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Implementation of Corporate Governance

【 Implementation of Corporate Governance 】

The Company actively drives and implements corporate governance and formulated the Corporate Governance Best-Practice Principles with reference to the "Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies", and disclosed in the Company's website.
Through the appointment of the Chief Corporate Governance Officer to support the Board of Directors in various work relating to monitoring and guiding corporate governance. 
Under the guidance of the senior management, promote continuous improvements. We are honored to be awarded the "The top 5% range of the TWSE listed companies" of the Corporate Governance Evaluation for two consecutive years. In the future, we will continue to advance for further improvements in governance quality and results.

Strengthen the Powers of the Board of Directors
The composition of the Company's Board of Directors is based on the Company Charter. There are 9 directors, among which, there must be more than 3 independent directors, and there must be more than 1/5 of the total number of director seats, with 3-year term of office. The election for all the directors is based on the company's nomination system. The procedures for nomination and evaluation are based on the Company Act. The review of the qualifications and independence of the independent directors are based on the related laws and regulations of securities.

The formation of all directors is in conformance to the spirit of diversity for the corporate governance of board formation. The current board members include 1 female director and 3 independent directors. Every director possesses related background and practical experiences in business, finance, accounting, or industries. The distribution of the directors' core capabilities, professionalism and age has considered the implementation of the diversity philosophy of the board members formation. The Board of Directors operations are based on related laws and regulations, company charter, shareholders meeting resolution to exercise its power.
The various functional committees have been setup under the Company's Board of Directors, namely, the Audit Committee, Remuneration Committee, and the Nomination Committee. The purpose is to strengthen the Board's functions and corporate governance with the experts' independent and objective perspectives supporting the Board in making evaluations and decision-making.


Board of Directors Performance Evaluation
The Company holds regular yearly evaluation of the overall performance of the Board of Directors, the individual director and the functional committee according to the "Rules Governing the Board of Directors Performance Evaluation". Apart from providing the performance evaluation results for peruse by the Board of Directors and Functional Committees for making improvements, the results are also a reference basis for the selection or nomination of directors. The performance evaluation results of the individual directors are also used as a reference for the formulation of their salary remuneration.
Internal Self-Evaluation:
Holds regular yearly evaluation of the overall performance of the Board of Directors, the individual director and the functional committee according to the "Rules Governing the Board of Directors Performance Evaluation".
  • Evaluation unit: The corporate governance team will distribute the questionnaire to every director and the Functional Committee members. After collecting the completed questionnaires and analysis of the self-evaluation, the results are submitted to the Chairperson, Chief Corporate Governance Officer, Nomination Committee and Board of Directors.
  • Evaluation period: January 1 - December 31, 2024
  • Evaluation method and contents:
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  • Evaluation results: The 2024 overall Board of Directors performance evaluation, self-evaluation by board members, and Functional Committees evaluation have an average score of more than 99 points (full score is 100 points). The overall operations show good status. The results will be submitted and reported to the Board of Directors and every Functional Committee (the Nomination Committee, Remuneration Committee, and Audit Committee).
  • Improvement plan: In response to the changes in market development and the trend of global sustainable development, ESG corporate sustainability, carbon management, industry dynamics, global economic prospects, and other topics may be added to the continuing education courses of Directors to improve the quality of continuing education.
 
