In recent years with respect to the governance of public companies listed at Taiwan Stock Exchange and Taipei Exchange, the Securities Exchange Act has aimed to protect investors by not only requiring the truthful disclosure in financial reports, but also by reinforcing the transparency of remunera
1. Background
In recent years with respect to the governance of public companies listed at Taiwan Stock Exchange and Taipei Exchange, the Securities Exchange Act has aimed to protect investors by not only requiring the truthful disclosure in financial reports, but also by reinforcing the transparency of remuneration information with a goal of fair and reasonable remuneration. As such, a few years ago, the working of a remuneration committee has brought in more professionalism and independence in the shaping of remuneration policies. With regard to Paragraph 5 of Article 14 of the Securities Exchange Act, as amended on May 5, 2020, promulgated on May 19, 2020 by the President, effective on May 21, 2020, further requires businesses to stipulate reasonable remunerations for directors, supervisors and managers, and protect the labor conditions of employees.
2. Key Points of the Amendment
Paragraph 5 of Article 14 of the Securities Exchange Act is amended as follows:
When a company listing its stock for trading on the Taiwan Stock Exchange and Taipei Exchange should disclose additional relevant information, including the average salary of all the company's employees and any adjustments thereto, and the remunerations for directors and supervisors, in accordance with the regulations prescribed by the competent authority, at the time of its preparation of the annual financial report in accordance with paragraph 2.
3. Comments
The basis of this amendment is the new version of Corporate Governance Roadmap (2018-2020) announced by the Financial Supervisory Commission. It has a good intention of requiring businesses, through an investor supervisory mechanism, to stipulate reasonable remunerations for directors, supervisors and managers and to protect the business’s labor conditions. However, there is still room for clarification about the concept of a company’s remuneration policies, and the supplementary interpretation by the competent authorities is expected in the future so as to set a clear framework.
