Sustainable Risk Control

Conduct regular self-evaluation on compliance to reduce risk of violation.

Regulatory Compliance System

In 2014, the President of Corporate Management served as the chief supervisor and established a company-wide regulatory compliance system.

Objective

Enhance employees’ legal awareness to avoid illegality.
Protect corporate interests and image.
Reduce operational risks for the Board and management team.
Improve corporate efficiency.

Coverage Areas

The system is to confirm key regulations concerning corporate operations. Regulations governing penalties for Board members and managers, damages to corporate image, major civil offenses and administrative liability are given priority status for implementation. Areas prone to deficiency are listed as the focus of the annual audit. Given the above criteria, 85 regulations and 602 control points are identified.

Implementation of 2023

All units are required to conduct self-assessments monthly to ensure compliance with field regulations, thus reducing legal risks. The Legal Department will perform on-site inspections, and the results will be submitted to the Board of Directors. Key tasks in 2023 include:

Responding to law amendments by establishing or revising relevant regulations in the Articles of Incorporation of the Company
Conducting legal compliance reviews, focusing on major public attention cases and addressing any illegal deficiencies
Revising the self-evaluation compliance system to enhance efficiency, particularly in response to information security
Improving awareness of sexual harassment in response to law amendments
Assisting the American subsidiary in preparing a document preservation policy and reaching an agreement with the state government on excess emission improvement
Utilizing robotic process automation to assist in checking whether foreign credit customers are subject to US sanctions
Monitoring the establishment or amendment of the Climate Change Act
Distributing the latest regulations to every factory and subsidiary on a monthly basis
Participating in monthly Risk Control Meetings and weekly member meetings at the Vietnam subsidiary, along with providing weekly reports on law regulations

Coverage Areas of Regulatory Audit

Target	Compliance Detail and Number of Control Points
Shareholder	Financial report (18), internal control (17), issuance of credit and endorsement/guarantee (17), acquisition and disposal of assets (42), convening of meeting (75)
Customer and Competitor	Fair trade (5), import/export (8)
Corporate Asset	Business accounting (9), tax management (58), patent and trademark (20), Copyright Act (13), trade secret (6), personal data protection (11)
Employee	Labor condition (59), welfare and insurance (28), labor relations (33), labor retirement (23), health and safety (69)
Society	Corporate corruption (18), political donation (8)
Environment	Environmental protection (65)

Note: The number indicated with the parenthesis refers the number of control points.

Implementation Detail

Category	Focus	Task	2022 Performance
Establish Communication	A clear and adequate system for the conveyance, consultation, coordination and reporting of regulatory information was established. The SOP and grievance mechanisms for violations were established, including the email for reporting regulatory compliance issues and for the Audit Committee and Audit Department.	Designate regulatory compliance personnel. Report violations and penalty immediately.	The compliance staff from all departments report monthly on violations and penalty. No grievance claims were filed in 2022.
Regulatory Update	Track the latest regulatory amendments and updates on a regular basis and convey the changes to all units immediately. Provide advanced risk alert on violations for all units.	Convey the latest regulatory changes to applicable units and personnel. Update Company regulations in accordance with regulatory changes.	Develop robotic process automation (RPA), which extracts regulatory updates daily from the Executive Yuan Gazette Online and the Financial Supervisory Commission, and weekly from sources related to the economy, health and safety, labor affairs and fire safety. The updates are sent to applicable personnel immediately. Amend Meeting Rules of Stockholders, Corporate Governance Principles, Procedures for Handling Material Inside Information and Meeting Rules of Board of Directors to align with regulatory amendments. Review and revise pension withdrawal rules at the U.S. subsidiaries in compliance with the U.S. federal and local tax regulations.
Regulatory Training	Publish information on regulatory enactment, case studies and regulatory education. Conduct training on key regulatory amendments. Provide in-person and online training on regulatory compliance for new employees (intellectual property/copyright/Criminal Code and corporate corruption/labor conditions/trade secret).	Designate appropriate staff to undergo training.	Prevent violations and ensure corporate compliance through corruption prevention and control promotion and training to familiarize staff with anti-corruption policy and regulations.
Compliance Evaluation	Implementation of regulatory compliance was reported to the Board quarterly. Self-evaluation checklists were established targeting the regulatory control points. The Legal Department collaborated with the Human Resources Department, Labor Safety and Health Department and Audit Department to complete on-site inspections, report to the Board, provide guidance for all departments on improvements and follow up.	All departments conducted self-evaluation on regulatory compliance and completed the necessarily forms. All departments formulate and implement improvement plans to address deficiencies identified in the self-evaluations. On-site inspections were conducted with supple mentary information provided.	Adjust quarterly self-evaluations to be conducted monthly to promptly monitor regulatory compliance at all departments and subsidiaries, effective in July 2022. Conduct on-site compliance audits at all plants and subsidiaries in October and at Corporate Management in December.