Newsletter
Latest Amendments to Regulations Governing Procedure for Board Meetings of Public Companies
Latest Amendments to
Regulations Governing Procedure for Board Meetings of Public Companies
In recent years, there have been several high-profile battles for corporate control where the board of directors attempted to dismiss its existing chairperson and elect a new chairperson through an extempore motion/AOB item (i.e., without submitting a formal proposal for such matter in advance), resulting in the sticky situation of having "two chairpersons" at the same time. In light of such controversies, for the purpose of setting forth a clear set of procedural rules for the dismissal of the chairperson of the board of directors and ensuring proper corporate governance, the Financial Supervisory Commission announced on August 5, 2022 the amendments to Articles 3, 7 and 19 of the Regulations Governing Procedure for Board of Directors Meetings of Public Companies (the "Regulations") to reinforce the procedural requirements for the election and dismissal of the chairperson of the board of directors. The key points of such amendments are as follows.
1. Paragraph 1, Article 7 of the Regulations now includes "a proposal for the election and dismissal of the chairperson" as one of the matters subject to board discussion and such proposal must be specified in advance in the notice of such board meeting and shall not be proposed during the meeting as an extempore motion/AOB item (amended Articles 3 and 7).
2. Where there are managing directors on the board, the election and dismissal of the chairperson shall be subject to the approval granted in a meeting of managing directors; the convening of such meeting is subject to the procedures that apply to a board meeting on a mutatis mutandis basis; the proposal for the election and dismissal of the chairperson must be specified in advance in the notice of the meeting of the managing directors and shall not be proposed during the meeting as an extempore motion/AOB item (amended Article 19).
Notwithstanding these amendments, in the event of an emergency, public companies may still convene board meetings at any time pursuant to Paragraph 2, Article 3 of the Regulations. If you have any questions or would like to have more information about the amendments to the Regulations, please do not hesitate to contact us.