About CHT

Governance Guidelines

 

  Code of Corporate Governance for
Chunghwa Telecom Co., Ltd.

 Adopted by the 4th Board of Directors at the 2nd meeting on Aug. 26, 2004
 Amended by the 4th Board of Directors at the 17th meeting on Dec. 26, 2006
 Amended by the 5th Board of Directors at the 19th meeting on Oct. 29, 2009
 Amended by the 6th Board of Directors at the 2nd meeting on July 27, 2010
 Amended by the 6th Board of Directors at the 9th meeting on June 28, 2011
 Amended by the 6th Board of Directors at the 19th meeting on Dec. 25, 2012
 Amended by the 7th Board of Directors at the 2nd meeting on Aug. 13, 2013
 Amended by the 7th Board of Directors at the 8th meeting on Aug. 12, 2014

Chapter 1 General Principles

Article 1 Chunghwa Telecom Co., Ltd. (herein referred to as the "Company") has hereby determined
             the Code of Corporate Governance for Chunghwa Telecom Co., Ltd. in accordance with the
             "Corporate Governance Best-Practice Principles for TSE/GTSM Listed Companies" drafted 
             by the Taiwan Stock Exchange Corporation (herein referred to as "TSEC") and GreTai 
             Securities Market in order to establish a sound corporate governance system.

Article 2  In addition to abiding by laws and the Articles of Incorporation, the corporate governance
             system established by the Company upholds the following principles:

     1. Establish an effective corporate governance structure.
     2. Protect shareholders' rights and interests.
     3. Strengthen the functions of the board of directors.
     4. Respect for stakeholders' rights and interests.
     5. Enhance information transparency

Article 3  The Company shall, pursuant to the Regulations Governing Establishment of Internal Control
             Systems by Public Companies, establish an effective internal control system in consideration
             of the overall operating activities of the Company and its subsidiaries, and shall regularly
             review said system in order to ensure the continued effectiveness of its design and
             implementation in light of changes in the Company's internal and external environment.

             The adoption or amendment to the internal control system shall be approved by one half or more
             of all audit committee members and be submitted to the Board for resolution; any opposed
             or qualified opinions stated by independent directors shall be explicitly recorded in the board
             meeting minutes.            

             Apart from effectively implementing self-audits of the internal control system, the Company's
             Board and the management shall review self-audit results of each department and the audit
             reports of audit organization at least once each year; the supervisors shall pay close attention
             to and supervise this review work. The directors and supervisors shall hold a meeting in person
             every year with internal auditors to review the internal control system for deficiency(ies), and
             duly keep in minutes or other records. The review of the effectiveness of the internal control
             system shall be subject to the consent of one-half or more of all audit committee members and
             be submitted to the board of directors for resolution.            

             The Company's management shall place importance on the internal audit department and its
             personnel, grant  it full authority, and urge it to conduct audits effectively, evaluate the
             deficiencies in the internal control system and assess the Company's operating efficiency to
             ensure the system can be carried out effectively on a continuous basis and can assist the Board
             of Directors and the management to execute their responsibilities, and thereby make the
             corporate governance system practicable.

             For the pupose of raising and preserving the quality and effect of execution for practicing sound
             internal control system, strengthening professional ability of the substitutes of the internal
             auditors, the Company shall establish designated substitutes of internal auditors.  

             Article 11, paragraph 3 regarding the prerequisites for internal auditors, and article 16, 17 and 18
             of the Regulations Governing Establishment of Internal Control Systems by Public Companies
             shall apply mutatis mutandis to the preceding paragraph.

Chapter 2  Protection of Shareholders' rights and interests

Section One  Encouraging Shareholders to Participate in Corporate Governance

Article 4  The Company shall take protection of shareholders' rights and interests as its foremost goal when
             implementing the corporate governance system, and shall treat all shareholders equally. 

             The Company shall establish a corporate governance system that can ensure shareholders’ right to
             know, right to participate and right to determine the Company's material matters, all in accordance
             with the laws. 

Article 5  The Company shall convene shareholders meetings in accordance with the Company Act and
             relevant laws and regulations, and shall establish comprehensive meeting rules of order; any
             matters that must be determined by resolution of the shareholders meeting shall be implemented
             in accordance with the meeting rules of order. 

             The content of resolutions of the shareholders meeting shall comply with laws, regulations, and
             articles of incorporation of the Company. 

Article 6  The Company's Board shall properly arrange shareholders meeting discussion topics and
             procedures. Each issue shall be allotted to reasonable time for discussion in the shareholders
             meeting, and shareholders shall be given appropriate opportunities for speaking out. 

             A majority of the directors shall personally attend shareholders meetings convened by the Board. 

Article 7  The Company shall encourage shareholders to participate in corporate governance, and shall
             hold shareholders meetings in a legal, effective, and secure manner. The Company shall employ
             all types of methods and channels as well as make full use of technological methods of
             information disclosure to increase the percentage of shareholders attending the shareholders
             meeting, and shall ensure that shareholders may fulfill their shareholders' rights at the
             shareholders meeting in accordance with relevant laws.

Article 8  The Company shall record minutes of the shareholders meeting in accordance with the Company
             Act and other relevant laws and regulations. With respect to the elections of Directors, the meeting
             minutes shall record the method of voting adopted therefore and the total number of voting rights
             that elected directors received.             

             With respect to the elections of Directors, the meeting minutes shall record the method of voting
             adopted therefore and the number of votes that elected directors received.

             The shareholders meeting minutes shall be kept indefinitely and appropriately as long as the
             Company is in existence, and should be sufficiently disclosed on the Company's website. 

Article 9  The chairman of shareholders meeting shall be fully aware of and comply with the Company’s
             Ordinance of Shareholders Meeting, ensuring the proper progress of the proceedings of the
             agenda, and may not arbitrarily declaring adjournment of the meeting. 

             In order to protect the rights and interests of the majority of shareholders, if the chairman
             declares the adjournment of a meeting in violation of the meeting rules of order, the other
             members of the Board should quickly assist attending shareholders, in accordance with
             statutory procedures, to elect one person as chairman on the basis of the majority of
             shareholders' voting rights, and continue the meeting. 

Article 10  The Company shall place high importance on shareholders' right of being informed and
             thoroughly comply with relevant regulations concerning information disclosure to regularly
             and promptly provide shareholders the information concerning the Company's finances,
             operations, insiders shareholdings and corporate governance by using of the Market
             Observation Post System or the Company's website. 

Article 11  Shareholders shall have the right to share the Company's earnings. In order to
             safeguard shareholders' investment rights and interests, the shareholders meeting may,
             in accordance with Article 184 of the Company Act, audit statements and books produced
             by the Board, and resolve to distribute earnings or decide deficit off-setting plans. The
             shareholders meeting may appoint an inspector to perform the foregoing audit tasks. 

             Shareholders may, in accordance with Article 245 of the Company Act, apply with the court to
             appoint an inspector to audit the Company's accounts of operation and property holdings.

             The Board and managers shall comply fully with the audit tasks performed by
             the inspector in the two foregoing paragraphs, and may not attempt to obstruct, refuse, or
             evade the inspector's work.

Article 12  To protect shareholders' rights and interests, the Company shall handle major financial
             actions, including acquisition or disposal of assets, lending capital to and making endorsements
             or providing guarantees for any other entities, in accordance with relevant laws and regulations,
             and shall draft and submit relevant handling procedures to the shareholders meeting for approval. 

             In the event of Management Buyout (MBO), the Company may, in addition to abiding by relevant
             laws and regulations when handling the matter, establish an objective and independent committee
             to review the reasonableness of the buyout price and buyout plan and shall pay attention to
             follow such rules related to information disclosure.

             Any of the Company's personnel, when handling matters prescribed in the above paragraph, shall
             take note of any conflicts of interest and the need to rescue. 

Article 13  To protect shareholders' rights and interests, the Company should have dedicated personnel to
             properly handle shareholders' recommendations, questions, and disputes. 

             If a resolution of the shareholders meeting or a board meeting violates laws and regulations or
             the articles of incorporation, or if the directors or managers violate laws and
             regulations or the articles of incorporation in the course of their duties, and results in harming
             shareholders' rights and interests, the Company shall appropriately handle any lawsuits
             initiated by shareholders in accordance with law. 

Section Two  Corporate Governance Relationship Between the Company and Affiliated Enterprises 

Article 14  The allocation of management authorities and responsibilities over personnel, assets and
             financial affairs of the Company and its affiliated enterprises shall be clearly identified; risk
             evaluation shall be conducted exactly and appropriate firewalls shall be established. 

Article 15  Unless otherwise provided by the laws and regulations, the Company's managers may not
             concurrently serve as managers at affiliated enterprises. 

             A director, who engages on behalf of himself or third party within the scope of the Company's
             operations, shall explain the major content of such actions to the shareholders meeting and
             obtain the latter's consent. 

Article 16  The Company shall establish sound management systems for finance, operations, and
             accounting in accordance with relevant laws and regulations. It shall further properly perform
             overall risk evaluation with its affiliated enterprises on main correspondent banks, customers,
             and vendors, and shall implement necessary control mechanisms in order to lessen credit risk. 

