Cathay Financial Holdings (CFH) has endeavored to build an effective corporate governance structure, to protect shareholders' rights, to strengthen the supervisory functions of the board of directors, to respect the rights of stakeholders and to enhance information transparency.

In consideration of dynamic business environment and the consolidated operation of CFH and its subsidiaries, CFH amended its Charter pursuant to Section 14-2 of Securities and Exchange Act and the rules promulgated thereunder and installed independent directors on June 15 2007.

To further enhance the supervisory function of the board of directors, CFH amended its Charter to establish an Audit Committee pursuant to Section 14-4 of the Securities and Exchange Act, which made CFH the first Financial Holding Company having an audit committee in compliance with the Securities and Exchange Act.

To further build an effective corporate governance structure, to balance the duties and rights of directors and officers and to reduce risk of directors, officers and the company itself, CFH purchased Directors and Officers Liability Insurance under Section 25 of its Charter, on June 15, 2007, to the benefits of indemnification to liabilities occurred while aforesaid persons fulfill their duties.

　
Board of Directors

CFH's Board of Directors comprises more then 10 directors with a great breadth of experience and expertise in finance, business, and management fields. Three of them are independent directors: Mr. Min-Houng Hong, the Chairman of the Board of Panasonic Taiwan Co. Ltd and the former Chairman of the Board of SinoPac Financial Holding Comapny; Mr. Tsing-Yuan Hwang, the Supervisor of Hon Hai Precision Industry Co.; and Mr. Andrew Ming-Jian Kuo, the former Managing Director and Country Head of JPMorgan Hong Kong and Taiwan. More

　
Audit Committee

The Audit Committee, which is composed of the entire number of the independent directors, assists the board of directors to enhance corporate governance effects. The Audit Committee is responsible for overseeing internal control systems and performance evaluation, auditing the integrity of CFH's financial statements, monitoring procedures of CFH's material financial operations, ensuring the compliance with legal and regulatory requirements and retaining any certificated public accountant.

Regular meetings of the Audit Committee shall be held quarterly. The Audit Committee is entitled to require that any officer, employee, internal audit executive, outside legal counsel, certificated public accountant or other related parties attend a meeting of the Committee and provide information.

Mr. Min-Houng Hong is the Convener and Chairman of the Audit Committee.More

　
Remuneration Committee

The Remuneration Committee, which is composed of the entire number of the independent directors, assists the board of directors to enhance corporate governance effects and ensure a sound remuneration system for the board members, and executive officers of the Company. The Remuneration Committee is responsible for “promulgating and periodically reviewing the policy, system, standard and composition of directors and executive officer’s evaluation and remuneration” and “promulgating and periodically evaluating directors and executive officer’s remuneration”. Regular meetings of the Committee shall be held at least twice a year. The Remuneration Committee is entitled to appoint outside legal counsels, certificated public accountants or other related parties to attend a meeting of the Committee and provide information.More