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ITEM | IMPLEMENTATION STATUS | DIFFERENCE FROM CORPORATE GOVERNANCE PRACTICE PRINCIPLES FOR TWSE/GTSM-LISTED COMPANIES AND REASONS | ||
|---|---|---|---|---|
| YES | NO | DESCRIPTION | ||
Does the Company set and disclose corporate governance code of practice according to corporate governance practice principles for TWSE/GTSM-Listed companies? | v | The Company has set a corporate governance code of practice, for the protection of shareholders’ rights, to strengthen the functions of the BOD, respect the interests of stakeholders, enhance the transparency of information and relevant rules. Detailed information can be found on the Company’s website. | No difference | |
Equity structure and shareholder rights. | ||||
Has the Company set internal operating procedures to deal with shareholder proposals, doubts, disputes and litigation matters, and does it implement these in accordance with its procedures? | v | Establishing an Investor Relations Department to deal with shareholders' suggestions or disputes. | No difference | |
Does the Company have a list of those who ultimately control the major shareholders of the Company? | v | The Company shall keep track of the shareholdings of directors, managers, and major shareholders holding 10% or more of the shares, and shall disclose such information as required by law. | ||
How does the Company establish its risk management mechanism and firewalls involving related enterprises? | v | The Company shall comply with regulations such as the "Regulations Governing Operations, Business, and Financial Dealings with Specific Companies and Group Companies", "Regulations Governing Finance and Business Matters Between Related Parties", "Regulations Governing the Supervision of Subsidiaries", “Procedures for Endorsement and Guarantee”, and "Procedures for Loans to Others" to establish appropriate risk control mechanisms and firewalls. Business relations between affiliated enterprises have been evaluated by an independent third party to prevent violations of unlawful transactions. | ||
Has the Company set internal standards to prohibit the use of undisclosed insider information to trade securities on the market? | v | The Company has established the "Regulations Governing the Prevention of Insider Trading" and " Procedures for Handling Material Inside Information ", which prohibit insiders from using undisclosed information in the market to trade securities, 30 days prior to the announcement date and the Company's shares or other equity securities during closed period of 15 days prior to the publication date of quarterly financial statements. Directors of the Company may not trade the Company's stock or other marketable securities of an equity nature from the moment they learn of the material news of the Company before the investor conference to the next day after the investor conference in order to prevent insider trading. | ||
Organization and responsibilities of the Board of Directors | ||||
Has the Company established a diversification policy or specific goal for the composition of its Board of Directors and has it been implemented accordingly? | v | The Company has established the "Corporate Governance Best Practice Principles" to formulate the diversity policy for the board of directors, as well as specific management goals and implement them. The company’s BOD (including independent directors) has adopted a nomination system. The Company's Board of Directors is diverse in terms of age, gender and industry experience in manufacturing, brand distribution, technology research and financial investment, in order to implement the diversity policy and build the Company's board structure. There are two directors who are employees of the Company, accounting for 28.57%; independent directors account for 57.14%; three independent directors have served for less than three years, and one has served for more than three years; five directors are aged between 61 and 70, and two are aged between 71 and 80. The Company attaches great importance to gender equality in the Board of Directors. Currently, there are two female directors, accounting for 28.57%, which is higher than the standard of one female director stipulated in the "Action Plan for Sustainable Development of Listed Companies" promoted by the Financial Supervisory Commission. The Company's target ratio for female directors is over 30%. One female director will be added during the board re-election in 2025. By then, the number of female directors will reach one third, further promoting gender diversity on the Board of Directors and achieving the Company's sustainable development goals. | No difference | |
Has the Company establish other functional committees besides the Compensation Committee and Audit Committee? | v | The Company has established the Audit Committee, Remuneration Committee and Corporate Governance and Nomination Committee, as well as Sustainability Committee, Employee Welfare Committee and Labor Retirement Reserve Supervision Committee. Other functional committees will be established as needed in the future. | ||
Has the Company set performance assessment rules and methods for the BOD and does it perform this evaluation every year? | v | The Company has established the "Regulations governing the performance evaluation of the Board of Directors and functional committees" on November 12, 2020. Performance evaluations are conducted every year at least once every three years by external professional independent institutions or external teams of experts and scholars, and clearly specify measurement aspects of each functional committees. In the Board of Directors' internal performance evaluation in the most recent year, the self-evaluation of the directors was conducted using the internal questionnaire method.
