Regulations and Implementation

The “Ethical Corporate Management Best Practice Principles for CSC” which has the total of 27 articles and was passed by the Board of Directors is adopted in accordance with the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies to assist the company to foster a corporate culture of ethical management and sound development, and offer a reference framework for establishing good commercial practices

Business Integrity

CSC established the “Procedures for Ethical Management and Guidelines for Conduct”, which is based on the principles of honesty, fairness, trustworthiness, and transparency, and is used to implement business activities based on integrity management policy. CSC's integrity management policies are being publicized in internal regulations, annual reports, company websites, publicity and external activities, so that managers, employees, suppliers, customers or other business-related institutions and personnel can understand CSC's integrity management philosophies and regulations.

In addition, with the aim of strictly requiring employees to comply with work rules and implement the “Procedures for Ethical Management and Guidelines for Conduct,” CSC also advocates new hires and employees to sign the “Statement and Commitment to Employee Code of Conduct” at the same time when initiating and promoting the Taiwan Intellectual Property Management System (TIPS), so that they understand and undertake that they shall neither directly nor indirectly provide, promise, demand or accept any improper benefits, or engage in other behaviors that are in breach of integrity, laws and regulations or fiduciary duty when performing their duties.

In annual training workshops for new employees, CSC arranges for a series of lectures on company rules and regulations, corporate culture, information security, and intellectual property. The company also raises awareness of the importance of integrity among employees by providing information on various topics, such as “part-time jobs,” “accepting improper benefits,” “use of information,” and “trade secrets.” Employees are also required to comply with laws and regulations as well as the company's rules and regulations. In 2022, CSC arranged 13 training sessions for new employees, and 514 participants were trained. To improve the professional and legal knowledge of directors and supervisors in the CSC Group, CSC arranged 2 corporate governance courses and 1 seminar on sustainable development, criminal and civil liabilities of directors and supervisors, and mergers and acquisitions.

Avoiding Conflicts of Interest

To promote honest and ethical behavior of directors and improve corporate governance, “The Codes of Ethics for Directors” of CSC strictly stipulates avoidance of conflict of interest and sets anti-corruption principles. Also, “Rules of Procedure for Board of Directors Meetings”, which was enacted in accordance with “Regulations Governing Procedure for Board of Directors Meetings of Public Companies”, provides that if there is a conflict of interest for any director with respect to any matter on the agenda at the board meeting, the director must recuse from discussion and voting on that matter and must not exercise voting rights as proxy for another director on that matter. With consideration to the trend of corporate governance, when amending the Rules of Procedure for Board of Directors Meetings in 2022, the Company deems directors to have a conflict of interest if the director's spouse, relative within the second degree of kinship, or a company with controlling interest or subordinate relationship with the director has a conflict of interest in the agenda item.

Please refer to CSC's 2022 annual report for the execution results of principles and regulations mentioned above; the report also provides a further disclosure on cross-board membership, cross-shareholding with suppliers and other stakeholders, existence of controlling shareholders, and related parties including their relationships, transactions, and outstanding balances.

Chapter 3 and its appendix - Financial Reports: Related Party Transactions Section. CSC implements the avoidance of executive directors' conflicts of interest, so there is no conflict of interest incidents in 2022.

In addition, the organizational regulations state the relevant rules regarding avoidance of conflict of interest and corresponding penalties, such as: 1. “The Code of Ethics for General Managers and Above”, which clearly regulates that personnel above General Managers should handle business in an objective and efficient manner, avoiding using their positions to cause undue benefits to related personnel or the company; 2. “The Ordinance for Avoiding Conflict of Interests”, prohibiting employees from using their power or position and information to plot private interests.

Prevention of Insider Trading

The Company has formulated the "Procedures for Handling Material Internal Information and Guidelines for Establishment of Spokesperson as well as Deputy Spokespersons" to prevent improper disclosure of information. With a view to setting out clear and comprehensive internal regulations for the prevention of insider trading, the Company has also formulated the “Regulations Governing Prevention of Insider Trading,” which not only prohibits any personnel from trading securities through utilizing information not disclosed to the market, but also specifies the stock trading control measures, where Directors and the management are prohibited from trading stocks during the closed period prior to the publication of financial statements.

Current directors, managers and employees will be educated on relevant laws and regulations at least once a year, and so as for the newcomers. In November 2022, the company held a 3-hour "Important Civil and Criminal Liabilities of Directors and Supervisors and Analysis of Case Studies" course for the directors, supervisors and managers of CSC, covering practical cases and procedures for violations of short-swing profits, insider trading and other issues; and regularly set up E-learning courses about insider trading for colleagues to watch and follow at the end of the year. In 2022, no directors, managers or employees of CSC were punished for violating insider trading laws.

