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”?

V

The Company has formulated the “Corporate Governance Best Practice Principles for KNH” with reference to the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies,” jointly formulated by the Taiwan Stock Exchange Corporation (TWSE) and the Taipei Exchange (TPEx). Each amendment must be resolved and passed by the board of directors and it is disclosed on the Company’s website for shareholders

https://en.knh.com.tw/governance4.html.

No material gap was found.

2.

Shareholding structure & shareholders’ rights

(1)

Does the company establish an internal operating procedure to deal with shareholders’ suggestions, doubts, disputes and litigations, and implement based on the procedure?

(2)

Does the company possess the list of its major shareholders as well as the ultimate owners of those shares?

(3)

Does the company establish and execute the risk management and firewall system within its conglomerate structure?

(4)

Does the company establish internal rules against insiders trading with undisclosed information?

V 

   V

   V

    V

(1) In addition to appointing an agent to handle shareholder affairs, the Company has also appointed spokespersons and deputy spokespersons, and a shareholder Affairs Unit to assist in handling shareholders’ suggestions, doubts, and disputes. When necessary, legal consultants are involved for assistance. The official Chinese and English websites of the Company fully disclose the contact information of relevant personnel and information necessary for shareholders’ meetings, investor conferences and other important meetings. Shareholders may reflect their opinions or inquire about related issues by telephone and e-mail, and the issued will handled in accordance with law and relevant internal procedures for proper response.

(2) Through our stock agent, we fully grasp and understand the structure of major shareholders and ultimate controllers of major shareholders. As required by Article 25 of the Securities and Exchange Act, changes in shareholding are reported and announced to the competent authorities each month.

(3) We have formulated the “Regulations Governing Establishment of Internal Control Systems by Public Companies” and the “Regulations Governing Supervision of Subsidiaries” in accordance with the requirements of the “Regulations Governing Management of Transactions with related parties”. Our risk control and firewall mechanisms between affiliates have been approved by the Board of Directors and implemented.

(4) The Company’s Board of Directors passed the “Procedures for Handling Material Inside Information and Management of the prevention of insider trading” to establish the basis for the Company’s processing of internal material information and disclosure of the information. The Company will periodically amend relevant regulations to keep them in line with the existing laws and practices. In 2023, the directors received further education courses namely “Material Internal Information and Prevention of Insider Trading” and “Prevention of Insider Trading and Insider Equity Trading”, with a total of 11 participants for a total of 84 training hours. In 2023, the Company carried out education and training - “Procedures for Handling Material Inside Information and Management of the Prevention of Insider Trading” on employees, with a total of 1108 participants for a total of 1550 training hours.

No material gap was found.

                                                                                                                        No material gap was found.                                                                                                                                                           

No material gap was found.

No material gap was found.

3.

Composition and Responsibilities of the Board of Directors

(1)

Has the Board formulated a diversity policy and specific management objectives, and have they been implemented?

        (2)

              Does the company voluntarily establish

              other functional committees in addition

              to the Remuneration Committee and

              the Audit Committee?

        (3)  

              Has the company established the Board

              of Directors’ performance evaluation

              and its evaluation methods, and does

              the company perform 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 term?

         (4)  

               Does the company regularly evaluate

               the independence of CPAs?

V

V

V

 V

(1) The Company’s “Procedures for Election of Directors” and the “Corporate Governance Best-Practice Principles” have diversified policies for the composition of the members of the Board. The Company considers its business model and development needs to formulate an appropriate diversity policy (please see “Board Diversity and Independence” on P.19 of the annual report), including but not limited to the following two major standards:

1. Basic requirements: Gender and age.

2. Professional knowledge and skills: Industry experience and professional competence.

The objectives of the Company’s diversity policy management are as follows:

    As of the publication date of the annual report, there were 11 directors in total, including 4 independent directors (36%), 3 directors with employee status of the Company (27%), 4 female directors (36%), independent directors. The tenure of directors is no more than 3 terms (1 term: 1 independent director; 2 terms: 2 independent directors; 3 terms: 1 independent director), and the ages of directors are 71 years old or above (3 directors), 61 - 70 years old (4 directors) and under 60 years old (4 directors). All directors have extensive experience in diversified industries, including: nonwoven, industrial machinery, daily necessities, construction engineering, electrical and mechanical engineering, and water treatment engineering. These directors also possess a wide range of professional capabilities, including: management, leadership, risk management, marketing, industrial technology and manufacturing, financial accounting and finance, and information technology, so as to strengthen the structure of the Company’s Board of Directors. For the implementation of diversified policies for the composition of the members of the Board, please see [Note 2].

