2022.02.23
The 17th meeting of the Audit Committee of the 17th Board of Directors

The “2021 Statement on Internal Control System” of the Company

Unanimously approved.

Not applicable

2022.02.23
The 1st communication between Independent Directors and Chief Internal Auditor in 2022

Audit implementation from October 2021 to January 2022

1. Considering that the management system at overseas subsidiaries remains unsound, the Company should actively seek improvements in this regard and specify the relevant management systems.
2. Does the Internal Audit Office exchange views with audit units at other group enterprises? The Independent Directors recommended that the Internal Audit Office exchange views with audit units at other large group enterprises in order to propose structural recommendations to CSC Group. The feasibility of this initiative can be discussed with the Chairman.

1. The Company endeavors to propose positive improvements in terms of internal control and system during auditing for subsidiaries in the future as such moves are of greater help to overseas subsidiaries.
2. The Internal Audit Office has exchanged views and practices on various issues, such as the establishment of company and group audit organizations, areas of audit work, and computer audits, with audit departments at other large manufacturing corporations in Taiwan, such as TSMC, Hon Hai, and CPDC, in May and June 2022.

2022.05.04
The 2nd communication between Independent Directors and Chief Internal Auditor in 2022

Audit implementation from February to March 2022

1. Considering that trade secrets are more abstract than patents and intellectual property, does the Company face any difficulty in implementing internal control over trade secrets?
2. Does the Company have rules and regulations in place with regards to reasonable considerations for the licensing of patents by the Technology Division to subsidiaries? Is it required by law or by the Company's own rules and regulations?

1. Since the second half of 2021, the Company has not only been promoting the importance of this issue, but also set out a clear definition for trade secrets and appropriate protective measures that are specific and feasible. In the future, the Internal Audit Office will include protection of the Company's trade secrets as the focus of audit work in each business cycle.
2. The Company rules and regulations in place for technology licensing which are set with reference to relevant government laws and regulations.

2022.08.03
The 3rd communication between Independent Directors and Chief Internal Auditor in 2022

Audit implementation from April to June 2022

Due to the large-scale of CSC Group, it is difficult for the Group to cover all the bases management-wise. However, all the companies under CSC Group should strictly comply with government regulations and their own rules and standard operating procedures to instill regulatory compliance.

Should any deficiencies of internal control be identified during auditing, the Internal Audit Office will require the business unit involved to make the necessary improvements in accordance with the relevant regulations.

2022.11.02
The 4th communication between Independent Directors and Chief Internal Auditor in 2022

Audit implementation from July to September 2022

1. Is the Chairman of China Steel Chemical Corporation (CSCC) currently appointed by the Company?
2. The Independent Directors expressed their utmost gratitude to the Internal Audit Office for proposing a host of recommendations for improvement for each subsidiary. Compared to other companies, the workload and efforts of the Company's Internal Audit Office were admirable. The Independent Directors specifically reminded the Company to be extra careful as there are often many irregularities in the businesses of joint ventures in China, which are difficult to manage.

1. The current Chairman of CSCC is appointed by the Company and elected by CSCC's Board of Directors, whereas the President of CSCC is recommended by the Company and appointed by CSCC's Board of Directors.
2. Despite conducting business audits on overseas subsidiaries via remote systems and in writing due to the COVID-19 pandemic over the past three years, the Internal Audit Office never compromised on data acquisition and the depth of audit work. Moreover, the Internal Audit Office maintained communication with the Company's subsidiaries and carried out audit work with the aim of helping them refine their management of internal controls.