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Dynamic Electronics Co., Ltd.

2017 Annual Meeting of Shareholders Meeting Handbook

Table of Contents

Table of Contents Page No.

I. Proceeding 1

II. Agenda 2

1. Reports 3

2. Proposals 3

3. Discussions 4

4. Motions 4

III. Attachments

1. 2016 Business Report 5

2. 2016 Audit Committee’s Review Report 10

3. Implementation of Investments in the PRC 11

4. Audit Report of Independent Auditors and Financial Statements 13

5. Amendment List of Operational Procedures for Acquisition and

Disposal of Assets 33

IV. Appendix

1. Operational Procedures for Acquisition and Disposal of Assets 45

2. Rules of Procedure for Shareholders’ Meeting 63

3. Articles of Incorporation 70

4. Shareholding by All Directors 76

I. Proceeding

Dynamic Electronics Co., Ltd. Procedure for 2017 Annual Meeting of Shareholders

1. Announcement of

Commencement

2. Chairman’s Statement

3. Reports

4. Proposals

5. Discussions

6. Motions

7. Adjournment

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II. Agenda


Agenda for 2017 Annual Meeting of Shareholders

Time: 9:00 a.m., Friday, May 26, 2017

Place: No. 398 Taoying Road, Taoyuan City (Chuto Plaza Hotel Roseate Hall)

1. Announcement of Commencement (Report the number of shares to attend)

2. Chairman’s Statement

3. Reports (1) 2016 Business Report

(2) 2016 Audit Committee’s Review Report

(3) Implementation of Investments in the PRC

4. Proposals (1) 2016 Business Report and Financial Statements

(2) 2016 Deficit Compensation

5. Discussions (1) Amendment to the “Operational Procedures for Acquisition and

Disposal of Assets”

6. Motions

7. Adjournment

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Reports 1. The 2016 business report is submitted for review.

Explanation: For 2016 business report, please refer to pages 5 to 9 of this manual [Attachment 1].

2. The 2016 Audit Committee’s Review Report is submitted for review. Explanation: For 2016 Audit Committee’s Review Report, please refer to page 10 of this manual [Attachment 2].

3. The Implementation of Investments in the PRC is submitted for review. Explanation: For the Implementation of Investments in the PRC, please refer to page 11 to 12 of this manual [Attachment 3].

Proposals Proposal 1 (proposed by Board of Directors) Subject: The 2016 business report, individual financial statements and

consolidated financial statements are submitted for adoption. Explanation: 1. The board of directors has prepared the 2016 business report,

individual financial statements and consolidated financial statements of the Company, among which the financial statements have been audited by accountants Ching-Piao Cheng and Mao-Yi Hung of Ernst & Young.

2. For the 2016 business report, accountant audit report and the above-mentioned financial statements, please refer to pages 5 to 9 [Attachment 1] and pages 13 to 32 [Attachment 4] of this manual.

Resolution: Proposal 2 (proposed by Board of Directors) Subject: The 2016 Deficit Compensation is submitted for adoption. Explanation: The Deficit Compensation is prepared in accordance with

the Company Act and the Articles of Incorporation of the Company. The Statement of Deficit Compensated is as follows:

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Dynamic Electronics Co., Ltd. 2016 Statement of Deficit Compensated

Unit: NT Dollars Item Amount

Opening Undistributed Profit $(275,942,531)Plus: Confirmed Benefit Plan Actuarial Profit and Loss (2016)

(442,405)

Plus: Net Profit after Tax of Current Year 10,699,574Closing Loss pending Compensation $(265,685,362)

Resolution:

Discussions Proposal 1 (proposed by Board of Directors) Subject: The amendment to the “Operational Procedures for Acquisition

and Disposal of Assets” is submitted for discussion. Explanation: 1. To amend the “Operational Procedures for Acquisition and Disposal of

Assets” according to Chin Kuan Cheng FA Tzu order #1060001296 on 02/09/2017 of the Financial Supervisory Commission R.O.C. (Taiwan).

2. For the Amendment List showing amended articles and current articles to the “Operational Procedures for Acquisition and Disposal of Assets”, please refer to pages 33 to 44 of this manual [Attachment 5].

Resolution:

Motions Adjournment

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III. Attachments

【Attachment 1】

Dynamic Electronics Co., Ltd. 2016 Business Report

Due to the impacts of global economic slowdown and the raw material prices falling

on the first half of 2016, the global economic did not perform well. In the second

half of 2016, the energy price started to stabilize and the global demand warmed up,

the global economy gradually improved. However, the growth rate was still limited.

With the impact of the adverse environment condition, the performance of Dynamic

in 2016 was unsatisfactory, yet the overall profit of the year reached NT $ 10 million.

In year 2016, the proportion of automotive products that accounted for the revenue

increased from the 16% of year 2015 to 25%.

In the beginning of year 2016, we carried out three turns of home-returning leave

program, so that the production during the Spring Festival was successfully

completed with such arrangement. In the second quarter, the automotive products

continued to grow which showed the silver lining to the off-season, and the third

quarter revenue continued to rise. However, G20 summit was held in Hangzhou in

September, the mainland government tightened the environmental protection

regulation on the neighboring enterprises. To ensure that environmental

standards were met, we put a considerable amount of waste water treatment costs,

and invested more in wastewater treatment to improve its capacity and quality. By

the end of the year the problem has been fully resolved. In addition, Dynamic

Corporate Social Responsibility Report published in 2016 was our third publication

and the first, by introducing integrated reporting framework, to both comply with the

International Integrated Reporting <IR> Framework and the Global Reporting

Initiative (GRI) G4 Guidelines. It created a more comprehensive, more integrated,

more coherent, and more efficient communication platform for Dynamic’s

stakeholders. Furthermore, Dynamic is ranked in the top 20 among all listed

companies in the "Corporate Governance Assessment II" promoted by Financial

Supervisory Commission.

Looking into year 2017, in terms of product strategy, we will continue to deepen our

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efforts in the ongoing automotive electronics products (including high-frequency

radar of ADAS), Netcom products (including car networking), high-end servers,

wearable devices, LED Green products, medical products, etc. In terms of

capacity allocation, Hubei Huangshi new plant is expected to output the first 40

million feet in the third quarter of 2017. At the initial stage, LCD panel will be

accounting for the biggest proportion of the production, but the long-term focus is to

develop Huangshi plant into the main production base of automotive products.

(1) Operation plan execution results in 2016

1. Consolidated

Unit: NTD thousands Item 2015 2016 Growth Rate

Operating income 11,150,214 11,791,838 5.75%

After-tax (loss) gain (92,971) 12,828 113.80%

Profitability (0.83)% 0.11 % 113.05%

2. Individual

Unit: NTD thousands Item 2015 2016 Growth Rate

Operating income 7,010,679 5,575,299 (20.47)%

After-tax (loss) gain (93,866) 10,700 111.40%

Profitability (1.34)% 0.19 % 114.33%

(2) Budget implementation in 2016 1. Consolidated

Unit: NTD thousands

Item 2016 Actual Performance

2016 Budget Achievement

Rate


Operating cost 10,569,067 10,567,277 99.98%

Operating margin 1,209,191 1,224,561 101.27%

Operating expenses 1,218,361 1,222,899 100.37%

Operating profit (9,170) 1,662 218.12%Net non-operating income and expense 32,912 40,784 123.92%

Pre-tax profit 23,742 42,446 178.78%

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2. Individual Unit: NTD thousands

Item 2016 Actual Performance 2016 Budget

Achievement Rate


Operating cost 5,277,968 5,299,579 100.41%

Operating margin 293,650 275,720 93.89%

Operating expenses 450,177 449,699 99.89%

Operating profit (156,527) (173,979) 88.85%Net non-operating income and expense 165,424 184,679 111.64%

Pre-tax profit 8,897 10,700 120.27%

(3) Revenue and profitability analysis in 2016 1. Consolidated

Unit: NTD thousands Item 2015 2016

Financial revenues & expenses

Financial revenue 11,273,302 11,890,072

Financial expenses 11,366,272 11,847,626

Profitability

Return on assets (0.43)% 0.45 %

Return on equity (1.97)% 0.29 %

Ratio to paid-in capital

Operating profit (5.70)% 0.06 %

Pre-tax profit (3.31)% 1.51 %

Net profit margin (0.83)% 0.11 %

Earnings (loss) per share in NTD (0.33) 0.04

2. Individual

Unit: NTD thousands Item 2015 2016

Financial revenues & expenses

Financial revenue 7,133,071 5,789,306

Financial expenses 7,226,937 5,778,606

Profitability

Return on assets (0.96)% 0.35 %

Return on equity (2.01)% 0.24 %

Ratio to paid-in capital

Operating profit (7.01)% (6.19)%

Pre-tax profit (3.34)% 0.38 %

Net profit margin (1.34)% 0.19 %

Earnings (loss) per share in NTD (0.33) 0.04

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(4) Research and development status in 2016

To respond accordingly to the development of portable and wearable electronic products, trend of 5G high-frequency high-speed interconnection of all things, widespread use in automotive electronics, and the sales growth of Advanced Driver Assistance Systems (ADAS) and electric vehicles; to achieve sustainable development and contribution of social responsibility and mission, we have strengthened the company's research and development capabilities by constantly importing new technology and equipment for products of niche market and future in year 2016 besides continuous improvement in quality and process capability. By doing this, we've strengthened the company's core competencies and increased our competitiveness in the industry. Here we summarized our major R&D projects and results in 2016 in the following five points: 1. For high-speed high-frequency low signal loss products, we have

successfully obtained certification of Insertion Loss -0.48dB/in, and succeeded in mass production. We also participated the testing of insertion loss -0.4db/in certification which required by 5G Communication era, the relevant materials and technology requirements of which are under active development.

2. For fine lines and thin products, 2 mil fine lines have been successfully produced massively, 12 any layer high density interconnect products have been produced massively, manufacturing process capability for 10 layer thin board with 24 mil thickness has also been developed and the sample is being certified. The improvement of 1.6 mil extremely fine line producing process is being developed.

3. Rigid-flex board and rotatable products has been successfully produced massively. The material and technology of flex board for high-frequency and ultra-high-resolution screen has successfully passed the sample certification. The process improving testing of the dual lens module product with Ultra flatness requirements is complete. The product is now under sample certification.

4. For automotive and microwave products, passive security products has been under mass production. We have mastered the relevant technology of 24GHz products and 77GHz millimeter wave products for ADAS radar, and the process is set in the development. The sample certification of Satellite Receiver Downstream Products LNB is also completed.

5. For heat sink material, BT material products that used in LED products have been successfully produced massively. We have mastered the

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process technology of thick copper and buried copper technologies that used in twin-lens module of high-end phone and automotive engine control modules, and are developing the samples proactively.

The global economy of year 2017 is expected to continuously stay in the slow-moving growth of the second half of year 2016. However, the US economy is anticipated to steady while the new president's policy will increase the risk of our global trade planning. On the other hand, the economic situation in Europe is stable, but the political situation is encountering risks due to the rise of populism. China's long-term economic growth is slowing down, and the risk of funds that caused by the raised interest rate of the US will remain. In the face of the turbulence and uncertainty of year 2017, regardless adversity or favorable circumstances, Dynamic is committed to learning continuously, having courage to innovate, showing momentum and moving people. We also know that only working together with our partners hand in hand, heart to heart is the way to break through all the obstacles and difficulties and moving towards the goal and mission of sustainable development with the environment and society.

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【Attachment 2】

Audit Committee’s Review Report

It is agreed to and resolved by the Audit Committee and the Board of Directors

that the company’s 2016 Financial Statement was audited and certified by Ernest &

Young, who is designated by the Board of Directors; and an audit report which

refers to the Financial Statement was issued.

In addition, the Company’s business report of 2016 and statement of Deficit

Compensation which were submitted by The Board of Directors have been

considered to be compliant with the relevant regulations of Company Law after

having them reviewed by the Audit Committee of Dynamic Electronics Co.,

Ltd. According to article 219 of Company Law, we hereby submit this report.

To

2017 Annual Meeting of Shareholders of Dynamic Electronics Co., Ltd.

Chairman of the Audit Committee: Po-sheng Lin

April 14th, 2017

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【Attachment 3】

Dynamic Electronics Co., Ltd. Implementation of Investments in the PRC

2016 Units: NTD in thousands

Investee Company

Main Business

and Products

Paid-in Capital

Inve

stment

Meth

od

Accumulated Outflow of Investment from Taiwan as of Jan. 1,

2016

Investment Flows

Accumulated Outflow of Investment

from Taiwan as of Dec. 31,

2016

Net Income

(Losses) of

Investee Company

Percentage of

Ownership

Investment Income (loss)

Recognized

Carrying Value as of

Dec. 31, 2016

Accumulated Inward

Remittance of Earnings as of Dec. 31, 2016

Accumulated Outflow of investment from Taiwan

as of Dec. 31, 2016

Investment Amount

Authorized by Investment

Commission MOEA

Upper Limit on

Investment

Ou

tflow

Inflo

w

Dynamic Electronics (Kunshan) Co., Ltd.

