1.

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

V

The Company’s Board of Directors passed the “Corporate Governance Best-Practice Principles of KNH Enterprise Co., Ltd.” in accordance with the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” established by TWSE and TPEx. The same has been posted in the “Corporate Governance” section on the Company’s website and accessible by the Company’s shareholders.

No material gap was found.

2.

Shareholding structure & shareholders’ rights

(1) 

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

V

(1)

The Company’s “Corporate Governance

Best-Practice Principles” expressly states that the spokesman should process suggestions, questions and dispute from shareholders via phone and email, and should retain legal advisors for help, if necessary.

The Company calls the shareholders’ meeting pursuant to the Company law and related laws, and formulates the sound parliamentary rules.  The Company executes the resolutions made by the shareholders’ meeting strictly in accordance with the parliamentary rules. The resolutions made by the shareholders’ meeting also comply with laws and the Company’s Articles of Incorporation.

No material gap was found.

(2) 

Does the company possess the list of

itsmajor shareholders as well as the ultimate owners of those shares?

V

(2)

According to Article 25 of the Securities

and Exchange Act, the Company discloses on the website designated by Securities and Futures Bureau, changes in the equity held by the insiders (directors, managerial officers, and shareholders holding more than 10 percent of the total shares of the Company), on a monthly basis.

No material gap was found.

(3)

Does the company establish and

executethe risk management and firewall system within its conglomerate structure?

V

(3)

The Company’s Board of Directors passed

the “Regulations Governing Supervision of Subsidiaries” and ”Regulations Governing Management of Transactions with Stakeholders”, and established and executed the firewall and risk control mechanism with its affiliates.

No material gap was found.

(4) 

Does the company establish internal rulesagainst insiders trading with undisclosed information?

V

(4)

The Company’s Board of Directors passed

the “Operating Procedures for Handling Internal Material Information and Preventing Insider Trading” to prohibit the insiders from trading securities based on undisclosed information and establish the basis for the Company’s processing of internal material information and disclosure of the information.  The Company will periodically review relevant regulations to keep them in line with the existing laws and practices.

No material gap was found.

3.

Composition and Responsibilities of the

Board of Directors

(1) 

Does the Board develop and implement

adiversified policy for the composition of its members?

V

(1)

For the time being, the Company appoints 9 directors, including 2 independent directors and 2 corporate director representatives, in accordance with the Company Law and Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies.

These directors are specialized and experienced in business management,decision-making,industrial knowledge, financial accounting, finance and environmental protection. The Company’s board members vary in expertise, gender and work area and thus sound the Company’s Board of Directors structure. For the diversified structure of the Board members, please see “Note 1”. 

No material gap was found.

(2) 

Does the company voluntarily establishother functional committees in addition to the Remuneration Committee and the Audit Committee?

V

(2)

The Company has established the Remuneration Committee responsible for proposing to the Board of Directors suggestions on the policies, systems, standards and structures for performance appraisal on directors and managerial officers, and remuneration to them, and also determining and periodically evaluating the remuneration to directors and managerial officers.

In addition to the Remuneration Committee,the Company will establish any other functional committees,if necessary.

(3) 

Does the company establish a standard

tomeasure the performance of the Board, and implement it annually?

V

(3)

For the time being, the Company has its Remuneration Committee review the policies, systems, standards and structures for performance appraisal on directors and managerial officers, and remuneration to them in accordance with the “Regulations Governing Payment of Remuneration to Directors, Supervisors and Managerial Officers”.  Meanwhile, the Board of Directors is expected to resolve to establish the Regulations Governing Performance Appraisal on Board of Directors” in 2018. The Company plans to conduct the performance appraisal for the given year in accordance with the evaluation procedures and indicators referred to in said Regulations, at the end of each year.

No material gap was found.

(4) 

Does the company regularly evaluate

theindependence of CPAs?

V

(4)

The Company evaluates the CPA’s independence and competency once per year.  The evaluation result was reviewed and approved by the Board of Directors on November 13, 2017, showing that the CPA met the Company’s requirement about independence and competency and should be held qualified to act as the Company’s CPA.  For the standards for evaluating the CPA’s independence and competency, please see “Note 2”.

