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I Understand
Ethical Corporate Management

The company supports the principle of ethical corporate management for various business operation and corporate culture implementation.

Implementation Status
Specific Measures for Ethical Management in 2018-2019

Implementation Status

UMC complies with all following evaluation items.

1. Establishment of ethical corporate management policies and programs

Evaluation Item

Implementation Status / Abstract Explanation

(1) Does the company declare its ethical corporate management policies and procedures approved by the Board of Directors, in its guidelines and external documents, implement the policies?

UMC has formulated the Code of Ethics for Directors and Officers, the Employee Code of Conduct, and the Ethical Corporate Management Best Practice Principles with approval by the Board of Directors, and the UMC Code of Conduct as regulatory guidelines for all directors, managers and employees of the Company.

(2) Does the company establish policies to prevent unethical conduct, analyze and evaluate the risk of unethical conduct in operating scope periodically, at least including appropriate precautions against high-potential unethical conduct or listed activities stated in Article 2, Paragraph 7 of the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies?

The UMC Ethical Corporate Management Best Practice Principles and the Employee Code of Conduct are provisions for addressing moral integrity, conflict of interest avoidance and business entertainment. The Company also establishes a risk assessment mechanism against unethical conduct. Other relevant education, training or tests are conducted from time to time for employee education.

(3) Does the company establish policies to prevent unethical conduct with clear statements regarding relevant procedures, guidelines of conduct, punishment for violation, rules of appeal, and the commitment to implement the policies and recheck the policies periodically?

The UMC Ethical Corporate Management Best Practice Principles and the Employee Code of Conduct are provisions for addressing moral integrity, conflict of interest avoidance and business entertainment. The Company also establishes a risk assessment mechanism against unethical conduct. Other relevant education, training or tests are conducted from time to time for employee education.

2. Fulfill operations integrity policy

Evaluation Item

Implementation Status / Abstract Explanation

(1) Does the company evaluate business partners’ ethical records and include ethics-related clauses in business contracts?

All suppliers have signed the Employment Ethics Terms and Conditions Agreement in which policies and reporting channels are clearly stated.

 

Furthermore, to strengthen and implement policies on quality, penalties for violating the above Process Change Notification (PCN) are clearly stated in the purchase order in accordance with the UMC Raw Material Supplier PCN Application Management Method (GG-Q12-008-E).

(2) Does the company establish an exclusively (or concurrently) dedicated unit supervised by the Board to be in charge of corporate integrity, implementation, and regularly report to the Board of Directors, at least one time a year?

The Corporate Sustainability Committee is the highest-level corporate social responsibility organization within UMC. The Committee formulates the direction and objectives of the Company’s corporate social responsibility and sustainable development, and reports to the Board of Directors annually. Ethical management is only one part of corporate sustainability. For further information, please refer to UMC website at Corporate Sustainability webpage.

(3) Does the company establish policies to prevent conflicts of interest and provide appropriate communication channels, and implement it?

Please refer to the Employee Code of Conduct for policies and reporting channels.

(4) Has the company established effective systems for both accounting and internal control to facilitate ethical corporate management, and are they audited by Audit Division based on the results of assessment of the risk of involvement in unethical conduct to examine accordingly the compliance with the prevention programs? or engage CPAs to carry out the audit?

The UMC Audit Division is directly under the Board of Directors/Audit Committee to ensure the independence and objectivity of audits. Each year, the Audit Division develops an annual audit plan based on risk evaluation results, including the involvement of unethical conduct, implements audit, issues audit report and tracks improvement accordingly, and conducts control self-assessment annually. The head of the audit division regularly communicates with members of the Audit Committee regarding audit results and follow-up, and presents audit affairs and discusses with independent directors during Audit Committee and Board of Directors meetings to fully communicate audit content and performance.

 

UMC regularly revises its internal control system to respond promptly to environmental changes and to improve the effectiveness of design and operating. Amendments are reported to the Audit Committee and Board of Directors for approval.


In addition, UMC is also listed on the New York Stock Exchange (NYSE) and subject to US regulations for foreign issuers. Since 2006, UMC has complied with the SOX 404 Act and has been audited by the independent auditors annually. To date, the independent auditors have issued unqualified audit reports for UMC’s internal control design and implementation performance.

 

 

(5) Does the company regularly hold internal and external educational trainings on operational integrity?

In accordance with the philosophy of ethical management, UMC has formulated the Code of Ethics for Directors and Officers, the Employee Code of Conduct, and the Ethical Corporate Management Best Practice Principles as regulatory guidelines for all its directors, managers and employees.


From top down, these regulations enhance the quality of conduct and professional ethics of the Company and its entire staff. The abovementioned Employee code of conduct is implemented in the daily tasks and businesses of all employees through physical and on-line training courses and online self-tests.


