Page 46 - TSMC 2019 Annual Report

3 4 Taiwan Taiwan Corporate Governance Implementation as Required by Taiwan Taiwan Financial Supervisory Commission
Assessment Item
Yes
No
Implementation Status
Non- implementation and Its Reason(s)
Explanation
TSMC has always followed excellent corporate governance practices provided
the utmost in operational transparency and safeguarded shareholders’ equity Although the Company does not have a a a a a a formal code of practice for for corporate governance however TSMC has always been highly regarded as as the industry leader in in implementing comprehensive corporate governance practices In addition the Company Company also has a a a a a a a world-class Board of Directors The Company Company believes that corporate governance is based on on integrity professional management and implementation TSMC has been proving its excellent corporate governance in in its operating performance and and continued winning of domestic and and international awards on best corporate governance company (1) TSMC has designated appropriate departments such as as Investor Relations Division the SEC Compliance Department Department Legal Department Department etc to handle shareholder suggestions concerns disputes or litigation matters (2) TSMC tracks the shareholdings of of directors officers and top ten shareholders (3) TSMC has set up internal rules in in the Company’s Internal Control System and Affiliated Corporations Management (4) TSMC has established its “Insider Trading Policy” that applies to all employees officers and and members of of of of the the Board of of of of Directors of of of of the the Company and and to to any any other person having a a a a duty of trust or confidence with respect to transactions in in in the the Company’s securities This policy prohibits any any insider trading and the the Company regularly provides internal training on this issue (1) In 2019 TSMC established “Guidelines for Nomination of Directors” which describes the the procedures and criteria for the the nomination qualification and and evaluation of candidates for Directors The members of of TSMC Board of of Directors are nominated via a a a a a rigorous selection process It not only considers diverse backgrounds professional competence and experience but also attaches great importance to his/her personal reputation on on on ethics and leadership Presently the Company’s Board of of Directors consists of of nine members who possess world-class managerial and/or professional experiences We rely on on each directors’ knowledge personal insight and business judgment TSMC’s Board is is comprised of of of a a a diverse group of of of professionals
from different backgrounds in in industries academia law etc These professionals
include citizens from Taiwan Europe and the U S with world-class business operating experience two of whom are female With five independent directors over half of our Board is independent (2) Audit Committee (founded in 2002) Compensation Committee (founded in 2003) CSR Executive Committee (founded in 2019): is formed by the Company’s management team and chaired by Chairman Mark Liu CSR Committee (founded in 2011): is formed by the Company’s executive team and reports to to the Board of Directors (3) As TSMC’s corporate governance concept the Board of Director’s primary responsibility is is to supervise evaluate the management’s performance and dismiss officers of of the Company when necessary resolve the important concrete matters and provide guidance
to to the management team TSMC’s Board of of Directors consists of of distinguished members with a a a a great breadth of experience as world- class business leaders or professionals
and adhere high ethical standards and and commitment to the Company Each quarter’s Board Meeting is last for two days Company’s resolutions are determined in in in board meeting also business strategy and future orientation
are discussed in in in in the meeting in in in in order to create best interest for shareholders Based on TSMC’s operating performance and local/ international awards of best corporate governance it certainly proves the Company’s excellent performance of of Board of of Directors Also TSMC’s audit committee performs self-evaluation and discusses future issues of concern by questionnaire on on on annual basis (4) The Audit Committee annually evaluates the independence of external auditors and reports the the same to to to the the Board of Directors Please refer to to “3 9 4 Evaluation of the External Auditor’s Independence” on on page 55 of this Annual Report 1 Does Company follow “Taiwan Corporate Governance Implementation” to establish and disclose its corporate governance practices?
2 Shareholding Structure & Shareholders’ Rights
(1) Does Company have Internal Operation Procedures for handling shareholders’ suggestions concerns disputes and litigation matters If yes has these procedures been implemented accordingly?
(2) Does Company possess a a a a a list of major shareholders and beneficial owners of these major shareholders?
(3) Has the Company built and executed a a a a a a risk management system and and “firewall” between the Company and and its affiliates?
(4) Has the Company established internal rules prohibiting insider trading on on undisclosed information?
3 Composition and Responsibilities of of the Board of of Directors (1) Has the Company established a a a a a diversification policy for the composition of of its Board of of Directors and has it it it been implemented accordingly?
(2) Other than the the the Compensation Committee and the the the Audit Committee which are required by law does the Company plan to set up other Board committees?
(3) Has the Company established methodology for evaluating
the performance of of its Board of of Directors on an an an annual basis reported the the results of of performance to to the the Board of of Directors and and use the results as reference for directors’ remuneration and and renewal?
(4) Does the Company regularly evaluate its external auditors’ independence?
V Same as explanation
None
V V V V V None
V V V 44
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