THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

If you are in any doubt as to the course of action to be taken, you should consult your stockbroker, bank manager, solicitor, accountant or other independent adviser immediately.

Bursa Malaysia Securities Berhad takes no responsibility for the contents of this Circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Circular.

FORMOSA PROSONIC INDUSTRIES BERHAD (172312-K)

CIRCULAR TO SHAREHOLDERS IN RELATION TO

PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE ANDPROPOSED NEW SHAREHOLDERS’ MANDATE FOR

RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE

The Ordinary Resolution in respect of the above will be tabled as Special Business at the Company’s Twenty-Fifth (25th) Annual General Meeting (“AGM”) to be held at Crystal Room, Level 1, Crystal Crown Hotel Harbour View, 217 Persiaran Raja Muda Musa, 42000 Port Klang on Thursday, 13 June 2013 at 2.30 p.m. Notice of the AGM together with a Form of Proxy are set out in the Annual Report of the Company for the financial period ended 31 December 2012 despatched together with this Circular.

The Form of Proxy must be lodged at the Registered Office of the Company at Level 18, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur at least forty eight (48) hours before the appointed time for the meeting or any adjournment thereof. The lodging of the Form of Proxy will not preclude you from attending and voting in person at the meeting or any adjournment thereof should you subsequently wish to do so. The last date and time for lodging the Proxy Form is on 11 June 2013 at 2.30 p.m.

This Circular is dated 22 May 2013

DEFINITIONS

Unless where the context otherwise requires, the following definitions shall apply throughout this

Circular:-

“Acoustech” : Acoustech Berhad (496665-W), a company listed on the Main Board of Bursa Securities.

“Act” : The Companies Act, 1965, as may be amended from time to time and any-enactment thereof.

“Aerotronic” : Aerotronic Sdn Bhd (478021-X), a 58.19% subsidiary of FPT.

“AE” : Acoustic Energy Limited, a wholly-owned subsidiary of FPIB.

“AGM” : Annual General Meeting

“APCS” : Asia Pacific Card & System Sdn Bhd (418808-K), a 89.25%

subsidiary of FPIB.

“Board” : Board of Directors

“Bursa Securities” : Bursa Malaysia Securities Berhad (635998-W)

“Elkay” : Elkay Pacific Rim (M) Sdn Bhd (458251-M), a 50% jointly

controlled company of FPEQ.

“ESB” : Energistic Sdn Bhd (526630-P), a 100% subsidiary of FPIB

“FPEQ” : Formosa Prosonic Equipment Sdn Bhd (365310-A), a 75%

subsidiary of Acoustech.

“FPGHK” : FP Group Limited, a wholly-owned subsidiary of Winmax Holdings Group Limited, who in turn is a 60% subsidiary of

FPIB.

“FPIB” or “the Company” : Formosa Prosonic Industries Berhad (172312-K)

“FPIB Group” or “the Group”

: FPIB, its subsidiaries and associated companies collectively.

“FPM” : Formosa Prosonic Manufacturing Sdn Bhd (200835-W), a

wholly-owned subsidiary of FPIB.

“FPMC” : Formosa Prosonic Manufacturing Corporation (Regn No.

BR00081968), a wholly-owned subsidiary of FPM

“FPC” : Formosa Prosonic Chemicals Sdn Bhd (190534-W), wholly-

owned subsidiary of Acoustech.

“FPT” : Formosa Prosonic Technics Sdn Bhd (242393-V), wholly-

owned subsidiary of Acoustech.

i

“Listing Requirements” : Main Market Listing Requirements of Bursa Securities

“Major Shareholder” : A person who has an interest or interests in one or more voting

shares in the Company and the nominal amount of that share, or the aggregate of the nominal amounts of those shares, is equal

to or more than 10% of the aggregate of the nominal amounts

of all the voting shares in the Company or equal to or more than 5% of the aggregate of the nominal amounts of all the voting

shares in the Company where such person is the largest

shareholder of the Company. For the purpose of this definition,

"interest in shares" shall have the meaning given in Section 6A of the Act.