Manufacturing and selling of PCB

$2,567,000

(Notes 2,3, 6)

(Note

1) $2,260,265 $- $- $2,260,265

$103,563(Note 2)

100% $104,497

(Notes 2, 4, 5 and 12)

$3,376,846(Notes 2, 4, 5

and 12)

$1,304,100(Note 2)

$2,260,265 $2,260,265 No upper

limit (Note 11) Dynamic

Electronics (Huangshi) Co., Ltd.

Manufacturing and selling of PCB

$805,000(Notes 2,

7, 8)

(Note

9) $- $292,330 $- $292,330 $(3,837) 100%

$(3,837) (Notes 2, 4, 10 and 12)

$762,527 (Notes 2, 4, 10

and 12) $- $292,330 $292,330

Note 1: The Company indirectly invested 100% in Dynamic Electronics (Kunshan) Co. Ltd.

Note 2: Foreign currencies were converted into New Taiwan dollars based on exchanged rate of balance sheet date.

Note 3: Total amount of paid-in capital is USD 80,000 thousand.

Note 4: The investment income (loss) recognized under equity method and by calculation was based on audited financial statements.

Note 5: Recognized investment income and carrying value by WINTEK (MAURITIUS) CO., LTD.

Note 6: The difference between investments remitted from Taiwan in amount of USD 69,500 thousand and the received paid-in capital of USD 80,000 thousand was a capital

injection of USD 10,500 thousand made by WINTEK (MAURITIUS) CO., LTD.

Note 7: The difference between the original investment of USD9,000 thousand remitted from Taiwan and the paid-in capital of USD25,000 thousand is a capital injection of

USD16,000 thousand by using cash dividends received from Dynamic Electronics (Kunshan) Co. Ltd.

Note 8: Total amount of paid-in capital is USD25,000 thousand.

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Note 9: The Company indirectly invested in its China subsidiary, Dynamic Electronics (Huangshi) Co. Ltd., through WINTEK (MAURITIUS) CO., LTD. and Dynamic Holding Pte.

Ltd.

Note 10: WINTEK (MAURITIUS) CO., LTD. indirectly, through the holding on Dynamic Holding Pte. Ltd., recognized the investment loss of Dynamic Electronics (Huangshi) Co.

Ltd.

Note 11: The Company meets the conditions of corporate operation headquarter in the Principle of Evaluation for Investment and Technical Cooperation in Mainland China. Thus,

there is no upper limit on investment amount.

Note 12: Transactions between consolidated entities are eliminated in the consolidated financial statements.

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【Attachment 4】

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Code Accounts Notes Amount % Amount %

Current assets

1100 Cash and cash equivalents 4, 6(1) $162,899 2 $390,918 5

1150 Notes receivable, net 4, 6(2) 10,806 - 11,446 -

1170 Accounts receivable, net 4, 6(3) 1,662,028 23 1,766,974 23

1180 　Accounts receivable - related parties, net 7 6,601 - 3,541 -

1200 　Other receivables 16,238 - 16,451 -

1210 　Other receivables - related parties 7 272 - 35,814 1

1310 Inventories, net 4, 6(4) 266,887 4 327,988 4

1410 Prepayments 46,444 1 36,243 1

1470 Other current assets 478 - 132 -

11XX Total current assets 2,172,653 30 2,589,507 34

Non-current assets

1550 Investment accounted for under equity method 4, 6(5) 4,246,831 59 4,195,000 54

1600 Property, plant and equipment, net 4, 6(6), 7, 8, 9 650,262 9 793,098 10

1780 Intangible assets, net 4, 6(7) 13,012 - 6,312 -

1840 Deferred tax assets 4, 6(19) 155,354 2 128,873 2

1900 Other non-current assets 6(8) 1,904 - 1,824 -

1942 Long-term accounts receivable - related parties, net 7 - - - -

15XX Total non-current assets 5,067,363 70 5,125,107 66

1XXX Total Assets $7,240,016 100 $7,714,614 100

English Translation of Parent-Company-Only Financial Statements Originally Issued in Chinese

(The accompanying notes are an integral part of the parent-company-only financial statements.)

DYNAMIC ELECTRONICS CO., LTD.

PARENT-COMPANY-ONLY BALANCE SHEETS

As of December 31, 2016 and 2015

(Amounts Expressed in Thousands of New Taiwan Dollars)

Assets As of December 31, 2016 As of December 31, 2015

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Code Accounts Notes Amount % Amount %

Current liabilities

2100 Short-term loans 6(9) $813,310 11 $546,563 7

2170 Accounts payable 377,070 5 350,126 5

2180 Accounts payable - related parties 7 978,935 14 1,229,657 16

2200 Other payables 6(10) 258,138 4 279,130 4

2220 Other payables - related parties 7 2,290 - - -

2300 Other current liabilities 12,359 - 10,226 -

2322 Current portion of long-term loans 6(11), 8 155,204 2 162,436 2

21XX Total current liabilities 2,597,306 36 2,578,138 34

Non-current liabilities

2540 Long-term loans 6(11), 8 138,604 2 318,711 4

2570 Deferred tax liabilities 4, 6(19) 226,921 3 259,828 3

2640 Net defined benefit liabilities 4, 6(12) 927 - 1,985 -

2650 Credit balance of equity investments 4, 6(5) 1,665 - 1,665 -

25XX Total non-current liabilities 368,117 5 582,189 7

2XXX Total liabilities 2,965,423 41 3,160,327 41

31XX Equity attributable to the parent company

3100 Capital 6(13)

3110 Common stock 2,810,594 39 2,810,594 36

3200 Capital surplus 6(13) 1,061,873 15 1,061,873 14

3300 Retained earnings 6(13)

3310 Legal reserve 531,385 7 531,385 7

3320 Special reserve 299,666 4 299,666 4

3350 Accumulated profit or loss (265,685) (4) (275,943) (4)

3400 Other components of equity (163,240) (2) 126,712 2

3XXX Total equity 4,274,593 59 4,554,287 59

Total liabilities and equity $7,240,016 100 $7,714,614 100

PARENT-COMPANY-ONLY BALANCE SHEETS(Continued)






Liabilities and Equity As of December 31, 2016 As of December 31, 2015

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Notes Amount % Amount %

4000 Operating revenues 4, 6(14), 7 $5,575,299 100 $7,010,679 100

5000 Operating costs 6(4), 7 (5,299,579) (95) (6,597,525) (94)

5900 Gross profit 275,720 5 413,154 6

6000 Operating expenses 7

6100 Sales and marketing expenses (241,368) (4) (400,764) (6)

6200 General and administrative expenses (157,930) (3) (119,614) (2)

6300 Research and development expenses (50,401) (1) (89,809) (1)

Operating expenses total (449,699) (8) (610,187) (9)

6900 Operating loss (173,979) (3) (197,033) (3)

7000 Non-operating income and expenses 6(17), 7

7010 Other income 52,468 1 59,447 1

7020 Other gains and losses (10,690) - 16,565 -

7050 Finance costs (18,638) - (19,225) -

7070 Share of profit or loss of subsidiaries, associates and joint ventures 4, 6(5) 161,539 2 46,380 1

　　Non-operating income and expenses total 184,679 3 103,167 2

7900 Income (loss) from continuing operations before income tax 10,700 - (93,866) (1)

7950 Income tax 4, 6(19) - - - -

8200 Net income (loss) 10,700 - (93,866) (1)

8300 Other comprehensive income (loss) 6(18)

8310 Not to be reclassified to profit or loss in subsequent periods

8311 Remeasurements of defined benefit plans (442) - (5,193) -

8360 May be reclassified to profit or loss in subsequent periods

8361 Exchange differences arising on translation of foreign operations (349,340) (6) (91,713) (1)

8399 Income tax related to items that may be reclassified subsequently to profit or loss 59,388 1 15,592 -

Total other comprehensive income (loss), net of tax (290,394) (5) (81,314) (1)

8500 Total comprehensive income (loss) $(279,694) (5) $(175,180) (2)

9750 Earnings per share - basic (in NT$) 6(20) $0.04 $(0.33)

9850 Earnings per share - diluted (in NT$) 6(20) $0.04 $(0.33)



PARENT-COMPANY-ONLY STATEMENTS OF COMPREHENSIVE INCOME


For the Years Ended December 31, 2016 and 2015

(Amounts Expressed in Thousands of New Taiwan Dollars, Except Earnings Per Share)

Code Accounts

2016 2015

-20-

Legal

Reserve

Special

Reserve

Accumulated

profit or loss

Exchange differences

arising on translation of

foreign operations

Treasury

Stock

Code 3110 3200 3310 3320 3350 3410 3500 3XXX

A1 Balance as of January 1, 2015 $2,860,594 $1,060,950 $531,385 $299,666 $(176,884) $202,833 $- $4,778,544

D1 Net loss for 2015 (93,866) (93,866)

D3 Other comprehensive income (loss) for 2015 (5,193) (76,121) (81,314)

D5 Total comprehensive income (loss) - - - - (99,059) (76,121) - (175,180)

L1 Acquried treasury stock (49,077) (49,077)

L3 Cancelled treasury stock (50,000) 923 49,077 -

Z1 Balance as of December 31, 2015 $2,810,594 $1,061,873 $531,385 $299,666 $(275,943) $126,712 $- $4,554,287

A1 Balance as of January 1, 2016 $2,810,594 $1,061,873 $531,385 $299,666 $(275,943) $126,712 $- $4,554,287

D1 Net income for 2016 10,700 10,700

D3 Other comprehensive income (loss) for 2016 (442) (289,952) (290,394)

D5 Total comprehensive income (loss) - - - - 10,258 (289,952) - (279,694)

Z1 Balance as of December 31, 2016 $2,810,594 $1,061,873 $531,385 $299,666 $(265,685) $(163,240) $- $4,274,593

Retained Earnings Other Components of equity



PARENT-COMPANY-ONLY STATEMENTS OF CHANGES IN EQUITY




Items Capital

Capital

Surplus

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AAAA Cash flows from operating activities: BBBB Cash flows from investing activities:

A10000 Net income (loss) before tax $10,700 $(93,866) B01800 Acquisition of Investment accounted for under equity method (292,330) (225,545)

A20000 Adjustments: B02700 Other receivable - related parties - 25,000

A20010 Profit or loss not effecting cash flows: B02800 Acquisition of property, plant and equipment (31,145) (243,463)

A20300 Bad debt expense (gain on recovery) 2,188 (20,500) B04400 Proceeds from disposal of property, plant and equipment 8,526 2,480

A20100 Depreciation 166,640 186,822 B04500 Acquisition of intangible assets (11,811) (6,681)

A20200 Amortization 5,111 4,751 B03700 Decrease (increase) in refundable deposits (80) (340)

A20900 Interest expense 18,638 19,225 B01900 Proceeds from disposal of investment under equity method 50,383 -

A21200 Interest income (312) (843) BBBB Net cash provided by (used in) investing activities (276,457) (448,549)

A22400 Share of profit or loss of subsidiaries, associates and joint ventures (161,539) (46,380)

A22500 Loss (gain) on disposal of property, plant and equipment (1,953) 1,672

A23200 Loss (gain) on disposal of investment under equity method (4,221) -

A30000 Changes in operating assets and liabilities:

A31130 Notes receivable 640 4,105

A31150 Accounts receivable 102,758 720,342

A31160 Accounts receivable - related parties (3,060) (673)

A31180 Other receivable 213 5,079 CCCC Cash flows from financing activities:

A31190 Other receivable - related parties 35,542 (19,927) C00100 Increase in (repayment of) short-term loans 266,747 476,347

A31200 Inventories 61,101 238,919 C01700 Repayment of long-term loans (187,339) (207,436)

A31230 Prepayment (10,201) 493 C04900 Treasury stock acquired - (49,077)

A31240 Other current assets (346) 583 CCCC Net cash provided by (used in) financing activities 79,408 219,834

A32150 Accounts payable 26,944 (3,931)

A32160 Accounts payable - related parties (250,722) (539,013)

A32180 Accrued expenses (13,247) (242,159)

A32190 Other payables - related parties 2,290 -

A32230 Other current liabilities 2,133 778

A32240 Net defined benefit liabilities (1,500) (4,518)

A32000 Cash generated from operations (12,203) 210,959

A33100 Interest received 312 843

A33300 Interest paid (19,079) (18,642) EEEE Net Increase (decrease) in cash and cash equivalents (228,019) (44,307)

A33500 Income tax paid - (8,752) E00100 Cash and cash equivalents at beginning of period 390,918 435,225

AAAA Net cash provided by (used in) operating activities (30,970) 184,408 E00200 Cash and cash equivalents at end of period $162,899 $390,918


2016 2015



PARENT-COMPANY-ONLY STATEMENTS OF CASH FLOWS


Code 2016 2015Items Code Items


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Code Accounts Notes Amount ％ Amount ％

11xx Current assets

1100 Cash and cash equivalents 4, 6(1) $1,261,941 12 $1,217,376 11

1147 Debt instrument investments for which no active market exists 4, 6(2), 8 1,417 - 9,460 -

1150 Notes receivable, net 4, 6(3) 226,286 2 188,012 3

1170 Accounts receivable, net 4, 6(4) 3,142,427 31 3,146,255 29

1200 Other receivables 81,806 1 77,007 1

1310 Inventories, net 4, 6(5) 1,272,885 13 1,275,823 12

1410 Prepayments 6(13) 277,270 3 159,264 1

1470 Other current assets 3,262 - 192 -

Total current assets 6,267,294 62 6,073,389 57

15xx Non-current assets

1600 Property, plant and equipment 4, 6(6), 8 3,425,029 34 4,505,619 42

1780 Intangible assets 4, 6(7) 17,967 - 10,183 -

1840 Deferred tax assets 4, 6(21) 155,354 1 129,212 1

1900 Other assets-others 6(8) 312,541 3 49,217 -

Total non-current assets 3,910,891 38 4,694,231 43

Total assets $10,178,185 100 $10,767,620 100

(The accompanying notes are an integral part of the consolidated financial statements.)

