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Title: Corporate Governance Best-Practice Principles for SITEs/SICEs
Date: 2008.04.08 ( Amended )

Article Content

 
Chapter I:General Provisions
Article 1     In order to assist securities investment trust enterprises ("SITEs") and securities investment consulting enterprises ("SICEs") conducting discretionary investment business (hereinafter collectively referred to as the "Member companies") to establish a sound corporate governance system, protect investors' interests, and promote a healthy development of the securities market, the Securities Investment Trust and Consulting Association of the R.O.C. ("SITCA") hereby adopts the Principles as a guideline for Member companies' reference.
    It is advisable that the above Member companies should establish their own corporate governance best practices in accordance with the Principles.
Article 2     The term "investors" as hereinafter defined by the Principles shall mean either the beneficiaries of the securities investment trust funds or any persons who consign the property to SITEs or SICEs that have been approved by the Financial Supervisory Commission, Executive Yuan ("FSC") to conduct discretionary investment business.
Article 3     When setting up the corporate governance system, in addition to complying with relevant laws and regulations, articles of incorporation, and SITCA guidelines, Member companies shall also follow the following principles:
  1. Establish an effective Corporate Governance framework.
  2. protect the rights and interests of shareholders and investors;
  3. strengthen the powers of the board of directors;
  4. fulfill the function of supervisors;
  5. respect stakeholders' rights and interests; and
  6. enhance information transparenc
Article 4     Member companies shall take into consideration the overall operational activities of their own and that of subsidiaries, establish an effective internal control system, 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 said system remain operationally effective in accordance with the Regulations Governing the Establishment of Internal Control Systems by Securities Investment Trust Enterprises and by Securities Investment Consulting Enterprises Conducting Discretionary Investment Business. The establishment and amendment of internal control system (including the internal audit implementation rules) should be submitted to the board of directors for approval. Any director expresses his or her dissenting opinions in a written statement or record, Member companies shall submit the dissenting opinions along with the approved internal control to each supervisor. Where a Member company has established the position of independent director, when it submits its internal control systems for discussion by the board of directors pursuant to the preceding paragraph, the board of directors shall take into full consideration each independent director's opinions; if the independent director has reserved or dissenting opinions, they shall be stipulated in the minutes of the board of directors' meeting. Where a Member company has established an audit committee in accordance with the Securities and Exchange Act, any adoption of or amendment to its internal control system shall be subject to the consent of one-half or more of the entire members of the audit committee and be submitted to the board of directors for a resolution.
    If any matter under the preceding paragraph that has not obtained approval from one-half or more of the entire members of the audit committee, it may be adopted with the consent of two-thirds or more of the entire board of directors, and the resolution of the audit committee shall be recorded in the board of directors meeting minutes.
    In addition to faithfully performing self-check of the internal control system, the board of directors and the management level shall at least annually review the result of the self-check of each department and the report of the internal audit department. Supervisors shall also pay attention to and exercise oversight on this matter. Where a Member company has established an audit committee in accordance with the Securities and Exchange Act, any adoption of or amendment to its internal control system shall be subject to the consent of one-half or more of the entire membership of the audit committee and be submitted to the board of directors for a resolution.
    Where it has not been approved with the consent of one-half or more of the entire members of the audit committee, the preceding paragraph shall apply mutatis mutandis.
    The management of Member companies shall pay 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 operated effectively on an ongoing 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.
Chapter II:Protection of Rights and Interests of Shareholders and Investors
Subchapter 1:Protecting Shareholders' Rights and Interests
Article 5     When implementing the corporate governance system, Member companies shall protect shareholders' rights and interests and treat all shareholders fairly.
    Member companies shall establish a corporate governance system ensuring that shareholders shall have the rights to be fully informed of, participate in and make decisions over important matters of the company.
Article 6     Except that laws and regulations stipulate to the otherwise, Member companies shall convene shareholders' meetings in accordance with the Company Law and relevant laws and regulations and faithfully perform resolutions passed by the shareholders' meeting.
