BASSO — AGM Information 2020

Jul 10, 2020

Stock Code: 1527

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BASSO INDUSTRY CORP.

2020 Annual Shareholders' Meeting Meeting Handbook

Time: June 30, 2020 10:00 a.m. Place: No. 24, 36th Rd., Taichung Industrial Park, Taichung (conference room at 4F)

Table of Contents

Chapter 1. Meeting Procedure----------------------------------------------------------------	Chapter 1. Meeting Procedure----------------------------------------------------------------	1
Chapter 2. Meeting Agenda--------------------------------------------------------------------		2
I.	Announcements---------------------------------------------------------------------------	3
**II. **	Proposals-------------------------------------------------------------------------------------	3
**III. **	Discussions----------------------------------------------------------------------------------	4
**IV. **	Extempore Motions----------------------------------------------------------------------	4
Chapter 3. Attachments
I.	2019 Business Report-------------------------------------------------------------------	5
**II. **	2019 Supervisors' Review Report-------------------------------------------------	6
**III. **	Independent Auditors’ Report------------------------------------------------------	9
**IV. **	2019 Financial Statements------------------------------------------------------------	13
**V. **	Earnings Distribution-------------------------------------------------------------------	18
**VI. **	Comparison Table for Amendments to the Articles of Association--	19
**VII. **	Comparison Table for Amendments to the Rules for Elections of Directors and Supervisors------------------------------------------------------------	22
Chapter 4. Appendices
I.	Rules of Procedure for Shareholders’ Meetings-----------------------------	24
**II. **	Articles of Association------------------------------------------------------------------	26
**III. **	Rules for Elections of Directors and Supervisors---------------------------	32
**IV. **	Shareholding of Directors and Supervisors-----------------------------------	33

BASSO INDUSTRY CORP.

The Procedure for the 2020 Annual Shareholders' Meeting

• I. Call Meeting to Order

• II. Chairman’s Address

• III. Announcements

• IV. Proposals

• V. Discussions

• VI. Extempore Motions

VII. Meeting Adjourned

1

BASSO INDUSTRY CORP. 2020 Annual Shareholders’ Meeting Agenda

• Time: June 30, 2020, 10:00 a.m. (Tuesday) Place: No. 24, 36th Rd., Taichung Industrial Park, Taichung (the Company's conference room at 4F)

• I. Call Meeting to Order

• II. Chairman’s Address

• III. Announcements

• (I) 2019 Business Report

• (II) 2019 Supervisors’ review report

• (III) 2019 Employees, Directors and Supervisors Remuneration Distribution Report

• IV. Proposals

• (I) Adoption of the 2019 Financial Statements and Business Report

• (II) Adoption of the Proposal for Distribution of 2019 Profits

• V. Discussions

• (I) Amendments to “the Articles of Association”

• (II) Amendments to the “Rules for Election of Directors and Supervisors”

• VI. Extempore Motions

• VII.Meeting Adjourned

2

Announcements

Proposal 1 Purpose: 2019 Business Report Explanation: Please refer to #page 5# Attachment 1 of the meeting agenda.

Proposal 2 Purpose: 2019 Supervisors’ Review Report Explanation: Please refer to #page 6 # Attachment 2 of the meeting agenda.

Proposal 3 Purpose: 2019 Employees, Directors and Supervisors Remuneration Distribution Report.

Explanation: 1. According to Article 26 of the Company's Article of Incorporation, the Company shall set aside not less than 0.5% of its annual profits as employee bonus to its employees and no more than 3% as compensation to its Directors.

1. The amount of compensation to Directors and Supervisors is NT$11,000,000, accounting for 1.41% of net income before tax. The amount of employee bonus is NT$31,973,000, accounting for 4.11% of net income before tax. All of the above bonus and compensation complied with the percentage set out in Articles of Association.

2. Directors' and Supervisors' compensation and employee bonus were all paid out by cash.

Proposals

Proposal 1 Proposed by the Board of Directors Purpose: Adoption of the 2019 Financial Statements and Business Report

• Explanation: 1. The Company's 2019 Financial Statements and Business Report have been approved by the Company's Board of Directors. The Company's Supervisors have reviewed and issued review report.

• Please refer to #page 5, 7, and 11# Attachment I, III, and IV of the meeting agenda.

• Please acknowledge.

Resolution:

3

Proposal 2

Proposal 2 Proposed by the Board of Directors Purpose: Adoption of the Proposal for Distribution of 2019 Profits

• Explanation: 1. The Company's 2019 earnings distribution has been approved by the Board of Directors and reviewed by the Supervisors. Please refer to #page 17# Attachment V of the meeting agenda.

• After the resolution of the shareholders' meeting, it is proposed to authorize the Chairman to set a separate record date for ex-dividends.

• Allotment of cash dividends is calculated up to NT Dollar (rounded down to less than NT$1). The total of decimals is returned to the company's account.

• If the dividend payout rate changes due to the purchase of treasury stocks, the transfer or cancellation of treasury stocks, or other factors that affect the total number of outstanding shares, propose to authorize the Chairman to handle the matter at his sole discretion.

• Please acknowledge.

Resolution:

Discussions

Discussion 1 Proposed by the Board of Directors Purpose: Amendments to “the Articles of Association”

Explanation: Please refer to #page 19 to 21# Attachment VI "The comparison table for the Articles of Association before and after revision" in the meeting agenda.

Resolution:

Discussion 2 Proposed by the Board of Directors Purpose: Amendments to the “Rules for Election of Directors and Supervisors” Explanation: Please refer to #page 22 to 23# Attachment VII "The comparison table for the Rules for Election of Directors and Supervisors before and after revision" in the meeting agenda.

Resolution:

Extempore Motions

Meeting Adjourned

4

【 Attachment I 】

BASSO INDUSTRY CORP.

2019 Business Report

				Unit: NT$1,000 Growth Rate (%) (7.21) (11.85) (4.98) (20.48) (40.47) (44.41)
Year Account	2019	2018	Difference	Growth Rate (%)
Net Sales	3,464,083	3,733,320	(269,237)	(7.21)
Gross Profit	985,478	1,117,939	(132,461)	(11.85)
Gross Profit Margin	28.45%	29.94%	-1.49%	(4.98)
Operating Income	576,509	725,010	(148,501)	(20.48)
Net Income Before Tax	735,056	1,234,800	(499,744)	(40.47)
Net Income After Tax	573,554	1,031,765	(458,211)	(44.41)

According to the Company's Income Statement for the year of 2019, net sales is NT$3,464,083,000, gross profit is NT$985,478,000, operating income is

NT$576,509,000, net income before tax is NT$735,056,000, and net income after tax is NT$573,554,000.

