Corporate Governance Practice

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Item Current practice
Shareholding structure and shareholders’ interests Handling of shareholders' suggestions and disputes The spokesperson or Secretarial Division handles all non-legal issues; the legal division handles all legal issues.
Identification of major shareholders and investors with controlling interest The Secretarial Division submits a monthly report listing the shareholdings of directors, managers and major shareholders (over 10% shareholding) to the authorities.
Risk control mechanisms and firewalls between the Company and its subsidiaries The Company’s internal control system has established “Rules and Procedures on Conducting Transactions between Group Companies and Related Parties” and “Rules and Procedures on Monitoring Subsidiaries” as risk control mechanisms.
Board of directors and its responsibilities Independent directors The Company's board includes four independent directors.
Board performance evaluation

The Company passed the Rules and Procedures on Evaluating the Performance of the Board and Functional Committees to enhance efficiency, under which the Remuneration and Nomination Committee conducts an analysis and submits a report on proposed improvements to the board after an annual performance evaluation and uses it as a reference for remuneration and re- appointment. The performance evaluation was completed through self-assessments by board members (Assessment Report), which covered evaluations of the performance of the board, board members and functional committees. Both the board and committees performed well, with an average rating of over 4.96, with 5 being the highest score.

The Company appointed the Taiwan Corporate Governance Association (TCGA) to conduct its board evaluation in January 2021. The evaluation, covering the period from March 1, 2020 to February 28, 2021, focused on eight aspects: composition, guidelines, authorization, supervision, communication, internal controls and risks, self-discipline and support systems. The report was issued on May 3, 2021, and presented to the Board of Directors by the Remuneration and Nomination Committee on August 5, 2021. The results of the evaluation and proposed countermeasures are as follows:

A. Comments：

(a)The Company values having a diverse board of directors, with members who are selected based not only on the Company’s current needs, but also their capabilities in advancing its future development. Independent members take up more than half of the board seats. Aside from attending scheduled meetings, board members take an active role in the Company’s various business operations and interact closely with management.

(b)To lead the Company’s transformation, the board appointed a president with a nontraditional telecommunications industry background two years ago. The president’s performance is evaluated by the Remuneration and Nomination Committee using the Balanced scorecard model, taking into consideration the Company’s short, medium and long-term goals.

(c)The Company again appointed an independent evaluator to assess board performance. It took actions on all recommendations from the previous evaluation and disclosed relevant information in the annual report and on its corporate website. This showed the board’s proactive approach to enhancing corporate governance and the effectiveness of the board.

(d)To manage potential risks related to the Company’s transformation, the chairman acts as the convener and supervisor of the Risk Management Committee. The committee holds a meeting at least every six months and reports its operations to the board at least once a year.

B. Suggestions/Implementation:

(a) As the Company pursues a new growth curve with a business model that differs from its existing position as a traditional telecommunications company, it is recommended that the board should continuously strengthen risk controls, regularly review the effectiveness of the internal control system and make adjustments accordingly. The Company has executed the suggestions.

(b)It is recommended that the Company set up a "Nomination Committee”. The functions of the "Nomination Committee" were incorporated into the Remuneration and Nomination Committee in 2018.
Periodic review of CPA's independence

The Audit Committee is authorized to evaluate the independence of the CPAs according to the “Bulletin of Norm of Professional Ethics for Certified Public Accountant of the Republic of China” and “Corporate Governance Best Practice Principles for TWSE/GTSM Listed Companies” on a quarterly basis based on the following criteria:

  • The CPAs neither serve as a director/supervisor /manager nor hold a position with major influence in the Company or its subsidiaries. Neither are they related parties nor do they have direct or indirect interests that conflict with the Company’s.
  • The Company has not engaged the services of the same CPA for seven consecutive years.
  • The CPAs should provide the Company with a Declaration of Independence on a periodic basis. All CPAs engaged by the Company have fulfilled the aforementioned criteria.
Communication channels with shareholders The spokesperson and the mailboxes of spokesperson and the Audit Committee serve as the main communication channels between the Company and shareholders.
Information disclosure Disclosure of information on financial status, operations and corporate governance Disclosure of financial-related and corporate governance information is posted periodically on the Company’s website.
Other ways of disclosing information Aside from having a spokesperson, the Company has a dedicated department, the Investor Relations Division, to handle information disclosure. It also has an English website and a team working on gathering and releasing relevant Company information.
Functional committees An Audit Committee and a Remuneration and Nomination Committee were set up under the board of directors. Their operations are detailed in the Company's annual report.