FIRST INS — AGM Information 2020

Jun 29, 2020

Stock ID: 2852

The First Insurance Co., Ltd.

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2020 Annual General Meeting

Agenda Handbook

AGM time: June 23, 2020 AGM venue: No. 88, Section 2, Zhongxiao East Road, Taipei City

Table of contents

			Table of contents
I.	Meeting		Procedures ····································································· 01
II.	Meeting		Agendas.········································································ 02
	(I)	Reports
		1.	The Business Report of the Company in 2019 ··························· 02
		2.	The Company’s 2019 Audit Committee Report ·························· 02
		3.	The Company’s 2019 Director and Employee Remuneration Report · 02
		4.	Amendments to Some of the Rules of Procedure of the Board of
			Directors Meetings ··························································· 02
		5.	Amendments to Some of the Ethical Corporate Management Best
			Practice Principles of the Company········································ 02
		6.	Amendments to Some of the Procedures for Ethical Management
			and Guidelines for Conduct of the Company····························· 02
		7.	Establishment of the Handling Procedures for Using Funds in
			Special Projects, Public Utilities and Social Welfare Enterprises” ···· 02
	(II)	Acknowledgments
		The	Business Report and Financial Report of the Company in 2019 ······· 02
	(III)	Discussions
		1.	The Proposal of the Distribution of Earnings of the Company in
			2019 ············································································ 03
		2.	The Proposal of the Distribution of Dividends of the Company in
			2019 ············································································ 03
		3.	Amendments to Some of the Rules of Procedure of Shareholders’
			Meetings ······································································· 03
	(IV)Other Proposals and Extraordinary Motions ··································· 04
Appendices:			1. Independent Auditor’s Report ········································ 34
			2. Annual Financial Report ·············································· 37
			3. The Rules of Procedure of the Board of Directors Meetings, the
			First Insurance Co., Ltd.··············································· 49
			4. The Ethical Corporate Management Best Practice Principles,
			the First Insurance Co., Ltd. ·········································· 54
			5. The Procedures for Ethical Management and Guidelines for
			Conduct, the First Insurance Co., Ltd.······························· 60
			6. The Rules of Procedure of Shareholders’ Meetings, the First
			Insurance Co., Ltd. ····················································· 68
			7. Articles of Incorporation, the First Insurance Co., Ltd.··········· 74
			8. Shareholdings of the Company’s Directors························· 81

Proceedings for the 2020 Annual General Meeting of the First Insurance Co., Ltd.

1. Commencement of meeting

2. Chairperson’s opening remarks

3. Reports

4. Acknowledgments

5. Discussions

6. Other Proposals and Extraordinary Motions

7. Dismissal

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Agenda for the 2020 Annual General Meeting of The First Insurance Co., Ltd.

1. Time: 9:00 am, June 23 (Tue), 2020

2. Venue: First Conference Hall, Haihua Financial Center, B1, No. 88, Section 2, Zhongxiao East Road, Taipei City

3. Meeting commences as scheduled

4. Chairperson’s opening remarks

5. Reports

6. (1) The Company’s 2019 Business Report (please see pages 5-7).

7. (2) The Company’s 2019 Audit Committee Report (please see page 8).

8. (3) The Company’s 2019 Director and Employee Remuneration Report (please see page 9).

9. (4) Amendments to Some of the Company’s Rules of Procedures for Board of Directors Meetings (please see pages 10-11)

10. (5) Amendments to Some of the Ethical Corporate Management Best Practice Principles of the Company (please see pages 12-17)

11. (6) Amendments to Some of the Procedures for Ethical Management and Guidelines for Conduct (please see pages 18-25)

12. (7) Establishment of the Handling Procedures for Using Funds in Special Projects, Public Utilities and Social Welfare Enterprises” (please see pages 26-33)

6. Acknowledgments

• Summary: The Company’s 2019 business report and financial statements have been prepared and subsequently audited by Deloitte Taiwan, and are available for acknowledgment (proposed by the board of directors).

• Description: (1) The Company’s 2019 business report and financial statements were passed during the 6th meeting of the 20th board of directors dated March 26, 2020. The financial statements were subsequently audited by Deloitte Taiwan and reviewed by the Audit Committee, to which they have

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issued separate audit reports. The financial statements are hereby presented for acknowledgment during AGM in accordance with the Articles of Incorporation.

• (2) The case is ready for acknowledgment (please see pages 5-7 and pages 37-44).

Resolution:

1. Discussions:

2. (1) Summary: Appropriation of the Company’s 2019 earnings (proposed by the board of directors).

   • Description: Please refer to the Earnings Appropriation Chart (page 45) for details regarding appropriation of the Company’s 2019 earnings.

Resolution:

• (2) Summary: Distribution of the Company’s 2019 dividends is ready for approval (proposed by the board of directors).

• Description: The board of directors has proposed to pay out

  • NT$289,117,233 from cumulative undistributed earnings as cash dividends. Based on the 301,163,784 shares outstanding, the payout is equivalent to NT$0.96 per share. The amount of cash dividend receivable by shareholders will be rounded to the nearest dollar. Fractional amounts of less than NT$1 will be summed up and allocated based on the size of decimals in descending order and shareholders’ account number in ascending order until the total amount of cash dividend is allocated. The board of directors shall be authorized to determine details relating to the cash dividend, including the baseline date, once the proposal has been resolved in the AGM.

Resolution:

• (3) Summary: Amendments to some clauses of the Company’s Rules of Procedure of Shareholders’ Meetings is ready for approval (proposed by the board of directors).

• Description: 1. To accommodate the samples of rules of procedures of shareholders’ meeting announced by the TWSE on January 2, 2020 in Letter Tai-Zheng-Zhi-Li-Zi No.

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10800242211, some clauses of the Company’s Rules of Procedure of Shareholders’ Meetings are amended.

1. Comparison of Amendments to the Clauses of Rules of Procedure of Shareholders’ Meetings is attached (please see page 46-48).

Resolution:

1. Other Proposals and Extraordinary Motions:

2. Dismissal

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Business Report

Ladies and gentlemen:

Welcome to the annual general meeting of The First Insurance Co., Ltd.

First of all, in the first half of 2019, as the effects of the US-China trade disputes emerged, the output of the global manufacturers and the international trade volume sharply declined, and the slowing trend of the global economic growth has been more apparent. Amid the slowing economics, data including the export orders, export, and industrial output of Taiwan were all depressed. In the latter half of 2019, while still being subject to the prolonged deadlock of the US-China trade and weakened overseas demands, Taiwan’s economics benefited from the effect of diverted trade orders, intensified returns of Taiwanese companies, and the expanded investment to semiconductor equipment, and the domestic demands were driven. The whole year economic growth of 2019 was 2.73%, 0.13% higher than 2018’s growth 2.60%.

Industry-wise, the non-life insurance industry posted total written premiums of NT$176.4 billion in 2019, up 6.97% from the NT$164.9 billion in 2018. The Company managed to generate NT$6.875 billion of written premiums in 2019, which represented a -1.99% growth over the NT$7.015 billion in 2018. Below is a breakdown of the Company’s 2019 business performance:

1. Business aspect

Fire insurance:

Premium revenues amounted to NT$1,076,828,000 and accounted for 15.66% of total premium revenues, representing a 5.90% decline over the NT$1,144,364,000 recorded in 2018. Retained loss ratio was calculated at 10.24%.

Marine insurance:

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Premium revenues amounted to NT$356,998,000 and accounted for 5.19% of total premium revenues, representing a 15.90% decline over the NT$424,498,000 recorded in 2018. Retained loss ratio was calculated at 49.28%.

Automobile insurance:

Premium revenues amounted to NT$4,549,863,000 and accounted for 66.18% of total premium revenues, representing a 1.26% growth over the NT$4,493,231,000 recorded in 2018. Retained loss ratio was calculated at 64.06%.

Other insurance:

Premium revenues amounted to NT$891,365,000 and accounted for 12.97% of total premium revenues, representing a 6.43% decline over the NT$952,640,000 recorded in 2018. Retained loss ratio was calculated at 43.96%.

1. Financial aspect

Total assets amounted to NT$15.857 billion by the end of 2019, which was NT$130 million higher than the NT$15.727 billion reported at 2018 year-end and was due mainly to the decrease of reinsurance contractual assets, and an increase of cash and financial assets. Total liabilities amounted to NT$9.046 billion, which was NT$713 million lesser than the NT$9.759 billion reported at 2018 year-end and was due mainly to the decrease of insurance liabilities.

Regarding the outlook of 2020, for the international situation, while the temporary agreements were reached by the U.S. and China, but the trade structural issues such as intellectual property, technology competitions, among other things, are not likely to be resolved in the near term. In addition, the U.S. economics has entered the slow-down cycle, and the risks of economic structural reforms and debt in China are lingering; to these factors, the pace of corporate investments and the consumer confidences tend to expose. Recently the outbreak of COVID-19 is

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likely to impact global trade, tourism and supply chains, and thus results in the contraction of investment and consumption. Based on the forecasts from major international institutions (April), the global economic growth rate will turn to -3.0%. On the domestic front, benefited from the expanded capacities in Taiwan by companies, accelerating development of 5G and high-end production process of semiconductors, the domestic demands are helped. The government also continues its three major investment programs, to implement the 5+2 industrial innovation and enhance the economic growth momentum. Provided, the outbreak extends to the whole world, and thus demands to end-products weaken while the prices of international raw materials drop significantly, which in turn limiting spaces of Taiwan’s export, production, and consumption. The latest forecasts (April) by the major institutions expect the economic growth of Taiwan this year is between 1.03%~1.92%, continuing the trend of modest growth. In response, the Company shall continue focusing on its core business activities while at the same time explore improvements with a focus on stability, pragmatism, and innovation. In terms of asset allocation, the Company will strive to raise capital efficiency and asset yields as a show of gratitude for the support of our shareholders.

Lastly,

we would like to give you our best regards for the future ahead.

Chairman: Cheng-Han Lee

General Manager: Chu-Minn Leu

Head of Accounting: Fei-Fen Hsiao

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The First Insurance Co., Ltd. Audit Committee Report

We have reviewed the Company’s 2019 financial statements, business report and earnings appropriation proposal prepared by the board of directors. The financial statements have been audited by Deloitte Taiwan, to which the firm issued an independent auditor’s report with unqualified opinion.

The Audit Committee has reviewed the abovementioned reports prepared by the board of directors and found them to be in compliance with regulatory requirements. We hereby issue this report in accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act.

For

2020 Annual General Meeting of The First Insurance Co., Ltd.

Audit Committee convener:

March 26, 2020

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The Company’s 2019 director and employee remuneration report

1. Pursuant to Article 31 of the Articles of Incorporation, the Company is required to allocate at least 1% of its annual profits for employee remuneration, and no more than 0.6% for director remuneration.

2. Based on the above criteria, a proposal has been made to allocate NT$4,046,491 and NT$6,744,152 for the Company’s 2019 director and employee (including managers) remuneration, respectively.

3. This proposal was passed during the 2nd meeting of the 4th Remuneration Committee dated February 17, 2020, and was subsequently presented to and passed during the 5th meeting of the 20th board of directors dated February 27, 2020.

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The First Insurance Co., Ltd. Comparison of Changes to Board of Directors Conference Rules

Amended clauses	Existingclauses	Description
Article 9 Where a meeting of the board of directors is called by the chairperson of the board, the meeting shall be chaired bythe chairperson. However,wherethe first meeting of each newly elected board of directors is called by the director who received votes representing the largest portion of voting rights at the shareholders’ meeting in which the directors were elected, the meeting shall bechaired by that director; if there are two or more directors so entitled to call the meeting, they shall choose one person by and from	Article 9 The Company’s board meetings shall be convenedandchaired by the Chairman. However, the first meeting of a newly-elected board is convened by the director that received the highest number of votes during the shareholder meeting election, and the meeting chairperson isto be elected among attending directors. If the Chairman is unable to perform duties due to leave of absence or any reason, a delegate shall be appointed in accordance with Article 208 of the CompanyAct.	To accommodate the amendments to the Regulations Governing Procedure for Board of Directors Meetings of Public Companies, some clauses of Paragraph 1 are amended, Paragraph 2 is added, and Paragraph 2 becomes Paragraph 3.
among themselves to chair the meeting. Where a meeting of the board of directors is called by a majority of directors on their own initiative in accordance with Article 203, paragraph 4 or Article 203-1, paragraph 3 of the Company Act, the directors shall choose one person by and from among themselves to chair the meeting. If the Chairman is unable to perform duties due to leave of absence or any reason, a delegate shall be appointed in accordance with Article 208 of the CompanyAct.
Article 14 If a director, or the corporate entity a director represents, is considered a stakeholder to the discussed topic, the director must state the stakes involved during the current meeting session and shall disassociate from all discussions and voting if the stakes are in conflict against the Company’s interests. In addition, the director maynot exercise voting	Article 14 If a director, or the corporate entity a director represents, is considered a stakeholder to the discussed topic, the director must state the stakes involved during the current meeting session and shall disassociate from all discussions and voting if the stakes are in conflict against the Company’s interests. In addition, the director maynot exercise voting	To accommodate the addition of Paragraph 2, the original Paragraph 2 becomes Paragraph 3 and wordings are revised.

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rights on behalf of other directors. Where the spouse, a blood relative within the second degree of kinship of a director, or any company which	rights on behalf of other directors. With respect to a resolution at a board of directors meeting, the provisions of Article 180, paragraph 2,of the Company Act, as applied mutatis mutandis under Article 206, paragraph 2, of that Act, shall apply in cases where a board director is prohibited by the preceding paragraph from exercising voting rights.
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. The provisions of Article 180, paragraph 2 of the Company Act, as applied mutatis mutandis under Article 206, paragraph4of that Act, apply to resolutions of board of directors meetings when a director is prohibited by the precedingtwo paragraphs from exercising voting rights.
Article 18 The above rules were first established on March 8, 2005. The 1st amendment was made on April 27, 2006 and implemented since January 1, 2007. The 2nd amendment was made on April 28, 2008. The 3rd amendment was made on March 26, 2010. The 4th amendment was made on December 26, 2012. The 5th amendment was made on March 28, 2016, and effected since June 24, 2016. The 6th amendment was made on August 28, 2017. The 7th amendment was made on March 28, 2018. The 8th amendment was made on February 27, 2020.	Article 18 The above rules were first established on March 8, 2005. The 1st amendment was made on April 27, 2006 and implemented since January 1, 2007. The 2nd amendment was made on April 28, 2008. The 3rd amendment was made on March 26, 2010. The 4th amendment was made on December 26, 2012. The 5th amendment was made on March 28, 2016, and effected since June 24, 2016. The 6th amendment was made on August 28, 2017. The 7th amendment was made on March 28, 2018.	The date of amendment is added.

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The First Insurance Co., Ltd. Comparison of the Amended Clauses of the Ethical Corporate Management Best Practice Principles

Amended clauses	Existingclauses	Description
Article 5 (Policies) The Company shall abide by the operational philosophies of honesty, transparency and responsibility, base policies on the principle of good faith and obtain approval from the board of directors,and establish good corporate governance and risk control and management mechanism so as to create an operational environment for sustainable development.	Article 5 (Policies) The Company shall abide by the operational philosophies of honesty, transparency and responsibility, base policies on the principle of good faith, and establish good corporate governance and risk control and management mechanism so as to create an operational environment for sustainable development.	To accommodate the amendments to the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, certain wordings are amended.
Article 7 (Scopes of the Prevention Programs) The Company shall establish a risk assessment mechanism against unethical conduct,analyze and assess on a regular basis business activities within their business scope which are at a higher risk of being involved in unethical conduct,and establish prevention programs accordingly and review their adequacy and effectiveness on a regular basis. It is advisable for the Company to refer to prevailing domestic and foreign standards or guidelinesin establishing the prevention programs, which shall at least include preventive measures against the following: I. Offering and acceptance of bribes. II. Illegal political donations. III. Improper charitable donations or sponsorship. IV. Offering or acceptance of unreasonable presents or hospitality, or other improper benefits. V. Misappropriation of trade	Article 7 (Scopes of the Prevention Programs) When establishing prevention programs,the Company shall analyze business activities within the business scope which are at a higher risk of being involved in unethical conduct, and enhances preventionmeasures. The Company’s prevention programs shall at least include preventive measures against the following: I. Offering and acceptance of bribes. II. Illegal political donations. III. Improper charitable donations or sponsorship. IV. Offering or acceptance of unreasonable presents or hospitality, or other improper benefits. V. Misappropriation of trade	To accommodate the amendments to the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, certain wordings are amended.

