Mega Bank Annual Report 2017

13 Annual Report 2017 -13- II. Corporate Governance Implementation Status and Deviations from “ Corporate Governance Best-Practice Principles for Banks ” As of December 31, 2017 Evaluation Item Implementation Status Yes No Abstract Illustration A. Ownership Structure and Shareholders ’ Equity 1. Does the Bank establish an internal operating procedure to deal with shareholders ’ suggestions, doubts, disputes and litigations, and implement based on the procedure? 3 „ The Bank is a 100% owned subsidiary of Mega Financial Holding Company (“Mega FHC”). The Bank’ s operation and management, financial business information and audit management are handled in accordance with the “Regulations on Supervision of Mega FHC ’s Subsidiaries”. Recommendations or questions regarding the Bank ’ s operations may be conveyed through formal letters, telephones, emails, etc. The Bank ’ s business supervisory units will handle or explain the case, in accordance to the internal operating procedures. „ Mega FHC is the Bank ’ s sole shareholder. Any shareholders ’ dispute or litigation shall be handled by the supervisory units. However, if due to complexity of the case or other special factors, where it is necessary to engage a lawyer, the units, according to Article 3 of the Bank ’ s Directions for Handling Legal Cases, shall request for approval from the authorized level before engaging a lawyer. 2. Does the Bank possess the identities of its major shareholders as well as the ultimate owners of those shares? 3 „ Mega FHC is the Bank ’ s sole shareholder and ultimate controller. 3. Does the Bank establish and execute the risk management and firewall system within its conglomerate structure? 3 „ The responsibilities for the management and risk control mechanism of personnels, assets and financial matters of the Bank and affiliated companies are completely independent; and tight firewall mechanisms are established and executed. z Information security: The internet between the Bank and affiliated companies is connected directly through peer-to-peer which is the safest way of internet connection, and controlled by Firewall to avoid unauthorized connection. z Client confidentiality: The person in charge of processing and using customer information has to be authorized for entering and removing customers ’ personal particulars, and a post-execution supervision mechanism is in place to ensure the appropriateness of authorization. z Stakeholder transactions: The Bank has established “Rules on Handling Stakeholder Transaction”. Also, in accordance with the relevant laws and regulations, the stakeholder transaction balance is submitted to the parent company, Mega FHC, regularly. Mega FHC then discloses the related information and submits it to the competent authority. B. Composition and Responsibilities of the Board of Directors 1. Does the Bank voluntarily establish other functional committees in addition to the Remuneration Committee and the Audit Committee? 3 „ After joining Mega FHC, the Bank is delisted from the stock market and is not mandatory to set up a Remuneration Committee. The design and adjustment of the Bank ’ s remuneration is submitted to Mega FHC for approval. „ Mega FHC has set up an Audit Committee. According to the