Integrity Management
To establish a culture of integrity, we adopt a "zero tolerance" policy towards bribery. The Board of Directors has approved the establishment of the "Code of Integrity Management" and "Code of Ethical Conduct" to promote ethical business practices and ensure the Company operates with integrity. We disclose relevant information on the Company's website and the Market Observation Post System to guide the ethical behavior of our managerial personnel and inform stakeholders of our ethical standards. With expressly provided operating procedures and penalties, we have established a reporting channel on the Company's website to allow stakeholders to report any improper behavior, and the Audit Department conducts annual audits to assess the effectiveness of the company's internal control system.
We advocate for integrity management and ethical professional conduct. The Board of Directors should fulfill their duty of care and supervise the company to prevent dishonest behavior, regularly reviewing its effectiveness and making continuous improvements to ensure the implementation of the policy of integrity management. The Finance Department is responsible for formulating the policy of integrity management and prevention plans, while the audit unit monitors the implementation done by relevant units and reports regularly to the Board of Directors. In addition, the website also provides an external tip-off mailbox, and the liaisons from the responsible units will keep the informant's identity and report content confidential. We expect all the employees, including managers, to fulfill their responsibilities for management and supervision, strictly adhering to ethical professional norms to ensure the Company's sustainable growth and development.
Anti-corruption and Anti-bribery Policies
The Company advocates for honest operation and adheres to high ethical standards in all business activities. It takes a zero-tolerance approach towards corruption and bribery, and has established relevant policies for honest operation. It has set clear guidelines against corruption and bribery, and provides communication and training to employees and business partners to help prevent bribery and corrupt practices. Formosa Laboratories follows the company's "Code of Integrity Management" to prevent dishonest behavior. Directors, managers, employees, appointees, and those with substantial control over the Company should be aware that any business activities, whether conducted directly or through third parties, are prohibited from involving bribery. In 2022, Formosa Laboratories had no incidents of corruption or reported cases.
Formosa Laboratories Anti-Corruption and Anti-Bribery Rules
| Company Regulations | Items | Rules |
|---|---|---|
| Code of Integrity Management | Business Activities | In daily operations, all departments are prohibited from bribery when conducting business activities, whether directly or through third parties (including transactions through subsidiaries, joint ventures, agents, representatives, consultants, stockbrokers, contractors, suppliers, or other intermediaries). A comprehensive prohibition on accepting bribes in various forms, such as receiving kickbacks from contracts or seeking to profit from customers, agents, contractors, suppliers, and employees. Prohibition to make direct or indirect donations to specific political parties, party members, candidates, political organizations, or figures as a form of disguised bribery. Charitable donations should be made only after being approved by the responsible supervisor according to the "Approval Authority Form" as attached in the duty authorization and delegation system to ensure that the entire donation process is transparent. Prohibition on providing or accepting unreasonable gifts, entertainment, or other improper benefits. Business relationships with suppliers, customers, and business partners involved in unethical conduct should be terminated. |
| Article 65 of the Work Rules | Due Diligence | Employees should be loyal and diligent during employment. Any benefits or advantages given by business partners belong to the Company. Other specific matters related to due diligence shall be governed by the Company's future relevant announcements and regulations. |
Internal Control and Internal Audit
The Company's internal audit unit is established under the Board of Directors and is equipped with one full-time auditor (also serving as the audit supervisor) in accordance with the Company's scale, business situation, management needs, and relevant laws and regulations. The auditor is responsible for evaluating the effectiveness of the Company's internal control system. The appointment and dismissal of the internal audit supervisor are submitted to the Board of Directors for approval, and their performance evaluation and compensation packages are approved by the Chairman. The appointment and dismissal of internal auditors are regulated in the by-laws for the implementation of internal audits.
The audit work is mainly carried out based on the audit plan approved by the Board of Directors. The audit plan is formulated based on identified risks, and project audits or reviews are conducted as needed. The general audits and project executions mentioned above provide the management with information on the functioning of internal control and timely information on existing or potential deficiencies. No significant non-compliance issues were found in the internal audit for the year 2022.
