Corporate Governance

1. The current Board of Directors is the 19th term from 2019/06/18 to 2022/06/17.
Pursuant to the Articles of Incorporation, the Company has seven to nine directors (no less than three independent directors) with a term of three years and can be re-elected. The candidate nomination system is adopted for the election of directors, and directors are elected during a shareholders' meeting from the list of candidates.

The Board of Directors is accountable to the shareholders' meeting, and the operations and arrangements of the corporate governance system ensure that the Board of Directors fulfills its responsibilities in accordance with the law, Articles of Incorporation, and resolutions of shareholders' meetings.
The candidate nomination system is used for the nomination and election of Board members in accordance with the Articles of Incorporation. Besides evaluating the education and experience of candidates, the opinions of stakeholders are also taken into consideration, and elections are held in accordance with the Rules Governing the Election of Directors and Corporate Governance Best Practice Principles, in order to ensure the diversity and independence of Board members.

3. The Company considers the diversity of Board members, and formulates an appropriate diversity policy based on it's business operations and development needs. Board members have the knowledge, skills, and literacy necessary to perform their duties. We set the goal to lower the percentage of directors who are concurrently employees of the Company to under 15% to achieve the goals of corporate governance, and the percentage was lowered to 12.5% this term; we also set the goal to increase the percentage of independent directors to 35% and above, and increased it to 37.5% this term. One independent director has served as independent director for 9 years and above, and two have served as independent director for 3 years or less. Board members are highly experienced and experts in the field of finance, commerce, and business administration.

The Audit Committee aims to assist the Board of Directors in performing its supervisory responsibilities, to ensure quality and integrity in the accounting, auditing, and financial reporting processes, as well as financial control. Matters reviewed by the Audit Committee include: Financial statements, auditing and accounting policy and procedures, internal control system, asset transactions or derivatives trading of a material nature, providing loans, endorsements, or guarantees to others, offering or issuance of securities, compliance, whether or not managers and directors engaged in related party transactions or have a conflict o interest, employee grievance reports, corruption investigation reports, the Company's risk management, the hiring, dismissal, and remuneration of accountants, and the appointment and dismissal of financial, accounting, and internal audit officers.

The Company established an Audit Committee after the 2019 shareholders' meeting. The committee is formed by all independent directors (3 in total), in which one independent director who is a CPA serves as the chairperson and convener of the committee.

The Audit Committee has the right to conduct any review and investigation appropriate to perform its duties in accordance with the Audit Committee Charter, and has direct communication channels with the Company's internal auditors, accountants, and all employees. The Audit Committee has the right to hire and supervise lawyers, accountants, or other consultants, and assist them with performing their duties.

The Remuneration Committee aims to assist the Board of Directors in implementing and evaluating the Company's overall salary and benefits system, as well as the remuneration of directors and managers.

The Company has established a Remuneration Committee in accordance with applicable laws. The Remuneration Committee consists of three independent directors, in which one independent director serves as the chairperson and convener. Remuneration Committee members are appointed by the Board of Directors and required to faithfully perform the following duties with the due care of a good administrator. Recommendations of the Remuneration Committee are submitted to the Board of Directors for discussion.

I. Establishes and periodically reviews the performance evaluation and policies, system, standards, and structure of the compensations for directors and managers.
II. Periodically evaluates and establishes the remuneration of directors and managers.

The Remuneration Committee is required to convene at least two meetings a year. Please see the Company's annual report for the status of Remuneration Committee meetings and the attendance of each member.

The Company established a Corporate Social Responsibility (CSR) Committee in accordance with the "SZS Corporate Social Responsibility Promotion and Management Regulations." Members of the committee include directors of various units and centers. The committee is the highest level authority for the Company's corporate social responsibility policy and related procedures.

Externally, the committee represents the Company in handling CSR related affairs. Internally, the committee oversees the establishment, implementation, and maintenance of the CSR system, and assists the Company in implementing and providing feedback on annual CSR goals.

A management review meeting is convened in January each year in accordance with the Regulations to examine the contents of CSR and attainment of goals in the previous year. Depending on the situation, the SZS Corporate Social Responsibility Promotion and Management Regulations are adjusted and amended for the following year, implementation goals and management plans are set based on the actual situation, and then submitted to the Board of Directors.

(1) SZS's "Articles of Association" stipulates that the election of directors shall adopt the candidate nomination system, and in the "Code of Practice for Corporate Governance" and "Director Election Method", it is stipulated that the composition of the board of directors should be diversified, and the company's own operation, business model and Development needs to formulate a diversified policy, including but not limited to basic conditions and values, professional knowledge and skills and other two aspects of the standard.

(2) SZS's on-going director election (succession) plan builds a director candidate database based on the following criteria:

• Integrity, responsibility, innovation and decision-making power, consistent with the company's core values Possess professional knowledge and skills that help the company's operation and management.

• Have industry experience related to the business of the company.

• It is expected that the addition of this member will continue to provide the company with an effective, synergistic, diverse board that meets the company's needs. It is also advisable to set up at least one female director, and the expertise of the overall board should include corporate strategy, sustainable development, accounting and taxation, finance, law, administrative management and production management. The selection process of the company's list of director candidates must comply with the qualification review and relevant specifications to ensure that when there is a vacancy in the number of directors or planning to increase, it can effectively identify and select suitable new director candidates.

(3) SZS has specified the "Measures for the Performance Evaluation of the Board of Directors". The measurement items of performance evaluation include control of the company's goals and tasks, recognition of responsibilities, participation in operations, internal relationship management and communication, professional functions and training, internal control and specific opinions. Statements, etc., to confirm the effective operation of the board of directors, and to evaluate the performance of directors, as a reference for the selection of directors in the future.

(1) The HR department will coordinate the establishment of the inheritance talent development mechanism, define key positions, submit 2 to 3 inheritance candidates for each key position, and specify the timetable for succession, which is divided into two years, two (inclusive) ~ four Years, four (inclusive) to six years, six (inclusive) years and above four preparation schedules.

(2) Conduct a strategic consensus camp for senior executives (including general managers), conduct training once a year, and conduct subject courses and discussions on future strategic planning. Course topics include system thinking, performance management and talent management, high-performance leadership, organizational change and continuous updating , change management, strategic thinking and planning and leadership career growth, talent development and leadership inheritance, strategy maps, leadership talent development and systems, etc.

(3) Once a year, the leadership team (middle and senior executives) management talent training is conducted. Through the sharing of external industry knowledge, new technological knowledge and benchmarking enterprise models, we can understand the latest management thinking and the pulse of the times. Leadership experience, sharing the company's organizational culture and leadership practices in business management.