Corporate governance report

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Corporate governance report

Corporate governance report

Corporate governance report


Corporate Governance Status and Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reason

Items of Evaluation Implementation Status Deviations from“ the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”and Reasons
1. Does Company follow “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” to establish and disclose its corporate governance practices? Wistron has set up “Corporate Governance Best Practice Principles” by Board of Director and made amendment on March 14, 2023, and there is no discrepancy between corporate governance principles. No discrepancy
2. Shareholding Structure & Shareholders’ Rights
(1) Does Company have Internal Operation Procedures for handling shareholders’ suggestions, concerns, disputes and litigation matters. If yes, has these procedures been implemented accordingly? Wistron has designated the Shareholder Service Office to handle the shareholders’ feedbacks, questions and disputes. No discrepancy
(2) Does Company possess a list of major shareholders and beneficial owners of these major shareholders? Wistron holds information on the identities of major shareholders and their ultimate controlling persons. No discrepancy
(3) Has the Company built and executed a risk management system and “firewall” between the Company and its affiliates? Wistron has established the appropriate risk control mechanisms and firewalls according to internal    rules, such as rules of supervision over subsidiaries, rules governing endorsement and guarantee, loaning of funds and the rules governing acquisitions and disposal of assets etc. No discrepancy
(4) Has the Company established internal rules prohibiting insider trading on undisclosed information? Wistron enacted “Procedures for Preventing Insider Trading” to prevent any illegal activities in terms of insider trading. When the new directors or managers assume office, the company will provide relevant standardized information for education and promotion of the policy; and after each notice of board meeting is sent, or if the company is raising funds or repurchasing treasury stock, the company will remind the insiders to avoid buying or selling company stock in order to comply with the insider trading prevention policy.

According to the “Procedures for Preventing Insider Trading”, Wistron’s also ask directors and managers shall not trade the shares in closed period during the 30 days before the announcement of the annual financial report and the 15 days before the announcement of the quarterly financial report. Wistron did ask insiders to comply with the regulations before the 2022 closed period started.
No discrepancy
3. Composition and Responsibilities 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? Wistron has set up the diversity policy of the board of directors in the Article 20 of “Corporate Governance Best Practice Principles”. For specific management objectives and implementation, please refer to the chapter "Diversity and Independence of the Board of Directors". No discrepancy
(2) Other than the Compensation Committee and the Audit Committee which are required by law, does the Company plan to set up other Board committees?  In addition to establishing the Compensation Committee and the Audit Committee as required by law, Wistron has created the Nominating Committee and the ESG committee.

A. The Nominating Committee is authorized to construct and to review the candidates of the directors, executives and the members of committees under the board of directors, and to construct and to review the setup and operation of committees.

B. ESG Committee is responsible for formulating the direction, strategy and goals of sustainability development and track the implementation status and effectiveness of corporate sustainable development.
No discrepancy
(3) Has the Company established a methodology for evaluating the performance of its Board of Directors, performed evaluations on an annual basis, submitted the results of the performance evaluation to the board, and use it as a reference for individual directors’ remuneration and renomination? Wistron has set up “Rules for Board of Directors and Function Committee Performance Assessments”. According to the assessments, the evaluation period shall be from January 1 to December 31 of the current year, and for the current year shall be reported to the board of directors and functional committees at the end of first quarter of the following year. Besides, Wistron shall conduct board performance evaluation by an external independent professional institution or a panel of external experts and scholars at least once every three years.

In 2022, Wistron commissioned an external professional institution, the Tawan Corporate Governance Association, to implement the board performance evaluation. The company has reported the evaluation results on December 21, 2023 to the board of directors.
External Performance Evaluating Results

