Chapter I General Provisions
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| Article 1 | In order to assist securities firms to establish a sound corporate governance system, and to promote the integrity of the securities market, the Taiwan Stock Exchange ("TSE"), the Taipei Exchange ("TPEx") and the Chinese Securities Association ("CSA") hereby jointly adopt the Principles, which have been submitted to the Financial Supervisory Commission ("FSC") for recordation, to be followed by securities firms.
A TSE/TPEx listed securities firm shall, unless otherwise provided for in the Principles, be required to comply with the Corporate Governance Best-Practice Principles For TSE/TPEx Listed Companies.
A foreign securities firm having Taiwan branches may be waived the application of the Principles' regulations from Chapter I to Chapter IV.
A company concurrently operating as securities firm may be waived the application of the Principles' regulations.
Securities firms are advised to promulgate their own corporate governance principles in accordance with the Principles and create an effective corporate governance structure.
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| Article 2 | When setting up the corporate governance system, in addition to complying with laws, regulations, and articles of incorporation, a securities firm shall also follow the following principles:
- protect shareholders' rights and interests;
- strengthen the powers of the board of directors;
- fulfill the function of supervisors;
- respect investors' and stakeholders' rights and interests; and
- enhance information transparency.
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| Article 3 | A securities firm shall follow the Criteria Governing the Establishment of Internal Control System in Securities and Futures Service Enterprises and the standard guidelines for the internal control system of securities firms as jointly promulgated by TSE and such other securities related institutions and take into consideration the overall operational activities of itself and its subsidiaries in designing and effectively implementing its internal control system, and review it at all times, in order to keep up with the dynamics of environment inside and outside the company and ensure that the design and enforcement of the system remain effective.
In addition to faithfully performing voluntary evaluations of the internal control system, the board of directors and the management shall review the result of the voluntary evaluations of each department on a yearly basis and audit the report of the internal audit department on a quarterly basis. The audit committee or supervisors shall also pay attention to and exercise oversight on this matter. Directors and supervisors shall meet with internal auditors to discuss how to correct the defects in the internal control system, which shall be stated in the minutes, on a regular basis. A securities firm is advised to establish a communication channel and system for its independent directors, audit committee or supervisions and internal audit officers. The convener or supervisor of the audit committee shall report at a shareholders’ meeting his/her communications with the independent directors and internal audit officers.
The management of a securities firm shall pay special attention to the internal audit department and its personnel, fully empower them and urge them to conduct audits effectively, evaluate problems of the internal audit system and evaluate the efficiency of operations to ensure that such a system can be carried out effectively on a continuous basis and can assist the board of directors and the management to perform their duties effectively so as to ensure a sound corporate governance system.
Where a proposal to correct major defects or violations of laws or rules pertaining to internal control made by the auditors and compliance officer of a securities firm is dismissed by the management and it is expected these defects or violations may cause significant losses to the securities firm, the competent authority shall be immediately notified of the issue.
It is advisable that the appointment, dismissal, assessment, salary and remuneration of internal audit personnel of a securities firm be proposed to the board of directors directly or through an audit officer for approval.
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| Article 3-1 | A securities firm is advised to have an adequate number of corporate governance personnel with appropriate qualifications based on the size of the company, business situation and management needs, and may appoint a chief corporate governance officer as the most senior officer to be in charge of corporate governance affairs. Said officer shall be a qualified, practice-eligible lawyer or accountant or have been in a managerial position for at least three years in a securities, financial, or futures related institution or a public company in handling legal affairs, legal compliance, internal audit, financial affairs, stock affairs, or corporate governance affairs.
It is required that the corporate governance affairs mentioned in the preceding paragraph include at least the following items:
- Handling matters relating to board meetings and shareholders meetings according to laws
- Producing minutes of board meetings and shareholders meetings
- Assisting in onboarding and continuous development of directors and supervisors
- Furnishing information required for business execution by directors and supervisors
- Assisting directors and supervisors with legal compliance
- Other matters set out in the articles or corporation or contracts
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Chapter II Protection of Shareholders' Rights and Interests
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Section 1 Encouraging Shareholders to Participate in Corporate Governance
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| Article 4 | When implementing the corporate governance system, a securities firm shall protect shareholders' rights and interests and treat all shareholders fairly.
A securities firm shall establish a corporate governance system which ensures shareholders' right of being fully informed of, participating in and making decisions over important matters of the company.
Shareholders' meetings in accordance with the rules for the meetings.
Resolutions adopted by shareholders' meetings of securities firms shall comply with laws, regulations and articles of incorporation.
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| Article 5 | A securities firm shall convene shareholders' meetings in accordance with the regulations under the Company Act and other applicable laws, and establish comprehensive meeting procedure rules, and strictly follow the meeting procedure rules in handling matters to be resolved at a shareholders' meeting.
When a securities firm whose shares are not publicly offered convenes a shareholders’ meeting, it is not advised to directly hold a teleconference in accordance with Article 172-2, paragraphs 1 and 2 of the Company Act or to hold the meeting in accordance with Article 175-1, paragraphs 1 and 2 of the Company Act, which govern shareholders’ voting rights, without the approval of the competent authority.
Resolutions made at the shareholders' meeting of a securities firm shall be consistent with the requirements of laws and regulations and the articles of incorporation.
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| Article 6 | The board of directors of a securities firm shall properly arrange the proposals and agenda of shareholders' meetings, and formulate the principles and procedures for shareholder nominations of directors and supervisors and submissions of shareholder proposals. The board shall also properly handle proposals duly submitted by shareholders. Arrangements shall be made to hold shareholders meetings at a convenient location, with sufficient time allowed and sufficient numbers of suitable personnel assigned to handle attendance registrations. No arbitrary requirements shall be imposed on shareholders to provide additional evidentiary documents beyond those showing eligibility to attend. Shareholders shall be granted reasonable time to deliberate each proposal and afforded an appropriate opportunity to make statements.
It would be advisable for shareholders' meetings convened by the board of directors to be chaired by the chairman of the board of directors and attended by a majority of the directors.
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| Article 7 | A securities firm shall encourage its shareholders to actively participate in its corporate governance and hold shareholders' meetings on the premise of legal, effective and safe proceedings. A securities firm shall seek all ways and means, including fully exploiting technologies for information disclosure and vote casting, so as to enhance the attendance rate of shareholders at the shareholders' meeting and ensure the exercise of shareholders' rights by shareholders at the shareholders' meeting in accordance with laws.
When adopting electronic voting at its shareholders' meeting, a securities firm is advised against submitting an extempore motion and a motion to amend the existing proposal at shareholders' meeting.