The items for the self- evaluation of the board of directors include the following aspects: 1. The items for the self- evaluation of the board of directors include the following aspects: (1) The degree of participation in the company's operations. (2) Improvement of board decision quality. (3) The composition and structure of the board of directors. (4) The selection and continuing education of directors. (5) Internal control. 2. The items for the self- evaluation of the individual directors include the following aspects: (1) Understanding of the Company’s goals and mission. (2) Awareness of directors' duties. (3) The degree of participation in the company's operations. (4) Internal relationship management and communication. (5) Continuing education of directors. (6) Internal control. 3. The items for the self- evaluation of the functional committees include the following aspects: (1) The degree of participation in the company's operations. (2) Awareness of the functional committees’ responsibilities. (3) Improvement of board decision quality. (4) Functional committee composition and member selection. (5) Internal control. 4. The self-evaluation items of the Board of Directors of the Company include the following five aspects: (1) The degree of participation in the company's operations. (2) Improvement of board decision quality. (3) The composition and structure of the board of directors. (4) The selection and continuing education of directors. (5) Internal control. 5. The items for the self- evaluation of the individual directors include the following aspects: (1) Understanding of the Company’s goals and mission. (2) Awareness of directors' duties. (3) The degree of participation in the company's operations. (4) Internal relationship management and communication. (5) Continuing education of directors. (6) Internal control. 6. The items for the self- evaluation of the functional committees include the following aspects: (1) The degree of participation in the company's operations. (2) Awareness of the functional committees’ responsibilities. (3) Improvement of board decision quality. (4) Functional committee composition and member selection. (5) Internal control. Evaluation Results:
The results of the performance evaluation of the Board of Directors and the functional committees were submitted to the Board of Directors and the Corporate Governance and Nomination Committee on March 14, 2025, and will be used as a reference for the remuneration and nomination of individual directors. The results of the 2024 Board of Directors' performance evaluation are as follows (out of 5 points): 1. The overall average score of the self-evaluation of the Board of Directors was 4.97; the overall average score of the self-evaluation of directors was 4.94. The overall performance evaluation results of the Board of Directors are that the board is operating effectively. 2. The overall average score for the Audit and Risk Committee's self-assessment was 4.99. 3. The overall average score for the Remuneration Committee's self-evaluation was 4.77. 4. The overall average score of the Corporate Governance and Nomination Committee's self-evaluation was 4.99 | ||
Does regularly evaluate the independence of the CPA? | v | The Company's board of directors regularly evaluates the independence and suitability of the CPAs. When discussing the independence and suitability of the CPAs appointed by the Board of Directors, the recommended CPAs are required to submit their resumes, a statement of independence from each CPAs (Not in violation of the Bulletin of the Code of Professional Ethics No. 10), "Guidelines on the Preparation of Audit Quality Indicators (AQIs)" (including 13 indicators from five major aspects: professionalism, independence, quality control, supervision, and innovation ability) for evaluation by the Board of Directors. Reviewed and approved by the Company's Board of Directors on March 14, 2025, all CPAs meet the Company's independence and suitability evaluation standards (there is no direct or significant indirect financial interest relationship with an audit client, no excessive reliance on a single client for the remuneration source, has a significant and close business relationship with an audit client, etc.) | ||
Whether the listed company appoints competent and appropriate corporate governance personnel, and appoints a corporate governance officer to be responsible for corporate governance-related affairs (including but not limited to providing directors and supervisors with the information needed to perform their duties, assisting directors and supervisors in compliance laws, handling matters related to the Board of Directors and Shareholders' Meetings in accordance with the law, and preparing minutes of the Board of Directors and Shareholders' meetings) ? | v | In order to implement corporate governance, the Company urges the Board of Directors to exercise their due functions, protects the rights and interests of investors, and allocates competent and appropriate corporate governance personnel. On May 14, 2019, the Board of Directors resolved to designate Chief Financial Officer Huang Te-Tsai as the corporate governance officer to protect the rights and interests of shareholders and strengthen the functions of the Board of Directors. The Chief Financial Officer, Huang Teh-Tsai, has more than 20 years of experience as a financial officer in a public company. Primary responsibilities include the following: 1. Assist Independent and Non-Independent Directors to carry out their duties pursuant to the Law: (1) Notify the board 7 days in advance before Board of Director meetings, and if matters are subject to abstaining due to conflicts of interest. (2) Registration of the Shareholders’ Meeting dates, and notification dates according to relevant laws. 2. Creation of board and shareholder meeting minutes - 20 days after the meeting according the relevant regulations. 