At the end of March, the Financial Supervisory Commission (FSC), along with a few securities and futures agencies, released the Corporate Governance 4.0: Sustainable Development Action Plan. In this document, gender equality is highlighted as one of the main criteria for companies in Taiwan.
The plan said that all listed and over-the-counter (OTC) companies would have to include at least one female board member. If a company fails to meet the standard, it would be barred from participating in an initial public offering (IPO) or stock launch. Clearly, officials have paid great attention to gender issues when outlining the corporate governance plan. Corporations and financial agencies have been discussing such a trend and ways of handling it.
Regarding the inclusion of women in corporate boards, officials of the Securities and Futures Bureau of the FSC stated that companies should increase their number of female board members. This is a standard in line with the international community. The board members would be more diversified and gender equality can be promoted. Therefore, having a female board member would become a prerequisite for an organization to launch an IPO.
Moreover, the corporate boards of all listed and OTC companies should have at least one female board member by next year.
As of now, 163 companies do not meet the standard and they are required to improve their status next year.
In response to this plan, some market participants believe that although the issue of gender equality is significant, a person’s ability should be emphasized more. The requirement to them is somewhat unreasonable and might cause inconvenience for some companies.
I would also like to shed light on a potential problem in this plan: the issue of aging. Many corporate leaders in Taiwan are in their 80s or 90s. Recent news reports have said that when one of the Far Eastern Group’s most important leaders, Chang Tsai-hsiung (張才雄), announced his retirement, he was almost 100 years old.
Despite his age, he is still a board member of a few listed and OTC companies. In Japan and South Korea, more than 30 percent of the people who are over 65 continue to work; in Taiwan, the number is only 6 percent.
As we are becoming an aging society. Those who are over 65 are likely to continue to work, as has happened in other countries. To cope with the situation, regulations regarding both aging and corporate governance should be revised as early as possible.
For instance, the statutory retirement age of 65 and the age for claiming pensions can both be raised. Official agencies can also come up with more incentives for the elderly to continue their careers.
In fact, the government should start considering providing more incentives now, so that corporate boards would treat their senior members with respect, and in turn, seniors can offer their valuable experience for their entire company.
The issue of aging would only become increasingly more serious in our society, and it must be addressed alongside the plan of corporate governance.
I would not say that my methods are the correct ones, but I would like to shed light on this issue, and here are my two cents for further discussion.
Cheng Ming-te is a professor in Taipei City University of Science and Technology’s department of business administration.
Translated by Emma Liu
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