A securities firm is advised to assist shareholders in voting on proposals submitted to the shareholders' meeting one after another.
When a securities firm provides giveaways in respect of a shareholders' meeting to its shareholders, there should be no different treatment or discrimination against shareholders.
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| Article 8 | A securities firm shall record the minutes of the shareholders' meeting the date, month and year of the meeting, venue of the meeting, chairperson's name and how a proposal was resolved, as well as the summary information about how the meeting was proceeded and the result of the meeting in accordance with the Company Act and other applicable laws and regulations. With respect to the election of directors and supervisors, the meeting minutes shall record the method of voting adopted therefore and the total number of votes for the directors or supervisors who were elected.
The minutes of the shareholders' meeting shall be properly and perpetually kept by the company during its legal existence. It would be advisable for a securities firm to fully disclose such meeting minutes on its website, if any.
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| Article 9 | The chairman of the shareholders' meetings shall be fully familiarized and comply with the rules governing the proceedings of the shareholders' meetings established by the company. The chairman shall ensure the proper progress of the proceedings of the meetings and may not adjourn the meetings at will.
In order to protect the interests of shareholders owning a significant portion of shares, if the chairman declares the adjournment of the meeting in a manner in violation of rules governing the proceedings of the shareholders' meetings, it would be advisable for the members of the board of directors other than the chairman of the shareholders' meeting to promptly assist the attending shareholders at the shareholders' meeting in electing a new chairman of the shareholders' meeting to continue the proceedings of the meeting, by a resolution to be adopted by a majority of the votes represented by the shareholders attending the said meeting in accordance with the legal procedures.
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| Article 10 | A securities firm shall respect the shareholders' right to know. With respect to the information of the financial conditions, operations, the insiders' shareholdings, and corporate governance status in the company, a securities firm shall faithfully comply with the applicable regulations regarding the information disclosure. If an official website is set up, a securities firm is advised to provide information to the shareholders regularly and promptly.
The information mentioned in the preceding paragraph shall be disclosed in English upon release, to ensure fair treatment to all shareholders.
To protect shareholders’ rights and interests and ensure fair treatment to shareholders, a securities firm shall lay down bylaws to forbid its internal personnel to make use of information not released on the market to trade securities.
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| Article 11 | The shareholders shall be entitled to profit distributions by the company. In order to ensure the shareholders' investment interests, the shareholders' meeting may according to Article 184 of the Company Act, examine the statements and books prepared and submitted by the board of directors and the audit reports submitted by the audit committee or supervisors, and may decide, by resolution, profit distributions and deficit off-setting plans. In order to proceed with the above examination, the shareholders' meeting may appoint an inspector.
The shareholders may, according to Article 245 of the Company Act, apply with the court to select an inspector in examining the accounting records, assets, special matters, and special transaction documents and records of the company.
The board of directors, audit committee or supervisors and managers of a securities firm shall fully cooperate in the examination conducted by the inspectors in the aforesaid two paragraphs without any obstruction, rejection or circumvention.
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| Article 12 | In entering into material financial and business transactions such as acquisition or disposal of assets, engaging in derivatives products transactions, lending funds of the company to any other person, making endorsements or providing guarantees to any other person, a securities firm shall proceed in accordance with the applicable laws and/or regulations. A securities firm shall further establish the operating procedures in relation to these material financial and business transactions and report the same to the shareholders' meeting for its approval so as to protect the interests of the shareholders.
In the event that a securities firm is the target of merger or tender offer, which shall be proceeded with the applicable laws and regulations, the securities firm shall pay attention to the fairness and adequacy of the merger or tender offer plan and the transaction, as well as information disclosure and soundness of the company's financial structure after the merger or tender offer.
A securities firm's staff responsible for matters pertaining to what is described in the preceding paragraph shall be careful about issues of conflict of interest and when they should abstain.
When making investments, a securities firm is advised to consider the corporate governance of the company issuing the underlying investments to set up its rules to be followed when making investments.
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| Article 13 | In order to protect the interests of the shareholders, it would be advisable for a securities firm to designate responsible personnel dedicated to handling shareholders' proposals, inquiries or disputes.
A securities firm shall properly deal with matters arising from any action instituted by shareholders pursuant to the applicable laws claiming damage to such shareholders' interests caused by the resolution adopted in its shareholders' meetings or the board of directors meetings in violation of the applicable laws, regulations or the company's articles of incorporation, or claiming breach by the company's directors, supervisors or managers of applicable laws, regulations or the company's articles of incorporation in performing their duty.
A securities firm is advised to establish the internal operation procedure to properly handle matters in the preceding two paragraphs and shall maintain written records thereof for recordation, which will be included in the internal control system for control and management.
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Section 2 Establishment of Methods to Interact with Shareholders
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| Article 13-1 | The board of directors of a securities firm shall have the responsibilities to establish methods to interact with the firm's shareholders to improve their mutual understanding of the development of the company's objectives.
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| Article 13-2 | In addition to communications with shareholders at shareholders' meetings and encouragement of shareholders to attend shareholders' meetings, the board of directors of a securities firm shall adopt effective methods to communicate with shareholders, and work with managers and independent directors to understand the opinions of shareholders and issues they concern about, and to clearly explain the company's policies to win the shareholders' support.
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Section 3 Corporate Governance Relationships Between the Company and Its Affiliated Ente
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| Article 14 | A securities firm shall clearly identify its management objectives and the allocation of authorities and responsibilities over personnel, assets and financial matters of its affiliated enterprises, and shall conduct risk evaluation and establish appropriate firewalls.
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| Article 15 | Unless otherwise provided by the laws and regulations, a manager of a securities firm may not serve as a manager of its affiliated enterprises.
A director, who engages in any transaction for himself or on behalf of another person that is within the scope of the company's business, shall disclose to the shareholders' meeting the material terms of such transaction and obtain its consent.
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| Article 16 | A securities firm shall establish the objectives and system of a sound management for finance, operations and accounting in accordance with the applicable laws and regulations. It shall further, together with its affiliated enterprises, properly conduct an overall risk evaluation of the major banks they are dealing with, their customers and their suppliers, and carry out the necessary control mechanism to reduce credit risks.
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| Article 17 | Where a securities firm and its affiliated enterprises enter into inter-company business transactions, a written agreement governing respect of the relevant financial and business operations between each other shall be made in accordance with the principle of fair dealing and reasonableness. Both parties shall definitively stipulate the terms and conditions of the price and payment terms mechanism, and desist from any transactions that are other than at arms' length.
All transactions or contracts made by and between a securities firm and its affiliated persons and shareholders shall follow the principles set forth in the proceeding sub-paragraph and tunneling of profits in strictly prohibited.