Article 17  Based on the principles of fairness and reasonableness, when the Company has a business
             transaction with an affiliated enterprise, the Company shall determine written standards for the
             conduct of mutual financial and business operations. 

             Transactions or contractual matters between the Company and related parties and shareholders
             shall also be conducted according to the principles set forth in the foregoing paragraph, and
             tunneling of benefit shall be strictly prohibited. 

Article 18  A juristic shareholder having controlling power over the Company shall comply with the following
             provisions: 

             1. It shall bear a duty of good faith to other shareholders and shall not directly or indirectly
                 cause the Company to be engaged in transactions at other than arm!|s length or involved in
                 a management conduct for illegal profit.
             2. Its representative shall follow the Company's regulations with respect to the exercise of rights
                 and participation in resolution, so that at shareholders meeting, the representative shall
                 exercise his/her voting right for the best interest of all shareholders and in good faith and
                 exercise the fiduciary duty of care of a directors.
             3. It shall comply with relevant laws, regulations, and the Articles of Incorporation of the Company
                 in nominating of the Company's directors and supervisors and shall not act beyond the
                 authority granted by the shareholders meeting or the board meeting.
             4. It shall not improperly intervene in corporate policy making or obstruct corporate management
                 activities.
             5. It shall not restrict or impede the Company's production operations by methods of unfair
                 competition such as monopolizing corporate procurement or foreclosing sales channels. 

Article 19  The Company shall ensure the command at any time of information on the identity of major
             shareholders, who own the higher percentage of shares and have an actual control over the
             Company, and its ultimate control persons. 

             To enable other shareholders to exercise supervision function, the Company shall regularly disclose
             important information about its shareholders holding more than ten percent of the outstanding
             shares relating to the pledge, increase or decrease of share ownership, or other important matters
             that may possibly trigger a change in the ownership of their shares. 

Chapter 3  Enhancing the Functions of the Board of Directors 

Section One  Structure of the Board of Directors 

Article 20  The Board of Directors of the Company shall be accountable to the shareholders at the
             shareholders’ meetings with respect to all procedures and arrangements under the corporate
             governance system, so as to ensure the Directors’ proper conduct of its duties in compliance with
             the applicable laws, regulations and Articles of Incorporation as well as corporate resolutions
             approved by the shareholders. 

             Regarding the structure of the Board of Directors of the Company, the number of directors, which
             shall be more than five, shall be properly determined by reviewing the scale of corporate
             management and operation and the shareholding of the major shareholders and taking into
             consideration of the practical needs for operation. 

             The composition of the Board shall be given due attention to the principles of gender equality, and
             the board members shall possess the necessary knowledge, skill, and experience for performing
             their duties. In order to achieve the ideal goals of corporate governance, the board of directors shall
             possess the following abilities:            

             1. Ability to make operational judgment
             2. Ability to perform accounting and financial analysis
             3. Ability to conduct management administration
             4. Ability to conduct crisis management
             5. Possession Industrial knowledge
             6. Possession perspective of International market
             7. Ability to lead
             8. Ability to make decisions 

Article 21  The Company shall incorporate a fair, just, and open procedure for the election of directors, and
             adopt the cumulative voting mechanism in order to fully reflect shareholders’ views. 

             A majority of the Company's directors may not be the spouse of or relative two-degree of
             consanguinity with each other. 

             The Company shall elect a director to fill the vacancy at the first subsequent shareholders
             meeting after a director has been released for a particular reason and the Board is left with
             less than five members. If, however, the number of vacancies exceeds one-third of the
             number of directors designated in the Articles of Incorporation, the Company shall, within
             60 days after the vacancies arise, convene a special shareholders meeting to elect for
             filling the vacancies. 

             The aggregate shareholding percentage of all of the directors of the Company shall comply with
             the laws and regulations. Restrictions on the share transfer of each director and the creation,
             release, or changes of any pledges over the shares held by each director shall be subject to the
             relevant laws and regulations, and the relevant information shall be fully disclosed. 

Article 22  Before the Company convenes a shareholders’ meeting to re-elect the directors, the
             qualifications, education, working experience, background and the existence of any other
             matters set forth in Article 30 of the Company Act with respect to the candidates recommended
             by shareholders or directors should be reviewed in advance and the result thereof be provided to
             shareholders for their reference, so that qualified directors will be elected. 

Article 23  The responsibilities and duties of the Chairman, CEO, and president shall be clearly distinct. 

             It would be inappropriate for the Chairman to also act as the president. If the chairman also acts
             as the president or they are spouses or relatives within one degree of consanguinity, the number
             of independent directors should be increased. 

Section Two  The Independent Director System 

Article 24  In accordance with the Articles of Incorporation, the Company shall have three independent 
             directors. 

             The Company's independent directors shall be elected via a nomination system; elections shall be 
             held as prescribed in Article 12-1 of the Articles of Incorporation. 

             If the Company and its group enterprises and organizations, and another company and its group 
             enterprises and organizations nominate each other’s director, supervisor or managers as a
             candidate for an independent director of its own, the Company shall, at the time it receives the
             nominations for independent directors, disclose the fact and explain the suitability of the
             candidate for independent director. If the candidate is elected as an independent director, the
             Company shall disclose the number of votes in favor of the elected independent director.

             The term of "group enterprises and organizations" in the preceding paragraph comprises the 
             Company’s subsidiaries, legal foundations in which it directly or indirectly donated more than 50 
             percent of the fund in the foundations, and other institutions or juridical persons that are
             substantially controlled by the Company.

             Independent directors and non-independent directors may not switch their status during their
             terms of appointment. 

             The subsequent shareholders meeting shall have election to fill the vacancy if an independent 
             director is released for a particular reason and the number of independent directors is less than the
             number designated in the first paragraph or in the Articles of Incorporation. If the independent
             directors are all released, the Company shall, within 60 days after the vacancies arise, convene a
             special shareholders meeting to  elect for filling the vacancies. 

             The independent directors, when carrying out their duties, shall maintain their independence and 
             may not have any direct or indirect interest with the Company. Regarding directors' professional 
             qualifications, shareholding and multiple posts holding restrictions as well as determination of 
             independency, manner of nomination and other matters requiring compliance, shall be  handled
             in accordance with the Securities and Exchange Law,  Regulations Governing Appointment of 
             Independent Directors and Compliance Matters for Public Companies and other regulations and
             rules set forth by the Taiwan Stock Exchange.

Article 25  The Company shall stipulate expressly the scope of duties of the independent directors and
             empower them with manpower and material support related to the exercise of their powers. 
             Neither the Company nor other members of the Board shall restrict or obstruct the independent
             directors' performance of their duties. 

             The Company shall stipulate directors' compensation in the Articles of Incorporation or pursuant
             to a resolution of shareholders meeting.  The compensation to the directors shall adequately
             reflect the long-term performance of the Company, and shall also take the overall operational
             risks of the Company into consideration. Different but reasonable compensation from that of
             other directors may be set forth for the independent directors. 

     When the Company, under the Articles of Incorporation, or by the resolution of shareholders 
     meeting, or by order of the competent authority, sets aside a certain proportion of earnings 
     as special reserve, such allocation shall be made after the allocation of legal reserve and 
     before the distribution of director compensation and employee bonuses, and the Company
     shall provide in the Articles of Incorporation the method to be adopted for distributing earnings
     when reversal of the special reserve is added into the undistributed earnings. 

Section Three  Functional Committees

Article 26  For the purpose of developing monitoring functions and  strengthening management 
             mechanisms, the Board of Directors of the Company may, taking into account the basis of the
             size of the Board and number of independent directors, set up functional committees and have
             them stipulated in the Articles of Incorporation. 

             Functional committees shall be responsible to the Board and submit proposals to the Board of
             Directors for approval. 

             Functional committees shall adopt organizational regulations governing the exercise of their
             power and duty to be approved by the Board of Directors. The content of organizational rules
             shall include the number of committee members, term of appointment, authority and duties,
             meeting rules and resources to be provided by the Company to facilitate the committee's
             carrying out its duties. 

 Article 27  The Board shall establish an audit committee composed of the entire independent directors;
             one of the audit committee members shall serve as chairman, and at least one member shall
             possess professional expertise in accounting or finance.

             The Company establishes an audit committee, the provisions regarding supervisors in the
             Securities and Exchange Act, the Company Act and other laws and regulations shall apply
             mutatis mutandis to the audit committee.

             The following matters shall be subject to the approval by at least one half or more of all audit
             committee members and be submitted to the board of directors for resolution:    

             1. Adoption or amendment to the internal control system pursuant to Article 14-1 of the
                  Securities and Exchange Act.
             2. Review of the effectiveness of the internal control system.
             3. Adoption or amendment, pursuant to Article 36-1 of the Securities and Exchange Act, 
                  to the handling procedures for significant financial or operational activities, including 
                  acquisition or disposal of assets, derivatives trading, extension of monetary loans to 
                  others, or endorsements or guarantees for others.
             4. A matter bearing on the personal interest of a director.
             5. A significant asset or derivatives transaction.
             6. A significant monetary loan, endorsement, or provision of guarantee.
             7. The offering, issuance, or private placement of any securities with equity nature.
             8. The engagement, discharge, or compensation of an attesting CPA.
             9. The appointment or discharge of a financial, accounting, or internal auditing officer.
             10. Annual and semi-annual financial reports.
             11. Any other significant matters so required by the company or the competent authority.

