Corporate Governance

Corporate Governance Division & Responsibilities

In order to strengthen corporate governance, establish a solid foundation for business development, provide quality products and services in the market, and pay attention to the interests of customers, employees, shareholders and other stakeholders to achieve the vision of sustainable corporate management, the Board of Directors adopted a resolution to appoint a Chief Corporate Governance Officer on March 25, 2021. The current Chief Corporate Governance Officer is Vice President An-Min Kao, who has at least three years of experience as a financial manager at a public company, meeting the legal requirements for a chief corporate governance officer.

I. Main responsibilities of the Chief Corporate Governance Officer

The main responsibilities of the corporate governance officer include providing the Board of Directors and functional committees with information required for their business, assisting directors and committee members in compliance, and convening meetings in accordance with the law, in order to enhance corporate governance and strengthen the functions of the Board of Directors.

II. The following are the activities performed by the Chief Corporate Governance Officer in 2023

Informing, from time to time, the Board of Directors and members of functional committees of the latest revisions and development of the laws and regulations related to KYE’s scope of business and corporate governance.
Examining the confidentiality level of the relevant information, providing directors and committee members with the corporate information they need, and maintaining smooth communication and interaction between directors, committee members and business managers.
Checking whether the shareholders’ meeting and meetings of the Board of Directors and functional committees are held in accordance with the applicable laws and the rules and regulations on corporate governance.
Assisting directors and committee members in and reminding them of compliance with the required laws and regulations when conducting business or adopting resolutions at meetings.
Reviewing and checking the material information in important resolutions before publication to ensure the contents of such information are legal and accurate and maintain symmetry of information between investors.
Maintaining good interaction with investors to ensure that shareholders are able to obtain sufficient information to assess the reasonable value of a business in the capital market.
Setting and giving a seven-day prior notice to directors and committee members of the agenda of the meetings of the Board of Directors and functional committees, convening meetings and providing meeting information, giving prior notice of issues requiring avoidance of conflicts of interest, and completing the meeting minutes within 20 days after the end of meetings.
Registering the date of any shareholders’ meeting in advance as required by law, preparing a meeting notice, a meeting handbook and meeting minutes within the legally required period, and applying for registration of change in the event of amendment to the Articles of Incorporation or a new election of directors.
Conducting evaluations of the performance of the Board of Directors and functional committees and the external evaluation of the performance of the Board of Directors in 2023.
Managing matters concerning the training of directors and communicating information of relevant external training courses on a regular basis to help directors implement the mechanism for diversified training. In 2023, all new and re-elected directors continued to attend training courses in accordance with the “Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies,” with an achievement rate of 100%.

III. Continuous training of the Chief Corporate Governance Officer in 2023

Course title	Category	Training Hours
2023 Conference on Awareness of Prevention of Insider Trading	Corporate governance	3.0
2023 Cathay Sustainable Finance and Climate Change Summit	Corporate sustainability	6.0
Conference on Promotion of Action Plans for the Sustainable Development of TWSE/TPEx-listed Companies	Corporate sustainability	3.0

Policy of Diversity of the Directors
Implementation of Diversity of the Directors
Succession Planning and Implementation for the Directors and Key Management
Resolution of Board of Directors

Policy of Diversity of the Directors

I. Purpose

This policy is established to strengthen corporate governance and promote the sound development of the composition and structure of the Board of Directors.

II. Vision and Objectives

The company aims to enhance the scope of business strategies and decision-making quality through the diversified operation of the Board of Directors. This will enable the company to effectively respond to market risks, thereby achieving the goals of continuously strengthening corporate governance and improving operational efficiency.

III. Policy Statement

In accordance with the company's "Corporate Governance Best Practice Principles," when selecting and reviewing candidates for the Board of Directors (including independent directors), the company not only considers the professional background of the candidates but also formulates appropriate diversification guidelines based on the company's operational development needs. These guidelines should include, but are not limited to, the following two major criteria: (1) Basic Criteria and Values: gender, age, nationality, and culture. (2) Professional Knowledge and Skills: professional background (such as law, accounting, industry, finance, marketing, or technology), professional skills, and industry experience.

