The Financial Supervisory Commission (FSC) yesterday bolstered regulations on who qualifies to be an independent director of a listed company, with the rules to take effect on Wednesday next week.
Based on amendments to the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies (公開發行公司獨立董事設置及應遵循事項辦法), a listed company’s board members, supervisors and employees cannot be independent directors of another listed company in which it has a stake, Securities and Futures Bureau Deputy Director Sam Chang (張振山) told a news conference in New Taipei City.
If two listed firms have the same major shareholder, share the same chairperson or general manager, or their chairs or general managers are married, their board members, supervisors and employees cannot not serve as independent directors of the other company, Chang said.
“We think there would be concerns about conflict of interest, as such companies would have close ties, even though they would not necessarily have stakes in each other high enough to define them as affiliated,” he said.
The amendment came as lawmakers accused the government of failing to detect that Oceanic Beverages Co Inc (大西洋飲料) appointed employees of its business partner Cathay Beverages Co (國信食品), which has a 0.49 percent stake in Oceanic Beverages, as independent directors.
People who have audited a company in the two preceding financial years or the current year cannot be appointed as independent directors, the amendments say.
Independent directors should not be paid more than NT$500,000 (US$16,556) for providing financial, accountancy or legal services for the company, Chang said.
Most independent directors in Taiwan are paid less than NT$500,000 per year, so if they earn more than that, they would be deemed to have a pecuniary relationship with the firm and it would not be appropriate for them to be independent directors, he said.
However, if a lawyer has earned more than NT$500,000 working for a listed company’s chairperson, they can become an independent director, he said.
As the Ministry of Education has changed its rules for faculty at public universities working at a second job, they should gain approval from their institutions before becoming an independent director to prevent disputes, Chang said.
Listed companies would not need to immediately dismiss independent directors who do not qualify according to the amended rules, but must appoint new candidates after their terms expire, he said.
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