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Commission downplays policy shifts

The Financial Supervisory Com-mission yesterday shrugged off criticism that is was again backtracking on policy decisions about the independence of board directors, saying that it was crucial to seek a balance between domestic conditions and the spirit of corporate governance.

"[The change] is not a concession," Securities and Futures Bureau Director-General Wu Tang-chieh (吳當傑) told the Taipei Times yesterday.

Communication with the business sector, which needs to comply with the commission's regulations, is essential, as all concerned parties are entitled to express their opinions before laws are passed by the legislature, Wu said.

"We do not necessarily have to stick to our high threshold," he said.

The commission originally said in a proposed amendment to the Securities and Exchange Law (證交法) that a quarter of a company's board members should be independent directors.

Although the proposed amendment has been submitted to the legislature for review, Wu said that the commission agreed on Tuesday at a closed-door meeting with representatives of the business community to change the requirement for independent directors to a minimum of two seats.

The veto bestowed upon the independent members over significant issues pertaining to finances and stockholder rights -- such as transactions with people having family or business relations with the management, and investment in derivatives -- was also revoked at the meeting, Wu said.

Dissenting opinions by independent board directors must be noted in the board meeting records and sent to the securities authority for examination, but apparently do not have to be made public.

However, in the first revision, significant issues vetoed by independent board directors needed to be approved by two-thirds of the total number of board members and carried out on condition that the dissenting opinions by the independents were disclosed to the public.

Wu played down the significance of the changes, saying that the second revision has not yet been fixed.

The authority's about-face was welcomed by representatives of the business community as the result of compromises on both sides.

Theodore Huang (黃茂雄), chairman of Teco Electric & Machinery Co (東元電機), as well as the Chinese National Association of In-dustry and Commerce (工商協進會), said on Tuesday that the proposed plan to set up independent supervisors on boards of directors is not the best way to improve corporate governance.

It is important that corporate leaders should have a high level of morality in operating their companies, he said.

Jason Lin (林蒼生), chief executive officer of Uni-President Group (統一集團), also strongly criticized the government's policy, saying that it would lead to splits within corporate boards, reduce corporate harmony and force companies to become conservative.

Lin said that most corporate operators are shareholders themselves. If independent directors or supervisors must be introduced, they would only force companies to be managed in a conservative way.

Susan Lin (林水仙), chief executive officer of Morgan Stanley, said Taiwan has the most financial regulations and restrictions in the world and that government authorities should not treat busi-nesspeople as potential criminals and enact complex regulations.
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