TSMC’s robust compliance efforts are comprised of legislation monitoring, developing and implementation of effective compliance policies and programs, training, and maintaining an open reporting environment.
TSMC operates in many countries. To comply with governing legislation, applicable laws, regulations and regulatory expectations, we closely monitor domestic and foreign government policies and regulatory developments that could materially impact TSMC’s business and financial operations. Our Legal organization periodically updates our relevant internal departments, management and the Audit Committee of applicable regulatory changes so that internal teams ensure compliance with new regulatory requirements in a timely manner. We are also a proactive advocate for local legislative and regulatory reform, and our comments and recommendations on legal reforms to the government have been accepted constructively. TSMC is increasingly dedicated to identifying potential regulatory issues and will continue to be involved in advocating public policy changes that foster a positive and fair business environment.
Policy and Compliance Program Development and Implementation
Under the framework of the Code, TSMC has established a regulatory compliance program that includes policies, guidelines and procedures in different compliance areas, including: Anti-corruption, Anti-harassment/discrimination, Employment Regulations, Antitrust (unfair competition), Environment, Export Control, Financial Reporting, Internal Controls, Insider Trading, Intellectual Property, Proprietary Information Protection (“PIP”), Privacy, Record Retention and Disposal, as well as procuring raw materials from socially responsible sources (“Conflict-free Minerals”). It is our belief that these policies are crucial in strengthening overall compliance with the Code and compliance program. TSMC, its employees and its subsidiaries are expected to fully understand and comply with all laws and regulations that govern our businesses and make ethical decisions in every circumstance.
Compliance Awareness Training
Training is a major component of our regulatory compliance program, conducted throughout the year to refresh TSMC’s employees’ commitment to ethical conduct, and to get updated information on laws and regulations related to their daily operations. Highlights of our training include:
- Awareness promotion emails to employees, posters at our facilities, and news articles, compliance guidelines, tips and FAQs which our employees can access through our intranet;
- Live seminars focusing on specific topics such as Anti-Corruption (this was the highlight of our compliance training activities for 2016, PIP, Intellectual Property, Personal Data Protection, Conflict Minerals Compliance and Export Control Management. Training is made mandatory for those employees whose jobs are especially relevant to a particular topic to ensure sufficient awareness of relevant laws and internal policies;
- On-line learning programs updated frequently to provide most up-to-date information and timely and flexible access for employees to understand the law and key compliance issues, covering topics of Antitrust, Anti-harassment, Insider Trading, Export Control Management, PIP, and Privacy Protection among others;
- External training, in Taiwan and abroad, for TSMC’s legal team to receive current developments of new laws and regulations, and for its lawyers to comply with applicable continuing legal education requirements. External experts are also invited to give in-house lectures on key issues.
In 2016, TSMC achieved several major accomplishments in regulatory compliance:
- Public Promotion Activities: In addition to fulfilling our obligations on regulatory compliance matters, TSMC exercised its civic duties as a responsible corporate citizen by advising the local government on law and policy reform, including urging the Government to amend certain outdated laws and regulations, which we believe were inconsistent with global practice, to improve Taiwan’s investment environment and economic development. For example, since Taiwan legislature’s acceptance of TSMC’s advice to impose criminal liability for trade secret misappropriation in 2012, TSMC continues to be an advocate of trade secret protection which is critical to innovation and fair competition, and hosted and attended multiple events to raise industries’ awareness of the importance of this topic.
- Internal Training: Throughout 2016, TSMC offered a wide range of training courses on various compliance topics, including 12 on-line training courses, and 42 topics covered via live seminars. These courses were all developed and conducted by internal and external compliance experts and legal professionals.
- Continuous Awareness Enhancement of Ethics Code and Anti-Corruption: Any corruption or other violation of the Code could not only impose long-term negative influence on our competitiveness, but could also seriously damage our strong industry reputation. To enhance employees’ and external partners’ awareness of the Code and anti-corruption rules, the Legal organization set the two topics as our awareness enhancement focus in 2016 and held a series of promotion activities through multiple channels, including: (1) provided over 50 face-to-face training sessions to approximately 3,000 employees, especially manager-level, from various internal organizations to promote awareness of and ensure compliance with TSMC’s business conduct standards when interacting with third parties; (2) provided two on-line training programs to approximately 26,000 manager-level and non-manager-level employees, (including those of our subsidiaries); (3) provided 8 live seminars to over 700 suppliers (a special focus for 2016) for a completion rate of 96%; (4) promoted reporting channels and whistleblower rights by emails and through posters throughout our facilities. Ahead into 2017, it is our objective to continuously provide compliance training on these and other compliance topics to our employees.
- Conflict-Free Supply Chain: As a recognized global leader in the electronics industry supply chain, we acknowledge our corporate social responsibility to strive to procure conflict free minerals in an effort to recognize humanitarian and ethical social principles that protect the dignity of all persons and have implemented a series of compliance safeguards. In 2016, TSMC has made continued progress to ensure a conflict-free supply chain, and our conflict-free minerals compliance program has also been highly ranked by independent third party rating agencies.
- Export Compliance: TSMC’s export management system (EMS) and policy has been in place for a number of years, and is continuously maintained to ensure compliance with all applicable regulations covering the export of information, technologies, products, materials and equipment. Our EMS was certified in September 2012 by the Bureau of Foreign Trade, the Taiwan regulator, as a qualified ICP (Internal Compliance Program) exporter. In addition, TSMC implements “No ECCN，No Shipment” control and customers are required to provide end use and export control classification number (ECCN) of the products, among other required information, for TSMC to apply for applicable export licenses. TSMC has frequently earned recognition as “best in class” and often shares our experience on EMS implementation to third parties including a variety of domestic and foreign organizations and industry peers. In 2016 TSMC was recognized by World Export Control Review (World ECR), a well-known international online journal of export controls, as the Export Controls Compliance team of the year for the Rest of the World (outside USA and Europe). We also provided an on-line learning program, live seminars, promotion emails, and posters at our facilities to further enhance relevant employees’ awareness of the topic.
- Other Major Compliance Topics: For other importance compliance topics such as privacy protection, insider trading, anti-harassment, and PIP, in 2016 we not only provided and updated, if necessary, relevant on-line courses and resources, but enhanced employees’ awareness by promotion emails and through posters at facilities. Employees were mandatorily required to complete on-line courses for both anti-harassment and PIP.