The Taiwan Monthly

Oct. 2019

Corporate Governance

Strengthening Stewardship Principles for Institutional Investors and Listed Companies Investor Relations Forum cocreate maximum value for both parties

The Taiwan Stock Exchange organized the "Strengthening Stewardship Principles for Institutional Investors and Listed Companies Investor Relations Forum" on September 19 to strengthen institutional investors' implementation of the Stewardship Principles and improve interactions between institutional investors and listed companies. In addition to an introduction of the "Corporate Governance Roadmap (2018-2020) Important Measures" by TWSE, the agenda contained keynote speeches by experts and panel discussions aimed at discussing the experience of implementing stewardship activities and helping listed companies improve investor relations.

 

Lih-chung Chien, TWSE President stated in his speech that more than 40% of the listed shares in terms of market value are held by foreign investors, and institutional investors play important roles in Taiwan’s capital market. With the implementation of the Corporate Governance Roadmap, the number of signatories of the "Stewardship Principles for Institutional Investors” has increased from 38 to 149 within two years. The TWSE updated the "Review and Recommendation of Stewardship Activities Disclosure" in May this year to strengthen stewardship principles for institutional investors in Taiwan and also aggressively enhance IR tasks in the overall capital market. In addition to cooperating with large securities firms each year to hold a series of events to attract foreign investors, the TWSE also holds themed business performance publication events each quarter to promote interactions between institutional investors and listed companies.

 

The first keynote speech was given by Chao-En Hsieh, the Senior Manager of the Corporate Governance Department of the Taiwan Stock Exchange. He explained the "Corporate Governance Roadmap (2018-2020) Important Measures" which included related measures and the results of the Roadmap. The speech also covered quality improvements of listed companies’ investor conferences, strengthening information disclosure in English, and superior practices of institutional investors' implementation of Stewardship Principles for improving the quality of disclosure.

 

The second key note speech was given by Tina Chang, a member of Blackrock’s Investment Stewardship team, who spoke about the "Experience of Implementing Stewardship Activities". She explained that BlackRock invests in companies for the long-term on behalf of its clients, and stewardship is how the firm promotes sound corporate governance and business practices on their behalf. Core components of the investment stewardship include analyzing and engaging with management or board members on corporate governance and other ESG topics, proxy voting, and participating in market level dialogue to understand and contribute to the development of policies and practices that support long-term shareholder value creation. Environmental and social issues are also important elements in the risk management of corporate governance. Different companies have different characteristics, so institutional investors like BlackRock fulfill their stewardship duties through carefully studying and engaging with companies around five engagement priorities: governance, corporate strategy and capital allocation, compensation that promotes long-termism, environmental risks and opportunities, and human capital management.

 

Andy Chien, Deputy Director of TECO Electric & Machinery Co. Ltd. was invited to share his experience in "Interact with Institutional Investors to Promote Corporate Value" in the third keynote speech. Mr. Chien stated that companies use annual reports, CSR reports, and other information disclosure channels as well as investor conferences, investor forums, and other marketing channels to display the companies' value. IR is the communication channel between companies and institutional investors. The goal of the work is to ensure reasonable valuation of the capital market and maintenance of investor relations to create liquidity, obtain long-term support from shareholders, and reduce information asymmetry. As for the impact of MiFID II, TECO currently opts to strengthen web content for investor relations, ensure the delivery of correct information in research reports, and establish direct communication channels with investors to respond to related needs.

 

TWSE Senior Vice President Pony Huang 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 two speakers and Director Julian Yu of the Bureau of Labor Funds of the Ministry of Labor, IR Consultant Director Celine Feng of Ipreo by HIS Markit, and Senior Manager Tom Huang of BizLink Holding Inc. The discussion included bilateral communication with investor relations and institutional investors, future trends in institutional investors' implementation of stewardship principles, and the effects of how both parties implement the stewardship principles and investor relations to maximize both values.

 

Director Julian Yu shared his experience in issues of concern to investee companies starting from the financial perspective into business strategies and social responsibilities. He also engaged investee companies through the perspective of stakeholders and shareholders. Recent actual cases include labor rights, successor models, and fund implementation.

 

Senior Manager Tom Huang stated that the company had begun engaging in investor relations by participating in various forums and introducing its business model to increase its exposure. It also used the uniqueness, competitiveness, and future long-term development goals of the company to present the company's value. Its long-term strategy is to hold roadshows and investor conferences to actively reach potential investors and adopt a conservative and consistent form of expression to maintain long-term stable relations with investors.

 

Director Celine Feng shared recent international trends and foreign shareholders' expectations of investee companies such as the avoidance of excessive concurrent roles for directors which may affect their eligibility, concurrent services as both the chairman and general manager, and the exercise of the shareholder proposal rights. In addition, companies should also fully understand the role of the investors and create customized information that meets shareholders' expectations and needs to achieve a win-win. Tina Chang also emphasized the importance of the role of shareholders. IR should serve as a bridge between the companies and investors. Both parties should fully discuss and strengthen corporate governance. Companies can consider a broad network of candidates when selecting board members to increase the diversity of board members and strengthen its operations.

 

With regard to the performance of the investor relations of listed companies, Deputy Director Andy Chien stated that IR should communicate with investors based on the principle of good faith. Companies can also explain their long-term business strategies, ESG information, and other non-financial information in greater detail as references for determining the value of companies. Senior Manager Tom Huang explained the role of IR in bilateral communication. In addition to communicating with investors, IR also discusses with senior management of the company and quickly responds and explains the companies' affairs to improve communication efficiency.

 

The forum attracted almost 200 participants, including institutional investors, spokespersons and investor relation representatives of listed companies. The panel discussion adopted different perspectives to provide attendees with a comprehensive understanding of institutional investors' stewardship principles and the actual operations of IR in listed companies. The TWSE hopes that the event facilitated fruitful dialogue and interactions between institutional investors and listed companies, and maximized value for both parties to improve the quality of investments in the Taiwan capital market.

 

For further inquiries, please contact Ms. Chang at 1087@twse.com.tw