Corporate Governance

AEMC has explicitly stipulated in the "Principles of Corporate Governance" that the composition of the Board of Directors should take diversity into consideration. Apart from limiting the number of directors concurrently serving as the company’s managerial personnel to no more than one-third of the total board seats, the company should also establish appropriate diversity policies based on its operations, business model, and developmental needs. These policies should include, but are not limited to, the following two major dimensions:

1. Basic Qualifications and Values: Factors such as gender, age, nationality, and culture. The proportion of female directors should ideally account for one-third of the total board seats.
2. Professional Knowledge and Skills: Professional backgrounds (e.g., law, accounting, industry, finance, marketing, or technology), professional skills, and industry experience.

Board members should generally possess the knowledge, skills, and qualities required to perform their duties. To achieve the ideal objectives of corporate governance, the Board as a whole should demonstrate the following competencies:

1. Operational judgment.
2. Accounting and financial analysis.
3. Business management capabilities.
4. Crisis management skills.
5. Industry knowledge.
6. International market perspective.
7. Leadership ability.
8. Decision-making skills.

For more information on the diversity of the Company’s directors, please refer to the "Implementation of Board Member Diversity."

To enhance its industry-leading position and protect its hard-won technological achievements, AEMC has devised an intellectual property strategy that aligns with its business goals and R&D efforts. This strategy is intended to create a business model that uses intellectual property to generate company value. It safeguards AEMC’s operational freedom, strengthens its competitive position, and can be utilized to help the company generate profit. This includes, but is not limited to, patents, trade secrets, trademarks, copyrights, and other intangible assets.

Patent Management 

• The company’s patent management strategy primarily focuses on maintaining operational freedom, patent productization, and product patenting. Through mechanisms such as review processes, reward systems, awareness campaigns, and talent development, the strategy ensures the protection of the company’s R&D achievements and technological leadership. 
• Internally, the company has established a diverse set of innovation encouragement mechanisms to motivate employees to file invention applications. Additionally, a systematic intellectual property management system is in place, supported by a graded review process to ensure both the volume and quality of patent applications are adequately managed.  
• Externally, the company maintains close contact and technical exchanges with patent authorities in key domestic and international markets, assisting patent examiners in gaining a better understanding of the company’s technological content. This collaboration helps improve examination efficiency and secure high-quality patent protection.

Trade Secret Protection

• Trade secrets are critical to maintaining AEMC’s competitive advantage in technological leadership, manufacturing excellence, and customer trust. Beyond safeguarding specific intellectual assets, AEMC has implemented a “Trade Secret Innovation Registration System” to systematically document and integrate the use of trade secrets that enhance its competitive advantages.

Intellectual Property Dispute Management

• In exceptional circumstances, if AEMC cannot secure or retain licensing for essential technologies or IP or fails to safeguard its proprietary rights, resulting infringement litigation may:
• Restrict AEMC’s ability to produce certain products, deliver specific services, or employ necessary technologies.
• Weaken AEMC’s competitive advantage against infringers, thereby limiting opportunities for revenue generation.
  AEMC has taken proactive steps to mitigate the potential impact of IP disputes on shareholder value. These actions include obtaining critical licenses strategically, securing defensive and offensive IP protections for core technologies, and robustly contesting unwarranted patent claims.

Implementation Overview

• AEMC shared its 2024 intellectual property (IP) management progress during the 8th Board of Directors' 14th meeting on November 11, 2024, implementing improvements based on directors' feedback.
  
  Since its establishment, AEMC has been actively promoting intellectual property management. The key initiatives over recent years include:
• Launching the "Trade Secret Innovation Registration System" in 2022.
• Winning the "National Industrial Innovation Award – Outstanding Innovative Enterprise" in 2023.
• Securing the "Silver Award with Advanced Semiconductor Photoresist" at the 2023 Industrial Patent Analysis & Deployment Competition.
• Joining the "Intellectual Property Committee of CNFI" in 2024.
• Integrating "Gen AI" for knowledge management in 2024.
• Participating in the "Trade Secret Sustainable Intelligent Management Alumni Program" in 2024.

IP Achievements

1. Patents: Close to 200 applications worldwide and over 120 granted patents by 2024, with an approval rate of 90%.
2. Trade Secrets: More than 500 registered trade secrets, underscoring a robust IP portfolio.

Policy and Commitment

• "Sincerity, Trust, Service, and Innovation" represent AEMC's core values and corporate culture. These values are a direct reflection of AEMC’s commitment to the Policy on Ethical Business Practices. Integrity is the foundation of our business philosophy, and we are committed to promoting these values throughout all levels of our organization.

