AHOKU - AGM Information 2019 | FinancialReports.eu

Stock Code: 3002

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AHOKU ELECTRONIC COMPANY

2019 Annual General Shareholders’ Meeting Meeting Handbook

Time: 9:00 a.m., Thursday, June 6, 2019 Venue: 5F-1, No.92, Sec.1, Nei-Hu Rd., Nei-Hu Dist., Taipei City, Taiwan

(This English translation is prepared in accordance with the Chinese version and is for reference purposes only. If there are any inconsistency between the Chinese original and this English translation, the Chinese version shall prevail.)

Page No. I. Meeting Procedures ..................................................................................... 1 II. Meeting Agenda ......................................................................................... 2 Report Items ................................................................................................. 3 Ratification Items ........................................................................................ 3 Discussion Items .......................................................................................... 4 Extemporary Motions . .................................................................................. 4 Adjournment . ................................................................................................ 4 III. Attachments 1. 2018 Business Report .............................................................................. 5 2. Supervisors’ Review Report .................................................................... 7 3. Independent Auditors’ Report and 2018 Financial Statements ............... 8 4. The Statement of 2018 Deficit Compensation ...................................... 26 5. The Comparison Table for Amendment to the “Procedures for Acquisition or Disposal of Assets” ........................................................ 27 6. The Comparison Table for Amendment to the “Procedures for Financial Derivatives Transactions” ...................................................... 51 IV. Appendices 1. Articles of Incorporation ........................................................................ 56 2. Rules and Procedures of Shareholders’ Meeting ................................... 63 3. Shareholding of Directors and Supervisors ........................................... 67 4. Other Explanation . .................................................................................. 68

AHOKU ELECTRONIC COMPANY

2019 Annual General Shareholders’ Meeting Procedures

I. Call the Meeting to Order

II. Chairman Remarks

III. Report Items

IV. Ratification Items
V. Discussion Items

VI. Extemporary Motions

VII. Adjournment

AHOKU ELECTRONIC COMPANY 2019 Annual General Shareholders’ Meeting Agenda

Time: 9:00 a.m., Thursday, June 6, 2019

Venue: 5F-1, No.92, Sec.1, Nei-Hu Rd., Nei-Hu Dist., Taipei City, Taiwan

I. Call the Meeting to Order (Report the attendance)

II. Chairman Remarks

III. Report Items

2018 Business Report
Supervisors’ Review Report on the 2018 Financial Statements

IV. Ratification Items

Adoption of the 2018 Business Report and Financial Statements
Adoption of the Proposal for 2018 Deficit Compensation

V. Discussion Items

Amendment to the “Procedures for Acquisition or Disposal of Assets”
Amendment to the “Procedures for Financial Derivatives Transactions”

VI. Extemporary Motions

VII. Adjournment

Report Items

Item No.1: 2018 Business Report.

Explanation: please refer to Attachment 1 (page 5 to page 6) of this Handbook for the 2018 Business Report.

Item No.2: Supervisors’ Review Report on the 2018 Financial Statements.

Explanation: please refer to Attachment 2 (page 7) of this Handbook for the Supervisors’ Review Report.

Ratification Items

Item No.1: (Proposed by the Board of Directors)

Proposal: Adoption of the 2018 Business Report and Financial Statements. Explanation:

The Company’s 2018 Financial Statements were approved by the Board of Directors, and audited by Certified Public Accountant Chen, Zhao-Mei and Certified Public Accountant Xie, Jian-Xin of Deloitte & Touche. The aforementioned Financial Statements together with the Business Report have been reviewed by the supervisors. Supervisors’ Review Report is provided herein.
Please refer to Attachment 1 (page 5 to page 6) of this Handbook for the 2018 Business Report.
Please refer to Attachment 3 (page 8 to page 25) of this Handbook for Independent Auditors’ Report and 2018 Financial Statements.

Resolution:

Item No.2: (Proposed by the Board of Directors) Proposal: Adoption of the Proposal for 2018 Deficit Compensation. Explanation:

The Company’s net loss for Fiscal 2018 was NT$ 28,292,787. After adding the adjustment of unappropriated retained earnings and the reversal of special reserve, the deficit yet to be compensated is NT$ 27,033,778. According to Article 239 of the “Company Act”, it is proposed to use the legal reserve to compensate the Company’s deficit.
Please refer to Attachment 4 (page 26) of this Handbook for the Statement of 2018 Deficit Compensation.

Resolution:

Discussion Items

Item No.1: (Proposed by the Board of Directors) Proposal: Amendment to the “Procedures for Acquisition or Disposal of Assets”.

Explanation:

To comply with amendment to “Regulations Governing the Acquisition and Disposal of Assets by Public Companies” issued by the Financial Supervisory Commission R.O.C. (Taiwan) (Rule No. 1070341072) on November 26, 2018, it is proposed to amend the Company’s “Procedures for Acquisition or Disposal of Assets”.
Please refer to the Attachment 5 (page 27 to page 50) of this Handbook for the Comparison Table for Amendment to the “Procedures for Acquisition or Disposal of Assets”.

Resolution:

Item No.2: (Proposed by the Board of Directors)

Proposal: Amendment to the “Procedures for Financial Derivatives Transactions”.

Explanation:

To comply with amendment to “Regulations Governing the Acquisition and Disposal of Assets by Public Companies” issued by the Financial Supervisory Commission R.O.C. (Taiwan) (Rule No. 1070341072) on November 26, 2018, it is proposed to amend the Company’s “Procedures for Financial Derivatives Transactions”.
Please refer to the Attachment 6 (page 51 to page 55) of this Handbook for the Comparison Table for Amendment to the “Procedures for Financial Derivatives Transactions”.

Resolution:

Extemporary Motions

Adjournment

Attachment 1

2018 Business Report

1. Results of Implementation of Business Plan

The consolidated operating revenue of the Company in 2018 was NT$ 612,158 thousand. The consolidated net loss was NT$ 31,922 thousand, and the loss per share was NT$ 0.28. The operating performance is described as follows:

Unit: NT$ thousand

Item	2018	2017	Increase /Decrease	Increase /Decrease %
Operatingrevenue	612,158	665,555	(53,397)	(8.02%)
Grossprofit	172,574	201,085	(28,511)	(14.18%)
Operatingexpenses	175,662	168,303	7,359	4.37%
Operatingincome(loss)	(3,088)	32,782	(35,870)	(109.42%)
Non-operatingincome and expenses	18,173	53,155	(34,982)	(65.81%)
Profit before income tax	15,085	85,937	(70,852)	(82.45%)
Netprofit(loss)	(31,922)	72,814	(104,736)	(143.84%)

2. Execution of the Budget

The Company didn’t release any financial forecast in 2018, so it is not applicable.

3. Financial Revenue and Expenses and Profitability Analysis

	Item	2018	2017
Financial structure	Debt ratio(%)	25.39	23.96
	Ratio of long-term capital to property, plant and equipment(%)	398.14	396.06
Solvency	Current ratio(%)	968.50	823.06
	Quick ratio(%)	865.19	747.55
Profitability	Return on assets(%)	(1.51)	4.29
	Return on equity (%)	(2.27)	5.83
	Netprofit ratio(%)	(4.62)	11.25
	Earnings(loss) per share(NT$)	(0.28)	0.73

5 -
Status of Research and Development

The Company has always believed that only R&D can make the company sustainable and create company value. Therefore, the Company devotes a lot of effort to developing new products or technologies. In 2018, R&D expenses were NT$ 41,215 thousand which accounted for 6.73% of the consolidated operating revenue. In the future R&D project, in addition to making effort in the advancement of core technologies, the Company also will actively grasp the development trends and business opportunities of new products and technologies, and continues to invest resources in growth potential or niche products, to drive the continued growth of company operations.

Chairman: Li, Guang-Hao Manager: Li, Guang-Hao Accounting Supervisor: Zheng, Yi-Shan

Attachment 2

AHOKU ELECTRONIC COMPANY Supervisors’ Review Report

2018 Financial Statements of AHOKU ELECTRONIC COMPANY are prepared by the Board of Directors and audited by Certified Public Accountant Chen, Zhao-Mei and Certified Public Accountant Xie, Jian-Xin of Deloitte & Touche. These Financial Statements, along with 2018 Business Report and the Proposal for 2018 Deficit Compensation, have been reviewed by supervisors ourselves and these reports and statements are indeed compliance with the related laws and regulations. According to Article 219 of the “Company Act”, we supervisors submit this review report for your consideration.

Submit to

2019 Annual General Shareholders’ Meeting, AHOKU ELECTRONIC COMPANY

Supervisors: Chen, Hui-Fen

Han, Dong-Lian Li, Shu-Ying Huang, Zhang-Qing

March 25, 2019

Attachment 3

Independent Auditors’ Report

(This is a summary translation of the Independent Auditors’ Report. Please refer to the Chinese version for full details.)

The Board of Directors and Shareholders

AHOKU ELECTRONIC COMPANY

Opinion

We have audited the accompanying consolidated financial statements of AHOKU ELECTRONIC COMPANY and its subsidiaries (the “Group”), which comprise the consolidated balance sheets as of December 31, 2018 and 2017, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2018 and 2017, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit

evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2018. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, we do not provide a separate opinion on these matters.

Key audit matters for the consolidated financial statements for the year ended December 31, 2018 and stated as follows:

Existence of sales revenue
9 -

AHOKU ELECTRONIC COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2018 and 2017

(In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 3, 4 and 6) Financial assets at fair value through profit or loss (Notes 3, 4 and 7) Financial assets at fair value through other comprehensive income (Notes 3, 4 and 8) Available-for-sale financial assets (Notes 3, 4 and 9) Notes receivable (Notes 3, 5 and 10) Accounts receivable (Notes 3, 5 and 10) Other receivables (Notes 3, 5 and 10) Other receivables - related parties (Notes 3, 5 and 34) Current tax assets (Notes 4 and 27) Inventories (Notes 4, 5 and 11) Prepayments Other current assets (Notes 3, 6 and 12) Total current assets NON-CURRENT ASSETS Property, plant and equipment (Notes 4 and 14) Investment properties (Notes 4 and 15) Goodwill (Notes 4 and 16) Intangible assets (Notes 4 and 17) Deferred tax assets (Notes 4 and 27) Long-term prepayments for lease (Note 18) Other non-current assets (Note 19) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term loans (Note 20) Contract liabilities-current (Notes 3 and 25) Notes payable (Note 21) Accounts payable (Note 21) Other payables (Note 22) Other payables – related parties (Note 34) Current tax liabilities (Notes 4 and 27) Receipts in advance (Note 3) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Deferred tax liabilities (Notes 4 and 27) Net defined benefit liabilities (Notes 4 and 23) Guarantee deposits received (Note 31) Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT Capital stock – common stock Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings (accumulated deficits) Total retained earnings Other equity Equity attributable to shareholders of the parent NON-CONTROLLING INTERESTS Total equity TOTAL		December 31,2018 Amount ％ $ 378,734 21 135,342 7 257,162 14 - - 4,131 - 168,040 9 9,185 1 117 - 1,086 - 144,754 8 13,148 1 368,706 20 1,480,405 81 306,646 17 3,424 - 3,550 - 7,464 1 5,073 - 17,583 1 5,629 - 349,369 19 $ 1,829,774 100 $ 24,564 1 11,559 1 2,390 - 54,680 3 52,489 3 3,694 - 630 - - - 2,850 - 152,856 8 289,528 16 21,948 1 260 - 311,736 17 464,592 25 1,020,000 56 14,762 1 213,150 12 44,982 2 31,357) ( 2) 226,775 12 40,658) ( 2) 1,220,879 67 144,303 8 1,365,182 75 $ 1,829,774 100	December 31,2018 Amount ％ $ 378,734 21 135,342 7 257,162 14 - - 4,131 - 168,040 9 9,185 1 117 - 1,086 - 144,754 8 13,148 1 368,706 20 1,480,405 81 306,646 17 3,424 - 3,550 - 7,464 1 5,073 - 17,583 1 5,629 - 349,369 19 $ 1,829,774 100 $ 24,564 1 11,559 1 2,390 - 54,680 3 52,489 3 3,694 - 630 - - - 2,850 - 152,856 8 289,528 16 21,948 1 260 - 311,736 17 464,592 25 1,020,000 56 14,762 1 213,150 12 44,982 2 31,357) ( 2) 226,775 12 40,658) ( 2) 1,220,879 67 144,303 8 1,365,182 75 $ 1,829,774 100		December 31,2017	December 31,2017	December 31,2017
		Amount $ 378,734 135,342 257,162 - 4,131 168,040 9,185 117 1,086 144,754 13,148 368,706 1,480,405 306,646 3,424 3,550 7,464 5,073 17,583 5,629 349,369 $ 1,829,774 $ 24,564 11,559 2,390 54,680 52,489 3,694 630 - 2,850 152,856 289,528 21,948 260 311,736 464,592 1,020,000 14,762 213,150 44,982 31,357) 226,775 40,658) 1,220,879 144,303 1,365,182 $ 1,829,774			Amount $ 256,700 - - 581,619 2,360 194,288 7,137 119 2,442 121,618 16,749 325,103 1,508,135 321,678 3,510 3,550 9,256 4,681 18,316 3,369 364,360 $ 1,872,495 $ 24,564 - 3,632 69,669 63,996 2,638 2,461 13,393 2,883 183,236 243,275 21,920 260 265,455 448,691 1,020,000 14,762 205,682 689 77,869 284,240 44,982) 1,274,020 149,784 1,423,804 $ 1,872,495		％
	( (		( (	(		(	14 - - 31 - 10 1 - - 7 1 17 81 17 - - 1 - 1 - 19 100 1 - - 4 4 - - 1 - 10 13 1 - 14 24 54 1 11 - 4 15 2) 68 8 76 100

