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

In 2023, classification societies inspected the Company's own ships and identified 126 deficiencies to be corrected within a specified time frame, and the Company has completed the corrective measures within the time frame. 122 ships underwent PSC inspections, of which 85 passed with deficiencies and 37 were identified to have 117 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.

In 2023, a total of 5 ships were detained during PSC inspections. Among them, 2 ships completed the corrective measures before departure and were not delayed. The details are shown below:

1. On September 22, 2023, YM UTILITY was detained in the Port of Shanghai, China, with the following deficiencies reported:

2. On November 7, 2023, YM ETERNITY was detained in the Port of Shekou, China, with the following deficiencies reported:

3. On November 30, 2023, YM UNIFORM was detained in the Port of Yantian, China, with the following deficiencies reported:

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. The Company has 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 according to Articles 8, 9 and 13 of the "Regulations Governing Establishment of Internal Control Systems by Public Companies." The Company also plans to include privacy protection and cyber security inspection as audit items in the annual internal audit plan from 2024.

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

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 Huan Ming (Shanghai) International Shipping Agency Co., Ltd. has reviewed internal procedures and made adjustments and revisions to relevant documents for compliance with the regulatory requirements.
 

In 2023, the Company did not have any substantiated personal data leakage incident or receive complaints from stakeholders regarding the use of personal data.

Litigations and Violations of Law

Since 2022, the Legal Affairs Office has submitted a list of major projects, contracts, or legal cases with brief descriptions to the Board of Directors on a quarterly basis to achieve information transparency and help the Board of Directors stay abreast of the development of major cases. In 2023, 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 2.420 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 severe violations of laws and regulations in environmental and social aspects.

Note: The Company defines serious violations as anti-competitive or anti-monopoly cases or cases with a penalty of NT$1 million or more.

Description of anti-competitive cases

In 2023, 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. In the same year, the FMC judge ruled that the respondents' specific conduct violated the Shipping Act and issued a cease and desist order, and did not impose a fine on the respondent or hold the respondent liable for compensation. The Company appealed within the time limit to protect the Company's rights and interests.

Description of anti-monopoly cases

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 has filed an administrative lawsuit with the Seoul High Administrative Court as per law, which is still in the adjudication process.

Training

The Company has always spared no effort when it comes to legal compliance. The Company arranges regular legal compliance courses for continuing learning and education for 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 compliance 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 in 2022. Unlike routine internal audits for management departments, the ship/financial/information project audits completed between 2022 and 2023 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 the 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, tender notices, 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

In line with the information security standards of digital transformation and upon the advice of the Company's independent directors and CPAs, the Legal Affairs Office worked with the Information Technology Department to select and purchase an appropriate electronic contract management system to manage the Company's contract review procedure in a fully systematic manner. The system was developed in 2022 and launched for all cases in 2023 so that the full track record of contract cases can be preserved and the problems of hard-copy documents and emails that were difficult to keep and check can be solved. In addition, the system also provides various auxiliary functions, such as a document comparison system and the setting of contract expiry notice, to improve operational efficiency and reserve business response time, avoiding an interim between the end of a contract and the start of a new one. In the future, the Company will continue to adjust or upgrade the system functions and optimize contract management procedures based on the Company's policies and needs.

The Duty of Audit Office

The organizational regulations of Yang Ming Marine Transport Corporation has been  approved at the 369^th (12^th meeting of the 20^th 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.