It also includes any person who is or was within the preceding 6 months of the date on which the terms of the transaction were

agreed upon, a major shareholder of the Company (as defined

above) or any other company which is its subsidiary or holding company.

“MNC” : Multinational Companies

“ODM” : Original Design Manufacturer

“OEM” : Original Equipment Manufacturer

“Proposed Shareholders’

Mandate”

: Proposed renewal of the shareholders’ mandate for the FPIB

Group to enter into RRPTs.

“Proposed New

Shareholders’ Mandate”

: Proposed new shareholders’ mandate for the FPIB Group to

enter into RRPTs

“Proposal” : Proposed Shareholders’ Mandate and Proposed New

Shareholders’ Mandate

“RRPTs” : Recurrent related party transactions of a revenue and/or trading

nature entered into in the ordinary course of business which are

necessary for the FPIB Group’s day to day operations on terms

not more favorable to the Related Parties than those generally available to the public and are not to the detriment of the

minority shareholders which involves the interest, direct or

indirect, of the Related Parties.

“Related Parties”

: A Director, Major Shareholder or person connected with such

Director or Major Shareholder including any person who is or was within the preceding six (6) months of the date on which

the terms of the transaction were agreed upon, a Director or

Major Shareholder or chief executive director of the Company

or any other company which is its subsidiary or holding company.

“RM” and “sen” : Ringgit Malaysia and sen respectively.

ii

CONTENTS

Page

LETTER TO SHAREHOLDERS CONTAINING:-

1. INTRODUCTION 1

2. BURSA SECURITIES LISTING REQUIREMENTS 2

3. DETAILS OF THE PROPOSAL

3.1 Principal Activities of the FPIB Group 3 3.2 The Related Parties 3

3.3 Information on the RRPTs 3

3.4 Shareholdings of Interested Persons 5 3.5 Deviation from Mandate 5

3.6 Review Procedures for the RRPTs 5

3.7 Threshold of Authority 6

4. STATEMENT BY AUDIT COMMITTEE 6

5. RATIONALE & BENEFITS FOR THE PROPOSAL 6

6. DISCLOSURE IN ANNUAL REPORT 7

7. DIRECTORS' AND MAJOR SHAREHOLDERS' INTERESTS 7

8. APPROVAL REQUIRED 7

9. DIRECTORS' RECOMMENDATION 7

10. ANNUAL GENERAL MEETING 7

11. FURTHER INFORMATION 8

11.1 Responsibility Statement 8

11.2 Material Contract 8

11.3 Material Litigation 8

11.4 Documents for Inspection 8

iii

1

FORMOSA PROSONIC INDUSTRIES BERHAD (172312-K)

(Incorporated in Malaysia)

Registered Office:- Level 18, The Gardens North Tower Mid Valley City, Lingkaran Syed Putra 59200 Kuala Lumpur

22 May 2013

Board of Directors:- Mr Jhang Tzu Hsiung, Executive Chairman Mr Shih Chao Yuan, Group Managing DirectorMr Tan Ah Guan @ Tan Teik Hoe, Independent Non Executive Director Mr Leow Ing Seng, Senior Independent Non Executive Director Mr Lim Chung Yin, Independent Non Executive Director Mr Chen Ching Sen, Executive Director Mr Chang Chen Hsi, Independent Non Executive Director Ambassador Dato’ Zaibedah Binti Ahmad, Non Independent Non Executive Director YM Tengku Mohamed Fauzi Bin Tengku Abdul Hamid, Non Independent Non Executive Director

TO: THE SHAREHOLDERS OF FPIB

Dear Sir/Madam, PROPOSED RENEWAL OF THE SHAREHOLDERS’ MANDATE AND PROPOSED NEW SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE

1. INTRODUCTION

At the 24th AGM of the Company held on 14 June 2012 shareholders had given a mandate for the Company and/or its subsidiaries to enter into RRPTs with Related Parties. Pursuant to Paragraph 10.09 and Practice Note 12 of the Listing Requirements, the said shareholders’ mandate will lapse at the conclusion of the forthcoming AGM unless authority for its renewal is obtained.

On 14 May 2013 the Company announced its proposal to seek its shareholders’ approval for the Proposed Shareholders’ Mandate and Proposed New Shareholders’ Mandate at its forthcoming AGM.

