Ethical Conduct and Code of Behavior

      To uphold ethical conduct and foster integrity-based management as the foundation of sustainable development and sound corporate governance, Shihlin Electric has established and implemented the following internal regulations and codes: Corporate Governance Best Practice Principles, Code of Ethical Conduct, Ethical Corporate Management Best Practice Principles, Procedures for Handling Material Internal Information, Sustainable Development Best Practice Principles, Organizational Charter of the Sustainable Development Committee, Guidelines for the Management of Charitable Donations and Sponsorships, These serve as the company's operational standards and behavioral guidelines for fulfilling corporate social responsibility (CSR) and building a culture of ethical governance.

Integrity Management Practices

Shihlin Electric has established a Sustainable Development Committee under the Board of Directors, with an Office of Sustainability as its executive arm. This office is responsible for driving group-wide policies on ethical management, anti-corruption, anti-bribery, and compliance. The committee reports its implementation status regularly to the Board, with the most recent report delivered on August 6, 2025. The company’s Ethical Corporate Management Best Practice Principles specify mechanisms for ethical solicitation, lawful conduct, and organizational integrity, including the following statement: “The Company monitors the development of domestic and international ethical business regulations and encourages directors, managers, and employees to provide suggestions for reviewing and improving the Company’s ethical policies and related measures, thereby enhancing the implementation of integrity in business operations.” In addition, the Sexual Harassment Prevention Measures, Employee Complaint Procedures, and Disciplinary Guidelines clearly define whistleblower mechanisms and reporting procedures for general complaints or sexual harassment cases. The Company commits to protecting whistleblowers from retaliation or improper treatment resulting from their reports. Through these comprehensive internal regulations and governance frameworks, Shihlin Electric aims to encourage all employees to support and uphold corporate social responsibility. In cases of suspected violations, internal investigations are initiated promptly to verify facts and prevent potential harm to the company or society.  

The execution status of integrity management for the current year is outlined in the table below:

Integrity Communication and Training

To prevent the occurrence of corruption, Shihlin Electric has established a culture of corporate integrity and ethical development by formulating the Code of Ethical Conduct and the Ethical Corporate Management Best Practice Principles, both of which are disclosed on the company’s official website. These policies aim to ensure that all directors, managers, employees, appointees, and de facto controllers adhere to the following ethical standards of conduct. In 2017, the company revised its Ethical Corporate Management Best Practice Principles, explicitly prohibiting directors, employees, appointees, and de facto controllers from engaging in dishonest conduct during business activities. The Work Rules and Corporate Ethics Statement further stipulate that employees must not abuse their positions for personal gain, accept improper gifts, or disclose confidential technical and business information. To ensure compliance, the company has implemented internal control systems and conducts both regular and ad-hoc audits. Shihlin Electric regularly conducts anti-corruption training for personnel at its headquarters, branches, and subsidiaries, including departments responsible for sales, procurement, and new employees. These trainings are designed to enhance legal awareness and inform employees of the criminal and civil liabilities that may arise from violations, thereby reducing legal risk. To reinforce its anti-corruption stance, the company leverages department heads and frontline staff (e.g., procurement and sales personnel) as communication bridges for both internal and external stakeholders. Real-world corruption cases from other companies are used as discussion starters in departmental and external business meetings to reiterate Shihlin Electric's zero-tolerance position. In 2025, no major corruption risks or incidents were identified within the company. There were no cases involving governmental procurement misconduct, and the company was not subject to any judicial or prosecutorial investigation for corruption. As for unfair competition, the company’s Code of Ethical Conduct, publicly disclosed on its website, clearly prohibits unfair trade practices. All distribution agreements with external dealers include clauses stipulating that dealers set their own prices independently, and Shihlin Electric does not engage in market price manipulation. In terms of prevention, onboarding training for new employees includes legal compliance courses. Additionally, sales and procurement staff are required to undergo annual legal training and complete e-Learning modules, which are designed to strengthen their awareness of relevant legal and regulatory requirements.

Implementation of Internal Control and Audit Management

Shihlin Electric has established an Audit Office under the Board of Directors, which assists both the Board and management in identifying and assessing corporate risks, as well as reviewing the design and operational effectiveness of the internal control system. Each year, the Audit Office formulates an annual audit plan based on the five components of internal control under the COSO framework (Committee of Sponsoring Organizations of the Treadway Commission). The plan takes into account prior audit experience, the upcoming year’s budget, and the current organizational structure. Audit procedures are designed to assess: Management’s awareness of internal and external environmental risks, Operational risk control across business units, and The effectiveness of internal control design and execution. Upon completion, audit reports and the status of corrective actions are regularly presented to the Audit Committee and the Board of Directors. In addition to internal control mechanisms, Shihlin Electric has established various certified management systems at each manufacturing site, such as ISO 14001 (Environmental Management), ISO 45001 (Occupational Health & Safety), and ISO 9001 (Quality Management). Compliance audits are conducted regularly at each site in accordance with these standards. Management reporting platforms are in place across departments and subsidiaries, enabling internal audits and management reviews to ensure the company’s operations remain compliant with legal and regulatory requirements. At the headquarters, compliance-related regulations are regularly published on the company intranet and promoted via email communications to enhance employee awareness. Additionally, new employee orientation programs include legal compliance training to prevent corporate or individual exposure to legal risks. In 2025, key audit areas included operational procedures, compliance with Financial Supervisory Commission (FSC) regulations, and internal control systems. The Audit Office successfully completed all scheduled audits, and each unit addressed and resolved identified deficiencies within the stipulated timeline. For business units with varying risk profiles, audit frequency is adjusted based on their potential impact on the company, in order to minimize overall operational risk.

Regulatory Compliance

Shihlin Electric rigorously complies with local laws, international conventions, and all relevant regulatory frameworks. The company adheres not only to the laws of the jurisdictions in which it operates, but also actively monitors global developments in sustainability and compliance trends. Through internal policies, compliance training, and systematic governance, the company ensures that all business activities align with legal requirements and reflects its commitment to fundamental corporate social responsibility. In the reporting year, no major regulatory violations occurred. Although a few minor fines were issued, Shihlin Electric promptly paid and rectified all cases.

Contact：Sustainable Development Division ESG@seec.com.tw