In 2019, due to the impact of the U.S.-China trade war, exchange loss recognized due to significant NTD appreciation, and loss from sale of financial products, income before and after tax in 2019 decreased NT$499,744 thousand and NT$458,211 thousand comparing to 2018. Diluted earnings per share after tax is NT$4.13.

Chairman: Ming-da Lai President: Bo-yan Lai Accounting Manager: Chi-piao Chen

5

【 Attachment II 】

Supervisors' Review Report of BASSO INDUSTRY CORP.

The Board of Directors has prepared the Company's 2019 Business Report, Balance Sheets, Statements of Comprehensive Income, Statements of Changes in Equity, and Statements of Cash Flows audited by the CPA firm. They have been determined to be correct by Supervisors. According to Article 219 of the Company Act, we hereby submit this report.

To

BASSO INDUSTRY CORP 2020 Annual Shareholders' Meeting

Supervisor: Wei-ting Chang

March 19, 2020

6

Supervisors' Review Report of BASSO INDUSTRY CORP.

The Board of Directors has prepared the Company's 2019 Business Report, Balance Sheets, Statements of Comprehensive Income, Statements of Changes in Equity, and Statements of Cash Flows audited by the CPA firm. They have been determined to be correct by Supervisors. According to Article 219 of the Company Act, we hereby submit this report.

To

BASSO INDUSTRY CORP 2020 Annual Shareholders' Meeting

Supervisor: Xiao-ling Lin

March 19, 2020

7

Supervisors' Review Report of BASSO INDUSTRY CORP.

The Board of Directors has prepared the Company's 2019 Business Report, Balance Sheets, Statements of Comprehensive Income, Statements of Changes in Equity, and Statements of Cash Flows audited by the CPA firm. They have been determined to be correct by Supervisors. According to Article 219 of the Company Act, we hereby submit this report.

To

BASSO INDUSTRY CORP 2020 Annual Shareholders' Meeting

Supervisor: Zi-ling Ye

March 19, 2020

8

【 Attachment III 】

Independent Auditors' Report

The Board of Directors, BASSO INDUSTRY CORP.:

Audit opinion

We have audited the accompanying financial statements of BASSO INDUSTRY CORP. (the “Company”), which comprise Balance Sheets as of December 31, 2019 and 2018, Statements of Comprehensive Income, Statements of Changes in Equity and Statements of Cash Flows for the years then ended, and the notes to the individual financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying individual financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the 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.

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 individual Financial Statements section of our report. We are independent of the Company in accordance with the Norm of Professional Ethics for Certified Public Accountant 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 individual financial statements for the year ended December 31, 2019. These matters were addressed in the context of our audit of the individual 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 financial statements are stated as follows:

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1. Revenue recognition

For the accounting policies relating to revenue recognition, please refer to Note 4 (13) of the individual financial statements.

Description of key audit matters:

Different sales terms such as discounts, returns, warranty (according to the contract), or consignment, are provided in part of the Company's sales contracts due to agreement or business practices. Therefore, risks exist in correctness of revenue recognition point. Thus, recognition cut-off test is one of the material evaluation items for us in auditing the individual financial reports of BASSO INDUSTRY CORP.

Audit procedures performed:

Our key audit procedures performed in respect of the above area included the following: Understood and tested the design and operating effectiveness of the key internal controls over the revenue and collection cycle; sampled and inspected material sales contracts or external sales orders to evaluate whether revenue has been recognized according to accounting standards; understood revenue from top 10 customers, compared difference between current period amount and same period of prior year to evaluate whether there is any significant abnormality; selected sales transaction samples incurred before and after the cut-off date, compared them with related evidences to evaluate the correctness of period when revenue is recognized and understood whether there is material sales return after the end of accounting period.

1. Inventory valuation

For the accounting policies of inventories, please refer to Note 4 (7) of the individual financial statements; for the accounting estimates and uncertainties in assumptions of inventory evaluation, please refer to Note 5 of the individual financial reports; for the description of inventory evaluation, please refer to Note 6 (6) of the individual financial reports. Description of key audit matters:

The inventory of BASSO INDUSTRY CORP. is measured by the lower of cost or net realizable value. Because of the fierce competition in the global market, the product design and manufacturing technology are rapidly changing. The introduction of new products may change the demand of European and American brand manufacturers and consumers and make the existing products obsolete or no longer meet market demand. The sales of related products may fluctuate drastically which resulted in risk that the cost of inventory may exceed its net realizable value. Therefore, the inventory evaluation is one of the material evaluation items for us to perform the audit of the individual financial report of BASSO INDUSTRY CORP. Audit procedures performed:

Our key audit procedures performed in respect of the above area included the following: Evaluated the reasonableness of the inventory valuation policy; examined the inventory aging, analyzed its change, and assessed whether the inventory valuation had been conducted in accordance with accounting policies; understood and assessed the reasonableness of basis for net realizable value adopted by the management, selected samples, verified with evidences to test the correctness of the amount, and assessed whether the management's disclosure regarding inventory valuation was fairly presented.

10

Responsibilities of Management and Those Charged with Governance for the Individual Financial Statements

Management is responsible for the preparation and fair presentation of the individual financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRS, IAS, IFRIC, and SIC endorsed and issued into effect by the Financial Supervisory Commission, and for such internal control as management determines is necessary to ensure the preparation of individual financial statements are free from material misstatement, whether due to fraud or error.

In preparing the individual financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance (including Supervisors) are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Individual Financial Statements

Our objectives are to obtain reasonable assurance about whether the individual financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these individual financial statements.

As part of an audit in accordance with the auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the individual financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

11

1. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the individual financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

2. Evaluate the overall presentation, structure and content of the individual financial statements, including the disclosures, and whether the individual financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

3. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the individual financial statements for the year ended December 31, 2019 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

KPMG

CPA:

Securities Authorization: Financial Supervisory Commission Authorization No. 1040007866 Approval No Financial Supervisory Commission VI No. 0950103298 March 19, 2020

