Data time: 2024/06/27

Major shareholders	Number of shares held	Shareholding ratio
Tairoun Investment Co., Ltd.	16,013,325	9.04%
Qian Ming Investment Co., Ltd.	13,869,589	7.83%
Beanli Investments Co., Ltd.	7,924,000	4.47%
Chen Weirang	6,880,720	3.89%
Quansheng Investment Co., Ltd.	5,580,382	3.15%
Chen Weigong	5,526,650	3.12%
Chen Lin hui-pin	4,957,478	2.80%
Chen Peihua	4,493,895	2.54%
Chen Peizhen	4,436,992	2.51%
Chen Yingming	2,592,876	1.46%

The following matters should be discussed at the Board of Directors meeting of our company:

1. The companys operational plans.

2. Annual financial reports.

3. Formulation or amendment of internal control systems and assessment of the effectiveness of internal control systems.

4. Establishment or amendment of procedures for significant financial transactions, such as acquiring or disposing of assets, engaging in derivative transactions, lending funds to others, endorsing for others, or providing guarantees.

5. Fundraising, issuance, or private placement of equity securities.

6. Appointment, dismissal, or remuneration of auditors.

7. Appointment or removal of financial, accounting, or internal audit executives.

8. Donations to related parties or significant donations to non-related parties. However, in the case of charitable donations for urgent relief efforts due to significant natural disasters, approval may be sought at the next Board of Directors meeting.

9. Other matters required by laws, regulations, or articles of incorporation to be resolved by the shareholders meeting or the Board of Directors, or significant matters stipulated by regulatory authorities.

Board of Directors Diversity: According to Article 20 of our company's Corporate Governance Guidelines, the composition of the Board of Directors should consider diversity. A suitable diversity policy should be formulated based on the board's own operations, business model, and development needs. This policy should include, but not be limited to, the following two major dimensions:

1. Basic Conditions and Values: Gender, age, nationality, and culture, among others.

2. Professional Knowledge and Skills: Professional backgrounds (such as law, accounting, industry, finance, marketing, or technology), professional skills, and industry experience, among others. Board members should generally possess the knowledge, skills, and qualities necessary for performing their duties.

To achieve the ideal goal of corporate governance, the board as a whole should have the following capabilities:

1. Operational judgment.

2. Accounting and financial analysis.

3. Business management.

4. Crisis management.

5. Industry knowledge.

6. International market outlook.

7. Leadership.

8. Decision-making.

Independence of the Board: In our company, all three independent directors have served consecutive terms of no more than three sessions, constituting 25% of the board seats. Two directors within the board have a second-degree or closer family relationship, constituting 17% of the board seats. There are three directors who concurrently serve as employees or executives, constituting 25% of the board seats. Two female directors make up 17% of the board seats. The implementation of board diversity in our company is as follows: [Additional information on how board diversity is implemented can be provided here.

 

Management Goals	Achievement Status
Directors concurrently serving as company executives shall not exceed one-third of the total number of director seats.	Achieved. There are four directors concurrently serving as company executives, accounting for 31% of the board seats, which does not exceed one-third of the director seats.
Independent directors shall not serve consecutive terms exceeding three sessions.	Achieved. All three independent directors have not exceeded three consecutive terms in office.
There must be at least one female director among the board members.	Achieved. There are two female directors, accounting for 15% of the board seats.
There must be at least one director with a financial accounting background among the board members.	Achieved. There are a total of four directors with a financial accounting background.
There must be at least two directors with relevant industry management experience among the board members.	Achieved. There are a total of seven directors with relevant industry management experience.

 
Succession Planning and Execution for Board Members

The directors of the company are elected by the shareholders' meeting through a candidate nomination system in accordance with the company's "Articles of Incorporation" and "Director Election Regulations." The composition of the board is planned based on the company's scale, industry, and the required expertise, experience, gender, and independence of the directors.

In accordance with the "Corporate Governance Guidelines," the company implements a policy for the diversification of the board members. Each member possesses rich experience and expertise in operational judgment, accounting and financial analysis, business management, crisis handling, industry knowledge, international market perspectives, leadership, and decision-making abilities. The board regularly plans annual training courses, considering global environmental changes and the company's development needs, to continually strengthen the board's capabilities. Senior executives are also encouraged to participate in training programs to enhance their knowledge and expertise, preparing them for succession.

To familiarize high-level executives with operational conditions in various units and provide them with more experience, the company has planned for senior executives to attend board meetings. This initiative aims to deepen corporate governance and enhance the functionality of the board.

To further strengthen corporate governance, the company conducts internal board performance evaluations at least once a year, as per the "Board and Functional Committees Performance Evaluation Regulations." Through this evaluation mechanism, the effectiveness of the board's operations is ensured. The results of director performance evaluations serve as references for future director nominations, renewals, and the selection of new successors.

