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Corporate Governance

Ethical Corporate Management Status

Update: 2023/1/11

Implementation of Ethical Corporate Management and Deviations from "Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies" and Reasons

1. Establishment of Ethical Corporate Management Policies and Programs

Abstract Illustration：
  • The Corporation adheres to the five core values of Discipline, Integrity, Efficiency, Innovation, and Sensibility, and has established ethical policies and a corporate culture of ethical management based on our operational principles of Honesty, Transparency, and Responsibility. We have also established our Code of Ethical Conduct; Ethical Corporate Management Best Practice Principles; Regulation of Whistle-Blowing System for Unlawful, Unethical Conduct and Dishonesty Behavior; Regulations for Management of the Prevention of Insider Trading; Reward and Discipline Regulation; Grievance Regulation; and Procurement Staff Ethical Regulation for our employees to abide by.
  • The Corporation established the "Ethical Corporate Management Best Practice Principles" following approval at the 11th meeting of the 7th Board on June 19, 2016, and these Principles were revised following approval at the 36th meeting of the 8th Board on March 18, 2020 to stipulate that directors and managers shall exercise due care of good administrators when carrying out business duties, rigorously execute their duties, and implement the commitments of ethical management policies.
  • Additionally, the Corporation's "Procedures for Ethical Corporate Management and Guidelines for Conduct" were established following approval at the 36th meeting of the 8th Board on March 18, 2020, and contain specific stipulations regarding compliance with ethical management policy items by Corporation personnel.

Abstract Illustration：
  • In addition to our "Code of Ethical Conduct" and "Code of Conduct," we have also established "Ethical Corporate Management Best Practice Principles" and "Regulation of Whistle-Blowing System for Unlawful, Unethical Conduct and Dishonesty Behavior" to provide clear and detailed guidelines for operating procedures, behaviors, education and training, disciplinary violations, and appeals systems. The formulation and implementation of integrity management policies are overseen by our audit department, which periodically reports to the Board.
  • The Corporation has also established "Procedures for Ethical Corporate Management and Guidelines for Conduct" to serve as our policy for guiding ethical management, stating in clear detail specific ethical management measures and preventive measures for unethical conduct.

Abstract Illustration：
  • The Corporation has also established "Procedures for Ethical Corporate Management and Guidelines for Conduct" to serve as our policy for guiding ethical management, stipulating operational procedures, codes of conduct, disciplinary actions for violations, and appeals systems, and we periodically review and revise whether preventive measures are operating effectively.
  • The Corporation has established "Procurement Regulation" containing articles relating to business confidentiality and conflicts of interests in procurement staff, and employees that exhibit dishonest behaviors are subject to disciplinary actions under the "Rules Governing Rewards and Disciplinary Action" depending on severity of the cases.
  • The Corporation's "Code of Ethical Conduct," "Code of Conduct," and "Work Rules" contain stipulations relating to business confidentiality and conflicts of interests in staff conduct, and employees that conduct dishonest behaviors are subject to disciplinary actions under the "Reward and Discipline Regulation" depending on severity of the cases.

2. Fulfillment of Operations Integrity Policy

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  • The Corporation has established an assessment system for suppliers and business partners. During contract negotiation, the rights and obligations of both parties are well documented, and confidentiality clauses are contained in all contracts.

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  • In order to fulfill our supervisory obligations of ethical management, the Corporation has established a Corporate Governance Nomination Committee, an Audit Committee, and a Remuneration Committee to supervise compliance with ethical management. Additionally, the Ethical Management Team, which is established under the "Corporate Governance Promotion Committee," is convened by the vice president of the Corporate Planning Division and composed of representatives from the Legal Office, the Audit Office, the Human Resources Division, the Secretariat Division of the Board of Directors, and the Corporate Planning Division. The Ethical Management Team is responsible for reviewing and improving ethical management policies and implementing measures, assessing ethical management developments both domestically and overseas, convening quarterly to discuss implementation of ethical management, and making annual reports on specific performance and promotion measures of ethical management to the Board. The specific performance and promotion measures of ethical management for 2021 and the first half of 2022 were reported at the 27th meeting of the 9th Board on June 15, 2022. The main annual work plans and duties of the Ethical Management Team are as follows:
    1. Integrate ethical values into the Corporation's operational strategies and establish measures to ensure ethical management in accordance with laws and regulations.
    2. Establish programs containing standard operating procedures and behavioral guidelines for work duties to prevent unethical behavior.
    3. Plan internal organization, preparation, and job duties for mutual supervision and balance of operational activities at high risk of unethical behavior.
    4. Promote and coordinate ethical management policies and training.
    5. Plan systems for reporting ethical violations to ensure effective implementation.
    6. Assist the Board and management in reviewing and assessing effective operation of ethical management measures, and periodically assess and report on adherence of relevant processes.
  • Implementations of the Ethical Management Team for 2022 included the following:
    1. Review of systems and establishment of preventive measures for ethical management in accordance with laws and regulations.
    2. Established programs for prevention of unethical behaviors, including associated standard operating procedures and codes of conduct.
    3. Promoted and ensured implementation of the "Ethical Corporate Management Best Practice Principles" and the "Procedures for Ethical Corporate Management and Guidelines for Conduct" according to the duties of each unit.
    4. Conduct periodic reviews of legal compliance in internal audits, accounting procedures, and internal controls. Additionally, all units conduct monthly surveys of regulatory changes and have established relevant management systems. The Legal Office hosts quarterly meeting for legal compliance representatives to discuss implementations and promote important regulations.
  • The Corporation has implemented ethical corporate management policies in accordance with corporate governance, business strategies, and operating procedures. Ethical management training, attendees, and training hours for 2022, as well as specific implementations of ethical management were as follows:
    1. 341 new recruiting employees received communications and training in anti-corruption policies, accounting for 7.2% of total employees.
    2. We hosted ethical management training programs for all employees for a total of 4,747 participants and ran for a total of 2,373.5 hours. In addition, the directors and senior management of the company have signed the "Ethical Management Policy Statement."
    3. We hosted training courses for prevention of insider trading for all employees for a total of 4,747 participants and ran for a total of 2,373.5 hours.
    4. We provide 203 people-times (including insiders and quasi insiders) with written information of the Prevention of Insider Trading every quarter.
    5. The Corporation upholds principles of ethical management and initiated the "Promotion Plan for Legal Compliance" in 2016 for comprehensive management of compliance with regulating authorities and Corporation regulations laid out in the Corporation Charter. Additionally, relevant regulations and rulings of regulating authorities are reviewed and presented every quarter, and legal compliance meetings are held to ensure that Corporation employees adhere to relevant regulations.
    6. Confidentiality of tender information, protection of intellectual property rights, and commitment of corporate social responsibility are enclosed on tender instructions and affidavits, and prevention of unjust enrichment and conflicts of interests are stated in the main body of the contract.
    7. We established an Audit Committee mailbox in the "Stakeholders" section of our corporate website to serve as a direct communication channel between stakeholders and the Audit Committee.
    8. We established internal and external whistle-blowing channels (including phone, fax, and mailbox channels) and set up a dedicated team for reviewing and investigating reported cases, and tracking management mechanisms.
  • Detailed information on the Ethical Management Team can be found under the “Corporation Governance and Organizational Structure” sub-section of the Corporate Governance section, and the “Ethical Governance” page under the "Sustainable Development" sub-section in the "ESG" section of our corporate website.

