All BOD members are elected by all shareholders through voting. Based on the operational model, and development and practical needs, the Company selects the candidates for directorship based on their professional backgrounds, education (experience), integrity, profession or relevant professional qualifications, and experiences. The diversity in their backgrounds and viewpoints are also taken into consideration, including gender, age, nationality and culture. The BOD selects qualified candidates with extensive industrial experience to improve the Company’s overall professional knowledge and skills, so as to achieve the ideal goal of corporate governance. As such, the directors and managers are also arranged to take part in courses related to economy, society, and environment.

The composition of the board of directors of the company is stipulated in Article 20 of "Corporate Governance Code of Practice". The diversity policy is: the composition of the board of directors should consider diversity, except that the number of directors who also serve as company managers should not exceed one-third of the board seats. , and formulate appropriate diversification policies based on the company's operations, business model and development needs, which should include but are not limited to the following two aspects:

1. Basic conditions and value: gender, age, nationality, culture, race or ethnicity
2. Professional knowledge and skills: professional background (such as accounting, industry, finance or technology), professional skills and industry experience, etc.

Board members should generally possess the knowledge, skills and necessary attainment to perform the duties. To achieve the ideal goal of corporate governance, the board of directors as a whole should possess the following capabilities: operational judgment, management, leadership and decision-making, crisis management, industry knowledge and international market perspectives.

The Board of Directors of the Company has nine directors, of which three are employees, accounting for less than one-third of the total number of directors. The company's board of directors has a diverse background. Its members include presidents of national universities, directors of research institutions, experts in the healthcare field, scholars and financial experts in the fields of financial accounting and strategic management, and professionals in the semiconductor and electronics industries. All directors are familiar with the ecosystem and the overview of the technology industry, and each director is capable of providing the company with professional advice from different perspectives.

Management objectives of the current board of directors: The Company attaches great importance to gender equality in the composition of the board of directors. The Company plans to add one female director in each subsequent election to gradually achieve a one-third female directorship.

The implementation status of the board diversity policy is as follows:

• Performance Evaluation

• After the audit report and follow-up report are reviewed by the audit supervisor of the Company, they shall be delivered to each independent director by the end of the following month. The audit results and follow-up status are reported to the independent directors at the Audit Committee and separate communication meetings with the independent directors, and the communication between the two parties is smooth.
• The Company invites certified public accountants to attend the Audit Committee and the certified public accountants report and communicate with the independent directors separately on the quarterly and annual financial statement review or audit results, key audit matters, amendments to IFRSs or the impact of the release of other laws on the Company.

On April 9, 2021, the Company’s Board of Directors appointed Ms. HSU, MEI SHAN - the assistant vice president of the Financial Division - as the corporate governance supervisor , and set up a corporate governance promotion unit to safeguard shareholders’ rights and interests; as well as to strengthen the functions of the Board of Directors, including handling matters related to the Shareholders Meeting, Board of Directors, Audit Committee and Remuneration Committee in accordance with the law; assisting directors in their taking office and continuing further education; providing directors with information needed to perform their duty; and assisting directors in complying with laws, as well as Articles and regulations of the Company.

The continuing education courses attended in 2021 & 2022 of the corporate governance supervisor.

In order to implement the prohibition of insider trading, the company formulated the "Management Measures for Preventing Insider Trading" and revised Article 10 of the "Corporate Governance Code of Practice" through a resolution of the board of directors on February 8, 2011, requiring insiders to be informed of the company's financial reports or relevant stock trading control measures from the date of the performance content include (but are not limited to) that directors are not allowed to trade their stocks during the closed period of 30 days before the announcement of the annual financial report and 15 days before the announcement of the quarterly financial report.

The implementation of the company's publicity is as follows:

1. For board directors, a publicity manual for the prevention of insider trading and the code of practice for corporate governance shall be provided when being on board.
2. For all employees, to strengthen the concept of insider trading and awareness of legal compliance, the company regularly organizes education and training courses on the prevention of insider trading-related laws and regulations every year, and implements online tests. In 2024, the complete rate reached 100%.
3. During the closed period before the quarterly or annual financial report announcement, the company will send letters to remind insiders of the provisions of Article 10 of the "Corporate Governance Practice Code" to prevent insiders from accidentally violating the regulations. Before the start of each closure period of the year, the above-mentioned control measures shall be strictly implemented.