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| Article 18 | A shareholder having controlling power over a securities firm shall comply with the following provisions:
- It shall bear a duty of good faith to other shareholders and shall not directly or indirectly cause the company to engage in transactions at other than arms' length or involve in management conduct for adverse interest.
- Its representative shall follow the rules implemented by the securities firm with respect to the exercise of rights and participation of resolution, so that at a shareholders' meeting, the representative shall exercise his/her voting right for the best interest of all shareholders and in good faith and, when acting as a director or supervisor, he/she will exercise the fiduciary duty of a director or supervisor.
- It shall comply with relevant laws, regulations and the articles of incorporation of the company in nominating directors or supervisors and shall not act beyond the authority granted by the shareholders meeting or board meeting.
- It shall not improperly intervene in corporate policy making or obstruct corporate management activities.
- It shall not restrict or impede the management of the company by methods of unfair competition.
- The corporate representative appointed by it after it was elected as director or supervisor shall have the professional qualifications required by the company, and it shall not replace the representative unless there is a good reason.
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| Article 19 | A securities firm shall ensure the command at any time of information of the identity of major shareholders or its ultimate control persons who own a higher percentage of shares and have actual control over the company.
A securities firm shall disclose from time to time important information about its major shareholders relating to the pledge, increase or decrease of shares, or other matters that may possibly trigger a change in the ownership of their shares.
The major shareholder indicated in the first paragraph refers to the one who owns five percent or more of the outstanding shares of the company or the shareholding stake thereof is on the top ten list, provided however that the company may set up a lower shareholding threshold according to the actual shareholding stake that may control the company.
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Chapter III Enhancing the Function of Board of Director
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Section 1 Structure of Board of Directors
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| Article 20 | The board of directors of a securities firm shall direct the company's strategies, supervise the management and be responsible to the company and shareholders. Procedures and arrangement relating to corporate governance shall ensure that, in exercising its authority, the board of directors will comply with laws, regulations, articles of incorporation, and the resolutions of shareholders' meetings of the company.
Regarding the structure of the board of directors of a securities firm, an appropriate number of the board members, which shall not be less than five, shall be determined based on the review of the scale of corporate management and operation and the shareholding of the major shareholders and by taking into consideration of the practical needs for operation. If independent directors are to be appointed, reasonable professional qualifications and objective conditions on how these directors may exercise powers independently shall be carefully reviewed.
The board of directors shall have members of diverse backgrounds. No more than one third of the directors may act as the company's managers at the same time. The board of directors shall formulate appropriate and diverse strategies based on how the board works, type of operation, and development needs, for which standards covering at least the following two aspects shall be included:
- Basic qualifications and value: such as gender, age, nationality and culture.
- Professional knowledge and skills: including professional background, such as law, accounting, industry, finance, marketing or technology, professional skills and industrial experience.
The board members shall have the necessary knowledge, skill, and experience for performing their duties. To achieve the ideal goal of corporate governance, the board of directors shall have the following abilities:
- ability to make operational judgment;
- ability to perform accounting and financial analysis;
- ability to conduct management administration;
- ability to conduct crisis management;
- possession of securities and financial derivatives products professional knowledge;
- possession of perspective of international market;
- ability to lead; and
- ability to make decisions.
- possession of knowledge of and ability for risk management.
The board of directors shall be aware of the securities firm's operational risk exposure, such as market risk, credit risk, liquidity risk, operational risk, legal risk, reputation risk, and other types of risk relating to the securities firm's operation, to ensure effectiveness of risk management and shall be ultimately responsible for risk management.
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| Article 20-1 | To achieve the goal of corporate governance, the board of directors of a securities firm has the following main job responsibilities:
- Establish an effective and appropriate internal control system.
- Elect and supervise managers.
- Review the company's management policy-making and operation plan, and supervise its execution.
- Review the company's financial objectives and supervise how they are accomplished.
- Supervise the results of the company's operation.
- Standards for performance evaluations and emoluments for managers and salespersons, and the structure and system of directors' emoluments.
- Supervise and handle the risks the company is facing.
- Ensure the company's compliance of applicable laws.
- Plan for the company's future objectives.
- Create and maintain the company's image and make the company a responsible member of the society.
- Elect accountants, lawyers and other experts.
- Protect investors' rights and interests.
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| Article 21 | A securities firm shall follow the principle of protecting shareholders' rights and interests and treating all shareholders equally to incorporate a fair, just, and open procedure for the election of directors, encourage shareholders' participation, and adopt the cumulative voting mechanism in order to fully reflect shareholders' views in accordance with the regulations of the Company Act.
Unless otherwise authorized by the competent authority, for the majority of the board of directors of a securities firm, no two board members may be relatives within two degrees of consanguinity.
If the number of directors become less than five after the dismissal of one or more directors for any reason, the company shall reelect new directors at the next shareholders' meeting. If, however, a third of or more seats at the board of directors, based on the number of directors specified in the articles of incorporation, become vacant, the company shall convene a special shareholders' meeting for reelection within 60 days of occurrence of the dismissal.
The aggregate shareholding percentage of all of the directors of a securities firm shall comply with the laws and regulations. Restrictions on the share transfer of each director and the creation, release, or changes of any pledges over the shares held by each director shall be subject to the relevant laws and regulations, and the relevant information shall be fully disclosed.
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| Article 22 | A securities firm is advised to state in its articles of incorporation in accordance with the Company Act that the candidate nomination system shall be adopted for election of its directors, to assess carefully the qualifications of the nominees, and to ascertain whether any of the circumstances set forth in Article 30 of the Company Act and Article 53 of the Securities and Exchange Act applies with respect to the nominees, so that qualified directors will be elected. Said firm shall also abide by Article 192-1 of the Company Act.
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| Article 23 | Clear distinctions shall be drawn between the responsibilities and duties of the chairman of the board of a securities firm and those of its general manager.
It is not advisable for the offices of chairperson and general manager or other comparable post to be assumed by the same person, unless otherwise approved by the competent authority in accordance with the Regulations Governing Responsible Persons and Salespersons of Securities Firms. If the chairman also acts as the general manager or they are spouses or relatives within one degree of consanguinity, it would be advisable that the number of independent directors be increased.
Where a securities firm has set up a functional committee, it shall specify the powers and duties of the committee.
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Section 2 Independent Directors
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| Article 24 | A securities firm that has appointed two or more independent directors in accordance with the articles of incorporation shall keep the number of its independent directors not less than one-fifth of number of seats at the board of directors.