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

10 -

AHOKU ELECTRONIC COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the years ended December 31, 2018 and 2017

(In Thousands of New Taiwan Dollars, except Earnings (Loss) Per Share)

OPERATING REVENUE (Notes 4, 25 and 34) Sales revenue Less: Sales returns Sales allowance Net sales revenue Service revenue Total operating revenue OPERATING COSTS (Notes 11, 26 and 34) GROSS PROFIT OPERATING EXPENSES (Notes 10, 26 and 34) Selling and marketing expenses General and administrative expenses Research and development expenses Expected credit loss Total operating expenses OPERATING INCOME (LOSS) NON-OPERATING INCOME AND EXPENSES Share of profit (loss) of associates accounted for using equity method (Note 4) Interest income (Note 34) Rental income Dividend income Other Income Valuation loss on financial assets at fair value through profit or loss Net gain on disposal of financial assets (Note 26) Net gain on foreign currency exchange (Note 26) Other losses		2018

(Continued)

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AHOKU ELECTRONIC COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the years ended December 31, 2018 and 2017 (In Thousands of New Taiwan Dollars, except Earnings (Loss) Per Share)

Interest Expenses Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 27) NET PROFIT (LOSS) (Note 26) OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Unrealized loss on investments in equity instruments at fair value through other comprehensive income Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations Unrealized income on available-for-sale financial assets Unrealized loss on investments in debt instruments at fair value through other comprehensive income Share of the other comprehensive loss of associates accounted for using equity method Total other comprehensive income (loss) TOTAL COMPREHENSIVE INCOME (LOSS)		2018

(Continued)

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AHOKU ELECTRONIC COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the years ended December 31, 2018 and 2017 (In Thousands of New Taiwan Dollars, except Earnings (Loss) Per Share)

NET PROFIT (LOSS) ATTRIBUTABLE TO: Owners of the parent company Non-controlling interests TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO: Owners of the parent company Non-controlling interests EARNINGS (LOSS) PER SHARE (Note 28) Basic Diluted	2018	％ ( 5 ) - ( 5) ( 4 ) ( 1) ( 5)		2017
	Amount ( $ 28,293 ) ( 3,629) ($ 31,922) ( $ 27,022 ) ( 5,151) ($ 32,173) ($ 0.28)			Amount $ 74,685 1,871) $ 72,814 $ 29,741 2,103) $ 27,638 $ 0.73 $ 0.73		％
			( (			11 - 11 4 - 4

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

13 -

AHOKU ELECTRONIC COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the years ended December 31, 2018 and 2017

(In Thousands of New Taiwan Dollars, except Dividends Per Share)

		Equityattributable to shareholders of theparent	Equityattributable to shareholders of theparent	Equityattributable to shareholders of theparent	Equityattributable to shareholders of theparent	Equityattributable to shareholders of theparent	Equityattributable to shareholders of theparent		Non-controlling interests (adjusted) (Notes 13 and 29) $ - - - - - ( 1,871 ) ( 232) ( 2,103) 151,887 149,784 ( 330) 149,454 - - - ( 3,629 ) ( 1,522) ( 5,151) $ 144,303		Total equity
Capital - common stock (Note 24) $ 1,020,000 - - - - - - - - 1,020,000 - 1,020,000 - - - - - - $ 1,020,000	Capital surplus (Note 24) $ 14,767 - - - ( 5 ) - - - - 14,762 - 14,762 - - - - - - $ 14,762	Retained Earnings(Note		24) Unappropriated earnings (accumulated deficits) (adjusted) $ 61,551 ( 6,027 ) ( 689 ) ( 51,000 ) - 74,685 ( 651) 74,034 - 77,869 ( 3,309) 74,560 ( 7,468 ) ( 44,293 ) ( 25,500 ) ( 28,293 ) ( 363) ( 28,656) ($ 31,357)	Other equity (Note 24) Exchange differences on translating foreign operations Unrealized gains from financial assets measured at fair value through other comprehensive income Unrealized Gain (Loss) on Available-for-sal e Financial Assets $ 50,909 $ - ($ 51,598) - - - - - - - - - - - - - - - ( 88,331) - 44,038 ( 88,331) - 44,038 - - - ( 37,422 ) - ( 7,560 ) ( 4) ( 4,866) 7,560 ( 37,426) ( 4,866) - - - - - - - - - - - - - 24,923 ( 23,289) - 24,923 ( 23,289) - ($ 12,503) ($ 28,155) $ -
					Exchange differences on translating foreign operations $ 50,909 - - - - - ( 88,331) ( 88,331) - ( 37,422 ) ( 4) ( 37,426) - - - - 24,923 24,923 ($ 12,503)	Unrealized gains from financial assets measured at fair value through other comprehensive income $ - - - - - - - - - - ( 4,866) ( 4,866) - - - - ( 23,289) ( 23,289) ($ 28,155)
		Legal reserve $ 199,655 6,027 - - - - - - - 205,682 - 205,682 7,468 - - - - - $ 213,150	Special reserve $ - - 689 - - - - - - 689 - 689 - 44,293 - - - - $ 44,982
	(			( ( ( ( ( ( ( ( ( ( ( (	( ( ( ( ( (	( ( ( ( (	( (	( ( ( ( ( ( (	( ( ( ( ( ( (	( ( ( ( ( ( ( (	$ 1,295,284 - - 51,000 ) 5 ) 72,814 45,176) 27,638 151,887 1,423,804 949) 1,422,855 - - 25,500 ) 31,922 ) 251) 32,173) $ 1,365,182

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

14 -

AHOKU ELECTRONIC COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31, 2018 and 2017 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before income tax Adjustments to reconcile profit (loss) Depreciation expenses Amortization expenses Provision for bad debt expenses Expected credit loss recognized on trade receivables Net loss on fair value changes of financial assets at fair value through profit or loss Interest expenses Interest income Dividend income Share of profit of associates accounted for using equity method Gain on disposal of financial assets Unrealized loss on foreign currency exchange Changes in operating assets and liabilities Notes receivable Accounts receivable Accounts receivable – related parties Other receivables Other receivables – related parties Inventories Prepayments Other current assets Contract liabilities Notes payable Accounts payable Accounts payable – related parties Other payables Other payables – related parties Other current liabilities Net defined benefit liabilities Cash generated from operations Income tax paid Net cash generated from operating activities	2018 $ 15,085 27,072 2,588 - 9,059 15,419 345 ( 24,443 ) ( 1,240 ) - ( 2,458 ) 167 ( 1,830 ) 14,947 - ( 118 ) 2 ( 21,984 ) 3,601 ( 1,047 ) ( 1,834 ) ( 1,242 ) ( 15,327 ) - ( 12,626 ) 987 ( 33 ) ( 335) 4,755 ( 1,609) 3,146	2017
		$ 85,937 24,689 2,152 1,935 - - 256 ( 19,991 ) ( 950 ) 689 ( 26,001 ) 5,600 992 ( 9,694 ) 10,098 ( 230 ) 24 24,207 9,332 ( 367 ) - ( 1,932 ) ( 3,110 ) ( 40 ) 2,167 1,311 784 ( 3,133) 104,725 ( 4,897) 99,828

(Continued)

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AHOKU ELECTRONIC COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31, 2018 and 2017 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of financial assets measured at fair value through other comprehensive income Disposals of financial assets measured at fair value through other comprehensive income Acquisition of financial assets at fair value through profit or loss Disposal of financial assets at fair value through profit or loss Acquisition of available-for-sale financial assets Disposal of available-for-sale financial assets Net cash inflow on acquisition of subsidiaries (Note 29) Acquisition of property, plant and equipment (Note 30) Acquisition of intangible assets Increase in other financial assets Increase in other non-current assets Interest received Other dividends received Net cash generated from (Used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term loans Cash dividends Interest paid Net cash used in Financing Activities EFFECTS OF EXCHANGE RATE CHANGES NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	2018 ( $ 210,171 ) 362,083 ( 62,650 ) 77,600 - - - ( 16,335 ) ( 269 ) ( 31,588 ) - 22,467 1,240 142,377 - ( 25,500 ) ( 344) ( 25,844) 2,355 122,034 256,700 $ 378,734	2017
		$ - - - - ( 458,412 ) 424,164 9,762 ( 17,178 ) ( 1,305 ) ( 135,187 ) ( 8 ) 20,515 950 (156,699) 10,000 ( 51,000 ) ( 256) ( 41,256) ( 27,901) ( 126,028 ) 382,728 $ 256,700

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

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Independent Auditors’ Report

(Parent Company Only Financial Statements)

(This is a summary translation of the Independent Auditors’ Report. Please refer to the Chinese version for full details.)

The Board of Directors and Shareholders AHOKU ELECTRONIC COMPANY

Opinion

We have audited the accompanying parent company only financial statements of AHOKU ELECTRONIC COMPANY (the “Company”), which comprise the parent company only balance sheets as of December 31, 2018 and 2017, and the parent company only statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the parent company only financial position of the Company as of December 31, 2018 and 2017, and its parent company only financial performance and its parent company only cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of Parent Company Only Financial Statements section of our report. We are independent of the Company in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

17 -

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the parent company only financial statements for the year ended December 31, 2018. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters for the Company’s parent company only financial statements for the year ended December 31, 2018 are stated as follows:

Existence of sales revenue
18 -

AHOKU ELECTRONIC COMPANY

PARENT COMPANY ONLY BALANCE SHEETS

December 31, 2018 and 2017 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash (Notes 3, 4 and 6) Financial assets at fair value through profit or loss (Notes 3, 4 and 7) Financial assets at fair value through other comprehensive income (Note3, 4 and 8) Available-for-sale financial assets (Notes 3, 4 and 9) Notes receivable (Notes 3, 5 and 10) Accounts receivable (Notes 3, 5 and 10) Accounts receivable - related parties (Notes 3, 5 and 28) Other receivables (Notes 3, 5 and 10) Other receivables - related parties (Notes 3, 5 and 28) Current tax assets (Notes 4 and 23) Inventories (Notes 4 and 11) Prepayments Other current assets (Notes 3, 6 and 12) Total current assets NON-CURRENT ASSETS Investments accounted for using equity method (Notes 3, 4 and 13) Property, plant and equipment (Notes 4 and 14) Investment properties (Notes 4 and 15) Intangible assets (Notes 4 and 16) Deferred tax assets (Notes 4 and 23) Other non-current assets Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Contract liabilities-current (Notes 3 and 21) Notes payable (Note 17) Accounts payable (Note 17) Accounts payable – related parties (Note 28) Other payables (Note 18) Other payables – related parties (Note 28) Current tax liabilities (Notes 4 and 23) Receipts in advance (Note 3) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Deferred tax liabilities (Notes 4 and 23) Net defined benefit liabilities (Notes 4 and 19) Guarantee deposits received (Note 25) Total non-current liabilities Total liabilities EQUITY Capital stock – common stock Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings (accumulated deficits) Total retained earnings Other equity Total equity TOTAL		December 31,	2018 ％ 11 2 - - - 3 - - - - - - - 16 79 5 - - - - 84 100 1 - - 19 1 - - - - 21 14 1 - 15 36 53 1 11 2 ( 1) 12 ( 2) 64 100		December 31,	2017	2017
		Amount $ 198,681 36,642 1,349 - 275 63,402 879 422 2,904 1,086 570 2,875 490 309,575 1,501,968 92,919 3,424 7 4,080 10 1,602,408 $ 1,911,983 $ 10,974 1,029 779 357,447 23,183 2,506 - - 2,574 398,492 271,671 20,686 255 292,612 691,104 1,020,000 14,762 213,150 44,982 31,357) 226,775 40,658) 1,220,879 $ 1,911,983			Amount $ 15,310 - - 48,473 268 75,937 406 350 2,057 2,442 807 2,798 484 149,332 1,493,836 93,931 3,510 54 3,007 10 1,594,348 $ 1,743,680 $ - 1,595 938 171,919 29,694 1,296 2,443 10,930 2,496 221,311 227,410 20,684 255 248,349 469,660 1,020,000 14,762 205,682 689 77,869 284,240 44,982) 1,274,020 $ 1,743,680		％
	( (		( (	(		(	1 - - 3 - 5 - - - - - - - 9 86 5 - - - - 91 100 - - - 10 2 - - 1 - 13 13 1 - 14 27 59 1 12 - 4 16 3) 73 100

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

19 -

AHOKU ELECTRONIC COMPANY

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

For the years ended December 31, 2018 and 2017

(In Thousands of New Taiwan Dollars, except Earnings (Loss) Per Share)

OPERATING REVENUE (Notes 4, 21 and 28) Sales revenue Less: Sales returns Sales allowance Net sales revenue Service revenue Total operating revenue OPERATING COSTS (Notes 11 and 28) GROSS PROFIT OPERATING EXPENSES (Notes 22 and 28) Selling and marketing expenses General and administrative expenses Research and development expenses Expected credit loss Total operating expenses OPERATING INCOME NON-OPERATING INCOME AND EXPENSES Share of profit (loss) of subsidiaries and associates accounted for using equity method (Note 4) Interest income (Note 28) Rental income Dividend income Other income (Note 28) Valuation profit on financial assets at fair value through profit or loss		2018	％ 100 - - 100 - 100 79 21 8 7 4 - 19 2 2 - - - - 1		2017
		Amount $ 329,750 2 1,187 328,561 694 329,255 259,505 69,750 28,125 23,119 12,812 1,049 65,105 4,645 7,041 151 974 1,240 1,066 3,034			Amount $ 380,787 885 237 379,665 869 380,534 296,590 83,944 32,168 27,952 14,004 - 74,124 9,820 32,161 582 971 950 1,183 -	％
						100 - - 100 - 100 78 22 8 7 4 - 19 3 8 - - - - -

