Corporate Code of Conduct (Hong Kong ICAC)

Transcription

1 Corporate Code of Conduct (Hong Kong ICAC) TABLE OF CONTENT ETHICS: CREATING AN ASSET 5 ETHICS AND PROFITS 7 BROAD PERSPECTIVE 9 Purpose of the Guide Codes of Conduct Who needs a Code of Conduct Basic Concepts of a Code of Conduct STANDARDS OF BEHAVIOUR 13 Compliance with Law Collective Standards of Practice Basic Values Ethics Test KEY CONTENT AREAS 15 The First Move Acceptance and Offering of Advantages Conflict of Interest Use of Privileged Company Information Maintenance of True Company Records Channel of Complaint The Second Move 17 Insider Trading Entertainment Outside Employment Loans from Suppliers, Contractors Gambling Company Property The Third Move 18 Commitment to Offering Quality and Fair Value Products Safety and Fitness for Use of Goods Expedient Product Recall and Related Practices Occupational Health and Safety

2 Equality of Employment Opportunity Environmental Policy Support for Community Activities SAMPLE CODE OF 18 CONDUCT FORMULATION AND 19 IMPLEMENTATION Getting Started Consultation Endorsement Format Communication Compliance Complaint BEYOND A CODE OF CONDUCT 21 Corporate Ethics Committee Safeguards in Work Systems and Procedures Staff Training ICAC BUSINESS SERVICES 23 Formulating Codes of Conduct Specialist Consultancy Service Preventive Education Managerial Training Appendix 25 A Sample Code of Conduct ETHICS: CREATING AN ASSET In an economy run on market principles the business of business is business. However, the freedom to pursue business goals and objectives also carries obligations to ensure that the freedom is enjoyed responsibly, that there is a level-playing field for all, and that ultimately the market survives and prospers. Some of these obligations are stipulated in law. They serve as a final defence against abuse, such as corruption, fraud and other malpractices. The most effective frontline defence is self-regulation. Those in business define for themselves what other obligations there are in addition to legal requirements, how these

3 are to be met and what sanctions are installed for those who do not abide. The higher the standard of behaviour, the lower the chance for abuse. Self-regulation begins at home. Business corporations have to work collectively as well as individually. A basic tool for self-regulation is a Code of Conduct which sets out the ground rules for all concerned. Internally, a Code of Conduct conveys to all staff a clear idea of the accepted conduct for achieving business goals. It also helps maintain consistent standards of behaviour throughout the company. Externally, adoption of a Code of Conduct enhances a company's reputation for fair and responsible dealing. It also strengthens Hong Kong's reputation as an international business centre where honesty and fair play prevails. Think of it this way: Just as the Rule of Law is essential to the stability and prosperity of Hong Kong, a Code of Conduct is vital to a company's proper and effective operation. Or think of it the other way: Business ethics is good business. It makes for better staff and a more valuable goodwill, which all goes to strengthening the company's competitive edge in the long run. Ethics is a valuable asset for your company. ETHICS AND PROFITS An effective Code of Conduct reduces costs and enhances profits because... * it reduces incidents of corruption fraud and other malpractices: * it reduces conflict of interest situations: * it enhances the trust of your customers, suppliers and contractors: * it enhances the credibility of your buyers and salespersons: * it enhances the loyalty and goodwill of your employees and other stakeholders: and ultimately, individual companies as well as the Hong Kong business community continue to enjoy a reputation of honesty and fair play. BROAD PERSPECTIVE Purposes of the Guide... This is a Guide produced for the reference of business organisations interested in formulating a code of conduct to guide management and staff. Just as the Companies Ordinance has a Table A as a basic set of clauses for a company's Articles of Association, the content of this Guide provides a starting point for companies to review an existing code of conduct or design a new one. The Guide aims to:

