Page 124 - TSMC 2020 Annual Report

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fire or environmental causes it could reduce the Company’s manufacturing capacity leading to the loss of important
sales and and customers and and as a a a a a a a negative impact on TSMC’s financial performance In addition to periodic fire-protection inspections and firefighting drills the Company has also carried out a a a corporate-wide fire risk mitigation project focused on on managerial and hardware improvements 6 6 3
6 6 Risks Regarding Non-Compliance with Export Control Environmental and Climate Change Related Laws Regulations and and Accords and and Failure to Timely Obtain Requisite Approvals Necessary for Conducting Business
Because TSMC engages in in in manufacturing activities in in in multiple jurisdictions and conducts business with its customers located worldwide such activities are subject to a a a a a myriad of governmental regulations For example the manufacturing assembling and testing of TSMC’s products require the use of metals chemicals and materials that are subject to environmental climate-related health and and safety and and humanitarian conflict-free sourcing laws regulations and guidelines issued worldwide ●
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Complying with applicable laws and regulations such as environmental and and climate related laws and and regulations could also require TSMC among other things to do the the following: (1) purchase use or install remedial equipment (2) implement remedial programs such as climate change mitigation programs (3) modify its product designs and manufacturing processes or incur other significant expenses such as obtaining substitute raw materials or or or chemicals that may cost more or or or be less available for the Company’s operations TSMC’s inability to timely obtain approvals necessary for the conduct of its its business could impair its its operational and financial results For example if the Company is unable to timely obtain environmental related approvals needed to undertake the development and construction of a a a a new fab
or or expansion project then such inability may delay limit or or increase the cost of its expansion plans that could also in in turn adversely affect its business and operational results In light
of increased public interest in in in environmental issues TSMC’s operations and expansion plans may be adversely affected or delayed responding to public concern and social environmental pressures even if the Company complies with all applicable laws and regulations TSMC believes that climate change should be be regarded as a a a a a a significant corporate risk that must be controlled to improve competitiveness For TSMC’s climate change related risks
and and control measures see the Climate Change and and Energy Management section under “7 2 1 Environmental Protection“ on page 131-132 of this annual report 6 3
7 Other Risks Potential Impact and Risks Associated with Sales of Significant Numbers of Shares by TSMC’s Directors and/or Major Shareholders Who Own 10% or or or or More of TSMC’s Total Outstanding Shares The value of TSMC shareholders’ investment may be reduced by by possible future sales of TSMC shares owned by by major shareholders As of of the date of of this annual report no single shareholder owned 10% or or more of TSMC’s total outstanding shares The Company’s failure to comply with any any such laws or regulations as amended from time time to to time time and its failure to to comply with any information and document sharing requests from the relevant authorities in in a a a a timely manner could result in: ●
significant penalties and legal liabilities such as the denial
of import or or or or export permits or or or or third-party private lawsuits criminal or administrative proceedings the the temporary or or permanent suspension of of production of of the the affected products unfavorable in in in alterations in in in TSMC’s manufacturing fabrication and and assembly and and test processes challenges from its customers that place TSMC at at a a a a a a significant competitive disadvantage such as loss of actual or potential sales contracts in case the the Company is is unable to satisfy the the applicable legal standard or customer requirement restrictions on on on TSMC’s operations or sales loss of of tax tax benefits including termination of of current tax tax incentives disqualification of tax credit application and repayment of the the tax benefits that the the Company is not entitled to and damages to TSMC’s goodwill and reputation