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Corporate Governance-Corporate Governance Architecture

Implementation of Corporate Governance:

Assessment Items Implementation Differences with Contents of Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and Reasons
Y N Summary
1. Does the Company disclose its established corporate governance best practice based on “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies”? V   The Company had established its “corporate governance best practice” based on “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and disclose it on the official site. No major differences

2. Corporate Ownership Structure and Equities

(1) Does the Company establish and implement internal procedure to handle shareholders suggestions, doubts, disputes and litigations?

(2) Does the Company have the list of major shareholders who control the Company operations and those who have superiority to those shareholders?

(3) Does the Company establish and implement mechanism of risks management and firewalls among its interactions with affiliates?

(4) Does the Company establish and implement internal regulations to prohibit its staff from purchasing/selling securities based on private information?

V  

(1) The Company has hired a spokesman (with one substitute) and investor mailbox (email) to gather suggestions, questions and opinions from the shareholders. The Company appointed attorneys for processing disputes such as litigations.

(2) The Company has appointed a transfer agency to process stock services affairs and has the list of major shareholders who control the Company operations and those who have superiority to those shareholders.

(3) The Company has established and implemented internal control system as well as management system for financial, business and accounting. The Company interacts with affiliates based on “Guidelines for Transaction with Group Enterprises, Specific Corporates and Related Parties”.

(4) The Company has established and implemented “Guidelines for Process of Internal Major Information and Insider Trading Prevention Management”.

No major differences

3. Board of Directors Organization and Duties

(1) Does the Company establish and implement diversified programs for the member formation of the Board of Directors?

(2) Does the Company voluntarily establish committee organization with similar functions as those of Remuneration Committee and Audit Committee?

(3) Does the Company establish the guidelines and methods for evaluation of performances of the Board of Directors, and conduct regular performance assessment annually?

(4) Does the Company evaluate the independence of independent auditors on a regular basis?

V  

(1) Based on the requirements of “corporate governance best practice”, the composition of members of the Board of Directors covers a variety of features in respect with genders, professional fields and working experiences (Note 1). The Company determines the member composition including but not limited to characteristics of genders, ages, cultural and education backgrounds, ethnic groups, knowledges, professional service experiences, skills and terms of services of the candidates with the perspective of having the best talents and suitable qualifications. There are seven members of the Board in which there is one female Director and two Independent Directors. The backgrounds of the members are business operators of technological industry, college professors, accountants with professional fields of the members cover management, science & technology, finance and medical, allowing the offering of professional recommendations from various perspectives and further improving efficiencies of business operation and management.

(2) The Company has established the Remuneration Committee. Assessment of necessity to establish auditing and other functional committees would be based on the assessment of business operation conditions of the Company.

(3) The assessment of the performance of the Board of Directors of the Company shall be conducted based on the Company’s “Guidelines for Assessment of Performance the Board of Directors”. Performance of each Director and Supervisor is assessed against the attendance and contribution of such Director and Supervisor.

1. Attendance (representing 60% of total compensation):
Distribution ratio is calculated based on the attendance rate and term of the Board of Directors. The calculation formula is based on the ratio of the radix of each individual to the total of all. The calculation formula for each individual's radix is “individual attendance/(total number of conferences-1)”

2. Contribution (representing 40% of total compensation)
Based on the degree of contribution of each Director and Supervisor to the Company, the Chairman evaluates and outlines the distribution ratio according to the following.

(1) Those who contribute to the promotion of the Company's business operation.

(2) Those assist the Company in contributing to the development of the general business operation.

Each Director and Supervisor’s compensation is paid annually based on the above assessment results.

(4) According to “Accountant Assessment and Performance Evaluation Guidelines” of the Company, the Department of Finance conducts the assessment to the independence of the certified accountant at the end of each fiscal year. The assessment process and results of the FY 2017 have been submitted to the Board of Directors on December 28, 2017. The Independence and Eligibility Assessment of FY 2017 is summarized as follows: (1) Evaluate the independence and eligibility of accountants according to the Bulletin No. 10 for Code of Professional Ethics “Integrity, Objectivity and Independence” and Regulations 29 of Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies; (2) quarterly, the accounting firm provides the “Total Independence Statement” signed by members of the auditing service team to ensure the independence and assess the eligibility of the accountant's professional service experience. The “Total Independence Statement” signed by the members of the auditing services team confirms that members have not violated any relevant legal regulations of independence and no ineligibility; (3) independence of the certified accountants is examined to determine whether such accountant serves the position of the director, supervisor, shareholder or the Company or employed as the Company’s in-house employee, as well as ensuring such accountant is not a stakeholder. In addition, the certified accountant shall conduct act on recusal due to having direct or indirect interest conflicts between the commissioned tasks and him/her. Relevant regulations shall be adhered to during rotation. (Note 2)

No major differences
4. Does the Company, if categorized as a TWSE/TPEx Listed Company, have the personnel (full-time or part-time) who is in charge of required for implementation of relevant affairs of corporate governance (including but not limited to preparation of documents required by Directors or Supervisors, conducting relevant affairs of meetings of the Board of Directors and shareholders, assisting registration and changes of registration of the Company and preparing minutes for meetings of the Board of Directors and shareholders, etc.)? V  

(1) The corporate governance personnel shall be the Chief Director of the financial departments of the Company.

