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TWSE Corporate Governance

Information Disclosure and Transparency Ranking System OverviewEvaluation System

1. Milestones
To cultivate global competitiveness in the financial landscape, the Executive Yuan established the Financial Reform Committee in July of 2002. In response to the global emphasis on corporate governance and the mandate for corporate information transparency, the committee prioritized construction of the Information Disclosure and Evaluation System. In 2003, the Taiwan Stock Exchange Corporation along with the Taipei Exchange commissioned the Securities and Futures Institute to implement this system, which led to the first annual disclosure and evaluation review. In 2013, the Financial Supervisory Commission listed "Disclosure of Material Corporate Governance Information" as one of the five main objectives of its "2013 Corporate Governance Roadmap". In the future, the quality disclosure requirements for nonfinancial information will be objective.

2. The Evaluation System
(1). Introduction to the Evaluation Indicators

The current evaluation system uses information that listed companies have entered into the Market Observation Post System and disclosed on their corporate website as the basis for its evaluations. The evaluation covers five main areas, including compliance, information timeliness, financial forecasting, annual reports, and website information disclosure. Each area may include mandatory or voluntary disclosure indicators. By including these two types of indicators, investors will be able to better interpret the evaluation results, as well as incentivize companies to elevate the quality of their disclosures to international standards.

(2). Method for Announcing Indicators
For 2002 and 2003, evaluation results only included companies that scored in the top third in regards to transparency. Starting with 2004, all listed companies were included and ranked according to a five-tier system consisting of A+, A, B, C, and C-. As listed and OTC companies improved their disclosure practices and rose in the rankings, a new standard was introduced and was based on a seven-tier ranking system consisting of A++, A+, A, A-, B, C, and C-. Since 2004, the overall score of companies has shown annual improvement, revealing increased information transparency by both listed and OTC companies.

(3). Future Prospects
Since information disclosure practices serve as an important part of corporate governance, the implementation of the system aims to promote national policy and encourage enterprises to improve their level of transparency and accessibility regarding material information. The goal is to evaluate the overall quality of disclosure within the capital market of the Republic of China, thereby increasing corporate value, reducing financing costs, and protecting the interests of investors. This will lead to healthy development of the market, while achieving the goal of "Disclosing Information and Expanding Participation." Since Corporate Governance Evaluation has adopted most of the key indicators in the Information Disclosure and Transparency Ranking System, the two evaluations merged into one starting in 2015. This has enhanced work efficiency and avoided redundancy, the Information Disclosure and Transparency Ranking System was dropped after the results were announced in 2015.