4 * present in a practical way the guiding principles in a code of conduct: * exemplify the options and circumstances for formulation of a code of conduct: and * provide a variety of cases, situations and examples for reference. Codes of Conduct... In its simplest form a code of conduct is a written statement of the standard of behaviour expected by a company of its management and employees. Some codes are more elaborate. They explain the company's business philosophy and values governing corporate conduct in achieving business goals. There are companies which include in their codes of conduct a detailed set of operating principles for management and staff to follow in dealings with customers, suppliers, contractors, public officials and any parties who have a relationship with the company. The broadest form of codes covers all of the above as well as company's policy regarding social issues which affect the community at large. Who Needs a Code of Conduct... A business organisation needs a code of conduct if: * it is interested in developing long term interest: * it regards its reputation a valuable asset: * it is determined to prevent corruption, fraud and other malpractices: * it regards corporate culture as a vital part of good management; and * it sees itself as a responsible employer and a contributive member of the Hong Kong business community. Basic Concepts of a Code of Conduct... Uniqueness For a code of conduct to be effective, it has to be developed by the company to suit its own needs and aspirations. A code must also be consistent with the culture of that company. It is not desirable nor possible to lay down a single model code suitable for all business corporations. A code of conduct is therefore unique and tailor-made for the company concerned. Open Process The development and implementation of a code of conduct is an open process carried out in a transparent and high-profile manner. This facilitates staff consultation. It also sends

5 the right signal to those within and outside the company that it abides by a certain standard of behaviour in its operations. Consistency in Standards Values and principles embodied in the code should be consistent. Double standards undermine management's credibility, cause confusion and erode the effectiveness of the code. Evolutionary A code of conduct should address the present day issues, concerns and situations faced by a company. An effective code of conduct evolves over time. It needs to be regularly reviewed to meet with the changes in a company's internal and external environments which may pose new legal and ethical considerations. The way in which the code is reviewed should also be transparent and mentioned explicitly in the code. Easily Understood Whatever contents a company decides to include in its code of conduct, they should be written in a manner and style that can be readily understood. Enforcement A code of conduct will not serve any useful purpose if it is not effectively enforced. Having the corporate will and determination to do so is the basic requirement. If necessary, supporting mechanisms in terms of drawing up related procedures, delegating responsibilities and creating new organisational set-up have also to be put in place. STANDARDS OF BEHAVIOUR It is up to each individual business organisation to determine the ethical standards of behaviour of its management and employees. The common approach is to take into account legal requirements, a company's own ethical values and general community expectations. Compliance with Law... Obviously, abiding by the law has to be an absolutely vital part of a code of conduct. Collective Standards of Practice... There already exist established standards of practice governing collectively the conduct of listed companies on the stock exchange, specific trades and professions as well as special types of business corporations. Basic Values... Ethical behaviour is behaviour which goes beyond legal requirements. It essentially comes down to honesty, equity, integrity and social responsibilities. These are the basic values for resolving difficult legal and ethical questions. Ethics Test... It is not possible to prescribe exhaustive guidelines to cover each and every single ethical concern that employees are likely to face in their work. When in doubt, the test is whether or not it would survive disclosure and critical public scrutiny. A breach of business ethics thus may extend beyond a violation of legal requirements. KEY CONTENT AREAS The First Move

6 Core legal and ethical questions faced by employees mostly relate to offering or acceptance of advantages, conflict of interest, use of privileged company information, maintenance of true company records and channel of complaint. Acceptance and Offering of Advantages... Under the Prevention of Bribery Ordinance, it is an offence for any employee to accept, in relation to his company's business, any money, gifts, commissions and other forms of advantage without the employer's permission. The law therefore entrusts the employer with the responsibility of providing clear guidance to staff to avoid committing corruption offence. It is strongly recommended that management states in clear terms its policy of compliance with the law both in letter and spirit. This means that it will not condone corrupt behaviour within the company nor allow its staff to engage in dishonest or questionable practices to obtain business. Some companies find it necessary to also declare that their policy of compliance with the law extends to abiding by the anti-corruption laws of foreign countries where they have a business interest. Further guidelines may be needed to help employees ward off inducements or undue influence. These guidelines are particularly necessary to guide staff in dealings with contractors and suppliers to avoid being offered or accepting illegal advantages over procurement of goods and services. If there are circumstances under which employees may be allowed to accept advantages of a certain value, these should be clearly spelt out. Examples of such circumstances are: * the acceptance will not influence the performance of the recipient: * the recipient will not feel obliged to do something in return for the offeror: * the nature of the advantage is such that refusal is highly unsociable or impolite: and * the recipient is able to openly discuss the acceptance without reservation. It is best that the code also specifies a channel for staff to seek clarification, make reports of acceptance or seek permission to retain advantages received under circumstances not covered by the code. Conflict of Interest... A conflict of interest situation arises when the personal interest of a director or an employee competes or conflicts with the interest of the company. It is the duty of the company director to act honestly in good faith and in the interests of the company, to avoid conflict between their personal interests and the company's interests.

