The Taiwan Stock Exchange states that in the morning of September 29 the Asian Corporate Governance Association (ACGA) released in Hong Kong its “CG Watch 2016,” a biennial investigation and rating survey on corporate governance performance in the Asian markets. This report publishes all the evaluation results for the year 2016. Among 11 Asian Markets, Taiwan corporate governance has ranked 4th, second only to Singapore, Hong Kong, and Japan. Comparing to the previous ranking in CG Watch 2014, Taiwan rises in the rank from no. 6 to no 4.
 
In CG Watch 2016, Taiwan scores 60 points, being the country’s highest score since the first ACGA CG Watch effective in 2003. Comparing with 2014, Taiwan has improved 4 points, the biggest progress among the 11 Asian markets. Also noteworthy is that in CG Watch 2014 Taiwan’s score had already been increased 3 points since 2012. The 2 survey results show an advancement of 7 points totally, demonstrating that the effectiveness of CG initiatives performed by Taiwan competent authorities based on the “2013 Corporate Governance Roadmap” has received high recognition by international corporate governance institutions.
 
At the end of 1999, the Asian Corporate Governance Association was founded by the California Public Employee Retirement System, Asian Development Bank, and Lombard/Asian Private Investment Company founded in Hong Kong as an independent non-profit membership organization dedicated to implementing effective corporate governance practices throughout Asia, in order to promote the development of Asian economies and capital markets. At present, the ACGA has already become the most important corporate governance promoter and advocacy organization within Asia. The association has more than 100 members, including global and regional pension investment funds, financial institutions, etc. The ACGA investor members--pension and asset managers--have a combined global AUM (assets under management) of more than US$24 trillion. In 2003 ACGA issued the first “CG Watch,” a survey which looks at 11 Asian markets from the perspective of macro corporate governance quality and individual corporate governance performance of large caps within the markets. The content of the report is highly valued by regional institutional investors and other market participants. The “CG Watch 2016” mentions that the Asian corporate governance practice has gradually improved, and this is significantly related to the corporate governance ecosystem in the markets, including: corporate governance regulations and measures, companies’ response to and implementation of CG reforms, investor engagement, regulatory enforcement, judicial system. These factors all contribute to the quality of corporate governance.  In Asia, investor engagement makes persistent improvement.
 
The ACGA 2016 survey compares and ranks the corporate governance level of 11 Asian markets by examining 5 categories: “corporate governance rules and practices”, “enforcement”, “political and regulatory environment”, “accounting and auditing”, “corporate governance culture”. In ordered sequence follows the 2016 ranking and scoring of every country: Singapore (67 points), Hong Kong (65 points), Japan (63 points), Taiwan (60 points), Thailand (58 points), Malaysia (56 points), India (55 points), South Korea (52 points), China (43 points), Philippines (38 points), Indonesia (36 points). Comparing with the “CG Watch 2014”, among the 11 rated markets 5 countries has progressed, 2 countries has maintained their previous position, and 4 countries has regressed. Among the 5 countries which have advanced, Taiwan has improved the most (4 points), and has improved in all the 5 categories. Singapore, Japan, and South Korea tied at second place in terms of score improvement, all advancing 3 points; India has advanced 1 point.
 
