Newsletter
FSC AMENDS PROXY VOTING RULES FOR FHCS
The operation of a financial institution such as a financial holding company, bank, or insurance company affects the rights and interests of large numbers of depositors and policyholders. If a minority shareholder uses proxy voting to ac-quire operational control over a financial insti-tution, this may adversely affect the institution's operations. In view of this, the Financial Su-pervisory Commission (FSC) has amended the Rules Governing the Use of Proxies for Atten-dance at Shareholder Meetings of Public Com-panies, to more strictly regulate the use of proxy voting in the election of directors and supervisors of financial institutions. The main points of the amendments are as follows:
When the agenda of a shareholders' meeting called by a financial institution includes the election of directors or supervisors, the re-quired shareholding period for an ordinary solicitor of proxies is raised from the present period of at least six months to a period of at least one year.
In general, the minimum level of shareholding at which a shareholder becomes eligible to appoint a trust enterprise or a shareholder service agent as a solicitor of proxies remains at 10% of the company's total issued shares, held continuously for at least one year. But if the agenda of a shareholders' meeting includes the election of directors or supervisors, this threshold is increased to 12% of the com-pany's total issued shares, held continuously for at least one year.
However, to avoid excessive impact on markets, the FSC has set a buffer period to delay imple-mentation of the above provisions until 1 January 2008. After the amended provisions take effect, a shareholder wishing to use solicited proxies as a means to acquire operating control over a fi-nancial institution, or to acquire directorships or supervisorships in a financial institution, will be subject to stricter controls than at present.