The Banking Act of The Republic of China Article 45-1

A bank shall establish an internal control and audit system. Regulations governing the objectives, principles, policies, operating procedures, qualification requirements for internal auditors, scope of internal control audits of mandated certified public accountants and other matters to be complied with shall be prescribed by the competent authority.A bank shall establish an internal processing system and procedures with respect to the evaluation of asset quality, the provision of loss reserves, the clearing of non-performing loan collectibles and writing off of bad loans. Regulations governing the above shall be prescribed by the competent authority.Where a bank entrusts its operation to another person, it shall establish internal operation systems and procedures for the scope of the entrusted matters, protection of customer rights and interests, risk management, and internal control principles. Regulations governing the above shall be prescribed by the competent authority.Where a bank engages in financial derivatives businesses, it shall establish internal operating systems and procedures for the scope of businesses, personnel management, protection of customer rights and interests, and risk management. Regulations governing the above shall be prescribed by the competent authority.