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cpc AGM Information 2020

Aug 10, 2020

51873_rns_2020-08-10_24f5b775-5b4a-4666-9efc-795f6a84d853.pdf

AGM Information

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Stock Code: 1597

Chieftek Precision Co., LTD.

2020 Annual Shareholders’ Meeting Handbook

Time：9:00 a.m., June 8, 2020 (Monday)

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.)

~60~

TABLE OF CONTENTS

TABLE OF CONTENTS
1. Meeting Procedure 1
2. Meeting Agenda 2
(1)Report Items 3
(2)Proposed Resolutions 5
(3)Discussion and Election Items 6
(4)ExtemporaryMotion 7
3. Attachment
(1)Business Report 10
(2)Supervisors’ Review Report 14
(3) Employees’ Profit Sharing Bonus and Directors and 16
Supervisors’ Compensation
(4)The Second Purchase of Share Transfer Employees 17
(5) The Comparison Table of the Amendment to “Ethical 17
Corporate Management Best Practice Principles”
(6)Accountants’ Audit Report and Financial Statement 36
(7) Profit Distribution Proposal 60
(8) The Comparison Table of the Amendment to “Rules of 61
Procedure for Shareholders Meetings”
(9) The Comparison Table of the Amendment to 67
“Procedures for Election of Directors and Supervisors”
(10) The Comparison Table of the Amendment to 75
“Corporate Governance Best Practice Principles”
(11) The Comparison Table of the Amendment to 85
“Regulations Governing the Acquisition and Disposal
of Assets”
(12) List of Candidates of Directors and Independent 86
Directors
4. Appendix
(1) Rules of Procedure for Shareholders Meetings (Before 89
Amendment)
(2) Procedures for Election of Directors and Supervisors 99
(Before Amendment)
(3)Articles of Incorporation 105
(4)Directors and Supervisors’ Shareholdings 110
(5) The Impact of Bonus Shares on the Company’s Business 112
Performances, Earnings per Share and Shareholders’
Return on Investment
(6) Other Explanation Matters 112

Chieftek Precision Co., Ltd. 2020 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 and Election Items

7. Extemporary Motion

8. Meeting Adjourned

~1~

Chieftek Precision Co., Ltd.

2020 Annual Shareholders’ Meeting Agenda

  1. Time︰9:00 a.m., June 8, 2020 (Monday)

  2. Place: 2F.-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) Report on the Business of 2019.

  7. (2) Supervisors’ Review Report on the 2019 Financial Statements.

  8. (3) Report on 2019 Employees’ Profit Sharing Bonus and Directors and

  9. Supervisors’ Compensation.

  10. (4) Measure the report on “the Second Purchase of Share Transfer Employees”

  11. (5) Report on the Resolution and Implementation on Company’s Shares Buyback.

  12. (6) Report the Implementation of Endorsement and Guarantee in 2019.

  13. (7) Amend the Report on “Ethical Corporate Management Best Practice Principles”

  14. (8) Report on 2019 Cash Distribution of Profit.

  15. Proposed Resolutions:

  16. (1) To accept 2019 Business Report and Financial Statements.

  17. (2) To approve the Proposal for Distribution of 2019 Profit.

  18. Discussion and Election Items:

  19. (1) Amendment to “Rules of Procedure for Shareholders Meetings”.

  20. (2) Amendment to “Procedures for Election of Directors and Supervisors”.

  21. (3) Amendment to “Corporate Governance Best Practice Principles”

  22. (4) Amendment to “Regulations Governing the Acquisition and Disposal of ssets”.

  23. (5) Election on 8[th] session of Board of Directors.

  24. (6) Release the Prohibition on Newly Elected Directors Working in Competing Businesses.

  25. Extemporary Motion

  26. Meeting Adjournment

~2~

Report Items

1. Report on the Business of 2019.

Explanatory Notes: The 2019 Business Report, please refer to the Attachment 1 in the Handbook of the 2020 Annual Shareholders’ Meeting.

2. Supervisors’ Review Report on the 2019 Financial Statements.

Explanatory Notes: The 2019 Supervisors’ Review Report, please refer to the Attachment 2 in the Handbook of the 2020 Annual Shareholders’ Meeting.

3. Report on 2019 Employees’ Profit Sharing Bonus and Directors and Supervisors’ Compensation.

Explanatory Notes: The 2019 Employees’ Profit Sharing Bonus and

Directors and Supervisors’ Compensation Report, please refer to the Attachment 3 in the Handbook of the 2020 Annual Shareholders’ Meeting.

4. Measure the report on “the Second Purchase of Share Transfer Employees”

Explanatory Notes: The Second Purchase of Share Transfer Employees Report, please refer to the Attachment 4 in the Handbook of the 2020 Annual Shareholders’ Meeting.

5. Report on the Resolution and Implementation on Company’s Shares Buyback.

Explanatory Notes: the resolution and implementation of Company’s

Explanatory Notes:the resolution and implementation of Company’s Explanatory Notes:the resolution and implementation of Company’s Explanatory Notes:the resolution and implementation of Company’s
shares buyback are as follows:
Batch Order The First Period The Second Period
Purpose of the buy-back Transferred the shares to
employees		 Transferred the shares to
employees
Timeframe of buy-back November 12, 2014 to January
9,2015		 March. 23, 2020 to May 20, 2020
Price range NT$ 22.30 to NT$50.40 NT$37.25 to NT$131.00
Expected number of
shares buyback		 Common stock 3,000,000 shares Common stocks 5,000,000 shares

~3~

Batch Order The First Period The Second Period
Type and amount of
shares buyback		 Common stock 3,000,000 shares Still in implementation period
(until 109/4/28,445,000 shares)
Amount of shares
buyback		 NT$ 118,543,503 Still in implementation period
(until 109/4/28, NT$26,530,420)
Eliminated and
transferred shares		 3,000,000 shares have been
eliminated(Note 1)
Still in implementation period
Accumulated number of
company shares held		 0 Still in implementation period
(until 109/4/28, 445,000 shares)
Percentage of total
company shares held(%)
(Note 2)
0%		 Still in implementation period
(until 109/4/30, 445,000 shares)

Note 1: In the case of the 3,000,000 shares of elimination listed above, the registration process was approved by the Ministry of Science and Technology Southern Science and Technology Industrial Park Administration on February 27, 2018, and the total number of issued shares after the reduction was 59,045,489 shares. Note 2: Until April 28, 2020, the Company has issued 81,187,549 shares.

6. Report the Implementation of Endorsement and Guarantee in 2019. Explanatory Notes:

  • (1) As of December 31, 2019, the amount of external

endorsements/guarantees is as following:

Company The Amount of
Endorsement and
Guarantees (Thousand)		 The Amount of
Actual Drawings
(Thousand)
Relationship with the
Company
cpc Europa GmbH 201,540 45,347 Subsidiaries with
100% of shareholding
Chieftek Precision
International LLC		 59,960 47,968 Subsidiaries with
100% of shareholding
CSM
Maschinen GmbH		 50,385 0 Subsidiaries with
100% of shareholding
  • (2) The above amount does not exceed the prescribed limit.

7. Amend the Report on “Ethical Corporate Management Best Practice Principles”.

Explanatory Notes:

(1) The amendment was made in accordance with the relevant provisions of Decree Chin Kuan Cheng Fa Tzu No.1080341134 issued on February 12, 2020 by Financial Supervisory Commission and Letter Cheng Kuei Chien Tzu No.10900521401 issued on February 19, 2020 by Taipei Exchange.

~4~

  • (2) Please refer the Attachment 5 of the in the Handbook of the 2020 Annual Shareholders’ Meeting for the comparison table of the amendment to “Ethical Corporate Management Best Practice Principles”.

8. Report on 2019 Cash Distribution of Profit.

Explanatory Notes:

  • (1) The 2019 profit distribution program of the company has been accepted by board on April 28, 2020, in accordance with company Act and the Articles of Incorporation of the company. The cash dividends of shareholders distributed in this plan amounted to NT$80,742,549 (NT$ 1.0 per share was allotted).

  • (2) No stock dividends will be issued. Actual placement and number of shares will depend on the number of registered shareholders on the ex-rights date. The cash dividend distribution will be calculated to the nearest NT$ dollar. After the aforementioned method was 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. Before ex-dividend 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 dividend yield, the company will submitted to the general shareholder’s meeting and the Board is authorized to make such adjustments. The Cash Distribution of Profit Report, please refer to the Attachment 7 in the Handbook of the 2020 Annual Shareholders’ Meeting.

  • (3) After the adoption by the general Shareholders Meeting, the Board of Directors is authorized to set the transfer of profit surplus.

~5~

Proposed Items

1. To accept 2019 Business Report and Financial Statements.

Proposed by the Board of Directors

Explanatory Notes:

  • (1) The Company’s 2019 Financial Statements, including the balance sheet, the statement of comprehensive income, the statement of changes in equity, 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 2019 Business Report could be referred to the Attachment 1 of the Handbook for the 2020 Annual Shareholders’ Meeting, independent auditors’ audit report, and Financial Statements by PWC could be referred to Attachment 6 of the Handbook for the 2020 Annual Shareholders’ Meeting.

Resolution:

2. To Approve the Proposal for Distribution of 2019 Profit.

Proposed by the Board of Directors

Explanatory Notes:

  • (1) The 2019 profit distribution program of the company has been accepted by board and sent to the supervisor for verification on April 28, 2020, in accordance with company Act and the Articles of Incorporation of the company.

  • (2) The Profit Distribution Report, please refer to the Attachment 7 in the Handbook of the 2020 Annual Shareholders’ Meeting.

Resolution:

~6~

Discussion and Election Items

1. Amendment to “Rules of Procedure for Shareholders Meetings”.

Proposed by the Board of Directors

Explanatory Notes:

  • (1) The amendment was made in accordance with the relevant provisions of Decree Chin Kuan Cheng Fa Tzu No.1080339900 issued on December 31, 2019 by Financial Supervisory Commission and Letter Cheng Kuei Chien Tzu No.10900500261 issued on January 13, 2020 by Taipei Exchange.

  • (2) We proposed to amend “Rules of Procedure for Shareholders Meeting” to go with the establishment of audit committee.

  • (3) Please refer the Attachment 8 of the in the Handbook of the 2020 Annual Shareholders’ Meeting for the comparison table of the amendment to “Rules of Procedure for Shareholders Meeting”.

Resolution:

2. Amendment to “Procedures for Election of Directors and Supervisors”.

Proposed by the Board of Directors

Explanatory Notes:

  • (1) We proposed to amend “Procedures for Election of Directors and Supervisors” to go with the establishment of audit committee.

  • (2) Please refer the Attachment 9 of the in the Handbook of the 2020 Annual Shareholders’ Meeting for the comparison table of the amendment to “Procedures for Election of Directors and Supervisors”.

  • Resolution:

3. Amendment to “Corporate Governance Best Practice Principles”.

Proposed by the Board of Directors

Explanatory Notes:

  • (1) The amendment was made in accordance with the relevant provisions of Decree Chin Kuan Cheng Fa Tzu No.1080341134 issued on February 12, 2020 by Financial Supervisory Commission and Letter Cheng Kuei Chien Tzu No.10900521401 issued on February 19, 2020 by Taipei Exchange.

~7~

  • (2) Please refer the Attachment 10 of the in the Handbook of the 2020 Annual Shareholders’ Meeting for the comparison table of the amendment to “Corporate Governance Best Practice Principles”.

Resolution:

4. Amendment to “Regulations Governing the Acquisition and Disposal of Assets”

Proposed by the Board of Directors

Explanatory Notes:

  • (1) The Board of Directors passed on November 6, 2019 to reduce the capital of CHIEFTEK PRECISION HOLDING CO., LTD. to return the equity of CHIEFTEK PRECISION USA CO., LTD. and change the investors of the re-investment second-tier company in which the Company holds 100% of the shares, CHIEFTEK PRECISION USA CO., LTD., from CHIEFTEK PRECISION HOLDING CO., LTD. to the Company itself directly.

  • (2) In response to the amendment to the structure of corporate organization, we proposed to amend “Regulations Governing the Acquisition and Disposal of Assets”.

  • (3) Please refer the Attachment 11 of the in the Handbook of the 2020 Annual Shareholders’ Meeting for the comparison table of the amendment to “Regulations Governing the Acquisition and Disposal of Assets Practice Principles”.

Resolution:

5. Election on 8[th] session of Board of Directors

Proposed by the Board of Directors

Explanatory Notes:

  • (1) The term of office of this session of the board of directors ends on June 21, 2020. They shall be re-elected in accordance with the law.

  • (2) In accordance with the provisions in Articles of Incorporation and the resolution made on March 11, 2020, 8 directors (including independent directors) shall be re-elected during the general shareholders’ meeting by candidate nomination system. The newly elected directors and independent directors shall take office after the completion of the

~8~

general shareholders’ meeting. Their term of office lasts 3 years, starting from June 8, 2020 to June 7, 2023.

  • (3) The election shall be conducted in accordance with “Procedures for Election of Directors and Supervisors”, which can be referred to on Attachment 2 of the 2020 Annual Shareholders’ Meeting.

  • (4) The qualification criteria for the candidates of the directors and independent directors have been reviewed and approved by board of directors on April 28, 2020. Please refer to Attachment 12 of the 2020 Annual Shareholders’ Meeting.

Resolution:

6. Release the Prohibition of Newly Elected Directors Working in Competing Businesses

Proposed by the Board of Directors

Explanatory Notes:

  • (1) In accordance with Article 209 of the Company Act, regarding releasing the prohibition on directors working in competing business, a director who does anything for himself or on behalf of another person that is within the scope of the company's business, shall explain to the meeting of shareholders the essential contents of such an act and secure its approval (directors working in subsidiaries in mainland China shall also apply).

  • (2) Considering the company’s business, we proposed to release the prohibition on newly elected directors working in competing businesses.

Resolution:

Extemporary Motion

Meeting Adjournment

~9~

Attachment 1

Chieftek Precision Co., Ltd.

2019 Business Report

Affected by the US-China trade war in 2019, the economic growth in China and many countries around the world are not as expected and it even brought adverse impact on global economy. The government has launched “Returning Companies Investment Action Plan ”. Hence, Chieftak Precision has taken this opportunity to build Phase 2 plant at Tree Valley and actively invests on advanced technologies and new product development to satisfy the future smart machinery, equipment automation and provide mechatronics system product and services. We hope to concurrently go forward with global technology and get ahead of the game in the era of comprehensive data intelligence revolution.

The combined revenue of 2019 was NT$1,300,351 thousand compared to 2018 of NT$2,078,901 thousand, it decreased by NT$778,550 thousand with a decreasing rate of 37.45%. The Income before Tax of 2019 was NT$222,227 thousand compared to 2018 of NT$609,837 thousand, it decreased NT$387,610 thousand with a decreasing rate of 63.56%.

The 2019 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, 2019 and 2018.

Unit: NT$ thousand

Items 2019 2018 Increase (Decrease)
Amount
Sales Revenue 1,300,351 2,078,901 (778,550)
Operating Cost (718,689) (1,090,575) (371,886)
Operating Margin 581,662 988,326 (406,664)
Operating Margin Rate 44.73% 47.54% (2.81%)
Operating Expenses (340,123) (383,432) (43,309)
Operating Profit 241,539 604,894 (363,355)
Non-Operating Income
and Expenses		 (19,312) 4,943 (24,255)
Profit Before Income Tax 222,227 609,837 (387,610)

~10~

Items 2019 2018 Increase (Decrease)
Amount
Income Tax Expenses (47,583) (138,585) (91,002)
Profit for the year 174,644 471,252 (296,608)
Other Comprehensive
Income(loss)		 (11,907) (6,088) 5,819
Comprehensive Income
for theyear		 162,737 465,164 (302,427)
Earnings per Share (NT$) 2.15 6.40 (4.25)

According to the above table

1. Turnover

  • (I) Net consolidated revenue for 2019 of NT$1,300,351 thousand, which decreased by NT$778,550 thousand compared with 2018 of NT$2,078,901 thousand, the growth rate was 37.45%.

  • (II) If compared by regions, the sales by revenue decreased 51.90% in Mainland, decreased 8.15% in European region, decreased 7.86% in the United States, decreased 43.5% in the domestic sales of Taiwan and decreased 45.52% in other regions.

2. Operating Margin Rate

The demand from the mainland market slowed down for 2019, especially in the machine tool related industries. The industry cut prices and seeks sales, the operating environment is fiercely competitive, and Chieftak Precision has high-quality products and improved gross profit High sales ratio of micro linear products and continuous strengthening of operating cost control The gross profit margin of the industry was 44.73%, which was only a decrease of 2.81% from 47.54% for 2018.

3. Profits

  • (I) Profit before tax was NT$222,227 thousand in 2019, which decreased by NT$387,610 thousand with comparison of NT$609,837 thousand in 2018. The decreasing rate was 63.56%.

  • (II) Basic earnings per share of 2019 was NT$2.15, which decreased NT$4.25 compared with NT$6.40 in 2018.

~11~

(2) Parent Company Only Statement of Comprehensive Income for the years ended December 31, 2019 and 2018.

) Parent Company Only Statement of Comprehensive Income for the years ended
December 31, 2019 and 2018.		 ) Parent Company Only Statement of Comprehensive Income for the years ended
December 31, 2019 and 2018.		 ) Parent Company Only Statement of Comprehensive Income for the years ended
December 31, 2019 and 2018.		 ) Parent Company Only Statement of Comprehensive Income for the years ended
December 31, 2019 and 2018.
Unit:NT$ thousand
Items 2019 2018 Increase (Decrease)
Amount
Sales revenue 1,040,726 1,836,489 (795,763)
Operatingcosts (652,831) (1,060,083) (407,252)
Grossprofit 387,895 776,406 (388,511)
Unrealized gain from
inter-affiliate accounts		 (82,238) (94,712) (12,474)
Realized gain from
inter-affiliate accounts		 94,712 52,500 42,212
Net operatingmargin 400,369 734,194 (333,825)
Operatingexpenses (185,417) (240,107) (54,690)
Operating profit 214,952 494,087 (279,135)
Non-operating income
and expenses		 (4,593) 93,373 (97,966)
Profit before income tax 210,359 587,460 (377,101)
Income tax expense (35,715) (114,743) (79,028)
Profit for theyear 174,644 472,717 (298,073)
Other comprehensive
income(loss)		 (11,907) (6,102) (5,805)
Comprehensive income
for theyear		 162,737 466,615 (303,878)

(3) Parent Company Only of Profitability Analysis for the 2019 and 2018

Items 2019 2018
Return on Total Assets(%) 5.87% 17.50%
Return on Equity(%) 8.82% 27.28%
OperatingIncome to Paid-in Capital Ratio(%) 26.48% 66.94%
Pre-tax Income to Paid-in Capital Ratio (%) 25.91% 79.59%
Net Margin (%) 16.78% 25.74%
Basic Earnings Per Share (NT$) 2.15 6.40

~12~

(4) Consolidated Company Only of Profit ability Analysis for the 2019 and 2018

Items 2019 2018
Return on Total Assets (%) 5.66% 16.44%
Return on Equity (%) 8.82% 27.20%
OperatingIncome to Paid-in Capital Ratio (%) 29.75% 81.96%
Pre-tax Income to Paid-in Capital Ratio (%) 27.37% 82.63%
Net Margin (%) 13.43% 22.67%
Basic Earnings Per Share (NT$) 2.15 6.40

2. Enterprise Development

Chieftek mainly works on the production of linear sports products. Among them, we are the leading brand of the micro linear skid rail products in the world. In addition to the R&D and production of micro linear skid rail products, machinery components and parts and sport field products, the Company also continues to devote in the R&D of key components and parts, which include electrical products, such as linear motor, DD motor, systematic development, design and manufacture of high-precision X, Y platform, as well as the development in industrial control platform, XY table platform and high positioning secondary system. Our main products are applied in semiconductors, panels, biomedicine, circuit boards, and automation industry. We researched, developed, produced and manufactured all the products, including software, firmware and hardware, ourselves. In addition, the Company also has made long-term devotion in the development of advanced spiral and advanced servomotor, AC/DC driver with communication protocols, CAN and EtherCAT and can connect to common coder of the brands on the market. In addition, the Company also made long-term devotion in the development of host control IDE platform, including PLC and CNC modules and the future AGV, VISION, SCADA, MES modules, multi-axis synchronous control and multi-point I.O. real-time monitoring, etc., which can be used as the control platform required by Industry 4.0. We aimed to go towards as high flexibility and high reliability system integrator to break the dilemma of depending overseas vendors for smart automation for a long time. In the past year, these are the major developments and devotion directions of the Company in smart industry, IOT, industry 4.0 and smart field to enhance the performance and profitability of the corporate group, successfully boost the international reputation of the self-created brand “ cpc ” well-known internationally and create reliable driven-control “soft” power system in the “hard” base of precision machinery.

~13~

Attachment 2

Chieftek Precision Co., Ltd. 2019 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 2019, 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. 2020 SHAREHOLDERS’ MEETING

Chieftek Precision Co., Ltd.

Supervisor: LI MEI

Supervisor: TSENG HSU-WEN

March 11, 2020

~14~

Chieftek Precision Co., Ltd. 2019 Supervisors’ Review Report

Hereby to approve,

The profit distribution table of the 2019 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. 2020 SHAREHOLDERS’ MEETING

Chieftek Precision Co., Ltd.

