2023 Guide to Investing in Taiwan - Taiwan Stock Exchange Corporation

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2023 Guide to Investing in Taiwan

Macro Overview of Taiwan Economic Development Capital Market Listed Securities Trading and Clearing Trading Principles Block Trading Odd Lot Trading Margin Trading Clearing and Settlement Securities Borrowing and Lending Direct Market Access Funding Free Delivery Fee Schedule and Transaction Taxes Market Participation Individual Investors and Institutional Investors Registration Multiple Trading Accounts Trading and Settlement Corporate Governance Corporate Governance Center Mission and Vision Organizational Structure Main Functions Shareholder Voting Investor Protection Securities and Futures Investors Protection Center Information Disclosure Market Observation Post System Investment-related Websites Contact Us

I. Macro Overview of Taiwan

Economic Development

Taiwan is a hub of the Asia-Pacific region, located in a significant economic and geostrategic position, with convenient logistics and transportation. Despite its compact size, Taiwan has a complete infrastructure and highly integrated industrial supply chain, which, in addition to decades of experience to cultivate outstanding scientific and technology talent, has laid the foundation for Taiwan's industrial development. At present, nearly half of the listed companies in Taiwan's centralized market belong to the electronics industry, with its trend-setting advances and innovative practices. The sound financing function of the securities market enables enterprises to grow stronger and promotes the development of Taiwan's economy. In 2022, Taiwan's semiconductor output value reached approximately USD162.3 billion; our ranking jumped to first in the world. Among them, Wafer OEMs, IC packaging and testing output value ranked first worldwide.

Small- and medium-enterprises ("SMEs") play a very important role in Taiwan's economic development, using flexible operating strategies, strong production efficiency and excellent cost control to provide customers with high value-added products and integrated services that create an outstanding competitive advantage. In 2021, the number of SMEs in Taiwan reached 1.59 million, accounting for above 98% of all enterprises. During a time when global economies are sluggish, the SME role becomes even more prominent in absorbing employment and stabilizing the economy.

As Taiwan is an export-oriented economy, Taiwan's foreign exchange deposits are rapidly accumulating under a high degree of internationalization and the competitiveness of its manufacturing industry. At the end of 2022, Taiwan's foreign exchange reserves were approximately USD554.9 billion. The International Institute for Management Development ("IMD") in Lausanne, Switzerland released the World Competitiveness Rankings in 2023, in which Taiwan's ranking rose to 6th, performing better than Hong Kong, China, South Korea and Japan. It demonstrates the strongest performance since 2012 and has been advancing in the rankings in the past five consecutive years.

In summary, Taiwan is positioned as a major Asia-Pacific transportation hub and as a global science and technology center. This, in addition to its solid industrial foundations, supported by a stable financial system and an outstanding talent pool, creates an excellent investment advantage and engages with international capital to invest in Taiwan.

Capital Market

Taiwan is one of the most active securities markets in the Asia-Pacific region. Currently, all listed securities are issued without physical stock certificates. As of the end of June 2023, there were 979 companies listed on the TWSE with a market capitalization of more than USD1.7 trillion and an overall market P/E ratio of 16.46. Furthermore, from January to June 2023, the centralized market trading value was more than USD 0.9 trillion. If economic scale is compared with stock market value, the total market capitalization of Taiwan in 2022 accounted for 195.29% of GDP.

As the operator of the Taiwan securities market, the TWSE continues to introduce diversified commodities to synergize the stock market. As of the end of June 2023, the assets of the 149 listed ETFs amounted to NTD1.52 trillion. These include stocks, overseas bonds, commodities (oil, gold, silver, copper, soybean), exchange rates (US dollars, Japanese yen), REITs, and other assets, as well as trading products such as leveraged, inverse and futures products. The indices tracked encompass the United States, Europe, Japan, China, Hong Kong, India, Vietnam and other markets, representing Taiwan investment globally. From January to June 2023, the average daily ETF product value reached NTD12.483 billion, accounting for 5.03% of centralized market transactions. Furthermore, Exchange Traded Notes ("ETNs") were launched in April 2019, and by the end of June 2023 there were 22 listed ETNs, including 16 domestic, three foreign, one leveraged, one inverse and one options strategy ETN.

