dynamic electroni cs co., ltd. meeting minutes of annual meeti… · 4. for automotive and...

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Tim Pla Tota Cha Rec Dire Non A. B. C. D. 2017 Me me: ce: al shares o airman: corder: ectors in at nvoting: Announc sharehold Chairman Chairma Reports 1. The 2 2. The Att 3. The Att Proposa Proposal Subject: Explanat Dyn eeting Mi 9:00 a.m., Chuto Plaz (No. 398 T of attendan in person Dynamic t Mr. Ken H Jean Liu ttendance: Stoney Ch James Yin Po-sheng Director an Ching-Pia Louis Liu, cement of ders prese n called the an’s Statem 2016 busin 2016 Au tachment 2 Implemen tachment 3 als 1 (propos The 2016 consolidat ion: amic El nutes of ( May 26, 2 za Hotel R T aoying Ro nce: total s n or by p total outsta uang, Cha : Ken Huan hiu, Directo n, Represe Lin, Heng- nd membe o Cheng, A Head of L f Commen ent in perso e meeting ment (omi ness report dit Comm 2. tation of I 3. ed by Boa 6 business ted financia lectroni f Annual (Translation 2017 Roseate Ha oad, Taoyu shares rep proxy are anding sha airman of th ng, Chairm or; entative of C -Yih Liu an ers of the A Accountan egal Affairs ncement (T on or by pr to order .) tted) t. Please mittee’s Re Investmen ard of Direc s report, in al stateme ics Co., Meeting n) all an City) presented b 156,621,9 res 281,05 he Board o man of the CDIB Vent nd Vincent Audit Comm t of Ernst & s The aggreg roxy consti e refer to eview Rep ts in the ctors) ndividual fi nts are su Ltd. of Share by shareho 976, takin 59,335. of Directors Board of D ture Capita Lin, Indep mittee & Young; gate share tuted a qu Attachme port. Ple PRC. Pl nancial st bmitted for eholders olders pres ng 55.72% s Directors; al Corp. pendent eholding of orum. The ent 1. ease refer lease refe tatements r adoption. s sent % of the e r to er to and . -1-

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Page 1: Dynamic Electroni cs Co., Ltd. Meeting Minutes of Annual Meeti… · 4. For automotive and microwave products, passive security products has been under mass production. We have mastered

Tim

Pla

Tota

Cha

Rec

Dire

Non

A.

B.

C.

D.

2017 Me

me:

ce:

al shares o

airman:

corder:

ectors in at

nvoting:

Announc

sharehold

Chairman

Chairma

Reports

1. The 2

2. The

【Att

3. The

【Att

Proposa

Proposal

Subject:

Explanat

Dyneeting Mi

9:00 a.m.,

Chuto Plaz

(No. 398 T

of attendan

in person

Dynamic t

Mr. Ken H

Jean Liu

ttendance:

Stoney Ch

James Yin

Po-sheng

Director an

Ching-Pia

Louis Liu,

cement of

ders prese

n called the

an’s Statem

2016 busin

2016 Au

tachment 2

Implemen

tachment 3

als

1 (propos

The 2016

consolidat

ion:

amic Elnutes of

(

May 26, 2

za Hotel R

Taoying Ro

nce: total s

n or by p

total outsta

uang, Cha

: Ken Huan

hiu, Directo

n, Represe

Lin, Heng-

nd membe

o Cheng, A

Head of L

f Commen

ent in perso

e meeting

ment (omi

ness report

dit Comm

2】.

tation of I

3】.

ed by Boa

6 business

ted financia

lectronif Annual

(Translation

2017

Roseate Ha

oad, Taoyu

shares rep

proxy are

anding sha

airman of th

ng, Chairm

or;

entative of C

-Yih Liu an

ers of the A

Accountan

egal Affairs

ncement (T

on or by pr

to order.)

tted)

t. Please

mittee’s Re

Investmen

ard of Direc

s report, in

al stateme

ics Co.,Meeting

n)

all

an City)

presented b

156,621,9

res 281,05

he Board o

man of the

CDIB Vent

nd Vincent

Audit Comm

t of Ernst &

s

The aggreg

roxy consti

e refer to

eview Rep

ts in the

ctors)

ndividual fi

nts are su

Ltd. of Share

by shareho

976, takin

59,335.

of Directors

Board of D

ture Capita

Lin, Indep

mittee

& Young;

gate share

tuted a qu

【Attachme

port. Ple

PRC. Pl

nancial st

bmitted for

eholders

olders pres

ng 55.72%

s

Directors;

al Corp.

pendent

eholding of

orum. The

ent 1】.

ease refer

lease refe

tatements

r adoption.

s

sent

% of

f the

e

r to

er to

and

.

