Corporate Governance
Corporate Governance Operations
Corporate Governance Officer
On August 11, 2025, the Company's Board of Directors resolved to appoint Ms. Hui-Min Wu, Chief Financial Officer of the Finance Department, as the Company's Corporate Governance Officer. To strengthen corporate governance, the Company established a dedicated Corporate Governance Officer position by resolution of the Board of Directors on December 14, 2022. The primary responsibilities of the Corporate Governance Officer include overseeing corporate governance-related matters, including:
Handling matters related to meetings of the Board of Directors and shareholders' meetings in accordance with applicable laws and regulations.
Preparing minutes of meetings of the Board of Directors and shareholders' meetings.
Assisting directors with their appointment and continuing education.
Providing directors with information required for the performance of their duties.
Assisting directors in complying with applicable laws and regulations.
Reviewing the legal compliance of the qualifications of independent directors.
Handling matters relating to changes in the composition of the Board of Directors.
Supervising and reporting on the Company's risk management operations.
Handling other matters stipulated in the Company's Articles of Incorporation or relevant contracts.
Risk Management
On December 14, 2022, the Company's Board of Directors approved the establishment of the “Risk Management Policies and Procedures,” which serve as the Company's highest guiding principles for risk management. The Group emphasizes that personnel responsible for business operations within each risk management unit shall conduct business in accordance with the internal control systems and management regulations applicable to their respective operations. They serve as the first line of defense and are directly responsible for identifying, assessing, and controlling risks, thereby ensuring the accurate and timely communication of risk information and implementing effective first-line risk management.
The supervisors responsible for each risk management unit shall assume second-line responsibility for risk management within their respective business operations. They shall have a clear understanding of and effectively implement relevant risk management regulations, supervise risk management activities within their departments, adjust risk levels and recommend appropriate response measures in response to changes in the internal and external environment, and promptly report relevant matters to the General Manager.
The General Manager is responsible for reviewing the completeness of the Company's risk management mechanisms, coordinating and supervising the risk control activities of all units, and reporting the Company's risk management operations to the Board of Directors on a regular basis, at least once a year.
Each risk management unit shall regularly adjust its risk control and management mechanisms in response to changes in the internal and external operating environment, continuously monitor developments in international and domestic risk management, and identify emerging risks.
In accordance with the principle of materiality, the Company identifies the scope of risk management across various dimensions, including strategic, operational, financial, and event-related risks.
The Company's risk management organizational structure comprises the Board of Directors, the dedicated or concurrently responsible Sustainability Development Unit, the Risk Management Team established under such unit, the Internal Audit Office, and various risk management units. Their respective responsibilities are as follows:
Board of Directors:
Approves the overall risk management policies and major decisions of the Company. The Board of Directors is the highest decision-making body for the Company's risk management and bears ultimate responsibility for the Company's overall risk management.
Risk Management Team:
The Risk Management Team is established under the dedicated or concurrently responsible Sustainability Development Unit. It conducts comprehensive assessments of the Company's risks and submits risk management reports to the dedicated or concurrently responsible Sustainability Development Unit. The Sustainability Development Unit reports regularly to the Board of Directors on an annual basis.
Internal Audit Office:
Based on the risk management policies and risk assessment results, the Internal Audit Office formulates and implements the annual audit plan and conducts audit activities. It assists the Board of Directors in supervising the implementation of its decisions, ensures that operational risks are effectively controlled, and provides recommendations for improvement when appropriate.
Risk Management Units:
All departments of the Company serve as risk management units and are responsible for implementing risk management measures. Department heads are responsible for risk management within their respective areas, including analyzing and monitoring relevant risks associated with their operations and ensuring the effective implementation of risk control mechanisms and procedures.
Information Security Management
Information security is a commitment of Hotron Precision Electronic Industrial to its customers, shareholders, and employees. The Company ensures that the confidentiality, integrity, and availability of information are strictly protected, which is also critical to the Company's operational resilience and competitive advantage.
