Newsletter
Amendments to Regulations Pertaining to Convening Hybrid/Virtual Shareholder Meetings by Public Companies
Amendments to Regulations Pertaining to
Convening Hybrid/Virtual Shareholder Meetings by Public Companies
In response to the latest round of the amendments to the Company Act, which allow public companies to hold shareholder meetings via video-conferencing, and to encourage shareholder activism through facilitating diversified forms of shareholder participation, on March 4, 2022, the Financial Supervisory Commission promulgated the amendments to the Regulations Governing the Administration of Shareholder Services of Public Companies (the "Shareholder Service Regulations") and the Regulations Governing the Content and Compliance Requirements for Shareholder Meeting Agenda Handbooks of Public Companies (the "Shareholder Meeting Regulations"). The amendments came into force on March 6, 2022, and the key points thereof are summarized as follows.
I. Definitions and conditions of convening hybrid and virtual shareholder meetings (Articles 44-9 and 44-10 of the Shareholder Service Regulations, as amended)
According to the amendments, public companies may hold hybrid and virtual shareholder meetings. A "hybrid shareholder meeting" is a shareholder meeting that is held both at a physical location and electronically via video-conferencing, providing shareholders with the option to attend the meeting either in person or virtually, while a "virtual shareholder meeting" is a shareholder meeting that is held entirely electronically via video-conferencing and the shareholders can only participate virtually. A public company's convening of either a hybrid or a virtual shareholder meeting is subject to its articles of incorporation and the approval of its board of directors. Nevertheless, given that a "hybrid shareholder meeting" should still be held at a physical location, within one year following the announcement of these amendments, a public company can convene a hybrid shareholder meeting solely based on the special approval of the board meeting prior to the amendments to its articles of incorporation.
In addition, these amendments also stipulate that in the event of natural disasters, accidents or other force majeure, the Ministry of Economic Affairs may make an announcement to allow public companies to convene a shareholder meeting via video-conferencing within a certain period of time, regardless of what their articles of incorporation stipulate. Furthermore, public companies shall engage qualified service providers of video-conferencing platforms to handle the technical aspects of the hybrid/virtual shareholder meetings.
II. Restrictions on matters to be discussed at a hybrid/virtual shareholder meeting; requirements on shareholder service (Article 44-11 of the Shareholder Service Regulations, as amended)
Matters to be discussed at a hybrid shareholder meeting shall not include election or dismissal of any director or supervisor (an election is only allowed where the number of candidates is no more than the number of seats being filled). Moreover, public companies whose shares are not listed on the Taiwan Stock Exchange or Taipei Exchange shall engage shareholder service agents to handle the shareholder services relating to the hybrid shareholder meetings.
Meanwhile, matters to be discussed at a virtual shareholder meeting shall not include the election or dismissal of a director or supervisor or a major transaction of merger or acquisition (i.e., matters specified in Articles 185 and 316 of the Company Act, Articles 18, 27, 29 and 35 of the Business Mergers and Acquisitions Act, and Subparagraph 1, Paragraph 2, Article 24 and Subparagraph 1, Paragraph 2, Article 26 of the Financial Holding Company Act). Also, public companies whose shares are not listed on the Taiwan Stock Exchange or Taipei Exchange shall engage shareholder service agents to handle the shareholder services relating to the virtual shareholder meetings.
III. Methods of and restrictions on shareholders' participation in hybrid/virtual shareholder meetings (Articles 44-12 to 44-14 and 44-16 of the Shareholder Service Regulations, as amended)
Shareholders, proxy solicitors and proxy agents who wish to attend a hybrid/virtual shareholder meeting shall register with the company two days prior to the shareholders' meeting, and their virtual attendance is deemed attendance in person and will be counted toward the quorum.
Where a shareholder, proxy solicitor or proxy agent that has already registered to attend a hybrid shareholder meeting virtually changes his/her/its mind and wishes to attend in person, he/she/it shall cancel such registration (via the same method he/she/it made the registration) two days prior to the shareholder meeting; otherwise, only virtual attendance will be allowed.
Besides, where a shareholder, proxy solicitor or proxy agent that has already voted on the matters of the meeting either via a hard-copy ballot or electronically in advance changes his/her/its mind and wishes to attend the meeting and vote virtually, he/she/it shall cancel such vote (via the same method he/she/it submitted the vote) two days prior to the shareholder meeting; otherwise, the vote he/she/it had submitted would stand when he/she attends the virtual meeting. In such event, he/she/it would not be allowed to vote again on said matters, propose any amendment thereto, or vote on any amendment thereto during the virtual meeting; he/she/it may only make proposals and vote on extempore motions.
IV. Detailed requirements on convening hybrid/virtual shareholder meetings (Articles 44-15, 44-17 to 44-23 of the Shareholder Service Regulations, as amended; Articles 3 and 6 of the Shareholder Meeting Regulations, as amended)
To ensure smooth operation of hybrid/virtual shareholder meetings, this round of the amendments to the Shareholder Service Regulations and the Shareholder Meeting Regulations also provide detailed stipulations on the following aspects: qualifications of the service providers of video-conferencing platform, matters to be specified in the meeting notice, contents to be recorded in the meeting minutes, operating procedures of the shareholder meetings, alternative measures for those who cannot attend the shareholder meeting via video-conferencing (due to lack of digital resources), ways to deal with loss of connection (which is defined as where the meeting is interrupted for 30 minutes or longer), methods to announce the results of motions or elections, and data retention period to be observed by the companies and the service providers of video-conferencing platform, as well as other contingency measures.
These amendments to the Shareholder Service Regulations and the Shareholder Meeting Regulations have significant impact on public companies' planning of hybrid/virtual shareholder meetings. If a public company wishes to convene a hybrid or virtual shareholder meeting, it must abide by the above regulations in order to avoid disputes and compliance risks. If you have any questions regarding these amendments or wish to learn more about relevant issues, please do not hesitate to contact us.