The purpose of this Circular is to provide you with information on the Proposal, to set out recommendation by the Board and to seek your approval for the ordinary resolution relating to the Proposal to be tabled at the forthcoming AGM.

2

2. BURSA SECURITIES LISTING REQUIREMENTS

2.1 Paragraph 10.09 and Practice Note 12 of the Listing Requirements

Pursuant to paragraph 10.09(2) of the Listing Requirements, a listed issuer may

seek shareholders' mandate in respect of RRPTs subject to the following:-

(i) the transactions are in the ordinary course of business and are on terms

not more favorable to the Related Parties than those generally available to the public;

(ii) the shareholders' mandate is subject to annual renewal and disclosure is made in the annual report of the aggregate value of transactions

conducted pursuant to the shareholders' mandate during the financial

year where the aggregate value is equal to or more than the threshold

prescribed paragraph 10.09(1) of the Listing Requirements;

(iii) the issuance of a circular to shareholders by the listed issuer for the

shareholders’ mandate; and

(iv) in a meeting to obtain shareholders' mandate, the interested director,

interested major shareholder or the interested person connected with a director or major shareholder, and where it involves the interest of an

interested person connected with a director or a major shareholder, such

director or major shareholder, must not vote on the resolution approving

the transactions. An interested director or interested major shareholder must ensure that persons connected with him abstain from voting on the

resolution approving the transactions; and

(v) the Company will immediately announce to Bursa Securities when the

actual value of the RRPTs entered into by the Company exceeds the

estimated value of the RRPTs disclosed in the Circular by 10% or more

inclusive of any information as may be prescribed by Bursa Securities.

2.2 Validity period

Pursuant to Practice Note 12 of the Listing Requirements, the shareholders’

mandate is subject to annual renewal and any authority conferred by the mandate

shall only continue to be in force until:

(i) the conclusion of the next AGM of the Company following the

forthcoming AGM at which the Proposed Shareholders’ Mandate is

approved, at which time it will lapse, unless by a resolution passed at the AGM the mandate is renewed;

(ii) the expiration of the period within which the next AGM of the Company after the forthcoming AGM is required to be held pursuant to Section

143(1) of the Act (but must not extend to such extension as may be

allowed pursuant to Section 143(2) of the Act); or

(iii) revoked or varied by resolution passed by the shareholders in general

meeting,

whichever is earlier.

3

3. DETAILS OF THE PROPOSAL

3.1 Principal Activities of the FPIB Group

FPIB is principally involved in the manufacture of high quality speaker systems marketed under the Acoustic Energy (“AE”) brand name and an OEM of speaker

systems for MNCs such as Panasonic, Onkyo, Sharp, Sony, JVC, Kenwood and

others. The subsidiaries and associates also involved in the Proposal are:

Subsidiaries/

Associate

Principal Activities

FPM Manufacture of moulded plastic components for audio and

video equipment.

FPMC Distributor of water dispensers

APCS Designing, development and manufacture of electrical

integrated circuit cards (“smart cards”) and manufacture of

printed circuit boards for home audio and video equipment.

ESB Consultancy and provision of system development and

integration solution for business application software.

AE Developing, manufacturing and marketing of drive-unit high

technology loudspeakers.

FPGHK

Manufacture and assembly of speaker systems, plastic

components, tool making and speaker cord.

3.2 The Related Parties

The Proposal will apply to the following Related Parties:

Related Party Principal Activities

Acoustech Investment Holding Company.

FPT Manufacture and assembly of multimedia speaker systems

and speaker units for MNC manufacturers.

FPC Manufacture of specialized chemical paints for plastics, metal

and wood.

FPEQ Manufacture of water dispensers and electrical thermo pots.

Aerotronic Manufacture of voice coils and related products.

Elkay Sale of water dispensers and related spare parts

3.3 Information on the RRPTs

It is anticipated that the Group would, in the ordinary course of business continue to enter into RRPTs which are detailed in the table below. In view of the time-sensitive,

confidential and frequent nature of such RRPTs, the Board is seeking shareholders’

approval for the Proposal for the Group with the classes of Related Parties set out below.