Supervisor: LI MEI Supervisor: TSENG HSU-WEN

April 28, 2020

~15~

Attachment 3

2019 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.

The current year’s annual profit status refers to the pre-tax interest in the current year before the distribution of employee compensation and the benefits of directors and supervisors before compensation.

The distribution of employee compensation and the compensation of directors and supervisors shall be implemented by the board of directors with a resolution of more than two-thirds of the directors attending and the majority of directors agreeing to attend, and report to the shareholders meeting.

  1. The employees’ compensation and the assignment of directors and supervisors in the year 2019 of the company were approved by the board of directors on March 11, 2020. The proposed distribution of the board of directors’ approval is as follows:

  2. (1) The remuneration for allotment of employees in cash is NT$16,000,000, which is approximately 6.93% of the profit for the current year. The amount of employee compensation reported on the accounts is NT$16,000,000, which is the same amount as the project is listed as annual profit of 2019.

  3. (2) The distribution of directors by cash and the supervisor’s remuneration is NT$4,500,000 in cash, which is approximately 1.95% of the profit for the year. The remuneration of directors and supervisors listed in the accounts is NT$4,500,000, which is the same amount as the project is listed as annual profit of 2019.

  4. (3) The above-mentioned Employees’ Profit sharing Bonus and Directors and Supervisors’ Compensation have been expensed in 2019.

~16~

Attachment 5

Chieftek Precision Co., Ltd.

The Comparison Table of the Amendment to “Ethical Corporate Management Best Practice Principles”

Before Amendment After Amendment Explanation
Article 1
This Corporation engages in commercial
activities following the principles of
fairness, honesty, faithfulness, and
transparency, and in order to fully
implement a policy of ethical
management and actively prevent
unethical conduct, these Procedures for
Ethical Management and Guidelines for
Conduct (hereinafter, “Procedures and
Guidelines”) are adopted pursuant to the
provisions of the Ethical Corporate
Management Best Practice Principles
for TWSE/GTSM-Listed Companies
and the applicable laws and regulations
of the places where this Corporation and
its business groups and organizations
operate, with a view to providing all
personnel of this Corporation with clear
directions for the performance of their
duties.
The scope of application of these
Procedures and Guidelines includes the
subsidiaries of this Corporation, any
incorporated foundation in which this
Corporation's accumulated contributions,
direct or indirect, exceed 50 percent of
the total funds of the foundation, and
other group enterprises and
organizations, such as institutions or
juristic persons, substantially controlled
by this Corporation.		 Article 1 (Purpose of adoption and
scope of application)
This Corporation engages in commercial
activities following the principles of
fairness, honesty, faithfulness, and
transparency, and in order to fully
implement a policy of ethical
management and actively prevent
unethical conduct, these Procedures for
Ethical Management and Guidelines for
Conduct (hereinafter, “Procedures and
Guidelines”) are adopted pursuant to the
provisions of the Ethical Corporate
Management Best Practice Principles
for TWSE/GTSM-Listed Companies
and the applicable laws and regulations
of the places where this Corporation and
its business groups and organizations
operate, with a view to providing all
personnel of this Corporation with clear
directions for the performance of their
duties.
The scope of application of these
Procedures and Guidelines includes the
subsidiaries of this Corporation, any
incorporated foundation in which this
Corporation's accumulated contributions,
direct or indirect, exceed 50 percent of
the total funds of the foundation, and
other group enterprises and
organizations, such as institutions or
juristic persons, substantially controlled
by this Corporation.		 Add the name
of this Article
in accordance
with “Sample
Template for
XXX Co., Ltd.
Procedures for
Ethical
Management
and
Guidelines for
Conduct”.
Article 2 Article 2 (Applicable subjects) Add the name

~17~

Before Amendment After Amendment Explanation
For the purposes of these Procedures and
Guidelines, the term “personnel of this
Corporation” refers to any director,
supervisor, managerial officer,
employee, mandatary or person having
substantial control, of this Corporation or
its group enterprises and organizations.
Any provision, promise, request, or
acceptance of improper benefits by any
personnel of this Corporation through a
third party will be presumed to be an act
by the personnel of this Corporation.		 For the purposes of these Procedures and
Guidelines, the term “personnel of this
Corporation” refers to any director,
supervisor, managerial officer,
employee, mandatary or person having
substantial control, of this Corporation or
its group enterprises and organizations.
Any provision, promise, request, or
acceptance of improper benefits by any
personnel of this Corporation through a
third party will be presumed to be an act
by the personnel of this Corporation.		 of this Article
in accordance
with “Sample
Template for
XXX Co., Ltd.
Procedures for
Ethical
Management
and
Guidelines for
Conduct”.
Article 3
For the purposes of these Procedures and
Guidelines, “unethical conduct” means
that any personnel of this Corporation, in
the course of their duties, directly or
indirectly provides, promises, requests,
or accepts improper benefits or commits
a breach of ethics, unlawful act, or
breach of fiduciary duty for purposes of
acquiring or maintaining benefits.
The counterparties of the unethical
conduct under the preceding paragraph
include public officials, political
candidates, political parties or their
staffs, and government-owned or
private-owned enterprises or
institutions and their directors,
supervisors, managerial officers,
employees, persons having substantial
control, or other interested parties.		 Article 3 (Unethical conduct)
For the purposes of these Procedures and
Guidelines, “unethical conduct” means
that any personnel of this Corporation, in
the course of their duties, directly or
indirectly provides, promises, requests,
or accepts improper benefits or commits
a breach of ethics, unlawful act, or
breach of fiduciary duty for purposes of
acquiring or maintaining benefits.
The counterparties of the unethical
conduct under the preceding
paragraph include public officials,
political candidates, political parties or
their staffs, and government-owned or
private-owned enterprises or
institutions and their directors,
supervisors, managerial officers,
employees, persons having substantial
control, or other interested parties.		 Add the name
of this Article
in accordance
with “Sample
Template for
XXX Co., Ltd.
Procedures for
Ethical
Management
and
Guidelines for
Conduct”.
Article 4
For the purposes of these Procedures
and Guidelines, the term “benefits”
means any money, gratuity, gift,
commission, position, service,
preferential treatment, rebate,
facilitating payment, entertainment,
dining, or any other item of value in
whatever form or name.		 Article 4 (Types of benefits)
For the purposes of these Procedures
and Guidelines, the term “benefits”
means any money, gratuity, gift,
commission, position, service,
preferential treatment, rebate,
facilitating payment, entertainment,
dining, or any other item of value in
whatever form or name.		 Add the name
of this Article
in accordance
with “Sample
Template for
XXX Co., Ltd.
Procedures for
Ethical
Management

~18~

Before Amendment After Amendment Explanation
and
Guidelines for
Conduct”.
Article 5
This Corporation shall designate the
Directors’ Office as the solely
responsible unit (hereinafter,
“responsible unit”) under the board of
directors and in charge of the
amendment, implementation,
interpretation, and advisory services with
respect to these Procedures and
Guidelines, the recording and filing of
reports, and the monitoring of
implementation. The responsible unit
shall be in charge of the following
matters and also submit regular reports to
the board of directors:
1. Assisting in incorporating ethics and
moral values into this Corporation’s
business strategy and adopting
appropriate prevention measures
against corruption and malfeasance
to ensure ethical management in
compliance with the requirements of
laws and regulations.
2. Adopting programs to prevent
unethical conduct and setting out in
each program the standard operating
proceduresand conduct guidelines
with respect to this Corporation's
operations and business.
3. Planning the internal organization,
structure, and allocation of
responsibilities and setting up
check-and-balance mechanisms for		 Article 5(Responsible unit)
This Corporation shall designate the
Directors’ Office as the solely
responsible unit (hereinafter,
“responsible unit”) under the board of
directors and allocate sufficient
resources and competent personnelin
charge of the amendment,
implementation, interpretation, and
advisory services with respect to these
Procedures and Guidelines, the
recording and filing of reports, and the
monitoring of implementation. The
responsible unit shall be in charge of the
following matters and also submit
regular reports to the board of directors
(at least once a year):
1. Assisting in incorporating ethics and
moral values into this Corporation’s
business strategy and adopting
appropriate prevention measures
against corruption and malfeasance
to ensure ethical management in
compliance with the requirements of
laws and regulations.
2. Regularly analyze and assess the
risks of unethical conduct within the
business scope to establishprograms
to prevent unethical conduct
accordingly, andsetting out in each
program the standard operating
procedures and conduct guidelines
with respect to this Corporation's
operations and business.
3. Planning the internal organization,
structure, and allocation of
responsibilities and setting up
check-and-balance mechanisms for		 Revise this
Article in
accordance
with “Sample
Template for
XXX Co., Ltd.
Procedures for
Ethical
Management
and
Guidelines for
Conduct”.
(Decree
Cheng Kuei
Chien Tzu No.
10900521402
issued on
2020.02.19).

~19~

Before Amendment After Amendment After Amendment Explanation
mutual supervision of the business
activities within the business scope
which are possibly at a higher risk
for unethical conduct.
4. Promoting and coordinating
awareness and educational activities
with respect to ethics policy.
5. Developing a whistle-blowing
system and ensuring its operating
effectiveness.
6. Assisting the board of directors and
management in auditing and
assessing whether the prevention
measures taken for the purpose of
implementing ethical management
are effectively operating, and
preparing reports on the regular
assessment of compliance with
ethical management in operating
procedures.		 4.
5.
6.
7.		 mutual supervision of the business
activities within the business scope
which are possibly at a higher risk
for unethical conduct.
Promoting and coordinating
awareness and educational activities
with respect to ethics policy.
Developing a whistle-blowing
system and ensuring its operating
effectiveness.
Assisting the board of directors and
management in auditing and
assessing whether the prevention
measures taken for the purpose of
implementing ethical management
are effectively operating, and
preparing reports on the regular
assessment of compliance with
ethical management in operating
procedures.
Compile and retained relevant
documented information on the
ethical management policy,
statement, commitment and
implementation properly.
Article 6
Except under one of the following
circumstances, when providing,
accepting, promising, or requesting,
directly or indirectly, any benefits as
specified in Article 4, the conduct of the
given personnel of this Corporation shall
comply with the provisions of the Ethical
Corporate Management Best Practice
Principles for TWSE/GTSM-Listed
Companies and these Procedures and
Guidelines, and the relevant procedures
shall have been carried out:
1. The conduct is undertaken to meet
business needs and is in accordance		 Article 6 (Prohibition against providing or
accepting improper benefits)
Except under one of the following
circumstances, when providing,
accepting, promising, or requesting,
directly or indirectly, any benefits as
specified in Article 4, the conduct of the
given personnel of this Corporation shall
comply with the provisions of the Ethical
Corporate Management Best Practice
Principles for TWSE/GTSM-Listed
Companies and these Procedures and
Guidelines, and the relevant procedures
shall have been carried out:
1. The conduct is undertaken to meet
business needs and is in accordance		 (Prohibition against providing or
Add the name
of this Article
in accordance
with “Sample
Template for
XXX Co., Ltd.
Procedures for
Ethical
Management
and
Guidelines for
Conduct”.

~20~

Before Amendment After Amendment Explanation
with local courtesy, convention, or
custom during domestic (or foreign)
visits, reception of guests, promotion
of business, and communication and
coordination.
2. The conduct has its basis in ordinary
social activities that are attended, or
others are invited to hold in line with
accepted social custom, commercial
purposes, or developing
relationships.
3. Invitations to guests or attendance at
commercial activities or factory
visits in relation to business needs,
when the method of fee payment,
number of participants, class of
accommodations, and the time period
for the event or visit have been
specified in advance.
4. Attendance at folk festivals that are
open to and invite the attendance of
the general public.
5. Rewards, emergency assistance,
condolence payments, or
honorariums from the management.
6. Other conduct that complies with the
rules of this Corporation.		 with local courtesy, convention, or
custom during domestic (or foreign)
visits, reception of guests, promotion
of business, and communication and
coordination.
2. The conduct has its basis in ordinary
social activities that are attended, or
others are invited to hold in line with
accepted social custom, commercial
purposes, or developing
relationships.
3. Invitations to guests or attendance at
commercial activities or factory
visits in relation to business needs,
when the method of fee payment,
number of participants, class of
accommodations, and the time
period for the event or visit have
been specified in advance.
4. Attendance at folk festivals that are
open to and invite the attendance of
the general public.
5. Rewards, emergency assistance,
condolence payments, or
honorariums from the management.
6. Other conduct that complies with the
rules of this Corporation.
Article 7
Except under any of the circumstances
set forth in the preceding article, when
any personnel of this Corporation are
provided with or are promised, either
directly or indirectly, any benefits as
specified in Article 4 by a third party, the
matter shall be handled in accordance
with the following procedures:
1. If there is no relationship of interest
between the party providing or
offering the benefit and the official
duties of this Corporation’s		 Article 7 (Procedures for handling the
acceptance of improper benefits)
Except under any of the circumstances
set forth in the preceding article, when
any personnel of this Corporation are
provided with or are promised, either
directly or indirectly, any benefits as
specified in Article 4 by a third party, the
matter shall be handled in accordance
with the following procedures:
1. If there is no relationship of interest
between the party providing or
offering the benefit and the official
duties of this Corporation’s		 Add the name
of this Article
in accordance
with “Sample
Template for
XXX Co., Ltd.
Procedures for
Ethical
Management
and
Guidelines for
Conduct”.

~21~

Before Amendment After Amendment Explanation
personnel, the personnel shall report
to their immediate supervisor within
3 days from the acceptance of the
benefit, and the responsible unit shall
be notified if necessary.
2. If a relationship of interest does exist
between the party providing or
offering the benefit and the official
duties of this Corporation's
personnel, the personnel shall return
or refuse the benefit, and shall report
to his or her immediate supervisor
and notify the responsible unit. When
the benefit cannot be returned, then
within 3 days from the acceptance of
the benefit, the personnel shall refer
the matter to the responsible unit for
handling.
“A relationship of interest between the
party providing or offering the benefit
and the official duties of this
Corporation’s personnel,” as referred to
in the preceding paragraph, refers to one
of the following circumstances:
1. When the two parties have
commercial dealings, a relationship
of direction and supervision, or
subsidies (or rewards) for expenses.
2. When a contracting, trading, or other
contractual relationship is being
sought, is in progress, or has been
established.
3. Other circumstances in which a
decision regarding this Corporation’s
business, or the execution or
non-execution of business, will result
in a beneficial or adverse impact.
The responsible unit of this Corporation
shall make a proposal, based on the
nature and value of the benefit under
paragraph 1, that it be returned, accepted		 personnel, the personnel shall report
to their immediate supervisor within
3 days from the acceptance of the
benefit, and the responsible unit shall
be notified if necessary.
2. If a relationship of interest does exist
between the party providing or
offering the benefit and the official
duties of this Corporation's
personnel, the personnel shall return
or refuse the benefit, and shall report
to his or her immediate supervisor
and notify the responsible unit.
When the benefit cannot be returned,
then within 3 days from the
acceptance of the benefit, the
personnel shall refer the matter to the
responsible unit for handling.
“A relationship of interest between the
party providing or offering the benefit
and the official duties of this
Corporation’s personnel,” as referred to
in the preceding paragraph, refers to one
of the following circumstances:
1. When the two parties have
commercial dealings, a relationship
of direction and supervision, or
subsidies (or rewards) for expenses.
2. When a contracting, trading, or other
contractual relationship is being
sought, is in progress, or has been
established.
3. Other circumstances in which a
decision regarding this Corporation’s
business, or the execution or
non-execution of business, will result
in a beneficial or adverse impact.
The responsible unit of this Corporation
shall make a proposal, based on the
nature and value of the benefit under
paragraph 1, that it be returned, accepted

~22~

Before Amendment After Amendment Explanation
on payment, given to the public, donated
to charity, or handled in another
appropriate manner. The proposal shall
be implemented after being reported and
approved by the chairman.		 on payment, given to the public, donated
to charity, or handled in another
appropriate manner. The proposal shall
be implemented after being reported and
approved by the chairman.
Article 8
This Corporation shall neither provide
nor promise any facilitating payment.
If any personnel of this Corporation
provides or promises a facilitating
payment under threat or intimidation,
they shall submit a report to their
immediate supervisor stating the facts
and shall notify the responsible unit.
Upon receipt of the report under the
preceding paragraph, the responsible unit
shall take immediate action and
undertake a review of relevant matters in
order to minimize the risk of recurrence.
In a case involving alleged illegality, the
responsible unit shall also immediately
report to the relevant judicial agency.		 Article 8 (Prohibition of and handling
procedure for facilitating payments)
This Corporation shall neither provide
nor promise any facilitating payment.
If any personnel of this Corporation
provides or promises a facilitating
payment under threat or intimidation,
they shall submit a report to their
immediate supervisor stating the facts
and shall notify the responsible unit.
Upon receipt of the report under the
preceding paragraph, the responsible
unit shall take immediate action and
undertake a review of relevant matters in
order to minimize the risk of recurrence.
In a case involving alleged illegality, the
responsible unit shall also immediately
report to the relevant judicial agency.		 Add the name
of this Article
in accordance
with “Sample
Template for
XXX Co., Ltd.
Procedures for
Ethical
Management
and
Guidelines for
Conduct”.
Article 9
Political contributions by this
Corporation shall be made in accordance
with the following provisions, reported
to the supervisor in charge for approval,
and a notification given to the
responsible unit, and when the amount of
a contribution is NT$50,000,000 or
more, it shall be made only after being
reported to and approved by the board of
directors:
It shall be ascertained that the political
contribution is in compliance with the
laws and regulations governing political
contributions in the country in which the
recipient is located, including the
maximum amount and the form in which		 Article 9 (Procedures for handling
political contributions)
Political contributions by this
Corporation shall be made in accordance
with the following provisions, reported
to the supervisor in charge for approval,
and a notification given to the
responsible unit, and when the amount
of a contribution is NT$50,000,000 or
more, it shall be made only after being
reported to and approved by the board of
directors:
It shall be ascertained that the political
contribution is in compliance with the
laws and regulations governing political
contributions in the country in which the
recipient is located, including the
maximum amount and the form in which		 Add the name
of this Article
in accordance
with “Sample
Template for
XXX Co., Ltd.
Procedures for
Ethical
Management
and
Guidelines for
Conduct”.

~23~

Before Amendment After Amendment Explanation
a contribution may be made.
A written record of the decision-making
process shall be kept.
Account entries shall be made for all
political contributions in accordance with
applicable laws and regulations and
relevant procedures for accounting
treatment.
In making political contributions,
commercial dealings, applications for
permits, or carrying out other matters
involving the interests of this
Corporation with the related government
agencies shall be avoided.		 a contribution may be made.
A written record of the decision-making
process shall be kept.
Account entries shall be made for all
political contributions in accordance
with applicable laws and regulations and
relevant procedures for accounting
treatment.
In making political contributions,
commercial dealings, applications for
permits, or carrying out other matters
involving the interests of this
Corporation with the related government
agencies shall be avoided.
Article 10
Charitable donations or sponsorships by
this Corporation shall be provided in
accordance with the following provisions
and reported to the supervisor in charge
for approval, and a notification shall be
given to the responsible unit. When the
amount is NT$50,000,000 or more, the
donation or sponsorship shall be
provided only after it has been submitted
for adoption by the board of directors:
1. It shall be ascertained that the
donation or sponsorship is in
compliance with the laws and
regulations of the country where this
Corporation is doing business.
2. A written record of the decision
making process shall be kept.
3. A charitable donation shall be given
to a valid charitable institution and
may not be a disguised form of
bribery.
4. The returns received as a result of
any sponsorship shall be specific and
reasonable, and the subject of the
sponsorship may not be a		 Article 10 (Procedures for handling
charitable donations or sponsorships)
Charitable donations or sponsorships by
this Corporation shall be provided in
accordance with the following provisions
and reported to the supervisor in charge
for approval, and a notification shall be
given to the responsible unit. When the
amount is NT$50,000,000 or more, the
donation or sponsorship shall be
provided only after it has been submitted
for adoption by the board of directors:
1. It shall be ascertained that the
donation or sponsorship is in
compliance with the laws and
regulations of the country where this
Corporation is doing business.
2. A written record of the decision
making process shall be kept.
3. A charitable donation shall be given
to a valid charitable institution and
may not be a disguised form of
bribery.
4. The returns received as a result of
any sponsorship shall be specific and
reasonable, and the subject of the
sponsorship may not be a		 Add the name
of this Article
in accordance
with “Sample
Template for
XXX Co., Ltd.
Procedures for
Ethical
Management
and
Guidelines for
Conduct”.

