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Bluebook 21st ed.

Pearlie Koh, Independent Directors in Asia: A Historical, Contextual and Comparative
Approach, 2018 Sing. J. LEGAL Stud. 157 (2018).

ALWD 7th ed.

Pearlie Koh, Independent Directors in Asia: A Historical, Contextual and Comparative
Approach, 2018 Sing. J. Legal Stud. 157 (2018).

APA 7th ed.

Koh, P. (2018). Independent directors in asia: historical, contextual and comparative
approach. Singapore Journal of Legal Studies, 2018(1), 157-160.

Chicago 17th ed.

Pearlie Koh, "Independent Directors in Asia: A Historical, Contextual and Comparative
Approach," Singapore Journal of Legal Studies 2018, no. 1 (March-September 2018):
157-160

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Pearlie Koh, "Independent Directors in Asia: A Historical, Contextual and Comparative
Approach" (2018) 2018:1 Sing J Legal Stud 157.

AGLC 4th ed.

Pearlie Koh, 'Independent Directors in Asia: A Historical, Contextual and Comparative
Approach' (2018) 2018(1) Singapore Journal of Legal Studies 157

MLA 9th ed.

Koh, Pearlie. "Independent Directors in Asia: A Historical, Contextual and
Comparative Approach." Singapore Journal of Legal Studies, vol. 2018, no. 1,
March-September 2018, pp. 157-160. HeinOnline.

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Sing JLS Book Reviews 157

to other legal relations, which is the object of Chapter 2. Here again the author has
taken steps to improve the first edition, specifically in presenting a clearer portrayal
of the sometimes difficult agent-employee distinction.
The monograph then proceeds to the creation of agency via agreement (Chapter 3),
before addressing agencies that arise by operation of law (Chapter 4), the nature and
function of ostensible authority (Chapter 5), and ratification (Chapter 6). Ostensible
authority appears in this sequence because questions of actual and implied authority
are covered in Chapter 3.
Chapters 7 and 8 target the duties that arise within an agency relationship, the
former from agent to principal, the latter the converse (which could also be viewed
in terms of the agent's rights against the principal). In Chapter 7, which has benefited
from re-writing when it comes to the duties of performance and gratuitous agents, I
would suggest that thought be given to collapsing the material presently under the
separate headings 'Fiduciary Duties' and 'Duty of Loyalty'. The impression left by
this discrete treatment (which is straddled by material under the heading 'Remedies
for Breach of Duty') is that they target qualitatively different duties, which is not so.
Chapters 9 and 10 probe the relationships with third parties arising out of agency,
from the perspective of the agent and the principal, respectively. Logically bookend-
ing the monograph, in the final chapter, is commentary directed to the termination
of agency.
A final 'house-keeping' comment is that the index could be improved (something
that could be said for several of my own works!). It is confined to a handful of
major headings rather than necessarily distilling specific points a reader may wish to
quickly locate. For instance, one searches in vain for 'Ostensible Authority' (instead
indexed as 'Apparent Authority'). The term 'solicitor' appears but at the same time
'director' is overlooked, even though the text addresses directors' agency in greater
detail.
Overall, the second edition of Professor Tan's work is very much to be welcomed,
for its concise, balanced, lively and reasoned analysis of legal doctrine, from a
jurisdictional slant not developed in other agency works.

GE DAL PONT
Professor
University of Tasmania

Independent Directorsin Asia: A Historical, Contextual and ComparativeApproach

BY DAN W PUCHNIAK, HARALD BAUM AND LuKE NOTTAGE, eds [Cambridge and
New York: Cambridge University Press, 2017. xv + 619 pp. Hardcover: US$155.00]

The concept of "legal transplants" and the role it played in the development of law
gave rise to much, and at times polarised, debate amongst comparative lawyers.
Nevertheless, there is no denying that such borrowing of legal rules does contribute
to legal reform-the question is the extent of the transplant and the form it takes. In the
area of corporate law alone, there is much evidence of such "transplantation" resulting
158 Singapore JournalofLegal Studies [2018]

in significant commonality in the governance of companies across jurisdictions.

