The COVID-19 pandemic has pushed many organizations to consider virtual means of upholding entity governance standards to minimize infection risk. While Taiwan’s regulations do allow for most organizations to conduct relevant meetings virtually, there are a few things leadership should be aware of in using this option.
As most TOPICS readers are now aware, the American Chamber of Commerce in Taipei (AmCham Taipei) has transitioned to the American Chamber of Commerce in Taiwan (AmCham Taiwan). Without going into the many (and sometimes inane) complexities of the process, suffice to say that numerous meetings were required – meetings of Chamber governors, meetings of governors and supervisors, meetings of task forces, and meetings of members – for both AmCham Taipei and AmCham Taiwan. With the COVID-19 pandemic impacting the ability and willingness of larger groups to convene in person, we naturally explored options to conduct the necessary meetings in a virtual format.
We are, of course, not alone in this search. Given recent trends in the spread of the COVID-19 pandemic, companies, non-profit organizations, and their various stakeholders and boards are rightfully evaluating various entity governance options. They are trying to find effective ways to meet governance requirements while simultaneously complying with relevant health and safety standards and regulations. Hopefully, our experience with AmCham Taiwan will provide some guidance for others.
Our inquiries into virtual meetings were mainly related to non-profit organizations (NPOs). If you are involved in the governance of an NPO, you will need to determine whether your organization is registered locally (for example, with a municipality) or nationally with the Ministry of the Interior (MOI). There are also different rules for foundations (in Chinese, 財團法人) and associations (in Chinese,社團法人). For our work, we concentrated on national associations.
The MOI allows national associations to conduct meetings of governors and supervisors by video conference if permitted by the organization’s articles of association. As of the printing of this article, association members may also meet virtually. All matters, except for the election or removal of governors and supervisors, may be conducted at these virtual meetings. Elections may be performed by separate written ballot, again if permitted by the association’s articles.
In addition to the regulations applicable to AmCham Taiwan, we also reviewed those relevant to AmCham Taipei, a locally registered association. The regulatory landscape for locally registered associations is much less well-defined than that for national organizations. In this context, we took guidance from the analogous MOI regulations as well as those applicable to private corporations, erring on the conservative side and largely following the standards set for national associations.
For those involved in the governance of private corporations, you may be pleased to know that board meetings by video conference are allowed. In addition, matters may be decided by written resolution without need of either a physical or a virtual meeting, as long as use of this method receives the unanimous consent of directors and is allowed in the company’s articles of incorporation. Shareholder meetings may also be held by video conference if permitted in the company’s articles. Of course, public companies are subject to further regulations promulgated by the Financial Supervisory Commission (FSC), but even these are likely to be relaxed when the FSC publishes new related regulations later this year.
We would be remiss if we failed to mention two other topics directly related to the holding of virtual board and stakeholder meetings: proxies and quorum calculations. Unlike corporations, proxies are not allowed for board meetings of an association; however, association members may be represented at member meetings by another member acting as proxy agent.
As with corporations, both board members and members of an association would be counted toward a quorum if they attend a meeting. The issue that arises with virtual meetings is demonstrating evidence of one’s attendance. The obvious approach would be to record the virtual meeting. Another method is to establish a virtual meeting process by which attendees are required to complete a voting poll that has options to affirm, reject, or abstain. The number of attendees completing the poll would indicate at least a minimum quorum figure.
Hopefully, this article has provided a broad view of what is possible with regard to entity governance through virtual meetings. We strongly recommend those navigating this new process work with their in-house legal team or outside legal advisors to ensure compliance and tailor any governance procedures to their organization’s particular needs.