FSC nixes employee representative idea
A proposal made by legislators that listed companies should have at least one board director coming from the ranks of employees to watch over labor interest contradicts regulations from the Company Act, said the Financial Supervisory Commission (FSC, ).
The Legislative Finance Committee is scheduled to review 17 amendment proposals for the nation’s finance laws such as the Securities and Exchange Act and the Financial Consumer Protection Act.
Democratic Progressive Party (DPP) lawmaker Hsu Chih-chieh ( ) has suggested amendments to the Securities and Ex- change Act company, so that listed corporations are obliged to have employee board members, or to have employee representatives in the remuneration committee to watch for labor interests.
Proponents of the amendment believe a company’s independent directors, supervisors and labor representative will form an “iron triumvirate” that ensures the com- pany carries out its social responsibilities while executing effective governance.
However, the FSC contends that the proposal contradicts with the existing Company Act which dictates that board members should be elected by shareholders.
In addition, the FSC said, the Securities and Exchange Act already has rules on independent directors, the audit committee and the remuneration committee that augment board functionality and corporate governance.
The FSC is reportedly backing a different proposal submitted by DPP lawmaker Lee Ying-yuan (
), who suggested that entities that seek to acquire real estate investment trusts (REITs) should disclose their tender offer intention.
Lee argued that REITs are similar to other securities, endowing beneficiaries with voting rights, and should be regulated in the same way to prevent sudden price fluctuations.
The proposed adjustment to the Securities and Exchange Act says entities looking to acquire 10-percent stakes should publicize their tender offers.