CATHAY RED - AGM Information 2019

Stock Code：2501

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2019 Annual General Shareholders'

Meeting Agenda Handbook

Meeting Time ： June 14, 2019, at 9 ： 00 a.m.

Place ： B1, No. 296, Section 4, Renai Road, Taipei, Taiwan, R.O.C. International Conference Room http://www.cathay-red.com.tw/

I. Meeting Agenda ..........................................................................1 1. Matters to Report (1) 2018 Business Report................................................3 (2) Audit Committee’s Review Report...........................7 (3) 2018 Compensation Report for Employees and Directors..................................................................10 2. Matters for Acknowledgement (1) 2018 Business Report and Financial Statements.....11 (2) 2018 Profit Distribution...........................................32 3. Matters for Discussion (1) Proposal for the amendment of the Company's procedures for Acquisition or Disposal of Assets……………………………..…………........34 (2) Proposal for the amendment of the Company's Operational Procedures for Loaning of Funds and Making of Endorsements/Guarantees……..............71 (3) Proposal for releasing the prohibition on the Company’s board of directors from participation in competitive business...............................................82 4. Provisional Motion(s) II. Appendix 1. Articles of Incorporation...................................................84 2. Rules of Procedure for Shareholder Meetings..................97 3. Procedures for Acquisition or Disposition of Assets......108

Procedures for Loaning of Funds and Making of

Endorsements/Guarantees..............................................136 5. Shareholdings of Directors.............................................153

Cathay Real Estate Development Co., Ltd.

2019 Shareholder Meeting Agenda

Commencement of Meeting
Chairman's Remarks
Matters to Report
(1) 2018 Business Report
(2) Audit Committee’s Review Report
(3) 2018 Compensation Report for Employees and Directors.
Matters for Acknowledgement
(1) Adoption of 2018 Business Report and Financial Statements
(2) Adoption of Proposal for 2018 Profit Distribution
Matters for Discussion
(1) Proposal for the amendment of the Company's procedures for Acquisition or Disposition of Assets.
(2) Proposal for the amendment of the Company's Operational Procedures for Loaning of Funds and Making of Endorsements/Guarantees.
(3) Proposal for releasing the prohibition on the Company’s board of directors from participation in competitive business.
Provisional Motion(s)

7. Adjournment

1. Matters to Report

(1) 2018 Business Report

When looking back on the year of 2018, the global economy continued to expand progressively in the first half of the year. The US-China trade war fermented in the second half of the year, and the US increased the interest rate for monetary tightening in the second half of the year. The global financial market fluctuated drastically, and the oil price plummeted, making the global economy turn to conservative growth in a slow down trend. Domestically, due to fluctuations in the global economy, it also showed an up-and-down trend. The overall economic growth rate forecasted, by the Directorate-General of Budget, Accounting, and Statistics, is 2.63%, which is lower than the previous year's 3.08%. In the real estate market, although the domestic economy slowed down slightly, it only slowed down significantly in the fourth quarter. It has not yet had a significant impact on the housing market. Besides, the policy is mainly based on soundness, and there is no measure of controlling house price. The consumer confidence in the housing market continued to stabilize, the transaction volume increased significantly, and the price stopped falling, and the bullets showed a steady increase in the price. The Company has grasped the opportunity for the promotion and continued to take the strategy of attacking conservatively. From May to July, it launched three pre-sales projects, namely, Sanchong“Park Beautiful Mansion,” Banqiao “ Tree River. Cathay's HomeⅠ” and Xindian “HYGGE.” Due to the projects fit market demands, not only the price is higher than the local level, but also the sales

performance is excellent. The average sales rate at the end of the year exceeded 75%. In terms of revenue, the accounts were received including Taipei "Cathay Mushan," Xinbei " Cathay Golden City," Taichung "The Royal Gallery," Tainan "landmark twin towers" and Kaohsiung "Cathay DOUBLE A," five whole batch construction cases. Plus the accruals from the five projects of the previous year, including Xinbei, Zhubei, Taichung, Tainan and Kaohsiung, the total annual revenue was around NT$12,812,520,000, which was a significant increase of 20.76% over the previous year.

In looking forward to 2019, the most significant change in the global economy is the uncertainty brought by the US-China trade war. It is inevitable that the economy will slow down. How to survive safely is a crucial point. On the domestic front, due to the global economic downturn, the expected economic trend will also be slightly slowed down. On the funding side, it is expected to continue to be a low-risk environment. As far as the policy side, after the 9-in-one election at the end of the year, the local government is fighting for economic growth. The government has actively guided the return of overseas funds, which should help the housing market to develop in the future. However, with the presidential election at the beginning of the year 2020, the election activities will be carried out in advance, which will distract the market and cause adverse effects on the housing market. The buying atmosphere continued to warm up, while the pessimistic atmosphere gradually decreased. The construction industry promotes more actively. It is expected that the market will remain in a positive cycle. The Company catches the pulsating

trend, with a more aggressive attack strategy, to challenge higher targets. It plans to launch, in the first half of the year, Beitou “ Cathay Warwick, ” Banqiao “ Tree River. Cathay's HomeⅡ,” Xindian “HYGGEⅡ” and Tucheng “ Taipei Uptown, ” and Tainan "Wenfu Stone," five pre-sales cases, and one built-and-sell Kaohsiung "Cathay Focus." There will be election disturbances in the second half of the year, and only a pre-sale case for Taichung "Nanxing First Road" will be planned. However, all stocks of land are actively prepared, and the timing of the case will be decided based on the market atmosphere.

Also, the company's business policy this year will focus on "stable business, expanding development," "innovative thinking, the sustainable brand," introducing business thinking into real estate development, creating added value, enhancing competitiveness and expanding business territory. In terms of future strategy, the company will move toward an integrated developer. For the core business, in addition to the necessary land reservation, the land will be acquired in diversified ways, such as joint venture and commercial city reform. In terms of investment, health management and hotel business have been operating steadily. The next step is to expand service capacity. We have already developed a project plan and believe that we can grow our business in the future. The mainland business was closed last year. Also, we also actively consider the investment in other new markets and expand the development and operation of the territory to create a higher profit margin.

Ladies and gentlemen, dear shareholders, I'd like to express

my most profound appreciation for your presence today. And

I wish you good health and good luck, thank you!

Chairman: Ching-kuei Chang President: Hung-Ming Lee Chief Accountant: Yo-Chi Lo

(2) Audit Committee’s Review Report

The financial statements of Cathay Real Estate Development covering the period from January 1 to December 31, 2018, and the business report and earning distribution plan have been prepared and submitted by the Board of Directors of the Company. The financial statements were audited by Jung-Huang Hsu, CPA, and Chien-Che Huang, CPA, of Ernst & Young, who issued an auditors’ report.

The Auditing Committee has appointed Cheng-Tao Chang, CPA, of Ernst & Young to review the aforementioned financial statements and documents pursuant to Article 14-4 of the Securities & Exchange Act and Article 219 of the Company Act. In his opinion, the aforementioned financial statements and documents are fairly presented as stated.

2019 Annual Meeting of Shareholders

Cathay Real Estate Development Co., Ltd.

Auditing Committee: Shiou-Ling Lin April 25, 2019

Auditor's Report on the Final Accounts of Cathay Real Estate Development Co., Ltd.

Cathay Real Estate Development Co., Ltd.'s 2018 final accounts, including 2018 business report, financial statements and financial distribution, have been audited by our auditor using the required audit procedures. The compilation of the above-mentioned financial statements is the responsibility of the management, and the auditor's responsibility is to express an opinion on the above-mentioned final accounts based on the audit results.

The financial statements referred to above have, according to the requirements of "Declaration and Auditing Methods of Company's Final Accounts", been audited and attested by the auditor in accordance with “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants" and Generally Accepted Auditing Standards. In the opinion of the auditor, the financial statements referred to above present fairly, in all material respects, the financial position of Cathay Real Estate Development Co., Ltd. as of December 31, 2018, and its financial performance and cash flow from January 1 to December 31, 2018, in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Financial Reporting Standards, International Accounting Standards, IFRIC and SIC approved and published by the Financial Supervisory Commission. Information related to financial statements in its business report is in compliance with the financial statements referred to above, and its financial distribution is in compliance with the regulations of the Articles of Incorporation.

Cathay Real Estate Development Co., Ltd.

Audit Committee

Ernst & Young CPA: Cheng-Tao Chang Firm phone number: 2757-8888 Unified Business Number: 04111302

FSC Approval Document Number

： FSC Securities Audit Letter

No.1030025503

April 25, 2019

(3) 2018 Compensation Report for Employees and Directors

Explanation:

Conducted in accordance with Article 27 of the Articles of Incorporation.
2018 Financial statements have been audited by Ernst & Young. The earnings before tax are NT$3,841,049,199 where 0.1% amounting to NT$3,841,049 is allotted as 2018 total employee compensation, and 0.0625% amounting to NT$2.4 million is allotted as 2018 total directors compensation. The above compensation is to be distributed in cash.

2. Matters for Acknowledgement

(1) Adoption of 2018 Business Report and Financial Statements.

[Proposed by the Board of Directors]

Explanation:

The Company's 2018 Financial Statements have been audited by Jung-Huang Hsu /CPA and Huang Chien-Che/CPA from Ernst & Young, and an unqualified audit report has been issued.
The above Financial Statements, together with the Business Report, have been reviewed by the Company's audit committee.
Please refer to pages 3 to 6, and 12 to 31 of this handbook.

Resolution:

Independent Auditors � Report Translated from Chinese

To the Board of Directors and Stockholders of Cathay Real Estate Development Co., Ltd.

Opinion

We have audited the accompanying individual balance sheets of Cathay Real Estate Development Co., Ltd. (the “Company”) as of December 31, 2018 and 2017, and the related individual statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2018 and 2017, and notes to the individual financial statements, including the summary of significant accounting policies.

In our opinion, the individual financial statements referred to above present fairly, in all material respects, the individual financial position of the Company as of December 31, 2018 and 2017, and their individual financial performance and cash flows for the years ended December 31, 2018 and 2017, in conformity with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, Interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee as endorsed by 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 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 of the Republic of China (the “Norm”), and we have fulfilled our other ethical responsibilities in accordance with the Norm. Based on our audits and the reports of other auditors, 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 2018 individual financial statements. 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.

Revenue recognition

The Company is primarily engaged in entrusting construction company in construction and planning of public housing and commercial offices for sale and rental. Since the company’s construction income is classified as operating revenue based on sale of goods, the relevant profit and loss are recognized when the ownership transferred. Due to the significance of the construction income in the individual financial statements, with respect to a significant proportion within operating revenue, and need to judge and determine performance obligation and the timing of satisfaction, the construction revenue is determined to be a key audit matter.

The audit procedures we performed regarding construction revenue recognition included but not �� transaction process and perform the tests of control on the effectiveness of control points during �� e transaction conditions and confirm the appropriateness of the timing the performance obligation is recognized.

We also assess whether the the company properly disclose information relating the construction income of financial statement. Please refer note 4.(17) and note 6.(21).

Valuation of inventories

The construction land of the Company shall be measured at the lower of cost and net realized value, and the net realizable value of the construction land is determined based on the management’s judgement and estimation. Due to the significance of construction land in the individual financial statements, the valuation of construction land is determined to be a key audit matter.

The audit procedures we performed regarding construction land valuation included but not limited �� process and perform tests of control on the effectiveness of control points during internal control ��e management valuation process and the key valuation parameters, and evaluate the reasonableness on the basis of working paper and relevant documentation corresponding to construction land valuation which included in inventories.

We also assess whether the the company properly disclose information relating the construction land valuation of financial statement. Please refer note 4.(9) ,note 5.(2).E and note 6.(7).

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 requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and for such internal control as management determines is necessary to enable the preparation of individual financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the individual financial statements, management is responsible for assessing the ability to continue as a going concern of the Company, 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 audit committee, are responsible for overseeing the financial reporting process of the Company.

Auditor’s 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 auditor’s 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 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 auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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.

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 internal control of the Company.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
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 ability to continue as a going concern of the Company. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s 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 auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the individual financial statements, including the accompanying notes, and whether the individual financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the individual financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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 2018 individual financial statements and are therefore the key audit matters. We describe these matters in our auditor’s 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.

Hsu, Jung Huang Huang, Chien Che Ernst & Young, Taiwan March 21,2019

Notice to Readers

The accompanying individual financial statements are intended only to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such individual financial statements are those generally accepted and applied in the Republic of China.

Accordingly, the accompanying individual financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice. As the financial statements are the responsibility of the management, Ernst & Young cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Individual Balance Sheet

As at 31 December 2018 and 31 December 2017

			(Expressed in thousan	(Expressed in thousan	ds of New Taiwan Dollars)	ds of New Taiwan Dollars)
Assets			December 31,2018		December 31,2017
Code	Items	Notes	Amount		Amount
1100 1120 1125 1150 1170 1200 1220 130x 1410 1470 1480 11xx 1517 1523 1543 1550 1600 1760 1780 1840 1990 15xx 1xxx	Current assets Cash and Cash equivalents Financial Assets At Fair Value Through Other Comprehensive Income-Current Financial assets in available-for-sale-Current Notes Receinable(Net) Accounts Receivable(Net) Others Receivable Current Tax Assets Inventories Prepayments Others Current-Assets Revenue from Contracts with Customers Total Current-Assets Non-Currents Assets Financial Assets At Fair Value Through Other Comprehensive Income-Non-Current Financial assets in available-for-sale-Non-Current Financial Assets Carried at Cost-Non-Current Investment Accounted for Using Equity Method Property,Plant and Equipment Investment property(Net) Intangible Assets Deferred Tax Assets Other Non-Currents Assets Total Non-Currents Assets Total Assets	4 & 6(1) & 7 3 & 4 & 6(2) 3 & 4 & 6(3) 4 & 6(5) 4 & 6(6) 4 & 6(27) 4 & 6(7) & 7 3 & 6(7),(21) 3 & 4 & 6(2) 3 & 4 & 6(3) 3 & 4 & 6(4) 3 & 4 & 6(8) 4 & 6(9) 4 & 6(10) 4 & 6(11) 4 & 6(27) 6(12) &	$925,462 2,620,886 - 23,164 230,089 2,195 59 25,991,144 119,074 354,840 481,597	2 6 - - - - - 56 - 1 1	$662,729 - 2,983,349 24,121 56,357 2,545 - 28,838,278 185,637 74,161 -	2 - 6 - - - - 62 - - -
			30,748,510	66	32,827,177	70
			1,637,651 - - 1,652,433 66,611 11,122,684 778 408,941 1,054,493	3 - - 4 - 24 - 1 2	- 1,525,265 211,885 1,505,488 65,471 9,026,310 1,124 578,403 946,622	- 3 1 3 - 20 - 1 2
			15,943,591	34	13,860,568	30
			$46,692,101	100	$46,687,745	100

(The accompanying notes are an integral part of these individual financial statements)

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Individual Balance Sheet(Continue)

As at 31 December 2018 and 31 December 2017

(Expressed in thousands of New Taiwan Dollars)

Liabilities and Equity	Liabilities and Equity	Liabilities and Equity	December 31,2018	December 31,2018	December 31,2017	December 31,2017
Code	Items	Notes	Amount		Amount
2100 2110 2130 2150 2170 2180 2200 2230 2300 2310 2320 21xx 2530 2540 2570 2600 25xx 2xxx 3100 3110 3200 3300 3310 3320 3350 3400 3xxx	Current Liabilities Short-term Loans Short-term Notes Payable Contract Liability Notes Payable Accounts Payable Accounts Payable!Related Parties Others Payable Current Tax Liabilities Other-Current Liabilities Advance Receipts Long-Term Liabilities-Current Portion Total Current-Liabilities Non-Current Liabilities Coporation Bonds Long-term Loans Deferred Tax Liabilities Other Non-Current Liabilities Total Non-Current Liabilities Toatal Liabilities Equity Capital stock Common Stock Capital Surplus Retained earnings Legal Capital Reserve Special Capital Reserve Unappropriated Retained Earnings "Total Retained Earnings Other Equity Total Equity Total Liabilities and Equity	4 & 6(13) 4 & 6(14) 3 & 4 & 6(21) 4 4 4 & 7 4 & 6(27) 3 & 4 4&6(16) 4 & 6(15) 4 & 6(16) 4 & 6(27) 4 & 6(17) & 7 4 6(18) 6(19) 6(20)	$8,150,000 - 3,626,329 90,385 392,450 590,534 207,715 - 114,659 - 4,200,000	18 - 8 - 1 1 - - - - 9	$5,469,000 579,744 - 28,554 338,120 263,853 196,961 91,815 45,403 4,473,657 -	12 1 - - 1 1 - - - 9 -
			17,372,072	37	11,487,107	24
			3,000,000 998,050 10,049 237,194	6 2 - 1	3,000,000 9,163,501 8,542 260,093	6 20 - 1
			4,245,293	9	12,432,136	27
			21,617,365	46	23,919,243	51
			11,595,611 25,783 3,991,496 504,189 8,877,586	25 - 9 1 19	11,595,611 18,063 3,847,032 504,189 6,418,942	25 - 8 1 14
			13,373,271	29	10,770,163	23
			80,071	-	384,665	1
			25,074,736	54	22,768,502	49
			$46,692,101	100	$46,687,745	100

(The accompanying notes are an integral part of these individual financial statements)

2017		100 (78) 22 - 22 (6) - (6) 16 2 - - (5) (3) 13 1 14 - - - - - - - - 14
	Amount	$10,610,084 (8,255,507) 2,354,577 41 2,354,618 (687,275) - (687,275) 1,667,343 227,821 (7,799) (5,342) (510,151) (295,471) 1,371,872 72,766 1,444,638 (5,004) - (613) 851 34,807 46,950 76,991 $1,521,629 After Taxes $1.25
2018		100 (75) 25 - 25 (7) - (7) 18 2 - - 10 12 30 (2) 28 - (3) - - - 1 (2) 26
	Amount	$12,812,525 (9,544,022) 3,268,503 41 3,268,544 (927,553) (12) (927,565) 2,340,979 274,338 2,514 (1,906) 1,218,883 1,493,829 3,834,808 (225,197) 3,609,611 5,630 (493,136) (486) (1,525) - 153,763 (335,754) $3,273,857 After Taxes $3.11
Notes		4 & 6(10),(21) & 7 4 & 6(7),(9),(10),(24) & 7 4 & 6(9),(23),(24) & 7 4 & 6(22) 4 & 6(25) & 7 4 & 6(8) 4 & 6(27) 6(26),(27) 6(28)
Items		Operating Revenue Operating Cost Gross Margin Realized sales profit Gross Margin(net) Operating Expense Administrative Expense Expected credit loss Total Operating Expense Operating Income Non-Operating Income and Expenses Other Revenues Other Gain or Loss Finance Costs Investment Income on Equity-Method Investees Total Non-Operating Income and Expenses Income before Income Tax Income Tax (Expense) Benefit Net income Other Comprehensive Income Not to be reclassified to profit or loss in subsequent periods Remeasurements of defined benefit plans Valuation losses on equity instruments at fair value through other comprehensive income Share of the other comprehensive income of associates and joint ventures accounted for using the equity method – not to be reclassified to profit or loss in subsequent periods Income taxes relating to not to be reclassified to profit or loss in subsequent periods To be reclassified to profit or loss in subsequent periods Unrealized valuation gains from available-for-sale financial assets Share of the other comprehensive income of associates and joint ventures accounted for using the equity method – to be reclassified to profit or loss in subsequent periods Other comprehensive (losses) income, net of tax Total comprehensive (losses) income Basic Earnings Per Share (In dollars) Basic Earnings Per Share
Code		4000 5000 5900 5920 5950 6000 6200 6450 6900 7000 7010 7020 7050 7070 7900 7950 8200 8300 8310 8311 8316 8330 8349 8360 8362 8380 8500 9750

	Total	3XXX	$22,978,559 - (1,739,342) 7,656 1,444,638 76,991	1,521,629	$22,768,502	$22,768,502 416,130	23,184,632 - (1,391,473) 7,720 3,609,611 (335,754)	3,273,857	$25,074,736
Other Equity	Remeasuremen ts of defined benefit plans	3445	$25,087 - - - - (4,766)	(4,766)	$20,321	$20,321 -	20,321 - - - - 3,619	3,619	$23,940
	Unrealized valuation (losses) gains from available-for- sale financial assets	3425	$393,562 - - - - 34,807	34,807	$428,369	$428,369 (428,369)	- - - - - -	-	$-
	Unrealized (losses) gains from financial assets at fair value through other comprehensive income	3420	$- - - - - -	-	$-	$- 459,529	459,529 - - - - (493,136)	(493,136)	$(33,607)
	Exchange differences resulting from translating the financial statements of foreign operations	3410	$(110,975) - - - - 46,950	46,950	$(64,025)	$(64,025) -	(64,025) - - - - 153,763	153,763	$89,738
Retained Earnings	Total		$11,064,867 - (1,739,342) - 1,444,638 -	1,444,638	$10,770,163	$10,770,163 384,970	11,155,133 - (1,391,473) - 3,609,611 -	3,609,611	$13,373,271
	Unappropriated Retained Earnings	3350	$7,015,437 (301,791) (1,739,342) - 1,444,638 -	1,444,638	$6,418,942	$6,418,942 384,970	6,803,912 (144,464) (1,391,473) - 3,609,611 -	3,609,611	$8,877,586
		3320	$504,189 - - - - -	-	$504,189	$504,189 -	504,189 - - - - -	-	$504,189
	Legal Capital Reserve	3310	$3,545,241 301,791 - - - -	-	$3,847,032	$3,847,032 -	3,847,032 144,464 - - - -	-	$3,991,496
	Capital Surplus	3200	$10,407 - - 7,656 - -	-	$18,063	$18,063 -	18,063 - - 7,720 - -	-	$25,783
	Capital Stock	3100	$11,595,611 - - - - -	-	$11,595,611	$11,595,611 -	11,595,611 - - - - -	-	$11,595,611
	Items		Balance on 1 January 2017 Appropriation and distribution of earnings for the year 2016 Legal Capital Reserve Cash dividends on common stock Changes in other capital surplus Net income for the year ended 31 December 2017 Other comprehensive income for the year ended 31 December 2017 Total comprehensive income for the year ended 31 December 2017 Balance on 31 December 2017 Balance on 1 January 2018 Effects on retrospective application and restatement Balance on 1 January 2018 (Adjusted) Appropriation and distribution of earnings for the year 2017 Legal Capital Reserve Cash dividends on common stock Changes in other capital surplus Net income for the year ended 31 December 2018 Other comprehensive income for the year ended 31 December 2018 Total comprehensive income for the year ended 31 December 2018 Balance on 31 December 2018
		Code	A1 B1 B5 C17 D1 D3 D5 Z1 A1 A3 A5 B1 B5 C17 D1 D3 D5 Z1

