Novatech is committed to promoting a transparent,accountable, and effectively supervised corporate governance system, continuously strengthening board
functions, enhancing the leadership and management capabilities of the executive team, and enhancing information disclosure to ensure shareholders' rights.
Novatech has been consecutively ranked in the top 5% of TPEx-listed companies in the Corporate Governance Evaluation by the Taiwan Stock Exchange for five terms(6th-10th term) and achieved top 10% performance among listed companies with market value over NT$10 billion in electronics category in the 10th term. These achievements have been widely recognized, positioning Novatech as a leader in corporate governance among domestic listed companies. In the future, Novatech will continue to align with international standards and advance towards becoming an excellent sustainable enterprise.
Sustainable Governance and Risk Management ┃ Management Approach
Significance and Meaning to the Company
- Disclose information about the organization's governance structure, composition, knowledge, roles, and remuneration.Ass i s t e x ternal stakeholders in understanding how the organization manages and integrates economic,environmental and human (including human rights) impacts into its strategy and operations. The Company's Board of Directors and senior management participate in the governance of economic, environmental, and social issues,establish relevant systems and performance monitoring, and provide necessary resources to support sustainable strategies and decision-making.
- The Company' s risk identification, risk policies, risk management and assessment procedures, and strategies for mitigating risks.
Management Strategies
- The Board of Directors is responsible for supervising company operational strategies, developing strong business leaders,and safeguarding investor interests. The Board of Directors,Audit Committee, and Risk Management Group, establish risk management policies to identify and assess risks from different sources, and effectively monitor, prevent, or control them.
Policy/Commitment
- Novatech's Sustainability Declaration, Corporate Governance Best Practice Principles, Risk Management Policy.
Actual and potential, negative and positive impacts
Positive:
- A robust governance framework ensures effective managementoperations and resource allocation of the enterprise, promoting sustainable operations and enhancing stakeholder trust.
- Conduct advance assessment and planning to mitigate operational risks, minimize potential losses, and prevent business interruptions.
Negative:
- A disorganized governance structure may create internal communication barriers or uneven resource allocation, affecting operational efficiency and hindering the achievement of corporate objectives.
- If potential risks are not anticipated and prepared for in advance, incidents may result in financial and reputational losses for the company, or potential business opportunities may be lost, and in severe.
Action
- Regularly convene functional committees and Board meetings to discuss major company matters and establish systems to prevent conflicts of interest among directors.
- Regularly conduct performance evaluations of directors and senior executives, and review remuneration policies, systems, standards, and structures.
- Monitor capital adequacy based on business scale, credit risk, market risk, operational risk conditions, and future operational trends.
- Establish management mechanisms to measure and monitor liquidity positions for liquidity risk.
- Establish business risk management by considering overall exposure, own capital and liability characteristics when making asset allocations.
* This material topic has no actual activities or business relationships involving negative impacts in the current year.
Organizational Structure
Board Composition and Operations
The Board of Directors serves as the highest decision-making and governance body. In addition to exercising the powers granted by the Company Act, Articles of Incorporation, and shareholders'resolutions, it is responsible for overseeing overall operational responsibilities and the implementation results of management's policies, as well as overseeing the planning and execution of sustainability development. Adhering to the Articles of Incorporation and Procedures for Election of Directors, the Company's Board of Directors adopts a candidate nomination system to elect 7 directors, each serving a 3-year term. Novatech has 4 independent directors, accounting for approximately 57% of all Board seats.In 2024, a total of 6 Board meetings were held, with a 100% actual attendance rate from directors. In
addition, Novatech has established three functional committees: the Audit Committee, Remuneration Committee, and Sustainability and Nominating Committee", which are responsible for reviewing important proposals and discussing significant issues related to economic, environmental, and social matters.
Board Diversity Policy
Novatech has established corporate governance guidelines that require consideration of diverse board composition and the formulation appropriate guidelines based on company operations,business models, and development needs. This includes, but is not limited to, two major aspects: basic conditions and values, as well
as professional knowledge and skills. Additionally, board members should generally possess eight core competencies necessary for performing their duties. To ensure the diversity and professionalism of the Board of Directors, Novatech has established a Sustainability and Nominating Committee responsible for director nominations.The committee reviews the qualifications of director candidates according to relevant regulations, strengthens the composition of the Board through rich experience, further enhances corporate governance, supervises management decisions, and improves the Company's operational quality.
Diversity in Board Composition
- Basic Conditions and Values: Gender, Age, Nationality,and Culture, etc.
- Professional Knowledge and Skills: Professional Background (such as Legal, Accounting, Industry,Finance, Marketing, or Technology), Professional Skills,and Industry Experience, etc.
