Implementation Status

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Item Status of Operation Divergence from Corporate Governance Practice Principles for financial holding companies and reasons
1. Shareholding Structure & Shareholders' Rights of Financial Holding Company (the "Company")

(1)Has the Company stipulated internal operation procedures or policies to handle shareholder suggestions, doubts disputes and lawsuits and implemented such procedures or policies?

(2)Has the Company possessed a list of major shareholders and a list of ultimate owners of these major shareholders?

(3)Has the Company established and implemented risk management mechanism and "firewall" between the Company and its affiliated enterprises?

 (1)Shareholder suggestions are handled by the personnel in charge.
The company website also has a Shareholder Services area disclosing shareholder contact information.
(2)A list of major shareholders of SinoPac Holdings is handled by the Secretariat of the Board of Directors. A list of major shareholders of subsidiaries is handled by the Finance Management Division.
(3)To effectively manage the risks arising from the operations of SinoPac Holdings and its subsidiaries, the Board of Directors serves as the highest supervisory unit in charge of approving the risk management policy and risk appetite or limit and giving the management authority for daily risk management. The Risk Management Division takes in charge of developing the risk management policies, guidelines, and systems for SinoPac Holdings
and its subsidiaries. In addition to implementing the risk management policies, guidelines, and systems approved by the Board of Directors, the Risk Management Division is responsible to regularly evaluate the performance of SinoPac Holdings and its subsidiaries in terms of risk
management.
Credit extension to stakeholders, such as Directors, Supervisors, persons in charge, and major shareholders of SinoPac Holdings and its subsidiaries, and any other deals comply with Articles 32, 33, and 33-1~33-4 of the Banking Act and Articles 44 and 45 of the Financial Holding Company Act.
SinoPac Holdings has established the "Firewall Policy", which specifies the firewall regulations governing personnel, information, business dealings or transactions, and the cross-industry provision of financial products and service, to prevent conflict of interest that may arise from the business dealings or transactions between SinoPac Holdings and its subsidiaries.

 

 

No divergence

2. Composition and Responsibilities of the Board of Directors

(1)In addition to Compensation Committee and Audit Committee, has the Company established other functional committee voluntarily?


(2)Has the Company established standards to measure the performance of the
Board, conductedtheevaluation annually, and reported the results of
evaluation to the Board of Directors andreferredtothesaidresults when determining each director's compensation and reelection?


(3)Has the company evaluated external auditors' independence regularly?

 (1)SinoPac Holdings has established the Audit Committee and the Remuneration Committee. Both Committees are composed of 3 Independent Directors. On March 23, 2018, SinoPac Holdings established the Ethical Corporate Management Committee, which was composed of 3 Independent Directors and the Independent Directors of Bank SinoPac and SinoPace Securities. The organization, responsibility, and operations of these 3 committees comply with the "Audit Committee Organizational Charter", the "Remuneration Committee Organizational Charter", and the "Ethical Corporate Management Committee Organizational Charter", respectively.
(2)To implement corporate governance and enhance the Board's functions, and to set forth performance objectives to improve the operation efficiency of the Board of Directors, SinoPac Holdings formulated the "Regulations Governing the Evaluation of the Performance of the Board of Directors" in 2018. The Board of Directors and functional committees shall conduct the evaluation of the Board's performance every year according to the evaluation procedures and indexes set forth in the "Regulations Governing the Evaluation of the Performance of the Board of Directors." The evaluation of the Board's performance shall be conducted by an external independent professional institution or a panel of external experts and scholars at least once every three years. The results of the evaluation shall be reported to the Board of Directors before the end of March of the following year. In 2019, EY Business Advisory Services Inc. was commissioned to evaluate the performance of the Board of Directors. The self-evaluation approach to the performance of the individual directors, Audit Committee, and Remuneration Committee was adopted. Based on the results of the external evaluation, the overall performance of the Board of Directors in "structure," "people," and "process and information" was advanced, benchmark, and advanced, respectively; "positive" results were obtained from the internal evaluation of the performance of the individual directors, Audit Committee, and Remuneration Committee. Reported to the Board of Directors on February 25, 2020, The results of both internal and external evaluations were positive, showing the good operations of the Board of Directors as a whole. The 2019 remuneration for each director was linked to the performance evaluation result. The nomination of directors (including ndependent directors) for the Seventh Term of the Board of Directors also took the performance evaluation for reference. In the future, SinoPac Holdings will continue to enhance the performance of the Board of Directors based on the opinions given by EY Business Advisory Services Inc. and the Board.
(3) SinoPac Holdings engages CPAs on a yearly basis and evaluates their independence. The evaluation criteria include not being SinoPac Holdings' stakeholder or shareholders, not holding any position in SinoPac Holdings, without disciplinary action been recorded, and not being engaged for 7 consecutive years. The results of evaluation have been reported to the Audit Committee on February 15, 2019 and passed by the Board of Directors on February 22, 2019.
All CPAs meet SinoPac Holdings' independence evaluation criteria, and SinoPac Holdings has received the independence statement from the CPAs.

