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H.C. — AGM Information 2026
Apr 21, 2026
51789_rns_2026-04-21_83bec22f-6e15-49c6-b761-2589ed214fcd.pdf
AGM Information
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Stock code: 1413
Hung Chou Fiber Industrial Co., Ltd.
2026 Annual Shareholders' Meeting Meeting Agenda
Date of meeting: May 22, 2026 (Wednesday), at 9:00 a.m.
Place of meeting: No. 29, Hongzhou St., Guishan Dist., Taoyuan City
(subsidiary: Hung Chou Factory)
Table of Contents
Meeting Proceeding... 1
Meeting Agenda... 2
Management presentation... 3
Acknowledgments... 4
Discussions... 6
Attachments:
- Audit Committee’s Review Report... 7
- Directors’ Remuneration Report... 8
- 2025 business report... 10
- 2025 independent auditor’s report and financial statements... 14
- Comparison Table for Procedures for Acquisition or Disposal of Assets... 24
Appendices:
- Articles of Incorporation... 28
- Shareholders Conference Rules... 35
- Directors’ shareholding position... 43
- Other remarks... 44
1
Hung Chou Fiber Industrial Co., Ltd.
2026Annual General Meeting Proceeding
- Call the Meeting to Order
- Chairperson Takes Chair
- Chairman's opening remarks
- Management presentation
- Acknowledgments
- Extraordinary motion
- Adjournment
Hung Chou Fiber Industrial Co., Ltd.
2026 Annual General Meeting Agenda
Form of meeting: Physical shareholder meeting
Time: 9am, May 22 (Wednesday), 2026
Venue: No. 29, Hongzhou Street, Guishan District, Taoyuan City
-
Management presentation:
(1) Presentation of 2025 business performance.
(2) 2025 Annual final accounting books and statements audited by audit committee
(3) 2025 Employees 'and Directors 'Remuneration Allocation Report -
Acknowledgments:
(1) 2025 business report and financial statements.
(2) 2025 loss reimbursement proposal. -
Discussion:
(1) Amendment to the "Procedures for Acquisition or Disposal of Assets". -
Extraordinary motions
-
Adjournment
2
Management Presentation (Company Reports)
-
The 2025 business performance report is hereby presented for review.
Details: Business report (please see pages 10-13 of this handbook) -
Audit Committee’s review of the 2025 year-end report is hereby presented for review.
Details: Audit Committee’s review report (please see page 7 of this handbook) -
2025 Employees’ and Directors’ Remuneration Allocation Report is hereby presented for review (please see page 8 of this handbook)
Explanation:
(1) The company’s director remuneration policy, standards, and structure are positively correlated with business performance and future risks. The relationship between the remuneration amount and factors such as responsibilities, risks, and time commitment is outlined as follows:
The remuneration of the company’s directors is determined by the Board of Directors, as authorized by the Articles of Incorporation, based on their level of participation in operations, contribution value, and reference to domestic industry standards.
The distribution of directors’ remuneration is handled in accordance with Article 27 of the company’s Articles of Incorporation.
The company periodically evaluates and reviews directors’ responsibilities, risks, time commitment, and other factors in accordance with the Board Performance Evaluation Policy. The review of the overall remuneration policy, payment standards, and system primarily considers the company’s overall operational condition. Payment standards are determined based on business performance and contribution to enhance the overall effectiveness of the Board and the management team.
(2) For details of individual director remuneration, please refer to Appendix II (see pages 8-9 of this handbook).
3
Acknowledgments
Motion 1
Proposed by the board of directors
Summary: The 2025 business report and financial statements are hereby presented for acknowledgment.
Details:
1. The Company's 2025 financial statements have been audited by CPA Chun-Ming Pan and CPA Shu-Ying Chang of KPMG, for which they issued an independent auditor's report with unqualified opinion.
2. Please Attachments 3 and 4 in pages 10-23 of this handbook for the business report and financial statements.
3. The motion is open for acknowledgment.
Resolution:
Motion 2
Proposed by the board of directors
Summary: The 2025 deficit compensation proposal is hereby presented for acknowledgment.
Details: 1. Refer to the 2025 Deficit Compensation Report attached afterwards:
Hung Chou Fiber Industrial Co., Ltd.
Deficit Compensation Report
2025
Unit: NTD$
| Item | |
|---|---|
| Opening losses pending reimbursement | (240,035,343) |
| Current net income | 59,924,693 |
| Deficit yet to be compensated – at the end of 2025 | (180,110,650) |
- The motion is open for acknowledgment.
Resolution:
Discussion
Motion 1
Proposed by: Board of Directors
Summary: Amendment to the "Procedures for Acquisition or Disposal of Assets", submitted for discussion.
Explanation:
1. In accordance with Order No. Jin-Guan-Zheng-Fa-Zi-1140383333 issued by the Financial Supervisory Commission (FSC), the Company proposes to amend certain provisions of its 'Procedures for Acquisition or Disposal of Assets'.
2. Please refer to Appendix V for the comparison table of the Articles of Incorporation before and after the amendments (see pages 24–27 of this handbook).
Resolution:
Attachment 1
Audit Committee's Review Report
The board of directors has resolved the Company's 2025 standalone financial statements, business report, and deficit compensation proposal. The standalone financial statements have been audited by CPA Chun-Ming Pan and CPA Shu-Ying Chang of KPMG, for which they issued an independent auditor's report with unqualified opinion.
The Audit Committee completed its review of the above standalone financial statements, business report, and deficit compensation proposal and found no misstatement, and hereby issues its report as presented above in accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of The Company Act
The report is hereby presented for approval.
For
2026 Annual General Meeting of Hung Chou Fiber Industrial Co., Ltd.
Hung Chou Fiber Industrial Co., Ltd.