(Continued)

20 -

AHOKU ELECTRONIC COMPANY

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

For the years ended December 31, 2018 and 2017

(In Thousands of New Taiwan Dollars, except Earnings (Loss) Per Share)

Net gain on disposal of financial assets (Notes 13 and 22) Net gain (loss) on foreign currency exchange (Note 22) Other losses Interest Expenses Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 23) NET PROFIT (LOSS) (Note 22) OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Unrealized loss on investments in equity instruments at fair value through other comprehensive income Share of the other comprehensive loss of subsidiaries and associates accounted for using equity method Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations	2018	％ 1 ( 1 ) - - 3 5 13 ( 8) - - - 8	2017
	Amount $ 1,467 ( 3,240 ) ( 659 ) ( 3) 11,071 15,716 44,009 ( 28,293) ( 284 ) ( 33 ) ( 79 ) 26,369		Amount $ 24,789 14,305 ( 608 ) - 74,333 84,153 9,468 74,685 ( 621 ) - ( 30 ) ( 90,460 )	％
				7 4 - - 19 22 2 20 - - - ( 24 )

(Continued)

21 -

AHOKU ELECTRONIC COMPANY

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

For the years ended December 31, 2018 and 2017

(In Thousands of New Taiwan Dollars, except Earnings (Loss) Per Share)

Unrealized income on available-for-sale financial assets Share of the other comprehensive loss of subsidiaries and associates accounted for using equity method Total other comprehensive income (loss) TOTAL COMPREHENSIVE INCOME (LOSS) EARNINGS (LOSS) PER SHARE (Note 24) Basic Diluted		2018	％ - ( 8) - ( 8)		2017
		Amount $ - 24,702) 1,271 $ 27,022) $ 0.28)			Amount $ 11,506 34,661 44,944) $ 29,741 $ 0.73 $ 0.73	％
	( ( (			(		3 9 (12) 8

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

22 -

AHOKU ELECTRONIC COMPANY

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

For the years ended December 31, 2018 and 2017 (In Thousands of New Taiwan Dollars, except Dividends Per Share)

Capital Surplus (Note 20) $ 14,767 - - - ( 5 ) - - - 14,762 - 14,762 - - - - - - $ 14,762	Retained Earnings (Note 20) Legal Reserve Special Reserve Unappropriated Earnings (accumulated deficits) (adjusted) $ 199,655 $ - $ 61,551 6,027 - ( 6,027 ) - 689 ( 689 ) - - ( 51,000 ) - - - - - 74,685 - - ( 651) - - 74,034 205,682 689 77,869 - - ( 3,309) 205,682 689 74,560 7,468 - ( 7,468 ) - 44,293 ( 44,293 ) - - ( 25,500 ) - - ( 28,293 ) - - ( 363) - - ( 28,656) $ 213,150 $ 44,982 ($ 31,357)	Retained Earnings (Note 20) Legal Reserve Special Reserve Unappropriated Earnings (accumulated deficits) (adjusted) $ 199,655 $ - $ 61,551 6,027 - ( 6,027 ) - 689 ( 689 ) - - ( 51,000 ) - - - - - 74,685 - - ( 651) - - 74,034 205,682 689 77,869 - - ( 3,309) 205,682 689 74,560 7,468 - ( 7,468 ) - 44,293 ( 44,293 ) - - ( 25,500 ) - - ( 28,293 ) - - ( 363) - - ( 28,656) $ 213,150 $ 44,982 ($ 31,357)	Retained Earnings (Note 20) Legal Reserve Special Reserve Unappropriated Earnings (accumulated deficits) (adjusted) $ 199,655 $ - $ 61,551 6,027 - ( 6,027 ) - 689 ( 689 ) - - ( 51,000 ) - - - - - 74,685 - - ( 651) - - 74,034 205,682 689 77,869 - - ( 3,309) 205,682 689 74,560 7,468 - ( 7,468 ) - 44,293 ( 44,293 ) - - ( 25,500 ) - - ( 28,293 ) - - ( 363) - - ( 28,656) $ 213,150 $ 44,982 ($ 31,357)	Other Equity (Note 20)	Other Equity (Note 20)	Unrealized Gain (Loss) on Available-for-sale Financial Assets ( $ 51,598 ) - - - - - 44,038 44,038 ( 7,560 ) 7,560 - - - - - - - $ -		Total Equity
				Exchange differences on translating foreign operations $ 50,909 - - - - - ( 88,331) ( 88,331) ( 37,422 ) ( 4) ( 37,426) - - - - 24,923 24,923 ($ 12,503)	Unrealized gains from financial assets measured at fair value through other comprehensive income $ - - - - - - - - - ( 4,866) ( 4,866) - - - - ( 23,289) ( 23,289) ($ 28,155)
	Legal Reserve $ 199,655 6,027 - - - - - - 205,682 - 205,682 7,468 - - - - - $ 213,150	Special Reserve $ - - 689 - - - - - 689 - 689 - 44,293 - - - - $ 44,982
(			( ( ( ( ( ( ( ( ( ( ( (	( ( ( ( ( (	( ( ( ( (	( (	( ( ( ( ( ( (	$ 1,295,284 - - 51,000 ) 5 ) 74,685 44,944) 29,741 1,274,020 619) 1,273,401 - - 25,500 ) 28,293 ) 1,271 27,022) $ 1,220,879

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

23 -

AHOKU ELECTRONIC COMPANY

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

For the years ended December 31, 2018 and 2017 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before income tax Adjustments to reconcile profit (loss) Depreciation expenses Amortization expenses Expected credit loss recognized on trade receivables Provision for bad debt expenses Net profit on fair value changes of financial assets at fair value through profit or loss Interest Income Dividend Income Gain on disposal of financial assets Share of profit of subsidiaries and associates accounted for using equity method Unrealized (gain) / loss on foreign currency exchange Changes in operating assets and liabilities Notes receivable Accounts receivable Accounts receivable – related parties Other receivables Other receivables – related parties Inventories Prepayments Contract liabilities Notes payable Accounts payable Accounts payable – related parties Other payables Other payables – related parties Other current liabilities Net defined benefit liabilities Cash generated from (used in) operations Income tax paid Net cash generated from (used in) operating activities	2018 $ 15,716 1,169 47 1,049 - ( 3,034 ) ( 151 ) ( 1,240 ) ( 1,467 ) ( 7,041 ) 7,198 ( 7 ) 11,103 ( 476 ) ( 80 ) ( 852 ) 237 ( 31 ) 44 ( 566 ) ( 160 ) 178,400 ( 6,514 ) 1,210 244 ( 282) 194,516 ( 1,908) 192,608	2017
		$ 84,153 1,190 87 - 1,849 - ( 582 ) ( 950 ) ( 24,789 ) ( 32,161 ) ( 1,589 ) 22 ( 9,724 ) 10,678 26 955 ( 714 ) 21 - ( 160 ) 28 ( 157,258 ) 2,693 991 ( 1,486 ) ( 3,019) ( 129,739 ) ( 344) ( 130,083)

(Continued)

24 -

AHOKU ELECTRONIC COMPANY

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

For the years ended December 31, 2018 and 2017 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of financial assets at fair value through profit or loss Disposal of financial assets at fair value through profit or loss Acquisition of available-for-sale financial assets Disposal of available-for-sale financial assets Acquisition of long-term stock right investment evaluated with equity method Acquisition of property, plant and equipment Decrease in other receivables - related parties Decrease (increase) in other financial assets Interest received Other dividends received Net cash generated from investing activities NET CASH USED IN FINANCING ACTIVITIES Cash dividends NET INCREASE/(DECREASE) IN CASH CASH AT THE BEGINNING OF THE YEAR CASH AT THE END OF THE YEAR	2018 ( $ 62,650 ) 77,600 - - - ( 71 ) - ( 6 ) 150 1,240 16,263 ( 25,500) 183,371 15,310 $ 198,681	2017
		$ - - ( 155,404 ) 231,995 ( 33,911 ) ( 844 ) 40,000 25,942 636 950 109,364 ( 51,000) ( 71,719 ) 87,029 $ 15,310

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

25 -

Attachment 4

AHOKU ELECTRONIC COMPANY

The Statement of 2018 Deficit Compensation

	Unit: NT$
Item	Amount
Unappropriated retained earnings of previous years Less: effect of adoption of IFRS Less: adjustment arising from investments accounted for using equity method Less: actuarial losses on defined benefit plans Adjustment of unappropriated retained earnings Less: net loss in 2018 Plus: reversal of special reserve Deficit yet to be compensated Item for compensating deficit: Legal reserve Unappropriated retained earnings at the end of theyear	607,592 (2,981,621) (327,555) (363,119)
	(3,064,703) (28,292,787) 4,323,712
	(27,033,778) 27,033,778
	0

Chairman: Li, Guang-Hao Manager: Li, Guang-Hao Accounting Supervisor: Zheng, Yi-Shan

26 -

Attachment 5

AHOKU ELECTRONIC COMPANY

Comparison Table for Amendment to the “Procedures for Acquisition or Disposal of Assets”

Article No.	Original Article		Amended Article	Explanatory Notes
Article 2	Scope of Assets 1. (omitted) 2. Real property (including land, houses and buildings, investment property,~~rights to use land and~~ construction enterprise inventory) and equipment. 3~4. (omitted) ~~5. ~~Claims of financial institutions (including receivables, bills purchased and discounted, loans, and overdue receivables). ~~6. ~~Derivatives. ~~7. ~~Assets acquired or disposed of in connection with mergers, spin-offs, acquisitions, or transfer of shares in accordance with the law. ~~8. ~~Other major assets.		Scope of Assets 1. (omitted) 2. Real property (including land, houses and buildings, investment property, and construction enterprise inventory) and equipment. 3~4. (omitted) 5. Right-of-use assets. 6. Claims of financial institutions (including receivables, bills purchased and discounted, loans, and overdue receivables). 7. Derivatives. 8. Assets acquired or disposed of in connection with mergers, spin-offs, acquisitions, or transfer of shares in accordance with the law. 9. Other major assets.	To conform to the amendment of laws and regulations.
Article 3	Definitions 1. Derivatives: refers to forward contracts, options contracts, futures contracts, leverage contracts, swap contracts, ~~and compound contracts~~ ~~combining the above products~~, whose value is derived from~~assets,~~ interest rates, foreign exchange rates, index or other interests. The term “forward contracts” does not include insurance contracts, performance contracts, after-sales service contracts, long-term leasing contracts, or long-term purchase (sale)~~agreements~~.		Definitions 1. Derivatives: refers to forward contracts, options contracts, futures contracts, leverage contracts,or swap contracts, whose value is derived froma specified interest rate, financial instrument price, commodity price, foreign exchange rate, indexof prices or rates, credit rating or credit index, or other variable; or hybrid contracts combining the above contracts; or hybrid contracts or structured products containing embedded derivatives.The term "forward contracts" does not include insurance contracts, performance contracts, after-sales service contracts, long-term leasing contracts,or long-termpurchase	To conform to the amendment of laws and regulations.

27 -

Article No.	Original Article			Amended Article	Explanatory Notes
	2. Assets acquired or disposed through mergers, spin-offs, acquisitions, or transfer of shares in accordance with law: refers to assets acquired or disposed through mergers, spin-offs, or acquisitions conducted under the Business Mergers and Acquisitions Act, Financial Holding Company Act, Financial Institution Merger Act and other acts, or to transfer of shares from another company through the issuance of new shares of its own as the consideration (hereinafter “transfer of shares”) under Article 15~~6~~~~, paragraph 8~~of the Company Act. 3~6. (omitted)		(sales)contracts. 2. Assets acquired or disposed through mergers, spin-offs, acquisitions, or transfer of shares in accordance with law: refers to assets acquired or disposed through mergers, demergers, or acquisitions conducted under the Business Mergers and Acquisitions Act, Financial Holding Company Act, Financial Institution Merger Act and other acts, or to transfer of shares from another company through issuance of new shares of its own as the consideration (hereinafter "transfer of shares") under Article 156-3 of the Company Act. 3~6. (omitted) 7. Investment professional: refers to financial holding companies, banks, insurance companies, bill finance companies, trust enterprises, securities firms operating proprietary trading or underwriting business, futures commission merchants operating proprietary trading business, securities investment trust enterprises, securities investment consulting enterprises, and fund management companies, that are lawfully incorporated and are regulated by the competent financial authorities of the jurisdiction where they are located. 8. Securities exchange:"Domestic securities exchange" refers to the Taiwan Stock Exchange Corporation;"foreign securities exchange" refers to any organized securities exchange market that is regulated by the competent
			8.

28 -

Article No.	Original Article		Amended Article	Explanatory Notes
		9.	securities authorities of the jurisdiction where it is located. Over-the-counter venue ("OTC venue", "OTC"):"Domestic OTC venue" refers to a venue for OTC trading provided by a securities firm in accordance with the Regulations Governing Securities Trading on the Taipei Exchange; "foreign OTC venue" refers to a venue at a financial institution that is regulated by the foreign competent authority and that is permitted to conduct securities business.

