The COVID-19 pandemic is so severe that it has affected not only people’s daily lives, but also normal business operations. With shareholders’ meetings on the horizon, the public and private sectors have become uneasy.
The Company Act (公司法) stipulates that all companies limited by shares — including listed and over-the-counter firms — must hold an annual shareholders’ meeting that convenes within six months of the close of the fiscal year, meaning that most companies must hold shareholders’ meetings by June or face a fine.
These meetings, which allow shareholders to examine records submitted by the board of directors and auditing conducted by the supervisors, are necessary for deciding by resolution the distribution of surplus earnings and plans to offset deficits. Without the meetings, how can shareholders decide these matters?
Many investors are also eager to collect their stock dividends. For example, Taiwan Semiconductor Manufacturing Co last year paid out more than NT$200 billion (US$6.63 billion) in cash dividends to its shareholders.
These meetings are essential, but how to convene them amid the pandemic has become problematic.
The act allows companies to hold shareholders’ meetings via videoconferencing, but that is not feasible for companies with publicly issued shares, which must hold face-to-face meetings.
For a limited company with only 20 to 30 shareholders, it is perhaps feasible to convene the annual meeting at a large venue over a short time, with all of the shareholders wearing masks and practicing social distancing.
However, it might be more complicated for listed or over-the-counter companies to do so, due to their relatively large number of shareholders.
It is common for hundreds or even thousands of shareholders to take part in an annual meeting. Typically held at a closed venue, a meeting attended by an infected shareholder could have serious consequences due to human-to-human transmission.
The authorities are hoping that shareholders can cast their votes through electronic means — but this is not easy either.
A company can postpone its shareholders’ meeting with regulatory approval for reasonable cause — as Article 170 of the act allows — but the company would be in hot water if it fails to punctually issue stock dividends to its investors.
Last month, the Central Epidemic Command Center recommended that starting on March 25, the organizer of any indoor gathering of more than 100 people should first conduct a “risk assessment” and then decide whether to cancel the event based on “six indicators” — such as the ability to identify beforehand those who would attend the event — which are specified in the “guidelines for large-scale public gatherings in the wake of the COVID-19 outbreak.”
If a company conducts an assessment and still decides to hold the shareholders’ meeting, it must follow the center’s directives on establishing contingency measures and a response mechanism — such as setting up a temporary shelter — in the case that suspected cases of COVID-19 are identified during the meeting, as well as providing recommendations for health protection and management before and during the event.
Finally, companies could try to reduce the number of attendees at their annual meeting by generously offering souvenirs to shareholders beforehand in exchange for their “proxy statements” so that meetings can be held without a hitch.
Yu Ying-fu is a lawyer.
Translated by Eddy Chang
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