Abstract Illustration：
  • The Corporation's regulations stipulate that managers of all levels are responsible for assisting the Corporation President in promoting ethical management policies. All conflicts of interest should be reported to department heads. The Corporation has also established "Grievance Regulation" and "Regulation of Whistle-Blowing System for Unlawful, Unethical Conduct and Dishonesty Behavior" to provide timely and appropriate channels for making statements and reports to prevent conflicts of interest.

Abstract Illustration：
  • In order to implement ethical management, regulation compliance at the Corporation is periodically reviewed by internal auditing, accounting, and internal control systems.
  • The Corporation implements internal control mechanisms on an annual basis. The Quality Assurance Office acts as a secretariat unit in executing internal control systems and self-inspection of administrative procedures. Each office carries out self-inspections that are reviewed by the Audit Office. Finally, CPAs are responsible for issuing review reports on internal control systems.
  • The accounting system at THSRC has been effectively implemented for many years. Every year, certified accountants conduct an audit and issue an audit report.
  • The Corporation's "Ethical Corporate Management Best Practice Principles" stipulate that internal audit units should formulate audit plans based on risk assessments of unethical conduct which can be used to review compliance with measures for preventing unethical conduct, and which may be audited by CPAs. Assistance may be obtained from professionals when necessary.

Abstract Illustration：
  • The Corporation's Ethical Corporate Management Best Practice Principles stipulate that the Corporation should host periodic training and promotion activities for Board directors, managers, employees, and fiduciaries s to help them understand the Corporation's determination in implementing ethical management, related policies, prevention solutions, and consequences of ethical violations.

3. Operation of the Integrity Channel

Abstract Illustration：
  • The Corporation has established our "Code of Conduct," "Grievance Regulation," and "Regulation of Whistle-Blowing System for Unlawful, Unethical Conduct and Dishonesty Behavior." Related matters are handled by dedicated units and service hotlines have been set up to handle feedback in accordance with established processes.

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  • The Corporation's "Code of Conduct," "Grievance Regulation," and "Regulation of Whistle-Blowing System for Unlawful, Unethical Conduct and Dishonesty Behavior" have clear stipulations on the appeals process and reviewing units, and commit to confidentiality for appeal makers and related evidence.

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  • The Corporation's "Code of Conduct," "Grievance Regulation," and "Regulation of Whistle-Blowing System for Unlawful, Unethical Conduct and Dishonesty Behavior" clearly stipulate that if reported persons threaten or retaliate against whistleblowers, the Corporation will take disciplinary action according to relevant regulations.

4. Enhancing Information Disclosure Does the company discloses its ethical corporate management policies and the results of its implementation on the company's website and MOPS?

Abstract Illustration：
  • The Corporation's "Ethical Corporate Management Best Practice Principles" and relevant standards are publicly available for review on our internal and external websites. When revisions are made, these are announced to all staff members and information on our website is simultaneously updated.
  • The Corporation has established a "Regulations of Disclosure Information" and "Regulation for Posting Information on the 'Market Observation Post System," allowing us to fulfill our responsibilities and obligations of information disclosures and disclose important information in a timely manner. Additionally, voluntary disclosures are posted to the Market Observation Post System and our corporate website to strengthen information transparency and enhance timeliness, symmetry, and fairness of information disclosures.

5. If the company has established the ethical corporate management policies based on the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies, please describe any discrepancy between the policies and their implementation?

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  • None

6. Other important information to facilitate a better understanding of the company's ethical corporate management policies (e.g., review and amend its policies).

Abstract Illustration：
  • To implement the basics of ethical corporate management policies, the Corporation operates under the Corporation Act, Securities and Exchange Act, Businesses Entity Accounting Act, related regulations for TWSE/TPEx-Listed Companies, and other laws and decrees concerning business transactions.