Fab 18

3
Corporate
Governance
TSMC was recognized by Fortune Magazine as one of the
“2023 World’s Most Admired Companies.”

040 041
 3.1 Overview 3.2 Board of Directors

TSMC advocates and acts upon the principles of operational transparency and respect for shareholder rights. We believe that the Board Structure
basis for successful corporate governance is a sound and effective Board of Directors. In line with this principle, TSMC Board of TSMC’s Board of Directors consists of
Directors delegates various responsibilities and authority to three Board Committees, Audit and Risk Committee, Compensation ten distinguished members with a great
and People Development Committee, and Nominating, Corporate Governance and Sustainability Committee. Each Committee’s breadth of experience as world-class
chairperson regularly reports to the Board on its activities and recommendations. business leaders or professionals. We deeply
rely on them for their diverse knowledge,
2023 Corporate Governance Awards and Ratings personal perspectives, and solid business
Organization Awards
judgment. Six of those ten members are
Independent Directors: former British
Dow Jones Sustainability Indices (DJSI) Dow Jones Sustainability World Index for the 23rd consecutive year
Telecommunications Chief Executive Officer,
MSCI ESG Indexes MSCI ACWI ESG Leaders Index component
MSCI ESG Research – AAA Ratings Sir Peter L. Bonfield; former Chairman
MSCI ACWI SRI Index component
MSCI ACWI Islamic Index component of National Performing Arts Center and
MSCI Emerging Markets ESG Leaders Index former Advisor of Executive Yuan, R.O.C.,
Morningstar The Best Sustainable Companies to Own in 2024
Ms. Kok-Choo Chen; former Chairman
S&P Global Corporate Sustainability Assessment – Top 10% S&P Global ESG Score of Applied Materials, Inc., Mr. Michael R.
Sustainalytics Company ESG Risk Ratings: Low ESG Risk – Semiconductor Industry Splinter; former Chief Executive Officer
ISS ESG ISS-oekom “Prime” Rated by ISS ESG Corporate Rating of Xilinx, Inc., Mr. Moshe N. Gavrielov;
FTSE4Good Index FTSE4Good Emerging Index component currently Chairman of Delta Electronics Inc.,
FTSE4Good All-World Index component
FTSE4Good TIP Taiwan ESG Index component Mr. Yancey Hai; and former President of
Taiwan Stock Exchange Top 5% in Corporate Governance Evaluation of Listed Companies for the 9th consecutive year MIT, Mr. L. Rafael Reif.
CommonWealth Magazine Talent Sustainability Award
TSMC’s Board is comprised of a diverse group of professionals from different backgrounds in industries, academia, law, etc. These
Institutional Investor Magazine Most Honored Company (Technology/Semiconductors) – All-Asia
Best Overall ESG (Technology/Semiconductors) – 1st Place (buy-side and sell-side) – All-Asia professionals include citizens from Taiwan, Europe and the U.S. with world-class business operating experience, one of whom is
Best Company Board (Technology/Semiconductors) – 1st Place (buy-side and sell-side) – All-Asia
female. Independent Directors constitute 60% of the Board.
Forbes The World’s Top 10 Largest Technology Companies in 2023
2023 World’s Best Employers
FORTUNE 2023 World’s Most Admired Companies In December 2023, TSMC announced that Dr. Mark Liu plans to retire from TSMC in June 2024, and will not seek re-election to the
Fortune Global 500
board of directors. During his tenure, Dr. Liu has reaffirmed the Company’s commitment to its mission and focused on enhancing
Asiamoney 2023 Asia’s Outstanding Companies – Semiconductors & Semiconductor Equipment Sector for the 6th consecutive year
corporate governance and competitiveness particularly in technology leadership, digital excellence, and global footprint. TSMC’s
Taiwan Institute of Sustainable Energy Taiwan Top 10 Sustainability Exemplary Awards for the 8th consecutive year
Nominating, Corporate Governance and Sustainability Committee recommends Dr. C.C. Wei, while remaining as CEO, to succeed as
IFI Claims Patent Services Ranked as 3rd in 2023 Top 50 US Patent Assignees
TSMC’s next Chairman, subject to the election of the incoming board in June 2024.

Board Responsibilities
Inheriting the spirit of TSMC’s Founder, Dr. Morris Chang’s philosophy on corporate governance, under the leadership of Chairman
Dr. Mark Liu and CEO & Vice Chairman Dr. C.C. Wei, TSMC’s Board of Directors takes a serious and forthright approach to its duties
and is a dedicated, competent and independent Board.

The Board’s primary duty is to supervise the Company’s compliance with relevant laws and regulations, financial transparency,
timely disclosure of material information, and maintaining of the highest integrity. TSMC’s Board of Directors strives to perform
these responsibilities through its Audit and Risk Committee, Compensation and People Development Committee, Nominating,
Corporate Governance and Sustainability Committee, the hiring of a financial expert consultant for the Audit and Risk Committee,
and coordination with our Internal Audit department.

The second duty of the Board of Directors is to appoint and dismiss officers of the Company when necessary, to evaluate
management performance and to review the succession plan for senior executives. TSMC’s management has maintained a healthy
and functional communication with the Board of Directors, has been devoted in executing guidance of the Board, and is dedicated
in running the business operations, all to achieve the best interests for TSMC shareholders.

042 043
 The third duty of the Board of Directors is to resolve critical matters, such as capital appropriations, investment activities, dividends, principles: (1) directors who also serve as executive officers of the Company are not entitled to receive compensation; (2) the
etc. compensation for Independent Directors may be higher than other directors, as all Independent Directors also serve as members of
the Audit and Risk Committee, Compensation and People Development Committee, and Nominating, Corporate Governance and
The fourth duty of the Board of Directors is to provide guidance to the Company’s management team and risk management. In Sustainability Committee, and thus participate in the discussions as well as resolutions of related Committee meetings in accordance
each quarter, TSMC’s management reports to the Board on various subjects (including ESG programs) and strategies, and spends with the charter of each Committee; and (3) the compensation for overseas Independent Directors may be higher than domestic
substantial time and effort to communicate with the Board. The Board would comment on the risk and probabilities for success of Independent Directors, as they require additional time to attend quarterly meetings in Taiwan.
the proposed corporate strategies. The Board also periodically oversees those strategies’ implementation and outcomes, and may
suggest the management team to make adjustments to the strategic goals and objectives if necessary. Directors’ Professional Qualifications and Independent Directors’ Independence Status
Number of Other
Criteria
Nomination and Election of Directors Taiwanese Public
Professional Qualification and Experience Independent Directors’ Independence Status Companies Concurrently
TSMC envisions the membership of its esteemed Board of Directors to be composed of highly ethical professionals with the Name/Title Serving as an Independent
Director
necessary knowledge, experience as world-class business leaders and understanding from diverse backgrounds. TSMC Board of
Mark Liu For Directors’ professional qualification and Not Applicable 0
Directors members are nominated via rigorous selection processes. TSMC established the “Guidelines for Nomination of Directors” Chairman experience, please refer to “2.4.1 Information
that set out the procedures and criteria for the nomination, qualification and evaluation of Director candidates to be nominated Regarding Board Members” on page 24-29 of this
C.C. Wei Annual Report. 0
Vice Chairman
by the Board of Directors. Also, TSMC developed the “Corporate Governance Guidelines” that set out the criteria for evaluating
Ming-Hsin Kung None of the Directors has been in or is under any 0
director candidates for election by the shareholders shall be based on, among other considerations, their professional knowledge, Director circumstances stated in Article 30 of the Company
Law. (Note 1)
experience, business judgment, commitment to uphold the Company’s core values, as well as reputation in both ethical conduct F.C. Tseng 0
and leadership. Diversity of backgrounds (including gender, age, and culture) of Board members shall also be considered. The Director
Sir Peter L. Bonfield 1. Every of the Independent Directors satisfy the requirements of Article 14-2 of 0
“Nominating, Corporate Governance and Sustainability Committee” will recommend Independent Director candidates to the Board Independent Director “Securities and Exchange Act” and “Regulations Governing Appointment of
of Directors for nomination. The independence of each Independent Director candidate is also considered and assessed under Kok-Choo Chen
Independent Directors and Compliance Matters for Public Companies” (Note 2) issued
0
by Taiwan’s Securities and Futures Bureau
relevant laws. Independent Director 2. Every of the Independent Directors (or nominee arrangement) as well as his/her
Michael R. Splinter spouse and minor children do not hold any TSMC common shares 0
Independent Director 3. Every of the Independent Directors received no compensation or benefits for
Directors shall be elected pursuant to the candidate nomination system specified in Article 192-1 of the R.O.C. Company Law. The providing commercial, legal, financial, accounting services or other services to the
Moshe N. Gavrielov Company or to any its affiliates within the preceding two years, and the service 0
tenure of office for Directors shall be three years. The independence of each independent director candidate is also considered and Independent Director provided is either an “audit service” or a “non-audit service”

assessed under relevant law such as the Taiwan “Regulations Governing Appointment of Independent Directors and Compliance Yancey Hai 1
Independent Director
Matters for Public Companies”. Under R.O.C. law, in which TSMC was incorporated, any shareholders holding one percent or
L. Rafael Reif 0
more of our total outstanding common shares may nominate their own candidate to stand for election as a Board member. This Independent Director

democratic mechanism allows our shareholders to become involved in the selection and nomination process of Board candidates. Note 1: The circumstances listed in Article 30 of the R.O.C. Company Act do not apply to me:
1. H
 aving committed an offence as specified in the Statute for Prevention of Organizational Crimes and subsequently convicted of a crime, and has not started serving the sentence, has not completed serving
The final slate of candidates is put to the shareholders for voting at the relevant annual shareholders’ meeting. the sentence, or five years have not elapsed since completion of serving the sentence, expiration of the probation, or pardon;
2. H
 aving committed the offence in terms of fraud, breach of trust or misappropriation and subsequently convicted with imprisonment for a term of more than one year, and has not started serving the
sentence, has not completed serving the sentence, or two years have not elapsed since completion of serving the sentence, expiration of the probation, or pardon;
3. H
 aving committed the offense as specified in the Anti-corruption Act and subsequently convicted of a crime, and has not started serving the sentence, has not completed serving the sentence, or two years
Taking the position that directors who over time have developed increasing knowledge, experience and insight into the have not elapsed since completion of serving the sentence, expiration of the probation, or pardon;
4. H
 aving been adjudicated bankrupt or adjudicated of the commencement of liquidation process by a court, and having not been reinstated to his rights and privileges;
semiconductor industry and deeper understanding of the operations of the Company can better perform their duties and provide 5. H
 aving been dishonored for unlawful use of credit instruments, and the term of such sanction has not expired yet; or
an increasing contribution and value to the shareholders of the Company. Except as otherwise provided in applicable regulations 6. H
 aving no or only limited disposing capacity.
7. H
 aving been adjudicated of the commencement of assistantship and such assistantship having not been revoked yet.
regarding the tenure limits of independent directors, there are no limits on the number of terms that a director may serve. The Note 2: 1. Not a governmental, juridical person or its representative as defined in Article 27 of the Company Law.
2. N
 ot serving concurrently as an independent director on more than three other Taiwanese public companies in total.
Board will, however, assess director tenure on an on-going basis to ensure the Board continues to benefit from new perspectives. 3. D
 uring the two years before being elected and during the term of office, meet any of the following situations:
(1) Not an employee of the company or any of its affiliates;
(2) Not a director or supervisor of the company or any of its affiliates;
(3) N
 ot a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of one percent
Directors’ Compensation or more of the total number of issued shares of the company or ranks as one of its top ten shareholders;
(4) N
 ot a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the officer in the preceding (1) subparagraph, or of any of the above persons in the
According to TSMC’s Articles of Incorporation, the Board of Directors is authorized to determine the salary for the Chairman, Vice preceding subparagraphs (2) and (3);
(5) N
 ot a director, supervisor, or employee of a corporate/institutional shareholder that directly holds five percent or more of the total number of issued shares of the company, ranks as of its top five
Chairman and Directors, taking into account the extent and value of the services provided for the management of the Corporation shareholders, or has representative director(s) serving on the company’s board based on Article 27 of the Company Law;
and the standards of the industry within the R.O.C. and overseas. (6) N
 ot a director, supervisor, or employee of a company of which the majority of board seats or voting shares is controlled by a company that also controls the same of the company;
(7) N
 ot a director, supervisor, or employee of a company of which the chairman or CEO (or equivalent) themselves or their spouse also serve as the company’s chairman or CEO (or equivalent);
(8) N
 ot a director, supervisor, officer, or shareholder holding five percent or more of the shares of a specified company or institution that has a financial or business relationship with the company; and
(9) N
 ot a professional individual, owner, partner, director, supervisor, or officer of a sole proprietorship or any type of legal entity, or a spouse thereof, that have provided to TSMC or its affiliates: (1) any
TSMC’s Articles of Incorporation also state that not more than 0.3 percent of our annual profits may be distributed as compensation audit service; or (2) commercial, legal, financial, accounting services or other services of which its total compensation exceeding NT$500,000 within the recent two years.

