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.
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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 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 or corporation's social responsibilities which cover subjects relating to corporate governance upon becoming directors and throughout their term of office. They shall also ensure that company 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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