Hotron actively strengthens its information security management by establishing a cross-functional “Information Security Promotion Team,” chaired by the General Manager, to coordinate, plan, and audit information security policies.
The Company has established six major protection and control mechanisms—“Identify, Protect, Detect, Respond, Recover, and Train”—with reference to the Cybersecurity Framework (CSF) developed by the National Institute of Standards and Technology (NIST) of the United States.
In addition, the Company continuously promotes an organizational culture of “Information Security is Everyone's Responsibility” through personnel management and education and training, thereby enhancing employees' awareness of information security protection across the organization.
To implement its information security policies, Hotron has adopted the following specific measures for its stakeholders and internal operations. For detailed information and major annual management initiatives, please refer to the Company's Information Security Implementation Plan:
Stakeholders:
Hotron demonstrates its highest-level guiding principles for information security risk management to ensure the reliability of information equipment and network systems and protect them from any external interference, damage, or unauthorized intrusion.
Hotron regards suppliers and outsourced service providers as important lines of defense. When outsourcing information-related operations, the Company specifies information security responsibilities and confidentiality requirements in advance and incorporates such requirements into the relevant contracts. For remote maintenance performed by system service providers and the implementation of critical software and hardware, the Company implements strict security controls and personnel supervision to ensure the security of internal and external information exchange and collaboration.
Internal Operations:
To protect the security of the Company's internal data and operating systems and minimize operational impacts arising from human error or natural disasters, Hotron has established comprehensive information security protection measures.
These measures cover system access controls, such as periodic password updates and access rights management upon employee transfer or departure; physical environmental security, including access control for server rooms and management of uninterruptible power supply (UPS) systems; and a Business Continuity Plan (BCP).
In terms of information technology protection, the Company has continuously strengthened firewall connection controls and deployed enterprise endpoint antivirus software in recent years. The Company has also upgraded its mail server systems to proactively defend against phishing emails and malicious attachments.
To ensure data security, the Company has implemented a sandbox architecture and comprehensive backup mechanisms, including daily NAS backups and weekly off-site backups. In addition, the document management system strictly controls the versions and access rights of important confidential information, providing employees with a secure and reliable information operating environment.
Intellectual Property Management
Hotron Precision Electronic Industrial is committed to innovation and research and development, and regards intellectual property as one of the Company's most important assets. To protect the advanced technological achievements derived from its innovation and R&D efforts and maintain its core competitive advantages in a rapidly changing environment, the Company has established detailed and comprehensive “Regulations Governing the Maintenance and Utilization of Intellectual Property,” which have been approved by the Board of Directors.
The Company regards respecting and avoiding infringement of the intellectual property rights of others as a top priority and continues to implement its intellectual property management system to ensure that its business operations comply with applicable laws and regulations. The Company's major intellectual property management activities in recent years are as follows:
As of the end of 2024, the Company's cumulative total of patent applications worldwide had reached 137, with a total of 102 valid granted patents, covering invention, utility model, and design patents. The Company had also obtained registration for three trademarks worldwide.
In 2024, the Company submitted a total of 20 patent applications and obtained 13 utility model patents in Mainland China.
In terms of education and training and related policies, the Company incorporates provisions regarding intellectual property ownership, confidentiality obligations, lawful software use, and information security requirements into the “Employment Agreement” for new employees. The Company also continuously plans and implements annual training programs related to trade secrets and intellectual property protection, helping employees remain vigilant and fostering a strong awareness of preventing intellectual property infringement.
Protection of Trade Secrets and Confidential Information:
The Company strictly implements access control and information security management measures to prevent the improper disclosure or leakage of information, and periodically promotes related requirements to employees through internal announcements. In addition, personnel engaged in inventions and creative work are required to properly maintain records of the R&D process, which may serve as supporting evidence in disputes or litigation concerning intellectual property rights.
To strengthen patent quality and maximize the substantive benefits of patents, the Company has established stringent management mechanisms for patent applications. Applications may only be submitted after patent benefit evaluation, technical searches, and internal review of R&D results have been completed.
