Article 10
The corporate governance report of a financial holding company shall include the following particulars:
1. Organizational system:
(1) Show the organizational structure of the financial holding company and the responsibilities of its principal divisions.
(2) Show the holding company-subsidiary relationship chart, indicating shareholding in each company, actual amount of investment, and cross-holding between parent and subsidiaries.
2. Information on the company’s directors, supervisors, president, vice presidents, assistant vice presidents, and managers of all divisions and branch units:
(1) Directors and supervisors: name, principal work experience and academic qualifications, position(s) held concurrently in the company and any other companies, date elected (appointed), term of office, date first elected (appointed), shares held by self, spouse, and minor children, and shares held through nominees, professional expertise, and status of independence. For directors and supervisors acting as the representatives of institutional shareholders, indicate the names of institutional shareholders, and the names of their top ten shareholders and respective holding percentage. If any of the top ten shareholders is an institutional shareholder, indicate the name of the institutional shareholder and the names of its top ten shareholders and respective holding percentage. (Form 1)
(2) The president, vice presidents, assistant vice presidents, and managers of all divisions and branch units: name, principal work experience and academic qualifications, date on which current position was assumed, term of office, and shares held by self, spouse, minor children, and shares held through nominees. (Form 1-1)
(3) Remunerations paid in the most recent fiscal year to directors, supervisors, president and vice presidents. (Form 1-2 and Form 1-3)
(4) Separately compare and describe total remunerations paid to directors, supervisors, president and vice presidents as a percentage of net income by the company and by each other company included in the consolidated financial statements in the past two fiscal years, and analyze and describe remuneration policies, standards and packages, the procedure for setting remuneration, and linkage to business performance.
3. Implementation of corporate governance
(1) The working of the board of directors: Number of meetings held, attendance rate of each director, an evaluation of targets set for strengthening the functions of the board and measures taken toward achievement thereof in the current and immediately preceding fiscal years, and any other matters that require documentation. (Form 2)
(2) The working of the audit committee: Number of meetings held, attendance rate of each independent director, and any other matters that require documentation. (Form 2-1)
(3) Information required for disclosure in accordance with Corporate Governance Best Practice Principle for Financial Holding Companies. If such information has been disclosed on company website, the company is only required to disclose the reference website.
(4) The state of implementation of corporate governance, any departure from the Corporate Governance Best Practice Principle for Financial Holding Companies, and the reasons for any such departure. (Form 2-2)
(5) If the company has adopted code of corporate governance and relevant rules, disclose how those code and rules are to be searched.
(6) Other significant information that will help enhance the understanding of the state of implementation of corporate governance by the company. (Form 2-2)
(7) The section on the implementation of internal control system shall reveal the following:
(i) A Statement on Internal Control.
(ii) An independent auditor’s report if an accountant has been appointed to carry out a special audit of the internal control system.
(8) Any sanctions imposed on the financial holding company and/or subsidiaries for violation of the law in the past two fiscal years, major deficiencies found and state of improvement actions taken, including:
(i) The responsible person or an employee being indicted by a prosecutor for a job-related offence;
(ii) Being fined by FSC for violation of law or regulation;
(iii) Being sternly reprimanded by FSC for misconduct;
(iv) Being disciplined by FSC in accordance with Paragraph 1, Article 54 of Financial Holding Company Act;
(v) If loss more than NT$50 million is sustained individually or collectively in any given year from employee corruption, an incident of material nature (fraud, theft, diversion and embezzlement of corporate assets, false transaction, forgery of certificate or security, receiving kickback, loss from natural disaster, loss from external forces, hacker attack and data theft, leak of trade secret or client data, and other material events), or security breach resulting from failure to abide by the Guidelines for Financial Institutions in the Maintenance of Security, disclose the nature of the incident and the amount of loss; and
(vi) Other matters required for disclosure by FSC.
(9) Major resolutions adopted in the shareholders meeting and the board of directors meeting in the most recent fiscal year and up to the date of the annual report.
(10) The gist of the dissenting opinion expressed by a director or supervisor and recorded or prepared in a written statement with respect to any major resolution adopted by the board of directors in the most recent fiscal year and up to the date of the annual report.
(11) A summary of resignations and dismissals of persons in connection with the company’s financial report (including the chairman, president, chief accounting officer, and chief internal auditor) in the most recent fiscal year and up to the date of the annual report. (Form 2-3)
4. Information on accountant fees: Given any of the following situation, a company shall disclose information on accountant fees:
(1) When non-audit fees paid to the certifying accountant, the accounting firm that the certifying accountant works for, and/or any affiliated enterprise of the accounting firm account for one fourth or more of the audit fees paid thereto, disclose the amounts of both audit and non-audit fees as well as details of the non-audit services. (Form 3)
(2) When the company changes accounting firm and the audit fees paid in the fiscal year in which such change took place are lower than those in the previous year, disclose the amount and percentage of decrease in audit fees and the reasons.
(3) When the audit fees paid in the current year are lower than those in the previous fiscal year by fifteen percent (15%) or more, disclose the amount and percentage of decrease in audit fees and the reasons.
The audit fees referred to in item (1) means the professional fees paid by the company to a certified public accountant for the services of audit, examination, and review of financial reports, examination of financial forecasts, and certification of tax returns.
5. Information on change of accountant: If the company has changed its accountant in the past two fiscal years or subsequently, disclose the following information: (Form 3-1)
(1) About the former accountant:
(i) Date of and reason for change of accountant , specifying whether it was the accountant that voluntarily ended the service or declined to continue service, or it was the company that terminated or discontinued the appointment.
