Integrity and Governance
Our sustainability reporting council oversees our governance and strategy for sustainability, including risk management mechanisms that identify and mitigate potential risks across seven categories. We prioritize upholding integrity and ethics in all our operations, and our approach to regulatory compliance meets the highest standards. By focusing on these areas, we aim to drive continuous improvement in our sustainability performance and contribute to a more sustainable future for all.
Board of Directors and Committees
The Group’s Board of Directors has the dual role of formulating the strategic direction and setting governance policies for the Company. The Board has appropriate independence in composition, and diversity of ideas as well as backgrounds, allowing it to make decisions that are in the best interests of the Company. Currently, there are 5 directors (4 males and 1 female, including 3 independent directors). The Board holds a meeting every quarter and meets whenever necessary to perform its duties.
To assist in the implementation of the duties and functions of the Board, the Board of Medtecs has established several functional committees, including Audit Committee, Nominating Committee, and Remuneration Committee, collectively known as the Board Committees. The Board together with the Company’s senior management, also established a Sustainability Reporting Council, which reports to the Board and works closely with the Audit Committee.
• Sustainability Reporting Council
In recent years, the Group has focused on sustainable development and regularly monitors ESG issues that are related to the environment, society, and governance, which may affect the sustainable development of the business. This ensures the sustainable operation and development of Medtecs.
To continuously improve the management principles of sustainable governance, the Group established the Sustainability Reporting Council in 2017 as a cross-departmental task force responsible for sustainability initiatives. The Council is chaired by the CEO of the Group, with the Chief Financial Officer and the General Counsel as executive members, and department heads as members. Through regular senior management meetings, the council identifies the Group’s risks and opportunities related to the ESG issues and their impacts on operational activities. It formulates response measures and sustainability strategies, and coordinates the sustainability reporting work of various units.
The council is also responsible for supervising the progress and achievement of various carbon reduction and water conservation plans.
Risk Management
• Risk Management Mechanisms
Medtecs has actively established a robust risk management mechanism to identify all risks and threats and to take preventive measures in advance. Based on the materiality principle, we identify and evaluate risks related to the Company’s operations, including economic (including corporate governance), environmental, social, and other aspects, and prioritise the risks based on their potential impact on the Group to come up with appropriate response measures. Then we submit the findings to the Audit Committee for review. The risks faced by the Company mainly included the following categories:
Supply Chain Risk
Description of risk
- Failure to negotiate with multiple suppliers and agents (distributors) may result in decreased competitiveness of product prices and quality, which could affect the Company’s profitability and lead to delays in the shipment of materials, affecting import/export scheduling.
- Failure to conduct regular assessments and evaluations of suppliers and agents (distributors) may result in significant discrepancies between their offered prices, quality, and actual market or implementation.
Response measures
- For fixed export routes, we inquire, compare, and negotiate prices with at least three suppliers every two weeks. We select suppliers based on their ability to meet our requirements in terms of timeliness and cost-effectiveness.
- We regularly assess third-party suppliers. The results are recorded in the Supplier Periodic Assessment Form by the Procurement and Quality Control departments before they are submitted for approval.
- The assessment team (including Quality Control and Production supervisors) assesses suppliers according to the criteria in the Supplier Evaluation Form, which includes the supplier’s willingness to sign the “Supplier Purchase Agreement.” The results are submitted to responsible departments according to the approval authority table. Those who pass the assessment will be recorded in the Qualified Supplier List by the Procurement department.
R&D and Production Risk
Description of risk
- The development of a product without a feasibility evaluation may result in abnormalities, affecting the overall development cost and launch schedule. Poor quality of supplied goods may cause problems in product development, and the product quality could not meet the requirements, resulting in a delay in the product trial stage.
- In the event of emergencies such as power outages, natural disasters, etc., the lack of corresponding handling measures may result in the Company’s production line coming to a halt. Failure to obtain or find qualified suppliers to cooperate within the deadline will face the inability to bid and fulfil contracts.
Response measures
- The product development team conducts review meetings with Production, Quality Control, Procurement, Sales and Marketing departments to review the competitive environment of our products in the market and evaluate development costs.
- We implement proactive measures to mitigate the impact of various natural disasters, including floods, fires, earthquakes, and typhoons, in order to minimise the risk of injuries. Our staff undergoes comprehensive training in advance to ensure swift and effective response during such events. Additionally, we conduct regular equipment inspections to identify and address any signs of wear, thus prolonging the lifespan of our equipment.
Sales Risk
Description of risk
- Giving excessive credit limits without fully understanding the customer’s situation may not only lead to bad debts or overdue payments it is difficult to predict customer order quantities, causing a lack of reference for stocking.
