Wed, Jul 12, 2017 page12

• FSC takes aim at corporate governance regulations

  • By Ted Chen / Staff reporter
  • • 
    • 
    • 

  The Financial Supervisory Commission (FSC) is to improve its corporate governance rules in a bid to reverse the public’s falling confidence in the nation’s financial sector, following a series of controversial cases.

  A meeting was held between financial services companies, regulatory agencies, law offices and industry associations, producing several recommended changes to corporate governance best practice principles for financial services companies and banks, the commission said.

  “As corporate governance lapses at financial companies affect the stability of the nation’s financial sector, they must be subject to more stringent rules than other publicly traded companies,” Banking Bureau Deputy Director-General Sherri Chuang (莊琇媛) said.

  Although the new measures are drafted as changes to the recommended best practice principles, which are not enforceable by law, a bill to include the new rules in the Banking Act (銀行法) is to be introduced during the next legislative session beginning in September, Chuang said.

  Chuang said the commission is also mulling extending the legal liabilities to include financial services companies as well as the perpetrator of a financial crime, such as a financial planner who sold questionable risky derivative products without regard of a client’s risk profile.

  To ensure the autonomy and oversight function of independent directors, companies have been recommended to justify their nominations at annual shareholders’ meetings.

  In addition, the performance of existing independent directors should be reviewed to determine whether they should retain their positions, the commission said.

  To ensure their commitment, an independent director of a financial services company must not hold the same post at more than four other companies, compared with five for non-financial services companies, the commission said.

  Most notably, financial companies must establish an effective whistle-blower mechanism that ensures that reports on illegal or unethical activities can be submitted without hindrance, it said.

  The commission said the mechanism should also protect the identity of the whistle-blower to protect the person from retribution.

  Financial services companies are also recommended to enlist third-party experts to prevent irregular transactions between interested parties and overt exposure to risk.

  In related news, the number of active traders on the local bourse rebounded as the TAIEX soared past the 10,000-point mark, the commission said.

  During the last quarter, the number of active traders with turnover exceeding NT$500 million (US$16.34 million) rose to 683, marking a new high in the past two years, with traders with turnover exceeding NT$100 million also rising to 9,526, the highest in the past 18 months.

  The commission attributed the increases to improving economic and export growth momentum, fewer “black swan” events in international markets, as well as the halving of the day-trading tax, Securities and Futures Bureau Chief Secretary Tsai Li-ling (蔡麗玲) said.

  The outcome also shows that foreign and domestic institutional investors were not the only contributors to the stock market rally since the beginning of this year and that retail investors have also rejoined the market, the commission said.

  The commission said that due to the expansion of credit lines such cash and stock loans by security brokerages, margin utilization is losing its significant as a technical indicator gauging participation by retail investors.
• Most Popular

  • 1

    Bologna advance to face AC Milan in Coppa final

  • 2

    Bukele proposes prisoner swap with Maduro

  • 3

    Wild’s top line too much for Vegas Golden Knights

  • 4

    HK, Macau residency rules tightened

  • 5

    Eric Chu, 2 others to be questioned for leading illegal assembly last week