|
1
|
Independent Director System and Related Matters
In order to promote the sound practice of corporate governance, strengthen the independence of directors, boost the efficiency of the board of directors, and implement accountability for professionals and business operators, the government of the Republic of China (Taiwan), after reviewing practices and ordinances in other countries, amended the Securities and Exchange Act with the addition of Article 14-2 and introduced the independent director system from January 1, 2007.
- Appointment of independent directors by listed companies
The competent authority, under authority of the Securities and Exchange Act, issued Letter No. Financial-Supervisory-Securities-Corporate-1020053112, requiring all Taiwan Stock Exchange (TWSE) and Taipei Exchange (TPEx) listed companies to specify in their articles of incorporation the requirement to appoint no less than two independent directors comprising no less than one-fifth of the number of director seats.
- Qualifications of independent directors
- Qualifications:
Pursuant to Subparagraphs 1 to 3, Paragraph 1, Article 2 of the Regulations Governing Appointment of Independent Directors and Compliance Matter for Public Companies, an independent director of a public company shall meet one of the following professional qualification requirements, together with at least five years work experience:
- An instructor or higher up in a department of commerce, law, finance, accounting, or other academic department related to company business in a public or private junior college, college, or university.
- A judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialist who has passed a national examination and has been awarded a certificate in a professional capacity that is necessary for company business.
- Having work experience in the area of commerce, law, finance or accounting, or otherwise necessary for company business.
- Disqualifications:
Pursuant to Subparagraphs 1 to 3, Paragraph 2, Article 2 of the Regulations Governing Appointment of Independent Directors and Compliance Matter for Public Companies, a person having any of the following circumstances may not serve as an independent director, or if already serving in such capacity, shall ipso facto be dismissed:
- Any of the circumstances in the subparagraphs of Article 30 of the Company Act.
- Elected in the capacity of a government agency, a juristic person, or a representative thereof, as provided in Article 27 of the Company Act.
- Any violation of the qualification requirements for independent director as set forth in the Regulations Governing Appointment of Independent Directors and Compliance Matter for Public Companies.
- Criteria for determining the independence of an independent director
In consideration that the independence of an independent director should not end following his or her election to the board, the competent authority, having taken into reference the requirements of the New York Stock Exchange, provides that an independent director must meet the independence criteria both before the appointment and during the term of the appointment. Hence Paragraph 1, Article 3 of the Regulations Governing Appointment of Independent Directors and Compliance Matter for Public Companies provides that within the scope of execution of business, an independent director of a public company shall maintain independence, and may not have any direct or indirect interest relationship with the company, and further provides that during the two years before the date of being elected by a shareholders' meeting and during the term of office, an independent director of a public company and his or her relatives may not have any of the following connections with the public company:
- Connection of the independent director with the public company
- An employee of the company or any of its affiliates.
- A director or supervisor of the company or any of its affiliates.
- Connection of relatives of the independent director with the company
- A natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate of one percent or more of the total number of issued shares of the company, or ranking among the top 10 natural-person shareholders in holdings.
- A spouse, or relative within the second degree of kinship, or lineal relative within the third degree of kinship, of an executive officer falling under Point 1.a. above, or of any of the persons in Point 1b. or 2a. above.
- Corporate shareholder
- A director, supervisor, or employee of a corporate shareholder that directly holds five percent or more of the total number of issued shares of the company, or that ranks among the top five in shareholdings, or that designates its representative to serve as a director or supervisor of the company under Paragraph 1 or 2, Article 27 of the Company Act.
- If a majority of the company's director seats or voting shares and those of any other company are controlled by the same person: a director, supervisor, or employee of that other company.
- If the chairperson, general manager, or person holding an equivalent position of the company and a person in any of those positions at another company or institution are the same person or are spouses: a director (or governor), supervisor, or employee of that other company or institution.
- Related party of a specified company or institution
A director, supervisor, executive officer, or shareholder holding five percent or more of the shares, of a specified company or institution that has a financial or business relationship with the company.
