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Implementation of Ethical Management and Measures Adopted

1. Ethical Management Policy

(1) MACHVISION has formulated Ethical Corporate Management Best Practice Principles and Procedures for Ethical Management and Guidelines for Conduct, which specify that all companies shall perform the business honestly and impartially in accordance with laws and regulations. The Board of Directors and the management also commit themselves to the implementation of ethical management.
(2) According to MACHVISION’s Procedures for Ethical Management and Guidelines for Conduct, before developing a commercial relationship with another party, such as an agent, supplier, customer, or other counterparty in commercial dealings, MACHVISION shall evaluate the legality and ethical management policy of the party and ascertain whether the party has a record of involvement in unethical conduct, in order to ensure that the party conducts business in a fair and transparent manner and will not request, offer, or take bribes.

 

2. Implementation Unit

The Company has designated the administration center as the unit in charge of ethical corporate management and integrity concerns. The administration center holds cross-departmental meetings to review violations of integrity. In case of serious violations of integrity, the administration center reports to the supervisors or the Board of Directors in accordance with relevant laws and procedures. Every year, the administration center also reports the implementation of ethical corporate management to the Board of Directors.

 

3. Ethical Management Programs

(1) According to MACHVISION’s Procedures for Ethical Management and Guidelines for Conduct, when the counterparty or partner in cooperation is found to have engaged in unethical conduct, the personnel shall immediately cease dealing with the counterparty and blacklist it for any further business interaction in order to effectively implement MACHVISION's ethical management policy.
(2) MACHVISION has appointed the Administration Department as the unit in charge of implementing the ethical management, solving the ethical doubts, and holding the interdepartmental meeting for reviewing and discussing the violation of integrity. In case of a material violation of integrity, the Administration Department shall report the case to supervisor or the Board of Directors in accordance with related laws and procedures. The Administration Department is also responsible to report the implementation of ethical management to the Board of Directors every year.
(3) In case of a conflict of interest, employees may report the case to the immediate supervisor and the Administration Department.
(4) MACHVISION has established the effective accounting system, the internal control system, and the internal audit program. The internal audit unit shall carry out the audit based on the audit program. In a special case, the audit project will be initiated separately.
(5) MACHVISION promotes the concept and regulations of ethical management among employees in executive meetings and quarterly gatherings.

 

4. Implementation Status of Ethical Corporate Management:

Assessment Items

Implementation (Note 1)

Differences with Contents of Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies and Reasons

 

Y

N

Summary

 

1. Establishing Ethical Corporate Management Best Practice Policies and Programs

(1) Does the Company demonstrate its commitment to ethical management policies and practices in its regulations and external documents, as well as the commitment of the Board of Directors and management level to actively implement such business policies?

(2)Does the Company establish programs to prevent dishonesty, and specify operating procedures, behavior guidelines, disciplinary and grievance systems for violations in each program and implement them?

(3) Does the Company adopt preventive measures for the business activities or other business activities with high risk of dishonesty specified in Paragraph 2 of Article 7 of “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies”?

V

 

(1) The Company has established “Ethical Corporate Management Best Practice Principles” and “Procedures for Ethical Management and Guidelines for Conduct” to ensure anti-corruption and legal compliance when implementing business activities. The Board of Directors and the managerial levels have committed to actively implement the principles of ethical corporate management.

(2) The Company has established “Ethical Corporate Management Best Practice Principles” and “Procedures for Ethical Management and Guidelines for Conduct to stipulate the clear contents of ethical corporate management and posted those on the official site.

(3) The personnel of the Company are required to in advance,

No major differences

 

2. Implementation of Ethical Management

(1) Does the Company assess the integrity records of the individuals or entities of transactions and specify the terms of integrity in the contract signed them?

(2) Does the Company establish full-time (part-time) unit that promotes the ethical management of the Company under the organizational management by the Board of Directors, and regularly report implementation to the Board of Directors?

(3) Does the Company establish policies to prevent conflicts of interest, provide proper statement channels, and implement them?

(4) Has the Company established efficient accounting, internal control and internal auditing systems for the implementation of ethical management, which are regularly reviewed by internal units the appointed accountants?

(5) Does the Company regularly hold the internal or offer external education training of ethnical management practices?

V

 

(1) Based on regulations of “Procedures for Ethical Management and Guidelines for Conduct”, commercial interaction with business or cooperation individuals or entities shall be immediately terminated if any dishonest behavior is discovered and those individuals or entities shall be categorized as debarred to implement the Company’s ethical management policies.

