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Chapter I General Principles
Article 1     In order to assist futures commission merchants in establishing a sound corporate governance system and to promote the sound development of the futures market, the Taiwan Futures Exchange Corporation (TAIFEX), in consultation with the Chinese National Futures Association (CNFA), has adopted these Principles for compliance by futures commission merchants.
    Except as otherwise provided by these Principles, a futures commission merchant listed on the Taiwan Stock Exchange (TWSE) or on the Taipei Exchange (TPEx) shall comply with the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies.
    Taiwan branch offices of foreign futures commission merchants are exempt from the application of Chapter I through Chapter IV of these Principles.
    Futures commission merchants concurrently operated by other enterprises are exempt from the application of these Principles.
    Futures commission merchants are advised to consult relevant provisions of these Principles to formulate their own corporate governance best-practice principles, establish an effective corporate governance structure, and disclose them in a timely manner.
Article 2     In addition to abiding by laws, regulations, bylaws, and the articles of incorporation, a futures commission merchant shall adhere to the following principles in establishing a corporate governance system:
  1. Protecting shareholders' rights and interests.
  2. Strengthening the functions of the board of directors.
  3. Fulfilling the functions of supervisors.
  4. Respecting the rights and interests of stakeholders.
  5. Raising the level of information transparency.
Article 3     A futures commission merchant shall design and fully implement an effective internal control system in accordance with the Regulations Governing the Establishment of Internal Control Systems by Service Enterprises in Securities and Futures Markets, and the rules providing standards for the internal control systems of futures commission merchants adopted by the Taiwan Futures Exchange Corporation and other futures-related organizations, as well as in consideration of its overall operating activities and those of any subsidiaries, and shall review the system from time to time to adapt to changes in its internal and external environments and to ensure sustained effectiveness in the design and operation of the system.
    A futures commission merchant shall faithfully perform self-assessments of its internal control system. In addition, its board of directors and management shall review the results of each department's self-assessments at least annually and the audit department's audit report on a quarterly basis. The audit committee or supervisors shall likewise pay attention to and oversee such inspection matters. The directors and supervisors shall have regular discussions with internal audit personnel regarding the review of the deficiencies of the internal control system. 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. The futures commission merchant is advised to establish channels and mechanisms of communication between its independent directors, audit committee or supervisors, and its chief internal auditor, and the convener of the audit committee or supervisors shall report the communications between members of the audit committee or supervisors and the chief internal auditor at the shareholders' meeting.
    The management of a futures commission merchant shall recognize the importance of the internal audit department and personnel, vest them with sufficient authority, and see that they faithfully inspect and assess any deficiencies in the internal control system and measure operating efficiency, to ensure the sustained effective operation of the system, and to assist the board of directors and the management to faithfully perform their responsibilities, so as to bring about the sound implementation of the corporate governance system.
    Audit personnel and the chief compliance officer at a futures commission merchant shall immediately prepare a report for submission to the competent authority, when their recommendations for improvements regarding significant deficiencies or noncompliance identified in internal controls are not accepted by the management and as a result the futures commission merchant might incur a material loss.
    It is advisable that any appointment, dismissal, evaluation and review, salary and compensation of internal auditors of a futures commission merchant be reported to the board of directors or be submitted by the chief auditor to the chairman of the board for approval.
Article 3-1     A futures commission merchant is advised to have in place, according to its size, business conditions, and management needs, qualified corporate governance personnel in an appropriate number and may appoint one chief corporate governance officer as the most senior executive for corporate governance affairs. The officer shall be a qualified, practice-eligible lawyer or CPA or have served in a managerial position for at least three years in a securities, financial, or futures related institution or a public company in a unit handling legal affairs, legal compliance, internal auditing, financial affairs, stock affairs (shareholder services), or corporate governance affairs.
    The corporate governance affairs referred to in the preceding paragraph shall include, at a minimum, the following:
  1. Handling of matters relating to board of directors meetings and shareholders' meetings in compliance with law.
  2. Preparation of minutes of board of directors meetings and shareholders' meetings.
  3. Assistance in onboarding and continuing education of the directors and supervisors.
  4. Provision of information required for performance of duties by the directors and supervisors.
  5. Assistance to the directors and supervisors in complying with laws and regulations.
  6. Other matters specified by the articles of incorporation or by contract.
Chapter II Protecting Shareholders' Rights and Interests
Section 1 Encouraging Shareholders to Participate in Corporate Governance
Article 4     In corporate governance, a futures commission merchant shall protect the rights and interests of shareholders, and shall treat all shareholders fairly.
    A futures commission merchant shall establish a system of corporate governance that ensures shareholders' rights such as being fully informed, participating in, and making decisions over important matters of the company.
Article 5     A futures commission merchant shall convene shareholders' meetings in accordance with the Company Act and relevant laws and regulations, and formulate comprehensive rules of procedure for such meetings. The rules of procedure shall be strictly implemented for matters requiring a resolution of the shareholders' meeting.
    When convening shareholders' meetings, except with the approval of the competent authority, a futures commission merchant that does not publicly issue stocks as a public company is advised not to hold shareholders' meetings by means of visual communication pursuant to Article 172-2, paragraphs 1 and 2 of the Company Act or handle matters of shareholders' voting rights pursuant to Article 175-1, paragraphs 1 and 2 thereof.
    Resolutions adopted by a shareholders' meeting of a futures commission merchant shall comply with laws and regulations and the company's articles of incorporation.
Article 6     The board of directors of a futures commission merchant shall properly arrange the agenda items and procedures for shareholders' meetings, and formulate the principles and procedures for shareholder nominations of directors and supervisors and submissions of shareholder proposals. The board of directors shall also properly handle the proposals duly submitted by shareholders. Arrangements shall be made to hold shareholders' meetings at a convenient location, with sufficient time allowed and sufficient numbers of suitable personnel assigned to handle attendance registrations. No arbitrary requirements shall be imposed on shareholders to provide additional evidentiary documents beyond those showing eligibility to attend. Shareholders shall be granted a reasonable amount of time for deliberation of each agenda item and afforded an appropriate opportunity for making statements.
    For a shareholders' meeting convened by the board of directors, it is advisable that the chairman of the board chair the meeting and that a majority of the directors attend in person.
Article 7     A futures commission merchant shall encourage active shareholder participation in corporate governance and cause shareholders' meetings to be convened in a lawful, effective, and safe manner. A futures commission merchant shall seek all ways and means, including full exploitation of technologies for information disclosure and voting, to enhance the attendance rate of shareholders at shareholders' meetings and to ensure that shareholders may duly exercise their shareholder's rights at shareholders' meetings in accordance with law.
    When using electronic voting for shareholders' meetings, a futures commission merchant is advised to avoid the raising of extraordinary motions or motions to amend the content of existing proposals.
