Corporate governance status
1. Has the Company established and disclosed its rules of corporate governance in accordance with the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies?

In accordance with the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies, the Company established its Corporate Governance Best-Practice Principles on May 12, 2011, which was amended after a resolution was adopted by the Board of Directors on February 17, 2022, with disclosure announced on the Company’s website and MOPS.

2. Equity structure and shareholders’ equity

(I) Has the Company established internal procedures to handle shareholders’ suggestions, doubts, disputes, and litigation matters; and have the procedures been implemented accordingly?

The Company has set up the “Whistleblower Reporting and Protection Procedures” to handle matters concerning shareholders’ rights and interests as well as disputes. Moreover, the Company has also set up a shareholder service unit to provide shareholder services, as well as a legal affairs unit to handle disputes and litigation matters in accordance with applicable procedures.

(II)Does the Company possess the list of the Company’s principal shareholders and the list of the ultimate controllers of the major shareholders?

Yes. The Company regularly keeps abreast of the list of the Company’s principal shareholders and the list of the ultimate controllers of the major shareholders.

(III)Does the Company establish and implement the risk control and firewall mechanisms with the related parties?

The Company has established the “Procedure for Transactions between Enterprise Groups, Specified Companies and Related Parties” to govern the Company’s financial and business transactions between enterprise groups, specified companies and related parties to safeguard the Company’s interests, while protecting its shareholders.

(IV) Does the Company set up internal norms to prohibit insiders from utilizing the undisclosed information to trade securities?

The Company has formulated the CMMT Procedures for Handling Material Inside Information to prohibit Company insiders, such as directors or employees, from trading securities using information that has not yet been disclosed on the market to gain illegal profit. The Company regularly offers legal education and training on insider trading for new insiders and employees every year. We have completed relevant legal education and training for all insiders in 2023 as required. Relevant course materials are placed on the Company’s internal website for relevant employees to refer to at any time, to duly increase their awareness of insider trading prevention. The responsible unit regularly tracks and examines the test results of new insiders and all employees to actively promote the values of insider trading prevention, integrity, and ethics, thereby strengthening corporate governance and risk control and establishing a corporate culture of integrity to improve operations.

3. The Composition of the Board of Directors and Their Duties

(I)The Company’s Corporate Governance Best-Practice Principles state that the composition of the board should take diversification into consideration.

 

The primary responsibility of our company's board of directors is the supervision, guidance, and assessment of the performance of the executive team, as well as the appointment and removal of executives. The composition of the board members is characterized by diverse backgrounds, encompassing rich experiences in corporate management or academia, all of whom adhere to exceptionally high ethical standards. Our company adheres to a "Candidate Nomination System," wherein all director candidates undergo a meticulous process of nomination and qualification review. Following approval by the board of directors, these candidates are presented to the shareholders' meeting for official appointment.

In accordance with our company's "Corporate Governance Best Practices, “The composition of the board of directors shall be determined by taking diversity into consideration.  Apart from Directors concurrently serving as company executives shall not exceed one-third of the total number of the board members, the formulation of appropriate diversification policies takes into consideration the operational aspects, and business model, and developmental needs of the company. This includes, but is not limited to, the following two major criteria:
1.    Basic requirements and values: Gender, age, nationality, culture, and ethnicity.
2.    Professional Knowledge and Skills: Professional background, expertise, and industry experience.

All members of the board shall have the knowledge, skills, and experience necessary to perform their duties. To achieve the ideal goal of corporate governance, the board of directors shall possess the following abilities:
1. Operational Judgment. 2. Accounting and Financial Analysis Proficiency.3. Business Management Competence.4. Crisis Management Aptitude. 5. Industry Knowledge. 6. International Market Insight. 7. Leadership Skills. 8. Decision-Making Ability.

The current board comprises eight members, all esteemed figures from both the industry and academia. 
The specific management objectives and achievements of the diversity policy are as follows,

Management objective Achievement

Independent director members not less than one-third.

Achieved

Less than one-third of directors concurrently serve as company executives

Achieved

At least one female director

Achieved


The implementation of the diversification policy for the composition of Board of directors is as follows(2023),

Age  40-50 50-60 60-70 70-80
Gender Male Female Male Female Male Female Male Female
Number of Board member 1 0 3 1 1 0 2 0
Ratio (by gender) 12.5% 0% 37.5% 12.5% 12.5% 0% 25% 0%
Ratio (by age) 12.5% 50.0% 12.5% 25.0%

 

(II) Apart from the Remuneration Committee and Audit Committee, has the Company assembled other functional committees at its own discretion?