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【 Attachment IV 】

BASSO INDUSTRY CORP. Balance Sheets December 31, 2019 and 2018

										Unit: NT$1,000	Unit: NT$1,000
		2019.12.31		2018.12.31			2019.12.31			2018.12.31
	Assets	Amount	%	Amount	%	Liabilities and Equity	Amount	%		Amount	%
	Current assets:					Current liabilities:
1100	Cash and cash equivalents	$ 542,488	12	253,364	2	2100 Short-term borrowings	$ -		-	8,993,000	60
1110	Financial assets at fair value through	-	-	3,755,830	25	2150 Notes payable	6,004		-	8,020	-
	profit or loss--current
1150	Notes receivable, net	12,450	-	9,858	-	2170 Accounts payable	238,797		5	270,802	2
1170	Accounts receivable, net	576,904	13	882,436	6	2200 Other payables	374,218		8	391,789	3
1200	Other receivables	8,811	-	172,003	1	2210 Contract liabilities	71,040		2	43,252	-
1220	Deferred tax assets	101,953	2	-	-	2230 Current income tax liabilities	-		-	91,483	1
1310	Inventories--manufacturing	550,959	12	547,552	4	2250 Provisions--current	5,020		-	6,417	-
1476	Other current financial assets	1,700,000	37	7,575,465	51	2320Current portion of long-term	-		-	769,000	5
						borrowings
1479	Other current assets	29,011	1	26,808	-	2399 Other current liabilities	1,524		-	1,261	-
		3,522,576	77	13,223,316	89		696,603	15		10,575,024	71
	Non-current Assets:					Non-current liabilities:
1520	Financial assets at fair value through comprehensive income--non-current	10	-	10	-	2540 Long-term borrowings	-		-	420,000	3
1600	Property, plant and equipment	960,244	20	889,073	6	2640 Defined benefit liabilities, net	36,195		1	38,074	-
1780	Intangible assets	16,831	-	22,693	-		36,195		1	458,074	3
1840	Deferred tax assets	76,509	2	222,963	2	Total Liabilities	732,798	16		11,033,098	74
1980	Other non-current financial assets	-	-	473,011	3	Equity:
1990	Other non-current assets	37,575	1	30,616	-	Equity attributable to owners
		1,091,169	23	1,638,366	11	3100 Capital stock	1,385,706	30		1,379,606	9
						3200 Capital surplus	26,396		1	593	-
						3300 Retained earnings	2,507,405		54	2,486,945	17
						3400 Others	(38,560)	(1)		(38,560)	-
						Total equity	3,880,947	84		3,828,584	26
	Total assets	$ 4,613,745	100	14,861,682	100	Total liabilities and equity	$ 4,613,745	100		14,861,682	100

Chairman: Ming-da Lai President: Bo-yan Lai

Accounting Manager: Chi-piao Chen Prepared by: Yu-Hsin Huang

13

BASSO INDUSTRY CORP. Statements of Comprehensive Income For the years ended December 31, 2019 and 2018

2019 Amount % 4000Operating revenues 4110Sales revenue $3,487,783 101 4170 Sales returns 4,360 - 4190 Sales allowances 19,340 1 Net operating revenues 3,464,083 100 5000Operating costs 2,478,605 72 Gross profit from operations 985,478 28 Operating expenses 6100 Selling expenses 137,939 4 6200 Administrative expenses 92,287 3 6300 Research and development expenses 178,743 5 408,969 12 Net operating income 576,509 16 Non-operating income and expenses 7010 Other income 311,962 9 7020 Other gains and losses (75,383) (1) 7050 Finance costs (78,032) (2) 158,547 6 7900Net income before tax 735,056 22 7950Less: income tax expense 161,502 4 Net income 573,554 18 8300Other comprehensive income: 8310 Items that may not be reclassified subsequently to profit or loss 8311 Gains (losses) on remeasurements of defined benefit plan (1,251) - 8349 Less Income tax related to components of other comprehensive income that will not be reclassified to profit or loss - - (1,251) - 8300Other comprehensive income (after tax) (1,251) - Comprehensive income 572,303 18 Earnings per share (NT$) 9710 Basic Earnings Per Share (NT$) $ 4.15 9810 Diluted Earnings Per Share (NT$) $ 4.13 Chairman: Ming-da Lai President: Bo-yan Lai Accounting Manager: Chi-piao Chen

Unit: NT$1,000 2018 Amount % 3,748,295 100 865 - 14,110 - 3,733,320 100 2,615,381 70 1,117,939 30 154,110 4 85,405 2 153,414 4 392,929 10 725,010 20 376,454 10 235,571 6 (102,235) (3) 509,790 13 1,234,800 33 203,035 5 1,031,765 28 7,840 - - - 7,840 - 7,840 - 1,039,605 28 7.48 7.43 Prepared by: Yu-Hsin Huang

14

BASSO INDUSTRY CORP. Statements of Changes in Equity For the years ended December 31, 2019 and 2018

Balance, January 1, 2018 Effects of retrospective application Adjusted balance, January 1, 2018 Net income Other comprehensive income Comprehensive income Appropriation and distribution of retained earnings: Legal reserve Special reserve Cash dividends Other changes in capital surplus Balance, December 31, 2018 Balance, January 1, 2019 Net income Other comprehensive income Comprehensive income Appropriation and distribution of retained earnings: Legal reserve Special reserve Cash dividends Reversal of special reserve Capitalisation of employees' compensation Balance, December 31, 2019	Capital stock-- common stock Capital surplus	Retained earnings
		Legal reserve Special reserve Unappropriated earnings Total

Chairman: Ming-da Lai

President: Bo-yan Lai

Accounting Manager: Chi-piao Chen

Prepared by: Yu-Hsin Huang

15

BASSO INDUSTRY CORP.

Statements of Cash Flows

For the years ended December 31, 2019 and 2018

Cash flows from operating activities: Income before income tax Adjustments for: Adjustments to reconcile profit (loss) Depreciation expense Amortization expense Net loss (gain) on financial assets or liabilities at fair value through profit or loss Interest expense Interest revenue Loss (gain) on disposal of property, plant and equipment Overdue dividend transferred to capital surplus Total adjustments to reconcile profit Changes in operating assets and liabilities: Decrease (increase) in notes receivable Decrease (increase) in accounts receivable Decrease (increase) in other receivables Increase in inventories Increase in other current assets Changes in operating assets Increase (decrease) in contract liability Decrease in notes payable Increase (decrease) in accounts payable Increase (decrease) in other payables Decrease in provisions Increase (decrease) in other current liabilities Decrease in net defined benefit liability Changes in operating liabilities Total changes in operating assets and liabilities Total adjustments

Unit: NT$1,000 2019 2018 735,056 1,234,800 99,638 85,469 14,260 11,676 29,184 46,055 78,032 102,235 (311,962) (376,454) 237 (2,175) - 288 (90,611) (132,906) (2,592) 1,048 305,532 (135,382) 177 517 (17,931) (125,214) (2,203) (1,932) 282,983 (260,963) 27,788 (8,031) (2,016) (139,273) (32,005) 41,890 (12,150) 85,057 (1,397) (108) 263 (875) (3,130) (3,158) (22,647) (24,498) 260,336 (285,461) 169,725 (418,367)

(Continued)

16

(Continued)

