Proposed Amendment to Relax Dividend Distribution to Twice a Year

To make the stock market healthier and thus more attractive to investors, the Executive Yuan has proposed to amend the Company Act. According to the proposed amendment, a public company will be able to allocate and distribute its surplus profits twice a year (instead of once every year), by distributing new shares or cash, and meeting of the board of directors will be sufficient for this purpose if the company’s articles so authorize. Considering the existing rules in which there is no room for a company to adjust the ratio of distribution in accordance with the actual operating conditions, the proposed amendment if passed will relax the requirement that the ratio of distribution must be fixed in the company’s articles.

In addition, a shareholder that is a body corporate will no longer be able to designate one of its representatives to be elected as a director and another to be elected as a supervisor of the company. Under Taiwan’s Company Act, a supervisor can intervene to investigate corporate affairs, call shareholders meeting or file lawsuits against corporate directors on behalf of the shareholders if directors fail to discharge their duties. If a supervisor is also designated by the same shareholder that designates a director, this function is evidently compromised. The Executive Yuan has also proposed to amend the Company Act so that corporations reaching a certain number of shareholders and threshold of capital will be required to become a public company. Listed companies and financial holding companies will be required to adopt electronic voting for shareholders meeting.