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  1. Regional Surveys
    1. CG Watch
    2. Topic Profiles
    3. Asian Proxy Voting Survey

  2. Advocacy Papers
    1. Country White Papers
    2. Statements and Submissions

1. Regional Surveys

CG Watch

"CG Watch" is a major regional survey undertaken by ACGA in collaboration with CLSA Asia-Pacific Markets. The report looks at the macro corporate governance quality in 11 Asian markets and provides aggregate data on more than 500 companies. ACGA provides the market analysis while CLSA is responsible for the data on individual companies in the 11 markets. The full report is available only to ACGA members and can be downloaded from the Premium Content page. Non-members may purchase the report by contacting Barbara Ko at: barbara@acga-asia.org.

CG Watch 2012: Tremors and Cracks
Our sixth survey, published in September 2012, found that on balance, the systemic changes in corporate governance in Asia over the past two years are more positive than negative, reflected in the fact that seven of 11 markets increased in score in 2012 compared to 2010—although three of these countries are at the same or a slightly lower level than in our 2007 survey. The main findings of our latest biannual survey were:

  • Rising markets are mostly in Southeast and South Asia, including Singapore, Thailand, Malaysia, India, and the Philippines.
  • Falling markets are mostly in North Asia, including: Japan, Taiwan and China.
  • Hong Kong rose slightly, but remained second in the rankings after Singapore.
  • Korea rebounded from its low base.
  • Indonesia slipped back (again) to the bottom of the survey.

A summary of our market rankings is available here.

CG Watch 2010: Stray not into perdition
Our fifth survey, published in September 2010. It significantly reordered the ranking of Asian markets in terms of overall CG quality, with Singapore regaining the top spot, Thailand winning the prize for "most improved" and Japan's score improving. India fell markedly in the ranking, while Korea collapsed and the Philippines came last. Indonesia moved into second last for the first time. An extract of the report may be downloaded by all users.

CG Watch 2007: On a wing and a prayer
Our fourth survey, published in September 2007, was the first to incorporate Japan. We expanded the survey, tightened the scoring and focussed more closely on how corporate governance rules and best practices were being implemented by companies. The survey included 87 questions under five categories: "CG Rules and Practices", "Enforcement", "Political and Regulatory Environment", "Accounting and Auditing Standards", and "CG Culture". An extract of the report may be downloaded by all users.

CG Watch 2005: The Holy Grail
Our third survey, published in November 2005. This survey took a different approach to assessing each market’s corporate governance rules and regulations: whereas in the past we had scored countries purely on whether a rule existed on paper, this survey looked at the extent to which those rules were being implemented. This approach produced a better approximation of reality, while also being fair to markets and companies. An extract of the report may be downloaded by all users.

CG Watch 2004: Spreading the word
Our second survey, published in September 2004, was the first to include a detailed template of questions developed by ACGA on the macro quality of corporate governance in different markets. An extract of the report may be downloaded by all users.

CG Watch 2003: Fakin' it: Board Games in Asia
Our first survey (and the fourth by CLSA) was published in May 2003. An executive summary of the report may be downloaded by all users.

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Topic Profiles

ACGA Paper on Independent Directors in Asia, August 2010
While working on "CG Watch 2010", we compiled a paper outlining the different requirements in Asia for independent directors on company boards.

Over the past few years, a number of markets such as Thailand, Taiwan, Philippines and Korea have been amending their regulations and Codes of Corporate Governance leading to more transparent, and in some cases stricter, rules on the number of independent directors on boards. Also of note is the fact that in some jurisdictions, such as Singapore, Malaysia and Korea, banking acts set more stringent rules on the board composition of banks. Meanwhile, some markets require supervisors as well as independent directors (a legacy of their company law being based on German civil law).

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Asian Proxy Voting Survey

ACGA Asian Proxy Voting Survey, September 2006
In mid-September 2006, ACGA published its inaugural report on proxy voting systems in Asia. Titled, "Voting for Change: Bringing Proxy Voting Systems in Asia into the 21st Century", the report examines the many impediments to effective and efficient voting in the region and makes a series of practical recommendations for companies, investors, regulators and custodians to implement.

The report also includes a detailed survey of the voting experiences of major institutional investors in 11 Asian markets and three benchmark economies--Australia, the UK and the US. It finds Hong Kong the clear leader in Asia, but well behind the benchmark markets.

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2. Advocacy Papers

Country White Papers

Taiwan White Paper, February 2011
On February 24, ACGA launched a new policy paper on Taiwan, the "ACGA White Paper on Corporate Governance in Taiwan". The Chinese version of the paper can be downloaded here.