7 It is a statutory requirement for a director to disclose to the Board any material interest in company contracts. Conflict of interest leads to divided loyalty and in its most serious form could result in corruption or fraud. The most common situations of conflict of interest involving company directors and employees are: * having undeclared financial interests in suppliers, contractors or parties that do business with the company: * offering assistance secretly to the company's competitors through taking on part-time employment or "consultancy" service: * engaging covertly in production of services or goods in competition with the company: * performing outside work, without permission, on the company's premises, using company time and assets; and * giving unduly favourable treatment to particular supplier, contractor, customer, job applicant or subordinate for personal reasons. Most companies find it necessary to have a current, well-considered statement of policy to guide management and employees. It is also advisable to establish a channel for management and staff to declare to the company possible or actual conflict of interest situations and to seek guidance. The existence of such a channel should be made known in the code. Use of Privileged Company Information... Information privy to a company may be misused by employees for personal advantage at the company's expense. Proprietary information may relate to all aspects of operations - new business or investment strategies, reorganisation, sales and marketing plans, products under research and development, patent applications, copyrighted materials, financial projections, customer database, price quotations, etc. The more serious forms of misuse of proprietary information are: * disclosure of information for bribes; * use of information for personal interest; and * disclosure of information to sabotage company interest.

8 There is therefore the need to remind employees of their obligation to safeguard company information and to act responsibly in the use of such information. Maintenance of True Company Records... The duty of a company to keep proper accounts is stipulated in law. True and proper maintenance of accounts, ledgers as well as business transaction records and documents such as correspondence, files and computer database is expected of any company. Staff should be made aware that falsifying documents or furnishing false records is a criminal offence under the laws of Hong Kong, including the Prevention of Bribery Ordinance. This does not refer only to accounting records but any document which is intended to mislead the management. Channel of Complaint... A code cannot work effectively without a formal channel of complaint for both staff and outsiders such as customers, suppliers and business associates. More details are given on page 20. The Second Move Other issues of concern which many business corporations consider necessary to cover in their codes of conduct are: insider trading, entertainment, outside employment, loans from suppliers, contractors, gambling and company property. Insider Trading... Insider trading by company employees is prohibited by law. Many companies make use of their codes of conduct to remind staff that if they are in possession of information obtained in the course of employment with the company which could materially affect the price of a listed company's securities, they are not allowed to directly or indirectly deal in that securities. Entertainment... Surely, entertainment is an acceptable and necessary form of business and social behaviour. But if it is offered excessively, it could cause embarrassment or the employee receiving the entertainment may lose objectivity when conducting the company's business. One approach is for management to allow staff to accept the invitation, if it is impolite to decline, on the understanding that they be allowed to reciprocate. Outside Employment... The common practice is for staff who wishes to accept concurrent employment, either on a regular or consulting basis, to seek prior written approval from the company. This enables management to prevent staff performance from being affected by employees personal endeavours, as well as divided loyalty and conflict of interest situations. Loans from Suppliers, Contractors... To prevent employees from getting themselves into positions of compromise or obligation, some companies clearly state in their codes of conduct that staff or their immediate families are not allowed to accept loans from, or through the assistance of, suppliers, contractors, customers or any parties doing business with the company, except

