Document:

EX-4.1 ARTICLES OF INCORPORATION

 

Exhibit 4.1

ARTICLES OF INCORPORATION

OF

TAIWAN SEMICONDUCTOR MANUFACTURING

COMPANY LIMITED

 

 

Section I — General Provisions

Article 1

The Corporation shall be incorporated, as a company limited by shares, under the Company Law of the
Republic of China, and its name shall be  in the Chinese language, and
Taiwan Semiconductor Manufacturing Company Limited in the English language.

Article 2

The scope of business of the Corporation shall be as follows:

	 	1.	 	Manufacturing and sales of integrated circuits and assembly of other semiconductor
devices in wafer form at the order of and pursuant to product design specifications
provided by customers.
	 
	 	2.	 	Provision of packaging and testing services related to the above services.
	 
	 	3.	 	Providing computer assisted design services and technology for integrated circuits.
	 
	 	4.	 	Providing mask making and mask design services.

Article 3

The Corporation shall have its head office in Science Based Industrial Park, Hsin Chu, Taiwan,
Republic of China, and shall be free, upon approval of government authorities in charge, to set up
representative and branch offices at various locations within and without the territory of the
Republic of China, wherever and whenever the Corporation deems it necessary or advisable to carry
out any or all of its activities.

Article 4

Public announcements of the Corporation shall be made in accordance with the Company Law and other
relevant rules and regulations of the Republic of China.

Article 5

The Corporation may provide endorsement and guarantee and act as a guarantor.

Article 6

The total amount of the Corporation’s reinvestment shall not be subject to the restriction of not
more than forty percent of the Corporation’s paid-up capital as provided in Article 13 of the
Company Law. Any matters regarding the reinvestment shall be resolved in accordance with the
resolutions of the Board of Directors.

 

 

Section II — Capital Stock

Article 7

The total capital stock of the Corporation shall be in the amount of 246,000,000,000 New Taiwan
Dollars, divided into 24,600,000,000 shares, at ten New Taiwan Dollars each, and may be paid-up in
installments.

The Corporation may issue employee stock options from time to time. A total of 500,000,000 shares
among the above total capital stock should be reserved for issuing employee stock options.

Article 8

The Corporation may issue shares without printing share certificate(s). If the Corporation decides
to print share certificates for shares issued, the Corporation shall comply with relevant
provisions of the Company Law and relevant rules and regulations of the Republic of China.

Article 9

The share certificates of the Corporation shall all be name-bearing share certificates, and issued
in accordance with the Company Law and relevant rules and regulations of the Republic of China.

Article 10

All transfer of stocks, pledge of rights, loss, succession, gift, loss of seal, amendment of seal,
change of address or similar stock transaction conducted by shareholders of the Corporation shall
follow the “Guidelines for Stock Operations for Public Companies” unless specified otherwise by law
and securities regulations.

Article 11

Registration for transfer of shares shall be suspended sixty (60) days immediately before the date
of regular meeting of shareholders, and thirty (30) days immediately before the date of any special
meeting of shareholders, or within five (5) days before the day on which dividend, bonus, or any
other benefit is scheduled to be paid by the Corporation.

Article 12

Shareholders’ meetings of the Corporation are of two types, namely: (1) regular meetings and (2)
special meetings. Regular meetings shall be convened, by the Board of Directors, within six (6)
months after the close of each fiscal year. Special meetings shall be convened in accordance with
the relevant laws, rules and regulations of the Republic of China.

Article 13

Written notices shall be sent to all shareholders at their latest places of residence as registered
with the Corporation for the convening of shareholders’ meetings, at least thirty (30) days in
advance, in case of regular meetings; and at least fifteen (15) days in advance, in case of special
meetings. The purpose(s) for convening any such meeting shall be clearly stated in the written
notices sent out to the shareholders. Notices shall be written in Chinese, and English when
necessary.

