Part II – Corporate Governance
A. Competence
1. VASPs shall establish and maintain policies and procedures to ensure that all members of the Board, Senior Management and Staff are suitably qualified in their relevant post. Criteria for such internal assessment shall include, but are not limited to—
a. academic credentials; b. professional qualifications; c. professional experience; d. awards and honours received; and e. memberships of professional and service organisations.
2. The Board can only appoint to supervisory positions Staff with relevant experience and qualifications as may be reasonably expected taking into account the responsibilities of the role and the VA Activities of the VASP.
B. Segregation of Duties
1. The Board shall ensure that policy formulation, supervisory and advisory functions and other internal review functions are effectively segregated from operational duties in order to—
a. ensure that supervisory and other internal controls are effectively maintained; and b. avoid undetected errors or abuses of certain functions.
2. The Board shall ensure that operational duties including sales, dealing, accounting, settlement and safekeeping of Virtual Assets are effectively segregated to minimise potential for conflicts, errors or abuses. 3. The Board shall ensure that compliance and internal audit functions are effectively segregated from and independent of the operational and related supervisory functions. The CO and any head of the internal audit function should report directly to the Board.
C. Conflicts of Interest
1. VASPs shall use all reasonable efforts to avoid conflicts of interest between any of the following—
a. their Group; b. the VASP; c. their Board; d. their Staff; e. their clients; and/or f. their investors. In the event that the VASP cannot avoid conflicts of interest after using all reasonable efforts, it shall ensure that such conflicts of interest are disclosed to its affected clients, and such clients should be fairly treated by the VASP.
2. If a VASP, a member of the Board or any of its Staff has an interest that may reasonably impair its objectivity, in a transaction with or for a client or a relationship which gives rise to an actual or potential conflicts of interest in relation to the transaction, the VASP shall—
a. promptly disclose the nature of such conflict to its affected client; and b. to the extent that the affected client’s interests can be sufficiently protected, manage and minimise such conflict by adopting appropriate measures to ensure fair treatment to its affected client, including establishing and maintaining “Chinese Walls” to separate Staff into different teams.
3. VASPs shall establish and implement appropriate written internal policies and procedures for the identification and management or resolution [as applicable] of any actual or potential conflicts of interest. VASPs shall maintain a special register for conflicts of interest in which the conflicts and management or remedial measures taken are recorded in detail. 4. When a member of the Board discloses to the Board that they have a material interest in a transaction, the remaining members of the Board present at the Board meeting shall consider whether it is appropriate for that Board member to continue to participate in the Board meeting after reviewing whether the conflict may affect the objectivity of that member and/or their ability to perform their tasks towards the company properly. If the remaining members of the Board decide that it is not appropriate for that member to participate, they may ask that member to leave the Board meeting. That Board member is not entitled to use the member’s personal influence in issues whether in or outside the meeting. The Board member shall not vote on the decision. The Company Secretary shall record the conflict in the relevant Board minutes. 5. Where a VASP represents itself as being independent when conducting a VA Activity—
a. it shall not receive fees, commissions or any benefits, paid or provided [whether directly or indirectly] by any Entity other than the end client in relation to the provision of services related to such VA Activity to clients; and b. it shall not have any close links or other legal or economic relationships with third parties which are likely to impair its independence to favour a particular third party in relation to its provision of services related to such VA Activity.
D. Information Disclosure
1. The Board shall establish and maintain effective policies and procedures to disclose all necessary information to the VASP’s shareholders and relevant stakeholders clearly, correctly and in an orderly manner in order to obtain a comprehensive view of the overall performance and financial position of the VASP. 2. The website of the VASP shall include all information required to be disclosed to the public in accordance with all applicable laws, Regulations, Rules and Directives, including but not limited to all public disclosures required under the Market Conduct Rulebook and all other Rulebooks applicable to the VASP, and any other details and information that can be published through other disclosure methods. 3. The Board shall review the VASP’s disclosure policies and procedures periodically, and ensure and procure its compliance to the best practices in the Virtual Asset industry.