    The content of the resolutions passed by the shareholders' meeting shall be in compliance with applicable laws, regulations, and articles of incorporation.
Article 7     The board of directors of Member companies shall properly arrange the proposals and agenda of shareholders' meetings. Shareholders shall be granted reasonable time to deliberate each proposal and afforded an appropriate opportunity to make statements.
    The shareholder meeting minutes shall be properly and permanently kept by Member companies during companies' duration period.
Subchapter 2:Protecting Investors' Rights and Interests
Article 8     When implementing the corporate governance system, Member companies shall protect the investors’ assets and deal fairly with investors according to applicable laws and regulations in order to establish a mutually beneficial relationship between the companies and the clients. When managing the securities investment trust funds and conducting discretionary investment business, the responsible persons and employees of Member companies shall have a duty of fiduciary and adhere to the principles of loyalty, honesty and integrity, prudent management, and professionalism.
Article 9     The responsible persons and employees of Member companies shall act and adhere to the principles of honesty and integrity. Other than observing the applicable laws and regulations, internal personnel management guidelines shall also be observed and followed accordingly.
    Member companies should schedule training courses of law and ethics for employees regularly and irregularly to ensure they understand and observe the current and most updated laws and regulations.
Article 9-1     Member companies shall establish handling and investigation procedures, and appoint a specialized person to deal with pleadings filed by employees as they find the company’s operation disobey the ethics, regulations and laws.
Article 9-2     Member companies shall firmly establish and implement a complete internal monitoring procedure in accordance with the relevant laws and regulations, especially the monitoring procedures for preventing abuses that endanger the investor rights and interests.
    The board of directors shall designate a member of the senior management as the chief compliance officer, to oversee compliance matters and report to the board of directors and to each and all supervisors at least semi-annually, in order to timely discover and improve any managerial non-compliance, and protect the investor rights and interests.
Article 10     SITEs shall convene the beneficiary meetings in accordance with securities investment trust fund agreement and relevant laws and regulations. Matter that should be resolved by beneficiary meetings shall be faithfully performed in accordance with the guidelines of beneficiary meetings. The content of the resolutions passed by the beneficiary meetings shall be in compliance with securities investment trust fund agreement and relevant laws and regulations.
    The minutes of the shareholders' meeting under the preceding paragraph shall be properly kept by SITEs in accordance with relevant laws and regulations. It would be advisable for SITEs to fully disclose such meeting minutes on its website, if any.
Article 11     When utilizing the securities investment trust fund or discretionary investment business assets to invest in securities, Member companies shall pay close attention to the information about the corporate governance status of the issuing company invested by fund.
Subchapter 3:Corporate Governance Relationships Between the Member Companies and Their Stakeholders
Article 12     Member companies shall clearly identify the allocation of its management authorities and responsibilities over personnel, assets and financial matters of its affiliated enterprises, and shall conduct risk evaluation and establish appropriate Firewalls
Article 13     Unless otherwise provided by the laws and regulations, a manager of Member companies may not concurrently serve as a manager of its affiliated enterprises. A director, supervisor, or manager shall be prohibited from using information that is obtained from his or her employment for the benefits of his or her own or a person other than the clients in conducting the purchase and/or sell of securities or an act that damages the rights and interests of investors.
Article 14     Member companies shall establish a sound management system for finance, operations and accounting in accordance with the applicable laws and regulations. They shall further properly conduct an overall risk evaluation of the major banks that the securities investment trust funds and discretionary investment business are dealing with, and the transaction counter-parties, and carries out the necessary control mechanism to reduce credit risks.
    Member companies shall periodically produce financial reports signed by or stamped with the seal of the chairperson, general manager, and accounting officers in compliance with general accepted accounting principles and relevant laws and regulations, and submit it to the FSC, together with a declaration that the report contains no misrepresentations or nondisclosures.