~24~

Before Amendment After Amendment Explanation
counterparty of this Corporation's
commercial dealings or a party with
which any personnel of this
Corporation has a relationship of
interest.
5. After a charitable donation or
sponsorship has been given, it shall
be ascertained that the destination to
which the money flows is consistent
with the purpose of the contribution.		 counterparty of this Corporation's
commercial dealings or a party with
which any personnel of this
Corporation has a relationship of
interest.
5. After a charitable donation or
sponsorship has been given, it shall
be ascertained that the destination to
which the money flows is consistent
with the purpose of the contribution.
Article 11
When a Company director ,
supervisor, officer or other stakeholder
attending or present at a board
meeting, or the juristic person
represented thereby, has a stakein a
proposal at the meeting,that director,
supervisor, officer or stakeholder shall
state the important aspects of the stake
in the meeting and, where there is a
likelihood that the interests of this
Corporation would be prejudiced, may
not participate in the discussion or vote
on that proposal, shall recuse himself
or herself from any discussion and
voting, and may not exercise voting
rights as proxy on behalf of another
director. The directors shall exercise
discipline among themselves, and may
not support each other in an
inappropriate manner.		 Article 11 (Recusal)
When a Company director , supervisor,
officer or other stakeholder attending or
present at a board meeting, or the juristic
person represented thereby, has a stake
in a meeting agenda,that director,
supervisor, officer or stakeholder shall
state the important aspects of the stake
in the meeting and, where there is a
likelihood that the interests of this
Corporation would be prejudiced, may
not participate in the discussion or vote
on that proposal, shall recuse himself or
herself from any discussion and voting,
and may not exercise voting rights as
proxy on behalf of another director. The
directors shall exercise discipline among
themselves, and may not support each
other in an inappropriate manner.
Where the spouse, a blood relative
within the second degree of kinship of a
director, or any company which has a
controlling or subordinate relation with a
director has interests in the matters
under discussion in the meeting of the
preceding paragraph, such director shall
be deemed to have a personal interest in
the matter.		 Revise this
Article in
accordance
with “Sample
Template for
XXX Co., Ltd.
Procedures for
Ethical
Management
and
Guidelines for
Conduct”.
(Decree
Cheng Kuei
Chien Tzu No.
10900521402
issued on
2020.02.19).

~25~

Before Amendment After Amendment Explanation
If in the course of conducting company
business, any personnel of this
Corporation discovers that a potential
conflict of interest exists involving
themselves or the juristic person that
they represent, or that they or their
spouse, parents, children, or a person
with whom they have a relationship of
interest is likely to obtain improper
benefits, the personnel shall report the
relevant matters to both his or her
immediate supervisor and the
responsible unit, and the immediate
supervisor shall provide the personnel
with proper instructions.
No personnel of this Corporation may use
company resources on commercial
activities other than those of this
Corporation, nor may any personnel’s job
performance be affected by his or her
involvement in the commercial activities
other than those of this Corporation.		 If in the course of conducting company
business, any personnel of this
Corporation discovers that a potential
conflict of interest exists involving
themselves or the juristic person that
they represent, or that they or their
spouse, parents, children, or a person
with whom they have a relationship of
interest is likely to obtain improper
benefits, the personnel shall report the
relevant matters to both his or her
immediate supervisor and the
responsible unit, and the immediate
supervisor shall provide the personnel
with proper instructions.
No personnel of this Corporation may use
company resources on commercial
activities other than those of this
Corporation, nor may any personnel’s job
performance be affected by his or her
involvement in the commercial activities
other than those of this Corporation.
Article 12
This Corporation shall formulate and
implement procedures for managing,
preserving, and maintaining the
confidentiality of this Corporation’s
trade secrets, trademarks, patents, works
and other intellectual properties and it
shall also conduct periodical reviews on
the results of implementation to ensure
the sustained effectiveness of the
confidentiality procedures.
All personnel of this Corporation shall
faithfully follow the operational
directions pertaining to intellectual
properties as mentioned in the preceding
paragraph and may not disclose to any		 Article 12 (Special unit in charge of
confidentiality regime and its
responsibilities)
This Corporation shallset up a special
unit charged with formulating and
implementing procedures for managing,
preserving, and maintaining the
confidentiality of this Corporation’s
trade secrets, trademarks, patents, works
and other intellectual properties and it
shall also conduct periodical reviews on
the results of implementation to ensure
the sustained effectiveness of the
confidentiality procedures.
All personnel of this Corporation shall
faithfully follow the operational
directions pertaining to intellectual
properties as mentioned in the preceding
paragraph and may not disclose to any		 Revise this
Article in
accordance
with “Sample
Template for
XXX Co., Ltd.
Procedures for
Ethical
Management
and
Guidelines for
Conduct”.
(Decree
Cheng Kuei
Chien Tzu No.
10900521402
issued on
2020.02.19).

~26~

Before Amendment After Amendment After Amendment Explanation
other party any trade secrets, trademarks,
patents, works, and other intellectual
properties of this Corporation of which
they have learned, nor may they inquire
about or collect any trade secrets,
trademarks, patents, and other
intellectual properties of this Corporation
unrelated to their individual duties.		 other party any trade secrets, trademarks,
patents, works, and other intellectual
properties of this Corporation of which
they have learned, nor may they inquire
about or collect any trade secrets,
trademarks, patents, and other
intellectual properties of this Corporation
unrelated to their individual duties.
Article 13
This Corporation shall follow the Fair
Trade Act and applicable competition
laws and regulations when engaging in
business activities, and may not fix
prices, make rigged bids, establish output
restrictions or quotas, or share or divide
markets by allocating customers,
suppliers, territories, or lines of
commerce.		 Article 13 (Prohibition against conducting
actions engaging unfair competition)
This Corporation shall follow the Fair
Trade Act and applicable competition
laws and regulations when engaging in
business activities, and may not fix
prices, make rigged bids, establish output
restrictions or quotas, or share or divide
markets by allocating customers,
suppliers, territories, or lines of
commerce.		 (Prohibition against conducting
Revise this
Article in
accordance
with “Sample
Template for
XXX Co., Ltd.
Procedures for
Ethical
Management
and
Guidelines for
Conduct”.
(Decree
Cheng Kuei
Chien Tzu No.
10900521402
issued on
2020.02.19).
Article 14
This Corporation shall collect and
understand the applicable laws and
regulations and international standards
governing its products and services.		 Article 14
damaging		 Revise this
Article in
accordance
with “Sample
Template for
XXX Co., Ltd.
Procedures for
Ethical
Management
and
Guidelines for
Conduct”.
(Decree
Cheng Kuei
Chien Tzu No.

~27~

Before Amendment After Amendment Explanation
When this Corporation’s products or
services are likely to pose any hazard to
the safety and health of consumers or
other stakeholders, this Corporation shall
verify the facts and present a review and
improvement plan.
The responsible unit of this Corporation
shall report the event as in the preceding
paragraph, actions taken, and subsequent
reviews and corrective measures taken to
the board of directors.		 This Corporation shall adopt and publish
on its website a policy on the protection
of the rights and interests of consumers
or other stakeholders to prevent its
products and services from directly or
indirectly damaging the rights and
interests, health, and safety of consumers
or other stakeholders.
When this Corporation’s products or
services are likely to pose any hazard to
the safety and health of consumers or
other stakeholders, this Corporation shall
verify the facts and present a review and
improvement plan.
The responsible unit of this Corporation
shall report the event as in the preceding
paragraph, actions taken, and subsequent
reviews and corrective measures taken to
the board of directors.		 10900521402
issued on
2020.02.19).
Article 15
All Company personnel shall adhere to
the provisions of the Securities and
Exchange Act, and may not take
advantage of undisclosed information of
which they have learned to engage in
insider trading. Personnel are also
prohibited from divulging undisclosed
information to any other party, in order to
prevent other party from using such
information to engage in insider trading.
Any organization or person outside of
this Corporation that is involved in any
merger, demerger, acquisition and share
transfer, major memorandum of
understanding, strategic alliance, other
business partnership plan, or the signing
of a major contract by this Corporation
shall be required to sign a non-disclosure
agreement in which they undertake not to
disclose to any other party any trade		 Article 15 (Prohibition against insider
trading and non-disclosure agreement)
All Company personnel shall adhere to
the provisions of the Securities and
Exchange Act, and may not take
advantage of undisclosed information of
which they have learned to engage in
insider trading. Personnel are also
prohibited from divulging undisclosed
information to any other party, in order
to prevent other party from using such
information to engage in insider trading.
Any organization or person outside of
this Corporation that is involved in any
merger, demerger, acquisition and share
transfer, major memorandum of
understanding, strategic alliance, other
business partnership plan, or the signing
of a major contract by this Corporation
shall be required to sign a non-disclosure
agreement in which they undertake not
to disclose to any other party any trade		 Revise this
Article in
accordance
with “Sample
Template for
XXX Co., Ltd.
Procedures for
Ethical
Management
and
Guidelines for
Conduct”.
(Decree
Cheng Kuei
Chien Tzu No.
10900521402
issued on
2020.02.19).

~28~

Before Amendment After Amendment After Amendment Explanation
secret or other material information of
this Corporation acquired as a result, and
that they may not use such information
without the prior consent of this
Corporation.		 secret or other material information of
this Corporation acquired as a result, and
that they may not use such information
without the prior consent of this
Corporation.
Article 16
This Corporation shall disclose its policy
of ethical management in its internal
rules, annual reports, on the company’s
websites, and in other promotional
materials, and shall make timely
announcements of the policy in events
held for outside parties such as product
launches and investor press conferences,
in order to make its suppliers, customers,
and other business-related institutions and
personnel fully aware of its principles and
rules with respect to ethical management.		 Article 16(Compliance and announcement
of policy of ethical management)
The Company shall request their
directors and senior management to issue
a statement of compliance with the
ethical management policy and require in
the terms of employment that employees
comply with such policy.
This Corporation shall disclose its policy
of ethical management in its internal
rules, annual reports, on the company’s
websites, and in other promotional
materials, and shall make timely
announcements of the policy in events
held for outside parties such as product
launches and investor press conferences,
in order to make its suppliers, customers,
and other business-related institutions and
personnel fully aware of its principles and
rules with respect to ethical management.		 (Compliance and announcement


Revise this
Article in
accordance
with “Sample
Template for
XXX Co., Ltd.
Procedures for
Ethical
Management
and
Guidelines for
Conduct”.
(Decree
Cheng Kuei
Chien Tzu No.
10900521402
issued on
2020.02.19).
Article 17
Before developing a commercial
relationship with another party, such as
an agent, supplier, customer, or other
counterparty in commercial dealings, this
Corporation shall evaluate the legality
and ethical management policy of the
party and ascertain whether the party has
a record of involvement in unethical
conduct, in order to ensure that the party
conducts business in a fair and
transparent manner and will not request,
offer, or take bribes.		 Article 17(Ethical management evaluation
prior to development of commercial
relationships)
Before developing a commercial
relationship with another party, such as
an agent, supplier, customer, or other
counterparty in commercial dealings,
this Corporation shall evaluate the
legality and ethical management policy
of the party and ascertain whether the
party has a record of involvement in
unethical conduct, in order to ensure that
the party conducts business in a fair and
transparent manner and will not request,
offer, or take bribes.		 (Ethical management evaluation
Add the name
of this Article
in accordance
with “Sample
Template for
XXX Co., Ltd.
Procedures for
Ethical
Management
and
Guidelines for
Conduct”.

~29~

Before Amendment After Amendment Explanation
Article 18
Any personnel of this Corporation, when
engaging in commercial activities, shall
make a statement to the trading
counterparty about this Corporation's
ethical management policy and related
rules, and shall clearly refuse to provide,
promise, request, or accept, directly or
indirectly, any improper benefit in
whatever form or name.		 Article 18(Statement of ethical
management policy to counterparties in
commercial dealings)
Any personnel of this Corporation, when
engaging in commercial activities, shall
make a statement to the trading
counterparty about this Corporation's
ethical management policy and related
rules, and shall clearly refuse to provide,
promise, request, or accept, directly or
indirectly, any improper benefit in
whatever form or name.		 Add the name
of this Article
in accordance
with “Sample
Template for
XXX Co., Ltd.
Procedures for
Ethical
Management
and
Guidelines for
Conduct”.
Article 19
All personnel of this Corporation shall
avoid business transactions with an
agent, supplier, customer, or other
counterparty in commercial interactions
that is involved in unethical conduct.
When the counterparty or partner in
cooperation is found to have engaged in
unethical conduct, the personnel shall
immediately cease dealing with the
counterparty and blacklist it for any
further business interaction in order to
effectively implement this Corporation’s
ethical management policy.		 Article 19 (Avoidance of commercial
dealings with unethical operators)
All personnel of this Corporation shall
avoid business transactions with an
agent, supplier, customer, or other
counterparty in commercial interactions
that is involved in unethical conduct.
When the counterparty or partner in
cooperation is found to have engaged in
unethical conduct, the personnel shall
immediately cease dealing with the
counterparty and blacklist it for any
further business interaction in order to
effectively implement this Corporation’s
ethical management policy.		 Add the name
of this Article
in accordance
with “Sample
Template for
XXX Co., Ltd.
Procedures for
Ethical
Management
and
Guidelines for
Conduct”.
Article 20
Before entering into a contract with
another party, this Corporation shall gain
a thorough knowledge of the status of the
other party's ethical management, and
shall make observance of the ethical
management policy of this Corporation
part of the terms and conditions of the
contract, stipulating at the least the
following matters:
1. When a party to the contract becomes
aware that any personnel has violated		 Article 20 (Stipulation of terms of
ethical management in contracts)
Before entering into a contract with
another party, this Corporation shall
gain a thorough knowledge of the status
of the other party's ethical management,
and shall make observance of the ethical
management policy of this Corporation
part of the terms and conditions of the
contract, stipulating at the least the
following matters:
1. When a party to the contract becomes
aware that any personnel has violated
the terms and conditions pertaining to		 Add the name
of this Article
in accordance
with “Sample
Template for
XXX Co., Ltd.
Procedures for
Ethical
Management
and
Guidelines for
Conduct”.

~30~

Before Amendment After Amendment Explanation
the terms and conditions pertaining to
prohibition of acceptance of
commissions, rebates, or other
improper benefits, the party shall
immediately notify the other party of
the violator’s identity, the manner in
which the provision, promise, request,
or acceptance was made, and the
monetary amount or other improper
benefit that was provided, promised,
requested, or accepted. The party
shall also provide the other party with
pertinent evidence and cooperate
fully with the investigation. If there
has been resultant damage to either
party, the party may claim from the
other party.
2. Where a party is discovered to be
engaged in unethical conduct in its
commercial activities, the other party
may terminate or rescind the contract
unconditionally at any time.
3. Specific and reasonable payment
terms, including the place and
method of payment and the
requirement for compliance with
related tax laws and regulations.		 prohibition of acceptance of
commissions, rebates, or other
improper benefits, the party shall
immediately notify the other party of
the violator’s identity, the manner in
which the provision, promise, request,
or acceptance was made, and the
monetary amount or other improper
benefit that was provided, promised,
requested, or accepted. The party
shall also provide the other party with
pertinent evidence and cooperate fully
with the investigation. If there has
been resultant damage to either party,
the party may claim from the other
party.
2. Where a party is discovered to be
engaged in unethical conduct in its
commercial activities, the other party
may terminate or rescind the contract
unconditionally at any time.
3. Specific and reasonable payment
terms, including the place and
method of payment and the
requirement for compliance with
related tax laws and regulations.
Article 21
As an incentive to insiders and outsiders
for informing of unethical or unseemly
conduct, this Corporation will grant a
reward depending the seriousness of the
circumstance concerned. Insiders having
made a false report or malicious
accusation shall be subject to disciplinary
action and be removed from office if the
circumstance concerned is material.
This Corporation shall internally establish
and publicly announce on its website and		 Article 21 (Handling of unethical
conduct by personnel of this
Corporation)
As an incentive to insiders and outsiders
for informing of unethical or unseemly
conduct, this Corporation will grant a
reward depending the seriousness of the
circumstance concerned. Insiders having
made a false report or malicious
accusation shall be subject to disciplinary
action and be removed from office if the
circumstance concerned is material.
This Corporation shall internally establish
and publicly announce on its website and
Revise this
Article in
accordance
with “Sample
Template for
XXX Co., Ltd.
Procedures for
Ethical
Management
and
Guidelines for
Conduct”.
(Decree
Cheng Kuei

~31~

Before Amendment After Amendment Explanation
the intranet, or provide through an
independent external institution, an
independent mailbox or hotline, for
Company insiders and outsiders to submit
reports. A whistleblower shall at least
furnish the following information:
1. the whistleblower’s name and I.D.
number, and an address, telephone
number and e-mail address where it
can be reached.
2. the informed party’s name or other
information sufficient to distinguish
its identifying features.
3. specific facts available for
investigation.
Company personnel handling
whistle-blowing matters shall represent in
writing they will keep the whistleblowers’
identity and contents of information
confidential. This Corporation also
undertakes to protect the whistleblowers
from improper treatment due to their
whistle-blowing.
The responsible unit of this Corporation
shall observe the following procedure:
1. An information shall be reported to
the department head if involving the
rank and file and to an independent
director or supervisor if involving a
director or a senior executive.
2. The responsible unit of this
Corporation and the department head
or personnel being reported to in the
preceding subparagraph shall
immediately verify the facts and,		 the intranet, or provide through an
independent external institution, an
independent mailbox or hotline, for
Company insiders and outsiders to submit
reports. A whistleblower shall at least
furnish the following information:
1. the whistleblower’s name and I.D.
number(may also whistle-blowing
anonymously),and an address,
telephone number and e-mail address
where it can be reached.
2. the informed party’s name or other
information sufficient to distinguish
its identifying features.
3. specific facts available for
investigation.
Company personnel handling
whistle-blowing matters shall represent
in writing they will keep the
whistleblowers’ identity and contents of
information confidential. This
Corporation also undertakes to protect
the whistleblowers from improper
treatment due to their whistle-blowing.
The responsible unit of this Corporation
shallhandle the whistle-blowing in
accordance withthe following procedure:
1. An information shall be reported to
the department head if involving the
rank and file and to an independent
director or supervisor if involving a
director or a senior executive.
2. The responsible unit of this
Corporation and the department head
or personnel being reported to in the
preceding subparagraph shall
immediately verify the facts and,
Chien Tzu No.
10900521402
issued on
2020.02.19).

~32~

Before Amendment After Amendment Explanation
where necessary, with the assistance
of the legal compliance or other
related department.
3. If a person being informed of is
confirmed to have indeed violated the
applicable laws and regulations or
this Corporation's policy and
regulations of ethical management,
this Corporation shall immediately
require the violator to cease the
conduct and shall make an
appropriate disposition. When
necessary, this Corporation will
institute legal proceedings and seek
damages to safeguard its reputation
and its rights and interests.
4. Documentation of case acceptance,
investigation processes and
investigation results shall be retained
for five years and may be retained
electronically. In the event of a suit in
respect of the whistleblowing case
before the retention period expires,
the relevant information shall
continue to be retained until the
conclusion of the litigation.
5. With respect to a confirmed
information, this Corporation shall
charge relevant units with the task of
reviewing the internal control system
and relevant procedures and
proposing corrective measures to
prevent recurrence.
6. The responsible unit of this
Corporation shall submit to the board
of directors a report on the
whistleblowing case, actions taken,
and subsequent reviews and		 3.
4.
5.
6.		 where necessary, with the assistance
of the legal compliance or other
related department.
If a person being informed of is
confirmed to have indeed violated
the applicable laws and regulations
or this Corporation's policy and
regulations of ethical management,
this Corporation shall immediately
require the violator to cease the
conduct and shall make an
appropriate disposition. When
necessary, this Corporation will
report the competent agency, send
the case to judicial authority for
investigation andinstitute legal
proceedings and seek damages to
safeguard its reputation and its rights
and interests.
Documentation of case acceptance,
investigation processes and
investigation results shall be retained
for five years and may be retained
electronically. In the event of a suit
in respect of the whistleblowing case
before the retention period expires,
the relevant information shall
continue to be retained until the
conclusion of the litigation.
With respect to a confirmed
information, this Corporation shall
charge relevant units with the task of
reviewing the internal control system
and relevant procedures and
proposing corrective measures to
prevent recurrence.
The responsible unit of this
Corporation shall submit to the board
of directors a report on the
whistleblowing case, actions taken,
and subsequent reviews and

~33~

Before Amendment After Amendment After Amendment Explanation
corrective measures. corrective measures.
Article 22
If any personnel of this Corporation
discovers that another party has engaged
in unethical conduct towards this
Corporation, and such unethical conduct
involves alleged illegality, this
Corporation shall report the relevant
facts to the judicial and prosecutorial
authorities; where a public service
agency or public official is involved, this
Corporation shall additionally notify the
governmental anti-corruption agency.		 Article 22 (Actions upon event of
unethical conduct by others towards this
Corporation)
If any personnel of this Corporation
discovers that another party has engaged
in unethical conduct towards this
Corporation, and such unethical conduct
involves alleged illegality, this
Corporation shall report the relevant
facts to the judicial and prosecutorial
authorities; where a public service
agency or public official is involved, this
Corporation shall additionally notify the
governmental anti-corruption agency.		 Add the name
of this Article
in accordance
with “Sample
Template for
XXX Co., Ltd.
Procedures for
Ethical
Management
and
Guidelines for
Conduct”.
Article 23
The responsible unit of this Corporation
shall organize irregular awareness
sessions each year to communicate the
importance of ethics.
This Corporation shall link ethical
management to employee performance
evaluations and human resources policy,
and establish clear and effective systems
for rewards, penalties, and complaints.
If any personnel of this Corporation
seriously violates ethical conduct, this
Corporation shall dismiss the personnel
from his or her position or terminate his
or her employment in accordance with
applicable laws and regulations or the
personnel policy and procedures of this
Corporation.
This Corporation shall disclose on its
intranet information the name and title of
the violator, the date and details of the
violation, and the actions taken in
response.		 Article 23 (Establishment of a system for
rewards, penalties, and complaints, and
related disciplinary measures)
The responsible unit of this Corporation
shall organize irregular awareness
sessions each year to communicate the
importance of ethics.
This Corporation shall link ethical
management to employee performance
evaluations and human resources policy,
and establish clear and effective systems
for rewards, penalties, and complaints.
If any personnel of this Corporation
seriously violates ethical conduct, this
Corporation shall dismiss the personnel
from his or her position or terminate his
or her employment in accordance with
applicable laws and regulations or the
personnel policy and procedures of this
Corporation.
This Corporation shall disclose on its
intranet information the name and title of
the violator, the date and details of the
violation, and the actions taken in
response.		 Revise this
Article in
accordance
with “Sample
Template for
XXX Co., Ltd.
Procedures for
Ethical
Management
and
Guidelines for
Conduct”.
(Decree
Cheng Kuei
Chien Tzu No.
10900521402
issued on
2020.02.19).
Article 24 Article 24 (Enforcement) Revise this

~34~

Before Amendment After Amendment Explanation
These Procedures and Guidelines, and
any amendments hereto, shall be
implemented after adoption by resolution
of the board of directors, and shall be
delivered to each supervisor and reported
to the shareholders meeting.
When these Procedures and Guidelines
are submitted to the board of directors
for discussion, each independent
director's opinions shall be taken into full
consideration, and their objections and
reservations expressed shall be recorded
in the minutes of the board of directors
meeting. An independent director that is
unable to attend a board meeting in
person to express objection or
reservation shall provide a written
opinion before the board meeting unless
there is a legitimate reason to do
otherwise, and the opinion shall be
recorded in the minutes of the board of
directors meeting.		 These Procedures and Guidelines, and
any amendments hereto, shall be
implemented after adoption by resolution
of the board of directors, and shall be
delivered to each supervisor and reported
to the shareholders meeting.
When these Procedures and Guidelines
are submitted to the board of directors
for discussion, each independent
director's opinions shall be taken into full
consideration, and their objections and
reservations expressed shall be recorded
in the minutes of the board of directors
meeting. An independent director that is
unable to attend a board meeting in
person to express objection or
reservation shall provide a written
opinion before the board meeting unless
there is a legitimate reason to do
otherwise, and the opinion shall be
recorded in the minutes of the board of
directors meeting.
Where the Company established an audit
committee, the provisions regarding
supervisors in these Principles shall
apply mutatis mutandis to the audit
committee.		 Article in
accordance
with “Sample
Template for
XXX Co., Ltd.
Procedures for
Ethical
Management
and
Guidelines for
Conduct”.
(Decree
Cheng Kuei
Chien Tzu No.
10900521402
issued on
2020.02.19).

