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Electronic voting on the way

Shareholder voting rights under the Taiwanese Companies Act explained

Chun-yih Cheng

According to the Taiwanese Companies Act, the shareholder of a company may exercise his voting right in a shareholders' meeting in writing or by way of electronic voting provided that it is so described in the shareholders' meeting notice. That is, whether a shareholder may exercise his voting right in writing or by way of electronic voting depends on the issuing company. A company is usually reluctant to use such alternative voting system.

In order to advocate shareholders' activism in public companies, the Companies Act empowers the Financial Supervisory Commission (FSC) to order the adoption by a public company of electronic voting in view of the company's scale, shareholder number, shareholder structure and other necessary circumstance. Under this authorisation, earlier this year the FSC promulgated the criteria of a public company that should adopt electronic voting: with a paid-in capital of at least NT$10 billion ($338 million) and at least 10,000 shareholders as recorded in the shareholders roster. According to the FSC criteria, there will be 83 public companies having 12 million shareholders in total adopting electronic voting in shareholders meetings this year, which in principle should be convened on or before June 30 2012.

A shareholder will be deemed present in person in the shareholders' meeting if he exercises his voting right by way of electronic voting. Therefore, the quorum for the opening of a shareholders' meeting will be easier to meet. It will be more difficult to pass a resolution than before, however, because at least more than half of the total votes should be cast in favour of the proposal. On the other hand, a shareholder will be deemed abstained for any amendment to the original proposal as listed in the shareholders' meeting notice and for any extemporary motion. This is the downside of exercising shareholder rights by way of electronic voting.

Chun-yih Cheng

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