At the same time, the Administration Department is responsible for coordinating the evaluation and maintenance of trademarks and strictly controlling their licensing and use to continuously accumulate and protect the Company's intellectual assets.
The Company regularly reports matters related to its intellectual property management plans, which are aligned with its operational objectives, to the Board of Directors. In 2024, the “Regulations Governing the Maintenance and Utilization of Intellectual Property” were approved by the Board of Directors on November 12. Subsequently, on December 18, the Company formally reported the “2024 Intellectual Property Management Plan” and the implementation results of its intellectual property management activities for the year to the Board of Directors.
On August 11, 2025, the Company's Board of Directors resolved to appoint Ms. Hui-Min Wu, Chief Financial Officer of the Finance Department, as the Company's Corporate Governance Officer. To strengthen corporate governance, the Company established a dedicated Corporate Governance Officer position by resolution of the Board of Directors on December 14, 2022. The primary responsibilities of the Corporate Governance Officer include overseeing corporate governance-related matters, including:
Handling matters related to meetings of the Board of Directors and shareholders' meetings in accordance with applicable laws and regulations.
Preparing minutes of meetings of the Board of Directors and shareholders' meetings.
Assisting directors with their appointment and continuing education.
Providing directors with information required for the performance of their duties.
Assisting directors in complying with applicable laws and regulations.
Reviewing the legal compliance of the qualifications of independent directors.
Handling matters relating to changes in the composition of the Board of Directors.
Supervising and reporting on the Company's risk management operations.
Handling other matters stipulated in the Company's Articles of Incorporation or relevant contracts.
Risk Management
On December 14, 2022, the Company's Board of Directors approved the establishment of the “Risk Management Policies and Procedures,” which serve as the Company's highest guiding principles for risk management. The Group emphasizes that personnel responsible for business operations within each risk management unit shall conduct business in accordance with the internal control systems and management regulations applicable to their respective operations. They serve as the first line of defense and are directly responsible for identifying, assessing, and controlling risks, thereby ensuring the accurate and timely communication of risk information and implementing effective first-line risk management.
The supervisors responsible for each risk management unit shall assume second-line responsibility for risk management within their respective business operations. They shall have a clear understanding of and effectively implement relevant risk management regulations, supervise risk management activities within their departments, adjust risk levels and recommend appropriate response measures in response to changes in the internal and external environment, and promptly report relevant matters to the General Manager.
The General Manager is responsible for reviewing the completeness of the Company's risk management mechanisms, coordinating and supervising the risk control activities of all units, and reporting the Company's risk management operations to the Board of Directors on a regular basis, at least once a year.
Each risk management unit shall regularly adjust its risk control and management mechanisms in response to changes in the internal and external operating environment, continuously monitor developments in international and domestic risk management, and identify emerging risks.
In accordance with the principle of materiality, the Company identifies the scope of risk management across various dimensions, including strategic, operational, financial, and event-related risks.
The Company's risk management organizational structure comprises the Board of Directors, the dedicated or concurrently responsible Sustainability Development Unit, the Risk Management Team established under such unit, the Internal Audit Office, and various risk management units. Their respective responsibilities are as follows:
Board of Directors:
Approves the overall risk management policies and major decisions of the Company. The Board of Directors is the highest decision-making body for the Company's risk management and bears ultimate responsibility for the Company's overall risk management.
Risk Management Team:
The Risk Management Team is established under the dedicated or concurrently responsible Sustainability Development Unit. It conducts comprehensive assessments of the Company's risks and submits risk management reports to the dedicated or concurrently responsible Sustainability Development Unit. The Sustainability Development Unit reports regularly to the Board of Directors on an annual basis.
Internal Audit Office:
Based on the risk management policies and risk assessment results, the Internal Audit Office formulates and implements the annual audit plan and conducts audit activities. It assists the Board of Directors in supervising the implementation of its decisions, ensures that operational risks are effectively controlled, and provides recommendations for improvement when appropriate.
