Chang Hwa Bank|Corporate Social Responsibility-Corporate Governance Framwork & the Board of Directors

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Corporate Governance

The Bank continued to strengthen the Board's diversified professional functions, implement integrity and operational responsibilities, ensure the rights and interests of shareholders and other stakeholders, and pay attention to the sustainability and the resilience of enterprises. Chang Hwa Bank ranked in the top 5% of overall listed companies for 3 consecutive years of Corporate Governance Evaluation of the Taiwan Stock Exchange Co., Ltd., affirming the Bank's commitment on improving various governance aspects to get positive results.
The Bank's highest governing body is the Board of Directors, under which there are three functional committees in place, namely the Audit Committee, the Remuneration Committee, and the Sustainable Development Committee. Corporate governance framework of the Bank is as below:

Corporate Governance Framework of the Bank

Composition and functioning of the Board

Appointment and Succession

Candidates Nomination System
Since the 25th session of the Board of Directors, the Bank has fully adopted candidates nomination system, and has adopted diversified and real-time information disclosure and voting methods to enable shareholders to fully understand relevant information about candidates, so as to ensure that shareholders can exercise shareholder rights fairly and effectively, promote the sound development of the company, and implement corporate governance.
Board of Directors Succession Plan
The Bank's Board of Directors adopts a candidate nomination system for the election of directors, in which shareholders nominate director candidates. With the Bank's business goals and direction as the benchmark, we measure the independence and diversity of the Board as well as the professional competence that the Board should possess as a whole, and the results of the Board performance evaluation are used as a reference for nominating directors for re-election.

Diversity and Professionalism of the Board Members

Composition of the Board of Directors
The term of the 27th Board of Directors of the Bank is from June 19, 2023 to June 18, 2026. Nine directors (three independent directors and six non-independent directors) were elected by the shareholders' meeting, and three directors were elected from among themselves as managing directors (including one independent director), and then the managing directors elected one person from among themselves as the Chairperson.

All Directors are nationals of the Republic of China, among which are four female directors (44.44%), three independent directors (33.33%), and one natural-person directors (11.11%).
Age Distribution of Directors: the age distribution of the 27th directors is between 50 and 70 years old.
The average tenure of directors is 2.11 years, none exceeding 9 years (three independent directors have a tenure of 1 years each).

Professionalism of Directors
The 27th Board of Directors' members of the Bank have industrial experiences and professional competencies including accounting, finance, banking, insurance, law, marketing, technology, securities, venture capital, administration, taxation, asset management, economics, business, information management, e-commerce and online marketing, monetary policy, risk management, labor rights and remuneration management, ESG and sustainability, etc. Diverse and different fields of professionalism endow the decision-making of the Board of Directors with objectivity and completeness, and improve the decision-making quality of the Board of Directors. In order to strengthen the professional functions of directors and assist in decision-making, all directors participate in corporate governance, risk management, information security, business operations, legal affairs, accounting, financial analysis, consumer rights and sustainable development (ESG) and other refresher courses in accordance with" Directions for the Implementation of Continuing Education for Directors" of the Bank, the total continuing education hours for all directors in 2023 is 140.6 hours, with an average of 15.6 continuing education hours per director, complying with the hours required by the competent authority. For further information, please refer to the Market Observation Post System.

Information of the 27th Board of Directors and Implementation of the Diversity Policy (2024.8.14)

Title	Name	Gender	Tenure (years)	Industrial Experience and Professional Competence	Independence of External Directors(*1)	Work Experience with GICS
Chairperson	Jong-Yuan Ling (Resigned on August 14, 2024)	F	4	Banking, Insurance, Securities, Venture Capital, Administration, Taxation, Risk Management, ESG and Sustainability.	V(*2)	Finance
Chairperson	Kuang-Hua Hu (Took office on August 14, 2024)	M	-	Banking, Securities, Administration, Business, Risk Management, ESG and Sustainability.	V(*2)	Finance
Managing Director	Chao-Chung Chou	M	2	Banking, Administration, Asset Management, Business, Risk Management, ESG and Sustainability.	Not applicable(*2)	Finance
Managing Director (Independent Director)	Yu-Hsueh Wu	M	1	Banking, Law, Labor Rights and Remuneration Management, ESG and Sustainability.	V	Consumer Discretionary
Director	Chien-Yi Chang	M	5	Banking, Technology, Venture Capital, Economics, Monetary Policy.	V	Finance
Director	Shiu-Yen Lin	F	1	Banking, Administration, Economics.	V	Finance
Director	Kuo-Tung Huang (Resigned on May 16, 2024)	M	1	Banking, Marketing, Labor Rights and Remuneration Management.	V	Finance
Director	Jen-Chieh Hsu (Took office on May 16, 2024)	M	-	Banking, Labor Rights, Law, Risk Management.	V	Finance
Director	Wen-Siung Lee	M	3	Banking, Insurance, Securities, Administration, Business.	V	Finance
Independent Director	Shu-Hua Lee	F	1	Accounting, Finance, ESG and Sustainability.	V	Finance
Independent Director	Chao-Kuei Huang	F	1	Marketing, Technology, Business, Information Management, e-Commerce and Online Marketing, ESG and Sustainability.	V	Information Technology

