Regulations of the Board of directors

The structure of the board of directors, the professionalism and independence of the members

Board independence

1. Board structure:
   SCSB established a director selection system with open and just procedures for selecting and appointing directors,　complying with the SCSB Articles of Incorporation, Regulations for the Election of Directors, Corporate Governance Best Practice Principles, and the competent authority's Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies, as well as Article 14-2 of the Securities and Exchange Act. None of the directors have any conditions specified in Article 30 of the Company Act. The current Board of Directors consists of three independent directors (33.3%) and six non-independent directors (66.7%), in which one director is concurrently an employee/manager (11%, not exceeding one third of all directors). Director YUNG, CHU-KUEN and Director YUNG CON-SING JOHN are father and son (2 seats) (22.2%). The remaining directors (7 seats) do not have any conditions specified in Article 26-3, Paragraphs 3 and 4 of the Securities and Exchange Act.
2. Independence of independent directors:
   All independent directors meet requirements specified by the Financial Supervisory Commission, and their independence is as follows:

   Name	CHEN, MU-TSAI	HSIEH, KING-HU	TSENG, KUO-LIEH
   Is the individual, his/her spouse, and relatives within the second degree of kinship a director, supervisor, or employee of SCSB or its affiliated enterprises?	No	No	No
   Number of shares and shareholding percentage of SCSB held by the individual, his/her spouse, and relative within the second degree of kinship	N/A	N/A	N/A
   Is the individual a director, supervisor, or employee in a company that has a certain relationship with SCSB?	No	No	No
   Amount of remuneration received for providing SCSB or its affiliated enterprises with commercial, legal, financial, or accounting services in the last two years	N/A	N/A	N/A

3. Board independence:
   SCSB's Board of Directors is responsible for the overall business strategies and major policies, for effectively supervising management, and is accountable to all shareholders. SCSB's operations and arrangements of the corporate governance system shall ensure that the Board of Directors exercises its functions and powers in accordance with the law, Articles of Incorporation, or resolutions of the shareholders' meeting. SCSB's Board of Directors emphasizes independent operation and transparent functions. Directors and independent directors are all independent individuals who independently exercise their powers and functions. The three independent directors comply with related laws and regulations, and review SCSB's management of current or potential risks using their power on the Audit Committee. The independent directors supervise the effective implementation of SCSB's internal controls, the appointment (dismissal), remuneration, and independence of the accountants, and the proper preparation of financial statements. Directors are elected according to SCSB's Regulations for the Election of Directors using the candidate nomination system and cumulative voting system. Shareholders are encouraged to participate and shareholders with a certain number of shares and above may propose list of candidates. Whether the candidates violate any matters specified in Article 30 of the Company Act and related procedures are carried out and announced according to the law. This is to protect shareholders' rights and interests and prevent nomination right from being monopolized or excessive, so as to maintain independence.
   SCSB has established a board performance evaluation system, and conducts self-evaluations of the Board of Directors, board members, and functional committees on an annual basis. An external assessment may be conducted by an external professional independent organization, team of external experts and scholars, or other appropriate method every three years. After the performance evaluation results above are reported to the Board of Directors, it is disclosed on SCSB's annual report and official website.
   Attendance of board members in board meetings, proposals and resolutions of board meetings, continuing education of directors, and changes in shareholding of board members (including shareholding ratio, share transfer, and pledge) are disclosed in the annual report, official website, and MOPS to let investors fully understand operations of SCSB's Board of Directors.

The diversity policy of Board of Directors

According to Article 26 of the SCSB Corporate Governance Best Practice Principles, board composition shall consider diversity. The number of directors serving concurrent positions in the SCSB's management should not exceed one third of the total number of directors. In addition, appropriate strategies of board diversity shall be formulated based on the board's operation, operating mode and developmental needs, and the directors should meet the criteria of the following two aspects:

1. Qualifications and values: gender, age, nationality, race, and culture.
2. Professional knowledge and skills: professional background (e.g., law, accounting, industry, finance, marketing, or technology), professional skills, and industrial experience.

Board members generally possess the necessary knowledge, skills and qualities to perform their duties. In order to achieve the ideal goal of corporate governance of the Bank, the Bank elected new (22nd) directors at the regular shareholder meeting held on June 21, 2024, including two female directors.
Current board members already possess the ability to make sound business judgments, ability to perform accounting and financial analysis, business administration ability, risk management ability, crisis management ability, knowledge of the industry, an international market perspective, leadership, and decision-making ability.

SCSB's attainment of management goals for the board diversity policy is as follows:

The Board of Directors currently has 9 directors, including 3 independent directors, 5 directors, and 1 director that is concurrently a manager at SCSB. Directors who are not concurrently managers at SCSB account for over half of all directors. All board members are outstanding with a wealth of practical experience, and possess the knowledge, skills, and experience necessary for performing their duties. 11% of board members are concurrently an employee. Independent directors account for 33% of board members (none have served more than 3 terms). SCSB’s goal is to increase the number of female board members with consideration to gender equality, in order to achieve a healthier board structure.