E. Group Governance
1. VASPs shall establish a framework for governing their Subsidiaries within the Group. The Board shall be responsible for determining how Subsidiary governance is addressed and conducted. 2. The Board shall approve the governance framework for the Subsidiaries that sets out the powers within the Subsidiaries and ensure that the boards of the Subsidiaries implement the governance framework for their respective Subsidiary. 3. The governance framework shall include—
a. planning of the rights and the roles of the VASP; b. company policies and procedures adopted by the Subsidiaries; c. participation of the Board with the boards of the Subsidiaries prior to the VASP exercising its right to elect members to the boards of the Subsidiaries; and d. restrictions imposed on the Board members not to use any information obtained as a member of the board of a Group Entity for the purposes of another company within the Group.
4. VASPs shall verify the performance of the governance framework of the Subsidiaries.
F. Insiders’ Transactions
1. The Board shall implement rules to govern and monitor the transactions of Board members and its Staff in order to ensure compliance with the Regulations and the Market Conduct Rulebook.
G. Transactions with Related Parties
1. VASPs shall not enter into transactions with any Related Party without the prior written consent of the Board where the value of the transaction exceeds five percent [5%] of their issued share capital. If there is a significant change to the terms of these transactions, further written consent of the Board is required before the VASP enters into the transaction under the changed terms. 2. The Related Party who has an interest in a transaction described in Rule II.G.1 of this Company Rulebook shall not participate in voting in terms of the decision taken by the Board in respect of such transactions. 3. The following Entities shall be liable for damages to the VASP if a transaction with a Related Party is concluded in contravention of this Rule II.G of this Company Rulebook, or if it is proven that the transaction is unfair or involves a conflict of interest and incurs damages or otherwise detrimental to the best interests of the VASP’s shareholders—
a. that Related Party with whom the transaction was entered into; and b. the Board if the decision was issued by consensus.
4. If the decision was only issued by the majority of the Board, the dissenting Board members shall not be held liable in the event that they have recorded their objection in the Board minutes. If a Board member is absent from the meeting in which the decision was issued, they are still responsible for the decision unless they prove that they were unaware of the decision or if they had constructive knowledge of it but could not object thereto. 5. In the event that a VASP enters into a transaction with a Related Party—
a. the Board shall provide VARA with prior notice which shall identify the Related Party and provide details of the transaction, including the nature and the benefit of the involvement of that Related Party in the transaction, together with a written confirmation that the terms of the transaction with that Related Party are fair, reasonable, and proportional to the interests of the shareholders of the VASP; b. it shall allow clients and shareholders to review its company records and any documents relating to those transactions; and c. VARA and/or the VASP’s clients and shareholders may take or join any legal action before a competent court regarding the transactions concluded with that Related Party to compel the parties of the transaction to provide all information and documents relating to those transactions, whether directly to prove the facts set out in the case relevant to it or to lead to the discovery of information that will help in the detection of the facts, and seek cancellation of the transaction and oblige that Related Party to return the profit or benefit gained back to the VASP, in addition to any compensation ordered to be payable by that Related Party.
6. VASPs shall maintain a register of transactions with Related Parties where the names of such Related Parties shall be recorded together with relevant transactions and actions taken in relation thereto in detail. 7. In addition to the requirement in Rule II.G.6 above and all other reporting requirements in the Compliance and Risk Management Rulebook, VASPs shall report all transactions with Related Parties to VARA monthly, or otherwise upon request by VARA, including the details of those transactions. 8. VASPs shall provide any documents and other information relating to transactions with Related Parties as reasonably requested by VARA to for the purposes of supervising the VASP’s compliance with this Rule II.G of this Company Rulebook.
H. Loans to the Board or Staff
1. VASPs shall notify VARA and obtain approval prior to making any loan to a member of the Board, Senior Management or Responsible Individual. 2. When making such notification, VASPs shall include full details of—
a. the name of the member of the Board, Senior Management or Responsible Individual receiving the loan; b. the amount of the loan; and c. the purpose of the loan.