-1-

Page 2: Dynamic Electroni cs Co., Ltd. Meeting Minutes of Annual Meeti… · 4. For automotive and microwave products, passive security products has been under mass production. We have mastered

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 【Attachment 1】

and 【Attachment 4】.

Resolution: Voting Results:

Shares represented at the time of voting (including electronic voting):

156,621,976; Approval votes: 141,132,833 (36,423,066 votes were

exercised through electronic way), taking 90.11%; Disapproval votes:

68,276 (68,276 votes were exercised through electronic way), taking

0.04%; Invalid votes: 0, taking 0.00%; Abstention votes/no votes:

15,420,867 (15,420,867 votes were exercised through electronic way),

taking 9.85%.

The above proposal was approved as proposed.

Proposal 2 (proposed by Board of Directors)

Subject: The 2016 Deficit Compensation is submitted for adoption.

Explanation: In accordance with the Company Act and the Articles of

Incorporation of the Company, the Statement of Deficit

Compensated is as follows:

Dynamic Electronics Co., Ltd.

2016 Statement of Deficit Compensated

Unit: NT Dollars

Item Amount

Opening Undistributed Loss $(275,942,531)

Plus: Confirmed Benefit Plan Actuarial Profit (Loss)

(2016) (442,405)

Plus: Net Profit after Tax of Current Year 10,699,574

Closing Loss pending Compensation $(265,685,362)

Resolution: Voting Results:

Shares represented at the time of voting (including electronic voting):

156,621,976; Approval votes: 141,122,730 (36,412,963 votes were

exercised through electronic way), taking 90.10%; Disapproval votes:

-2-

Page 3: Dynamic Electroni cs Co., Ltd. Meeting Minutes of Annual Meeti… · 4. For automotive and microwave products, passive security products has been under mass production. We have mastered

78,378 (78,378 votes were exercised through electronic way), taking

0.05%; Invalid votes: 0, taking 0.00%; Abstention votes/no votes:

15,420,868 (15,420,868 votes were exercised through electronic way),

taking 9.85%.

The above proposal was approved as proposed.

E. 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 【Attachment 5】.

Resolution: Voting Results:

Shares represented at the time of voting (including electronic voting):

156,621,976; Approval votes: 141,117,149 (36,407,382 votes were

exercised through electronic way), taking 90.10%; Disapproval votes:

78,372 (78,372 votes were exercised through electronic way), taking

0.05%; Invalid votes: 0, taking 0.00%; Abstention votes/no votes:

15,426,455 (15,426,455 votes were exercised through electronic way),

taking 9.85%..

The above proposal was approved as proposed.

F. Motions: No motion was raised after Chairman consulted all shareholders

in attendance.

G. Adjournment: Chairman adjourned the meeting at nine sixteen on the

same day.

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Page 4: Dynamic Electroni cs Co., Ltd. Meeting Minutes of Annual Meeti… · 4. For automotive and microwave products, passive security products has been under mass production. We have mastered

【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 5% among all listed

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

Supervisory Commission.

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

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Page 5: Dynamic Electroni cs Co., Ltd. Meeting Minutes of Annual Meeti… · 4. For automotive and microwave products, passive security products has been under mass production. We have mastered

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 income 11,778,258 11,791,838 100.12%

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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Page 6: Dynamic Electroni cs Co., Ltd. Meeting Minutes of Annual Meeti… · 4. For automotive and microwave products, passive security products has been under mass production. We have mastered

2. Individual Unit: NTD thousands

Item 2016 Actual Performance 2016 Budget

Achievement Rate

Operating income 5,571,619 5,575,299 100.07%

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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Page 7: Dynamic Electroni cs Co., Ltd. Meeting Minutes of Annual Meeti… · 4. For automotive and microwave products, passive security products has been under mass production. We have mastered

(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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Page 8: Dynamic Electroni cs Co., Ltd. Meeting Minutes of Annual Meeti… · 4. For automotive and microwave products, passive security products has been under mass production. We have mastered

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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Page 9: Dynamic Electroni cs Co., Ltd. Meeting Minutes of Annual Meeti… · 4. For automotive and microwave products, passive security products has been under mass production. We have mastered

【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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Page 10: Dynamic Electroni cs Co., Ltd. Meeting Minutes of Annual Meeti… · 4. For automotive and microwave products, passive security products has been under mass production. We have mastered

【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.

