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1      These Directions are adopted to promote independent directorship as means of achieving sound corporate governance, and are applicable to the following entities:
  1. Companies that apply to the TPEx for initial listing of their stock on the TPEx after 25 February 2002.
  2. TPEx listed companies that are ordered by the competent authority to appoint independent directors in accordance with the proviso in Article 14-2, paragraph 1 of the Securities and Exchange Act.
2     When the number of independent directors of a TPEx listed company falls below the required number due to departure (including by resignation, dismissal, or expiration of term of office), the company shall at the next shareholders meeting elect additional independent directors to fill the vacant seats. In the event that all the independent directors have been dismissed, the company shall convene a special shareholders meeting to hold a by-election to fill the vacant seats within 60 days from the date of occurrence.
3     Measures that may be taken if a TPEx listed company fails to duly elect independent directors to fill vacant seats:
  1. A TPEx listed company in any of the following events will be notified to convene a special shareholders meeting and rectify the deficiency with 60 days of the notice, and additionally will be issued a penalty of NT$100,000:
    1. Due to departure for any reason, the number of independent directors has fallen below the required number, and the company has failed at the next shareholders meeting to elect independent directors to fill the vacant seats.
    2. All the independent directors have been dismissed, and the company has failed to convene a special shareholders meeting and hold a by-election to fill the vacant seats within 60 days from the date of occurrence.
    3. The company convened a shareholders meeting and elected independent directors but was unable to complete the appointment procedure, or the appointed independent directors do not satisfy subparagraph 8 of the Standards for Determining Unsuitability for TPEx Listing under Article 10, paragraph 1 of the Taipei Exchange Securities Market Rules Governing the Review of Securities for Trading on the TPEx.
  2. If a TPEx listed company fails to completely rectify the deficiency within the timeframe in the preceding subparagraph, the TPEx may, under the provision for "other causes for which the TPEx deems it necessary" in Article 12, subparagraph 15 of the Rules Governing Securities Trading on the TPEx , impose an altered trading method requiring all securities brokers to collect the payments or securities in full before they may place trade orders for that company's shares.
  3. If a TPEx listed company fails to completely rectify the deficiency within three months after the altered trading method has been imposed, the TPEX may, under the provision of "for any cause for which the TPEx deems it necessary to suspend TPEx trading of the company's securities " in Article 12-1, paragraph 1, subparagraph 15 of the Rules Governing Securities Trading on the TPEx, suspend the trading of the company's securities on the TPEx .
  4. If a TPEx listed company fails to completely rectify the deficiency within six months after the altered trading method has been imposed, the TPEx may, under Article 12-2, paragraph 1, subparagraph 12 of Rules Governing Securities Trading on the TPEx, terminate the trading of the company's securities on the TPEx.
4     A TPEx listed company shall report any changes in independent directors in accordance with Article 2, paragraph 1, subparagraph 6 of the Taipei Exchange Market Procedures for Verification and Disclosure of Material Information of Companies with TPEx Listed Securities.
    The TPEx may exercise regulation by exception over any TPEx listed company that violates the information disclosure requirements of the preceding paragraph, or at which the number of independent directors falls below the required number for reasons other than illness, death, or other force majeure.
5     These Directions, and any amendments hereto, shall enter into force following submission to and approval by the competent authority.