External Evaluation
The external performance evaluation for the Board of Directors shall take place once every three years by external professional institutions in accordance with the "Rules Governing the Board of Directors Performance Evaluation".
  • Evaluation unit: The Company appointed the "Taipei Foundation of Finance" (hereinafter referred to as the Foundation) in August 2024 to evaluate the performance of its Board of Directors. Established on March 5, 1991, the Foundation aims to "enhance financial research and development, promote accurate financial knowledge, improve the quality of financial services, and assist in upgrading the financial industry", thereby boosting the international competitiveness of Taiwan's financial sector. For over 30 years, we have continuously kept pace with international financial trends and monitored financial developments while organizing various seminars, forums, interviews, lectures, and courses. Leveraging the strengths of industry, government, academia, research institutions, and media, we have fulfilled the role of financial social education and established a platform for cross-industry communication. The Foundation and the experts involved in this evaluation have no business transactions with the Company, ensuring their independence and compliance with Article 6 of the Company's "Board of Directors Performance Evaluation" requirements for external evaluation institutions.
  • Evaluation period: August 1, 2023 to July 31, 2024
  • Evaluation method and contents: This performance evaluation covers seven key aspects of development, including protecting shareholder rights, enhancing the structure and operation of the board, participation in company operations, improving board decision-making quality, increasing information transparency and internal control, and promoting sustainable development. It also incorporates additional evaluation considerations conducted through questionnaires and on-site interviews.
  • Evaluation process: The Company and the Foundation respectively completed questionnaire self-evaluation and document reviews between August and September 2024. On September 19, the Foundation conducted an on-site visit to the Company. Evaluations were based on the aforementioned seven key aspects and additional evaluation criteria, referencing the Company's questionnaire responses, various materials (including meeting minutes of the Board of Directors and functional committees during the evaluation period), and publicly available information. Face-to-face interviews were conducted with Chairman Yen, Tsu-Fang, Independent Director Chen, Chiun-Man, the General Manager, and the head of corporate governance, accounting, and auditing.
  • Evaluation results:
    1. The Company is a leading domestic enterprise in promoting plant protection and nutritional cultivation. In recent years, it has invested significant resources in establishing and enhancing its corporate governance system. In order to protect the rights and interests of shareholders, all directors attend the general shareholders’ meeting in person, and the Chairman also serves as the Chair of the meeting in person. The Company has clearly defined relevant regulations for the financial and business transactions with related parties for the Company to follow, and has also established internal regulations for the insiders to use the undisclosed information in the market to trade securities, which are disclosed on the Company’s website to actively promote the Company’s ethical corporate management.
    2. In order to strengthen the structure and operation of the Board of Directors, the Company has established the "Corporate Governance Best Practice Principles" to formulate the diversity policy of the Board of Directors. In addition to considering the experience of the industry in the age, professional background, financial accounting, chemical engineering, and business management, the Company has set the policy ahead of many listed companies to set at least one female director on the Board of Directors. The Company has also formulated succession plans for directors and important senior management. Through participation in the operation of the Board of Directors, job rotation within the Group, and weekly work reports, the Company aims to deepen the work experience and professional qualifications required by the management.
    3. The Company's Board of Directors upholds the management philosophy of "honesty, fairness, and balancing interests", establishing clear core values, vision, and mission to enhance the quality of Board decision-making. To effectively evaluate and oversee existing or potential risks and opportunities, the Board actively participates in the Company's operations. Members attending the weekly work review meetings include the Honorary Chairman, current Chairman, Vice Chairman, General Manager, Head of Corporate Governance, Business Group General Managers, Deputy General Managers, and consultants. These meetings focus on reporting and discussing current financial statements, potential risks, and overall future business strategies to identify appropriate response measures.
    4. To enhance overall information transparency, the Company discloses the educational background, work experience, and relevant expertise of Board members in accordance with applicable regulations. It also appropriately shares information on the Board of Directors and shareholders' meetings. Internally, a comprehensive whistleblower mechanism is in place to encourage and protect individuals who expose corporate misconduct. To strengthen the quality of the Company’s internal control, the Company will disclose the individual communication between independent directors and internal audit managers and CPAs. The audit managers regularly attend the Board of Directors’ meeting and submit an internal business audit report.
    5. The Company adheres to the business philosophy of "honesty, fairness, and balancing interests" in promoting sustainable development goals. It actively initiates carbon inventory activities, earnestly addresses the issue of net-zero carbon emissions, and maintains positive interactions with all stakeholders. The Company aims to share the benefits with employees, shareholders, and society while fostering symbiosis with rural communities and contributing to social prosperity. The Company is committed to sustainable operations, with a particular focus on promoting sustainable agriculture and cultivating a safe environmental culture, which has yielded tangible benefits and outcomes.
  • Suggested matters: The Foundation has provided suggestions on 4 matters. The Company has already drafted the reviews and revisions of related systems and management procedures based on the suggested matters. We will continue to refine and advance the functions of the Board of Directors. The work has been reported to the Board of Directors and the Nomination Committee on November 8, 2024.
     Recommendations   Improvement plan   
    A recommendation is made to elevate the "Sustainable Development Committee" to a functional committee under the Board of Directors. The committee's responsibilities could include risk management, or the current unit promoting sustainable development, the "Sustainable Development Task Force", could be renamed to "Sustainable Development and Risk Control Committee" or another suitable name to clarify the governance and responsibilities related to the Company's sustainable development.
    1. The Company’s current "Sustainability Committee" is a task force formed by representatives from various units. The Chairman appoints the General Manager to serve as the Chair to promote the Company’s sustainability measures and regularly reports on the promotion status to the Board of Directors.
    2. In response to the "Sustainable Development Action Plan for TWSE/TPEx Listed Companies (2023)" of the FSC, the Company plans to set up the "Sustainability Committee" as a functional committee of the Board of Directors, and to include risk management in the scope of the Audit Committee’s responsibilities.
    A recommendation is made for the Company to arrange relevant courses for both directors and senior managers to study together, based on the industry's specific needs or future development trends. Topics could include: Macroeconomic development, information security management, AI development trends and impacts, carbon inventory and carbon reduction strategy management, IFRS (S1, S2), and others.
    1. The Company plans continuing education courses for directors every year in response to industry development trends. On August 9, 2024, the Company appointed the Taiwan Corporate Governance Association to conduct two courses, namely, "Trends and Risk Management of Generative AI" and "The Carbon Wave: An Overview of Carbon Credit Formation and Trading Systems", and obtained the course certificates.
    2. In the future, we will continue to keep abreast of the industry development trends and key issues of concern, and plan the blueprint of continuing education for directors to help them improve their professional capabilities.
    As internal audit tasks become increasingly burdensome, sustainable information management should also be incorporated into internal control items. It is suggested that the Company appropriately supplement professional audit personnel or consider implementing audit information management system (CAATs), which would effectively monitor and consolidate the operational status of various internal departments.
    1. The Company will complete the revision of relevant management regulations by the end of 2024 in accordance with the "Regulations Governing Establishment of Internal Control Systems by Public Companies", and incorporate sustainability information into the internal control items.
    2. The Company will review the audit operation process and study the need to introduce the audit information management system (CAATs) to improve the internal audit operation efficiency.
    The Company’s outstanding performance in ESG, such as efforts to engage with stakeholders, employee care activities, flexible working hours, and initiatives like agricultural chemical-derived plant protection, soil regeneration, and biodiversity restoration, should be included in the annual sustainability report. Additionally, specific protective measures or directions for future implementation can be outlined to effectively enhance the Company's overall image of environmental responsibility.
    1. In the annual sustainability report, the Company has disclosed its initiatives on employee and social welfare, promoting sustainable agriculture, and continues to emphasize the concept of sustainability. The Company strives to share benefits with employees, shareholders, and society, fostering symbiosis with rural communities and contributing to social prosperity.
    2. The Company will continue to improve the promotion of sustainability measures based on the suggestions and improve the content of the sustainability report to enhance the interaction and exchange with stakeholders.

