In order to strengthen its regulation of proxy agents, to ensure more reasonable provisions in contracts related to proxy solicitation matters, and to ensure better legal compliance by proxy solicitors and proxy agents in their conduct of solicitation matters, the FSC amended the "Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies" on 17 August 2022. Key objectives of the amendment include the following:
1.Improve compliance of solicitors and companies mandated to handle solicitation matters: For those who have seriously violated the Proxy Regulations and have been punished by the FSC (including proxy purchases, obtaining proxies by using others' names, using a solicited proxy as a non-solicited proxy for attendance of a shareholders' meeting, and being declared ineligible for being a solicitor), they will be disqualified from being solicitors or companies mandated to handle solicitation matters for the following year. In addition, the votes represented by violators will not be counted accordingly.
2.Enhance the qualifications and professionalism of companies mandated to handle solicitation matters: With references to "Regulations Governing the Administration of Shareholder Services of Public Companies" regarding the requirements for practical experiences of the shareholder services agent’s executive personnel, at least one of the executives handling solicitation affairs at the companies mandated to handle solicitation matters should have at least five years' experience of shareholder services or solicitation work. Personnel who handle solicitation activities are also required to attend shareholder services training. Also, in order to improve the competency and understanding of all personnel at the place of solicitation, the amended Regulations require that employees must meet the shareholder services unit's internal control system standard rules regarding competency testing. To give the companies mandated to handle solicitation matters sufficient time to meet the new requirements described above, the requirements will not enter into force until 31 December 2022.
3.Strengthen the reasonableness and supervisory information of solicitation-related contracts: It is explicitly stipulated that solicitors entrusted by shareholders or companies mandated to handle solicitation matters by solicitors should specify their remuneration in their contracts. They should also thoroughly conduct the Know Your Customer work, examine the reasonableness of their contracts on a regular basis, and renew their contracts every year. In addition, in view of the time it takes to implement the requirements set out in contracts related to proxy solicitation matters, the amended Regulations will not enter into force until 31 December 2022.