9 if the loans fall within normal lendings of banks or other proper financial institutions. Gambling... It may be necessary to take a company line on alerting staff to the risks of engaging in frequent, excessive gambling of any kind with persons having business dealings with the company as well as among colleagues, particularly with subordinates. Company Property... It is not uncommon for codes of conduct to include a reminder to staff that appropriation of company's property for personal use or for resale is a crime of theft and renders the culprit liable to dismissal and prosecution. The Third Move Obviously, there are other ethical issues which companies, because of their nature of business or special requirements of the trade/industry they are engaged in, may wish to cover in their codes of conduct. Some of these issues are... * Commitment to offering quality and fair value products * Safety and fitness for use of goods * Expedient product recall and related practices * Occupational health and safety * Equality of employment opportunity * Environmental policy * Support for community activities Sample Code of Conduct For an illustration of how companies in general provide guidelines in respect of the key content areas, please refer to the Appendix for a comprehensive sample code of conduct. FORMULATION AND IMPLEMENTATION Getting Started... The initiative to formulate a code of conduct necessarily comes from top management, the Chief Executive Officer or the Board of Directors. Actual drafting work may be taken up by one or more senior executives who are familiar with the legal and ethical issues that need to be addressed. For outside help, the ICAC offers this service to any company in Hong Kong, on a free and confidential basis. More details are given on page 23. Consultation...

10 Whether employees at all levels should be consulted on the content of the code depends on the specific circumstances of individual companies. If a detailed set of operating principles is to be included, it is essential that the functional managers give views on the draft and how it is to be implemented. Obviously, the more people who are involved, the greater the sense of commitment. Endorsement... Final agreement and endorsement of the provisions of the code would ideally need to come from the Board as the senior policy making body of the company. Alternatively, the Chief Executive Officer or a senior ranking officer can be delegated the responsibility. Format... A code may take various shapes and forms depending on its size and the company's preference. It may be issued as a separate document, be included in staff handbook, appointment letter or terms and conditions of service, or in the form of a staff circular. Communication... Once formulated, it is essential that a code of conduct be effectively communicated to all parties concerned both within and outside the company. Special briefing sessions may be organised or functional managers can be tasked to explain the code to their subordinates. For new recruits, the code may be included in induction training or orientation briefing. For outside parties such as suppliers or contractors, a convenient method is to extract the relevant parts of the code and then either include them in the tender document or contract, or attach them in the form of an annexure. To inform customers, some companies publish the code through corporate advertisements, display signs at point-of-sales, customer newsletters or product instructions, or issue the code as part of a customer charter. It is important that the communication process be an on-going one to regularly remind all concerned of the requirements of the code. Compliance... The common approach is for functional or line managers to be made responsible for those staff under their supervision to comply with the code. At the same time a high ranking officer is also assigned to the task of overall co-ordination and monitoring of the implementation of the code. This individual may be designated Compliance Officer or another suitable title. Complaint... For a code to be effective, it must be enforced with ethical behaviour properly recognised, and illegal and unethical behaviour dealt with promptly and decisively.

11 Punitive actions include disciplinary measures taken within a company. In cases of suspected corruption, fraud or other forms of criminality, they should be reported by company management to the ICAC or an appropriate government authority. A formal channel to receive complaints of alleged breaches of the code should be established and made known to employees as well as customers, suppliers, contractors and other parties concerned. It is also important that complaints be followed up expeditiously and preferably by a senior ranking officer holding an independent monitoring position such as the chief internal auditor. It is preferable for the "Complaints Officer" to report to the Compliance Officer rather than for the two jobs to be done by one person. BEYOND A CODE OF CONDUCT Corporate Ethics Committee... There are business corporations which prefer establishing a high level executive body to oversee all matters concerning corporate ethics and designating a Compliance Officer. The committee's responsibilities may include advising the Board and the Chief Executive Officer on the company's ethics policy, developing a code of conduct, supervising its implementation as well as considering investigation reports from the Complaints Officer and recommending appropriate follow up action. The committee may also be given the duty of monitoring the development of issues which may require changes be made to the code. Safeguards in Work Systems and Procedures... The values and principles promulgated in codes of conduct must be buttressed by safeguards in work systems and procedures. A company should ensure that its work methods and practices are free from opportunities for corruption or other malpractices. Such opportunities arise when there are loopholes or weaknesses that could be exploited by unscrupulous employees for personal gain. It is also important that all levels of staff are clear about their responsibilities and be held accountable for their actions. Organisational clarity is essential to maintaining legal and ethical behaviour. Staff Training... Formal training can also be used to impress upon employees the company's values and principles. The inclusion of an ethics module or ethical issues in staff training programmes is useful to embed ethical concerns in company operations.