             The exercise of power by the audit committee and independent directors and the related matters
             shall be handled in accordance with the Securities and Exchange Act, the Regulations Governing 
             the Exercise of Powers by Audit Committees of Public Companies, and the rules and regulations 
             of the TWSE or GTSM.             

Article 27-1: The Company’s Board shall set up a Compensation Committee.  The Compensation 
             Committee shall consist of at least three directors, including at least (one) independent
             director(s) who shall be the president of the meeting of the Committee. 

             The Compensation Committee shall give advice to the Board of Directors regarding the
             compensation policy for the directors, supervisors and managerial officers.

             The compensation policy of the Company shall not lead the directors and managerial officers
             to conduct activities at excessive risks for the Company. 

Article 28  The Company shall select a professional, responsible, and independent certifying CPA to 
             perform regular review of the financial conditions and internal control measures of the Company.
             With regard to the irregularity or deficiency timely discovered and disclosed by the CPA during 
             the review, and the concrete measures for improvement or prevention suggested by the CPA,
             the Company shall faithfully implement improvement actions. 

             The Company shall evaluate the independence of the CPA engaged by the Company regularly
             and no less frequently than once annually. In the event that the Company engages the same
             CPA without replacement for five years consecutively, or if the CPA is subject to disciplinary
             actions or other circumstances prejudicial to the independence of the CPA, the Company shall
             review the necessity of replacing the CPA, and shall submit the conclusion of such review to the
             Board. 

Article 29 The Company should engage a competent and professional legal counsel to provide adequate
             legal consulting services to the Company, or to assist the directors and the management improve
             their knowledge of the law, for the purpose of preventing any infraction by the Company or its
             staff of laws or regulations, and ensuring the corporate governance matters will proceed pursuant
             to the relevant legal framework and prescribed procedures. 

             In the event that the directors or the management are involved in litigation as result of performing
             his or  her duties as provided by the law or arising from shareholders disputes, depending on the 
             circumstances, the Company shall retain a legal counsel to provide assistance.            

             The audit committee or any of its independent director members in the audit committee may, on
             behalf of the Company, engage a legal Counsel, CPA, or other professional to perform necessary
             auditing tasks or provide consulting services in connection with the committee's exercise of its
             powers; the Company shall bear responsibility for payment of the expenses so incurred.

Section Four  Rules for the Proceedings of Board Meetings and the Decision-making Procedures  

Article 30  The Company shall convene the board meeting at least one time a quarter, and may convene the
             Board at any time when urgent circumstances have arisen. When convening the Board, the 
             Company shall state the main contents of the meeting, notify all directors to attend at the
             designated time. The Company shall also provide sufficient meeting materials when notifying
             the directors. If the provided materials are insufficient, the directors have the right to request
             supplementary information, or may delay deliberation following a board resolution. 

             The Company shall draft the regulations governing procedures for board meetings and report the
             same to the shareholders meeting. Regulations governing major deliberation items, operating
             procedures, items to be explicitly stated in the minutes, announcements, and other binding matters
             shall comply with the Regulations Governing Procedure for Board of Directors Meetings of Public
             Companies.

Article 31  A director shall exercise a high degree of self-discipline and shall voluntarily abstain from voting, 
             for himself or herself or as proxy for another director, on a proposal submitted to the Board of 
             Directors that risks the involvement of the director!|s own interest to the detriment of the interest
             of the Company. The directors shall also practice self-discipline as to their internal relationship and
             must not support each other in an inappropriate manner.

             The matters that a director shall voluntarily abstain from voting shall be clearly set forth in the 
             rules for the proceedings of the board meetings.

Article 32  The independent directors shall attend meetings in person, and may not appoint a
             non-independent director to attend in their stead, when the Board discusses matters that must
             be submitted to the Board pursuant to Article 14-3 of the Securities and Exchange Law.
             Independent directors' opposed or qualified opinions shall be explicitly recorded in the board
             meeting minutes. If an independent director cannot attend a board meeting in person to
             express an opposed or qualified opinion, unless he or she has a legitimate excuse, the
             independent director shall submit a written opinion in advance; said opinion shall be explicitly
             recorded in the board meeting minutes.

             In any of the following circumstances, decisions made by the board of directors shall be noted in the
             meeting minutes, and in addition, announced and reported on a website designated by the
             competent authority within 2 days after the date of said board meeting:

             1. An independent director has a dissenting or qualified opinion which is on record or stated in a 
                  written statement; or      
             2. The remuneration approved by the Board is better than that proposed by the compensation 
                  committee.
             3. The matter was not approved by the audit committee, but had been approved by two-thirds 
                  or more of all directors.

            When the content of proposals to be discussed warrants, the Board may notify managerial
            personnel in relevant departments to attend the board meeting in a non-voting capacity in
            order to report on the Company's current business situation and respond to inquires raised
            by the directors. When necessary, the Board may also invite the CPA, legal counsel, or other
            professional to attend the meeting in a non-voting capacity to assist the directors in
            understanding the conditions of the Company for the purpose of adopting an appropriate
            resolution. 

Article 33  In accordance with relevant regulations, staff personnel of the Company attending board
            meetings shall collect and correctly  record the meeting minutes in detail, and the summary,
            method of resolution, and voting results of all the proposals submitted to the board meeting.            

            The board meeting minutes shall be signed or sealed by the chairman and secretary of the
            board meeting and sent to each director within 20 days after the meeting.  The attendance
            sheet forms a part of the minutes which shall be fully recorded which shall be treated as an
            important corporate document and well preserved permanently during the existence of the
            Company. 

            The minutes may be produced, distributed, and kept via electronic methods. 

            The Company shall make audio or video recordings of board meetings, and shall keep such
            recordings for at least five years. Recordings may be kept via electronic methods. 

            If a lawsuit concerning a relevant board resolution occurs before the end of the preservation period
            mentioned in the foregoing paragraph, relevant archival audio or video recordings shall be kept
            indefinitely, and the regulations of the foregoing paragraph shall not apply. 

            When a board meeting is held by means of videoconferencing, audio and video recordings of the
            meeting shall be part of the minutes, and shall be kept indefinitely. 

            Where a resolution of the Board violates laws, regulations, articles of incorporation, or resolutions
            adopted in the shareholders meeting, and thus causes an injury to the Company, dissenting
            directors whose dissent can be proven by minutes or written statements will not be liable for
            damages.

Article 34  The Company shall submit the following matters to the Board for discussion:

     1. Approval of the Company's operating plan and budget.
     2. Approval of the Company’s financial forecast.
     3. Review and approval of semi-annual, annual financial reports/statements and business report.
     4. Approval of adoption or amendment to human resource, procurement, accounting, and internal
          control systems.
     5. Approval of the statement of internal control system.
     6. Adoption or amendment in accordance with Article 36-1 of the Securities and Exchange Act
          of procedures for handling major financial actions such as acquisition or disposal of assets,
          engaging in derivative trading, extension of monetary loans to others, endorsements or
          guarantees for others.
     7. Offering, issuing, or private offering of equity-type securities.
     8. Appointment and dismissal of finance, accounting, and internal audit executives.
     9. Increase or decrease of the capital.
     10. Approval of Company's organizational regulations.
     11. Establishment, alteration, or revocation of domestic or foreign branches.
     12. Distribution of profits or making up of losses.
     13. Approval of amounts and terms of domestic and foreign debt of loans.
     14. Approval of re-investment amount.
     15. Approval of issuance of corporate bonds.
     16. Adoption or amendment to organizational regulations for the Board and functional committees.
     17. Adoption or amendment to regulations governing the scope of independent directors' duties.
     18. Approval of the treatment standard of employee.
     19. Appointment and discharge of President, Executive Vice Presidents, Presidents of branches
            and Presidents of the Telecommunication Laboratories and Telecommunication Training
            Institute.
     20. Approval of chairmen and presidents of re-investment companies recommended by the
            Company.
     21. Remuneration of directors and manager proposed by the Compensation Committee, with
            consideration of the compensation amount, payment methods and the potential future risks of
            the Company etc.
     22. Matters that shall be submitted to the Board for resolution in accordance with the Organizational
            Regulations of the audit committee.
     23. Remuneration of directors and managers of the subsidiaries which shall be approved by the
            Board in accordance with table of scope of duties of such subsidiary.
     24. Matters that should be submitted to Board for resolution in accordance to the table of scope of
            duties t of BOD and the Management.
     25. A donation to a related party or a significant donation to a non-related party, provided that a
            public-interest donation of disaster relief for a serious natural disaster may be submitted to the
            following Board for retroactive recognition.
     26. Matters that must be decided by a resolution of the shareholders meeting or submitted to the 
            Board in accordance with Article 14-3 of the Securities and Exchange Law or the articles of 
            incorporation of the Company, or other material matters designated by the authority. 

