Taiwan Depository & Clearing Corporation

Two bellwether global proxy advisors, ISS and Glass Lewis, have both issued the latest 2021 Taiwan Voting Guidelines. The FINI holding ratio of the Taiex market is currently above 40%, so it’s very important for companies, especially those listed on the TWSE and TPEx markets with higher FINI holdings, to win the support of FINI investors for any shareholder meeting proposals.

Global proxy advisors have long had a profound influence on FINI voting in shareholder meetings. Given the multitude and complexity of investment targets, most FINI investors value the analyses of proxy advisors and tend to follow their recommendations when voting as this makes their decision making more efficient. As FINI holding in the Taiex rises, the opinion of global proxy advisors matters more as it could largely determine whether proposals are approved or declined at a shareholder meeting.

Before preparations for 2021 AGMs start, TDCC would like to provide an overview of the two proxy advisors’ perspectives on the Taiex market in regard to the exercise of voting rights by FINI.

ISS suggests investors vote against cash dividend distribution proposals if the payout ratios have remained low without justification. They should also vote against the re-election of incumbent board directors, supervisors or committee members if major flaws exist in the company’s corporate governance, stewardship, risk management and/or fiduciary duty.

Glass Lewis says all Taiwanese companies should “have at least one female director” by 2022 and investors should vote against the chair of the nomination committee as a board director if a company fails to achieve that. Also, independent directors that have been in office for more than twelve years will no longer be deemed independent from 2022. The independence of those that have been in office for more than nine years, but less than twelve years, shall be reviewed on a case by case basis. In its 2021 Voting Guidelines, Glass Lewis adds a new section on the standard policy for corporate guarantee, outlining the focus of assessment, including information disclosure, relationship between the company and receivers of the corporate guarantees, benefits of such guarantees to the company and shareholders, as well as the size of and rationale behind the guarantee.

TDCC President Chu Han-Chiang said issuing companies and investors may access the full Voting Guidelines and contact information via the TDCC IR Platform, which is part of TDCC’s corporate governance 3.0 initiatives. TDCC will host seminars to help local issuing companies understand the key issues that proxy advisors pay attention to in order to facilitate communication between the two parties, ultimately strengthening the common good of the market. For more information, please visit TDCC’s IR Platform at https://irplatform.tdcc.com.tw/ir/en/front/index