English Translation of Financial Statements Originally Issued in Chinese CATHAY REAL ESTATE DEVELOPMENT CO., LTD. Individual Statements of Cash Flows

For the year-ended 31 December 2018 and 2017

(Expressed in thousands of N	(Expressed in thousands of N	(Expressed in thousands of N	ew Taiwan Dollars)
Code	Items	2018	2017
		Amount	Amount
AAAA A10000 A20000 A20100 A20200 A20300 A20900 A21200 A21300 A22400 A22500 A23100 A29900 A31130 A31150 A31180 A31200 A31230 A31240 A31270 A32125 A32130 A32150 A32160 A32180 A32210 A32230 A33000 A33100 A33500 AAAA BBBB B00400 B01800 B02400 B02700 B02800 B04500 B06700 B06800 B07600 BBBB CCCC C00100 C00600 C01700 C04400 C04500 C05600 CCCC EEEE E00100 E00200	Cash flows from operating activities Net income before tax Adjustments: Depreciation Amortization Provision for bad debt expenses Interest Expenses Interest Income Dividend Income Share of other comprehensive income of subsidiaries, associates and joint ventures Loss (gain) on disposal of property, plant and equipment Loss(gain) on disposal of investments Gain on disposal of investment property Changes in operating assets and liabilities: Decrease (increase) in notes receivable Decrease (increase) in account receivable Decrease (increase) in other receivable Decrease (increase) in inventories Decrease (increase) in prepayments Decrease (increase) in other current assets Decrease (increase) in revenue from contracts with customers Increase (decrease) in contract liability Increase (decrease) in notes payable Increase (decrease) in accounts payable Increase (decrease) in accounts payable to related parties Increase (decrease) in other payables Increase (decrease) in advances receipts Increase (decrease) in other current liabilities Cash inflow (outflow) generated from operations Interested received Income taxes paid Net cash flows from (used in) operating activities Cash flow from investing activities Proceeds from disposal of available-for-sale financial assets Acquired an investment using the equity method Returns the shares from investments using the equity method Acquisition of property, plant and equipment Disposal of property, plant and equipment Acquisition of intangible assets Increase in other non-current assets Decrease in other non-current assets Dividends received Net cash flows from (used in) investing activities Cash flow from financing activities Increase in short-term loans Decrease in short-term notes payable Decrease in long-term loans Decrease in other non-current liabilities Payment of cash dividends Interest paid Net cash flows from (used in) financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period	$3,834,808 190,843 486 12 1,906 (734) (152,719) (1,218,883) (4,363) - 173,324 957 (173,743) 350 635,488 66,563 (280,679) (27,087) (847,328) 61,831 54,330 326,681 19,971 - 69,256 2,731,270 734 (217,167) 2,514,837 - (650,000) 1,785,698 (22,269) 7,456 (140) (107,871) - 242,220 1,255,094 2,681,000 (579,744) (3,965,451) (17,269) (1,391,473) (234,261) (3,507,198) 262,733 662,729 $925,462	$1,371,872 195,348 1,043 - 5,342 (1,557) (119,656) 510,151 (680) 847 275,552 2,273 (37,518) 4,133 1,200,476 (38,010) (1,309) - - (15,484) (261,462) (86,658) (4,002) (1,285,137) (6,694) 1,708,870 1,559 (328,546) 1,381,883 4,001 (276,637) - (5,237) 5,353 (1,381) - 104,048 183,231 13,378 2,279,000 (70,111) (2,225,319) (22,565) (1,739,342) (234,994) (2,013,331) (618,070) 1,280,799 $662,729

(The accompanying notes are an integral part of these individual financial statements)

Independent Auditors � Report Translated from Chinese

To the Board of Directors and Stockholders of Cathay Real Estate Development Co., Ltd.

Opinion

We have audited the accompanying consolidated balance sheets of Cathay Real Estate Development Co., Ltd. (the “Company”) and its subsidiaries as of December 31, 2018 and 2017, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2018 and 2017, and notes to the consolidated financial statements, including the summary of significant accounting policies (together “the consolidated financial statements”).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company and its subsidiaries as of December 31, 2018 and 2017, and their consolidated financial performance and cash flows for the years ended December 31, 2018 and 2017, in conformity with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, Interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee as endorsed by 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 Company and its subsidiaries in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China (the “Norm”), and we have fulfilled our other ethical responsibilities in accordance with the Norm. Based on our audits and the reports of other auditors, 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 2018 consolidated financial statements. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Revenue recognition

The Company and its subsidiaries is primarily engaged in entrusting construction company in construction and planning of public housing and commercial offices for sale. Since the company’s construction income is classified as operating revenue based on sale of goods, the relevant profit and loss are recognized when the ownership transferred. Due to the significance of the construction income in the consolidated financial statements, with respect to a significant proportion within operating revenue, and need to judge and determine performance obligation and the timing of satisfaction, the construction revenue is determined to be a key audit matter.

The audit procedures we performed regarding construction revenue recognition included but not limited to: evaluate the appropriateness of the construction income recognition policies; realize the transaction process and perform the tests of control on the effectiveness of control points during internal control audit; select samples to perform transaction test of details and verify major clauses and conditions in the construction contract; review the transaction conditions and confirm the appropriateness of the timing the performance obligation is recognized.

We also assess whether the the company properly disclose information relating the construction income of financial statement. Please refer note 4(18) and note 6.(21).

Valuation of inventories

The construction land of the Company and its subsidiaries shall be measured at the lower of cost and net realized value, and the net realizable value of the construction land is determined based on the management’s judgement and estimation. Due to the significance of construction land in the consolidated financial statements, the valuation of construction land is determined to be a key audit matter.

The audit procedures we performed regarding construction land valuation included but not limited to: evaluate the appropriateness of the construction land accouting policies; realize the transaction process and perform tests of control on the effectiveness of control points during internal control audit; select samples to analyze the management valuation process and the key valuation parameters, and evaluate the reasonableness on the basis of working paper and relevant documentation corresponding to construction land valuation which included in inventories.

We also assess whether the the company properly disclose information relating the construction land valuation of financial statement. Please refer note 4(10) , note 5.2(E) and note 6.(7).

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

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, Interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee as endorsed by Financial Supervisory Commission of the Republic of China and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance, including audit committee or supervisors, are responsible for overseeing the financial reporting process of the Company and its subsidiaries.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s 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 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 consolidated financial statements.

Identify and assess the risks of material misstatement of the consolidated 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.
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 internal control of the Company and its subsidiaries.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
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 ability to continue as a going concern of the Company and its subsidiaries. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated 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 auditor’s report. However, future events or conditions may cause the Company and its subsidiaries to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the accompanying notes, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company and its subsidiaries to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of 2018 consolidated financial statements and are therefore the key audit matters. We describe these matters in our auditor’s 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.

We have audited and expressed an unqualified opinion on financial statements of the Company as of and for the years ended December 31, 2018 and 2017.

Hsu, Jung Huang Huang, Chien Che Ernst & Young, Taiwan March 21,2019

Notice to Readers

The accompanying consolidated financial statements are intended only to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally accepted and applied in the Republic of China.

Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice. As the financial statements are the responsibility of the management, Ernst & Young cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Consolidated Balance Sheet

As at 31 December 2018 and 31 December 2017

			(Expressed in thousan	(Expressed in thousan	ds of New Taiwan Dollars)	ds of New Taiwan Dollars)
Assets			December 31,2018		December 31,2017
Code	Items	Notes	Amounts		Amounts
1100 1120 1125 1150 1170 1200 1220 130x 1410 1470 1480 11xx 1517 1523 1543 1550 1600 1760 1780 1840 1900 15xx 1xxx	Current assets !Cash and Cash equivalents !Financial Assets At Fair Value Through Other Comprehensive Income-Current !Financial assets in available-for-sale-Current !Notes Receivable(Net) !Accounts Receivable(Net) !Others Receivable !Current Tax Assets !Inventories !Prepayments !Others Current-Assets Revenue from Contracts with Customers !!Total Current-Assets Non-Current Assets !Financial Assets At Fair Value Through Other Comprehensive Income-Non-Current !Financial assets in available-for-sale-Non-Current !Financial Assets measured at Cost - Non-Current !Investment Accounted for Using Equity Method !Property,Plant and Equipment !Investment property(Net) !Intangible Assets !Deferred Tax Assets !Other Non-Current Assets !!Total Non-Current Assets Total Assets	4 & 6(1),(29) &7 3 & 4 & 6(2) 4 & 6(3) 4 & 6(5),(22) 4 & 6(6),(22),(29) 6(29) 4 & 6(27) 4 & 6(7) & 7 6(12),(29) 3 & 6(7),(21) 3 & 4 & 6(2) 4 & 6(3) 4 & 6(4) 4 & 6(8) 4 & 6(9),(29) 4 & 6(10),(29) 4 & 6(11) 4 & 6(27) 6(12),(29) & 7	$1,620,157 2,620,886 - 24,209 461,933 424,397 105 26,003,437 511,030 382,155 481,597	3 6 - - 1 1 - 53 1 1 1	$1,227,465 - 2,983,349 24,121 267,884 23,988 4 28,850,643 600,779 105,194 -	2 - 6 - - - - 54 1 - -
			32,529,906	67	34,083,427	63
			1,637,951 - - - 1,858,494 11,132,166 20,416 516,233 1,076,222	3 - - - 4 23 - 1 2	- 1,525,265 212,200 11,088 1,136,419 12,983,381 33,008 687,765 3,088,635	- 3 - - 2 24 - 2 6
			16,241,482	33	19,677,761	37
			$48,771,388	100	$53,761,188	100

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

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD.

Consolidated Balance Sheet(Continue)

As at 31 December 2018 and 31 December 2017

			(Expressed in thousan	(Expressed in thousan	ds of New Taiwan Dollars)	ds of New Taiwan Dollars)
Liabilities and Equity			December 31,2018		December 31,2017
Code	Items	Notes	Amounts		Amounts
2100 2110 2130 2150 2170 2180 2200 2230 2300 2310 2320 21xx 2530 2540 2570 2600 2650 25xx 2xxx 3100 3110 3200 3300 3310 3320 3350 3400 31xx 36xx 3xxx	Current Liabilities !Short-term Loans !Short-term Notes Payable Contract Liability !Notes Payable !Accounts Payable !Accounts Payable-Related Parties !Others Payable !Current Tax Liabilities !Other-Current Liabilities !Advance Receipts !Long-Term Liabilities-Current Portion !!Total Current-Liabilities Non-Current Liabilities Bonds Payable !Long-term Loans !Deferred Tax Liabilities !Other Non-Current Liabilities Investment Accounted for Using Equity Method(Credit) !!Total Non-Current Liabilities Toatal Liabilities Equity !Capital stock !!Common Stock !Capital Surplus !Retained earnings !!Legal Capital Reserve !!Special Capital Reserve !!Unappropriated Retained Earnings !!!Total Retained Earnings !Other Equity Total Controlling Interests Non-controlling Interests Total Equity Total Liabilities and Equity	4 & 6(13) & 7 4 & 6(14) 3 & 6(21) 6(29) 7 6(29) 4 & 6(27) 4 & 6(29) 3 & 4 4 & 6(16),(29) 4 & 6(15) 4 & 6(16),(29) 4 & 6(27) 4 & 6(17),(29) & 7 4 & 6(8) 4 6(18) 6(19) 6(20) 6(20)	$8,715,000 260,000 3,651,612 90,385 461,385 595,710 653,898 27,056 122,731 - 4,200,000	18 1 8 - 1 1 1 - - - 9	$5,779,000 879,529 - 28,554 604,318 265,555 444,793 108,513 54,360 4,504,886 59,566	11 2 - - 1 - 1 - - 9 -
			18,777,777	39	12,729,074	24
			3,000,000 1,405,285 10,049 234,590 2,138	6 3 - - -	3,000,000 14,475,709 8,542 323,701 -	6 27 - - -
			4,652,062	9	17,807,952	33
			23,429,839	48	30,537,026	57
			11,595,611 25,783 3,991,496 504,189 8,877,586	24 - 8 1 18	11,595,611 18,063 3,847,032 504,189 6,418,942	21 - 7 1 12
			13,373,271 80,071	27 -	10,770,163 384,665	20 1
			25,074,736 266,813	51 1	22,768,502 455,660	42 1
			25,341,549	52	23,224,162	43
			$48,771,388	100	$53,761,188	100

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

2017		100 (79) 21 (10) - (10) 11 2 (1) (2) - (1) 10 - 10 - - - 1 - - 1 11 12 (2) 10 12 (1) 11
	Amount	$12,270,182 (9,683,371) 2,586,811 (1,245,036) - (1,245,036) 1,341,775 231,578 (133,588) (245,368) (2,919) (150,297) 1,191,478 50,147 1,241,625 (5,717) - 972 76,162 34,807 (2,504) 103,720 $1,345,345 $1,444,638 (203,013) $1,241,625 $1,521,629 (176,284) $1,345,345 After Taxes $1.25
2018		100 (74) 26 (10) - (10) 16 2 15 (1) - 16 32 (2) 30 - (4) - 2 - - (2) 28 25 5 30 23 5 28
	Amount	$14,294,770 (10,576,571) 3,718,199 (1,485,484) (4,482) (1,489,966) 2,228,233 281,597 2,146,096 (133,801) (13,145) 2,280,747 4,508,980 (267,183) 4,241,797 5,369 (493,136) (1,766) 228,874 - (287) (260,946) $3,980,851 $3,609,611 632,186 $4,241,797 $3,273,857 706,994 $3,980,851 After Taxes $3.11
Notes		4 & 6(10),(21) &7 4 & 6(7),(9),(10),(23),(24) &7 4 & 6(9),(10),(23),(24) &7 4 & 6(22) 4 & 6(25) & 7 6(29) 4 & 6(8) 4 & 6(27) 6(26),(27) 6(28)
Items		Operating Revenue Operating Cost Gross Margin Operating Expense !Administrative Expense !Expected credit loss !!Total Operating Expense Operating Income Non-Operating Income and Expenses !Other Revenues !Other Gain or Loss !Finance Costs !Investment Income on Equity-Method Investees !!Total Non-Operating Income and Expenses Income before Income Tax Income Tax (Expense) Benefit Net income Other Comprehensive Income !Not to be reclassified to profit or loss in subsequent periods !!Remeasurements of defined benefit plans !!Valuation losses on equity instruments at fair value through other comprehensive income !!Income taxes relating to not to be reclassified to profit or loss in subsequent periods !To be reclassified to profit or loss in subsequent periods !!Exchange differences resulting from translating the financial statements of foreign operations !!Unrealized valuation gains from available-for-sale financial assets Share of the other comprehensive income of associates and joint ventures accounted for using the equity method – to be reclassified to profit or loss in subsequent periods Other comprehensive (losses) income, net of tax Total comprehensive (losses) income Net income (losses) attributable to: !Equity holders of the parent !Non-controlling interests Total comprehensive income (losses) attributable to: !Equity holders of the parent !Non-controlling interests Basic Earnings Per Share (In dollars) Basic Earnings Per Share
Code		4000 5000 5900 6000 6200 6450 6900 7000 7010 7020 7050 7060 7900 7950 8200 8300 8310 8311 8316 8349 8360 8361 8362 8370 8500 8600 8610 8620 8700 8710 8720 9750

		Total	3XXX	$23,579,527 - (1,739,342) 7,656 1,241,625 103,720	1,345,345	30,976	$23,224,162	$23,224,162 416,130	23,640,292 - (1,391,473) 7,720 4,241,797 (260,946)	3,980,851	(895,841)	$25,341,549
		Non- Controlling Interests	36XX	$600,968 - - - (203,013) 26,729	(176,284)	30,976	$455,660	$455,660 -	455,660 - - - 632,186 74,808	706,994	(895,841)	$266,813
Controlling Interests		Total	31XX	$22,978,559 - (1,739,342) 7,656 1,444,638 76,991	1,521,629	-	$22,768,502	$22,768,502 416,130	23,184,632 - (1,391,473) 7,720 3,609,611 (335,754)	3,273,857	-	$25,074,736
	Other Equity	Remeasureme nts of defined benefit plans	3445	$25,087 - - - - (4,766)	(4,766)	-	$20,321	$20,321 -	20,321 - - - - 3,619	3,619	-	$23,940
		Unrealized valuation (losses) gains from available-for- sale financial assets	3425	$393,562 - - - - 34,807	34,807	-	$428,369	$428,369 (428,369)	- - - - - -	-	-	$-
		Unrealized (losses) gains from financial assets at fair value through other comprehensive income	3420	$- - - - - -	-	-	$-	$- 459,529	459,529 - - - - (493,136)	(493,136)	-	$(33,607)
		Exchange differences resulting from translating the financial statements of foreign operations	3410	$(110,975) - - - - 46,950	46,950	-	$(64,025)	$(64,025) -	(64,025) - - - - 153,763	153,763	-	$89,738
	Retained Earnings	Total		$11,064,867 - (1,739,342) - 1,444,638 -	1,444,638	-	$10,770,163	$10,770,163 384,970	11,155,133 - (1,391,473) - 3,609,611 -	3,609,611	-	$13,373,271
		Unappropriat ed Retained Earnings	3350	$7,015,437 (301,791) (1,739,342) - 1,444,638 -	1,444,638	-	$6,418,942	$6,418,942 384,970	6,803,912 (144,464) (1,391,473) - 3,609,611 -	3,609,611	-	$8,877,586
		Special Capital Reserve	3320	$504,189 - - - - -	-	-	$504,189	$504,189 -	504,189 - - - - -	-	-	$504,189
		Legal Capital Reserve	3310	$3,545,241 301,791 - - - -	-	-	$3,847,032	$3,847,032 -	3,847,032 144,464 - - - -	-	-	$3,991,496
		Capital Surplus	3200	$10,407 - - 7,656 - -	-	-	$18,063	$18,063 -	18,063 - - 7,720 - -	-	-	$25,783
		Capital Stock	3100	$11,595,611 - - - - -	-	-	$11,595,611	$11,595,611 -	11,595,611 - - - - -	-	-	$11,595,611
		Items		Balance on 1 January 2017 Appropriation and distribution of earnings for the year 2016 Legal Capital Reserve Cash dividends on common stock Changes in other capital surplus Net income for the year ended 31 December 2017 Other comprehensive income for the year ended 31 December 2017 Total comprehensive income for the year ended 31 December 2017 Changes In Non-Controlling Interests Balance on 31 December 2017 Balance on 1 January 2018 Effects on retrospective application and restatement Balance on 1 January 2018 (Adjusted) Appropriation and distribution of earnings for the year 2017 Legal Capital Reserve Cash dividends on common stock Changes in other capital surplus Net income for the year ended 31 December 2018 Other comprehensive income for the year ended 31 December 2018 Total comprehensive income for the year ended 31 December 2018 Changes In Non-Controlling Interests Balance on 31 December 2018
			Code	A1 B1 B5 C17 D1 D3 D5 O1 Z1 A1 A3 A5 B1 B5 C17 D1 D3 D5 O1 Z1

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD. Consolidated Statements of Cash Flows

For the year-ended 31 December 2018 and 2017

(Expressed in thousands of N	(Expressed in thousands of N	(Expressed in thousands of N	ew Taiwan Dollars)
Code	Items	2018	2017
		Amount	Amount
AAAA A10000 A20000 A20100 A20200 A20300 A20900 A21200 A21300 A22300 A22500 A23100 A29900 A30000 A31130 A31150 A31180 A31200 A31230 A31240 A31270 A32125 A32130 A32150 A32160 A32180 A32210 A32230 A33000 A33100 A33500 AAAA BBBB B00400 B02300 B02700 B02800 B04500 B05500 B06700 B06800 B07600 BBBB CCCC C00100 C00600 C01700 C04400 C04500 C05600 C05800 CCCC DDDD EEEE E00100 E00200	Cash flows from operating activities Net income before tax Adjustments: Depreciation Amortization Provision for bad debt expenses Interest Expenses Interest Income Dividend Income Share of other comprehensive income of subsidiaries, associates and joint ventures Loss (gain) on disposal of property, plant and equipment Loss (gain) on disposal of investments Cost on disposal of investment property Changes in operating assets and liabilities: Decrease (increase) in notes receivable Decrease (increase) in account receivable Decrease (increase) in other receivable Decrease (increase) in inventories Decrease (increase) in prepayments Decrease (increase) in other current assets Decrease (increase) in revenue from contracts with customers Increase (decrease) in contract liability Increase (decrease) in notes payable Increase (decrease) in accounts payable Increase (decrease) in accounts payable to related parties Increase (decrease) in other payables Increase (decrease) in advances receipts Increase (decrease) in other current liabilities Cash inflow (outflow) generated from operations Interested received Income taxes paid Net cash flows from (used in) operating activities Cash flow from investing activities Proceeds from disposal of available-for-sale financial assets Disposal of subsidiary Acquisition of property, plant and equipment Disposal of property, plant and equipment Acquisition of intangible assets Disposal of investment property Increase in other non-current assets Decrease in other non-current assets Dividends received Net cash flows from (used in) investing activities Cash flow from financing activities Increase in short-term loans Decrease in short-term notes payable Decrease in long-term loans Decrease in other non-current liabilities Payment of cash dividends Interest paid Change in non-controlling interests of equity Net cash flows from (used in) financing activities Effect of currency exchange rate on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period	$4,508,980 417,546 15,786 4,482 133,801 (7,297) (152,719) 13,145 898 (2,128,213) 173,324 (88) (226,351) (18,760) 635,559 63,775 (276,961) (27,086) (853,274) 61,831 (66,428) 330,155 84,044 - 83,001 2,769,150 7,302 (247,008) 2,529,444 - 2,775,858 (881,664) 7,539 (3,194) 570 (90,296) - 152,719 1,961,532 2,936,000 (619,529) (3,785,554) (17,332) (1,391,473) (348,207) (895,841) (4,121,936) 23,652 392,692 1,227,465 $1,620,157	$1,191,478 520,851 17,503 - 245,368 (4,338) (119,656) 2,919 (449) 847 275,552 2,547 (74,629) (651) 1,201,766 (122,887) (24,149) - - (15,484) (496,111) (87,139) 79,033 (1,278,962) (3,962)
			1,309,447
			4,363 (352,841)
			960,969
			4,001 - (164,281) 5,356 (17,942) - - 95,869 119,656
			42,659
			1,963,000 (89,912) (1,246,391) (25,823) (1,739,342) (466,718) 30,976
			(1,574,210)
			126,382
			(444,200) 1,671,665
			$1,227,465

(The acompanying notes are an integral part of these consolidated financial statements)

(2) Adoption of Proposal for 2018 Profit Distribution.