              The term "related party" in subparagraph 25 of the preceding paragraph refers to a related party
              as defined in the Regulations Governing Preparation of Financial Reports by Securities Issuers.
              The term "significant donation to a non-related party" refers to a single donation, or accumulative
              donations within a 1-year period to a single recipient, at an amount of NTD100 million or more, or
              at an amount equal to or greater than 1 percent of net operating revenue or 5 percent of paid-in
              capital as stated in the CPA-attested financial report for the most recent year. 

              The term "within a 1-year period" in the preceding paragraph refers a period of 1 year calculated
              retroactively from the date on which the current board meeting is convened. Amounts already
              submitted to and passed by a resolution of the Board are exempted from inclusion in the
              calculation.

              The company shall submit the minutes of the seminars regarding the problems and review of the
              internal control system to the board of directors and make a report to the same. 

              Apart from matters in the foregoing paragraph that shall be submitted to the Board for discussion,
              the Chairman and CEO or president shall exercise the powers of the Board in accordance with the
              table of scope of duties of the Board and the management when the Board is adjourned. However,
              matters involving the Company's material interests must still be decided by resolution of the Board. 

Article 35  The Company shall ask the appropriate corporate department or personnel to handle matters and
             implement actions pursuant to the Board of Directors' resolutions in a way consistent with the
             program schedule and objectives. It shall also follow up on these matters and faithfully review their
             implementation. 

             The Board of Directors shall ensure full control of implementation and progress of these matters and
             make a report in subsequent meeting so as to ensure that the Board!|s management decisions are
             faithfully implemented. 

Article 36 Board members shall faithfully conduct corporate affairs and discharge the duty of care as a good
             administrator. In conducting the affairs of the Company, they shall exercise their power with a
             hightened level of self-discipline and prudential attitude. 

             Unless matters are reserved for shareholders meeting by law or in the articles of incorporation of
             the Company, they shall ensure that all matters will faithfully adhere to the Board's resolutions.

             Where resolutions of the Board involve major policy directions and the corporate management, the
             Board shall make careful consideration and may not affect the implementation and effectiveness of
             corporate governance. 

             Independent directors shall perform duties faithfully in accordance with laws and ordinances and
             the Company’s Articles of Incorporation so as to safeguard the interests of the Company and the
             Company’s shareholders. 

             The Company’s Board shall assess the performance of the Board of Directors, the Functional
             Committees and respective directors by means of self-evaluation, peer evaluation, evaluation by
             out-sourcing professional institutions, or any other methods as deemed appropriate. 

Article 36-1:The Company shall establish a succession plan for management. The Board of Directors shall
             evaluate the development and implementation of the said plan on a regular basis to assure the
             sustainability of the performance of the said plan. 

Article 37  If a resolution of the Board of Directors violates laws, regulations or the Company’s articles of
             incorporation, at the request of shareholders holding shares continuously for a year or an
             independent director, or at the notice of a supervisor to discontinue the implementation of the
             resolution, members of the Board shall promptly take appropriate measures or discontinue the
             implementation of such resolution as soon as possible.            

             Upon discovering any risk of material damage to the Company, members of the Board shall do as
             guided in the foregoing paragraph and immediately report to the audit committee or any
             independent director of the audit committee. 

Article 38  The Company may take out liability insurance for directors with respect to their liabilities resulting
             exercising their duties during their terms of occupancy so as to reduce and spread the risk of
             material harm to the Company and shareholders arising from any illegal conduct. 

Article 39  Members of the Board should participate in training courses, offered by an organization
             designated in the Advanced Study Promotion Guidelines for the Directors and Supervisors of
             TSE/GTSM Listed Companies, of finance, risk management, business, commerce, accounting
             or law which cover subjects relating to corporate governance upon becoming directors and
             throughout their terms of occupancy. They should also ensure that the Company employees
             at all levels will enhance their professionalism and knowledge of the law. 

Chapter 4  Respecting Stakeholders' Rights 

Article 40  The Company shall maintain open communication channels with correspondent banks and other
             creditors, employees, consumers, vendors, the community, and all other parties connected with the
             Company's interests, and shall respect and maintain those parties' due lawful rights and interests. 

             In the event of management buyout, the Company shall take note of the subsequent impact on the
             overall soundness of the Company's financial structure. 

             The Company shall take appropriate action in the principle of good faith when the lawful rights and
             interests of stakeholders are infringed.  

Article 41  The Company shall provide full information to correspondent banks and other creditors in order
             to facilitate their judgments concerning the Company's operating and financial status and
             decision-making process. The Company shall respond proactively when the lawful rights and
             interests of these parties are infringed, and shall give creditors appropriate routes for redress
             with a forthright and responsible attitude. 

Article 42  The Company has established communication channels with employees, and encourages
             employees to appropriately express their opinions concerning the Company's operating and
             financial status and major decisions affecting employees'  interests.   

Article 43  The Company shall show concern for consumers' rights and interests while it maintains normal
             operations and seeks to maximize stockholders' interests. The Company will actively participate in
             various types of activities through marketing packaging to enhance the Company's public-spirited
             image and fulfill its social responsibilities.    

Chapter 5  Enhancement of Information Transparency  

Section One  Strengthening Information Disclosure 

Article 44  The Company shall certainly discharge its duties of information disclosure in accordance with
             relevant laws and regulations, including regulations of Taiwan Stock Exchange. 

             To ensure the prompt, appropriate disclosure of information that may affect the decisions of
             shareholders and stakeholders, the Company shall designate specific personnel to be in charge of
             information collection and disclosure, and shall establish a spokesperson system. 

Article 45  To enhance the accuracy and efficiency of information disclosure, the Company shall assign
             persons who have a comprehensive understanding of the Company's finances and operations,
             or who are able to coordinate the provision of relevant data from individual displays, and who are
             able to single-handedly speak on behalf of the Company to the public, to serve as the Company's
             spokespersons and deputy spokespersons.    

             The Company shall assign more than one deputy spokespersons, and each one shall be able to
             speak single-handedly on behalf of the spokesperson when the spokesperson is unable to perform
             the speaking duties. However, to avoid confusion, the Company shall confirm the order in which
             deputy spokespersons perform their duties. 

             In order to effectively implement its spokesperson system, the Company shall explicitly prescribe
             unified speaking procedures, and shall request management and employees to maintain the
             confidentiality of financial and business secrets and not arbitrarily disseminate information without
             authorization. 

             Any changes in the status of spokespersons or deputy spokespersons shall be promptly disclosed. 

Article 46  The Company should establish a website in order to take advantage of the speed and 
             convenience of the Internet. 

             The Company shall post the information regarding finance, operation and corporate governance on
             said website to facilitate the reference for shareholders and stakeholders. 

             The Company should also provide an English version of such on the website. 

             The website in the foregoing paragraph shall be maintained by specific personnel. To avoid 
             misleading information, posted data shall be accurate, in detail and updated timely.   

Article 47  The Company shall hold institutional investor conferences in accordance with Taiwan Stock 
             Exchange regulations, and should keep audio or video recordings of said conferences. 

             Financial and operation information disclosed at investor conferences shall be filed on the
             designated Internet information posting system of the Taiwan Stock Exchange in accordance with
             Taiwan Stock Exchange regulations, and shall be provided for queries via the Company's website
             or other appropriate channels.       

Section Two  Disclosure of Corporate Governance Information

Article 48  The Company shall disclose the information regarding corporate governance in the fiscal year
             in accordance with relevant laws and regulations, including Taiwan Stock Exchange regulations.

             1. Corporate governance framework and rules.
             2. The ownership structure and the shareholders’ equity of the Company.
             3. The structure and independence of the Board of Directors.
             4. Responsibility of the Board of Directors and managerial officers.
             5. The composition, duties, and independence of the Audit Committee.
             6. The composition, duties, and operation of the Compensation Committee.
             7. The compensation of the directors, the president and senior vice presidents in the most
                 recent year; the analysis regarding the percentage ratio of the aggregate remuneration divided
                 into the net profit after tax; the compensation policy, standards and composition; the process of
                 determining the compensation, and the relation with performance; In particular situation, the
                 compensation of respective directors may be disclosed.
             8. Training status of the directors.
             9. Rights and relationship of stakeholders.
             10. Detailed status of the information disclosure required by laws and regulations.
             11. The difference between the operation status of the Company, the Code of Corporate
                   Governance for the Company, and the Corporate Governance Best-Practice Principles for
                   TSEC/GTSM Listed Companies; the reasons for the difference.
             12. Other information relating to corporate governance. 

              The Company should, according to the actual performance of the corporate governance, disclose
              the specific plans and measures to improve its corporate governance via appropriate
              mechanisms.       

Chapter 6  Supplementary Provisions

Article 49  The Company shall at all times monitor the domestic and international development of
             corporate governance and thereby review and revise its corporate governance system so as
             to enhance the performance of corporate governance.

Article 50 The Codes of Corporate Governance will be implemented with the approval of the board of
             directors; so is the amendment.

