CMC - Annual Report 2018 | FinancialReports.eu

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Stock Code ： 2204

China Motor Corporation 2018 Annual Report

(Translation)

Printed on March 31, 2019

Notice to Readers

The Annual Report have been translated into English from the original Chinese version. 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 version shall prevail.

I. Information regarding Spokesperson, Deputy Spokesperson

Spokesperson: Ching-Wu Chien Title: Vice President Deputy Spokesperson: Ling-Jun Lin Title: General Manager, Corporate Planning Division, China Motor Corporation Tel: 886-3-4783191 Email: [email protected]

II. Contact Information of Headquarter, Branch Company and Plant

Headquarter Address: 11F., No.2, Sec. 2, Dunhua S. Rd., Da’an Dist., Taipei City 106, Taiwan Tel: 886-2-23250000

China Motor Training Center Address: No.3, Qingnian Rd., Yangmei Dist., Taoyuan City 326, Taiwan Tel: 886-3-4641100 Yang Mei Plant Address: No.618, Xiucai Rd., Yangmei Dist.,Taoyuan City 326, Taiwan Tel: 886-3-4783191 Hsin Chu Plant Address: No.2, Guangfu Rd., Hukou Township, Hsinchu County 303, Taiwan Tel: 886-3-5985841

III. Common Share Transfer Agent and Registrar

Company: China Motor Corporation

Address: 7F., No.150, Sec. 2, Nanjing E. Rd., Zhongshan Dist., Taipei City 104, Taiwan

Tel: 886-2-25156421

Website: http:// www.china-motor.com.tw

IV. Information regarding 2018 Auditors

Company: Deloitte & Touche

Auditors: Eddie Shao, Ya-Ling Wong

Address: 20F, Taipei Nan Shan Plaza, No. 100, Songren Rd., Xinyi Dist., Taipei 11073,Taiwan

Tel: 886-2-27259988

Website: http://www.deloitte.com.tw

V. Information regarding Depositary: N.A.
VI. Corporation Website: http:// www.china-motor.com.tw

Table of Contents

[Letter to Shareholders]──────────────────────────	4
[Company Profile]────────────────────────────	6
I. Founding Date ····························································································	6
II. Company History ························································································	6
III. Business Results ························································································	7
IV. Charity ···································································································	8
[Corporate Governance]────────────────────────── 13
I. Organization ······························································································	13
II. Directors and Management Team ·····································································	14
(I) Information Regarding Board of Directors ································································	14
(II) Directors' Professional Qualifications and Independent Analysis ·····································	27
(III) Information Regarding President, Executive Vice President, Vice President, and General Manager
of Each Department ························································································	28
(IV) Remuneration Paid to Board of Directors, Supervisors, President, and Executive Vice President
in the Latest Year ···························································································	34
(V) Employment Compension Granted to Management Team ·············································	38
III. Implementation of Corporate Governance ··························································	39
(I) Board of Directors Meeting Status ·········································································	39
(II) Attendance of Supervisors for Board Meetings ·························································	40
(III) Audit Committee Meeting Status ·········································································	40
(IV) Corporate Governance Execution Status and Deviations from “Corporate Governance
Best-Practice Principles for TWSE/GTSM Listed Companies” ······································	44
(V) Composition, Responsibilities and Operations of Compensation Committee ·······················	51
(VI) Social Responsibility ·······················································································	53
(VII) Taiwan Corporate Conduct and Ethics Implementation as Required by the Taiwan
Financial Supervisory Commission ·····································································	61
(VIII) Corporate Governance Guidelines and Regulations ·················································	64
(IX) Other Important Information Regarding Corporate Governance ····································	64
(X) Internal Control System Execution Status ·······························································	65
(XI) Punishment and Improvement Status of Violation Internal Control System during the 2018
Calendar Year and up to March 31, 2019 ·······························································	66
(XII) Major Resolutions at Shareholders Meetings and Board of Directors Meetings during the 2018
Calendar Year and up to March 31, 2019 ·······························································	66
(XIII) Major Issues of Record or Written Statements Made by Any Director or Supervisor Dissenting to
Important Resolutions Passed by the Board of Directors during the 2018 Calendar Year and up	to
March 31, 2019 ····························································································	68
(XIV) Resignation or Dismissal of Chairperson, President, and General Manager of Accounting,
Finance, Internal Audit and R&D during the 2018 Calendar Year and up to March 31, 2019 ··	68
IV. Information Regarding Audit Fees ···································································	68
V. Information Regarding Replacement or Rotation of Accountants ································	69
VI. Chairperson, Prisident and General Manager of Financial Affairs or Accounting Working
in CMC’s Independent Audit Firm or its affiliates during 2018 ·································	70
VII. Changes in Shareholding of Directors, Managers and Major Shareholders ···················	71
VIII. Information Disclosing the Relationship between any of the Top 10 Shareholders ·········	72
IX. Long-Term Investment Ownership ··································································	73

[Capital Overview]──────────────────────────── 74 I. Capital and Shares ····························································································································· 74 (I) Sources of Capital ···························································································· 74 (II) Type of Stock ································································································· 74 (III) Status of Shareholders ····················································································· 74 (IV) Shareholding Distribution Status ········································································· 75 (V) List of Major Shareholders ················································································· 75 (VI) Market Price, Net Worth, Earnings, and Dividends per Share ······································· 76 (VII) Corporate Dividend Policy and Implementation Status ·············································· 76 (VIII) The Impact of Stock Dividend Issuance on Business Performance and EPS ···················· 77 (IX) Employee Compension and Directors' Remuneration ················································· 77 (X) Buyback of Treasury Stock ················································································· 79 II. Issurance of Corporate Bonds ·········································································[79] III. Issurance of Preferred Stock ··········································································[79] IV. Issuance of Depository Receipts ······································································[79] V. Status of Employee Stock Option Plan and Employee Restricted Stock ·························[79] VI. Status of New Share Issuance in Connection with Mergers and Acquisitions ·················[79] VII. Financing Plans and Implementation ·······························································[79] [Operational Highlights]──────────────────────────── 80 I. Business Activities ·······················································································[80] (I) Business Scope ································································································ 80 (II) Industry Overview ··························································································· 83 (III)Technology and R&D Overview ·········································································· 84 (IV) Long- and Short-term Business Development Plan ···················································· 85 II. Market, Production, and Sales Overview ····························································[85] (I) Market Analysis ······························································································· 85 (II) Main Uses and Production Processes of Major Products ·············································· 89 (III) Supply Status of Main Materials ········································································· 90 (IV) Major Suppliers and Clients Taking over 10% of the Amount of Incoming (Sales) over the Last Two Years ···································································································· 90 (V) Production over the Last Two Years ······································································ 92 (VI) Sales over the Last Two Years ············································································ 92 III. Human Resources ······················································································[92] IV. Environmental Cost ····················································································[93] (I) Losses and Fines Caused by Environmental Pollution during the 2018 Calendar Year and up to March 31, 2019 ································································································ 93 (II) Forecast of Environmental Cost for the Next Three Years ············································· 93 V. Labor and Management Relationship ·································································[93] (I) Employee's Benefits, Training, Retirement Measures and Implementation ·························· 93 (II) Dispute between Labor and Management during the 2018 Calendar Year and up to March 31, 2019 ················································································································· 98 VI. Major Contracts ························································································[99] [Financial Highlights]──────────────────────────── 100 I. Condensed Balance Sheet and Statement of Comprehensive Income over the Last Five Years[100] (I) Condensed Balance Sheet and Statement of Comprehensive Income ································· 100 (II) Auditors' Opinions over the Last Five Years ····························································· 103

Table of Contents

II. Financial Analysis over the Last Five Years ·························································[104] III. Audit Committee's Review Report ···································································[107] IV. Consolidated Financial Statements and Appendix ·················································[108] V. Financial Statements and Appendix of the Corporation ············································[210] VI. Financial Difficulties during the 2018 Calendar Year and up to March 31, 2019 ···············[283] [ R e v i e w o f F i n a n c i a l St a t u s , Op e r a t i n g R e s u l t s , a n d R i s k Management]─────────────────────────────────── 284 I. Analysis of Financial Status ·············································································[284] II. Analysis of Operating Results ·········································································[285] III. Analysis of Cash Flow ·················································································[286] IV. Major Capital Expenditure ············································································[286] V. Re-investment Policies in last year and Major causes for Profit/Loss and Improvement, and Investment Plans in the coming year ··································································[287] VI. Risk Management ······················································································[288] (I) Impact on profits/losses of Interest rate volatility, Exchange rate volatility and Inflation and the Future Countermeasures ················································································ 288 (II) Risks Associated with High-risk/High-leveraged Investment; Lending, Endorsement and Guarantees; and Derivative Transactions ································································· 289 (III) Future R&D Plans and Expected R&D Spending ······················································ 289 (IV) Effects of and Response to Changes of Government Policies and Regulatory Environment ···· 289 (V) Effects of and Response to Changes in Technology and Industry ···································· 290 (VI) Effects of and Response to Changes in Corporate Image on Company's Crisis Management ··· 290 (VII) Expected Benefits from, Risks Relating to and Response to Merger and Acquisition Plans ···· 290 (VIII) Expected Benefits from, Risks Relating to and Response to Capacity Expansion ·············· 290 (IX) Risks Associated with Sales and Purchase Concentration ············································ 290 (X) Effects of, Risks Relating to and Response to Sales of Significant Numbers of Shares by Directors, and/ or Major Shareholders Who Own 10% or More of the Corporation’s Total Outstanding Share ················································································································ 290 (XI) Effects of, Risks Relating to and Response to Changes in Control over the Corporation ········ 290 (XII) Risks Associated with Litigation or Non-litigation Matters ········································· 290 (XIII) Other Risks ································································································ 290 VII. Other Information Matters ···········································································[290] [Special Disclosure]────────────────────────────────── 291 I. Summary of Affiliated Companies ·····································································[291] (I) Consolidated Business Report of Affiliated Enterprises ················································· 291 (II) Consolidated Financial Statement of Affiliated Enterprises ··········································· 300 (III) Affiliation Report ··························································································· 301 II. Private Placement Securities during the 2018 Calendar Year and up to March 31, 2019 ·······[302] III. Status of Shares Held or, Disposed of, by Subsidiaries during the 2018 Calendar Year and up to March 31, 2019 ·························································································[ 302] IV. Other Special Notes ····················································································[302] V. Impacts of Significant Events on Shareholders' Rights or Stock Value during the 2018 Calendar Year and up to March 31, 2019 ··········································································[302]

Letter to Shareholders

Weakened growth of the global economy combined with the ongoing trade dispute between China and USA caused car demands to dwindle in Taiwan from the 2nd quarter of the previous year (2018). Overall car sales totaled 435,000 (including large/imported vehicles) in 2018, down 2.2% compared to 2017.

In an attempt to stimulate market demand, CMC introduced ECLIPSE CROSS, a popular-selling model from Mitsubishi Japan, and a significantly upgraded version of CMC OUTLANDER in 2018 that, with the support of an improved distribution network, contributed to CMC's brand image, sales and distribution performance, and advertising effects. Domestic vehicle sales amounted to 48,335 units (including heavy vehicles) for the year, down 1.8% from the 49,223 units reported in 2017 and resulted in an EPS of NT$2.64. In the export market, CMC had yet to adjust to the tightened safety regulations that GCC (Gulf Cooperation Council; an organization of 6 Middle Eastern countries) introduced back in 2017, and therefore saw a decline of export sales performance to 443 units in 2018.

Despite the market's challenging outlook, CMC will continue to grow both domestic and export sales in 2019 by introducing special edition models and making adjustments to the current business framework. With newly improved models such as DELICA and ZINGER scheduled for launch during the 3rd quarter, CMC has set its domestic sales target at 49,624 (including heavy vehicles) for 2019. As for exports, models including VERYCA and ZINGER now conform with GCC safety regulations, and sales volume should grow by 20% compared to 2018 (sales are expected to resume in October this year).

Sales in China totaled 28.08 million units in 2018, down 2.8% from 2017 and represented the first decline since 1990 due to reduced import tariffs and escalation of the China-USA trade war that weakened automobile demand since the 3rd quarter. Due to a downturn of the overall environment and intensified market competition, Southeast Auto sold a total of 90,500 units in 2018, down 41.5% from 2017. For the coming year (2019), Southeast Auto will focus on promoting sale of DX7 and DX3, and the launch of DX5 (SUV) in the 2nd half followed by DX3 EV500 (an extended mileage edition of electric vehicle - DX3) towards year-end should increase sales to 102,200 units for the year. Meanwhile, Fujian Benz Automotive, one of CMC's investments, sold nearly 28,600 units in 2018 due to popular demand for VS20, representing a growth of 27.1% over the 22,500 units reported in 2017. Given the expected reduction of value-added tax in China this year (2019), Fujian Benz Automotive should be able lower selling price across all products, and improve sales performance by

Letter to Shareholders

7.6% over 2018 to 30,800 units.

In terms of new business development, CMC's scooters sold a total of 10,093 units in 2018, up 7.7% from 2017. CMC expects to launch two new motorcycle models (115c.c.~125c.c.) into the mainstream market in 2019, and will be working with CPC and government agencies in a strategic collaboration to expand charging stations for users' convenience. This new development combined with ongoing popular demand for electric scooters should greatly improve sales performance in 2019.

CMC appreciates the dedicated support and encouragement of its shareholders. Despite intensified competition in the automobiles market, we shall strive to improve sales performance further in 2019 to reciprocate our shareholders.

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Li-lien Chen Yen Chairperson

March 31, 2019

Company Profile

I. Founding Date

June 13, 1969

II. Company History

1969 The Corporation was founded by late Yen Tjing Ling with capital NT$100 million.
1970 The Corporation signed technique cooperation contract with Mitsubishi Motors Corporation.
1973 Yangmei Plant was built, manufacturing Fuso and Delica.
1986 Mitsubishi Motors Corporation (MMC) and Mitsubishi Corporation officially invested the Corporation, holding 19% and 6% of the stock respectively.
1988 Verica, a light commercial vehicle, was developed by the Corporation successfully, launched for formal production.
1990 Mechanical stamping plant was built, and Hsinchu Plant was built.
1993 Our first product in the sedan field - official launch of LANCER. The production amount of cars in the same year broke 500 thousand.
1998 Over 1 million cars were sold.
1999 SEM was completed for production. In the same year, the main building of CARTEC was completed, and China-Motor Indigenous Culture and Education Foundation was founded.
2006 The Corporation signed a letter of intent with Chrysler to produce Dodge brand vehicles and exported them to Mexico from Taiwan.
In the same year, the Corporation undertook the prodution of Chrysler’s Town & Country RV, which was the first time of it to be techinically authorized and produced overseas.
2007 The plant of Fujian Daimler Motors Industry Co., Ltd. (now Fujian Benz Automotive Co., Ltd.) was built.
2010 The Corporation joined in green energy industry, releasing "e-moving", an electric scooter.
2012 Export of the LANCER FORTIS to the Middle East market. CMC cooperated with Mitsubishi Motors Corporation (MMC) to march toward the international market together with the work divided into production and marketing.

Company Profile

2013 Own brand 3.5T Leadca commercial vehicle was released.
2015 Research and develop ZINGER independently, and have the car released with China Motor Brand.
2016 CMC helped Mitsubishi Motor Corporation with international division of labor. The first batch of modules was shipped to Indonesia.
2017 The GRAND LANCER, of which China-motor Asia Research & Technology Center (CARTEC) led the development, was launched.
2018 Launch of CMC A180/A190.

III. Business Results

(1) Won the first place in Award of Coporate Social Responsiblity, traditional industry group, Global Views Monthly, three years in a row, and was listed in CSR three times.
(2) COLT PLUS, LANCER iO, and OUTLANDER were certified with energy label by Ministry of Economic Affairs.
(3) Received the Award of Corporation with the Highest Average Asset Return in the Past 20 Years from China Credit Information Service, Ltd.
(4) Selected as 2010 Excellent Company with Friendly Working Space by Ministry of Labor.
(5) China Motor Training Center was honored as Excellent Training Unit in Taoyuan Area, Vocational Training Bureau, Executive Yuan.
(6) E-moving electric scooter was certified TES (Taiwan E-scooter Standard) by Industrial Development Bureau, Ministry of Economic Affairs and honored as Eco-Friendly Vehicle of the Year by Environmental Protection Agency.
(7) In 2010, e-moving electric motorcycle received iF Design Award, Germany, Taiwan Excellence, Award of Good Design Mark, and Golden Pin Design Award, Industrial Development Bureau, Ministry of Economic Affairs.
(8) CMC's e-moving Super and GreenTrans (mid-mounted motor kit) won the 22nd and 23rd Taiwan Excellence Award, respectively.
(9) Outlander and Lancer Fortis received Award of High Efficient Dynamics and Award of Energy Conservation in Yahoo! 2010 Outstanding Vehicle Competition respectively.
(10) Won Taoyuan County Excellent Enterprise Award for Environmental Protection and Green Energy and Excellent Enterprise Award in Taoyuan City.

Company Profile

(11) Received double award in the first National Training Quality Award.
(12) Lancer received Award of High Efficiency in Energy Conservation and Award of Fun in Driving in Yahoo! 2011 Outstanding Vehicle Competition.
(13) Won the 2nd "Green Classics Award" and the 2016 Energy Conservation Excellence Award from the Ministry of Economic Affairs.
(14) Won "Award of Excellence" in BusinessNext's Top Green Brands, and ranked 2nd among the automobiles industry in CommonWealth Magazine's Excellence in Corporate Social Responsibility.
(15) Won CommonWealth Magazine's Excellence in Corporate Social Responsibility from 2014 to 2018, and ranked 1st in the automobiles industry for 5 consecutive years.
(16) Won the 9th "National HRD InnoPrize" and 2015 National Talent Development Awards - Large Enterprise Category from the Workforce Development Agency, Ministry of Labor.
(17) CMC's service system was ranked first among non-luxury brands in J.D. Power's customer satisfaction survey in 2014 and 2017.
(18) CMC received "Top 5% Ranking in the TWSE Division" from the 1st to the 4th Corporate Governance Evaluation of the Taiwan Stock Exchange Corporation.
(19) CMC's green factory efforts achieved another milestone, as Yang Mei Plant was awarded Gold in "MOEA Energy Label" and Excellent in Taoyuan City's air pollution reduction reward program.
(20) CMC received award of excellence in the "2018 Green Factory Counseling Program" and was the only enterprise to win the award in the automobiles industry.
(21) MITSUBISHI ECLIPSE CROSS won Best Imported SUV in 2018 Car of The Year Awards.

IV. Charity

Education

(1) CMC has long sponsored the "Read for Hope" and funded the nationwide tour of the Read for Hope bus

The "CMC Cultural and Educational Foundation for Indigenous People" has been founded with the mission of closing the urban-suburban divide and promoting knowledge in remote areas. In 2004, the foundation began a collaboration with Common Wealth Education

Company Profile

Foundation and launched a "Read for Hope" project that resulted in the donation of 5 special-purpose buses. For 15 years, these buses have toured the far corners of Taiwan and traveled more than 182,920km, a distance that could circle Taiwan 137 times.

(2) Given the rise of the Internet generation and the change of reading habits, CMC mobilized employees and gathered nearly a thousand children's books to help expand collection of Taishan Forest Book House, the first library of the indigenous people, in 2018. Furthermore, CMC initiated an industry-academia collaboration program called "Anchor" to train talents for the automobiles industry, and invited students from vocational high schools to a tour at CMC where they can experience the corporate culture early and gain exposure to advanced knowledge.

In Combination with the Automobile Industry

(1) Guarding happiness - Shuttling with love.

CMC started its "Guarding Happiness Project" at the end of 2016 and has since been making donations to "Wufeng Church" in Taichung and "Fengtian Little League" in Taiyung, plus 3 shuttle buses to "Pingtung Wanluan Happiness Association" for the safety of children living in remote areas. Through the "Guarding Happiness Project," CMC introduced "Children's Shuttle Safety Solution" and donated shuttle buses to "Tainan City Social Care Association" and "Bethel Humanity Association." These buses were painted yellow to symbolize the sun, hope and our care for disadvantaged children.

(2) Vehicle maintenance service tour to guard the vehicle safety in remote villages.

CMC has a comprehensive distribution and service network available to ensure car owners' safety. In addition to the 141 service stations, CMC has also collaborated with Fortune Motors and Shung Ye Motors to launch a "Vehicle Maintenance Service Tour" aimed at remote and less populated coastal and mountain areas, and thereby improve travel safety of vehicle owners at remote locations. The project made 24 service tours and examined a total of 1,007 vehicles in 2018, which was 60% higher than 2017. Through this project, CMC discovered that many car owners in remote locations have neglected the severe wear of their tyres. In response, CMC joined tyre supplier - Bridgestone Taiwan in a trip to Nanho Village, Pingtung County, where they communicated with the locals on vehicle maintenance and safe driving, and offered one-for-one discount on Bridgestone tyres for owners of Mitsubishi Delica (excluding 4WD models) and CMC vehicles with tread depth below

Company Profile

1.6mm or tyres that show extensive wear, subject to technician's inspection. This initiative was intended to offer higher safety assurance for indigenous vehicle owners who are less financially sound.

(3) CMC's Anchor program and donation of emoving and GRAND LANCER test models

CMC has long been collaborating with academic institutions to offer internship opportunities, and has trained nearly 2,000 talents for the automobiles industry to date. In support of technical and vocational education in Taiwan, CMC has donated 28 test models since 2015 to better equip vocational schools nationwide. After donating 11 emoving units to New Taipei Industrial Vocational High School for the organization of "New Tipei City Education Department Junior High School Technical Contest - Basic Introduction to Automobile and Motorcycle" in early 2018, CMC donated 11 units of GRAND LANCER to support workshop practice and study for automobile department students at Chien Hsin University of Science and Technology, National Tseng-Wen Agricultural & Industrial High School, National Kangshan Senior High School, Chi-Ying Senior High School, Cheng-kung Senior Industrial Commercial Vocational School and ARTC.

Support for indigenous people and residents in remote areas

(1) Remote agricultural community development support program
CMC has spent nearly NT$1 million into purchasing agricultural produce from indigenous farmers since 2012, owing to the passionate group purchase support from employees. Employees' passion also led to the commencement of "Remote Agricultural Community Development Program," where CMC purchases organic produce at reasonable prices from small, indigenous farmers nationwide that do not have access to a reliable distribution channel, and promotes them internally to employees. In addition to organizing group purchase of fresh produce three times a year, CMC began serving organic vegetables at the employee restaurant since 2015, and later increased the frequency of organic vegetable servings from two days to three days a week in 2018. What began as an act of kindness is now contributing to employees' health. As of the end of 2018, CMC had supported indigenous farmers by purchasing 17,166 kg of organic vegetables. To maximize CSR influence, CMC coordinated with nearly 50 business partners including Hsin Chong Machinery, Chien Sheng, Ying Ming Industry, Chung Tuan, Shan Li, Sentec, and Kian Shen

Company Profile

to assemble a "Distribution Alliance for Indigenous People" in 2018 that helped sell 2,092 kg of persimmons for indigenous farmers at Hoping Township, Taichung County. In just one week, the alliance was able to amass group purchase orders for one-third of farmers' total harvest. With the support of business partners, CMC was able to organize more than NT$1 million of purchases on organic vegetables and fruit that not only solved distribution difficulties for farmers, but contributed significantly to the sustainability of indigenous villages as well.

(2) "Dream Project" - employees' voluntary service to indigenous people

CMC has long been running "Dream Project," a program that invites employees to raise proposals to care for people in far corners of Taiwan and expand influence through social network. There has been severe loss of population in Taiwan's remote areas in recent years, and a total of 275 remotely located elementary schools may be made redundant. New Taipei City alone has 26 schools with less than 50 students, and 4 of which received only 1 new student in academic year 2017. Meanwhile, only one student is graduating from Fushan Elementary School located in Wulai District, New Taipei City, in 2018. Situated 90 minutes away from the nearest city, many remotely located schools are having difficulties finding photographers to shoot graduation pictures for them, which was why CMC initiated the "Remote Student Dream Graduation Project" and arranged transportation to carry photographer Wen-Yi Yang deep into the mountains to help children preserve their memorable moments.

Transportation service was provided using CMC's COLT PLUS, which proves competent in delivering photographers to the furthest corners. CMC has sponsored the "Remote Student Dream Graduation Project" with an additional NT$300,000 to fund photo shoots in 2019; in addition, OUTLANDER will be provided as a shuttle vehicle to transport volunteer photographers in 2019. With corporate support, the Dream Project is able to expand to help produce graduation album for children from 31 schools.

(3) Sports Day for remotely located elementary schools

CMC has been organizing "Remote Elementary School Sports Day" events for children in remote locations since 2016, and has so far achieved favorable outcomes whether in terms of car owners' participation, teachers' interaction with parents, and public support. In an attempt to connect remotely located children with urban life and provide them with an opportunity to explore the world given their limited resources, CMC introduced a

Company Profile

"Children's Vision" program where it invited 28 children of the Bunun tribe from Baoshan Elementary School and Jian-Shan Primary School located in Taoyuan District, Kaohsiung City, to an eye-opening tour. Through a series of photography events, we helped children develop a different perspective about home and the city, and captured their exciting summer story on camera. A total of 336 children in remote locations benefited from the program at the end of 2018.

Attention to urban and rural areas

(1) "Discovery Tour" - An invitation to discovering local beauties

For more than 40 years, CMC has cared for the local environment through action, and actively mobilized car owners to visit interesting places. Through association with charity events, we bring significant number of visitors to the local community and introduce car owners to the distinctive beauties of the local environment. In 2018, CMC invited its customers to relive their childhood memories featuring bricks, a century-old toy that still fascinates people till this day, by organizing an event called "Discovery Tour - Fairy Tale in Bricks." The sight of Taiwan's largest brick maze with a fairy tale theme combined with exciting activities attracted participation from more than ten thousand car owners. Children of Wufeng Church who took part in CMC's "Guarding Happiness Project" No. 1 - After School Association of Taiwan were invited to join car owners in fun activities and discover the beauty of Nantou.

At the end of the event, more than ten thousand bricks were donated to remotely located elementary schools and children's charity institutions such as After School Association of Taiwan and Pingtung County Association of Aboriginal Cultures and Education.

(2) Coastal and mountain cleanup

CMC has long devoted attention and taken action to ensure sustainability of the environment. In addition to setting energy and carbon reduction targets for Hsin Chu Plant and Yang Mei Plant, CMC has also made environmental protection a long-term volunteer activity within the organization since 2017. The employees formed their own environmental protection volunteer club and organized 8 coastal/mountain cleanup events in 2018 at various locations including Yingge Sunlong Trail, Taoyuan Yongan Fishing Port, Hsinchu Eighteen Peaks Mountain, Hsinchu Jiuqiong Lake and Hsinfeng Mangrove. A total of 215 volunteers had participated in the above events and contributed their efforts to the sustainability of the environment.