- Professionals providing services to the company or its affiliate
A professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides auditing services to the company or any affiliate of the company, or that provides commercial, legal, financial, accounting or related services to the company or any affiliate of the company for which the provider in the past 2 years has received cumulative compensation exceeding NT$500,000, or a spouse thereof. This restriction does not apply, however, to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Securities and Exchange Act or to the Business Mergers and Acquisitions Act or related laws or regulations.
- Non-application of certain restrictions with respect to concurrent service of independent directors in such capacity at a parent and its subsidiary or a subsidiary of the same parent Paragraph 2, Article 3 of the Regulations Governing Appointment of Independent Directors and Compliance Matter for Public Companies provides that Subparagraph 2 and Subparagraphs 5 to 7 of Paragraph 1 (i.e. points 1.b and 3 above), and Subparagraph 1, Paragraph 4, Article 3 of those Regulations do not apply to independent directors appointed in accordance with the Securities and Exchange Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.
- Non-application of certain restrictions to a person who formerly served in any of the following capacities, but no longer does
Pursuant to Paragraph 3, Article 3 of the Regulations Governing Appointment of Independent Directors and Compliance Matter for Public Companies, the provisions regarding “during the two years before being elected” do not apply where an independent director of a public company has served in any of the following capacities, but is currently no longer in that position:
a. An independent director of the company or any of its affiliates. b. An independent director of a specified company or institution.
- The term “specified company or institution” means an entity having any of the following relationships with the company:
- It holds 20 percent or more and no more than 50 percent of the total number of issued shares of the public company.
- It holds shares, together with those held by any of its directors, supervisors, and shareholders holding more than 10 percent of the total number of shares, in an aggregate total of 30 percent or more of the total number of issued shares of the public company, and there is a record of financial or business transactions between it and the public company. The shareholdings of any of the aforesaid persons include the shares held by the spouse or any minor child of the person or by the person under others' names.
- It and its group companies are the source of 30 percent or more of the operating revenue of the public company.
- It and its group companies are the source of 50 percent or more of the total volume or total purchase amount of principal raw materials (those that account for 30 percent or more of total procurement costs, and are indispensable and key raw materials in product manufacturing) or principal products (those accounting for 30 percent or more of total operating revenue) of the public company.
The terms "parent", "subsidiary", and "group" above have the meanings as determined under International Financial Reporting Standards 10. The term "affiliate" above means an affiliated enterprise under Chapter VI-1 of the Company Act, or a company for which consolidated financial reports are required to be prepared under the Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises or under International Financial Reporting Standard 10. (Paragraphs 5 and 6, Article 3 of the Regulations Governing Appointment of Independent Directors and Compliance Matter for Public Companies)
- Criteria for determining the performance quality of the independent director
No independent director of a public company may concurrently serve as an independent director of more than three other public companies. Where an independent director of a financial holding company or of a TWSE listed or TPEx listed investment holding company concurrently serves as an independent director of more than one wholly owned subsidiary of that company, the number of such subsidiaries beyond one shall be included in the calculation of the above-stated limit on the number of subsidiaries at which the independent director concurrently serves. (Paragraphs 1 and 2, Article 4 of the Regulations Governing Appointment of Independent Directors and Compliance Matter for Public Companies)
- Criteria for the voting, nomination, election, seats and special appointment of independent directors
- In case a candidate nomination system is adopted by a company for the election of its directors, the adoption of such system shall be expressly stipulated in the articles of incorporation (Article 192-1 of Company Act), and shareholders shall elect independent directors from among a list of independent director candidates.
- Period for acceptance of nomination and public notice requirements:
- A public company shall, prior to the record date to suspend title transfer registration for convening a shareholders’ meeting, announce in a public notice the following matters:
- Period for accepting the nomination of independent director candidates.
- Seats slated for independent director.
- Place for accepting the nomination.
- Other necessary matters.
- The period for accepting the nomination of independent director candidates shall not be less than 10 days.