 

 

 

 

 

  Code of Corporate Governance for
Chunghwa Telecom Co., Ltd.

 Adopted by the 4th Board of Directors at the 2nd meeting on Aug. 26, 2004
 Amended by the 4th Board of Directors at the 17th meeting on Dec. 26, 2006
 Amended by the 5th Board of Directors at the 19th meeting on Oct. 29, 2009
 Amended by the 6th Board of Directors at the 2nd meeting on July 27, 2010
 Amended by the 6th Board of Directors at the 9th meeting on June 28, 2011
 Amended by the 6th Board of Directors at the 19th meeting on Dec. 25, 2012
 Amended by the 7th Board of Directors at the 2nd meeting on Aug. 13, 2013
 Amended by the 7th Board of Directors at the 8th meeting on Aug. 12, 2014

Chapter 1 General Principles

Article 1 Chunghwa Telecom Co., Ltd. (herein referred to as the "Company") has hereby determined
             the Code of Corporate Governance for Chunghwa Telecom Co., Ltd. in accordance with the
             "Corporate Governance Best-Practice Principles for TSE/GTSM Listed Companies" drafted 
             by the Taiwan Stock Exchange Corporation (herein referred to as "TSEC") and GreTai 
             Securities Market in order to establish a sound corporate governance system.

Article 2  In addition to abiding by laws and the Articles of Incorporation, the corporate governance
             system established by the Company upholds the following principles:

     1. Establish an effective corporate governance structure.
     2. Protect shareholders' rights and interests.
     3. Strengthen the functions of the board of directors.
     4. Respect for stakeholders' rights and interests.
     5. Enhance information transparency

Article 3  The Company shall, pursuant to the Regulations Governing Establishment of Internal Control
             Systems by Public Companies, establish an effective internal control system in consideration
             of the overall operating activities of the Company and its subsidiaries, and shall regularly
             review said system in order to ensure the continued effectiveness of its design and
             implementation in light of changes in the Company's internal and external environment.

             The adoption or amendment to the internal control system shall be approved by one half or more
             of all audit committee members and be submitted to the Board for resolution; any opposed
             or qualified opinions stated by independent directors shall be explicitly recorded in the board
             meeting minutes.            

             Apart from effectively implementing self-audits of the internal control system, the Company's
             Board and the management shall review self-audit results of each department and the audit
             reports of audit organization at least once each year; the supervisors shall pay close attention
             to and supervise this review work. The directors and supervisors shall hold a meeting in person
             every year with internal auditors to review the internal control system for deficiency(ies), and
             duly keep in minutes or other records. The review of the effectiveness of the internal control
             system shall be subject to the consent of one-half or more of all audit committee members and
             be submitted to the board of directors for resolution.            

             The Company's management shall place importance on the internal audit department and its
             personnel, grant  it full authority, and urge it to conduct audits effectively, evaluate the
             deficiencies in the internal control system and assess the Company's operating efficiency to
             ensure the system can be carried out effectively on a continuous basis and can assist the Board
             of Directors and the management to execute their responsibilities, and thereby make the
             corporate governance system practicable.

             For the pupose of raising and preserving the quality and effect of execution for practicing sound
             internal control system, strengthening professional ability of the substitutes of the internal
             auditors, the Company shall establish designated substitutes of internal auditors.  

             Article 11, paragraph 3 regarding the prerequisites for internal auditors, and article 16, 17 and 18
             of the Regulations Governing Establishment of Internal Control Systems by Public Companies
             shall apply mutatis mutandis to the preceding paragraph.

Chapter 2  Protection of Shareholders' rights and interests

Section One  Encouraging Shareholders to Participate in Corporate Governance

Article 4  The Company shall take protection of shareholders' rights and interests as its foremost goal when
             implementing the corporate governance system, and shall treat all shareholders equally. 

             The Company shall establish a corporate governance system that can ensure shareholders’ right to
             know, right to participate and right to determine the Company's material matters, all in accordance
             with the laws. 

Article 5  The Company shall convene shareholders meetings in accordance with the Company Act and
             relevant laws and regulations, and shall establish comprehensive meeting rules of order; any
             matters that must be determined by resolution of the shareholders meeting shall be implemented
             in accordance with the meeting rules of order. 

             The content of resolutions of the shareholders meeting shall comply with laws, regulations, and
             articles of incorporation of the Company. 

Article 6  The Company's Board shall properly arrange shareholders meeting discussion topics and
             procedures. Each issue shall be allotted to reasonable time for discussion in the shareholders
             meeting, and shareholders shall be given appropriate opportunities for speaking out. 

             A majority of the directors shall personally attend shareholders meetings convened by the Board. 

Article 7  The Company shall encourage shareholders to participate in corporate governance, and shall
             hold shareholders meetings in a legal, effective, and secure manner. The Company shall employ
             all types of methods and channels as well as make full use of technological methods of
             information disclosure to increase the percentage of shareholders attending the shareholders
             meeting, and shall ensure that shareholders may fulfill their shareholders' rights at the
             shareholders meeting in accordance with relevant laws.

Article 8  The Company shall record minutes of the shareholders meeting in accordance with the Company
             Act and other relevant laws and regulations. With respect to the elections of Directors, the meeting
             minutes shall record the method of voting adopted therefore and the total number of voting rights
             that elected directors received.             

             With respect to the elections of Directors, the meeting minutes shall record the method of voting
             adopted therefore and the number of votes that elected directors received.

             The shareholders meeting minutes shall be kept indefinitely and appropriately as long as the
             Company is in existence, and should be sufficiently disclosed on the Company's website. 

Article 9  The chairman of shareholders meeting shall be fully aware of and comply with the Company’s
             Ordinance of Shareholders Meeting, ensuring the proper progress of the proceedings of the
             agenda, and may not arbitrarily declaring adjournment of the meeting. 

             In order to protect the rights and interests of the majority of shareholders, if the chairman
             declares the adjournment of a meeting in violation of the meeting rules of order, the other
             members of the Board should quickly assist attending shareholders, in accordance with
             statutory procedures, to elect one person as chairman on the basis of the majority of
             shareholders' voting rights, and continue the meeting. 

Article 10  The Company shall place high importance on shareholders' right of being informed and
             thoroughly comply with relevant regulations concerning information disclosure to regularly
             and promptly provide shareholders the information concerning the Company's finances,
             operations, insiders shareholdings and corporate governance by using of the Market
             Observation Post System or the Company's website. 

Article 11  Shareholders shall have the right to share the Company's earnings. In order to
             safeguard shareholders' investment rights and interests, the shareholders meeting may,
             in accordance with Article 184 of the Company Act, audit statements and books produced
             by the Board, and resolve to distribute earnings or decide deficit off-setting plans. The
             shareholders meeting may appoint an inspector to perform the foregoing audit tasks. 

             Shareholders may, in accordance with Article 245 of the Company Act, apply with the court to
             appoint an inspector to audit the Company's accounts of operation and property holdings.

             The Board and managers shall comply fully with the audit tasks performed by
             the inspector in the two foregoing paragraphs, and may not attempt to obstruct, refuse, or
             evade the inspector's work.

Article 12  To protect shareholders' rights and interests, the Company shall handle major financial
             actions, including acquisition or disposal of assets, lending capital to and making endorsements
             or providing guarantees for any other entities, in accordance with relevant laws and regulations,
             and shall draft and submit relevant handling procedures to the shareholders meeting for approval. 

             In the event of Management Buyout (MBO), the Company may, in addition to abiding by relevant
             laws and regulations when handling the matter, establish an objective and independent committee
             to review the reasonableness of the buyout price and buyout plan and shall pay attention to
             follow such rules related to information disclosure.

             Any of the Company's personnel, when handling matters prescribed in the above paragraph, shall
             take note of any conflicts of interest and the need to rescue. 

Article 13  To protect shareholders' rights and interests, the Company should have dedicated personnel to
             properly handle shareholders' recommendations, questions, and disputes. 

             If a resolution of the shareholders meeting or a board meeting violates laws and regulations or
             the articles of incorporation, or if the directors or managers violate laws and
             regulations or the articles of incorporation in the course of their duties, and results in harming
             shareholders' rights and interests, the Company shall appropriately handle any lawsuits
             initiated by shareholders in accordance with law. 

Section Two  Corporate Governance Relationship Between the Company and Affiliated Enterprises 

Article 14  The allocation of management authorities and responsibilities over personnel, assets and
             financial affairs of the Company and its affiliated enterprises shall be clearly identified; risk
             evaluation shall be conducted exactly and appropriate firewalls shall be established. 

Article 15  Unless otherwise provided by the laws and regulations, the Company's managers may not
             concurrently serve as managers at affiliated enterprises. 

             A director, who engages on behalf of himself or third party within the scope of the Company's
             operations, shall explain the major content of such actions to the shareholders meeting and
             obtain the latter's consent. 

Article 16  The Company shall establish sound management systems for finance, operations, and
             accounting in accordance with relevant laws and regulations. It shall further properly perform
             overall risk evaluation with its affiliated enterprises on main correspondent banks, customers,
             and vendors, and shall implement necessary control mechanisms in order to lessen credit risk. 