No material gap was found.

4.

Does the company set up a corporate

governance unit or appoint personnel responsible for corporate governance matters (including but not limited to providing information for directors and supervisors to perform their functions, handling work related to meetings of the board of directors and the shareholders' meetings, filing company registration and changes to company registration, and producing minutes of board meetings and shareholders’ meetings)?

V

The Company delegates the dedicated legal specialists under supervision by the President’s Office, who should be responsible for the company registration and alteration of the registration.  The accounting specialists are also delegated under supervision of Financial dept., responsible for handling the directors’ meeting and shareholders’ meeting affairs and preparing the directors’ meeting and shareholders’ meeting minutes.  The Company delegates the vice president of Group Administration to review the corporate governance affairs handled by said personnel, and also provide the information required by directors and supervisors to perform their duties.

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?

 V

(1)

The Company has delegated th spokesman in charge of the Company’s disclosure of information to and communication with the public.The Company also established the stakeholders section on its website dedicated to timely responding to the important CSR issues concerned by the stakeholders.

(2)

Meanwhile, the Company organized one investor conference and one shareholders’ meeting in 2017, and disclosed the financial report on a quarterly basis, disclosed the important messages on the MOPS from time to time, or released the latest news on the Company’s website.

(3)

The frequency of communication by the Company with various stakeholders in 2017 is stated as following:

1.

Communication with investors via phone - 15 times

2. 

Communication meeting between the labor and management- 4 times

3. 

Audit by customers - 11 times

4.  

Audit by suppliers - 8 times  

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 as the Company’s shareholders service entity dedicated to processing the shareholders’ meeting affairs.

No material gap was found.

7.

Information Disclosure

(1) 

Does the company have a corporate

websiteto disclose both financial standings and the status of corporate governance?

V

(1)

Please refer to the company’s website：

http://www.knh.com.tw/, which already offered the investor section and CSR section to disclose the information about its finance/business and corporate governance.

No material gap was found.

(2) 

Does the company have other

informationdisclosure channels (e.g. building an English website, appointing designated people to handle information collection and disclosure, creating a spokesman system, webcasting investor conferences)?

V

(2)

The Company set up the website in Chinese and English languages, and had various responsible units collect information by business type, and delegated the dedicated personnel to maintaining the disclosed information.The Company disclosed the information about the spokesman system and investor conference on the Company’s website as required.

No material gap was found.

8.

Is there any other important information

tofacilitate 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 four 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 four 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.

No material gap was found.

(2)

Investor relations and rights of

stakeholders:

1. 

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.

2. 

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:

1.

 Ask qualified suppliers to sign the “Code of Conduct for Suppliers” to undertake compliance with the requirements about labors’ interest and right, environmental safety and ethical conduct, etc.

2. 

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

(4)

Directors’ and supervisors’ training records:

The directors and supervisors may pursue their continuing education per their personal need, and shall disclose the continuing education on the website designated by the competent authority. For details, please see “Note 3”.

(5)

Implementation of risk management policies and risk evaluation measures:

1.

The Company demands that visitors and contractors entering the production areas should sign the statement of health, safety, confidentiality and environmental sanitation to maintain the interest and rights of the visitors and the Company. A total of 243 persons signed the statement in 2017.

2.

In order to mitigate the operational risk, the Company organizes fire drills at the factory premises each year.  In 2017, it has organized a total of 6 drills with a total of 363 persons that participated.  Meanwhile, the Company is used to organizing the crisis management drill for IT service interruption in December or January each year.

3.

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 31 reports have been issued in 2017.

(6)

Implementation of customer relations policies:

The Company interacts and works with customers fairly, and accepts the audit and evaluation by important customers from time to time, improve product quality and management per customers’ request, and execute tasks related to CSR. A total of 217 questionnaires for customers’ satisfaction were distributed in 2017, and the average satisfaction attained 96.8 scores.

