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cpc AGM Information 2019

Jun 14, 2019

51873_rns_2019-06-14_29375850-f791-45fd-bc7d-7d7cf1c1af49.pdf

AGM Information

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Stock Code: 1597

Chieftek Precision Co., LTD.

2019 Annual Shareholders’ Meeting Handbook

Time：9:00 a.m., June 12, 2019(Wednesday)

Place：2F.-1, No.26, Nanke 3rd Rd., Xinshi Dist., Tainan City 744, Taiwan,

R.O.C. (Southern Science Park Industries)

(This document is prepared in accordance with the Chinese version and is for reference only. In the event of any inconsistency between the English version and the Chinese version, the Chinese version shall prevail.)

TABLE OF CONTENTS

TABLE OF CONTENTS
1. Meeting Procedure 1
2. Meeting Agenda 2
(1) Report Items 3
(2) Proposed Resolutions 4
(3) Discussion Items 6
(4) Extemporary Motion 9
3. Attachment
(1) Business Report 10
(2) Supervisors’ Review Report 14
(3) Employees’ Profit Sharing Bonus and Directors and 16
Supervisors’ Compensation
(4) Independent Auditors’ Report 17
(5) Profit Distribution Proposal 41
(6) The comparison tables of the articles to be amended 42
(7) The Comparison tables of the Procedures for the 47
acquisition or disposal of assets to be amended
(8) The Comparison tables of the Procedures for the 74
Endorsement and Guarantees to be amended
(9) The Comparison tables of the Management of 79
Loans to Others to be amended
(10) The Comparison tables of the Code of Corporate 88
Governance to be amended

Chieftek Precision Co., Ltd.

2019 Annual Shareholders’ Meeting

Meeting Procedure

1. Report the number of attendance

2. Call Meeting to Order

3. Chairman’s Address

4. Report Items

5. Proposed Resolutions

6. Discussion Items

7. Extemporary Motion

8. Meeting Adjourned

~1~

Chieftek Precision Co., Ltd.

2019 Annual Shareholders’ Meeting Agenda

  1. Time︰9:00 a.m., June 12, 2019 (Wednesday)

  2. Place: 1F.-1, No.26, Nanke 3rd Rd., Xinshi Dist., Tainan City 744, Taiwan, R.O.C. (Southern Science Park Industries)

  3. Attendants：Call the Meeting to Order (Report the number of attendance)

  4. Chairman’s Address

  5. Report Items:

  6. (1) To Report the Business of 2018.

  7. (2) Supervisors’ Review Report on the 2018 Financial Statements.

  8. (3) To Report 2018 Employees’ Profit Sharing Bonus and Directors and

  9. Supervisors’ Compensation.

  10. (4) To Report the 2018 Endorsement and Guarantee.

  11. Proposed Resolutions:

  12. (1) To accept 2018 Business Report and Financial Statements.

  13. (2) To approve the Proposal for Distribution of 2018 Profit.

  14. Discussion Items:

  15. (1) In the case of 2018 Surplus Transferring Capital and Issuing New Shares.

  16. (2) To amend the Article of Incorporation.

  17. (3) To amend the procedures for the acquisition or disposal of assets

  18. (4) To amend the Management of Endorsement and Guarantees.

  19. (5) To amend the Management of Loans to Others.

  20. (6) To amend the Code of Corporate Governance.

  21. Extemporary Motion

  22. Meeting Adjournment

~2~

Report Items

1. To Report the business of 2018.

  • Explanatory Notes ： The 2018 Business Report, please refer to the

    • Attachment 1 in the Handbook of the 2019 Annual Shareholders’ Meeting.

2. Supervisors’ Review Report on the 2018 Financial Statements.

  • Explanatory Notes ： The 2018 Supervisors’ Review Report, please refer to the Attachment 2 in the Handbook of the 2019 Annual Shareholders’ Meeting.

3. To Report 2018 Employees’ Profit Sharing Bonus and Directors and Supervisors’ Compensation.

  • Explanatory Notes ： The 2018 Employees’ Profit Sharing Bonus and

    • Directors and Supervisors’ Compensation Report, please refer to the Attachment 3 in the Handbook of the 2019 Annual Shareholders’ Meeting.

4. To Report the 2018 Endorsement and Guarantee. Explanatory Notes ：

  • (1) As of December 31, 2018, The Company’s amount of the Treasury Stock of Buyback is as following:
Company The Amount of
Endorsement and
Guarantees (Thousand)		 The Amount of
Actual Drawings
(Thousand)
Relationship with the
Company
cpc Europa GmbH 200,640 12,320 Subsidiaries with
100% of shareholding
Chieftek Precision
International LLC		 92,145 46,073 Subsidiaries with
100% of shareholding
CSM
MaschinenGmbH		 123,200 32,014 Subsidiaries with
100% of shareholding
  • (2) The above amount does not exceed the prescribed limit.

~3~

Proposed Items

1. To accept 2018 Business Report and Financial Statements.

Proposed by the Board of Directors

Explanatory Notes ：

  • (1) The Company’s Financial Statements, including the balance sheet, the statement of comprehensive income, the statement of changes inequity, and statement of cash flows, were audited by independent auditors, Mr. Lin,Yung-Chih and Ms. Lin, Tzu-Shu of PricewaterhouseCoopers (PwC), Taiwan. Also, Business Report and Financial Statements have been approved by the Board of Directors and examined by the supervisors of the Company.

  • (2) The 2018 Business Report could be referred to the Attachment 1 of the Handbook for the 2019 Annual Shareholders’ Meeting, independent auditors’ audit report, and Financial Statements by PWC could be referred to Attachment 4 of the Handbook for the 2019 Annual Shareholders’ Meeting.

Resolution ：

2. To Approve the Proposal for Distribution of 2018 Profit.

Proposed by the Board of Directors

Explanatory Notes ：

  • (1) The 2018 profit distribution program of the company has been accepted by board on May 2, 2019, in accordance with company Act and the Articles of Incorporation of the company.

  • (2) The cash dividends of shareholders distributed in this plan amounted to NT$73,806,862. Based on the actual number of shares in circulation, NT$1.0 per share was allotted and NT$73,806,870 was a dividend on shares. According to the number of shares actually traded, 100 shares are issued for each 1,000 shares and the total amount is NT$147,613,732. Please refer to Appendix 5 of this manual for the surplus allocation table

  • (3) Actual placement and number of shares will depend on the number of registered shareholders on the ex-rights date. The cash dividend

~4~

distribution will be calculated to the nearest NT$ dollar. After the above mentioned method were approved by regular shareholders’ meeting. The ex-dividend date will be decided by the Board of Directors meeting after approval by the competent authority. Allotment of fractional shares (less than one share) shall be paid in cash, and the chairman or his designated representative may subscribe at par value.

  • (4) After the adoption by the general Shareholders Meeting, the Board of Directors is authorized to set out other related matters, such as exright date and the transfer of profit surplus.

  • (5) Before ex- right date if buying back shares the transfer of treasury shares of the company, cancellation or other reasons prior to the date of ex-right affect the number of shares of the outstanding shareholders and change the allotment rate, the company will submitted to the shareholder’s meeting and the Board is authorized to make such adjustments.

Resolution ：

~5~

Discussion Items:

1. In the case of 2018 Surplus Transferring Capital and Issuing new Shares.

Proposed by the Board of Directors

Explanatory Notes ：

  • (1) In order to meet the needs of business development, the Company proposes to allocate NT$73,806,870 from the available-for-distribution surplus for 2018, and to transfer 7,380,687 new shares to be issued for capital increase. The denomination of each share is NT$10.

  • (2) According to the shareholder’s name list on the basis of the shares allotment, the proportion of shares held by the company, 100 shares are promissory for every 1,000 shares, and less than one share of abnormal shares is issued, and the shares are transferred from the shareholders to the company shares within five days from the date of transfer. The agency shall handle the registration of the whole stock by itself and make up the missing shares that are still insufficient or overdue. The depreciation shall be calculated in denominations to NTD (less than 1NTD will not be counted). Its shares will authorize the chairman of the board to appoint a specific person to subscribe for it in denomination.

  • (3) The capital increase and issuance of new shares have the same rights and obligations as the shares that have already been issued.

  • (4) Issues relating to the issuance of benchmark dates for new shares and capital increase issues shall be determined by the board of directors after being reported to the competent authority for approval.

  • (5) Prior to the issuance of the new shares, if the share ratio of the shareholders is changed due to the purchase of shares of the company or the transfer, cancellation or other reasons of the treasury shares, which would affect the number of shares in circulation, the shareholders' meeting shall authorize the board of directors to handle the issue.

  • (6) If the above matters relating to capital increase are subject to amendments approved by the competent authority and subject to changes in the operational requirements of the objective environment, the shareholders' meeting shall be authorized to authorize the board of directors to take full responsibility.

Resolution ：

~6~

2. To Amendment the Articles of Incorporation.

Proposed by the Board of Directors

Explanatory Notes ：

  • (1) According to Southern Business Registration Certificate’s letter of August 14, 2018, Southern Taiwan Science Park Administration and The Company Act, No.1070023518, in conjunction with amending the Article of Incorporation No.1, 3, 5, 6, 14, 21 and 23 of the partial clauses, and revise provision No.7-1 and No.21-1.

  • (2) Please refer to the Attachment 6 in the Handbook of the 2019 Annual Shareholders’ Meeting for the comparison tables of the articles to be amended.

Resolution ：

3. To Amendment the Procedures for the Acquisition or Disposal of Assets.

Proposed by the Board of Directors

Explanatory Notes ：

  • (1) Based on the Financial Supervisory Commission's letter of November 26, 2018, ChinKuanChengPhaChi No.1070341072 and December 21, 2018, ChinKuanChengPhaChi No.1070346971 “Regulations Governing Procedure for the Acquisition or Disposal of Assets of Public Companies”.

  • (2) The Comparison Tables of the Procedures for the Acquisition or Disposal of Assets can be referred to the Attachment 7 in the Handbook of the 2019 Annual Shareholders’ Meeting.

Resolution ：

4. To Amendment the Procedures for the Endorsement and Guarantees

Proposed by the Board of Directors

Explanatory Notes ：

  • (1) Based on the Financial Supervisory Commission’s letter of March 7, 2019, ChinKuanChengPhaChi No.1080304826 “The Amendment of the Procedure for the Endorsement and Guarantees”.

~7~

  • (2) The Comparison Tables of the Procedures for the Endorsement and Guarantees can be referred to the Attachment 8 in the Handbook of the 2019 Annual Shareholders’ Meeting.

Resolution ：

5. To Amendment the Procedures for the Management of Loans to Others

Proposed by the Board of Directors

Explanatory Notes:

  • (1) Based on the Financial Supervisory Commission’s letter of March 7, 2019, ChinKuanChengPhaChi No.1080304826 “The Amendment of the Procedure for the Management of Loans to Others”.

  • (2) The Comparison Tables of the Procedures for the Endorsement and Guarantees to be amended can be referred to the Attachment 9 in the Handbook of the 2019 Annual Shareholders’ Meeting.

  • Resolution ：

6. To Amendment the Code of Corporate Governance

Proposed by the Board of Directors

Explanatory Notes:

  • (1) Based on the Gre Tai Securities Market (GTSM)’s letter of December 21, 2018, ChinKuanChengPhaChi No.10700540421 “ Regulation of Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies”.

  • (2) The Comparison Tables of Code of Corporate Governance to be amended can be referred to the Attachment 10 in the Handbook of the 2019 Annual Shareholders’ Meeting.

Resolution ：

~8~

Extemporary Motion

Meeting Adjournment

~9~

Attachment 1

Chieftek Precision Co., Ltd.

2018 Business Report

The demand of global automation and intelligent automation continues to heat up. Because the industry 4.0 has just started, the industrial automation has also become an unstoppable trend, providing the basic growth for Linear Slides. Chieftek Precision aims to improve the characteristics of the client machine products and improve the productivity of the client station equipment. Under the trend of automation, intelligentization. and energy conservation in the industry, the company will directly control the internal cost, yield rate control and the marketing power, which made the 2018 operating results and market share continue to grow. Revenue, gross profit margin, and profitability had all hit new highs since the listing on the cabinet.

The combined revenue of 2018 was up to NT$2,078,901 thousand compared to 2017 of NT$1,488,259 thousand, it significantly increased by NT$590,642 thousand the growth rate was even up to 39.69%. The Income before Tax of 2018 was up to NT$609,837 thousand compared to 2017 of NT$300,124 thousand, it dramatically increased NT$309,713 thousand, the growth rate was even up to 103.20%.

The 2018 Business Report is as following:

1. The Result of Implement of Business Plan

(1) Consolidated Statement of Comprehensive Income for the years ended December 31, 2018 and 2017.

Unit:NT$ thousands

31, 2018 and 2017. Unit:NT$ thousands
Items 2018 2017 Increase(Decrease)
Amount
Sales Revenue 2,078,901
1,488,259
590,642
Operating Cost (1,090,575) (865,292) (225,283)
New Operating Margin 988,326 622,967 365,359
Operating Expenses (383,432) (290,450) (92,982)
Operating Profit 604,894 332,517 272,377
Non-Operating Income
and Expenses		 4,943 (32,393) 37,336

~10~

Items 2018 2017 Increase(Decrease)
Amount
Profit Before Income
Tax		 609,837 300,124 309,713
Income Tax Expenses (138,585) (62,252) (76,333)
Profit for the year 471,252 237,872 233,380
Other Comprehensive
Income(loss)		 (6,088) (7,507) 1,419
Comprehensive Income
for theyear		 465,164 230,365 234,799
Earning Per Share (NT$)
6.40		 3.23 3.17

According to the above table

1.Turnover

  • (I) Net consolidated revenue for 2018 of NT$ 2,078,901 thousand, which increased by NT$590,642 thousand compared with 2017 of NT$ 1,488,259 thousand, the growth rate was 39.69%.

  • (II) If comparing the sales by revenue, the growth rate was 24.52% in Mainland and was 58.55% in European region. It increased by 22.86% in The United States and increased by 30.43% in the domestic sales of Taiwan and other regions increased by 67.75%.

2. Profits

  • (I) Consolidated operating margin in 2018 was NT$988,326 thousand, compared with NT$622,967 thousand in 2017 which was increased NT$ 365,359 thousand. The increasing rate was 58.65%.

  • (II) Profit before tax was NT$609,837 thousand in 2018, which increased by NT$309,713 thousand with comparison of NT$300,124 thousand in 2017. The increasing rate was 103.20%. The main reasons are as follows:

  • A. The significant growth of revenue resulted in the higher Capacity Utilization, and the gross margin of Miniature Linear Guides increased and its percentage of revenue went up as well.

  • B. The effect on expansion of Japanese market is significant, which made the gross margin of Normal Linear Guides increased and its revenue went up as well.

~11~

  • (III) Basic earnings per share for the year ended December 31,2018 was NT$6.40, which increased NT$3.17 compared with NT$3.23 in 2017.

(2) Parent Company Only Statement of Comprehensive Income for the years ended December 31, 2017 and 2016.

Unit:NT$ Thousands

Items 2018 2017 Increase(Decrease)
Amount
Sales revenue 1,836,489
1,198,518
637,971
Operatingcosts (1,060,083) (788,524) (271,559)
Grossprofit 776,406 409,994 366,412
Unrealized gain from
inter-affiliate accounts		 (94,712) (52,500) (42,212)
Realized gain from inter-
affiliate accounts		 52,500 61,186 (8,686)
Net operatingmargin 734,194 418,680 315,514
Operatingexpenses (240,107) (179,646) (60,461)
Operating profit 494,087 239,034 255,053
Non-operating income
and expenses		 93,373 39,456 53,917
Profit before income tax 587,460 278,490 308,970
Income tax expense (114,743) (40,319) (74,424)
Profit for theyear 472,717 238,171 234,546
Other comprehensive
income(loss)		 (6,102) (7,503) 1,401
Comprehensive income
for theyear		 466,615 230,668 235,947

(3) Parent Company Onlyof Profitability Analysis for the 2018 and 2017

Items 2018 2017
Return on Total Assets(%) 17.50％ 10.77％
Return on Equity(%) 27.28％ 16.49％
OperatingIncome to Paid-in Capital Ratio(%) 66.94％ 38.53％
Pre-tax Income to Paid-in Capital Ratio (%) 79.59％ 44.89％
Net Margin (%) 25.74％ 19.87％
Basic Earnings Per Share (NT$) 6.40 3.23

~12~

(4) Consolidated Company Only of Profit ability Analysis for the 2018 and 2017

Items 2018 2017
Return on Total Assets (%) 16.44％ 10.25％
Return on Equity (%) 27.20％ 16.49％
OperatingIncome to Paid-in Capital Ratio (%) 81.96％ 53.59％
Pre-tax Income to Paid-in Capital Ratio (%) 82.63％ 48.37％
Net Margin (%) 22.67％ 15.98％
Basic Earnings Per Share (NT$) 6.40 3.23

2. Enterprise Development

Chieftek Precision Co Ltd mainly engages in the production of linear motion products, among which the miniature linear slide products are the leading brands in the world. In addition to the production of miniature linear slide products, mechanical components, and sports products, the company continuous to research and develop in key components, including motor products, such as the production of linear motors, DD motor, highprecision X, Y Platform system development, design, and manufacturing, and long-term commits to the development of Taiwan, XY table Platform and high positioning subsystem. All products, including software, firmware, and hardware, are fully developed, manufactured, and produced. Also, the company also long-term invests in the development of high-end rotary and high-order servo motors and AC/DC drivers, and has CAN, EtherCAT, and other communication protocol functions, and can be connected to the encoders of various brands commonly used in the market. Besides, the company has been long-term engaged in the development of the upper-level control IDE platform, which includes PLC, CNC, and other modules, as well as the future development of AGV, VISION, SCADA, MES, and other modules. The above mentioned can do multi-axis synchronous control, multi-point 1.0, instant monitoring, etc., and can be used as a control platform for Industry 4.0. These are the primary development and investment direction of the company in the fields of industrial intelligence, IOT, Industry 4.0, and intelligentization in recent years, to meet the need of automation equipment and improve sales performance and profitability, successfully brightened up the international popularity of own branding” CPC”.

~13~

Attachment 2

Chieftek Precision Co., Ltd.

2018 Supervisors’ Review Report

Hereby to approve,

The undersigned PwC TW Mr. Lin, Yung-Chih and Ms. Lin, Tzu-Shu have duly audited the Operating Report and Financial Statements prepared by the supervisor of the year of 2018, and issued recorded unqualified opinion auditing report. All statistical forms shall be compiled in accordance with the law after being reviewing by the Supervisor. Any discrepancies shall be reported to the superior in accordance with Article 219 of the Company Law.

With respect,

CHIEFTEK PRECISION CO., LTD.2019 SHAREHOLDERS’ MEETING

Chieftek Precision Co., Ltd.

Supervisor: LI MEI

Supervisor: TSENG HSU-WEN

March 12, 2019

~14~

Chieftek Precision Co., Ltd.

2018 Supervisors’ Review Report

Hereby to approve,

The profit distribution table of the 2018 provided by the board of directors of the company was completed and reviewed by the supervisor, etc., and it was deemed that there was no inconformity. Therefore, the application for review was required according to Article 219 of the company act.

With respect,

CHIEFTEK PRECISION CO., LTD.2019 SHAREHOLDERS’ MEETING

Chieftek Precision Co., Ltd.

Supervisor: LI MEI

Supervisor: TSENG HSU-WEN

May 2, 2019

~15~

Attachment 3

2018 Employees’ Profit sharing Bonus

and Directors and Supervisors’ Compensation

  1. Percentage or range of remuneration of employees, directors and supervisors specified in the articles of association:

According to the provisions of the revised articles of association, this company should distribute 3% to 15% of profit of current year to reward employees, and should distribute no more than 3% of profit of current year to reward directors and supervisors. But when the company has accumulated loss, it should be covered. The employee remuneration should be distributed in cash or stock, and those who are distributed with cash or stock should meet certain conditions of being affiliated to the company employees. These certain conditions should be formulated by the board of directors.

  • 2.The employees' compensation and the assignment of directors and supervisors in the year 2018 of the company were approved by the board of directors on March 12, 2019. The proposed distribution of the board of directors' approval is as follows:

  • (1) The proposed remuneration for allotment of employees in cash is NT$48,000,000, which is approximately 7.40% of the profit for the current year. The amount of employee compensation reported on the accounts is NT$48,000,000, which is the same amount as the project is listed as annual profit of 2019.

  • (2) The proposed distribution of directors by cash and the supervisor’s remuneration is NT$13,013,223 in cash, which is approximately 2.01% of the profit for the year, and the remuneration of directors and supervisors listed in the accounts is NT$13,013,223, which is the same as NT$13,013,223. This item is listed as profit and equal in 2018.

  • (3) The above-mentioned Employees’ Profit sharing Bonus and Directors and Supervisors’ Compensation have been expensed in 2018.

~16~

Attachment 4

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of CHIEFTEK PRECISION CO., LTD.

Opinion

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

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

Basis for opinion

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

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the parent company only financial statements of the current period. These matters were addressed in the context of our audit of the parent company only financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

Key audit matters for the Company’s financial statements of the current period are stated as follows: 

~17~

Adequacy of allowance for valuation loss on individually recognized obsolete or damaged inventories

Description

Refer to Note 4(9) for description of accounting policy on inventory, Note 5 for accounting estimates and assumption uncertainty in relation to inventory valuation, and Note 6(3) for description of inventory. As of December 31, 2018, the balances of inventories and allowance for inventory valuation losses were NT$561,905 thousand and NT$13,801 thousand, respectively.

The Company is primarily engaged in the manufacture and sales of linear slide and slide base. As users have high-level quality requirement, there is risk of inventory valuation losses or obsolescence. The Company measures its inventories at the lower of cost and net realizable value. For inventories aged over a certain period, the net realizable value is calculated based on the inventory clearance and historical data of discounts. The allowance for valuation loss mainly arises from individually recognized obsolete inventories. As the basis for individual recognition of inventory obsolescence involves subjective judgment resulting in high degree of estimation uncertainty, and considering that the Company’s inventory and the allowance for inventory valuation losses are material to the financial statements, we identified the adequacy of the allowance for inventory valuation loss a key audit matter.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

  • A. We obtained understanding of the Company’s operations and its industry to assess the reasonableness of policies and procedures on allowance for inventory valuation loss.

  • B. We verified whether the date used in the inventory aging reports that the Company applied to value inventories were accurate and complete. We recalculated and evaluated the reasonableness of allowance for inventory valuation losses in order to confirm whether the reported information was in line with the Company’s policies.

  • C. We selected samples from inventory items by each sequence number to verify its realizable value and to evaluate the reasonableness of allowance for inventory valuation loss.

Cut off of operating revenue from export sales

Description

Refer to Note 4(23) for the accounting policies on revenue recognition.

The Company sells in both domestic and foreign countries, and export sales is significant to the Company. Based on the Company’s accounting policy, revenue is recognized when the significant risks and rewards 

~18~

of ownership have been transferred to the customers. The terms and conditions of transactions vary from different export customers, and manual process of obtaining evidence of ownership transferred after delivery and judging the timing of revenue recognition are essential. As export sales involve manual process, daily transaction amounts are significant, timing of revenue recognition may not be in the proper period, and the transaction amounts around the balance sheet date are material, we consider the cut-off of export sales revenue a key audit matter.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

  • A. We obtained an understanding and evaluated the effectiveness of internal controls relevant to cut-off of revenue, and tested the internal controls over goods delivery and customer billing process.

  • B. We selected samples from details of export sales revenue around the balance sheet date, confirmed data completeness, performed cut-off tests on a sampling basis, including checking the terms and conditions of contracts, verifying the evidence of ownership transferred, and examining and analyzing the returns of goods of export sales after the balance sheet date to check whether export revenue, changes in inventories and cost of goods sold were recorded in the appropriate period.

