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Corporate Governance

Corporate Governance Implementation Status

Update: 2024/1/30

Implementation Status of Corporate Governance and Deviations from "the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and Reasons

1. Does the company establish and disclose the Corporate Governance Best-Practice Principles based on "Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies"?

Abstract Illustration：
  • The Corporation has established "Guidelines for Corporate Governance" which are disclosed on the "Investor Relations" and the "Corporate Governance" sections of our corporate website, as well as on the Market Observation Post System. Revisions to our "Guidelines for Corporate Governance" were approved at the 24th meeting of the 9th Board (convened on March 16, 2022) and a shareholders' general meeting (convened on May 26, 2022).

2. Shareholding structure & shareholders' rights

Abstract Illustration：
  • The Corporation has a shareholder services unit that is responsible for providing shareholder services, handling shareholder recommendations, and responding to shareholder queries, while our legal unit handles shareholder disputes and litigation matters. All related matters are handled according to our operating procedures. All related matters are handled according to our operating procedures.

Abstract Illustration：
  • The Corporation regularly maintains a list of its major shareholders as well as the ultimate owners of those shares. At present, most of our major shareholders are board members or financial institutions, and the list of major shareholders and ultimate owners can be viewed at any time to ensure the stability of the Corporation's operating policies.

Abstract Illustration：
  • The Corporation currently has no affiliated enterprises. To avoid conflicts of interest, the Corporation has established the “Rules Governing Transactions with Affiliated Enterprises” in accordance with laws and regulations, and the Audit Committee reviews transactions with affiliated enterprises and other necessary transactions to prevent conflicts of interest.
  • The Corporation has established the Rules Governing Transactions with Affiliated Enterprises, Procedures for the Acquisition or Disposal of Assets, Operational Procedures for Loaning Funds to Others, and other written regulations relating to financial and business transactions between the Corporation and affiliated enterprises. Amendments were made to the Rules Governing Transactions with Affiliated Enterprises on November 8, 2023 to include a new requirement: “Actual transaction statuses for major purchases, sales, asset acquisitions and disposals, and other transactions with individual affiliated enterprises which have been approved by the Board shall be reported at the most recent shareholders' meeting at the end of the year.”
  • The aforementioned amendment encompasses management procedures for purchase and sale transactions as well as asset acquisitions and disposals, and stipulates that the aforementioned major transactions should be approved by the Board prior to commencement.
  • The aforementioned amendment also stipulates that actual transaction statuses for major purchases, sales, asset acquisitions and disposals, and other transactions with individual affiliated enterprises which have been approved by the Board shall be reported at the most recent shareholders' meeting at the end of the year.

Abstract Illustration：
  • The Corporation has established "Regulations for Management of the Prevention of Insider Trading" which stipulate that corporate insiders and quasi-insiders must abide by the provisions of the Securities and Exchange Act, and any trade of securities conducted using undisclosed information is prohibited. Revisions to our " Article 12 of Regulations for Management of the Prevention of Insider Trading" were approved in 2022, the revision contains that insiders shall not trade the company's stock within thirty days before the annual financial report is announced and within fifteen days before each quarterly financial report is announced during the lock-up period. Additionally, Article 11 of our "Code of Ethical Conduct" and Subparagraph (d), Paragraph 3, Article 6.1.2 of our "Code of Conduct" also contains stipulations inhibiting insider trading.