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secrets and infringement of trademark rights, patent rights, copyrights, and other intellectual property rights. VI. Engaging in unfair competitive practices. VII. Damage directly or indirectly caused to the rights or interests, health, or safety of consumers or other stakeholders in the course of research and development, procurement, manufacture, provision, or sale of products and services.	secrets and infringement of trademark rights, patent rights, copyrights, and other intellectual property rights. VI. Engaging in unfair competitive practices. VII. Damage directly or indirectly caused to the rights or interests, health, or safety of consumers or other stakeholders in the course of research and development, procurement, manufacture, provision, or sale of products and services.
Article 8 (Commitment and Implementation) The Company shall request their directors and senior management to issue a statement of compliance with	Article 8 (Commitment and Implementation) The Company and the group’s entities and organizations shall clearly specify in their rulesand external documents the ethical corporate management policies and the commitment by the board of directors and senior management on rigorous and thorough implementation of such policies, and shall carry out the policies in internal management and in commercial activities.	To accommodate the amendments to the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, Paragraph 1 and 3 are added, and the wordings in Paragraph 2 are amended.
the ethical management policy and require in the terms of employment that employees comply with such policy. The Company and the group’s entities and organizations shall clearly specify in their rules, external documents and on the company websitethe ethical corporate management policies and the commitment by the board of directors and seniormanagement on rigorous and thorough implementation of such policies, and shall carry out the policies in internal management and in commercial activities. The policies, statements, commitments, and implementation of ethical management specified in Paragraph 1 and 2, shall be documented and retained duly.
Article 17 (Organizations and Responsibilities) (Skipped Paragraph 1) To achieve sound ethical corporate management,the Companyshall	Article 17 (Organizations and Responsibilities) (Skipped Paragraph 1) To achieve sound ethical corporate management,the Companyshall	To accommodate the amendments to the Ethical Corporate Management Best

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establish a dedicated unit that is under the board of directors and avail itself of adequate resources and staff itself with competent personnel, responsible for establishing and supervising the implementation of the ethical corporate management policies and prevention programs. The dedicated unit shall be in charge of the following matters, and shall report to the board of directors on a regular basis (at least once a year): I. 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. II. Analyzing and assessing on a regular basis the risk of involvement in unethical conduct within the business scope, adopting accordingly programs to prevent unethical conduct, and setting out in each program the standard operating procedures and conduct guidelines with respect to the company’s operations and business. III. Planning the internal organization, structure, and allocation of responsibilities and setting up check-and-balance mechanisms for mutual supervision of the business activities within the business scope which are possibly at a higher risk for unethical conduct. IV. Promotingand coordinating	avail	establish a dedicated unit that is under the board of directors and avail itself of adequate resources and staff itself with competent personnel, responsible for establishing and supervising the implementation of the ethical corporate management policies and prevention programs. The dedicated unit shall be in charge of the following matters,andshall report to the board of directors on a regular basis: I. 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. II. Adopting programs to prevent unethical conductandsetting out in each program the standard operating procedures and conduct guidelines with respect to this Corporation’s operations and business. III. Planning the internal organization, structure, and allocation of responsibilities and setting up check-and-balance mechanisms for mutual supervision of the business activities within the business scope which are possibly at a higher risk for unethical conduct. IV. Promotingand coordinating	Practice Principles for TWSE/GTSM Listed Companies, certain wordings are amended.

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awareness and educational activities with respect to ethics policy. V. Developing a whistle-blowing system and ensuring its operating effectiveness. VI. 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 assessment reports on the regular basis of compliance with ethical management in operating procedures.	awareness and educational activities with respect to ethics policy. V. Developing a whistle-blowing system and ensuring its operating effectiveness. VI. 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 assessment reports on the regular basis of compliance with ethical management in operating procedures.
Article 20 (Accounting and Internal Controls) (Skipped Paragraph 1) The internal audit unit of the Company shall, based on the results of assessment of the risk of involvement in unethical conduct, devise relevant audit plans including auditees, audit scope, audit items, audit frequency, etc., and examine accordinglythe compliance with the prevention programs. The internal audit unit may engage a certified public accountant to carry out the audit, and may engage professionals to assist if necessary. The results of examination in the preceding paragraph shall be reported to senior management and the ethical management dedicated unit and put down in the form of an audit report to be submitted to the board of directors.	Article 20 (Accounting and Internal Controls) (Skipped Paragraph 1) The internal audit unit of the Company shall,on the regular basis, audits thecompliancewith the aforementioned system,and prepares audit reports to be presented to the Board of Directors. The internal audit unit may engage a certified public accountant to carry out the audit, and may engage professionals to assist if necessary.	To accommodate the amendments to the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, Paragraph 3 is added, and the wordings in Paragraph 2 are amended.
Article 23 (Whistle-Blowing System) The Company shall adopt a concrete whistle-blowing system and scrupulously operate the system. The whistle-blowingsystem shall include	Article 23 (Whistle-Blowing System) The Company shall adopt a concrete whistle-blowing system and scrupulously operate the system. The whistle-blowingsystem shall include	To accommodate the amendments to the Ethical Corporate Management Best Practice Principles

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at least the following: I. An independent mailbox or hotline, either internally established and publicly announced or provided by an independent external institution, to allow company insiders and outsiders to submit reports. II. Dedicated personnel or unit appointed to handle the whistle-blowing system. Any tip involving a director or senior management shall be reported to the independent directors or supervisors. Categories of reported misconduct shall be delineated and standard operating procedures for the investigation of each shall be adopted. III. Follow-up measures to be adopted depending on the severity of the circumstances after investigations of cases reported are completed. Where necessary, a case shall be reported to the competent authority or referred to the judicial authority. IV. Documentation of case acceptance, investigation processes, investigation results, and relevant documents. V. Confidentiality of the identity of whistle-blowers and the content of reported cases, and an undertaking regarding anonymous reporting. VI. Measures for protecting whistle-blowers from inappropriate disciplinary actions due to their whistle-blowing. VII.Whistle-blowing incentive measures. (Skipped Paragraph 2)	at least the following: I. An independent mailbox or hotline, either internally established and publicly announced or provided by an independent external institution, to allow company insiders and outsiders to submit reports. II. Dedicated personnel or unit shall be appointed to handle the whistle-blowing system. Any tip involving a director or senior managers shall be reported to the independent directors. Categories of reported misconduct shall be delineated and standard operating procedures for the investigation of each shall be adopted. III. Documentation of case acceptance, investigation processes, investigation results, and relevant documents. IV. Confidentiality of the identity of whistle-blowers and the content of reported cases. V. Measures for protecting whistle-blowers from inappropriate disciplinary actions due to their whistle-blowing. VI. Whistle-blowing incentive measures. (Skipped Paragraph 2)	for TWSE/GTSM Listed Companies, Subparagraph 3 of Paragraph 1 is added, and the numbers of other subparagraphs are amended accordingly.

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Article 27 (Implementation) The ethical corporate management best practice principles of the Company shall be implemented after the board of directors grants the approval, and shall be sent to the supervisors and reported at a shareholders’ meeting. When the Company submits its ethical corporate management best practice principles to the board of directors for discussion pursuant to the preceding paragraph, the board of directors shall take into full consideration each independent director’s opinions. Any objections or reservations of any independent director shall be recorded in the minutes of the board of directors meeting. An independent director that cannot attend the board meeting in person to express objections or reservations shall provide a written opinion before the board meeting, unless there is some legitimate reason to do otherwise, and the opinion shall be specified in the minutes of the board of directors meeting. For the Company that has established an audit committee, the provisions regarding supervisors in these Principles shall apply mutatis mutandis to the audit committee. For amendments to the Principles, such amendments shall be reviewed by the Audit Committee and presented to the Board of Directors for passing before implementing; the amendments shall be presented to the Shareholders’ Meeting as well. The above Principles were first established on March 28, 2016. The 1st amendment was made on July 11, 2019.	Article 27 (Implementation) The ethical corporate management best practice principles of the Company shall be implemented after the board of directors grants the approval, and shall be sent to the supervisors and reported at a shareholders’ meeting. For the Company thathas appointed any independent director, when the principles are submitted for discussion by the board of directors pursuant to the preceding paragraph, the board of directors shall take into full consideration each independent director’s opinions. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors meeting. An independent director that cannot attend the board meeting in person to express objection or reservations shall provide a written opinion before the board meeting, unless there is some legitimate reason to do otherwise, and the opinion shall be specified in the minutes of the board of directors meeting. For the Company that has established an audit committee, the provisions regarding supervisors in these Principles shall apply mutatis mutandis to the audit committee. For amendments to the Principles, such amendments shall be reviewed by the Audit Committee and presented to the Board of Directors for passing before implementing; the amendments shall be presented to the Shareholders’ Meeting as well. The above Principles were first established on March 28, 2016.	To accommodate the amendments to the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, certain wordings are amended.

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The First Insurance Co., Ltd. Comparisons of amendments to the Procedures for Ethical Man ment and Guidelines for Conduct of the Com n age pa y

Amended clauses

Article 5

This Corporation shall designate the Corporate Governance Center as the solely responsible unit (hereinafter, “responsible unit”) under the board of directors, availing itself of adequate resources and staffing itself with competent personnel, 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 (at least once a year) to the board of directors:

Existing clauses

Article 5

This Corporation shall designate the Corporate Governance Center 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:

Description

To accommodate the amendment to Article 17 of the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, certain wordings are amended and Subparagraph 7 is added.

• I. Assisting in incorporating I. Assisting in incorporating ethics and moral values into ethics and moral values into this Corporation’s business this Corporation’s business strategy and adopting strategy and adopting appropriate prevention appropriate prevention measures against corruption measures against corruption and malfeasance to ensure and malfeasance to ensure ethical management in ethical management in compliance with the compliance with the requirements of laws and requirements of laws and regulations. regulations.

• II. Analyzing and assessing on a II. Adopting programs to regular basis the risk of prevent unethical conduct involvement in unethical and setting out in each conduct within the business program the standard scope, adopting accordingly operating procedures and programs to prevent conduct guidelines with unethical conduct, and respect to this Corporation’s setting out in each program operations and business. the standard operating

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	procedures and conduct guidelines with respect to the company’s operations and business. (Skipped Paragraph 3-6) VII. Produce and duly retain the ethical management policies, and the documented information, including the compliance statements, implementation commitment, and status of implementation.	(Skipped Paragraph 3-6)
	Article 11 When the Company’s director, supervisor, officer or other stakeholder attending or presenting at a board meeting, or the juristic person represented thereby, has a stake in amatterat 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. 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	Article 11 When the Company’s director, supervisor, officer or other stakeholder attending or presenting at a board meeting, or the juristic person represented thereby, has a stake in aproposal 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.	Wordings in Paragraph 1 are amended; the scope of stake specified in Paragraph 2 is amended pursuant to Paragraph 3, Article 206 of the Company Act; the numbers of paragraphs are adjusted accordingly.

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	paragraph, such director shall be deemed to have a personal interest in the matter. 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 16 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 timelyannouncements of	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 timelyannouncements of	To accommodate the amendment to Article 8 of the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, Paragraph 1 is added, and the numbers of paragraphs are adjusted accordingly.

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	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.	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 21 The Company encourages insiders and outsiders for informing of unethical or unseemly conduct. 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 the intranet, or provide through an independent external institution, an independent mailbox or hotline, for Company insiders and outsiders to submit reports. A whistleblower is advisedat least furnish the following information: I. The whistle-blower’s name and I.D. number, (anonymous whistle-blowing is permitted) and an address, telephone number and e-mail address where it can be reached. II. The informed party’s name or other information sufficient to distinguish its identifying features. III. Specific facts available for investigation. If the whistle-blowing is concrete	Article 21 The Company encourages insiders and outsiders for informing of unethical or unseemly conduct. 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 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: I. The whistleblower’s name and I.D. number, and an address, telephone number and e-mail address where it can be reached. II. The informed party’s name or other information sufficient to distinguish its identifying features. III. Specific facts available for investigation.	To accommodate the amendments to the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, certain wordings are amended.

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	and verifiable, the operational procedure of the whistle-blowing system may be followed by the Company even without the whistle-blower’s name or contact information; provided, the whistle-blowing without concrete content will not be proceeded. Should any investigation find any whistle-blowing is false and involving malicious attacks to the Company or its personnel, the protection mechanism is not applicable. 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 for whistle-blowing: I. Any information shall be reported to the department head. File to an independent director if involving a director or a senior executive. II. 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, where necessary, with the assistance of the legal compliance or other related department.		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. Andthe responsible unit of this Corporation shall observe the following procedure: I. Any information shall be reported to the department head. File to an independent director if involving a director or a senior executive. II. 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, where necessary, with the assistance of the legal compliance or other related department. III. If aperson beinginformed

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III. IV. V.	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 to the competent authorities, transfer the cases to judicial institution for investigation, orinstitute 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 andproposingcorrective	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. IV. 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. V. With respect to a confirmed information, this Corporation shall charge relevant units with the task of reviewing the internal control system and relevant procedures andproposingcorrective

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• measures to prevent recurrence.

• measures to prevent recurrence.

• VI. 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 corrective measures.

• VI. 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 corrective measures.

• Article 24

Article 24

These Operational Procedures These Operational Procedures and Guidelines of Conduct, and and Guidelines of Conduct, and any amendments hereto, shall be any amendments hereto, shall be implemented after adoption by implemented after adoption by resolution of the board of resolution of the board of directors, and shall be delivered directors, and shall be delivered to each supervisor and reported to each supervisor and reported to the shareholders meeting. to the shareholders meeting. When these Procedures and When these Procedures and Guidelines are submitted to the Guidelines are submitted to the board of directors for discussion, board of directors for discussion, each independent director’s each independent director’s opinions shall be taken into full opinions shall be taken into full consideration, and their consideration, and their objections and reservations objections and reservations expressed shall be recorded in the expressed shall be recorded in the minutes of the board of directors minutes of the board of directors meeting. An independent meeting. An independent director that is unable to attend a director that is unable to attend a board meeting in person to board meeting in person to express objection or reservation express objection or reservation shall provide a written opinion shall provide a written opinion before the board meeting unless before the board meeting unless there is a legitimate reason to do there is a legitimate reason to do otherwise, and the opinion shall otherwise, and the opinion shall be recorded in the minutes of the be recorded in the minutes of the board of directors meeting. board of directors meeting. For the Company that has For the Company that has established an audit committee, established an audit committee, the provisions regarding the provisions regarding supervisors in these Principles supervisors in these Principles shall apply mutatis mutandis to shall apply mutatis mutandis to the audit committee. For the audit committee. For amendments to the Principles, amendments to the Principles, such amendments shall be such amendments shall be

The date of this amendment is added.

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reviewed by the Audit Committee and presented to the Board of Directors for passing before implementing; the amendments shall be presented to the Shareholders’ Meeting as well. The Operational Procedures and Guidelines of Conduct were first established on March 28, 2016. The 1st amendment was made on July 11, 2019. The 2nd amendment was made on April 29, 2020.

reviewed by the Audit Committee and presented to the Board of Directors for passing before implementing; the amendments shall be presented to the Shareholders’ Meeting as well. The Operational Procedures and Guidelines of Conduct were first established on March 28, 2016.

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The First Insurance Co., Ltd. The Handling Procedures for Using Funds in Special Projects, Public Utilities and Social Welfare Enterprises

• Article 1 The Regulations are established based on the “Regulations Governing Use of Insurer’s funds in Special Projects, Public Utilities and Social Welfare Enterprises”

• Article 2 Use of the Company’s funds for special projects shall be restricted to investments in or extension of loans for the following projects:

• I. Emerging and key strategic projects or venture investment projects approved by the government.

• II. Industrial zone or regional development projects approved by the government. III. Purchase of houses by the homeless.

• IV. Cultural and educational conservation and construction.

• V. Funeral facilities not distributed as public utilities listed in Article 3. VI. Other use in line with the government policies.

• Article 3 Use of the Company’s funds for public utilities shall be restricted to the following utilities:

• I. Transportation facilities of highways, railroads, harbors, parking lots and airports.

• II. Facilities of public utilities, such as water, electricity, telecommunications, etc.

• III. Construction of social housing and elderly residence projects.

• IV. Environmental protection facilities, including river, sewerage, garbage and waste disposal, and funeral facilities. The aforementioned funeral facilities exclude cemeteries and columbarium.

• V. Construction of public-welfare facilities for public recreation.

• VI. Other public utilities as promoted by the government or in line with the government’s construction projects.

• Article 4 The Company’s investment in social welfare business is limited to the business for social welfare operation that is established in accordance with the authorization of the competent authorities and the necessary facilities, including social assistance, welfare services, employment, social insurance, and healthcare.

• Article 5 The investment targets of an Company, either special projects, public utilities and social welfare enterprises, shall be profitable and restricted to such companies limited by shares that are incorporated and registered in accordance with the Company Act, with the exception of such development and construction projects, loans and investments as are in line with the government policies or making contribution to long-term care institutions registered in accordance with relevant laws.

Where the Company uses its funds to invest in a special project and public utilities, the invested entity meeting any of the following criteria may be a limited partnership enterprise registered in accordance with the Limited Partnership Act without being subject to the restriction of company limited by shares provided in the preceding paragraph:

• I. The invested entity is a venture investment enterprise qualified to receive guidance and/or assistance from the central competent authority according to

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the Regulations for the Guidelines for Venture Capital Businesses.