12 Such programmes can also aid middle and lower levels of management by reviewing the legal and ethical content of decisions they must make in their day to day work and helping them to explore better ways of dealing with these decisions. This focus may also assist those who are responsible for overseeing the implementation of the code to take note of areas that require review or changes. ICAC BUSINESS SERVICES Formulating Codes of Conduct... The ICAC has wide experience in assisting business organisations to draw up codes of conduct or to make improvements to existing ones. The ICAC is most happy to offer the service to any company that is interested and to provide sample codes of conduct and other related materials for reference. This service is provided on a free and confidential basis. Adoption of ICAC recommendations by the company concerned is voluntary. In fact, hundreds of companies in Hong Kong have made use of this service. Specialist Consultancy Service... If any company further needs indepth consultancy to improve system controls, work practices and procedures, the ICAC has an expert group, the Advisory Services Group, to satisfy this need. All information regarding requests and ICAC recommendations is kept strictly confidential. The company concerned is free to adopt its considered choice of the recommendations without being under any obligation to the ICAC. Preventive Education... The ICAC also provides business organisations with advice on matters relating to the anti-corruption legislation and corruption prevention measures. "Corruption Prevention and Cost Control" packages for specific trades and industries are produced. As the name implies, these packages contain practical guidelines and information for a company to strengthen operational cost control through effective management methods which, of course, also help eliminate corruption opportunities. Managerial Training... Any company can approach the ICAC to organise corruption prevention training for managers, supervisory staff as well as employees in general to enable them to better understand the legal controls of the corruption problem, prevention concepts and methods and the common ethical concerns in management or work situations. Such training usually takes the form of a half-day seminar using case studies, presentations and workshops. The format can fit in a company's regular training programmes. Key contacts in ICAC's Community Relations Department to whom enquiries may be directed are shown below:

13 Regional Office Contact Number ICAC Regional Office Hong Kong East ICAC Regional Office Hong Kong West/Islands ICAC Regional Office Kowloon Central ICAC Regional Office Kowloon East/Sai Kung ICAC Regional Office Kowloon West ICAC Regional Office New Territories East ICAC Regional Office New Territories North West ICAC Regional Office New Territories South West Appendix A Sample Code of Conduct CONTENTS Personal Conduct of Directors and Employees i Bribery, Illegal Gifts and Commissions Prevention of Bribery Ordinance Soliciting Advantages Accepting Advantages Offering Advantages Entertainment Use of Proprietary Information Handling of Conflict of Interest Situations Misuse of the Company Assets and Resources Loans Personal Conduct Outside Hours of Work, including Outside Employment Relations with Suppliers and Contractors iii

14 Fair and Open Competition Meeting Public Interest and Accountability Standards Procurement and Tendering Procedures Bribery and Corrupt Practices Payment Procedures Responsibilities to Shareholders and the Financial Community iv Attractive Return in Terms of Increased Earnings and Long-term Growth Honest Disclosure of Information True and Fair Accounting Policies and Practices Insider Trading Relations with Customers and Consumers v Service to Customers Commitment to Offering Quality and Fair Value Products Safety and Fitness for Use of Goods Expedient Product Recall and Related Practices Product Policy Pricing Policies Employment Practices vi Occupational Health and Safety Equality of Employment Opportunity Individuality Communication Development and Remuneration Policy and Practice on Alcoholism and Drug Dependence Responsibilities to the Community vii Environmental Policy Support for Community Activities Policy and Practice on Donations Charitable Donations Political Donations Monitoring of Compliance and the Means of Enforcement viii Understanding and Compliance of the Code of Conduct Violation of the Code of Conduct Complaints