The Implementation Status of Board of Directors

Performance Evaluation of Boards

SCSB's Board of Directors in November 2020 adopted the resolution to amend the Rules for Performance Evaluation of Boards, in order to implement corporate governance and enhance functions of the Board of Directors. The regulations specify that internal board performance evaluations shall be conducted once a year, external board performance evaluations shall be conducted once every three years, in order to establish performance goals and improve operational efficiency.

1. The criteria for evaluating the performance of the board of directors should cover the following five aspects:
   • Participation in the operation of the company;
   • Improvement of the quality of the board of directors' decision making;
   • Composition and structure of the board of directors;
   • Election and continuing education of the directors; and
   • Internal control.
2. The criteria for evaluating the performance of the functional committee should cover the following five aspects:
   • Participation in the operation of the company;
   • Awareness of the duties of the functional committee;
   • Improvement of the quality of the functional committee’s decision-making;
   • Composition and election of the member of the functional committee; and
   • Internal control.
3. The criteria for evaluating the performance of the board members should cover the following six aspects:
   • Familiarity with the goals and missions of the company;
   • Awareness of the duties of a director;
   • Participation in the operation of the company;
   • Management of internal relationship and communication;
   • The director's professionalism and continuing education; and
   • Internal control.

Functional Committee

Board member succession and senior executive plan

The structure of SCSB's Board of Directors was established based on the scale of business and development, as well as needs of practical operations.

The candidate nomination system is used for directors’ elections. Shareholders nominate candidates and the Board of Directors reviews the qualifications of candidates according to the "Regulations Governing Qualification Requirements and Concurrent Serving Restrictions and Matters for Compliance by the Responsible Persons of Banks." The professional background, professional skills, and diversity of directors is taken into consideration according to the Corporate Governance Best Practice Principles. Directors also have leadership, business administration ability, an international perspective, and business planning and banking-related expertise. There are currently 9 directors (including 3 independent directors) with a variety of complementing industry experience and expertise in finance and accounting. One director concurrently holds the position of an executive manager of SCSB, in order to align actual business needs with SCSB's business development.

To cultivate senior managers to become members of the Board of Directors, SCSB plans to let senior managers attend board meetings and functional committee meetings (audit, remuneration, risk management, and nomination) without voting rights, or arranges for them to gain experience on the board of directors of affiliated enterprises, so that they become familiar with the operations and affairs of related meetings, and also gain industry and management experience through job rotations.

SCSB provides long-term training to executive management talent and currently has a sufficient talent pool to appoint directors from. The number of directors concurrently serving as a manager does not exceed one third of all directors due to diversity considerations, and suitable training plans are formulated based on operations, type of business, and development needs. Training on finance, risk management, commerce, legal affairs, ESG, internal control policy, and financial reporting responsibility is arranged for directors to improve their expertise and meet international standards on corporate governance.

The current Chairman LEE CHING YEN STEPHEN became a member of the Board of Directors in 1979, and held the position of director and managing director. He was elected the vice chairman in 2020, and assumed the position of chairman in 2021. Mr. YUNG CON-SING JOHN became a member of SCSB in 2004, and previously served as special assistant to the president, deputy executive vice president, chief information officer, and executive vice president. He became a member of the Board of Directors in 2003. Mr. CHIOU, YI-JEN became a member of SCSB in 1980, and previously served as vice president, deputy executive vice president, chief information officer, executive vice president, president, and director of an affiliated enterprise. He became a member of the Board of Directors in 2006.

In pursuant of “The Nominating Committee Charter”, Article 4, Item 1, Sub-paragraph 3 on “Evaluating the performance of the senior executive and reviewing on a regular basis programs for the succession plans of senior executives. " and ”The Corporate Governance Best Practice Principles of Banking”, Article 23-1 on " The bank should establish a succession plan for the management. The development and implementation of such plan shall be periodically evaluated by the board of directors to ensure sustainable operation."