Wistron had completed the internal performance evaluation of Board of Directors and functional committee for the period from January 1, 2023 to December 31, 2023. The scores of evaluation of Board of Directors, Audit Committee, Compensation Committee, Nominating Committee and ESG Committee were 99.78, 99.60, 99.33, 100 and 98.86, the evaluation results were "exceed the standard".
No discrepancy
(4) Does the Company regularly evaluate its external auditors’ independence? The evaluation of CPA is one of the main duties of the Audit Committee each year. Wistron evaluates the independence of CPA based on Audit Quality Indicators (AQIs) provided by KPMG, Certified Public Accountant Act and ”Integrity, Objectivity and Independence”, No.10 of “The Norm of Professional Ethics for Certified Public Accountant of the Republic of China”. Wistron also  obtained the statement of independence signed by the accountant, the results of the assessment did not find any violation of independence, and the rotation of certified accountants also complied with the relevant regulations.
No discrepancy
4. Has a TWSE/TPEx listed company appointed an appropriate number of suitable corporate governance personnel, and designated a corporate governance officer to be in charge of corporate governance affairs (including, but not limited to, providing directors and supervisors with the information necessary to execute business, assisting directors and supervisors in complying with laws, handling matters related to board meetings and shareholders meetings in accordance with the laws, processing corporate registration and amendment registration, and preparing minutes of board meetings and shareholders meetings)? The Chief of Staff Office of the Company is the unit to be in charge of corporate governance affairs. The board of directors appointed Mr. Frank F.C. Lin as the Corporate Governance Officer of Wistron on March 25, 2019.

It is advisable that the corporate governance affairs mentioned in the preceding paragraph include at least the following items:
A. Handling matters relating to board meetings and shareholders meetings according to laws.
B. Producing minutes of board meetings and shareholders meetings.
C. Assisting in onboarding and continuous education of directors.
D. Furnishing information required for business execution by directors.
E. Assisting directors with legal compliance.
F. Reporting to the board of directors the results of their review of whether the qualifications of the independent directors comply with relevant laws, regulations, rules, and bylaws at the time of their nomination, election, and during their term of office.
G. Handling of matters relating to changes in directors.
H. Other matters set out in the articles or corporation or contracts.

The 2023 implement of corporate governance affairs were as bellows:

A. In 2023, Wistron convened 8 times of board meetings, 8 times of Audit Committee meetings, 3 times of Compensation Committee meetings, 2 times of Nominating Committee meetings, and 5 times of ESG Committee meetings.
B. Convened shareholders' meeting on June 15, 2023 as required by law and assisted with the convening of shareholders' meetings.
C. Responsible for material announcements and matters related to the resolutions of board meetings and shareholders' meetings and announced material information pursuant to law.
D. Arranged 6 hours of a continuing education courses for all Directors, President, chief Corporate Governance Officer and CFO of Wistron. The courses are " Key Factors for Enhancing Board Effectiveness " and " Winning the Future: Global Key Trends and Practical Case Studies in ESG ".
E. Arranged to have independent directors communicate to the head of Audit Division and the CPA at an Audit Committee meeting. 
F. Arrange the MIS to present the information security implementation to the Board of Directors on December 21, 2023.
G. Arranged legal department to present intellectual property rights management to the Board of Directors on December 21, 2023.
H. Arranged HR department to present the 2023 actions for ethical corporation management to the Board of Directors on December 21, 2023.
I. Arranged the convener of risk management team to present the implement of risk management and the risk map to the Audit Committee and Board of Directors on May 11, 2023 and November 9, 2023.
J. Arranged the Sustainability Office to present the Stakeholder Engagement Result on March 14, 2023, and the Evaluation Results of Material Topics and the implementation of Sustainable Development on December 21, 2023.
K. Performed the 2023 performance assessments of Board of Directors and functional committees, and reported the results of the performance evaluation to the Board of Directors and functional committees on March 12, 2024.
No discrepancy
5. Whether the company has established channels of communication with Stakeholders (including but not limited to shareholders, employees, customers and suppliers), and open the Stakeholders section on the company's website, and respond appropriately to Stakeholders’ interests/ concerns regarding corporate social responsibility. Wistron has adopted the Global Reporting Initiative Standards (GRI Standards) and the AA1000 Stakeholder Engagement Standards as the framework to establish the procedures for identifying material topics for corporate sustainable development. The framework is used as the basis for disclosures in the Sustainability Report.

