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Implementation of Corporate Governance

【 Implementation of Corporate Governance 】

The Company actively drives and implements corporate governance and formulated the Corporate Governance Best-Practice Principles with reference to the "Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies", and disclosed in the Company's website.
Through the appointment of the Chief Corporate Governance Officer to support the Board of Directors in various work relating to monitoring and guiding corporate governance.
Under the guidance of the senior management, promote continuous improvements. We are honored to be awarded the "The top 5% range of the TWSE listed companies" of the Corporate Governance Evaluation for two consecutive years. In the future, we will continue to advance for further improvements in governance quality and results.

Strengthen the Powers of the Board of Directors

The composition of the Company's Board of Directors is based on the Company Charter. There are 9 directors, among which, there must be more than 3 independent directors, and there must be more than 1/5 of the total number of director seats, with 3-year term of office. The election for all the directors is based on the company's nomination system. The procedures for nomination and evaluation are based on the Company Act. The review of the qualifications and independence of the independent directors are based on the related laws and regulations of securities.

The formation of all directors is in conformance to the spirit of diversity for the corporate governance of board formation. The current board members include 1 female director and 3 independent directors. Every director possesses related background and practical experiences in business, finance, accounting, or industries. The distribution of the directors' core capabilities, professionalism and age has considered the implementation of the diversity philosophy of the board members formation. The Board of Directors operations are based on related laws and regulations, company charter, shareholders meeting resolution to exercise its power.
The various functional committees have been setup under the Company's Board of Directors, namely, the Audit Committee, Remuneration Committee, and the Nomination Committee. The purpose is to strengthen the Board's functions and corporate governance with the experts' independent and objective perspectives supporting the Board in making evaluations and decision-making.

Board of Directors Performance Evaluation
The Company holds regular yearly evaluation of the overall performance of the Board of Directors, the individual director and the functional committee according to the "Rules Governing the Board of Directors Performance Evaluation". Apart from providing the performance evaluation results for peruse by the Board of Directors and Functional Committees for making improvements, the results are also a reference basis for the selection or nomination of directors. The performance evaluation results of the individual directors are also used as a reference for the formulation of their salary remuneration.

Internal Self-Evaluation：
Holds regular yearly evaluation of the overall performance of the Board of Directors, the individual director and the functional committee according to the "Rules Governing the Board of Directors Performance Evaluation".

Evaluation unit: The corporate governance team will distribute the questionnaire to every director and the Functional Committee members. After collecting the completed questionnaires and analysis of the self-evaluation, the results are submitted to the Chairperson, Chief Corporate Governance Officer, Nomination Committee and Board of Directors.
Evaluation period: January 1 - December 31, 2023
Evaluation method and contents:

Evaluation results: The 2023 overall Board of Directors performance evaluation, self-evaluation by board members, and Functional Committees evaluation have an average score of more than 98 points (full score is 100 points). The overall operations show good status. The results will be submitted and reported to the Board of Directors and every Functional Committee (the Nomination Committee, Remuneration Committee, and Audit Committee).
Improvement plan: In response to the changes in market development and the trend of global sustainable development, ESG corporate sustainability, carbon management, industry dynamics, global economic prospects, and other topics may be added to the continuing education courses of Directors to improve the quality of continuing education.

External Evaluation
The external performance evaluation for the Board of Directors shall take place once every three years by external professional institutions in accordance with the "Rules Governing the Board of Directors Performance Evaluation".

Evaluation unit: The Company outsourced to "Taiwan Corporate Governance Association (CGA)" in 2021 for the performance evaluation on the Company's Board of Directors. CGA began to provide the corporate governance system rating and appraisal since 2005. Until now, it has serviced over 300 companies across many industries, possessing a comprehensive rating system and a wealth of rating experiences. Its professional service can be trusted and relied upon. The experts of CGA in the evaluation this time do not have business relationship with the Company. This meets the independent requirement of Article 6 of the Company's "Board of Directors Performance Evaluation" on the qualifications requirement of external evaluation institution.
Evaluation period: August 1, 2020 to July 31, 2021
Evaluation method and contents: The CGA conducted reviews on the eight major aspects of the Company on the formation, guidance, authorization, monitoring, communications, self- discipline of the Board of Directors, and the internal control system and risk management, the Board meetings and support systems. The evaluation is conducted through questionnaire and visits of actual places.
Evaluation process: The Company and the association completed the self-evaluation questionnaire and the document review respectively in September 2021. On October 5, 2021, four members of the evaluation team of the Association, including executive member and convener Mr. Wang Huai, executive member Mr. Lin Chien-Chong, evaluation specialist Mr. Chen Yi-Chong, and researcher Mr. Luo Shang-Hsiu, visited the Company in person and interviewed the Chairman Mr. Horng Po-Yen, independent director Mr. Huang Shen-Yi, certain executive, chief corporate governance officer and chief auditor of the Company from eight aspects of the evaluation project, referring to the questionnaires filled out by the Company, various information provided (minutes of board meetings and functional committee meetings held during the evaluation period) and public information, etc.
Evaluation results:
1. In response to the "Corporate Governance 3.0 - Sustainable Development Blueprint", the Company established a nomination committee in 2021, which is in the charge of building and developing the organization structure of the board of directors and each functional committee, conducting the board of directors' performance evaluation, and handling directors' election and educational training.
2. The Company's management team compiled stakeholders' engagement and reported it to the board of directors annually, and invited directors to attend the shareholders' meeting every year. The attendance of all board members at the shareholders' meeting in 2021 demonstrates the importance that the board of directors attaches to stakeholder communication.
3. The board of directors had formulated the "Risk Management Policies", and each responsible unit evaluated the risks accordingly, took appropriate countermeasures, and then reported to the board, assisting the board to master the implementation status of the relevant management mechanism.
4. The chairman received a report from the chief corporate governance officer on the results of the Corporate Governance Evaluation annually and highlighted the results to the board members in person at the board meeting, guiding the relevant refinement plan. In 2021, the board of directors further commissioned an independent professional organization to conduct an external evaluation of the board, demonstrating the board's proactive attitude towards corporate governance and enhancing the effectiveness of the board.

