Chung Hsin Electric & Machinery Mfg. Corp. Ltd.

2022 ANNUAL SHAREHOLDERS’ MEETING MEETING HANDBOOK

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

28 JUNE, 2022

INDEX

INDEX .................................................................................................................................. 1	INDEX .................................................................................................................................. 1
1.	MEETING PROCEDURES & AGENDA .......................................................................... 1
2.	MANAGEMENT PRESENTATIONS (REPORTS ON COMPANY AFFAIRS) .......................... 2
3.	PROPOSALS .................................................................................................................. 5
4.	DISCUSSION .................................................................................................................. 8
5.	QUESTIONS AND MOTIONS .......................................................................................... 8
6.	ATTACHMENT ............................................................................................................... 9
I.	2021 Business Report............................................................................................................................. 9
II.	Audit Committee’s Review Report...................................................................................................... 10
III.	Financial Statements.......................................................................................................................... 11
IV.	The Reformulated “Operational Procedures for the Acquisition or Disposal of Assets”................ 31
7.	APPENDICES .............................................................................................................. 51
I.	Operational Procedures for the Acquisition or Disposal of Assets (BEFORE Revision)................... 51
II.	Shareholders’ Meeting Rules............................................................................................................ 64
III.	Corporate Charter.............................................................................................................................. 69
IV.	Current Shareholdings of Directors................................................................................................... 78

1.Meeting Procedures & Agenda

Chung Hsin Electric & Machinery Mfg. Corp. Ltd.(CHEM) Meeting Agenda & Procedures for the 2022 Annual Meeting of Shareholders

Time: 9:00 a.m., Tuesday, June 28, 2022

Location: CHEM’s Headquarters at Linkou, Auditorium

Address: No.25, Wende Rd., Guishan Dist., Taoyuan City 333, Taiwan

 Meeting Procedures:

1.Call the Meeting to Order

2.Chairperson to Take Seats

3.Chairperson Remarks

4.Management Presentation (Company Reports)

(1) To report the business review of 2021
(2) To report the Audit Committee’s review report of 2021
(3) To report The Status of Endorsement and Guarantee of 2021
(4) To report the Implementation of Investments in the PRC.
(5) To report the Staff Remuneration and Director's Remuneration Distribution for 2021.
(6) To report the Issuance of the first secured corporate bond.

5.Proposals

(1) Audit Committee’s Review Report on the 2021 Financial Statements
(2) Proposal for Profits Distribution of 2021

6.Discussions

(1) To reformulate the Company’s “Operational Procedures for the Acquisition or Disposal of Assets”

7.Questions and Motions:

8.Adjournment

2. Management Presentations (Reports on Company Affairs)

Report No.1: 2021 Business Reports

(Submitted by the Board of Directors)

Explanation: The 2021 Business report is attached as Attachment 1.

Report No.2: The Audit Committee’s Review Report on Financial Statements of 2021

(Submitted by the Board of Directors)

Explanation: The Company’s 2021 financial statements has been duly audited and certified by Jin-Feng Lin and Ya-Chuan Chang of Crowe Horwath (TW) CPAs and also further audited by Audit Committee,. The CPA and Audit Committee also presented the report by CPA and the Audit Committee respectively, the abovementioned is attached as the attachment 2.

Report No. 3: The Status of Endorsement and Guarantee of 2021.

(Submitted by the Board of Directors)

Explanation:

(1) The procedures are practiced with Operational Procedures for Endorsements/Guarantees of the Company.
(2) Total endorsements and guarantees by the Company to the investees pursuant to the Company’s “Operational Procedures for Endorsements and Guarantees” have totaled US$1,300,000 / NT$5,558,579,444 at the end of December 2021. The endorsements and guarantees are for project performance guarantee and bank financing. Details are as follows.

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Chung Hsin Electric & Machinery Mfg. Corp. Ltd.
List of Endorsees/Guarantees
December 2021
Balance
Name of Endorsees/Guarantee
USD TWD
Chung-Hsin Power Systems (Shenyang) Inc. 1,300,000
Cheng-Hsin Engineering & Services Co.,Ltd 1,200,000,000
Global-Entech Co.,Ltd 30,000,000
San Feng Construction Co.,Ltd 360,000,000
Bao-Sheng Global Co., Ltd. 460,000,000
Wha Dun Building Management Service Co., Ltd. 10,000,000
Tian Chong Energy Co. 2,100,046,000
Tian Peng Energy Co. 1,238,000,000
Vataan Energy Technology Inc. 95,179,903
Takumo Technology Inc. 95,353,541
Total Balance 1,300,000 5,558,579,444
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Report No.4: Report of the Company’s indirect investments in Mainland China

(the PRC)

(Submitted by the Board of Directors)

Explanation: The new investments approved by Investment Commission, Ministry of Economic Affairs in Mainland China made via overseas subsidiaries have totaled USD 112,882,089.58. Accumulated investment from Taiwan to Mainland China has totaled USD 104,065,245.84.

Report No.5: Report of the Staff Remuneration and Director's Remuneration

Distribution

(Submitted by the Board of Directors)

Explanation:

(1) The procedure of remuneration is in accordance with the Corporate Charter, Article 33. The Company shall compensate more than 1% of the current year distributable as employees’ compensation and less than 3% to the board of directors. However, the company’s accumulated losses shall have been covered before distributing the profit according to the amount of the balance after the deduction from accumulated losses.

(2) The employee bonus sharing (NT$26,000,000) and the compensation for board of directors (NT$52,000,000) in 2022 from 2021 shall be as follows with financial statement audited and after adjustment executed, according to the decisions on distribution by Remuneration Committee on January 21,2022.
Employee Bonus in Cash (1%): NT$24,496,265.
Compensation of Directors (2%): NT$48,992,531

Report No.6: To report the Issuance of the first secured corporate bond.

Explanation:

(1) The procedure is in accordance with the Corporate Charter Article 246.
(2) For enhancing efficiency of loan repayment to financial organizations, and strengthening the company's financial structures, the company issued the first Secured Corporate Bond on September 29, 2021, with the total amount of NTD 2 billion.

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Type of Corporate Bonds The first secured corporate
bond in 2021 (#B60104)
Date of Issuance September 29, 2021
Par Value NT$1,000,000
Issuance & trading location Domestic Trading
Issuance Price Issued at full face value
Total Amount NT$2 billion
Interest Rate Coupon Rate of 0.55%
Maturity 5 years; Martures on Sep. 29.
2026
Gurantor Taiwan Cooperative Bank
Trustee Bank Sinopac Company Limited
Underwriting Institution Taiwan Cooperative Bank
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Accurance Attorney Chiu, Ya-Wen of Far East Law
Offices - Attorneys-at-Law
Accurance Accountant Jin-Feng Lin of Crowe Horwath
(TW) CPAs
Repayment Method Repayment will be 100% of net
value per share after the
issuance of 5 years full upon
maturity.
Outstanding NT$2,000,000,000
Redemption or Early Repayment None
Clause
Covenants N/A
Credit Rating N/A
Other Rights Amount of Converted
of or Exchanged Common
N / A
Bondholders Shares, ADRs or Other
Securities
Conversion Right
N/A
Dilution Effect and Other Adverse None
Effects on
Existing Shareholders
custodian None
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3. Proposals

Motion 1: Audit Committee’s Review Report on the 2021 Financial Statements (Submitted by the Board of Directors)

Explanation: Adoption of the 2021 Company’s business report and financial statements, which have been approved by resolution of board of directors and examined by Audit Committee. Please refer to Attachment 2 and Attachment 3 of the Meeting Handbook for the 2021 business report.

Resolution:

Motion 2: Adoption of the proposal for distribution of 2021 profits

(Submitted by the Board of Directors)

Explanation:

The proposal of Distribution of 2021 profits has been approved by the Audit Committee.
The distribution of cash dividend is calculated to the NT dollar (round up to the NT dollar). The total amount of the odd shares with a distribution of less than NT$1 will be booked as unappropriated retained earnings and will be distributed by the authorized Board of Directors on a designated date.
As the final resolution on distribution of retained earning confirmed and declared by the board of Directors, for those whose shares have changed due to the repurchasing of shares by the Company, or the transfer of treasury shares to employees, or the conversion of shares from domestic convertible bonds, etc., such that the ratios of the stock dividends and cash dividends are affected and must be adjusted in accordance with Article 28-2 of Securities and Exchange Act , the Board is authorized to make such adjustments in accordance to the actual outstanding shares on the date of distribution on bonus.
4.The details of distribution of the retained earnings are as follows:

Chung Hsin Electric & Machinery Mfg. Corp. Ltd. Table of Profit Distribution 2021

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Expressed in New Taiwanese Dollar
Items Amount
Unappropriated retained earnings – beginning 754,905,778
Net Income of 2021 1,957,171,137
Add:
Retained earning -the defined benefit plan actuarial 11,799,000
re-measurement
Retained earning -changes in ownership and equity of 191,448
subsidiaries
Retained earning -Others 13,746
Available for Unappropriated Retained Earnings 1,969,175,331
from Net Income, with items other than net income of the same year
Deduct: 10% legal reserve appropriated (196,917,533)
Current earnings available for distribution 2,527,163,576
Distributions:
Common Stock Cash Dividend (EPS $2.8) (1,333,176,068)
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1,193,987,508

Unappropriated retained earnings – ending

Chairman: Chiang, Yi-Fu President: Kuo, Hui-Chuan Director of Accounting: Wu, Shu-Chen

Resolution:

4. Discussion

Discussion No.1: To reformulate the Company’s “Operational Procedures for the Acquisition or Disposal of Assets”

Explanation:

(1) The reformulation t of the “Operational Procedures for the Acquisition or Disposal of Assets,” has been made in accordance with announcement for reformulation and revision. The Company is to remove the originally-established procedures and to reformulate the new “Operational Procedures for the Acquisition or Disposal of Assets” for the Company’s operation.

(2) The reformulation is in accordance with the announcement dated, Jan. 28 2022, numbered 1110380465, based on the Securities and Exchange Act.

(3) Please refer to the revision for comparison from the

attachment 4.

Resolution:

5.Questions and Motions

6. Attachment

I. 2021 Business Report

1. Overview of Business Performance

1.1 Total consolidated revenue of 2021 was (hereinafter the same) NT$18,024.76 million, increased for NT$2,633.97 million, an increase of 17.11% compared with NT$15,390.79 million in 2020. The parent company revenue of 2021 was NT$18,278.94 million, compared with NT$17,609.22 million in 2020, an increase of NT$669.72 million, a 3.8% year-over-year increase.
1.2 Profit for the period from continuing operations of 2021 was NT$1,972.56 million, increased for NT$421.26 million, an increase of 27.16% compared with NT$1,551.30 million in 2020. Income attributable to owners of parent was NT$1,957.17 million, compared with NT$1,527.37 million in 2020, an increase of NT$429.80 million, a 28.14% year-over-year growth. Basic earnings per share of 2021 were NT$4.19.

2. Budget Implementation:

Total consolidated revenue for 2021 totaled to NT$18,024.76 million, giving a budget achievement ratio of 114.96% of NT$15,679.11 million.

3. Financial Overview:

3.1 As of the end of 2021, total consolidated asset was NT$34,264.95 million, and total liability was NT$ 22,619.58 million (includes NT$10,752.62 million as long-term liability and NT$1,766.33 million as short-term liability and total liability was $12,518.95 million). Based on the 476,134,310 outstanding shares issued by the Company at the time of issue, total equity was NT$11,645.37 million, and book value per share was NT$23.93 after adjusting for minority interests of NT$253.44 million.
3.2 Business performance consolidated analysis over the last two years

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Items Analyzed 2021 2020
Debt to Total Asset Ratio (%) 66.01% 63.09%
Current Ratio (%) 161.17% 136.81%
Gross Profit Margin (%) 23.85% 21.35%
Pretax Profit Margin (%) 13.76% 11.71%
Return on equity (%) 17.50% 16.57%
Net Profit Margin (%) 10.94% 10.08%
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Chairman: Chiang, Yi-Fu President: Kuo, Hui-Chuan Director of Accounting: Wu, Shu-Chen

Chung Hsin Electric & Machinery Mfg. Corp. Ltd.

II. Audit Committee’s Review Report

The Board reports the financial statement, business report, and earnings distribution proposal of 2021, and financial statement have been audited by Crowe Horwath CPAs TAIWAN. The financial statements, business report and earnings distribution proposal have been audited by us as Audit Committee of the Company. We deem no inappropriateness on these documents. Pursuant to Article 14-4 of Securities and Exchange Act and the Article 219 of the Company Act, we hereby present the audited report. Please review.

Chung Hsin Electric & Machinery Mfg. Corp

Chairperson of the Audit Committee:

Gene-Tzn Chen

On the Date of March 31, 2022

III. Financial Statements

INDEPENDENT AUDITORS’ REPORT

To The Board of Directors and the Stockholders Chung-Hsin Electric and Machinery Manufacturing Corp.

Opinion

We have audited the parent company only financial statements of Chung-Hsin Electric and Machinery Manufacturing Corp. (the Corporation), which comprise the parent company only balance sheets as of December 31, 2021 and 2020, and the parent company only statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the report of the other independent accountants, as described in the other matters section of our report, the accompanying parent company only financial statements present fairly, in all material respects, the financial position of the Corporation as of December 31, 2021 and 2020, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audit 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 Parent Company Only Financial Statements section of our report. We are independent of the Corporation in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the parent company only financial statements for the year ended December 31, 2021. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

The description of the key audit matters of the parent company only financial statements for the year ended December 31, 2021 are as follows:

Engineering Revenue Recognition

Key Audit Matters statements

Refer to the Note 4(17) to the accounting policy of revenues recognition.

The Corporation business included electric power engineering construction and design. Contract revenue should be recognized by reference to the stage of completion of the performance obligation over time. Performance obligation should be measured by reference to the stage of completion of the contract activity. The stage of completion of a contract is measured by the proportion of contract costs incurred for work performed to date to the estimated total costs for the contract which are based on significant accounting estimation and judgment of management. Therefore, the recognition of construction revenues is considered as a key audit matter by decision of CPA.

Key Audit procedures

By conducting the tests of controls, we obtained an understanding of the Corporation’s recognition of construction revenues and of the design and implementation of related controls. We also perform corresponding audit procedures as follows:

Review the amount and estimate cost of matter contracts to confirm the accuracy of the information in the profit or loss on construction.
Test the accuracy of the construction listing on percentage of completion calculation and confirm the accuracy of the information in the accounting system.
Acquire and review the statements about the matter changing of construction, which is prepared by the corporation.

Other Matter

Certain investments which were accounted for under the equity method based on the financial statements of the investees were audited by other independent accountants. Therefore, Our Opinion to the above parent company only financial statements, insofar as it related to certain investments which were accounted for under the equity method are based solely on the reports of other independent accountants.

The investments accounted for under the equity method balance of NT 2,149,920 thousands and NT 2,292,513 thousands, which represented 8.75% and 8.58% of the total assets as of December 31, 2021 and 2020, the related shares of profit of associates and joint ventures accounted for using equity method in the amount of NT 12,679 thousands and NT 245,603 thousands, which represented 0.53% and 14.11% of the income from continuing operations before income tax for the years ended December 31, 2021 and 2020.

Responsibilities of Management and Those Charged with Governance for the Parent Company Only Financial Statements

Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with 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 parent company only financial statements that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance, including the Audit Committee, are responsible for overseeing the Corporation’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Parent Company Only Financial Statements

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

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

Identify and assess the risks of material misstatement of the parent company only 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 Corporation’s internal control.
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 Corporation’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Corporation to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the parent company only 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 statements that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements for the year ended December 31, 2021 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditors’ report is Lin, Chin Feng and Chang, Ya Chuan.

Crowe (TW) CPAs Republic of China March 11, 2022

Notice to Reader

The accompanying 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 financial statements are those generally accepted and applied in the Republic of China. For the convenience of readers, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

CHUNG-HSIN ELECTRIC AND MACHINERY MANUFACTURING CORPS. PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2021 AND 2020

(In Thousands of New Taiwan Dollars)

ASSETS	December 31, 2021		December 31, 2020
	Amount ＄ 1,715,034 11,876 22,193 2,902,946 66,144 501 1,032,950 657,907 169 449,708 3,357,842 1,966,245 651,898 192,602 13,028,015 124,556 5,348,143 3,153,195 1,547,454 520,941 4,235 381,792 161,576 299,156 11,541,048 ＄ 24,569,063 ＄ 773,531 16,950 2,506,610 8,042 1,829,930 99,216 681,758 11,274 659,445 683,935 900,000 16,981 8,187,672 3,434,306 - 195,005 340,696	%	Amount % ＄ 605,350 2 12,242 - - - 2,358,320 9 79,717 - 1 - 1,934,718 7 2,764,393 11 16,007 - 68,821 - 3,533,755 13 3,083,130 12 795,234 3 229,851 1 15,481,539 58 60,727 # - 5,762,488 22 3,217,193 12 1,119,923 4 527,191 2 2,619 - 270,999 1 116,270 1 151,055 - 11,228,465 42 ＄ 26,710,004 100 ＄ 758,953 3 10,200 - 2,644,955 10 27,686 - 2,649,669 10 21,194 - 679,071 3 11,966 - 393,009 1 497,072 2 950,000 3 15,973 - 8,659,748 32 1,422,555 6 4,902,770 18 - - 340,696 1	%
CURRENT ASSETS： Cash and cash equivalents (Note 6) Current financial assets at fair value through profit or loss (Note 6) Current financial assets at amortised cost (Note 6) Current contract assets (Notes 6 and 7) Notes receivable, net (Note 6) Notes receivable due from related parties, net (Notes 6 and 7) Accounts receivable, net (Note 6) Accounts receivables due from related parties (Notes 6 and 7) Other accounts receivables, net Other accounts receivables due from related parties (Note 7) Inventory – manufactory (Note 6) Inventory – Construction (Notes 6, 7 and 8) Prepayments (Notes 6 and 7) Other current assets (Note 8) Total current assets NON-CURRENT ASSETS： Non-current financial assets at fair value through profit or loss (Note 6) Investments accounted for using equity method (Note 6) Property, plant and equipment (Notes 6, 7 and 8) Right-of-use assets (Note 6) Investment property, net (Notes 6 and 8) Intangible property Deferred income tax assets (Note 6) Guarantee deposits paid (Note 8) Other noncurrent assets (Note 6, 7 and 8) Total non-current assets TOTAL ASSETS LIABILITIES AND SHAREHOLDERS'EQUITY		7 - - 12 - - 4 3 - 2 13 8 3 1		2 - - 9 - - 7 11 - - 13 12 3 1
		53		58
		- 22 13 6 2 - 2 1 1
		47		42
		100		100
		3 - 10 - 8 - 3 - 3 3 4 -		3 - 10 - 10 - 3 - 1 2 3 -
CURRENT LIABILITIES： Short-term debts (Notes 6 and 8) Current financial liabilities at fair value through profit or loss (Note 6) Current contract liabilities (Notes 6 and 7) Notes payable Accounts payable Accounts payable due from related parties (Note 7) Other payables (Note 6) Other payables due from related parties (Note 7) Current tax liabilities Current lease liabilities (Note 6) Long-term liabilities, current portion (Note 6) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES： Bonds payable (Note 6) Long-term debts (Note 6) Current tax liabilities-non current Deferred income tax liabilities (Note 6)
		34		32
		14 - 1 1		6 18 - 1

