Implementation Status and Deviations from Principles

Non-implementation and Its Reason(s)

1. Does the company establish and disclose the Corporate Governance Best-Practice Principles based on “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”?

The company has established the LITE-ON Technology Corporation Corporate Governance Best Practice Principles based on the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies. The Company's Best Practice Principles have been passed and implemented by resolution of a board of directors meeting, and disclosed and made the principles available for download on the company website. In addition to compliance with the laws and regulations, the company's corporate governance practices are built within an effective corporate governance framework to protect the shareholders' rights, strengthen the board's functions, ensure respect for stakeholders' rights, and increase transparency.

In compliance with the Best Practice Principles

2. Shareholding Structure & Shareholders’ Rights.

(1) Does Company have Internal Operation Procedures for handling shareholders’ suggestions, concerns, disputes and litigation matters. If yes, has these procedures been implemented accordingly?

(1) The company has set up internal operation procedures and appointed a spokesperson, a deputy spokesperson, and representatives of legal department to handle shareholders’ suggestions, concerns, disputes and litigation matters. The procedures have been implemented accordingly.

In compliance with the Best Practice Principles

(2) Does Company possess a list of major shareholders and beneficial owners of these major shareholders?

(2) The company is able to track shareholding by principal shareholders who hold 10% or more of the company's shares. The company also files the information with the authority as required.

In compliance with the Best Practice Principles

(3) Has the Company built and executed a risk management system and“firewall” between the Company and its affiliates?

(3) The company has established the Subsidiary Management Guidelines and the Operating Procedures for Management, Business, and Financial Interactions between Affiliates to keep risks between the company and its affiliates under adequate control and create a sufficient firewall.

In compliance with the Best Practice Principles

(4) Has the Company established internal rules prohibiting insider trading on undisclosed information?

(4)

A. The company has implemented “the Material Insider Information Procedures” (including major data processing, transmission, confidentiality, preservation, disclosure mechanisms and insider transaction prevention, laws and regulations, etc.), expressly stipulating that directors, managers and employees must not disclose Known internal material information to others, not to inquire or collect from companies who have knowledge of the company's internal material information. Company's undisclosed internal material information that is not related to his or her position, and to know the company's undisclosed internal material information for non-execution of business It must not be disclosed to others.

B. The Company arranges for its directors to take 6 hours of continuing education each year; it also educates current directors on laws and regulations related to prevention of insider trading at least once per year. The "Material Insider Information Procedures” is listed as an annual compulsory education and training for all colleagues (including new recruits). It is aimed at the major violations of the company's internal major information (such as insider trading), the huge impact that the behavior may have on the company, and the law Disciplinary regulations and other propaganda were conducted to guide colleagues to review the attitudes and legal procedures that should be followed when handling important information within the company. Course briefings and video files are placed in the internal staff system throughout the year, providing a variety of learning channels for all colleagues. For course name, number of students, and duration, please refer to "5. Operational Highlights-5.5 Labor elations" of this annual report.

In compliance with the Best Practice Principles

3. Composition and Responsibilities of the Board of Directors

(1) Has Board of Directors established a diversification policy and a specific management goal, and has it been implemented accordingly?

(1) The company has stated explicitly its board diversity policy in the Corporate Governance Best Practice Principles. The company considers the industry and professional background and the field of work and experience of individuals and selects candidates with the knowledge, skills, and disposition necessary to perform the duties to be its directors. The company's business operations and its overall development can derive benefits from the approach. And implement the specific management objectives of directors concurrently serving as company officers not exceed one-third of the total number of the board members.

The board of directors of the company must be composed of experts and scholars from industry, finance, business, investment, information, and communications. Over half of the board members must have industry experience, and there is at least one person in each professional field covering operational judgment, salary management, corporate governance, business management, information security, risk management, and sustainable development management; it is actively looking for one female director.

In compliance with the Best Practice Principles

(2) Does the company voluntarily establish other functional committees in addition to the Compensation Committee and the Audit Committee?

(2) In addition to establishing the Audit Committee(Set in 2007) and the Compensation Committee(Set in 2008) as required by law, the company has created below functional committees.

A. The Growth Strategy committee(Set in 2010) is authorized by board of directors to direct and review the company and the Group's overall growth strategies and to preview the important

investment projects.

B. To be in accordance with the international trend of sustainable governance, LITEON had passed the proposal to set up the Corporate Sustainability Committee (Set in 2019) that directly report to the Board. The committee is responsible for scheming up sustainable development policy, extended determination and supervision. Nine subcommittees are comprised in the committee and in charge of the promotion and practice of the work in RBA, social involvement, sustainable supply chain management, environmental sustainability, green design, public relations, risk management, ethical operation and information security aspect according to the authority.