Audit Committee convener: Shou-Po Chao
March 2, 2026
Attachment 2
Directors' Remuneration Report
| Position | Name | Directors' compensation | Sum of A, B, C and D as a percentage of net income (Note 10) | Compensation received as employee | The sum of A, B, C, D, E, F and G as a percentage of net income (%) (Note 10) | Compensation from parent company or business investments other than subsidiaries (Note 11) |
|---|---|---|---|---|---|---|
| Benefits (A) (Note 2) | Severance pay and pension (B) | Director remuneration (C)(Note 3) | Fees for services rendered (D) (Note 4) | Salaries, bonuses, special allowances etc. (E) (Note 5) | Severance pay and pension (F) | Employee remuneration (G) (Note 6) |
| The Company | All companies included in the financial statements (Note 7) | The Company | All companies included in the financial statements (Note 7) | The Company | All companies included in the financial statements (Note 7) | The Company |
| Director | Cheng-Tien Chan | - | - | - | - | - |
| Director | Representative of Yi Jinn Industrial -Yu-Ching Cheng | - | - | - | - | - |
| Director | Representative of Yi Jinn Industrial -Yi-Ching Chan | - | - | - | - | - |
| Director | Representative of Yi Jinn Industrial -G.L. Lin | - | - | - | - | - |
| Director | Representative of Yi Jinn Industrial -Heng-Chia Chang | - | - | - | - | - |
| Director | Representative of Yi Jinn Industrial -Tse-Hua Lin | - | - | - | - | - |
| Director | Representative of Yi Jinn Industrial -Shang Yu Hsiao | - | - | - | - | - |
| Director | Lin-Te Chen | |||||
| Director | Representative of Bowa International Leasing - Kuan-Ru Chen |
| Position | Name | Directors' compensation | Sum of A, B, C and D as a percentage of net income (Note 10) | Compensation received as employee | The sum of A, B, C, D, E, F and G as a percentage of net income (%) (Note 10) | Compensation from parent company or business investments other than subsidiaries (Note 11) |
|---|---|---|---|---|---|---|
| Benefits (A) (Note 2) | Severance pay and pension (B) | Director remuneration (C)(Note 3) | Fees for services rendered (D) (Note 4) | Salaries, bonuses, special allowances etc. (E) (Note 5) | Severance pay and pension (F) | Employee remuneration (G) (Note 6) |
| The Company | All companies included in the financial statements (Note 7) | The Company | All companies included in the financial statements (Note 7) | The Company | All companies included in the financial statements (Note 7) | The Company |
| Independent director | Shou-Po Chao | |||||
| Independent director | Wei-Chi Huang | |||||
| Independent director | Hsien-Chang Kuo | |||||
| Independent director | Chen,Yi-Min | |||||
| * 1. Please explain the policy, system, standards, and structure by which independent director compensation is paid, and association between the amount paid and independent directors' responsibilities, risks and time committed: 2. Compensation received by director for providing service to any company included in the financial statements (e.g. consultancy service without the title of an employee) in the last year, except those disclosed in the above table: None. 3 Upon the re-election on May 28, 2025, the number of directors was reduced from 12 to 9 (including 4 independent directors). |
Attachment 3
2024 Business Report of Hung Chou Fiber Industrial Co., Ltd.
I. 2025 Business Results:
In 2025, Taiwan's chemical fiber industry faced dual challenges from global geopolitics—such as U.S. tariff policies—and overcapacity in China. Consequently, industry performance showed a significant divergence: profits for traditional bulk products remained under pressure, while green sustainability and high-end materials (such as carbon fiber) demonstrated robust growth.
According to the Manufacturing Sector Climate Survey by the Taiwan Institute of Economic Research (TIER), the mid-to-upstream textile segments continued to struggle with China's persistent oversupply, which is unlikely to ease in the short term. This led to widening year-on-year declines in export and production indices, weighing down both raw material input and demand-side performance. Nevertheless, through the Group's vertical integration and stringent cost control, the Company maintained a relatively stable performance in 2025, successfully turning a profit (shifting from loss to gain) in our comprehensive income.
Strategic Realignment and Product Innovation
In response to current industry trends and to strengthen our competitive advantage, the Company has undertaken a comprehensive review and restructuring of existing product lines. Our goal is to develop a "small-volume, large-variety" production model while investing in the development of differentiated new products to enhance gross margins.
Furthermore, to ensure long-term sustainable development, we have procured eco-friendly rPET chips for the production of recycled yarn, and polyester masterbatches for the R&D of dope-dyed yarns. These initiatives increase yarn diversity and color richness, better meeting environmental standards and customer demands while enriching our overall product portfolio. By gradually increasing the proportion of niche products, we aim to broaden product applications, expand our customer base, and mitigate seasonal fluctuations, thereby further improving profitability.
Green Supply Chain and Asset Optimization
Global apparel brands have identified "Sustainability and Functionality" as the core criteria for textile supply chain selection and new consumer trends. Consequently, energy saving and carbon reduction have become top priorities within the textile industry. Both suppliers and brand owners are actively establishing green supply chains that integrate eco-friendliness with functional performance.
To meet customer needs and secure orders, the Company has been dedicated in recent years to strengthening highly differentiated niche products to maintain a competitive position in the international supply chain. Additionally, we continue to optimize asset utilization by leasing out idle factory space and land to generate a steady and consistent stream of income.
(1) Results of Business Plan Implementation
In 2024, the Company recorded operating revenue of NT$2,118,976 thousand, operating costs of NT$2,007,039 thousand, gross profit of NT$111,937 thousand, operating expenses of NT$46,927 thousand, and a net operating income of NT$65,010 thousand. The total comprehensive income for the year was NT$59,925 thousand.
(2) Budget Execution Status
In 2025, the Company set internal budget targets but did not publicly disclose financial forecasts.
(3) Financial Performance and Profitability Analysis
| Item | 2025 | 2024 |
|---|---|---|
| Financial Performance | ||
| Operating Revenue | NT$2,118,976 | NT$2,342,732 |
| Operating Costs | NT$2,007,039 | NT$2,298,594 |
| Net Profit (Loss) Before Tax | NT$71,368 | (NT$22,645) |
| Comprehensive Income (Loss) | NT$59,925 | (NT$22,788) |
| Profitability | ||
| Return on Assets (%) | 2.86 | -0.33 |
| Return on Equity (%) | 5.44 | -2.10 |
| Pre-Tax Profit to Paid-In Capital Ratio (%) | 5.40 | -1.98 |
| Net Profit Margin (%) | 2.83 | -0.99 |
| Earnings Per Share (NT$) | 0.45 | -0.17 |
(4) Research and Development Status
| Yarn Type | Composition | Applications | Characteristics |
|---|---|---|---|
| 37.5 Technology Fiber | Volcanic rock (activated carbon) | Professional sportswear and athleisure | Utilizing the natural porosity of volcanic rock, the fiber absorbs moisture continuously evaporated from the skin. Simultaneously, it captures the body's natural infrared energy to heat the particles and accelerate evaporation. This process ensures the skin remains dry more quickly while helping to store energy and maintain a constant body temperature. |
| Eco-Friendly Yarn | Recycled polyester chemical fiber products, reused in a circular process | Various apparel fabrics and industrial fabrics | Resource recycling |
| Graphene Fiber | Raw materials with uniformly dispersed graphene processed into fiber masterbatches and spun into yarn | Smart clothing and wearable device applications | Anti-static: Graphene's conductivity reduces fabric surface resistivity. Its lubricated surface lowers the friction coefficient, suppressing and reducing static electricity to prevent skin irritation. Excellent thermal conductivity: Graphene textile materials act as a filter between the body, external environment, and clothing, ensuring the wearer maintains an ideal temperature. |
II. Outline of the 2026 Business Plan
(1) Business Strategy
In recent years, Taiwan's textile industry has developed two key strengths—functional fashion and environmental sustainability—laying a foundation for growth and expanding into international markets. "Environmental sustainability" has become a critical niche for Taiwan's man-made fiber industry. In response to environmental protection and corporate social responsibility, the man-made fiber industry has pursued development in bio-based materials, recycling, low-carbon processes, eco-friendly practices, and biodegradable materials. The Company has spared no effort in developing "sustainable and eco-friendly" products.