    "Accounting officer" under the preceding paragraph means the highest-level executive that manages a company's accounting affairs in accordance with the company's articles of incorporation or a resolution of the board of directors.
Article 15     Where Member companies and their affiliated enterprises enter into inter-company business transactions, both parties shall definitively stipulate the terms and conditions of the price and payment terms mechanism in terms of the principle of fair dealing and reasonableness. Tunneling of profits is strictly prohibited in the above inter-company business transactions.
Article 16     A corporate shareholder having controlling power over a Member company shall comply with the following provisions:
  1. 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 illegal profit.
  2. 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 investment decision.
Chapter III:Enhancing the Function of Board of Directors
Subchapter 1:Structure of Board of Directors
Article 17     The board of directors of Member companies shall be responsible to the shareholders' meetings. Procedures and arrangement relating to corporate governance shall ensure that, in exercising its authority, the board of directors will comply with laws, regulations, articles of incorporation, and the resolutions of shareholders' meetings of the company.
    Regarding the structure of the board of directors of Member companies, the number of the board members qualified for corporate governance principles shall not be less then three (3) and be properly determined by reviewing to the scale of corporate management and operation and the shareholding of the major shareholders and taking into consideration of the practical needs for operation. While installing independent directors, it is advisable that it shall take into account the reasonable professional composition of the directors and the objective requirements for them to perform the duty independently.
    The board members shall have the necessary knowledge, skill, and experience for performing their duties. To achieve the ideal goal of corporate governance, the board of directors shall have the following abilities:
  1. ability to make day-to-day operation decisions;
  2. ability to perform accounting and financial analysis;
  3. management capability;
  4. ability to conduct crisis management;
  5. industrial knowledge;
  6. global perspectives;
  7. leadership; and
  8. ability to make decisions
Article 18     The articles of incorporation of Member companies shall adopt the cumulative voting system or other voting mechanisms capable of fully reflecting shareholders' views for the election of directors in accordance with the Company Law.
    A Member company shall have more than half of its directors, among whom no spousal or familial relationship within the second degree of kinship exits. Also shall have at least one or more supervisors, or one or more supervisors and directors, among whom no relationship under the preceding subparagraphs exists.
Article 19     A SITE shall literally review whether candidates for director to be elected have violated the qualifications, education and work, background and the existence of any other matters set forth in Article 9, Section 1 of the Regulations Governing the Management of Securities Investment Trust Enterprises so that qualified directors will be elected. A SICE shall literally review whether candidates for director to be elected have violated the qualifications, education and work, background and the existence of any other matters set forth in Article 24, Section 1 of the Regulations Governing the Management of Securities Investment Consulting Enterprises so that qualified directors will be elected.
Article 20     Clear distinctions shall be drawn between the responsibilities and duties of the chairman of the board of a Member company and those of its general manager.
    If the chairmen also act as the general manager or they are spouses or relatives within the consanguinity of the first degree, it would be advisable that the number of independent directors be increased.
Subchapter 2:Independent Directors
Article 21     If a Member company has independent directors, it is advisable that they shall be elected in the shareholders meeting after an objective assessment of the board of directors is made. Said independent director shall be a natural person with professional knowledge of securities or derivative products, good moral and characters. The assessment of professional qualifications and independence shall in compliance with Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies. Independent directors shall not have any of the followings for the latest year:
  1. An employee of the company or act as director, supervisor, or an employee of an affiliate of the company;
  2. Acts as a natural person shareholder who directly or indirectly owns 1% or above of the total issued shares of or has a shareholding among top 10 of the company;
  3. A spouse or relatives within the consanguinity of the second degree of the person listed in preceding sections 1 and 2;
  4. Acts as a director, supervisor, or employee of a corporate shareholder who directly or indirectly owns 5% or above of the total issued shares of or has a shareholding among top 5 of the company;
  5. Acts as a director, supervisor, or manager of a corporation or institution that has financial business relationship with the company;
  6. Act as the business owner, partner, director, supervisor, manager, or a spouse of the professional, sole proprietorship, corporation or institution that provides financial, business, legal consultancy for the company or its affiliates.
