Corporate Governance

Corporate Governance Organization Structure

Dynamic Holding (3715) was newly listed on August 25, 2022. The board of directors was fully re-elected on May 18, 2023. On May 29, 2023, the Risk Management Committee was established under the board of directors, and on December 16, 2024, the Sustainability Development Committee was formed under the board of directors.

Functional Committee

Succession Planning

Succession planning, also known as management succession planning, is a process the company targets and keeps tracking the high-potential talents in key positions and develops these high-potential talents. High-potential talents refer to those who the company considers the potential candidates to be competent in senior management positions. Succession planning is to obtain the human resources of the organization systematically and effectively through internal promotion, which is essential to sustainable development of the company.

In view of the limited managerial career time of each senior manager, the company must carry out the successor program a considerable time before the end of the managerial career of those in key positions in order to prepare the succeeding talents; so that the company can realize sustainable development. In year 2016, the company established successor program for key positions, and has been tracking and developing high-potential talents to systematically and effectively acquire human resources of the organization.

In the company's succession planning, in addition to being professional and having outstanding executive ability, the successors must reach a consensus with the company on values. The successors should be possessed of honesty, enthusiasm, customers’ trust, innovation
Dynamic's business philosophy is customer satisfaction, commitment to quality, continuous innovation, smart manufacturing and corporate sustainability,This is the philosophy that all of our senior executives at Dynamic must uphold in management.
The incumbent should scheme out the training plan for his/her successor and update the follow-up development and implementation status every six months, then submit it to the board of directors for review.
In order to avoid affecting the successor's mentality at work and to objectively observe the successor's performance, Dynamic can make adjustments or replacements when necessary. We have not disclosed the successor list to the successor themselves or others.
In 2024, Dynamic Holding reviewed succession plans for a total of eight positions (including the Chairman, independent directors, and key management personnel). Training programs were formulated or external hiring was considered. The training content was tailored to the specific requirements of each role and the needs of the individual successor, as determined by the current position holder. This plan was approved by the Board of Directors on December 16, 2024.

Assessment of the Independence of CPA

Risk Mamagement

Risk Management Policies and Procedures

The company formulated the "Risk Management Policy" on October 30, 2015, and established the "Risk Management Committee", which was approved by the board of directors as the highest guiding principle and execution unit of the company's risk management. The risk management committee of the company regularly evaluates the frequency of internal and external risks and the severity of the impact on operations through the risk matrix (Risk Map) on a quarterly basis, and defines risk levels and priorities, hoping to respond in a cost-effective manner. At the same time, according to the latest internal audit development and standard requirements, monitor the potential risks of internal operations and implement preventive measures to strengthen risk management, and report quarterly to the board of directors. In addition, we evaluate and disclose the major issues in the ESG report every year based on the opinions of internal and external stakeholders of the company, and include them in our risk management process for evaluation and discussion.

On May 29, 2023, to strengthen the functions of the Board of Directors and enhance the risk management mechanism, the Board appointed four independent directors to serve as members of the first Risk Management Committee. The committee was established under the Board of Directors and operates in accordance with the "Risk Management Committee Organization Regulations," which were approved by the Board on August 4, 2023. The term of the first Risk Management Committee members is effective from May 29, 2023, to May 17, 2026, aligning with the term of the current Board of Directors.

Risk Management Category

The Risk Management Committee assesses and discloses significant issues related to strategic risks, operational risks, financial risks, hazard and climate change risks, business ethics and human rights risks, as well as other hidden risk factors based on the perspectives of both internal and external stakeholders. These risks are evaluated and disclosed in the ESG report. The committee also monitors and supervises the execution of control measures, ensuring the effective use of resources to uncover potential opportunities and mitigate the greatest crises.

