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FUNCTIONAL COMMITTEE

Information of Functional Committees

Audit Committee

The Audit Committee has been established since June 2007 to oversee the financial affairs of the Company, the appointment (discharge) of certified accountants, and the control of independence, internal control, relevant legislation, and potential risks to assist the board of directors in its functions.

The Audit Committee shall hold a regular meeting at least once a quarter. Please refer to the Company’s annual report for the actual meeting of the Committee.

The matters discussed by the Audit Committee mainly include:

1. Establishment or amendment of the internal control system in accordance with Article 14(1) of the Securities and Exchange Act.
2. Effectiveness assessment of the internal control system.
3. Stipulation or amendment of the procedures for the disposal of major financial business activities of acquiring or disposing of assets, engaging in derivatives trading, lending funds to others, endorsing or providing guarantees for others in accordance with Article 36(1) of the Securities and Exchange Act.
4. Matters involving the interests of the directors.
5. Major transactions in assets or derivatives.
6. To lend, endorse, or provide a guarantee of major funds.
7. To raise, issue, or place private equity securities.
8. Appointment, discharge, or remuneration of certified accountants.
9. Appointment and discharge of finance, accounting, or internal audit directors.
10. Annual and semi-annual financial statements.
11. Other important matters stipulated by the Company or the competent authority.

Remuneration Committee

The function of the Remuneration Committee is to evaluate, in a professional and objective manner, the remuneration policies and system of the Company’s directors, supervisors, and managers, and to make recommendations to the board for its policy reference. The Remuneration Committee shall hold at least two regular meetings a year. Please refer to the Company’s annual report for the actual meeting of the Committee.

The matters discussed by the Remuneration Committee mainly include:

1. To review the organizational procedures of the Remuneration Committee on a regular basis and make recommendations for amendments.
2. To stipulate and review annual and long-term performance goals and remuneration policies, system, standards, and structures of the Company’s directors, supervisors, and managers.
3. To evaluate regularly the achievement of performance goals of the Company’s directors, supervisors, and managers, and determine the content and amount of individual remuneration.

Board and Functional Committee Performance Evaluation

In order to implement corporate governance, enhance the function of the board of directors of the Company, and establish performance goals to strengthen the operational efficiency of the board of directors, the board of directors of the Company adopted the Directions for Performance Evaluation of the Board of Directors on December 26, 2019, and implemented it since 2020. The main evaluation period, evaluation scope and method, evaluation execution unit, evaluation procedure and other matters to be followed shall be handled in accordance with the provisions of the Directions.

The most recent evaluation period was from January 1, 2025 to December 31, 2025. The meeting affairs unit is under the responsibility of the Finance Department, and the 2025 evaluation results were submitted to the Board of Directors on March 11, 2026.

The Company takes into account the situation and needs of the Company and sets up the measurement items of the board of directors performance evaluation, including the following five aspects:

1. Involvement in the operation of the Company.
2. Improvement of the quality of the board decisions.
3. Board composition and structure.
4. Appointment of directors and continuing education.
5. Internal control.

The measurement items of the board members (self or peer) performance evaluation include the following six aspects:

1. Knowledge of the Company’s goals and tasks.
2. Cognition of director responsibility.
3. Involvement in the operation of the Company.
4. Internal relationship management and communication.
5. Professional and continuing education of directors.
6. Internal control.

The measurement items of the Functional Committee performance evaluation include the following five aspects:

1. Involvement in the operation of the Company.
2. Cognition of the Functional Committee responsibility.
3. Improvement of the quality of the Functional Committee decisions.
4. Composition and appointment of the Functional Committee.
5. Internal control.

External Evaluation of Board Performance: Taiwan Corporate Governance Association

In 2023, the Company conducted its second external performance evaluation of the Board of Directors. The Taiwan Corporate Governance Association conducted the evaluation based on eight major dimensions, including the Board’s guidance, authorization, supervision, communication, internal control and risk management, self-discipline, and other support systems, through online self-assessment questionnaires and on-site visits. The Taiwan Corporate Governance Association and its evaluation experts had no business dealings with the Company and maintained independence. The evaluation report issued thereby was submitted to the Board of Directors on March 13, 2024.