To maintain stable profitability and seize opportunities for survival and growth in 2025, the Company will continue to develop differentiated products, focusing on the stable production of eco-friendly fibers, 37.5 technology fibers, and graphene fibers. Additionally, the Company will adjust its operational scale, revitalize assets, integrate production lines to reduce electricity costs, adopt low-carbon energy sources, and increase the use of renewable energy. These efforts aim to secure a competitive position in the restructuring of the global textile supply chain.
(2) Projected Sales Volume and Basis
Based on the Company's equipment capacity and market demand, the projected sales volume for 2026 is approximately 15,600 tons of polyester pellets and 43,360 tons of polyester yarn.
(3) Key Production and Sales Policies
- Close collaboration among marketing, production, R&D, and after-sales service.
- Responding to the strengthening of global environmental awareness and the trends of renewable energy and net-zero emissions.
- Enhancing product diversity and quality while strengthening process improvements and machinery upgrades to accommodate structural adjustments and the need for flexible production.
- Maintaining quality stability and continuous improvement through daily management of anomaly handling and performance tracking, while reinforcing complaint analysis and the effectiveness of corrective measures to establish management accountability across all levels.
- Adjusting production schedules based on market conditions, managing raw yarn (POY/FDY) capacity, and controlling production costs.
- Actively utilizing idle funds to invest in real estate with stable returns (rental income) to enhance non-operating income.
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III. Future Development Strategy and Impact of External Competitive Environment, Regulatory Environment, and Overall Business Environment
-
Global Supply Chain Competition and Cost Pressure
The chemical fiber industry is highly competitive within traditional manufacturing. The Company faces low-cost competition from China and Southeast Asian countries (e.g., Vietnam, Indonesia), which benefit from lower labor and energy costs, creating price pressure for Taiwan's chemical fiber enterprises. Additionally, recent volatility in raw material prices (e.g., petrochemicals) poses significant cost control challenges for chemical fiber companies reliant on petroleum derivatives. -
Environmental Regulations and Sustainability Requirements
Taiwan's government and international markets are imposing increasingly stringent environmental sustainability requirements, such as carbon reduction targets and green manufacturing standards. The chemical fiber industry, due to its reliance on petrochemical raw materials and energy-intensive processes, is often viewed as high-pollution. The Company may need to invest in equipment upgrades, adopt low-carbon technologies, or develop eco-friendly fiber products to comply with regulations and meet customer demands for sustainable products, increasing capital expenditure pressure. -
Demand Fluctuations and Downstream Industry Transformation
Chemical fiber products are primarily used in the textile and apparel industries, but rapid changes in the global fast fashion sector and shifting consumer trends (e.g., reduced consumption of disposable clothing) may lead to unstable demand. Additionally, some downstream customers are shifting to natural fibers or emerging alternative materials, posing a potential threat to traditional chemical fiber products. The Company must flexibly adjust its product structure to adapt to market changes. -
Uncertainty in the International Trade Environment
Taiwan's chemical fiber industry is heavily export-dependent. However, U.S.-China trade tensions, tariff barriers, and geopolitical uncertainties may impact export orders. Additionally, regional trade agreements (e.g., RCEP) could place the Company at a competitive disadvantage. -
Technological Upgrades and Innovation Pressure
As demand for functional fibers grows, the Company must continue investing in R&D to enhance product value. However, compared to international giants or emerging tech companies, the Company may face limitations in funding and technical resources, making it challenging to keep pace with rapid industry upgrades.
The Company faces multifaceted challenges in the chemical fiber industry, including cost competition, environmental regulations, demand fluctuations, trade risks, and technological innovation pressures. These challenges are not unique to the Company but reflect the broader context of Taiwan's chemical fiber industry amid globalization and the transition to sustainability. To maintain competitiveness, the Company is committed to addressing these challenges by enhancing product differentiation, optimizing production efficiency, and exploring new markets.
Chairman: Cheng-Tien Chan
General Manager: Shang Yu Hsiao
Attachment 4
Independent Auditor's Report
Independent Auditor's Report
To the board of directors of Hung Chou Fiber Industrial Co., Ltd.:
Audit opinion
We have audited the standalone balance sheet of Hung Chou Fiber Industrial Co., Ltd. as at December 31, 2025 and 2024, and the standalone statement of comprehensive income, statement of changes in equity, cash flow statement, and the accompanying footnotes (including summary of key accounting policies) for the periods January 1 to December 31, 2025 and 2024.
In our opinion, all material disclosures of the standalone financial statements mentioned above were prepared in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and the version of International Financial Reporting Standards, International Accounting Standards and interpretations thereof approved and published by the Financial Supervisory Commission, and presented a fair view of the financial position of Hung Chou Fiber Industrial Co., Ltd. as at December 31, 2025 and 2024 and business performance and cash flow for the periods January 1 to December 31, 2025 and 2024
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 for the standalone financial statements under the abovementioned standards are explained in the Responsibilities paragraph. All relevant personnel of the accounting firm have followed CPA code of ethics and maintained independence from Hung Chou Fiber Industrial 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 2025 standalone financial statements of Hung Chou Fiber Industrial 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. Below are the key audit issues that we consider relevant for disclosure in this audit report:
- Revenue recognition
Accounting policies relating to revenue recognition have been disclosed in Note 4(13) - Revenue recognition of the standalone financial statements; for details on
recognized revenues, please refer to Note 6(15) - Revenue from contracts with customers of the standalone financial statements.
Explanation of key audit issues:
Hung Chou Fiber Industrial Co., Ltd. generates revenues mainly from sale of polyester filament, and the risks associated with revenue recognition lies in the authenticity of the underlying transactions. Due to the fact that operating revenues are highly susceptible to changes in the economy, we have identified revenue recognition test as one of the key assessments when auditing the financial statements of Hung Chou Fiber Industrial Co., Ltd.
Audit procedures:
The primary audit procedures taken to address the above key audit matters included: testing the sales and collection cycle as well as relevant controls; verifying and reconciling sales system data against customers' contracts, external certificates, and general journal entries; and evaluating whether the revenue recognition policy of Hung Chou Fiber Industrial Co., Ltd. conforms with accounting standards.
- Inventory valuation
For accounting policies on inventory valuation, please refer to Note 4(7) - Inventory of the standalone financial statements; for detailed disclosure on inventory valuation, please refer to Note 6(4) - Inventory of the standalone financial statements.
Explanation of key audit issues:
Fluctuations in the international price of raw materials combined with changes in supply and demand may give rise to significant volatility with regards to the selling price and sales volume of the inventory held by Hung Chou Fiber Industrial Co., Ltd., causing the cost of inventory to exceed net realizable value in some circumstances. For this reason, inventory impairment test was identified as one of our key assessments when auditing the financial statements of Hung Chou Fiber Industrial Co., Ltd.
Audit procedures:
The primary audit procedures taken to address the above key audit matters included: learning the management's inventory management and valuation policies, and assessing whether inventory management and valuation were duly performed according to policies. We have conducted random checks to determine the rationality of net realizable values adopted by the management, to test the correctness of the inventory aging reports prepared, and to evaluate the adequacy of inventory loss provisions that Hung Chou Fiber Industrial Co., Ltd. had made as at the reporting date.