- In adequate handling of customer complaints may result in customer loss or a negative image of the Company, which may seriously damage the Company’s reputation.
- Failure to obtain or find qualified suppliers within the deadline may result in the inability to bid and fulfil contracts. This may result in fines or being blacklisted, preventing participation in other bidding opportunities.
Response measures
- We include a customer’s credit limit when adding them to the database and submitting the Customer Information Form for approval.
- We engage in materials procurement for our long-term customers with recurring orders. We periodically confirm the quantity of materials procured with the customers to prevent any potential disputes. Additionally, the stock availability and pricing of the materials must receive annual approval from the supervisor. This ensures efficient operations and maintains customer satisfaction.
- When we receive a customer complaint, the Sales team shall figure out the cause of the issue, handle it accordingly, and fill out the Customer Complaint Handling Form. After the form is approved by the department supervisor, it is submitted to the Quality Control department for cause analysis and tracking progress. The Quality Control department will record the handling method and preventive measures in the Customer Complaint Handling Form and submit it to the Sales team to reply to the customer.
- The sales department must first confirm a customer order. Subsequently, they should coordinate with the production and warehouse departments to gather the necessary details such as the product name, quantity, and delivery date. Once the feasibility of the order is determined, the information should be recorded in the “order maintenance tracker” and subsequently submitted for approval.
Operation Risk
Description of risk
- The Group’s network and data management processes if not covered sufficiently, may result in data breaches such as theft of confidential files and leakage of trade secrets, which could potentially lead to system failure.
- Failure to timely update operational regulations may result in operational deficiencies and negligence in departmental operational processes, leading to losses for the Company.
Response measures
- When a network issue occurs, it is repaired immediately with the troubleshooting steps recorded. The Company’s information security is also regularly reviewed and strengthened.
- The Company forbids the use of removable media or any type of portable storage device. Personal storage devices should not be used for storage of any Company information or be used with Company hardware. Case control records are maintained by department heads and reviewed from time to time by the heads of the Company’s IT & Internal Control department.
- Keep up with regulatory changes through the assistance of external lawyers and consultants to ensure compliance.
Fixed Asset Risk
Description of risk
- Failure to insure fixed assets may result in a lack of protection in the event of a disaster, or failure to obtain the entitlements of insured fixed assets after a disaster.
- Improper management of machinery and equipment may result in a lack of contingency measures in the event of a disaster and causing losses for the Company.
- Property inventory if not regularly updated and reviewed may lead to a discrepancy between actual fixed assets and accounting records.
Response measures
- The Finance department is responsible for the insurance and management of the Company’s buildings, vehicles, and equipment.
- Each equipment undergoes regular usability checks as it has a specific lifespan. In the event of a disaster, on-site employees in close proximity are responsible for handling the situation and promptly reporting it to supervisors at all levels.
- The Accounting department conducts a physical inventory in accordance with the “Inventory List” alongside the Finance department and the Internal Control/Audit departments.
Financial Risk
Description of risk
- Inability to raise sufficient funds when needed may lead to operational disruption for the Company.
- Due to the adverse effects from financial and global political turbulence, lower-than-expected investment performance for the Company, significant fluctuations in interest rates, or fluctuations in exchange rates may occur, which leads to exchange losses or increased manufacturing costs for existing positions and future transactions, and may bring about decreased profits or even losses for the Company.
Response measures
- The Finance department conducts a monthly analysis of the company’s financial credit rating, establishes and maintains a line of credit with banks, and cultivates positive relationships with financial institutions.
- The Finance department is responsible for establishing a robust investment strategy, ensuring its crucial importance. Additionally, they are responsible for raising awareness of the overall economic environment within the organization. This involves identifying and familiarising themselves with various types of market hedging instruments to effectively mitigate risks and make informed investment decisions.
Legal and Compliance Risk
Description of risk
- Failure to familiarise with relevant laws related to the Company’s operations or differences in laws between countries may result in losses for the Company or even cause a negative impact on the Company’s reputation.
- Insufficient regulation compliance/legal awareness among the Company’s employees, performing unauthorised actions or failure to follow contract management procedures when signing legally binding documents with external parties may lead to errors or the inclusion of unequal terms, causing improper decision making risks.
Response measures
- The Company consults external professionals on a regular basis to monitor and stay updated on relevant regulations in various countries.
- Regular education and training programs are conducted to enhance employees’ awareness of compliance and legal knowledge.
- Contract management policies and procedures are continuously strengthened to ensure effective oversight and adherence to legal requirements.