Article 4	Amount of the investment in real property for non-business use~~and~~ the investment in securities The amount of the aforementioned assets acquired by the Company and each of its subsidiaries are as follows: 1. The acquisition amount of real estate for non-business use shall not exceed 30% of the Company’s net worth. 2~3.(omitted)	Amount of the investment in real propertyand right-of-use assets thereoffor non-business useorthe investment in securities The amount of the aforementioned assets acquired by the Company and each of its subsidiaries are as follows: 1. The acquisition amount of real estateand right-of-use assets thereof for non-business use shall not exceed 30% of the Company’s net worth. 2~3.(omitted)		To conform to the amendment of laws and regulations.
Article 5	Professional appraisers and their appraisal officers, certified public accountants, attorneys and securities underwriters, who provide the Company 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.~~	Professional appraisers and their appraisal officers, certified public accounts, attorneys, and securities underwriters, who provide public companies with appraisal reports, certified public accountant’s opinions, attorney's opinions, or underwriter's opinions, shallmeet the following requirements: 1. May not have previously received a final and unappealable sentence to imprisonment for 1 year or longer for a violation of the Act, the Company Act, the Banking Act of The Republic of China, the		To conform to the amendment of laws and regulations.
		1.

29 -

Article No.	Original Article			Amended Article	Explanatory Notes
			2.
			3.
			1.
			2.
			3.

30 -

Article No.	Original Article		Amended Article	Explanatory Notes
		4.	comprehensiveness, accuracy, and reasonableness of the sources of data used, the parameters, and the information, as the basis for issuance of the appraisal report or the opinion. They shall issue a statement attesting to the professional competence and independence of the personnel who prepared the report or opinion, and that they have evaluated and found that the information used is reasonable and accurate, and that they have complied with applicable laws and regulations.

Article 7	Procedures for Acquisition or Disposal of Securities 1. (omitted) 2. Decision Procedures for Transaction Terms and Authorized Amount (1)~(2) (omitted) (3) Regarding the Company’s acquisition or disposal of assets which needs to be approved by the board of directors in accordance with this Procedure or other laws, if there is any objection from the directors with a record or written statement, the Company shall send the objection related information to the supervisors. ~~In the case that~~ the Company has established the position of independent directors in accordance with the “Securities and Exchange Act”, the opinion of each independent director shall be fully taken into consideration. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes	Procedures for Acquisition or Disposal of Securities 1. (omitted) 2. Decision Procedures for Transaction Terms and Authorized Amount (1)~(2) (omitted) (3) Regarding the Company’s acquisition or disposal of assets which needs to be approved by the board of directors in accordance with this Procedure or other laws, if there is any objection from the directors with a record or written statement, the Company shall send the objection related information to the supervisors. The Company has established the position of independent directors in accordance with the “Securities and Exchange Act”, the opinion of each independent director shall be fully taken into consideration. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes		To amend the wording.

31 -

Article No.	Original Article	Amended Article	Explanatory Notes
	of the board of directors. 3~4.(omitted)	of the board of directors. 3~4.(omitted)
Article 8	Procedures for Acquisition or Disposal of Real Estate~~or~~ Equipment 1. Assessment and Operating Procedures The Company’s acquisition or disposal of real estate~~or~~equipment shall abide by the revolving procedures of~~fixed assets~~in the Company’s internal control system. 2. Decision Procedures for Transaction Terms and Authorized Amount (1) In the event of acquisition or disposal of real estate, the terms of transaction and the transaction price shall be determined by referring to the announced current value, appraised value and actual transaction price of neighboring real estate, and an analysis report shall be submitted to the Company’s chairman. If the transaction price is NT$ 100 million or less, the transaction shall be approved by the chairman and report to the board of directors for recognition on an after-the-event basis; if the transaction price exceeds NT$ 100 million, the transaction may not be conducted until the board of directors approves the transaction. (2) The acquisition or disposal of equipment shall be conducted by	Procedures for Acquisition or Disposal of Real Estate~~or,~~ Equipment, or right-of-use assets thereof 1. Assessment and Operating Procedures The Company’s acquisition or disposal of real estate,equipmentor right-of-use assets thereof shall abide by the revolving procedures of real estate, factories and facilities in the Company’s internal control system. 2. Decision Procedures for Transaction Terms and Authorized Amount (1) In the event of acquisition or disposal of real estateor right-of-use assets thereof, the terms of transaction and the transaction price shall be determined by referring to the announced current value, appraised value and actual transaction price of neighboring real estateor right-of-use assets thereof,and an analysis report shall be submitted to the Company’s chairman. If the transaction price is NT$ 100 million or less, the transaction shall be approved by the chairman and report to the board of directors for recognition on an after-the-event basis; if the transaction price exceeds NT$ 100 million, the transaction may not be conducted until the board of directors approves the transaction. (2) The acquisition or disposal of equipment or right-of-use	To conform to the amendment of laws and regulations and amend the wording.
		1. 2.

32 -

Article Original Article No. means of price inquiry, price comparison, price negotiation or bidding. In the event where the amount is NT$ 50 million or less, the transaction shall be approved in accordance with the Company’s levels of authorization; in the event where the transaction amount exceeds NT$ 50 million, the transaction may not be conducted until the board of directors approves the transaction.

Amended Article

assets thereof shall be

comparison, price negotiation or conducted by means of price bidding. In the event where the inquiry, price comparison, price amount is NT$ 50 million or negotiation or bidding. In the less, the transaction shall be event where the amount is NT$ approved in accordance with the 50 million or less, the Company’s levels of transaction shall be approved in authorization; in the event where accordance with the Company’s the transaction amount exceeds levels of authorization; in the NT$ 50 million, the transaction event where the transaction may not be conducted until the amount exceeds NT$ 50 million, board of directors approves the the transaction may not be transaction. conducted until the board of directors approves the transaction. (3) Regarding the Company’s (3) Regarding the Company’s acquisition or disposal of assets acquisition or disposal of assets which needs to be approved by which needs to be approved by the board of directors in the board of directors in accordance with this Procedure accordance with this Procedure or other laws, if there is any or other laws, if there is any objection from the directors with objection from the directors with a record or written statement, a record or written statement, the Company shall send the the Company shall send the objection related information to objection related information to the supervisors. ~~In the case that~~ the supervisors. The Company the Company has established the has established the position of position of independent directors independent directors in in accordance with the accordance with the “Securities “Securities and Exchange Act”, and Exchange Act”, the opinion the opinion of each independent of each independent director director shall be fully taken into shall be fully taken into consideration. If an independent consideration. If an independent director objects to or expresses director objects to or expresses reservations about any matter, it reservations about any matter, it shall be recorded in the minutes shall be recorded in the minutes of the board of directors. of the board of directors.

3. Implementation unit

Implementation unit

The Company’s acquisition or disposal of real estate ~~or~~ equipment shall be approved in accordance with the levels of authorization specified in the preceding paragraph

The Company’s acquisition or disposal of real estate, equipment or right-of-use assets thereof shall be approved in accordance with the levels of authorization specified in

Explanatory Notes

33 -

Explanatory Notes

Article

Original Article

Amended Article

No.

Article No.	Original Article	Amended Article	Amended Article	Explanatory Notes
	and shall be implemented by the department (or management department) which intends to use the real estate or the equipment. 4. Appraisal report on real estate~~or~~ equipment In the event of the Company’s acquisition or disposal of real estate ~~or~~equipment where the transaction amount reaches 20% of the Company’s paid-in capital or NT$ 300 million or more, except for transactions with governments, engaging others to build on their land, engaging others to build on rental land, or acquiring or disposing of~~machinery and~~ equipment for business use, the Company shall obtain an appraisal report from a professional appraiser prior to the date of occurrence and shall comply with the following provisions: (1) In the event where, due to special circumstances, the transaction price shall refer to a limited price, a specified price or a special price that is necessary in serving as reference, such a transaction shall be submitted for the board of directors’ prior approval, and the same procedure shall apply if there are~~future~~changes to the terms and conditions of the transaction. (2)~(4) (omitted)	4.	the preceding paragraph and shall be implemented by the department (or management department) which intends to use the real estate or the equipment. Appraisal report on real estate`，` equipment or right-of-use assets thereof In the event of the Company’s acquisition or disposal of real estate, equipmentor right-of-use assets thereof where the transaction amount reaches 20% of the Company’s paid-in capital or NT$ 300 million or more, except for transactions withdomestic governments, engaging others to build on their land, engaging others to build on rental land, or acquiring or disposing of equipmentor right-of-use assets thereoffor business use, the Company shall obtain an appraisal report from a professional appraiser prior to the date of occurrence and shall comply with the following provisions: (1) In the event where, due to special circumstances, the transaction price shall refer to a limited price, a specified price or a special price that is necessary in serving as reference, such a transaction shall be submitted for the board of directors’ prior approval, and the same procedure shall apply if there aresubsequent changes to the terms and conditions of the transaction. (2)~(4) (omitted)
Article 9	Procedures for Acquisition or Disposal of Assets with the Related Party	Procedures for Acquisition or Disposal of Assets with the Related Party		To conform to the amendment

(2)~(4) (omitted) Procedures for Acquisition or To conform Disposal of Assets with the Related to the Party amendment

34 -

Article Explanatory Original Article Amended Article No. Notes 1. In the event where the Company 1. In the event where the Company of laws and engages in any acquisition or engages in any acquisition or regulations. disposal of assets from or to a disposal of assets or right-of-use related party, in addition to ensuring assets thereof from or to a related that necessary resolutions are party, in addition to ensuring that adopted and that the reasonableness necessary resolutions are adopted of the term of the transaction has and that the reasonableness of the been evaluated in accordance with term of the transaction has been Article 7, 8,10 and this Article, if evaluated in accordance with Article the transaction amount reaches 10% 7, 8,10 and this Article, if the of the Company’s total assets, the transaction amount reaches 10% of Company shall also obtain an the Company’s total assets, the appraisal report from a professional Company shall also obtain an appraiser or a certified public appraisal report from a professional accountants opinion in accordance appraiser or a certified public with the aforementioned accountants opinion in accordance regulations. with the aforementioned regulations. The aforementioned transaction The aforementioned transaction amount shall be calculated in amount shall be calculated in accordance with Article 10-1 of this accordance with Article 10-1 of this Procedure. Procedure. When determining whether a When determining whether a trading counterparty is a related trading counterparty is a related party, in addition to the legal party, in addition to the legal formalities, the substance of the formalities, the substance of the relationship shall also be relationship shall also be considered. considered. 2. Assessment and Operating 2. Assessment and Operating Procedures Procedures In the event where the Company In the event where the Company engages in any acquisition or engages in any acquisition or disposal of real estate from or to a disposal of real estate or related party, or engages in any right-of-use assets thereof from or acquisition or disposal of assets to a related party, or engages in any other than real property from or to a acquisition or disposal of assets related party, and the transaction other than real property or amount reaches 20% or more of the right-of-use assets thereof from or Company’s paid-in capital, 10% or to a related party, and the more of the Company’s total assets, transaction amount reaches 20% or or NT$ 300 million or more, except more of the Company’s paid-in for the trading of government bonds capital, 10% or more of the or bonds under repurchase and Company’s total assets, or NT$ 300

35 -

Article

No.

Original Article

resale agreements, or subscription or redemption of money market funds issued by domestic securities investment trust enterprises, the Company may not proceed to enter into a transaction agreement or make a payment until the following matters have been approved by the board of directors and supervisors:

(1)~(2) (omitted)

(3) In the event where the Company acquires real estate from a related party, information concerning the evaluation of the reasonableness of the preliminary terms of the transaction in accordance with from subparagraphs (1) to (4), paragraph 3 of this Article.

(4)~(7) (omitted)

The aforementioned transaction amount shall be calculated in accordance with subparagraph (5), paragraph 1 of Article 14. The term “within one year” as used herein means the year preceding the date of occurrence of this transaction. Items that have been approved by the board of directors and supervisors will not be counted towards the calculation.

With respect to ~~the acquisition or disposal of equipment for business use~~ between the Company and its parent company or subsidiary, the board of directors may pursuant to subparagraph (2), paragraph 2 of Article 8 authorize the chairman to

Amended Article

million or more, except for the trading of domestic government bonds or bonds under repurchase and resale agreements, or subscription or redemption of money market funds issued by domestic securities investment trust enterprises, the Company may not proceed to enter into a transaction agreement or make a payment until the following matters have been approved by the board of directors and supervisors:

(1)~(2) (omitted)

(3) In the event where the Company acquires real estate or right-of-use assets thereof from a related party, information concerning the evaluation of the reasonableness of the preliminary terms of the transaction in accordance with from subparagraphs (1) to (4), paragraph 3 of this Article. (4)~(7) (omitted)

With respect to the types of transactions listed below, when to be conducted between the Company and its parent company or subsidiary, or between its subsidiaries in which it directly or indirectly holds 100 % of the

Explanatory Notes

36 -

Article

No.

Original Article proceed with transaction within certain amount. The chairman’s approval shall subsequently be submitted to and ratified by the next board of directors’ meeting.

Amended Article

issued shares or authorized capital , the board of directors may pursuant to subparagraph (2), paragraph 2 of Article 8 authorize the chairman to proceed with transaction within certain amount. The chairman’s approval shall subsequently be submitted to and ratified by the next board of directors’ meeting: (1) Acquisition or disposal of equipment or right-of-use assets thereof held for business use. (2) Acquisition or disposal of real property right-of-use assets held for business use.