Responsibilities of management and those charged with governance for the parent company only financial statements

Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, and for such internal control as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance, including supervisors, are responsible for overseeing the Company’s financial reporting process.

Auditor’s responsibilities for the audit of the parent company only financial statements

Our objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an 

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auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with R.O.C. GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with R.O.C. GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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

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

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

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

  • E. Evaluate the overall presentation, structure and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

  • F. Obtain sufficient appropriate audit evidence regarding the parent company only financial information of the entities or business activities within the Company to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. 

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

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

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

Independent Accountants

Lin, Yung-Chih Lin, Tzu-Shu

PricewaterhouseCoopers, Taiwan Republic of China March 12, 2019

----------------------------------------------------------------------------------------------------------------------------- -------------------The accompanying parent company only financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying parent company only financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation. 

~21~

CHIEFTEK PRECISION CO., LTD.

PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars)

Assets Notes
6(1)
6(2) and 12
6(2) and 12
7
7
5 and 6(3)
6(4)
6(5) and 8
6(6)(7)
6(21)
6(5)
8
6(6) and 7		 December31,2018
AMOUNT
%
$ 513,703
17
25,223
1
193,483
6
331,376
11
4,209
-
-
-
548,104
18
13,601
-
1,629,699
53
404,277
13
848,825
28
101,446
3
27,076
1
52,737
2
1,567
-
-
-
3,436
-
1,439,364
47
$ 3,069,063
100		 December31,2017 December31,2017
AMOUNT
$ 513,703
25,223
193,483
331,376
4,209
-
548,104
13,601
1,629,699
404,277
848,825
101,446
27,076
52,737
1,567
-
3,436
1,439,364
$ 3,069,063		 AMOUNT
$ 345,051
23,933
209,939
215,744
4,028
45,033
293,179
8,223
1,145,130
306,036
814,135
42,907
16,552
11,561
1,561
1,445
73,185
1,267,382
$ 2,412,512		 %
Current assets
1100
Cash and cash equivalents
1150
Notes receivable, net
1170
Accounts receivable, net
1180
Accounts receivable-related
parties
1200
Other receivables
1210
Other receivables-related parties
130X
Inventory
1410
Prepayments
11XX
Total current assets
Non-current assets
1550
Investments accounted for under
equity method
1600
Property, plant and equipment
1780
Intangible assets
1840
Deferred income tax assets
1915
Prepayments for equipment
1920
Guarantee deposits paid
1980
Other financial assets-non-current
1990
Other non-current assets
15XX
Total non-current assets
1XXX
Total assets		 14
1
9
9
-
2
12
-
47
13
34
2
1
-
-
-
3
53
100

(Continued) 

~22~

CHIEFTEK PRECISION CO., LTD.

PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity December31,2018
December31,2017
Notes
AMOUNT
%
AMOUNT
%
6(8)(25)
$ 120,000
4
$ 125,000
5
6(15) and 12
94
-
-
-
154,647
5
115,672
5
67,610
2
90,645
4
6(9)
166,059
5
113,081
5
6(21)
81,873
3
21,642
1
12
-
-
727
-
6(10)(25), 8 and 9
55,134
2
58,533
2
645,417
21
525,300
22
6(10)(25), 8 and 9
421,116
14
332,100
14
6(21)
25,827
1
8,697
-
6(11)
7,444
-
5,674
-
6(4)
33,404
1
10,825
1
487,791
16
357,296
15
1,133,208
37
882,596
37
6(12)(14)
738,069
24
620,455
26
6(13)(14)
440,667
14
463,051
19
6(12)(14)(21)
97,280
3
73,463
3
12,367
-
5,928
-
664,519
22
497,930
21
(
17,047 )
- (
12,367) (
1)
6(12)
-
- (
118,544) (
5)
1,935,855
63
1,529,916
63
6(23), 7 and 9
$ 3,069,063
100
$ 2,412,512
100
Liabilities
Current liabilities
2100
Short-term borrowings
2130
Current contract liabilities
2150
Notes payable
2170
Accounts payable
2200
Other payables
2230
Current income tax liabilities
2310
Advance receipts
2320
Long-term liabilities, current
portion
21XX
Total current liabilities
Non-current liabilities
2540
Long-term borrowings
2570
Deferred income tax liabilities
2640
Net defined benefit liabilities
2670
Other non-current liabilities
25XX
Total non-current liabilities
2XXX
Total liabilities
Equity
Share capital
3110
Share capital - common stock
Capital reserves
3200
Capital surplus
Retained earnings
3310
Legal reserve
3320
Special reserve
3350
Unappropriated retained earnings
3400
Other equity interest
3500
Treasury stocks
3XXX
Total equity
Significant Contingent Liabilities
and Unrecognized Contract
Commitments
3X2X
Total liabilities and equity

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

~23~

CHIEFTEK PRECISION CO., LTD. PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars, except for earning per share amounts)

Items YearendedDecember31
2018
2017
Notes
AMOUNT
%
AMOUNT
%
6(15) and 7
$ 1,836,489
100
$ 1,198,518
100
6(3)(6)(11)(19)(20)(2
3)
(
1,060,083) (
58) (
788,524)(
66)
776,406
42
409,994
34
6(4)
(
94,712 ) (
5) (
52,500) (
4)
6(4)
52,500
3
61,186
5
734,194
40
418,680
35
6(6)(11)(19)(20) and
7
(
45,427 ) (
3) (
39,451) (
3)
(
116,820 ) (
6) (
74,813) (
6)
(
78,768 ) (
4) (
65,382) (
6)
12
908
-
-
-
(
240,107) (
13) (
179,646)(
15)
494,087
27
239,034
20
6(16), 7 and 12
4,223
-
7,694
1
6(6)(7)(17) and 12
19,948
1
(
34,328) (
3)
6(18)
(
8,602 )
-
(
9,043) (
1)
6(4)
77,804
4
75,133
6
93,373
5
39,456
3
587,460
32
278,490
23
6(21)
(
114,743) (
6) (
40,319)(
3)
$ 472,717
26
$ 238,171
20
6(11)
($ 2,005 )
-
($ 1,281)
-
6(21)
583
-
217
-
6(4)
(
4,680) (
1) (
6,439)(
1)
($ 6,102) (
1) ($ 7,503)(
1)
$ 466,615
25
$ 230,668
19
6(22)
$ 6.40
$ 3.23
$ 6.35
$ 3.21
4000
Sales revenue
5000
Operating costs
5900
Gross profit
5910
Unrealized gain from inter-affiliate
accounts
5920
Realized gain from inter-affiliate
accounts
5950
Net operating margin
Operating expenses
6100
Selling expenses
6200
General and administrative expenses
6300
Research and development expenses
6450
Expected credit impairment profit
6000
Total operating expenses
6900
Operating profit
Non-operating income and expenses
7010
Other income
7020
Other gains and losses
7050
Finance costs
7070
Share of profit of subsidiaries,
associates and joint ventures
accounted for under equity method
7000
Total non-operating income and
expenses
7900
Profit before income tax
7950
Income tax expense
8200
Profit for the year
Other comprehensive income
(loss)(Net)
Components of other comprehensive
income (loss) that will not be
reclassified to profit or loss
8311
Actuarial loss on defined benefit
plans
8349
Income tax related to components of
other comprehensive income that
will not be reclassified to profit or
loss
Components of other comprehensive
income (loss) that will be reclassified
to profit or loss
8361
Financial statements translation
differences of foreign operations
8300
Other comprehensive loss for the
year
8500
Total comprehensive income for the
year
Earnings per share (in dollars)
9750
Basic
9850
Diluted

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

~24~

CHIEFTEK PRECISION CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars)

For the year ended December 31, 2017
Balance at January 1, 2017
Profit for the year
Other comprehensive loss for the year
Total comprehensive income (loss) for the year
Distribution of 2016 profit:
Legal reserve
Special reserve
Cash dividends
Balance at December 31, 2017
For the year ended December 31, 2018
Balance at January 1, 2018
Profit for the year
Other comprehensive loss for the year
Total comprehensive income (loss) for the year
Distribution of 2017 profit:
Legal reserve
Special reserve
Cash dividends
Stock dividends
Retirement of treasury stock
Difference between the acquisition price and carrying amount of subsidiaries
Balance at December 31, 2018		 Notes Share capital -
commonstock		 Capital reserve Retained earnings Retained earnings Other equity
interest		 Treasury stocks Total
Legal reserve Special reserve Unappropriated
retained
earnings		 Financial
statements
translation
differences of
foreign
operations
6(14)
6(14)
6(14)
6(14)
6(12)(14)
6(12)(13)
6(14)		 $ 620,455
-
-
-
-
-
-
$ 620,455
$ 620,455
-
-
-
-
-
-
147,614
(
30,000 )
-
$ 738,069		 $ 463,051
-
-
-
-
-
-
$ 463,051
$ 463,051
-
-
-
-
-
-
-
(
22,384 )
-
$ 440,667		 $ 64,905
-
-
-
8,558
-
-
$ 73,463
$ 73,463
-
-
-
23,817
-
-
-
-
-
$ 97,280		 $ -
-
-
-
-
5,928
-
$ 5,928
$ 5,928
-
-
-
-
6,439
-
-
-
-
$ 12,367		 $ 334,354
238,171
(
1,064 )
237,107
(
8,558 )
(
5,928 )
(
59,045 )
$ 497,930
$ 497,930
472,717
(
1,422 )
471,295
(
23,817 )
(
6,439 )
(
59,045 )
(
147,614 )
(
66,160 )
(
1,631 )
$ 664,519		 ($ 5,928 )
-
(
6,439 )
(
6,439 )
-
-
-
($ 12,367 )
($ 12,367 )
-
(
4,680 )
(
4,680 )
-
-
-
-
-
-
($ 17,047 )		 ($ 118,544 )
-
-
-
-
-
-
($ 118,544 )
($ 118,544 )
-
-
-
-
-
-
-
118,544
-
$ -		 $1,358,293
238,171
(
7,503 )
230,668
-
-
(
59,045 )
$ 1,529,916
$ 1,529,916
472,717
(
6,102 )
466,615
-
-
(
59,045 )
-
-
(
1,631 )
$ 1,935,855

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

~25~

CHIEFTEK PRECISION CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Expected credit impairment profit

Reversal of allowance for doubtful accounts

(Gain) loss on inventory market price decline

Share of profit of subsidiaries, associates and
joint ventures accounted for under equity
method

Unrealized gain from inter-affiliate accounts

Realized gain from inter-affiliate accounts

Depreciation

Gain on disposal of property, plant and
equipment

Amortization

Impairment loss

Interest income

Interest expense

Changes in operating assets and liabilities
Changes in operating assets
Notes receivable
Accounts receivable
Accounts receivable-related parties
Other receivables
Other receivables-related parties
Inventories
Prepayments
Changes in operating liabilities
Current contract liabilities
Notes payable
Accounts payable
Other payables
Advance receipts
Net defined benefit liabilities
Cash inflow generated from operations
Interest received
Interest paid
Income tax paid
Net cash flows from operating activities		 For the years ended December 31,
Notes
2018
2017
$ 587,460 $ 278,490
12
(
908 )
-
6(16) and 12
- (
1,176 )
6(3)
(
8,690 )
9,119
6(4)
(
77,804 ) (
75,133 )
6(4)
94,712
52,500
6(4)
(
52,500 ) (
61,186 )
6(5)(19)
75,652
98,067
6(17)
- (
2,027 )
6(6)(19)
2,319
1,962
6(6)(7)(17)
10,117
10,162
6(16)
(
3,372 ) (
775 )
6(18)
8,602
9,043
(
1,290 ) (
5,087 )
17,364 (
35,097 )
(
115,632 ) (
64,478 )
(
181 ) (
2,540 )
4,602 (
4,525 )
(
246,235 ) (
93,720 )
(
5,378 ) (
2,565 )
94
-
40,200
46,615
(
23,035 )
47,777
43,425
46,356
(
727 )
469
(
235) (
232)
348,560
252,019
3,276
521
(
8,596 ) (
9,075 )
(
47,323) (
13,594)
295,917
229,871

(Continued) 

~26~

CHIEFTEK PRECISION CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

CASH FLOWS FROM INVESTING ACTIVITIES
Decrease (increase) in other non-operating
receivables due from related parties
Interest received from borrowings and lending
among related parties
Cash paid for acquisition of investments accounted
for under equity method-subsidiaries

Cash paid for acquisition of property, plant and
equipment

Interest paid for acquisition of property, plant and
equipment

Proceeds from disposal of property, plant and
equipment
Cash paid for acquisition of intangible assets

Increase in prepayment for equipment
(Increase) decrease in guarantee deposits paid
Decrease (increase) in other financial assets-non-
current
Increase in other non-current assets
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in short-term borrowings

Increase in long-term borrowings

Decrease in long-term borrowings

Payment of cash dividends

Net cash flows from (used in) financing
activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year
 For the years ended December 31,
Notes
2018
2017
$ 40,431 ( $ 40,431 )
96
254
6(4)
(
46,381 ) (
15,170 )
6(24)
(
58,123 ) (
31,934 )
6(5)(18)(24)
(
845 )
-
-
2,600
6(6)
(
1,170 ) (
3,899 )
(
84,228 ) (
8,758 )
(
6 )
412
1,445 (
15 )
(
56 ) (
35,671 )
(
148,837 ) (
132,612 )
6(25)
(
5,000 )
-
6(25)
510,000
-
6(25)
(
424,383 ) (
58,533 )
6(14)
(
59,045 ) (
59,045 )
21,572 (
117,578 )
168,652 (
20,319 )
6(1)
345,051
365,370
6(1)
$ 513,703$ 345,051

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

~27~

REVIEW REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

To the Board of Directors and Stockholders of CHIEFTEK PRECISION CO., LTD.

Opinion

We have audited the accompanying consolidated balance sheets of CHIEFTEK PRECISION CO.,LTD. and its subsidiaries (collectively referred herein as the “Group”) as at December 31, 2018 and 2017, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2018 and 2017, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, International Financial Reporting Interpretations Committee Interpretations, and Standing Interpretations Committee Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China (R.O.C GAAS). Our responsibilities under those standards are further described in the “Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements” section of our report. We are independent of the Group in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 

~28~

Key audit matters

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

Key audit matters for the Group’s consolidated financial statements of the current period are stated as follows:

Adequacy of allowance for valuation loss on individually recognized obsolete or damaged inventories

Description

Refer to Note 4(10) for description of accounting policy on inventory, Note 5 for accounting estimates and assumption uncertainty in relation to inventory valuation, and Note 6(3) for description of inventory. As of December 31, 2018, the balances of inventories and allowance for inventory valuation losses were NT$738,388 thousand and NT$54,844 thousand, respectively.

The Group is primarily engaged in the manufacture and sales of linear slide and slide base. As users have high-level quality requirement, there is risk of inventory valuation loss or obsolescence. The Group measures its inventories at the lower of cost and net realizable value. For inventories aged over a certain period, the net realizable value is calculated based on the inventory clearance and historical data of discounts. The allowance for valuation loss mainly arises from individually recognized obsolete inventories, As the basis for individual recognition of inventory obsolescence involves subjective judgment resulting in high degree of estimation uncertainty and considering that the Group’s inventory and the allowance for inventory valuation loss are material to the financial statements, we identified the adequary of the allowance for inventory valuation loss a key audit matter. 

~29~

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

  • A. We obtained understanding of the Group’s operations and its industry to assess the reasonableness of policies and procedures on allowance for inventory valuation loss.

  • B. We verified whether the date used in the inventory aging reports that the Group applied to value inventories were accurate and complete. We recalculated and evaluated the reasonableness of allowance for inventory valuation loss in order to confirm whether the reported information was in line with the Group’s policies.

  • C. We selected samples from inventory items by each sequence number to verify its realizable value and to evaluate the reasonableness of allowance for inventory valuation loss.

Cut off of operating revenue from export sales

Description

Refer to Note 4(23) for the accounting policies on revenue recognition.

The Group sells in both domestic and foreign countries, and export sales is significant to the Group. Based on the Group’s accounting policy, revenue is recognized when the significant risks and rewards of ownership have been transferred to the customers. The terms and conditions of transactions vary from different export customers, and the manual process of obtaining evidence of ownership transfer after delivery and judging the timing of revenue recognition are essential. As export sales involve manual process, daily transaction amounts are significant, timing of revenue recognition may not be in the proper period, and the transaction amounts around balance sheet date are material, we consider the cut-off of export sales revenue a key audit matter. 

~30~

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

  • A. We obtained an understanding and evaluated the effectiveness of internals controls relevant to cutoff of revenue and tested the internal controls of goods delivery and customer billing process.

  • B. We selected samples from details of export sales revenue around the balance sheet date, confirmed data completeness, performed cut-off tests on a sampling basis, including checking the terms and conditions of contracts, verifying the evidence of ownership transferred, and examining and analyzing the returns of goods of export sales after the balance sheet date to check whether export revenue, changes in inventories and cost of goods sold were recorded in the appropriate period.

Other matter – Parent company only financial statements

We have audited and expressed an unqualified opinion on the parent company only financial statements of CHIEFTEK PRECISION CO., LTD. as at and for the years ended December 31, 2018 and 2017.

Responsibilities of management and those charged with governance for the consolidated financial statements

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

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

Those charged with governance, including supervisors, are responsible for overseeing the Group’s financial reporting process. 

~31~

Auditor’s responsibilities for the audit of the consolidated financial statements

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

As part of an audit in accordance with R.O.C GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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

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

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

~32~

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

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

  • F. Obtain sufficient appropriate audit evidence regarding the consolidated financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

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

~33~

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

Lin, Yung-Chih

Independent Accountants

Lin, Tzu-Shu

PricewaterhouseCoopers, Taiwan

Republic of China March 12, 2019

----------------------------------------------------------------------------------------------------------------------------- -------------------The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation. 

~34~

CHIEFTEK PRECISION CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars)

Assets Notes
6(1)
6(2) and 12
6(2) and 12
5 and 6(3)
6(4)(5) and 8
6(5)(6)
6(20)
6(4)
8		 December31,2018
AMOUNT
%
$ 797,400
25
50,722
2
432,443
13
12,371
-
683,544
21
21,825
1
1,998,305
62
1,035,570
32
124,977
4
27,076
1
52,737
1
5,076
-
-
-
3,643
-
1,249,079
38
$ 3,247,384
100		 December31,2017 December31,2017
AMOUNT
$ 797,400
50,722
432,443
12,371
683,544
21,825
1,998,305
1,035,570
124,977
27,076
52,737
5,076
-
3,643
1,249,079
$ 3,247,384		 AMOUNT
$ 651,824
26,540
400,091
4,522
374,046
22,598
1,479,621
999,260
123,173
16,552
11,561
5,161
1,445
2,046
1,159,198
$ 2,638,819		 %
Current assets
1100
Cash and cash equivalents
1150
Notes receivable, net
1170
Accounts receivable, net
1200
Other receivables
130X
Inventories
1410
Prepayments
11XX
Total current assets
Non-current assets
1600
Property, plant and equipment
1780
Intangible assets
1840
Deferred income tax assets
1915
Prepayments for equipment
1920
Guarantee deposits paid
1980
Other financial assets - non-
current
1990
Other non-current assets
15XX
Total non-current assets
1XXX
Total assets		 25
1
15
-
14
1
56
38
5
1
-
-
-
-
44
100

(Continued) 

~35~

CHIEFTEK PRECISION CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity December31,2018
December31,2017
Notes
AMOUNT
%
AMOUNT
%
6(7)(25)
$ 210,407
6
$ 214,755
8
6(14) and 12
1,828
-
-
-
154,647
5
115,672
4
68,940
2
91,689
4
6(8)
196,074
6
140,970
5
6(20)
83,397
3
27,276
1
12
1,781
-
3,422
-
6(9)(25), 8 and 9
57,208
2
69,935
3
774,282
24
663,719
25
6(9)(25), 8 and 9
503,976
15
430,993
17
6(20)
25,827
1
8,697
-
6(10)
7,444
-
5,674
-
537,247
16
445,364
17
1,311,529
40
1,109,083
42
6(11)(13)
738,069
23
620,455
23
6(11)(12)
440,667
14
463,051
18
6(11)(13)(22)
97,280
3
73,463
3
12,367
-
5,928
-
664,519
20
497,930
19
(
17,047 )
- (
12,367)
-
6(11)
-
- (
118,544) (
5)
1,935,855
60
1,529,916
58
-
- (
180)
-
1,935,855
60
1,529,736
58
6(23) and 9
$ 3,247,384
100
$ 2,638,819
100
Liabilities
Current liabilities
2100
Short-term borrowings
2130
Current contract liabilities
2150
Notes payable
2170
Accounts payable
2200
Other payables
2230
Current income tax liabilities
2310
Advance receipts
2320
Long-term liabilities, current
portion
21XX
Total current liabilities
Non-current liabilities
2540
Long-term borrowings
2570
Deferred income tax liabilities
2640
Net defined benefit liabilities
25XX
Total non-current liabilities
2XXX
Total liabilities
Equity
Share capital
3110
Share capital - common stock
Capital reserves
3200
Capital surplus
Retained earnings
3310
Legal reserve
3320
Special reserve
3350
Unappropriated retained earnings
3400
Other equity interest
3500
Treasury stocks
31XX
Equity attributable to owners
of the parent
36XX
Non-controlling interest
3XXX
Total equity
Significant Contingent Liabilities
and Unrecognized Contract
Commitments
3X2X
Total liabilities and equity

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

~36~

CHIEFTEK PRECISION CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars, except for earnings per share amount)

Items YearendedDecember31
2018
2017
Notes
AMOUNT
%
AMOUNT
%
6(14)
$ 2,078,901
100
$ 1,488,259
100
6(3)(5)(10)(18)(19)(2
3)
(
1,090,575) (
53) (
865,292)(
58)
988,326
47
622,967
42
6(5)(10)(18)(19) and
7
(
122,653 ) (
6) (
97,879) (
7)
(
168,236 ) (
8) (
127,189) (
9)
(
87,175 ) (
4) (
65,382) (
4)
12
(
5,368)
-
-
-
(
383,432) (
18) (
290,450)(
20)
604,894
29
332,517
22
6(15) and 12
9,292
-
8,672
1
6(5)(6)(16) and 12
11,327
1
(
29,093) (
2)
6(7)(9)(17)
(
15,676) (
1) (
11,972)(
1)
4,943
-
(
32,393)(
2)
609,837
29
300,124
20
6(20)
(
138,585) (
7) (
62,252)(
4)
$ 471,252
22
$ 237,872
16
6(10)
($ 2,005 )
-
($ 1,281)
-
6(20)
583
-
217
-
(
4,666)
-
(
6,443)(
1)
($ 6,088)
-
($ 7,507)(
1)
$ 465,164
22
$ 230,365
15
$ 472,717
22
$ 238,171
16
(
1,465)
-
(
299)
-
$ 471,252
22
$ 237,872
16
$ 466,615
22
$ 230,668
15
(
1,451)
-
(
303)
-
$ 465,164
22
$ 230,365
15
6(21)
$ 6.40
$ 3.23
$ 6.35
$ 3.21
4000
Sales revenue
5000
Operating costs
5900
Net operating margin
Operating expenses
6100
Selling expenses
6200
General and administrative expenses
6300
Research and development expenses
6450
Expected credit impairment loss
6000
Total operating expenses
6900
Operating profit
Non-operating income and expenses
7010
Other income
7020
Other gains and losses
7050
Finance costs
7000
Total non-operating income and
expenses
7900
Profit before income tax
7950
Income tax expense
8200
Profit for the year
Other comprehensive income
(loss)(Net)
Components of other comprehensive
income (loss) that will not be
reclassified to profit or loss
8311
Actuarial loss on defined benefit
plans
8349
Income tax related to components of
other comprehensive income that
will not be reclassified to profit or
loss
Components of other comprehensive
income (loss) that will be reclassified
to profit or loss
8361
Financial statements translation
differences of foreign operations
8300
Total other comprehensive loss for
the year
8500
Total comprehensive income for the
year
Profit (loss) attributable to:
8610
Owners of the parent
8620
Non-controlling interest
Comprehensive income (loss)
attributable to:
8710
Owners of the parent
8720
Non-controlling interest
Earnings per share (in dollars)
9750
Basic
9850
Diluted

