The Board of Directors appointed Ms. Sylvia Fang, the Senior Vice President and General Counsel of TSMC, as the Corporate Governance Officer responsible for corporate governance matters, including handling of matters relating to Board, Audit and Risk Committee, Compensation and People Development Committee, Nominating, Corporate Governance and Sustainability Committee, and Shareholders’ meetings in compliance with law, assistance in onboarding and continuing education of directors, provision of information required for performance of duties by directors, and assistance in directors’ compliance of law, etc.

The duties performed by the Corporate Governance Office in 2024 are as follows: assisted Chairman of Board of Directors and Committees’ Chairs to convene four Board Meetings, two Special Board Meetings, four Audit and Risk Committee Meetings, one Special Audit and Risk Committee Meeting, four Compensation and People Development Committee Meetings, four Nominating, Corporate Governance and Sustainability Committee Meetings, and 2024 Annual Shareholders’ Meeting; provided continuing education information to directors; provided information required for performance of duties by directors; presented quarterly legal compliance report to the Board of Directors, and timely responded to all Directors’ requests, and etc.

In 2024 for the 10th consecutive year, TSMC has been ranked again in the top 5% of “2023 Corporate Governance Evaluations ” by the Taiwan Stock Exchange (TWSE).

Note: Each year, the Taiwan Stock Exchange (TWSE) and the Taipei Exchange (TPEx) jointly release evaluation results of corporate governance and board performance for publicly listed companies based on assessments conducted independently by the Securities and Futures Institute.
 

Continuing Education Training of Corporate Governance Officer in 2024

Corporate Conduct and Ethics Implementation

TSMC’s Board of Directors strives to perform the responsibilities of supervising the corporate conduct and ethics compliance practice through the Audit and Risk Committee and the Compensation and People Development Committee, the hiring of a financial expert consultant for the Audit and Risk Committee, and coordination with the Internal Audit department. The General Counsel and the Corporate & Compliance Legal Division (which directly reports to the General Counsel) promotes the Company’s ethical standards, and the General Counsel reports quarterly to the Board on the implementation status. In addition, both the responsible senior manager appointed by the CEO to oversee the Ombudsmen system and Internal Auditors update the Board on ethical standards and compliance issues on a regular basis. Moreover, 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.

Furthermore, to ensure that our conduct meets relevant legal requirements and the highest ethical standards under the Ethics Code, TSMC provides multiple channels for reporting business conduct concerns. Please refer to Assessment Item 3 for details. We do not tolerate any violation of the Ethics Code and treat every possible violation incident seriously. Each violator of the Ethics Code (or relevant regulations), for employees, in addition to affecting individual annual performance evaluation, will be severely disciplined to the full extent of our policies and the law, up to and including immediate dismissal, or termination of business relationship for suppliers, and judicial prosecution as appropriate.
 

The Implementation in 2024

Under the framework of the Ethics Code, TSMC has established a regulatory compliance program that includes policies, guidelines and procedures in other policy areas, including: Corporate Governance, Securities Laws, Anti-corruption, Anti-harassment, Anti-discrimination, Labor Laws, Anti-trust (fair competition), Environmental Protection, Safety and Health, Export Control, Financial Reporting, Insider Trading, Intellectual Property, Proprietary Information Protection, Personal Data Protection, Record Retention and Disposal, as well as procuring certain raw materials from socially responsible sources (Conflict-free Minerals). The above-mentioned policies are crucial in facilitating overall compliance with the Ethics Code. TSMC provided an “Annual Ethics and Compliance Training Course”(mandatory 0.5 hour online course) covering various important regulatory compliance topics and a total of 75,767 employees (including employees in subsidiaries) completed this training course, both completion rate and exam pass rate reaching 100%.

In 2024, TSMC did not receive any reports related to insider trading, money laundering, or other finance, accounting or antitrust matters, nor did we receive any complaints concerning breach of customer privacy and loss of customer data, or any material regulatory violations (where a fine exceeds NT$1 million), including non-monetary sanctions. 

In 2024, the incidents reported through the Audit and Risk Committee Whistleblower System, Ombudsman System, and Irregular Business Conduct Reporting System totaled 358. Among them, 235 cases were related to people management/employee relations, 106 cases were categorized as others (e.g., asking personal questions or private matters), and 16 cases were related to ethics. One incident was verified upon investigation and determined for disciplinary action by the Ethics Committee. In 2024 TSMC leveraged the five violations to strengthen ethics promotion for employees and suppliers in supplier-related activities. 

Intellectual Property

For a long time, TSMC has been protecting R&D innovation and operation development by way of utilizing patents and trade secrets as dual tracks under the established comprehensive IP management system, encouraging Company’s innovation culture, and strengthening Company’s competitive strengths so as to fulfill the Company’s ESG vision. TSMC’s General Counsel updates the Board of Directors on the status of the intellectual property management scheme. 

• TSMC received a AAA (the highest tier) certificate by Taiwan Intellectual Property Management System (TIPS) from Industrial Development Administration, Ministry of Economic Affairs in December 2024 again, and the valid period will expire after December 31, 2027.  
• In terms of patent filings, TSMC has accumulated more than 94,000 patent applications worldwide as of end of 2023, including 8,700+ applications filed in 2023. TSMC ranked No. 2 among global US patent applicants, and No. 1 among patent applicants in Taiwan.
• In terms of patent grants, TSMC has accumulated 62,000+ patents worldwide as of end of 2023, including 6,000 global patents received, ranking No. 3 among U.S. Patentees and No. 1 among patent patentees in Taiwan. 
• In terms of patent quality, the allowance rate of TSMC’s U.S. applications reached 100%.