Passage of Amendment to Financial Company Governance Supervision Regulations Including Guidelines for Drafting Responsibility Structure Diagrams

Add Additional Responsible Staff
Add Stock Acquisition Due to Auction
Add Reasons for Post-Approval Application of Major Shareholder Change

The financial authorities have approved an amendment to the Financial Company Governance Supervision Regulations, which stipulates the method for preparing a responsibility structure chart that holds the Chief Executive Officer (CEO) legally accountable in the event of a financial accident.

According to the Financial Services Commission on the 26th, at the regular meeting held that day, the amendment to the Financial Company Governance Supervision Regulations was approved to determine matters delegated by the "Act on the Governance of Financial Companies and the Enforcement Decree of the Governance Act."

The revised supervision regulations first stipulate the method for preparing and submitting the responsibility structure chart. The responsibility structure chart is prepared with a "Responsibility Description Document," which details the responsibilities of each executive, and a "Responsibility System Chart," which provides an overall view of the responsibility system by executive position. The responsibility structure chart must be submitted to the financial authorities within 7 business days from the date of the board of directors' resolution.

The Governance Act stipulates cases where the financial authorities may request correction or supplementation of the submitted responsibility structure chart, such as "when the format is not properly followed" or "when important matters are omitted." The supervision regulations added "when there are errors in the responsibility structure chart or when the recorded content is factually incorrect."

Employees eligible to be assigned responsibilities were also added. The Enforcement Decree of the Governance Act defines non-executive employees such as compliance officers and risk management officers as financial company employees who can be assigned responsibilities in the responsibility structure chart. The supervision regulations added "employees performing the relevant duties equivalent to executives (only when there is no executive in charge of the relevant duties)."

In addition, reasons for post-approval applications for major shareholder changes were added. The current Governance Act generally requires prior approval for changes in major shareholders for those acquiring shares of a financial company to become major shareholders. As exceptions, it requires post-approval when shares are acquired due to the death of an existing major shareholder, execution of collateral rights, or receipt of in-kind repayment.

Acquisition of shares through auction is similar to the current post-approval application reasons such as execution of collateral rights, and considering the uncertainty of auction bidding, it is difficult to apply for prior approval of major shareholder changes. Therefore, this was clearly stipulated as a reason for post-approval application for major shareholder changes.

This amendment is scheduled to take effect from the 3rd of next month, the enforcement date of the Governance Act.