 

 

Article 14

Except as provided in the Company Law of the Republic of China, shareholders’ meetings may be held
if attended by shareholders in person or by proxy representing more than one half of the total
issued and outstanding capital stock of the Corporation, and resolutions shall be adopted at the
meeting with the concurrence of a majority of the votes held by shareholders present at the
meeting.

Article 15

Each share of stock shall be entitled to one vote.

Article 16

If a shareholder is unable to attend a meeting, he/she may appoint a representative to attend it,
and to exercise, on his/her behalf, all rights at the meeting, in accordance with Article 177 of
the Company Law of the Republic of China. A representative does not need to be a shareholder of the
Corporation.

Article 17

The shareholders’ meeting shall be presided over by the Chairman of the Board of Directors of the
Corporation. In his absence, either the Vice Chairman of the Board of Directors, or one of the
Directors shall preside in accordance with Article 208 of the Company Law of the Republic of China.

Article 18

The resolutions of the shareholders’ meeting shall be recorded in the minutes, and such minutes
shall be signed by or sealed with the chop of the chairman of the meeting. Such minutes, together
with the attendance list and proxies, shall be filed and kept at the head office of the
Corporation. The minutes shall be drafted in both the Chinese language and the English language.

 

 

Section III — Directors and Supervisors

Article 19

The Corporation shall have seven to nine Directors and three Supervisors. The Board of Directors is
authorized to determine the number of Directors.

Article 20

The term of office for Directors and Supervisors shall be three (3) years. Both the Directors and
the Supervisors shall be eligible for re-election.

Article 21

Except as otherwise provided in the Company Law of the Republic of China, a meeting of the Board of
Directors may be held if attended by a majority of total Directors and resolutions shall be adopted
with the concurrence of the majority of the Directors present at the meeting.

Article 22

The Directors shall elect from among themselves a Chairman of the Board of Directors, and may elect
a Vice Chairman of the Board of Directors, by a majority in a meeting attended by over two-thirds
of the Directors. The Chairman shall not have a second or casting vote at any meeting of the Board
of Directors. The Chairman of the Board of Directors shall have the authority to represent the
Corporation.

Article 23

Except the first Board meeting of every term of the newly elected Board of Directors, which shall
be convened by the Director who has received the largest number of votes after such new election,
meetings of the Board of Directors shall be convened by the Chairman of the Board of Directors,
upon written notice mailed to all the other Directors and Supervisors, at least fourteen days,
unless in case of urgent circumstances, prior to the date of the meeting, specifying the date and
place of the meeting and its agenda. The meeting of the Board of Directors shall be held at least
once every quarter. Such prescribed notices may be waived in writing by any Director and
Supervisor, either before or after the meeting. The meetings of the Board of Directors may be
convened, at any time, without such prescribed notice in case of urgent circumstances. Notices
shall be written in both the Chinese language and the English language. Personal attendance at a
meeting will represent a waiver of the notice. Any Director attending the meeting via video
conference shall be deemed attending the meeting in person.

Article 24

The Chairman of the Board of Directors shall preside over all meetings of the Board of Directors.
In addition, the Chairman shall have the right to execute documents in accordance with the
resolutions of the Board of Directors in the name and on behalf of the Corporation as well as
acting on behalf of the Board pursuant to Board resolutions and the Corporation’s objectives when
the Board is not in session. In his absence, the Vice Chairman of the Board of Directors, or any
one of the Directors shall be acting for him according to Article 208 of the Company Law of the
Republic of China.

 

 

Article 25

A Director may, by written authorization, appoint another Director to attend on his behalf any
meeting of the Board of Directors, and to vote for him on all matters presented at such meeting,
but no Director may act as proxy for more than one other Director.

Article 26

The Directors shall exercise their functions by resolutions adopted at meetings of Shareholders and
the Board of Directors.

Article 27

The functions of the Supervisors shall be:

	 	1	 	To review the financial condition of the Corporation;
	 
	 	2	 	To examine the accounting books and documents; and
	 
	 	3	 	Any other functions assigned by law, rules, regulations or ordinance.

Article 28

Supervisor(s), in addition to executing his (their) own duties according to law, may attend
meetings of the Board of Directors and express his (their) opinion, but shall not be entitled to
vote.