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

~37~

CHIEFTEK PRECISION CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars)

For the year ended December 31, 2017
Balance at January 1, 2017
Profit (loss) for the year
Other comprehensive loss for the year
Total comprehensive income (loss) for the
year
Distribution of 2016 profit
Legal reserve
Special reserve
Cash dividends
Balance at December 31, 2017
For the year ended December 31, 2018
Balance at January 1, 2018
Profit (loss) for the year
Other comprehensive loss for the year
Total comprehensive income (loss) for the
year
Distribution of 2017 profit
Legal reserve
Special reserve
Cash dividends
Stock dividends
Retirement of treasury stock
Difference between the acquisition price and
carrying amount of subsidiaries
Balance at December 31, 2018		 Notes Equity attributable to owners ofthe Equity attributable to owners ofthe Equity attributable to owners ofthe Equity attributable to owners ofthe parent parent Non-controlling
interest		 Non-controlling
interest		 Totalequity
Share capital -
commonstock		 Capital reserve RetainedEarnings Other EquityInterest Treasury stocks Total
Legal reserve Special reserve Unappropriated
retained earnings		 Financial statements
translation differences
of foreignoperations
6(13)
6(13)
6(13)
6(13)
6(11)(13)
6(11)(12)
6(22)		 $ 620,455
-
-
-
-
-
-
$ 620,455
$ 620,455
-
-
-
-
-
-
147,614
(
30,000 )
-
$ 738,069		 $ 463,051
-
-
-
-
-
-
$ 463,051
$ 463,051
-
-
-
-
-
-
-
(
22,384 )
-
$ 440,667		 $ 64,905
-
-
-
8,558
-
-
$ 73,463
$ 73,463
-
-
-
23,817
-
-
-
-
-
$ 97,280		 $ -
-
-
-
-
5,928
-
$ 5,928
$ 5,928
-
-
-
-
6,439
-
-
-
-
$ 12,367













$ 334,354
238,171
(
1,064 )
237,107
(
8,558 )
(
5,928 )
(
59,045 )
$ 497,930
$ 497,930
472,717
(
1,422 )
471,295
(
23,817 )
(
6,439 )
(
59,045 )
(
147,614 )
(
66,160 )
(
1,631 )
$ 664,519		 ($ 5,928 )
-
(
6,439 )
(
6,439 )
-
-
-
($ 12,367 )
($ 12,367 )
-
(
4,680 )
(
4,680 )
-
-
-
-
-
-
($ 17,047 )






($ 118,544 )
-
-
-
-
-
-
($ 118,544 )
($ 118,544 )
-
-
-
-
-
-
-
118,544
-
$ -		 $ 1,358,293
238,171
(
7,503 )
230,668
-
-
(
59,045 )
$ 1,529,916
$ 1,529,916
472,717
(
6,102 )
466,615
-
-
(
59,045 )
-
-
(
1,631 )
$ 1,935,855		 $ 123
(
299 )
(
4 )
(
303 )
-
-
-
($ 180 )
($ 180 )
(
1,465 )
14
(
1,451 )
-
-
-
-
-
1,631
$ -		 $ 1,358,416
237,872
(
7,507 )
230,365
-
-
(
59,045 )
$ 1,529,736
$ 1,529,736
471,252
(
6,088 )
465,164
-
-
(
59,045 )
-
-
-
$ 1,935,855

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

~38~

CHIEFTEK PRECISION CO., LTD. AND SUBSIDIARIES AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2018 and 2017

(Expressed in thousands of New Taiwan dollars,)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Expected credit impairment loss

Reversal of allowance for doubtful accounts

Reversal of inventory market price decline

Depreciation

Loss (gain) on disposal of property, plant and
equipment

Amortization

Impairment loss

Interest income

Interest expense

Changes in operating assets and liabilities
Changes in operating assets
Notes receivable
Accounts receivable
Other receivables
Inventories
Prepayments
Changes in operating liabilities
Current contract liabilities
Notes payable
Accounts payable
Other payables
Advance receipts
Net defined benefit liabilities
Cash inflow generated from operations
Interest received
Interest paid
Income tax received
Income tax paid
Net cash flows from operating activities		 For the years ended December 31,
Notes
2018
2017
$ 609,837 $ 300,124
12
5,368
-
6(15) and 12
- (
2,300 )
6(3)
(
3,712 ) (
14,424 )
6(4)(5)(18)
84,158
101,951
6(16)
41 (
2,027 )
6(5)(18)
2,753
2,036
6(5)(6)(16)
10,117
10,162
6(15)
(
5,333 ) (
2,170 )
6(17)
15,676
11,972
(
24,182 )
5,655
(
37,433 ) (
73,903 )
(
7,849 ) (
2,597 )
(
305,750 ) (
40,760 )
773 (
6,090 )
1,828
-
40,200
46,615
(
22,749 )
48,995
44,813
60,739
(
1,641 )
2,450
(
235 ) (
232 )
406,680
446,196
5,333
2,170
(
14,970 ) (
11,767 )
-
254
(
75,275 ) (
30,147 )
321,768
406,706

(Continued) 

~39~

CHIEFTEK PRECISION CO., LTD. AND SUBSIDIARIES AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2018 and 2017

(Expressed in thousands of New Taiwan dollars,)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment

Interest paid for acquisition of property, plant and
equipment

Proceeds from disposal of property, plant and
equipment
Acquisition of intangible assets

Increase in prepayment for equipment
Decrease (increase) in guarantee deposits paid
Decrease (increase) in other financial assets - non-
current
(Increase) decrease in other non-current assets
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
(Decrease) increase in short-term borrowings

Increase in long-term borrowings

Decrease in long-term borrowings

Payment of cash dividends

Change in non-controlling interest
Net cash flows (used in) from financing
activities
Effect of foreign exchange rate changes on cash and
cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year
 For the years ended December 31,
Notes
2018
2017
6(24)
( $ 63,607 ) ( $ 205,337 )
6(4)(17)(24)
(
845 )
-
522
2,600
6(5)
(
16,282 ) (
63,361 )
(
84,228 ) (
8,758 )
85 (
1,164 )
1,445 (
15 )
(
1,597 )
1,568
(
164,507 ) (
274,467 )
6(25)
(
5,516 )
27,040
6(25)
460,000
114,189
6(25)
(
402,426 ) (
61,446 )
6(13)
(
59,045 ) (
59,045 )
- (
4 )
(
6,987 )
20,734
(
4,698 ) (
7,579 )
145,576
145,394
6(1)
651,824
506,430
6(1)
$ 797,400 $ 651,824

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

~40~

Attachment 5

Chieftek Precision Co., Ltd. 2018 Profit Distribution Proposal

Unit: NT$ in dollar

Unit: NT$ in dollar Unit: NT$ in dollar
Item Amount
Subtotal Total
Undistributed surplus balance at the beginning of the period
Decrease: Confirmation of actuarial losses of benefit plan
Decrease: Retirement of treasury stock
Decrease: Difference between the acquisition price and carrying
amount of subsidiaries
Reserved surplus at the beginning of the period after adjustment
Distributable surplus available of this year
Profit for the year
Less: 10% Legal Reserve
Less: reverse special reverse
Profit in 2018 Available for Distribution
Cumulative distributable surplus
Distribution Item:
- Cash Dividends to Common Share Holders (NT$1 per share)
- dividend on shares(NT$1.0 per share)
Subtotal of distributed amount
Undistributed surplus balance
472,717,241
( 47,271,724)
( 4,680,148)
( 73,806,862)
( 73,806,870)
 $ 261,014,366
( 1,421,826)
( 66,159,764)
( 1,630,611)
191,802,165
420,765,369
612,567,534
(147,613,732)
$ 464,953,802
Notes:
1. The surplus distribution for this time will give priority to distribution of 2018 surplus.
2. The cash dividend shall be calculated according to the shareholding ratio of shareholders recorded
in the shareholders ledger on the dividend distribution base date, until distributed to
NT$1(neglecting all those less than NT$1). After the above dividend distribution is passed by the
general meeting of shareholders, the board of directors shall be authorized to further arrange the
dividend distribution base date and designate special persons for handling all the cash dividend of
less than NT$1.		 
~41~

Attachment6

Chieftek Precision Co., Ltd.

The Comparison Table of Amendment of Articles of Incorporation

Before revised Revised Version Description
Article 1:
According to the Company Acts, the
company is naming as Chieftek
Precision Co., Ltd		 Article 1:
According to the Company Acts, the
company is naming as Chieftek
Precision Co., Ltd, and the English
version will be named asCHIEFTEK
PRECISION CO.,LTD.。		 Modified with
acts
Article 3:
The company established head office
in Tainan Science-based Industrial
Park. The Board of Directors will
resolute to establish branches at home
and abroad if necessary.		 Article 3:
The head office of the company
established in Tainan Science-based
Industrial Park, the Board of Directors
will resolute to establish branches at
home and abroad if necessary		 Modified with
the changing
name of
Administration
Article 5:
The amount of capital of the company
is NT$1,200,000,000, which divided
into 120,000,000 shares. The
denomination of every share is NT$10,
and is authorized to be distributed by
the Board of Directors. The former
amount of capital retains
NT$30,000,000 for the issuance of
employee’s equity certificates, taking
into account 3 million shares, and each
denomination of per share is NT$10, it
is authorized to be distributed by the
Board of Directors.		 Article 5:
The amount of capital of the company
isNT$1,500,000,000, which be divided
into 150,000,000 shares.The
denomination of each share is NT$10,
and is authorized to be distributed by
the Board of Directors. The former
amount of capital retains
NT$30,000,000 for the issuance of
employee’s equity certificates, taking
into account 3 million shares, and each
denomination of per share is NT$10, it
is authorized to be distributed by the
Board of Directors.		 In response to
the future
development of
the company,
increasing the
rated amount of
capital.
Article 6:
The company may issue registered
shares and be signed or stamped by
more than three directors, who shall be
issued after a visa by the competent
authority in accordance with the law.
When the company issues new shares,
its shares shall be printed or be free of
printed shares in respect of the total
number of such offerings. However, it
shall be kept or logged in with the
centralized custody institutions of the
securities. The shares of the company
have to be issued without physical		 Article 6:
The company may issue registered
shares andbe signed or stamped by the
directors representing the company, and
shall, by law, act as a bank visa for the
issuer of the shares.When the company
issues new shares, its shares shall be
printed or be free of printed shares in
respect of the total number of such
offerings. However, it shall be kept or
logged in with the centralized custody
institutions of the securities. The shares
of the company have to be issued
without physical distribution, and so do
the other securities.		 Modified with
acts
  • 42 -
Before revised Revised Version Description
distribution, and so do the other
securities.
Article 7-1:
The company shall buy shares in
accordance with the provisions of
company law, the object of its transfer,
the object of the employee’s equity
voucher, the employees who acquire the
issuance of new shares, and the object
of issuing new shares restricting the
rights of employees, including
employees of subordinate companies
who meet certain conditions.		 Modified with
acts
Article 14:
The Board of Directors shall be
organized by the directors, who shall
be represented by more than two-thirds
of the directors and the consent of a
majority of the directors to be
represented by the Chairman, who
represents the company externally. The
notice of the convening of the Board of
Directors shall be dealt with in
accordance with Article 204 of acts
and by written, e-mail or facsimile
means. The resolution of the Board of
Directors shall, except as otherwise
provided by law, be attended by a
majority of the directors and be
represented by a majority of the
directors.		 Article 14:
The Board of Directors shall be
organized by the directors, who shall be
represented by more than two-thirds of
the directors and the consent of a
majority of the directors to be
represented by the Chairman, who
represents the company externally. The
notice of the convening of the Board of
Directors shall be dealt with in
accordance with Article 204 of acts and
by written, e-mail, facsimile and any
otherelectronicalmeans. The resolution
of the Board of Directors shall, except
as otherwise provided by law, be
attended by a majority of the directors
and be represented by a majority of the
directors.		 Modified with
acts
Article 21:
The general annual accounts of the
company will be assigned as following
if there is a surplus:
1. Withholding Tax
2. Covering the deficit
3. The deposit of 10% is the legal
surplus reserve.
4. If necessary, providing for the
listing of rotation of the special
surplus reserve by order of law or by
the competent authority.		 Article 21:
The general annual accounts of the
company will be assigned as following
if there is a surplus:
1. Withholding Tax
2. Covering the deficit
3. The deposit of 10% is the legal
surplus reserve. However, if the
statutory surplus reserve has reached
the amount of capital received, it
would be an exception.
4. If necessary, providing for the listing
of rotation of the special surplus
reserve by order of law or by the
competent authority.		 Modified with
acts
  • 43 -
Before revised Revised Version Description
5. After deducting the balance of the
preceding paragraphs 1-4, and with
the undistributed surplus of the
previous year, the Board shall
subject to the operational
requirements, propose an allocation
motion to be summited to the
shareholders’ meeting for the
allocation of dividends or
reservations to shareholders.
However, the dividend distribution
amount shall not be less than 20% of
the remaining amount after the
annual return is deducted according
to the amount specified in paragraph
1 to 4.
In order to continuously expand the
scale of operation, enhance
competitive strength, modify with the
company’s long term business
development, and the needs of capital
as well as long-term financial
planning, the company’s dividend
issuance policy is based on stock
dividend and matching part of cash
dividend, the total amount of cash
dividend should not be less than 10%
of the total shareholder dividend to be
issued.		 5. After deducting the balance of the
preceding paragraphs 1-4, and with
the undistributed surplus of the
previous year, the Board shall subject
to the operational requirements,
propose an allocation motion to be
summited to the shareholders’
meeting for the allocation of
dividends or reservations to
shareholders. However, the dividend
distribution amount shall not be less
than 20% of the remaining amount
after the annual return is deducted
according to the amount specified in
paragraph 1 to 4.
In order to continuously expand the
scale of operation, enhance competitive
strength, modify with the company’s
long term business development, and
the needs of capital as well as long-
term financial planning, the company’s
dividend issuance policy is based on
stock dividend and matching part of
cash dividend, the total amount of cash
dividend should not be less than 10%
of the total shareholder dividend to be
issued.
The Board of Directors of the company
shall be represented by more than two-
thirds directors and shall attend a
resolution of a majority of the
directors. Also, shall assign all or part
of the reserve of dividends, bonus,
capital reserve or legal reserve to the
payment of cash, and report to the
shareholders’meeting. It is not
applicable to the provisions of the
preceding resolution of the
shareholders’’meeting.
Article 21-1:
The company may, in accordance with
acts, make a surplus allocation or loss-
making supplement after the end of
each half of the fiscal year. When
allocating surplus, the company should		 Modified with
acts
  • 44 -
Before revised Revised Version Description
initially estimate and retain taxable
contributions, make up for losses in
accordance with the law and bring up
legal reserve. However, if legal reserve
reached the amount of capital received,
it would be an exception. If the retained
earnings are issued in cash, it shall be
handled by resolution of the Board of
Directors. When the issuance of new
shares is issued, it shall be governed by
a resolution of the shareholders’
meeting in accordance with the
provisions.
Article 23:
The article was established on October
14, 1998.
First amended on January 6, 1999.
The second amendment was on
October 14, 1999.
The third amendment was on January
1, 2000.
The fourth amendment was on June
22, 2000.
The fifth amendment was on April 4,
2001.
The sixth amendment was on May 15,
2001.
The seventh amendment was on April
3, 2002.
The eighth amendment was on June 6,
2002.
The ninth amendment was on June 20,
2003.
The tenth amendment was on August
25, 2003.
The eleventh amendment was on
November 25, 2003.
The twelfth amendment was on April
15, 2004.
The thirteenth amendment was on
December 30, 2004.
The fourteenth amendment was on
November 17, 2006.
The fifteenth amendment was on June
29,2007.		 Article 23:
The article was established on October
14, 1998.
First amended on January 6, 1999.
The second amendment was on
October 14, 1999.
The third amendment was on January
1, 2000.
The fourth amendment was on June 22,
2000.
The fifth amendment was on April 4,
2001.
The sixth amendment was on May 15,
2001.
The seventh amendment was on April
3, 2002.
The eighth amendment was on June 6,
2002.
The ninth amendment was on June 20,
2003.
The tenth amendment was on August
25, 2003.
The eleventh amendment was on
November 25, 2003.
The twelfth amendment was on April
15, 2004.
The thirteenth amendment was on
December 30, 2004.
The fourteenth amendment was on
November 17, 2006.
The fifteenth amendment was on June
29,2007.		 Modified with
dates.
  • 45 -
Before revised Revised Version Description
The sixteenth amendment was on June
30, 2008.
The seventeenth amendment was on
November 12, 2010.
The eighteenth amendment was on
June 17, 2011.
The nineteenth amendment was on
June 20, 2012.
The twentieth amendment was on June
27, 2013.
The twenty-first amendment was on
June 6, 2014.
The twenty-second amendment was on
June 25, 2015.
The twenty-third amendment was on
June 26, 2016.
The twenty-fourth amendment was on
June 22, 2017.
The twenty-fifth amendment was on
May 28, 2018.		 The sixteenth amendment was on June
30, 2008.
The seventeenth amendment was on
November 12, 2010.
The eighteenth amendment was on
June 17, 2011.
The nineteenth amendment was on
June 20, 2012.
The twentieth amendment was on June
27, 2013.
The twenty-first amendment was on
June 6, 2014.
The twenty-second amendment was on
June 25, 2015.
The twenty-third amendment was on
June 26, 2016.
The twenty-fourth amendment was on
June 22, 2017.
The twenty-fifth amendment was on
May 28, 2018.
The twenty-sixth amendment was on
June 12,2019.
  • 46 -

Attachment 7

Chieftek Precision Co., Ltd.

Comparison Tables of Procedures for the acquisition or disposal of assets to be amended

