CSRC adheres to the Company’s business philosophy of “Modesty leads to harmony; honesty builds credibility” and clearly indicates its ethical management attitude on the Company’s official website. In order to establish a corporate culture of ethical management and an optimal business operation model, there are regulations such as the Ethical Corporate Management Best Practice Principles and the Code of Ethical Conduct. The first point of CSRC’s brand value is to stick to its promises, and practical rules are as follows:

In order to improve the supervision of ethical management, CSRC is responsible for the formulation and supervision of the implementation of the ethical management policy and prevention plan by the corporate governance unit. Furthermore, this is regularly (at least once a year) reported to the Board of Directors. Reported items include:

1. Assist in integrating ethics and moral values into the Company’s business strategy, and cooperate with the legal system to formulate relevant anti-fraud measures to ensure ethical management.
2. Regularly analyze and evaluate the risk of dishonesty within the business scope, and formulate plans to prevent dishonesty, defining the Procedures and Guidelines for Conduct as applied to work operations within each plan.
3. Plan internal organization, staffing structure and responsibility, and place mutual supervision and checks and balances on business activities with high risks of dishonesty in the business scope.
4. Promotion and coordination of ethical policy advocacy training.
5. Plan the reporting system to ensure the effectiveness of the implementation.
6. Assist the Board of Directors and management to check and evaluate whether the preventive measures established by the implementation of integrity management are operating effectively, and regularly evaluate and follow the relevant business processes and make reports.

In order to make sure that employees, managers, and directors know and follow the Ethical Corporate Management Best Practice Principles, CSRC regularly conducts advocacy and training courses and incorporates them into the internal control system every year. CSRC always pays attention to the development of domestic and foreign standards for ethical management, revising the content from time to time according to the internal and external situation and developments. At the same time, it also encourages directors, managers, and employees to make suggestions while reviewing and improving the Company’s Ethical Corporate Management Best Practice Principles so as to enhance the effectiveness of the Company’s ethical management. CSRC’s Ethical Corporate Management Best Practice Principles and Code of Ethical Conduct are as follows:

CSRC takes the highest professional ethical standards as a self-requirement, abiding by discipline and zero tolerance for corruption, and does not allow any bribery, fraud, misuse of Company assets or sacrifice of Company interests in exchange for personal gain. In the future, we will continue to evaluate the revisions of regulations such as governance, product liability, and environmental protection, in order to make adjustments in advance to meet regulatory requirements. To strengthen compliance with the Company's Ethical Corporate Management Best Practice Principles, ensuring employees fully understand the Company's regulations regarding receiving hospitality, socializing, gifts, and other benefits, specific Procedures for Receiving Hospitality, Social Interaction, and Gifts as well as Gift Giving and Receiving Management Regulations have been established.

To strengthen our ethical corporate management policy and deepen ESG-related issues, CSRC has proposed a five-point strategy as the basis for future improvement.

The Company firmly believes that incorporating the above strategies into corporate management policies will not only reflect the practice of ethics, sustainability, and responsible business, but also gain the trust of stakeholders and create a better future together.

CSRC regularly organizes education, training, and advocacy for directors, managers, employees, and substantial controllers (non-shareholders, but individuals who through investment relationships, agreements, or other arrangements effectively control company actions), making them fully understand the Company’s determination, policies, prevention plans, and the consequences of dishonest behavior violations. Directors and colleagues of CSRC participated in corporate governance and ethical management related courses in 2023. Courses included “Insider Trading Education and Training Course,” “Practical Key Moments in Opening Bids, Chairing, Reviewing, Supervising, and Undertaking 40 Key Moments of Opening a Bidding,” “The Fair Trade Act,” and “Audit Techniques and Practical Skills.” Through external and internal training courses, colleagues have strengthened their understanding and awareness of laws and regulations related to corporate governance, ethical management, and ethical behavior. The percentage of employees and board members in each operating location who have received anti-corruption communication and training is 100%, ensuring that colleagues at all operating locations are aware of and follow the core values of CSRC in respect to ethical corporate management. In terms of business partners, CSRC also attaches great importance to reliable supply and demand relationships with suppliers. The Greater China region includes suppliers from Linyuan Advanced Plant, Maanshan Plant, Anshan Plant, and Chongqing Plant. The purchase amount accounts for approximately 40.2% of the overall proportion, and all have signed the Statement of Integrity Commitment Note in accordance with regulations, and required suppliers to protect employees' human rights, provide legal working conditions, and uphold business ethics. In 2023, the percentage of suppliers signing was 100%.