15 The Company believes that honesty, integrity and fairplay are its important assets in business. All directors and employees of the Company must ensure that the Company's reputation is not tarnished by dishonesty, disloyalty or corruption. Personal Conduct of Directors and Employees Bribery, Illegal Gifts and Commissions Prevention of Bribery Ordinance Any director or employee soliciting or accepting an advantage in connection with his duties without the permission of the Company commits an offence under the Prevention of Bribery Ordinance. The term "advantage" is defined in the Ordinance and includes gift, loan, fee, reward, office, employment, contract, service and favour. Soliciting Advantages It is the policy of the Company to prohibit directors or employees to solicit any advantage from clients, suppliers or any person in connection with the Company business. Accepting Advantages Directors or employees should decline advantages offered in connection with their duties if the acceptance of advantages could affect their objectivity or induce-them to act against the Company's interests or lead to complaints of bias. Directors or employees could consider accepting voluntarily given advantages only if: * the acceptance will not influence the performance of the recipient: * the recipient will not feel obliged to do something in return for the offeror: * the recipient is able to openly discuss the acceptance without reservation; and * the nature (e.g. advertising or promotional gift, customary gift or lucky money given during festive occasions) and the value (e.g. not exceeding $---) of the advantage are such that refusal could be seen as unsociable or impolite. In case of doubt, the recipient should refer the matter to (name and/or rank of a nominated officer of the Company) for advice and instructions. Offering Advantages Under no circumstances may an employee or director offer bribes or similar considerations to any person or Company for the purpose of influencing such person or Company in obtaining or retaining business for, or directing business to the Company.

16 Any commissions paid or payments made, or favourable terms conceded, or other advantages given by any director, or employee in the conduct of the Company's business shall be in accordance with the Company's prevailing policies on such matters and shall obtain the prior written approval of the Company. Entertainment Although entertainment is an acceptable form of business and social behaviour, directors or employees should turn down invitations to meals or entertainment that are excessive in nature or frequency, so as to avoid embarrassment or loss of objectivity when conducting the Company business. If it is impolite to decline an invitation, the director or employee might accept, on the understanding that he be allowed to reciprocate. Use of Proprietary Information Directors and employees are not allowed at any time to disclose any proprietary information to anybody outside the Company without permission. Such information may relate to all aspects of the Company's operations including investment strategies, sales and marketing plans, new products, financial projections, patent applications, clientele databases, copyrighted materials etc. It is the responsibility of each director and employee who has access to or in control of the proprietary information to provide adequate safeguards to prevent its abuse or misuse. Examples of misuse include disclosure of information in return for monetary rewards; use of information for personal interest: and disclosure of information to sabotage the Company interest. Handling of Conflict of Interest Situations Conflict of interest situations arise when the personal interests of directors or employees compete or conflict with the interests of the Company. Such situations at best can lead to divided loyalty and at worst can result in corruption or other questionable practices. The most common types of conflict of interest situations directors or employees may involve in are: * having undeclared financial interests in any supplier, contractor or parties that do business with the Company: * offering assistance to the Company's competitors through taking on part-time employment or "consultancy" service: * engaging covertly in production of services or goods in competition with the Company: * performing outside work on the Company's premises and using the Company's time and assets: and