CHUNG-HSIN ELECTRIC AND MACHINERY MANUFACTURING CORPS. PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2021 AND 2020

(In Thousands of New Taiwan Dollars)

ASSETS	December 31, 2021		December 31, 2020
	Amount 795,146 224,308 4,989,461 13,177,133 4,761,343 1,477,215 1,350,034 858,940 2,724,081 4,933,055 337,197 ( 116,880) 11,391,930 ＄ 24,569,063	%	Amount 555,346 178,595 7,399,962 16,059,710 4,761,343 1,455,475 1,203,581 858,940 1,948,855 4,011,376 538,980 ( 116,880) 10,650,294 ＄ 26,710,004
Non-current lease liabilities (Note 6) Other non-current liabilities, others (Notes 6 and 7) Total non-current liabilities Total liabilities Equity attributable to owners of parent Common stock (Note 6) Capital surplus (Note 6) RETAINED EARNINGS (Note 6) Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity (Note 6) Treasury shares (Note 6) Total Equity TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		3 1
		20
		54
		19 6 6 3 11
		20 1 -
		46
		100

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

CHUNG-HSIN ELECTRIC AND MACHINERY MANUFACTURING CORPS.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

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

OPERATING REVENUE (Notes 6 and 7) OPERATING COST (Notes 6 and 7) GROSS PROFIT UNREALIZED GROSS PROFIT ON SALES TO SUBSIDIARIES AND ASSOCIATES REALIZED GROSS PROFIT ON SALES TO SUBSIDIARIES AND ASSOCIATES NET GROSS PROFIT OPERATING EXPENSES (Notes 6 and 7) Marketing expenses Administrative expenses Research and development expenses Expected credit impairment losses (gains) Total operating expenses OPERATING INCOME NON-OPERATING INCOME AND EXPENSES Interest income (Notes 6 and 7) Other income (Notes 6 and 7) Other gains and losses (Note 6) Financial cost (Notes 6 and 7) Share of profit (loss) of associates and joint ventures accounted for using equity method (Note 6) Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX (Note 6) PROFIT OTHER COMPREHENSIVE INCOME (Note 6) Items that may not be reclassified to profit or loss Remeasurements of defined benefit pension plans Share of other comprehensive income associates of and joint ventures accounted for using equity method Items that may be reclassified subsequently to profit or loss Share of other comprehensive income associates of and joint ventures accounted for using equity method TOTAL OTHER COMPREHENSIVE INCOME, NET OF INCOME TAX TOTAL COMPREHENSIVE INCOME FOR THE PERIOD EARNINGS PER SHARE (Note 6) Basic earnings per share Diluted earnings per share	For theyears ended December 31,	For theyears ended December 31,
	2021	2020

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

CHUNG-HSIN ELECTRIC AND MACHINERY MANUFACTURING CORPS. PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

(In Thousands of New Taiwan Dollars)

Common Stock		RETA	INED EARNINGS		OTHER EQUITY
	Legal reserve	Special reserve	Unappropriated earnings ＄ 1,048,760 ( 60,438 ) ( 504,000 ) - - 1,527,368 ( 50,548 ) 1,476,820 - - ( 12,317 ) 30 1,948,855 ( 146,453 ) ( 1,047,495 ) 1,957,171 11,799 1,968,970 - - 191 13 ＄ 2,724,081	Exchange differences on translating foreign operations ＄( 208,979 ) - - - - - 6,124 6,124 - - - - ( 202,855 ) - - - ( 20,446 ) ( 20,446 ) - - - - ＄( 223,301 )	Unrealized gain (loss) on Financial assets at fair value through other comprehensive incomes ＄ 230,677 - - - - - 511,158 511,158 - - - - 741,835 - - - ( 181,337 ) ( 181,337 ) - - - - ＄ 560,498
＄ 4,200,000 - - - - - -	＄ 1,143,143 60,438 - - - - -	＄ 858,940 - - - - - -
- 561,343 - - -	- - - - -	- - - - -
4,761,343 - - - -	1,203,581 146,453 - - -	858,940 - - - -
- - - - -	- - - - -	- - - - -
＄ 4,761,343	＄ 1,350,034	＄ 858,940

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

CHUNG-HSIN ELECTRIC AND MACHINERY MANUFACTURING CORPS.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

(In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Profit Before Tax Adjustments to reconcile profit (loss): Depreciation Amortization Expected credit impairment losses (gains) Net loss (gain) on financial assets or liabilities at fair value through profit or loss Interest expenses Interest income Dividend income Share of (profit) loss of associates and joint ventures accounted for using equity th d Loss (Gain) on disposal of property, plant and equipment Loss (Gain) on disposal of investment Other Net changes in operating incomes and losses which do not affect cash flows Net changes in operating assets and liabilities (Increase) Decrease in financial assets mandatorily classified as at fair value th h fit l (Increase) Decrease in contract assets (Increase) Decrease in notes receivable (Increase) Decrease in notes receivable - related parties (Increase) Decrease in accounts receivables (Increase) Decrease in accounts receivable - related parties (Increase) Decrease in other accounts receivables (Increase) Decrease in other accounts receivable - related parties (Increase) Decrease in inventory (Increase) Decrease in prepayments (Increase) Decrease in other current assets Net cash provided by (used in) operating assets (Decrease) Increase in contract liabilities (Decrease) Increase in notes payable (Decrease) Increase in accounts payable (Decrease) Increase in accounts payable - related parties (Decrease) Increase in other accounts payables (Decrease) Increase in other accounts payables - related parties (Decrease) Increase in provisions (Decrease) Increase in other current liabilities (Decrease) Increase in net defined benefit liability Net cash provided by (used in) operating liabilities Net changes provide by (used in) operating assets and liabilities Total Adjustments Cash provided by (used in) operating activities Cash received for interest Cash received for dividend Cash paid for interest Cash received (paid) for Income tax Net cash provided by (used in) operating activities	For theyears ended	December 31, 2020 ＄ 1,740,024 1,057,114 57,093 ( 1,863 ) 78,233 59,913 ( 3,230 ) ( 36 ) ( 372,292 ) ( 1,242 ) ( 59,801 ) ( 936 ) 812,953 - ( 703,521 ) ( 20,161 ) ( 1 ) ( 798,441 ) ( 2,720,589 ) ( 15,417 ) ( 64,273 ) ( 1,319,860 ) ( 327,444 ) 12,874 ( 5,956,833 ) ( 348,281 ) 27,686 1,934,166 ( 15,108 ) 156,534 4,292 ( 169,745 ) 1,741 ( 38,105 ) 1,553,180 ( 4,403,653 ) ( 3,590,700 ) ( 1,850,676 ) 3,345 41,172 ( 37,834 ) ( 85,709 ) ( 1,929,702 )
	2021 ＄ 2,376,138 1,087,411 74,708 ( 2,072 ) ( 52,413 ) 60,697 ( 2,845 ) ( 7,853 ) ( 110,736 ) ( 65,367 ) - ( 117 ) 981,413 ( 4,301 ) ( 541,687 ) 13,573 ( 500 ) 900,900 2,106,487 15,699 ( 380,195 ) 1,282,502 143,336 37,249 3,573,063 ( 138,345 ) ( 19,644 ) ( 819,739 ) 78,022 329 ( 692 ) 85,122 1,008 ( 644 ) ( 814,583 ) 2,758,480 3,739,893 6,116,031 2,292 47,099 ( 27,951 ) ( 68,319 ) 6,069,152

(Continued)

CHUNG-HSIN ELECTRIC AND MACHINERY MANUFACTURING CORPS. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

(In Thousands of New Taiwan Dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of Investments under equity method Refund from capital reduction of investments accounted for using equity method Proceeds from non-current assets as held for sale Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in guarantee deposits paid Acquisition of financial assets at amortized cost Acquisition of Intangible assets Acquisition of right-of-use assets Decrease in long-term lease receivables Increase in other noncurrent assets Other investment activities Net cash provided by (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term debts Proceeds from issuing bonds Increase in long-term debts Decrease in long-term debts Increase in guarantee deposit received Decrease in guarantee deposit received Payment of lease liabilities Increase in other noncurrent liabilities Decrease in other noncurrent liabilities Cash Dividends Paid Other financing activities Net cash provided by (used in) financing activities NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD CASH AND CASH EQUIVALENTS, END OF PERIOD	For theyears ended	December 31, 2020 ( 2,061,121 ) 307,680 22,433 ( 216,828 ) 15,488 ( 16,772 ) - ( 2,725 ) ( 67,518 ) 2,547 ( 41,472 ) 756,848 ( 1,301,440 ) 105,368 3,001,020 1,799,000 - 4,283 - ( 763,094 ) 33,478 - ( 504,000 ) 2,794 3,678,849 447,707 157,643 ＄ 605,350
	2021 ( 161,254 ) - - ( 236,160 ) 70,666 ( 45,306 ) ( 22,193 ) ( 2,519 ) ( 8,454 ) 2,616 ( 151,129 ) 476,835 ( 76,898 ) 14,578 1,996,270 - ( 4,954,000 ) - ( 1,000 ) ( 855,373 ) - ( 37,576 ) ( 1,047,495 ) 2,026 ( 4,882,570 ) 1,109,684 605,350 ＄ 1,715,034

(Concluded)

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

INDEPENDENT AUDITORS’ REPORT

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To The Board of Directors and the Stockholders

Chung-Hsin Electric and Machinery Manufacturing Corp.

Opinion

We have audited the consolidated financial statements of Chung-Hsin Electric and Machinery Manufacturing Corp. and its subsidiaries (the Group), which comprise the consolidated balance sheets as of December 31, 2021 and 2020, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2021. 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.

The description of the key audit matters of the consolidated financial statements for the year ended December 31, 2021 are as follows:

Engineering Revenue Recognition

Key Audit Matters statements

Refer to the Note 4(20) to the accounting policy of revenues recognition. The Group business included electric power engineering construction and design. Contract revenue should be recognized by reference to the stage of completion of the performance obligation over time. Performance obligation should be recognized by reference to the stage of completion of the contract activity. The stage of completion of a contract is measured by the proportion of contract costs incurred for work performed to date to the estimated total costs for

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the contract which are base on significant accounting estimation and judgment of management. The construction revenue has significant influence on financial statements. Therefore, the recognition of construction revenues is considered as a key audit matter by decision of CPA.

Key Audit procedures

By conducting the tests of controls, we obtained an understanding of the Group’s recognition of construction revenues and of the design and implementation of related controls. We also perform corresponding audit procedures as follows:

Review the amount and estimate cost of matter contracts to confirm the accuracy of the information in the profit or loss on construction.
Test the accuracy of the construction listing on percentage of completion calculation and confirm the accuracy of the information in the accounting system.
Acquire the statements about the matter changing of construction, which is assessed by the corporation.

Other Matter

Certain investments which were accounted for under the equity method based on the financial statements of the investees were audited by other independent accountants. Our audit, insofar as it related to these companies’ total assets were NT 1,678,675 thousand and NT 1,826,502 thousand, which represented 4.90% and 6.18% of the total consolidated assets as of December 31, 2021 and 2020, the related shares of net operating revenue from the associates in the amount of NT 1,408,385 thousand and NT 1,363,325 thousand, which represented 7.81% and 8.86% of the total consolidated net operating revenue for the years ended December 31, 2021 and 2020;

The investments accounted for under the equity method balance of NT 1,119,637 thousand and NT 1,256,774 thousand, which represented 3.27% and 4.25% of the total consolidated assets as of December 31, 2021 and 2020, the related shares of profit of associates and joint ventures accounted for using equity method in the amount of NT 21,027 thousands and NT 150,035 thousands, which represented 0.85% and 8.33% of the consolidated income from continuing operations before income tax for the years ended December 31, 2021 and 2020.

We have audited and expressed an unqualified opinion with other matter paragraph on the parent company only financial statements of Chung-Hsin Electric and Machinery Manufacturing Corp. for the years ended December 31, 2021 and 2020, respectively.

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 Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRS, IAS, IFRIC, and SIC endorsed and issued into effect by the 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 Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including the Audit Committee, are responsible for overseeing

the Group’s financial reporting process.

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Auditors’ 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 auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these 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 Group’s internal control.
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 Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the 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 auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the Group 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 the consolidated financial statements for the year ended December 31, 2021 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditors’ report is Lin, Chin Feng and Chang, Ya Chuan.

Crowe (TW) CPAs Republic of China March 11, 2022

Notice to Reader

The accompanying consolidated financial statements are intended only to present the consolidated 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.

For the convenience of readers, the auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language auditors’ report and consolidated financial statements shall prevail.

CHUNG-HSIN ELECTRIC AND MACHINERY MANUFACTURING CORPS. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF BALANCE SHEETS

DECEMBER 31, 2021 AND 2020

(In Thousands of New Taiwan Dollars)

ASSETS	December 31,	2021	December 31,20	20
	Amount ＄ 2,344,201 109,742 206,602 3,673,680 78,958 1,480,965 13,740 20,425 128,706 1,691 3,784,067 1,966,245 825,705 674,205 15,308,932 249,783 81,284 1,326,515 12,480,880 2,995,324 520,941 274,662 385,483 200,564 440,578 18,956,014 ＄ 34,264,946	%	Amount ＄ 1,160,714 238,469 143,711 1,465,041 94,126 2,283,236 7,656 30,583 90,322 1,711 3,913,268 3,083,130 908,507 486,162 13,906,636 217,933 98,273 1,470,523 9,226,449 2,925,456 527,191 383,457 275,000 156,128 354,189 15,634,599 ＄ 29,541,235	%
CURRENT ASSETS： Cash and cash equivalents (Note 6) Current financial assets at fair value through profit or loss (Note 6) Current financial assets at amortized cost (Note 6) Current contract assets (Notes 6 and 7) Notes receivable, net (Note 6) Accounts receivable, net (Note 6) Accounts receivables due from related parties (Notes 6 and 7) Other accounts receivables, net Other accounts receivables due from related parties (Note 7) Current tax assets Inventory – manufactory (Note 6) Inventory – Construction (Notes 6, 7 and 8) Prepayments (Notes 6 and 7) Other current assets (Note 8) Total current assets NON-CURRENT ASSETS： Non-current financial assets at fair value through profit or loss (Note 6) Non-current financial assets at fair value through other comprehensive income (Note 6) Investments accounted for using equity method (Note 6) Property, plant and equipment (Notes 6 and 8) Right-of-use assets (Note 6) Investment property, net (Notes 6 and 8) Intangible property (Note 6) Deferred income tax assets (Note 6) Guarantee deposits paid (Note 8) Other noncurrent assets (Note 6, 7 and 8) Total non-current assets TOTAL ASSETS LIABILITIES AND SHAREHOLDERS' EQUITY		7 - 1 11 - 4 - - - - 11 6 3 2		4 1 - 5 - 8 - - - - 13 11 3 2
		45		47
		1 - 4 36 9 1 1 1 1 1		1 - 5 31 10 2 1 1 1 1
		55		53
		100		100
	＄ 819,833 22,993 16,950 2,704,940 9,093 2,247,017 6,194 1,003,289 631 709,205 - 1,009,601 923,500 25,286 9,498,532 3,434,306 7,318,310 201,582 340,696 1,653,385 172,769 13,121,048 22,619,580 4,761,343 1,477,215 1,350,034 858,940 2,724,081 4,933,055 337,197 ( 116,880 ) 11,391,930 253,436 11,645,366 ＄ 34,264,946	2 - - 8 - 7 - 3 - 2 - 3 3 -	＄ 926,830 76,425 10,200 2,787,611 32,422 3,038,697 16,380 889,086 950 430,485 62 933,589 999,200 22,783 10,164,720 1,422,555 4,912,967 - 340,804 1,659,788 136,855 8,472,969 18,637,689 4,761,343 1,455,475 1,203,581 858,940 1,948,855 4,011,376 538,980 ( 116,880 ) 10,650,294 253,252 10,903,546 ＄ 29,541,235	3 - - 10 - 10 - 3 - 2 - 3 3 -
CURRENT LIABILITIES： Short-term debts (Notes 6 and 7) Short-term notes and bills payable (Note 6) Current financial liabilities at fair value through profit or loss (Note 6) Current contract liabilities (Notes 6 and 7) Notes payable Accounts payable Accounts payable due from related parties (Note 7) Other payables (Note 6) Other payables due from related parties (Note 7) Current tax liabilities Current provisions (Note 6) Current lease liabilities (Note 6) Long-term liabilities, current portion (Note 6) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES： Bonds payable (Note 6) Long-term debts (Note 6) Current tax liabilities-non current Deferred income tax liabilities (Note 6) Non-current lease liabilities (Note 6) Other non-current liabilities, others (Notes 6 and 7) Total non-current liabilities Total liabilities Equity attributable to owners of parent Common stock (Note 6) Capital surplus (Note 6) RETAINED EARNINGS (Note 6) Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity (Note 6) Treasury shares (Notes 6 and 8) Total Equity attributable to owners of parent Non-controlling interests (Note 6) Total equity TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
		28		34
		10 21 1 1 5 -		5 17 - 1 6 -
		38		29
		66		63
		14 4 4 2 8		16 5 4 3 6
		14 1 -		13 2 -
		33 1		36 1
		34		37 100
		100

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

CHUNG-HSIN ELECTRIC AND MACHINERY MANUFACTURING CORPS. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

In Thousands of New Taiwan Dollars, Except Earnings Per Share

OPERATING REVENUE (Notes 6 and 7) OPERATING COST (Notes 6 and 7) GROSS PROFIT OPERATING EXPENSES (Notes 6 and 7) Marketing expenses Administrative expenses Research and development expenses Expected credit impairment losses (gains) Total operating expenses OPERATING INCOME NON-OPERATING INCOME AND EXPENSES Interest income (Notes 6 and 7) Other income (Notes 6 and 7) Other incomes and losses (Note 6) Financial cost (Notes 6 and 7) Share of profit (loss) of associates and joint ventures accounted for using equity method (Note 6) Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX (Note 6) PROFIT OTHER COMPREHENSIVE INCOME (Note 6) Items that may not be reclassified to profit or loss Gains (losses) on remeasurements of defined benefit plans Unrealised gains (losses) from investments in equity instruments measured at fair value through other comprehensive income Share of other comprehensive income of associates and joint ventures accounted for using equity method Components of other comprehensive income that will be reclassified to profit or loss Exchange differences on translation Total other comprehensive income Total comprehensive income Profit (loss), attributable to: Owners of parent Non-controlling interests COMPREHENSIVE INCOME tt ib t bl t ： Owners of parent Non-controlling interests EARNINGS PER SHARE (Note 6) Basic earnings per share Diluted earnings per share	2021	％ 100 ( 76 ) 24 ( 3 ) ( 5 ) ( 1 ) - ( 9 ) 15 - 1 ( 2 ) - - ( 1 ) 14 ( 3 ) 11 - - ( 1 ) - ( 1 ) 10 11 - 11 10 - 10	2020	％ 100 ( 79 ) 21 ( 3 ) ( 6 ) ( 1 ) - ( 10 ) 11 - 1 ( 1 ) - 1 1 12 ( 2 ) 10 - ( 1 ) 4 - 3 13 10 - 10 13 - 13
	Amount ＄ 18,024,761 ( 13,726,222 ) 4,298,539 ( 449,970 ) ( 956,101 ) ( 213,615 ) ( 706 ) ( 1,620,392 ) 2,678,147 9,435 107,243 ( 265,466 ) ( 86,953 ) 37,770 ( 197,971 ) 2,480,176 ( 507,616 ) 1,972,560 11,799 ( 12,691 ) ( 168,646 ) ( 21,250 ) ( 190,788 ) ＄ 1,781,772 ＄ 1,957,171 15,389 ＄ 1,972,560 ＄ 1,767,187 14,585 ＄ 1,781,772 ＄ 4.19 ＄ 4.00		Amount ＄ 15,390,789 ( 12,105,150 ) 3,285,639 ( 405,162 ) ( 919,694 ) ( 241,839 ) 2,029 ( 1,564,666 ) 1,720,973 12,803 102,620 ( 133,650 ) ( 74,584 ) 173,643 80,832 1,801,805 ( 250,504 ) 1,551,301 ( 50,548 ) ( 54,705 ) 565,863 9,654 470,264 ＄ 2,021,565 ＄ 1,527,368 23,933 ＄ 1,551,301 ＄ 1,994,102 27,463 ＄ 2,021,565 ＄ 3.59 ＄ 3.40
			＄
			＄
			＄
			＄
			＄
			＄
			＄