[Proposed by the Board of Directors]

Explanation:

The Company’s 2018 Profit Distribution, has according to Article 27 of the Articles of Incorporation, is scheduled to distribute NT$ 2.1 cash dividend per share, and the undistributed profit from the most recent years shall be distributed first. With regards to the above cash dividend distribution, the total dividend distributed to the individual shareholders shall be rounded up to the nearest "yuan," and the difference shall be treated as company expense.
Upon resolution at the annual meeting of the shareholders, the board of directors is authorized to set the ex-dividend date and adjust the dividend yield based on actual circumstances.
For table of profit distribution, please refer to page 33 of this manual.

Resolution:

Cathay Real Estate Development Co., Ltd. EARNINGS DISTRIBUTION TABLE OF THE 2018

Unit: NT$ Dollar

	Unit: NT$ Dol
Item	Amount
Retained earnings at the beginning	5,267,975,666
Add: Net income of 2018	3,609,610,796
Less: Legal reserves	360,961,080
Distributable earnings	8,516,625,382
Distributable items:
Shareholders' dividends - Cash	2,435,078,224
Unappropriated retained earnings	6,081,547,158
Note: 1. For the Earnings Distribution, NT$ 2.1cash dividend is to be distributed per share, where undistributed earnings from the most recent years shall be distributed first. 2. Undistributed earnings at the beginning of the period have included the adjusted NT$384,970,265 from the retrospective application of IFRS 15.

For the Earnings Distribution, NT$ 2.1 cash dividend is to be distributed per share, where undistributed earnings from the most recent years shall be distributed first.
Undistributed earnings at the beginning of the period have included the adjusted NT$384,970,265 from the retrospective application of IFRS 15.

Chairman: Ching-kuei Chang President: Hung-Ming Lee Chief Accountant: Yo-Chi Lo

3. Matters for Discussion

(1) Proposal for the amendment of the Company's Procedures for Acquisition or Disposal of Assets.

[Proposed by the Board of Directors]

Explanation:

In line with amendments to the Regulations Governing the Acquisition and Disposal of Assets by Public Companies, it is proposed to amend the Company's "Procedures for Acquisition or Disposal of Assets".
For the amendment comparison table, please refer to page 35 to 70 of this manual.

Resolution:

Cathay Real Estate Development Co., Ltd. Procedures for Acquisition or Disposal of Assets Articles amendment comparison table

	Amended Articles	Current Articles	Explanation
	Article2 The scope of application of the assets mentioned in the Procedures is as follows: 1. Stocks, treasury bonds, corporate bonds, financial bonds, marketable securities representing interest in a fund, depository receipts, call (put) warrants, beneficial securities, and asset-backed securities. 2. Real estate (including land, housing and buildings, investment real estate, and inventory of construction) and equipment. 3. Membership. 4. Patent rights, copyrights, ownership of trademark, franchises and other intangible assets. 5. Right-of-use assets. 6.Derivatives. 7.Assets acquired or disposed of by merger, division, acquisition or transfer of shares in accordance with the law. 8.Other major assets.	Article 2 The scope of application of the assets mentioned in the procedures is as follows: 1. Stocks, treasury bonds, corporate bonds, financial bonds, marketable securities representing interest in a fund, depository receipts, call (put) warrants, beneficial securities, and asset-backed securities. 2. Real estate (including land, housing and buildings, investment real estate,land use right, inventory of construction) and equipment. 3. Membership. 4. Patent rights, copyrights, ownership of trademark, franchises and other intangible assets. 5. Derivatives. 6. Assets acquired or disposed of by merger, division, acquisition or transfer of shares in accordance with the law. 7. Other major assets.	To follow the amendment to the Regulations Governing the Acquisition and Disposal of Assets by Public Companies (the Regulations) on November 26, 2018.

	Amended Articles	Current Articles	Explanation
	Article4 Under any of the following circumstances, the Company acquiring or disposing of assets shall publicly announce and report the relevant information on the competent authority's designated website in the appropriate format as prescribed by regulations within 2 days counting inclusively from the date of occurrence of the event: 1. Acquisition or disposal of real property or right-of-use assetsthereof from or to a related party, or acquisition or disposal of assets other than real propertyor right-of-use assetsthereof 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. However, this shall not apply to trading ofdomestic government bonds or bonds under repurchase and resale agreements, or subscription or redemption of money	Article4 Under any of the following circumstances, the Company acquiring or disposing of assets shall publicly announce and report the relevant information on the competent authority's designated website in the appropriate format as prescribed by regulations within 2 days counting inclusively from the date of occurrence of the event: 1. Acquisition or disposal of real property from or to a related party, or acquisition or disposal of assets other than real property from or to a related party where the transaction amount reaches 20% or more of paid-in capital, 10% or more of the company's total assets, or NT$300 million or more. However, this shall not apply to trading of government bonds or bonds under repurchase and resale agreements, or subscription or redemption of money market funds issued by securities investment trust enterprises.	To follow the amendment to the Regulations on November 26, 2018.

	Amended Articles		Current Articles	Explanation
	market funds issued by securities investment trust enterprises. 2. Merger, demerger, acquisition, or transfer of shares. 3. Losses from derivatives trading reaching the limits on aggregate losses or losses on individual contracts set out in the procedures adopted by the Company. 4. Where the type of asset acquired or disposed is equipment orright-of-use assetsthereof for business use, the trading counterparty is not a related party, and the transaction amount is more than NT$1 billion. 5. Acquisition or disposal of real property or right-of-use assetsthereof by the Company for construction use, where the trading counterparty is not a related party, and the transaction amount reaches NT$500 million;in case of disposal of real property from a completed construction project that it constructed itself, and the transaction counterparty is not a related party, the		2. Merger, demerger, acquisition, or transfer of shares. 3. Losses from derivatives trading reaching the limits on aggregate losses or losses on individual contracts set out in the procedures adopted by the Company. 4. Where the type of asset acquired or disposed is equipment for business use, the trading counterparty is not a related party, and the transaction amount is more than NT$1 billion. 5. Acquisition or disposal of real property bythe Companyfor construction use, where the trading counterparty is not a related party, and the transaction amount reaches NT$500 million. 6. Where land is acquired under an arrangement to engage others to build on the Company's own land, engage others to build on rented land, joint construction and allocation of housing units, joint construction and allocation of ownership percentages, or joint construction and separate sale, and the

	Amended Articles		Current Articles	Explanation
	threshold shall be a transaction amount reaching NT$1 billion or more. 6. Where land is acquired under an arrangement to engage others to build on the Company's own land, engage others to build on rented land, joint construction and allocation of housing units, joint construction and allocation of ownership percentages, or joint construction and separate sale, and the transaction counterparty is not a related party, and the amount the Company expects to invest in the transaction reaches NT$500 million. 7. Where an asset transaction other than any of those referred to in the preceding six subparagraphs, or an investment in the mainland China area reaches 20% or more of paid-in capital or NT$300 million. However, the following cases do not apply: (1) Trading of domestic government bonds. (2) Trading of bonds under		amount the Company expects to invest in the transaction reaches NT$500 million. 7. Where an asset transaction other than any of those referred to in the preceding six subparagraphs, or an investment in the mainland China area reaches 20% or more of paid-in capital or NT$300 million. However, the following cases do not apply: (1) Trading of treasury bonds. (2) Trading of bonds under repurchase/resale agreements, or subscription or redemption of money market funds issued by securities investment trust enterprises. Subsidiary's public announcement and reporting: 1. Acquisitions and disposals of assets by a subsidiary shall comply with Article 6. 2.If the subsidiary is not a local publicly listed company, and has information to be publicly announced as stated in the subparagraphs of the

	Amended Articles	Current Articles	Explanation
	repurchase/resale agreements, or subscription or redemption of money market funds issued by securities investment trust enterprises. Subsidiary's public announcement and reporting: 1.If the subsidiary is not a local publicly listed company, and has information to be publicly announced asstated in the Procedures, the Company shall be notified immediately on the date of occurrence, for it to make a public announcement and report the information in accordance with the regulations. 2.The paid-in capital or total assets of the Company shall be the standard for determining whether or not a subsidiary referred to in the preceding paragraph in the event the type of transaction specified therein reaches 20% of paid-in capital or 10% of the total assets.	preceding paragraph, the Company shall be notified immediately on the date of occurrence, for it to make a public announcement and report the information in accordance to the regulations. 3. The paid-in capital or total assets of the Company shall be the standard for determining whether or not a subsidiary referred to in the preceding paragraph in the event the type of transaction specified therein reaches 20% of paid-in capital or 10% of the total assets.
	Article5 For acquiring or disposing of assets, the Company shall keepall relevant	Article5 For acquiring or disposing of assets, the Company shall keepall relevant	To follow the amendment to the Regulations on November 26,

	Amended Articles	Current Articles	Explanation
	contracts, meeting minutes, log books, appraisal reports and certified public accountant, attorney, and securities underwriter opinions at the Company, where they shall be retained for 5 years except where another Act provides otherwise. The amount of transactions above shall be calculated as follows: 1.The amount of any individual transaction. 2.Accumulation of acquisition or disposal of the same type of transaction amount with the same counterparty in a year. 3.The cumulative transaction amount of real property orright-of-use assets acquisitionsand disposals (cumulative acquisitions and disposals, respectively) within the same development project within the preceding year. 4.The cumulative transaction amount of acquisitions and disposals (cumulative acquisitions and disposals respectively) of the same marketable securities within a year.	contracts, meeting minutes, log books, appraisal reports and certified public accountant, attorney, and securities underwriter opinions at the Company, where they shall be retained for 5 years except where another acts provides otherwise. The amount of transactions above shall be calculated as follows: 1.The amount of any individual transaction. 2.Accumulation of acquisition or disposal of the same type of transaction amount with the same counterparty in a year. 3. The cumulative transaction amount of real estate acquisitions and disposals (cumulative acquisitions and disposals respectively) with the same development project with in a year. 4.The cumulative transaction amount of acquisitions and disposals (cumulative acquisitions and disposals respectively) of the same marketable securities within a year. "Within a year" mentioned in thepreceding paragraph	, 2018.

Amended Articles Current Articles Explanation "Within a year" mentioned refers to the date of in the preceding paragraph occurrence of the current refers to the date of announced in accordance occurrence of the current with the procedures do not transaction. Items duly need to be counted when announced in accordance going back and estimating with the procedures do not for a year. need to be counted when Date of occurrence going back and estimating mentioned in the preceding for a year. paragraph refers to date of "Date of occurrence" as contract signing, date of used in the procedures payment, date of proxy, refers to date of contract date of stock transfer, date signing, date of payment, of the Board of Directors' date of consignment trade, resolution, or other dates date of transfer, dates of that can confirm the boards of directors counterpart and monetary resolutions, or other date amount of the transaction, that can confirm the whichever date is earlier. counterpart and monetary However, for an investment amount of the transaction, who needs the regulator's whichever date is earlier. approval, the earlier one of However, for an investment the above dates or the date who needs the regulator's of approval by the regulator approval, the earlier one of shall apply. the above dates or the date The Company shall of approval by the regulator compile monthly reports on shall apply. the status of derivatives The Company shall trading conducted by the compile monthly reports on Company and its the status of derivatives subsidiaries that are not trading conducted by the domestic public entities in Company and its the prescribed format and subsidiaries that are not input them to the domestic public entities in information declaration the prescribed format and website designated by the input them to the regulator before 10th of

Amended Articles	Current Articles	Explanation
information declaration website designated by the regulator before 10th of each month at the end of the month. When the Company at the time of public announcement makes an error or omission in an item required by regulations to be publicly announced and so is required to correct it, all the items shall be again publicly announced and reported in their entirety within two days counting inclusively from the date of knowing of such error or omission. Where any of the following circumstances occurs with respect to a transaction that the Company has already publicly announced and reported in accordance with the regulation, a public report of relevant information shall be made on the information reporting website designated by the competent authority with in 2 days counting inclusively from the date of occurrence of the event: 1.Change, termination, or rescission of a contract	each month at the end of the month. When the Company at the time of public announcement makes an error or omission in an item required by regulations to be publicly announced and so is required to correct it, all the items shall be again publicly announced and reported in their entirety within two days counting inclusively from the date of knowing of such error or omission. Where any of the following circumstances occurs with respect to a transaction that the Company has already publicly announced and reported in accordance with the regulation, a public report of relevant information shall be made on the information reporting website designated by the competent authority with in 2 days counting inclusively from the date of occurrence of the event: 1. Change, termination, or rescission of a contract signed in regard to the original transaction. 2. The merger,demerger,

	Amended Articles	Current Articles	Explanation
	signed in regard to the original transaction. 2. The merger, demerger, acquisition, or transfer of shares is not completed by the scheduled date set forth in the contract. 3. Change to the originally publicly announced and reported information.	acquisition, or transfer of shares is not completed by the scheduled date set forth in the contract. 3. Change to the originally publicly announced and reported information.
	Article 6 In acquiring or disposing of real property, equipment or right-of-use assetswhere the transaction amount reaches 20% of the Company's paid-in capital or NT$300 million or more, the Company, unless transacting with a domestic government agency, engaging others to build on its own land, engaging others to build on rented land, or acquiring or disposing of equipmentor right-of-use assetsfor business use, shall obtain an appraisal report prior to the date of occurrence of the event from a professional appraiser and shall further comply with the following provisions. 1.Where due to special circumstances it is necessarytogive a limited	Article 6 In acquiring or disposing of real property or equipment where the transaction amount reaches 20% of the Company's paid-in capital or NT$300 million or more, the Company, unless transacting with a government agency, engaging others to build on its own land, engaging others to build on rented land, or acquiring or disposing of equipment for business use, shall obtain an appraisal report prior to the date of occurrence of the event from a professional appraiser and shall further comply with the following provisions： 1.For special reasons, a limited price, a specified price or a special price as a reference for the transaction price,the transaction should	To follow the amendment to the Regulations on November 26, 2018.

Amended Articles		Current Articles	Explanation
price, specified price, or special price as a reference basis for the transaction price, the transaction shall be submitted for approval in advance by the board of directors, and the same procedure shall be followed for any subsequent changes to the terms and conditions of the transaction. 2.The transaction amount is NT$1 billion or more shall be appraised by two or more professional appraisers. 3. Any of the following circumstances applies with respect to the professional appraiser's appraisal results, except all the appraisal results of acquired assets are higher than the transaction amount or all the appraisal results of the disposed assets are lower than the transaction amount, CPA shall be engaged in performing the appraisal in accordance with the provisions of Statement of Auditing Standards No. 20 issued by the Accounting Research and Development Foundation and shall render specific opinions regarding		be passed by the Board of Directors in advance for resolution. Change of future transaction conditions should also be approached in accordance with the procedures. 2. The transaction amount is NT$1 billion or more shall be appraised by two or more professional appraisers. 3. Any of the following circumstances applies with respect to the professional appraiser's appraisal results, except all the appraisal results of acquired assets are higher than the transaction amount or all the appraisal results of the disposed assets are lower than the transaction amount, CPA shall be engaged in performing the appraisal in accordance with the provisions of Statement of Auditing Standards No. 20 issued by the Accounting Research and Development Foundation and shall render specific opinions regarding the reason for discrepancy and the appropriateness of transaction price： (1)The discrepancy

Amended Articles	Current Articles	Explanation
the reason for discrepancy and the appropriateness of transaction price: (1) The discrepancy between the appraisal result and the transaction amount is 20% or more of the transaction amount. (2) The discrepancy between the appraisal results of two or more professional appraisers is 10% or more of the transaction amount. 4. The date of report presented by the professional appraiser and the date of establishment of contract shall not be more than three months. However, if the publicly announced present value for the same period applies and is not more than 6 months, the original appraiser shall present a position paper. 5.Except where a limited price, specified price, or special price is employed by the Company as the reference basis for the transaction price, if an appraisal report cannot be obtained in time and there is a legitimate reason for the delay,the report,and	between the appraisal result and the transaction amount is 20% or more of the transaction amount. (2) The discrepancy between the appraisal results of two or more professional appraisers is 10% or more of the transaction amount. 4. The date of report presented by the professional appraiser and the date of establishment of contract shall not be more than three months. However, if the publicly announced present value for the same period applies and is not more than 6 months, the original appraiser shall present a position paper. 5.Except a limited price, a specified price, or a special price is employed by our company as a reference for the transaction price, if there is a justifiable reason for failure to obtain an immediate appraisal report, the appraisal report and CPA’s opinions under the preceding paragraph (3) shall be obtained within 2 weeks from the date of occurrence.

Amended Articles	Current Articles	Explanation
the certified public accountant's opinion under Subparagraph 3 of this paragraph, shall be obtained within 2 weeks counting inclusively from the date of occurrence. The Company acquiring or disposing of securities shall, prior to the date of occurrence of the event, obtain financial statements of the issuing company for the most recent period, certified or reviewed by a certified public accountant, for reference in appraising the transaction price, and if the dollar amount of the transaction is 20% of the Company's paid-in capital or NT$300 million or more, the Company shall additionally engage a certified public accountant prior to the date of occurrence of the event to provide an opinion regarding the reasonableness of the transaction price. If the certified public accountant needs to use the report of an expert as evidence, the certified public accountant shall do so in accordance	The Company acquiring or disposing of securities shall, prior to the date of occurrence of the event, obtain financial statements of the issuing company for the most recent period, certified or reviewed by a certified public accountant, for reference in appraising the transaction price, and if the dollar amount of the transaction is 20% of the Company's paid-in capital or NT$300 million or more, the Company shall additionally engage a certified public accountant prior to the date of occurrence of the event to provide an opinion regarding the reasonableness of the transaction price. If the certified public accountant needs to use the report of an expert as evidence, the certified public accountant shall do so in accordance with the provisions of Statement of Auditing Standards No. 20 published by the ARDF. However, this requirement does not apply to public quotation of marketable securities that

	Amended Articles		Current Articles	Explanation
	with the provisions of Statement of Auditing Standards No. 20 published by the ARDF. However, this requirement does not apply to public quotation of marketable securities that have an active market, or where otherwise provided by regulators. Where the Company acquires or disposes of intangible assets or right-of-use assets thereof or membershipsand the transaction amount reaches 20% or more of paid-in capital or NT$300 million or more, except in transactions with a government agency, the Company shall engage a certified public accountant prior to the date of occurrence of the event to render an opinion on the reasonableness of the transaction price; the certified public accountant shall comply with the provisions of Statement of Auditing Standards No. 20 published by the ARDF. Where the Company acquires or disposes of assets through court auction procedures,the evidentiary		have an active market, or where otherwise provided by regulators. Where the Company acquires or disposes of membershipsor intangible assets and the transaction amount reaches 20% or more of paid-in capital or NT$300 million or more, except in transactions with a government agency,the Company shall engage a certified public accountant prior to the date of occurrence of the event to render an opinion on the reasonableness of the transaction price; the certified public accountant shall comply with the provisions of Statement of Auditing Standards No. 20 published by the ARDF. When our company acquires or disposes of assets through court auction procedures, evidentiary documentation presented by the court may be substituted for appraisal reports or CPA's opinions. When our company acquires or disposes of assets with related parties and the transaction amount

Amended Articles	Current Articles	Explanation
documentation issued by the court may be substituted for the appraisal report or certified public accountant's opinion. When our company acquires or disposes of assets with related parties and the transaction amount is 10% of the paid-in capital of the company, it shall obtain appraisal reports from professional appraisers or CPA's opinions in compliance with this condition. The calculation of the transaction amounts referred to in the Article shall be done in accordance with Article 5, Paragraph 2 herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items for which an appraisal report from a professional appraiser or a certified public accountant's opinion has been obtained need not be counted toward the transaction amount.	is 10% of the paid-in capital of the company, it shall obtain appraisal reports from professional appraisers or CPA's opinions in compliance with this condition. The calculation of the transaction amount in this article shall be conducted in accordance with the provisions of paragraph 2 of Article 5. "Within a year" refers to the date of occurrence of the current transaction. If appraisal reports from professional appraisers or CPA's opinions in compliance with this condition are obtained, they do not need to be counted when going back and estimating for a year.
Article 7 When the Company intends to acquire or dispose of real property or right-of-use	Article 7 When the Company intends to acquire or dispose of real propertyfrom or to a	To follow the amendment to the Regulations on November 26,2018