Preventing Malpractice

CSC has always banned dishonest behaviors such as “soliciting, accepting, and being bribed with improper benefits from suppliers or stakeholders”, and this stance has been a part of CSC's corporate culture. Complying with Article 7.1.1 of the “Political Donations Act”, CSC does not contribute to political donations. According to “Ethical Corporate Management Best Practice Principles for CSC”, all of the CSC's directors, managers, employees, mandataries or anyone who de facto controls the management of CSC should neither directly nor cause other dishonest behaviors such as violation of integrity, illegality, or breach of fiduciary duty when engaging in commercial activities.

To realize a high-quality corporate culture and maintain a positive corporate image, CSC formulated” The Ordinance for Handling on Receiving of Gifts, Receiving of Drinking and Dining Treat, Requests for Intercession through Influence” for employees to follow.

The company establishes an open complaint channel through the whistleblower hotline, fax, e-mail and company website etc. The Internal Audit Office is responsible for handling the complaint case, keeping the information of such case confidential throughout the investigation process.

Organizational
Regulations
Employee
Training
Evaluation of
compliance
and operations
Self-inspection
(Self-assessment)
Countermeasures
against
Misconduct
Complaint
Channels

Organizational Regulations

CSC stipulates moral requirements of CSC such as “Ethical Corporate Management Best Practice Principles for CSC”, “Procedures for Ethical Management and Guidelines for Conduct”, “The Code of Ethics for General Managers and Above”, “the Ordinance for Avoiding Conflict of Interests”, “Integrity and Ethics Directions for Employees of China Steel Corporation Group”.
CSC Semi-Monthly Journal CSC has been publishing the "CSC Semi-Monthly Journal" since January 28, 1976, and two issues are published on a regular basis every month. The magazine disseminates CSC's corporate culture to employees, such as teamwork, enterprise, pragmatism, innovation, cautiousness, establishing an environment with good integrity, and strictly rejecting manufacturers' improper actions to gain personal interests in a bid to form decent corporate culture and values.

Employee Training

New employees are trained on ethical practice，discipline following, information utilization, confidential items and other organizational regulations. Promotion of corporate culture is accessible to all employees through the CSC Semimonthly Journal and website.

Evaluation of compliance and operations

In accordance with the FSC's Regulations Governing the Establishment of Internal Control Systems by Public Companies, the Internal Audit Office evaluates compliance with relevant laws and regulations, as well as operational cycles. Additionally, it formulates annual audit plans based on evaluation results each year.

Self-inspection (Self-assessment)

In 2022, 39 departments, 7 divisions, and 25 subsidiary companies of CSC Group compile self-assessment. These reports were then reviewed and consolidated by Internal Audit Office(IA) before being presented to President. To proactively respond to the changing environment, CSC adjusted the internal control system and operation in order to fully implement self- assessment.

Countermeasures against Misconduct

All cases of misconduct are reviewed by the Employee Reward & Punishment Committee appropriate actions are taken accordingly.

Complaint Channels

Complaint Hotline: +886-7-8021111#2191 (Headquarter)
+886-7-3371111#22191 (China Steel Building)
Complaint Fax: +886-7-8010736; Complaint Mailbox: P.O. BOX 47-13 Kaohsiung, Taiwan
E-mail: IA00@mail.csc.com.tw
Information is also available in the procurement inquiry (within the e-commerce system) for reporting incidents of malpractice, bribery, and fraud. The Internal Audit Office is responsible for accepting complaints related to improper conduct, such as graft, fraud, actions that harm the interests of the Company, and violations of company regulations.
In 2022, a total of 21 cases were received, and they were all thoroughly examined and processed with the cooperation of all units. None of the cases involved significant drawbacks or resulted in serious losses of corporate profits.

Socializing Guidelines

Implementing “The Ordinance for Avoiding Conflict of Interests”, which states that employees shall not manipulate their official powers or duties to borrow or lend money, enter mutually beneficial contracts or treat other improper benefits with the following types of individuals or organizations:
◇ Individuals or organizations that undertake engineering projects from CSC.
◇ Banks, financial institutions or private banks that have dealings with CSC.
◇ Individuals or business firms that undertake the purchase and sale of CSC's property or provide labor services to CSC.

According to “The Ordinance for Handling on Receiving of Gifts, Receiving of Drinking and Dining Treat, Requests for Intercession through Influence”, unless provided otherwise, the gifts received from the stakeholders shall be rejected and returned. When the gift cannot be returned, it shall be reported to the supervisor and taken to the General Affairs Dept. of CSC.

CSC's employees, when they need to banquet the guests because of executing business or developing external relationship, shall comply with “The Directions for the Staff to Entertain the Guests at Banquets for Business”.

The Internal Audit Office periodically collects the information regarding request for intercession through influence, including the case-handling process, and thereby reports to the Chairman and Board of Directors. There is no case in Year 2022.