Before Revised Revised Version Description
Article 3: Scope of Assets
1. Investments in stocks, bonds,
corporate bonds, financial bonds,
securities recognized by the fund,
depository receipts, call warrant,
beneficiary certificate and asset
backed securities, etc.。
2. Real estate (including land, housing
and construction, investment real
estate, inventory of construction
industry) and equipment.
3. Membership.
4. Intangible assets such as patent
rights, copyrights, trademark rights
and concessions.
5. Claims of financial institutions
(including receivables, discounting
of purchase of remittances and
loans, collection items).
6. Financial Derivatives:
7. Assets acquired or disposed of by
merging, splitting, acquiring or
obtaining shares in accordance
with the law.
8. Other important assets.		 Article 3: Scope of Assets
1. Investments in stocks, bonds,
corporate bonds, financial bonds,
securities recognized by the fund,
depository receipts, call warrant,
beneficiary certificate and asset
backed securities, etc.。
2. Real estate (including land, housing
and construction, investment real
estate, inventory of construction
industry) and equipment.
3. Membership.
4. Intangible assets such as patent
rights, copyrights, trademark rights
and concessions.
5. Right-of-Use Assets thereof
6. Claims of financial institutions
(including receivables, discounting
of purchase of remittances and
loans, collection items).
7. Financial Derivatives.
8. Assets acquired or disposed of by
merging, splitting, acquiring or
obtaining shares in accordance
with the law.
9. Other important assets.		 1. Modified
with
the
application
of
the
international
Financial
Reporting
Standards(IFRS) No.
16
“Lease”,
the
addition of paragraph
5 of the right to use
assets norms.
2. Section 5 to section 8
are moved to section 6
to section 9.
Article 3: Nominal Definition
1. Financial Derivatives: It referred
herein are broadly defined as
instruments that derive their value
from
the
performance
of
underlying
assets,
interest
or
currency exchange rates, indexes
or other. Such instruments include
swaps, options, futures contracts,
leverage contracts, forwards, and
various
combinations
thereof.
Forwards referred herein exclude
insurance, performance, post-sale
service, long-term lease and long-
term sales/procurement contracts.		 Article 3: Nominal Definition
1. Financial Derivatives: Forward
contracts, options contracts, futures
contracts, leverage contracts, or
swap contracts, whose value is
derived from a specified interest
rate, financial instrument price,
commodity price, foreign exchange
rate, index of prices or rates, credit
rating or credit index, or other
variable;
or
hybrid
contracts
combining the above contracts; or
hybrid contracts or structured
products
containing
embedded
derivatives. The term “forward		 1. Modified
with
the
application
of
the
International
Financial
Reporting
Standards (IFRS) No.
9
“Financial
Instruments”,
amended section 1
and texts.
2. Modified with acts,
amended Article 156,
section 8 to Article
156-3.
3. Clearly
define
the
scope
of
stock
  • 47 -
Before Revised Revised Version Description
2. Assets
acquired
or
disposed
through
mergers,
demergers,
acquisitions, or transfer of shares
in accordance with law: Refers to
assets
acquired
or
disposed
through mergers, demergers, or
acquisitions conducted under the
Business Mergers and Acquisitions
Act, Financial Holding Company
Act, Financial Institution Merger
Act and other acts, or to transfer of
shares from another company
through issuance of new shares of
its own as the consideration
therefor (hereinafter “transfer of
shares”) under Article 156-3 of the
Company Act.
3. Related party or subsidiary: As
defined
in
the
Regulations
Governing the Preparation of
Financial Reports by Securities
Issuers.
4. Professional appraiser: Refers to a
real property appraiser or other
person duly authorized by law to
engage in the value appraisal of real
property or equipment.
5. Date of occurrence: Refers to the
date of contract signing, date of
payment, date of consignment
trade, date of transfer, dates of
boards of directors’ resolutions, or
other date that can confirm the
counterpart and monetary amount
of the transaction, whichever date
is earlier; provided, for investment
for
which
approval
of
the
competent authority is required, the
earlier of the above date or the date		 contracts”
does
not
include
insurance contracts, performance
contracts,
after-sales
service
contracts,
long-term
leasing
contracts, or long-term purchase
(sales) contracts.
2. Assets
acquired
or
disposed
through
mergers,
demergers,
acquisitions, or transfer of shares in
accordance with law: Refers to
assets acquired or disposed through
mergers, demergers, or acquisitions
conducted under the Business
Mergers and Acquisitions Act,
Financial Holding Company Act,
Financial Institution Merger Act
and other acts, or to transfer of
shares from another company
through issuance of new shares of
its own as the consideration
therefor (hereinafter “transfer of
shares”) under Article 156-3 of the
Company Act.
3. Related party or subsidiary: As
defined
in
the
Regulations
Governing the Preparation of
Financial Reports by Securities
Issuers.
4. Professional appraiser: Refers to a
real property appraiser or other
person duly authorized by law to
engage in the value appraisal of real
property or equipment.
5. Date of occurrence: Refers to the
date of contract signing, date of
payment, date of consignment
trade, date of transfer, dates of
boards of directors’ resolutions, or
other date that can confirm the
counterpart and monetary amount
of the transaction, whichever date
is earlier; provided, for investment
for
which
approval
of
the
competent authority is required, the
earlier of the above date or the date		 exchanges at home
and abroad and stock
exchanges and over-
the-counter market.
4. Modified
with
the
provisions to amend
texts.
5. Article 7 to Article 8
amended to Article 10
to Article 11.
  • 48 -
Before Revised Revised Version Description
of receipt of approval by the
competent authority shall apply.
6. Mainland China area investment:
Refers to investments in the
mainland China area approved by
the Ministry of Economic Affairs
Investment
Commission
or
conducted in accordance with the
provisions of the Regulations
Governing
Permission
for
Investment
or
Technical
Cooperation in the Mainland Area.
7. Provisions
of
this
procedure
relating to total assets 10% will
calculate the total amount of assets
in the latest individual or individual
reports
as
stipulated
in
the
guidelines for the preparation of
financial reports by issuers of
securities.
8. Those who own company shares
that are non-denomination or
denomination per share of NT$10,
this procedure provides for the
transaction amount of 20% of the
collected
capital
amount,
calculated on the basis of the equity
attributable to the owner of 10% of
the parent company.		 of receipt of approval by the
competent authority shall apply.
6. Mainland China area investment:
Refers to investments in the
mainland China area approved by
the Ministry of Economic Affairs
Investment
Commission
or
conducted in accordance with the
provisions of the Regulations
Governing
Permission
for
Investment
or
Technical
Cooperation in the Mainland Area.
7. Investment professional: Refers to
financial
holding
companies,
banks, insurance companies, bill
finance
companies,
trust
enterprises,
securities
firms
operating proprietary trading or
underwriting
business,
futures
commission merchants operating
proprietary
trading
business,
securities
investment
trust
enterprises, securities investment
consulting enterprises, and fund
management companies, that are
lawfully incorporated and are
regulated
by
the
competent
financial
authorities
of
the
jurisdiction where they are located.
8. Securities exchange: "Domestic
securities exchange" refers to the
Taiwan
Stock
Exchange
Corporation; "foreign securities
exchange" refers to any organized
securities exchange market that is
regulated
by
the
competent
securities
authorities
of
the
jurisdiction where it is located.
9. Over-the-counter venue (“OTC
venue”, “OTC”): “Domestic OTC
venue” refers to a venue for OTC
trading provided by a securities
firm in accordance with the
Regulations Governing Securities
Trading on the Taipei Exchange;
“foreign OTC venue” refers to a
  • 49 -
Before Revised Revised Version Description
venue at a financial institution that
is
regulated
by
the
foreign
competent authority and that is
permitted to conduct securities
business.
10.The provisions of the procedure
relating to total assets 10% are
calculated on the basis of the total
assets in the latest individual or
individual financial reports, as
stipulated in the guidelines for the
preparation of financial reports of
issuers of securities.
11. People who own company shares
that are non-denomination or
denomination per share of NT$10,
this procedure provides for the
transaction amount of 20% of the
collected
capital
amount,
calculated on the basis of the equity
attributable to the owner of the
parent company 10%. Provisions
on the amount of transactions in
which the paid-in capital amounts
to NT$ 10 billion are calculated on
the basis of BT$ 20 billion in the
interest attributable to the owners
of theparent company.
Article 5: Exclusion of related persons
Professional appraisers and their
officers, certified public accounts,
attorneys, and securities underwriters
that provide public companies with
appraisal reports, certified public
accountant's
opinions,
attorney's
opinions, or underwriter's opinions
shall not be the related persons of the
company.
Article 5: Exclusion of related persons
Professional appraisers and their
officers, certified public accounts,
attorneys, and securities underwriters
that provide public companies with
appraisal reports, certified public
accountant's
opinions,
attorney's
opinions, or underwriter's opinions
shall meet the following requirement:
1. May not have previously received
a final and unappeasable the
following requirement: sentence
to imprisonment for 1 year or
longer for a violation of the Act,
the Company Act, the Banking Act
of The Republic of China, the
Insurance
Act,
the
Financial
HoldingCompanyAct,or the
1. Giving
explicit
of
destructive
qualifications
of
relevant experts.
2. Giving explicit of the
responsibilities
of
external experts, and
to add the valuation of
reports or submissions
by relevant experts,
verify
and
declare
matters.
  • 50 -
Before Revised Revised Version Description
Business Entity Accounting Act, or
for
fraud,
breach
of
trust,
embezzlement,
forgery
of
documents, or occupational crime.
However, this provision does not
apply if 3 years have already
passed since completion of service
of the sentence, since expiration of
the period of a suspended sentence,
or since a pardon was received.
2. May not be related parties or de
facto related parties of each other.
3. If the company is required to obtain
appraisal reports from two or more
professional
appraisers,
the
different professional appraisers or
appraisal officers may not be
related parties or de facto related
parties of each other.
When issuing an appraisal report or
opinion, the personnel referred to
in the preceding paragraph shall
comply with the following:
1. Prior to accepting a case, they shall
prudently
assess
their
own
professional capabilities, practical
experience, and independence.
2. When examining a case, they shall
appropriately plan and execute
adequate working procedures, in
order to produce a conclusion and
use the conclusion as the basis for
issuing the report or opinion. The
related working procedures, data
collected, and conclusion shall be
fully and accurately specified in the
case working papers.
3. They shall undertake an item-by-
item
evaluation
of
the
comprehensiveness, accuracy, and
reasonableness of the sources of
data used, the parameters, and the
information, as the basis for
issuance of the appraisal report or
the opinion.
  • 51 -
Before Revised Revised Version Description
4. They shall issue a statement
attesting
to
the
professional
competence and independence of
the personnel who prepared the
report or opinion, and that they
have evaluated and found that the
information used is reasonable and
accurate, and that they have
complied with applicable laws and
regulations.
Article 6: Procedures for Acquisition
orDisposal of Immovable
Property or Equipment
1. Procedures for Evaluating and
Operating
The company obtains or disposes
of real estate or equipment, in
accordance with the company’s
internal control system of real
estate,
factory,
and
cycle-
equipment related regulations.
2. Procedure for determining the
terms of trading and the amount of
authorization
(1) To acquire or dispose of
immovable property, reference
shall be made to the present
value of the announcement, the
value assessed, the actual
transaction price of adjacent
real estate, and the resolution of
the terms of the transaction and
the
transaction
price,
the
amount of the NT$50,000,000
of the following persons, shall
petition the Chairman for
approval and shall make a
presentation
at
the
recent
Directors’ meeting. Those who
exceed NT$50,000,000 shall
petition the approval of the
Chairman and upon adoption		 Article 6: Procedures for Acquisition
or Disposal of Immovable
Property,Equipmentor
Assets of their right to use
1. Procedures for Evaluating and
Operating
The company obtains or disposes
of real estate ,equipmentor its
right-of-use assetsthereof, in
accordance with the company’s
internal control system of real
estate,
factory,
and
cycle-
equipment related regulations.
2. Procedure for determining the
terms of trading and the amount of
authorization
(1) To acquire or dispose of
immovable property, reference
shall be made to the present
value of the announcement, the
value assessed, the actual
transaction price of adjacent
real estate, and the resolution of
the terms of the transaction and
the
transaction
price,
the
amount of the NT$50,000,000
of the following persons, shall
petition the Chairman for
approval and shall make a
presentation
at
the
recent
Directors’ meeting. Those who
exceed NT$50,000,000 shall
petition the approval of the
Chairman and upon adoption		 1. Modified
with
the
application
of
the
International
Financial
Reporting
Standards (IFRS) No.
16 “Lease”, added the
right-of-use
assets
thereof regulation.
2. Modified
with
the
provisions to amend
texts.
3. Domestic bonds are
not within the scope of
immunity due to the
different
debt
of
overseas government.
  • 52 -
Before Revised Revised Version Description
by the Board of Directors
before doing so.
(2) The acquisition or disposition
of equipment shall be made by
way
of
inquiry,
price
comparison,
bargaining
or
tender. Those whose amount is
below NT$50,000,000, shall be
approved step by step in
accordance with the nuclear
Authority
management
procedures; those who exceed
the
NT$50,000,000
are
appointed after the approval of
the Board of Directors.
3. Execution Unit
When the company acquires or
disposes of real propertyor
equipment, shall be carried out by
the user department and the
relevant unit of responsibility after
the decision has been made in
accordance with the preceding
decision.
4. Valuation Report on Real Estateor
Equipment
The company acquires or disposes
of real property or equipment, in
addition
to
transactions
with
government agencies, self-district
committee construction, Rental
District Committee construction,
or
acquisition,
disposal
of
equipment for business use, those
whose transaction amount is up to
20% or NT$ 300,000,000 for the
company’s paid in capital, shall
obtain a valuation report issued by
a professional valuer before the
fact occurs, and shall meet the
following requirements:
3.
4.		 by the Board of Directors
before doing so.
(2) The acquisition or disposition
of equipmentor its right-of-use
assetsthereof, shall be made by
way
of
inquiry,
price
comparison,
bargaining
or
tender. Those whose amount is
below NT$50,000,000, shall be
approved step by step in
accordance with the nuclear
Authority
management
procedures; those who exceed
the
NT$50,000,000
are
appointed after the approval of
the Board of Directors.
Execution Unit
When the company acquires or
disposes of real property or
equipmentor its right-of-use assets
thereof, shall be carried out by the
user department and the relevant
unit of responsibility after the
decision
has
been
made
in
accordance with the preceding
decision.
Valuation Report on Real Estate,
Equipmentor its right-of-use assets
thereof.
The company acquires or disposes
of real property or equipmentor its
right-of-use assetsthereof, in
addition
to
transactions
with
domestic government agencies,
self-district
committee
construction,
Rental
District
Committee
construction,
or
acquisition, disposal of equipment
for business use or its right-of-use
assets thereof, those whose
transaction amount is up to 20% or
NT$ 300,000,000
for
the
company’s paid in capital, shall
obtain a valuation report issued by
a professional valuer before the
  • 53 -
Before Revised Revised Version Description
(1) When the price, specific price
or special price shall be used as
the reference for the transaction
price for special reasons, the
transaction shall be approved
first by resolution of the Board
of Trustees. Those who change
the trading conditions in the
future shall also proceed with
theprocedure accordingly.		 fact occurs, and shall meet the
following requirements:
(1) When the price, specific price
or special price shall be used as
the reference for the transaction
price for special reasons, the
transaction shall be firstly
approved by resolution of the
Board of Trustees, and the
same shall apply as to the
change of trading condition
hereafter.
Article 8: Procedures for acquisition
or deposal of membershipor
intangible assets
1. Procedure
for
valuation
and
operation
The company acquires or disposes
of the transaction process of
membershipsor intangible assets,
shall in accordance with the
related
regulations
of
the
company’s internal control system
of real estate, factories and cycle-
equipment.
2. Procedure for determining the
terms of trading and the amount of
authorization.
(1) To acquire or dispose of a
memberships, shall refer to as
fair value, resolute trading
conditions
and
transaction
prices, when the amount is
below
NT$50,000,000
(inclusive), the approval shall
be given step by step in
accordance with the Nuclear
Authority
management
procedure. Those who exceed
NT$ 50,000,000, could start it
after the adoption of the Board
Directors.
(2) When acquires or disposes of
intangible assets,shall refer to		 Article 8: Procedures for acquisition or
deposal ofintangible assets
or right-of-use assetsthereof
or memberships
1. Procedure
for
valuation
and
operation
The company acquires or disposes
of the transaction process of
intangible assets or right-of-use
assetsthereof or memberships,
shall in accordance with the related
regulations of the company’s
internal control system of real
estate,
factories
and
cycle-
equipment.
2. Procedure for determining the
terms of trading and the amount of
authorization.
(1) To acquire or dispose of
memberships, shall refer to as
fair value, resolute trading
conditions
and
transaction
prices, when the amount is
below
NT$ 50,000,000
(inclusive), the approval shall
be given step by step in
accordance with the Nuclear
Authority
management
procedure. Those who exceed
NT$ 50,000,000, could start it
after the adoption of the Board
Directors.
(2) When acquires or disposes of
intangible assetsor right-of-		 1. Modified
with
the
application
of
the
International
Financial
Reporting
Standards (IFRS) No.
16 “Lease”, added the
right-of-use
assets
thereof regulation.
2. Modified
with
the
provisions to amend
texts.
3. Domestic bonds are
not within the scope
of immunity due to
the different debt of
overseas
government.
  • 54 -
Before Revised Revised Version Description
3.

4.
 valuation
report
of
the
professionals or fair value.
Resolution
of
trading
conditions
and
transaction
prices, the amount of which is
below
NT$ 50,000,000
(inclusive), shall approved by
the Chairman and make a
presentation at the recent
Directors’
meeting.
Those
who exceed NT$ 50,000,000,
could start it after the adoption
of the Board Directors.
Execution Unit
When the company acquires or
deposes
of
memberships
or
intangible assets,shall be carried
out by the user department and the
relevant unit of responsibility after
the decision has been made in
accordance with the preceding
decision.
Professionals’ assessment report on
membershipsor intangible assets
When the company acquires or
disposes ofintangible assetsor
memberships and the transaction
amount reaches 20 percent or more
of
paid-in
capital
or
NT$300,000,000 or more, except
in transactions with government
agency, the company shall engage
a certified public accountant prior
to the date of occurrence of the
event to render an opinion on the
reasonableness of the transaction
price; the CPA shall comply with
the provisions of Statement of
Auditing
Standards
No.
20
published by the ARDF.		 3.

4.		 use assetsthereof, shall refer
to valuation report of the
professionals or fair value.
Resolution
of
trading
conditions
and
transaction
prices, the amount of which is
below
NT$ 50,000,000
(inclusive), shall approved by
the Chairman and make a
presentation at the recent
Directors’
meeting.
Those
who exceed NT$ 50,000,000,
could start it after the adoption
of the Board Directors.
Execution Unit
When the company acquires or
deposes of orintangible assets or
right-of-use
assets
thereof
or
memberships, shall be carried out
by the user department and the
relevant unit of responsibility after
the decision has been made in
accordance with the preceding
decision.
Professionals’ assessment report on
intangible assets or right-of-use
assetsthereof or memberships.
When the company acquires or
disposes ofintangible assets or
right-of-use
assets
thereof
or
memberships and the transaction
amount reaches 20 percent or more
of
paid-in
capital
or
NT$300,000,000 or more, except
in transactions with adomestic
government agency, the company
shall engage a certified public
accountant prior to the date of
occurrence of the event to render
an opinion on the reasonableness
of the transaction price; the CPA
shall comply with the provisions of
Statement of Auditing Standards
No. 20published bythe ARDF.
Article 9: Procedure for the
transaction of relatedparty		 Article 9: Procedure for the
transaction of relatedparty		 1. Domestic bonds are
not within the scope of
  • 55 -
Before Revised Revised Version Description
2. Procedure
for
Valuation
and
Operation
When the company intends to acquire
or dispose of real property, or when it
intends to acquire or dispose of assets
other than real property or right-of-
use assets thereof from or to a related
party and the transaction amount
reaches 20 percent or more of paid-in
capital, 10 percent or more of the
company's total assets, or NT$300
million or more, except in trading of
government bonds or bonds under
repurchase and resale agreements, or
subscription or redemption of money
market funds issued by domestic
securities
investment
trust
enterprises, the company may not
proceed to enter into a transaction
contract or make a payment until the
following
matters
have
been
approved by the board of directors
and recognized by the supervisors:
(1) The
purpose,
necessity
and
anticipated
benefit
of
the
acquisition or disposal of assets.
(2) The reason for choosing the
related party as a transaction
counterparty.
(3) With respect to the acquisition of
real property from a related party,
information regarding appraisal of
the
reasonableness
of
the
preliminarytransaction terms in		 2. Procedure
for
Valuation
and
Operation
When the company intends to acquire
or dispose of real property or right-of-
use assets thereof from a related party,
or when it intends to acquire or
dispose of assets other than real
property or right-of-use assets thereof
from
a related party
and the
transaction amount reaches 20 percent
or more of paid-in capital, 10 percent
or more of the company's total assets,
or NT$300 million or more, except in
trading of domestic government
bonds or bonds under repurchase and
resale agreements, or subscription or
redemption of money market funds
issued
by
domestic
securities
investment trust enterprises, the
company may not proceed to enter
into a transaction contract or make a
payment until the following matters
have been approved by the board of
directors and recognized by the
supervisors:
(1) The
purpose,
necessity
and
anticipated
benefit
of
the
acquisition or disposal of assets.
(2) The reason for choosing the
related party as a transaction
counterparty.
(3) With respect to the acquisition of
real property or right-of-use assets
thereof from a related party,
information regarding appraisal of
the
reasonableness
of
the		 immunity due to the
different
debt
of
overseas government.
2. Modified
with
the
application
of
the
International Financial
Reporting
Standards
(IFRS)
No.
16
“Lease”, added the
right-of-use
assets
regulation.
3. Relaxing of the
relationship
between
the
acquisition
or
disposal
of
operational
equipment
and
right-of-use assets,
shall
be
firstly
approved
by
the
Chairman,
and
amended texts
4.
Added
suitable
regulation of The
Audit Committee.
  • 56 -
Before Revised Revised Version Description
accordance
with
Article
9
paragraph 3, section 1 to 4 and 6.
(4) The date and price at which the
related party originally acquired
the real property, the original
transaction
counterparty,
and
relationship to the company and
the related party.
(5) Monthly cash flow forecasts for
the year commencing from the
anticipated month of signing of
the contract, and evaluation of the
necessity of the transaction, and
reasonableness
of
the
funds
utilization.
(6) An appraisal report from a
professional appraiser or a CPA’s
opinion obtained in compliance
with the preceding article.
(7) Restrictive covenants and other
important stipulations associated
with the transaction.
The calculation of the transaction
amounts referred to in the preceding
paragraph
shall
be
made
in
accordance with Article 12, paragraph
1, section 8 herein, and "within the
preceding year" as used herein refers
to the year preceding the date of
occurrence of the current transaction.
Items that have been approved by the
board of directors and recognized by
the supervisors need not be counted
toward the transaction amount.		 preliminary transaction terms in
accordance
with
Article
9
paragraph 3, section 1 to 4 and 6.
(4) The date and price at which the
related party originally acquired
the real property, the original
transaction
counterparty,
and
relationship to the company as
well as the related party.
(5) Monthly cash flow forecasts for
the year commencing from the
anticipated month of signing of
the contract, and evaluation of the
necessity of the transaction, and
reasonableness
of
the
funds
utilization.
(6) An appraisal report from a
professional appraiser or a CPA’s
opinion obtained in compliance
with the preceding article.
(7) Restrictive covenants and other
important stipulations associated
with the transaction.
The calculation of the transaction
amounts referred to in the preceding
paragraph
shall
be
made
in
accordance with Article 12, paragraph
1, section 8 herein, and "within the
preceding year" as used herein refers
to the year preceding the date of
occurrence of the current transaction.
Items that have been approved by the
board of directors and recognized by
the supervisors need not be counted
toward the transaction amount.
  • 57 -
Before Revised Revised Version Description
When to acquire or dispose the
equipment for business operation
between
the
company
and
its
subsidiaries, the company's board of
directors may pursuant to Article 6,
paragraph 2, Article 7, paragraph 2
and Article 8, paragraph 2 delegate
the board chairman to decide such
matters when the transaction is within
a certain amount and have the
decisions subsequently submitted to
and ratified by the next board of
directors meeting.		 Where an audit committee has been
established in accordance with the
provisions of the Act, the matters for
which regulation requires recognition
by the supervisors shall first be
approved by more than half of all
audit committee members and then
submitted to the board of directors for
a resolution. If approval of more than
half of all audit committee members
as required in the preceding paragraph
is not obtained, the procedures may be
implemented if approved by more
than two-thirds of all directors, and
the resolution of the audit committee
shall be recorded in the minutes of the
board of directors meeting. The
terms “all audit committee members”
and “all directors” in the preceding
paragraph shall be counted as the
actual number of persons currently
holding those positions.
When to acquire or dispose the
equipment for business operation
between
the
company
and
its
subsidiaries, or by its subsidiaries in
which it directly or indirectly holds
100 percent of the issued shares or
authorized capital, the company's
board of directors may pursuant to
Article 6, paragraph 2, Article 7,
paragraph 2 and Article 8, paragraph
2 delegate the board chairman to
decide
such
matters
when
the
transaction is within a certain amount
  • 58 -
Before Revised Revised Version Description
3. Reasonable
Valuation
of
Transaction cost
(1) The company that acquires real
property from a related party shall
evaluate the reasonableness of the
transaction costs by the following
means:
1. Based upon the related party's
transaction price plus necessary
interest on funding and the costs to
be duly borne by the buyer.
"Necessary interest on funding" is
imputed as the weighted average
interest rate on borrowing in the
year the company purchases the
property; provided, it may not be
higher than the maximum non-
financial industry lending rate
announced by the Ministry of
Finance.
2. Total loan value appraisal from a
financial institution where the
related
party
has
previously
created a mortgage on the property
as security for a loan; provided, the
actual cumulative amount loaned
by the financial institution shall
have been 70 percent or more of
the financial institution's appraised
loan value of the property and the
period of the loan shall have been		 and have the decisions subsequently
submitted to and ratified by the next
board of directors meeting:
(1) Acquisition
or
disposal
of
equipment or right-of-use assets
thereof held for business use.
(2) Acquisition or disposal of real
property right-of-use assets held
for business use.
3. Reasonable
Valuation
of
Transaction cost
(1) The company that acquires real
property or right-of-use assets
thereof from a related party shall
evaluate the reasonableness of the
transaction costs by the following
means:
1. Based upon the related party's
transaction price plus necessary
interest on funding and the costs to
be duly borne by the buyer.
"Necessary interest on funding" is
imputed as the weighted average
interest rate on borrowing in the
year the company purchases the
property; provided, it may not be
higher than the maximum non-
financial industry lending rate
announced by the Ministry of
Finance.
2. Total loan value appraisal from a
financial institution where the
related party has previously created
a mortgage on the property as
security for a loan; provided, the
actual cumulative amount loaned
by the financial institution shall
have been 70 percent or more of the
financial institution's appraised
loan value of the property and the
  • 59 -
Before Revised Revised Version Description
1 year or more. However, this shall
not apply where the financial
institution is a related party of one
of the transaction counterparties.
(2) Where
land
and
structures
thereupon are combined as a
single property purchased in one
transaction, the transaction costs
for the land and the structures may
be
separately
appraised
in
accordance with either of the
means listed in the Article 9,
paragraph 3, section1.
(3) The company that acquires real
property from a related party and
appraises the cost of the real
property in
accordance with
Article 9, paragraph 3, section 1
and section 2 shall also engage a
CPA to check the appraisal and
render a specific opinion.
(4) The company that acquires real
property, when the results of the
company's appraisal conducted in
accordance
with
Article
9,
paragraph 3, section 1 and section
2 are uniformly lower than the
transaction price, the matter shall
be handled in compliance with
Article 9, paragraph 3, section 5.
However, where the following
circumstances
exist, objective
evidence has been submitted and
specific
opinions
on		 period of the loan shall have been 1
year or more. However, this shall
not apply where the financial
institution is a related party of one
of the transaction counterparties.
(2) Where
land
and
structures
thereupon are combined as a
single property purchased or
leased in one transaction, the
transaction costs for the land and
the structures may be separately
appraised in accordance with
either of the means listed in the
Article 9, paragraph 3, section1.
(3) The company that acquires real
property or right-of-use assets
thereof from a related party and
appraises the cost of the real
property or right-of-use assets
thereof in accordance with Article
9, paragraph 3, section 1 and
section 2 shall also engage a CPA
to check the appraisal and render
a specific opinion.
(4) The company that acquires real
property or right-of-use assets,
when the results of the company's
appraisal conducted in accordance
with Article 9, paragraph 3,
section 1 and section 2 are
uniformly
lower
than
the
transaction price, the matter shall
be handled in compliance with
Article 9, paragraph 3, section 5.
However, where the following
circumstances
exist,
objective
evidence has been submitted and
  • 60 -
Before Revised Revised Version Description
reasonableness
have
been
obtained from a professional real
property appraiser and a CPA
have
been
obtained,
this
restriction shall not apply:
1. Where the related party acquired
undeveloped land or leased land
for development, it may submit
proof of compliance with one of
the following conditions:
(1) Where
undeveloped
land
is
appraised in accordance with the
means in Article 9, paragraph 3,
section 1 to section 3 and section
6, and structures according to the
related party’s construction cost
plus
reasonable
construction
profit are valued in excess of the
actual transaction price. The
“Reasonable construction profit”
shall be deemed the average gross
operating profit margin of the
related
party’s
construction
division over the most recent 3
years or the gross profit margin
for the construction industry for
the
most
recent
period
as
announced by the Ministry of
Finance, whichever is lower.
(2) Completed
transactions
by
unrelated
parties
within
the
preceding year involving other
floors of the same property or
neighboring or closely valued
parcels of land, where the land
area and transaction terms are		 specific
opinions
on
reasonableness
have
been
obtained from a professional real
property appraiser and a CPA
have
been
obtained,
this
restriction shall not apply:
1. Where the related party acquired
undeveloped land or leased land
for development, it may submit
proof of compliance with one of
the following conditions:
(1) Where
undeveloped
land
is
appraised in accordance with the
means in Article 9, paragraph 3,
section 1 to section 3 and section
6, and structures according to the
related party’s construction cost
plus
reasonable
construction
profit are valued in excess of the
actual transaction price. The
“Reasonable construction profit”
shall be deemed the average gross
operating profit margin of the
related
party’s
construction
division over the most recent 3
years or the gross profit margin
for the construction industry for
the
most
recent
period
as
announced by the Ministry of
Finance, whichever is lower.
(2) Transactions by unrelated parties
within
the
preceding
year
involving other floors of the same
property or neighboring or closely
valued parcels of land, where the
land area and transaction terms are
similar
after
calculation
of
  • 61 -
Before Revised Revised Version Description
similar
after
calculation
of
reasonable price discrepancies in
floor or area land prices in
accordance
with
standard
property market sale.
(3) Leasing transactions by unrelated
parties within the preceding year
involving other floors, where the
land area and trading transaction
terms are similar after calculation
of reasonable price discrepancies
or spread estimation in floor in
accordance
with
standard
property market sale or leasing
practices.
2. Where the company acquiring real
property, from a related party
provides evidence that the terms of
the completed transaction are
similar to the terms of completed
transactions involving neighboring
or closely valued parcels of land of
a similar size by unrelated parties
within the preceding year.
Completed transactions involving
neighboring or closely valued parcels
of land in the preceding paragraph in
principle refers to parcels on the same
or an adjacent block and within a
distance of no more than 500 meters
or parcels close in publicly announced
current value; transactions involving
similarly sized parcels in principle
refers to transactions completed by
unrelated parties for parcels with a
land area of no less than 50percent of		 reasonable price discrepancies in
floor or area land prices in
accordance
with
standard
property market sale or leasing
practices.
2. Where the company acquiring real
property or obtaining real property
right-of-use asset through leasing,
from a related party provides
evidence that the terms of the
transaction are similar to the terms
of
transactions
involving
neighboring or closely valued
parcels of land of a similar size by
unrelated
parties
within
the
preceding year.
Transactions involving neighboring
or closely valued parcels of land in the
preceding paragraph in principle
refers to parcels on the same or an
adjacent block and within a distance
of no more than 500 meters or parcels
close in publicly announced current
value;
transactions
involving
similarly sized parcels in principle
refers to transactions completed by
unrelated parties for parcels with a
land area of no less than 50 percent of
  • 62 -
Before Revised Revised Version Description
the
property
in
the
planned
transaction; within the preceding year
refers to the year preceding the date of
occurrence of the acquisition of the
real property.
(5) Where the company acquires real
property from a related party and
the results of appraisals conducted
in accordance with Article 9,
paragraph 3, section 1 to section 4,
are uniformly lower than the
transaction price, the following
steps shall be taken:
Where the company or the company
uses the equity method to account for
its investment in a public company,
then the special reserve called for
under the Act shall be set aside pro
rata in a proportion consistent with
the share of public company's equity
stake in the other company.
The company that has set aside a
special reserve under the preceding
paragraph may not utilize the special
reserve until it has recognized a loss
on decline in market value of the
assets it purchased, or they have been
disposed of, or adequate compensation
has been made, or the status quo ante
has been restored, or there is other
evidence confirming that there was
nothing
unreasonable
about
the