	Amended Articles	Current Articles	Explanation
	from or to a related party, or when it intends to acquire or dispose of assets other than real propertyor right-of-usefrom or to a related party and 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, except in trading of domesticgovernment bonds or bonds under repurchase and resale agreements, or subscription or redemption of money market funds issued bydomestic securities investment trust enterprises, the Company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by the audit committee and the board of directors: 1. The purpose, the necessity and the anticipated benefits of acquisition or disposal of assets. 2. The reason for selecting the related party as a trading counterparty. 3. With respect to the	related party, or when it intends to acquire or dispose of assets other than real property from or to a related party and the transaction amount reaches 20% or more of the Company's paid-in capital, 10% or more of the Company's total assets, or NT$300 million or more, except in trading of government bonds or bonds under repurchase and resale agreements, or subscription or redemption of money market funds issued by securities investment trust enterprises, the Company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by the audit committee and the board of directors: 1. The purpose, the necessity and the anticipated benefits of acquisition or disposal of assets. 2. The reason for selecting the related party as a trading counterparty. 3. With respect to the acquisition of real estate from a relatedparty,

	Amended Articles	Current Articles	Explanation
	acquisition of real property or right-of-usefrom a related party, information regarding appraisal of the reasonableness of the preliminary transaction terms in accordance with Article 8 and Article 9. 4. The date and price the related party originally acquires, the trading counterparty and the relationship with the trading counterparty and the company. 5. Monthly cash forecast for the year commencing from the anticipated month of contract signing, and evaluation of necessity of transaction and rationality of application of funds. 6. An appraisal report from a professional appraiser or a certified public accountant's opinion obtained in compliance with the preceding Article. 7. Restrictive terms and other important covenants associated with the transaction. The calculation of the transaction amounts referred to in the preceding paragraph shall be made in accordance with Paragraph	relevant information regarding rationality of predetermined transaction terms in accordance with Article 8 and Article 9 shall be appraised. 4.The date and price the related party originally acquires, the trading counterparty and the relationship with the trading counterparty and the company. 5.Monthly cash forecast for the year commencing from the anticipated month of contract signing, and evaluation of necessity of transaction and rationality of application of funds. 6. Appraisal reports from a professional appraiser or a certified public accountant's opinion obtained in compliance with the preceding article. 7.Restrictive terms and other important covenants associated with the transaction. The calculation of the transaction amounts referred to in the preceding Paragraph shall be made in accordance with Paragraph 2, Article 5 herein, and "within thepreceding year"

	Amended Articles		Current Articles	Explanation
	2, Article 5 herein, and "within the preceding year" as used herein refers tothe year precedingthe date of occurrence of the current transaction retroactively. Items that have been approved by the audit committee and the board of directors in accordance with the proceduresneed not be counted toward the transaction amount. With respect to the acquisition or disposal of business use equipmentor right-of-use assets and real property right-of-use assets between the Company and its parent or subsidiaries, the Company's board of directors may delegate the board chairman to decide such matters when the transaction is withinNT$1 billionand have the decisions subsequently submitted to and ratified by the next board of directors meeting. When the matters are submitted to the audit committee for approval in accordance with Paragraph		as used herein refers to the year preceding the date of occurrence of the current transaction. Items that have been approved by the board of directors and recognized by the audit committee need not be counted toward the transaction amount. With respect to the acquisition or disposal of equipment for operating purpose between our company and the parent company /subsidiaries, the Board of Directors may delegate the chairman of the board to approve within a certain amount in advance based on the regulated procedures and then present the latest the Board of Directors’ratification. If there is Independent Director in our company, when reporting to the Board of Directors for discussion based on paragraph 1, opinions from each Independent Director shall be taken into full consideration, and any consents or qualified opinions from Independent Director shall be recorded in details in the minutes of the Board of Directors'

	Amended Articles		Current Articles	Explanation
	1, they shall be approved by more than half of all audit committee members and submitted to the board of directors for a resolution. If approval by more than half of all audit committee members as required in the preceding paragraph is not obtained, the procedures may be implemented if approved by more than two-thirds of all directors, and the resolution of the audit committee shall be recorded in the minutes of the board of directors meeting. The terms"all audit committee members"in Paragraph 3 and"all directors"in the preceding paragraph shall be counted as the actual number of persons currently holding those positions.		meeting.
	Article 8 The Company shall evaluate the rationality of the transaction costs by the following means in acquiring real estateor right-of-use assetsfrom related parties: 1.Based on the related party's transaction price plus necessaryinterest of		Article 8 The Company shall evaluate the rationality of the transaction costs by the following means in acquiring real estate from related parties: 1. Based on the related party's transaction price plus necessary interest of funds and the cost of the	To follow the amendment to the Regulations on November 26, 2018.

Amended Articles	Current Articles	Explanation
funds and the cost of the obligation assumed by the buyer in accordance with the law Necessary interest of funds is imputed as the weighted average interest rate on borrowing in the year that the company purchases assets. It may not be higher than the maximum non-financial industry lending rate announced by the Ministry of Finance. 2.Total of loan appraisal from a financial institution where the related party has previously collateralized on the property, the actual cumulative amount loaned by the financial institution shall be 70% or more of the total of loan appraisal and the period of the loan shall have been one year or more. However, this shall not apply if the financial institution and the counterparty have a relationship as related parties. For mergers and acquisitions orleaseof land and premises with the same property, the transaction cost may be respectively	obligation assumed by the buyer in accordance with the law Necessary interest of funds is imputed as the weighted average interest rate on borrowing in the year that the company purchases assets. It may not be higher than the maximum non-financial industry lending rate announced by the Ministry of Finance. 2.Total of loan appraisal from a financial institution where the related party has previously collateralized on the property, the actual cumulative amount loaned by the financial institution shall be 70% or more of the total of loan appraisal and the period of the loan shall have been one year or more. However, this shall not apply if the financial institution and thecounterparty have a relationship as related parties. For mergers and acquisitions of land and premises with the same property, the transaction cost may be respectively assessed on the basis of any

	Amended Articles		Current Articles	Explanation
	assessed on the basis of any of the means listed in the preceding paragraph in respect of land and premises. The Company shall assess the cost of real estateor right-of-useacquired based on the provisions of the preceding two paragraphs and consult CPA for review and specific comments in acquiring real estateor right-of-use from related parties. When the Company acquires real estate or right-of-use assets from related parties in any of the following circumstances, it shall be subject to the provisions of Article 7 and shall not apply to the provisions of the preceding three Paragraphs: 1. The related party acquired the real estateor right-of-use assetsthrough inheritance or bestowal. 2. It has been more than five years since the date on which the related party signed the contract to acquire the real estate or right-of-use assetsfor the transaction. 3. The real estate is		of the means listed in the preceding paragraph in respect of land and premises. Our company shall assess the cost of real estate based on the provisions of1st paragraph and2nd paragraph and consult CPA for review and specific comments in acquiring real estate from related parties. When our company acquires assets from related parties in any of the following circumstances, it shall be subject to the provisions of Article 7 and shall not apply to the provisions of the preceding three paragraphs: 1.The related party acquired the real estate through inheritance or bestowal. 2. It has been more than five years since the date on which the related party signed the contract to acquire the real estate for the transaction. 3. The real estate is acquired through the signing of a joint development contract with the related party, or through engaging others to build on the Company's own land,

	Amended Articles	Current Articles	Explanation
	acquired through the signing of a joint development contract with the related party, or through engaging others to build on the Company's own land, engaging others to build on rented land, etc. 4.The real property right-of-use assets are acquired for business use between the Company and its parent or subsidiaries, or between its subsidiaries in which it directly or indirectly holds 100% of the issued shares or capitalization.	engaging others to build on rented land, etc.
	Article 9 When the results of our company's appraisal conducted in accordance with the preceding 1st paragraph and 2nd paragraph are lower than the transaction price, ,it shall be subject to the provisions of Article 10. However, if the following circumstances exist, and objective evidence and specific rational comments from professional real estate appraisers and CPA have been presented, they do not apply:	Article 9 When the results of our company's appraisal conducted in accordance with the preceding 1st paragraph and 2nd paragraph are lower than the transaction price, ,it shall be subject to the provisions of Article 10. However, if the following circumstances exist, and objective evidence and specific rational comments from professional real estate appraisers and CPA have been presented, they do not apply:	To follow the amendment to the Regulations on November 26, 2018.

Amended Articles	Current Articles	Explanation
1. If the related party acquires undeveloped land or leased land for development, proof of one of the following conditions must be presented: (1) In the case of an assessment of undeveloped land is conducted with the method specified in the preceding provisions, the house shall be added rational operating profits according to the related parties’ operating cost, and the total shall exceed the actual transaction price. Rational operating profits refer to the lower gross margins based on the average operating gross margins of the related parties’ operating department for the last three years or the latest construction industry’ s gross margins issued by the Ministry of Finance. (2) Transactions of other floors of the same property or neighboring regions of unrelated parties within a year, where the area and conditions are similar with the trading terms including rational floors or regions’ spread based on real estate	1. Where the related party acquired undeveloped land or leased land for development, it may submit proof of compliance with one of the following conditions: (1) In the case of an assessment of undeveloped land is conducted with the method specified in the preceding Article, the house shall be added rational operating profits according to the related parties’ operating cost, and the total shall exceed the actual transaction price. Rational operating profits refer to the lower gross margins based on the average operating gross margins of the related parties’ operating department for the last three years or the latest construction industry’ s gross margins issued by the Ministry of Finance. (2) Accomplished transactions of other floors of the same property or neighboring regions of unrelated parties within a year, where the area and conditions are similar with the trading terms including rational floors or regions’

Amended Articles Current Articles Explanation dealing or lease practice conditions are similar with after assessment. the trading terms including 2. Where the Company rational floors or regions’ provides evidence that the dealing practice after real estate acquired or real assessment estate right-of-use assets (3) Rental cases of other acquired due to the lease floors of the same property from a related party has from unrelated parties similar terms of transaction within a year with as the transaction of estimation of equivalent neighboring regions of dealing conditions that other non-related parties cover rational floors spread within a year, and that the based on real estate lease area is similar, too. practices The transaction of 2. Where the Company neighboring regions provides evidence that the referred to in the preceding real estate acquired by a Paragraph in principle related party has similar refers to parcels on the terms of transaction as the same or an adjacent block traded case of neighboring and within a distance of no regions of other non-related more than 500 meters or parties within a year, and parcels close in publicly that the area is similar, too. announced current value; The traded case of transaction for similarly neighboring regions sized parcels in principle mentioned in the preceding refers to transactions paragraph refers to the completed by unrelated same or vicinal parties for parcels with a neighborhood and the land area of no less than distance from the property 50% of the property in the shall not exceed a planned transaction; within circumference of 500 the preceding year refers to meters or shall be similar to the year preceding the date the current announced of occurrence of the values; similar area refers acquisition of the real to area of the traded case of property or right-of-use other non-related parties

	Amended Articles	Current Articles	Explanation
	assetsthereof.	and shall not be less than 50% of the property area in transaction; "within a year" refers to the date of occurrence of the current transaction and do not need to be counted when going back and estimating for a year.
	Article 10 Where the Company acquires real propertyor right-of-usethereof from a related party and the results of appraisals conducted in accordance with the preceding two articles are uniformly lower than the transaction price, the following steps shall be taken: 1. A special reserve shall be set aside in accordance with Article 41, Paragraph 1 of the Securities and Exchange Act against the difference between the real property or right-of-use assets transaction price and the appraised cost, and may not be distributed or used for capital increase or issuance of bonus shares. If an investor evaluates the company’s investment byequitylaw is apublic	Article 10 Where the Company acquires real property from a related party and the results of appraisals conducted in accordance with Article 8 and Article 9 are uniformly lower than the transaction price, the following steps shall be taken: 1.Appropriated as special capital reserve shall be set aside in accordance with Paragraph 1 of Article 41 of Securities Exchange Act against the discrepancy between the real estate transaction price and the appraised cost. It shall not be allocated or transferred to capital increase and allotment of shares. If an investor evaluates the company’s investment by equity law is a public entity, then the	To follow the amendment to the Regulations on November 26, 2018.

	Amended Articles		Current Articles	Explanation
	entity, then the appropriated as special capital reserve shall be presented according to shareholding ratio to list the amount based on Article 41, Paragraph 1 of Securities Exchange Act. 2.Independent directors of the audit committeeshall comply with Article 218 of the Company Act. 3. Actions taken pursuant to the precedingtwo subparagraphs shall be reported to a shareholders' meeting, and the details of the transaction shall be disclosed in the annual report and any investment prospectus. The Company having set aside a special reserve under the preceding paragraph, may not utilize the special reserve until it has recognized a loss on decline in market value of the assets it purchasedor leasedat a premium, or they have been disposed of, or the lease contract has been terminated,or adequate compensation has been made, or the status quo ante has been restored, or there is other evidence		appropriated as special capital reserve shall be presented according to shareholding ratio to list the amount based on Article 41, Paragraph 1 of Securities Exchange Act. 2. Members of the audit committee shall comply with Article 218 of the Company Act. 3. The handling process of Subparagraph 1 and Subparagraph 2 shall be reported to the shareholders' meeting and the details of the transaction shall be disclosed in the annual report and prospectus. The appropriated as special capital reserve presented by our company according to the preceding paragraph may not utilize the appropriated as special capital reserve until the assets purchased at a high price has been recognized as a loss of drop in price or been disposed of, or its adequate compensation has been made, or reinstatement occurs, or there is other evidence confirmed to be rational, and it is approved by the regulator. When our company

	Amended Articles		Current Articles	Explanation
	confirming that there was nothing unreasonable about the transaction, and the competent authority has given its consent. When the Company obtains real propertyor right-of-use assetsfrom a related party, it shall also comply with the preceding two paragraphs if there is other evidence indicating that the acquisition was not an arm's length transaction.		acquires real estate from a related party, it shall also comply with the preceding two paragraphs if there is other evidence indicating that the transaction does not conform to the operating regulations.
	Article 11 The procedures for the Company’s engaging in derivatives’ trading are as follows: 1. Derivatives mentioned in the procedures refer to forward contracts, options contracts, futures contracts, leveraged deposit contracts, swap contracts whose value is derived from specific interest rates,financial instrument prices, commodity prices, exchange rates, index of prices or rates, creditrating or credit index, or other variable; or hybrid contractscombining the above contracts; or hybrid contracts or structured productscontaining		Article 11 The procedures for the Company’s engaging in derivatives’ trading are as follows: 1. Derivatives mentioned in the procedures refer to forward contracts, options contracts, futures contracts, leveraged deposit contracts, swap contracts whose value is derived from commodities such asassets, interest rates, exchange rates, indices,or other benefits, and the above-mentioned commodity combinations, and other commodities approved by the regulator for investment.Forward contracts doe not include insurance contracts,	To follow the amendment to the Regulations on November 26, 2018.

Amended Articles	Current Articles	Explanation
embedded derivatives. Forward contracts do not cover insurance contracts, performance contracts, after-sales service contracts, long-term lease contracts, and long-term purchase (sales)contracts. 2. The Company’s hedging strategies in derivatives’ trading are as follows: (1) Setting the total of the contract for transaction and the maximum amount of total contracts and individual contracts’ loss (i.e., stop-loss point). (2) Evaluating the profit and loss and performance of derivatives periodically. (3) Evaluating the credit status and professional ability of the trading object strictly. (4) All transactions and related operations shall be handled in accordance with the provisions of the law. 3. The rights and liabilities of the Company for derivatives shall be divided as follows, and the personnel of each department shall not concurrently hold office with each other. (1) AuditingDepartment:	performance contracts, after-sales service contracts, long-term leasing contracts, and long-term purchase (sales) contracts. 2. The Company’s hedging strategies in derivatives’ trading are as follows: (1) Setting the total of the contract for transaction and the maximum amount of total contracts and individual contracts’ loss (i.e., stop-loss point). (2) Evaluating the profit and loss and performance of derivatives periodically. (3) Evaluating the credit status and professional ability of the trading object strictly. (4) All transactions and related operations shall be handled in accordance with the provisions of the law. 3. The rights and liabilities of the Company for derivatives shall be divided as follows, and the personnel of each department shall not concurrently hold office with each other. (1) Auditing Department: supervising transaction process, transaction record audits,and risk tracking

Amended Articles	Current Articles	Explanation
supervising transaction process, transaction record audits, and risk tracking assessment. (2) Accounting Department: accounting processing, announcement and declaration. (3) Trading Department: transaction execution, transaction control, trading object evaluation and performance evaluation. (4) Delivery Department: transaction confirmation and delivery operations. (5) Depository Department: the custody of transaction contracts and trading evidence. 4. The Company’s derivatives-related guidelines, authorized quotas, levels of decision-making, and methods of performance evaluation shall be formulated by each dealing department based on the nature of commodities, and then be submitted to the chairman of the board for approval before implementation. 5. The total of the derivatives transaction	assessment. (2) Accounting Department: accounting processing, announcement and declaration. (3) Trading Department: transaction execution, transaction control, trading object evaluation and performance evaluation. (4) Delivery Department: transaction confirmation and delivery operations. (5) Depository Department: the custody of transaction contracts and trading evidence. 4. The Company’s derivatives-related guidelines, authorized quotas, levels of decision-making, and methods of performance evaluation shall be formulated by each dealing department based on the nature of commodities, and then be submitted to the chairman of the board for approval before implementation. 5. The total of the derivatives transaction contract the Company engages in is limited to20% of the paid-in capital of the Company;the upper

Amended Articles	Current Articles	Explanation
contract the Company engages in is limited to 20% of the paid-in capital of the Company; the upper limit of loss (stop-loss point) is 30% of traded total and individual contract amount. 6. The board of directors shall delegate the chairman of the board functional authority to engage inderivatives as follows: (1) A list of the transaction targets and commodity categories. (2) The verification of the list of counterparties and their upper limits of quotas. (3) Determination of respective transaction.	limit of loss (stop-loss point) is 30% of traded total and individual contract amount. 6. The board of directors shall delegate the chairman of the board functional authority to engage inderivatives as follows: (1) A list of the transaction targets and commodity categories. (2) The verification of the list of counterparties and their upper limits of quotas. (3) Determination of respective transaction.
Article 14 The Company engaging in derivatives trading shall establish a log book in which details of the types and amounts of derivatives trading engaged in, board of directors approval dates, and the matters required to be carefully evaluated under Subparagraph 4 of Article 12 and Subparagraph 2 of Paragraph 1, and Subparagraph 1 of Paragraph 2,of Article 13	Article 14 The Company engaging in derivatives trading shall establish a log book in which details of the types and amounts of derivatives trading engaged in, board of directors approval dates, and the matters required to be carefully evaluated under Subparagraph 4 of Article 12 and Subparagraph 2 of Paragraph 1, and Subparagraph 1 of Paragraph 2,of Article 13	Wording is adjusted.

Amended Articles	Current Articles	Explanation
shall be recorded in detail in the log book. The Company's internal audit personnel shall periodically make a determination of the suitability of internal controls on derivatives and conduct a monthly audit of how faithfully derivatives trading by the trading department adheres to the procedures for engaging in derivatives trading, and prepare an audit report. If any material violation is discovered,membersof the audit committee shall be notified in writing.	shall be recorded in detail in the log book. The Company's internal audit personnel shall periodically make a determination of the suitability of internal controls on derivatives and conduct a monthly audit of how faithfully derivatives trading by the trading department adheres to the procedures for engaging in derivatives trading, and prepare an audit report. If any material violation is discovered, the audit committee shall be notified in writing.
Article 17 Companies participating in merger, demerger or acquisition, unless otherwise stipulated in other laws or there is special factors which must be reported to the regulator for approval, shall convene the Board of Directors and shareholders’ meeting on the same day to decide the merger, demerger or acquisition-related matters. Unless otherwise provided by other laws or because of special factors,,companies	Article 17 Companies participating in merger, demerger or acquisition, unless otherwise stipulated in other laws or there is special factors which must be reported to the regulator for approval, shall convene the Board of Directors and shareholders’ meeting on the same day to decide the merger, demerger or acquisition-related matters. Unless otherwise provided by other laws or because of special factors,,companies	Wording is adjusted.

Amended Articles	Current Articles	Explanation
participating in transfer of shares shall report to the regulator for approval in advance and convene the Board of Directors on the same day. When participating in merger, demerger, acquisition, or transfer of shares, companies that are listed or have their shares traded at securities dealers shall prepare a full written record of the following information and retain it for 5 years for examination: 1. Basic Information of the Party: including titles, names , ID numbers (passport numbers for foreigners) of all the members participating in merger, demerger, acquisition, or transfer of shares plans or its executors. 2. Dates of Material Events: including dates of signing of letter of intent or memorandum, delegation of financial or legal advisors, signing of contracts, and the Board of Directors. 3. Material Documents and Minutes: including merger, demerger,acquisition or	participating in transfer of shares shall report to the regulator for approval in advance and convene the Board of Directors on the same day. When participating in merger, demerger, acquisition, or transfer of shares, companies that are listed or have their shares traded at securities dealers shall prepare a full written record of the following information and retain it for 5 years for examination: 1. Basic Information of the Party: including titles, names , ID numbers (passport numbers for foreigners) of all the members participating in merger, demerger, acquisition, or transfer of shares plans or its executors. 2. Dates of Material Events: including dates of signing of letter of intent or memorandum, delegation of financial or legal advisors, signing of contracts, and the Board of Directors. 3. Material Documents and Minutes: including merger, demerger,acquisition or

	Amended Articles		Current Articles	Explanation
	transfer of shares plans, letter of intent or memorandum, material contracts, and minutes of the Board of Directors. When participating in merger, demerger, acquisition, or transfer of shares, companies that are listed or have their shares traded at securities dealers shall prepare information of the preceding subparagraph1 and subparagraph 2 and report it to the regulator for examination in regulated format via Internet information system within 2 days commencing from the date of the Board of Directors’ resolution. Companies that are listed or have their shares traded at securities dealers shall sign an agreement with companies participating in merger, demerger, acquisition, or transfer of shares, companies that are non-listed or have their shares traded at securities dealers, and comply with the regulations of the preceding two paragraphs.		transfer of shares plans, letter of intent or memorandum, material contracts, and minutes of the Board of Directors. When participating in merger, demerger, acquisition, or transfer of shares, companies that are listed or have their shares traded at securities dealers shall prepare information of the preceding subparagraph 1 and subparagraph 2 and report it to the regulator for examination in regulated format via Internet information system within 2 days commencing from the date of the Board of Directors’ resolution. Companies that are listed or have their shares traded at securities dealers shall sign an agreement with companies participating in merger, demerger, acquisition, or transfer of shares, companies that are non-listed or have their shares traded at securities dealers, and comply with the regulations of Paragraph 3 and Paragraph 4.