Cash inflow generated from operations Interest received Interest paid Income taxes paid Net cash flows from operating activities Cash flow from (used in) investing activities: Acquisition of financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Acquisition of property, plant and equipment Proceeds from disposal of Property, Plant and Equipment Acquisition of intangible assets Decrease (increase) in other financial assets Decrease (increase) in other non-current assets Increase in prepaid equipment Net cash flows from (used in) investing activities Cash flows from (used in) financing activities: Increase in short-term loans Repayments of short-term borrowings Increase in long-term borrowings Repayments of long-term borrowings Cash dividends paid Capitalisation of employees' compensation Net cash used in financing activities Net increase (decrease) of cash and cash equivalents Cash and cash equivalent, beginning of year Cash and cash equivalents, end of year	2019 2018
	904,781 816,433 474,977 354,738 (87,256) (100,757) (208,484) (166,247)
	1,084,018 904,167
	- (673,869) 3,726,646 496,638 (23,219) (19,753) 3,741 2,910 (8,398) (6,632) 6,348,476 (456,589) (168) 275 (140,032) (74,188)
	9,907,046 (731,208)
	650,000 310,000 (9,643,000) (428,000) 50,000 230,000 (1,239,000) 0 (551,843) (193,145) 31,903 0
	(10,701,940) (81,145)
	289,124 91,814 253,364 161,550
	542,488 253,364

Chairman: Ming-da Lai

President: Bo-yan Lai

Accounting Manager: Chi-piao Chen

Prepared by: Yu-Hsin Huang

17

【 Attachment V 】

(Attachment II) Earnings Distribution

BASSO INDUSTRY CORP.

Earnings Distribution

2019

Item	Amount
Balance at the beginningof theperiod(December 31, 2019)	1,093,626,787
Add: adjustment for defined benefit	(1,251,108)
Add: netprofit after tax from Januaryto December 2019	573,554,146
Less: 10% legal surplus reserve	(57,355,415)
Retained earnings available for distribution for thisperiod	1,608,574,410
Distributable items in the currentperiod
1. Shareholder dividend(NT$1.2 / share)	166,284,768
(Cash distribution of NT$1.2)
Undistributed earnings at the end of theperiod	1,442,289,642

Chairman: Ming-da Lai General Manager: Bo-yan Lai Prepared by: Ju-Chen Hu

18

【 Attachment VI 】

Comparison Table for the Articles of Association Before and After Revision

BASSO INDUSTRY CORP.

Comparison Table for Amendments to the Articles of Association Before and After Revision

After Amendment	Before Amendment	Explanation
Article 16 The Company shall have seven to eleven Directors, among which shall have at least three Independent Directors, and Independent Directors shall not be less than one fifth of the Directors. Directors shall be elected by adopting candidate nomination system; persons with capacity can be elected at the Shareholders' Meeting for a 3-year term, with consecutive re-election. The total share ownership ratio of all Directors shall not be less than which was prescribed in the Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies.	Article 16 The Company shall have seven to eleven Directors, among which shall have at least two Independent Directors, and Independent Directors shall not be less than one fifth of the Directors. Independent Directors shall be elected by adopting candidate nomination system. The Company shall have two to three Supervisors. Persons with capacity can be elected at the Shareholders' Meeting for a 3- year term, with consecutive re-election. The total share ownership ratio of all Directors and Supervisors shall not be less than which was prescribed in the Rules and Review Procedures for Director and Supervisor Share OwnershipRatios at Public Companies.	Conducted in accordance with relevant laws and regulations.
Article 16-1 In compliance with Article 14-4 of the Securities and Exchange Act, the Company shall establish an Audit Committee, which shall consist of all Independent Directors. The Audit Committee or the members of Audit Committee shall be responsible for those responsibilities of Supervisors specified under the Company Act, the Securities and Exchange Act and other relevant regulations.		Articles are added and conducted according to practical needs.
Article 18 The Board meeting shall be convened by the Chairman of the Board. Except as otherwise provided in the Company Act, a Board meeting may be held if attended by a majority of total Directors and resolutions shall be adopted with the concurrence of the majority of the Directors present at the meeting. A Director may, by written authorization specifying the scope of delegated authority, appoint another Director to attend on his behalf any Board meeting, and to vote for him on matters presented at such meeting. But no Director may act as proxy for more than one other Director. In case a Board meeting held via video conference, any Director attending the meeting via video conference shall be deemed attending the meeting in person. Board meeting shall be convened upon written notice with the agenda mailed to all theDirectorsat least7 days prior tothe date	Article 18 The Board meeting shall be convened by the Chairman of the Board. Except as otherwise provided in the Company Act, a Board meeting may be held if attended by a majority of total Directors and resolutions shall be adopted with the concurrence of the majority of the Directors present at the meeting. A Director may, by written authorization specifying the scope of delegated authority, appoint another Director to attend on his behalf any Board meeting, and to vote for him on matters presented at such meeting. But no Director may act as proxy for more than one other Director. In case a Board meeting held via video conference, any Director attending the meeting via video conference shall be deemed attending the meeting in person. Board meetings shall be convened upon written notice with the agenda mailed to all theDirectorsand Supervisorsat least7 days	Minor revision of wording.

19

After Amendment	BeforeAmendment	Explanation
of the meeting. In case of urgent circumstances, however, a meeting may be called at any time. Board meetings shall be convened through facsimile or E-mail.	prior to the date of the meeting. In case of urgent circumstances, however, a meeting may be called at any time. Board meetings shall be convened through facsimile or E- mail.
Article 20 Deleted	Article 20 The responsibilities of Supervisors are as below: I. Review the Company's financials and documents. II. Inquire the Company's operation. III. Investigate financial status of branch companies. IV. Other investigationon financialstatus.
Article 22 Deleted	Article 22 Aside from independently conducting his right of audit, a Supervisor may attend the Board meeting. However, he may not join the vote.
Article 24 Participation fee for each Director to present in Board meetings is NT$10,000 every month. The Board of Directors is authorized to decide the remuneration of Independent Directors, including those acting as other committee members. The remuneration shall be decided considering the usual standard of the industry. Independent Directors may not participate in distribution of compensation to Directors stipulated in Article 26 of Articles of Association. The Board of Directors is authorized to decide remuneration of Directors according to the level of participation in the Company's operation, value of their contribution, and the usual standard of the industry. The Company may purchase liability insurance during the terms of Directors in order to reduce and diversify risks in the Company's operation.	Article 24 Participation fee for each Director and Supervisor to present in Board meetings is NT$10,000 every month. The Board of Directors are authorized to decide the remuneration of Independent Directors, including those acting as other committee members. The remuneration shall be decided considering the usual standard of the industry. Independent Directors may not participate in distribution of compensation to Directors and Supervisors stipulated in Article 26 of Articles of Association. The Board of Directors are authorized to decide remuneration of Directors and Supervisors according to the level of participation in the Company's operation, value of their contribution, and the usual standard of the industry. The Company may purchase liability insurance during the terms of Directors and Supervisors in order to reduce and diversify risks in the Company's operation.	Minor revision of wording.