The TWSE is actively implementing a new trading system. In March 2020, continuous trading was executed in a major market transformation that significantly enhanced overall securities market transaction efficiency and information transparency, catering to Taiwan's market and consistent with international standards. Moreover, an intraday odd-lot trading system was launched in October 2020, making it easier for younger investors to participate in the capital market. Starting from December 19, 2022, the matching interval has been shortened from 3 minutes to 1 minute. At the end of June 2021, Stock Market Making Mechanisms were realized to synergize market trading volume and liquidity.

In response to the government's industrial development strategy and efforts to optimize the investment environment for new ventures, the TWSE added the Taiwan Innovation Board (TIB) to the centralized securities trading market to encourage companies with key core technologies and innovative capabilities or innovative business models to enter the securities market. Market financing takes into account the purpose of developing the securities market and activating economic activities. In July 2021, the "Taiwan Innovation Board" was officially launched, bringing together domestic and foreign innovative companies to enter the capital market for listing.

Listed Securities

Foreign Institutional Investors ("FINIs") and Foreign Individual Investors ("FIDIs") may invest in the following securities of the domestic stock market:

Stocks, certificates of entitlement to new shares from convertible bonds, and Taiwan depository receipts publicly offered or privately placed by listed companies; ETFs; Government bonds, financial bonds, general corporate bonds, convertible corporate bonds, and corporate bonds with warrants; Beneficiary securities publicly offered or privately placed by trustee institutions, asset-backed securities publicly offered or privately placed by special purpose companies; Share subscription (sale) warrants; and Other securities approved by the regulatory authority.

II. Trading and Clearing

Trading Principles

Trading hours:

Regular trading session: 9:00-13:30; orders can be entered from 8:30. After-hours fixed price trading session: 14:00-14:30. Odd-lot trading session: intraday odd-lot trading, with orders entered between 9:00-13:30; after-hours odd-lot trading, with orders entered between 13:40-14:30. Auction trading session: 15:00-16:00. Tender offer trading session: 15:00-16:00.

Trading units:
Orders may be in one trading unit or multiples of trading units. One trading unit is 1,000 shares for stocks, warrants, domestic ETFs and ETNs. Some listed securities, such as cross-listed ETFs and foreign stocks, are not limited to 1,000 shares for one trading unit and are, instead, subject to the issuer's choice. Orders below one trading unit must trade as odd-lot orders.

Daily price fluctuation limit:
To maintain market stability, the daily price fluctuation limit on stocks, beneficiary certificates, Taiwan Depository Receipts ("TDRs"), convertible bonds, domestic ETFs and ETNs is set at 10% of the market opening auction reference price. For TWSE-listed bonds, the limit is set at 5%. There are some exceptions not under the 10% daily price fluctuation limit. These include the first five trading-days of newly listed stocks, cross-listed ETFs, and ETFs whose constituents include foreign stocks, ETNs comprised of foreign securities, foreign or government bonds.

Matching system principles:
Continuous trading has been implemented during market hours (9:00-13:25). Call auction is conducted at market opening and closing. New order types have been added to continuous trading, such as Market Order, Immediate or Cancel ("IOC"), and Fill or Kill ("FOK").

The execution price of continuous trading shall be determined based on the following principles:

When the price of a buy order entered is higher than or equal to the minimum price of a sell order previously entered, orders shall be satisfied from the lowest to the highest price of a sell order until fully satisfied or until the price of the buy order is lower than the price of the unsatisfied sell order. When the price of a sell order entered is lower than or equal to the maximum price of a buy order previously entered, orders shall be satisfied from the highest to the lowest price of a buy order until orders are fully executed or until the price of the sell order is higher than the price of the unsatisfied buy order.

As the closing price of securities is widely used by market participants as a benchmark for portfolio valuation as well as index calculation, the system accumulates orders during the last five minutes as follows:

To satisfy maximum trading volume, all bid orders higher than and ask orders lower than the determination price must be satisfied; At least one of the bid order and ask order determination prices must be satisfied; and When more than two price points meet the preceding two principles, the price closest to the most recent trade price in the current market is adopted. If there is no trade price in the current market, the price closest to the market opening reference price is chosen.

Intraday Volatility Interruption measures:
In order to avoid extreme market volatility resulting in transaction prices exceeding investor expectations, if the price limit of a security valid on the day (limit rest of day ["ROD"]) order is entered and matched to a prior calculated trade price that exceeds 3.5% above or below the reference price, the matching of that security will be suspended for two minutes; the security will be matched by call auction, and then it will be restored to continuous trading. When the market ROD, market IOC and limit IOC orders are entered, the orders that do not exceed this standard are executed first. Orders exceeding this standard will not be executed and will be cancelled, and continuous trading will be implemented; limit FOK and market FOK orders will all be cancelled and all other orders will be completed by continuous trading.