The following action for succession plan of senior executive has been taken:

• Execute the leadership assessment and accelerate the development program
  The Bank in consultation with external consultant teams has adopted their senior executive assessment and development program so as
  • to establish talent standards for senior executives to support their strategic development, and
  • to perform leadership assessment of the reserve talents to understand their current capabilities.
  Based on the assessment results, the Bank implements individual development plan and regularly review his development to confirm his readiness and accelerate his growth.
• Implement the Business English Communication Skills Enhancement Program
  The Bank has planned continuous training courses in English communication for senior executives. It aims to enhance their abilities with reference to international conference hosting and discussion, international social etiquette, business presentation and related capabilities. After evaluation of the current level of senior executives’ English communication ability and individual learning needs, one-on-one or group training courses are arranged. Regular review the learning results are conducted to monitor their progress. Bilingual communication in meetings is conducted to gradually establish the foundation of international development.
• Integrate external training resources to strengthen the cultivation
  • In response to the digital transformation in the financial environment, the Bank continues to strengthen the digital thinking of the management, by rolling out "MasterCheers" online classes to the executives. These classes explain the concept of digital marketing using social media platform, big data and related sales trends.
  • The Bank arranged the senior executives to join the “Leading Executive Apex Program (LEAP) organized by the Taiwan Academy of Banking and Finance (TABF).” Through diverse seminar activities such as co-learning, interaction, case study, practice, field trip and strategy topic among executives in the competitor organizations, the Program helps the trainees acquire critical abilities.
  • Senior executives participated in advanced professional training classes and seminars organized by external organizations. The classes cover the following topics: Corporate Governance, ESG, Accounting, Trust, Finance, High-Asset Customers, Treat Clients Fairly, Risk Management, Regulation Compliance, Anti-Money Laundering, Information Security, Financial Technology and Digital Transformation. It aims to meet the requirements of regulations, implement the compliance and keep abreast of the market conditions and latest developments in the professional fields.

Training course for Directors

• Training course for all directors:
  • "Corporate Governance Forum - Latest Trends in Money Laundering Control Regulations and Supervision" organized by the Taiwan Academy of Banking and Finance on August 13, 2022 (3 hours).
  • "2022 Friendly Financial Service Guidelines - Elderly and Accessibility Course" organized by Taipei Foundation of Finance from October 17 to December 16, 2022 (2 hours).
  • The "Corporate Governance Forum: Arrival of the Net Zero Era - Analysis of Climate Risk Management in the Financial Industry" co-organized by Taiwan Corporate Governance Association Excellent Director Continuing Education Academy & Deloitte Taiwan on November 12,2022 (3 hours).
  • "2022 Information Security Awareness Training" organized by SCSB e-Learning from April 14 to December 30, 2022 (1 hour).
  • "2022 Communication of Important Notes in SCSB Ethical Corporate Management Best Practice Principles" organized by SCSB e-Learning from June 8 to December 13, 2022 (0.3 hours).
  • "Communication of Notes on Short-term Trading vs Insider Trading" organized by SCSB e-Learning from August 2 to 31,2022 (1 hour).
  • "2022 Friendly Financial Services" organized by SCSB e-Learning from October 17 to December 30, 2022 (1.5 hours).
  • "2022 Principles of Treating Customers Fairly in the Financial Service Industry" organized by SCSB e-Learning from November 14 to December 31, 2022 (3.6 hours).
• Additional training courses for each director:
  • Courses attended by director CHIOU, YI-JEN:
    • "ESG Climate Risk Management - Hedging Applications and Development Trends of Financial Products" held by the Independent Director Association Taiwan on March 9, 2022 (3 hours).
    • "Information security, strategies, and crisis management from the perspective of the metaverse " held by the Independent Director Association Taiwan on March 30, 2022 (3 hours).
  • Courses attended by independent director TSENG, KUOLIEH:
    The "Independent Directors and 2022 Shareholders' Meetings from an International Perspective" organized by QIC,Georgeson, and Taiwan Stock Exchange Corporation on March 10, 2022 (1.5 hours).
  • Courses attended by director YUNG CON-SING JOHN:
    "Update on Corporate Governance Code and Related Rule Changes" held by PwC Corporate Services Ltd. On December 8,2022 (1 hour).

Responsibility of the board of directors, managerial officers

A. Except the matters which shall be subject to decisions to be resolved by the shareholders’ meeting according to law or according to the Bank’s Articles of Incorporation, all business affairs of the Bank shall be duly handled under the decisions to be resolved by the board of directors. The board of directors shall have the following powers, duties and responsibilities:

• Review and finalize mid-term and long-term strategic plans.
• Review and finalize organizational rules and major rules and regulations.
• Propose increase/decrease of capital.
• Review and finalize decisions on establishment, dissolution or change in branch banks.
• Review and finalize the Bank’s budgets, final accounts.
• Propose for allocation of surplus earnings or coverage of losses.
• Appoint or discharge managerial officers.
• Take charge of issues assigned by the chairman.
• Exercise other powers, duties and responsibilities bestowed by laws and/or regulations concerned or the shareholders’ meeting.

B.The president shall generally handle all affairs of the bank according to resolutions adopted at the board of directors. The senior executive vice presidents, executive vice presidents, deputy executive vice presidents, and managers shall assist the president in handling such affairs.

Remuneration

Remuneration of Directors (including Independent Directors), President, and Executive Vice Presidents