, "Once a company delivers the solicitation documents to the Securities and Futures Institute or announces such documents in the daily newspapers in accordance with Paragraph 1, Article 7, the proxy solicitors should attend the shareholders' meeting as mandated by the shareholders". Paragraph 2, Article 10-1 stipulates, "The proxy solicitors shall not state in the documents and advertisements for the solicitation of proxies that the solicitors may not attend the shareholders' meeting or any other relevant wording". In addition, in order to effectively ensure that the proxy solicitors comply with Article 10-1 and attend the shareholders' meeting in accordance with the intent of shareholders issuing the proxies, and cast votes as mandated in accordance with their fiduciary duty, the Proposed Amendment enacts a new provision as Subparagraph 5, Paragraph 2, Article 5. According to the amended Subparagraph 5, Paragraph 2, Article 5, proxy solicitors who have been imposed fines by the FSC pursuant to Article 178 of the Securities and Exchange Act for violating Article 10-1 shall not act as a proxy solicitor again within three years.
The last paragraph of the current Paragraph 2, Article 11 of Proxy Rules stipulates, "The companies' distribution of shareholders' meeting souvenirs shall adhere to the principle of fairness". The goal of such provision is to maintain the fairness of solicitation of proxies and to prevent unfair solicitation of proxies among different shareholders as a result of the companies' distribution of shareholders' meeting souvenirs. The Proposed Amendment moves the last paragraph of the current Paragraph 2, Article 11 to paragraph 4 of such Article and revises the provision to clearly stipulate that the companies' "distribution of shareholders' meeting souvenirs "to the proxy solicitors" should be handled in accordance with the principle of fairness", so as to enable the public to better understand the spirit of this provision.