| Article 28 | The board of directors shall be responsible for the bank's overall business strategies and major policies, supervise the management effectively, and shall be accountable to all shareholders.
Procedures and arrangements relating to corporate governance shall ensure that, in exercising its powers, the board of directors will comply with laws, regulations, the articles of incorporation and resolutions of shareholders’ meetings of the bank. |
| Article 29 | The board members shall have the necessary knowledge, skill, and experience for performing their duties. To achieve the ideal goal of corporate governance of a bank, the board of directors shall have the following abilities:
1. ability to make operational judgment;
2. ability to perform accounting and financial analysis;
3. ability to conduct management administration;
4. ability to manage risks;
5. ability to conduct crisis management;
6. possession industrial knowledge;
7. possession perspective of international market;
8. ability to lead; and
9. ability to make decisions. |
| Article 30 | A bank shall stipulate a fair, impartial, and open procedure for the election of directors in accordance with the Company Law, and shall adopt the cumulative voting mechanism or other methods set forth in the articles of incorporation sufficient to fully reflect the opinions of the shareholders.
Directors of a bank shall comply with the requirements set forth in the "Regulations Governing Qualification Requirements For Responsible Persons of Banks.” |
| Article 31 | A bank may designate an appropriate number of independent directors based on the operational scale and business needs. Shareholders shall recommend candidates, who are natural persons that comply with the qualification prescribed by the competent securities authority to be elected in the shareholders’ meeting. However, a TSE/GTSM listed bank shall proceed in accordance with the regulations governing independent directors prescribed by the competent securities authority, the Taiwan Stock Exchange and the GreTai Securities Market. |
| Article 32 | Clear distinctions shall be drawn between the responsibilities and duties of the chairman and its general manager. The chairman shall not also act as the general manager or they are spouses. |
| Article 33 | A bank, which has independent directors, 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 bank or other board members shall not restrict or obstruct the performance of duties by the independent directors.
A bank may set forth reasonable compensation different from that of other directors for the independent directors. |
| Article 34 | In order to achieve the goal of corporate governance, the major duties of the board of directors of a bank 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 bank;
4. review of the financial goals of the bank;
5. supervision of the result of operations of the bank;
6. supervision of the establishment of risk management mechanisms by the bank;
7. supervision of the compliance with relevant laws and regulations by the bank;
8. planning the future development of the bank;
9. maintenance of the bank image; and
10. appointment of specialists, such as CPAs. |
| Article 35 | For the purpose of developing decision-making functions and strengthening management mechanisms, the b oard of directors of a bank may, taking into account the basis of the size of the board and the number of the independent directors, set up various functional special committees and have them stipulated in the articles of incorporation.
Special committees shall be responsible to the board of directors and submit the proposals to the board of directors for approval.
Special 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 and duty shall at least be comprised 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 regulations for exercising the power and duty. |
| Article 36 | A bank may set up the audit committee, whose functions and duties are as follows:
1. examination of the accounting system, financial conditions, and the procedure for financial reports of the bank;
2. reviewing the procedures for major financial and business transactions such as acquisition or disposal of assets;
3. communications with the CPAs of the bank;
4. examination of the internal auditors and their performance;
5. assessment of the internal control of the bank;
6. assessment and supervision of the risk-tolerance of the bank, current status of risk borne, and compliance with risk management procedures; and ensuring the independence of the risk management department;
7. inspection of law compliance by the bank;
8. assessment of the qualifications of CPAs and nomination of qualified candidates.
Where a bank has independent directors, the audit committee shall consist of at least one independent director and be convened by the same. |
| Article 37 | A bank may engage a professional and competent legal counsel to provide adequate legal consultation services to the bank, or to assist the directors, the supervisors and the management to improve their knowledge of the law, for the purpose of 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 bank shall retain a legal counsel to provide assistance. |
| Article 38 | A bank shall select a professional, responsible and independent CPA to be its external auditor, who shall perform regular reviews of the financial conditions and internal control measures of the bank. 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 bank shall faithfully implement improvement actions.
