INVESTORS

UMC Corporate Governance Policy

UMC has an effective corporate governance framework that is consistent with Taiwan's Company Act, Securities and Exchange Act, and other related laws and regulations. UMC also established the "UMC Corporate Governance Practice Principles", "UMC Ethical Corporate Management Best Practice Principles", "Policies and Procedures for Refraining from Insider Trading" and "UMC Corporate Social Responsibility Principles" as practical company considerations to protect shareholders' equity, respect stakeholders, enhance information transparency, strengthen the competency of the Board, and uphold corporate integrity and code of conduct.

UMC has established the Nominating Committee to strengthen the functions of the Board of Directors, ensure shareholders' rights, and supervise relevant departments in the formulation of corporate governance rules and systems. The appointment of the Head of Corporate Governance was approved by the Nominating Committee and Board of Directors on March 6, 2019. The Head of Corporate Governance is the Chief Financial Officer, who has been in a managerial position for at least three years in a public company in handling financial and stock affairs. The Head of Corporate Governance already completed 15 hours of training in 2019, and will complete professional training in accordance with laws and regulations. The key task of the Head of Corporate Governance is supervising finance division’s convening of Board meetings and shareholders meetings, producing meeting agendas, minutes and information disclosure, providing business information required by the directors, assisting the directors with legal compliance, and assisting the directors with their responsibilities and in-service training. In addition, the Head of Corporate Governance communicates with the independent directors on corporate governance-related affairs on a regular basis every year. The following are the 2019 Corporate Governance tasks, and a report has been submitted to the Nominating Committee and Board of Directors:

 

1.

Ensure that Board members are promptly informed of key company information, and immediately notified after the company has issued a press release.

 

2.

Institute a Nominating Committee under the Board of Directors to supervise corporate governance plans and implementation by UMC and its subsidiaries. Regularly report UMC's key operational and governance issues or legal amendments to the Board.

 

3.

Arrange the required number of hours of in-service education for members of the Board, evaluate and purchase appropriate Directors' and Officers' Liability Insurance and report its contents to the Board of Directors.

 

4.

Convene communication meetings on an as needed basis for independent directors, independent auditors and the head of auditing, finance and accounting to implement internal control.

 

5.

Notify Board of Directors members of the agenda seven days before Board meetings, convene meetings and provide meeting materials. Avoid presence during discussion and voting where a motion presents a conflict of interest. Complete and submit minutes of the Board of Directors meeting to each Board member within 20 days after the meeting.

 

6.

To fulfill corporate governance, evaluate the performance of the Board of Directors, functional committees and individual board members according to the Rules for Performance Evaluation of the Board of Directors, and accept external evaluation at least once every three years.

 

7.

Conduct investor briefings on quarterly business performance, participate in periodic investment forums, designate specialists to service shareholders and establish multi communication channels for investors.

 

8.

Schedule shareholders' meeting in accordance with the law, complete and post meeting notification, meeting handbook and minutes within the legally mandated time frame, record changes such as Article of Incorporation of UMC or Board re-election within the legally mandated time frame.

> Ethical Corporate Management

Evaluation Item

Implementation Status

Yes

No

Abstract Illustration

1. Establishment of ethical corporate management policies and programs

     

(1) Does the company declare its ethical corporate management policies and procedures in its guidelines and external documents, as well as the commitment from its board to implement the policies?

V

 

UMC has formulated the Ethical Corporate Management Best Practice Principles, the Code of Ethics for Directors and Officers, the Employee Code of Conduct and the UMC Code of Conduct as regulatory guidelines for all directors, managers and employees of the company. Please refer to the UMC website at http://www.umc.com/English/CSR/c_4.asp for details.

(2) Does the company establish policies to prevent unethical conduct with clear statements regarding relevant procedures, guidelines of conduct, punishment for violation, rules of appeal, and the commitment to implement the policies?

V

 

The UMC Ethical Corporate Management Best Practice Principles and the Employee Code of Conduct are provisions for addressing moral integrity, conflict of interest avoidance and business entertainment. Other relevant education, training or tests are conducted from time to time for employee education.