Article 17  Based on the principles of fairness and reasonableness, when the Company has a business
             transaction with an affiliated enterprise, the Company shall determine written standards for the
             conduct of mutual financial and business operations. 

             Transactions or contractual matters between the Company and related parties and shareholders
             shall also be conducted according to the principles set forth in the foregoing paragraph, and
             tunneling of benefit shall be strictly prohibited. 

Article 18  A juristic shareholder having controlling power over the Company shall comply with the following
             provisions: 

             1. It shall bear a duty of good faith to other shareholders and shall not directly or indirectly
                 cause the Company to be engaged in transactions at other than arm!|s length or involved in
                 a management conduct for illegal profit.
             2. Its representative shall follow the Company's regulations with respect to the exercise of rights
                 and participation in resolution, so that at shareholders meeting, the representative shall
                 exercise his/her voting right for the best interest of all shareholders and in good faith and
                 exercise the fiduciary duty of care of a directors.
             3. It shall comply with relevant laws, regulations, and the Articles of Incorporation of the Company
                 in nominating of the Company's directors and supervisors and shall not act beyond the
                 authority granted by the shareholders meeting or the board meeting.
             4. It shall not improperly intervene in corporate policy making or obstruct corporate management
                 activities.
             5. It shall not restrict or impede the Company's production operations by methods of unfair
                 competition such as monopolizing corporate procurement or foreclosing sales channels. 

Article 19  The Company shall ensure the command at any time of information on the identity of major
             shareholders, who own the higher percentage of shares and have an actual control over the
             Company, and its ultimate control persons. 

             To enable other shareholders to exercise supervision function, the Company shall regularly disclose
             important information about its shareholders holding more than ten percent of the outstanding
             shares relating to the pledge, increase or decrease of share ownership, or other important matters
             that may possibly trigger a change in the ownership of their shares. 

Chapter 3  Enhancing the Functions of the Board of Directors 

Section One  Structure of the Board of Directors 

Article 20  The Board of Directors of the Company shall be accountable to the shareholders at the
             shareholders’ meetings with respect to all procedures and arrangements under the corporate
             governance system, so as to ensure the Directors’ proper conduct of its duties in compliance with
             the applicable laws, regulations and Articles of Incorporation as well as corporate resolutions
             approved by the shareholders. 

             Regarding the structure of the Board of Directors of the Company, the number of directors, which
             shall be more than five, shall be properly determined by reviewing the scale of corporate
             management and operation and the shareholding of the major shareholders and taking into
             consideration of the practical needs for operation. 

             The composition of the Board shall be given due attention to the principles of gender equality, and
             the board members shall possess the necessary knowledge, skill, and experience for performing
             their duties. In order to achieve the ideal goals of corporate governance, the board of directors shall
             possess the following abilities:            

             1. Ability to make operational judgment
             2. Ability to perform accounting and financial analysis
             3. Ability to conduct management administration
             4. Ability to conduct crisis management
             5. Possession Industrial knowledge
             6. Possession perspective of International market
             7. Ability to lead
             8. Ability to make decisions 

Article 21  The Company shall incorporate a fair, just, and open procedure for the election of directors, and
             adopt the cumulative voting mechanism in order to fully reflect shareholders’ views. 

             A majority of the Company's directors may not be the spouse of or relative two-degree of
             consanguinity with each other. 

             The Company shall elect a director to fill the vacancy at the first subsequent shareholders
             meeting after a director has been released for a particular reason and the Board is left with
             less than five members. If, however, the number of vacancies exceeds one-third of the
             number of directors designated in the Articles of Incorporation, the Company shall, within
             60 days after the vacancies arise, convene a special shareholders meeting to elect for
             filling the vacancies. 

             The aggregate shareholding percentage of all of the directors of the Company shall comply with
             the laws and regulations. Restrictions on the share transfer of each director and the creation,
             release, or changes of any pledges over the shares held by each director shall be subject to the
             relevant laws and regulations, and the relevant information shall be fully disclosed. 

Article 22  Before the Company convenes a shareholders’ meeting to re-elect the directors, the
             qualifications, education, working experience, background and the existence of any other
             matters set forth in Article 30 of the Company Act with respect to the candidates recommended
             by shareholders or directors should be reviewed in advance and the result thereof be provided to
             shareholders for their reference, so that qualified directors will be elected. 

Article 23  The responsibilities and duties of the Chairman, CEO, and president shall be clearly distinct. 

             It would be inappropriate for the Chairman to also act as the president. If the chairman also acts
             as the president or they are spouses or relatives within one degree of consanguinity, the number
             of independent directors should be increased. 

Section Two  The Independent Director System 

Article 24  In accordance with the Articles of Incorporation, the Company shall have three independent 
             directors. 

             The Company's independent directors shall be elected via a nomination system; elections shall be 
             held as prescribed in Article 12-1 of the Articles of Incorporation. 

             If the Company and its group enterprises and organizations, and another company and its group 
             enterprises and organizations nominate each other’s director, supervisor or managers as a
             candidate for an independent director of its own, the Company shall, at the time it receives the
             nominations for independent directors, disclose the fact and explain the suitability of the
             candidate for independent director. If the candidate is elected as an independent director, the
             Company shall disclose the number of votes in favor of the elected independent director.

             The term of "group enterprises and organizations" in the preceding paragraph comprises the 
             Company’s subsidiaries, legal foundations in which it directly or indirectly donated more than 50 
             percent of the fund in the foundations, and other institutions or juridical persons that are
             substantially controlled by the Company.

             Independent directors and non-independent directors may not switch their status during their
             terms of appointment. 

             The subsequent shareholders meeting shall have election to fill the vacancy if an independent 
             director is released for a particular reason and the number of independent directors is less than the
             number designated in the first paragraph or in the Articles of Incorporation. If the independent
             directors are all released, the Company shall, within 60 days after the vacancies arise, convene a
             special shareholders meeting to  elect for filling the vacancies. 

             The independent directors, when carrying out their duties, shall maintain their independence and 
             may not have any direct or indirect interest with the Company. Regarding directors' professional 
             qualifications, shareholding and multiple posts holding restrictions as well as determination of 
             independency, manner of nomination and other matters requiring compliance, shall be  handled
             in accordance with the Securities and Exchange Law,  Regulations Governing Appointment of 
             Independent Directors and Compliance Matters for Public Companies and other regulations and
             rules set forth by the Taiwan Stock Exchange.

Article 25  The Company shall stipulate expressly the scope of duties of the independent directors and
             empower them with manpower and material support related to the exercise of their powers. 
             Neither the Company nor other members of the Board shall restrict or obstruct the independent
             directors' performance of their duties. 

             The Company shall stipulate directors' compensation in the Articles of Incorporation or pursuant
             to a resolution of shareholders meeting.  The compensation to the directors shall adequately
             reflect the long-term performance of the Company, and shall also take the overall operational
             risks of the Company into consideration. Different but reasonable compensation from that of
             other directors may be set forth for the independent directors. 

     When the Company, under the Articles of Incorporation, or by the resolution of shareholders 
     meeting, or by order of the competent authority, sets aside a certain proportion of earnings 
     as special reserve, such allocation shall be made after the allocation of legal reserve and 
     before the distribution of director compensation and employee bonuses, and the Company
     shall provide in the Articles of Incorporation the method to be adopted for distributing earnings
     when reversal of the special reserve is added into the undistributed earnings. 

Section Three  Functional Committees

Article 26  For the purpose of developing monitoring functions and  strengthening management 
             mechanisms, the Board of Directors of the Company may, taking into account the basis of the
             size of the Board and number of independent directors, set up functional committees and have
             them stipulated in the Articles of Incorporation. 

             Functional committees shall be responsible to the Board and submit proposals to the Board of
             Directors for approval. 

             Functional committees shall adopt organizational regulations governing the exercise of their
             power and duty to be approved by the Board of Directors. The content of organizational rules
             shall include the number of committee members, term of appointment, authority and duties,
             meeting rules and resources to be provided by the Company to facilitate the committee's
             carrying out its duties. 

 Article 27  The Board shall establish an audit committee composed of the entire independent directors;
             one of the audit committee members shall serve as chairman, and at least one member shall
             possess professional expertise in accounting or finance.

             The Company establishes an audit committee, the provisions regarding supervisors in the
             Securities and Exchange Act, the Company Act and other laws and regulations shall apply
             mutatis mutandis to the audit committee.

             The following matters shall be subject to the approval by at least one half or more of all audit
             committee members and be submitted to the board of directors for resolution:    

             1. Adoption or amendment to the internal control system pursuant to Article 14-1 of the
                  Securities and Exchange Act.
             2. Review of the effectiveness of the internal control system.
             3. Adoption or amendment, pursuant to Article 36-1 of the Securities and Exchange Act, 
                  to the handling procedures for significant financial or operational activities, including 
                  acquisition or disposal of assets, derivatives trading, extension of monetary loans to 
                  others, or endorsements or guarantees for others.
             4. A matter bearing on the personal interest of a director.
             5. A significant asset or derivatives transaction.
             6. A significant monetary loan, endorsement, or provision of guarantee.
             7. The offering, issuance, or private placement of any securities with equity nature.
             8. The engagement, discharge, or compensation of an attesting CPA.
             9. The appointment or discharge of a financial, accounting, or internal auditing officer.
             10. Annual and semi-annual financial reports.
             11. Any other significant matters so required by the company or the competent authority.