3. Composition and Responsibilities of the Board of Directors

Abstract Illustration：
  • Article 14, Chapter 2 of the Corporation's "Charter of the Corporate Governance & Nominating Committee" (Structural Composition of the Board and its Committees and Performance Assessments) stipulates a diversification policy for board member composition and overall capabilities of board members. Article 17 of the Charter also stipulates succession plans for directors.
  • The Corporation's diversification policy for board member composition states that appropriate diversification standards for the Board should be set according to operations, mode of operation, and development needs, including but not limited to the following:
    1. Basic qualifications and values: gender, age, nationality, and culture.
    2. Level of contribution to businesses or in other professional areas.
    3. Personality, professional expertise and skills. Professional expertise and skills include professional backgrounds (such as in finance, accounting, legal practice, marketing, technology, business management, and so on), as well as professional skills and industry experience.
    4. Willingness and time to participate in corporate affairs.
    5. Concurrent director and manager positions held at other companies.
  • Overall, the Board as a whole should possess the following capabilities：
    1. Operational insight capabilities.
    2. Accounting and financial analysis capabilities.
    3. Management capabilities.
    4. Crisis management capabilities.
    5. Industry knowledge.
    6. International outlook.
    7. Leadership and decision-making ability.
  • THSRC has established a Corporate Governance & Nominating Committee which is responsible for reviewing the diversified standards of professional knowledge, techniques, experience, and gender distribution required by directors to ensure that the Board possesses appropriate professional knowledge and expertise. The committee is also responsible for conducting regular evaluations of Board performance, reviewing director training plans, and reviewing manager succession plans.
  • Composition of the Corporation's 10th Board complies with our "Articles of Incorporation"; nominated candidates are selected, nominated, and elected through the rigorous processes stipulated in the Corporation's "Charter of the Corporate Governance & Nominating Committee" and "Rules for the Election of Directors," thus ensuring diversification and independence of board members.
  • The Board is currently composed of 15 directors, including 5 independent directors and 10 non-independent directors. Our current directors are all industrial or academic experts, with management experience in listed companies or in government institutes. Apart from possessing leadership and decision-making capabilities, crisis management capabilities, and an international outlook, our five independent directors also have expertise in legal affairs, finance and accounting, industrial knowledge, and operational insights: Independent Director Kenneth Huang-Chuan Chiu is a partner at Kew & Lord, Independent Director Duei Tsai served as the Minister of Transportation and Communications, Independent Ming-Teh Wang served as the Chairman of Taoyuan International Airport Corporation, Independent Director Pai-Ta Shih is a full-time professor at the National Taiwan University Department of Finance, and Independent Director Yung-Cheng (Rex) Lai is a professor at the National Taiwan University Railway Technology Research Center. Additionally, of the other ten non-independent directors, directors Qing-Hong PAN and Shien-Quey Kao and Yu-Fen Hung all have finance and accounting expertise; Director Cheng-Chung Young is currently the Director of MOTC；Director Wei-Cheng Hsieh is currently the Secretary General of China Aviation Development Foundation; and Chairman Yao-Chung Chiang and directors Chien-Chih Hwang, Ming-Jou Yang, Mao-Hsiung Huang, and Chumin Hong all have significant management experience as a chairperson or president of listed companies in industries spanning from technology, construction, automobiles, steel, airlines, manufacturing, and services; they therefore possess capabilities relating to marketing, technology, management, industrial knowledge, and operational insight.
  • The Corporation sets the 4Ts (Transport, Technology, Taiwan, and Taiwan) as our main developmental goal and selects directors based on their management experience and expertise. Our current directors possess knowledge on corporate governance, the latest industrial insights, and expertise in business, finance, accounting, and corporate matters, fulfilling the goals set out by our 4Ts.
  • The Corporation strives to maintain gender equality in the composition of Board members. Our goal is to increase our ratio of female directors to 1/3 (33%). Currently, we have 86% (13) male directors and 13% (2) female directors. In future, we hope to add other female directors to achieve our goal.
  • Currently, four of our five independent directors was reelected following a full term (approximately four years) and one is all newly appointed independent directors who have served for approximately one year. We currently have 15 Board members, of which 27% (4) are under 60 years old, 13% (2) are between 60 to 65 years old, and 60% (9) are over 65 years old.
  • Board members are all active in attending Board meetings, with average attendance rates for 2022 reaching 97%, and 2021 was 96%, showing that our Board is indeed exercising its supervisory duties.
  • Overall, our Board possesses capabilities aligned with the Corporation's future development, and our policy of board diversification has been well implemented. (See details on the implementation status of our board diversification policy.)

Abstract Illustration：
  • The Corporation has established a Remuneration Committee and Audit Committee in accordance with law, and we have also voluntarily established other functional committees including our Corporate Governance & Nomination Committee and Special Committee in consideration of corporate matters and development. The Audit Committee and Remuneration Committee are convened by independent directors. The Audit Committee and Remuneration Committee are composed of independent directors, while more than half of the members in the Corporate Governance & Nomination Committee are independent directors. All functional committees are well operated, exercise sound supervisory duties, and strengthen the functions of the Board.

