The Legislative Yuan yesterday passed the final reading of the amendments to the Securities and Exchange Law (證券交易法), demanding that listed companies allocate at least two seats and no less than one-fifth of total board seats to independent directors, in an attempt to strengthen corporate governance.
Additionally, companies shall also either set up an audit committee or establish a superintendent system on the board.
The regulation is set to take effect on Jan. 1, 2007 and will apply to priority listed companies, including financial-holding firms, financial institutions with capitalization over NT$10 billion (US$300 million) and manufacturing companies with capitalization of over NT$5 billion.
The approved amendments explicitly banned so-called "insiders" from buying shares within 12 hours after the company announces information which is significant enough to influence its share price.
According to the Financial Supervisory Committee, "insiders" include individual government-appointed representatives, board directors, superintendents and managers who leave their pos-itions within six months.
Certified public accountants (CPAs) were obligated to bear compensation liability toward investors and companies for endorsement of any falsified financial books. However, CPAs' duty to prove their innocence in such cases was removed in the final version.
The amount of fines on illegal proxy solicitation activities to dogfight for management power was raised to a minimum of NT$240,000, and a maximum NT$4.8 million for serial fines.
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