English Translation of Consolidated Financial Statements Originally Issued in Chinese

DYNAMIC ELECTRONICS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


As of December 31, 2016Assets As of December 31, 2015


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Code Accounts Notes Amount ％ Amount ％21xx Current liabilities

2100 Short-term loans 6(9), 8 $2,145,170 21 $2,195,461 20

2150 Notes payable - - 402 -

2160 Notes payable-related parties 7 - - 840 -

2170 Accounts payable 2,151,893 21 1,931,925 18

2180 Accounts payable-related parties 7 153,744 1 65,242 1

2200 Other payables 6(10) 773,075 8 944,427 9

2220 Other payables-related parties 7 421 - 1,281 -

2230 Current tax liabilities 4, 6(21) 5 - 1 -

2300 Other current liabilities-others 51,215 - 74,511 1

2322 Current portion of long-term loans 6(11), 8 155,204 2 195,230 2

2355 Lease payable 4, 6(12) - - 8,779 -

Total current liabilities 5,430,727 53 5,418,099 51

25xx Non-current liabilities

2540 Long-term loans 6(11), 8 138,604 2 433,387 4

2570 Deferred tax liabilities 4, 6(21) 226,921 2 259,907 2

2613 Lease payable 4, 6(12) - - 521 -

2640 Net defined benefit liability 4, 6(13) 927 - 1,985 -

2645 Guarantee deposits 106,413 1 54,163 1

Total non-current liabilities 472,865 5 749,963 7

Total liabilities 5,903,592 58 6,168,062 58

31xx Equity attributable to the parent company

3100 Capital 6(14)

3110 Common stock 2,810,594 28 2,810,594 26

3200 Capital surplus 6(14) 1,061,873 11 1,061,873 10

3300 Retained earnings 6(14)

3310 Legal reserve 531,385 5 531,385 5

3320 Special reserve 299,666 3 299,666 3

3350 Accumulated profit or loss (265,685) (3) (275,943) (3)

3400 Other components of equity (163,240) (2) 126,712 1

36xx Non-controlling interests 6(14) - - 45,271 -

Total equity 4,274,593 42 4,599,558 42

Total liabilities and equity $10,178,185 100 $10,767,620 100



DYNAMIC ELECTRONICS CO., LTD. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS (Continued)


Liabilities and Equity As of December 31, 2016 As of December 31, 2015


-29-

Notes Amount % Amount %

4000 Operating revenues 4, 6(16) $11,791,838 100 $11,150,214 100

5000 Operating costs 6(5), 7 (10,567,277) (90) (9,705,359) (87)

5900 Gross profit 7 1,224,561 10 1,444,855 13

6000 Operating expenses

6100 　Sales and marketing expenses (620,099) (5) (826,695) (7)

6200 General and administrative expenses (486,686) (4) (368,711) (3)

6300 Research and development expenses (116,114) (1) (409,578) (4)

　　 Operating expenses total (1,222,899) (10) (1,604,984) (14)

6900 Operating income (loss) 1,662 - (160,129) (1)

7000 Non-operating income and expenses 6(19), 7

7010 Other income 98,234 1 91,734 1

7020 Other gains and losses (16,301) - 31,354 -

7050 Finance costs (41,149) (1) (55,929) (1)

　　Non-operating income and expenses total 40,784 - 67,159 -

7900 Income (loss) from continuing operations before income tax 42,446 - (92,970) (1)

7950 Income tax 4, 6(21) (29,618) - (1) -

8200 Net income (loss) 12,828 - (92,971) (1)

8300 Other comprehensive income (loss) 6(20)

8310 Not to be reclassified to profit or loss in subsequent periods

8311 Remeasurement of defined benefit plans (442) - (5,193) -

8360 May be reclassified to profit or loss in subsequent periods

8361 Exchange differences arising on translation of foreign operations (349,340) (3) (91,713) (1)

8399 Income tax related to items that may be reclassified subsequently to profit or loss 59,388 1 15,592 -

Total other comprehensive income (loss), net of tax (290,394) (2) (81,314) (1)

8500 Total comprehensive income (loss) $(277,566) (2) $(174,285) (2)

8600 Net income (loss) attributable to:

8610 Shareholders of the parent $10,700 - $(93,866) (1)

8620 Non-controlling interests 2,128 - 895 - $12,828 - $(92,971) (1)

8700 Total comprehensive income (loss) attributable to:

8710 Shareholders of the parent $(279,694) (2) $(175,180) (2)

8720 Non-controlling interests 2,128 - 895 - $(277,566) (2) $(174,285) (2)

9750 Earnings per share - basic (In NT$) 4, 6(22) $0.04 $(0.33)

9850 Earnings per share - diluted (In NT$) 4, 6(22) $0.04 $(0.33)




For the years ended December 31, 2016 and 2015

Code Accounts

20152016

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts Expressed in Thousands of New Taiwan Dollars, Except for Earnings per Share)

-30-

Code

Legal

Reserve

Special

Reserve

Accmulated

profit or

loss

Exchange

differences

arising on

translation of

foreign

operations

Treasury

Stock Total

3110 3200 3310 3320 3350 3410 3500 31xx 36XX 3xxx

A1 Balance as of January 1, 2015 $2,860,594 $1,060,950 $531,385 $299,666 $(176,884) $202,833 $- $4,778,544 $46,043 $4,824,587

D1 Net income (loss) for 2015 (93,866) (93,866) 895 (92,971)

D3 Other comprehensive income (loss) for 2015 (5,193) (76,121) (81,314) (81,314)

D5 Total comprehensive income (loss) - - - - (99,059) (76,121) - (175,180) 895 (174,285)

L1 Acquired treasury stock (49,077) (49,077) (49,077)

L3 Cancelled treasury stock (50,000) 923 49,077 - -

O1 Decrease in non-controlling interests (1,667) (1,667)

Z1 Balance as of December 31, 2015 $2,810,594 $1,061,873 $531,385 $299,666 $(275,943) $126,712 $- $4,554,287 $45,271 $4,599,558

A1 Balance as of January 1, 2016 $2,810,594 $1,061,873 $531,385 $299,666 $(275,943) $126,712 $- $4,554,287 $45,271 $4,599,558

D1 Net income (loss) in 2016 10,700 10,700 2,128 12,828

D3 Other comprehensive income (loss) in 2016 (442) (289,952) (290,394) (290,394)

D5 Total comprehensive income (loss) - - - - 10,258 (289,952) - (279,694) 2,128 (277,566)

O1 Decrease in non-controlling interests (47,399) (47,399)

Z1 Balance as of December 31, 2016 $2,810,594 $1,061,873 $531,385 $299,666 $(265,685) $(163,240) $- $4,274,593 $- $4,274,593



CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


(In Thousands of New Taiwan Dollars)


Items

Non-

controlling

Interests Total Equity

Equity Attributable to Shareholders of the Parent

Capital

Capital

Surplus

Retained Earnings Other Components of equtiy

-31-

Code 2016 2015 Code 2016 2015

AAAA Cash flows from operating activities: BBBB Cash flows from investing activities:

A10000 Net income (loss) before tax $42,446 $(92,970) B02700 Acquisition of property, plant and equipment (409,148) (627,730)

A20000 Adjustments: B02800 Proceeds from disposal of property, plant and equipment 11,209 6,288

A20010 Income and expense adjustments: B00600 Acquisition of debt instrument investments for which no active market exists (40) 53,182

A20300 Bad debt expenses (reversal) 2,188 (20,500) B04500 Acquisition of intangible assets (14,947) (7,923)

A20100 Depreciation 789,932 903,259 B03700 Decrease (Increase) in refundable deposits 482 (2,042)

A20200 Amortization 6,870 6,544 B01900 Disposal of subsidiary resulted in decrease of net cash (9,637) -

A20900 Interest expense 41,149 55,929 BBBB Net cash provided by (used in) investing activities (422,081) (578,225)

A21200 Interest revenue (9,803) (8,267)

A22500 Loss on disposal of property, plant and equipment 467 11,485

A23200 Loss (gain) on disposal of investment under equity method (4,221)

A23700 Impairment loss (reversal) on non-financial assets 10,719 13,721

A30000 Changes in operating assets and liabilities: CCCC Cash flows from financing activities:

A31130 Notes receivable (46,205) 85,793 C00100 Increase in (repayment of) short-term loans 169,402 652,520

A31150 Accounts receivable (69,516) (26,890) C01700 Decrease in long-term loans (196,858) (546,781)

A31180 Other receivables 3,475 55,343 C03700 Increase (Decrease) in other payables-related parties - (50,000)

A31200 Inventories (64,418) (108,444) C03000 Increase (Decrease) in guarantee deposits 52,310 16,164

A31230 Prepayments (122,546) (15,282) C04900 Acquired treasury stock - (49,077)

A31240 Other current assets (3,188) 582 C03900 Increase (Decrease) in lease payable (1,892) (8,970)

A31990 Long-term prepaid rent (264,082) 2,191 C04500 Change in non-controlling interests - (1,667)

A32130 Notes payable 1,236 (1,706) CCCC Net cash provided by (used in) financing activities 22,962 12,189

A32140 Notes payable-related parties 420 686

A32150 Accounts payable 256,748 98,117

A32160 Accounts payable-related parties 89,706 65,043

A32180 Accrued expenses (28,877) (138,991)

A32190 Other payables-related parties (848) (1,384)

A32230 Other current liabilities (18,184) 48,571 DDDD Effect of exchange rate changes on cash and cash equivalents (98,435) (7,285)

A32240 Net defined benefit liability (1,500) (4,518)

A32000 Cash generated from operations 611,968 928,312

A33100 Interest received 9,803 8,267

A33300 Interest paid (41,701) (56,386) EEEE Net increase (decrease) in cash and cash equivalents 44,565 298,120

A33500 Income tax paid (37,951) (8,752) E00100 Cash and cash equivalents at beginning of period 1,217,376 919,256

AAAA Net cash provided by (used in) operating activities 542,119 871,441 E00200 Cash and cash equivalents at end of period $1,261,941 $1,217,376


Items Items



CONSOLIDATED STATEMENTS OF CASH FLOWS



-32-

【Attachment 5】 Amendment List of Operational Procedures

for Acquisition and Disposal of Assets

Amended Article Current Article Comment Article 8 (above is omitted) 1. Real property and

equipment appraisal report: In acquiring or disposing of real property or equipment where the transaction amount reaches 20 percent of the company's paid-in capital or 300 million NTD or more, the company, unless transacting with a government agency, engaging others to build on its own land, engaging others to build on rented land, or acquiring or disposing of equipment for business use, shall obtain an appraisal report prior to the date of occurrence of the event from a professional appraiser and shall further comply with the following provisions:

(below is omitted)

Article 8 (above is omitted) 4. Real property and

equipment appraisal report: In acquiring or disposing of real property or equipment where the transaction amount reaches 20 percent of the company's paid-in capital or 300 million NTD or more, the company, unless transacting with a government agency or facility, engaging others to build on its own land, engaging others to build on rented land, or acquiring or disposing of equipment for business use, shall obtain an appraisal report prior to the date of occurrence of the event from a professional appraiser and shall further comply with the following provisions:

(below is omitted)

Considering the original article only meant government agency, and that central and local government agencies are more unlikely to manipulate prices, expert opinion is exempt for such case, and wording is slightly adjusted.

Article 10 (above is omitted)

Article 10 (above is omitted)

The term “domestic monetary fund” as used in this

-33-

Amended Article Current Article Comment 2. Appraisal and

operating procedure When the company intends to acquire or dispose of real property from or to a related party, or when it intends to acquire or dispose of assets other than real property from or to a related party and the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or 300 million NTD or more, except in trading of government bonds or bonds under repurchase and resale agreements, or subscription or buy back of domestic money market funds issued by institutions of securities investment trust business, the company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by the board of directors and recognized by the supervisors committee:

(below is omitted)

2. Appraisal and operating procedure When the company intends to acquire or dispose of real property from or to a related party, or when it intends to acquire or dispose of assets other than real property from or to a related party and the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or 300 million NTD or more, except in trading of government bonds or bonds under repurchase and resale agreements, or subscription or redemption of domestic money market funds, the company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by the board of directors and recognized by the supervisors committee:

(below is omitted)

subparagraph is the monetary market fund issued by institutions of securities investment trust business that are approved by the FSC in accordance with Securities Investment Trust and Consultant Law. Wording is adjusted accordingly.