Compliance with Laws and Regulations
Compliance with Laws and Regulations is a core requirement for business operations. If a company is involved in illegal activities, its long-established reputation and image will be damaged. The substantial fines or compensation will violate the Company's profits and even shareholder interests. Therefore, Compliance with Laws and Regulations is important for protecting the rights and interests of shareholders and other stakeholders, ensuring the Company operates sustainably. Formosa Laboratories strictly adheres to the regulations and standards set by the regulatory authorities in the pharmaceutical industry, whether it is in procurement and supply, sales, labor management and welfare, environmental protection, or corporate governance. Each department constantly monitors changes in laws, regulations, and the environment, and updates compliance guidelines with changes in laws and regulations. Immediate assessments are made on the impact of regulatory change on corporate governance and operations to develop action plans. Once decisions are made, they are implemented promptly.
Formosa Laboratories defines major violation event as a single event or cumulative events that have been subjected to administrative penalties of over NT$ 1 million, or situations that seriously affect the Company's operations. If such violations occur, they should be disclosed in the sustainability report. In 2022, the Company did not have any major violations.
The administrative penalties that occurred were all minor violations or deficiencies in fire regulations, environmental regulations, etc. There were 5 monetary sanctions totaling NT$274 thousand. The listed deficiencies have all been improved or are being continuously improved.
Formosa Laboratories Environment-related Administrative Fines
| Fining Units | Fine Details | Fine (NT$) |
|---|---|---|
| Taoyuan Fire Department | Audit Deficiencies in Public Hazardous Substances | $32,000 |
| Taoyuan City Department of Environmental Protection | Violating the Toxic and Concerned Chemical Substances Control Act | $72,000 |
| Taoyuan Fire Department | Audit deficiencies in public hazardous substances fines | $64,000 |
| Taoyuan Fire Department | The public hazardous substances were not supervised by security personnel as required. | $22,000 |
| Taoyuan Fire Department | The location of the public hazardous material handling site does not comply with regulations. | $84,000 |
| Total | $274,000 | |
Formosa Laboratories relevant laws and regulations
Legal Compliance Training
To provide immediate assistance and consultation services on legal and regulatory matters to each department, wehave established a Legal Planning Department. We also organize various educational training programs and disseminate information, including training courses for new recruits on workplace rights and relevant regulations to each unit. This ensures that our employees are fully informed of the latest standards so that they can review and update their practical operations, thereby avoiding inadvertent violations or breaches due to unfamiliarity with the regulations. In recent years, the Company has also strengthened the educational training in risk management for particular staff members. For example, we had the Evidence course in 2021 to stress the importance of preserving evidence. In 2022, we had the Purchase Order and Order Risk Management course to help avoid contract risks, and the Educational Training in Business Secret course to facilitate our staff's understanding of trade secrets. As a result, our staff's awareness of Compliance with Laws and Regulations and ethical standards would be strengthened enough to fulfill the Company's social responsibility.
Employees having regulatory compliance training
Performance of Formosa Laboratories on the Educational Legal Compliance Training in the Past 3 Years
| Year | 2020 | 2021 | 2022 |
|---|---|---|---|
| Training Sessions | 3 | 4 | 5 |
| Course Hours | 28 | 29.5 | 30 |
| Number of Attendees | 807 | 851 | 1071 |
An Overview of Formosa Laboratories 2022 Educational Training in Compliance with Laws and Regulations
Grievance and Suggestions Procedures
Integrity and responsible business practices are the foundation of sustainable business operations. Therefore, we have established various channels for complaints, reports and suggestions. Stakeholders are encouraged to make reports, complaints or suggestions in regards to any dishonest or unethical behavior, or any activities that impact the environment, economy, society, and human rights.
Formosa Laboratories provides a reporting channel on its official website. Both the internal personnel and the public can report illegal activities directly to the Company through the tip-off mailbox (ethic@formosalab.com). The unit responsible for handling the reports is required to keep the informant's identity and report content confidential. The information will not be provided to unrelated third parties if not necessary for investigation, so as to prevent unfair and unfavorable treatment. The relevant protection system, case acceptance process, and handling standards for violations are specified in the Regulations on Workplace Unlawful Infringement. In 2022, the Company received a total of 1 employee-assisted complaint and 8 suggestions, with a closure rate of 100%.
Formosa Laboratories Statistics for Complaints and Reports in the Past 3 Years