to our directors. In addition, directors who also serve as executive officers of the Company are not entitled to receive any director
compensation. According to TSMC’s Compensation and People Development Committee Charter, the distribution of compensation
to directors shall be made in accordance with TSMC’s “Rules for Distribution of Compensation to Directors” based on the following

044 045
 Board Diversity and Independence 3.2.1 Audit and Risk Committee
TSMC Board of Directors members are nominated via rigorous selection processes. TSMC established both the “Guidelines for
The Audit and Risk Committee assists the Board in fulfilling its oversight of the quality and integrity of the accounting, auditing,
Nomination of Directors” that set out the procedures and criteria for the nomination, qualification and evaluation of Director
reporting, and financial control practices, as well as risk management of the Company.
candidates to be nominated by the Board of Directors, and the “Corporate Governance Guidelines” that set out the criteria for
evaluating director candidates for election by the shareholders shall be based on, among other considerations, their professional
The Audit and Risk Committee is responsible to review the following major matters:
knowledge, experience, business judgment, commitment to uphold the Company’s core values, as well as reputation in both
● Financial reports;
ethical conduct and leadership. Diversity of backgrounds (including gender, age, and culture) of Board members shall also be
● Auditing and accounting policies and procedures;
considered. The Company aims to have at least 50% Independent Directors and at least one female director to serve on the Board.
● Internal control systems and related policies and procedures;
Currently, all ten members of the Board of Directors, including a female board member, represent diverse range of perspectives,
● Material asset or derivatives transactions;
including a complementary mix of skills, experiences, and backgrounds such as that from the industry, academia, and in law.
● Material lending funds, endorsements or guarantees;
These professionals, including a female board member, are citizens from Taiwan, Europe and the U.S. with world-class corporate
● Offering or issuance of any equity-type securities;
management experiences. The six Independent Directors constitute 60% of the Board, and there is no marital or is within the second
● Derivatives and cash investments;
degree of kinship relationship between or among the Directors. As such, the Board of Directors carries independence. The following
● Legal compliance;
table demonstrates the implementation of the board diversity policy:
● Related-party transactions and potential conflicts of interests involving executive officers and directors;

● Ombudsman reports;

Implementation of the Diversity Policy for Board Members ● Fraud prevention and investigation reports;

Title Chairman Vice Director Independent Director ● Corporate information security;

Chairman
● Corporate risk management;
Name Mark Liu C.C. Wei F.C. Tseng Ming-Hsin Sir Peter L. Kok-Choo Michael R. Moshe N. Yancey Hai L. Rafael Reif
Kung Bonfield Chen Splinter Gavrielov ● Performance, independence, qualification of independent auditor;

Gender Male Male Male Male Male Female Male Male Male Male ● Hiring or dismissal of an attesting CPA, or the compensation given thereto;

Nationality U.S. R.O.C. R.O.C. R.O.C. UK R.O.C. U.S. U.S. R.O.C./U.S. U.S. ● Appointment or discharge of financial, accounting, or internal auditing officers;

● Assessment of Committee Charter and fulfillment of Committee duties;

Age 66-70 71-75 76-80 56-60 76-80 76-80 71-75 66-70 71-75 71-75
● Self-assessment of the Committee’s performance; and
Employed by TSMC V
● Any other matters that shall be reviewed by the Audit and Risk Committee Meeting as required by relevant laws and regulations or
Professional Knowledge and Expertise
Business V V V V V V V V V
its Committee Charter, or that are deemed to be material by the regulatory authorities.

Technology V V V V V V V V
Under R.O.C. law, the membership of audit committee shall consist of all independent directors. TSMC’s Audit and Risk Committee
Finance/Accounting V V
satisfies this statutory requirement. The Committee also engaged a financial expert consultant in accordance with the rules of
Legal V the U.S. Securities and Exchange Commission. The Audit and Risk Committee annually conducts self-evaluation to assess the
Sales and Marketing V V V V V V V V Committee’s performance and identify areas for further attention.
Cybersecurity V
TSMC’s Audit and Risk Committee is empowered by its Charter to conduct any study or investigation it deems appropriate to fulfill
Others Innovation/
R&D/ its responsibilities. It has direct access to TSMC’s internal auditors, the Company’s independent auditors, and all employees of the
Education/
Training Company. The Committee is authorized to retain and oversee special legal, accounting, or other consultants as it deems appropriate
Skills and Experience to fulfill its mandate. The Audit and Risk Committee Charter is available on TSMC’s corporate website.
Leadership Skill V V V V V V V V V V

Strategic Decision-making V V V V V V V V V V 3.2.2 Compensation and People Development Committee

Global Market Perspective V V V V V V V V
The Compensation and People Development Committee assists the Board in discharging its responsibilities related to TSMC’s
Industry Experience V V V V V V V V compensation and benefits policies, plans and programs, in evaluation of compensation of TSMC’s directors of the Board and
Financial V V V V V V V V V executives, and the review of the pipeline planning of the Company’s senior executives to ensure the long-term sustainability of the
Operating and V V V V V V V Company.
Manufacturing
Business Development V V V V V V V V The members of the Compensation and People Development Committee are appointed by the Board as required by R.O.C. law.
Risk/Crisis Management V V V V V V V V V V According to its charter, the Committee shall consist of no fewer than three independent directors of the Board, whereas the actual
Environmental Sustainability V V V V V V V V V V Committee is comprised of all six Independent Directors. The Chairman of the Board and the Chief Executive Officer are invited by
Social Engagement V V V V V V V V V V the Committee to attend all meetings and are excused from the Committee’s discussion of their own compensation.

046 047
 TSMC’s Compensation and People Development Committee is authorized by its charter to retain an independent consultant to assist 3.2.5 Director and Committees Members’ Attendance
in the evaluation of CEO’s or executive officer’s compensation. The Compensation and People Development Committee Charter is
Each Director is expected to attend every Board meeting and the Committees meeting on which he or she serves. In 2023, the
available on TSMC’s corporate website.
average Board Meeting attendance rate was 94% and the attendance rate for the Audit and Risk Committee, Compensation and
People Development Committee, and Nominating, Corporate Governance and Sustainability Committee’s Meetings were 97%,
Information Regarding Compensation and People Development Committee Members
100%, and 97% respectively.
Number of Other
Criteria Taiwanese Public
Professional Qualification and Experience Independent Directors’ Independence Status Companies Concurrently Board of Directors Meeting Status
Name/Title Serving as a Compensation
Committee Member Tenures of the Board of Directors members are from July 26, 2021 to July 25, 2024. Dr. Mark Liu, TSMC’s Chairman of the Board of
Michael R. Splinter (Chair) TSMC’s Compensation and People Development 1. All the Committee members satisfy the requirements of Article 14-6 of 0 Directors convened four regular meetings and one special meeting in 2023. The directors’ attendance status is as follows.
Independent Director Committee is comprised of all six Independent “Securities and Exchange Act” and the requirements of “Regulations Governing
Directors. For members professional qualification the Appointment and Exercise of Powers by the Compensation Committee of
Sir Peter L. Bonfield 0 Attendance in Attendance Rate
and experience, please refer to “2.4.1 Information a Company Whose Stock is Listed on the Taiwan Stock Exchange or the Taipei Title Name By Proxy Notes
Independent Director Person in Person (%)
Regarding Board Members” on page 24-29 of this Exchange” (Note) issued by Taiwan’s Securities and Futures Bureau
Kok-Choo Chen Annual Report. 2. All the Committee members (or nominee arrangement) as well as his/her spouse 0 Chairman Mark Liu 5 0 100% None
Independent Director and minor children do not hold any TSMC common shares
3. All the Committee members received no compensation or benefits for providing Vice Chairman C.C. Wei 5 0 100% None
Moshe N. Gavrielov commercial, legal, financial, accounting services or other services to the 0
Independent Director Company or to any its affiliates within the preceding two years, and the service Director Ming-Hsin Kung 3 2 60% None
provided is either an “audit service” or a “non-audit service” (Representative of National Development Fund, Executive
Yancey Hai 1 Yuan)
Independent Director
Director F.C. Tseng 5 0 100% None
L. Rafael Reif 0
Independent Director Independent Director Sir Peter L. Bonfield 5 0 100% None

Note: During the two years before being elected and during the term of office, meet any of the following situations: Independent Director Kok-Choo Chen 5 0 100% None
(1) N
 ot an employee of the company or any of its affiliates; Independent Director Michael R. Splinter 4 1 80% None
(2) N
 ot a director or supervisor of the company or any of its affiliates;
(3) N
 ot a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of one percent or Independent Director Moshe N. Gavrielov 5 0 100% None
more of the total number of issued shares of the company or ranks as one of its top ten shareholders;
(4) N
 ot a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the officer in the preceding (1) subparagraph, or of any of the above persons in the Independent Director Yancey Hai 5 0 100% None
preceding subparagraphs (2) and (3);
(5) N
 ot a director, supervisor, or employee of a corporate/institutional shareholder that directly holds five percent or more of the total number of issued shares of the company, ranks as of its top five shareholders, Independent Director L. Rafael Reif 5 0 100% None
or has representative director(s) serving on the company’s board based on Article 27 of the Company Law;
(6) N
 ot a director, supervisor, or employee of a company of which the majority of board seats or voting shares is controlled by a company that also controls the same of the company; Annotations:
(7) N
 ot a director, supervisor, or employee of a company of which the chairman or CEO (or equivalent) themselves or their spouse also serve as the company’s chairman or CEO (or equivalent); A. (1) M  atters listed in the Securities and Exchange Act §14-3: The Securities and Exchange Act §14-3 is not be applicable because the Company has established the Audit and Risk Committee. For relevant
(8) N
 ot a director, supervisor, officer, or shareholder holding five percent or more of the shares of a specified company or institution that has a financial or business relationship with the company; and information, please refer to the “Audit and Risk Committee Meeting Status” in this Annual Report.
(9) N
 ot a professional individual, owner, partner, director, supervisor, or officer of a sole proprietorship or any type of legal entity, or a spouse thereof, that have provided to TSMC or its affiliates: (1) any audit (2) T here were no other written or otherwise recorded resolutions on which an Independent Director had an objection or reservation.
service; or (2) commercial, legal, financial, accounting services or other services of which its total compensation exceeding NT$500,000 within the recent two years. B. Recusals of Directors due to conflicts of interests: (1) Directors recused themselves from the discussion and voting of their compensation resolution; (2) given that NXP Semiconductors N.V. is a party to the sale
of a 30% equity share of TSMC’s wholly-owned German subsidiary, European Semiconductor Manufacturing Company (ESMC) GmbH, in an arrangement of TSMC selling 10% each to Bosch, Infineon and NXP,
Mr. Moshe N. Gavrielov recused himself from the discussion and voting as he also serves as a Director of NXP.
C. Measures taken to strengthen the functionality of the Board:
3.2.3 Nominating, Corporate Governance and Sustainability Committee - TSMC’s Directors are composed of diverse backgrounds, including professional backgrounds in different industries, academic and legal, etc.; nationalities in different countries in Taiwan, Europe and the U.S.;
world-class business operating experience; and one Director is female. Our Board has six Independent Directors who constitute 60% of the Board.
The Nominating, Corporate Governance and Sustainability Committee assists the Board in strengthening the selection mechanism - The Chairman of the Board of Directors is not executive officer of the Company.
- To continue to make our corporate governance more comprehensive, the TSMC Board took a step further in February 2023 to expand and strengthen the functions and responsibilities of its Committees,
for directors, selecting candidates for nomination to be elected as independent directors to the Board, building diversified and including renaming the “Audit Committee” to the “Audit and Risk Committee”, and the renaming the “Compensation Committee” to the “Compensation and People Development Committee”. In addition,
in order to strengthen the selection mechanism for directors, build diversified and professional board, TSMC’s Board of Directors approved the establishment of the “Nominating, Corporate Governance and
professional board, and advising on corporate governance and sustainability matters. Sustainability Committee” referencing international practices.
- TSMC Board of Directors established “Corporate Governance Guidelines” in May, 2023.

