Proposal to Convert Private Companies of Certain Sizes to Public Companies

In view of the recent Rebar Group scandal in Taiwan, the Ministry of Economic Affairs (MOEA) has decided to require a company with capital or number of shareholders exceeding certain levels to be converted into a public company (which will be subject to regulations governing public issuers). An initial consensus is reached that thresholds for the mandatory conversion will be if a company has a paid-in capital of NT$500 million or more, and 200 (or 300) shareholders. The specific quantitative requirements may vary depending the particular industry sectors; however, these general requirements will be incorporated into the Company Act, leaving the specific details to be issued by the MOEA in its administrative regulations so as to be flexible. Franchise businesses such as the financial and telecommunications industries will have their own thresholds set by their respective regulators. The Company Act will forbid companies to have representatives of the same institutional shareholder serving as board director and supervisor simultaneously. Additionally, the Financial Supervisory Commission (FSC) plans to encourage listed companies and financial holding companies to adopt electronic voting for election of board directors and supervisors as well as for major corporate matters requiring a vote, partially aiming to solve the problem faced by beneficial share owners abroad unable to cast their votes.