the
property
in
the
planned
transaction; within the preceding year
refers to the year preceding the date of
occurrence of the acquisition of the
real property or obtainment of the
right-of-use assets thereof.
(5) Where the company acquires real
property or right-of-use assets
from a related party and the results
of
appraisals
conducted
in
accordance
with
Article
9,
paragraph 3, section 1 to section 4,
are uniformly lower than the
transaction price, the following
steps shall be taken:
Where the company or the company
uses the equity method to account for
its investment in a public company,
then the special reserve called for
under the Act shall be set aside pro
rata in a proportion consistent with the
share of public company's equity
stake in the other company.
The company that has set aside a
special reserve under the preceding
paragraph may not utilize the special
reserve until it has recognized a loss
on decline in market value of the
assets it purchased or leased at a
premium, or they have been disposed
of, or the leasing contract has been
terminated, or adequate compensation
has been made, or the status quo ante
has been restored, or there is other
evidence confirmingthat there was
  • 63 -
Before Revised Revised Version Description
transaction, and the FSC has given its
consent.
1. A special reserve shall be set aside
in accordance with Article 41,
paragraph 1 of the Act against the
difference
between
the
real
property transaction price and the
appraised cost, and may not be
distributed or used for capital
increase or issuance of bonus
shares. Where a public company
uses the equity method to account
for its investment in another
company, then the special reserve
called for under Article 41,
paragraph of the Act shall be set
aside pro rata in a proportion
consistent with the share of public
company’s equity stake in the other
company.
2. Supervisors shall comply with
Article 218 of the Company Act.
3. Shall report to the shareholders’
meeting
the
processing
subsequences of the first and
second of the section and the
details of the transaction will be
disclosed in the annual report as
well as annual handbook.
(6) Where the company acquires real
property from a related party and one
of the following circumstances exists,
the acquisition shall be conducted in
accordance with Article 9, paragraph
nothing
unreasonable
about
the
transaction, and the FSC has given its
consent.
1. A special reserve shall be set aside
in accordance with Article 41,
paragraph 1 of the Act against the
difference
between
the
real
property and right-of-use assets
transaction price and the appraised
cost, and may not be distributed or
used for capital increase or
issuance of bonus shares. Where a
public company uses the equity
method
to
account
for
its
investment in another company,
then the special reserve called for
under Article 41, paragraph of the
Act shall be set aside pro rata in a
proportion consistent with the
share of public company’s equity
stake in the other company.
2. Supervisors shall comply with
Article 218 of the Company Act.
Where an audit committee has been
established in accordance with the
provisions
of
the
Act,
the
preceding part of this subparagraph
shall apply mutatis mutandis to the
independent director members of
the audit committee.
3. Shall report to the shareholders’
meeting
the
processing
subsequences of the first and
second of the section, and the
details of the transaction will be
disclosed in the annual report as
well as annual handbook.
(6) Where the company acquires real
property or right-of-use assets thereof
from a related party and one of the
following circumstances exists, the
acquisition shall be conducted in
accordance with Article 9,paragraph
  • 64 -
Before Revised Revised Version Description
2, and Article 9, paragraph 3, section
1 to section 3 does not apply:
1. The related party acquired the real
property through inheritance or as
a gift.
2. More than 5 years will have elapsed
from the time the related party
signed the contract to obtain the
real property to the signing date for
the current transaction.
3. The real property is acquired
through
signing
of
a
joint
development contract with the
related party, or through engaging
a related party to build real
property, either on the company's
own land or on rented land.
(7) When a public company obtains
real property from a related
party, it shall also comply with
Article 9, paragraph 3, section 5
if
there
is
other
evidence
indicating that the acquisition
was
not
an
arms
length
transaction.		 2, and Article 9, paragraph 3, section
1 to section 3 does not apply:
1. The related party acquired the real
property or right-of-use assets
thereof through inheritance or as a
gift.
2. More than 5 years will have elapsed
from the time the related party
signed the contract to obtain the
real property or right-of-use assets
thereof to the signing date for the
current transaction.
3. The real property is acquired
through
signing
of
a
joint
development contract with the
related party, or through engaging
a related party to build real
property, either on the company's
own land or on rented land.
4. The real property right-of-use
assets for business use are acquired
by the company with its parent or
subsidiaries, or by its subsidiaries
in which it directly or indirectly
holds 100 percent of the issued
shares or authorized capital.
(7) When a public company obtains
real property from a related
party, it shall also comply with
Article 9, paragraph 3, section 5
if
there
is
other
evidence
indicating that the acquisition
was
not
an
arms
length
transaction.
Article 10: Engaging in Derivatives
Trading
2. Risk management measures
(5) Operating Risk Management
1. Certainly follow the degree of
authority
delegated,
operating
procedure and incorporate into
Internal audit system, in order to
avoid operational risks.
2. Personnel engaged in derivatives
tradingmaynot serve concurrently		 Article 10: Engaging in Derivatives
Trading
2. Risk management measures
(5) Operating Risk Management
1. Certainly follow the degree of
authority
delegated,
operating
procedure and incorporate into
Internal audit system, in order to
avoid operational risks.
2. Personnel engaged in derivatives
tradingmaynot serve concurrently		 1. Modified with the
provisions to amend
texts.
2.
Added
suitable
regulation of The Audit
Committee
  • 65 -
Before Revised Revised Version Description
in
other
operations
such
as
confirmation and settlement.
3. Risk measurement, monitoring,
and control personnel shall be
assigned to a different department
that the personnel in the preceding
subparagraph and shall report to
the board of directors or senior
management personnel with no
responsibility
for
trading
or
position decision-making.
4. Derivatives trading positions held
shall be evaluated at least once per
week; however, positions for
hedge trades required by business
shall be evaluated at least twice per
month. Evaluation reports shall be
submitted to senior management
personnel authorized by the board
of directors.
3. Internal Audit System
A public company's internal audit
personnel shall periodically make a
determination of the suitability of
internal controls on derivatives and
conduct a monthly audit of how
faithfully derivatives trading by the
trading department adheres to the
procedures
for
engaging
in
derivatives trading, and prepare an
audit report. If any material violation
is discovered, all supervisors shall be
notified in writing.		 in
other
operations
such
as
confirmation and settlement.
3. Risk measurement, monitoring, and
control personnel shall be assigned
to a different department that the
personnel
in
the
preceding
subparagraph and shall report to
the board of directors or senior
management personnel with no
responsibility
for
trading
or
position decision-making.
4. Derivatives trading positions held
shall be evaluated at least once per
week; however, positions for
hedge trades required by business
shall be evaluated at least twice per
month. Evaluation reports shall be
submitted to senior management
personnel authorized by the board
of directors.
5. Other important risk management
measures.
3. Internal Audit System
A public company's internal audit
personnel shall periodically make a
determination of the suitability of
internal controls on derivatives and
conduct a monthly audit of how
faithfully derivatives trading by the
trading department adheres to the
procedures
for
engaging
in
derivatives trading, and prepare an
audit report. If any material violation
is discovered, all supervisors shall be
notified in writing.
Where independent directors have
been appointed in accordance with the
provisions of the Act, for matters for
which notice shall be given to the
supervisors under the preceding
paragraph, written notice shall also be
given to the independent directors.
Where an audit committee has been
  • 66 -
Before Revised Revised Version Description
5. Supervision and Management of
Board of Directors
(1) board of directors shall faithfully
supervise and manage such
trading in accordance with the
following principles:
1. Designate
senior
management
personnel
to
pay
continuous
attention
to
monitoring
and
controlling derivatives trading risk.
The rule of managing is as
following:
(1) Periodically evaluate the risk
management. measures currently
employed are appropriate and are
faithfully
conducted
in
accordance
with
these
Regulations and the procedures
for
engaging
in
derivatives
trading
formulated
by
the
company.
(2) When irregular circumstances are
found
in
the
course
of
supervising trading and profit-
loss circumstances, appropriate
measures shall be adopted and a
report immediately made to the
board of directors; where a
company
has
independent
directors,
an
independent
director shall be present at the
meeting and express an opinion.
2. Periodically
evaluate
whether
derivatives trading performance is
consistent
with
established
operational strategy and whether
the risk undertaken is within the
company's permitted scope of
tolerance.		 established in accordance with the
provisions of the Act, the provisions
relating to supervisors shall apply
mutatis
mutandis
to
the
audit
committee.
5. Supervision and Management of
Board of Directors
(1) board of directors shall faithfully
supervise and manage such
trading in accordance with the
following principles:
1. Designate
senior
management
personnel
to
pay
continuous
attention
to
monitoring
and
controlling derivatives trading risk.
The rule of managing is as
following:
(1) Periodically evaluate the risk
management. measures currently
employed are appropriate and are
faithfully
conducted
in
accordance
with
these
Regulations and the procedures
for
engaging
in
derivatives
trading
formulated
by
the
company.
(2) When irregular circumstances are
found
in
the
course
of
supervising trading and profit-
loss circumstances, appropriate
measures shall be adopted and a
report immediately made to the
board of directors; where a
company
has
independent
directors,
an
independent
director shall be present at the
meeting and express an opinion.
2. Periodically
evaluate
whether
derivatives trading performance is
consistent
with
established
operational strategy and whether
the risk undertaken is within the
company's permitted scope of
tolerance.
  • 67 -
Before Revised Revised Version Description
3. A company shall report to the
soonest meeting of the board of
directors after it authorizes the
relevant
personnel
to
handle
derivates trading in accordance
with its Procedures for Engaging in
Derivatives Trading.		 3. A company shall report to the
soonest meeting of the board of
directors after it authorizes the
relevant
personnel
to
handle
derivates trading in accordance
with its Procedures for Engaging in
Derivatives Trading.
Article 12: Procedures for Information
Disclosure
1. Announce the declaration project
and the standard:
(1) When the company intends to
acquire or dispose of real
property from or to a related
party, or when it intends to
acquire or dispose of assets other
than real property from or to a
related party and the transaction
amount reaches 20 percent or
more of paid-in capital, 10
percent
or
more
of
the
company’s
total
assets,
or
NT$300 million or more, except
in trading of government bonds
or bonds under repurchase and
resale
agreements,
or
subscription or redemption of
money market funds issued by
domestic securities investment
trust enterprise.
(2) Merger, demerger, acquisition,
or share transfer.
(3) Losses from derivatives trading
reaching the limits on aggregate
losses or losses on individual
contracts
set
out
in
the
procedures
adopted
by
the
company.
(4) Where equipment or the type of
assets for business use are
acquired or disposed of, and
furthermore
the
transaction
Article 12: Procedures for Information
Disclosure
1. Announce the declaration project
and the standard:
(1) When the company intends to
acquire or dispose of real
property or right-of-use assets
thereof from or to a related party,
or when it intends to acquire or
dispose of assets other than real
property or right-of-use assets
thereof from or to a related party
and
the
transaction
amount
reaches 20 percent or more of
paid-in capital, 10 percent or
more of the company’s total
assets, or NT$300 million or
more, except in trading of
domestic government bonds or
bonds under repurchase and
resale
agreements,
or
subscription or redemption of
money market funds issued by
domestic securities investment
trust enterprise.
(2) participating in the merger,
demerger, acquisition, or share
transfer.
(3) Losses from derivatives trading
reaching the limits on aggregate
losses or losses on individual
contracts
set
out
in
the
procedures
adopted
by
the
company.
(4) Where equipment or right-of-use
assets thereof for business use are
acquired or disposed of, and
furthermore
the
transaction
1. Modified with the
provisions to amend
texts.
2. Modified with the
application of the
International
Financial Reporting
Standards
(IFRS)
No. 16 “Lease”,
added the right-of-
use assets thereof
regulation.
3. Harmonize normative
terms,
the
principles of the
subject matter or
institutions referred
to in this standard
are
consistently
included at home
and abroad, thus
delete the words at
home and abroad.
4. Domestic bonds are
not within the scope of
immunity due to the
different
debt
of
overseas government.
  • 68 -
Before Revised Revised Version Description
counterparty is not a related
party, and the transaction amount
meets any of the following
criteria:
1. For a public company whose paid-
in capital is less than NT$10
billion, the transaction amount
reaches NT$500 million or more.
2. For a public company whose paid-
in capital is NT$10 billion or more,
the transaction amount reaches
NT$1 billion or more.
(5) Acquisition or disposal by a public
company in the construction
business of real property for
construction use, and furthermore
the transaction counterparty is
not a related party, and the
transaction
amount
reaches
NT$500 million.
(6) Where land is acquired under an
arrangement on engaging others
to build on the company's own
land, engaging others to build on
rented land, joint construction
and allocation of housing units,
joint construction and allocation
of ownership percentages, or
joint construction and separate
sale,
and
the
amount
the
company expects to invest in the
transaction
reaches
NT$500
million.		 counterparty is not a related
party, and the transaction amount
meets any of the following
criteria:
1. For a public company whose paid-
in capital is less than NT$10
billion, the transaction amount
reaches NT$500 million or more.
2. For a public company whose paid-
in capital is NT$10 billion or more,
the transaction amount reaches
NT$1 billion or more.
(5) Acquisition or disposal by a public
company in the construction
business of real property or right-
of-use
assets
thereof
for
construction use, and furthermore
the transaction counterparty is not
a
related
party,
and
the
transaction
amount
reaches
NT$500 million; among such
cases, if the public company has
paid-in capital of NT$10 billion
or more, and it is disposing of real
property
from
a
completed
construction
project
that
it
constructed
itself,
and
furthermore
the
transaction
counterparty is not a related
party, then the threshold shall be
a transaction amount reaching
NT$1 billion or more.
(6) Where land is acquired under an
arrangement on engaging others
to build on the company's own
land, engaging others to build on
rented land, joint construction
and allocation of housing units,
joint construction and allocation
of ownership percentages, or
joint construction and separate
sale,
and
furthermore
the
transaction counterparty is not a
related party, and the amount the
company expects to invest in the
  • 69 -
Before Revised Revised Version Description
(7) Where an asset transaction other
than any of those referred to in
the preceding six subparagraphs,
a disposal of receivables by a
financial
institution,
or
an
investment in the mainland
China area reaches 20 percent or
more of paid-in capital or
NT$300 million; provided, this
shall not apply to the following
circumstances:
1. Trading of government bonds.
2. Where
done
by
professional
investors-securities
trading
on
securities
exchanges
or
OTC
markets at home or abroad, or
subscription of ordinary corporate
bonds or general bank debentures
without equity characteristics that
are offered and issued in the
primary market, or subscription by
a securities firm of securities as
necessitated by its undertaking
business
or
as
an
advisory
recommending securities firm for
an emerging stock company, in
accordance with the rules of the
Taipei Exchange.
3. Trading of bonds under repurchase
and
resale
agreements,
or
subscription or redemption of
money market funds issued by
domestic
securities
investment
trust enterprises.
(8) The amount of transactions above
shall be calculated as follows:
1. The amount of any individual
transaction.
2. The cumulative transaction amount
of acquisitions and disposals of the		 transaction
reaches
NT$500
million.
(7) Where an asset transaction other
than any of those referred to in
the preceding six subparagraphs,
a disposal of receivables by a
financial
institution,
or
an
investment in the mainland
China area reaches 20 percent or
more of paid-in capital or
NT$300 million; provided, this
shall not apply to the following
circumstances:
1. Trading of domestic government
bonds.
2. Where
done
by
professional
investors-securities
trading
on
securities
exchanges
or
OTC
markets,
or
subscription
of
ordinary
corporate
bonds
or
general bank debentures without
equity characteristics (excluding
subordinated debt) that are offered
and issued in the primary market,
or subscription or redemption of
securities investment trust funds or
futures trust funds, or subscription
by a securities firm of securities as
necessitated by its undertaking
business
or
as
an
advisory
recommending securities firm for
an emerging stock company, in
accordance with the rules of the
Taipei Exchange.
3. Trading of bonds under repurchase
and
resale
agreements,
or
subscription or redemption of
money market funds issued by
domestic
securities
investment
trust enterprises.
(8) The amount of transactions above
shall be calculated as follows:
1. The amount of any individual
transaction.
2. The cumulative transaction amount
of acquisitions and disposals of the
  • 70 -
Before Revised Revised Version Description
same type of underlying asset with
the same transaction counterparty
within the preceding year.
3. The cumulative transaction amount
of
acquisitions
and
disposals
(cumulative
acquisitions
and
disposals, respectively) of real
property
within
the
same
development project within the
preceding year.
4. The cumulative transaction amount
of
acquisitions
and
disposals
(cumulative
acquisitions
and
disposals, respectively) of the same
security within the preceding year.		 same type of underlying asset with
the same transaction counterparty
within the preceding year
3. The cumulative transaction amount
of
acquisitions
and
disposals
(cumulative
acquisitions
and
disposals, respectively) of real
property or right-of-use assets
thereof
within
the
same
development project within the
preceding year.
4. The cumulative transaction amount
of
acquisitions
and
disposals
(cumulative
acquisitions
and
disposals, respectively) of the same
securitywithin thepreceding year.
Article 14: Control procedures for the
acquisition and disposal of
assets by subsidiaries
1. Subsidiaries shall also stipulate the
Procedure
for
Acquisition
or
Disposal of Assets of a Public
Company in accordance with the
relevant
provisions
of
the
Procedure
for
Acquisition
or
Disposal of Assets.
2. When subsidiaries acquire or
dispose
assets,
they
execute
according
to
the
processing
procedure that instituted by Acts.
3. Information required to be publicly
announced
and
reported
in
accordance with the provisions of
the
preceding
Chapter
on
acquisitions and disposals of assets
by a public company's subsidiary
that is not itself a public company
in Taiwan shall be reported by the
public company.
4. In
the
announcement
and
declaration
standard
of
subsidiaries, 20% of the amount of
capital received by the company or
10% of the total assets, shall be
based on the amount of capital		 Article 14: Control procedures for the
acquisition and disposal of
assets by subsidiaries
1. Subsidiaries shall also stipulate the
Procedure
for
Acquisition
or
Disposal of Assets of a Public
Company in accordance with the
relevant
provisions
of
the
Procedure
for
Acquisition
or
Disposal of Assets.
2. When subsidiaries acquire or
dispose
assets,
they
execute
according
to
the
processing
procedure that instituted by Acts.
3. Information required to be publicly
announced
and
reported
in
accordance with the provisions of
the
preceding
Chapter
on
acquisitions and disposals of assets
by a public company's subsidiary
that is not itself a public company
in Taiwan shall be reported by the
public company.
4. In
the
announcement
and
declaration
standard
of
subsidiaries, 20% of the amount of
capital received by the company or
10% of the total assets, shall be
based on the amount of capital		 1.
Added
suitable
regulation of The
Audit Committee
  • 71 -
Before Revised Revised Version Description
received or the total assets of the
company.
5. If subsidiaries acquire or dispose
assets,
they
shall
at
least
periodically
be
made
a
determination of the procedure for
acquisition or disposal of assets,
and its operational situation. If any
material violation is discovered,
the audit unit of the company shall
be notified in writing, and the audit
unit of the company shall notify
supervisors in writing.
6. The auditor of the company shall be
informed of the implementation of
the procedure for acquisition or
disposal of assets by subsidiaries
when auditors auditing subsidiaries
under the annual audit plan. If any
violation
is
discovered,
its
reformation shall be continually
traced
and
be
reported
to
supervisors.
Where an audit committee has been
established in accordance with the
provisions of the Act, the provisions
relating to supervisors shall apply
mutatis
mutandis
to
the
audit
committee.		 received or the total assets of the
company.
5. If subsidiaries acquire or dispose
assets,
they
shall
at
least
periodically
be
made
a
determination of the procedure for
acquisition or disposal of assets,
and its operational situation. If any
material violation is discovered,
the audit unit of the company shall
be notified in writing, and the audit
unit of the company shall notify
supervisors in writing.
6. The auditor of the company shall be
informed of the implementation of
the procedure for acquisition or
disposal of assets by subsidiaries
when auditors auditing subsidiaries
under the annual audit plan. If any
violation
is
discovered,
its
reformation shall be continually
traced
and
be
reported
to
supervisors.
Where an audit committee has been
established in accordance with the
provisions of the Act, the provisions
relating to supervisors shall apply
mutatis
mutandis
to
the
audit
committee.
Article 17: Implement and Amendment
A public company shall establish its
procedures for the acquisition or
disposal of assets in accordance with
the provisions of these Regulations.
After the procedures have been
approved by the board of directors,
they shall be submitted to each
supervisor, and then to a shareholders'
meeting for approval; the same
applies when the procedures are
amended. If any director expresses
dissent and it is contained in the
minutes or a written statement, the
company shall submit the director’s
dissenting opinion to each supervisor.
Article 17: Implement and Amendment
A public company shall establish its
procedures for the acquisition or
disposal of assets in accordance with
the provisions of these Regulations.
After the procedures have been
approved by the board of directors,
they shall be submitted to each
supervisor, and then to a shareholders'
meeting for approval; the same
applies when the procedures are
amended. If any director expresses
dissent and it is contained in the
minutes or a written statement, the
company shall also submit the
director’s dissenting opinion to each
supervisor.
1. Modified with the
provisions to amend
texts.
2. Added
suitable
regulation
of
The
Audit Committee.
  • 72 -
Before Revised Revised Version Description
In the case of a discussion by the
Board,
the
opinions
of
the
independent directors shall be fully
taken into account, if they have
objections or reservations, shall be set
out in the proceedings of the Board of
Trustees.		 In the case of a discussion by the
Board,
the
opinions
of
the
independent directors shall be fully
taken into account, if they have
objections or reservations, shall be set
out in the proceedings of the Board of
Trustees.
Where the position of independent
director
has
been
created
in
accordance with the provisions of the
Securities and Exchange Act, when
the procedures for the acquisition and
disposal of assets are submitted for
discussion by the board of directors
pursuant to the preceding paragraph,
the board of directors shall take into
full consideration each independent
director’s opinions. If an independent
director objects to or expresses
reservations about any matter, it shall
be recorded in the minutes of the
board of directors meeting. Where an
audit committee has been established
in accordance with the provisions of
the Act, when the procedures for the
acquisition and disposal of assets are
adopted or amended they shall be
approved by more than half of all
audit
committee
members
and
submitted to the board of directors for
a resolution. If approval of more than
half of all audit committee members
as required in the preceding paragraph
is not obtained, the procedures may be
implemented if approved by more
than two-thirds of all directors, and
the resolution of the audit committee
shall be recorded in the minutes of the
board of directors meeting. The terms
“all audit committee members” and
“all directors” in the preceding
paragraph shall be counted as the
actual number of persons currently
holdingthosepositions.
  • 73 -

Attachment 8

Chieftek Precision Co., Ltd.

