Ethical Corporate Management and Legal Compliance


● Ethical Corporate Management Culture

SinoPac Holdings established the " Ethical Corporate Management Committee" in 2018. The " Ethical Corporate Management Committee" consists of 7 members including the Independent Directors of SinoPac Holdings, Bank SinoPac, and SinoPac Securities. Meetings are convened at least once every six months. The Committee is responsible for the review of the ethical corporate management policies and prevention programs, and for supervision of the implementation performance of the managerial departments.

● Ethical Corporate Management Policy and Management

SinoPac Holdings established the "Guidelines for Ethical Corporate Management" and "Procedures for Ethical Management and Guidelines for Conduct" as the basis for compliance by all employees of SinoPac Holdings and subsidiaries. The regulations expressly prohibit employees from accepting illegitimate interests for the purpose of establishing business relations in their business operations or business conduct. They may not leak or inquire trade secrets unrelated to their duties. They must process business affairs in an objective manner, and they must recuse themselves from conflicts of interest. SinoPac Holdings and its subsidiaries have conducted business activities in accordance with the Fair Trade Act and related laws and regulations, as well as internal regulations including Guidelines for Codes of Ethical Conduct, Corporate Governance Guidelines, Guidelines for Corporate Social Responsibility, Human Rights Policy, Anti-Money Laundering and Counter Terrorism Financing Policy (AML/CFT Policy), and Equity Management Policy for compliance. SinoPac Holdings also established the Supplier Corporate Social Responsibility Code of Conduct to encourage suppliers to fulfill corporate social responsibility together.

● Whistleblowing Channels and Whistleblower Protection

SinoPac Holdings' "Whistleblowing Policy" provides clear regulations on the whistleblowing system for internal and external whistleblowers. The Company announced the whistleblowing channels on the official websites and regularly organizes promotion and training on the whistleblowing system to encourage insiders and outsiders to report unethical or inappropriate conduct. All whistleblowing cases are processed by the Legal & Compliance Division of SinoPac Holdings. Whistleblowers are provided with rewards based on the severity of the case and any insider having made a false report or malicious accusation shall be subject to disciplinary action.

SinoPac Holdings shall keep the whistleblower's identity and contents of the report confidential. Anonymous reports may still be accepted if they are provided with specific contents or evidence that warrant investigations, as determined by the unit that received the report. SinoPac Holdings is committed to protecting whistleblowers from inappropriate treatment for their report. Whistleblowers may not be subject to inappropriate treatment for their reports such as dismissal, relief of duty, demotion, salary cut, any loss of benefit that they are entitled to under laws, contracts or customary practices, or adverse treatments of any kind. If whistleblowers are subject to inappropriate disciplinary actions due to their whistleblowing, they may lodge a complaint with the Human Resources Division, which shall report the complaint to the next meeting of the Ethical Corporate Management Committee.

● Tax Policy

SinoPac Holdings amended the "Tax Policy" and the amendment was passed in the meeting of the Board of Directors in December 2020. SinoPac Holdings mainly operates in Taiwan. In 2020 and 2019, the percentage of revenue from Taiwan was 86.4% and 84.4%, respectively. Except for Taiwan, no more than 10% of the revenue came from other countries. SinoPac Holdings complies with tax regulations and pays all taxes within the statutory tax-paying period. The income tax paid in 2020 and 2019 was NT$1,410,821 thousand and NT$1,465,893 thousand in which the percentage of income tax paid in accordance with Taiwan tax laws were 53.3% and 88.7%. According to Taiwan Income Tax Law, the taxable amount of income tax for corporate income tax shall be the higher of the general income tax and the basic tax rate. The corporate income tax rate applicable in 2020 and 2019 was 20%, and the basic tax amount shall be calculated according to the Income Basic Tax regulations of 12%, which is comparably lower than that of other countries. This is the main reason that the effective tax rate of SinoPac Holdings is lower than the average of the global bank industry.

● Anti-Money Laundering and Counter Terrorism Financing

● Anti-Money Laundering and Counter Terrorism Financing Policy
SinoPac Holdings has established the "Anti-Money Laundering and Counter Terrorism Financing Policy" ("AML/CFT Policy") for compliance by SinoPac Holdings and all subsidiaries. The subsidiaries also established their own internal regulations and operating procedures for anti-money laundering and counter terrorism financing based on laws for their respective industries, related industrial laws and regulations, the self-disciplinary regulations and conventions of industry associations, and references provided in the AML/CFT Policy of SinoPac Holdings.

● Anti-Money Laundering Management Framework
To implement the Group's Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) tasks and create an AML/CFT culture, SinoPac Holdings established the "Risk Management Committee" under the management of the Chairman of SinoPac Holdings. The Chairman of SinoPac Holdings serves as the chair of the Committee and supervises and manages the AML/CFT risk and the integration and distribution of resources between subsidiaries. The Legal & Compliance Division of SinoPac Holdings serves as the dedicated AML/CFT unit responsible for supervising and assisting the planning and execution of AML/CFT operations of subsidiaries. SinoPac Holdings established the Guidelines for Information Sharing and Using of Anti-Money Laundering and Counter Terrorism Financing and established an information sharing platform to prevent omissions in horizontal communication between subsidiaries from causing gaps in AML operations. Under the premises of ensuring the protection of personal information and ensuring information confidentiality, SinoPac Holdings requires all subsidiaries to share their money laundering or terrorism financing patterns and blacklists on a regular or irregular basis. The information should be uploaded to SinoPac Holdings' information sharing platform for reference by all subsidiaries to prevent similar cases from occurring in other subsidiaries.

● Material Violations and Improvement Measures

The senior executives and employees of SinoPac Holdings and its subsidiaries are fully committed to implementing ethical corporate management in daily actions and operations. However, there remains items that require continual improvement and they will be adopted as lessons for optimizing decisions for corporate governance in the future. There were three cases of material violations in 2020 which involved the violation of internal regulations at SinoPac Futures and Bank SinoPac, and leak of customer personal data at SinoPac Securities. Related personnel received penalties including demerits and warnings based on the severity of the violation. There were no cases of corruption, bribery or antitrust/anti-competitive practices in 2020. To continue to increase employees' compliance awareness, Bank SinoPac established the Employee Service and Code of Conduct Guidelines on November 11, 2019 in accordance with the Employee Service Guidelines of SinoPac Holdings and the Internal Control Principles for the Prevention of Misappropriation of Client Funds by Wealth Management Specialists of the Bankers' Association. The Guidelines of Bank SinoPac included important compliance matters such as the requirements for fiduciary duties, ethical conduct, and personal data protection. Training is organized each quarter starting from November 2019, and employees are required to sign statements each year to confirm compliance.