The estimated values of the RRPTs as set out in table below are for the period from the

conclusion of the forthcoming AGM of the Company until the conclusion of the next

AGM of the Company based on the FPIB Group's budgeted figures for the respective

4

period and may be subject to changes. The aggregate or actual values of these transactions

may/may not exceed the estimated amounts over the said period.

Related

Party

Com-

pany

in FPIB

Group

Nature of Transaction Estimated

Value per

last

Mandate

(RM‘000)

Actual

Value

Transacted

as at 30

April 2013

(RM’000)

Estimated

Value for the

validity of

the Proposed

Mandate

(RM’000)

Interested Parties

FPT

FPIB FPM APCS AE

FPT supplies raw materials such as speaker units and woofer materials for high end audio speaker systems and OEM audio speaker systems

178,113

145,807

135,202

Interested

Director: Shih Chao Yuan

Person Connected

to Interested

Director:

Shih Huang Hsiu Fang

Interested

Shareholder: Chang Song Hai

FPT

FPIB

FPIB rents warehouse space* from FPT of approximately 47,695 sq ft at a rental of RM0.575 per sq ft. or RM27,500 per month.

330

303

330

FPC

FPIB FPM

FPC supplies high quality plastic paints and thinner for use on moulded plastic casings for audio and video equipment

480

172

180

FPT

FPM

APCS

FPT purchases printed circuit boards

(“PCB”), plastic parts, multimedia speaker casings and crossover materials

3,906

3,365

3,136

FPEQ

FPM APCS

FPEQ purchases PCB, plastic parts, and casings.

3,462

2,622

2,031

FPT, FPC, FPEQ, Aerotronic Elkay

ESB

ESB provides information technology related consultancy services to the various companies

336

241

263

FPEQ

FPIB

FPEQ supplies water dispenser and electrical thermo pots

6

12

12

FPT FPEQ

FPGHK

FPGHK supplies cord and parts to FPT and FPEQ

1,500

2,664

2,616

New Shareholders’ Mandate

FPEQ

FPMC

FPEQ sells water dispensers and water dispenser parts to FPMC

-

5,114

9,181

TOTAL

188,133

160,300

152,951

Note: FPM, the wholly-owned subsidiary of FPIB, is a substantial shareholder holding 27.09% direct

interest in Acoustech. Mr Shih Chao Yuan is a director in both FPIB and Acoustech. He is also a

director in FPM and ESB. He is deemed interested in Acoustech pursuant to Sec 6A of the Act by

virtue of FPM being a body corporate accustomed to act in accordance to his direction. Mdm

Shih Huang Hsiu Fang is the spouse of Mr Shih Chao Yuan and is therefore a person connected to

Mr Shih.

5

Mr Chang Song Hai, a substantial shareholder in FPIB is a director in Acoustech.

* FPT’s warehouse is located at Kawasan Perusahaan LPK, Taman Ria Jaya, 08000

Sungei Petani, Kedah Darul Aman.

3.4 Shareholdings of Interested Persons

The shareholdings of the interested persons named above as at 30 April

2013 are as follows:

Interested party Interests in FPIB Interest in Acoustech

Direct

Interest

Indirect

Interest

Direct

Interest

Indirect

Interest

No. of

Shares

% No. of

Shares

% No. of

Shares

% No. of

Shares

%

Interested Director

Shih Chao Yuan

10,919,846 4.42 - - 1,854,290 1.08 47,882,474 1 27.93

Person Connected to

Interested Director

Shih Huang Hsiu Fang

2,016,000

0.82

-

-

1,440,000

0.84

-

-

Interested

Shareholder

Chang Song Hai

18,739,504

7.58

-

-

400,000

0.23

-

-

Note: 1 Deemed interested pursuant to Section 6A of the Act by virtue of FPM being a body corporate accustomed to act in accordance to the direction of the director and pursuant to Section 134 of the Act by virtue of shares held by spouse.

3.5 Deviation from Mandate

The actual value of the RRPTs did not exceed the estimated value as approved under the previous mandate granted to the Company at the last AGM.

