Corporate Governance

In accordance with the spirit of corporate governance, we protect shareholders’ rights and interests, strengthen the competencies of the Board of Directors, enhance information transparency, form an effective internal control system, and respect the rights and interests of stakeholders, while at the same time implementing ethical governance and sustainable management.

The Board of Directors is the highest authority of corporate governance; All directors are responsible for exercising the due care of a good manager in planning the Company’s operating policies and reviewing financial performance, as well as ensuring that the Company’s operations are in compliance with all laws and regulations. The Board of Directors has established an Audit Committee and a Remuneration Committee in a bid to improve corporate governance, and strengthen the Company’s competitive position. An independent Audit Office has also been set up under the Board of Directors to regularly carry out audits and report the audit results to the Audit Committee and the Board of Directors. In addition, the assistant vice president serves as chief of corporate governance, responsible for helping directors perform their duties, providing necessary information, arranging for continuing education, handling matters related to Board meetings and shareholders’ meetings in accordance with laws, as well as assisting the Company in resolutions of Board meetings and shareholders’ meetings and maintaining investor relations.

We abide by the Company's management principles and adhere to sound business integrity to continue the Company's operations in an ethical manner, from top management to basic employees. In 2021, there were no incidents of corruption, bribery or breach of customer privacy.

Microbio constructs corporate core values based on the principle of “regulatory compliance as a basis” and “ethics first”, and carries out business in the spirit of honesty and regulatory compliance. Microbio internally formulated the “Ethical Corporate Management Best Practice Principles” and the “Guidelines for the Adoption of Codes of Ethical Conduct”, which have been approved by more than one half of all the members of the Audit Committee. These internal rules have been implemented after resolution by the Board meeting and were reported in the shareholders’ meeting. At the same time, these internal regulations are disclosed on the Company official website for stakeholders’ reference. Moreover, diverse communication channels have also been set up for stakeholders to reflect their views.

Moreover, the Chief of Corporate Governance promotes internal ethics regulations to Board members. These internal ethics regulations are also incorporated in the training courses for new employees. On the other hand, the Company externally asked business counterparties for complying with the Company’s Ethical Management Policy by means of contractual terms or attachments. At the same time, if a counterparty is involved in unethical conduct, the Company may terminate or cancel the contract at any time.

Microbio has formulated the “Whistleblowing Policy” to provide a channel for internal and external personnel to report violations of the Guidelines for the Adoption of Codes of Ethical Conduct and the Ethical Corporate Management Best Practice Principles. In case of a violation of the law, violation of company policies, systems or the Guidelines for the Adoption of Codes of Ethical Conduct, damage to the Company’s rights such as misconduct including fraud, misappropriation of company assets, leakage of company secrets, and receipt of improper benefits discovered by the Company’s employees or external personnel, a report can be filed by letter or email:

▌By letter: 14F-1, No. 3, Park Street, Nangang District, Taipei City, 115, Whistleblower Mailbox

▌By email: MBG audit@microbio.com.tw

We will open a case for investigation in accordance with the Whistleblowing Policy” and are committed to protecting the whistleblower. We will ensure the whistleblower will not be dismissed, demoted, have their salary reduced, or have the rights and interests they enjoy as prescribed by the law or their contract harmed, or suffer from other adverse disposition as a result of the case. Also, the Company is responsible for the confidentiality of the identity of the whistleblower, the content of the case, and the investigation procedures. Information sufficient to identify the whistleblower shall not be leaked.

In order to ensure that auditors are impartial when performing internal audits, the Audit Office has been established under the Board of Directors. The Audit Office is an independent unit, with an appropriate number of dedicated auditors according to the scale of operation, business development, management needs and other regulatory requirements.

Firstly, in pursuit of the spirit of independence and objectivity, auditors shall perform audits according to the annual audit plan to ensure the implementation of all internal operations meet regulatory requirements and the internal control system. During routine audits, if the audited unit is unfamiliar with the internal control procedures or operations, the auditor will point out key risks, while also explaining how to effectively control them. Any major violations or concerns of the Company being at risk of significant damage will be truthfully disclosed in the audit report. The auditor regularly reports the internal audit results to the Audit Committee and reviews audit deficiencies for follow-up improvement. The Chief Internal Auditor also periodically attends Board meetings to timely provide the Board with an understanding of potential operational risks. Secondly, the Audit Office assists the Board of Directors and senior management in evaluating the completeness and effectiveness of the internal control system in an independent and objective manner, while providing apt recommendations to reasonably ensure the sustainable implementation of the internal control system. Furthermore, to strengthen the professional capabilities of auditors, continuing education is arranged for auditors and they also attend internal audit courses organized by institutions designated by the competent authorities, in order to enhance and maintain the quality and effectiveness of audits.

Microbio continues to monitor the implementation of various operational systems through auditors. Additionally, the Company has established sound governance practices and risk control mechanisms to create a sustainable management environment. In 2021, a total of 80 audits were conducted, with no significant non-conformities. All minor nonconformities were addressed and improved within the deadline.

With risk management being the key to an enterprise’s operations, Microbio establishes a comprehensive management system to effectively control risks, and also incorporates the spirit of risk management into the operation strategy. The Board of Directors resolved and approved the “Risk Management Policy and Procedures”. As the highest unit of risk management policy, the Board of directors is responsible for approving, reviewing and monitoring the Company’s risk management policy to ensure the effectiveness of risk management. The Audit Committee routinely listens to the reports given by the risk team and monitors the implementation of risk management of the Company and its major subsidiaries. At the same time, the Company advocates that risk management is not just the responsibility of certain units; all employees should acknowledge the idea that responsibilities should be shared. From the perspective of the enterprise’s overall operations, the responsible unit identifies related risk factors and measures and analyzes the impact of each risk on the enterprise’s operation. Risk control measures are also be planned to control risks that may be faced in operating activities within the tolerance of the enterprise. To improve the risk management system and to achieve sustainable operation goal, in addition to risk issues of regulatory compliance, market competition, drug/healthcare product safety, intellectual property rights protection, sustainable operation related issues such as climate change is also included.

For the content of Microbio's financial risks and related responses, please refer to page 356 of Microbio's 2021 Annual Report.

In 2020, Microbio revised our “Supplier Management Procedure”, with the goal of jointly implementing corporate social responsibility, and we added anti-corruption, labour, human rights, and environmental protection-related regulations, and require suppliers to sign the "Supplier Corporate Social Responsibility Commitment Letter", incorporated the labor rights and interests of the supply chain, environmental protection, occupational safety and health, integrity standards, and anti- corruption into the requirements of supplier evaluation. By December 15, 2022, Microbio has completed the signing of commitment from 83 suppliers.

• Supplier CSR Commitment Letter
• Supplier ESG Risk Evaluation Checklist

As of the end of 2021, Microbio had been evaluated 41 collaborating suppliers. The results of the levels of risk as follows:

As for the geographical location of above mentioned suppliers’ manufactures, Taiwan is 100%