After nearly three years of drafting, discussion and negotiation, lawmakers on Friday passed amendments to the Company Act (公司法) into law.
Billed as the largest revision of the act in 17 years, the amended law aims to create a safer and more flexible business environment in Taiwan, making changes in areas such as the disclosure of shareholder information, the arrangement of dividend distributions and procedures regarding board and shareholder meetings.
In addition, the revised act is intended to improve corporate governance while bolstering Taiwan’s mechanisms to prevent money laundering.
The amendments have sparked heated debate from all sides over the past year and still received mixed reviews after becoming law over the weekend.
An amendment to Article 173-1 of the act stipulates that shareholders who have held more than a 50 percent stake in a company for three months or longer are eligible to call a special general meeting. Business groups said that the article could trigger proxy fights and create uncertainty over the control of companies, or even lead to hostile takeovers, while others praised the amendment, as it allows dissident shareholders to take on companies that are poorly run, reject reforms and are controlled by long-serving board members.
The amendment has also created uncertainty for publicly listed companies as to which law governs extraordinary shareholder meetings, as Article 43-5 of the Securities and Exchange Act (證券交易法) requires that shareholders controlling at least half of a listed company’s shares through a public tender offer obtain approval from the board to call such a meeting.
Financial Supervisory Commission (FSC) Chairman Wellington Koo (顧立雄) on Saturday clarified the issue, saying that eligible shareholders could choose to follow whichever law they prefer, as they face two different requirements: One allows shareholders who have held a majority stake for more than three months to call a special general meeting without requesting permission, while the other does not stipulate a minimum length of ownership, but demands that shareholders gain permission from the board.
Whichever law dissident shareholders or activist investors follow, there is an increased chance that they will seek ways to oust longtime board members and force management to make changes.
The bill also lowered the threshold for minority shareholders to request that a court-appointed inspector examine the operational and financial condition of the company if alleged misconduct by board members is found to harm shareholders’ interests.
Clearly, the government intends to change the rules of the game, enabling shareholders to put pressure on management and giving managers no place to hide. Longtime board members will not be able to relax until they put their job on the line by setting out new strategies or reform plans.
Media and critics have dubbed the revised Article 173-1 the “Tatung clause,” in reference to proxy fights between activist investors and home appliance maker Tatung Co’s founding Lin (林) family over the years. However, the revised article is actually an “empowering clause” that supports shareholders, helping them protect their interests and exert more influence over companies, versus Article 203-1, which entitles board members to call board meetings to debate issues or make decisions.
Major shareholders and board members could work together to increase their holdings and bolster their control over companies, so worries about an increase in proxy fights, while legitimate, should not be exaggerated. Rather, such concerns reflect the Taiwanese business environment’s persistent bias in favor of existing board members, major shareholders and big business.
Because much of what former US president Donald Trump says is unhinged and histrionic, it is tempting to dismiss all of it as bunk. Yet the potential future president has a populist knack for sounding alarums that resonate with the zeitgeist — for example, with growing anxiety about World War III and nuclear Armageddon. “We’re a failing nation,” Trump ranted during his US presidential debate against US Vice President Kamala Harris in one particularly meandering answer (the one that also recycled urban myths about immigrants eating cats). “And what, what’s going on here, you’re going to end up in World War
Earlier this month in Newsweek, President William Lai (賴清德) challenged the People’s Republic of China (PRC) to retake the territories lost to Russia in the 19th century rather than invade Taiwan. He stated: “If it is for the sake of territorial integrity, why doesn’t [the PRC] take back the lands occupied by Russia that were signed over in the treaty of Aigun?” This was a brilliant political move to finally state openly what many Chinese in both China and Taiwan have long been thinking about the lost territories in the Russian far east: The Russian far east should be “theirs.” Granted, Lai issued
On Tuesday, President William Lai (賴清德) met with a delegation from the Hoover Institution, a think tank based at Stanford University in California, to discuss strengthening US-Taiwan relations and enhancing peace and stability in the region. The delegation was led by James Ellis Jr, co-chair of the institution’s Taiwan in the Indo-Pacific Region project and former commander of the US Strategic Command. It also included former Australian minister for foreign affairs Marise Payne, influential US academics and other former policymakers. Think tank diplomacy is an important component of Taiwan’s efforts to maintain high-level dialogue with other nations with which it does
On Sept. 2, Elbridge Colby, former deputy assistant secretary of defense for strategy and force development, wrote an article for the Wall Street Journal called “The US and Taiwan Must Change Course” that defends his position that the US and Taiwan are not doing enough to deter the People’s Republic of China (PRC) from taking Taiwan. Colby is correct, of course: the US and Taiwan need to do a lot more or the PRC will invade Taiwan like Russia did against Ukraine. The US and Taiwan have failed to prepare properly to deter war. The blame must fall on politicians and policymakers