IV. Diversification Indicators

To implement the company's policy of board member diversification, the following measurable diversification indicators are established:

Skills and Experience: The company places great emphasis on the professional qualities and industry experience of board members. In addition to having professional knowledge and skills (such as operations management, technology, finance and accounting, marketing, etc.), the current goal is that members should have at least three years of experience as an executive director (including independent directors) or in senior management roles, or hold professional qualifications and licenses. Directors who simultaneously serve as company managers should not exceed one-third of the board seats.
Gender/Age: The company is committed to maintaining a work environment free from gender discrimination. When selecting and reviewing candidates for the Board of Directors (including independent directors), the company will prioritize the qualifications of female candidates to achieve gender balance. The current goal is to have at least one female director. The company’s Board of Directors emphasizes operational judgment, management, and crisis handling abilities, and age is not a primary consideration.
Nationality and Culture: To meet the company’s operational development needs, when selecting and reviewing candidates for the Board of Directors (including independent directors), the company will prioritize the qualifications of candidates who are not of the nationality of the Republic of China, to enhance the international perspective and risk management capabilities of the board members.

Implementation of Diversity of the Directors

Diversity and independence of the Board of Directors

To strengthen corporate governance and facilitate well-developed composition and structure of the Board of Directors, in accordance with the KYE’s “Corporate Governance Best-Practice Principle” states that the election of directors shall be held under a candidate nomination system. For the election of directors (including independent directors), KYE not only takes into account the diverse and professional backgrounds and abilities of directors (including independent directors), but also formulates an appropriate diversity policy based on the needs of KYE’s operational development.

To ensure diversity and independence in the composition of the Board of Directors, KYE does not set any gender or age limit for the directors and mainly considers their operational judgment, business management and crisis management. At present, the diversity goal of the board of directors is to have at least one female director among the board seats, and the number of directors concurrently serving as company executives shall not exceed one-third of the board seats. They should have at least three years of experience as an executive director (including independent directors) or in senior management positions, or hold professional qualifications or licenses. The Board of Directors is currently composed of seven directors, including six men and one woman, all of whom are unrelated. One of whom serves concurrently as a manager. There are three independent directors, with two serving for 6 to 9 years, and one serving for less than 3 years. Four directors are aged 60 to 69, two directors are aged 50 to 59, and one director is aged 30 to 39. Six directors have more than 10 years of experience as executive directors (including independent directors) or in senior management positions, and two directors hold CPA certificates. The board members each possess professional backgrounds and skills in fields of management, technology, financial accounting, and research and development marketing, all of which meet the qualifications and competencies required for their positions. When the company conducted a comprehensive board election in the year 2022, it achieved the specific management goal of board diversity at the current stage.

Implementation of the policy for diversity in members of the Board of Directors

The Board of Directors must provide guidance for KYE’s policies, supervise the management, and report to KYE and its shareholders. All operations and arrangements under the corporate governance system must ensure that the Board of Directors exercises its powers in accordance with the law, the Articles of Incorporation or resolutions of the shareholders’ meeting. The status of implementation by the Board of Directors is as follows:

	Diversified abilities
Directors	Innovation ability	Business experience	Financial accounting	Legal affairs	Industry
Shih-Kun Tso	V	V	V	*	V
Yung-Far Wei	V	V	-	*	V
Han-Liang Hu	V	V	V	V	V
Tseng-Ping Liu	V	V	-	*	V
Hung-Tsu Hsu	V	V	-	*	V
Wan-Ting Su	V	V	V	V	-
Anti Tsai	V	V	-	*	-

*This means the director is partially competent in the field.

	Abilities required
Directors	Business management	Leadership and decision making	Financial accounting	Industrial knowledge	Crisis management	International vision
Shih-Kun Tso	V	V	V	V	V	V
Yung-Far Wei	V	V	-	V	V	V
Han-Liang Hu	V	V	V	V	V	V
Tseng-Ping Liu	V	V	-	V	V	V
Hung-Tsu Hsu	V	V	-	V	V	V
Wan-Ting Su	V	V	V	-	V	V
Anti Tsai	V	V	-	-	V	V

Succession Planning and Implementation for the Directors and Key Management

Succession Planning and Implementation for the Directors

KYE’s directors shall, according to the Articles of Incorporation, be elected under a candidate nomination system for a term of three years in accordance with the Procedures for Election of Directors. The results of evaluation of the performance of the Board of Directors will be used as reference for the selection or nomination of directors. The Corporate Governance Best Practice Principles has set out the abilities required for members of the Board of Directors, with an appropriate diversity policy formulated based on the functions, operating patterns and development needs of KYE. The policy should include, but not be limited to, criteria in the following two aspects:

Basic requirements and values: gender, age, nationality and culture. The directors should include at least one woman.
Professional knowledge and skills: professional backgrounds (e.g. law, accounting, industry, finance, marketing or technology), professional skills (e.g., abilities in operational judgment, accounting and finance, business management, and crisis management, industrial knowledge, international market vision, leadership ability, and decision-making ability) and industrial experience.

