Risk Management

Acting on our sustainable development commitment to employees, shareholders, long-term development, and social responsibility, HIWIN (including subsidiaries and sub-subsidiaries) applies rigorous systems to integrate and manage various operating risks, i.e., operating strategies, finances, and potential risks to business performances.

HIWIN operations are overseen and audited by the Remuneration Committee, internal audits, and independent directors. The Board of Directors communicates sustainability topics across economic, environmental, and social dimensions. Senior executives then review and formulate operation plans to prevent material risks. HIWIN manages and controls internal processes rigorously, implements job rotation for important tasks, continues to improve processes, and updates documents to ensure timeliness and security. In addition, HIWIN also conducts audits and inspections on a need basis through auditing agencies and establishes various management and control systems to minimize the possibility of risks materializing.

Rigorous Control & Audit

HIWIN controls and manages internal processes rigorously, implements regular job rotations for important functions, and conducts audits and inspections through auditing agencies on a need basis to minimize corruption risks and confidential information leaks.

Honesty & Integrity

In accordance with the Company's management philosophy and mission statement, employees are prohibited to solicit, offer or deliver bribes, entertain, give or receive kickbacks, or bribe for personal or third-party gains when carrying out their duties. To ensure anti-corruption policies are followed, HIWIN’s philosophies and core values are reiterated at onboarding training or functional training. When recruiting employees, HIWIN also carefully selects employees that will fit into HIWIN's culture. HIWIN formulated an Integrity Management Code stating that HIWIN, directors, management, employees, and actual controllers are prohibited from directly or indirectly offering, committing, requiring, or receiving any forms of illegal profits to and from customers, distributors, contractors, suppliers, government officials, or other stakeholders when carrying out their duties. We hope the Board of Directors and management team can comply with integrity management policies. The Company's business philosophy of “professional standards, enthusiasm for work, and ethics of practice” is promoted daily and during daily morning meetings to internalize the philosophy in employees.

HIWIN’s internal reporting system enables stakeholders to report suspicious behaviors in HIWIN employees or anyone representing HIWIN that potentially violates ethical codes of conduct. HIWIN also uses education and training to inform employees about reporting channels. Employees can also send emails directly to the chairman or independent directors through the Company website, which ensures open communication channels. For example, in 2021, all HIWIN locations fulfilled 100% of the anti-corruption campaigns. HIWIN has therefore successfully conveyed the core philosophy of integrity and honesty.

Locations Taipei Office Taichung Factory Yunlin Factory Dapumei Factory
Completion Rate 100% 100% 100% 100%

Auditing agencies and HIWIN’s internal control systems regularly evaluate corruption risks within the Company and formulate audit plans. The audits are then conducted according to the audit plans. Results are regularly reported to the Audit Committee and Board of Directors to actively prevent corruption. There was no major corruption in 2021.

Anti-competitive Practices

HIWIN strictly forbids fixing production volumes and sales volumes with peers and associations to prevent any form of pricefixing. The Company also strictly complies with local and foreign regulations. In terms of organizational structure, HIWIN has established comprehensive internal control systems and measures (including management policies, authorization systems, separation of duties, etc.). The systems and measures are supplanted by internal audits to prevent any sources of corruption. There were no lawsuits on anticompetitive practices, anti-trust practices, and monopoly behaviors in 2021.

Conflict of Interests

 Please refer to the 2021 Annual Report (https://www.hiwin.tw/stock/annual_report/2021_中文年報.pdf) for information on HIWIN directors serving concurrently at other companies, stakeholder shareholding, and controlling shareholders and affiliates.

Directors & Profit-sharing

HIWIN is a capital-intensive business. For any profits after clearing, the Company is required to first set aside provisions for taxes and losses from previous years. Then, set aside legal reserves (10%) and surplus reserves. Then, allocate 6% (or less) of the remaining profits for dividend payments. Lastly, allocate 4% (or less) as remuneration for directors and 1% (or more) as employee bonuses.

To comply with the Balanced Dividend Policy set forth by the Securities and Futures Bureau, HIWIN has formulated a profitsharing scheme in accordance with the Company's current business environment and in pursuit of sustainable management and long-term development. The profitsharing scheme prioritizes cash dividends but also issues stock dividends. The percentage of stock dividends is capped at two-thirds of the sum of the year’s dividend and extra dividends. The Board of Directors will formulate and submit an annual profitsharing scheme to the shareholders' meeting for approval before distributing dividends.

Regulatory Compliance & Advocacy

HIWIN believes that strict regulatory and legal compliance are basic inviolable principles. The Company regularly organized various campaigns to advocate laws and regulations. We also reach out to units to learn about their regulatory compliance practices, striving to raise awareness of relevant laws and regulations among employees and assist with any practical challenges.

To satisfy customer demands and ensure on-time deliveries for the success of our customers, employees work overtime voluntarily. To facilitate work-life balance and prevent overworking, HIWIN reviews the attendance system and has added an overtime alert function. We also regularly advocate at labor-management meetings on the factory level, urging supervisors and employees to comply and adhere to overtime policies. There were no substantial penalties in 2021.

Note: Substantial penalties are any penalties over NT$1 million.