To coordinate with the implementation of measures in the Corporate Governance Roadmap, the Taiwan Stock Exchange (TWSE) comprehensively overhauls “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies.” These principles offer guidance that meet practical needs and agree with international development trends for TWSE/GTSM listed companies. They also help corporations to foster a corporate culture that emphasizes corporate governance.
The TWSE states that, since “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies” became effective on 2002 to this day, it has been modified many times. The major purpose of such modifications is helping TWSE/GTSM listed companies to create sound corporate governance systems and promote healthy development of securities markets. To allow the principles to evolve with time and become a benchmark that guides practices, the TWSE uses corporate governance trends, examples worldwide and issues that have grabbed the attention of the public in Taiwan in recent years as reference. Furthermore, after discussions with various related businesses and institutional investors engaged in corporate governance, TWSE has made substantial amendments to the principles after a comprehensive review: 19 articles were amended, 1 article was added, and 6 articles had revisions to their text.
The TWSE states that the focus of this revision is based on the planning of the“Corporate Governance Roadmap 2013” announced by the FSC. The revision also takes the current condition of corporate governance in neighboring Asian countries and relevant regulations in developed nations into consideration. The revised principles added provisions in the diversity in the composition of board members. The revised principles also require appropriate diversity of the board members based on the companies’ operations, types of businesses, and development needs. At least, the diversity measures should add standards for the two major dimensions that are basic qualifications and values (including gender, age, nationality, and culture) and professional knowledge and skills (including professional backgrounds, professional skills, and industry experience such as law, accounting, industry, finance, marketing, or technology).
Additionally, to improve the protection for whistleblowers and the internal communication between independent directors, supervisors and members of the audit committee, and internal audit supervisors or CPAs who are work in the capacity as independent external auditors, the TWSE added measures that encourage TWSE/GTSM listed companies to provide channels for whistleblowers and the regulation to protect them. The TWSE also added measures that provide communication channels and mechanisms between independent directors, supervisors and members of the audit committee, and internal audit supervisors or CPAs who are work in the capacity as independent external auditors. Such measures are incorporated into internal control regulations to improve internal oversight of corporations.
The TWSE also indicates that this revision uses the content of board performance review table that is practiced worldwide for the purpose of providing a basis for the regulations and procedures of self-review and peer review for boards of TWSE/GTSM listed companies. The TWSE added dimensions and examples of indicators of self-review and peer review for boards. The TWSE also encourages companies to codify the regulations and procedures on performance review for boards so that these companies have examples to follow.
The TWSE emphasizes that companies listed on TWSE and GTSM should refer to the newly revised Corporate Governance Best Practice Principles, and update or amend their own principles accordingly. In addition, they should also review and improve on existing systems and processes, as well as incorporate the content of their principles into daily operating activities for the implementation of corporate governance.
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