3. Assist Directors in assuming the position: According to the Company’s specific industry, and the profession and educational backgrounds of the Director, assist the Director in formulating an advancement plan and arrange relevant classes 4. Assist in production of materials to assist the Board of Directors to carry out their duties: (1) Regularly inform the Board of Directors with relevant information regarding updates rules and regulations of Company’s industry and relevant corporate governance updates. (2) Review relevant information confidentiality levels and provide the Board of Directors the necessary information, maintain the Board and Managements communication channels. (3) Meeting with internal and external auditors to maintain Independent Director’s compliance with the Company’s corporate governance regulations, and if needed, organize relevant meetings. 5. Assist in the Board’s compliance with Laws: (1) Report to the Board regarding the Company’s governance situation, and make sure the Company’s Shareholders’ and Board of Directors’ Meetings comply with relevant laws and corporate governance practices. (2) Assist and remind Directors regarding the importance of adherence to laws and regulations for resolutions within meetings, and provide suggestions in the case where such laws and regulations are infringed upon. (3) Examination of Directors’ Meeting’s resolutions post-meeting, and the release of such information. Confirming the resolutions and relevant information are according to law and correct, to protect the integrity of investors’ trading information. 6. Report to the Board of Directors on the results of its review of whether the qualifications of independent directors at the time of nomination, election and during their term of office comply with relevant laws and regulations: On March 14, 2025, the Board of Directors reported the professional qualifications and independence of the current independent directors, and all independent directors comply with relevant regulations. 7. Matters with regard to the change of directors: Inform directors of related matters to pay attention to, release material messages as required, and handle matters related to the declaration of directors' onboarding changes and identification of changes in the registration of directors on the Market Observation Post System. 8. The continuing education of the corporate governance officer. (please refer to the table below for specific case studies) | No difference | |
Does the Company create channels for communication with stakeholders (including but not limited to shareholders, employees, customers and suppliers), set up a stakeholder section on the Company's website, and appropriately respond to important corporate social concerns of stakeholders responsibility issues? | v | The Company's communication with various stakeholders was reported to the Board of Directors on May 11, 2024. The Company's official website has set up a "Stakeholders Section" with the contact information of spokespersons and various relevant business departments to respond to stakeholders, including but not limited to important CSR issues of concern to shareholders, employees, customers, and suppliers. Please refer to the official website of the Compan https://www.honhai.com/zh-tw/CSR/stake-holder. | No difference | |
Has the company appointed a professional stock affairs agency for shareholders affairs? | v | The Company authorized “Grand Fortune Securities Co., Ltd.” as stock service agency to handle shareholder transactions. | No difference | |
Disclosure of information | ||||
Does the Company set up website to disclose financial operations and corporate governance information? | v | The Company has placed financial and corporate governance information of each year on its website. | No difference | |
Has the Company adopted other measures (such as English website, a designated person responsible for the collection and disclosure of information, implementation of the spokesman system, the legal entities announcements uploaded to website, etc.) to disclose information? | v | The Company has an English website and a spokesperson, investor relations department and shareholder services department to disclose relevant information. The Company issued global depository receipts (GDR) in London, and discloses company information on its website according to the provisions of the relevant rules of the London Stock Exchange. | ||