In order to communicate with different stakeholders effectively, the Company has adopted the five factors specified by the AA1000 Stakeholder Engagement Standards. According to these factors (dependency, responsibility, influence, diverse perspectives, and tension), we have identified seven stakeholder categories including customers, employees, shareholders/investors, suppliers/contractors, government/authorities, and media.
We have also designated a stakeholder section on the corporate ESG website to address our corporate sustainability and social responsibility activities and relevant issues.
No discrepancy
6. Has the Company appointed a professional registrar for its Shareholders’ Meetings? Wistron has designated the Shareholders Service Office to handle the shareholders’ proposal and disputes. No discrepancy
7. Information Disclosure
(1) Has the Company established a corporate website to disclose information regarding its financials, business and corporate governance status? Wistron has set up a website containing the information regarding financials, business and corporate governance status. No discrepancy
(2) Does the Company use other information disclosure channels (e.g. maintaining an English-language website, designating staff to handle information collection and disclosure, appointing spokespersons, webcasting investors conference etc.)? Wistron has one chief spokesman and one acting spokesman and also designated a team to be responsible for gathering and disclosing the information. Wistron has formulated Regulations on Insider Trading to govern procedures to manage material information disclosure; such management procedure has been informed to all employees, management and directors. No discrepancy
(3) Does the Company announce and report the annual financial report within two months of the fiscal year end, and announce and report the financial reports for the first, second and third quarter and each month’s operating performance ahead of the required deadline? Wistron has not announced and declared the annual financial report within two months after the end of the fiscal year, but the Company announced the self-assessed consolidated financial results for 2023Q4 on January 18, 2024 and announced the quarterly financial reports as early as possible within the prescribed time limit, and announces important financial figures and XBRL information on the day the board of directors approved the financial report. No discrepancy
8. Has the Company disclosed other information to facilitate a better understanding of its corporate governance practices (e.g. including but not limited to employee rights, employee wellness, investor relations, supplier relations, rights of stakeholders, directors’ training records, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, and purchasing insurance for directors)?
Employee benefits and rights, Employee care The company has always attached great importance to the rights and interests of employees and ensures that all management systems comply with laws and regulations. All corporate governance-related regulations and operations are published on the Company's official website to ensure that all colleagues understand it. The Company is committed to fulfilling its social responsibilities and protecting the rights and interests of employees. Wistron has also joined the Responsible Business Alliance (RBA) as a member of the alliance, strictly abides by relevant regulations, integrates concern for human rights into all aspects of daily operations, and fulfills the employer's duty to care for its employees. No discrepancy
Investor Relations The major mission of the investor relations department is to update the latest business development and strategy thinking to global investors. Through such periodic communication, the company can enhance its public image and the transparency of financials and corporate governance. No discrepancy
Supplier relationship In order to maintain long-term advantages of research and development in new technology, quality control, price competition, adequate supply, and to provide green products that are in  line with energy conservation and environmental protection, Wistron on the basis of good faith to conduct supplier audit and management, so to confirm suppliers comply with various environmental protection treaties and social responsibilities, continue to provide products that meet the standards of Wistron, and with competitive advantages in price. Wistron will keep upholding the spirit of mutual trust and benefit to grow together with suppliers and create Win-win. No discrepancy
Stakeholders’ Rights The company’s investor relations, public relations, shareholder services, and legal departments communicate with stakeholders for various situations and provide the related contact information on the company website. No discrepancy
Continuing education of Directors and Managers No discrepancy
The implementation of risk management policies and risk evaluation measures Wistron implements the enterprise risk management (ERM) mechanism in accordance with the regulation of "Risk Management Policies and Procedures", which confirms the board of directors as the unit with the highest risk responsibility, and establishes a risk management team under the Audit Committee. Wistron conducts risk assessments on a regular basis, identifies and measures risks in accordance with industry practices and international standards, and issues risk management reports to the board of directors every half a year.

Wistron actively promotes the implementation of risk management mechanisms, and reports to the Board of Directors every half a year. The main results of conducting risk management policy in 2023 are as follows:

A.    Following the Task Force on Climate-related Financial Disclosures (TCFD) to identify climate risks and opportunities, based on the framework of "Governance", "Strategy", "Risk Management", "Metrics and Targets". And establish measurement indicators and target management mechanism.