In 2019, UMC fabs in Taiwan and Singapore have completed the training courses and passed relevant tests.

3. Operation of the integrity channel

Evaluation Item

Implementation Status / Abstract Explanation

(1) Does the company establish both a reward/punishment system and an integrity hotline? Can the accused be reached by an appropriate person for follow-up?

Article 6 of the Employee code of conduct describes measures against ethics and fraud violations, and protective and anti-retaliation measures for reporting. Employees may report violations to relevant management and supervisory units through e-mail or hotlines, and the head of the Audit Division is promptly notified of the report.

(2) Does the company establish standard operating procedures for confidential reporting on investigating accusation cases and follow-up?

After receiving a fraud report, UMC will convene an investigative team to investigate the suspected fraud described in the report. Once investigation confirm, those found violating or breaching the Code of Conduct are to face adequate corrective action by the Company depending on the severity of the incident. The Company will protect any employee reporting ethics violation or fraud and members of the investigative team from unfair treatment or retaliation. For details, please refer to the Employee code of conduct.

(3) Does the company provide proper whistleblower protection?

The Company will protect any employee reporting ethics violation or fraud and members of the investigative team from unfair treatment or retaliation. For details, please refer to the Employee code of conduct.

4. Strengthening information disclosure

Evaluation Item

Implementation Status / Abstract Explanation

(1) Does the company disclose its ethical corporate management policies and the results of its implementation on the company’s website and MOPS?

UMC discloses its principles on ethical corporate management and relevant regulations on its website and MOPS.

 

In addition, UMC discloses relevant information in its CSR Report.

 

5. The company has established the ethical corporate management policies based on the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies, please describe any discrepancy between the policies and their implementation.

UMC has formulated the Code of Ethics for Directors and Officers, the Employee Code of Conduct and the Ethical Corporate Management Best Practice Principles. All directors, managers and employees of the Company shall abide by the provisions of these Codes and related regulations. For employee compliance with the Employee Code of Conduct, please refer to the Employee Code of Conduct in this annual report.

6. Other important information to facilitate a better understanding of the company’s ethical corporate management policies (e.g., review and amend its policies).

For other relevant communications such as employee rights, employee care, investor relations, supplier relationships and stakeholder rights, please refer to the UMC Corporate Social Responsibility Report and the Corporate Sustainability webpage on the UMC website.

 

Specific Measures for Ethical Management in 2018 - 2019

Implementation Status

Legal Compliance

Inter-division regulatory compliance is coordinated by the Legal Division, and other regulations are regularly reviewed by relevant divisions.

In 2019, the Legal Division coordinated overall regulatory compliance with the EU General Data Protection Regulation.

UMC Code of Conduct Implementation

The content of the Codes is reviewed bi-annually:
1. Review of the Employee Code of Conduct was completed in April 2019.
2. Relevant penal provisions were added to the Employee Code of Conduct in December 2017.

Major violations of employee ethics are reported to the Audit Committee on a quarterly basis. In 2019, no major ethical violations were reported.

Employee Code of Conduct education and testing were conducted in August 2019, with 100% completion rate.

Employee Code of Conduct training course for new employees: 625 participants and a total of 937.5 hours in 2018; and 224 participants and a total of 336 hours in 2019.

UMC Fair Competition, Intellectual Property Rights Violations

Litigation cases in each quarter of 2019 were reported to the Audit Committee.

The UMC Antitrust Policy for promoting fair competition can be found on the UMC website, and online testing is conducted regularly. Online testing for the Fair Trade Law (i.e. the Antitrust Law) was conducted in September 2019.

For intellectual property rights education, three weekly training courses are offered to new employees: Introduction to UMC Intellectual Property Rights, Trade Secret and Basic Legal and Risk Awareness on the Incoming Data. In the first half of 2019, we will continue to focus on training via eUMC website, maintaining the frequency of announcement every six months.

Introduction to UMC Intellectual Property Rights training course for new employees: 1,333 participants and a total of 653 hours in 2018; and 285 participants and a total of 71.3 hours in 2019.

Trade Secret training course for new employees: separate from UMC Intellectual Property Rights as an individual course since December 2018 with 54 participants and a total of 8.6 hours in 2018; and 285 participants and a total of 45.6 hours in 2019.

Basic Legal and Risk Awareness on the Incoming Data training course for new employees: implemented since April 2018. A total of 837 participants and a total of 209.3 hours in 2018; and 285 participants and a total of 71.3 hours in 2019.

Financial Reporting Related Internal Control

Annual audit by external auditors and internal Audit Division.

Results of internal audits for 2019 were reported at the Audit Committee/Board of Directors meetings on a quarterly basis.

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