• To cultivate a culture of integrity and ensure sustainable growth, AEMC has established key policies approved by the Board of Directors, including the "Corporate Governance Best Practice Principles", "Ethical Corporate Management Principles", "Code of Ethical Conduct", and "Procedures for Ethical Management and Guidelines for Conduct". These policies are publicly disclosed in AEMC’s annual reports. The Board of Directors and management are actively dedicated to upholding these principles and require full compliance from all employees across the group.

• AEMC’s Policy on Ethical Business Practices set clear standards for stakeholders to ensure integrity in all interactions. It strictly prohibits bribery, illegal political contributions, conflicts of interest, and improper relationships with third parties, particularly in high-risk business activities. To address violations, AEMC has implemented the "Whistleblowing Procedure for Violations of Ethical Conduct and Integrity" and "Employee Grievance Handling Procedures". If a violation is confirmed upon investigation, disciplinary actions will be taken in accordance with AEMC’s policies.

Upholding Ethical Management

• AEMC evaluates the integrity history of its partners and ensures all contracts contain clearly defined provisions on integrity. In cases of dishonest behavior, AEMC reserves the right to terminate or rescind the contract at any time.

• Ethical Management is coordinated by the Administration Division and the Legal and Intellectual Property Office, with regular reports submitted to Board of Directors. On March 27, 2024, the Board approved the "Ethical Corporate Management Best Practice Principles" and established the Ethical Management Office. The office is led by the head of the Administrative Management Department as the convener, with the head of the Legal and Intellectual Property Office serving as the deputy convener, and supported by a team of public affairs and legal professionals. This office is responsible for the promotion of the Policy on Ethical Business Practices, conducting relevant educational programs, and investigating reports of ethical or legal violations. It must submit at least an annual update to the Board, detailing the implementation of the policy and the measures in place to prevent dishonest behavior.

• AEMC has established a policy to prevent conflicts of interest, aimed at identifying, monitoring, and managing risks related to dishonest behavior arising from such conflicts. Additionally, AEMC provides appropriate channels for directors, managers, and other stakeholders involved in Board meetings to proactively disclose any potential conflicts of interest with AEMC.

Preventing Conflicts of Interest

• AEMC has established clear guidelines to ensure that its directors and managerial personnel (including president and equivalent positions, vice president and equivalent positions, heads of finance departments, heads of accounting departments, and other individuals authorized to manage company affairs and sign on behalf of the company.) act in alignment with ethical standards. These measures aim to enhance stakeholders’ understanding of AEMC’s commitment to ethical practices.To ensure transparency, AEMC discloses these guidelines on its corporate website, annual reports, prospectuses, and the Market Observation Post System (MOPS). Any amendments are disclosed in the same manner.

Preventing Insider Trading and Conflicts of Interest

• AEMC has implemented the "Procedures for the Prevention of Insider Trading" to safeguard both investors' and AEMC's interests. Monthly alerts are sent to remind employees about insider trading prevention. Since 2023, Ethical Management training, which includes preventing insider trading, proprietary information classification, and basic patent and disclosure training, has been incorporated into compulsory courses for new employees and those in specific roles. A total of 1930 participants have attended the training, accumulating 703 hours of training time.

Whistleblower System/Complaint Mechanism

• AEMC has implemented the “Whistleblowing Procedure for Violations of Ethical Conduct and Integrity,” and provides a designated whistleblowing mailbox to encourage internal employees, as well as external clients and suppliers, to report feedback and dishonest behavior. Upon receiving a report, the office will clarify the intent and specific evidence of the complaint. If there is clear evidence of a legal or unethical violation, or dishonest behavior, the case will be forwarded to management for further action.

• AEMC strictly upholds the confidentiality of the whistleblower’s identity and the contents of the report, guaranteeing that whistleblowers will not face retaliation or improper treatment. Personnel responsible for handling whistleblower cases must ensure strict confidentiality of both the whistleblower’s identity and the reported matter. Additionally, AEMC has established "Employee Grievance Handling Procedures" to manage confirmed violations, with the results submitted to the Disciplinary Committee for appropriate disciplinary actions based on AEMC’s regulations. In addition to the Ethical Management Office, a Sexual Harassment Complaints Committee has been established to enhance internal investigation and reporting mechanisms.

Whistleblowing Channels

Email: whistle@aemc.com.tw