Corporate Governance

Ethical Management

Issue Date:2023/06/29

Responsible Business Conduct

To ensure that all employees conduct business activities with the highest ethical standards, we have stipulated Ethical Corporate Management Best Practice Principles, Code of Conduct, and Procedures for Ethical Operation and Guidelines for Conducts to detail the required ethics and responsibilities for employees in business practices and extensively promote and strengthen the corporate culture of ethics and integrity.

The purpose of stipulating the Code of Conduct of Chunghwa Telecom is to prevent occurrence of misconduct and encourage stakeholders to act in line with integrity and ethics, not for personal gains, and abide by the laws and regulations. Also, the stakeholders conducting business with Chunghwa Telecom are encouraged to abide by ethical standards equivalent to that of the CHT employees.

Category Description
Employees Promotion and Trainings on the Code of Conduct
  • 100% signing and receiving promotion and trainings on the Code of Conduct
  • Part-time employees and fixed-term contract employees receiving promotion and trainings on the Code of Conduct
  • The training programs include explanations and case studies on the code of conduct, integrity guidelines, and protection of trade secrets to prevent unethical behavior and promote the reporting mechanism.
  • In 2022, the annual training was completed from September 12th to October 7th. The total number of employees tested at irregular intervals was 19,596 (100% completion).
  • The total number of trainings for part-time and fixed-term contract employees is 69.
  • We incorporate compliance with the code of conduct as a performance criterion in the performance evaluation process and link it to compensation. Violations of the code of conduct may result in disciplinary actions, including the possibility of termination of employment contracts.

Code of Conduct (CoC) Audit
external audit
  • Regular independent third-party audits by SGS-Taiwan under commission regarding implementation of the Code of Conduct each year (with the headquarter and a 100% coverage of our branch offices)
internal audit
  • Regular review is performed in accordance with the annual audit plan for the compliance and implementation of ethical management practices.
  • The Fiscal Year 2022 internal audit plan was based on the results of the risk assessment. A total of 134 internal control cycles of 33 institutions (headquarters, branches, and subsidiaries) were audited. The content covered 447 sub-operations of the 11 major cycles of the Company's internal control system, and all cycles of the internal control system of the subsidiaries that were audited. A comprehensive review of the Group's business operations and compliance with the laws and regulations was conducted, and recommendations were proposed.
Suppliers
  • Suppliers required to comply with Chunghwa Telecom Sustainability/ESG Guidelines and Supplier Code of Conduct
  • Evaluate the implementation of anti-corruption policies of new suppliers through our ESG Self-Assessment Questionnaire
  • Regular audits by SGS-Taiwan to contractors and suppliers in terms of compliance with relevant laws and regulations to capture their implementation statuses

To achieve sound ethical corporate management, the chairman of the Company serving as the highest responsible person for Ethical Corporate Management and Anti-Corruption. "The Organization and Talent Development Department" (hereinafter referred as HR Department) shall allocate resources and personnel to formulate ethical corporate management policies and guidelines for conduct, supervise all departments to implement these policies and guidelines. Besides, the top manager who supervises HR Department, Senior Executive Vice President shall report on the execution to the Sustainable Development & Strategy Committee and provide the regular reports to the board of directors regularly (at least once a year) on the implementation results, including training results on business ethics and anti-corruption issues, tracking of relevant risk indicators and the implementation results of the "Anti-Fraud Business Execution Plan", etc.

  • There were 74 complaints received in 2022, which were all handled and closed in line with pertaining regulations.
  • There was no corruption, bribery, discrimination, harassment, customer privacy or personal information, conflict of interest, money laundering, insider trading, and other violations specified in the Code of Conduct in 2022.
  • Other cases (e.g. violation of attendance regulations or discipline at work) were investigated, deliberated, and handled in line with operating regulations and handling principles, followed by enhanced promotion to all employees to strengthen their awareness of compliance with the Code of Conduct.
Categories of Violations in 2022
Violation Category Violation Category Count
Corruption or Bribery 0
Discrimination or Harassment 0
Customer Privacy Data 0
Conflict of Interest 0
Money Laundering of Insider Trading 0
CoC Violation & the Prevention and Corrective Actions

Regarding incidents of Code of Conduct (CoC) violation, we enhance the promotion and communication of the CoC principles in line with the categories of violation incidents via appropriate training occasions and interviews. Meanwhile, reoccurrence of relevant incidents is prevented through interviews, correction of operating procedures, and improvement of internal review/audit mechanisms.

System & Procedures

Chunghwa Telecom has established a quality corporate governance system. With reference to “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” stipulated by Taiwan Stock Exchange (TWSE) and Taipei Exchange (TPEx), it formulated “Code of Corporate Governance of Chunghwa Telecom Ltd. Co.,” for guidance and compliance.

To become the most valuable and most trust-worthy ICT company, professionals from different areas are invited as the Independent Directors. On one hand, they further improve the corporate governance with their expertise; on the other, they play the role of supervising the Company on behalf of the broader investors in terms of risk management and decent business operation.

Chunghwa Telecom sticks to political neutrality and avoids utilization of internal funds, workforce, facilities, or other resources of the Company out of political agenda.

 

Reporting Channels & Protection

We have established a variety of communication and reporting channels to ensure the needs and recommendations of internal and external stakeholders heard and responded by the corresponding units of the Company. In the event of any violation or potential breach of laws or regulations, complaints and reports can be made via relevant channels.

The whistleblower’s identity will be rigorously kept in confidence. The whistleblower will not be subject to disciplinary action such as dismissal, demotion or transfer, or salary reduction. An official protection system for anonymous whistleblowers with legal protection is in place.

 

Internal Audit

The purpose of internal audit is to assist the Board of Directors and managers to check and review the internal control system and evaluate the operation efficiency. The CHT internal audit team answers to the Board of Directors, which conducts internal audits in line with the regulations and system. At the end of each year, based on the results of risk assessment, the audit plan of the coming year is formulated. Upon approval by the Board of Directors after submission thereof, the audit plan is submitted via online information system for the competent authority’s reference. The internal audit and internal control mechanisms of Chunghwa Telecom have been audited and stated in the financial report by CPA.

2022 Information of Interest Conflicts
Item Description
Cross-board memberships
  • Lifting of the Non-competition Restrictions against the Candidates for the 10th Board of Directors of the Company, Session 18, 9th Board of Directors.
  • Lifting of the Non-competition Restrictions against the Legal Representative Directors , Session 2, 10th Board of Directors.
Cross-shareholding with suppliers and other stakeholders
  • Cross-shareholding with suppliers and other stakeholders the “Procedures for Acquisition or Disposal of Assets of Chunghwa Telecom Co., Ltd.” has been stipulated in line with the government regulations; related parties are identified in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and the list of such is disclosed online.
  • Pursuant to the procedures, the Company may not enter into a transaction contract or make a payment until materials pertaining to a transaction of an amount of NT$300 million or more with related party are submitted and approved by the Audit Committee, followed by adoption by the Board of Directors and report on the website designated by the FSC.
Existence of controlling shareholders Existence of controlling shareholders The controlling shareholder of Chunghwa Telecom is the Ministry of Transportation and Communications, with whom there is no conflict of interest that leads to damage to investors’ rights.
Related parties, their relationships, transactions, and outstanding balances The disclosure requirement is met by the notes on the related parties in the financial statements in the Annual Report for the Shareholders’ Meeting.

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