    A person may not serve as an independent director if he or she has any of the followings, or if already acting in such capacity, shall be dismissed:
  1. Any circumstance set out in a subparagraph of Article 30 of the Company Act.
  2. The director is a government agency, juristic person, or representative thereof, and was elected in accordance with Article 27 of the Company Act.
  3. The person fails to meet the qualifications for independent director set forth under the preceding paragraph.
Article 22     If a Member company has independent directors, it shall stipulate expressly the scope of duties of the 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 restrict or obstruct the performance of duties by the independent directors. It is advisable that different but reasonable compensations from that of other directors may be set forth for the independent directors.
    Independent directors shall maintain their independence and objectivity within the scope of their duties, and fulfill their supervising responsibility to pursue and safeguard the best interests of shareholders and investors.
Subchapter 3:Audit Committee and Other Functional Committees
Article 23     In order to achieve the goal of corporate governance, the major duties of the board of directors of a Member company are as follows:
  1. stipulation of an effective and appropriate internal control system;
  2. selection and supervision of managers;
  3. review of the management policy and business plan of the company;
  4. review of the financial goals of the company;
  5. supervision of the result of operations of the company;
  6. supervision and handling of the risks encountered by the company;
  7. ensuring the compliance with relevant laws and regulations by the company;
  8. planning the future development of the company;
  9. creation and maintenance of the company image and fulfillment of social obligations;
  10. appointment of CPA.
Article 24     For the purpose of developing monitoring functions and strengthening management mechanisms, the board of directors of a Member company may taking into account the basis of the size of the board and the number of the independent directors, set up functional committees with various functions to be stipulated in the articles of incorporation.
    Functional committees shall be responsible to the board and submit the proposals to the board of directors for approval.
    Functional committees shall adopt regulations governing the exercise of their power and duty to be approved by the board of directors. The regulations governing the exercise of their power shall at least comprise of the functions, responsibilities, the process for exercising the power (the status of the organization, the qualifications of the members, the resources for exercising the power and duty and the procedure for such exercise) and annual review and assessment of the necessity of renewing the policy of regulation for exercising the power and duty.
Article 25     It is advisable that a Member company shall make its first priority to set up the audit committee, whose primary functions and duties are as follows:
  1. examination of the company, the accounting systems of securities investment trust funds and discretionary investment business, financial conditions, and the procedure for financial reports of the company;
  2. reviewing the procedures for major financial and business transactions such as acquisition or disposition of assets, engaging in derivatives transaction, making loans to others, and endorsement or provision of guaranty for others;
  3. communications with the CPAs of the company or securities investment trust funds;
  4. examination of the internal auditors and their performance;
  5. examination of the internal control of the company;
  6. assessment, inspection, and monitoring the existence and threat of risks of all kinds for the company and assets under management; whenever the internal management has serious problems or material violations occur, an immediate report to the board of directors shall be made wherein relevant departments within the company shall bring forward the remedial plans or actions;
  7. inspection of applicable laws and contract compliance by the company and the management business;
  8. reviewing the transactions set forth in Article 30 of the Principles where voting shall be disqualified due to conflicts of the interest of directors, especially material related-party transactions, acquisition or disposition of assets;
  9. assessing the qualifications of CPAs and nomination of qualified candidates. If a Member company has established independent directors, the audit committee shall have independent directors participate in and be convened by the independent director.
Article 26     A Member Company shall select a professional, responsible and independent CPA to be its external auditor, who shall perform regular reviews of the financial conditions of the company and its management business.
    With regard to the irregularity or deficiency timely discovered and disclosed by the auditor during the review, and the concrete measures for improvement or prevention suggested by the auditor, the company shall faithfully implement improvement actions.