- Methods of nomination:
To ensure shareholders’ nomination rights are protected, it is provided that shareholders with a certain percentage of shareholding or higher as well as the board of directors may recommend candidates for independent director. The list of candidates is submitted to the shareholders’ meeting for voting after the qualifications of these independent director candidates have been reviewed and accepted by the board of directors. Nomination methods include the following:
- Any shareholder holding 1 percent or more of the total outstanding shares of the company may submit to the company in writing of a list of independent director candidates, provided that the total number of candidates so nominated does not exceed the seats slated for independent director.
- The number of candidates for independent director submitted by the board of directors shall not exceed the seats slated for independent director.
- Other methods of nomination as allowed by the competent authority.
- Required information about the independent director nominees
- In light of the specific power and responsibility of an independent director as compared with other members of the board of director, it is required that, when providing a recommended slate of independent director candidates under the preceding paragraph, a shareholder or the board of directors shall specify each nominee's name, educational background, and work experience, and submit therewith documentation that the nominees meet the requirements with respect to professional qualifications, and limits on concurrent service, and other documentary proof. (Paragraph 4, Article 5 of the Regulations Governing Appointment of Independent Directors and Compliance Matter for Public Companies)
- Review of nominees
To facilitate the election of qualified independent directors, it is provided that the board of directors or other conveners of shareholders’ meetings shall review the nominees for independent directors and shall remove nominees having any of the following circumstances from the final list of nominated candidates:
- The list of nominated independent director candidates is submitted by the nominating shareholder outside the announced period for accepting nomination of independent director candidates.
- The number of shares held by the nominating shareholder is less than 1 percent of the total outstanding shares of the company at the time when the share transfer registration is suspended by the company in accordance with the provisions set out in Paragraph 2 or 3, Article 165 of the Company Act.
- The number of independent director candidates nominated exceeds the seats slated for independent director.
- The relevant supporting documents as required in the preceding paragraph were not attached to the list.
If an independent director candidate included by a public company under the above provisions has already served as an independent director of the public company for three consecutive terms or more, the company shall publicly disclose, together with the results of the above-stated review, the reasons why the candidate is nominated again for the independent directorship, and present the reasons to the shareholders at the time of the election at the shareholders meeting.
- Election of independent directors
- In the process of electing directors at a shareholders’ meeting, unless it is otherwise provided in the company’s articles of incorporation, the number of votes exercisable in respect of one share shall be the same as the number of directors to be elected. The total votes per share may be cast for one candidate or split among two or more candidates. A candidate to whom the ballots cast represents more votes shall be deemed a director elect (Article 198 of the Company Act).
- Independent and non-independent directors shall be elected at the same time, but the ballots will be tallied separately (Paragraph 7, Article 5 of the Regulations Governing Appointment of Independent Directors and Compliance Matter for Public Companies).
- Seats of independent directors
- A public company required by the competent authority to appoint independent directors shall appoint no less than two independent directors that make up no less than one-fifth the total number of directors. A public company voluntarily appointing independent directors may, in view of its operational needs, provide in its articles of incorporation the numbers or percentage of independent directors (Article 14-2 of the Securities and Exchange Act).
- A public company that has established an audit committee shall appoint to the committee at least one independent director with expertise in accounting or finance (Article 14-4 of the Securities and Exchange Act).
- Where a company’s board of directors has created the position of managing directors, then the managing directors shall include no less than one independent director, and no less than one-fifth of the managing director seats shall be held by independent directors (Article 8 of the Regulations Governing Appointment of Independent Directors and Compliance Matter for Public Companies).
- Special appointment of independent directors
Article 7 of the Regulations Governing Appointment of Independent Directors and Compliance Matter for Public Companies provides that in the case of a subsidiary whose issued shares are held entirely by the parent financial holding company, or a public company organized by the government or by one sole corporate shareholder, the independent directors of the company may be appointed by the financial holding company, the government, or the sole corporate shareholder, as the case may be; provided that such appointment shall be made in compliance with the provisions of the Regulations, excluding Article 5 thereof. However, the independent directors so appointed shall also meet the qualification requirements set forth in the Securities and Exchange Act and relevant subordinate legislation.
