The Taiwan Monthly

Oct. 2018

Corporate Governance

Investor Relations Forum gains momentum

The Taiwan Stock Exchange (TWSE) is continuously enhancing interactions between  listed companies and investors. One way this is done is by holding Investor Relations Forum, the first of which took place on September 10. The TWSE introduced highlights of the “Corporate Governance Roadmap (2018~2020)” and industry experts gave practical experience sharing to the audience that explored investor relations  practices to increase corporate value in the years to come.

 

Rebecca Chen, TWSE Senior Executive Vice President shared the Taiwan capital market has a high percentage of institutional investors that contributes to greater market transparency and stronger corporate governance in Taiwan. In 2016, the “Stewardship Principles for Institutional Investors” were released, along with indices that support solid governance values. These include TWSE RA Taiwan Employment Creation 99 Index, TWSE  RAFI® Taiwan High Compensation 100 Index, TWSE Corporate Governance 100 Index and FTSE4Good TIP Taiwan ESG Index. Since 2014, listed companies within a certain criteria are required to file the Corporate Social Responsibility (CSR) report. In meeting the English-language needs of global investors, listed companies that fall into a certain category will be required to publish their financial statements, annual reports, AGM related material, and more in English effective 2019.

 

Cathay Life Insurance Vice President, Lin Shih-Ciao delivered a keynote speech about “Stewardship Principles Practices of Institutional Investors”. He shared that Cathay Life uses the three major steps, namely, dialogue, engagement and voting. He expressed the strong desire that all listed companies upgrade their financial and non-financial reporting transparency, and positively engage investors and global ESG rating institutions.   

 

Chailease Holding Company Chief Strategic Officer Liao Ying-Chih gave an speech on “Communications with Institutional Investors” wherein he stated the objective of IR is to engage investors in ways that increase corporate capital, liquidity and stock transaction volume as well as solid corporate value. The strategy encompasses an action plan that conveys clear and consistent core information, plus timely and effective communications with investors to achieve objectives.   

 

QIC CEO Alex Lee shared his knowledge of “How IR enhances the value of investment” He noted that the new EU MiFID II impacted foreign investment around the world because institutional investors are required to pay for the research reports, investment recommendations and roadshows prepared by the brokerage firms. This surge in the cost of access to information may hamper investment here and abroad as cost factors make it more challenging for the companies to be visible to foreign investors. According recent research about the influence of MiFID II, institutional investors pay greater attention to listed companies that provide free reports. IR plays an important role under this new EU requirement because IR is where investors first look for information. Augmenting corporate visibility and having good communication practices will attract investors.

 

TWSE Senior Vice President Joe Cheng was the moderator for the second half of the forum, which was a panel session. Diverse backgrounds were represented in the panel with the previous three speakers and Director Julian Yu of the Bureau of Labor Funds of the Ministry of Labor, and IR consultant Director Celine Feng of Ipreo by HIS Markit. Director Yu urged listed companies to disclose non-financial information on their websites to optimize being part of  ESG global index constituents. He also stressed the value of the Stewardship Principles in engaging with investee companies. Director Feng spoke on the trend of shareholder activism, which in Taiwan translates to greater AGM participation and nomination of board candidates. International institutional investors pay strict attention to dissenting shareholders and their reasons for wanting a change in the board of directors; and secondly, what type of board candidates best fit the corporate and shareholder values in the long run.

 

Chailease Holding CSO Laio Ying-Chih was asked about the impact of MiFID II on Taiwan’s market. He responded that when his company entered the Taiwan capital market, a priority was made to engage with institutional investors and created an IR database. He stressed the importance of investors’ conferences to assure smooth communication with shareholders. The same question was directed to Director Celine Feng, who agreed with the perspective of other panelists that SMEs tend to lack research reports, which institutional investors want to see. QIC and Cathay Life shared the same view that IR creates value among investors and IR should be part of any company’s operating strategy to facilitate dialogue.   

 

The forum has attracted almost 200 participants, including spokespersons and investor relation representatives of listed companies. The Forum delivers crucial information to keep up-to-date on industry trends and analysis. The TWSE will host two other forums on October 4 and October 5 in Taichung and Kaohsiung, thereby cultivating corporate social responsibility values into the operational foundation of all listed companies in the Taiwan capital market.

 

For further inquiries, please contact Ms. Yang at 1214@twse.com.tw .