~~In the case that~~ the Company has established the position of independent directors in accordance with the “Securities and Exchange Act”, the opinion of each independent director shall be fully taken into consideration. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors.

The Company has established the position of independent directors in accordance with the “Securities and Exchange Act”, the opinion of each independent director shall be fully taken into consideration. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors.

Assessment of the Reasonableness of Transaction Costs
Assessment of the Reasonableness of Transaction Costs (1) In the event where the Company acquires real property or right-of-use assets thereof from a related party, the reasonableness of the transaction costs shall be assessed by the following means: A~B. (omitted)

(1) In the event where the Company acquires real property from a related party, the reasonableness of the transaction costs shall be assessed by the following means:

A~B. (omitted) A~B. (omitted) (2) In the event that land and (2) In the event that land and structures thereupon are structures thereupon are combined as a single property combined as a single property purchased in one transaction, the purchased or leased in one

Explanatory Notes

37 -

Article No.	Original Article		Amended Article	Explanatory Notes
	transaction costs of the land and structures may be evaluated separately in accordance with either of the methods listed in the preceding subparagraph. (3) In the event where the Company acquires real property from a related party, the Company shall evaluate the costs of the real property in accordance with paragraph 3, subparagraphs (1) and (2) of this Article, and shall engage a certified public accountant to review the evaluation and render a specific opinion. (4) In the event where the Company acquires real property from a related party, and the results of the evaluation conducted in accordance with paragraph 3, subparagraphs (1) and (2) of this Article are uniformly lower than the transaction price, paragraph 3, subparagraph (5) of this Article shall apply. However, this restriction shall not apply in the event that the following events exist, objective evidence has been submitted and specific opinions on their reasonableness from a professional real property appraiser and a certified public accountant have been obtained: A. In the event where the related party acquires undeveloped land or leases land for development, it may submit proof of compliance with one	(3) (4)	transaction, the transaction costs of the land and structures may be evaluated separately in accordance with either of the methods listed in the preceding subparagraph. In the event where the Company acquires real propertyor right-of-use assets thereoffrom a related party, the Company shall evaluate the costs of the real propertyor right-of-use assets thereof in accordance with paragraph 3, subparagraphs (1) and (2) of this Article, and shall engage a certified public accountant to review the evaluation and render a specific opinion. In the event where the Company acquires real propertyor right-of-use assets thereoffrom a related party, and the results of the evaluation conducted in accordance with paragraph 3, subparagraphs (1) and (2) of this Article are uniformly lower than the transaction price, paragraph 3, subparagraph (5) of this Article shall apply. However, this restriction shall not apply in the event that the following events exist, objective evidence has been submitted and specific opinions on their reasonableness from a professional real property appraiser and a certified public accountant have been obtained: A. In the event where the related party acquires undeveloped land or leases land for development, it may submit proof of compliance with one

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Article No.		Original Article	Amended Article	Explanatory Notes
	of the following conditions: (a) (omitted) (b) Completed transactions by unrelated parties within the preceding year involving other floors of the same property or neighboring lands, where the land area and the transaction terms are similar, after calculation of reasonable price discrepancies in floor or area land prices in accordance with standard property market practices. ~~(c) Completed leasing~~ ~~transactions by~~ ~~unrelated parties for~~ ~~other floors of the same~~ ~~property 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. In the event where the Company acquires real property from a related party and provides evidence that the terms of the transaction are similar to the terms of transactions completed for the acquisition of neighboring land of a similar size by unrelated parties within the preceding year. The aforementioned “transactions		of the following conditions: (a) (omitted) (b) Completed transactions by unrelated parties within the preceding year involving other floors of the same property or neighboring lands, where the land area and the transaction terms are similar, after calculation of reasonable price discrepancies in floor or area land prices in accordance with standard property marketsale or leasingpractices. B. In the event where the Company acquires real property, or obtaining real property right-of-use assets through leasing,from a related party and provides evidence that the terms of the transaction are similar to the terms of transactions completed for the acquisition of neighboring land of a similar size byunrelated

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Article No.	Original Article			Amended Article	Explanatory Notes
	completed for the acquisition of neighboring land” refers to parcels on the same or adjacent block and within a distance of no more than 500 meters from the subject matter of the transaction, or the announced value of the land is close to that of the subject matter; the term “similar size” refers to transactions completed by unrelated parties where the land area is no less than 50% of the land area of the transaction’s subject matter. The aforementioned term “within one year” refers to the year preceding the date of occurrence of the acquisition of the real property. (5) In the event where the Company acquires real property from a related party, and the results of the evaluation conducted in accordance with subparagraphs (1) and (2), paragraph 3 of this Article are uniformly lower than the transaction price, the following actions shall be taken: A. A special reserve shall be set aside in accordance with paragraph 1 of Article 41 of the Securities and Exchange Act against the difference between the real property transaction price and the evaluated cost, and may not distributed or used for capital	(5)	parties within the preceding year. The aforementioned “transactions completed for the acquisition of neighboring land” refers to parcels on the same or adjacent block and within a distance of no more than 500 meters from the subject matter of the transaction, or the announced value of the land is close to that of the subject matter; the term “similar size” refers to transactions completed by unrelated parties where the land area is no less than 50% of the land area of the transaction’s subject matter. The aforementioned term “within one year” refers to the year preceding the date of occurrence of the acquisition of the real propertyor right-of-use assets thereof. In the event where the Company acquires real propertyor right-of-use assets thereoffrom a related party, and the results of the evaluation conducted in accordance with subparagraphs (1) and (2), paragraph 3 of this Article are uniformly lower than the transaction price, the following actions shall be taken: A. A special reserve shall be set aside in accordance with paragraph 1 of Article 41 of the Securities and Exchange Act against the difference between the real propertyor right-of-use assets thereof transaction price and the evaluated cost,and maynot

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Article

No.

Original Article

increase or issuance of bonus shares. In the event where a public company uses the equity method to account for its investment in the Company, the special reserve under paragraph 1 of Article 41 of the Securities and Exchange Act shall be set side pro rata in a proportion consistent with the public company’s equity stake in the Company.

B~C. (omitted)

In the event where the Company has set aside a special reserve in accordance with the preceding paragraph, the Company may not utilize the special reserve until it has recognized a loss on due to 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 status quo ante has been restored, or there is other evidence confirming that the transaction was not unreasonable, and which the competent authorities has approved.

(6) In the event where the Company acquires real property from a related party and one of the following circumstances exists, the acquisition shall be conducted in accordance with the Assessment and Operating Procedures under paragraph 1 and 2 of this Article, and

Amended Article

distributed or used for capital increase or issuance of bonus shares. In the event where a public company uses the equity method to account for its investment in the Company, the special reserve under paragraph 1 of Article 41 of the Securities and Exchange Act shall be set side pro rata in a proportion consistent with the public company’s equity stake in the Company.

B~C. (omitted)

In the event where the Company has set aside a special reserve in accordance with the preceding paragraph, the Company may not utilize the special reserve until it has recognized a loss on due to decline in market value of the assets it purchased or leased at a premium, or they have been disposed of, or the leasing contract has been terminated, or adequate compensation has been made, or status quo ante has been restored, or there is other evidence confirming that the transaction was not unreasonable, and which the competent authorities has approved.

(6) In the event where the Company acquires real property or right-of-use assets thereof from a related party and one of the following circumstances exists, the acquisition shall be conducted in accordance with the Assessment and Operating Procedures under paragraph 1

Explanatory Notes

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Article No.	Original Article			Amended Article	Explanatory Notes
	paragraph 3, subparagraphs (1), (2) and (3) of this Article shall not apply: A. Where the related party acquired the real property by virtue of inheritance or as a gift. B. Where more than 5 years has elapsed between the time the related party executed the agreement to acquire the real property and the execution date of the current transaction. C. (omitted) (7) In the event where the Company acquires real property from a related party, it shall also comply with paragraph 3, subparagraph (5) of this Article if there is other evidence indicating that the acquisition was not an arm’s length transaction.		(7)	and 2 of this Article, and paragraph 3, subparagraphs (1), (2) and (3) of this Article shall not apply: A. Where the related party acquired the real propertyor right-of-use assets thereof by virtue of inheritance or as a gift. B. Where more than 5 years has elapsed between the time the related party executed the agreement to acquire the real propertyor right-of-use assets thereof and the execution date of the current transaction. C. (omitted) D. Where the real property right-of-use assets for business use are acquired by the Company with its parent or subsidiaries, or by its subsidiaries in which it directly or indirectly holds 100% of the issued shares or authorized capital. In the event where the Company acquires real propertyor right-of-use assets thereoffrom a related party, it shall also comply with paragraph 3, subparagraph (5) of this Article if there is other evidence indicating that the acquisition was not an arm’s length transaction.
Article 10	Procedures for Acquisition or Disposal of Memberships or Intangible Assets 1. Assessment and Operating		Procedures for Acquisition or Disposal of Memberships or Intangible Assetsor right-of-use assets thereof 1. Assessment and Operating		To conform to the amendment of laws and regulations

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Article

No.

Original Article

Procedures

In the event of the Company’s acquisition or disposal of memberships or intangible assets, the Company shall abide by the revolving ~~fixed assets~~ procedures in the Company’s internal control system.

Decision Procedures for Transaction Terms and Authorized Amount (1) (omitted)

(2) In the event of the Company’s acquisition or disposal of intangible assets, the terms and price of the transaction shall be determined by referring to an appraisal report issued by an expert or by referring to the fair price in the market, and an analysis report shall be submitted to the chairman. If the transaction price is NT$ 50 million or less, the transaction shall be approved by the chairman and report to the board of directors for recognition on an after-the-event basis; if the transaction price exceeds NT$ 50 million, the transaction may not be conducted until the board of directors approves the transaction.

(3) Regarding the Company’s acquisition or disposal of assets which needs to be approved by the board of directors in accordance with this Procedure or other laws, if there is any objection from the directors with a record or written statement, the Company shall send the

Explanatory Amended Article Notes Procedures and amend In the event of the Company’s the acquisition or disposal of wording. memberships or intangible assets or right-of-use assets thereof , the Company shall abide by the revolving real estate, factories and facilities procedures in the Company’s internal control system.

Decision Procedures for Transaction Terms and Authorized Amount (1) (omitted)
(2) In the event of the Company’s acquisition or disposal of intangible assets or right-of-use assets thereof , the terms and price of the transaction shall be determined by referring to an appraisal report issued by an expert or by referring to the fair price in the market, and an analysis report shall be submitted to the chairman. If the transaction price is NT$ 50 million or less, the transaction shall be approved by the chairman and report to the board of directors for recognition on an after-the-event basis; if the transaction price exceeds NT$ 50 million, the transaction may not be conducted until the board of directors approves the transaction.
(3) Regarding the Company’s acquisition or disposal of assets which needs to be approved by the board of directors in accordance with this Procedure or other laws, if there is any objection from the directors with a record or written statement, the Company shall send the
43 -

Explanatory Notes

Article

No.

Original Article

objection related information to the supervisors. ~~In the case that~~ the Company has established the position of independent directors in accordance with the

“Securities and Exchange Act”, the opinion of each independent director shall be fully taken into consideration. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors.

3. Implementation Unit

The Company’s acquisition or disposal of memberships or intangible assets shall be approved in accordance with the preceding paragraph and shall be implemented by the finance department, administration department and related authority department.

Appraisal Report on Memberships or Intangible Assets

In the event where the transaction amount of the Company’s acquisition or disposal of memberships or intangible assets reaches 20% or more of the Company’s paid-in capital or NT$ 300 million or more, except for trading with governments, the Company shall engage a certified public accountant to issue an opinion on the reasonableness of the transaction price prior to the date of occurrence. The certified public accountant shall issue his/her opinion in accordance with the provisions of Statement of Auditing Standards No.20 published by the

Amended Article

objection related information to the supervisors. The Company has established the position of independent directors in accordance with the “Securities and Exchange Act”, the opinion of each independent director shall be fully taken into consideration. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors.

Implementation Unit

The Company’s acquisition or disposal of memberships or intangible assets or right-of-use assets thereof shall be approved in accordance with the preceding paragraph and shall be implemented by the finance department, administration department and related authority department.

Appraisal Report on Memberships or Intangible Assets or right-of-use assets thereof

In the event where the transaction amount of the Company’s acquisition or disposal of memberships or intangible assets or right-of-use assets thereof reaches 20% or more of the Company’s paid-in capital or NT$ 300 million or more, except for trading with domestic governments, the Company shall engage a certified public accountant to issue an opinion on the reasonableness of the transaction price prior to the date of occurrence. The certified public accountant shall issue his/her opinion in accordance with the provisions of Statement of Auditing

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Article No.	Original Article	Amended Article	Explanatory Notes
	ARDF.	Standards No.20 published by the ARDF.
Article 14	Procedures of public disclosure 1. The Company shall report related information to the website designated by the competent authorities for announcement based on its nature in stipulated form and reporting within 2 days of transaction date if the assets acquired or disposed of by the Company are as below: (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% or more of the Company’s paid-in capital, 10% or more of the Company’s total assets or NT$ 300 million or more; provided that this shall not apply to the trade of government bonds or bonds under repurchase and resale agreements, or subscription or redemption of money market funds issued by domestic securities investment trust enterprises. (2)~(3) (omitted) (4) Where~~the type of asset~~ ~~acquired or disposed is~~ equipment for business use, and furthermore the trading counterparty is not a related party, and the transaction amount reaches one of the following conditions: A. When the Company’spaid-in	Procedures of public disclosure 1. The Company shall report related information to the website designated by the competent authorities for announcement based on its nature in stipulated form and reporting within 2 days of transaction date if the assets acquired or disposed of by the Company are as below: (1) Acquisition or disposal of real propertyor right-of-use assets thereof from or to a related party, or acquisition or disposal of assets other than real property or right-of-use assets thereof from or to a related party where the transaction amount reaches 20% or more of the Company’s paid-in capital, 10% or more of the Company’s total assets or NT$ 300 million or more; provided that this shall not apply to the trade of domestic government bonds or bonds under repurchase and resale agreements, or subscription or redemption of money market funds issued by domestic securities investment trust enterprises. (2)~(3) (omitted) (4) Where equipmentor right-of-use assets thereof for business useare acquired or disposed of,and furthermore the trading counterparty is not a related party, and the transaction amount reaches one of the following conditions: A. When the Company’spaid-in	To conform to the amendment of laws and regulations.