~35~

Attachment 6

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 of December 31, 2019 and 2018, 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 of December 31, 2019 and 2018, and its financial performance and its cash flows for the years then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”.

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:

~36~

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

Description

Refer to Note 4(9) for the accounting policy on inventory, Note 5 for the information of accounting estimates and assumption uncertainty in relation to inventory valuation, and Note 6(3) for the details of inventory. As of December 31, 2019, the balances of inventories and allowance for inventory valuation losses were NT$521,673 thousand and NT$12,240 thousand, respectively.

The Company engages primarily in the manufacture and sales of linear guides and linear blocks. As the end-users require high-quality performances, risk of inventory devaluation or obsolescence could have incurred. The Company measures its inventories at the lower of cost and net realizable value. The net realizable value of the Company’s inventories aged over a certain period is calculated based on the historical extent of inventory clearance and degree of price markdown. The allowance for valuation loss mainly arises from individually identified obsolete inventories, and the procedures of such identification involves subjective judgment, which might result in high degree of estimation uncertainty. Considering that the Company’s inventory and the allowance for inventory valuation losses are material to the financial statements, we, independent accountants, viewed the allowance for inventory valuation loss as one of the key audit matters.

How our audit addressed the matter

We performed following audit procedures in response to the abovementioned key audit matter:

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

  • B. We verified whether the dates 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 net realizable value and to evaluate the reasonableness of allowance for inventory valuation loss.

~37~

Authenticity of sales revenue

Description

Refer to Note 4(24) for the accounting policy on revenue recognition and Note 6(16) for the details of operating revenue.

The Company sells a variety of linear guides, ball screws and linear modules, and the target market reaches globally, including Taiwan, Asia, Europe, America and so forth. Since the customers are numerous and scattered, and the number of transactions is voluminous, it will take a longer time to verify their authenticity. Thus, we viewed the authenticity of sales revenue as one of the key audit matters for the year.

How our audit addressed the matter

We performed following audit procedures in response to the abovementioned key audit matter:

  • A. We confirmed the process of revenue recognition, including reviewing customer basic information and credit limit table, revenue recognition basis, authorizing procedures and collection processes. Also, we selected samples from different customers to evaluate the management’s effectiveness of internal controls over sales revenue recognition.

  • B. We performed a series verification sample test for the sales revenue transactions of the year, including vouching customers’ orders, shipping orders, export declaration documents, customer receipt records and sales invoices or subsequent receipts, to confirm whether the sales revenue transactions really occurred.

  • C. We tested the manual accounting entries recognized for sales revenue, including verifying the transactions nature of the relevant manual entries and checking the relevant supporting documents. For the same purpose, we also checked the relevant supporting documents and the rationality of the debit notes issued after the balance sheet date.

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.

~38~

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 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

~39~

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 audit. We remain solely responsible for our audit opinion.

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of 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.

~40~

Lin, Yung-Chih

Independent Accountants

Lin, Tzu-Shu

PricewaterhouseCoopers, Taiwan Republic of China March 11, 2020

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.

~41~

CHIEFTEK PRECISION CO., LTD. PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars)

Assets Notes
6(1)
6(2)
6(2) and 12
7
7
5 and 6(3)
6(4)
6(5) and 8
3(1) and 6(6)
6(7)(8) and 7
6(22)
6(5)		 December 31, 2019
AMOUNT
%
$ 419,025
13
18,984
1
154,733
5
267,370
8
1,630
-
509,433
16
23,604
1
1,394,779
44
295,776
10
1,105,943
35
130,248
4
120,143
4
26,060
1
57,161
2
2,135
-
1,925
-
1,739,391
56
$ 3,134,170
100		 December 31, 2018 December 31, 2018
AMOUNT
$ 419,025
18,984
154,733
267,370
1,630
509,433
23,604
1,394,779
295,776
1,105,943
130,248
120,143
26,060
57,161
2,135
1,925
1,739,391
$ 3,134,170		 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		 %
Current assets
1100
Cash and cash equivalents
1150
Notes receivable, net
1170
Accounts receivable, net
1180
Accounts receivable - related parties
1200
Other receivables
130X
Inventories
1410
Prepayments
11XX
Total current assets
Non-current assets
1550
Investments accounted for under
equity method
1600
Property, plant and equipment
1755
Right-of-use assets
1780
Intangible assets
1840
Deferred income tax assets
1915
Prepayments for equipment
1920
Guarantee deposits paid
1990
Other non-current assets
15XX
Total non-current assets
1XXX
Total assets		 17
1
6
11
-
18
-
53
13
28
-
3
1
2
-
-
47
100

(Continued)

~42~

CHIEFTEK PRECISION CO., LTD. PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity Notes
6(9)(26)
6(16)
6(10) and 7
6(22)
3(1), 6(6)(26)
6(11)(26), 8 and 9
6(11)(26), 8 and 9
6(22)
3(1), 6(6)(26)
6(12)
6(4)
6(13)(15)
6(13)(14)
6(13)(15)
6(4)

6(6)(24), 7 and 9		 December 31, 2019
AMOUNT
%
$ 220,000
7
2,349
-
79,155
3
17,045
1
119,496
4
15,109
-
4,912
-
99,028
3
557,094
18
402,202
13
4,211
-
126,431
4
6,664
-
12,783
-
552,291
17
1,109,385
35
811,876
26
440,667
14
144,552
5
17,047
1
640,037
20
(
29,394 )(
1 )(
2,024,785
65
$ 3,134,170
100		 December 31, 2018 December 31, 2018
AMOUNT
$ 220,000
2,349
79,155
17,045
119,496
15,109
4,912
99,028
557,094
402,202
4,211
126,431
6,664
12,783
552,291
1,109,385
811,876
440,667
144,552
17,047
640,037
(
29,394 )(
2,024,785
$ 3,134,170		 AMOUNT
$ 120,000
94
154,647
67,610
166,059
81,873
-
55,134
645,417
421,116
25,827
-
7,444
33,404
487,791
1,133,208
738,069
440,667
97,280
12,367
664,519
17,047 )
1,935,855
$ 3,069,063		 %
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
2280
Current lease liabilities
2320
Long-term liabilities, current portion
21XX
Total current liabilities
Non-current liabilities
2540
Long-term borrowings
2570
Deferred income tax liabilities
2580
Non-current lease 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
3XXX
Total equity
Significant Contingent Liabilities and
Unrecognized Contract Commitments
3X2X
Total liabilities and equity		 4
-
5
2
5
3
-
2
21
14
1
-
-
1
16
37
24
14
3
-
22
-
63
100 
The accompanying notes are an integral part of these parent company only financial statements.

~43~

CHIEFTEK PRECISION CO., LTD. PARENT COMPANY ONLY STATEMENTS OF COMPEHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

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

Items Year ended December 31
2019
2018
Notes
AMOUNT
%
AMOUNT
6(16) and 7
$ 1,040,726
100
$ 1,836,489
6(3)(12)(20)(21)(2
4)
(
652,831 ) (
62 ) (
1,060,083 ) (
387,895
38
776,406
6(4)
(
82,238 ) (
8 ) (
94,712 ) (
6(4)
94,712
9
52,500
400,369
39
734,194
6(7)(12)(20)(21)
and 7
(
44,232 ) (
4 ) (
45,427 ) (

(
81,062 ) (
8 ) (
116,820 ) (

(
59,576 ) (
6 ) (
78,768 ) (
12
(
547 )
-
908
(
185,417 ) (
18 ) (
240,107 ) (
214,952
21
494,087
6(17) and 7
7,479
1
4,223
6(7)(8)(18) and 12 (
18,081 ) (
2 )
19,948
6(5)(6)(19)
(
9,131 ) (
1 ) (
8,602 )
6(4)
15,140
1
77,804
(
4,593 ) (
1 )
93,373
210,359
20
587,460
6(22)
(
35,715 ) (
3 ) (
114,743 ) (
$ 174,644
17
$ 472,717
6(12)
$ 550
-
($ 2,005 )
6(22)
(
110 )
-
583
6(4)
(
12,347 ) (
1 ) (
4,680 ) (
($ 11,907 ) (
1 ) ($ 6,102 ) (
$ 162,737
16
$ 466,615
6(23)
$ 2.15
$ $ 2.14
$		 Year ended December 31 Year ended December 31 %
100
58 )
42
5 )
3
40
3 )
6 )
4 )
-
13 )
27
-
1
-
4
5
32
6 )
26
-
-
1 )
1 )
25
5.82
5.77
2019 2018
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 (loss)
gain
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 gain (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 tranlation
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.

~44~

CHIEFTEK PRECISION CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars)

2018
Balance at January 1, 2018
Profit for the year
Other comprehensive loss for the year
Total comprehensive income (loss) for the year
Appropriations of 2017 earnings:
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
2019
Balance at January 1, 2019
Profit for the year
Other comprehensive income (loss) for the year
Total comprehensive income (loss) for the year
Appropriations of 2018 earnings:
Legal reserve
Special reserve
Cash dividends
Stock dividends
Balance at December 31, 2019		 Notes Share capital -
commonstock		 Capital reserve RetainedEarnings RetainedEarnings RetainedEarnings Financial statements
translation
differences of
foreignoperations		 Financial statements
translation
differences of
foreignoperations		 Treasury stocks Treasury stocks Total
Legal reserve Special
reserve		 Unappropriated
retained earnings
6(4)
6(15)
6(15)
6(13)(15)
6(13)(14)
6(15)
6(4)
6(15)
6(15)
6(13)(15)		 $ 620,455
-
-
-
-
-
-
147,614
(
30,000
)
-
$ 738,069
$ 738,069
-
-
-
-
-
-
73,807
$ 811,876		 $ 463,05
-
-
-
-
-
-
-
(
22,384
)
-
$ 440,66
$ 440,66
-
-
-
-
-
-
-
$ 440,66		 $ 73,463
-
-
-
23,817
-
-
-
-
-
$ 97,280
$ 97,280
-
-
-
47,272
-
-
-
$ 144,552		 $ 5,928
-
-
-
-
6,439
-
-
-
-
$ 12,367
$ 12,367
-
-
-
-
4,680
-
-
$ 17,047		 (
(
(
(
(
(
(
(
(
(
(		 $ 497,930
472,717
1,422
)
471,295
23,817
)
6,439
)
59,045
)
147,614
)
66,160
)
1,631
)
$ 664,519
$ 664,519
174,644
440
175,084
47,272
)
4,680
)
73,807
)
73,807
)
$ 640,037		 (
(
(
(
(
(
(
(		 $ 12,367
)
-
4,680
)
4,680
)
-
-
-
-
-
-
$ 17,047
)
$ 17,047
)
-
12,347
)
12,347
)
-
-
-
-
$ 29,394
)		 ( $ 118,54)
-
-
-
-
-
-
-
118,544
-
$ $ -
-
-
-
-
-
-
$		 (
(
(
(
(		 $ 1,529,916
472,717
6,102
)
466,615
-
-
59,045
)
-
-
1,631
)
$ 1,935,855
$ 1,935,855
174,644
11,907
)
162,737
-
-
73,807
)
-
$ 2,024,785

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

~45~

CHIEFTEK PRECISION CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(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 (gain)
Reversal of 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
Amotization
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
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
Dividend received
Interest received
Interest paid
Income tax paid
Net cash flows from operating activities		 For the years ended December 31,
Notes
2019
2018
$ 210,359
$ 587,460
12
547
(
908 )
6(3)
(
1,561 ) (
8,690 )
6(4)
(
15,140 ) (
77,804 )
6(4)
82,238
94,712
6(4)
(
94,712 ) (
52,500 )
6(5)(6)(20)
76,397
75,652
6(7)(20)
2,334
2,319
6(7)(8)(18)
-
10,117
6(17)
(
2,575 ) (
3,372 )
6(19)
9,131
8,602
6,239
(
1,290 )
38,203
17,364
64,006
(
115,632 )
2,579
4,421
40,232
(
246,235 )
(
10,003 ) (
5,378 )
2,255
94
(
97,182 )
40,200
(
50,565 ) (
23,035 )
(
62,392 )
43,425
-
(
727 )
(
230 ) (
235 )
200,160
348,560
6(4)
121,770
-
1,720
3,276
(
9,120 ) (
8,596 )
(
123,189 ) (
47,323 )
191,341
295,917

(Continued)

~46~

CHIEFTEK PRECISION CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES
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
Acquisition of intangible assets
Increase in prepayment for equipment
Increase in guarantee deposits paid
Decrease in other financial assets - non-current
Decrease (increase) in other non-current assets
Decrease in other non-operating receivables due
from related parties
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in short-term borrowings
Payments of lease liability
Increase in long-term borrowings
Decrease in long-term borrowings
Payments of cash dividends
Net cash flows from financing activities
Net (decrease) 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
2019
2018
$ 855
$ 96
6(4)
(
18,623 ) (
46,381 )
6(25)
(
176,768 ) (
58,123 )
6(5)(19)(25)
(
3,326 ) (
845 )
6(7)
(
21,031 ) (
1,170 )
(
114,417 ) (
84,228 )
(
568 ) (
6 )
-
1,445
1,511
(
56 )
-
40,431
(
332,367 ) (
148,837 )
6(26)
100,000
(
5,000 )
6(26)
(
4,825 )
-
6(26)
200,000
510,000
6(26)
(
175,020 ) (
424,383 )
6(15)
(
73,807 ) (
59,045 )
46,348
21,572
(
94,678 )
168,652
6(1)
513,703
345,051
6(1)
$ 419,025
$ 513,703

~47~

The accompanying notes are an integral part of these parent company only financial statements. 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 of December 31, 2019 and 2018, 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 of December 31, 2019 and 2018, 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.

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.

~48~

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(11) for the accounting policy on inventory, Note 5 for the information of accounting estimates and assumption uncertainty in relation to inventory valuation, and Note 6(4) for the details of inventory. As of December 31, 2019, the balances of inventories and allowance for inventory valuation losses were NT$687,120 thousand and NT$49,843 thousand, respectively.

The Group engages primarily in the manufacture and sales of linear guides and linear blocks. As the end-users require high-quality performances, risk of inventory devaluation or obsolescence could have incurred. The Group measures its inventories at the lower of cost and net realizable value. The net realizable value of the Group’s inventories aged over a certain period is calculated based on the historical extent of inventory clearance and degree of price markdown. The allowance for valuation loss mainly arises from individually identified obsolete inventories, and the procedures of such identification involves subjective judgment, which might result in high degree of estimation uncertainty. Considering that the Group’s inventory and the allowance for inventory valuation losses are material to the financial statements, we, independent accountants, viewed the allowance for inventory valuation loss as one of the key audit matters.

How our audit addressed the matter

We performed following audit procedures in response to the abovementioned key audit matter:

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

  • B. We verified whether the dates 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 losses 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 net realizable value and to evaluate the reasonableness of allowance for inventory valuation loss.

~49~

Authenticity of sales revenue

Description

Refer to Note 4(25) for the accounting policy on revenue recognition and refer to Note 6(16) for the details of operating revenue.

The Group sells a variety of linear guides, ball screws and linear modules, and the target market reaches globally, including Taiwan, Asia, Europe, America and so forth. Since the customers are numerous and scattered, and the number of transactions is voluminous, it will take a longer time to verify their authenticity. Thus, we viewed the authenticity of sales revenue as one of the key audit matters for the year.

How our audit addressed the matter

We performed following audit procedures in response to the abovementioned key audit matter:

  • A. We confirmed the process of revenue recognition, including reviewing customer basic information and credit limit table, revenue recognition basis, authorizing procedures and collection processes. Also, we selected samples from different customers to evaluate the management’s effectiveness of internal controls over sales revenue recognition.

  • B. We performed a series verification sample test for the sales revenue transactions of the year, including vouching customers’ orders, shipping orders, export declaration documents, customer receipt records and sales invoices or subsequent receipts, to confirm whether the sales revenue transactions really occurred.

  • C. We tested the manual accounting entries recognized for sales revenue, including verifying the transactions nature of the relevant manual entries and checking the relevant supporting documents. For the same purpose, we also checked the relevant supporting documents and the rationality of the debit notes issued after the balance sheet date.

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 of and for the years ended December 31, 2019 and 2018.

~50~

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.

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.

~51~

  • 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.

  • 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.

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

~52~

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 11, 2020

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.