A successor director must possess not only outstanding strategic thinking skills, but also the ability to plan for business management and professional experience in KYE’s business. In order to strengthen and continuously improve the functions of the Board of Directors, we have selected courses on corporate governance topics such as finance, risk management, business, commerce, legal affairs, accounting, corporate social responsibility, internal control system and financial reporting responsibilities when planning for the continuous training of directors. We arrange for each director to attend at least six hours of training courses each year to help directors acquire new knowledge, keep up with the times, and get familiar with their roles, functions, responsibilities and obligations on the Board of Directors to effectively implement the corporate governance system.

Currently, all of the Group’s senior managers possess the management and professional abilities required for directors. In the future, they may be included as candidates for directors depending on the actual needs of the operation of the Board of Directors. In the meantime, we will also seek external professional talent and build a database of candidates for directors according to the following criteria:

The candidate must be a person of integrity, responsibility and innovation with decision-making ability, adhere to our core values, and possess professional knowledge and skills helpful for our business management.
The candidate must have industrial experience related to KYE’s business.
The addition of the member is expected to continue to provide KYE with an effective, coordinated and diversified Board of Directors that meets KYE’s needs.
The expertise of the whole Board of Directors must include aspects such as business strategy and management, accounting and taxation, finance, and law.We im

We implement the director succession plan in the following ways:

Current directors recommend appropriate candidates.
Shareholders recommend candidates for directors.
The results of evaluation of the performance of the Board of Directors are used as reference for the nomination of directors for re-election.

Succession Planning and Implementation for the Directors

Senior managers (including the level and above) of the company are considered key management personnel. They are composed of professionals from various fields and are responsible for the relevant business management within the organization. In addition to possessing the necessary professional skills and background, key management personnel must also have values and business philosophies that align with the company's corporate philosophy.

To develop key management personnel and their deputies, the training mechanism includes not only professional skills and corporate governance-related courses but also participation in board meetings and regular internal key management meetings. Practical training in project management is also provided.

The company conducts annual employee performance evaluations. Through daily observations and performance assessments, the company identifies areas for improvement, personal development needs, and company expectations. The results of these evaluations serve as a reference for future succession planning.

Internal Audit Organization and Operation

The design, implementation, and internal audit of the company’s internal control system are handled according to "Regulations Governing Establishment of Internal Control Systems by Public Companies" and related regulations.

Purpose of Internal Audit

The purpose of internal audit is to assist the Board of Directors and management in identifying and reviewing deficiencies in the internal control system, assessing the effectiveness and efficiency of operations, and providing timely improvement recommendations. This ensures that the internal control system continues to be effectively implemented and serves as a basis for reviewing and revising the internal control system.

Audit Scope

The audit covers all units of the company and its subsidiaries.

Internal Audit Organization

The company's Audit Department is an independent unit reporting directly to the Board of Directors. It is staffed with qualified internal auditors and deputy auditors based on business, management needs, and relevant regulations. The names, ages, educational backgrounds, experience, years of service, and training of internal auditors and deputy auditors are reported to the Financial Supervisory Commission (FSC) in the required format by the end of January each year via an internet information system.

Operation of Internal Audit

Internal auditors, maintaining an independent and objective stance, perform their duties with the necessary professional diligence. They should formulate an annual audit plan based on risk assessments, including controls over significant transaction cycles, major financial transactions, oversight and management of subsidiaries, and information security checks. This plan must be approved by the Board of Directors, and the execution of the annual audit plan is reported regularly to the Board.

Appointment and Dismissal of Internal Auditors

In accordance with the company’s "Personnel Regulations," "Human Resources Requirements and Appointments," and "Performance Evaluation" policies, the appointment, evaluation, and compensation of internal auditors must be approved by the Audit Supervisor and submitted to the Chairman for final approval. The appointment and dismissal of the Audit Supervisor must be approved by the Audit Committee and reported to the Board of Directors for resolution.