A bank shall evaluate the independence of the auditor engaged by the bank regularly (at least once a year). In the event that the bank engages the same auditor without replacement for several years consecutively, or if the auditor is subject to disciplinary actions or other circumstances prejudicial to the independence of the auditor, the bank shall review the necessity of replacing the auditor, and shall submit to the board the conclusion of such review. |
| Article 39 | A bank shall hold a board meeting regularly 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.
A bank shall 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 40 | 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.
A bank with independent directors shall pay attention to the independent directors’ request of sufficient information. A TSE/GTSM listed bank shall comply with Article 33 of the Corporate Governance Best-Practice Principles for TSE/GTSM Listed Companies. |
| Article 41 | 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 interest to the detriment of the interest of the bank.
The matters that a director shall voluntarily abstain from voting as referred to in the preceding paragraph shall be clearly set forth in the rules for the proceedings of board meetings. |
| Article 42 | When a bank convenes a board meeting, relevant materials shall be duly prepared for reference and reviewed by the directors participating in the meeting at any time.
Where a bank has an audit committee or independent directors, when the board deliberates on the material financial or operational transactions, such as proposals of acquisition or the disposal of assets, sufficient consideration shall be given to the opinion of the audit committee or that of the independent directors.
During the proceeding of the board meetings, managers from the relevant departments shall sit in at the meetings, make report on the current business conditions of the bank and respond to inquiries raised by the directors, so as to assist the directors in understanding the conditions of the bank for the purpose of adopting an appropriate resolution. |
| Article 43 | Staff personnel of a bank attending board meetings shall collect and correctly record the meeting minutes in detail.
The board meeting minutes shall be signed or sealed by the chairman and secretary of the meeting, be treated as important corporate records and, during the life of the bank, shall be placed in safekeeping permanently.
Where a resolution of the board of directors violates laws, regulations, articles of incorporation, or resolutions adopted in the shareholders' meeting, and thus causes an injury to the bank, dissenting directors whose dissent can be proven by minutes or written statements will not be liable for damages. |
| Article 44 | A bank shall designate managing directors pursuant to the Company Law, in consideration of the scale and need of the board of directors.
If a bank has independent directors, it is advisable that there shall be one or more independent directors among its managing directors.
A bank shall set forth in the articles of incorporation the scope of delegation to managing directors or the chairman when the board of directors is in recess. When material interest of the bank is involved, the matter shall be disposed of by a resolution of the board of directors. |
| Article 45 | A bank shall ask the appropriate corporate department 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 and faithfully review these matters, and report the implementation situation to the board of directors. |
| Article 46 | Members of the board shall faithfully conduct corporate affairs and discharge this duty of care as a good administrator. In conducting the affairs of the bank, unless matters are reserved for resolutions in shareholders' meetings by law or in the articles of incorporation of the bank, they shall ensure that all matters will faithfully adhere to the board's resolutions.
Where a bank has independent directors, the independent directors shall perform their duties in accordance with relevant laws, regulations and the articles of incorporation of the bank so as to protect the interest of the bank and shareholders. |
| Article 47 | If a resolution of the board of directors violates law, regulations or the bank's articles of incorporation, at the request of shareholders holding shares continuously for a year 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. |
| Article 48 | The aggregate shareholding percentage of all of the directors of a bank shall comply with the laws and regulations. Restrictions on the share transfer of each director and the creation, release, or changes of any pledges over the shares held by each director shall be subject to the relevant laws and regulations, and the relevant information shall be fully disclosed. |
| Article 49 | A bank shall constitute a liability insurance contract with an insurance company for independent directors with respect to their liabilities resulting from exercising their duties. |
| Article 50 | Directors of a bank are advised to participate in training courses of law, finance, business or accounting which cover subjects relating to corporate governance upon becoming directors and throughout their terms of occupancy in accordance with the rules of the Taiwan Stock Exchange and the GreTai Securities Market. They shall also ensure that employees at all levels will enhance their professionalism and knowledge of the law. |