-34-

Amended Article Current Article Comment Article 11 (Above is omitted) 4. Expert opinion report

on memberships or intangible assets: Where the company acquires or disposes of memberships or intangible assets and the transaction amount reaches 20 percent or more of paid-in capital or 300 million NTD or more, except in transactions with a government agency, the company shall engage a certified accountant prior to the date of occurrence of the event to render an opinion on the reasonableness of the transaction price; the accountant shall comply with the provisions of Statement of Auditing Standards No. 20 published by the ARDF.

(below is omitted)

Article 11 (Above is omitted) 4. Expert opinion report

on memberships or intangible assets: Where the company acquires or disposes of memberships or intangible assets and the transaction amount reaches 20 percent or more of paid-in capital or 300 million NTD or more, except in transactions with a government agency or facility, the company shall engage a certified accountant prior to the date of occurrence of the event to render an opinion on the reasonableness of the transaction price; the accountant shall comply with the provisions of Statement of Auditing Standards No. 20 published by the ARDF.

(below is omitted)

Same reason as the amendment of Article 8.

Article 14 (Above is omitted) 1. Appraisal and

operating procedure: (1) Where the

company conducts a

Article 14 (Above is omitted) 1. Appraisal and

operating procedure: (1) Where the

company conducts a

Considering the company conducts merger with 100 percent owned subsidiaries or merger between 100 percent owned subsidiaries in

-35-

Amended Article Current Article Comment merger, split, acquisition, or transfer of shares, prior to convening the board of directors to resolve on the matter, the company shall engage an accountant, attorney, or securities underwriter to give an opinion on the reasonableness of the share exchange ratio, acquisition price, or distribution of cash or other property to shareholders, and submit it to the board of directors for deliberation and passage. Whereas the direct or indirectly, 100 percent outstanding shares or capital owned subsidiaries, or the merge between the direct or indirectly, 100 percent outstanding shares or capital

merger, split, acquisition, or transfer of shares, prior to convening the board of directors to resolve on the matter, the company shall engage an accountant, attorney, or securities underwriter to give an opinion on the reasonableness of the share exchange ratio, acquisition price, or distribution of cash or other property to shareholders, and submit it to the board of directors for deliberation and passage.

(Below is omitted)

accordance with the Merger and Acquisition Law. The spirit would recognize that the restructure within a corporation shall not have mattered with shares transfer ratio or cash or asset paid to shareholders. Thus such mergers are exempt from having experts to comment on the reasonableness of shares transfer ratio.

-36-

Amended Article Current Article Comment owned subsidiaries are exempt from obtaining such expert’s opinion.

(Below is omitted) Article 15 Where the company acquires and disposes of asset that fits the following conditions, the company shall publicly announce and report the relevant information on the information reporting website designated by FSC within 2 days commencing immediately from the date of occurrence of the event: 1. Acquisition or disposal

of real property from or to a related party, or acquisition or disposal of assets other than real property from or to a related party where the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or 300 million NTD or more; provided, this shall not apply to trading of government bonds or bonds under repurchase and resale agreements, or subscription or buy back of domestic money market funds

Article 15 Procedure of information disclosure for the company is as following：1. Under any of the

following circumstances, the company shall publicly announce and report the relevant information:

(1) Acquisition or

disposal of real property from or to a related party, or acquisition or disposal of assets other than real property from or to a related party where the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or 300 million NTD or more; provided, this shall not apply to trading of government bonds or bonds under repurchase and resale agreements, or subscription or redemption of

1. The amendment on subparagraph 1 of paragraph 1 is the same reason as the amendment of Article 10.

2. Considering that acquiring or disposing equipment or machinery for business use is a necessary and routine operation of the company, setting the standard for reporting too low would lead to reporting too frequently, thus lowering the significance of information disclosure. Therefore the current paragraph 1, subparagraph 1, item 4 of this procedure is amended. When the paid-in capital of the company is above 10 billion NTD, acquiring or disposing equipment for

-37-

Amended Article Current Article Comment issued by institutions of securities investment trust business.

2. Merger, split, acquisition, or transfer of shares.

3. Losses from derivatives trading reaching the limits on aggregate losses or losses on individual contracts set out in the procedures.

domestic money market funds.

(2) Merger, split, acquisition, or transfer of shares.

(3) Losses from derivatives trading reaching the limits on aggregate losses or losses on individual contracts set out in the procedures.

(4) Where an asset transaction other than any of those referred to in the preceding three subparagraphs, a disposal of receivables by a financial institution, or an investment in the mainland China area reaches 20 percent or more of paid-in capital or 300 million NTD; provided, this shall not apply to the following circumstances:

a. Trading of government bonds.

b. Given that the company is an investment professional, securities trading on foreign or domestic securities exchanges or over-the-counter markets, or subscription of securities by a securities firm, either

business use and while the counterparty is nor a related party, the standard for reporting is raised to a transaction amount more than 1 billion NTD. The regulation is also moved to paragraph 1, subparagraph 4.

3. Specifies that when the announcement made in accordance with regulation is mistaken or missing parts and needs to be corrected, the whole announcement shall be reported again within 2 days acknowledging the mistake.

4. The current paragraph 1, subparagraph 4, item 5 is deleted, item 6 is moved to subparagraph 5 of paragraph 1. The current subparagraph 4 of paragraph 1 is moved to subparagraph 6 of paragraph 1,

-38-

Amended Article Current Article Comment 4. Where the type of

asset acquired or disposed by the company is equipment or machinery for business use, the trading counterparty is not a related party, and the transaction amount reaches any of the following standards:

a. When the paid-in capital of the company is less than 10 billion NTD, the amount is 500 million NTD or more.

b. When the paid-in capital of the company is more than 10 billion NTD, the amount is 1 billion NTD or more.

in the primary market or in accordance with relevant regulations.

c. Trading of bonds under repurchase/resale agreements, or subscription or redemption of domestic money market funds.

d. Where the type of asset acquired or disposed by the company is equipment or machinery for business use, the trading counterparty is not a related party, and the transaction amount is less than 500 million NTD.

e. Acquisition or disposal by a the company in the construction business of real property for construction use, where the trading counterparty is not a related party, and the transaction amount is less than 500 million

and item 2 of subparagraph 4 is deleted. The reason for amendment of subparagraph 4, item 3 of paragraph 1 is the same as Article 10, and is moved to subparagraph 7, item 2 of paragraph 1..

-39-

Amended Article Current Article Comment

5. Where land is acquired under an arrangement on engaging others to build on the company's own land, engaging others to build on rented land, joint construction and allocation of housing units, joint construction and allocation of ownership percentages, or joint construction and separate sale, and the amount the company expects to invest in the transaction is more than 500 million NTD.

6. Besides the asset transaction of the preceding 5 subparagraphs, disposal of receivables by a financial institution, or an investment in the mainland China area that reaches 20 percent of the paid-in capital or 300 million NTD or more; provided, this shall not apply to the following circumstances:

(1) Trading of government bonds.

(2) Trading of bonds under repurchase and resale agreements, or subscription or buy back of domestic

NTD. f. Where land is

acquired under an arrangement on engaging others to build on the company's own land, engaging others to build on rented land, joint construction and allocation of housing units, joint construction and allocation of ownership percentages, or joint construction and separate sale, and the amount the company expects to invest in the transaction is less than 500 million NTD.

-40-

Amended Article Current Article Comment money market funds issued by institutions of securities investment trust business.

The calculation method for the preceding paragraph is as following: 1. The amount of any

individual transaction. 2. The cumulative

transaction amount of acquisitions and disposals of the same type of underlying asset with the same trading counterparty within the preceding year.

3. The cumulative transaction amount of real property acquisitions and disposals (cumulative acquisitions and disposals, respectively) within the same development project within the preceding year.

4. The cumulative transaction amount of acquisitions and disposals (cumulative acquisitions and disposals, respectively) of the same security within the preceding year.

"Within the preceding year" as used in the preceding paragraph

(5) The calculation

method for item 5 of the preceding subparagraph is as following:

a. The amount of any individual transaction.

b. The cumulative transaction amount of acquisitions and disposals of the same type of underlying asset with the same trading counterparty within the preceding year.

c. The cumulative transaction amount of real property acquisitions and disposals (cumulative acquisitions and disposals, respectively) within the same development project within the preceding year.

d. The cumulative transaction amount of acquisitions and disposals (cumulative acquisitions and disposals, respectively) of the same security within the preceding year.

e. "Within the preceding year" as used in the above refers to the

-41-

Amended Article Current Article Comment refers to the year preceding the date of occurrence of the current transaction. Items duly announced in accordance with these Regulations need not be counted toward the transaction amount. The company shall disclose by month the derivatives trading condition of itself and its domestic, non-public subsidiaries in the appropriate format, and by the 10th of each month, input the relevant information to the FSC's

year preceding the date of occurrence of the current transaction. Items duly announced in accordance with these Regulations need not be counted toward the transaction amount.

2. Time limit for the company to publicly announce and report the relevant information: Where the company acquires and disposes of asset that fits the description of disclosure required items, and transaction amount reaches the disclosure required standard in the preceding subparagraph, the company shall publicly announce and report the relevant information within 2 days commencing immediately from the date of occurrence of the event

3. Procedure for announcement and report of the relevant information:

(1) The company shall publicly announce and report the relevant information on the FSC's designated website.

-42-

Amended Article Current Article Comment designated information disclosure website When the announcement made in accordance with regulation is mistaken or missing parts and needs to be corrected, the whole announcement shall be reported again within 2 days acknowledging the mistake. Where the company acquires or disposes asset, relevant contracts, conference note, memoranda book, and appraisal report, opinion report of accountant, lawyer or securities underwriter shall be stored in the company for at least 5 years, unless other act provides otherwise.

(2) The company shall disclose by month the derivatives trading condition of itself and its domestic, non-public subsidiaries in the appropri ate format, and by the 10th of each month, input the relevant information to the FSC's designated information disclosure website

(3) When the announcement made in accordance with regulation is mistaken or missing parts and needs to be corrected, the whole announcement shall be reported again.

(4) Where the company acquires or disposes asset, relevant contracts, conference note, memoranda book, and appraisal report, opinion report of accountant, lawyer or securities underwriter shall be stored in the company for at least 5 years, unless other act provides otherwise.

(5) Where any of the following circumstances occurs with respect to a transaction that the company has already publicly announced

-43-

Amended Article Current Article Comment and reported in accordance with the regulation, a public report of relevant information shall be made on the website designated by the FSC within 2 days commencing immediately from the date of occurrence of the event:

a. Change, termination, or rescission of a contract signed in regard to the original transaction.

b. The merger, split, acquisition, or transfer of shares is not completed by the scheduled date set forth in the contract.

c. Change to the originally publicly announced and reported information.

4. Announcement format: The announcement made in accordance with this procedure shall be presented in the format as prescribed on the information reporting website designated by FSC.

Article 19 (Above is omitted) Revised for the sixth time on June 23rd, 2014. Revised for the seventh time on May 26th, 2017.

Article 19 (Above is omitted) Revised for the sixth time on June 23rd, 2014.

-44-

IV. Appendix

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-45-

3. Related party or subsidiary: As defined in the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

4. Professional appraiser: Refers to a real property appraiser or other person duly authorized by law to engage in the value appraisal of real property or equipment.

5. Date of occurrence: Refers to the date of contract signing, date of payment, date of consignment trade, date of transfer, dates of boards of directors resolutions, or other date that can confirm the counterpart and monetary amount of the transaction, whichever date is earlier; provided, for investment for which approval of the competent authority is required, the earlier of the above date or the date of receipt of approval by the competent authority shall apply.

6. Mainland China area investment: Refers to investments in the mainland China area approved by the Ministry of Economic Affairs Investment Commission or conducted in accordance with the provisions of the Regulations Governing Permission for Investment or Technical Cooperation in the Mainland Area.

7. The term “latest financial report” as used in this procedure is the financial report audited or signed by accountants disclosed according to law before the acquisition or disposal of asset.

8. Disposed asset value: Refers to the higher of transaction price or book value at the time of disposal.

Article 5：

The limits for the company on non-operational purpose real property or securities are as following: 1. The purchase of non-operational purpose real property cannot exceed 20 percent

of the company’s book value on the latest financial report. 2. Total investment in securities cannot exceed 50 percent of the company’s book

value on the latest financial report. 3. Investment in individual security cannot exceed 20 percent of the company’s book

value on the latest financial report. The limits for the company’s subsidiaries on non-operational purpose real property or securities are as following: 1. The purchase of non-operational purpose real property cannot exceed 20 percent

of each subsidiary’s book value on the latest financial report. 2. Total investment in securities cannot exceed 100 percent of each subsidiary’s

book value on the latest financial report. 3. Investment in individual security cannot exceed 100 percent of each subsidiary’s

book value on the latest financial report. The value of “securities” as used in paragraph 1 and 2 is determined by the original investment amount.

Article 6： Professional appraisers and their officers, certified accountants, attorneys, and securities underwriters that provide public companies with appraisal reports, certified public accountant's opinions, attorney's opinions, or underwriter's opinions shall not be a related party of any party to the transaction.

