Corporate governance structure

I. Does the company formulate and disclose its Corporate Governance Best Practice Principles in accordance with the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies?”

√

The Company has the Corporate Governance Best Practice Principles formulated in accordance with the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies,” which was approved by the board of directors on September 29, 2021 for implementation. It is mainly used to establish an effective corporate governance structure of the Company, protect the rights and interests of shareholders, enhance the functions of the board of directors, exercise the functions of the Audit Committee, respect the rights and interests of stakeholders, and enhance data transparency; also, it has been implemented progressively.

No major difference

II. The company’s shareholding structure and shareholders’ equity
(I) Has the company established internal operating procedures for handling shareholders’ proposals, inquiries, disputes, and litigation matters, and then has them processed in accordance with the procedures?

(II) Does the company have a list of the major shareholders who actually control the company and the ultimate controllers of the major shareholders?

(III) Does the company establish and implement risk control and firewall mechanisms with affiliated companies?

(IV) Does the company have internal guidelines formulated to prohibit insiders from using undisclosed information to buy and sell securities?

√

√

√

√

(I) 1. The Company has entrusted a stock agency in Taiwan to handle stock affairs and set up a responsible stock affair service unit.
    2. The Company has spokespersons and acting spokespersons in service to handle shareholders’ suggestions, doubts, disputes, and legal actions in accordance with the operating procedures. Investors can also contact the Company’s spokesperson directly by the Company’s website at https://www.ikka.com.tw→Investor section → Shareholder Q&A.

(II) The Company is aware of the changes in the Company’s major shareholders and the ultimate controllers of major shareholders through the insider reporting system.

(III) The “Guidelines for Supervision and Management of Subsidiaries” and “Guidelines for Financial Operations between Affiliated Enterprises” are formulated to regulate the business transactions conducted with affiliated companies. Furthermore, each subsidiary shall implement daily operations in accordance with relevant internal control systems and rules. The Company’s Audit Department and Finance Department or the entrusted CPAs are to conduct audits regularly or occasionally.

(IV) The Company’s board of directors resolved on March 25, 2020 to have the “Procedures for Handling Material Inside Information and Preventing Insider Trading” formulated. It is clearly stipulated that the Company’s personnel must comply with the provisions of the Securities and Exchange Act, and shall not use the unpublished information known to them to engage in insider trading, and shall not disclose such information to others in order to prevent others from using the undisclosed information to engage in insider trading. A reporting mechanism is in place to achieve the intended effect.

(I) No major difference

(II) No major difference

(III) No major difference

(IV) No major difference

III. Composition and responsibilities of the board of directors
(I) Does the board of directors formulate diversity policies, specific management objectives, and have them implemented?

(II) Does the company have set up other functional committees voluntarily in addition to the Remuneration Committee and the Audit Committee?

(III) Does the company formulate the “Rules for Performance Evaluation of Board of Directors,” conduct a performance evaluation annually and regularly, report the performance evaluation results to the board of directors, and apply it as a reference for determining the director’s remuneration and nomination of directors for another term?

(IV) Does the company regularly evaluate the independence of the independent auditors?

√

√

√

√

(I) 1. The composition of the Company’s board of directors takes into account the Company’s operation, operation pattern, and business development needs; also, the board directors are with industrial background, business management expertise, and financial and accounting expertise.
     2. Please refer to One. III. (IV) 6 of the Prospectus for the description of the diversity and independence of the Company’s board of directors.

(II) The Company currently does not set up any other functional committees except the Remuneration Committee and Audit Committee according to the law. The Company will have other functional committee set up according to the actual operation situation and governing laws and regulations in the future.

(III) The Company’s board of directors had resolved on September 29, 2020 to have the “Rules for Performance Evaluation of Board of Directors” formulated. It is planned to have a performance evaluation questionnaire distributed by the administrative office at the end of each year, then collected with the evaluation results reported to the board of directors for review and improvement.

(IV) The CPAs of the Company have an internal rotation system in place that conforms to the principle of independence, and their appointment is based on the resolution of the board of directors. However, the Company has not regularly evaluated the independence of the certified public accountants, but simply evaluate their independence by confirming that they are not directors or shareholders of the Company, not receiving remuneration from the Company, and not a stakeholder of the Company.

(I) No major difference

(II) No major difference

(III) No major difference

(IV) No major difference

IV. Does the TWSE/TPEx listed company have sufficient number of competent and appropriate corporate governance personnel and a corporate governance supervisor appointed to be responsible for corporate governance-related affairs (including but not limited to providing directors and supervisors with the information necessary for business operation, assisting directors and supervisors in complying with laws and regulations, handling matters related to the board meetings and shareholders meetings lawfully, preparing the minutes of board meeting and shareholders meetings, etc.)?