Human Resources Management Risk
Description of risk
- If relevant technical expertise for the Company’s operations is concentrated in the hands of specific individuals, there may be gaps in work handover.
- Major labour disputes may make recruitment difficult.
- Non-compliance with the Taiwan Labor Standards Act or other relevant laws and regulations in personnel management may result in fines from regulatory authorities.
Response measures
- Standard operating procedures (“SOPs”) are developed for specific tasks, and training plans are formulated to ensure proper guidance and consistency in operations. Regular training sessions are conducted to enhance employee skills and knowledge.
- Human resource planning shall be properly adjusted accordingly to the changes and development of the Group, and in compliant with relevant regulations.
- Each year, updates are made to ensure compliance with the Taiwan Labor Standards Act and to align with changes in relevant regulations and industry trends. The working hours are adjusted periodically to insure ongoing compliance with legal requirements and maintaining a compliant work environment.
Climate Risk
Description of risk
- The increasing impact of climate change due to global warming in recent years has led to more frequent extreme weather events, which in turn may affect the production activities of the Company.
- The Company may face increased capital expenditure due to compliance with emerging environmental regulations, as the use of green energy and environmentally friendly materials increases, the higher production costs and decreased profitability for the Company.
- Rising environmental awareness among customers to seek companies with sustainable environmental certifications may result in the transfer of orders, affecting the future profitability of the Company.
Response measures
- To keep pace with global sustainability trends, the Company adopted the TCFD framework, and integrated climate-related risks and opportunities into its business strategy and corporate governance. Apart from disclosing and implementing response measures relating to such risks and opportunities, we also incorporate climate-related risks into our risk management procedures to allocate resources fairly and efficiently, and achieve better financial performance and sustainable development.
- In order to meet the GHG reduction and net-zero emissions targets by 2050, the Group plans to purchase renewable energy certificates (priced at approximately US$67 per 1000 kWh of electricity) to reduce its carbon footprint from electricity usage.
- The Company expects to improve its process to save energy and reduce carbon footprint or use low-carbon materials, with an estimated investment of about 5 million USD. At the same time, the Procurement department shall prepare a list of replaceable key materials and trimmings, and maintain good communication with supplier to ensure we receive market information as early as possible and prepare in advance.
Other Risk
Description of risk
- Risks that do not fall under the above categories but could cause significant losses for the Company, such as major external threats or tail risks triggered by catastrophic events.
- Other risks should be managed with appropriate risk management procedures based on the characteristics of the risks and their impact levels.
Response measures
- After identifying risks and opportunities, the Company discusses possible countermeasures for each risk to mitigate the economic impact brought by the risks, and sets achievable target.
- The Company’s risk management structure encompasses the CEO, internal control department, and all functional teams. Each functional team is responsible for monitoring risks specific to their area, developing appropriate countermeasures, and reporting their findings to senior management. This collaborative approach ensures comprehensive risk oversight and enables timely decision-making to mitigate potential risks.
• Integrity and Regulatory Compliance
Adhering to Medtecs’ principles of integrity governance, we have established a consistent and appropriate culture, which emphasizes values and standards of ethical behavior at all levels of the Company. The Board of Directors and functional committees act in accordance with the Medtecs Corporate Governance Code and the Code of Conduct for Dealing in Securities, to implement the purpose of corporate integrity.
Internal Control and Audit System
Medtecs set up the Internal Control Department comprising 3 members in 2021 dedicated to strengthening sound governance and management across the Group. The internal control and systems for the Company and its subsidiary in Cambodian were fully implemented in 2021, and implementation in relation to the Philippine subsidiary was completed in early 2022.
The Internal Control Department has outlined the following plans to strengthen internal controls and conduct effective internal audits:
Whistle-Blowing Policy
The Group is committed to complying with high standards of accounting, financial reporting, internal control, corporate governance, auditing requirements, and any related laws and regulations. To fulfil this commitment, a whistleblowing policy has been established to provide employees with channels to raise concerns while ensuring that they will be protected and not subject to retaliation or harm. Employees can report matters to their immediate supervisors, the Head of Human Resources or via email (whistleblowing@medtecs.com). Upon receipt of a report, the matter is referred to the Audit Committee and the Chairman for necessary action.
Privacy Policy
Regulatory Compliance
Internal Policies
The Company is committed to achieving and maintaining a high standard of corporate governance within the Company and its subsidiaries by embracing the tenets of good governance, including accountability, transparency and sustainability, and by having policies in place to support our commitment. Visit our Corporate Governance page for our governing documents.