FSC Registers Amendments by the Bankers Association to the Corporate Governance Best Practice Principles for Financial Holding Companies and Corporate Governance Best Practice Principles for Banks
2022-10-13
Press Release
FSC Registers Amendments by the Bankers Association to the Corporate Governance Best Practice Principles for Financial Holding Companies and Corporate Governance Best Practice Principles for Banks
October 13, 2022
To strengthen the corporate governance of financial holding companies and banks, the Financial Supervisory Commission (FSC) has supervised the Bankers Association of the Republic of China (hereinafter referred to as the Bankers Association) to amend the "Corporate Governance Best Practice Principles for Financial Holding Companies" and "Corporate Governance Best Practice Principles for Banks," to address corporate governance issues discovered by supervisory authorities regarding the interactions between financial institutions and major shareholders and the operations of the board of directors. The amended Corporate Governance Best Practice Principles have been registered and will be forwarded by the Bankers Association to member institutions for compliance. The key points of the amendment are as follows:
1. Added principles for compliance when a company communicates and interacts with a shareholder with controlling power over the company:
(1) In principle, a shareholder with controlling power over the company shall interact with the company through their representative, who was elected as a director of the financial holding company (bank). The director representative may, where necessary, invite management personnel of the company to accompany them in communicating with the shareholder. The financial holding company (bank) shall maintain records of the communication.
(2) When a shareholder with controlling power over the company wants to make suggestion on agenda items of the board meeting or the company's business decisions, they shall ask their director representative to propose the recommendation in the board meeting or the functional committee to exchange opinions and negotiate. The shareholder may not convene a meeting without authorization or inappropriately intervene in the company's decisions in another manner.
2. Added regulations for the exercise of powers by the chairman of the board of directors:
(1) If the chairman of the board of directors carries out their duties through remote work, work from home, video conference, or other similar methods for an extended period, the chairman shall loyally conduct business operation and perform the duty of care of a good administrator. In conducting the company affairs, they shall exercise their powers highly self-disciplined and prudently. In addition, the chairman shall ensure the effective execution of their duties.
(2) Where the chairman is on leave or cannot exercise their power and authority for any cause, the acting chairman shall be selected under Paragraph 3, Article 208 of the Company Act. When the chairman designates the acting chairman or when the directors elect the acting chairman from among themselves, the candidate must meet the principle of the separation of banking and commerce specified in the Regulations Governing Qualification Requirements for the Founder or Responsible Persons of Financial Holding Companies and Concurrent Serving Restrictions and Matters for Compliance by the Responsible Persons of a Financial Holding Company (Regulations Governing Qualification Requirements and Concurrent Serving Restrictions and Matters for Compliance by the Responsible Persons of Banks). The acting chairman's exercise of powers and duties during the period may not exceed those of the chairman. If there are restrictions, they must be listed in detail before the appointment.
3. The Bankers Association referenced the articles of the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” amended in recent years and added related regulations. It also referenced the core strategy of the “Sustainable Development Roadmap” to add the provision that companies are advised to create a governance structure and unit to promote sustainable development and assess and manage risk for the environmental, social, or governance issues related to the company’s operations. It also requires the board of directors shall fulfill sustainable development obligations.
The FSC states that the operations of financial holding companies form the basis of the trust of society and the implementation of corporate governance is particularly critical. It aims to ensure the progression of corporate governance of financial holding companies and banks with the amendment and implementation of the two Corporate Governance Best Practice Principles specified above. The FSC shall continue supervising financial institutions in enhancing and implementing related systems. The FSC expects to spur the boards of directors and senior management of financial institutions to attach importance to a culture that values integrity and accountability, to foster the creation of sound values and appropriate conduct from the top-down, and to establish stable and robust business management systems.
Contact unit: Legal Affairs Division, Banking Bureau
Telephone: (02) 8968-9650
If you have any questions, please send an email to:
https://fscmail.fsc.gov.tw
FSC Registers Amendments by the Bankers Association to the Corporate Governance Best Practice Principles for Financial Holding Companies and Corporate Governance Best Practice Principles for Banks
October 13, 2022
To strengthen the corporate governance of financial holding companies and banks, the Financial Supervisory Commission (FSC) has supervised the Bankers Association of the Republic of China (hereinafter referred to as the Bankers Association) to amend the "Corporate Governance Best Practice Principles for Financial Holding Companies" and "Corporate Governance Best Practice Principles for Banks," to address corporate governance issues discovered by supervisory authorities regarding the interactions between financial institutions and major shareholders and the operations of the board of directors. The amended Corporate Governance Best Practice Principles have been registered and will be forwarded by the Bankers Association to member institutions for compliance. The key points of the amendment are as follows:
1. Added principles for compliance when a company communicates and interacts with a shareholder with controlling power over the company:
(1) In principle, a shareholder with controlling power over the company shall interact with the company through their representative, who was elected as a director of the financial holding company (bank). The director representative may, where necessary, invite management personnel of the company to accompany them in communicating with the shareholder. The financial holding company (bank) shall maintain records of the communication.
(2) When a shareholder with controlling power over the company wants to make suggestion on agenda items of the board meeting or the company's business decisions, they shall ask their director representative to propose the recommendation in the board meeting or the functional committee to exchange opinions and negotiate. The shareholder may not convene a meeting without authorization or inappropriately intervene in the company's decisions in another manner.
2. Added regulations for the exercise of powers by the chairman of the board of directors:
(1) If the chairman of the board of directors carries out their duties through remote work, work from home, video conference, or other similar methods for an extended period, the chairman shall loyally conduct business operation and perform the duty of care of a good administrator. In conducting the company affairs, they shall exercise their powers highly self-disciplined and prudently. In addition, the chairman shall ensure the effective execution of their duties.
(2) Where the chairman is on leave or cannot exercise their power and authority for any cause, the acting chairman shall be selected under Paragraph 3, Article 208 of the Company Act. When the chairman designates the acting chairman or when the directors elect the acting chairman from among themselves, the candidate must meet the principle of the separation of banking and commerce specified in the Regulations Governing Qualification Requirements for the Founder or Responsible Persons of Financial Holding Companies and Concurrent Serving Restrictions and Matters for Compliance by the Responsible Persons of a Financial Holding Company (Regulations Governing Qualification Requirements and Concurrent Serving Restrictions and Matters for Compliance by the Responsible Persons of Banks). The acting chairman's exercise of powers and duties during the period may not exceed those of the chairman. If there are restrictions, they must be listed in detail before the appointment.
3. The Bankers Association referenced the articles of the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” amended in recent years and added related regulations. It also referenced the core strategy of the “Sustainable Development Roadmap” to add the provision that companies are advised to create a governance structure and unit to promote sustainable development and assess and manage risk for the environmental, social, or governance issues related to the company’s operations. It also requires the board of directors shall fulfill sustainable development obligations.
The FSC states that the operations of financial holding companies form the basis of the trust of society and the implementation of corporate governance is particularly critical. It aims to ensure the progression of corporate governance of financial holding companies and banks with the amendment and implementation of the two Corporate Governance Best Practice Principles specified above. The FSC shall continue supervising financial institutions in enhancing and implementing related systems. The FSC expects to spur the boards of directors and senior management of financial institutions to attach importance to a culture that values integrity and accountability, to foster the creation of sound values and appropriate conduct from the top-down, and to establish stable and robust business management systems.
Contact unit: Legal Affairs Division, Banking Bureau
Telephone: (02) 8968-9650
If you have any questions, please send an email to:
https://fscmail.fsc.gov.tw
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Update:
2022-12-07