- Term of office for independent directors
According to Paragraph 1, Article 195 of the Company Act, a director shall have a term of office of no more than three years, but he/she may be eligible for re-election. As an independent director is a member of the board of directors, the term of office shall be of no more than three years, but he/she may be eligible for re-election.
If an independent director candidate included by a public company under the above provisions has already served as an independent director of the public company for three consecutive terms or more, the company shall publicly disclose, together with the results of the above-stated review, the reasons why the candidate is nominated again for the independent directorship, and present the reasons to the shareholders at the time of the election at the shareholders meeting. (Paragraph 6, Article 5 of the Regulations Governing Appointment of Independent Directors and Compliance Matter for Public Companies).
- No switching of status between independent directors and non-independent directors during term of office
To ensure that independent directors uphold and maintain their neutral status in the performance of duties and to prevent disputes arising out of a change of status among the directors, Article 6 of the Regulations Governing Appointment of Independent Directors and Compliance Matter for Public Companies prohibits the change of status between independent director and non-independent director during the term of office as provided below:
- If an independent director elected at a shareholders’ meeting, or appointed by a financial holding company, the government, or a sole corporate shareholder under Article 7 of the above Regulations, is ipso facto dismissed during the term of office for reason of a violation of Articles 2 or 3 of the Regulations, it is prohibited to change the status of the independent director to that of a non-independent director in order to circumvent the dismissal.
- A non-independent director elected at a shareholders’ meeting, or appointed by a financial holding company, the government, or a sole corporate shareholder under Article 7 of the above Regulations, likewise may not be arbitrarily changed during his/her term of office from the original status of a non-independent director to that of an independent director.
- The scope of authority and responsibility of independent directors
- Board of directors
Under the Securities and Exchange Act and the Regulations Governing Procedure for Board of Directors Meetings of Public Companies, a company shall submit the following items for discussion by the board of directors:
- Corporate business plan.
- Annual financial reports and, where subject to the requirement of audit and attestation by a certified public accountant, semi-annual financial reports.
- Adoption or amendment of an internal control system pursuant to Article 14-1 of the Securities and Exchange Act, and an assessment of the effectiveness of the internal control system.
- Adoption or amendment, pursuant to Article 36-1 of the Securities and Exchange Act, of handling procedures for financial or operational actions of material significance, such as acquisition or disposal of assets, derivatives trading, extension of monetary loans to others, and endorsements or guarantees for others.
- The offering, issuance, or private placement of any equity-type securities.
- The appointment or discharge of a financial, accounting, or internal audit officer.
- A donation to a related party or a major donation to a non-related party, provided that a public-interest donation of disaster relief for a major natural disaster may be submitted to the next subsequent board of directors meeting for retroactive recognition.
- Any matter required by Article 14-3 of the Securities and Exchange Act or any other law, regulation, or bylaw to be approved by resolution at a shareholders' meeting or board of directors meeting, or any such significant matter as may be prescribed by the competent authority.
If a company has an independent director or directors, at least one independent director shall attend each board of directors meeting in person. In the case of a meeting concerning any of the above-listed matters required to be submitted for a resolution by the board of directors, each independent director shall attend in person. If an independent director is unable to attend in person, he or she shall appoint another independent director to attend as his or her proxy. If an independent director expresses any objection or reservation about a matter, it shall be recorded in the board meeting minutes. When an independent director has a dissenting opinion or qualified opinion, it shall be noted in the minutes of board of directors’ meeting. If the independent director cannot attend the board meeting in person to voice his or her dissenting or qualified opinion, he or she should provide a written opinion beforehand unless there are justified reasons not to do so. The written opinion furthermore shall be noted in the minutes of the board of directors’ meeting.
- Audit committee
- Functions of the audit committee
To enhance the functions of the board of directors, the Securities and Exchange Act was augmented to allow the setup of an audit committee under the board of directors to help the board in decision making with its expertise and its independent stance, and to further enhance the independence of the board of directors and supervisors, and increases the accountability of relevant personnel against the falsification of financial reports.
