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Functions of the Board

The Board of Directors is the highest managing body, charged with the task of electing and nominating top managers, and defining CSR and sustainable development strategies. An able and functioning Board, accompanied by the auditing unit, engages in the auditing of the internal control system and promotes corporate governance issues.

The company is governed in accordance with the six principles provided by the Code of Practice for Governance of Listed and OTC Corporates: a) Establish an effective governance structure; b) Protect the benefits of the shareholders; c) Enhance the functions of the Board; d) Effectively employ the functions of the supervisors; e) Respect the benefits of the stakeholders; and f) Increase information transparency.

The Ta Ya Board is comprised of five directors, three independent directors and two supervisors. Each member has extensive management experience and professional backgrounds, and is dedicated to maximizing shareholder benefits. The Board defines the measures for proceedings in accordance with the Procedures for Public Company Boards. For matters related to a director’s own interests and where there is conflict with the interests of the company, directors can participate in commenting and answering, but neither in discussions nor voting, and must avoid situations to execute any other voting rights for any other Board members.

In December 2011, the Ta Ya Board established a compensation committee, and added three independent directors at the shareholder’s meeting held in June 2012. This made us the first company to establish independent directors in the wire and cable industry in Taiwan. The qualifications of the directors of the Board are in accordance with the relevant regulations of the relevant competent authorities. The company’s Articles of Association also states that the election of directors and independent directors must be in accordance to the nomination system. The Compensation Committee is comprised of three independent directors, who periodically review the Articles and provide suggestions. These tasks include: a) to define and publicize our policies, regulations, standards and structures for performance evaluation and determining the salaries of our directors, supervisors and managers; and b) to periodically review the salaries of our directors, supervisors, and managers. The Ta Ya Board met five times in 2016 with an attendance rate of 90%; the compensation committee met twice with an attendance rate of 100%.

In November 2015, Ta Ya's Board of Directors passed the "Board of Directors Performance Assessment Policy" that introduced a set of performance targets aimed at improving board functionality and efficiency. Internal performance assessment of the Board of Directors must be made once a year and an annual performance assessment must be made at the end of the year. An assessment must be made by an external independent institution or expert team once every three years. In addition to the Board of Directors being assessed for its overall operation status, every director must be assessed separately.

The Board of Directors of Ta Ya is subject to assessment in five major aspects: 1. Involvement in the operation of the Company; 2. Improvement of the decision-making quality of the Board of Directors; 3. Composition and organizational structure of the Board of Directors; 4. Selection, appointment and continuous education of Directors; 5. Internal control. The results of the assessment are classified into five levels: Excellent, Outstanding, Good, Fair, and Improvement Required. The result of the assessment in 2016 was Excellent.

In Ta Ya (Viet Nam), the Board of Directors approved the “Corporate Governance Regulations” on April 22, 2013. The “Internal Regulations” is approved in February 2014 to establish a good corporate government system and ensure sound operation and development of the Company. The Ta Ya Board of Directors held 11 meetings in 2016 at an attendance rate of more than 90%; the supervisors held 4 meetings in the same year at an attendance rate of more than 90%, too.

Risk Management

Ta Ya has implemented risk management measures on a group scale based on Financial Supervisory Commission's "Regulations Governing Establishment of Internal Control Systems by Public Companies." It also has a robust, efficient internal control policy in place to oversee its eight main operational cycles and management systems. The Auditing Office serves two purposes: 1. Assist the Board of Directors and managers in the inspection and review of internal control system for defect, performance and efficiency, and offer improvement advices where appropriate to rectify the internal control system while ensuring its effectiveness. 2. Devise annual audit plans based on internal control self assessments and priorities, and execute accordingly in the following year with the approval of the accountable manager and the Board of Directors.

In order to facilitate self governance and timely adjustment to environmental changes, the Auditing Office prepares an internal control self assessment report in the fourth quarter every year and disseminates it to the relevant departments. The report gives each department an overview of their risk tolerance, which can be based upon to adjust the design and execution of internal control systems. All the audit actions were completed in both 2015 and 2016. The 2016 audit plan was devised with 87 audit actions, of which 87 (100%) were completed. The plan was comprised of 11 audit actions on the sales and collection cycle, 3 actions on the procurement cycle, 8 actions on the production cycle, 3 actions on the R&D cycle, 8 actions on the salary cycle, 36 actions on the financing cycle, 2 actions on the property, plant and equipment cycle, 10 actions on the data processing cycle, and 6 actions on the administrative cycle.

