The Board has the overall responsibility for THSRC’s performance. Its main duties include regularly reviewing the Company’s strategy, planning capital expenditure, internal restructuring and human resources policy. It also appoints, dismisses and supervises the Company’s senior management team, chief auditor and chief accountant. The current Board consists of a Chairman, eleven Directors, and three Independent Directors. The current Board was elected on November 10, 2009 for a term of 3 years. The Board held 13 meetings during 2011. To carry out its duties, the Board has delegated certain authority to several committees. The Board currently has 5 committees.
Corporate Governance Committee
The Corporate Governance Committee recommends candidates to be nominated for election as independent directors at THSRC’s shareholders’ meeting, consistent with criteria approved by the Board. The Committee also develops and regularly reviews corporate governance principles and related policies for approval by the Board. The Committee consists of five members, and the meeting shall be convened by the independent director.
Quasi Audit Committee
The Quasi Audit Committee assists the Board in fulfilling its responsibilities for generally overseeing the Company’s financial reporting processes, the audit of the Company’s financial statements, and the Company’s compliance with legal and regulatory requirements; the qualifications and independence of the Company’s Chief Auditor; the performance of THSRC’s internal control function; any conflicts of interest from affiliated parties; and risk assessment and risk management. The Committee consists of three members, and the meeting shall be convened by the independent director.
The Compensation Committee assists the Board in fulfilling its responsibilities with regard to the compensation policies, systems and standards, and in the evaluation and compensation of THSRC’s directors and supervisors of the Board and executives. The Committee consists of four members, and the meeting shall be convened by the independent director.
The Finance Committee assists the Board in fulfilling its responsibilities for planning and reviewing the Company’s capital and debt structure, and for reviewing the Company’s financial and investment policies, strategies and capital structure, and financial risk management. The Committee consists of seven members, and the current meeting is convened by the independent director.
The Procurement Committee assists the Board in fulfilling its responsibilities for overseeing processes and assessments for major procurements and construction awards.
THSRC’s "Guidelines for Corporate Governance," which was approved by the stockholders’ meeting on November 1st, 2004, are based upon OECD Principles of Corporate Governance; S&P Corporate Governance Score-Criteria, Methodology and Definitions; NYSE Listed Company Manual Sec303A; Infosys Corporate Governance Report; the international and/or domestic companies’ guidance governing corporate governance; the related regulations in Taiwan; and rules issued by Taiwan Stock Exchange. The main purposes are to construct the best corporate governance system, protect stockholders’ rights and interests, strengthen the structure of the board of directors, build up the supervisors’ function and fulfill social obligations. In addition to "Guidelines for Corporate Governance," THSRC also stipulated "Rules for Proceedings of Board Meetings," "Charter of Corporate Governance Committee," "Charter of Quasi-Audit Committee," "Enforcement Rules of the Quasi-Audit Committee Charter," " Charter of Compensation Committee," "Charter of Procurement Committee," "Information Disclosure Rules," "Code of Conduct & Ethics," etc. These have become the basis for THSRC’s corporate governance. All related regulations and rules governing corporate governance (Chinese version only) are disclosed in the "About Us" section of THSRC’s website, and the address is http://www.thsrc.com.tw.
According to THSRC’s "Guidelines for Corporate Governance," THSRC has taken liability insurance to indemnify its directors, supervisors and executive managers against liability while acting for THSRC, and the coverage was US$10 million each year. Since November 1, 2010, the renewal of the coverage of the liability insurance was adjusted to US$20 million each year.
Based on the findings of a self-assessment, Taiwan High Speed Rail Corporation (THSRC) states the following with regard to its internal control system during the period from January 1 to December 31, 2011:
- THSRC is fully aware that establishing, operating, and maintaining an internal control system is the responsibility of its Board of Directors and management. THSRC has established such a system aimed at providing reasonable assurance regarding the achievement of objectives in the following categories:(1) effectiveness and efficiency of operations (including profitability, performance, and safeguarding of assets), (2) reliability of financial reporting, and (3) compliance with applicable laws and regulations.
- An internal control system has its inherent limitations. No matter how perfectly designed, an effective internal control system can only provide reasonable assurance of accomplishing the three objectives mentioned above. Moreover, the effectiveness of an internal control system may be subject to changes of environment or circumstances. Nevertheless, the internal control system of THSRC contains self-monitoring mechanisms, and THSRC takes corrective actions whenever a deficiency is identified.
- THSRC evaluates the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing the Establishment of Internal Control Systems by Public Companies (herein below, the "Regulations"). The criteria adopted by the Regulations identify five components of internal control based on the process of management control: (1) control environment, (2) risk assessment, (3) control activities, (4) information and communication, and (5) monitoring. Each component further contains several items. Please refer to the Regulations for details.
- THSRC has evaluated the design and operating effectiveness of its internal control system according to the aforementioned criteria.
- Based on the findings of the evaluation mentioned in the preceding paragraph, TSHRC believes that, during the year 2011, its internal control system (including its supervision and management of subsidiaries), as well as its internal controls to monitor the achievement of its objectives concerning operational effectiveness and efficiency, reliability of financial reporting, and compliance with applicable laws and regulations, were effective in design and operation, and reasonably assured the achievement of the above-stated objectives.
- This Statement will be an integral part of THSRC’s Annual Report for the year 2011 and Prospectus, and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Law.
- This Statement has been passed by the Board of Directors meeting held on April 19, 2012, with fourteen of the attending directors all affirming the content of this Statement.