According to its Charter, the Committee shall be composed of the Chairman of the Board and three to six independent directors.
Currently, the Committee consists of the Chairman of the Board and all six Independent Directors. Audit and Risk Committee Meeting Status
Tenures of the Audit and Risk Committee members are from July 26, 2021 to July 25, 2024. Sir Peter L. Bonfield, Chairman of the
The Nominating, Corporate Governance and Sustainability Committee is authorized by its Charter to hire independent legal, Audit and Risk Committee, convened four regular meetings in 2023. In addition to these meetings, he also convened one special
financial and other advisors as it may deem necessary to fulfill its responsibilities. The Nominating, Corporate Governance and meeting and three telephone conferences to review the Company’s Annual Report to be filed with the Taiwan and U.S. authorities
Sustainability Committee Charter is available on TSMC’s corporate website. and investor conference materials. The Committee members’ and consultant’s attendance status is as follows.

3.2.4 Corporate Governance Officer

The Board of Directors appointed Ms. Sylvia Fang, the Vice President of Legal and General Counsel of TSMC, as the Corporate
Governance Officer responsible for corporate governance matters, including handling of matters relating to Board, Audit and Risk
Committee, Compensation and People Development Committee, Nominating, Corporate Governance and Sustainability Committee,
and Shareholders’ meetings in compliance with law, assistance in onboarding and continuing education of directors, provision of
information required for performance of duties by directors, and assistance in directors’ compliance of law, etc.

For details on performance of duties by the Corporate Governance Officer, please refer to “3. Corporate Governance” on page
40-67 of this Annual Report.

048 049
 Attendance Rate Compensation and People Development Committee Meeting Status
Attendance in Attendance Rate in Telephone
Title Name By Proxy of Telephone Notes
Person Person (%) Conferences Conferences (%) Tenures of the Compensation and People Development Committee members are from July 26, 2021 to July 25, 2024. Mr. Michael
Chair Sir Peter L. Bonfield 5 0 100% 3 100% None R. Splinter, Chairman of the Committee, convened four regular meetings in 2023. The Committee members’ qualification and
Member Kok-Choo Chen 4 1 80% 3 100% None attendance are as follows.
Member Michael R. Splinter 5 0 100% 3 100% None
Title Name Attendance in Person By Proxy Attendance Rate in Person (%) Notes
Member Moshe N. Gavrielov 5 0 100% 2 67% None
Member Yancey Hai 5 0 100% 3 100% None Chair Michael R. Splinter 4 0 100% None

Member L. Rafael Reif 5 0 100% 2 67% None Member Sir Peter L. Bonfield 4 0 100% None

Financial Expert Jan C. Lobbezoo 5 0 100% 3 100% None Member Kok-Choo Chen 4 0 100% None
Consultant Member Moshe N. Gavrielov 4 0 100% None
Annotations: Member Yancey Hai 4 0 100% None
A. (1) Resolutions related to Securities and Exchange Act §14-5:
Member L. Rafael Reif 4 0 100% None
Audit and Risk Committee Resolution Annotations:
Meeting Date
A. In 2023, the Compensation and People Development Committee conducted four regular meetings on February 13, May 8, August 7 and November 13. The discussion items were as follows:
2023 1st Regular Meeting 2022 annual financial statements
●
- Report on matters related to employee compensation
February 13 2022 business report
●
- Total amount of quarterly business performance bonus
2022 fourth quarter earnings distribution
●
- Total amount of annual profit sharing
Capital injection of not more than US$3.5 billion to TSMC Arizona
●
- The amount of quarterly business performance bonus for executive officers, CEO and Chairman
Fund-lending to TSMC Arizona for an amount not to exceed US$3 billion and a period not to exceed one year
●
- The annual compensation of directors and executive officers, and the disclosure of same in the Annual Report
Amendments to TSMC’s “Procedures for Endorsement and Guarantee”
●
- Vest of Employee restricted stock awards for 2021
NTD corporate bond issuance
●
- Grant of Employee restricted stock awards for 2022
Issuance of total 2,110,000 shares of 2022 employee restricted stock awards
●
- Employee restricted stock awards rules for 2023
Issuance of 2023 employee restricted stock awards
●
- Clawback Policy
2022 Statement of Internal Control System
●
- Organization and Executive Succession Discussion
2023 2nd Regular Meeting 2023 first quarter financial statements
● - The renaming the “Compensation Committee” to the “Compensation and People Development Committee” and the amendments to its Charter
May 8 2023 first quarter business report
● All of the above matters were reviewed and/or approved by the Committee.
2023 first quarter earnings distribution
● B. The Board of Directors adopted all recommendations of the Committee without modification.
NTD corporate bond issuance
● C. There were no written or otherwise recorded resolutions on which any member of the Committee had an objection or reservation opinion.
Amendments to TSMC’s internal control related policies and procedures
●

3rd
2023 Regular Meeting 2023 second quarter financial statements
Nominating, Corporate Governance and Sustainability Committee Meeting Status
●

August 7 2023 second quarter business report

●

2023 second quarter earnings distribution

●
According to its Charter, the Committee shall be composed of the Chairman of the Board and three to six independent directors.
Capital injection of not more than €3,499,930,000 to European Semiconductor Manufacturing Company (ESMC) GmbH
●

Capital injection of not more than US$4.5 billion to TSMC Arizona

●
Currently, the Committee consists of the Chairman of the Board and all six Independent Directors. The Nominating, Corporate
Ratification of TSMC’s security investments classified as non-current assets
●

Governance and Sustainability Committee assists the Board in strengthening the selection mechanism for directors, selecting
2023 4th Regular Meeting 2023 third quarter financial statements
●

November 13 2023 third quarter business report

●
candidates for nomination to be elected as independent directors to the Board, building diversified and professional board, and
2023 third quarter earnings distribution
advising on corporate governance and sustainability matters.
●

Related-party sale of existing TSMC equipment to Japan Advanced Semiconductor Manufacturing, Inc. (JASM)
●

2024 service fees and out-of-pocket expenses for Deloitte

●

Independent Directors’ objections, reservations or major suggestions: None.

On February 14, 2023, the Board established the Nominating, Corporate Governance and Sustainability Committee. Tenures of
Resolution of the committee and the Company’s response to the committee’s opinion: The members of the Committee unanimously approved all the resolutions, and the Board of Directors approved all such
resolutions recommended by the Committee. the Committee members are from February 14, 2023 to July 25, 2024. Mr. Moshe N. Gavrielov, Chairman of the Governance and
(2) There were no other resolutions which was not approved by the Committee but was approved by two thirds or more of all directors in 2023. Sustainability Committee, convened five meetings in 2023. The Committee members’ professional qualification and experience,
B. Recusals of Independent Directors due to conflicts of interests: Given that NXP Semiconductors N.V. is a party to the sale of a 30% equity share of TSMC’s wholly-owned German subsidiary, European
Semiconductor Manufacturing Company (ESMC) GmbH, in an arrangement of TSMC selling 10% each to Bosch, Infineon and NXP, Mr. Moshe N. Gavrielov recused himself from the discussion and voting as he attendance status, and discussion items are as follows:
also serves as a Director of NXP.
C. Descriptions of the communications between the Independent Directors, the internal auditors, and the independent auditors in 2023 (which should include the material items, channels, and results of the audits Criteria Attendance in Attendance Rate in
on the corporate finance and/or operations, etc.): Professional Qualification and Experience By Proxy (Note) Notes
Name/Title Person Person (%)
(1) T he internal auditors have sent the audit reports to the members of the Committee periodically and presented the findings of all audit reports in the quarterly meetings of the Committee. The head of Internal
Audit will immediately report to the members of the Committee any material matters. During 2023, the head of Internal Audit did not report any such material matters. The communication channel between Moshe N. Gavrielov (Chair) TSMC’s Nominating, Corporate Governance and 5 - 100% None
the Committee and the internal auditor functioned well. Independent Director Sustainability Committee is comprised of the Chairman of
(2) T he Company’s independent auditors have presented the findings of their quarterly review or audits on the Company’s financial results. Under applicable laws and regulations, the independent auditors the Board and all six independent directors. For members
are also required to immediately communicate to the Committee any material matters that they have discovered. During 2023, the Company’s independent auditors did not report any irregularity. The Mark Liu 5 - 100% None
professional qualification and experience, please refer to
communication channel between the Committee and the independent auditors functioned well. Chairman of the Board
“2.4.1 Information Regarding Board Members” on page
The communications between the Independent Directors, the internal auditors, and the independent auditors are listed in the table below. Sir Peter L. Bonfield 24-29 of this Annual Report. 5 - 100% None
Independent Director
Audit and Risk Committee Communications between the Independent Directors and Communications between the Independent Directors and the Independent
Meeting Date the Internal Auditors Auditors Kok-Choo Chen 5 - 100% None
Independent Director
2023 1st Regular Meeting Internal Auditor’s report (Closed Door Session)
●
External auditor relationship (i.e. qualification, performance and independence)
●

February 13 Report on SOX 404 self-testing results for the year 2022 (Closed
●
Report of regulatory developments
●
Michael R. Splinter 5 - 100% None
Door Session) Any audit problems or difficulties and management’s response in connection with 2022
●
Independent Director
2022 Statement of Internal Control System (Closed Door Session)
●
annual financial statements (Closed Door Session)
Yancey Hai 5 - 100% None
2023 2nd Regular Meeting Internal Auditor’s report (Closed Door Session)
●
The result of 2022 CPA evaluation questionnaire
●
Independent Director
May 8 Amendments to TSMC’s internal control related policies and
●
External auditors’ report on Deloitte China and KY matters
●

procedures (Closed Door Session) Report of regulatory developments

● L. Rafael Reif 4 - 80% None
Any review problems or difficulties and management’s response in connection with 2023
● Independent Director
first quarter financial statements (Closed Door Session) Annotations:
2023 3rd Regular Meeting Internal Auditor’s report (Closed Door Session)
●
Report of regulatory developments
● A. In 2023, the Nominating, Corporate Governance and Sustainability Committee conducted five meetings on February 14, March 23, May 8, August 7 and November 13. The discussion items were as follows:
August 7 Any review problems or difficulties and management’s response in connection with 2023
● - Committee’s operarion
second quarter financial statements (Closed Door Session) - Future candidates for Independent Directors
- Establishment of the TSMC’s Corporate Governance Guidelines
2023 4th Regular Meeting Internal Auditor’s report (Closed Door Session)
●
Report of regulatory developments
●
- Sustainable Development Action Plans for Listed Companies (2023)
November 13 2024 internal audit plan (Closed Door Session)
●
Any review problems or difficulties and management’s response in connection with 2023
●

- Quarterly ESG report

third quarter financial statements (Closed Door Session) - Annual reviewing and assessing the Committee charter and fulfillment of Committee duties
Result: all of the above matters were reviewed and/or approved by the Committee whereupon Independent Directors raised no objection. All of the above matters were reviewed, discussed and/or approved by the Committee.
B. There were no resolutions on which any member of the Committee had an objection opinion.
C. The Board of Directors approved and adopted all recommendations of the Committee without modification.
Note: The Committee members shall attend the meetings in-person, and there is no proxy available for the Committee members who are unable to attend the meeting.