• II. The invested entity is the cultural and educational conservation and construction project provided in Subparagraph 4 of Article 2.

III. Other entity regulated by the competent authority.

Where the Company uses its funds to engage in investments provided in the preceding paragraph, the insurer shall be a limited partner in the limited partnership enterprise and meet the following requirements:

• I. The Company has established internal operating rules in accordance with relevant self-regulatory rules set out by the insurance association and filed with the competent authority for reference.

• II. The Company’s risk-based capital ratio in the most recent period complies with the provisions of Paragraph 1, Article 143-4 of the Insurance Act.

• Article 6 The limits quota for the Company engaging in investment on special projects, public utilities, and social welfare enterprises is set forth as follows:

• I. The total amount shall not exceed 10% of its total funds.

• II. The total amount of an insurer invested in the same entity shall not exceed 5% of its total funds except for the invested entity listed in Paragraph 2 of Article 5.

• III. The investment or contribution ratio of an insurer invested in the following entities shall be complied with:

  • (I) Where the invested entity is a venture investment enterprise and the entity is listed in Subparagraph 3 of Paragraph 2 of Article 5, such amount shall not exceed 25% of the paid-in capital or capital contribution actually paid of the invested entity.

  • (II) Where the investment is made onto an enterprise with the items enumerated under Article 3 and 4, such amount shall not exceed 45% of the paid-in capital or capital contribution actually paid of the invested entity. The foregoing is not applied to the insurer which is qualified with the following conditions and obtains the approval of the competent authority:

    1. The insurer’s risk-based capital ratio as of the end of most recent period shall comply with Paragraph 1, Article 143-4 of the Insurance Act;

    2. The investment shall be approved by the board of directors and audit committee, and an independent director shall be appointed.

    3. There have been no major violations of the internal control procedure governing various applications of funds in the immediately preceding year, or the violations have been rectified and the rectification has been affirmed by the competent authorities with relevant supporting document.

    4. There have been no major sanctions and disciplinary actions imposed by the competent authority in the most recent year. However, this does not include violations that have been rectified and affirmed by the competent authority.

    5. Where this is not the first investment and the investment amount is no less than 45% of the paid-in capital or capital contribution actually paid of the invested entity, except for the invested entity is the private institution regulated by the “Act for Promotion of Private Participation in Infrastructure Projects” (hereinafter referred to as the “Act for PPP”), the financial report of such invested entity shows no accumulated losses in the most recent period.

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• (III) Except for the invested entity prescribed in the above two Items, such amount shall not exceed 10% of the paid-in capital or capital contribution actually paid of the invested entity.

• IV. In case of securitization products issued by an insurer aiming at the contents set forth in Article 3 and 4 as the target, such insurer may invest within the limit of 10% of the total amount of the securitization products, free of the restriction of the investment ratio set forth in the preceding Subparagraph.

• V. The total amount of an insurer invested in the entity listed in Paragraph 2 of Article 5 shall not exceed 2% of its total funds.

The major sanctions and disciplinary actions as prescribed in Item 2-4, Subparagraph 3 of the preceding Paragraph and Item 1-5, Subparagraph 2, Paragraph 3 of Article 9 refer to one of the major sanctions and disciplinary actions as specified in Subparagraph 1 to 12 of Article 2 of the Financial Supervisory Commission Regulations Governing Public Announcement and Explanation of Major Sanctions and Disciplinary Actions for Violations of Financial Laws and a fine of at least three times the minimum statutory amount for a single violation action as prescribed in Subparagraph 13 of the aforementioned Regulations. Where, after the Company invests in an entity for special projects, public utilities and social welfare enterprises, the said entity is qualified to accept investments under Subparagraph 3 or 4 of Paragraph 1 of Article 146-1 of the Insurance Act, the investments in such entity shall be governed by the provisions of the said Subparagraph instead, provided that if the said investment exceeds such limits as are prescribed in Subparagraph 3 or 4 of Paragraph 1 of Article 146-1 of the Act instead; provided that if the said investment exceeds the ratio as prescribed in Subparagraph 3 or 4 of Paragraph 1 or Paragraph 2 of Article 146-1 of the Insurance Act, no additional funds shall be invested in the entity unless the additional investment is made to maintain the original equity share in the entity.

Where the Company and its interested parties jointly invest in a venture investment enterprise as listed in Subparagraph 1 of Article 2 or Subparagraph 1, Paragraph 2 of Article 5 of the Regulations or take any methods to achieve controlling and subordinate relations with the same venture investment enterprise, the following regulations shall be met:

• I. The Company may not take any direct or indirect methods via the venture investment enterprise to intervene in the business management and investment decisions of the same venture investment enterprise and its investees;

• II. The combined investments of the Company and the invested venture investment enterprise in a company stock whose public issuance is approved by law as prescribed in Subparagraph 3, Paragraph 1 of Article 146-1 of the Insurance Act may not exceed the limit as prescribed in Subparagraph 3, Paragraph 1 of Article 146-1 of the Insurance Act.

The Subparagraph 2 of the preceding Paragraph regarding the invested venture investment enterprise’s investment in a company stock whose public issuance is approved by law as prescribed in Subparagraph 3, Paragraph 1 of Article 146-1 of the Insurance Act, which shall be combined calculation with the Company’s investment in the same company stock, is based on the insurer’s investment or contribution ratio in the invested venture investment enterprise. Where the limit is exceeded, the insurer shall comply with the following regulations before the condition is improved:

• I. The Company’s shareholding in the aforementioned company stock may not be increased;

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• II. The combined calculation of the Company and the invested venture investment enterprise’s shareholding in the aforementioned company stock may not be increased.

• Article 7 If the total amount of the Company invested in the same invested exceeds half of the paid-in capital or half of the total outstanding voting shares of such invested entity, the followings shall be complied with:

• I. The Company shall ensure that the invested entity has set up an internal audit unit and set out in its internal control system the procedures and methods for self-assessment operation. Compliance with this implementation shall be tracked periodically by the Company.

• II. The Company shall ensure that the invested entity has agreed to provide at least an annual audit report or self-assessment report to the Company. The Company shall also ensure that the invested entity has agreed to submit a report to it within 10 days from the date the invested entity has found any violation or abnormality of the internal control system while conducting a project or annual audit.

• III. The Company shall ensure that the invested entity has agreed it to conduct an on-site audit on the invested entity during the investment period.

• IV. If the post-tax profit or loss of the invested entity in the most recent accounting year is negative after investing, the insurer shall submit an improvement plan to its board of directors within two months from the date the financial report has been prepared by the invested entity. In addition, the audit unit of the insurer shall submit a quarterly audit report on the implementation of the improvement plan to the board of directors.

• V. The internal audit unit of the Company shall track the improvement status of the invested entity on the flaw or abnormality mentioned in Subparagraph 2 and conduct an on-site audit on the invested entity once every six months. The relevant tracking and audit items shall be included in scope of the internal control and audit of the insurer. If any illegal activity or major violation is detected, the insurer shall immediately inform the invested entity and periodically prepare a tracking report. The completed audit and tracking report shall be submitted to a meeting of the board of directors of the insurer in its latest meeting.

• VI. The subsidiaries shall comply with the required control procedure according to the “Regulations Governing Implementation of Internal Control and Auditing System of Insurance Enterprises” and “Regulations Governing Establishment of Internal Control Systems by Public Companies”.

• VII. The Company shall establish a monitoring and audit management system. Such monitoring and audit system shall at least include the regulations prescribes in the preceding six subparagraphs and be submitted to and passed by the board of directors. If the independent directors have objections or reserve their opinions, the details shall be recorded on the meeting minutes.

The audit and tracking report prescribed in Subparagraph 5 of previous Paragraph shall be signed by the general manager, the general auditor, and the compliance officer of the headquarters of the Company. The content of the audit report shall at least include the followings:

1. Operating status of the invested entity;

2. Quarterly financial statement of the invested entity;

3. The meeting minutes and the implementation status of the resolutions passed

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by the board of directors of the invested entity;

1. The implementation status of the resolutions passed by the shareholders meeting of the invested entity;

2. The existence of violation or abnormalities in the internal control system of the invested entity; and

3. Whether the invested entity has a major violation or has been involved in any illegal activity.

The Company shall comply with Article 11 of the “Regulations Governing Public Disclosure of Information by Non-life Insurance Enterprises” to disclose the audit report for the implementation of investment improvement plans listed in Subparagraph 4 of Paragraph 1 as well as the complete audit report of the invested entity listed in Subparagraph 5 in the same Paragraph to the public under the notes which shall be made under the information disclosure website. The aforesaid disclosure information shall be updated within ten days after submission to the board of directors.

• Article 8 When the Company uses its funds for special projects, public utilities and social welfare enterprises it shall apply for approval from the competent authority by submitting the following documents:

• I. Investment plan and objectives (including objectives, method, market analysis, cost analysis, analysis of long-term and short-term return on investment, composition of shareholders or partners’ structure of the limited partnership enterprise and management team). This document can be replaced by a letter of opinion on the financial adequacy of the investment project issued by a certified public accountant and a letter of legal opinion on the legitimacy of the investment project issued by a qualified lawyer where the investment is made onto an enterprise with the items enumerated under Articles 3 and 4.

• II. Details of the funds used for the special project or public utilities or social welfare enterprises, and analysis of return (including analysis of return on investment in each phase with explanatory notes)

• III. Financial statements of the invested entity. This document does not need to be attached if the invested entity has been established for less than a year.

• IV. Summary of the limited partnership agreement draft if the invested entity is the limited partnership enterprise provided in Paragraph 2 of Article 5.

• V. Documents regarding decisions resolved or powers authorized by the board of directors.

• VI. Letters of approval issued by the relevant authorities.

• VII. Other information specified by the competent authority.

• Article 9 In any of the following circumstances, the Company may use its funds for a special project or public utilities or social welfare enterprises within the limit authorized by the board of directors without going through the application procedure, provided that the documents set forth in Paragraph 1 of the preceding Article shall be submitted to the competent authority for subsequent review:

• I. The Company increases its monetary investment in an entity for such project as has been approved by the competent authority, without increasing its original share or contribution in the total investment in the project.

• II. The invested entity is a venture investment enterprise qualified to receive guidance and/or assistance from the central competent authority according to

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the Regulations for the Guidelines for Venture Capital Businesses, the public utilities listed in Article 3 and the entity listed in Subparagraph 3 of Paragraph 2 of Article 5, and the total amount that the insurer invests in the same entity is less than NT$500 million and less than 5% of the owner’s equity of the Company.

• III. The invested entity is not such an enterprises as specified in the preceding Subparagraph and the total amount that the insurer invests in one and the same entity is less than NT$50 million and less than 2% of the owner’s equity of the Company.

• IV. Other circumstances regulated by the competent authority.

For an insurer engaging in the investment set forth in preceding Paragraph, the risk-based capital ratio thereof should comply with the provisions of Paragraph 1 of Article 143-4 of the Insurance Act.

If the invested entity is the entity regulated by the Act for PPP and the following investment amount and conditions are met, the insurer can invest in such entity without going through the application procedure. provided that the documents set forth in Paragraph 1 of the preceding Article shall be submitted to the competent authority for subsequent review:

• I. The total amount of investment in the same project of the Company is under NT$1 billion and 10% of its owner’s equity, and the following conditions are fulfilled:

• (I) The risk-based capital ratio of the Company in the most recent period shall comply with Paragraph 1, Article 143-4 of the Insurance Act.

• (II) The documents of the investment project prescribed in preceding article have been submitted to and resolved and approved by the board of directors before the investment is made.

• II. The total amount of investment in the same project of the Company is under NT$5 billion and 10% of its owner’s equity, and the following conditions are fulfilled:

• (I) The financial conditions, corporate governance, and internal control of the Company shall fulfill the following conditions:

  1. Both of the risk-based capital ratio of the insurer in the most recent period and the average risk-based capital ratio of the insurer over the most recent two years are 250% at least.

  2. The documents of the investment project prescribed in preceding article have been submitted to the board of directors and resolved and approved by over half of the directors at the board meeting attended by over two thirds of all directors before the investment is made.

  3. Independent directors and an audit committee have been established. 4. There have been no major violations of the internal control procedure governing various applications of funds in the immediately preceding year, or the violations have been rectified and the rectification has been affirmed by the competent authority.

  4. There have been no major sanctions and disciplinary actions imposed by the competent authority in the most recent year. However, this does not include violations that have been rectified and affirmed by the competent authority.

• (II) The investment project complies with the financial standards set forth by the insurance association and filed with the competent authority for reference, has the guarantee or risk sharing mechanism provided by the

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authority in charge, and stipulates dispute settlement mechanism, and meets the following conditions:

1. The risk-based capital ratio of the Company in the most recent period shall comply with Paragraph 1, Article 143-4 of the Insurance Act.

2. The documents of the investment project prescribed in preceding article have been submitted to and resolved and approved by the board of directors before the investment is made.

The total amount of investment made in accordance with the Act for PPP and mentioned in the preceding paragraph refers to the total amount of royalty, construction cost, and rent paid by the insurer under the investment contract.

• Article 10 The Company handles special use of loans as follows:

• I. Loans guaranteed by credit guarantee institutions authorized by the banks or competent authorities;

• II. Loans guaranteed with the collateral of properties or real properties;

• III. Loans guaranteed with collateral of marketable securities in compliance with Article 146-1 of Insurance Act;

The Company shall collect 100% collateral for the loans granted to the person in charge, employees or major shareholders, or the related party of the person in charge or the responsible loan officer; also, the loan terms and conditions shall not be superior to other similar debtors, If the loan amount exceeds the threshold stipulated by the competent authorities, it shall be with the consent of three fourths of the directors at the meeting and two thirds of the boards attending the meeting. The scope, quota, total loan amount, and other binding matters for the related party are guided by the “Regulations for Extending Loans by Insurance Enterprises to Interested Parties”. Should the Company have the latest equity capital and risk capital ratio over 200%, the special loans arranged in accordance with the government policy may be reported to the competent authorities for exemption not subject to the restrictions of the first Paragraph.

Article 11 The handling procedures for the Company engaging in investment on special projects, public utilities, and social welfare enterprises

• I. Assessment and operational procedures

• (I) Authorized limits and levels: Pursuant to the Company’s “Authorization Hierarchy for Decision-Making of Investment Policies,” the limits shall be presented to the chairman for approval in accordance to the approving procedures, and reported to the board of director for review and approval before implementation.

• (II) The project selections and initial assessments are conducted by the Management Department. It aggregates the initial basic information of the intended investee, and prepares the “assessment reports” according to the researches based the aforementioned selection criteria. The “assessment reports” shall include the objectives and methods of investment, market analysis, cost analysis, long- and short term investment effectiveness analysis, structure of shareholders and management team, profitability, and operation outlooks.

• (III) The Management Department prepares the request of approval, assessment report, and supporting documents, presents to the chairman for approval, and report to the board of director for review

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• II. Procedure for determination of transaction terms

  • (I) The subsequent transaction procedure is conducted by the Management Department pursuant to the transaction method and amount approved by the board of directors.

  • (II) To ensure the profitability of investments and risk control, or to enhance the strategic partnership between the parties, the “investment agreement” may be entered if the Company requires it.

• III. Internal control system

  • (I) Risk control: review whether the risks related to investment projects conform to the regulations of the Handling Procedures.

  • (II) Operational procedure control:

    1. Whether the restrictions of investment proportions specified by the Handling Procedures are met.

    2. Assess whether the contents conform to the assessment and operational procedures of the the Handling Procedures.

    3. Whether the intended investment projects are approved pursuant to the procedure, and reviewed/approved by the board of directors.

    4. Whether all required documents are in place and the competent authorities are filed to competent authority for consents.

    5. An “investment agreement” is required for the intended invest project, whether the required procedures are completed.

  • (III) Regular assessments and performance analysis: the Management Department shall assess and analyze the performance of the invested projects regularly, and presents to the higher managements pursuant to the procedures of approval.

• IV. Internal audit system

  • (I) Structure of the internal audit: The Auditing Department is established under the board of directors. The audits are conducted by the Auditing Department. The audit reports are presented to the Chief Internal Auditor before presented to the board of directors.

  • (II) Frequency of audit: at least once a year and audit reports shall be produced.

  • (III) Scope of audit: the audits shall be conducted in compliance with the Handling Procedures and related laws and regulations.

  • (IV) The presentation procedure of and defect rectifications for the audit reports shall observe the Company’s internal audit system.

• V. Other than supervision and control from time to time, the head of Management Department shall assess the performance and report to the board of directors on regular basis.

• Article 12 Anything not specified in the Handling Procedures shall observe the relevant regulations and other related operational regulations of the Company.

• Article 13 The Handling Procedures, as well as the amendments to them, shall be approved by the board of directors, filed to the competent authorities for reference, and presented to shareholders’ meetings.

