Shareholding Limits Relaxed for Directors and Supervisors

The Financial Supervisory Commission (FSC) has moved to encourage companies to establish auditing committees and appoint independent directors by promulgating a revision of Article 2 of the Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Pubic Companies. Under the new Rules, listed companies the independent directors of which exceed half of all directors, and that have established an auditing committee in accordance with the Securities and Exchange Act, will not be subject to the rule that the shareholding of all directors and supervisors must not be less than a set ratio. The FSC notes that when the number of a company’s independent directors exceeds half of the total number, and when it has set up an auditing committee in accordance with the Securities and Exchange Act, its independent directors already have a decisive influence; the present revision, therefore, is undertaken to promote corporate governance by loosening the restriction on the ratio of shareholding by all directors. However, in consideration of the fact that the operation of financial holding companies, banks, insurance firms, and other financial institutions involve depositors from the public and the interests of insured depositors, it is necessary to strengthen management; for this reason, shareholding by all directors and supervisors of financial institutions will be maintained at the currently required amount.