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

CHUNG-HSIN ELECTRIC AND MACHINERY MANUFACTURING CORPS. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

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(In Thousands of New Taiwan Dollars)
Equity attributable to owners of parent
RETAINED EARNINGS OTHER EQUITY
Unrealized gain
Exchange (loss) on
Common Stock Capital surplus reserve Legal reserve Special Unappropriated earnings Retained Total differences on translating Financial assets at fair value Other equity Total Treasury stock attributable to Total Equity Non-controllinginterests Total Equity
earnings foreign through other owners of Parent
operations comprehensive
incomes
BALANCE, JANUARY 1, 2020 ＄ 4,200,000 ＄ 421,024 ＄ 1,143,143 ＄ 858,940 ＄ 1,048,760 ＄ 3,050,843 ＄ ( 208,979 ) ＄ 230,677 ＄ 21,698 ＄ ( 116,880 ) ＄ 7,576,685 ＄ 238,566 ＄ 7,815,251
Legal reserve appropriated - - 60,438 - ( 60,438 ) - - - - - - - -
Cash dividends of ordinary share - - - - ( 504,000 ) ( 504,000 ) - - - - ( 504,000 ) - ( 504,000 )
Due to recognition of equity - 68,614 - - - - - - - - 68,614 - 68,614
component of convertible bonds
(preference share) issued
Changes in equity of associates and - 451 - - - - - - - - 451 - 451
joint ventures accounted for using
equity method
Profit (loss) - - - - 1,527,368 1,527,368 - - - - 1,527,368 23,933 1,551,301
OTHER COMPREHENSIVE
INCOME - - - - ( 50,548 ) ( 50,548 ) 6,124 511,158 517,282 - 466,734 3,530 470,264
TOTAL COMPREHENSIVE
INCOME - - - - 1,476,820 1,476,820 6,124 511,158 517,282 - 1,994,102 27,463 2,021,565
Conversion of convertible bonds 561,343 939,167 - - - - - - - - 1,500,510 - 1,500,510
Adjustments of capital surplus for
- 10,815 - - - - - - - - 10,815 - 10,815
company’s dividends
Changes in ownership interests in subsidiaries - 12,640 - - ( 12,317 ) ( 12,317 ) - - - - 323 - 323
Net changes in Non-controlling interests - - - - - - - - - - - ( 12,777 ) ( 12,777 )
Other - 2,764 - - 30 30 - - - - 2,794 - 2,794
BALANCE, December 31, 2020 4,761,343 1,455,475 1,203,581 858,940 1,948,855 4,011,376 ( 202,855 ) 741,835 538,980 ( 116,880 ) 10,650,294 253,252 10,903,546
Legal reserve appropriated - - 146,453 - ( 146,453 ) - - - - - - - -
Cash dividends of ordinary share - - - - ( 1,047,495 ) ( 1,047,495 ) - - - - ( 1,047,495 ) - ( 1,047,495 )
Profit (loss) - - - - 1,957,171 1,957,171 - - - - 1,957,171 15,389 1,972,560
OTHER COMPREHENSIVE
INCOME - - - - 11,799 11,799 ( 20,446 ) ( 181,337 ) ( 201,783 ) - ( 189,984 ) ( 804 ) ( 190,788 )
TOTAL COMPREHENSIVE
INCOME - - - - 1,968,970 1,968,970 ( 20,446 ) ( 181,337 ) ( 201,783 ) - 1,767,187 14,585 1,781,772
Adjustments of capital surplus for
- 19,885 - - - - - - - - 19,885 - 19,885
company’s dividends
Difference between consideration and - ( 332 ) - - - - - - - - ( 332 ) - ( 332 )
carrying amount of subsidiaries
acquired or disposed
Changes in ownership interests in - 174 - - 191 191 - - - - 365 - 365
subsidiaries
Net changes in Non-controlling interests - - - - - - - - - - - ( 14,397 ) ( 14,397 )
Other - 2,013 - - 13 13 - - - - 2,026 ( 4 ) 2,022
BALANCE, December 31, 2021 ＄ 4,761,343 ＄ 1,477,215 ＄ 1,350,034 ＄ 858,940 ＄ 2,724,081 ＄ 4,933,055 ＄ ( 223,301 ) ＄ 560,498 ＄ 337,197 ＄ ( 116,880 ) ＄ 11,391,930 ＄ 253,436 ＄ 11,645,366
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(The accompanying notes are an integral part of the consolidated financial statements.)

CHUNG-HSIN ELECTRIC AND MACHINERY MANUFACTURING CORPS. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

(In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Profit Before Tax Adjustments to reconcile profit (loss): Depreciation Amortization Expected credit impairment losses (gains) Net loss (gain) on financial assets or liabilities at fair value through profit or loss Interest expenses Interest income Dividend income Share of (profit) loss of associates and joint ventures accounted for using equity method Loss (Gain) on disposal of property, plant and Loss (Gain) on disposal of investment Impairment loss on non-financial assets Other Net changes in operating incomes and losses which do not affect cash flows Net changes in operating assets and liabilities (Increase) Decrease in financial assets mandatorily classified as at fair value through profit or loss (Increase) Decrease in contract assets (Increase) Decrease in notes receivable (Increase) Decrease in notes receivable - related parties (Increase) Decrease in accounts receivables (Increase) Decrease in accounts receivable - related parties (Increase) Decrease in other accounts receivables (Increase) Decrease in other accounts receivable - related parties (Increase) Decrease in inventory (Increase) Decrease in prepayments (Increase) Decrease in other current assets Net cash provided by (used in) operating assets (Decrease) Increase in contract liabilities (Decrease) Increase in notes payable (Decrease) Increase in accounts payable (Decrease) Increase in accounts payable - related parties (Decrease) Increase in other accounts payables (Decrease) Increase in other accounts payables - related parties (Decrease) Increase in provisions (Decrease) Increase in other current liabilities (Decrease) Increase in net defined benefit liability Net cash provided by (used in) operating liabilities Net changes provide by (used in) operating assets and liabilities Total Adjustments Cash provided by (used in) operating activities Cash received for interest Cash received for dividend Cash paid for interest Cash received (paid) for Income tax Net cash provided by (used in) operating activities	2021 ＄ 2,480,176 1,893,816 159,658 706 ( 50,909 ) 86,953 ( 9,435 ) ( 21,010 ) ( 37,770 ) ( 55,276 ) ( 5,263 ) 147,107 1,504 2,110,081 159,724 ( 2,205,701 ) 15,168 - 800,891 ( 8,347 ) 10,175 ( 38,450 ) 1,234,723 82,800 ( 188,043 ) ( 137,060 ) ( 82,671 ) ( 23,329 ) ( 791,680 ) ( 10,186 ) 126,359 ( 319 ) 85,060 2,503 ( 644 ) ( 694,907 ) ( 831,967 ) 1,278,114 3,758,290 9,483 56,067 ( 27,122 ) ( 138,188 ) 3,658,530	2020 ＄ 1,801,805 1,591,546 143,016 ( 2,029 ) 127,118 74,584 ( 12,803 ) ( 31,345 ) ( 173,643 ) ( 1,655 ) ( 123,231 ) 22,131 ( 942 ) 1,612,747 285,698 141,917 ( 27,695 ) 21,088 ( 764,212 ) 34,211 ( 16,699 ) ( 26,427 ) ( 1,403,422 ) ( 361,066 ) ( 197,025 ) ( 2,313,632 ) ( 345,489 ) 23,375 1,874,202 ( 228 ) 183,638 ( 460 ) ( 170,463 ) ( 4,405 ) ( 39,770 ) 1,520,400 ( 793,232 ) 819,515 2,621,320 12,719 88,151 ( 43,782 ) ( 92,721 ) 2,585,687

(Continued)

CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of financial assets at fair value through comprehensive income Acquisition of financial assets at amortized cost Proceeds from financial assets at amortized cost Acquisition of investments accounted for using equity Net cash flow from acquisition of subsidiaries Refund from capital reduction of investments Proceeds from non-current assets as held for sale Acquisition of property, plant and equipment Proceeds from disposal of property, plant and Increase in guarantee deposits paid Acquisition of Intangible assets Acquisition of right-of-use assets Increase in long-term lease receivables Decrease in long-term lease receivables Increase in other non-current assets Other investment activities Net cash provide by (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term loans Decrease in short-term loans Increase in short-term notes and bills payable Decrease in short-term notes and bills payable Proceeds from issuing bonds Increase in long-term debts Increase in guarantee deposit received Decrease in guarantee deposit received Payment of lease liabilities Increase in other non-current liabilities Decrease in other non-current liabilities Cash Dividends Paid Change in non-controlling interests Other financing activities Net cash provided by (used in) financing activities EFFECT OF EXCHANGE RATE CHANGES ON NET (DECREASE) INCREASE IN CASH AND CASH AND CASH EQUIVALENTS, BEGINNING CASH AND CASH EQUIVALENTS, END OF	2021 - ( 106,917 ) 43,448 ( 21,508 ) - - - ( 3,962,033 ) 75,294 ( 44,436 ) ( 13,703 ) ( 60,878 ) - 2,616 ( 184,934 ) ( 32,873 ) ( 4,305,924 ) - ( 106,997 ) - ( 53,500 ) 1,996,270 2,329,100 - ( 971 ) ( 1,229,503 ) - ( 37,115 ) ( 1,047,495 ) ( 15,205 ) 2,013 1,836,597 ( 5,716 ) 1,183,487 1,160,714 ＄ 2,344,201	2020 ( 161,116 ) ( 141,460 ) - - ( 350,420 ) 112,500 22,433 ( 5,111,365 ) 57,734 ( 2,042 ) ( 2,727 ) ( 103,945 ) ( 580 ) - ( 119,905 ) ( 2,510 ) ( 5,803,403 ) 207,885 - 61,500 - 3,001,020 1,760,400 4,031 - ( 1,160,722 ) 35,499 - ( 504,000 ) ( 9,247 ) 2,765 3,399,131 ( 3,961 ) 177,454 983,260 ＄ 1,160,714

(Concluded)

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

IV. The Reformulated “Operational Procedures for the Acquisition or Disposal of Assets”

CHEM

Operational Procedures for the Acquisition or Disposal of Assets

Chapter 1 General Principal

Article	1	For the purpose of protecting investors and implementing disclosure of
		information, the Company shall handle the acquisition or disposal of assets in
		compliance with these Regulations.
Article	2	These Regulations are adopted in accordance with the provisions of Article 36-1
		of the Securities and Exchange Act ("the Act") and Regulations Governing the
		Acquisition and Disposal of Assets by Public Companies from Financial
		SupervisoryCommission(“the Commission,FSC”).
Article	3	The term "assets" as used in these Regulations includes the following:
		1.Investments in stocks, government bonds, corporate bonds, financial bonds,
		securities representing interest in a fund, depositary receipts, call (put)
		warrants, beneficial interest securities, and asset-backed securities.
		2.Real property (including land, houses and buildings, investment property, and
		construction enterprise inventory) and equipment.
		3.Memberships.
		4.Patents, copyrights, trademarks, franchise rights, and other intangible assets.
		5.Right-of-use Asset
		6.Claims of financial institutions (including receivables, bills purchased and
		discounted, loans, and overdue receivables).
		7.Derivatives.
		8.Assets acquired or disposed of in connection with mergers, demergers,
		acquisitions, or transfer of shares in accordance with law.
		9.Other major assets.
Article	4	Terms used in these Regulations are defined as follows:
		1.Derivatives: Forward contracts, options contracts, futures contracts, leverage
		contracts, or swap contracts, whose value is derived from a specified interest
		rate, financial instrument price, commodity price, foreign exchange rate,
		index of prices or rates, credit rating or credit index, or other variable; or
		hybrid contracts combining the above contracts; or hybrid contracts or
		structured products containing embedded derivatives.
		The term "forward contracts" does not include insurance contracts,
		performance contracts, after-sales service contracts, long-term leasing
		contracts, or long-term purchase (sales) agreements.
		2.Assets acquired or disposed through mergers, demergers, acquisitions, or
		transfer of shares in accordance with law: Refers to assets acquired or
		disposed through mergers, demergers, or acquisitions conducted under the
		Business Mergers and Acquisitions Act, Financial Holding Company Act,
		Financial Institution Merger Act and other acts,or to transfer of shares from

another company through issuance of new shares of its own as the consideration therefore (hereinafter "transfer of shares") under Article 156-3 of the Company Act.

3.Related party or subsidiary: As defined in the Regulations Governing the Preparation of Financial Reports by Securities Issuers.
4.Professional appraiser: Refers to a real property appraiser or other person duly authorized by law to engage in the value appraisal of real property or equipment.
5.Date of occurrence: Refers to the date of contract signing, date of payment, date of consignment trade, date of transfer, dates of boards of directors resolutions, or other date that can confirm the counterpart and monetary amount of the transaction, whichever date is earlier; provided, for investment for which approval of the competent authority is required, the earlier of the above date or the date of receipt of approval by the competent authority shall apply.
6.Mainland China area investment: Refers to investments in the mainland China area approved by the Ministry of Economic Affairs Investment Commission or conducted in accordance with the provisions of the Regulations Governing Permission for Investment or Technical Cooperation in the Mainland Area.
7.Investment professional: Refers to financial holding companies, banks, insurance companies, bill finance companies, trust enterprises, securities firms operating proprietary trading or underwriting business, futures commission merchants operating proprietary trading business, securities investment trust enterprises, securities investment consulting enterprises, and fund management companies, that are lawfully incorporated and are regulated by the competent financial authorities of the jurisdiction where they are located.
8.Securities exchange: "Domestic securities exchange" refers to the Taiwan Stock Exchange Corporation; "foreign securities exchange" refers to any organized securities exchange market that is regulated by the competent securities authorities of the jurisdiction where it is located.
9.Over-the-counter venue ("OTC venue", "OTC"): "Domestic OTC venue" refers to a venue for OTC trading provided by a securities firm in accordance with the Regulations Governing Securities Trading on the Taipei Exchange; "foreign OTC venue" refers to a venue at a financial institution that is regulated by the foreign competent authority and that is permitted to conduct securities business.

Article 5

Professional appraisers and their officers, certified public accounts, attorneys, and securities underwriters that provide public companies with appraisal reports, certified public accountants’ opinions, attorney's opinions, or underwriter's opinions shall meet the following requirements:

May not have previously received a final and unappeasable sentence to imprisonment for 1 year or longer for a violation of the Act, the Company Act, the Banking Act of The Republic of China, the Insurance Act, the Financial Holding Company Act, or the Business Entity Accounting Act, or for fraud, breach of trust, embezzlement, forgery of documents, or occupational crime. However, this provision does not apply if 3 years have already passed since completion of service of the sentence, since

expiration of the period of a suspended sentence, or since a pardon was received.

May not be a related party or de facto related party of any party to the transaction.
If the company is required to obtain appraisal reports from two or more professional appraisers, the different professional appraisers or appraisal officers may not be related parties or de facto related parties of each other.

When issuing an appraisal report or opinion by the previously-mentioned individuals, the personnel referred to in the preceding paragraph shall comply with the self-discipline rules of its trade associations and the following:

Prior to accepting a case, they shall prudently assess their own professional capabilities, practical experience, and independence.
When running a case, they shall appropriately plan and execute adequate working procedures, in order to produce a conclusion and use the conclusion as the basis for issuing the report or opinion. The related working procedures, data collected, and conclusion shall be fully and accurately specified in the case working papers.
They shall undertake an item-by-item evaluation of the comprehensiveness, accuracy, appropriateness and reasonableness of the sources of data used, the parameters, and the information, as the basis for issuance of the appraisal report or the opinion.
They shall issue a statement attesting to the professional competence and independence of the personnel who prepared the report or opinion, and that they have evaluated and found that the information used is appropriate and reasonable, and that they have complied with applicable laws and regulations.

Chapter 2 Procedures

Section 1- Acquisition or Disposal of Assets

Article 6

The limit of non-business real estate, its right-of-use asset, and securities that are invested by the Company and its subsidiaries

The investment for non-business-use real estate shall be no more than 20% book value of the Company and its subsidiaries.
The limit of the total investment of securities by the Company and its subsidiary shall be no more than 60% book value of the Company. The limit amount of one individual security shall be no more than 30% book value of the Company.
When the amount of investment for non-business real estate and securities that are invested by the subsidiaries is more than NT5 million dollars, confirmation and decision shall be made by the board of Directors.

For the subsidiaries which see reinvestment as the main business, the limit of total value for the acquired securities and the limit amount of on individual security shall not be more than 400% of its own paid-in capital.
For the subsidiaries which do not see reinvestment as the main business, the limit of total value for the acquired securities shall not be more than 300% of the net value of its own.

Article 7 Handling Procedure for Acquiring or Disposing of Assets

1.Procedure of evaluation and operation When acquiring or disposing of assets or its right-of-use assets is required, the Company shall compile the budget for capital expenditure in advance. Procedures for compiling, evaluating, implementing and controlling shall follow the regulations and provision of the Company for fixed assets.
2.Procedure for deciding transaction terms
A. Report from professional appraisers for acquiring or disposing of assets shall be used for further deliberation after enquiring, comparing or negotiating. Approval is needed from board of directors when the value for non-business fixed assets or its right-of-use assets is more than NTD 50 million.
B. The Company stipulates or revises the Procedures for the Acquisition or Disposal of Assets. The procedures shall be approved by at least one-half of the members of Auditing Committee before sending it for approval in Board Meetings. Approval in Shareholders’ Meeting shall then be granted after the approval is received in Board Meetings.

If not approved by more than one-half of all members of the audit committee, it may be carried out with the consent of more than two-thirds of all board directors. The opinions of independent directors shall also be fully considered during the discussion. In the case of opposing or reserved opinions, the resolutions of the audit committee shall be stated in the minutes of the board of directors.

All members of the audit committee referred to above and all directors referred to in the preceding paragraph shall be counted on the basis of the actual incumbents.