Risk Management Units:
All departments of the Company serve as risk management units and are responsible for implementing risk management measures. Department heads are responsible for risk management within their respective areas, including analyzing and monitoring relevant risks associated with their operations and ensuring the effective implementation of risk control mechanisms and procedures.
Information Security Management
Information security is a commitment of Hotron Precision Electronic Industrial to its customers, shareholders, and employees. The Company ensures that the confidentiality, integrity, and availability of information are strictly protected, which is also critical to the Company's operational resilience and competitive advantage.
Hotron actively strengthens its information security management by establishing a cross-functional “Information Security Promotion Team,” chaired by the General Manager, to coordinate, plan, and audit information security policies.
The Company has established six major protection and control mechanisms—“Identify, Protect, Detect, Respond, Recover, and Train”—with reference to the Cybersecurity Framework (CSF) developed by the National Institute of Standards and Technology (NIST) of the United States.
In addition, the Company continuously promotes an organizational culture of “Information Security is Everyone's Responsibility” through personnel management and education and training, thereby enhancing employees' awareness of information security protection across the organization.
To implement its information security policies, Hotron has adopted the following specific measures for its stakeholders and internal operations. For detailed information and major annual management initiatives, please refer to the Company's Information Security Implementation Plan:
Stakeholders:
Hotron demonstrates its highest-level guiding principles for information security risk management to ensure the reliability of information equipment and network systems and protect them from any external interference, damage, or unauthorized intrusion.
Hotron regards suppliers and outsourced service providers as important lines of defense. When outsourcing information-related operations, the Company specifies information security responsibilities and confidentiality requirements in advance and incorporates such requirements into the relevant contracts. For remote maintenance performed by system service providers and the implementation of critical software and hardware, the Company implements strict security controls and personnel supervision to ensure the security of internal and external information exchange and collaboration.
Internal Operations:
To protect the security of the Company's internal data and operating systems and minimize operational impacts arising from human error or natural disasters, Hotron has established comprehensive information security protection measures.
These measures cover system access controls, such as periodic password updates and access rights management upon employee transfer or departure; physical environmental security, including access control for server rooms and management of uninterruptible power supply (UPS) systems; and a Business Continuity Plan (BCP).
In terms of information technology protection, the Company has continuously strengthened firewall connection controls and deployed enterprise endpoint antivirus software in recent years. The Company has also upgraded its mail server systems to proactively defend against phishing emails and malicious attachments.
To ensure data security, the Company has implemented a sandbox architecture and comprehensive backup mechanisms, including daily NAS backups and weekly off-site backups. In addition, the document management system strictly controls the versions and access rights of important confidential information, providing employees with a secure and reliable information operating environment.
Intellectual Property Management
Hotron Precision Electronic Industrial is committed to innovation and research and development, and regards intellectual property as one of the Company's most important assets. To protect the advanced technological achievements derived from its innovation and R&D efforts and maintain its core competitive advantages in a rapidly changing environment, the Company has established detailed and comprehensive “Regulations Governing the Maintenance and Utilization of Intellectual Property,” which have been approved by the Board of Directors.
The Company regards respecting and avoiding infringement of the intellectual property rights of others as a top priority and continues to implement its intellectual property management system to ensure that its business operations comply with applicable laws and regulations. The Company's major intellectual property management activities in recent years are as follows:
As of the end of 2024, the Company's cumulative total of patent applications worldwide had reached 137, with a total of 102 valid granted patents, covering invention, utility model, and design patents. The Company had also obtained registration for three trademarks worldwide.
In 2024, the Company submitted a total of 20 patent applications and obtained 13 utility model patents in Mainland China.
In terms of education and training and related policies, the Company incorporates provisions regarding intellectual property ownership, confidentiality obligations, lawful software use, and information security requirements into the “Employment Agreement” for new employees. The Company also continuously plans and implements annual training programs related to trade secrets and intellectual property protection, helping employees remain vigilant and fostering a strong awareness of preventing intellectual property infringement.
