Director Election Mechanism
Fubon Financial Holdings’ board of directors is the Company’s highest corporate governance body. Board members are elected once every three years (their current terms run from June 16, 2017 to June 15, 2020), and a system requiring all director candidates to be nominated has been in place since 2014. The Corporate Governance and Sustainability Committee recommends director (and independent director) candidates based on independence standards set by regulatory agencies and the Company’s “Procedures for the Election of Directors”.
The Corporate Governance and Sustainability Committee is also responsible for nominating candidates to serve on Fubon Financial Holdings’ board of directors. Since 2017 was a board election year for Fubon Financial Holdings, a comprehensive re-election was conducted, and six nominees for independent director were recommended to the board. With independent directors accounting for 40% of all directors, Fubon has the highest proportion of independent directors of any financial holding company.
|Age Distribution of Fubon Financial Holdings Board Directors|
|Age||Below 40||40~60||Above 60|
“Directors and Officers Liability Insurance” has been purchased on an annual basis since 2002 to mitigate the legal and financial risks of Fubon Financial Holdings and its subsidiaries and their board directors, board supervisors, and key personnel. The step was taken in consideration of the importance of board members and key personnel being able to exercise their rights and fulfill their duties and has reinforced the Company’s corporate governance mechanism.
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Board of Directors’ Independence and Diversity
Fubon Financial Holdings and its subsidiaries do everything they can to strengthen the independence and diversity of their boards of directors. Independent director candidates are required to personally fill out “nominee qualification checklists” before they are nominated to confirm their professional qualifications and independence. To maintain the board’s independence, external directors (including independent directors) continue to account for more than half of the seats on the board. Also, no independent directors have effective terms of longer than nine years, ensuring that their independence will not be compromised by serving in the same role for too long and that they will fulfill their duties objectively.
In order to increase the independence of the boards of directors of subsidiaries, the Company has gone to great lengths to implement a diversity policy for the composition of the board of directors which ensures that professional ability and gender are given balanced consideration. It is hoped that this will facilitate the inclusion of different backgrounds and pool together different views for more optimized decision-making. In 2015, the Company amended the “Procedures for the Election of Directors” to clearly stipulate that the composition of the board members shall take into consideration certain basic criteria including gender, age, nationality, and culture in addition to professional background, industry experience, and other professional knowledge and skills. At present, the board of directors of Fubon Financial Holdings includes one independent director who is a foreign national along with three directors who are women.
Seats on the Boards of Fubon Financial Holdings and its Subsidiaries
|Internal Directors||External Directors (including independent directors)||Total|
|Fubon Financial Holdings||6||9(6)||15|
|Taipei Fubon Bank||9||6(5)||15|
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Board of Directors’ Operations
Fubon Financial Holdings’ Board of Directors meets at least once per quarter. In 2017, it held six regular meetings and three extraordinary meetings, and the actual attendance rate was 91% (100% if attendance by proxy is included).
An Overview of Important Company Rules and Guidelines Formulated and Passed or Amended by the Board of Directors in 2017 is as Follows
|Board Rules and Regulations||Articles of Association; Board of Directors Meeting Policy; Rules Governing the Scope of Powers of Independent Directors; Regulations Governing Board Performance Reviews; Organizational Regulations of the Audit Committee|
|Corporate Governance||Procedures for Ethical Management and Conduct Guidelines; Code of Ethical Conduct; Corporate Governance Best Practice Principles; Corporate Social Responsibility Best Practice Principles; Ethical Corporate Management Best Practice Principles|
|Internal Control||Procedure for Acquisition and Disposal of Assets; Internal Control System; Accounting Policy|
|Investment Management||Guidelines for Managing Total Investments in Mainland China; Standards for Reporting Transactions of Major Assets of Subsidiaries to the Board of Directors of Fubon Financial Holdings|
|Risk Management||Risk Management Policies; Market Risk Management Policies; Reputation Risk Management Policies|
|Legal Compliance||Legal Compliance System and Management Policy; Guidelines for Assisting Employees Involved in Job-Related Litigation|
|Personnel Management System||Standards for Deferring Bonuses to Financial Market Transaction and Sales Related Personnel; Guidelines for Assisting Employees Involved in Job-Related Litigation; Regulations Governing Appointment and Dismissal of Managers; Regulations Governing Employee Stock Ownership Plans; Working Guidelines|
|Consumer Protection||Financial Consumer Protection Management Guidelines|
|Interested Party Transactions||Guidelines for Managing Interested Party Transactions|
For details concerning important resolutions reached by the board of directors in 2017, please refer to Section 3.4.13(2) "Important Board Resolutions" on page 85–86 of the 2017 Annual Report.
