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Title	Taipei Exchange Directions for Compliance Requirements for the Appointment and Exercise of Powers of the Boards of Directors of TPEx Listed Companies CH
Date	2018.12.27 ( Amended )

Article Content

Article 1	These Directions are adopted to promote corporate governance and effective implementation of the functions of boards of directors.
Article 2	These Directions are adopted pursuant to the Contract for TPEx Trading of Securities and the Contract for TPEx Primary Listing of Stock of a Foreign Issuer.
Article 3	The appointment of the board of directors ("board") by a TPEx listed company and the exercise of its powers shall be subject to the Company Act, the Securities and Exchange Act, the laws and regulations of the competent authority, as well as these Directions and other applicable rules and regulations of the TPEx. The term "TPEx listed company" as used in these Directions means a domestic TPEx listed company or foreign TPEx primary listed company within the scope of Chapter II of the TPEx Rules Governing Securities Trading on the TPEx.

Article 4	A TPEx listed company shall have not less than 5 members on its board, and shall appoint independent directors numbering not less than 2 persons and not less than one-fifth of the board seats. However, if a TPEx listed company has established an audit committee, as required by the Securities and Exchange Act, the laws and regulations of the competent authority, or the rules and regulations of the TPEx, it shall appoint not less than 3 independent directors.
Article 5	The main agenda items, operational procedures, required content of meeting minutes, public announcements, and other compliance requirements for board of directors meetings ("board meetings") of a TPEx listed company shall be subject to the Regulations Governing Procedure for Board of Directors Meetings of Public Companies.
Article 6	A TPEx listed company shall, in accordance with the laws and regulations of the competent authority, expressly state in its articles of incorporation that it adopts a candidate nomination system for the election of directors.
Article 7	The appointment of independent directors by a TPEx listed company and the exercise of their powers shall be subject to the Securities and Exchange Act and the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies.
Article 8	When the number of directors of a TPEx listed company falls below 5 due to the dismissal of a director for any reason, the company shall hold a by-election at its next shareholders meeting to fill the vacancy. However, when the number of directors falls short by one-third or more of the board seats stated in its articles of incorporation, the company shall convene a special shareholders meeting within 60 days from the date of occurrence of the fact ("date of occurrence") to hold a by-election to fill the vacancies. When the number of independent directors of a TPEx listed company falls below the required number prescribed in Article 4 above or stated in its articles of incorporation, the company shall hold a by-election at its next shareholders meeting to fill the vacancies. When all independent directors are dismissed, the company shall convene a shareholders meeting within 60 days from the date of occurrence to hold a by-election to fill the vacancies.

Article 9	The board of a TPEx listed company shall appoint an audit committee, a remuneration committee, and any other committees as required by the Securities and Exchange Act, the laws and regulations of the competent authority, and the rules and regulations of the TPEx, and may voluntarily appoint other functional committees. A functional committee shall adopt an organizational charter, subject to approval by board resolution. The organizational charter shall provide for matters including the number, term of office, and powers of committee members, as well as the rules of procedure for its meetings and resources to be provided by the company to facilitate its exercise of powers.
Article 10	An audit committee shall be composed of the entire number of independent directors. It shall consist of not less than 3 members, 1 of whom shall be the committee convener, and at least 1 of whom shall have accounting or financial expertise.
Article 11	The appointment of an audit committee by a TPEx listed company and the exercise of its powers shall be subject to the Securities and Exchange Act and the Regulations Governing the Exercise of Powers by Audit Committees of Public Companies.
Article 12	A remuneration committee shall consist of not less than 3 members, a majority of whom shall be independent directors. The committee convener and meeting chair shall be elected by all members from among the independent director members. When the number of members of the remuneration committee falls below 3 due to the dismissal of a member for any reason, the company shall convene a board meeting within 3 months from the date of occurrence to appoint another member to fill the vacancy. However, if an independent director member is dismissed and there is no other independent director to fill the vacancy, then before an independent director is elected at a by-election in accordance with Article 8, the company may appoint a person without the qualification for an independent director to temporarily serve as a member of the remuneration committee to fill the vacancy, who shall, after the by-election, be replaced by the elected independent director.
Article 13	The appointment of a remuneration committee by a TPEx listed company and the exercise of its powers shall be subject to the Securities and Exchange Act and the Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Stock Exchange or Traded Over the Counter.

Article 14	Board members of a TPEx listed company shall faithfully perform their duties and exercise the duty of care of a good administrator, and shall exercise their powers with a high level of self-discipline and prudence. They shall conduct or ensure that the affairs of the company are conducted in accordance with board resolutions, except for matters that are otherwise reserved by law or in the articles of incorporation for approval by resolution at shareholders meetings.
Article 15	A TPEx listed company may not impede, refuse, or evade the actions of independent directors in the performance of their duties. As independent directors deem necessary for the performance of their duties, they may request the board to appoint relevant personnel, or may at their own discretion hire professionals, to provide assistance in performing their duties, with any necessary expenses incurred to be borne by the TPEx listed company. A TPEx listed company shall adopt standard operating procedures for handling requests made by directors (covering issues including personnel resources and deadlines for handling requests), and shall adequately and timely respond to the directors' requests.
Article 16	A TPEx listed company shall purchase and maintain liability insurance for all directors and supervisors with respect to their legally required liabilities for damages arising from their performance of duties during the term of office.