Diversity in Required Professional Competencies
- Operational Judgment
- Accounting and
- Financial Analysis
- Business Management
- Crisis Management
- Industry Knowledge
- International Market
- Perspective
- Leadership
- Decision-Making
In accordance with the above principles, the 7 members of the Company's 10th Board of Directors include: Chairman Liang, Chin-Li, Director Ma, Wei, and Director Yang, Ying-Tang, who have management experience in different industries and excel in leadership, business management, and possess diverse industry knowledge, decisionmaking capability, and international market perspective; Director Li, Cheng who has legal affairs experience;Directors Chi, Chih-Yi and Yang, Sheng-Yung who have financial expertise; and Director Chiu, Hui-Yin who is a practicing accountant. All directors and independent directors possess comprehensive and rich educational and professional backgrounds, enabling the Board to continuously perform its functions in business decision-making,leadership, and supervision.
Board of Directors Conflict of Interest Management
To ensure the Board of Directors effectively fulfills its supervisory and balancing functions, Novatech's Board adheres to the principles of integrity and conflict of interest avoidance.The Code of Conduct for Directors' Meetings establishes a recusal system. When meeting agenda items involve personal interests of directors, their spouses, relatives within the second degree of kinship, or companies with control and subordinate relationships with directors, they are required to voluntarily
recuse themselves and may not participate in discussions or voting. Information regarding Board members' attendance,conflict of interest recusals, directors' concurrent positions, and major shareholders' shareholding status is disclosed on pages 21, page 5, and page 8 of the Company's 2024 Annual Report.
Board Members' Continuing Education Status
The Company continues to arrange training courses for Board members to enhance their professional knowledge and management capabilities. The courses cover three aspects:economic governance, environmental, and social dimensions,including corporate governance, corporate sustainability transformation, sustainable financial information disclosure, and climate change. In 2024, all continuing directors completed more than 6 hours of continuing education, achieving 100% compliance with the required training hours in line with the continuing education guidelines. For detailed information on continuing education status, please refer to page 75 of the Company's 2024 Annual Report.
Board Performance Evaluation
To implement corporate governance and continuously strengthen the operational efficiency of the Board of Directors and functional committees, Novatech has established the Rules for Performance Evaluation of Board of Directors, which regulates the cycle, scope, method, procedure, and criteria for performance evaluation of the Board and functional committees. The evaluation results serve as a reference for the selection or nomination of directors. In addition to legal compliance, corporate governance, and risk management, the performance evaluation criteria also incorporate sustainability indicators such as corporate sustainable operations to ensure that the Board and functional committees fulfill their responsibilities in various aspects, including corporate governance, operational management, and corporate sustainability practices. The internal performance evaluation of the Board of Directors for 2024 was conducted in early 2025,with internal evaluation scores exceeding 90 points, indicating good operational performance.
In addition to internal self-evaluation, the Board's performance is evaluated by an external professional independent institution every three years. In 2023, the Taiwan Corporate Governance Association was appointed to conduct an on-site evaluation of Board effectiveness. Through guidance and exchange with the evaluation committee, the Board can maximize its functional capabilities and receive a professional and objective assessment report. The performance evaluation results are disclosed on the Company's official website:
Communication Mechanism for Material Sustainability Issues
Novatech's Sustainability Promotion Group reviews the effectiveness and methods of stakeholder communication at least once annually. It regularly reports sustainability promotion progress to the Board of Directors. The Board is responsible for formulating the Company's sustainability development vision. It receives sustainability development reports, monitors the progress of various sustainability initiatives, and provides statements and recommendations on sustainability development policies while considering both the Company's operational performance and the implementation of social, environmental, and corporate governance initiatives.In November 2024, a report was presented to the Board of Directors regarding stakeholder communication status up to the third quarter of 2024.
In 2024, the Board of Directors completed discussions or decisions on the following sustainability-related matters:
Management Team
The Novatech management team consists of the President and managers from various departments. Upholding the business philosophy of "Building a high-tech industry ecosystem together with customers and supply chain partners," when the Board of Directors resolves major matters, the team follows principles of sustainable operations, integrity guidelines, and risk assessment authorization measures, ensuring the rights and interests of employees and shareholders. For information about the educational and professional background of Novatech's operational team,please refer to page ** of Novatech's 2024 Annual Report.
Risk Management
Risk is a key elements in a company's operational growth. To control and mitigate operational risks, support the Company's growth, and uphold sustainable business philosophy, Novatech has established a Risk Management Policy as the highest guiding principle and basis for implementation of risk management. This
policy clearly defines risk management policies, objectives, scope,organizational structure, unit responsibilities, risk management mechanisms, and implementation processes.