The Comparison tables of the Procedures for the Endorsement and

Guarantees to be amended

Before Revised Revised Version Description
Article 10：Announcement and
Declaration of Time
Limit and Content
1. The company shall announce
and report the previous month's
balance
of
endorsements/guarantees
of
itself and its subsidiaries by the
10th day of each month.
2. The company whose balance of
endorsements/guarantees
reaches one of the following
levels shall announce and report
such event within two days
commencing immediately from
the date of occurrence:
(1) The aggregate balance of
endorsements/guarantees
by
the
company
reaches
50
percent or more of the public
company's net worth as stated
in its latest financial statement.
(2) The balance of endorsements
/guarantees by the company for
a single enterprise reaches 20
percent or more of the public
company's net worth as stated
in its latest financial statement.
(3) The balance of endorsements
/guarantees by the public
company and its subsidiaries
for a single enterprise reaches
NT$10 millions or more, and
the investment of a long-term
nature in, and balance of loans
to,such enterprise reaches 30		 Article 10：Announcement and
Declaration of Time
Limit and Content
1. The company shall announce
and report the previous month's
balance
of
endorsements/guarantees
of
itself and its subsidiaries by the
10th day of each month.
2. The company whose balance of
endorsements/guarantees
reaches one of the following
levels shall announce and report
such event within two days
commencing immediately from
the date of occurrence:
(1) The aggregate balance of
endorsements/guarantees
by
the
company
reaches
50
percent or more of the public
company's net worth as stated
in its latest financial statement.
(2) The balance of endorsements
/guarantees by the company for
a single enterprise reaches 20
percent or more of the public
company's net worth as stated
in its latest financial statement.
(3) The balance of endorsements
/guarantees
by
the
public
company and its subsidiaries
for a single enterprise reaches
NT$10 millions or more and
the aggregate amount of all
endorsements/guarantees for,
investment of a long-term		 Modified
with
the
Financial Supervisory
Commission's letter of
March
7,
2019,
ChinKuanChengPhaC
hi No. 1080304826,
amended
the
Procedures
for
the
Endorsement
and
Guarantees.
  • 74 -
Before Revised Revised Version Description
percent
or
more
of
the
company's net worth as stated
in its latest financial statement,
or after the declaration is
declared in accordance with
these measures, the balance of
each
increase
exceeds
5
percent
or
more
of
the
company's net worth as stated
in its latest financial statement.
(4) The
amount
of
new
endorsements/guarantees
made by the company or its
subsidiaries reaches NT$30
million or more, and reaches 5
percent
or
more
of
the
company’s net worth as stated
in its latest financial statement.
3. The company shall announce
and report on behalf of any
subsidiary thereof that is not a
public company of the Republic
of China any matters that such
subsidiary
is
required
to
announce and report pursuant to
the preceding paragraph.
4. “Date of occurrence” in these
Regulations means the date of
contract
signing,
date
of
payment, dates of boards of
directors’ resolutions, or other
date that can confirm the
counterparty
and
monetary
amount of the transaction,
whichever date is earlier.		 nature in, and balance of loans
to, such enterprise reaches 30
percent
or
more
of
the
company's net worth as stated
in its latest financial statement,
or after the declaration is
declared in accordance with
these measures, the balance of
each increase exceeds 5 percent
or more of the company's net
worth as stated in its latest
financial statement.
(4) The
amount
of
new
endorsements/guarantees made
by
the
company
or
its
subsidiaries reaches NT$30
million or more, and reaches 5
percent
or
more
of
the
company’s net worth as stated
in its latest financial statement.
3. The company shall announce
and report on behalf of any
subsidiary thereof that is not a
public company of the Republic
of China any matters that such
subsidiary
is
required
to
announce and report pursuant to
the preceding paragraph.
4. “Date of occurrence” in these
Regulations means the date of
contract
signing,
date
of
payment, dates of boards of
directors’ resolutions, or other
date that can confirm the
counterparty
and
monetary
amount
of
the
transaction,
whichever date is earlier.
Article 6: Hierarchy of Decision-
making Authority and
Delegation thereof
1. When departments are required
to
obtain
endorsement
or
guarantees due to business
needs, they shall firstly be
approved bythe Board of		 Article 6: Hierarchy of Decision-
making Authority and
Delegation thereof
1. When departments are required
to
obtain
endorsement
or
guarantees due to business
needs, they shall firstly be
approved bythe Board of		 Modified
with
the
Financial Supervisory
Commission's letter of
March
7,
2019,
ChinKuanChengPhaC
hi No. 1080304826,
amended
the
Procedures
for
the
  • 75 -
Before Revised Revised Version Description
Directors. Where the company
has established the position of
independent director, when it
submits
its
Operational
Procedures for Loaning Funds
to Others for discussion by the
board of directors under the
preceding paragraph, the board
of directors shall take into full
consideration each independent
director's opinion; independent
directors' opinions specifically
expressing assent or dissent and
their reasons for dissent shall be
included in the minutes of the
board of directors' meeting.
However, in order to meet the
time
limit,
the
Board
of
Directors shall authorize the
Chairman to make a decision in
accordance with the provisions
of this operating method within
the
limits
of
per
NT$ 20,000,000, and shall report the
Board of Directors afterwards
for approvals.		 Directors. Where the company
has established the position of
independent director, when it
submits
its
Operational
Procedures for Loaning Funds to
Others for discussion by the
board of directors under the
preceding paragraph, the board
of directors shall take into full
consideration each independent
director's opinion; independent
directors' opinions specifically
expressing assent or dissent and
their reasons for dissent shall be
included in the minutes of the
board of directors' meeting.
However, in order to meet the
time
limit,
the
Board
of
Directors shall authorize the
Chairman to make a decision in
accordance with the provisions
of this operating method within
the
limits
of
per
NT$ 50,000,000, and shall report the
Board of Directors afterwards
for approvals.		 Endorsement
and
Guarantees.
Article 13: Procedures for
implementation
After the Procedures are passed by
the resolution of the Board of
Directors, submit the Procedures
to each supervisor and submit
them
for
approval
by
the
shareholders' meeting; where any
director expresses dissent and it is
contained in the minutes or a
written statement, the company
shall submit the dissenting opinion
to
each
supervisor
and
for
discussion by the shareholders'
meeting. The same shall apply to		 Article 13: Procedures for
implementation
After the Procedures are passed by
the resolution of the Board of
Directors, submit the Procedures
to each supervisor and submit
them
for
approval
by
the
shareholders' meeting; where any
director expresses dissent and it is
contained in the minutes or a
written statement, the company
shall submit the dissenting opinion
to
each
supervisor
and
for
discussion by the shareholders'
meeting. The same shall apply to
any
amendments
to
the
Procedures.
When it submits its Operational
Procedures for LoaningFunds to		 Modified
with
the
Financial Supervisory
Commission's letter of
March
7,
2019,
ChinKuanChengPhaC
hi No. 1080304826,
amended
the
Procedures
for
the
Endorsement
and
Guarantees.
  • 76 -
Before Revised Revised Version Description
any
amendments
to
the
Procedures.		 Others for discussion by the Board
of Directors under the preceding
paragraph, the board of directors
shall take into full consideration
each
independent
director’s
opinion; independent directors’
opinions specifically expressing
assent or dissent and their reasons
for dissent shall be included in the
minutes of the Board of Directors'
meeting.
Where an audit committee has
been established in accordance
with the provisions of the Act,
when the procedures for the
acquisition and disposal of assets
are adopted or amended they shall
be approved by more than half of
all audit committee members and
submitted to the board of directors
for a resolution.
If approval of more than half
of all audit committee members as
required
in
the
preceding
paragraph is not obtained, the
procedures may be implemented if
approved by more than two-thirds
of all directors, and the resolution
of the audit committee shall be
recorded in the minutes of the
board of directors meeting.
The terms “all audit committee
members” in paragraph 3 and “all
directors”
in
the
preceding
paragraph shall be counted as the
  • 77 -
Before Revised Revised Version Description
actual number of persons currently
holding those positions.
Article 12: Penalty for violation of
these Regulations or
the
company’s
Operational
Procedures
for
Endorsements/Guarant
ees by managers and
personnel in charge
When the manager and personnel
in charge of the company violates
this operating procedure, shall
report
the
assessment
in
accordance with the company’s
Personnel Management Act and
Work Rules, shall be punished
according to its circumstances and
severity.		 Article 12: Penalty for violation of
these Regulations or
the
company’s
Operational
Procedures
for
Endorsements/Guarant
ees by managers and
personnel in charge
When the manager and personnel
in charge of the company violates
this operating procedure, shall
report
the
assessment
in
accordance with the company’s
Personnel Management Act and
Work Rules, shall be punished
according to its circumstances and
severity.
Where independent directors have
been appointed in accordance with
the provisions of the Act, for
matters for which notice shall be
given to the supervisors under
Article 15, paragraph 2 or Article
18, paragraph 2, written notice
shall
also
be
given
to
the
independent directors. Based on
Article 16 or Article 20, the
reformation
plan
for
the
supervisors, shall also inform
independent directors.
Where an audit committee has
been established by the company,
Article 15, Article 16, Article 18
and
Article
20
relating
to
supervisors shall apply mutatis
mutandis to the audit committee.		 Modified
with
the
Financial Supervisory
Commission's letter of
March
7,
2019,
ChinKuanChengPhaC
hi No. 1080304826,
amended
the
Procedures
for
the
Endorsement
and
Guarantees.
  • 78 -

Attachment 9

Chieftek Precision Co., Ltd.

The Comparison tables of the Procedures for the Management of

Loaning Funds to Others to be amended

Before Revised Revised Version Description
Article 3: Evaluation Standards for
Loaning Funds to Others
Under the Company Act, the
company shall not loan funds to any
of its shareholders or any other
person except under the following
circumstances:
1. Where an inter-company or inter-
firm business transaction calls
for a loan arrangement with the
company.
The
term
“inter-firm
business
transaction” refers to those who
have a purchase or sales conduct
with the company.
2. Where an inter-company or
inter-firm short-term financing
facility with the company.
It refers to an inter-company or
inter-firm
short-term
financing
facility whose shareholding of the
company reaches 50% or more.
The term “short-term” as used in the
preceding paragraph means the
period of one year, or where the
company’s
operating
cycle
(whichever is longer),
The term “financing amount” as
used in means the cumulative		 Article 3: Evaluation Standards for
Loaning Funds to Others
Under the Company Act, the
company shall not loan funds to any
of its shareholders or any other
person except under the following
circumstances:
1. Where an inter-company or
inter-firm business transaction
calls for a loan arrangement with
the company.
The term “inter-firm business
transaction” refers to those who
have a purchase or sales conduct
with the company.
2. Where an inter-company or
inter-firm short-term financing
facility with the company.
It refers to an inter-company or
inter-firm
short-term
financing
facility whose shareholding of the
company reaches 50% or more.
The term “short-term” as used in
the preceding paragraph means the
period of one year, or where the
company’s
operating
cycle
(whichever is longer),
The term “financing amount” as
used in means the cumulative		 Modified with the
Financial
Supervisory
Commission's letter
of March 7, 2019,
ChinKuanChengPh
aChi
No.
1080304826,
amended
the
Procedures for the
Management
of
Loans to Others.
  • 79 -
Before Revised Revised Version Description
balance of the public company's
short-term financing.
3. To which the company’s Board of
Directors approves to loan funds.
4. The restriction in paragraph 1,
subparagraph 2 shall not apply to
inter-company loans of funds
between overseas companies in
which
the
company
holds,
directly or indirectly, 100% of the
voting shares. However, the
provisions of Article 4 and
Article 5, concerning the setting
of the amount limits and the
durations of loans shall still
apply.		 balance of the public company's
short-term financing.
3. To which the company’s Board
of Directors approves to loan
funds.
4. The restriction in paragraph 1,
subparagraph 2 shall not apply to
inter-company loans of funds
between overseas companies in
which
the
company
holds,
directly or indirectly, 100% of
the voting shares, or the inter-
company loans of funds between
overseas companies in which the
public company holds, directly
or indirectly, 100% of the voting
shares. However, the provisions
of Article 4 and Article 5,
concerning the setting of the
total amount limits, individual
amount limits and the durations
of loans shall still apply.
Article 10: Disclosure of Information
1. The company shall enter the
company’s and its subsidiaries’
balance of loaning funds for the
previous month into the Public
Information Observatory by 10th
of each month.
2. The company whose balance of
loaning funds reaches one of the
following levels shall enter into
the
Public
Information
Observatory within two days
commencing immediately from
the date of occurrence:
(1) The aggregate balance of loaning
funds to others reaches 20
percent or more of the company's
net worth as stated in its latest		 Article 10: Disclosure of Information
1. The company shall enter the
company’s and its subsidiaries’
balance of loaning funds for the
previous month into the Public
Information Observatory by 10th
of each month.
2. The company whose balance of
loaning funds reaches one of the
following levels shall enter into
the
Public
Information
Observatory within two days
commencing immediately from
the date of occurrence:
(1) The
aggregate
balance
of
loaning funds to others reaches
20 percent or more of the
company's net worth as stated in
Modified with the
Financial
Supervisory
Commission's letter
of March 7, 2019,
ChinKuanChengPh
aChi
No.
1080304826,
amended
the
Procedures for the
Management
of
Loans to Others.
  • 80 -
Before Revised Revised Version Description
financial statement, or after the
declaration in accordance with
the provisions of this regulation,
those whose balance each of
time exceeds 2 percent or more
of the company's net worth as
stated in its latest financial
statement.
(2) Where the balance of loaning
funds of single entity reaches
10%, or more, of the company's
net worth as stated in its latest
financial statement, or after the
declaration in accordance with
the provisions of this regulation,
those whose balance each of
time exceeds 2 percent or more
of the company's net worth as
stated in its latest financial
statement.
(3) The amount of new loaning funds
made by the company or its
subsidiaries
reaches
NT$10
million or more, and reaches 2
percent or more of the company's
net worth as stated in its latest
financial statement.
3. The company shall announce and
report on behalf of any subsidiary
thereof that is not a public
company of the Republic of China
any matters that such subsidiary is
required to announce and report
pursuant to any subparagraph of
the preceding paragraph. The
calculation of the ratio of the
loaning funds balance of the
preceding subsidiaries to the net is
calculated on the basis of the
proportion of the balance of
loaning funds of subsidiaries.’
4. The company shall assess the
loaning funds and circumstances
of
its
and
make
adequate
provision for bad debts,and		 its latest financial statement, or
after
the
declaration
in
accordance with the provisions
of this regulation, those whose
balance each of time exceeds 2
percent
or
more
of
the
company's net worth as stated in
its latest financial statement.
(2) Where the balance of loaning
funds of single entity reaches
10%, or more, of the company's
net worth as stated in its latest
financial statement, or after the
declaration in accordance with
the provisions of this regulation,
those whose balance each of
time exceeds 2 percent or more
of the company's net worth as
stated in its latest financial
statement.
(3) The amount of new loaning
funds made by the company or
its subsidiaries reaches NT$10
million or more, and reaches 2
percent
or
more
of
the
company's net worth as stated in
its latest financial statement.
3. The company shall announce and
report on behalf of any subsidiary
thereof that is not a public
company of the Republic of
China any matters that such
subsidiary
is
required
to
announce and report pursuant to
any
subparagraph
of
the
preceding
paragraph.
The
calculation of the ratio of the
loaning funds balance of the
preceding subsidiaries to the net
is calculated on the basis of the
proportion of the balance of
loaning funds of subsidiaries.’
4. The company shall assess the
loaning funds and circumstances
of
its
and
make
adequate
provision for bad debts,and
  • 81 -
Before Revised Revised Version Description
properly disclose the relevant
information
in
the
financial
report, also provide relevant data
to the visa accountant to carry out
the
necessary
verification
procedures.
5. “Date of occurrence” in these
Regulations means the date of
trading contract signing, date of
payment, dates of Boards of
Directors resolutions, or other
date
that
can
confirm
the
counterparty
and
monetary
amount
of
the
transaction,
whichever date is earlier.		 properly disclose the relevant
information in the financial
report, also provide relevant data
to the visa accountant to carry out
the
necessary
verification
procedures.
5. “Date of occurrence” in these
Regulations means the date of
contract
signing,
date
of
payment, dates of Boards of
Directors resolutions, or other
date
that
can
confirm
the
counterparty of loaning funds
and monetary amount of the
transaction, whichever date is
earlier.
Article 6: Procedures for Handling
and Reviewing
1. Process of Application
(1) When handling the matters of
loaning funds, the company shall
ask the debtor attaches the basic
information (including Ministry
of Economy Company license,
Business
Registration
Certificate, and a copy of the ID
card of person in charge), and
other
necessary
financial
documents, and the debtor could
apply to the financial unit of the
company for integration.
(2) If inter-firm business engages in
loaning funds, the financial unit
of the company shall evaluate
whether the amount of loan is
equivalent to the inter-firm
business amount of transaction.
If
short-term
financing
is
necessary, the reason as well as
circumstances of loaning funds
shall be carried out, and shall be
taken a credit investigation.
After reporting the relevant
information and proposed loan
conditions to the supervisor and
thegeneral manager of the		 Article 6: Procedures for Handling
and Reviewing
1. Process of Application
(1) When handling the matters of
loaning funds, the company
shall ask the debtor attaches the
basic information (including
Ministry of Economy Company
license, Business Registration
Certificate, and a copy of the ID
card of person in charge), and
other
necessary
financial
documents, and the debtor
could apply to the financial unit
of the company for integration.
(2) If inter-firm business engages in
loaning funds, the financial unit
of the company shall evaluate
whether the amount of loan is
equivalent to the inter-firm
business amount of transaction.
If
short-term
financing
is
necessary, the reason as well as
circumstances of loaning funds
shall be carried out, and shall be
taken a credit investigation.
After reporting the relevant
information and proposed loan
conditions to the supervisor and
thegeneral manager of the		 Modified with the
Financial
Supervisory
Commission's letter
of March 7, 2019,
ChinKuanChengPh
aChi
No.
1080304826,
amended
the
Procedures for the
Management
of
Loans to Others.
  • 82 -
Before Revised Revised Version Description
financial unit, it shall also be
reported
to
the
Board
of
Directors for resolution.
(3) Where
the
company
has
established
the
position
of
independent director, when it
submits
Loaning
Funds
to
Others for discussion by the
Board of Directors, the Board of
Directors shall take into full
consideration each independent
director's opinion; people who
specifically expressing assent or
dissent and their reasons for
dissent shall be included in the
minutes of the board of directors'
meeting.
2. Credit Investigation
(1) For the first time of debtor,
shallprovide basic information		 financial unit, it shall also be
reported to the Board of
Directors for resolution.
(3) Where
the
company
has
established the position of
independent director, when it
submits Loaning Funds to
Others for discussion by the
board of directors, the Board of
Directors shall take into full
consideration each independent
director's opinion; independent
directors' opinions specifically
expressing assent or dissent and
their reasons for dissent shall be
included in the minutes of the
board of directors' meeting.
Where an audit committee has been
established in accordance with the
provisions of the Act, when the
procedures for the acquisition and
disposal of assets are adopted or
amended they shall be approved by
more than half of all audit
committee members and submitted
to the board of directors for a
resolution. If approval of more than
half
of
all
audit
committee
members
as
required
in
the
preceding paragraph 2 is not
obtained, the procedures may be
implemented if approved by more
than two-thirds of all directors, and
the
resolution
of
the
audit
committee shall be recorded in the
minutes of the board of directors
meeting. The terms "all audit
committee members" and "all
directors"
in
the
preceding
paragraph 4 shall be counted as the
actual number of persons currently
holding those positions.
2. Credit Investigation
(1) For the first time of debtor,
shallprovide basic information
  • 83 -
Before Revised Revised Version Description
and financial documents for the
processing of the credit.
(2) In the case of continuing debtor,
in principle, shall re-conduct the
credit investigation the time of
renewal. If it comes to an
urgency, it could be processed at
any time if necessary.
(3) If the financial condition of the
debtors is fine, and the annual
financial statements have been
entrusted to the accountant to
complete the financing visa, they
shall follow the survey report,
which has not been more than
one
year,
and
with
the
accountant of the period to audit
the Visa report, as a reference for
loan.
(4) When the company makes a
credit survey of the debtor, shall
also assess the impact of capital
loans
on
the
company’s
operational
risks,
financial
position
and
shareholders’
equity.
3. Hierarchy of decision-making
authority and delegation thereof.
The loaning funds and matters of the
company, could be applied after the
adoption of the resolution of the
Board of Directors.
Where the company has established
the position of independent director,
when it submits Loaning Funds to
Others for discussion by the Board
of Directors, the Board of Directors
shall take into full consideration
each independent director's opinion;
people who specifically expressing
assent or dissent and their reasons
for dissent shall be included in the
minutes of the board of directors'
meeting.
4. Loan Approval and Notification		 and financial documents for the
processing of the credit.
(2) In the case of continuing debtor,
in principle, shall re-conduct the
credit investigation the time of
renewal. If it comes to an
urgency, it could be processed at
any time if necessary.
(3) If the financial condition of the
debtors is fine, and the annual
financial statements have been
entrusted to the accountant to
complete the financing visa,
they shall follow the survey
report, which has not been more
than one year, and with the
accountant of the period to audit
the Visa report, as a reference
for loan.
(4) When the company makes a
credit survey of the debtor, shall
also assess the impact of capital
loans
on
the
company’s
operational
risks,
financial
position
and
shareholders’
equity.
3. Hierarchy of decision-making
authority and delegation thereof.
The loaning funds and matters of the
company, could be applied after the
adoption of the resolution of the
Board of Directors.
Where the company has established
the
position
of
independent
director, when it submits Loaning
Funds to Others for discussion by
the Board of Directors, the Board of
Directors shall take into full
consideration each independent
director's opinion; people who
specifically expressing assent or
dissent and their reasons for dissent
shall be included in the minutes of
the board of directors' meeting.
4. Loan Approval and Notification
  • 84 -
Before Revised Revised Version Description
(1) Cases that resolute not to loan
after
investigation
and
assessment of credit, the agent
shall reply to the debtor as soon
as possible on the grounds of
refusal.
(2) Cases that resolute to loan after
investigation and assessment of
credit, the person in charge shall
reply to the debtor as soon as
possible with letter, informing
the company’s loan conditions in
detail, including the amount,
duration, interest rate, collateral
and guarantor, etc., and ask the
debtor to complete the contract
signing procedures within the
time limit.
5. Contract Signing and Identity
Verification
(1) The loan case shall be drafted by
the person in charge, and shall be
reviewed by the manger to audit
and sent to the Legal Counsel for
verification before signing the
contract.
(2) When the content of the contract
is consistent with the approved
loan conditions, the person in
charge
shall
complete
the
procedure
for
identity
verification after the debtor and
guarantor sign the contract.
6. Collateral value assessment and
right-setting debtor shall provide
the same amount of guaranteed
ticket or collateral, and shall
complete pledge or mortgage-
setting procedure. The company
shall also assess the value of
collateral in order to ensure the
claim of the company.
7. Insurance
(1) In addition to land and marketable
securities, Fire Insurance and
related insurance shall also be		 (1) Cases that resolute not to loan
after
investigation
and
assessment of credit, the agent
shall reply to the debtor as soon
as possible on the grounds of
refusal.
(2) Cases that resolute to loan after
investigation and assessment of
credit, the person in charge shall
reply to the debtor as soon as
possible with letter, informing
the company’s loan conditions
in detail, including the amount,
duration, interest rate, collateral
and guarantor, etc., and ask the
debtor to complete the contract
signing procedures within the
time limit.
5. Contract Signing and Identity
Verification
(1) The loan case shall be drafted by
the person in charge, and shall
be reviewed by the manger to
audit and sent to the Legal
Counsel for verification before
signing the contract.
(2) When the content of the contract
is consistent with the approved
loan conditions, the person in
charge
shall
complete
the
procedure
for
identity
verification after the debtor and
guarantor sign the contract.
6. Collateral value assessment and
right-setting debtor shall provide
the same amount of guaranteed
ticket or collateral, and shall
complete pledge or mortgage-
setting procedure. The company
shall also assess the value of
collateral in order to ensure the
claim of the company.
7. Insurance
(1) In
addition
to
land
and
marketable
securities,
Fire
Insurance and related insurance
  • 85 -
Before Revised Revised Version Description
insured, and the amount of
insurance shall be based on the
principle of not lower than the
quality of the collateral. The
policy shall indicate that the
company is the beneficiary, and
the name, quantity, storage
location, insurance conditions,
insurance approval, etc., of the
subject matter on the policy shall
be in accordance with the
original nuclear loan conditions
of the company.
(2) The personal in charge shall be
careful to notify the debtor to
continue to insurance before the
expiration
of
the
insurance
period.
8. Granting
When the loan conditions are
approved and signed by the debtor,
also the guarantee quality(return)
registration has been completed, the
debtor can apply to the financial unit
for granting after all
of the
procedureshave beenverified.		 shall also be insured, and the
amount of insurance shall be
based on the principle of not
lower than the quality of the
collateral. The policy shall
indicate that the company is the
beneficiary, and the name,
quantity,
storage
location,
insurance conditions, insurance
approval, etc., of the subject
matter on the policy shall be in
accordance with the original
nuclear loan conditions of the
company.
(2) The personal in charge shall be
careful to notify the debtor to
continue to insurance before the
expiration of the insurance
period.
8. Granting
When the loan conditions are
approved and signed by the debtor,
also the guarantee quality(return)
registration has been completed, the
debtor can apply to the financial
unit for granting after all of the
procedureshave beenverified.
Article 11: Penalties
When the manager and the person in
charge of the company violates the
processing procedure, they shall be
punished
in
accordance
with
circumstances and be submitted
assessment
according
to
the
company’s work rules.		 Article 11: Penalties
When the manager and the person
in charge of the company violates
the processing procedure, they shall
be punished in accordance with
circumstances and be submitted
assessment
according
to
the
company’s work rules.
Where independent directors have
been appointed in accordance with
the provisions of the Act, for
matters for which notice shall be
given to the supervisors under
Article 15, paragraph 2 or Article
18, paragraph 2, written notice shall
also be given to the independent
directors. Based on Article 16 or
Article 20,the reformationplan for		 Modified with the
Financial
Supervisory
Commission’s letter
of March 7, 2019,
ChinKuanChengPh
aChi
No.
1080304826,
amended
the
Procedures for the
Management
of
Loans to Others.
  • 86 -
Before Revised Revised Version Description
the supervisors, shall also inform
independent directors.
Where an audit committee has
been established by the company,
Article 15, Article 16, Article 18
and
Article
20
relating
to
supervisors shall apply mutatis
mutandis to the audit committee.
  • 87 -