Independent directors shall have expertise and required knowledge, and are subject to restrictions on shareholding. In addition to abiding by the applicable laws and regulations, they are also advised not to act as a director (including independent director) or supervisor of more than five companies concurrently. They shall maintain their independence when performing duties, and shall not have any direct or indirect interest in the company.
No independent directors of a securities firm may hold the position for more than three consecutive terms.
During their incumbency, no independent directors or non-independent directors may switch roles with each other.
Professional qualifications, restrictions on shareholding and outside employment, determination of independence, method of nomination and other regulations for compliance with regard to independent director shall be governed by the Securities and Exchange Act, the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies, and the regulations of Taiwan Stock Exchange or Taipei Exchange.
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| Article 25 | A securities firm shall, in accordance with the regulations of the Securities and Exchange Act, have the following matters resolved at the board of directors. Adverse opinion or qualified opinion, if any, expressed by independent director shall be stated in the board of directors' meeting minutes:
- Establishment of or modification to the internal control system in accordance with Article 14-1 of the Securities and Exchange Act.
- Establishment of and modification to the procedures of major financial and business activities such as acquisition or disposal of assets, performance of transactions of derivatives, lending of funds to third parties, granting of endorsements and provision of guarantees in accordance with Article 36-1 of the Securities and Exchange Act.
- Matters involving interests pertaining to directors or supervisors themselves.
- Major transactions of assets or derivatives.
- Major lending of funds, endorsement or provision of guarantee.
- Offering, issuance or private placement of securities of the nature of equity.
- Appointment,dismissal or remuneration of certified public accountant.
- Appointment and dismissal of chief financial, accounting, risk management, compliance and internal audit officers.
- Standards for performance evaluations and emoluments for managers and salespersons.
- Structure and system of directors' emoluments.
- Other major issues specified by the competent authority.
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| Article 26 | A securities firm shall stipulate expressly the scope of duties of the independent directors and empower them with manpower and material support related to the exercise of their power. The company or other board members shall not restrict, obstruct, reject, or evade the performance of duties by the independent directors.
A securities firm shall, in accordance with the applicable laws and regulations, stipulate expressly the emoluments of the directors in its articles of incorporation or pursuant to a resolution of the shareholders' meeting. Different but reasonable emoluments from that of other directors may be set forth for the independent directors.
Where a securities firm separately sets aside a special reserve as stated in its articles of incorporation, as resolved at a shareholders' meeting or as ordered by the competent authority, the special reserve shall be set aside only after a legal reserve has been set aside and before remunerations of directors and supervisors and employee compensations are to be allocated. Its articles of incorporation shall also state how earnings shall be appropriated when the special reserve is reversed towards unappropriated earnings.
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Section 3 Functional Committees
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| Article 27 | For the purpose of developing monitoring functions and strengthening management mechanisms, the board of directors of a securities firm may, taking into account the basis of the size of the company, nature of business and the number of board directors, set up audit, compensation and remuneration, risk management, nomination, any other functional committees, and may set up environmental protection, corporate social responsibility or other committees based on the philosophy of corporate social responsibility and sustainable operation, and have them stipulated in the articles of incorporation.
Functional committees shall be responsible to the board and submit the proposals to the board of directors for approval. The above requirements, however, shall not apply when the audit committee is exercising the powers of supervisors in accordance with the Securities and Exchange Act, the Company Act and other laws.
Functional committees shall adopt organizational regulations to be resolved and approved by the board of directors. The organizational regulations should cover at least the number of members in the committee, terms of office, duties and authorities, meeting proceedings, and what resources to be provided by the company to support their exercise of duties.
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| Article 28 | It is advisable that a securities firm make it the first priority to set up the risk management committee, and shall either set up the audit committee or appoint supervisors.
The main functions and duties of the risk management committee are as follows:
- Stipulation of risk management policy and framework and designate responsibilities to the relevant corporate departments.
- Stipulation of risk assessment criteria.
- Setting the overall level of risk of the company and of each corporate department and managing the risk.
The risk management committee shall have at least one independent director with the expertise in securities and financial derivatives, accounting or finance in the committee who shall act as the convener.
The audit committee shall be made up of all independent directors and shall have at least three members. One of the members shall act as the convener, and at least one member shall have the expertise in securities and financial derivatives, accounting or finance.
Exercise of powers by the audit committee and independent directors who are members of the committee and other related matters shall be governed by the Securities and Exchange Act, the Regulations Governing the Exercise of Powers by Audit Committees of Public Companies, and the regulations of Taiwan Stock Exchange or Taipei Exchange.
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| Article 28-1 | A securities firm is advised to set up a remuneration committee or other committees with equivalent functions, with the major responsibilities of establishing the performance evaluation standards and emolument standards for managers and salespersons, and the structure and system of directors' emoluments. It is advisable for these committees to consist of a majority of members who are advised independent directors.
The performance evaluation standards and emolument standards for managers and salespersons, and the structure and system of directors' emoluments shall be created based on the following principles:
- A securities firm shall establish the standards for, or the structure or system of, performance evaluations and emoluments based on the performance after taking into consideration future risks, and with reference to the its overall long-term profits and shareholders' interest.
- The emolument and incentive system is not designed to encourage directors, managers and salespersons to attempt to perform an act that falls outside of its risk appetite suitable for a securities firm. The securities firm shall regularly review the emolument and incentive system and performance to ensure they are within its risk appetite.
- How long a securities firm pays emoluments shall be subject to its profits after future risks have been taken into consideration to prevent the securities firm from suffering losses after paying emoluments and other adverse circumstances. A significant part of emoluments paid as incentives shall be in a deferred manner or in the form of equities.
- When evaluating contribution of a director, manager and salesperson to the securities firm's profits on a personal level, a securities firm shall perform an overall analysis of the securities industry to figure out if their profits were generated because they have used the securities firm's overall advantages so that it will be able to have a meaningful evaluation of their individual contribution.
- A securities firm's agreement on severance pay with its director, manager and salesperson shall be made based on the performance that has been achieved to prevent the occurrence of a circumstance where an individual receives a large amount of severance pay after a short-term employment, and other inappropriate circumstances.
- A securities firm shall fully disclose to its shareholders the principles, methods and goals based on which it has established the standards for, or structure and system of, performance evaluations and emoluments as described above.
For purpose of the Principles, salespersons are individuals whose emoluments or performance evaluations are based on their sales of various financial products and/or services.
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| Article 28-2 | A securities firm is advised to establish a nomination committee and adopt organizational regulations. It is advisable for such committee to consist of a majority of its members who are independent directors and be chaired by an independent director.
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| Article 28-3 | A securities firm is advised to establish and announce whistleblowing methods for internal staff and external individuals, and create a whistleblower protection system. This system shall have related internal operation procedures and be included in the internal control system for control and management.
