Annual Reports  >  2013  >  Corporate Governance > Code of Ethics and Business Conduct
Code of Ethics and Business Conduct
繁中

Ethics Values

Integrity is the most important core value of TSMC’s culture. TSMC is committed to acting ethically in all aspects of our business; constantly and vigilantly promoting integrity, honesty, fairness, accuracy, and transparency in all that we say and do.

At the heart of our corporate governance culture is TSMC’s Code of Ethics and Business Conduct (the “Code“) that applies to TSMC and its subsidiaries, and this Code requires that each employee bears a heavy personal responsibility to preserve and to protect TSMC’s ethical values and reputation and to comply with various applicable laws and regulations.

In so doing, each of us:

  • must not advance our personal interests at the expense of, or in conflict with the Company;
  • must refrain from corruption, unfair competition, fraud, waste and abuse;
  • must not undertake any practices detrimental to TSMC, the environment and to society;
  • must procure all of our raw materials from socially responsible sources;
  • must abide by both the spirit and letter of all applicable laws, rules and regulations; and
  • must avoid any efforts improperly to influence the decisions of anyone, including government officials, agencies, and courts, as well as our customers, suppliers, and vendors.

In order to continue to build an environment of innovation, technology leadership, and sustainable profitable growth, the Code requires that we must promote business relationships founded upon an unwavering respect for the intellectual property rights, proprietary information and trade secrets of TSMC, our customers, and others; and the proper use of the Company’s assets, not for personal use, but for achieving TSMC’s vision for many years to come.

All employees, officers and Board members must whole-heartedly embrace and practice the Code. TSMC’s management must set the best example of integrity and ethical conduct. TSMC’s officers, especially our CEO, CFO, and General Counsel, with oversight from our Board, are responsible for the full, fair, accurate, timely, and understandable financial accounting and financial disclosure in reports and documents filed by the Company with securities authorities and in all TSMC public communications and disclosures.

Code Administration and Disciplinary Action

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All employees, officers and managers must comply with the Code and the other Company policies, procedures, and regulations based on the Code. TSMC expects our customers, suppliers, vendors, advisors and others with which we come into contact to understand and respect the Company’s ethics standards and culture.

As part of our ethics compliance program, all employees must disclose any matters that have, or may have, the appearance of undermining the Code (such as any actual or potential conflict of interest). Key employees and senior officers must periodically declare their compliance status with the Code. To encourage an open culture of ethics compliance, we also have implemented several related policies that allow employees or any whistleblowers with relevant evidence to report any financial, legal, or ethical irregularities through the “Complaint Policy and Procedures for Certain Accounting and Legal Matters“ or “Procedures for Ombudsman System“. When an employee finds or suspects a breach of this Code, he/she should report it immediately to any of the following persons: their supervisor; the Function Head of Human Resources; the Company’s Ombudsman; or to the Chairman of the Company’s Audit Committee, depending on the nature of the suspected breach.

In order to promote a culture of awareness, we have made all of our various policies available through easy access on our intranet and require all employees to be trained on our core values and compliance regime. Our compliance program for all employees includes regular live seminars and online training on various topics on ethics, including the requirements to prevent bribery and to protect our intellectual property. Our intranet website posts various guidelines and informative articles on ethics and honorable business conduct. We also require our stakeholders such as our suppliers, vendors and other partners to accept and abide by the same high ethical standard to which we hold all of our officers and employees. For example, we require all of our suppliers, vendors and partners to declare in writing that they will not engage in any fraud or any unethical conduct when dealing with us or our officers and employees. We also promote our ethical culture to our business partners through regular live seminars to prevent any unethical conduct. We have established an online “hotline“ that any relevant person may use to report any ethical irregularities to be investigated personally by designated senior management of TSMC.

The internal auditors of TSMC regularly audit the compliance by the Company, our vendors, suppliers, and customers, of relevant rules and regulations.