    A Member company shall evaluate the independence of the auditor engaged by the company regularly and no less frequently than once annually. In the event that the company engages the same auditor without replacement for 5 years consecutively, or if the auditor is subject to disciplinary actions or other circumstances prejudicial to the independence of the auditor, the company shall review the necessity of replacing the auditor, and shall submit to the board the conclusion of such review.
Article 27     It is advisable that a Member company shall select professional and competent legal counsel to provide adequate legal consultation services to the company, or to assist in the endeavor by the directors, the supervisors and the management to improve their knowledge of the law, for the purposes of preventing any infraction by the company or its staff of laws or regulations, and ensuring the corporate governance matters will proceed pursuant to the relevant legal framework and the prescribed procedures.
    In the event that the directors, supervisors or the management are involved in litigation as result of performing his or her duties as provided by the law or arising from shareholders disputes, depending on the circumstances the company shall retain legal counsel to provide assistance.
Subchapter 4:Rules for the Proceedings of Board Meetings and the Decision-Making Procedures
Article 28     It is advisable for a Member company to hold a meeting of board of directors no less frequently than once per season so as to meet business needs. The board meeting may be convened at any time in the event of an emergency. In terms of a regular board meeting, an agenda shall be arranged in advance, notices shall be sent to all directors and supervisors according to the time scheduled set by the laws, and sufficient meeting materials shall be prepared.
    It is advisable for a Member company to adopt the rules for proceedings of board meetings and report the same to the shareholders' meeting so as to enhance the operational efficiency and decision-making capability of the board.
Article 29     A director shall exercise a high degree of self-discipline and shall voluntarily abstain from voting, for himself or herself or as proxy for another director, on a proposal submitted to the board of directors that risks the involvement of the director's own interests to the detriment of the interest of the company.
Article 30     When a Member company convenes a board meeting, relevant materials shall be duly prepared for reference and can be reviewed by the directors participating in the meeting at any time.
    When the board deliberates on the proposals of internal control system, the acquisition or disposal of assets, and other material financial or operational transactions, sufficient consideration shall be given to the opinion of the audit committee or that of the independent directors. Any vote for or against the proposal and the reasons thereof shall be recorded in the minutes.
    The board of directors may request managers from the relevant departments, who are not directors to attend the meetings, make reports on the current business operations of the company and respond to inquiries raised by the directors, so as to assist the directors in understanding the current conditions of the company for the purpose of adopting an appropriate resolution.
Article 31     Staff personnel of a Member company attending board meetings shall literally collect and record meeting minutes and the summary, voting method and result of each proposal in accordance with relevant regulations.
    The meeting minutes shall be signed by the chair and the meeting secretary, and the directors’ attendance shall be completely documented. Both meeting minutes and directors’ attendance records shall be listed as an important corporation file and permanently well kept during the duration of the corporation.
    Where a resolution of the board of directors violates laws or regulations, charter or the decision of shareholder meeting, causing injury to the company, the dissenting directors whose dissent can be proven by minutes or written statements will not be liable for damages.
Article 32     A Member company shall set forth in its articles of incorporation the scope of delegation to the chairman when the board of directors is in recess. The delegation shall be specific, and general authorization is not permitted. Matters involving material interests of the company shall be disposed of by a resolution of the board of directors.
Article 33     A Member company shall ask the appropriate corporate departments or personnel to handle matters and implement actions pursuant to the board of directors' resolutions in a way consistent with the program schedule and objectives. It shall also follow up on these matters and faithfully review their implementation.
    The board of directors shall fully oversee the implementation and progress of these matters and make a report in subsequent meetings so as to ensure that the board's management decisions are faithfully implemented.
Subchapter 5:Fiduciary Duty, Duty of Care and Responsibility of Directors
Article 34     Members of the board shall faithfully conduct corporate affairs and perform their duties of care as good administrators. In conducting the affairs of the company, they shall exercise their power with a highlighted level of self-discipline and prudential attitude. Regarding the company's business operation, unless matters are reserved for resolutions in shareholders' meetings by law or the articles of incorporation of the company, they shall faithfully adhere to the board's resolutions.
