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Corporate Conduct and Ethics Implementation

Assessment Items Status Non-compliance and Reasons
Yes No Description
1. Establishment of ethical management policies and implementation measures
(1) Does the Company clearly express in the Company’s internal policies and external documents of ethical management policies and the Board and management’s commitment to implement those policies? V (1) The Company has established the “Principles of Business Ethics” and publicly announced to all personnel. Both the Board of Directors and management team are committed to its execution. None
(2) Does the Company establish policies to prevent unethical conduct, stipulate relevant procedures, guidelines, disciplinary measures and compliant system in those policies and thoroughly execute them? V (2) The Company has established “Procedures and Guidelines for Business Ethics” to encourage internal and external parties to report unethical behaviors or misconducts. Based on the degree of misconduct, whistleblowers could receive a citation of merit pursuant to the Company’s reward and discipline policy. Internal personnel making false accusation or malicious claims will be disciplined. Serious offense can lead to termination of employment. The Company will create and announce an internal, independent whistleblowing mailbox or hotline for internal and external personnel of the Company.
(3) Does the Company establish preventive measures for the business activities prescribed in Paragraph 2, Article 7 of the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies and any other such activities associated with high risk of unethical conduct? V (3) The Company has established measures to prevent operating activities involving higher risk of unethical conduct, which include:
  1. Offering and acceptance of bribes
  2. Provision of illegal political contribution
  3. Improper charitable donations or sponsorship
  4. Offering or acceptance of unreasonable gifts, hospitality or other improper benefits
  5. Infringement of trade secrets, trademarks, patents, copyrights and other intellectual property rights
  6. Unfair competition
  7. Maliciously and gravely jeopardize the rights, health and safety of consumers or other stakeholders during the process of research and development, purchase, manufacture, rendering or sale of products and services
2. Implementation of ethical management
(1) Does the Company review the counterparty’s history of ethical conduct and include the compliance of business ethics as a clause in the contract? V (1) Personnel of the Company shall avoid engaging in business with unethical agents, suppliers, customers or other business counterparties. Once we are aware of the counterparty’s misconduct, we will terminate all business dealings and blacklist the counterparty for future dealings to meet our requirement for business ethics. None
(2) Has the Company established an exclusively or concurrently dedicated department under the Board to promote ethical conducts and report to the Board of Directors periodically? V (2) The Company appoints a dedicated division to be in charge of formulating and monitoring the execution of ethics policies and preventive actions. The division shall communicate to the Board of Directors whenever they deem necessary.
(3) Has the Company established policies to prevent conflicts of interest, provide appropriate communication channels and thoroughly implement the policies? V (3) Before signing contracts, the Company and its subsidiaries shall fully understand the degree of business ethics of the counterparty and include the compliance of business ethics as a clause in the contract. Once a party becomes aware of any violation of contractual terms on prohibition of commission, rebates or other benefits, it shall promptly inform the other party of the violator’s identity, method of provision, promise, request, or acceptance of improper benefits, amount or other benefits and provide relevant evident to assist with investigation. The Company and its subsidiaries are entitled to make a claim to the other party for any detriment suffered as a result. The claims can be deducted from our payables if this clause was explicitly stated in the contract. Moreover, in order to thoroughly implement the rules regarding conflict of interest and prevent damage to the Company, the Auditing Office will soon establish a whistleblowing system as a proper complaint channel to avoid any conflict of interest.
(4) Has the Company established effective accounting and internal control systems for the implementation of ethics policies and appointed internal auditors or CPAs to audit such execution and compliance? V (4) The Company has established Auditing Office, which reports directly to the Board. Each year, the Auditing Office carries out audits according to the Annual Audit Plan, monitors corrective actions for deficiencies and regularly submits audit reports to the Board for management to understand the effectiveness of internal control system.
(5) Has the Company regularly held internal and external training sessions of business ethics? V (5) The Company conveys the importance of business ethics at orientation programs, regular meetings and corporate ethics sessions. Ethics is one of the indicators in performance review.
3. Implementation of whistleblowing system
(1) Has the Company established specific whistleblowing and reward systems, set up conveniently accessible complaint channels, and designated responsible individuals to handle the complaint received? V (1) The Company has provided proper channels for reporting any unethical conducts. It would keep the identity and complaint of the whistleblower confidential. The Company has designated responsible individuals to investigate the complaint. None
(2) Has the Company established standard operating procedures for investigating the complaints received and ensuring such complaints are handled in a confidential manner? V (2) The Company follows standard operating procedures and relevant mechanism to maintain the confidentiality of case details when conducting investigations.
(3) Has the Company established measures to protect whistleblowers from retaliation? V (3) The Company follows standard operating procedures and relevant mechanism to protect the whistleblowers from retaliation.
4. Enhancement on Information disclosure
(1) Does the Company disclose its principles of business ethics and information about implementation of such guidelines on its website and MOPS? V (1) The Company has disclosed the “Principles of Business Ethics” on the corporate website, www.taiflex.com.tw. Relevant information is disclosed in the 2015 annual report. None
5. If the Company has established ethical conduct policies based on “Ethical Corporate Management Best Practice Principles for TWSE/GTSM-Listed Companies”, please specify any discrepancy between the policies and their implementation:
The Company upholds the principles of fairness, honesty, trustworthiness and transparency in all business transactions. Principles of Business Ethics are established in accordance with the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM-Listed Companies” for all employees to follow.
6. Other important information to facilitate better understanding of the Company’s ethical conduct practices (e.g. the Company reviews and revises its Principles of Business Ethics, etc.):
The Company follows ethical guidelines for all business transactions and encourages business partners to follow suit.