Corporate Governance and Implementation
Deviation and causes of deviation of the Company’s actual governance from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies
|Assessment criteria||Actual governance (Note)||Deviation and causes of deviation from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies|
|I. Has the company established and disclosed its corporate governance principles based on "Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies"?||"JihSun Financial Holding Corporate Governance Practice Principles" has been established by the parent company.||None|
|II. The shareholding structure and shareholders’ equity of the Company
(I) Does the Company have the internal procedures regulated to handle shareholders’ proposals, doubts, disputes, and litigation matters; in addition, have the procedures implemented accordingly?
(II) Is the company constantly informed of the identities of its major shareholders and the ultimate controller?
(III) Has the company established and implemented risk management practices and firewalls for companies it is affiliated with?
(IV) Has the company established internal policies that prevent insiders from trading securities against non-public information?
(I) Not applicable as JihSun Financial Holding Co., Ltd. is the only shareholder.
(II) JihSun Financial Holding Co., Ltd. is the Company’s only shareholder; hence the Company’s major shareholder and ultimate shareholder with controlling interest are one and the same.
(III) The Company’s employees and assets are independent from those of its affiliated companies. “Rules Governing the Division of Authority” and the “Handling Procedures Governing the Acquisition or Disposal of Assets” have been established to segregate areas of authority. The Bank was also financially independent from its affiliated companies with performances and areas of responsibility clearly segregated. The above status was constantly under review by auditors. Firewalls were properly established. Credit extension and non-credit extension transactions to the Company’s representative, major shareholders, affiliated companies, and stakeholders are conducted in compliance with Article 44 and 45 of the Financial Holding Company Act and other regulations. The Company has also established internal policies such as “Operating Rules for Transactions Other Than Credit Extension with Interested Parties of JihSun Securities Co., Ltd.” to ensure compliance with the above regulations.
(IV) According to the Company’s “Internal Control System” regarding consigned trading and transaction operations, employees' trade orders need to be checked for involvement of non-public information before processing. In addition, transaction records are printed in chronological order at the end of each day and are checked and signed by the head of trade department to determine whether transactions involved non-public information.
|III. The constitution and obligations of the Board of Directors
(I) Does the Board of Directors have diversified policies regulated and implemented substantively according to the composition of the members?
(II) Apart from the Remuneration Committee and Audit Committee, has the Company assembled other functional committees at its own discretion?
(III) Has the Company established a set of policies and assessment tools to evaluate the board's performance? Is performance evaluated regularly at least on an annual basis?
(IV) Are external auditors' independence assessed on a regular basis?
|(I) The Company does not have rules on the diversity of the board of directors.
The parent company, however, has implemented "JihSun Financial Holding Director Election Rules" that suggest diversity among board members.
(II) The Company has complied with regulations and its Articles of Incorporation and appointed three independent directors and established an Audit Committee and the Remuneration Committee. No other functional committees was assembled.
(III) Currently, board of directors' performance is evaluated by reporting "board functionality (meeting attendance) and directors' ongoing education" to the Remuneration Committee. The Company has yet to establish dedicated policy for evaluating board of directors' performance.
(IV) 1. The Company has taken steps to make sure that its financial statement auditor does not meet the definition of a stakeholder, as described in Article 45 of the Financial Holding Company Act. Not only is the auditor required to produce a declaration of independence on a yearly basis, all members of the CPA firm’s audit team are also subject to the following assessments of independence, and the outcomes of which are reported to the Company’s Audit Committee and board of directors:
(1) Members of the audit team are free of any direct or indirect financial involvement with the Company and its related parties that would compromise their independence.
(2) Members of the audit team had not assumed the role of director, supervisor, or any position within the Company in the last two years that would materially affect their audit performance.
(3) Members of the audit team are free of all violations described in Statement of CPA Professional Ethics No. 10 that may compromise their independence.
2. The Company assesses auditors' independence on a yearly basis, and has obtained Declaration of Independence issued from the appointed CPAs and the audit team members for review by the Company’s Audit Committee and Board of Directors; also, the Company has not retained the service of the same CPAs for seven consecutive years. CPAs Jun-Kuang Chen and Feng-Hui Li of KPMG were appointed as auditors for the Company's 2016 financial statements. This decision was resolved during the 23rd meeting of the 3rd Audit Committee and the 23rd meeting of the 14th board of directors held on 3.17.2016.
|IV. Where the financial holding company is a TWSE/TPEx listed company, has the company designated a department or personnel that specializes (or is involved) in corporate governance affairs (including but not limited to providing directors/supervisors with the information needed to perform their duties, convention of board meetings and shareholder meetings, company registration and changes, preparation of board meeting and shareholder meeting minutes etc)?||The Company has specialized units to handle corporate governance affairs.||None|
|V. Has the Company provided proper communication channels and created dedicated sections on its website to address corporate social responsibility issues that are of significant concern to stakeholders (including but not limited to shareholders, employees, customers and suppliers)?||The Company has created a Stakeholder Engagement section on its website and established contact window at its Administration Division to communicate and respond to corporate social responsibility issues that are of concern to stakeholders.||None|
|VI. Does the Company engage a share administration agency to handle shareholder meeting affairs?||JihSun Financial Holding Co., Ltd. is the only shareholder of the Company. According to Article 128-1 of the Company Act, the board of directors may exercise authority decision authority on shareholders' behalf, and hence is not required to engage a share administration agency for shareholder meeting-related affairs.||None|
|VII. Information disclosure
(I) Has the Company established a website that discloses financial, business, and corporate governance-related information?