~53~

CHIEFTEK PRECISION CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER31, 2019 AND 2018

(Expressed in thousands of (Expressed in thousands of New Taiwan dollars)
December 31, 2019 December 31, 2018
Assets Notes AMOUNT % AMOUNT %
Current assets
1100 Cash and cash equivalents 6(1) $ 678,134 21 $ 797,400 25
1136 Financial assets at amortized cost - 6(2)
current 7,629 - - -
1150 Notes receivable, net 6(3) 27,559 1 50,722 2
1170 Accounts receivable, net 6(3) and 12 298,789 9 432,443 13
1200 Other receivables 3,252 - 12,371 -
1220 Current income tax assets 6(22) 2,992 - - -
130X Inventories 5 and 6(4) 637,277 19 683,544 21
1410 Prepayments 28,538 1 21,825 1
11XX Total current assets 1,684,170 51 1,998,305 62
Non-current assets
1600 Property, plant and equipment 6(5)(7) and 8 1,290,959 39 1,035,570 32
1755 Right-of-use assets 3(1) and 6(6) 130,248 4 - -
1780 Intangible assets 6(7)(8) 120,990 3 124,977 4
1840 Deferred income tax assets 6(22) 26,060 1 27,076 1
1915 Prepayments for equipment 6(5) 57,161 2 52,737 1
1920 Guarantee deposits paid 7,700 - 5,076 -
1990 Other non-current assets 2,879 - 3,643 -
15XX Total non-current assets 1,635,997 49 1,249,079 38
1XXX Total assets $ 3,320,167 100 $ 3,247,384 100

(Continued)

~54~

CHIEFTEK PRECISION CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity December 31, 2019
Notes
AMOUNT
%
6(9)(27)
$ 313,315
9
6(16)
3,964
-
79,155
2
18,711
1
6(10)
135,507
4
6(22)
18,700
1
3(1), 6(6)(27)
4,912
-
1,699
-
6(11)(27), 8 and 9
101,136
3
677,099
20
6(11)(27), 8 and 9
480,977
15
6(22)
4,211
-
3(1), 6(6)(27)
126,431
4
6(12)
6,664
-
618,283
19
1,295,382
39
6(13)(15)
811,876
25
6(13)(14)
440,667
13
6(13)(15)(24)
144,552
4
17,047
1
640,037
19
(
29,394 )(
1 )(
2,024,785
61
6(6)(25) and 9
$ 3,320,167
100		 December 31, 2018 December 31, 2018
AMOUNT
$ 210,407
1,828
154,647
68,940
196,074
83,397
-
1,781
57,208
774,282
503,976
25,827
-
7,444
537,247
1,311,529
738,069
440,667
97,280
12,367
664,519
17,047 )
1,935,855
$ 3,247,384		 %
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
2280
Current lease 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
2580
Non-current lease 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
3XXX
Total equity
Significant Contingent Liabilities and
Unrecognized Contract Commitments
3X2X
Total liabilities and equity		 6
-
5
2
6
3
-
-
2
24
15
1
-
-
16
40
23
14
3
-
20
-
60
100

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

~55~

CHIEFTEK PRECISION CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

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

Items Year ended December 31
2019
2018
Notes
AMOUNT
%
AMOUNT
6(16)
$ 1,300,351
100
$ 2,078,901
6(4)(12)(20)(21)(2
5)
(
718,689 )(
55 ) (
1,090,575 ) (
581,662
45
988,326
6(7)(12)(20)(21)
and 7
(
112,591 ) (
9 ) (
122,653 ) (

(
143,748 ) (
11 ) (
168,236 ) (

(
72,112 ) (
5 ) (
87,175 ) (
12
(
11,672 )(
1 ) (
5,368 )
(
340,123 )(
26 ) (
383,432 ) (
241,539
19
604,894
6(2)(17)
12,413
1
9,292
6(18) and 12
(
17,743 ) (
2 )
11,327
6(6)(19)
(
13,982 )(
1 ) (
15,676 ) (
(
19,312 )(
2 )
4,943
222,227
17
609,837
6(22)
(
47,583 )(
3 ) (
138,585 ) (
$ 174,644
14
$ 471,252
6(12)
$ 550
-
( $ 2,005 )
6(22)
(
110 )
-
583
(
12,347 )(
1 ) (
4,666 )
($ 11,907 )(
1 ) ($ 6,088 )
$ 162,737
13
$ 465,164
$ 174,644
14
$ 472,717
-
-
(
1,465 )
$ 174,644
14
$ 471,252
$ 162,737
13
$ 466,615
-
-
(
1,451 )
$ 162,737
13
$ 465,164
6(23)
$ 2.15
$ $ 2.14
$		 Year ended December 31 Year ended December 31 Year ended December 31 %
100
53 )
47
6 )
8 )
4 )
-
18 )
29
-
1
1 )
-
29
7 )
22
-
-
-
-
22
22
-
22
22
-
22
5.82
5.77
2019 %
100
55 ) (
45
9 ) (
11 ) (
5 ) (
1 ) (
26 ) (
19
1
2 )
1 ) (
2 )
17
3 ) (
14
-
(
-
1 ) (
1 ) (
13
14
-
(
14
13
-
(
13
2.15
2.14		 2018
AMOUNT
$ 2,078,901
1,090,575 ) (
988,326
122,653 ) (
168,236 ) (
87,175 ) (
5,368 )
383,432 ) (
604,894
9,292
11,327
15,676 ) (
4,943
609,837
138,585 ) (
$ 471,252
$ 2,005 )
583
4,666 )
$ 6,088 )
$ 465,164
$ 472,717
1,465 )
$ 471,252
$ 466,615
1,451 )
$ 465,164
$
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 gain (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
Net Income
Comprehensive income (loss)
attributable to:
8710
Owners of the parent
8720
Non-controlling interest
Net Income
Earnings per share (in dollars)
9750
Basic
9850
Diluted
$ $

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

~56~

CHIEFTEK PRECISION CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars)

2018
Balance at January 1, 2018
Profit (loss) for the year
Other comprehensive income (loss) for the year
Total comprehensive income (loss) for the year
Appropriations of 2017 earnings:
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
2019
Balance at January 1, 2019
Profit (loss) for the year
Other comprehensive income (loss) for the year
Total comprehensive income (loss) for ther year
Appropriations of 2018 earnings:
Legal reserve
Special reserve
Cash dividends
Stock dividends
Balance at December 31, 2019		 Notes Equity attributable to owners ofthe parent Equity attributable to owners ofthe parent Equity attributable to owners ofthe parent Equity attributable to owners ofthe parent Equity attributable to owners ofthe parent Equity attributable to owners ofthe parent Non-controllin
ginterest		 Totalequity
Share capital -
commonstock		 Capital reserve RetainedEarnings Financial
statements
translation
differences of
foreign
operations		 Treasury stocks Total
Legal reserve Special reserve Unappropriated
retained earnings
6(15)
6(15)
6(13)(15)
6(13)(14)
6(24)
6(15)
6(15)
6(13)(15)		 $ 620,455
-
-
-
-
-
-
147,614
(
30,000 )
-
$ 738,069
$ 738,069
-
-
-
-
-
-
73,807
$ 811,876		 $463,051
-
-
-
-
-
-
-
(
22,384 )
-
$ 440,667
$ 440,667
-
-
-
-
-
-
-
$ 440,667		 $ 73,463
-
-
-
23,817
-
-
-
-
-
$ 97,280
$ 97,280
-
-
-
47,272
-
-
-
$ 144,552		 $ 5,928
-
-
-
-
6,439
-
-
-
-
$ 12,367
$ 12,367
-
-
-
-
4,680
-
-
$ 17,047		 $ 497,930
472,717
(
1,422 )
471,295
(
23,817 )
(
6,439 )
(
59,045 )
(
147,614 )
(
66,160 )
(
1,631 )
$ 664,519
$ 664,519
174,644
440
175,084
(
47,272 )
(
4,680 )
(
73,807 )
(
73,807 )
$ 640,037		 ($ 12,367 )
-
(
4,680 )
(
4,680 )
-
-
-
-
-
-
($ 17,047 )
($ 17,047 )
-
(
12,347 )
(
12,347 )
-
-
-
-
($ 29,394 )		 ($ 118,544 )
-
-
-
-
-
-
-
118,544
-
$ -
$ -
-
-
-
-
-
-
-
$ -		 $1,529,916
472,717
(
6,102 )
466,615
-
-
(
59,045 )
-
-
(
1,631 )
$1,935,855
$ 1,935,855
174,644
(
11,907 )
162,737
-
-
(
73,807 )
-
$ 2,024,785		 ($ 180 )
(
1,465 )
14
(
1,451 )
-
-
-
-
-
1,631
$ -
$ -
-
-
-
-
-
-
-
$ -		 $1,529,736
471,252
(
6,088 )
465,164
-
-
(
59,045 )
-
-
-
$1,935,855
$ 1,935,855
174,644
(
11,907 )
162,737
-
-
(
73,807 )
-
$ 2,024,785

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

~57~

C HIEFTEK PRECISION CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(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 inventory market price decline
Depreciation
Loss 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 paid
Net cash flows from operating activities		 For the years ended December 31,
Notes
2019
2018
$ 222,227
$ 609,837
12
11,672
5,368
6(4)
(
3,482 ) (
3,712 )
6(5)(6)(7)(20)
89,222
84,158
6(18)
25
41
6(7)(20)
2,992
2,753
6(7)(8)(18)
-
10,117
6(17)
(
4,180 ) (
5,333 )
6(19)
13,982
15,676
23,163
(
24,182 )
122,959
(
37,433 )
9,119
(
7,849 )
51,268
(
305,750 )
(
6,713 )
773
2,136
1,828
(
97,182 )
40,200
(
50,229 ) (
22,749 )
(
75,773 )
44,813
(
82 ) (
1,641 )
(
230 ) (
235 )
310,894
406,680
4,180
5,333
(
14,556 ) (
14,970 )
(
135,982 ) (
75,275 )
164,536
321,768

(Continued)

~58~

C HIEFTEK PRECISION CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES
Increase in financial assets at amortized cost -
current
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
Acquisition of intangible assets
Increase in prepayment for equipment
(Increase) decrease in guarantee deposits paid
Decrease in other non-current financial assets
Decrease (increase) in other non-current assets
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in short-term borrowings
Payments of lease liability
Increase in long-term borrowings
Decrease in long-term borrowings
Payments of cash dividends
Net cash flows from (used in) financing
activities
Effect of foreign exchange rate changes on cash and
cash equivalents
Net (decrease) 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
2019
2018
( $ 7,629 )
$ -
6(26)
(
192,792 ) (
63,607 )
6(5)(19)(26)
(
3,326 ) (
845 )
-
522
6(7)
(
119 ) (
16,282 )
(
114,417 ) (
84,228 )
(
2,624 )
85
-
1,445
764
(
1,597 )
(
320,143 ) (
164,507 )
6(27)
106,222
(
5,516 )
6(27)
(
4,825 )
-
6(27)
200,000
460,000
6(27)
(
177,102 ) (
402,426 )
6(15)
(
73,807 ) (
59,045 )
50,488
(
6,987 )
(
14,147 ) (
4,698 )
(
119,266 )
145,576
6(1)
797,400
651,824
6(1)
$ 678,134
$ 797,400

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

~59~

Attachment 7

Chieftek Precision Co., Ltd. 2019 Profit Distribution Proposal

Unit: NT$ in dollar

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
Increase: Confirmation of actuarial losses of benefit plan
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		 174,644,076
(
17,464,408)
( 12,347,203)
( 80,742,549)
0		 $ 464,953,802
440,386
465,394,188

144,832,465
610,226,653
( 80,742,549)
$ 529,484,104
Notes:
1. The surplus distribution for this time will give priority to distribution of 2019 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.
3. 81,187,549 current capital shares minus 445,000 treasury shares＝80,742,549 outstanding preferred
shares

~60~

Attachment 8

Chieftek Precision Co., Ltd.

The Comparison Table of the Amendment to “Rules of Procedure for

Shareholders Meetings”

Before Amendment After Amendment Explanation Article 3: Convening a Board Article 3: Convening a Board meeting Revise in meeting and meeting notice and meeting notice accordance Unless otherwise provided by law or Unless otherwise provided by law or with regulation, this Corporation's regulation, this Corporation's “Corporate shareholders meetings shall be shareholders meetings shall be Governance convened by the board of directors. convened by the board of directors. Best Practice This Corporation shall prepare This Corporation shall prepare Principles electronic versions of the electronic versions of the for shareholders meeting notice and shareholders meeting notice and TWSE/TPEx proxy forms, and the origins of and proxy forms, and the origins of and Listed explanatory materials relating to all explanatory materials relating to all Companies”. proposals, including proposals for proposals, including proposals for ratification, matters for deliberation, ratification, matters for deliberation, or the election or dismissal of or the election or dismissal of directors or supervisors, and upload directors or supervisors, and upload them to the Market Observation Post them to the Market Observation Post System (MOPS) before 30 days System (MOPS) before 30 days before the date of a regular before the date of a regular shareholders meeting or before 15 shareholders meeting or before 15 days before the date of a special days before the date of a special shareholders meeting. This shareholders meeting. This Corporation shall prepare electronic Corporation shall prepare electronic versions of the shareholders meeting versions of the shareholders meeting agenda and supplemental meeting agenda and supplemental meeting materials and upload them to the materials and upload them to the MOPS before 21 days before the date MOPS before 21 days before the date of the regular shareholders meeting of the regular shareholders meeting or or before 15 days before the date of before 15 days before the date of the the special shareholders meeting. In special shareholders meeting. In addition, before 15 days before the addition, before 15 days before the date of the shareholders meeting, this date of the shareholders meeting, this Corporation shall also have prepared Corporation shall also have prepared the shareholders meeting agenda and the shareholders meeting agenda and supplemental meeting materials and supplemental meeting materials and made them available for review by made them available for review by shareholders at any time. The shareholders at any time. The meeting meeting agenda and supplemental agenda and supplemental materials materials shall also be displayed at shall also be displayed at this this Corporation and the professional Corporation and the professional shareholder services agent shareholder services agent designated

  • 61 -
designated thereby as well as being
distributed on-site at the meeting
place.
The reasons for convening a
shareholders meeting shall be
specified in the meeting notice and
public announcement. With the
consent of the addressee, the meeting
notice may be given in electronic
form.
Election or dismissal of directors or
supervisors, amendments to the
articles of incorporation, the
dissolution, merger, or demerger of
the corporation, or any matter under
Article 185, paragraph 1 of the
Company Act,Articles 26-1 and
43-6 of the Securities and Exchange
Act, or Articles 56-1 and 60-2 of the
Regulations Governing the Offering
and Issuance of Securities by
Securities Issuersshall be set out in
the notice of the reasons for
convening the shareholders meeting.
None of the above matters may be
raised by an extraordinary motion.
A shareholder holding 1 percent or
more of the total number of issued
shares may submit to this
Corporation a written proposal for
discussion at a regular shareholders		 thereby as well as being distributed
on-site at the meeting place.
The reasons for convening a
shareholders meeting shall be
specified in the meeting notice and
public announcement. With the
consent of the addressee, the meeting
notice may be given in electronic
form.
Election or dismissal of directors or
supervisors, amendments to the
articles of incorporation,reduction of
capital, application for the approval of
ceasing its status as a public
company, approval of competing with
the company by directors, surplus
profit distributed in the form of new
shares, reserve distributed in the form
of new shares, the dissolution,
merger, or demerger of the
corporation, or any matter under
Article 185, paragraph 1 of the
Company Act shall be set outand the
essential contents thereof shall be
explainedin the notice of the reasons
for convening the shareholders
meeting. None of the above matters
may be raised by an extraordinary
motion.The essential contents may be
posted on the website designated by
the competent authority in charge of
securities affairs or the company, and
such website shall be indicated in the
above notice.
If re-election of the directors and
independent directors and the date of
appointment thereof are both stated
clearly on the reasons for convening a
shareholders’ meeting, then the date
of appointment shall not be changed
by extempore motion or other means
during the same meeting after the
re-election of the Board is completed.
A shareholder holding 1 percent or
more of the total number of issued
shares may submit to this Corporation
a written proposal for discussion at a
regular shareholders meeting. Such
  • 62 -
meeting. Such proposals, however,
are limited to one item only, and no
proposal containing more than one
item will be included in the meeting
agenda. In addition, when the
circumstances of any subparagraph
of Article 172-1, paragraph 4 of the
Company Act apply to a proposal put
forward by a shareholder, the board
of directors may exclude it from the
agenda.
Prior to the book closure date before
a regular shareholders meeting is
held, this Corporation shall publicly
announce that it will receive
shareholder proposals, and the
location and time period for their
submission; the period for
submission of shareholder proposals
may not be less than 10 days.
Shareholder-submitted proposals are
limited to 300 words, and no
proposal containing more than 300
words will be included in the
meeting agenda. The shareholder
making the proposal shall be present
in person or by proxy at the regular
shareholders meeting and take part in
discussion of the proposal.
Prior to the date for issuance of
notice of a shareholders meeting, this
Corporation shall inform the
shareholders who submitted
proposals of the proposal screening
results, and shall list in the meeting
notice the proposals that conform to
the provisions of this article. At the
shareholders meeting the board of
directors shall explain the reasons for
exclusion of any shareholder
proposals not included in the agenda.		 proposals, however, are limited to one
item only, and no proposal containing
more than one item will be included
in the meeting agenda.
However, a shareholder proposal
proposed for urging a company to
promote public interests or fulfill its
social responsibilities may still be
included in the list of proposals to be
discussed at a regular meeting of
shareholders by the board of
directors. In addition, when the
circumstances of any subparagraph of
Article 172-1, paragraph 4 of the
Company Act apply to a proposal put
forward by a shareholder, the board of
directors may exclude it from the
agenda.
Prior to the book closure date before a
regular shareholders meeting is held,
this Corporation shall publicly
announce that it will receive
shareholder proposals, and the
location and time period for their
submission; the period for submission
of shareholder proposals may not be
less than 10 days.
Shareholder-submitted proposals are
limited to 300 words, and no proposal
containing more than 300 words will
be included in the meeting agenda.
The shareholder making the proposal
shall be present in person or by proxy
at the regular shareholders meeting
and take part in discussion of the
proposal.
Prior to the date for issuance of
notice of a shareholders meeting, this
Corporation shall inform the
shareholders who submitted proposals
of the proposal screening results, and
shall list in the meeting notice the
proposals that conform to the
provisions of this article. At the
shareholders meeting the board of
directors shall explain the reasons for
exclusion of any shareholder
proposals not included in the agenda.
  • 63 -
Article 10: Discussion on Agenda
If a shareholders meeting is convened
by the board of directors, the meeting
agenda shall be set by the board of
directors. The meeting shall proceed
in the order set by the agenda, which
may not be changed without a
resolution of the shareholders
meeting.
The provisions of the preceding
paragraph apply mutatis mutandis to
a shareholders meeting convened by
a party with the power to convene
that is not the board of directors.
The chair may not declare the
meeting adjourned prior to
completion of deliberation on the
meeting agenda of the preceding two
paragraphs (including extraordinary
motions), except by a resolution of
the shareholders meeting. If the chair
declares the meeting adjourned in
violation of the rules of procedure,
the other members of the board of
directors shall promptly assist the
attending shareholders in electing a
new chair in accordance with
statutory procedures, by agreement
of a majority of the votes represented
by the attending shareholders, and
then continue the meeting.
The chair shall allow ample
opportunity during the meeting for
explanation and discussion of
proposals and of amendments or
extraordinary motions put forward by
the shareholders; when the chair is of
the opinion that a proposal has been
discussed sufficiently to put it to a
vote, the chair may announce the
discussion closed and call for a vote.		 Article 10: Discussion on Agenda
If a shareholders meeting is convened
by the board of directors, the meeting
agenda shall be set by the board of
directors. Relevant proposals
(including extempore motion and the
amendment to original agenda) shall
be passed on a one agenda by one
agenda basis. The meeting shall
proceed in the order set by the
agenda, which may not be changed
without a resolution of the
shareholders meeting.
The chair may not declare the
meeting adjourned prior to
completion of deliberation on the
meeting agenda of the preceding two
paragraphs (including extraordinary
motions), except by a resolution of
the shareholders meeting. If the chair
declares the meeting adjourned in
violation of the rules of procedure, the
other members of the board of
directors shall promptly assist the
attending shareholders in electing a
new chair in accordance with
statutory procedures, by agreement of
a majority of the votes represented by
the attending shareholders, and then
continue the meeting.
The chair shall allow ample
opportunity during the meeting for
explanation and discussion of
proposals and of amendments or
extraordinary motions put forward by
the shareholders; when the chair is of
the opinion that a proposal has been
discussed sufficiently to put it to a
vote, the chair may announce the
discussion closed and call for a vote
where appropriate voting time shall
be arranged.		 Revise in
accordance
with
“Corporate
Governance
Best Practice
Principles
for
TWSE/TPEx
Listed
Companies”.
Article 13: Vote on Agenda and
Scrutinizing Ballots and How Ballots
are Counted
A shareholder shall be entitled to one
vote for each share held, except		 Article 13: Vote on Agenda and
Scrutinizing Ballots and How Ballots
are Counted
A shareholder shall be entitled to one
vote for each share held, except when		 Revise in
accordance
with
“Corporate
Governance
  • 64 -
when the shares are restricted shares
or are deemed non-voting shares
under Article 179, paragraph 2 of the
Company Act.
When this Corporation holds a
shareholders meeting, it mayallow
the shareholders to exercise voting
rights by correspondence or
electronic means (in accordance with
the proviso of Article 177-1 of the
Company Act regarding companies
that shall adopt electronic voting:
When this Corporation holds a
shareholder meeting, it shalladopt
exercise of voting rights by
electronic means and may adopt
exercise of voting rights by
correspondence). When voting rights
are exercised by correspondence or
electronic means, the method of
exercise shall be specified in the
shareholders meeting notice. A
shareholder exercising voting rights
by correspondence or electronic
means will be deemed to have
attended the meeting in person, but
to have waived his/her rights with
respect to the extraordinary motions
and amendments to original
proposals of that meeting; it is
therefore advisable that this
Corporation avoid the submission of
extraordinary motions and
amendments to original proposals.
Hereunder is omitted.		 the shares are restricted shares or are
deemed non-voting shares under
Article 179, paragraph 2 of the
Company Act.
When this Corporation holds a
shareholders meeting, it may adopt
exercise of voting rights by electronic
means and may adopt exercise of
voting rights by correspondence.
When voting rights are exercised by
correspondence or electronic means,
the method of exercise shall be
specified in the shareholders meeting
notice. A shareholder exercising
voting rights by correspondence or
electronic means will be deemed to
have attended the meeting in person,
but to have waived his/her rights with
respect to the extraordinary motions
and amendments to original proposals
of that meeting; it is therefore
advisable that this Corporation avoid
the submission of extraordinary
motions and amendments to original
proposals.
Hereunder is omitted.		 Best Practice
Principles
for
TWSE/TPEx
Listed
Companies”.
Article 15: Meeting minutes and
signature
Matters relating to the resolutions of
a shareholders meeting shall be
recorded in the meeting minutes. The
meeting minutes shall be signed or
sealed by the chair of the meeting
and a copy distributed to each
shareholder within 20 days after the
conclusion of the meeting. The
meetingminutes maybeproduced		 Article 15: Meeting minutes and
signature
Matters relating to the resolutions of a
shareholders meeting shall be
recorded in the meeting minutes. The
meeting minutes shall be signed or
sealed by the chair of the meeting and
a copy distributed to each shareholder
within 20 days after the conclusion of
the meeting. The meeting minutes
maybeproduced and distributed in		 Revise in
accordance
with
“Corporate
Governance
Best Practice
Principles
for
TWSE/TPEx
Listed
Companies”.
  • 65 -

and distributed in electronic form. electronic form. This Corporation may distribute This Corporation may distribute the meeting minutes of the preceding the meeting minutes of the preceding paragraph by means of a public paragraph by means of a public announcement made through the announcement made through the MOPS. MOPS. The meeting minutes shall The meeting minutes shall accurately accurately record the year, month, record the year, month, day, and place day, and place of the meeting, the of the meeting, the chair’s full name, chair's full name, the methods by the methods by which resolutions which resolutions were adopted, and were adopted, and a summary of the a summary of the deliberations and deliberations and their results of their results, and shall be retained for voting (including the statistical tallies the duration of the existence of this of the numbers of votes), tallies of the Corporation. numbers of votes for each candidate of director if an election is held and shall be retained for the duration of the existence of The Company.