Attachment 10

Chieftek Precision Co., Ltd.

The Comparison tables of the Code of Corporate Governance to be

amended

amended
Before Revised **Revised Version ** **Description **
Article 3 (Establishing Internal Control
Systems)
The company shall follow the
Criteria Governing Establishment of
Internal Control Systems by the
company and take into consideration
the overall operational activities of
itself and its subsidiaries to design and
fully implement an internal control
system, and shall conduct continuing
reviews of the system, in order to
ensure the continued effectiveness of
its design and implementation in light
of changes in the company's internal
and external environment.
The company shall perform full self-
assessments of its internal control
system. Its board of directors and
management shall review the results of
the self-assessments by each
department at least annually and the
reports of the internal audit department
on a quarterly basis. The audit
committee or supervisors shall also
attend to and supervise these matters.
Directors and supervisors shall
periodically hold discussions with their
internal auditors about reviews of
internal control system deficiencies. A
record of the discussions shall be kept,
and the discussions shall be followed
up, improvements implemented, and a
report submitted to the board of
directors.
Where an audit committee has been
established in accordance with the
provisions of the Securities and
Exchange Act, the examination of the		 Article 3 (Establishing Internal Control
Systems)
The company shall follow the Criteria
Governing Establishment of Internal
Control Systems by the company and
take into consideration the overall
operational activities of itself and its
subsidiaries to design and fully
implement an internal control system,
and shall conduct continuing reviews of
the system, in order to ensure the
continued effectiveness of its design and
implementation in light of changes in the
company's internal and external
environment.
The company shall perform full self-
assessments of its internal control
system. Its board of directors and
management shall review the results of
the self-assessments by each department
at least annually and the reports of the
internal audit department on a quarterly
basis. The audit committee or
supervisors shall also attend to and
supervise these matters.
Directors and supervisors shall
periodically hold discussions with their
internal auditors about reviews of internal
control system deficiencies. A record of
the discussions shall be kept, and the
discussions shall be followed up,
improvements implemented, and a report
submitted to the independent director,
supervisor or The Audit Committee. They
are advised to establish channels and
mechanisms of communication between		 Modified
with the
Cooperate
Governance
Best Practice
Principles for
TWSE/TPEx
Listed
Companies,
letter ofＤ
December 21,
2018, No.
10700540421
  • 88 -
Before Revised Revised Version Description
effectiveness of the internal control
system shall be approved by more than
half of all audit committee members and
submitted to the board of directors for a
resolution.
The company shall pay special
attention to the internal audit department
and its personnel, fully empower them
and urge them to conduct audits
effectively, to evaluate problems of the
internal control system and assess the
efficiency of its operations to ensure that
the system can operate effectively on an
on-going basis, and to assist the board of
directors and the management to perform
their duties effectively so as to ensure a
sound corporate governance system.
To put the internal control system into
effect, strengthen the professional
abilities of the deputies of the internal
auditors and to further improve and
maintain the quality and implementing
result of the audit, a futures commission
merchant shall have deputies in place for
the duties of the internal auditing
personnel.
The qualification requirements for
internal auditors specified in Article 11,
paragraph 6, and provisions in Article 16,
17 and 18 of the Regulations Governing
the Establishment of Internal Control
Systems by Service Enterprises in
Securities and Futures Markets shall
apply mutatis mutandis to the deputies
under thepreceding paragraph.		 their independent directors, audit
committees or supervisors, and chief
internal auditors, and the convener of the
audit committee or supervisors shall report
their communication with the independent
directors and chief internal auditors at the
shareholders’ meeting.
The company shall pay special attention
to the internal audit department and its
personnel, fully empower them and urge
them to conduct audits effectively, to
evaluate problems of the internal control
system and assess the efficiency of its
operations to ensure that the system can
operate effectively on an on-going basis,
and to assist the board of directors and the
management to perform their duties
effectively so as to ensure a sound
corporate governance system.
Appointment, dismissal, evaluation and
review, salary and compensation of
internal auditors of the company shall be
reported to the board of directors or shall
be submitted by the chief auditor to the
board chairperson for approval.
  • 89 -
Before Revised Revised Version Description
Article 3-1: (Personnel responsible for
corporate governance affairs)
The company is advised to have an
adequate number of full time (or part-
time) corporate governance personnel
with appropriate qualifications and to
appoint a chief corporate governance
officer as the most senior officer to be in
charge of corporate governance affairs.
Said officer shall be a qualified, practice-
eligible lawyer or accountant or have
been in a managerial position for at least
three years in a security, financial, or
futures related institution or a public
company in handling legal affairs,
financial affairs, stock affairs, or
corporate governance affairs.
It is required that the corporate
governance affairs mentioned in the
preceding paragraph include at least the
following items:
1. Handle the registration of the company
as well as the change of registration.
2. Handling matters relating to board
meetings and shareholders’ meetings
according to laws, and assisting the
company in following the related laws
of the Board of Directors and
Shareholders’ meeting.
3. Producing minutes of board meetings
and shareholders’ meetings
4. Furnishing information required for
business execution and company
operation bydirectors and supervisors,		 Article 3-1: (Personnel responsible for
corporate governance affairs)
The company is advised to have an
adequate number of corporate governance
personnel with appropriate qualifications
based on the size of the company, business
situations and management needs, and to
appoint a chief corporate governance
officer as the most senior officer to be in
charge of corporate governance affairs.
Said officer shall be a qualified, practice-
eligible lawyer or accountant or have been
in a managerial position for at least three
years in a security, financial, or futures
related institution or a public company in
handling legal affairs, financial affairs,
stock affairs, or corporate governance
affairs.
It is required that the corporate
governance affairs mentioned in the
preceding paragraph include at least the
following items:
1. Handling matters relating to board
meetings and shareholders’ meetings
according to laws, and assisting the
company in following the related laws
of the Board of Directors and
Shareholders’ meeting.
2. Producing minutes of board meetings
and shareholders’ meetings
3. Assisting in onboarding and continuous
development of directors and
supervisors.		 Modified
with the
Cooperate
Governance
Best Practice
Principles for
TWSE/TPEx
Listed
Companies,
letter ofＤ
December 21,
2018, No.
10700540421
  • 90 -
Before Revised Revised Version Description
and the latest development of the laws
that related to the operating company,
in order to assist the directors and
supervisors with legal compliance.
5. Matters related to investor relations.
6. Other matters set out in the articles or
corporation or contracts.		 4. Furnishing information required for
business execution and company
operation by directors and supervisors.
5. Assisting directors and supervisors with
legal compliance.
6. Other matters set out in the articles or
corporation or contracts.
Article 6: (The Board of Directors shall
properly arrange the agenda items and
procedures for shareholders’ meetings)
The Board of Directors of the
company shall properly arrange the
agenda items and procedures for
shareholders’ meetings, and formulate
the principles and procedures for
shareholder nominations of directors and
supervisors and submissions of
shareholder proposals. The board shall
also properly handle the proposals duly
submitted by shareholders. Arrangements
shall be made to hold shareholders’
meetings at a convenient location, with
sufficient time allowed and sufficient
numbers of suitable personnel assigned to
handle attendance registrations. No
arbitrary requirements shall be imposed
on shareholders to provide additional
evidentiary documents beyond those
showing eligibility to attend.
Shareholders shall be granted reasonable
time to deliberate each proposal and an
appropriate opportunity to make
statements.
For a shareholders meeting called by
the board of directors, it is advisable that
the board chairperson chair the meeting,		 Article 6: (The Board of Directors shall
properly arrange the agenda items and
procedures for shareholders’ meetings)
The Board of Directors of the company
shall properly arrange the agenda items
and procedures for shareholders’ meetings,
and formulate the principles and
procedures for shareholder nominations of
directors and supervisors and submissions
of shareholder proposals. The board shall
also properly handle the proposals duly
submitted by shareholders. Arrangements
shall be made to hold shareholders’
meetings at a convenient location, with
sufficient time allowed and sufficient
numbers of suitable personnel assigned to
handle attendance registrations. No
arbitrary requirements shall be imposed on
shareholders to provide additional
evidentiary documents beyond those
showing eligibility to attend. Shareholders
shall be granted reasonable time to
deliberate each proposal and an
appropriate opportunity to make
statements.
For a shareholders meeting called by the
board of directors, it is advisable that the
board chairperson chair the meeting, that a
majorityof the directors (includingat least		 Modified
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that a majority of the directors (including
at least one independent director) , or at
least one supervisor, attend in person,
and that at least one member of other
functional committees attend as
representative. Attendance details should
be recorded in the shareholders meeting
minutes.		 one independent director) and convener of
the audit committee, or at least one
supervisor, attend in person, and that at
least one member of other functional
committees attend as representative.
Attendance details should be recorded in
the shareholders meeting minutes.
Article 7: (The company shall
encourage its shareholders to actively
participate in corporate governance)
The company shall encourage its
shareholders to actively participate in
corporate governance. It is advisable that
the company engage a professional
shareholder services agent to handle
shareholders meeting matters, so that
shareholders’ meetings can proceed on a
legal, effective and secure basis. The
company shall seek all ways and means,
including fully exploiting technologies
for information disclosure, to upload
notification of meeting of shareholders,
meeting handbook, and supplementary
information of shareholders’ meetings in
both Chinese and English concurrently,
and shall adopt electronic voting, in order
to enhance shareholders' attendance rates
at shareholders’ meetings and ensure
their exercise of rights at such meetings
in accordance with laws.
The companies are advised to arrange
for their shareholders to electronically
vote on each separate proposal in the
shareholders meeting agenda, and to
avoid raisingextraordinarymotions and		 Article 7: (The company shall encourage
its shareholders to actively participate in
corporate governance)
The company shall encourage its
shareholders to actively participate in
corporate governance. It is advisable that
the company engage a professional
shareholder services agent to handle
shareholders meeting matters, so that
shareholders’ meetings can proceed on a
legal, effective and secure basis. The
company shall seek all ways and means,
including fully exploiting technologies for
information disclosure, to upload annual
reports, annual financial statements,
notices, agendas and supplementary
information of shareholders’ meetings in
both Chinese and English concurrently,
and shall adopt electronic voting, in order
to enhance shareholders' attendance rates
at shareholders’ meetings and ensure their
exercise of rights at such meetings in
accordance with laws.
The company is advised to avoid raising
extraordinary motions and amendments to
original proposals at a shareholders’
meeting, and is advised to adopt a		 Modified
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amendments to original proposals at a
shareholders’ meeting, and is advised to
adopt a candidate nomination system for
the election of directors and supervisors.
, and following conclusion of the
meeting, to enter the voting results the
same day, namely the numbers of votes
cast for and against and the number of
abstentions, on the Market Observation
Post System.
The company shall not have
differential treatment or discrimination if
it issues a souvenir to the shareholders in
the shareholders’meeting.		 candidate nomination system for the
election of directors and supervisors.
. The companies are advised to arrange for
their shareholders to vote on each separate
proposal in the shareholders meeting
agenda, and following conclusion of the
meeting, to enter the voting results the
same day, namely the numbers of votes
cast for and against and the number of
abstentions, on the Market Observation
Post System.
Article 11: (The Shareholders shall be
entitled to profit distributions by the
company)
The shareholders shall be entitled to
profit distributions by the company. In
order to ensure the investment interests of
shareholders, the shareholders’ meeting
may, pursuant to Article 184 of the
Company Act, examine the statements
and books prepared and submitted by the
board of directors and the reports
submitted by the audit committee or
supervisors, and may decide profit
distributions and deficit off-setting plans
by resolution. In order to proceed with the
above examination, the shareholders
meeting may appoint an inspector.
The shareholders may, pursuant to
Article 245 of the Company Act, apply
with the court to select an inspector in
examiningthe accountingrecords and		 Article 11: (The Shareholders shall be
entitled to profit distributions by the
company)
The shareholders shall be entitled to
profit distributions by the company. In
order to ensure the investment interests of
shareholders, the shareholders’ meeting
may, pursuant to Article 184 of the
Company Act, examine the statements and
books prepared and submitted by the board
of directors and the reports submitted by
the audit committee or supervisors, and
may decide profit distributions and deficit
off-setting plans by resolution. In order to
proceed with the above examination, the
shareholders meeting may appoint an
inspector.
The shareholders may, pursuant to
Article 245 of the Company Act, apply
with the court to select an inspector in
examiningthe accountingrecords, assets,		 Modified
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records of specific transaction of the
company.
The Board of Directors, audit
committee or supervisors, and managers
of the company shall fully cooperate in
the examination conducted by the
inspectors in the aforesaid two paragraphs
without any obstruction, rejection or
circumvention.		 particulars, documents and records of
specific transaction of the company.
The Board of Directors, audit committee
or supervisors, and managers of the
company shall fully cooperate in the
examination conducted by the inspectors in
the aforesaid two paragraphs without any
circumvention, obstruction or rejection.
Article 22: (To specify in the articles of
incorporation that the it adopts the
candidate nomination system for
elections of directors)
The company is advised to specify in its
articles of incorporation that it adopts the
candidate nomination system for
elections of directors pursuant to the
Company Act. It is advisable that the
company review in advance the
qualifications, education, working
experience, background, and the
existence of any other matters set forth in
Article 30 of the Company Act with
respect to the director candidates
recommended by shareholders or
directors, and the company may not
arbitrarily add requirements for
documentation of other qualifications. It
is advised to provide the results of the
review to shareholders for their
reference, so that qualified directors will
be elected.
The Board of Directors shall assess
carefully the qualifications and other
matters listed in the preceding paragraph
and the willingness of a candidate to act		 Article 22: (To specify in the articles of
incorporation that the it adopts the
candidate nomination system for elections
of directors)
The company is advised to specify in its
articles of incorporation that it adopts the
candidate nomination system for elections
of directors, carefully review the
qualifications of a nominated candidate
and the existence of any other matters set
forth in Article 30 of the Company Act,
and act in accordance with Article 192-1 of
the Company Act.		 Modified
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as director after it is so elected, before
proposing a roster of director candidates
as required.
Article 23: (Clear Distinctions shall be
drawn between the responsibilities and
duties of the chairperson of the board of
the company and those of its general
manager)
Clear distinctions shall be drawn
between the responsibilities and duties of
the chairperson of the board of the
company and those of its general
manager.
It is inappropriate for the chairperson to
also act as the general manager. If the
chairperson also acts as the general
manager or the chairperson and general
manager are spouses or relatives within
one degree of consanguinity, it is
advisable that the number of independent
directors be increased.
The company with a functional
committee shall clearly define the
responsibilities and duties of the
committee.		 Article 23: (Clear Distinctions shall be
drawn between the responsibilities and
duties of the chairperson of the board of
the company and those of its general
manager)
Clear distinctions shall be drawn
between the responsibilities and duties of
the chairperson of the board of the
company and those of its general
manager.
It is inappropriate for the chairperson to
also act as the general manager or other
equivalent position (highest managerial
position). If the chairperson also acts as the
general manager or other equivalent
position (highest managerial position) or
the chairperson and general manager or
other equivalent position (highest
managerial position) are spouses or
relatives within one degree of
consanguinity, it is advisable that the
number of independent directors be
increased and there be a majority of the
members of the board of directors who are
not employees or managers.
The company with a functional
committee shall clearly define the
responsibilities and duties of the
committee.		 Modified
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Article 24: (The company shall appoint
independent directors in accordance with
its articles of incorporation)		 Article 24: (The company shall appoint
independent directors in accordance with
its articles of incorporation)		 Modified
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The company shall appoint
independent directors in accordance with
its articles of incorporation. They shall be
not less than two in number and not less
than one-fifth of the total number of
directors.
Independent directors shall possess
professional knowledge and there shall
be restrictions on their shareholdings.
Applicable laws and regulations shall be
observed and, in addition, it is not
advisable for an independent director to
hold office concurrently as a director
(including independent director) or
supervisor of more than five other
companies. Independent directors shall
also maintain independence within the
scope of their directorial duties, and may
not have any direct or indirect interest in
the company.
The company shall, in accordance with
Article 192-1 of the Company Act, adopt
a candidate nomination system for
election of the independent directors and
expressly stipulate such system in the
articles of incorporation; and the
shareholders shall elect the directors from
among the nominees listed in the roster
of director candidates. Independent and
non-independent directors shall be
elected at the same time but on separate
ballots pursuant to Article 198 of the
Company Act.
If the company and its group
enterprises and organizations, and		 The company shall appoint independent
directors in accordance with its articles of
incorporation. They shall be not less than
two in number and not less than one-fifth
of the total number of directors.
Independent directors shall possess
professional knowledge and there shall be
restrictions on their shareholdings.
Applicable laws and regulations shall be
observed and, in addition, it is not
advisable for an independent director to
hold office concurrently as a director
(including independent director) or
supervisor of more than five other
companies. Independent directors shall also
maintain independence within the scope of
their directorial duties, and may not have
any direct or indirect interest in the
company.
If the company and its group enterprises
and organizations, and another company
and its group enterprises and organizations
nominate for each other any director,
supervisor or managerial officer as a
candidate for an independent director of
the other, the company shall, at the time it
receives the nominations for independent
directors, disclose the fact and explain the
suitability of the candidate for independent
director. If the candidate is elected as an
independent director, the company shall
disclose the number of votes cast in favor
of the elected independent director.
The "group enterprises and organizations"
in thepreceding paragraph comprise the		 Principles for
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another company and its group
enterprises and organizations nominate
for each other any director, supervisor or
managerial officer as a candidate for an
independent director of the other, the
company shall, at the time it receives the
nominations for independent directors,
disclose the fact and explain the
suitability of the candidate for
independent director. If the candidate is
elected as an independent director, the
company shall disclose the number of
votes cast in favor of the elected
independent director.
The "group enterprises and
organizations" in the preceding paragraph
comprise the subsidiaries of the
company, any foundation to which the
company's cumulative direct or indirect
contribution of funds exceeds 50 percent
of its endowment, and other institutions
or juristic persons that are effectively
controlled by the company.
Change of status between
independent directors and non-
independent directors during their term of
office is prohibited.
If an independent director is discharged
for any reason, resulting in a number of
directors lower than that required under
paragraph 1 or the articles of
incorporation, a by-election for
independent director shall be held at the
next shareholders meeting. In the event
that all the independent directors have		 subsidiaries of the company, any
foundation to which the company's
cumulative direct or indirect contribution
of funds exceeds 50 percent of its
endowment, and other institutions or
juristic persons that are effectively
controlled by the company.
Change of status between independent
directors and non-independent directors
during their term of office is prohibited.
The professional qualifications,
restrictions on both shareholding and
concurrent positions held, determination of
independence, method of nomination and
other requirements with regard to the
independent directors shall be set forth in
accordance with the Securities and
Exchange Act, the Regulations Governing
Appointment of Independent Directors and
Compliance Matter for Public Companies,
and the rules and regulations of the Taiwan
Stock Exchange or GreTai Securities
Market.
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been discharged, the company shall
convene a special shareholders meeting
to hold a by-election within 60 days from
the date on which the vacancies arose.
The professional qualifications,
restrictions on both shareholding and
concurrent positions held, determination
of independence, method of nomination
and other requirements with regard to the
independent directors shall be set forth in
accordance with the Securities and
Exchange Act, the Regulations
Governing Appointment of Independent
Directors and Compliance Matter for
Public Companies, and the rules and
regulations of the Taiwan Stock
Exchange or GreTai Securities Market.
Article 26: (The company shall stipulate
the scope of duties of the independent
directors)
The company shall stipulate the scope
of duties of the independent directors and
empower them with manpower and
physical support related to the exercise of
their power. The company or other board
members shall not restrict or obstruct the
performance of duties by the independent
directors.
The company shall stipulate the
remuneration of the directors according
to applicable laws and regulations. The
remuneration of the directors shall fully
reflect the personal performance and the
long-term management performance of
the company, and shall also take the		 Article 26: (The company shall stipulate
the scope of duties of the independent
directors)
The company shall stipulate the scope of
duties of the independent directors and
empower them with manpower and
physical support related to the exercise of
their power. The company or other board
members shall not obstruct, reject or
circumvent the performance of duties by
the independent directors.
The company shall stipulate the
remuneration of the directors according to
applicable laws and regulations. The
remuneration of the directors shall fully
reflect the personal performance and the
long-term management performance of the
company, and shall also take the overall		 Modified
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overall operational risks of the company
into consideration. Different but
reasonable remuneration from that of
other directors may be set forth for the
independent directors.
When the company, under its articles
of incorporation, or by resolution of its
shareholders meeting, or by order of the
competent authority, sets aside a certain
proportion of earnings as special reserve,
such allocation shall be made after the
allocation of legal reserve and before the
distribution of director, supervisor, and
employee compensations, and the
company shall provide in the articles of
incorporation the method to be adopted
for distributing earnings when reversal of
the special reserve is added into the
undistributed earnings.		 operational risks of the company into
consideration. Different but reasonable
remuneration from that of other directors
may be set forth for the independent
directors.
Article 28: (The company shall establish
either an audit committee or a supervisor)
The company shall establish either an
audit committee or a supervisor
The audit committee shall be composed
of the entire number of independent
directors. It shall not be fewer than three
persons in number, one of whom shall be
convener, and at least one of whom shall
have accounting or financial expertise.
For a company that has established an
audit committee, the provisions regarding
supervisors in the Securities and
Exchange Act, the Company Act, other
laws and regulations, and these Principles
shall apply mutatis mutandis to the audit
committee.
For the company that has established an
audit committee, Article 25 herein does		 Article 28: (The company shall establish
either an audit committee or a supervisor)
The company shall establish either an
audit committee or a supervisor		 Modified
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not apply to the following matters, which
shall be subject to the consent of at least
one half of all audit committee members
and be submitted to the board of
directors for a resolution:
1. Adoption or amendment of internal
control system pursuant to Article 14-
1 of the Securities and Exchange Act.
2. Assessment of the effectiveness of the
internal control system.
3. Adoption or amendment, pursuant to
Article 36-1 of the Securities and
Exchange Act, of handling procedures
for financial or operational actions of
material significance, such as
acquisition or disposal of assets,
derivatives trading, extension of
monetary loans to others, or
endorsements or guarantees for
others.
4. A matter bearing on the personal
interest of a director.
5. A material asset or derivatives
transaction.
6. A material monetary loan,
endorsement, or provision of
guarantee.
7. The offering, issuance, or private
placement of any equity-type
securities.
8. The hiring, discharge, or
compensation of an attesting CPA.
9. The appointment or discharge of a
financial, accounting, or internal
auditingofficer.		 The exercise of power by audit
committee and independent directors and
related matters shall be set forth in
accordance with the Securities and
Exchange Act, the Regulations Governing
the Exercise of Powers by Audit
Committees of Public Companies, and the
rules and regulations of the TWSE or
TPEx.
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10. Annual and semi-annual financial
reports.
11. Any other material matter so
required by the company or the
competent authority.
The exercise of power by audit
committee and independent directors and
related matters shall be set forth in
accordance with the Securities and
Exchange Act, the Regulations
Governing the Exercise of Powers by
Audit Committees of Public Companies,
and the rules and regulations of the
TWSE or TPEx.
Article 28-1: (The company shall
establish a remuneration committee)
The company shall establish a
remuneration committee. The
professional qualifications for the
committee members, the exercise of their
powers of office, the adoption of the
organizational charter, and related
matters shall be handled pursuant to the
Regulations Governing the Appointment
and Exercise of Powers by the
Remuneration Committee of a Company
Whose Stock is Listed on the Stock
Exchange or Traded Over the Counter.
The remuneration committee shall
exercise the care of a good administrator
in faithfully performing the official
powers listed below, and shall submit its
recommendations for deliberation by the
board of directors. However,
recommendations regarding
remuneration for supervisors may be		 Article 28-1: (The company shall establish
a remuneration committee)
The company shall establish a
remuneration committee. More than half of
its majority of members shall be taken on
the independent director. The professional
qualifications for the committee members,
the exercise of their powers of office, the
adoption of the organizational charter, and
related matters shall be handled pursuant to
the Regulations Governing the
Appointment and Exercise of Powers by
the Remuneration Committee of a
Company Whose Stock is Listed on the
Stock Exchange or Traded Over the
Counter.		 Modified
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submitted for deliberation by the board of
directors only when the board of
directors is expressly authorized to
handle supervisor remuneration by the
company's articles of incorporation or by
a resolution of the shareholders meeting:
1. Prescribing and periodically reviewing
the policies, systems, standards, and
structures for performance evaluation
and remuneration for directors,
supervisors and managerial officers.
2. Periodically evaluating and
prescribing the remuneration of
directors, supervisors, and managerial
officers.
When performing the official powers of
the preceding paragraph, the
remuneration committee shall follow the
principles listed below:
1. With respect to the performance
assessments and remuneration of
directors, supervisors and managerial
personnel of the company, it shall
refer to the typical pay levels adopted
by peer companies, and take into
consideration the reasonableness of
the correlation between remuneration
and individual performance, the
company's business performance, and
future risk exposure.
2. It shall not produce an incentive for the
directors or managerial officers to
engage in activity to pursue
remuneration exceeding the risks that
the company may tolerate.