Article 17

A TPEx listed company shall disclose information on remuneration paid to its directors, supervisors, general manager, and assistant general managers during the most recent fiscal year in accordance with the Regulations Governing Information to be Published in Annual Reports of Public Companies and other applicable laws and regulations of the competent authority.

Article 18

A TPEx listed company each year shall regularly evaluate the performance of the board and individual board members through self-evaluation or peer review by board members and report the performance evaluation results to the TPEx.

Article 19

Performance evaluations of the board shall cover the following aspects, with appropriate evaluation indicators being adopted in consideration of the company's needs:

Participation in the operation of the company.
Improvement in the quality of decision making of the board.
Composition and structure of the board.
Election/appointment and continuing education of the directors.
Internal controls.

Performance evaluations of board members (through self-evaluation or peer review) shall cover the following aspects and be subject to appropriate adjustments with the company's needs being taken into consideration:

Alignment of the goals and mission of the company.
Awareness of the duties of a director.
Participation in the operation of the company.
Management of internal relationships and communication.
Professionalism and continuing education of the directors.
Internal controls.

Article 20	The board of a TPEx listed company shall appoint an agenda working group in accordance with the Regulations Governing Procedure for Board of Directors Meetings of Public Companies. It is advisable that a TPEx listed company should have in place, according to its size, business conditions, and management needs, qualified corporate governance personnel in an appropriate number and appoint one chief corporate governance officer as the most senior executive for corporate governance affairs. A TPEx listed company shall appoint a chief corporate governance officer if it has paid-in capital of NT$10 billion or more or if it is a financial enterprise that is so required by the competent authority. The appointment of a chief corporate governance officer by a TPEx listed company shall be subject to these Directions, provided, where the laws and regulations of the competent authority provide otherwise, such provisions shall govern.
Article 21	The corporate governance affairs described in paragraph 2 of the preceding article shall cover, at a minimum, the following: Handling of matters relating to board meetings and shareholders meetings in accordance with law. Preparation of minutes of board meetings and shareholders meetings. Provision of assistance in onboarding and continuing education of the directors and supervisors. Provision of information required for the performance of duties by the directors and supervisors. Provision of assistance to the directors and supervisors in complying with laws and regulations. Other matters specified by the articles of incorporation or by contract.
Article 22	A chief corporate governance officer is a managerial officer of the company and shall be governed by the provisions of the Company Act and the Securities and Exchange Act with respect to managerial officers. Unless otherwise provided by law or regulation, a TPEx listed company may appoint a person holding another position in the company to concurrently serve as its chief corporate governance officer. Where a TPEx listed company appoints a person holding another position in the company to concurrently serve as its chief corporate governance officer, it shall ensure that the functions and duties of both the principal position and the concurrent position of that person are discharged effectively and without any conflict of interest or violation of internal control.
Article 23	A chief corporate governance officer shall be a qualified, practice-eligible lawyer or certified public accountant (CPA) or have served in a managerial position for at least 3 years in a securities, financial, or futures related institution or a public company in a unit handling legal affairs, financial affairs, stock affairs, or the corporate governance affairs specified in Article 21.
Article 24	A TPEx listed company shall arrange for continuing professional education (CPE) for its chief corporate governance officer. A chief corporate governance officer shall complete a minimum of 12 CPE hours per year, except that an initially appointed chief corporate governance officer shall complete a minimum of 18 CPE hours within 1 year from the date of appointment. The continuing education scope, continuing education system, and other continuing education affairs with respect to the CPE shall be governed mutatis mutandis by the Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies.
Article 25	In the event of resignation or dismissal of a chief corporate governance officer appointed under Article 20, paragraph 3, the TPEx listed company shall appoint another person to fill the vacancy within 1 month from the date of occurrence.

Article 26	In the event of a violation of Article 8, paragraph 2 by a TPEx listed company, the TPEx shall impose a penalty of NT$100,000 on the company and require it to hold a by-election within 60 days from the date of notification by the TPEx. If the TPEx listed company fails to hold a by-election to fill any independent director vacancy by the deadline specified in the preceding paragraph, the TPEx may classify the company's TPEx listed securities as "securities under an altered trading method." If no by-election is held within 3 months from the date the trading method is altered, the TPEx may suspend the trading of its TPEx listed securities and report the suspension to the competent authority for recordation. If no by-election is held within 6 months from the suspension of trading, the TPEx may terminate the TPEx trading of its securities and report the termination to the competent authority for recordation.
Article 27	If a TPEx listed company violates any requirements under Article 6; Article 8, paragraph 1; Article 9, paragraph 1; Article 10; Article 12; Article 15, paragraph 2; Article 16 to 18; Article 20, paragraph 3; or Article 21 to 25, the TPEx may impose a penalty of NT$30,000 on the company and require it to make correction within a specified period of time. If the company fails to make the correction within the time limit, a penalty of NT$10,000 may be imposed on it for each business day beyond the deadline until the correction is made.
Article 28	If a TPEx listed company is in any of the circumstances set out in the preceding 2 articles, the TPEx may also disclose to the public the information on the penalty measures imposed on the company.
Article 29	Reporting of information and measures against violations under these Directions shall be governed by the TPEx Rules Governing Information Reporting by Companies with TPEx Listed Securities and the TPEx Procedures for Verification and Disclosure of Material Information of Companies with TPEx Listed Securities.

Article 30

These Directions, and any amendments hereto, shall enter into force by public announcement after approval by the competent authority.