Article 29

In the case that vacancies on the Board of Directors exceed, for any reason, one third of the total
number of the Directors, or all three (3) Supervisors are discharged or resign concurrently, then
the Board of Directors shall convene a shareholders’ meeting to elect new Directors or Supervisors
to fill such vacancies in accordance with relevant laws, rules and regulations. Except for the
election of new Directors or Supervisors across the board, the new Directors or Supervisors shall
serve the remaining term of the predecessors.

Article 30

The Board of Directors is authorized to determine the compensation for the Chairman, Directors and
Supervisors, taking into account the extent and value of the services provided for the management
of the Corporation and the standards of the industry within the R.O.C. and overseas.

Section IV — Management of the Corporation

Article 31

The Corporation may, by resolution of the Board of Directors, appoint a Chief Executive Officer
with overall responsibilities for the business of the Corporation and all the affiliated companies.
The Corporation

 

 

shall also have one President and one or more Vice Presidents, all to be appointed by the Board of
Directors. The President shall also be the Chief Operating Officer of the Corporation and may be a
Director of the Corporation. Subject to the policies of the Corporation, the President shall act
under the direction of the Board of Directors headed by the Chairman and be responsible for the
overall control of allocated business and operation of the Corporation and shall report to the
Board of Directors. The President shall supervise and control day-to-day business and operation of
the Corporation, subject to the policies of the Board of Directors headed by the Chairman. The
Chief Executive Officer shall cause to be prepared and furnished to the Board of Directors of the
Corporation a balance sheet of the Corporation and related statements of income and loss, as of the
end of each calendar month, quarter and year. Monthly and quarterly statements shall be furnished
no more than sixty (60) days after the end of each month and quarter, and year-end statements shall
be furnished no more than ninety (90) days after the end of each year. Such financial statements
shall be prepared in accordance with generally accepted accounting principles applied in the
Republic of China on a consistent basis. Such statements shall be accompanied by a certification of
the Corporation that such statements have been so prepared. The Vice President-Finance shall have
special responsibility for the financial affairs and accounting of the Corporation.

Article 32

The President and Vice Presidents shall perform such duties as designated by the Board of
Directors. The President and Vice Presidents may, in accordance with Chief Executive Officer’s
authorization, handle all matters within the scope of his/her responsibilities and sign documents
on behalf of the Corporation.

Article 33

Subject to the provisions of the Company Law of the Republic of China and these Articles of
Incorporation, all actions of the Corporation’s officers shall be in conformance with, and in
furtherance of, the directions of the Board of Directors.

Section V — Financial Reports

Article 34

The fiscal year for the Corporation shall be from January 1 of each year to December 31 of the same
year. After the close of each fiscal year, the following reports shall be prepared by the Board of
Directors, and, after being audited by the Supervisors of the Corporation, shall be submitted by
the Board of Directors to the regular shareholders’ meeting for acceptance:

	 	1.	 	Business Report;
	 
	 	2.	 	Financial Statements;
	 
	 	3.	 	Proposal Concerning Appropriation of Net Profits or Covering of Losses.

     Article 35

 

 

When allocating the net profits for each fiscal year, the Corporation shall first offset its losses
in previous years and set aside a legal capital reserve at 10% of the profits left over, until the
accumulated legal capital reserve has equaled the total capital of the Corporation; then set aside
special capital reserve in accordance with relevant laws or regulations or as requested by the
authorities in charge; and then set aside 0.3% of the balance as bonus to directors and supervisors
and not less than 1% as bonus to employees of this Corporation. This Corporation may issue stock
bonuses to employees of an affiliated company meeting the conditions set by the Board of Directors
or, by the person duly authorized by the Board of Directors. Any balance left over shall be
allocated according to the following principles per resolution of the shareholders’ meeting:

	 	1.	 	Except distribution of reserve in accordance with item (2) below, this Corporation
shall not pay dividends or bonuses when there is no profit; however, where the legal
capital reserve reaches over 50% of the paid-in capital, this Corporation may distribute
the amount in excess as dividends and bonuses. Profits may be distributed in total after
taking into consideration financial, business and operational factors. Profits of this
Corporation may be distributed by way of cash dividend and/or stock dividend. Since this
Corporation is in a capital-intensive industry at the steady growth stage of its
business, distribution of profits shall be made preferably by way of cash dividend.
Distribution of profits may also be made by way of stock dividend; provided however, the
ratio for stock dividend shall not exceed 50% of total distribution.
	 
