Corporate Governance

Novatek commits to integrity and acts complied with government laws and regulations to provide sufficient operational transparency and respect for shareholder rights. The Company's Board of directors consists of industry seniors with profound professional experiences and related expertise. The Remuneration Committee and the Audit Committee are constructed under supervision by the Board of directors to further reinforce the Company's internal operation and corporate governance.

Corporate Governance Officer

The Board of Directors appointed Mr. Shen-Cheng,Chou, the Financial Officer of Novatek, as the Corporate Governance Officer responsible for corporate governance matters, including handling of matters relating to Board, Audit Committee, Compensation Committee and Shareholders' meetings in compliance with law, assistance in onboarding and continuing education of directors, provision of information required for performance of duties by directors, and assistance in directors' compliance of law, etc.

In 2020, the Corporate Governance Officer of Novatek has completed the three-hour courses of “Analysis and Decision-making Application of Corporate Financial Information” and “Principles and Applications of Artificial Intelligence” organized by the Securities and Futures Institute, and the three-hour courses of“Corporate Risks Management and Internal Control” and "Corporate Fraud Identification and Prevention" organized by the Taiwan Corporate Governance Association, reaching the total number of training hours in the year to 12 hours.

Ethics and Integrity

Trustworthiness is one of Novatek’ mottos while all employees are asked to obey and follow. In order to ensure the implementation of the integrity management, Novatek has formulated the “Anti-Corruption, Anti-Bribery Commitment”, ”Ethical Corporate Management Principles” and “Procedures for Ethical Management and Guidelines for Conduct” and assigned Legal Division and Human Resources Division responsible for the monitoring and implementation of ethical management policies and prevention programs. Novatek also sets the internal and external reporting mechanisms for violations of integrity management and whistle-blower protection stipulated in “Regulations Governing Grievance and Whistleblowing”.

The online course of “Advocacy of Integrity Management Behaviors” has been organized for the entire staff once a year, and the content of this course includes the six major topics of processing of major internal information, prevention of insider transaction, avoidance of conflict of interests, protection of trade secret, integrity management, and informing channel. The advocacy of relevant information has been conducted once every six months.

Novatek has completed the above course in September 2020, and the completion rate for all employees was 100%. The course materials and related audio-visual files were archived in the internal system.

Management-level Succession Planning

The Company’s management-level personnel must not only possess outstanding professional abilities and substantial abilities in terms of work execution, but at the same time, they must also fulfill our business philosophy of integrity, create sustainable corporate value, and implement Novatek’s corporate social responsibility.

To meet with the development of the Group’s organization, the Company continues to dynamically cultivate potential middle and senior management personnel through the following programs:

(1) Expertise Development Training for Middle and Senior Management

The Company’s Human Resources Department evaluates and coordinates the overall planning of expertise development training courses for middle and senior management personnel every year, in the form of the DeepBench course series, or as individual courses with specific themes. The cornerstone of this training covers the three main fields of management functionality (which includes abilities in strategic thinking, deliberation, analytical, planning, work execution, and abilities of expression, cultivation, coordination, teamwork and leadership), professional abilities (such as the judgment of operational markets, accounting, financial analysis, business management, crisis management, industry knowledge, and international market outlook), and personal development. Every successor candidate in 2021 has completed eight to twelve hours of refresher courses, including research and discussion courses on “The Silo Effect” and “Why A+ Giants Fall,” in which they exchanged their views on how to improve the efficiency of cross-departmental communication and on how to use the experiences of other enterprises that have slid into decline to serve a reference to turning defeat into victory, as well as such management courses as “CSR / ESG Trends and Opportunities at Home and Abroad,” which explores how to combine corporate operational strategies with sustainable development goals to improve corporate governance. Specialized courses on forward-looking technologies are also arranged in relevant fields to meet the needs of different managers, with the intention of reinforcing future management teams in a planned and targeted manner.

(2) Job Rotation Experiential Learning

The Company attaches great importance to learning through practical experience. In addition to the performance of different project tasks during normal working hours, participation in monthly business meetings and regular senior executive strategy meetings, reviews and evaluations are also carried out, and job rotations or participation in external assignment projects are arranged every year. This is to allow management-level candidate successors to accrue experience in business management practices and foster an all-round business management vision, to improve their business management capabilities and mental dexterity, cultivate their decision-making and judgment abilities, and integrate these qualities into their positions.

(3) Regular Goal-oriented Assessments

The Company carries out performance evaluations for middle and senior-level managers every year to review the results of implementation. This is used as a reference for promotion and to review the individual salaries of management personnel. Every year, we also regularly draw up an inventory of potential middle and senior management candidates, to ensure the quality and quantity of the available talent pool which serves to supply successors to the senior leadership team.