Operation of the Risk Management Committee
The Risk Management Committee under the Board of Directors is responsible for monitoring and making recommendations to the Board of Directors. The executives in the management team who are responsible for strategy, operations, finance, hazards, climate change, business ethics, human rights, Stakeholders' engagement etc., continuously evaluate the impact of external economic, environmental, and social changes on the organization, thereby looking for opportunities, and formulating countermeasures and action plans. The report is summarized and submitted to the General Manager for approval, and then supervised by the Risk Management Committee. Its operation is as follows:

The Risk Management Committee’s report date and risk topics to the Board of Directors in 2024 are as follows:

Date of the report of Risk Management Committee to the Board of Directors	Risk Issues
2024/02/27	Reporting items: Business risks (Red Sea crisis)
2024/07/29	Reporting items: 1. Conducting nature-related risk and opportunity assessment based on TNFD (Nature-related Financial Disclosure) 2. Operational risk (ChatGPT’s information security risk) 3. Strategic risk (Geopolitical risk) Discussion items: Proposed formulation of the company’s “Risk Management Policy and Procedures”
2024/12/16	Reporting items: 1. Conducting business ethics risk and opportunity assessment 2. Conducting community issue risk and opportunity assessment 3. Tracking progress on geopolitical risk issues

Risk assessment of environmental, social and corporate governance issues related to company operations
Based on the principle of materiality, the company conducts risk assessments on issues related to the company's operations, such as the environment, society, and corporate governance, and formulates relevant risk management policies or strategies based on the assessed risks and opportunities as follows:

Specific implementation of "Prevention of Insider Trading"

In 2024, the company implemented internal regulations prohibiting directors, employees and other insiders from using undisclosed information in the market to buy and sell securities. The implementation is as follows:

1. The company provides education and promotion on the "Management Measures for Preventing Insider Trading", "Internal Important Information Processing Procedures" and related laws to current directors, managers and employees. For new directors and managers, education and promotion will be arranged within 3 months after taking office. For new employees, human resources will provide education and promotion during pre-employment training. After the course, the presentation will be placed in the company's internal system for directors, managers and employees to study and refer to.
2. The Company conducts "Insider Trading Prevention Training" and related laws and regulations education and promotion at least once a year. In 2024, the Company conducted a one-hour online education and promotion for 57 current directors, managers and managers above the manager level on November 20. The course content includes: insider trading regulations and prevention practices, equity change regulations and reporting practices, large-scale acquisitions, short-term trading, and links to the "Insider Trading Prevention Zone" of the stock exchange. After the course, the presentation will be placed in the company's internal system for directors, managers and managers above the manager level to study and refer to.
3. Directors should not trade their stocks during the closed period of thirty days before the annual financial report announcement and fifteen days before the quarterly financial report announcement. The Company will notify the directors of the meeting date of the Board of Directors of the following year at the end of each year, and will also include the closed period for trading their stocks before the announcement of each quarterly financial report (thirty days before the annual financial report announcement and fifteen days before the quarterly financial report announcement) to prevent directors from accidentally violating the regulations.
4. The Company will send an email to remind all directors again on the 30th/15th day before the financial report announcement that they should not trade their stocks during the closed period.

Major Internal Policies

Sustainable supply chain

Supply Chain Structure

Implementation and supervision of supplier’s ESG plans
Dynamic continues to review the implementation of the supplier code of conduct to ensureconsistency with ESG requirements and to avoid potential ESG conflicts. When selecting suppliers ofsimilar performance, we assign contracts to suppliers with better ESG performance. If a supplier cannotmeet the minimum ESG requirements within the set time, the cooperation will be voided. The Board ofDirectors is the body with the highest decision-making responsibility.

Dynamic has established “Supplier Code of Conduct”, which is disclosed on the Company's website;scan QR code below for the full text.

Planning of education and training programs for the supply chain
1. Re-identify and sort out the internal talent structure, establish an ESG-related project organization, build a corresponding talentteam, and conduct a series of professional training and assessments.
2. Incorporate ESG into the supply chain review process, evaluate suppliers' capabilities and ESG contributions from differentdimensions, and establish an ESG supply chain management system, such as supplier selection, training, evaluation,supervision and elimination system, and suppliers’ ESG management policies.