1.

2.
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3. It shall take into consideration the
characteristics of the industry and the
nature of the company's business when
determining the ratio of compensation
for the short-term performance of its
directors and senior management and
the time at which the variable part of
remuneration is paid.
Article 33: (An independent director and
the Board of Directors)
When a board meeting is convened to
consider any matter submitted to it
pursuant to Article 14-3 of the Securities
and Exchange Act, an independent
director of the company shall attend the
board meeting in person, and may not be
represented by a non-independent
director via proxy. When an independent
director has a dissenting or qualified
opinion, it shall be noted in the minutes
of the board of directors meeting; if the
independent director cannot attend the
board meeting in person to voice his or
her dissenting or qualified opinion, he or
she should provide a written opinion
before the board meeting unless there are
justifiable reasons for failure to do so,
and the opinion shall be noted in the
minutes of the board of directors
meeting.
In any of the following circumstances,
decisions made by the board of directors
shall be noted in the meeting minutes,
and in addition, publicly announced and
filed on the MOPS before the beginning		 Article 33: (An independent director and
the Board of Directors)
When a board meeting is convened to
consider any matter submitted to it
pursuant to Article 14-3 of the Securities
and Exchange Act, an independent director
of the company shall attend the board
meeting in person, and may not be
represented by a non-independent director
via proxy. When an independent director
has a dissenting or qualified opinion, it
shall be noted in the minutes of the board
of directors meeting; if the independent
director cannot attend the board meeting in
person to voice his or her dissenting or
qualified opinion, he or she should provide
a written opinion before the board meeting
unless there are justifiable reasons for
failure to do so, and the opinion shall be
noted in the minutes of the board of
directors meeting.
In any of the following circumstances,
decisions made by the board of directors
shall be noted in the meeting minutes, and
in addition, publicly announced and filed
on the MOPS two hours before the
beginning of trading hours on the first
business day after the date of the board
meeting:
1. An independent director has a dissenting
or qualified opinion which is on record
or stated in a written statement.		 Modified
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of trading hours on the first business day
after the date of the board meeting:
1. An independent director has a
dissenting or qualified opinion which
is on record or stated in a written
statement.
2. The matter was not approved by the
audit committee (if the company has
set up an audit committee), but had the
consent of more than two-thirds of all
directors.
During a board meeting, managers
from relevant departments who are not
directors may, in view of the meeting
agenda, sit in at the meetings, make
reports on the current business conditions
of the company and respond to inquiries
raised by the directors. Where necessary,
a CPA, legal counsel, or other
professional may be invited to sit in at
the meetings to assist the directors in
understanding the conditions of the
company for the purpose of adopting an
appropriate resolution, provided that they
shall leave the meeting when deliberation
or votingtakesplace.		 2. The matter was not approved by the
audit committee (if the company has set
up an audit committee), but had the
consent of more than two-thirds of all
directors.
During a board meeting, managers from
relevant departments who are not directors
may, in view of the meeting agenda, sit in
at the meetings, make reports on the
current business conditions of the company
and respond to inquiries raised by the
directors. Where necessary, a CPA, legal
counsel, or other professional may be
invited to sit in at the meetings to assist the
directors in understanding the conditions
of the company for the purpose of adopting
an appropriate resolution, provided that
they shall leave the meeting when
deliberation or voting takes place.
Article 35: (The company shall submit the
following matters to its board of directors
for discussion)
The company shall submit the
following matters to its board of directors
for discussion:
1. Corporate business plans.
2. Annual and semi-annual financial
reports, with the exception of semi-
annual financial reports which, under		 Article 35: (The company shall submit the
following matters to its board of directors
for discussion)
The company shall submit the following
matters to its board of directors for
discussion:
1. Corporate business plans.
2. Annual and semi-annual financial
reports, with the exception of semi-
annual financial reports which, under		 Modified
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relevant laws and regulations, need not
be CPA audited and attested.
3. Adoption or amendment to an internal
control system pursuant to Article 14-1
of the Securities and Exchange Act.
4. Adoption or amendment, pursuant to
Article 36-1 of the Securities and
Exchange Act, to the handling
procedures for financial or operational
actions of material significance, such
as acquisition or disposal of assets,
derivatives trading, extension of
monetary loans to others, and
endorsements or guarantees for others.
5. The offering, issuance, or private
placement of any equity-type
securities.
6. The performance assessment and the
standard of remuneration of the
managerial officers.
7. The structure and system of director's
remuneration.
8. The appointment or discharge of a
financial, accounting, or internal audit
officer.
9. A donation to a related party or a
major donation to a non-related party,
provided that a public-interest donation
of disaster relief for a major natural
disaster may be submitted to the next
board meeting for retroactive
recognition.		 relevant laws and regulations, need not
be CPA audited and attested.
3. Adoption, amendment to an internal
control system pursuant to Article 14-1
of the Securities and Exchange Act, and
audit the efficiency of its internal control
system.
4. Adoption or amendment, pursuant to
Article 36-1 of the Securities and
Exchange Act, to the handling
procedures for financial or operational
actions of material significance, such as
acquisition or disposal of assets,
derivatives trading, extension of
monetary loans to others, and
endorsements or guarantees for others.
5. The offering, issuance, or private
placement of any equity-type securities.
6. The performance assessment and the
standard of remuneration of the
managerial officers.
7. The structure and system of director's
remuneration.
8. The appointment or discharge of a
financial, accounting, or internal audit
officer.
9. A donation to a related party or a major
donation to a non-related party, provided
that a public-interest donation of disaster
relief for a major natural disaster may be
submitted to the next board meeting for
retroactive recognition.		 2018, No.
10700540421
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Before Revised Revised Version Description
10. Any matter required by Article 14-3
of the Securities and Exchange Act or
any other law, regulation, or bylaw to
be approved by resolution at a
shareholders meeting or to be
submitted to a meeting of the board of
directors, or any such significant
matter as may be prescribed by the
competent authority.
Except for matters that must be
submitted to the board of directors for
discussion under the preceding
paragraph, when the board of directors is
in recess, it may delegate the exercise of
its power to others in accordance with
law, regulations, or its articles of
incorporation. However, the level of
delegation or the content or matters to be
delegated shall be clearly specified, and
general authorization is not permitted.		 10. Any matter required by Article 14-3 of
the Securities and Exchange Act or any
other law, regulation, or bylaw to be
approved by resolution at a shareholders
meeting or to be submitted resolution
matters to a meeting of the board of
directors, or any such significant matter
as may be prescribed by the competent
authority.
Except for matters that must be
submitted to the board of directors for
discussion under the preceding paragraph,
when the board of directors is in recess, it
may delegate the exercise of its power to
others in accordance with law, regulations,
or its articles of incorporation. However,
the level of delegation or the content or
matters to be delegated shall be clearly
specified, and general authorization is not
permitted.
Article 37: (Members of the board of
directors shall faithfully conduct
corporate affairs and perform the duty of
care of a good administrator)
Members of the board of directors shall
faithfully conduct corporate affairs and
perform the duty of care of a good
administrator. In conducting the affairs
of the company, they shall exercise their
powers with a high level of self-
discipline and prudence. Unless matters
are otherwise reserved by law for
approval in shareholders meetings or in
the articles of incorporation, they shall
ensure that all matters are handled		 Article 37: (Members of the board of
directors shall faithfully conduct corporate
affairs and perform the duty of care of a
good administrator)
Members of the board of directors shall
faithfully conduct corporate affairs and
perform the duty of care of a good
administrator. In conducting the affairs of
the company, they shall exercise their
powers with a high level of self-discipline
and prudence. Unless matters are otherwise
reserved by law for approval in
shareholders meetings or in the articles of
incorporation, they shall ensure that all
matters are handled accordingto the		 Modified
with the
Cooperate
Governance
Best Practice
Principles for
TWSE/TPEx
Listed
Companies,
letter ofＤ
December 21,
2018, No.
10700540421
  • 106 -
Before Revised Revised Version Description
according to the resolutions of board of
directors.
Any resolution of the board of
directors that involves the company's
business development or a major policy
direction shall be carefully considered
and may not affect the implementation or
effectiveness of corporate governance.
It is advisable that the company
formulate rules and procedures for board
of directors performance assessments,
and that each year it conduct regularly
scheduled performance assessments of
the board of directors, functional
committees, and individual directors
through self-assessment, peer-to-peer
assessments, engaging outside
professional institutions, or in any other
appropriate manner. It is advisable that
the performance assessment of the board
of directors (functional committees)
include the following aspects, and that
appropriate assessment indicators be
developed in consideration of the
company's needs:
1.The degree of participation in the
company's operations.
2. Improvement in the quality of decision
making by the board of directors.
3. The composition and structure of the
board of directors.
4. The election of the directors and their
continuing professional education.
5. Internal controls.		 resolutions of board of directors.
Any resolution of the board of
directors that involves the company's
business development or a major policy
direction shall be carefully considered and
may not affect the implementation or
effectiveness of corporate governance.
It is advisable that the company
formulate rules and procedures for board
of directors performance assessments, and
that each year it conduct regularly
scheduled performance assessments of the
board of directors, functional committees,
and individual directors through self-
assessment, peer-to-peer assessments,
engaging outside professional institutions,
or in any other appropriate manner. It is
advisable that the performance assessment
of the board of directors (functional
committees) include the following aspects,
and that appropriate assessment indicators
be developed in consideration of the
company’s needs:
1. The degree of participation in the
company's operations.
2. Improvement in the quality of decision
making by the board of directors.
3. The composition and structure of the
board of directors.
4. The election of the directors and their
continuing professional education.
5. Internal controls.
It is advisable that performance
assessments of board members (self-
assessments orpeer-to-peer assessments)
  • 107 -
Before Revised Revised Version Description
It is advisable that performance
assessments of board members (self-
assessments or peer-to-peer assessments)
include the following aspects, with
appropriate adjustments made on the
basis of the company's needs:
1. Their grasp of the company's goals and
missions.
2. Their recognition of director's duties.
3. Their degree of participation in the
company's operations.
4. Their management of internal
relationships and communication.
5. Their professionalism and continuing
professional education.
6. Internal controls.
The company's board of directors
shall consider adjusting its composition
based on the results of performance
assessments.		 include the following aspects, with
appropriate adjustments made on the basis
of the company's needs:
1. Their grasp of the company's goals and
missions.
2. Their recognition of director's duties.
3. Their degree of participation in the
company’s operations.
4. Their management of internal
relationships and communication.
5. Their professionalism and continuing
professional education.
6. Internal controls.
The functional committee shall consider
adjusting its composition based on the
results of performance assessments as
following:
1. Their degree of participation in the
company's operations.
2. Their recognition of the functional
committees’duties.
3. Improves the quality of the functional
committee.
4. Composition and selection of the
functional committee.
5. Internal control.
The company shall consider adjusting
its composition based on individual
director’s remuneration and the
nomination of renewal.
Article 39: (The responsibility insurance
of the director)
The company is advised to take out
directors’ liability insurance with respect
to liabilities resulting from exercising
their duties during their terms of
occupancyso as to reduce and spread the		 Article 39: (The responsibility insurance of
the director)
The company shall take out directors’
liability insurance with respect to liabilities
resulting from exercising their insured
duties during their terms of occupancy so
as to reduce and spread the risk of material		 Modified
with the
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Governance
Best Practice
Principles for
TWSE/TPEx
Listed
  • 108 -
Before Revised Revised Version Description
risk of material harm to the company and
shareholders arising from the
wrongdoings or negligence of a director.
The company is advised to report the
insured amount, coverage, premium rate,
and other major contents of the liability
insurance it has taken out or renewed for
directors, at the next board meeting.		 harm to the company and shareholders
arising from the wrongdoings or negligence
of a director.
The company is advised to report the
insured amount, coverage, premium rate,
and other major contents of the liability
insurance it has taken out or renewed for
directors, at the next board meeting.		 Companies,
letter ofＤ
December 21,
2018, No.
10700540421
Article 42: (To specify in its articles of
incorporation that it adopts the candidate
nomination system for elections of
supervisor)
The company is advised to specify in
its articles of incorporation that it adopts
the candidate nomination system for
elections of supervisors pursuant to the
Company Act, and to review in advance
the qualifications, education, working
experience, background and the existence
of any other matters set forth in Article
30 of the Company Act with respect to
the supervisor candidates recommended
by the shareholders or directors, and the
company may not arbitrarily add
requirements for documentation of other
qualifications. It is advised to provide the
results of the review to the shareholders
for their reference, so that qualified
supervisors will be elected.
The board of directors shall assess
carefully the qualifications and other
matters listed in the preceding paragraph
and the willingness of a candidate to act
as supervisor after it is so elected, before
proposing a roster of supervisor
candidates as required.		 Article 42: (To specify in its articles of
incorporation that it adopts the candidate
nomination system for elections of
supervisor)
The company is advised to specify in its
articles of incorporation that it adopts the
candidate nomination system for elections
of supervisors pursuant to the Company
Act, assess carefully the qualification of the
nominee and the existence of any other
matters set forth in Article 30 of the
Company Act with respect to the
supervisor candidates recommended by the
shareholders or directors based on Article
192-1 of the Company Act.		 Modified
with the
Cooperate
Governance
Best Practice
Principles for
TWSE/TPEx
Listed
Companies,
letter ofＤ
December 21,
2018, No.
10700540421
  • 109 -
Before Revised Revised Version Description
Article 46: (A supervisor shall investigate
the operational and financial conditions of
the company from time to time)
A supervisor shall investigate the
operational and financial conditions of
the company from time to time, and the
relevant departments in the company
shall provide the books or documents that
will be needed for the supervisor's
review.
When reviewing the finance or
operations of the company, a supervisor
may retain attorneys or CPAs on behalf
of the company to perform the review;
however, the company shall inform the
relevant persons of their confidentiality
obligations.
The board of directors or managers
shall submit reports in accordance with
the request of the supervisors and shall
not for any reason obstruct, circumvent,
or refuse the inspection of the supervisor.
When a supervisor performs his/her
duties, the company shall provide
necessary assistance as needed by the
supervisor, and the reasonable expenses
that the supervisor needs shall be borne
by the company.		 Article 46: (A supervisor shall investigate
the operational and financial conditions of
the company from time to time)
A supervisor shall investigate the
operational and financial conditions of the
company from time to time, and the
relevant departments in the company shall
provide the books or documents that will be
needed for the supervisor's review,
transcribe or copy.
When reviewing the finance or
operations of the company, a supervisor
may retain attorneys or CPAs on behalf of
the company to perform the review;
however, the company shall inform the
relevant persons of their confidentiality
obligations.
The board of directors or managers
shall submit reports in accordance with the
request of the supervisors and shall not for
any reason obstruct or circumvent the
inspection of the supervisor.
When a supervisor performs his/her
duties, the company shall provide
necessary assistance as needed by the
supervisor, and the reasonable expenses
that the supervisor needs shall be borne by
the company.		 Modified
with the
Cooperate
Governance
Best Practice
Principles for
TWSE/TPEx
Listed
Companies,
letter ofＤ
December 21,
2018, No.
10700540421
Article 49: (Supervisors’ liability
insurance)
The company may take out
supervisors’ liability insurance with
respect to liabilities resulting from the
exercise of duties during their terms, so
as to reduce and spread the risk of
material harm to the company and		 Article 49: (Supervisors’ liability
insurance)
The company shall take out supervisors
liability insurance with respect to liabilities
resulting from the exercise of duties during
their terms, so as to reduce and spread the
risk of material harm to the company and
shareholders arising from the wrongdoing
or negligence of a supervisor.
The companyis advised to report the		 Modified
with the
Cooperate
Governance
Best Practice
Principles for
TWSE/TPEx
Listed
Companies,
letter ofＤ
  • 110 -
Before Revised Revised Version Description
shareholders arising from the
wrongdoing or negligence of a
supervisor.
The listed company is advised to
report the insured amount, coverage,
premium rate, and other major contents
of the liability insurance it has taken out
or renewed for supervisors, at the next
board meeting.		 insured amount, coverage, premium rate,
and other major contents of the liability
insurance it has taken out or renewed for
supervisors, at the next board meeting.		 December 21,
2018, No.
10700540421
Article 55: (Disclosure of information and
the internet reporting system)
Disclosure of information is a major
responsibility of the company. The
company shall perform its obligations
faithfully in accordance with the relevant
laws and the related TWSE and TPEx
rules.
The company shall establish an
Internet-based reporting system for
public information, appoint personnel
responsible for gathering and disclosing
the information, and establish a
spokesperson system so as to ensure the
proper and timely disclosure of
information about policies that might
affect the decisions of shareholders and
stakeholders.		 Article 55: (Disclosure of information and
the internet reporting system)
Disclosure of information is a major
responsibility of the company. The
company shall perform its obligations
faithfully in accordance with the relevant
laws and the related TWSE and TPEx
rules.
The company is advised to publish and
report its annual financial report within
two months after the end of a fiscal year,
and publish and report its financial reports
for the first, second and third quarters as
well as its operating status for each month
before the specified deadline.
The company shall establish an Internet-
based reporting system for public
information, appoint personnel responsible
for gathering and disclosing the
information, and establish a spokesperson
system so as to ensure the proper and
timely disclosure of information about
policies that might affect the decisions of
shareholders and stakeholders.		 Modified
with the
Cooperate
Governance
Best Practice
Principles for
TWSE/TPEx
Listed
Companies,
letter ofＤ
December 21,
2018, No.
10700540421
  • 111 -

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