Apart from the Remuneration Committee and Audit Committee, the Company established the Sustainable Development Committee upon approval by the Board of Directors on December 30, 2022. 

 

(III) Has the Company established the Regulations Governing the Board Performance Evaluation and its evaluation methods, and does the Company perform a regular performance evaluation each year and submit the results of performance evaluations to the board of directors and use them as reference in determining compensation for individual directors, their nomination, and additional office terms?

The Company passed the formulation of the Regulations Governing the Board Performance Evaluation on January 29, 2021. At least one internal performance evaluation is performed each year and the result is reported to the board of directors to be used as a reference for directors’ remuneration and candidate nomination.

The scope of the overall performance evaluation of the board of directors of the Company covers the following 5 aspects, with a total of 45 items evaluated:

I. Participation in the operation of the Company.

II. Improvement of the quality of the board of directors’ decision making.

III. Composition and structure of the board of directors.

IV. Election and continuing education of the directors.

V. Internal control.

The scope of the self-performance evaluation of the Company’s board members covers the following 6 aspects, with a total of 23 items evaluated:

I. Their grasp of the Company’s goals and missions.

II. Their recognition of duties of the functional committee.

III. Participation in the operation of the Company;

IV. Their management of internal relationships and communication.

V. Their management of internal relationships and communication.

VI. Internal control.

The scope of the performance evaluation of the Company’s functional committee covers the following 5 aspects, with a total of 26 items evaluated:

I. Participation in the operation of the Company.

II. Their recognition of the duties of the functional committee.

III. Improvement in the quality of decision making by the functional committee.

IV. The composition of the functional committee, and election and appointment of committee members.

V. Internal control.

The performance evaluation stated above was carried out and compiled by members of the board, members of the functional committee, and the stock affairs office before the end of 2023 Q1.

The evaluation was conducted using an internal questionnaire.

The result of the director performance evaluation stated above is provided to directors and is used as a reference basis for determining their remuneration as well as for nominating directors or selecting remuneration committee members.

The overall performance evaluation results for the 2022 Board of Directors was excellent, and the board was able to perform its functions properly. It scored an average of 4.7 out of 5.

The performance evaluation result for the functional committee is excellent and that it is able to perform functions properly. It scored an average of 4.9 out of 5.

The members on the board in 2022 did not make any other suggestions. The aforementioned evaluation results were submitted to the board meeting held on March 13, 2023.

(IV) Is an external auditor’s independence assessed by the Company on a regular basis?

The Audit Committee of the Company evaluates the professionalism and independence of the CPAs once a year and then submits the evaluation results to the Board of Directors. The latest evaluation was discussed and approved by the Audit Committee on January 16, 2023, and was submitted for approval by the Board of Directors on January 16, 2023.

I. The evaluation items for the independence of CPAs are as follows:

1. Whether the CPA has a direct or significant indirect financial interest relationship with the Company.

2. Whether the CPA engages in any financing or guarantee for the Company or its directors.

3. Whether the CPA has a close business relationship and potential employment relationship with the Company.

4. Whether the CPA or their audit team members have served as directors, supervisors, or managers at the Company or held a position with a significant influence on the Company’s audit case currently or within the last two years.

5. Whether the CPA has provided the Company with non-audit services that may directly affect the audit work.

6. Whether the CPA has served as a broker for the shares or other securities issued by the Company.

7. Whether the CPA has acted as the Company’s defender or represented the Company in coordinating conflicts with other third parties.

8. Whether the CPA is a relative of any director or manager of the Company or a person with a significant influence on the audit work.

II. Whether the independence and suitability of the certified public accountants are assessed based on audit quality indicators (AQIs): Yes.

Based on the AQIs indicator information, it is confirmed that the audit experience, training hours, and the proportion of audit personnel in the professional audit department of the certified public accountant are all better than the industry average; In order to improve audit quality, the firm is continuously committed to digital transformation work and has established digital strategies and goals to import relevant system tools.

Evaluation result: The CPAs have passed the Company’s independent evaluation criteria.