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|I. Organization|Shareholders'|April 1, 2019|
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April 1, 2019

Corporate Governance

II. Directors and Management Team

(I) Information Regarding Board of Directors

Title	Nationality or Country of Incorporation	Name	Gender	Date Elected	First Elected Date	Term	Shareholding When Elected	Shareholding When Elected	Current Shareholding	Current Shareholding	Spouse and Minor Shareholdi ng	Spouse and Minor Shareholdi ng
							Shares	%	Shares	%	Shar es	%
Chairperson	R. O. C.	Yulon Motor Co., Ltd. Representative: Li-lien Chen Yen	Female	2018/12/07	1994/7/1	3 years	111,480,444	8.05	111,480,444	8.05	-	-
Director	Japan	Mitsubishi Motors Corporation Representative: Eiichi Takasawa	Male	2016/6/24	2013/4/1	3 years	193,768,273	14.00	193,768,273	14.00	-	-

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Corporate Governance

March 31, 2019

				March 31, 2019	March 31, 2019	March 31, 2019
Shareholdings in Others’ Names		Education and Selected Past Positions	Current Positions	Other Directors, Board of Directors, or Supervisors Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
Shares	%			Title	Name	Relation
-	-	Department of Physical Education, Chinese Culture University	Chairperson, Yulon Motor Co., Ltd. Chairperson, Yulon Nissan Motor Co., Ltd. Director, Taiwan Acceptance Corporation Chairperson, Tai Yuen Textile Co., Ltd. Vice Chairman, Winsome Development Co., Ltd. For details, please refer “Summary of Affiliated Companies.”	-	-	-
-	-	Science and Engineering Department, Aoyama Gakuin University Positions are described as those in the right column.	General Manager of North Asia B Department, North Asia Division, Mitsubishi Motors Corporation Director, Fortune Motors Co., Ltd. Director, South East (Fujian) Motor Co., Ltd. Director, Shenyang Aerospace Mitsubishi Motors Engine Manufacturing Co., Ltd. Director, Harbin Dongan Automotive Engine Manufacturing Co., Ltd. Director, Mitsubishi Motors (China) Co., Ltd.	-	-	-

Corporate Governance

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Title	Nationality or Country of Incorporation	Name	Gender	Date Elected	Date First Elected	Term	Shareholding When Elected	Shareholding When Elected	Current Shareholding	Current Shareholding	Spouse and Minor Shareholding	Spouse and Minor Shareholding
							Shares	%	Shares	%	Shares	%
Director	R. O. C.	Tai Yuen Textile Co., Ltd., Representative: Hsin-I Lin	Male	2016/6/24	1984/7/20	3 years	348,589,538	25.19	348,589,538	25.19	-	-
Director	R. O. C.	Tai-Yuen Textile Co., Ltd., Representative: Kuo-Rong Chen	Male	2016/6/24	2004/6/24	3 years	348,589,538	25.19	348,589,538	25.19	-	-
Director	Japan	Mitsubishi Corporation, Representative: Takayasu Yonekura	Male	2018/4/01	2018/4/01	3 years	66,404,796	4.80	66,404,796	4.80	-	-

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Corporate Governance

Shareholdings in Others’ Names	Shareholdings in Others’ Names	Education and Selected Past Positions	Current Positions	Other Directors, Board of Directors, or Supervisors Who are Spouses or within Second-degree Relative of Consanguinity to Each Other	Other Directors, Board of Directors, or Supervisors Who are Spouses or within Second-degree Relative of Consanguinity to Each Other	Other Directors, Board of Directors, or Supervisors Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
Shares	%			Title	Name	Relation
-	-	Dept. of Mechanical Engineering, National Cheng Kung University Chairperson,,Industrial Technology Research Institute Deputy Minister, Executive Yuan and Minister, Council for Economic Planning and Development Minister, Ministry of Economic Affairs Chairperson, Taiwan Transportation Vehicle Manufacturers Association Vice Chairman and President,China Motor Corporation	Director, Yulon Motor Co., Ltd. Independent Director, E. SUN Financial Holding Co., Ltd. Managing & Independent Director, Shihlin electric & engineering Corporation	-	-	-
-	-	Executive Master of Business Administration, National Chiao Tung University Executive vice president & President, Yulon Motors Co., Ltd.	Vice Chairman, Yulon Motor Co., Ltd. Director and Executive Assistant to the Chairperson, Yulon Nissan Motor Co., Ltd. Chairperson, Taiwan Acceptance Corporation Director, Tai-Yuen Textile Co., Ltd. Chairperson, Hua-chuang Automobile Information Technical Center Co., Ltd. Chairman, Luxgen Motor Co., Ltd. Director, Winsome Development Co., Ltd. Vice Chairman, Dong Feng Yulon Motor Co., Ltd. For details, please refer “Summary of Affiliated Companies.”	-	-	-
-	-	Policy Management Dept. Keio University Positions are described as those in the right column.	Taiwan & Korea Team Leader, North Asia Automotive Dept. Automotive Business Division. Mitsubishi Corporation	-	-	-

Corporate Governance

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Title	Nationality or Country of Incorporation	Name	Gender	Date Elected	Date First Elected	Term	Shareholding When Elected		Current Shareholding		Spouse and Minor Shareholding
							Shares	%	Shares	%	Shares	%
Director	R. O. C.	Le Wen Enterprise Co., Ltd. Representative: Chao-Wen Chen	Male	2016/6/24	2016/6/24	3 years	5,539,400	0.40	5,539,400	0.40	-	-
Director	R. O. C.	Yulon Motor Co., Ltd. Representative: Tai-Ming Chen	Male	2019/1/02	2008/7/21 (Note)	3 years	111,480,4444	8.05	111,480,4444	8.05	-	-
Director	R. O. C.	Tai Yuen Textile Co., Ltd., Representative: Hsin-Cheng Tseng	Male	2018/11/20	2018/11/20	3 years	348,589,538	25.19	348,589,538	25.19	-	-

Note : Director Tai-Ming Chen was first elected on July 21, 2010, and the term of his service ended June 30, 2013 (Continued on the next page)

Corporate Governance

Shareholding in Others' Names	Shareholding in Others' Names	Education and Selected Past Positions	Current Positions	Other Directors, Board of Directors, or Supervisors Who are Spouses or within Second-degree Relative of Consanguinity to Each Other	Other Directors, Board of Directors, or Supervisors Who are Spouses or within Second-degree Relative of Consanguinity to Each Other	Other Directors, Board of Directors, or Supervisors Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
Shares	%			Title	Name	Relation
-	-	Executives Program of Graduate School of Business Administration, National Chengchi Univeristy Dept. of Chemical Engineering, Chung Yuan Christian University ExecutiveVice President, China Motor Corporation General Manager, Production Engineering Division, China Motor Corporation	Director and General Manager of China Motor Corporation Chairperson, Kian Shen Corporation Chairperson, ROC Spicer Ltd. Chairperson, Fortune Motors Co., Ltd. Director, Shung Ye Motor Enterprise Director, Tokio Marine Newa Insurance Co., Ltd. Director, Hua-chuang Automobile Information Technical Center Co., Ltd. Director, Shye Shyang Mechanical Industrial Co., Ltd. Director, South East (Fujian) Motor Co., Ltd. For details, please refer “Summary of Affiliated Companies.”	-	-	-
-	-	LLM, Boston University	Senior Consultant, Jones Day Taipei Office Independent Director, Simplo Technology Co., Ltd. Independent Director, PCL Technologies, Inc. Independent Director, Orient PHARMA Co., Ltd. Supervisor, Otsuka Information TechnologyCorp.	-	-	-
-	-	MBA, National Chengchi University Department of Nuclear Engineering and Science, National Tsing Hua University Vice Presidenof China Motor Corporation	Director and Vice President of China Motor Corporation Substitute President, South East (Fujian) Motor Co., Ltd. The following duties have been undertaken concurrently since April 1, 2019: Director, Kian Shen Corporation Director, Fortune Motors Co., Ltd. Director, Shung Ye Motor Enterprise Director, South East (Fujian) Motor Co., Ltd. Director, ROC Spicer Ltd. Director, Tai-Ya Investment (HK) Co., Ltd. Director, Fujian Spicer drivetrain System Co., Ltd. Director, Aprec (Cayman) Industrial Co., Ltd. Director, Fuzhou Aprec Mechanical and Electrical Co., Ltd. Director, Alance (Samoa) Machines Co., Ltd. Director, Fuzhou Xinrui Electromechanical Co., Ltd. For details, please refer “Summary of Affiliated Companies.”	-	-	-

Corporate Governance

(Continued from the previous page)

Title	Nationality or Country of Incorporation	Name	Gender	Date Elected	Date First Elected	Term	Shareholding When Elected	Shareholding When Elected	Current Shareholding	Current Shareholding	Spouse and Minor Shareholding	Spouse and Minor Shareholding
							Shares	%	Shares	%	Shares	%
Independent Director	R. O. C.	Chen-Chi Hsiao	Male	2016/6/24	2016/6/24	3 years	-	-	-	-	-	-
Independent Director	R. O. C.	Chi-Ching Chen	Male	2016/6/24	2016/6/24	3 years	-	-	-	-	-	-
Independent Director	R. O. C.	Yun-Hua Yang	Male	2016/6/24	2016/6/24	3 years	-	-	-	-	-	-

Corporate Governance

Shareholdings in Others’ Names	Shareholdings in Others’ Names	Education and Selected Past Positions	Current Positions	Other Managers, Directors, or Supervisors Who are S p o u s e s o r w i t h i n Second-degree Relative of Consanguinityto Each Other	Other Managers, Directors, or Supervisors Who are S p o u s e s o r w i t h i n Second-degree Relative of Consanguinityto Each Other	Other Managers, Directors, or Supervisors Who are S p o u s e s o r w i t h i n Second-degree Relative of Consanguinityto Each Other
Shares	%			Title	Name	Relation
-	-	Department of Accounting, National Chengchi University EMBA, Feng Chia University	Member of Compensation Committee, China Motor Corporation Independent Director and Member of Compensation Committee, Kian Shen Corporation Chairman of Taichung Certified Public Account Association Independent Director, Honmyue Enterprise Co. Ltd Vice Chairman, The National Federation of CPA Associations of the R.O.C.	-	-	-
-	-	MBA, Massachusetts Institute of Technology Sloan School of Management Director, GigaMedia Limited Co. Director, Financial One Corp.	Member of Compensation Committee, China Motor Corporation Member of Compensation Committee, Kian Shen Corporation Independent Director and Member of Compensation Committee,Taiwan Acceptance Corporation Director, Haofeng Assets Co., Ltd.	-	-	-
-	-	Ph.D in Law, University of Tuebingen Master of Law, National Taiwan University Professor of Law, National Chengchi University Member of the Law Committee, Ministry of Justice, Executive Yuan Seminar at the Academy for the Judiciary, Ministry of Justice, Executive Yuan	Member of Compensation Committee, China Motor Corporation Independent Director and Member of Compensation Committee,Yulon Nissan Motor Co., Ltd.	-	-	-

Corporate Governance

Table 1: Major Shareholders of the Institutional Shareholders

April 28, 2019

	April 28, 2019
Name of Institutional Shareholder	Major Shareholders of the Institutional Shareholders
1. Tai-Yuen Textile Co., Ltd.	1. Yuan Wen Investment Co., Ltd. (20.85%) 2. Yen Tjing Ling Industrial Development Foundation (14.24%) 3. British Virgin Islands Hoffman Brother Investment Company (9.80%) 4. British Virgin Islands Evans Corporation (9.71%) 5. Cayman Islands West Bridge Investment Company (9.13%) 6. Li Yuan Investment Co., Ltd. (7.17%) 7. Yong Shun Investment Corporation (6.82%) 8. Li Peng Investment Co., Ltd. (5.61%) 9. Diamond Hosiery & Thread Co., Ltd. (4.55%) 10. Yuan Wei Investment Co., Ltd. (3.10%)
2. Yulon Motor Co., Ltd.	1. Tai-Yuen Textile Co., Ltd. (18.11%) 2. China Motors Corporation (16.67%) 3. Kenneth K. T. Yen (10.18%) 4. Mercuries Life Insurance Co., Ltd. (3.15%) 5. Fan-Terh Investment Co., Ltd. (1.58%) 6. Yen Tjing Ling Industrial Development Foundation (1.09%) 7. JP Morgan Chase Bank in its Capacity as Master Custodian for PGIA Progress International Equity Index (0.87%) 8. JP Morgan Chase Bank in its Capacity as Master Custodian for Vanguard Emerging Stock Market Index Fund (0.85%) 9. Yu Jing Industrial Co., Ltd. (0.75%) 10. Citibank (Taiwan) in its capacity as Master Custodian for Investment Account of Dimension EmergingMarket Fund(0.70%)
3. Mitsubishi Motors Corporation	1. Nissan Motor Co., Ltd. (34.03%) 2. MAI Corporation (10.77%) 3. Mitsubishi Corporation (9.25%) 4. Japan Trustee Services Bank (Trust Account) (2.47%) 5. The Master Trust Bank of Japan (Trust Account) (2.13%) 6. Mitsubishi Heavy Industries, Ltd (1.44%) 7. BNYMSANV AS AGENT/CLIENTS LUX UCITS NON TREATY 1 (1.01%) 8. JP MORGAN CHASE BANK 385632(1.00%) 9. Mitsubishi UFJ Bank (0.99%) 10. Japan Trustee Services Bank(Trust Account 5) (0.96%)
4. Mitsubishi Corporation	1. Japan Trustee Services Bank (Trustee) (8.97%) 2. The Master Trust Bank of Japan (Trust Account) (6.69%) 3. Tokyo Marine & Nichido Fire Insurance Co., Ltd. (4.49%) 4. Meiji Yasuda Life Insurance Company (4.07%) 5. Japan Trustee Services Bank (Trust Account 9) (2.45%) 6. ICHIGO TRUST PET. LTD.(2.41%) 7. The Master Trust Bank of Japan (Mitsubishi Heavy Industries Ltd.･Retirement Benefits Trust Account) (2.02%) 8. Japan Trustee Services Bank (Trust Account 5) (1.70%) 9. STATE STREET BANK WEST CLIENT – TREATY 505234 (1.30%) 10. JP MORGAN CHASE 385151(1.25%)
5. Le Wen Enterprise Co., Ltd.	1. Kenneth K. T. Yen (54.02%) 2. Wei Tai Investment Co., Ltd. (25.66%) 3. Wavin Investment Corp. (16.08%) 4. Fan-Terh Investment Co., Ltd. (4.20%) 5. Li-lien Chen Yen (0.02%) 6. Wei-kungChi(0.02%)

Corporate Governance

Table 2: The Major Shareholders of the Major Shareholders of the Institutional Shareholders in Table 1

April 28, 2019

	April 28, 2019
Corporation Name	Major Shareholders of the Corporation
1.Yuan Wen Investment Co., Ltd.	Yulon Motor Co., Ltd.(100%)
2. Yen Tjing Ling Industrial Development Foundation	Foundation constituted as a juristic person
3. British Virgin Islands Hoffman Brother Investment Company	The information is not available due to the limitations of local practices.
4. British Virgin Islands Evans Corporation	The information is not available due to the limitations of local practices.
5. Cayman Islands West Bridge Investment Company	The information is not available due to the limitations of local practices.
6. Li Yuan Investment Co., Ltd.	1. Vivian Wu Industry and Commerce ECCC Foundation (99.126%) 2. Diamond Hosiery & Thread Co., Ltd. (0.869%) 3. Fan-Terh Investment Co., Ltd. (0.001%) 4. Wei Tai Investment Co., Ltd. (0.001%) 5. Le Wen Enterprise Co., Ltd. (0.001%) 6. Vincent Investment Co., Ltd. (0.001%) 7. Wavin Investment Corp.(0.001%)
7. Yong Shun Investment Corporation	1. Vivian Wu Industry and Commerce ECCC Foundation (99.083%) 2. Diamond Hosiery & Thread Co., Ltd. (0.912%) 3. Fan-Terh Investment Co., Ltd. (0.001%) 4. Wei Tai Investment Co., Ltd. (0.001%) 5. Le Wen Enterprise Co., Ltd. (0.001%) 6. Vincent Investment Co., Ltd. (0.001%) 7. Wavin Investment Corp.(0.001%)
8. Li Peng Investment Co., Ltd.	1. Vivian Wu Industry and Commerce ECCC Foundation (98.993%) 2. Diamond Hosiery & Thread Co., Ltd. (1.002%) 3. Fan-Terh Investment Co., Ltd. (0.001%) 4. Wei Tai Investment Co., Ltd. (0.001%) 5. Le Wen Enterprise Co., Ltd. (0.001%) 6. Vincent Investment Co., Ltd. (0.001%) 7. Wavin Investment Corp.(0.001%)
9. Diamond Hosiery & Thread Co., Ltd.	1. British Virgin Islands Wanda Company (72.51%) 2. Tai -Yuen Textile Co., Ltd. (21.97%) 3.Yuan Wen Investment Co., Ltd. (5.09%) 4. Vivian Wu Industry and Commerce ECCC Foundation (0.1684%) 5. Le Wen Enterprise Co., Ltd. (0.13%) 6. Wavin Investment Corp. (0.13%) 7. Kenneth K. T. Yen(0.0006%)
10. Yuan Wei Investment Co., Ltd.	1. Vivian Wu Industry and Commerce ECCC Foundation (91.513%) 2. Diamond Hosiery & Thread Co., Ltd (8.477%) 3. Fan-Terh Investment Co., Ltd. (0.002%) 4. Wei Tai Investment Co., Ltd. (0.002%) 5. Le Wen Enterprise Co., Ltd. (0.002%) 6. Vincent Investment Co., Ltd. (0.002%) 7. Wavin Investment Corp. (0.002%)

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Corporate Governance

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Corporation Name	Major Shareholders of the Corporation
11. China Motor Corporation	1. Tai-Yuen Textile Co., Ltd. (25.19%) 2. Mitsubishi Motors Corporation (14.00%) 3. Yulon Motor Co., Ltd. (8.05%) 4. Diamond Hosiery & Thread Co., Ltd (6.76%) 5. Mitsubishi Corporation (4.80%) 6. Cathay Life Insurance Co., Ltd. (3.74%) 7. Mercuries Life Insurance Co., Ltd. (2.13%) 8. Kenneth K. T. Yen (1.20%) 9. Taiwan Life Insurance Co., Ltd. (1.18%) 10. Investment account at the Norges Bank under the custody of Citibank (1.16%)
12. Mercuries Life Insurance Co., Ltd.	1. MERCURIES & ASSOCIATES, HOLDING LTD. (41.51%) 2. Shang Lín Investment Co., Ltd. (6.02%) 3. Shu Ren Investment Co., Ltd. (5.36%) 4. Mercuries Fu Bao Co., Ltd. (2.69%) 5. New Labor Pension Fund (1.21%) 6. Ming-Jung Hsu (0.77%) 7. Investment account at the Norges Bank under the custody of Citibank (0.74%) 8. JPMorgan Chase Bank, N.A., Taipei Branch in Custody foranguard Emerging Markets Stock Index Fund, a Series of Vanguard International Equity Index Funds (0.72%) 9. JPMorgan Chase Bank N.A. Taipei Branch in Custody for Vanguard Total International Stock Index Fund, a series of Vanguard Star Funds (0.66%) 10. Napali Co.,Ltd.(0.58%)
13. Fan-Terh Investment Co., Ltd.	1. Wei Tai Investment Co., Ltd. (33.36%) 2. Wavin Investment Corp. (33.30%) 3. Le Wen Enterprise Co., Ltd. (33.30%) 4. Chuan-Lin Zhu (0.02%) 5. Wei KungChi(0.02%)
14. JP Morgan Chase Bank in its Capacity as Master Custodian for PGIA Progress International EquityIndex	The information is not available due to the limitations of local practices.
15. JP Morgan Chase Bank in its Capacity as Master Custodian for Vanguard Emerging Stock Market Index Fund	The information is not available due to the limitations of local practices.
16. Yu Jing Industrial Co., Ltd.	1. Yulon Motor Co., Ltd. (59.99%) 2. Yu PengIndustrial Co.,Ltd.(40.01%)
17. Citibank (Taiwan) in its capacity as Master Custodian for Investment Account of Dimension Emerging Market Fund	The information is not available due to the limitations of local practices.
18. Nissan Motor Co., Ltd.	1. Renault S.A. (43.4%) 2. The Chase Manhattan Bank, N.A. London Special Account No.1 (3.42%) 3. The Master Trust Bank of Japan (Trustee Account) (3.13%) 4. Japan Trustee Services Bank (Trustee Account) (2.64%) 5. Japan Trustee Services Bank (Trustee Account 9) (1.35%) 6. Nippon Life Insurance Company (1.28%) 7. Japan Trustee Services Bank (Trustee Account 5) (1.09%) 8. STATE STREET BANK WEST CLIENT – TREATY 505234(0.99%) 9. Japan Trustee Services Bank(Trustee Account 1) (0.79%)

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Corporate Governance

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Corporation Name	Major Shareholders of the Corporation
	10. Japan Trustee Services Bank (Trustee Account 2) (0.78%)
19.MAI Corporation	Mitsubishi Corporation(100%)
20. Japan Trustee Service Bank(Trustee Account)	JTC HOLDINGS (100%)
21. The Master Trust Bank of Japan (Trustee Account)	1. Mitsubishi UFJ Trust and Banking Corporation (46.50%) 2. Nippon Life Insurance Co. (33.50%) 3. Meiji Yasuda Life Insurance Co. (10.00%) 4. The Norinchukin Trust & BankingCo.,Ltd.(10.00%)
22. Mitsubishi Heavy Industries Co., Ltd.	1. Japan Trustee Services Bank (Trustee Account) (6.00%) 2. The Master Trust Bank of Japan (Trustee Account) (5.30%) 3. Meiji Yasuda Life Insurance Company (2.30%) 4. Japan Trustee Services Bank (Trustee Account 5) (1.90%) 5. The Nomura Trust and Banking Co., Ltd. (Retirement Benefits Trust･Bank of Tokyo-Mitsubishi UFJ, Ltd. Account) (1.90%) 6. Japan Trustee Services Bank (Trustee Account 9) (1.90%) 7. Japan Trustee Services Bank (Trustee Account 7) (1.60%) 8. STATE STREET BANK WEST CLIENT - TREATY 505234 (1.50%) 9. Mizuho Securities Co., Ltd. (1.30%) 10. Mitsubishi HeavyIndustries ShareholdingCommission(1.08%)
23. BNYMSANV AS AGENT/CLIENTS LUX UCITS NON TREATY 1	The information is not available due to the limitations of local practices.
24. Japan Trustee Services Bank (Trust Account 9)	The information is not available due to the limitations of local practices.
25. Bank of Tokyo-Mitsubishi UFJ, Ltd.	Mitsubishi UFJ FINANCIAL GROUP (100%)
26. Japan Trustee Services Bank (Trust Account 5)	The information is not available due to the limitations of local practices.
27. Tokio Marine & Nichido Fire Insurance Co., Ltd.	Tokio Marine Holdings Co. (100%)
28. Meiji Yasuda Life Insurance Company	The information is not available due to the limitations of local practices.
29. Japan Trustee Services Bank (Trust Account 9)	The information is not available due to the limitations of local practices.
30. ICHGO TRUST PTE. LTD.	The information is not available due to the limitations of local practices.
31. The Master Trust Bank of Japan (Mitsubishi Heavy Industries Ltd.･Retirement Benefits Trust Account)	The information is not available due to the limitations of local practices.
32. STATE STREET BANK WEST CLIENT – TREATY 505234	The information is not available due to the limitations of local practices.
33. JP MORGAN CHASE BANK 385151	The information is not available due to the limitations of local practices.

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Corporate Governance

Corporate Governance	Corporate Governance
(Continued from thepreviouspage)
Corporation Name	Major Shareholders of the Corporation

34. Wei Tai Investment Co., Ltd.	1. Kenneth K. T. Yen (99.88%) 2. Fan-Terh Investment Co., Ltd. (0.04%) 3. Wavin Investment Co., Ltd. (0.02%) 4. Chuan-Lin Zhu (0.02%) 5. Li-Lien Chen (0.02%) 6. Wei KungChi(0.02%)
35. Wavin Investment Co., Ltd.	1. Kenneth K. T. Yen (99.4%) 2. Wei Tai Investment Co., Ltd. (0.1%) 3. Le Wen Enterprise Co., Ltd. (0.1%) 4. Fan-Terh Investment Co., Ltd. (0.1%) 5. Jing Yu Investment Co., Ltd. (0.1%) 6. Yu Xin Investment Co., Ltd. (0.1%) 7. Li-Lien Chen(0.1%)

Corporate Governance

(II) Directors' Professional Qualifications and Independent Analysis

March 31, 2019

Criteria Name	Meet the Following Professional Qualification Requirements Together with at Least Five Years Work Experience	Meet the Following Professional Qualification Requirements Together with at Least Five Years Work Experience	Meet the Following Professional Qualification Requirements Together with at Least Five Years Work Experience	Criteria (Note)	Criteria (Note)	Criteria (Note)	Criteria (Note)	Criteria (Note)	Criteria (Note)	Criteria (Note)	Criteria (Note)	Criteria (Note)	Criteria (Note)	Number of Other Taiwanese Public Companie s Currently Serving as an Independe nt Director
	An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College, or University	A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialists Who Has Passed a National Examination and Been Awarded a Certificate in a Profession Necessary for the Business of the Company	Have Work Experience in the Area of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company	1	2	3	4	5	6	7	8	9	10
Li-Lien Chen Yen	-	-			-	-		-	-				-	-
Eiichi Takasawa	-	-			-			-	-				-	-
Hsin-I Lin	-	-			-			-	-				-	2
Kuo-RongChen	-	-			-			-	-				-	-
Takayasu Yonekura	-	-			-			-	-		-		-	-
Chao-Wen Chen	-	-		-	-			-	-				-	-
Tai-MingChen		-			-			-	-				-	3
Hsin-ChengTseng	-	-		-	-				-				-	-
Chen-Chi Hsiao														2
Chi-ChingChen	-	-												1
Yun-Hua Yang			-											1

Note: If the Directors or Supervisors meet any of the following situations two years before being elected or during the term of office, please mark “  ”in the appropriate corresponging boxes.

Not an employee of the Corporation or any of its affiliates.
Not a director or supervisor of an affiliated business of the Company. However, this restriction does not apply in cases where the person is an independent director of the Company, its parent or subsidiary established in pursuant to this law or local laws.
Not a natural-person shareholder who holds shares, together with those held by the person's spouse, , minor children, or held by the person under others' names, in an aggregate amount of one percent or more of the total number of issued shares of the Corporation or ranks as one of its top ten shareholders.
Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the above persons in the preceding three subparagraphs.
Not a director, supervisor, or employee of a corporate/institutional shareholder that directly holds five percent or more of the total number of issued shares of the Corporation or ranks as one of its top five shareholders.
Not a director, supervisor, officer, or shareholder holding five percent or more of the shares of a specified company or institution that has a financial or business relationship with the Corporation.
Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal, financial, accounting services or consultation to the Corporation or to any affiliate of the Corporation, or a spouse thereof.
Not a spouse, or relative within the second degree of the kinship with other directors.
Not been a person of any conditions defined in Article 30 of the Company Law.
Not a government, juridical person, or its representative elected under the definition of Article 27 of the Company Law.

Corporate Governance

(III) Information Regarding President, Executive Vice President, Vice President, and General Manager of Each Department

Title	Nationality	Name	Gender	Date Effective	Shareholding	Shareholding	Spouse and Minor Shareholding	Spouse and Minor Shareholding	Shareholdings in Others’ Names	Shareholdings in Others’ Names
					Shares	%	Shares	%	Shares	%
President	R. O. C.	Chao-Wen Chen	Male	2015/6/1	-	-	-	-	-	-
Executive Vice President	R. O. C.	Te-Jun Lo	Male	2011/2/1	47,356	-	231	-	-	-
Executive Vice President t	R. O. C.	Hsin-Cheng Tseng	Male	2019/4/1	-	-	-	-	-	-

(Continued on the next page)

Corporate Governance

March 31, 2019

		March 31, 2019	March 31, 2019	March 31, 2019
Education and Selected Past Positions	Current Positions in Other Companies	Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
		Title	Name	Relation
Executives Program of Graduate School of Business Administration, National Chengchi Univeristy Dept. of Chemical Engineering, Chung Yuan Christian University ExecutiveVice President, China Motor Corporation General Manager, Production Engineering Division, China Motor Corporation	Chairperson, Kian Shen Corporation Chairperson, ROC Spicer Ltd. Chairperson, Fortune Motors Co., Ltd. Director, Shung Ye Motor Enterprise Director, Tokio Marine Newa Insurance Co., Ltd. Director, Hua-chuang Automobile Information Technical Center Co., Ltd. Director, Shye Shyang Mechanical Industrial Co., Ltd. Director, South East (Fujian) Motor Co., Ltd. For details, please refer “Summary of Affiliated Companies.”	-	-	-
Executive Master of Business Administration, School of Management, National Central University Vice President, China Motor Corporation General Manager, Marketing Division, China Motor Corporation Plant General Manager, Yang Mei Plant, China Motor Corporation General Manager, Procurement Division, China Motor Corporation General Manager, Service Division, China Motor Corporation General Manager, Quality Control Division, China Motor Corporation	Director,Uni-Calsonic Corp. For details, please refer “Summary of Affiliated Companies.”	-	-	-
MBA, National Chengchi University Department of Nuclear Engineering and Science, National Tsing Hua University Vice Presiden of China Motor Corporation	Substitute President, South East (Fujian) Motor Co., Ltd. The following duties have been undertaken concurrently since April 1, 2019: Director, Kian Shen Corporation Director,Fortune Motors Co., Ltd Director,Shung Ye Motor Enterprise Director, South East (Fujian) Motor Co., Ltd. Director,ROC Spicer Ltd. Director, Tai-Ya Investment (HK) Co., Ltd. Director, Fujian Spicer drivetrain System Co., Ltd. Director, Aprec (Cayman) Industrial Co., Ltd. Director, Fuzhou Aprec Mechanical and Electrical Co., Ltd. Director, Alance (Samoa) Machines Co., Ltd. Director, Fuzhou Xinrui Electromechanical Co., Ltd. For details, please refer “Summary of Affiliated Companies.”	-	-	-

Corporate Governance

(Continued from the previous page)

Title	Nationality	Name	Gender	Date Effective	Shareholding	Shareholding	Spouse and Minor Shareholding	Spouse and Minor Shareholding	Shareholdings in Others’ Names	Shareholdings in Others’ Names
					Shares	%	Shares	%	Shares	%
Vice President	R. O. C.	Ching-Wu Chien	Male	2014/1/1	-	-	-	-	-	-
Vice President	R. O. C.	Shing JuChen	Male	2016/1/1	11,553	-	20,000	-	-	-
Vice President	R. O. C.	Hung-Ching Yang	Male	2016/1/1	-	-	-	-	-	-

(Continued on the next page)

Corporate Governance

Education and Selected Past Positions	Current Positions in Other Companies	Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other	Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other	Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
		Title	Name	Relation
MBA Program, National Chengchi University General Manager, Sales Division, China Motor Corporation General Manager, Marketing Division, China Motor Corporation	Director, Kian Shen Corporation Director, Fortune Motors Co., Ltd Supervisor, Shung Ye Motor Enterprise Director,ROC Spicer Ltd. Director, Yulon IT Solutions Co., Ltd. Director, Fujian Benz Automotive Co., Ltd. Director, Fuzhou Fushiang Motor Co., Ltd. For details, please refer “Summary of Affiliated Companies.”	-	-	-
Department of Mechnical and Computer-Aided Engineering, Feng Chia University General Manager, Product Engineering Division General Manager, Product Program and Testing Division, China Motor Corporation Project General Manager, Engineering Division, China Motor Corporation	Director, Uni-Calsonic Corp. Director, Yue Ki Industrial Co., Ltd. Director, Hua-Chuang Automobile Information Technical Center Co., Ltd. Director, Xin Mi Co., Ltd. Director, Aprec (Cayman) Industrial Co., Ltd. Director, China Engine (Fujian) Co., Ltd. For details, please refer “Summary of Affiliated Companies.”	-	-	-
Department of Mechanical and Electromechanical Engineering, National Sun Yat-sen University General Manager, Parts Development Division Project General Manager, Electrical and Elctronic Engineering Division, China Motor Corporation	Director, Kian Shen Corporation Chairperson,GreenTrans Co., Ltd. Director,ROC Spicer Ltd. Director, Aprec (Cayman) Industrial Co., Ltd. Director, Tai-Ya Investment (HK) Co., Ltd. Director, Fujian Spicer drivetrain System Co., Ltd.	-	-	-

Corporate Governance

(Continued from thepreviouspage)	(Continued from thepreviouspage)	(Continued from thepreviouspage)	(Continued from thepreviouspage)	(Continued from thepreviouspage)
Title	Nationality	Name	Gender	Date Effective	Shareholding		Spouse and Minor Shareholding		Shareholdings in Others’ Names
					Shares	%	Shares	%	Shares	%
Special Assistant (Vice President)	R. O. C.	Koju Huang	Male	2016/12/19	-	-	-	-	-	-
Vice President	R. O. C.	Chiung-chih Tseng	Male	2005/1/1	46,415	-	-	-	-	-
Accounting and Finance Supervisor	R. O. C.	Mei-Chu Tai	Female	2010/4/1	-	-	-	-	-	-
Corporate governance officer	R. O. C.	Ling-Jun Lin	Female	2019/2/1	21,634	-	650	-	-	-

Corporate Governance

Education and Selected Past Positions	Current Positions in Other Companies	Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other	Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other	Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
		Title	Name	Relation
Bachelor of Science in Transportation / Industrial Design Art Center College of Design California, USA Graphic / Industrial Design Pasadena City College California, USA Design director of Styling Division (Yulon Motor Corporation, Yulon Nissan Motor Corporation, Hua-Chuang Automobile Information Technical Center Corporation, China Motor Corporation)	None	-	-	-
Department of Mechanical and Electro-Mechanical Engineering, Tamkang University Project General Manager, Procurement Division, China Motor Corporation	Director,Fortune Motors Co., Ltd Director,Shung Ye Motor Enterprise Director of CARPLUS Auto Leasing Corporation For details, please refer “Summary of Affiliated Companies.”	-	-	-
Executive Master of Business Administration, National Chiao Tung University Project General Manager, Financial and Accounting Division, China Motor Corporation	Supervisor,Fortune Motors Co., Ltd Supervisor, Hua-Chuang Automobile Information Technical Center Co., Ltd. Supervisor, Uni-Calsonic Corp. Supervisor, Xin Mi Co., Ltd. Supervisor, Fuzhou Fushiang Motor Co., Ltd. Supervisor, Fuzhou Xin Mi Electric Co., Ltd. For details, please refer “Summary of Affiliated Companies.”	-	-	-
Master of Commerce, National Taiwan University Project Manager of Business Management Group, China Motor Corporation Project Manager of Planning & Management Group, China Motor Corporation Manager of General Manager Office, China Motor Corporation	None	-	-	-

Corporate Governance

(IV) Remuneration Paid to Board of Directors, Supervisors, President, and Executive Vice President in the Latest Year
Remuneration Paid to Directors

Title	Name	Director's Remuneration	Director's Remuneration	Director's Remuneration	Director's Remuneration	Director's Remuneration	Director's Remuneration	Director's Remuneration	Director's Remuneration	Total Remuneration (A+B+C+D) as a % of Net Income	Total Remuneration (A+B+C+D) as a % of Net Income
		Compensation (A)		Pensions(B)		Remuneration (C)		Allowances(D)
		From the Corporation	From All Consolidated Entities	From the Corporation	From All Consolidated Entities	From the Corporation	From All Consolidated Entities	From the Corporation	From All Consolidated Entities	From the Corporation	From All Consolidated Entities
Chairperson	Li-Lien Chen Yen	1,336	1,816	-	-	19,746 ~~（~~Note1~~）~~	19,746	3,489 ~~（~~Note2~~）~~	3,624	0.68	0.70
Director	Eiichi Takasawa
Director	Hsin-I Lin
Director	Kuo-Rong Chen
Director	Takayasu Yonekura
Director	Chao-Wen Chen
Director	Tai-Ming Chen
Director	Hsin-Cheng Tseng
Independent Director	Chen-Chi Hsiao
Independent Director	Chi-Ching Chen
Independent Director	Yun-Hua Yang
In addition to the aforementioned disclosures, any remuneration received in the most recent year by the directors of the Company for rendering services (such as serving as a non-employed consultant) to any company listed in the Financial Report: None.

