[Investment] Company Act Revised for Better Protection of Shareholder Interests

On July 2 the Legislative Yuan passed a partial revision of the Company Act, authorizing the competent authority for securities to ask publicly listed companies to adopt electronic voting so that their shareholders can exercise voting rights more easily. The revised law also stipulates the use of the cumulative voting system in the election of directors and relaxes the restriction on the issuance of cash dividends from legal reserve, moves designed to protect the interests of shareholders, facilitate corporate operations, and attract investment. In consideration of the fact that during the past some companies accumulate large amounts of legal reserve and capital reserve that can be allocated only as capital for the issuance of new shares in accordance with the original shareholding ratios, leaving insufficient flexibility in their use, the revision stipulates that legal reserve and capital reserve may, in whole or in part, be distributed in the form of cash instead of shares. The requirement that legal reserve must exceed 50% of paid-in capital before it can be distributed has been relaxed to a requirement of 25% so as to boost flexibility in the utilization of reserves.