TSMC Internal Audit assists the Board of Directors and Management in inspecting and reviewing whether TSMC’s internal control system is adequate and effective in its design and operation to ensure that:

  • Financial, managerial, and operating information is accurate, reliable, and timely.
  • Legislative or regulatory issues impacting the organization are recognized and addressed properly.
  • Employee’s actions are in compliance with policies, standards, procedures, and applicable laws and regulations.
  • Resources are acquired economically, used efficiently, and adequately protected.

To achieve the above objectives, Internal Audit submits an annual audit plan incorporating the regulatory compliance audit projects to the Board of Directors for approval. Subsequent to the audits, Internal Audit reports the audit findings along with issue follow-up to the Board and Management on a regular basis.

We have a “zero tolerance“ rule for any violation of any ethics rule. Simply put, any officer or employee, regardless of their seniority, will be severely punished (including immediate dismissal and judicial prosecution as appropriate) to the full extent of our policies and the law, for violations of our ethical standards. For example, in 2013, there are two ongoing legal actions filed by the Company against former employees for misappropriation of the Company’s intellectual property and violating other ethics rules. Additionally, the Company took severe disciplinary action against 7 employees who committed major violations of our Proprietary Information Protection (“PIP“) rules, and terminated 1 employee for violating other ethics rules.

Taiwan Corporate Conduct and Ethics Implementation as Required by the Taiwan Financial Supervisory Commission

Item

Implementation Status

Non-implementation and Its Reason(s)

1. Establishment of Corporate Conduct and Ethics Policy and Implementation Measures
  (1) The company’s guidelines on corporate conduct and ethics are provided in internal policies and disclosed publicly. The Board of Directors and the management team demonstrate their commitments to implement the policies.


 



  (2) The company establishes relevant policies for preventing any unethical conduct. The implementation of the relevant procedures, guidelines and training mechanism are provided in the policies.

 




 



  (3) The company establishes appropriate measures for preventing bribery and illegal political contribution for higher potential unethical conduct in the relevant policies.


 

 



Integrity is the most important core value of TSMC’s culture. TSMC is committed to acting ethically in all aspects of our business. TSMC has established the Code of Ethics and Business Conduct (the “Code“) to require that each employee bears a heavy personal responsibility to uphold TSMC’s ethics value. All details of the Code and the measures that the Board and the management team take to ensure compliance of the Code are reported in TSMC’s annual report and the Corporate Responsibility Report.


In order to promote a culture of awareness, we have made available through easy access all of our various policies on our intranet and require all employees to be trained periodically on our core values and compliance regime.

We also require our stakeholders such as our suppliers, vendors and other partners to accept and abide by the same high ethical standard to which we hold all of our officers and employees.

The internal auditors of TSMC regularly audit compliance by the Company, our vendors, suppliers, and customers, of relevant rules and regulations.

 

In order to prevent any unethical conduct, all employees must disclose any matters that have or may have the appearance of undermining the Code, such as any actual or potential conflict of interest. Key employees and senior officers must periodically declare their compliance status with the Code.

TSMC requires all of our suppliers, vendors and partners to declare in writing that they will not engage in any fraud or provide unethical conduct when dealing with us or our officers and employees. We have established internal and external online “hotline“ that any relevant person may use to report any ethical irregularities to be investigated personally by designated senior management of TSMC.

None

2. Corporate Conduct and Ethics Compliance Practice
  (1) The company shall prevent doing business with whomever has unethical records and include business conduct and ethics related clauses in the business contracts.




 



  (2) The company sets up dedicated unit in charge of promotion and execution of the company’s corporate conduct and ethics. The board of directors supervises such execution and compliance of the policies.













  (3) The company establishes policies to prevent conflicts of interest and provides appropriate communication and complaint channels.













  (4) The company establishes effective accounting and internal control systems for the implementation of policies, and the internal auditors audit such execution and compliance.