17 * giving unduly favourable treatment to particular supplier, contractor, customer, job applicant or subordinate for personal reasons. Every director or employee of the Company should take it as his personal responsibility to avoid engaging in situations that may lead to or involve conflict of interest. He should at all times ensure that his dealings with customers, suppliers, contractors and colleagues do not place him in a position of obligation that may lead to a conflict of interest. In cases where a director or employee or his immediate family might have engaged or considered engaging in business, investments or activities that might have existing or potential conflict with the Company interests, it is the responsibility of the director or employee to make full disclosure in writing to (name and/or rank of a nominated officer). Misuse of the Company Assets and Resources Appropriation of the Company properties, including raw materials and finished goods by employees for personal use or for resale is a crime of theft and renders the culprit liable to dismissal and prosecution. Loans A director or an employee or his immediate family should not grant or guarantee a loan to, or accept a loan from or through the assistance of any individual or organisation having business dealings with the Company. There is, however, no restriction on normal loans from banks or financial institutions made at the prevailing interest rates and terms. Personal Conduct Outside Hours of Work, including Outside Employment Directors and employees are advised not to engage in frequent and excessive gambling of any kind, including games of mahjong, with persons having business dealings with the Company. In social games with clients, contractors or suppliers, directors and employees must exercise judgement and withdraw from any high stake games. Directors and employees should not take up concurrent employment, either regular or on a consulting basis, without the prior written approval from the Company. Applications for outside employment should be sent to (name and/or rank of a nominated officer) for consideration. Relations with Suppliers and Contractors Fair and Open Competition The Company promotes fair and open competition and aims at developing and securing long term relationship with suppliers and contractors based on mutual trust. Meeting Public Interest And Accountability Standards

18 Procurement of supplies and services shall be conducted in a manner of the highest ethical standards which assure a quality end product as well as the continued confidence of customers, suppliers and the public. Procurement and Tendering Procedures The hire of services or the purchase of goods should be based solely upon price, quality and need. Procurement and tendering actions will be based on the following principles: * impartial selection of capable and responsible suppliers and contractors: * maximum use of competition: * selection of appropriate contract types according to needs: * compliance with laws, relevant regulations and contractual obligations: and * adoption of an effective monitoring system and management controls to detect and prevent bribery, fraud or other malpractices in the processes of procurement and tendering. Procurement and tendering procedures implementing this policy will specifically include procedures and practices designed to detect and prevent fraudulent activity. Bribery and Corrupt Practices It is the policy of the Company to prohibit bribery and corrupt practices. Directors and employees should follow the Company policy on the acceptance of advantages. Under no circumstances are they permitted to use the insider information for their own private gains. Those involved in the selection of and purchase from suppliers and contractors should avoid misuse of authority or engage in situations which could interfere, or appear to interfere, with their ability to make free and independent decisions regarding purchase and procurement. Payment Procedures The Company undertakes to pay the suppliers and contractors on time and according to agreed terms of trade. Responsibilities to Shareholders and the Financial Community Attractive Return in Terms of Increased Earnings and Long-term Growth The Company endeavours to achieve growth in earnings for shareholders over the long term. Shareholders and the financial community will benefit from the productive, efficient and competitive operation of the Company. Honest Disclosure of Information

19 The Company respects shareholders and potential shareholders' right to know all information that is necessary to evaluate how their investments are being managed. True and accurate information regarding the management of the Company, its financial position, and its general plans is available to all who have an interest in the Company. True and Fair Accounting Policies and Practices It is the policy of the Company to maintain complete and accurate records and accounts. All accounting records, and the reports produced from them must be kept and presented in accordance with all applicable laws and professional accounting standards. The account books of the Company shall, in reasonable and accurate detail, reflect the transaction and disposition of the Company's assets. Detailed guidelines as to accounting controls and financial reporting are available to the concerned directors and employees of the Company. It is the unequivocal position of the Company that no false, artificial or misleading statements or entries should be made in the Company's books, accounts, records, documents or financial statement. Any director or employee having information of any hidden fund or false entry in the Company's records should promptly report the matter to the Company. Insider Trading The Company shall not tolerate the use of insider information by directors or employees to secure personal advantage at the expense of the Company or over those not in the Company. The use of insider information, which has not been made public, for personal gain is illegal, unethical and is strictly prohibited. Relations with Customers and Consumers Service to Customers The Company seeks to provide efficient and courteous customer service to maintain customer satisfaction and co-operation with the Company. The Company keeps the customers informed of the truth about the Company's capabilities and shall avoid misrepresentation, exaggeration and overstatement. Commitment to Offering Quality and Fair Value Products The Company always puts the customers first by providing them with good quality products at prices which represent good value for money. Safety and Fitness for Use of Goods