Responsibilities of the management and governance body to the standalone financial statements
Responsibilities of the management were to prepare and ensure fair presentation of standalone financial statements in accordance with "Regulations Governing the Preparation
15
of Financial Reports by Securities Issuers" and the version of IFRS, IAS, IFRIC and interpretations thereof approved and effected by the Financial Supervisory Commission, and to exercise proper internal control practices that are relevant to the preparation of standalone financial statements so that the standalone financial statements are free of material misstatements, whether caused by fraud or error.
The management's responsibilities when preparing standalone financial statements also involved: assessing the ability of Hung Chou Fiber Industrial 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 governance body of Hung Chou Fiber Industrial Co., Ltd. (including supervisors) is responsible for supervising the financial reporting process.
Responsibilities of the auditor when auditing standalone financial statements
The purposes of our audit were to obtain reasonable assurance of whether the standalone financial statements were prone to material misstatements, whether due to fraud or error, and to 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 standalone financial statements. Misstatements can arise from fraud or error. Misstatements are considered material if the individual amount or aggregate total is reasonably expected to affect economic decisions of the standalone financial statement user.
When conducting audits in accordance with generally accepted auditing principles, we exercised judgments and raised doubts as deemed professionally appropriate. We also performed the following tasks as an auditor:
- Identifying and assessing risks of material misstatement due to fraud or error; designing and executing appropriate response 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.
- 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 Hung Chou Fiber Industrial Co., Ltd.
- Assessing the appropriateness of accounting policies adopted by the management, and the rationality of accounting estimates and related disclosures made.
- Forming conclusions regarding the appropriateness of management's decision to account
16
for the business as a going concern, and whether there are doubts or uncertainties about the ability of Hung Chou Fiber Industrial 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 on the audit evidence obtained up to the date of audit report. However, future events or change of circumstances may still render Hung Chou Fiber Industrial Co., Ltd. no longer capable of operating as a going concern.
-
Assessing the overall presentation, structure, and contents of the standalone financial statements (including related footnotes), and whether certain transactions and events are presented appropriately in the standalone financial statements.
-
Obtaining sufficient and appropriate audit evidence on financial information of equity-accounted investments held by the Company, and expressing opinions on standalone financial statements. Our responsibilities as auditor are to instruct, supervise, and execute audits and form audit opinions on Hung Chou Fiber Industrial Co., Ltd.
We have communicated with the governance body about the scope, timing, and significant findings (including significant defects identified in internal control) of our audit.
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 2025 standalone financial statements of Hung Chou Fiber Industrial 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 decide not to communicate in the audit report because of higher negative impacts they may cause than the benefits they bring to public interest.
KPMG
CPA: Jun-Ming Pan
Shu-Ying Chang
Approval reference of the : Jin-Guan-Zheng-Shen-1110333933 securities authority Jin-Guan-Zheng-VI-0940100754 March 2, 2026
Hung Chou Fiber Industrial Co., Ltd.
Balance sheet
As at December 31, 2025 and 2024
Unit: NTD thousands
| Asset | December 31, 2025 | December 31, 2024 | |||
|---|---|---|---|---|---|
| Amount | % | Amount | % | ||
| Current assets: | |||||
| 1100 | Cash and cash equivalents (Note 6(1)) | $ 53,608 | 2 | 49,831 | 2 |
| 1110 | Financial Assets Measured at Fair Value Through Profit or Loss - Current (Note 6(18)) | 192,455 | 7 | 57,400 | 2 |
| 1120 | Financial assets at fair value through other comprehensive income - current (Note 6(2)) | 3 | - | 3 | - |
| 1150 | Notes receivable - net (Notes 6(3) and (15)) | 10,867 | - | 45,235 | 2 |
| 1160 | Notes receivable - related parties, net (Notes 6(3) and (15) and 7) | 67,573 | 2 | 57,306 | 2 |
| 1170 | Accounts receivable, net (Notes 6(3) and (15)) | 37,182 | 1 | 33,604 | 1 |
| 1180 | Accounts receivable - related parties, net (Notes 6(3) and (15) and 7) | 3,863 | - | - | - |
| 1200 | Other receivables | 3,328 | - | 242 | - |
| 1210 | Other receivables - related parties (Note 7) | 15,566 | 1 | 13,411 | 1 |
| 130X | Inventory (Note 6(4)) | 533,296 | 20 | 500,653 | 20 |
| 1410 | Prepayments (Note 9(3)) | 15,290 | 1 | 6,034 | - |
| 1479 | Other current assets - others | 850 | - | 760 | - |
| 933,881 | 34 | 764,479 | 30 | ||
| Non-current assets: | |||||
| 1517 | Financial assets at fair value through other comprehensive income - non-current (Note 6(2)) | 3,147 | - | 3,147 | - |
| 1550 | Equity-accounted investments (Note 6(5)) | 68,093 | 2 | 69,743 | 3 |
| 1600 | Property, plant and equipment (Notes 6(6), 8, and 9(3)) | 1,045,235 | 38 | 1,038,197 | 40 |
| 1760 | Investment property - net (Notes 6(7) and 8) | 648,596 | 25 | 655,857 | 26 |
| 1840 | Deferred income tax assets (Note 6(12)) | 26,673 | 1 | 36,000 | 1 |
| 1900 | Other non-current assets (Notes 6(3) and 9(3)) | 524 | - | 250 | - |
| 1,792,268 | 66 | 1,803,194 | 70 | ||
| Total assets | $ 2,726,149 | 100 | 2,567,673 | 100 |
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Hung Chou Fiber Industrial Co., Ltd.
Balance Sheet (continued)
As at December 31, 2025 and 2024
Unit: NTD thousands
| Liabilities and equity | December 31, 2025 | December 31, 2024 | |||
|---|---|---|---|---|---|
| Amount | % | Amount | % | ||
| Current liabilities: | |||||
| 2100 | Short-term borrowings (Note 6(8)) | $ 362,050 | 13 | 247,812 | 10 |
| 2130 | Contractual liabilities - current (Note 6(15)) | 29,954 | 1 | 37,237 | 1 |
| 2150 | Notes payable | 5,332 | - | 7,746 | - |
| 2170 | Accounts payable | 157,429 | 6 | 168,536 | 7 |
| 2180 | Accounts payable - related parties (Note 7) | 3,908 | - | 2,298 | - |
| 2200 | Other payables | 103,403 | 4 | 60,864 | 2 |
| 2220 | Other payables - related parties (Note 7) | 290 | - | 236 | - |
| 2230 | Current income tax liabilities | 2,259 | - | - | - |
| 2320 | Long-term liabilities due within 1 year or 1 business cycle (Note 6(9)) | 64,528 | 2 | 42,028 | 2 |
| 2399 | Other current liabilities - others | 4,796 | - | 3,970 | - |
| 733,949 | 26 | 570,727 | 22 | ||
| Non-current liabilities: | |||||
| 2540 | Long-term borrowings (Note 6(9)) | 636,360 | 24 | 700,888 | 27 |
| 2570 | Deferred income tax liabilities (Note 6(12)) | 223,530 | 8 | 223,673 | 9 |
| 859,890 | 32 | 924,561 | 36 | ||
| Total liabilities | 1,593,839 | 58 | 1,495,288 | 58 | |
| Equity (Note 6(13)): | |||||
| 3100 | Share capital | 1,321,124 | 48 | 1,321,124 | 51 |
| 3350 | Losses pending reimbursement | (180,111) | (6) | (240,036) | (9) |
| 3400 | Other equity items | (8,703) | - | (8,703) | - |
| Total equity | 1,132,310 | 42 | 1,072,385 | 42 | |
| Total liabilities and equity | $ 2,726,149 | 100 | 2,567,673 | 100 |
(Please refer to the attached notes to financial statements)
Chairman: Cheng-Tien Chan
General Manager: Shang Yu Hsiao
Accountant Manager: Wallace Lin
Hung Chou Fiber Industrial Co., Ltd.