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Article Explanatory Original Article Amended Article No. Notes capital is less than NT$ 10 capital is less than NT$ 10 billion, the transaction billion, the transaction amount reaches NT$ 500 amount reaches NT$ 500 million or more. million or more. B. When the Company’s paid-in B. When the Company’s paid-in capital is NT$ 10 billion or capital is NT$ 10 billion or more, the transaction amount more, the transaction amount reaches NT$ 1 billion or reaches NT$ 1 billion or more. more.

(5) Acquisition or disposal by the (5) Acquisition or disposal by the Company in the construction Company in the construction business of real estate for business of real estate or construction use, where the right-of-use assets thereof for trading counterparty is not a construction use, where the related party, and the transaction trading counterparty is not a amount reaches NT$ 500 related party, and the transaction million. amount reaches NT$ 500 million ; among such cases, if the public company has - paid in capital of NT$ 10 billion or more, and it is disposing of real property from a completed construction project that it constructed itself, and furthermore the transaction counterparty is not a related party, then the threshold shall be a transaction amount reaching NT$ 1 billion or more .

(6) Where land is acquired under an arrangement on engaging others to build on the Company’s own land, engaging others to build on rented lands, joint construction and allocation of housing units, joint construction and allocation of ownership percentages or joint construction and separate sale, and the Company’s estimated investment amount in the transaction reaches NT$ 500 million.

(6) Where land is acquired under an arrangement on engaging others to build on the Company’s own land, engaging others to build on rented lands, joint construction and allocation of housing units, joint construction and allocation of ownership percentages or joint construction and separate sale, and furthermore the trading counterparty is not a related party, and the Company’s estimated

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Article No.	Original Article	Amended Article	Explanatory Notes
	(7) Where an asset transaction other than any of those referred to in the preceding six provisions, disposal of receivables by financial institutions or an investment in the mainland China area reaches 20% or more of the Company’s paid-in capital or NT$ 300 million; provided that this shall not apply to any of the following circumstances: provided that this shall not apply to any of the following circumstances: A. Trading of government bonds. B. Securities trading by investment professionals on ~~foreign or domestic~~ securities exchanges or over-the-counter markets, or subscription by investment professionals of ordinary corporate bonds or general bank debentures without equity characteristics offered and issued in the~~domestic~~ primary market, or subscription by a securities firm of securities as necessitated by its undertaking business or as an advisory recommending securities firm for an emerging stock company, in accordance with the rules of the Taipei Exchange.	investment amount in the transaction reaches NT$ 500 million. (7) Where an asset transaction other than any of those referred to in the preceding six provisions, disposal of receivables by financial institutions or an investment in the mainland China area reaches 20% or more of the Company’s paid-in capital or NT$ 300 million; provided that this shall not apply to any of the following circumstances: provided that this shall not apply to any of the following circumstances: A. Trading of domestic government bonds. B. Securities trading by investment professionals on securities exchanges or over-the-counter markets, or subscription by investment professionals of ordinary corporate bonds or general bank debentures without equity characteristics (excluding subordinated debt) that are offered and issued in the primary market, or subscription or redemption of securities investment trust funds or futures trust funds, or subscription by a securities firm of securities as necessitated by its undertaking business or as an advisory recommending securities firm for an emerging stock company, in accordance with the rules of

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Article Explanatory Original Article Amended Article No. Notes the Taipei Exchange. C. Trading of bonds under C. Trading of bonds under repurchase and resale repurchase and resale agreements, or subscription agreements, or subscription or redemption of money or redemption of money market funds issued by market funds issued by domestic securities domestic securities investment trust enterprises. investment trust enterprises. 2. The amount of the transactions 2. The amount of the transactions referred to in the previous paragraph referred to in the previous paragraph shall be calculated as follows. The shall be calculated as follows. The term “within the preceding year” as term “within the preceding year” as used in the paragraph below refers used in the paragraph below refers to the year preceding the date of to the year preceding the date of occurrence of the current occurrence of the current transaction. Items duly announced transaction. Items duly announced in accordance with the relevant in accordance with the relevant regulations shall not be counted regulations shall not be counted towards the transaction amount. towards the transaction amount. (1)~(2) (omitted) (1)~(2) (omitted)

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

(4) (omitted)

3~4. (omitted)

The Company acquiring or disposing of assets shall keep all relevant contracts, meeting minutes, log books, appraisal reports and opinions issued by certified public accountants, attorneys or securities underwriter opinions at the Company’s headquarters. Except as otherwise provided by other laws or regulations, such documents shall be preserved for at least 5 years.
(omitted)
(3) The cumulative transaction amount of acquisitions and disposals (cumulative acquisitions and disposals, respectively) of real property or right-of use assets thereof under the same development project within the preceding year.

(4) (omitted)

3~4. (omitted)

The Company acquiring or disposing of assets shall keep all relevant contracts, meeting minutes, log books, appraisal reports and opinions issued by certified public accountants, attorneys or securities underwriter opinions at the Company’s headquarters. Except as otherwise provided by other laws or regulations, such documents shall be preserved for at least 5 years.
(omitted)
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Article No.	Original Article	Amended Article	Explanatory Notes
Article 15	Procedures complied with by the Company’s subsidiaries: 1~2. (omitted) 3. In the event where the Subsidiary is a non-public company, and where its acquisition or disposal of assets has reached the announcement standard stipulated by “Regulations Governing the Acquisition and Disposal of Assets by Public Companies”, the Company shall announce and report the relevant matters on behalf of the Subsidiary. In the event of the subsidiary’s, the term “reaches~~20% of~~ the Company’s paid-in capital or~~10%~~ ~~of ~~the Company’s total assets” stipulated in the Subsidiary’s announcement and report standards refers to the Company’s paid-in capital or total assets.	Procedures complied with by the Company’s subsidiaries: 1~2. (omitted) 3. In the event where the Subsidiary is a non-public company, and where its acquisition or disposal of assets has reached the announcement standard stipulated by “Regulations Governing the Acquisition and Disposal of Assets by Public Companies”, the Company shall announce and report the relevant matters on behalf of the Subsidiary. In the event of the subsidiary’s, the term “reaches the Company’s paid-in capital or the Company’s total assets” stipulated in the Subsidiary’s announcement and report standards refers to the Company’s paid-in capital or total assets.	To conform to the amendment of laws and regulations.
Article 15-1	The term “10% of the Company’s total asset” used herein shall be calculated based on the total asset stated in the most recent standalone financial report prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”. For any Subsidiary whose shares have no par value or a par value of other than NT$ 10, the “20% of its paid-in capital” criteria under this Procedure shall be replaced by “10% of its equity attributable to shareholders of the parent”.	The term “10% of the Company’s total asset” used herein shall be calculated based on the total asset stated in the most recent standalone financial report prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”. For any Subsidiary whose shares have no par value or a par value of other than NT$ 10, the “20% of its paid-in capital” criteria under this Procedure shall be replaced by “10% of its equity attributable to shareholders of the parent”; for calculations under this Procedure regarding transaction amounts relative to paid-in capital of NT$10 billion, NT$20 billion of equity attributable to owners of the parent shall be substituted.	To conform to the amendment of laws and regulations.
Article 17	Implementation and Revision This Procedure shall be approved by	Implementation and Revision This Procedure shall be approved by	To amend the

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Article No.		Original Article	Amended Article	Explanatory Notes
		the board of directors, forwarded to the respective supervisors and submitted to the shareholders’ meeting for consent. The same shall apply to revisions thereto. Where there are objections from directors and such objections have been recorded or declared in writing, the Company shall forward all such objections to the respective supervisors. ~~In the event that~~the Company has established the position of independent directors in accordance with the “Securities and Exchange Act”, when this Procedure is submitted for discussion by the board of directors, the opinion of each independent director shall be fully taken into consideration. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors.	the board of directors, forwarded to the respective supervisors and submitted to the shareholders’ meeting for consent. The same shall apply to revisions thereto. Where there are objections from directors and such objections have been recorded or declared in writing, the Company shall forward all such objections to the respective supervisors. The Company has established the position of independent directors in accordance with the “Securities and Exchange Act”, when this Procedure is submitted for discussion by the board of directors, the opinion of each independent director shall be fully taken into consideration. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors.	wording.

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Attachment 6

AHOKU ELECTRONIC COMPANY

Comparison Table for Amendment to the “Procedures for Financial Derivatives Transactions”

Article No.	Original Article	Amended Article	Explanatory Notes
Article 1	Trading Principles and Strategies 1. Scopes of Derivatives (1) The derivatives engaged by the Company refer to forward contracts, options contracts, futures contracts, leverage contracts, swap contracts~~and~~ ~~compound contracts~~ ~~combining the above~~ ~~products,~~whose value is derived from~~assets, interest~~ ~~rates,~~foreign exchange rates, indexes~~or other interests~~. The term “forward contracts” does not include insurance contracts, performance contracts, after-sales service contracts, long-term leasing contracts or long-term purchase (sales) ~~agreements.~~ (2)~(3) (omitted) 2. (omitted) 3. Segregation of Duties (1) Finance Department A.~C. (omitted) D. Levels of Authority for Derivatives (a)~(b) (omitted) (c) Regarding the Company’s derivatives transactions which need to be approved bythe board of directors in	Trading Principles and Strategies 1. Scopes of Derivatives (1) The derivatives engaged by the Company refer to forward contracts, options contracts, futures contracts, leverage contracts, or swap contracts, whose value is derived from a specified interest rate, financial instrument price, commodity price,foreign exchange rate, indexesof prices or rates, credit rating or credit index, or other variable; or hybrid contracts combining the above contracts; or hybrid contracts or structured products containing embedded derivatives. The term "forward contracts" does not include insurance contracts, performance contracts, after-sales service contracts, long-term leasing contracts, or long-term purchase (sales) contracts. (2)~(3) (omitted) 2. (omitted) 3. Segregation of Duties (1) Finance Department A.~C. (omitted) D. Levels of Authority for Derivatives (a)~(b) (omitted) (c) Regarding the Company’s derivatives transactions which need to be approved bythe board of directors in	To conform to the amendment of laws and regulations and amend the wording.

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Article No.		Original Article	Amended Article	Explanatory Notes
	accordance with the Procedures or other laws, if there is any objection from the directors with a record or written statement, the Company shall send the objection related information to the supervisors.~~In the case~~ ~~that ~~the Company has established the position of independent directors in accordance with the “Securities and Exchange Act”, when the transactions for acquisition or disposal of assets is submitted for discussion by the board of directors, the opinion of each independent director shall be fully taken into consideration. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors. (2) Audit Department The audit department shall be responsible for understanding the appropriateness of internal controls concerning derivatives transactions, auditing the transaction department’s compliance with the operating procedures, analyzing the transaction cycle, preparing audit reports. In the event of any material breach or the Company is likely to suffer material loss,suchpersonnel		accordance with the Procedures or other laws, if there is any objection from the directors with a record or written statement, the Company shall send the objection related information to the supervisors. The Company has established the position of independent directors in accordance with the “Securities and Exchange Act”, when the transactions for acquisition or disposal of assets is submitted for discussion by the board of directors, the opinion of each independent director shall be fully taken into consideration. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors. (2) Audit Department The audit department shall be responsible for understanding the appropriateness of internal controls concerning derivatives transactions, auditing the transaction department’s compliance with the operating procedures, analyzing the transaction cycle, preparing audit reports. In the event of any material breach or the Company is likely to suffer material loss,suchpersonnel

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Article No.	Original Article		Explanatory Notes
	shall immediately prepare a report and notify the supervisors. 4~5.(omitted)	shall immediately prepare a report and notify the supervisors. The Company has established the position of independent directors in accordance with the“Securities and Exchange Act”, for matters for which notice shall be given to the supervisors under the preceding paragraph, written notice shall also be given to the independent directors. 4~5.(omitted)
Article 2	Risk Management 1~4. (omitted) 5. Operation Risk Management (1)~(3) (omitted) (4) The positions of derivatives transactions shall be evaluated at least once per week; however, the positions for hedging transactions required by business shall be evaluated at least twice per month, and the evaluation report shall be submitted to the senior management personnel authorized by the board of directors. 6~7.(omitted)	Risk Management 1~4. (omitted) 5. Operation Risk Management (1)~(3) (omitted) (4) The positions of derivatives transactions shall be evaluated at least once per week; however, the positions for hedging transactions required by business shall be evaluated at least twice per month, and the evaluation report shall be submitted to the senior management personnel authorized by the board of directors. 6~7.(omitted)	To amend “submitted” name in Chinese version accordance with revision of regulations. English version no change for same translation.
Article 3	Internal Audit 1. Internal audit personnel shall periodically review the appropriateness of internal controls concerning derivatives transactions and shall monthly audit the transaction department’s compliance with the operating procedures, analyze the transaction cycle and prepare audit reports. In the event where any of the internal auditpersonnel discovers material	Internal Audit 1. Internal audit personnel shall periodically review the appropriateness of internal controls concerning derivatives transactions and shall monthly audit the transaction department’s compliance with the operating procedures, analyze the transaction cycle and prepare audit reports. In the event where any of the internal auditpersonnel discovers material	To conform to the amendment of laws and regulations.