  • 66 -

Attachment 9

Chieftek Precision Co., Ltd.

The Comparison Table of the Amendment to “Procedures for Election of Directors and rvisors” Supe

Before Amendment After Amendment Explanation
Name of the Document:
Procedures for Election of
Directors and Supervisors		 Name of the Document: Election
of Directors
Article 1:
Except as otherwise provided by law
and regulation or by this
Corporation's articles of
incorporation, elections of directors
and supervisorsshall be conducted
in accordance with these Procedures.		 Article 1:
Except as otherwise provided by
law and regulation or by this
Corporation's articles of
incorporation, elections of directors
shall be conducted in accordance
with these Procedures.		 Revise in accordance
with laws and
regulations and to go
with the establishment
of audit committee.
Article 3:
Supervisors of this Corporation
shall meet the following
qualifications:
1. Integrity
and
a
practical
attitude.
2. Impartial judgment.
3. Professional knowledge.
4. Broad experience.
5. Ability
to
read
financial
statements.
In addition to the requirements
of the preceding
paragraph, at least one
among the supervisors of
this Corporation must be
an accounting or finance
professional.
Appointments of supervisors
shall be made with
reference to the provisions
on independence
contained in the
Regulations Governing
Appointment of
Independent Directors and
Compliance Matters for
Public Companies, in
order to select appropriate
supervisors to help
strengthen the		 Article 3:
Deleted.		 Revise in accordance
with laws and
regulations and to go
with the establishment
of audit committee.
  • 67 -
corporation's risk
management and control
of finance and operations.
At least one supervisor
position must be held by a
person having neither a
spousal relationship nor a
relationship within the
second degree of kinship
with any other supervisor
or with any director.
A supervisor may not serve
concurrently as the
director, managerial
officer, or any other
employee of this
Corporation, and at least
one of the supervisors
must be domiciled in the
Republic of China to be
able to promptly fulfill the
functions of supervisor.		 corporation's risk
management and control
of finance and operations.
At least one supervisor
position must be held by a
person having neither a
spousal relationship nor a
relationship within the
second degree of kinship
with any other supervisor
or with any director.
A supervisor may not serve
concurrently as the
director, managerial
officer, or any other
employee of this
Corporation, and at least
one of the supervisors
must be domiciled in the
Republic of China to be
able to promptly fulfill the
functions of supervisor.
Article 4:
The
election
of
independent
directors of this Corporation shall
comply
with
the
Regulations
Governing
Appointment
of
Independent
Directors
and
Compliance Matters for Public
Companies and relevant laws and
regulations.		 Article 3:
The election of independent
directors of this Corporation shall
comply with the Regulations
Governing Appointment of
Independent Directors and
Compliance Matters for Public
Companies and relevant laws and
regulations.		 Revise in accordance
with laws and
regulations and to go
with the establishment
of audit committee.
Article 5:
Elections of both directors and
supervisorsat this Corporation
shall be conducted in accordance
with the candidate nomination
system and procedures set out in
Article 192-1 of the Company Act.
This Corporation shall review 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 nominee
independent directors and may not
arbitrarily add requirements for
documentation of other		 Article 4:
Elections of both directors at this
Corporation shall be conducted in
accordance with the candidate
nomination system and procedures
set out in Article 192-1 of the
Company Act. This Corporation
shall review 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 nominee
independent directors and may not
arbitrarily add requirements for
documentation of other
  • 68 -

qualifications. It shall further provide the results of the review to shareholders for their reference, so that qualified independent directors will be elected.

qualifications. It shall further provide the results of the review to shareholders for their reference, so that qualified independent directors will be elected.

Election of independent directors shall be conducted in accordance Election of independent directors with the candidate nomination shall be conducted in accordance system stipulated in Article 192-1 with the candidate nomination of the Company Act. system stipulated in Article 192-1 When the number of directors falls of the Company Act. below five due to the dismissal of a When the number of directors falls director for any reason, this below five due to the dismissal of a Corporation shall hold a director for any reason, this by-election to fill the vacancy at its Corporation shall hold a next shareholders meeting. When by-election to fill the vacancy at its the number of directors falls short next shareholders meeting. When by one third of the total number the number of directors falls short prescribed in this Corporation’s by one third of the total number articles of incorporation, this prescribed in this Corporation’s Corporation shall call a special articles of incorporation, this shareholders meeting within 60 Corporation shall call a special days from the date of occurrence to shareholders meeting within 60 hold a by-election to fill the days from the date of occurrence to vacancies. hold a by-election to fill the When the number of independent vacancies. directors falls below that required When the number of independent under the proviso of Article 14-2, directors falls below that required paragraph 1 of the Securities and under the proviso of Article 14-2, Exchange Act, or the related paragraph 1 of the Securities and provisions of the Taiwan Stock Exchange Act, or the related Exchange Corporation rules provisions of the Taiwan Stock governing the review of listings, or Exchange Corporation rules subparagraph 8 of the Standards for governing the review of listings, or Determining Unsuitability for subparagraph 8 of the Standards for GTSM Listing under Article 10, Determining Unsuitability for Paragraph 1 of the GreTai GTSM Listing under Article 10, Securities Market Rules Governing Paragraph 1 of the GreTai the Review of Securities for Securities Market Rules Governing Trading on the GTSM, a the Review of Securities for by-election shall be held at the next Trading on the GTSM, a shareholders meeting to fill the by-election shall be held at the next vacancy. When the independent shareholders meeting to fill the directors are dismissed en masse, a vacancy. When the independent special shareholders meeting shall directors are dismissed en masse, a be called within 60 days from the special shareholders meeting shall date of occurrence to hold a be called within 60 days from the by-election to fill the vacancies. date of occurrence to hold a

  • 69 -
When the number of supervisors
falls below that prescribed in this
Corporation’s
articles
of
incorporation due to the dismissal
of a supervisor for any reason, a
by-election to fill the vacancy
should ideally be held at the next
shareholders meeting. When the
supervisors are dismissed en masse,
a special shareholders meeting shall
be called within 60 days from the
date of occurrence to hold a
by-election to fill the vacancies.		 by-election to fill the vacancies.
Article 6:
The cumulative voting method
shall be used for election of the
directors and supervisors at this
Corporation. Each share will have
voting rights in number equal to the
directors or supervisors to be
elected, and may be cast for a
single candidate or split among
multiple candidates.		 Article 5:
The cumulative voting method shall
be used for election of the directors
at this Corporation. Each share will
have voting rights in number equal
to the directors to be elected, and
may be cast for a single candidate
or split among multiple candidates.		 Revise in accordance
with laws and
regulations and to go
with the establishment
of audit committee.
Article 7:
The board of directors shall prepare
separate ballots for directorsand
supervisors
in
numbers
corresponding to the directors or
supervisors to be elected. The
number of voting rights associated
with each ballot shall be specified
on the ballots, which shall then be
distributed
to
the
attending
shareholders at the shareholders
meeting. Attendance card numbers
printed on the ballots may be used
instead of recording the names of
voting shareholders.		 Article 6:
The board of directors shall prepare
separate ballots for directors in
numbers
corresponding
to
the
directors or supervisors to be
elected. The number of voting
rights associated with each ballot
shall be specified on the ballots,
which shall then be distributed to
the attending shareholders at the
shareholders meeting. Attendance
card numbers printed on the ballots
may be used instead of recording
the names of voting shareholders.		 Revise in accordance
with laws and
regulations and to go
with the establishment
of audit committee.
Article 8:
The number of directorsand
supervisors will be as specified in
this Corporation's articles of
incorporation, with voting rights
separately calculated for
independent and non-independent
director positions. Those receiving
ballots representing the highest		 Article 7:
The number of directors will be as
specified in this Corporation's
articles of incorporation, with
voting rights separately calculated
for independent and
non-independent director positions.
Those receiving ballots representing
the highest numbers of voting rights		 Revise in accordance
with laws and
regulations and to go
with the establishment
of audit committee.
  • 70 -
numbers of voting rights will be
elected sequentially according to
their respective numbers of votes.
When two or more persons receive
the same number of votes, thus
exceeding the specified number of
positions, they shall draw lots to
determine the winner, with the chair
drawing lots on behalf of any
person not in attendance.
The person elected concurrently as
director
and
supervisor
according to the preceding
paragraph shall decide to
serve
as
director
or
supervisor on its own while
the
candidate
receiving
second most votes to such
Director shall be elected to
fill the vacancy.		 will be elected sequentially
according to their respective
numbers of votes. When two or
more persons receive the same
number of votes, thus exceeding the
specified number of positions, they
shall draw lots to determine the
winner, with the chair drawing lots
on behalf of any person not in
attendance.

Article 9:
Before the election begins, the
chair shall appoint a number of
persons with shareholder status to
perform the respective duties of
vote monitoring and counting
personnel. The ballot boxes shall
be prepared by the board of
directors and publicly checked by
the vote monitoring personnel
before voting commences.		 Article 8:
Before the election begins, the chair
shall appoint a number of persons
with shareholder status to perform
the respective duties of vote
monitoring and counting personnel.
The ballot boxes shall be prepared
by the board of directors and
publicly checked by the vote
monitoring personnel before voting
commences.		 Revise in accordance
with laws and
regulations and to go
with the establishment
of audit committee.
Article 10:
If a candidate is a shareholder, a
voter must enter the candidate's
account name and shareholder
account number in the "candidate"
column of the ballot; for a
non-shareholder, the voter shall
enter the candidate's full name and
identity card number. However,
when the candidate is a
governmental organization or
juristic-person shareholder, the
name of the governmental
organization or juristic-person
shareholder shall be entered in the
column for the candidate's account		 Article 9:
If a candidate is a shareholder, a
voter must enter the candidate's
account name and shareholder
account number in the "candidate"
column of the ballot; for a
non-shareholder, the voter shall
enter the candidate's full name and
identity card number. However,
when the candidate is a
governmental organization or
juristic-person shareholder, the
name of the governmental
organization or juristic-person
shareholder shall be entered in the
column for the candidate's account		 Revise in accordance
with laws and
regulations and to go
with the establishment
of audit committee.
  • 71 -
name in the ballot paper, or both
the name of the governmental
organization or juristic-person
shareholder and the name of its
representative may be entered.
When there are multiple
representatives, the names of each
respective representative shall be
entered.		 name in the ballot paper, or both
the name of the governmental
organization or juristic-person
shareholder and the name of its
representative may be entered.
When there are multiple
representatives, the names of each
respective representative shall be
entered.
Article 11:
A ballot is invalid under any of the
following circumstances:
1.
The ballot was not prepared by
the board of directors.
2.
A blank ballot with anything
written is placed in the ballot
box.
3.
The writing is unclear and
indecipherable.
4.
Any item written on the ballot
has been altered.
5.
The candidate whose name is
entered in the ballot is a
shareholder, but the candidate's
account name and shareholder
account
number
do
not
conform with those given in
the shareholder register, or the
candidate
whose
name
is
entered in the ballot is a
non-shareholder,
and
a
cross-check shows that the
candidate's name and identity
card number do not match.
6.
Other words or marks are
entered in addition to the
candidate's account name or
shareholder account number
(or identity card number) and
the number of voting rights
allotted.
7.
Two or more candidates were
written on the same ballot.
8.
The name of the candidate
entered in the ballot is identical
to that of another shareholder,
but no shareholder account		 Article 10:
A ballot is invalid under any of the
following circumstances:
The ballot was not prepared by the
board of directors.
2.
A blank ballot with anything
written is placed in the ballot
box.
3.
The writing is unclear and
indecipherable.
4.
Any item written on the ballot
has been altered.
5.
The candidate whose name is
entered in the ballot is a
shareholder, but the candidate's
account name and shareholder
account number do not
conform with those given in
the shareholder register, or the
candidate whose name is
entered in the ballot is a
non-shareholder, and a
cross-check shows that the
candidate's name and identity
card number do not match.
6.
Other words or marks are
entered in addition to the
candidate's account name or
shareholder account number
(or identity card number) and
the number of voting rights
allotted.
7.
Two or more candidates were
written on the same ballot.
8.
The name of the candidate
entered in the ballot is identical
to that of another shareholder,
but no shareholder account
  • 72 -
number
or
identity
card
number is provided in the
ballot
to
identify
such
individual.		 number
or
identity
card
number is provided in the
ballot
to
identify
such
individual.
Article 12:
Except in the case approved by the
competent agency, more than half
of the directors,at least one among
supervisors or supervisors and
directors shall be persons who have
neither of the following
relationship with any other director:
1. a spousal relationship
2. a relationship within the second
degree of kinship.		 Article 11:
Except in the case approved by the
competent agency, more than half
of the directors shall be persons
who have neither of the following
relationship with any other director:
1. a spousal relationship
2. a relationship within the second
degree of kinship.		 Revise in accordance
with laws and
regulations and to go
with the establishment
of audit committee.
Article 13:
If the original selectees of directors
and supervisors do not meet the
conditions of the preceding article,
determination of which directors or
supervisors are elected shall be
made according to the following
provisions:
1. When there are some among the
directors who do not meet the
conditions, the election of the
director receiving the lowest
number of votes among those
not meeting the conditions
shall be deemed invalid.
2. When there are some among the
supervisors who do not meet
the conditions, the provisions
of the preceding subparagraph
shall apply mutatis mutandis.
3. When there are some among the
directors and supervisors who
do not meet the conditions, the
election
of
the
supervisor
receiving the lowest number of
votes among those not meeting
the conditions shall be deemed
invalid.		 Article 12:
If the original selectees of directors
and supervisors do not meet the
conditions of the preceding article,
determination of which directors or
supervisors are elected shall be
made according to the following
provisions:
1. When there are some among the
directors who do not meet the
conditions, the election of the
director receiving the lowest
number of votes among those
not meeting the conditions
shall be deemed invalid.
2. When there are some among the
supervisors who do not meet
the conditions, the provisions
of the preceding subparagraph
shall apply mutatis mutandis.
3. When there are some among the
directors and supervisors who
do not meet the conditions, the
election
of
the
supervisor
receiving the lowest number of
votes among those not meeting
the conditions shall be deemed
invalid.		 Revise in accordance
with laws and
regulations and to go
with the establishment
of audit committee.
Article 14:
The voting rights shall be
calculated on site immediately after
the end of the poll, and the results		 Article 13:
The voting rights shall be
calculated on site immediately after
the end of the poll, and the results		 Revise in accordance
with laws and
regulations and to go
with the establishment
  • 73 -
of the calculation, including the list
of persons elected as directorsor
supervisors and the numbers of
votes with which they were elected,
shall be announced by the chair on
the site.
The ballots for the election referred
to in the preceding paragraph shall
be sealed with the signatures of the
monitoring personnel and kept in
proper custody for at least one
year. If, however, a shareholder
files a lawsuit pursuant to Article
189 of the Company Act, the
ballots shall be retained until the
conclusion of the litigation.		 of the calculation, including the list
of persons elected as directors and
the numbers of votes with which
they were elected, shall be
announced by the chair on the site.
The ballots for the election referred
to in the preceding paragraph shall
be sealed with the signatures of the
monitoring personnel and kept in
proper custody for at least one year.
If, however, a shareholder files a
lawsuit pursuant to Article 189 of
the Company Act, the ballots shall
be retained until the conclusion of
the litigation.		 of audit committee.
Article 15:
These Procedures, and any
amendments hereto, shall be
implemented after approval by a
shareholders meeting.		 Article 14:
These Procedures, and any
amendments hereto, shall be
implemented after approval by a
shareholders meeting.		 Revise in accordance
with laws and
regulations and to go
with the establishment
of audit committee.
  • 74 -

Attachment 10

Chieftek Precision Co., Ltd. The Comparison Table of the Amendment to “Corporate Governance Best Practice Principles”

Before Amendment

After Amendment Explanations Article 3 (Establishment of Revise in accordance Internal Control System) with “Corporate The Company shall follow the Governance Best Criteria Governing Establishment Practice Principles for of Internal Control Systems by TWSE/TPEx Listed Public Reporting Companies and Companies” (Decree take into consideration the overall Cheng Kuei Chien Tzu operational activities of itself and No.10900521401 its subsidiaries to design and fully issued on 2020.2.19) 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.