The above procedures were first established on February 27, 2020

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Independent Auditor’s Report

To stakeholders of The First Insurance Co., Ltd.:

Audit opinion

We have reviewed the balance sheet of The First Insurance Co., Ltd. as at December 31, 2019 and 2018, the statement of comprehensive income, statement of changes in equity and cash flow statement for periods from January 1 to December 31, 2019 and 2018, and the accompanying footnotes of the financial statement (including summary of major accounting policies).

In our opinion, all material disclosures of the financial statements mentioned above were prepared in accordance with Regulations Governing the Preparation of Financial Reports by Insurance Enterprises, international financial reporting standards approved and published by the Financial Supervisory Commission, the International Accounting Standards and interpretations thereof, and presented a fair view of the financial position of The First Insurance Co., Ltd. as of December 31, 2019 and 2018, and business performance and cash flow for periods from January 1 to December 31, 2019 and 2018.

Basis of audit opinion

We have conducted our audits in accordance with “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and the generally accepted auditing standards. Our responsibilities as an auditor under the abovementioned standards will be explained in the Responsibilities paragraph. All relevant personnel of the accounting firm have followed CPA code of ethics and maintained independence from The First Insurance Co., Ltd. when performing their duties. We believe that the evidence obtained provide an adequate and appropriate basis for our opinion.

Key audit issues

Key audit issues are matters that we considered to be the most important, based on professional judgment, when auditing the 2019 financial statements of The First Insurance Co., Ltd. These issues have already been addressed when we audited and formed our opinions on the financial statements. Therefore we do not provide opinions separately for individual issues.

Key audit issues concerning the 2019 financial statements of The First Insurance Co., Ltd. are as follows:

Estimation of not reported (NR) and not settled (NS) reserves

The First Insurance Co., Ltd. has an actuarial team that estimates NR/NS reserves based on previous claims and expenses incurred by the various types of insurance, using methods that conform with actuarial principles. The book value of claim reserves in the insurance liabilities as at December 31, 2019 amounted to NT$2,491,233,000, of which NT$680,803,000 were NR/NS reserves. Because the amount was presented based on actuarial estimate, any change of assumption or any misjudgment may cause significant changes to profit and loss, and therefore has been listed as a key audit issue for the current year.

For more details on the accounting policy and methodology adopted for loss reserve provisioning, please refer to Note 4(12) and Note 5 of the financial statements. For details on amounts and changes, please refer to Note 36(3) of the financial statements.

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We have performed tests to gain insight about the design and execution of various procedures and controls. The Company had adopted to estimate unreported and outstanding claim reserves. In addition, we obtained data on direct claims paid by the First Insurance Co., Ltd. for various insurance categories and retained materials related to actual losses to verify the integrity of data used in the actuarial estimate. In addition, our actuarial experts assisted us in evaluating whether the methodologies and assumptions undertaken to provide for NR/NS reserves were compliant with laws and establishing proprietary models for validating the rationality of the NR/NS reserves provided by the Company.

Responsibilities of the management and governing body to the financial statements

Responsibilities of the management were to prepare and ensure fair presentation of financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Insurance Enterprises, international financial reporting standards approved and published by the Financial Supervisory Commission, the International Accounting Standards and interpretations thereof, and exercise proper internal control practices that are relevant to the preparation of financial statements so that the financial statements are free of material misstatements caused by fraud or error.

The management’s responsibilities when preparing financial statements also involved: assessing the ability of The First Insurance Co., Ltd. to operate, disclose information and account for transactions as a going concern unless the management intends to liquidate or cease business operations, or is compelled to do so with no alternative solution.

The governing body of The First Insurance Co., Ltd. (including the Audit Committee) is responsible for supervising the financial reporting process.

Responsibilities of the auditor when auditing financial statements

The purposes of our audit were to obtain reasonable assurance of whether the financial statements were prone to material misstatements caused by fraud or error, and issue a report of our audit opinions. We considered assurance to be reasonable only if it is highly credible. However, audit tasks conducted in accordance with generally accepted auditing principles do not necessarily guarantee detection of all material misstatements within the financial statements. Misstatements can be attributed to fraud or error. Misstatements are considered material if the individual amount or aggregate total is reasonably expected to affect economic decisions of the financial statement user.

When conducting audits in accordance with generally accepted audit principles, we exercised judgments and raised doubts as deemed professionally appropriate. We also performed the following tasks as an auditor:

1. Identifying and assessing risks of material misstatement due to fraud or error; designing and executing appropriate responsive measures for the identified risks; and obtaining adequate and appropriate audit evidence to support audit opinions. Fraud may involve conspiracy, forgery, intentional omission, untruthful declaration or breach of internal control, and our audit did not find any material misstatement where the risk of fraud is greater than the risk of error.

2. Developing the required level of understanding on relevant internal controls and designing audit procedures that are appropriate under the prevailing circumstances, but without providing opinion on the effectiveness of internal control system of The First Insurance Co., Ltd.

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1. Assessing the appropriateness of accounting policies adopted by the management, and the rationality of accounting estimates and related disclosures made.

2. Forming conclusions regarding the appropriateness of management’s decision to account for the business as a going concern, and whether there are doubts or uncertainties about the ability of The First Insurance Co., Ltd. to operate as a going concern, based on the audit evidence obtained. We are bound to remind financial statement users and make related disclosures if material uncertainties exist in regards to the abovementioned events or circumstances, and amend audit opinions when the disclosures are no longer appropriate. Our conclusions are based upon audit evidence obtained as of the audit report date. However, occurrences of future events or circumstances may still render The First Insurance Co., Ltd. no longer capable of operating as a going concern.

3. Assessing the overall presentation, structure and contents of the financial statements (including related footnotes), and whether certain transactions and events are presented appropriately in the financial statements.

We have communicated with the governing body about the scope, timing and significant findings (including significant defects identified in the internal control) of our audits.

We have also provided the governance body with a declaration of independence stating that all relevant personnel of the accounting firm have complied with auditors’ professional ethics, and communicated with the governance body on all matters that may affect the auditor’s independence (including protection measures).

We have identified the key audit issues after communicating with the governance body regarding the 2019 financial statements of The First Insurance Co., Ltd. These issues have been addressed in our audit report except for: 1. Certain topics that are prohibited by law from disclosing to the public; or 2. Under extreme circumstances, topics that we decided not to communicate in the audit report because of higher negative impacts they may cause than the benefits they bring to the public interest.

Deloitte Taiwan

CPA Huang, Hai-Yue CPA Wan-Yi Liao

Approval reference of the Securities and Approval reference of the Financial Futures Bureau Supervisory Commission Tai-Cai-Zheng-(VI)-Zi No. 0920131587 Jin-Guan-Zheng-Shen-Zi No. 1010028123

March 26, 2020

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The Company’s 2019 Financial Statements

1. Balance Sheet

2. Comprehensive Income Statement

3. Statement of Changes in Equity

4. Cash Flow Statement

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The First Insurance Co., Ltd. Balance Sheet

As at December 31, 2019 and 2018

Unit: in NT$ 1,000

Code 11000 12100 12200 12500 14110 14145 14180 14190 14200 15000 16000 16700 17300 17800 18300 18700 1XXXX Code 21200 21400 21500 21600 21700 23800 24000 27100 28000 25300 25900 2XXXX 31000 33100 33200 33300 33000 34000 3XXXX	Assets Cash (Notes 4 and 6) Notes receivable - net (Notes 4 and 12) Premiums receivable - net (Notes 4, 12, and 30) Other receivables (Notes 4 and 12) Financial assets at fair value through profit and loss (Notes 4 and 7) Financial assets carried at cost after amortization (Notes 4, 9 and 10) Other financial assets (Notes 4, 6 and 11) Financial assets at fair value through other comprehensive income (Notes 4, 8 and 10) Investment properties (Notes 4 and 13) Reinsurance contract assets (Notes 4, 14 and 36) Property, plant, and equipment (Notes 4 and 15) Right-of-use assets (Note 4 and 16) Intangible assets (Notes 4 and 17) Deferred income tax assets (Notes 4 and 26) Guarantee deposits paid (Notes 8 and 18) Other assets - Others (Note 19) Total assets Liabilities and equity Insurance claims and benefit payable (Notes 4 and 36) Commission payable (Notes 4 and 36) Reinsurance accounts payable (Notes 4 and 36) Other payables (Note 20) Current income tax liabilities (Note 4) Lease liabilities (Note 4 and 16) Insurance liabilities (Notes 4, 5, 21 and 36) Provision for employee benefits (Notes 4 and 22) Deferred income tax liabilities (Notes 4 and 26) Guarantee deposits received Other liabilities - Others (Note 23) Total liabilities Share capital (Note 24) Retained earnings (Note 24) Legal reserve Special reserve Undistributed earnings Total retained earnings Other equity (Note 24) Total equity Total liabilities and equity		December 31,201	9 % 12 1 2 - 10 10 17 20 6 14 4 - - - 4 - 100 - 1 3 1 - - 50 1 1 - - 57 19 8 11 2 21 3 43 100		December 31,201	8
			Amount $ 1,860,014 139,251 278,527 45,607 1,645,093 1,529,333 2,663,153 3,185,743 943,248 2,269,819 620,038 4,320 7,203 52,582 562,858 50,025 $ 15,856,814 $ - 110,162 436,418 178,688 49,329 4,139 7,911,750 170,179 92,934 15,114 76,840 9,045,553 3,011,638 1,246,749 1,740,117 405,734 3,392,600 407,023 6,811,261 $ 15,856,814			Amount $ 1,626,898 163,155 395,446 169,702 3,667,879 1,337,877 2,574,677 707,590 950,186 2,907,356 624,243 - 10,955 50,799 519,158 21,551 $ 15,727,472 $ 4,445 107,181 487,821 169,883 22,026 - 8,587,098 177,884 95,196 15,114 91,914 9,758,562 3,011,638 1,156,391 1,530,505 243,074 2,929,970 27,302 5,968,910 $ 15,727,472	%
							10 1 3 1 23 9 16 5 6 19 4 - - - 3 - 100 - 1 3 1 - - 55 1 1 - - 62 19 7 10 2 19 - 38 100

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

Chairman: Cheng-Han Lee

Manager: Chu-Minn Leu

Head of Accounting: Fei-Fen Hsiao

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The First Insurance Co., Ltd.

Comprehensive Income Statement

For periods from January 1 to December 31, 2019 and 2018

Unit: NTD thousands, except EPS which is in dollars

Code Operating revenues (Note 4) 41110 Written premiums (Notes 30 and 36) 41120 Reinsurance premiums (Note 36) 41100 Premium revenues 51100 Less: Reinsurance expenses (Note 36) 51310 Less: Net change in unearned premium reserve 41130 Retained earned premiums (Note 36) 41300 Reinsurance commissions received (Note 36) 41400 Service fee Net investment gains 41510 Interest income 41521 Gains on financial assets or liabilities at fair value through profit and loss 41527 Realized gains/losses on financial assets at fair value through other comprehensive income (Note 8(1)) 41550 Gain (loss) on exchange (Note 25) 41570 Gains (losses) on investment property (Note 25) 41585 Expected credit impairment loss and reversal gain on investment (Note 29) 41500 Total net investment gains Other operating revenues 41890 Other operating revenues - Others 41000 Total operating revenues Operating Cost Retained claims and benefits paid (Notes 30 and 36) 51200 Insurance claim and benefit payments 41200 Less: Claims recovered from reinsurers and payment 51260 Total retained claims and benefits paid		2019		% 113 7 120 32 ) - 88 5 - 2 3 1 - 1 - 7 - 100 73 22) 51		2018		% 115 6 121 33 ) 1 89 5 - 2 3 - - 1 - 6 - 100 70 20) 50	% of Changes (%)	% of Changes (%)
		Amount $ 6,875,054 404,585 7,279,639 1,925,618 ) 8,615) 5,345,406 287,665 24,477 95,210 168,034 92,357 16,063 ) 55,980 4,835) 390,683 966 6,049,197 4,387,778 1,319,005) 3,068,773				Amount $ 7,014,733 383,845 7,398,578 2,006,642 ) 60,368 5,452,304 299,240 24,466 107,383 148,054 16,486 18,852 56,000 5,126 351,901 1,478 6,129,389 4,274,824 1,227,024) 3,047,800
	( ( ( ( (		( (		( (		( (		( ( ( ( ( ( ( ( ( ( (	2 ) 5 2 ) 4 ) 114 ) 2 ) 4 ) - 11 ) 13 460 185 ) - 194 ) 11 35 ) 1 ) 3 7 1

(Continued next page)

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(Continued from previous page)

Code Net change in other liabilities (Note 36) 51320 Net change in claim reserves 51340 Net change in special claim reserves 51350 Net change in premium deficiency reserves 51300 Total net change in other liabilities 51510 Commission expenses (Note 36) 51600 Service charges (Note 36) Other operating costs 51810 Contribution to insurance stabilization fund (Note 36) 51830 Interest expenses 51850 Loss on exchange - non-investment (Note 25) 51890 Other operating costs - Others 51800 Total other operating costs 51000 Total operating costs 60000 Gross profit Operating expenses (Notes 25 and 30) 58100 Business expenses 58200 Administrative expenses 58300 Employees training expenses 58000 Total operating expenses 61000 Total operating income Non-operating income and expenses 59100 Gain on disposal of property, plant and equipment 59990 Sundry expenses (Note 16) 59000 Total non-operating income and expenses 62000 Pre-tax profit from continuing operations 63000 Income tax expenses (Notes 4 and 26) 66000 Current net income Other comprehensive income (Note 24) 83100 Items not reclassified into profit and loss 83110 Revaluation of defined benefit plan (Notes 4 and 22)		2019		% 2 ) - - 2) 16 2 - - - - - 67 33 20 2 - 22 11 - - - 11 2 9 -		2018		% 2 1 ) - 1 15 2 - - - 1 1 69 31 20 2 - 22 9 - - - 9 1 8 -	% of Changes (%)
		Amount $ 113,104 ) 6,035 ) 5,756) 124,895) 946,137 139,269 13,758 41 2,017 - 15,816 4,045,100 2,004,097 1,234,408 101,880 3,619 1,339,907 664,190 476 ) 89) 565) 663,625 82,657 580,968 1,799 )				Amount $ 156,514 74,902 ) 7,237 88,849 929,630 145,802 14,038 9 507 24,594 39,148 4,251,229 1,878,160 1,218,036 92,911 3,398 1,314,345 563,815 647 ) - 647) 563,168 71,859 491,309 8,275
	( ( ( ( ( ( ( (		( (		( ( (		(		( 172 ) ( 92 ) ( 180 ) ( 241 ) 2 ( 4 ) ( 2 ) 356 298 ( 100 ) ( 60 ) ( 5 ) 7 1 10 7 2 18 ( 26 ) - ( 13 ) 18 15 18 ( 122 )

(Continued next page)

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(Continued from previous page)

Code 83180 Income tax on items not reclassified into profit and loss (Note 26) 83190 Gains/losses on valuation of equity instruments at fair value through other comprehensive income Total items not reclassified into profit and loss 83200 Items likely to be reclassified into profit and loss 83290 Gains/losses on debt instruments at fair value through other comprehensive income 83000 Other comprehensive income for the current period (net, after-tax) 85000 Total comprehensive income - current Earnings per share (Note 27) 97500 Basic 98500 Diluted		2019		% - 7 7 - 7 16		2018		% - 1) 1) - 1) 7	% of Changes (%)	% of Changes (%)
		Amount $ 360 387,894 386,455 22,498 408,953 $ 989,921 $ 1.93 $ 1.93				Amount $ 226 39,850) 31,349) 2,287) 33,636) $ 457,673 $ 1.63 $ 1.63
					( ( ( (		( ( (			59 1,073 1,333 1,084 1,316 116

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

Chairman: Cheng-Han Lee

Manager: Chu-Minn Leu

Head of Accounting: Fei-Fen Hsiao

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The First Insurance Co., Ltd.

Statement of Changes in Equity

For periods from January 1 to December 31, 2019 and 2018

Unit: in NT$ 1,000

Co de A1 Balance as at January 1, 2018 A3 Effect of retrospective application A5 Adjusted balance as at January 1, 2018 Appropriation and distribution of earnings: B1 Legal reserve B3 Special reserve B5 Cash dividend D1 2018 net income D3 2018 other comprehensive income D5 2018 total comprehensive income Q1 Disposal of equity instruments at fair value through other comprehensive income (Note 8(1)) Z1 Balance as at December 31, 2018 Appropriation and distribution of earnings: B1 Legal reserve B3 Special reserve B5 Cash dividend D1 2019 net income D3 2019 other comprehensive income D5 2019 total comprehensive income Q1 Disposal of equity instruments at fair value through other comprehensive income (Note 8(1)) Z1 Balance as at December 31, 2019	Shar	e capital(Note 24) $ 3,011,638 - 3,011,638 - - - - - - - 3,011,638 - - - - - - - $ 3,011,638		R	etained earnings(Note 24)	etained earnings(Note 24)
				Legal reserve $ 1,065,068 - 1,065,068 91,323 - - - - - - 1,156,391 90,358 - - - - - - $ 1,246,749	Special reserve $ 1,319,782 - 1,319,782 - 210,723 - - - - - 1,530,505 - 209,612 - - - - - $ 1,740,117	Und

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

Chairman: Cheng-Han Lee

Manager: Chu-Minn Leu

Head of accounting: Fei-Fen Hsiao

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The First Insurance Co., Ltd.