B.    Convened a risk management meeting to conduct sensitivity analysis and stress tests on financial risks, climate change risks, water resources risks, information security risks, geopolitical risks, new technology risks and intellectual property rights of Wistron and its important subsidiaries. To strengthen the risk awareness of and quantitatively analyze the risk tolerance levels.

C.    Conduct comprehensive identification of enterprise and operational-level risks, including but not limited to operational risks, market risks, compliance risks, information security risks, environmental risks, climate change risks, operational risks, and other operational-related risks. Through "bottom-up" and "top-down" analysis and discussion," comprehensively identify potential risk events that may lead to the goals not being achieved, causing losses or negative impacts of Wistron. Besides, based on the company's strategic objectives, internal and external stakeholders' perspectives, risk tolerance, and available resources, we select risk response measures and implement risk mitigation plans. The risk management team members, together with each operating units, continues to monitor and report to the risk management team in a timely manner, and make relevant records.

D.    Risk management team reports the execution status of the risk management plan and provide the risk management report to the Audit Committee, which includes the results of risk assessments from various perspectives, and explains control and monitoring procedures for higher risks aspects. The Audit Committee then report the results of risk management execution to the Board of Directors.

E.    Establish a visually-interactive dashboard displaying critical risk indicators, which identifies potential risk events that may hinder the achievement of our company's objectives, cause losses, or have negative impacts. Develop relevant formulas to quantify risk values and set warning and danger thresholds. This monitoring process will be carried out continuously by risk management professionals in collaboration with relevant personnel from various operational units. The results of risk monitoring will be presented through visual reports, and the latest status of risk indicators will be sent regularly.

F.    The general manager urges all units and subsidiaries within the company to conduct self-assessment of internal control twice a year, and the audit unit reviews the self-assessment reports of all units and subsidiaries, and together with the report of improvement of internal control deficiencies and abnormal matters found, annually issue a statement of internal control system.
No discrepancy
The implementation of customer relations policies Wistron always strictly abides by customer confidentiality. If there are competitors among customers, different teams will be set up to serve customers, or even different factories to produce and build firewalls. It is strictly forbidden to talk about customer confidentiality in public in order to achieve the goal of protecting customers. No discrepancy
Purchasing insurance for directors Wistron has purchased liability insurance for directors and managers, and had report the insured amount, coverage, premium rate, and other major contents of the liability insurance to Board of Directors on November 9, 2023. No discrepancy
9. Succession plan of board members and management team The selection of directors of Wistron adopts the candidate nomination system and is handled in accordance with the "Board of Directors Nomination and Election Procedures". Wistron has also set a diversity policy for the composition of the board of directors in the "Corporate Governance Best Practice Principles", taking into account the diversity of professional knowledge, technology, experience and gender required by board of directors, and will refer to the recommendations of the Nominating Committee to propose board of director candidates and the appropriate arrangements for the composition of the board of directors and candidates for succession.

In response to the ever-changing environment and to drive the company's future growth, the requirements of top management team's capabilities go beyond business acumen and leadership. The digital acumen, global perspectives and sustainability are also emphasized to enhance the company’s business competitiveness and operational excellence. In the dynamic business landscape, Wistron provides tailored development plans and various learning resources to cultivate its leadership team including training courses, project assignments, strategic rotations, cross-business executive coaching, and external industry trend forums, corporate executive programs, strategic leadership trainings and so on. Through systematic talent development initiatives, Wistron builds the succession bench depth and talent pipeline, to maintain a robust management team to foster strategy execution and realize corporate sustainability.
No discrepancy
10. Please indicate the improvement of the results of the corporate governance evaluation issued by the Company's Center for Corporate Governance in the last year of the TWSE and provide priority measures and measures for those who have not yet improved. (1)  In 2023, we have obtained the Taiwan Intellectual Property Management System (TIPS) and passed the verification.

(2) Wistron will continue to cooperate with the competent authorities with regard to implementation and improvement of the corporate governance assessment in the future.
No discrepancy