Indeed, comparative studies in corporate law are often informed by the underlying
uniformity of the corporate form, and the laws that govern it. As Armour et al
observed in their essay "What is Corporate Law?" in The Anatomy of Corporate
Law: A Comparativeand FunctionalApproach 3d ed (New York: Oxford University
Press, 2017) 1 at p 1, "[b]usiness corporations have a fundamentally similar set of
legal characteristics-and face a fundamentally similar set of legal problems-in
all jurisdictions". Legal transplants run the gamut from the adoption of entire Acts
to the borrowing of particular concepts. The independent director is an instance of
the latter form of transplant. This particular concept has been so widely adopted
that the presence of independent directors is de rigueuron corporate boards from
Europe to Asia. Nevertheless, legal transplants may not always operate as expected
in the country of reception. A number of jurisdiction-specific factors, including
social, political and cultural, may influence the "success" of the transplant. Kahn-
Freund astutely observed that the "problem of transplantation" (Otto Kahn-Freund,
"On Uses and Misuses of Comparative Law" (1974) 37 Mod L Rev 1 at p 5) lay
with "the inappropriateness of assuming that a legal norm or structure which had
been seen to work well in one jurisdiction could be successfully introduced into
another" (see Mark Freedland, "Otto Kahn-Freund (1900-1979)" in Jack Beatson

&
Reinhard Zimmermann, eds, Jurists Uprooted: German Speaking tmigrt Lawyers in
Twentieth-Century Britain(New York: Oxford University Press, 2004) 299 at p 311,
cited in John W Cairns, "Watson, Walton, and the History of Legal Transplants"
(2013) 41 Ga J Intl & Comp L 637 at p 687). Local context matters. This is the broad
point so eloquently made in this book, which is edited by scholars whose own research
backgrounds equip them with the insight to undertake a project of this nature. Asia
is diversity itself. A project that attempts to look at a seemingly common concept
in corporate governance, the independent director, must necessarily be prepared
to embrace the inconvenience of difference and hence the challenge of weaving a
coherent whole. The editors have managed this admirably by adopting a thoughtful
structure.
The book is organised into three parts. The first part serves to prepare the reader
for her journey through Asia in Part II by providing three foundational chapters.
Chapter 1 provides the historical backdrop to the Anglo-American concept of the
independent director by examining its origins and then tracing its spread across
Europe. The independent director has been an important figure on the corporate gov-
ernance scene in the United States ("US") for many years before it "went global" (see
Dan W Puchniak & Luh Luh Lan, "Independent Directors in Singapore: Puzzling
Compliance Requiring Explanation" (2017) 65 Am J Comp L 265 at p 274), first
to the United Kingdom ("UK") and then on to other jurisdictions the world over.
In Asia, too, the independent director was embraced wholeheartedly as a means of
strengthening the board of directors for effective corporate governance. But Chapter
2 takes a hard look at the central concept of independence, and exposes its short-
comings. It makes the important point that "independence needs to be designed in
accordance with the corporate environment and the specific purpose it is designed
for in a given jurisdiction" (at p 83). In this connection, Ringe proposes that the
concept of independence may be improved by paradoxically combining it with an
Sing JLS Book Reviews 159

