TSMC Annual Report 2012 :: Company Information

Taiwan Corporate Governance Implementation as Required by the Taiwan Financial Supervisory Commission

Item	Implemention Status	Non-implementation and Its Reason(s)
1. Shareholding Structure & Shareholders' Rights		None
(1) Method of handling shareholder suggestions or complaints	TSMC has designated appropriate departments, such as Corporate Communication Division, the SEC Compliance Department, Legal Department, etc., to handle shareholder suggestions or complaints.
(2) The Company's possession of a list of major shareholders and a list of ultimate owners of these major shareholders	TSMC tracks the shareholdings of directors, officers, and shareholders holding more than 10% of the outstanding shares of TSMC.
(3) Risk management mechanism and "firewall" between the Company and its affiliates	TSMC has established appropriate guidelines in its "Internal Control System" and "TSMC Invested Entity Governance and Management Policy".
2. Composition and Responsibilities of the Board of Directors		None
(1) Independent Directors	Sir Peter Leahy Bonfield, Mr. Stan Shih, Mr. Thomas J. Engibous, Mr. Gregory C. Chow and Ms. Kok-Choo Chen are the independent directors of TSMC.
(2) Regular evaluation of external auditors' independence	The TSMC Audit Committee regularly evaluates the independence of external auditors.
3. Communication Channel with Stakeholders	TSMC has designated appropriate departments, such as Corporate Communication Division, the SEC Compliance Department, etc., to communicate with stakeholders on a case by case basis, as needed. Furthermore, the contact information providing access to the Company's spokesperson and relevant departments is available on TSMC's website.	None
4. Information Disclosure		None
(1) Establishment of a corporate website to disclose information regarding the Company's financials, business and corporate governance status	TSMC discloses information through its website (in both Chinese and English) http://www.tsmc.com. Since TSMC is a foreign private issuer with American Depository Receipts listed on the New York Stock Exchange (NYSE), TSMC is subject to various NYSE regulations, one of which requires TSMC to disclose the significant ways in which its corporate governance practices differ from those followed by U.S. domestic companies under NYSE listing standards. Such disclosure information may be found at the following web address: http://www.tsmc.com/download/english/e03_governance/NYSE_Section_303A.pdf
(2) Other information disclosure channels (e.g. maintaining an Englishlanguage website, designating people to handle information collection and disclosure, appointing spokespersons, webcasting investors conference etc.)	TSMC has designated appropriate departments (e.g. Corporate Communication Division, the SEC Compliance Department, etc.) to handle the collection and disclosure of information as required by the relevant laws and regulations of Taiwan and other jurisdictions. TSMC has designated spokespersons as required by relevant regulations. TSMC webcasts live investor conferences.
5. Operations of the Company's Nomination Committee or other committees of the Board of Directors	TSMC's Board of Directors has established an Audit Committee and a Compensation Committee. Please refer to "Corporate Governance" of this Annual Report for details.	None
6. If the Company has established corporate governance policies based on TSE Corporate Governance Best Practice Principles, please describe any discrepancy between the policies and their implementation. TSMC advocates and acts upon the principles of operational transparency and respect for shareholder rights. We believe that the basis for successful corporate governance is a sound and effective Board of Directors. In line with this principle, TSMC's Board of Directors established an Audit Committee in 2002 and a Compensation Committee in 2003. For the status of TSMC's corporate governance, please refer to "Corporate Governance" of this Annual Report for details.
7. Other important information to facilitate better understanding of the Company's corporate governance practices (e.g., employee rights, employee wellness, investor relations, supplier relations, rights of stakeholders, directors' training records, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, and purchasing insurance for directors):
(1) Status of employee rights and employee wellness: Please refer to " Employees " of this Annual Report.
(2) Status of investor relations, supplier relations and rights of stakeholders: Please refer to "Corporate Social Responsibility "of this Annual Report.
(3) Directors' training records: Please refer to "Continuing Education / Training of Directors in 2012 " of this Annual Report for details.
(4) Status of Risk Management Policies and Risk Evaluation: Please refer to "Risk Management " of this Annual Report.
(5) Status of Customer Relations Policies: Please refer to " Customer Trust " of this Annual Report.
(6) TSMC maintains D&O Insurance for its directors and officers.
8. If the Company has a self corporate governance evaluation or has authorized any other professional organization to conduct such an evaluation, the evaluation results, major deficiencies or suggestions,and improvements are stated as follows: None TSMC's corporate governance won international recognition in 2012: Corporate Governance Asia honored TSMC with its "Corporate Governance Asia Recognition Awards 2012". Financial Asia honored TSMC with its "Best Corporate Governance Company – Ranked No. 1 in Taiwan". Asian Corporate Governance Association honored TSMC with its "Top 1 Corporate Governance Raking in Asia Pacific". Securities & Futures Institute's 9 ^th Information Disclosure of Public Companies Ranking ranked TSMC "A ⁺⁺". Commonwealth Magazine honored TSMC with its "Most Admired Company in Taiwan".

