• Directory of Taiwan

Taiwan holds stewardship code forum to push corporate governance

Taiwan holds stewardship code forum to push corporate governance

The Taiwan Stock Exchange (TWSE) recently held a forum on the Taiwan Stewardship Code, hoping to get institutional investors to make a greater commitment to improving their corporate governance.

Institutional investors hold nearly 50 percent of the market value of Taiwan's stock market and trade about half of all shares traded every day, demonstrating their importance to the stability and development of the equity market, the TWSE said.

Jamie Allen, secretary general of the Hong Kong-based Asian Corporate Governance Association, said at the March 29 meeting that while some investors paid attention to corporate governance in Australia in the 1980s and in the U.K. in the 1990s, it was not until 2010 that Britain set up its stewardship code.

Japan, Hong Kong and Malaysia have followed suit more recently, he said.

Allen cited several issues that needed to be addressed in a stewardship code, one of them being the proper relationship between a company's board of directors and its shareholders.

He said board directors are the main managers of companies, so shareholders needed to establish how they can most efficiently perform their stewardship function.

Another issue, Allen said, was how political intervention in government pension funds or institutional investors should be dealt with.

Jerry G. Fong, a law professor at National Chengchi University, said the Taiwan Stewardship Code has six principles.

Among them, institutional investors should establish and disclose stewardship policies, establish and disclose policies on managing conflicts of interest, and pay continued attention to the companies they have invested in.

They also include maintaining an appropriate dialogue and interaction with investee companies, establishing and disclosing a clear policy on voting and voting results, and periodically disclosing the status of fulfilling stewardship responsibilities to clients or beneficiaries.

Chunghwa Post Co. Chairman Ong Wen-chyi said his company manages on its own about 99 percent of its NT$6.7 trillion (US$207 billion) in assets, which exceed the assets of Singapore's Temasek Holdings by about 10 to 15 percent.

Ong said the company pays close attention to corporate governance and corporate social responsibility and indicated that 98 percent of the stocks it has invested in are based on ESG (environmental, social and corporate governance) considerations, Ong said.

The draft Taiwan Stewardship Code was made public for discussion last December and formally announced in March.

The National Development Fund voluntarily signed the stewardship code at the end of last month.

Updated : 2021-08-02 15:18 GMT+08:00