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Lin, Yu-Hsin --- "How Public Regulation Changes Corporate Governance Practice – Corporate Board Reform in Taiwan" [2012] ELECD 391; in Vasudev, M. P.; Watson, Susan (eds), "Corporate Governance after the Financial Crisis" (Edward Elgar Publishing, 2012)

Book Title: Corporate Governance after the Financial Crisis

Editor(s): Vasudev, M. P.; Watson, Susan

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9780857931528

Section: Chapter 9

Section Title: How Public Regulation Changes Corporate Governance Practice – Corporate Board Reform in Taiwan

Author(s): Lin, Yu-Hsin

Number of pages: 18

Extract:

9. How public regulation changes
corporate governance practice ­
corporate board reform in Taiwan
Yu-Hsin Lin

INTRODUCTION

This chapter takes the example of the legal transplantation of US-style
independent directors into Taiwan and explores how public regulation
affects (or does not affect) corporate governance practice. Taiwan's
corporate law traditionally follows a two-tier board system where the
board of directors is the decision-making institution and the statutory
supervisor is the monitoring institution. However, most statutory super-
visors of Taiwanese public companies have long been controlled by the
controlling shareholders and failed to act as corporate monitors. Since
2002, Taiwan has gradually introduced independent directors into cor-
porate boards in order to strengthen the internal governance of public
companies.
As of September 2011, 43.92 per cent of the companies listed on the
Taiwan Stock Exchange (TSE) had at least one independent director
on their board. In other words, 56.08 per cent of TSE-listed firms
chose not to have any independent directors. Only 6.8 per cent of TSE-
listed companies had established audit committees to replace statutory
supervisors. In summary, few Taiwanese public companies have made a
complete switch to the US-style board structure. The majority of firms
have stayed with the original structure and preferred not to have inde-
pendent directors on their boards. This chapter focuses on companies
that, whether voluntarily or not, introduce independent directors onto
their boards and assesses the effectiveness of these new independent
directors.




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