             The exercise of power by the audit committee and independent directors and the related matters
             shall be handled in accordance with the Securities and Exchange Act, the Regulations Governing 
             the Exercise of Powers by Audit Committees of Public Companies, and the rules and regulations 
             of the TWSE or GTSM.             

Article 27-1: The Company’s Board shall set up a Compensation Committee.  The Compensation 
             Committee shall consist of at least three directors, including at least (one) independent
             director(s) who shall be the president of the meeting of the Committee. 

             The Compensation Committee shall give advice to the Board of Directors regarding the
             compensation policy for the directors, supervisors and managerial officers.

             The compensation policy of the Company shall not lead the directors and managerial officers
             to conduct activities at excessive risks for the Company. 

Article 28  The Company shall select a professional, responsible, and independent certifying CPA to 
             perform regular review of the financial conditions and internal control measures of the Company.
             With regard to the irregularity or deficiency timely discovered and disclosed by the CPA during 
             the review, and the concrete measures for improvement or prevention suggested by the CPA,
             the Company shall faithfully implement improvement actions. 

             The Company shall evaluate the independence of the CPA engaged by the Company regularly
             and no less frequently than once annually. In the event that the Company engages the same
             CPA without replacement for five years consecutively, or if the CPA is subject to disciplinary
             actions or other circumstances prejudicial to the independence of the CPA, the Company shall
             review the necessity of replacing the CPA, and shall submit the conclusion of such review to the
             Board. 

Article 29 The Company should engage a competent and professional legal counsel to provide adequate
             legal consulting services to the Company, or to assist the directors and the management improve
             their knowledge of the law, for the purpose of preventing any infraction by the Company or its
             staff of laws or regulations, and ensuring the corporate governance matters will proceed pursuant
             to the relevant legal framework and prescribed procedures. 

             In the event that the directors or the management are involved in litigation as result of performing
             his or  her duties as provided by the law or arising from shareholders disputes, depending on the 
             circumstances, the Company shall retain a legal counsel to provide assistance.            

             The audit committee or any of its independent director members in the audit committee may, on
             behalf of the Company, engage a legal Counsel, CPA, or other professional to perform necessary
             auditing tasks or provide consulting services in connection with the committee's exercise of its
             powers; the Company shall bear responsibility for payment of the expenses so incurred.

Section Four  Rules for the Proceedings of Board Meetings and the Decision-making Procedures  

Article 30  The Company shall convene the board meeting at least one time a quarter, and may convene the
             Board at any time when urgent circumstances have arisen. When convening the Board, the 
             Company shall state the main contents of the meeting, notify all directors to attend at the
             designated time. The Company shall also provide sufficient meeting materials when notifying
             the directors. If the provided materials are insufficient, the directors have the right to request
             supplementary information, or may delay deliberation following a board resolution. 

             The Company shall draft the regulations governing procedures for board meetings and report the
             same to the shareholders meeting. Regulations governing major deliberation items, operating
             procedures, items to be explicitly stated in the minutes, announcements, and other binding matters
             shall comply with the Regulations Governing Procedure for Board of Directors Meetings of Public
             Companies.

Article 31  A director shall exercise a high degree of self-discipline and shall voluntarily abstain from voting, 
             for himself or herself or as proxy for another director, on a proposal submitted to the Board of 
             Directors that risks the involvement of the director!|s own interest to the detriment of the interest
             of the Company. The directors shall also practice self-discipline as to their internal relationship and
             must not support each other in an inappropriate manner.

             The matters that a director shall voluntarily abstain from voting shall be clearly set forth in the 
             rules for the proceedings of the board meetings.

Article 32  The independent directors shall attend meetings in person, and may not appoint a
             non-independent director to attend in their stead, when the Board discusses matters that must
             be submitted to the Board pursuant to Article 14-3 of the Securities and Exchange Law.
             Independent directors' opposed or qualified opinions shall be explicitly recorded in the board
             meeting minutes. If an independent director cannot attend a board meeting in person to
             express an opposed or qualified opinion, unless he or she has a legitimate excuse, the
             independent director shall submit a written opinion in advance; said opinion shall be explicitly
             recorded in the board meeting minutes.

             In any of the following circumstances, decisions made by the board of directors shall be noted in the
             meeting minutes, and in addition, announced and reported on a website designated by the
             competent authority within 2 days after the date of said board meeting:

             1. An independent director has a dissenting or qualified opinion which is on record or stated in a 
                  written statement; or      
             2. The remuneration approved by the Board is better than that proposed by the compensation 
                  committee.
             3. The matter was not approved by the audit committee, but had been approved by two-thirds 
                  or more of all directors.

            When the content of proposals to be discussed warrants, the Board may notify managerial
            personnel in relevant departments to attend the board meeting in a non-voting capacity in
            order to report on the Company's current business situation and respond to inquires raised
            by the directors. When necessary, the Board may also invite the CPA, legal counsel, or other
            professional to attend the meeting in a non-voting capacity to assist the directors in
            understanding the conditions of the Company for the purpose of adopting an appropriate
            resolution. 

Article 33  In accordance with relevant regulations, staff personnel of the Company attending board
            meetings shall collect and correctly  record the meeting minutes in detail, and the summary,
            method of resolution, and voting results of all the proposals submitted to the board meeting.            

            The board meeting minutes shall be signed or sealed by the chairman and secretary of the
            board meeting and sent to each director within 20 days after the meeting.  The attendance
            sheet forms a part of the minutes which shall be fully recorded which shall be treated as an
            important corporate document and well preserved permanently during the existence of the
            Company. 

            The minutes may be produced, distributed, and kept via electronic methods. 

            The Company shall make audio or video recordings of board meetings, and shall keep such
            recordings for at least five years. Recordings may be kept via electronic methods. 

            If a lawsuit concerning a relevant board resolution occurs before the end of the preservation period
            mentioned in the foregoing paragraph, relevant archival audio or video recordings shall be kept
            indefinitely, and the regulations of the foregoing paragraph shall not apply. 

            When a board meeting is held by means of videoconferencing, audio and video recordings of the
            meeting shall be part of the minutes, and shall be kept indefinitely. 

            Where a resolution of the Board violates laws, regulations, articles of incorporation, or resolutions
            adopted in the shareholders meeting, and thus causes an injury to the Company, dissenting
            directors whose dissent can be proven by minutes or written statements will not be liable for
            damages.

Article 34  The Company shall submit the following matters to the Board for discussion:

     1. Approval of the Company's operating plan and budget.
     2. Approval of the Company’s financial forecast.
     3. Review and approval of semi-annual, annual financial reports/statements and business report.
     4. Approval of adoption or amendment to human resource, procurement, accounting, and internal
          control systems.
     5. Approval of the statement of internal control system.
     6. Adoption or amendment in accordance with Article 36-1 of the Securities and Exchange Act
          of procedures for handling major financial actions such as acquisition or disposal of assets,
          engaging in derivative trading, extension of monetary loans to others, endorsements or
          guarantees for others.
     7. Offering, issuing, or private offering of equity-type securities.
     8. Appointment and dismissal of finance, accounting, and internal audit executives.
     9. Increase or decrease of the capital.
     10. Approval of Company's organizational regulations.
     11. Establishment, alteration, or revocation of domestic or foreign branches.
     12. Distribution of profits or making up of losses.
     13. Approval of amounts and terms of domestic and foreign debt of loans.
     14. Approval of re-investment amount.
     15. Approval of issuance of corporate bonds.
     16. Adoption or amendment to organizational regulations for the Board and functional committees.
     17. Adoption or amendment to regulations governing the scope of independent directors' duties.
     18. Approval of the treatment standard of employee.
     19. Appointment and discharge of President, Executive Vice Presidents, Presidents of branches
            and Presidents of the Telecommunication Laboratories and Telecommunication Training
            Institute.
     20. Approval of chairmen and presidents of re-investment companies recommended by the
            Company.
     21. Remuneration of directors and manager proposed by the Compensation Committee, with
            consideration of the compensation amount, payment methods and the potential future risks of
            the Company etc.
     22. Matters that shall be submitted to the Board for resolution in accordance with the Organizational
            Regulations of the audit committee.
     23. Remuneration of directors and managers of the subsidiaries which shall be approved by the
            Board in accordance with table of scope of duties of such subsidiary.
     24. Matters that should be submitted to Board for resolution in accordance to the table of scope of
            duties t of BOD and the Management.
     25. A donation to a related party or a significant donation to a non-related party, provided that a
            public-interest donation of disaster relief for a serious natural disaster may be submitted to the
            following Board for retroactive recognition.
     26. Matters that must be decided by a resolution of the shareholders meeting or submitted to the 
            Board in accordance with Article 14-3 of the Securities and Exchange Law or the articles of 
            incorporation of the Company, or other material matters designated by the authority. 

