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    Corporate Governance

    Implementation of Corporate Governance Practices

    Assessment Item Status Non-compliance and Reasons
    Yes No Description
    1. Does the Company follow “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” to establish and disclose its corporate governance practices? V The Company has established “Guidelines on Corporate Governance” in order to enhance its performance in corporate governance, secure shareholders’ rights, improve the performance of the Board, respect stakeholder’s right and enhance information transparency. None
    2. Ownership structure and shareholders’ rights
    (1) Does the Company have internal operation procedures to handle shareholders’ suggestions, concerns, disputes and litigations? If yes, has these procedures been implemented accordingly? V (1) The Company has spokesperson, deputy spokesperson and departments such as investor relation, shareholder service and legal to handle shareholders’ suggestions or complaints. None
    (2) Does the Company possess a list of major shareholders and ultimate owners of these major shareholders? V (2) Pursuant to Article 25 of the Securities and Exchange Act, the Company has monthly updated the changes in shareholdings of internal parties, including Directors, Supervisors, managers and shareholders with more than 10% shareholdings, at MOPS website designated by Securities and Futures Bureau.
    (3) Does the Company build and execute a risk management system and firewall between itself and affiliates? V (3) In addition to various risk management mechanism already in place, there are Procedures to be followed for operational, business and financial transactions between the Company and its affiliates, for instance, the Procedures for Long-term Investment. They provide guidance for the subsidiaries to establish internal controls in writing, set authorization levels and formulate Procedures for Acquisition or Disposal of Assets, Endorsement and Guarantee, and Lending Funds to Other Parties based on the Company’s corresponding Procedures in order to enforce risk management mechanism on subsidiaries.
    (4) Does the Company have internal rules to prevent insiders from using undisclosed information to trade securities? V

    (4) The Company has established “Procedures for Prevention of Insider Trading” prohibiting insiders from using undisclosed information to trade securities. The Company also holds sessions to inform all relevant personnel of the Procedures to avoid any violations.

    The Company holds advocacy education activities for current directors, supervisors, managers, and employees on "Procedures for Prevention of Insider Trading" and related laws at least once a year; for new directors, supervisors and managers, education and publicity will be arranged after taking office; for new employees, education and publicity will be given during personnel pre-service training.

    Conduct relevant education and publicity for current directors, managers and employees on 2019/04/09, 2019/07/10, and 2019/10/10, covering the scope of internal major information, confidential operations, public operations and violations, and the file will be sent to all directors, managers and employees for reference; the Legal Affair Center will announce the "Confidential Information Protection Policy" every month.
    3. Composition and duties of the Board of Directors
    (1) Has the Company established a diversification policy for the composition of its Board of Directors and has it been implemented accordingly? V (1) A.The Company has formulated the “Code of Practice for Corporate Governance” and the diversification policy is stipulated in Chapter III. Strengthen the Board's Functions.

    B.Board members have diverse backgrounds. The expertise of Board members covers global perspectives, reginal management capabilities, financial management, copper manufacturing, polymer chemical engineering and international business, which shapes a well-structured Board.