element of dependence defined by reference to the purpose which the concept is

intended to serve-adopting what Ringe refers to as a "functional notion" of director
independence. Hence, if the purpose for the presence of the independent director
is to protect minority shareholder interests, then the independent director should be
made accountable to minority shareholders. This seems at first blush an immensely
attractive proposal, but there may be practical difficulties. First, even within a single
jurisdiction, companies are not necessarily homogeneous in their ownership patterns.
And this is the case even in the US, where the widely-held, Berle and Means-type
company (Adolf A Berle & Gardner C Means, The Modern Corporationand Pri-
vate Property (1940) at p 47), characterised by a separation of shareholding and
management control corporate ownership, is considered broadly representative of
the majority of public corporations. Controlled corporations, whilst in the minor-
ity, nevertheless constitute a "sizeable minority" (see Lucian A Bebchuk & Assaf
Hamdani, "Independent Directors and Controlling Shareholders" (2017) 165 U Pa L
Rev 1271 at p 1279). The possibility that there are differences even within either class
of corporations-widely-dispersed or controlled-cannot be excluded, as Puchniak
and Lan demonstrate in their chapter on Singapore where they drew a distinction
between family-controlled companies and Government-linked companies. In the
US, at least, this lack of homogeneity has led Bebchuk and Hamdani to note the
ineffectiveness of US-type independent directors in controlled companies to safe-
guard against "controller opportunism" (Bebchuk & Hamdani at p 1274). What this
means is that the parameters of any "functional notion" of director independence
may well be very difficult to define. Secondly, any concept of "dependence" in this
context will have to cohere with the extant imposition of directors' duties. In Sin-
gapore, the law does not distinguish between the different types of directors. All
directors are therefore subject to the duties imposed on them by the CompaniesAct
(Cap 50, 2006 Rev Ed Sing) and by general law. Taiwan adopts a similar position as
the Taiwanese Company Act applies the same duties to both inside and independent
directors (at p 242). However, whilst the Singapore courts have tended to approach
the no-conflict rules strictly, Taiwan's courts appear to take a more nuanced approach
by taking into consideration a number of factors, including the position and knowl-
edge of the independent director, to "reduce or exempt" the independent director
from liability (at p 243). Again, this underscores the need to be sensitive to the situa-
tion that obtains in any particular jurisdiction, and any attempt to shift the object of a
director's accountability will have to be carefully considered against that backdrop.
Chapter 3 concludes the introductory part by exposing the "myth of the mono-
lithic 'Anglo-American' independent director", and demonstrates that, even as the
phrase "independent director" is adopted universally, in reality, none of the Asian
jurisdictions had adopted the American concept of the independent director. What
is particularly interesting is the finding of a broad commonality within Asia-that
the main function of the independent director is to monitor controlling shareholders.
With this insight, it might well prove more edifying for Asian jurisdictions to study
intra-Asia similarities and differences, to look East instead of West, when mining for
lessons in law reform. Puchniak and Kim attempt to facilitate this by identifying six
factors that influenced the development of the concept of the independent director in
Asia, providing what the authors term as a "loose taxonomy" with which to compare
160 Singapore JournalofLegal Studies [2018]

and contrast the concept of the independent director across Asia. These factors pro-
vide a useful framework with which to approach the jurisdiction-specific chapters in
Part II of the book.
As the editors explain in the Introduction, they had chosen to concentrate on Asia's
seven most important and dynamic economies-China, Hong Kong, India, Japan,
Singapore, South Korea and Taiwan. Each chapter provides carefully researched cov-
erage of the origins and development of the independent director within each specific
jurisdiction, as well as useful surveys of relevant empirical research. Each chapter
tells the jurisdiction's own unique experience of introducing and operationalising
the concept of the independent director within that jurisdiction's peculiar context.
It appears that the single most significant common denominator across these Asian
jurisdictions is the corporate ownership structure: most companies across the swath
of Asian jurisdictions have a concentrated shareholder structure. Although Puchniak
and Kim would consider Japan a "notable exception" (at p 120), it is possible that
Japan may still have more similarity with the rest of Asia in this aspect than with
either the US or the UK. Goto, Matsunaka and Kozuka point out in their chapter that
investors in Japanese listed companies may be categorised into "insider sharehold-
ers" and "outside shareholders", with the former historically controlling a majority of
the shares. These insider shareholders tended to be supportive of the incumbent man-
agement, suggesting that, behaviourally, they might well approximate the controlling
shareholders of other Asian jurisdictions. The authors also point out that whilst the
percentage of shares held by insider shareholders fell to a minority by 2012 in large
public corporations, this was not the case for small and medium-sized listed com-
panies. For these latter type corporations, the balance of control remained vested in
the insider shareholders. Nevertheless, what comes out most strongly throughout the
book is the diversity that surrounds this single concept-from the identity of those
who tend to be appointed independent directors to the purpose for which they serve.
These points are emphasised in the chapters that make up Part III of the book.
Apart from the chapter on Australia, which provides a counterfoil to the East-facing
perspective (although, paradoxically, Australia is geographically even farther east),
the final two chapters attempt to tie the earlier chapters together. Chapter 12 utilises
actual case studies from six of the jurisdictions considered to make the point that
the function of the Asian independent director differs in unexpected but positive
ways from the independent director originally conceptualised in the US/UK model.
Chapter 13 places the discussions in the book within the broader comparative law
context, and affirms that legal transplants are necessarily complex processes. Baum
had ended Chapter 1 by asking "Should the West's Independent Director Migrate
East?". The answer is provided by Kozuka and Nottage in the final chapter-yes,
but in a re-contextualised manner.
All in all, this book has been a fascinating read, rich in detail and full of insight.
The editors have succeeded in putting together a book that will undoubtedly be an
important resource in the arsenal of all who are concerned with corporate governance
generally.

PEARLIE KOH
Associate Professor
School of Law, Singapore Management University