050 051
 Board of Directors’ Performance Evaluation Implementation Status 3.3.2 Major Resolutions of Board Meetings
Evaluation Cycle Evaluation Period Evaluation Scope Evaluation Method Evaluation Aspect During 2023 and as of the date of this Annual Report, major resolutions approved at Board meetings are summarized below:
Annual From January 1, 2023 to December The Board of Directors as a
●
Internal assessment of the
●
The Board of Directors are assessed on the following five aspects: (1) B oard Meeting of February 13 & 14, 2023:
31, 2023 whole Board 1. Involvement in the Company’s operations
The individual directors
●
Self-assessments by each
●
2. Enhancement of the quality of the board’s decision-making ● approving the 2022 Business Report and Financial Statements;

The Audit and Risk Committee

●
board member 3. Makeup and structure of the board
● approving the distribution of a NT$2.75 per share cash dividend for the fourth quarter of 2022, and setting June 21, 2023 as
The Compensation and People
●
Internal assessment of each
●
4. Election of board members and continuing knowledge
Development Committee committee development
The Nominating, Corporate
●
5. Internal control
the record date for common stock shareholders entitled to participate in this cash dividend distribution;
Governance and Sustainability ● approving distribution of employees’ business performance bonus and profit sharing for 2022;
Committee The individual directors are assessed on the following six aspects:
1. Understanding of the Company’s goals and mission ● approving capital appropriations of approximately US$6,959.5 million for purposes including: 1. Installation and upgrade

2. Awareness of director’s duties

3. Involvement in the Company’s operations of advanced technology capacity; 2. Installation of specialty technology capacity; 3. Fab construction, and installation of fab
4. Internal relationship and communication
5. Director’s professionalism and continuing knowledge
facility systems;
development ● approving the capital injection of not more than US$3.5 billion to TSMC Arizona, a wholly-owned subsidiary of TSMC;
6. Internal control
● approving the issuance of unsecured corporate bonds in the domestic market for an amount not to exceed NT$60 billion to

Each functional Committee is assessed on the following five aspects:

1. Involvement in the Company’s operations finance TSMC’s capacity expansion and/or pollution prevention related expenditures;
2. Awareness of the committee’s duties ● to attract and retain corporate executives and critical talents and to link their compensation with shareholders’ interests and
3. Enhancement of the quality of the committee’s decision-making
4. Makeup of the committee and election of its members ESG achievements, the board approved the issuance of 2,110,000 shares of 2022 employee restricted stock awards (RSAs). In
5. Internal control
addition, the board approved the issuance of no more than 6,249,000 common shares of RSAs for the year 2023, which will
be submitted to the 2023 Annual Shareholders’ Meeting for approval;
The Company completed self-assessments of Board and each Committee performance in 2023 and reported the results to the Board ● approving the renaming of “Audit Committee” to “Audit and Risk Committee”, and the renaming of “Compensation

and each Committee at its first quarter meeting in 2024 for review and improvement. The weighted average score for the overall Committee” to “Compensation and People Development Committee”, and the establishment of a “Nominating, Corporate
performance of the Board of Directors is out of 5, that included an average score of 4.90 on a particular assessment item “The Governance and Sustainability Committee” of the Board of Directors; and
board has sufficient discussions over the Company’s involvement in the implementation of ESG programs”. The weighted average ● convening the 2023 Annual Shareholders’ Meeting.

score for the performance of the individual directors is 4.81 out of 5. As demonstrated, the overall board’s operation has been (2) R egular Board Meeting of May 9, 2023:
effective. On a scale out of 5, the weighted average scores for self-assessed performance results of the Audit and Risk Committee, ● approving the distribution of a NT$3.00 per share cash dividend for the first quarter of 2023, and setting September 20, 2023

the Compensation and People Development Committee and the Nominating, Corporate Governance and Sustainability Committee as the record date for common stock shareholders entitled to participate in this cash dividend distribution;
are 4.82, 4.68 and 4.63, respectively. As demonstrated, each committee’s operation has been effective. ● approving capital appropriations of approximately US$366.1 million for the purpose of fab construction and installation of fab

facility systems;
3.3 Major Decisions of Shareholders’ Meeting and Board Meetings ● approving the issuance of unsecured corporate bonds in the domestic market for an amount not to exceed NT$60 billion to

finance TSMC’s capacity expansion and/or pollution prevention related expenditures;

3.3.1 Major Resolutions of Shareholders’ Meeting and Implementation Status
● approving TSMC’s “Corporate Governance Guidelines”; and

TSMC held 2023 Annual Shareholders’ Meeting in Hsinchu, Taiwan on June 6, 2023. At the meeting, shareholders present in ● approving the promotion of Fab Operations I Fab 18A Senior Fab Director Mr. Ray Chuang to Vice President.

person or by proxy approved the following resolutions: (3) R egular Board Meeting of August 8, 2023:
(1) T he 2022 Business Report and Financial Statements. Consolidated revenue totaled NT$2,263.89 billion and net income was ● approving the distribution of a NT$3.00 per share cash dividend for the second quarter of 2023, and setting December 20,

NT$1,016.53 billion, with diluted earnings per share of NT$39.20; 2023 as the record date for common stock shareholders entitled to participate in this cash dividend distribution;
(2) T he issuance of employee restricted stock awards for year 2023. ● approving capital appropriations of approximately US$6,059.5 million for purposes including: 1. Fab construction, and

(3) T he revisions to the Procedures for Endorsement and Guarantee installation of fab facility systems; 2. Installation of advanced packaging, mature and/or specialty technology capacity;
(4) T he revisions to the following TSMC policies in order to reflect the Audit Committee name change to the Audit and Risk ● approving an equity investment of not more than €3,499.93 million (approximately US$3,884.9 million) to a

Committee: TSMC-majority-owned subsidiary, European Semiconductor Manufacturing Company (ESMC) GmbH, in Germany to provide
● Procedures for Acquisition or Disposal of Assets foundry services; and
● Procedures for Financial Derivatives Transactions ● approving the capital injection of not more than US$4.5 billion to TSMC Arizona, a wholly-owned subsidiary of TSMC.

● Procedures for Lending Funds to Other Parties (4) S pecial Board Meeting of September 12, 2023:
● Procedures for Endorsement and Guarantee ● approving the purchase of 10% equity interest in IMS Nanofabrication Global, LLC from Intel Corporation for an amount not

exceeding US$432.8 million; and

Implementation Status ● approving an investment in Arm Holdings plc in an amount not exceeding US$100 million based on Arm’s share price at IPO.

All the resolutions of the Shareholders’ Meeting have been fully implemented in accordance with the resolutions.

052 053
 (5) R
 egular Board Meeting of November 13 & 14, 2023: Assessment Item Implementation Status Non-
● approving the distribution of a NT$3.50 per share cash dividend for the third quarter of 2023, and setting March 24, 2024 as
implementation
Yes No Explanation and Its Reason(s)
the record date for common stock shareholders entitled to participate in this cash dividend distribution; and 3. Composition and Responsibilities of the Board of Directors None
● approving capital appropriations of approximately US$4,341.95 million for purposes including: 1. Installation of advanced (1) H
 as the Board of Directors established a diversity policy, set goals, and V (1) P lease refer to “3.2 Board of Directors – Board Diversity and Independence” on
implemented them accordingly? page 46 of this Annual Report.
technology capacity; 2. Installation of advanced packaging, mature and specialty technology capacity; 3. 2024 R&D capital
(2) O
 ther than the compensation committee and the audit committee V (2) A
 udit and Risk Committee (Audit Committee is founded in 2002 and renamed
investments and sustaining capital expenditures; 4. 2024 capitalized leased assets. which are required by law, does the Company plan to set up other Board in 2023); Compensation and People Development Committee (Compensation
(6) R
 egular Board Meeting of February 5 & 6,2024: committees? Committee is founded in 2003 and renamed in 2023); Nominating, Corporate
Governance and Sustainability Committee (founded in 2023); ESG Steering
● approving the 2023 Business Report and Financial Statements; Committee (founded in 2019): is formed by the Company’s management
team and chaired by Chairman Mark Liu; ESG Committee (founded in 2011): is
● approving the distribution of a NT$3.50 per share cash dividend for the fourth quarter of 2023, and setting June 19, 2024 as
formed by the Company’s executive team and reports quarterly to the Board/
Nominating, Corporate Governance and Sustainability Committee on the
the record date for common stock shareholders entitled to participate in this cash dividend distribution; implementation of plans and results.
● approving distribution of employees’ business performance bonus and profit sharing for 2023;
(3) H
 as the Company established methodology for evaluating the performance V (3) A
 s TSMC’s corporate governance concept, the Board of Director’s primary
● approving capital appropriations of approximately US$9,421.48 million for purposes including: 1. Installation of advanced of its Board of Directors, on an annual basis, reported the results of responsibility is to supervise, evaluate the management’s performance and
performance to the Board of Directors, and use the results as reference for dismiss officers of the Company when necessary, resolve the important,
technology capacity; 2. Installation of advanced packaging, mature and/or specialty technology capacity; 3. Fab construction, directors’ remuneration and renewal? concrete matters and provide guidance to the management team. TSMC’s
Board of Directors consists of distinguished members with a great breadth of
and installation of fab facility systems, including construction of the Zero Waste Manufacturing Center at the Southern Taiwan experience as world-class business leaders or professionals and adhere high
Science Park; 4. capitalized leased assets; ethical standards and commitment to the Company. Each quarter’s Board
Meeting is last for two days. Company’s resolutions are determined in board
● approving the capital injection of not more than US$5,262 billion to Japan Advanced Semiconductor Manufacturing, Inc. meeting, also business strategy and future orientation are discussed in the
meeting, in order to create best interest for shareholders. Based on TSMC’s
(JASM); operating performance and local/international awards of best corporate
● approving the capital injection of not more than US$5 billion to TSMC Arizona, a wholly-owned subsidiary of TSMC;
governance, it certainly proves the Company’s excellent performance of Board
of Directors.
● approving the capital injection of not more than US$3 billion to TSMC Global Ltd., a wholly-owned subsidiary of TSMC, for the
Each year, TSMC conducts regular Board performance self-evaluation in form
purpose of reducing foreign exchange hedging costs. of written questionnaires for the Board, individual directors, the Audit and Risk
Committee, the Compensation and People Development Committee, and the
● approving the issuance of 2,960,000 shares of 2023 employee restricted stock awards (RSAs). In addition, approving the
Nominating, Corporate Governance and Sustainability Committee.
issuance of no more than 4,185,000 common shares of RSAs for the year 2024, which will be submitted to the 2024 Annual
The Board of Directors are assessed on the following five aspects:
Shareholders’ Meeting for approval; and 1. Involvement in the Company’s operations
2. Enhancement of the quality of the board’s decision-making
● convening the 2024 Annual Shareholders’ Meeting;
3. Makeup and structure of the board
4. Election of board members and continuing knowledge development
● approving the promotion of Vice President, Finance and Chief Financial Officer Mr. Wendell Huang to Senior Vice President;
5. Internal control
● approving the promotion of Vice President, Legal and General Counsel Ms. Sylvia Fang to Senior Vice President.
The individual directors are assessed on the following six aspects:
(7) Special Board Meeting of February 29, 2024: 1. Understanding of the Company’s goals and mission
2. Awareness of director’s duties
● approving the appointment of Senior Vice President of R&D Dr. Y.J. Mii and Senior Vice President of Operations Mr. Y.P. Chyn
3. Involvement in the Company’s operations
4. Internal relationship and communication
as Executive Vice Presidents and Co-Chief Operating Officers of TSMC. 5. Director’s professionalism and continuing knowledge development
6. Internal control

