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Article 3-2
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In promoting sustainable development initiatives, a securities firm shall give due consideration to the rights and interests of stakeholders and, while pursuing sustainable operations and profits, also emphasize factors such as the environment, society and corporate governance, etc. and incorporate such factors in its corporate management guidelines and business operations.
A securities firm shall, in accordance with applicable laws and regulations, conduct based on the materiality principle risk assessments of environmental, social and corporate governance issues pertaining to company operations and establish accordingly the risk management policies and procedures.
A securities firm shall, in accordance with the applicable laws and regulations, have its board of directors authorize executive-level positions to handle economic, environmental, and social issues resulting from the business operations, and to report the status of handling to the board of directors. The handling procedures and the relevant responsible personnel shall be concrete and clear.
A securities firm shall take into consideration the correlation between the development of domestic and foreign sustainable development issues and corporate core business, and the effect of the operation of individual companies and their respective business groups as a whole on stakeholders, and, in accordance with the applicable laws and regulations, establish policies, systems, or relevant management guidelines and concrete promotion plans for sustainable development, which shall be approved by the board of directors and then reported to the shareholders’ meeting. If a shareholder proposes a motion involving sustainable development, the company's board of directors is advised to consider including it in the shareholders meeting agenda.
It is advisable that the sustainable development policies under the preceding paragraph be formulated respectively for the short, mid, and long term, and annual goals be set and a tracking and evaluation mechanism be established for continuous review and revision.
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Article 3-3
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For the purposes of sound management of sustainable development initiatives, a securities firm is advised to create a governance structure to promote sustainable development, and to establish an exclusively (or concurrently) dedicated unit for sustainable development, which is responsible for proposing and enforcing sustainable development policies, systems, or relevant management guidelines and concrete promotional plans, and to report to the board of directors at least once on a quarterly basis, for assessing the results of implementation.
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Article 3-4
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A securities firm shall carry out the following information security protection matters in accordance with appliable laws and regulations:
- Designate personnel and the departments to coordinate and liaise with relevant departments.
- Periodically evaluate the core operating systems and equipment, take appropriate measures based on the evaluation results, and report to the board of directors, to ensure the ability of business continuity and resilience of operations.
- In the sustainability report, annual report, financial report, or on company website, disclose resources required for the continued operation of the company's core operating systems and equipment for the fiscal year and the items implemented in the annual budget or education and training programs.
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Article 10-1
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It is advisable that a securities firm report at a general shareholders' meeting the remuneration received by directors, including the remuneration policy, individual remuneration packages, amounts, and association with the outcomes of performance reviews.
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Article 18
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A shareholder having controlling power over a securities firm shall comply with the following provisions:
- It shall bear a duty of good faith to other shareholders and shall not directly or indirectly cause the company to engage in transactions at other than arms' length or involve in management conduct for adverse interest.
- Its representative shall follow the rules implemented by the securities firm with respect to the exercise of rights and participation of resolution, so that at a shareholders' meeting, the representative shall exercise his/her voting right for the best interest of all shareholders and in good faith and will exercise the fiduciary duty of a director or supervisor.
- It shall comply with relevant laws, regulations and the articles of incorporation of the company in nominating directors or supervisors and shall not act beyond the authority granted by the shareholders meeting or board meeting.
- It shall not improperly intervene in corporate policy making or obstruct corporate management activities.
- It shall not restrict or impede the management of the company by methods of unfair competition.
- The corporate representative appointed by it after it was elected as director or supervisor shall have the professional qualifications required by the company, and it shall not replace the representative unless there is a good reason.
If a controlling shareholder wishes to communicate and liaise with the securities firm, it shall do so through the representative under subparagraph 6 of the preceding paragraph, and shall emphasize the following principles:
- The representative may invite a managerial officer(s) of the company to accompany him or her to communicate with the controlling shareholder when necessary, and the securities firm shall prepare a record of the communication.
- Suggestions regarding a proposal to be put to the board of directors or an operational policy shall be presented only to the board of directors or functional committee for exchange and discussion.
- With regard to any news with a material impact on the securities firm that is learnt about in the course of communication or liaison, the obligation of confidentiality shall be fulfilled until such news is publicly disclosed, and Article 157-1 of the Securities and Exchange Act regarding insider trading shall be observed.
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Article 24
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A securities firm that has appointed two or more independent directors in accordance with the articles of incorporation shall keep the number of its independent directors not less than one-third of the number of seats at the board of directors.
Independent directors shall have expertise and required knowledge, and are subject to restrictions on shareholding. In addition to abiding by the applicable laws and regulations, they are also advised not to act as a director (including independent director) or supervisor of more than five companies concurrently. They shall maintain their independence when performing duties, and shall not have any direct or indirect interest in the company.
No independent directors of a securities firm may hold the position for more than three consecutive terms.
During their incumbency, no independent directors or non-independent directors may switch roles with each other.
Professional qualifications, restrictions on shareholding and outside employment, determination of independence, method of nomination and other regulations for compliance with regard to independent director shall be governed by the Securities and Exchange Act, the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies, and the regulations of Taiwan Stock Exchange or Taipei Exchange.
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Article 27
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For the purpose of developing monitoring functions and strengthening management mechanisms, the board of directors of a securities firm may, taking into account the size of the company, nature of business and the number of board directors, set up audit, compensation and remuneration, risk management, nomination, any other functional committees, and may set up environmental protection, corporate social responsibility, sustainability, or other committees or task forces based on the philosophy of corporate social responsibility and sustainable operation, carry out periodic analysis and evaluation of the matters listed below, formulate countermeasures and present them to the board of directors, and expressly provide for them in the articles of incorporation:
- Environmental, social, and corporate governance related risks pertaining to the company's operations.
- Business continuity and resilience of core operating systems and equipment.
The functional committees or task forces in the preceding paragraph shall be responsible to the board of directors and submit the proposals to the board of directors for approval. The above requirements, however, shall not apply when the audit committee is exercising the powers of supervisors in accordance with the Securities and Exchange Act, the Company Act and other laws.
Functional committees or task forces shall adopt organizational regulations to be resolved and approved by the board of directors. The organizational regulations should cover at least the number of members in the committee, terms of office, duties and authorities, meeting proceedings, and what resources to be provided by the company to support their exercise of duties.
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Article 28-4
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When a securities firm establishes a sustainability committee or other functional committees or task forces under Article 27, to enhance sustainability-related risk evaluation and analysis, information disclosure, and countermeasures, it may make appropriate use of the functions of external experts by the following means:
- Select and appoint them to participate in the day-to-day operation of the committee or task force on a routine basis.
- According to actual needs, engage them to provide professional evaluation reports or opinions, and to attend and report to board of directors meetings when necessary.
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Article 37
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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 37-2
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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
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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 40
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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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Article 51
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Supervisors 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 assuming the position and throughout their term of office.
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Article 62
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A securities firm shall prepare each year a Sustainability Report (ESG Report) for the preceding fiscal year in accordance with the Rules Governing the Preparation and Filing of Sustainability Reports by Securities Firms. If it is a securities firm with a capital less than NT$2 billion, it may simplify the content and method of disclosure.
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Article 63
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A securities firm shall at all times monitor domestic and international development of corporate governance and thereby review and improve the company's corporate governance mechanism so as to enhance performance of corporate governance.
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