(2) The Company established the Remuneration Committee on November 28, 2011. The Remuneration Committee is responsible for the recommendation of the policies, systems, standards and structures for the performance evaluation of directors and managerial performances as well as the periodic evaluation of the remuneration to directors and managerial officers. The Company also established the Audit Committee on June 11, 2020. Recommendations shall be provided by the Audit Committee to the Board of Directors as a reference for decision making regarding matters that may have a significant impact on the Company’s financial operations.

(3) 

• On May 14, 2018, the Board of Directors of the Company adopted the “Procedures for the Board of Director’s Performance Evaluation”, which stipulate that the self-performance evaluation of the Board of Directors, functional committees and individual board members shall be conducted once a year. The Board of Directors approved the amendments to the “Procedures for the Board of Director’s Performance Evaluation” on January 30, 2024, that the external professional independent institutions or external experts and scholars should evaluate the performance once every three years, and the evaluation results should be completed within three months after the end of the year. At the end of the year, the Finance Division collects relevant information and is responsible for filling out the “Self-evaluation Questionnaire of the Performance” for the Board of Directors as a whole, the Remuneration Committee and the Audit Committee. The “Self-evaluation Questionnaire of the Board Member” will be filled out by the board members. The results of the said questionnaires are disclosed on the Company’s website.

The Company’s internal performance evaluation on the Board of Directors as a whole, individual board members, the Remuneration Committee and the Audit Committee in 2023 were all excellent, and the results were reported to the Board of Directors on January 30, 2024.

In the external evaluation of the Board of Directors in 2023, the Company commissioned “Taiwan Investor Relations Institute” to conduct the performance evaluation of the Board of Directors. The evaluation report was issued on February 22, 2024, and was submitted to the report at the Board of Directors on February 27, 2024. The Company has implemented the recommendations made by the Institute into the Company’s practical operations (see “The Evaluation of the Board of Directors” P.30-31).

The Company’s Remuneration Committee reviews the rationality of the remuneration to directors, members and managerial officers based on the said performance evaluation results and the “Board of Directors’ Performance Evaluation Results” and “Procedures of Remuneration to Directors, Functional Committees’ Members, Managers and Internal Auditors”, which will also be used as a reference for the nomination for reappointment.

(4) The Company has established the “Procedures for Evaluating the CPA’s Independence and Competency”. Before appointing CPAs every year, it is necessary for the Company to obtain the “Audit Quality Indicators (AQIs)” provided by CPAs and review their independence and suitability by the Audit Committee and the Board of Directors. The 2024 evaluation results were reviewed and approved by the Audit Committee and the Board of Directors on February 27, 2024, and the CPAs all meet the Company’s independence and suitability standards. Please see Note 3 for the evaluation criteria of the independence and suitability of CPAs.

No material gap was found.

At present, the Company has established the Remuneration Committee and the Audit Committee as required by the law. Other functional committees will be established in accordance with the Company’s future development needs.

No material gap was found.

No material gap was found.

4.   

        Where the company is a TWSE/TPEX

        listed company, has the company

        designated an appropriate number of

        personnel that specializes (or is

        involved) in corporate governance

        affairs (including but not limited to

        providing directors/supervisors with

        the information needed and assist

        directors and supervisors in complying

        with the laws and regulations to

        perform their duties, convention of

        board meetings and shareholder

        meetings, preparation of board meeting

        and shareholder meeting minutes etc.)?

V

The Company has established a full-time legal manager under the President’s Office to be responsible for the registration of companies, registration of changes, and contact of the stock agent; and a Legal Compliance Team under the Finance Division to be responsible for matters associated with the convening of Board of Directors’ meeting and document preparation for shareholders’ meeting. Therefore, a number of suitable and appropriate corporate governance personnel has been assigned.

