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Revision of Stewardship Principles for Institutional Investors Released
In accordance with the new Corporate Governance Roadmap (2018 - 2020) and in line with the international trend of stewardship and the operations of domestic institutional investors, the Taiwan Stock Exchange Corporation revised the Stewardship Principle for Institutional Investors on August 10, 2020.
In order to promote corporate governance, institutional investors are encouraged to pay attention to the operating conditions of the investee, attend the shareholders' meetings, exercise their voting rights and properly communicate and interact with the management. The market mechanism is also used to strengthen the corporate governance level of the overall capital market. In response, the TWSE, in collaboration with the Taiwan Financial Services Roundtable Co., Ltd., the Taiwan Depository and Clearing Corporation and the Securities Investment Trust and Consulting Association of the Republic of China, jointly issued the “Stewardship Principles for Institutional Investors” of the country. Driven by the implementation of the new Corporate Governance Roadmap, 151 companies have already signed the Principles and stewardship has become an important part of Taiwan's corporate governance system.
In the process of revising the Stewardship Principles, the TWSE consulted domestic and foreign institutional investors to ensure that the revision is in line with practical implementation. In addition, it took into consideration the suggestions provided by international corporate governance organizations, including International Corporate Governance Network (ICGN) and The Asian Corporate Governance Association (ACGA), to assure Stewardship Principles of Taiwan are globally aligned.
The key points of the revision are as follows:
- Taking into consideration the sustainable development of an investee company: Institutional investors are advised to include ESG issues in the investment evaluation and decision making processes, as well as to evaluate ESG-related risks and opportunities and understand the sustainable development strategy of the investees companies when tracking their performance.
- Expanding the scope of stewardship: with the expansion of the investment scope of institutional investors other than stocks, institutional investors should expand their stewardship to bonds, real estate, private equity funds, alternative investment and other asset types according to the importance of the investment.
- Establishing and disclosing voting policies and strengthening the disclosure of voting records: institutional investors should establish and disclose their defined voting policies and disclose the voting process, such as explaining the reasons for approving, opposing or abstaining from major motions.
- Improving the disclosure quality of stewardship information: institutional investors are advised to publish a stewardship report on their websites every year and include in the report a statement of compliance with the Stewardship Principles, their reasons for not being able to comply with some of the principles, the resources invested by the institutional investor to implement stewardship, a description of the achievements with actual cases, the voting process and other relevant stewardship information.
The TWSE said that the companies which signed the Principles should update the compliance statement in accordance with the revised Principles within six months after its announcement and inform the Corporate Governance Center; then, the updated situation of each signatory will be disclosed on the Corporate Governance Center website. The signatory should refer to the revised Stewardship Principles and follow the guidelines to gradually implement the stewardship of institutional investors to improve the overall investment efficiency and jointly improve the quality of the Taiwan capital market.