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After Amendment	BeforeAmendment	Explanation
Article 25 After the close of each fiscal year, the following reports shall be prepared by the Board of Directors and submitted to the Audit Committee for review 30 days prior to the regular shareholders’ meeting. The reports shall be thereby submitted to the Shareholders' Meeting for acknowledgement. I. Business Report; II. Financial Statements; III. Proposal Concerning Distribution of Earnings orCovering of Losses.	Article 25 After the close of each fiscal year, the following reports shall be prepared by the Board of Directors and submitted to Supervisors for review 30 days prior to the regular shareholders’ meeting. The reports shall be thereby submitted to the Shareholders' Meeting for acknowledgement. I. Business Report; II. Financial Statements; III. Proposal Concerning Distribution of Earnings orCovering of Losses.	Minor revision of wording.
Article 26 If the Company earns a profit for the year, the Company shall set aside not less than 0.5% of its annual profits as employees' compensation and not more than 3% as remuneration of Directors. However, if the Company still has accumulated deficit, the amount for offsetting the deficit should be reserved first. Parties eligible to receive the said employees' compensation in the form of stock or cash shall include employees in affiliated companies whometcertainconditions.	Article 26 If the Company earns a profit for the year, the Company shall set aside not less than 0.5% of its annual profits as employee bonus and not more than 3% as remuneration of Directors and Supervisors. However, if the Company still has accumulated deficit, the amount for offsetting the deficit should be reserved first. Parties eligible to receive the said employee bonus in the form of stock or cash shall include employees in affiliated companies whometcertainconditions.	Minor revision of wording.
Article 32 The 33rd amendment was made on June 27, 2016. The 34th amendment was made on June 30, 2020. Wordings regarding Supervisors are deleted and shall be effective upon the date when theAuditCommitteeis established.	Article 32 The 33rd amendment was made on June 27, 2016.	Addition of revision date.

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【 Attachment VII 】

Comparison Table for the Rules for Elections of Directors and Supervisors Before and After Revision

BASSO INDUSTRY CORP.

Comparison Table for Amendments to the Rules for Elections of Directors and Supervisors Before

and After Revision

	and After Revision
After Amendment	BeforeAmendment	Explanation
Title Rules for Elections of Directors	Title Rules for Elections of Directors and Supervisors	Revised the title of the Rules in accordance with the establishment of AuditCommittee.
Article 1 The Directors of the Company shall be elected in accordance with the Rules specifiedherein.	Article 1 The Directors and Supervisors of the Company shall be elected in accordance with the Rules specifiedherein.	Deleted related rules for election of Supervisors in accordance with the establishment of Audit Committee.
Article 3 Election of Directors of the Company shall be held at the shareholders' meeting.	Article 3 Election of Directors and Supervisors of the Company shall be held at the shareholders' meeting.	Deleted related rules for election of Supervisors in accordance with the establishment of Audit Committee.
Article 4 The registered cumulative voting system is used in election of Directors of the Company. Attendance card numbers printed on the ballots may be used instead of recording the names of voting shareholders.	Article 4 The registered cumulative voting system is used in election of Directors and Supervisors of the Company. Attendance card numbers printed on the ballots may be used instead of recording the names of voting shareholders.	Deleted related rules for election of Supervisors in accordance with the establishment of Audit Committee.
Article 5 In the election of Directors of the Company, each share shall have voting rights equivalent to the number of seats to be elected and such voting rights can be combined to vote for one person or divided to vote for several persons.	Article 5 In the election of Directors and Supervisors of this Company, each share shall have voting rights equivalent to the number of seats to be elected and such voting rights can be combined to vote for one person or divided to vote for several persons.	Deleted related rules for election of Supervisors in accordance with the establishment of Audit Committee.
Article 6 The Company’s Directors shall be elected by adopting the candidate nomination system specified in Article 192-1 of the Company Act.	Article 6 The Company’s Independent Directors shall be elected by adopting the candidate nomination system specified in Article 192-1 of the Company Act.	Conducted in accordance with relevant laws and regulations.
Article 7 In the election of Directors of the Company, candidates who acquire more votes should win the seats of Directors and Independent Directors with the quota established by the Company's Articles of Association. If two or more candidates acquire the same number of votes and exceed the specified seats available, such candidates shall draw lots to	Article 7 In the election of Directors and Supervisors of the Company, candidates who acquire more votes should win the seats of Directors, Independent Directors, and Supervisors with the quota established by the Company's Articles of Association. If two or more candidates acquire the same number of votes and exceed the specified seats available, such candidates shall draw lots to	Deleted related rules for election of Supervisors in accordance with the establishment of Audit Committee.

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After Amendment	BeforeAmendment	Explanation
decide who should win the seats available. For non-attending candidates, the chairperson shall draw lots on behalf him or her. Candidates that simultaneously won the seats of Directors shall decide by themselves to act as Directors. The vacancy shall be filled by rest of the candidates with the highest number of votes.	decide who should win the seats available. For non-attending candidates, the chairperson shall draw lots on behalf him or her. Candidates that simultaneously won the seats of Directors and Supervisors shall decide by themselves to act as Directors or Supervisors. The vacancy shall be filled by rest of the candidates with the highest number of votes.
Article 13 The Board of Directors of the Company shall issue notifications to respective Directors elected.	Article 13 The Board of Directors of the Company shall issue notifications to respective Directors and Supervisors elected.	Deleted related rules for election of Supervisors in accordance with the establishment of Audit Committee.

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【 Appendix I 】

BASSO INDUSTRY CORP.

Rules of Procedure for Shareholders’ Meetings

• Article 1. Shareholders' Meetings of the Company (the "Meeting") shall be conducted in accordance with the Rules unless otherwise stipulated by relevant laws and regulations. The Rules were established according to Letter No.04109 issued by SFC, Ministry of Finance on August 4, 1997.

• Article 2. The Chairman of the Board shall be the chairperson presiding at the Meeting in the case that the Meeting is convened by the Board of Directors. If, for any reason, the Chairman of the Board cannot preside at the Meeting, the Chairman may appoint a Director to act on his behalf. If no one is appointed, the Directors shall select from among themselves one person to perform the Chairman's duties. If the Meeting is convened by someone other than the Board of Directors, the convener will act as the meeting chairperson. If there are two or more conveners, they shall appoint one amongst themselves to chair the meeting.

• Article 3. Shareholders (or their representatives) attending the Meeting shall sign on attendance record or submit the attendance card for the purpose of signing in.