    Where resolutions of the board involve major policy directions of the corporate management, the board shall make careful consideration and may not affect the implementation and operation of corporate governance.
    Independent directors shall perform their duties in accordance with relevant laws, regulations and the company's articles of incorporation so as to protect the interests of the company, shareholders, and investors.
Article 35     If a resolution of the board of directors violates law, regulations, or a Member company's articles of incorporation, at the request of shareholders holding shares continuously for a year or an independent director, or at the notice of a supervisor to discontinue the implementation of the resolution, members of the board shall take appropriate measures or discontinue the implementation of such resolution as soon as possible.
    Upon discovering any threat of the company suffering material injury, members of the board shall immediately report to supervisors in accordance with the foregoing paragraph.
Article 36     A Member company may purchase Director and Officer liability insurance coverage against the liabilities for damage compensation for its directors during their tenure, so as to reduce and diversify the risk of damages that may be sustained by the company or shareholders caused by any illegal act of its directors.
Article 37     It is advisable that members of board of directors should take the courses on the subjects of finance, business, commerce, accounting or laws, which are relevant to corporation governance, during their period of duty, as well as to give task to the employees of all levels to improve the knowledge of profession and law.
Chapter IV:Empowering the Supervisors
Subchapter 1:Functions and Systems of Supervisor
Article 38     The articles of incorporation of a Member company shall adopt cumulative votes or other election methods that can fully reflect the opinions of the shareholders in selecting the supervisors in accordance with the Company Law.
Article 39     In order to elect such adequate supervisors, the Securities Investment Trust Company shall firmly review and ensure that the candidates of supervisor comply with Article 9, Section 1 of Regulations Governing Securities Investment Trust Enterprises; the Securities Investment Consulting Company shall firmly review and ensure that the candidates of supervisor comply with Article 24, Section 1 of Regulations Governing Securities Investment Consulting Enterprises.
Article 40     While performing their duties, the supervisors of a Member company shall have ample professional knowledge and skills, work experience, honesty, integrity, fair and impartial attitude.
Subchapter 2:Duties and Obligations of The Supervisor
Article 41     A supervisor shall be familiar with the relevant laws and regulations, understand the rights, obligations, and duties of directors of the company and the functions and duties, and operation of each department, and it is advisable that he/she should attend regular meetings of the board of directors to supervise the operations and to state his/her opinions when appropriate so as to control or discover any abnormal situation.
Article 42     A supervisor shall supervise the implementation of the operations of the company, the performance of duties by directors and managers and pay close attention to the enforcement of internal control so as to reduce the financial and operational risks of the company.
    Where a director, for himself/herself or on behalf of others, enters into a sales/purchase or loan transaction, or conducts any other legal acts, a supervisor shall act as the representative of the company.
Article 43     A supervisor shall investigate the operational and financial conditions of the company from time to time and the relevant departments in the company shall provide the books or documents that will be needed for the supervisor's review.
    When reviewing the finance or operations of the company, a supervisor may retain attorneys or accountants on behalf of the company to perform the review; however, the company shall inform the relevant persons of their confidentiality obligations.
    The board of directors and managers shall submit reports in accordance with the request of the supervisors and shall not for any reason obstruct, circumvent, or refuse the inspection of the supervisor. During the performance of his or her duties as the supervisor, a Member company shall provide necessary assistance and offer the reasonable expenses which shall be borne by the company in accordance with the needs of the supervisor.
Article 44     For supervisors to timely discover any possible irregular conduct in the company, a Member company shall establish a channel for supervisors to communicate with the employees, shareholders, and stakeholders.
    Upon discovering any irregular conduct, the supervisors shall take appropriate measures timely, such as filing a report to the relevant regulatory authorities or agencies to curb the expansion of the irregular conduct.