(3) Does the company establish appropriate precautions against high-potential unethical conduct or listed activities stated in Article 2, Paragraph 7 of the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies?

V

 

The UMC Ethical Corporate Management Best Practice Principles and the Employee Code of Conduct are provisions for addressing moral integrity, conflict of interest avoidance and business entertainment. Other relevant education, training or tests are conducted from time to time for employee education.

2. Fulfill operations integrity policy

     

(1) Does the company evaluate business partners’ ethical records and include ethics-related clauses in business contracts?

V

 

All suppliers have signed the Employment Ethics Terms and Conditions Agreement in which policies and reporting channels are clearly stated. Furthermore, to strengthen and implement policies on quality, penalties for violating the above Process Change Notification (PCN) are clearly stated in the purchase order in accordance with the UMC Raw Material Supplier PCN Application Management Method (GG-Q12-008-E).

(2) Does the company establish an exclusively (or concurrently) dedicated unit supervised by the Board to be in charge of corporate integrity?

V

 

The Corporate Sustainability Committee is the highest-level corporate social responsibility organization within UMC. The Committee formulates the direction and objectives of the Company's corporate social responsibility and sustainable development, and reports to the Board of Directors annually. Ethical management is only one part of corporate sustainability. For further information, please refer to UMC website at http://www.umc.com/English/CSR/c_4.asp.

(3) Does the company establish policies to prevent conflicts of interest and provide appropriate communication channels, and implement it?

V

 

Please refer to the Employee Code of Conduct for policies and reporting channels.

(4) Has the company established effective systems for both accounting and internal control to facilitate ethical corporate management, and are they audited by either Audit Division or CPAs on a regular basis?

V

 

The UMC Audit Division is directly under the Board of Directors/Audit Committee to ensure the independence and objectivity of audits. Each year, the Audit Division evaluates the Company's risks and develops an annual audit plan, implements audits, issues audit reports and tracks improvement accordingly, and conducts control self-assessment annually. The head of the Audit Division regularly communicates with members of the Audit Committee regarding audit results and follow-up, and presents audit affairs and discusses with independent directors during Audit Committee and Board of Directors meetings to fully communicate audit content and performance.
UMC regularly revises its internal control system to respond promptly to environmental changes and to improve the effectiveness of design and operation. Amendments are reported to the Audit Committee and Board of Directors for approval.
In addition, UMC is also listed on the New York Stock Exchange (NYSE) and subject to US regulations for foreign issuers. Since 2006, UMC has complied with the SOX 404 Act and has been audited by the independent auditors annually. To date, the independent auditors have issued unqualified audit reports for UMC's internal control design and implementation performance.

(5) Does the company regularly hold internal and external educational trainings on operational integrity?

V

 

In accordance with the philosophy of ethical management, UMC has formulated the Code of Ethics for Directors and Officers, the Ethical Corporate Management Best Practice Principles and the Employee Code of Conduct as regulatory guidelines for all its directors, managers and employees.
From top down, these regulations enhance the quality of conduct and professional ethics of the company and its entire staff. The above mentioned Employee Code of Conduct is implemented in the daily tasks and businesses of all employees through physical and on-line training courses and online self-tests.
In 2018, UMC fabs in Taiwan and Singapore have completed the training courses and passed relevant tests.

3. Operation of the integrity channel

     

(1) Does the company establish both a reward/punishment system and an integrity hotline? Can the accused be reached by an appropriate person for follow-up?

V

 

Article 6 of the Employee Code of Conduct describes measures against ethics and fraud violations, and protective and anti-retaliation
measures for reporting. Employees may report violations to relevant management and supervisory units through e-mail or hotlines, and the head of the Audit Division is promptly notified of the report.

(2) Does the company establish standard operating procedures for confidential reporting on investigating accusation cases?