Abstract Illustration：
  • On March 21, 2017, the Corporation's "Regulation of Self-Evaluation of the Board of Directors" was passed at the 27th meeting of the 7th Board, and revised version was passed at the 18th meeting of the 9th Board on September 15, 2021. The Corporation's Corporate Governance & Nomination Committee serves as the implementation unit for these evaluations, and the Secretariat Division of the Board of Directors assists the Corporate Governance & Nomination Committee in collecting information on Board activities at the end of each year for internal self-assessments of Board performance. Self-assessments on Board operations, Board members, and all functional committees (including the Corporate Governance & Nominating Committee, Audit Committee, Remuneration Committee, and Special Committee) are conducted via surveys. Survey results are organized and submitted to the Board as a basis for review and improvement. Additionally, assessment results on the Board and its functional committees serve as a reference for selecting or nominating directors (and independent directors), while assessment results on individual directors may be used in future as a reference when setting salaries and remuneration. Furthermore, the aforementioned Corporation bylaw stipulates that an internal assessment should take place at least once every years and an external assessment should take place at least once every three years.
  • Assessment indicators for the Corporation's Board includes the following five aspects:
    1. Participation in corporate operations.
    2. Enhancement of Board decision-making quality.
    3. Board composition and structure.
    4. Director elections and continued training.
    5. Internal control.
  • Assessment indicators of the Corporation's directors includes the following six aspects:
    1. Understanding of corporate goals and tasks.
    2. Recognition of director responsibilities.
    3. Participation in corporate operations.
    4. Internal relations and communication.
    5. Director knowledge and continued training.
    6. Internal control.
  • The Corporation completed all self-assessments of the Board, Board members for 2022 in January 2023. The full score for assessments was 100. The Board and Board members received self-assessment scores of 97.31 and 97.77 (the scores were 96.85 and 97.84 in 2021). Assessment results were the same as for the previous year: "Significantly exceeded standards."
  • The aforementioned assessment results were submitted to the 32th Remuneration Committee meeting of the 9th Board on January 16, 2023 and the 31th Corporate Governance & Nomination Committee meeting of the 9th Board on January 16, 2023, and were reported at the 34th meeting of the 9th Board on January 18, 2023. Suggestions for improvement and future strengthening were as follows:
    1. Board of Directors:
      • "Participation in corporate operations": Strengthen risk assessments for important proposals to provide a reference for the Board when making decisions.
      • "Enhancement of Board decision-making quality": The integrity and authenticity of the information for the board of directors will be strengthened, so that the directors can better understand the content of the proposals and make the board meeting more complete and smooth.
      • "Director election and continued training": The Company's " Charter of the Corporate Governance & Nominating Committee " stipulates that the composition of the board of directors should consider diversity, and formulate appropriate diversity policies, standards and capabilities required by directors for its own operation, operation type and development needs. Continue to implement the implementation of the concept of previous disclosure.
      • "Internal control": Strengthen proposals for internal control systems and risk management so as to help directors evaluate and supervise the implementation of relevant operations.
    2. Board members:
      • "Participation in corporate operations ": continue strengthening the contents of the proposals of the internal control system and risk management for the Board of Directors to evaluate and supervise the implementation of related operations.
      • "Internal relationship management and communication": When the management department interacts with directors, the timeliness, relevance and completeness of inquiries and explanations will be strengthened, so as to truly respond to the opinions and questions raised by directors.
      • "Director knowledge and continuing training": More diversified training courses for directors will be held every year.
      • "Internal control": Strengthen proposals for internal control systems and risk management so as to help directors evaluate and supervise the implementation of relevant operations.
  • Self-assessment indicators for Corporate Governance & Nominating Committee members include the following five aspects:
    1. Participation in corporate operations.
    2. Recognition of functional committee responsibilities.
    3. Enhancement of functional committee decision-making quality.
    4. Composition of functional committees and election of committee members.
    5. Internal control.
  • The Corporation completed all self-assessments of the Corporate Governance & Nominating Committee for 2022 in January 2023. The full score for assessments was 100. The Corporate Governance & Nominating Committee received self-assessment scores of 98.2 (the scores were 97 in 2021). Assessment results were the same as for the previous year: "Significantly exceeded standards." The aforementioned assessment results were submitted to the 31th Corporate Governance & Nomination Committee meeting of the 9th Board on January 16, 2023, and were reported at the 34th meeting of the 9th Board on January 18, 2023. Suggestions for improvement and future strengthening were as follows:
    1. "Participation in corporate operations": Strengthen timeliness, relevance, and comprehensiveness of answers provided by our management team when interacting with directors so as to ensure that director suggestions and questions are appropriately handled.
    2. "Enhancement of functional committee decision-making quality": Improve the quality of meeting materials provided to the Board so that directors can better understand proposals, strengthen risk assessments for important proposals to provide a reference for functional committees when making decisions, and regularly review proposals submitted to functional committees and appropriateness of meeting frequencies.
  • Self-assessment indicators for Audit Committee members include the following five aspects:
    1. Participation in corporate operations.
    2. Recognition of functional committee responsibilities.
    3. Enhancement of functional committee decision-making quality.
    4. Composition of functional committees and election of committee members.
    5. Internal control.
  • The Corporation completed all self-assessments of the Audit Committee for 2022 in January 2023. The full score for assessments was 100. The Audit Committee received self-assessment scores of 99.75 (the scores were 99.75 in 2021). Assessment results were the same as for the previous year: "Significantly exceeded standards." The aforementioned assessment results were reported at the 34th meeting of the 9th Board on January 18, 2023. Suggestions for improvement and future strengthening were as follows:
    1. "Participation in corporate operations": Strengthen timeliness, relevance, and comprehensiveness of answers provided by our management team when interacting with directors so as to ensure that director suggestions and questions are appropriately handled.
    2. "Enhancement of functional committee decision-making quality": Improve the quality of meeting materials provided to the Board so that directors can better understand proposals, strengthen risk assessments for important proposals to provide a reference for functional committees when making decisions, and regularly review proposals submitted to functional committees and appropriateness of meeting frequencies.
  • Self-assessment indicators for Remuneration Committee committee members include the following five aspects:
    1. Participation in corporate operations.
    2. Recognition of functional committee responsibilities.
    3. Enhancement of functional committee decision-making quality.
    4. Composition of functional committees and election of committee members.
    5. Internal control.
  • The Corporation completed all self-assessments of the Remuneration Committee for 2022 in January 2023. The full score for assessments was 100. The Remuneration Committee received self-assessment scores of 99.33 (the scores were 96.67 in 2021). Assessment results were the same as for the previous year: "Significantly exceeded standards." The aforementioned assessment results were submitted to the 32th Remuneration Committee meeting of the 9th Board on January 16, 2023, and were reported at the 34th meeting of the 9th Board on January 18, 2023. Suggestions for improvement and future strengthening were as follows:
    1. "Participation in corporate operations": Strengthen timeliness, relevance, and comprehensiveness of answers provided by our management team when interacting with directors so as to ensure that director suggestions and questions are appropriately handled.
    2. "Enhancement of functional committee decision-making quality": Improve the quality of meeting materials provided to the Board so that directors can better understand proposals, strengthen risk assessments for important proposals to provide a reference for functional committees when making decisions, and regularly review proposals submitted to functional committees and appropriateness of meeting frequencies.
  • Self-assessment indicators for Special Committee members include the following five aspects:
    1. Participation in corporate operations.
    2. Recognition of functional committee responsibilities.
    3. Enhancement of functional committee decision-making quality.
    4. Composition of functional committees and election of committee members.
    5. Internal control.
  • The Corporation completed all self-assessments of the Special Committee for 2022 in January 2023. The full score for assessments was 100. The Special Committee received self-assessment scores of 97.32 (the scores were 96.51 in 2021). Assessment results were the same as for the previous year: "Significantly exceeded standards." The aforementioned assessment results were reported at the 34th meeting of the 9th Board on January 18, 2023. Suggestions for improvement and future strengthening were as follows:
    1. "Participation in corporate operations": Strengthen timeliness, relevance, and comprehensiveness of answers provided by our management team when interacting with directors so as to ensure that director suggestions and questions are appropriately handled.
    2. "Enhancement of functional committee decision-making quality": Improve the quality of meeting materials provided to the Board so that directors can better understand proposals, strengthen risk assessments for important proposals to provide a reference for functional committees when making decisions, and regularly review proposals submitted to functional committees and appropriateness of meeting frequencies.
  • According to the stipulations of our "Regulation of Self-Evaluation of the Board of Directors," an evaluation of Board performance should be conducted by external units at least once every three years. The Corporation commissioned the "Taiwan Corporate Governance Association" to evaluate Board effectiveness and performance. The most recent external evaluation of Board performance was completed in January 2022. The Taiwan Corporate Governance Association and evaluating experts were independent units that had no business dealings with the Corporation; a report on Board performance was issued on February 22, 2022 and the report were approved by the the Board meeting held on June 15, 2022. Implementation details were as follows:
    1. Evaluation duration: January 1, 2021 to December 31, 2021.
    2. Evaluation method: The Taiwan Corporate Governance Association conducted reviews of the relevant documents submitted by the Corporation for evaluations, and also commissioned three experts to conduct on-site evaluations and interviews with the Corporation's Chairman, President, independent directors, corporate governance officer, head of audit office on February 16, 2022.
    3. Evaluation standards: Standards included the eight aspects of board composition, board guidance, board authority, board supervision, board communication, internal control and risk management, self-discipline of the board, and others (board meetings, support systems, and so on). Experts conducting the evaluations referenced information provided by the Corporation and publicly available information regarding implementation for each indicator and carried out on-site interviews before submitting evaluation reports.
    4. Overall evaluation results:
      • (1) The Corporation has achieved remarkable results in promoting ESG (environmental, social, and corporate governance). In addition to being affirmed by the top 5% of the national listed company corporate governance evaluation for the last four consecutive years, it has been continuously selected as the "FTSE Social Responsibility Index". and a constituent stock of the "Taiwan Sustainability Index", and won the "Top Ten Sustainability Model Enterprise Award" of the Taiwan Sustainability Award (TCSA).
      • (2) After the Corporation first commissioned an external professional independent agency to conduct the performance evaluation of the board of directors in 2019, the relevant recommendations were listed as priorities for corporate governance enhancement, and the continuation of this (second) external independent evaluation showed that the board of directors of the company actively implement the corporate governance system and improve the effectiveness of the board of directors, and seek opportunities for improvement through independent and objective inspections.
      • (3) The Corporation has set up a "Corporate Governance Promotion Committee", with the president as the chairman and the senior managers of the management department as members. Regularly report the overall corporate governance promotion and implementation to the board of directors, strengthen various corporate governance-related measures and legal compliance systems, and fully demonstrate the company's ambition to improve corporate governance and sustainable operations.
      • (4) The Corporation formulates a "risk management policy", which identifies four major risk categories including "operational security, information security, environmental security, and financial risk" according to the principle of materiality. The president supervises and each authorized and responsible unit controlled the risks according to individual standard operating procedures, and the management team regularly reports the implementation of risk management to the audit committee and the board of directors. Through a comprehensive response strategy and management mechanism, the board of directors can more efficiently supervise the control of the company's operating risks.
    5. Implementation of evaluation recommendations and improvement items:
      • (1) It is recommended that the Corporation refers to the requirements of the "Corporate Governance 3.0 - Sustainable Development Roadmap(2021-2023)" issued by the Financial Supervisory Commission. The composition of the next board of directors will not only be based on the company's operational development needs, but also consider the diversity of the board composition and increase the number of independent directors. To more than one-third of the number of directors, to enhance the independence and professionalism of the overall board of directors. ---The Corporaiton will plan the seats of the next board of directors in consideration of the content of " Corporate Governance 3.0 -Sustainable Development Roadmap(2021-2023)".
      • (2) The Corporaiton's board of directors, functional committees and other relevant corporate governance regulations have been clearly stipulated and disclosed on the company's website. It is recommended that the Corporation can regularly review the functional committee's articles of association, and consider the practice to cooperate with the revision of relevant laws and regulations, and keep pace with the times. For example, in the organizational regulations of the Audit Committee, the list of duties and tasks of the audit committee may cover the review of business reports, earnings distribution statements, changes in accounting policies, etc. ---The Corporation will review the content of the relevant organizational regulations and make corrections as appropriate.
      • (3) The Corporation has set up the "Reporting Measures for Cases of Illegal and Immoral or Dishonest Behavior", which will be handled by the Audit Office in a coordinated manner. Considering that the whistleblower mechanism attaches great importance to the direct connection with the board of directors (especially independent directors), it is recommended that the Corporation establishes an independent and reliable communication channel in addition to the existing mechanism, so that employees, suppliers and other stakeholders can directly communicate with each other through this channel. Or simultaneously report relevant matters to independent directors/Audit Committees to strengthen the independence of the whistle-blowing system --- The Corporation has established a mailbox to contact our Audit Committee on the Stakeholder section of our external website, creating a communication channel for stakeholders to directly contact the Audit Committee.