3.3.3 M
 ajor Issues of Record or Written Statements Made by Any Director Dissenting to Important Resolutions Passed Each functional Committee is assessed on the following five aspects:
1. Involvement in the Company’s operation
by the Board of Directors in 2023 and as of the Date of this Annual Report: None. 2. Awareness of the committee’s duties
3. Enhancement of the quality of the committee’s decision-making
4. Makeup of the audit committee and election of its members
5. Internal control
3.4 C
 orporate Governance Implementation Status as Required by Taiwan Financial Supervisory
Commission The Company completed self-assessments of Board performance in 2022 and
reported the results to the Board of Directors at its first quarter meeting in
2023 for review and improvement. The weighted average score for the overall
Assessment Item Implementation Status Non- performance of the Board of Directors is 4.73 out of 5, that included an
implementation average score of 4.90 on a particular assessment item “The board has sufficient
Yes No Explanation and Its Reason(s) discussions over the Company’s involvement in the implementation of ESG
programs”. The weighted average score for the performance of the individual
1. Does Company follow “Taiwan Corporate Governance Implementation” to V The Board of Directors of the Company has approved the establishment of the None directors is 4.81 out of 5. As demonstrated, the overall board’s operation has
establish and disclose its corporate governance practices? Corporate Governance Guidelines, which has been disclosed in the Company’s been effective. On a scale of 5, the weighted average scores for self-assessed
official website. performance results of the Audit and Risk Committee, the Compensation and
People Development Committee and the Nominating, Corporate Governance
2. Shareholding Structure & Shareholders’ Rights None and Sustainability Committee are 4.82, 4.68 and 4.63, respectively. As
(1) D
 oes Company have Internal Operation Procedures for handling V (1) T SMC has designated appropriate departments, such as Investor Relations demonstrated, each committee’s operation has been effective.
shareholders’ suggestions, concerns, disputes and litigation matters. If yes, Division, Public Relations Division, Shareholders Services & SEC Compliance
has these procedures been implemented accordingly? Department, Legal, etc., to handle shareholder suggestions, concerns, disputes (4) D
 oes the Company regularly evaluate its external auditors’ independence? V (4) T he Audit and Risk Committee annually evaluates the independence of external
or litigation matters according to relevant internal procedures. auditors and reports the same to the Board of Directors. Please refer to “3.9.4
Evaluation of the External Auditor’s Independence and Suitability” on page 67
(2) D
 oes Company possess a list of major shareholders and beneficial owners V (2) T SMC tracks the shareholdings of directors, officers, and top ten shareholders. of this Annual Report.
of these major shareholders?
(Continued)
(3) H
 as the Company built and executed a risk management system and V (3) T SMC has set up internal rules in the Company’s Internal Control System and
“firewall” between the Company and its affiliates? Affiliated Corporations Management.

(4) H
 as the Company established internal rules prohibiting insider trading on V (4) T SMC has established its “Insider Trading Policy” that applies to all employees,
undisclosed information? officers and members of the Board of Directors of the Company and to any
other person having a duty of trust or confidence, with respect to transactions
in the Company’s securities. This policy prohibits any insider trading and the
Company regularly provides internal training on this issue.
(Continued)

054 055
 Assessment Item Implementation Status Non- Continuing Education/Training of Directors in 2023
implementation
Yes No Explanation and Its Reason(s) The major training methods of Directors include:
● At quarterly Board meetings, TSMC management presents updates on the Company’s business, regulatory developments and
4. Does the Company appoint competent and appropriate corporate governance V The Board of Directors appointed the Vice President of Legal and General None
personnel and corporate governance officer to be in charge of corporate Counsel of TSMC as the Corporate Governance Officer. TSMC’s Corporate & other information;
governance affairs (including but not limited to furnishing information Compliance Legal Division, which directly reports to the General Counsel, is
required for business execution by directors, assisting directors’ compliance of in charge of assisting in related affairs, including handling of matters relating ● The Company arranges speeches on politics, economics, and regulatory compliance, etc.;

law, handling matters related to board meetings and shareholders’ meetings to Board, Audit and Risk Committee, Compensation and People Development
● At quarterly Audit and Risk Committee meetings, TSMC’s General Counsel and the Company’s independent auditors provide
according to law, and recording minutes of board meetings and shareholders’ Committee, Nominating, Corporate Governance and Sustainability Committee
meetings)? and Shareholders’ meetings in compliance with law, assistance in onboarding regulatory update reports and legal compliance status; and
and continuing education of directors, provision of information required for
performance of duties by directors, and assistance in directors’ compliance of law, ● Directors participate in externally-provided training courses as needed.
etc.
5. Has the Company established a means of communicating with its V Depending on the situation, the Company’s Investor Relations Division, Public None
Stakeholders (including but not limited to shareholders, employees, Relations Division, Shareholders Services & SEC Compliance Department, Human In addition, from time to time, Directors are invited by other parties to give speeches on corporate governance and related topics.
customers, suppliers, etc.) or created a Stakeholders Section on its Company Resources Organization, Customer Service Department, Procurement Department
website? Does the Company respond to stakeholders’ questions on corporate and ESG will communicate with stakeholders. We also have publicly disclosed the Name Date Host by Training/Speech Title Duration
responsibilities? contact information of our corporate spokesperson and relevant departments.
Also, we have a stakeholder section on our corporate website to address our Mark Liu (Note) 09/06 SEMI SEMICON Taiwan 2023, CEO Summit 2.5 hours
sustainability and any other issues. For details, please refer to “7. Environmental Keynote speech: Semiconductor Technology in the Era of Artificial Intelligence
Social Governance (ESG)” on page 150-176 of this Annual Report and “Materiality
Analysis and Stakeholder Communication” of TSMC’s Sustainability Report. 10/02 Science and Technology in Society (STS) Forum Semiconductor Technology in the Era of Artificial Intelligence 1 hour

6. Has the Company appointed a professional registrar for its Shareholders’ V We have appointed China Trust as registrar for our Shareholders’ Meetings. None 11/22 Chinese National Association of Industry and Commerce Gongliang Memorial Lecture: TSMC in the Artificial Intelligence (AI) Era 1.5 hours
Meetings?
F.C. Tseng 04/27 Taiwan Corporate Governance Association Development of Artificial Intelligence and Application of Third-generation 3 hours
7. Information Disclosure None Semiconductors in Servers
(1) H
 as the Company established a corporate website to disclose information V (1) T SMC discloses its financials business and corporate governance status on its
regarding its financials, business and corporate governance status? website at http://www.tsmc.com (in Chinese and English). TSMC’s American 12/08 Taiwan Corporate Governance Association TCFD & SBTi Development Trends and Directors’ Powers 3 hours
Depositary Receipt (ADR) is listed on the New York Stock Exchange (NYSE).
As a foreign issuer, TSMC must comply with NYSE’s rules. We have been Sir Peter L. Bonfield 06/20 AlixPartners, London Impact of Semiconductors in Electric Cars and Supply Chains 1 hour
operating in accordance with NYSE listing standards, and have been disclosing
09/15 Darktrace Cybersecurity Training for Board Members 4 hours
the major differences between our corporate governance practices and U.S.
corporate governance practices. Please see https://www.tsmc.com/download/ir/ 11/23 AlixPartners, Munich Impact of Semiconductors in Electric Cars and Supply Chains 1 hour
NYSE_Section_303A.pdf.
Moshe N. Gavrielov 04/28 Ascend Director Summit 2 hours
(2) D
 oes the Company use other information disclosure channels (e.g. V (2) T SMC has designated appropriate departments (e.g. the Investor Relations
maintaining an English-language website, designating staff to handle Division, Public Relations Division, Shareholders Services & SEC Compliance 07/10-11 Goldman Sachs Corporate Director Symposium 9 hours
information collection and disclosure, appointing spokespersons, Department, etc.) to handle the collection and disclosure of information as
webcasting investors conference etc.)? required by the relevant laws and regulations of Taiwan and other jurisdictions. 09/20-22 Morgan Stanley 6th Annual Semiconductor Company CEO and Board of Directors Forum 12 hours
TSMC has designated Spokesperson and Deputy Spokesperson as required by
relevant regulations. TSMC provides live audio webcasts and replays of investor 11/01-03 McKinsey & Company T-30 Semiconductor Executive/Board Member Event 12 hours
conferences on its website.
11/07 Barclays Semiconductor Board and CEO Summit 6 hours
(3) D
 oes the Company announce and report the annual financial statements V (3) T SMC follows relevant laws and regulations to announce and report the annual
within two months after the end of the fiscal year, and announce and financial statements within two months after the end of the fiscal year, and Yancey Hai 04/27 Taiwan Corporate Governance Association Corporate Strategy 3 hours
report the first, second, and third quarter financial statements as well as announce and report the first, second, and third quarter financial statements
the operating status of each month before the prescribed deadline? as well as the operating status of each month before the prescribed deadline. 07/31 Taiwan Corporate Governance Association Technology, Applications and Societal Impacts of Artificial Intelligence 3 hours
Please refer to Market Observation Post System for the aforementioned
disclosure. Note: Selected speeches on corporate governance and related topics.

8. Has the Company disclosed other information to facilitate a better V (1) F or employee rights and employee wellness, please refer to “5.6 Human None
understanding of its corporate governance practices (e.g. including but Capital” on page 112-119 of this Annual Report.
not limited to employee rights, employee wellness, investor relations,
Continuing Education/Training of Corporate Governance Officer in 2023
supplier relations, rights of stakeholders, directors’ training records, the (2) F or investor relations, supplier relations and rights of stakeholders, please refer
implementation of risk management policies and risk evaluation measures, to “7. Environmental Social Governance (ESG)” on page 150-176 of this Annual Name Date Host by Training/Speech Title Duration
the implementation of customer relations policies, and purchasing insurance Report.
for directors)? Vice President and 04/07 Securities and Futures Institute Practical Advanced Seminar for Directors and Supervisors (including Independent) 3 hours
(3) F or Directors’ training records, please refer to “Continuing Education/Training of General Counsel and Corporate Governance Officers – 2030/2050 Green Industrial Revolution
Directors in 2023” on page 57 of this Annual Report. Corporate Governance
Officer 04/21 Taiwan Corporate Governance Association How Board of Directors Formulate ESG Sustainable Governance Strategies in 2023 3 hours
(4) F or Risk Management Policies and Risk Evaluation, please refer to “6.3 Risk Sylvia Fang
Management” on page 133-149 of this Annual Report. 11/22 Intellectual Property Office, Ministry of Economic Affairs, Trade Secret Protection and Management Practice Sharing Forum 3 hours
R.O.C.
(5) F or Customer Relations Policies, please refer to “5.4 Customer Trust” on page Taiwan Association for Trade Secret Protection
109-111 of this Annual Report. 12/01 Intellectual Property Office, Ministry of Economic Affairs, Trade Secret Litigation Practice and the Impact of Generative AI on Trade Secret 3 hours
R.O.C. Protection
(6) T SMC maintains D&O Insurance for its directors and officers. Taiwan Association for Trade Secret Protection
9. The improvement status for the result of Corporate Governance Evaluation announced by Taiwan Stock Exchange

