In response to rapidly shifting capital markets, Taiwan has seen added impetus to further refine domestic corporate governance and capitalize on the growing global attentiveness to environmentally and socially responsible corporate behavior. The Financial Supervisory Commission (FSC) has therefore chosen 2021 to initiate its Corporate Governance 3.0 plan, a three-year roadmap that lays out five principal action plans and 39 specific measures to prompt the widespread adoption of good governance and strengthen sustainable development. The plan also aims to drive positive developments and interactions among investors and other stakeholders, create more fully the conditions conducive to the sustainable development of environmentally and socially responsible governance, and ultimately boost the global competitiveness of Taiwan's capital markets.
Five principal action plans
■ Strengthen the dynamics and functions of boards of directors: Companies seeking an initial public offering, as well as listed firms with paid-in capital of at least NT$10 billion (US$344.6 million) and all listed companies in the financial and insurance industries, will be required beginning in 2024 to reserve at least a third of board seats for independent board members. In addition, no more than half of independent board members may serve beyond three consecutive terms.
■ Improve information transparency: The requirement to produce and file a sustainability report will be extended to listed firms with paid-in capital of at least NT$2 billion (US$68.9 million), to underscore the importance of environmental and social responsibility to corporate governance. Listed companies will also be required to publicize pre-audited financial results annually with the goal of improving transparency and timeliness.
■ Enhance communication with interested parties: The daily maximum number of listed firms permitted to hold regular shareholder meetings will be incrementally lowered to 90 from the current limit and then to 80 companies in order to guarantee the proper exercise of shareholder rights.
■ Encourage investor stewardship: Principles will be established to encourage proxy advisory firms to improve the quality of their shareholder voting recommendations, which will facilitate the participation of investors in corporate governance at listed companies.
■ Lay deeper foundations for a self-perpetuating culture of sustainable corporate governance: Plans call for the Taipei Exchange to set up a "sustainability board" to promote sustainability bonds, green bonds, socially responsible lending instruments, and other products related to sustainable development.