Abstract Illustration：
  • According to Article 5-3-06 of the Corporation's Guidelines for Corporate Governance, the Audit Committee shall conduct assessments of CPA professionalism, independence, and reasonableness of audit fees at the end of each fiscal year, and these assessments shall be submitted to the Board.
  • The company's audit committee evaluates the independence and competency of its certified accountants every year. In addition to requiring the certified accountants to provide an "Independence Statement", the audit committee also conducts evaluations based on the independence and competency assessment standards and reference AQIs indicators. All audit and non-audit services provided by accountants must be reviewed in advance by the audit committee, and there will be no change of accountants for seven years or an accountant's return interval of less than two years. Accountants maintain independence in form and substance. We also refer to AQIs indicator information to confirm that accountants' audit experience, training hours, professional support and audit investment are better than the industry average, and there are no external inspection deficiencies and penalties. The firm also continues to introduce digital audit tools to improve audit quality.
  • CPA assessment results for 2022 were approved by the 9th Board at the 33th Audit Committee meeting held on February 20, 2023 and the 35th Board meeting held on February 22, 2023, confirming that accountants Jui-Hsuan Ho and Kuo-Tyan Hong of Deloitte & Touche both fulfilled the assessment standards for independence and competency. A letter of declaration was provided by Deloitte and Touche (download).