Personnel Responsible for Corporate Governance Affairs
 
Chief Corporate Governance Officer
The Company has set up a Chief Corporate Governance Officer to be in charge of corporate governance affairs. The Chief Corporate Governance Officer has been in a managerial position for more than three years in a public company in handling stock affairs whose main jobs and responsibilities include:
  1. Supervising and handling matters relating to Board meetings and shareholders meetings according to laws and producing minutes of Board meetings and shareholders meetings.
  2. Assisting directors' on-boarding and continuous education.
  3. Providing information required for business execution by directors.
  4. Assisting directors with legal compliance.
  5. Other matters set out in the articles or corporation or contracts

Corporate Governance Implementation Status in 2024
 1.Handling matters relating to board meetings and shareholders meetings according to laws
  • The Company convened 5 Board meetings, 5 Audit Committee meetings, 2 Remuneration Committee meetings and 2 Nominating Committee meeting in 2024. Meeting notice and data have been mailed out at least 7days in advance. Where there were any interest conflicts, the directors(committee members) were reminded in advance to avoid the interests. Meeting minutes were sent out within 20 days of the meeting.
 2.Examine the Adequacy of Internal Regulations and Amend them Periodically
  • The internal regulations amended in year 2024 include: "Procedures for Preparation and Certification of Sustainability Report", "Procedures for Management of related party transactions", "Corporate Governance Best Practice Principles", "Sustainable Development Best Practice Principles", "Rules Governing the Board of Directors Performance Evaluations","Procedures for Preparation and Certification of Sustainability Report",and " Rules governing the management of sustainability information".
 3.Continuing education of the director Chief Corporate Governance Officer
  • Assist directors' continuous education: promote training information to directors and arrange the training hours for the directors. All directors have completed the training hours. Each director took at least 6 hours of continuing education, which is in compliance with the "Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies"; the chief corporate governance officer took at least 12 hours in continuing education, which is in complied with the "Taiwan Stock Exchange Corporation Operation Directions for Compliance with the Establishment of Board of Directors by TWSE Listed Companies and the Board's Exercise of Powers" .
 4.Improving Information Transparency
  • Increase the disclosure of various information in English version, including the shareholders' meeting minutes, shareholders' meeting notice, annual report, material information, annual financial statements and mid-term financial statements.
  • Increase communications frequency with stakeholders by organizing 4 investor conferences, an average of 1 session each quarter. This is at a frequency more than the stated legal requirements for TWSE listed companies which require the organizing of 1 investor conferences each year.