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Guidelines for the Adoption of Codes of Ethical Conduct for TWSE/GTSM Listed Companies
- Purpose and basis for establishing the Code of Ethical Conduct
To provide guidance to directors (including independent directors), supervisors and executive officers (including president or its equivalent, vice president or its equivalent, senior vice president or its equivalent, finance department manager, accounting department manager, and other managing personnel authorized to sign on behalf of the company) of a listed company so their conduct will conform to ethical standards, and to let stakeholders of the company have better understanding of the ethical standards adopted by the company, it is necessary for a company to adopt a code of ethics and professional conduct, and these Guidelines are provided for this purpose.
It is advised that each TWSE and TPEx listed company set a code of ethics and professional conduct with reference to these Guidelines and related provisions, and separate codes of ethics may be set forth for different executive officers.
- Contents of the Code of Ethical Conduct
A listed company can set its own code of ethics and professional conduct in view of its conditions and needs; however, its code of ethics and professional conduct shall include at least the following eight topics:
- Avoiding conflicts of interest:
A conflict of interest occurs when a person’s private interest interferes or may interfere with the company’s interest as a whole. For example, a conflict arises when a director (including independent director), supervisor or executive officer of the company is unable to perform his/her work objectively and effectively due to his/her personal interest, or when he/she, his/her spouse or relative within second degree of kinship receives undue benefits as a result of his position in the company. The company should pay particular attention to loans or guarantees of obligations provided to businesses that have any affiliation with the aforesaid persons, or major asset transactions, or business dealings (purchases and sales) with businesses that have any affiliation with the aforesaid persons. The company should have a policy in place to prohibit such conflicts of interest, and provide an appropriate means for directors (including independent directors), supervisors or executive officers to proactively communicate potential conflicts to the company.
- Avoiding opportunities for self-dealing:
A company should prevent its directors (including independent directors), supervisors or executive officers from:
- taking the opportunities discovered through the use of corporate property, information or position to benefit themselves;
- using corporate property, information, or his/her position for personal gain; and c. competing with the company. When profit opportunities arise, directors (including independent directors), supervisors or executive officers have the responsibility to advance the legitimate and lawful interest of the company.
- Confidentiality:
Directors (including independent directors), supervisors, and executive officers are obligated to keep the information on the company and customers from/to whom the company purchases or sells confidential, unless the disclosure of such information is authorized or legally required. Confidential information includes all non-public information that may possibly be used by competitors or harmful to the company or customers if disclosed.
- Fair dealing:
Directors (including independent directors), supervisors and executive officers should deal fairly with the company’s customers, competitors, and employees, and shall not reap illicit gains through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or other unfair dealing practice.
- Protection and proper use of company assets:
Directors (including independent directors), supervisors and executive officers have the responsibility to protect the company’s assets and ensure their use in corporate business be efficient and legal. Theft, omission or waste has a direct impact on the company’s profitability.
- Compliance with laws and regulations:
The company should promote compliance with the Securities and Exchange Act and other laws and regulations.
- Encouraging the reporting of any illegal or unethical behavior:
The company should step up the propagation of ethical conduct and encourage employees to report to an independent director, supervisor, executive officer, head of internal audit, or other appropriate personnel when they suspect or discover any conduct or behavior that violates laws or regulations, or the code of ethical conduct. To encourage employees to report such violations, the company is required to adopt a concrete whistle-blowing system, allow anonymous reporting, and ensure that employees know that the company will do everything it can to protect the safety of informants, in order to safeguard whistle-blowing employees from retaliation.
- Disciplinary actions:
In the event a director (including independent director), supervisor or executive officer acts or omits to act in a manner that violates the code of ethical conduct, the company shall impose disciplinary action as provided in the code, and promptly post related information on the Market Observation Post System, including the date and circumstances of the violation, the code violated, and actions taken by the company. The company furthermore shall set up a related appeal system to provide the violator means of redress.
- Procedure for waiver
The code of ethical conduct set forth by the company should provide that any waiver of the code of ethical conduct for directors (including independent directors), supervisors and executive officers must be approved by the board of directors and promptly disclosed on the Market Observation Post System, including the date of approval of the waiver by the board of directors, any dissenting or qualified opinions by independent directors, duration of the waiver, reasons for the waiver, and the code under which the waiver applies. The disclosure gives shareholders a chance to assess whether the decision made by the board of directors is proper so as to inhibit arbitrary or questionable waiver and assure that a waiver is accompanied by appropriate control mechanisms to protect the company.
- Method of disclosure
A listed company should disclose its code of ethical conduct and any amendment thereof on its company website, in its annual report, prospectus, and the Market Observation Post System.
- Implementation
The company’s code of ethical conduct will be implemented after it is passed by the board of directors, given to all independent directors and supervisors, and submitted to the shareholders’ meeting. This also applies to any subsequent amendment to the code.
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