The planning, execution, supervision, and assessment cycle of business operation, and the cooperation between the board of directors and the management team define the scope of the “Board Performance Evaluation Service” of the Association, including the following eight aspects:

1. Composition of the board of directors.
2. Guidance of the board of directors.
3. Authorization of the board of directors.
4. Supervision of the board of directors
5. Communication of the board of directors.
6. Internal control and risk management.
7. Self-discipline of the board of directors.
8. Others including board meetings, support systems, etc.

General Comments and Suggestions

General Comments:

1. The Chairman of the Company fully respects the professional opinions of the independent directors. Prior to formal meetings, the Chairman consults with the independent directors on significant matters, and through annual strategy meetings, enables the independent directors to gain a comprehensive understanding of the Company’s operations and industry trends. In the event of major matters, meetings are convened with the independent directors at any time to provide reports. Through close communication and interaction with the management team, the independent directors are able to actively perform their strategic advisory functions, thereby forming a sound culture for Board operations.
2. The Company places emphasis on talent cultivation and cultural identity. The Remuneration Committee regularly reviews the succession talent pool for key positions and provides recommendations on their development and evaluation methods. Each year, the Committee fully discusses the reasonableness of the remuneration structure and the setting of performance targets, and provides guidance thereon. The opinions expressed are duly recorded in the meeting minutes.
3. The Audit Committee of the Company actively supervises matters relating to internal control and risk management, and fulfills its responsibility to review the suitability of appointments of the chief internal auditor and accounting and finance officers. The chief internal auditor regularly provides internal audit reports and reports on the handling of whistleblowing cases to the Audit Committee by email each month, including newly received cases and the progress of existing whistleblowing cases. The independent directors are therefore able to obtain sufficient information to effectively perform their duties.
4. This was the second time the Company commissioned a third-party professional and independent institution to conduct a Board performance evaluation. The Company has strengthened many areas based on the recommendations provided in the previous evaluation report, demonstrating its commitment to continuously enhancing Board effectiveness.

Suggestions:

1. The Company plans and promotes sustainability-related matters from a strategic perspective, with the Legal Affairs Center currently serving as the highest-level management unit responsible for promoting sustainable development. It is recommended that the Company consider establishing a more integrated functional organization in the future, such as a Strategy Development Committee, and invite independent directors and directors to participate therein. This would enhance the leadership level of sustainability-related matters, strengthen the Company’s resilience in facing severe market challenges, and further demonstrate the Board’s commitment to actively promoting sustainability affairs and participating in the formation of major corporate strategies.
2. Although the Company has practical measures in place to assist directors in enhancing their effectiveness, it is recommended that such measures be further institutionalized to facilitate the performance of directors’ duties. As 2024 is the year of Board re-election, the Company may consider establishing an “orientation program for newly appointed directors” to provide new directors with information necessary for the performance of their duties, including the Company’s business operations, industry trends, laws and regulations, and corporate governance-related rules and systems. Arranging on-site visits to key subsidiaries and meetings with key executives would also help new directors quickly understand the Company’s operations and facilitate the performance of their duties. In addition, although the Company has reported significant incidental events to Board members, it is recommended that the current procedures be strengthened by defining in writing the materiality threshold, types of events to be reported, reporting deadlines, reporting methods, and reporting levels, so as to ensure that all Board members can obtain timely and sufficient information on significant matters of the Company.
3. The members of the Audit Committee actively perform their duties and maintain detailed records. However, it is recommended that the Audit Committee regularly hold closed-door meetings with the certifying CPAs and the internal auditor without the presence of management, so as to ensure smooth communication channels and strengthen supervision over the internal control system and financial statements.