C. Nomination Committee(Set in 2021) enables a stronger director election mechanism, and builds a board with better professionally trained members from various backgrounds. The committee is responsible for setting the criteria for qualified directors and executive officers. These criteria provide the basis for searching and nominating candidates, establishing and developing the organizational structure for the board and its committees, and devising and regularly reviewing continuing training plans for directors and director and executive officer succession plans.

In compliance with the Best Practice Principles

(3) Has the Company established methodology for evaluating the performance of its Board of Directors, on an annual basis and submit the results of performance assessments to the board of directors and use them as reference in determining compensation for individual directors, their nomination and additional office term?

(3) The company has implemented the Rules for Evaluating Board of Directors and Functional Committee Performance, and has been performing board performance evaluation every year. The methods of evaluation include the internal evaluation of the board, self_e-valuation by individual board members, and internal evaluation of the functional committee. External professional institutions or teams of experts and scholars are hired to perform evaluation every three years.

The performance evaluation results of Board of Directors and Functional Committees of the Company for the year 2023 are used as a reference when electing or nominating members of the board of directors, and base its determination of an individual director's remuneration on the evaluation results of his or her performance. The Company reported the evaluation results in the first quarter Compensation Committee (Feb.21, 2024), Nomination Committee (Feb.21, 2024)and board meeting (Feb.26, 2024), the results will be a reference for enhancing the professional competence of the Board of Directors and had been announced on the company website for investors’ reference.

In compliance with the Best Practice Principles

(4) Does the Company regularly evaluate its external auditors’ independence?

(4) The Audit Committee of the company evaluates the independence and competency of the Certificated Public Accountants (CPA) every year. In addition to requiring the CPA to provide "declarations of impartiality and independence", the evaluation is conducted based on the independence assessment criteria specified in Note 1 and the Audit Quality Indicators (AQI) in Note 2. The company has confirmed that apart from the certification and finance and tax

related handling charges between the CPA and the company, there exist no financial interest or business relationship between any of the CPA and the company, and none of the CPA's family members is in violation of the independence requirement. The company also considers the AQI, make sure that the CPA and the CPA firm have sufficient audit experience and training hours, and they have been continuously adopting digital audit tools over the past three years to enhance audit quality. The recent year’s evaluation result of the CPA’s independence was approved by the board of directors on February 26, 2024.

In compliance with the Best Practice Principles

4. Does the TWSE/TPEx listed company have in place an adequate number of qualified corporate governance officers and appoint a corporate governance supervisor to be responsible for corporate governance practices (including but not limited to providing information necessary for directors and supervisors to perform their duties, aiding directors and supervisors in complying with the laws, organizing board meetings and annual general meetings as required by law, and compiling minutes of board meetings and annual general meetings)?

Through a company resolution passed by the board of directors meeting on February 26, 2019, the company appoints Jean Hong, vice president of the Finance Department and Board Secretariat, as the corporate governance officer responsible for protecting the shareholders' rights and making the board function more effectively. Ms. Jean Hong has a minimum of ten-year experience in conducting financial operations and business meetings in a management capacity in listed companies. The main duties are the following:

1. Formulating company policies and an appropriate organizational structure to facilitate independence of the board of directors, transparency of the company, and effective implementation of compliance, internal audit and internal control.
2. Reporting to the board of directors, directors, and the functional committees on the status of corporate governance practices in the company, and checking if shareholders meetings and board meetings are called in compliance with the applicable regulations and corporate governance principles.
3. Inviting suggestions from directors prior to a board meeting to facilitate preparation of the meeting agenda; and giving a minimum of 7-day notice to all directors to attend a meeting and providing sufficient materials for the directors to familiarize themselves with the items. Giving prior notice to the individuals involved in the presence of items that involve stakeholder interest and require recusal.
4. Registering the date of shareholders meeting and preparing and filing with the authority the shareholders meeting notice, agenda, and minutes by the statutory deadline every year; and completing the procedures after an amendment of the Articles of Incorporation or an election of directors.
5. Inspecting the disclosure of material information passed by the board of directors after a board meeting or shareholders meeting in order to ensure the legality and accuracy of said material information and protect parity of investor information.
6. Keeping board members informed of latest changes and developments in laws and regulations relevant to the company's field and regarding corporate governance.
7. Create yearly study plans or enroll in courses based on the characteristics of the company's business activities and the education and experience of respective directors.
8. Providing the directors with necessary company information; and maintaining an open communication channel between the directors and the department leaders.
9. Providing assistance to arrange communication between the independent directors and the Chief Audit Officer and the certified public accountants to facilitate understanding of the company's financial operations.
10. Other duties pursuant to the Articles of Incorporation or other contracts.

