Deputy Director Professor Chao-Hung Chen of CIEL has published a paper in the Taiwan Law Review of Financial and Economic Law, titled “Corporate Compliance Systems and the Governance Responsibilities of the Board of Directors.”

This research approaches the topic from the perspective of corporate governance, illustrating how the establishment of institutionalized preventive and supervisory mechanisms enables both management and employees to ensure compliance with the law—an increasingly crucial aspect of modern corporate responsibility. In Taiwan, the current framework primarily targets publicly listed companies through mechanisms such as internal control systems, internal and external auditing, disclosure obligations, as well as the legal responsibilities of boards of directors and managers. Together, these measures create multiple lines of defense aimed at strengthening corporate compliance culture and reducing legal risks.

In the article, Deputy Director Chen also cautions that despite the formal soundness of the legal framework, practical implementation still faces challenges. For instance, internal control statements are often overly formalistic and lack substantive information, making it difficult for investors or the public to accurately assess a company’s true compliance status. While the imposition of director liability may serve as a deterrent, it remains uncertain whether it sufficiently motivates directors to actively fulfill their supervisory duties. Likewise, the role and responsibilities of managers within the compliance framework warrant ongoing examination. Moreover, if the legal framework merely remains at the level of documentation, its protective function may be severely limited. Beyond listed companies, Taiwan also has hundreds of thousands of non-listed corporations and limited liability companies, whose operations equally implicate public safety and the broader social interest.

Deputy Director Chen concludes that compliance is the cornerstone of corporate governance and the most fundamental requirement of corporate social responsibility. Looking ahead, not only should the effectiveness of the existin the legal framework be continuously reviewed, but greater attention must also be given to the compliance practices of non-listed companies in order to prevent the legal framework from becoming a mere formality.

The full paper is available for download at the following link:
https://lawdata.com.tw/tw/detail.aspx?no=533537