Before Amendment After Amendment Explanations
Article 3 (Establishment of
Internal Control System)
The Company shall follow the
Criteria Governing Establishment
of Internal Control Systems by
Public Reporting Companies 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.Internal auditors
shall regularly report the
deficiencies and reviews of
internal control system to
independent directors and
supervisors or audit committee.
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.，And the convener of the
audit committee or supervisors		 Article 3 (Establishment of
Internal Control System)
The Company shall follow the
Criteria Governing Establishment
of Internal Control Systems by
Public Reporting Companies 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.		 Revise in accordance
with “Corporate
Governance Best
Practice Principles for
TWSE/TPEx Listed
Companies” (Decree
Cheng Kuei Chien Tzu
No.10900521401
issued on 2020.2.19)
The Company is advised to
establish channels and mechanisms
of communication between their
  • 75 -
shall reporttheir communication
with the independent directors and
chief internal auditors at the
shareholders'meeting.
The management of 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.		 independent directors, audit
committees or supervisors, and
chief internal auditors, and the
convener of the audit committee or
supervisors shall report the
communication between the
members of the audit committee or
the supervisors and chief internal
auditors at the shareholders’
meeting.
The management of 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.
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 securities,
financial, or futures related
institution or a public company in
handling legal affairs, financial		 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 shall appoint a chief corporate
governance officer in accordance
with the provisions of the
competent agency, stock exchange
or Taipei Exchange 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 securities,		 Revise in accordance
with “Corporate
Governance Best
Practice Principles for
TWSE/TPEx Listed
Companies” (Decree
Cheng Kuei Chien Tzu
No. 10900521401
issued on 2020.2.19)
  • 76 -
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
2. Producing minutes of board
meetings and shareholders
meetings
3. Assisting in onboarding and
continuous development of
directors and supervisors
4. Furnishing information
required for business execution
by directors and supervisors
5. Assisting directors and
supervisors with legal
compliance
6. Other matters set out in the
articles or corporation or
contracts		 financial, or futures related
institution or a public company in
handling legal affairs, law
compliance, internal audit,
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
2. Producing minutes of board
meetings and shareholders
meetings
3. Assisting in onboarding and
continuous development of
directors and supervisors
4. Furnishing information
required for business execution
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 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 engages a professional
shareholder services agent to
handle shareholders meeting
matters, so that shareholders
meetings can proceed on a legal,
effective and secure basis. The
Companyshall seek all ways 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 engages a professional
shareholder services agent to
handle shareholders meeting
matters, so that shareholders
meetings can proceed on a legal,
effective and secure basis. The
Companyshall seek all ways and		 Revise in accordance
with “Corporate
Governance Best
Practice Principles for
TWSE/TPEx Listed
Companies” (Decree
Cheng Kuei Chien Tzu
No. 10900521401
issued on 2020.2.19)
  • 77 -
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 candidate
nomination system for the
election of directors and
supervisors.
The company is 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.		 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.
The company is 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 10 (The Company shall
place high importance on the
shareholder right to know)
The Company shall place high		 Article 10 (The Company shall
place high importance on the
shareholder right to know)
The Company shall place high		 Revise in accordance
with “Corporate
Governance Best
Practice Principles for
  • 78 -
importance on the shareholder
right to know, and shall faithfully
comply with applicable
regulations regarding information
disclosure in order to provide
shareholders with regular and
timely information on company
financial conditions and
operations, insider shareholdings,
and corporate governance status
through the MOPS or the website
established by the company.
To protect its shareholders’ rights
and interests and ensure their
equal treatment, the Company
shall
adopt
internal
rules
prohibiting
company
insiders
from trading securities using
information not disclosed to the
market.		 importance on the shareholder
right to know, and shall faithfully
comply with applicable
regulations regarding information
disclosure in order to provide
shareholders with regular and
timely information on company
financial conditions and
operations, insider shareholdings,
and corporate governance status
through the MOPS or the website
established by the company.
To treat all shareholders equally,
it is advisable that the company
concurrently
discloses
the
information under the preceding
paragraph in English.
To protect its shareholders’ rights
and interests and ensure their
equal treatment, the Company
shall
adopt
internal
rules
prohibiting
company
insiders
from trading
securities
using
information not disclosed to the
market.
The regulation in the preceding
paragraph is advised to include
control measures for stock trade
starting from the date internal
personnel acquire the Company’s
financial statement or relevant
performances.		 TWSE/TPEx Listed
Companies” (Decree
Cheng Kuei Chien Tzu
No. 10900521401
issued on 2020.2.19)
Article 22 (Specify the adoption
of candidate nomination system
for elections of directors in
articles of incorporation)
The Company is advised to
specify in its articles of
incorporation that it adopts the
candidate nomination system for
elections of directors in
accordance with the provisions in
the Company Act,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.		 Article 22 (Specify the adoption
of candidate nomination system
for elections of directors in
articles of incorporation)
The Company shall specify in its
articles of incorporation that
election of directors shall adopt
the candidate nomination system
in accordance with the provisions
of competent agency,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.		 Revise in accordance
with “Corporate
Governance Best
Practice Principles for
TWSE/TPEx Listed
Companies” (Decree
Cheng Kuei Chien Tzu
No. 10900521401
issued on 2020.2.19)
  • 79 -
Article 23 (Clear distinctions shall
be drawn between the authority,
responsibilities and duties of the
functional committee, those 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 forthe
chairpersonto also act asthe
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.		 Article 23 (Clear distinctions shall
be drawn between the authority,
responsibilities and duties of the
functional committee, those 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 position with
equivalent duties.
The Company with a functional
committee shall clearly define the
responsibilities and duties of the
committee.		 Revise in accordance
with “Corporate
Governance Best
Practice Principles for
TWSE/TPEx Listed
Companies” (Decree
Cheng Kuei Chien Tzu
No. 10900521401
issued on 2020.2.19)
Article 24 (The Company may
appoint independent directors in
accordance with its articles of
incorporation.)		 Article 24 (The Companyshall
appoint independent directors in
accordance with its articles of
incorporation.)		 Revise in accordance
with “Corporate
Governance Best
Practice Principles for
TWSE/TPEx Listed
Companies” (Decree
Cheng Kuei Chien
Tzu No. 10900521401
issued on 2020.2.19)
Article 28-2 (A whistleblowing
system)
The Company is advised to
establish and announce channels
for internal and external
whistleblowers and have
whistleblower protection
mechanisms in place. The unit
that handles whistleblowers’
reporting shall be independent,		 Article 28-2 (The Company is
advised to establish nomination
committee)
The Company is advised to
establish nomination committee
and stipulate organizational rule.
It is advisable that more than half
of the committee members be
independent directors and an
independent director serve as the		 Revise in accordance
with “Corporate
Governance Best
Practice Principles for
TWSE/TPEx Listed
Companies” (Decree
Cheng Kuei Chien
Tzu No. 10900521401
issued on 2020.2.19)
  • 80 -
provide encrypted protection for
the files furnished by
whistleblowers, and appropriately
restrict access to such files. It
shall also formulate internal
procedures and incorporate those
procedures into the company’s
internal control system for
management purposes.		 chairperson.
Article 28-3 (A whistleblowing
system)
The Company is advised to
establish and announce channels
for internal and external
whistleblowers and have
whistleblower protection
mechanisms in place. The unit
that handles whistleblowers'
reporting shall be independent,
provide encrypted protection for
the files furnished by
whistleblowers, and appropriately
restrict access to such files. It
shall also formulate internal
procedures and incorporate those
procedures into the company's
internal control system for
management purposes.		 Revise in accordance
with “Corporate
Governance Best
Practice Principles for
TWSE/TPEx Listed
Companies” (Decree
Cheng Kuei Chien
Tzu No. 10900521401
issued on 2020.2.19)
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 according to the
resolutions of board of directors.
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
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 according to the
resolutions of board of directors.
It is advisable that the Company
formulate rules and procedures for
board of directors performance
assessments, and thatin addition
to conducting each year regularly
scheduled performance
assessments of the board of		 Revise in accordance
with “Corporate
Governance Best
Practice Principles for
TWSE/TPEx Listed
Companies” (Decree
Cheng Kuei Chien
Tzu No. 10900521401
issued on 2020.2.19)
  • 81 -
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 include
the following aspects, and that
appropriate assessment indicators
be developed in consideration of
the company’s needs:
The degree of participation in the
company's operations.
Improvement in the quality of
decision making by the board of
directors.
The composition and structure of
the board of directors.
The election of the directors and
their continuing professional
education.
Internal controls.
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:
Their grasp of the company’s
goals and missions.
Their recognition of director’s
duties.
Their degree of participation in
the company’s operations.
Their management of internal
relationships and communication.
Their professionalism and
continuing professional education.
Internal controls.
It is advisable that the
performance assessment of a
functional committee cover the
following aspects, subject to
changes according to the
company’s needs:
Their degree of participation in
the company's operations.
Their recognition of the duties of
the functional committee.
Improvement in the quality of
decision making by the functional
committee.		 directors and individual directors
through self-assessment,
peer-to-peer assessments, it may
engage outside professional
institutions, or in any other
appropriate manner. It is advisable
that the performance assessment
of the board of directors include
the following aspects, and that
appropriate assessment indicators
be developed in consideration of
the company’s needs:
The degree of participation in the
company's operations.
Improvement in the quality of
decision making by the board of
directors.
The composition and structure of
the board of directors.
The election of the directors and
their continuing professional
education.
Internal controls.
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:
Their grasp of the company’s
goals and missions.
Their recognition of director’s
duties.
Their degree of participation in
the company’s operations.
Their management of internal
relationships and communication.
Their professionalism and
continuing professional education.
Internal controls.
The Company is advised to
conduct performance assessment
on functional committees, and it is
advised to cover the following
aspectsin the assessment, subject
to changes according to the
company’s needs:
Their degree of participation in
the company's operations.
Their recognition of the duties of
the functional committee.
Improvement in the quality of
decision making by the functional
committee.
  • 82 -
The composition of the functional
committee, and election and
appointment of committee
members.
Internal control.
The Company is advised to
submit the results of performance
assessments to the board of
directors and use them as
reference in determining
compensation for individual
directors, their nomination and
additional office term.		 The composition of the functional
committee, and election and
appointment of committee
members.
Internal control.
The Company is advised to
submit the results of performance
assessments to the board of
directors and use them as
reference in determining
compensation for individual
directors, their nomination and
additional office term.
Article 37-2 (Establishment of
intellectual property management
system)
Board of directors is advised to
conduct assessment and
supervision on the operational
direction and performances of the
intellectual properties with the
following aspects to ensure the
company established intellectual
property management system with
the management cycle of“plan,
execute, inspect and act”:
1. Establish intellectual property
management policy, objective
and system related to business
strategies.
2. Establish, implement, maintain
the acquisition, protection,
maintenance and application
management system of its
intellectual property according
to the scale and type.
3. Decide and provide resources
required for implementing and
maintaining intellectual
property management system
effectively.
4. Observe internal and external
risks or opportunities related to
intellectual property
management and adopt
countermeasures.
5. Plan and implement continuous
rectification mechanism to
ensure the operation and
performance of intellectual		 Revise in accordance
with “Corporate
Governance Best
Practice Principles for
TWSE/TPEx Listed
Companies” (Decree
Cheng Kuei Chien
Tzu No. 10900521401
issued on 2020.2.19)

2.

3.

4.
5.
  • 83 -

property management system meet the expectation of the Company. Article 42 (Specify the adoption Article 42 (Specify the adoption Revise in accordance of candidate nomination system of candidate nomination system with “Corporate for elections of supervisors in for elections of supervisors in Governance Best articles of incorporation) articles of incorporation) Practice Principles for The Company is advised to specify The Company shall specify in its TWSE/TPEx Listed Companies” (Decree in its articles of incorporation that articles of incorporation that Cheng Kuei Chien it adopts the candidate nomination election of supervisors shall adopt Tzu No. 10900521401 system for elections of supervisors the candidate nomination system issued on 2020.2.19) in accordance with the provisions in accordance with the provisions in the Company Act, carefully of competent agency, carefully review the qualifications of a review the qualifications of a nominated candidate and the nominated candidate and the existence of any other matters set existence of any other matters set forth in Article 30 of the Company forth in Article 30 of the Company Act, and act in accordance with Act, and act in accordance with Article 192-1 of the Company Act. Article 192-1 of the Company Act.

  • 84 -

Attachment 11

Chieftek Precision Co., Ltd.

The Comparison Table of the Amendment to “Regulations Governing the Acquisition and Disposal of Assets”

Before Amendment After Amendment Explanation Article 7: Procedures governing Article 7: Procedures governing In response to the the acquisition or disposal of the acquisition or disposal of revision in securities investments securities investments organizational VI. The Company shall not waive VI. The Company shall not waive structure its subscription right in the its subscription right in the rights issue of cpc Europa rights issue of cpc Europa GmbH and CHIEFTEK GmbH and CHIEFTEK PRECISION HOLDING PRECISION HOLDING CO., CO.,LTD. (hereinafter referred LTD. (hereinafter referred to as to as CHIEFTEK HOLDING).; CHIEFTEK HOLDING). and CHIEFTEK HOLDING shall CHIEFTEK PRECISION USA not waive its subscription right CO., LTD. CHIEFTEK in the rights issue of HOLDING shall not waive its CHIEFTEK PRECISION USA subscription right in the rights CO., LTD. and CHIEFTEK issue of CHIEFTEK PRECISION (Hong Kong) Co. PRECISION USA CO., LTD. Ltd. (hereinafter referred to as and CHIEFTEK PRECISION CHIEFTEK Hong Kong), and (Hong Kong) Co. Ltd. CHIEFTEK Hong Kong shall (hereinafter referred to as not waive its subscription right CHIEFTEK Hong Kong), and in the rights issue of CHIEFTEK Hong Kong shall CHIEFTEK Machinery not waive its subscription right (Kunshan) Co. Ltd. in the fiscal in the rights issue of years going forward. Provided CHIEFTEK Machinery that any of the (Kunshan) Co. Ltd. in the fiscal above-mentioned subscription years going forward. Provided rights is waived or the disposal that any of the of the shares of the above-mentioned subscription abovementioned companies is rights is waived or the disposal made by one of such companies of the shares of the in the future for the purpose of abovementioned companies is strategic alliance or other made by one of such circumstances approved by the companies in the future for the Taipei Exchange, such waiver purpose of strategic alliance or or disposal shall be passed by other circumstances approved special resolution of CPC by the Taipei Exchange, such Board. waiver or disposal shall be passed by special resolution of CPC Board.

  • 85 -

Attachment 12

Chieftek Precision Co., Ltd.

List of Candidates of Directors and Independent Directors

  1. Candidates of Directors (5 seats) and independent directors (3 seats) have been approved by the board of directors on April 28, 2020.
Item Name Academic Background
&Experiences		 Current Position Shareholdings
Director CHEN
LI-FEN		 Art History of Universität
Stuttgart
Founding President of National
Cheng Kung University
Innovation & Incubation
Association
Chairman of Alumni association
of National Tainan Girl’s
Senior High School
Chief Strategy Officer of
Chieftek Precision Co., Ltd.
Chairman of Deneng
Sunshine Investment Co.,
Ltd
Chairman of Deyuan
Management Consulting Co.,
Ltd
Chairman of
Zhenshanmeihui Investment
Co., Ltd
Chairman of Guiren Defu
Investment Co., Ltd.
Chairman of Yizhide
Management Consultant Co.,
Ltd.
Board Director of Sunshine
Bio Technology Co., Ltd
Vice Chairman of The Allied
Association for Science Park
Industries
Vice Chairman of
Sino-German Cultural and
Economic Association
Standing Director of
Academia-Industry
Consortium for Southern
Taiwan Science Park
Member of Tainan Industrial
Development & Investment
Promotion Committee		 3,653,107
Director HSU
MING CHE		 Master of Mechanical
Engineering of Universität
Stuttgart		 GeneralManager and R&D
Supervisor of Chieftek
Precision CO.,Ltd.		 5,579,338
  • 86 -
Item Name Academic Background
&Experiences		 Current Position Shareholdings
General Manager and R&D
Supervisor of Chieftek
Precision CO.,Ltd.
Director LiAnne Bachelor of Science in Food &
Nutrition, Fu-Jen University
Master of Science in Nutrition
& Dietetics, New York
University
Master of Computer
Information System, University
of Denver
NREL Computer Engineer
US West Senior Computer
Engineer
MOTECH INDUSTRIES, INC.
CIO		 Director of Deneng Sunshine
Investment Co., Ltd		 1,075,290
Director WANG CHEN
PI-HSIA
Provincial Tainan Girls' Senior
High School
Chairmanof Yucheng Starch
Co., Ltd
Board Director of Deyuan
ManagementConsulting Co.,
Ltd
Supervisorof ST&T Instrument
Corp.		 Chairman of Yucheng Starch
Co., Ltd
Board Director of Deyuan
Management Consulting Co.,
Ltd
Supervisor of ST&T
InstrumentCorp.		 557,355
Director CHENG
SHENG -FEN		 Master ofMechanical
Engineering of National Taiwan
University
Assistant Manager of Jianxing
Electronics Co., Ltd
Vice-GeneralManager of
A-OPTRONICS Co.,Ltd.		 None 554,736
Independent
director
MingTzuHo		 Bachelor of National Cheng
Kung University of engineering
science
Master of Texas A&M
University of Electrical
Engineering
Doctor of Texas A&M
University of Electrical
Engineering
Assistant Professor of National		 Associate Professor of
National Cheng Kung
University of engineering
science		 0
  • 87 -
Item Name Academic Background
&Experiences		 Current Position Shareholdings
Cheng Kung University of
engineering science
Researcher of RITEK
Corporation of Research
Associate Professor of
National Cheng Kung
University of engineering
science
Independent
director
WEI
NAI CHANG		 Master of National Chiao Tung
University Institute of Business
& Management
Audit Team Leader of PwC
Taiwan
Accounting Officer of Foresight
Energy Technologies
Development Co., Ltd
Accountant and Administration
Manager of Taiwan Intervet
Animal Drug Co., Ltd
CFO of Ambit Microsystems
Vice-General Manager of Clevo
Co. Management Center		 None 0
Independent
director
WU
CHUNG-JEN		 Researcher of Industrial
Technology Research Institute
Union Chemical Laboratories
Project Manager of National
Cheng-kung University
Business Incubation Center
Vice Director of Technology
Transfer & Business Incubation
Center of National Cheng Kung
University
Executive Manager of Incubator
Center of Southern Taiwan
Science Park
Division Head of Legal &
Intellectual Property General
Division, Chung Hwa Picture
Tubes,LTD.		 Chairman of CHIH RO
ENTERPRISE CO., LTD
Chairman of YYC Material
Technology CO., LTD
Chairman of Jiangsu
Yunyoucheng Biological
Environmental Protection
Material CO., LTD.		 29,403
  • 88 -

Appendix 1

Chieftek Precision Co., Ltd. Rules of Procedure for Shareholders Meetings (Before Amendment)

Article 1: Establishment basis

To establish a strong governance system and sound supervisory capabilities for this Corporation's shareholders meetings, and to strengthen management capabilities, these Rules are adopted pursuant to Article 5 of the Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies.

  • Article 2: Scope of the rules

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

  • Article 3: Convening a Board meeting and meeting notice Convening a Board meeting and meeting notice

  • Unless otherwise provided by law or regulation, this Corporation's shareholders meetings shall be convened by the board of directors.

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

  • 89 -

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

Election or dismissal of directors or supervisors, amendments to the articles of incorporation, the dissolution, merger, or demerger of the corporation, or any matter under Article 185, paragraph 1 of the Company Act, Articles 26-1 and 43-6 of the Securities and Exchange Act, or Articles 56-1 and 60-2 of the Regulations Governing the Offering and Issuance of Securities by Securities Issuers shall be set out in the notice of the reasons for convening the shareholders meeting. None of the above matters may be raised by an extraordinary motion.

A shareholder holding 1 percent or more of the total number of issued shares may submit to this Corporation a written proposal for discussion at a regular shareholders meeting. Such proposals, however, are limited to one item only, and no proposal containing more than one item will be included in the meeting agenda. In addition, when the

circumstances of any subparagraph of Article 172-1, paragraph 4 of the Company Act apply to a proposal put forward by a shareholder, the board of directors may exclude it from the agenda.

Prior to the book closure date before a regular shareholders meeting is held, this Corporation shall publicly announce that it will receive shareholder proposals, and the location and time period for their submission; the period for submission of shareholder proposals may not be less than 10 days.

Shareholder-submitted proposals are limited to 300 words, and no proposal containing more than 300 words will be included in the meeting agenda. The shareholder making the proposal shall be present in person or by proxy at the regular shareholders meeting and take part in discussion of the proposal.

Prior to the date for issuance of notice of a shareholders meeting, this Corporation shall inform the shareholders who submitted proposals of the proposal screening results, and shall list in the meeting notice the proposals that conform to the provisions of this article. At the shareholders meeting the board of directors shall explain the reasons for exclusion of any shareholder proposals not included in the agenda.

  • 90 -

Article 4: Director’s attendance by proxy in shareholders’ meeting and authorization thereof For each shareholders meeting, a shareholder may appoint a proxy to attend the meeting by providing the proxy form issued by this Corporation and stating the scope of the proxy’s authorization.

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

After a proxy form has been delivered to this Corporation, if the shareholder intends to attend the meeting in person or to exercise voting rights by correspondence or electronically, a written notice of proxy cancellation shall be submitted to this Corporation before 2 business days before the meeting date. If the cancellation notice is submitted after that time, votes cast at the meeting by the proxy shall prevail.

  • Article 5: Principles determining the time and place of a shareholders meeting

The venue for a shareholders meeting shall be the premises of this Corporation, or a place easily accessible to shareholders and suitable for a shareholders meeting. The meeting may begin no earlier than 9 a.m. and no later than 3 p.m. Full consideration shall be given to the opinions of the independent directors with respect to the place and time of the meeting.

Article 6: Preparation of signature book and other documents This Corporation shall specify in its shareholders meeting notices the time during which shareholder attendance registrations will be accepted, the place to register for attendance, and other matters for attention.

The time during which shareholder attendance registrations will be accepted, as stated in the preceding paragraph, shall be at least 30 minutes prior to the time the meeting commences. The place at which attendance registrations are accepted shall be clearly marked and a sufficient number of suitable personnel assigned to handle the registrations. Shareholders and their proxies (collectively, “shareholders”) shall attend shareholders meetings based on attendance cards, sign-in cards, or other certificates of attendance. This Corporation may not arbitrarily add requirements for other documents beyond those showing eligibility to attend presented by shareholders. Solicitors soliciting proxy forms shall also bring identification documents for verification.

  • 91 -

This Corporation shall furnish the attending shareholders with an attendance book to sign, or attending shareholders may hand in a sign-in card in lieu of signing in. This Corporation shall furnish attending shareholders with the meeting agenda book, annual report, attendance card, speaker's slips, voting slips, and other meeting materials. Where there is an election of directors or supervisors, pre-printed ballots shall also be furnished.

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

Article 7: The chair and non-voting participants of a shareholders meeting

If a shareholders meeting is convened by the board of directors, the meeting shall be chaired by the chairperson of the board. When the chairperson of the board is on leave or for any reason unable to exercise the powers of the chairperson, the vice chairperson shall act in place of the chairperson; if there is no vice chairperson or the vice chairperson also is on leave or for any reason unable to exercise the powers of the vice chairperson, the chairperson shall appoint one of the managing directors to act as chair, or, if there are no managing directors, one of the directors shall be appointed to act as chair. Where the chairperson does not make such a designation, the managing directors or the directors shall select from among themselves one person to serve as chair.

When a managing director or a director serves as chair, as referred to in the preceding paragraph, the managing director or director shall be one who has held that position for six months or more and who understands the financial and business conditions of the company. The same shall be true for a representative of a juristic person director that serves as chair.

It is advisable that shareholders meetings convened by the board of directors be chaired by the chairperson of the board in person and attended by a majority of the directors, at least one supervisor in person, and at least one member of each functional committee on behalf of the committee. The attendance shall be recorded in the meeting minutes. If a shareholders meeting is convened by a party with power to convene but other than the board of directors, the convening party shall chair the meeting. When there are two or more such convening parties, they shall mutually select a chair from among themselves. This Corporation may appoint its attorneys, certified public accountants, or related persons retained by it to attend a shareholders meeting in a non-voting capacity.

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Article 8: Documentation of a shareholders meeting by audio or video

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

Article 9: Calculation of number of shares in attendance and meeting Attendance at shareholders meetings shall be calculated based on numbers of shares. The number of shares in attendance shall be calculated according to the shares indicated by the attendance book and sign-in cards handed in plus the number of shares whose voting rights are exercised by correspondence or electronically.

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

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

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

Article 10: Discussion on Agenda

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

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

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

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

Article 11: Shareholder speech

Before speaking, an attending shareholder must specify on a speaker's slip the subject of the speech, his/her shareholder account number (or attendance card number), and account name. The order in which shareholders speak will be set by the chair. A shareholder in attendance who has submitted a speaker's slip but does not actually speak shall be deemed to have not spoken. When the content of the speech does not correspond to the subject given on the speaker's slip, the spoken content shall prevail. Except with the consent of the chair, a shareholder may not speak more than twice on the same proposal, and a single speech may not exceed 5 minutes. If the shareholder's speech violates the rules or exceeds the scope of the agenda item, the chair may terminate the speech.

When an attending shareholder is speaking, other shareholders may not speak or interrupt unless they have sought and obtained the consent of the chair and the shareholder that has the floor; the chair shall stop any violation.

When a juristic person shareholder appoints two or more representatives to attend a shareholders meeting, only one of the representatives so appointed may speak on the same proposal.

