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Stewardship Principles for Institutional Investors
Chapter 1 Institutional Investors and Their Duties
Institutional investors can be classified into two types based on their business models:
1. "Asset owners" (e.g. insurance companies, pension funds) which invest with their proprietary
capital or funds collected from clients or beneficiaries; and2. "Asset managers" (e.g. investment trust, investment consulting companies, etc.) which provide
assistance to clients on management and investment/utilization of funds.
The Principles may be abided by the service providers providing the above services for
institutional investors; service providers, such as proxy advisors, play a key role in the investment
industry to fulfil their stewardship responsibilities.
With financial services gradually becoming diversified, capital providers not only engage directlyin trading of relevant assets (including securities such as stocks and bonds or other assets) but alsoachieve various investment objectives through the assistance of institutional investors.
Nowadays, the investment chain is frequently complicated and institutional investors can greatly
influence the market and investee companies through fund management. An institutional investor,
when making an investment or carrying out its fiduciary duty, is advised to be based on the fundprovider's (may contain clients, beneficiaries or shareholders of the institutional investors) overall
interests, monitor the operation of an investee company and participate in corporate governancethrough attendance at shareholders' meetings, exercise of voting rights, engagement in appropriate
dialogue and interaction with management, including the board of directors or executives, of theinvestee company. Such is "stewardship" of an institutional investor referred to in these Principles.
Institutional investors may outsource part of their stewardship activities (e.g. to provide votingadvice or to cast proxy votes) to other service providers. However, institutional investors shall not
be released from their existing stewardship responsibilities to their clients and beneficiaries. The
institutional investor must, through effective communications, agreements or monitoring, ensurethat service providers act in accordance with their requests, so that the rights and benefits of theirclients and beneficiaries are protected.

Chapter 2 Objectives of the Principles
The Principles, through provision of a principle-based framework and guidance, are intended to1

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encourage institutional investors to apply their expertise and influence, and fulfill their duties asasset owners or managers, so as to enhance long-term value for themselves and capital providers.
The institutional investors, through monitoring, engaging in dialogue and interacting with investee
companies, as well as efforts to enhance investment value, are also able to improve the quality ofcorporate governance of the investee companies, thus creating an overall positive effect on thedevelopment of industry, economy and society.
The Principles encourage institutional investors and service providers valuing stewardship toendorse and comply with relevant principles (Please refer to Chapter 3). All institutional investors,
that are, asset owners or managers, investing in securities issued by Taiwanese companies(including but not limited to TWSE listed, TPEx listed, emerging or public companies), regardlessof whether they are domestic or foreign, government- or private- owned, are encouraged to besignatories.

Chapter 3 Endorsement and "Comply or Explain"
Institutional investors and service providers are encouraged to publicly endorse the Principles todemonstrate their intention to support the Principles. Public endorsement means an institutional
investor and service provider disclose a statement of how the Principles have been applied(hereinafter the "statement") on its website and a website designated by the Corporate GovernanceCenter, and it becomes a signatory after notifying the Corporate Governance Center of the above.
Foreign institutional investors and service providers who are signatories of other national orinternational codes/principles with similar objectives may refer back to their home country
reporting or statements and notify the Corporate Governance Center to become a signatory of thePrinciples.
A statement shall at least include the following:
1. A brief introduction of the business of an institutional investor or service provider;
2. A brief description of the status of compliance with each principle set forth under Chapter 4
herein;3. Letterhead or signature of an institutional investor or service provider (who may publicly
endorse the Principles in the name of its business group or as an individual company); and4. Date of announcement (endorsement date) or update.

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The institutional investor or service provider shall complete a brief description of its statuscompliance with each principle mentioned in the preceding paragraph 2 within six months startingfrom the endorsement date and notify the Corporate Governance Center.
A signatory may also disclose information to stakeholders by means of press releases, press
conferences or others.
The Corporate Governance Center will consolidate a list of signatories, statements, and links tosignatories' websites where they disclose information according to the guidelines for compliancewith the Principles (refer to Chapter 5) and publish on a website designated by the Corporate
Governance Center.
A signatory is advised to update its statement and other information disclosed according to theguidelines for compliance with the Principles depending on its business content and actual
compliance status with the Principles. If an update occurs, the Corporate Governance Center must
be notified. The information disclosed by each signatory will form a reference point for future
updates or ongoing facilitation of the Principles by the Corporate Governance Center.
Signatories are not required to fully comply with all principles under Chapter 4 but rather apply a“comply or explain” basis which aims to retain flexibility, so that the Principles may be abided bymore institutional investors and service providers. If a signatory is unable to comply with certain
principles stipulated under Chapter 4, it must provide a reasonable explanation in its statement orincorporate such explanation on its website or reports such as the business report or annual report,provided that relevant disclosures must be made in an ethical and transparent manner.

