Annual Report Corporate Governance Shareholder Services Risk Management and Disclosure Practice

Corporate Governance

Ways to deal with shareholders' suggestion or dispute

•Operation：   The Company has retained a spokesman to accept shareholders' suggestions and explain questions with the support from the staff of the function section of the President's Office. After discussion about the shareholder's suggestions or questions, the spokesman will respond to shareholders verbally or in writing to the shareholders' satisfaction. •Compliance with Article 13 of the "Corporate Governance Best-Practice Principles for TSE/GTSM Listed Companies".

The status of the Company's control over the name list of major shareholders of the controlling company and the major shareholders' ultimate controllers:

•Operation：   The Company is used to keeping watch over the variation due to increase/decrease or mortgage of the shareholders holding more than 5% shares and shareholders assuming directors/supervisors, and will disclose the directors / supervisors and shareholders holding more than 10% shares on the information disclosure website designated by the Securities and Futures Commission (SFC) on a monthly basis. •Compliance with Article 19 of the "Corporate Governance Best-Practice Principles for TSE/GTSM Listed Companies".

Way to establish mechanism for control management and firewall between Company and affiliates

•Operation：   (1) The Company and affiliates all perform the central administration of profit. The job-division of each company's staff and property management duty are definite. Therefore, none of the trading staff will assume managers concurrently. (2) The interest accruing to the finance is subject to the average cost for the acquisition of actual fund. The amount thereof shall be re-evaluated subject to the demand for transactions per year. The endorsement applicable to a single enterprise is also subject to the guaranteed scope and limit of amount. (3) This Company is used to considering the comprehensive risk for its trading banks, customers and suppliers, and may prohibit each company from shipping goods and making payments to the same customer or supplier concurrently via computer, so as to decease loss. • Compliance with Articles 14-18 of the "Corporate Governance Best-Practice Principles for TSE/GTSM Listed Companies".

The status of independent directors retained by the Company

•Operation：   The Company does not retain independent directors. • Difference from the administrative practices of listed and OTC companies and reasons thereof:   Despite that the Company does not retain independent directors, the Board of Directors is used to exercising its duty and responsibility pursuant to laws, articles of incorporation and resolutions of shareholders' meetings. All directors shall not only possess professional knowledge, skill and expertise required in the performance of duty but also make endeavor to create the maximum profit for all shareholders in good faith and with care. This can be evidenced by the Company's historical performance and dividend policy. Therefore, this Company believes that it is not necessary to retain any independent directors.

The status of periodical appraisal on independence of a CPA

•Operation：   The Company has never conduct the periodical appraisal on the independence of a CPA in the past. Nevertheless, the Company schedules to ask the CPA to provide a "declaration of independence" per year as of this year. After confirming that the CPA has no financial interest and business relations, other than the expenses for certification and tax cases, with this Company, and that the CPA's family members would not violate the requirement for independence, this Company will report this to the Board of Directors. • Difference from "Corporate Governance Best-Practice Principles for TSE/GTSM Listed Companies" and reasons thereof:   The CPA office retained by the Company is a member of the internationally renowned CPA offices alliance, which is used to asking its practicing CPAs and employees to report their "declaration of independence" to be delivered to their customers, so as to maintain the independence and just in the progress of audit and certification. Given this, the Company has never conducted the periodical appraisal on the independence of the CPA in the past.

The status of independent supervisors retained by the Company

•Operation：   The Company does not retain any independent supervisors. • Difference from "Corporate Governance Best-Practice Principles for TSE/GTSM Listed Companies" and reasons thereof:   The supervisors' duty is to supervise the execution of the Company's business and audit the financial statement and books in good faith. If independent supervisors are retained, it is likely that their duty and responsibility will be confused with the general supervisors' and, therefore, the operation will become too complicated. Therefore, the Company believes that it is not necessary to retain independent supervisors.

The status of communication between supervisors and the Company's employees and shareholders

•Operation：   The supervisors communicate employees and shareholders via the one-stop window played by the Company's spokesman. This operation has run successfully in recent years and been helpful for supervisors to exert their office function. • Difference from the administrative practices of listed and OTC companies and reasons thereof:   Compliance with Article 48 of the "Corporate Governance Best-Practice Principles for TSE/GTSM Listed Companies".

The status of communication channel for interested parties

•Operation：   Interested parties may apply the communication channels, including each business divisions, financial department, procurement department, contract awarding center, administration division of each factory, and spokesman. This operation has run successfully in recent years and promoted and thrived the Company's business. • Difference from the administrative practices of listed and OTC companies and reasons thereof:   Compliance with Article 52 of the "Corporate Governance Best-Practice Principles for TSE/GTSM Listed Companies".

	The status of the Company's website, disclosure of financial business and administrative information
•Operation：   The Company has set up Chinese and English websites, whereon the Company will disclose the correct financial and business information to be declared and made public timely pursuant to the law. • Compliance with Article 56 of "Corporate Governance Best-Practice Principles for TSE/GTSM Listed Companies".

Other manners in which the Company discloses information (such as setting up English websites, designating special personnel to be responsible for collection and disclosure of the Company's information, fulfilling the system of spokesmen, releasing the process of the investor conference on the Company's websites, etc.)

•Operation：   The Company retains spokesmen and deputies in the event of the spokesmen's absence, and designates the special personnel of the President Office to be responsible for collection and disclosure of the Company's information. The Company also provides such information to the spokesmen and relevant business departments, so as to enable them to answer to questions posed by the interested parties and the inquiry made by the competent authorities. • Compliance with Article 56 of the "Corporate Governance Best-Practice Principles for TSE/GTSM Listed Companies".

The operation of such auditing commission as function commission set up by the Company

•Operation：   The Company does not set up any function commissions. • Difference from "Corporate Governance Best-Practice Principles for TSE/GTSM Listed Companies" and reasons thereof:   Though the Company does not set up any function commissions, it has set up the President's Office of the Company Administration for affiliates, which governs the various function sections. The staff thereof come from the affiliates, totaling about 200 persons, who are in charge of the job responsibility of the various function commissions referred to in Articles 27 and 28 of the "Corporate Governance Best-Practice Principles for TSE/GTSM Listed Companies". The operation has run for more than two decades and performed very well, which is very helpful for the operation, management and development of each affiliate of the Company.