No divergence
3. Has the Financial Holding Company establish corporate governance (part-time) unit, or personnel that are responsible for corporate governance matters? The Secretariat of the Board of Directors is responsible for corporate governance matters, including providing Directors any information required for performing their duties, holding the Board meetings, Audit Committee meetings, Remuneration Committee meetings, and shareholders' meetings, and keeping the minutes at the aforementioned meetings according to the law.
On May 24, 2019, the Board of Directors resolved to appoint the chief secretary of the Secretariat as the corporate governance officer in order to strengthen the Board's functions and protect shareholder equity. The corporate governance officer has been engaged in legal
affairs and corporate governance of the listed companies for more than 20 years.
The primary duties of the Chief Secretary are to assist the Board of Directors in implementing corporate governance and legal compliance and fulfilling the duty of care as a good administrator, so as to strengthen the efficiency and functions of the Board of Directors.
In 2019, the performance of the duties is as follows:
(1)Assisted Independent Directors and Directors in performing their duties, provided necessary information, and arranged for continuing education for directors.
(2)Facilitated the procedures for the Board meetings and shareholders' meetings and the compliance of resolutions.
(3)Drafted the agenda seven days prior to the Board meeting, convened the Board meeting and provided meeting materials, reminded Directors of necessaryrecusal in advance, and completed the meeting minutes within 20 days after the meeting.
(4)Registered the date of the shareholders' meeting in advance according to the law and prepared the meeting notice, handbook, and meeting minutes within the statutory time limit.
(5)Assisted Directors in legal compliance.
Continuing education for Directors in 2019 is as follows:
(1)2-hour lecture on ESG: Financial Opportunities and Challenges in the Age of Climate Change
(2)2-hour Information Security Training - Preventing Malicious Emails & Social Engineering Attacks (1st Half)
(3)1-hour Information Security Training (2nd Half)
(4)2-hour lecture on Keynote Speech on the Personal Data Protection Act and Penalties in the Banking Industry
(5)15-hour On-the-job Training for Compliance Officers
(6)4-hour Internal Control Training for Management
(7)3-hour Corporate Governance Evaluation - Field Evaluation Counseling
(8)21-hour Corporate Governance Lecture Series
(9)2-hour Seminar on Anti-money Laundering Practices
(10)0.25-hour Online Training on Ethical Corporate Management at SinoPac Holdings and Its Subsidiaries
No divergence
4. Has the Financial Holding Company established communication channel with stakeholders?  

Each year, SinoPac Holdings reviews and evaluates all key stakeholder groups, including employees, customers, shareholders (investors), suppliers, media, community groups or NPOs/NGOs, and regulators, for dedicated communication channels. For example, SinoPac Holdings has established a Stakeholder Engagement area on the company website, regularly holds investor conferences, issues press releases, participates in seminars and forums, and works with regulators in policy suggestions, to ensure that feedback and stakeholder concerns are considered in the future business development, product design, service channels, and community feedback. By doing so, SinoPac Holdings aims to maintain good interaction and engagement with all stakeholders.

 

No divergence

5.Information Disclosure

(1)Has the Financial Holding Company established a corporate website to disclose information regarding the company's financials, business and corporate governance status?

(2)Has the Financial Holding Company established any other information disclosure channels (e.g. maintaining a website in English, designating people to handle information collection and disclosure, appointing spokespersons, webcasting investors' conference, etc.)?

(3) Has the Company publicly announced and registered the annual financial
statements after the close of each fiscal year, the quarterly financial
statements after the end of the first, second, and third quarters of each fiscal year, and the monthly operating status within the respective time limits set forth in the Financial Holding Company Act and the Securities and Exchange Act?

 

(1)SinoPac Holdings has set up a website to disclose company information, including financial updates, business operations, and corporate governance.

(2)SinoPac Holdings has set up both Chinese and English websites and has designated personnel to be in charge of collecting and disclosing company information. SinoPac Holdings has also appointed the spokesperson and the acting spokesperson to be in charge of disclosing company information in an uniform manner.

(3)SinoPac Holdings has publicly announced and registered the annual financial statements after the close of each fiscal year and the monthly operating status within the respective time limits set forth in the Financial Holding Company Act and the Securities and Exchange Act.
According to the FSC Official Letter No. 10110002230, the Q1 and Q3 financial statements have been publicly announced and registered within 60 days after the end of the first and third quarters, respectively, and the Q2 financial statements have been audited and certified by
the CPAs and registered within two months after the end of the second quarter.