Cash Flow Statement

For periods from January 1 to December 31, 2019 and 2018

Unit: in NT$ 1,000

Code Cash flow from operating activities A10000 Pre-tax net profit for the current period A20000 Adjustments: A20010 Income, expenses and losses A20100 Depreciation A20200 Amortizations A20900 Interest expenses A21200 Interest income A21300 Dividend income A21400 Net change of various reserves - current A21830 Expected credit impairment loss on investment (reversal gain) A22500 Loss on disposal of property and equipment A50000 Change in assets/liabilities related to operating activities A51110 Notes receivable A51120 Premiums receivable A51130 Other receivables A51140 Gains on financial assets or liabilities at fair value through profit and loss A51141 Financial assets at fair value through other comprehensive income A51145 Debt instrument investments measured at cost after amortization A51160 Other financial assets A51170 Reinsurance Contracts Assets A51190 Guarantee deposits paid A51990 Other assets A52120 Insurance claim and benefit payments payable A52140 Commission payable A52150 Reinsurance accounts payable A52160 Other payables	2019 $ 663,625 20,928 6,771 130 ( 95,210) ( 127,887) ( 675,348 ) 4,835 476 23,904 116,919 133,402 2,022,786 ( 2,118,191) ( 197,521) ( 88,476 ) 637,537 4,251 ( 28,474) ( 4,445) 2,981 ( 51,403) 8,805	2018
		$ 563,168 17,538 7,223 - ( 107,383) ( 109,406) 475,706 ( 5,126 ) 647 55,789 ( 69,679 ) ( 133,714) ( 745,659 ) 123,573 700,000 159,707 ( 433,773) 5,741 ( 6,360 ) ( 15,181 ) ( 9,084 ) 21,198 7,795

(Continued next page)

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(Continued from previous page)

Code A52200 Provision for employee benefits liabilities A52990 Other liabilities A33000 Cash inflow from operating activities A33100 Interests received A33200 Dividends received A33300 Interest paid A33500 Income tax paid AAAA Net cash inflow from operating activities Cash flow from investing activities B02700 Acquisition of property, plant and equipment B04500 Acquisition of intangible assets BBBB Net cash outflow from investing activities Cash flows from financing activities C04020 Principal repayment for lease liabilities C04500 Cash dividends paid CCCC Net cash flows from financing activities EEEE Increase in cash and cash equivalents for the current period E00100 Opening cash and cash equivalents E00200 Closing cash and cash equivalents	2019 ($ 9,504) ( 15,074) 235,817 89,612 127,887 ( 130 ) ( 59,039) 394,147 ( 8,589) ( 3,019) ( 11,608) ( 1,853) ( 147,570) ( 149,423) 233,116 1,626,898 $ 1,860,014	2018
		($ 19,851 ) 7,989 490,858 122,400 109,406 - ( 57,575) 665,089 ( 9,100 ) ( 5,567) ( 14,667) - ( 180,698) ( 180,698) 469,724 1,157,174 $ 1,626,898

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

Chairman: Cheng-Han Lee Manager: Chu-Minn Leu Head of Accounting: Fei-Fen Hsiao

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The First Insurance Co., Ltd.

Earnings Appropriation Chart

2019

Unit: NTD $

2019	Unit: NTD $
Item	Amount
Opening undistributed earnings The remeasurement of the defined benefit programs recognized in the retained earnings For the disposal of equity instruments investment measured at fair value through other comprehensive income, the accumulated income/loss is transferred to the retained earnings Adjusted undistributed earnings Plus: current net income Plus: Reversal of special reserve for FinTech development from 2016-2018 (Note 3) Less: Provision for legal reserve (Note 1) Less: Provision for special reserve (Note 2) Distributable earnings in the current period Distributions: Dividends (cash dividend at NT$0.96 per share) Closing undistributed earnings	$2,986,726 (1,439,196) 30,671,340 32,218,870 580,967,860 1,843,281 (116,193,572) (207,452,719) 291,383,720 ($289,117,233) $2,266,487

Note 1: Determined according to the Insurance Act and the Articles of Incorporation. Note 2: Determined according to Articles 8, 9 and 10 of “Regulations Governing Provision of Reserves for Insurance Industry.”

Note 3: Handled pursuant to the Letter Jin-Guan-Bao-Cai-Zi No. 10804932431

Note 4: The distribution of shareholders’ bonuses is based on the total outstanding shares of 301,163,784 shares.

Chairman: Cheng-Han Lee Manager: Chu-Minn Leu

Head of Accounting: Fei-Fen Hsiao

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The First Insurance Co., Ltd. Comparison of Amendments to the Clauses of Rules of Procedure of Shareholders’ Meetings

	Amended clauses		Existingclauses	Description
	Article 2 (Skipped paragraphs 1 to 2) The meeting advice and announcement must state clearly the agenda to be discussed during the meeting, and can be issued in electronic form if consented by the recipient. Election or dismissal of directors, 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,dissolution, merger, or demerger of the corporation, or any matter under Article 185, paragraph 1 of the Company Act, shall be set out in the noticeof the reasons for convening the shareholders meeting. None of the above matters may be raised by an extraordinary motion; the key contents may be uploaded to the websites designated by the competent authorities or the Company, and specify the link in the notice. The reasons for convening the shareholders meeting have specified the overall election of new directors with the date of inauguration. Once the election is completed in the concerned shareholders’meeting, the date of inauguration shall not be changed through an extraordinary motion or other way. A shareholder holding 1 percent or more of the total number of issued shares maysubmit to this Corporation		Article 2 (Skipped paragraphs 1 to 2) The meeting advice and announcement must state clearly the agenda to be discussed during the meeting, and can be issued in electronic form if consented by the recipient. Election or dismissal of directors, amendment of Articles of Incorporation, dismissal of the Company, merger, demerger, and any issues listed in Paragraph 1, Article 185 of the Company Act,Articles 26-1 and 43-6 of the Securities and Exchange Act, and Articles 56-1 and 60-2 of Regulations Governing the Offering and Issuance of Securities by Securities Issuersshall be notified in advance as part of the meeting agenda, and cannot be raised in the form of extraordinary motion. A shareholder holding 1 percent or more of the total number of issued shares maysubmit to this Corporation	To accommodate Paragraph 5 of Article 172, Paragraph 1 of Article 172-1, amendment to Paragraph 2 of Article 172-1 of the Company Act, and the interpretations specified in Letter Jing-Shang-Zi No. 10702417500 by the MOEA, dated August 6, 2018, certain contents have been amended, Paragraph 4 has been added, and the order has been adjusted.

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	a 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.Provided that a shareholder’s proposal is to urge the Company to promote the public benefits, or fulfill its social responsibility, is not subject to the previous paragraph.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 shallpublicly announce that it will receive shareholder proposals, acceptance method in written or electronic manner,and the location and time period for their submission; the period for submission of shareholder proposals may not be less than 10 days. (Skippedparagraphs 7 to 8)		awrittenproposal for discussion at a regular shareholders meeting. Such proposals,however, are limited to one item only.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. (Skippedparagraphs 6 to 7)
	Article 11 If the shareholder meeting is convened by the board of directors, the related proposals (extraordinary motions and amendments to original proposals included) shall be voted by poll;the board of directors will determine the meeting proceeding. The proceeding cannot be changed unless resolved during the shareholder meeting. (Skippedparagraphs 2 to 4)		Article 11 If the shareholder meeting is convened by the board of directors, the board of directors will determine the meeting proceeding. The proceeding can not be changed unless resolved during the shareholder meeting. (Skippedparagraphs 2 to 4)	As TWSE/TPEx Listed Companies have fully adopted the electronic voting and implemented the spirit of voting by poll, certain wordings have been amended.
	Article 18 The chairmanshall allow ample opportunity during the meeting for explanation and discussion of proposals and of amendments or extraordinary motions put forward by		Article 18 When the chairman is of the opinion that a proposalhas been discussed sufficiently to put it to a vote, the chairman may announce the discussion closed and call for a vote.	To prevent the convener of the shareholders’ meeting from over-limiting the votingtime of

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the shareholders; when the chairman is of the opinion that a proposal has been discussed sufficiently to put it to a vote, the chairman may announce the discussion closed and call for a vote.		shareholders and thus their voting rights are affected, certain wordings have been amended.
Article 23 (Skipped paragraphs 1 and 2) The meeting minutes shall accurately record the year, month, day, and place of the meeting, the chairperson’s full name, the methods by which resolutions were adopted, and a summary of the deliberations and their results (the statistics of rights included);if there is any director elected, the rights favorite to each candidate shall be disclosed.The minutes shall be retained for the duration of the existence of this Corporation.	Article 23 (Skipped paragraphs 1 and 2) The meeting minutes shall accurately record the year, month, day, and place of the meeting, the chairperson’s full name, the methods by which resolutions were adopted, and a summary of the deliberations andtheir results, and shall be retained for the duration of the existence of this Corporation.	To implement the spirit of voting by poll, certain wordings have been amended.

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The First Insurance Co., Ltd. Board of Directors Conference Rules

• Article 1 The following rules have been established in accordance with Paragraph 8, Article 26-3 of the Securities and Exchange Act (hereinafter referred to as the Act).

• Article 2 All issues relating to the Company’s board of directors meetings, such as discussions, procedures, minutes details, announcements and compliance matters, shall proceed according to the following rules unless otherwise specified by law or the Articles of Incorporation.

• Article 3 Board of directors meetings shall be convened once every quarter. Convention of board meeting shall be communicated to directors 7 days in advance with detailed agenda; however, board meetings may be convened in shorter notices in case of emergency or at the request of more than half of board members.

• Meeting advices may be served in various forms such as written correspondence, fax or email.

• Article 4 Board meetings should be convened at the Company’s premise and within office hours. However, meetings may also be convened at other locations and times that are convenient and suitable for directors to attend, depending on the nature of topics discussed.

• Article 5 The Administration Department is the meeting organizer for the Company’s board of director meetings.

• The meeting organizer is responsible for outlining the board of directors meeting agenda and preparing adequate meeting information, which will be distributed along with the meeting advice.

• Directors may request for supplemental information from the meeting organizer if they consider the prepared information to be inadequate.

• Directors may resolve to postpone certain agenda items if they consider the information presented to them to be inadequate.

• Article 6 Apart from decisions that are subject to board resolution under the Act, the Company’s regular board meetings shall cover at least the following issues:

• Reports:

  • (1) Minutes of the previous meeting and execution of meeting conclusions.

  • (2) Reports on key financial information.

  • (3) Reports on internal audit.

  • (4) Reports on other important issues.

• Discussions:

  • (1) Discussions carried forward from the previous meeting.

  • (2) Discussions proposed for the current meeting.

• Extraordinary motions.

• Article 7 In addition to the scope of board of directors’ responsibilities outlined in the Articles of Incorporation, the following issues shall also be raised for discussion during board meetings:

• The Company’s operating plans.

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1. Annual and semi-annual financial reports.

2. Establishment or amendments to the internal control system according to Article 14-1 of the Act, and evaluating the effectiveness of internal control system.

3. Establishment or amendments to asset acquisition, derivative trading procedures, third party lending procedures, third party endorsement and guarantee procedures, and other procedures of major financial consequences according to Article 36-1 of the Act.

4. Offering, issuance, or private placement of securities with equity characteristics. 6. Appointment and dismissal of the head of finance, accounting, or chief internal auditor.

5. Major donation to non-related party. However, in the occurrence of a major natural disaster, emergency aids of charitable nature can be made first and acknowledged later during the next board of directors meeting.

6. Any decisions that must be resolved in a shareholder meeting or a board of directors meeting as required by Article 14-3 of the Act, or relevant regulations or Articles of Incorporation, and any major issues prompted by the competent authority.

Major donation to non-related party, as mentioned in Subparagraph 7 above, shall refer to any single or cumulative donations that amount to NT$100 million or above in a year to the same party, or amounts that accumulate to more than 1% of net revenues or 5% of paid-up capital, as shown in the latest audited financial statements. The one-year period mentioned above shall refer to the one year dating back from the current board meeting. Amounts that have already been passed in previous board meetings may be excluded from calculation.

The Company shall not donate to any stakeholder or political party.

If the Company has independent directors in place, at least one independent director shall be personally present at each board of directors meeting. For any decisions specified in Paragraph 1 that require resolution from a board of directors meeting, all independent directors shall personally attend the board meeting. Independent directors who are unable to attend personally shall appoint another independent director to attend on behalf. All objections and qualified opinions expressed by independent directors must be detailed in the board of directors meeting minutes. If the independent director is unable to express objections or qualified opinions in person during the board of directors meeting, the opinion shall be expressed in writing in advance and recorded in the board of directors meeting minutes unless there is justifiable reason not to do so.

Article 8 Attendance logs must be provided during board meetings and signed by attending directors.

Directors are required to attend board meetings personally. Those who are unable to attend personally may seek proxy attendance by another director in a manner compliant with the Articles of Association. Directors who participate in the meeting using video conferencing are considered to have attended personally, but must fax over the attendance slip for record purpose.

If a director wishes to seek proxy attendance by another director, a separate proxy letter shall be issued for every board meeting, with the extent of delegated authority specified separately for each agenda item.

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Each proxy attendant may only represent the presence of one absent director.

		Each proxy attendant may only represent the presence of one absent director.
Article	9	The Company’s board meetings shall be convened and chaired by the Chairman.
		However, the first meeting of a newly-elected board is convened by the director that
		received the highest number of votes during the shareholder meeting election, and the
		meeting chairperson is to be elected among attending directors.
		If the Chairman is unable to perform duties due to leave of absence or any reason, a
		delegate shall be appointed in accordance with Article 208 of the Company Act.
Article	10	When the board convenes its meeting, the Administration Department shall have
		relevant information ready for use at directors’ request.
		During board meetings, the board may, depending on the nature of discussed topics,
		call managers of relevant departments who do not hold director position to report on
		the Company’s business performance and answer directors’ queries, and thereby
		provide directors with more insight into the Company’s operations for more informed
		decision. Certified public accountants, lawyers, or other professionals may also be
		invited to provide statements and opinions in board meetings if necessary, but must
		disassociate from discussion and voting.
		The chairperson may restrain directors from speaking repeatedly or outside the scope
		of the discussed topic, if their actions have prevented other directors from speaking or
		have affected the meeting’s proceeding.
Article	11	The chairperson may commence board meeting when the time is due with more than
		half of all directors present. If the meeting is due to convene but less than half of the
		board is present, the chairperson may postpone the meeting for up to two times. If the
		number of participants remains insufficient after two postponements, the chairperson
		shall re-convene the meeting according to Article 3 of the conference rules.
		The term “all directors” mentioned above shall refer to those who are currently in
		active duty.
Article	12	Board meeting discussions shall proceed according to the scheduled proceedings.
		However, changes to proceedings are allowed if agreed by more than half of attending
		directors.
		The chairperson can not dismiss the meeting without the consent of more than half of
		all attending directors.
		The chairperson may call the meeting into recess or proceed with negotiation at a
		suitable time.
		If the number of remaining directors falls throughout the course of meeting to less than
		half of the number of attending directors at the start of meeting, the remaining directors
		may motion for the chairperson to suspend the meeting and proceed with Paragraph 1
		of the Preceding Article.
Article	13	The meeting chairperson may announce to discontinue further discussions if the topic
		is considered to have been sufficiently discussed to proceed with the vote.
		A motion is considered passed if the chairperson receives no objection from any
		attending directors. Should any director express objection after being inquired by the
		chairperson, the discussed topic shall be resolved through vote.
		The chairperson may choose to proceed with the vote in one of two methods: raise of
		hands or using ballots. However, if there is any participant who objects otherwise, the

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voting method shall be determined by the opinion of the majority.

Except for resolutions that are passed without objection, the voting process needs to be examined by independent directors whereas ballots are to be counted by the meeting organizer.

Unless otherwise regulated by the Company Act or the Articles of Incorporation, a motion is passed if it is supported by more than half of attending directors. The attending directors mentioned in the four paragraphs above do not include directors who are not permitted to vote under Paragraph 1, Article 14.

In cases where several amendment or alternative solutions have been proposed at the same time, the chairperson shall determine the order in which the proposals are voted. However, if any proposal is passed, all other proposals shall be deemed rejected and no further voting is necessary.

The outcome of the vote must be documented and announced on site.

The Company shall disclose on MOPS (Market Observation Post System) any board meeting resolutions that constitute material information as defined by law or the rules of Taiwan Stock Exchange Corporation.

