Newsletter
Promulgation by the President of Amendments to the Securities and Exchange Act
Promulgation by the President of Amendments to the Securities and Exchange Act
In order to strengthen the supervisory function of the audit committee, to safeguard the rights and interests of minority shareholders, and to stabilize the business operations, the Executive Yuan, on April 20, 2023, proposed the draft amendments to the Securities and Exchange Act ("Amendments"), which have been passed by the Legislative Yuan on May 30, 2023 and promulgated by the President on June 28, 2023. The Amendments will take effect on July 1, 2023 and the key provisions of the Amendments are as follows:
1. Initiating a lawsuit against the director, convening a shareholders’ meeting and representing the company in director's self-dealing matter shall be resolved by the meeting of the audit committee thorough resolutions adopted therein (Paragraph 4, Article 14-4 of the Amendments).
2. If the meeting of the audit committee cannot be convened due to justifiable reasons, matters to be resolved by the audit committee shall be approved by at least two-thirds of all board members. Nonetheless, the financial reports shall still be referred to the independent directors for seeking concurring opinion (Paragraph 3, Article 14-5 of the Amendments).
3. Violation of Paragraph 3, Article 14-5 of the Amended SEA will be subject to an administrative fine ranging from NT$240,000 to NT$4.8 million and an order to correct within a designated time period; the fine can be imposed consecutively if the violation is not corrected within the designated time period (Subparagraph 2, Paragraph 1, Article 178 of the Amendments).
The Amendments effectively change the manner and procedure on how the audit committee should exercise certain power vested to it, which would have a significant impact on public companies. Lee and Li's “Corporate and Investment” practice group offers structuring and consultation services on corporate governance, business operations, and legal compliance. If you have any questions on the Amendments, please do not hesitate to contact us at any time.