(2) Responsibilities: in charge of corporate governance-related affairs, providing information required for the Directors, Supervisors and functional committees to conduct business activities, compiling relevant agenda and minutes of the Board of Directors and shareholders meetings as well as the implementation results of the business in current FY, and processing company registration and registration changing activities, etc.

No major differences
5. Does the Company provide the communication channel for stakeholders (including but not limited to shareholders, employees, clients and suppliers, etc.), have webpages for stakeholder engagement, and properly respond to the issues regarding major CSR concerned by the stakeholders? V   There are webpages for stakeholder engagement at the Company’s official site as a channel communication with stakeholders in order to properly respond to the issues regarding major CSR concerned. No major differences
6. Does the Company appoint the stock service agency to process affairs of shareholders meeting? V   The Company has appointed the Transfer Agency of CTBC Bank Co., Ltd. to conduct relevant activities. No major differences

7. Information Disclosure

(1) Does the Company construct the official website, and disclose the financial and corporate governance information on it?

(2) Does the Company conduct information disclosure in other manners (for example, provide English version official site, have specific personnel in charge of collection and disclosure of Company information, good implementation of spokesman and provide minutes of investor conferences at the official site)?

V  

(1) The Company has disclosed relevant information regarding its financial business and corporate governance at the official site.

(2) The Company’s official site is available in English, and there is a spokesman (with one substitute) as well as the specific personnel are in charge of collection and disclosure of Company information, and all materials of presentations and videos of investor conferences are available at the webpages for shareholders.

No major differences
8. Does the Company offer any other important information regarding corporate governance (including but not limited to employee benefits, employment caring, investor relationships, suppliers relationships, stakeholder rights, advanced studies of Directors and Supervisors, implementation of standards for assessment of risks and risks management policies, implementation of customer policies, and purchasing of liability insurances for Directors and Supervisors by the Company)? V  

(1) Employee benefits: the Company ensures its best employee benefits by establishing the Employee Welfare Committee, pension funds as well as “Feedback Box” to receive and review direct feedbacks from employees.

(2) Employment caring: the Company emphasizes the mental and physical health and education/training of employees by organizing employee group insurance, regular health examination and various education/training programs.

(3) The Company discloses the corporate information based on all applicable regulations to ensure the rights of investors and fulfil corporate responsibilities to shareholders.

(4) Suppliers relationships: The Company has at all times maintained good relationships with suppliers. By maintaining a smooth communication channel for suppliers based on mutual trust and reciprocity, interests of both parties could be ensured.

(5) Stakeholder rights: the Company has hired a spokesman (with one substitute) and investor mailbox (email) to gather suggestions, questions and opinions from the shareholders. The Company appointed attorneys for processing disputes such as litigations.

(6) The advanced studies of Directors, Supervisors and managers: the Directors, Supervisors and managers of the Company have sufficient industrial knowledge and business operation experiences, and attend relevant courses regarding corporate governance for at least 6 hours annually. Please refer to Note 3 for details of advanced studies of Directors and Supervisors.

(7) Implementation of standards for assessment of risks and risks management policies: all internal control systems and necessary management regulations enter into effect only after the approval by the Board of Directors or shareholders meeting. Implementation assessment is conducted quarterly and submitted to the Board of Directors.

(8) Implementation of customer policies: the company strictly abides by the contracts signed with customers and relevant regulations, ensures the relevant rights and interests of customers and provides good service quality.

(9) Purchasing of liability insurances for Directors and Supervisors by the Company: the liability insurances for Directors and Supervisors has been purchased from TOKIO MARINE NEWA INSURANCE CO., LTD. by the Company.

No major differences
9. Please elaborate the improvement made based on most recent annual evaluation on corporate governance conducted by the TWSE Corporate Governance Center, and those which have not been improved and categorized as priority. Annually, the Company thoroughly examines its standards on recent evaluation results of corporate governance and the evaluation indicators of corporate governance of the most recent year to retain the applicable indicator(s), arrange improvement schedules and completed the revision of those invalid indicators.

