Organizational Structure of Corporate Governance
Qisda complies with Company Law, the Securities and Exchange Act, and other relevant laws and regulations of the Republic of China to formulate and implement the company’s corporate governance structure. Qisda corporate governance model is composed of three units: the board of directors, the audit committee, and the salary compensation committee. The audit committee and the salary compensation committee are made up of independent members of the board of directors, while all members of the board of directors (including independent directors) are selected based on shareholder votes.
Corporate Governance Status
Qisda’s board of directors considers company and shareholder interests as top priorities in performing operational evaluations and passing significant resolutions. The audit committee fulfills an overseeing role through prudent and meticulous supervision over the operations of the company and the board of directors. In addition, Qisda’s Corporate Sustainability Development (CSD) activities are promoted through the CSD commit tee under the supervision of its chairman, Mr. Peter Chen.
I. Board of Directors Operation
According to the Securities and Exchange Act Ar ticle 26, Paragraph 3, Subparagraph 8 regulations, Qisda created the “Rules of Procedure for Board of Directors Meetings”. The major agenda, operational procedures, matters required to be stated in the minutes of the meeting, public announcements and other compliance requirements of the board shall be proceeded in accordance with the Rules of Procedure. The board meeting shall be convened at least once each quarter. The board of directors strives to maximize the benefits of the shareholders, and each director is expected to fulfill his or her supervisory role faithfully with the highest degree of self-discipline and integrity.
II. Audit Committee Operation
In 2008, Qisda installed independent directors and an audit committee in accordance with the Securities and Exchange Act and shareholder resolutions. Through the “Audit Committee Chapter” as enacted by the board of directors, Qisda maintains sound strategic and executive organizations to continuously increase operational efficiency by implementing practical and exact measures in corporate governance. The audit committee must convene at least once each quarter, requesting the attendance of accountants, internal auditors, risk management, legal and finance department representatives. The audit committee then receives reports and makes inquiries into the audit status concerning the latest financial report, internal audit results, significant litigation, and financial operation status. This implementation is aimed to assure that the audit committee can assist investors to ensure the credibility with regard to corporate governance and transparent information, and further safeguard the rights and interests of the shareholders.
III. Salary and Compensation Committee Operation
Qisda established the salary and compensation committee in 2011. The board of directors enacted “Salary and Compensation Committee Chapter” to strengthen the corporate governance and foster the company’s compensation system for its directors and executives. The committee convenes at least twice a year. Additional meetings will be held if needed. Functioning as managers of goodwill, the committee exercises its role and responsibility faithfully according to the relevant laws and regulations. The committee submits its propositions to the board of directors for further discussion. To let the committee members have better knowledge in the laws and regulations per tinent to the functioning of the Salary and Compensation Committee, briefings are arranged for the committee, including company financial and operational status and salary and compensation status of the senior managers. The meeting oversees the salary structure (fixed salary, fluctuating wage and short/long term benefits) of governance bodies. In addition, the annual performance index in reference to the peer industry4 , the local economic condition and corporate operation status will be linked to the evaluation of given salary and compensation. At the end of year, a thorough review on goals achieved will be executed.
IV. Corporate Sustainable Development Committee Operation
In 2015, Qisda via its board of directors of passed the Corporate Governance Best Practice Principles, the Principle of Corporate Social Responsibility (CSR), Principles for Ethical Management and Code of Ethics for Board of Directors and Managers while authorizing the Corporate Sustainable Development Committee to be responsible for providing and executing CSR policy, system or related management policies and actual promotion plans. Starting from 2015, the committee regularly reported to the board of directors each year of the CSR and ethical operation executional status of the year to communicate with the directors of related issues. The CSR activities of Qisda is overseen by Mr. Peter Chen, director and president of Qisda, as the chairman of the Corporate Sustainable Development Committee, monitoring and managing the promotion of CSR activities.
In accordance with the regulations in Article 208, Item 3 of the Company Act, the chairman of the board of directors, Mr. K. Y. Lee, shall not concurrently serve in any position at Qisda. Board of directors shall not participate in any discussion or vote on any matter in which he or she has potential conflict of interest or such participation is likely to prejudice the interest of the company. When such a situation presents itself, according to Company Act, Article 206, Item 2, and Article 178, the director should be excused from the meeting until the discussion and voting is over on the matter involved. When deemed necessary, the Chairman shall appoint someone else to act on the director’s behalf. If conflicts of interest in the board of directors of the year occur, Qisda will disclose related information according to the law in the corporate governance chapter of its annual report that year (for details, refer to the annual report of 2014.)
According to current Qisda regulations and procedures, the compensation for directors must not surpass 1% of distributable annual earnings, which demonstrates the relationship between operational performance and the compensation of the board of directors. However, the board of directors’ devotion and commitment to performing various responsibilities and duties will not decrease due to company’s losses or profits. Therefore, considering the company’s industry risk, the responsibilities of the chairman, directors and independent directors, the scope of its operations and so on, under the principle of uniformity of treatment as to fair compensation for those performing tasks that bear heavy responsibilities, the company shall issue director compensation on a regular basis governed by company regulations and upon the approval of the salary and compensation committee and board of directors.
The board of directors shall submit the annual financial statement, business report, profit surplus distribution and all related documentation and proposals to shareholders’ meeting for approval. Such a measure allows shareholders to verify the operational results of the board of directors and to determine the performance of the top management entity of the corporate. It is also expected that the information regarding the compensation of the directors and high-level executives shall be reasonably disclosed in the company’s annual report, providing all stakeholders with needed information to understand the relationship between top executives’ compensation and corporate performance.
5. A: In the year 2012-2014, the information was presented using International Financial Reporting Standards; B:During 2010-2012, the information was presented using the finance and accounting standards from Taiwan. The Statements of Comprehensive Income were audited by accountants and included information from all business entities under common control.