    A futures commission merchant is advised to arrange for shareholders to vote by poll on each individual proposal at the shareholders' meeting.
    When a futures commission merchant offers shareholders' meeting souvenirs to shareholders, it shall not have preferential or discriminating treatment towards shareholders.
Article 8     A futures commission merchant shall keep minutes of shareholders' meetings in accordance with the Company Act and applicable laws and regulations, in which it shall record the year, month, and date of the meeting, its location, the meeting chair's name, and the method of resolution. The minutes shall also record a summary of the deliberations and the results. For elections of directors and supervisors, the minutes shall record the taking of a vote and the number of share votes cast for the directors and supervisors.
    The minutes of the shareholders' meeting shall be properly and perpetually kept by the company during its existence; where the company has a website, full disclosure of minutes on the website is advisable.
Article 9     The chair of the shareholders' meeting shall be fully familiar with the rules of procedure adopted by the company. The chair shall ensure the proper progress of the meetings pursuant to the agenda, and shall not adjourn meetings at will.
    In order to protect the rights and interests of the majority of shareholders, should the chair adjourn the meeting in violation of procedural rules, other members of the board of directors are advised to promptly assist attending shareholders in electing a new chair in accordance with statutory procedures, by a resolution to be adopted by a majority of the votes represented by the shareholders attending the meeting, and continue the meeting.
Article 10     A futures commission merchant shall respect the shareholders' right to know, and faithfully comply with applicable rules relating to public disclosure of information on the company's financial conditions, operations, insider shareholdings, and corporate governance status. If it has established an official website, it is advised to provide relevant information to shareholders in a regular and timely manner.
    To treat all shareholders equally, the company may concurrently disclose the information under the preceding paragraph in English.
    To protect its shareholders' rights and interests and ensure their equal treatment, a futures commission merchant shall adopt internal rules prohibiting company insiders from trading securities using information not disclosed to the market.
Article 11     Shareholders shall be entitled to share in corporate earnings. For the protection of shareholders' investment rights and interests, the shareholders' meeting may examine the statements produced by the board of directors and the audit committee's or supervisors' audit reports in accordance with the provisions of Article 184 of the Company Act, and to resolve on distribution of earnings or compensation for budget deficit. The shareholders' meeting may select inspectors to carry out the examinations referred to in the preceding paragraph.
    Shareholders may apply to the court for appointment of an inspector to inspect the business operations, financial accounts, property, particular items, and documents and records of particular transactions of the company in accordance with Article 245 of the Company Act.
    The board of directors, audit committee or supervisors, and managerial officers of the futures commission merchant shall cooperate fully with respect to the inspector's inspection operations as in the preceding paragraphs, and shall not refuse, obstruct, or evade such inspections.
Article 12     A futures commission merchant entering into a major financial transaction, such as acquisition or disposal of assets, trading of financial derivatives, lending of funds, or provision of endorsements or guarantees, shall do so in accordance with the provisions of applicable laws and regulations, adopt related operating procedures, and report the same to the shareholders' meeting for its approval, so as to protect the rights and interests of shareholders.
    If a futures commission merchant is involved in a merger, acquisition, or public tender offer, then in addition to proceeding in accordance with relevant laws and regulations, the futures commission merchant shall review the fairness and reasonableness of the plan and the transaction of the merger, acquisition, or public tender offer, and shall give due attention to information disclosure and to the subsequent soundness of the company's financial structure.
    Personnel employed by the futures commission merchant who handle the matters of the preceding paragraph shall give due attention to conflicts of interest and circumstances for recusal.
    A futures commission merchant, when executing investment, shall take into consideration the corporate governance of the issuing company of the investment instrument, as a guiding reference for investment.
Article 13     In order to protect the rights and interests of shareholders, it is advisable for a futures commission merchant to have staff that will be exclusively responsible for handling shareholder suggestions, questions, or disputes.
    When a resolution of a shareholders' meeting or board of directors meeting violates a law or regulation or the articles of incorporation, or where a director, supervisor, or managerial officer violates a law or regulation or the articles of incorporation in the course of his or her work, resulting in injury to rights and interests of shareholders, the futures commission merchant shall handle in an objective and proper manner any litigation duly instituted by a shareholder.
    It is advisable for a futures commission merchant to adopt internal procedures for appropriate handling of matters referred to in the preceding two paragraphs, and keep relevant written records for future reference and incorporate the procedures into its internal control system for management purposes.
Section 2 Establishing a Mechanism for Interaction with Shareholders
Article 13-1     A futures commission merchant's board of directors is responsible for establishing a mechanism for interaction with shareholders to enhance their mutual understanding of the development of the company's objectives.
Article 13-2     In addition to communicating with shareholders through shareholders' meetings and encouraging shareholders to participate in such meetings, the board of directors of a futures commission merchant together with the managerial officers and independent directors shall engage with shareholders in an efficient manner to ascertain shareholders' views and concerns, and expound company policies explicitly, in order to gain shareholders' support.
Section 3 Corporate Governance Relationships Between the Company and Its Affiliated Enterprises
Article 14     A futures commission merchant shall clearly define the allocation of objectives, rights, and responsibilities for management of personnel, assets, and finances with its affiliated enterprises, and scrupulously implement risk assessments and establish appropriate firewalls.
Article 15     Except where otherwise provided by law or regulation, a managerial officer of a futures commission merchant shall not concurrently serve as a manager of an affiliated enterprise thereof.
    A director taking any action on behalf of himself or another person that falls within the scope of the company's business shall explain to the shareholders' meeting the material terms of the act and secure its approval.
Article 16     A futures commission merchant shall establish sound financial, operational, and account management objectives and systems in accordance with applicable laws and regulations; it shall further carry out combined risk assessments with its affiliated enterprises in regard to its major correspondent banks, clients, and suppliers and implement necessary control mechanisms for mitigation of credit risk.
Article 17     A futures commission merchant entering into a business transaction with any affiliated enterprise thereof shall adopt written standards based on the principle of reasonableness and fair dealing to govern the financial and operational relationships entailed therein. Any contractual agreements shall include clear stipulation of the terms and conditions governing prices and payment methods and shall preclude any transactional irregularities.
    Transactions or contractual agreements between a futures commission merchant, its related persons, and their shareholders shall also be carried out in accordance with the provisions of the preceding paragraph, with all forms of illicit transfer of profit or interests strictly prohibited.
Article 18     Any juristic person shareholder with a controlling interest in a futures commission merchant shall abide by the following provisions:
  1. It shall bear the obligation of acting in good faith toward other shareholders, and shall not directly or indirectly cause the company to conduct any business which is contrary to normal business practice or not profitable.
