Cathay FHC created the Corporate Governance Project Team in 2010 to improve the Group's corporate governance structure. In 2011, the Corporate Social Responsibility Committee (renamed to the Corporate Sustainability [CS] Committee in 2015) was subsequently established to push forward on corporate governance practices. The original corporate governance team was folded into the Sustainable Governance Working Group, one of six working groups under the CS Committee, so as to strengthen the Group's sustainable governance measures with the aim of achieving the triple bottom line of economy, society, and environment positively. 

 

Establishing Comprehensive Functional Committees under the Board of Directors

Cathay FHC established the Audit Committee, Remuneration Committee, and Corporate Governance and Nomination Committee under the Board of Directors to fully leverage the board's function and improve its efficiency. The committees are responsible for reviewing proposals. The responsibilities and operations of each Functional Committee are as follows:

 

Sustainability Committee

Under the jurisdiction of the Board of Directors, the Cathay FHC Corporate Sustainability Committee is the unit responsible for promoting corporate sustainability. Independent Director Feng-Chiang Miao acts as the supervisor of the CS Committee. Members consist of presidents of Cathay FHC and its subsidiaries. Executive Director and President of Cathay FHC, Chang-Ken Lee, serves as the chairman of the committee. 
 

Professional Qualifications and Independence of the Board

Cathay FHC has the "Corporate Governance and Nomination Committee" and implements the "Nomination System for Candidates." All of the candidates for the Board of Directors are nominated and qualified for review by the Corporate Governance and Nomination Committee. After the qualifications of all candidates for directorship are reviewed and approved by the Committee and the Board of Directors, the list of qualified candidates is then submitted to the shareholders' meeting for election. According to Paragraph 3, Article 30 of the Cathay Financial Holdings Corporate Governance Best Practice Principles, the members of the Board of Directors shall possess the knowledge, skills, and experience necessary for performing their duties. To achieve the ideal goal of corporate governance, the Board of Directors shall possess the following abilities:

1. Ability to make operational judgments;

2. Ability to perform accounting and financial analysis;

3. Ability to conduct management administration (including ability to conduct management subsidiaries);

4. Ability to handle crisis management;

5. Knowledge of the industry;

6. An international market perspective;

7. Leadership;

8. Ability to make policy decisions;

9. Risk management knowledge and skills.

Cathay FHC's Board of Directors comprises 8 non-executive directors, 3 independent directors, and 1 executive director (Cathay FHC President Chang-Ken Lee). All members are professionals and well-experienced in finance, business, and management matters. The directors are on average 66 years in age. Cathay FHC’s 6th Board of Directors had convened 7 meetings with an attendance rate of 88% in 2018. Directors on average serve 8.9 year terms (Independent directors on average serve 5 year terms.)


Board Diversity

To strengthen corporate governance and the sound composition and structure of the Board of Directors, Cathay FHC incorporated a board diversity policy in Paragraph 2, Article 30 of the Cathay Financial Holdings Corporate Governance Best Practice Principles, which was amended in 2017. The related contents and implementations are described as follows: the composition of the Board of Directors shall be determined by giving due consideration to operational structure, business development direction, future trends and other needs, and it is advisable to assess aspects of diversity including but not limited to basic compositions (e.g., gender, age, nationality and race), professional experience (e.g., financial holding, banking, insurance, securities, industry and technology) and professional knowledge and skills (e.g., business, finance, accounting, law, marketing and digital technology).

 

Cathay FHC's Implementation of the Board Diversity Policy


Furthermore, Cathay emphasizes gender equality in the composition of its Board of Directors. As of December 31, 2018, 89% of Cathay FHC's subsidiaries in Taiwan appointed female directors or supervisors as board members, an increase of 11% compared with 2017. In addition, in order to enhance the board diversity of Cathay's subsidiaries, starting from the 5th Board of Directors meeting on June 20, 2016, Cathay Securities' newly recruited Tina Pan, the Chairman of the Modern Women's Foundation, joined as the independent director.


Evaluation of the Board and Functional Committee’s Performance and Third-party Certification

Besides establishing the Guidelines for Evaluation of Directors’ Performance and the Guidelines for Directors’ Remuneration for implementing corporate governance and improving the Board and Functional Committee’s performance, the Regulations Governing the Evaluation of the Board and Functional Committee’s Performance was also established for the Board and Functional Committee's overall operations. Corporate sustainability indicators, including compliance, corporate governance, risk management, and corporate sustainability and CSR, were incorporated into the Regulations to ensure that the Board and Functional Committee fulfills its corporate governance, operation, and CSR tasks, thereby enabling the Company to advance toward sustainability. In 2018, the result of Cathay FHC's Board and Functional Committee’s performance evaluation was “above standard", demonstrating the success of the Company’s efforts in improving the Board and Functional Committee’s performance.
To strengthen the independence and effectiveness of the Board performance evaluation, Cathay FHC will appoint an external independent institution or an expert to carry out the Board performance evaluation once every three years, starting from 2017. Evaluation results will be submitted to the Board of Directors for discussion and disclosed in the annual report or on the company website. The commissioning of an external professional independent institution for conducting external evaluations of the Board performance is expected to be completed before the end of 2019.
Since 2007, Cathay FHC has purchased liability insurance for its directors, supervisors, and key staff members, including those from its subsidiaries. This is in line with the legal requirements during their terms in office. Contents of the insurance policy are reviewed annually, and the insured amount, coverage, premium rate, and other major contents are reported in the next board meeting after the policy is renewed each year starting in 2017. We hope to thus lower the risks taken on by directors, supervisors, and the Company, and establish a well-rounded corporate governance mechanism. 

