Corporate Governance Introduction

The concept, corporate governance, has been emerging since the early 1970’s in response to the perceived lack of effective board oversight that contributed to the poor performance problems. In 1997 there were numbers of scandals and corruption within Asian financial markets that led to severe Asian financial crises. Inadequate corporate governance system has been concluded the major reason suffering the serious consequences on the Asian financial crises. The impact arising from Enron and Corporate America has now put the issue under a spotlight. Therefore, the attention to enhance corporate governance is being emphasized hence after. Furthermore, OECD, in its ministerial meeting as of 1998, also pointed out the lack of corporate governance has been one of the root causes of the recent Asian financial crisis.

The Asian financial crises provide lessons for Taiwan to esteem the importance of corporate governance. Knowing that inadequate corporate governance is identified as the key fact that Asian corporations could not build the competition in world financial markets, Taiwan securities regulator (Financial Supervisory Commission, or FSC) has tried its best to emphasize the importance of advocating corporate governance to public companies since 1998. It believes that greater transparency as to corporate governance is needed for enterprises to control risk. Securities and Futures Institute (SFI), founded as a quasi-public organization for research, training and protecting investors, together with Taiwan Stock Exchange (TWSE), Taiwan’s computerized over-the-counter market (known as Taipei Exchange, TPEx), and Taiwan Corporate Governance Association (TCGA), introduce the system of independent directors, audit committee, etc. They also established and promoted “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” in Taiwan. To strengthen the legal base in the field of corporate governance, Taiwan amended Company Law and Securities & Exchange Act.

In 2013, the FSC issued the "Corporate Governance Roadmap 2013 ". The roadmap established a more definite mandatory regulatory framework and added recommendations to the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies. In addition, the TWSE Corporate Governance Center was created to bring the government, the private sector, securities agencies, and the media together to shape corporate governance culture. The "Corporate Governance Roadmap 2013" was completed in 2017. The FSC went on to launch the new "Corporate Governance Roadmap (2018 - 2020) " in 2018. The roadmap envisions more active participation from companies and investors in corporate governance, through deepening corporate governance culture, enhancing board functions, strengthening information transparency, encouraging participation of external shareholders, and augmenting regulatory enforcement. Meanwhile, it also aims to have corporate governance culture rooted, create an investment-friendly environment and improve international competitiveness.