	 	2.	 	In case there is no profit for distribution in a certain year, or the profit of a
certain year is far less than the profit actually distributed by this Corporation in the
previous year, or considering the financial, business or operational factors of this
Corporation, this Corporation may allocate a portion or all of its reserves for
distribution in accordance with relevant laws or regulations or the orders of the
authorities in charge.

Section VI — Supplementary Provisions

Article 36

The internal organization of the Corporation and the detailed procedures of business operation
shall be determined by the Board of Directors.

Article 37

In regard to all matters not provided for in these Articles of Incorporation, the Company Law of
the Republic of China shall govern.

Article 38

 

 

These Articles of Incorporation are agreed to and signed on December 10, 1986 by all the promoters
of the Corporation, and the first Amendment was approved by the shareholders’ meeting on April 28,
1987, the second Amendment on November 27, 1989, the third Amendment on May 28, 1991, the fourth
Amendment on May 18, 1993, the fifth Amendment on January 28, 1994, the sixth Amendment on May 12,
1995, the seventh Amendment on April 8, 1996, and the eighth Amendment on May 13, 1997, the ninth
Amendment on May 12, 1998, the tenth Amendment on May 11, 1999, the eleventh Amendment on April
14, 2000, the twelfth Amendment on September 5, 2000, the thirteenth Amendment on May 15, 2001, the
fourteenth Amendment on May 7, 2002, the fifteenth Amendment on June 3, 2003, and the sixteenth
Amendment on December 21, 2004.EX-4.2 TSMC 2004 EMPLOYEE STOCK OPTIONS PLAN

 

Exhibit 4.2

Taiwan Semiconductor Manufacturing Company Limited

2004 Employee Stock Options Plan

(Translation)

	1.	 	Purpose
	 
	 	 	The purpose of the 2004 Employee Stock Options Plan (the “Plan”) of Taiwan Semiconductor
Manufacturing Company Limited (the “Company”) is to promote the interests of the Company
and its shareholders by attracting and retaining the high-tech talents/professionals of the
Company and its subsidiaries by means of incentives in the form of stock options.
	 
	2.	 	Period of Grant
	 
	 	 	The Company may grant the options in one or more tranches within one (1) year from the date
of receipt of notice from the relevant authority (“Authority”) indicating that the
Company’s filing of the Plan with the Authority has become effective. The actual dates of
grant will be determined by the Chairman of the Board of Directors of the Company (the
“Chairman”).
	 
	3.	 	Optionee
	 
	 	 	Each optionee shall be a full-time employee of either the Company or any of its domestic or
foreign subsidiaries, in which the Company’s shareholding with voting rights, directly or
indirectly, is more than fifty percent (50%). Whether an employee is entitled to receive
options, and the number of options to be received, shall be reviewed and determined by the
Chairman taking into consideration factors as relates to job grade, performance,
contribution, special achievement and/or years of employment, subject to approval by the
Compensation Committee of the Board of Directors of the Company. The number of options
granted to any optionee in any tranche shall not exceed ten percent (10%) of the total
number of options granted in that tranche, and the total number of options to be exercised
by any optionee within each fiscal year shall not exceed one percent (1%) of the
outstanding common shares of the Company at the year-end.
	 
	4.	 	Total Number of Options to be Granted
	 
	 	 	The total number of options authorized to be granted with respect to the Plan shall be
11,000,000 units, with one (1) unit entitled to subscribe one (1) common share of the
Company. The total number of common shares of the Company to be reserved for granting the
options shall be 11,000,000 shares.
	 