With regard to the above, at least the following shall be covered:
- Create and announce the mailbox and telephone number for internal whistleblowing, or appoint a third-party independent organization to provide the mailbox and telephone number for internal and external whistleblowing.
- Appoint staff or department responsible for accepting whistleblowing cases.
- Records of acceptance of whistleblowing cases, how the cases were processed, results, and production of related documents and archival of documents.
- Confidentiality of whistleblower's identity and details of the whistleblowing case.
- Measures for protection of rights and interests of whistleblower, who will not be subject to inappropriate treatment because of the whistleblowing.
Anonymous whistleblowing cases without identifying the real name and address of the whistleblower, or without providing specific information, may be rejected.
The regulations under subparagraph 5 of the second paragraph shall not apply to a whistleblowing case that, based on the findings of investigations, contains false claims and malicious accusations against securities firms or their staff.
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| Article 29 | A securities firm shall select a professional, responsible and independent CPA to be its external auditor, who shall perform regular reviews of the financial conditions and internal control measures of the company. With regard to the irregularity or deficiency timely discovered and disclosed by the auditor during the review, and the concrete measures of improvement or prevention suggested by the auditor, the company shall faithfully implement improvement actions. The securities firm is also advised to establish a communication channel or system for its independent directors, supervisors or audit committee and certified public accountants, and establish the internal operation procedures that shall be included in the internal control system for control and management.
A securities firm shall evaluate the independence and adequacy of the auditor engaged by the company regularly and no less frequently than once annually. In the event that the company engages the same auditor without replacement for seven years consecutively, or if the auditor is subject to disciplinary actions or other circumstances prejudicial to the independence of the auditor, the company shall evaluate the necessity of replacing the auditor, and shall submit to the board the conclusion of such evaluation.
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| Article 30 | A securities firm shall engage professional and competent legal counsel to provide adequate legal consultation services to the company, or to assist in the endeavor by the directors, the supervisors and the management to improve their knowledge of the law, for the purposes of preventing any infraction by the company or its staff of laws or regulations, and ensuring the corporate governance matters will proceed pursuant to the relevant legal framework and the prescribed procedures.
In the event that the directors, supervisors or the management are involved in litigation as result of performing his or her duties as provided by the law or arising from shareholders disputes, depending on the circumstances the company shall retain legal counsel to provide assistance.
The audit committee or its members who are independent directors may act on behalf of the company to appoint a lawyer, accountant or other professional to perform necessary reviews or provide consultations on matters relating to exercise of powers, with the costs to be borne by the company.
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Section 4 Rules for the proceedings of the board of directors' meetings and policy making procedures
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| Article 31 | A securities firm shall hold a board of directors' meeting no less frequently than once every quarter. The board meeting may be convened at any time in the event of an emergency. To convene a board meeting, it shall be expressly stated in the articles of incorporation that a notice be sent to each director and supervisor, stating the reason to hold the meeting, seven days before the meeting date. The meeting notice shall include sufficient information necessary to prepare the directors and supervisors for the meeting. In case of insufficient meeting information, directors shall have the right to request additional information or the board of directors may resolve to postpone reviews of a proposal.
A securities firm shall create the rules for the proceedings of the board of directors' meetings. Regulations for issues to be handled at the meeting, how a meeting is proceeded, particulars to be stated in the meeting minutes, public announcement and other matters for compliance shall be governed by the Regulations Governing Procedure for Board of Directors Meetings of Public Companies.
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| Article 32 | A director shall exercise a high degree of self-discipline and if a director himself or herself, or the juristic person the director is acting on its behalf, has an interest in a proposal submitted to the board of directors, he or she shall describe the important information about such interest, and if the risks may be detrimental to the interest of the company, the director shall not participate in discussion and voting of the proposal and shall voluntarily abstain from voting for himself or herself or as proxy for another director. The directors shall practice self-discipline as to their internal relationship and must not support each other in an inappropriate manner.
The matters with regard to which a director shall voluntarily abstain from voting shall be clearly set forth in the rules for the proceedings of board meetings. A securities firm shall set forth the matters which shareholders, directors, supervisors and other stakeholders apply for director abstaining on a particular proposal in the rules. The rules shall include qualification of applicants, procedure of applying and reviewing and deadline and formula of responding. The proposal that the director being applied for abstaining from voting shall abstain or not shall be submitted to the board for approval. Before resolution, the director shall not participate in or be proxy for voting on this proposal.
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| Article 33 | Independent directors of a securities firm shall attend a meeting in person, and not to have their proxy who are not independent directors to act on their behalf, to submit a proposal for matters to be submitted to the board of director under Article 14-3 of the Securities and Exchange Act. If an independent director expresses an adverse or qualified opinion, his or her opinion shall be stated in the minutes of the board meeting. If an independent director is unable to attend a board meeting in person to express an adverse or qualified opinion, he or she shall submit a written opinion prior to the meeting, unless with a legitimate reason, and his or her opinion shall be stated in the minutes of the board meeting.
When the board of directors resolves a matter relating to one of the following circumstances, the matter and resolution shall be stated in the meeting minutes and shall also be declared at the information reporting website designated by the competent authority within two days of the date of the board meeting:
- An independent director has expressed an adverse or qualified opinion, which has been stated in the meeting minutes or described in a written statement.
- Where a securities firm has set up an audit committee, a matter not passed at the audit committee but approved by more than two thirds of all directors.
During the proceeding of the board meetings, depending on the information in the proposal, managers from the relevant departments who are not directors may be notified to sit in at the meetings, make report on the current business conditions of the company and respond to inquiries raised by the directors. Where necessary, accountants, lawyers or other professionals may be invited to sit in at the meetings so as to assist the directors in understanding the conditions of the company for the purpose of adopting an appropriate resolution, provided they shall recuse themselves from the meeting during discussion and voting.
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| Article 34 | Staff personnel of a securities firm attending board meetings shall faithfully record meeting minutes in details and the summary, method of resolution, and voting results of all the proposals submitted to the board meeting in accordance with relevant regulations. In case a director has an interest in a proposal, the name of the director who has an interest in the proposal and the specific reason why he or she should abstain from discussion and voting, or not to abstain, shall be stated in the company's meeting minutes.
The board meeting minutes shall be signed or chopped by the chairman and secretary of the meeting, to be distributed to each director and supervisor within 20 days after the meeting. The director attendance records should be part of the meeting minutes. Board meeting minutes shall be treated as important corporate records and, during the life of the company, shall be placed in safekeeping permanently.
Meeting minutes may be produced, distributed and stored electronically.