3. Implementing department

When approval from aforementioned (assets or its right-of-use assets) directors in previous paragraph is confirmed and received,

While acquiring or disposing assets or its right-of-use assets by the Company, the application department or office of general affairs shall be in charge of implementation based on the responsibility of the division and also shall be proceeded after the aforementioned procedures are completed.

4.In acquiring or disposing of real property, equipment or its right-of-use asset, where the transaction amount reaches 20 percent of the company's paid-in capital or NT$300 million or more, the company, unless transacting with a domestic government authorities, engaging others to build on its own land, engaging others to build on rented land, or acquiring or disposing of

equipment for business use or its right-of-use asset, 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 necessary to give a limited 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 after-changes to the terms and conditions of the transaction, too.
(2)Where the transaction amount is NT$1 billion or more, appraisals from two or more professional appraisers shall be obtained.
(3)Where any one of the following circumstances applies with respect to the professional appraiser's appraisal results, unless all the appraisal results for the assets to be acquired are higher than the transaction amount, or all the appraisal results for the assets to be disposed of are lower than the transaction amount, a certified public accountant shall be engaged to perform the appraisal and render a specific opinion regarding the reason for the discrepancy and the appropriateness of the transaction price:
A.The discrepancy between the appraisal result and the transaction amount is 20 percent or more of the transaction amount.
B.The discrepancy between the appraisal results of two or more professional appraisers is 10 percent or more of the transaction amount.
(4)No more than 3 months may elapse between the date of the
appraisal report issued by a professional appraiser and the contract execution date; provided, where the publicly announced current value for the same period is used and not more than 6 months have elapsed, an opinion may still be issued by the original professional appraiser.

Article 8 Handling Procedure for Negotiable Securities (or Valuable Papers)

1.Procedure of evaluation and operation

When acquiring or disposing of long-term or short-term negotiable securities is required, the Company shall comply with the operation of investment based on internal control system regulations and provision of the Company for negotiable securities. Those with the total amount of NTD250 Million (inclusive) shall be approved by the Chairperson and submit to the Board Meeting for ratification.

2.Procedure for deciding transaction terms

A. While acquiring of disposing the negotiable securities that are offered in centralized securities exchange market, financial institutions, or OTC, the value should be deemed based on the current market price. The

approval shall be confirmed by the Chairperson of the board if the value of one single transaction is NT$300 million or under.

B. While acquiring of disposing the negotiable securities that are not offered in centralized securities exchange market, or OTC, a recent confirmation or evaluation of the financial report from certificated accountant shall be used as references for the value of securities. P/B ratio, profitability and potential shall be taken into consideration before transactions. Approval shall be confirmed from the Chairperson of the board if the value of one single transaction is NT$50 million or under. Recognition from the board of directors shall be also confirmed after submission from the Chairperson. While the value of one single transaction exceeds NT$50 million, the approval shall be issued by the board of directors.

C. While dealing with procedures for acquiring or disposing of negotiable securities and/or other regulations that needed to be approved by board of directors, the Company shall proceed as such and comply with the Article 17, item 2 and (2).

3.Implementing department

For the Company to perform investment of negotiable securities, the completion shall take the responsibility of the division into account and complete the aforementioned procedures before the implementation being carried out by the financial department.

Acquisition of professional opinions and reports

If the dollar amount of the transaction is 20 percent 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. This requirement does not apply, however, to publicly quoted prices of securities that have an active market, or where otherwise provided by regulations of the supervisory authority.

Article 9 Handling Procedure for acquires or disposal of memberships or intangible assets

1.Procedure of evaluation and operation

When acquiring or disposing of memberships or intangible assets is required, the Company shall follow the internal control system and operation of the Company for other assets or its right-of-use assets.

2.Procedure for deciding transaction terms

(1)The value of the memberships shall be evaluated based on fair market value while acquiring or disposing of memberships or intangible assets or its right-of-use assets is required. Approval shall be confirmed from the chairperson of the board if the value of one single transaction is NT$50 million or under. Recognition from the board of directors shall be confirmed after submission from the Chairperson. While the value of one single transaction exceeds NT$50 million, the

approval shall be issued by the board of directors.

(2)The value of the intangible assets or its right-of-use assets shall be evaluated based on the appraisal report from professional appraisers and fair market value. Approval shall be confirmed from the chairperson of the board if the value of one single transaction is NT$50 million or under. Recognition from the board of directors shall be confirmed after submission from the Chairperson. While the value of one single transaction exceeds NT$50 million, the approval shall be issued by the board of directors.

(3)while dealing with procedures for acquiring or disposing of memberships or intangible assets or its right-of-use assets that needed to be approved by board of directors, the Company shall proceed and comply with the Article 17, the item 2 and (1).

3. Implementing department

When approval for the aforementioned (including its right-of-use assets) is confirmed and received, the responsibility of the division shall be taken into account and the aforementioned procures shall be completed. Later the department of general affairs and the department which made such requests shall be in charge of implementation.

Acquisition of professional opinions and reports

Where the Company acquires or disposes of memberships or intangible assets or its right-of-use assets and the transaction amount reaches 20 percent or more of paid-in capital or NT$300 million or more, except in transactions with a domestic 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.

Article 10 The calculation of the transaction amount of the assets acquired and disposed of by the Company, the so-called within one year is based on the date of the occurrence of this fact, and is then traced back to the past. The appraisal report or the accountant's opinion issued by the professional appraiser who has obtained the appraisal report in accordance with the provisions of this procedure is exempted from the calculation

Article 11 For assets acquired or disposed from court auction, the valuation report or opinions from certified accountants shall be and can be replaced by the proof from the court.

Section 2 - Handling procedures for acquisition or disposal of assets from or to a related party

Article 12

Handling procedures for acquisition or disposal of assets from or to a related party
When the Company engages in any acquisition or disposal of assets from or to a related party, in addition to ensuring that the proceeding sections, when the transaction amount reaches 10 percent or more of the company's total assets, the company shall also obtain an appraisal report from a professional appraiser or a CPA's opinion in compliance with the provisions.
2.When the Company intends to acquire or dispose of real property or its right-of-use assets from or to a related party, or when it intends to acquire or dispose of assets other than real property or its right-of-use assets from or to a related party and the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or NT$300 million or more, except in trading of government bonds or bonds under repurchase and resale agreements, or subscription or redemption of domestic money market funds by domestic securities business, the company may not proceed to enter into a transaction contract signing or make a payment until the following matters have been approved by the Audit Committee and later reported to the Board of Directors:
A.The purpose, necessity and anticipated benefit of the acquisition or disposal of assets.
B.The reason for choosing the related party as a trading counterparty.
C.With respect to the acquisition of real property or right-of-use assets thereof from a related party, information regarding appraisal of the reasonableness of the preliminary transaction terms according to the Article 13 and 14.
D.The date and price at which the related party originally acquired the real property, the original trading counterparty, and that trading counterparty's relationship to the company and the related party.
E.Monthly cash flow forecasts for the year commencing from the anticipated month of signing of the contract, and evaluation of the necessity of the transaction, and reasonableness of the funds utilization.
F.An appraisal report from a professional appraiser or a CPA's opinion obtained in compliance with the preceding article.
G.Restrictive covenants and other important stipulations associated with the transaction.

The calculation of the transaction amounts referred to in the preceding paragraph shall be made in accordance with Article 18, item 1 - (8), items that have been approved by the board of directors need not be counted toward the transaction amount.

Article 13 The reasonableness of the transaction costs with a related party

1.The company that acquires real property or its right-of-use assets from a related

party shall evaluate the reasonableness of the transaction costs by the following means:

甲、 Based upon the related party's transaction price plus necessary interest on funding and the costs to be duly borne by the buyer. "Necessary interest on funding" is imputed as the weighted average interest rate on borrowing in the year the company purchases the property; provided, it may not be higher than the maximum non-financial industry lending rate announced by the Ministry of Finance.
乙、 Total loan value appraisal from a financial institution where the related party has previously created a mortgage on the property as security for a loan; provided, the actual cumulative amount loaned by the financial institution shall have been 70 percent or more of the financial institution's appraised loan value of the property and the period of the loan shall have been 1 year or more. However, this shall not apply where the financial institution is a related party of one of the trading counterparties.
2.Where land and structures thereupon are combined as a single property purchased or leased in one transaction, the transaction costs for the land and the structures may be separately appraised in accordance with either of the means listed in the preceding paragraph.
3.The Company that acquires real property or its right-of-use assets from a related party and appraises the cost of the real property or its right-of-use assets in accordance with paragraph (1) and paragraph (2) shall also engage a CPA to check the appraisal and render a specific opinion.
4.Where a public company acquires real property from a related party and one of the following circumstances exists, the acquisition shall be conducted in accordance with paragraph (1) and (2). The preceding three paragraphs do not apply:
- (1)The related party acquired the real property or its right-of-use assets through inheritance or as a gift.
- (2)More than 5 years will have elapsed from the time the related party signed the contract to obtain the real property or its right-of-use assets to the signing date for the current transaction.
- (3)The real property is acquired through signing of a joint development contract with the related party, or through engaging a related party to build real property, either on the company's own land or on rented land.
- (4)The real property right-of-use assets for business use are acquired by the company with its parent or subsidiaries, or by its subsidiaries in which it directly or indirectly holds 100 percent of the issued shares or authorized capital.

Article 14

When the results of the Company’s appraisal conducted in accordance with paragraph (1) and (2) of the preceding Article are uniformly lower than the transaction price, the matter shall be handled in compliance with the

Article 15. However, where the following circumstances exist, objective evidence has been submitted and specific opinions on reasonableness have been obtained from a professional real property appraiser and a CPA has been obtained, this restriction shall not apply:

1.In the circumstance of the related party acquiring the undeveloped land or rental area for re-building, evidence shall be proposed to apply one of the following:
(1)Where undeveloped land is appraised in accordance with the means in the preceding Article, and structures according to the related party's construction cost plus reasonable construction profit are valued in excess of the actual transaction price. The "Reasonable construction profit" shall be deemed the average gross operating profit margin of the related party's construction division over the most recent 3 years or the gross profit margin for the construction industry for the most recent period as announced by the Ministry of Finance, whichever is lower.
(2)Completed transactions by unrelated parties within the preceding year involving other floors of the same property or neighboring or closely valued parcels of land, where the land area and transaction terms (including buying, selling or renting) are similar after calculation of reasonable price discrepancies in floor or area land prices in accordance with standard property market practices.
2.The public listed company shall prove that the completed leasing transactions by unrelated parties for other floors of the same property from within the preceding year, where the land area and transaction terms are similar after calculation of reasonable price discrepancies among floors in accordance with standard property leasing market practices.

The aforementioned transaction cases in adjacent areas shall be based on the same or adjacent street profile and the distance from the transaction object is less than 500 meters in vicinity or, the current value of the announcement is similar. As for the similarity of the area/ land size, it means no less than 50 percent of the area/land size is as the principle; the term within one year is based on the date of the acquisition of the real estate or the right-to-use asset, and is retrospectively calculated one year ahead.

Article 15

Where the Company acquires real property from a related party and the results of appraisals conducted in accordance with the preceding 2 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 Act against the difference between the real property or its 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. Where a public company uses the equity method to account for its investment in another company, then the special reserve called for under Article 41, paragraph of the Act shall be set aside pro rata in a proportion consistent with the share of the Company's equity stake in the other company.

The Company has established the Audit Committee in accordance with the law. The Independent directors of the audit committee shall comply with Article 218 of the Company Act.
3.Actions taken pursuant to subparagraph 1 and 2 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 that has 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 purchased or leased at a premium, or they have been disposed of, or the leasing contract has been terminated or adequate compensation has been made, or the status quo ante has been restored, or there is other evidence confirming that there was nothing unreasonable about the transaction, and the supervisory authority has given its consent.

When the Company obtains real property or its right-of-use assets from 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.

Section 3 Handling Procedures for Financial Derivatives.

Article 16 The handling procedures for financial derivatives.

The procedures for transactions of financial derivatives shall be attentive to major risk management and the control over auditing items. All procedures have to be included in the handling procedures of financial derivatives.

1.Principles

(1) Type of Transactions

The procedures are for transactions of acquisition or disposal of financial derivatives, including FORWARD, OPTION, SWAP and the contracts for the combination of the above.

(2) Business Management and Strategies for Risk-Aversion

The Company shall deem “Risk Aversion” as the purpose for trading financial derivatives. Choosing financial derivatives shall always meet the needs for risk aversion for the Company management. For banking service, the company shall choose the ones with business relationship to avoid risk in credits.

(3) Responsibilities

a.Financial Departments

a.The settlement of derivatives trading

b.Planning the strategies, collecting market information, and practicing the management strategies to offer the most instant information for management to deliberate.

b.Accounting Departments
i.Confirmation of derivatives trading

ii.Handling of Accounting and checks

c.Cashier Section

Cash delivery of derivatives trading

d.Level of Authority for Financial Derivatives

i.On hedge trades required by business

Approval shall be confirmed and received from the chairperson of the board for the contracts that reach US$40 million as the total amount. The same approval is required from the board of directors if the amount is more than US$40 million.

ii.While dealing with derivatives, the procedures and/or other regulations have to be approved by the board of directors. The Company shall also take the opinions from other independent directors into consideration for deliberation. When the independent directors propose other opinions for objections or reservations, the information shall be recorded in the board meeting minutes.

iii. While dealing with important or critical matters on derivatives, approval shall be granted by the Audit Committee and shall be reported to Board of Directors’ Meeting.

(4)Evaluation for Performance

The financial department shall evaluate the performance and the results of practicing based on the market price per month. A review report on strategies for risk aversion shall be presented for evaluation of net profit or loss.

(5)Decisions on the total amount of derivatives contracts that may be traded, and the maximum loss limit on total trading and for individual contracts.
a.the total amount of derivatives contracts that may be traded

a.Trading on hedge contracts

The financial department shall fully control the strategies to avoid risk on trading. The amount of trading value of hedge trades shall not exceed 50% of the company’s foreign currency holding.

b.Trading on regular financial transactions

The responsible individual shall be assigned and has to be approved by the chairperson. The amount of trading shall not exceed US$5 million dollars. For amount that exceeds, it shall be approved by the board of directors.

b.the maximum loss limit on total trading and for individual contracts
i.Trading on hedge contracts

This shall be practiced based on the Company’s need. The settlement of the stop-loss limit shall not exceed 15% of the total amount of transaction. This shall apply to the individual contracts and the contracts with the total amount.

ii.Trading on regular financial transactions

The limit of loss shall not exceed US$50,000 for one individual contract. The total loss limit of all the contracts shall not exceed US$200,000.

2.Risk Management

(1)Risk Management in Credit

The company shall choose large-scaled business or cooperation with better credits for trading, and has to be able to provide professional advice for consultation.

(2)Risk Management in Market

Risk-aversion shall be the purpose of trading

(3)Risk Management in Liquidity

Trades with higher possibility in liquidity shall be firstly considered to ensure the market liquidity. The assigned financial banking service provider shall be able to trade to suit different needs from different markets.

(4)Risk Management in Cash Flow

Cash flow shall be always under control to ensure successful cash delivery.

(5)Risk Management in Operating
A. The authorized amount shall always be the same as requested by the Company. The procedures of handling shall be also included in internal auditing to ensure risk aversion in management.
B.The individual of the Company for trading financial derivatives, proceeding confirmation and delivering the cash shall be different individuals.
C.The individuals of the Company for risk evaluation, supervision and settlement shall be from different departments and report back to the board of directors or to senior management who are not involved in decision-making in trading process.
D.For the details, performance and amount of holding for derivatives shall be evaluated at least once a week. For derivatives needed for risk aversion in business shall be evaluated at least twice a month. The report of evaluation shall be submitted to senior management who has been assigned by the board of directors.
(6)Risk Management in Law

For the contacts on financial derivatives proceeded with trading organizations shall be evaluated by legal department before signing to avoid any risk or misunderstanding in legal elaboration.

3.Internal Auditing

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 and the independent directors of the board shall be notified in writing.

4.Periodic Evaluation

(1)The board of directors shall authorize the management to periodically evaluate

whether derivatives trading performance is consistent with established operational strategy and whether the risk undertaken is within the company's permitted scope of tolerance. When there violation or unexpected issues happen, the management shall report to the board of directors and take certain actions to avoid unexpected issues.

(2)For the details, performance and amount of holding for derivatives shall be evaluated at least once a month. For derivatives needed for risk aversion in business shall be evaluated at least twice a month. The report of evaluation shall be submitted to senior management who has been assigned by the board of directors.
5.Supervision and Management for Derivatives by the board of Directors
(1)The board of directors shall authorize the senior management to the risk undertaken for trading and supervision over the control and settlement. The authorized senior management or personnel shall follow the following principle for trading the financial derivatives:
A.The periodic evaluation for the risk management system shall be always followed with The Principal and the handling procedures for trading derivatives.
B. Where there is violation or the unexpected issue occurring, proper certain actions shall be taken to respond the issue. The board of directors shall also receive the report. The presence of whom and the opinions for action to take shall be required in the board of meeting.
(2) The board of directors shall periodically evaluate whether derivatives trading performance is consistent with established operational strategy and whether the risk undertaken is within the company's permitted scope of tolerance.
(3) The designated and authorized personnel for derivatives trading shall follow the handling procedures of derivatives trading and report to the most recent board of meeting.
(4) The details of derivatives in types, amount of money, and approval date from board of directors shall be recorded into proper record for later examination. The procedures and information provided and recorded shall be in compliance with the evaluation items and criteria from this principle.

Section 4 Mergers and Consolidations, Splits, Acquisitions, and Assignment of Shares

Article 17

1.Evaluation and Procedures

(1)The Company that conducts a merger, demerger, acquisition, or transfer of shares, prior to convening the board of directors to resolve on the matter, shall engage a CPA, 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. For mergers with the subsidiaries which the Company holds, directly or indirectly, 100% of total capitals, shares or issued shares, acquisition of experts’ opinions or reasons shall not need to be obtained.

(2)The Company participating in a merger, demerger, acquisition, or transfer of shares shall prepare a public report to shareholders detailing important contractual content and matters relevant to the merger, demerger, or acquisition prior to the shareholders meeting and include it along with the expert opinion referred to in paragraph 1 of the preceding Article when sending shareholders notification of the shareholders meeting for reference in deciding whether to approve the merger, demerger, or acquisition. Provided, where a provision of another act exempts a company from convening a shareholder’s 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 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.

2. Other Matters that shall apply:

(1)The company participating in a merger, demerger, or acquisition shall convene a board of directors meeting and shareholders meeting on the day of the transaction to resolve matters relevant to the merger, demerger, or acquisition, unless another act provides otherwise or the FSC is notified in advance of extraordinary circumstances and grants consent. The company participating in a transfer of shares shall call a board of directors meeting on the day of the transaction, unless another act provides otherwise or the FSC is notified in advance of extraordinary circumstances and grants consent.
(2)Every person participating in or privy to the plan for merger, demerger, acquisition, or transfer of shares shall issue a written undertaking of confidentiality and may not disclose the content of the plan prior to public disclosure of the information and may not trade, in their own name or under the name of another person, in any stock or other equity security of any company related to the plan for merger, demerger, acquisition, or transfer of shares.
(3)The Company participating in a merger, demerger, acquisition, or transfer of shares may not arbitrarily alter the share exchange ratio or acquisition price unless under the below-listed circumstances, and shall stipulate the circumstances permitting alteration in the contract for the merger, demerger, acquisition, or transfer of shares:
a.Cash capital increase, issuance of convertible corporate bonds, or the

issuance of bonus shares, issuance of corporate bonds with warrants, preferred shares with warrants, stock warrants, or other equity based securities.

b.An action, such as a disposal of major assets that affects the company's financial operations.
c.An event, such as a major disaster or major change in technology that affects shareholder equity or share price.
d.An adjustment where any of the companies participating in the merger, demerger, acquisition, or transfer of shares from another company, buys back treasury stock.

e.An increase or decrease in the number of entities or companies participating in the merger, demerger, acquisition, or transfer of shares.

f.Other terms/conditions that the contract stipulates may be altered and that have been publicly disclosed.