Suggested matters: The CGA has provided suggestions on 4 matters. The Company has already drafted the reviews and revisions of related systems and management procedures based on the suggested matters. We will continue to refine and advance the functions of the Board of Directors. The work has been reported to the Board of Directors and the Nomination Committee on November 5, 2021.

Recommendations	Improvement plan
The Company was recommended to establish a "New Elected Director Orientation System".	The Company holds various legal education training for new elected directors, and executive will report the Company's operations to the directors in the board meeting as well. The Company will establish an orientation system in accordance with the recommendation. In addition, it has already planned the exchange between the management and directors and the tour to visit the Group's businesses at the end of 2021, helping directors understand and participate in the Company's operation.
The Company was recommended to regularly evaluate the competency of CPAs on an annual basis.	The Company's Board of Directors has approved the amendment to the "Evaluation Rules for the Independency and Competency of CPAs" to strengthen the procedures and standards of the evaluation on November 5, 2021.
The Company was recommended that the performance evaluation of the internal chief auditor should take the opinion of the independent directors in advance into account.	The performance evaluation of the internal chief auditor has to be finalized by the chairman. The chairman has, as recommended, taken the opinion of the independent directors in advance into account when finalizing the performance evaluation of the internal chief auditor for 2021.
The Company was recommended to allow anonymous reporting, as the advocation example of the "Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies".	The Company is formulating the rules and procedures for reporting as recommended.

Personnel Responsible for Corporate Governance Affairs

Chief Corporate Governance Officer
The Company has set up a Chief Corporate Governance Officer to be in charge of corporate governance affairs. The Chief Corporate Governance Officer has been in a managerial position for more than three years in a public company in handling stock affairs whose main jobs and responsibilities include:

Supervising and handling matters relating to Board meetings and shareholders meetings according to laws and producing minutes of Board meetings and shareholders meetings.
Assisting directors' on-boarding and continuous education.
Providing information required for business execution by directors.
Assisting directors with legal compliance.
Other matters set out in the articles or corporation or contracts

Corporate Governance Implementation Status in 2023
1.Handling matters relating to board meetings and shareholders meetings according to laws

The Company convened 8 Board meetings, 6 Audit Committee meetings, 3 Remuneration Committee meetings and 2 Nominating Committee meeting in 2023. Meeting notice and data have been mailed out at least 7days in advance. Where there were any interest conflicts, the directors(committee members) were reminded in advance to avoid the interests. Meeting minutes were sent out within 20 days of the meeting.

2.Examine the Adequacy of Internal Regulations and Amend them Periodically

The internal regulations amended in year 2023 include: "Procedures for Preparation and Certification of Sustainability Report", "Procedures for Management of related party transactions", "Corporate Governance Best Practice Principles", "Sustainable Development Best Practice Principles", and "Rules Governing the Board of Directors Performance Evaluations".

3.Continuing education of the director Chief Corporate Governance Officer

Assist directors' continuous education: promote training information to directors and arrange the training hours for the directors. All directors have completed the training hours. Each director took at least 6 hours of continuing education, which is in compliance with the "Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies"; the chief corporate governance officer took at least 12 hours in continuing education, which is in complied with the "Taiwan Stock Exchange Corporation Operation Directions for Compliance with the Establishment of Board of Directors by TWSE Listed Companies and the Board's Exercise of Powers" .

4.Improving Information Transparency

Increase the disclosure of various information in English version, including the shareholders' meeting minutes, shareholders' meeting notice, annual report, material information, annual financial statements and mid-term financial statements.
Increase communications frequency with stakeholders by organizing 4 investor conferences, an average of 1 session each quarter. This is at a frequency more than the stated legal requirements for TWSE listed companies which require the organizing of 1 investor conferences each year.