12 - The Assessment of Taiwan’s Shareholder Stewardship Codes

Summary

Taiwan launched its Stewardship Code in 2016 and modified it in 2020. Although patterned after the UK model, it differs in many aspects. Taiwan adopts the voluntary opt-in model. After becoming signatories of the Code, institutional investors are expected to perform stewardship duties according to its Principles and Guidelines. Taiwan has a ‘comply or explain’ policy and no sanctions for non-compliance. Would an institutional investor act as a good steward of investee companies while pursuing the overall interests of various fund provider types, i.e., shareholders, clients and beneficiaries? An inherent difficulty is how overall interests can properly be ensured while making investment decisions and performing stewardship duties. Another major issue is whether there are monitoring mechanisms to ensure that the Code can produce the expected effects. The author suggests that the Code will identify its objectives first. A system for evaluating the performance and disclosure quality of institutional investors may be a good way of ensuring that the Code produces optimal value. The Taiwan Securities and Futures Investors Protection Center acts as an alternative form of good stewardship.