TSMC was ranked in top 5% in Corporate Governance Evaluation over the years. The improvement status in 2023 is as follows:
(1) T he TSMC Board set up the “Audit Committee” and the “Compensation Committee” in 2002 and 2003 respectively. In order to make our corporate governance more comprehensive, the TSMC Board took a 3.5 Code of Ethics and Business Conduct
step further in February 2023 to expand and strengthen the functions and responsibilities of its Committees, including renaming the “Audit Committee” to the “Audit and Risk Committee”, and the renaming
the “Compensation Committee” to the “Compensation and People Development Committee”. It also established a “Nominating, Corporate Governance and Sustainability Committee”.
(2) The TSMC Board established TSMC’s “Corporate Governance Guidelines” in May 2023. Ethics at TSMC
“Integrity” is TSMC’s most important core value. TSMC strictly adheres to the highest standards of integrity and promotes good
ethical behavior to sustain the hard-earned trust and confidence of its shareholders, customers, suppliers, employees and the
general public – constantly and vigilantly promoting integrity, fairness, and transparency in all that we say and do. We have zero
tolerance for corruption, refrain from bribery, fraud, abuse or embezzlement of corporate assets, and prohibit the advancement
of personal interests at the expense of or in conflict with TSMC. At the heart of our corporate governance culture is the “TSMC

056 057
 Ethics and Business Conduct Policy” (Ethics Code). The Ethics Code requires that each employee bear a heavy personal responsibility Internal Auditor conducts audits of various control points within the Company in accordance with its annual audit plan approved by
to preserve and to protect TSMC’s ethical values and reputation. At the same time, we have formulated the “TSMC’s Supplier the Board of Directors and subsequently reports its audit findings and remedial issues to the Board and management on a regular
Code of Conduct” as well to ensure our suppliers understand and follow the Ethics Code and together fulfill our corporate social basis.
responsibilities.
Training and Promotion: To promote awareness to our employees of their responsibilities under the Ethics Code, we publish our
Specifically, every TSMC employee must adhere to the following: Ethics Code and related policies and documents on our intranet and, provide training courses, posters, emails, and other diversified
● Do not advance personal interests at the expense of or in conflict with the Company; ways to advocate the Company’s core values and compliance system. In terms of training courses, TSMC not only provides annual
● Refrain from corruption (including collusion with others), bribery, unfair competition, fraud, extortion, embezzlement, and waste online course on the Ethics Code and requires all employees to complete the training, as well as face-to-face training courses
or abuse of corporate assets; delving into more specific ethics-related topics for targeted employees. In 2023, there were 73,034 attendances that completed the
● Avoid any improper efforts to influence the decisions of anyone, including government officials, agencies, as well as TSMC’s “Annual Ethics and Compliance Training Course” (mandatory 0.5 hour online course) at TSMC and its subsidiaries, both completion
customers and suppliers; rate and exam pass rate reaching 100%.
● Do not undertake any practices detrimental to TSMC, to the environment, or to society;

● Procure all of our raw materials from socially responsible sources; In addition to our internal compliance efforts, we expect and assist our business partners such as customers and suppliers, and
● Protect proprietary information of TSMC, our customers and suppliers; and any other entities with whom we deal (include consultants or third party agents who act for or on behalf of TSMC) to recognize
● Abide by the letter of all applicable laws, rules and regulations. and understand TSMC’s ethical standards to fulfill our responsibilities as a corporate citizen. For instance, we require all of our
suppliers to declare in writing that they will respect and comply with TSMC’s ethical standards and culture. TSMC is a full member
The protection of intellectual properties is also an important part of TSMC’s Ethics Code. In order to build and sustain an of the Responsible Business Alliance (RBA, formerly the Electronic Industry Citizenship Coalition, EICC). In addition to adopting the
environment of innovation, technology leadership, and sustainable profitable growth, the Ethics Code requires that TSMC promotes RBA Code of Conduct at all of its facilities, TSMC applied the RBA’s standards to enhance our audit program of our suppliers and
business relationships founded upon an unwavering respect for the intellectual property rights, proprietary information and trade relevant business partners. We provide training and communicate our ethical culture to our suppliers through live seminars and
secrets of TSMC, our customers, and others. online programs to prevent any unethical conduct and detect any sign of Ethics Code violations. In 2023, we held a sustainable
supply chain ESH forum to share/exchange practical experiences on topics such as the Ethics Code, environmental protection, and
With regarding to public disclosures, TSMC’s officers, especially our CEO, CFO, and General Counsel, with oversight from our Board, occupational safety. We also exchange views on appropriate business conduct and TSMC’s ethical standards and implementation
are responsible for the full, fair, accurate, timely, and understandable financial accounting and financial disclosure in reports and status with our customers as part of customer audit programs.
documents filed by the Company with securities authorities and in all TSMC public communications and disclosures. TSMC has a
variety of measures in place to ensure compliance with these disclosure obligations. Reporting Channels and Whistleblower Protection
TSMC has established and published its “Complaint Policy and Procedure for Certain Accounting & Legal Matters” and pledges
Any modification to the Ethics Code requires the approval of our Audit and Risk Committee to ensure our ethics compliance to comply with the relevant regulations in the policy. Open and multiple reporting channels are available for internal and external
program is independently reviewed against corporate best practices. voices to protect the rights and interests of stakeholders and the Company. All reported incidents collected from reporting channels
inside or outside of TSMC are properly recorded and traced. TSMC also prohibits any form of retaliation by providing proper
Ethics Code Implementation protection for any individual who in good faith reports a suspected violation or participates in an investigation. In 2023, the Ethics
High Standard of Ethics Culture: Our ethics program is implemented in four ways by all of TSMC’s Board members, officers, and Committee held a total of five meetings to examine major reported incidents under investigation.
employees. First, the TSMC management team sets the “tone from top” by acting in accordance with the Ethics Code so that they
will be an example to all stakeholders. Second, working-level managers are responsible for ensuring their staff’s understanding TSMC investigates each individual case according to its characteristics through specific divisions, and treats every received case
of and compliance with applicable rules and regulations. Third, TSMC encourages an environment of open communications in seriously, carefully, and effectively to ensure the accuracy of the investigation. The TSMC Ethics Committee will evaluate each case
discussing any questions related to the Ethics Code. Any employee may consult his or her direct supervisors, Human Resources or to determine whether it is an exceptional case or whether it results from systemic issues of insufficient awareness in ethics. This
Legal to obtain timely advice. Lastly, TSMC requires all employees to stay vigilant and report any noncompliance by anyone to their allows TSMC to continue evaluating whether it is necessary to improve its management and internal control procedures. Awareness
supervisors, the function head of Human Resources, the responsible corporate senior management appointed by CEO that oversees such as emails to employees describing the violations and disciplinary actions in each quarter are conducted to promote employees’
the Ombudsman system, or to the Chairman of the Company’s Audit and Risk Committee directly. awareness and avoid recurrence of similar incidents.

Self-Assessment of All Departments and Employees: Self-assessment of all departments and employees is an important part of In 2023, TSMC did not receive any reports related to insider trading, money laundering, or other finance, accounting or antitrust
our ethics compliance program. All TSMC departments and subsidiaries are required to conduct Control Self-Assessment (CSA) tests matters, nor did we receive any complaints concerning breach of customer privacy and loss of customer data, or any material
annually in reviewing employees’ awareness of the Ethics Code, and to evaluate and strengthen the effectiveness of internal control regulatory violations (where a fine exceeds NT$1 million), including non-monetary sanctions.
related to the Ethics Code. The CSA results are reviewed to track the results of our compliance program. In addition, all employees
must disclose any matters that cause, or may cause, actual or potential conflict of interest. In addition to this proactive disclosure In 2023, the incidents reported through the Audit and Risk Committee Whistleblower System, Ombudsman System, and Irregular
requirement, employees with specific job grades or job responsibilities must annually declare any relationships that may constitute a Business Conduct Reporting System totaled 348. Among them, 218 cases were related to people management/employee relations,
conflict of interest, which enables TSMC to take necessary arrangements and report the results to the Audit and Risk Committee. 117 cases were categorized as others (e.g., asking personal questions or private matters), and 13 cases were related to ethics. Five
incidents were verified upon investigation and determined for disciplinary action by the Ethics Committee. In 2023, TSMC leveraged
Internal Auditing: The Internal Auditor of TSMC plays a critical role in ensuring the Company’s compliance with the Ethics Code the five violations to strengthen ethics promotion for employees and suppliers in supplier-related activities. Below are the summary
and relevant rules and regulations. To ensure that our financial, managerial, and operating information is accurate, reliable, and of reported incidents and reporting area.
timely and that our employees’ actions are in compliance with applicable policies, standards, procedures, laws and regulations, our

