2018-01-08

Amendments to the Securities and Exchange Act and Investigatory Powers of Independent Directors

On December 25, 2017, draft amendments to Articles 14-2 and 178 of the Securities and Exchange Act (Amendments) were submitted to the Finance Committee of the Legislative Yuan for further deliberation.

Supporters of the Amendments argued that according to the current Securities and Exchange Act, a company's independent director must possess certain professional knowledge in the fields of accounting, law, or corporate governance; however, it is unreasonable to expect a person to possess such a wide range of professional knowledge regarding the well-being of a company. Therefore, they suggested that, an independent director should be allowed to seek and obtain professional opinions where necessary, in order to protect the right of the company and its shareholders.

In the Amendments, which have been approved by the Financial Supervisory Commission, it is stipulated that (1) a company or its member of the board of directors shall not interfere with, deny access or prevent an independent director from exercising his/her investigatory powers; (2) where the independent director deems necessary, he/she may seek professional assistance; and (3) any necessary cost incurred in connection with obtaining such professional assistance or exercising the investigatory powers of the independent director shall be borne by the company. Any violations of the above provisions will result in an administrative fine from NT$240,000 to NT$ 2,400,000.

The Amendments will be subject to the Legislative Yuan's further examination and consideration.
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