Chapter 4 Stewardship Principles
Principle 1

Establish and disclose stewardship policies

Principle 2

Establish and disclose policies on managing conflicts of interest

Principle 3 Regularly monitor investee companies
Principle 4

Maintain an appropriate dialogue and interaction with investee companies

Principle 5

Establish and disclose clear voting policies and voting results

Principle 6

Periodically disclose the status of fulfilment of stewardship responsibilities

Principle 7

Service providers should provide services for institutional investors to fulfill theirstewardship responsibilities32023.07

Chapter 5 Guidelines for Compliance with Principles
Introduction to the guidelines"Stewardship" of an institutional investor
An institutional investor, when making an investment or carrying out its fiduciary duty, is advised
to be based on the fund providers’ (may contain clients, beneficiaries or shareholders of theinstitutional investors) overall interests, monitor the operation of an investee company andparticipate in corporate governance through attendance at shareholders' meetings, exercise ofvoting rights, engagement in appropriate dialogue and interaction with management, including theboard of directors or executives, of the investee company. Such is "stewardship" of an institutionalinvestor.
Take into account the sustainable development of an investee company
An institutional investor is responsible for its stewardship and advised to consider the risk andperformance of an investee company in terms of environment, social and governance, andintegrate them into the investment evaluation process and decision making. The constructive
communication and interaction with an investee company promotes the sustainable developmentof an investee company, thereby enhancing the long-term interests of clients and having a positive
impact on the society.
Scope of StewardshipAs the investment scope of an institutional investor expands, the scope of stewardship should beextended by the importance to other asset classes such as bonds, real estate, private equity,
alternative investment and other asset classes beyond equities.
The following guidelines are references for signatories to comply with the six principles set forth
under Chapter 4.
Principle 1 Establish and disclose stewardship policies
Guideline 1-1
When establishing stewardship policies, an institutional investor is advised to contemplate its rolein an investment chain, its nature of business and how to protect the rights and benefits of its
clients and beneficiaries.
Guideline 1-2
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An institutional investor is advised to integrate environmental, social, and corporate governance(ESG) factors into the investment evaluation process to fulfill their stewardship responsibility andcreate long-term investment value.
Guideline 1-3
Disclosure of stewardship policies is advised to at least include the following:
1. A brief introduction of business;
2. Duties to clients or beneficiaries;
3. Stewardship activities, e.g. frequency and methods of monitoring investee companies,
interaction with management, participation in shareholders’ meetings and voting;
4. Status and management measures of outsourcing stewardship activities; and5. Manner and frequency of status disclosure of stewardship fulfilment.
Principle 2 Establish and disclose policies on managing conflicts of interest
Guideline 2-1
A policy on managing conflicts of interest aims to ensure that an institutional investor operates in
the interests of its clients or beneficiaries.
Guideline 2-2
A policy on managing conflicts of interest is advised to at least include the following:
1. Possible situations of conflicts of interest; and2. How conflicts of interest in each situation are managed.
Guideline 2-3
Situations of conflicts of interest may include the following:
1. Where an institutional investor, for its own benefits, makes a decision or carries out an activity
to the disadvantage of clients or beneficiaries; and2. Where an institutional investor, for benefits of certain clients or beneficiaries, makes a decisionor carries out an activity to the disadvantage of other clients, beneficiaries or stakeholders.
Guideline 2-4
Measures of managing conflicts of interest may include training, delegation of duties, information
security, firewalls, control mechanisms regarding detection and monitoring, reasonable52023.07

remuneration policies, and remedial measures.
Guideline 2-5
An institutional investor is advised to consolidate and explain to clients or beneficiaries, either
regularly or when considered necessary, about causes and handling measures for major incidentsof conflicts of interest which have taken place.
Principle 3 Regularly monitor investee companies
Guideline 3-1The purpose of monitoring investee companies is such that impacts of relevant information on
long-term values of investee companies, clients or beneficiaries may be assessed, so that an
institutional investor’s manner and time of further dialogue and interaction with the investee
companies can be determined. It may also form a reference for future investment decisions.
Guideline 3-2
In determining the content, extent and frequency of monitoring investee companies, aninstitutional investor is advised to consider its purposes of investment, cost and benefits.
Information such as industry profile, opportunities and risks, shareholding structure, operational
strategies, business profile, financial position, results of operation, cash flow, stock price,environmental impacts, social issues and corporate governance may be monitored.
Guideline 3-3
An institutional investor is advised to use environmental, social, and corporate governance (ESG)
factors to monitor, analyze, and evaluate the related risks and opportunities of an investeecompany. An institutional investor is advised to understand the sustainable development strategy
of an investee company.
Principle 4 Maintain an appropriate dialogue and interaction with investee companies
Guideline 4-1
The purpose of an institutional investor’s dialogue and interaction with investee companies is suchthat it may better understand the views of management of the investee companies regarding
material issues and obtain mutual feedback, so as to strengthen corporate governance.
Guideline 4-26

