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| Corporate Governance | | SKFH's policy on corporate governance is based chiefly on the "Corporate Governance Best-Practice Principles for Financial Holding Companies" and "Corporate Governance Best-Practice Principles for TSEC/GTSM Listed Companies."
(1) Independent Directors and Supervisors
At SKFH's Annual General Shareholders' meeting held on June 10, 2005, amendments were passed to the Company Charter that stipulates the establishment of the positions of Independent Director and Supervisor. Election to these positions was held subsequently in accordance with the relevant laws and regulations.
SKFH currently has one Independent Director and one Independent Supervisor. The position of Independent Director is held by Dr. Cheng Chi Shih, a former head of the Department of Insurance, Ministry of Finance, and representative for the Asia region on the Executive Committee of the International Association of Insurance Supervisors (IAIS). Dr. Cheng is an insurance expert with extensive educational and professional experiences. The position of Independent Supervisor is held by Dr. Prof. Lawrence J. Lau, Vice-Chancellor of the Chinese University of Hong Kong. A former professor at the Stanford University, Dr. Lau has made outstanding research contributions in the fields of economic development, economic growth, and the economies of East Asia, including China.
When the term of the current company Directors and Supervisors concludes in 2008, the number of Independent Directors will be increased to no less than one-fifth of the total number of Directors. The Independent Directors also will be elected by a nomination system.
(2) Code of Ethics
SKFH is the first financial holding company in Taiwan to establish a code of ethics. This code serves as a guide for company Directors, Supervisors and officers (including officers holding the positions of President, Executive Vice President, Assistant Vice President, manager, heads of finance and accounts departments, and positions of equal rank, as well as other officers with management duties and signing rights) to comply with ethical standards. It serves furthermore to inform shareholders and other interested parties of the ethical standards followed at SKFH.
(3) Internal Control and Audit Systems
As part of its risk management and legal compliance policies, SKFH conducts routine business audits at least once annually and special business audits on finance, risk management, and compliance of the company and its subsidiaries at least once semi-annually. Such audits are carried out in accordance with the "Regulations Governing the Implementation of Internal Control and Audit Systems by Financial Holding Companies."
(4) Information Disclosure System
SKFH has taken the following measures to fully inform shareholders and interested parties of the company's financial affairs and operational status:
a.) Establishment of a spokesperson and acting spokesperson system
b.) Announcements to the Market Observation Post System (MOPS) as designated by the competent authority, publication of annual reports, shareholder prospectuses, and share issue prospectuses to upgrade the quality of information disclosure
c.) Disclosure on the company website of investor-related financial information; and establishment of an IR support team to provide updated information to domestic and overseas investors
d.) Holding of quarterly investor conferences to brief investors of the company's operating status; and posting of conference materials on the company website
(5) Credit Rating System
In order to reinforce investor confidence in its financial strength, SKFH has continued to commission the credit rating services of Fitch Ratings and since 2006 has commissioned the services of Standard & Poor's (S&P) for the parent and major subsidiary companies of the group. Both credit rating agencies have given solid ratings to SKFH for financial soundness and flexibility. For detailed information on the 2006 credit rating results, please go to "credit rating" page.
(6) Director and Supervisor Study System
Based on the Guidelines for "Continuing Studies by Directors and Supervisors of TSEC/GTSM Listed Companies," SKFH has drafted measures to encourage company Directors and Supervisors to pursue further study.
(7) Interested Party Transactions
SKFH has drafted "Rules on Transactions by Shin Kong Financial Holding Co. and Interested Parties" and "Measures on the Management of Credit and Non-credit Transactions by Shin Kong Financial Holding Co., its Subsidiaries, and Interested Parties" in accordance with articles 44 and 45 of the Financial Holding Company Law. | | |
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