The Auditing Office of PSMC is an independent unit directly under the Board of Directors and is allocated adequate qualified persons as full-time internal auditors. Chief Internal Auditor reports the audit operations to the Audit Committee and the Board of Directors on a regular basis and attends the Board of Directors meetings, and reports to the chairman and each independent director on as needed basis. The appointment, dismissal, evaluation, and salary and compensation of internal auditors shall be all handled in accordance with PSMC’s human resources operation regulations, in addition, the appointment or dismissal of Chief Internal Auditor shall be approved by the Audit Committee and submitted to the Board of Directors for a resolution.

The Auditing Office shall formulate annual audit plans based on the results of the risk assessment, to conduct the audit items monthly in accordance with the annual audit plan approved by the Audit Committee and submitted to the Board of Directors, also to conduct special audits as needed, in order to discover any defects and irregularities of internal control systems and propose recommendations for improvement, and to prepare audit reports with the corrective measures of the audited departments. After having presented the reports, follow up on the matters and prepare follow-up reports on a quarterly basis until such time as correction is made, to ensure that the relevant departments have taken appropriate corrective measures in a timely manner. After having presented the reports and follow-up reports, the Auditing Office shall submit the same for review by each independent director by the end of the month next following the completion of the audit items.

The audit scope of the Auditing Office covers the internal control system of PSMC and subsidiaries, including various control activities which be divided by operating cycles and non-operating cycles, to audit on control activities such as research and development, sales, procurement, production, labor and wage, financing, Property, plant and equipment, investment, and management, in order to assist the board of directors and mangers in inspecting and reviewing defects in the internal control systems as well as measuring operational effectiveness and efficiency, and shall make timely recommendations for improvements to ensure the sustained operating effectiveness of the systems and to provide a basis for review and correction.

The Auditing Office sees that all departments and subsidiaries conduct self-assessment of internal control system every year, and reviews the self-assessment documents to ensure the quality of implementation, in order to implement the company's self-monitoring mechanisms. The results of the self-assessment, together with the reports on the correction of defects and irregularities of internal control systems discovered by the Auditing Office, to serve as the primary basis for the board of directors and general manager to evaluate the overall efficacy of all internal control systems and to produce Internal Control System Statements.

IP Management Plan:

PSMC has devised an intellectual property right management plan aligned with its three primary foundry services (i.e. customized logic, integrated circuits, and discrete components), and the Open Foundry operation model. The goals are to strengthen innovation, optimize patent portfolio, ensure that the R&D results are fully protected, and provide customers with advanced and comprehensive foundry services.

• Innovation
  Based on operational strategies, we have been drawing roadmaps for the technologies and products, specifying scopes of work for industry-academy cooperation, and improving innovation in conjunction with relevant patent applications.
• Patent
  We consolidate patent portfolio according to our technology milestones in pursuit of qualities as well as quantities with annual adjustment of application nations and volumes. With respect to core technologies, our IP team conducts patent mapping analysis for R&D engineers to develop optimal IP layout and avoid potential patent infringement.
• Implementation
  We have enacted the rule "Procedures for Intellectual Property Management" and provided IP training to encourage employees to contribute their ideas and make new invention proposals for relevant technologies in R&D, production and operations. With the efforts of employees, IP team, Intellectual Property Committee which reviews our internal patent proposals, and IP management system, we endeavor to continuously achieve annual target of patent applications.

IP Management Achievement:

We have been granted 1,355 global patents by December 31, 2024, mainly in Taiwan, USA and China. Among them, 162 patents were approved in 2023 and 145 patents were approved in 2024.
We regularly report the intellectual property management plans and implementation status to the board of directors every year. The intellectual property management direction and implementation results and performance for 2023 were reported to the board of directors on February 20, 2024, and the intellectual property management plan and implementation results for 2024 will be reported to the board of directors in the first quarter of 2025. In 2023, we applied for the Taiwan Intellectual Property Management System (TIPS) A-level certification from the Industrial Development Administration of the Ministry of Economic Affairs, and completed relevant systems and document updates and conducted financial education and training courses in accordance with the verification requirements to ensure that the operation and effectiveness of the intellectual property management system meet expected goals. Our TIPS A-level verification application was approved on December 29, 2023, and the certificate is valid until December 31, 2024. To continue to strengthen the acquisition, management and application of intellectual property rights, improve technological innovation, optimize patent layout, and strengthen our competitiveness with complete intellectual property management in accordance with the company’s strategies and operational goals, we applied for the Taiwan Intellectual Property Management System (TIPS) A-level certification from the Industrial Development Administration of the Ministry of Economic Affairs and the application was approved again. The certificate is valid from December 31, 2024 to December 31, 2026.