Hong Da Zipper Co., Ltd.
Audit Committee Organization Regulations
Article 1: These regulations are established in accordance with Article 3 of the "Regulations Governing the Exercise of Powers by the Audit Committee of Public Companies" and the company's articles of incorporation.
Article 2: The number of committee members, term of office, scope of authority, meeting rules, and resources to be provided by the company shall be governed by these regulations, unless otherwise stipulated by law.
Article 3: The primary purpose of the committee's operations is to supervise the following matters:
1. The fair presentation of the company's financial statements.
2. The appointment, dismissal, independence, and performance of certified public accountants.
3. The effective implementation of the company's internal controls.
4. The company's compliance with relevant laws and regulations.
5. The management of existing or potential risks faced by the company.
Article 4: The committee shall consist of all independent directors, with a minimum of three members, one of whom shall be the convener and at least one member shall have accounting or financial expertise.
The term of office for independent directors shall be three years, and they may be re-elected. If a member is removed from office, causing the number of members to be less than the minimum required, a by-election shall be held at the next shareholders' meeting.
If all independent directors are removed from office, the company shall convene an extraordinary shareholders' meeting within 60 days to hold a by-election.
Article 5: Except for the powers stipulated in Article 14-4, paragraph 4 of the Securities Exchange Act, the committee shall exercise the powers that should be exercised by the supervisors as stipulated in the Company Act and other laws. The convener of the committee shall represent the committee externally.
The provisions of the Company Act regarding the actions or representations of supervisors shall apply to the independent director members of the committee.
The term "all members" in these regulations refers to the actual number of members in office.
Article 6: The scope of authority of the committee shall include the following matters:
1. Establishing or amending internal control measures in accordance with Article 14-1 of the Securities Exchange Act.
2. Evaluating the effectiveness of internal control measures.
3. Establishing or amending procedures for major financial transactions, such as acquiring or disposing of assets, engaging in derivative transactions, lending funds to others, providing guarantees, or endorsing for others.
4. Matters involving the personal interests of directors.
5. Major transactions involving assets or derivatives.
6. Major financial lending, guarantees, or endorsements.
7. Issuing or privately placing securities with equity characteristics.
8. Appointing, removing, or compensating certified public accountants.
9. Appointing or removing financial, accounting, or internal audit officers.
10. Reviewing quarterly financial reports.
11. Other major matters as required by the company or regulatory authorities.
Resolutions on the above matters shall require the consent of more than half of the committee members and shall be submitted to the board of directors for resolution.
For matters listed in paragraph 1, except for item 10, if the committee members do not reach a consensus, the matter may be resolved by a two-thirds majority vote of the board of directors, and the committee's resolution shall be recorded in the minutes of the board meeting.
Article 7: The committee shall meet at least once a quarter and may convene additional meetings as needed.
The convener shall notify all independent director members of the committee at least seven days prior to the meeting, stating the purpose of the meeting, unless there are urgent circumstances.
The committee shall elect a convener and meeting chair from among its members, who shall represent the committee externally. If the convener is unable to convene a meeting, they shall designate another independent director member to act on their behalf.
The committee may invite relevant department heads, internal audit personnel, accountants, legal advisors, or other personnel to attend meetings and provide necessary information, but they shall leave the meeting during discussions and voting.
The committee shall prepare relevant materials for reference by committee members during meetings.
Article 8: The company shall provide a sign-in sheet for attending independent director members to sign, which shall be kept for reference.
Independent director members shall attend committee meetings in person, and if unable to attend, may appoint another independent director member to attend on their behalf. If a member participates in a meeting via video conference, it shall be considered as attending in person.
When a committee member appoints another member to attend on their behalf, they shall provide a proxy letter stating the scope of authorization for each meeting. The committee's resolutions shall require the consent of more than half of the members. The results of voting shall be reported immediately and recorded.
If the committee is unable to convene a meeting due to legitimate reasons, the matter may be resolved by a two-thirds majority vote of the board of directors. However, for matters listed in Article 6, paragraph 1, item 10, independent director members shall still provide their opinions on whether they agree or disagree.
A proxy shall be limited to one person.
Article 9: The committee's meetings shall be recorded in minutes, which shall include the following:
1. Meeting number and date, time, and location.
2. Name of the chairperson.
3. Attendance status of independent director members, including names and numbers of attendees, absentees, and those on leave.
4. Names and titles of attendees.
5. Name of the recorder.
6. Reported matters.
7. Discussed matters: decision-making methods and results, summaries of speeches by committee members, experts, and other personnel, names of independent director members with conflicts of interest, explanations of conflicts of interest, reasons for recusal or non-recusal, recusal situations, and dissenting or reserved opinions.
8. Temporary motions: proposer's name, decision-making methods and results, summaries of speeches by committee members, experts, and other personnel, names of independent director members with conflicts of interest, explanations of conflicts of interest, reasons for recusal or non-recusal, recusal situations, and dissenting or reserved opinions.
9. Other matters that should be recorded.
The committee's sign-in sheet shall be part of the meeting minutes and shall be kept safely during the company's existence.
The meeting minutes shall be signed or sealed by the chairperson and the recorder within 20 days after the meeting and shall be distributed to committee members. The minutes shall be kept as important company files and safely stored permanently during the company's existence.
The company shall record the entire meeting process of the audit committee and keep the recording for at least five years, which may be done electronically.
If a lawsuit related to the committee's resolutions is filed before the storage period expires, the relevant recording or video materials shall be kept until the lawsuit is concluded.
If the committee meeting is held via video conference, the video and audio materials shall be part of the meeting minutes and shall be kept safely during the company's existence.
Article 10: The committee's meeting agenda shall be determined by the convener, and other members may also provide proposals for discussion by the committee.
Article 11: If a committee member has a conflict of interest with a meeting matter, they shall explain the important content of the conflict of interest. If the conflict of interest may harm the company's interests, the member shall not participate in discussions and voting and shall recuse themselves.
If a director's spouse, blood relative within two degrees, or a company with a controlling or subordinate relationship with the director has a conflict of interest with a meeting matter, it shall be considered that the director has a personal conflict of interest with the matter.
Article 12: The committee may decide to appoint lawyers, accountants, or other professionals to conduct necessary investigations or provide consultations on matters related to Article 6, and the company shall bear the expenses.
Article 13: Committee members shall exercise their duties with the diligence of a good administrator, faithfully perform their responsibilities as stipulated in these regulations, and be responsible to the board of directors. They shall submit proposed matters to the board of directors for resolution.
Article 14: The committee shall regularly review and revise these regulations and provide them to the board of directors for amendment.
Matters resolved by the committee may be authorized to the convener or other committee members for continued handling, and they shall report to the committee in writing or orally during the implementation period. If necessary, they shall report to the committee at the next meeting for ratification or reporting.
Article 15: These regulations shall be implemented after being approved by the board of directors, and amendments shall be handled in the same manner.
Article 16: These regulations were established on March 24, 2020.