Note:

With respect to contracts signed by CSRC with agents, suppliers, customers or other business partners, which include compliance with ethical management policies, if the counterparty of the transaction is involved in dishonest conduct then the terms of the contract may be terminated or rescinded at any time and reported.

CSRC has established a risk assessment mechanism for dishonest conduct in accordance with the Ethical Corporate Management Best Practice Principles. It regularly analyzes and evaluates business activities with a high risk of dishonesty in the business scope and establishes an effective accounting system and internal control system. No foreign accounts or secret accounts shall be kept and reviews should be undertaken at any time to ensure that the design and implementation of the system continues to be effective.

The internal audit unit shall draw up relevant audit plans based on the assessment results of the risk of dishonest conduct. The content is to include audit targets, scope, items, frequency, and so on, and it shall check the compliance of the prevention plan accordingly. For example, on the basis of the scale of each factory, emergency cases, and project progress (e.g., plant construction, expansion, overhaul, or other special projects, etc.), the Audit Office shall every year evaluate the type and frequency of corruption incidents and formulate an annual audit plan. When necessary, accountants may be hired to assist. The results of the inspection in the preceding paragraph shall be reported to the senior management and the unit responsible for ethical management. Furthermore, it shall prepare an audit report and submit it to the Board of Directors. The frequency of the report is at least once a year. In addition to routine annual audit operations, the Audit Office specifically analyzes whether there are red flags for corruption incidents (e.g., if there are warning signs of risk in procurement outsourcing cases such as incomplete sign-off procedures, unauthorized review and authorization by the responsible supervisor, or unreasonable designated manufacturers). CSRC conducts annual risk assessments related to corruption. Risk assessment self-evaluation forms (voluntary audit operations) are distributed to each plant, which include risks related to integrity. Based on the evaluation scores, the audit office conducts annual audit operations. After the assessments, it was found that in 2023, there were no significant corruption risks identified within the group, no major incidents of fraud, corruption, or violations of integrity or ethical business conduct, and no involvement in anti-competitive behavior or litigation related to violations of antitrust and monopoly regulations.

Total number and percentage of operations assessed for risks related to corruption

In 2023, 100% of CSRC's global operating locations underwent corruption-related risk assessments and included them in annual audits based on the scoring results. No major abnormalities were found.

In order to establish an honest and transparent corporate culture and promote sound management, CSRC has a Reporting System for Violations of Professional Ethics. This includes instructions on reporting channels and processing procedures, ensuring the legal rights and interests of informants and related persons. For any internal or external stakeholders of CSRC, if they find anything that may endanger the reputation and the safety of the property of CSRC, or any corruption, theft, embezzlement, private practice, fraud, or other unethical and dishonest behavior, then reports and complaints can be made through the following reporting channels of CSRC:

• 1	Email reporting: mp.buster@csrc.com
  2	Written reports: Audit Office, CSRC Investment Holdings Co., Ltd., 8F., No. 113, Section 2, Zhongshan North Road, Zhongshan District, Taipei City
  3	On-site reporting department: The receiving department is the Audit Department of CSRC

The whistleblower can make a named report or an anonymous report, and can provide relevant specific information and documents. If the report is named, the reporter should provide their name and contact information. If the relevant information and documents are not complete, it will not be accepted.

CSRC has integrated the value of ethical management and ethical behavior into the Company’s business strategy, and cooperates with laws and regulations to establish relevant anti-fraud measures to ensure honest operation and ethical behavior. Through the Reporting System for Violations of Professional Ethics, we ensure that the opinions of internal and external stakeholders can be communicated through unobstructed channels. (The scope of application of this approach includes subsidiaries of CSRC, foundations where direct or indirect donations cumulatively exceed fifty percent, and other group enterprises and organizations with substantial control capabilities.) Thededicated unit is the Audit Office. When necessary, it will cooperate with Regulatory Compliance or other relevant departments to ascertain relevant facts. For reported cases that are accepted, the identity of the informant, the content of the investigation, the investigation process and the investigation results are all properly kept and access rights are restricted. At the same time, it promises to protect the informant from being improperly dealt with due to the report. If the report is verified to be true, relevant units of CSRC will be instructed to review the internal control system and operating procedures, propose improvement measures and report to the Board of Directors to prevent the same incident from happening again. In addition, we also encourage internal and external personnel to report dishonest behavior or misconduct, and bonuses will be awarded according to the circumstances of the report.

Statistics show that in 2023, no incidents of ethical management violations were reported through the aforementioned reporting system at CSRC Group. There were also no incidents of employees being dismissed or disciplinary actions being taken due to corruption, nor of business partners being terminated or not renewed due to corrupt violations; and there were no legal cases related to corruption among the Company or its employees.