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Article 7： When the company acquires or disposes of assets through court auction procedures, the evidentiary documentation issued by the court may be substituted for the appraisal report or accountant’s opinion.

Article 8： The real property or equipment acquisition and disposal procedure is as following: Appraisal and operating process: 1. The appraisal and operating procedure for the company to acquire or dispose real

property or equipment is adopted pursuant to the internal control regulation of fixed asset cycle and purchase, and payment cycle.

2. Transaction term and degree of authority delegated determination procedure: (1) The transaction term for real property acquisition and disposal shall refers to

the current disclosed price, appraised value, actual transaction price of neighboring real property. The final transaction term and price shall be filed to analysis report for the chairman of the board to approve. For the case with transaction value below 300 million NTD, the transaction shall be reported in the latest board of directors meeting after the transaction; for the case with transaction value above 300 million NTD, the transaction shall only be executed after being approved by the board of directors resolution.

(2) Transaction term for acquisition and disposal of equipment shall be done through quoting, price competition, price negotiation or tender opening. The degree of authority delegated and level of authority is determined in accordance to regulation of Authority Delegation List of the company.

3. Executing Unit: Management Department and Purchasing Department is responsible for execution of real property or equipment acquisition and disposal.

4. Real property and equipment appraisal report: In acquiring or disposing of real property or equipment where the transaction amount reaches 20 percent of the company's paid-in capital or 300 million NTD or more, the company, unless transacting with a government agency or facility, engaging others to build on its own land, engaging others to build on rented land, or acquiring or disposing of equipment for business use, shall obtain an appraisal report prior to the date of occurrence of the event from a professional appraiser and shall further comply with the following provisions: (1) Where due to special circumstances it is necessary to give a limited price,

specified price, or special price as a reference basis for the transaction price, the transaction shall be submitted for approval in advance by the board of directors, and the same procedure shall be followed for any future changes to the terms and conditions of the transaction.

(2) Where the transaction amount is 1 billion NTD or more, appraisals from two or more professional appraisers shall be obtained.

(3) Where any one of the following circumstances applies with respect to the professional appraiser's appraisal results, unless all the appraisal results for the assets to be acquired are higher than the transaction amount, or all the

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appraisal results for the assets to be disposed of are lower than the transaction amount, a certified public accountant shall be engaged to perform the appraisal in accordance with the provisions of Statement of Auditing Standards No. 20 published by the ROC Accounting Research and Development Foundation (ARDF) and render a specific opinion regarding the reason for the discrepancy and the appropriateness of the transaction price: a. The discrepancy between the appraisal result and the transaction amount

is 20 percent or more of the transaction amount. b. The discrepancy between the appraisal results of two or more

professional appraisers is 10 percent or more of the transaction amount. (4) No more than 3 months may elapse between the date of the appraisal report

issued by a professional appraiser and the contract execution date; provided, where the publicly announced current value for the same period is used and not more than 6 months have elapsed, an opinion may still be issued by the original professional appraiser.

Article 9： The securities acquisition and disposal procedure is as following: 1. Appraisal and operating process:

(1) The appraisal and operating procedure for the company to acquire or dispose securities is adopted pursuant to the internal control regulation of investment cycle.

(2) For companies that are not listed on an exchange nor traded in an OTC market, the financial report signed or audited by certified accountant shall be obtained before date of occurrence to evaluate the price of such securities, considering book value per share, profitability and future growth potential.

(3) For securities acquired through IPO or SPO, an open statement, operation plan or other materials that are sufficient to help understand its future profitability and operation strategy shall be obtained to evaluate such investment.

2. Transaction term and degree of authority delegation determination process: The transaction term for securities acquisition or disposal shall be determined by the executing unit on its market view. For the case with transaction value below 300 million NTD, the transaction shall be approved by the chairman of the board and reported in the latest board of directors meeting after the transaction, while also filing an analysis report on unrealized profit or loss; for the case with transaction value above 300 million NTD, the transaction shall only be executed after being approved by the board of directors resolution.

3. Executing Unit: Finance Department is responsible for execution of securities acquisition and disposal.

4. Obtaining accountant’s opinion: If the value of the transaction is 20 percent of the company's paid-in capital or 300 million NTD or more, the company shall obtain accountant’s opinion on the transaction price adequacy prior to the date of occurrence. If the accountant

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needs to use the report of an expert as evidence, the accountant shall do so in accordance with the provisions of Statement of Auditing Standards No. 20 published by the ARDF. This requirement does not apply, however, to publicly quoted prices of securities that have an active market, or where otherwise provided by regulations of the Financial Supervisory Commission (FSC).

Article 10： Transaction with related party 1. When the company engages in any acquisition or disposal of assets from or to a

related party, in addition to ensuring that the necessary resolutions are adopted and the reasonableness of the transaction terms is appraised according to Article 8, if the transaction amount reaches 10 percent or more of the company's total assets, the company shall also obtain an appraisal report from a professional appraiser or an accountant’s opinion. The calculation of the transaction amount referred to in the preceding paragraph shall be made in accordance with Article 18-1 herein. When judging whether a trading counterparty is a related party, in addition to legal formalities, the substance of the relationship shall also be considered.

2. Appraisal and operating procedure When the company intends to acquire or dispose of real property from or to a related party, or when it intends to acquire or dispose of assets other than real property from or to a related party and the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or 300 million NTD or more, except in trading of government bonds or bonds under repurchase and resale agreements, or subscription or redemption of domestic money market funds, the company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by the board of directors and recognized by the supervisors committee: (1) The purpose, necessity and anticipated benefit of the acquisition or disposal

of assets. (2) The reason for choosing the related party as a trading counterparty. (3) With respect to the acquisition of real property from a related party,

information regarding appraisal of the reasonableness of the preliminary transaction terms in accordance with this paragraph, subparagraph 3, item 1 and 4 herein.

(4) The date and price at which the related party originally acquired the real property, the original trading counterparty, and that trading counterparty's relationship to the company and the related party.

(5) Monthly cash flow forecasts for the year commencing from the anticipated month of signing of the contract, and evaluation of the necessity of the transaction, and reasonableness of the funds utilization.

(6) An appraisal report from a professional appraiser or an accountant's opinion obtained in compliance with paragraph 1.

(7) Restrictive covenants and other important stipulations associated with the transaction. The calculation of the transaction amounts referred to in the preceding paragraph shall be made in accordance with Article 15, paragraph 1, item 5

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herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items that have been approved by the board of directors and recognized by the supervisors committee need not be counted toward the transaction amount. With respect to the acquisition or disposal of business-use equipment between the company and its subsidiaries, the company's board of directors may delegate the chairman of the board to decide such matters when the transaction is within 300 million NTD and have the decisions subsequently submitted to and ratified by the next board of directors meeting.

3. Evaluation of transaction cost reasonableness (1) Where the company acquires real property from a related party, the

company shall evaluate the reasonableness of the transaction costs by the following means: a. Based upon the related party's transaction price plus necessary

interest on funding and the costs to be duly borne by the buyer. "Necessary interest on funding" is imputed as the weighted average interest rate on borrowing in the year the company purchases the property; provided, it may not be higher than the maximum non-financial industry lending rate announced by the Ministry of Finance.

b. Total loan value appraisal from a financial institution where the related party has previously created a mortgage on the property as security for a loan; provided, the actual cumulative amount loaned by the financial institution shall have been 70 percent or more of the financial institution's appraised loan value of the property and the period of the loan shall have been 1 year or more. However, this shall not apply where the financial institution is a related party of one of the trading counterparties.

(2) Where land and structures thereupon are combined as a single property purchased in one transaction, the transaction costs for the land and the structures may be separately appraised in accordance with either of the means listed in the preceding subparagraph.

(3) Where the company that acquires real property from a related party and appraises the cost of the real property in accordance with item (1) and (2) of this subparagraph, the company shall also engage an accountant to check the appraisal and render a specific opinion.

(4) Where the company acquires real property from a related party and the values of the real property cost appraised in accordance with both item (1) and (2) of this subparagraph are lower than transaction price, the acquisition shall be conducted in accordance with item 5 of this subparagraph. However, where the following circumstances exist, objective evidence has been submitted and specific opinions on reasonableness have been obtained from a professional real property appraiser and an accountant opinion have been obtained, this restriction shall not apply: a. Where the related party acquired undeveloped land or leased land for

development, it may submit proof of compliance with one of the

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following conditions: i. Where undeveloped land is appraised in accordance with the

means in the preceding Article, and structures according to the related party's construction cost plus reasonable construction profit are valued in excess of the actual transaction price. The "Reasonable construction profit" shall be deemed the average gross operating profit margin of the related party's construction division over the most recent 3 years or the gross profit margin for the construction industry for the most recent period as announced by the Ministry of Finance, whichever is lower.

ii. Completed transactions by unrelated parties within the preceding year involving other floors of the same property or neighboring or closely valued parcels of land, where the land area and transaction terms are similar after calculation of reasonable price discrepancies in floor or area land prices in accordance with standard property market practices.

iii. Completed leasing transactions by unrelated parties for other floors of the same property from within the preceding year, where the transaction terms are similar after calculation of reasonable price discrepancies among floors in accordance with standard property leasing market practices.

b. Where acquiring real property from a related party, the company provides evidence that the terms of the transaction are similar to the terms of transactions completed for the acquisition of neighboring or closely valued parcels of land of a similar size by unrelated parties within the preceding year. Completed transactions for neighboring or closely valued parcels of land in principle refers to parcels on the same or an adjacent block and within a distance of no more than 500 meters or parcels close in publicly announced current value; transaction for similarly sized parcels in principle refers to transactions completed by unrelated parties for parcels with a land area of no less than 50 percent of the property in the planned transaction; within the preceding year refers to the year preceding the date of occurrence of the acquisition of the real property.

(5) Where a public company acquires real property from a related party and the value of real property cost appraised in accordance with both item (1) and (2) of this subparagraph are lower than the transaction price, the following steps shall be taken: a. A special reserve shall be set aside in accordance with Article 41,

paragraph 1 of the Securities Exchange Act against the difference between the real property transaction price and the appraised cost, and may not be distributed or used for capital increase or issuance of bonus shares.

b. Supervisors shall comply with Article 218 of the Company Act. c. Actions taken pursuant to subitem 1 and subitem 2 shall be reported to

a shareholders meeting, and the details of the transaction shall be

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disclosed in the annual report and any investment prospectus. As the company has set aside a special reserve under the preceding regulation, the company may not utilize the special reserve until it has recognized a loss on decline in market value of the assets it purchased at a premium, or they have been disposed of, or adequate compensation has been made, or the status quo ante has been restored, or there is other evidence confirming that there was nothing unreasonable about the transaction, and the FSC has given its consent.

When the company obtains real property from a related party and applies to one of the following condition, it shall also comply with the appraisal and operating procedure mentioned in paragraph 1 and 2 of this article, while the reasonableness of appraised cost mentioned in paragraph 3 of this article does not apply. 1. The related party acquired the real property through inheritance or as a gift. 2. More than 5 years will have elapsed from the time the related party signed the

contract to obtain the real property to the signing date for the current transaction. 3. The real property is acquired through signing of a joint development contract

with the related party, or through engaging a related party to build real property, either on the company's own land or on rented land,.

When a public company obtains real property from a related party, it shall also comply with paragraph 1, subparagraph 3, item 5 of this article if there is other evidence indicating that the transaction does not apply to business operation norm.

Article 11：

The memberships or intangible assets acquisition and disposal procedure is as following: 1. Evaluation and operation procedure:

(1) Where the company acquires or disposes of memberships or intangible assets, the company shall consider the future economic benefit it could generate and refers to the current or most recent completed transaction price to evaluate the necessity and reasonableness.

(2) Where the company acquires or disposes of memberships or intangible assets, the company shall consider the future economic benefit it could generate and whether the contract terms of price and payment is reasonable. The impact to the company’s technology and business shall also be considered.

(3) The operation procedure for acquisition or disposal of membership or intangible asset shall comply with subparagraph 2, 3, and 4 of this paragraph.

2. Transaction term and degree of authority delegated determination procedure: (1) Where the company acquires or disposes of membership, for the case that

transaction amount is below 6 million NTD or less, the transaction shall be filed in internal document for the president to approve; for the case that transaction amount is above 6 million NTD or more, the transaction shall only be executed after being approved by the board of directors resolution.

(2) Where the company acquires or disposes of intangible asset, for the case that transaction amount is below 20 million NTD or less, the transaction

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shall be filed in internal document for the chairman of the board to approve, and be reported in the most recent board meeting; for the case that transaction amount is above 20 million NTD or more, the transaction shall only be executed after being approved by the board of directors resolution.

3. Executing unit: Where the company acquires or disposes of memberships or intangible assets, the company shall determine the degree of authority delegated, then either the department in use, finance department or the management department is responsible for executing.

4. Expert opinion report on memberships or intangible assets: Where the company acquires or disposes of memberships or intangible assets and the transaction amount reaches 20 percent or more of paid-in capital or 300 million NTD or more, except in transactions with a government agency or facility, the company shall engage a certified accountant prior to the date of occurrence of the event to render an opinion on the reasonableness of the transaction price; the accountant shall comply with the provisions of Statement of Auditing Standards No. 20 published by the ARDF.