• Article 14 If a director, or the corporate entity a director represents, is considered a stakeholder to the discussed topic, the director must state the stakes involved during the current meeting session and shall disassociate from all discussions and voting if the stakes are in conflict against the Company’s interests. In addition, the director may not exercise voting rights on behalf of other directors.

With respect to a resolution at a board of directors meeting, the provisions of Article 180, paragraph 2, of the Company Act, as applied mutatis mutandis under Article 206, paragraph 2, of that Act, shall apply in cases where a board director is prohibite

Article 15 Proceeding of the Company’s board of directors meetings shall be compiled into detailed minutes. The meeting minutes must record the following details:

1. The meeting session (or year), time, and venue.

2. Name of the meeting chairperson.

3. Directors’ attendance, including the number and names of attendees, absentees, and those on leave of absence.

4. The names and designations of meeting participants.

5. Name of the minutes taker.

6. The reported issues.

7. Discussions: The methods by which resolutions were reached and outcomes of each motion; summary of opinions expressed by directors (including independent directors), experts and other personnel involved; the names of directors who held conflicting interests in the discussed topic as described in Paragraph 1 of the preceding Article, descriptions of the stakes involved, reasons for directors’ disassociation or participation in the discussed topic, and whether the director had disassociated from the discussion/voting; any objections or qualified opinions expressed on record or in writing; and independent directors’ written opinions raised according to Paragraph 5, Article 7.

8. Extraordinary motions: The name of the person who raised the motion; the method of resolution and outcome; summary of opinions expressed by directors, experts and other personnel; the names of directors who held conflicting interests

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in the discussed topic as described in Paragraph 1 of the preceding Article, descriptions of the stakes involved, reasons for directors’ disassociation or participation in the discussed topic, and whether the director had disassociated from the discussion/voting; and any objections or qualified opinions expressed on record or in writing.

1. Other details as deemed relevant.

If the board resolution involves any of the following, the details of which shall be addressed in the meeting minutes and posted onto the reporting website designated by the authority within 2 days after the board resolution is made:

1. Objections or qualified opinions expressed by independent directors on record or in writing.

2. Where an Audit Committee has been assembled, any issues that are not agreed by the Audit Committee but passed by more than two-thirds of entire directors.

The attendance log constitutes part of the board meeting minutes, and therefore shall be kept properly over the Company’s existence.

The meeting minutes must be signed or sealed by the chairperson and the minute taker, and distributed to all directors within 20 days after the meeting. It should also be treated as part of the Company’s key files and retained as such over the Company’s existence.

The preparation and distribution of meeting minutes, as described in Paragraph 1, can be made in electronic form.

• Article 16 The Company’s board of directors meetings shall be recorded in both video and audio, and kept for at least 5 years. The footage can be stored in electronic form. Should any litigation arise with respect to a specific board meeting resolution before the abovementioned expiry, the relevant recordings must be retained as evidence until the litigation is concluded.

• Where meetings are held by way of video conferencing, the recorded video and audio shall be treated as part of the meeting minutes, and kept properly over the Company’s existence.

• Article 17 Establishment and amendment of the conference rules are subject to approval by the board of directors, and acknowledgment in shareholder meeting.

• Article 18 The above rules were first established on March 8, 2005.

• The 1st amendment was made on April 27, 2006 and implemented since January 1, 2007.

The 2nd amendment was made on April 28, 2008.

The 3rd amendment was made on March 26, 2010.

The 4th amendment was made on December 26, 2012.

The 5th amendment was made on March 28, 2016, and effected since June 24, 2016. The 6th amendment was made on August 28, 2017.

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The Ethical Corporate Management Best Practice Principles, the First Insurance Co., Ltd.

Article 1 (Purpose and Applicable Scope)

To establish the corporate culture of ethical management, the Company’s Ethical Corporate Management Best Practice Principles are established (hereafter the “Principles”).

The Principles are applicable to the subsidiaries; the institutions where the Company has contributed 50% or more of funds, directly and indirectly; and other group’s entities and organizations over which Company has substantial controls (hereafter the “group’s entities and organizations”).

Article 2 (Prohibitions to Unethical Conducts)

When engaging in commercial activities, directors, supervisors, managers, employees, and mandataries of the Company or persons having substantial control over such companies (hereafter the “substantial controllers”) shall not directly or indirectly offer, promise to offer, request or accept any improper benefits, nor commit unethical acts including breach of ethics, illegal acts, or breach of fiduciary duty (hereafter the “unethical conduct”) for purposes of acquiring or maintaining benefits.

Parties referred to in the preceding paragraph include civil servants, political candidates, political parties or members of political parties, state-run or private-owned businesses or institutions, and their directors, supervisors, managers, employees or substantial controllers or other stakeholders.

Article 3 (Forms of Benefits)

“Benefits” in these Principles means any valuable things, including money, endowments, commissions, positions, services, preferential treatment or rebates of any type or in any name. Benefits received or given occasionally in accordance with accepted social customs and that do not adversely affect specific rights and obligations shall be excluded.

Article 4 (Compliance)

The Company shall comply with the Company Act, Securities and Exchange Act, Business Entity Accounting Act, Political Donations Act, Anti-Corruption Statute, Government Procurement Act, Act on Recusal of Public Servants Due to Conflicts of Interest, TWSE/GTSM listing rules, or other laws or regulations regarding commercial activities, as the underlying basic premise to facilitate ethical corporate management.

Article 5 (Policies)

The Company shall abide by the operational philosophies of honesty, transparency and responsibility, base policies on the principle of good faith, and establish good corporate governance and risk control and management mechanism so as to create an operational environment for sustainable development.

Article 6 (Prevention Programs)

The Company shall, in their own ethical management policy, clearly and thoroughly prescribe the specific ethical management practices and the programs to forestall unethical conduct (hereafter the “prevention programs”), including operational procedures, guidelines, and training.

When establishing the prevention programs, TWSE/GTSM listed companies shall comply with

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relevant laws and regulations of the territory where the companies and their business group are operating.

In the course of developing the prevention programs, the Company is advised to negotiate with staff, labor unions members, important trading counterparties, or other stakeholders.

Article 7 (Scopes of the Prevention Programs)

When establishing prevention programs, the Company shall analyze business activities within the business scope which are at a higher risk of being involved in unethical conduct, and enhances prevention measures.

The Company’s prevention programs shall at least include preventive measures against the following:

• I. Offering and acceptance of bribes.

• II. Illegal political donations.

• III. Improper charitable donations or sponsorship.

• IV. Offering or acceptance of unreasonable presents or hospitality, or other improper benefits.

• V. Misappropriation of trade secrets and infringement of trademark rights, patent rights, copyrights, and other intellectual property rights.

• VI. Engaging in unfair competitive practices.

• VII. Damage directly or indirectly caused to the rights or interests, health, or safety of consumers or other stakeholders in the course of research and development, procurement, manufacture, provision, or sale of products and services.

Article 8 (Commitment and Implementation)

The Company and the group’s entities and organizations shall clearly specify in their rules and external documents the ethical corporate management policies and the commitment by the board of directors and senior management on rigorous and thorough implementation of such policies, and shall carry out the policies in internal management and in commercial activities.

Article 9 (Business Activities with Ethical Management)

The Company shall engage in commercial activities in a fair and transparent manner based on the principle of ethical management.

Prior to any commercial transactions, the Company shall take into consideration the legality of their agents, suppliers, clients, or other trading counterparties and whether any of them are involved in unethical conduct, and shall avoid any dealings with persons so involved.

When entering into contracts with their agents, suppliers, clients, or other trading counterparties, the Company shall include in such contracts terms requiring compliance with ethical corporate management policy and that in the event the trading counterparties are involved in unethical conduct, the Company may at any time terminate or rescind the contracts.

Article 10 (Prohibition to Briberies)

When conducting business, the Company and the directors, supervisors, managers, employees, mandataries, and substantial controllers, may not directly or indirectly offer, promise to offer, request, or accept any improper benefits in whatever form to or from clients, agents, contractors, suppliers, public servants, or other stakeholders.

Article 11 (Prohibition to Offering Illegal Political Donations)

The Company is prohibited to donate to any political party.

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When directly or indirectly offering a donation to political parties or organizations or individuals participating in political activities, the Company and the directors, supervisors, managers, employees, mandataries, and substantial controllers, shall comply with the Political Donations Act and their own relevant internal operational procedures, and shall not make such donations in exchange for commercial gains or business advantages.

Article 12 (Prohibitions to Improper Charitable Donations or Sponsorships)

When making or offering donations and sponsorship, the Company and the directors, supervisors, managers, employees, mandataries, and substantial controllers shall comply with relevant laws and regulations and internal operational procedures, and shall not surreptitiously engage in bribery.

Article 13 (Prohibitions to Unreasonable Presents/Hospitality/Other Improper Benefits) The Company and the directors, supervisors, managers, employees, mandataries, and substantial controllers shall not directly or indirectly offer or accept any unreasonable presents, hospitality or other improper benefits to establish business relationship or influence commercial transactions.

Article 14 (Prohibition to IP Infringement)

The Company and the directors, supervisors, managers, employees, mandataries, and substantial controllers shall observe applicable laws and regulations, the company’s internal operational procedures, and contractual provisions concerning intellectual property, and may not use, disclose, dispose, or damage intellectual property or otherwise infringe intellectual property rights without the prior consent of the intellectual property rights holder.

Article 15 (Prohibition to Unfair Competitions)

The Company shall engage in business activities in accordance with applicable competition laws and regulations, 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 16 (Preventions to Products and Services Damaging Stakeholders)

In the course of research and development, procurement, manufacture, provision, or sale of products and services, the Company and the directors, supervisors, managers, employees, mandataries, and substantial controllers shall observe applicable laws and regulations and international standards to ensure the transparency of information about, and safety of, their products and services. They shall also adopt and publish a policy on the protection of the rights and interests of consumers or other stakeholders, and carry out the policy in their operations, with a view to preventing their products and services from directly or indirectly damaging the rights and interests, health, and safety of consumers or other stakeholders. Where there are sufficient facts to determine that the company’s products or services are likely to pose any hazard to the safety and health of consumers or other stakeholders, the company shall, in principle, recall those products or suspend the services immediately.

Article 17 (Organizations and Responsibilities)

The directors, supervisors, managers, employees, mandataries, and substantial controllers of the Company shall exercise the due care of good administrators to urge the company to prevent unethical conduct, always review the results of the preventive measures and continually make adjustments so as to ensure thorough implementation of its ethical corporate management policies. To achieve sound ethical corporate management, the Company shall establish a dedicated unit that

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is under the board of directors and avail itself of adequate resources and staff itself with competent personnel, responsible for establishing and supervising the implementation of the ethical corporate management policies and prevention programs. The dedicated unit shall be in charge of the following matters, and shall report to the board of directors on a regular basis:

• I. 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.

• II. Adopting programs to prevent unethical conduct and setting out in each program the standard operating procedures and conduct guidelines with respect to this Corporation’s operations and business.

• III. Planning the internal organization, structure, and allocation of responsibilities and setting up check-and-balance mechanisms for mutual supervision of the business activities within the business scope which are possibly at a higher risk for unethical conduct.

• IV. Promoting and coordinating awareness and educational activities with respect to ethics policy.

• V. Developing a whistle-blowing system and ensuring its operating effectiveness.

• VI. 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 assessment reports on the regular basis of compliance with ethical management in operating procedures.

Article 18 (Compliance when Executing Business)

The Company and the directors, supervisors, managers, employees, mandataries, and substantial controllers shall comply with laws and regulations and the prevention programs when conducting business.

Article 19 (Recusal)

The Company shall adopt policies for preventing conflicts of interest to identify, monitor, and manage risks possibly resulting from unethical conduct, and shall also offer appropriate means for directors, supervisors, managers, and other stakeholders attending or present at board meetings to voluntarily explain whether their interests would potentially conflict with those of the company. When the Company’s director, supervisor, officer or other stakeholder attending or presenting at a board meeting, or the juristic person represented thereby, has a stake in 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.

The Company’s directors, supervisors, managers, employees, mandataries, and substantial controllers shall not take advantage of their positions or influence in the companies to obtain improper benefits for themselves, their spouses, parents, children or any other person.

Article 20 (Accounting and Internal Controls)

The Company shall establish effective accounting systems and internal control systems for business activities possibly at a higher risk of being involved in an unethical conduct, not have under-the-table accounts or keep secret accounts, and conduct reviews regularly so as to ensure that the design and enforcement of the systems are showing results.

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The internal audit unit of the Company shall, on the regular basis, audits the compliance with the aforementioned system, and prepares audit reports to be presented to the Board of Directors. The internal audit unit may engage a certified public accountant to carry out the audit, and may engage professionals to assist if necessary.

Article 21 (Operational Procedures and Conduct Guidelines)

The Company shall establish operational procedures and guidelines in accordance with Article 6 hereof to guide directors, supervisors, managers, employees, and substantial controllers on how to conduct business. The procedures and guidelines should at least contain the following matters:

• I. Standards for determining whether improper benefits have been offered or accepted.

• II. Procedures for offering legitimate political donations.

• III. Procedures and the standard rates for offering charitable donations or sponsorship.

• IV. Rules for avoiding work-related conflicts of interests and how they should be reported and handled.

• V. Rules for keeping confidential trade secrets and sensitive business information obtained in the ordinary course of business.

• VI. Regulations and procedures for dealing with suppliers, clients and business transaction counterparties suspected of unethical conduct.

• VII. Handling procedures for violations of these Principles.

• VIII.Disciplinary measures on offenders.

Article 22 (Trainings)

The chairperson, general manager, or senior management of the Company shall communicate the importance of corporate ethics to its directors, employees, and mandataries on a regular basis. The Company shall periodically organize training and awareness programs for directors, supervisors, managers, employees, mandataries, and substantial controllers and invite the companies’ commercial transaction counterparties so they understand the companies’ resolve to implement ethical corporate management, the related policies, prevention programs and the consequences of committing unethical conduct.

Article 23 (Whistle-Blowing System)

The Company shall adopt a concrete whistle-blowing system and scrupulously operate the system. The whistle-blowing system shall include at least the following:

• I. An independent mailbox or hotline, either internally established and publicly announced or provided by an independent external institution, to allow company insiders and outsiders to submit reports.

• II. Dedicated personnel or unit shall be appointed to handle the whistle-blowing system. Any tip involving a director or senior managers shall be reported to the independent directors. Categories of reported misconduct shall be delineated and standard operating procedures for the investigation of each shall be adopted.

• III. Documentation of case acceptance, investigation processes, investigation results, and relevant documents.

• IV. Confidentiality of the identity of whistle-blowers and the content of reported cases.

• V. Measures for protecting whistle-blowers from inappropriate disciplinary actions due to their whistle-blowing.

• VI. Whistle-blowing incentive measures.

When material misconduct or likelihood of material impairment to the Company comes to their

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awareness upon investigation, the dedicated personnel or unit handling the whistle-blowing system shall immediately prepare a report and notify the independent directors in written form.

Article 24 (Disciplinary and Appeal System)

The Company shall adopt and publish a well-defined disciplinary and appeal system for handling violations of the ethical corporate management rules, and shall make immediate disclosure on the company’s internal website of the title and name of the violator, the date and details of the violation, and the actions taken in response.

Article 25 (Information Disclosure)

The Companies shall collect quantitative data about the promotion of ethical management and continuously analyze and assess the effectiveness of the promotion of ethical management policy. They shall also disclose the measures taken for implementing ethical corporate management, the status of implementation, the foregoing quantitative data, and the effectiveness of promotion on their company websites, annual reports, and prospectuses, and shall disclose their ethical corporate management best practice principles on the Market Observation Post System.

Article 26 (Review and Amendment to the Ethical Corporate Management Best Practice Principles) The Company shall, at all times, monitor the development of relevant local and international regulations concerning ethical corporate management and encourage their directors, supervisors, managers, and employees to make suggestions, based on which the adopted ethical corporate management policies and measures taken will be reviewed and improved with a view to achieving better implementation of ethical management.

Article 27 (Implementation)

The ethical corporate management best practice principles of the Company shall be implemented after the board of directors grants the approval, and shall be sent to the supervisors and reported at a shareholders’ meeting.

For the Company that has appointed any independent director, when the principles are submitted for discussion by the board of directors pursuant to the preceding paragraph, the board of directors shall take into full consideration each independent director’s opinions. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors meeting. An independent director that cannot attend the board meeting in person to express objection or reservations shall provide a written opinion before the board meeting, unless there is some legitimate reason to do otherwise, and the opinion shall be specified in the minutes of the board of directors meeting.

For the Company that has established an audit committee, the provisions regarding supervisors in these Principles shall apply mutatis mutandis to the audit committee. For amendments to the Principles, such amendments shall be reviewed by the Audit Committee and presented to the Board of Directors for passing before implementing; the amendments shall be presented to the Shareholders’ Meeting as well.

The above Principles were first established on March 28, 2016.