	5.	 	Terms and Conditions

	 	(1)	 	Exercise Price
	 
	 	 	 	The exercise price of the options shall be the closing price of the Company’s
common shares on the date that the options are granted.

 

 

	 	(2)	 	Vesting Schedule
	 
	 	 	 	The options will not vest in the first two (2) years (“Waiting Period”) and may be
exercised in accordance with the following schedule. The options will be existent
for ten (10) years and may not be transferred, except by inheritance.

	 	 	 	 	 	 	 	 
	 
	 	Number of Years after the Date the	 	 	Accumulated Percentage of Options	 
	 	Options are Granted	 	 	Exercisable	 
	 	2 years

	 	 	 	50	%	 
	 	3 years

	 	 	 	75	%	 
	 	4 years

	 	 	 	100	%	 
	 

	 	(3)	 	Type of Shares Underlying the Options
	 
	 	 	 	The common shares of the Company shall be the underlying shares.
	 
	 	(4)	 	After the Company grants options to an optionee, the Company shall have the
right to revoke and cancel unvested options in the event that the optionee commits
serious misconduct and violates the employment contract or policies of the Company.
	 
	 	(5)	 	Termination of Employment
	 
	 	 	 	If an optionee’s employment with the Company is terminated, the optionee shall
exercise options in accordance with the following provisions, subject to the
ten-year limit set forth in Paragraph 5(2) above:

	 	a.	 	Voluntary Termination or Terminated for Cause by the Company
in Accordance with Labor Law of ROC — Options vested in accordance with the
schedule set forth in Paragraph 5(2) above shall be exercised within three (3)
months from the employment termination date. Unvested options shall become
invalid on the employment termination date.
	 
	 	b.	 	Retirement — All options granted are exercisable subject to
the Waiting Period, regardless of the vesting schedule set forth in Paragraph
5(2) above. Nevertheless, the optionee shall exercise all options within one
(1) year from the later of: (x) the date of retirement; or, (y) the end of the
Waiting Period.
	 
	 	c.	 	Temporarily on Leave Without Pay — In case the optionee is
approved to be temporarily on leave without pay, vested options shall be
exercised within three (3) months from the effective date of the temporary
leave; otherwise, the right to exercise options shall be deferred until the
optionee’s reinstatement. For unvested options, the accumulation of years of
employment with respect to the vesting schedule set forth in Paragraph 5(2)
above shall suspend during the period of the optionee’s temporary leave and
shall resume after the optionee’s reinstatement, subject to the ten-year limit
set forth in Paragraph 5(2) above.
	 
	 	d.	 	Death — Options vested in accordance with the schedule set
forth in Paragraph 5(2) above shall be exercised by the optionee’s inheritor
within one (1) year from the death of the optionee. Unvested options shall
expire and become invalid upon the death of the optionee.

 

 

	 	e.	 	Death or Disability Caused by Work Injury —

	 	(a)	 	Regardless of the vesting schedule set
forth in Paragraph 5(2) above, all options granted are exercisable
upon the departure of the optionee from the Company due to any
disability caused by work injury, subject only to the Waiting Period.
Nevertheless, the optionee shall exercise the options within one (1)
year from the later of: (x) the date of departure; or, (y) the end of
the Waiting Period.
	 
	 	(b)	 	Regardless of the vesting schedule set
forth in Paragraph 5(2) above, all options granted are exercisable by
the optionee’s inheritor upon the death of the optionee, which is
caused by work injury, subject only to the Waiting Period.
Nevertheless, the inheritor shall exercise the options within one (1)
year from the later of: (x) the death of the optionee; or, (y) the
end of the Waiting Period.

	 	f.	 	Transfer to Affiliates — In case the optionee is
transferred to an affiliate due to the necessity of the operations of the
Company, the rights and obligations of the options granted shall not be
affected by such transfer.
	 
