Taiwan Stock Exchange - Rules & Regulations Directory
Chapter I General Principles
The Taiwan Stock Exchange Corporation (TWSE) and the Taipei Exchange (TPEx) hereby jointly adopt these Principles, to be followed by TWSE and TPEx listed companies, to assist them in establishing sound corporate governance systems and promote sound development of the securities market.
TWSE/TPEx listed companies are advised to formulate their own corporate governance principles and establish an effective corporate governance framework with reference to these Principles and disclose them through the Market Observation Post System (MOPS).
When setting up the corporate governance system, in addition to complying with relevant laws, regulations, articles of incorporation, contracts signed with the TWSE or TPEx, and other relevant regulations, a TWSE/TPEx listed company shall follow the following principles:
- Protect the rights and interests of shareholders.
- Strengthen the powers of the board of directors.
- Fulfill the function of supervisors.
- Respect the rights and interests of stakeholders.
- Enhance information transparency.
A TWSE/TPEx listed company shall follow the Criteria Governing Establishment of Internal Control Systems by Public Reporting Companies and take into consideration the overall operational activities of itself and its subsidiaries to design and fully implement an internal control system, and shall conduct continuing reviews of the system, in order to ensure the continued effectiveness of its design and implementation in light of changes in the company's internal and external environment.
A TWSE/TPEx listed company shall perform full self-assessments of its internal control system. Its board of directors and management shall review the results of the self-assessments by each department at least annually and the reports of the internal audit department on a quarterly basis. The audit committee or supervisors shall also attend to and supervise these matters. Directors and supervisors shall periodically hold discussions with their internal auditors about reviews of internal control system deficiencies. A record of the discussions shall be kept, and the discussions shall be followed up, improvements implemented, and a report submitted to the board of directors. TWSE/TPEx listed companies are advised to establish channels and mechanisms of communication between their independent directors, audit committees or supervisors, and chief internal auditors, and the convener of the audit committee or supervisors shall report the communications between members of the audit committees or supervisors and chief internal auditors at the shareholders' meeting.
The management of a TWSE/TPEx listed company shall pay special attention to the internal audit department and its personnel, fully empower them and urge them to conduct audits effectively, to evaluate problems of the internal control system and assess the efficiency of its operations to ensure that the system can operate effectively on an on-going basis, and to assist the board of directors and the management to perform their duties effectively so as to ensure a sound corporate governance system.
Appointment, dismissal, evaluation and review, salary and compensation of internal auditors of a TWSE/TPEx listed company shall be reported to the board of directors or shall be submitted by the chief auditor to the board chairperson for approval.
(Personnel responsible for corporate governance affairs)
A TWSE/TPEx listed company is advised to have an adequate number of corporate governance personnel with appropriate qualifications based on the size of the company, business situations and management needs, and shall appoint in accordance with the requirements of the competent authorities, TWSE or TPEx 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