• Article 4. The Company may summon its lawyers, certified public accountants, or any relevant personnel to attend the Meeting. Staff handling administrative affairs of the Meeting shall wear identification cards or arm bands.

• Article 5. Chairperson 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 chairperson may postpone the time for the Meeting. The postponements shall be limited to two times at the most and Meeting shall not be postponed for longer than 1 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 Article 175 of the Company Act. If the number of shares represented during the meeting reaches a total of over half of all outstanding shares, the chairperson may re-propose the temporary resolutions for final voting according to Article 174 of the Company Act.

• Article 6. 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 chairperson cannot announce adjournment of the Meeting before all the discussion items (including special motions) listed in the agenda are resolved. However, in the event that the chairperson adjourns the Meeting in violation of these Rules of Procedures, the shareholders may designate, by a majority of votes represented by shareholders attending the Meeting, one person as chairperson to continue the Meeting.

• Article 7. The shareholders cannot designate any other person as chairperson and continue the

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		Meeting in the same or other place after the Meeting is adjourned.
Article	8.	During the Meeting, the chairperson may, at his discretion, set time for intermission.
Article	9.	When a shareholder present at the Meeting wishes to speak, a Speech Note should be
		filled out. The sequence of speeches by shareholders should be decided by the
		chairperson. 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 chairperson and the shareholder in speaking, no shareholder shall interrupt the
		speeches of the other shareholders; otherwise the chairperson shall stop such
		interruption.
Article	10.	Each shareholder shall not, for each discussion item, speak more than two times (each
		time not exceeding 5 minutes), unless permitted and extended by the chairperson. In
		case the speech of any shareholder violates the above provision or exceeds the scope of
		the discussion item, the chairperson may stop the speech of such shareholder.
Article	11.	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. If a corporate shareholder
		designates two or more representatives to attend the Meeting, only one representative
		can speak for each discussion item.
Article	12.	After the speech of a shareholder, the chairperson may respond by himself/herself or
		appoint an appropriate person to respond. The chairperson may announce to end the
		discussion of any resolution and go into voting if the chairperson deems it appropriate.
Article	13.	The person(s) to check and the person(s) to record the ballots during a vote by casting
		ballots shall be appointed by the chairperson. The person(s) checking the ballots shall
		be a shareholder(s). The result of voting shall be announced at the Meeting and placed
		on record.
Article	14.	The chairperson may conduct the disciplinary officers or the security guard to assist in
		keeping order of the Meeting place.
Article	15.	Except otherwise specified in the Company Act or the Company's Articles of
		Association, a resolution shall be adopted by a majority of the votes represented by the
		shareholders present at the Meeting. The resolution shall be deemed adopted and shall
		have the same effect as if it was voted by casting ballots if no objection is voiced after
		solicitation by the chairperson. 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	16.	The process of the Meeting shall be tape-recorded or videotaped and these tapes shall
		be preserved for at least 1 year.
Article	17.	Any matter not provided in the Rules shall be handled in accordance with the Company
		Act and relevant regulations. The Rules shall be effective from the date approved by the
		Shareholders' Meeting. The same applies in case of revision.

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【 Appendix II 】

BASSO INDUSTRY CORP. Articles of Association

Chapter 1. General Provisions

• Article 1. The Company shall be incorporated, as a company limited by shares, under the Company Act, and its name shall be 鑽全實業股份有限公司 in the Chinese language, and BASSO INDUSTRY CORP. in the English language.

• Article 2. The scope of business of the Company shall be as follows:

• The manufacturing, processing, assembly, and sales of electric-powered nailers, pneumatic nailers, and other pneumatic or electronic machines.

• The manufacturing, processing, assembly, and sales of pneumatic tools, electricpowered hand tools and machines.

• The processing, assembly, and sales of building materials.

• The processing, assembly, and sales of parts and hardware parts of afore-mentioned products.

• The import and export of parts and hardware parts of afore-mentioned products.

• The quotation, tender offer, and sells services (except futures) on behalf of domestic and overseas suppliers.

• CA02020 Aluminum and Copper Products Manufacturing

• CA01010 Mold Manufacturing

• CB01010 Machinery and Equipment Manufacturing

• CB01020 Office Machines Manufacturing

• CC01030 Electric Appliances Manufacturing

• CC01050 Data Storage Media Units Manufacturing

• CD01030 Automobiles and Parts Manufacturing

• CD01040 Motor Vehicles and Parts Manufacturing

• CD01050 Bicycles and Parts Manufacturing

• CE01010 Precision Instruments Manufacturing

• CE01030 Photographic and Optical Equipment Manufacturing

• CP01010 Hand Tool Manufacturing

• CH01010 Sporting and Athletic Articles Manufacturing

• CH01040 Toys Manufacturing

• C805030 Plastic Made Grocery Manufacturing

• C805050 Industrial Plastic Products Manufacturing

• CA01100 Aluminum Rolling, Drawing and Extruding

• CA01990 Other Non-ferrous Metal Basic Industries (producing magnesium or aluminum alloy through rolling, wire drawing, forging, or extrusion)

• CA03010 Metal Heat Treating

• CA04010 Metal Surface Treating

• ZZ99999 All business items that are not prohibited or restricted by law, except those that are subject to special approval.

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Article	3.	The Company shall have its head office in Taichung City. When necessary and upon
		approval of Board of Directors, the Company may set up branch companies within and
		without the territory of the Republic of China.
Article	4.	Public announcements of the Company shall be made in accordance with the Company
		Act and other relevant rules and regulations from competent authorities.
		Chapter 2. Shares
Article	5.	The total capital stock of the Company shall be in the amount of NT$1,862,196,000,
		divided into 186,219,600 shares at NT$10 each, and the Board of Directors is authorized
		to issue in installments.
Article	6.	The share certificates of the Company shall all be name-bearing share certificates, with
		the signature or authorized seal of three or more Directors before issuing stock, subject
		to validation according to relevant laws. The Company is exempt from printing
		certificates for its issued shares. Shares should be registered with the governing
		centralized securities depository organization. Same to other securities.
Article	7.	The transfer, registration, loss report, damage, split, merger, or pledge of the Company's
		stock shall all be handled according to the Company Act and related regulations.
Article	8.	Registration for transfer of shares shall be suspended 60 days immediately before the
		date of regular Shareholders' Meetings, and 30 days immediately before the date of any
		special Shareholders' Meetings, or within 5 days before the day on which dividend,
		bonus, or any other benefit is scheduled to be paid by the Company.
Article	9.	Shareholders’ Meetings of the Corporation are of two types, namely: (1) regular
		meetings and (2) special meetings. Regular meetings shall be convened, by the Board
		of Directors, within 6 months after the close of each fiscal year. Special meetings may
		be convened whenever necessary.
Article	10.	Notices shall be sent to all shareholders according to law for the convening of
		Shareholders’ Meetings, at least 30 days in advance, in case of regular meetings; and at
		least 15 days in advance, in case of special meetings.
Article	11.	When a shareholder is unable to attend the Shareholders' Meeting, a proxy may be
		appointed. The use of proxy shall be conducted according to the law or competent
		authorities.
Article	12.	The Chairman of the Board shall be the chairman presiding at the Shareholders' Meeting
		in the case that the Meeting is convened by the Board of Directors. If, for any reason,
		the Chairman of the Board cannot preside at the Meeting, the Chairman may appoint a
		Director to act on his behalf. If no one is appointed, the Directors shall select from
		among themselves one person to perform the Chairman's duties. If the Shareholders'
		Meeting is convened by someone other than the Board of Directors, the convener will
		act as the meeting chairperson. If there are two or more conveners, they shall appoint
		one amongst themselves to chair the meeting.
Article	13.	Aside from shares with no voting rights stipulated according to the Company Act, each
		share of stock shall be entitled to one vote.
Article	14.	At the time of the Shareholders’ Meeting, apart from when otherwise regulated by the
		Company Act, when over half of issued shares are represented, a motion may be passed
		with over half of the present shareholders' votes.