Statements of Comprehensive Income
For the periods January 1 to December 31, 2025 and 2024
Unit: NTD thousands
| 2025 | 2024 | ||||
|---|---|---|---|---|---|
| Amount | % | Amount | % | ||
| 4110 | Sales revenues (Notes 6(15) and 7) | $ 2,123,582 | 100 | 2,354,156 | 100 |
| 4170 | Less: sales return | 2,867 | - | 7,664 | - |
| 4190 | Sales discount | 1,739 | - | 3,760 | - |
| Net operating revenues | 2,118,976 | 100 | 2,342,732 | 100 | |
| 5110 | Cost of sale (Notes 6(4) and (11) and 7) | 2,007,039 | 95 | 2,298,594 | 98 |
| Gross profit (loss) | 111,937 | 5 | 44,138 | 2 | |
| 6000 | Operating expenses (Notes 6(11) and 7) | 46,927 | 2 | 49,379 | 2 |
| Net operating profit (loss) | 65,010 | 3 | (5,241) | - | |
| Non-operating income and expenses (Notes 6(17) and 7): | |||||
| 7100 | Interest income | 26 | - | 150 | - |
| 7010 | Other income | 9,133 | - | 1,254 | - |
| 7020 | Other gains and losses | 19,993 | 1 | 2,084 | - |
| 7050 | Financial costs | (21,144) | (1) | (19,727) | (1) |
| 7060 | Share of profit/loss from equity-accounted associated companies (Note 6(5)) | (1,650) | - | (1,165) | - |
| 6,358 | - | (17,404) | (1) | ||
| Profit (loss) before tax from continuing segments | 71,368 | 3 | (22,645) | (1) | |
| 7950 | Less: income tax expense (benefit) (Note 6(12)) | 11,443 | 1 | 143 | - |
| Current net income (loss) | 59,925 | 2 | (22,788) | (1) | |
| 8300 | Other comprehensive income for the current period (net, after-tax) | - | - | - | - |
| Total comprehensive income for the current period | $ 59,925 | 2 | (22,788) | (1) | |
| Earnings (losses) per share (NTD) (Note 6(14)) | |||||
| 9750 | Basic earnings (losses) per share | $ | 0.45 | (0.17) | |
| 9810 | Diluted earnings per share | $ | 0.45 | (0.17) |
(Please refer to the attached notes to financial statements)
Chairman: Cheng-Tien Chan
General Manager: Shang Yu Hsiao
Accountant Manager: Wallace Lin
Hung Chou Fiber Industrial Co., Ltd.
Statement of Changes in Equity
For the periods January 1 to December 31, 2025 and 2024
Unit: NTD thousands
| Common share capital | Losses pending reimbursement | Other equity items - unrealized gains (losses) on financial assets at fair value through other comprehensive income | Total equity | |
|---|---|---|---|---|
| Balance as at January 1, 2024 | $ 1,321,124 | (217,248) | (8,703) | 1,095,173 |
| Current net loss | - | (22,788) | - | (22,788) |
| Other comprehensive income for the current year | - | - | - | - |
| Total comprehensive income for the current period | - | (22,788) | - | (22,788) |
| Balance as at December 31, 2024 | 1,321,124 | (240,036) | (8,703) | 1,072,385 |
| Current net income | - | 59,925 | - | 59,925 |
| Other comprehensive income for the current year | - | - | - | - |
| Total comprehensive income for the current period | - | 59,925 | - | 59,925 |
| Balance as at December 31, 2025 | $ 1,321,124 | (180,111) | (8,703) | 1,132,310 |
(Please refer to the attached notes to financial statements)
Chairman: Cheng-Tien Chan
General Manager: Shang Yu Hsiao
Accountant Manager: Wallace Lin
21
Hung Chou Fiber Industrial Co., Ltd.
Cash Flow Statement
For the periods January 1 to December 31, 2025 and 2024
| Unit: NTD thousands | ||
|---|---|---|
| 2025 | 2024 | |
| Cash flow from operating activities: | ||
| Pre-tax profit (loss) for the current period | $ 71,368 | (22,645) |
| Adjustments: | ||
| Income, expenses, and losses | ||
| Depreciation expenses | 46,521 | 64,569 |
| Net gain on financial assets at fair value through profit or loss | (19,230) | (780) |
| Interest expenses | 21,144 | 19,727 |
| Interest income | (26) | (150) |
| Share of profit/loss from equity-accounted associated companies and joint ventures | 1,650 | 1,165 |
| Gain on disposal of property, plant, and equipment | (41) | (79) |
| Income, expenses, and losses | 50,018 | 84,452 |
| Change in assets and liabilities related to operating activities: | ||
| Net change in assets related to operating activities: | ||
| Financial assets mandatory to be carried at fair value through profit or loss | (115,825) | (55,619) |
| Notes receivable | 34,368 | 882 |
| Notes receivable - related parties | (10,267) | (20,687) |
| Accounts receivable | (3,578) | (15,411) |
| Accounts receivable - related parties | (3,863) | 2,779 |
| Other receivables | (3,100) | (217) |
| Other receivables - related parties | (2,155) | (4,440) |
| Inventory | (32,643) | (177,189) |
| Prepayments | (9,256) | (3,253) |
| Other current assets - others | (90) | - |
| Net change in assets related to operating activities | (146,409) | (273,155) |
| Net change in liabilities related to operating activities: | ||
| Notes payable | (2,414) | (5,430) |
| Accounts payable | (11,107) | 95,817 |
| Accounts payable - related parties | 1,610 | 2,298 |
| Other payables | 42,464 | 15,400 |
| Other payables - related parties | 54 | 236 |
| Contractual liabilities | (7,283) | 5,314 |
| Other current liabilities - others | 826 | 556 |
| Net change in liabilities related to operating activities | 24,150 | 114,191 |
| Net change in assets and liabilities related to operating activities | (122,259) | (158,964) |
| Total adjustments | (72,241) | (74,512) |
| Cash inflow (outflow) from operating activities | (873) | (97,157) |
| Interests received | 26 | 150 |
| Interests paid | (21,069) | (20,203) |
| Income tax paid | 14 | (8) |
| Net cash inflow (outflow) from operating activities | (21,902) | (117,218) |
Hung Chou Fiber Industrial Co., Ltd.