(2) The Company has designated the Administrative Center as the specific department to promote corporate ethical management, and serves as a consultancy center for any doubts about integrity-related affairs. It conducts cross-functional communication for violations of integrity. If such violation is a major breach of integrity, report submission to the Board of Directors or Supervisors based on relevant procedures and legal regulations would be required. Implementation results would be submitted to the Board of Directors annually as well. The Center is mainly responsible for the following matters:

1. Assist in integrating integrity and ethical values into the Company's business strategies, and establish relevant preventive measures to ensure ethical management based on legal regulations.

2. Stipulate programs to prevent dishonesty, and standard operation procedures and behavior guidelines for tasks within in each program.

3. Outline the internal organizations and their positions/duties. Establish mutual monitoring and balancing mechanism for business activities with high risk of dishonest behavior within the scope such business.

4. Promote and coordinate of integrity and ethical practice policies education training.

5. Outline the whistle-blowing system to ensure the effectiveness of the implementation.

6. Assist the Board of Directors and management level to audit and evaluate whether the preventive measures established have implement ethical management effectively, and regularly submit reports to evaluate the compliance in relevant business operation processes.

(3) For the relevant issues of conflicts of interest, the Company's internal staff may report directly to department directors directly as well as submitting reports.

(4) The Company has established efficient accounting and internal control systems, as well as a set of internal auditing programs. The internal auditing unit performs various auditing operations according to the programs. Should any special situations arise, project auditing would be conducted for them.

(5) The Company promotes and has the colleagues understand the corporate ethical management ideas and norms by holding management level conferences and quarterly gathering meal events.

No major differences

 

3. Implementation of Whistle-blowing System of the Company:

(1) Does the Company establish clear and unbiased whistle-blowing and rewarding system, convenient reporting channels and assign proper personnel to process the reported cases?

(2) Does the Company establish standard procedures for receiving and reviewing reporting?

(3) Does the Company apply any measurement to prevent the whistleblower from improper treatment?

V

 

(1) The Company has established whistle-blowing system based on “Guidelines for Procedures of Process of Whistle-blowing to Illegal, Unethical or Dishonest Acts” which “whistle-blowing in person”, “whistle-blowing in telephone” and “whistle-blowing in electronic or written mails” are available. The spokesman shall receive and review the whistle-blowing reports from stakeholders such as shareholders and investors and the Director of Auditing shall receive and review the whistle-blowing reports from Company colleagues, clients and suppliers, etc.

(2) Procedures for Receiving and Reviewing Whistle-blowing Reports:

1. Anonymous reports: in principle, no anonymous reports shall be received and reviewed; however, they can be investigated under independent projects and serve as reference for internal review.

2. Non-anonymous reports: the reception departments shall clarify the objectives and supporting evidences of the received reports. Reports

3. The Company shall process reported cases in a confidential manner and investigate with independent channels to protect the identities of whistleblowers.

4. If the whistleblower is a colleague, the Company shall prevent such colleague from any improper treatment.

5. The Company shall grant the reported individuals the grievance rights to realize the principle of equality and prevent intentional, resentful reporting. A hearing of personnel evaluation committee may be held if necessary.

(3) The Company is responsible for the protection of the confidentiality of the whistleblowers.

No major differences

4. Enhancement of Information Disclosure

(1) Does the Company disclose the contents and efficiency of implementation of its Ethical Corporate Management Best Practice Principles at the official site and Market Observation Post System?

V

 

The Company has disclosed its “Ethical Corporate Management Best Practice Principles” and “Procedures for Ethical Management and Guidelines for Conduct” at the official site and Market Observation Post System.

No major differences

5. The Company shall specify the differences between the established Best Practice Principles and its implementation practices if such Best Practice Principles is established based on “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies”:

There is no major differences between the Company’s “Ethical Corporate Management Best Practice Principles” and “Procedures for Ethical Management and Guidelines for Conduct” and “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies”.

6. Other important information for better understanding the ethical corporate management best practice of the Company (such as reviewing and amendment of its Ethical Corporate Management Best Practice Principles):

The Company is committed to the business conduct of ethical management, which also demonstrates the Company's pursuit of ethical management.

7. In 2018, the Company organized 4-day education (8 hours) on the Ethical Corporate Management Best Practice Principles and the Operating Procedures for Ethical Corporate Management and Code of Conduct for the employees, 6 suppliers, and some shareholders.