(7)

Purchasing insurance for directors and

supervisors:

The Company has purchased the liability insurance for the directors and supervisors, and reported the insured value, coverage and insurance premium to the Board of Directors. The liability insurance coverage applicable for 2018 has been reported to the Board of Directors on February 26, 2018.

 9.

Please descript 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. (The evaluation results which were not included in the assessment did not need to be listed)

The scores of the Company's Corporate Governance evaluation are in the block of 81%~100% of all evaluated companies. The following are the improvement plans of the Company：

◆The shareholders’ meeting handbook and supplementary information uploaded within thirty (30) prior to the meeting:

The shareholders’ meeting handbook and supplementary information 2017 are scheduled to be uploaded to the MOPS within thirty (30) prior to the general shareholders’ meeting 2018.

◆E-Vote/Voting by poll adopted by the general shareholders’ meeting:

The Company’s general shareholders’ meeting 2018 will adopt the e-vote to increase the channel via which the shareholders may exercise their right to vote. The general shareholders’ meeting adopts the vote by poll. The assent, dissent and abstention opinion expressed by shareholders against each motion will be recorded in the meeting minutes and disclosed on the MOPS.

◆The general shareholders’ meeting will be attended by at least 1 supervisor and 1 independent director:

The Company has appointed independent directors in 2017. Therefore, the general shareholders’ meeting 2018 will be attended by at least one supervisor and one independent director.

◆Disclosure of the shareholders’ meeting notice, meeting handbook, supplementary information and annual report in English language/disclosure of the annual financial report in English language:

The Company plans to upload the meeting notice in English language within thirty (30) prior to the general shareholders’ meeting 2018, the meeting handbook and supplementary information in English language within twenty-one (21) days prior to the meeting, and the annual report in English language within seven (7) days prior to the meeting, to the MOPS.  Meanwhile, the Company plans to upload the 2017 financial report audited by the CPA in English language (including financial statements and notes thereto) to the MOPS by the end of June 2018.

◆Disclose independent director’s comments on the important motions proposed at the directors’ meeting and the Company’s responsive measures:

The Company has appointed independent directors in 2017, and honestly disclosed the independent director’s comments on each important motion proposed at the directors’ meeting at the general shareholders’ meeting 2017, and the Company’s responsive measures against the independent director’s comments.

◆Evaluation on CPA’s independence:

The administrative unit of the Company’s Board of Directors collects related information and provides the same to the Board of Directors for evaluation.  Upon evaluation, Pan, Hui-Lin, CPA and Chih, Ping-Chiun, CPA of PwC Taiwan are held satisfying the Company’s requirements about independence and competency and qualified as the Company’s CPA.  The result of evaluation on the CPA’s independence and competency will be reported to the Board of Directors for review and approval in 2018, and then posted on the Company’s website.

◆The remuneration to individual director and supervisor disclosed in the Company’s annual report:

The annual report 2017 would disclose the remuneration to the individual director and supervisor voluntarily.

◆The annual report disclosed the concrete dividend policy:

The annual report 2017 has disclosed the Company’s concrete dividend policy.

◆Disclose emissions of CO2 or other greenhouse gas in the past two (2) years:

The annual report 2017 has disclosed the Company’s emissions of CO2 in the past two (2) years.

◆Establish the energy saving and carbon reduction and other waste disposal policies:

The annual report 2017 has disclosed the target and result of the Company’s energy saving and carbon reduction and waste disposal policies.

◆Whether the Company’s annual report disclosed the resolution made by the general shareholders’ meeting of the previous year:

The annual report 2017 has disclosed the resolution made by the general shareholders’ meeting of the previous year and implementation thereof.

◆Take out liability insurance for directors/supervisors and report the same to the Board of Directors:

The Company has taken out the liability insurance for directors/supervisors in 2018 and reported the same to the Board of Directors on February 26, 2018.

◆Company profile, product, organizational structure and management team disclosed on the Company’s website:

The Company has disclosed the Company’s profile, product, organization structure, and names, educational background/working experience and functions of the management team members on its official website.