Note ： 1. The earnings distribution was paid to Corporate Directors but not its representatives.
(1) Chairperson Li-Lien Chen Yen and Director Tai-Ming Chen are representatives of Yulon Motor Co., Ltd.
(2) Director Hsin-I Lin, Director Kuo-Rong Chen and Hsin-Cheng Tseng are representatives of Tai-Yuen Textile Co., Ltd.
(3) Director Chao-Wen Chen is representatives of Le Wen Enterprise Co., Ltd.
(4) Director Eiichi Takasawa is representative of Mitsubishi Motors Corporation. Mitsubishi Motors Corporation assigned Mr. Eiichi Takasawa in replacement of Mr. Katsuro Asaoka as its representative from May 1, 2018.
(5) Director Takayasu Yonekura is representative of Mitsubishi Corporation. Mitsubishi Corporation assigned Mr. Takayasu Yonekura in replacement of Mr. Setsuya Yoshino as its representative from April 1, 2018.
The above-mentioned figures include depreciation expense for official business cars NT$100 thousand and other expenses NT$8 thousand.

Corporate Governance

Unit: NT$thousands/thousand shares

Compensation Earned by a Director Who is an Employee of the Corporation or of the Corporation’s Consolidated Entities	Compensation Earned by a Director Who is an Employee of the Corporation or of the Corporation’s Consolidated Entities	Compensation Earned by a Director Who is an Employee of the Corporation or of the Corporation’s Consolidated Entities	Compensation Earned by a Director Who is an Employee of the Corporation or of the Corporation’s Consolidated Entities	Compensation Earned by a Director Who is an Employee of the Corporation or of the Corporation’s Consolidated Entities	Compensation Earned by a Director Who is an Employee of the Corporation or of the Corporation’s Consolidated Entities	Compensation Earned by a Director Who is an Employee of the Corporation or of the Corporation’s Consolidated Entities	Compensation Earned by a Director Who is an Employee of the Corporation or of the Corporation’s Consolidated Entities	Total Compensation (A+B+C+D+E+F+G) as a % of Net Income (%)	Total Compensation (A+B+C+D+E+F+G) as a % of Net Income (%)	Compensation Paid to Directors from Non- consolidated Affiliates (J)
Compensation, Bonuses, and Allowances (E)		Pensions (F)		Employee Compensation (G)
From the Corporatio n	From All Consolidat ed Entities	From the Corporatio n	From All Consolidated Entities	From the Corporation		From All Consolidated Entities		From the Corporation	From All Consolidated Entities
				Cash	Stock	Cash	Stock
26,844 (Note 2)	30,725	173	399	73	-	122	-	1.44	1.57	7,692

Corporate Governance

Remuneration	Name of Director	Name of Director	Name of Director	Name of Director
	Total Remuneration(A+B+C+D)		Total Compensation(A+B+C+D+E+F+G)
	From the Corporation	From All Consolidated Entities	From the Corporation	From All Consolidated Entities and Non-consolidated Affiliate (Note)
Under NT$2,000,000	Mitsubishi Motors Corporation Mitsubishi Corporation Le Wen Enterprise Co., Ltd Li-Lien Chen Yen Eiichi Takasawa Hsin-I Lin Kuo-Rong Chen TakayasYonekura Chao-Wen Chen Tai-Ming Chen Hsin-ChengTseng Chen-Chi Hsiao Chi-Ching Chen Yun-Hua Yang	Mitsubishi Motors Corporation Mitsubishi Corporation Le Wen Enterprise Co., Ltd Li-Lien Chen Yen Eiichi Takasawa Hsin-I Lin Kuo-Rong Chen TakayasYonekura Chao-Wen Chen Tai-Ming Chen Hsin-ChengTseng Chen-Chi Hsiao Chi-Ching Chen Yun-Hua Yang	Mitsubishi Motors Corporation Mitsubishi Corporation Le Wen Enterprise Co., Ltd Li-Lien Chen Yen Eiichi Takasawa Kuo-Rong Chen TakayasYonekura Tai-Ming Chen Chen-Chi Hsiao Chi-Ching Chen Yun-Hua Yang	Mitsubishi Motors Corporation Mitsubishi Corporation Le Wen Enterprise Co., Ltd Li-Lien Chen Yen Eiichi Takasawa TakayasYonekura Tai-Ming Chen Chen-Chi Hsiao Chi-Ching Chen Yun-Hua Yang
NT$2,000,000 ～NT$5,000,000	-	-	Hsin-I Lin Hsin-ChengTseng	Kuo-Rong Chen
NT$5,000,000 ～NT$10,000,000	Yulon Motor Co., Ltd. Tai-Yuen Textile Co., Ltd.	Yulon Motor Co., Ltd. Tai-Yuen Textile Co., Ltd.	Yulon Motor Co., Ltd. Tai-Yuen Textile Co., Ltd.	Yulon Motor Co., Ltd. Tai-Yuen Textile Co., Ltd. Hsin-I Lin Hsin-ChengTseng
NT$10,000,000 ～NT$15,000,000	-	-	-	-
NT$15,000,000 ～NT$30,000,000	-	-	Chao-Wen Chen	Chao-Wen Chen
NT$30,000,000 ～NT$50,000,000	-	-	-	-
NT$50,000,000 ～NT$100,000,000	-	-	-	-
Over NT$100,000,000	-	-	-	-
Total	11 seats	11 seats	11 seats	11 seats

Note : The remuneration paid to Director from non-consolidated affiliates shall be included in this column.

Corporate Governance

Remuneration Paid to Supervisors: None
Remuneration Paid to President and Executive Vice President

Unit: NT$ thousands/thousand shares

Title	Name	Compensation (A)	Compensation (A)	Pensions （B）	Pensions （B）	Bonuses and Allowances (C)	Bonuses and Allowances (C)	Employee Compensation (D)	Employee Compensation (D)	Employee Compensation (D)	Employee Compensation (D)	Total Compensation (A+B+C+D) as a % of Net Income (%)	Total Compensation (A+B+C+D) as a % of Net Income (%)	Compensati on from Noncon -solidated Affiliates
		From the Corpo ra-tion	From All Consol i-dated Entitie s	From the Corpo - ration	From All Consoli -dated Entities	From the Corpor a-tion	From All Consolid a-ted Entities	From the Corporation		From All Consolidate d Entities		From the Corporatio n	From All Consolidat ed Entities
								Cash	Stock	Cash	Stock
President	Chao-Wen Chen													1,470
Executive Vice President	Te-Jun Lo	5,513	5,513	409	409	20,697 (Note)	20,697	127	-	127	-	0.74	0.74

Note: The above-mentioned figures include depreciation expense for official business cars NT$291 thousand, gasoline NT$187thousand, and other expenses NT$91 thousand. Besides, compensation paid to the drivers is NT$1,526 thousand.

thousand.
Remuneration	Name of President and Executive Vice President
	The Corporation	From All Consolidated Entities and Non-consolidated Affiliates (Note)
Under NT$2,000,000	-	-
NT$2,000,000～NT$ 5,000,000	-	-
NT$5,000,000～NT$10,000,000	Te-Jun Lo	Te-Jun Lo
NT$10,000,000～NT$15,000,000	-	-
NT$15,000,000～NT$30,000,000	Chao-Wen Chen	Chao-Wen Chen
NT$30,000,000～NT$50,000,000	-	-
NT$50,000,000～NT$100,000,000	-	-
Over NT$100,000,000	-	-
Total	2 people	2 people

Note: The remuneration paid to President and Executive Vice Presidents from non-consolidated affiliates shall be included in this column.

The Ratio of the Remuneration Paid to Board of Directors, Supervisors, Presidents, and Executive Vice Presidents to Net Income in 2017 and 2018

(1) Paid from the Corporation

(1) Paid from the Corporation
Paid to	The ration of Remuneration to Net Income (%)		Increase (Decrease) Rate (%)
	2018	2017
Director	0.68	1.02	(0.34)
Supervisor	-	-	-
President andExecutive Vice President	0.74	0.67	0.07

Corporate Governance

(2) Paid from the Corporation

(2) Paid from the Corporation
Paid to	The ration of Remuneration to NetIncome (%)		Increase (Decrease) Rate (%)
	2018	2017
Director	0.70	1.04	(0.34)
Supervisor	-	-	-
President and Executive Vice President	0.74	0.67	0.07

(3) Analysis
The percentage of director remuneration relative to after-tax profit (loss) was lower than 2017 mainly because of lower profits in 2018. Percentage of President's and executive vice presidents' remuneration relative to after-tax profit (loss) was 0.7% for both years and there were no significant changes.
Remuneration policies, standards, packages and procedures, and association with future risks and business performance: The Compensation Committee is responsible for the establishment and regular review of annual and long-term performance targets for CMC directors and managers, as well as the compensation policy, system, standards and structure. For each director/manager, the committee proposes a compensation package after taking into consideration the payment method and future risks, which is executed with the approval of the board of directors. Where the distribution involves an item on the earnings appropriation report, the decision would also have to be raised for approval during a shareholder meeting.
2018 performance of individual directors were evaluated according to CMC's "Board of Directors Evaluation Policy," and no material difference in performance score was found. For this reason, director remuneration was allocated in equal percentages except the Chairman.

(V) Employment Compensation Granted to Management Team

	(V) Employment Compensation Granted to Management Team	(V) Employment Compensation Granted to Management Team	(V) Employment Compensation Granted to Management Team	(V) Employment Compensation Granted to Management Team	(V) Employment Compensation Granted to Management Team	(V) Employment Compensation Granted to Management Team
	March 31, 2019 Unit: NT$ thousands
	Title	Name	Stock	Cash	Total	Ratio of the Total to Net Income （％）
Managers	President	Chao-Wen Chen	-	512	512	0.014
	Executive Vice President	Te-Jun Lo
	Vice President	Ching-Wu Chien
	Vice President	Shing JuChen
	Vice President	Hung-Ching Yang
	Special Assistant(Vice President)	Koju Huang
	Vice President	Chiung-chih Tseng
	Accounting and Finance Supervisor	Mei-Chu Tai
	Corporate Governance Officer	Ling-Jun Lin

Corporate Governance

III. Implementation of Corporate Governance

(I) Board of Directors Meeting Status

A total of 8Board Meetings were held in 2018 and up to the end of March 2019. The

following lists the directors’ attendance to the Board Meetings:

Tiitle	Name of Corporate Shareholder	Representative	Attendance	Attendance	Attendance Rate in Person(%)	Notes
			in Person	By Proxy
Chairperson	Yulon Motor Co., Ltd.	Kenneth K.T. Yen	0	5	0	Service until December 3, 2018
		Li-Lien Chen Yen	8	0	100	Succeeded as Chairman since December 7, 2018
Director	Tai-Yuen Textile Co.	Hsin-Tai Liu	5	0	100	Hsin-Cheng Tseng was reappointed the representative of corporate director since November 20, 2018
Director	Mitsubishi Motors Corporation	Katsuro Asaoka	1	0	100	Eiichi Takasawa was reappointed the representative of corporate director since May1,2018
		Eiichi Takasawa	6	1	85.7	Service began on May 1, 2018
Director	Tai-Yuen Textile Co., Ltd.	Hsin-I Lin	8	0	100
Director	Tai-Yuen Textile Co., Ltd.	Kuo-Rong Chen	8	0	100
Director	Mitsubishi Corporation	Setsuya Yoshino	0	1	0	Takayasu Yonekura was reappointed the representative of corporate director since April 1, 2018
		Takayasu Yonekura	6	1	85.7	Service began on April 1, 2018
Director	Le Wen Enterprise Co., Ltd.	Chao-Wen Chen	8	0	100
Director	Yulon Motor Co., Ltd.	Tai-Ming Chen	1	0	100	Service began on January 2, 2019
Director	Tai-Yuen Textile Co.,Ltd.	Hsin-Cheng Tseng	3	0	100	Service began on November 20,2018
Independent Director	-	Chen-Chi Hsiao	8	0	100
Independent Director	-	Chi-Ching Chen	8	0	100
Independent Director	-	Yun-Hua Yang	7	1	87.5
Annotation: 1. Where one of the following circumstances apply for the operations of the Board of Director meetings, the date, session, topic discussed, opinions of every independent directors, and handling of the opinions of the independent directors bythe CMC shall be explained:

Corporate Governance

Tiitle	Name of Corporate Shareholder	Representative	Attendance	Attendance	Attendance Rate in Person(%)	Notes
			in Person	By Proxy
(1) Items listed by Article 14-3 of the “Securities and Exchange Act”: Following the establishment of the audit committee, Article 14-5 of the “Securities and Exchange Act” shall now apply, while Article 14-3 thereof shall not. For relevant resolutions, refer to the explanations provided in (Ⅲ)Audit Committee Meeting Status. (2) In addition to the aforementioned matters, any other resolutions from the Board of Directors where an independent director expressed a dissenting or qualified opinion that have been recorded or stated by written: None. 2. Recusals of Directors due to conflicts of interests: The directors of the Corporation are highly disciplined and recused themselves from the voting for proposal involved with their interest. There was no proposl with interest involved and therefore it was unnecessary for them to recuse. Regarding recusal for conflicts of interests relating to remuneration for independent directors, CMC has stipulated a clear internal operation procedure for handling recusals for conflicts of interests in 2017 and enforced the said procedure accordingly. 3. Measures taken to strengthen the functionality of the Board (e.g. establish Autid Committee, enhance information transparency): The Corporation had established the Audit Committee in 2016.

A total of 8 Board Meetings were held in 2018 and up to the end of March 2019. The
following lists the independent directors’ attendance to the Board Meetings:

Independent directors’ attendance to the Board Meetings

following lists the independent directors’ attendance to the Board Meetings:	following lists the independent directors’ attendance to the Board Meetings:	following lists the independent directors’ attendance to the Board Meetings:	following lists the independent directors’ attendance to the Board Meetings:	following lists the independent directors’ attendance to the Board Meetings:	following lists the independent directors’ attendance to the Board Meetings:	following lists the independent directors’ attendance to the Board Meetings:	following lists the independent directors’ attendance to the Board Meetings:	following lists the independent directors’ attendance to the Board Meetings:
Independent directors’ attendance to the Board Meetings
◎In person；●By proxy；*Not present
Year	2018							2019
Date	03.26	05.11	06.25	08.06	11.09	12.07	12.17	03.27
Chen-Chi Hsiao	◎	◎	◎	◎	◎	◎	◎	◎
Chi-Ching Chen	◎	◎	◎	◎	◎	◎	◎	◎
Yun-Hua Yang	◎	◎	◎	●	◎	◎	◎	◎

(II) Attendance of Supervisors for Board Meetings: None.
(III) Audit Committee Meeting Status
(1) The Audit Committee consists of 3 members.
(2) Tenure of office: the audit committee of CMC was established on July 1, 2016. The
- tenure of first session of committee is from July 1, 2016 to June 30, 2019. A total of 5 meetings were held in 2018 and up to the end of March 2019. Attendance is provided in

the following:

Tiitle	Representative	Attendance	Attendance	Attendance Rate in Person(%)
		in Person	By Proxy
Convener	Chen-Chi Hsiao	5	0	100
Member	Chi-Ching Chen	5	0	100
Member	Yun-Hua Yang	5	0	100

Corporate Governance

Tiitle	Representative	Attendance	Attendance	Attendance Rate in Person(%)	Notes
		in Person	By Proxy
Annotation: 1. Where one of the following circumstances apply for the operations of the audit committee, the date, session, and topic discussed of the Board Meeting, the resolution of the audit committee, and handling of the resolution of the audit committee by the CMC shall be described: (1) Items prescribed by Article 14-5 of the “Securities and Exchange Act”: For details, refer to Point (3). (2) In addition to the aforementioned items, other proposals not passed by the audit committee but voted for by more than two-thirds of the entirety of the Board of Directors: None. 2. For the implementation and state of independent director’s recusal for conflict of interest, the independent director's name, contents of the topic, reasons for the required recusal, and participation in the voting process: None. 3. State of communication between independent directors and internal audit supervisor and CPA (such as items, methods, and results of communications on the Company’s finances and business status): For details, refer to Point(4)State of communication of CMC independent directors with internal audit supervisor and CPA.

(3) The purpose of CMC's Audit Committee is to assist the board of directors in supervising
the quality and integrity of CMC's accounting, auditing, financial reporting and financial control processes. The committee is mainly involved in the review of the following issues. The Audit Committee held 4 meetings in 2018.
Financial statement audit and accounting policy and procedures
Internal control system and related policy and procedures
Material asset or derivative transactions
Major loans, endorsements or guarantees
Offering or issuance of securities
Derivatives and cash investments
Compliance
Whether managers and directors are involved in related party transactions and prone to conflict of interest
Grievance report
Fraud prevention plan and investigation report
Information security
Corporate risk management
Background, independence and performance of financial statement auditors
Appointment, dismissal or remuneration of financial statement auditors
Appointment and dismissal of finance, accounting or internal audit managers
Fulfillment of Audit Committee duties

Corporate Governance

(4) CMC's Audit Committee has been empowered under its foundation principles to conduct appropriate review and investigation as needed to fulfill its duties. The committee may also contact internal auditors, financial statement auditors and employees directly to serve the above purpose. The Audit Committee is also empowered to engage lawyers, CPAs or other consultants to assist its duties, and may monitor performance of the above external parties. For a complete context of Audit Committee foundation rules, please visit CMC's website.

(5) Operational status of the audit committee:

Board of Directors Meetings	Proposals	Items prescribed by Article 14-5 of the Securities and Exchange Act
11thmeeting of 19th term of BOD on March 26, 2018	1.2017financialstatement ofCMC.	V
	2.Earnings distributionplan for 2017ofCMC.	V
	3. Propose the “Internal Control System Statement” for 2017 ofCMC.	V
	4. Evaluate the independence and suitability of certified public accountants (CPA)for 2018	V
	Resulting resolutions of the audit committee (March 26, 2018): Resolution passed by every memberofthe audit committee.
	Handling of the opinions of the audit committee by the CMC: Approved by all Directors present in the meeting.
13thmeeting of 19th term of BOD on June 25, 2018	1. Remuneration to CMC's financial statement auditors for 2018~2020	V
	2. Amendments to CMC's "Internal Control System for Stock Affairs Unit" and "Internal Audit Implementation for Stock Affairs Unit"	V
	3. Proposal to invest directly into Fujian Spicer Drivetrain System and Tai Ya Investment (HK) to simply ROC Spicer's investment structure in theMainland	V
	Resulting resolutions of the audit committee (June 25, 2017): All members of the audit committee passed theresolution.
	Handling of the opinions of the audit committee by the CMC: Approved by all Directors present in the meeting.
14thmeeting of 19th term of BOD on August 6, 2018	1.Financial Report ofthe second quarter,2018	V
	Resulting resolutions of the audit committee (August 6, 2017): Resolution passed by every memberofthe audit committee.
	Handling of the opinions of the audit committee by the CMC: Approved by all Directors present in the meeting.
17thmeeting of 19th term of BOD on December 17,	1. Stipulationofthe“2019AuditPlan”ofCMC	V
	2. NT$7 billion dolars loan plan for Sino Diamond Motors Co.,Ltd.	V
	Resulting resolutions of the audit committee (December 17, 2018): Resolution passed by everymemberofthe audit committee.
2018	Handling of the opinions of the audit committee by the CMC: Approved by all Directors present in the meeting.

(Continued)

Corporate Governance

Board of Directors Meetings	Proposals	Items prescribed by Article 14-5 of the_Securities_ and Exchange Act
18thmeeting of 19th term of BOD on March 27, 2019	1. 2018financialstatement ofCMC.	V
	2. Earnings distributionplan for 2018 ofCMC.	V
	3. Proposal of a 60% capital reduction in cash to adjust capital structure and improve return on shareholders'equity	V
	4. Evaluate the independence and suitability of certified public accountants (CPA)for 2018.	V
	5. Propose the “Internal Control System Statement” for 2017 ofCMC.	V
	6. Amendments to CMC's "Asset Acquisition and Disposal Procedures" and "Internal Audit Implementation for Asset Acquisition and Disposal Procedures"	V
	7. Amendments to CMC's "Derivative Transaction Procedures"	V
	8. Amendments to CMC's "External Party Lending Procedures" and "Internal Audit Implementation for External PartyLendingProcedures"	V
	9. Amendments to CMC's "Endorsement and Guarantee Policy" and "Internal Audit Implementation for Endorsement and Guarantee Policy"	V
	10. Amendments to CMC's "Code of Corporate GovernancePractice"
	Resulting resolutions of the audit committee (March 27 2019: Resolution passed by every memberofthe audit committee.
	Handling of the opinions of the audit committee by the CMC: Approved by all Directors present in the meeting.

(6) State of communication of CMC independent directors with internal audit supervisor and

CPA:

A.Method of communications between independent directors and the internal audit supervisor and CPA
a. Independent directors and the CPA hold regular meetings every year. The CPA shall communicate matters related to the auditing of the financial position as well as internal controls implemented of CMC as well as explanations related to decree updates and contents that exert material influences on losses or gains.
b. The internal audit supervisor holds regular meetings with the independent directors to provide explanations on the state of implementing internal audits and of operations of internal controls in CMC.

Corporate Governance

B.Summary of the state of communications in 2018and up to March 31, 2019

Date	Key communications between independent directors and CPA	Key communications between independent directors and internal audit supervisor
03.26.2018	 CPA's report on gains/losses recognized on investees and key financial statement issues for 2017.  The CPA communicated with attending personnel on questions that have been raised.	 Report on key audit implementation matters from November 2017 to Fabruary 2018.  The audit supervisor communicated with attending personnel on questions that have been raised.
06.25.2018	 None	 Report on key audit implementation matters from March 2018 to June 2018.  The audit supervisor communicated with attending personnel on questions that have been raised.
08.06.2018	 CPA's report on gains/losses recognized on investees in the first half of 2018.  The CPA communicated with attending personnel on questions that have been raised.	 Report on key audit implementation matters from July 2018.  The audit supervisor communicated with attending personnel on questions that have been raised.
12.17.2018	 The CPA communicated with attending personnel on questions that have been raised.	 Report on key audit implementation matters from August 2018 to November 2018.  The audit supervisor communicated with attending personnel on questions that have been raised.
03.27.2019	 CPA's report on the 2018 audit progress, and discussion of key audit issues.  The CPA communicated with attending personnel on questions that have been raised.	 Report on key audit implementation matters from December 2018 to Fabruary 2019.  The audit supervisor communicated with attending personnel on questions that have been raised.

(IV) Corporate Governance Execution Status and Deviations from “Corporate Governance

Best-Practice Principles for TWSE/GTSM Listed Companies”

Assessment Item			Status of Implementation	Status of Implementation	Non-compliance with the Corporate Governance BPP and reasons
	Yes	No.	Performance Summary
1. Does the Corporation establish and disclose own corporate practice principles with reference to the “Corporate Governance BPP”?			The Corporation has established the Code of Corporate Governance Practice and disclosed it on the Market Observation Post System and own corporate website.		The Corporation has established and disclosed own “Code of Corporate Governance Practice” with reference to the “Corporate Governance BPP” and has established own internal control system. Therefore, this Corporation is operated with reference to the spirit of the Corporate Governance BPP and has implemented relevant regulations.
2. Shareholding structure & shareholders’ rights: (1) Does the Corporation establish and implement the internal operation procedures to handle shareholders’ suggestions, concerns, disputes and litigation matters?			(1)	Apart from establishing the spokesperson system to handle the shareholder suggestions, concerns, disputes and litigation matters, shareholders can express their comments on the corporate website at http://www.china-motor.com.tw . The Corporation will assign relevant departments to appropriately respond to their comments. Under the Financial Department,we have established	(1) Comply with the “Corporate Governance BPP”.

Corporate Governance

Assessment Item			Status of Implementation	Non-compliance with the Corporate Governance BPP and reasons
	Yes	No.	Performance Summary
(2) Does the Corporation maintain a list of major shareholders who controlling the Corporation and their beneficial owners? (3) Has the Corporation established and implemented a risk management system and “firewall” between the Corporation and its affiliates? (4) Has the Corporation established internal rules prohibiting insider trading securities on undisclosed information?	  		a share registration unit to handle and respond to relevant affairs. (2) The Corporation maintains a list of major shareholders who controlling the Corporation and their beneficial owners and reports their shares and stock mortgage/relief status by the Rules Governing Information Filing for TWSE-Listed Companies. (3) The Corporation has established the “Interested Party Trading Management Regulations” as the risk management system and firewall between the Corporation and affiliates. (4) The Corporation has established the “Insider Trading Prevention SOP” to prohibit insiders from trading securities with undisclosed information.	(2) Comply with the “Corporate Governance BPP”. (3) Comply with the “Corporate Governance BPP”. (4) Comply with the “Corporate Governance BPP”.
3. Formation and responsibility of the board of directors: (1) Does the Corporation establish and implement diversified policies with reference to board formation? (2) Besides establishing the Compensation Committee and Audit Committee by the law, does the Corporation voluntarily establish other functional committees? (3) Does the Corporation establish board performance evaluation regulations and methods to evaluate board performance every year?	 		(1) The_Corporate Governance Best Practice_ Principles of CMC stipulated the “Diversification Policy for the Membership of the Board of Directors” in December 2016 after forming the Board of Directors. The Policy was announced on the official website and was enforced accordingly. To ensure that the membership of the Board of Directors meets diversification requirements, refer to the section on “Diversification Policy for the Membership of the Board of Directors” for relevant measurement indicators and state of implementation. (2) The Corporation has established the Compensation Committee and the Audit Committee. (3) The Corporation established the “Regulations Governing Evaluation of Performance of Board of Directors” in December 2015. The Corporation will conduct an internal evaluation on performance of the board of directors at least once per year. Methods of evaluation include: Internal evaluations for the operations of the Board of Directors, and self-evaluation by members of the Board. Scope of evaluation includes the entirety of the Board of Directors and individual members of the Board. The	(1) Comply with the “Corporate Governance BPP”. (2) Comply with the “Corporate Governance BPP”. (3) Comply with the “Corporate Governance BPP”.

Corporate Governance

Assessment Item			Status of Implementation	Non-compliance with the Corporate Governance BPP and reasons
	Yes	No.	Performance Summary
(4) Does the Corporation assess the independency of its CPAs?			scope of evaluation extends to the entire board of directors and individual board member. The scope of evaluation on performance of the BOD covers:①Level of participation in the Corporation’s operation; ②Upgrading of quality of decision made by the board of directors;③Composition and structure of the board of directors;④Election and continued education of directors;⑤Internal control. The scope of evaluation on the board members shall at least cover the following:⑥Understanding about the Corporation and knowledge about job duties; ⑦Level of participation in the Corporation’s operation; ⑧Expertise and continued education of directors;⑨Internal control. The evaluation result 2018 showed that the entire operation of the BOD was fair, particularly with respect to⑩the composition and structure of board of directors, (11)Understanding about the Corporation and knowledge about job duties and (12)Expertise and continued education of directors. (4) The following is the evaluations of the independence of the CPA: A. Rules from the_Corporate Governance Best_ _Practice Principles_of CMC require the CMC to regularly evaluate the independence of CPA (once every year). B. The CMC has acquired the statement of independence from the accounting firm and evaluated CPA independence using an evaluation form using background information of the CPA. C. Evaluation standards are divided into 6 major categories, namely: relationships of interests between the CPA and the CMC, the presence of dual identities, whether the CPA has a history of defending the Company, familiarity with the personnel of the Company, whether the CPA is subject to duress from the Company, and the length of professional practice. Each of these categories is further subdivided into smaller items for evaluation. D. After evaluations carried out by the audit committee and Board of Directors in March 2019, the CPA commissioned by the CMC were found to have not violated the requirements for independence.	(4) Comply with the “Corporate Governance BPP”.
4. Has the TWSE/TPEx listed company set up a full- (or part-) time corporate governance unit or personnel to be in charge of corporate governance affairs (including but not limited to furnishing information required for			CMC has created a "Corporate Governance Officer" position under the General Manager Office to oversee corporate governance affairs. The role of Corporate Governance Officer is undertaken by a department manager (of managerial role with at least 3 year's legal, financial, meeting affairs or administration experience in a public company). The General Manager Office and Financial & AccountingDivision are the dedicated units for	Comply with the “Corporate Governance BPP”.

Corporate Governance

Assessment Item			Status of Implementation	Non-compliance with the Corporate Governance BPP and reasons
	Yes	No.	Performance Summary
business execution by directors and supervisors, handling matters related to board meetings and shareholders meetings, handling corporate registration and amendment registration, and producing minutes of board meetings and shareholders meetings)?			overseeing the following corporate governance-related affairs: 1. Change of company registration, including change of directors/supervisors and change of registered business activities. 2. Shareholder meeting-related, including the board's approval for meeting agenda, board and shareholder meeting advice, and preparation and upload of meeting minutes. 3. Board meeting-related, including internal approval for meeting agenda, board meeting advice, convention advice, preparation of minutes, mandatory announcements, and submission of minutes and relevant documents to the authority. 4. Providing directors with the information needed to perform duties, including quarterly financial reports, business overview, Audit Committee resolutions, and Compensation Committee resolutions. 5. Enforcement of corporate governance, including arrangement of regular corporate governance courses for directors and applicable managers, establishment and regular tracking of corporate governance goals etc. 6. Improve ranking in corporate governance evaluation, with a goal of achieving top 5% ranking among TWSE-listed companies. Progress of CMC's 2018 corporate governance efforts is explained below; details concerning the Corporate Governance Officer's ongoing education has been disclosed on the CMC website: 1. Planning and arrangement of directors' ongoing education in 2018. 2. Purchase of director liability insurance in 2018. 3. For sound corporate governance, CMC had evaluated performance of the board and individual directors in January 2018, and presented its results during the board meeting held in March. 4. Regular convention of investor seminars to address business performance in 2018. 5. Annual general meeting was convened in June 2018; processes such as registration of shareholder meeting date, preparation of meeting advice, manual and minutes etc., were completed in accordance with laws and within the required timeframe. 6. Directors are notified and given relevant information at least 7 days in advance prior to a board meeting. Minutes are prepared and disseminated to individual directors within 20 days after each meeting, and are being kept as important files. 7. The CSR Committee reviews corporate governance objectives and accomplishment on a regular basis, and presents its findings to the board of directors one every six months. 8. Having achieved top 5% ranking among TWSE

Corporate Governance

Assessment Item	Status of Implementation	Status of Implementation	Status of Implementation	Non-compliance with the Corporate Governance BPP and reasons
	Yes	No.	Performance Summary
			companyfor 4consecutive years.
5. Does the Corporation establish mechanisms for communicating with stakeholders and a stakeholder site on the corporate website to appropriately respond to material CSR topics they concern about?			The Corporation has established the stakeholder site provided detailed contact information on the corporate website for stakeholders (customers, the public, and suppliers) to express their comments, so that the Corporation can make appropriate response.	Comply with the “Corporate Governance BPP”.
6. Does the Corporation assign professional share registers to handle shareholder meetingaffairs?			The Corporation has an own share register department.	Comply with the “Corporate Governance BPP”.
7. Information disclosure (1) Does the Corporation establish a website to disclose own operation, financial and corporate governance information? (2) Does the Corporation disclose such information with other methods (e.g., English website, assigning staff to gather and disclose relevant information, implementing the spokesperson system, and posting the conference call on the corporate website)?	 		(1) The Corporation discloses relevant operation, financial and corporate governance information over the corporate website. (2) The Corporation has established an English website, assigned special staff to gather and disclose corporate information, implemented the spokesperson system, and posted conference call on the corporate website.	(1) Comply with the “Corporate Governance BPP”. (2) Comply with the “Corporate Governance BPP”.
8. Does the Corporation disclose other information for investors to better understand its corporate governance practices (including but not limited to employee rights and benefits, employee care, investor relations, supplier relations, stakeholder rights and benefits, training for directors and supervisors, implementation of risk management policies and risk assessment standards, implementation of customer relations policies, and Directors and Officers LiabilityInsurance)?			See Note.	Comply with the “Corporate Governance BPP”.

