Legal Compliance

 

Response to Countries’ Competition Laws

Yang Ming operates worldwide. To comply with the laws and regulations of each country, the Company has set up the Legal Compliance Office to be in charge of data on the competition laws of Taiwan, China, the European Union, the USA and other important regions. We also actively join external organizations to be informed of the latest information and regulations, continuously monitor the environment and competition, and make timely adjustments to operational actions to ensure legal compliance. To respond to countries’ competition law updates and ensure the consistency of internal information with the updated competition laws, in addition to sending emails regularly to all employees of the Group, including its agents worldwide, to propagate the competition laws so as to enhance their compliance awareness and reduce the probability of violations of law by them, the responsible units present compliance matters at important meetings and increase the knowledge of the personnel assigned overseas on local competition laws to prevent violations of law. 

Vessel PSC Inspection and Detention Events

95 of the Company’s vessels underwent PSC inspections in 2022 and among them, 69 vessels passed without deficiencies and 26 vessels were identified to have 61 deficiencies. Abnormality and non-compliance (NC) reports, corrective action reports (CARs/CAPs) and corrective evidence were prepared for continuous tracking and improvement, and they were then transferred to the competent authorities of the flag states for case closure. 

On July 12, 2022, YM MASCULINITY cooperated with the NingBo Maritime Safety Administration to undergo a remote PSC inspection at the Port of Ningbo. Deficiencies were found in the inspection and the vessel was requested to receive a second inspection. The vessel was thus detained for 1 day. The deficiency report is shown below：

Deficiencies	An alarm message displayed on the panel of the fire control system in the bridge.  The second officer had a lack of familiarity with operating GMDSS equipment.
Corrective Measures	The crew in the engine room conducted tests to check if the alarm message resulted from line problems. After short circuits were ruled out, if the failure could not be fixed on the vessel, such failure must be reported to the Company immediately, and MCP accessories were replaced instantly to solve the failure.  The second officer has striven for self-improvements, and personnel were designated to provide guidance. The superior of the second officer checked the familiarity thereof with the operating skills for verification.  For the detention deficiencies, an ABS SURVEYOR was commissioned to board the vessel for a second inspection. The vessel passed the inspection.
Prevention Mechanisms	Implement inspections and reporting and request onboard inspectors to be more focused on the inspections, on which further supervision and training on the vessel will be ensured.  Request onboard officers to give operational training to the new staff coming on board and verify their familiarity during their familiarization training and add the training to the monthly retraining items.

Personal Data Protection Laws

Personal data protection is not only an important process to implement corporate governance, but also a key commitment to achieve sustainable development. The Company established the “Personal Data Protection Operating Procedures” as the norm for employees’ collection, processing and use of personal data. We have developed a sound personal data protection system, kept an eye on the development of laws and regulations related to personal data protection, and, if appropriate, adjusted the Company’s legal compliance policies and relevant norms to ensure that the related procedures are compliant with the latest regulatory requirements. The Company’s employees are required to attend courses on personal data protection laws and regulations regularly, and the education and training hours include those for such courses, raising the employees’ personal data protection awareness and enhancing management measures. In response to the digital development trend, the Company has developed control procedures for personal data protection and computerized information systems and included inspection of information and communications security as a required audit item for the annual audit plan according to Articles 8, 9 and 13 of the “Regulations Governing Establishment of Internal Control Systems by Public Companies”. 

Pursuant to the General Data Protection Regulation (GDPR) implemented by the EU, the Company has designated a Data Protection Officer (DPO) in the Europe Head Office, who is responsible for handling local personal data protection matters, and adjusted the Privacy and Security Statement on the Group’s website. 

To respond to the “Personal Information Protection Law” implemented by China from November 2021 to regulate the collection and use of personal data, the Company’s agent in China has reviewed internal procedures and made adjustments and revisions to relevant documents for compliance with the regulatory requirements. 

Litigations and Violations of Law

In 2022, there were 1 anti-competitive case (not closed yet) and 1 anti-monopoly case arising from the Company’s operating activities worldwide. A penalty of 2.419 billion won (about US$2 million) was imposed on Yang Ming in the anti-monopoly case. The detailed description of the 2 cases is as follows. The Company was neither involved in any litigation due to corruption nor punished for serious violations of laws and regulations in environmental and social aspects. 