  2. Its representatives shall abide by the relevant provisions adopted by the futures commission merchant with regard to the exercise of their rights and their participation in resolutions; they shall exercise their voting rights at shareholders' meetings based on the principles of good faith and greatest benefit to all shareholders, and faithfully fulfill their fiduciary duty and duty of care when acting as directors or supervisors.
  3. It shall abide by applicable laws and regulations and the articles of incorporation in nominating directors and supervisors for the company, and shall not exceed the scope of powers and functions granted by the shareholders' meeting or the board of directors.
  4. It shall not improperly intervene in corporate decisions or obstruct corporate management activities.
  5. It shall not restrict or impede management of the company through unfair competition.
  6. The representative that is designated when a corporate shareholder has been elected as a director or supervisor shall meet the company's requirements for professional qualifications. Arbitrary replacement of the corporate shareholder's representative is inappropriate.
Article 19     A futures commission merchant shall retain in its possession at all times a roster of major shareholders who own a relatively high percentage of shares and who have an actual control over the company, and of the ultimate controllers of those major shareholders.
    A futures commission merchants shall make regular disclosures of any pledges, increases, or decreases in the company shares held by directors or other material matters on the part of directors with the potential to cause changes in ownership of shares, so that other shareholders can exercise supervision.
    A major shareholder as mentioned in paragraph 1 shall mean a shareholder who owns 5 percent or more of the equity shares or whose equity shareholding ratio is among the top 10 shareholders, provided that the company may set a lower shareholding ratio threshold according to the shareholding ratio that could actually control the company.
Chapter III Enhancing the Functions of the Board of Directors
Section 1 Structure of the Board of Directors
Article 20     A futures commission merchant's board of directors shall direct company strategies, supervise the management, and be responsible to the company and shareholders.. Procedures and arrangements under its system of corporate governance shall be directed to ensuring that the board of directors carries out its functions in compliance with laws and regulations, the articles of incorporation, and the resolutions of the shareholders' meetings.
    In structuring its board of directors, a futures commission merchant shall determine the appropriate number of directors, which shall be at least five, with reference to the scale of corporate development and operations and the shareholdings of the major shareholders, while taking into account practical operational needs. If it establishes independent directors, it shall give careful consideration to the reasonable professional composition of the board and the objective requirements for the independent exercise of their duties.
    The composition of the board of directors shall be determined by taking diversity into consideration. It is advisable that directors concurrently serving as company officers not exceed one-third of the total number of the board members, and that an appropriate policy on diversity based on the company's business operations, operating dynamics, and development needs be formulated and include, without being limited to, the following two general standards:
  1. Basic requirements and values: gender, age, nationality, and culture.
  2. Professional knowledge and skills: a professional background (e.g., law, accounting, industry, finance, marketing, or technology), professional skills, and industry experience.
    Board members shall have the knowledge, skill, and experience necessary to perform their duties. To realize the ideal of corporate governance, the board of directors as a whole shall possess the following abilities:
  1. Ability to make judgments about operations.
  2. Ability to perform accounting and financial analysis.
  3. Business management ability.
  4. Crisis management ability.
  5. Expert knowledge of futures and financial derivatives.
  6. Knowledge of international markets.
  7. Leadership ability.
  8. Ability to make policy decisions.
  9. Knowledge and ability of risk management.
    The board of directors shall recognize the risks (such as market risks, credit risks, liquidity risks, operational risks, legal risks, reputation risks, and other risks associated with the operation of the futures commission merchant) faced by the futures commission merchant during business operations, and ensure the effectiveness of risk management, and bear the final responsibility for risk management.
Article 20-1     In order to achieve the goals of corporate governance, the major duties of a futures commission merchant's board of directors are as follows:
  1. Adoption of an effective and appropriate internal control system.
  2. Selection and supervision of managerial officers.
  3. Review of the company's management policies and operating plans, and supervising their implementation.
  4. Review of the company's financial goals and supervising their achievement.
  5. Supervising results of the company's operations.
  6. Performance evaluation and remuneration standards of the managerial officers and associated persons, and the remuneration structures and systems of the directors.
  7. Supervising and handling risks faced by the company.
  8. Ensuring corporate compliance with applicable laws and regulations.
  9. Planning the company's future development.
  10. Creating and maintaining a corporate image and fulfilling social responsibilities.
  11. Appointing professionals such as CPAs or attorneys.
  12. Safeguarding the rights and interests of futures traders.
Article 21     A futures commission merchant shall, based on the principles of protecting shareholder rights and interests and treating shareholders fairly, adopt fair, just, and open procedures for the selection of directors, encourage shareholder participation, and shall adopt a cumulative voting system in accordance with the Company Act to sufficiently reflect shareholders' opinions.
    Except where the competent authority has granted approval, the spouse, or persons related within the second degree of kinship may not exist among more than half of a company's directors.
    When the number of directors falls below five due to the departure from office of a director for any reason, the company shall hold a by-election for directors at the next following shareholders' meeting. When the shortfall of directors reaches one-third of the total number prescribed by the articles of incorporation, the company shall convene a special shareholders' meeting within 60 days of the occurrence of that fact to hold a by-election for directors.
    The combined shareholding of the entire board of directors of the futures commission merchant shall comply with laws and regulations. The restriction on share transfer, and the creation or cancellation and variation of pledges of shares shall be handled in compliance with relevant provisions, and all information shall be sufficiently disclosed.
Article 22     It is advisable for a futures commission merchant, in accordance with the Company Act, to specify in its articles of incorporation that it shall adopt a candidate nomination system for the election of directors, and carefully evaluate and review the qualifications of nominated candidates, whether any of the circumstances set out in Article 30 of the Company Act or Article 4 of the Standards Governing the Establishment of Futures Commission Merchants exist, and other relevant matters, in order to assure selection of a suitable candidate. It furthermore shall comply with Article 192-1 of the Company Act.
Article 23     Clear distinctions shall be drawn between the duties and responsibilities of the chairman of the board and the general manager of a futures commission merchant.
    The chairman of the board may not concurrently serve as general manager. This restriction does not apply, however, if approval has been obtained from the competent authority pursuant to the Regulations Governing Responsible Persons and Associated Persons of Futures Commission Merchants. If the two positions are held by the same person or by two persons in a spousal relationship or by persons within the first degree of kinship, it is advisable to increase the number of independent directors.
    A futures commission merchant with a functional committee shall clearly define the responsibilities and duties of the committee.
Section 2 The Independent Director System
Article 24     A futures commission merchant may appoint two or more independent directors pursuant to the articles of incorporation, and it is advisable that the independent directors not be less than one fifth of all directors.
    Independent directors shall possess professional knowledge and there shall be restrictions on their shareholdings. Applicable laws and regulations shall be observed and, in addition, it is not advisable for an independent director to hold office concurrently as a director (including independent director) or supervisor of more than five companies. Independent directors shall also maintain independence within the scope of their directorial duties, and may not have any direct or indirect interest in the company.
    No independent director at a futures commission merchant may serve in that position for more than three consecutive terms. Change of status between independent directors and non-independent directors during their term of office is prohibited.
    Regulations governing the professional qualifications, restrictions on shareholdings and concurrent positions held, assessment of independence, method of nomination, and other matters for compliance with respect to independent directors shall be in compliance with the Securities and Exchange Act, Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies, and relevant TWSE or TPEx rules.
Article 25     A futures commission merchant shall submit the following matters to the board of directors for approval by resolution as provided in the Futures Trading Act; if an independent director objects to or expresses reservations about any matter, it shall be recorded in the board meeting minutes.
  1. An internal control system adopted or amended pursuant to Article 97-1 of the Futures Trading Act.
  2. Adoption or amendment, pursuant to Article 36-1 of the Securities and Exchange Act, of any procedure for handling financial or operational actions of material significance, such as acquisition or disposal of assets, derivatives trading, loans of funds to others, and endorsements or guarantees for others.
  3. A matter bearing on the personal interest of a director.
  4. A material asset or derivatives transaction.
  5. A material monetary loan, endorsement, or provision of a guarantee.
  6. The offering, issuance, or private placement of any equity-type securities.
  7. The hiring or dismissal of an attesting CPA, or the compensation given thereto.
  8. The appointment or discharge of a financial, accounting, risk management, compliance, or internal audit officer.
  9. Performance evaluation and remuneration standards of managerial officers and associated persons.
  10. Remuneration structure and system of the directors.
  11. Any other material matter so required by the competent authority.
Article 26     A futures commission merchant shall expressly define the scope of duties of independent directors and empower them with manpower and material support related to the exercise of their power. The company or other board members shall not impede, refuse, or evade the actions of the independent directors in the performance of their duties.
    A futures commission merchant shall expressly prescribe the remuneration of the directors according to applicable laws and regulations. A reasonable level of remuneration different from that of other directors may be prescribed for independent directors.
     When a futures commission merchant, under its articles of incorporation, or by resolution of its shareholders' meeting, or by order of the competent authority, sets aside a certain proportion of earnings as special reserve, such allocation shall be made after the allocation of legal reserve and before the distribution of director, supervisor, and employee profit-sharing compensation, and the futures commission merchant shall provide in the articles of incorporation the method to be adopted for distributing earnings when reversal of the special reserve is added into the undistributed earnings.
Section 3 Oher functional committees
Article 27     For the purpose of developing monitoring functions and strengthening management mechanisms, the board of directors of a futures commission merchant, in consideration of the company's scale, the nature of its business, and the number of its board members, may set up functional committees for auditing, remuneration, nomination, risk management or any other functions, and based on concepts of corporate social responsibility and sustainable operation, may set up environmental protection, corporate social responsibility, or other committees, and expressly provide for them in the articles of incorporation.
    The functional committees shall be responsible to the board of directors and submit their proposals to the board for approval, provided that this rule shall not apply if the audit committee exercises the powers and duties of the supervisors pursuant to the Securities and Exchange Act, the Company Act and other laws and regulations.
    The functional committees shall adopt an organizational charter to be approved by a resolution of the board of directors. The organizational charter shall include at least the number of members in the committee, their term of office and powers and duties, rules of procedure, and the resources that the company shall provide when they exercise their powers and duties.
Article 28     A Futures commission merchant is advised to give priority to establishing a risk management committee, and it shall establish either an audit committee or supervisors.
    The primary responsibilities of the risk management committee are as follows:
  1. Adopt risk management policies and structure, and delegate the powers and duties to relevant units.
  2. Prescribe standards for risk measurement.
  3. Manage the total risk limits of the company and the risk limits of each unit.
    At least one independent director who has professional background in futures and derivatives products, accounting, or finance shall participate in the risk management committee, and serve as the convener.
    The audit committee shall be composed of the entire number of independent directors. It shall not be fewer than three persons in number, one of whom shall be committee convener, and at least one of whom shall have futures and derivatives, accounting, or financial expertise.
    The exercise by the audit committee and its independent director members of their powers and related matters shall be in compliance with the Securities and Exchange Act, the Regulations Governing the Exercise of Powers by Audit Committees of Public Companies, and relevant TWSE or TPEx rules.
Article 28-1     A futures commission merchant is advised to establish a remuneration committee or another committee incorporating equivalent functions, whose primary responsibilities shall include adopting performance evaluation standards and remuneration standards for managerial officers and associated persons and the remuneration structure and system for directors. It is advisable that a majority of the members of the committee be independent directors.
    The performance evaluation standards and remuneration standards for the managerial officers and associated persons and the remuneration structure and system for the directors of a futures commission merchant shall be adopted in accordance with the following principles:
  1. The futures commission merchant shall adopt the performance evaluation standards and remuneration standards or a remuneration structure and system based on future risk-adjusted performance, and in line with long-term overall profitability and shareholders interests.
  2. The remuneration and reward system shall not induce any director, managerial officer, or associated person to conduct any act beyond the company's risk appetite to pursue remuneration. The futures commission merchant shall on a periodic basis review the remuneration and reward system and performance in order to ensure their consistency with the company's risk appetite.
  3. The time for payment of remuneration by the futures commission merchant shall be set based on future risk-adjusted profitability in order to avoid the improper circumstance of sustaining loss after the payment of remuneration. A significant percentage of the remuneration/reward shall be paid by a deferred or equity-related method.
  4. When a futures commission merchant assesses the contribution of a director, managerial officer, or associated person to the company's profits, it shall conduct an overall analysis of futures commission merchant peers to clarify whether such profits resulted from an overall advantage of the company, in order to effectively assess the contributions that come from individual persons.
  5. The stipulations on severance pay between the futures commission merchant and its directors, managerial officers, and associated persons shall be adopted based on realized performance, in order to avoid improper circumstances such as receiving high severance pay after a short term of employment.
  6. The futures commission merchant shall fully disclose to shareholders the adopted principles, methods, and goals of the aforesaid performance evaluation standards and remuneration standards or structure and system.
    The associated persons governed by these Principles are those persons whose remuneration or performance evaluation is based on the sale of various financial products or services.
Article 28-2     A futures commission merchant is advised to establish a nomination committee and adopt an organizational charter for the committee. It is advisable that a majority of the members of the committee be independent directors and an independent director be its chair.
Article 28-3     A futures commission merchant is advised to establish and announce channels for internal and external whistleblowers and have a whistleblower protection system in place. It shall furthermore formulate internal operational procedures for the system and incorporate those procedures into its internal control system for management purposes.