Corporate Governance

Status of Implementation Non-compliance with the
Assessment Item Corporate Governance BPP and Yes No. Performance Summary reasons
1. Improvements made in the most recent year in response to the results of corporate governance evaluation conducted by the Corporate Governance Center of the Taiwan Stock Exchange Corporation, and prioritized matters and measures to be improved upon for matters that have not been improved: According to the corporate governance accreditation result published in April, 2018, our 2017 corporate governance accreditation result was the top 5%. Regarding the indicators below the scoring requirements, 2.23, we completed them in 20178and their descriptions are as following: CMC has amended its Board of Directors Performance Evaluation Policy that specifically requires external evaluations to be performed at least once every three years

Note: Material information for better understanding of corporate governance:

(1) Employee rights and benefits: The Corporation protects the rights and benefits of employees with reference to the Labor Standards Act and has specified employee rights and benefits in the Employee Handbook. The Corporation also publishes information regarding employee rights and benefits on the intranet and bulletin board.
(2) Employee care: The Corporation provides employees with comprehensive care, including the employee canteen, employee dormitory, employee gymnasium, swimming pool, employee library, and infirmary. The Corporation also organizes employee fair (Family Day) and subsidizes employee tours from time to time and arranges heath examinations for employees regularly.
(3) Investor relations: The Corporation publishes on the corporate website information regarding the future development and financial condition of the Corporation and holds conference call at least 2 times a year. The Corporation also assigns special staff to answer questions of investors and explains to them the Corporation’s future development through teleconferences or presentations from time to time.
(4) Supplier relations: The Corporation has a procurement department to handle product supply of suppliers and handle the quality improvement of suppliers from time to time. The Corporation also holds the contractor conference every year to explain to suppliers the annual plan and future development of the Corporation.
(5) Stakeholder rights and benefits: The Corporation maintains the rights and benefits of stakeholders with reference to the law and assigns relevant units to respond to stakeholders.
(6) Training for directors (including independent directors): The Corporation regularly provides training information for directors (including independent directors) and encourages them to receive training. In addition, the Corporation arranges training on new laws and accounting systems for directors (including independent directors). Relevant training information is disclosed over the MOPS.
(7) Implementation of risk management policy and risk assessment standards: The Corporation has established the Audit Division to audit potential risks on a routine basis and report results to the internal business meeting at planned intervals.
(8) Implementation of customer service policy (respect for consumer demand): The Corporation has established a helpline (toll-free 0800) and suggestion box on the corporate website for consumers to express their demand and comments. The Corporation also requests dealers to make timely response to customers.
(9) Directors (including independent directors) and Officers Liability Insurance: In order to strengthen corporate goverence of the Corporation, CMC buy D&O Liability Insurance every year. The information is published on the MOPS.
●Diversification Policy for the Membership of the Board of Directors

Policy for the diversification of Board of Directors membership of CMC has been passed in the

Board Meeting of December 19, 2016. Major contents are provided in the following:

When selecting and evaluating candidates for directors and independent directors, the CMC shall include a wide range of considerations for membership diversity such as academic background, work experiences, gender, independence, skills and experience, and nationality to determine whether or not the candidate should be made a member of the Board to bring about the maximum benefits for CMC.
The following lists indicators of diversity requirements to ensure that the Board members of CMC are able to meet diversity requirements:
(1) Independence: The ratio of the directors and independent directors in the Board of Directors shall be balanced to ensure that the Board is highly independent. The Board of the CMC shall have at least three independent directors.
(2) Gender: CMC actively promotes a work place free from gender discrimination. In the

Corporate Governance

spirit of this consideration, there shall be at least one female director on the Board.

(3) Nationality: Given the diversity of the business portfolio of CMC, having one (or more) director of another nationality on the Board will provide better information and understanding of business operations in other countries. Hence, the Board of Directors of CMC shall have at least one director from another country.
(4) Skills and experience: Directors with a background in finance, academic subjects, and management will help provide professional recommendations for corporate management. The Board of CMC shall include at least a director or independent director with a professional background (such as accounting).

3. State of implementation:

Diversity indicators Name of director	Age group (29 and below/30-50/51 and above)	Independence	Gender	Nationalit y	Skills and experience
Li-Lien Chen Yen	51 and above	Non-independe nt	Female	R. O. C.	Administration and management
Eiichi Takasawa	51 and above	Non-independe nt	Male	R. O. C.	International corporate management
Hsin-I Lin	51 and above	Non-independe nt	Male	Japan	Administration and management
Kuo-Rong Chen	51 and above	Non-independe nt	Male	R. O. C.	Administration and management
TakayasYonekura	51 and above	Non-independe nt	Male	Japan	International corporate management
Chao-Wen Chen	51 and above	Non-independe nt	Male	R. O. C.	Administration and management
Tai-Ming Chen	51 and above	Non-independe nt	Male	R. O. C.	Law and legal affairs
Hsin-Cheng Tseng	51 and above	Non-independe nt	Male	R. O. C.	Administration and management
Chen-Chi Hsiao	51 and above	Independent	Male	R. O. C.	Accounting
Chi-Ching Chen	51 and above	Independent	Male	R. O. C.	Administration and management
Yun-Hua Yang	51 and above	Independent	Male	R. O. C.	Law and legal affairs

Corporate Governance

(V) Composition, Responsibilities and Operations of Compensation Committee:

1. Information of compensation committee members

Identity (Note 1)	Criteria Name	Meet the following professional qualification requirments, together with at least five years work experience	Meet the following professional qualification requirments, together with at least five years work experience	Meet the following professional qualification requirments, together with at least five years work experience	Criteria（Note 2）	Criteria（Note 2）	Criteria（Note 2）	Criteria（Note 2）	Criteria（Note 2）	Criteria（Note 2）	Criteria（Note 2）	Criteria（Note 2）	Numer of other Taiwanese public companies concurrently serving as a compensation committee member in Taiwan
		An instructoror higher position in a department of commerce, law, finance, accounting or other academic department related to the business needs of the company in a public or private junior college, college or university	A judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialists who has passed a national examination and been awarded a certificate in a profession necessary for the business of the company	Have work experience in the area of commerce, law, finance or accounting or otherwise necessary for the business of the company	1	2	3	4	5	6	7	8
Independent Director	Chen-Chi Hsiao												1
Independent Director	Chi-Ching Chen	-	-										2
Independent Director	Yun-Hua Yang			-									1

Note 1: Serve as a director, independent director or otherwise

Note 2: Status of independence compliance

(1)Not an employee of the company or its affiliates
(2)Not a director or supervisor of an affiliated business of the Company. However, this restriction does not apply in cases where the person is an independent director of the Company, its parent or subsidiary established in pursuant to this law or local laws.
(3) Not a natural-person shareholder who holds the share, altogether with those shares held by the person’s spouse, minor children or held by the person under others’ names, in an aggregate amount of one percent or more or the total number of issued shares of the company or rank as one of its top 10 shareholders.
(4) Not a spouse, relative with in second degree of kinship or lineral relative within the third degree of kinship, or any of the above person in the preceding three subparagraphs
(5) Not a director, supervisor or employee of a corporate/institutional shareholder that directly holds 5% or more of the total number of issued shares of the company or rank as one of its top 5 shareholders
(6) Not a director, supervisor, officer or shareholder holding 5% or more of the shares of a specified company or institution that has a financial or business relationship with the company.
(7) Not a professional individual who, or an owner, partner, director, supervisor, officer of a sole proprietorship, company or institution that, provides commercial, legal, accounting services or consultation to the company or any affiliate of the company, or a spouse thereof.
(8) Not been a person of any conditions defined in article 30 of the Company Law
Compensation committee meeting status
(1) The Corporation’s compensation committee consists of 3 members.

Corporate Governance

(2) Tenure of office: the tenure of third session of committee is from July 1, 2016 to June 30, 2019. Attendance in 2018 up to the end of March 2019 is provided in the following:

Title	Name	Meeting Times (A)	Attendance	Attendance	Attendance rate in person (%)(Ｂ/Ａ)
			in person (B)	By proxy
Convener	Chen-Chi Hsiao	3	3	0	100%
Member	Chi-Ching Chen		3	0	100%
Member	Yun-Hua Yang		3	0	100%
Annotations: 1. There was no recommendation of the compensation committee which was not adopted or was modified by the Board. 2. There were no written or otherwise recorded resolutions on which a member of the compensation committee had a dissentingopinion orqualified opinion.

(3) Duties of the Compensation Committee

The Compensation Committee shall exercise the care of a prudent manager to fulfill

the following duties, and offer recommendations for discussion by the board of directors:

A. Stipulate and review regularly the compensation policies, systems, standards and structures, and performance of directors and managers.
B. Regularly review and adjust directors' and managers' compensation.
(4) Meetings held and resolutions made in the last year, and the Company's response to

opinions of the Compensation Committee:

Compensation Committee	Motion	Outcome of resolution	Company's response to Compensation Committee's opinions
107.3.26 5th meeting of the 3rd board 2018.3.26	1. Allocation of director and employee remuneration for 2017. 2. Amendments to Compensation Committee Foundation Principles.	Passed unanimously by committee members.	Passed unanimously by committee members.
107.12.17 6th meeting of the 3rd board 2018.12.17	1. Amendments to CMC's "Annual Incentive Bonus and Employee Profit-sharing Policy" 2. Establishment of 2019 Compensation Committee meeting schedule.	Passed unanimously by committee members.	Passed unanimously by committee members.
108.3.27 7th meeting of the 3rd board 2019.3.27	1. Allocation of employee and director remuneration for 2018. 2. Amendments to "Compensation Committee Foundation Principles."	Passed unanimously by committee members.	Proposed by the board of directors and passed unanimously by all attending members.

(5) Other remarks: None

Corporate Governance

(VI) Social Responsibility:

China Motor has long devoted attention to corporate governance, environmental sustainability and social welfare. To improve the efficiency of its corporate social responsibility efforts, CMC assembled a "Corporate Social Responsibility Management Committee" (CSR Management Committee) in 2014 with the President serving the role of chief committee member and the General Manager Office undertaking the role of Executive Secretary. The committee has "Corporate Governance," "Employ Care," "Environment Sustainability," "Customer and Partnership" and "Social Welfare" teams assembled thereunder, each of which is headed by a manager of assistant vice president grade or above. The General Manager Office, General Administration Division, Yang Mei Plant and Procurement Division serve as the secretary for each of the above teams, and the teams operate with the support of other departments including: Financial & Accounting Division, Management Information System Division, Audit Division, Hsin Chu Plant, Product Program Division, Electrical and Electronic Engineering Division, Product Engineering Division, Vehicle Testing Division, Advanced Technology Division, Production Control Division, Service Division, Sales Division, Electric Scooter Sales Division and Parts Development Division. The CSR Management Committee is responsible for the execution of corporate social responsibility tasks and preparation of CMC's CSR reports; it reports progress to the board of directors on a regular basis.

Corporate Governance

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CSR Management Chief Committee
Committee President Chao-Wen Chen
Executive Secretary
General Manager Office
Corporate Employee Care Environment Customer and Social Welfare
Governance Team Sustainability Partnership Team Team
Team Team
Assistant Vice Assistant Vice Executive Vice Assistant Vice Assistant Vice
President of President of President of President of President of
Planning & Planning & Manufacture Business Planning &
Management Gr. Management Gr. Management Gr. Management
Gr. Gr.
General General Yang Mei Plant Procurement General
Manager Office Administration Hsin Chu Plant Division Manager Office
Financial & Division General Service Division General
Accounting Administration Sales Division Administration
Division Division Electric Scooter Division
Audit Division Product Sales Division Sales Division
Management Program Parts Electric Scooter
Information Division Development Sales Division
System Division Electrical and Division
Electronic
Engineering
Division
Product
Engineering
Division
Vehicle Testing
Division
Advanced
Technology
Division
Production
Control
Division
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Note: denotes the main responsible division.

Corporate Governance

Assessment Item	Implementation	Implementation	Implementation	Non-compliance with the Corporate Social Responsibility BPP for TWSE/GTSM Listed Companies and Reasons
	Yes	No	Performance Summary
Corporate governance promotion Does the Corporation establish a CSR policy or system and review the effectiveness of implementation? Does the Corporation arrange CSR training on a regular basis? Does the Corporation establish a dedicated (concurrent) unit to promote CSR with authorization from top management and to report the effectiveness of implementation to the board?	  		(1) CMC stipulated its Corporate Social Responsibility Best Practice Principles in 2014 to implement corporate governance, develop sustainable environments, sustain community services, enhance corporate social responsibility (CSR) information disclosure, and fulfill other principles and practices. CMC also established a CSR management committee to be in charge of implementing various plans for CSR. Practices include CSR training, establish and audit the Environmental Management System (green product/green materials/ energy management system), preparing CSR report, enhancing CSR awareness and providing counseling to dealers and partners, establishing channels of appeal for various stakeholders, participate in social activities and held on charitable activities. The state of implementing various practices and guidelines is also regularly reported in Board Meetings to evaluate the results of implementation. (2) The Administration Department arranges corporate ethics-related training regularly, including pre-service training and labor law related courses for new employees. (3) 1.China Motor has long devoted attention to corporate governance, environmental sustainability and social welfare. To improve the efficiency of its corporate social responsibility efforts, CMC assembled a "Corporate Social Responsibility Management Committee" (CSR Management Committee) in 2014 with the President serving the role of chief committee member and the General Manager Office undertaking the role of Executive Secretary. The committee has "Corporate Governance," "Employ Care," "Environment Sustainability," "Customer and Partnership" and "Social Welfare" teams assembled thereunder, each of which is headed by a manager of assistant vice president grade or above. The General Manager Office, General Administration Division, Yang Mei Plant and Procurement Division serve as the secretary for each of the above teams, and the teams operate with the support of other departments including: Financial & Accounting Division, Management Information System Division, Audit Division, Hsin Chu Plant, Product Program Division, Electrical and Electronic Engineering Division, Product Engineering Division, Vehicle Testing Division, Advanced Technology Division, Production Control Division, Service Division, Sales Division, Electric Scooter Sales Division and Parts DevelopmentDivision.The CSR Management	(1) Comply with the CSR BPP. (2) Comply with the CSR BPP. (3) Comply with the CSR BPP.

Corporate Governance

Assessment Item	Implementation	Implementation	Implementation	Non-compliance with the Corporate Social Responsibility BPP for TWSE/GTSM Listed Companies and Reasons
	Yes	No	Performance Summary
			Committee is responsible for the execution of corporate social responsibility tasks and preparation of CMC's CSR reports; it reports progressto the board of directors on a regular basis. 2. Plans and progress: CMC sets its 3-year objectives on a yearly basis. Its 2018 action plans were largely focused on "execution and refinement." The following accomplishments were made during the year: ①Corporate Governance Team: A. CMC was ranked top 5% among TWSE-listed companies during the 4th Corporate Governance Evaluation. B. Ranked 10th among large enterprises in CommonWealth Magazine's 2018 Excellence in Corporate Social Responsibility award - automobile Industry. ②Employee Care Team: A. Organized one seminar on sexual harassment (Act of Gender Equality in Employment). B. Electric scooter charging stations have been installed at dormitories and made available to occupants free of charge since February 2019. ③Environment Sustainability Team: A. Yang Mei Plant won Award of Excellence in Taoyuan City's 2017 Air Pollution Reduction Incentives, and was presented a trophy by the mayor of Taoyuan City in May 2018; B. CMC participated in the 2018 "Ministry of Economic Affairs Energy Conservation Benchmark Challenge," and Yang Mei Plant won Gold (1st place) in the large corporations division. C. Solar power generators are being introduced to CMC plants since 2016 as a means to mitigate the impact of greenhouse gas and as a response to rising environmental protection and green energy awareness throughout the world. Phase 1 installation of solar panels had already been completed on the rooftop of the stamping workshop at Yang Mei Plant and on the rooftop of Hsin Chu Plant, whereas phase 2 installation at Yang Mei Plant, Hsin Chu Plant extension and Youshi Plant commenced operation in 2018. As a support to the government's green energy policy and in response to "Autonomous Regulation on Development of Low-carbon City" stipulated by Taoyuan City on January 1, 2017, which requires all electricity users with contracted capacity of 5,000 KW and above to develop green energy at 10% the contracted capacity, CMC took the initiative to construct 2,778 KW of solar power at plants located in Taoyuan City and Hsinchu County that represented 20% and 67% of local contracted capacity, respectively. These installations are estimated to reduce carbon by 1,737 tonnes per year, which is equivalent to planting 174,000 trees. ④Customer and Partnership Team: A. The team has encouraged its business partners to obtain OHSAS18001 certification by 2020 during the Business Partners Conference held in March. B. Energy experts from Yang Mei Plant were assigned

Corporate Governance

Assessment Item			Implementation	Non-compliance with the Corporate Social Responsibility BPP for TWSE/GTSM Listed Companies and Reasons
	Yes	No	Performance Summary
(4) Does the Corporation establish a fair compensation policy combing with the employee performance evaluation system and CSR policy and an effective and well-defined reward and punishment system?			to provide counsel for business partners including Yue Sheng, Hengtong and Chao Long. C. At least one E-Moving bike has been provided at 117 service stations (two at 28 service stations) that customers may use for free. Uses of E-Moving bike are being exposed and promoted in association with service station campaigns their webpages and fan pages. D. Every service station now offers blood pressure meters and massage pillows for use by car owners. The equipment is being maintained in the proper condition. E. CMC has expanded its CSR philosophy to Shung Ye Motors, one of the distributors, and made sure that all service stations adopt some form of recycling mechanism on organic solvents for cost-saving and environmental protection effect. ⑤Social Welfare Team: A. The employee restaurant now serves organic vegetables three days a week instead of two. B. Sponsored Genesis Social Welfare Foundation in organizing the "Caring Heart" charity carnival at Sun Yat-sen Memorial Hall on April 21 (Saturday). Approximately 250 employees and family members had participated in the event on that day. C. Executed the Guarding Happiness Project that subsidizes use of vehicle by charity organizations. D. Collaborated with New Taipei Industrial Vocational High School for the opening of "China Motor New Taipei City Electric Scooter Technology Certification Center," which provides pre-employment learning and training opportunities for students and all who are looking to join the electric scooter industry. This movement will help promote CMC's electric scooters to other schools nationwide, and build up users that may become loyal to the EM brand in the future. It is a model example of how industry-academia collaboration may produce win-win solutions. E. Vehicle servicing tours and complimentary vehicle maintenance for charity organizations and disadvantaged groups. (4) The Corporation has strictly followed the labor-and-human-rights regulations established by the government, and has established an appropriate compensation system and relevant disciplinary items to reward or punish employees with reference to their performance and conduct.	(4) Comply with the CSR BPP.
2. Development of a sustainable environment: (1) Does the Corporation make efforts to enhance resource efficiency and use recycled materials with lower environmental impact?			(1)In order to boost the efficiency for the use of resources, we established the CMC energy management system and convene meetings regularly for the review. We promoted energy management with a system and received the ISO50001 certificate.	(1)Comply with the CSR BPP.

Corporate Governance

Assessment Item	Implementation	Implementation	Implementation	Non-compliance with the Corporate Social Responsibility BPP for TWSE/GTSM Listed Companies and Reasons
	Yes	No	Performance Summary
(2) Does the Corporation establish an appropriate environmental management system (EMS) according to the characteristics of its industry? (3) Has the Corporation noticed the effect of climate change on its business activities and does it implement GHG inventory and establish an energy conservation and GHG reduction strategy?	 		(1) The Corporation has established an EMS with reference to relevant environmental regulations and other requirements, effective resource utilization, pollution prevention and continual improvement, and organizational operation. The Corporation has also passed ISO14001 EMS certification. (2) CMC has been disclosing greenhouse gas emissions voluntarily on the National Greenhouse Gas Registration Platform of the Environmental Protection Administration since 2009 on a yearly basis. In the meantime, an Energy Conservation Team has been assembled with contacts appointed at various departments to implement an energy audit system. The purposes of this team are to set and execute energy conservation plans and goals, analyze energy usage, convene regular work review meetings, and propose improvement solutions for greenhouse gas reduction. Through ISO 14001 - Environment Management System, CMC has made energy conservation one of the improvements to be made by all plants on a yearly basis. Energy conservation meetings are held each month to discuss energy conservation measures and practices of each unit. CMC began greenhouse gas survey (ISO14064-1) in 2018, and passed review by BSI, an external institution, in March 2019 to obtain ISO14064-1 certification. The certificate gave a reasonable assurance to CMC's greenhouse gas survey efforts.	(2)Comply with the CSR BPP. (3) Comply with the CSR BPP.
3. Implementation of philanthropy (1) Does the Corporation establish relevant management policies and procedures with reference to relevant international regulations and international human rights treaties? (2) Does the Corporation establish mechanisms and channels for and properly handle employee grievances?	 		(1) The Corporation observes relevant labor laws and regulations, and respects internationally recognized basic labor and human rights. After regularly gathering reviews labor laws and regulations, the General Administration Division reviews relevant the compliance of relevant SOPs and regulations and amend them where necessary. The Corporation also ensures no discrimination in employment policies. (2) The Corporation sets up a suggestion box to gather opinion and comments from employees. The Corporation also establishing channels of appeal for various stakeholders for different stakeholders and will be handled by assigned staff immediately.	(1) Comply with the CSR BPP. (2) Comply with the CSR BPP.
(3) Does the Corporation provide employees with a safe and healthy work environment and regularly arrange safety and health training/education for employees?			(3) CMC has a Health and Safety Office and a Health Center in place to inspect safety of the work environment and operations. They also organize regular health checkups and have physicians on site to oversee employees' health. CMC also organizes weight loss programs on a yearly basis. A total of 137 employees participated in the program in 2018, and 71 of whom were successful. Furthermore, CMC organized a"Health Reward"	(3) Comply with the CSR BPP.

Corporate Governance

Assessment Item			Implementation	Non-compliance with the Corporate Social Responsibility BPP for TWSE/GTSM Listed Companies and Reasons
	Yes	No	Performance Summary
			program between November 2017 and March 2018, during which employees were encouraged to upload data on the number of paces taken per day using a complimentary wristband in exchange for rewards. A total of 685 employees had participated in this program.
(4) Does the Corporation establish mechanisms for periodic employee communication and reasonably notice employees of significant operational changes that could substantially affect them? (5) Does the Corporation establish effective training plans for employees to develop employability?	 		(4) CMC communicates with employees through regular labor-management meetings. In November 2018, CMC held a seminar titled "CMC's Challenges, Changes and Expectations" where the President addressed all entry-level managers and employees on CMC's future and how the changes may affect business operations. (5) The Corporation implements training/ education programs regularly, including pre-service training and in-service training. The Corporation also assigns suitable employees to attend knowledge and skill training courses to develop competencies required by work.	(4) Comply with the CSR BPP. (5) Comply with the CSR BPP.
(6) Does the Corporation establish policies and procedures to protect consumer rights and benefits in R&D, procurement, production, operation, and service processes? (7) Does the Corporation follow relevant regulations and international standards to market and label products and services? (8) Does the Corporation assess if suppliers have records regarding causing impacts on the environment and society?	  		(6) The Corporation prioritizes maintenance of consumer rights and benefits and establishes the following standards to handle product liability and accidents: “Toll-free Helpline Answering Service Quality Management SOP”, “Toll-free Helpline and Consumer Complaint Handling SOP”, and “Toll-free Helpline Complaint Closure Aftercare SOP”. In addition, all product assurance standards and SOPs are reviewed and revised periodically to ensure a flawless product assurance system. (7) In advertising products, apart from complying with the verity and good faith principle of automobiles, all appeals and methods comply with relevant legal requirements. In legal compliance, product related data is indicated in respective locations to clearly inform consumers. Details are also given in the owner’s manual to ensure consumers fully and easily understand the specifications, performance, operation, and precautions of product. (8) CMC has identified green purchasing as one of its key objectives in the future, and actively encourages suppliers to undergo ISO 14001 certification. All suppliers are subject to assessment and audit on green purchase and CSR-related issues prior to commencing transaction. A total of 116 supply partners were audited in 2018.	(6) Comply with the CSR BPP. (7) Comply with the CSR BPP. (8) Comply with the CSR BPP.

Corporate Governance

Assessment Item	Implementation	Implementation	Implementation	Non-compliance with the Corporate Social Responsibility BPP for TWSE/GTSM Listed Companies and Reasons
	Yes	No	Performance Summary
(9) When signing contracts with major suppliers, does the Corporation include the following terms in the contract: when suppliers violate the Corporation’s CSR policy and have significant impact on the environment and society, the Corporation may terminate or rescind the contract at any time?			(9) Starting from 2017, CMC requires all suppliers to sign a "fundamental contract" that outlines the rights and obligations of the two parties. Suppliers are bound by the contract to comply with CMC's environmental policies and regulations, whereas CMC is entitled to terminate contract and claim compensation should the supplier commit any violation. Furthermore, as per supplier management policy, CMC instructs and supervises suppliers to constantly improve quality, delivery time, cost, R&D and safety, and offers support in the form of routine management, counseling and incentive to stimulate progress for the sustainability and mutual benefit of both parties.	(9) Comply with the CSR BPP.
4. Reinforcement of disclosure of CSR information. (1) Does the Corporation disclose relevant and reliable CSR information on the corporate website and MOPS?			(1) The Corporation has set up a corporate website and discloses regularly information related to consumers and investors on the corporate website and the MOPS. In addition, the Corporation publishs CSR-related information in the annual report.	(1) Comply with the CSR BPP.
5. If the Corporation has established own code of CSR practice with reference to the “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies,” specify its operation and non-compliance with the best practice principles: In 2014 the Corporation established own Code of CSR Practice with reference to the “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.” At present, the Corporation has completed our own internal control system. Therefore, the Corporation has operated and implemented relevant regulations with reference to the spirit of the “Corporate Social ResponsibilityBest Practice Principles for TWSE/GTSM Listed Companies.”
6. Other material information enabling a better understanding of CSR implementation: The Corporationpublished and disclosed the CSR Report on the corporate website and the MOPS.
7. If the organizational CSR report has passed the verification standards of relevant certification authorities, please specify: CMC's 2017 Corporate Social ResponsibilityReport was externallycertified bySGS(Societe Generale de Surveillance S.A.).

Other material information enabling a better understanding of CSR implementation:

The Corporation published and disclosed the CSR Report on the corporate website and the MOPS.

If the organizational CSR report has passed the verification standards of relevant certification authorities, please specify: CMC's 2017 Corporate Social Responsibility Report was externally certified by SGS (Societe Generale de Surveillance S.A.).

Corporate Governance

(VII) Taiwan Corporate Conduct and Ethics Implementation as Required by the Taiwan Financial Supervisory Commission:

Assessment Item			Implementation	Non-compliance with Ethical Corporate Management BPP for TWSE/GTSM Listed Companies and Reasons
	Yes	No	Performance Summary
1. Policies and plans for fair and ethical business operations (1) Does the Corporation specify its policies and practices to maintain fair and ethical business operations in relevant regulations and external documents? Do the board and managers actively implement the commitments made in relevant policies? (2) Does the Corporation draw up and pratice programs to prevent unethical conduct and set out in each program and implement SOPs, conduct guidelines, penalties for violation, and a grievance system? (3) Does the Corporation take precautionary action to prevent business activities specified in paragraph 2 of Article 7 of the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies” and other business activities within its scope of business with higher behavioral risk?	  		(1) The Corporation sets “harmony, innovation, excellence” as management philosophy and “integrity, care, and responsibility” as the employee’s code of conduct, apart from ensuring “philosophy” is implemented in management, it is specified in the employee handbook The Corporation established “Code of Business Ethics” to enhance fair and ethical business. (2) “Code of Business Ethics” stipulates the improper ethical behavior and rules to prevent improper behavior. In the organizational “Work Rules”, the Corporation specifies that no employee shall accept bribes or other improper benefits for an official act and punishes employees based on the severity of indecent act. (3) “Code of Business Ethics” sets up rules and prevention about risky business operation like improper profit, political donation In the “Service Ethics” and “Punishment, Reward, Promotion, Transfer, and Performance Evaluation” sections of the “Work Rules”, the Corporation specifies what employee behaviors are acceptable and how to respond to the indecent act of others. The “Work Rules” are explained to employees upon hiring.	(1) Comply with the Ethical Corporate Management BPP. (2) Comply with the Ethical Corporate Management BPP. (3) Comply with the Ethical Corporate Management BPP.
2. Implementation of fair and ethical business operations (1) Does the Corporation assess if trading counterparts involved in any unfair and unethical business operations and include the fair and ethical business operations clause in the transaction agreement signed with them? (2) Has the Corporation established a dedicated (concurrent) unit directly under the board to promote fair and ethical business operations and report the effectiveness of implementation directly to the	 		(1) Aside from setting “integrity, care, and responsibility” as the employee’s code of conduct and specifying relevant service ethics in the “Work Rules”, the Corporation values the integrity of trading counterparties and thus specifies ethical clauses in standard contract with vendor. (2) The following describes the state of implementation in CMC: A. CMC has established an Ethical Corporate Management and Compliance Management Committee. The managementdepartment isresponsible	(1) Comply with the Ethical Corporate Management BPP. (2) Comply with the Ethical Corporate Management BPP.

Corporate Governance

Assessment Item	Implementation	Implementation	Implementation	Non-compliance with Ethical Corporate Management BPP for TWSE/GTSM Listed Companies and Reasons
	Yes	No	Performance Summary
board?			for serving as the executive secretary, with GR. Ching-wu Chien of planning management serving as the chairperson. The job functions and scope of responsibilities of each department are referenced to ensure the proper implementation of best practice principles of ethical corporate management. The general manager’s office shall report the state of the implementation to the Board Meeting on an annual basis. The state of implementation in 2018 has been reported to the Board of Directors on December 17, 2018. B. To prevent conflicts of interest and provide suitable channels of appeals, CMC has established an Ethical Corporate Management Best Practice Principles of CMC in 2015. C. The following actions were taken in relation to business integrity in 2018: (1) Establishment of CMC Business Integrity Policy. (2) New directors and managers were communicated on business integrity principles and required to sign commitments to integrity code of conduct. (3) Ongoing communication of integrity value to employees.
(3) Does the Corporation establish and implement policies to prevent conflicts of interest and provide appropriate channels for reporting such conflicts?			(3) In the “Work Rules” the Corporation specifies that employees may be dismissed and face relevant legal action if they engage in work of a similar nature externally with conflicts of interest with the Corporation that causes serious damage to the Corporation without prior permission from the Corporation. Also, the annual work target of employees is set with reference to the organizational or departmental annual work policies, and the goal of employees and the organization should be consistent and conflicts of interest should be prevented through thorough communication. The Corporation has established “Procedures for Ethical Management and Guidelines for Conduct” stipulates the improper ethical behavior and rules to prevent improper behavior and “Corporate Ethical Management and Compliance Committee” to process and communicate relativemanners.	(3) Comply with the Ethical Corporate Management BPP.