Also, the Company has assigned the vice president of the Group Administration, Wu, Jeng-Rong, as the corporate governance manager by resolution of the Board of Directors’ meeting held on February 24, 2021. Wu will be responsible for the supervision and planning of corporate governance. Responsibilities of the Corporate Governance Manager include:

A. Handles matters in relation to the board meeting and shareholders’ meeting.

B. Produces minutes for the board meeting and the shareholders’ meeting.

C. Assists in the appointment of directors and continuing education.

D. Provides information necessary for the directors to carry out their business.

E. Assists the directors in legal compliance.

Corporate governance keys for the year:

A. A total of 10 board meetings and 7 Audit Committee meetings were held in 2023.

B. A total of 1 annual general shareholders’ meeting was held in 2023.

C. All members of the Board of Directors have completed at least 6 credits for their continuing education courses.

D. The Company takes out liability insurance for the directors and key employees, and reports to the Board of Directors after the insurance renewal.

E. The Company conducted the performance evaluation on the Board of Directors and functional committees. The evaluation results for the Board of Directors, the Audit Committee and Remuneration Committee were excellent.

F. The Company was ranked in the top 21% to 35% of the 10th annual corporate governance evaluation.

G. In 2023, the Head of Corporate Governance has completed 12 hours of further education as required by law.

No material gap was found.

5.   

       Does the company establish a

       communication channel and build a

       designated section on its website for

       stakeholders (including but not limited

       to shareholders, employees, customers,

       and suppliers), as well as handle all the

       issues they care for in terms of

       corporate social responsibilities’

       meetings?

V

The Company has maintained good communication with investors, employees, consumers, public associations, banks, etc., through labor conferences, consumer/customer service lines, procurement, finance and other dedicated units, and sets up an area for stakeholders on the Company website in order to respond to important matters of corporate social responsibility in relation to stakeholders. The communication with stakeholders is reported to the Board of Directors at least once a year. For the implementation of the stakeholder issues, communication channels, communication content and frequency of different types of stakeholders in 2023, please see [Note 4]. The communication results with stakeholders were reported to the Board of Directors on February 27, 2024.

No material gap was found.

6.    

        Does the company appoint a

        professional shareholder service agency

        to deal with shareholder affairs?

V

The Company appointed Shareholders Service Dept. of KGI Securities Co., Ltd. as the Company’s shareholders service entity dedicated to assist in the handling of the shareholders’ meeting affairs.

No material gap was found.

7.   

        Information Disclosure

       (1) 

             Does the company have a corporate

             website to disclose both financial

             standings and the status of corporate

             governance?

       (2) 

             Does the company have other

             information disclosure channels (e.g.

             building an English website, appointing

             designated people to handle

             information collection and disclosure,

             creating a spokesman system,

             webcasting investor conferences)?

      (3) 

            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?

V

V

V

(1)   The Company has a website: http://www.knh.com.tw/ and has established a dedicated section “Investor” to disclose the Company’s latest financial affairs and a dedicated section “Corporate Governance” to disclose information regarding the Company’s execution status of corporate governance.

(2) The Company’s website is created in both Chinese and English. Each responsible unit collects information depending on the contents, and the disclosed information is periodically maintained by the unit in charge of the official website. Moreover, we implement a spokesperson system in accordance with requirements and fully disclose the contact means of the spokesperson. Information associated with investor conference is disclosed on the website available for investors.

(3)  The Company publishes and reports its financial report within two months after the end of each fiscal year, and publishes and reports its financial reports for the first, second, and third quarters, as well as its operating status for each month.

No material gap was found.

 No material gap was found.

No material gap was found.

8. 

       Is there any other important

       information to facilitate a better

       understanding of the company’s

       corporate governance practices (e.g.,

       including but not limited to employee

       rights, employee wellness, investor

       relations, supplier relations, rights of

       stakeholders, directors’ and supervisors’

       training records, the implementation of

       risk management policies and risk

       evaluation measures, the

       implementation of customer relations

       policies, and purchasing insurance for

       directors and supervisors)?

