The Administrative Yuan has passed the policy concerning the corporate governance reform. A corporation or government shareholder shall not serve simultaneously as a board director and a supervisor.

Administrative Yuan has passed the guidelines for corporate governance policy and its action scheme yesterday, setting up a new milestone for the progress of corporate governance in Taiwan. Once the Company Law Amendment becomes effective in the future, any corporation or government shareholder shall be prohibited from serving simultaneously as a board director and a supervisor, so as to prevent the enterprise’s funds being exhausted. The current nomination system of the board directors and supervisors shall also be amended, for an enterprise will be allowed to decide for itself whether or not to adopt a nomination system in the election.

 

In order to strengthen the enterprise merge mechanism, the practicability of the unification the Bankruptcy Law and the Company Resuscitation Law in the Company Law and the Law of Bankruptcy will also be considered. Meanwhile, the foreign investment system is also to be further amended, in order to strengthen the foreign merge and acquisition on TSE & OTC listed companies in Taiwan. There will also be a thorough study in the management measures concerning the stock exchange between foreign and domestic companies, thus reinforce the corporate merge mechanism.

 

According to the guidelines for corporate governance policy and its action scheme passed by the Administrative Yuan yesterday, up to 15 provisions in the Securities Law, Company Law, and Certified Public Accountant Law among all the other corporate governance policy measures are to be further amended. The TSE & OTC listed companies are encouraged to apply a system of independent board directors and supervisors. While the sunrise clauses have been regulated in the Securities Law, as to when should a compulsory be applied to the public listed company, the Executive Yuan effective gradually depending on the real practices, the Executive Yuan plans announce phased enforcement in view of the operation of relevant enterprises. (2003.11)

CYJ/WYL