The contract for participation by the Company in a merger, demerger, acquisition, or transfer of shares shall also record the rights and obligation of a merger, demerger, acquisition, or transfer of shares and the following:

a.Breach of contract shall be handled according to the contract
b.Principles for the handling of equity-type securities previously issued or treasury stock previously bought back by any company that is extinguished in a merger or that is demerged.
c.The amount of treasury stock 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.
d.The manner of handling changes in the number of participating entities or companies.
e.Preliminary progress schedule for plan execution, and anticipated completion date.

f.Scheduled date for convening the legally mandated shareholders meeting if the plan exceeds the deadline without completion, and relevant procedures.

(4)After public disclosure of the information, if any company participating in the merger, demerger, acquisition, or share transfer intends further to carry out a merger, demerger, acquisition, or share transfer with another company, all of the participating companies shall carry out anew the procedures or legal actions that had originally been completed toward the merger, demerger, acquisition, or share transfer; except that where the number of participating companies is decreased and a participating company's shareholders meeting has adopted a resolution authorizing the board of directors to alter the limits of authority, such participating company may be exempted from calling another shareholders meeting to resolve on the matter anew.

(5)Where any of the companies participating in a merger, demerger, acquisition,

or transfer of shares is not a public company, the Company shall sign an agreement with the non-public company whereby the latter is required to abide by the provisions of paragraph of this Article.

(6)When participating in a merger, demerger, acquisition, or transfer of another company's shares, the Company shall prepare a full written record of the following information and retain it for 5 years for reference, this shall includes,
a.Basic identification data for personnel: Including the occupational titles, names, and national ID numbers (or passport numbers in the case of foreign nationals) of all persons involved in the planning or implementation of any merger, demerger, acquisition, or transfer of another company's shares prior to disclosure of the information.
b.Dates of material events: Including the signing of any letter of intent or memorandum of understanding, the hiring of a financial or legal advisor, the execution of a contract, and the convening of a board of directors meeting.
c.Important documents and minutes: Including merger, demerger, acquisition, and share transfer plans, any letter of intent or memorandum of understanding, material contracts, and minutes of board of directors meetings.
(7)When participating in a merger, demerger, acquisition, or transfer of another company's shares, the Company shall, within 2 days commencing immediately from the date of passage of a resolution by the board of directors, report (in the prescribed format and via the Internet-based information system) the information set out to the supervisory authority for recordation.
(8) Where any of the companies participating in a merger, demerger, acquisition, or transfer of another company's shares is neither listed on an exchange nor has its shares traded on an OTC market, the Company so listed or traded shall sign an agreement with such company whereby the latter is required to abide by the provisions of paragraphs in this Article.

Chapter 3 Openness of Information

Article 18

If there are any of the following circumstances when the Company acquires or disposes of assets, the Company shall announce the relevant information on the website designated by the authority within two days from the date of the occurrence of the fact in the prescribed format.

Standard for public declaration and the declaration items

(1)Acquisition or disposal of real property or its right-of-use assets from or to a related party, or acquisition or disposal of assets other than real property or its right-of-use assets from or to a related party where the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or NT$300 million or more; provided, this shall not apply to trading of domestic bonds or bonds under repurchase and resale agreements, or subscription or redemption of domestic money market funds.

(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/machinery or its right-of-use assets for business use, the trading counterparty is not a related party, and the transaction amount is more than NT$500 million.

(5)Acquisition or disposal by the company in the construction business of real property or its right-of-use assets for construction use, where the trading counterparty is not a related party, and the transaction amount is more than NT$500 million.

(6)Where land is acquired under an arrangement on engaging others to build on the Company's own land, engaging others to build on rented land, joint construction and allocation of housing units, joint construction and allocation of ownership percentages, or joint construction and separate sale, and furthermore the transaction counterparty is not a related party, and the amount the Company expects to invest in the transaction is more than NT$500 million.

(7)Where an asset transaction other than any of those referred to in the above 6 paragraphs, a disposal of receivables by a financial institution, or an investment in the mainland China area reaches 20 percent or more of paid-in capital or NT$300 million; provided, this shall not apply to the following circumstances:

A.Trading of domestic bonds or , domestic government bonds or foreign

government bonds with a credit rating not lower than Taiwan's sovereign rating

B.Where done by professional investors—securities trading on securities exchanges or OTC markets, or subscription of foreign bonds or ordinary corporate bonds or general bank debentures without equity characteristics (excluding subordinated debt) that are offered and issued in the primary market, or subscription or redemption of securities investment trust funds or futures trust funds, purchase/sale of Exchange-Traded Note, or subscription by a securities firm of securities as necessitated by its undertaking business or as an advisory recommending securities firm for an emerging stock company, in accordance with the rules of the Taipei Exchange.
C.Trading of bonds under repurchase/resale agreements, or subscription or redemption of domestic money market funds issued by domestic securities investment trust enterprises

(8)The transaction amount shall be counted as follows.

A.The amount of any individual transaction.
B.The cumulative transaction amount of acquisitions and disposals of the same type of underlying asset with the same transaction counterparty within the preceding year.
C.The cumulative transaction amount of acquisitions and disposals (cumulative acquisitions and disposals, respectively) of real property or right-of-use assets thereof within the same development project within the preceding year.
D.The cumulative transaction amount of acquisitions and disposals (cumulative acquisitions and disposals, respectively) of the same security within the preceding year.

“Within the preceding year” as used in the preceding paragraph refers to the year preceding the date of occurrence of the current transaction. Items duly announced in accordance with these Procedures need not be counted toward the transaction amount.

The procedures of public announcement

(1)The Company shall compile monthly reports on the status of derivatives trading engaged in up to the end of the preceding month by itself and any subsidiaries that are not domestic public companies and enter the information in the prescribed format into the information reporting website designated by the Authorities by the 10th day of each month.

(2)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 2 days commencing immediately from the date of occurrence of the event.

(3)The Company acquiring or disposing of assets shall keep all relevant contracts, meeting minutes, log books, appraisal reports and CPA, attorney, and securities underwriter opinions at company headquarters, where they shall be retained for 5 years except where another act provides otherwise.

(4)Where any of the following circumstances occurs with respect to a transaction that a public company has already publicly announced and reported in accordance with the preceding article, a public report of relevant information shall be made on the information reporting website designated by the Authorities within 2 days commencing immediately from the date of occurrence of the event:

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

Article 19 The Procedures below shall be followed by the Company and the subsidiaries of the Company.

A.The Subsidiaries of the Parent company are not listed public company and the acquisition or disposal of assets is subject to announcement and declaration, the company shall do so.
B.Announcement for subsidiaries reporting standards on the amount of paid-in capital or total assets, the amount of paid-in capital or total assets of the Company shall prevail.

Chapter 4 Supplementary Provisions

Article 20 Should any violation rises from employees being responsible for such procedures on acquiring or disposal of assets, the Employees Code shall be adopted for penalties in accordance with the seriousness of the violation.
Article 21 Regarding the requirement of 10% of total assets, the most recent individual or individual financial statements stipulated in the financial reporting standards of securities issuers shall be used.
Article 22 When any matter arises on which the aforementioned rules and regulations are silent, the procedures shall follow the related regulations and the laws.
Article 23 This Handling Procedures are formulated on March 11, 2022 and shall take effect after the approval is settled in Shareholder’s Meeting.

Appendix 1

7.Appendices

I.Operational Procedures for the Acquisition or Disposal of Assets (BEFORE Revision)

Article 1 For the purpose of protecting investors and implementing disclosure of information, the Company shall handle the acquisition or disposal of assets in compliance with these Regulations.

Article 2 These Regulations are adopted in accordance with the provisions of Article 36-1 of the Securities and Exchange Act ("the Act") and Regulations Governing the Acquisition and Disposal of Assets by Public Companies from Financial Supervisory Commission.

Article 3 The term "assets" as used in these Regulations includes the following:

1.Investments in stocks, government bonds, corporate bonds, financial bonds, securities representing interest in a fund, depositary receipts, call (put) warrants, beneficial interest securities, and asset-backed securities.
2.Real property (including land, houses and buildings, investment property , and construction enterprise inventory) and equipment.
3.Memberships.
4.Patents, copyrights, trademarks, franchise rights, and other intangible assets.
5.Right-of-use Asset
6.Claims of financial institutions (including receivables, bills purchased and discounted, loans, and overdue receivables).
7.Derivatives.
8.Assets acquired or disposed of in connection with mergers, demergers, acquisitions, or transfer of shares in accordance with law.
9.Other major assets.

Article 4 Terms used in these Regulations are defined as follows:

1.Derivatives: Forward contracts, options contracts, futures contracts, leverage contracts, or swap contracts, whose value is derived from a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable; or hybrid contracts combining the above contracts; or hybrid contracts or structured products containing embedded derivatives.
The term "forward contracts" does not include insurance contracts, performance contracts, after-sales service contracts, long-term leasing contracts, or long-term purchase (sales) agreements.
2.Assets acquired or disposed through mergers, demergers, acquisitions, or transfer of shares in accordance with law: Refers to assets acquired or disposed through mergers, demergers, or acquisitions conducted under the Business Mergers and Acquisitions Act, Financial Holding Company Act, Financial Institution Merger Act and other acts, or to transfer of shares from another company through issuance of new shares of its own as the consideration therefore (hereinafter "transfer of shares") under Article 156-3 of the Company Act.
3.Related party or subsidiary: As defined in the Regulations Governing the Preparation of Financial Reports by Securities Issuers.
4.Professional appraiser: Refers to a real property appraiser or other person duly authorized by law to engage in the value appraisal of real property or equipment.
5.Date of occurrence: Refers to the date of contract signing, date of payment, date of consignment trade, date of transfer, dates of boards of directors resolutions, or other date that can confirm the counterpart and monetary amount of the transaction, whichever date is earlier; provided, for investment for which approval of the competent authority is required, the earlier of the above date or the date of receipt of approval by the competent authority shall apply.
6.Mainland China area investment: Refers to investments in the mainland China area approved by the Ministry of Economic Affairs Investment Commission or conducted in accordance with the provisions of the Regulations Governing Permission for Investment or Technical Cooperation in the Mainland Area.
7.Investment professional: Refers to financial holding companies, banks, insurance companies, bill finance companies, trust enterprises, securities firms operating proprietary trading or underwriting business, futures commission

merchants operating proprietary trading business, securities investment trust enterprises, securities investment consulting enterprises, and fund management companies, that are lawfully incorporated and are regulated by the competent financial authorities of the jurisdiction where they are located.

8.Securities exchange: "Domestic securities exchange" refers to the Taiwan Stock Exchange Corporation; "foreign securities exchange" refers to any organized securities exchange market that is regulated by the competent securities authorities of the jurisdiction where it is located.
9.Over-the-counter venue ("OTC venue", "OTC"): "Domestic OTC venue" refers to a venue for OTC trading provided by a securities firm in accordance with the Regulations Governing Securities Trading on the Taipei Exchange; "foreign OTC venue" refers to a venue at a financial institution that is regulated by the foreign competent authority and that is permitted to conduct securities business.

Article 5 Professional appraisers and their officers, certified public accounts, attorneys, and securities underwriters that provide public companies with appraisal reports, certified public accountants’ opinions, attorney's opinions, or underwriter's opinions shall meet the following requirements:

May not have previously received a final and unappealable sentence to imprisonment for 1 year or longer for a violation of the Act, the Company Act, the Banking Act of The Republic of China, the Insurance Act, the Financial Holding Company Act, or the Business Entity Accounting Act, or for fraud, breach of trust, embezzlement, forgery of documents, or occupational crime. However, this provision does not apply if 3 years have already passed since completion of service of the sentence, since expiration of the period of a suspended sentence, or since a pardon was received.
May not be a related party or de facto related party of any party to the transaction.
If the company is required to obtain appraisal reports from two or more professional appraisers, the different professional appraisers or appraisal officers may not be related parties or de facto related parties of each other.

When issuing an appraisal report or opinion, the personnel referred to in the preceding paragraph shall comply with the following:

Prior to accepting a case, they shall prudently assess their own professional capabilities, practical experience, and independence.
When examining a case, they shall appropriately plan and execute adequate working procedures, in order to produce a conclusion and use the conclusion as the basis for issuing the report or opinion. The related working procedures, data collected, and conclusion shall be fully and accurately specified in the case working papers.
They shall undertake an item-by-item evaluation of the comprehensiveness, accuracy, and reasonableness of the sources of data used, the parameters, and the information, as the basis for issuance of the appraisal report or the opinion.
They shall issue a statement attesting to the professional competence and independence of the personnel who prepared the report or opinion, and that they have evaluated and found that the information used is reasonable and accurate, and that they have complied with applicable laws and regulations.

Article 6 The limit of non-business real estate, its right-of-use asset, and securities that are invested by the Company and its subsidiaries

The investment for non-business-use real estate shall be no more than 20% book value of the Company and its subsidiaries.
The limit of the total investment of securities by the Company and its subsidiary shall be no more than 60% book value of the Company. The limit amount of one individual security shall be no more than 30% book value of the Company.
When the amount of investment for non-business real estate and securities that are invested by the subsidiaries is more than NT5 million dollars, confirmation and decision shall be made by the board of Directors.
For the subsidiaries which see reinvestment as the main business, the limit of total value for the acquired securities and the limit amount of on individual security shall not be more than 400% of its own paid-in capital.
For the subsidiaries which do not see reinvestment as the main business, the limit of total value for the acquired

securities shall not be more than 300% of the net value of its own.

Article 7 Handling Procedure for Acquiring or Disposing of Assets

1.Procedure of evaluation and operation

When acquiring or disposing of assets or its right-of-use assets is required, the Company shall compile the budget for capital expenditure in advance. Procedures for compiling, evaluating, implementing and controlling shall follow the regulations and provision of the Company for fixed assets.

2.Procedure for deciding transaction terms
A. Report from professional appraisers for acquiring or disposing of assets shall be used for further deliberation after enquiring, comparing or negotiating. Approval is needed from board of directors when the value for non-business fixed assets or its right-of-use assets is more than NTD 50 million.
B. while dealing with procedures for acquiring or disposing assets or its right-of-use assets and other regulations that needed to be approved by board of directors. The Company shall also take the opinions from other independent directors into consideration for deliberation. When the independent directors propose other opinions for objections or reservations, the information shall be recorded in the board meeting minutes.

3. Implementing department

When approval from aforementioned (assets or its right-of-use assets) directors in previous paragraph is confirmed and received, the application department or office of general affairs shall be in charge of implementation.

4.In acquiring or disposing of real property, equipment or its right-of-use asset, where the transaction amount reaches 20 percent of the company's paid-in capital or NT$300 million or more, the company, unless transacting with a government authorities, engaging others to build on its own land, engaging others to build on rented land, or acquiring or disposing of equipment for business use or its right-of-use asset, 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:
A.Where due to special circumstances it is necessary to give a limited 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 after-changes to the terms and conditions of the transaction, too.
B.Where the transaction amount is NT$1 billion or more, appraisals from two or more professional appraisers shall be obtained.
C.Where any one of the following circumstances applies with respect to the professional appraiser's appraisal results, unless all the appraisal results for the assets to be acquired are higher than the transaction amount, or all the appraisal results for the assets to be disposed of are lower than the transaction amount, a certified public accountant shall be engaged to perform the appraisal in accordance with the provisions of Statement of Auditing Standards No. 20 published by the ROC Accounting Research and Development Foundation (ARDF) and render a specific opinion regarding the reason for the discrepancy and the appropriateness of the transaction price:
- a. The discrepancy between the appraisal result and the transaction amount is 20 percent or more of the transaction amount.
- b. The discrepancy between the appraisal results of two or more professional appraisers is 10 percent or more of the transaction amount.
D.No more than 3 months may elapse between the date of the appraisal report issued by a professional appraiser and the contract execution date; provided, where the publicly announced current value for the same period is used and not more than 6 months have elapsed, an opinion may still be issued by the original professional appraiser.
E.For real property or equipment attained from court auction, the appraisal report shall be and can be replaced by the proof from the court.

Article 8 Handling Procedure for Negotiable Securities (or Valuable Papers)

1.Procedure of evaluation and operation

When acquiring or disposing of long-term or short-term negotiable securities is required, the Company shall follow the regulations and provision of the Company for negotiable securities.

2.Procedure for deciding transaction terms
A. The value of the securities is based on the offers from "centralized securities exchange market” while acquiring or disposing of negotiable securities is required

B. A recent confirmation or evaluation of the financial report from certificated accountant shall be used as references for the value of securities. P/B ratio, profitability and potential shall be taken into consideration before transactions. Approval shall be confirmed from the Chairperson of the board if the value of one single transaction is NT$50 million or under. Recognition from the board of directors shall be also confirmed after submission from the Chairperson. While the value of one single transaction exceeds NT$50 million, the approval shall be issued by the board of directors.

C. while dealing with procedures for acquiring or disposing of negotiable securities and/or other regulations that needed to be approved by board of directors, the Company shall also take the opinions from other independent directors into consideration for deliberation. When the independent directors propose other opinions for objections or reservations, the information shall be recorded in the board meeting minutes.

3.Implementing department

When approval is confirmed and received, the financial department shall be in charge of implementation.

Acquisition of professional opinions and reports
A. 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 percent 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. This requirement does not apply, however, to publicly quoted prices of securities that have an active market, or where otherwise provided by regulations of the Financial Supervisory Commission (FSC)
- a. acquiring or disposing of securities from a non-Stock Exchange authorities
- b. acquiring or disposing of securities from private securities

B. For securities acquired from court auction, the valuation report or opinions from certified accountants shall be and can be replaced by the proof from the court.

Article 8-1

For important and critical matters in Acquisition or Disposal of Assets, these shall be approved by the Audit Committee and shall be reported to Board of Directors for further approval.

Article 9 Handling Procedure for acquires or disposal of memberships or intangible assets

5.Procedure of evaluation and operation

When acquiring or disposing of memberships or intangible assets is required, the Company shall follow the regulations and provision of the Company for other assets or its right-of-use assets.

6.Procedure for deciding transaction terms

A. The value of the memberships shall be evaluated based on fair market value while acquiring or disposing of memberships or intangible assets or its right-of-use assets is required. Approval shall be confirmed from the chairperson of the board if the value of one single transaction is NT$50 million or under. Recognition from the board of directors shall be confirmed after submission from the Chairperson. While the value of one single transaction exceeds NT$50 million, the approval shall be issued by the board of directors.