(II) Has the Company adopted other means to disclose information (e.g. English website, assignment of specific personnel to collect and disclose corporate information, implementation of a spokesperson system, broadcasting of investor conferences via the company website)?
(I) The Company has established its own website for introducing services and promotions. The Company’s corporate governance information is disclosed on the website of its parent company – JihSun Financial Holding Co., Ltd.
(II) 1. The Spokesperson Policy and the Agency Policy have been established.
2. A system has been established for posting public information over the Internet.
3. Assigned dedicated personnel for the collection of information relating to the Company in order to facilitate more transparent and timely disclosure of information.
4. The Company has disclosed all information relevant to corporate governance in compliance with the regulations.
|VIII. Does the Company have other information that enables a better understanding of the Company's corporate governance practices (including but not limited to employee rights, employee care, investor relations, supplier relations, stakeholders' interests, continuing education of directors/supervisors, implementation of risk management policies and risk measurements, implementation of customer policy, and insuring against liabilities of company directors and supervisors)?
||(I) Directors’ and supervisors’ ongoing education: The Company’s directors (including independent directors) had completed their mandatory courses and learning hours in 2016.
(II) For risk management policies and risk assessment standards, please refer to P.147 ~ P.153 of this annual report.
(III) Implementation of consumer or customer protection policies: The Company has followed parent company's "JihSun Financial Holding and Subsidiaries Customer Data Confidentiality Regulations" to protect customers’ interests.
(IV) The Company’s insurance against directors’ and supervisors’ liabilities: The Company is insured against the liabilities of its directors and supervisors in accordance with Article 39 and 49 of the Corporate Governance Principles for Securities Firms. The insurance coverage spans across the duration of directors’ and supervisors’ active duty.
(V) The rights and care for employees: The Company is especially dedicated to improve employees’ work efficiency and loyalty by providing the best welfare and maintaining employer/employee relationship through care and protection of employees’ rights.
(VI) Investor relations: to enhance the transparency of financial and business information, the Company has appointed a spokesperson and an acting spokesperson to address the public with accurate and reasonable explanations to investors' queries. Furthermore, the Company makes regular public announcements as required by law and publishes information to the Market Observation Post System and to JihSun Holding's website for easy access.
(VII) Supplier relations: the Company has maintained good relationship with its suppliers and developed mutual trust through sharing of information, which in turn raises satisfaction and loyalty between the two parties and facilitates positive influences to work efficiency.
(VIII) Stakeholders’ interests: The Company’s transactions with its stakeholders are carried out in accordance with its relevant policies and stringent operating procedures. The Company’s Directors complied with the “Board of Directors Conference Rules of JihSun Securities Co., Ltd.” by disassociating themselves from resolutions which pose conflicting interests.
Note: Always provide explanation in the summary description column, regardless of whether there are any deviations from the best practice principles. Amendment explanation:
1. On September 30, 2016, Taiwan Stock Exchange Corporation amended its Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies that require additional disclosure on whether a company has department or personnel that specializes (or is involved) in corporate governance-related affairs. Item 4 was added to the Assessment Criteria, while existing Items 4~6 were renumbered Items 5~7.
2. To enhance disclosure on stakeholder communication and protection of stakeholders' interests across TWSE/TPEx listed companies, Item 5 of the Assessment Criteria was amended to outline minimum requirements for stakeholders.
3. Considering the fact that the Corporate Governance Best-Practice Principles do not require preparation of corporate governance self-assessment reports, whether by the Company or by an external institution, and that corporate governance evaluation is already being performed by TWSE Corporate Governance Center on all TWSE and TPEx listed companies while "company's voluntary participation in other corporate governance assessment systems" is already being recognized as an added credit, the additional benefits of making related disclosures in the annual report seemed immaterial. For this reason, the Company had decided to remove Item 8 and Note 2 from the Assessment Criteria, and renumber Item 7 to Item 8 with change of wordings.
4. Considering the fact that TWSE Corporate Governance Center has been disclosing corporate governance assessment results on TWSE/TPEx companies on a yearly basis since April 2015, and that the Company was able to improve corporate governance by following the abovementioned results, Item 9 was therefore added to the Assessment Criteria.