Cash Flow Statement (continued)
For the periods January 1 to December 31, 2023 and 2022
Unit: NTD thousands
Cash flow from investing activities:
Acquisition of property, plant and equipment (46,298) (28,331)
Disposal of property, plant and equipment 41 79
Other non-current assets (274) -
Net cash outflow from investing activities (46,531) (28,252)
Cash flow from financing activities:
(Decrease) increase in short-term borrowings 114,238 43,164
Borrowing of long-term loan - 450,000
Repayment of long-term borrowings (42,028) (360,778)
Net cash inflow (outflow) from financing activities 72,210 132,386
Increase in cash and cash equivalents for the current period 3,777 (13,084)
Opening cash and cash equivalents balance 49,831 62,915
Closing cash and cash equivalents balance $ 53,608 49,831
(Please refer to the attached notes to financial statements)
Chairman: Cheng-Tien Chan
General Manager: Shang Yu Hsiao
Accountant Manager: Wallace Lin
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Attachment 5
Hung Chou Fiber Industrial Co., Ltd..
Comparison Table for Procedures for Acquisition or Disposal of Assets
| Article No. | Original Text | Amended Text | Explanation |
|---|---|---|---|
| Article 12 | Public Disclosure and Reporting Procedures | ||
| I. For the acquisition or disposal of assets under any of the following circumstances, the Company shall, based on the nature of the assets and in the prescribed format, publicly disclose and report the relevant information on the designated website within two days from the date of occurrence of the event: | |||
| 1. Acquisition or disposal of real property or right-of-use assets from or to a related party; or acquisition or disposal of assets other than real property or right-of-use assets from or to a related party where the transaction amount reaches 20% of the Company's paid-in capital, 10% of total assets, or NT$300 million or more. This shall not apply to the trading of domestic government bonds, bonds under repurchase or resale agreements, or the subscription or redemption of money market funds issued by domestic securities investment trust enterprises. | |||
| 2. Merger, demerger, acquisition, or transfer of shares. | |||
| 3. Losses from derivatives trading reaching the maximum loss limit (either for all contracts or for individual contracts) as stipulated in the Company's Procedures. | |||
| 4. Acquisition or disposal of equipment or right-of-use assets thereof for business use, where the counterparty is not a related party and the transaction amount reaches NT$500 million or more. | |||
| 5. Acquisition of real property through a construction project on the Company's own land, a joint construction and house-splitting | Public Disclosure and Reporting Procedures | ||
| I. For the acquisition or disposal of assets under any of the following circumstances, the Company shall, based on the nature of the assets and in the prescribed format, publicly disclose and report the relevant information on the designated website within two days from the date of occurrence of the event: | |||
| 1. Acquisition or disposal of real property or right-of-use assets from or to a related party; or acquisition or disposal of assets other than real property or right-of-use assets from or to a related party where the transaction amount reaches 20% of the Company's paid-in capital, 10% of total assets, or NT$300 million or more. This shall not apply to the trading of domestic government bonds, bonds under repurchase or resale agreements, or the subscription or redemption of money market funds issued by domestic securities investment trust enterprises. | |||
| 2. Merger, demerger, acquisition, or transfer of shares. | |||
| 3. Losses from derivatives trading reaching the maximum loss limit (either for all contracts or for individual contracts) as stipulated in the Company's Procedures. | |||
| 4. Acquisition or disposal of equipment or right-of-use assets thereof for business use, where the counterparty is not a related party and the transaction amount meets one of the following requirements: | |||
| 1. When the company's paid-in capital does not reach NT$10 billion, the transaction amount reaches NT$500 million or more. | |||
| 2. When the paid-in capital of the company reaches NT$10 billion | Revised in accordance with the company's current situation |
| contract, a joint construction and profit-sharing contract, or a joint construction and sale-splitting contract, where the counterparty is not a related party and the estimated transaction amount reaches NT$500 million or more. | or more, the transaction amount reaches NT$1 billion or more. | |
|---|---|---|
| 6. Asset transactions other than those specified in items (1) to (5), disposal of receivables by a financial institution, or investments in the Mainland China area, where the transaction amount reaches 20% of the Company's paid-in capital or NT$300 million or more. However, the following cases are exempt: | 5. Acquisition of real property through a construction project on the Company's own land, a joint construction and house-splitting contract, a joint construction and profit-sharing contract, or a joint construction and sale-splitting contract, where the counterparty is not a related party and the estimated transaction amount reaches NT$500 million or more. | |
| Trading of domestic government bonds or foreign government bonds with a credit rating not lower than Taiwan's sovereign rating. | 6. Asset transactions other than those specified in items (1) to (5), disposal of receivables by a financial institution, or investments in the Mainland China area, where the transaction amount reaches 20% of the Company's paid-in capital or NT$300 million or more. However, the following cases are exempt: | |
| Trading of bonds under repurchase or resale agreements, or subscription/redemption of money market funds issued by domestic securities investment trust enterprises. | Trading of domestic government bonds or foreign government bonds with a credit rating not lower than Taiwan's sovereign rating. | |
| II. The transaction amounts referred to in the preceding paragraph shall be calculated as follows: | Trading of bonds under repurchase or resale agreements, or subscription/redemption of money market funds issued by domestic securities investment trust enterprises. | |
| 1. The amount of each individual transaction. | II. The transaction amounts referred to in the preceding paragraph shall be calculated as follows: | |
| 2. The cumulative transaction amount of acquisitions or disposals of the same type of underlying asset with the same counterparty within one year. | 1. The amount of each individual transaction. | |
| 3. The cumulative amount of acquisitions or disposals (calculated separately for acquisitions and disposals) of real property or right-of-use assets under the same development project within one year. | 2. The cumulative transaction amount of acquisitions or disposals of the same type of underlying asset with the same counterparty within one year. | |
| 4. The cumulative amount of acquisitions or disposals (calculated separately for acquisitions and disposals) of the same security within one year. | 3. The cumulative amount of acquisitions or disposals (calculated separately for acquisitions and disposals) of real property or right-of-use assets under the same development project within one year. |
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| III. The term "within one year" as used in Paragraph II refers to the one-year period immediately preceding the date of occurrence of the current transaction. Items already disclosed in accordance with these Procedures need not be re-included in the calculation. IV. Monthly Reporting: The Company shall enter the status of derivatives trading for itself and its subsidiaries that are not domestic public companies as of the end of the previous month into the designated website in the prescribed format by the 10th day of each month. V. Correction of Information: If there is any error or omission in an item required to be disclosed, the Company shall re-disclose and report all items within two days from the date it becomes aware of such error or omission. VI. Document Retention: The Company shall keep relevant contracts, meeting minutes, logbooks, appraisal reports, and opinions of CPAs, attorneys, or securities underwriters at the Company's premises. Unless otherwise provided by law, these documents shall be preserved for at least five years. VII. Subsequent Changes: If any of the following circumstances occur regarding a transaction already disclosed, a public disclosure and report of the relevant information shall be made on the designated website within two days from the date of occurrence of the event: 1. Change, termination, or rescission of the original contract signed for the transaction. 2. Failure to complete a merger, demerger, acquisition, or transfer of shares according to the scheduled timeline in the contract. | 4. The cumulative amount of acquisitions or disposals (calculated separately for acquisitions and disposals) of the same security within one year. III. The term "within one year" as used in Paragraph II refers to the one-year period immediately preceding the date of occurrence of the current transaction. Items already disclosed in accordance with these Procedures need not be re-included in the calculation. IV. Monthly Reporting: The Company shall enter the status of derivatives trading for itself and its subsidiaries that are not domestic public companies as of the end of the previous month into the designated website in the prescribed format by the 10th day of each month. V. Correction of Information: If there is any error or omission in an item required to be disclosed, the Company shall re-disclose and report all items within two days from the date it becomes aware of such error or omission. VI. Document Retention: The Company shall keep relevant contracts, meeting minutes, logbooks, appraisal reports, and opinions of CPAs, attorneys, or securities underwriters at the Company's premises. Unless otherwise provided by law, these documents shall be preserved for at least five years. VII. Subsequent Changes: If any of the following circumstances occur regarding a transaction already disclosed, a public disclosure and report of the relevant information shall be made on the designated website within two days from the date of occurrence of the event: 1. Change, termination, or rescission of the original contract signed for the transaction. 2. Failure to complete a merger, demerger, acquisition, or transfer of shares according to the scheduled timeline in the contract. |
|---|---|
Appendix 1
Articles of Incorporation of Hung Chou Fiber Industrial Co., Ltd.