 

 


TSMC requires our stakeholders such as our suppliers, vendors and other partners to accept and abide by the same high ethical standard to which we hold all of our officers and employee. For example, we require all of our suppliers, vendors and partners to declare in writing that they will not engage in any fraud or provide unethical conduct when dealing with us or our officers and employees. We also promote our ethical culture to our business partners through regular live seminars to prevent any unethical conduct.

 

Integrity is the most important core value of TSMC’s culture. TSMC’s Board, under the leadership of the Chairman, the Company’s Ombudsman and other internal functions of the Company including Legal Department, Human Resources and Internal Auditors fully promote the code values of the Company from the various perspectives. All employees, officers, and Board members must whole-heartedly embrace and practice the Code. TSMC’s management must set the best example of integrity and ethical conduct. TSMC’s officers, especially our CEO, CFO, and General Counsel, with oversight from our Board, are responsible for the full, fair, accurate, timely, and understandable financial accounting and financial disclosure in reports/documents filed by the Company with securities authorities and in all TSMC public communications/disclosures.

 

ITSMC requires each newly hired employee to declare if there is any conflict of interest, and asks all employees to disclose any matters that have, or may have, the appearance of undermining the Code (such as any actual or potential conflict of interest). Key employees and senior officers must periodically declare their compliance status with the Code.
TSMC requires all of our suppliers, vendors and partners to declare in writing that they will not engage in any fraud or provide unethical conduct when dealing with us or our officers and employees.
We have established an internal and external online “hotline“ that any employee or relevant person may use to report any ethical irregularities to be investigated personally by designated senior management of TSMC.

TSMC continues maintaining the integrity of its financial reporting processes and controls and establishes appropriate internal control systems for preventing higher potential unethical conduct. The Internal auditors formulate annual audit plans based on the results of the risk assessment and report to the Board its audit report.

None

3. The company establishes the channels for reporting any ethical irregularities and sets up punishment for violations of the policies.

 

TSMC has established internal and external online “hotline“ that any employee or relevant person may use to report any ethical irregularities to be investigated personally by designated senior management of TSMC.


Any officer or employee will be severely punished (including immediate dismissal and judicial prosecution as appropriate) and prosecuted to the full extent of our policies and the law, for any violation of our ethical standards. For example, in 2013, there are two ongoing legal actions filed by the Company against former employees for misappropriation of the Company’s intellectual property and violating other ethics rules. Additionally, the Company took severe disciplinary action against 7 employees who committed major violations of our Proprietary Information Protection (“PIP“) rules and terminated 1 employee for violating other ethics rules.

None

4. Information Disclosure
  (1) To set up a corporate website that publishes information relating to company’s corporate conduct and ethics.

 

  (2) Other information disclosure channels (e.g. maintaining an English website, designating personnel to handle information collection and disclosure)
 
Our intranet website posts various guidelines and informative articles on ethics and honorable business conduct for employees’ reference (in both Chinese and English).

TSMC discloses the relevant information in its’ Annual Report and Corporate Responsibility Report which are available in TSMC external website (http://www.tsmc.com, in both Chinese and English)

None

5.

If the company has established corporate governance policies based on TSE Corporate Conduct and Ethics Best Practice Principles, please describe any discrepancy between the policies and their implementation.


TSMC has established the Code of Ethics and Business Conduct (the “Code“) which requires that all employees, officers and board members comply with the Code and the other Company policies, procedures and regulations based on the Code. For details on the implementation of TSMC’s Corporate Conduct and Ethics, please refer to “Code of Ethics and Business Conduct“ .

6.

Other important information to facilitate better understanding of the company’s corporate conduct and ethics compliance practices (e.g., promote and demonstrate the company’s commitment to ethical standard and provide training to its business partners; review the company’s corporate conduct and ethics policy).


For details on the implementation of TSMC’s Corporate Conduct and Ethics, please refer to “Code of Ethics and Business Conduct“.