LITEON pledges to uphold honesty and integrity in business management, and to obey the laws and ethical standards of the countries in which it carries out its business activities. LITEON also commits itself to complete compliance with one of its key policies. LITEON has mplemented a well-designed management system and has deployed regulation identification with training programs to strengthen compliance on an ongoing basis.

The Legal Department at LITEON has built an extensive compliance system and devised compliance policies. The department regularly monitors changes in domestic and foreign regulations that may have a potential impact on the company's business operations. In the presence of such changes, the appropriate local legal department will proceed to perform regulation identification to ensure all business activities around the world comply with the local and international laws and regulations. Meanwhile, LITEON's management structure provides a robust risk management framework and an effective implementation roadmap for identifying and managing the risks that require the attention of business managers. Besides, LITEON's internal control mechanisms prevent potential fraud and inappropriate behaviors to minimize risks. Internal interdepartmental reviews and external inspections are in place to ensure the compliance of implementation and performance. For large investment projects, the company created task forces to apply certain processes to manage and prevent the risk of fraud and prevent illegal activities. A major key event in terms of compliance is defined as it is in the Procedures for Verification and Disclosure of Material Information of Companies with Listed Securities. A single event on which a total amount of no less than NTD 1 million has been imposed in penalties is defined as a major event. Major events, if any, are disclosed in the appropriate chapters the LITEON Sustainabiity Report.

LITEON requires that its employees, managers, executives, and directors not engage in or use any reason to instruct another to engage in any illegal or unethical behavior. The rules of integrity must be established explicitly and strictly adhered to the employee Code of Conduct in areas including professional ethics, laws and regulations, employee relations, gifts and hospitality, client privacy, intellectual property rights, discrimination, bribery, conflict of interest, protection of corporate assets and reputation and other rules to be observed by employees. Compliance is implemented throughout every operational level of the business activities, such as product design, procurement procedures, and discipline is strictly enforced. We explicitly state prohibition of offering or taking of bribes; offering of illegal political donations, inappropriate sponsorship or charity donations, and improper gifts, treatments, or other unjustified benefits; infringement of intellectual property rights; and unfair competition as well as prevention measures and procedures that prevent products or services from causing damages to stakeholders in the Ethical Corporate Management Best Practice Principles. The rules are intended to protect the rights of customers and prevent loss of assets, penalties, and damage to reputation.

LITEON requires newly-recruited employees to sign a statement of commitment to ethical conduct upon onboarding to help them understand the importance and necessity of ethical conduct. Furthermore, LITEON requires employees to complete anti-corruption training. To raise awareness of integrity and self-discipline, the company advocates compliance education and training regularly, and in addition to various seminars from time to time, organizes courses that help participants learn about the laws and key compliance issues, including LITEON work ethics, anti-corruption, insider information, and anti-trust issues. The Responsible Business Alliance (RBA, formerly EICC) offers the following in-person courses: business integrity, avoidance of illegitimate gains, protection of confidential information, protection of intellectual property, intellectual property rights, advertising and competition, contract risk management, fair trade, anonymity and confidentiality, anti-corruption, responsible minerals (metal procurement), environmental protection, privacy, and the prohibition against retaliation. The courses are provided to raise awareness of ethical standards in the workplace. (Please see the Employee Development and Training page for details of related training.)

As part of the internal control and audit system, internal inspections and reviews are conducted in individual units and subsidiaries, and the updates and results are disclosed in the annual report. Please refer to Page 71 for the results of internal control in the 2021 Annual Report.

Reporting mechanisms

LITEON upholds honesty and integrity in business management and complies with the laws and ethical standards of the countries in which it conducts business. To strengthen compliance and corporate governance practices, the board of directors passed the Corruption Reporting Guidelines. The guidelines require that the Office of Chairman handle reports in accordance with the guidelines and related procedures. Details of the reporting mechanisms and processes are as follows:

Ethics complaint filing and reporting channels

The LITEON reporting channels are monitored by a dedicated staff responsible for accepting and processing reports. The staff also makes regular status reports to the Audit Committee. LITEON keeps informants' identities and their reports confidential and takes action to investigate and handle the cases.

Discovery of any unethical behavior or violation of the code of conduct may be reported by using one of the hotline and mailboxes below.

• Telephone: +886-2-8793-6833
  

• By email: ETHIC.HOTLINE@LITEON.COM
  

• Mailbox: Office of Chairman Reporting Mailbox at PO Box 156-21, Jiangnan Post Office, Neihu District, Taipei City 114956.

Other channels available to employees in the company are the existing internal reporting extension at 1234 and the email address1234@LITEON.COM.

Process

Reports that are accepted by the task force will be assigned to the appropriate units for review according to the report and complaint processing procedures. If a complaint is confirmed to be valid, a committee consisting of department representatives andexperts will be created to review and rule on the complaint. Employees who areconfirmed to have violated the ethical corporate management best practice principles will be subject to administrative disciplinary action, recourse against unlawful gains, or further legal actions as appropriate.

Internal controls

Regular internal audits and training are performed to strengthen internal control. Furthermore, task forces will be created for large investment projects to apply certain processes to manage and prevent the risk of fraud and prevent illegal activities.

• A campaign to raise awareness of the LITEON Ethical Management Policy takes place every year. The objective is to ensure the directors, managers, and employees understand fully and adhere to the ethical management regulations. Related training courses are also organized to reinforce compliance awareness.
  

• To raise awareness of integrity and self discipline, LITE-ON requires new employees sign a statement of commitment to ethical conduct when they join the company so to help its employees understand the importance of ethical conduct and the need for it.

Complaints received in 2021

A total of 4 cases were accepted through the grievance channel; the acceptance method was as follows: 3 of the cases were reported by email, and 1 case was reported by post office letter.

Results of handling: One case reported was a non-fraud case, which was transferred to the HR dedicated line for processing. Two cases had no specific fraudulent content and thus were closed. After the case was closed, it was listed for reference. One case is still under investigation as of the time of publication of this report.
The Office of the Chairman report investigation task force promptly launched an investigation for each email and post office letter as it was received. A summary of these cases is reported regularly to the Audit Committee.

Case studies in lawsuits involving employee corruption

No relevant cases this year

For effective implementation of sound ethical management practices, LITEON created the Integrity Management Sub-committee in 2017. The team is responsible for formulating, implementing, and supervising the ethical management policy and prevention plans. A full-time unit is in place to report the results from the past year and the work plans for the coming year to the board of directors every year. The Integrity Management Sub-committee established the Ethical Management Policy in 2017. It is listed as one of the mandatory courses for new employees. It is also often referred to in meetings inside the company to raise awareness. The Employee Code of Conduct was amended in 2018, which provides a basis for ethical management behaviors. Courses aimed at strengthening ethical management practices have been made part of the mandatory annual training for all employees from 2019.

Ethical Corporate Management▸

Sustainable Governance▸