Article 12：

The company does not engage in transactions involving acquisition or disposal of claims of financial institutions. When attempted to engage in such transactions afterward, the company will report to the board of directors for approval, then establish the evaluation and operation procedure.

Article 13： The derivatives acquisition and disposal procedure is as following: 1. Trading principle and strategy:

(1) Transaction type a. The types of derivatives the company could engage in trading comply

with the definition stated in article 4, paragraph 1, subparagraph 1 herein.

b. Bond margin trading related issue shall comply with the relative rules of this procedure. Transaction of bond under repurchase agreement could be exempt from this procedure.

(2) Business (Hedging) strategy The purpose of derivatives transaction made by the company shall be hedging. The chosen commodity shall mainly avert the risk generated by the business operation of the company.

(3) Different roles and responsibility a. Trader

i. Responsible for the planning of derivatives trading strategy for the whole company.

ii. Trader shall calculate the position every two weeks, gather market data, conduct trend analysis and risk evaluation, plan trading strategy, and trade in accordance after approved by authority.

iii. Execute trade in accordance with delegated authority and planned strategy.

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iv. Upon major change in financial market, and trader have decided the planned strategy does not apply anymore, the trader could propose an evaluation report anytime and plan new strategy, then trade in accordance after approved by chairman of the board.

b. Accounting officers i. Review if the trade is executed in accordance with planned

strategy and delegated authority. ii. Conduct appraisal every month and report to the chairman of the

board. iii. Process accounting treatment. iv. File in declaration and announcement in accordance with

administration regulation. c. Cashier: Confirm trade and execute settlement. d. Auditor

Act in accordance with subparagraph 3 of this paragraph. (4) Authority delegation

a. Authority for hedging transaction: i. For the case when net accumulated position sums to value of 6

million USD or more, the transaction will need to be approved by the board of directors; when the value sums to 6 million USD or less, all transactions are approved by the chairman of the board.

ii. Unless authorized by the board of directors beforehand, the transaction amount the chairman of the board could authorize is no more than 3 million USD.

b. Derivatives trading for other specific purpose shall be reported to the board of directors for approval before executing

(5) Performance assessment a. Hedging purpose transaction

i. The assessment shall be based on comparing the foreign exchange cost on the company book with the profit and loss from derivatives trading.

ii. To fully contain and express the appraisal risk of transaction, the company implement monthly appraisal method to evaluate profit and loss.

iii. Finance department shall provide the appraisal of foreign exchange position and foreign exchange market trend and analysis to the chairman of the board for management purpose and guidance.

b. Specific purpose transaction The assessment shall be based on the actual profit and loss, and accounting officer shall periodically compile position into report for managers’ reference.

(6) Setting the cap for total contract value and loss a. Total contract value

i. Hedging purpose transaction amount Hedging purpose transaction amount could not exceed half of the total hedged net position of the company.

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ii. Specific purpose transaction amount The net accumulated contract value for specific purpose of the whole company could not exceed 10 million USD.

b. Setting loss cap i. Hedging purpose is about averting risk, the loss cap is no more

than 10 percent of the contract value, if the loss has exceed 10 percent, it needs to be reported to the chairman of the board immediately, and also report to the board of directors.

ii. Setting stop loss amount for specific purpose transaction is no more than 10 percent of the contract value, if the loss has exceed 10 percent, it needs to be reported to the chairman of the board immediately, and also report to the board of directors to discuss necessary action to be taken.

iii. The loss cap for individual contract is the lower of 100 thousand USD or 10 percent of the contract value.

iv. The annual loss cap for specific purpose trading is 100 thousand USD.

2. Risk management measure: (1) Credit risk management

Based on the variation of different factors in the market, derivatives are prone to generate operating risk, so to manage credit risk, the company will operate in accordance with the following principle: a. Trading counterparty: Mainly well-known foreign or domestic financial

institutions. b. Trading commodity: Mainly commodity provide by well-known foreign

or domestic financial institutions. (2) Market risk management

The company shall avoid derivatives that are too sensitive to market price, so public foreign exchange market provide by banks shall be chosen mainly, future market is not to be considered. While after establishing position, stop loss setting shall be strictly followed.

(3) Liquidity risk management To ensure market liquidity, derivatives with higher liquidity (meaning it’s possible to liquidate the position on market anytime) is chosen. The financial institutions assigned to trade shall have sufficient information and the capability to trade in any market at any time.

(4) Cash flow risk management To ensure the stability of operating cash flow, the company could only engage derivatives trading with private capital, and the amount shall take into consideration the predicted cash inflow and outflow for the future three months, also ensure that there will be enough (foreign dollars) cash for payment.

(5) Operating risk management a. The company shall comply with the authority delegation, operating

procedure and internal audit to prevent operational risk. b. The roles of derivatives trader and trade confirmation, settlement officer

cannot overlap.

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c. The role of risk evaluation, supervision and control shall be in a different department with the roles mentioned in the previous item, and shall report to the board of directors or senior managers without trading or position decision making responsibility.

d. The position for trading purpose derivatives shall be appraised weekly, as for hedging purpose position, the transaction shall be appraised twice per month, the appraisal report shall be sent to senior manager assigned by the board of directors.

(6) Commodity risk management Internal trader shall have complete and correct knowledge of derivatives and demand banks to fully disclose risk to avoid choosing the wrong commodity.

(7) Legal risk management The documents signed by financial institution shall be inspected by foreign exchange and legal or legal consultant until it could be formally signed to avoid legal risk.

3. Internal audit regulation: (1) Internal audit officer shall periodically review the adequacy of the internal

control on derivatives trading, and list the auditing on derivative trading into annual audit plan, monthly audit the compliance of trading department on transaction process procedure and analyze trade cycle to generate audit report, if found any major violation of regulation, it shall be filed to inform supervisors committee.

(2) Other relative internal audit regulation shall adopt Internal Audit Implementation Rules of the company.

4. Supervising management principle of board of directors when engaging derivatives trading: (1) Board of directors shall assign senior manager to constantly supervise and

control the derivatives trading risk, the management principles are as following: a. Periodically evaluate whether the current risk management measure is

adequate and comply with this procedure. b. Supervise trading and profit and loss condition, when abnormal

circumstances arise, take necessary action, and immediately report to the board of directors, if the company has elected independent director, the meeting shall have independent directors present and express opinion.

(2) Periodically assess whether the performance of derivatives trading is aligned with set business strategy and risk undertaken is within bearable amount of the company.

(3) When the company engages in derivatives trading, the company will authorized relative personnel in accordance with this procedure, and report in the most recent board of directors afterward.

5. When the company engages in derivatives trading, a memorandum book shall be established to record in detail the derivative types, value amount, date that the transaction has been approved by the board of directors and other relative issue to be closely considered in accordance to this procedure for future

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reference. The memorandum book shall be signed monthly by the manager of finance department.

Article 14： The procedure for the company participating in a merger, split, acquisition, or transfer of shares is as following: 1. Appraisal and operating procedure:

(1) Where the company conducts a merger, split, acquisition, or transfer of shares, prior to convening the board of directors to resolve on the matter, the company shall engage an accountant, attorney, or securities underwriter to give an opinion on the reasonableness of the share exchange ratio, acquisition price, or distribution of cash or other property to shareholders, and submit it to the board of directors for deliberation and passage.

(2) The company shall prepare a public report to shareholders detailing important contractual content and matters relevant to the merger, split, or acquisition prior to the shareholders meeting and include it along with the expert opinion referred to in item (1) of this subparagraph when sending shareholders notification of the shareholders meeting for reference in deciding whether to approve the merger, split, or acquisition. Provided, where a provision of another act exempts a company from convening a shareholders meeting to approve the merger, split, or acquisition, this restriction shall not apply.

(3) Where the shareholders meeting of any one of the companies participating in a merger, split, or acquisition fails to convene or pass a resolution due to lack of a quorum, insufficient votes, or other legal restriction, or the proposal is rejected by the shareholders meeting, the companies participating in the merger, split or acquisition shall immediately publicly explain the reason, the follow-up measures, and the preliminary date of the next shareholders meeting.

2. Other matters to be noted (1) A company participating in a merger, split, or acquisition shall convene a

board of directors meeting and shareholders meeting on the day of the transaction to resolve matters relevant to the merger, split, or acquisition, unless another act provides otherwise or the FSC is notified in advance of extraordinary circumstances and grants consent.

(2) Every person participating in or privy to the plan for merger, split, acquisition, or transfer of shares shall issue a written undertaking of confidentiality and may not disclose the content of the plan prior to public disclosure of the information and may not trade, in their own name or under the name of another person, in any stock or other equity security of any company related to the plan for merger, split, acquisition, or transfer of shares.

(3) When participates in a merger, split, acquisition, or transfer of shares, the company may not arbitrarily alter the share exchange ratio or acquisition price unless under the below-listed circumstances, and shall specify the circumstances permitting alteration in the contract for the merger, split, acquisition, or transfer of shares: a. Cash capital increase, issuance of convertible corporate bonds, or the

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issuance of bonus shares, issuance of corporate bonds with warrants, preferred shares with warrants, stock warrants, or other equity based securities.

b. An action, such as a disposal of major assets, that affects the company's financial operations.

c. An event, such as a major disaster or major change in technology, that affects shareholder equity or share price.

d. An adjustment where any of the companies participating in the merger, split, acquisition, or transfer of shares from another company, buys back treasury stock.

e. An increase or decrease in the number of entities or companies participating in the merger, split, acquisition, or transfer of shares.

f. Other terms/conditions that the contract specify may be altered and that have been publicly disclosed.

(4) When company participates in a merger, split, acquisition, or transfer of shares, the contract shall comply with Article 317-1 of Company Act and Article 22 of Business Mergers and Acquisitions Act, and also record the following: a. Handling of breach of contract. b. Principles for the handling of equity-type securities previously issued or

treasury stock previously bought back by any company that is extinguished in a merger or that is demerged.

c. The amount of treasury stock participating companies are permitted under law to buy back after the record date of calculation of the share exchange ratio, and the principles for handling thereof.

d. The manner of handling changes in the number of participating entities or companies.

e. Preliminary progress schedule for plan execution, and anticipated completion date.

f. Scheduled date for convening the legally mandated shareholders meeting if the plan exceeds the deadline without completion, and relevant procedures.

(5) After public disclosure of the information, if any company participating in the merger, split, acquisition, or share transfer intends further to carry out a merger, split, acquisition, or share transfer with another company, all of the participating companies shall carry out anew the procedures or legal actions that had originally been completed toward the merger, split, acquisition, or share transfer; except that where the number of participating companies is decreased and a participating company's shareholders meeting has adopted a resolution authorizing the board of directors to alter the limits of authority, such participating company may be exempted from calling another shareholders meeting to resolve on the matter anew.

(6) Where any of the companies participating in a merger, split, acquisition, or transfer of shares is not a public company, the company shall sign an agreement with the non-public, and act in accordance with the preceding items of this paragraph..

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Article 15： Procedure of information disclosure for the company is as following： 1. Under any of the following circumstances, the company shall publicly announce

and report the relevant information: (1) Acquisition or disposal of real property from or to a related party, or

acquisition or disposal of assets other than real property from or to a related party where the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or 300 million NTD or more; provided, this shall not apply to trading of government bonds or bonds under repurchase and resale agreements, or subscription or redemption of domestic money market funds.

(2) Merger, split, acquisition, or transfer of shares. (3) Losses from derivatives trading reaching the limits on aggregate losses or

losses on individual contracts set out in the procedures. (4) Where an asset transaction other than any of those referred to in the

preceding three subparagraphs, a disposal of receivables by a financial institution, or an investment in the mainland China area reaches 20 percent or more of paid-in capital or 300 million NTD; provided, this shall not apply to the following circumstances: a. Trading of government bonds. b. Given that the company is an investment professional, securities

trading on foreign or domestic securities exchanges or over-the-counter markets, or subscription of securities by a securities firm, either in the primary market or in accordance with relevant regulations.

c. Trading of bonds under repurchase/resale agreements, or subscription or redemption of domestic money market funds.

d. Where the type of asset acquired or disposed by the company is equipment or machinery for business use, the trading counterparty is not a related party, and the transaction amount is less than 500 million NTD.

e. Acquisition or disposal by a the company in the construction business of real property for construction use, where the trading counterparty is not a related party, and the transaction amount is less than 500 million NTD.

f. Where land is acquired under an arrangement on engaging others to build on the company's own land, engaging others to build on rented land, joint construction and allocation of housing units, joint construction and allocation of ownership percentages, or joint construction and separate sale, and the amount the company expects to invest in the transaction is less than 500 million NTD.

(5) The calculation method for item 5 of the preceding subparagraph is as following: a. The amount of any individual transaction. b. The cumulative transaction amount of acquisitions and disposals of the

same type of underlying asset with the same trading counterparty within the preceding year.

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c. The cumulative transaction amount of real property acquisitions and disposals (cumulative acquisitions and disposals, respectively) within the same development project within the preceding year.

d. The cumulative transaction amount of acquisitions and disposals (cumulative acquisitions and disposals, respectively) of the same security within the preceding year.

e. "Within the preceding year" as used in the above refers to the year preceding the date of occurrence of the current transaction. Items duly announced in accordance with these Regulations need not be counted toward the transaction amount.

