SDG Group Business Management Regulations(SDG-001)

1.Purpose
The SDG Group, comprising MEAN WELL, PowerNex, SHARE WELL, and the MEAN WELL Foundation, aims to develop and invest in the creation of 100 ESG enterprises. These management regulations clearly define the operational and managerial responsibilities of each company and functional unit within the Group, serving as a standard for all relevant personnel to follow.

2.Scope
These regulations apply to the operational teams and organizational units of the SDG Group, including all group companies, branch offices, and investment entities.

3.RESPONSIBILITIES
SDG Group Board of Directors:As the highest governing body of the SDG Group, the Board is responsible for setting long-term strategy and has the authority to appoint and oversee the CEO, COO, CSO, and GMs of group subsidiaries.
SDG Group CEO:Appointed by the Board, the CEO oversees the operations and performance of branch companies and has full authority to appoint and evaluate the GMs of investment companies.
Branch Company GMs:Appointed by the Board, branch GMs are responsible for managing their respective companies and supervising the operational performance of invested companies.
Investment Company GMs:Appointed by the CEO, investment GMs are responsible for managing their respective investment companies and ensuring achievement of operational and strategic goals.
Group Function Heads:Responsible for functional planning, integration, implementation, support, and cross-functional performance evaluation.
Compensation Committee:Develops and approves the Group’s compensation policies, regularly reviews the remuneration structure of directors, supervisors, and managers, and assesses compensation levels to ensure alignment with industry standards and the Group’s overall objectives and financial performance.
Audit Committee:Oversees the accuracy and integrity of the Group’s financial statements, evaluates the effectiveness of internal controls, strengthens risk management, and ensures compliance with relevant laws and regulations.

4.DEFINITIONS
SDG:The decision-making center of the SDG Group. It integrates both SQM and TQM management approaches and serves as a key forum for group-wide decisions and strategic discussions.
TQM:(Total Quality Management) This refers to the management team of an individual company, led by the General Manager and responsible for business operations, decision-making, and problem-solving.
SQM:(System Quality Management) Manages functional systems across companies by integrating related systems, reviewing policies, allocating resources, and coordinating cross-system functions.
FQM:(Functional Quality Management) Involves cross-company committees based on business functions to ensure horizontal coordination and integration.
DQM:(Department Quality Management) Covers department-level management within one company, where department heads assign tasks, execute plans, and handle internal coordination.

5.DURATION AND TERMS
Board Directors of the SDG Group:Individuals who are 72 years of age or older shall not be eligible to serve or be reappointed as members of the Board of Directors of the SDG Group.
Chairperson of the SDG Group:In addition to the age requirement stated above, the Chairperson may normally serve up to three terms and shall not exceed a maximum of four terms.
CEO of the SDG Group:Individuals who reach the age of 70 shall not be eligible for reappointment as CEO.
GM of the SDG Group:Individuals who reach the age of 65 shall not be eligible for reappointment as GM.

6. OPERATION MANAGEMENT
SDG Group holds regular weekly meetings to coordinate various group operational matters, aiming to achieve the SDG Group’s sustainability and development goals.
6.1 Annual Plan:Every January, the SDG Group Annual Meeting is held at headquarters, inviting key members from important group companies. In addition to setting the annual goals and KPIs for the year, the meeting also focuses on planning and reviewing strategies and manpower needs for the next three years. This process helps consolidate consensus within the group and integrates these plans into the annual plans of each entity for full implementation.
6.2 Mid-year meeting:Each July, the various groups convene their respective mid-year meetings, inviting general managers and key executives from subsidiaries and equity-invested companies. The purpose is to review the companies’ performance for the first half of the year and jointly examine and adjust ongoing initiatives and strategies.
6.3 Annual financial briefing:A financial briefing is held every year on the third Wednesday of July via video conference, providing shareholders with a transparent and timely overview of company operations. After the briefing, internal stock trading may be conducted if needed, allowing shareholders to flexibly manage their investments and financial planning.