Chapter One General Provisions
Article 1: The Company is incorporated in accordance with The Company Act, and is named Hung Chou Fiber Industrial Co., Ltd.
Article 2: Business activities of the Company are as follows:
- Manufacturing, processing, and trading of synthetic fibers.
- Manufacturing, processing, and trading of plastic filaments.
- Manufacturing of cosmetics.
- Manufacturing, transportation, and sale of other chemicals and byproducts.
- Manufacturing of petrochemicals.
- Import and export trade and agency service for the above products and raw materials.
- Investment into the design and technical service of manufacturing equipment relating to the business activities mentioned above.
- Leasing of machinery, tool, instrument, transportation equipment, and vehicle (excluding small passenger vehicles).
- Operation of supermarkets and departmental stores.
- Design and implementation of interior renovation projects.
- Weaving and processing of knitwear, textile, and fabrics.
- Manufacturing and processing of garments.
- Bleaching, dyeing, and printing of cotton yarn, fabrics, textile products, and nets.
- General import and export trade (except for business activities subject to special approval),
- H701010 - Housing and Building Development and Rental.
- H701020 - Industrial Factory Development and Rental.
- H701040 - Specific Area Development.
- H701050 - Investment, Development and Construction in Public Construction.
- H703090 - Real Estate Business.
- H703100 - Real Estate Leasing.
- ZZ99999 - All business items that are not prohibited or restricted by law,
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except those that are subject to special approval.
- F108031 - Wholesale of Medical Devices.
- F208031 - Retail Sale of Medical Apparatus.
- C303010 - Manufacture of Non-woven Fabrics.
Article 3: The Company is headquartered in Taipei City, and may establish domestic or foreign branches subject to board of directors' resolution.
Article 4: Public announcements of the Company shall be duly made in accordance with Article 28 of The Company Act.
Article 4-1: The Company may invest in other business entities subject to board of directors' resolution, for more than 40% of paid up capital.
Chapter Two Share Capital
Article 5: The Company has an authorized capital of Three Billion Five Hundred Million New Taiwan Dollars, available in three hundred and fifty million shares. Each share has a face value of Ten New Taiwan Dollars. Share capital may be raised in multiple issues.
Article 6: 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.
Shares of the Company may be issued in non-tangible form, subject to registration with the centralized securities depository.
Article 7: Unless otherwise specified by laws and regulations, all share-related affairs shall be handled according to "Regulations Governing the Administration of Shareholder Services of Public Companies."
Article 8: Transfer of share ownership shall be suspended during the 60 days prior to an annual general meeting, during the 30 days prior to an extraordinary shareholder meeting, and during the 5 days prior to the baseline date of any dividend, profit sharing, or rights distribution.
Chapter Three Shareholder Meetings
Article 9: The Company holds two types of shareholder meeting: the annual general meeting and extraordinary shareholder meeting. The annual general meeting is held once a year within six months after the end of an accounting period, whereas extraordinary shareholder meetings may be held whenever deemed necessary. For shareholders that hold less than one thousand shares, meeting advices can be communicated by way of public announcement instead.
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Article 10: Shareholders who are unable to attend shareholder meetings in person may delegate proxy attendees in compliance with Article 177 of The Company Act and relevant laws.
Article 11: For shareholder meetings that are convened by the board of directors, the chair shall be determined in accordance with Paragraph 3, Article 208 of The Company Act. For shareholder meetings that are convened by any entitled party other than the board of directors, the convener shall chair the meeting. If two or more parties are equally eligible to serve as convener, one shall be elected among themselves to chair the meeting.
Article 12: Unless otherwise regulated by laws, shareholders of the Company shall be entitled to one voting right for every share held.
Article 13: Except otherwise regulated by laws, a shareholder meeting resolution is passed when more than 50% of all outstanding shares are represented in the meeting, and that the motion is voted in favor by more than 50% of all voting rights represented at the meeting.
Article 14: Shareholder meeting resolutions shall be compiled into detailed minutes, signed or sealed by the chair, and disseminated to each shareholder by no later than 20 days after the meeting. Preparation and dissemination of meeting minutes can be made in electronic form.
The minutes of shareholders' meeting shall record the date and place of the meeting, the name of the chairman, the method of adopting resolutions, and a summary of the essential points of the proceedings and the results of the meeting. The minutes shall be kept persistently throughout the life of the company.
Chapter Four Directors and Supervisors
Article 15: The Company shall have 7 to 13 directors who are elected using the nomination system from the list of director (including independent director) candidates presented during the shareholder meeting. Directors shall serve a term of 3 years, which is renewable if re-elected. The total number of registered shares held across all directors shall not fall below a certain percentage of the Company's total outstanding shares, which is calculated according to rules of the authority. Amongst the directors chosen above, there shall be no fewer than two independent directors representing no less than one-fifth of the board. Restrictions concerning independent directors' eligibility, shareholding, concurrent employment, nomination, method of election, and all other compliance issues are governed by relevant laws of the securities authority.
Article 16: If the board loses more than one-third of its directors or if supervisors are
30
entirely dismissed, the board of directors shall convene a shareholder meeting within 60 days to elect new members for the shortfall. In which case, the newly elected members shall serve the remaining term of the existing board.