4. Does the company set up an appropriate number of suitable personnel responsible for corporate governance matters and appoint a corporate governance manager responsible for corporate governance matters (including but not limited to providing information for directors to perform their functions, assisting directors with legal compliance, handling work related to meetings of the board of directors and the shareholders' meetings in accordance with law, and producing minutes of board meetings and shareholders meetings)?

Abstract Illustration：
  • The Corporation established the Secretariat Division under the Board of Directors as the unit responsible for corporate governance, and set up an appropriate number of qualified corporate governance personnel according to Article 3-08 of the Corporation's Guidelines for Corporate Governance. The qualifications and duties of the Board Secretariat manager complies with the criteria for corporate governance officers. On March 20, 2019, Board Secretariat Secretary Senior Vice President Barret Wang was appointed the Corporation's corporate governance officer at the 24th meeting of the 8th Board to protect shareholder rights and strengthen Board functions as he possesses legal qualifications and served in managerial capacities for more than three years, handling the legal, shareholding, and corporate governance affairs of listed companies. The main duties of the corporate governance officer are to handle Board and shareholder meeting matters in accordance with law, prepare meeting handbooks for Board and shareholder meetings, assist directors in taking office and continued training, provide directors with information necessary for implementation of business matters, and assist directors in complying with laws and regulations. The implementation status of corporate governance within the Corporation will report at the 35th meeting of the 9th Board on February 22, 2023, and will be periodically reported to the Board every year. In addition On January 1, 2024, Board Secretariat Secretary Joe Wang was appointed the Corporation's corporate governance officer at the 8th meeting of the 10th Board.
  • Main implementations for 2023 included:
    1. Assisting the Board or its committees with drawing up annual work plans and meeting agendas, and collecting, researching, analyzing, or providing related materials.
    2. Providing analysis and opinions on the legality, appropriateness, and feasibility of proposals to be deliberated by the Board or its committees, for reference by the Board and its committees during deliberations.
    3. Ensuring that the operations of the Corporation's shareholders' meetings, Board meetings, and committees do not violate laws or regulations, the Corporation's Articles of Incorporation, shareholders' meeting resolutions, and the Corporation's Guidelines for Corporate Governance.
    4. Assisting with deliberation, supervision, or other processes relating to the planning and review of systems for liaison and interaction between the Corporation and shareholders, employees, consumers, stakeholders, and the general public.
    5. Assisting with the general administrative affairs of shareholders' meetings and the calling of, notices for, holding of, and record-keeping for Board meetings and committee meetings.
    6. Ensuring that Board members have timely knowledge of material information by notifying Board members upon publication of such information.
    7. Formulating Board meeting agendas and notifying directors seven days in advance of meetings, convening meetings and providing meeting information, providing prior reminders of conflicts of interest, and compiling Board meeting handbooks within 20 days of meetings.
    8. Organizing at least six hours of director training courses within the corporate offices and assisting directors in organizing other training plans and courses.
    9. Assessing and taking out appropriate D&O liability insurance for directors, supervisors, and managers.
    10. Conducting performance assessments in accordance with the Corporation's Regulation of Self-Evaluation of the Board of Directors.
  • Training undertaken by the Corporation's corporate governance officers in 2023 were as follows:
    Training Date Hosting Organization Course Title Training Hours
    2023/2/14 Taiwan Corporate Governance Association The new look of corporate governance under the ESG trend 3
    2023/4/12 Securities and Futures Institute The Metaverse and the Future of Cryptocurrency Blockchain 3
    2023/4/21 Taiwan Corporate Governance Association How the board of directors can formulate ESG sustainable governance strategies in 2023 3
    2023/7/13 Taipei Exchange Publicity meeting on sustainable development action plans for listed companies 3
    2023/9/18 Taiwan Insurance Institute Introduction to proportional reinsurance 6
    2023/9/25 Taiwan Insurance Institute Introduction to non-proportional reinsurance 6
    Accumulated training hours in 2023: 24 hours
  • Training undertaken by the Corporation's corporate governance officers in 2022 were as follows:
    Training Date Hosting Organization Course Title Training Hours
    2022/3/10 Securities and Futures Institute Global risk perception- opportunities and challenges for the next 10 years 3
    2022/4/13 Securities and Futures Institute External innovation and Sustainable development 3
    2022/8/03 Securities and Futures Institute Legality Of Cyber Security Management Act under the threat of ransomware 3
    2022/10/05 Securities and Futures Institute Future of Metaverse and Blockchain 3
    2022/10/21 Securities and Futures Institute Advocacy meeting of Prevention of Insider Trading in 2022 3
    2022/11/03 Taiwan Corporate Governance Association Seminar of ESG Trend and Risk Management 3
    Accumulated training hours in 2022: 18 hours
  • The Corporation has established a shareholder services unit under the Finance Department; this unit is responsible for providing shareholder services, handling matters relating to shareholders' meetings, making changes to Corporation registration details, and publishing information on shareholder matters in accordance with law.