The company shall audio- or video-record the whole proceedings of the board meetings and the recordings shall be kept for at least five years. The recordings may be stored electronically.
If, prior to expiry of the storage period in the preceding paragraph, there is a lawsuit pertaining to matters resolved at the board meeting, the audio or video recordings that are part of the evidence shall continue to be kept, in which case the preceding paragraph shall not apply.
Where a board of directors' meeting is held via videoconferencing, the audio and video recordings of the meeting shall be part of the meeting minutes and shall be stored permanently.
Where a resolution of the board of directors violates laws, regulations, articles of incorporation, or resolutions adopted in the shareholders' meeting, and thus causing injury to the company, dissenting directors whose dissent can be proven by minutes or written statements will not be liable for damages.
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| Article 35 | A securities firm shall submit the following matters to the board of directors for discussion.
- The company's operation plan.
- Annual financial report and semi-annual financial report.
- Establishment of or modification to the internal control system in accordance with Article 14-1 of the Securities and Exchange Act, and review of the effectiveness of said system.
- Establishment of and modification to the procedures of major financial and business activities such as acquisition or disposal of assets, performance of transactions of derivatives, lending of funds to third parties, granting of endorsements and provision of guarantees in accordance with Article 36-1 of the Securities and Exchange Act.
- Offering, issuance or private placement of securities of the nature of equity.
- Standards for performance evaluations and emoluments for managers and salespersons.
- Structure and system of directors' emoluments.
- Appointment and dismissal of chief financial, accounting risk management, compliance and internal audit officers.
- Donations to related parties or major donations to non-related parties, provided emergency pro bono donations in response to major natural disasters may be submitted to the board of directors' next meeting for retrospective approval.
- Matters to be submitted to the shareholders' meeting or board of directors for resolution in accordance with Article 14-3 of the Securities and Exchange Act, other laws and regulations or articles of incorporation, or important matters specified by the competent authority.
Except the matters required to be submitted to the board of directors for discussion as provided in the preceding paragraph, during the recess of the board of directors, the board of directors may authorize other persons to exercise the powers of the board in accordance with laws or the company's articles of incorporation. When such an authorization is made, information about level of authorization, what is covered in the authorization or particulars of the authorization shall be clear and specific. No general authorization shall be made.
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| Article 35-1 | Standards for performance evaluations and emoluments for a securities firm's managers and salespersons, and the structure and system of its directors' emoluments shall be established based on the following principles:
- A securities firm shall establish the standards for, or the structure or system of, performance evaluations and emoluments based on the performance after taking into consideration future risks, and with reference to the company's overall long-term profits and shareholders' interest.
- The emolument and incentive system is not designed to encourage directors, managers and salespersons to attempt to perform an act that falls outside of its risk appetite. The securities firm shall regularly review the emolument and incentive system and performance to ensure they are within the company's risk appetite.
- How long a securities firm pays emoluments shall be subject to its profits after future risks have been taken into consideration to prevent the securities firm from suffering losses after paying emoluments and other adverse circumstances. A significant part of emoluments paid as incentives shall be in a deferred manner or in the form of equities.
- When evaluating contribution of a director, manager and salesperson to the company's profits on a personal level, a securities firm shall perform an overall analysis of the securities industry to figure out if their profits were generated because they have used the company's overall advantages such as lower cost of funds so that it will be able to have a meaningful evaluation of their individual contribution.
- A securities firm's agreement on severance pay with its director, manager and salesperson shall be made based on the performance that has been achieved to prevent the occurrence of a circumstance where an individual receives a large amount of severance pay after a short-term employment, and other inappropriate circumstances.
- A securities firm shall fully disclose to its shareholders the principles, methods and goals based on which it has established the standards for, or structure and system of, performance evaluations and emoluments as described above.
For purpose of the Principles, salespersons are individuals whose emoluments or performance evaluations are based on their sales of various financial products and/or services.
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| Article 36 | A securities firm shall ask the appropriate corporate department or personnel to handle matters and implement actions pursuant to the board of directors' resolutions in a way consistent with the program schedule and objectives. It shall also follow up on these matters and faithfully review their implementation.
The board of directors shall ensure full control of the implementation and progress of these matters and make a report in subsequent meetings so as to ensure that the board's management decisions are faithfully implemented.
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Section 5 Fiduciary Duty, Duty of Care and Responsibility of Directors
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| Article 37 | Members of the board shall faithfully conduct corporate affairs and discharge this duty of care as a good administrator. In conducting the affairs of the company, they shall exercise their power with a heightened level of self-discipline and prudential attitude. Unless matters are reserved for resolutions in shareholders' meetings by law or in the articles of incorporation of the company, they shall ensure that all matters will faithfully adhere to the board's resolutions.
A securities firm is advised to create the rules and procedures for evaluation of performance of the board of directors, and conduct performance evaluations on the board of directors, functional committees and individual directors based on self-evaluation, peer-to-peer evaluation, evaluation by contracted external professional organization or other appropriate method regularly on an annual basis. It is advisable that the performance evaluations of the board of directors, including functional committees, include the following aspects, and that appropriate evaluation indicators be developed in consideration of the company's needs:
- The degree of participation in the company's operations.
- Improvement in the quality of decision making by the board of directors.
- The composition and structure of the board of directors.
- The election of the directors and their continuing professional education.
- Internal control.
It is advisable that performance evaluations of board members (self-evaluations or peer-to-peer evaluations) include the following aspects, with appropriate adjustments made on the basis of the company's needs:
- Their understanding of the company's goals and missions.
- Their recognition of director's duties.
- Their degree of participation in the company's operations.
- Their management of internal relationships and communication.
- Their professionalism and continuing professional education.
- Internal control.
The board of directors of a securities firm shall consider the results of the performance evaluations to adjust the composition of the board members.
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| Article 37-1 | The board of directors of a securities firm is advised to evaluate and monitor the following aspects of its direction of operation and performance in connection with intellectual properties, to ensure the firm develops an intellectual property regulatory system in accordance with the Plan-Do-Check-Act cycle:
- Formulate intellectual property regulatory policies, objectives and systems that are slightly associated with the operational strategies.
- Develop, implement and maintain on the basis of scale and form its regulatory systems governing the procurement, protection, maintenance and utilization of intellectual properties.
- Identify and provide the necessary resources sufficient to ensure effective implementation and maintenance of the intellectual property regulatory system.
- Observe internally and externally the risks and opportunities that intellectual property regulation may present and adopt corresponding measures.
- Plan for and implement a continuous improvement mechanism to ensure the operation and effects of the intellectual property regulatory regime meet the firm's expectations.
