We will constantly strengthen our corporation governance to gear ourselves toward international standards. We have founded an Audit Committee according to law, which is affiliated under the Board of Directors, to replace the original duty of supervisors.
main responsibility is to assist the board in overseeing the following:

(1)Fair presentation of financial statements of Company.
(2)Hiring (and dismissal), independence, and remuneration of certificated public accountants (CPA) of Company.
(3)Formulate and revise the Company’s internal control system and procedures.
(4)Assessment of the effectiveness of the internal control system of Company.
(5)Asset transactions, derivatives trading, loans of funds, endorsements, or provision of guarantees of a mater nature.
(6)Offering, issuance, or private placement of equity-type securities.
(7)Appointment or discharge of a financial, accounting, or internal audit officer.
(8)Compliance with relevant laws and regulations by Company.
(9)Management of the existing or potential risks of Company.

There are three members in the Audit Committee, who are all independent directors. The committee is operated under the Organic Regulation of the Audit Committee. The term of this Audit Committee will last from Jun 24, 2020 to Jun 23, 2023.

To enhance corporate governance and to keep in line with international standards, we established a Remuneration Committee. The Committee assists the Board of Directors in reviewing corporate payroll structure, the performance and salary compensation of directors and managerial officer, and employee benefit policy and programs. The reviews serve as an important basis to attract, encourage, and maintain talented employees, in hopes of maximizing benefits for our shareholders.

Members of the Remuneration Committee are appointed by the Board of Directors and operated under the Organic Regulation of the Remuneration Committee. The 5th Remuneration Committee is composed of independent directors. Its main duties include:

• (1)Reviewing the Organic Regulation of the Remuneration Committee regularly
• (2)Establish and regularly review the performance evaluation and remuneration policy, system, standards, and structure of directors and managerial officers.
• (3)Decide compensation for directors and managers and carry out periodic evaluations

The committee is operated under the Organic Regulation of the Remuneration Committee. The term of this Remuneration Committee will last from Jun. 24, 2020 to Jun. 23, 2023.

In order to strengthen the function of the BOD and furnishing information required for business execution by directors, we restructured the Secretariat into the Corporate Governance Division, which is responsible for corporate governance related matters, promoting corporate social responsibility and formulating sustainable development goals, etc.

The head of corporate governance is responsible for furnishing information required for business execution by directors, assisting directors with legal compliance, assisting in onboarding and continuous development of directors, handling matters relating to board meetings and shareholders meeting according to laws and review and regularly report to the BOD on the implementation of corporate governance.

The Audit Dept. is an independent dept. with designated personnel who report directly to the BOD. Currently, 1 auditor is assigned as a full-time staff. The appointment qualifications are in accordance with the requirements of the competent authority. The assessment and compensation of the Chief Auditor are regularly reviewed by Remuneration Committee and report to the BOD. The assessment and compensation of member of Audit Dept. shall be submitted by the Chief Auditor to Chairman for approval.

For improve the quality and ability of auditing, the auditors have continued to study the number of hours of internal audit professional courses per year in accordance with the regulations of the competent authority.

In accordance with coThe execution of audit activities is in accordance with the Regulations Governing Establishment of Internal Control Systems by Public Companies. The audit object include financial, business, operational management aspects of Company and the subsidiaries. Audit reports are submitted on a regular basis and reviewed by the Chairman, as well as presented to the Audit Committee and the Board of Directors by the Chief Auditor. Special audit projects are implemented as needed. These audits enhance internal control and provide timely recommendations for future improvements.

Each department conducts self-assessment every year, and the member of Audit Dept. review the results to evaluate the effectiveness of the overall internal control system. It is the basis for issuing internal control system declaration.

The financial information of LCY TECHNOLOGY is published on the company website（http://www.lcyt.com）to provide complete, up-to-date, and fair disclosure of financial information and corporate governance to the public. Stakeholders can download annual reports, financial reports, financial information, corporate governance rules, and stock price and dividend information from company website. All information regarding our operation status and financial figures are complete, up-to-date, and transparent.

Shareholders can also contact us by telephone or email. In addition to answering questions in detail, we also respond to all suggestions made at the shareholder’s meetings. We make announcements on Competent authority in a timely manner.

Other than financial information, strategies for corporate sustainable development and potential risks and opportunities in business operations have become the focus of major institutional investors around the world in recent years. LCYT has always been cognizant of communicating with our investors; We make efforts in improving these shortcomings and seek sustainable development to safeguard the long-term investment value of our shareholders.

We provide convenient channels of communication for our shareholders and stakeholders. We have also established the spokesperson system and created a web forum for investors to provide feedbacks, so that communication and advice could be offered. The mechanisms for shareholders or employees to make suggestions or give advice on business directions are:

• (1)Shareholders can voice their opinions through shareholder’s meetings, company website or spokesperson.
• (2)Employees can communicate and propose their ideas through established internal mechanisms.
• (3)Stakeholders can propose suggestions through the reporting channel of the corporation’s website.