Corporate Governance

Assessment Item	Implementation	Implementation	Implementation	Non-compliance with Ethical Corporate Management BPP for TWSE/GTSM Listed Companies and Reasons
	Yes	No	Performance Summary
(4) Has the Corporation established effective accounting and internal control systems to implement fair and ethical business operations? Does the Corporation have these system audited regularly by the internal auditunitor aCPA?			(4) The Audit Division audits internal systems and external activities regularly and report the results to the board.	(4) Comply with the Ethical Corporate Management BPP.
(5) Does the Corporation arrange regular internal/external training/ education for fair and ethical business operations?			(5) Apart from arranging training on fair and ethical operations for new employees, the Corporation has established the “Work Rules” and “NC-0403 Reward and Punishment Regulations” and posted them on the intranet for the reference of all employees to ensure employees understand the importance of fair and ethical operations and relevant reward and punishment regulations. In addition, the Corporation reviews relevant regulations at planned intervals and publishes them after each time of revision for employees to understand.	(5) Comply with the Ethical Corporate Management BPP.
3. Operation of the whistleblower system (1) Does the Corporation establish a practical whistleblower and reward system and channels to facilitate reporting of unfair and unethical business operations and assign appropriate personnel to handle a reported case? (2) Does the Corporation establish a SOP and a non-disclosure mechanism of relevant investigations? (3) Does the Corporation establish and implement an informer protection policy to ensure no informer will receiveindecent treatment?	  		(1) ~ (3) Employees can directly report to the General Administration Division or to the supervisors through the “Employee Grievance Box” any violation of fair and ethnical operations and no part of investigations will be disclosed. In addition, employees can make anonymous reports and the case responsible unit will not disclose any information of informers (whistleblowers) to ensure absolute protection. The report hotline and SOP are published on the Corporation website and reports will be handling by stakeholder identity under SOP.	(1) ~ (3) Comply with the Ethical Corporate Management BPP.
4. Reinforcement of information disclosure (1) Does the Corporation disclose the content and effectiveness of implementation of the Code of Business Ethics on the corporate website and MOPS?			(1) The Corporation discloses the content of own Code of Business Ethics on the corporate website and MOPS and the status of operation on the corporate website at planned intervals, including the status of fair and ethnical operations wherenecessary.	(1) Comply with the Ethical Corporate Management BPP.
5. If The Corporation has established own code of business ethics with reference to the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies,” specify its operation and non-compliance with the best practice principles. In 2014, the Corporation established own Code of Business Ethics with reference to the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies.” At present, the Corporation also has a completly internal control system. Therefore, the Corporation has operated and implemented relevant regulations with reference to the spirit of the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies.”

Corporate Governance

Assessment Item	Implementation	Implementation	Implementation	Non-compliance with Ethical Corporate Management BPP for TWSE/GTSM Listed Companies and Reasons
	Yes	No	Performance Summary
6. Other material information enabling a better understanding of fair and ethical business operations (such as review and revise the code of business ethics): To respond to the replacement of supervisors with an audit committee, the CMC has revised its Ethical Corporate Management Best Practice Principles in December 2015 (entered into force in July 2016). An Ethical Corporate Management and Compliance Management Committee meeting was convened in November 2018 to adjust committee organization and discuss future implementation.

(VIII) Corporate Governance Guidelines and Regulations:

Please refer the “Corporate Governance” of Market Observation Post System and the corporate website (http://www.china-motor.com.tw).

(IX) Other Important Information Regarding Corporate Governance:

Please refer the “Corporate Governance” of Market Observation Post System and the corporate website (http://www.china-motor.com.tw).

Corporate Governance

(X) Internal Control System Execution Status

1. Statement of Internl Control System

China Motor Corporation Statement of Internl Control System

Date: March 27, 2018

Based on the findings of a self-assessment, the Corporation states the following with regard to its internal control system during the year of 2018:

The Corporation’s Board of Directors and Management are responsible for establishing, implementing, and maintaining an adequate internal control system. Our internal control is a process designed to provide reasonable assurance over the effectiveness and efficiency of our operation (including profitability, performance, and safeguarding of assets), reliabilitiy of our financial reporting, and compliance with applicable laws and regulations.
An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance of accomplishing its stated objectives. Moreover, the effectiveness of an internal control system may be subject to changes due to extenuating circumstances beyond our control. Nevertheless, ourt internal control system contains self-monitoring mechanism, and the Corporation takes immediate actions in response to any identified deficicies.
The Corporation evaluates the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing the Establishment of Internal Control System by Public Companies (herein below, the “Regulations”). The criteria adopted by the Regulations identify five key components of managerial internal control: (1) control environment, (2) risk assessment, (3) control activities, (4) information and communication, and (5) monitoring. Each component further covers certain items. Please refer to “Regulations” for preceding items.
The Corporation has evaluated the design and operating effectiveness of its internal control system according to the aforesaid Regulations.
Based on the findings of such evaluation, the Corporation believes that, on December 31, 2018, we have maintained, in all material respects, an effective internal control system (that includes the supervision and management of our subsidiaries), to provide reasonable assurance over our operational effectiveness and efficiency, reliability of financial reporting, and compliance with applicable laws and regulations.
This statement will be an integral part of the Corporation’s Annual Report for the year 2017 and Prospectus, and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Article 20, 32, 171, and 174 of the Securities and Exchange Law.
This statement has been passed by the Board of Directors in their meeting held on March 27, 2019, with none of 11 attending directors expressing dissenting opinions, and the remainder all affirming the content of this statement.

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China Motor Corporation

Chairperson: Li-lien Chen Yen President ： Chao-Wen Chen

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Corporate Governance

The independent auditor’s report shall be disclosed if the the auditor is designated to review internal control system: None
(XI) Punishment and Improvement Status of Violation Internal Control System during the 2018 Calendar Year and up to March 31, 2019: None
(XII) Major Resolutions at Shareholders Meetings and Board of Directors Meetings during the 2018 Calendar Year and up to March 31, 2019
Major Resolutions at Board of Directors Meetings

Date of meeting	Important resolution	Implementation
03.26.2018	1. The Corporation’s 2017 Annual Report. 2. The Corporation’s 2017 Earning Distribution. 3. Passed the date and location of the Corporation’s general shareholders’ meeting 2018. 4. Passed the allocation of remuneration and compensation to directors/supervisors and employees 2017. 5. Passed the issue of the Corporation’s “Statement of Internal Control System” for 2017. 6. Amendments to CMC's "Compensation Committee Foundation Principles." 7. Change of manager at China Motor Training Center. 8. Amendments to CMC's "Board of Directors Performance Evaluation Policy." 9. Independence and suitability assessment for CMC's 2018 financial statement auditors. 10. Removal of restrictions imposed against CMC's managers for involving in competing business activities. 11. Proposal to remove restrictions imposed against CMC's directors for involving in competing business activities during the 2018 annual general meeting.	Already published on the MOPS and implemented with reference to relevant regulations. Motions 1, 2 and 11 were submitted to the general shareholders’ meeting 2018 for recognition and resolution.
05.11.2018	1. Removal of restrictions imposed against CMC's managers for involving in competing business activities. 2. Proposal to remove restrictions imposed against CMC's directors for involving in competing business activities during the 2018 annual general meeting.	Already implemented per the resolution. Motions 2 were submitted to the general shareholders’ meeting 2018 for resolution.
06.25.2018	1. Remuneration to CMC's financial statement auditors for 2018~2020. 2. Amendments to CMC's "Internal Control System for Stock Affairs Unit" and "Internal Audit Implementation for Stock Affairs Unit." 3. Proposal to invest directly into Fujian Spicer Drivetrain System and Tai Ya Investment (HK) to simply ROC Spicer's investment structure in the Mainland. 4. Reassignment of department managers and above. 5. Removal of restrictions imposed against CMC's managers for involvingin competingbusiness activities.	Already implemented per the resolution.
08.06.2018	None.	None.
11.09.2018	None.	None.
12.07.2018	None.	None.

Corporate Governance

Date of meeting	Important resolution	Implementation
12.17.2018	1. CMC's 2019 objectives. 2. Establishment of CMC's 2019 audit plan. 3. Proposal to lend NT$700 million to subsidiary - Hualing Motors. 4. Amendments to CMC's "Board of Directors Performance Evaluation Policy." 5. Proposal to remove restrictions imposed against CMC's directors for involving in competing business activities during the 2019 annual general meeting. 6. Amendments to CMC's "Annual Incentive Bonus and Employee Profit-sharing Policy." 7. Reassignment of department managers and above. 8. Removal of restrictions imposed against CMC's managers for involvingin competingbusiness activities.	Already published on the MOPS and implemented with reference to relevant regulations.
03.27.2019	1. CMC's 2018 financial statements. 2. CMC's 2018 earnings appropriation. 3. Allocation of 2018 employee remuneration and director remuneration. 4. Proposal of a 60% capital reduction in cash to adjust capital structure and improve return on shareholders' equity 5. Date and location of CMC's 2019 annual general meeting. 6. Proposal to re-elect CMC's directors and independent directors during the 2019 annual general meeting. 7. Proposal to remove restrictions imposed against CMC's 12th board of directors during the 2019 annual general meeting. 8. Reassignment of CMC's department managers and above. 9. Removal of restrictions imposed against CMC's managers for involving in competing business activities. 10. Independence and suitability assessment for CMC's 2019 financial statement auditors. 11. Proposal to issue CMC's 2018 "Declaration of Internal Control System." 12. Amendments to CMC's "Asset Acquisition and Disposal Procedures" and "Internal Audit Implementation for Asset Acquisition and Disposal Procedures." 13. Amendments to CMC's "Derivative Transaction Procedures." 14. Amendments to CMC's "External Party Lending Procedures" and "Internal Audit Implementation for External Party Lending Procedures." 15. Amendments to CMC's "Endorsement and Guarantee Policy" and "Internal Audit Implementation for Endorsement and Guarantee Policy." 16. Amendments to CMC's "Code of Corporate Governance Practice." 17. Amendments to CMC's "Compensation Committee Foundation Principles."	Already published on the MOPS and implemented with reference to relevant regulations. Items 1 and 2 are subject to acknowledgment during the 2019 annual general meeting; items 4, 7, 12, 13, 14 and 15 are subject to resolution during the 2019 annual general meeting; whereas item 6 is subject to re-election during the 2019 annual general meeting.

Corporate Governance

2. Major Resolutions at Shareholders Meetings

. Major Re	solutions at Shareholders Meetings
Date of Meeting	Important resolution	Implementation
06.28.2017	1. Recognition of the final account book 2017.	Already published on the MOPS.
	2. Recognition of allocation of earnings 2017.	The cash dividend allocated at NT$1.8 per share. The record date was set on July 27, 2018, and the dividend was granted on August 28,2018.
	3. Passed removal of restrictions imposed against CMC's directors for involving in competingbusiness activities	Already posted on the Corporation’s website and implemented per the resolution.

(XIII) Major Issues of Record or Written Statements Made by Any Director or Supervisor Dissenting to Important Resolutions Passed by the Board of Directors during the 2017 Calendar Year and up to March 31, 2019: None

(XIV) Resignation or Dismissal of Chairperson, President, and General Manager of Accounting, Finance, Internal Audit and R&D during the 2017Calendar Year and up to March 31, 2019:

2019:
Title	Name	Inaugural Date	Change Date	Reason for Change
Chairperson	Kenneth K.T. Yen	July 25, 2007	Dec 3 2018	passed away

IV. Information Regarding Audit Fees

Audit Fees

Audit Fees
AccountingFirm	Name of CPA	Audit Period	Note
Deloitte & Touche	Chih-Ming Shao, Ya-Ling Wong	2018.01.01~2018.12.31

Item Range of the Amount	Item Range of the Amount	Audit Fee	Non-Audit Fee	Total
1	Belwo 2,000 thousands		
2	2,000 thousands（included）～ 4,000 thousands
3	4,000 thousands（included）～ 6,000 thousands
4	6,000 thousands（included）～ 8,000 thousands
5	8,000 thousands（included）～ 10,000 thousands			
6	10,000 thousands（included） and above

Corporate Governance

When the non-audit fees paid to CPA, the firm of CPA and its affiliates are more than one fourth of the audit fee, disclose the amounts of audit and non-audit fee and the content of non-audit services:

Unit ： Thousand

Accounti ng Firm	Name of CPA	Audit Fee		Non-Audit Fee	Non-Audit Fee	Non-Audit Fee		Audit Period	Note
			Syste m Desig n	Company Registratio n	Human Resour ce	Other （note ）	Subto atl
Deloitte & Touche	Chih-Ming Shao, Ya-Ling Wong	8,375	-	162	-	290	452	2018.01.01 ~2018.12. 31	Fees for Transfer Pricing, etc.

Note: If the “other” of non-audit fee reaches 25% of non-audit fee, specify its service content in the note.

Replace the accounting firm and the audit fee paid in the year of replacement is less than the audit fee in previous year, disclose the amount of audit fee before and after the replacement and its reasons: N.A.
For the audit fee is reduced more than 15 percent as comparing to previous year, disclose the amount reduced, percentage and reason: N.A.

V. Information Regarding Replacement or Rotation of Accountants

(I) Regarding the former CPA

Regarding the former CPA
Date of Replacement	October 2017
Reason and Description of Replacment	Due to relevant regulatory requirements on rotation, Deloitte & Touche has rotated audit partners in 2017, the CPA Ya-Ling Wong succeeded the duty of orignal CPA Shiow-Ming Hsue in October 2017.
Reason for termination or rejection of appointment	Related Party Status		CPA	Appointer
	Voluntary termination of appointment		(NA)	(NA)
	Reject the (continued) appointment		(NA)	(NA)
Opinion and reason for any report otherthan unqualified opinion in last twoyears	Partial long-term investment under equity method is recognized based on the audit report of other CPA and therefore the modified unqualified opinions are issued.
Any disagreement with the issuer	Yes	-	Accounting principle or practice
		-	Disclosure of financial statement
		-	Scope or steps of audit
		-	Other
	No	
	Note	-
Other disclosure (items to be disclosed in accordance with article 10.5.(1)(iv) of Regulations Governing Information to be Published in Annual Reports of Public Companies)		None

Corporate Governance

(II) Regarding the successive CPA

) Regarding the successive CPA
Account Firm	Deloitte & Touche
Name of CPA	CPAYa-LingWong
Date of Appointment	October 2017
The items and results of possible opinion on the financial report aiming at accounting methods or accounting principles applied to specific transactions as enquiried before the appointment	NA
The written opinions of successive CPA which are different from the former CPA	None

(III) The former CPA written response to the matters referred to in article 10.5.(1) and article 10.

5.(2) (ii) of Regulations Governing Information to be Published in Annual Reports of Public Companies: N.A.

VI. Chairperson, Prisident and General Manager of Financial Affairs or Accounting Working in CMC’s Independent Audit Firm or its affiliates during 2018: None

Corporate Governance

VII. Changes in Shareholding of Directors, Managers and Major Shareholders

(I) Share transfer and change in pledged shares of directors, managers and shareholders holding more than 10% of shares

Unit: share

				Unit: share	Unit: share
Title	Name	2018		As of March 31, 2019
		Change in Shareholding	Increase (decrease) on pledged shares	Change in Shareholding	Increase (decrease) on pledged shares
Director (Note1)	Tai-Yuen Textile Co., Ltd.	-	-	-	-
Director	Yulon Motor Co., Ltd.	-	-	-	-
Director (Note1)	Mitsubishi Motors Corporation	-	-	-	-
Director	Mitsubishi Corporation	-	-	-	-
Director	Le Wen Enterprise Co., Ltd.	-	-	-	-
Chairperson	Kenneth K. T. Yen	-	-	-	-
	Li-Lien Chen Yen
Director	Eiichi Takasawa	-	-	-	-
Director	Hsin-I Lini	-	-	-	-
Director	Kuo-Rong Chen	-	-	-	-
Director	TakayasYonekura	-	-	-	-
Director /Prsident	Chao-Wen Chen	-	-	-	-
Director	Tai-Ming Chen	-	-	-	-
Director	Hsin-ChengTseng	-	-	-	-
Independent Director	Chen-Chi Hsiao	-	-	-	-
Independent Director	Chi-Ching Chen	-	-	-	-
Independent Director	Yun-Hua Yang	-	-	-	-
Executive Vice Prsident	Te-Jun Lo	-	-	-	-
Vice President	Ching-Wu Chien	-	-	-	-
Vice President	Shing JuChen	-	-	-	-
Vice President	Hung-Ching Yang	-	-	-	-
Special Assistant (Vice President)	Koju Huang	-	-	-	-
Vice President	Chiung-chih Tseng	-	-	-	-
Accounting and Finance Supervisor	Mei-Chu Tai	-	-	-	-
Corporate governance officer	Ling-Jun Lin	-	-	-	-

Note1: Shareholders holding over 10% of issued shares.

Note2: Service of Chairman Kenneth Yen ended on December 3, 2018 and was succeeded by Li-Da Yen Chen on December 7, 2018.

(2) When the opponent party of shares transfer or pledge is a related party, disclose the name of the opponent party, the relation with the Corporation, directors, supervisors and shareholders holding over 10% of shares and the shares acquired or pledged: None.

Corporate Governance

VIII. Information Disclosing the Relationship between any of the Top Ten Shareholders

Name	Shareholding	Shareholding	Spouse & Minor Children Shareholding	Spouse & Minor Children Shareholding	Shares Held Through Other Parties	Shares Held Through Other Parties	Names and Relationship of Any of the Top Ten Shareholders being A Related Party or spouse or relatives within 2nd degree kinship	Names and Relationship of Any of the Top Ten Shareholders being A Related Party or spouse or relatives within 2nd degree kinship	Note
	Number of Shares	%	Number of Shares	%	Number of Shares	%	Titel (or Name)	Relation
Tai-Yuen Textile Co., Ltd.	348,589,538	25.19	-	-	-	-	Yulon Motor Co.,Ltd.	Same chairperson	-
							Diamond Hosiery & Thread Co.,Ltd.	Same chairperson	-
Representative： Hsin-I Lin	-	-	-	-	-	-	-	-	-
Representative： Kuo-RongChen	-	-	-	-	-	-	-	-	-
Representative： Hsin-ChengTseng	-	-	-	-	-	-	-	-	-
Mitsubishi Motors Corporation	193,768,273	14.00	-	-	-	-	Mitsubishi Corporation	Investee under equitymethod	-
Representative： Eiichi Takasawa	-	-	-	-	-	-	-	-	-
Yulon Motor Co., Ltd.	111,480,444	8.05	-	-	-	-	Tai-Yuen Textile Co., Ltd	Same chairperson	-
							Diamond Hosiery & Thread Co.,Ltd.	Same chairperson	-
Representative： Li-Lien Chen Yen	-	-	-	-	-	-	-	-	-
Representative： Tai-MingChen	-	-	-	-	-	-	-	-	-
Diamond Hosiery & Thread Co., Ltd.	93,596,630	6.76	-	-	-	-	Tai-Yuen Textile Co., Ltd.	Same chairperson	-
							Yulon Motor Co.,Ltd.	Same chairperson	-
Mitsubishi Corporation	66,404,796	4.80	-	-	-	-	Mitsubishi Motors Corporation	Invester under equity method	-
Representative： TakayasYonekura	-	-	-	-	-	-	-	-	-
Cathay Life Insurance Co.,Ltd.	51,828,454	3.74	-	-	-	-	-	-	-
Mercuries Life Insurance Co.,Ltd.	29,492,000	2.13	-	-	-	-	-	-	-
Kenneth K. T. Yen	16,621,212	1.20	-	-	-	-	-	-	-
Taiwan Life Insurance Co.,Ltd.	16,374,000	1.18	-	-	-	-	-	-	-
Investment account at the Norges Bank under the custodyof Citibank	16,132,196	1.16	-	-	-	-	-	-	-

Corporate Governance

IX. Long-Term Investment Ownership

March 31, 2019

Investee	Investment of the Corporation	Investment of the Corporation	Investments of Directors, Supervisors, Managers and Businesses with Shares Directly or Indirectly Held bythe Corporation	Investments of Directors, Supervisors, Managers and Businesses with Shares Directly or Indirectly Held bythe Corporation	Syndicated Invetments	Syndicated Invetments
	Shares	Shareholding %	Shares	Shareholding %	Shares	Shareholding %
Yulon Motor Co.,Ltd.	262,228,166	16.67	293,339,332	18.65	555,567,498	35.32
Kian Shen Corporation	32,201,367	43.87	48,040	0.07	32,249,407	43.94
Hwa Wei Holdings Co.,Ltd.	40,000	40.00	60,000	60.00	100,000	100.00
China Motor Investment Co., Ltd.	40,000	100.00	-	-	40,000	100.00
Fortune Motors Co.,Ltd	132,116,729	41.01	31,005,908	9.62	163,122,637	50.63
Sino Diamond Motor Corporation	278,167,030	100.00	-	-	278,167,030	100.00
Alliance Investment & Management Co.,Ltd.	183,000,000	100.00	-	-	183,000,000	100.00
ROC Spicer Ltd.	144,990	29.00	102,302	20.46	247,292	49.46
Tokio Marine Newa Insurance Co.,Ltd.	61,510,524	20.57	52,009,524	17.39	113,520,048	37.96
Daimler Vans Hong Kong Ltd.	46,565,750	32.45	-	-	46,565,750	32.45
ShungYe Motor Enterprise	28,228,232	39.98	11,768	0.02	28,240,000	40.00
Gatetech TechnologyInc.	29,278,485	56.53	8,429,014	16.27	37,707,499	72.80
COC Tooling & Stamping Co., Ltd.	33,564,678	49.76	33,891,444	50.23	67,456,122	99.99
Uni-calsonic Corp.	6,083,525	31.20	5,982,575	30.68	12,066,100	61.88
China Engine Corporation	32,000,000	18.95	88,000,000	52.10	120,000,000	71.05
Hua-Chuang Automobile Information Technical Center Co.,Ltd.	56,600,000	17.25	215,000,000	65.51	271,600,000	82.76
Uni Auto Parts Manufacture Co.,Ltd.	13,032,137	15.00	21,728,516	25.00	34,760,653	40.00
Huang Chung Motor Co., Ltd.	8,790,000	100.00	-	-	8,790,000	100.00
Yulon IT Solutions Inc.	8,331,999	43.85	10,668,001	56.15	19,000,000	100.00
Yueki Industrial Co., Ltd.	2,936,222	15.08	12,783,109	65.67	15,719,331	80.75
Fujian Spicer Drivetrain System Co.,Ltd.	7,308,000	29.00	5,166,000	20.50	12,474,000	49.50
Tai Ya Investment (HK) Co., Limited	2,242,077	29.00	1,584,917	20.50	3,826,994	49.50

Note: The investees are investment of the Corporation under equity method.

Capital Overview

I. Capital and Shares

(I) Sources of Capital

Unit: thousand shares; NTD thousand

						Unit: thousand shares; NTD thousand	Unit: thousand shares; NTD thousand	Unit: thousand shares; NTD thousand
Month/Year	Issue Price (NTD)	Authorized Capital		Paid-in Capital		Remark
		Shares	Amount	Shares	Amount	Source of capital	Capital Increase by assets Other than Cash	Other
09/2007	10	1,800,000	18,000,000	1,391,301	13,913,008	Capital increment by earning	-	2007/09/14 Jing Shou Shang No. 9601227310
01/2011	10	1,800,000	18,000,000	1,384,051	13,840,508	Cancellation of treasury stocks	-	2011/01/17 Jing Shou Shang No. 10001001380

(II) Type of stock

I) Type of stock	I) Type of stock	I) Type of stock	I) Type of stock
April 28, 2019
Type of Stock	Authorized Capital
	Issued Shares (share, note)	Unissued Shares (share)	Total
Inscribed common stock	1,384,050,854	415,949,146	1,800,000,000

Note: TWSE listed stock.

(III) Status of Shareholders

II) Status of Shareholders	II) Status of Shareholders	II) Status of Shareholders	II) Status of Shareholders	II) Status of Shareholders	II) Status of Shareholders	II) Status of Shareholders
April 28, 2019
Type of Shareholders Qty	Government Agencies	Financial Institutions	Other Judicial Person	Domestic Natural Persons	Foreign Instituions & Natural Persons	Total
Number of Shareholders	2	38	139	41,189	313	41,681
Shareholding (share)	10,588,000	110,423,382	638,126,624	191,509,517	433,403,331	1,384,050,854
Shareholding (％)	0.77	7.98	46.11	13.84	31.30	100.00

Capital Overview

(IV) Shareholding Distribution Status

April 28, 2019

			April 28, 2019
Shareholder Ownership (share)	Number of Shareholders (person)	Onwership (share)	Ownership (%)
1～999	16,306	2,859,453	0.21
1,000～5,000	18,289	39,024,447	2.82
5,001～10,000	3,567	27,303,992	1.97
10,001～15,000	1,170	14,074,058	1.02
15,001～20,000	683	12,589,758	0.91
20,001～30,000	585	14,624,843	1.05
30,001～40,000	241	8,430,752	0.61
40,001～50,000	197	9,214,014	0.67
50,001～100,000	278	20,374,033	1.47
100,001～200,000	138	19,294,812	1.39
200,001～400,000	95	27,799,821	2.01
400,001～600,000	36	17,959,313	1.30
600,001～800,000	19	13,150,647	0.95
800,001～1,000,000	12	10,402,192	0.75
Over 1,000,000	65	1,146,948,719	82.87
Total	41,681	1,384,050,854	100.00

(V) List of Major Shareholders

April 28, 2019

		April 28, 2019
Share Shareholders	Total Shares Owned (share)	Ownership (%)
1. Tai-Yuen Textile Co., Ltd.	348,589,538	25.19
2. Mitsubishi Motors Corporation	193,768,273	14.00
3. Yulon Motor Co., Ltd.	111,480,444	8.05
4. Diamond Hosiery & Thread Co., Ltd	93,596,630	6.76
5. Mitsubishi Corporation	66,404,796	4.80
6. Cathay Life Insurance Co., Ltd.	51,828,454	3.74
7.Mercuries Life Insurance Co., Ltd.	29,492,000	2.13
8. Kenneth K. T. Yen	16,621,212	1.20
9. Taiwan Life Insurance Co., Ltd	16,374,000	1.18
10.. Investment account at the Norges Bank under the custodyof Citibank	16,132,196	1.16

Capital Overview

(VI) Market Price, Net Worth, Earnings, and Dividends per Share

Item	Year	Year	2017	2018	As of March 31, 2019
Market Price Per Share (NTD)	Highest		29.75	29.45	29.35
	Lowest		25.30	22.85	23.50
	Average		27.53	26.32	26.51
Net Worth Per Share(NTD)	Before distribution		36.81	37.69	-(Note3)
	After distribution		35.01	37.69(Note1)	-(Note3)
Earning Per Share (NTD)	Weighted average shares (thousand shares)		1,384,051	1,384,051	1,384,051
	Earning per share		3.01	2.64	- (Note3)
Dividend Per Share (NTD)	Cash dividend(note 2)		1.60	1.80	-
	Stock dividend	-	-	-	-
		-	-	-	-
	Accumulated undistributed dividend		-	-	-
Return on I	Price/earningratio		9.15	9.97	-
	Price/dividend ratio		17.21	14.62	-
nvestment	Cash dividendyield rate		5.81%	6.84%	-

Note: 1. The 2019 shareholders’ meeting has not yet been convened, and the earning distribution is not yet confirmed. Therefore, the EPS amounts before and after distribution are the same.

The earning distribution in previous year.
Up to the publication date of March 31, 2019, of this Report, there is no financial figure of the first quarter reviewed by the CPA that has not been disclosed.

(VII) Corporate Dividend Policy and Implementation Status

1. Dividend policy

The dividend policy in the current version of the Articles of Incorporation is as follows:

If there is a profit after the annual closing of books, the Corporation shall, after having provided for taxes and covered the losses of previous years by law, appropriate ten percent (10%) of the net profit after tax to the legal reserve. The remainder plus undistributed earnings from prior years should be distributed as dividends as recommended by the board of directors and approved by the stockholders in their meeting.

The Corporation is operated in a mature and stable industry. Dividends are distributed with reference to the organizational profitability, capital demand for future business plans, and industry environment change. In addition, the dividend distribution plan is made with reference to shareholder benefit and long-term

Capital Overview

organizational financial planning. Dividend distribution is not less than 40% of the net income, but there’ll no dividend distribution in deficit year. Dividends are distributed in the form of cash or stock. The amount of cash distributed each year shall not be less than 20% of the total amount of dividends issued.

Proposed dividend allocation plan at the present Shareholders Meeting:

The profit allocation plan of 2018 was established by the board to distribute cash dividend at NT$1.70 per share.

The profit for allocation was appropriated from the unallocated profit of 2018.

If the Corporation decided to re-purchase company shares or assign treasury stock to employees and such decision affects the number of shares circulating on the market on the dividend distribution base date, the shareholders’ meeting will be requested to authorize the board to adjust the dividend ratio.

(VIII) The Impact of Stock Dividend Issuance on Business Performance and EPS: N.A.

(IX) Employees’ Compensation and Remuneration to Directors

The percentage or scope of employee’ compensation and remuneration to directors specified in articles of incorporation

The policy in the current version of the Articles of Incorporation is as follows:

(1) No higher than 0.5% of net profit before income tax as remunerations for directors.
(2) Not less than 0.1% of net profit before income tax as employee’ compensation in the form of cash or stock approved by the BOD. In either form, employee’ compensation should also be distributed to employees of affiliated companys complying with certain requirements established by the board.

The employee’ compensation and remuneration to directors should be approved by the BOD and then be presented on Shareholders Meeting.

There should be reservation for losses of previous years and then the residential balance should be distributed accroding to the ratio stipulated in Articles of

Capital Overview

Incorporation.

According to a fixed percentage(0.5% in the last 3 years) of net profit before income tax deduct the employee’ compensation and remuneration to directors as remunerations for directors.

The accounting for the discrepancy between actual amount distributed and the estimated amount arised from differences of the basis of estimate of employee’ compensation and remuneration to directors and supervisors

The Corporation has made as most appropriate estimate and recognized the expenses pursuant to the percentage of employee’ compensation and remuneration to directors and supervisors as set forth in the Articles of Incorporation. If there is significant change with the proposed amount by the BOD afterward, the change shall be recognized as expenses in current year (the year of recognizing expenses). If the actual amount of distribution changes upon the amount approved by the BOD in next year, then the change will be carried to the profit and loss of next year in principle of change in accounting estimate.