Article 14-4 of the Securities and Exchange Act provides that a company that has issued stock shall establish either an audit committee or a position of supervisor. For a company that has established an audit committee, the provisions regarding supervisors in the Securities and Exchange Act, the Company Act, and other laws and regulations shall apply mutatis mutandis to the audit committee (Paragraph 3, Article 14-4 of the Securities and Exchange Act).
- Composition of the audit committee
The audit committee shall be composed entirely of independent directors with no fewer than three members, one of whom shall be the convener, and at least one of whom shall have accounting or financial expertise (Paragraph 2, Article 14-4 of the Securities and Exchange Act).
- The power and meeting procedure of the audit committee (Article 14-5 of the Securities and Exchange Act).
Pursuant to Article 14-5 of the Securities and Exchange Act, for a public company that has established an audit committee, the provisions of Article 14-3 shall not apply to the following matters, which are instead subject to the consent of at least a majority of all audit committee members and must be submitted to the board of directors for a resolution:
- Adoption of or amendment to an internal control system pursuant to Article 14-1.
- Assessment of the effectiveness of the internal control system.
- Adoption or amendment, pursuant to Article 36-1, of procedures for financial or operational activities of material significance, such as acquisition or disposal of assets, derivatives trading, extension of monetary loans to others, or providing endorsements or guarantees for others.
- A matter bearing on the personal interest of a director or supervisor.
- A transaction involving material asset or derivatives trading.
- A material monetary loan, endorsement, or provision of guarantee.
- The offering, issuance, or private placement of any equity-type securities.
- The hiring, dismissal or remuneration of an attesting certified public accountant.
- The appointment or dismissal of a financial, accounting, or internal auditing officer.
- Annual financial reports, and second quarter financial reports that must be audited and attested by a certified public accountant, which are signed or sealed by the chairperson, executive officer, and accounting officer.
- Any other material matter so determined by the company or the competent authority.
With the exception of the abovementioned Subparagraph 10), any matter under the preceding paragraph that has not been approved by the consent of at least a majority of all the audit committee members may still be undertaken upon the consent by two-thirds or more of all members of the board of directors, without regard to the restrictions of the preceding paragraph. The resolution of the audit committee shall be recorded in the minutes of the board of directors’ meeting. The term “all audit committee members” and “all directors” as used in the Securities and Exchange Act shall mean the actual number of persons currently holding those positions. A company that has established an audit committee is not subject to the provisions of Paragraph 1, Article 36 of the Securities and Exchange Act requiring that its financial reports be recognized by a supervisor.
- Key elements of the rules of procedure of the audit committee
- Meeting of the audit committee:
- General meeting: Audit committee members should meet at least once every quarter. The meeting notice which specifies the purposes of the meeting should be sent to each committee member no later than 7 days before the date scheduled for the meeting.
- Emergency meeting: In case of emergency, a meeting can be convened at any time (Article 204 of the Company Act, Article 3 of the Regulations Governing Procedure for Board of Directors Meetings of Public Companies, and Paragraph 2, Article 7 of the Regulations Governing the Exercise of Powers by Audit Committees of Public Companies).
- Special circumstances: If the audit committee meeting cannot be convened, with justifiable reasons, the matter for consideration may be undertaken upon the consent of at least two-thirds of all directors. Notwithstanding the foregoing, the matter specified in Subparagraph 10, Paragraph 1 of Article 14-5 of the Securities and Exchange Act still requires the opinion of the independent directors indicating their consent or dissent.
- Convener: The audit committee members shall elect among themselves a convener and chairperson for the meeting. Where the convener is on leave or unable to call a meeting, he or she may appoint another independent director as deputy who acts on behalf of the convener. Where the convener fails to make such an appointment to act on behalf of the convener, then the other committee members will elect among themselves a deputy to chair the meeting (Paragraph 3, Article 7 of the Regulations Governing the Exercise of Powers by Audit Committees of Public Companies).
