Among the reasons given by the investor for the veto was it was not clear why the company should have the ability to hold virtual-only meetings, how shareholder rights would be protected and there was no mechanism for ending the ability to hold virtual-only meetings such as a set expiration date or future vote.ĪCGA sees great value in shareholders attending AGMs in person and we do not want to see this option taken off the table. We know of at least one major international investor who has voted against Article amendments by an issuer which sought to conform with the new rules. In the event that a director was misbehaving, it is unclear how shareholders could take steps for his or her dismissal. If directors were up for election, it is unclear whether the existing directors would have to continue to serve beyond the end of their terms, and for how long. Consider the context of another pandemic making a virtual AGM necessary. While we understand the regulators’ intention, the implications of such a narrow approach are readily apparent. For hybrid meetings, director elections are allowed, but only if they are uncontested. For example, the rules do not allow virtual meetings to be held when the agenda includes a director election, director dismissal, or mergers and acquisition activity. However, Taiwan regulators decided to approach the issue by limiting the content of the meeting. Most markets seek to prevent abuse of the virtual AGM mechanism by setting limits on the circumstances under which it can be used, for example, only in the case of natural disasters or pandemics. However, the approach they took was unorthodox. Regulators inserted guardrails in an apparent effort to prevent Taiwan’s notoriously inventive blockholders from gaining an upper hand in battles for management control under the new rules, an intention that ACGA understands and supports. Under the new rules which came into effect in March 2022, issuers may make changes to their Articles of Incorporation to allow virtual meetings without any limitations on the circumstances in which they can be held. These are defined respectively as those held only by video conferencing without a physical meeting and as physical shareholder meetings with the assistance of video conferencing. New rules on virtual AGMs drafted in the wake of COVID-19 are drawing investor ire because they allow AGMs to be fully virtual in the absence of exceptional circumstances, and limit what shareholders can decide during the meeting.Īfter the pandemic wreaked havoc on Taiwan’s 2021 AGM season, regulators updated the Company Act and Regulations Governing the Administration of Shareholder Services of Public Companies to include provisions on virtual and hybrid shareholder meetings. Regulatory decision to allow fully virtual AGMs as convention will ironically be of limited use during a pandemic, writes Neesha Wolf, Research Director for Taiwan and Malaysia.
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