Section 4 Rules for the proceedings of the board of directors' meetings and policy making procedures |
| 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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