7.COMPANY MANAGEMENT
Under the authorization of the Board of Directors, each company's General Manager is entrusted with the overall management of their respective entity. The General Manager delegates responsibilities to departmental managers while retaining ultimate accountability for operational performance.
By overseeing key initiatives, monitoring KPIs, and driving continuous improvement efforts, the General Manager ensures effective execution and sustainable growth.
7.1 Annual Plan:By the end of October each year, the SDG Group formulates a Group-wide key events calendar. By year-end, each company's General Manager submits the annual plan and budget, which are reviewed by the Group Finance Team and reported at the Annual Meeting.
7.2 Regular Weekly Meetings:DQM Department Meeting: (9:00–10:00), SDG Group Meeting: (10:00–12:00), TQM Weekly Meeting: schedule defined by the CEO, (14:00–16:00). If a meeting falls on a public holiday, it will be postponed to the next working day.
7.3 Monthly Reports:Each company shall submit its SDG monthly report to the Group by the 5th of every month.

8.Functional Management
Cross-company functional committees are established to oversee the planning, promotion, integration, guidance, support, and performance management of designated functional areas. Management systems are initially developed by the Group’s functional teams, with Taiwan serving as the pilot and demonstration site. Once validated, these systems are extended and integrated across other subsidiaries to ensure group-wide implementation and alignment.
8.1 Chairperson:
(a) Responsible for setting the agenda of the FQM meetings, guiding the proper conduct of meetings, and making final decisions on matters resolved during the meetings.
(b) Decides whether follow-up items can be closed and issues improvement points accordingly, evaluates the operational performance of the committee.
8.2 Coordinator:
(a) Responsible for KPI management within the SQM, ensuring that KPIs do not fall into red or yellow warning zones, and implementing appropriate corrective actions when necessary.
(b) Oversees internal control within the SQM, manages ERP system updates and enhancements related to functional operations, and takes responsibility for integrating newly introduced initiatives into SQM operations.
8.3 Secretary:
(a) Manages the To-Do List of the SQM, ensuring that all resolutions are executed and tasks are completed on schedule (green status).
(b) Tracks and reviews the completion status of items on the To-Do List (with accompanying closure reports) and submits them to the Chairperson for final approval of closure.

9.KPI Management and Evaluation:The SDG Group monitors the operational status of each company and functional area through Group-level KPIs. The monthly SDG meeting is held on the Monday following the 8th of each month.
9.1 KPI:Key Performance Indicators (KPIs) shall be aligned with the Group’s long-term development goals and strategies. KPI frameworks are derived from the Group’s objectives and annual operating plans, and are further developed into functional performance KPIs based on each function’s operational plans.
9.2 Operating Coefficient:The Operating Coefficient is a management model unique to the SDG Group. It allows each company to operate with a self-directed management mechanism and links operational performance directly to employee bonus structures. It is based on five key indicators: revenue growth rate, revenue achievement rate, profit growth rate, profit achievement rate, and net profit margin. If a company’s Operating Coefficient declines for three consecutive years, the board of directors of the respective groups shall evaluate the performance of the General Manager and propose their replacement with a more suitable candidate.
9.3 Functional Performance Evaluation:Performance evaluations for functional entities are conducted by the SDG Committee in January and July each year. Based on the Group’s KPI red-light rate, results are categorized into three levels: A, B, and C. High-performing entities are acknowledged for their achievements, and underperforming ones are actively supported to improve, in order to achieve a positive and mutually influential outcome.
9.4 ESG Certification:For companies in which the SDG Group holds more than a 20% equity stake, priority is encouraged for the adoption of the MEAN WELL ERP system. ESG certification should be pursued once the company has been in operation for at least two years and has reached profitability.

10.Revision of Regulations
Amendments to these regulations shall require the approval of at least 4/5 of the SDG Group management team before they can be adopted.