Employee’ Compensation and Remuneration to Directors and Supervisors approved by BOD
(1) The employee’ compensation and remuneration to directors and supervisors in cash and stock. Where there is discrepancy between the expenses recorded and the estimated, disclose the amount, reason and handling of difference
- The 2018 proposal concerning the employee’ compensation and remuneration to directors had been approved by the 18[th] meeting of 19[th] term of BOD on March 27, 2019. It is approved to distribute $33,511 thousands to employees as compensation and $19,746 thousands to directors as remunerations, which are identical to the estimate in the year of recording expenses. In case the actual distribution amount is changed upon the resolution of BOD, it will be deemed as change of accounting estimate and will be adjusted in the actual distributing year. In addition to allocating the aforementioned employees’ compensation, the CMC

Capital Overview

also issued other bonuses such as the three major festivals, end of year bonuses, and business team growth and performance awards on the basis of business performance and personal performance by the employee to encourage workers to generate better performance for the Company as well as shareholders.

(2) The percentage of stock employee’ compensation over the net income and the total employee’ compensation

There was no stock employee’ compensation distributed in 2018 and therefore this is not applicable

The actual distribution of employee profit shareing and compensation to directors and supervisors (including the number of shares, amount and share price), the amount, reason and handling of difference from the recognized employee profit sharing and compensations to directors and supervisors.
- The 2017 employee profit sharing and compensation to directors and supervisors had been approved by the 11[th] meeting of 19[th] term of BOD on March 26, 2018. The proposed cash bonus to employees was 45,459 thousands and 22,036 as compensation to directors, which were identical to the actual amount distributed after the shareholders’ meeting.
(X) Buyback of Treasury Stock: None

II. Issurance of Corporate Bonds: None

III. Issuance of Preferred Stock: None

IV. Issuance of Depository Receipts: None
V. Status of Employee Stock Option Plan and Employee Restricted Stock: None
VI. Status of New Share Issuance in Connection with Mergers and Acquisitions: None

VII. Financing Plans and Implementation: N.A.

Operational Highlights

I. Business Activities

(I) Business Scope
The Main Content of the Corporation’s Business:
- (1) CA01090 Aluminum Casting Manufacturing
- (2) CB01010 Machinery and Equipment Manufacturing
- (3) CC01010 Electric Power Supply, Electric Transmission and Power Distribution Machinery Manufacturing
- (4) CD01030 Automobiles and Parts Manufacturing
- (5) CD01040 Motor Vehicles and Parts Manufacturing
- (6) CD01050 Bicycles and Parts Manufacturing
- (7) CC01090 Batteries Manufacturing
- (8) CD01990 Other Transport Equipment and Parts Manufacturing
- (9) CQ01010 Die Manufacturing
- (10) E603050 Cybernation Equipments Construction
- (11) E603100 Electric Welding Construction
- (12) E604010 Mechanical Installation Construction
- (13) E605010 Computing Equipments Installation Construction
- (14) F106030 Wholesale of Mold
- (15) F112040 Wholesale of Petrochemical Fuel Products
- (16) F113010 Wholesale of Machinery
- (17) F113110 Wholesale of Batteries
- (18) F113020 Wholesale of Household Appliance

(19) F113070 Wholesale of Telecom Instruments

(20) F114010 Wholesale of Automobiles

(21) F114020 Wholesale of Motorcycles

(22) F114030 Wholesale of Motor Vehicle Parts and Supplies

(23) F114040 Wholesale of Bicycle Parts and Supplies

(24) F114050 Wholesale of Tire and Tubes

(25) F119010 Wholesale of Electronic Materials

(26) F206030 Retail Sale of Die

(27) F212050 Retail Sale of Petroleum Products

(28) F213010 Retail Sale of Household Appliance

Operational Highlights

(29) F213060 Retail Sale of Telecom Instruments

(30) F213110 Retail Sale of Batteries

(31) F214010 Retail Sale of Automobiles

(32) F214020 Retail Sale of Motorcycles

(33) F214030 Retail Sale of Motor Vehicle Parts and Supplies

(34) F214040 Retail Sale of Bicycles and Parts

(35) F214050 Retail Sale of Tires and Tubes

(36) F219010 Retail Sale of Electronic Materials

(37) F401010 International Trade

(38) F401021 Restrained Telecom Radio Frequency Equipments and Materials Import

(39) F501990 Other Eating and Drinking Places Not Elsewhere Classified

(40) H703100 Real Estate Rental and Leasing

(41) I102010 Investment Consultancy

(42) I103060 Management Consulting Services

(43) I301010 Software Design Services

(44) I401010 General Advertising Services

(45) I501010 Product Designing

(46) IE01010 Telecommunications Number Agencies

(47) IZ01010 Copying Services

(48) IZ02010 Typewriting Services

(49) IZ04010 Translation Services

(50) IZ12010 Manpower Services

(51) J901020 Hotels and Motels

(52) J903020 Mountain Climbing Guiding Services

(53) JA01010 Automotive Repair and Maintenance

(54) JA01990 Other Automobile Services

(55) JA02010 Electric Appliance and Audiovisual Electric Products Repair Shops

(56) JA02020 Motorcycle Repair Shops

(57) JA02030 Bicycle Repair Shops

(58) JB01010 Exhibition Services

(59) JE01010 Rental and Leasing Business

(60) J202010 Industry Innovation and Incubation Services

Operational Highlights

(61) F106010 Wholesale of Ironware
(62) CC01020 Electric Wires and Cables Manufacturing
(63) CC01030 Electric Appliance and Audiovisual Electric Products Manufacturing
(64) CC01080 Electronic Parts and Components Manufacturing
(65) IZ99990 Other Industry and Commerce Services Not Elsewhere Classified
(66) ZZ99999 Other than licensed businesses, to manage and operate businesses not

prohibited or restricted by law

2. Revenue distribution

Manufacture and sales of vehicles and related components accounted for 96% of revenue.

Current Products of Company
Commercial vehicles:

LEADCA 3.49T series DELICA 2.4L series VERYCA 1.3L series CMC A180/A190 1.5L series

Sedans:

GRAND LANCER 1.8L series

COLT PLUS 1.5L series

Recreational/Business vehicles:

OUTLANDER 2.4L car series ZINGER 2.4L car series ECLIPSE CROSS 1.5T

Electric vehicles:

Electric scooter series: e-moving

Electric bike: e-moving Bobe 、 emoving Shine

4. New products to be developed in the future

Our new product development plans for the next three years are aimed toward meeting market demands and creating selling points. CMC will continue to unveil innovative and cutting-edge features to existing models for enhanced product competitiveness and market segmentation. With the support of comprehensive marketing strategies, we aim to raise sales performance to a whole new level. In addition, CMC will strive to introduce at least one next-generation product per year staring from 2020, and thereby increase Mitsubishi’s brand

Operational Highlights

visibility.

In light of the rapidly growing demand for electric scooters, CMC will be adopting the following plans with respect to the development of electric vehicles:

(1) A special edition of e-moving Shine will be introduced in the 2nd quarter packed with useful accessories to enhance product competitiveness.
(2) A new series of e-moving scooters will be introduced in the 2nd quarter offering features such as "fashionable appearance" and "compatible charging" to appeal to the young generation and to promote the use of e-moving scooters for short-distance commuting.
(3) As for e-moving Super, a new fast-charging model of competitive appearance and specifications capable of delivering performance comparable to fossil fuel vehicles is scheduled to be released in the 3rd quarter. Furthermore, a network of charging stations with different efficiency ratings will be deployed based on users' living circle to eliminate their mileage concerns. Also scheduled for launch in the 3rd quarter is a new model of e-moving Super that not only delivers performance comparable to fossil fuel vehicles, but offers higher load than vehicles of the same class as well.
(II) Industry Overview
Current and future industry prospects Sales in Taiwan averaged 420,000 ~ 450,000 units in recent years. According to the National Development Council, Purchasing Manager Index (PMI; a value higher than 50 indicates economic expansion) was concluded at 44.8 for December 2018, representing the fastest contraction since the index was first compiled in July 2012 and indicated that Taiwan's economy is undergoing contraction. Car sales in Taiwan totaled 435,100 units last year (2018), which was 2.1% lower than the 444,600 units reported in 2017. Research institutions have grown conservative about the outlook of Taiwan's economic growth this year (2019) due to prevailing uncertainties around the world; the Directorate-General of Budget, Accounting and Statistics gave a growth forecast of 2.27%, whereas Taiwan Institute of Economic Research estimated growth at 2.12% and Chung-Hua Institution for Economic Research predicted growth at 2.18%.
- Due to a slowdown of the global economy and diminishing effects of the vehicle renewal policy, sale of small passenger vehicles is estimated at 428,000 units (or 438,500 units including large vehicles) for 2019, which is comparable to the 423,200

Operational Highlights

units (or 435,100 units including large vehicles) concluded last year (2018).

Association between upstream, midstream, and downstream industry participants Automobiles is a technology and capital intensive industry that involves an extensive range of business partners from parts suppliers in the upstream, car manufacturing in the midstream to sales and after-sale service partners in the downstream. These industry participants work closely and affect each other on a significant level. The relationship between parts suppliers and car manufacturers is especially intricate given the complex procedures and more than ten thousand parts involved in car manufacturing and assembly. For this reason, parts suppliers generally work with car manufacturers in a satellite arrangement to ensure long-term and stable business relationship. Due to the tight working relationship within the automobile industry, car manufacturers also have the tendency to engage upstream and downstream partners in vertical integrations of varying degree.
Product development trends

Automobiles are a competitive market in Taiwan, one that car manufacturers are constantly creating new segments by introducing new models and offerings. Due to rising environmental protection awareness and oil prices, car manufacturers will become more aggressive in the introduction of next-generation engines, hybrids, plug-in hybrids and electric vehicles, and CMC will respond to this trend by assessing and investing into the development of relevant technologies.

Product competition

Automobiles has long been a highly competitive market in Taiwan, and with the share of imported vehicles increasing continuously in recent years, locally produced vehicles accounted for approximately 53.4% share of the market last year (2018). In the future, CMC will continue investing into R&D and production capacity to enhance product competitiveness, satisfy consumers' changing needs and adapt to the new market environment

(III) Technology and R&D overview

1. R&D Expenses

In 2018 the R&D expenses were NT$1,593,859 thousand. In 2018 the consolidated R&D expenses were NT$2,092,742 thousand.

Successfully developed technology and products in 2018 and by 31 March 2019

Operational Highlights

(1) January 2018 - Completed development of special edition ZINGER and commenced mass production and sale.
(2) January 2018 - Completed development of VERYCA, an electric postal vehicle, and commenced mass production and delivery.
(3) September 2018 - Completed development of COLT PLUS, a vehicle designed in accordance with the latest safety regulations, and commenced mass production and sale.
(4) September 2018 - Completed development of a new VERYCA model and commenced mass production and sale.
(5) October 2018 - Completed development of GRAND LANCER, a vehicle designed in accordance with the latest safety regulations, and commenced mass production and sale.
(6) October 2018 - Completed development of DELICA, a vehicle designed in accordance with the latest safety regulations, and commenced mass production and sale.
(7) October 2018 - Completed development of ZINGER, a vehicle designed in accordance with the latest safety regulations, and commenced mass production and sale.
(8) November 2018 - Completed development of a commercially enhanced model for OUTLANDER and commenced mass production and sale.
(IV) Long- and short-term business development plan
CMC's short-term business plan will continue to focus on introducing new Mitsubishi models from Japan and growing export sales. As for long-term business plan, CMC is actively investing into the development of electric scooters as a means to capitalize on newly emerged opportunities associated with green energy. In addition to refining product quality and technology, CMC will also support the government's policies to create a convenient charging environment. In the future, CMC will remain committed to is long-term strategies of "building the Mitsubishi brand," "securing market leadership in commercial vehicles" and "promoting electric scooters" in Taiwan, and thereby ensure profitability, business growth and business sustainability.

II. Market, production, and sales overview

(I) Market analysis
Market condition of auto sales

CMC's products comprise medium and small-size passenger vehicles, recreational vehicles and commercial vehicles. Products are primarily sold in Taiwan at the moment. In the last year (2018), CMC sold a total of 49,197 passenger vehicles and commercial vehicles weighing 3.5

Operational Highlights

tonnes and below (including imports), which represented a market share of approximately 11.6%. The sales figure included 6,551 sedans (3.6% share of the sedan market), 14,886 RVs (7.3% share of the RV market), and 27,760 commercial vehicles weighing 3.5 tonnes and below (72.8% share of commercial vehicles market). In addition, CMC sold 2,861 heavy commercial vehicles weighing more than 3.5 tonnes, representing 24.0% share of the market. (The above sales figures are based on the number of licensed vehicles).

Future supply and demand and growth of the auto market

Taiwan's automobiles market is largely affected by the grand environment, and has been shrinking since the sale peaked at 510,000 in 2005 until it hit bottom at 229,000 in 2008. With the global economy recovering and the government introducing policy incentives, domestic vehicle sales have risen above 400,000 to 435,000 in 2018. Vehicle sales (including large vehicles) in Taiwan is expected to remain at around 400,000~450,000 units over the short term.

New or revised models are expected to be introduced to Taiwan's market this year (2019), including:

CMC's ECLIPSE CROSS/ZINGER/DELICA, MAZDA 3/CX-5, FORD FOCUS/KUGA, LUXGEN S5, TOYOTA ALTIS/RAV4/C-HR, VW T-CORSS/T-ROC, SUZUKI APV, and HYUNDAI TUCSON etc.

Competition strategy in the auto market

Faced with a challenging environment, CMC will focus on growing the Taiwan market and invest into new energy and systems. Explanation is as follows:

Favorable factors

(1) After years of diligent cultivation, the Corporation has established an excellent brand image with great word of mouth that has won consumer identification and recognition. Moreover, we have successfully established the No. 1 brand image of commercial vehicle in consumers.
(2) Having committed to proprietary R&D for several decades, CMC is already capable of developing its own technology and has won the recognition of its business partners. With the launch of light-weight commercial vehicles and new CMC models, we aim to showcase our technical capacity and gain the market's preference
(3) CMC, too, has invested into new energy technology in response to the rising green

energy awareness, and applied its new energy systems on electric vehicles and scooters

Operational Highlights

that are now in mass production, making it one of the forerunners of electric vehicles in Taiwan. As demand for electric scooters grows, CMC will further enrich its product line to satisfy the needs of consumers.

(4) CMC has a comprehensive sales and service network supported by complete industries including retail, non-life insurance, owner service, leasing and used car trading that fully enhance CMC's competitive advantage.
(5) Support of a strong sales system. CMC currently has Fortune Motors and Shung Ye Motors serving as distributors for small vehicles, both of which are sizable and reputable automobile distributors in Taiwan.

Unfavorable factors

(1) Other automakers launch competitive (low fuel consumption and low price) new sedans manufactured in Taiwan, commercial vehicles, and RVs.
(2) Market share of imported vehicles has been increasing progressively year after year, and accounted for more than 46% of total vehicles sold last year (2018). This was largely due to improved competitiveness of imported vehicles. Import of affordable vehicles in high quantities and variety has made imported vehicles more attractive and competitive in the domestic market compared to locally made vehicles.

Countermeasures

(1) Emphasis on the Taiwan market: CMC will focus on growing the Mitsubishi brand and its proprietary products, and invest into enhancing product competitiveness and shortening product development cycle.

Taiwan is an essential market to CMC, therefore CMC will continue to focus on growing local presence. In addition to participating in Mitsubishi Motor's new car development programs, CMC will also focus on developing other competitive models to accommodate the needs of Taiwanese consumers while shortening the time to launch.

Meanwhile, the sales channel has been undergoing a transformation of corporate identity since 2018 following the reshaping of the Mitsubishi brand to bring consumers a whole new experience.

CMC will continue to develop auto parts according to customers' needs to satisfy

Operational Highlights

consumers' diverse demands. A mobile APP has been developed in line with the new consumption trend to provide car owners with more personalized and customized service, and to improve customers' attachment and loyalty to the CMC brand.

(2) CMC will take the initiative to participate in the industry's specialization on a global level, and enhance its strategic collaboration with Mitsubishi Japan. With improved technological capacity, CMC is able to take part in the international specialization system of Mitsubishi Japan and expand the scope and application of new technologies. CMC will continue to collaborate with Mitsubishi Japan on exploring overseas markets in the future, and build a tighter relationship that creates synergies for both parties.

(3) Enhanced technology R&D

Funded and established by CMC, the "China-motor Asia Research & Technology Center" has developed several new and improved models to date (e.g.:

VERYCA/VARICA, FREECA, GRUNDER, ZINGER, COLT PLUS, LEADCA and GRAND LANCER) to accommodate market demands in Taiwan and China. CMC will continue to commit resources into developing proprietary technology and production capacity for critical parts, and thereby secure competitiveness as well as the ability to design proprietary models. In light of the world's rising energy conservation awareness and initiatives undertaken by the Taiwanese government towards building a low-carbon environment, CMC has responded by investing a significant amount of resources into developing new energy technologies.

Electric bikes and scooters:

CMC had 5,768 emoving scooters registered for license last year (2018), down 15% from the 6,770 units reported in 2017. Since the government's introduction of TES certification for electric scooters, CMC has sold a total of 40,477 scooters to date (from 2011 to 2018), representing a 22% market share. Meanwhile, 4,325 electric bicycles were sold last year (2018), up 66% from the 2,602 units reported in 2017.

82,483 electric scooters were sold market-wide last year (2018), which represented an 87% growth over the 44,100 units reported in 2017. It is apparent that the government's promotional efforts have made electric scooters more acceptable to the general public. Apart from

Operational Highlights

continuing business practices from the previous year (2018), CMC expects to release electric motorcycles into the mainstream market sometime this year (2019) to further expand sales. Meanwhile, electric scooters with new colors and attractive designs will be introduced to strength CMC's market presence. In terms of distribution channel, CMC plans to increase the number of retail outlets to 40 by the end of this year, which has the potential to offer higher quality service and experience, and raise brand image for significant improvement in sales

(II) Main Uses and Production Processes of Major Products

The Corporation mainly produces various types of commercial vehicles, sedans, and RV/business vehicles whose main uses are to carry cargo, passengers and offer leisure. The production processes are shown below:

==> picture [419 x 460] intentionally omitted <==

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

Product
planning Client
Style design Dealer
Vehicle
Design Readiness
Completed
Test vehicle
manufacturing compliance
Development Completed
and various vehicle
types of testing inspection
Stamping and
door Mechanical Supplier
assembly processing parts
Body Engine
Welding Assembly
Body Vehicle
Painting assembly
----- End of picture text -----

Operational Highlights

(III) Supply Status of Main Materials

The raw materials purchased by the Corporation are mainly parts needed for operations such as car manufacturing, sales and maintenance. International supplier is Mitsubishi Corporation of Japan. Domestic parts supplies are supplied by auto parts third-parties. With long term

contracts signed and long term cooperation, supply status of raw materials is very stable.

Major Materials	Major Suppliers	Items	Procurement Strategy
Automotive Parts	Mitsubishi Corporation	Parts such as CKD	Contract signed, delivery in installments
Automotive Parts	117 auto parts suppliers such as Kian Shen Corporation, etc	Auto parts that are domestically produced	Contract signed, delivery in installments
Raw materials	CPC Corporation, Taiwan	Various oil products	Contract signed, delivery in installments
Raw materials	Taiwan Kansai Paint Co. Ltd., etc	Baking varnish, spray paint, solvent, etc	Contract signed, delivery in installments
Raw materials	Nippon Steel and Sumitomo Metal and Chun Yuan Steel Industry Co., Ltd.	Steel Plates	Contract signed, delivery in installments

(IV) Major Suppliers and Clients Taking over 10% of the Amount of Incoming (Sales) over the Last Two Years

1. Major Suppliers

Unit: NT$ thousands

Two Years 1. Major Suppliers	Two Years 1. Major Suppliers	Two Years 1. Major Suppliers	Two Years 1. Major Suppliers	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands
2017				2018
Supplier	Procurement Amount	As % of Total Net Procurement	Relation to CMC	Supplier	Procureme nt Amount	As % of Total Net Procurement	Relation to CMC
South East Motor	3,468,357	14	Investee accounted for using equity method	South East Motor	1,192,906	6	Investee accounted for using equity method
Mitsubishi Corporation	1,981,080	8	Investor with significant influence	Mitsubishi Corporation	3,166,731	15	Investor with significant influence
Net Procurement	24,472,179	100	-	Net Procurement	21,277,031	100	-

Note: The table above is base on consolidated information.

Operational Highlights

2. Main Customers

Unit: NT$ thousands

2. Main Customers	2. Main Customers	2. Main Customers	2. Main Customers	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands
2017				2018
Customer	Net Sales	As % of Total Net Sales	Relation to CMC	Customer	Net Sales	As % of Total Net Sales	Relation to CMC
Fortune Motors Co., LTD	18,800,506	48	Investee accounted for using equity method	Fortune Motors Co., LTD	18,020,746	52	Investee accounted for using equity method
Shung Ye Motor Enterprise	5,134,913	13	Investee accounted for using equity method	Shung Ye Motor Enterprise	7,181,616	21	Investee accounted for using equity method
Daimler Trucks Asia Taiwan Ltd.	5,828,548	15	-	Daimler Trucks Asia Taiwan Ltd.	6,245,930	18	-
Net Sales	38,908,093	100	-	Net Sales	34,869,514	100	-

Note: The table above is base on consolidated information.

Operational Highlights

(V) Production over the Last 2 Years

Unit: Quantity –Vehicles Unit: NT$ thousands

				Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands
Year Capacity/ Volume Value Main Products	2017			2018
	Production Capacity	Production Volume	Production Value	Production Capacity	Production Volume	Production Value
4-wheeled vehicles	56,880	49,977	21,686,882	56,880	47,689	19,004,299
2-wheeled vehicles	14,640	8,706	384,665	14,640	10,434	356,723

Note: The production volume and value in the table above is mainly based on production of car built-up. Production capacity refers the volume manufactured using existing production equipment operating under normal single shift given considerations to factors such as holidays or days when production ceases.

(VI) Sales over the Last 2 Years

Unit: Quantity –Vehicles (Set) Unit: NT$ thousands

					Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands
Year Sales Volume Value Main Products	2017				2018
	Domestic Sales		Exports		Domestic Sales		Exports
	Volume	Value	Volume	Value	Volume	Value	Volume	Value
4-wheeled vehicles	49,126	24,562,288	593	146,571	48,317	21,859,597	443	116,223
2-wheeled vehicles	9,245	479,668	-	-	10,234	449,765	-	-
Sets of parts	-	-	12,270	718,204	-	-	1,320	15,514

Note: The sales volume and value in the table above is mainly based on sale of car built-up.

III. Human Resources

uman Resources	uman Resources
Year		2017	2018	March 31, 2019
Number of employees		4,095	3,973	3,942
Average Age (years)		40.35	41.14	41.22
Average Years of Service (years)		11.61	12.01	12.15
Education	Ph.D.	9	6	6
	Master’s	569	605	602
	Bachelor’s or Other higher education	1,513	1,398	1,384
	High School	1,458	1,417	1,414
	Junior High School or Less	546	547	536

Note: The table above is base on consolidated information.

Operational Highlights

IV. Environmental Cost

(I) Losses and Fines Caused by Environmental Pollution during the 2018 Calendar Year and up to March 31, 2019: None
(II) Forecast of Environmental Protection Expenses for Next Three Years

Unit: NT$ thousands

Year Item	2019	2019	2020	2020	2021	2021
	Environmental Protection Expenses	Amount	Environmental Protection Expenses	Amount	Environmental Protection Expenses	Amount
Proposed Purchase of Pollution Prevention Equipment or Content of Expenses	(1) Waste water and polluted air running costs (2) Pollution inspection fees	57,252 6,239	(1) Waste water and polluted air running costs (2) Pollution inspection fees	97,700 4,054	(1) Waste water and polluted air running costs (2) Pollution inspection fees	58,749 4,054
Expected Improvement	Comply with the (1) Air Pollution Control Act, (2) Water Pollution Control Act, (3) Waste Disposal Act, and (4) Toxic Chemical Substances Control Act.

V. Labor and Management Relationship

(I) Employee's Benefits, Training, Retirement Measures and Implementation

Employee Benefits Programs
(1) Providing uniforms, shuttle buses and transport vehicles to return home during consecutive holidays.
(2) Providing full equipped dormitories, activity centers, training centers, restaurants and nurseries.
(3) Holding activities such as domestic and foreign travel, year-end dinner and raffles drawing.
(4) Sponsoring worker social group activities.
(5) Providing free group term insurance, accident insurance, and regular general health checks.
(6) Providing hospitalization condolences, sympathy and mutual aid pro mourning, and dependents entitled to hospitalization benefits.
(7) Providing gifts for the three major Chinese holidays, birthdays, wedding, child birth, pregnancy and retirement.
(8) Providing scholarships for employees and their children, emergency loans and aids.
(9) Signing agreements with excellent domestic stores to become “Special Arrangement Stores” to provide employees with diversified information for purchasing and selection.
(10) Providing discounts to purchase the Corporation’s vehicles.

Operational Highlights

2. People Development

(1) The Corporation’s human resources development integrates the double objectives of "Corporate Development" and “Employee Satisfaction.” These objectives are for nurturing professionals, developing personal potential and building a learning organization so that the growth of the Corporation and colleagues are combined with each other.
(2) To implement the people development vision, the Corporation’s human resource development system is divided into "In-house Training", "External Education and Training," "Overseas Training", "On the Job Training" and "Validation Personnel Training." These provide a series of core skill, management skill and professional skill courses and convenient real-time online learning system. These allow the tight integration of employee personal development and work assignments.
A. In-house Training consists of five categories:
- a. Core work skill training
- b. Management skill training
- c. Professional skill training
- d. New staff training
- e. Project training
B. External Education and Training:

To carry out the Corporation’s educational training, each unit can apply to send employees based on needs to attend educational training courses held outside the Corporation in addition to attending regularly scheduled in-house training. In addition, the application to attend external educational training shall be reviewed and approved by educational and training unit for recommendation on whether to attend or not.

C. Overseas Training:

Each department can send its staff members to attend oversea training programs held by external institutions based on actual work needs or develop its oversea training plan to send the appropriate staff member. After approval, staff members are then sent abroad for overseas training while providing managerial staff from the mainland China’s joint ventures to receive project training in Taiwan.

D. On the Job Training (OJT):

Using methods such as delegated work, work instructions, project implementation, and so forth, managers at all levels shall develop abilities of the team members based on the individual ability and work nature of the team member.

E. Validation Personnel Training:

Operational Highlights

Implement the training of inspection, testing, monitoring, and so forth of processes or product designs, manufacture, installation, services and environmental management of each unit shall be done. The training and qualification certification of internal auditors, environmental management, and occupational safety staff members are held.

3. Retirement

(1) The retirement of workers shall be conducted according to the following stipulations:
A. The Corporation has a retirement plan for formally hired employees. Retirement pensions are set aside into the retirement reserve fund and managed by the Corporation’s Labor Pension Fund Supervisory Committee and deposited into Bank of Taiwan on behalf of the committee.
B. Pension can be claimed only for those conforming to the requirements of Labor Standards Act upon retirement for those who select to retire according to the regulations of the Labor Standards Act.
C. For those who select the Labor Pension Act, the Corporation shall set aside funds monthly based on the employees’ wages. In addition, the working years prior to selecting the Labor Pension Act shall be retained until the time conforming to the stipulations of retirement according to the Labor Pension Act. Only upon retirement shall the pension be claimed.
D. The Labor Pension Act is applicable to all employees (including those re-employed after leaving the Corporation) that reported to duty after July 1, 2005.
(2) The standard for retirement is based on the following stipulations:
A. For employees satisfying any of the conditions listed below, they can apply for voluntary retirement.
- a. For those who have worked in the Corporation for fifteen years and aged fifty-five or above.
- b. For those who have worked in the Corporation for twenty-five years.
- c. For those who have worked in the Corporation for ten years and aged sixty or above.
B. The Corporation shall not implement compulsory retirement unless one of the following conditions applies:
- a. For those aged sixty-five or above.
- b. For those unable to fulfill their duties at work due to insanity or physical disability.
(3) The calculation for the amount of pension given is based on the following criteria for those where Labor Standards Act apply:

Operational Highlights

A. Based on years worked, each full year worked shall receive two basis points. However, for those with years work exceeding fifteen years, each full year worked shall receive one basis point with the highest total of forty-five points as the upper limit. For those who have worked less than half a year, the basis used is one-half year. Those who have worked half a year or more shall be calculated based on one full year.
B. For employees who become insane or physically disabled while performing work duties, an additional twenty percent or five basis points (which ever one is more) shall be added in addition to those stipulated by the previous article.
C. The standard of pension basis point refers to the monthly average age at the time of retirement.

4. Labor and Management Agreement

(1) The Corporation philosophy is based on coexistence and common prosperity through the spirit of working together cooperatively and harmoniously to seek the maximum well-being for all.
(2) The establishing of year-end bonuses and profit-sharing system match the interests of employees in conjunction with the Corporation's interests and create outstanding employee performance in the process.
(3) Regular labor and management meetings are held to ensure smooth communication channels and promote labor and management harmony.

5. Implementation of Measures Protecting Employee Rights

(1) Promoting employee assistance programs, maintaining health of employees in terms of physical and social functions, providing psychological and legal consultations and counseling, and establishing comprehensive, holistic care counseling system.
(2) Conducting management skill training and implementing counseling skills in day to day management.
(3) Promoting mutely-channel communication concepts, encouraging participating in management, developing team consensus.
(4) Being open and public about management and operating conditions, increasing solidarity and sense of crisis among employees.
(5) Emphasizing worker issues, establishing sound labor unions and ensuring employee rights.
(6) Holding labor and management meetings regularly to coordinate labor and management relations.

Operational Highlights

Protective Measures for Work Environment and Employee Safety
- Workplace safety of the employees is of vital importance to us. We have complied with applicable laws and regulations and received the certifications of OHSAS 18001 and CNS 15506 (TOSHMS) regarding occupational safety and health management systems (see our website for the certificates). We identify potential hazards in all kinds of areas, including cutting, entanglement, electrification, falling, fire, explosion, falling objects, poisoning and asphyxiation. We conduct risk assessment and introduce hazard prevention measures and management regulations, with the aim to protect the safety and health of our employees and stakeholders. At the same time, we continue to improve the risks of hazards regarding personnel, equipment and environment through the functions of the occupational safety and health management system.
(1) Work Environment: The Corporation provides a good work environment to employees in the following specific ways:
- A. Planting large amount of plants in the factory’s empty spaces to beautify the environment. In addition, themes are planned according to the four seasons for the flower section and seasonal flowers.
- B. Setting up rest areas as QCC garden, coffee shops, and so forth.
- C. Banning cigarette smoking in all workplace and restaurants, so that cigarette smoking can only be in designated areas.
- D. Setting up dedicated walkways for dining and commuting, ensuring proper separation of people and vehicle lanes.
- E. Establishing widely turbine exhausts and local exhausts in the factory area to ensure the air quality.
- F. Introduction and improvement of intrinsic safety design of equipment.
- G. Setting up air conditioner in the painting field operation area to raise comfort level.
- H. Measuring the operating environment focusing on the monitoring and improvement of operational areas for the plant dust, noise, organic solvents and so forth semiannually.
(2) Protecting of Employee Safety
- A. Introducing occupational safety and health management system and improving health and safety management performance.
- B. Formulating labor safety and health management programs to implement and ensure the safety and health of the employees.
- C. Environmental health and safety meetings are held regularly. In addition, tracking safety and health performance indicators are to done to reach state to strengthen the

Operational Highlights

implementation of safety and health policy.