Supplier screening
Formulate supplier evaluation and management documents. In particular, at the initial stage of supplier selection, focuson investigating suppliers' ESG requirements in terms of labor, human rights, occupational health and safety, environmental protection, green product management practices, and the use of conflict minerals and other ESG requirement items, and continue to implement them in subsequent review management. In addition, the risk levels are divided, and on-site audits are conducted for high-risk items to ensure that both parties have a consensus on the identified ESG risk items, confirm the improvement plan and progress tracking, and discuss with suppliers in the follow-up cooperation to optimize the ESG implementation of both parties. In addition to specific commodity risks, special risks such as water, energy consumption and biodiversity risks are also included in the assessment of country-specific risks and specific industry risks.

Supply chain management process
1.Supplier screening and evaluation:In the primary selection evaluation documents, besides defining the procurement, quality, technical, and service aspects of suppliers as evaluation items, the relevant system certifications of suppliers, such as the ISO 14001 Environmental System and ISO 45001 Occupational Health and Safety System, were also included in the evaluation. In terms of procurement, suppliers are required to comply with ESG requirements in terms of cooperation and confidentiality, anti-corruption, environmental protection, green products, and conflict minerals. In particular, raw material suppliers must have 100% compliance with the relevant requirements.

2.Ongoing supplier management evaluation: After being included in the list of qualified suppliers, the Company will continue to conduct annual audits on supplier's aspects of labor, human rights, occupational health and safety, environmental protection, green products, and conflict minerals, and perform level-by-level audits to classify risks and develop improvement tracking. The evaluation performance will be included in the amount of cooperation between the two parties.

3.Continue to optimize ESG management: Discuss and negotiate ESG audit management with suppliers, especially important suppliers of major raw materials, and exchange and promote green production solutions such as energy conservation, environmental protection, emissions reduction, and water conservation, and move forward together on the road to continuous optimization of ESG management.

Composition and types of suppliers
In 2023, Huangshi Plant had direct transactions with a total of 470 suppliers, which were defined as “Grade 1 suppliers”. We divided suppliers into raw material manufacturers, precious metal manufacturers, pharmaceutical solution manufacturers, auxiliary material manufacturers, and hardware manufacturers according to the type of materials purchased. Among them, there are 26 strategic partners of raw materials and precious metal manufacturers, which are defined as “Grade 1 important suppliers”, including seven categories of key raw materials (substrate PP) and precious metals (copper foil, copper oxide powder, phosphorus copper balls, gold salts, pure tin hemispheres, tin bars), accounting for 42.2% of the total expenditure of Grade 1 suppliers. These manufacturers are the targets of our ESG management, and we audit their compliance every year in terms of labor, human rights, occupational health and safety, environmental protection, corporate integrity, integrity, non-use of conflict minerals, and continuous implementation of net-zero carbon emissions.
According to DJSI, Grade 1 suppliers refer to suppliers that provide goods, materials, or services (including intellectual property (IP) and patents) directly to the Company. If companies do not specify, DJSI assumes they are Grade 1. Non-Grade 1 suppliers are suppliers that provide products and services to the Company through Grade 1 suppliers. Non-Grade 1 suppliers exclude Grade 1 suppliers and are Grade 2, 3, or Grade N of the Company's supply chain. According to DJSI's definition, there is no other condition for specifying Grade 1 suppliers, so the total number of suppliers with direct transactions is the total number of Grade 1 suppliers; among non-grade 1 suppliers, Dynamic assesses that there are no important suppliers.

Supplier screening key performance indicators


Supplier evaluation and development of key performance indicators


Capacity construction plan

Enhance the supply chain's resilience to climate change risks
In 2023, Dynamic conducted a carbon emission survey on eight major carbon emitting manufacturers (substrate/film, copper foil). Three of them provided complete data for scope 1, 2 and 3, one for scope 1 and 2, and the data from the remaining four were either incomplete or incorrect. In terms of short, medium and long-term emission reduction targets and measures, only three companies have formulated plans and targets. This survey shows that the carbon reduction journey of the printed circuit board’s supply chain has just begun. We will more actively promote cooperation and experience sharing between upstream and downstream enterprises in the supply chain to jointly explore carbon reduction measures and technological innovation; at the same time, in terms of supplier management, we will also use carbon emissions as one of the important criteria for selecting suppliers, and encourage suppliers to improve their carbon reduction capabilities.