| 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 and reported them for recordation by the Financial Supervisory Commission, for the compliance of futures commission merchants.
Except as otherwise provided by these Principles, an exchange or OTC listed futures commission merchant shall comply with the Corporate Governance Best-Practice Principles for Exchange/OTC 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 in formulating their own corporate governance best-practice principles. |
| 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. Establishing an effective corporate governance structure.
2. Protecting shareholders' rights and interests.
3. Strengthening the functions of the board of directors.
4. Fulfilling the functions of supervisors.
5. Respecting the rights and interests of futures traders and interested parties.
6. Raising the level of information transparency. |
| Article 3 |
A futures commission merchant shall establish 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 Establishing 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.
The adoption or amendment of the internal control system shall be submitted to and passed by a resolution of the board of directors. If any director expresses dissent, where stated in minutes or in a written statement, the company shall submit such dissenting opinions to each supervisor together with the internal control system passed by the board of directors. Where the company has established the position of independent director, when it submits its internal control system for discussion by the board of directors, the board of directors shall take into full consideration each independent director's opinions. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors meeting. Where an audit committee has been established in accordance with the provisions of the Securities and Exchange Act, the system shall be approved by more than half of all audit committee members and submitted to the board of directors for a resolution.
If approval of more than half of all audit committee members as required in the preceding paragraph is not obtained, the system may be implemented if approved by more than two-thirds of all directors, provided that the resolution of the audit committee is recorded in the minutes of the board of directors meeting.
The securities firm shall faithfully perform self-inspection of its internal control operations. In addition, the board of directors and managerial staff shall critique the results of each department's internal inspection and the audit department's audit report no less than once a year. Supervisors shall likewise pay attention to and oversee such inspection matters. The responsible persons (directors and supervisors) shall have regular discussions with internal audit personnel regarding the review of the deficiencies of the internal control system, and keep a record thereof. Where an audit committee has been established in accordance with the provisions of the Securities and Exchange Act, the examination of the effectiveness of the internal control system shall be approved by more than half of all audit committee members and submitted to the board of directors for a resolution.
Managerial staff at a futures commission merchant shall recognize the importance of the internal audit department and personnel, vesting them with sufficient authority and seeing 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 also shall assist the board of directors and the managerial staff to faithfully perform their responsibilities, 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 securities firm might incur a material loss. |
| Article 4 |
In corporate governance, a futures commission merchant shall be chiefly concerned with protecting 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 provisions of the Company Act and related acts and regulations, and formulate comprehensive rules of procedure (which shall include 1. meeting notices; 2. preparation of attendance rosters and related documents; 3. establishing principles which will assure meetings are convened at appropriate times and venues; 4. choosing the chairman and participants; 5. archiving of the audio or video recording of the meeting; 6. procedures for convening, deliberation, statements from shareholders, voting, and examination and tabulation of ballots; 7. matters relating to minutes of the meetings and their signing; 8. announcement of shareholders' meetings in the case of publicly-issued futures commission merchants; 9. measures for recusal of shareholders who are affiliated persons; 10. principles regarding authorizations from the shareholders' meeting; and 11. maintaining order at the meeting site). The rules of procedure shall be strictly implemented for matters requiring a resolution of the shareholders' meeting.
Resolutions adopted by a shareholders' meeting of a futures commission merchant shall conform with acts and regulations and the company's articles of incorporation. |
| Article 6 |
The futures commission merchant's board of directors shall properly arrange the agendas and procedures for shareholders' meetings. Shareholders shall be granted a reasonable amount of time for deliberation of each agenda item and afforded an appropriate opportunity for making statements.
For shareholders' meetings convened by the board of directors, attendance in person by a majority of directors is advisable. |
| 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 a futures commission merchant offers shareholder meeting souvenirs to shareholders, it shall not have preferential or discriminating treatment towards shareholders. |
| Article 8 |
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 fulfill their fiduciary duty and duty of care when acting as directors or supervisors.
3. It shall abide by applicable acts 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. |
| Article 9 |
The chairman of the shareholders' meeting shall be fully familiar with the rules of procedure adopted by the company. The chairman 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 chairman 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 chairman 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 finances, operations, insider shareholding, and corporate governance. |
| 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 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, accounts and property of the company in accordance with Article 245 of the Company Act.
The board of directors, 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 acts 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.
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 tohave 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 an act or regulation or the articles of incorporation, or where a director, supervisor, or managerial officer violates an act 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. |
| Article 14 |
A futures commission merchant shall clearly define the allocation of rights and responsibilities for management of personnel, assets, and finances with its affiliated enterprises, and conduct risk assessments and establish appropriate firewalls. |
| Article 15 |
Except where otherwise provided by act 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 systems in accordance with applicable acts 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 institute 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 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. |
| Article 20 |
A futures commission merchant's board of directors shall be responsible to the shareholders' meetings. 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 acts 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.