B. The value of the intangible assets or its right-of-use assets shall be evaluated based on the appraisal report from professional appraisers and fair market value. Approval shall be confirmed from the chairperson of the board if the value of one single transaction is NT$50 million or under. Recognition from the board of directors shall be confirmed after submission from the Chairperson. While the value of one single transaction exceeds NT$50 million, the approval shall be issued by the board of directors.

C. while dealing with procedures for acquiring or disposing of memberships or intangible assets or its right-of-use assets that needed to be approved by board of directors, the Company shall also take the opinions from other independent directors into consideration for deliberation. When the independent directors propose other opinions for objections or reservations, the information shall be recorded in the board meeting minutes.

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 percent of the company's paid-in capital or NT$300 million or more, the company shall additionally engage a public accountant prior to the date of occurrence of the event to provide an opinion regarding the reasonableness of the transaction price. This requirement does not apply, however, to publicly quoted prices of securities that have an active market, or where otherwise provided by regulations of the Financial Supervisory Commission (FSC)

7. Implementing department

When approval for the aforementioned (includeing its right-of-use assets) is confirmed and received, the department of general affairs and the department which made such requests shall be in charge of implementation.

Acquisition of professional opinions and reports
A. Where the Company acquires or disposes of memberships and the transaction amount reaches $5,000,000, the appraisal report issued by a professional appraiser shall be presented.

B. Where the Company acquires or disposes of intangible assets or its right-of-use assets and the transaction amount reaches $50,000,000, the appraisal report issued by a professional appraiser shall be presented.

C. Where the Company acquires or disposes of memberships or intangible assets or its right-of-use assets and the transaction amount reaches 20 percent 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 CPA shall comply with the provisions of Statement of Auditing Standards No. 20 published by the ARDF.

Article 10 Handling procedure for acquires or disposal of receivables by a financial institution

The Company shall not proceed with acquires or disposals of receivables by a financial institution in principal, should the needs and requests are received, the procedures and evaluation reports shall be submitted to the board of directors.

Article 11 Handling procedures for acquisition or disposal of assets from or to a related party

When the company engages in any acquisition or disposal of assets from or to a related party, in addition to ensuring that the proceeding sections, and with Article 7, are adopted and the reasonableness of the transaction terms is appraised. When the transaction amount reaches 10 percent or more of the company's total assets, the company shall also obtain an appraisal report from a professional appraiser or a CPA's opinion in compliance with the provisions.
2.When a public company intends to acquire or dispose of real property or its right-of-use assets from or to a related party, or when it intends to acquire or dispose of assets other than real property or its right-of-use assets from or to a related party and the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or NT$300 million or more, except in trading of government bonds or bonds under repurchase and resale agreements, or subscription or redemption of domestic money market funds by domestic securities business, the company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by the Audit Committee and later reported to the Board of Directors:
A.The purpose, necessity and anticipated benefit of the acquisition or disposal of assets.
B.The reason for choosing the related party as a trading counterparty.
C.With respect to the acquisition of real property or right-of-use assets thereof from a related party, information regarding appraisal of the reasonableness of the preliminary transaction terms.
D.The date and price at which the related party originally acquired the real property, the original trading counterparty, and that trading counterparty's relationship to the company and the related party.
E.Monthly cash flow forecasts for the year commencing from the anticipated month of signing of the contract,

and evaluation of the necessity of the transaction, and reasonableness of the funds utilization.

F.An appraisal report from a professional appraiser or a CPA's opinion obtained in compliance with the preceding article.
G.Restrictive covenants and other important stipulations associated with the transaction.

The calculation of the transaction amounts referred to in the preceding paragraph shall be made in accordance with Article 14-5, 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 need not be counted toward the transaction amount.

3. The reasonableness of the transaction costs

The company that acquires real property or its right-of-use assets from a related party shall evaluate the reasonableness of the transaction costs by the following means:

A. Based upon the related party's transaction price plus necessary interest on funding and the costs to be duly borne by the buyer. "Necessary interest on funding" is imputed as the weighted average interest rate on borrowing in the year the company purchases the property; provided, it may not be higher than the maximum non-financial industry lending rate announced by the Ministry of Finance.

B. Total loan value appraisal from a financial institution where the related party has previously created a mortgage on the property as security for a loan; provided, the actual cumulative amount loaned by the financial institution shall have been 70 percent or more of the financial institution's appraised loan value of the property and the period of the loan shall have been 1 year or more. However, this shall not apply where the financial institution is a related party of one of the trading counterparties.

C. Where land and structures thereupon are combined as a single property purchased or leased in one transaction, the transaction costs for the land and the structures may be separately appraised in accordance with either of the means listed in the preceding paragraph.

D. The Company that acquires real property or its right-of-use assets from a related party and appraises the cost of the real property or its right-of-use assets in accordance with paragraph 1 and paragraph 2 shall also engage a CPA to check the appraisal and render a specific opinion.

E. Where a public company acquires real property from a related party and one of the following circumstances exists, the acquisition shall be conducted in accordance with paragraph 1 and 2. The preceding three paragraphs do not apply:

a.The related party acquired the real property or its right-of-use assets through inheritance or as a gift.

b.More than 5 years will have elapsed from the time the related party signed the contract to obtain the real property or its right-of-use assets to the signing date for the current transaction.
c.The real property is acquired through signing of a joint development contract with the related party, or through engaging a related party to build real property, either on the company's own land or on rented land.
d.The real property right-of-use assets for business use are acquired by the company with its parent or subsidiaries, or by its subsidiaries in which it directly or indirectly holds 100 percent of the issued shares or authorized capital.

F. When the results of the Company’s appraisal conducted in accordance with paragraph 1 (A) and paragraph 2 (B) of the preceding Article are uniformly lower than the transaction price, the matter shall be handled in compliance with paragraph (G). However, where the following circumstances exist, objective evidence has been submitted and specific opinions on reasonableness have been obtained from a professional real property appraiser and a CPA has been obtained, this restriction shall not apply:

a.Where undeveloped land is appraised in accordance with the means in the preceding Article, and structures according to the related party's construction cost plus reasonable construction profit are valued in excess of the actual transaction price. The "Reasonable construction profit" shall be deemed the average gross operating profit margin of the related party's construction division over the most recent 3 years or the gross profit margin for the construction industry for the most recent period as

announced by the Ministry of Finance, whichever is lower.

b.Completed transactions by unrelated parties within the preceding year involving other floors of the same property or neighboring or closely valued parcels of land, where the land area and transaction terms (including buying, selling or renting) are similar after calculation of reasonable price discrepancies in floor or area land prices in accordance with standard property market practices.
c.Completed leasing transactions by unrelated parties for other floors of the same property from within the preceding year, where the transaction terms are similar after calculation of reasonable price discrepancies among floors in accordance with standard property leasing market practices.

G. Where a public company acquires real property from a related party and the results of appraisals conducted in accordance with the (3)A and (3)B are uniformly lower than the transaction price, the following steps shall be taken:

a.A special reserve shall be set aside in accordance with Article 41, paragraph 1 of the Act against the difference between the real property transaction price and the appraised cost, and may not be distributed or used for capital increase or issuance of bonus shares. Where a public company uses the equity method to account for its investment in another company, then the special reserve called for under Article 41, paragraph of the Act shall be set aside pro rata in a proportion consistent with the share of the Company's equity stake in the other company.
b. The Company has established the Audit Committee in accordance with the law. The Independent directors of the audit committee shall comply with Article 218 of the Company Act.
c.Actions taken pursuant to subparagraph 1 and subparagraph 2 shall be reported to a shareholders meeting, and the details of the transaction shall be disclosed in the annual report and any investment prospectus.

d.When the Company obtains real property or its right-of-use assets from 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.

Article 11-1

For the calculation of 10 percent of total assets under these Regulations, the total assets stated in the most recent parent company only financial report or individual financial report prepared under the Regulations Governing the Preparation of Financial Reports by Securities Issuers shall be used.

In the case of a company whose shares have no par value or a par value other than NT$10, for the calculation of transaction amounts of 20 percent of paid-in capital under these Regulations, 10 percent of equity attributable to owners of the parent shall be substituted.

Article 12 Handling procedures for dealing derivatives

1.Business Principals and Policies
A. Type of Transactions

The procedures are for transactions of acquisition or disposal of financial derivatives, including FORWARD, OPTION, SWAP and the contracts for the combination of the above.

B. Business Management and Strategies for Risk-Aversion

C. Responsibilities
a.Financial Departments
- i.The settlement of derivatives trading

ii.Planning the strategies, collecting market information, and practicing the management strategies to offer the

most instant information for management to deliberate.

b.Accounting Departments

iii.Confirmation of derivatives trading.

iv.Handling of Accounting and checks

c.Cashier Section

Cash delivery of derivatives trading

d.Level of Authority for Financial Derivatives
i.On hedge trades required by business

iii. While dealing with important or critical matters on derivatives, approval shall be granted by the Audit Committee and shall be reported to Board of Directors’ Meeting.

D.Evaluation for Performance

The financial department shall evaluate the performance and the results of practicing based on the market price. A review report on strategies for risk aversion shall be presented for evaluation of net profit or loss.

E.Decisions on the total amount of derivatives contracts that may be traded, and the maximum loss limit on total trading and for individual contracts.

a.the total amount of derivatives contracts that may be traded
i.Trading on hedge contracts

The financial department shall fully control the strategies to avoid risk on trading. The amount of trading value of hedge trades shall not exceed 50% of the company’s foreign currency holding. ii.Trading on regular financial transactions

b.the maximum loss limit on total trading and for individual contracts
iii.Trading on hedge contracts

iv.Trading on regular financial transactions

The limit of loss shall not exceed US$50,000 for one individual contract. The total loss limit of all the contracts shall not exceed US$200,000.

2.Risk Management
A.Risk Management in Credit

The company shall choose large-scaled business or cooperation with better credits for trading, and has to be able to provide professional advice for consultation.

B.Risk Management in Market

Risk-aversion shall be the purpose of trading

C.Risk Management in Liquidity

D.Risk Management in Cash Flow

Cash flow shall be always confirmed to ensure successful cash delivery.

E.Risk Management in Operating
a. The authorized amount shall always be the same as requested by the Company. The procedures of handling shall be also included in internal auditing to ensure risk aversion in management.
b.The individual of the Company for trading financial derivatives, proceeding confirmation and delivering the cash shall be different individuals.
c.The individuals of the Company for risk evaluation, supervision and settlement shall be from different departments and report back to the board of directors or to senior management who are not involved in decision-making in trading process.
d.For the details, performance and amount of holding for derivatives shall be evaluated at least once a week. For derivatives needed for risk aversion in business shall be evaluated at least twice a month. The report of

evaluation shall be submitted to senior management who has been assigned by the board of directors. F.Risk Management in Law

For the contacts on financial derivatives proceeded with financial organizations shall be evaluated by legal department before signing to avoid any risk or misunderstanding in legal elaboration.

3.Internal Auditing

A. 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 and the independent directors of the board shall be notified in writing.
B. The internal audit personnel shall submit the monthly audit and annual auditing planning to the competent authority before the end of February of the next year. Improvement of material violation shall also submit to the competent authority for later examination no later than the end of May of the next year.

4.Periodic Evaluation

A.The board of directors shall authorize the management to periodically evaluate whether derivatives trading performance is consistent with established operational strategy and whether the risk undertaken is within the company's permitted scope of tolerance. When there violation or unexpected issues happen, the management shall report to the board of directors and take certain actions to avoid unexpected issues.
B.For the details, performance and amount of holding for derivatives shall be evaluated at least once a week. For derivatives needed for risk aversion in business shall be evaluated at least twice a month. The report of evaluation shall be submitted to senior management who has been assigned by the board of directors.
5.Supervision and Management for Derivatives by the board of Directors
A.The board of directors shall designate the senior management to the risk undertaken for trading and supervision over the control and settlement.
a.The periodic evaluation for the risk management system shall be always followed with The Principal and the handling procedures for trading derivatives.
b. Where there is violation or the unexpected issue occurring, proper certain actions shall be taken to respond the issue. The board of directors shall also receive the report. The presence of whom and the opinions for action to take shall be required in the board of meeting.
B. The board of directors shall periodically evaluate whether derivatives trading performance is consistent with established operational strategy and whether the risk undertaken is within the company's permitted scope of tolerance.
C. The designated and authorized personnel for derivatives trading shall follow the handling procedures of derivatives trading and report to the most recent board of meeting.
D. The details of derivatives in types, amount of money, and approval date from board of directors shall be recorded into proper record for later examination. The procedures and information provided and recorded shall be in compliance with the evaluation items and criteria from this principal, 4(B), 5(A) and 5(B).

Article 13 Mergers and Consolidations, Splits, Acquisitions, and Assignment of Shares

1.Evaluation and Procedures

A. The Company that conducts a merger, demerger, acquisition, or transfer of shares, prior to convening the board of directors to resolve on the matter, shall engage a CPA, 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.

For mergers with the subsidiaries which the Company holds, directly or indirectly, 100% of total capitals, shares or issued shares, acquisition of experts’ opinions or reasons shall not need to be obtained.

B. A public company participating in a merger, demerger, acquisition, or transfer of shares shall prepare a public report to shareholders detailing important contractual content and matters relevant to the merger,

demerger, or acquisition prior to the shareholders meeting and include it along with the expert opinion referred to in paragraph 1 of the preceding Article when sending shareholders notification of the shareholders meeting for reference in deciding whether to approve the merger, demerger, or acquisition. Provided, where a provision of another act exempts a company from convening a shareholder’s 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 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.

2. Other Matters that shall apply:

A. The company participating in a merger, demerger, or acquisition shall convene a board of directors meeting and shareholders meeting on the day of the transaction to resolve matters relevant to the merger, demerger, or acquisition, unless another act provides otherwise or the FSC is notified in advance of extraordinary circumstances and grants consent. The company participating in a transfer of shares shall call a board of directors meeting on the day of the transaction, unless another act provides otherwise or the FSC is notified in advance of extraordinary circumstances and grants consent.

B. Every person participating in or privy to the plan for merger, demerger, acquisition, or transfer of shares shall issue a written undertaking of confidentiality and may not disclose the content of the plan prior to public disclosure of the information and may not trade, in their own name or under the name of another person, in any stock or other equity security of any company related to the plan for merger, demerger, acquisition, or transfer of shares.

C. Public companies participating in a merger, demerger, acquisition, or transfer of shares may not arbitrarily alter the share exchange ratio or acquisition price unless under the below-listed circumstances, and shall stipulate the circumstances permitting alteration in the contract for the merger, demerger, acquisition, or transfer of shares:

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

D. Other than be in accordance with the Article 317-1 in Corporate Charter and Article 22 in Business Mergers And Acquisitions Act, the contract for participation by the Company in a merger, demerger, acquisition, or of shares shall also record the following:

a.Breach of contract shall be handled according to the contract

b.Principles for the handling of equity-type securities previously issued or treasury stock previously bought back by any company that is extinguished in a merger or that is demerged.
c.The amount of treasury stock 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.
d.The manner of handling changes in the number of participating entities or companies.
e.Preliminary progress schedule for plan execution, and anticipated completion date.
f.Scheduled date for convening the legally mandated shareholders meeting if the plan exceeds the deadline without completion, and relevant procedures.

E. After public disclosure of the information, if any company participating in the merger, demerger, acquisition, or share transfer intends further to carry out a merger, demerger, acquisition, or share transfer with another company, all of the participating companies shall carry out anew the procedures or legal actions that had originally been completed toward the merger, demerger, acquisition, or share transfer; except that where the number of participating companies is decreased and a participating company's shareholders meeting has adopted a resolution authorizing the board of directors to alter the limits of authority, such participating company may be exempted from

calling another shareholders meeting to resolve on the matter anew.

F. Where any of the companies participating in a merger, demerger, acquisition, or transfer of shares is not a public company, the Company shall sign an agreement with the non-public company whereby the latter is required to abide by the provisions of paragraph B(a), (b) and (e).

G. When participating in a merger, demerger, acquisition, or transfer of another company's shares, the Company shall prepare a full written record of the following information and retain it for 5 years for reference, this shall includes,

a.Basic identification data for personnel: Including the occupational titles, names, and national ID numbers (or passport numbers in the case of foreign nationals) of all persons involved in the planning or implementation of any merger, demerger, acquisition, or transfer of another company's shares prior to disclosure of the information.
b.Dates of material events: Including the signing of any letter of intent or memorandum of understanding, the hiring of a financial or legal advisor, the execution of a contract, and the convening of a board of directors meeting.
c.Important documents and minutes: Including merger, demerger, acquisition, and share transfer plans, any letter of intent or memorandum of understanding, material contracts, and minutes of board of directors meetings.

H. When participating in a merger, demerger, acquisition, or transfer of another company's shares, the Company shall, within 2 days commencing immediately from the date of passage of a resolution by the board of directors, report (in the prescribed format and via the Internet-based information system) the information set out to the FSC for recordation.

I. Where any of the companies participating in a merger, demerger, acquisition, or transfer of another company's shares is neither listed on an exchange nor has its shares traded on an OTC market, the Company(s) so listed or traded shall sign an agreement with such company whereby the latter is required to abide by the provisions of paragraphs B, C and G.

Article 14 Openness of Information

Standard for public declaration and the declaration items
A.Acquisition or disposal of real property or its right-of-use assets from or to a related party, or acquisition or disposal of assets other than real property or its right-of-use assets from or to a related party where the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or NT$300 million or more; provided, this shall not apply to trading of domestic bonds or bonds under repurchase and resale agreements, or subscription or redemption of domestic money market funds.
B.Merger, demerger, acquisition, or transfer of shares. Investment in the PRC.
C.Losses from derivatives trading reaching the limits on aggregate losses or losses on individual contracts set out in the procedures adopted by the company.
D.Where the type of asset acquired or disposed is equipment/machinery or its right-of-use assets for business use, the trading counterparty is not a related party, and the transaction amount is more than NT$500 million.
E.Acquisition or disposal by the company in the construction business of real property or its right-of-use assets for construction use, where the trading counterparty is not a related party, and the transaction amount is more than NT$500 million.
F.Where land is acquired under an arrangement on engaging others to build on the Company's own land, engaging others to build on rented land, joint construction and allocation of housing units, joint construction and allocation of ownership percentages, or joint construction and separate sale, and furthermore the transaction counterparty is not a related party, and the amount the Company expects to invest in the transaction is more than NT$500 million.
G.Where an asset transaction other than any of those referred to in the above 6 paragraphs, a disposal of receivables by a financial institution, or an investment in the mainland China area reaches 20 percent or more of paid-in capital or NT$300 million; provided, this shall not apply to the following circumstances:

a.Trading of domestic bonds.

b.Where done by professional investors—securities trading on securities exchanges or OTC markets, or

subscription of ordinary corporate bonds or general bank debentures without equity characteristics (excluding subordinated debt) that are offered and issued in the primary market, or subscription or redemption of securities investment trust funds or futures trust funds, or subscription by a securities firm of securities as necessitated by its undertaking business or as an advisory recommending securities firm for an emerging stock company, in accordance with the rules of the Taipei Exchange.

c.Trading of bonds under repurchase/resale agreements, or subscription or redemption of domestic money market funds issued by domestic securities investment trust enterprises
H. “ Within the preceding year” as used in the preceding paragraph refers to the year preceding the date of
- occurrence of the current transaction. Items duly announced in accordance with these Procedures need not be counted toward the transaction amount.
a.The amount of any individual transaction.
b.The cumulative transaction amount of acquisitions and disposals of the same type of underlying asset with the same transaction counterparty within the preceding year.
c.The cumulative transaction amount of acquisitions and disposals (cumulative acquisitions and disposals, respectively) of real property or right-of-use assets thereof within the same development project within the preceding year.
d.The cumulative transaction amount of acquisitions and disposals (cumulative acquisitions and disposals, respectively) of the same security within the preceding year.