During Intraday Volatility Interruption measures:

Only limit ROD orders, cancellation and volume changes may be entered, and market order, IOC, and FOK are not accepted. Automatic deletion of market ROD orders and report it to the brokerage. Every five seconds, the simulated matched trade price, volume and the best five bid-ask prices and volumes are disclosed.

However, volatility interruption is not applicable in the following conditions: after 9:00 the first match; for stocks whose auction reference price at market opening is below NTD1; for call (put) warrants and warrant certificates; or, for IPO securities during their first five trading days when they are not subject to daily price fluctuation limits.

Real-time trading information disclosure:
"Real-time trading information" and a "5-second market snapshot" are provided. This information can be accessed at:
https://mis.twse.com.tw/stock/fibest.jsp

Information disclosure before market opening and closing:
Starting on June 29, 2015, the TWSE disclosed simulated transaction prices, trading volume, and the five best bid/ask prices and volume for investors' reference before market opening (8:30-9:00) and the closing session (13:25-13:30).

Furthermore, a volatility interruption system has been adopted before market opening and closing. If in the last one minute before market opening (8:59-9:00) or closing (13:29-13:30), there is a volatile change exceeding 3.5% of a securities reference price by the order-matching system, in the market opening or closing there will be a two-minute temporary suspension for those individual stocks. During such suspension, investors can still continue to add to, cancel or revise orders.

Day Trading:
Day trading is limited to regular trading (9:00-13:30) and reverse day trading in after-hours fixed-price trading. If an investor trades with the same account on the same day, and completes the cash purchase and securities sales of the same stock at the same quantity, they may conduct clearing on the price difference after day trading. When market trends are uncertain, the investor misjudges the situation, or the price of the securities purchased by the investor rises in the intraday market, reverse day trading may be executed immediately to reduce investor risk or realize profit in advance.

Block Trading

To meet market demand and to strengthen investor services, in the beginning of 2009, the TWSE made further adjustments to the block trading system. These adjustments focused on extended trading hours for block trading, in order to provide investors with the option to continue trading with block trading even when the market is closed. In addition, as of May 25, 2009, investors may conduct block trading through an omnibus trading account, specifically, this does not require the allocated transaction for a FINI to meet the minimum trade size requirement.

Trading method Non-paired trading Paired trading Trading session 9:00-17:00 8:00-8:30 and 9:00-17:00 Price increment (up/down tick) Within the limit-up limit-down price of normal trading, the price increment of reported bid-ask prices of non-paired trading and paired trading is NTD0.01. Pre-collection requirement Unless otherwise regulated (i.e., altered trading securities, disposition securities, etc.), securities firms may exercise discretion as to whether to require pre-collection in full or in part. Settlement Normal settlement (T+2 days) Minimum trade size A single security - exceeding 500 units or NTD15 million A basket of stocks - at least five different stocks whose aggregate value is more than NTD15 million

Odd Lot Trading

In order to meet the needs of the general public and investors, from October 26, 2020, buying and selling of odd lot shares during ordinary trading hours will be made available in addition to the current after-hours trading of odd lot shares, which continue to operate under the existing mechanism. During intraday odd lot trading, orders may be placed from 9:00 to 13:30, and the first matching starts at 9:10. After this, orders are matched every one minute by call auction, and trades are executed according to the principles of price and time priority. Odd lot trading should be based on the price limit, and will be valid on the same day. Unexecuted orders will not be kept for after-hours trading. Currently, odd lot orders are placed between 13:40-14:30 and orders are matched by call auction after 14:30 on the same day.

Margin Trading

Investors who meet certain qualifications of age, identity, actual trading record and financial integrity may apply for margin accounts, which can be opened with eligible brokers or securities finance companies. The securities eligible for margin trading are common stocks, TDRs, and beneficiary certificates which have been listed for at least six months without an excessively concentrated shareholding, excessively intense share price volatility and excessively irregular trade volume. ETFs eligible for margin trading are exempted from all of the above criteria.

Investors engaging in margin trading must comply with margin requirements and maintenance ratios regulated by the Central Bank and Financial Supervisory Commission. The securities bought on margin and the proceeds of short sales are held as collateral. The collateral amount is evaluated mark-to-market every day to make sure it is above the maintenance ratio. In the event that margin accounts fail to meet said ratio, margin calls are issued.