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 acts 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
13. ensuring the company’s compliance with relevant laws. |
| Article 21 |
A futures commission merchant shall adopt fair, just, and open procedures for the selection of directors, and except where otherwise provided by the articles of incorporation, a cumulative voting system shall be adopted to be 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 |
Before convening a shareholders' meeting for re-election of directors, a futures commission merchant is advised to undertake a prior review of the qualifications of candidates recommended by shareholders or directors, their educational and professional backgrounds, and whether any of the circumstances set out in Article 30 of the Company Act and Article 4 of the Rules Governing the Establishment Standards of Futures Commission Merchants exist, and disclose the results of such review to the shareholders in order to assure selection of a suitable candidate. Where independent directors are appointed pursuant to a resolution of the shareholders’ meeting, their qualifications and standards for recognition shall conform with Article 24. |
| 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.
It is not advisable that the positions of chairman of the board and general manager be held by the same person. 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. |
| Article 24 |
A futures commission merchant may establish two or more independent directions 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 and the positions they may concurrently hold.
The election of independent directors at a futures commission merchant is subject to the provisions of Article 192-1 of the Company Act in that a candidate nomination system shall be adopted, that such system shall be expressly stated in the articles of incorporation, and that shareholders shall elect independent directors from among those listed in the slate of independent director candidates. Elections for independent directors and non-independent directors shall be held concurrently pursuant to the provisions of Article 198 of the Company Act, and the lists of successful candidates shall be calculated separately.
Independent directors and non-independent directors shall not exchange their positions during their terms as directors.
When any independent director is dismissed for any reason, causing the number to fall below the number as required by paragraph 1 or the articles of incorporation, the company shall hold a by-election for independent directors at the next following shareholders meeting. When all independent directors are dismissed, the company shall convene a special shareholders meeting within 60 days of the occurrence of that fact to hold a by-election for independent directors.
Where a futures commission merchant has managing directors, not less than one of the managing directors shall be an independent director. The futures commission merchant shall set forth in the articles of incorporation the scope of delegation to managing directors when the board of directors is in recess. When material interest of the futures commission merchant is involved, the matter shall be disposed of by a resolution of the board of directors.
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 the TWSE or GTSM regulations. |
| Article 25 |
If a futures commission merchant has independent directors, except where approved by the competent authority, the following matters shall be submitted to the board of directors for approval by resolution; 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 2 of the Regulations Governing Futures Commission Merchants.
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 restrict or obstruct the performance of duties by the independent directors.
A futures commission merchant shall expressly prescribe the remuneration of the directors in its articles of incorporation or pursuant to a resolution of the shareholders' meeting. A reasonable level of remuneration different from that of other directors may be prescribed for independent directors. |
| 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 size of the board and the number of the independent directors, may set up audit, risk management, nomination, or other committees with various functions to be prescribed 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 acts and regulations.
The functional committees shall adopt organization regulations to be approved by a resolution of the board of directors. The organization regulations 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 |
futures commission merchant 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 derivative, accounting, or financial expertise.
For a futures commission merchant that has established an audit committee, the provisions regarding supervisors in the Securities and Exchange Act, the Company Act, other laws and regulations, and these Principles apply mutatis mutandis to the audit committee.
For a futures commission merchant that has established an audit committee, the provisions of Article 25 of these Principles shall not apply to the following matters, which shall be subject to the consent of one-half or more of all audit committee members and be submitted to the board of directors for a resolution:
1. Adoption or amendment, pursuant to Article 2 of the Regulations Governing Futures Commission Merchants, of an internal control system.
2. Assessment of the effectiveness of the internal control system.
3. 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.
4. Any matter bearing on the personal interest of a director.
5. Any material asset or derivatives transaction.
6. Any material monetary loan, endorsement, or provision of a guarantee.
7. The offering, issuance, or private placement of any equity-type securities.
8. The hiring or dismissal of an attesting CPA, or the compensation given thereto.
9. The appointment or discharge of a financial, accounting, or internal audit officer.
10. The annual financial report and semi-annual financial report.
11. Other material matters as provide by the company or the competent authority.
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 TWSE or GTSM regulations. |
| 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.