5. Does the company establish a communication channel and build a designated section on its website for stakeholders (including but not limited to shareholders, employees, customers, and suppliers), as well as handle all the issues they care for in terms of corporate social responsibilities?

Abstract Illustration：
  • A "Stakeholders Communications" sub-section has been established under the "Corporate Social Responsibility" section of our corporate website to uphold the rights of stakeholders by periodically assessing stakeholder categories, establishing designated units and communication channels for stakeholders, using appropriate communication measures to understand the reasonable expectations and needs of stakeholders, and providing fitting responses to major CSR issues of concern. Communication with stakeholders and handling of major disputes for 2022 were reported to the Corporation's 27th meeting of the 9th Board on June 15 2022, and will continue to be reported to the Board on an annual basis.
  • For more comprehensive information on stakeholders, please refer to the "Stakeholders Communications" sub-section in the "Corporate Social Responsibility" section of our corporate website and the "Material Issues and Stakeholders" section in our CSR report.

6. Does the company appoint a professional shareholder service agency to deal with shareholder affairs?

Abstract Illustration：
  • The Corporation has appointed Fubon Securities Transfer Agency Department as our professional shareholder service agency.

7. Information Disclosure

Abstract Illustration：
  • The Corporation's corporate website has an "Investor Relations" section and a "Corporate Governance" section which both disclose information regarding the Corporation's finances, business matters, and corporate governance. This information is updated periodically and in a timely manner.

Abstract Illustration：
  • When disclosing information, the Corporation not only publishes the information on our annual reports and prospectuses in accordance with law, but also publicly discloses and files the information to websites designated by governing authorities and on our corporate website. Additionally, information is also disclosed in the following ways:
    1. The Corporation has established an English language website https://en.thsrc.com.tw/ to disclose important information on the Corporation's finances, business matters, and corporate governance.
    2. The Corporation has implemented a spokesperson system.
    3. The Corporation's Investor Conference notices and related information are disclosed on our corporate website.

Abstract Illustration：
  • The Corporation publicly disclosed and filed our financial report for 2021 on February 23, 2022, and our financial reports for the first, second, and third quarters of 2022 and monthly operational status reports for the same year were publicly disclosed and filed prior to the time limits set by regulations.

8. Is there any other important information to facilitate a better understanding of the company's corporate governance practices (e.g., including but not limited to employee rights, employee wellness, investor relations, supplier relations, rights of stakeholders, directors' and supervisors' training records, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, and purchasing insurance for directors and supervisors)?