Clearing and Settlement

The TWSE is the clearinghouse for all trades executed in its market, including stocks, TDRs, warrants, ETFs, beneficiary securities, bonds and ETNs. All securities firms (brokers and dealers) must fulfill settlement obligations to the TWSE by themselves - the entrusting of settlement obligation to others is not permitted. The TWSE bears the final responsibility for settlement of the market.

Securities Borrowing and Lending

In 2003, the TWSE established a centralized Securities and Borrowing Lending ("SBL") system to increase the competitiveness of Taiwan's securities market and to meet the needs of institutional investors. Utilizing this system, the TWSE acts as an agent, allowing for centralized securities lending.

In 2006, the competent authorities authorized brokers to handle securities lending, leading to the formation of two current domestic securities lending channels, the "TWSE SBL System" and "SBL by Brokers." The TWSE SBL System provides three kinds of lending: fixed-rate, competitive bid and negotiated. The SBL by Brokers only allows for negotiated lending. Since July 2017, the SBL participant qualifications have expanded to include domestic and foreign institutional investors, satisfying increasing market demand.

Direct Market Access

Direct Market Access ("DMA") is a form of E-trading on the securities market through a leased line or a closed private network directly linking the trading systems of investor and broker. By means of this linkage, the investor can place orders directly with the broker's trading system without human intervention from the brokerage firm. Orders are automatically checked by the broker's risk control system and routed to the TWSE's matching system for execution. The DMA was launched on June 1, 2006.

Funding

To meet the diversified needs of investors, provide additional capital flexibility and ease the pressure of settlement deadlines for foreign investors, the FSC has allowed securities firms and securities finance enterprises to conduct financial intermediation:

Investors may pledge securities purchased and securities held as collateral with loan options of T+5 type or half-a-year type which allows for rollover twice. Eligible collateral includes TWSE and TPEx listed stocks, beneficial certificates of open-end securities investment trust funds and of futures trust funds, domestic bonds, or TPEx traded physical gold. Since April 1, 2021, offshore foreign investors possessing specified qualifications are allowed to use foreign currencies which they hold and pledge them as security to obtain financing from securities firms; and Offshore foreign investors are permitted to have loans denominated in NTD from local securities firms when investing in the Taiwan stock market.

Free Delivery

When there is no change of ultimate beneficiary and no violation of off-exchange transaction regulations, FINIs are permitted to freely transfer their securities. The custodian bank may transfer the securities once online registration is completed. The relevant transfer documents proving that the beneficiary owner remains unchanged must be filed within five business days after the transfer of securities. Free delivery is available in the following circumstances:

Asset transfer due to merger or division of a fund or corporation, or any changes or adjustments resulting from internal reorganization (including wholly-owned subsidiaries and branches of the corporation; Asset transfer between FINI and FINI or FINI and FIDI, when there is no change of ultimate beneficiary (note: transfer between FIDI and FIDI is not applicable); Asset transfer based upon trust agreement; Asset transfer due to ETF subscription/redemption; Asset transfer based upon court orders/rulings; and Asset transfer from the master fund of an umbrella fund to a sub-fund of such umbrella fund when there is no change of ultimate beneficiary.

Fee Schedule and Transaction Taxes

Commission rate Type of product Commission Stocks, beneficiary certificates, warrants, TDRs, convertible bonds, other bonds, ETFs and ETNs

Securities brokers who are entrusted to buy and sell securities must charge handling fees to the client, and they set their fee standards themselves based on the customer's transaction amount. In addition to the fees charged for handling various businesses, relevant operating costs, transaction risks, and reasonable profits should be considered in accordance with the management rules. Unreasonable fees are not allowed in business solicitation.

Operating costs, breaches of contract for entrusted trading of securities, wrong accounts, credit and other related transaction risks should be considered.