2023 Corporate Governance Operating Status:

1. Reporting to the board of directors, directors, and the functional committees on the status of corporate governance practices and making sure that shareholders and board meetings are called in compliance with the applicable regulations and corporate governance principles.
2. Established the annual work plan and meeting agenda for the board of directors and functional committees, and prepared legislative proceedings. Inviting suggestions from directors prior to a board meeting to facilitate preparation of the meeting agenda; and giving 7-day notice to all directors to attend a meeting by e-mail and providing sufficient materials for the directors to familiarize themselves with the items. Gave prior notice to the individuals involved where there were items involving stakeholder interest and requiring recusal. Held 7 board meetings, 7 Audit Committee meetings, 3 Compensation Committee meetings, 2 Nomination Committee meetings, 2 Growth Strategy Committee meetings, and 2 Corporate Sustainability Committee meeting in 2023. The details of the above meetings are on the Company's website.
3. Inspecting the disclosure of material information passed by the board of directors after a board meeting or shareholders meeting in order to ensure the legality and accuracy of said material information and protect parity of investor information.
4. Keeping board members informed of latest changes and developments in laws and regulations relevant to the company's field and regarding corporate governance.
5. Providing the directors with necessary company information; and assist directors and department heads to interact and communicate smoothly.
6. Registered shareholder meeting date within the legally ordered period (2023 shareholder meeting was held on May 17), and the shareholders' meeting shall be completed within the time limit specified by the competent authority.
7. Arranged 6 hours of educational training for the directors on “The function and role of financial strategy” and “Matters needing attention in corporate mergers and acquistions”.
8. Arranged communication between independent directors and internal auditors/Certified Public Accountants during Audit Committee meetings. Summarizes can be found on the Company’s website.
9. On October 30, 2023, report the company's annual risk management operation and plan to the audit committee, and the audit committee will report to the board of directors, and arrange to report on the implementation of the integrity business to ensure the implementation of the Ethical Management Policy.
10. Complete the performance evaluation of Board of Directors and Functional Committees of the Company for the year 2023. The Company reported the evaluation results in the first quarter Compensation Committee (Feb.21, 2024), Nomination Committee (Feb.21, 2024)and board meeting (Feb.26, 2024).

In compliance with the Best Practice Principles

5. Has the Company established a means of communicating with its Stakeholders (including but not limited to shareholders, employees, customers, suppliers, etc.) and created a Stakeholders Section on its Company website? Does the Company respond to stakeholders’ questions on corporate social responsibilities?

The company places great emphasis on maintaining balanced relationship and open communication with stakeholders, including shareholders, employees, customers, and suppliers.

1. Shareholders: In addition to annual general meetings, the company holds quarterly earnings conference and discloses relevant information in the “Investors and Shareholders” section of the company website. Furthermore, shareholders can share their comments via email: LITEONTech.IR@liteon.com, where a dedicate contact window will response to these requests.
2. Employees:

(1)In terms of organization, an employee relations unit and HR representatives have been assigned the responsibility of improving employer-employee communication and interaction to make the communication mechanism be improved and perfected.

(2)In terms of execution, company-wide employee communication meetings and new hire communication meetings are regularly held by top executives. Two-way communication meetings with employees are also organized by each unit to boost employee loyalty and identification with the Company. In addition to internally published e-mails, websites and employee hot-lines, the Company also manages social networking platforms for conveying information on company activities and collecting employee feedback. These ensure open channels of communication are maintained between the Company and employees.

3. Customers: In addition to day-to-day communication channels and regular meetings, the company utilizes the RBA-Online platform to disclose RBA self-assessment results from the factories to customers.
4. Suppliers: In addition to day-to-day communication channels and regular meetings, the company hosts annual supplier conventions to convey the company's business performance and goals.
5. Furthermore, the company organizes employees and suppliers' training on topics such as corporate social responsibility, the RBA code, and greenhouse gas emission as needed.

The company has created the LITEON CSR and Investors section on the company website to provide information for stakeholders. It also offers an email address, Corporate Sustainability Committee & ESG Division: LITEONTech.ESG@liteon.com, for comments.

In 2023, the company has continued to use diversified communication channels to improve results and stimulate different social values with nine types of stakeholders. The identification of material topics at LITEON is conducted every three years and the most recent one was done in early 2023. The results of this survey will be analyzed and reported to the Corporate Sustainability Committee directly under the Board of Directors.

In compliance with the Best Practice Principles

6. Has the Company appointed a professional registrar for its Shareholders’ Meetings?

The company has appointed Yuanta Securities Co., Ltd. as registrar for our Shareholders’ Meetings.

In compliance with the Best Practice Principles

7. Information Disclosure

(1) Has the Company established a corporate website to disclose information regarding its financials,

business and corporate governance status?

(1) The Company will fully disclose company’s latest information, product information, financial information, sustainability report, public meeting information, human resources information, etc. in both Chinese and English on the official website for the reference of shareholders and relevant stakeholders.