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Article No.	Original Article		Amended Article	Explanatory Notes
	breach, such personnel shall notify the supervisors in writing. 2.(omitted)	2.	breach, such personnel shall notify the supervisors in writing. The Company has established the position of independent directors in accordance with the “Securities and Exchange Act”, for matters for which notice shall be given to the supervisors under the preceding paragraph, written notice shall also be given to the independent directors. (omitted)
Article 4	Monitoring and Management Principles of the Board of Directors When Engaging in Derivatives Transactions 1. The board of directors shall appoint senior management officers to pay continuous attention to monitoring and controlling derivatives transaction risks. The principles are as follows: (1) Periodically evaluate whether the risk management measures currently employed are appropriate and comply with the “Regulations Governing the Acquisition and Disposal of Assets by Public Companies” of the securities authority and “Procedures for Engaging in Derivatives Trading” stipulated by the Company. (2) If any irregular situation is discovered in the course of monitoring the transactions and the profits and losses, necessary appropriate measures shall be undertaken, and a report shall be made immediately to the board of directors.~~In the case~~ ~~that ~~the Company has established theposition of	Monitoring and Management Principles of the Board of Directors When Engaging in Derivatives Transactions 1. The board of directors shall appoint senior management officers to pay continuous attention to monitoring and controlling derivatives transaction risks. The principles are as follows: (1) Periodically evaluate whether the risk management measures currently employed are appropriate and comply with the “Regulations Governing the Acquisition and Disposal of Assets by Public Companies” of the securities authority and “Procedures for Engaging in Derivatives Trading” stipulated by the Company. (2) If any irregular situation is discovered in the course of monitoring the transactions and the profits and losses, necessary appropriate measures shall be undertaken, and a report shall be made immediately to the board of directors. The Companyhas established the		1.To amend “Stipulated” name in Chinese version accordance with revision of regulations. English version no change for same translation. 2.To amend the wording.

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Article No.		Original Article	Amended Article	Explanatory Notes
		independent directors in accordance with the “Securities and Exchange Act”, independent directors shall be present and express their opinions at the board of directors’ meeting. 2. (omitted) 3. The Company shall report to the next board of directors’ meeting after it authorizes relevant personnel to handle the derivatives transactions in accordance with the “Procedures for Financial Derivatives Transactions” stipulated by the Company. 4.(omitted)	position of independent directors in accordance with the “Securities and Exchange Act”, independent directors shall be present and express their opinions at the board of directors’ meeting. 2. (omitted) 3. The Company shall report to the next board of directors’ meeting after it authorizes relevant personnel to handle the derivatives transactions in accordance with the “Procedures for Financial Derivatives Transactions” stipulated by the Company. 4.(omitted)
Article 9		Implementation and Revision This Procedure shall be approved by the board of directors, forwarded to the respective supervisors and submitted to the shareholders’ meeting for consent. The same shall apply to revisions thereto. Where there are objections from directors and such objections have been recorded or declared in writing, the Company shall forward all such objections to the respective supervisors. ~~In the event that ~~the Company has established the position of independent directors in accordance with the “Securities and Exchange Act”, when this Procedure is submitted for discussion by the board of directors, the opinion of each independent director shall be fully taken into consideration. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors.	Implementation and Revision This Procedure shall be approved by the board of directors, forwarded to the respective supervisors and submitted to the shareholders’ meeting for consent. The same shall apply to revisions thereto. Where there are objections from directors and such objections have been recorded or declared in writing, the Company shall forward all such objections to the respective supervisors. The Company has established the position of independent directors in accordance with the “Securities and Exchange Act”, when this procedure is submitted for discussion by the board of directors, the opinion of each independent director shall be fully taken into consideration. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors.	To amend the wording.

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Appendix 1

AHOKU ELECTRONIC COMPANY Articles of Incorporation

Chapter 1 General Provisions

Article 1

The Company is organized as a company limited by shares and permanently existing in accordance with the Company Act of the Republic of China (the “Company Act”) and the Company’s English name is AHOKU ELECTRONIC COMPANY.

Article 2

The scope of business of the Company shall be as follows:

CC01010 Electric power supply, electric transmission and power distribution machinery manufacturing
CC01030 Electrical appliance and audiovisual electronic products manufacturing
CC01040 Lighting facilities manufacturing
CC01060 Wire communications machinery and equipment manufacturing
CC01080 Electronic parts and components manufacturing
F113020 Electrical appliance wholesale
F119010 Electronic material wholesale
F113070 Telecommunication equipment wholesale
F213060 Telecommunication equipment retail
F401010 International trade
F401021 Restrained telecom radio frequency equipment and materials import
ZZ99999 Except for permitted business, the Company may engage in other businesses not prohibited or restricted by laws or regulations

Article 3

The Company may invest outward with the total amount of investment free of restrictions as set forth in Article 13 of the Company Act, and may act as a guarantor externally.

Article 4

The head office of the Company is located in Taipei City, Taiwan, The Republic of China. Subject to the approval of the board of directors and, the Company may, if necessary, set up subsidiaries or branches within or outside the territory of the Republic of China.

Article 5

Public announcements of the Company shall be made in accordance with the provisions of Article 28 of the Company Act.

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Chapter 2 Shares

Article 6

The total capital amount of the Company shall be 1,500,000,000 New Taiwan Dollars, divided into 150,000,000 shares, at par value of 10 New Taiwan Dollars each. The board of directors is authorized to issue the unissued shares in installments.

A total amount of 80,000,000 New Taiwan Dollars among the above total capital amount shall be reserved for issuing employee stock options, which is 8,000,000 shares at par value of 10 New Taiwan Dollars each. The board of directors is authorized to issue the unissued shares in installments according to the Company Act and other relevant laws and regulations.

Article 7

The share certificates of the Company shall be all in registered form. The share certificates, after due registration with the competent authority, shall be signed or sealed by at least three directors and shall be legally authenticated prior to issue.

The Company may, pursuant to the applicable laws and regulations, deliver shares or other securities in book-entry form, instead of delivering physical certificates evidencing shares or other securities. The Company shall arrange for such shares to be recorded by a centralized securities custodian institution.

Article 8

Registration for transfer of shares shall be suspended sixty days immediately before the date of general shareholders’ meeting, and thirty days immediately before the date of extraordinary shareholders’ meeting, or within five days before the day on which dividend, bonus, or any other benefit is scheduled to be paid by the Company.

Article 9

All matters concerning shares shall be conducted in accordance with “Regulations Governing the Administration of Shareholder Services of Public Companies” and the relevant laws and regulations.

Chapter 3 Shareholders’ Meetings

Article 10

Shareholders’ meetings shall be of two types, general meetings and extraordinary meetings. General meetings shall be convened annually by the board of directors within six months of the end of each fiscal year. Extraordinary meetings shall be convened in accordance with the relevant laws, whenever necessary.

Article 11

A notice for convening a general shareholders’ meeting shall be given thirty (30) days

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prior to the meeting. A notice for convening a extraordinary shareholders’ meeting shall be given fifteen (15) days prior to the meeting. The notice shall specify the date, place and agenda of the meeting. The notice may be given by means of electronic transmission, after obtaining a prior consent from the shareholders.

The aforementioned notice may be publicly announced, provided that for the shareholders who hold less than 1,000 shares.

Article 12

Where a shareholder is unable to attend a shareholders’ meeting, such shareholder may appoint a proxy by using the proxy form provided by the Company, which shall specify the scope of proxy and be signed and sealed by the shareholder. The attendance of shareholder’s proxies shall be in accordance with the Article 177 of the Company Act and “Regulations Governing the Use of Proxies for Attendance at Shareholders’ Meeting of Public Companies” issued by the competent authority.

Article 13

The chairman of the board of directors shall preside at each meeting of shareholders. In the event the chairman of the board of directors is absent, he shall designate one director to act on his behalf. In the absence of such a designation, the directors shall elect a director from among themselves to preside at the meeting. If the shareholders’ meeting is called by any convener other than the board of directors, the chairperson shall be assumed by the convener. If there are more than two conveners, the chairperson shall be elected out of the conveners.

Article 14

The Company’s shareholders are entitled to one voting right per share, provided that shareholders have no voting right for shares held under Article 179 of the Company Act.

Article 15

Except as otherwise provided in the relevant laws or the Company Act, any resolution of a shareholders’ meeting shall be adopted at a meeting which at least general majority of the shareholders attend and at which meeting a general majority of the shareholders present vote in favor of such resolution.

To transfer shares to employees at less than the average actual repurchase price, the Company must has obtained the consent of at least two-thirds of the voting rights present at the latest shareholders meeting attended by shareholders representing a majority of total issued shares.

To issue employee stock options that the exercise price may be lower than the closing price of the Company stocks as of the issue date, the Company must has obtained the consent of at least two-thirds of the voting rights represented at a shareholders

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meeting attended by shareholders representing a majority of the total issued shares. Resolutions adopted at a shareholders’ meeting shall be recorded in the minutes of the meeting, which shall be signed or bear the seal of the chairman of the meeting and shall be distributed to all shareholders within 20 days after the close of the meeting. The distribution of the minutes of shareholders’ meeting as required in the preceding paragraph may be made by means of public announcements.

Chapter 4 Directors and Supervisors

Article 16

The Company shall have five to seven (5~7) directors and two to four (2~4) supervisors to be elected from among persons with capacity to make judicial acts by the shareholders’ meeting. The term of their office shall be three (3) years and they are eligible for re-election.

The Company shall have, among the aforementioned directors, at least two independent directors, and the number of independent directors shall be no less than one-fifth of the total number of directors. Independent directors shall be elected by adopting the candidate nomination system, and shareholders elect from the slate of independent director candidates.

The professional qualification, shareholding, restriction on the concurrent posts, the means of nomination and election of independent directors and other matters to be complied with, shall all be in accordance with the relevant rules of the competent authority of securities.

Article 17

The board of directors shall consist of the directors of the Company. The chairman of the board of directors shall be elected by and among the directors by a majority of directors present at a meeting attended by more than two-thirds of directors. The chairman of the board of directors shall externally represent the Company.

The reasons for convening a board of directors’ meeting shall be notified to each director and supervisor at least seven days in advance. If the board of directors’ meeting needs to be convened due to emergency, it may be convened at any time. In order to convene the board of directors’ meeting, notice may be made by written notice, fax or e-mail.

Article 18

Where the chairman of the board of directors is on leave or can’t exercise his powers or perform his duties for any reason, an acting chairman shall be designated in accordance with Article 208 of the Company Act. Where a director is unable to attend the meeting of the board of directors, he may appoint another director as his proxy to attend the meeting by issuing a letter of proxy. Each director can act as a proxy for

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only one other director.

Article 19

Unless otherwise provided for in the Company Act, resolutions of the board of directors shall be adopted by a majority of the directors at the meeting attended by a majority of the directors.

Article 20

In case no election of new directors and supervisors is effected after expiration of the term of office of existing directors and supervisors, the term of office of out-going directors and supervisors shall be extended until the time new directors and supervisors have been elected and assumed their office.

Article 21

The supervisors shall perform their duties of supervision in accordance with laws and regulations, and may attend the board of directors’ meeting, but may not have voting rights.

Article 22

No matter the Company’s profits or losses, the Company shall pay remuneration for the directors and supervisors conducting the business of the Company. The remuneration to the directors and supervisors shall be determined by the board of directors in consideration of the directors’ and supervisors’ participation in and devotion to the operation of the Company as well as reference to the common practical standards.

The Company may purchase liability insurance policies for directors and supervisors during the tenure of their offices and within the scope of damages results from the performances of their official duties.

Chapter 5 Managers

Article 23

The Company may have one general manager, several vice general managers and managers, whose appointment, removal and remuneration shall be handled in accordance with Article 29 of the Company Act.

Chapter 6 Accounting

Article 24

The fiscal year of the Company is annually from 1 January until 31 December. Upon closing of each fiscal year, the board of directors shall prepare the following statements and reports and shall submit the same to the supervisors for inspection no

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later than thirty (30) days prior to the meeting date of the general shareholders’ meeting for ratification:

The business report.
The financial statements.
The proposal for distributing earnings or covering losses.

Article 25

If the Company has profit at the end of each fiscal year, the Company shall allocate 4% to 8% of profit as employees’ compensation. The board of directors can determine to issue stock or distribute cash to employees, including employees of the Company’s subsidiaries who meet certain qualifications. The Company may allocate no more than 5% of profit as directors’ and supervisors’ remuneration. Employees’ compensation and directors’ and supervisors’ remuneration shall be reported to the shareholders’ meeting.

When the Company has retained losses, profit shall be retained to offset previous years’ losses before distribution of profit as indicated above shall apply.