- Minutes of audit committee meetings: Minutes of audit committee meetings shall record matters in accordance with Article 10 of the Regulations Governing the Exercise of Powers by Audit Committees of Public Companies.
- Attendance and voting:
- When the audit committee meets, the company should set up a register book for the independent directors who attend the audit committee meeting to sign-in, and for future reference.
- Independent director members of the audit committee should attend the audit committee meeting in person. If personal attendance is not possible, however, then an independent director may by proxy appoint another independent director member of the audit committee. Audit committee members who attend the meeting by video conferencing are deemed as having attended in person.
- An audit committee member appointing an independent director member to attend a committee meeting as their proxy shall in each instance issue a written power of attorney for that specific meeting, which furthermore shall specify the scope of authorization with respect to the business to be transacted at that meeting. A member appointed as proxy may accept a proxy from one person only.
- Any resolution adopted by the audit committee shall have the consent of a majority of audit committee members. The outcome of a vote at the audit committee meeting shall be reported on the spot and be recorded accordingly.
- If an independent director member of the audit committee has a personal interest in any agenda item, the independent director shall explain the essential content of the interest. If the independent director's personal interest is likely to prejudice the interest of the company, the independent director member may not participate in the discussion and voting, and shall recuse himself or herself during the discussion and voting, and also may not exercise voting rights as a proxy for any other independent director member.
- Remuneration Committee
- Functions of the remuneration committee
The remuneration system plays a critical role in corporate governance and risk management. To enhance corporate governance and ensure that a sound system is in place for the remuneration of company directors, supervisors, and executive officers, Article 14-6 of the Securities and Exchange Act requires all companies whose stock is listed on an exchange or traded over-the-counter to establish a remuneration committee. The remuneration committee's function is to evaluate, from an expert and objective standpoint, the company's policies and systems for the remuneration of directors, supervisors, and executive officers, and to make recommendations to the board of directors for the board's reference in decision making.
- Composition and term of office of the remuneration committee
- Composition: The remuneration committee members shall be appointed by resolution of the board of directors, and shall not be fewer than three members. A majority of the members shall be independent directors, and the entire membership shall elect an independent director to serve as the convener and meeting chair.
- Term of office: The term of the remuneration committee members shall end at the same time as that of the board of directors that appointed the remuneration committee.
- Powers of the remuneration committee
The remuneration committee shall exercise the care of a good administrator in faithfully performing its official powers, and shall submit its recommendations for deliberation by the board of directors:
- Scope of powers:
- Prescribe and periodically review the performance review and remuneration policy, system, standards, and structure for directors, supervisors and executive officers.
- Periodically evaluate and prescribe the remuneration of directors, supervisors, and executive officers.
- "Remuneration" includes cash compensation, stock options, profit sharing and stock ownership, retirement benefits or severance pay, allowances or stipends of any kind, and other substantive incentive measures. It scope shall be consistent with that of remuneration for directors, supervisors, and executive officers as set out in the Regulations Governing Information to be Published in Annual Reports of Public Companies.
- Principles for performance of the committee' official powers:
- With respect to the performance assessment and remuneration of directors, supervisors, and executive officers of the company, it shall refer to the typical pay levels adopted by peer companies, and take into consideration the reasonableness of the correlation between remuneration and individual performance, the company's business performance, and future risk exposure.
- It shall not produce an incentive for the directors or executive officers to engage in activity to pursue remuneration exceeding the risks that the company may tolerate.
- It shall take into consideration the characteristics of the industry and the nature of the company's business when determining the ratio of bonus payout based on the short-term performance of its directors and senior management and the time for payment of the variable part of remuneration.
- Key elements of the rules of procedure of the remuneration committee
- Convening of remuneration committee meetings
- The remuneration committee shall convene at least twice a year.
- In calling a meeting of the remuneration committee, a notice setting forth the subject(s) to be discussed at the meeting shall be given to each member at least 7 days in advance. In emergency circumstances, however, the meeting may be convened at any time.
- The meeting agenda shall be provided to the committee members in advance.