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The resolution shall be deemed adopted and shall have the same effect as if it was voted by casting ballots if no objection is voiced after solicitation by the chairperson.

• Article 15. The resolutions of the Shareholders' Meeting shall be recorded in the minutes, and such minutes shall be signed by or sealed with the chop of the chairperson of the meeting. Meeting minutes shall be distributed to all shareholders within 20 days of the Shareholders' Meeting. The preparation and distribution of meeting minutes may be conducted electronically. The distribution of meeting minutes after the public issuance of the Company's shares may be conducted through public announcement.

Chapter 3. Directors and Supervisors

• Article 16. The Company shall have seven to eleven Directors, among which shall have at least two Independent Directors, and Independent Directors shall not be less than one fifth of the Directors. Independent Directors shall be elected by adopting candidate nomination system. The Company shall have two to three Supervisors. Persons with capacity can be elected at the Shareholders' Meeting for a 3-year term, with consecutive re-election. The total share ownership ratio of all Directors and Supervisors shall not be less than which was prescribed in the Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies.

• Article 17. The Directors shall form the Board of Directors and elect from among themselves a Chairman of the Board by a majority in a meeting attended by over two-thirds of the Directors. The Board of Directors conducts all of the Company's related affairs according to law, Articles of Association, and resolutions of Shareholders' Meetings and Board meetings.

• Article 18. The Board meetings shall be convened by the Chairman of the Board. Except as otherwise provided in the Company Act, a Board meeting may be held if attended by a majority of total Directors and resolutions shall be adopted with the concurrence of the majority of the Directors present at the meeting. A Director may, by written authorization specifying the scope of delegated authority, appoint another Director to attend on his behalf any Board meeting, and to vote for him on matters presented at such meeting. But no Director may act as proxy for more than one other Director.

• In case a Board meeting held via video conference, any Director attending the meeting via video conference shall be deemed attending the meeting in person.

• Board meetings shall be convened upon written notice with the agenda mailed to all the Directors and Supervisors at least 7 days prior to the date of the meeting. In case of urgent circumstances, however, a meeting may be called at any time. Board meetings shall be convened through facsimile or E-mail.

• Article 19. The responsibility of Board of Directors are as below:

• The preparation of business plan;

• The preparation of earnings distribution;

• The preparation of capital increase and reduction;

• The preparation and review of significant rules and contracts;

• The appointment and dismissal of management;

• The engagement of the Company's consultant;

• The establishment or closure of branch companies;

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1. The review and decision of budget and final accounts;

2. The review and decision of real estate transaction and investment in other businesses;

3. The decision of other important matters.

4. Article 20. The responsibilities of Supervisors are as below:

5. Review the Company's financials and documents.

6. Inquire the Company's operation.

7. Investigate financial status of branch companies.

8. Other investigations on financial status.

9. Article 21. The resolutions of Board meetings shall be recorded in the minutes, and such minutes shall be signed by or sealed with the chop of the Directors presented in the meeting. Meeting minutes shall be distributed to all Directors within 20 days of the meeting. Such minutes, together with the attendance list and proxies, shall be filed and kept at the office of the Company.

10. Article 22. Aside from independently conducting his right of audit, a Supervisor may attend the Board meeting. However, he may not join the vote.

11. Article 23. The Company appoints several managers. The appointment, dismissal, and remuneration are conducted according to the Company Act.

12. Article 24. Participation fee for each Director and Supervisor to present in Board meetings is NT$10,000 every month.

13. The Board of Directors is authorized to decide the remuneration of Independent Directors, including those acting as other committee members. The remuneration shall be decided considering the usual standard of the industry. Independent Directors may not participate in distribution of compensation to Directors and Supervisors stipulated in Article 26 of Articles of Association.

14. The Board of Directors is authorized to decide remuneration of Directors and Supervisors according to the level of participation in the Company's operation, value of their contribution, and the usual standard of the industry. The Company may purchase liability insurance during the terms of Directors and Supervisors in order to reduce and diversify risks.

Chapter 4. Accounting

• Article 25. After the close of each fiscal year, the following reports shall be prepared by the Board of Directors and submitted to Supervisors for review 30 days prior to the regular shareholders’ meeting. The reports shall be thereby submitted to the Shareholders' Meeting for acknowledgement.

• Business Report;

• Financial Statements;

• Proposal Concerning Distribution of Earnings or Covering of Losses.

• Article 26. If the Company earns a profit for the year, the Company shall set aside not less than 0.5% of its annual profits as employee bonus and not more than 3% as remuneration of Directors and Supervisors. However, if the Company still has accumulated deficit, the amount for offsetting the deficit should be reserved first. Parties eligible to receive the said employee bonus in the form of stock or cash shall include employees in affiliated companies who met certain conditions.

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Article 26-1. If there is any annual profit, the Company shall first pay out income tax, offset its losses in previous years and set aside a legal reserve at 10% of the earnings left over, until the accumulated legal reserve has equaled the total capital of the Company; then set aside or reverse special reserve if needed by the Company's operation or in accordance with relevant laws or regulations. If there is still remaining profit and beginning undistributed earnings, the Board of Directors shall propose earnings distribution to the Shareholders' Meeting for resolution.

Chapter 5. Dividend Policy

• Article 27. The Company's dividend policy is based on the future expansion plan, operation plan, and capital needs. The proportion of cash dividends may not be below 10% of total dividends.

Chapter 6. Supplementary Provisions

• Article 28. The Company's rules for organization and operation shall be determined by the Board of Directors.

