Delta believes that high quality corporate governance is the best way to ensure that the company always delivers excellent performance and provides an optimum balance for all stakeholders' interests.

The Board of Delta Electronics currently consists of thirteen directors, including three independent directors 2. The "Rules for Director Elections" require the appointment of directors to take into account of the Board's overall composition. The members of the Board are also expected to possess the knowledge, skills and expertise to perform their duties. According to the "Articles of Incorporation of Delta Electronics, Inc." 3, the remuneration for directors is no more than 1% of the distributed balance.

To enhance the board's responsibility and trust, it convenes at least once quarterly to review the company's performance and discuss important strategic issues. The board convened on eight occasions in 2011, and the overall attendance rate was 94%. Key resolutions passed by the board are published in a timely manner on the Market Observation Post System of the Taiwan Stock Exchange and in the corporate governance section of the Delta website ⁴. The Article of Incorporation, board meeting regulations and election rules for the directors/supervisors are also provided online for reference ⁵.

Apart from the board meetings, the directors and independent directors also take part in Delta Electronics' internal strategy meetings to ensure they are familiar with the company's current activities and can provide appropriate advice when necessary. Meanwhile, the Board organized the Compensation Committee6 to evaluate the overall compensation policy and the compensation of the company's directors and officers. Moreover, the Audit Committee was established in 2012. The main function of the Audit Committee is to supervise the following matters:

1. The fair presentation of the financial reports of the corporation.
2. The hiring (and dismissal), independence, and performance of certificated public accounts of the corporation.
3. The effective implementation of the internal control system of this corporation
4. Compliance with relevant laws and regulations by this corporation.
5. Management of the existing or potential risks of this corporation.

Our company's core activities are R&D, manufacturing and sales. We do not participate in high-risk and highly leveraged investments. The charter of the compensation committee also specifically advises against the committee setting remuneration policies that encourage directors and managers to exceed the company's capacity for risk in search of higher remuneration.

The Delta organization includes an independent internal audit team that reports directly to the Board. Risk maps are used by the internal audit team to analyze the severity and frequency of business risks. The information is submitted to the Board then tracked for improvements. The audit supervisor is also required to report major discoveries to the Board of Directors.

Detailed risk assessments are carried out by each department based on their own
particular field of expertise. Also, management policies and response plans that reduce, transfer or avoid risks are developed to effectively reduce business risks.

Examples include :

Financial risk management:
Strict controls and legal tax planning, credit risk management and financial risk prediction
models are used to reduce risks. Market capital and bank interest rates are also regularly
assessed to determine appropriate fund raising strategies. Hedging measures are used to
minimize the impact of current fluctuations on our company.

Corporate investment risk management:
The benefits of medium and long-term investments are assessed with strategic targets
identified in conjunction with businessunits. Non-core investments are disposed of as
necessary. Re-investments are alsoassessed, reviewed, supervised and managed to
strategically reduce, transfer or avoid risks.

Information risk management:
A sound corporate IT management system is used to monitor and protect the safety of the
information network. The system also provides the management with fast, effective and
transparent business management information to reduce the risk of IT security threats.

Legal and intellectual property right risk management:
This is provided by reviewingall contracts, providing internal legal consultations, extending
product liability insurance, dealing with legal disputes and lawsuits, helping business units
handle patent, trademark and other intellectual property items. Anti-trust training and
consultations are also provided to reduce, transfer and avoid risks.

Environmental risk management:
Regulatory requirements, current management, internal/external environmental impact and
priority of improvements are taken into account when defining management plans and
indicators. Regular reviews and assessments are also performed.

Safety and health risk Management:
Factors such as hazard frequency, employee operating frequency and hazard severity are
used to identify the levels of risk. The relevant plant departments are then required to define
control measures based on risk severity.

Delta continued to receive outside recognition for our efforts in corporate governance in 2011. Not only were we selected for the DJSI World and DJSI Asia/Pacific indexes of the 2011/2012 Dow Jones Sustainability Indexes (DJSI) but also given the highest "Gold Class" rating and named "Sector Mover" in the electronics equipment sector of Sustainable Asset Management (SAM) 2012. We were certified to the CG6006 corporate governance standard of the Taiwan Corporate Governance Association, awarded the "Most Admired Company in the Electronics Industry" by CommonWealth magazine and received a rating of A+ for transparency and disclosure by the Securities and Futures Institute in Taiwan. Delta's founder and Honorary Chairman Mr. Bruce Cheng was awarded the 5th "Distinguished Accomplishment Award" by the Chinese Professional Management Association while Chairman Yancey Hai was named among the Top 3 "Best CEO" in the technology/hardware field of Asia for 2011 by Institutional Investor magazine. Delta continues to strengthen the organizational functions and activities of our Board of Directors to better ensure sound corporate governance at Delta.

The "Delta Code of Conduct" describes our expectations of all Delta employees around the world. The Code provides guidelines for employee conduct and asks all employees to protect Delta's assets, rights and image by engaging in legal and ethical behavior so the company can continue to develop in a sustainable manner. Where an employee interacts with company customers, suppliers, partners and any other third-party due to the demands of business, they must obey the Code of Conduct. All behavior that reflects negatively on the company's reputation and interests including bribery and graft are strictly prohibited. In addition to obeying the applicable laws and corporate policies, implementing the principles of "Care for the Environment, Energy-saving and Our Green Earth" as well as maintaining "Integrity" are stated at the very beginning of the Code.