2. Time limit for the company to publicly announce and report the relevant information: Where the company acquires and disposes of asset that fits the description of disclosure required items, and transaction amount reaches the disclosure required standard in the preceding subparagraph, the company shall publicly announce and report the relevant information within 2 days commencing immediately from the date of occurrence of the event

3. Procedure for announcement and report of the relevant information: (1) The company shall publicly announce and report the relevant information on

the FSC's designated website. (2) The company shall disclose by month the derivatives trading condition of

itself and its domestic, non-public subsidiaries in the appropriate format, and by the 10th of each month, input the relevant information to the FSC's designated information disclosure website

(3) When the announcement made in accordance with regulation is mistaken or missing parts and needs to be corrected, the whole announcement shall be reported again.

(4) Where the company acquires or disposes asset, relevant contracts, conference note, memoranda book, and appraisal report, opinion report of accountant, lawyer or securities underwriter shall be stored in the company for at least 5 years, unless other act provides otherwise.

(5) Where any of the following circumstances occurs with respect to a transaction that the company has already publicly announced and reported in accordance with the regulation, a public report of relevant information shall be made on the website designated by the FSC within 2 days commencing immediately from the date of occurrence of the event: a. Change, termination, or rescission of a contract signed in regard to the

original transaction. b. The merger, split, acquisition, or transfer of shares is not completed by

the scheduled date set forth in the contract. c. Change to the originally publicly announced and reported information.

4. Announcement format: The announcement made in accordance with this procedure shall be presented in the format as prescribed on the information reporting website designated by FSC.

Article 16：

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The subsidiaries of the company shall follow the following regulations: 1. The acquisition or disposal of asset shall be conducted in accordance with this

procedure, or another Operational Procedures for Acquisition and Disposal of Assets shall be established according to Regulations Governing the Acquisition and Disposal of Assets by Public Companies, then conduct the acquisition or disposal of asset accordingly.

2. For subsidiaries that are not public companies, when the acquisition or disposal of asset is required to be reported and announced by chapter 3 of Regulations Governing the Acquisition and Disposal of Assets by Public Companies, the company shall also report and announce accordingly for its subsidiaries.

3. The term “reaches 20 percent of the company's paid-in capital or 10 percent of the company's total asset” as used in the report and announce standard for subsidiaries is based on the paid-in capital or total asset of the parent company.

The company shall urge its subsidiaries to check autonomously whether it has acquire or dispose asset in accordance with the regulation of the preceding paragraph, and audit unit of the company shall periodically review the autonomously checking report of the subsidiaries.

Article 17： The violation of this procedure by employees undertaking acquisition or disposal of company asset is punished according to the seriousness of violation and in accordance with the personnel management rules and employee manual.

Article 18： After the procedure has been approved by the supervisors committee, it shall be submitted to the board of directors, and then to a shareholders' meeting for approval; the same applies when the procedures are amended. While submitting the procedure to the board of directors for discussion, independent director shall be present, and the board of directors shall take into full consideration each independent director's opinions. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors meeting.

Article 18-1： The transaction amount in article 8, 9, 11 shall be calculated in accordance with article 15, paragraph 1, subparagraph 5. The term “within 1 year” as used is the preceding 1 year from the occurrence date of transaction, the transaction amount with professional appraiser’s appraisal report or accountant’s opinion is exempt from being calculated.

Article 18-2

For the calculation of 10 percent of total assets under this procedure, the total assets stated in the most recent parent company only financial report or individual financial report prepared under the Regulations Governing the Preparation of Financial Reports by Securities Issuers shall be used.

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In the case of a company whose shares have no par value or a par value other than NT$10, for the calculation of transaction amounts of 20 percent of paid-in capital under this procedure, 10 percent of equity attributable to owners of the parent shall be substituted.

Article 19： This procedure was established on April 8th, 2002. Revised for the first time on June 23rd, 2003. Revised for the second time on June 30th, 2006. Revised for the third time on June 21st, 2007. Revised for the fourth time on May 26th, 2010. Revised for the fifth time on June 18th, 2012. Revised for the sixth time on June 23rd, 2014.

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-63-

for submission of shareholder proposals may not be less than 10 days. Shareholder-submitted proposals are limited to 300 words, and no proposal containing more than 300 words will be included in the meeting agenda. The shareholder making the proposal shall be present in person or by proxy at the regular shareholders meeting and take part in discussion of the proposal.

Prior to the date for issuance of notice of a shareholders meeting, this Corporation shall inform the shareholders who submitted proposals of the proposal screening results, and shall list in the meeting notice the proposals that conform to the provisions of this article. At the shareholders meeting the board of directors shall explain the reasons for exclusion of any shareholder proposals not included in the agenda.

Article 4 (Proxy to Attend Shareholders Meeting and Authorization)

After a proxy form has been delivered to this Corporation, if the shareholder intends to attend the meeting in person, a written notice of proxy cancellation shall be submitted to this Corporation before 2 business days before the meeting date. If the cancellation notice is submitted after that time, votes cast at the meeting by the proxy shall prevail.

Article 5 (Principles Determining Time and Place of Shareholders Meeting)

The venue for a shareholders meeting shall be the premises of this Corporation, or a place easily accessible to shareholders and suitable for a shareholders meeting. The meeting may begin no earlier than 9 a.m. and no later than 3 p.m. Full consideration shall be given to the opinions of the independent directors with respect to the place and time of the meeting.

Article 6 (Preparation of Documents such as Attendance Book)

This Corporation shall specify in its shareholders meeting notices the time during which shareholder attendance registrations will be accepted, the place to register for attendance, and other matters for attention.

The time during which shareholder attendance registrations will be accepted, as stated in the preceding paragraph, shall be at least 30 minutes prior to the time the meeting commences. The place at which attendance registrations are accepted shall be clearly marked and a sufficient number of suitable personnel assigned to handle the registrations.

Shareholders and their proxies (collectively, "shareholders") shall attend shareholders meetings based on attendance cards, sign-in cards, or other certificates of attendance. Solicitors soliciting proxy forms shall also bring identification documents for verification.

This Corporation shall furnish the attending shareholders with an attendance book to sign, or attending shareholders may hand in a sign-in card in lieu of signing in.

This Corporation shall furnish attending shareholders with the meeting agenda books, annual reports, attendance cards, speaker's slips, voting ballots, and other meeting materials. Where there is an election of directors

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or supervisors, pre-printed ballots shall also be furnished.

When the government or a juristic person is a shareholder, it may be represented by more than one representative at a shareholders meeting. When a juristic person is appointed to attend as proxy, it may designate only one person to represent it in the meeting.

Article 7 (The Chair and Non-Voting Participants of a Shareholders Meeting)

If a shareholders meeting is convened by the board of directors, the meeting shall be chaired by the chairperson of the board. When the chairperson of the board is on leave or for any reason unable to exercise the powers of the chairperson, the vice chairperson shall act in place of the chairperson; if there is no vice chairperson or the vice chairperson also is on leave or for any reason unable to exercise the powers of the vice chairperson, the chairperson shall appoint one of the managing directors to act as chair, or, if there are no managing directors, one of the directors shall be appointed to act as chair. Where the chairperson does not make such a designation, the managing directors or the directors shall select from among themselves one person to serve as chair.

It is advisable that shareholders meetings convened by the board of directors be attended by a majority of the directors.

If a shareholders meeting is convened by a party with power to convene but other than the board of directors, the convening party shall chair the meeting. When there are two or more such convening parties, they shall mutually select a chair from among themselves.

This Corporation may appoint its attorneys, certified public accountants, or related persons retained by it to attend a shareholders meeting in a non-voting capacity.

Article 8 (Documentation of Shareholders Meeting by Audio or Video)

This Corporation, beginning from the time it accepts shareholder attendance registrations, shall make an uninterrupted audio and video recording of the registration procedure, the proceedings of the shareholders meeting, and the voting and vote counting procedures.

The recorded materials of the preceding paragraph shall be retained for at least 1 year. If, however, a shareholder files a lawsuit pursuant to Article 189 of the Company Act, the recording shall be retained until the conclusion of the litigation.

Article 9 (Number of Shares Attending Shareholders Meeting and Meeting Proceeding)

Attendance at shareholders meetings shall be calculated based on numbers of shares. The number of shares in attendance shall be calculated according to the shares indicated by the attendance book and sign-in cards handed in, plus the count of the number of shares in writing or by exercising voting rights in electronic way.

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The chair shall call the meeting to order at the appointed meeting time. However, when the attending shareholders do not represent a majority of the total number of issued shares, the chair may announce a postponement, provided that no more than two such postponements, for a combined total of no more than one (1) hour, may be made. If the quorum is not met after two postponements and the attending shareholders still represent less than one third of the total number of issued shares, the chair shall declare the meeting adjourned.

If the quorum is not met after two postponements as referred to in the preceding paragraph, but the attending shareholders represent one third or more of the total number of issued shares, a tentative resolution may be adopted pursuant to Paragraph 1, Article 175 of the Company Act; all shareholders shall be notified of the tentative resolution and another shareholders meeting shall be convened within one (1) month.

When, prior to conclusion of the meeting, the attending shareholders represent a majority of the total number of issued shares, the chair may resubmit the tentative resolution for a vote by the shareholders meeting pursuant to Article 174 of the Company Act.

Article 10 (Discussion of Proposals)

If a shareholders meeting is convened by the board of directors, the meeting agenda shall be set by the board of directors. The meeting shall proceed in the order set by the agenda, which may not be changed without a resolution of the shareholders meeting.

The provisions of the preceding paragraph apply mutatis mutandis to a shareholders meeting convened by a party with the power to convene that is not the board of directors.

The chair may not declare the meeting adjourned prior to completion of deliberation on the meeting agenda of the preceding two paragraphs (including extraordinary motions), except by a resolution of the shareholders meeting. If the chair declares the meeting adjourned in violation of the rules of procedure, the other members of the board of directors shall promptly assist the attending shareholders in electing a new chair in accordance with statutory procedures, by agreement of a majority of the votes represented by the attending shareholders, and then continue the meeting.

The chair shall allow ample opportunity during the meeting for explanation and discussion of proposals and of amendments or extraordinary motions put forward by the shareholders; when the chair is of the opinion that a proposal has been discussed sufficiently to put it to a vote, the chair may announce the discussion closed and call for a vote.

Article 11 (Shareholder Speech)

Before speaking, an attending shareholder must specify on a speaker's slip the subject of the speech, his/her shareholder account number (or

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attendance card number), and account name. The order in which shareholders speak will be set by the chair.

A shareholder in attendance who has submitted a speaker's slip but does not actually speak shall be deemed to have not spoken. When the content of the speech does not correspond to the subject given on the speaker's slip, the spoken content shall prevail.

Except with the consent of the chair, a shareholder may not speak more than twice on the same proposal, and a single speech may not exceed 5 minutes. If the shareholder's speech violates the rules or exceeds the scope of the agenda item, the chair may terminate the speech.

When an attending shareholder is speaking, other shareholders may not speak or interrupt unless they have sought and obtained the consent of the chair and the shareholder that has the floor; the chair shall stop any violation.

When a juristic person shareholder appoints two or more representatives to attend a shareholders meeting, only one of the representatives so appointed may speak on the same proposal.

After an attending shareholder has spoken, the chair may respond in person or direct relevant personnel to respond.

Article 12 (Calculation of Voting Shares and Recusal System)

Voting at a shareholders meeting shall be calculated based the number of shares.

With respect to resolutions of shareholders meetings, the number of shares held by a shareholder with no voting rights shall not be calculated as part of the total number of issued shares.

When a shareholder is an interested party in relation to an agenda item, and there is the likelihood that such a relationship would prejudice the interests of this Corporation, that shareholder may not vote on that item, and may not exercise voting rights as proxy for any other shareholder.

The number of shares for which voting rights may not be exercised under the preceding paragraph shall not be calculated as part of the voting rights represented by attending shareholders.

With the exception of a trusted enterprise or a shareholder services agent approved by the competent securities authority, when one person is concurrently appointed as proxy by two or more shareholders, the voting rights represented by that proxy may not exceed three (3) percent of the voting rights represented by the total number of issued shares. If that percentage is exceeded, the voting rights in excess of that percentage shall not be included in the calculation.

Article 13 (Voting on Proposals, Vote Monitoring and Vote Calculation Method)

A shareholder shall be entitled to one vote for each share held, except when the shares are restricted shares or are deemed non-voting shares under

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Paragraph 2, Article 179 of the Company Act.

Except as otherwise provided in the Company Act and in this Corporation's articles of incorporation, the passage of a proposal shall require an affirmative vote of a majority of the voting rights represented by the attending shareholders. At the time of a vote, for each proposal, the chair or a person designated by the chair shall announce the total number of voting rights represented by the attending shareholders. Then, the shareholder would carry out the vote case by case, the result including consent, opposition and abstention will be entered in MOPS on the same day of the shareholders’ meeting.

When there is an amendment or an alternative to a proposal, the chair shall present the amended or alternative proposal together with the original proposal and decide the order in which they will be put to a vote. When any one among them is passed, the other proposals will then be deemed rejected, and no further voting shall be required.