Abstract Illustration：
  • Since going public, the Corporation has been ranked among the top 5% of publicly listed companies by the TWSE Corporate Governance Evaluations for six consecutive years (from 2017 to 2022).
  • The Corporation was awarded a "Platinum" certification by the Taiwan Corporate Governance Association under the CG6012 (2019) Corporate Governance System Assessment on July 28, 2020, the certification period being from July 9, 2020 to July 8, 2022. The Corporation previously participated in the CG6011 (2017) Corporate Governance System Assessment and was awarded an "Excellent" certification.
  • The Corporation continued to be included in the "FTSE4Good TIP Taiwan ESG Index" and was granted the right to use the "FTSE4Good TIP Taiwan ESG Index exclusive label" from December 18, 2022 to June 16, 2023, highlighting this recognition of our sustainability actions relating to E (Environment), S (Society), and G (Corporate Governance).
  • The Corporation participated in the "2020 13th TCSA Award" hosted by the Taiwan Institute for Sustainable Energy and received the "Top Ten Most Prestigious Sustainability Awards (Service Industry Category)" and the "Platinum Corporate Sustainability Report Award" in November 2020.
  • The Corporation was awarded first place in Outstanding Enterprises by the 18th National Brand Yushan Awards in October 2021.
  • The Corporation's "Charter of the Corporate Governance & Nominating Committee" stipulates succession plans for Board of Director members. In order to pass on the professionalism and experiences of our Board members, the Corporation has organized plans for director successors through a variety of appropriate methods and has placed a list of director candidates in our talent pool database; nominees are submitted to the Board for review when appropriate and serve as a reference for the Board to nominate director candidates. For more information, please refer to the "Succession Plan for Board of Director Members" page under "Board of Directors" sub-section in the "Corporate Governance" section of our corporate website. Additionally, the Corporation plans annual training courses for directors in accordance with changes in external and internal environmental conditions and development needs to enhance the professional knowledge of new and returning directors and strengthen Board capabilities.
  • The Corporation has also established succession plans for senior management in accordance with the "Succession Plan for Senior Management" passed by the 33rd meeting of the 8th Board on December 18, 2019, which is implemented through five stages (identification of key skills, availability of current talent, development of successors, evaluation of successors, and approval of management personnel), the purpose being to ensure sustainable management and growth, and establish a succession system for important management personnel to pass on the professionalism and experiences of important management personnel. In order to cultivate successors, the Corporation will conduct evaluations of management skills for all department managers, and will conduct management training courses once evaluations have concluded. Depending on availability of important management positions, operational goals, and organizational needs, these will be submitted to the Board for review following approval from the Chairman. For more information, please refer to the "Succession Plan for Senior Management" page under "Corporation Governance and Organizational Structure" sub-section in the "Corporate Governance" section of our corporate website.
  • The Corporation's Guidelines for Corporate Governance stipulate that the Corporation shall devote attention to public policy, economic development, consumer rights and interests, community concerns, environmental protection and sanitation, public safety, and other public interest issues, to enhance the Corporation's image, and to faithfully fulfill its social responsibilities. The Corporation participates in social contribution through a number of measures, for example through subsidies to preserve jacanas and other wildlife, providing care to communities alongside the HSR line, and support of other environmental hygiene and public policies.
  • The Corporation has established "Ethical Corporate Management Best Practice Principles," "Code of Ethical Conduct," "Code of Conduct," "Regulation of Whistle-Blowing System for Unlawful, Unethical Conduct and Dishonesty Behavior," "Regulations for Management of the Prevention of Insider Trading," "Reward and Discipline Regulation," "Grievance Regulation," and "Procurement Staff Ethical Regulation," which not only govern the ethical standards and codes of conduct for Corporation personnel when carrying out their duties, but also ensure that the corporate activities of the Corporation do not interfere with social contributions, thus maintaining the rights of the Corporation and our shareholders, fulfilling our corporate social responsibilities, and helping our stakeholders to understand relevant regulations.
  • The Corporation has established an Occupational Safety and Health Policy and is committed to compliance with government health and safety laws, regulations, and procedures to ensure the safety of passengers, employees, and other members of the public. We periodically conduct employee health checks, promote health enhancing activities, and implement health management every year to enhance the physical and mental health of employees.
  • The Corporation has established a Safety Policy, relevant procedures, and implementation results, which are regularly reviewed each year to further our goal of continued improvements to safety. All employees have to undergo training in accordance with our safety regulations and operating procedures so that they can continue to present and be equipped with attention to and recognition of safety measures when carrying out daily tasks. Our contractors are carefully selected, supervised, and managed to ensure that their operations fulfill the Corporation's safety goals.
  • The Corporation is committed to appropriate utilization of internationally recognized risk assessments and safety management methods in our safety management system to actualize control and minimize hazards. We are committed to maintaining the highest quality control standards and are active in exercising safety management policies as we strive to implement various health and safety measures.
  • The Corporation has established a Supply Chain Management Policy which states that when collaborating with suppliers, we should gradually integrate environmental, social, and corporate governance needs into our supplier regulations in hopes of creating a more sustainable collaboration with our suppliers. Our management policies are disclosed on our corporate website.
  • Since 2004, the Corporation has complied with the "Guidelines for Corporate Governance" approved by the shareholders' meeting and taken out liability insurance for all directors, supervisors, and managers with respect to their liability under the law for their actions when exercising their duties. D&O liability insurance policies for 2023 and 2024 were approved by the 30th meeting of the 9th Board on September 14, 2022 and the 5th meeting of the 10th Board on September 13, 2023. Insurance application procedures have since been completed, and the total insurance amount came to NT$ 0.9 billion. Additionally, the insurance amount for environmental pollution defense costs came to NT$ 3 million.
  • The continued education of all current Corporation directors complies with the number of training hours stipulated by the Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies. In 2023, Corporation directors underwent a total of 132 hours of training. The detailed is in Director training status.