Continuing Education / Training of Directors in 2012

Name	Date	Host by	Training / Speech Title	Duration
Morris Chang (Note)	10/25	The Economic Daily News	2012 Master Forum - Far away from the Storm and Sailing alone Steady - a panel discussion with visiting 2011 Nobel Economics Prize winner Christopher Sims	40 minutes
Morris Chang (Note)	06/25	The United Daily New Group	A Critical Two Years for Taiwan's Economic Development Forum - a panel discussion: The Priority of The Critical Two Years	1.5 hours
F.C. Tseng	08/16	Global Unichip Corp.	Executive Compensation and Long-Term Incentive Program	1 hour
Stan Shih (Note)	04/18	Taiwan Corporate Governance Association	Speech: Enterprise Management & Corporate Governance	2 hours
	10/25	Securities & Future Institute	The 8^th Taipei Corporate Governance Forum Speech: Wangdao & Corporate Governance	20 minutes
	11/30	Taiwan Corporate Governance Association	International Corporate Governance Forum Speech: Wangdao & Corporate Governance	3 hours
Kok-Choo Chen	05/22	Taiwan Corporate Governance Association	Function Performance of Independent Directors and Practice of Audit Committee	3 hours
Johnsee Lee	05/23	Securities & Future Institute	Directors and Supervisors Practice Advanced Seminar: Financial Forecast and Risk Management	3 hours
Johnsee Lee	11/07	Global Views Monthly Magazine	The Chinese Enterprise Leader Forum - Global Change and New Leadership	2 days
From time to time, TSMC provides directors with information concerning regulatory requirements and developments as related to directors' activities. TSMC management also regularly presents updates on the Company's business and other information to directors. Regular regulatory update reports are provided by TSMC's General Counsel and by the Company's independent auditors at the Audit Committee meetings.

Note: Selected speeches on corporate governance and related topics.

Continuing Education/Training of Management in 2012

Name / Title	Date	Host by	Training	Duration
Jessica Chou Director, Accounting Division	02/20	Accounting Research and Development Foundation	Guiding principles of amending regulations of financial statements preparation under IFRS (International Financial Reporting Standard)	3 hours
	02/20	Accounting Research and Development Foundation	Conference on business finance and tax: Case study of administrative proceedings regarding enterprise income tax and business tax	3 hours
	11/20	Accounting Research and Development Foundation	The legal responsibility and case study of environmental protection (development and sustainable environment) for enterprise	3 hours
	11/21	Accounting Research and Development Foundation	Case study of "Transfer Pricing" audit in China, and the latest development in value added tax in China	3 hours
	12/10	Accounting Research and Development Foundation	Analysis of 2012 International Financial Reporting Standard - Chapter one: Preparation of financial statements	3 hours
	12/10	Accounting Research and Development Foundation	Analysis of 2012 International Financial Reporting Standard - Chapter two: Revenue and inventory	3 hours
John Liang Director, Internal Audit	11/10	The Institute of Internal Auditors, R.O.C.	Supervision of Subsidiary	7 hours
John Liang Director, Internal Audit	12/10	The Institute of Internal Auditors, R.O.C.	Audit for Newly Added Items of Internal Control System	7 hours

Note:

In 2012, Our Management attended various external, internal training programs, and speech presentations, such as the one conducted by our Sr. Vice President & CFO, Lora Ho on "TSMC Corporate Income Tax".