TSMC’s corporate governance practices are governed by applicable Taiwan law, specifically, the R.O.C. Company Act and R.O.C. Securities andExchange Act, and also TSMC’s Articles of Incorporation. Also, because TSMC securities are registered with the U.S. SEC and are listed on the NYSE,
TSMC is subject to corporate governance requirements applicable to NYSE-listed foreign private issuers.
Under Section 303A of the NYSE Listed Company Manual, NYSE-listed non-US companies may, in general, follow their home country corporate
governance practices in lieu of most of the new NYSE corporate governance requirements. However, all NYSE-listed foreign private issuers mustcomply with NYSE Sections 303A.06, 303A.11, 303A.12(b), 303A.12(c) and 303A.14.
Item 16G as well as NYSE Section 303A.11 requires that foreign private issuers disclose any significant ways in which their corporate governancepractices differ from US companies under NYSE listing standards. This requirement is not intended to suggest that one country’s corporate governancepractices are better or more effective than another. A NYSE-listed foreign private issuer is required to provide to its US investors, a brief, generalsummary of the significant differences, either: (a) on the company website in English, or (b) in its annual report distributed to its US investors. To
comply with NYSE Section 303A.11, TSMC has prepared the comparison in the table below.
The most relevant differences between TSMC corporate governance practices and NYSE standards for listed companies are as follows:

NYSE Standards for US Companies
under Listed Company ManualSection 303A

NYSE Section 303A.01 requires a NYSE-listed company to have amajority of independent directors on its board of directors.

TSMC Corporate Practices

Taiwan law does not require a board of directors of publicly traded
companies to consist of a majority of independent directors. Taiwan law
requires public companies meeting certain criteria to have at least three
independent directors but no less than one fifth of the total number ofdirectors on its board of directors. Starting from 2024, public companies
that meet certain criteria are required to have a minimum of one-third of
their directors serving as independent directors. In addition, Taiwan law
requires public companies to disclose information pertaining to theirdirectors, including their independence status. Please see TSMC’sannual report and Form 20-F for the relevant year filed with the Taiwan
authorities and the U.S. SEC (both of which are available online atwww.tsmc.com) for information on the total number of TSMC directors
and directors who would be considered independent under NYSE
Section 303A.02 and Taiwan law.

NYSE Section 303A.02 establishes general standards to evaluate directors’ Taiwan law establishes comparable standards to evaluate director
independence (no director qualifies as independent unless the board ofindependence. For further information, please consult TSMC’s Taiwan
directors affirmatively determines that the director has no material
annual report for the relevant year.
relationship with the listed company either directly or as a partner,shareholder or officer of an organization that has a relationship with thelisted company).

NYSE Section 303A.03 requires non-management directors to meet atregularly scheduled executive meetings that are not attended bymanagement.

Taiwan law does not contain such a requirement. Except for meetings ofsub-committees of the board of directors and those held by managing
directors, Taiwan law does not allow separate board meetings of part but
not all of the board of directors.

NYSE Section 303A.04 requires listed companies to have anominating/corporate governance committee comprised entirely ofindependent directors which committee shall have a written charter
establishing certain minimum responsibilities as set forth in NYSE
Section 303A.04(b)(i) and providing for an annual evaluation of thecommittee’s performance.

Taiwan law does not contain such a requirement. Pursuant to Taiwan
law, TSMC’s directors must be nominated either by the shareholders orby the entire board of directors. TSMC, however, has established aNominating, Corporate Governance and Sustainability Committee inFebruary 2023 to assist our Board of Directors mainly in selecting
candidates for nomination to be elected as independent directors to theBoard and advising on corporate governance and sustainability matters.
The Nominating, Corporate Governance and Sustainability Committee,
by its charter, shall be composed of the Chairman of the Board and three
to six independent directors.

NYSE Section 303A.05(a) requires listed companies to have acompensation committee comprised entirely of independent directors.

Taiwan law requires certain public companies, such as us, to establish acompensation committee by September 30, 2011. TSMC, however, hasestablished its Compensation Committee since 2003, which has met therequirements under the Taiwan law. Taiwan law permits a non-director
independent member, appointed by the board of directors, to serve as amember on the compensation committee, so long as such member meetsthe independent and other requirements under the relevant Taiwan law.
Also, as required by the TWSE, the compensation committee of thecompanies listed on the TWSE must consist of a majority ofindependent directors, and all the members of the compensationcommittee shall elect an independent director to act as the convener andthe chairperson of the meeting. Please see TSMC’s annual report andForm 20-F for the relevant year filed with the Taiwan authorities and theU.S. SEC (both of which are available online at www.tsmc.com) for
further information regarding the composition and functions of its
compensation committee. In February 2023, our Board of Directors
approved the renaming of TSMC’s Compensation Committee as“Compensation and People Development Committee”, effective as ofFebruary 14, 2023.