3.6 Review Procedures for the RRPTs

The management of FPIB Group has implemented the following procurement procedures

to ensure that RRPTs are conducted at arm’s length and on normal commercial terms not

more favorable to the related party than those generally available to the public which are consistent with the FPIB Group’s usual business practices and are not detriment to the

minority shareholders:-

(i) All subsidiaries of FPIB have been notified that all RRPTs are required to be

undertaken on arm’s length basis based on commercial terms and terms which

are not more favorable to the Related Parties than those generally available to the

public;

(ii) Credit terms are determined by senior management i.e. by Assistant General

Managers and General Managers before any RRPTs are entered into;

(iii) The sales and purchase prices, terms and conditions of the RRPTs are determined

after into consideration amongst others, the demand and supply of products,

credit terms and reliability of supply and where feasible, quotations will be obtained from third parties to ascertain the appropriate purchase prices. As the

Group is basically an OEM and ODM manufacturer there are many instances

where products/services are proprietary in nature. For such products/services

6

prices are negotiated specifically between the individual proprietor and the

purchasers;

(iv) The internal audit department reviews RRPTs at least twice in a financial year,

pursuant to the shareholders’ mandate to ensure that relevant internal review

procedures are adhered to. Accordingly, the Audit Committee reviews the RRPTs with the internal audit department to ensure that the RRPTs were carried out on

normal commercial terms that are not detrimental to the interest of the minority

shareholders.

3.7 Threshold of Authority

The nature of business of FPIB Group is that of an OEM and ODM manufacturer and

products are manufactured on a ‘made-to-order’ basis in accordance to specifications

determined and dictated by customers. Most materials and major component parts are

either manufactured internally or sourced from the Related Parties who are contracted to manufacture the parts based on specific design and these are not generally available in the

market.

Due to the nature of the ‘made-to-order’ products, prices with regards to purchases as

well as supplies are assessed by executives, engineering and managers and requires the

final approval of assistant general managers and general managers prior to confirmation. As customers’ orders are based on project basis the authority limits of the assistant

general managers and general managers will therefore be based on the projects in

question. For new facilities the added approval of the Group Managing Director is

required.

3.8 Amount Due and Owing to the Company by Related Parties

As at the financial year ended 31 December 2012, there is no amount due and

owing to the Company which has exceeded the credit term given.

4. STATEMENT BY AUDIT COMMITTEE

The Audit Committee of the Company has seen and reviewed the procedures mentioned above and is of the view that the said procedures are sufficient to ensure that the RRPTs entered into are

monitored, tracked and identified in a timely manner and are not more favorable to the Related

Parties than those generally available to the public and are not detrimental to the minority shareholders. The processes and procedures in connection thereto are reviewed biannually.

5. RATIONALE & BENEFITS FOR THE PROPOSAL

The rationale for and benefits of the Proposal to the FPIB Group are as follows:

(i) to facilitate transactions with Related Parties which are in the ordinary course of business of the FPIB Group undertaken at arms' length, normal commercial terms and on terms

which are not more favorable to the Related Parties than those generally available to the

public and are not detrimental to the interests of minority shareholders;

(ii) to enable the FPIB Group to transact with the Related Parties in an expeditious manner to

meet business needs for the supply and/or provision of quality raw materials and services

from reliable partners in close proximity, allowing lower delivery costs and managed delivery times, which are necessary for its day-to-day operations particularly business

needs which are time sensitive in nature;

7

(iii) will eliminate the necessity of convening separate general meetings to seek shareholders' mandate as and when potential recurrent transactions with a related party arises, thereby

substantially reducing expenses and administrative time in convening such meetings,

without compromising the corporate objectives and adversely affecting business

opportunities available to the Group.

6. DISCLOSURE IN ANNUAL REPORT

Disclosure will be made in the annual report of the Company of the aggregate value of

transactions conducted based on the type of transaction and the names of the Related Parties

pursuant to the Proposal during the financial period and in the annual report of the subsequent year during which the Proposal is in force.