9. Please explain the improvements which have been made in accordance with the results of the Corporate Governance Evaluation System released by the Corporate Governance Center, Taiwan Stock Exchange, and provide the priority enhancement measures:

  • The Corporation was ranked among the top 5% listed companies in the 9th Corporate Governance Evaluations (2022). We list improvements to unachieved evaluation items below:
    Item Evaluation Indicators Improvements
    1.17 Does the company have no government agency or single legal entity and its subsidiaries accounting for more than one-third of the seats on the board of directors? [If the company does not have a government, legal person or its representative as a director, one additional point will be added to the total score. ] The Corporation's board of directors currently does not have any government agency or single legal entity or its subsidiaries accounting for more than one-third of the seats on the board of directors. However, not all directors are natural persons, so they do not meet the bonus requirements for this indicator.
    2.6 Did the company's board members include at least one female director?
    [If directors of each gender accounted for at least 1/3 of all of the directors, one additional point will be added to the total score. ]    		 The Corporation's 9th Board currently includes two female directors but no female independent directors. In future, we will seek to increase the number of female directors so as to achieve gender equality and raise the ratio of female directors and independent directors.
    2.7 Did the company's independent directors reached one-half or more of all of the directorse. The Corporation's 9th Board has four independent directors, but does not reached one-half or more of all of the directorse.
    2.21 Has the company appointed a company secretary and disclosed on the company's website and in its annual report the scope of the company secretary's authority, the key tasks carried out by the company secretary that fiscal year, and the status of the company secretary's continuing education? [If the post of company secretary is filled by a person not serving in any other position in the company, one additional point will be added to the total score. ] The Corporation has appointed the Head of Secretariat Division under the Board of Directors as our corporate governance officer. The corporate governance officer holds other concurrent positions within the Corporation, and therefore does not fulfill the criteria for additional points.
    3.8 Did the company voluntarily disclose its financial forecast quarterly, without having any corrections ordered by the competent authority or having any demerits imposed by the TWSE or TPEx? The Corporation currently has no plans to publish financial forecast reports for the fourth quarter, and will discuss the necessity of disclosing financial forecast reports when appropriate.
    3.21 Did the company's annual report disclose the individual remuneration details of the general manager (chief executive officer) and assistant general manager(s)? The Corporation temporarily maintains summary disclosures for remuneration of our president and managers ranking above vice president.

Implementation of board diversification policy

Director Name /
Core Diversification Items		 Composition Professional Background and Capabilities
Nationality Gender Finance and Accounting Legal Practice Marketing, Technology Operational Management Leadership and Decision-Making Industry Knowledge and Operational Judgment Crisis Management and International Outlook
Yao-Chung Chiang R.O.C. M     ✔ ✔ ✔ ✔ ✔
Kenneth Huang-Chuan Chiu R.O.C. M   ✔     ✔   ✔
Duei Tsai R.O.C. M         ✔ ✔ ✔
Ming-Teh Wang R.O.C. M       ✔ ✔ ✔ ✔
Huan-Tung Tseng R.O.C. M ✔       ✔ ✔ ✔
Yung-Cheng(Rex) Lai R.O.C. M         ✔ ✔ ✔
Cheng-Chung Young R.O.C. M     ✔ ✔ ✔ ✔ ✔
Qing-Hong Pan R.O.C. M ✔       ✔   ✔
Yu-Fen Hung R.O.C. F ✔   ✔ ✔ ✔ ✔ ✔
Wei-Cheng Hsieh R.O.C. M     ✔ ✔ ✔ ✔ ✔
Chien-Chih Hwang R.O.C. M     ✔ ✔ ✔ ✔ ✔
Ming-Jou Yang R.O.C. M     ✔ ✔ ✔ ✔ ✔
Mao-Hsiung Huang R.O.C. M     ✔ ✔ ✔ ✔ ✔
Shien-Quey Kao R.O.C. F ✔       ✔   ✔
Chumin Hong R.O.C. M     ✔ ✔ ✔ ✔ ✔

Independence assessment indicators of CPA

No. Evaluation Item Evaluation Results Passed Independence Assessment
1 As of the most recent audit, there have been no instances where CPA remained unchanged for 7 years, or where CPA was reassigned to the Corporation within 2 years. Yes Yes
2 CPA has no direct or indirect major financial stake in the Corporation. Yes Yes
3 CPA is not involved in any financing or financial guarantee agreements involving the Corporation or Corporation directors. Yes Yes
4 CPA does not have any potential employment relationship with the Corporation. Yes Yes
5 Accounting firm of CPA is not overly reliant on funds from any single client, including the Corporation. Yes Yes
6 CPA and members of the audit team are not currently serving as Corporation directors, managers, or in positions that have major impact on Corporation audits, and have not done so over the past 2 years. Yes Yes
7 Non-audit services provided by CPA to the Corporation have no direct impact on the major items of audit services provided. Yes Yes
8 CPA does not promote or sell shares or other securities issued by the Corporation. Yes Yes
9 CPA is not representing the Corporation in litigation of a third party or other disputes. Yes Yes
10 CPA and members of the audit team have no familial relationships with directors, managers, or people in positions that have major impact on Corporation audits at the Corporation. Yes Yes
11 CPA has not served as company director, manager, or in positions that have major impact on Corporation audits within 1 year of termination. Yes Yes
12 The Corporation has not requested that members of the audit team accept improper accounting practices or improper disclosures on financial statements made by the Corporation. Yes Yes
13 The Corporation has not pressured accountants and facilitated improper reduction of audit duties in order to reduce audit fees. Yes Yes
14 CPA is not involved in decision-making managerial duties at the Corporation. Yes Yes
Letter of declaration from PWC
Important resolutions of Shareholders' Meetings and implementation status in 2023
THSRC Intellectual Property Management Plan