Note 1:Diversity of board members

Diversified projects

Names of Directors

Gender Management Leadership strategy Industry knowledge Financial accounting Legal Medical leadership
Wang, Guang-Shiah Male V V V      
Chuang, Yung-Shun Male V V V      
Yu, Ming-Chang Male V V V      
Chang, Yung-Yang Male V   V V V  
Lee, Tsu-Der Male V V       V
Yen, Tsung-Ming Male V V V V V  
Du, Ming-Han Male V V V      
Yan, Wei-Chyun Male V V V V    
Chen,Fu-Sheng Male V V V      

Note 2: Standards for Assessment of Independence of Accountants

Assessment Items Assessment Result Independence
1. Does the Accountant have direct or significant indirect financial interest relationships with the Company? N Y
2. Does the Accountant conduct financing or guarantee activities with the Company or any Directors of the Company? N Y
3. Does the Accountant have intimate business relationships and potential employment relationships with the Company? N Y
4. Do the Accountant and auditing members currently have positions in the Company for the past two years as a Director, a Manager or the position with significant influence to the auditing activities? N Y
5. Does the Accountant provide non-auditing services for the Company which may directly influence the auditing activities? N Y
6. Does the Accountant provide services for the transaction of stocks or other securities issued by the Company? N Y
7. Does the Accountant serve as the Defense Attorney for the Company or have coordinated the Company’s conflicts with any other third parties on behalf of the Company? N Y
8. Does the Accountant have kinship with any Directors or Managers of the Company, or those who have significant influence on the auditing activities N Y

Note 2:

(1) Advanced Studies of Directors and Supervisors:

Names Dates Organizers Courses/Topic Speeches Durations
Wang, Guang-Shiah 2019/05/15 Taiwan Stock Exchange ESG Investment Forum 3 hours
2019/11/21 Stock Exchange Board Functions Enhancement Seminars 3 hours
Yu, Ming-Chang 2019/10/21 Accounting Research and Development Foundation Audit Committee Independent Directors 6 hours
Chang, Yung-Yang 2019/12/19 Accounting Research and Development Foundation Deficiency in internal control and auditing for Taiwanese subsidiaries with case analysis 6 hours
Chen,Fu-Sheng 2019/06/28 The Institute of Internal Auditors Practice in auditing for subsidiaries 6 hours
2019/11/25 The Institute of Internal Auditors Introduction to the standards for handling of assets acquired or disposed of by public companies and rules for related internal control and internal audit 6 hours
Lee, Tsu-Der 2020/07/09 Securities and Futures Institute Business strategies and corporate governance in response to the risk of world's unsustainability, as seen from the outbreak of the new coronavirus 3 hours
2020/07/22 Taiwan Academy of Banking and Finance Corporate Governance and Corporate Sustainability Workshop 3 hours
Yan, Wei-Chyun 2020/07/22 Taiwan Academy of Banking and Finance Corporate Governance and Corporate Sustainability Workshop 3 hours
2020/08/26 Taipei Exchange Briefing on equity information for internal personnel from over-the-counter and emerging stork companies 3 hours
Yen, Tsung-Ming 2020/09/02 Securities and Futures Institute Discussion on Cases of Corporate Financial Statements Fraud 3 hours
2020/08/20 Securities and Futures Institute Analysis of practical cases on the establishment of breach of trust and special breach of trust by directors and supervisors 3 hours
Chuang, Yung-Shun 2020/08/05 Taiwan Corporate Governance Association Practice and Case Analysis for Enterprise M&A 3 hours
2020/04/06 Taiwan Corporate Governance Association Offense and defense for Patent Wars 3 hours
2020/03/16 Taiwan Listed Companies Association Discussion on Environmental Protection in our country 2 hours
2020/02/25 Taiwan Securities Association Digital Empowerment - Practice and Cases for the Model of Outsourcing and Innovation by Enterprises 3 hours
Du, Ming-Han 109/08/13 Accounting Research and Development Foundation Protection of corporate intellectual property rights and analysis of related legal liabilities 3 hours
2020/08/13 Accounting Research and Development Foundation Discussion on Tax Laws and Cases for Enterprise M&A 3 hours

 

(2) Advanced Studies of Managers:

Names Dates Organizers Courses/Topic Speeches Durations
Chen,Fu-Sheng 2019/06/28 The Institute of Internal Auditors Practice in auditing for subsidiaries 6 hours
2019/11/25 The Institute of Internal Auditors Introduction to the standards for handling of assets acquired or disposed of by public companies and rules for related internal control and internal audit 6 hours
Wen, Pei-Chun 2020/07/02 Accounting Research and Development Foundation Introductory training course for accounting supervisors of the issuer securities firm and stock exchange 6 hours
2020/07/03 Accounting Research and Development Foundation Introductory training course for accounting supervisors of the issuer securities firm and stock exchange 6 hours
2020/07/08 Accounting Research and Development Foundation Introductory training course for accounting supervisors of the issuer securities firm and stock exchange 6 hours
2020/07/09 Accounting Research and Development Foundation Introductory training course for accounting supervisors of the issuer securities firm and stock exchange 6 hours
2020/07/10 Accounting Research and Development Foundation Introductory training course for accounting supervisors of the issuer securities firm and stock exchange 6 hours