NYSE Section 303A.05(b) requires a compensation committee’s charter to Taiwan law requires certain public companies, such as us, to establish acompensation committee by September 30, 2011. TSMC, however, hasestablish certain minimum responsibilities and to provide for an annual
established its Compensation Committee since 2003, which has met theevaluation of the committee’s performance.
requirements under the Taiwan law, and TSMC’s Compensation andPeople Development Committee charter contains the same
responsibilities as those provided under NYSE Section 303A.05(b)(i)and mandates the committee to review the adequacy of its charter
annually.

NYSE Section 303A.06 requires listed companies to have an audit
committee that satisfies the requirements of Rule 10A-3 under theExchange Act. Foreign private issuers must satisfy the requirements ofRule 10A-3 under the Exchange Act by July 31, 2005.

TSMC voluntarily established its Audit Committee before thepromulgation of related Taiwan law. Our Audit Committee fullycomplies with both local law requirements and corporate governancestandards. Please see TSMC’s annual report and Form 20-F for therelevant year filed with the Taiwan authorities and the U.S. SEC (bothof which are available online at www.tsmc.com) for further information
regarding the composition of its audit committee. TSMC’s Audit
Committee members are all financially literate and are assisted by afinancial expert consultant. In February 2023, our Board of Directors
approved the renaming of TSMC’s Audit Committee as “Audit and RiskCommittee”, effective as of February 14, 2023.

NYSE Section 303A.07(a) requires an audit committee to consist of atleast three board members. All of its members shall be financially literate
or must acquire such financial knowledge within a reasonable period and at
least one of its members shall have experience in accounting or financial
administration.

Taiwan law requires all independent directors of a public company to bemembers of the audit committee if the company has established such acommittee of which at least one shall have accounting or financialexpertise. Please see TSMC’s annual report and Form 20-F for therelevant year filed with the Taiwan authorities and the U.S. SEC (bothof which are available online at www.tsmc.com) for further information
regarding the composition of its audit committee. TSMC’s Audit andRisk Committee members are all financially literate and are assisted bya financial expert consultant.

NYSE Section 303A.07(a) requires that if an audit committee member issimultaneously a member of the audit committee of more than three publiccompanies, and the listed company does not limit the number of audit
committees on which its members may serve, then, in each case the boardof that company shall determine whether the simultaneous service would
prevent such member from effectively serving on the listed company’saudit committee, and shall report its decision in the annual proxy statementof the company or in the company’s annual report on Form 10-K filed with
the U.S. SEC.

Taiwan law does not contain such requirement. Taiwan law requires all
independent directors of a public company to be members of the audit
committee if the company has established such a committee. Taiwan law
forbids an independent director from serving as an independent director
on a total of more than four Taiwan public companies.

NYSE Section 303A.07(a) requires all members of the audit committee tobe independent.

Taiwan law requires all independent directors of a public company to bemembers of the audit committee if the company has established such acommittee.

NYSE Section 303A.07(b) requires an audit committee to have a written
charter establishing the duties and responsibilities of its members,
including the duties and responsibilities required, at a minimum, by Rule
10A-3(b)(2), (3), (4) & (5) of the Exchange Act.

Taiwan law requires comparable standards. TSMC currently has awritten Audit and Risk Committee charter containing the same duties
and responsibilities as those provided under Section 10A-3(b)(1) of theExchange Act.

NYSE Section 303A.07(b)(iii)(B) and (C) establishes audit committee
TSMC’s written Audit and Risk Committee charter establishes the sameobjectives: (i) to discuss the annual audited financial statements and theaudit committee objectives.
quarterly financial statements of the company with management and theindependent auditor, including the information disclosed under the heading“Management’s Discussion and Analysis of Financial Condition andResults of Operations”; and (ii) to discuss the company’s press releases
relating to its earnings as well as the financial information and guidelines
relating to its earnings that are supplied to analysts and rating agencies.
NYSE Section 303A.07(b)(iii)(G) requires an audit committee to establish Taiwan law does not contain such requirement.
clear policies for hiring external auditor’s employees.
NYSE Section 303A.07(c) requires each company to have an internal audit
function that provides to the management and to the audit committee
ongoing assessments on the company’s risk management processes andinternal control system.