              The term "related party" in subparagraph 25 of the preceding paragraph refers to a related party
              as defined in the Regulations Governing Preparation of Financial Reports by Securities Issuers.
              The term "significant donation to a non-related party" refers to a single donation, or accumulative
              donations within a 1-year period to a single recipient, at an amount of NTD100 million or more, or
              at an amount equal to or greater than 1 percent of net operating revenue or 5 percent of paid-in
              capital as stated in the CPA-attested financial report for the most recent year. 

              The term "within a 1-year period" in the preceding paragraph refers a period of 1 year calculated
              retroactively from the date on which the current board meeting is convened. Amounts already
              submitted to and passed by a resolution of the Board are exempted from inclusion in the
              calculation.

              The company shall submit the minutes of the seminars regarding the problems and review of the
              internal control system to the board of directors and make a report to the same. 

              Apart from matters in the foregoing paragraph that shall be submitted to the Board for discussion,
              the Chairman and CEO or president shall exercise the powers of the Board in accordance with the
              table of scope of duties of the Board and the management when the Board is adjourned. However,
              matters involving the Company's material interests must still be decided by resolution of the Board. 

Article 35  The Company shall ask the appropriate corporate department or personnel to handle matters and
             implement actions pursuant to the Board of Directors' resolutions in a way consistent with the
             program schedule and objectives. It shall also follow up on these matters and faithfully review their
             implementation. 

             The Board of Directors shall ensure full control of implementation and progress of these matters and
             make a report in subsequent meeting so as to ensure that the Board!|s management decisions are
             faithfully implemented. 

Article 36 Board members shall faithfully conduct corporate affairs and discharge the duty of care as a good
             administrator. In conducting the affairs of the Company, they shall exercise their power with a
             hightened level of self-discipline and prudential attitude. 

             Unless matters are reserved for shareholders meeting by law or in the articles of incorporation of
             the Company, they shall ensure that all matters will faithfully adhere to the Board's resolutions.

             Where resolutions of the Board involve major policy directions and the corporate management, the
             Board shall make careful consideration and may not affect the implementation and effectiveness of
             corporate governance. 

             Independent directors shall perform duties faithfully in accordance with laws and ordinances and
             the Company’s Articles of Incorporation so as to safeguard the interests of the Company and the
             Company’s shareholders. 

             The Company’s Board shall assess the performance of the Board of Directors, the Functional
             Committees and respective directors by means of self-evaluation, peer evaluation, evaluation by
             out-sourcing professional institutions, or any other methods as deemed appropriate. 

Article 36-1:The Company shall establish a succession plan for management. The Board of Directors shall
             evaluate the development and implementation of the said plan on a regular basis to assure the
             sustainability of the performance of the said plan. 

Article 37  If a resolution of the Board of Directors violates laws, regulations or the Company’s articles of
             incorporation, at the request of shareholders holding shares continuously for a year or an
             independent director, or at the notice of a supervisor to discontinue the implementation of the
             resolution, members of the Board shall promptly take appropriate measures or discontinue the
             implementation of such resolution as soon as possible.            

             Upon discovering any risk of material damage to the Company, members of the Board shall do as
             guided in the foregoing paragraph and immediately report to the audit committee or any
             independent director of the audit committee. 

Article 38  The Company may take out liability insurance for directors with respect to their liabilities resulting
             exercising their duties during their terms of occupancy so as to reduce and spread the risk of
             material harm to the Company and shareholders arising from any illegal conduct. 

Article 39  Members of the Board should participate in training courses, offered by an organization
             designated in the Advanced Study Promotion Guidelines for the Directors and Supervisors of
             TSE/GTSM Listed Companies, of finance, risk management, business, commerce, accounting
             or law which cover subjects relating to corporate governance upon becoming directors and
             throughout their terms of occupancy. They should also ensure that the Company employees
             at all levels will enhance their professionalism and knowledge of the law. 

Chapter 4  Respecting Stakeholders' Rights 

Article 40  The Company shall maintain open communication channels with correspondent banks and other
             creditors, employees, consumers, vendors, the community, and all other parties connected with the
             Company's interests, and shall respect and maintain those parties' due lawful rights and interests. 

             In the event of management buyout, the Company shall take note of the subsequent impact on the
             overall soundness of the Company's financial structure. 

             The Company shall take appropriate action in the principle of good faith when the lawful rights and
             interests of stakeholders are infringed.  

Article 41  The Company shall provide full information to correspondent banks and other creditors in order
             to facilitate their judgments concerning the Company's operating and financial status and
             decision-making process. The Company shall respond proactively when the lawful rights and
             interests of these parties are infringed, and shall give creditors appropriate routes for redress
             with a forthright and responsible attitude. 

Article 42  The Company has established communication channels with employees, and encourages
             employees to appropriately express their opinions concerning the Company's operating and
             financial status and major decisions affecting employees'  interests.   

Article 43  The Company shall show concern for consumers' rights and interests while it maintains normal
             operations and seeks to maximize stockholders' interests. The Company will actively participate in
             various types of activities through marketing packaging to enhance the Company's public-spirited
             image and fulfill its social responsibilities.    

Chapter 5  Enhancement of Information Transparency  

Section One  Strengthening Information Disclosure 

Article 44  The Company shall certainly discharge its duties of information disclosure in accordance with
             relevant laws and regulations, including regulations of Taiwan Stock Exchange. 

             To ensure the prompt, appropriate disclosure of information that may affect the decisions of
             shareholders and stakeholders, the Company shall designate specific personnel to be in charge of
             information collection and disclosure, and shall establish a spokesperson system. 

Article 45  To enhance the accuracy and efficiency of information disclosure, the Company shall assign
             persons who have a comprehensive understanding of the Company's finances and operations,
             or who are able to coordinate the provision of relevant data from individual displays, and who are
             able to single-handedly speak on behalf of the Company to the public, to serve as the Company's
             spokespersons and deputy spokespersons.    

             The Company shall assign more than one deputy spokespersons, and each one shall be able to
             speak single-handedly on behalf of the spokesperson when the spokesperson is unable to perform
             the speaking duties. However, to avoid confusion, the Company shall confirm the order in which
             deputy spokespersons perform their duties. 

             In order to effectively implement its spokesperson system, the Company shall explicitly prescribe
             unified speaking procedures, and shall request management and employees to maintain the
             confidentiality of financial and business secrets and not arbitrarily disseminate information without
             authorization. 

             Any changes in the status of spokespersons or deputy spokespersons shall be promptly disclosed. 

Article 46  The Company should establish a website in order to take advantage of the speed and 
             convenience of the Internet. 

             The Company shall post the information regarding finance, operation and corporate governance on
             said website to facilitate the reference for shareholders and stakeholders. 

             The Company should also provide an English version of such on the website. 

             The website in the foregoing paragraph shall be maintained by specific personnel. To avoid 
             misleading information, posted data shall be accurate, in detail and updated timely.   

Article 47  The Company shall hold institutional investor conferences in accordance with Taiwan Stock 
             Exchange regulations, and should keep audio or video recordings of said conferences. 

             Financial and operation information disclosed at investor conferences shall be filed on the
             designated Internet information posting system of the Taiwan Stock Exchange in accordance with
             Taiwan Stock Exchange regulations, and shall be provided for queries via the Company's website
             or other appropriate channels.       

Section Two  Disclosure of Corporate Governance Information

Article 48  The Company shall disclose the information regarding corporate governance in the fiscal year
             in accordance with relevant laws and regulations, including Taiwan Stock Exchange regulations.

             1. Corporate governance framework and rules.
             2. The ownership structure and the shareholders’ equity of the Company.
             3. The structure and independence of the Board of Directors.
             4. Responsibility of the Board of Directors and managerial officers.
             5. The composition, duties, and independence of the Audit Committee.
             6. The composition, duties, and operation of the Compensation Committee.
             7. The compensation of the directors, the president and senior vice presidents in the most
                 recent year; the analysis regarding the percentage ratio of the aggregate remuneration divided
                 into the net profit after tax; the compensation policy, standards and composition; the process of
                 determining the compensation, and the relation with performance; In particular situation, the
                 compensation of respective directors may be disclosed.
             8. Training status of the directors.
             9. Rights and relationship of stakeholders.
             10. Detailed status of the information disclosure required by laws and regulations.
             11. The difference between the operation status of the Company, the Code of Corporate
                   Governance for the Company, and the Corporate Governance Best-Practice Principles for
                   TSEC/GTSM Listed Companies; the reasons for the difference.
             12. Other information relating to corporate governance. 

              The Company should, according to the actual performance of the corporate governance, disclose
              the specific plans and measures to improve its corporate governance via appropriate
              mechanisms.       

Chapter 6  Supplementary Provisions

Article 49  The Company shall at all times monitor the domestic and international development of
             corporate governance and thereby review and revise its corporate governance system so as
             to enhance the performance of corporate governance.

Article 50 The Codes of Corporate Governance will be implemented with the approval of the board of
             directors; so is the amendment.