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Article NO. Content

Title:

Corporate Governance Best-Practice Principles for Securities Firms  CH

Amended Date: 2019.01.14 
Categories: Corporate Governance
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:
  1. Stipulation of risk management policy and framework and designate responsibilities to the relevant corporate departments.
  2. Stipulation of risk assessment criteria.
  3. 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.
    Where a securities firm has set up an audit committee, the regulations of the Securities and Exchange Act, the Company Act, other laws and regulations and the Principles applicable to supervisors shall apply mutatis mutandis to the audit committee.
    Where a securities firm has set up an audit committee, the following matters shall be subject to approval of the majority of all members of the audit committee and the board of directors' resolution and Article 25 of the Principles shall not apply to these matters:
  1. Establishment of or modification to the internal control system in accordance with Article 14-1 of the Securities and Exchange Act.
  2. Evaluation of effectiveness of the internal control system.
  3. Establishment of and modification to the procedures of major financial and business activities such as acquisition or disposal of assets, performance of transactions of derivative products, 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.
  4. Matters involving interests pertaining to directors themselves.
  5. Major transactions of assets or derivative products.
  6. Major lending of funds, endorsement or provision of guarantee.
  7. Offering, issuance or private placement of securities of the nature of equity.
  8. Appointment, dismissal or remuneration of certified public accountant.
  9. Appointment and dismissal of chief financial, accounting or internal audit officers.
  10. Annual financial report and semi-annual financial report.
  11. Establishment of the investor protection policy and evaluation of how the policy is being implemented.
    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.
    A securities firm is advised to set up a remuneration committee, mainly responsible to establish the standards for performance evaluations and emoluments for managers and salespersons, and the structure and system of directors' emoluments. The remuneration committee shall have independent director(s) as its member(s), and it is advisable that an independent director act as the convener.