Taiwan law requires public companies to establish an internal audit
function. Internal auditors are subject to strict qualification standards
under Taiwan law, which require the board of directors to approve theappointment of the head of a company’s internal audit function. TSMC’s
internal audit function has substantially the same responsibilities asprovided under NYSE Section 303A.07(d).

NYSE Section 303A.08 requires each company to give to shareholders the Taiwan law imposes a similar requirement. Employee stock option plans(“ESOPs”) are required to be approved by the board of directors.
opportunity to vote on all equity based compensation plans and material
Shareholders’ approval is not required if the number of options granted
revisions thereto with certain exceptions.
under the relevant ESOP does not exceed the reservation made in
TSMC’s Articles of Incorporation and if the exercise price is not below
the price as determined by relevant regulations. Otherwise, any change
to such reservation in the Articles requires shareholders’ approval.
Employee restricted stock awards are required to be approved by theboard of directors and the shareholders’ meeting with a quorum ofholders of at least two-thirds of all issued and outstanding shares ofcommon stock at which the holders of at least a majority of the common
stock represented at the meeting vote in favor thereof. However, in thecase of a publicly held company such as TSMC, such a resolution by theshareholders’ meeting may be adopted by the holders of at least
two-thirds of the shares of common stock represented at a shareholders’meeting at which holders of at least a majority of the issued andoutstanding shares of common stock are present. TSMC currently has
three equity-based compensation plans in effect, which were approvedby the Board of Directors on April 22, 2021, February 15, 2022, andFebruary 14, 2023, and by the shareholders on July 26, 2021, June 8,2022, and June 6, 2023, respectively.
NYSE Section 303A.09 requires public companies to adopt and disclose
corporate governance guidelines, including several issues for which suchreporting is mandatory, and to include such information on the company’swebsite (which website should also include the charters of the audit
committee, the nominating committee, and the compensation committee.)Taiwan law does not contain such requirement. TSMC, however,voluntarily adopted corporate governance guidelines in May 2023, anddiscloses such guidelines at www.tsmc.com.

NYSE Section 303A.09 requires the board of directors to make a selfassessment of its performance at least once a year to determine if it or its
committees function effectively and report thereon.

Starting from 2020, companies listed on the TWSE are required by
TWSE’s new rule to conduct self-assessment or peer assessment on theperformance of the board of directors and each director every year andto submit the assessment results to TWSE by the end of the first quarterof the next year. TSMC has been conducting annual self-assessment on
its Audit and Risk Committee’s performance since 2011 and on its
Board of Directors as well as each director since 2020 in compliancewith TWSE’s requirements. Starting from 2023, TSMC also conducts
annual assessment on all its Board committees, including the Audit andRisk Committee, Compensation and People Development Committee,and Corporate Governance and Sustainability Committee.

NYSE Section 303A.10 provides for the adoption of a Code of BusinessConduct and Ethics and sets out the topics that such code must contain.

Taiwan law does not contain such requirement. But, because of soundcorporate governance principles, TSMC has adopted an “Ethics andBusiness Conduct Policy”, which complies with the Sarbanes-Oxley
Act’s requirements concerning financial officers and CEOaccountability.

NYSE Section 303A.12(a) requires the CEO, on a yearly basis, to certify
Taiwan law does not contain such a requirement. But, in order toto the NYSE that he or she knows of no violation by the company of NYSE comply with relevant U.S. SEC regulations, TSMC’s CEO is required torules relating to corporate governance.
certify in TSMC’s 20-F annual report that, to his or her knowledge theinformation contained therein fairly represents in all material respects
the financial condition and results of operation of TSMC.
NYSE Section 303A.12(b) requires the CEO to notify the NYSE inwriting whenever any executive officer of the company becomes aware ofany substantial non-fulfillment of any applicable provision under NYSE
Section 303A.

Taiwan law does not contain such requirement. But, in order to beconsistent with the corporate governance principles established under
the Sarbanes-Oxley Act of 2002, TSMC’s CEO complies with the noticeprovision as set forth under NYSE Section 303A.12(b).

NYSE Section 303A.12(c) requires each listed company to submit anexecuted Written Affirmation annually to the NYSE and Interim Written
Affirmation each time a specified change occurs in the board or any of thecommittees subject to Section 303A.

Taiwan law does not contain such requirement. But, in order to comply
with the corporate governance principles established under theSarbanes-Oxley Act of 2002, TSMC complies with NYSE
Section 303A.12(c).

NYSE Section 303A.14 requires each listed company to adopt a policy for In compliance with NYSE Section 303A.14, TSMC adopted the TSMC
the recovery of excess incentive-based compensation earned by current or Clawback Policy in August 2023, available on TSMC’s website.
former executive officers.