The Financial Supervisory Commission (FSC) is to continue looking into measures to improve corporate governance by bolstering the independence of outside directors.
The Company Act allows a government agency or a juristic person to act as a shareholder of a company and be elected as a company director or supervisor, and appoint a neutral person as its proxy on the invitee’s board of directors.
The act has been criticized by industry and legal experts, who have said that major shareholders can easily replace proxies and their undue influence compromises the independence of outside directors, limiting their ability to carry out their supervisory duties.
“We want to see more neutral board members rather than proxies of major shareholders,” FSC Chairman Wellington Koo said.
“We also want to set a new rule that requires companies to allocate more than half of total board seats to independent directors,” Koo said, adding that the boardrooms of many of the nation’s listed companies are occupied by institution-appointed proxies.
Koo’s comments came after a round of draft revisions to the act were approved by the Executive Yuan, but did not include changes that would curb the influence of major shareholders.
The Company Act encompasses all publicly trade firms, Koo said, adding that the commission would work within its jurisdiction to explore possible amendments to the Banking Act.
The commission is focused on the financial sector, where more stringent regulatory compliance is needed, Koo said.
In related news, 272 independent directors resigned between 2014 and the first half of last year, Taiwan Stock Exchange and the Taipei Exchange data showed.
The flight of independent directors is due to low pay relative to the severe potential legal consequences they could face if they are unable to detect and prevent mismanagement or poor operating performance, Koo said.
Independent directors are facing 13-class action lawsuits and about NT$2.24 billion (US$74.8 million) in damages, Securities and Futures Investors Protection Center data showed.
Contrary to notions that directors are highly paid, 92.8 percent, or 3,429 independent directors, are paid less than NT$2 million per year, while 255, or 6.9 percent, were paid between NT$2 million and NT$10 million, Koo said, citing FSC data.
Only 0.03 percent, or 12 independent directors, were paid more than NT$10 million 2016, Koo said. |
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