● Description of anti-competitive cases

In 2022, the Company was involved in an unsettled anti-competitive behavior suit arising from the complaint filed by Intermodal Motor Carriers Conference (IMCC) of the American Trucking Associations (ATA) to the Federal Maritime Commission (FMC) against the Ocean Carrier Equipment Management Association (OCEMA) and its member carriers for restricting the rights of American trucking companies to select suppliers and chassis together with the Company. 

● Description of anti-monopoly

In 2022, the Korea Fair Trade Commission (KFTC) confirmed that a total of 23 carriers (including the Company) around the world were engaged in an illegal concerted action on the Korea-Southeast Asia line, which was in violation of Korea's Monopoly Regulation and Fair Trade Act and thus imposed penalties and rectification orders. For the written ruling by the KFTC, the Company sought relief by “submitting an objection against the ruling by the KFTC and, if necessary, filing an administrative lawsuit.” In July 2022, although the KFTC overruled the objection submitted by Yang Ming, the Company immediately filed an administrative lawsuit to the Seoul High Administrative Court as per law to protect the rights and interests of the Company. 

Training

The Company has always spared no effort when it comes to legal compliance. We arrange regular legal compliance courses for continuing learning and education for our employees to ingrain the idea of legal compliance in their daily work routine. 

Implementation of the Internal Audit System

Project Audit

The Audit Department is the third line of defense for compliance governance and is mainly responsible for fully assessing and checking the Company’s internal control and operations and reviewing the compliance of the internal control and operations with laws and regulations as well as moral standards through audits in order to identify and solve issues as soon as possible, thereby boosting the Company’s legal compliance and risk management capabilities. Yang Ming’s Audit Department introduced a project audit system (covering vessel and financial project audits) in 2022. Unlike routine internal control audits for management departments, project audits involve multiple departments and relevant personnel. By promoting departmental communication and coordination, the horizontal and vertical efficiency of collaboration in projects is increased, facilitating corporate optimization and reducing repetitive tasks and resource waste. This not only improves departmental synergy and project quality, but also promotes relevant units’ identification of potential problems and bottlenecks and development of innovative management solutions. Fully assessing and analyzing items through project audits can effectively help decision makers enhance decision quality, improve risk management, and boost the Company’s risk prevention and control capabilities, reducing losses and risks. Furthermore, project audits can help improve the credibility and reputation of the Company, cement the trust and recognition of the stakeholders, increase the transparency and fairness of the Company’s information disclosure, and assist the Company in achieving long-term and sustainable business development. 

Compliance Review

The Company’s Legal Affairs Office, Insurance & Claim Department, Legal Compliance Office, and relevant departments and offices assist in reviewing contracts and other legal documents to verify the legality, compliance and reasonableness in order to reduce the risks and losses resulting from legal and contract violations. In addition, they also give relevant units reminders to pay attention to competition laws, personal data protection, anti-money laundering, economic sanctions, embargos and other related laws and regulations and help clarify and identify legal risks to avoid violations of related laws and regulations. 

Contract Management

According to the advice of the Company’s independent directors and CPAs, the Legal Affairs Office, together with the Information Technology Department, has selected and purchased an appropriate contract management system to manage the Company’s contract review procedure in a fully systematic manner and to preserve and manage relevant contract documents using a unified method for a more transparent and controllable contract submission process. Using such a contract management system can not only reinforce contract management, contract performance management, and risk management for compliance with the existing information security standards, but also effectively boost the efficiency and quality of the contract review procedure. The contract management system was developed in 2022 and is scheduled to go live in 2023. 
 

The Duty of Audit Office

The organizational regulations of Yang Ming Marine Transport Corporation has been  approved at the 369th (12th meeting of the 20th session) Board of Directors, the duty of audit office as following： 

1. Auditing of each department’s compliance with policies, objectives and operating procedures. 
2. Internal control to cycle operation by internal audit system. 
3. ISO /ISM CODE internal operation audit matters. 
4. Coordinate and handle ISO/ISM CODE external audit matters 
5. Deliberation and supervision the projects including construction, renovation, purchase and sale property. 
6. Auditing of business matters entrusted by the agents and shipowners. 
7. Execution of the internal control system audit of the group's subsidiaries. 
8. Other assigned and special audit cases 

Audit Office organization table

In addition to the appointment and dismissal of the Senior Auditor, evaluation, and Remuneration shall be approved by the Board of Directors. The rest of the internal auditors can be approval by the Chairman.