In line with our brand spirit “We are family,” our corporate mission “to protect and to create,” and our core values of “caring, professionalism, and trustworthiness,” CTBC is committed to strengthening its corporate governance to ensure the Company’s sustainable development. CTBC is also continuing to improve its board performance and information disclosure in order to protect the interests of all stakeholders.
Shaping Corporate Governance Culture
When it comes to implementing corporate governance, CTBC places great importance on team building. After the Board of Directors formulates a policy, each department institutes a hierarchical system of responsibility specifically tailored for the task at hand. The goal here is to instill a culture of corporate governance from the top down and build sound corporate governance frame. CTBC has also established the role of Corporate Governance Officer under the Chairman’s office to supervise matters related to corporate governance. A Corporate Governance Department handles the policies and protocols required to strengthen the corporate governance and integrity management.
Separating Ownership and Management
CTBC began separating management from ownership in 2007. This means directors can no longer serve on the Board while concurrently holding a managerial position. Key business proposals and objectives devised by the management team can be implemented and executed only after deliberation and approval by the Board of Directors. In addition, the Board is held responsible for supervising the management team—from adhering to business plans to meeting scheduled business targets.
Strengthening the role of Independent Directors
CTBC is the first financial holding company in Taiwan to have more than one-half of the board comprising independent directors. The board of directors is composed of seven directors, of whom four are independent directors and the remaining three are non-independent directors. Each of the independent directors has expertise in business judgment, accounting and financial analysis, risk management or legal, respectively. In 2018, to catch up the global corporate governance trend, CTBC revised its Corporate Governance Best Practice Principles to rule the independent director’s term of office not exceeding three sessions.
Valuing Director Diversity
CTBC knows that in today’s fast-changing economic environment, the financial sector is increasingly complex. That’s why we maintain a Board of Directors with industry-leading expertise, professional experience, and renowned diligence. When searching for a new director, CTBC seeks only candidates with diverse backgrounds who possess international experience, broad perspectives, strong leadership, and effective communication skills.
All seven of CTBC’s current directors boast a diverse educational background and experience, with each having specialized business experience in a major financial institution such as bank, insurance, or securities firm, and one director with professional knowledge in legal. Except for two directors over the age of 70 years, the other directors are all 50 years or older and with an abundance of related experience.
To implement gender equality, subsidiary Taiwan Lottery has appointed two female directors and CTBC Investments has appointed one female director as board members.
Five functional committees currently operate under the Board of Directors: the Audit Committee, Remuneration Committee, Risk Management Committee, Nomination Committee and Ethics & Integrity Committee, which was newly established in April, 2018. The Audit Committee consists of all independent directors; the Remuneration Committee consists of 3 independent directors; the Risk Management Committee consists of 1 director and 2 independent directors; the Nomination Committee consists of 1 director and 2 independent directors; and the Ethical & integrity Committee consists of 2 directors and 1 independent director.
A More Functional and Efficient Board
To strengthen the administrative process for Board meetings, CTBC adopted a Web-based system in 2012, comprehensively integrating the overall administrative meetings process into an online submissions system. The benefits of this approach include more convenient supervision, reduced human resource needs, and less wasted paper and other stationery.
All CTBC directors must satisfy annual continuing education requirement of 6 hours (pursuant to the provisions of the Directors for the Implementation of Continuing Education for Directors and Supervisor of TWSE Listed and TPEx Listed Companies). Furthermore, CTBC conducts a performance assessment of the Board of Directors every December. Regarding assessment measures, directors shall meet the minimum attendance rate at 70% of board meeting per year. In addition, each Board director performs self-assessment exercises, with the results categorized as either excellent, great, good, acceptable, or to be improved. The corporate governance department is tasked with reporting the assessment results to the Board of Directors and suggesting specific areas for improvement. In 2017, 18 meetings were held with average attendance rate of 96.82%, the result of the Board of Directors’ self-assessment was “excellent”; the assessment method and results may be found on the website.
Communication between Independent Directors and Internal Auditors, CPAs
The independent directors communicate with internal auditors and CPAs every six months. The major issues discussed include audit methodologies, the key results and findings of completed audits, and the annual financial report. Additional matters considered are, among others, internal and external audit reports, the implementation of internal controls, and the execution of follow-up audit-related activities.
Effective Information Disclosure
CTBC are committed to maintaining an open and transparent disclosure policy when it comes to company information. That’s why we provide easy access to all publicly required information on our website, which is available in both English and Chinese. Information released online includes financial reports, annual reports, and documents relating to CTBC’s corporate governance and corporate social responsibility initiatives. In 2017, a total of three investor conferences were held.
Stakeholder Communication and Whistleblower System
CTBC values the rights and interests of every stakeholder and has set up a stakeholder page on the company website to understand the expectations and needs of ours stakeholders in order to provide responses to the CSR issues of their concern. In addition, CTBC has also established an internal reporting mechanism. Any negligence and misconduct by employees can be reported through the employee complaints hotline, mailbox, or in writing. In response to regulatory and social trends, CTBC has appointed compliance units, in addition to employee complaint mechanism, to process complaints. CTBC also set up a dedicated committee to conduct investigation and review of filed complaints. We have stipulated in the guidelines the confidentiality obligations of complaint handlers and investigators and prohibition against detrimental treatment for whistleblowers in order to protect the whistleblowers' right to work.
To foster integrity and ensure that it is rightly valued as a critical part of business operations, CTBC has stipulated a number of guidelines, protocols, and codes for directors and employees. These include Ethical Corporate Management Best Practice Principles, Procedures for Ethical Management and Guidelines for Conduct, Corporate Governance Best Practice Principles, Codes of Ethical Conduct, Employee Code of Conduct, and Code of Corporate Social Responsibility. In addition, company integrity reports and related progress updates are presented to the Board of Directors every six months.
Through educational training and internal outreach by the corporate governance unit and via the audit and internal control mechanism, personnel throughout all levels of the Company develop a comprehensive understanding of CTBC’s prioritization of integrity in decision-making and of the consequences of behavior violating the ethical standards.
CTBC also requests all directors and employees to complete an hour annual integrity course either by reading or online learning, thereby ensuring ethical corporate management.
Key Governance Awards in 2017
CTBC was selected as a constituent stock in the 2017 DJSI World Index for the first time.
CTBC was selected as a constituent stock in the 2017 DJSI Emerging Markets Index for the second consecutive year.
CTBC was included in the MSCI ESG Leader Indexes for four consecutive years.
CTBC was included in the FTSE4Good Emerging Index for the second consecutive year.