(ii) If the former accountant has issued an audit report expressing other than an unqualified opinion in the past two fiscal years, disclose such opinion and reason.
(iii) Indicate whether there was any disagreement between the company and the former accountant on any of the following issues:
(a) Accounting principles or practices.
(b) The disclosure of financial report.
(c) The scope or procedure of audit.
If any disagreements did exist, describe in detail the nature of each such disagreement, how the company handled them (including whether the company has authorized the former accountant to answer fully the questions of the newly appointed accountant concerning each such disagreement), and how the situations were ultimately handled.
(iv) The following situations must also be disclosed:
(a) The former accountant once advised the company that the company lacked sound internal controls such that the reliability of its financial report comes into question.
(b) The former accountant once advised the company that he or she did not have confidence in the statements made by the company, or was unwilling to be associated with the preparation of the company’s financial reports.
(c) The former accountant once advised the company of the need to expand the scope of audit, or that information shows that an expanded audit might impair the reliability of a previously issued financial report or a financial report to be issued. However the former accountant never carried out an expanded audit due to change of accountant or any other reason.
(d) The former accountant once advised the company that the reliability of a previously issued financial report or the financial report to be issued could be impaired based on the information collected. However the former accountant never dealt with the issue due to change of accountant or any other reason.
(2) About the newly appointed accountant:
(i) Name of the newly appointed accounting firm, name of the newly appointed accountant, and date of appointment.
(ii) If the company has consulted the new accountant prior to his/her official appointment regarding the accounting treatment of or the application of accounting principles to a specific transaction, or the type of audit opinion that might be rendered by the new accountant on the company’s financial report, the company shall disclose the subjects discussed during those consultations and the consultation results.
(iii) The company shall disclose the written opinions of the newly appointed accountant regarding the matters on which the company had a disagreement with the former accountant and consulted the newly appointed accountant.
(3) The company shall mail to the former accountant a copy of the disclosures it has made pursuant to items (1) and (2)(iii) of this subparagraph, and advise the accountant to respond by mail in 10 days should he or she have any disagreement. The company shall disclose the content of the reply letter from the former accountant.
6. Where the company’s chairman, president, or any managerial officer in charge of finance or accounting matters has in the most recent year held a position at the accounting firm that its certifying accountant works for or at an affiliated enterprise of such accounting firm, disclose the name and position of the person, and the duration of employment at the accounting firm or its affiliated enterprise. The term “affiliated enterprise of the accounting firm that its certifying accountant works for” means an enterprise in which the accountants in the accounting firm that the certifying accountant works for hold more than 50% of its shares, or have acquired more than half of the seats on its board of directors, or a company or institution identified as an affiliated enterprise in the published or printed materials of the accounting firm that the certifying accountant works for.
7. Any transfer of equity interest and/or changes in shares pledged in the most recent fiscal year and up to the date of the annual report by a director, supervisor, managerial officer, or shareholder required to file a report on his or her equity interest pursuant to Paragraph 7 and Paragraph 8, Article 16 of Financial Holding Company Act. Where the counterparty in any such transfer or pledge is a related party, disclose the counterparty’s name, relationship with the company as well as the company’s directors, supervisors, and shareholders, and shareholders required to file a report on their equity interest pursuant to Paragraph 7 and Paragraph 8, Article 16 of Financial Holding Company Act, and the number of shares transferred or pledged. (Form 4)
8. Information on the relationship between the top ten shareholders if they are to each other a related party as defined in the Statement of Financial Accounting Standards No. 6, or the spouse or a relative within the second degree of kinship. (Form 4-1)
9. The number of shares held in any investee by the financial holding company and its subsidiaries, its directors, supervisors, managers, and any enterprise in which the financial holding company has direct or indirect control, and the combined percentage of shareholding in such investee. (Form 5)
Article 22 Special information to be included
1. Information on affiliates: The consolidated business report, consolidated financial statements, and relationship report for the most recent fiscal year, prepared by the financial holding company in accordance with the Regulations Governing the Preparation of Consolidated Business Reports, Consolidated Financial Statements, and Relationship Reports by Financial Holding Company.
2. Where the company has carried out a private placement of securities in the most recent fiscal year and up to the date of the annual report, disclose the date on which the placement was approved in a shareholders’ meeting or a board of directors’ meeting, the number of units thus approved, the basis for and reasonableness of the pricing, the manner in which specific investors were selected, necessary reasons for the private placement, the targets of private placement, their qualifications, quantities subscribed, relationship with the company, participation in the operations of the company, actual subscription/conversion price, the difference between the actual subscription/conversion price and the reference price, the effect of the private placement on shareholders’ equity, and the use of proceeds from the issue of securities, plan implementation progress and realized benefits of the plan from the time the subscriptions were paid in full to the time the fund utilization plan has been completed. (Form 23)
3. Shares held or disposed by subsidiaries in the most recent fiscal year and up to the date of the annual report. (Form 24)
4. Other necessary supplemental information.
Article 24
The company shall upload an electronic file containing its annual report to a website designated by the FSC prior to the day on which a shareholders’ meeting is scheduled. Notwithstanding the foregoing, if the annual report is to be used as supplemental material to the meeting agenda for the shareholders’ meeting, the company shall upload such electronic file of the annual report to a website designated by the FSC fifteen (15) days before the scheduled date for the shareholders’ meeting.