The Council of Economic Planning and Development (經濟建3]委-?|) yesterday decided to suggest strengthening the regulations on the responsibilities of the boards of directors of corporate companies. They also decided to recommend fortifying the enforcement of the existing Company Law.
The decision follows the CEPD's review of the government's plan to "Enhance Taiwan's Competitiveness" (提?仱禤a競爭?O-p畫). The CEPD's suggestions are scheduled to be proposed to the Executive Yuan tomorrow.
Thomas Yeh (?明峰), Secretary General of the CEPD, said, "The existing law instructs boards of directors to take full responsibility if a loss is incurred through an inappropriate decision. But it is not strictly enforced."
According to latest ranking in The World Competitiveness Yearbook (世界競爭?O排), compiled by the International Institute for Management Development (IMD, 瑞?h國際?THORN>2z學院), the effectiveness of Taiwanese boards of directors ranked 35th amongst 47 countries.
The ranking for Taiwan's business management dropped from ninth in 1996 to fifteenth in 1999.
The problem of the board of directors surfaced after the Asian financial crisis, Yeh said. "It's either the case of a president confiscating the company's money and running away, or a parent company illegally covering up for its subsidiaries," he said.
Taiwan Fertilizer Co Ltd (台肥) and the case a year ago of Taichung Commercial Bank were such examples demanding the government's attention.
Yeh noted that the president of Taiwan Fertilizer transferred stocks illegally through establishing subsidiaries. But if the role of the board of directors had been properly carried out, the scandal may have been avoided, he said.
He added that it may be necessary not only to enhance law enforcement, but also to fortify the Company Law. But according to Yeh, the CEPD also thinks it's unfair to have the evaluation of Taiwan based solely on the IMD's standard.
The Global Competitiveness Report by the World Economic Forum (WEF, 世界經濟?壇) can also be a good reference," he said.
In 1996, the IMD announced the result of an investigation of the ability of 49 countries to compete internationally. Taiwan ranked 18th.
In response, Lien Chan (3s戰), the then-president of the Executive Yuan, announced a plan to boost Taiwan's ranking to number five by the year 2000.
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