2.2 Ethical Management and Codes of Conduct

To develop a corporate culture featuring ethical management and sound development, PSC adheres to the spirit of ethical service and sustainable development and sincerely serves the general investors. We require PSC’s senior management and employees to adhere to the Company’s Ethical Corporate Management Best Practice Principles and to make every effort to avoid violating the principles.

Ethical Corporate Management Best Practice Principles

The Board of Directors adopted the Ethical Corporate Management Best Practice Principles of President Securities Corporation on August 23, 2012 and included the relevant rules of the principles in the Company's work rules, which has been approved by the Labor Affairs Bureau. The Ethical Management Team is in charge of evaluating ethical management practices in relevant business processes and preparing compliance reports to the Board of Directors on a regular basis. The audit units under the Board of Directors have also included the compliance status of ethical management in the scope of the annual audit to fully commit to the Company’s ethical management policies.

In 2020, the Board of Directors approved the latest amendments. To actively prevent unethical behavior, the Board of Directors passed the Procedures for Ethical Management and Guidelines for Conduct of President Securities Corporation in August 2020. Integrity and ethical values are actively incorporated into our business strategy. The Company also formulates and implements pertinent anti-corruption measures in accordance with legal requirements.

Ethical Management Risk Assessment

PSC conducts an annual risk assessment of dishonest conduct to review the adequacy and effectiveness of ethical management measures. This helps enhance the control and prevention of risks related to ethical management, thereby promoting ethical operations and reducing corruption risks. In 2022, the Company conducted a risk assessment of dishonest conduct for all operating branches (a total of 31 branches in northern, central, southern Taiwan, and offshore islands). The assessment found that the Company's dishonest conduct risk was low, and no significant corruption risks were identified.

Throughout 2022, PSC did not experience any corrupt incidents. No employees were dismissed or disciplined due to corrupt activities, and there were no cases of terminating business cooperation with partners due to corruption or non-compliance.

Implementation of Ethical Management

PSC has adhered to the concept of ethical management. We require all people, from the board members, supervisors, managers, and employees to duly abide by the Ethical Corporate Management Best Practice Principles. The principles require all people not to, directly or indirectly, offer, promise, request, or accept any illegitimate benefits or commit other unethical acts in violation of good faith, laws, or breach of fiduciary duty in the course of performing duties, to obtain or maintain benefits. We have also adopted punishment measures and whistleblowing channels for strict control. Every year, the Company conducts training and seminars for employees to effectively communicate the importance of ethical management. In 2022, the Company achieved a 100% participation rate among employees in various regions for ethical management education and training.

For PSC's business partners, we have engaged in extensive communication with each of them. The Company's Supplier Social Responsibility Commitment clearly stipulates that its suppliers must adhere to principles of ethical management. This includes refraining from accepting any improper benefits or engaging in any dishonest or unlawful behavior. Suppliers are also expected to participate in market competition with fairness, honesty, and integrity. In 2022, the signing rate for the Supplier Social Responsibility Commitment reached 94.38%. For further details on supplier management, please refer to Chapter 5.3 Responsible Procurement and Supplier Management in this report.

Other Codes of Conduct

In addition to the Ethical Corporate Management Best Practice Principles, PSC is committed to following other codes of conduct related to corporate social responsibility. We have published the details of these commitments on our official website. Within the capacity of our operations and online resources, we aspire to lead by example and have a positive impact, progressively achieving shared prosperity and benefits with the society and the environment.

Negative Impact Management

In 2016, we established the Procedures for Handling Illegal and Unethical Conduct Reported. To duly implement the Company's work rules and Ethical Corporate Management Best Practice Principles, we motivate the reporting of any illegal and unethical conduct and established the inside and outside reporting channels and handling procedures, to ensure integrity and ethical conduct, create a corporate culture of ethical management, facilitate sound development, and protect whistleblowers’ and counterparties’ legitimate rights and interests.

Anyone who discovers that PSC employees are engaging in behavior that violates legal regulations, PSC’s Ethical Corporate Management Best Practice Principles, Work Rules, as well as behavior guidelines like the Codes of Ethical Conduct for Directors and Managers or any unethical conduct, may report it in accordance with the Company's Regulations for Reporting Illegal and Unethical Behavior.

In cases where reported incidents are substantiated and of significant nature, in addition to taking appropriate actions in accordance with legal regulations and company policies, the Company may also provide the whistleblower with appropriate rewards. For a comprehensive understanding of the whistleblowing mechanism, please refer to the Chapter 2.3.3 Whistleblowing System and Procedures in this report.

Furthermore, suppliers who have signed and committed to the Supplier Social Responsibility Commitment should adhere to the ethical management principles outlined in the commitment and are expected to deliver corporate social responsibility and promote sustainability awareness. If PSC verifies that a supplier is involved in significant dishonest conduct or breaches the terms of the Supplier Social Responsibility Commitment, including but not limited to the violation of labor rights and environmental protection resulting in negative impacts on society and the environment, the Company reserves the right to terminate or cancel the contract at any time.

Whistleblowing channels