The Taiwan Monthly

Jan. 2020

ESG

The 2020 (7th Round) Corporate Governance Evaluation Indicators are officially announced

The Taiwan Stock Exchange (TWSE) has officially announced the 2020 (7th Round) Corporate Governance Evaluation. The system consists of four dimensions and 82 indicators and is in effect between January 1, 2020 and December 31, 2020. The 2020 Evaluation results are expected to be announced by the end of April 2021.

 

The TWSE points out that the revision of the 7th Evaluation follows the "New Corporate Governance Roadmap (2018-2020)" and continues along the themes of stronger qualitative indicators, optimized differentiation grading, and ongoing questionnaires to gather feedback. The Evaluation also reflects important trends in corporate governance, regulations and policies worldwide as well as suggestions from various industries. Four new indicators have been added and seven old ones removed (of which one indicator are merged into the additional deduction category). Four indicators have the wording slightly adjusted, 22 indicators are amended, and three indicators types are adjusted. The goal is to drive corporate governance culture.

 

The TWSE goes on to state that a number of indicators related to compliance were moved in response to relevant amendment of applicable laws and currently compulsory requirements. To enhance a differentiation effect, the amendment also takes into account the New Corporate Governance Roadmap and the feedback received from all sectors. For example, the indicator "implementation of procedures for approving appointments, performance evaluation, and remuneration of internal auditors" is added to enhance the independence of internal auditors; and the indicator "publication of financial statements on the day after they are approved by or submitted to the board of directors" is added to make information more transparent and up-to-date. To strengthen the board of directors’ ability to identify material risks, a higher weighted scoring indicator "implementation and disclosure of a board-approved risk management policy and performance" is also added.

 

In addition, the Evaluation continues to strengthen qualitative indicators, and focuses on "actual implementation" or different scores for various degrees of implementation. For example, to encourage companies to pay attention to intellectual property management, a differentiation grading indicator "basic points for implementation of business targets linked intellectual property management plans and disclosure of performance; and additional points awarded for the content of disclosure has been certified" is added.

 

The TWSE emphasizes that the purpose of the Corporate Governance Evaluation is to lead companies to the goal of best practice in corporate governance through the essence of the indicators, and it also serves as a mechanism for healthy competition among the companies listed on the TWSE or TPEx. The ultimate goal is to improve the image of these companies and make them more competitive in the global capital market. The 2019 (6th) Corporate Governance Evaluation is still ongoing. The results are expected to be announced by the end of April 2020.