In November 2010 the Legislative Yuan passed a bill to amend the Securities and Exchange Act to include new provisions on (among other things) the establishment of remuneration committees by companies whose stocks are listed on the stock exchange or traded over the counter (ie, a listed company). Accordingly, on March 18 2011, the Financial Supervisory Commission of the Executive Yuan announced its Rules on the Establishment of a Remuneration Committee by a Company whose Stocks are Listed on the Stock Exchange or Traded Over-the-Counter and a Remuneration Committee's Functions and Duties. According to the new rules, a listed company must establish a remuneration committee through a board resolution on the organisation rules of its remuneration committee and have the committee conduct regular reviews to determine the remuneration of its supervisors, managers and directors.

In addition to imposing certain qualifications and restrictions relating to committee members' independence and expertise, the rules also stipulate that remuneration committees must have at least three members and must hold at least two meetings every year.

Pursuant to the rules, a listed company must establish its remuneration committee before September 30 2011 and the committee must hold at least one meeting before December 31 2011. However, listed companies with a paid-in capital of less than NT$10 billion have until December 31 2011 to establish their remuneration committees and are therefore not subject to the requirement to hold a meeting before the same date.

For further information on this topic please contact Julia Yung at Lee and Li Attorneys at Law by telephone (+886 2 2715 3300), fax (+886 2 2713 3966) or email ([email protected]).