    C.Board diversity:
    Diverse core items
    Directors
    Gender Opera-tion Judge-ment Acco-unting and Finan-cial Anal-ysis Manag-ement Crisis Manag-ement Indus-trial Know-ledge Inter-national Perspe-ctive Leader-ship Deci-sion -Making
    Chair-person Qiao Mei Develop-ment Corpora-tion
    Represen-tative: Ta-Wen Sun
    M V V V V V V V V
    Director Qiao Mei Develop-ment Corpora-tion
    Represen-tative: Jun-Yan Jiang
    M V V V V V V V V
    Director Ching-Yi Chang M V V V V V V V V
    Director Fuding Invest-ment Co., Ltd.
    Represen-tative: Re-Zhang Lin
    M V V V V V V V V
    Director Chun-Chi Lin M V V V V V V V V
    Director Fu-Le Lin M V V V V V V V
    Indepen-dent Director Chein-Ming Hsu M V V V V V V V V
    Indepen-dent Director Wen-I Lo M V V V V V V V V
    Indepen-dent Director Shi-Chern Yen M V V V V V
    D. Based on current scale and development, the Company has nine Directors (including three Independent Directors), of which, there are three Directors serving concurrently as managerial officers, three Independent Directors and three outside Directors. Each category accounts for one third of the total number of Directors, which is in compliance with the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies.
    None
    (2) Other than Compensation and Audit Committees which are required by law, does the Company plan to set up other functional Committees? V (2) In addition to the existing Compensation Committee, Audit Committee and Corporate Social Responsibility Committee, the Company plans to establish other functional committees to assist the Board in managing the Company.
    (3) Has the Company established methods to evaluate the performance of its Board of Directors annually? V (3) The Company’s Board of Directors had approved the “Methods for Evaluating Board of Directors’ Performance” on October 23, 2018. Internal assessments on the Board shall be conducted at least once every year and assessments by external institutions shall be carried out every three years when the need arises. Please refer to page 29 to 30 for assessment details. The outcome of 2019 assessment has been submitted to the Board of Directors on February 26, 2020 and is in compliance with the spirit of corporate governance. It also is used as reference for the remuneration and re-election nomination of individual Director.
    (4)  Has the Company periodically evaluate the independence of its CPAs? V (4) The Board annually evaluates the independence of the CPAs and obtains the Declaration of Independence. Once it is confirmed that other than audit and tax fees, there is no financial interests nor business between the Company and the CPAs, and the family members of CPAs do not violate the requirements for independence, the Company would report to the Board. When discussing the independence and engagement of CPAs in the Board meeting, the resume (detailing the CPA’s past and current customers) and independence declaration (he/she did not violate Article 10 of the Bulletins of Professional Ethics Code for CPAs) of each CPA shall be submitted for evaluation.
    Standards for CPA Independence:
    Evaluation Item Evaluation Result Independence Status
    1. Whether the CPAs have remained unchanged for seven years, up till the latest audit?  N Y
    2. Whether the CPAs have significant financial interests in the Company?  N Y
    3. Whether the CPAs have improper relationships with the Company?  N Y
    4. Whether the assistants of CPAs have failed to be honest, fair and independent?  N Y
    5. Whether the CPAs have audited the financial statements of companies where they have served during the previous two years?  N Y
    6. Whether the CPAs allow others to use their credentials?  N Y
    7. Whether the CPAs own shares of the Company or its associates?  N Y
    8. Whether there is any financing between the CPAs and the Company or its associates?  N Y
    9. Whether the CPAs have joint investments or profit-sharing agreements with the Company or its associates? N Y
    10. Whether the CPAs do regular works for the Company or its associates and receive fixed salaries? N Y
    11. Whether the CPAs are involved with decision-making management functions of the Company or its associates? N Y
    12. Whether the CPAs engages in businesses which may deprive them of audit independence?  N Y
    13. Whether the CPAs are spouses, lineal relatives, relatives by marriage, or relatives within the second degree of kinship to managerial officers of the Company? N Y
    14. Whether the CPAs received any commissions in association with their businesses?  N Y
    15. Up till now, whether there is any circumstance where the CPAs have been punished or the independence principle violated? N Y

    The Board evaluated the independence of CPAs, Fang-Wen Li and Jheng-Chu Chen, from Ernst & Young on February 26, 2020. As they both met the Company’s standards for independence, they were qualified to be its CPAs.