7. DIRECTORS' AND MAJOR SHAREHOLDERS' INTERESTS

Mr Shih Chao Yuan, a director, holds 10,919,846 shares or 4.44% equity interest in the FPIB and

is interested in respect of the Proposal to the extent the shares of Acoustech are held by FPM, the

wholly-owned subsidiary of FPIB. He has and will continue to abstain from all Board deliberations in relation to the Proposal. He will also abstain from voting in respect of his direct

and indirect shareholdings (if any) in FPIB and has undertaken that he will ensure that persons

connected to him (as defined in the Listing Requirements) will abstain from deliberating or voting on the resolution in relation to the Proposal.

Mr Chang Song Hai, an interested shareholder, will abstain from voting in respect of his direct

and indirect shareholdings (if any) in relation to the Proposal and has undertaken that he will

ensure that persons connected to him will abstain from deliberating or voting on the resolution in relation to the Proposal.

Save as disclosed above, none of the other directors, major shareholders or persons connected to

them have any direct or indirect interest in the Proposal.

8. APPROVAL REQUIRED

The Proposal is subject to the approval of the shareholders of FPIB which will be sought at the forthcoming AGM.

9. DIRECTORS’ RECOMMENDATION

Your Directors, with the exception of Mr Shih Chao Yuan, being an interested director and who

has abstained and will continue to abstain from board deliberations pertaining to the Proposal, are of the opinion that the Proposal is in the best interest of the Company and its subsidiaries and is

not detrimental to the minority shareholders. Accordingly, the Directors, with the exception of Mr

Shih Chao Yuan, recommend that you vote in favor of the ordinary resolution to be proposed at

the forthcoming AGM. The text of the said ordinary resolution is set out in the Notice convening the AGM.

10. AGM

The 25th

AGM of the Company will be held at Crystal Room Level 1, Crystal Crown Hotel,

Harbour View, 217 Persiaran Raja Muda Musa, 42000 Port Klang, Selangor Darul Ehsan on 13 June 2013 at 2.30 pm for the purpose of considering and if thought fit, to pass the Ordinary

Resolution relating to the Proposal under the agenda as Special Business as set out in the Notice

of AGM which is enclosed in the Annual Report of the Company for the financial period ended

31 December 2012 accompanying this Circular.

8

If you are unable to attend and vote in person at the AGM and wish to appoint a Proxy instead, you should complete and return the Form of Proxy enclosed in the Annual Report in accordance

with the instructions therein. The Form of Proxy must be lodged at the Registered Office of the

Company at least 48 hours before the time set for holding the meeting or any adjournment

thereof. The lodging of the Form of Proxy will not preclude you from attending the AGM and voting in person at the AGM if you wish to do so.

11. FURTHER INFORMATION

Shareholders of FPIB are advised to refer to the attached Appendices for further information.

11.1 RESPONSIBILITY STATEMENT

This Circular has been seen and approved by the Board of Directors of FPIB and they collectively and individually accept full responsibility for the accuracy of the information

given and confirm that after making all reasonable enquiries and to the best of their

knowledge and belief, there are no other material facts the omission of which would make any statement herein misleading.

11.2 MATERIAL CONTRACTS

There are no material contracts (not being contracts entered into in the ordinary course of

business) which have been entered into by FPIB or its subsidiary companies within the past two (2) years preceding the date of this Circular.

11.3 MATERIAL LITIGATION

FPIB and/or its subsidiaries are not engaged in any material litigation, claims or arbitration either as plaintiff or defendant and the Directors have no knowledge of any

fact likely to give rise to any proceedings which might materially affect the position or

the business of the Company or its subsidiary companies.

11.4 DOCUMENTS FOR INSPECTION

Copies of the following documents are available for inspection at the registered office of the Company during normal office hours on Monday to Friday (except public holidays)

from the date of this Circular up to and including the date of the AGM:-

(i) Memorandum and Articles of Association of FPIB;

(ii) The audited accounts of FPIB Group for the past two (2) financial years

ended 31 December 2011 and 31 December 2012 and the unaudited results for the three (3) months ended 31 March 2013.

Yours faithfully,

For and on behalf of the Board of FORMOSA PROSONIC INDUSTRIES BERHAD (172312-K)

Tan Ah Guan @ Tan Teik Hoe

Independent Director