V

 

After receiving a fraud report, UMC will convene an investigative team to investigate the suspected fraud described in the report. The Company will protect any employee reporting ethics violation or fraud and members of the investigative team from unfair treatment or retaliation. For details, please refer to the Employee Code of Conduct.

(3) Does the company provide proper whistleblower protection?

V

 

The Company will protect any employee reporting ethics violation or fraud and members of the investigative team from unfair treatment or retaliation. For details, please refer to the Employee Code of Conduct.

4. Strengthening information disclosure

     

(1) Does the company disclose its ethical corporate management policies and the results of its implementation on the company’s website and MOPS?

V

 

UMC discloses its principles on ethical corporate management and relevant regulations on its website and MOPS. In addition, UMC discloses relevant information in its CSR Report.

5. If the company has established the ethical corporate management policies based on the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies, please describe any discrepancy between the policies and their implementation.
UMC has formulated the Code of Ethics for Directors and Officers, the Ethical Corporate Management Best Practice Principles and the Employee Code of Conduct. All directors, managers and employees of the Company shall abide by the provisions of these Codes and related regulations. For employee compliance with the Employee Code of Conduct, please refer to the Employee Code of Conduct in this annual report.

6. Other important information to facilitate a better understanding of the company’s ethical corporate management policies (e.g., review and amend its policies).
For other relevant communications such as employee rights, employee care, investor relations, supplier relationships and stakeholder rights, please refer to the UMC Corporate Social Responsibility Report and the Corporate Sustainability web page at http://www.umc.com/English/CSR/index.asp on the UMC website.

Item

Implementation Status

Legal Compliance

• Inter-division regulatory compliance is coordinated by the Legal Division, and other regulations are regularly reviewed by relevant divisions.
• In 2019, the Legal Division coordinated overall regulatory compliance with the EU General Data Protection Regulation.

UMC Code of Conduct Implementation

• The content of the Codes is reviewed bi-annually:

  1. Review of the Employee Code of Conduct was completed in April 2019.
  2. Relevant penal provisions were added to the Employee Code of Conduct in December 2017.
• Major violations of employee ethics are reported to the Audit Committee on a quarterly basis. In 2019, no major ethical violations were reported.
• Employee Code of Conduct education and testing were conducted in August 2018, with 100% completion rate.
• 4 sessions of Employee Code of Conduct were offered for new employees in 2019, with 100% completion rate.
• Employee Code of Conduct promotion/educational courses: 625 participants and a total of 19.5 hours in 2018; and 173 participants and a total of 6 hours in 2019.

UMC fair competition, intellectual property rights violations

• Litigation cases in each quarter of 2019 were reported to the Audit Committee.
• The UMC Antitrust Policy for promoting fair competition can be found on the UMC website, and online testing is conducted regularly. Online testing for the Fair Trade Law (i.e. the Antitrust Law) was conducted in November 2019.
• For intellectual property rights education, three weekly training courses are offered to new employees: Introduction to UMC Intellectual Property Rights, Operational Secrecy and Basic Legal Knowledge and Risk Awareness Regarding External Documents. In the first half of 2019, we will continue to focus on training via eUMC website, maintaining the frequency of announcement every six months.
• Introduction to UMC Intellectual Property Rights education/training course: 1,333 participants totaling 45.9 hours in 2018.; and 212 participants totaling 12 hours in 2019.
• Operational Secrecy training course: separate from UMC Intellectual Property Rights as an individual course since December 2018 with 54 participants totaling 1 hour in 2018; and 212 participants totaling 12 hours in 2019.
• Basic Legal Knowledge and Risk Awareness Regarding External Documents education/training course: 836 participants totaling 20 hours in 2018; and 212 participants totaling 12 hours in 2019 since implementation began in April 2018.

Financial reporting related internal control

• Annual audit by external auditors and internal Audit Division.
• Results of internal audits for 2019 were reported at the Audit Committee/Board of Directors meetings on a quarterly basis.