	 	g.	 	Severance/Layoff in Accordance with Labor Law of ROC —
Options vested in accordance with the schedule set forth in
Paragraph 5(2)
above shall be exercised within three (3) months from the effective date of
the severance/layoff (other than situations set forth in Paragraph 5(5) a
above). Unvested options shall become invalid upon the effective date of the
severance/layoff; or, may be exercised in accordance with a schedule
determined by the Chairman based on the schedule set forth in Paragraph 5(2)
above, which shall be subsequently approved by the Compensation Committee of
the Board of Directors of the Company.
	 
	 	h.	 	If the optionee or his/her inheritor is unable to exercise
the options within the periods set forth above, the unexercised options shall
expire and become invalid.

	 	(6)	 	Invalidated Options
	 
	 	 	 	Any invalidated options shall be cancelled.

	6.	 	Underlying Shares
	 
	 	 	The Company will issue new common shares of the Company as the underlying shares.

 

 

	7.	 	Adjustments of the Exercise Price
	 
	 	 	The exercise price shall be subject to adjustment in accordance with the following formula,
to be rounded to the tenth, upon the occurrence of changes in paid-in capital of the
Company as a result of capitalization of retained earnings or capital reserves.
	 
	 	 	NEP = OEP  ́ [N/(N+ n)]

	 	 	 	 	 
	Where:

	 	NEP =
	 	the exercise price after such adjustment
	

	 	OEP =
	 	the exercise price before such adjustment
	

	 	N =
	 	the number of outstanding common
shares (the number of treasury
shares which have not been
transferred or cancelled shall be
deducted.)
	

	 	n =
	 	the number of new common shares
arising from the capitalization of
retained earnings or capital
reserves

	 	 	The exercise price will not be adjusted in case of issuance of new common shares in
connection with mergers.
	 
	8.	 	Issuance of Additional Options
	 
	 	 	Upon the occurrence of the Company’s capitalization of retained earnings or capital
reserves, in addition to adjusting the exercise price in accordance with provisions set
forth in Paragraph 7(1) above, the Company will issue additional options in proportion to
the increase of paid-in capital (only integral options will be issued and any fractional
options resulting therefrom will be disregarded) at the adjusted price to holders of
existing unvested or unexercised options, provided that there are sufficient common shares
reserved for granting the options as specified in the Articles of Incorporation of the
Company.
	 
	9.	 	Procedures for Exercising Options

	 	(1)	 	Except during a period in which the shareholders’ book is closed in
accordance with relevant laws; or, the period from three (3) business days prior to
the date of public announcement to close shareholders’ book for stock dividends, cash
dividends, or rights offering filed by the Company with the Taiwan Stock Exchange
Corporation to the record date, optionee may exercise options in accordance with the
vesting schedule set forth in Paragraph 5(2) above by submitting a written notice (the
“Exercise Notice”) to the Company to purchase the newly issued common shares of the
Company.
	 
	 	(2)	 	The Company shall inform the optionee of the payment for exercising the
options to a designated bank upon the receipt of the Exercise Notice. The Exercise
Notice shall not be withdrawn once the payment has been made.
	 
	 	(3)	 	The transfer agent of the Company shall register the optionee and his/her
 shares in the shareholders record upon the Company’s confirmation of the payment and
shall book transfer common shares of the Company to the optionee within five (5)
business days. The common shares so issued are tradable on the Taiwan Stock Exchange
upon delivery to the optionee.
	 
	 	(4)	 	The Company shall file the change in the paid-in capital with the relevant
authority once each quarter.

	10.	 	Rights and Obligations after Exercising Options
	 
	 	 	The holders of common shares of the Company issued after options are exercised shall have
the same rights, obligations and privileges as holders of common shares of the Company.

 

 

	11.	 	Miscellaneous

	 	(1)	 	The Plan shall become effective upon obtaining approval from the Board of
Directors of the Company and the Authority. Any amendments to the Plan shall become
effective upon the Board of Directors’ approval.
	 
	 	(2)	 	Any other matters not set forth in the Plan shall be dealt with in accordance with the
applicable laws and regulations.

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