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Board of Directors’ Performance Evaluation
To establish a board feedback mechanism to enhance the effectiveness of board operations, Fubon Financial Holdings conducts assessments in accordance with The “Evaluation Criterion for the Performance of Board of Directors” formulated and passed by the board of directors, including carrying out self-assessments for individual board members and performance reviews of the board of directors as a whole.
In 2015, the Company established the Regulations Governing Board Performance Reviews by following the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies and the TWSE template. It also started carrying out self-assessments for individual board members and performance reviews of the board of directors as a whole in the same year. The results have been improving every year.
The Company revised the “The Evaluation Criterion for the Performance of Board of Directors” in 2016 by mandating professional and independent evaluations of the board by thirdparty organizations once every three years.It also incorporated ESG participation as a performance indicator in response to the growing global emphasis on sustainable (ESG) operations.Qualitative and quantitative indicators are identified and categorized at the same time. Evaluations by third party organizations above will start taking place in 2018.
The Company revised the Evaluation Criterion for the Performance of Board of Directors in 2017 by including the process under performance evaluation of functional committees. Indicators relevant to functional committees and questionnaires were added, and the process was renamed “The Evaluation Criterion for the Performance of Board of Directors and Functional Committees”. The results on performance of the board of directors and the functional committees in 2017 were submitted to the board meeting in February 2018.
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Avoiding Conflict of Interests
Fubon Financial Holdings has formulated a clearly-defined system for ensuring the avoidance of conflicts of interests among directors. In addition to requiring directors to avoid certain situations stipulated by relevant laws and regulations, it also stipulates that directors shall independently recuse themselves if a potential conflict exists for various issues, including: matters involving the appointment of a manager of the Company or a board director or supervisor of a subsidiary, matters involving the lifting of non-competition restrictions, and the like. In addition, relevant regulations governing how Fubon Financial Holdings and its subsidiaries may conduct transactions with related parties have also been fully implemented in a way that ensures the interests of the Company are given priority and fair trade principles are respected to prevent the pursuit of personal gain. For more information on this subject, please refer to Section 3.4.1 “Functionality of Board of Directors”, Other matters that shall be recorded (2) on pages 35-39 of the 2017 Annual Report.
Directors’ Continuing Education
The Company puts a premium on the continuing education of board members and has initiated “Directions for the Implementation of Continuing Education for Directors” to help them keep up with the latest corporate governance and CSR concepts. Experts and scholars are invited, for example, to serve as lecturers in continuing education classes organized for directors and supervisors of the financial holding company and its subsidiaries.Board members are also encouraged to participate in outside workshops or seminars, such as a seminar on good public welfare practices held by the National Association of Industry and Commerce, to strengthen the board’s professional knowledge and create value for Fubon.
Furthermore, in 2017, Fubon Financial Holdings organized two 3-hour classes focused on the impact of artificial intelligence entitled “Building Intelligent Robots for Commercial Insurance”and “The AI Revolution & Opportunities for Banking Industry”, helping directors to stay up to date on the latest knowledge. In total, Fubon Financial Holdings’ directors participated in more than 127 hours of continuing education. For more details concerning the continuing education of Fubon Financial Holdings’ directors, please refer to Section 3.4.1 “Functionality of Board of Directors”, d. Enhancement of Directors Expertise, on page 40–42 of the Fubon Financial Holdings Annual Report.
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