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TWSE Announces Draft “Stewardship Principles for Institutional Investors”, Seeks Public Comments

Publish time:2015-12-08

In an effort to promote the fulfillment of stewardship responsibilities by institutional investors in order to assist investee companies strengthen corporate governance and enhance long-term value for its clients and shareholders, the Corporate Governance Center of Taiwan Stock Exchange (TWSE), in conjunction with the Taiwan Depository Clearing Corp., the Securities Investment Trust & Consulting Association, and Taiwan Financial Services Roundtable collectively issued a draft of the “Stewardship Principles for Institutional Investors”  (hereafter, “the Principles”) and invites public opinions before February 5, 2016. Consultation document is available on the Corporate Governance Center’s website (http://cgc.twse.com.tw/promoteEvent/promoteEventArticleEn/278).
 
Responsibilities of investors as equity owners or managers are referred to as “stewardship” responsibilities including attending shareholders' meetings, voting, monitoring, and other means of engagements to understand investee companies’ business strategies, risks, capital structures, corporate governance, investment returns, etc. so as to enhance the long-term interests of the investee companies and its shareholders. Stewardship of institutional investors has become a significant doctrine in the international community; currently, the UK, Switzerland, Italy, the Netherlands, Japan, Malaysia and other countries have proposed relevant guidelines or principles. Hong Kong has also completed its public consultation process. The Principles were formulated from the external governance perspective and complements the “Corporate Governance Best Practice Principles for TWSE/GTSM Listed Companies” which focuses on promoting governance of the board. By leveraging effective governance of institutional investors, it will eventually enhance values of beneficiaries, investee companies and investors themselves.
 
The Principles comprises six major principles, including:
  1. Establish and disclose stewardship policies;
  2. Establish and disclose policies on managing conflict of interests;
  3. Pay continued attention to investee companies;
  4. Appropriate dialogue and interaction with investee companies;
  5. Establish and disclose clear policy on voting and voting results, and
  6. Periodically disclose status of fulfillment of stewardship responsibilities to clients or beneficiaries.

Considering that institutional investors are heterogeneous, a “comply or explain” approach will be applied to ensure flexibility. The TWSE will actively encourage institutional investors to publicly sign up to the Principles.