Securities transaction tax Type of product Tax rate Stocks 0.3% of the value traded is levied on the seller. (From April 28, 2017 to December 31, 2024, the securities transaction tax for the subject to the day trading offsetting transaction is reduced from 0.3% to 0.15%.) Beneficiary certificates, warrants, TDRs, ETFs (Bond ETFs are excluded) and ETNs 0.1% of the value traded is levied on the seller. Government bonds, convertible bonds and bond ETFs Tax exempt (Bond ETFs are exempt up to December 31, 2026) Taxation on dividends Resident beneficiary Non-resident beneficiary Taxpayers may choose between two options: Treat dividends and surplus earnings as part of total taxable income: an 8.5% tax deduction may also be applied to the dividend and surplus earnings portion, provided the deduction does not exceed NTD80,000 per taxpayer per year. Treat dividends and surplus earnings separately from other taxable income: apply a flat tax rate of 28% to dividends and earnings. 21% withholding tax Capital gains tax Tax exempt for individuals

III. Market Participation

Individual Investors and Institutional Investors

As of the end of June 2023, the accumulated number of accounts opened stands at approximately 21.98 million, with the accumulated number of investors with trading accounts and number of investors with trading activities at 12.28 million and 4.59 million, respectively. In the period from January to June 2023, individual investors accounted for 58.4% of all transactions, domestic institutional investors for 10.7%, and foreign institutional investors for 30.9%.

Registration

Foreign investors are required to register with the TWSE so as to obtain both an "Investor ID" and "Tax ID" before opening a trading account with a local securities firm.

Required documents:

Overseas Chinese and foreign natural persons (having a nationality other than Mainland Chinese and being of at least 18 years of age): a passport and other identification documents. Foreign institutional investors (1) Non-funds: banks, insurance companies, securities firms, futures commission merchants, and others. Companies (a) A certificate establishing the company issued by the local government such as a company license; if there is no company license, the following documents may serve as a substitute: Articles of Incorporation of which the governing authority has a record. Qualification certificate issued by the local tax authorities. (b) Statement of purpose of registration of TWSE/TPEx primary listed companies, emerging stock companies or TWSE/TPEx secondary listed companies. Other organizations established according to law, such as government investment institutions, non-profit organizations, foundations, and academic organizations: A certificate or letter from the governing authority approving their establishment should be presented; if there is no such certificate or letter, the following documents may be substituted: (a) Articles of Incorporation of which the governing authority has a record. (b) The regulations or rules enacted as the basis for the establishment of the applicant. (c) Qualification certificate issued by the local tax authorities. (2) Funds: corporate funds, trust funds, partnership funds, pension funds, mutual funds, unit trusts, and funds of other types. A certificate or letter from the local governing authority approving its establishment should be presented. If there is no such certificate or letter, the following documents may serve as a substitute: (a) The record published on the website of the local governing authority showing that the fund has completed its registration; (b) Documents such as an offering prospectus, trust contract, or memorandum for private placement that can serve to show that the local governing authority has accepted the filing or has created a record; (c) Qualification certificate issued by the local tax authorities; and (d) In the case that a fund was established by an international organization not subject to government supervision in any jurisdiction, copies of the meeting minutes regarding the establishment of such fund by the international organization and the statement of its decision to invest in the Taiwan market. In the case that an applicant for registration is a sub-fund, and is unable to provide documents as provided in point (1) of this section, it shall substitute the following documents: (a) Document in compliance with point (1) for the parent fund; and, (b) Documents specifying the legal or regulatory basis of the establishment of the sub-fund, and sufficient proof of the relationship between the parent fund and the sub-fund.

Multiple Trading Accounts

FINIs who meet one of the following conditions may open two or more investment transaction accounts with the same brokerage firm (including each branch office). An instruction letter should be attached, stating the reason for opening the account and the name of the account. On the requirement of the competent authority or the TWSE, the investor shall provide the documentary proof of reason for opening the account stated in the letter of instruction; account renaming and cancellation are likewise. Reasons for opening the account stated in the instruction letter are listed below, but are not limited to this list. If there are more than two reasons, all must be stated:

The investment strategy calls for operation by an external manager; External account administrators (international brokers or global custodian banks) are assigned to operate and manage accounts; Internal investment operations use different trading platforms, including different branches, different internal trading units or traders, sub-funds under parent funds, different insurance policies, and different contract types.

Trading and Settlement

Trading orders may be placed through the following methods:

Trading through non-electronic media:
The principal or its agent or authorized person can place trading orders for securities in person, via telephone, in writing, by telegraph, or by any other method approved by the TWSE. Trading through electronic media:
The principal can use voice mail, the Internet, a dedicated line, a closed private network, or other electronic means approved by the TWSE to place a trading order.