Vote monitoring and counting personnel for the voting on a proposal shall be appointed by the chair, provided that all monitoring personnel shall be shareholders of this Corporation.

Vote counting for shareholders meeting proposals or elections shall be conducted in public at the place of the shareholders meeting. Immediately after vote counting has been completed, the results of the voting, including the statistical tallies of the numbers of votes, shall be announced on-site at the meeting, and a record made of the vote.

Article 14 (Election of Directors)

The election of directors at a shareholders meeting shall be held in accordance with the applicable election and appointment rules adopted by this Corporation, and the voting results shall be announced on-site immediately, including the names of those elected as directors and the numbers of votes with which they were elected.

The ballots for the election referred to in the preceding paragraph shall be sealed with the signatures of the monitoring personnel and kept in proper custody for at least one (1) year. If, however, a shareholder files a lawsuit pursuant to Article 189 of the Company Act, the ballots shall be retained until the conclusion of the litigation.

Article 15 (Meeting Minutes and Signature)

Matters relating to the resolutions of a shareholders meeting shall be recorded in the meeting minutes and shall be handled in accordance with Article 183 of the Company Act.

Article 16 (Public Disclosure)

On the day of a shareholders meeting, this Corporation shall compile in the prescribed format a statistical statement of the number of shares obtained by solicitors through solicitation and the number of shares represented by

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proxies, and shall make an express disclosure of the same at the place of the shareholders meeting.

If matters put to a resolution at a shareholders meeting constitute material information under applicable laws or regulations or under the Taiwan Stock Exchange Corporation (or GreTai Securities Market) regulations, this Corporation shall upload the content of such resolution to the MOPS within the prescribed time period.

Article 17 (Maintaining Order at Meeting Place)

The chair may direct the proctors or security personnel to help maintain order at the meeting place.

At the place of a shareholders meeting, if a shareholder attempts to speak through any device other than the public address equipment set up by this Corporation, the chair may prevent the shareholder from so doing.

When a shareholder violates the rules of procedure and defies the chair's correction, obstructing the proceedings and refusing to heed calls to stop, the chair may direct the proctors or security personnel to escort the shareholder from the meeting.

Article 18 (Recess and Resumption of Shareholders Meeting)

When a meeting is in progress, the chair may announce a break based on time considerations. If a force majeure event occurs, the chair may rule the meeting temporarily suspended and announce a time when, in view of the circumstances, the meeting will be resumed.

If the meeting venue is no longer available for continued use and not all of the items (including extraordinary motions) on the meeting agenda have been addressed, the shareholders meeting may adopt a resolution to resume the meeting at another venue.

A resolution may be adopted at a shareholders meeting to defer or resume the meeting within five (5) days in accordance with Article 182 of the Company Act.

Article 19 These Rules, and any amendments hereto, shall be implemented after adoption by shareholders meetings.

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-70-

distribution of any dividend or other benefit determined by the Company.

Chapter 3 Shareholders Meeting Article 9. Shareholders meetings are divided into general meetings and special

meetings. General meetings are held once every year by the board of

directors in accordance with law within 6 months from the end of each

accounting year. Special meetings are held as required in accordance

with applicable laws. However, for shareholders holding less than 1,000

shares, public announcement may be made.

Article 9-1. Shareholders holding 1% or more of the shares may make a written

proposal to be included in the general shareholders meeting held by the

Company, provided that no more than one proposal shall be made. If

more than one proposal is made, none will be included in the agenda.

The relevant procedure shall be carried out in accordance with the

Company Act and applicable regulations.

Article 10. Any shareholder who cannot attend a shareholders meeting for any

reason may issue a proxy printed by the Company, specifying the scope

of authorization, to appoint one person to attend the meeting on the

shareholder’s behalf. Rules of proxies for shareholders meeting shall be

in accordance with the Company Act and the Regulations Governing the

Use of Proxies for Attendance at Shareholder Meetings of Public

Companies.

Article 11. Shareholders are entitled to one vote per share, except shares with

restrictions or shares with no voting rights in accordance with Paragraph

2, Article 179 of the Company Act.

Article 12. Unless otherwise provided by applicable law, shareholder resolutions

shall be approved by shareholders representing the majority of voting

rights represented in a meeting that is attended by shareholders or

proxies representing the majority of all outstanding shares. The

shareholders are allowed to exercise their voting rights via electronic

system, and these shareholders will be assumed presence through this

way. The related matters should be conducted according to the law.

Article 12-1. Any proposal to cancel the public listing status of the Company’s shares

shall be subject to shareholder resolution. This clause shall not be

revised during the listing period in the Emerging Market, the Stock

Exchange or the Over-the-Counter Market.

Article 13. Unless otherwise provided in the Company Act, shareholders meetings

shall be convened by the board of directors. If a shareholders meeting is

convened by the board of directors, the meeting shall be chaired by the

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chairman of the board of directors. If the chairman is on leave or cannot

perform his duty due to any reason, the chairman will designate a

managing director to chair the meeting. If there is no managing director,

one director will be designated. If the chairman does not make such

designation, the managing directors or the directors shall elect one

person from among themselves. If the shareholders meeting are

convened by any person other than the board of directors with

entitlement to convene a shareholders meeting, such person shall chair

the meeting. If the meeting is convened by two or more persons, one of

them should chair the meeting.

Article 14. Matters resolved in the shareholders meeting should be recorded in

minutes in accordance with Article 183 of the Company Act. Attendance

books showing attending shareholders and proxies for attendance by

designated representatives shall be maintained for at least one year.

However, if any shareholder files a lawsuit in accordance with Article 189

of the Company Act, these documents shall be maintained until the end

of the lawsuit.

Chapter 4 Directors and Audit Committee Article 15. The Company has 7 to 9 directors, to be elected from persons with legal

capacities by the shareholders meeting. Directors shall serve terms of

three (3) years. The same person may be re-elected upon expiry of the

term. Directors of the company shall be elected under the candidate

nomination system and single accumulative voting system. Among the

above number of directors, there shall be no less than two independent

directors. The number of independent directors shall represent no less

than 1/5 of all directors. Independent directors shall be elected under the

candidate nomination system. The Company may purchase liability

insurance for directors in accordance with the Corporate Governance

Best Practice Principles for TWSE/GTSM Listed Companies. The board

of directors is authorized to determine the scope of insurance through

resolution. The total number of shares held by all directors shall be

consistent with the provisions of the Rules and Review Procedures for

Director and Supervisor Share Ownership Ratios at Public Companies.

Article 16. In case of vacancy for 1/3 or more of the directors or if all supervisors are

dismissed, the board of directors shall convene a special shareholders

meeting within 60 days to fill the vacancy. The persons filling the

vacancies shall serve the original terms of the persons who have created

the vacancies.

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Article 17. The board of directors is constituted by directors. One person shall be

elected as chairman by the directors from among themselves by the

majority of directors attending a meeting that is attended by 2/3 or more

of all directors. The chairman represents the Company.

Article 17-1. The board of directors may establish all types of functional committees

as required. The members of the committees must include independent

directors. Committees shall report to the board of directors and shall

submit proposals to the board of directors for resolution.

Article 18. Any director who cannot attend a board meeting in person for any reason

may issue a proxy, specifying the scope of authorization for the agenda

and designating another director to attend the meeting on his behalf.

One director shall represent no more than one other director.

Article 19. If the chairman is on leave or cannot perform his duties for any reason,

the representation shall be in accordance with Article 208 of the

Company Act.

Article 20. Unless otherwise provided by the Company Act, board resolutions shall

be approved by the majority of directors attending a meeting that is

attended by the majority of all directors.

Any director who has a vested interest in any matter discussed in the

meeting shall disclose the key contents of such vested interest in the

meeting.

Article 21. Board meetings shall be convened in accordance with Article 204 of the

Company Act. Notices for board meetings may be sent by fax or email.

Article 22. The Company has established an audit committee in accordance with

Article 14-4 of the Securities and Exchange Act. The audit committee is

constituted by all independent directors. The duties of the audit

committee, the meeting rules and other matters of compliance shall be in

accordance with the Company Act, the Securities and Exchange Act,

other applicable legislations and the charters of the Company.

Article 23. The board of directors is authorized to determine the remunerations for

the chairman and the directors based on the levels of participation in the

operation of the Company, the value of their contributions and the

common standards of the same industry.

Independent directors may receive reasonable remuneration that is

different from general directors.

Chapter 5 Managers Article 24. The Company may have managers, the hiring, dismissal and

remuneration of which shall be in accordance with Article 29 of the

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Company Act.

Chapter 6 Accounting Article 25. The board of directors shall prepare the following documents at the end

of each accounting year. These documents shall be submitted to the

audit committee for audit 30 days before the general shareholders

meeting. The documents shall then be submitted to the general

shareholders meeting for ratification.

1. Business report.

2. Financial statements.

3. Profit distribution or loss compensation proposal.

Article 26. (Employee Remuneration and Director Remuneration)

If the Company has annual profit, 10 percent to 18 percent should be

drawn for employees as the remuneration. The board will decide whether

to grant the employees with stock or cash. The personnel who receive

the remuneration include the employees of subsidiaries who meet certain

qualifications. According to the above mentioned annual profit, the board

will make a resolution of granting the directors no higher than three

percent of the profit as the director remuneration. This distribution among

the employees and directors should be reported in the shareholders’

meeting.

But when there are accumulated losses, it should be reserved in

advance to make up the amount, and then draw the mentioned

proportion as the remuneration for the employees and directors.

Article 26-1. (Shareholder Bonus and Dividend Policy)

If the Company’s annual closing shows any profit, taxes should be paid

first. Then past losses shall be compensated. Then 10% shall be

provided as legal reserve, unless the accumulated legal reserve has

reached the level of the total capital amount of the Company. Then a

special reserve shall be provided or reversed in accordance with law or

the requirements of the competent authority. The remaining profit, if any,

combines with the accumulated retained earning, a proposal for

distribution of profits will be drafted by the board, then the shareholders’

meeting will make a resolution to distribute the bonus to the

shareholders.

In response to the change of economic climate and to seek sound

financial structure of the Company, the Company adopts a balanced

dividend policy. The policy for dividend distribution in the future is as

follows:

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1. The Company is currently at an enterprise growth stage. The main

consideration for the dividend policy is the funding requirements for the

Company’s investments in the future, the financial structure and profits.

The board of directors will make a profit distribution proposal every

year based on the profit of the current year, which shall be resolved by

the shareholders meeting.

2. In consideration for a balanced and stable dividend policy, dividend will

be paid in shares or in cash, depending on the funding requirements

for investment and the level of dilution of earnings per share,

distribution will be made in stock dividend or cash dividend. Cash

dividend shall represent no less than 10% of the total dividend of the

current year.

Chapter 7 Miscellaneous Article 27. Matters that are not provided in these Articles of Association are subject

to the Company Act and applicable legislations.

Article 28. These Articles of Association were established on 12 August 1988.

The first amendment was made on 21 March 1989.

The second amendment was made on 24 October 1996.

The third amendment was made on 20 March 1998.

The fourth amendment was made on 7 June 1998.

The fifth amendment was made on 7 May 2001.

The sixth amendment was made on 8 April 2002.

The seventh amendment was made on 23 June 2003.

The eighth amendment was made on 25 June 2004.

The ninth amendment was made on 29 September 2004.

The tenth amendment was made on 13 December 2004.

The eleventh amendment was made on 10 June 2005.

The twelfth amendment was made on 30 June 2006.

The thirteenth amendment was made on 21 June 2007.

The fourteenth amendment was made on 26 March 2008.

The fifteenth amendment was made on 19 June 2008.

The sixteenth amendment was made on 19 June 2009.

The seventeenth amendment was made on 26 May 2010.

The eighteenth amendment was made on 22 June 2011.

The nineteenth amendment was made on 18 June 2012.

The twentieth amendment was made on 18 June 2013.

The twenty-first amendment was made on 28 May 2015.

The twenty-second amendment was made on 27 May 2016.

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【Appendix 4】


Shareholding by All Directors

1. The statutory holding by the current directors of the Company is: No. of ordinary shares issued by the Company

281,059,335 shares

No. of statutory shares that should be held by all directors (7.5% x 80%)

12,000,000 shares

(Since the Company has two or more independent directors, the statutory shareholding ratio by directors and supervisors is lowered to 80%; also, since the Company has an audit committee, there is no statutory shareholding by supervisors.)

2. Directors’ shareholding of the Company is as follows, which is consistent with the legal requirement:

Title Name

As of Mar. 28 2017, start date of share transfer blackout

period

No. of SharesShareholding

Ratio Chairman Ken Huang 8,746,341 3.11%Director Stoney Chiu 3,083,749 1.10%

Director CDIB Venture Capital Corp.

3,285,131 1.17%Representative: James Yin

Director

Ming-Ji Investments Co., Ltd.

3,082,633 1.10%Representative: Yuan-chuan Sun

Independent Director

Po-sheng Lin 0 0.00%


Heng-Yih Liu 0 0.00%


Vincent Lin 0 0.00%

Total by All Directors 18,197,854 6.48%

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