058 059
 Case FY2019 FY2020 FY2021 FY2022 FY2023 3.5.1 C
 orporate Conduct and Ethics Implementation Status as Required by Taiwan Financial Supervisory Commission
Total reported cases 205 246 327 335 348
Ethics-related cases 26 22 17 11 13
Implementation Status Causes
Assessment Item for the
Cases investigated and verified as ethics violations 2 6 4 4 5 (Note 1)
Yes No Summary Difference
Sexual Harassment Investigation Committees Formed 4 4 14 19 35
1. Establishment of Corporate Conduct and Ethics Policy and Implementation None
Cases investigated and verified as violations 4 2 11 14 23 (Note 2)
Measures
Note 1: O f the five verified cases: one incident involved employee of vendor failed to follow the SOP for scrapping materials, one incident involved employees of vendors evaded the regular process to steal TSMC (1) D
 oes the company have a clear ethical corporate management policy V (1) Integrity is the most important core value of TSMC’s culture. TSMC is committed to
scrapped materials in pursuit of personal gain, and all the employees of the vendors involved in the misconducts were prohibited to provide service in TSMC. One incident involved employee who failed to follow approved by its Board of Directors, and bylaws and publicly available acting ethically in all aspects of our business. We have established TSMC Code of
TSMC’s conflict-of-interest principles when dealing with vendors and received major demerit. One incident involved an employee who improperly asked subordinates to fund the department event, failed to documents addressing its corporate conduct and ethics policy and Ethics and Business Conduct (the “Ethics Code”) to require that each employee bears
follow SOP for payment requests, and failed to separate their personal and public accounts. The supervisor received a major demerit. One incident involved an employee who improperly asked a specific vendor measures, and commitment regarding implementation of such policy a heavy personal responsibility to uphold TSMC’s ethics value. For more details on
to buy food and drinks to treat the other vendor who helped that specific vendor to complete the undo job. Even the purpose behind was not related to the bribery or fraud, the employee then received oral from the Board of Directors and the top management team? the Ethics Code and the measures that TSMC Board of Directors (the “Board”) and
coaching. the management team take to ensure compliance of the Ethics Code please refer to
Note 2: E mployees who violated Company sexual prevention policy (the “Policy”) were disciplined by the Company based on the case-by-case nature and severity of the verified misbehaviors. Since these violations TSMC’s Annual Report and the Sustainability Report.
involved various inappropriate behaviors, the Company leveraged the violations and summarized the Policy to educate employees what kinds of behaviors could be viewed as sexual harassment and the
consequences as well as emphasize the type and possible consequences for power harassment in 2023 TMSC annual sexual harassment prevention training so as to raise employees’ awareness. (2) W
 hether the company has established an assessment mechanism for V (2) A
 t the heart of our corporate governance culture is the Ethics Code that applies
the risk of unethical conduct; regularly analyzes and evaluates within a to TSMC and its subsidiaries, and this Ethics Code requires that each employee
business context, the business activities with a higher risk of unethical bears a heavy personal responsibility to preserve and to protect TSMC’s ethical
Cases Investigated and Verified as Violations FY2019 FY2020 FY2021 FY2022 FY2023 (Note) conduct; has formulated a program to prevent unethical conduct with values and reputation and to comply with various applicable laws and regulations.
in Different Reporting Area a scope no less than the activities prescribed in paragraph 2, Article 7 Specific requirements under the Ethics Code could be found in our Annual Report.
of the Ethical Corporate Management Best Practice Principles for TWSE/ In addition, to educate and remind our employees of their responsibilities under
Corruption or Fraud 2 6 4 4 2 GTSM Listed Companies? the Ethics Code, we publish our Ethics Code, relevant policies and documents on
our intranet and promote its awareness through training courses, posters, emails,
Discrimination or Harassment 4 2 11 14 22 and other diversified ways to advocate the company’s core values and compliance.
Furthermore, to ensure that our conduct meets relevant legal requirements and the
Customer Privacy Data 0 0 0 0 0
highest ethical standards under the Ethics Code, TSMC provides multiple channels for
Conflicts of Interest - - - - 1 reporting business conduct concerns. Please refer to Assessment Item 3 for details.
We do not tolerate any violation of the Ethics Code and treat every possible violation
Money Laundering or Insider trading - - - - 0 incident seriously. Each violator of the Ethics Code (or relevant regulations), for
employees, in addition to affecting individual annual performance evaluation, will be
Antitrust 0 0 0 0 0 severely disciplined to the full extent of our policies and the law, up to and including
Others - - - - 2 immediate dismissal, or termination of business relationship for suppliers, and
judicial prosecution as appropriate.
Note: The reporting area classification is starting from 2023.
(3) W
 hether the company has established relevant policies that are duly V (3) U
 nder the framework of the Ethics Code, TSMC has established a regulatory
enforced to prevent unethical conduct, provided implementation compliance program that includes policies, guidelines and procedures in other
procedures, guidelines, consequences of violation and complaint policy areas, including: Corporate Governance, Securities Laws, Anti-corruption,
Ethics Code Violation Disciplinary Action procedures, and periodically reviews and revises such policies? Anti-harassment, Anti-discrimination, Labor Laws, Anti-trust (fair competition),
Environmental Protection, Safety and Health, Export Control, Financial Reporting,
TSMC does not tolerate any violation of the Ethics Code and treat every possible violation incident seriously. Each violator of the Insider Trading, Intellectual Property, Proprietary Information Protection, Personal
Ethics Code (or relevant regulations), for employees, in addition to affecting individual annual performance evaluation, will be Data Protection, Record Retention and Disposal, as well as procuring certain raw
materials from socially responsible sources (Conflict-free Minerals). The above-
severely disciplined to the full extent of our policies and the law, up to and including immediate dismissal, or termination of business mentioned policies are crucial in facilitating overall compliance with the Ethics Code.
TSMC provided an “Annual Ethics and Compliance Training Course”(mandatory 0.5
relationship for suppliers, and judicial prosecution as appropriate. hour online course) covering various important regulatory compliance topics and
a total of 73,034 employees (including employees in subsidiaries) completed this
training course, both completion rate and exam pass rate reaching 100%. TSMC,
its employees and its subsidiaries are expected to fully understand and comply with
all laws and regulations that govern our businesses, as well as relevant policies,
guidelines and procedures, and make ethical decisions in every circumstance.
The Internal Auditor of TSMC also plays a critical role in ensuring the Company’s
compliance with the Ethics Code and relevant rules and regulations. To ensure
that our financial, managerial, and operating information is accurate, reliable, and
timely and that our employee’s actions are in compliance with applicable policies,
standards, procedures, laws and regulations, our Internal Auditor conducts audits of
various control points within the Company in accordance with its annual audit plan
approved by the Board of Directors and subsequently reports its audit findings and
remedial issues to the Board and Management on a regular basis.

(Continued)

060 061
 Implementation Status Causes 3.6 Regulatory Compliance
Assessment Item for the
Yes No Summary Difference
TSMC’s compliance systems are comprised of a series of legislation monitoring, developing and implementation of effective
2. Ethic Management Practice None
(1) W
 hether the company has assessed the ethics records of whom it has V (1) W
 e expect and assist our customers, suppliers, business partners, and any other compliance policies and programs, training, and maintaining open reporting channels.
business relationship with and include business conduct and ethics entities with whom we deal (such as consultant or third party agents who act for
related clauses in the business contracts? or on behalf of TSMC) to understand and act in accordance with TSMC’s ethical
standards. For instance, we require all of our suppliers to declare in writing that Legislative Monitoring
they will respect and comply with TSMC’s ethical standards and culture. In addition
to periodic audit, we provide training and communicate our ethical culture to our TSMC operates in many countries. To comply with governing legislation, applicable laws, regulations and regulatory expectations,
suppliers through live seminars or online programs to prevent any unethical conduct.
We exchange views on appropriate business conduct and TSMC’s ethical standards
we closely monitor domestic and foreign government policies and regulatory developments that could materially impact TSMC’s
with our customers as part of customer audit programs. business and financial operations. Our Legal organization periodically updates our relevant internal departments, management
(2) W
 hether the company has set up a unit which is dedicated to promoting V (2) T SMC’s Board of Directors strives to perform the responsibilities of supervising and the Audit and Risk Committee of applicable regulatory changes so that internal teams ensure compliance with new regulatory
the company’s ethical standards and regularly (at least once a year) the corporate conduct and ethics compliance practice through the Audit and Risk
reports directly to the Board of Directors on its ethical corporate Committee and the Compensation and People Development Committee, the hiring requirements in a timely manner. We are also a proactive advocate for legislative and regulatory reform, and our comments and
management policy and relevant matters, and program to prevent of a financial expert consultant for the Audit and Risk Committee, and coordination
unethical conduct and monitor its implementation? with the Internal Audit department. The General Counsel and the Corporate &
recommendations on legal reforms to the government have been accepted constructively. TSMC is increasingly dedicated to
Compliance Legal Division (which directly reports to the General Counsel) promotes identifying potential regulatory issues and will continue to be involved in advocating public policy changes that foster a positive and
the Company’s ethical standards, and the General Counsel reports quarterly to
the Board on the implementation status. In addition, both the responsible senior fair business environment.
manager appointed by the CEO to oversee the Ombudsmen system and Internal
Auditors update the Board on ethical standards and compliance issues on a regular
basis. Moreover, TSMC’s officers, especially our CEO, CFO, and General Counsel, Policy and Compliance Program Development and Implementation
with oversight from our Board, are responsible for the full, fair, accurate, timely,
and understandable financial accounting and financial disclosure in reports and TSMC has established a regulatory compliance program that includes policies, guidelines and procedures in different compliance
documents filed by the Company with securities authorities and in all TSMC public
communications and disclosures. areas, including: Corporate Governance, Securities Laws, Anti-corruption, Anti-harassment, Anti-discrimination, Labor Laws,
(3) W
 hether the company has established policies to prevent conflict of V (3) T SMC requires newly hired employees to declare any conflict of interest situation as Antitrust (fair competition), Environmental Protection, Safety and Health, Export Control, Financial Reporting, Insider Trading,
interests, provide appropriate communication and complaint channels appropriate. In addition, according to the Ethics Code, all employees must declare Intellectual Property, Proprietary Information Protection, Personal Data Protection, Record Retention and Disposal, as well as
and implement such policies properly? any actual or potential conflict of interest. Furthermore, employees with specific job
grades or positions need to complete the conflict of interest declarations annually. procuring certain raw materials from socially responsible sources (Conflict-free Minerals). It is our belief that these policies are
(4) T o implement relevant policies on ethical conducts, has the company V (4) T SMC continues maintaining the integrity of its financial reporting processes and crucial in strengthening overall compliance with the Ethics Code and compliance program. TSMC, its employees and its subsidiaries
established effective accounting and internal control systems, audit controls and establishes appropriate internal control systems for preventing higher
plans based on the assessment of unethical conduct, and have its ethical potential unethical conduct, and the Internal Auditors formulate annual audit
are expected to fully understand and comply with all laws and regulations that govern our businesses, as well as internal relevant
conduct program audited by internal auditors or CPA periodically? plans based on the results of the risk assessment and subsequently reports its audit policies, guidelines and procedures, and make ethical decisions in every circumstance.
findings and remedial issues to the Board and Management on a regular basis. In
addition, all departments and subsidiaries of TSMC are also required to conduct
Control Self-Assessment (CSA) tests annually to review the effectiveness of the
internal control system. Compliance Awareness Training
(5) D
 oes the company provide internal and external ethical conduct training V (5) T raining is a major component of our compliance program, conducted throughout
Training is one of the major components of our regulatory compliance program. To get updated information on laws and
programs on a regular basis? the year to refresh TSMC’s employees’ commitment to ethical conduct, and to get regulations related to their daily operations and to strengthen TSMC’s employees’ commitment to regulatory compliance and ethical
updated information on laws and regulations related to their daily operations. Please
refer to Assessment Item 1 for more information regarding the training courses. conduct through regular promotion and training courses. Highlights of our training include:
As for our suppliers, we communicate our ethical culture to our business partners
● Multiple types for training and promotion: TSMC enriches employees’ information sources for regulatory compliance through
through live seminars or online programs to ensure their fully understanding of our
commit to ethical conduct. various promotion activities. Awareness promotion emails to employees, posters at our facilities, and compliance guidelines, news
3. Implementation of Complaint Procedures None articles, tips and FAQs which our employees can access through our intranet.
(1) D
 oes the company establish specific complaint and reward procedures, V (1) T SMC has implemented the “Complaint Policy and Procedures for Certain Accounting
set up conveniently accessible complaint channels, and designate and Legal Matters” that allows employees or any whistleblowers with relevant ● Customized face-to-face training courses for different business attributes: For important specific laws and regulations, TSMC
responsible individuals to handle the complaint received? evidence to report any financial, legal, or ethical irregularities anonymously through
the Audit and Risk Committee Whistleblower System, Ombudsman System, and provides face-to-face seminars. These customized training is made mandatory for those employees whose job responsibilities are
Irregular Business Conduct Reporting System. TSMC also requires all employees to
stay vigilant and whistle-blow any noncompliance by anyone to their supervisors, the especially relevant to a particular topic to ensure sufficient awareness of relevant laws and internal policies.
function head of Human Resources, or through those current reporting channels. ● Various on-line courses available to employees at any time: On-line learning programs updated frequently to provide most

(2) W
 hether the company has established standard operation procedures V (2) T SMC treats any complaint and the investigation thereof in a confidential and up-to-date information and timely and flexible access for employees to understand the law and key compliance issues, covering
for investigating the complaints received, follow-up measures after sensitive manner, as is clearly stated in our bylaws.
investigation are completed, and ensuring such complaints are handled in topics of Corporate Governance, Securities Laws, Anti-corruption, Anti-harassment, Anti-discrimination, Labor Laws, Antitrust
a confidential manner?
(fair competition), Environmental Protection, Safety and Health, Export Control, Financial Reporting, Insider Trading, Intellectual
(3) D
 oes the company adopt proper measures to prevent a complainant from V (3) T SMC strictly prohibits any form of retaliation against any individual who in good Property, Proprietary Information Protection, Personal Data Protection, Record Retention and Disposal, as well as “Conflict-free
retaliation for his/her filing a complaint? faith reports or helps with the investigation of any complaint, as is clearly stated in
our bylaws. Minerals” among others. The course contents will be updated with changes in applicable laws or TSMC internal policies to ensure
4. Information Disclosure None the timeliness and accuracy of the course contents.
Does the company disclose its guidelines on business ethics as well as V TSMC provides the guidelines and informative articles related to ethics and honorable
● Continuous training of the Legal team: TSMC’s Legal team actively participate in external professional courses held in Taiwan or
information about implementation of such guidelines on its website and business conduct on its internal website (in both Chinese and English) for employees’
Market Observation Post System (“MOPS”)? easy access. In addition, TSMC posts its Annual Report (which is also available at the
MOPS)and Sustainability Report on its external website (in both Chinese and English,
abroad to receive current developments of new laws and regulations and track the latest developments in various professional
available at: http://www.tsmc.com) to disclose TSMC Ethics Code and the information legal fields, and for its lawyers to comply with applicable continuing legal education requirements. External experts are also invited
about implementation of the Ethics Codes.
to give in-house lectures on key issues.
5. If the company has established corporate governance policies based on Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, please describe any discrepancy between the
policies and their implementation.

