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  • HC-11.1 Overall Responsibilities, Corporate Culture and Values

    • HC-11.1.1

      The licensee must have in place:

      (a) A sound and proper corporate and risk culture and values;
      (b) Strategy, business plan and budget;
      (c) An appropriate framework of governance and risk management, inclusive of risk appetite, policies, procedures, systems and internal controls which must be reviewed in case a major new business activity is considered, or in case of material changes to the licensee’s size, complexity, business strategy, markets or regulatory requirements, or the occurrence of a major failure of controls;
      (d) Adequate processes to ensure full compliance with the requirements of the CBB Law, other relevant laws and the pertinent rulebooks;
      (e) A robust finance function responsible for accounting and financial data;
      (f) Properly positioned risk management, compliance and internal audit functions which are adequately staffed and resourced and carry out their responsibilities independently, objectively and effectively;
      (g) An effective and transparent relationship with the CBB;

      (h) An appropriate code of conduct/ethics that must:

      i. outline the acceptable practices that all senior management and other staff must follow in performing their duties, and the unacceptable practices/conduct that must be avoided;
      ii. include the corporate values that create expectations that the business must be conducted in a legal, professional and ethical manner, and oversee the adherence to such values by senior management and other employees;
      iii. promote risk awareness within a strong risk culture, that does not support risk-taking beyond the risk appetite and risk limits of the licensee, and that all employees are responsible for ensuring that the licensee operates within the established risk appetite and risk limits;
      iv. ensure that the code, corporate values and professional standards it sets, together with supporting policies, are adequately communicated throughout the licensee; and
      v. ensure that all senior management and other staff are aware that appropriate disciplinary or other actions will follow unacceptable behaviour, practices and transgressions.

      (i) An approved and well communicated whistleblowing policy and adequate procedures and processes, consistent with applicable laws. Such policy must encourage employees to communicate, confidentially and without the risk of reprisal, legitimate concerns about illegal, unethical or questionable practices, and must include the escalation process of material concerns to the CBB. The CEO of the Branch must:

      i. have oversight of the whistleblowing policy mechanism and ensure that senior management addresses legitimate issues that are raised;
      ii. take responsibility for ensuring that staff who raise concerns are protected from detrimental treatment or reprisals, and that their rights are not undermined;
      iii. approve and oversee how and by whom legitimate material concerns shall be investigated and addressed such as by an objective and independent internal or external body, senior management; and
      iv. ensure that, after verifying the validity of the allegations, the person responsible for any misconduct is held accountable and is subjected to an appropriate disciplinary measure.

      (j) A conflict of interest policy on identifying and managing potential conflicts of interest related to all approved persons. The policy must include:

      i. An approved person’s duty to:

      1. Avoid, to the extent possible, activities that could create conflicts of interest or the appearance of conflicts of interest. An approved person shall be considered to have a “personal interest” in a transaction with a company if they themselves, or a member of their family (i.e. spouse, father, mother, sons, daughters, brothers or sisters), or another company of which they are a director or controller, are a party to the transaction or have a material financial interest in the transaction or are expected to derive material personal benefit from the transaction (transactions and interests which are de minimis in value should not be included);
      2. Promptly disclose any matter that may result, or has already resulted, in a conflict of interest;
      3. Abstain from getting involved in or voting on any matter where they may have a conflict of interest or where their objectivity or ability to properly fulfil duties to the licensee may be otherwise compromised. Any decision to enter into a transaction in which an approved person appears to have a material conflict of interest must be formally approved by the Regional Office or Head Office;
      4. Act with honesty, integrity and care for the best interest of the licensee and its stakeholders;
      5. Not use properties of the licensee for their personal needs;
      6. Not misuse or misappropriate the licensee’s assets or resources;
      7. Not disclose confidential information of the licensee or use it for their personal profit or interest;
      8. Make every practicable effort to arrange their personal and business affairs to avoid a conflict of interest with the licensee;
      9. Not take business opportunities of the licensee for themselves; and
      10. Not compete in business with the licensee or serve the licensee’s interest in any transaction with a company in which they have a personal interest.
      ii. Examples of where conflict of interest may arise when serving as an approved person;
      iii. A rigorous review and approval process for approved persons to follow before they engage in certain activities so as to ensure that such activity will not create a conflict of interest;
      iv. Adequate requirements that transactions with related parties must be made on an arm’s length basis;
      v. Sufficient restrictions on and/or a robust and transparent process for the employment of relatives of approved persons;
      vi. Requirements for properly managing and disclosing conflict of interest that cannot be prevented;
      vii. Requirements for all approved persons to annually declare in writing all their other interests in other enterprises or activities (whether as a shareholder of above 5% of the voting capital of a company, a manager or other form of significant participation) to the Regional Office or Head Office;
      viii. The way in which the Licensee will deal with any non-compliance with the policy; and
      ix. The CEO/General Manager of the licensee must disclose to the Regional Office or Head Office on an annual basis those individuals who are occupying controlled functions and who are relatives of any approved persons within the licensee.
      Added: January 2024