Does the Company announce and report the annual financial statements within two months after the end of the fiscal year, and announce and report the first, second, and third quarter financial statements as well as the operating status of each month before the prescribed deadline? | v | The Company's annual financial report and the first, second, and third quarter financial reports are all announced and declared within the deadlines set by the law. The Company's revenue is announced on the 5th day of the next month starting in June 2019. | ||
Does the Company have other important information for better understanding the Company’s corporate governance system (including but not limited to interests and rights of employees, care for employees, relation with investors, relation with suppliers, relation with interested parties, continuing education of directors and supervisors, execution of risk management policies and risk measuring standards, execution of customer policies, liability insurance for the Company’s directors and supervisors)? | v | (1) Interests and rights of employees: The Company has always treated employees in good faith to ensure their legal interests and rights in accordance with the Labor Standards Act. (2) Care for employees: by adopting a welfare system and good education and training, a relationship of mutual trust has been established with employees. Such as: employee benefits and community cultural and recreational activities and entertainment, health clinic grants and medical advice, the Company also provides staff quarters, rented accommodations for staff, accommodation care, parking lots, etc. (3) Investor Relations: The Investor Relations Department was set up to specifically deal with shareholder proposals. (4) Supplier Relationship: good relations with suppliers are maintained at all times. (5) Relations with stakeholders: stakeholders shall communicate with the Company and put forward proposals to protect their due legal rights and interests. (6) Continuing education of directors and supervisors: The Company’s directors are qualified with industrial professional knowledge and practice experience in operation management. Please refer to the following table for more information on continuing education (please refer to the table below for specific case studies). (7) Execution of risk management policy and risk measuring standards: various internal regulations are established legally for various risk management and evaluation. (8) Execution of customer policies: stable and good relations with customers are maintained with the view of creating profits. (9) Liability insurance purchased by the Company for directors: In order to protect directors from personal liability and financial losses caused by third-party litigation due to the performance of their duties, the Company has purchased liability insurance for directors, reported the insurance status in most recent year to the Board of Directors on March 14, 2025. The insurance period is from January 15, 2025 to January 15, 2026. | No difference | |
Please specify the measures adopted by the Company to improve the items listed in the corporate governance review result from Taiwan Stock Exchange's Corporate Governance Center and the improvement plans for items yet to be improved (I) The Company will discuss the unscored matters for the follow-up improvement directions. (II) The Company's priorities and measures for corporate governance are as follows: 1. The intellectual property management plan has introduced Taiwan Intellectual Property Management System (TIPS),ISO56005 or similar intellectual property management system standards, and has been verified or audited by a third party. | ||||
Continuing education of Directors
TITLE | NAME | DATE | ORGANIZER | COURSE | HOURS |
|---|---|---|---|---|---|
Chairman | Liu, Young-Way | 2024/11/22 | Greater China Financial and Economic Development Association | Discussion of Taiwanese Firms' operating and M&A strategy from the perspective of global political and economic situation | 3HOURS |
2024/11/22 | Corporate Governance and Securities Regulations-Executives of the listed companies with the understanding of supervision from governmental authority | 3HOURS | |||
Corporate Director representative | Christina Y. Liu | 2024/11/22 | Greater China Financial and Economic Development Association | Advanced Trends in Circular Economy and Sustainable Business Practices | 3HOURS |
2024/12/5 | The Prospect for Global and Taiwan's Economy | 3HOURS | |||
Corporate Director representative | Wang, Charng-yang | 2024/8/28 | Greater China Financial and Economic Development Association | Digital Marketing Strategies | 3HOURS |
2024/9/19 | Corporate Finance Decision: Behavioral Perspective | 3HOURS | |||
Independent Director | James Wang | 2024/8/20 | Taiwan Corporate Governance Association | How to Reduce The Risk of Insider Trading | 3HOURS |
2024/8/20 | Trends in digital technology and artificial intelligence and risk management | 3HOURS | |||
Independent Director | Liu ,Len-yu | 2024/3/20 | Taiwan Corporate Governance Association | Seminar on Strengthening Resilience and Sustainability Governance | 2HOURS |
2024/05/22 | Co-Creating the Green Ecosystem : Megatrend and Vision - TCX Operations and Prospects | 1HOURS | |||
2024/7/30 | The Vision and Megatrend of ESG Evaluation | 1HOURS | |||
