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 |
| 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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