2.The time limit of public announcement

The Company acquiring or disposing of assets, where the assets meet the items stated from the preceding paragraph (1) and the amount of transaction reaches what is stated in the same paragraph, shall publicly announce and report the relevant information within 2 days commencing immediately from the date of occurrence of the event

The procedures of public announcement
A. The Company shall announce and report the relevant information on the FSC's designated website in the appropriate format by regulations
B. The Company shall compile monthly reports on the status of derivatives trading engaged in up to the end of the preceding month by itself and any subsidiaries that are not domestic public companies and enter the information in the prescribed format into the information reporting website designated by the FSC by the 10th day of each month.
C.When a public 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.
D.The Company acquiring or disposing of assets shall keep all relevant contracts, meeting minutes, log books, appraisal reports and CPA, attorney, and securities underwriter opinions at company headquarters, where they shall be retained for 5 years except where another act provides otherwise.
E.Where any of the following circumstances occurs with respect to a transaction that a public company has already publicly announced and reported in accordance with the preceding article, a public report of relevant information shall be made on the information reporting website designated by the FSC within 2 days commencing immediately from the date of occurrence of the event:
a.Change, termination, or rescission of a contract signed in regard to the original transaction.
b.The merger, demerger, acquisition, or transfer of shares is not completed by the scheduled date set forth in the contract.
c.Change to the originally publicly announced and reported information.
F.Information on assets acquired or disposed of in connection with mergers, demergers, acquisitions, or transfer of shares should be included in announcement with the regulated format, see attachment 8.

4.Format of announcement

A.The negotiable securities of parent company and the subsidiary company(s) that the Company trades in over-the-counter exchange market or domestic/oversea stock exchange market, shall be included in announcement with the regulated format, see attachment 2.
B.For information on engaging others to build on its own land, engaging others to build on rented land, or acquiring or disposing of equipment for business use, it should be included in announcement with the regulated format,

see attachment 3.

C.For information on acquiring or disposal of real property or facilities, and the aforementioned from a related party, should be included in announcement with the regulated format, see attachment 4.
D.For information on acquiring or disposal of the negotiable securities, membership, intangible assets or receivables by a financial institution, should be included in announcement with the regulated format, see attachment 5.
E.Information on investment in the PRC, shall be included in announcement with the regulated format, see attachment 6.
F.Information on trading the derivatives, within 2 days commencing from the date of trading, should be included in announcement with the regulated format, see attachment 7-1.
G.Information on assets acquired or disposed of in connection with mergers, demergers, acquisitions, or transfer of shares should be included in announcement with the regulated format, see attachment 8.

Article 15 Subsidiary of the (parent) Company shall follow the regulatory as follows:

The subsidiary shall follow Regulations Governing the Acquisition and Disposal of Assets by Public Companies to regulate the Procedures Governing the Acquisition and Disposal of Assets by the Company. The procedures shall be approved by the board of directors and be submitted to the shareholder’s meeting. The procedural rules and any amendments thereto, shall also be submitted.
The subsidiary shall follow the regulations from the Company
Information required to be publicly announced and reported in accordance with the provisions on acquisitions and disposals of assets by the subsidiary of the Company that is not itself a public company in Taiwan shall be reported by the Company
The paid-in capital or total assets of the Company shall be the standard for determining whether or not a subsidiary requiring a public announcement and regulatory filing in the event the type of transaction specified therein of paid-in capital or the total assets.

Article 16 Penalties

Should any violation rises from employees being responsible for such procedures on acquiring or disposal of assets, the Employees Code shall be adopted for penalties in accordance with the seriousness of the violation.

Article 17 Provision and Execution

This procedure of dealing shall be approved by the Audit Committee and then the board of directors. It shall be reported to the shareholders’ meeting. Any amendment is subject to the same procedures.

Article 18 Other Matters.

When any matter arises on which the aforementioned rules and regulations are silent, the procedures shall follow the related regulations and the laws.

Appendix II

II.Shareholders’ Meeting Rules

Article 1 - The rules of procedures for this Corporation's shareholders meetings, except as otherwise provided by law, regulation, or the articles of incorporation, shall be as provided in these Rules.

Article 2 - (Convening shareholders meetings and shareholders meeting notices) This Corporation's shareholders meetings shall be convened by the board of directors, unless otherwise provided by law or regulation.

This Corporation shall prepare electronic versions of the shareholders meeting notice and proxy forms, and the origins of explanatory materials relating to all proposals, including proposals for ratification, matters for deliberation, or the election or dismissal of directors, and upload them to the Market Observation Post System (MOPS) before 30 days before the date of a regular shareholders meeting or before 15 days before the date of a special shareholders meeting. This Corporation shall prepare electronic versions of the shareholders meeting agenda and supplemental meeting materials and upload them to the MOPS before 21 days before the date of the regular shareholders meeting or before 15 days before the date of the special shareholders meeting. In addition, before 15 days before the date of the shareholders meeting, this Corporation shall also have prepared the shareholders meeting agenda and supplemental meeting materials and made them available for review by shareholders at any time. The meeting agenda and supplemental materials shall also be displayed at this Corporation and the professional shareholder services agent designated thereby as well as being distributed on-site at the meeting place.

The reasons for convening a shareholder’s meeting shall be specified in the meeting notice and public announcement. With the consent of the addressee, the meeting notice may be given in electronic form.

Election or dismissal of directors, amendments to the articles of incorporation, capital reduction, application for suspension of public issuance, directors’ competition license, surplus capital increase, public reserve capital increase, the dissolution, merger, or demerger of the corporation, or any matter under Article 185, paragraph 1 of the Company Act, Articles 26-1 and 43-6 of the Securities and Exchange Act, or Articles 56-1 and 60-2 of the Regulations Governing the Offering and Issuance of Securities by Securities Issuers shall be set out in the notice of the reasons for convening the shareholders meeting and shall provide appropriate explanation. None of the above matters may be raised by an extraordinary motion.

Shareholders who hold more than one percent of the total number of shares in issue may submit a proposal to the company's ordinary shareholders meeting. The proposal is limited to one item. Any proposal with more than one proposal shall not be included in the proposal.

In addition, the shareholder’s proposal is subject to one of the conditions in Article 172-1, Item 4 of the Company Law, and the board of directors may not be included as a proposal.

Shareholders may submit proposed proposals to urge the company to promote the public interests or fulfill its social responsibilities. The procedures shall be limited to one item in accordance with the relevant provisions of Article 172-1 of the Company Law. Any proposal with more than one item shall not be included in the proposal.

Article 3 - For each shareholders meeting, a shareholder may appoint a proxy to attend the meeting by providing the proxy form issued by this Corporation and stating the scope of the proxy's authorization.

A shareholder may issue only one proxy form and appoint only one proxy for any given shareholders meeting, and shall deliver the proxy form to this Corporation before 5 days before the date of the shareholders meeting. If duplicate proxy forms are delivered, the one received earliest shall prevail, unless a declaration is made to cancel the previous proxy appointment.

Article 4 -The venue for a shareholders meeting shall be the premises of this Corporation, or a place easily accessible to shareholders and suitable for a shareholders meeting. The meeting may begin no earlier than 9 a.m. and no later than 3 p.m.

Article 5 - This Corporation shall furnish the attending shareholders with an attendance book to sign, or attending shareholders may hand in a sign-in card in lieu of signing in.

This Corporation shall furnish attending shareholders with the meeting agenda book, annual report, attendance card, speaker's slips, voting slips, and other meeting materials. Where there is an election of directors, pre-printed ballots shall also be furnished.

Shareholders and their proxies (collectively, "shareholders") shall attend shareholders meetings based on attendance cards, sign-in cards, or other certificates of attendance. This Corporation may not arbitrarily add requirements for other documents beyond those showing eligibility to attend presented by shareholders. Solicitors soliciting proxy forms shall also bring identification documents for verification.

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 - If the Meeting is convened by the Board of Directors, the Chairman of the Board of Directors shall be the chairman presiding over the meeting, and majority of the Board of Directors ought to attend the Meeting in person, among which at least one member of each functional committee attend the Meeting as representative. Attendance status should be recorded in the meeting minutes.

If a shareholder’s meeting is convened by a party with power to convene but other than the board of directors, the convening party shall chair the meeting. When there are two or more such convening parties, they shall mutually select a chair from among themselves.

This Corporation may appoint its attorneys, certified public accountants, or related persons retained by it to attend a shareholder’s meeting in a non-voting capacity.

Article 7 - This Corporation, beginning from the time it accepts shareholder attendance registrations, shall make an uninterrupted audio and video recording of the registration procedure, the proceedings of the shareholders meeting. The recorded materials of the preceding paragraph shall be retained for at least 1 year. If, however, a shareholder files a lawsuit pursuant to Article 189 of the Company Act, the recording shall be retained until the conclusion of the litigation.

Article 8 - Attendance at shareholders meetings shall be calculated based on 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 correspondence or electronically.

Article 9 - The chair shall call the meeting to order at the appointed meeting time. Relevant information such as the number of non-voting rights and the number of shares present shall be announced.

However, when the attending shareholders do not represent a majority of the total number of issued shares, the chair may announce a postponement, provided that no more than two such postponements, for a combined total of no more than 1 hour, may be made. If the quorum is not met after two postponements and the attending shareholders still represent less than one third of the total number of issued shares, the chair shall declare the meeting adjourned.

If the 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 1 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 10 - If a shareholder’s 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 by the agenda, which may not be changed without a

resolution of the shareholders meeting.

The provisions of the preceding paragraph apply mutatis mutandis to a shareholders meeting convened by a party with the power to convene that is not the board of directors.

The chair may not declare the meeting adjourned prior to completion of deliberation on the meeting agenda of the preceding two paragraphs (including extraordinary motions), except by a resolution of the shareholders meeting. If the chair declares the meeting adjourned in violation of the rules of procedure, the other members of the board of directors shall promptly assist the attending shareholders in electing a new chair in accordance with statutory procedures, by agreement of a majority of the votes represented by the attending shareholders, and then continue the meeting.

If the chairperson violates these rules of procedure, the meeting shall not be continued after electing one of the attendees to be the meeting chairperson after the meeting is adjourned, shareholders may not separately elect a chair and resume the meeting at the original or another venue.

Article 11 - Before speaking, an attending shareholder must specify on a speaker's slip the subject of the speech, his/her shareholder account number (or attendance card number), and account name. The order in which shareholders speak will be set by the chair.

A shareholder in attendance who has submitted a speaker's slip but does not actually speak shall be deemed to have not spoken. When the content of the speech does not correspond to the subject given on the speaker's slip, the spoken content shall prevail.

Except with the consent of the chair, a shareholder may not speak more than twice on the same proposal, and a single speech may not exceed 5 minutes. If the shareholder's speech violates the rules or exceeds the scope of the agenda item, the chair may terminate the speech.

When an attending shareholder is speaking, other shareholders may not speak or interrupt unless they have sought and obtained the consent of the chair and the shareholder that has the floor; the chair shall stop any violation. When a juristic person shareholder appoints two or more representatives to attend a shareholder’s meeting, only one of the representatives so appointed may speak on the same proposal.

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

Article 12 - 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 may announce the discussion closed and call for a vote

Article 13 - Voting at a shareholders meeting shall be calculated based the number of shares.

With respect to resolutions of shareholders meetings, the number of shares held by a shareholder with no voting rights shall not be calculated as part of the total number of issued shares.

When a shareholder is an interested party in relation to an agenda item, and there is the likelihood that such a relationship would prejudice the interests of this Corporation, that shareholder may not vote on that item, and may not exercise voting rights as proxy for any other shareholder.

The number of shares for which voting rights may not be exercised under the preceding paragraph shall not be calculated as part of the voting rights represented by attending shareholders.

With the exception of a trust enterprise or a shareholder services agent approved by the competent securities authority, when one person is concurrently appointed as proxy by two or more shareholders, the voting rights represented by that proxy may not exceed 3 percent of the voting rights represented by the total number of issued shares. If that percentage is exceeded, the voting rights in excess of that percentage shall not be included in the calculation.

Article 14 - A shareholder shall be entitled to one vote for each share held, except when the shares are restricted shares or are deemed non-voting shares under Article 179, paragraph 2 of the Company Act.

Except as otherwise provided in the Company Act and in this Corporation's articles of incorporation, the passage of a proposal shall require an affirmative vote of a majority of the voting rights represented by the attending shareholders. At the time of a vote, for each proposal, the chair or a person designated by the chair shall first announce the total number of voting rights represented by the attending shareholders, followed by a poll of the shareholders. The Company shall arrange for shareholders to vote by poll on the proposals included in the Shareholders Meeting agenda one by one and enter the voting results, namely the numbers of votes cast "For", "Against" , and "Abstentions," for each proposal, after the shareholders’ Meeting on the same day that it is held, into the Market Observation Post System.

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

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.

Article 15 - Vote counting for shareholders meeting proposals or elections shall be conducted in public at the place of the shareholders meeting. Immediately after vote counting has been completed, the results of the voting, including the statistical tallies of the numbers of votes, shall be announced on-site at the meeting, and a record made of the vote.

Article 16 - The election of directors at a shareholders meeting shall be held in accordance with the applicable election and appointment rules adopted by this Corporation, and the voting results shall be announced on-site immediately, including the names of those elected and not 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. If, however, 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 17 - 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 meeting minutes may be produced and distributed in electronic form.

This Corporation may distribute the meeting minutes of the preceding paragraph by means of a public announcement made through the MOPS.

The meeting minutes shall accurately record the year, month, day, and place of the meeting, the chair's full name, the methods by which resolutions were adopted, and a summary of the deliberations and their results, and shall be retained for the duration of the existence of this Corporation.

Article 18 - On the day of a shareholders meeting, this Corporation 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 (or GreTai Securities Market) regulations, this Corporation shall upload the content of such resolution to the MOPS within the prescribed time period.

Article 19 - Staff handling administrative affairs of a shareholders meeting shall wear identification cards or arm bands.

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."

At the place of a shareholders meeting, if a shareholder attempts to speak through any device other than the public address equipment set up by this Corporation, the chair may prevent the shareholder from so doing.

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

Article 20 - (Recess and resumption of a shareholders meeting)

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

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

A resolution may be adopted at a shareholders meeting to defer or resume the meeting within 5 days in accordance with Article 182 of the Company Act.

Article 21 -

These Rules and any amendments hereto, shall be implemented after adoption by shareholders meetings.

Appendix III

III.Corporate Charter

Article 1

The Corporation shall be incorporated, as a company limited by shares, under the Company Law of the Republic of China.

Article 2

Its name shall be Chung Hsin Electric and Machinery Manufacturing Corporation Limited.

Article 3

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

(1) Synthetic Resin & Plastic Manufacturing
(2) Strengthened Plastic Manufacturing
(3) Glass and glass made products Manufacturing
(4) Iron and Steel Rolling, Drawing, and Extruding
(5) Metal Containers Manufacturing
(6) Metal Surface Treating
(7) Machinery and Equipment Manufacturing
(8) Pollution Controlling Equipment Manufacturing
(9) Frozen and Air-conditioning Equipment Manufacturing

(10) Electric Power Supply, Electric Transmission and Power Distribution Machinery Manufacturing (11) Electric Wires and Cables Manufacturing (12) Electric Appliance and Audiovisual Electric Products Manufacturing (13) Wired Communication Equipment and Apparatus Manufacturing (14) Telecommunication Equipment and Apparatus Manufacturing (15) Electronic Parts and Components Manufacturing (16) Batteries Manufacturing (17) Restrained Telecom Radio Frequency Equipments and Materials Manufacturing (18) Computers and Computing Peripheral Equipments Manufacturing (19) Ship and Parts Manufacturing (20) Tramway Cars Manufacturing (21) Automobiles and Parts Manufacturing (22) Aircraft and Parts Manufacturing (23) Precision Instruments Manufacturing (24) Metrological Instruments Manufacturing (25) Steam and Electricity Paragenesis (26) Heat Energy Supplying (27) Soil Pollution Restricting Engineering (28) Water Pipe Construction (29) Fuel Pipe Construction (30) Pipe Lines Construction (31) Electric Appliance Construction (32) Electric Appliance Installation (33) Frozen and Air-conditioning Engineering (34) Cables Construction (35) Elevator Construction (36) Fire Fighting Equipments Construction (37) Cybernation Equipments Construction (38) Traffic Signals Construction (39) Illumination Equipments Construction (40) Machinery Installation Construction (41) Computing Equipments Installation Construction (42) Telecommunications Construction (43) Channel KU and C of Satellite TV Equipments and Materials Construction

(44) Restrained Telecom Radio Frequency Equipments and Materials Construction

(45) Building Maintenance and Upholstery

(46) Glass Construction

(47) Kitchen and Bath Facilities Construction

(48) Painting Construction

(49) Eroding and Rusting Construction

(50) Apparatus Installation Construction

(51) Traffic Labels Construction

(52) Warming and Cooling Maintenance Construction

(53) Wholesale of Industrial Catalyst

(54) Wholesale of Petrochemical Fuel Products

(55) Wholesale of Machinery

(56) Wholesale of Household Appliance

(57) Wholesale of Precision Instruments

(58) Wholesale of Computing and Office Equipment

(59) Wholesale of Metrological Instruments

(60) Wholesale of Telecom Instruments

(61) Wholesale of Traffic Signal Equipments and Materials (62) Wholesale of Pollution Controlling Equipments

(63) Wholesale of Batteries

(64) Wholesale of Motor Vehicle Parts and Supplies

(65) Wholesale of Ship Machinery and Parts

(66) Wholesale of Aircraft and Parts

(67) Wholesale of Tramway Cars and Parts

(68) Wholesale of Photographic Equipment

(69) Wholesale of Fire Fighting Equipments

(70) Wholesale of Computer Software

(71) Wholesale of Electronic Materials

(72) Retail Sale of Paints, Varnishes and Lacquers

(73) Retail Sale of Household Appliance

(74) Retail sale of Computing and Business Machinery Equipment

(75) Retail Sale of Precision Instruments

(76) Retail Sale of Metrological Instruments

(77) Retail Sale of Telecom Instruments

(78) Retail Sale of Machinery and Equipment

(79) Retail Sale of Traffic Signal Equipments and Materials

(80) Retail Sale of Pollution Controlling Equipments

(81) Retail Sale of Batteries

(82) Retail Sale of Motor Vehicle Parts and Supplies

(83) Retail Sale of Ship Machinery and Parts

(84) Retail Sale of Aircraft and Parts

(85) Retail Sale of Tramway Cars and Parts

(86) Retail Sale of Photographic Equipment

(87) Retail Sale of Fire Fighting Equipments

(88) Retail Sale of Computer Software

(89) International Trade (90) Restrained Telecom Radio Frequency Equipments and Materials Import (91) Residence and Buildings Lease Construction and Development

(92) Parking Garage Business

(93) Specialized Field Construction and Development

(94) Public Works Construction and Investment

(95) New County and Community Construction and Investment

(96) Real Estate Rental and Leasing

(97) Software Design Services

(98) Data Processing Services

(99) Digital Information Supply Services (100)General Advertising Services (101)Fire Fighting Equipments Overhauling (102)Electricity Equipments Checking and Maintenance (103)Energy Technical Services (104)Waste Removing (105)Waste Disposing

(106)Sanitary and Pollution Controlling Services
(107)Wastewater (Sewage) Treatment
(108)Electric Appliance and Audiovisual Electric Products Repair Shops
(109)Metrological Instruments Repairing
(110)Non-Public use power generating

(111)All businesses except those banned or restricted by laws and other business subject to special permission.

