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      Corporate governance status
      1. Has the Company established and disclosed its rules of corporate governance in accordance with the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies?

      In accordance with the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies, the Company established its Corporate Governance Best-Practice Principles on May 12, 2011, which was amended after a resolution was adopted by the Board of Directors on February 17, 2022, with disclosure announced on the Company’s website and MOPS.

      2. Equity structure and shareholders’ equity

      (I) Has the Company established internal procedures to handle shareholders’ suggestions, doubts, disputes, and litigation matters; and have the procedures been implemented accordingly?

      The Company has set up the “Whistleblower Reporting and Protection Procedures” to handle matters concerning shareholders’ rights and interests as well as disputes. Moreover, the Company has also set up a shareholder service unit to provide shareholder services, as well as a legal affairs unit to handle disputes and litigation matters in accordance with applicable procedures.

      (II)Does the Company possess the list of the Company’s principal shareholders and the list of the ultimate controllers of the major shareholders?

      Yes. The Company regularly keeps abreast of the list of the Company’s principal shareholders and the list of the ultimate controllers of the major shareholders.

      (III)Does the Company establish and implement the risk control and firewall mechanisms with the related parties?

      The Company has established the “Procedure for Transactions between Enterprise Groups, Specified Companies and Related Parties” to govern the Company’s financial and business transactions between enterprise groups, specified companies and related parties to safeguard the Company’s interests, while protecting its shareholders.

      (IV) Does the Company set up internal norms to prohibit insiders from utilizing the undisclosed information to trade securities?

      The Company has formulated the CMMT Procedures for Handling Material Inside Information to prohibit Company insiders, such as directors or employees, from trading securities using information that has not yet been disclosed on the market to gain illegal profit. The Company regularly offers legal education and training on insider trading for new insiders and employees every year. We have completed relevant legal education and training for all insiders in 2021 as required. Relevant course materials are placed on the Company’s internal website for relevant employees to refer to at any time, to duly increase their awareness of insider trading prevention. The responsible unit regularly tracks and examines the test results of new insiders and all employees to actively promote the values of insider trading prevention, integrity, and ethics, thereby strengthening corporate governance and risk control and establishing a corporate culture of integrity to improve operations.

      In 2021, the Company offered education and training to a total of 552 incumbent directors, managers, and employees.

      3. The Composition of the Board of Directors and Their Duties

      (I)The Company’s Corporate Governance Best-Practice Principles state that the composition of the board should take diversification into consideration. Hence the number of directors who concurrently serve as managers of the Company shall not exceed one-third of the number of directors, and suitable diversification guidelines have been drawn up for board operations, business models, and development requirements. The criteria should include, but are not limited to, the following two major aspects: I. Basic requirements and values: Gender, age, nationality, and culture. II. Professional knowledge and skills: Professional background (e.g., law, accounting, industry, finance, marketing or technology), professional skills and industry experience.

      The Company’s board diversification guidelines offer 8 indicators based on industry experience and professional discipline: business management, technical R&D, internationalization, marketing, accounting and finance, law, corporate governance, and environmental technology. The industry experience and professional discipline of the Company’s eight directors encompass all 8 indicators; in particular, 12.5%, 25%, 37.5%, and 25% of the directors satisfy 5, 4, 3, and 2 indicators, respectively.

      Company directors and independent directors who are also employees account for 12.5% and 37.5%, respectively. 1 director falls in the 40-50 years old age group, 4 fall in the 50-60 years old age group, 1 falls in the 60-70 years old age group, and 2 fall in the 70-80 years old age group.

      The Company’s specific management objectives of its diversity policy and status of achievement:

      Management objective


      More than 2 independent directors


      Less than one-third of directors concurrently serve as managerial officers


      At least one female director (Note)


      Note: On March 13, 2023, Abraham Investment Co. assigned Ms. Sung Yen-Yi as its representative as a corporate director

      (II) Apart from the Remuneration Committee and Audit Committee, has the Company assembled other functional committees at its own discretion?

      Apart from the Remuneration Committee and Audit Committee, the Company established the Sustainable Development Committee upon approval by the Board of Directors on December 30, 2022. The convenors of the three aforementioned committees are independent directors.

      (III) Has the Company established the Regulations Governing the Board Performance Evaluation and its evaluation methods, and does the Company perform a regular performance evaluation each year and submit the results of performance evaluations to the board of directors and use them as reference in determining compensation for individual directors, their nomination, and additional office terms?

      The Company passed the formulation of the Regulations Governing the Board Performance Evaluation on January 29, 2021. At least one internal performance evaluation is performed each year and the result is reported to the board of directors to be used as a reference for directors’ remuneration and candidate nomination.

      The scope of the overall performance evaluation of the board of directors of the Company covers the following 5 aspects, with a total of 45 items evaluated:

      I. Participation in the operation of the Company.

      II. Improvement of the quality of the board of directors’ decision making.

      III. Composition and structure of the board of directors.

      IV. Election and continuing education of the directors.

      V. Internal control.

      The scope of the self-performance evaluation of the Company’s board members covers the following 6 aspects, with a total of 23 items evaluated:

      I. Their grasp of the Company’s goals and missions.

      II. Their recognition of duties of the functional committee.

      III. Participation in the operation of the Company;

      IV. Their management of internal relationships and communication.

      V. Their management of internal relationships and communication.

      VI. Internal control.

      The scope of the performance evaluation of the Company’s functional committee covers the following 5 aspects, with a total of 26 items evaluated:

      I. Participation in the operation of the Company.

      II. Their recognition of the duties of the functional committee.

      III. Improvement in the quality of decision making by the functional committee.

      IV. The composition of the functional committee, and election and appointment of committee members.

      V. Internal control.

      The performance evaluation stated above was carried out and compiled by members of the board, members of the functional committee, and the stock affairs office before the end of 2023 Q1.