Statement of Internal Control System

Communication Between Independent Directors and the Chief Internal Auditor and CPAs

I. Communication Channel

At least two regular meetings among the independent directors and CPAs are called every year. The CPAs report the financial conditions of KYE, the financial conditions and overall operations of domestic and foreign subsidiaries and the status of internal audit to the independent directors, and adequately communicate whether there are any significant adjusting journal entries or impact on the account records due to the amendment of related laws. In the event of any material irregularity, they may hold a meeting at any time.
The chief internal auditor and independent directors meet regularly to give reports on the implementation of audits and the operation of internal control, and to communicate and respond to the inquiries of independent directors in person, at least on a quarterly basis. All independent directors are promptly informed of the status of implementation of internal audits. In the event of any material irregularity, they may hold a meeting at any time or contact the chief auditor directly by phone for discussion.

II. Communication

Summary of communication between independent directors and the chief internal auditor in 2023 and 2024

Date	Attendees	Subject of communication	Result of communication
March 14, 2023	Independent Director Hung-Tsu Hsu Independent Director Wan-Ting Su Independent Director Anti Tsai	Report on the internal audit work from December 2022 to February 2023 The results of self-assessment and the statement of internal control for 2022	Approved without objection or amendment Approved without objection or amendment
May 9, 2023	Independent Director Hung-Tsu Hsu Independent Director Wan-Ting Su Independent Director Anti Tsai	Report on the internal audit work from March to April 2023	Approved without objection or amendment
August 8, 2023	Independent Director Hung-Tsu Hsu Independent Director Wan-Ting Su Independent Director Anti Tsai	Report on the internal audit work from May to July 2023	Approved without objection or amendment
November 7, 2023	Independent Director Hung-Tsu Hsu Independent Director Wan-Ting Su Independent Director Anti Tsai	Report on the internal audit work from August to October 2023	Approved without objection or amendment
December 26, 2023	Independent Director Hung-Tsu Hsu Independent Director Wan-Ting Su Independent Director Anti Tsai	Report on the internal audit work for November 2023 Amendments to the internal control system, implementation rules of internal audit, and administrative regulations The 2024 audit plan	Approved without objection or amendment Approved without objection or amendment Approved without objection or amendment
March 12, 2024	Independent Director Hung-Tsu Hsu Independent Director Wan-Ting Su Independent Director Anti Tsai	Report on the internal audit work from December 2023 to February 2024 The results of self-assessment and the statement of internal control for 2023	Approved without objection or amendment Approved without objection or amendment
May 3, 2024	Independent Director Hung-Tsu Hsu Independent Director Wan-Ting Su Independent Director Anti Tsai	Report on the internal audit work from March to April 2024	Approved without objection or amendment
August 9, 2024	Independent Director Hung-Tsu Hsu Independent Director Wan-Ting Su Independent Director Anti Tsai	Report on the internal audit work from May to June 2024	Approved without objection or amendment
November 8, 2024	Independent Director Hung-Tsu Hsu Independent Director Wan-Ting Su Independent Director Anti Tsai	Report on the internal audit work from July to October 2024 Amendment of the “Internal Control System Self-assessment Process”	Approved without objection or amendment Approved without objection or amendment

Conclusion: The company's independent directors have good communication with the chief internal auditor.