- Convener and meeting chair
- In the case of a company that has independent directors on its board office and serving on the remuneration committee, the entire remuneration committee membership shall elect an independent director member to serve as the committee convener and meeting chair.
- In the case of a company with no independent director, one member shall be elected as the convener and meeting chair by and from among the entire committee membership.
- When the convener goes on leave or otherwise for any reason is unable to convene a meeting, the meeting shall be convened by another independent director of the committee designated by the convener as deputy; or if there is no other independent director on the committee, by another member designated by the convener as deputy; or if the convener does not designate a deputy, then by another member elected by and from among the other members of the committee.
- Remuneration committee agenda and resolutions
- Agenda: The remuneration committee meeting agenda shall be drawn up by the convener. Other members also may submit motions for deliberation by the committee.
- Resolution: A resolution of the remuneration committee shall require the approval of one-half or more of all of the members. During voting, if the committee chair solicits and receives no dissents, the motion is deemed passed, with equivalent force as a resolution by vote.
- Attendance by proxy
- Remuneration committee members shall attend the committee in person. A member who cannot attend in person may appoint another member to attend as their proxy. Attendance via video-conference is deemed as attendance in person.
- A remuneration committee member appointing another member to attend a committee meeting as their proxy shall in each instance issue a written power of attorney for that specific meeting, which furthermore shall specify the scope of authorization with respect to the business to be transacted at that meeting. A member appointed as proxy may accept a proxy from one person only.
- Recusal to avoid conflict of interest
When a meeting of the remuneration committee will discuss the remuneration of any member of the remuneration committee, it will be clearly stated at the meeting. If there is likely to be any prejudice to the interests of the company, that member may not participate in the discussion or voting and shall enter recusal during the discussion and voting. The member also may not act as another remuneration committee member's proxy to exercise voting rights on that matter. (Article 9-1 of the Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Taiwan Stock Exchange or the Taipei Exchange.)
- Attendance by non-members as nonvoting participants
The remuneration committee may invite directors, executive officers of relevant departments, internal auditors, certified public accountants, legal consultants, or other personnel to attend meetings as nonvoting participants and provide relevant necessary information, provided that they shall leave the meeting when deliberation and voting take place. (Paragraph 4, Article 8 of the Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Taiwan Stock Exchange or the Taipei Exchange)
- Remuneration Committee Meeting Minutes
- Content of the meeting minutes: The meeting minutes must record in a detailed and accurate manner all of the matters specified in Article 10 of the Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Taiwan Stock Exchange or the Taipei Exchange.
- If with respect to any resolution of the remuneration committee, any member has a dissenting or qualified opinion that is on record or stated in a written statement, the opinion shall be specified in the meeting minutes.
- The meeting minutes shall bear the signature or seal of the meeting chair and the minute taker. The minutes shall be distributed to each committee member within 20 days after the meeting, and shall be submitted to the board of directors and treated as important records of the company, and shall be preserved for 5 years.
- Recommendations of the remuneration committee:
If the board of directors will decline to adopt, or will modify, a recommendation of the remuneration committee, it shall require the consent of a majority of the directors in attendance at a meeting attended by two-thirds or more of the entire board, which in its resolution shall specify the comprehensive consideration it has given to the matter, and shall specifically explain whether the remuneration passed by it exceeds in any way the recommendation of the remuneration committee.
- Public disclosure of information:
- When the remuneration committee is established and when there is any appointment (election) of, or change in, a member of the remuneration committee, the company shall, within 2 days counting from the date of occurrence of the event, publicly announce and report it on the information reporting website designated by the competent authority.
- If with respect to any resolution of the remuneration committee, any member has a dissenting or qualified opinion that is on record or stated in a written statement, it shall, within two days counting inclusively from the date of occurrence, be publicly disclosed and reported on the information reporting website designated by the competent authority.
- If the remuneration passed by the board of directors exceeds the recommendation of the remuneration committee, the circumstances and cause for the difference shall be publicly announced and reported on the information reporting website designated by the competent authority within 2 days counting inclusively from the date of passage by the board of directors.
|