• 1.Succession Planning for Board Members: The company’s "Articles of Association" stipulate that the election of directors shall fully adopt a candidate nomination system. The "Corporate Governance Best Practice Principles" and "Rules for the Election of Directors" clearly define that the composition of the board of directors should consider diversity. The company formulates a diversification policy based on its operations, business model, and development needs, covering two major aspects: basic qualifications and values, as well as professional knowledge and skills.
• 2. Board Structure: The structure of the board should be determined based on the scale of the company's business development, the shareholding structure of its major shareholders, and practical operational needs.
• 3.Ongoing Succession Planning for Directors: The company maintains a database of potential director candidates based on the following criteria:
• •Integrity, responsibility, innovation, and decision-making ability that align with the company's core values, as well as professional knowledge and skills beneficial to the company’s management.
• •Experience in industries related to the company’s business operations.
• •The expectation that the candidate's inclusion will enhance the board’s effectiveness, collaboration, and diversity, with at least one female director.
• •The board's overall expertise should include areas such as corporate strategy, accounting and taxation, finance, law, administrative management, and production management.
• •The selection process for the list of director candidates must adhere to qualification reviews and relevant regulations, ensuring the effective identification and appointment of suitable new directors when vacancies arise or when expanding the board.
• •The company also implements the "Board Performance Evaluation Measures," assessing board operations through various metrics, such as alignment with company goals, understanding of responsibilities, participation in operations, internal relations and communication, professional skills and training, internal control, and the expression of specific opinions. This serves to evaluate the board's effectiveness and individual director performance, providing a reference for future director appointments.

Succession Planning and Operation for Key Management

The policy, standards, and composition of remuneration payment

Directors’ remuneration at our company is divided into two parts: a fixed monthly amount as a retainer fee and a share of profits as director compensation. The director compensation is determined in accordance with Article 27 of the company's Articles of Association: the company shall allocate the pre-tax profits, after deducting the amount designated for employee compensation and director compensation and any amount reserved for covering losses, with at least 3.5% set aside for employee compensation and no more than 5% for director compensation. The decision on the distribution ratio between director and employee compensation, and whether the employee compensation is to be paid in stock or cash, shall be made by a resolution of the Board of Directors with at least two-thirds of directors present and with the approval of a majority of the directors in attendance, and reported at the shareholders' meeting.
Additionally, Article 7 of the company's Compensation Committee Charter stipulates that the Compensation Committee shall regularly review the company's policies, systems, standards, and structures regarding the annual and long-term performance objectives and remuneration for directors and managers. It also evaluates the achievement of performance objectives on a regular basis and determines the content and amount of individual compensation. The principles of the committee's evaluation are as follows: The proportion of reasonable remuneration is calculated and paid by taking into account the occurrence of moral hazard events or other risk events that may cause negative impact on the Company's image or reputation, internal management malfunctions, or personnel malpractices, with reference to the target achievement rate of directors and managers, the Company’s profitability, operating efficiency, and contribution of directors and managers remuneration. We also review the remuneration system for directors and managers on a timely manner, depending on the actual business conditions and relevant laws and regulations.

Director Compensation

The director compensation is determined in accordance with Article 27 of the company's Articles of Association: the company shall allocate the pre-tax profits, after deducting the amount designated for employee compensation and director compensation and any amount reserved for covering losses, with no more than 5% for director compensation.
The payment of directors' compensation is based on four performance indicators: company operating conditions, external evaluations, industry standards, and sustainable development. The detailed breakdown is as follows:

Target	Performance Indicators	Performance Standards	Weighting
Directors	Operating Performance	1.Annual revenue growth rate (20%) 2.Pre-tax net profit growth rate (15%) 3.Operating profit growth rate (10%) 4.Return on equity growth rate (10%)	55%
	External Evaluation	1.Improvement in corporate governance evaluation score/ranking (10%) 2.100% completion rate of board members' annual continuing education (10%)	20%
	Industry Standards	Compensation of directors in listed companies within the same industry and the industry average (10%)	10%
	Sustainable Development	1.Corporate governance transparency (3%) 2.Smart manufacturing transformation (3%) 3.Sustainable procurement responsibility (3%) 4.Promotion of low-carbon and green energy (2%) 5.Occupational health and safety (2%) 6.Talent development and career sustainability (2%)	15%

Employee Compensation ( Including manager)

The employee compensation is determined in accordance with Article 27 of the company's Articles of Association: the company shall allocate the pre-tax profits, after deducting the amount designated for employee compensation and director compensation and any amount reserved for covering losses, with at least 3.5% set aside for employee compensation.
The company has established the "Employee Performance Evaluation Management Measures," to evaluate the manager performance, which, in addition to considering objective factors such as seniority, experience, and rewards and punishments, also evaluates managers based on three key areas: job execution ability (50%), leadership and coordination skills (40%), and project management (10%). The comprehensive evaluation of the manager's work performance serves as the basis for determining the manager's compensation.