    The whistleblowing system under the preceding paragraph shall include at least the following:
  1. A complaint mailbox and hotline, either internally established and publicly announced or provided by an independent external institution, to enable company insiders and outsiders to submit complaints.
  2. Dedicated personnel or unit appointed to handle the whistleblowing system.
  3. Documentation and preservation of records of the acceptance of cases for handling, the handling process, handling results, and relevant documents.
  4. Preservation of confidentiality of the identity of whistleblowers and the content of complaints.
  5. Measures to protect the rights and interests of whistleblowers, and to protect them from improper disciplinary actions due to their whistleblowing.
    Violation reports that are anonymous, without addresses or specific content need not be accepted for handling.
    The provisions of paragraph 2, subparagraph 5 shall not apply to a complaint case which, upon investigation, is found to contain false content which furthermore involves a malicious attack against a futures commission merchant or its personnel.
Article 29     A futures commission merchant shall select a professional, responsible, and independent CPA who shall perform regular audits of the company's financial condition and internal control measures. When the auditor makes timely discovery of any irregularities or deficiencies during the course of the review and provides concrete measures for their improvement or for prevention, the company shall review the matter and effect improvement. It is advisable for the company to establish channels and mechanisms of communication between the independent directors, the supervisors or audit committee, and the attesting CPA, and adopt internal operational procedures for that purpose incorporate them into the company's internal control system for management purposes.
    The futures commission merchant shall evaluate the independence and suitability of the CPA engaged by it regularly and no less frequently than once annually. In the event that the futures commission merchant engages the same CPA without replacement for 7 years consecutively, or if the CPA is subject to disciplinary actions or other circumstances prejudicial to the independence of the CPA, the futures commission merchant shall assess whether there is a need to replace the CPA, and shall submit to the board the conclusion of such assessment.
Article 30     A futures commission merchant is advised to engage professional and competent legal counsel to provide adequate legal consultation services to the company, or to assist the board of directors, supervisors, and management in improving their understanding of the law, in order to prevent any infraction of laws or regulations by the company or its staff and to ensure that corporate governance will operate subject to the relevant legal framework and procedures.
    In the event that directors, supervisors, or management are involved in litigation as a result of performing their duties under the law or disputes with shareholders, the company shall retain legal counsel to provide assistance as required by circumstances.
    The audit committee or any independent director member thereof may, on behalf and at the cost of the company, engage an attorney, certified public accountant, or other professional to conduct a necessary audit or provide advice with respect to any matter related to the exercise of the committee's powers.
Section 4 Rules for the Proceedings of Board Meetings and Decision-Making Procedures
Article 31     The board of directors of a futures commission merchant shall meet at least once every quarter, or convene at any time in case of emergency. Its articles of incorporation shall stipulate that, to convene a board meeting, a meeting notice which specifies the purposes of meeting shall be sent to each director and supervisor no later than 7 days before the scheduled date. Sufficient meeting material shall also be prepared and enclosed in the meeting notice. If the meeting material is deemed inadequate, a director may ask the unit in-charge to provide more information or request a postponement of the meeting with the consent of the board of directors.
    A futures commission merchant shall adopt rules of procedure for board meetings. The main agenda items for board meetings, operational procedures, required content of meeting minutes, public announcements, and other compliance requirements shall be handled in accordance with the Regulations Governing Procedure for Board of Directors Meetings of Public Companies.
Article 32     A company director shall exercise a high degree of self-discipline. If a director or a juristic person represented by the director is an interested party with respect to any proposal for a board meeting, the director shall state the important aspects of the interested party relationship at the meeting. When the relationship is likely to prejudice the interests of the company, the director may not participate in discussion or voting on that proposal and shall enter recusal during the discussion and voting. The director also may not act as another director's proxy to exercise voting rights on that matter. The directors shall practice self-discipline among themselves and shall not provide inappropriate forms of mutual aid.
    Matters requiring a director to voluntarily abstain from voting shall be clearly set forth in the rules of procedure for board meetings. A futures commission merchant shall also adopt procedural rules under which shareholders, directors, supervisors, and stakeholders may apply for the recusal of directors with regard to specific proposals; those rules shall include applicants' qualifications, particulars of the application, the review process, and the time limit and the method for giving a response. Whether the subject of the application shall recuse him or herself shall be decided by a resolution of the board; prior to such resolution the subject shall not participate or act as proxy for another in voting on the proposal.
Article 33     A futures commission merchant's independent directors, with respect to any matter required by Article 14-3 of the Securities and Exchange Act to be submitted to a meeting of the board of directors, shall attend the meeting in person, and may not give a proxy to a non-independent director. If an independent director objects to or expresses reservations about the matter, it shall be recorded in the board meeting minutes. An independent director intending to express objection or reservations but unable to attend the meeting in person shall, unless there is some legitimate reason to do otherwise, issue a written opinion in advance, which shall be recorded in the meeting minutes.
    Any of the following matters in relation to a resolution passed at a meeting of the board of directors shall be stated in the meeting minutes, and within 2 days from the date of the meeting be published on the information reporting website designated by the competent authority:
  1. Any matter about which an independent director expresses an objection or reservation of which there is a record or written statement.
  2. If the futures commission merchant has established an audit committee, any matter adopted with the approval of two-thirds or more of all directors without having been passed by the audit committee.
    During the proceedings of the board meetings, managers from the relevant departments who are not directors may, in view of the meeting agenda, sit in at the meetings, make report on the current business conditions of the futures commission merchant and respond to inquiries raised by the directors. Where necessary, CPA, legal counsel or other professionals may be invited to sit in at the meetings to assist the directors in understanding the conditions of the company for the purpose of adopting an appropriate resolution, provided that they shall leave the meeting when deliberation or voting takes place.
Article 34     Secretarial personnel for a futures commission merchant's boards of directors shall duly keep full and accurate minutes of board of directors meetings, a summary of deliberation on all proposals, and the method of resolution and the results of voting in accordance with applicable regulations. In the event that any director has an interest relationship to any proposal, the secretarial personnel shall record in detail in the minutes the name of the director who may have an interest relationship, and the specific reasons that recusal by the director is required or not required.
    The minutes of a board of directors meeting shall bear the signature or seal of both the presiding chair and the minutes taker of the meeting. A copy of the minutes shall be distributed to each director and supervisor within 20 days after the meeting. The attendance book forms a part of the minutes and shall be well preserved as important company records during the existence of the company.
    The production, distribution, and preservation of the meeting minutes may be done in electronic form.
    A company shall record on audio or video tape the entire proceedings of a board of directors meeting, and preserve the recordings for at least 5 years, in electronic form or otherwise.
