The Taiwan Monthly

Apr. 2020

Corporate Governance

2020 Corporate Governance Evaluation Educational Sessions available on TWSE WebPro website

The TWSE notes that since the implementation of the corporate evaluation in 2014, the evaluation indicators, scoring method, and evaluation results have become increasingly valued by listed companies. The educational seminars held by the TWSE and TPEx during the first quarter of each year also attract around 2000 listed companies’ representatives. This year, due to the coronavirus outbreak and to avoid the infectious risk in large indoor environment, the educational sessions were provided on the TWSE WebPro website. Listed companies had access to the online video sessions from February 26 to March 6, to better understand the content of the 2020 (seventh) Corporate Governance Evaluation and take early responses.

 

The TWSE explained that the revisions of the 2020 Corporate Governance Evaluation tailor to the “New Corporate Governance Roadmap (2018-2020)” published by the competent authority, and are made with references to the trends of local and foreign corporate governance development, as well as latest amendments to the statutes and policies, to continuously enhance the evaluation standards. Four new indicators were added, seven deleted (one of which is combined into the point deduction indicators) and 22 revised, and three indicators’ types were adjusted to promote corporate governance excellence among all companies.

 

The TWSE emphasized that the purposes of promoting Corporate Governance Evaluation are to guide the companies via the context of the indicators, to take initiatives in adopting the best international standards, and to raise the level of corporate governance in Taiwan through a healthy competition of evaluating all TWSE- and TPEx-listed companies. For example, two indicators regarding ethical conduct was revised for this year’s evaluation: “Did the company have a designated unit in charge of promoting ethical corporate management, with responsibility for establishing and supervising the implementation of the ethical corporate management policies and prevention programs, and disclose the unit's operations and implementation on the company's website and in its annual report, and did the unit report to the board of directors at least once a year?”, and “Did the company disclose on its website or in its annual report its ethical corporate management policy passed by its board of directors, expressly prescribing its specific ethical management practices and its programs to prevent unethical conduct?”. The revisions were made in response to the amendments to the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies” published in May 2019, to enforce the resolutions of the 2018 United Nations Convention Against Corruption and the Central Integrity Committee, that is to promote the anti-corruption objective of “advocating ethics in private corporate”, strengthen international connections, and bolster ethical management and anti-corruption practices in listed companies.

 

In addition, the revisions were also made to the indicators in consideration of the international trend of nonfinancial disclosures, and the “Task Force on Climate-related Financial Disclosures (TCFD)”. For example, “Did the company have a designated unit in charge of promoting corporate social responsibility that, following the principle of materiality, conducted risk assessment on environmental, social, or corporate governance issues related to the company's operations, and adopted relevant risk management policies or strategies, and did it disclose the same on the company's website and in its annual report?” is an indicator for extra credit. And “Did the company set management policies for energy conservation, reduction of carbon/greenhouse gas (GHG) emissions, water use, or other waste/pollutants?” will receive one point if the company has assessed the potential risks and opportunities presented by climate change for the company in the present and in the future, and has adopted corresponding measures dealing with climate change issues, one additional point will be added to the total score. By revising the indicators, and rewarding extra points, the nonfinancial disclosures standards are expected to be aligned with the international trend, and listed companies are encouraged to put more emphasis on climate change issues.

 

The Corporate Governance Evaluation is one of the most important actions in the “2013 Corporate Governance Roadmap”. After implementing and promoting the evaluation system for six years now, corporates are inspired contribute resources in improving corporate governance and corporate social responsibility. The data over the past six years shows noticeable enhancements in corporate governance practices. For example, regarding the protection of shareholder equity, 764 companies, or 81% of all TWSE-listed companies, have specified the adoption of a candidate nomination system for the election of directors and supervisors in their bylaws in 2019, representing a big leap forward from 24% in 2014. Regarding the operation of the board of directors, 696 companies or 74% of the TWSE- listed companies have set up an audit committee, tripled the number 170 in 2014. Among the 262

 

TWSE-listed companies that have appointed their corporate governance officers, more than half of them (140 companies) have voluntarily made such appointments. Regarding nonfinancial disclosure, 359 TWSE-listed companies have prepared their CSR reports and 90 of them are voluntary. From the above data, TWSE-listed companies are taking a more proactive attitude toward adopting good corporate governance practices.

 

This year’s educational sessions cover the main revisions of the evaluation indicators, and elaborate scoring guidelines through examples. In correspondence to the five main objectives of the recent “New Corporate Governance Roadmap (2018-2020)”, many regulations of corporate governance are amended to continuously enhance the functionality of the board of directors, protect shareholders equity, improve nonfinancial disclosure, and assist companies in ethical management. The educational sessions also provide specific topics regarding the recent modifications to the regulations of corporate governance, and the practices of shareholder services. Our goal is to assist listed companies to strengthen corporate governance, raise the international rating of Taiwan’s corporate governance, as well as enhance the competitiveness of Taiwan’s capital market.

 

The online educational sessions offer solid and extensive content. All listed companies were invited to watch the videos from February 26 to March 6. Questionnaires were sent to listed companies to evaluate the effectiveness of the online sessions, and to collect valuable feedback. Those who are interested can access the online sessions by visiting the TWSE WebPro website and choosing “Corporate Governance”.

 

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