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The First Insurance Co., Ltd. Procedures for Ethical Management and Guidelines for Conduct

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 2

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.

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.

Parties referred to in the preceding paragraph include civil servants, political candidates, political parties or members of political parties, state-run or private-owned businesses or institutions, and their directors, supervisors, managers, employees or substantial controllers or other stakeholders.

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 5

This Corporation shall designate the Corporate Governance Center 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

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responsible unit shall be in charge of the following matters and also submit regular reports to the board of directors:

• I. 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.

• II. Adopting programs to prevent unethical conduct and setting out in each program the standard operating procedures and conduct guidelines with respect to this Corporation’s operations and business.

• III. Planning the internal organization, structure, and allocation of responsibilities and setting up check-and-balance mechanisms for mutual supervision of the business activities within the business scope which are possibly at a higher risk for unethical conduct.

• IV. Promoting and coordinating awareness and educational activities with respect to ethics policy.

• V. Developing a whistle-blowing system and ensuring its operating effectiveness.

• VI. 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 assessment reports on the regular basis of compliance with ethical management in operating procedures.

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:

• I. The conduct is undertaken to meet business needs and is in accordance with local courtesy, convention, or custom during domestic (or foreign) visits, reception of guests, promotion of business, and communication and coordination.

• II. 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.

• III. 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.

• IV. Attendance at folk festivals that are open to and invite the attendance of the general public.

• V. Rewards, emergency assistance, condolence payments, or honorariums from the management. VI. Property with a market value of NT$10,000 or less received due to engagement, marriage, maternity, relocation, assumption of a position, promotion or transfer, retirement, resignation, or severance, or the injury, illness, or death of the recipient or the recipient’s spouse or lineal relative.

VII. 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:

• I. If there is no relationship of interest between the party providing or offering the benefit and the official duties of this Corporation’s personnel, the personnel shall report to their immediate

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• supervisor within 3 days from the acceptance of the benefit, and the responsible unit shall be notified if necessary.

• II. 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:

• I. When the two parties have commercial dealings, a relationship of direction and supervision, or subsidies (or rewards) for expenses.

• II. When a contracting, trading, or other contractual relationship is being sought, is in progress, or has been established.

• III. 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 on payment, given to the public, donated to a charity, or handled in another appropriate manner. The proposal shall be implemented after being reported and approved.

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 9

No political donation is offered by this Corporation.

Article 10

Charitable donations or sponsorships by this Corporation shall be provided in accordance with the following provisions and reported to the chairman in charge for approval, and a notification shall be given to the responsible unit. When the amount is NT$100 million or more, the donation or sponsorship shall be provided only after it has been submitted for adoption by the board of directors:

• I. 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.

• II. A written record of the decision making process shall be kept.

• III. A charitable donation shall be given to a valid charitable institution and may not be a disguised form of bribery.

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• IV. The returns received as a result of any sponsorship shall be specific and reasonable, and the subject of the sponsorship may not be a counterparty of this Corporation’s commercial dealings or a party with which any personnel of this Corporation has a relationship of interest.

• V. 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.

Any sponsorship made by this Corporation, shall observe the Corporation’s managerial regulations for advertisement, business solicitation, and production of the sales promotion materials.

Article 11

When the Company’s director, supervisor, officer or other stakeholder attending or presenting at a board meeting, or the juristic person represented thereby, has a stake in 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.

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’ management department is in charge of 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 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 14

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This Corporation shall collect and understand the applicable laws and regulations and international standards governing its products and services which it shall observe and gather and publish all guidelines to cause personnel of this Corporation to ensure the transparency of information about, and safety of, the products and services in the course of their research and development, procurement, manufacture, provision, or sale of products and services.

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. Where there are media reports, or sufficient facts to determine, that 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, within 30 days, recall those products or suspend the services, 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.

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 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 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.

When this Corporation carries out the evaluation under the preceding paragraph, it may adopt appropriate audit procedures for a review of the counterparty with which it will have commercial dealings with respect to the following matters, in order to gain a comprehensive knowledge of its ethical management:

• I. The enterprise’s nationality, location of business operations, organizational structure, and management policy, and place where it will make payment.

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• II. Whether the enterprise has adopted an ethical management policy, and the status of its implementation.

• III. Whether enterprise’s business operations are located in a country with a high risk of corruption.

• IV. Whether the business operated by the enterprise is in an industry with a high risk of bribery.

• V. The long-term business condition and degree of goodwill of the enterprise.

• VI. Consultation with the enterprise’s business partners on their opinion of the enterprise. VII. Whether the enterprise has a record of involvement in unethical conduct such as bribery or illegal political contributions.

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 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 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:

• I. When a party to the contract becomes aware that any personnel has violated 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 ten percent of the contract price as damages, and may also deduct the full amount of the damages from the contract price payable.

• II. 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.

• III. 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

The Company encourages insiders and outsiders for informing of unethical or unseemly conduct. 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.

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This Corporation shall internally establish and publicly announce on its website 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:

• I. The whistleblower’s name and I.D. number, and an address, telephone number and e-mail address where it can be reached.

• II. The informed party’s name or other information sufficient to distinguish its identifying features.

• III. 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. And the responsible unit of this Corporation shall observe the following procedure:

• I. Any information shall be reported to the department head. File to an independent director if involving a director or a senior executive.

• II. 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, where necessary, with the assistance of the legal compliance or other related department.

• III. 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.

• IV. 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.

• V. 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.

• VI. 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 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 23

The responsible unit of this Corporation shall organize the trainings or awareness sessions each year regularly, to enable the directors, supervisors, managers, employees, and substantial controllers fully understand the Corporation’s commitment to the ethical management, and the consequences of unethical conducts.

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.

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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 24

These Operational Procedures and Guidelines of Conduct, 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.

For the Company that has established an audit committee, the provisions regarding supervisors in these Principles shall apply mutatis mutandis to the audit committee. For amendments to the Principles, such amendments shall be reviewed by the Audit Committee and presented to the Board of Directors for passing before implementing; the amendments shall be presented to the Shareholders’ Meeting as well.

The Operational Procedures and Guidelines of Conduct were first established on March 28, 2016.

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The First Insurance Co., Ltd. Shareholders Conference Rules

Passed during AGM dated June 26, 2015

1. Unless otherwise specified by law or the Articles of Incorporation, shareholder meetings of The First Insurance Co., Ltd. (hereinafter referred to as the Company) shall proceed according to the following rules.

2. Unless otherwise specified by law, shareholder meetings are to be convened by the board of directors.

The Company shall compile an electronic file that contains the meeting advice, a proxy form, a detailed agenda of topics to be acknowledged or discussed during the meeting, and notes on the re-election or dismissal of directors and post it onto the Market Observation Post System (MOPS) at least 30 days before an annual general meeting, or 15 days before an extraordinary shareholder meeting. At least 21 days before an annual general meeting, or 15 days before an extraordinary shareholder meeting, an electronic copy of the shareholder meeting manual and supplementary information shall be prepared and posted onto MOPS. Physical copies of the shareholder meeting manual and supplementary information shall be prepared at least 15 days before the meeting, and made accessible to shareholders upon request. These documents must also be placed within the Company’s premises and at the share administration agency, and distributed on-site during the shareholder meeting.

The meeting advice and announcement must state clearly the agenda to be discussed during the meeting, and can be issued in electronic form if consented by the recipient. Election or dismissal of directors, amendment of Articles of Incorporation, dismissal of the Company, merger, demerger, and any issues listed in Paragraph 1, Article 185 of the Company Act, Articles 26-1 and 43-6 of the Securities and Exchange Act, and Articles 56-1 and 60-2 of Regulations Governing the Offering and Issuance of Securities by Securities Issuers shall be notified in advance as part of the meeting agenda, and cannot be raised in the form of 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. 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

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proposals not included in the agenda.

1. Shareholders may appoint proxies to attend shareholder meetings on their behalf by completing the Company’s proxy form and specifying the scope of delegated authority. Each shareholder may issue one proxy form and delegate one proxy only. All proxy forms must be received by the Company at least 5 days before the shareholder meeting. In cases where multiple proxy forms are issued, the one that arrives first shall prevail. However, this excludes situations where the shareholder has issued a proper declaration to withdraw the previous proxy arrangement.

Should the shareholder decide to attend shareholder meeting personally or exercise voting rights in writing or using electronic means after a proxy form has been received by the Company, a written notice must be sent to the Company by no later than two days before the meeting commences to withdraw the proxy arrangement. If the shareholder fails to withdraw proxy arrangement before the due date, the vote of the proxy attendant shall prevail.

1. The meeting advice must specify details such as meeting time, venue, and important notes where relevant.

2. Admission of meeting participants shall begin at least 30 minutes before the meeting commences. The reception area must be clearly labeled and stationed with competent personnel.

Shareholders and representatives thereof (collectively referred to as shareholders) shall attend shareholder meetings by presenting valid conference pass, attendance card or other document of similar nature. The Company may not request shareholders to present additional documentary proof unless specified in advance. Proxy form acquirers are required to bring identity proof for verification.

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.

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.

Shareholders who attend the meeting shall be given a copy of the meeting manual, annual report, attendance pass, opinion slip, agenda ballots and any information relevant to the meeting. Prepare additional ballots if director election is also being held during the meeting. Where the shareholder is a government agency or corporate entity, more than one representative may attend shareholder meetings on their behalf. Corporate entities that have been designated as proxy attendants can only appoint one representative to attend shareholder meeting.

1. Attendance and votes during shareholder meetings shall be calculated based on number of shares held.

2. Shareholder meetings shall be held at locations that are suitable and convenient for shareholders to attend. Meetings must not commence anytime earlier than 9AM or later than 3PM.

3. Unless otherwise specified in the Company Act, shareholder meetings shall be convened by the board of directors and chaired by the Chairman. If the Chairman is unable to fulfill duties due to leave of absence or any other reason, a person of acting duty shall be appointed according to Article 208 of the Company Act. For shareholder meetings that are convened by any

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authorized party other than the board of directors, the convener shall chair the meeting. If there are two or more eligible conveners at the same time, one shall be appointed among themselves to chair the meeting.

The role of acting chairperson mentioned above shall be assumed by a director who has been on the board for more than six months and understands the Company’s financial and business performance. The same applies if the chairperson is a representative of a corporate director. Shareholder meetings that are convened by the board of directors should be chaired by the Chairman and attended personally by more than half of the board, with at least one representative from each functional committee present at the meeting. Attendance of the above participants shall be recorded in details in the shareholder meeting minutes.

1. The Company may summon its lawyers, certified public accountants, and any relevant personnel to be present at shareholder meetings. Organizers of the shareholder meeting must wear proper identification or arm badges.

2. The Company shall record non-stop, in audio or video, from the time admission is accepted and throughout the entire meeting proceeding, voting and vote counting. These recordings need to be maintained for at least one year. However, if a shareholder raises a litigious claim against the Company according to Article 189 of the Company Act, the abovementioned documents must be retained until the end of the litigation.

3. The chairperson should announce the commencement of meeting as soon as it is due. However, if current attendants represent less than half of the Company’s outstanding shares, the chairperson may announce to postpone the meeting up to two times, for a period totaling no more than one hour. If the attending shareholders represent more than one-thirds but less than half of outstanding shares after two postponements, the attending shareholders may reach a tentative resolution according to Paragraph 1, Article 175 of the Company Act. This tentative resolution shall then be communicated to every shareholder and another shareholder meeting shall be held within the next month.

If the number of shares represented accumulate to more than half of all outstanding shares as the meeting progresses, the chairperson may propose the tentative resolutions for final vote according to Article 174 of the Company Act.

1. If the shareholder meeting is convened by the board of directors, the board of directors will determine the meeting proceeding. The proceeding can not be changed unless resolved during the shareholder meeting.

2. The above rule also applies if the shareholder meeting is convened by any authorized party other than the board of directors.

In either of the two arrangements described above, the chairperson can not dismiss the meeting while an agenda item (including extraordinary motions) is still in progress.

Once the meeting has been dismissed, shareholders may not elect to continue the meeting with another chairperson or at a different venue unless the chairperson is found to have dismissed the meeting in violation of the conference rules. In the latter case, the meeting may continue with a separate chairperson that has the support of more than half of voting rights represented at the meeting.

1. Shareholders (or proxies thereof) may propose amendments or alternative solutions to items listed on the agenda, and may raise new discussions by way of extraordinary motion.

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1. Shareholders who wish to speak during the meeting must first produce an opinion slip detailing the topic and shareholder account number (or conference pass serial number) and account name. The order of shareholders’ comments shall be determined by the chairperson. Shareholders who submit an opinion slip without actually speaking are considered to have remained silent. If the shareholder’s actual comments differ from those stated in the opinion slip, the actual comments expressed shall be taken into record.

2. While a shareholder is speaking, other shareholders can not speak simultaneously or interfere in any way unless agreed by the chairperson and the person speaking. Any violators shall be restrained by the chairperson.

3. Shareholder cannot speak for more than two times, for 5 minutes each, on the same topic without the consent of the chairperson. The chairperson may restrain shareholders in violation of the above rule or interrupt any comments that are irrelevant to the topics discussed.

4. Where a corporate shareholder has appointed two or more representatives to attend the shareholder meeting, only one representative may speak for each discussed topic.

5. After a shareholder has finished speaking, the chairperson may answer the shareholder’s queries personally or appoint any relevant personnel to do so.

6. Voting rights in a shareholder meeting are calculated based on the number of shares represented.

Shares that do not carry voting rights are excluded from the calculation of outstanding shares when voting for the final resolution.

Shareholders may not vote on decisions that pose a conflicting interest between them and the Company, and neither shall them exercise voting rights on behalf of other shareholders. The number of shares held by shareholders who are not permitted to vote shall be excluded from the calculation of total voting rights.

With the exception of trust enterprises and certain share administration agencies approved by the competent authority, a proxy may not represent more than 3% of total voting rights in aggregate when representing two or more shareholders during the meeting. Voting rights that exceed this threshold shall be excluded from calculation.

1. The chairperson may announce to discontinue further discussions if the topic is considered to have been sufficiently discussed to proceed with the vote.

2. The chairperson will appoint a ballot examiner and a ballot counter; the ballot examiner must be a shareholder.

3. Discussion and election votes are to be counted openly at the shareholder meeting. Results of the vote, including the final tally, must be announced on-site and recorded in minutes.

4. The chairperson may put the meeting in recess at appropriate times. In the occurrence of force majeure event, the chairperson may suspend the meeting temporarily and resume at another time.

If the shareholder meeting is unable to conclude all agenda items (including extraordinary motions) before the venue is due for return, participants may resolve to continue the meeting at an alternative location.

Shareholders may also resolve to postpone or resume the meeting within the next 5 days, according to Article 182 of the Company Act.

1. Shareholders are entitled to one vote per share, except for shares that are subject to voting

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restrictions or situations outlined in Paragraph 2, Article 179 of the Company Act. Voting rights can be exercised using the electronic method or in writing. Instructions for exercising voting rights in writing or using the electronic form must be clearly stated on the shareholder meeting advice. Shareholders who have voted in writing or using the electronic method are considered to have attended shareholder meeting in person. However, they are considered to have waived their rights to participate in any extraordinary motions or amendments to the original discussions that may arise during the shareholder meeting. For this reason, the Company should avoid proposing extraordinary motions and amendments to the original agendas where possible.

Instructions to exercise written and electronic votes must be delivered to the Company at least 2 days before the shareholder meeting. In the event of duplicate submissions, the earliest submission shall be taken into record. However, exception is granted if the shareholder issues a proper declaration to withdraw the previous instruction.

Shareholders who wish to attend the shareholder meeting in person after exercising their voting rights in writing or using electronic methods are required to withdraw their votes using the same method by which the vote was cast in the first place, and by no later than two days before the day of shareholder meeting. The written/electronic vote shall prevail if not withdrawn before the cutoff time. If the shareholder has exercised written or electronic votes and at the same time delegated a proxy to attend the shareholder meeting, then the voting decision exercised by the proxy shall prevail.

Unless otherwise specified in the Company Act or the Articles of Incorporation, a decision is passed with the consent of shareholders representing more than half of total voting interests in the meeting. When voting, the chairperson or delegate thereof shall announce the total number of voting rights represented by attending shareholders for every agenda item discussed, and have shareholders vote on a case-by-case basis. Details on the number of votes in favor, against, and abstained for each discussion shall be uploaded onto MOPS on the same day after the shareholder meeting has ended.

1. Shareholder meetings that involve election of directors shall proceed according to the Company’s election policy. Results of the election, including the list of elected directors and the final tally, must be announced on-site.

2. All ballots used in the above election shall be sealed and signed by ballot examiners, and held in proper custody for at least one year. However, if a shareholder raises a litigious claim against the Company according to Article 189 of the Company Act, the abovementioned documents must be retained until the end of the litigation.