    If before the end of the period for keeping documentation under the preceding paragraph any litigation arises with respect to a resolution of a board of directors meeting, the relevant audio or video documentation shall continue to be kept, in which case the preceding paragraph does not apply. If a board of directors meeting is held via telecommunications, the audio or video documentation of the meeting forms a part of the meeting minutes and shall be retained indefinitely.
    Where a resolution of the board of directors violates laws or regulations, the articles of incorporation, or shareholders' meeting resolutions, with resulting injury to the company, dissenting directors whose dissent is documented by the minutes or by written declarations will not be liable for damages.
Article 35     A futures commission merchant shall submit the following items for discussion by the board of directors:
  1. Corporate business plan.
  2. Annual and semi-annual financial reports.
  3. Adoption or amendment of an internal control system pursuant to Article 2 of the Regulations Governing Futures Commission Merchants, and evaluation of effectiveness of the internal control system.
  4. Adoption or amendment, pursuant to Article 36-1 of the Securities and Exchange Act, of any procedure for handling financial or operational actions of material significance, such as acquisition or disposal of assets, derivatives trading, loans of funds to others, and endorsements or guarantees for others.
  5. The offering, issuance, or private placement of any equity-type securities.
  6. Performance evaluation and remuneration standards of managerial officers and associated persons.
  7. Remuneration structure and system of the directors.
  8. The appointment or discharge of a financial, accounting, risk management, compliance, or internal audit officer.
  9. A donation to a related party or a major donation to a non-related party, provided that a public-interest donation of disaster relief that is made for a major natural disaster may be submitted to the following board of directors meeting for retroactive recognition.
  10. Any matter required by Article 14-3 of the Securities and Exchange Act or any other law, regulation, or bylaw to be approved by resolution at a shareholders' meeting or to be submitted to a meeting of the board of directors, or any material matter as may be prescribed by the competent authority.
    With the exception of the items to be submitted for discussion by the board of directors under the preceding paragraph, with respect to the delegation by the board of directors, in accordance with laws and regulations or the company's articles of incorporation, of powers of the board exercisable during periods when it is not in session, the levels of such delegation and the content and matters covered by it shall be specific; general authorization is not permitted.
Article 35-1     The performance evaluation and remuneration standards of managerial officers and associated persons and the remuneration structure and system of the directors in a futures commission merchant shall be adopted in accordance with the following principles:
  1. The futures commission merchant shall adopt performance evaluation and remuneration standards or a remuneration structure and system, pursuant to the future risk-adjusted performance, and in line with long-term overall profitability and shareholders interests.
  2. The remuneration and reward system shall not entice any director, managerial officer, or associated person to conduct any acts beyond the company's risk appetite to pursue remuneration. The futures commission merchant shall on a periodic basis review the remuneration and reward system and performance in order to ensure their consistency with the company's risk appetite.
  3. The time for payment of remuneration by the futures commission merchant shall be set based on future risk-adjusted profitability in order to avoid the inappropriate circumstance of sustaining loss after the payment of remuneration. A significant percentage of the remuneration/reward shall be paid by a deferred method or an equity-related method.
  4. When a futures commission merchant assesses the contribution of a director, managerial officer, or associated person to the company's profits, it shall conduct an overall analysis of the futures industry to clarify whether such profits resulted from an overall advantage such as the use of the lower capital cost of the company, in order to effectively assess the contributions that come from individual persons.
  5. The stipulations on severance pay between the futures commission merchant and its directors, managerial officers, and associated persons shall be adopted based on realized performance, in order to avoid improper circumstances such as receiving high severance pay after a short term of employment.
  6. The futures commission merchant shall fully disclose to shareholders the adopted principles, methods, and goals of the aforementioned performance evaluation and remuneration standards or structure and system.
    The associated persons governed by these Principles are those persons whose remuneration or performance evaluation is based on the sale of various financial products or services.
Article 36     A futures commission merchants shall entrust the appropriate corporate departments and personnel to handle matters pursuant to board of directors' resolutions, requiring that their execution be consistent with the planned schedule and objectives, and shall follow up on these matters and faithfully evaluate their implementation.
    The board of directors shall adequately direct the implementation of these matters and make reports at subsequent meetings to ensure realization of the board's management decisions.
Section 5 Fiduciary Duty, Duty of Care, and Responsibility of Directors
Article 37     Members of the board of directors shall conduct corporate affairs faithfully and act with the care of a good administrator, exercising their powers with a high degree of prudence and self-discipline. They shall faithfully adhere to the resolutions of the board in conducting corporate affairs, except for those matters reserved for resolutions of shareholders' meetings by law or the articles of incorporation.
    It is advisable that a futures commission merchant formulate rules and procedures for board of directors performance assessments, and that each year it conduct regularly scheduled performance assessments of the board of directors, functional committees, and individual directors through self-assessment, peer assessment, engaging outside professional institutions, or in any other appropriate manner. It is advisable that the performance assessments of the board of directors (and functional committees) include the following aspects, and that appropriate assessment indicators be developed in consideration of the company's needs:
  1. Degree of participation in the company's operations.
  2. Improvement in the quality of decision making by the board of directors.
  3. The composition and structure of the board of directors.
  4. The election of the directors and their continuing professional education.
  5. Internal controls.
    It is advisable that performance assessments of board members (self-assessments or peer assessments) include the following aspects, with appropriate adjustments made on the basis of the company's needs:
  1. Grasp of the company's goals and missions.
  2. Understanding of director's duties.
  3. Degree of participation in the company's operations.
  4. Management of internal relationships and communication.
  5. Professionalism and continuing professional education.
  6. Internal controls.
    A futures commission merchant's board of directors shall consider adjusting its composition based on the results of performance assessments.
Article 37-1     The board of directors of a futures commission merchant is advised to evaluate and monitor the following aspects of the company's direction of operations and performance in connection with intellectual properties, to ensure the company develops an intellectual property management system in accordance with the Plan-Do-Check-Act (PDCA) management cycle:
  1. Formulate intellectual property management policies, objectives and systems that are associated with the operational strategies.
  2. Develop, implement and maintain, on the basis of scale and form, its management systems governing the procurement, protection, maintenance and utilization of intellectual properties.
  3. Identify and provide the necessary resources sufficient to ensure effective implementation and maintenance of the intellectual property management system.
  4. Observe internally and externally the risks and opportunities that intellectual property management may present and adopt corresponding measures.
  5. Plan for and implement a continuous improvement mechanism to ensure the operation and effectiveness of the intellectual property management system meet the company's expectations.
Article 38     If a resolution of the board of directors violates a law, regulation, or the company's articles of incorporation, at the request of an independent director or of shareholders who have held shares continuously for a year, or upon notification from a supervisor to discontinue the implementation of the resolution, members of the board shall promptly take appropriate measures or discontinue the implementation of such a resolution.
