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Ethical Corporate Management

Location:Home > CSR > CORPORATE GOVERNANCE > Ethical Corporate Management

According to Ethical Corporate Management Principles, and with integrity serving as the basis for policies, a prevention program was created and all employees signed an undertaking agreeing to comply with company rules. Moreover, in 2014, Ethical Corporate Management Best-Practice Procedure and Code of Conduct were issued. Acts of bad faith, benefits, and a reward system were specified in order to standardize employee business practices and to assign special units responsible for maintaining and implementing integrity management.

The Ethical Corporate Management Principles helps ensure that employees perform their duties according to the law and to ethical codes of conduct, it aims to prevent conflicts of interest, and it shows our commitment to the pursuit of high ethical standards. New hires are also required to attend courses, including ones on corporate ethics and the Ethical Corporate Management Principles. With proper training and a clear stance on company discipline, and with employees’ strict adherence to the Code, we assure that this attitude persists.

Insurance for "Employee Integrity Risk", with the company listed as the insured, prevents and protects against dishonest actions by employees which might cause grave damage to the company (such as legal or financial accounting personnel), and cause the loss of company assets or assets the company is charged to steward. This will offset operational risk onto an insurance liability, reducing losses to the company and thereby protecting shareholder interests.

Revised by the Taiwan Stock Exchange in December 2018, the Corporate Governance Best Practice Principles require companies to obtain directors liability insurance with respect to liabilities resulting from exercising their duties during their terms of directorship in order to reduce and disperse the risk of significant damage to the company and shareholders due to director error or negligence.

The company’s policy regarding director insurance goes beyond current legal requirements. Since going public in 2012, the company has purchased liability insurance for our directors. In August 2017, during a special shareholder meeting, the Articles of Association were revised to add retired directors to the scope of compensation, while indemnity agreements shall also be signed by each director. At the same time, the company purchases Directors and Officers Liability Insurance to prevent erroneous actions taken by directors and supervisors and company officers in the process of their executive duties to cause damages to third parties and provide them with a means to pursue a claim. The insurance also helps to mitigate financial risks to the company caused by litigation and ensure healthy company operations.

As stated in Clause 3 of the company's "Guiding Principles for Operational Integrity": "Directors, managers, employees, responsible persons or those with the capacity for material control in the company and its subsidiaries may not directly or indirectly supply, pledge, require or accept any improper benefit in the course of doing business, or engage in any dishonest action that would violate law or be in contradiction of the duties with which they were entrusted, to seek gain or maintain interests."

Moreover, Clause 10 addresses regulations governing commercial activities: "Prior to a business interaction, the company shall consider the legality of agents, suppliers, customers or other commercial counterparts in the transaction, and whether these are engaged in dishonest actions, and avoid transactions with those engaging in dishonest actions." Consequently, all bribes are explicitly forbidden (Clause 11) as are improper gains (Clause 14).

On the other hand, the company's "Guide to Integrity in Management Procedures and Behavior" further stipulates how cases of improper gain shall be handled (Clause 7) as well as the method for assessment of integrity before establishing a business relationship with a customer (Article 17) and how to avoid transactions with dishonest parties (Article 19). In March 2019, the company amended the Chailease Corporate Governance Best Practice Principles, Ethical Conduct Principles, and Procedures for Ethical Management and Guidelines for Conduct.

The company has also established a set of "Rules for Reporting Corruption and Actions Against the Code of Conduct" and "Rules for the Protection of Whistleblowers", and personnel within and outside of the company may utilize variety of channels to report improper actions, corruption, or actions in violation of law or the Code of Conduct. They may call the hotline listed in the official website's corruption watch section, or submit reports in writing or by email.

After verification, the matter will be dealt with accordingly and internal guidance provided for compliance with the requirements of company discipline and work rules. As of February 12, 2020, a total of 8 cases of violations of the Code of Conduct(one cases involves an employee accepts improper personal benefits)had been handled among employees in Taiwan and Mainland China, all of which have been handled according to the company's regulations, with internal guidance provided. (Relevant information has been disclosed in the company's annual report "Corporate Governance Report" in the "Most Recent Year and Year-to-Date-of-Publication Corporate Personnel Sanctioned According to Law, Sanctions against Personnel Contravening Internal Controls Systems, and Major Losses").