Note:

1. We adopt the definitions of independent directors under RobecoSam's Dow Jones Sustainability Index (DJSI) for outside directors' independence criteria. Directors must meet at least 4 of the 9 following indicators and meet at least 2 of the first 3 indicators:

The director must not have been employed by the Bank in an executive capacity within 2023.
The director and Family Member of the director must not accept any payments from the Bank or any subsidiary of the Bank in excess of US$60,000 during 2023, other than those permitted by SEC Rule 4200 Definitions.
The director must not be a "Family Member of an individual who is employed by the Bank or by any subsidiary of the Bank as an executive officer."
The director must not be an adviser or consultant to the Bank or a member of the Bank's senior management. ． The director must not be affiliated with a significant customer or supplier of the Bank.
The director must have no personal services contract(s) with the Bank or a member of the Bank's senior management.
The director must not be affiliated with a not-for-profit entity that receives significant contributions from the Bank.
The director must not have been a partner or employee of the company's outside auditor during 2023.
The director must not have any other conflict of interest that the board itself determines to mean they cannot be considered independent.

2. Chairperson Jong-Yuan Ling, the newly appointed chairperson Kuang-Hua Hu, Director Kuo-Tung Huang, and the newly appointed director Jen-Chieh Hsu (Manager & Deputy Section Chief, Loan Asset Management Division - not a senior managerial position) do not occupy senior managerial positions in the Bank and meet the independence criteria of DJSI. Managing Director Chao- Chung Chou serves as the President of the Bank concurrently, who is also an "Executive Director" (meaning that a director of the Bank is also an employee and senior manager of the Bank), and the criteria for the independence of the outside directors above do not apply; the rest of the Directors are "Non-executive Directors".
For the Directors' independence status of the Bank in accordance with the standards of domestic regulations, please refer to the Bank's 2023 Annual Report for detailed information.
All directors of the Bank are R.O.C nationals.

Implementation of the Board and Recusal due to Conflicts of Interest

All directors performed their duties in accordance with the Bank's Articles of Incorporation and Rules of Procedures for Board of Directors Meetings. The average of the attendance of all members on the Board should reach 85% or above. In 2023, the Board of Directors held 14 meetings (the 26th: 6 times/ attendance rate: 94.12%; the 27th: 8 times/attendance rate: 100%).
If there is a proposal, with which a director has a conflict of interest, at a Board meeting, they should recuse themselves from the resolution. For the directors' recusal from the resolution due to conflicts of interest, Please refer to the Annual Report, III Corporate Governance Report, D. Implementation Status of Corporate Governance, a. Implementation of Board of Directors, and 2. The implementation of the Directors' recusal to content of motion in conflicts of interest. (The Bank discloses the following information in the annual report, including the positions held by directors concurrently, the institutional shareholders they represent, the major shareholders of the institutional shareholders, and the information on the top ten shareholders who are related parties to each other.)
Communication about Key Material Events All the Bank's responsible units submit major proposals to the Board of Directors for review or deliberation on a regular or irregular basis due to practical operational needs or regulatory requirements. They can also report to the Board of Directors in real time by means of extraordinary motions, to inform the Board of Directors and communicate with it in a timely manner.

Functional Committees of the Board of Directors

The Board of Directors of the Bank has set up 3 functional committees, the Audit Committee, the Remuneration Committee and the Sustainable Development Committee. Their composition and operating status are as follows: