The Asian Corporate Governance Association (ACGA) has urged Taiwanese regulators and listed companies to change shareholder meeting and voting procedures, improve board effectiveness and increase shareholder rights.
In a white paper, ACGA advises companies to align themselves to global best practices, without necessarily waiting for formal regulatory changes, to bring Taiwan in line with global corporate governance procedures and boost investor confidence.
The ACGA report draws attention to difficulties faced particularly by foreign shareholders in making informed voting decisions at shareholder meetings in Taiwan. The white paper urges Taiwanese companies to avoid clustering meetings by spreading out AGM dates over the course of several weeks. It suggests the release of meeting agendas well in advance of meeting dates, and the provision of biographies for all director candidates, with English translations.
The report also recommends that companies introduce greater clarity in the voting system by adopting poll voting, having an independent entity counting votes and publishing a full breakdown of results as soon as possible during or after meetings.
To ensure greater board effectiveness, the white paper encourages Taiwanese companies to strengthen and broaden the role of independent directors on boards, and to introduce independent audit committees to replace the current internal supervisor system.
The ACGA identifies a lack of independent directors and auditing mechanisms as one of the most important factors keeping corporate governance in Taiwan behind global standards.
It is now mandatory for newly listed companies to have independent directors, but many of those already listed have not made the change. The white paper recommends that companies rectify this even in the absence of regulatory obligations.
Finally, the ACGA recommends the implementation of measures to improve shareholder rights. Companies are urged to be more open with disclosures so as to allow investors to achieve a better understanding of company valuations.
It is also suggested that the shareholder agreement threshold for voluntary de-listings be increased.
Furthermore, regulatory change is encouraged to remove the option whereby boards can decide to de-list on their own. Boards should also not be allowed on their own to set the size or price discount of private share placements, states the ACGA.
Read the ACGA white paper on Taiwan in full here.