A futures commission merchant shall regularly (at least once annually) evaluate the independence of the CPA engaged by the company. In the event that the company engages the same CPA without change for five years consecutively, or if the CPA is subject to disciplinary action or other circumstances prejudicial to independence, the company shall review the necessity of replacing the auditor and submit to the board the conclusion of such review. |
| 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 acts 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. |
| Article 31 |
Board meetings shall be convened no less than once per quarter, and may be convened at any time in the event of an emergency. Each director and supervisor shall be given at least seven days advance notice of the reasons for convening a board of directors meeting, and be provided with sufficient pre-meeting materials, to be sent together with the notice of the meeting. If the pre-meeting materials are insufficient, the directors may request for supplementation of the materials, or the meeting may be postponed by a resolution 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 director shall exercise a high degree of self-discipline and voluntarily abstain from discussion or voting, for himself or herself or as a proxy for another director, on a proposal submitted to the board that may involve the director's own interest to the detriment of the company's interest. 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 interested parties 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 |
If a futures commission merchant has 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, each independent director 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 two 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 board meetings, as merited by the content of a proposal to be put forward at the meeting, the convener of the board of directors meeting may notify a non-director who is a managerial officer of a relevant department to attend, report on the company's current operational status and respond to inquiries from the directors, and when necessary, may also invite certified public accountants, attorneys, or other professionals to attend the meeting as non-voting participant, in order to assist the directors in understanding the company's condition and make appropriate resolutions. |
| 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.
The minutes of a board of directors meeting shall bear the signature or seal of both the presiding chairman 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 five 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.
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. 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.
Minutes of the panel discussion conducted by a futures commission merchant to review the deficiencies of the internal control system shall be submitted and reported to the board of directors.
With the exception of the items to be submitted for discussion by the board of directors under paragraph 1, 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. |
| 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.
Board resolutions involving corporate management and development or the direction of major policies shall be considered with great care, and shall not be allowed to influence the promotion or implementation of corporate governance.
Independent directors shall perform their duties in accordance with the requirements of relevant acts, regulations, and the company's articles of incorporation, in order to protect the rights and interests of the company and shareholders. |
| Article 38 |
If a resolution of the board of directors violates an act, 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 |
Pursuant to its articles of incorporation or a resolution of the shareholders' meeting, a futures commission merchant may 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 error on their part. |
| 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, or law that include topics related to corporate governance. They shall also ensure that company employees at all levels enhance their professional and legal knowledge. |
| Article 41 |
A futures commission merchant shall prescribe a fair, impartial, and open procedure for the selection of supervisors in accordance with the Company Act, and, unless otherwise provided by the articles of incorporation, 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 acts 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 |
Prior to convening a shareholders' meeting to undertake re-selection of supervisors, a futures commission merchant is advised to undertake a prior review of the qualifications of candidates recommended by shareholders or directors, their educational and professional backgrounds, and whether any of the circumstances set out in Article 30 of the Company Act or Article 4 of the Rules Governing the Establishment Standards of Futures Commission Merchants exist, and disclose the results of such review to the shareholders in order to assure selection of a suitable candidate. |
| 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 the TWSE or GTSM regulations. |
| 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 condition of the company from time to time, and the relevant departments in the company shall cooperate in providing the account books or documents required for auditing.
When reviewing the finances or operations of the company, a supervisor may retain attorneys or accountants on behalf of the company to perform the review; the company, however, shall inform the relevant persons of their confidentiality obligations.
The board of directors and managers shall submit reports in accordance with supervisors' requests and shall not for any reason obstruct, circumvent, or refuse inspections performed 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, interested parties, 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 |
Pursuant to a resolution of the shareholders' meeting or its articles of incorporation, a futures commission merchant may 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. |
| 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, or law 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. |
| Article 53 |
A futures commission merchant shall maintain open channels of communication with its correspondent banks, other creditors, employees, futures traders, and persons whose interests are connected with companies with which it does business, and shall respect and safeguard their legal rights.
When an interested party'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. |
| Article 58 |
A futures commission merchant shall carry out disclosure obligations faithfully in accordance with applicable acts 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 interested parties. |
| 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 interested parties, and are advised to provide English versions of information relating to corporate governance 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. |
| Article 61 |
A futures commission merchant shall disclose the following information regarding corporate governance for the given fiscal year pursuant to relevant rules or the bylaws of the futures exchange or futures industry associations:
1. the framework and rules for corporate governance;
2. the company's ownership structure and shareholders' equity;
3. the structure and the 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. Remuneration paid during the 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, policies for remuneration payment, standards and packages, procedures for setting remuneration, and linkage to business performance and future risks;
7. the ongoing training being received by directors and supervisors;
8. risk management information;
9. the rights of and relationships between interested persons;
10. details of the management of public disclosures required by acts and regulations;
11. 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;
12. information on related party transactions;
13. disclosure of adjusted net capital;
14. other information regarding corporate governance.
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. |
| Article 62 |
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. |
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