The Taiwan Monthly

Jun. 2019

Corporate Governance

TWSE Announced the 2018 Corporate Governance Evaluation Results

The Taiwan Stock Exchange (TWSE) announced that the fifth (2018) Corporate Governance Evaluation had been completed. A total of 1,554 companies were evaluated, including 868 TWSE- and 686 TPEx-listed companies. Based on the evaluation scores, the companies were divided into seven groups - Top 5%, 6% to 20%, 21% to 35%, 36% to 50%, 51% to 65%, 66% to 80% and 81% to 100%. The results for the TWSE- and TPEx-listed companies were announced separately.

 

The TWSE pointed out that, compared to the 2017 evaluation, the list of companies in the top 20% contains 28 new entries this year, while the list of companies in the top 5% contains 14 new entries. The replacement ratio is 16% and 33%, respectively. Among the top 5% group, 4 out of the 14 companies that moved into Top 5% this year are new entries for the first time.

 

Based on the new Corporate Governance Roadmap (2018-2020) and taking into account the different regulatory requirements on corporate governance and internal control for companies in different industries, the evaluation results based on industry by industry basis was added this year, including the financial industry (total of 42 companies), the electronics industry with a market value of 10 billion TWD or more (total of 151 companies) and the non-finance and non-electronics industry with a market value of 10 billion TWD or more (total of 171 companies). Combined ranking is adopted among TWSE- and TPEx-listed companies. Based on the scores, the companies are classified into five groups, which are: top 10%, 11% to 20%, 21% to 40%, 41% to 60% and 61% to 100%. This approach is expected to increase the comparability of information and encourage the proactive enhancement of corporate governance by the companies.

 

Since the implementation of the Corporate Governance Evaluation system in 2014, the TWSE has now completed the evaluation for five rounds. Through the selected evaluation indicators, TWSE endeavors to, step by step, introduce the best corporate governance practices to the companies. This is showcased by the following corporate governance statistics. With respect to the shareholders meetings, all listed companies have adopted electronic voting and voting by poll in 2018. 669 companies have mandated a director or supervisor candidate nomination system in their articles of incorporation, which accounted for 72% of all the TWSE-listed companies and marked a significant increase from the 24% in 2014. In terms of the structure and operations of the board of directors, a total of 586 companies have established an audit committee, which is 63% of the total TWSE-listed companies and marked a significant improvement from the 20% in 2014. As to information disclosure, the number of companies that filed financial statements for the previous year by the end of February has grown to 82 in 2018 from 22 in 2014. Also, the number of companies which have provided information in English for their AGM has also considerably increased. For example, the number of companies that have prepared English meeting notices has significantly increased to 451 when compared with the 73 in 2014. The number of companies that provided an English agenda handbook has grown from 80 to 267. Moreover, 196 companies have prepared English annual reports as compared to the 80 previously. In addition, the number of companies that have compiled corporate social responsibility reports has grown to 351, which is also a big increase from the 171 in 2014.

 

Corporate Governance Evaluation is one of the most important tasks of the “Corporate Governance Roadmap 2013.” In the new Corporate Governance Roadmap (2018-2020), “enhancing the effectiveness of the corporate governance evaluation system” is also highlighted as the top strategic objective. In future, the TWSE will continuously improve the Corporate Governance Evaluation system and encourage companies to value corporate governance voluntarily in order to enhance the international competitiveness of the Taiwan capital market.

 

To encourage the top performing companies, TWSE and TPEx plan to hold an award ceremony to honor the Top 5% companies (43 from TWSE and 34 from TPEx). The results of the 2018 Corporate Governance Evaluation can be found on the Corporate Governance Center website (http://cgc.twse.com.tw/evaluationCorp/listCh) and the SFI website (http://www.sfi.org.tw/finance/finance1/finance1_1). The results are also available through a link from the Market Observation Post System (http://mops.twse.com.tw/mops/web/index) for easy access.

 

For further inquiries, please contact Ms. Hsieh at 1124@twse.com.tw .