Amended Articles	Current Articles	Explanation
Article 22 Provided that companies participating in merger, demerger, acquisition, or transfer of shares are not public entities, the Company shall sign an agreement with them in accordance with the provisions of Articles 17 and 18 and the preceding article.	Article 22 Provided that companies participating in merger, demerger, acquisition, or transfer of shares are not public entities, the Company shall sign an agreement with them in accordance with the provisions ofArticles17, 18 and21.	Wording is adjusted.
Article 23 The total of the real estate andright-of-use assetsor marketable securities for non-operating purpose as well as the quotas for individual marketable securities that the Company and its respective subsidiaries acquire: 1. The total of real estate andright-of-use assets thereof for non-operating purpose the Company acquires shall not be higher than 50% of shareholders' equity; The total of real estate for non-operating purpose the Company and its respective subsidiaries acquire shall not be higher than 10% of the Company's	Article 23 The total of the real estate or marketable securities for non-operating purpose as well as the quotas for individual marketable securities that the Company and its respective subsidiaries acquire: 1. The total of real estate for non-operating purpose the Company acquires shall not be higher than 50% of shareholders' equity; the total of real estate for non-operating purpose the Company and its respective subsidiaries acquire shall not be higher than 10% of the Company's shareholders' equity. 2. he amount of individual	To follow the amendment to the Regulations on November 26, 2018.

	Amended Articles		Current Articles	Explanation
	shareholders' equity. 2. The amount of individual marketable securities the Company invests in shall not be higher than 50% of shareholders' equity; The amount of individual marketable securities the Company and its respective subsidiaries invest in shall not be higher than10% of the Company's shareholders' equity. 3.The net investment of consolidated shareholders' equity of the total of marketable securities that the Company and its subsidiaries purchase shall not be higher than 150% of the Company's shareholders' equity unless otherwise specified by laws. Shareholders’ equity mentioned in the preceding paragraph refers to the balance of the shareholders’ equityattributable to the parent companyas specified in the consolidatedfinancial statements that have recently been audited by the CPAs.		marketable securities the Company invests in shall not be higher than 50% of the Company's shareholders' equity; The amount of individual marketable securities the Company and its respective subsidiaries invest in shall not be higher than 10% of the Company's shareholders' equity. 3. The net investment of consolidated shareholders' equity of the total of marketable securities that the Company and its subsidiaries purchase shall not be higher than 150% of our parent company shareholders' equity of the latest consolidated financial statements unless otherwise specified by laws. Shareholders’ equity mentioned in the preceding paragraph refers to the balanceofshareholders’ equity of financial statements that has recently been audited by CPA.
	Article 26 The matters not stipulated		Article 26 The matters not stipulated	Wording is adjusted.

	Amended Articles		Current Articles	Explanation
	in the procedures shall be handled in accordance with the “Guidelines for Acquisition or Disposal of Assets by Public Entities” and its relevant provisions issued by the Financial Supervisory Commission.		in the procedures shall be handled in accordance with the “Guidelines for Acquisition or Disposal of Assets by Public Entities” and its relevant provisions issued by the Financial Supervisory Commission of Executive Yuan.
	Article 27 The formulation of the procedures shall be submitted to the audit committee and the Board of Directors and then to a shareholders' meeting for approval; the same applies when the procedures are amended. When the matters are submitted to the audit committee for approval in accordance with Paragraph 1, they shall be approved by more than half of all audit committee members and submitted to the Board of Directors for a resolution, and shall be subject to mutatis mutandis application of Paragraphs 5 and 6 of Article 7 herein.		Article 27 After the procedures have been approved by the Board of Directors, they shall be submitted to the audit committee, and then to a shareholders' meeting for approval; the same applies when the procedures are amended. If any director expresses dissent and it is contained in the minutes or a written statement, the Company shall submit the director's dissenting opinion to the audit committee. If there is Independent Director in the Company, when reporting the procedures of acquisition or disposal of assets to the Board of Directors for discussion based on the preceding regulations, opinions from each Independent Director shall	To follow the amendment to the Regulations on November 26, 2018.

	Amended Articles		Current Articles	Explanation
			Independent Director shall be taken into full consideration, and any objections or qualified opinions from Independent Director shall be recorded in details in the minutes of the Board of Directors' meeting.
	Article 28 The provisions of the proceduresrelating to 10% of the total assets shall be calculated on the basis of the total assets in the latest individual or respective financial statements as stipulated in the guidelines for financial reports made by securities issuers.		Article 28 Theprovisionsof these Guidelines relating to 10% of the total assets shall be calculated on the basis of the total assets in the latest individual or respective financial statements as stipulated in the guidelines for financial reports made by securities issuers. In the case of a company’s stock has no nominal amount or the nominal amount is not NT$10 per share, according to the guidelines of transaction amount of 20% paid-in capital, it shall be calculated by 10% of the parent company proprietary equity.	Wording is adjusted and the provision that a company's stock has no nominal amount or the nominal amount is not NT$10 per share is deleted.

(2) Proposal for the amendment of the Company's Operational Procedures for Loaning of Funds and Making of Endorsements/Guarantees.

[Proposed by the Board of Directors]

Explanation:

In line with amendments to the Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies, it is proposed to amend the Company's "Operational Procedures on Loaning of Funds and Making of Endorsements/Guarantees".
For the amendment comparison table, please refer to page 72 to 81 of this manual.

Resolution:

Cathay Real Estate Development Co., Ltd.

Operational Procedures for Loaning of Funds and Making of Endorsements/Guarantees Articles amendment

comparison table

	Amended Articles	Current Articles	`Explanation:`
	Article 3 The wording of this procedure is defined as follows: 1. Net Value: Referring to the equity of the Company’s latest balance sheet of financial statements audited or certified by CPA is attributable to the owner of the parent company. 2. Date of Occurrence: Referring to the formerest date among the date of contract signing, the date of payment, the date of the board of directors’ resolution, or other dates when the object and the amount of the capital lending or endorsementcan be confirmed.	Article 3 The wording of this procedure is defined as follows: 1. Net Value: Referring to the equity of the Company’s latest balance sheet of financial statements audited or certified by CPA is attributable to the owner of the parent company. 2. Date of Occurrence: Referring to the formerest date among the date of contract signing, the date of payment, the date of the board of directors’ resolution, or other dates when the object and the amount of thetransaction can be confirmed	"Handling guidelines for capital loan and endorsement by publicly owned corporation" (hereinafter referred to as the "Handling Guidelines") amended by March 7th, 2019.
	Article 6 The total of capital lent by the Company and the quota permitted to an individual object: 1. The total of the Company’s lendingof	Article 6 The total of capital lent by the Company and the quota permitted to an individual object: 1. The total of the Company’s lendingof	Amended and revised wording in accordance with the “Handling Guidelines”as amended by March 7th,2019

Amended Articles		Current Articles	`Explanation:`
capital shall not exceed 40% of the Company’s net value. 2. For corporations or companies that do business with the Company, individual lending of capital shall not exceed the amount of transactions between the two parties. The amount of transaction refers to the higher amount based on the amount of purchase or sales between the two parties. 3. For corporations or companies having a need of making short-term financing, individual lending of capital shall not exceed 20% of the Company’s net value. Lending of capital between foreign companies which the Company directly and indirectly holds 100% of the voting shares, lending of capital from foreign companies which the company directly and indirectly holds 100% of the voting shares to the Company, does not subject to the preceding third paragraph. However, individual lending of capital shall not exceed		capital shall not exceed 40% of the Company’s net value. 2. For corporations or companies that do business with the Company, individual lending of capital shall not exceed the amount of transactions between the two parties. The amount of transaction refers to the higher amount based on the amount of purchase or sales between the two parties. 3. For corporations or companies having a need of making short-term financing, individual lending of capital shall not exceed 20% of the Company’s net value. When those foreign companies that directly and indirectly hold 100% shares of voting rights are engaged in lending of capital, the lending companiesare not subject tothepreceding paragraph. However,the total of capital to be lent and the quota, deadline and method of interest calculation for an individual object should be set separately for business transactions and short-term

	Amended Articles		Current Articles	`Explanation:`
	40% of the Company’s net value, and each lending period shall be limited to three years. If the responsible persons of the Company violate the provisions of the preceding paragraph, it shall be responsible for the return of the loan with the borrower; if the Company suffers damage, it shall also be liable for damages.		financing.
	Article 7 The procedures of the Company’s lending of capital: 1. Review of Credit Investigation When it comes to the Company’s lending of capital, the objects that need capital lending should submit required documents and the latest financial statements and then apply for the amount of capital lending in written form to the department in charge of this matter. Upon receiving the application, the department in charge of this matter will turn it over to our Operation Management Dept. for evaluation investigation into the		Article 7 The procedures of the Company’s lending of capital: 1. Review of Credit Investigation When it comes to the Company’s lending of capital, the objects that need capital lending should submit required documents and the latest financial statements and then apply for the amount of capital lending in written form to the department in charge of this matter. Upon receiving the application, the department in charge of this matter will turn it over to our Operation Management Dept. for evaluation investigation into the	Revised in accordance with the “Guidelines”as amended by March 7, 2019

Amended Articles

Current Articles

`Explanation:`

objects of capital lending, objects of capital lending, including the description of including the description of relevant capital-lending relevant capital-lending content, necessity and content, necessity and rationality, risk assessment rationality, risk assessment results, and the impact of results, and the impact of capital lending on the capital lending on the Company’s operational Company’s operational risk, financial conditions, risk, financial conditions, and shareholders' equity. and shareholders' equity. Collateral should be Collateral should be obtained, if necessary. obtained, if necessary. 2. Approval of Credit 2. Approval of Credit When it comes to the When it comes to the Company’s lending of Company’s lending of capital, it shall be approved capital, it shall be approved by the chairman of the by the chairman of the board after our Operation board after our Operation Management Dept.’s Management Dept.’s evaluation based on the evaluation based on the procedures; the department procedures; the department in charge of this matter in charge of this matter shall report to the board of shall report to the board of directors for resolution and directors for resolution and approval and shall not approval and shall not delegate others to decide. delegate others to decide. 3. Preservation of Claims 3. Preservation of Claims When it comes to the When it comes to the Company’s lending of Company’s lending of capital, except the capital, except the subsidiaries that directly subsidiaries that directly and indirectly hold more and indirectly hold more than 50% shares of voting than 50% shares of voting rights, the same amount of rights, the same amount of guaranteed promissory note guaranteed promissory note shall be required and, if shall be required and, if necessary, mortgage of necessary, mortgage of

Amended Articles		Current Articles	`Explanation:`
movable property or real estate shall be set. However, if the objects of capital lending provide personal or company’s adequate financial resources and credit as a guarantee instead of providing collateral, the Board of Directors may take Operation Management Dept.’s evaluation report into account; if a company is the guarantor, attention should be paid to whether the constitution of the company is set as an external guarantee clause.		movable property or real estate shall be set. However, if the objects of capital lending provide personal or company’s adequate financial resources and credit as a guarantee instead of providing collateral, the Board of Directors may take Operation Management Dept.’s evaluation report into account; if a company is the guarantor, attention should be paid to whether the constitution of the company is set as an external guarantee clause. When reporting the procedures of lending of capital to the Board of Directors based on the preceding regulations, opinions from each Independent Director shall be taken into full consideration, and their specific ideas and reasons for consent or opposition shall also be included in the minutes of the Board of Directors'meeting.
Article 16 Theoperatingprocedure of the Company’s endorsements:		Article 16 The procedure of the Company’s endorsements: 1.Review of Credit	Amended and revised wording in accordance with the

Amended Articles Current Articles Explanation: 1.Review of Credit Investigation “Handling Investigation When it comes to the Guidelines”as When it comes to the Company’s endorsements, amended by Company’s endorsements, the companies that need March 7th, 2019 the companies that need endorsements should endorsements should submit required company submit required company documents and the latest documents and the latest financial statements, and financial statements, and then apply for then apply for endorsements in written endorsements in written form to the department in form to the department in charge of this matter. charge of this matter. Upon receiving the Upon receiving the application, the department application, the department in charge of this matter will in charge of this matter will turn it over to our turn it over to our Operation Management Operation Management Dept. for evaluation Dept. for evaluation investigation into the investigation into the objects of endorsements, objects of endorsements, including the description of including the description of relevant endorsements relevant endorsements content, necessity and content, necessity and rationality, risk assessment rationality, risk assessment results, and the impact of results, and the impact of endorsements on the endorsements on the Company’s operational Company’s operational risk, financial conditions, risk, financial conditions, and shareholders' equity. and shareholders' equity. Collateral should be Collateral should be obtained, if necessary. obtained, if necessary. 2.Approval and Delegation 2. Approval and Delegation of Authority of Authority When it comes to the When it comes to the Company’s endorsements, Company’s endorsements, it shall be approved by the it shall be approved by the chairman of the board after

Amended Articles		Current Articles	`Explanation:`
chairman of the board after our Operation Management Dept.’s evaluation based on the procedures; the department in charge of this matter shall report to the board of directors for resolution, but the Board of Directors may delegate the chairman to determine the object and below NT$1 billion for resolution, and then report the matter to the Board of Directors for ratification.		our Operation Management Dept.’s evaluation based on the procedures; the department in charge of this matter shall report to the board of directors for resolution, but the Board of Directors may delegate the chairman to determine the object and below NT$1 billion for resolution, and then report the matter to the Board of Directors for ratification. When reporting the procedures of endorsements to the Board of Directors based on the preceding regulations, opinions from each Independent Director shall be taken into full consideration, and their specific ideas and reasons for consent or opposition shall also be included in the minutes of the Board of Directors'meeting.
Article 19 If an endorsement is required for business purposes and it is necessary to exceed the amount set in the procedures and meets the requirements of the procedures, it shall be agreed bythe Board of		Article19 If an endorsement is required for business purposes and it is necessary to exceed the amount set in the procedures and meets the requirements of the procedures, it shall be agreed bythe Board of	Revised in accordance with the “Guidelines”as amended by Marchth 7, 2019

Amended Articles		Current Articles	`Explanation:`
Directors and there must be a joint guarantee of more than half of the directors affixing their signatures for the possible loss exceeding the limit. The procedure shall be also amended to be ratified by the shareholders’ meeting; if the shareholders’ meeting disagrees, a plan shall be made to eliminate the excess part within a certain period of time.		Directors and there must be a joint guarantee of more than half of the directors affixing their signatures for the possible loss exceeding the limit. The procedure shall be also amended to be ratified by the shareholders’ meeting; if the shareholders’ meeting disagrees, a plan shall be made to eliminate the excess part within a certain period of time. When reporting the procedures of endorsements to the Board of Directors based on the preceding regulations, opinions from each Independent Director shall be taken into full consideration, and their specific ideas and reasons for consent or opposition shall also be included in the minutes of the Board of Directors'meeting.
Article 23 If the Company’s endorsements meet one of the following standards, it shall announce the declaration within two days from the date of occurrence: 1. The balance of the Companyand its		Article 23 Company’s endorsements meet one of the following standards, it shall announce the declaration within two days from the date of occurrence: 1. The balance of the Company and its subsidiaries’ endorsements	Revised in accordance with the “Guidelines”as amended by March 7th, 2019

	Amended Articles	Current Articles	`Explanation:`
	subsidiaries’ endorsements is more than 50% of our latest financial statements’ net value. 2. The balance of the Company and its subsidiaries’ endorsements to a single enterprise is more than 20% of our net value. 3. The balance of the Company and its subsidiaries’ endorsements to a single enterprise is more than NT $10 million, and the sum of the balance of endorsement, investmentsunder equity method, and capital-lending is more than 30% of our net value. 4. The increased endorsement amount of the Company or its subsidiaries is more than NT $30 million and more than 5% of our net value. If a subsidiary is not a domestic public entity, it has to declare according to the fourth subparagraph of the preceding paragraph. It shall notify the Company immediately upon the date of occurrence and the Company shall announce the declaration in	is more than 50% of our latest financial statements’ net value. 2. The balance of the Company and its subsidiaries’ endorsements to a single enterprise is more than 20% of our net value. 3. The balance of the Company and its subsidiaries’ endorsements to a single enterprise is more than NT $10 million, and the sum of the balance of endorsement, long-term investment, and capital-lending is more than 30% of our net value. 4. The increased endorsement amount of the Company or its subsidiaries is more than NT $30 million and more than 5% of our net value. If a subsidiary is not a domestic public entity, it has to declare according to the preceding fourth paragraph. It shall notify the Company immediately upon the date of occurrence and the Company shall announce the declaration in accordance with regulations.

	Amended Articles		Current Articles	`Explanation:`
	accordance with regulations.
	Article 28 This procedure shall be approved with the consent of more than half of all audit committee members and submitted to the board of directors for a resolution; the same applies when the procedures are amended. If approval of more than half of all audit committee members as required is not obtained, the procedures may be implemented if approved by more than two-thirds of all directors, and the resolution of the audit committee shall be recorded in the minutes of the board of directors meeting. The all audit committee members and the all directors in the preceding paragraphs refers to the actual Incumbents.		Article 28 This procedure shall be approved with the consent of more than half of all audit committee members and submitted to the board of directors for a resolution; the same applies when the procedures are amended. If approval of more than half of all audit committee members as required is not obtained, the procedures may be implemented if approved by more than two-thirds of all directors, and the resolution of the audit committee shall be recorded in the minutes of the board of directors meeting. When reporting the procedures of capital lending and endorsements to the Board of Directors based on the preceding regulations, opinions from each Independent Director shall be taken into full consideration, and their specific ideas and reasons for consent or opposition shall also be included in the minutes of the Board of Directors'meeting.	Revised in accordance with the “Guidelines”as amended by March 7th, 2019

(3) Proposal for releasing the prohibition on the Company’s board of directors from participation in competitive business.

[Proposed by the Board of Directors]

Explanation:

In accordance with Article 209 of the Company Act, a director who does anything for himself or on behalf of another person that is within the scope of the company's business, shall obtain approval from the shareholders' meeting.
The director of the company, Tzi-Li Tung, and independent director Shiou-Ling Lin and independent director Chih-Wei Wu, are involved in other companies' operations which are the same or similar to the scope of our Company's business. It is proposed to release the prohibition from participation in competitive business (details as follows), and do not deem the previous earnings as earnings of the company.

Director	Company	Concurrent Post
Tzi-Li Tung	CCH Commercial Company Limited	Director

Independent Director	Company	Concurrent Post
Shiou-Ling Lin	Accton Technology Corporation	Independent Director
	KHL V Venture Capital Co., Ltd.	Director
	HONG CE Investment Co., Ltd.	Director

	ZHEN HAN Capital Co., Ltd	Director
	HONG SHUN Investment Co., Ltd.	Director
Chih-Wei Wu	Nien Hsing Textile Co. Ltd.	Independent Director

Resolution:

Provisional Motion(s)

Appendix 1 Cathay Real Estate Development Co., Ltd.,

Articles of Incorporation

Chapter 1 General Provisions

Article 1

The Company shall be named Cathay Real Estate Development Co., Ltd. ("Cathay Real Estate" in short) in accordance with the provisions of Company Limited by Shares in the Company Act.

Article 2

The Company's business scopes are as follows:

F208031 Retail Sale of Medical Equipment.
F301010 Department Stores.
G101041 Passenger Car Rental and Leasing.
G202010 Parking Garage Business.
H701010 Residence and Buildings Lease Construction and Development.
H701020 Industrial Factory Buildings Lease Construction and Development.
H701040 Specialized Field Construction and Development.
H701050 Public Works Construction and Investment.
H701060 New County and Community Construction and Investment.
H701070 Land Levy and Delimit.

H701080 Reconstruction within the renewal area.
H701090 Renovation, or maintenance within the renewal area.
H702010 Construction Management.
H703090 Real Estate Commerce.
H703100 Real Estate Rental and Leasing.
I103060 Management Consulting Services.
I199990 Other Consultancy.
ZZ99999 All business items that are not prohibited or restricted by law, except those that are subject to special approval.

The operations of the above businesses shall be conducted in accordance with the relevant laws and regulations.

Article 3

The Company may provide endorsements and guarantees due to business requirements.

Article 4

The Company's total reinvestment amount is not restricted by the reinvestment ratio as stipulated in Article 13 of the Company Act.

Article 5

The main office (headquarters) of the Company shall be established in Taipei City, and branches may be established in other appropriate places where necessary, and its setup, closure or change shall be approved by the board of directors.

Article 6

The Company's public notice shall be handled in accordance with the Company Act and other relevant laws and regulations.

Chapter 2 Shareholdings

Article 7

The registered capital of the Company is NT$20 billion, divided into 2 billion shares with a par value of NT$10. The board of directors is authorized to issue the shares in installments.

Article 8

The Company's shares are issued as registered share certificates, signed or sealed by three or more directors of the Company, affixed with the Company's stamp and serial number, and duly authenticated by the competent authority or certifying institution appointed by the competent authority. For the above publicly issued registered shares, the Company may print consolidated share certificates or be exempted from printing any share certificates. However, share certificates shall be placed under the custody of a centralized securities custody enterprise. The same applies for other securities issued.

Article 9

The Company's stock affairs shall be handled in accordance with the Regulations Governing the Administration of Shareholder Services of Public Companies and other relevant

laws and regulations, except as otherwise stated in the Articles of Incorporation.

Article 10

Transfer of the Company's shares is suspended within 60 days before the convening date of the annual shareholders meeting, within 30 days before the special shareholders meeting, and within five days before the date of allocation of dividends and bonuses or other benefits decided by the Company.

Chapter 3 Shareholders Meeting Article 11

The Shareholders meetings are comprised of regular and special meetings, where a regular meeting is conducted annually, within six months upon the close of the fiscal year, and convened by the board of directors. Special meetings may be convened by the board of directors where necessary according to the law, except as otherwise provided by the Company Act. Shareholders shall be notified of the date, place and meeting agenda of regular shareholders meetings, no later than 30 days prior to the meeting date; and no later than 15 days prior to the date of special meetings.