The brokerage trading of securities, order confirmation, and execution report between a securities broker and a principal shall be conducted in accordance with the following provisions:

Trading through non-electronic media:
The execution report may be provided via email, telephone, facsimile, text message, voice message, or the Internet. Trading through electronic media:
The transmission of the brokerage order for purchase/sale of securities, order confirmation, execution report, and other electronic documents between a securities broker and the principal who uses an electronic trading method other than voice mail, shall carry the electronic signature issued by the institution providing vouchers for identification and confirmation; however, this restriction shall not apply in the following circumstances: (1) The order confirmation and execution report are conducted by telephone, facsimile, text message, voice menu system, or the Internet; and (2) The conditions for exemption are met under the "Operational Guidelines for the Implementation of Direct Market Access by Securities Brokers."

The TWSE is the clearinghouse for all trades executed in its market. The settlement day is T+2. A two-tiered settlement principle has been adopted. First, domestic investors must complete the settlement of funds and securities with the executing brokers; foreign investors must instruct their domestic agent representative (custodian bank) to complete settlement with the executing brokers. Afterwards, all brokers need to complete the settlement of funds and securities with the TWSE.

IV. Corporate Governance

Corporate Governance Center

The FSC launched the "Corporate Governance Roadmap 2013," wherein 13 substantive measures to achieve five goals were proposed. These include cultivating corporate governance culture, promoting shareholder activism, enhancing board functions, disclosing material corporate governance information and improving regulatory practices. The first measure for shaping corporate governance culture was "Consolidating and coordinating resources by constructing a Corporate Governance Center (the ’CGC’)". As a result, the roadmap required the TWSE to establish the CGC. To achieve this, the TWSE gathered government, private-sector organizations related to corporate governance, various securities institutions and industry leaders together to collaborate in the CGC's formation. The CGC serves to consolidate resources, implement a variety of important corporate governance measures and further enhance the standards of Taiwan's corporate governance. In October of 2013, the CGC was officially established and promotional initiatives began immediately.

Mission and Vision

The "Corporate Governance Roadmap 2013" was completed in 2017. Action plans included in the roadmap delivered remarkable and measurable results in terms of board functions, shareholders' meetings and information disclosure; the FSC officially launched the "Corporate Governance Roadmap (2018~2020)" on April 24, 2018. The aims of the roadmap are to encourage corporate governance culture to be deeply rooted, create an investment-friendly environment and augment the international competitiveness of capital markets in Taiwan. To sustain our corporate governance reform momentum, the FSC issued the "Corporate Governance 3.0 - Sustainable Development Roadmap (2021~2023)" on August 25, 2020. This roadmap envisions the enhancement of corporate governance from companies through strengthening board functions, enhancing information transparency, strengthening communication with stakeholders, encouraging stewardship of institutional investors, and deepening a corporate culture of sustainable governance. Additionally, sustainable development and ESG are advanced. To achieve this vision, the CGC has implemented various substantive measures in accordance with the 2021-2023 Roadmap, and coordinated resources across government, private-sector organizations, various securities institutions and the media. Regulatory amendments, research projects, corporate governance evaluations, education, and investor relations are significant actions guiding enterprises in the strengthening of their corporate governance and thereby, shaping this culture into an everyday working reality. Additionally, the CGC focuses on global outreach and promotes Taiwan's corporate governance enhancements, greatly heightening Taiwan's international image and standing.

Organizational Structure

The CGC has established an advisory committee. The committee is composed of 11 representatives from the Securities and Futures Bureau (the "SFB"), Banking Bureau (the "BB"), Insurance Bureau (the "IB") and Financial Examination Bureau (the "FEB") of the FSC, Department of Commerce of the Ministry of Economic Affairs (the "MOEA"), the TWSE, Taiwan Futures Exchange ( "TAIFEX"), Taipei Exchange (the "TPEx"), Taiwan Depository & Clearing Corporation (the "TDCC"), Securities and Futures Investors Protection Center (the "SFIPC"), and Securities & Futures Institute (the "SFI"). Furthermore, a TWSE representative serves as the committee's convener, and TWSE's Corporate Governance Department handles the overall project.

The CGC has a Corporate Governance Evaluation Committee responsible for reviewing corporate governance evaluations and related matters. The Evaluation Committee is composed of 14 members, including nine academic experts and five representatives from the TWSE, TPEx, TDCC, SFIPC and SFI.

Main Functions

Corporate governance (A) Corporate governance evaluation; (B) Corporate governance-related rules and research; (C) Director training; (D) CGC e-newsletter; and, (E) International network and promotions. Corporate sustainable development (A) Non-financial information disclosure; and (B) Corporate governance index and sustainability index. Stewardship Code (A) Promotion of institutional investors' stewardship

Shareholder Voting

Restrictions on voting rights:
Following the principle of "one share, one vote," in accordance with Article 179 of the "Company Act," unless otherwise provided by law, a shareholder has the right to one vote with respect to each share in his/her/its possession.

