1.

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

V

The Company has established the “KNH Corporate Governance Best-Practice Principles” with reference to the “Corporate Governance Best-Practice Principles for TSEC/TPEx Listed Companies” of the TWSE and the TPEx, and was approved by the board of directors meeting. In addition, the Company has disclosed “The Company’s Relevant Regulations” of “Corporate Governance” on the Company’s website for shareholders’ enquiries.

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?

 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 Act 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 its major 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 execute the 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 related parties, and established and executed the firewall and risk control mechanism with its affiliates.

No material gap was found.

(4) 

Does the company establish internal rules

against insiders trading with undisclosed information?

 V

(4)

The Company’s Board of Directors

passed the “Procedures for Handling Material Inside Information and Management of the prevention of 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 diversified policy for the composition of its members?

V

(1)

The Company’s “Procedures for Election of Directors and Supervisors” and the “Corporate Governance Best-Practice Principles” have diversified policies for the composition of the members of the Board. The Company focuses on the gender equality in the composition of the board of directors, with the goal to have female directors account for more than one-third of total directors, which is presently 33% of total directors.

The Company has directors and independent directors representing 22% and 22% respectively of total employees, amongst which 2 independent directors have been elected for less than 3 years, 1 director is over 71 years old, 4 are 61-70 years old, and 4 are under the age of 60. Each of them has experience and expertise in business management, leadership decision-making, industry knowledge, financial accounting, finance and environmental protection. The board of directors has different professions, genders and working fields to improve the structure of the board of directors’ meeting. For the implementation status of the diversified policy for the composition of its members, please refer to [Note 1].

No material gap was found.

(2) 

Does the company voluntarily establish other 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 evaluation 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 establishing the remuneration committee, the Company is expected to establish an audit committee in 2020, other functional committees will be established when necessary in the future according to the Company’s development needs.

(3) 

Does the company establish a standard to measure the performance of the Board, and implement it annually?

V

(3)

The Company currently appoints the

Remuneration Committee to be responsible for reviewing the policies, systems, standards and structures of directors and managers’ performance evaluation and remunerations based on the “Procedures of Remuneration to Directors, Supervisors and Managers”, and has adopted the “Procedures for the Board of Director’s Performance Evaluation” on May 14, 2018 after approval of the board of directors’ meeting, which requires an annual performance evaluation of the board of directors to be completed within three months after the end of the fiscal year.

At the end of each year, each executive unit collects information on board activities, and the “Finance Department” is responsible for completing the “Questionnaire of Self-Evaluation of Performance of the Board” of the board of directors, whichincludes the following five aspects:

1.

Participation in the operation of the company.

2.

Improvement of the quality of the board of directors' decision making.

3.

Composition and structure of the board of directors.

4.

Election and continuing education of the directors.

5.

Internal Control.

The assessment results will be reported to the Board of Directors for review and improvement. The results of the 2018 Board of Directors’ performance evaluation have been reported to the Board of Directors in January 23, 2019. The Company performed quite well, with the score of 100% for the 2018 performance evaluation. The assessment questionnaire can be found on the official website of the Company. In the future, the Company will consider the performance evaluation of the board of directors, as well as the performance evaluation of the functional committee as reference for determining the individual salary.

No material gap was found.

(4)

Does the company regularly evaluate the independence 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 May 14, 2018, 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 shareholder

V

The Company has currently set up a full-time legal manager under the President’s office to handle the Company’s registration and change matters, and has designated a management accounting commissioner under the finance department to be responsible for related matters and proceedings of the board of directors and shareholders meeting. It is also summarized the corporate governance related matters of the above-mentioned personnel to be reviewed by the deputy general manager of the general management office to protect the shareholders’ rights and improve functions of the board of directors.

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?s’ meetings)?

V

The Company has maintained good communication with investors, employees, consumers, suppliers, distributors, etc., through labor conferences, consumer 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. For the implementation of the stakeholder issues, communication channels, content and frequency of different types of stakeholders in 2018, please refer to [Note 3]. Communications with various stakeholders will be reported to the Board of Directors at May 9, 2019.

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 processing 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?

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 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)?

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 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 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.

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.

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.

3.

Carried out 11 times of auditing

related to matters such as safety and health at the supplier’s business location in 2018, followed by improvements and tracking.

(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 4].

(5)

Implementation of risk management policies and risk evaluation measures:

1.

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 189 persons signed the statement in 2018.

2.

6 fire drills with a total of 352

people were held in the Company’s factories in 2018 in order to reduce operational risks, and crisis management drills are held every December or January. Its Taipei office building also held a fire drill for 3 days with a total of 4 people.

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 47 reports have been issued in 2018.

4.

The Company conducted a

comprehensive update of the employee’s emergency contact information to ensure that employees’ relatives can get information immediately in the event of an emergency, and collected a total of 573 survey data in 2018.

(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 221 questionnaires for customers’ satisfaction were distributed in 2018, and the average satisfaction attained 96.5 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 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.

The Company’s result of the 2018 “5th Session of the Corporate Governance Evaluation System” was 21%-35%. The Company has held a meeting to review projects that did not get a score to implement corporate governance. Descriptions of the finished or ongoing improvement of the review results are as follows:

◆ The candidate nomination system for the election of directors/supervisors:

The Company passed the revision of the Articles of Incorporation by the Board of Directors in February 22, 2019, and the candidate nomination system for the election of directors/supervisors is expected to be discussed and approved at the 2019 Annual Shareholders’ Meeting.

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

The shareholders’ meeting handbook and supplementary information 2019 are scheduled to be uploaded to the MOPS within thirty (30) prior to the general shareholders’ meeting 2019.

◆ Establish a functional committee - audit committee:

The Company plans to establish an audit committee simultaneously with the re-election of directors in 2020 to replace the supervisor’s authority.

◆ Establish a remuneration committee with independent directors accounting for more than half of the members of the committee:

The Company plans to convene the board of directors in June 13, 2019, and re-elect the members of the remuneration committee to constitute independent directors accounting for more than half of the members of the committee.

◆ Material information is simultaneously published in English:

All material information of the Company since January 1, 2019 up to the date of publication of the annual report, are simultaneously published in both Chinese and English.

◆The disclosure of future targets such as measurable energy conservation and carbon reduction, greenhouse gas reduction, and waste management policies: The Company aims to disclose the measurable targets for future waste reduction in the 2018 annual report.