  - D. Implanting concepts of predetermined danger and risk management into the minds of employees and families. To continue promoting residential safety and fire escape, to implement fire escape training in offices, factories and dormitories, to promote the prevention of carbon monoxide poisoning and traffic safety, on site safety observations, cases of other factory occupational hazards, and so forth.

  - E. Implementing regular health checks for employees. For those with abnormalities, requesting periodic follow-up and tracking or treatment is done in addition to health education to ensure the physical health of employees.

Code of Ethics and Business Conduct
(1) Code of Conduct: The Corporation employees’ code of conduct is "Honesty, Caring, and Responsibility."
(2) Code of Ethics: The Corporation work rules have a chapter dedicated to “Service Ethics.” The chapter includes explicit specifications regarding working attitude, strict keeping of confidentiality, requirements regarding using public properties, no bribery or improper benefits allowed, and so forth.
(3) Learning Code of Conduct and Code of Ethics are the keypoints of new employee training.
(II) Dispute between Labor and Management during the 2018 Calendar Year and up to March 31, 2019:
The Corporation has had no labor disputes in 2018 and as of March 31, 2019. In the future, this philosophy will be used to promote labor and management harmony. Therefore, the prediction is that there will not be any labor disputes or losses from it.

Operational Highlights

VI. Major Contracts

Contract Nature	Interested Party	Contract Term	Content	Restrictions
Licensing and technology cooperation	Mitsubishi Motors Corporation	July 1, 2005 to September 7, 2025	The Corporation is licensed to manufacture and sell parts, components, and vehicles designed by Mitsubishi Motors based on the design, drawings, and technical specifications provided by Mitsubishi Motors. Mitsubishi Motors should send staff to provide necessary technical assistance in manufacture for the Corporation at any time at the request of the Corporation.	The Corporation should not assign or re-license the rights and licenses granted by Mitsubishi Motors to a third party without prior permission of Mitsubishi Motors.
Agreement for parts supply and sales of completed vehicles	Daimler Trucks Asia Taiwan Ltd.	January 1, 2017 to December 31, 2021	1.CMC supplies vehicles bearing the FUSO brand and locally manufactured parts to Daimler Trucks Asia Taiwan Ltd. (DTAT). 2.DTAT shall supply imported parts to CMC.	Unless provided with a written consent from the other party, the relevant rights and obligations shall not be transferred to any third party
Distribution contract	Fortune Motors Co., Ltd.	August 1, 2017 to July 31, 2020	Distribution of sedans, RVs, vans, and trucks under 3.5t (exclusive).	Territory: Taiwan and Fujian areas under the ROC jurisdiction.
Distribution contract	Shung Ye Motor	December 30, 2017 to December 29, 2020	Distribution of sedans, RVs, and vans under 3.5t (exclusive).	Territory: Taiwan and Fujian areas under the ROC jurisdiction.
Shareholders Agreement	Daimler AG	Since November 4, 2004	Established and managed Fujian Daimler Automotive Co., Ltd. (now Fujian Benz Automotive Co., Ltd.), a joint venture established among CMC, Daimler AG, and Fujian Motor, to manufacture medium and light sedans at 2-6t.	Except for models licensed by Mitsubishi Motors or Daimler AG or independently developed models, the Corporation should not develop, manufacture, and distribute models competitive with models manufactured and distributed by Fujian Benz Automotive Co., Ltd. in China.

Financial Highlights

I. Condensed Balance Sheet and Statement of Comprehensive Income over the Last

Five Years

（ I ） Condensed Balance Sheet and Statement of Comprehensive Income
Condensed Balance Sheet
- (1) Consolidated Financial Report

Unit: NT$ thousands

Year Item	Year Item	Financial Data Last Five Years	Financial Data Last Five Years	Financial Data Last Five Years	Financial Data Last Five Years	Financial Data Last Five Years
		2018 (Note 1)	2017	2016	2015	2014 (Note 2)
Current assets		25,022,561	24,571,917	24,001,876	23,381,141	22,939,000
Long-term Investments		30,893,216	30,156,745	29,528,944	30,441,435	29,743,458
Property, Plant, & Equipment		6,388,147	6,543,043	6,432,443	6,543,123	6,490,732
Intangible Assets		304,163	154,628	142,571	208,051	245,859
Other Assets		1,896,329	2,102,593	2,073,639	2,108,281	2,104,369
Total Assets		64,504,416	63,528,926	62,179,473	62,682,031	61,523,418
Current Liabilities	Before Distribution	7,520,912	7,787,062	7,877,685	7,694,923	7,856,941
	After Distribution	7,520,912	10,278,354	10,092,166	9,770,999	9,448,599
Non-current Liabilities		1,209,415	1,284,902	1,580,426	2,327,897	2,267,307
Total Liabilities	Before Distribution	8,730,327	9,071,964	9,458,111	10,022,820	10,124,248
	After Distribution	8,730,327	11,563,256	11,672,592	12,098,896	11,715,906
Equity Attributable to owners of the Corporation		52,160,275	50,950,021	49,421,655	49,515,345	48,441,258
	Capital Stock	13,840,508	13,840,508	13,840,508	13,840,508	13,840,508
	Capital Surplus	6,403,633	6,407,340	6,407,220	6,404,906	6,392,369
Retained Earnings	Before Distribution	32,431,776	30,434,088	28,619,636	27,800,054	26,422,019
	After Distribution	32,431,776	27,942,796	26,405,155	25,723,978	24,830,361
Other Equity		(515,642)	268,085	554,291	1,469,877	1,786,362
Treasury stock		-	-	-	-	-
Non-controlling Interests		3,613,814	3,506,941	3,299,707	3,143,866	2,957,912
Total	Before Distribution	55,774,089	54,456,962	52,721,362	52,659,211	51,399,170
Equity	After Distribution	55,774,089	51,965,670	50,506,881	50,583,135	49,807,512

Note 1: Because the 2019 shareholders’ meeting is not held yet, the earnings distribution is not yet finalized. Therefore, the earnings before and after distribution are the same.

Note 2: Disclosures are in accordence with the revised Statement.

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(2) Unconsolidated Financial Report

Unit: NT$ thousands

		Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands
Year Item		Financial Data Last Five Years
		2018 (Note 1)	2017	2016	2015 (Note2)	2014 (Note2)
Current assets		18,364,097	18,199,258	17,695,756	17,273,150	16,872,698
Long-term Investments		34,316,145	33,640,632	33,011,238	33,972,084	33,399,414
Property, Plant, & Equipment		3,610,823	3,654,637	3,471,752	3,502,485	3,370,510
Intangible Assets		304,163	154,628	142,571	180,379	218,187
Other Assets		1,111,356	1,204,990	1,251,585	1,329,847	1,314,492
Total Assets		57,706,584	56,854,145	55,572,902	56,257,945	55,175,301
Current Liabilities	Before Distribution	4,692,751	4,969,538	5,014,126	4,909,518	4,971,795
	After Distribution	4,692,751	7,460,830	7,228,607	6,985,594	6,563,453
Non-current	Liabilities	853,558	934,586	1,137,121	1,833,082	1,762,248
Total Liabilities	Before Distribution	5,546,309	5,904,124	6,151,247	6,742,600	6,734,043
	After Distribution	5,546,309	8,395,416	8,365,728	8,818,676	8,325,701
Capital Stock		13,840,508	13,840,508	13,840,508	13,840,508	13,840,508
Capital Surplus		6,403,633	6,407,340	6,407,220	6,404,906	6,392,369
Retained Earnings	Before Distribution	32,431,776	30,434,088	28,619,636	27,800,054	26,422,019
	After Distribution	32,431,776	27,942,796	26,405,155	25,723,978	24,830,361
Other Equity		(515,642)	268,085	554,291	1,469,877	1,786,362
Treasury stock		-	-	-	-	-
	Before Distribution	52,160,275	50,950,021	49,421,655	49,515,345	48,441,258
Total Equity	After Distribution	52,160,275	48,458,729	47,207,174	47,439,269	46,849,600

Note1: Because the 2019 shareholders’ meeting is not held yet, the earnings distribution is not yet finalized. Therefore, the earnings before and after distribution are the same.

Note2: Disclosures are in accordence with the revised Statement.

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2. Statement of Comprehensive Income

(1) Consolidated Financial Reports

tatement of Comprehensive Income ) Consolidated Financial Reports	tatement of Comprehensive Income ) Consolidated Financial Reports	tatement of Comprehensive Income ) Consolidated Financial Reports	tatement of Comprehensive Income ) Consolidated Financial Reports	tatement of Comprehensive Income ) Consolidated Financial Reports	tatement of Comprehensive Income ) Consolidated Financial Reports
Unit: NT$thousands(except EPS,NT$)
Year Item	Financial Datafor Last FiveYears
	2018	2017	2016	2015	2014(Note1)
Operating Revenue	34,869,514	38,908,093	40,584,424	36,884,447	35,951,427
Realized Gross Profit	6,190,557	6,521,213	7,172,452	6,713,127	6,062,064
Profit from Operations	1,898,041	2,434,560	2,591,893	2,215,415	1,969,934
Non-operating income and expenses	2,412,672	2,441,447	1,493,659	1,675,814	1,269,735
Profit Before Income Tax	4,310,713	4,876,007	4,085,552	3,891,229	3,239,669
Net Profit from continuing operations after income taxes	3,892,042	4,537,351	3,592,360	3,504,688	2,821,482
Net Profit from discontinued operations (Note2)	-	2,839	5,012	-	-
Net Profit (losses)	3,892,042	4,540,190	3,597,372	3,504,688	2,821,482
Other Comprehensive income (Loss) (after-tax)	( 367,622)	( 389,392)	(1,370,347)	( 544,138)	732,458
Total Comprehensive income	3,524,420	4,150,798	2,227,025	2,960,550	3,553,940
Net profit attributable to owners of the Corporation	3,592,999	4,105,643	3,189,100	3,166,104	2,558,118
Net profit attributable to non-controlling interests	299,043	434,547	408,272	338,584	263,364
Total Comprehensive income attributable to owners of the Corporation	3,298,141	3,743,553	1,993,759	2,667,467	3,223,837
Total Comprehensive income attributable to non-controlling interests	226,279	407,245	233,266	293,083	330,103
Earnings per share (NT$)	2.64	3.01	2.34	2.32	1.88

Note1: Disclosures are in accordence with the revised Statement.

Note2: Net Profit from discontinued operations is net after tax.

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(2) Unconsolidated Financial Report

) Unconsolidated Financial Report	) Unconsolidated Financial Report	) Unconsolidated Financial Report	) Unconsolidated Financial Report	) Unconsolidated Financial Report	) Unconsolidated Financial Report
Unit: NT$thousands(except EPS,NT$)
Year Item	Financial Datafor Last FiveYears
	2018	2017	2016	2015(Note)	2014(Note)
Operating Revenue	26,585,972	30,234,697	30,577,106	28,447,231	28,272,683
Gross Profit	4,485,470	4,606,119	5,128,358	4,874,165	4,550,959
Profit from Operations	1,807,663	2,064,434	2,263,593	2,002,384	1,971,191
Non-operating income and expenses	2,088,336	2,275,209	1,264,507	1,454,043	925,927
Profit Before Income Tax	3,895,999	4,339,643	3,528,100	3,456,427	2,897,118
Net Profit from continuing operations After Income Taxes	3,592,999	4,105,643	3,189,100	3,166,104	2,558,118
Net Profit from discontinued operations	-	-	-	-	-
Net Pfofit (losses)	3,592,999	4,105,643	3,189,100	3,166,104	2,558,118
Other Comprehensive income(after-tax)	( 294,858)	( 362,090)	(1,195,341)	( 498,637)	665,719
Total Comprehensive income	3,298,141	3,743,553	1,993,759	2,667,467	3,223,837
Earnings per share (NT$)	2.64	3.01	2.34	2.32	1.88

Note: Disclosures are in accordence with the revised Statement.

(II) Auditors’ Opinions for the Last Five Years

Year	2018	2017	2016	2015	2014
CPA	Chih-Ming Shao Ya-Ling Wong	Chih-Ming Shao Ya-Ling Wong (Note)	Chih-Ming Shao Shiow-Ming Shue	Chih-Ming Shao Shiow-Ming Shue	Chih-Ming Shao Shiow-Ming Shue
Auditors’ Opinion	An Unqualified Opinion with Other Matter Paragraph	An Unqualified Opinion with Other Matter Paragraph	An Unqualified Opinion with Other Matter Paragraph	A Modified Unqualified Opinion	A Modified Unqualified Opinion

Note: Because of internal retation within the CPA firm, the auditing CPA changed from Shiow-Ming Shue to Ya-Ling Wong in 2017.

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II. Financial Analysis over the Last Five Years

(I) Consolidated Financial Report

(I)Consolidated Financial Report	(I)Consolidated Financial Report
Year Item of Analysis			Financial Analysisfor theLast FiveYears
		2018	2017	2016	2015	2014
Capital Structure Analysis (%)	Debt Ratio	13.53	14.28	15.21	15.99	16.45
	Long-term Fund to Property, Plant,and Equipment Ratio	892.02	851.93	844.19	840.38	827.03
Liquidity Analysis	Current Ratio	332.71	315.55	304.68	303.85	292.47
	Quick Ratio	253.61	232.23	228.50	217.58	207.99
%	Times Interest Earned (Times)	295.47	366.82	337.02	223.80	153.02
Operating Performanc e Analysis (Times)	Average Collection Turnover	11.13	13.03	13.91	12.85	11.93
	Days Sales Outstanding (Days)	32.79	28.01	26.24	28.40	30.60
	Average Inventory Turnover	6.51	6.59	6.44	5.45	5.08
	Average Payment Turnover	7.84	9.32	9.96	8.87	8.16
	Average Inventory Turnover Days(Days)	56.06	55.38	56.67	66.97	71.85
	Property, Plant, and Equipment Turnover	5.18	5.77	6.04	5.45	5.59
	Total Assets Turnover	0.52	0.60	0.63	0.57	0.57
Profitability Analysis (%)	Return on Total Assets	6.10	7.24	5.78	5.67	4.67
	Return on Equity	7.06	8.47	6.83	6.74	5.60
	Pre-tax Income to Paid in capital	31.15	35.23	29.57	28.11	23.41
	Net Margin	11.62	12.13	9.17	9.86	8.12
	Earnings per Share (NT$)	2.64	3.01	2.34	2.32	1.88
Cash Flow (%)	Cash Flow Ratio	38.24	22.28	41.31	38.48	47.78
	Cash Flow Adequacy Ratio	85.06	92.85	87.44	N/A	N/A
	Cash Flow Reinvestment Ratio	0.45	( 0.58)	1.44	1.66	2.75
Leverage	Operating Leverage	3.09	2.45	2.57	2.76	2.76
	Financial Leverage	1.01	1.01	1.00	1.01	1.01
1. Cash flow ratio increased in 2018 mainly due to decreased prepayments that led to higher net cash flow from operating activities. 2. Cash reinvestment ratio increased in 2018 mainly due to higher net cash flow from operating activities in 2018. 3. Degree of operating leverage increased in 2018 mainly due to variable operating costs and expenses representinga lowerpercentage of total operatingcosts and expenses.

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(II) Unconsolidated Financial Report

II)Unconsolidated Financial Report	II)Unconsolidated Financial Report
Year Item of Analysis		Financial Analysis for the Last Five Years
		2018	2017	2016	2015 (Note)	2014
Capital Structure Analysis (%)	Debt Ratio	9.61	10.38	11.07	11.99	12.20
	Long-term Fund to Property, Plant, and Equipment Ratio	1468.19	1419.69	1456.29	1466.06	1489.51
Liquidity Analysis	Current Ratio	391.33	366.22	352.92	351.83	339.37
	Quick Ratio	303.32	279.87	264.56	260.41	248.08
%	Times Interest Earned (Times)	86578.76	94341.07	54279.46	26385.94	32924.75
Operating Performance Analysis (Times)	Average Collection Turnover	15.60	17.46	18.24	17.44	17.56
	Days Sales Outstanding (Days)	23.40	20.90	20.01	20.93	20.79
	Average Inventory Turnover	6.96	6.94	6.49	5.85	5.77
	Average Payment Turnover	8.15	9.73	9.95	9.17	8.81
	Average Payment Turnover Days (Days)	52.44	52.59	56.24	62.39	63.26
	Property, Plant, and Equipment Turnover	7.19	8.35	8.64	8.14	8.85
	Total Assets Turnover	0.46	0.53	0.54	0.50	0.51
Profitability Analysis (%)	Return on Total Assets	6.27	7.30	5.70	5.68	4.71
	Return on Equity	6.97	8.18	6.45	6.46	5.38
	Pre-tax Income As Ratio of Paid in capital	28.15	31.35	25.49	24.97	20.93
	Net Margin	13.75	13.80	10.58	11.32	9.19
	Earnings per Share (NT$)	2.64	3.01	2.34	2.32	1.88
Cash Flow (%)	Cash Flow Ratio	47.00	44.17	38.10	56.10	48.57
	Cash Flow Adequacy Ratio	70.80	82.94	70.23	N/A	N/A
	Cash Flow Reinvestment Ratio	( 0.37)	( 0.03)	( 0.22)	1.56	1.22
Leverage	Operating Leverage	3.09	2.80	2.45	2.93	2.56
	Financial Leverage	1.00	1.00	1.00	1.00	1.00
1. Cash reinvestment ratio decreased in 2018 mainly due to higher amounts of cash dividend paid during the year.

Note: Disclosures are in accordence with the revised Statement.

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Capital Structure Analysis
(1) Debt Ratio = Total Liabilities / Total Assets
(2) Long-term Fund to Fixed Assets Ratio = (Equity + Non-current Liabilities) / Net Property, Plant, & Equipment
Liquidity Analysis
(1) Current Ratio = Current Assets / Current Liabilities
(2) Quick Ratio = (Current Assets - Inventories - Prepaid Expenses) / Current Liabilities
(3) Times Interest Earned = Earnings before Interest and Taxes / Interest Expenses
Operating Performance Analysis
(1) Average Collection Turnover = Net Sales / Average Trade Receivables
(2) Days Sales Outstanding = 365 / Average Collection Turnover
(3) Average Inventory Turnover = Cost of Sales / Average Inventory
(4) Average Payment Turnover = Cost of Sales / Average Trade Payables
(5) Average Inventory Turnover Days = 365 / Average Inventory Turnover
(6) Property, Plant, & Equipment Turnover = Net Sales / Net Property, Plant, & Equipment
(7) Total Assets Turnover = Net Sales / Total Assets
Profitability Analysis
(1) Return on Total Assets = (Net Profit + Interest Expenses * (1 - Effective tax rate))/ Average Total Assets
(2) Return on Equity = Net Profit / Average Equity
(3) Net Margin = Net Profit / Net Sales
(4) Earnings per Share = (Net Profit - Preferred Stock Dividend) / Weighted Average Number of Shares Outstanding

5. Cash Flow

(1) Cash Flow Ratio = Net Cash Generated from Operating Activities / Current Liabilities
(2) Cash Flow Adequacy Ratio = Five-year sum of cash from operations / Five-year sum f capital expenditures, inventory additions, and cash dividend
(3) Cash Flow Reinvestment Ratio = (Cash Provided by Operating Activities - Cash Dividends)/ (Gross Property, Plant, & Equipment + Long-term Investments + Other Non-current Assets + Working Capital)
Leverage
(1) Operating Leverage = (Net Sales - Variable Cost of goods sold) / Profit from Operations
(2) Financial Leverage = Profit from Operations / (Profit from Operations - Interest Expenses)

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III. Audit Committee's Review Report

The Company the 2018 Financial Statements and the Consolidated Financial Report which were audited by Chih-Ming Shao and Ya-Ling Wong of Deloitte & Touche. The Annual Report and Earnings Distribution proposal have been reviewed by the Audit Committee members of the Company and determined to be correct and accurate. This is hereby reported in accordance with Article14-4 of the Securities and Exchange Act and Article 219 of the Company Act.

Please verify the audit and review results.

To The 2019 Annual Shareholders’ Meeting

China Motor Corporation

Chairman of Audit Committee: Chen-Chi Hsiao

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Date: March 27, 2019

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Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance 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 applied in the Republic of China.

For the convenience of readers, the independent 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 independent auditors’ report and consolidated financial statements shall prevail.

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The accompanying financial statements are intended only to present the financial position, financial performance 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 applied in the Republic of China.

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VI. Financial Difficulties during the 2018 Calendar Year and up to March 31, 2019: None

283

Review of Financial Status, Operating Results, and Risk Management

I. Analysis of Financial Status

Brief Presentation on Financial Status Analysis

Unit: NT$ thousands

			Unit: NT$ thousands	Unit: NT$ thousands
Year Item	December 31, 2018	December 31, 2017	Variation
			Amount	%
Current assets	25,022,561	24,571,917	450,644	1.83
Long-termInvestments	30,893,216	30,156,745	736,471	2.44
Property, plant and equipment	6,388,147	6,543,043	(154,896)	(2.37)
Intangible assets	304,163	154,628	149,535	96.71
Other assets	1,896,329	2,102,593	(206,264)	(9.81)
Total assets	64,504,416	63,528,926	975,490	1.54
Current liabilities	7,520,912	7,787,062	(266,150)	(3.42)
Non-current liabilities	1,209,415	1,284,902	(75,487)	(5.87)
Total liabilities	8,730,327	9,071,964	(341,637)	(3.77)
Capital stock	13,840,508	13,840,508	-	-
Capital surplus	6,403,633	6,407,340	(3,707)	0.06
Retained earnings	32,431,776	30,434,088	1,997,688	6.56
Other equity	(515,642)	268,085	(783,727)	(292.34)
Treasury stock	-	-	-	-
Equity attributable to owners of the Corporation	52,160,275	50,950,021	1,210,254	2.38
Non-Controlling Interests	3,613,814	3,506,941	106,873	3.05
Total equity	55,774,089	54,456,962	1,317,127	2.42
Analysis of Variation (for variation over 20% in the latest 2 years and with an amount up to NT$10 million): 1. Intangible assets increased mainly due to the additional intangible assets accumulated from development of new vehicle models. 2. Other equity items decreased mainly due to retrospective adjustments from first-time adoption of IFRS9.

Intangible assets increased mainly due to the additional intangible assets accumulated from development of new vehicle models.

284

Review of Financial Status, Operating Results, and Risk Management

II. Analysis of Operating Results

Brief Presentation on Operating Performance Analysis

Unit: NT$ thousands

			Unit:	NT$ thousands
Year Item	2018	2017	Increase (Decrease)	Ratio of Variation%
Operating Revenue	34,869,514	38,908,093	(4,038,579)	(10.38)
Operating costs	28,676,904	32,396,813	(3,719,909)	(11.48)
Gross Profit	6,192,610	6,511,280	(318,670)	(4.89)
Realized Gross Profit	6,190,557	6,521,213	(330,656)	(5.07)
Operating expenses	4,292,516	4,086,653	205,863	5.04
Profit from Operations	1,898,041	2,434,560	(536,519)	(22.04)
Non-operating incom and expenses	2,412,672	2,441,447	(28,775)	(1.18)
Continuously operating divisions’ profit before income tax	4,310,713	4,876,007	(565,294)	(11.59)
Income tax expense	(418,671)	(338,656)	(80,015)	(23.63)
Cautiously operating divisions’ net profit	3,892,042	4,537,351	(645,309)	(14.22)
Net Profit from discontinued operations	0	2,839	(2,839)	(100.00)
Net profit of the year	3,892,042	4,540,190	(648,148)	(14.28)
Other comprehensive income (Loss) (after-tax)	(367,622)	(389,392)	21,770	(5.59)
Total Comprehensive income	3,524,420	4,150,798	(626,378)	(15.09)
Analysis of Variation (for a variation over 20% in the latest 2 years with a 1. Operating profits decreased mainly as a result of lower operative reve 2. Income tax expenses increased mainly due to higher taxes imposed on			n amount up to NT$10 million): nues and increased R&D expense. undistributed earnings.

285

Review of Financial Status, Operating Results, and Risk Management

III. Analysis of Cash Flow

(I) Liquidity analysis for the latest two years

Year Item	2018	2017	Ratio of Increase (Decrease)
Cash flow ratio(%)	38.24	22.28	15.96
Cash flow adequacyratio(%)	85.06	92.85	(7.79)
Cash flow reinvestment ratio(%)	0.45	(0.58)	1.03
Analysis of the Ratio of Increase/Decrease: 1. Cash flow ratio increased mainly due to decreased prepayments that led to higher net cash flow from operating activities. 2. Cash reinvestment ratio increased mainly due to higher net cash flow from operating activities in 2018.

Cash flow ratio increased mainly due to decreased prepayments that led to higher net cash flow from operating activities.

(II) Liquidity analysis of cash for the next year

Unit: NT$ thousands

				Unit: NT$ thousands	Unit: NT$ thousands
Beginning cash balance	Net cash generated expected from operating activities of the wholeyear	Expected cash outflows from Investing and Financing activities the wholeyear	Expected remaining cash (shortage)	Expected measures to be taken for cash shortage
				Investment plan	Financial plan
11,289,781	2,393,188	12,013,767	1,669,202	-	-
3.Analysis of variation in cash flows for the next year: (1) Operating activities: Expected cash inflows from operating income NT$ 2,393,188 thousand. (2) Investing activities: Expected net cash outflows from investing activities NT$ 1,356,881 thousand. (3) Financing activities: Expected net cash outflows from financing activities NT$ 10,656,886 thousand. 4. Expected measures to be taken for cash shortage and liquidity analysis: Not applicable

IV. Major Capital Expenditure

The important capital expenditure was NT$ 1,020,468 thousand in 2018. Its effects are expected as follows:

(I) Introducing new products: The market share of the Corporation’s products will increase and turnover and sales will rise.
(II) Introducing parts and components: Self-manufacturing rate of parts will rise and production cost will be reduced.
(III) Strengthening sales: The reputation of the Corporation and its products will be developed and the quality of after-sale service will be enhanced to facilitate sales.

286

Review of Financial Status, Operating Results, and Risk Management

(IX) Increasing productivity: The equipment for production lines will be upgraded and automatized and layout will be rationalized to increase productivity and enhance technology.
(X) Enhancing quality: Cooperative companies will increase their ability in quality assurance. Quality assurance systems will be operated more effectively to eliminate PONC (Price of Non Conformance) and have customers be more satisfied with the quality of products. Source management and fool-proofing measures will be conducted more effectively.
(XI) Improving work environment: Computer equipment will be upgraded. Old office equipment and company vehicles will be replaced with new ones. Office planning construction and air quality will be improved. Pollution prevention equipment will be installed.
V. Re-investment policies in last year and major causes for profit/loss and improvement, and investment plans in the coming year CMC's investments remain largely related to the automobiles industry. Although overall car sales (including large vehicles) in Taiwan had declined in 2018 compared to 2017, upstream and downstream industry participants have been able to maintain profitability by undertaking revenue expansion and cost-cutting measures. The Chinese market, on the other hand, exhibited its first negative growth in more than 20 years due to ongoing China-USA trade war and general slowdown of the economy. The sharp decline in market demand caused CMC to recognize lower profits from Southeast Auto compared to 2017; however, CMC was able to recognize higher profits from its investment in Fujian Benz Automotive due to the introduction and promotion of New Vito and improved models. Overall, CMC recognized NT$2.099 billion from investments last year, up 1.2% from the NT$2.75 billion reported in 2017.
(I) As for Chinese investments, China reported an economic growth rate of 6.6% for 2018 that was 0.3% lower than 2017, but the automobiles market as a whole encountered a 2.8% decline from 2017 with a total of 28.08 million units sold. Southeast Auto, one of CMC's investments, was affected by the overall decline and sold 90,500 units in 2018 that represented a 41.6% drop from 2017; Fujian Benz Automotive, on the other hand,

287

Review of Financial Status, Operating Results, and Risk Management

sold 28,600 units in 2018 that represented an increase of 27.1% from the 22,500 units concluded in 2017.

(II) Green energy represents another focus in CMC's future investments. With respect to electrical scooters, CMC launched its first model - the EM50 in 2010 and has since followed up with new models including EM80 in 2012 and EM100 in 2013. In 2013, a new EM25 offering "5 waivers" (registration, license, fuel tax, inspection and fueling waiver) was launched, and in November 2017, CMC introduced emoving Shine with a refreshing design. CMC had 5,768 electric scooters registered in 2018, representing a cumulative market share of 7%.

In January last year (2018), CMC delivered the first shipment of emoving Post, a commercial electric motorcycle designed specifically for Chunghwa Post for postal use. With this success, CMC plans to release a new line of electric motorcycles this year (2019). In terms of charging, we provide users the option to fast-charge away from home and charge at cost-saving speed at home. In terms of distribution network, we plan to increase the number of retail outlets and flagship stores to bring customers better service and experience, and satisfy their needs by offering a comprehensive range of products and services.

VI. Risk Management

(I) Impact on profits/losses of Interest rate volatility, Exchange rate volatility and Inflation and the Future Countermeasures:

Changes of interest rates mainly affect our financial assets. If the interest rate increases by 0.25%, NT$28,431 thousand will be added to our net profit before tax for 2018.

We hold some assets and liabilities in foreign currencies. As a result, any change in the exchange rates will lead to decreased values of our assets in foreign currencies and exposure to risks of fluctuating cash flow in the future. According to the estimated data in our operating results for 2018, if the NT dollar appreciates 1% against the US dollar, our net profit before tax will decrease by NT$2,895thousand; if the NT dollar appreciates 1% against the Japanese yen, our net profit before tax will increase by NT$1,289 thousand; if the NT dollar appreciates 1% against the RMB, our net profit before tax will decrease by

288

Review of Financial Status, Operating Results, and Risk Management

NT$4,626 thousand.

Outlook of the global economy turned grim as a result of the China-USA trade war, so much so that the FED expects to cease further interest rate hikes in 2019 to prevent a downturn of the economy. Meanwhile, central banks of Europe, Japan and emerging countries are starting to adopt a more moderate approach with respect to their monetary policies. The low-growth, low-interest environment coupled with effects of the ongoing trade war will ultimately affect consumers' spending, which central banks around the world are likely to respond with lower interest rate or other forms of expansionary money supply. Hyperinflation, deflation or negative interest all have the potential to undermine market efficiency, investment and consumption, and partially affect CMC's operating costs. For this reason, CMC will continue monitoring the market's expectations toward inflation or deflation, and respond with appropriate product and service adjustments.

(II) Risks Associated with High-risk/High-leveraged Investment; Lending, Endorsement and Guarantees; and Derivative Transactions:
The Corporation does not engage in high risk or high leveraged investments.
The funds loaned to others, endorsement guarantee and derivative product transactions are made in accordance with the policy provided in the Procedure of Loaning of Funds and Procedure of Endorsements/Guarantees, and the Procedure of Engaging for Derivative Trading.
(III) Future R&D Plans and Expected R&D Spending:

The task of CARTEC, the Corporation’s Research and Development Center, and the product lines are developed pursuant to the guiding principle made by the Corporation. Technological research and development is executed to (1) develop vehicle-related technologies that meet the needs of the market and the requirements of the law, (2) develop the systemic integrating ability of differentiation and high value added products, (3) modify products to meet the demand by different foreign regions, (4) develop new energy and energy-saving related products, and focus on advanced power system, electric control system, and the design integration and analysis and verification technology for automobile electronic (5) develop green energy two-wheeler products with advanced characteristics. The R&D expenses of the Corporation estimates NT$1,578 million in 2019.