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

Article 12: Calculation of voting shares

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

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

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

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

Article 13: Vote on Agenda and Scrutinizing Ballots and How Ballots are Counted

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

When this Corporation holds a shareholders meeting, it may allow the shareholders to exercise voting rights by correspondence or electronic means (in accordance with the proviso of Article 177-1 of the Company Act regarding companies that shall adopt electronic voting: When this Corporation holds a shareholder meeting, it shall adopt exercise of voting rights by electronic means and may adopt exercise of voting rights by correspondence). When voting rights are exercised by correspondence or electronic means, the method of exercise shall be specified in the shareholders meeting notice. A shareholder exercising voting rights by correspondence or electronic means will be deemed to have attended the meeting in person, but to have waived his/her rights with

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respect to the extraordinary motions and amendments to original proposals of that meeting; it is therefore advisable that this Corporation avoid the submission of extraordinary motions and amendments to original proposals.

A shareholder intending to exercise voting rights by correspondence or electronic means under the preceding paragraph shall deliver a written declaration of intent to this Corporation before 2 days before the date of the shareholders meeting. When duplicate declarations of intent are delivered, the one received earliest shall prevail, except when a declaration is made to cancel the earlier declaration of intent.

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

Except as otherwise provided in the Company Act and in this Corporation's articles of incorporation, the passage of a proposal shall require an affirmative vote of a majority of the voting rights represented by the attending shareholders. At the time of a vote, for each proposal, the chair or a person designated by the chair shall first announce the total number of voting rights represented by the attending shareholders, followed by a poll of the shareholders. After the conclusion of the meeting, on the same day it is held, the results for each proposal, based on the numbers of votes for and against and the number of abstentions, shall be entered into the MOPS.

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

Vote monitoring and counting personnel for the voting on a proposal shall be appointed by the chair, provided that all monitoring personnel shall be shareholders of this Corporation.

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

Article 14: Election of directors and supervisors

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

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

Article 15: Meeting minutes and signature

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

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

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

Article 16: Public disclosure

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

If matters put to a resolution at a shareholders meeting constitute material information under applicable laws or regulations or under Taiwan Stock Exchange Corporation (or

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GreTai Securities Market) regulations, this Corporation shall upload the content of such resolution to the MOPS within the prescribed time period.

Article 17: Maintaining order at the meeting place

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

The chair may direct the proctors or security personnel to help maintain order at the meeting place. When proctors or security personnel help maintain order at the meeting place, they shall wear an identification card or armband bearing the word "Proctor." At the place of a shareholders meeting, if a shareholder attempts to speak through any device other than the public address equipment set up by this Corporation, the chair may prevent the shareholder from so doing. When a shareholder violates the rules of procedure and defies the chair's correction, obstructing the proceedings and refusing to heed calls to stop, the chair may direct the proctors or security personnel to escort the shareholder from the meeting. Article 18: Recess and resumption of a shareholders meeting When a meeting is in progress, the chair may announce a break based on time considerations. If a force majeure event occurs, the chair may rule the meeting temporarily suspended and announce a time when, in view of the circumstances, the meeting will be resumed.

If the meeting venue is no longer available for continued use and not all of the items (including extraordinary motions) on the meeting agenda have been addressed, the shareholders meeting may adopt a resolution to resume the meeting at another venue. A resolution may be adopted at a shareholders meeting to defer or resume the meeting within 5 days in accordance with Article 182 of the Company Act. Article 19: Supplementary Provisions These Rules, and any amendments hereto, shall be implemented after adoption by shareholders meetings.

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Appendix 2

Chieftek Precision Co., Ltd. Procedures for Election of Directors and Supervisors (Before Amendment)

  • Article 1: Except as otherwise provided by law and regulation or by this Corporation's articles of incorporation, elections of directors and supervisors shall be conducted in accordance with these Procedures.

  • Article 2: The overall composition of the board of directors shall be taken into consideration in the selection of this Corporation's directors. The composition of the board of directors shall be determined by taking diversity into consideration and formulating an appropriate policy on diversity based on the company's business operations, operating dynamics, and development needs. It is advisable that the policy include, without being limited to, the following two general standards:

  • Basic requirements and values: Gender, age, nationality, and culture.

  • Professional knowledge and skills: A professional background (e.g., law, accounting, industry, finance, marketing, technology), professional skills, and industry experience.

Each board member shall have the necessary knowledge, skill, and experience to perform

their duties; the abilities that must be present in the board as a whole are as follows:

  1. The ability to make judgments about operations.

  2. Accounting and financial analysis ability.

  3. Business management ability.

  4. Crisis management ability.

  5. Knowledge of the industry.

  6. An international market perspective.

  7. Leadership ability.

  8. Decision-making ability.

The board of directors of this Corporation shall consider adjusting its composition based on the results of performance evaluation.

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Article 3: Supervisors of this Corporation shall meet the following qualifications:

  1. Integrity and a practical attitude.

  2. Impartial judgment.

  3. Professional knowledge.

  4. Broad experience.

  5. Ability to read financial statements.

In addition to the requirements of the preceding paragraph, at least one among the supervisors of this Corporation must be an accounting or finance professional. Appointments of supervisors shall be made with reference to the provisions on independence contained in the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies, in order to select appropriate supervisors to help strengthen the corporation's risk management and control of finance and operations.

At least one supervisor position must be held by a person having neither a spousal relationship nor a relationship within the second degree of kinship with any other supervisor or with any director.

A supervisor may not serve concurrently as the director, managerial officer, or any other employee of this Corporation, and at least one of the supervisors must be domiciled in the Republic of China to be able to promptly fulfill the functions of supervisor.

Article 4: The qualifications and election for the independent directors of this Corporation shall comply with the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies and relevant laws and regulations.

Article 5: Elections of both directors and supervisors at this Corporation shall be conducted in accordance with the candidate nomination system and procedures set out in Article 192-1 of the Company Act. This Corporation shall review 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 nominee independent directors and may not arbitrarily add requirements for documentation of other qualifications. It shall further provide the results of the review to shareholders for their reference, so that qualified independent directors will be elected.

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Election of independent directors shall be conducted in accordance with the candidate nomination system stipulated in Article 192-1 of the Company Act.

When the number of directors falls below five due to the dismissal of a director for any reason, this Corporation shall hold a by-election to fill the vacancy at its next shareholders meeting. When the number of directors falls short by one third of the total number prescribed in this Corporation’s articles of incorporation, this Corporation shall call a special shareholders meeting within 60 days from the date of occurrence to hold a by-election to fill the vacancies.

When the number of independent directors falls below that required under the proviso of Article 14-2, paragraph 1 of the Securities and Exchange Act, or the related provisions of the Taiwan Stock Exchange Corporation rules governing the review of listings, or subparagraph 8 of the Standards for Determining Unsuitability for GTSM Listing under Article 10, Paragraph 1 of the GreTai Securities Market Rules Governing the Review of Securities for Trading on the GTSM, a by-election shall be held at the next shareholders meeting to fill the vacancy. When the independent directors are dismissed en masse, a special shareholders meeting shall be called within 60 days from the date of occurrence to hold a by-election to fill the vacancies.

When the number of supervisors falls below that prescribed in this Corporation’s articles of incorporation due to the dismissal of a supervisor for any reason, a by-election to fill the vacancy should ideally be held at the next shareholders meeting. When the supervisors are dismissed en masse, a special shareholders meeting shall be called within 60 days from the date of occurrence to hold a by-election to fill the vacancies.

  • Article 6: The cumulative voting method shall be used for election of the directors and supervisors at this Corporation. Each share will have voting rights in number equal to the directors or supervisors to be elected, and may be cast for a single candidate or split among multiple candidates.

  • Article 7: The board of directors shall prepare separate ballots for directors and supervisors in numbers corresponding to the directors or supervisors to be elected. The number of voting rights associated with each ballot shall be specified on the ballots, which shall then be distributed to the attending shareholders at the shareholders meeting. Attendance card

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numbers printed on the ballots may be used instead of recording the names of voting shareholders.

  • Article 8: The number of directors and supervisors will be as specified in this Corporation's articles of incorporation, with voting rights separately calculated for independent and non-independent director positions. Those receiving ballots representing the highest numbers of voting rights will be elected sequentially according to their respective numbers of votes. When two or more persons receive the same number of votes, thus exceeding the specified number of positions, they shall draw lots to determine the winner, with the chair drawing lots on behalf of any person not in attendance. The person elected concurrently as director and supervisor according to the preceding paragraph shall decide to serve as director or supervisor on its own while the candidate receiving second most votes to such Director shall be elected to fill the vacancy.

  • Article 9: Before the election begins, the chair shall appoint a number of persons with shareholder status to perform the respective duties of vote monitoring and counting personnel. The ballot boxes shall be prepared by the board of directors and publicly checked by the vote monitoring personnel before voting commences.

  • Article 10: If a candidate is a shareholder, a voter must enter the candidate's account name and shareholder account number in the "candidate" column of the ballot; for a non-shareholder, the voter shall enter the candidate's full name and identity card number. However, when the candidate is a governmental organization or juristic-person shareholder, the name of the governmental organization or juristic-person shareholder shall be entered in the column for the candidate's account name in the ballot paper, or both the name of the governmental organization or juristic-person shareholder and the name of its representative may be entered. When there are multiple representatives, the names of each respective representative shall be entered.

Article 11: A ballot is invalid under any of the following circumstances:

  1. The ballot was not prepared by the board of directors.

  2. A blank ballot with anything written is placed in the ballot box.

  3. The writing is unclear and indecipherable.

  4. Any item written on the ballot has been altered.

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  6. The candidate whose name is entered in the ballot is a shareholder, but the candidate's account name and shareholder account number do not conform with those given in the shareholder register, or the candidate whose name is entered in the ballot is a non-shareholder, and a cross-check shows that the candidate's name and identity card number do not match.

  7. Other words or marks are entered in addition to the candidate's account name or shareholder account number (or identity card number) and the number of voting rights allotted.

  8. Two or more candidates were written on the same ballot.

  9. The name of the candidate entered in the ballot is identical to that of another shareholder, but no shareholder account number or identity card number is provided in the ballot to identify such individual.

  10. Article 12: Except in the case approved by the competent agency, more than half of the directors, at least one among supervisors or supervisors and directors shall be persons who have neither of the following relationship with any other director:

  11. a spousal relationship

  12. a relationship within the second degree of kinship.

  13. Article 13: If the original selectees of directors and supervisors do not meet the conditions of the preceding article, determination of which directors or supervisors are elected shall be made according to the following provisions:

  14. When there are some among the directors who do not meet the conditions, the election of the director receiving the lowest number of votes among those not meeting the conditions shall be deemed invalid.

  15. When there are some among the supervisors who do not meet the conditions, the provisions of the preceding subparagraph shall apply mutatis mutandis.

  16. When there are some among the directors and supervisors who do not meet the conditions, the election of the supervisor receiving the lowest number of votes among those not meeting the conditions shall be deemed invalid.

Article 14: The voting rights shall be calculated on site immediately after the end of the poll, and the results of the calculation, including the list of persons elected as directors or

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supervisors and the numbers of votes with which they were elected, shall be announced by the chair on the site.

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

Article 15: These Procedures, and any amendments hereto, shall be implemented after approval by a shareholders meeting.

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Appendix 3

Chieftek Precision Co., Ltd.

Articles of Incorporation

Chapter 1 General Provisions

  • Article 1: According to the Company Acts, the company is naming as Chieftek Precision Co., Ltd, and the English version will be named as CHIEFTEK PRECISION CO., LTD.

  • Article 2: The Company’s scope of services is set out hereunder:

  • (i) CB01990 Other Machinery Manufacturing;

  • (ii) F401010 International Trading.

  • Products which are researched, developed and marketed are as follows:

  • (a) Miniature linear guide;

  • (b) Miniature ball screw;

  • (c) Miniature linear modules;

  • (d) Photoelectric and semi-conductor machinery equipments; (e) International trading relating to aforesaid products.

  • Article 2.1: In the event that the Company becomes a shareholder of limited liability in other companies, the amount of investment thereof shall not be bound by article 13 of the Company Act relating to the total reinvestment amount restriction.

  • 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.

  • Article 4: The Company’s public announcements are published in accordance with article 28 of the Company Act.

  • Article 4.1: The Company is entitled to offer guarantees to externally.

Chapter 2 Shares

  • Article 5: The amount of capital of the company is NT$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 the event that the Company intends to issue shares at a buyback value that is lower than that of the employee’s ordinary share subscription warrants on the closing day, the aforesaid shares shall only be issued under the circumstances that a majority of the shareholders present who represent two-thirds or more of the total number of its outstanding shares.

  • Article 6: The company may issue registered shares and be 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.

  • Article 7: Assignment/transfer of change-of-name shares shall be proceeded in accordance with article 165 of the Company Act.

  • 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

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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.

Chapter 3 Shareholders Meeting

  • Article 8: There are two types of shareholders meeting, namely, regular meeting and special meeting. The regular meeting shall be convened within six months after close of each fiscal year. Whereas, special meetings are held in accordance with law, when necessary.

  • Article 8.1: The Notice of Shareholders Meeting shall be done electronically with the consent of the shareholders.

  • Article 8.2: In accordance with Articles 193-1 of Company Act, the Company will electronically be listed as one of the exercise of voting rights. The elections for directors of the Company shall proceed with the candidate nomination system; the shareholders shall elect the directors from among the nominees listed in the roster of candidates.

  • Article 9: When a shareholder is unable to attend the shareholders meeting for whatever reason, that shareholder shall appoint a proxy to attend by offering company issued solicitation document stipulating the extent of the authorization with signature or company seal thereon.

  • Article 10: A shareholder, unless otherwise provided for in article 179 of the Company Act relating to the circumstances of certain shares having no voting right, shall have one voting right in respect of each share in his/her/its possession.

  • Article 11: A resolution is passed at the shareholders meeting by a majority of the shareholders present who represent two-thirds or more of the total number of its outstanding shares.

  • Article 12: Resolutions adopted at a shareholders meeting shall be recorded in the minutes of the meeting. The preparation, distribution, and safekeeping thereof must be proceeded in accordance with article 183 of the Company Act.

Chapter 4 Directors and Supervisors

  • Article 13: The Company shall appoint five to nine directors and two to three supervisors, and a three-year term and may be re-elected after the term.

  • The Company shall by law purchase liability insurance in order to cover liability that may arise from the directors and supervisors exercising their duties during their term. The appointed number of the aforesaid director shall have no less than two independent directors and the same shall not be less than one fifth of the total number of directors of the Company. The appointment of in-dependent director is by electing from among the nominated candidates by the shareholders. The professional qualification, shareholding, part-time job restrictions, nominations, means of election as well as other relevant issues are proceeded in accordance with the regulations of the competent authority. The Company shall subject to the Securities and Exchange Act establish an audit committee. The members of the committee are composed of the entire number of independent directors. It shall not be less than three persons in number and at least one thereof shall have accounting or financial expertise. The previsions of relevant regulations or Company’s Articles of Incorporation shall apply mutatis mutandis to the exercise of power, committee charter, as well as other applicable matters of the audit committee. Upon the establishment of the audit committee, the supervisor shall be released from duty. The provisions regarding supervisor in this Articles of Incorporation shall be void with immediate effect.

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The Company shall establish committees to carry out various functions in order to fortify its strategic objectives and strengthen management mechanisms. Each committee charter shall be resolved by the Board of Directors.

  • Article 13.1: The cumulative voting method shall be used for election of the directors and supervisors of this Company. Each share will have voting rights in umber equal to the directors to be elected, and may be cast for a single candidate or split among multiple candidates.

  • 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 other electronical 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 15: In case the Managing Director is on leave or unable to exercise his/her duties for whatever reasons, his/her proxy shall act in accordance with article 208 of the Company Act.

  • Article 16: The Board of Director is authorized to determine the amount of compensation relating to transportation and remuneration to the directors and supervisors of the Company based on standard terms in the industry and subject to concerned director and supervisor’s level of operational participation as well as value of the contribution thereof.

  • Article 17: The director shall present the solicitation document and assign another director to attend the meeting of the Board of Directors in order to exercise his/her voting right. The director that is assigned to represent another director can only accept one such assignment.

  • The participants are deemed present by taking part of the meeting of the Board of Directors using video conference facility when the meeting is conducted by way of video conference.

  • Article 18: The Board of Directors is composed of all directors. Wherefore, the scope of duties is set out hereunder:

  • (i) Draft operational plans;

  • (ii) Offer proposals relating to appropriation of profit and remedy in the event of loss; (iii) Resolve whether the Company should increase or reduce capital;

  • (iv) Review and finalize important provisions of the Articles of Incorporation or contracts;

  • (v) Elect and discharge the General Manager of the Company;

  • (vi) Establish and close branch offices;

  • (vii) Review and approve budget as well as balanced budget;

  • (viii) Other duties vested by virtue of the Company Act and resolutions adopted at the meeting of the Board of Directors.

Chapter 5 Managerial Personnel

  • Article 19: The Company shall have managerial personnel. Appointment, discharge and the remuneration thereto shall be subject to article 29 of the Company Act.

Chapter 6 Accounting

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  • Article 20: The Company shall, at the end of each fiscal year, submit to its shareholders for their ratification of (i) the annual business report, (ii) the financial statements, and (iii) the appropriation of profit and remedy in the event of loss proposal.

  • Article 21: The general annual accounts of the company will be assigned as following if there is a surplus:

  • (i) Withholding Tax

  • (ii) Covering the deficit

  • (iii) 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. (iv) If necessary, providing for the listing of rotation of the special surplus reserve by order of law or by the competent authority.

  • (v) 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 shall subject to its business performance for that year retain between three to Fifteen percent of the profit for the use of employee remuneration. Further, the Company shall subject to its business performance for that year retain no higher than three percent for the use of director and supervisor remuneration. In the event that the Company still suffers a loss, that loss shall be made up.

  • Employee remuneration shall be paid by way of cash or share. The recipient of the cash or share shall include employees of the subordinate companies that fulfill the necessary criteria determined by the Board of Directors.

  • The business performance for that year referred to in the preceding paragraph means its profit before tax without the deductions of employee, director and supervisor’s remuneration therefrom.

  • Article 21.2: 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 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.

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Chapter 7 Supplementary Provisions

Article 22: Any unspecified matters in this Articles of Incorporation shall be dealt in accordance with the Company Act.

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. 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.

Chieftek Precision Co., Ltd

Chairman: Li-fen Chen

  • 109 -

Appendix 4

Directors and Supervisors’ Shareholdings

  • I. As of the book closure date for the shareholders’ meeting, the paid-in capital of the Company is NT$811,875,490 and the total number of issued shares is 81,187,549 shares.

  • II. In accordance with Article 26 of Securities and Exchange Act and Article 2 of Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies, the minimum numbers of shares required to be held by the entire bodies of directors is 6,495,004 shares and minimum numbers of shares required to be held by the entire bodies of supervisors is 649,501 shares.

III. As of April 10, 2020, the shareholdings of all directors and supervisors:

Position Name Date of
Election		 Term of
Office
(year)		 Shareholdings
recorded on the
shareholders roster as
of the book closure
date for the
shareholders’meeting		 Sharehold
ing ratio
%
Chairman CHEN LI-FEN 106.06.22 3 3,653,107 4.50%
Director HSU MINGCHE 106.06.22 3 5,579,338 6.87%
Director CHENG SHENG -FEN 106.06.22 3 554,736 0.68%
Director WANG CHEN PI-HSIA 106.06.22 3 557,355 0.69%
Director Anne Li 106.06.22 3 1,075,290 1.32%
Independent
director		 WU CHUNG -JEN 106.06.22 3 29,403 0.04%
Independent
director		 WEI NAICHANG 106.06.22 3 0 0.00%
Independent
director		 Ming Tzu Ho 106.06.22 3 0 0.00%
Total shares of the entire bodies of directors 11,449,229 14.10%
Supervisor LI MEI 106.06.22 3 494,643 0.61%
Supervisor TSENG HSU-WEN 106.06.22 3 155,167 0.19%
Total shares of the entire bodies of supervisors 649,810 0.80%

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  • Note: The shareholdings of independent directors elected by a public company shall not be counted in the total referred to in the preceding paragraph; if a public company has elected two or more independent directors, the share ownership figures calculated at the rates set forth in the preceding paragraph for all directors and supervisors other than the independent directors and shall be decreased by 20 percent.

  • IV. The shareholdings of the entire bodies of directors and supervisors satisfied “Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies”.

  • 111 -

Appendix 5

The Impact of Bonus Shares on the Company’s Business Performances, Earnings per Share and Shareholders’ Return on Investment

The Company has passed Proposal for Distribution of 2019 Profit on April 28, 2020. Hence, there is no bonus shares distributed and this part is not applicable.

Appendix 6

Other Explanation Matter

The explanation for shareholders’ proposal during the regular shareholders’ meeting. Explanation:

  • I. In accordance with Article 172-1 of the Company Act, a shareholder holding 1 percent or more of the total number of issued shares may submit to this Corporation a written proposal for discussion at a regular shareholders meeting. Such proposals, however, are limited to one item only and limited to 300 words.

  • II. The Company handles the submission of proposals for the shareholders’ meeting. The period of submission is from April 1, 2020 to April 10, 2020. The information has been announced on the Market Observation Post System.

  • III. The Company has not received any proposals from the shareholders.

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