√

1. The Company has not yet appointed a corporate governance officer. The administrative department is a part-time promotion unit for corporate governance-related affairs. It is responsible for providing the directors with the information necessary for business operation, handling matters related to the board meetings and shareholders meetings lawfully, processing company registration and change registration, preparing the minutes of board meetings and shareholders meetings, etc.
2. The Company has LCS & Partners entrusted to have the relevant change registrations of the company established in the Cayman Islands handled in accordance with the relevant local regulations in Cayman.

No major difference

V. Has the company established communication channels with stakeholders (including but not limited to shareholders, employees, customers, suppliers, etc.), set up a page specially for stakeholders on the company’s website, and appropriately responded to the important corporate social responsibility issues of concern to stakeholders?

√

The Company’s website is with a page designated for stakeholders in the investor section with a dedicated E-mail reply function. The Company also has a spokesperson and acting spokesperson system in service. Stakeholders may communicate to the spokesperson by the Company’s Internet, phone, and fax, and grasp information in a timely manner to safeguard the legitimate rights and interests of both parties.

No major difference

VI. Does the company contract a professional stock affairs agency to handle the affairs of the shareholders meeting?

√

The Company entrusts the Agency Department of CTBC Bank to handle the affairs of the shareholders meeting and various stock affairs matters.

No major difference

VII. Information disclosure
(I) Does the company set up a website to disclose financial business and corporate governance information?

(II) Does the company adopt other information disclosure methods (such as, setting up an English website, appointing a person to be responsible for the collection and disclosure of company information, implementing the spokesperson system, placing the corporate shareholder briefing on the company website, etc.)?

(III) Does the company announce and report the annual financial statements within two months after the end of the fiscal year, and announce and report the financial statements for the first, second, and third quarters and the operating conditions of each month before the specified deadline?

√

√

√

(I) The Company has a website set up at: www.ikka.com.tw. The Company’s financial, business, and corporate governance information is disclosed on the Market Observation Posting System and the Company’s website in accordance with regulations.

(II) The Company has set up a website in Chinese, English, and Japanese (www.ikka.com.tw) with the information related to the Company’s financial, business, and corporate governance disclosed, and the Company’s information collected and disclosed by the designated personnel. The Company has established a spokesperson and acting spokesperson system; also, the corporate shareholder briefing related information is announced on the Company’s website.

(III) The Company does not have financial report announced in advance currently, but will be evaluate the needs of doing so in the future according to the actual operation or the requirements of laws and regulations.

(I) No major difference

(II) No major difference

(III) The Company’s financial reports are all announced within the prescribed time limit.

VIII. Does the company have other important information that is helpful to understand the operation of corporate governance (including but not limited to employee interests, employee care, investor relations, supplier relations, stakeholders’ rights, advanced study of directors and supervisor, the implementation of risk management policies and risk measurement standards, the implementation of customer policies, the company’s purchase of liability insurance for directors and supervisors, etc.)?