In compliance with the Best Practice Principles

(2) Does the Company use other information disclosure channels (e.g. maintaining an English-language website, designating staff to handle information collection and disclosure, appointing spokespersons, webcasting investors conference etc.)?

(2) Finance center, investor relations and media windows are set in the Company to take responsibility for collection and disclosure on shareholders, laws and regulations, investment, and market information. The Company also has a spokesperson system to implement and comply with relevant laws and regulations. The presentations and videos of each quarterly earnings conference will also be disclosed in the investor section of the official website for the reference of shareholders and relevant stakeholders.

In compliance with the Best Practice Principles

(3) Does the company publish and report its annual financial report within two months after the end of a fiscal year, and publish and report its financial reports for the first, second and third quarters as well as its operating statements for each month before the specified deadline?

(3) The Company published and reported the annual consolidated and standalone financial report within two months after the end of a fiscal year. And the Company published and reported the financial reports for the first, second and third quarters as well as the operating statements for each month before the specified deadline.

In compliance with the Best Practice Principles

8. Has the Company disclosed other information to facilitate a better understanding of its corporate governance practices (e.g. including but not limited to employee rights, employee wellness, investor relations, supplier relations, rights of stakeholders, directors’ training records, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, and purchasing insurance for directors)?

1. Employee share in the Company’s profits and are provided with benefits as the Company’s most important partner. We cultivate a working environment unique to the corporate culture of “LITEON” for employees that includes: The Company shares surpluses with employees every year. We also actively support health promoting activities and employee care programs. Our goal is to create a high-quality workplace that takes the quality of life of individuals and families into account, and promote a positive atmosphere for teamwork so that employees can create more value at work and in their own lives.
2. The principle of equality opportunity is embraced by the Company. An open and transparent merit-based selection process is followed during recruitment and there is no discrimination on the basis of race, gender, age, religion, nationality or political affiliation. Employees are placed in roles appropriate for their skills and we recognize the contributions of talented people from diverse backgrounds. All forms of workplace discrimination, inequality and sexual harassment are prohibited at LITEON. Related management regulations and a complaint hot-line have been set up to maintain a friendly and healthy working environment.
3. The Company treats all customers and vendors in a fair, respectful and dignified manner. Ethics and best practice principles are also emphasized for employees, vendor, and customers.
4. All of the company's directors and independent directors have expert knowledge and practical experience in the industry. The company organizes seminars and provides information on relevant regulations as needed. Some directors take the initiative to complete corporate governance courses, and ask the company to report their training online. Records of training completed by the directors are shown in Director Education and Training of the annual report (P.97~98).
5. Directors and independent directors attend board meetings and give opinions on governance oversight and business decisions to achieve professional governance. The company has completed online filing of details and attendance for meetings of the board and the Audit Committee.
6. Board meetings are conducted in compliance with the Company Act and related regulations regarding conflict of interest and recusal. Recusals of Directors due to conflicts of interests can refer to the annual report P.40.
7. The company has purchased liability insurance for the company's directors, independent directors, and key persons.
8. The company's risk management policy is to define each risk in accordance with the company's overall operating policy, establish a risk management mechanism to identify early, measure accurately, monitor effectively and control strictly, to prevent possible losses within the range of affordable risks. Based on changes in the internal and external environment, the Company will continue to adjust and improve the best risk management practices to protect the interests of employees, shareholders, partners and customers, increase the value of the company, and achieve the principle of optimizing the allocation of company resources. Furthermore, the annual risk management plan and operation were presented to the Corporate Sustainability Committee and the Audit Committee in 2023. The Audit Committee in turn presented the results to the board of directors.

In compliance with the Best Practice Principles

9. Please explain the improvements which have been made in accordance with the results of the Corporate Governance Evaluation System released by the Corporate Governance Center, Taiwan Stock Exchange, and provide the priority enhancement measures. 

   The company has started taking actions and implementing measures according to the internal best-practice principles in response to the results of the Corporate Governance Evaluation.

Evaluation Items

Evaluation Result

Compliant with Independence?

1. Does the CPA have a direct or significant/ indirect relations with the Company in financial interests?

2. Does the CPA have financing or guarantee with the Company or its directors?

3. Does the CPA have a close business relationship and potential employer-employee relationship with the Company?

4. Does the CPA or members of the audit team hold the posts in the Company, such as the director, supervisor and officer or occupied a key position with significant influence on the auditing process?

5. Does the CPA offer non-audit service which could impact the auditing process for the Company?

6. Does the CPA act as a broker for the shares or other securities issued by the Company?

7. Does the CPA act as the Company’s defense attorney or represent the Company to negotiate with any third party over any dispute?

8. Does the CPA have kinship with the Company’s director, supervisors, or officers or any post with significantly on the auditing work?