V

(1) Employee rights and wellness:

The Company organizes the communication meeting between the labor and management for 4 times per year, and sets up the “employees mailbox” and “sexual harassment prevention hotline”. The Company also establishes the worker welfare committee, which will hold the meeting at least 4 times per year to discuss the motions about employees’ welfare, and also provide the gift money for marriage or celebration, or monetary condolences for funeral services, group insurance and accident insurance, etc. Meanwhile, the Company establishes the regulations government employees’ retirement and forms the Labor Pension Supervisory Committee according to the Labor Standards Act. The Company contributes a specific percentage of the salary to the pension account opened at Bank of Taiwan as the labor pension reserve on a monthly basis, in order to cover the future payment of pension to labors. According to the Labor Pension Act, the Company has contributed no less than 6% of the salary to each employee’s personal account maintained at Bureau of Labor Insurance on a monthly basis since July 1, 2005.

(2)   Investor relations and rights of stakeholders:

A. Offer the stakeholders the email, CSR@knh-global.com, to help them communicate with the Company about the issues including environment, society and corporate governance.

B. Set up the email, whistleblower@knh-global.com and hotline at 02-2349909 #2268, as the channels for internal and external stakeholders to report on any corruption or unethical conduct.

(3)   Supplier relations:

A.Qualified raw material suppliers are required to sign the “Code of Conduct for Suppliers” and promise to abide by matters such as labor rights, environmental safety and ethical laws and regulations.

B.In order to verify that the suppliers’ product quality satisfies the Company’s requirements, the Company establishes the “Regulations Governing Management of Supplier”, and arrange the on-site audit at the suppliers’ premises by the type of supplies and risk level.

C. Carried out 11 times of auditing related to matters such as safety and health at the supplier’s business location in 2023, followed by improvements and tracking.

(4)  Continuing education for directors:

      The directors may pursue their continuing education per their personal need, and shall disclose the continuing education on the website designated by the competent authority. For the contents of the in-service training courses for directors as of the publication date of the annual report, please see [Note 5].

(5)  Implementation of risk management policies and risk evaluation measures:

A. The Company requires visitors and contractors entering the production area to sign an undertaking of confidentiality related to health and security to protect the Company and its own interests. A total of 146 persons signed the statement in 2023.

B. 6 fire drills with a total of 228 employees taking part were carried out in the Company’s plants in 2023 in order to reduce operational risks. Information security promotion is performed each December or the next January.

C. The Company establishes the “Regulations Governing Management of New Product Risk” with respect to new products, and has its R&D unit call related personnel to analyze risk and complete risk assessment report based on the “Failure Mode Analysis Form”. A total of 11 reports have been issued in 2023.

(6)  Implementation of customer relations policies:

      The Company has maintained good relations with its customers. It has accepted audits and evaluations of important customers in an irregular basis, carried out various improvements on product quality and management according to customer needs, and implement matters related to corporate social responsibility. A total of 204 questionnaires for customers’ satisfaction were distributed in 2023, and the average satisfaction attained 96.6 scores.

(7)  Purchasing insurance for directors:

        The Company has purchased the liability insurance for the directors, and reported the insured value, coverage and insurance premium to the Board of Directors. The liability insurance coverage applicable for 2023 has been reported to the Board of Directors on February 24, 2023.

No material gap was found.

9.  Please description the improvement of the result of Corporate Governance Evaluation System by the Corporate Governance Center of the Taiwan Stock Exchange announced in the last year.

(1)  The improvements in 2023 from the previous year are as follows:

◆The minutes of general shareholders’ meetings record important contents of shareholders’ questions and the Company’s responses.

◆Upload uninterrupted audio and video of the entire shareholders’ meeting after the meeting.

◆The external evaluation of the Board of Directors is conducted once every three years. The implementation and evaluation results in 2023 are disclosed on the Company’s website and annual report.

(2)  The priorities for future corporate governance assessment are as follows. Their feasibility of future improvement is being constantly evaluated:

◆ Evaluate the necessity for functional committees other than the ones required by the law.

◆ Evaluate the necessity for formulation of risk management policies and procedures.

◆ The GRI standards are the basis of evaluation. A sustainability report is prepared and uploaded to the Market Observation Post System and the Company’s website by the end of August.