1. The Fourth Asian Roundtable on Corporate Governance The Recent Development of Corporate Governance in the Greater China Area Prof. Ruyin Hu Director of Research Center Shanghai Stock Exchange 11-12 November 2002 Mumbia, India

2. Development of Corporate Governance in Mainland China Two path breaking documents:  Code of Corporate Governance enacted by CSRC and State and Economic Trade Commission  Based on a Shanghai Stock Exchange Corporate Governance Guideline  Guidelines for Introducing Independent Directors enacted by CSRC

3. Development of Corporate Governance in Mainland China Other developments:  Rules that target the behavior of controlling shareholders  Improvement in communications technology leads to improvement in corporate governance

4. Development of Corporate Governance in Mainland China Directions of improvement:  Legal infrastructure and independent judiciary  Class action  Investor education

5. Development of Corporate Governance in Hong Kong Corporate governance culture:  Listed companies continue to be dominated by families  Pushing forward the best practices of corporate governance by amending related rules  Proposed Amendments to Listing Rules

6. Information disclosure:  Balance among three factors  Frequency (concerns about short run stock price volatility)  Coverage  Timely report Development of Corporate Governance in Hong Kong

7. Independent director:  All shareholders should have the same voting rights  Large shareholders should not be deprived of the rights of nominating and appointing independent directors.  Good corporate governance depends on individual professional integrity

8. Development of Corporate Governance in Taiwan New publication:  Listed companies’ corporate governance practice  Protect investors’ rights  Strengthen functions of the board and supervisory board  Increase transparency

9. Development of Corporate Governance in Taiwan Information disclosure:  Six categories  Financial and investment related matters  Legal actions  Material events related to operation and production  Changes in management and board members  Decisions related to dividend and shareholders' right  Other matters that may have impacts on stock price or shareholders' equity  Market Observation System linked with the exchange’s website

10. Development of Corporate Governance in Taiwan Development of Investor Protection Law (Primary testimony passed in May 2002)  Service of consultation  Litigation of Class Action is proceeded for investors

11. Conclusion The role of honest and capable courts and regulators is critical. Overemphasis on regulations and rules carries the risk of a triumph of form over substance. Education, regulation, and enforcement are equally important.