TSMC has established the Ethics Code to require that all employees, officers and board members comply with the Ethics Code and the other policies and procedures. There is no discrepancy between the Ethics
Code, including its affiliate policies and procedures, and its implementation. For more details, please refer to “3.5 Code of Ethics and Business Conduct” on page 57-62 of this Annual Report.
6. Other important information to facilitate better understanding of the company’s corporate conduct and ethics compliance practices (e.g., review the company’s corporate conduct and ethics policy).

For details on the implementation of TSMC’s corporate conduct and ethics, please refer to “3.5 Code of Ethics and Business Conduct” on page 57-62 of this Annual Report.

062 063
 Reporting Channels 3.7 Internal Control System Execution Status
TSMC provides multiple channels for reporting business conduct concerns to ensure that our conduct meets relevant legal
requirements and the highest ethical standards under the Ethics Code. For more details about the reporting channels, please refer to 3.7.1 Statement of Internal Control System
“3.5 Code of Ethics and Business Conduct” on page 57-62 of this Annual Report.

Taiwan Semiconductor Manufacturing Company Limited

Major Accomplishments
In 2023, TSMC achieved several major accomplishments in regulatory compliance. Externally, in addition to fulfilling the Statement of Internal Control System
Company’s obligations toward regulatory compliance matters, TSMC exercised its civic duties as a responsible corporate citizen by
February 6, 2024
providing feedback on current regulations and regulations in legislation, with the intent to improve Taiwan’s industrial investment
Based on the findings of a self-assessment, Taiwan Semiconductor Manufacturing Company Limited (TSMC) states the
environment, enhance economic development, and help align domestic laws with international law. Furthermore, TSMC continues
following with regard to its internal control system during the year 2023:
to focus on the topics related to the Company Law, the Securities and Exchange Act, intellectual property protection and
environment protection. In addition, TSMC shared its practices and experiences on trade secrets, labor rights, regulatory compliance 1. T SMC’s Board of Directors and management are responsible for establishing, implementing, and maintaining an adequate
system and reporting channel with outside institutions. internal control system. Internal control system is designed to provide reasonable assurance over the effectiveness and
efficiency of our operations (including profitability, performance and safeguarding of assets), reliability, timeliness,
Internally, TSMC provides multiple courses about legal and regulatory compliance. The important achievements are as follows: transparency and regulatory compliance of our reporting, and compliance with applicable rulings, laws and regulations.
● Ethics and Compliance: TSMC provided an “Annual Ethics and Compliance Training Course” (mandatory 0.5 hour online course)
2. A
 n internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system
covering various important regulatory compliance topics and a total of 73,034 employees (including employees in subsidiaries)
can provide only reasonable assurance of accomplishing its stated objectives. Moreover, the effectiveness of an internal
completed this training course, both completion rate and exam pass rate reaching 100% – with all production staffs were starting
control system may be subject to changes due to extenuating circumstances beyond our control. Nevertheless, our internal
from 2019.
control system contains self-monitoring mechanisms, and TSMC takes immediate remedial actions in response to any
● Export Compliance: TSMC’s export management system (EMS) and policy have been in place for a number of years, and was
identified deficiencies.
certified by the Bureau of Foreign Trade, the Taiwan regulator, as a qualified Internal Compliance Program (ICP) exporter. It aims
to ensure that TSMC complies with all applicable regulations covering the export of information, technologies, products, materials 3. T SMC evaluates the design and operating effectiveness of its internal control system based on the criteria provided in the
and equipment. In addition, TSMC implements “No ECCN, No Shipment” control and customers are required to provide end Regulations Governing the Establishment of Internal Control Systems by Public Companies (herein below, the “Regulations”).
use and export control classification number (ECCN) of their products, among other required information, for TSMC to apply for The criteria adopted by the Regulations identify five key components of managerial internal control: (1) control environment,
applicable export licenses. To further enhance relevant employees’ awareness of the export control requirements, in 2023 TSMC (2) risk assessment, (3) control activities, (4) information and communication, and (5) monitoring activities. Each component
altogether provided 9 face-to-face meeting sessions and a targeted on-line learning program to employees in relevant functions. also includes several items which can be found in the Regulations.
● Supplier Management: TSMC shares and exchanges practical experiences with suppliers with sales offices in Taiwan by holding a
4. T SMC has evaluated the design and operating effectiveness of its internal control system according to the aforesaid
sustainable supply chain ESH forums on topics such as Ethics Code, environmental protection and occupational safety. In total, Regulations.
359 attendees from 117 suppliers participated (including through on-line meeting) in these activities.
● Conflict-Free Supply Chain: As a recognized global leader in the Hi-tech supply chain, we acknowledge our corporate social
5. B
 ased on the findings of such evaluation, TSMC believes that, on December 31, 2023, it has maintained, in all material
responsibility to strive to procure conflict-free minerals in an effort to recognize humanitarian and ethical social principles that respects, an effective internal control system (that includes the supervision and management of our subsidiaries), to provide
protect the dignity of all persons. Meanwhile, we have implemented a series of compliance safeguards in accordance with industry reasonable assurance over our operational effectiveness and efficiency, reliability, timeliness, transparency and regulatory
leading practices, requesting suppliers to fill in the “Conflict Minerals Reporting Template” and sign the “TSMC Conflict-Free compliance of reporting, and compliance with applicable rulings, laws and regulations.
Minerals Declaration” every year. TSMC will continuously make progress to ensure a conflict-free supply chain. 6. T his Statement is an integral part of TSMC’s annual report and prospectus, and will be made public. Any falsehood,
● Personal Data Protection: Because of the importance of personal data protection, TSMC periodically reviews the Rules of Privacy
concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the
and Personal Data Protection and external and internal privacy policies to identify the needs to update such documents. Based on Securities and Exchange Law.
current personal data protection laws and risks, TSMC conducts an annual training on privacy and personal data protection to
7. T his Statement was passed by the Board of Directors in their meeting held on February 6, 2024, with none of the ten
enhance employees’ awareness and compliance. In addition, the Personal Data Protection Committee composed of Legal, Human
attending directors expressing dissenting opinions, and the remainder all affirming the content of this Statement.
Resources, and IT divisions convene on an annual basis to assist the implementation of and monitoring compliance with the rules.
● Antitrust Compliance: Based on annual antitrust risk assessment results, TSMC identified functions with potential higher risk from Taiwan Semiconductor Manufacturing Company Limited
an antitrust perspective. To enhance targeted functions’ employee awareness of the importance of competition and antitrust laws
and issues during daily operations, TSMC established antitrust training programs and conducted several antitrust trainings, via
either face-to-face or on-line training sessions, for global sales personnel at Taiwan, North America, Europe, Asia Pacific, Japan and Mark Liu,
mainland China areas, and employees in other relevant departments. Chairman
● Insider Trading Compliance: To implement insider trading regulatory compliance and to strengthen employees’ awareness

and compliance with, in 2023, TSMC designated managers at Human Resources, Finance, Business Development and other
Organizations as trainees – a total of 888 managers completed this insider trading on-line program (0.5 hour-length course), both C.C. Wei,
completion rate and exam pass rate reaching 100%. Chief Executive Officer

3.7.2 If CPA Was Engaged to Conduct a Special Audit of Internal Control System, Provide Its Audit Report: None.

064 065
 3.8 Status of Personnel Responsible for the Company’s Financial and Business Operation 3.9.2 CPA’s information

3.8.1 R
 esignation or Dismissal of Chairman, President, and Heads of Accounting, Finance, Internal Audit, Corporate (1) Former CPAs
Governance Officer and R&D in 2023 and as of the Date of this Annual Report: None. Date of Change Approved by BOD on November 8, 2022

Reasons and Explanation of Changes In compliance with regulatory requirements on rotation, the engagement partner Mei-Yen Chiang will be replaced by Shih-Tsung Wu starting
3.8.2 Certification of Employees Whose Jobs Are Related to the Release of the Company’s Financial Information from 2023. The co-signing partner will remain to be Shang-Chih Lin.
State Whether the Appointment Is Terminated or Client CPA Consignor
Number of Employees Rejected by the Consignor or CPAs Status
Certification
Internal Audit Finance Appointment terminated automatically Not available Not available
Appointment rejected (discontinued) Not available Not available
Certified Public Accountants (CPA) 1 59
The Opinions Other than Unmodified Opinion None
US Certified Public Accountants (US CPA) 3 25 Issued in the Last Two Years and the Reasons for
the Said Opinions (Note)
Certified Internal Auditor (CIA) 4 3
Is There Any Disagreement in Opinion with the Yes Accounting principle or practice
Chartered Financial Analyst (CFA) - 2 Issuer
Disclosure of financial statements
Certified Management Accountant (CMA) - 1 Auditing scope or procedures
Financial Risk Manager (FRM) - 2 Others

Certified Information Systems Auditor (CISA) 7 1 No V

Explanation
Certified Fraud Examiner (CFE) 3 -
Supplementary Disclosure (Disclosures Specified in None
Article 10.6.1.4~7 of the Standards)

3.9 Information Regarding TSMC’s Independent Auditor

3.9.1 Audit Fees (2) Successor CPAs

Accounting Firm Deloitte & Touche
The Audit and Risk Committee approves all fees payable to TSMC’s independent auditor and recommends the same to the Board
CPA Shih-Tsung Wu and Shang-Chih Lin
of Directors for further approval. The Board of Directors has authorized the Audit and Risk Committee to approve any increase not
Date of Engagement Approved by BOD on November 8, 2022
exceeding 10% of the approved fees.
Prior to the Formal Engagement, Any Inquiry or Consultation on the Accounting None
Unit: NT$ thousands Treatment or Accounting Principles for Specific Transactions, and the Type of Audit
Opinion that Might Be Rendered on the Financial Report
Non-audit Fee
Accounting Firm Name of CPA CPA’s Audit Period Audit Fee Total Remark
(Note) Written Opinions from the Successor CPAs that Are Different from the Former CPA’s None
Opinions
Deloitte & Touche Shih-Tsung Wu and 01/01/2023 – 12/31/2023 79,710 7,526 87,236 -
Shang-Chih Lin

Note: The fees were mainly related to audit of annual income tax returns.
(3) The Reply of Former CPAs on Article 10.6.1 and Article 10.6.2.3 of the Standards: None.

3.9.3 T
 SMC’s Chairman, Directors, Chief Executive Officer, Chief Financial Officer, and Managers in Charge of Its
Finance and Accounting Operations Did Not Hold Any Positions within TSMC’s Independent Audit Firm or Its
Affiliates in the Most Recent Year.

3.9.4 Evaluation of the External Auditor’s Independence and Suitability

The Audit and Risk Committee annually monitors the independence and suitability of TSMC’s external auditor by conducting the
following evaluation standards and reports the same to the Board of Directors:
1. T he auditor’s independence declaration
2. T he Audit and Risk Committee pre-approves all audit and non-audit services conducted by the auditor to ensure that the
non-audit services do not influence the results of the audit
3. E nsure the audit partner rotates every five years
4. A nnually evaluate the independence and suitability of the external auditor based on the results of the auditor survey and the
Audit Quality Indicator (AQI) released by Financial Supervisory Commission (FSC) regarding its financial interests, commercial
relations, employment relations, etc.

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