TDCC Kicks off Bilingual IR Platform to Facilitate Foreign Investor Decision Making & Fiscal Discipline Act Receives Third Reading

WEEKY NEWS PICTURE (TW)

TDCC Kicks off Bilingual IR Platform to Facilitate Foreign Investor Decision Making & Fiscal Discipline Act Receives Third Reading

TDCC Kicks off Bilingual IR Platform to Facilitate Foreign Investor Decision Making

To be in line with country’s latest corporate governance guideline – the Corporate Governance Blueprint 2018~2020, the Taiwan Depository & Cleaning Cooperation(TDCC) held the launching ceremony of Investor Relations(IR) Platform, followed by an international forum with regard to Environmental Social Governance (ESG) this month. In addition to promoting the new Investor Relations Platform, TDCC has invited foreign and domestic lecturer to discuss issues such as shareholder, ESG and investor relations practices. Approximately 200 representatives of listed companies and over-the-counter companies, as well as investors from major domestic funds, insurance companies, domestic and foreign investment companies, has attended the forum, which is believed to have a positive effect on the development of the island’s capital market.

Wellington L. Koo, the Chairman of Financial Supervisory Commission(FSC), pointed out that a good cooperation-investor relationship helps companies understand the needs of investors, provide more information to investors, and open a dialogue mechanism between the two parties to obtain long-term support from investors for the company’s operations, as an important part of promoting corporate governance.

The Chairman of TDCC, Xiu-ming Lin, stated that since the establishment of the electronic voting platform in 2009, TDCC has been working on relevant measures to facilitate investors. For instance, in 2014, it has cooperated with Broadridge, the world’s largest electronic voting platform to provide the Straight Through Processing(STP) platform, a cross-border direct voting service for foreign investors of Taiwan. Efforts have been made to turn voting procedures into an automated process that makes sub-custodians execute votes more efficiently. In 2016, the laws have stipulated that listed companies with more than 10,000 shareholders or over NTD$2 billion of capitals are mandatory to adopt an e-voting service. By 2018, all the listed companies and OTC companies in Taiwan are able to cast their votes through the electronic voting mechanism, STOCKVOTE.

Originated from the e-voting platform, the newly-launched bilingual IR platform developed by the TDCC intends to provide updated corporate governance policies, contact persons and details of all listed companies. Communications, ESC and International Cooperation, Lin said, will be the axis scheme of the platform’s development. It is hoped that English-language financial reports, annual reports, and shareholder meeting agendas, which companies obliged to provide under Company Act and Securities and Exchange Act, on the platform would allow international investors to better understand their investments, as well as the risks.

TDCC will continue to launch more innovative services based on electronic voting system and expand the cooperation with more top overseas research institutions and service providers to help create corporate value and strengthen Taiwan’s corporate governance, to achieve the ultimate goal of integrating with global capital market.

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Fiscal Discipline Act Receives Third Reading

The Legislative Yuan approved a new bill, the Fiscal Discipline Act, this Tuesday on third reading which comprehensively consolidated the fiscal disciplines that were scattered in various regulations in the past. In short, the main points of the revision include: (1) the government at all levels needs to disclose the taxation expenditure assessment operation, (2) implement the public debt law, and (3) under the circumstance where a legal bill will result in government expenditure increase or income reduce substantially, it is necessary to specify the source of the funds. The new bill is expected the serve the function of stabilizing national finance.

With the inclination of maintaining a moderate scale of expenditure and ensure the sound development of the country’s finances in the long term, both the ruling party and the opposing parties believed it is essential to establish a comprehensive fiscal discipline system in legal point of view. Although regulations and mechanisms for fiscal disciplines such as the Budget Act, the Public Debt Act, and the Public Debt Committee exist, the little practical effect was reckoned by the parliament. As a consequence, KMT lawmaker, Ming-zong Zeng and Shiz-bao Lai, as well as Rong-zhen Wang from DPP proposed the Draft for Fiscal Discipline Act and eventually received its third reading.

The Fiscal Disciplinary Act has five major points. The first is to regulate governments at all levels to implement the assessment of public tax expenditures in order to facilitate the supervision of public representatives. The second is to set up the conditions for the establishment exit mechanism for non-operating special funds; the measure is believed to solve the problem of remaining “Tiny Treasury” on a certain obsolete government project.

The third key point borrowed the idea from the Maastricht Treaty, is to stipulate the regulation of debt financing. “Debt financing should be executed in accordance with the provisions of the Public Debt Act”, Wang said, “while the budgetary debt limit should not exceed 15% of the total amount of the total budget and special budget within a year.”

Wang went on to elaborate the early-warning mechanism as the fourth key point of the bill. “The local government shall set up control mechanism for abnormal fiscal discipline,” he added, “which means government at all levels, that is, central government, special municipalities, counties, and townships, are obliged to regularly reveal public debt statements and debt repayment plans, moreover, the transfer to special funds shall disclose to the public.”

The last focus of the Fiscal Discipline Act is that, if a draft legal bill will significantly increase the financial pressure, the proposers of the bill, regardless from the executive or legislative department, must specify the financial source. “When the legislator or the ministry proposes a bill that will increase the financial burden or reduce the income, he must state in the bill where the financial resources are,” Zeng explained.

The KMT legislator Lai pointed out that the bill has its significance as legislation completed by this cross-party cooperation. The ruling and opposition legislators hope to supervise the central and local finances through a clearer and more centralized legal system in order to maintain the integrity of national finance and support national development needs.

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