Article 12

The Company's shareholders meeting shall be convened by the board of directors, and chaired by the Chairman of the Board.

For a shareholders meeting convened by any other person having the convening right, he/she shall act as the Chair of

that meeting. However, if there are two or more persons having the convening right, the Chair of the meeting shall be elected from among them.

Article 13

A shareholder of the Company shall have one voting right for each share in his/her/its possession.

Restrictions to the exercise of the above voting rights shall be in accordance with the Company Act and relevant laws and regulations.

Article 14

A shareholder who is unable to attend the shareholders meeting, may appoint a proxy to attend by executing a power of attorney printed by the company, five days before the shareholders meeting, stating the scope of power authorized by the proxy. A shareholder may only execute one power of attorney and appoint one proxy only, except for trust enterprises or stock agencies approved by the competent authority. When a person acts as proxy for two or more shareholders concurrently, the number of voting rights represented by him/her shall not exceed 3% of the total number of voting shares of the company, otherwise, the portion of excessive voting power shall not be counted. When the government or a juristic person is a shareholder, its proxy shall not be limited to one person, provided that the voting right that may be exercised shall be calculated on the basis of the total number of voting shares it holds.

Article 15

Resolutions at a shareholders meeting shall, unless otherwise provided in the Company Act, be adopted by a majority vote of the attending shareholders, who represent more than one-half of the total number of voting shares.

Article 16

Matters relating to the resolutions of a shareholders meeting shall be recorded in the meeting minutes. The meeting minutes shall be signed or sealed by the Chair of the meeting and a copy distributed to each shareholder within 20 days after the conclusion of the meeting.

The preparation and distribution of the minutes of shareholders meetings as required in the preceding Paragraph may be effectuated by electronic means or public notice.

Chapter 4 Board of Directors

Article 17

The Company's board of directors is to be formed by nine to 15 directors, comprised of at least three independent directors, and the number shall not be less than one-fifth of the board seats. The members shall be elected from among the shareholders with disposing capacity.

The election of the Company's directors utilizes a candidate nomination system, where shareholders elect the directors from the nominees list during the shareholders meeting. The nomination and election methods shall be in accordance with the Company Act, Securities and Exchange Act and relevant laws and regulations. Assessment of independent directors'

professional qualifications, shareholdings and sideline restrictions, independence and other compliance matters, shall be handled in accordance with the relevant laws and regulations.

The Company's Audit Committee shall be formed by all independent directors in accordance with Article 14-4 of the Securities and Exchange Act. Members of the Audit Committee, execution of power and authority, and other compliance matters, shall be conducted in accordance with the relevant laws and regulations or the Articles of Incorporation, and its Corporate Charter shall be established by the board of directors.

Article 18

The term of office of a director is three years, and he/she may be eligible for re-election. In case no election of new directors is effectuated after expiration of the term of office of existing directors, the out-going directors may extend their period of duty until new directors have been elected and assumed their office.

The eligibility and re-election of the Company's independent directors shall be handled in accordance with the relevant laws and regulations.

The board of directors is authorized to issue compensation to the Company's directors (including independent directors) for their terms in office, by referencing the Company's business status and industry standards.

The Company may, by resolution of the board of directors, purchase liability insurance for its directors or important

employees during their term of duty, for compensation they are liable to during their performance of duties, according to the law.

The board of directors may authorize the Chairman of the Board to handle the amount and renewal of the liability insurance.

Article 19

Three managing directors may be elected by all directors, and the managing directors are to elect one person among themselves as the Chairman of the Board, and one person may be elected as Vice Chairman where necessary. In case no managing directors have been elected, a Chairman of the Board shall be elected by a majority vote among the attending directors at a meeting attended by over two-thirds of the directors, and a Vice Chairman may be elected where necessary.

In case the Company has managing directors, at least one managing director shall be an independent director, and the number shall not be less than one-fifth of the total number of managing directors.

Article 20

The Chairman of the Board shall internally preside over the shareholders meeting, meeting of the board of directors, and meeting of the managing directors, and shall externally represent the Company. In case the Chairman of the Board is on leave or unable to exercise his power and authority for any cause, the Vice Chairman shall act on his behalf. In case there

is no Vice Chairman, or the Vice Chairman is on leave or unable to exercise his power and authority for any cause, the Chairman of the Board shall designate one of the managing directors to act on his behalf. Where there are no managing directors, one of the directors shall be designated to act on his behalf. In the absence of such a designation, the managing directors or the directors shall elect from among themselves an acting Chairman of the Board.

Article 21

The directors shall attend the meetings of the board in person. If he/she is unable to attend in person, unless otherwise provided in the Company Act, he/she may execute a power of attorney and state therein the scope of authority with reference to the subjects to be discussed at the meeting, by delegating other directors to attend on his/her behalf, but this is only limited to one director.

The convening notice for the above shall be given in writing, e-mail or fax.

If the meeting of the board of directors is conducted by video conference, the directors participating in the video conference shall be deemed to have attended the meeting in person.

Article 22

The power and authority of the Board of Directors are as follows:

Approval of the Corporate Charter.
Decisions regarding business policies.
Review of financial reports.

4.Preparation of profit distribution and deficit compensation.
5.Preparation of capital increases and reductions, and resolution of shares or corporate bonds issuances.
6.Purchase, sale, split, exchange, property rights settlements and all other disposals of immovable properties.
7.Establishment of functional committees and the establishment and amendment of the Corporate Charter.
8.Power and authority authorized by the law, Articles of Incorporation or resolutions of the shareholders meetings.

Article 23

Resolutions of the board of directors shall be recorded in the board meetings minutes, and signed or sealed by the Chair and kept at the Company.

Article 24

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

Chapter 5 Manager

Article 25

The Company may have managers, whose appointment, dismissal and remuneration shall be handled in accordance with the Company Act and relevant regulations.

Chapter 6 Accounting

Article 26

The Company's fiscal year is from 1 January to 31 December

for each year. When the fiscal year has closed, the board of directors shall prepare the following statements, and present these sataements at the shareholders meeting for approval according to the regulations.

Business report.
Financial statements.
Proposals of profit distribution or deficit compensation.

Article 27

If the Company earns profit for the year, 0.1% to 1% of it shall be distributed as employees compensation, and not more than 1% as directors and supervisors compensation. However, the company's accumulated losses shall first be covered.

If there are earnings after the fiscal year closes, besides paying taxes according to the law, the Company shall first offset its previous years' losses, and set aside a legal reserve, set aside or reverse special reserve according to the law, and then allocate 30% to 100% as shareholders dividends and bonuses. The remaining monies, together with the beginning undistributed earnings, shall be the distributable earnings. The board of directors shall prepare a earnings distribution proposal, and submit it at the shareholders meeting for approval. The distribution ratio of the above shareholders’ dividends and bonuses depends on the current year's major financial or working capital planning, and may be adjusted upon resolution of the shareholders meeting.

In response to economic and market environment changes, the Company adopts a diversified investment approach to increase profitability.In consideration of long-term financial

planning and future funding requirements, a residual dividend policy is adopted for the dividend policy, so as to achieve steady growth and sustainable operations.

Based on the Company's operational planning and capital investment, as well as taking into account shareholders' cash inflow requirements, and to avoid over expansion of share capital, earnings are be first distributed in the form of a cash dividend, followed by a stock dividend. However, a cash dividend distribution shall not be less than 50% of total dividend.

Chapter 7 Supplementary Provisions

Article 28

Matters not covered in the Articles of Incorporation shall be handled in accordance with the Company Act and other relevant laws and regulations.

Article 29

The Articles of Incorporation were established on 14 September 1964, and the 1st amendment was made on 27 February 1965, 2nd amendment on 30 Mar 1966, 3rd amendment on 20 April 1967, 4th amendment on 6 June 1969, 5th amendment on 25 May 1970, 6th amendment on 6 May 1971, 7th amendment on 19 May 1972, 8th amendment on 7 May 1973, 9th amendment on 17 May 1974, 10th amendment on 30 May 1975, 11th amendment on 14 May 1976, 12th amendment on 21 April 1978, 13th amendment on 16 May 1980, 14th amendment on 22 May 1981, 15th amendment on 27 May 1983, 16th amendment on 25 May 1984, 17th

amendment on 24 May 1985, 18th amendment on 23 May 1986, 19th amendment on 2 May 1987, 20th amendment on 20 May 1988, 21st amendment on 26 May 1989, 22nd amendment on 25 May 1990, 23rd amendment on 17 May 1991, 24th amendment on 22 May 1992, 25th amendment on 14 May 1993, 26th amendment on 20 May 1994, 27th amendment on 26 May 1995, 28th amendment on 24 May 1996, 29th amendment on 23 May 1997, 30th amendment on 22 May 1998, 31st amendment on 19 May 1999, 32nd amendment on 19 May 2000, 33rd amendment on 24 May 2001, 34th amendment on 16 May 2002, 35th amendment on 22 May 2003, 36th amendment on 14 May 2004, 37th amendment on 10 June 2005, 38th amendment on 19 June 2009, 39th amendment on 10 June 2011, 40th amendment on 15 June 2012, 41st amendment on 14 June 2013, 42nd amendment on 6 June 2014, 43rd amendment on 8 June 2016, and 44rd amendment on 8 June 2018.

Appendix 2 Cathay Real Estate Development Co., Ltd., Rules of Procedure for Shareholder Meetings

Article 1 (Basis and Regulatory Compliance)

To establish good governing system of shareholder meetings, build solid supervision functions and enhance management functions, the Rules which are established according to Article 5 of Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies, shall be followed. The rules of procedures for the Company's shareholder meetings, except when otherwise provided by laws and regulations or the Articles of Incorporation, shall be as provided in these Rules.

Article 2 (Summon and Notice of Annual Meeting of Shareholders) The summon and notice of the company's shareholders meetings shall be in accordance with the provisions of Article 171, Article 172, Article 172-1 and Article 185 Paragraph 1 of the Company Act, and Article 26-1, Article 26-2 and Article 43-6 of the Securities and Exchange Act, Article 56-1, Article 60-2 of Regulations Governing the Offering and Issuance of Securities by Securities Issuers, and Article 5 and Article 6 of Regulations Governing Content and Compliance Requirements for Shareholders Meeting Agenda Handbooks of Public Companies, or other relevant laws and regulations.

Article 3 (Entrusted to attend the Annual Meeting of Shareholders) A shareholder may appoint a proxy to attend a shareholders

meeting on his/her/its behalf by executing a power of attorney notice printed by the Company stating the scope of power authorized by the proxy.

A shareholder may only execute one power of attorney notice and appoint one proxy only, and shall serve such written proxy to the company no later than five days prior to the date of the shareholders’ meeting. In case two or more written proxies are received from one shareholder, the first one received by the Company shall prevail, unless an explicit statement to revoke the previous written proxy is made in the proxy which comes later.

If the shareholder wishes to attend the shareholder meeting or wishes to exercise the right to vote in writing or electronic form, after the power of attorney notice has been delivered to the Company, the shareholder shall notify the Company in writing, two days before the shareholders meeting, of his/her/its intention to cancel the power of attorney. If the shareholder fails to cancel within the stipulated date, the proxy vote shall prevail.

Article 4 (Place and Time of Annual Meeting of Shareholders)

The place for convening a shareholders meeting shall be inside the premises of the Company, or any other place convenient for the shareholders, and suitable for holding of the said meeting. The time for commencing the said meeting shall not be earlier than 9 a.m. or later than 3 p.m.

Article 5 (Attendance of Annual Meeting of Shareholders)

The Company shall clearly state the shareholders reporting

time, venue and any other matters to be noted. Shareholders shall attend a shareholders meeting by presenting an attendance card, sign-in card or other identity document. The Company shall not request additional supporting documents from the shareholders to attend the meeting.

The proxy shall bring his/her identification document for verification. The Company shall prepare an attendance book for shareholders to sign in, or the shareholder present may hand in an attendance card in lieu of signing the attendance book.

The Company shall furnish attending shareholders with the meeting agenda book, annual report, attendance card, speaker's slip, voting slip, and other meeting materials. Where there is an election of directors, a voting ballot shall also be furnished.

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

Article 6 (Chair and Attendees of the Annual Meeting of Shareholders)

Convening of shareholders meeting shall be conducted by the Chair in accordance with Article 182-1, Article 208 of the Company Act or other relevant laws and regulations.

The Company may designate its lawyer, certified public accountant or other relevant persons to attend the shareholders meeting.

Shareholders meeting convened by the board of directors, shall be attended by majority of the board of directors and at least one representative from the functional committee required by the Securities and Exchange Act, and the attendance shall be recorded in the shareholders meeting minutes.

Article 7 (Evidence of Process of Annual Meeting of Shareholders) The Company shall document the shareholders meeting by audio or video, and the recorded materials shall be retained for at least one year. If, however, a shareholder files a lawsuit pursuant to Article 189 of the Company Act, the recordings shall be retained until the conclusion of the litigation.
Article 8 (Calculation of number of shares representing shareholders present in the Annual Meeting of Shareholders and commencement of meeting) Attendance at a shareholders meeting shall be calculated based on the numbers of shares. The number of shares in attendance shall be calculated according to the shares indicated by the attendance book and sign-in cards handed in, plus the number of shares whose voting rights are exercised by written or electronic form.
The Chair shall call the meeting to order at the appointed meeting time. However, when the attending shareholders do not represent a majority of the total number of issued shares, the Chair may announce a postponement. The postponement of the said meeting shall be limited to two times, and the total time postponed shall not exceed one hour. If a quorum is not met after two postponements and the attending shareholders

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still represent less than one-third of the total number of issued shares, the Chair shall declare the meeting adjourned.

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

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

Article 9 (Agenda Discussions)

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

The provisions of the preceding paragraph apply to a shareholders meeting convened by a party with the power to convene, other than the board of directors.

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

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may announce the discussion closed and call for a vote, and decide on the voting pattern and sequence.

Article 10 (Shareholders' Speech)

A shareholder wishing to speak in a shareholders meeting shall first fill out a slip, specifying therein the major points of his speech, his/her shareholder account number (or attendance card number) and his/her name, and the Chair shall determine the order for speaking.

A shareholder who submits his/her slip for a speech but does not actually speak shall be considered as not having given a speech. If the content of that speech differs from that specified on the slip, the content of the speech shall prevail.

A shareholder shall not speak more than two times for one proposal, unless he/she has obtained prior consent from the Chair, and each speech shall not exceed five minutes. If a shareholder violates the above provisions or his speech exceeds the scope of the motion, the Chair may terminate the speech.

When a shareholder is giving a speech, the other shareholders shall not interrupt unless they have obtained prior consent from the Chair and the said shareholder, and the Chair shall prevent such violations.

If a juristic person shareholder designates two or more representatives at the shareholders meeting, only one representative may speak on the same proposal.

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

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Article 11 (Calculation of Voting Shares and Recusal System) Voting and resolution at the Company's shareholders meetings shall be in accordance with Article 177, Article 178, and Article 180 of the Company Act or other relevant laws and regulations.

Article 11-1 (Voting, monitoring and calculation method)

A shareholder shall be entitled to one vote for each share held, except when the shares are deemed non-voting shares under Article 179, Paragraph 2 of the Company Act.

When the Company holds a shareholders meeting, it shall list electronic means as one of the ways to exercise voting rights, and may adopt written means to exercise its voting rights. When voting rights are exercised by written or electronic means, the method of exercise shall be specified in the shareholders meeting notice. A shareholder exercising voting rights by written or electronic means will be deemed to have attended the meeting in person. However, his/her rights with respect to extraordinary motions and amendments to original proposals of that meeting are deemed to have been waived.

A shareholder intending to exercise voting rights by written or electronic means under the preceding paragraph shall deliver a written declaration of intent to the Company two days before the date of the shareholders meeting. When duplicate declarations of intent are delivered, the earliest received declaration shall prevail, except when a declaration is made to cancel the earlier declaration of intent.

After a shareholder has exercised voting rights by written or electronic means, in the event the shareholder intends to attend

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the shareholders meeting in person, a written declaration of intent to retract the voting rights already exercised under the preceding paragraph shall be made, by the same means which the voting rights were exercised, 2 days before the date of the shareholders meeting. If the notice of retraction is submitted after the stipulated time, the voting rights already exercised by written or electronic means shall prevail. When a shareholder has exercised voting rights both by written or electronic means, and appointed a proxy to attend a shareholders meeting, the voting rights exercised by the proxy in the meeting shall prevail.

Except when otherwise provided in the Company Act and in the Company's Articles of Incorporation, resolutions shall require a majority of the voting rights from the attending shareholders to pass. At the time of a vote, the Chair or designated person shall first announce the total number of voting rights represented by the attending shareholders for each proposal, followed by a poll of the shareholders. The voting results shall be entered into the Market Observation Post System (MOPS).

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

Vote monitoring and counting personnel for the voting on a proposal shall be appointed by the Chair and the monitoring personnel shall be shareholders of the Company.

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Vote counting for proposals or elections in a shareholders meeting shall be conducted in public at the place of the shareholders meeting. Immediately after the 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 12 (Elections)

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

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

Article 13 (Minutes of Meeting)

Matters relating to the resolutions of a shareholders meeting shall be in accordance with Article 183, Paragraph 1 to 4 of the Company Act, compiled and distributed as meeting minutes, and kept permanently during the existence of the Company.

Article 14 (Public Disclosure)

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On the day of a shareholders meeting, the Company shall compile in the prescribed format, a statistical statement of the number of shares obtained by solicitors through solicitation and the number of shares represented by proxies, and shall make an express disclosure of the same at the place of the shareholders meeting.

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

Article 15 (Maintaining order at the meeting place)

Staff handling administrative affairs of a shareholders meeting shall wear identification cards or armbands.

The Chair may direct the proctors or security personnel to help maintain order at the meeting place. When proctors or security personnel help maintain order at the meeting place, they shall wear an identification card or armband bearing the word "Proctor".

When a public address (PA) system is available at the place of a shareholders meeting, and a shareholder attempts to speak through any devices other than the device provided by the Company, the Chair may prevent the shareholder from so doing.

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

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Article 16 (Recess and resumption of shareholders meeting)

The Chair may call for breaks during the meeting when appropriate. In an event of force majeure , the Chair may rule the meeting temporarily suspended, and based on the circumstances, announce the time of a resumption of the meeting. A resolution may be adopted at a shareholders meeting to defer or resume the meeting within five days in accordance with Article 182 of the Company Act.

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

Article 17

The Rules, and any amendments hereto, shall be implemented upon approval by the shareholders meetings.

Article 18

The Rules were established on 27 February 1965, and its 1st amendment was made on 23 May 1998, 2nd amendment on 16 May 2002, 3rd amendment on 14 June 2013, 4th amendment on 9 June 2015, 5th amendment on 8 June 2016, and the 6th amendment on 08 June 2018.

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Appendix 3 Cathay Real Estate Development Co., Ltd. Procedures for Acquisition or Disposal of Assets

Amendment made at shareholders meeting on 24 May 1996 Amendment made at shareholders meeting on19 May 2000 Amendment made at shareholders meeting on 22 May 2003 Amendment made at shareholders meeting on 14 May 2004 Amendment made at shareholders meeting on 22 June 2007 Amendment made at shareholders meeting on 10 June 2011 Amendment made at shareholders meeting on 15 June 2012 Amendment made at shareholders meeting on 9 June 2015 Amendment made at shareholders meeting on 8 June 2018

Article 1

The procedures are formulated in accordance with “Guidelines for Acquisition or Disposal of Assets by Public Entities” issued by the Financial Supervisory Commission.

Article 2

The scope of application of the assets mentioned in the procedures is as follows:

Stocks, treasury bonds, corporate bonds, financial bonds, marketable securities representing interest in a fund, depository receipts, call (put) warrants, beneficial securities, and asset-backed securities
Real estate (including land, housing and buildings, investment real estate, land use right, inventory of

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construction) and equipment.

Membership.
Patent rights, copyrights, ownership of trademark, franchises and other intangible assets.
Derivatives.
Assets acquired or disposed of by merger, division, acquisition or transfer of shares in accordance with the law.
Other major assets.

Article 3

The procedures for acquisition or disposal of assets:

When The Company and its subsidiaries acquire or dispose of assets, the undertaker shall submit the market survey data as a reference to understand the feasibility and necessity of the plan and then petition the general manager and the chairman of the board in written form for approval of the investment scope and quota.
Except for marketable securities traded in the centralized trading market or over-the-counter trading centers at money-of-the-day price, other assets shall be processed by invitation for bids, price comparison or negotiation, and the payment terms of which shall be subject to the general commercial market conditions.

Article 4

Under any of the following circumstances, the Company acquiring or disposing of assets shall publicly announce and report the relevant information on the competent authority's

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designated website in the appropriate format as prescribed by regulations within 2 days counting inclusively from the date of occurrence of the event:

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 paid-in capital, 10% or more of the company's total assets, or NT$300 million or more. However, this shall not apply to trading of government bonds or bonds under repurchase and resale agreements, or subscription or redemption of money market funds issued by securities investment trust enterprises.
Merger, demerger, acquisition, or transfer of shares.
Losses from derivatives trading reaching the limits on aggregate losses or losses on individual contracts set out in the procedures adopted by the Company.
Where the type of asset acquired or disposed is equipment for business use, the trading counterparty is not a related party, and the transaction amount is more than NT$1 billion.
Where the type of asset acquired or disposed is equipment for business use, the trading counterparty is not a related party, and the transaction amount is more than NT$1 billion.
Where land is acquired under an arrangement to engage others to build on the Company's own land, engage others to build on rented land, joint construction and allocation of housing units, joint construction and

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allocation of ownership percentages, or joint construction and separate sale, and the amount the Company expects to invest in the transaction reaches NT$500 million.

Where an asset transaction other than any of those referred to in the preceding six subparagraphs, or an investment in the mainland China area reaches 20% or more of paid-in capital or NT$300 million. However, the following cases do not apply:
(1) Trading of treasury bonds.
(2) Trading of bonds under repurchase/resale agreements, or subscription or redemption of money market funds issued by securities investment trust enterprises.

