Chapter I General Provisions |
| 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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| Article 3-2 | In promoting sustainable development initiatives, a securities firm shall give due consideration to the rights and interests of stakeholders and, while pursuing sustainable operations and profits, also emphasize factors such as the environment, society and corporate governance, etc. and incorporate such factors in its corporate management guidelines and business operations.
A securities firm shall, in accordance with applicable laws and regulations, conduct based on the materiality principle risk assessments of environmental, social and corporate governance issues pertaining to company operations and establish accordingly the risk management policies and procedures.
A securities firm shall, in accordance with the applicable laws and regulations, have its board of directors authorize executive-level positions to handle economic, environmental, and social issues resulting from the business operations, and to report the status of handling to the board of directors. The handling procedures and the relevant responsible personnel shall be concrete and clear.
A securities firm shall take into consideration the correlation between the development of domestic and foreign sustainable development issues and corporate core business, and the effect of the operation of individual companies and their respective business groups as a whole on stakeholders, and, in accordance with the applicable laws and regulations, establish policies, systems, or relevant management guidelines and concrete promotion plans for sustainable development, which shall be approved by the board of directors and then reported to the shareholders’ meeting. If a shareholder proposes a motion involving sustainable development, the company's board of directors is advised to consider including it in the shareholders meeting agenda.
It is advisable that the sustainable development policies under the preceding paragraph be formulated respectively for the short, mid, and long term, and annual goals be set and a tracking and evaluation mechanism be established for continuous review and revision.
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| Article 3-3 | For the purposes of sound management of sustainable development initiatives, a securities firm is advised to create a governance structure to promote sustainable development, and to establish an exclusively (or concurrently) dedicated unit for sustainable development, which is responsible for proposing and enforcing sustainable development policies, systems, or relevant management guidelines and concrete promotional plans, and to report to the board of directors at least once on a quarterly basis, for assessing the results of implementation.
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| Article 3-4 | A securities firm shall carry out the following information security protection matters in accordance with appliable laws and regulations:
- Designate personnel and the departments to coordinate and liaise with relevant departments.
- Periodically evaluate the core operating systems and equipment, take appropriate measures based on the evaluation results, and report to the board of directors, to ensure the ability of business continuity and resilience of operations.
- In the sustainability report, annual report, financial report, or on company website, disclose resources required for the continued operation of the company's core operating systems and equipment for the fiscal year and the items implemented in the annual budget or education and training programs.
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