The Taiwan Stock Exchange has also claimed that this year’s survey holds a positive recognition concerning the CG reform in Taiwan in the last 2 years. The survey indicates that Taiwan has sustained the CG reform momentum through a combination of strong government support, close coordination between regulatory and support agencies, the formation of a corporate governance center to promote reform measures. The regulators and the Stock Exchange actively participate in international and regional conferences on corporate governance and CRS in recently years.  It gives participants a broader outlook on global reform trends and expansion of their vision of reform.
The main reasons by categories for the upgrade of Taiwan’s ranking in CG Watch 2016 are as follows:
1. Corporate governance rules and practices: The “Stewardship Principles for Institutional Investors” can be judged a success and gains support of institutional investors. There has been explosion in corporate sustainability reports and electronic voting, and the quality of shareholders’ meetings improved, information disclosure in English increased.
2. Enforcement: This is the category where 11 Asian markets show most consistent improvement. The advancement of Taiwan’s score is contributed by robust regulatory enforcement and the enhanced efforts by institutional investors in AGM attendance/participation, share voting and company engagement. In December 2015 the verdict of the Green Point Enterprise’s insider trading case was a big victory.
3. Political and regulatory environment: The evolving “Corporate Governance Roadmap” launched in 2013 still provides clear planning guidelines and targets.  In addition, the regulator and enforcement agencies provide sufficient and accessible information on their websites.  Also the quality and professional knowledge in the Taiwan media reporting on corporate governance is on the rise.
4. Accounting and auditing: Among 5 categories, this is where Taiwan scored the highest. The ACGA corrects a mistake in CG Watch 2014. The Financial Supervisory Commission is reaffirmed as an independent audit regulator, producing a separate report on its inspections of CPA firms and audit engagements.
5. Corporate governance culture: It is the category where 11 Asian countries make less improvement, but both Taiwan and Japan made obvious progress. The reasons of Taiwan’s progress include the establishment of independent directors and an increase in the number of audit committees, more information disclosed in English, implementation of the electronic voting system, voting by poll, etc. The ACGA also suggested Taiwan’s medium-sized companies to disclose more relevant information in English, in order to avoid losing investment opportunities from institutional investors. Moreover, ACGA recognizes the without the TWSE taking a lead on CG education through its numerous conferences, seminars, training courses and so on, much of this would not be happening either. The ACGA hopes these efforts continue. Over the longer term, the ACGA also hopes that “the stewardship code inspires domestic institutional investors to expand their efforts and demand higher standards of governance from companies.”
 
The Taiwan Stock Exchange said that this year the ACGA survey has given a positive recognition on our corporate governance reforms, which expresses the implementation and effectiveness of CG measures assigned in the “Corporate Governance Roadmap” issued in 2013. Since the implementation of the corporate governance evaluation system in 2014, significant achievements have been made in the past two years regarding promotion and awareness of corporate governance. Checking multiple quantitative data, it is indeed shown that Taiwanese listed companies have a more positive attitude towards the adoption good corporate governance practices. According to statistics on shareholders' meetings, in 2016 up to 70% of the TWSE listed companies adopted poll voting at their AGMs, which is a 56% increase comparing to that in 2015. Among these companies, more than 93% have reported the resolution results to the MOPS on the same day of the meeting. In 2016 more than a half of the TWSE listed companies adopted electronic voting system at their AGMs, increasing by 86% compared to that in 2015, and nearly a half of TWSE listed companies adopts the director nomination system in their articles of association; it's a 34% increase comparing to that in 2015. In 2016 the AGM handbooks and annual reports were disclosed on an earlier date than in 2015. Concerning "Board Structure and Operating", as of June 2016 the number of TWSE listed companies with audit committees has reached 35%. 87% of the TWSE listed companies have established independent directors, which has increased by 20% compared to that in 2015. About "Information Disclosure", in 2016, 30% of listed companies provided meeting notices in English, 21% provided AGM handbooks in English, and 16% provided English annual reports. There are significant improvements in information transparency, but there is still room for improvement.
 
The Stock Exchange has underlined that good corporate governance is the most important foundation for a sound capital market, and it is also the key to attract long-term investors. Competent and judicial authorities, listed companies, institutional investors and corporate governance related agencies have their roles to play in the corporate governance ecosystem. In the future, the Stock Exchange and the Corporate Governance Center will continue to cooperate with the members of the corporate governance ecosystem to promote corporate governance related measures, especially the exercise and enhancement of the board functions, with the goal to improve the quality of the whole capital market and increase competitiveness among listed companies. The statistic data related to corporate governance are available in the database area of the Corporate Governance Center's website (http://cgc.twse.com.tw/).