Board of Directors Audit Committee Remuneration Committee Election of Directors Independent Directors Internal Audit Major Internal Policies

Responsibilities of the Board of Directors

The responsibilities of Novatek Microelectronic’s Board of Directors are to assist management in the formulation of short, medium and long-term strategic plans which correspond with corporate objectives and meet the expectations of our shareholders and stakeholders, and to vigorously implement the responsibilities of executive supervision, convening meetings every quarter, and maintaining excellent communication with the management level.

Board Performance Evaluations

The Company passed the “Measures for Performance Evaluation of the Board of Directors” in the October 2019 board meeting, which stipulates that an internal board meeting and functional committee be held every year, and that individual directors carry out a self-performance evaluation. Every three years, a performance evaluation is carried out by an independent external professional institution. The results are reported to the Board of Directors in the first quarter, to serve as a reference in continuously enhancing the board’s operational effectiveness.

Results of the Board Performance Evaluations

In 2021, the overall Board of Directors and functional committee self-evaluations, and the self-evaluations of directors of the board were carried out by means of internal self-evaluation questionnaires. The period evaluated was from January 1 to December 31, 2021. The questionnaires mainly covered the following facets: degree of participation in Company operations, improvement of decision-making quality, composition and structure of membership, position selection and continuous education, and internal control. After statistical self-evaluation results had been collected, the self-evaluation results of the Board of Directors, the Audit Committee, the Remuneration Committee and individual directors averaged as “Excellent.” In addition, in accordance with the Company’s board performance evaluation measures, an independent external professional institution is commissioned to carry out evaluation work every three years. An evaluation report was issued on January 13, 2022, and the Board of Directors reported the results in the first quarter of 2022.

The Independence of External institutions: The Taiwan Corporate Governance Association is an independent professional corporate governance counseling and evaluation institution which has already provided services to more than 300 companies. Its scope spans various industries and it also covers public enterprises with different shareholding structures and board membership compositions, listed OTC companies and general companies with public offerings and non-public offerings of shares.
Evaluation period: December 1, 2020 to November 30, 2021
Evaluation Methods: Online self-assessments and on-site assessments carried out by interviewers.
Evaluation Criteria:
1. Composition of the Board of Directors
2. Guidance of the Board of Directors
3. Authorization of the Board of Directors
4. Supervision of the Board of Directors
5. Communication of the Board of Directors
6. Internal control and risk management
7. Self-discipline of the Board of Directors
8. Others such as Board meetings, support systems, etc.
Summary of Evaluations:
1. The Company’s Board of Directors has proactively investigated and planned the establishment of a functional committee to assist in the operations of the board.
2. External directors have been appointed since 2006. Through their wealth of experience and industry connections, external directors have added value to the Company’s operations.
3. ESG-related measures are being vigorously promoted. Outsourced manufacturing supply chain partners are required to produce environmentally friendly products, and this issue has been incorporated into discussions between the Board of Directors and the management team. ESG concepts are being realized in daily operations throughout the Company’s hierarchy, from the top down.
4. The Audit Committee has taken the initiative to guide internal auditing operations. In addition to routine audits, ad hoc audits have also been enhanced. At the same time, aspects of auditing work such as information security architecture have been integrated to improve the Company’s operational efficiency.
Evaluation Recommendations:
1. It was recommended that a nomination committee be set up, and that simultaneously specific goals and schedules should be formulated, a written system established, relevant mechanisms improved, and that the Board of Directors be invited to participate together in this, so as to facilitate the Company’s sustainable operation and implement the inheritance of talented personnel.
2. It was recommended that to coordinate the promotion of future ESG concepts in work, key performance indicators, remuneration, and the succession planning of senior managers gradually be linked, as this would facilitate the Company’s future operation and development.
3. It was recommended that the current whistleblower mailbox be capable of simultaneously allowing independent directors to directly receive the content of unscreened or forwarded reports, to facilitate independent directors gaining a direct understanding of important information.

Succession Planning for Board Members

The Company’s selection of directors is based on the overall configuration of the Board of Directors and the realization of the goal of diversifying the professionalism and background of directors. Board members need to have professional backgrounds (such as in law, accounting, industry, finance, marketing or technology) and professional skills (such as operational judgment, accounting and financial analysis, business management, crisis management, industry knowledge, international market outlook, leadership and decision-making).

Apart from requiring that board members have professional backgrounds and specialized skills, in order to prepare them for succession, the Company arranges for each director to take at least six to 18 hours of refresher courses every year. These courses cover corporate governance topics related to finance, risk management, sales, business, legal affairs, accounting, and fields such as corporate social responsibility, or those related to internal control systems and financial reporting responsibilities. Directors are thereby helped to fully familiarize themselves with the Company’s operational activities and acquire new knowledge of the industry’s underlying structure, so as to continuously hone their professional capabilities.

The Company carries out performance evaluations on its board members every year, and this is used as a reference for selecting or nominating directors, and for reviewing the remuneration of individual directors.

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Board of Directors
Diversification of Board Members’ Background
Procedures and Rules of Board of Directors Meeting

Investor Relations

Corporate Governance