Voting methods:

Voting in person
A shareholder can attend the shareholders' meeting in person. Voting in writing or electronic voting

The voting power at a shareholders' meeting may be exercised in writing or by way of electronic transmission with due notification to shareholders. In such cases where a shareholder elects to exercise their voting power in writing or by way of electronic transmission, a declaration of intention must be served to the company no later than two days prior to the scheduled shareholders' meeting date. If two or more declarations of the same intention are served to the company by the same shareholder, the first declaration received prevails, unless an explicit statement canceling the previous declaration is made in the latter declaration.

In order to facilitate shareholders to exercise their voting rights, treating shareholders equally and continuing to enhance corporate governance, since 2018, the scope of electronic voting has been expanded to all listed companies.

The TDCC established a platform for electronic voting in April 2009. For more information, please contact the TDCC or visit https://www.tdcc.com.tw .

Voting by proxy
A shareholder may appoint a proxy to attend a shareholders' meeting on their behalf by granting power of attorney to the proxy. However, except for certain agencies approved by the relevant authority, the voting power represented by a proxy for more than two shareholders cannot exceed 3% of the total number of voting shares of the company.

Furthermore, a shareholder may only grant one power of attorney and appoint one proxy only. Notice of proxy must be served to the company no later than five days prior to the shareholders' meeting date. In such cases where two or more written proxies are received from one shareholder, the first written proxy received by the company prevails, unless an explicit statement canceling the previous declaration is made in the latter declaration.

For more information, please visit the website of the Law Source Retrieving System of Stock Exchange and Futures Trading at http://eng.selaw.com.tw/ and search for "Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies."

Split voting:
If a shareholder of a public company holds shares for others, said shareholder may exercise his/her/its voting power separately.

For more information, please visit the website of the Law Source Retrieving System of Stock Exchange and Futures Trading at http://eng.selaw.com.tw/ and search for "Regulations Governing the Operation of and Compliance Requirements for Split Voting by Shareholders of Public Companies."

Protection of the Rights and Interests of Shareholders of Foreign Companies

For shareholders of foreign primary listing companies:

The foreign listing applicants are obliged to include important provisions protecting the shareholders’ interests with regard to the formation and change of its capital, convening procedure and passing of resolutions at shareholder meetings etc., in its Articles of Incorporation or organizational memorandum. The foreign listing applicants shall consult with a R.O.C. lawyer to apply due diligence with regard to legal issues which may violate laws or regulations in the jurisdiction of the R.O.C. and report legal opinions. The R.O.C. lawyer with reference to the "Checklist of Legal Items for Foreign Issuers Applying for Primary Listing on the Main Board/Taiwan Innovation Board " and "Checklist of Shareholders Rights Protection Items at the Place of Registration of the Foreign Issuers" shall evaluate the legal system in the foreign issuer's country, the level of shareholders' protection, legal compliance and material contracts of the foreign company, and issue opinions accordingly. Unless prohibited by the relevant laws and regulations in the jurisdiction of the issuer's incorporation, the important shareholder protection standards should comply with the "Company Act," "Securities and Exchange Act" and other laws of the R.O.C.; and these shall be clearly specified in its Articles of Incorporation or organizational memorandum.

For shareholders of secondary listing companies:

Investors are entitled to stock dividends, profit distribution, and other rights of shareholders of the original shares underlying the depository receipts; The foreign issuer shall set up an automatic and simultaneous reporting system of material information after listing; and TDR issuers are required to include a substantive dividend policy in its Articles of Incorporation and disclose such policy in its prospectus for investors' consideration.

V. Investor Protection

Securities and Futures Investors Protection Center

In order to strengthen investor protection and promote the sound development of the securities and futures markets in Taiwan, the SFIPC was established in January 2003 under the "Securities Investor and Futures Trader Protection Act." In addition to consultation and mediation, the SFIPC also handles investors' complaints and files class-action lawsuits on behalf of investors, derivative suits on behalf of companies and discharge suits against wrongdoing directors/supervisors. The SFIPC also manages an investor protection fund.

VI. Information Disclosure

Market Observation Post System

To ensure that investors have equal and timely access to material information about all listed companies, the TWSE and TPEx established the Market Observation Post System ("MOPS"), an information disclosure platform. All public companies (including TWSE/TPEx-listed companies) are required by law to disclose relevant information on MOPS, including material, periodic and non-periodic information. Please visit https://mops.twse.com.tw for further details.