No divergence
6. Has the Financial Holding Company provided any other material information that may assist in the understanding of corporate governance of the Company. (including but not limited to employee rights, care for colleagues, investor relations stakeholder related rights, board and supervisor training, risk management and risk evaluation standards, execution of customer service and policies, banking participation in liability insurance of directors and supervisors, political and stakeholder and charity donations, etc.)
(1)The "Corporate Governance Guidelines" stipulate that the diversity policy shall be adopted in the composition of the Board of Directors in Chapter 4 (Strengthening the Functions of the Board of Directors).The 6th-term Board of Directors of SinoPac Holdings The incumbent Board of the Company consists of 9 directors, including 3 independent directors, 1 director concurrently holding a position as a managerial officer (Director Stanley CHU concurrently acts as the President of SinoPac Holdings), and 5 Directors. The Board members have different professional experiences (financial holdings, banking, securities, financial administration
or management, and others) or backgrounds (banking, commerce, law, accounting, finance, information security/information technology, and risk management) and possess the knowledge, skills, and competence required to perform their duties. The diversity policy has been disclosed on the company website and the Market Observation Post System.
(2)SinoPac Holdings holds the Board meetings on a monthly basis. In 2019, the attendance rate averages reached 96.3%.
(3)Directors that have conflict of interests in resolutions have been recused from voting.
(4)SinoPac Holdings has purchased liability insurance for Directors and Supervisors.
(5)SinoPac Holdings has established risk management guidelines as the basic principles of risk managementof SinoPac Holdings and its subsidiaries. Each major subsidiary has also established separate risk management policies and rules based on its business characteristics.
(6)Bank SinoPac has the Customer Service Center and SinoPac Securities has the Customer Service Section. The customer service personnel provide a free customer service line and online service to solve customers’ problems promptly in hopes of protecting consumers and
satisfying customers.
(7)SinoPac Holdings has established the "Work Rules" and the regulations governing salary and benefits as the basic principles of personnel management of SinoPac Holdings and its subsidiaries. Each major subsidiary has also established separate personnel management policies and rules based on its business characteristics. In terms of employee training, the Human Resources Division is responsible for the planning and execution of training and career development.
(8)To fulfill the spirit of corporate governance, SinoPac Holdings communicates with investors with respect to the future vision and business strategies.
(9)SinoPac Holdings discloses information, such as financial statements, material information, and investor conferences, in time and on a regular basis to assist investors and the market in understanding its business operations, financial status, and strategic execution.
(10)In terms of investor relations, SinoPac Holdings has established an "Investor Relations" area to fully disclose company information, including major announcements, press release, and annual reports. A dedicated person of the Financial Management Division has also been appointed to respond to investors' inquiries.
(11)SinoPac Holdings and subsidiaries have feedback mechanisms on their respective websites with contact windows provided to respond to investors' complaints and suggestions.
(12)To prevent insider trading, the "Equity Management Policy," "Work Rules," and "Ethical Management Procedures and Guidelines for Conduct" established by SinoPac Holdings clearly prohibit directors, managers, insiders, and employees from being involved in insider
trading. These regulations have been disclosed on the Intranet for all employees to follow and prevent insidertrading. The Company also organized the following training courses on insider trading for the Directors, managerial officers and employees on a regular basis or from time to time:
a.SinoPac Holdings introduced the insider trading prevention manual and related laws and regulations to the Directors on December 30, 2019.
b.In 2019, SinoPac Holdings organized on-the-job training for compliance officers of SinoPac Holdings and its subsidiaries.
c.In 2019, SinoPac Holdings organized an online training course on ethical corporate management for all employees of SinoPac Holdings and its subsidiaries.
(13)In 2019, SinoPac Holdings and its subsidiaries did not make a donation to any political parties or interested parties.
In June 2019, Bank SinoPac donated NT$1,500,000 to Taiwan Financial Services Roundtable, which has set up the financial service industry education fund to assist the economically disadvantaged students in completing their study.
In September 2019, Bank SinoPac donated NT$114,311,770 to the Small & Medium Business
Credit Guarantee Fund.
In December 2019, Bank SinoPac donated NT$243,000 to the Finance Bureau of Taichung City Government to support the 2020 Taiwan Lantern Festival.
No divergence
7. The TWSE Corporate Governance Center released its Corporate Governance Evaluation results. Please disclose any improvements done, and plans for future improvements. Improvements done:
(1)The annual report has disclosed future research and development plans and estimated costs.
(2)Policies on energy conservation and carbon reduction, greenhouse gas reduction, water conservation or other waste management have been developed.
Plans for future improvements:
(1)The Board of Directors shall contain at least one female Director.
(2)There shall be no single company accounting for more than one-third of the Board of Directors.
No significant divergence