4. Is the Company a TWSE/TPEx listed company, and has the Company designated an appropriate number of personnel that specialize (or are involved) in corporate governance affairs (including but not limited to providing directors/supervisors with the information needed and assisting directors and supervisors in complying with laws and regulations to perform their duties, convene board meetings and shareholders meetings, prepare board meeting and shareholders meeting minutes, etc.)?

As per Article 3-1 of the Company’s Corporate Governance Best-Practice Principles, the Company has designated the Service Office as the unit in charge of corporate governance affairs and has staffed it with qualified and an appropriate number of corporate governance personnel. As per the regulations on the appointment of the corporate governance executive, the Board of Directors has passed a resolution to appoint Lian Wei-Chung, Vice President and CFO, as the chief corporate governance officer to protect shareholders’ rights and interests and reinforce the board’s functions. He has held managerial positions in charge of the legal affairs, stock affairs, and corporate governance at publicly listed companies for more than three years. He is mainly responsible for business registration and matters associated with the convening of board meetings, meetings of the Audit Committee and the Remuneration Committee, and shareholders’ meetings, while assisting board members with taking office and continuing education, providing assistance to directors with compliance, and handling matters related to investor relations, to improve the effectiveness of corporate governance comprehensively. The implementation of corporate governance has been reported to the Company’s Board of Directors on March 16, 2022, and will be reported to the Board of Directors regularly every year.

 

 

5. Has the Company established mechanisms for communicating with stakeholders (including but not limited to shareholders, employees, clients, and suppliers) and a stakeholder site on the Company website to appropriately respond to material CSR topics stakeholders are concerned about?

The Company has established communication channels with its stakeholders and responds accordingly to its stakeholders regarding important issues of their concern. There is a section on the Company’s website (www.cmmt.com.tw) dedicated to stakeholders. The website contains information on the major contact persons and communication channels: Spokesperson: Huang Pei-Ming, Acting spokesperson: Ma Shao-Heng; contact number: 06-5889988; and email: cmmt_ir@cmmt.com.tw. Please contact the contact persons for detailed contact information.

 

6. Has the Company appointed a professional shareholder services agent to process the affairs related to shareholders’ meetings?

The Company has appointed a professional shareholders service agent to process the affairs related to shareholders’ meetings :

Stock Transfer Agency Department, Capital Securities Corp.

  

 

 

7. Information disclosure

(I) Does the Company have a website set up and disclosed financial business and corporate governance information?

The Company discloses its financial and corporate governance information on the website (www.cmmt.com.tw).

(II)Has the company adopted other information disclosure methods (such as, establishing an English website, designating a responsible person for collecting and disclosing information of the Company, substantiating the spokesman system, placing the juristic person seminar program on the Company’s website, etc.)?

The Company has an official website in English to disclose financial, business, and corporate governance information. The Company has established a spokesperson, and a stock affairs department responsible to disclose relevant information in accordance with the regulations. The Company’s website also discloses relevant information on the investor conference.

 

(III) Has the Company published and reported its annual financial report within two months after the end of a fiscal year, and published and reported its financial reports for the first, second, and third quarters, as well as its operating status for each month before the specified deadline.

The Company announces its financial report within 75 days after the end of an accounting year and publishes its operational information on time.

8. Intellectual Property Management

Intellectual Property Management Policy

Our company is not only engaged in the production and manufacturing of optical films but also focuses on the research and innovation of optical films to provide customers with the necessary optical film solutions. In order to strengthen our competitiveness in the optical film industry, our company has formulated the following intellectual property management policy, aligned with operational objectives:

1.Enhance employees' expertise in intellectual property rights.

2.Strengthen intellectual property management systems.

3.Accumulate research and development capabilities.

4.Enhance brand value.

Intellectual Property Management Goals

1.Conduct at least one intellectual property education and training session for new employees and intellectual property personnel each year.

2.Achieve TIPS (Technology and Intellectual Property Services) Level A certification by the year 2024.

3.Apply for a minimum of two patents by the year 2024.

4.Complete an inventory of domestic and international trademarks by the year 2024.

Intellectual Property Achievements
1.    Submitted a total of 5 patent applications from 2022 to 2023 (with another 5 technologies under internal review). 2 More patent applications are still in progress with 18 patents being granted so far.
2.    Registered for 27 trademarks (one is under review).

Implementation status
The Company regularly reports matters related to intellectual property to the Board of Directors each year, with the most recent report being submitted on Dec 18, 2023.