The Board of Directors is Novatech's highest risk management authority, with the Audit Committee under the Board responsible for supervising risk management-related operational mechanisms, and a Risk Management Group has been established. The Risk Management Group is convened by the President, who is responsible for coordinating and directing the implementation and operation of risk management plans. Responsible units within each department manage the various risks faced in their business operations and regularly report the status of risk management implementation to the Audit Committee and Board of Directors. All employees are responsible for identifying and reporting risks. If any significant risk events that may affect company operations are discovered,they must immediately report to their supervisors and the Risk Management Group, which will evaluate response procedures to mitigate the risk and its impact.
Risk Management Organization Structure
Risk Management Procedures
Risk Management and Response Strategies
Based on the scope covered by the risk management framework, Novatech has identified significant risk items and assessed risk levels in its 2024 risk assessment results.Appropriate risk control methods have been selected to formulate response strategies and monitor the implementation of related plans to ensure their effective execution. The main risk management and response strategies are explained in the table below.
Internal Audit
Novatech has established an internal control system in accordance with the Regulations Governing Establishment of Internal Control Systems by Public Companies. The Auditing Office, which reports to the Board of Directors,executes internal audits. The Auditing Office has one chief auditor and assigns qualified and appropriate audit personnel to carry out related work based on the Company's scale, business conditions, management needs, and other relevant regulatory requirements. Based on risk assessment results, audit personnel develop annual audit plans which are implemented after Board approval. Internal control deficiencies and irregularities are truthfully documented in audit reports, and regular reports on audit implementation and quarterly deficiency improvement
tracking results are presented to the Audit Committee and the Board of Directors.
The 2024 audit operations included on-site inspections or document reviews of various Novatech operating units and operating sites, including Winmax Technology (Shanghai), Winmax Technology (SuZhou), Winmega Technology Corp., NTEC, and Dadewin Technology Corp. Related internal control system self-assessments and
operational risk indicator checks were also conducted. In 2024, a total of 146 audit reports were issued with 140 deficiency improvement recommendations. No major violations of integrity management risk incidents occurred.
Regular Internal Audit Process
Operating Performance
Novatech is accountable to stakeholders through strong operating performance, which forms the foundation for sustainable business operations and enables the Company to invest additional resources in optimizing corporate governance, enhancing environmental protection, and promoting social engagement in the future. In view of this, Novatech has established relevant systems and holds management review meetings to conduct annual reviews and improvements, implementing various management tracking indicators to enhance the Company's operational and financial performance.
Performance
Benefiting from the robust development and active expansion of the semiconductor industry, Novatech's consolidated operating revenue in 2024 was NT$10,382 million,representing an increase of approximately 13.6% compared to 2023. In terms of profitability, the consolidated net profit attributable to the parent company in 2024 was NT$1,279 million, reflecting an increase of 22.7% compared to 2023.
The economic value generated and distributed by the organization in 2024 is shown in the figure below. For more information on operating performance, please refer to the consolidated financial reports on our website:
• (Note 1) As the par value per share of the Company's stock is not NT$10, the aforementioned ratio to paidin capital is alternatively calculated based on the ratio of equity attributable to property owners of the parent company in the balance sheet.
• (Note 2) Cash dividend is denominated in New Taiwan Dollars.
• (Note 3) Employee remuneration and benefits exclude remuneration for directors and supervisors.
Management Review Meeting
Novatech has established the Management Review Procedure to regulate and track the progress of management system objectives, serving as preventive and improvement early warning measures during company operations. To ensure the continuous appropriateness, accuracy, and timeliness of the management system, management review meetings are held regularly to assess and improve the Company's operational performance and achievement of key performance indicators. The
meeting discussions covers the Company's management system processes and the implementation of risk management measures. Senior executives lead the heads of various units in conducting management reviews and business assessments. In addition to designating responsible units for time-bound improvements based on meeting resolutions, all matters are formally reported to the President via written documents or immediate emails, and relevant personnel are assigned to carry out
the tasks. This ensures that the management system and its processes,customer requirements, and resource needs can receive timely and effective improvement recommendations, thereby successfully achieving the Company's performance indicators.
Management Review Meeting Flowchart
Nova Tech is accountable to its stakeholders through good operating performance, which serves as the basis for sustainable business operations and enables the company to invest more resources in optimising corporate governance, enhancing environmental protection and promoting social participation in the future. In view of this, Nova Tech has formulated relevant systems and held annual management review meetings to review and improve the company's operations and financial performance, as well as to implement various management tracking indicators.