2024/10/16 | Thriving for Talent Edge via Focusing on Governance | 3HOURS | |||
2024/12/19 | Activating Asia: Key Trends in Corporate Governance across Asia | 1HOURS | |||
Independent Director | Hwang, Tsing- yuan | 2024/6/7 | Taiwan Corporate Governance Association | The latest ESG laws and regulations, trends, impacts and responses | 3HOURS |
2024/11/1 | Securities and Futures Institute | Digital Reengineering Creates a New Future for AI - Sharing of Generative AI Application Cases | 3HOURS | ||
Independent Director | Chen, Yue-min | 2024/7/15 | Taipei Foundation of Finance | Sustainable Finance | 3HOURS |
2024/7/16 | Taiwan Corporate Governance Association | Zero Carbon Strategy: Essential ESG and Energy Practices for Businesses | 3HOURS |
Continuing education of company executives
TITLE | NAME | DATE | ORGANIZER | COURSE | HOURS |
|---|---|---|---|---|---|
Corporate Governance Manager | Huang, Teh-Tsai | 2024/11/22 | Greater China Financial and Economic Development Association | Corporate Governance and Securities Regulations-Executives of the listed companies with the understanding of supervision from governmental authority | 3HOURS |
2024/11/22 | Discussion of Taiwanese Firms' operating and M&A strategy from the perspective of global political and economic situation | 3HOURS | |||
2024/11/27 | Analysis of practical disputes in the board of directors | 3HOURS | |||
2024/12/5 | How to Ensure Cybersecurity for Safety to Reduce the Risks in Manufacturing and Operation | 3HOURS |
Preventing insider trading education promotion
The Company hosts educational awareness training pertaining to "Prevention of Insider Trading" and relevant regulations at least once a year. Newly appointed directors and managers will be scheduled for these courses respectively. The Company's current directors and management has undertaken the aforementioned education training on December 3th, 2020. The course includes non-disclosure related issues regarding material information, the definition of insider trading, and case studies.
Succession Planning for Board Members and Key Management
Selection of Directors
For many years, the Company has been operating with high standards of corporate governance and corporate succession planning. In 1996, the independent director system was introduced, the Remuneration Committee was established in 2011, and the Audit Committee was established in 2016. In order to avoid compromising independence of independent directors, the term of office of independent directors does not exceed three terms. Optimization of the Board of Directors shall be carried out step by step by a gradual process.
In addition to the professional background and skills, the Directors of the Company should also have expertise in the company’s business and planning. To enhance the professionalism of the Board Members and continue to improve, Directors should consider the scope beyond the professional capabilities. Director courses should be selected in relation to the nature of the Company’s industry in finance, risk management, sales, business, legal affairs, accounting, corporate social responsibility, internal control systems or financial reporting responsibilities, to ensure all Board Members have a considerable degree of industry knowledge and attain new knowledge.
The company launched the Chairman’s succession plan in 2019 to cultivate the Company’s internal senior managers to join the Board of Directors and familiarize them with the operation of the Board of Directors, and expand their participation in the Group’s operating units, work rotation, and expatriate experience. After the full re-election of Directors in June 2019, Chairmanship of Terry Gou was successfully handed over to Liu Young-Way, the general manager of the company's S Group, and the founder Terry Gou served as a director of the company.
Succession Planning for Key Management
The Company emphasizes that in addition to having certain professional skills, high-level managers must also maintain a consistently high level of ethics and integrity, with the concept of "What needs to be done, do as promised". Therefore, development of their hard and soft knowledge requires long-term cultivation and execution. The Company’s senior managers are responsible for related businesses within the organization, and use job rotation and assignments, one-on-one experience transfer and coaching; and through the management committee, deepen the understanding of the business philosophy and the cultivation of various operation and management skills were used to select key members of the succession echelon. On January 1, 2020, You, Xiang-fu; Lu Fang-ming; Chien, Yi-bin; and Chen Wei stepped down as managers. Wang, Charng-yang; Chiang, Chih-siung; Lin, Chung-cheng; and Chu, Cheng-qing stepped in as managers of the Business Groups.
In response to the Group’s organizational development and growth momentum, the Company will not only externally recruit outstanding high-level managers, but also continue to actively cultivate potential mid-level and high-level managers internally, strengthen individual counseling and work exchanges, and provide job rotation and assignment plans when appropriate. Enabling the selection of all-round talent, resulting in a targeted strengthening of the future management team.