      The evaluation was conducted using an internal questionnaire.

      The result of the director performance evaluation stated above is provided to directors and is used as a reference basis for determining their remuneration as well as for nominating directors or selecting remuneration committee members.

      The overall performance evaluation results for the 2022 Board of Directors was excellent, and the board was able to perform its functions properly. It scored an average of 4.7 out of 5.

      The performance evaluation result for the functional committee is excellent and that it is able to perform functions properly. It scored an average of 4.9 out of 5.

      The members on the board in 2022 did not make any other suggestions. The aforementioned evaluation results were submitted to the board meeting held on March 13, 2023.

      (IV) Is an external auditor’s independence assessed by the Company on a regular basis?

      The Audit Committee of the Company evaluates the professionalism and independence of the CPAs once a year and then submits the evaluation results to the Board of Directors. The latest evaluation was discussed and approved by the Audit Committee on January 16, 2023, and was submitted for approval by the Board of Directors on January 16, 2023.

      I. The evaluation items for the independence of CPAs are as follows:

      1. Whether the CPA has a direct or significant indirect financial interest relationship with the Company.

      2. Whether the CPA engages in any financing or guarantee for the Company or its directors.

      3. Whether the CPA has a close business relationship and potential employment relationship with the Company.

      4. Whether the CPA or their audit team members have served as directors, supervisors, or managers at the Company or held a position with a significant influence on the Company’s audit case currently or within the last two years.

      5. Whether the CPA has provided the Company with non-audit services that may directly affect the audit work.

      6. Whether the CPA has served as a broker for the shares or other securities issued by the Company.

      7. Whether the CPA has acted as the Company’s defender or represented the Company in coordinating conflicts with other third parties.

      8. Whether the CPA is a relative of any director or manager of the Company or a person with a significant influence on the audit work.

      II. Whether the independence and suitability of the certified public accountants are assessed based on audit quality indicators (AQIs): Yes.

      Based on the AQIs indicator information, it is confirmed that the audit experience, training hours, and the proportion of audit personnel in the professional audit department of the certified public accountant are all better than the industry average; In order to improve audit quality, the firm is continuously committed to digital transformation work and has established digital strategies and goals to import relevant system tools.

      Evaluation result: The CPAs have passed the Company’s independent evaluation criteria.

      4. Is the Company a TWSE/TPEx listed company, and has the Company designated an appropriate number of personnel that specialize (or are involved) in corporate governance affairs (including but not limited to providing directors/supervisors with the information needed and assisting directors and supervisors in complying with laws and regulations to perform their duties, convene board meetings and shareholders meetings, prepare board meeting and shareholders meeting minutes, etc.)?

      As per Article 3-1 of the Company’s Corporate Governance Best-Practice Principles, the Company has designated the Service Office as the unit in charge of corporate governance affairs and has staffed it with qualified and an appropriate number of corporate governance personnel. As per the regulations on the appointment of the corporate governance executive, the Board of Directors has passed a resolution to appoint Lian Wei-Chung, Vice President and CFO, as the chief corporate governance officer to protect shareholders’ rights and interests and reinforce the board’s functions. He has held managerial positions in charge of the legal affairs, stock affairs, and corporate governance at publicly listed companies for more than three years. He is mainly responsible for business registration and matters associated with the convening of board meetings, meetings of the Audit Committee and the Remuneration Committee, and shareholders’ meetings, while assisting board members with taking office and continuing education, providing assistance to directors with compliance, and handling matters related to investor relations, to improve the effectiveness of corporate governance comprehensively. The implementation of corporate governance has been reported to the Company’s Board of Directors on March 16, 2022, and will be reported to the Board of Directors regularly every year.



      5. Has the Company established mechanisms for communicating with stakeholders (including but not limited to shareholders, employees, clients, and suppliers) and a stakeholder site on the Company website to appropriately respond to material CSR topics stakeholders are concerned about?

      The Company has established communication channels with its stakeholders and responds accordingly to its stakeholders regarding important issues of their concern. There is a section on the Company’s website (www.huanengdx.com) dedicated to stakeholders. The website contains information on the major contact persons and communication channels: Spokesperson: Huang Pei-Ming, Acting spokesperson: Ma Shao-Heng; contact number: 06-5889988; and email: cmmt_ir@cmmt.com.tw. Please contact the contact persons for detailed contact information.


      6. Has the Company appointed a professional shareholder services agent to process the affairs related to shareholders’ meetings?

      The Company has appointed a professional shareholders service agent to process the affairs related to shareholders’ meetings :

      Stock Transfer Agency Department, Capital Securities Corp.




      7. Information disclosure

      (I) Does the Company have a website set up and disclosed financial business and corporate governance information?

      The Company discloses its financial and corporate governance information on the website (www.huanengdx.com).

      (II)Has the company adopted other information disclosure methods (such as, establishing an English website, designating a responsible person for collecting and disclosing information of the Company, substantiating the spokesman system, placing the juristic person seminar program on the Company’s website, etc.)?

      The Company has an official website in English to disclose financial, business, and corporate governance information. The Company has established a spokesperson, and a stock affairs department responsible to disclose relevant information in accordance with the regulations. The Company’s website also discloses relevant information on the investor conference.


      (III) Has the Company published and reported its annual financial report within two months after the end of a fiscal year, and published and reported its financial reports for the first, second, and third quarters, as well as its operating status for each month before the specified deadline.

      The Company announces its financial report within 3 months after the end of an accounting year and publishes its operational information on time.

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