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TWSE Corporate Governance

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The Financial Supervisory Commission (FSC) launched the "Corporate Governance Roadmap 2013", wherein thirteen substantive measures to achieve five goals were proposed."These include cultivating corporate governance culture, promoting shareholder activism, enhancing board functions, disclosing material corporate governance information and improving regulatory practices."The first measure for shaping corporate governance culture was "Consolidating and coordinating resources by constructing a corporate governance center.""As a result, the roadmap required the Taiwan Stock Exchange (TWSE) to establish the "Corporate Governance Center" (the “Center”)."To achieve this, the TWSE gathered government, private-sector organizations related to corporate governance, various securities institutions and industry leaders together to collaborate in the Center's formation."This Center serves to consolidate resources, implement a variety of important corporate governance measures and further enhance the standards of Taiwan's corporate governance."In October of 2013, the "Corporate Governance Center" was officially established and promotional initiatives immediately began.

Mission and Vision

The "Corporate Governance Roadmap 2013" was completed in 2017."Action plans included in the roadmap delivered remarkable measurable results in terms of board functions, the quality of shareholders’ meetings and information disclosure."To sustain our corporate governance reform momentum, the FSC officially launched the "Corporate Governance Roadmap (2018~2020)" on April 24, 2018."This roadmap envisions more active participation from companies and investors in corporate governance, through deepening corporate governance culture, enhancing board functions, strengthening information transparency, encouraging participation of external shareholders, and augmenting regulatory enforcement."Furthermore, it targets corporate governance culture to be deeply rooted, creates an investment-friendly environment and improves the international competitiveness of the Taiwan capital market."To achieve this vision, the Center has implemented various substantive measures in accordance with the 2018-2020 roadmap, and coordinated resources across government, private-sector organizations, various securities institutions and the media."Regulation amendments, investor relations and education, corporate governance evaluations and research projects are significant actions guiding enterprises in strengthening their corporate governance and thereby, shaping this culture into an everyday working reality."Additionally, the Center focuses on global outreach and promotes Taiwan's corporate governance enhancements which greatly heightens Taiwan's international image and standing.

Organizational Structure

The Corporate Governance Center has established an advisory committee. The committee is composed of 11 representatives from the Securities and Futures Bureau (SFB), Banking Bureau (BB), Insurance Bureau (IB) and Financial Examination Bureau (FEB) of the FSC, Department of Commerce of the Ministry of Economic Affairs (MOEA), Taiwan Stock Exchange (TWSE), Taiwan Futures Exchange (TAIFEX), Taipei Exchange (TPEx), Taiwan Depository & Clearing Corporation (TDCC), Securities and Futures Investors Protection Center (SFIPC), and Securities & Futures Institute (SFI). Furthermore, a TWSE representative serves as the committee’s convener, and the TWSE’s Corporate Governance Department handles the overall project.

The Center has a Corporate Governance Evaluation Committee responsible for reviewing CG evaluations and related matters. The Evaluation Committee is composed of 14 members, including nine academic experts and five representatives from the TWSE, TPEx, TDCC, SFIPC and SFI.

Main Functions

1. Corporate Governance

(1) Corporate Governance Evaluation: Responsible for the development of the Corporate Governance Evaluation system of listed companies. Our work includes drafting evaluation indicators to reflect amendments of domestic regulations, main policy initiatives and global corporate governance trends. In addition, we develop scoring guidance and disclosure examples, hold educational seminars, announce evaluation results and recognize top achievers. Through the introduction of the evaluation, listed companies have shown significant quantifiable improvement in various aspects of corporate governance in Taiwan.

(2) Corporate Governance related Rules and Research: We collect and refer to corporate governance rules and practices of advanced foreign markets and amend listing rules, regulations and codes regarding corporate governance. Notable research is also conducted.

(3) Director Training: We collect cases, prepare teaching materials, and provide further explanations based on the preceding materials to listed companies and directors through all types of promotion, forums, seminars or training programs. To assist the media and investors in establishing the correct recognition of corporate governance, we build case studies in applications, clips and other channels.

(4) Corporate Governance Center E-newsletter: The E-newsletter consolidates information on corporate governance and CSR, as well as other important material. Through the monthly newsletter, subscribers are able to get a grasp on the latest domestic and foreign corporate governance information, CSR dynamics and policy developments. For users seeking more information, the E-newsletter also contains direct links to the Center’s website.

(5) International Network and Promotions: We coordinate with international corporate governance institutions and establish interactive networks. In addition, we promote our latest corporate governance rules and policies through participating in domestic and international corporate governance activities.

2. Corporate Social Responsibility

(1) Non-Financial Information Disclosure: The disclosure of non-financial information is not only the focus of stakeholders but also companies’ competitiveness in the context of sustainable development. It can also effectively enhance information transparency in the Taiwan capital market. The Corporate Governance Center promotes corporate social responsibility reporting in accordance with international standards and enhances the quality of non-financial information disclosure to provide forward-looking information to demonstrate corporate economic resources and activities.

(2) Stewardship Code: Stewardship of institutional investors is becoming critical in Taiwan as their shareholdings grow dramatically. The Corporate Governance Center launched the “Stewardship Principles for Institutional Investors” in June, 2016, aiming to leverage market mechanisms, along with regulations and corporate self-improvement, to enhance corporate governance quality in Taiwan. Based on fund provider's long-term interests, institutional investors should monitor the operation of an investee company and participate in corporate governance through attendance at shareholders' meetings, exercise voting rights, engagement in appropriate dialogue and interact with management of the investee company.

(3) Corporate Governance Index and Sustainability Index: In response to the trend of international socially responsible investing, the “TWSE RA Taiwan Employment Creation 99 Index” was compiled in 2010, and the “Taiwan High Compensation 100 Index” was launched in 2014. One year later, the “Taiwan Corporate Governance 100 Index” was compiled based on the results of the Corporate Governance Evaluation. Furthermore, the " FTSE4Good TIP Taiwan ESG Index " was launched in 2017, which is the first index in Taiwan that combines E (environment), S (social) and G (corporate governance) dimensions and financial indicators. It is designed to lead domestic funds to invest in local enterprises with sustainable development, and drive the capital market by introducing relevant indices and commodities.