In order to implement the prohibition of insider trading, the company has formulated the "Policies and Procedures for Refraining from Insider Trading". In addition, to establish a good internal major information processing and disclosure mechanism of the company, to prevent inappropriate disclosure of information and to ensure the consistency and accuracy of all information publicly released by the company, the company has formulated the "Procedures for Handling Proprietary/Strictly Confidential Information" to follow.
The company regularly publishes relevant laws and regulations to directors and managers on a monthly basis and provides courses on preventing insider trading for directors and managers to attend.


Board of Directors

Nomination and Election

The Company shall have nine (9) to eleven (11) directors who serve a term of three years, elected at the shareholders’ meeting from persons of legal capacity through a nominating system adopted from 2006. A director may be re-elected.

At least three (3) directors or one-fifth of all directors, whichever is higher, shall be independent directors. Their qualifications, shareholding limitations, whether or not they concurrently serve in other positions, methods of nomination and election, and other related matters shall be subject to applicable laws.

According to Article 192-1 of the R.O.C. Company Act, UMC announced on March 20, 2018, the period for accepting the nomination of director candidates (including independent directors), the number of directors to be elected, the place designated for accepting the roster of director nominees and other necessary matters. Any shareholder holding 1% or more of the outstanding shares of the Company may nominate candidate(s) for directors in writing. Any shareholder qualified to nominate may submit nominee(s) to the director, and shall send, during the nomination period from April 3 to April 16, 2018, the name, educational background and past work experience of the nominee(s), a letter signed by each nominee consenting to act as director if elected, a written statement issued by each nominee assuring that he/she is not prohibited from acting under any of the circumstances set forth in Article 30 of the R.O.C. Company Act, and other relevant documents signed and provided by each nominee to UMC via registered mail sent to the Finance Division of the Company. There were no nominations from stockholders except those from the Board during the nomination period.

> Director Candidate List

> Directors' Professional Knowledge and Independence Information

> List of Directors Elected

The Company conducts annual self-evaluation of the BOD, its functional committees and individual board members' performance based on "the Rules for Performance Evaluation of the Board of Directors" approved by the Board of Directors. The evaluation covers aspects such as awareness of the duties of directors, the degree of participation in the Company's operations, understanding the business and its risks, the improvement of policy decision quality, the composition and structure of the Board of Directors, the election and continuing professional development of directors, internal control and Audit Committee communications, oversight of the financial reporting process, oversight of the external audit function and so on.

In 2018, the Nominating Committee conducted the self-evaluation of the Board of Directors, functional committees and individual board members and reported the result to the Nominating Committee and Board of Directors on March 6, 2019. The performance result was "Excellent," but the company may be further trained with professional courses according to the company's overall needs to assist directors in their functions.

To improve the operating efficiency of the Board of Directors and enhance corporate governance, “The Rules for Performance Evaluation of the Board of Directors" was revised by UMC and approved by the Board of Directors in October of 2017, which requires the Company's board performance evaluation to be conducted by an external independent professional institution or a panel of external experts and scholars at least once every three years.

The Company engaged with Taiwan Corporate Governance Association to conduct an evaluation of board performance and efficiency, and completed the evaluation on March 7, 2018. The evaluation comprised of 8 scopes and 38 indicators including Composition, Direction, Authorization, Monitoring, Communication, Internal control, Risk management and Discipline of the Board, and was executed through online self-evaluation and due diligence. After receiving the formal evaluation report in April 2018, the report was provided to all directors.

The report concluded that the discretion of the company's long-term strategy was incorporated into the composition of the Board, and the establishment of the Nominating Committee surpassed governmental regulations; the independent directors with diversified backgrounds were devoted to and were fully accountable with regard to their duties of direction and monitoring; the intensive communication between board members and management team ensured timely and sufficient information delivery, thus building an open and transparent culture for the Board. The report also provided recommendations on periodic evaluation and human resource development for the Company to enhance the efficiency of the Board. Since 2018, the scope of the company's internal regular performance evaluation has been expanded to individual directors and all functional committees. In response to suggestions for human resource development, the implementation of the development plan for senior executives of each department was carried out, and the senior management training program planning was based on the assessment results of competence development.