The "Taiwan White Paper", the third policy paper we have done on an individual market, was compiled by ACGA on the basis of our own research and numerous contributions from ACGA members and associates around the world and in Taiwan. The paper is the first effort of its kind focussing on corporate governance issues in Taiwan and makes a series of recommendations for reform in three key areas:

  • Shareholder meetings and voting;
  • Board effectiveness; and
  • Shareholder rights.

We believe that if Taiwan brings its corporate governance regime more closely into line with global best practices, this would help to attract more investment and make its capital markets more internationally competitive.

Our hope is that the points and recommendations raised in this document will serve to stimulate a lively exchange of views among and between government officials, legislators, financial regulators, stock exchanges, listed companies, as well as both domestic and foreign investors in Taiwan.

India White Paper, January 2010
On January 19, 2010, ACGA launched a new policy document on India, the "ACGA White Paper on Corporate Governance in India".

The "India White Paper" was compiled with the support and input of ACGA members and friends in India and around the globe, and is the first effort of its kind focussing on corporate governance issues in India. The paper makes a series of recommendations for reform in five key areas:

  • Shareholder meetings and voting;
  • Related-party transactions;
  • Preferential warrants;
  • Corporate disclosure; and
  • The auditing profession.

ACGA believes these reforms are necessary to strengthen the long-term competitiveness of India's capital markets and the accountability of its listed companies.

Prior to and after the launch, we talked to a number of regulators, fund managers, analysts, government officials and business federations about the White Paper, including: the National Stock Exchange; the Securities and Exchange Board of India (SEBI); Ministry of Finance; Institute of Company Secretaries of India; Ministry of Corporate Affairs; and the Federation of Indian Chambers of Commerce and Industry.

Japan White Paper, May 2008
On May 15, 2008, the "White Paper on Corporate Governance in Japan", a new policy document on corporate governance in Japan published by ACGA, was launched. The Japanese version of the paper can be downloaded here.

The “Japan White Paper” is the first collaborative effort of its kind focussing on corporate governance issues in Japan and involving global institutional investors. It has been compiled with the support and input of ACGA members and is endorsed by leading global pension funds and fund mangers, including: Aberdeen Asset Management, Singapore; Alliance Trust Asset Management (Asia-Pacific), Hong Kong; British Columbia Investment Management Corporation, Canada; the California Public Employees’ Retirement System (CalPERS), USA; F&C Asset Management, UK; Hermes Fund Managers, UK; RAILPEN Investments, UK; and the Universities Superannuation Scheme, UK.

The paper states that sound corporate governance is essential to building a more internationally competitive corporate sector in Japan and to the longer-term growth of the Japanese economy and its capital markets. It argues that while a number of leading Japanese companies have improved their corporate governance practices in recent years, the system of governance in most Japanese listed companies fail to meet the needs of stakeholders or the nation in three ways:

  • By not providing for adequate supervision of corporate strategy;
  • By protecting management from the discipline of the market, thus rendering the development of a healthy and efficient market in corporate control all but impossible;
  • By failing to provide the returns that are vitally necessary to protect Japan's social safety net—its pension system.

Accordingly, the White Paper makes recommendations on six key issues:

  1. Recognition of shareholders as owners of listed companies
  2. Efficient use of capital
  3. Independent supervision of management
  4. Pre-emption rights and third-party share placements
  5. Poison pill takeover defences
  6. Fairness and transparency in shareholder voting

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Statements and Submissions

Submission to HKEx Board Diversity consultation
On November 9, 2012, ACGA sent our final submission to the Hong Kong Exchanges and Clearing (HKEx) on its "Consultation Paper on Board Diversity". The Exchange was looking for feedback on promoting board diversity and amending the Corporate Governance Code in order to do that.

Submission to IAASB Invitation to Comment: Improving the Auditor's Report
On October 13, 2012, ACGA sent our response to the June 2012 Invitation to Comment: Improving the Auditor's Report from the International Auditing and Assurance Standards Board (IAASB). ACGA limited its response to a few issues: how an expanded, amended auditor report that included an Auditor Commentary could be used as a handy guide on how to read complex accounts; that the Board should more thoroughly review the issue of "going concern" and "material uncertainty" before finalising any changes in the standards; and a few suggestions on how to make the auditor report more transparent.

Submission on IPO Sponsor Regulation in Hong Kong
On July 6, 2012, ACGA sent our final submission to the Hong Kong Securities and Futures Commission (SFC) on its "Consultation Paper on the Regulation of Sponsors". The aim of this consultation is to improve the quality of due diligence carried out by investment-bank "sponsors" for IPOs in Hong Kong and enhance the value of prospectuses.