If the Company has earnings at the end of the fiscal year, the Company shall first allocate the earnings to pay taxes and cover accumulated losses, and then 10% of the remaining net earnings shall be allocated as the Company’s legal reserve unless and until the accumulated legal reserve reaches the paid in capital. Certain amount shall be further allocated as special reserve or the special reserve shall be reversed in accordance with applicable laws and regulations or as requested by the competent authority. The balance (if any) together with accumulated unappropriated retained earnings can be distributed after the distribution plan proposed by the Board of Directors and approved by the shareholders’ meeting.

The Company’s dividend policy is to take into consideration the Company’s industrial environment and growth phases, future demands of funds, long-term financial planning, and the cash flows that the shareholders desire. With respect to distribution of dividends, no less than 30% of the retained earnings available for distribution of the current year shall be distributed to shareholders as dividends, which may be distributed in stock dividend or cash dividend, and the distribution of cash dividend shall not be less than 10% of total dividends. If the retained earnings available for distribution of the current year do not reach 1% of the paid in capital of the Company, the Company may distribute no dividend.

Chapter 7 Supplementary Articles

Article 26

With respect to the matters not provided herein, the Company Act and other relevant laws and regulations shall govern.

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Article 27

These Articles of Incorporation were enacted on July 12, 1983. The first amendment was made on August 12, 1985. The second amendment was made on April 15, 1986. The third amendment was made on June 9, 1994. The fourth amendment was made on November 29, 1997. The fifth amendment was made on November 21, 1998. The sixth amendment was made on May 30, 1999. The seventh amendment was made on December 28, 1999. The eighth amendment was made on June 9, 2000. The ninth amendment was made on May 8, 2001. The tenth amendment was made on May 31, 2002. The eleventh amendment was made on June 3, 2005. The twelfth amendment was made on June 14, 2006. The thirteenth amendment was made on June 13, 2008. The fourteenth amendment was made on June 16, 2009. The fifteenth amendment was made on June 18, 2010. The sixteenth amendment was made on June 6, 2012. The seventeenth amendment was made on June 6, 2014. The eighteenth amendment was made on June 24, 2015. The nineteenth amendment was made on June 17, 2016.

AHOKU ELECTRONIC COMPANY Chairman: Li, Guang-Hao

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Appendix 2

AHOKU ELECTRONIC COMPANY

Rules and Procedures of Shareholders’ Meeting

Article 1

Shareholders’ Meeting of the Company (the “Meeting”) shall be conducted in accordance with these Rules and Procedures. Any matter not provided in these Rules and Procedures shall be handled in accordance with relevant laws and regulations.

Article 2

The Meeting shall be held at the head office of the Company or at any other appropriate place that is convenient for the shareholders to attend. The time to start the Meeting shall not be earlier than 9:00 a.m. or later than 3:00 p.m.

The process of the Meeting shall be taperecorded or videotaped and these tapes shall be preserved for at least one year.

Article 3

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

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.

Article 4

The Company shall prepare an attendance book for attending shareholders to sign in, or shareholder present may hand in an attendance card in lieu of signing on the attendance book. The number of shares in attendance shall be calculated according to the shares indicated by the attendance book or the attendance cards handed, plus the number of shares whose voting rights are exercised by correspondence or electronically.

Any legal entity designated as proxy by a shareholder(s) to be present at the Meeting may appoint only one representative to attend the Meeting.

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If a corporate shareholder designates two or more representatives to attend the Meeting, only one representative can speak for each discussion item.

Article 5

The Company may appoint designated counsel, certified public accountant or other related persons to attend the Meeting.

Persons handling affairs of the Meeting shall wear identification cards or badges.

Article 6

Attendance and voting at the Meeting shall be calculated based on the number of shares.

Chairman shall call the Meeting to order at the time scheduled for the Meeting. If the number of shares represented by the shareholders present at the Meeting has not yet constituted the quorum at the time scheduled for the Meeting, the chairman may postpone the time for the Meeting. The postponements shall be limited to two times at the most and the Meeting shall not be postponed for longer than one hour in the aggregate. If after two postponements no quorum can yet be constituted but the shareholders present at the Meeting represent more than one-third of the total outstanding shares, tentative resolutions may be made in accordance with Section 1 of Article 175 of the Company Act.

If during the process of the Meeting the number of outstanding shares represented by the shareholders present becomes sufficient to constitute the quorum, the chairman may submit the tentative resolutions to the Meeting for approval in accordance with Article 174 of the Company Act.

Article 7

The agenda of the Meeting shall be set by the Board of Directors if the Meeting is convened by the Board of Directors. Unless otherwise resolved at the Meeting, the Meeting shall proceed in accordance with the agenda.

The above provision applies mutatis mutandis to cases where the Meeting is convened by any person, other than the Board of Directors, entitled to convene such Meeting.

Unless otherwise resolved at the Meeting, the chairman can’t announce adjournment of the Meeting before all the discussion items (including special motions) listed in the agenda are resolved. In the event that the chairman adjourns the Meeting in violation of these Rules and Procedures, the shareholders may designate, by a majority of votes represented by shareholders attending the Meeting, one person as chairman to continue the Meeting.

The shareholders can’t designate any other person as chairman and continue the Meeting in the same or other place after the Meeting is adjourned.

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Article 8

When a shareholder present at the Meeting wishes to speak, a Speech Note should be filled out with summary of the speech, the shareholder’s number (or the number of Attendance Card) and the name of the shareholder. The sequence of speeches by shareholders should be decided by the chairman.

Unless otherwise permitted by the chairman, each shareholder shall not, for each discussion item, speak more than two times (each time not exceeding 5 minutes). In case the speech of any shareholder violates the above provision or exceeds the scope of the discussion item, the chairman may stop the speech of such shareholder.

If any shareholder present at the Meeting submits a Speech Note but does not speak, no speech should be deemed to have been made by such shareholder. In case the contents of the speech of a shareholder are inconsistent with the contents of the Speech Note, the contents of actual speech shall prevail.

Unless otherwise permitted by the chairman and the shareholder in speaking, no shareholder shall interrupt the speeches of the other shareholders, otherwise the chairman shall stop such interruption.

Article 9

After the speech of a shareholder, the chairman may respond himself/herself or appoint an appropriate person to respond.

Article 10

The chairman may announce to end the discussion of any resolution and go into voting if the chairman deems it appropriate.

Article 11

When the Company holds a shareholders’ meeting, it may allow the shareholders to exercise voting rights by correspondence or electronic means.

A shareholder exercising voting rights by correspondence or electronic means will be deemed to have attended the Meeting in person, but to have waived his/her rights with respect to the extraordinary motions and amendments to original proposals of that Meeting.

In regards to the resolution of proposals, unless otherwise provided for in the relevant laws and regulations of the Company Act and the Articles of Incorporation of the Company, resolution shall be passed by a majority of the voting rights represented by the shareholders attending the Meeting.

The proposal for a resolution shall be deemed approved if no objection or waiver expressed by the shareholders casting their votes via electronic means, and if the chairman inquires and receives no objection from the shareholders in attendance in person.

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Article 12

The person(s) to check and the person(s) to record the ballots during a vote by casting ballots shall be appointed by the chairman. The person(s) checking the ballots shall be a shareholder(s).

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 13

If there is amendment to or substitute for a discussion item, the chairman shall decide the sequence of voting for such discussion item, the amendment or the substitute. If any one of them has been adopted, the others shall be deemed vetoed and no further voting is necessary.

Article 14

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

If a meeting fails to complete all of the items on the Meeting agenda, a resolution may be adopted at the Meeting to defer or resume the Meeting within 5 days without the need to make any further written notices or published announcements to the shareholders.

Article 15

The chairman may conduct the disciplinary officers or the security guard to assist in keeping order of the Meeting place. Such disciplinary officers or security guards shall wear badges marked “Disciplinary Officers” for identification purpose.

Article 16

Any matters not adequately provided for herein shall be subject to handling in accordance with the Company Act, Securities and Exchange Act, Articles of Incorporation of the Company and other relevant laws and regulations.

Article 17

These Rules and Procedures shall be effective from the date it is approved by the shareholders’ meeting. The same applies in case of revision.

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Appendix 3

Shareholding of Directors and Supervisors

As of the book closure date (April 8, 2019) of this year’s annual general shareholders’ meeting, the paid-in capital of the Company is NT$ 1,020,000,000, the issued and outstanding shares are 102,000,000 shares.
According to Article 26 of “Securities and Exchange Act” and “Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies”, the minimum shareholding held by all directors of the Company shall be 8,000,000 shares and that held by all supervisors of the Company shall be 800,000 shares. (Note 1)
As of the book closure date of this year’s annual general shareholders’ meeting, the shareholding held by individual and all directors and supervisors is listed in the table below, which has been in accordance with the aforementioned statutory standard.

Shareholding of Individual and All Directors

Unit: shares; %

			Unit: shares;%
Title	Name	Current Shareholding	Shareholding Ratio
Chairman	Li,Guang-Hao	8,332,359	8.17%
Director	Weng,Zhen-Xiang	3,606,532	3.54%
Director	Chen,Mei-Ling	6,177,651	6.06%
Director	Zhuang,Li-Yu	10,084	0.01%
Director	Li,Wen-Han	8,899,103	8.72%
Independent Director	Huang,Rong-Wen	0	0.00%
Independent Director	Zhang,Jia-Xian	0	0.00%
Total		27,025,729	26.50%

Shareholding of Individual and All Supervisors

Unit: shares; %

			Unit: shares;%
Title	Name	Current Shareholding	Shareholding Ratio
Supervisor	Chen,Hui-Fen	749,968	0.74%
Supervisor	Han,Dong-Lian	5,000	0.00%
Supervisor	Li,Shu-Ying	408,823	0.40%
Supervisor	Huang,Zhang-Qing	55,125	0.05%
Total		1,218,916	1.19%

Note1: According to Article 2 of “Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies”, if a public company has elected two or more independent directors, the share ownership figures calculated at the rates for all directors and supervisors other than the independent directors shall be decreased to 80 percent.
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Appendix 4

Other Explanation

The impact of stock dividends issuance on business performance, earnings per share and shareholders’ return on investment:
The Company will not distribute any stock dividends this fiscal year, so this item is not applicable.
The explanation for handling the proposals of the shareholders in this year’s Annual General Shareholders’ Meeting:
(1)According to Article 172-1 of the “Company Act”, any shareholder holding one percent or more of the total number of outstanding shares may propose to the Company a written proposal for discussion in the annual general shareholders’ meeting, provided that only one agenda shall be allowed, and such proposal shall be elaborated by 300 words or less.
(2)The acceptance period for the proposals to be resolved in this year’s annual general shareholders’ meeting is from March 29 to April 8, 2019. The aforementioned information has been lawfully published on the Market Observation Post System.
(3)There was not any proposal submitted by any shareholder during the said acceptance period.
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AI assistant

AHOKU — AGM Information 2019

52239_rns_2019-06-14_c0026889-82bb-4ee7-b07d-8974b4290d62.pdf

AHOKU ELECTRONIC COMPANY

2019 Annual General Shareholders’ Meeting Meeting Handbook

Table of Contents

AHOKU ELECTRONIC COMPANY

2019 Annual General Shareholders’ Meeting Procedures

AHOKU ELECTRONIC COMPANY 2019 Annual General Shareholders’ Meeting Agenda

I. Call the Meeting to Order (Report the attendance)

II. Chairman Remarks

III. Report Items

IV. Ratification Items

V. Discussion Items

VI. Extemporary Motions

VII. Adjournment

Report Items

Item No.1: 2018 Business Report.

Item No.2: Supervisors’ Review Report on the 2018 Financial Statements.

Ratification Items

Item No.1: (Proposed by the Board of Directors)

Proposal: Adoption of the 2018 Business Report and Financial Statements. Explanation:

Item No.2: (Proposed by the Board of Directors) Proposal: Adoption of the Proposal for 2018 Deficit Compensation. Explanation:

Resolution:

Discussion Items

Item No.1: (Proposed by the Board of Directors) Proposal: Amendment to the “Procedures for Acquisition or Disposal of Assets”.

Explanation:

Resolution:

Item No.2: (Proposed by the Board of Directors)

Proposal: Amendment to the “Procedures for Financial Derivatives Transactions”.

Explanation:

Resolution:

Extemporary Motions

Adjournment

Attachment 1

2018 Business Report

1. Results of Implementation of Business Plan

2. Execution of the Budget

3. Financial Revenue and Expenses and Profitability Analysis

AHOKU ELECTRONIC COMPANY Supervisors’ Review Report

Submit to

Independent Auditors’ Report

Opinion

Basis for Opinion

Key Audit Matters

AHOKU ELECTRONIC COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AHOKU ELECTRONIC COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

AHOKU ELECTRONIC COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

AHOKU ELECTRONIC COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

AHOKU ELECTRONIC COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

AHOKU ELECTRONIC COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

AHOKU ELECTRONIC COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Independent Auditors’ Report

(Parent Company Only Financial Statements)

The Board of Directors and Shareholders AHOKU ELECTRONIC COMPANY

Opinion

Basis for Opinion

Key Audit Matters

AHOKU ELECTRONIC COMPANY

PARENT COMPANY ONLY BALANCE SHEETS

AHOKU ELECTRONIC COMPANY

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

AHOKU ELECTRONIC COMPANY

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

AHOKU ELECTRONIC COMPANY

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

AHOKU ELECTRONIC COMPANY

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

AHOKU ELECTRONIC COMPANY

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

AHOKU ELECTRONIC COMPANY

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

AHOKU ELECTRONIC COMPANY

AHOKU AGM Information 2019