In response to the advancement in technology, shareholders participate in shareholders’ meeting via visual communication network and execute their rights has become more and more common today. In order to strengthen the protection for shareholders’ rights and promote activism among shareholders, the Ministry of Economic Affairs (“MOEA”) announced on August 30, 2021 the notice of the proposed amendment to Articles 172-2 and 356-8 of the Company Act related to “shareholders’ meeting held by means of visual communication network.” The following is a brief summary of this amendment which related to the provisions of holding shareholders’ meeting via visual communication network, as well as the provisions of holding directors’ meeting via visual communication network. We will continue to pay attention to any further update of the amendment.

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1. Shareholders’ meeting (proposed amendment to Articles 172-2 & 356-8)

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(1) Cancelled the provisions that a company may hold shareholders’ meeting by means of visual communication network only when it explicitly provides in its Article of Incorporation
Articles 172-2 & 356-8 originally provided that, “A company may explicitly provide for in its Articles of Incorporation that its shareholders’ meeting can be held by means of visual communication network or other methods promulgated by the central competent authority.” However, due to the development of technologies and the need for virtual conference by the company, it is amended to “Shareholders’ meetings may be held by means of visual communication network or other methods promulgated by the central competent authority” to allow companies limited by shares and close companies whose articles of incorporation provide no specification for holding shareholders’ meeting via visual communication network. (Paragraph 1 of Article 172-2 & Paragraph 1 of Article 356-8 of the amendment)
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(2) Loosen applications to public companies
Under current laws, public companies are not allowed to hold shareholders’ meeting via visual communication network. This amendment allows public companies to hold shareholders’ meeting via visual communication network. However, considering large number of shareholders in a public company, it may have broad impact to many levels if holding shareholders’ meeting via visual communication network. Therefore, in order to protect the shareholders’ rights, a public company shall comply with the rules the securities exchange competent authority provides otherwise in regard to the conditions, related procedures, and other compliance matters required. (Paragraph 3 of Article 172-2 of the amendment)
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2. The meeting of the board of directors (current provisions)
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(1) Holding the meeting of the board of directors via visual communication network
Due to the advancement in telecommunication technologies, virtual conference can also achieve the goal of discussions in a meeting and the effect is no different from meeting in person. Hence, it is allowed that the director may attend the meeting of the board of directors by visual communication network. (Paragraph 2 of Article 205)
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(2) Exercising voting right in writing
In order to strengthen flexibility of corporate operation and corporate governance, after referencing foreign legislation that allow convention of board of directors’ meeting via a diversity of means, a company may explicitly provide for in its Articles of Incorporation that if it is agreed by all directors, any action to be taken at a meeting of the board of directors may be taken, without a meeting, by written consents to exercise their voting power. However, the preceding provision does not apply to public companies. (Paragraphs 5 to 7 of Article 205)

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（Author: Yi-Hwa Lu, Intern Attorney）

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