We broadly supported the SFC’s proposals in our submission, but believe much more emphasis should be placed on the governance advisory role of sponsors in helping listing applicants implement basic systems of governance well before their IPO. We recommended some tangible criteria that the regulator could use to assess the extent and depth of pre-IPO governance preparation. We also expressed concerns about the structure of fees for sponsoring compared to underwriting and the potentially adverse effects on due diligence caused by the proclivity for multiple sponsors and multiple bookrunners (leading to the fee pie being shared between ever larger numbers of banks).

Submission to MOJ consultation on Companies Act proposal
On January 31, 2012, ACGA submitted its response to the Ministry of Justice's "Interim Proposal concerning Revision of Companies Act". ACGA limited its comments to the proposals to strengthen the independence of Outside Directors and obligate public and listed companies to appoint such Outside Directors. A Japanese translation of the submission was also provided to the MOJ.

Statement on third-party allotments in Japan, January 2012
On January 19, 2012, ACGA released a statement to the media on the weaknesses in the Japanese financial regulatory system in regulating third-party allotments (third-party placements) and their potential adverse impact on minority shareholders. A Japanese translation of the statement was also provided to the media.

Submission to Securities Commission Malaysia, December 2011
On December 12, 2011, ACGA submitted a response to the SC's CG Blueprint, which it released in July 2011, and a November Consultation on Independent Chairman and Voting by Poll.

ACGA analysed and made recommendations on most of the key proposals, including:

  • Voting by poll;
  • Appointment of proxies and corporate representatives;
  • A new code and industry umbrella body for institutional investors;
  • Mandating nomination committees;
  • Limiting the number of directorships; and
  • Independent chairmen.

While we supported many of the proposed revisions, we did suggest amendments to some.

Letter to Tokyo Stock Exchange, November 2011
On November 17, 2011, ACGA wrote a letter to the Tokyo Stock Exchange (TSE) regarding the Olympus Corporation and its ongoing status as a listed company. A Japanese translation of the letter can be found here. Our main points were:

  • That the Exchange should refrain from delisting the company even if it meets the December 14 deadline for its quarterly report;
  • That delisting is generally not a favourable penalty for securities malfeasance since it punishes shareholders as much as the managers responsible; and
  • Olympus would probably not be delisted in most other developed market exchanges since it remains a going concern with a reasonable business.

The letter was co-signed by 16 members of ACGA who hold approximately 17% in aggregate of the issued share capital of Olympus.

Submission to Ministry of Finance, Singapore, September 2011
On September 30, 2011, ACGA submitted a response to a Ministry of Finance consultation paper on the Report of the Steering Committee for Review of the Companies Act.

ACGA analysed and made recommendations on selected issues, including:

  • The disclosure requirements under sections 156 and 165 should be extended to the Chief Executive Officer of a company;
  • To allow for multiple proxies to be appointed to AGMs;
  • To allow the multiple proxies to vote on a show of hands at shareholders' meetings;
  • To amend the timeline for the filing of proxies from 48 hours prior to the shareholders' meeting to 72 hours prior to the shareholders' meeting;
  • Liberalise rules on electronic transmission of notices and documents; and
  • Companies should be allowed to issue non-voting shares and shares with multiple votes.

While we supported most of these proposals, we did suggest amendments to some, and strongly opposed allowing companies to issue non-voting shares and shares with multiple votes.

Submission to Monetary Authority of Singapore, August 2011
On August 3, 2011, ACGA submitted a response to a Monetary Authority of Singapore consultation paper on proposed revisions to the Singapore Code of Corporate Governance.

ACGA analysed and made recommendations on most of the key proposals, including:

  • Director Independence;
  • Board Composition;
  • Director Training;
  • Multiple Directorships;
  • Remuneration Practices and Disclosure;
  • Risk Management; and
  • Shareholder Rights and Role.

While we supported many of the proposed revisions, we suggested amendments to several and sought clarification on some of the issues raised.

Letter on Capital Raising in Japan, June 2011
On June 25, 2011, ACGA wrote to the Financial Services Agency (FSA) of Japan on the issue of capital raising. Our letter addressed ongoing weaknesses in the country's system of public offerings, rights issues and private placements, and made a series of recommendations for improving efficiency and investor protection.

Submission to Singapore Exchange, June 2011
On June 13, 2011, ACGA submitted a response to a Singapore Exchange consultation paper on proposed rule changes on general meetings to increase shareholder engagement and introduce voting by poll.