Subsidiary's public announcement and reporting:

Acquisitions and disposals of assets by a subsidiary shall comply with Article 6.
If the subsidiary is not a local publicly listed company, and has information to be publicly announced as stated in the subparagraphs of the preceding paragraph, the Company shall be notified immediately on the date of occurrence, for it to make a public announcement and report the information in accordance to the regulations.
The paid-in capital or total assets of the Company shall be the standard for determining whether or not a subsidiary referred to in the preceding paragraph in the event the type of transaction specified therein reaches 20% of paid-in capital or 10% of the total assets.

Article 5

For acquiring or disposing of assets, the Company shall keep

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all relevant contracts, meeting minutes, log books, appraisal reports and certified public accountant, attorney, and securities underwriter opinions at the Company, where they shall be retained for 5 years except where another acts provides otherwise.

The amount of transactions above shall be calculated as follows:

The amount of any individual transaction.
Accumulation of acquisition or disposal of the same type of transaction amount with the same counterparty in a year.
The cumulative transaction amount of real estate acquisitions and disposals (cumulative acquisitions and disposals respectively) with the same development project with in a year.
The cumulative transaction amount of acquisitions and disposals (cumulative acquisitions and disposals respectively) of the same marketable securities within a year.

"Within a year" mentioned in the preceding paragraph refers to the date of occurrence of the current transaction. Items duly announced in accordance with the procedures do not need to be counted when going back and estimating for a year.

Date of occurrence mentioned in the preceding paragraph refers to date of contract signing, date of payment, date of proxy, date of stock transfer, date of the Board of Directors' resolution, or other dates that can confirm the counterpart and monetary amount of the transaction, whichever date is

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earlier. However, for an investment who needs the regulator's approval, the earlier one of the above dates or the date of approval by the regulator shall apply.

The Company shall compile monthly reports on the status of derivatives trading conducted by the Company and its subsidiaries that are not domestic public entities in the prescribed format and input them to the information declaration website designated by the regulator before 10th of each month at the end of the month.

When the Company at the time of public announcement makes an error or omission in an item required by regulations to be publicly announced and so is required to correct it, all the items shall be again publicly announced and reported in their entirety within two days counting inclusively from the date of knowing of such error or omission.

Where any of the following circumstances occurs with respect to a transaction that the Company has already publicly announced and reported in accordance with the regulation, a public report of relevant information shall be made on the information reporting website designated by the competent authority within 2 days counting inclusively from the date of occurrence of the event:

Change, termination, or rescission of a contract signed in regard to the original transaction.
The merger, demerger, acquisition, or transfer of shares is not completed by the scheduled date set forth in the contract.
Change to the originally publicly announced and

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reported information.

Article6

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

For special reasons, a limited price, a specified price or a special price as a reference for the transaction price, the transaction should be passed by the Board of Directors in advance for resolution. Change of future transaction conditions should also be approached in accordance with the procedures.
The transaction amount is NT$1 billion or more shall be appraised by two or more professional appraisers.
Any of the following circumstances applies with respect to the professional appraiser's appraisal results, except all the appraisal results of acquired assets are higher than the transaction amount or all the appraisal results of the disposed assets are lower than the transaction amount, CPA shall be engaged in performing the appraisal in accordance with the provisions of Statement of Auditing Standards No. 20 issued by the Accounting Research and Development Foundation and shall render specific

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opinions regarding the reason for discrepancy and the appropriateness of transaction price:

(1) The discrepancy between the appraisal result and the transaction amount is 20% or more of the transaction amount.
(2) The discrepancy between the appraisal results of two or more professional appraisers is 10% or more of the transaction amount.
The date of report presented by the professional appraiser and the date of establishment of contract shall not be more than three months. However, if the publicly announced present value for the same period applies and is not more than 6 months, the original appraiser shall present a position paper.
Except a limited price, a specified price, or a special price is employed by our company as a reference for the transaction price, if there is a justifiable reason for failure to obtain an immediate appraisal report, the appraisal report and CPA’s opinions under the preceding paragraph (3) shall be obtained within 2 weeks from the date of occurrence.

The Company acquiring or disposing of securities shall, prior to the date of occurrence of the event, obtain financial statements of the issuing company for the most recent period, certified or reviewed by a certified public accountant, for reference in appraising the transaction price, and if the dollar amount of the transaction is 20% of the Company's paid-in capital or NT$300 million or more, the Company shall additionally engage a certified public accountant prior to the

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date of occurrence of the event to provide an opinion regarding the reasonableness of the transaction price. If the certified public accountant needs to use the report of an expert as evidence, the certified public accountant shall do so in accordance with the provisions of Statement of Auditing Standards No. 20 published by the ARDF. However, this requirement does not apply to public quotation of marketable securities that have an active market, or where otherwise provided by regulators.

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

When our company acquires or disposes of assets through court auction procedures, evidentiary documentation presented by the court may be substituted for appraisal reports or CPA's opinions.

When our company acquires or disposes of assets with related parties and the transaction amount is 10% of the paid-in capital of the company, it shall obtain appraisal reports from professional appraisers or CPA's opinions in compliance with this condition.

The calculation of the transaction amount in this article shall be conducted in accordance with the provisions of paragraph

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2 of Article 5. "Within a year" refers to the date of occurrence of the current transaction. If appraisal reports from professional appraisers or CPA's opinions in compliance with this condition are obtained, they do not need to be counted when going back and estimating for a year.

Article 7

When the Company intends to acquire or dispose of real property from or to a related party, or when it intends to acquire or dispose of assets other than real property from or to a related party and the transaction amount reaches 20% or more of the Company's paid-in capital, 10% or more of the Company's total assets, or NT$300 million or more, except in trading of government bonds or bonds under repurchase and resale agreements, or subscription or redemption of money market funds issued by securities investment trust enterprises, the Company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by the audit committee and the board of directors:

The purpose, the necessity and the anticipated benefits of acquisition or disposal of assets.
The reason for selecting the related party as a trading counterparty.
With respect to the acquisition of real estate from a related party, relevant information regarding rationality of predetermined transaction terms in accordance with Article 8 and Article 9 shall be appraised.

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The date and price the related party originally acquires, the trading counterparty and the relationship with the trading counterparty and the company.
Monthly cash forecast for the year commencing from the anticipated month of contract signing, and evaluation of necessity of transaction and rationality of application of funds.
Appraisal reports from a professional appraiser or a certified public accountant's opinion obtained in compliance with the preceding article.
Restrictive terms and other important covenants associated with the transaction.

The calculation of the transaction amounts referred to in the preceding Paragraph shall be made in accordance with Paragraph 2, Article 5 herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items that have been approved by the board of directors and recognized by the audit committee need not be counted toward the transaction amount.

With respect to the acquisition or disposal of equipment for operating purpose between our company and the parent company/subsidiaries, the Board of Directors may delegate the chairman of the board to approve within a certain amount in advance based on the regulated procedures and then present the latest the Board of Directors’ ratification.

If there is Independent Director in our company, when reporting to the Board of Directors for discussion based on paragraph 1, opinions from each Independent Director shall

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be taken into full consideration, and any consents or qualified opinions from Independent Director shall be recorded in details in the minutes of the Board of Directors' meeting.

Article 8

The Company shall evaluate the rationality of the transaction costs by the following means in acquiring real estate from related parties:

Based on the related party's transaction price plus necessary interest of funds and the cost of the obligation assumed by the buyer in accordance with the law Necessary interest of funds is imputed as the weighted average interest rate on borrowing in the year that the company purchases assets. It may not be higher than the maximum non-financial industry lending rate announced by the Ministry of Finance.
Total of loan appraisal from a financial institution where the related party has previously collateralized on the property, the actual cumulative amount loaned by the financial institution shall be 70% or more of the total of loan appraisal and the period of the loan shall have been one year or more. However, this shall not apply if the financial institution and the counterparty have a relationship as related parties.

For mergers and acquisitions of land and premises with the same property, the transaction cost may be respectively assessed on the basis of any of the means listed in the preceding paragraph in respect of land and premises.

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Our company shall assess the cost of real estate based on the provisions of 1st paragraph and 2nd paragraph and consult CPA for review and specific comments in acquiring real estate from related parties.

When our company acquires assets from related parties in any of the following circumstances, it shall be subject to the provisions of Article 7 and shall not apply to the provisions of the preceding three paragraphs:

The related party acquired the real estate through inheritance or bestowal.
The related party acquired the real estate through inheritance or bestowal.
The real estate is acquired through the signing of a joint development contract with the related party, or through engaging others to build on the Company's own land, engaging others to build on rented land, etc.

Article 9

When the results of our company's appraisal conducted in accordance with the preceding 1st paragraph and 2nd paragraph are lower than the transaction price, ,it shall be subject to the provisions of Article 10. However, if the following circumstances exist, and objective evidence and specific rational comments from professional real estate appraisers and CPA have been presented, they do not apply:

Where the related party acquired undeveloped land or leased land for development, it may submit proof of compliance with one of the following conditions：

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(1) In the case of an assessment of undeveloped land is conducted with the method specified in the preceding Article, the house shall be added rational operating profits according to the related parties’ operating cost, and the total shall exceed the actual transaction price. Rational operating profits refer to the lower gross margins based on the average operating gross margins of the related parties’ operating department for the last three years or the latest construction industry’ s gross margins issued by the Ministry of Finance.
(2) Accomplished transactions of other floors of the same property or neighboring regions of unrelated parties within a year, where the area and conditions are similar with the trading terms including rational floors or regions’ spread based on real estate dealing practice after assessment.
(3) Rental cases of other floors of the same property from unrelated parties within a year with estimation of equivalent dealing conditions that cover rational floors spread based on real estate lease practices.
Where the Company provides evidence that the real estate acquired by a related party has similar terms of transaction as the traded case of neighboring regions of other non-related parties within a year, and that the area is similar, too.

The traded case of neighboring regions mentioned in the preceding paragraph refers to the same or vicinal neighborhood and the distance from the property shall not

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exceed a circumference of 500 meters or shall be similar to the current announced values; similar area refers to area of the traded case of other non-related parties and shall not be less than 50% of the property area in transaction; "within a year" refers to the date of occurrence of the current transaction and do not need to be counted when going back and estimating for a year.

Article 10

Where the Company acquires real property from a related party and the results of appraisals conducted in accordance with Article 8 and Article 9 are uniformly lower than the transaction price, the following steps shall be taken:

Appropriated as special capital reserve shall be set aside in accordance with Paragraph 1 of Article 41 of Securities Exchange Act against the discrepancy between the real estate transaction price and the appraised cost. It shall not be allocated or transferred to capital increase and allotment of shares. If an investor evaluates the company’s investment by equity law is a public entity, then the appropriated as special capital reserve shall be presented according to shareholding ratio to list the amount based on Article 41, Paragraph 1 of Securities Exchange Act.
Members of the audit committee shall comply with Article 218 of the Company Act.
The handling process of Subparagraph 1 and Subparagraph 2 shall be reported to the shareholders' meeting and the details of the transaction shall be

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disclosed in the annual report and prospectus.

The appropriated as special capital reserve presented by our company according to the preceding paragraph may not utilize the appropriated as special capital reserve until the assets purchased at a high price has been recognized as a loss of drop in price or been disposed of, or its adequate compensation has been made, or reinstatement occurs, or there is other evidence confirmed to be rational, and it is approved by the regulator.

When our company acquires real estate from a related party, it shall also comply with the preceding two paragraphs if there is other evidence indicating that the transaction does not conform to the operating regulations.

Article 11

The procedures for the Company’s engaging in derivatives’ trading are as follows:

Derivatives mentioned in the procedures refer to forward contracts, options contracts, futures contracts, leveraged deposit contracts, swap contracts whose value is derived from commodities such as assets, interest rates, exchange rates, indices, or other benefits, and the above-mentioned commodity combinations, and other commodities approved by the regulator for investment. Forward contracts doe not include insurance contracts, performance contracts, after-sales service contracts, long-term leasing contracts, and long-term purchase (sales) contracts.
The Company’s hedging strategies in derivatives’ trading

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are as follows:

(1) Setting the total of the contract for transaction and the maximum amount of total contracts and individual contracts’ loss (i.e., stop-loss point).
(2) Evaluating the profit and loss and performance of derivatives periodically.
(3) Evaluating the credit status and professional ability of the trading object strictly.
(4) All transactions and related operations shall be handled in accordance with the provisions of the law.
The rights and liabilities of the Company for derivatives shall be divided as follows, and the personnel of each department shall not concurrently hold office with each other.
(1) Auditing Department: supervising transaction process, transaction record audits, and risk tracking assessment.
(2) Accounting Department: accounting processing, announcement and declaration.
(3) Trading Department: transaction execution, transaction control, trading object evaluation and performance evaluation.
(4) Delivery Department: transaction confirmation and delivery operations.
(5) Depository Department: the custody of transaction contracts and trading evidence.
The Company’s derivatives-related guidelines, authorized quotas, levels of decision-making, and

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methods of performance evaluation shall be formulated by each dealing department based on the nature of commodities, and then be submitted to the chairman of the board for approval before implementation.

The total of the derivatives transaction contract the Company engages in is limited to 20% of the paid-in capital of the Company; the upper limit of loss (stop-loss point) is 30% of traded total and individual contract amount.
The board of directors shall delegate the chairman of the board functional authority to engage inderivatives as follows:
(1) A list of the transaction targets and commodity categories.
(2) The verification of the list of counterparties and their upper limits of quotas.
(3) Determination of respective transaction.

Article 12

When the Company engages in derivatives trading, the following risk management measures should be adopted:

The scope of risk management should cover credit, market price, liquidity, cash flow, operation and legal risk management.
The functions of dealing, confirmation and settlement of derivatives trading shall be performed by different personnel.
Risk assessment, monitoring and control shall be performed by personnel from division other than the above, and report to the Board or senior management not

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in a position of trading or decision-making.

Positions held in derivatives trading shall be assessed at least once weekly. For hedging trades held for business needs, assessment shall be undertaken at least twice monthly. The evaluation report shall be remitted to senior managers authorized by the Board of Directors.
If the Company is involved with legal matters arising from the transaction of derivatives, consultation with legal personnel or external legal adviser.

Article 13

The Board of Directors shall supervise and manage in accordance with the following principles when the Company engages in derivatives trading:

The designated senior supervisors shall pay attention to the supervision and control of the transaction risk of derivatives at any time.
The Board shall periodically conduct evaluation over whether performance of derivative trading is in compliance with established operational strategies and whether risk-taking are within a permitted scope.
Senior management personnel authorized by the board of directors shall manage derivatives trading in accordance with the following principles:
Regularly assessing whether the current risk management measures in use are appropriate and comply with the procedures of the company’s derivatives trading.
While supervising transaction and profit and loss, in case of any abnormal situation, necessary measures shall be

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taken and the Board of Directors shall be notified immediately. If there is Independent Director, Independent Director shall attend the Board of Directors and express opinions.

The Company shall submit a report to the Board of Directors after delegating relevant personnel to handle derivatives transaction in accordance with the provisions of the procedures governing the derivatives trading.

Article 14

The Company engaging in derivatives trading shall establish a log book in which details of the types and amounts of derivatives trading engaged in, board of directors approval dates, and the matters required to be carefully evaluated under Subparagraph 4 of Article 12 and Subparagraph 2 of Paragraph 1, and Subparagraph 1 of Paragraph 2, of Article 13 shall be recorded in detail in the log book.

The Company's internal audit personnel shall periodically make a determination of the suitability of internal controls on derivatives and conduct a monthly audit of how faithfully derivatives trading by the trading department adheres to the procedures for engaging in derivatives trading, and prepare an audit report. If any material violation is discovered, the audit committee shall be notified in writing.

Article 15

The Company conducting a merger, demerger, acquisition, or transfer of shares, prior to convening the board of directors to resolve on the matter, shall engage a certified

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public accountant, attorney, or securities underwriter to give an opinion on the reasonableness of the share exchange ratio, acquisition price, or distribution of cash or other property to shareholders, and submit it to the board of directors for deliberation and passage. However, the requirement of obtaining an aforesaid opinion on reasonableness issued by an expert may be exempted in the case of a merger of a subsidiary in which it directly or indirectly holds 100% of the issued shares or authorized capital, and in the case of a merger between subsidiaries in which the Company directly or indirectly holds 100% of the respective subsidiaries’ issued shares or authorized capital.

Article 16

When the Company participates in merger, demerger, or acquisition, it shall prepare a public report to shareholders covering important contract content and relevant matters prior to the shareholders' meeting, along with the experts' opinions of the preceding 1st paragraph as well as the notification of the shareholders' meeting to shareholders altogether as a reference for determination of whether to approve the merger, demerger, or acquisition. Provided, where a provision of another act exempts the Company from convening a shareholders' meeting to approve the merger, demerger, or acquisition, this restriction shall not apply.

Where the shareholders meeting of any one of the companies participating in a merger, demerger, or acquisition fails to convene or pass a resolution due to lack of a quorum, insufficient votes, or other legal restriction, or the proposal is

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rejected by the shareholders meeting, the companies participating in the merger, demerger or acquisition shall immediately publicly explain the reason, the follow-up measures, and the preliminary date of the next shareholders meeting.

Article 17

Companies participating in merger, demerger or acquisition, unless otherwise stipulated in other laws or there is special factors which must be reported to the regulator for approval, shall convene the Board of Directors and shareholders’ meeting on the same day to decide the merger, demerger or acquisition-related matters.

Unless otherwise provided by other laws or because of special factors,, companies participating in transfer of shares shall report to the regulator for approval in advance and convene the Board of Directors on the same day.

When participating in merger, demerger, acquisition, or transfer of shares, companies that are listed or have their shares traded at securities dealers shall prepare a full written record of the following information and retain it for 5 years for examination:

Basic Information of the Party: including titles, names , ID numbers (passport numbers for foreigners) of all the members participating in merger, demerger, acquisition, or transfer of shares plans or its executors.
Dates of Material Events: including dates of signing of letter of intent or memorandum, delegation of financial or legal advisors, signing of contracts, and the Board of

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Directors.

Material Documents and Minutes: including merger, demerger, acquisition or transfer of shares plans, letter of intent or memorandum, material contracts, and minutes of the Board of Directors.

When participating in merger, demerger, acquisition, or transfer of shares, companies that are listed or have their shares traded at securities dealers shall prepare information of the preceding subparagraph 1 and subparagraph 2 and report it to the regulator for examination in regulated format via Internet information system within 2 days commencing from the date of the Board of Directors’ resolution.

Companies that are listed or have their shares traded at securities dealers shall sign an agreement with companies participating in merger, demerger, acquisition, or transfer of shares, companies that are non-listed or have their shares traded at securities dealers, and comply with the regulations of Paragraph 3 and Paragraph 4.

Article 18

People who participate in or know the merger , demerger, acquisition, or transfer of shares shall issue a written letter of confidentiality commitment and shall not disclose the contents of the plans before public disclosure of the information, nor shall they use their own names or under the names of other people to trade and merge, demerge, acquire, or transfer of shares of all the company’s shares and other marketable securities with equity property.

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Article 19

When the Company participates in merger, demerger, acquisition, or transfer of shares, the share exchange ratio or acquisition price cannot be arbitrarily altered unless under the following circumstances. Besides, it shall stipulate the circumstances permitting alteration in the contract for merger, demerger, acquisition, or transfer of shares:

Cash capital increase, issuance of convertible corporate bonds, issuance of bonus shares, issuance of corporate bonds with warrants, preferred shares with warrants, stock warrants, or other equity based securities.
An action, such as a disposal of major assets, which affects the Company's financial operations.
An event, such as a major disaster or major change in technology, that affects the Company’s shareholder equity or share price.
An adjustment where any of the companies participating in the merger, demerger, acquisition, or transfer of shares from another company, buys back treasury stocks.
An increase or decrease in the number of entities or companies participating in the merger, demerger, acquisition, or transfer of shares.
Other terms/conditions that the contract stipulates may be altered and that have been publicly disclosed.

Article 20

When the Company participates in merger, demerger, acquisition, or transfer of shares, the contracts shall specify rights and obligations of the company’s merger, demerger,

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acquisition, or transfer of shares as well as the following items:

Handling of breach of contract.
Principles for the handling of equity-type securities previously issued or treasury stocks previously bought back by any company that is extinguished in a merger or that is demerged.
The amount of treasury stocks participating companies are permitted under law to buy back after the record date of calculation of the share exchange ratio, and the principles for handling thereof.
The manner of handling changes in the number of participating entities or companies.
Preliminary progress schedule for plan execution, and anticipated completion date.
Scheduled date for convening the legally mandated shareholders' meeting if the plan exceeds the deadline without completion, and relevant procedures.

Article 21

As far as the companies participating in merger, demerger, acquisition, or transfer of shares are concerned, if any of the parties intends further to carry out merger, demerger, acquisition, or transfer of shares with another company after public disclosure of the information, and the number of participating companies decreases and the shareholders’ meeting has adopted a resolution authorizing the Board of Directors to alter the limits of authority, such participating companies may exempt from calling another shareholders’

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meeting for resolution anew. All of the participating companies shall carry out anew the procedures or legal actions that had been completed on the original merger, demerger, acquisition, or transfer of shares.

Article 22

Provided that companies participating in merger, demerger, acquisition, or transfer of shares are not public entities, the Company shall sign an agreement with them in accordance with the provisions of Articles 17, 18 and 21.

Article 23

The total of the real estate or marketable securities for non-operating purpose as well as the quotas for individual marketable securities that the Company and its respective subsidiaries acquire:

The total of real estate for non-operating purpose the Company acquires shall not be higher than 50% of shareholders' equity; the total of real estate for non-operating purpose the Company and its respective subsidiaries acquire shall not be higher than 10% of the Company's shareholders' equity.
The amount of individual marketable securities the Company invests in shall not be higher than 50% of the Company's shareholders' equity; The amount of individual marketable securities the Company and its respective subsidiaries invest in shall not be higher than 10% of the Company's shareholders' equity.
The net investment of consolidated shareholders' equity

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of the total of marketable securities that the Company and its subsidiaries purchase shall not be higher than 150% of our parent company shareholders' equity of the latest consolidated financial statements unless otherwise specified by laws.