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| Article 38 | If a resolution of the board of directors violates law, regulations or the company's articles of incorporation, at the request of shareholders holding shares continuously for a year or an independent director, or at the notice of a supervisor to discontinue the implementation of the resolution, members of the board shall take appropriate measures or discontinue the implementation of such resolution as soon as possible.
Upon discovering any threat of the company suffering material injury, members of the board shall immediately report to the audit committee or independent directors who are members of the audit committee or supervisors in accordance with the foregoing paragraph.
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| Article 39 | A securities firm is advised to take out liability insurance for directors with respect to their liabilities resulting from exercising their duties during their terms of occupancy so as to reduce and spread the risk of material harm caused by directors due to wrongful or negligent acts to the company and shareholders.
After taking out or renewing liability insurance for directors, the securities firm is advised to report key information about the insurance such as insured amount, coverage and insurance premiums of the liability insurance to the next board of directors' meeting.
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| Article 40 | Members of the board are advised to participate in training courses of finance, risk management, business, commerce, accounting, law or corporation's social responsibilities which cover subjects relating to corporate governance upon becoming directors and throughout their term of office. They shall also ensure that company employees at all levels will enhance their professionalism and knowledge of the law.
The training of directors shall be fully disclosed, and such information along with their performance during the current term shall be provided to shareholders for their consideration to elect the next term of directors.
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Chapter IV Empowering the Supervisors
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Section 1 Duties of Supervisors
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| Article 41 | A securities firm shall stipulate a fair, impartial, and open procedure for the election of supervisors and shall adopt the cumulative voting mechanism to fully reflect the opinions of the shareholders in accordance with the regulations of the Company Act.
The aggregate shareholding percentage of all of the supervisors of a securities firm shall comply with the laws and regulations. Restrictions on the share transfer of each supervisor and the creation, release, or other changes of any pledges over the shares held by each supervisor shall comply with the relevant laws and regulations, and the relevant information shall be fully disclosed.
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| Article 42 | A securities firm is advised to state in its articles of incorporation in accordance with the Company Act that the candidate nomination system shall be adopted for election of its supervisors, to assess carefully the qualifications of the nominees, and to ascertain whether any of the circumstances set forth in Article 30 of the Company Act and Article 53 of the Securities and Exchange Act applies with respect to the nominees, so that qualified supervisors will be elected. Said firm shall also abide by Article 192-1 of the Company Act.
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| Article 43 | Unless otherwise approved by the competent authority, at least one supervisor of a securities firm shall not be a person who is the spouse or a relative within two degrees of consanguinity to another supervisor or a director.
A securities firm is advised to follow the requirements of independence in the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies to appoint appropriate supervisors to strengthen the company's risk management and control over finance and operation.
A supervisor is advised to have a domestic residence to be ready to exercise his or her supervision when needed.
The minimum number of supervisors of a securities firm shall be governed by the Company Act or the regulations of the TWSE or the Taipei Exchange.
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Section 2 Supervisors' powers and obligations
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| Article 44 | A supervisor shall have the specialized knowledge and shall be familiar with the relevant laws and regulations, understand the rights, obligations, and duties of directors of the company and the functions and duties, and operation of each department, and attend regular meetings of the board of directors to supervise the operations and to state his/her opinions when appropriate so as to control or discover any abnormal situation early on.
A person acting as a supervisor shall evaluate what time and resources available to him/her to ensure he/she is capable of performing the job of a supervisor.
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| Article 45 | A supervisor shall supervise the implementation of the operations of the company and the performance of duties by directors and managers and care the enforcement of the internal control system so as to reduce the financial and operational risks of the company.
Where a director, for himself/herself or on behalf of others, engages in sales and purchases, lending and loaning activities, or conducts any legal act with the company, a supervisor shall act as the representative of the company. In the event that there is an audit committee, it is advisable that the member of the audit committee shall act as the representative of the company in the above situation.
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| Article 46 | A supervisor may investigate the operational and financial conditions of the company from time to time and the relevant departments in the company shall provide the books or documents that will be needed for the supervisor's review, transcription, or copying.
When reviewing the finance or operations of the company, a supervisor may retain attorneys or accountants on behalf of the company to perform the review; however, the company shall inform the relevant persons of their confidentiality obligations.
The board of directors and managers shall submit reports in accordance with the request of the supervisors and shall not for any reason obstruct, circumvent, or refuse the inspection of the supervisor.
When a supervisor performs his/her duties, a securities firm shall provide necessary assistance as needed by the supervisor, and the reasonable expenses that the supervisor needs shall be borne by the company.
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| Article 47 | For supervisors to timely discover any possible irregular conduct in the company, a securities firm shall establish a channel for supervisors to communicate with the employees, shareholders, and stakeholders.
Upon discovering any irregular conduct, the supervisors shall take appropriate measures timely to curb the expansion of the irregular conduct and shall file a report to the relevant regulatory authorities or agencies if necessary.
Where any of the independent directors, general managers, officers of finance, accounting, and internal audit department, or CPAs resigns his/her position, the supervisors shall further investigate the cause of the resignation.
In the event that a supervisor neglects his/her duties and therefore causes harm to the company, the supervisor shall be liable to the company.
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| Article 48 | When exercising his/her supervision power, each supervisor of a securities firm may convene a meeting to exchange opinions among all the supervisors when he or she feels necessary, but may not by such way obstruct supervisors in exercising their duties.
When supervisors individually exercise their supervision power at a different time, the departments subject to supervision shall not demand they act consistently in their supervision activities or refuse to provide information requested by another supervisor.
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| Article 49 | A securities firm is advised to take out liability insurance for its supervisors with respect to their liabilities resulting from exercising their duties during their terms of occupancy so as to reduce and spread the material harm caused by supervisors due to wrongful or negligent acts to the company and shareholders.
After taking out or renewing liability insurance for supervisors, the securities firm is advised to report key information about the insurance such as insured amount, coverage and insurance premiums of the liability insurance to the next board of directors' meeting.
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| Article 50 | A supervisor shall exercise a high degree of self-discipline and shall voluntarily abstain from being involved in a proposal from which the supervisor's own interest might create a possible adverse impact on the interest of the company.
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| Article 51 | Supervisor(s) are advised to participate in training courses of finance, risk management, business, commerce, accounting, law or corporation's social responsibilities which cover subjects relating to corporate governance when he/she assumes the position and shall do the same or during his/her term of office.
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| Article 52 | A securities firm shall set forth the emoluments of supervisor(s) in its Articles of Incorporation or by a resolution of its shareholders' meeting.
The regulations of Article 35-1 of the Principles shall apply mutatis mutandis to a securities firm's determination of the standards of the emoluments of supervisor(s).
