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9 August, 2017
Article 192-1 of the Company Act prescribes the directors candidates nomination system for public traded companies. Article 192-1 (4) of the Company Act provides that the roster of director candidates submitted by a nominating shareholder shall annex thereto the proof of education and other background. According to Article 192-1 (5) of the Company Act, the board of directors or other authorized conveners of shareholders’ meeting shall have the right to remove the roster of director candidates in the evnet that the requirement of Article 192-1(4) is not complied with.
The direction where the MOEA is considering to amend the foregoing provisions is to also allow that directors candidates nomination system be openly adopted by a privately held company and be expressly stated in the Articles of Incorporation of the company. As to public traded companies, the MOEA is considering to authorize the Competent Authority to require theadoption of director candidates nomination system with the consideration of the size of the company, the number of shareholders, the organizational structure, and other factors.
In order to simplify processes of candidates nomination, in the future a nominating shareholder will merely be required to “express” the relevant information of the directors candidates. The board of directors or other authorized conveners of shareholders meetings will no longer have the right to remove the roster of director candidates as set forth in the existing Subparagra (5). If the board of directors or other authorized conveners of shareholders’ meetings do not listed the nominated candidates in the roster of candidates, the record of the review process must be recorded in writing.
In addition, according to Article 192-1 (8) of the Company Act, the responsible person of a company who violates Articles 192-1 (2) (failure to announce the period for accepting nomination of director candidates) , 192-1(6) (failure to retain in file the written record of the review process), and 192-1(7) (failure to announce the result of the review) of the Company Act will be imposed with a fine of not less than NT$10,000, but not more than NT$50,000. Such penalties have been criticized for being too light to prevent companies from violating the law. Therefore, other than increasing the penalties, the future amendment will provide the nominating shareholder with a right to seek relief from court or the competent authority to order the board of directors or other authorized conveners of shareholders meetings to insert the nominated candidate in the roster of candidates.
For further information, please contact:
Steven Yen, Tsar & Tsai Law Firm
StevenYen@TsarTsai.com.tw
