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Article 3
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A securities firm shall follow the Criteria Governing the Establishment of Internal Control System in Securities and Futures Service Enterprises and the standard guidelines for the internal control system of securities firms as jointly promulgated by TSE and such other securities related institutions and take into consideration the overall operational activities of itself and its subsidiaries in designing and effectively implementing its internal control system, and review it at all times, in order to keep up with the dynamics of environment inside and outside the company and ensure that the design and enforcement of the system remain effective.
In addition to faithfully performing voluntary evaluations of the internal control system, the board of directors and the management shall review the result of the voluntary evaluations of each department on a yearly basis and audit the report of the internal audit department on a quarterly basis. The audit committee or supervisors shall also pay attention to and exercise oversight on this matter. Directors and supervisors shall meet with internal auditors to discuss how to correct the defects in the internal control system, which shall be stated in the minutes, on a regular basis. A securities firm is advised to establish a communication channel and system for its independent directors, audit committee or supervisions and internal audit officers. The convener or supervisor of the audit committee shall report at a shareholders’ meeting his/her communications with the independent directors and internal audit officers.
The management of a securities firm shall pay special attention to the internal audit department and its personnel, fully empower them and urge them to conduct audits effectively, evaluate problems of the internal audit system and evaluate the efficiency of operations to ensure that such a system can be carried out effectively on a continuous basis and can assist the board of directors and the management to perform their duties effectively so as to ensure a sound corporate governance system.
Where a proposal to correct major defects or violations of laws or rules pertaining to internal control made by the auditors and compliance officer of a securities firm is dismissed by the management and it is expected these defects or violations may cause significant losses to the securities firm, the competent authority shall be immediately notified of the issue.
It is advisable that the appointment, dismissal, assessment, salary and remuneration of internal audit personnel of a securities firm be proposed to the board of directors directly or through an audit officer for approval.
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