Implement Ethical Management

In order to push ahead with the effective implementation of ethical management and comply with regulations governing business conducts, including the “Financial Holding Company Act”, “Company Act”, “Securities and Exchange Act”, “Business Entity Accounting Act”, and “Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies”, TCFHC has stipulated of its own bylaws of “ Ethical Corporate Management Best Practice Principles ”, and “ Procedures for Ethical Management and Guidelines for Conduct ” as ethical management policies for the Company to comply with by referring to the “Anti-Corruption Act”, “Government Procurement Act”, and “Act on Recusal of Public Servants Due to Conflicts of Interest”. The Company has these policies aim to prohibit the provision or acceptance of improper benefits, political donations, donations or sponsorship, anti-corruption, and bribery, prohibition of insider trading, agreement of confidentiality, avoidance of conflicting interests, avoidance of transactions with unethical operators, manage business activities ethically, prohibition of unfair competition acts, handling of reports related to unethical conducts and internal promotion, establishment of reward and punishment systems, reporting mechanisms, disciplinary actions, integration of ethical management policies with employee performance evaluations, and other measures. In addition, the Company has established the “ Employee Service and Norms of Behavior Guidelines ,” “ Measures of Whistleblowing ,” and “Guidelines for Handling Reported Cases,” and clearly stated its ethical management policies and practices on its official website, annual reports, and external documents to promote and prevent unethical conducts.

The Company has formulated regulations such as the “Human Rights Policy” and the “Employee Service and Code of Conduct Guidelines” to regulate all employees. In case any managers or employees violates the code of conduct, the Company will report to the its Review and Evaluation Committee in accordance with the “Employee Rewards and Discipline Guideline” and“Employee Performance Evaluation Guidelines ” . The severity of the violation will be considered to determine the corresponding disciplinary action and the grade for the year-end performance. For severe violations, the labor contract will be terminated in accordance with relevant regulations. The disciplinary actions or results for year-end performance evaluation mentioned above will affect the employee's annual reward in accordance with the “Regulations on the Distribution of Performance Bonuses” to ensure effective implementation of internal code of conduct.

In order to further fulfill commitment to ethical management, the Company stipulated “Declaration on the Compliance of Ethical Management by Directors and Senior Management” and has since received a total of 108 signed declarations from all directors and senior management of the Company and its subsidiaries in 2022, attaining a 100% of signing rate. Furthermore, 100% of the employees of the Company and TCB signed the “ Statement of Employee Code of Conduct ” . All subsidiaries report the status of compliance with the Ethical Corporate Management Best Practice Principles to their respective Board of Directors every year. The status of compliance with the Ethical Corporate Management Best Practice Principles in 2022 was all reported to the respective Board of Directors in 2023.

In addition to operating with the spirit of ethical management, the Company also needs to conduct an integrity management assessment before establishing business relationships with external partners to avoid transactions with dishonest operators, and incorporate the ethical management policy into the terms of the contract to implement the concept of ethical management.

In 2022, the subsidiaries of the group have no violations of integrity management or major impacts, and no corruption, fraud, bribery, insider trading, money laundering, conflict of interest, discrimination, violation of customer privacy, anti-competitive behavior, anti-trusts, monopoly, market manipulation, improper political contributions, improper charitable donations and sponsorship violating the Code of Conduct, while the amount of related legal proceedings and penalties is 0.

Ethical Management Educational Trainings

TCFHC has added elements and rules of ethical management to the “Guidelines of Service and Conducts by Employees” and the “Supplier Management Policy”. The purpose is to require employees not directly or indirectly provide, promise, demand or accept any inappropriate benefit or engage in any other unethical behavior in the process of conducting a business activity or performing a duty.

In order to let all employees understand the importance of ethical management, TCFHC holds ongoing ethical management related educational trainings every year and requires all employees undergo the training.

Whistleblowing system

In order to prevent unlawful conduct and promote sound operations of the Company, protect whistle-blowers, and support the whistleblowing mechanism, the Company established the “Measures for Whistleblowing” and “Guidelines for Handling Reported Cases”. The measures and guidelines rule that if any employee with the Company or its subsidiaries is found to have provided, received, promised, or requested any illegitimate benefits in order to receive or maintain benefits, or to have engaged in any conduct that may break integrity or entrusted compulsory, or to have been suspected for committing crime or fraud, or violating financial related regulations, anyone can raise such a case or report to the designated unit which is the Ethical Management Committee through designated email address on the website or internal hotline. All incidents reported through the whistleblowing channels are recorded properly and handled with careful follow-up by the Company.

After the Company receives a reported case, the Auditing Department of the Board of Directors or the designated dedicated unit will investigate according to the types of cases. If the person handling the reported case discovers that they have a personal interest in the reported matter, they should voluntarily recuse themselves. If the investigation reveals a material violation or potential material damage to the Company or its subsidiaries, a report must be promptly prepared and inform the Company’s independent directors in writing. In the event of a material contingency or illegal case, it shall be proactively reported or tipped off to the relevant authorities.

All the acceptance, investigation process, investigation results, and related documents of reported cases shall be recorded for preservation. The investigation results shall be sent to the Ethical Management Committee for future reference, and the reported cases, handling methods and follow-up review and improvement measures shall be reported to the Board of Directors. If the person who is reported is a director, supervisor, or a managerial officer in a position equivalent to an executive vice president or higher of the Company and its subsidiaries, the Company's independent directors shall first be reported, and the investigation report shall be reported to the Company's Audit Committee for review. The rest shall be investigated by the Auditing Department of the Board/ subsidiaries or the responsible unit with no conflict of interest with the reported person and has independent functions designated by Auditing Department of the Board. If the reported person is personnel of the Company’s General Auditor or Auditing Department of the Board, he/she will be investigated by the Company’s Compliance Department or responsible unit with independent functions designated by the Compliance Department. If there is evidence of unethical or illegal conducts, it should be reported to the Company’s Board of Directors.

Except in cases where the whistleblower cannot be contacted, the whistleblower will be informed of the investigation results in writing or by other means within 30 days after the investigation is completed. If the audit report meets the requirements for reporting to the competent authority, it shall be submitted to the competent authority within 2 months from the end date of the audit for declarations.

The whistleblower’s identity shall be kept confidential, and no information that may be used to identify that person shall be disclosed. The whistleblower shall not be terminated, dismissed, downgraded/relocated, given a reduction in pay, impairment to any entitlement under the law, contract or customs, or other unfavorable disposition due to the reported case.

If the tip-off case is found to be true, the Company or its subsidiaries will resort to relevant punitive measures against those who are reported or involved and the whistleblower will be rewarded according to the seriousness of the case. If the internal personnel make false reports or malicious accusations, they shall be disciplined, hoping to strengthen and embed the corporate culture of ethics and transparency.

Status of Handling Reported Cases in 2022

In 2022, there was no such thing as aforementioned being occurring in the TCFHC Group. In 2022, there was a total 6 cases being reported via the tip-off email address, and all of the cases had been investigated and closed without having any evidence of violation found out. Only one of the cases was reported to have issues with leadership in the management, and the financial holding company has already sent a letter to its subsidiary to supervise and improve the situation. The investigation results of the reported cases received by the Group in 2022 have been reported to the Ethical Management Committee according to the Company's reporting regulations for record keeping.