• Article 29. The total amount of the Company’s reinvestment may exceed 40% of the Company ’ s paid-up capital. The Board of Directors is authorized to execute the investment.

• Article 30. The Company may provide endorsements and guarantees and act as a guarantor. Article 31. Any matters that are not addressed in the Articles of Association shall be governed by the Company Act and other relevant laws and regulations.

• Article 32. This Articles of Association was established on June 18, 1983. The 1st amendment was made on December 7, 1984. The 2nd amendment was made on July 24, 1985. The 3rd amendment was made on March 12, 1986. The 4th amendment was made on July 2, 1987. The 5th amendment was made on August 26, 1991. The 6th amendment was made on October 5, 1991. The 7th amendment was made on September 7, 1992. The 8th amendment was made on May 7, 1993. The 9th amendment was made on February 20, 1994. The 10th amendment was made on May 9, 1994. The 11th amendment was made on September 29, 1994. The 12th amendment was made on April 10, 1995. The 13th amendment was made on August 7, 1995. The 14th amendment was made on March 20, 1997. The 15th amendment was made on May 3, 1997. The 16th amendment was made on December 6, 1997. The 17th amendment was made on June 13, 1998. The 18th amendment was made on June 1, 1999. The 19th amendment was made on April 14, 2000. The 20th amendment was made on November 30, 2000. The 21st amendment was made on May 31, 2001. The 22nd amendment was made on June 17, 2002.

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The 23rd amendment was made on May 27, 2003. The 24th amendment was made on June 28, 2004. The 25th amendment was made on May 10, 2005. The 26th amendment was made on June 23, 2006. The 27th amendment was made on June 19, 2009. The 28th amendment was made on June 29, 2010. The 29th amendment was made on June 28, 2011. The 30th amendment was made on June 18, 2012. The 31st amendment was made on June 27, 2014. The 32nd amendment was made on June 22, 2015. The 33rd amendment was made on June 27, 2016.

BASSO INDUSTRY CORP.

Chairman Ming-da Lai

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【 Appendix III 】

BASSO INDUSTRY CORP.

Rules for Elections of Directors and Supervisors

• I. The Directors and Supervisors of the Company shall be elected in accordance with the rules specified herein.

• II. Any matters not specified in the Rules shall be governed by the Company Act or related regulations.

• III. Elections of Directors and Supervisors of the Company shall be held at the Shareholders' Meeting.

• IV. Elections of Directors and Supervisors of the Company shall use a registered cumulative voting system. Attendance card numbers printed on the ballots may be used instead of recording the names of voting shareholders.

• V. In the election of Directors and Supervisors of the Company, each share shall have voting rights equivalent to the number of seats to be elected and such voting rights can be combined to vote for one person or divided to vote for several persons.

• VI. The Company’s Independent Directors shall be elected by adopting the candidate nomination system specified in Article 192-1 of the Company Act.

• VII. In the election of Directors and Supervisors of the Company, candidates who acquire more votes should win the seats of Directors, Independent Directors, and Supervisors with the quota established by the Company's Articles of Association. If two or more candidates acquire the same number of votes and exceed the specified seats available, such candidates shall draw lots to decide who should win the seats available. For non-attending candidates, the chairperson shall draw lots on behalf him or her. Candidates that simultaneously won the seats of Directors and Supervisors shall decide by themselves to act as Directors or Supervisors. The vacancy shall be filled by rest of the candidates with the highest number of votes.

• VIII. The Company shall prepare ballots. The attendance card numbers shall be printed on the ballots, and the number of voting rights associated with each ballot shall be specified on the ballots.

• IX. At the beginning of the election, the chairperson shall appoint several persons each to check and record the ballots.

• X. A voter must enter the candidate's name, and may add the shareholder account number or identity card number in the "Candidate" column of the ballot. If the candidate is a legal entity, the full name of the legal entity shall be filled in, or the full name of the legal entity or name(s) of their representative(s) should be filled in the column.

• XI. Ballots shall be deemed void under the following conditions:

• (I) A ballot is not the one prescribed in the Rule.

• (II) A blank ballot is placed in the ballot box.

• (III) The writing is unclear and illegible.

• (IV) Ballots with other writing on it apart from the name, shareholder account number, or identity card number of the person to be elected.

• (V) Ballots where the name of the person to be elected is the same as another person to be elected, and a shareholder account number or identity card number is not provided to differentiate.

• XII. The ballots should be calculated during the meeting right after the vote casting and the results of the election should be announced by the chairperson at the meeting.

• XIII. This Company's Board of Directors shall issue notifications to the Directors and Supervisors elected.

• XIV. The Rules and any revision thereof shall become effective after approval at the Shareholders' Meeting.

The 1st amendment was made on June 27, 2014.

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【 Appendix IV 】

BASSO INDUSTRY CORP. Shareholding of Directors and Supervisors

The minimal number of shares to be held by all directors and supervisors

1. In accordance with Article 2, Paragraph 2 of the Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies: Where the paid-in capital of the company is more than NT$1 billion but NT$2 billion or less, the total registered shares owned by all directors shall not be less than 7.5 percent of the total issued shares; the total registered shares owned by all supervisors shall not be less than 0.75 percent of the total issued shares. Provided that if the total shareholding of all directors and supervisors calculated in accordance with the ratio is less than the maximum shareholding under the subparagraph immediately preceding the given subparagraph, the maximum shareholding under that preceding subparagraph shall be applicable.

2. The paid in capital of the Company is NT$1,385,706,400, i.e. 138,570,640 shares are issued. The registered shares held by all directors shall not be less than 10,392,798 shares, and all supervisors shall not be less than 1,039,280 shares.

3. The number of shares held by individual and all directors and supervisors in the register of shareholders as of the book closure (May 2, 2020) for annual shareholders' meeting in 2020 is as follows:

as follows:
Title	Name	Number of Shares	Shareholdingratio%
Director	Ba Wei Investment Co., Ltd. Representative: Ming-da Lai	13,507,138	9.75
Director	Ming-xingLai	1,220,313	0.88
Director	Zhong-xiungHong	93,275	0.07
Director	Bo-yan Lai	2,132,831	1.54
Director	Bo-fengLai	2,991,826	2.16
Director	Qi-wen Lin	16,200	0.01
Director	Hong-yi Chen	28,000	0.02
Director	Fu-luo Huang	15,000	0.01
Independent Director	Chun-zhongLian	2,203	0.002
Independent Director	Zheng-nanShen	3,524	0.003
Total of all directors		20,010,310	14.44
Supervisors	Wei-tingChang	1,378,100	0.99
Supervisors	Xiao-lingLin	0	0
Supervisors	Zi-lingYe	0	0
Total of all supervisors		1,378,100	0.99

33