    4.      Does the Company have an adequate number of qualified corporate governance personnel and appoint a chief corporate governance officer to handle matters pertaining to corporate governance (including but not limited to provide information required for business execution by directors and supervisors, assist directors and supervisors with regulatory compliance, handle matters pertaining to board meetings and shareholders’ meetings according to laws and regulations, produce minutes of board meetings and shareholders meetings, etc.)? V The Company has corporate governance personnel in finance, shareholder service and legal & intellectual property divisions to handle matters pertaining to corporate governance, including providing information required for business execution by Directors, handling matters relating to Board meetings and Shareholders’ Meetings according to laws and regulations, handling corporate registration and amendment registration, producing minutes of Board meetings and shareholders meetings, etc. The Company plans to appoint a chief corporate governance officer before June 30, 2021. None
    5. Has the Company established a communication channel with its stakeholders (including but not limited to shareholders, employees, customers and suppliers) and created a stakeholder section on the Company’s website to respond to their questions on corporate social responsibilities? V The Company has spokesperson and deputy spokesperson. Depending on the circumstances, investor relation, shareholder service and legal divisions would also communicate with stakeholders (including but not limited to shareholders, employees, customers and suppliers). In addition, the contact information of spokesperson and each department can be found on the Company’s website and a stakeholder section has been created to respond to stakeholders’ questions on corporate social responsibilities with care. None
    6. Has the Company appointed a professional registrar to organize the Shareholders’ Meetings? V To service our shareholders, the Company has appointed the stock management service department of Yuanta Securities to manage issues related to shareholders and organize the Shareholders’ Meetings. None
    7. Information disclosure
    (1) Has the Company established a corporate website to disclose information regarding the Company’s financials, business and corporate governance status? V (1) The Company discloses financial and business information through the corporate website, http://www.taiflex.com.tw, which is maintained by designated persons. Information is available in both Chinese and English. Material information, financial status, organization and operation of internal audit, significant laws and regulations and major resolutions of the Boards are disclosed on the Company’s official website for foreign and domestic investors to access. None
    (2) Does the Company have other information disclosure channels (e.g. maintaining an English-language website, designating people to handle information collection and disclosure, appointing spokesperson, webcasting investor conference on the corporate website)? V (2) The Company would hold investor conferences when deemed necessary and the video or audio recording of such event would be available in the investors section on the website. Relevant information would be filed on the MOPS website. The Company has set up both Chinese and English corporate websites and appointed dedicated personnel to collect relevant data and disclose material information. Spokesperson/deputy spokesperson are responsible for communication with external parties.
    (3) Does the Company publicly announce and file its annual financial report within two months after the end of financial year, and its financial reports of the first three quarters as well as operational status of each month prior to the prescribed deadlines? V (3) The Company has been publicly announced and filed its annual financial report within two months after the end of financial year, and its financial reports of the first three quarters as well as operational status of each month prior to the prescribed deadlines. Information is available on the corporate website at http://www.taiflex.com.tw and MOPS website at http://mops.twse.com.tw.
    8. Does the Company have other important information to facilitate better understanding of the Company’s corporate governance practices (including but not limited to employees’ rights and welfare, investor relations, supplier relations, rights of stakeholders, continuing education of directors and supervisors, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, and insurance for directors and supervisors provided by the company) ? V (1) Employees’ rights and welfare: A Welfare Committee is formed by employees of the Company to undertake various welfare projects and activities. Please refer to “5. Industrial Relations” (Page 90 to 96) for details. None
    (2) Investor relations: The Company values investors’ rights. Relevant information is disclosed timely on the MOPS website pursuant to laws and regulations and on the Company’s official website simultaneously.
    (3) Supplier relations: The Company maintains good relationship with suppliers. There has been no complaints regarding the quality and delivery schedule of purchases and there is no shortage or interruption of supplies.
    (4) Stakeholder relations: The Company’s official website has set up a stakeholder section, which is served as a communication channel to protect the legal rights of both parties.
    (5) Continuing education of Directors and Supervisors: Please refer to the table of “Continuing Education of Directors in 2019” for details.
    (6) The implementation of risk management policies and risk evaluation standards: Please refer to “Risk Analysis and Assessment” (page 109 to 113) for details.
    (7) The implementation of customer policies: The Company follows ethical guidelines and maintains good relationship with customers. Quality policy includes innovation on research and development, continuous improvement, quick response, customer satisfaction, environmental protection and green environment. Technical personnel of the Company provides on-time delivery and after-sale services.
    (8) Insurance for Directors and Supervisors provided by the Company: The Company provides liability insurance for Directors each year.
    (9) The Company adopted electronic voting in Shareholders’ Meetings since 2016, ahead of the schedule announced by Financial Supervisory Commission (FSC).
    9. The improvement status for the outcome of Corporate Governance Evaluation announced by Taiwan Stock Exchange Corporate Governance Center and the priority of pending issues. (Companies not included in the Evaluation are exempted.)
    (1)       The Company ranked in the top 6% to 20% in the 5th Corporate Governance Evaluation of Taiwan Stock Exchange Corporate. It recognized the Company’s outstanding performance in various management aspects, including corporate governance, corporate social responsibility, protection of shareholders’ rights, information transparency and timely disclosure of information.
    (2)       Improvements completed in 2019 for the 5th Corporate Governance Evaluation: The Company held at least six Board meetings annually and had external professional institution conducting Board performance assessments. It also set up a framework for information security risk management and formulated information security policies along with specific management schemes, and had the information disclosed at the corporate website or annual report. The English translation of annual financial reports (including the financial statements and notes) were available at the corporate or MOPS websites.
    (3) Pending issues with high priority

    A. To strengthen the structure and operation of the Board
    (a)      The Company shall set up a corporate governance supervisor position to handle matters pertaining to corporate governance. The supervisor’s job function, main focuses of the year and continuing education shall be disclosed in the annual report and corporate website.
    (b)      At least one of the Company’s internal auditing personnel shall have the certifications of Certified Internal Auditor or Certified Information Systems Auditor or for passing the CPA examination.
    (c)      The Company shall draw up intellectual property management plans associated with the operational goals and have the execution status disclosed at the corporate website or annual report. It shall report to the Board at least once every year.

    B.      To fulfill corporate social responsibilities
    (a)      To regularly report communications with stakeholders to the Board.

    (4)       The Company performed self-assessment based on the 6th Corporate Governance Evaluation in January 2020. The outcome will be reviewed to determine the improvement plans.