Shareholders’ equity mentioned in the preceding paragraph refers to the balance of shareholders’ equity of financial statements that has recently been audited by CPA.

Article 24

When the Company and its subsidiaries acquire or dispose of assets, they shall formulate the procedures for the company based on the Company's “Procedures for Acquisition or Disposal of Assets”.

Article 25

Relevant personnel of the the Company shall be dealt with in accordance with our regulations if they violate the procedures.

Article 26

The matters not stipulated in the procedures shall be handled in accordance with the “Guidelines for Acquisition or Disposal of Assets by Public Entities” and its relevant provisions issued by the Financial Supervisory Commission of Executive Yuan.

Article 27

After the procedures have been approved by the Board of

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Directors, they shall be submitted to the audit committee, and then to a shareholders' meeting for approval; the same applies when the procedures are amended. If any director expresses dissent and it is contained in the minutes or a written statement, the Company shall submit the director's dissenting opinion to the audit committee.

If there is Independent Director in the Company, when reporting the procedures of acquisition or disposal of assets to the Board of Directors for discussion based on the preceding regulations, opinions from each Independent Director shall be taken into full consideration, and any objections or qualified opinions from Independent Director shall be recorded in details in the minutes of the Board of Directors' meeting.

Article 28

The provisions of these Guidelines relating to 10% of the total assets shall be calculated on the basis of the total assets in the latest individual or respective financial statements as stipulated in the guidelines for financial reports made by securities issuers.

In the case of a company’s stock has no nominal amount or the nominal amount is not NT$10 per share, according to the guidelines of transaction amount of 20% paid-in capital, it shall be calculated by 10% of the parent company proprietary equity.

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Appendix 4 Cathay Real Estate Development Co., Ltd. Operational Procedures for Loaning of Funds and Making of Endorsements/Guarantees

Amendment made at shareholders meeting on 14 June 2013 Amendment made at shareholders meeting on 8 June 2016 Amendment made at shareholders meeting on 8 June 2018

Chapter 1 General Provisions

Article 1

The procedures are formulated in accordance with Article 36-1 of the Securities Exchange Act and the relevant provisions of the “Guidelines for Lending of Capital and Endorsements by Public Entities”. Except as otherwise provided, the Company’s relevant lending of capital to others and endorsements shall comply with the procedures.

Article 2

If a subsidiary of the Company plans to lend capital to others and endorse or provide guarantees for others, it shall formulate the procedures of the company based on the “Guidelines for Lending of Capital and Endorsements by Public Entities” and these procedures.

Article 3

The wording of this procedure is defined as follows:

Net Value: Referring to the equity of the Company’s latest balance sheet of financial statements audited or

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certified by CPA is attributable to the owner of the parent company.

Date of Occurrence: Referring to the formerest date among the date of contract signing, the date of payment, the date of the board of directors’ resolution, or other dates when the object and the amount of the transaction can be confirmed.

Chapter 2 Lending of Capital

The objects that the Company can lend capital:

Corporations or companies with which the Company does business.
Corporations or companies necessary for short-term financing with the Company.

The term "short-term" as mentioned in the preceding paragraph refers to the longer period based on one year or the Company’s operating cycle.

Article 5

The evaluation criteria forthe Company’s lending capital to others:

If the Company and other corporations or companies are engaged in lending of capital because of business, the provisions of paragraph 1 (2) of Article 6 shall be applied.
If there is a need for short-term financing to lend capital, it shall be subject to the following circumstances:
(1) Subsidiaries of the Company that hold more than

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50% shares of voting rights directly or indirectly.

(2) A corporation or a company makes short-term financing due to the need of purchasing materials or operating turnover.
(3) Others that have obtained the approval from the Board of Directors of the Company to lend capital.

Article 6

The total of capital lent by the Company and the quota permitted to an individual object:

The total of the Company’s lending of capital shall not exceed 40% of the Company’s net value.
For corporations or companies that do business with the Company, individual lending of capital shall not exceed the amount of transactions between the two parties. The amount of transaction refers to the higher amount based on the amount of purchase or sales between the two parties.
For corporations or companies having a need of making short-term financing, individual lending of capital shall not exceed 20% of the Company’s net value.

When those foreign companies that directly and indirectly hold 100% shares of voting rights are engaged in lending of capital, the lending companies are not subject to the preceding paragraph. However, the total of capital to be lent and the quota, deadline and method of interest calculation for an individual object should be set separately for business transactions and short-term financing.

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Article 7

The procedures of the Company’s lending of capital:

Review of Credit Investigation When it comes to the Company’s lending of capital, the objects that need capital lending should submit required documents and the latest financial statements and then apply for the amount of capital lending in written form to the department in charge of this matter.
Upon receiving the application, the department in charge of this matter will turn it over to our Operation Management Dept. for evaluation investigation into the objects of capital lending, including the description of relevant capital-lending content, necessity and rationality, risk assessment results, and the impact of capital lending on the Company’s operational risk, financial conditions, and shareholders' equity. Collateral should be obtained, if necessary.
Approval of Credit
When it comes to the Company’s lending of capital, it shall be approved by the chairman of the board after our Operation Management Dept.’s evaluation based on the procedures; the department in charge of this matter shall report to the board of directors for resolution and approval and shall not delegate others to decide.
Preservation of Claims

When it comes to the Company’s lending of capital, except the subsidiaries that directly and indirectly hold more than 50% shares of voting rights, the same amount of guaranteed promissory note shall be required and, if

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necessary, mortgage of movable property or real estate shall be set. However, if the objects of capital lending provide personal or company’s adequate financial resources and credit as a guarantee instead of providing collateral, the Board of Directors may take Operation Management Dept.’s evaluation report into account; if a company is the guarantor, attention should be paid to whether the constitution of the company is set as an external guarantee clause.

When reporting the procedures of lending of capital to the Board of Directors based on the preceding regulations, opinions from each Independent Director shall be taken into full consideration, and their specific ideas and reasons for consent or opposition shall also be included in the minutes of the Board of Directors' meeting.

Article 8

The Company’s deadlines of capital lending and method of interest calculation:

Deadlines of Capital Lending
Each deadline of capital lending is limited to the longer period based on one year or the Company’s operating cycle.
Method of Interest Calculation

The interest rate of capital lending shall not be less than the average interest rate of our short-term financing from financial institutions. The Company’s interest of lending accrues on a monthly basis and is subject to the principle of monthly interest payment. In case of special

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circumstances, adjustment is made according to the actual needs after the approval of the Board of Directors.

Article 9

Subsequent measures for control and management of the lending of capital and procedures for handling overdue claims:

Measures for Control and Management
(1) After the loan has been allocated, the department in charge of this matter shall pay constant attention to the financial, business and related credit status of the capital-lending object and the guarantor. If there is any provision of collateral, it should be in the custody of the department in charge of this matter. Attention should also be paid to any change in the value of the guarantee. If there is a material change, it should be immediately reported to the chairman of the board and be appropriately handled as directed.
(2) When the loan is due or the loan is settled before maturity, the Operation Management Dept. shall first calculate the interest payable and collect it together with the principal before cancelling the loan of promissory note and returning to the capital-lending object or applying for mortgages cancellation.
Handling of Overdue Claims
(1) The capital-lending object should pay off the principal and interest before the maturity of the loan. If the repayment cannot be made in the due time and the deferment is required, a claim shall be made in

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advance. The deferment of the deadline of settlement shall be reported to the Board of Directors for approval. However, the extension of the repayment agreed by the Board of Directors shall not violate deadlines of capital lending of Article 8.

(2) If the loan is due or the overdue extension of the loan expires, the Company can execute punishment and claim for recovery in accordance with the law in terms of the provided collateral, guarantor, and capital-lending object.

Article 10

The lending of capital between the Company and a subsidiary, or between subsidiaries, the department in charge of this matter should propose the resolution of the Board of Directors in accordance with the provisions of the procedures of respective capital-lending company. The chairman of the board may also be authorized to allocate loans in installments or make a revolving credit line available for drawing down with a certain quota and within a period no more than one year resolved by the Board of Directors to the same capital-lending object.

In terms of a certain quota mentioned in the preceding paragraph, except the conformity to the provisions of paragraph 2 of Article 6, the Company or its subsidiaries’ granted quota of capital lending to a single enterprise shall not exceed 10% of the net value of each lending company’s latest financial statements.

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Article 11

The Operations Management Department shall prepare a memorandum book for the Company's fund-loaning activities, and truthfully record the following information: borrower, amount, date of approval by the board of directors, lending/borrowing date, loan duration, and interest calculation method, to be carefully evaluated and reported periodically.

The Company's internal auditors shall audit the Operational Procedures for Loaning Funds to Others and the implementation thereof no less frequently than quarterly and prepare written records accordingly. They shall promptly notify the members of the audit committee in writing of any material violation found.

Article 12

If, as a result of a change in circumstances, an entity for which a loan is made does not meet the requirements of the "Operational Procedures on Loaning of Funds and Making of Endorsements/Guarantees" or the loan balance exceeds the limit, the management authority shall adopt rectification plans and submit the rectification plans to members of the audit committee, and shall complete the rectification according to the timeframe set out in the plan.

Chapter 3 Lending of Capital

Article 13

The endorsements mentioned in the procedures includes:

Financing Endorsements

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(1) Discount financing for bills.
(2) Endorsements or guarantee for the purpose of financing other companies.
(3) Issuing a separate bill to a non-financial enterprise as a guarantee for the purpose of the Company’s financing.
Endorsements for Tariffs

Endorsements or guarantee for the Company or other companies in relation to tariffs.

Other Endorsements

Any endorsements or guarantee that cannot be classified as the preceding two subparagraphs.

The Company provides movable or immovable property for other companies to set pledges and mortgages for the guarantee of the loan in accordance with the procedures.

Article 14

The Company may endorse the following companies:

Companies that do business with us.
Subsidiaries that directly and indirectly hold more than 50% shares of voting rights.
Direct and indirect holding more than 50% shares of the voting rights of the company.

Those foreign companies that directly and indirectly hold more than 90% shares of voting rights may be endorsed. It is subject to the resolution of our board of directors for approval and the amount shall not exceed 10% of the net value of the Company. However, those foreign companies that directly and indirectly hold 100% shares of the voting

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rights for endorsements do not apply.

Those counterparts or co-creators have mutual guarantee according to contract regulations due to the needs of undertaking projects or endorse investees by all shareholders’ contribution of capital based on their share holding ratio as a result of the joint investment relationship, or the counterparts assume joint responsibilities for the performance bond of pre-sale house sale contract subject to Consumers Protection Act may conduct endorsements free of the restriction of the preceding two paragraphs.

Contribution of capital mentioned in the preceding paragraph refers to the Company’s direct contribution or contribution made by companies that hold 100% shares of the voting rights.

Article 15

The evaluation criteria and quotas of the Company’s endorsements:

The total endorsements of the Company and its subsidiaries shall not exceed 60% of our net value.
The Company’s endorsements towards a single company shall not exceed 30% of our net value. The total of the Company and its subsidiaries’ endorsements towards a single company shall not exceed 30% of our net value.
The Company’s endorsements towards a single company for business are subject to the foregoing regulations and shall not exceed the amount of mutual transaction. The amount of transaction refers to the higher amount based on the amount of purchase or sales between the two

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parties.

In case of our endorsement object is a subsidiary whose net value is less than 1/2 of the paid-in capital, the Operation Management Dept. should regularly review the subsidiary’s financial statements to control the risks that may arise from the endorsements.

If a subsidiary’s stock has no nominal amount or the nominal amount is not NT$10 per share, the paid-in capital calculated in accordance with the provisions in the preceding paragraph shall be the sum of the capital stock plus the capital surplus-issued premium.

Article 16

The procedure of the Company’s endorsements:

Review of Credit Investigation
When it comes to the Company’s endorsements, the companies that need endorsements should submit required company documents and the latest financial statements, and then apply for endorsements in written form to the department in charge of this matter.
Upon receiving the application, the department in charge of this matter will turn it over to our Operation Management Dept. for evaluation investigation into the objects of endorsements, including the description of relevant endorsements content, necessity and rationality, risk assessment results, and the impact of endorsements on the Company’s operational risk, financial conditions, and shareholders' equity. Collateral should be obtained, if necessary.

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Approval and Delegation of Authority When it comes to the Company’s endorsements, it shall be approved by the chairman of the board after our Operation Management Dept.’s evaluation based on the procedures; the department in charge of this matter shall report to the board of directors for resolution, but the Board of Directors may delegate the chairman to determine the object and below NT$1 billion for resolution, and then report the matter to the Board of Directors for ratification.

When reporting the procedures of endorsements to the Board of Directors based on the preceding regulations, opinions from each Independent Director shall be taken into full consideration, and their specific ideas and reasons for consent or opposition shall also be included in the minutes of the Board of Directors' meeting.

Article 17

The Company’s exclusive seal for endorsements is a company seal registered with the Ministry of Economic Affairs and is in the custody of someone in charge. The depository of endorsement-related seals shall be reported to the Board of Directors for consent; the same shall apply in the event of change.

While the Company issues guarantee to foreign companies, the letter of guarantee shall be signed by the person authorized by the Board of Directors.

Article 18

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For endorsement/guarantee activities, besides applying for a chop according to the prescribed procedure, the Operations Management Department shall prepare a memorandum book and record in detail the following information: endorsement/guarantee matter, enterprise name for which the endorsement/guarantee is made, risk assessment results, endorsement/guarantee amount, date of passage by the board of directors or of authorization by the chairman of the board, endorsement/guarantee date, content of collateral, and conditions and date for discharging endorsement/guarantee responsibilities, to be carefully evaluated and reported periodically. Documents such as negotiable instruments and agreements shall be held for safekeeping by the management authority.

The Company's internal auditors shall audit the Operational Procedures for Endorsements/Guarantees for Others and the implementation thereof no less frequently than quarterly and prepare written records accordingly. They shall promptly notify members of the audit committee in writing of any material violation found.

Article 19

If an endorsement is required for business purposes and it is necessary to exceed the amount set in the procedures and meets the requirements of the procedures, it shall be agreed by the Board of Directors and there must be a joint guarantee of more than half of the directors affixing their signatures for the possible loss exceeding the limit. The procedure shall be also amended to be ratified by the shareholders’ meeting; if

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the shareholders’ meeting disagrees, a plan shall be made to eliminate the excess part within a certain period of time. When reporting the procedures of endorsements to the Board of Directors based on the preceding regulations, opinions from each Independent Director shall be taken into full consideration, and their specific ideas and reasons for consent or opposition shall also be included in the minutes of the Board of Directors' meeting.

Article 20

If, as a result of a change in circumstances, an entity for which an endorsement/guarantee is made does not meet the requirements of "Operational Procedures on Loaning of Funds and Making of Endorsements/Guarantees" or the amount exceeds the limit, the management authority shall adopt rectification plans and submit the rectification plans to members of the committee, and shall complete the rectification according to the timeframe set out in the plan.

Chapter 4 Declaration and Information Disclosure Article 21

A subsidiary shall inform our Operation Management Dept. of the situation of its capital lending and endorsements of the last month before 5th of each month. The Company shall declare its and its subsidiaries’ last-month balance of capital lending and endorsements before 10th of each month.

Article 22

If the Company’s capital lending meets one of the following standards, it shall announce the declaration within two days

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from the date of occurrence:

The balance of the Company and its subsidiaries’ lending capital to others is more than 20% of our net value.
The balance of the Company and its subsidiaries’ lending capital to a single enterprise is more than 10% of our net value.
The increased capital-lending amount of the Company or its subsidiaries is more than NT $10 million and more than 2% of our net value.

If a subsidiary is not a domestic public entity, it has to declare according to the third subparagraph of the preceding paragraph. It shall notify the Company immediately upon the date of occurrence and the Company shall announce the declaration in accordance with regulations.

Article 23

Company’s endorsements meet one of the following standards, it shall announce the declaration within two days from the date of occurrence:

The balance of the Company and its subsidiaries’ endorsements is more than 50% of our latest financial statements’ net value.
The balance of the Company and its subsidiaries’ endorsements to a single enterprise is more than 20% of our net value.
The balance of the Company and its subsidiaries’ endorsements to a single enterprise is more than NT $10 million, and the sum of the balance of endorsement, long-term investment, and capital-lending is more than

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30% of our net value.

The increased endorsement amount of the Company or its subsidiaries is more than NT $30 million and more than 5% of our net value.

If a subsidiary is not a domestic public entity, it has to declare according to the preceding fourth paragraph. It shall notify the Company immediately upon the date of occurrence and the Company shall announce the declaration in accordance with regulations.

Article 24

Our Operation Management Dept. shall assess the conditions of capital lending and provide sufficient allowances for bad debts. It shall also evaluate or recognize the contingent losses of endorsements, disclose capital-lending and endorsements information properly in financial reports, and provide relevant information to CPA to carry out the necessary verification procedures.

Chapter 5 Supplementary Provisions

Article 25

The procedure shall be incorporated into the Company’s internal control system after adoption.

Article 26

Managers and organizers who violate the procedures shall be dealt with in accordance with the Company’s regulations.

Article 27

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The matters not stipulated in the procedures shall be handled in accordance with “Guidelines for Lending of Capital and Endorsements by Public Entities” and its relevant provisions issued by the Financial Supervisory Commission.

Article 28

This procedure shall be approved with the consent of more than half of all audit committee members and submitted to the board of directors for a resolution; the same applies when the procedures are amended.

If approval of more than half of all audit committee members as required is not obtained, the procedures may be implemented if approved by more than two-thirds of all directors, and the resolution of the audit committee shall be recorded in the minutes of the board of directors meeting.

When reporting the procedures of capital lending and endorsements to the Board of Directors based on the preceding regulations, opinions from each Independent Director shall be taken into full consideration, and their specific ideas and reasons for consent or opposition shall also be included in the minutes of the Board of Directors' meeting.

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Appendix 5 Shareholdings of Directors

As of 16 April 2019, the Company's paid-up capital is NT$ 11,595,610,590, the number of shares issued is 1,159,561,059.
Details of the minimum required combined shareholdings of all directors and supervisors by law,

and shareholdings as per the shareholders' register:

Position	Shareholdings required by law	Shares recorded in shareholders'
Director	32,000,000 shares	33,049,822 shares

Note: Book closure date: 16 April 2019.

Shareholding details of directors and supervisors:

Position	Name	Shares held as at book closure date	Remarks
Chairman	Ching-Kuei Chang	22,000,000	He Hsin Capital.CO.,LTD. representative
Director	Hung-Ming Lee	22,000,000	He Hsin Capital.CO.,LTD. representative
Director	Chung-Yan Tsai	22,000,000	He Hsin Capital.CO.,LTD. representative
Director	Tzi-Li Tung	5,941,332	Cathay Charity Foundation representative
Director	Chung-Chang Chu	2,353,690	Cathay Real Estate Foundation representative
Director	Chin-Liang Lin	2,754,800	Cathay Real Estate Employees’ welfare Committee representative
Independent Director	Shiou-Ling Lin	0
Independent Director	Chih-Wei Wu	0
Independent Director	James Y. Chang	0
Total shares held		33,049,822

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AI assistant

CATHAY RED — AGM Information 2019

52129_rns_2019-07-01_0dcf7569-0d48-4a1d-980e-b069613e6779.pdf

2019 Annual General Shareholders'

Meeting Agenda Handbook

Table of Contents

Cathay Real Estate Development Co., Ltd.

2019 Shareholder Meeting Agenda

7. Adjournment

1. Matters to Report

(1) 2018 Business Report

(2) Audit Committee’s Review Report

Auditor's Report on the Final Accounts of Cathay Real Estate Development Co., Ltd.

Audit Committee

(3) 2018 Compensation Report for Employees and Directors

2. Matters for Acknowledgement

(1) Adoption of 2018 Business Report and Financial Statements.

Independent Auditors � Report Translated from Chinese

Opinion

Basis for Opinion

Key Audit Matters

Revenue recognition

Valuation of inventories

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

Auditor’s Responsibilities for the Audit of the Individual Financial Statements

Notice to Readers

English Translation of Financial Statements Originally Issued in Chinese

English Translation of Financial Statements Originally Issued in Chinese

English Translation of Financial Statements Originally Issued in Chinese CATHAY REAL ESTATE DEVELOPMENT CO., LTD. Individual Statements of Cash Flows

Independent Auditors � Report Translated from Chinese

Opinion

Basis for Opinion

Key Audit Matters

Revenue recognition

Valuation of inventories

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

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Notice to Readers

English Translation of Financial Statements Originally Issued in Chinese

English Translation of Financial Statements Originally Issued in Chinese

English Translation of Financial Statements Originally Issued in Chinese

CATHAY REAL ESTATE DEVELOPMENT CO., LTD. Consolidated Statements of Cash Flows

(2) Adoption of Proposal for 2018 Profit Distribution.

Cathay Real Estate Development Co., Ltd. EARNINGS DISTRIBUTION TABLE OF THE 2018

3. Matters for Discussion

Cathay Real Estate Development Co., Ltd. Procedures for Acquisition or Disposal of Assets Articles amendment comparison table

(2) Proposal for the amendment of the Company's Operational Procedures for Loaning of Funds and Making of Endorsements/Guarantees.

Cathay Real Estate Development Co., Ltd.

comparison table

Amended Articles

Current Articles

Explanation:

(3) Proposal for releasing the prohibition on the Company’s board of directors from participation in competitive business.

Provisional Motion(s)

Appendix 1

Cathay Real Estate Development Co., Ltd.,

Articles of Incorporation

Chapter 1 General Provisions

Article 2

Article 3

Article 4

Article 5

Article 6

Chapter 2 Shareholdings

Article 8

Article 9

Article 10

Article 12

Article 13

Article 14

Chapter 4 Board of Directors

Article 18

Article 19

Article 20

Article 21

Article 22

Chapter 5 Manager

Chapter 6 Accounting

Chapter 7 Supplementary Provisions

Appendix 2

CATHAY RED AGM Information 2019

`Explanation:`