Main material information:

Dishonor of a negotiable instrument due to insufficient deposits, reorganization, bankruptcy and material litigious matters; Severe production cuts, complete or partial halt of production, or complete or partial pledge of the material assets; Appointment of or change in directors, supervisors, senior managerial officers, accounting supervisors, and requisite operations officers; Capital reduction, merger or consolidation, division, acquisition or issue of new stock for a capital increase; The date for convening an ordinary shareholders meeting and dividend distribution information; Signing of important contracts or cooperative agreements; Material acquisition or disposal of assets; Share repurchase; and Matters that have a material effect on shareholder's equities or securities prices.

Main periodic information:

Financial reports; Monthly operating revenues, loaning of funds, endorsements and guarantees, and derivatives information; Quarterly information on its Mainland Area investments and overseas subsidiary investments; Changes in the shareholdings of directors, supervisors, managerial officers, or shareholders owning more than 10% of the shares; Information on the remuneration of directors and supervisors; and Sustainability report.

Main non-periodic information on:

Basic company data; A cash capital increase or corporate bonds; The date of holding a shareholders' meeting; The record date fixed by the company for distribution of dividends, bonuses or other benefits; Treasury stocks; Employee stock option certificates; Investor conferences; Acquisition or disposal of assets; and The operation status of the functional committee.

In order to provide extra information disclosure in English and to keep in accordance with international standards, the Taiwan Stock Exchange has newly established a Chinese and English information disclosure search engine for listed companies under "ezSearch," which was launched in April 2022 (https://mops.twse.com.tw/mops/web/ezsearch). The website allows investors to utilize the multi-functional search bar with keyword searches to identify the announcements of listed and OTC companies that the investors are interested in at the Market Observation Post System. The search method of the website is quick, simple and intuitive. This platform is convenient for users to use the English page to browse the English announcements, providing users with more friendly and more enriching experiences with search methods.

VII. Investment-related Websites

Taiwan Stock Exchange: https://www.twse.com.tw/en/ The official TWSE website includes an organizational introduction, market data, indices information, listed companies, products & services, clearing services, announcements, regulations, and more.

TWSE ETF section: https://www.twse.com.tw/en/products/securities/etf/news.html Information and related ETF regulations

TWSE ETN section: https://www.twse.com.tw/en/products/securities/etn/overview/introduction.html Information and related ETN regulations

Market Observation Post System: https://emops.twse.com.tw MOPS includes profiles, announcements, material information, and financial statements of each listed company.

Market Observation Post System ezSearch: https://mops.twse.com.tw/mops/web/ezsearch The website selects listed company and OTC company announcements that investors are interested in at the Market Observation Post System, and provides a multi-functional search bar with keyword searches, which can easily direct the user to English pages to browse English announcements.

Market Information System: https://mis.twse.com.tw The Market Information System ("MIS") includes stock indices, market summaries, the five best bids & asks, and more.

Information Services: https://www.twse.com.tw/en/products/information/history.html The TWSE Data E-shop website provides end-of-day information, including indices, historical trading records and customized data to subscribe in a wide variety of delivery options.

Information of Securities Firms: https://www.twse.com.tw/en/products/broker/infomation/list.html Securities firms’ profiles and summaries of associated persons

Securities and Futures Investors Protection Center: https://www.sfipc.org.tw Consultation, mediation, litigation services on behalf of investors, and more

VIII. Contact Us

If you have any questions or feedback regarding our information, please leave a message through any of the following social media, and we will respond.

TWSE FB: https://www.facebook.com/TaiwanStockExchangeCorp TWSE Suggestion Box: https://suggestionbox.twse.com.tw ::: TWSE Contact TWSE Subscribe SiteMap Disclaimer Privacy Rights Protection Policy Personal Information Management Policy Statement TWSE's Information Security Policy Operating Continuity Policy Anti-harassment Enforcement 3F, 9F-12F, 19F, No.7, Sec.5, Xinyi Rd., Taipei City 110615, Taiwan (R.O.C.)
Tel: 886-2-81013101 ISC: 886-2-27928188 TWSE approved data vendors also distribute a comprehensive range of market data from the Taiwan Stock Exchange. Copyright © 2023 Taiwan Stock Exchange Corporation. All rights reserved. Facebook YouTube The Taiwan Monthly Top

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