Article 3-1

The Corporation may provide endorsement and guarantee and act as a guarantor.

Article 4

The Corporation shall have its head office in New Taipei City, Taiwan, Republic of China, and shall be free, upon approval of government authorities in charge, to set up representative and branch offices, establishments, shops, factories, and warehouses at various locations both domestically and abroad.

Article 5

The Corporation, in the event of being a shareholder with limited liability of another company, its total investment amount shall not be subject to the restriction of Article 13 of Taiwan Company Act of not more than 40% of the Corporation’s paid-in capital.

Chapter Two Shares

Article 6

The total capital of the Corporation shall be in the amount of $7,500,000,000 New Taiwan Dollars (NTD), divided into 750,000,000 shares at $10 NTD

par value, and unissued stocks are to be authorized for issuance in installments when deemed necessary by the Board of Directors’ meeting; among which $1,000,000,000 NTD can be issued in the form of preferred stocks.

Article 6-1 Deleted

Article 7 Deleted

Article 8 Deleted

Article 9

The stocks issued by the Corporation shall be name-bearing stocks, and shall be duly signed and sealed by a minimum of three directors, and issued upon approval of authorities in charge and issuing institution.

Article 10

Registration for transfer of shares shall be suspended sixty days prior to the regular shareholders' meetings, or within thirty days prior to extraordinary shareholders' meeting, or within five days prior to the day on which dividend, bonus or any other benefits is scheduled to be paid by the Corporation.

Article 11

The Corporation shall process its stock affairs in accordance with the “Guidelines for Handling of

Stock Affairs by Public Companies” issued by the authorities in charge.

Chapter Three Shareholder’s Meeting

Article 12

The two types of shareholders' meetings hereof refer to the annual (regular) meeting of shareholders and special (extraordinary) meeting of shareholders. The former is called once per annum within six months from the close of each fiscal year and the latter may be duly called whenever necessary.

Article 13

The shareholders shall be informed of the meeting date, place and subject matters 30 days or more prior to the shareholders' meeting; while the meeting date, place and proposed matters shall be 15 days before calling of an extraordinary session.

Article 14

Unless otherwise provided for in the Company Act, the shareholders' meeting shall be convened only if a majority of the shareholders or a representation of the majority of the total issued and outstanding capital stock is in attendance; whereas the resolutions shall be adopted by a majority vote in the meeting attended by shareholders representing a majority of the total issued and outstanding capital stock.

According to regulatory requirements, shareholders may also vote via an electronic voting system, and those who do shall be deemed as attending the shareholders' meeting in person; electronic voting shall be conducted in accordance with the relevant laws and regulations.

Article 15

If a shareholder is unable to attend a shareholders' meeting, he/she may appoint a proxy using the power of attorney provided by the Corporation, specifying scope of the authorization. In addition to provisions stated in Article 177 of the Company Act, the proxy shall be handled in accordance with “Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies".

Article 16

Each share held by a shareholder hereof is entitled to one vote except otherwise set forth in Article 179 of the Company Act and Board of Directors whose possession of stock pledge exceeds more than half of the Corporation’s total outstanding shares during their term in office.

Article 17

Election of the Directors of the Corporation shall adopt name-bearing cumulative voting. Each share shall have the same number of ballots as the number of Directors to be elected, and the number of ballots can be casted to one individual Director or several different Directors. The election results are determined by the candidates who win the most votes.

Election of Board of Directors shall adopt the Article 192-1 of Company Act to nominate the candidates. Regulations based on Company Act and Securities Exchange Act shall be followed. Independent Directors and non-independent directors shall be elected at the same time and the election results shall be determined separately.

Article 18

The shareholders' meeting is convened by the Board of Directors’ meeting and presided by the Chairman. When the chairman is absent, the Vice Chairman shall act as his/her proxy. In the event where both of them are absent and the Chairman fails to appoint a proxy, one Director shall be elected among the Directors as the Chairman. Should the meeting be convened by a non Director, the individual shall be the Chairman; whereas when two or more are involved in calling for the meeting, they shall elect one person among them to be the Chairman.

Article 19

Resolutions adopted at the shareholders’ meeting shall be recorded in the minutes, signed or sealed by the Chairman of the shareholders, and distributed to the shareholders within 20 days immediately following the conclusion of the meeting.

The Corporation may distribute the aforementioned minutes via public announcements.

Chapter Four Directors and the Audit Commitee

Article 20

The Corporation shall establish 7 to 13 members of Directors for a term of 3 years among the shareholders with legal capacity, and they shall be eligible for re-election. . The number of board of directors shall be agreed by the meeting of board of directors, and the number shall include the independent board of directors for at least 3 individuals. Should their terms of office expire before the re-election, their capacity shall be extended until the re-election of Directors takes office. When 1/3 of the total number of Director seats is not filled, the Board shall convene an extraordinary shareholders' meeting within 60 days to fill the seats. The total share ownership ratio of all Directors shall be dealt with in accordance with Article 2 of the “Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies."

Article 20-1

Deleted

Article 20-2

The Company shall establish the audit committee, in compliance of the Securities Exchange Act, Article 14-, and such audit committee shall be composed of the entire number of independent directors. Regulations governing exercise by the audit committee and its independent director members of the powers and matters related, shall be prescribed by the Competent Authority according to the Regulations and Acts.

Article 21

Board of Directors shall elect a Chairman among themselves; act in accordance with relevant laws and regulations, resolutions adopted by the shareholders’’ meeting and Board of Director’s meeting, oversee all internal operations and serve as representative of the Corporation. The Board may, depending on the actual needs of the Corporation, elect 1 Vice-Chairmen among the Directors, and the term of office hereof shall be the same as the term of office of the incumbent Board members.

Article 22

The Board of Directors’ meeting shall be convened on a quarterly basis at minimum and chaired by the Chairman. In the Chairman’s absence, the Vice Chairman shall act as the Chairman’s proxy. Should the Vice-Chairman have not been appointed or not be available for the meeting, while the Chairman also fails to appoint his/her proxy, the Board shall elect among the members as their Chairman. The Board of Directors shall attend the meeting in person. Should any member of the Board delegate another Director to attend the meeting on his/her behalf, he/she shall thereby issue

a power of attorney. Each Director is subject to one designation of another Director per Board meeting.

Notification of the Board of Director’s meeting shall be delivered via means such as fax or email.

Article 23

Capacity and function of the Board of Directors are as follows:

Convening the shareholders’ meeting and implementing the resolutions thereof.
Ratifying and approving business plans and reviewing the results thereof.
Ratifying and approving various provisions, guidelines and contracts of significance.
Ratifying and approving budget and operations reports.
Ratifying and approving the appropriation of Net Profits.
Proposing and approving the increase or decrease of capital.
Ratifying and approving the increase, decrease, or change of branch offices.
Reviewing and approving the appointment/discharge of the President and Vice-President(s).
Proposing and approving the revision of the Company’s provisions and procedures.
Proposing and approving the issuance of corporate bond.
Dealing with the collateralization against the sale and purchase related to fixed assets.
Supervising internal auditing operation of the Corporation.

Article 24

The Board of Directors shall establish an internal audit unit, which performs the following duties:

Proposing, amending, and implementing matters related to regulations and provisions of the corporate-wide audit system.
Auditing of matters related to payroll, procurement, production, sales, finance and accounting of the Corporation.
Supervising and evaluating the performance results produced by the Company’s business and finance audit unit.
Reviewing projects of each business unit and inspecting units-in-charge, CPA audit, and managing and following up on misconduct or operational flaws discovered by the Audit Committee.
Supervising the transition of the higher level managers of the Corporation.
Auditing matters relevant to the tasks instructed by the Board of Directors or the President.

Article 25 Deleted

Article 26 Deleted

Article 27 Deleted

Article 27-1

Remuneration for Directors of the board shall be within the average standard in the same industry.

Article 27-2

The company shall take out liability insurance for the directors with respect to liabilities resulting from the performance of duties during their terms of office.

Chapter Five Management and Staff

Article 28

The Corporation shall establish 1 President, reporting directly to the Chairman, presiding over all

business operations of the Corporation, and may establish 1 to 5 of Vice Presidents to assist the President. Appointment, dismissal and remuneration of the management herein shall adopt provisions in accordance with Article 29 of the Company Act.

Article 29

The President and Vice Presidents, unless otherwise regulated, shall depend on the needs, establish hierarchies and units under them. The candidates for the top tier management staff shall be submitted by the President to the Chairman, and their appointment and discharge shall be dealt with in accordance with law.

Article 30

The President and management staff reported to the President of the Corporation shall not, for himself/herself or other parties, participate in any business operations similar to the Company’s.

Article 31

The Company's fiscal year shall start from the 1[st] of January and end on the 31[st] of December, and the year-end closing is thus conducted at the end of the year, as well as settled once a year at the end of June.

Article 32

At the close of each fiscal year, the Board of Directors shall prepare the following statements and records, and subsequently submit them to the regular shareholders' meeting for ratification.

Business report.
Financial statements.
Proposal concerning appropriation of net profits or covering of losses.

Article 33

The Company shall compensate more than 1% of the current year distributable as employees’ compensation and less than 3% to the board of directors. However, the company’s accumulated losses shall have been covered before distributing the profit according to the amount of the balance after the deduction from accumulated losses.

Article 33-1

Any earnings after the Company’s fiscal year final settlement shall be allotted to each item in the following order:

Payment of taxes and dues.
Completing the deficit and losses.
Set aside 10% for statutory surplus reserve, unless the statutory surplus reserve has reached the total capital.
Set aside or rotate special reserves.
Any further remaining amount shall be added to the unallocated surplus from the prior year as shareholder dividend and bonus. The Board of Directors shall draft a proposal to distribute the surplus, which shall be approved at a shareholders’ meeting.

Article 33-2

The resolution for appropriating net profits adopted by the shareholders’ meeting of the Corporation shall be congenial to the overall business environment and industrial growth policies, in the context of long-term financial planning, in pursuit of a stable and sustainable growth. The dividend policy shall fully reflect the operating performance and need for diversification. If net profits are available for appropriation upon year-end closing, the Corporate shall, each year, issue cash dividend based on 50% ~ 80% of the earnings available for distribution.

Chapter Six Supplementary Provisions

Article 34

The Company's organizational code and handling procedures are set forth specifically and separately.

Article 35

Amendments to the Articles of Incorporation shall be adopted with an attendance of shareholders representing two-thirds or more of the Company’s total number of shares issued, and consent of the majority of the shareholders participating in the meeting; or shareholders representing the majority of the Company’s total number of shares issued, and consent of two-thirds of the shareholders participating in the meeting.

Article 36

Matters not specified herein shall be subject to provisions in the Company Act and other relevant laws and regulations.

Article 37

These Articles of Incorporation are agreed to and signed on These Articles of Incorporation are agreed to and signed on April 28, 1962, and the first Amendment was approved on July 23, 1963, the second Amendment on May 7, 1964, the third Amendment on May 1, 1965, the fourth Amendment on July 18, 1967, the fifth Amendment on February 27, 1969, the sixth Amendment on May 1, 1969, the seventh Amendment on November 21, 1970, the eighth Amendment on March 2, 1971, the ninth Amendment on May 12, 1973, the tenth Amendment on April 3, 1976, the eleventh Amendment on May 5, 1979, the twelfth Amendment on May 17, 1980, the thirteenth Amendment on August 2, 1980, the fourteenth Amendment on October 4, 1980, the fifteenth Amendment on November 20, 1980, the sixteenth Amendment on June 13, 1981, the seventeenth Amendment on September 16, 1981, the eighteenth Amendment on December 12, 1981, the nineteenth Amendment on July 17, 1982, the twentieth Amendment on October 23, 1982, the twenty-first Amendment on December 18, 1982, the twenty-second Amendment on November 5, 1983, the twenty-third Amendment on June 8, 1984, the twenty-fourth Amendment on March 2, 1985, the twenty-fifth Amendment on May 5, 1986, the twenty-sixth Amendment on October 8, 1985, the twenty-seventh Amendment on January 7, 1986, the twenty-eighth Amendment on March 28, 1986, the twenty-ninth Amendment on May 29, 1986, the thirtieth Amendment on June 11, 1987, the thirty-first Amendment on June 3, 1988, the thirty-second Amendment on July 4, 1988, the thirty-third Amendment on June 12, 1989, the thirty-fourth Amendment on December 5, 1989, the thirty-fifth Amendment on December 12, 1990, the thirty-sixth Amendment on May 31, 1990, the thirty-seventh Amendment on October 24, 1990, the thirty-eighth Amendment on April 20, 1991, the thirty-ninth Amendment on June 13, 1990, the fortieth Amendment on June 12, 1992, the forty-first Amendment on June 11, 1993, the forty-second Amendment on May 27, 1994, the forty-third Amendment on June 15, 1995, the forty-fourth Amendment on June 6, 1996, the forty-fifth Amendment on June 12, 1997, the forty-sixth Amendment on June 12, 1997, the forty-seventh Amendment on June 2, 1998, the forty-eighth Amendment on May 18, 1999, the forty-ninth Amendment on November 11, 1999, the fiftieth Amendment on June 20, 2000, the fifty-first Amendment on June 27, 2001, the fifty-second Amendment on June 14, 2002, the fifty-third Amendment on May 20, 2004, the fifty-fourth Amendment on June 10, 2005, the fifty-fifth Amendment on June 9, 2006, the fifty-sixth Amendment on June 8, 2007, the fifty-seventh

Amendment on June 18, 2010, the fifty-eighth Amendment on June 22, 2012, the fifty-ninth Amendment on June 25, 2016. The sixtieth Amendment on June 28, 2017, the sixty-second Amendment on June 22, 2020. The sixty-third Amendment on July 30, 2021

Chairman: CHIANG, YI FU

Appendix IV

IV. Current Shareholdings of Directors

The total paid-up Capital of the Company is NTD 4,761,343,100 and the issued shares are of the total 476,134,310.
In accordance with Article 26 of the Securities Exchange Act, the minimum required combined shareholding of all directors by law is 16,000,000 shares.
As of the final day for stock transfer, the shareholding of the Company’s directors on the shareholders’ registry was as follows, which is in accordance with the standards listed in Article 26 of Securities and Exchange Act.

==> picture [441 x 375] intentionally omitted <==

----- Start of picture text -----

Title Remark/Name Shareholding (Shares)
Chairman SHENG-YUAN Investment Corp.
38,922,546
The Representative: CHIANG, YI FU
Director Sunrise Tech. Co. Ltd
6,266,514
The Representative: KUO, HUI CHUAN
Director Sunrise Tech. Co. Ltd
6,266,514
The Representative: WU, JIN TIOU
Director Sunrise Tech. Co. Ltd
6,266,514
The Representative: CHANG, WEI CHUN
Director Sunrise Tech. Co. Ltd
6,266,514
The Representative: CHIANG, FU NIEN
Director CHC International Investment Co.,Ltd.
2,256,730
The Representative: WENG, MIN SHIEN
Independent Gene-Tzn Chen
0
Director
Independent Sing-San Pai
0
Director
Independent Horng-Chi Chen
0
Director
The Total Shares of the Company’s Directors 47,445,790
----- End of picture text -----

AI assistant

CHEM — AGM Information 2022

51839_rns_2022-06-28_6f3281ea-2795-4594-a6c8-72dc30fe0275.pdf

Chung Hsin Electric & Machinery Mfg. Corp. Ltd.

2022 ANNUAL SHAREHOLDERS’ MEETING MEETING HANDBOOK

28 JUNE, 2022

INDEX

1.Meeting Procedures & Agenda

Chung Hsin Electric & Machinery Mfg. Corp. Ltd.(CHEM) Meeting Agenda & Procedures for the 2022 Annual Meeting of Shareholders

 Meeting Procedures:

1.Call the Meeting to Order

2.Chairperson to Take Seats

3.Chairperson Remarks

4.Management Presentation (Company Reports)

5.Proposals

6.Discussions

7.Questions and Motions:

8.Adjournment

2. Management Presentations (Reports on Company Affairs)

Report No.1: 2021 Business Reports

Report No.2: The Audit Committee’s Review Report on Financial Statements of 2021

Report No. 3: The Status of Endorsement and Guarantee of 2021.

Report No.4: Report of the Company’s indirect investments in Mainland China

(the PRC)

Report No.5: Report of the Staff Remuneration and Director's Remuneration

Distribution

Report No.6: To report the Issuance of the first secured corporate bond.

3. Proposals

Motion 2: Adoption of the proposal for distribution of 2021 profits

Chung Hsin Electric & Machinery Mfg. Corp. Ltd. Table of Profit Distribution 2021

4. Discussion

5.Questions and Motions

6. Attachment

I. 2021 Business Report

1. Overview of Business Performance

2. Budget Implementation:

3. Financial Overview:

Chung Hsin Electric & Machinery Mfg. Corp. Ltd.

II. Audit Committee’s Review Report

Chung Hsin Electric & Machinery Mfg. Corp

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for Opinion

Key Audit Matters

Engineering Revenue Recognition

Other Matter

Responsibilities of Management and Those Charged with Governance for the Parent Company Only Financial Statements

Auditors’ Responsibilities for the Audit of the Parent Company Only Financial Statements

Notice to Reader

CHUNG-HSIN ELECTRIC AND MACHINERY MANUFACTURING CORPS. PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2021 AND 2020

CHUNG-HSIN ELECTRIC AND MACHINERY MANUFACTURING CORPS. PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2021 AND 2020

CHUNG-HSIN ELECTRIC AND MACHINERY MANUFACTURING CORPS.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

CHUNG-HSIN ELECTRIC AND MACHINERY MANUFACTURING CORPS. PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

CHUNG-HSIN ELECTRIC AND MACHINERY MANUFACTURING CORPS.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

CHUNG-HSIN ELECTRIC AND MACHINERY MANUFACTURING CORPS. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Opinion

Basis for Opinion

Key Audit Matters

Engineering Revenue Recognition

Other Matter

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Notice to Reader

CHUNG-HSIN ELECTRIC AND MACHINERY MANUFACTURING CORPS. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF BALANCE SHEETS

DECEMBER 31, 2021 AND 2020

CHUNG-HSIN ELECTRIC AND MACHINERY MANUFACTURING CORPS. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

CHUNG-HSIN ELECTRIC AND MACHINERY MANUFACTURING CORPS. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

CHUNG-HSIN ELECTRIC AND MACHINERY MANUFACTURING CORPS. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

CHEM

Operational Procedures for the Acquisition or Disposal of Assets

Chapter 1 General Principal

Chapter 2 Procedures

CHEM AGM Information 2022