Summary of communication between independent directors and CPAs in 2023 and 2024

Date	Attendees	Subject of communication	Result of communication
March 14, 2023	Independent Director Hung-Tsu Hsu Independent Director Wan-Ting Su Independent Director Anti Tsai CPA Yao-Lin Huang Assistant Vice President of Deloitte Taiwan Kai-Tang Chan Chief Internal Auditor Yi-Chen Chen	The CPAs gave a report on the result of audit of the 2022 consolidated and parent-only financial reports. The independent directors did not raise any opinion of material anomaly regarding the result of audit of the 2022 consolidated and parent-only financial reports. The explanation of the missing internal control recommendation letter and improvement suggestions. The CPAs engaged in communication and discussion regarding important issues of updates to laws and regulations. The “CPA firm’s Audit Quality Indicators (AQI)” in 2021. The CPAs gave an explanation for questions raised by the Audit Committee.	The independent directors adequately communicated with the CPAs and did not raise any objection. The annual financial report was approved by the Audit Committee and submitted to and approved by the Board of Directors. It was then published and submitted to the competent authority as scheduled.
December 26, 2023	Independent Director Hung-Tsu Hsu Independent Director Wan-Ting Su Independent Director Anti Tsai CPA Yao-Lin Huang Assistant Vice President of Deloitte Taiwan Kai-Tang Chan Chief Internal Auditor Yi-Chen Chen	The CPA communicates with the corporate governance unit regarding the audit planning and pre-audit matters for the financial statements for the fiscal year 2023, including: The method and scope of audit. Significant risks and key audit matters. Quality Management System of Deloitte Taiwan. Declaration on the independence. The responsibilities of the governance unit.	The independent directors adequately communicated with the CPAs and did not raise any objection.
March 12, 2024	Independent Director Hung-Tsu Hsu Independent Director Wan-Ting Su Independent Director Anti Tsai CPA Han-Ni Fang Assistant Vice President of Deloitte Taiwan Kai-Tang Chan Chief Internal Auditor Yi-Chen Chen	The CPAs gave a report on the objective, scope, process, and result of audit of the 2023 consolidated and parent-only financial reports.	The independent directors adequately communicated with the CPAs and did not raise any objection.

Date

Attendees

Subject of communication

Result of communication

March 14, 2023

Independent Director Hung-Tsu Hsu
Independent Director Wan-Ting Su
Independent Director Anti Tsai
CPA Yao-Lin Huang
Assistant Vice President of Deloitte Taiwan Kai-Tang Chan
Chief Internal Auditor Yi-Chen Chen

The CPAs gave a report on the result of audit of the 2022 consolidated and parent-only financial reports.
The independent directors did not raise any opinion of material anomaly regarding the result of audit of the 2022 consolidated and parent-only financial reports.
The explanation of the missing internal control recommendation letter and improvement suggestions.
The CPAs engaged in communication and discussion regarding important issues of updates to laws and regulations.
The “CPA firm’s Audit Quality Indicators (AQI)” in 2021.
The CPAs gave an explanation for questions raised by the Audit Committee.

The independent directors adequately communicated with the CPAs and did not raise any objection.
The annual financial report was approved by the Audit Committee and submitted to and approved by the Board of Directors. It was then published and submitted to the competent authority as scheduled.

December 26, 2023

The CPA communicates with the corporate governance unit regarding the audit planning and pre-audit matters for the financial statements for the fiscal year 2023, including:

The method and scope of audit.
Significant risks and key audit matters.
Quality Management System of Deloitte Taiwan.
Declaration on the independence.
The responsibilities of the governance unit.

The independent directors adequately communicated with the CPAs and did not raise any objection.

March 12, 2024

Independent Director Hung-Tsu Hsu
Independent Director Wan-Ting Su
Independent Director Anti Tsai
CPA Han-Ni Fang
Assistant Vice President of Deloitte Taiwan Kai-Tang Chan
Chief Internal Auditor Yi-Chen Chen

The CPAs gave a report on the objective, scope, process, and result of audit of the 2023 consolidated and parent-only financial reports.

The independent directors adequately communicated with the CPAs and did not raise any objection.

Conclusion: The company's independent directors have good communication with CPAs.

Corporate Governance

Corporate Governance Division & Responsibilities

I. Main responsibilities of the Chief Corporate Governance Officer

II. The following are the activities performed by the Chief Corporate Governance Officer in 2023

III. Continuous training of the Chief Corporate Governance Officer in 2023

Policy of Diversity of the Directors

I. Purpose

II. Vision and Objectives

III. Policy Statement

IV. Diversification Indicators

Implementation of Diversity of the Directors

Diversity and independence of the Board of Directors

Implementation of the policy for diversity in members of the Board of Directors

Succession Planning and Implementation for the Directors and Key Management

Succession Planning and Implementation for the Directors

Succession Planning and Implementation for the Directors

Resolution of Board of Directors

Functional Committees

Annual Evaluation Result

Internal Audit Organization and Operation

Purpose of Internal Audit

Audit Scope

Internal Audit Organization

Operation of Internal Audit

Appointment and Dismissal of Internal Auditors

Statement of Internal Control System

Communication Between Independent Directors and the Chief Internal Auditor and CPAs

I. Communication Channel

II. Communication

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