(IV) Effects of and Response to Changes of Government Policies and Regulatory Environment:

289

Review of Financial Status, Operating Results, and Risk Management

The Corporation consistently paid attention to any change in laws, statutes and policies that might influence the business or operation of this Corporation. No change in domestic and foreign policies and laws has had significant influence on the financial business of the Corporation since 2018.

(V) Effects of and Response to Changes in Technology and Industry:Information security risk events are deemed to have immaterial impact on CMC's operations.
(VI) Effects of and Response to Changes in Corporate Image on Company's Crisis Management: None
(VII) Expected Benefits from, Risks Relating to and Response to Merger and Acquisition Plans: None
(VIII) Expected Benefits from, Risks Relating to and Response to Capacity Expansion: None
(IX) Risks Associated with Sales and Purchase Concentration:

The Corporation purchases from hundreds of cooperative suppliers instead of from only particular ones. Though the Corporation sells products through only two main distributors, yet it is one of the characteristics of this industry that the products are distributed by limited distributors. The Corporation has also entered into a contract with each distributor and has stock equity of each distributor. The Corporation has worked the distributors for years. There is no risk of centralized sales.

(X) Effects of, Risks Relating to and Response to Sales of Significant Numbers of Shares by Directors, and/ or Major Shareholders Who Own 10% or More of the Corporation’s Total Outstanding Share : None
(XI) Effects of, Risks Relating to and Response to Changes in Control over the Corporation: None
(XII) Risks Associated with Litigation or Non-litigation Matters : None
(XIII) Other Risks: None

VII. Other Important Matters: None

290

Special Disclosure

I. Summary of Affiliated Companies

(I) Consolidated business report of affiliated enterprises
Organization charts of affiliated enterprises: Please see page 200.
Basic information of each affiliated enterprise

December 31, 2018

Unit: NT$ thousands

							December 31, 2018 Unit: NT$ thousands
No.	Name of Company	Date of Establishment	Address	Paid-in Capital			Major business or production item
				Currency	Amount	Exchange Rate
1	Kian Shen Corporation	May 30, 1963	No. 100, Xinjiang Road, Yangmei City, Taoyuan County	NT	$ 734,001	1.000	Manufacturing of large car racks and molds
2	Kian Shen Investment Co., Ltd.	March 13, 2002	Trust Net Chambers, P. O. Box 3444, Road Town, Tortola, British Virgin Island	US	$ 10,296	30.715	Investment in production and service businesses
3	Kian Shen Investment Hong Kong Co. Limited	November 15, 2007	15/F.,BOC Group Life Assurance Tower,136 Des Voeux Road Central,Central,HK	US	$ 25,907	30.715	General investment
4	COC Tooling & Stamping Co., Ltd.	December 2, 1982	No. 412, Sec. 2, Renhe Road, Daxi Township, Taoyuan County	NT	$ 674,591	1.000	Molds, examination tools and clamping apparatus for cars
5	Y. M. Hi-Tech Industry Ltd.	October 1, 2003	No. 412, Sec. 2, Renhe Road, Daxi Township, Taoyuan County	NT	$ 50,000	1.000	Steel cutting
6	Shye Shinn Corporation(British Virgin Islands)	January 26, 1996	Tortola, British Virgin Island	US	$ 968	30.715	General investment
7	China Engine Corporation	July 24, 1995	No. 3, Chiniudiao, Neighborhood 30, Hengfeng Village, Dayuan Township, Taoyuan County	NT	$ 1,689,000	1.000	Manufacture of car engines and accessories
8	Advance Power Machinery Co., Ltd.	June 3, 2008	No. 39-1, Bogongkeng, Xihu Village, Sanyi Township, Miaoli County	NT	$ 5,000	1.000	Manufacture of cars and accessories
9	Advance Power Investment Co., Ltd.	April 26, 2002	2nd Floor, Felix House, 24 Dr. Joseph Riviere Street, Port Louis, Mauritius	US	$ 3,750	30.715	Reinvestment and general sales business
10	Gatetech Technology Inc.	May 20, 1988	No. 1-1, Datong First Road, Guanyin Industrial Zone, Guanyin Township, Taoyuan County	NT	$ 517,917	1.000	Aluminum-magnesium alloy foundry industry

(To be continued)

291

Special Disclosure

(Continued)

No.	Name of Company	Date of Establishm ent	Address	Paid-in Capital	Paid-in Capital	Paid-in Capital	Major business or production item
				Currency	Amount	Exchange Rate
11	Gatech Holding Co. Ltd.	January 22, 2002	TrustNet Chambers, Lotemau Centre,P.O.Box 1225,Apia,Samoa	US	$ 20,130	30.715	General investment
12	Gatech International Co. Ltd	January 22, 2002	TrustNet Chambers, Lotemau Centre,P.O.Box 1225,Apia,Samoa	US	$ 20,268	30.715	General investment
13	Gatetech (Suzhou) Technology Inc.	June 27, 2002	No. 6, Yanshan W. Road, Chengqu Industrial Park, Chengxiang Township, Taicang City, Jiangsu Province,Chian	US	$ 24,300	30.715	Aluminum-ma gnesium alloy foundry industry
14	Hwa Chung Motor Co., Ltd.	February 15, 2006	No. 618, Xiucai Road, Yangmei City, Taoyuan County	NT	$ 87,900	1.000	Sale and production of cars and accessories
15	GreenTrans Co., Ltd.	December 24, 2009	11F, No. 2, Sec. 2, Dunhua S. Road, Daan Dist., Taipci City	NT	$ 10,000	1.000	Sale and production of motorcycles
16	Ling Wei Motor Co., Ltd.	November 19, 2007	11F, No. 2, Sec. 2, Dunhua S. Road, Daan Dist., Taipei City	NT	$ 36,084	1.000	Sale of used cars
17	Green Trans Investment Co., Ltd.	March 14, 2012	Offshore Chambers,P.O.Box 217,Apia,Samoa	US	$ 11,200	30.715	General investment
18	Jiangsu Greentrans Electronics Technology Co., Ltd.	July 10, 2012	No. 130, Yanshan W. Road, Chengqu Industrial Park, Chenxiang Township, Taicang City, Jiangsu Province, Chian	US	$ 11,200	30.715	Sale and production of Electric scooters’ relevant parts and accessories
19	Brilliant Insight International Consultancy Service Co.,Ltd.	January 16, 2014	11F, No. 2, Sec. 2, Dunhua S. Road, Daan Dist., Taipei City	NT	$ 22,000	1.000	Consulting and service
20	Fujian Rui Hua Consulting Co., Ltd.	April 24, 2013	General Office Building,South East (Jujian) Car Industrial Co., Ltd., South East Investment Zone, Minhou County	US	$ 3,400	30.715	Consulting and service
21	Hwa Wei Holdings Co., Ltd.	May 26, 1995	Citco Building, Wickhams Cay, P. O. Box 662, Road Town, Tortola, British Virgin Island	US	$ 100	30.715	Overseas investment in production and service businesses
22	China Motor Investment Co., Ltd.	November 8, 2005	Level 2. Lotemau Centre, Vaea Street, Apia, Samoa	US	$ 40	30.715	General investment
23	Alliance Investment & Management Co., Ltd.	January 11, 1999	13F, No. 2, Sec. 2, Dunhua S. Road, Daan Dist., Taipci City	NT	$ 1,830,000	1.000	General investment

(To be continued)

292

Special Disclosure

(Continued)

No.	Name of Company	Date of Establishment	Address	Paid-inCapital	Paid-inCapital	Paid-inCapital	Major business or production item
				Currency	Amount	Exchange Rate
24	Sino Diamond Motor Corporation	June 5, 1993	11F, No. 2, Sec. 2, Dunhua S. Road, Daan Dist., Taipei City	NT	$ 2,781,670	1.000	Sale of automobiles and provision of after-sale service
25	Hwa Yu Co., Ltd.	November 12, 2003	2nd Floor,Building B,SNPF Plaza,Savalalo,Apia,Samoa	US	$ 45,643	30.715	Overseas investments in production and service businesses
26	Hwa Lin Investment Ltd.	December 14, 1999	OMC Chambers,P.O. Box 3152, Road Town, Tortola, British Virgin Island	US	$ 42,093	30.715	Overseas investment in production and service businesses
27	Guangzhou Huayou Motor Maintenance Co., Ltd.	February 19, 2004	Guangzhou Automobile Market,Yuangang Sec., Guangshan Highway, Tianhe Dist., Guangzhou City	US	$ 12,810	30.715	Car repair and supporting service, and the sale of cars and parts
28	Guangzhou Huayou Motor Sale Co., Ltd.	September 9, 2002	Guangzhou Automobile Market, Yuangang Sec., Guangshan Highway, Tianhe Dist., Guangzhou City	CNY	$ 43,000	4.472	Sale of cars and parts
29	Sichuan Huafeng Hanwei Cars Service And Maintenance Co., Ltd.	November 10, 2004	（Shipping Ave., Wuhou Dist.）Shuangfeng Village, Jinhua Township, Wuhou Dist., Chengdu City	US	$ 13,330	30.715	Car repair and supporting service, and the sale of cars and parts
30	Sichuan Lingwei Cars Service And Maintenance Co., Ltd.	January 16, 2003	（Shipping Ave., Wuhou Dist.）Shuangfeng Village, Jinhua Township, Wuhou Dist., Chengdu City	CNY	$ 2,000	4.472	Sale of cars and parts
31	Tianjin Hwarui Maintenance Co., Ltd.	September 22, 2003	Block A, Car Town, Wanglan Manor, Weijin S. Road, Xiqing Dist., Tianjin City	US	$ 8,020	30.715	Car repair and supporting service, and the sale of cars and parts
32	Tianjin Hwahong Sale Co., Ltd.	January 19, 2003	Block A, Car Town, Wanglan Manor, Weijin S. Road, Xiqing Dist., Tianjin City	CNY	$ 60,000	4.472	Sale of cars and parts
33	Dongguan Huayi Motor Maintenace Co., Ltd.	July 11, 2006	Baotun Sec., Guantai Road, Houjie Township, Dongguan City	US	$ 4,450	30.715	Car repair and supporting service, and the sale of cars and parts
34	Dongguan Huashun Motor Sale Co.,Ltd.	October 18, 2002	Baotun Sec., Guantai Road, Houjie Township, Dongguan City	CNY	$ 25,000	4.472	Sale of cars and parts

293

Special Disclosure

Information of the shareholders in a controlling or affiliated entity: None
Information of directors, supervisors and presidents of each affiliated enterprise

December 31, 2018

Unit:Share；%

			December 31, 2018 Unit:Share；%	December 31, 2018 Unit:Share；%
Name of Company	Title	Name or Representative (based on prevailing circumstances as at April 1,2019)	Number of shares held(Note 1,2)
			Number of shares	Shareholding ratio
Kian Shen Corporation	Chairperson Director Director Director Independent Director Independent Director Supervisor President	China Motor Corporation Representative: Chao-Wen Chen China Motor Corporation Representative: Te-Chao Huang Yulon Business Management Company Representative: Hsin-Cheng Tseng Ching-Wu Chien Kuozui Motors, Ltd. Representative: Qing-Song Lee XiaoLuYe XiaoZhi Wen-Ji Jian Chen-Chi Hsiao De-ChangYe Wei Tai Investment Co., Ltd. Representative: Yong-Yuan Wang Yuan-Long Chen Te-Chao Huang	32,201,367 32,201,367 10,600 24,178,711 0 0 740,857	43.87% 43.87% 0.01% 32.94% 1.01%
Kian Shen Investment Co., Ltd.(British Virgin Islands)	Director	Kian Shen Corporation Representative: Chao-Wen Chen	10,296,105 (US$1per share)	100.00%
Kian Shen Investment Hong Kong Co.Limited	Director	Kian Shen Investment Co., Ltd. (British Virgin Islands) Representative: Chao-Wen Chen	25,907,038 (US$1 per share)	100.00%
COC Tooling & Stamping Co., Ltd.	Chairperson Director Director Supervisor President	Yulon Motor Co., Ltd. Representative: Zhen-Xiang Yao Yulon Motor Co., Ltd. Representative: Zeng-Qiang Huang Yong-Yuan Wang China Motor Corporation Representative: Tung-Tai Hsiung Te-Jun Lo Shing JuChen Hua-Xun Yin Tai-Yuan Textile Co., Ltd. Representative: Yuan-Long Chen Tung-Tai Hsiung	25,469,581 25,469,581 33,564,678 8,421,863	37.76% 37.76% 49.76% 12.48%

(To be continued)

294

Special Disclosure

(Continued)

(Continued)
Name of Company	Title	Name or Representative (based on prevailing circumstances as at April 1,2019)	Number of shares held(Note 1,2)
			Number of shares	Shareholding ratio
Y. M. Hi-Tech Industry Ltd.	Chairperson Director Director Supervisor President	COC Tooling & Stamping Co., Ltd. Representative: Tung-Tai Hsiung COC Tooling & Stamping Co., Ltd. Representative: Chia-Pin Lin Shou-Hsu Chiu Zong-Jhih Chen Metal One (Japan) Representative:Makoto Morita Mei-Ching Wu Jia-Bin Lin	4,250,000 4,250,000 750,000	85.00% 85.00% 15.00%
Shye Shinn Corporation	Chairperson	COC Tooling & Stamping Co., Ltd. Representative: Tung-Tai Hsiung	968,000 (Contribution:US$)	100.00%
China Engine Corporation	Chairperson Director Director Director Supervisor Supervisor Supervisor President	China Motor Corporation Representative: Jin-Chung Lee China Motor Corporation Representative: Te-Jun Lo Ching-Ya Chen Shing JuChen Tao-Ming Wang Yulon Motor Co., Ltd. Representative: Zhen-Xiang Yao Chieg-Hui Lee National Development Fund, Executive Yuan Representative: Wei-Hsien Lee Jin-Piao Lin Sino Diamond Motor Corporation Representative: Mei-Chu Tai Sentec E&E Co., Ltd. Representative: Chao-Hui Huang Ministry of Economic Affairs Representative: Chao-chung Kuo Jin-ChungLee	32,000,000 32,000,000 32,000,000 32,000,000 56,000,000 6,000,000 8,900,000	18.95% 18.95% 18.95% 18.95% 33.16% 3.55% 5.27%
Advance Power Machinery Co., Ltd.	Chairperson Director Supervisor President	China Engine Corporation Representative: Li-Hua Wu China Engine Corporation Representative: Jin-Chung Lee Tao-Ming Wang China Engine Corporation Representative: Wun-Yi Luo, Li-HuangLei	500,000 500,000 500,000	100.00% 100.00% 100.00%
Advance Power Investment Co.,Ltd.	Director	China Engine Corporation Representative: Jin-ChungLee	3,750,000 (US$1per share)	100.00%

(To be continued)

295

Special Disclosure

(Continued)

(Continued)
Name of Company	Title	Name or Representative (based on prevailing circumstances as at April 1,2019)	Number of shares held(Note 1,2)
			Number of shares	Shareholding ratio
Gatetech Technology Inc.	Chairperson Director Director Supervisor Supervisor President	China Motor Corporation Representative: Te-Jun Lo China Motor Corporation Representative: Ya-Cheng Hsiao Shing JuChen Lai-Fa Lyu Jing Yu Co., Ltd. Representative: Bai-Chuan Cheng Sino Diamond Motor Corporation Representative: Mei-Chu Tai Sheng-Le Lin Ya-ChengHsiao	29,278,485 29,278,485 1,196,056 4,672,402 872,530	56.53% 56.53% 2.31% 9.02% 1.68%
Gatech Holding Co. Ltd..	Director	Gatetech Technology Inc. Representative: Te-Jun Lo	20,130,389 (US$1per share)	100.00%
Gatech International Co. Ltd.	Director	Gatech Holding Co. Ltd. Representative: Te-Jun Lo	20,268,460 (US$1per share)	100.00%
Gatetech (Suzhou) Technology Inc.	Executive Director President	Gatech International Co. Ltd. Representative: Te-Jun Lo Ya-ChengHsiao	24,300,000 (Contribution:US$)	100.00%
Hwa Chung Motor Co., Ltd.	Chairperson President	China Motor Corporation Representative: Chao-Wen Chen Hsin-ChengTseng	8,790,000	100.00%
GreenTrans Co., Ltd.	Chairperson President	Hwa Chung Motor Co., Ltd. Representative: Hsin-Cheng Tseng Kuo-HsiungPeng	1,000,000	100.00%
Ling Wei Motor Co., Ltd.	Chairperson President	Hwa Chung Motor Co., Ltd. Representative: Chiung-chih Tseng Chiung-chih Tseng	3,608,397	100.00%
Green Trans Investment Co., Ltd.	Director	Alliance Investment & ManagementCo., Ltd. Representative: Chao-Wen Chen	11,200,000 (US$1 per share)	100.00%
Jiangsu Greentrans Electronics Technology Co., Ltd.	Executive Director Supervisor President	Green Trans Investment Co., Ltd. Representative: Shing JuChen Green Trans Investment Co., Ltd. Representative: Mei-Chu Tai Shih-Cing Yao	11,200,000 (Contribution: US$) 11,200,000 (Contribution: US$)	100.00% 100.00%
Brilliant Insight International Consultancy Service Co., Ltd.	Chairperson President	Sino Diamond Motor Corporation Representative: Ching-Wu Chien Meng-Yan Liao	2,200,000	100.00%
Fujian Rui Hua Consulting Co., Ltd.	Executive Director Supervisor President	Hwa Yu Ltd. Representative: Ching-Wu Chien Hwa Yu Ltd. Representative: Mei-Chu Tai Ching-Wu Chien	3,400,000 (Contribution: US$) 3,400,000 (Contribution: US$)	100.00% 100.00%

(To be continued)

296

Special Disclosure

(Continued)

(Continued)
Name of Company	Title	Name or Representative (based on prevailing circumstances as at April 1,2019)	Number of shares held(Note 1,2)
			Number of shares	Shareholding ratio
Hwa Wei Holdings Co., Ltd.	Director	China Motor Corporation Representative: Chao-Wen Chen	40,000 (US$1per share)	40.00%
China Motor Investment Co., Ltd.	Director	China Motor Corporation Representative: Chao-Wen Chen	40,000 (US$1per share)	100.00%
Alliance Investment & ManagementCo., Ltd.	Chairperson Director Supervisor President	China Motor Corporation Representative: Chao-Wen Chen China Motor Corporation Representative: Li-Lien Chen Yen Kuo-Rong Chen Hsin-ChengTseng Ching-Wu Chien China Motor Corporation Representative: Mei-Chu Tai Chao-Wen Chen	183,000,000 183,000,000 183,000,000	100.00% 100.00% 100.00%
Sino Diamond Motor Corporation	Chairperson President	China Motor Corporation Representative: Chao-Wen Chen Hsin-ChengTseng	278,167,030	100.00%
Hwa Yu Co., Ltd.	Director	Sino Diamond Motor Corporation Representative: Chao-Wen Chen	45,642,942 (US$1per share)	100.00%
Hwa Lin Investment Ltd.	Director	Hwa Yu Ltd. Representative: Chao-Wen Chen	42,092,942 (US$1per share)	100.00%
Guangzhou Huayou Motor Maintenance Co., Ltd.	Chairperson Director Supervisor President	Hwa Lin Investment Ltd. Representative: Te-Jun Lo Hwa Lin Investment Ltd. Representative: Ching-Wu Chien Kuo-Hsiung Peng Hwa Lin Investment Ltd. Representative: Mei-Chu Tai Yi-Yu Chen	12,810,000 (Contribution: US$) 12,810,000 (Contribution: US$) 12,810,000 (Contribution: US$)	100.00% 100.00% 100.00%
Guangzhou Huayou Motor Sale Co., Ltd.	Executive Director President	Hwa Lin Investment Ltd. Representative: Yi-Yu Chen Yi-Yu Chen	43,000,000 (Contribution: RMB)	100.00%
Sichuan Huafeng Hanwei Cars Service And Maintenance Co., Ltd.	Chairperson Director Supervisor President	Hwa Lin Investment Ltd. Representative: Te-Jun Lo Hwa Lin Investment Ltd. Representative: Ching-Wu Chien Kuo-Hsiung Peng Hwa Lin Investment Ltd. Representative: Mei-Chu Tai Yi-Yu Chen	13,330,000 (Contribution: US$) 13,330,000 (Contribution: US$) 13,330,000 (Contribution: US$)	100.00% 100.00% 100.00%
Sichuan Lingwei Cars Service And Maintenance Co., Ltd.	Executive Director President	Sichuan Huafeng Hanwei Cars Service And Maintenance Co., Ltd. Representative: Yi-Yu Chen Yi-Yu Chen	2,000,000 (Contribution: RMB)	100.00%

(To be continued)

297

Special Disclosure

(Continued)

(Continued)
Name of Company	Title	Name or Representative (based on prevailing circumstances as at April 1, 2019)	Number of shares held(Note 1,2)
			Number of shares	Shareholding ratio
Tianjin Hwarui Maintenance Co., Ltd.	Chairperson Vice Chairperson Director Supervisor President	Hwa Lin Investment Ltd. Representative: Kuo-Hsiung Peng Dongguan Huayi Motor Maintenace Co., Ltd. Representative: Ching-Wu Chien Hwa Lin Investment Ltd. Representative: Ying-Zhong Zeng Hwa Lin Investment Ltd. Representative: Mei-Chu Tai Sa-He Wang	8,000,000 (Contribution: US$) 20,000 (Contribution: US$) 8,000,000 (Contribution: US$) 8,000,000 (Contribution: US$)	99.75% 0.25% 99.75% 99.75%
Tianjin Hwahong Sale Co., Ltd.	Executive Director President	Tianjin Hwarui Maintenance Co., Ltd. Representative: Sa-He Wang Sa-He Wang	60,000,000 (Contribution: RMB)	100.00%
Dongguan Huayi Motor Maintenace Co., Ltd.	Executive Director Supervisor President	Hwa Lin Investment Ltd. Representative: Kuo-Hsiung Peng Hwa Lin Investment Ltd. Representative: Mei-Chu Tai Ming-JhangWang	4,450,000 (Contribution: US$) 4,450,000 (Contribution: US$)	100.00% 100.00%
Dongguan Huashun Motor Sale Co., Ltd.	Executive Director President	Dongguan Huayi Motor Maintenace Co., Ltd. Representative: Ming-Jhang Wang Ming-JhangWang	25,000,000 (Contribution: RMB)	100.00%

Note: 1. If the invested company is a company limited by shares, number of shares and shareholding ratio will be disclosed. As for other types of companies, contribution and contribution ratio will be disclosed.

If the director or supervisor is a corporation, the information of its representative will also be disclosed.

298

Special Disclosure

5. Business Status of Each Related Enterprise

December 31, 2018 Unit: NT$ thousands; except earnings per share in NT$

Name of Company	Capital	Total Assets	Total Liabiities	Equlity	Operating Income	Operatin g Profit	This year’s profit (loss) (After tax)	Earnings per share (After tax)
Kian Shen Corporation	734,001	4,987,846	874,708	4,113,138	1,337,755	36,051	453,196	6.17
Kian Shen Investment Co.,Ltd.	328,888	3,784,022	497	3,783,525	0	(3)	469,969	45.65
Kian Shen Investment Hong Kong Co.Limited	795,734	3,819,584	35,573	3,784,011	0	(481)	469,969	18.14
COC Tooling & StampingCo.,Ltd.	674,591	2,045,13	680,670	1,364,467	1,136,745	104,701	107,308	1.59
Y. M. Hi-Tech IndustryLtd.	50,000	217,543	143,660	73,883	271,228	5,581	4,610	0.92
Shye Shinn Corporation (British Virgin Islands)	29,732	39,718	0	39,718	0	0	299	-
China Engine Corporation	1,689,000	1,219,059	261,708	957,351	693,551	(103,484)	(57,045)	(0.34)
Advance Power MachineryCo.,Ltd.	5,000	39,018	28,919	10,099	104,555	324	236	0.47
Advance Power Investment Co.,Ltd.	115,181	96,732	0	96,732	0	0	2,739	0.73
Gatetech Technology Inc.	517,917	1,147,762	595,927	551,835	378,120	44,517	63,905	1.23
Gatech Holding Co. Ltd.	647,041	610,086	0	610,086	0	0	26,115	1.30
Gatech International Co. Ltd.	657,284	610,060	0	610,060	0	(0)	26,115	1.29
Gatetech (Suzhou) TechnologyInc.	746,375	696,061	87,390	608,671	408,884	16,170	26,070	-
Hwa Chung Motor Co.,Ltd.	87,900	64,036	123	63,913	0	(177)	(2,311)	(0.26)
GreenTrans Co., Ltd.	10,000	19,570	9,080	10,490	20,677	289	152	0.15
Ling Wei Motor Co., Ltd.	36,084	44,164	18,631	25,533	115,841	(3,893)	(2,531)	(0.70)
Green Trans Investment Co.,Ltd.	344,369	266,322	0	266,322	1,439	(23,198)	(23,196)	(2.07)
Jiangsu Greentrans Electronics Technology Co.,Ltd.	344,008	281,719	15,483	266,236	75,128	(25,419)	(23,164)	-
Brilliant Insight International Consultancy Service Co., Ltd.	22,000	39,355	18,118	21,237	74,637	(478)	(269)	(0.12)
Fujian Rui Hua Consulting Co., Ltd.	104,431	92,533	738	91,795	10,981	(1,592)	(1,48 4)	-
Hwa Wei Holdings Co., Ltd.	3,080	2,008,133	79,334	1,928,799	0	(32,825)	9,695	96.95
China Motor Investment Co., Ltd.	1,402	1,159,432	0	1,159,432	5,817	5,817	5,923	148.08

(To be continued)

299

Special Disclosure

(Continued)

(Continued)
Name of Company	Capital	Total Assets	Total Liabiities	Equlity	Operating Income	Operating Profit	This year’s profit (loss) (After tax)	Earnings per share (After tax)
Alliance Investment & ManagementCo.,Ltd.	1,830,000	1,642,647	6,237	1,636,410	0	(317)	(19,938)	(0.11)
Sino Diamond Motor Corporation	2,781,670	4,145,708	1,316,807	2,828,901	3,574,870	38,911	(73,672)	(0.26)
Hwa Yu Co., Ltd.	1,450,378	985,192	0	985,192	0	(76,387)	(76,386)	(1.67)
Hwa Lin Investment Ltd.	1,328,660	915,822	22,465	893,357	(87,540)	(89,527)	(74,903)	(1.78)
Guangzhou Huayou Motor Maintenance Co.,Ltd.	393,459	58,770	29,373	29,397	130,690	(68,341)	(79,729)	-
Guangzhou Huayou Motor Sale Co.,Ltd.	192,296	13,243	7,337	5,906	172,901	13,316	7,697	-
Sichuan Huafeng Hanwei Cars Service And Maintenance Co., Ltd.	409,431	92,231	33,767	58,464	361,107	(50,498)	(58,866)	-
Sichuan Lingwei Cars Service And Maintenance Co.,Ltd.	8,944	215	5	210	10,234	8,495	2,681	-
Tianjin Hwarui Maintenance Co.,Ltd.	246,334	296,396	85,217	211,179	34,791	407	50,284	-
Tianjin Hwahong Sale Co.,Ltd.	268,320	377,629	99,877	277,752	314,827	7,337	8,605	-
Dongguan Huayi Motor Maintenace Co.,Ltd.	136,682	219,853	115,589	104,264	303,966	8,427	(24,248)	-
Dongguan Huashun Motor Sale Co.,Ltd.	111,800	182,774	90,065	92,709	482,125	16,396	11,833	-

(II) Consolidated Financial Statements of Affiliated Enterprises: Same as the financial report of parent company and its subsidiaries.

300

Special Disclosure

Declaration of the Consolidated Financial Statements of Affiliates

The companies required to be included in the consolidated financial statements of affiliates in accordance with the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” for the year ended December 31, 2018 are all the same as the companies required to be included in the consolidated financial statements of parent and subsidiary companies as provided in International Financial Reporting Standard 10 “Consolidated Financial Statements”. Relevant information that should be disclosed in the consolidated financial statements of affiliates has all been disclosed in the consolidated financial statements of parent and subsidiary companies. Hence, we have not prepared a separate set of consolidated financial statements of affiliates.

==> picture [89 x 93] intentionally omitted <==

China Motor Corporation

==> picture [47 x 48] intentionally omitted <==

Chairperson: Li-Lien Chen Yen

March 26, 2019

(III) Affiliation Report: None

301

Special Disclosure

II. Private Placement Securities during the 2018 Calendar Year and up to March 31, 2019: None
III. Status of Shares Held or, Disposed of, by Subsidiaries during the 2018 Calendar Year and up to March 31, 2019: None
IV. Other Special Notes: None
V. Impacts of Significant Events on Shareholders' Rights or Stock Value during the 2018Calendar Year and up to March 31, 2019: None

China Motor Corporation

==> picture [89 x 92] intentionally omitted <==

Chairperson: Li-Lien Chen Yen

==> picture [126 x 58] intentionally omitted <==

302

AI assistant

CMC — Annual Report 2018

51979_rns_2019-07-16_5ceed8a8-cb94-4e87-9637-d304ef41a8b0.pdf

China Motor Corporation 2018 Annual Report

Notice to Readers

III. Common Share Transfer Agent and Registrar

Table of Contents

Letter to Shareholders

7.6% over 2018 to 30,800 units.

Company Profile

I. Founding Date

II. Company History

Company Profile

III. Business Results

Company Profile

IV. Charity

Education

Company Profile

In Combination with the Automobile Industry

Company Profile

Support for indigenous people and residents in remote areas

Company Profile

Attention to urban and rural areas

Corporate Governance

Corporate Governance

II. Directors and Management Team

(I) Information Regarding Board of Directors

Corporate Governance

Corporate Governance

Corporate Governance

Corporate Governance

Corporate Governance

(Continued from the previous page)

Corporate Governance

(II) Directors' Professional Qualifications and Independent Analysis

Corporate Governance

Corporate Governance

Corporate Governance

Corporate Governance

Corporate Governance

Corporate Governance

Corporate Governance

Corporate Governance

(V) Employment Compensation Granted to Management Team

III. Implementation of Corporate Governance

(I) Board of Directors Meeting Status

Corporate Governance

Corporate Governance

(5) Operational status of the audit committee:

CPA:

Corporate Governance

(IV) Corporate Governance Execution Status and Deviations from “Corporate Governance

Best-Practice Principles for TWSE/GTSM Listed Companies”

Corporate Governance

Corporate Governance

Corporate Governance

Corporate Governance

Corporate Governance

3. State of implementation:

1. Information of compensation committee members

Corporate Governance

(VI) Social Responsibility:

Corporate Governance

Corporate Governance

Corporate Governance

Corporate Governance

Corporate Governance

Corporate Governance

Corporate Governance

Corporate Governance

(VIII) Corporate Governance Guidelines and Regulations:

(X) Internal Control System Execution Status

1. Statement of Internl Control System

China Motor Corporation Statement of Internl Control System

Corporate Governance

Corporate Governance

2. Major Resolutions at Shareholders Meetings

IV. Information Regarding Audit Fees

V. Information Regarding Replacement or Rotation of Accountants

Corporate Governance

CMC Annual Report 2018