Corporate Governance in Taiwan: Legal and Policy Perspectives

Abstract

This paper describes the law, policy and industrial profile of Taiwan which shape the current status of corporate governance in Taiwan. The article first begins by examining the family-owned listed companies, which dominate Taiwan's two organized securities markets. I then deal with the issues of the "market for corporate ownership." I believe it is difficult to achieve a market for corporate control when there are cultural and historical reasons for ownership concentration. The Taiwan experience suggests that when the government promotes high-tech industries, and when the macroeconomic policies force traditional companies to invest outside Taiwan, owners of human capital may be able to compete with owners of financial capital. This could result in a more de-centralized ownership structure, as indicated by Taiwan's high-tech sector.

The paper also discusses the role of mergers and acquisitions in Taiwan, and the concept of fiduciary duty and independent directors. The author ventures that certain rigid features of Civil-Law style corporate laws make corporate governance difficult to achieve. I also queried how well Civil-Law style Company Law and Common-Law style Securities and Exchange Law interface with each other, and suggest that they don't.

The paper also examines the financial system, insolvency laws and attempts to simulate securities class actions in Taiwan. I end with ten preliminary observations on the current state of corporate governance in Taiwan.

JEL Classification: G3, K22, K41, K42