A so-called corporate culture of "commitment to business integrity" stresses that all business activities must comply with local laws and regulations of Taiwan and the place of business. We stress to our employees that they must refrain from violating relevant laws and regulations for obtaining business profits.

We are in the manufacturing industry and our main compliance risks are related to labor and environmental protection laws, as well as the use of conflict minerals. Sales related risks include protection of consumer safety and health rights by the industry's competent authority and the Fair Trade Act. Accounting related risks are mainly related to the Tax Laws, the Tax Collection Regulations in each country, and the Anti Money Laundering Regulation. Public companies are required to comply with the Company Act, Securities and Exchange Act, and corporate governance and CSR related regulations. We closely follow policy and law changes in Taiwan and overseas that may have a material impact on our business operations and financial positions. Therefore, we follow regulatory changes based on the classification of organizational functions and the laws relevant to each one of them, as described be low:

In 2022, the Company fully complied with the Company Act and the Ethical Management Best Practice Principles for TWSE/GTSM Listed Companies without any serious violation of relevant laws and regulation. The Company also improved its fraud prevention measures to strengthen ethical management by amending its Articles of Incorporation, Ethical Management Best Practice Principles, and Regulations for Patent Right Management to stay abreast with the latest changes in relevant laws and regulations. However, Walsin (Nanjing) Development Co., Ltd. failed to complete construction planning permit application for its One Mall‘s roof beautification and noise reduction projects, and was fined of RMB$698,000 by the local Urban Administrative and Law Enforcement Bureau for violation of Article 35 of the Urban and Rural Planning Regulations. Necessary application procedures were completed in 2022, when legal compliance promotion was also strengthened at Walsin (Nanjing) Development.

Walsin Lihwa is committed to ethical corporate management, legal compliance, and effective corporate governance and therefore has its Ethical Conduct Guidelines for Directors of the Board and Managerial Officers, Ethical Conduct Guidelines for Employees, and Regulations of Business Handling by Employees to require employees to abide by them to meet the Company's requirements fort business ethics, labor relations, environmental protection, occupational health and safety, internal control, corporate governance, and community involvement. Moreover, the Ethical Corporate Management Best Practice Principles and Procedures for Ethical Management and Guidelines for Conduct are the two pillars of the Company ethical management policy, and relevant information on ethical management for business integrity is also available on the Company's website and intranet to highlight the importance of ethical management.

The Corporate Governance Director of Walsin Lihwa is charge of the Company's Business Integrity Center. Members of the Business Integrity Center and their duties are introduced as follows.

Walsin Lihwa strengthens ethical management through public commitment, information dissemination, and education and training to embed a corporate culture of business integrity from top to bottom of the Company. The board of directors and senior management are required to sign the Company's ethical management statement to demonstrate their determination in this regard. In 2022, 8 directors attended ethical (including anti-corruption) management related courses. Moreover, there are ethical management education and training including online courses to strengthen the corporate culture of business integrity and commitment to compliance with professional ethics.

1. Enhancement of corporate governance effectiveness: Arrange education and training for directors of the board on a regular basis and update them on the changes in relevant domestic and overseas laws and regulations including prohibition of insider trading to strengthen their professional knowledge.
2. Comprehension of the key points of legal compliance: Employees are encouraged to attend professional programs in Taiwan or elsewhere in the world to keep themselves updated on the latest law and policy changes as well as the latest developments in specific laws.
3. Effective implementation of anti-corruption measures: Require suppliers to sign the Supplier Management Commitment and announce the Company's anti-bribery and anti-corruption commitments as well as related measures at supplier conventions and investor briefings, and provide stakeholder communication channels on the Company's website for stakeholders to report any breach of integrity and corruption issue they discover to help the Company activate investigation procedures.
4. Enhancement of legal compliance and risk management at affiliates and subsidiaries: Convene legal compliance meetings at affiliates and subsidiaries on a non-periodic basis to strengthen their legal compliance and risk management and ensure them to adopt the same legal compliance standards as their parent company, and ensure their consistency in implementation of ethical management through concerted review and amendment of the Ethical Conduct Guideline for Employees and other important company regulations.
5. Enhancement of employees' awareness of legal compliance and integrity: Provide various training programs on ethical management, corporate governance, and legal knowledge on the Company's intranet and internal education and training platform Walsin Lihwa Academy, with foci on ethical management, intellectual property management, business secrets, and confidentiality obligations in 2022.

Pursuant to the Ethical Conduct Guidelines for Directors of the Board and Managerial Officers of Walsin Lihwa, the board and managerial officers of the Company shall be bound by the obligation to maintain the confidentiality of any information regarding the Company itself or its suppliers and customers. In 2022, the confidentiality requirement was further emphasized to the incumbent directors of the board and executives above the managerial officer level.

Ethical management, anti-corruption, and legal compliance promotion to suppliers at different plants in 2022 (1 hour per session):

In 2022, the education and training at the Company focused on ethical management, patents, and the Taiwan Intellectual Property Management System. 951, 877, and 859 people respectively completed the ethical management (including anti-bribery), patent education, and the Taiwan Intellectual Property Management System programs, while the promotion of such subjects was provided to 147 major suppliers.