3. Shareholder meeting resolutions shall be compiled into detailed minutes, and signed or sealed by the chairperson, and disseminated to each shareholder by no later than 20 days after the meeting. Preparation and distribution of meeting minutes can be made in electronic form. The Company may disseminate meeting minutes by posting details onto MOPS.

The meeting minutes shall accurately record the year, month, day, and place of the meeting, the chairperson’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.

1. During the shareholder meeting, the Company shall publish information regarding the number of shares acquired by proxy form acquirers and the number of shares represented by proxies using the prescribed format.

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The Company must disclose on MOPS any shareholder meeting resolutions that constitute material information as defined by law or the rules Taiwan Stock Exchange Corporation.

1. In cases where several amendment or alternative solutions have been proposed at the same time, the chairperson shall determine the order in which the proposals are voted. However, if any solution is passed, all other proposals shall be deemed rejected and no further voting is necessary.

2. The chairperson may appoint picketers (or security staff) to help maintain order in the meeting. While maintaining order in the meeting, all picketers (security staff) must wear arm badges that identify their role as “Picketer.”

3. The chairperson may stop anyone who attempts to speak using instruments that are not provided by the Company.

4. The chairperson may instruct picketers or security staff to remove shareholders who continue to violate the meeting policy despite being warned by the chairperson.

5. Any matters that are not addressed in the above rules shall be governed by the Company Act, Articles of Incorporation and relevant regulations.

6. The above rules shall take effect immediately once approved during shareholder meeting; the same applies to all subsequent revisions.

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The First Insurance Co., Ltd. Articles of Incorporation

Chapter One General Provisions

Article 1: The Company is incorporated in accordance with the Company Act, and is named The First Insurance Co., Ltd. Article 2: The Company specializes in offering non-life insurance service for the stability of the domestic economy, welfare of the society, and prosperity of the industrial and commercial sectors. Article 3: The Company is headquartered in Taipei City, and may establish domestic or foreign branches to support business activities if deemed necessary. Establishment, removal and change of branch offices are subject to board of directors’ resolution and approval of the local authority.

Article 4: The Company’s public announcements shall be made by publishing information in local daily newspapers that circulate in the location of the Company’s office.

Chapter Two Business Activities

Article 5: The Company’s business activities comprise the following: H501021 Non-life insurance.

Chapter Three Share Capital

Article 6: The Company has an authorized share capital of Three Billion Eleven Million Six Hundred and Thirty-seven Thousand Eight Hundred and Forty New Taiwan Dollars, which has been fully issued in Three Hundred and One Million One Hundred and Sixty-three Thousand Seven Hundred and Eighty-four shares. Each share has a face value of Ten New Taiwan Dollars.

Article 7: The Company issues its shares to registered owners only. Share certificates are issued with the signatures or authorized seals of at least three directors, subject to certification by the competent authority or any of its approved institutes. The Company is not required to print share certificates for publicly issued shares. Article 8: The Company may, at the request of Taiwan Depository and Clearing Corporation, produce share certificates of large denomination for outstanding shares. Article 9: Unless otherwise specified by law or securities regulations, all share-related affairs of the Company shall proceed according to the authority’s “Regulations Governing the Administration of Shareholder Services of Public Companies.” Article 10: Registration for transfer of share ownership shall be suspended during the 60 days prior to the AGM, or during the 30 days prior to an extraordinary shareholder meeting, or during the 5 days before the baseline date for dividends, bonuses or other gains distributed by the Company.

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Chapter Four Shareholder Meetings

• Article 11: The Company convenes two types of shareholder meeting: the annual general meeting and extraordinary shareholder meetings. Annual general meetings (AGMs) are convened once a year within six months after the end of each financial year. Extraordinary shareholder meetings may be held whenever deemed necessary, subject to compliance with the relevant laws.

• Article 12: The Company is required to notify all shareholders at least 30 days before convention of AGM, and at least 15 days before convention of extraordinary shareholder meeting, and make corresponding public announcements in compliance with laws. Meeting advices and announcements shall specify the date, the venue, and topics to be discussed during the meeting.

• Article 13: Unless otherwise specified by law, the following decisions need to be resolved in shareholder meetings:

• Establishment and amendments to the Articles of Incorporation.

• Election and dismissal of directors.

• Acknowledgment of reports prepared by the board of directors and the Audit Committee, and resolution of earnings appropriation or loss reimbursement proposal.

• Increase and reduction of share capital.

• Other material issues and decisions that are subject to resolution in shareholder meetings, as specified by law.

• Article 14: If a shareholder is unable to attend the shareholder meeting in person, a proxy can be appointed by completing the Company’s proxy form and by specifying the scope of delegated authority. Unless otherwise regulated in Article 177 of the Company Act, shareholders shall delegate their proxy attendants in compliance with “Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies.”

• Article 15: Unless otherwise specified in the Company Act, shareholder meetings shall be convened by the board of directors and chaired by the Chairman. If the Chairman is unable to fulfill duties due to leave of absence or any other reason, a person of acting duty shall be appointed according to Article 208 of the Company Act. For shareholder meetings that are convened by any authorized party other than the board of directors, the convener shall chair the meeting. If there are two or more eligible conveners at the same time, one shall be appointed among themselves to chair the meeting.

• Article 16: Except otherwise regulated by law, a shareholder meeting resolution is passed when more than 50% of all outstanding shares are represented in the meeting, and voted in favor by more than 50% of all voting rights represented at the meeting. However, resolution of the following decisions would require the attendance (personal or proxy) of shareholders representing more than two-thirds of total voting rights, with more than half of voting rights represented in the meeting voting in favor.

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1. Acquisition or merger of another domestic or foreign enterprise.

2. Dismissal, liquidation or demerger of the Company.

3. Article 17: The Company’s shareholders are entitled to one vote for every share held unless otherwise specified in the Company Act or the Articles of Incorporation. However, shareholders that meet the conditions outlined in Article 179 of the Company Act are not entitled to vote.

4. Article 18: Shareholder meeting resolutions shall be compiled into detailed minutes, and signed or sealed by the chairperson, and disseminated to each shareholder by no later than 20 days after the meeting. Preparation of meeting minutes shall comply with Article 183 of the Company Act.

   • Chapter Five Board of Directors

5. Article 19: The board shall consist of 11 to 13 directors elected from persons of adequate capacity during shareholder meeting. Candidates shall be chosen using the nomination system in accordance with Article 192-1 of the Company Act, and the election shall proceed according to the Company’s “Director Election Procedures.” The director seats mentioned above shall include at least 2 independent directors who account for no lesser than one-fifth of total director seats. Independent directors’ seats, nomination and election shall also comply with the laws of the securities authority. Directors are elected to serve a term of 3 years, which can be renewed if re-elected. A Chairman shall be elected among directors during a board meeting with more than two-thirds of directors present, and with the support of more than half of attending directors. The Chairman serves as the Company’s representative to the outside world. If the Chairman is unable to perform duties due to leave of absence or any reason, a delegate shall be appointed in accordance with Article 208 of the Company Act. However, matters concerning appointment of independent directors must still comply with the authority’s rules.

Once the Company has made a public offering of shares, directors’ total shareholding shall comply with the rules of the securities authority. The board of directors should assemble committees of various functions including audit, risk management and remuneration to assist the board in supervising and managing the Company’s operations.

Functional committees shall report directly to the board of directors, and present proposals for the board’s resolution. However, this excludes Audit Committee’s duties as corporate supervisors, as defined in the Securities and Exchange Act, the Company Act and other related laws.

Each functional committee shall implement a separate foundation principle, which is subject to resolution by the board of directors. The foundation principles shall cover details including the number of committee members, terms of service, responsibilities, conference rules, and resources that the Company is bound to provide to assist committees with their duties.

Article 20: The Company shall comply with the Company Act and implement fair, just and open procedures for the election of its directors.

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If the board loses more than one-third of its directors, the Company shall convene an extraordinary shareholder meeting within 60 days to elect new directors for the shortfall.

• Article 21: Responsibilities of the board of directors are as follows:

• (1) Review and approve the Company’s organization policy and Articles of Incorporation.

• (2) Outline business strategies.

• (3) Approve acquisition, construction and disposal of real estate properties.

• (4) Review and approve budgets and year-end account closure.

• (5) Appointment and dismissal of key personnel.

• (6) Approve proposals raised by the Chairman and the President.

• (7) Establish, amend and abolish major contracts.

• (8) Propose earnings appropriation or loss reimbursement plan.

• (9) Propose capital increment and reduction plan.

• (10) Perform duties outlined in Article 14-3 of the Securities and Exchange Act and related laws, and exercise authorities vested by shareholders.

(11) Approval of functional committee foundation rules.

For any decisions that need to be resolved through a board meeting under Article 14-3 of the Securities and Exchange Act, the independent directors must be involved either by attending the meetings personally or by appointing other independent directors as proxy attendants. All objections and qualified opinions expressed by independent directors must be detailed in the board of directors meeting minutes. If the independent director is unable to express objections or qualified opinions in person during the board of directors meeting, the opinion shall be expressed in writing in advance and recorded in the board of directors meeting minutes unless there is justifiable reason not to do so.

• Article 22: Board of directors meetings are convened once per quarter, and may be held under shorter notices in the event of an emergency or at the request of more than half of board members. The Chairman servers as the convener and shall chair the meeting in either cases. If the Chairman is unable to fulfill duties due to leave of absence or any other reason, a person of acting duty shall be appointed according to Article 208 of the Company Act.

Meeting advices may be served in various forms such as written correspondence, fax or email.

Article 23: Unless otherwise regulated by the Company Act, the board’s resolutions shall be passed only if more than half of total board members are present in a meeting, and with more than half of attending directors voting in favor. If a board meeting is convened by way of video conference, those who participate in the meeting using video conferencing are considered to have attended the meeting in person. Directors who are unable to attend meetings personally may seek proxy attendance by another director in manners compliant with law.

Article 24: President, Vice Presidents and other senior officers may be invited to participate in

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board meetings if necessary, but they are not entitled to vote.

• Article 25: The board of directors is authorized to determine the level of remuneration for the Chairman, directors (including independent directors) and supervisors based on individual participation and contribution to the Company’s operations, and in reference to industry peers.

Chapter Six Audit Committee

• Article 26: The Company shall assemble an Audit Committee in accordance with Article 14-4 of the Securities and Exchange Act. The Audit Committee is responsible for carrying out duties of the supervisor, as specified in the Company Act, Securities and Exchange Act and other relevant regulations.

• Article 27: The committee shall consist entirely of independent directors with no less than 3 members. One among whom will serve as the convener, and at least one member shall possess accounting or finance expertise.

• The Committee’s resolutions are made with the support of more than half of all committee members.

• Establishment of Audit Committee shall take effect after the 18th supervisors have served their term or agreed to full dismissal.

Chapter Seven Managers

• Article 28: The Company shall have one president and unrestricted number of vice presidents, assistant vice presidents and managers. The President oversees all affairs of the Company under the instruction of the Chairman. Responsibilities of vice presidents, assistant vice presidents and managers are to assist the President. Appointment, dismissal and remuneration of the President, vice presidents, assistant vice presidents, and managers shall comply with Article 29 of the Company Act.

• Article 29: Apart from the authorities vested to shareholders and board of directors by laws and the Articles of Incorporation, managers, too, may represent the Company in business activities to the extent deemed necessary. The scope of delegated authority is subject to compliance with the Company’s policies.

Chapter Eight Accounting

• Article 30: The Company’s accounting period begins on January 1 and ends on December 31 each year. The board of directors is responsible for preparing the following statements and reports at the end of each financial year. These statements and reports shall be submitted to the Audit Committee for review at least 30 days before the AGM, and presented during the AGM for the final acknowledgment.

• (1) Business report.

• (2) Financial statements.

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		(3) Earnings appropriation or loss reimbursement proposals.
Article	31:	Annual profits concluded by the Company are subject to employee remuneration of
		at least 1%, which the board of directors may decide to distribute in cash or in shares.
		Employees who meet certain criteria are entitled to receive remuneration. Up to 0.6%
		of the aforementioned profit may be distributed as directors’ remuneration at the
		discretion of the board of directors. Employee and director remuneration proposals
		are to be raised for resolution during shareholder meetings.
		Profits must first be taken to offset against cumulative losses, if any, before the
		remainder can be distributed as employee/director remuneration in the above
		percentages.
		Annual surpluses concluded by the Company are first subject to taxation and
		reimbursement of previous losses, followed by a 20% provision or reversal of special
		reserve as required by the authority. The Company may retain an appropriate amount
		of earnings before distributing the remainder to shareholders as dividends.
Article	32:	The Company’s dividend decisions involve several factors including the current
		business environment and growth stage, its future capital requirements and long-term
		financial plan, and shareholders’ needs for cash flow. When distributing dividends,
		the cash dividends shall be amounting to no lesser than 10% of total dividends.
		Chapter Nine Additional Rules
Article	33:	Organization rules, practical rules and other policies of the Company and branches
		shall be established separately.
Article	34:	Any matters that are not addressed in the Articles of Incorporation shall be governed
		by the Company Act and relevant regulations.
Article	35:	The Articles of Incorporation was established on August 18, 1962; the 1st
		amendment was made on April 29, 1967; the 2nd amendment was made on April 12,
		1969; the 3rd amendment was made on March 28, 1970; the 4th amendment was
		made on March 21, 1971; the 5th amendment was made on April 20, 1974; the 6th
		amendment was made on May 22, 1976; the 7th amendment was made on June 11,
		1977; the 8th amendment was made on June 17, 1978; the 9th amendment was made
		on June 2, 1979; the 10th amendment was made on May 28, 1981; the 11th
		amendment was made on June 18, 1982; the 12th amendment was made on June 29,
		1985; the 13th amendment was made on June 23, 1990; the 14th amendment was
		made on June 21, 1991; the 15th amendment was made on June 23, 1992; the 16th
		amendment was made on May 27, 1993; the 17th amendment was made on May 25,
		1994; the 18th amendment was made on May 25, 1995; the 19th amendment was
		made on May 29, 1996; the 20th amendment was made on May 29, 1997; the 21st
		amendment was made on May 29, 1998; the 22nd amendment was made on May 28,
		1999; the 23rd amendment was made on May 10, 2000; the 24th amendment was
		made on May 25, 2001; the 25th amendment was made on May 30, 2002; the 26th
		amendment was made on May 30, 2003; the 27th amendment was made on May 27,
		2004; the 28th amendment was made on May 26, 2005; the 29th amendment was
		made on June 9, 2006; the 30th amendment was made on June 15, 2007; the 31st

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amendment was made on June 13, 2008; the 32nd amendment was made on June 25, 2010; the 33rd amendment was made on June 28, 2012; 34th amendment was made on June 26, 2015; and the 35th amendment was made on June 24, 2016. All clauses concerning supervisors in the Articles of Incorporation shall be removed from the date the Audit Committee is assembled.

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Directors’ shareholding position as recorded in the shareholder registry on April 25, 2020 (the book closure date)

Occupational title	Name	Elected Date	Tenure	Shareholding when elected	Shareholding when elected	Shareholding position as at the book closure date	Shareholding position as at the book closure date
				Shares		Shares
Chairman	Yi Chi Co., Ltd. Representative: Cheng-Han Lee	June 27, 2019	3 years	4,928,750	1.64%	4,928,750	1.64%
Director	Chien Yi Industrial Co., Ltd. Representative: Cheng-TsungLee	June 27, 2019	3 years	7,335,189	2.44%	7,335,189	2.44%
Director	Cheng-Tu Lee	June 27,2019	3years	3,296,991	1.09%	3,296,991	1.09%
Director	Edward Y. C. Lee	June 27, 2019	3 years	2,807,896	0.93%	2,807,896	0.93%
Director	Shao-YingLee	June 27,2019	3years	195,104	0.06%	195,104	0.06%
Director	Chimax Development Company Representative: Chi-Chen Tu	June 27, 2019	3 years	1,357,389	0.45%	1,357,389	0.45%
Director	David Huang	June 27,2019	3years	828,518	0.28%	828,518	0.28%
Director	Cheng-Chin Lee	June 27,2019	3years	347,000	0.12%	347,000	0.12%
Director	Chien Cheng Development Co., Ltd. Representative: Tien-ChingYang	June 27, 2019	3 years	18,806,192	6.24%	18,806,192	6.24%
Director	OSTA Trading Co., Ltd. Representative: Chien-Yi Hsu	June 27, 2019	3 years	15,823,085	5.25%	15,823,085	5.25%
Independent Director	Jui-Tung Lu	June 27, 2019	3 years	0	0%	0	0%
Independent Director	Jui-Chou Lin	June 27, 2019	3 years	0	0%	0	0%
Independent Director	Lin, Shiu-Mei	June 27, 2019	3 years	0	0%	0	0%

The Company has a paid-up capital of NT$3,011,637,840 (301,163,784 shares)

☆ Board of directors’ minimum required shareholding: 5.00%; 15,058,189 shares

★ Based on shareholder registry as at the book closure date Board of directors’ total shareholding: 18.5%; 55,726,114 shares

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