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Chapter V Respecting Stakeholders and Interested Persons' Right
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| Article 53 | A securities firm shall maintain communications with its banks, other creditors, employees, consumers, suppliers, community or the company's other interested parties and shall respect and protect their legal rights. It is advisable a designated area for interested parties be included in the company's website.
In the event that the legal rights of a stakeholder are harmed, the company shall handle such matter in a proper manner and in good faith.
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| Article 54 | The company shall provide sufficient information to banks and its other creditors to facilitate their evaluation of the operational and financial conditions of the company and decision making process. When any of their legal rights or interest is harmed upon, the company shall respond with a responsible attitude and assist creditors in obtaining compensation through proper means.
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| Article 55 | A securities firm shall not only respect and protect the legal rights of investors, but also conduct its business in good faith and handle all disputes properly.
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| Article 56 | A securities firm shall establish communication channels with employees and encourage employees to communicate directly with the management, directors and supervisors so as to reflect employees' opinions about the management, financial conditions and material decisions of the company concerning employee welfare.
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| Article 57 | In developing its normal business and maximizing the shareholders interest, a securities firm shall pay attention to investor's interests, orders of securities markets, community, environmental protection and other pro bono activities, and shall have a high regard for the social responsibility of the company.
If the securities firm has investment plans, it shall take into account the implementation of corporate governance by the invested enterprise and whether said enterprise fulfils its duty to protect the environment and its social responsibility.
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Chapter VI Improvement of Information of Transparency
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Section 1 Disclosure of Enhancing Information Disclosure
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| Article 58 | A securities firm shall perform its disclosure obligations faithfully in accordance with the relevant laws and regulations.
A securities firm is advised to establish a public web-reporting system, appoint personnel responsible for gathering and disclosing the information and establish a spokesperson system so as to ensure the proper and timely disclosure of information about policies affecting shareholders and stakeholder.
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| Article 59 | In order to enhance the accuracy and timeliness of the information disclosed, a securities firm shall a appoint spokesperson and acting spokesperson who understand thoroughly the company's financial and business conditions and who are capable of coordinating among departments for gathering relevant information and representing the company in making statements independently.
A securities firm shall appoint one or more acting spokesperson who shall represent the company, when the spokesperson cannot perform his/her duties, in making statements independently, provided that the order of authority is established to avoid any confusion.
In order to implement the spokesperson system, a securities firm shall unify the process of making external statements and require management and employees to maintain the confidentialities of financial and operational secrets and prohibit disclosure thereof by them at will.
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| Article 60 | In order to keep shareholders and stakeholders fully informed, it is advisable for a securities firm to take advantage of the convenience of the Internet and to set up a web site containing the information regarding the company's finance, operation and corporate governance. It is also advisable to contain the finance, corporate governance or other related information in English as well.
To avoid misleading information, the aforesaid web site shall be maintained by specified personnel, and the recorded information shall be accurate, in detail and updated timely.
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Section 2 Disclosure of Information of Corporate Governance
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| Article 61 | A securities firm shall disclose the following relevant information regarding corporate governance for the fiscal year in accordance with laws and regulations and the regulations of the TSE, TPEx or Chinese Securities Associations, and shall continue to update the information, provided no disclosure of information about supervisors is required in the case of an audit committee:
- corporate governance framework structure and rules;
- ownership structure and shareholders' equity, including specific and clear dividend policy;
- structure of board of directors and professionalism and independence of board members;
- responsibility of the board of directors and managerial personnel;
- composition, duties and independence of the audit committee or supervisors;
- composition, duties and operation of the remuneration committee and other functional committees;
- emoluments paid to directors, supervisors, general manager, and vice general manager in the most recent two years, analysis of ratio of the sum of emoluments paid to after-tax net profits in separate or individual financial report, emolument payment policy, standards and makeups, procedures to determine emoluments, and the relevance to operational performance and future risks. In a special individual circumstance, emoluments of an individual director and supervisor shall be disclosed;
- the progress of training of directors and supervisors;
- risk management information;
- interested parties' rights, channels for submitting complaints, issues of concern, and appropriate response method;
- details of the events subject to information disclosure required by law and regulations;
- the enforcement of corporate governance, deficiency between the corporate governance principles implemented by the company and the Principles, and the reason for the deficiency;
- information about transactions with related parties;
- disclosure of capital adequacy; and
- other information regarding corporate governance.
The Taiwan branches of foreign securities firms may choose not to disclose the matters set forth in items 2 to 8 in the preceding paragraph.
A securities firm is advised, according to the actual performance of the corporate governance system, to disclose the plans and measures to improve its corporate governance system through appropriate mechanisms.
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Section 3 Enhanced Information Disclosure as Part of A Corporate Enterprise’s Social Responsibility
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| Article 62 | A securities firm has a share capital of more than NT$5 billion as indicated in its financial report for the most recent fiscal year shall prepare a corporate enterprise’s social responsibility report of the previous year on an annual basis.
The above provision may not apply if the overall operating activities of the securities firm have been covered in the corporate enterprise’s social responsibility report prepared by the TSE or TPEx listed company that is also a member of the same business group as the securities firm.
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| Article 63 | When preparing the corporate enterprise’s social responsibility report for a previous year, the securities firm meeting the requirements in the preceding article shall refer to the GRI Standards published by the Global Reporting Initiatives (GRI), practice of disclosure prevailing in its industry, and other applicable rules based on the characteristics of its industry, to disclose the major economic, environmental and social topics identified by the firm, management policies, disclosed items and their reporting requirements, and should, as a minimum requirement, meet the core options under the GRI Standards and is advised to obtain a third party’s accreditation or guarantee. Its report is advised to cover:
- Implementation of corporate enterprise’s social responsibility policy, system or related management guidelines, and a specific promotion plan.
- Major interested parties and topics of their concerns.
- Performance and review of the firm’s implementation of corporate government, development of sustainable environment, support of social welfare and promotion of economic development.
- How improvements can be made in the future and objectives.
The contents of the corporate enterprise’s social responsibility report in the preceding paragraph should cover risk evaluation of environmental, social and corporate governance issues, and establish relevant performance indexes for management of major issues identified.
A securities firm shall in its corporate enterprise’s social responsibility report contain an index showing what part of the GRI Standards the disclosure of the report corresponds to, and shall indicate in the report whether an individual disclosure has obtained a third party’s accreditation or guarantee.
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Chapter VII Ancillary Rules |
| Article 64 | A securities firm shall at all times monitor domestic and international development of corporate governance and thereby review and improve the company's corporate governance mechanism so as to enhance performance of corporate governance.
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