√

The Company bases on the spirit of law-biding, due diligence, and corporate governance to go for a sustainable operation with the following corporate governance operated additionally:
1. Operational performance:
In order to substantiate corporate governance, the Company, in addition to establishing an effective internal control system and implementing self-inspection operations, had independent directors elected at the regular shareholders meeting on March 20, 2020, an independent director system introduced, taken advantage of the independent directors’ professional experience, increased the practical experience of the management team, and formulated the “Rules of Procedure for Board of Directors Meetings” to enhance the functions of the board of directors. Also, for the purpose of protecting the rights and interests of shareholders and improving data transparency, the Company has set up a spokesperson and acting spokesperson system to disclose all major company information in a timely manner, and to have a person designated to be responsible for handling communication with shareholders. On the other hand, the Company has established the “Rules Governing Information Reporting Operations” in accordance with relevant regulations, which allows shareholders and stakeholders to fully understand the Company’s financial status and the implementation of corporate governance.
The Company is mainly engaged in the development of auto parts production with the marketing channels expanded through investment operations. The Company continues to enhance product quality through the introduction of ISO14001 and IATF16949 quality management systems in each subsidiary in order to realize a stable growth in revenue and profitability, and to create value for shareholders.
2. Environmental protection:
The Company strives to fulfill its social responsibility of environmental protection and energy saving for the love of the earth, and adheres to the concept of actively reducing environmental pollution in order to ensure that environmental performance complies with environmental protection laws and regulations, and makes commitments to improving and preventing pollution continuously. At the same time, the Company promotes resource recycling and sorting for the good of the environment and the earth, and for the sustainable operation of the enterprise, the endless life of the earth, and a win-win situation for economic development and environmental protection.
3. Employee interests and employee care:
The Company does not discriminate against gender or race in recruitment. The Company has qualified and competent candidates recruited by evaluating their professional knowledge, skills, etc. in accordance with the principle of “equality in employment.” The Company values the importance of pre-job training for employees, including workplace safety courses, in order to provide employees with a comfortable and safe working environment. In addition, the Company arranges a health checkup for all employees every year to fully understand the health conditions of employees in order to reduce the risk of occupational injuries.
The Company has employee welfare measures stipulated in accordance with the Labor Standards Act and relevant laws and regulations; also, has formulated the “Rules Governing Weddings and Funerals” to regulate various subsidies for employees’ weddings, funerals, illnesses, and childbirth. In addition, regularly arrange various tourism activities and social activities to help ease the mind and body of employees and to enhance the interaction of employees. The Company also shares earnings with employees and distributes dividends and annual prize money to employees so to realize the business philosophy of “providing social welfare.”
The Company also appropriates pension reserve for an amount equivalent to 6% of the monthly salary to the qualified employee’s pension account in accordance with the provisions of the Labor Pensions Act in order to protect the retired employees.
The Company is subject to the provision of the Labor Standards Act, and has operated in accordance with the Labor Standards Act. The Company for the purpose of promoting labor-management cooperation and improving work efficiency regularly holds labor-management meetings in accordance with the “Regulations for Implementing Labor-Management Meeting” in order to communicate opinions between labor and management and cooperate with each other. In addition, the Company values the importance of employee career plan and talent cultivation; therefore, the Company actively encourages employees to participate in various training courses, including internal and external training courses. An internal training course aims at the exchange of professional techniques within the Company and the enhancement of employees’ productivity. In terms of an external training course, the Company may assign employees to participate in external seminars depending on the Company’s needs with good and specialized training opportunities provided to employees.
4. Investor Relations:
The Company for the purpose of ensuring that shareholders have had full knowledge, participated in, and made decisions over the Company’s major matters, in addition to sending a meeting notice to shareholders in advance, has the spokesperson and acting spokesperson designated to serve and act as the communication channel between the Company and shareholders, investors, and stakeholders. The Company also has an official website setup to introduce the Company’s products and business operation for the public to understand the Company’s current status.
5. Supplier Relations:
The Company maintains a long-term and good cooperative relationship with the suppliers.
6. Stakeholders’ rights:
The Company, the stakeholders, corresponding banks, etc., have the rights and obligations performed in accordance with the contract and related operational provisions to safeguard the legitimate rights and interests of both parties. The Company also provides sufficient information to the corresponding banks so to help the banks better understand the Company’s operations and financial status.
7. Directors’ advanced studies:
The Company’s directors have taken the courses of Stock and Exchange Act, corporate governance, etc. as their advanced studies in accordance with the “Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies.”
8.Implementation of risk management policies and risk measurement standards: Please refer to Note 1 for details.
9.Implementation of customer policy:
The Company maintains a stable and good relationship with customers, adheres to the quality policy of “Improving productivity, continuing improvement, and fulfilling customer satisfaction” with an aim to become an industry giant that shows product yield, continuous improvement, and precision in every aspect, as well as providing value products to customer and generating profits.
10.The liability insurance acquired by the Company for directors:
The Company’s board of directors had resolved on August 10, 2021 to acquire liability insurance for directors continuously, which was completed accordingly. The liability insurance policy acquired is for an insurance period of 09/01/2021~09/01/2022 in order to reduce and disperse the risk of material losses and damages occurred to shareholders due to mistakes or negligence committed by the directors.
11.The relevant licenses and certificates obtained by the personnel related to financial information transparency:
There is one stock affair clerk who is with licenses and certificates received from the Securities and Futures Institute.
12.Managerial officers who participate in corporate governance-related advanced studies and trainings: Please refer to Note 2 for details.

No major difference

IX. Please explain the corrective action performed for the corporate governance evaluation results issued by the Corporate Governance Center of Taiwan Stock Exchange Corporation in the most recent year, and propose prioritized enhancements and measures for those that have not yet been corrected (The company not subject to evaluation is exempted from this requirement).
The Company has not been listed for less than one year in 2021; therefore, the Company was not subject to evaluation and this requirement was not applicable under the circumstance.

1. Interest rate, exchange rate, and financial risk

Finance Department

Finance Department
President
Chief Strategy Officer

Audit Office: Responsible for risk inspection, evaluation, supervision, improvement, tracking, and reporting.

Board of Directors: The decision-making and ultimate control unit for risk evaluation and control.

2. High-risk and high-leverage investment, loaning of funds to others, derivatives trading, and financial wealth management and investment

3. Investment, reinvestment, and merger & acquisition benefits

4. Policy and legal changes

Administration Office

Administration Office
President
Chief Strategy Officer

5. Litigation and non-litigation matters

6. Changes in corporate image

7. Changes in the equity of directors, supervisors, and major shareholders

Administration Office
and Stock Affairs Service Unit

8. Changes in operating rights

9. Environmental safety and health

Administration Office

10. Industry changes

Sales Department

Sales Department
President
Chief Strategy Officer

None