    Where any of the independent directors, general managers, chief financial or accounting officers, the head of internal auditing department or CPAs resigns his/her position, the supervisors shall further investigate the cause of the resignation.
    In the event that a supervisor neglects his/her duties and therefore causes harm to the company, the supervisor shall be liable to the company.
Article 45     When exercising his/her supervision power, each supervisor of a Member company may convene meetings on a regular or non-regular basis if he/she deems necessary to exchange opinions among all other supervisors after taking into consideration the overall interest of the company and shareholders; however, it may not by such way obstruct supervisors in exercising their duties independently.
Article 46     A Member company may purchase Director and Officer liability insurance coverage against the liabilities for damage compensation for its supervisors during their tenure, so as to reduce and spread the risk of damages that may be sustained by the company or shareholders caused by any illegal act of its supervisors.
Article 47     The supervisors shall take the courses on the subjects of finance, business, commerce, accounting or laws, which are relevant to corporation governance, during their tenure.
Chapter V:Respecting Stakeholders' Right
Article 48     A Member company shall maintain at all times a smooth communication with its dealing banks, investors, employees or other stakeholders and shall respect and safeguard their legal rights.
    When any of a stakeholder's legal rights is harmed upon, the company shall handle such matter in a proper manner and in good faith.
Article 49     A Member company shall provide sufficient information to banks and its other creditors to facilitate their evaluation of the operational and financial conditions of the company and decision making process. Whenever their rights or interests are violated upon, the company shall respond with a proactive attitude and assist creditors in obtaining compensation through proper means.
Article 50     A Member company shall establish communication channels with employees and encourage employees to communicate directly with the management, directors and supervisors so as to reflect employees' opinions about the management, financial conditions and material decisions of the company concerning employee welfare.
Article 51     In developing its normal business and maximizing the shareholders' interests, a Member company shall also pay attention to its social responsibilities as well.
Chapter VI:Improvement of Information of Transparency
Subchapter 1:Disclosure of Enhancing Information Disclosure
Article 52     To have an open and public information is the major responsibility of a Member company. The company shall perform its obligations faithfully in accordance with the relevant laws.
Article 53     A SITE shall report the information of its securities investment trust funds in accordance with relevant laws and regulations and designate a spokesperson to ensure a proper and timely disclosure of information about affecting policies of investors and stakeholders.
Article 54     In order to keep investors and stakeholders fully informed, it is advisable that a SITE shall take advantages of the convenience of the Internet and set up its own web site containing the information regarding the securities investment trust funds.
    To avoid misleading information, it is advisable that the web site under the preceding paragraph should be maintained by designated personnel and its information should be detailed and accurate and timely updated.
Subchapter 2:Disclosure of Information of Corporate Governance
Article 55     It is advisable that a Member company shall disclose the following relevant information regarding the corporate governance for its the fiscal year in the annual report, fund prospectus, or web site.
  1. corporate governance framework structure and rules;
  2. ownership structure and shareholders' equity;
  3. structure and independence of board of directors;
  4. responsibility of the board of directors and managerial personnel;
  5. composition and duties of supervisors;
  6. stakeholders' rights and relationship;
  7. details of the events subject to information disclosure required by law and regulations; and
  8. other relevant information regarding the corporate governance.
    With the exception that a Member company conducting its business shall apply the relevant laws and regulations, the term "stakeholder" as used in this Principles that involve a stakeholdershall apply mutatis mutandis to Article 11 of Regulations Governing Securities Investment Trust Funds.
Chapter VII:Ancillary Rules
Article 56     A Member company shall at all times keep abreast of domestic and international development of corporate governance and thereby review and improve the company's corporate governance mechanism so as to enhance its performance of corporate governance.
Article 57     These Principles shall be implemented after ratified by the board of directors of the SITCA and submitted to the FSC for approval. This rule shall apply to any amendments occurred thereafter.