Protection of Trade Secrets and Confidential Information:
The Company strictly implements access control and information security management measures to prevent the improper disclosure or leakage of information, and periodically promotes related requirements to employees through internal announcements. In addition, personnel engaged in inventions and creative work are required to properly maintain records of the R&D process, which may serve as supporting evidence in disputes or litigation concerning intellectual property rights.
To strengthen patent quality and maximize the substantive benefits of patents, the Company has established stringent management mechanisms for patent applications. Applications may only be submitted after patent benefit evaluation, technical searches, and internal review of R&D results have been completed.
At the same time, the Administration Department is responsible for coordinating the evaluation and maintenance of trademarks and strictly controlling their licensing and use to continuously accumulate and protect the Company's intellectual assets.
The Company regularly reports matters related to its intellectual property management plans, which are aligned with its operational objectives, to the Board of Directors. In 2024, the “Regulations Governing the Maintenance and Utilization of Intellectual Property” were approved by the Board of Directors on November 12. Subsequently, on December 18, the Company formally reported the “2024 Intellectual Property Management Plan” and the implementation results of its intellectual property management activities for the year to the Board of Directors.
Corporate Governance Structure
Corporate Governance Principles and Structure
The Company has established a corporate governance system. In addition to complying with applicable laws, regulations, and the Articles of Incorporation, the Company is committed to safeguarding shareholders' rights and treating all shareholders equally, strengthening the structure and operations of the Board of Directors, enhancing information transparency, and fulfilling corporate social responsibility. The Company is also committed to establishing an effective corporate governance structure, as described below:
B. Implementation of Corporate Governance
The Company has established a corporate governance system. In addition to complying with applicable laws, regulations, and the Articles of Incorporation, the Company is committed to safeguarding shareholders' rights and treating all shareholders equally, strengthening the structure and operations of the Board of Directors, enhancing information transparency, and fulfilling corporate social responsibility. The Company is also committed to establishing an effective corporate governance structure, as described below:
A. Implementation Principles
The Company places great importance on corporate governance and conducts its operations in accordance with the following principles, with the aim of implementing corporate governance in accordance with the highest international standards:
1. Timely disclosure of material information.
2. Promoting sound interaction and checks and balances between the Board of Directors and the management team.
3. Maintaining an appropriate proportion of independent directors on the Board of Directors.
4. Establishing a Remuneration Committee to strengthen corporate governance and establish a sound compensation system for directors and managers.
5. Establishing a specific and clearly defined dividend policy.
6. Voting on each proposal individually at shareholders' meetings and providing electronic voting to fully facilitate the exercise of shareholders' rights.
7. Complying with the Corporate Governance Best Practice Principles, upholding the principle of integrity in business operations, and implementing an effective internal audit mechanism.
2. Promoting sound interaction and checks and balances between the Board of Directors and the management team.
3. Maintaining an appropriate proportion of independent directors on the Board of Directors.
4. Establishing a Remuneration Committee to strengthen corporate governance and establish a sound compensation system for directors and managers.
5. Establishing a specific and clearly defined dividend policy.
6. Voting on each proposal individually at shareholders' meetings and providing electronic voting to fully facilitate the exercise of shareholders' rights.
7. Complying with the Corporate Governance Best Practice Principles, upholding the principle of integrity in business operations, and implementing an effective internal audit mechanism.
B. Implementation of Corporate Governance
Under the Company's corporate governance structure, the Company has established the Remuneration Committee, Audit Committee, and Sustainability Development Committee.
C. Information Disclosure System
The Company has established a comprehensive information disclosure system to ensure that shareholders have access to the Company's latest and most accurate information as a basis for making investment decisions. The Company adheres to the principles of accurate, complete, fair, and timely disclosure, and promptly provides information regarding its operations, financial affairs, resolutions of the Board of Directors, and the General Manager's management philosophy and policies.