ACGA analysed and offered responses on all four proposals:

  • Issuers with primary listings in Singapore should be required to hold shareholder meetings there;
  • Listed companies should be required to vote by poll on all resolutions at all general meetings;
  • Issuers shall announce immediately after each general meeting the outcome of the voting; and
  • Amending the relevant Catalist Rules arising from the above proposals.

We supported all the above proposals with the exception of providing a grace period for smaller issuers until January 1, 2014.

ACGA Letter on India Proxy Proposal, May 2011
On May 27, 2011, ACGA wrote letters opposing a recommendation by the Indian parliament's Standing Committee on Finance to remove the right of shareholders to appoint proxies. The proposal was made in a report that was given to the parliament in August 2010. The letters were addressed to Dr. K. P. Krishnan, Secretary, Economic Advisory Council to the Prime Minister, and Shri D. K. Mittal, Secretary, Ministry of Corporate Affairs. We also sent a copy to the Securities and Exchange Board of India.

The Committee argued that since postal ballots were already in use and electronic voting was being introduced in the new Companies Bill, "the need for proxies may become minimal". In our letter we noted that postal ballots can only be used for certain special resolutions, such as major transactions; they cannot substitute for ordinary resolutions in an AGM.

Meanwhile, the argument that electronic voting will make proxies obsolete is premature—not only will the adoption of electronic voting be voluntary on the part of companies, but experience in other markets in Asia (Japan, Taiwan and Korea) indicates that implementing this system takes time and is harder than regulators expect.

Submission to Hong Kong Exchange, April 2011
In mid-April, 2011, ACGA submitted a response to a Hong Kong Exchanges and Clearing Limited (HKEx) consultation paper, published in December 2010, on proposed changes to the Hong Kong Code on Corporate Governance Practices.

ACGA analysed and made recommendations on nine issues:

  • Directors’ duties and recommendations, including on the number of directorships;
  • Director training and independent directors;
  • Remuneration and nomination committee;
  • Corporate governance committee;
  • Audit committee;
  • Management accounts;
  • Shareholders’ general meetings;
  • Voting by poll; and
  • Appointment and removal of auditors.

We agreed with most of the proposals we responded to, although we recommended that some should be reworded or further expanded on.

ACGA Letter to the Ministry of Justice, September 2010
On September 28, 2010, ACGA wrote a letter to the Ministry of Justice expressing our views on some amendments, including the general model of governance for corporations, the role and authority of statutory auditors (kansayaku), the proper role of directors, and the governance of dilutive capital issues, to the Company Law that the Legislative Advisory Council's Company Law Sub-Committee was considering.

We provided specific comments and suggestions on:

  • Independent directors;
  • Board committees;
  • Role of boards;
  • Voting by Kansayaku;
  • Shareholder approval rights: and
  • The "Joint Audit Committee Company" proposal.

ACGA Statement on CG Reform in Japan, December 2009
On December 15, 2009, ACGA released its new "ACGA Statement on Corporate Governance Reform in Japan" in both Japanese and English. A press release was also released to the media. The Statement is a follow-up to the 2008 ACGA "Japan White Paper" and a response to the various corporate governance policy papers produced this year by leading business and government agencies in Japan -- namely, the Nippon Keidanren, Ministry of Economy, Trade and Industry (METI), Financial Services Agency (FSA), and Tokyo Stock Exchange (TSE).

The Statement analyses and offers reform recommendations on five main issues:

  • The role of independent directors vis-à-vis “statutory auditors” (Kansayaku);
  • Shareholder meetings and proxy voting;
  • Private placements and other capital-raising issues;
  • Cross-shareholdings and other equity investments;
  • Company-investor dialogue.

Submission to the Singapore Government, October 2007
In October 2007 ACGA submitted a paper to the Singapore Government on “Opening Shareholder Meetings to Fund Managers in Singapore”. It addresses certain legal obstacles that stand in the way of institutional investors who want to attend shareholder meetings in Singapore, known as the “two proxy card issue”. The paper offers recommendations on how to resolve the issue, namely to amend both the Companies Act and the Listing Manual of the Singapore Stock Exchange.

Singapore Proxy Voting Roundtable, January 2007
On January 15, 2007, ACGA co-hosted a Proxy Voting Roundtable in Singapore with the Singapore Association of the Institute of Chartered Secretaries and Administrators (SAICSA) and the Singapore Institute of Directors (SID). The main themes arising from the Roundtable are covered in a summary paper on the event. Key issues included: voting by poll; appointment of multiple proxies to shareholder meetings; clustering of AGM dates; deadlines for holding AGMs after the year end; meeting notice periods; and attendance of CPF members at AGMs. The programme for the event, including details on speakers and other supporting organisations, is attached. See also ACGA's presentation to the Roundtable.

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