The responsibilities of Novatek Microelectronic’s Board of Directors are to assist management in the formulation of short, medium and long-term strategic plans which correspond with corporate objectives and meet the expectations of our shareholders and stakeholders, and to vigorously implement the responsibilities of executive supervision, convening meetings every quarter, and maintaining excellent communication with the management level.

The Company passed the “Measures for Performance Evaluation of the Board of Directors” in the October 2019 board meeting, which stipulates that an internal board meeting and functional committee be held every year, and that individual directors carry out a self-performance evaluation. Every three years, a performance evaluation is carried out by an independent external professional institution. The results are reported to the Board of Directors in the first quarter, to serve as a reference in continuously enhancing the board’s operational effectiveness.

The overall Board of Directors, functional committee self-evaluations, and the self-evaluations of directors of the board are carried out by means of internal self-evaluation questionnaires annually. The period evaluated was from January 1 to December 31 of the current year. The questionnaires mainly covered the following facets: degree of participation in Company operations, improvement of decision-making quality, composition and structure of membership, position selection and continuous education, and internal control. After statistical self-evaluation results had been collected in 2022 and 2023, the two-year self-evaluation results of the Board of Directors, the Audit and Risk Committee, the Remuneration Committee and individual directors averaged as “Excellent” and results of the Nominating and Sustainable Development Committee were "Good" in 2022 and  "Excellent" in 2023, which were reported to the Board of Directors in the first quarter of 2023 and 2024, respectively.

• The Independence of External institutions: The Taiwan Corporate Governance Association is an independent professional corporate governance counseling and evaluation institution which has already provided services to more than 300 companies. Its scope spans various industries and it also covers public enterprises with different shareholding structures and board membership compositions, listed OTC companies and general companies with public offerings and non-public offerings of shares.
• Evaluation Methods: Online self-assessments and on-site assessments carried out by interviewers.
• Evaluation Period: December 1st, 2020 to November 30th, 2021.

• Evaluation Criteria:

1. Composition of the Board of Directors
2. Guidance of the Board of Directors
3. Authorization of the Board of Directors
4. Supervision of the Board of Directors
5. Communication of the Board of Directors
6. Internal control and risk management
7. Self-discipline of the Board of Directors
8. Others such as Board meetings, support systems, etc.

• Summary of Evaluations:

1. The Company’s Board of Directors has proactively investigated and planned the establishment of a functional committee to assist in the operations of the board.
2. External directors have been appointed since 2006. Through their wealth of experience and industry connections, external directors have added value to the Company’s operations.
3. ESG-related measures are being vigorously promoted. Outsourced manufacturing supply chain partners are required to produce environmentally friendly products, and this issue has been incorporated into discussions between the Board of Directors and the management team. ESG concepts are being realized in daily operations throughout the Company’s hierarchy, from the top down.
4. The Audit and Risk Committee has taken the initiative to guide internal auditing operations. In addition to routine audits, ad hoc audits have also been enhanced. At the same time, aspects of auditing work such as information security architecture have been integrated to improve the Company’s operational efficiency.

• Evaluation Recommendations:

1. It was recommended that a nomination committee be set up, and that simultaneously specific goals and schedules should be formulated, a written system established, relevant mechanisms improved, and that the Board of Directors be invited to participate together in this, so as to facilitate the Company’s sustainable operation and implement the inheritance of talented personnel.
2. It was recommended that to coordinate the promotion of future ESG concepts in work, key performance indicators, remuneration, and the succession planning of senior managers gradually be linked, as this would facilitate the Company’s future operation and development.
3. It was recommended that the current whistleblower mailbox be capable of simultaneously allowing independent directors to directly receive the content of unscreened or forwarded reports, to facilitate independent directors gaining a direct understanding of important information.

The company established the Nominating Committee in July 2022 and renamed it the Nominating and Sustainable Development Committee in July 2024, which be responsible to nominate candidates for directors and independent directors, strengthen the competency of the Board of Directors and enhance enterprise sustainability value. The Company’s selection of directors is based on the overall configuration of the Board of Directors and the realization of the goal of diversifying the professionalism and background of directors, then be voted by the shareholders' meeting.

The Company's ongoing director succession plan is based on the Company's amended "Director's Nomination and Selection Policy" approved in 2023, and a director candidate database is established according to the following standards:

• Board members need to have professional backgrounds (such as in law, accounting, industry, finance, marketing or technology) and professional skills (such as operational judgment, accounting and financial analysis, business management, crisis management, industry knowledge, international market outlook, leadership and decision-making) and attach great importance to enterprise sustainability and social participation: corporate governance, environmental sustainability, social responsibility, legal compliance and human rights protection, etc. Apart from requiring that board members have professional backgrounds and specialized skills, in order to prepare them for succession, the Company arranges for each director to take at least six to 18 hours of refresher courses every year. These courses are divided into two main categories: core courses and professional courses, covering areas such as enhancing the performance of Board of Directors, finance, accounting, as well as fields like corporate social responsibility, risk management, internal control systems, corporate governance, etc. Directors are thereby helped to fully familiarize themselves with the Company’s operational activities and acquire new knowledge of the industry’s underlying structure, so as to continuously hone their professional capabilities.
• Diversification of the Board:

1. At least one female director
   
2. The number of independent directors exceeds one-half of the board seats
   
3. At least one seat with accounting or financial expertise
   
4. At least one seat with academic background
   
5. Diverse industrial experience: Experience of directors covers at least 3 different industries
   
6. All directors are not a spouse or relative within the second degree of kinship to any of other directors
   
7. Limit the number of directors who also serve as managers of the Company to less than one-third of the total directors