With regards to supervision of subsidiaries, the Company obtains monthly management reports as a means of insight into subsidiaries' operations, and regularly participates in subsidiaries' administrative meetings. In 2015, the Company audited its subsidiaries, which represented a completion rate of 94%. 14 subsidiaries were initially arranged in the 2016 audit plan. However, since the Zhang Zhou plant was closed down, the number of the plants to be audited in the plan was changed to 13. All of these plants were audited, representing a completion rate of 100%.

Code of Conduct and Anti-Corruption

Ta Ya upholds the business philosophy of integrity toward its employees, clients and suppliers. The Ta Ya Employee’s Code of Conduct is required to be signed by all employees when reporting for duty to ensure all behaviors are in accordance with the regulations, which include employees being forbidden to accept any gifts, treatments or treats from any dealing manufacturers and clients. In addition, all employees are prohibited from engaging in transactions with individuals that have records of dishonesty in order to protect the interests of Ta Ya and its stakeholders. An employee may not engage in activities outside the company that are in conflict with the interests of the corporation, may not engage in external activities that may counteract their responsibilities at Ta Ya, and may not engage in relevant Ta Ya transactions for their own self interests.

Ta Ya has established the "Insider Trading Prevention Procedures" and "Code of Ethics" that explicitly prohibit corporate insiders from trading securities against non-public information.

Information Disclosure

The Group values all comments and suggestions from stakeholders, given that it is the basis on which CSR is implemented upon. It is to this end that specialized personnel are responsible in coordinating and acting as a communications bridge between the corporation and its stakeholders. They are tasked with understanding and rapidly responding and implementing the necessary responses when required, and enhancing information disclosure. In terms of improving information transparency, details of the Investor Conferences, consolidation of operations, and the Group’s financial-related information are periodically released on the official website. Furthermore, detailed listings are provided in the annual reports regarding the company’s current operating status, future plans, strategic implementations and financial performance so as to provide investors with the best available service.

We have different mechanisms, such as the spokesman, deputy spokesman, and agent of stock affairs, to deal with the suggestions, questions, disputes, and litigations with respect to our shareholders and protect their rights and benefits. In order to allow a few shareholders’ rights to be implemented without the constraints of space and time, the Investor Conferences starting in 2014 will adopt the method of electronic voting and vote-by-case. This protects shareholders’ rights and makes possible another channel for them to express their opinions.

Moreover, all Ta Ya employees have by law the right to organize trade unions and are entitled to freedom of association. Employee representatives can provide suggestions and comments of their colleagues on specific topics via a laborers’ conference. After a consensus is reached through discussions with company operators at the conference, the consensus will be reported to the Board and be handled by the operations group. Other affiliated companies should also uphold the principles of valuing all stakeholders, so that all employees and shareholders are entitled to present their suggestions to the management staff and have them reported to the Board if the situation requires such attention.

Corporate Governance Rating

In December 2013, the Financial Supervisory Commission published a 5-year "Corporate Governance Enhancement Roadmap" and introduced a corporate governance evaluation system. The evaluation system is a comparison of corporate governance practices across the entire market and is aimed to help investors and businesses understand how effective a company's governance practices are. It is intended to inspire progressive competition and motivate companies to take the initiative in enhancing and improving their corporate governance culture.

In 2015, Ta Ya's Board of Directors amended the Company's "Corporate Governance Code of Practice" and "Code of Ethics," and established "Corporate Social Responsibility Code of Practice" and "Board of Directors Performance Assessment Policy" as a means of enhancing corporate governance practice and protecting stakeholders' interest. The evaluation of 2015 and 2016 placed Ta Ya in the top 20% of all TWSE-listed companies.

Board Effectiveness

In order to enhance the effectiveness of the Board and establish performance goals to strengthen operational efficiency, the Board of Directors of Taya conducts an internal board performance evaluation at least once a year based on the “Board Performance Evaluation Guidelines.” Additionally, an external professional independent organization conducts the evaluation once every three years. In addition to the Board of Directors being assessed for its overall operation status, every director must be assessed separately. The overall evaluation of Taya's Board of Directors covers five major dimensions:

1. The level of engagement in company operations.

2. Improvement of the decision-making quality of the Board of Directors;

3. Composition and organizational structure of the Board of Directors;

4. Selection, appointment and continuous education of Directors;

5. Internal control.

Additionally, TA YA entrusted the external organization, Taiwan Corporate Governance Association, in 2022 to conduct an evaluation of the Board of Directors’ performance. We will continue to implement improvements and track the recommendations from the evaluation.

Chinese Corporate Governance Association Board Performance Evaluation Report_CH