    Discovery by any member of the board of directors of a likelihood of material injury to the company shall be handled pursuant to the provisions of the preceding paragraph, and shall be immediately reported to the audit committee or the independent director members of the audit committee or the supervisors.
Article 39     A futures commission merchant is advised to take out liability insurance for directors during their terms with respect to the liability they bear under the law for damages in relation to the scope of duties they perform, in order to reduce and spread the risk of material injury to the company or shareholders arising from any mistake or negligence on their part.
    A futures commission merchant is advised to report the insured amount, coverage, premium rate, and other major contents of the liability insurance it has taken out or renewed for directors, at the next board meeting.
Article 40     Members of the board of directors are advised, upon becoming directors or during their term of office, to participate in training courses on the subjects of finance, operations, business, accounting, law, or corporate social responsibility that include topics related to corporate governance. They shall also ensure that company employees at all levels enhance their professional and legal knowledge.
Chapter IV Fulfilling the Functions of Supervisors
Section 1 The Functions of Supervisors
Article 41     A futures commission merchant shall prescribe a fair, impartial, and open procedure for the selection of supervisors, and in accordance with the Company Act, shall adopt a cumulative voting system to sufficiently reflect the opinions of the shareholders.
    The total aggregate shareholding ratio of the supervisors of a futures commission merchant shall comply with relevant laws and regulations, and restrictions on share transfers, creation or releases of pledges, or changes in share ownership shall be carried out in accordance with regulations, with full disclosure of relevant information.
Article 42     It is advisable for a futures commission merchant, in accordance with the Company Act, to specify in its articles of incorporation that it shall adopt a candidate nomination system for the election of supervisors, and carefully evaluate and review the qualifications of nominated candidates, whether any of the circumstances set out in Article 30 of the Company Act or Article 4 of the Standards Governing the Establishment of Futures Commission Merchants exist, and other relevant matters, in order to assure selection of a suitable candidate. It shall also act in accordance with Article 192-1 of the Company Act.
Article 43     Unless otherwise approved by the competent authority, among the supervisors, or among the supervisors and directors, of a futures commission merchant, there shall be at least one or more among whom there does not exist any relationship of spouse or of kinship within the second degree.
    A futures commission merchant shall select appropriate supervisors with reference to the provisions regarding independence in the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies, in order to strengthen the company's risk management and financial and operational controls. Supervisors shall have domestic domiciles in order to facilitate the timely exercise of supervision.
    The minimum number of supervisors in a futures commission merchant shall be in compliance with the Company Act or relevant TWSE or TPEx rules.
Section 2 The Duties and Obligations of Supervisors
Article 44     A supervisor shall have professional expertise and be familiar with applicable provisions of law, shall understand the rights, duties, and obligations of directors of the company, the separation of functions among the various departments and the content of their operations. A supervisor shall regularly attend meetings of the board of directors to supervise their operation and to state their opinions, when appropriate, in order to discover or control the occurrence of any irregularity.
    A person that serves as a supervisor shall evaluate whether he or she has sufficient time and energy for the work of a supervisor.
Article 45     In order to lower the possibility of financial crisis and to manage risk, supervisors shall monitor the implementation of the company's operations and the directors' and managerial officers' performance of their duties, and shall give due attention to the implementation of the internal control system.
    When a director, for himself or herself or on behalf of another, conducts any purchase or sale, lending, or any legal act with the company, a supervisor shall act as the company's representative. If the company has an audit committee, a member of the audit committee shall act as the company's representative.
Article 46     A supervisor may investigate the operational and financial conditions of the company from time to time, and the relevant departments in the company shall cooperate in providing the account books or documents that will be needed for the supervisor's inspection, transcription or copying.
    When inspecting the finances or operations of the company, a supervisor may retain lawyers or CPAs on behalf of the company to conduct the examination; however, the company shall inform the relevant persons of their confidentiality obligations.
    The board of directors and managerial officers shall submit reports in accordance with supervisors' requests and shall not for any reason impede, evade, or refuse inspections by supervisors.
    A futures commission merchant shall provide any necessary assistance to supervisors as they require in the performance of their duties and shall bear all reasonable costs connected therewith.
Article 47     In order to allow directors to make timely discovery of possible abuses, a futures commission merchants shall establish channels of communication between employees, shareholders, stakeholders, and supervisors.
    Upon discovering any abuse, a supervisor shall immediately take appropriate measures in order to curb the spread of any abuse, and when necessary, shall also file a report with the relevant competent authority or agency.
    Given the resignation or replacement of an independent director, general manager, or chief officer of the financial, accounting, or internal auditing departments at a futures commission merchant, the supervisors shall thoroughly apprise themselves of the reasons therefor.
    The supervisor shall be liable for damages in the event that neglect of his or her duties results in injury to the company.
Article 48     Based on the overall interests of the company and shareholders, any supervisor of a futures commission merchant, in exercising their individual supervisory powers, may exchange opinions by means of meetings, but may not thereby impede the exercise of independent supervisory powers by any other individual supervisor.
    When individual supervisors exercise their individual supervisory powers at different times, the related departments may not demand that they carry out examinations in a consistent uniform manner, nor may they refuse to once again provide data.
Article 49     A futures commission merchant is advised to take out liability insurance for supervisors during their terms with respect to the liability they bear under the law for damages in relation to the scope of duties they perform, in order to reduce and spread the risk of material injury to the company or shareholders arising from any mistake or negligence on their part.
    A futures commission merchant is advised to report the insured amount, coverage, premium rate, and other major contents of the liability insurance it has taken out or renewed for supervisors, at the next board meeting.
Article 50     Supervisors shall exercise a high degree of self-discipline, and voluntarily recuse themselves immediately with respect to any proposal submitted to the board that may involve the supervisor's own interest to the detriment of the company's interest.
Article 51     Supervisors, upon assuming their positions or during their term of office, are advised to participate in training courses on the subjects of finance, risk management, operations, business, accounting, law, or corporate social responsibility that include topics related to corporate governance.
Article 52     A futures commission merchant shall expressly prescribe the remuneration of the supervisors in its articles of incorporation or pursuant to a resolution of the shareholders' meeting.
    The provisions of Article 35-1 of these Principles shall apply mutatis mutandis when a futures commission merchant negotiates the remuneration standards for supervisors.
Chapter V Respecting the Rights and Interests of Stakeholders
Article 53     A futures commission merchant shall maintain open channels of communication with its correspondent banks, other creditors, employees, consumers, suppliers, community, or other stakeholders of the company, respect and safeguard their legal rights, and designate a stakeholders section on its website.
    When a stakeholder's legal rights suffer injury, the company shall handle the matter in good faith and in an appropriate manner.