20 It is the policy of the Company to provide to its customers products that meet high standards of safety, quality and reliability. Expedient Product Recall and Related Practices The Company shall bear full responsibility for all products which do not meet the required standards of safety, quality and reliability. In cases where product recalls are required, they would be done promptly and expediently. Product Policy The Company accepts its social responsibility to improve its products so as to promote the quality of life of human beings. Pricing Policies The Company believes in free-market economic system under which the price is determined by supply and demand. Besides, the Company also seeks to provide customers with the highest quality products at fair prices which allow the Company a reasonable profit in relation to the value provided. Employment Practices Occupational Health and Safety The Company is firmly committed to ensuring the health, safety and welfare of its employees. The Company shall comply with all occupational health and safety laws and provide all employees with good and safe conditions of working environment. Equality of Employment Opportunity The Company recognizes that success of the Company depends on the full contribution of all employees. The Company is dedicated to the achievement of equality of opportunity for all of its employees in relation to all personnel matters including recruitment, training, promotion, transfer, benefits, dismissal and etc. without regard to race, colour, religion, sex, age, national origin or handicap status. All employees will be treated as individuals solely according to their abilities to meet job requirements. Individuality The dignity and individuality of each employee will be respected and the privacy and confidentiality of employee records will be safeguarded. Communication

21 Employees shall be kept informed of the Company matters affecting them including the Company goals, directions and performances. Channels for open communication which foster an atmosphere of mutual trust and respect between the Company and employees always exist. If an employee wishes to discuss any matter about the Company, he may speak to his supervisor or any higher level of management. Development and Remuneration The Company shall provide an open, challenging and involving environment for all employees. The Company aims to provide opportunities for the development of the skills of employees to the fullest extent possible within the constraints of the Company. The Company's pay structures shall aim at rewarding individual abilities and personal performance. Policy and Practice on Alcoholism and Drug Dependence The Company prohibits the use and abuse of alcohol and illegal drugs during the working hours, including lunch time, or at the Company's facilities. Possession or sale of illegal drugs by directors or employees at the Company shall be reported immediately to the Police. Alcoholism and drug dependence that negatively affects work performance shall not be tolerated. Responsibilities to The Community Environmental Policy Care for the environment is one of the Company's main concern. The Company policy aims at manufacturing, handling and disposing all materials in compliance with present laws and regulations and in a responsible manner without creating risks to human health or the environment. Support for Community Activities The Company encourages directors and employees to participate in community and civic affairs. As regards participation in political activities, it is entirely personal and voluntary. Policy and Practice on Donations Charitable Donations The Company supports charitable organizations and encourages directors and employees to contribute to charities and/or organize fund-raising events. Political Donations The Company shall not make any illegal or improper payment or contribution to any public official, person or entity with political background for the purpose of seeking improper advantages.

22 Monitoring of Compliance and the Means of Enforcement Understanding and Compliance of the Code of Conduct It is the personal responsibility of every director and employee to understand and comply with the Code of Conduct. Functional managers should also in their day to day supervision ensure that their subordinates understand well and comply with the standards and requirements stipulated in the Code of Conduct. Problems encountered in enforcement as well as comments or suggestions for improvement of the Code of Conduct should be channelled to (name and rank of the officer responsible for overall co-ordination and monitoring of the implementation of the Code of Conduct) for consideration and action. Violation of the Code of Conduct The Company shall not tolerate any illegal or unethical acts. Anyone violating the Code of Conduct will be disciplined, including termination of employment. In cases of suspected corruption or other forms of criminality, a report will be made to the ICAC or appropriate authorities. Complaints Channels of complaint are open to all shareholders and potential shareholders: customers and consumers: suppliers and contractors and all directors and employees of the Company. Complaints can be sent directly to (name and rank of the officer designated for receiving and investigating complaints, holding an independent and neutral position). He shall answer directly to (the Chief Executive Officer or the Board of Director) for impartial and efficient handling of complaints received. The Company shall consider all complaints impartially and efficiently. Unlawful or unethical conduct will be investigated promptly. All information received shall be kept confidential.