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An institutional investor is advised to determine the manner and time of dialogue and interaction
with investee companies by taking its purpose, cost and benefits of the investment andsignificance of particular issues of concern to it into account. The manners of dialogue andinteraction between an institutional investor and its investee company may include the following:
1. Written or verbal communications with management;
2. Public statements on specific issues;
3. Expression of opinions at shareholders’ meetings;
4. Submitting motions at shareholders’ meetings; and5. Casting votes at shareholders’ meetings.
Guideline 4-3
Under circumstances where an institutional investor judges it necessary to take action, it may act
collectively with other institutional investors, so as to protect the rights and interests of clients orbeneficiaries, and for the sustainable development of investee companies. It may also participate
in relevant advocacy organizations for specific environmental, social, and corporate governance
ESG issues, jointly expand and leverage its influence as an institutional investor.
Guideline 4-4
An institutional investor should pay attention to the engagement, the impact brought to an investee
company after negotiation, the formulation plan and concerns for future negotiation, so as todetermine subsequent investment decisions.
Principle 5 Establish and disclose clear voting policies and voting results
Guideline 5-1
The purpose that an institutional investor exercises its voting right is to express an opinion on eachmotion at a shareholder's meeting of investee companies. Specifically, the institutional investor isadvised to carefully exercise voting rights of stocks it holds or manages in relation to motions
which have significant impacts on rights and benefits of its clients and beneficiaries.
Guideline 5-2
Voting rights shall be exercised based on information obtained from investee companies by taking
long-term joint interests of clients, beneficiaries and investee companies into account. An
institutional investor shall not always vote in favor of, against or abstain from motions, but shall72023.07

judge each motion individually. Voting rights shall be exercised objectively even in the case wherea voting recommendation report has been obtained from a service provider.
Guideline 5-3
An institutional investor should establish and disclose voting policies, which may include thefollowing:
1. Threshold for exercising voting rights as determined in contemplation of cost and benefit. For
instance, voting rights will only be exercised if shareholding reaches a certain percentage oramount;
2. To the best of an institutional investors’ ability, prudently evaluate each motion of ashareholders' meeting before casting votes and communicate in advance with the managementof an investee company when necessary;
3. Define types of motions which an institutional investor may support, oppose to or may only
deliver its abstention from in principle;
4. A statement that an institutional investor does not necessarily support motions proposed bymanagement;
5. Extent to which an institutional investor obtains and adopts voting recommendation reports
made by service providers;
Guideline 5-4
An institutional investor is advised to carefully record and analyze voting rights exercised inaccordance with relevant policies, so as to facilitate disclosure of the voting activities, which may
be disclosed in aggregate. For instance, votes cast in favor, against or abstaining from various
types of motions made by investee companies, and the reason for in favor, against or abstaining of
the motion which are considered important.
Principle 6

Periodically disclose the status of fulfilment of stewardship responsibilities

Guideline 6-1
An institutional investor is advised to carefully record its stewardship activities to form a basis ofassessment and improvement for its stewardship policy, action and disclosure.
Guideline 6-2
An institutional investor is advised to regularly review its stewardship policies, policies on8

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managing conflicts of interest, voting policies and the status of fulfilment of stewardship
responsibilities. An institutional investor is advised to evaluate the effectiveness in conducting
stewardship activities.
Guideline 6-3
When regularly disclosing to its clients or beneficiaries a status of its fulfilment of stewardshipduty according to agreement with or request of its clients or beneficiaries, an institutional investor
may disclose relevant information; it may be made in written, electronic or any other form which
can be easily accessible and readable.
Guideline 6-4
Under a situation where clients and beneficiaries are vast in number or the status provision offulfilment of stewardship duty is not specified in an agreement, an institutional investor is advised
to publish a stewardship report annually on its website or disclose its stewardship activities in its
reports such as the business report and annual report.
The content is advised to include:
1. A statement on "Stewardship Principles for Institutional Investors" and explanations for noncompliance with certain principles;
2. Information of the company's internal resources and organizational structure to implement
stewardship;
3. Statistics of the engagement activities,
4. Case description of the dialogue and interaction with the investee company, the results of theagreement and the follow-up situation;
5. Cases of cooperation with other institutional investors;6. Attendance in person or by proxy at shareholders' meetings of an investee company;
7. Voting activities (as specified under Guideline 5-4);
8. Contact channel for stakeholders such as clients, beneficiaries, investee companies or otherinstitutional investors to reach a signatory; and9. Other material events (e.g.major incidents of conflicts of interest which have taken place in thelast year).
Guideline 6-5
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If investment or stewardship activities are not directly performed by a signatory, for instance
where management of a fund is fully entrusted to an asset manager by an asset owner, measurestaken to ensure the trustee's compliance with a stewardship policy is advised to be explained whendisclosing the stewardship activities to the clients or beneficiaries.
Principle 7 Service providers should provide services for institutional investors to fulfill
their stewardship responsibilities
Guideline 7-1
A service provider should explain its purpose and objective, services, business model and strategy,
and culture, and explain its actions taken to promote effective stewardship, and is advised toperiodically review and disclose the stewardship fulfilment.
Guideline 7-2
A service provider should disclose how to identify possible situations of conflicts of interest, andits policies and related measures to minimize or avoid, and effectively manage conflicts ofinterest.
Guideline 7-3
To provide clients appropriate voting advices, a service provider is advised to disclose its voting
recommendation process, including measures to assure transparency.
Guideline 7-4
A service provider is advised to consider environment, social and corporate governance (ESG)
factors when providing services to support clients to fulfil stewardship responsibilities.

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