Section 5 Fiduciary Duty, Duty of Care and Responsibility of Directors |
| 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.
Each director shall attend meetings of the board of directors in person. If a director for some reason is unable to attend a meeting, the director may, as provided in the articles of incorporation, appoint another director to attend on his or her behalf, provided that each time a director does so, he or she shall issue a written proxy and state therein the scope of authority with reference to the subjects to be discussed at the meeting. A director may accept appointment to act as proxy of one other director only.
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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 37-2 | A securities firm's board of directors shall scrupulously review the selection and appointment of managerial officers and oversee their suitability to their positions and maintenance of their qualifications. With respect to material issues including information security protection, fair customer treatment, and legal compliance, said firm shall further establish accountability systems as listed below in accordance with the Plan-Do-Check-Act management cycle:
- Designate dedicated departments with responsibility for coordination and liaison with relevant departments, and for the overall coordination of the various operations.
- Designate dedicated business of each department with regard to the internal management regulations governing the aforementioned material issues.
- For various cross-departmental operations, designate the main responsible and assisting departments. It is advisable that the division of tasks be reviewed at least once a year.
- Ensure that there is a separation of powers and duties and a hierarchy of responsibility, and charge senior management with supervising all business departments.
- Complete the hierarchical structure of responsibility and establish specific and detailed regulations for the internal authorization and approval levels for the business operations of each dedicated department under the preceding subparagraph.
- Assign senior management at or above the level of deputy general manager to directly supervise the heads of the abovementioned departments in the actual execution of day-to-day operations.
- Assign a dedicated person with responsibility for compiling the performance of all relevant departments and for inputting the required information and uploading supporting documents to the securities and futures industry ESG implementation information control system on a quarterly basis.
- Regularly evaluate the efficacy of overall implementation and include it in the performance appraisals of relevant business departments and personnel.
- The quarterly implementation performance mentioned in the preceding paragraph shall be approved by the general manager before it is input and uploaded. If a dedicated functional committee has been set up, it shall first confirm the correctness of the contents.
- The senior management responsible for supervising each department head shall explain to the board of directors the reasons for any failure to achieve predetermined objectives and provide specific plans and supporting evidence such as the expected completion time and anticipated response measures.
- The board of directors shall review annually the performance of the departments in charge of information security protection, fair customer treatment, and legal compliance, and institute rewards and penalties for the responsible personnel according to their respective hierarchical and operational classifications.
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| Article 37-3 | If the chairman of the board performs his or her duties in a remote working mode such as working off-site, at home, or by video conferencing for a long period of time, he or she shall ensure the effective performance of his or her duties.
In case the chairman of the board is on leave or cannot exercise his or her power and authority for any cause, the vice chairman shall act on his or her behalf. In case there is no vice chairman, or the vice chairman is also unable to exercise his or her power and authority, the chairman shall designate one of the managing directors, or where there is no managing director, one of the directors to act on his or her behalf. In the absence of such a designation, the managing directors or the directors shall elect from among themselves an acting chairman of the board of directors.
The designation or election of an acting chairman under the preceding paragraph shall be subject to the qualifications and restrictions on concurrent appointments set out in the Regulations Governing Responsible Persons and Associated Persons of Futures Commission Merchants. The authorities and powers exercised by the acting chairman during the period of agency shall not exceed the authority of the chairman of the board, and if there are any other restrictions on such authority, they shall be specified in advance.
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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, corporate social responsibility or sustainable development which cover subjects relating to corporate governance as held by institutions designated under the Implementation Directions and Study Roadmap for Continuing Education for Directors and Supervisors of Securities Firms, upon becoming directors and throughout their term of office. They shall also ensure that 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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