-14-

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Page 11: Dynamic Electroni cs Co., Ltd. Meeting Minutes of Annual Meeti… · 4. For automotive and microwave products, passive security products has been under mass production. We have mastered

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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Page 12: Dynamic Electroni cs Co., Ltd. Meeting Minutes of Annual Meeti… · 4. For automotive and microwave products, passive security products has been under mass production. We have mastered

【Attachment 4】

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Page 13: Dynamic Electroni cs Co., Ltd. Meeting Minutes of Annual Meeti… · 4. For automotive and microwave products, passive security products has been under mass production. We have mastered

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Page 14: Dynamic Electroni cs Co., Ltd. Meeting Minutes of Annual Meeti… · 4. For automotive and microwave products, passive security products has been under mass production. We have mastered

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Page 15: Dynamic Electroni cs Co., Ltd. Meeting Minutes of Annual Meeti… · 4. For automotive and microwave products, passive security products has been under mass production. We have mastered

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Page 16: Dynamic Electroni cs Co., Ltd. Meeting Minutes of Annual Meeti… · 4. For automotive and microwave products, passive security products has been under mass production. We have mastered

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Page 17: Dynamic Electroni cs Co., Ltd. Meeting Minutes of Annual Meeti… · 4. For automotive and microwave products, passive security products has been under mass production. We have mastered

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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Page 18: Dynamic Electroni cs Co., Ltd. Meeting Minutes of Annual Meeti… · 4. For automotive and microwave products, passive security products has been under mass production. We have mastered

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)

As of December 31, 2016 and 2015

(Amounts Expressed in Thousands of New Taiwan Dollars)

DYNAMIC ELECTRONICS CO., LTD.

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.)

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

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Page 19: Dynamic Electroni cs Co., Ltd. Meeting Minutes of Annual Meeti… · 4. For automotive and microwave products, passive security products has been under mass production. We have mastered

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)

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

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

PARENT-COMPANY-ONLY STATEMENTS OF COMPREHENSIVE INCOME

DYNAMIC ELECTRONICS CO., LTD.

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

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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

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

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

PARENT-COMPANY-ONLY STATEMENTS OF CHANGES IN EQUITY

DYNAMIC ELECTRONICS CO., LTD.

For the Years Ended December 31, 2016 and 2015

(Amounts Expressed in Thousands of New Taiwan Dollars)

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

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

2016 2015

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

DYNAMIC ELECTRONICS CO., LTD.

PARENT-COMPANY-ONLY STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2016 and 2015

Code 2016 2015Items Code Items

(Amounts Expressed in Thousands of New Taiwan Dollars)

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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, 2016 and 2015

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

(Amounts Expressed in Thousands of New Taiwan Dollars)

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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

(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 SUBSIDIARIESCONSOLIDATED BALANCE SHEETS (Continued)

As of December 31, 2016 and 2015

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

(Amounts Expressed in Thousands of New Taiwan Dollars)

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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)

(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

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)

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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

English Translation of Consolidated Financial Statements Originally Issued in Chinese

DYNAMIC ELECTRONICS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the years ended December 31, 2016 and 2015

(In Thousands of New Taiwan Dollars)

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

Items

Non-

controlling

Interests Total Equity

Equity Attributable to Shareholders of the Parent

Capital

Capital

Surplus

Retained Earnings Other Components of equtiy

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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

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

Items Items

English Translation of Consolidated Financial Statements Originally Issued in Chinese

DYNAMIC ELECTRONICS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31, 2016 and 2015

(Amounts Expressed in Thousands of New Taiwan Dollars)

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【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

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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.

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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

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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.

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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

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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,

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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..

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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.

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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

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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.

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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

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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.

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.

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d.