Article 54     A futures commission merchant shall provide sufficient information to correspondent banks and other creditors to facilitate their judgment and decision making process with respect to the company's operational and financial condition. Should any of their legal rights or interests be infringed, the company shall respond in a positive manner, giving creditors appropriate channels through which to obtain compensation.
Article 55     In addition to respecting and safeguarding the legal rights and interests of futures traders, a futures commission merchant shall act according to the principles of good faith and credit in conducting business, and handle trading disputes in an appropriate manner.
Article 56     A futures commission merchant shall establish channels for communication with employees, encouraging them to communicate directly with management, directors, and supervisors so as to reflect employees' opinions about the management of the company and its financial condition or any policies with a material impact on employee welfare.
Article 57     While maintaining normal business development and maximizing the shareholders' interest, a futures commission merchant shall attend to issues such as the rights and interests of futures traders and the trading order in the futures market, community environmental protection and social welfare, and shall also have a serious regard for the social responsibility of the company.
    If a futures commission merchant has any plan to buy stock of a TWSE/TPEx listed company, it shall simultaneously consider the performance of the given company in implementing corporate governance and whether the given company has been duly fulfilling its environmental protection and social responsibilities.
Chapter VI Enhancing Information Transparency
Section 1 Strengthening of Information Disclosure
Article 58     A futures commission merchant shall carry out disclosure obligations faithfully in accordance with applicable laws and regulations.
    A futures commission merchant shall establish an online reporting operation system for public information, and assign to specific persons the responsibility for collecting and disclosing company information, and establish a spokesperson system, in order to ensure the timely, appropriate disclosure of information that is likely to affect the decision-making of shareholders and stakeholders.
Article 59     In order to enhance the accuracy and timeliness of the information disclosed, a futures commission merchant shall appoint a spokesperson and acting spokesperson who understand thoroughly the company's financial and operating condition, or who are capable of coordinating with the various departments to gather relevant information, and who are able to independently represent the company in issuing statements.
    A futures commission merchant shall appoint one or more acting spokespersons, each of whom are capable of independently representing the company in making statements when the spokesperson cannot perform his or her duties, provided that their order of authority as deputy shall be made clear to avoid any confusion.
    In order to implement the spokesperson system, a futures commission merchant shall unify the process of making public statements and require management and employees to maintain the confidentiality of financial and operational secrets and prohibit them from disclosing such information at will.
Article 60     Futures commission merchants are advised to take advantage of the convenience of the Internet and set up web sites for posting information relevant to the company's finances, operations, and corporate governance for the benefit of shareholders and stakeholders, and are advised to provide English versions of information relating to financial, corporate governance, and other matters.
    Special personnel shall be responsible for maintaining the website referred to in the preceding paragraph, and the information provided thereon shall be updated in a detailed, accurate, and prompt manner, to avoid the possibility of misleading information.
Section 2 Disclosure of Corporate Governance Information
Article 61     A futures commission merchant shall disclose and continuously update the following information regarding corporate governance for the given fiscal year pursuant to relevant rules or the bylaws of the TAIFEX or CNFA (disclosure of supervisors' information is not required if the company has an audit committee):
  1. The framework and rules for corporate governance.
  2. The company's ownership structure and shareholders' equity (including its specific and explicit dividend policy).
  3. The structure, professionalism, and independence of the board of directors.
  4. The responsibilities of the board of directors and managerial personnel.
  5. The composition, duties and independence of the audit committee or supervisors.
  6. The composition, duties, and operational status of the remuneration committee and other functional committees.
  7. Remuneration paid during the two most recent fiscal year to directors, supervisors, the general manager, and assistant general managers, analysis of the percentage that the total remuneration accounts for in the net income after tax in the parent company only financial reports or individual financial reports, policies for remuneration payment, standards and packages, procedures for setting remuneration, and linkage to business performance and future risks.
  8. The ongoing training being received by directors and supervisors.
  9. Risk management information.
  10. Rights, avenues for complaints, and concerns, of stakeholders, and appropriate response mechanisms.
  11. Details of the management of public disclosures required by laws and regulations.
  12. The state of the company's implementation of corporate governance, and any discrepancies between the corporate governance best practice principles adopted by the company itself and these Principles.
  13. Information on related party transactions.
  14. Disclosure of adjusted net capital.
  15. Other information regarding corporate governance.
    Taiwan branch offices of a foreign futures commission merchant need not disclose matters set out in subparagraphs 2 to 8 of the preceding paragraph.
    A futures commission merchant is advised to disclose concrete plans and measure for improvement of corporate governance in view of the actual condition of corporate governance implementation.
    A futures commission merchant shall refer to the Risk Management Best-Practice Principles For Futures Commission Merchants adopted by the TAIFEX when establishing its risk management system.
Section 3 Enhancing Disclosure of Corporate Social Responsibility Information
Article 62     A futures commission merchant that meets either of the following conditions shall each year prepare a corporate social responsibility report for the preceding year:
  1. Its capital stock stated on the financial report of the most recent fiscal year reaches NT$2 billion or more.
  2. It is a public company and is a subsidiary of a financial holding company.
    If the overall operational activities of a futures commission merchant have been included in the scope of the corporate social responsibility report of a TWSE or TPEx listed company that is part of the same corporate group, the preceding provision need not be applied.
Article 63     A futures commission merchant that meets the requirements of the preceding article shall each year prepare a corporate social responsibility report for the preceding year by referring to the Global Reporting Initiative (GRI) Standards and Sector Disclosures issued by the GRI, and other applicable rules according to its sector features. The report shall disclose the company's identified material economic, environmental, and social topics, its management approach, its topic-specific disclosures for each material topic, and the reporting requirements for those disclosures, and shall at a minimum meet the Core option set out in the GRI Standards. It furthermore is advisable that it obtain third-party verification or assurance. It is advised that the report content include the following:
  1. The policy, system, or relevant management guidelines and concrete promotional plans for implementing corporate social responsibility initiatives.
  2. Major stakeholders and their concerns.
  3. Performance results and review of the company's exercise of corporate governance, fostering of a sustainable environment, preservation of public welfare, and promotion of economic development.
  4. Directions and goals for improvement in the future.
    The corporate social responsibility report mentioned in the preceding paragraph shall include relevant environmental, social, and corporate governance risk assessments and set out performance indicators to manage its identified material topics.
    In the corporate social responsibility report, the futures commission merchant shall include a GRI Content Index specifying the GRI Standards to which the contents of the report correspond, and specify in the report whether the topic-specific disclosures have been verified or assured by a third party.
Chapter VII Supplementary Provisions
Article 64     A futures commission merchant shall at all times monitor domestic and international developments in corporate governance, as a basis for review and improvement of their own corporate governance mechanisms and enhancing their effectiveness.
Article 65     These Principles, and any amendments hereto, shall be implemented by public announcement after approval and recordation by the competent authority.