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Chapter 3 Endorsement and "Comply or Explain"
Institutional investors and service providers are encouraged to publicly endorse the Principles to demonstrate their intention to support the Principles. Public endorsement means an institutional investoror a service provider discloses a statement of how the Principles has been applied (hereinafter the "statement") on its website and a website designated by the Corporate Governance Center, and it becomes a signatory after notifying the Corporate Governance Center of the above. Foreign institutional investors who are signatories of other national or international 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 the Principles.
A statement shall at least include the following:
- A brief introduction of the business of an institutional investor or service provider;
- A brief description of the status of compliance with each principle set forth under Chapter 4 herein;
- Letterhead or signature of an institutional investor or service provider (which may publicly endorse the Principles in the name of its business group or as an individual company);
- Date of announcement (endorsement date) or update.
The institutional investor or service provider shall complete a brief description of status of its compliance with each principle mentioned in the preceding paragraph 2 within six months starting from 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 to signatories' websites where they disclose information according to the guidelines for compliance with 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 the guidelines for compliance with the Principles depending on its business content and actual status in compliance 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 theprinciples under Chapter 4 but rather apply a “comply or explain” basis which aims to retain flexibility, so that the Principles may be abided by more institutional investors and service providers. If a signatory, whether an institutional investor or service provider, is unable to comply with certain principles stipulated under Chapter 4, it must provide a reasonable explanation in its statement or incorporate such explanation on its website or reports such as business report or annual report, provided that relevant disclosures must be made in an ethical and transparent manner.
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