 

Valuing the Rights and Interests of Shareholders

Cathay FHC's website has a "shareholders' section" that announces information on shareholders' meetings, dividends, and financial information. There is also a spokesperson system, investor services, and "contact us" mailbox for shareholders to express their opinions at any time. Cathay carefully handles all suggestions, questions, disputes, and litigations involving shareholders in accordance with the “Cathay Financial Holdings Guidelines for Handling Shareholder Suggestions, Questions, Disputes, and Litigation." In addition. Cathay has urged corporate shareholders, including major shareholders as well as insurance, investment trusts, and securities companies, to exercise their right to vote via electronic means. In 2018, the electronic voting rate reached 91% which is increased year by year.


Cathay FHC has set up a "Corporate Sustainability Committee" under the board of directors and has set up a "Sustainable Governance Group" to promote corporate governance matters such as integrity management, anti-corruption, anti-bribery and compliance with the group, and report to the board of directors every six months. In addition, the administrative office and the formulation, amendment, set the “Code of Operation Integrity” or repeal of this code shall be subject to the approval of the board. The board of directors has made great efforts to ensure that the integrity management policies are implemented. Furthermore, in order to improve the integrity of the company, the auditing unit shall incorporate the compliance with this code into the scope of the investigation and report to the board on a regular basis the lack of improvement. 

 

Code of Operation Integrity

Cathay FHC shall conduct business activities in a fair and honest manner. Before the business dealings, Cathay FHC shall take into account the legality and credibility of the commercial objects. It shall avoid trading with the record of dishonesty and sign with others contract should contain integrity terms. The directors shall uphold the high degree of self-discipline and shall, when they have an interest in their own motions, should explain the important contents of their own interests when the board of directors is concerned. If the directors are interested in the interests of Cathay FHC, they shall not be included in the discussion and voting, and shall be avoided when discussing and voting, and shall not act on behalf of other directors to exercise their voting rights. For more detailed information:

Cathay Financial Holdings Code of Operation Integrity

 

Cathay held training courses related to business integrity in 2018 in order to implement business integrity and ethical conduct (such as annual training and newcomer training courses regarding the Code of Conduct for Employees, compliance supervisor forums, and AML/CFT courses), which amounted to a total of 2,089 hours with 610 participants.

 

Sound reporting mechanism to implement the DNA of integrity

Cathay FHC’s internal auditors cover all key operations in Taiwan. In 2012, Cathay FHC established the “Code of Operation Integrity” and built a reporting mechanism in which the Board of Directors, Audit Committee, and Auditing Div. are in charge to handle internal violations of integrity management. External reporting is accepted via Independent Director mailbox. 

The “Regulations Governing Reports of Illegal, and Unethical or Dishonest Behavior Conduct Cases” was devised to ensure sustainable operations and development of Cathay FHC and encourage the reporting of any illegal, unethical, or dishonest conduct. The Regulations aims at strengthening the company’s internal and external reporting channels, establish more clearly defined procedures, and ensuring the legal rights of the involved parties. The Regulations also specify that the identity of all involved parties including the whistleblower and investigation personnel shall remain confidential and protected to prevent unfair treatments or revenge. 

To ensure the sustainable operation and development of Cathay FHC, Cathay FHC Code of Ethics and Employee Code of Conduct were established to guide staff’s actions to meet the standard for work ethics and for the stakeholders to further understand the ethics of Cathay FHC. These codes require staff to follow related laws and principles of integrity and prevent conflict of interest during their jobs. In addition, they should not engage in bribery and work for personal benefit. The codes aim at perfecting corporate governance and implementing integrity.

 

Preventing fraud and strengthening business control and legal compliance

To prevent internal frauds, Cathay incorporated anticorruption and anti-bribery inspections into annual routine inspection and Employee Code of Conduct. Legal compliance is also included as a compulsory item of employee performance valuation, thereby fully realizing Cathay’s core principles of integrity. The company and major subsidiaries were not involved in any case of corruption or bribery in 2015. To effectively manage overseas branches, CUB, with the most extensive presence in Asia Pacific regions among subsidiaries, set up an international management Dept in 2015 after devising the Overseas Branch Management Policy in 2014.

 

Incorporating Non-Finance Goals in Performance Assessments

Regulations of employee performance management and development require Cathay FHC employees to set personal performance goals base on position, department, and Cathay’s strategic goals. Evaluation results serve as reference for salary, promotion and bonus distribution. When Cathay FHC employees are in charge of corporate sustainability tasks, such as involving in the CS Committee, non-financial performance indicators become their performance goals

 

Implementing Tax Governance

In response to global trends in tax governance, Cathay FHC established Tax Governance Policy with the Board of Directors as the highest decision-maker for tax risk management mechanisms to effectively control tax risks and implement corporate sustainability, and to enhance shareholders' value. 
In 2018, Cathay FHC paid a total tax of NT$22.1 billion worldwide, including corporate income tax, undistributed profits tax, business tax, house and land tax. The amount of taxes paid in Taiwan account for 94% of taxes paid worldwide due to the fact that Taiwan is our main country of operation. For more detailed information: Cathay Financial Holdings Tax Governance Report 2018

 


Feedback

Please let us know your precious opinions.

Contact US

Video

Happiness is how you think of what you have.

More

News Center

For more information, please visit our News Center.

More
Feedback