Audit Committee

The Audit Committee assists the Board of Directors in performing its supervision functions. It is also responsible for tasks defined by the Company Act, Securities and Exchange Act and other relevant regulations. Since UMC is listed on the NYSE, it also has to comply with the U.S. regulations regarding foreign issuers. The Audit Committee is comprised of all independent directors. Cheng-Li Huang and Wenyi Chu qualify as audit committee financial experts. The Committee shall meet at least once every quarter, and may be convened any time if necessary.

The Committee's duty and responsibility includes the following items: supervising the financial reporting of the Company, internal audit, internal control of the Company, material transactions of assets and derivatives, loans, endorsements, guarantees, engaging and removing the Company's independent auditors and accessing such auditors' compensation and independence, and appointing or removing managers of finance, accounting and internal audit divisions. The Committee is also responsible for dealing with any whistleblower cases received and periodically reviewing the Company's compliance with government law, documentation that involves government agencies, and the compliance of the employees' Code of Conduct. The Committee may also engage an attorney, certified public accountant, or other professional to assist them in exercising the Committee's duties. For further information regarding UMC's audit committee charter, please click on the link below.


Remuneration Committee

The goal of Remuneration Committee's operation is to strengthen corporate governance and risk control, and to evaluate and monitor the Company's remuneration system for its directors and managers while considering the provision of incentives to facilitate talent retention. The committee shall be composed of all the Company's independent directors, and convene meetings accordance with the laws.


Capital Budget Committee

The Capital Budget Committee shall comprise of members from the Company's independent directors and non-executive directors. The Committee's goal includes review of the Company's capital expenditure budget, with the intent to strengthen long-term corporate strategy, financial planning and business performance.

> Link to Capital Budget Committee Charter

Nominating Committee

The Nominating Committee shall comprise of members from the Company's independent directors. The Committee's goal is to assist the Board of Directors (“the Board”) to enhance management mechanism and to improve corporate governance for the Company’s sustainable development. The objectives of the Committee are as follows: 1. To constitute nomination policy and succession plans of the directors and the executives, then to search, to review and to propose the candidate list of the directors and the executives accordingly. 2. To construct and to develop the operation of the Board and the sub-committees, as well as to plan and to execute the performance assessment of the Board, the sub-committees and the executive(s). 3. To enhance corporate governance system and practices in order to protect the interests of stakeholders.

> Link to Nominating Committee Charter


Gov
Full Version

> Download UMC Corporate Governance Statement (pdf, 29kb)


Individual Sections

> The Board of Directors' Responsibilities and Meetings
> Audit Committee's Responsibilities
> Structure of the Board of Directors


> Articles of Incorporation of UMC (pdf, 41kb)
> UMC Acquisition or Disposal of Assets Procedure (pdf, 242kb)
> UMC Financial Derivatives Transaction Procedure (pdf, 131kb)
> UMC Loan Procedure (pdf, 95kb)
> UMC Endorsements and Guarantees Procedure (pdf, 101kb)
> Organization and Operation of UMC's Internal Audit (pdf, 27kb)
> UMC Ethical Corporate Management Best_Practice Principles(pdf, 143kb)
> UMC Code of Ethics for Directors and Officers(pdf, 38kb)
> UMC Employee Code of Conduct (pdf, 119kb)
> UMC Corporate Social Responsibility Principles (pdf, 225kb)
> UMC Procedures for Handling Proprietary/Strictly Confidential Information (pdf, 160kb)
> Download the UMC Corporate Governance Practice Principles (pdf, 96kb)
> The differences between the UMC's corporate governance practices and those required of domestic companies under NYSE listing standards
> Download Taxation Policy and Governance (pdf, 98kb)

> Code of Conduct violations can be reported by e-mail or phone:
Email: whistleblower@umc.com
Phone: 0800-024-399 (toll free) or 03-5782258 ext.31425

Please note that all information is governed by the following Terms & Conditions.

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