HTC 2012 Annual Report Download - page 41

6. Status of HTC's Implementation of Ethical Corporate Management Best Practices and
Adoption of Related Measures:
Status of Implementation of Ethical Corporate Management Best Practices
Item Implementation Status Reason for Non-
implementation
1. Adoption of ethical corporate
management policies and programs
(1) Status of HTC's progress in
clearly adopting ethical corporate
management policies in its rules
and external documents, and of
the board of directors and the
management in undertaking to
rigorously and thoroughly enforce
such policies.
HTC's Code of Conduct is a guideline to provide high
ethical standards for all employees in conducting HTC
business activities. This Code includes three major
sections: the General Moral Imperative, Vendors/
Suppliers and Customers Relationship, and Conflict
of Interests which covers HTC's ethical management
policy. This Code is disclosed in the Annual report and
on the investor website.
The board of directors and the management all
place the greatest importance on adopting the
highest standards of integrity and ethics in corporate
management and employee work conduct. Bribery,
corruption, deception, and all other forms of improper
conduct are prohibited.
HTC does not produce
a Ethical Corporate
Management Best Practice
Principles per the Ethical
Corporate Management Best
Practice Principles for TWSE/
GTSM-Listed Companies.
HTC adopted Code of
Conduct for follow up.
(2) Status of HTC's adoption of a
program to prevent unethical
conduct, including its operational
procedures, guidelines for ethical
conduct, and education and
training operations.
The Code of Conduct describes Corporate
Confidentiality, Protection of Property, HTC's Assets,
and Personal Information, standards for entertainment
and Business Courtesies among All employees or
their immediately family members, customers and
suppliers/Vendors, Travel, Conflict of interest, Outside
Employment and Inside Trading to prevent unethical
conduct. The Code of Conduct is one of the courses
in the new employee orientation and is declared in the
e-learning courses. HTC also adopted the Corporation
Rules for Donations Out of Income as the principle to
approve and process Company's donation.
None
(3) Status of HTC's efforts, when
establishing the program to
prevent unethical conduct, to
address which business activities
within its business scope pose
higher risk of unethical conduct,
and to adopt preventive
measures against the offering
and acceptance of bribes, illegal
political donations, and so forth.
Per the Code of Conduct, HTC will hold new employee
orientation and ask employees to review the code
periodically to prevent unethical conduct.
None
2. Enforcement of ethical corporate
management
(1) Status of HTC's efforts in its
business activities to avoid
dealings with persons who have
any record of unethical conduct,
and to include ethical conduct
clauses in its business contracts.
When signing purchasing or engineering contracts
with suppliers, HTC consistently requires the suppliers
to cooperate by signing an Integrity Policy Statement,
to expressly provide that its business partners will
uniformly comply with national laws and refrain
from using unethical conduct to gain advantages in
business or work (for example by offering kickbacks,
entertainment, or other improper benefits). The signed
terms and conditions expressly stipulate that HTC will
voluntarily terminate its dealings with any cooperating
firm that violates the Integrity Policy, which is designed
to consistently maintain a relationship of integrity
between HTC and its business counterpart.
None
Item Implementation Status Reason for Non-
implementation
(2) Status of HTC's establishment
and operation of a dedicated (or
part-time) unit with responsibility
for the enforcement of ethical
corporate management, and
supervision by the board of
directors.
HTC has not established a dedicated (or part-time)
unit with responsibility for the enforcement of ethical
corporate management. Currently, HTC has adopted
an employee code of conduct that sets rules for
compliance by all division supervisors and employees
in their execution of company operations, to prevent
violations of ethical corporate management principles
by HTC. When violations of the employee code of
conduct occur or are suspected, the human resources
and legal divisions will cooperate to investigate
and then report to management so that necessary
disciplinary measures can be taken. Also, HTC's internal
auditors conduct routine audits of the work operations
and internal control system operations of HTC's various
divisions, and submit quarterly reports to the board of
supervisors and the board of directors.
HTC has not established a
dedicated (or part-time)
unit with responsibility for
the enforcement of ethical
corporate management.
(3) Status of HTC's adoption of
policies for preventing conflicts of
interest and offering appropriate
channels for stating opinions, and
the operation thereof.
HTC has set out high ethical standards in its employee
code of conduct. Additionally, in its employment
agreements and employee handbook, it expressly
stipulates non-competition provisions for the period
of employment, to prevent conflicts of interest. Unit
supervisors and internal auditors can investigate and
audit any questionable conduct in line with these
policies.
Also, in its Rules of Procedure for Board of Directors
Meetings, it has duly set out a system for recusal and
avoidance of conflicts of interest by directors, for
compliance in the operations of the board of directors.
HTC also has established channels for statements of
opinions and reports of violations, by which employees
may report any questionable conduct discovered.
None
(4) Status of HTC's establishment and
operation of effective accounting
systems and internal control
systems for the enforcement of
ethical corporate management,
and of audits by internal auditors.
HTC has established an accounting system that
takes into account the characteristics of its industry
and is based on applicable laws and regulations and
generally accepted accounting principles. The system
provides a basis for compliance in HTC's accounting
affairs (including the types and formats of accounting
evidence, account books, accounting classifications,
and financial statements, and the rules and procedures
for handling various kinds of accounting matters).
The system enables the regular provision of reliable
accounting information for reference by the
management. The implementation of the operational
procedures and rules of the accounting system ensures
that HTC's business operations proceed according to
rigorous procedural rules, with mutual checking and
reconciliation between various operations, to prevent
any occurrence of abuses, ensuring the security of
HTC's assets.
None
(Continued)(Continued)
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