Submission to Taiwan's SFB on the proxy solicitation regulations

2022-06-13

On 13 June 2022, ACGA sent a letter to Taiwan's Securities and Futures Bureau in response to the consultation paper on the “Proposed Draft Amendments to Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies”.

We support the proposed changes and believe that steps to enhance the professionalization of the proxy solicitation industry, “know your customer” rules and clear contracting requirements will benefit the market as a whole.

We also support the strengthening of the regulator’s enforcement options. Taiwan has had “four red lines” on the rule books for some time:

no buying proxies
no soliciting proxies under another’s name
no soliciting more proxies than allowed under the rules
no soliciting proxies if unqualified to do so

However, the rules as they have stood have apparently not had sufficient deterrent effect and when the rules are transgressed there is potential for serious market distortion and disruption. Therefore, we support the Commission’s decision to add provisions that would bar those transgressing the “four red lines” from soliciting proxies for one year.

In addition to the changes as proposed, we encourage regulators to consider the following:

Setting hard limits on the number of proxy solicitation agencies that can be engaged at one time so as to prevent market “lock up” and unfair competition
Revisiting existing high shareholder meeting quorum requirements, which may be producing unintended consequences
Reviewing how blank non-solicited proxies are handled
Enforcing against all parties involved in transgressing the “four red lines”
Requiring disclosure of those who acquire or seek to acquire, individually or jointly, 5 percent or more of voting share