Article 17: If directors and supervisors can not be re-elected in time at the end of service, the existing directors and supervisors shall have services extended until new directors/supervisors have been elected and commenced duty.
Article 18: The board shall appoint one Chairman in a board meeting with more than two-thirds of directors present and with the support of more than half of all attending directors. The Chairman will chair shareholder meetings and board of directors meetings internally, and represent the Company to the outside world. Board of directors meetings shall be convened at least once every quarter.
Article 19: Strategies and key issues concerning the Company's operations shall be resolved by the board of directors. The first meeting of a new board is to be convened according to Article 203 of The Company Act, whereas all subsequent board meetings shall be convened and chaired by the Chairman. If the Chairman is unable to perform duties for any reason, the Chairman may appoint one standing director to act on behalf. If no delegate is appointed, the remaining directors will appoint one among them to perform the Chairman's duties on behalf.
Article 20: Unless otherwise regulated by The Company Act, a board of directors resolution is passed with more than half of the board present in a meeting, and supported by more than half of attending directors. If a director is unable to attend the meeting, another director can be appointed to attend on behalf by issuing a proxy form detailing the scope of delegated authority. One director can only represent the presence of one other director. In case a meeting of the board of directors is proceeded via visual communication network, then the directors taking part in such a visual communication meeting shall be deemed to have attended the meeting in person. Convention of board of directors meetings may be advised through written correspondence, e-mail, or fax.
Article 21: Details of board meeting shall be recorded in minutes and signed or sealed by the chair. Minutes are to be distributed to directors within 20 days after each meeting. The minutes shall contain details including the progress and outcome of each motion. The minutes, the attendance log, and proxy forms shall be retained permanently within the Company.
Article 22: The Company shall have two supervisors who are elected from persons of adequate capacity in a shareholder meeting to serve a term of three years, which can be renewed if re-elected. The total number of registered shares
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held across all supervisors shall not fall below a certain percentage of the Company's total outstanding shares, which is calculated according to rules of the authority.
Article 23: In addition to exercising individual supervisory power in accordance with laws, supervisors may also be invited to board meetings, but can not participate in the voting.
Article 23-1: Compensation to the Chairman, directors, and supervisors shall be determined based on their participation and contribution to the Company's operations, in reference to peer level. The board of directors is authorized to set the level of compensation.
The Company may purchase liability insurance for directors, supervisors, and key staff subject to board of directors' resolution.
Chapter Five Managers and Staff
Article 24: The Company may create managerial positions. Appointment, dismissal, and compensation of whom shall comply with Article 29 of The Company Act.
Article 25: The Company may engage consultants subject to board of directors' resolution.
Chapter Six Year-end Closure
Article 26: The Company's board of directors is responsible for preparing the following statements and reports at the end of each financial year; these statements and reports must be submitted to supervisors for review at least 30 days before the annual general meeting, and presented during the annual general meeting for the final acknowledgment: 1. Business report. 2. the financial statements; and 3. Earnings distribution or deficit compensation proposal.
Article 27: Profits concluded in a year (refers to profit before tax, employee remuneration, and director/supervisor remuneration) are subject to employee remuneration of 2% and director/supervisory remuneration of no more than 2%. However, profits must first be reserved to offset against cumulative losses (including adjustment of unappropriated earnings) if any. Employee remuneration in the preceding paragraph can be paid in cash or in shares. Payments may also be made to employees of subordinate companies that satisfy the eligibility criteria set forth by the board of directors. The director/supervisor remuneration mentioned in the preceding paragraph may be paid in cash only.
The two decisions above shall be resolved by the board of directors and reported during the next shareholder meeting.
Article 27-1: Any current net income concluded at year-end closing shall first be taken to
32
offset cumulative losses (including adjustment of unappropriated earnings), allowed by a 10% provision for legal reserve unless the legal reserve has accumulated to an amount equal to paid-up capital. The remaining balance of net income is then subject to provision or reversal of special reserve pursuant to laws or the authority's instructions. Part of the earnings may be retained, and the remaining balance can be added to the opening balance of unappropriated earnings in the current period (including adjustment of unappropriated earnings), which the board of directors may propose to distribute in the form of dividends for shareholders' resolution. Any cash distribution of the above dividend, profit, legal reserve, or capital reserve, whether in whole or in part, may be resolved in a board meeting with more than two-thirds of the board present, voted in favor by more than half of attending directors, and reported in the upcoming shareholder meeting. The Company's dividend policy has been established to accommodate current and future development plans after taking into consideration the investment environment, capital requirement, domestic/foreign competition, and shareholders' interests. No less than 10% of distributable earnings from the above shall be paid as dividend each year. Dividends can be paid in cash or in shares, with cash dividends amounting to no less than 10% of total dividends.
Chapter Seven Supplementary Provisions
Article 28: Charters and enforcement rules of the Company shall be established separately by the board of directors.
Article 29: Any matters that are not addressed in the Articles of Incorporation shall be governed by The Company Act and related laws.
Article 30: To better support business requirements, the Company authorizes the board of directors to exercise full discretion over decisions concerning the transfer, trading, and pledge of property and seek acknowledgment afterwards in the upcoming shareholder meeting, except for the circumstances listed in Article 185 of The Company Act.
Article 31: The Articles of Incorporation was established on July 8, 1968. The 1st amendment was made on June 24, 1969; the 2nd amendment was made on May 29, 1971; the 3rd amendment was made on May 15, 1972; the 4th amendment was made on April 21, 1973; the 5th amendment was made on June 12, 1973; the 6th amendment was made on May 25, 1974; the 7th amendment was made on October 27, 1974; the 8th amendment was made on May 31, 1975; the 9th amendment was made on June 16, 1975; the 10th amendment was made on September 25, 1976; the 11th amendment was
33
made on June 25, 1977; the 12th amendment was made on June 17, 1978; the 13th amendment was made on May 12, 1979; the 14th amendment was made on June 14, 1980; the 15th amendment was made on June 12, 1982; the 16th amendment was made on June 18, 1983; the 17th amendment was made on June 16, 1984; the 18th amendment was made on April 13, 1985; the 19th amendment was made on May 24, 1986; the 20th amendment was made on May 21, 1988; the 21st amendment was made on May 6, 1989; the 22nd amendment was made on June 23, 1990; the 23rd amendment was made on June 15, 1991; the 24th amendment was made on June 20, 1992; the 25th amendment was made on June 19, 1993; the 26th amendment was made on June 4, 1994; the 27th amendment was made on May 20, 1995; the 28th amendment was made on May 25, 1996; the 29th amendment was made on May 24, 1997; the 30th amendment was made on June 27, 1998; the 31st amendment was made on May 20, 2000; the 32nd amendment was made on June 21, 2002; the 33rd amendment was made on June 17, 2005; the 34th amendment was made on June 26, 2009; the 35th amendment was made on June 25, 2010; the 36th amendment was made on June 27, 2012; the 37th amendment was made on June 26, 2014; the 38th amendment was made on May 22, 2015; the 39th amendment was made on June 22, 2016; the 40th amendment was made on June 4, 2019; the 41st amendment was made on August 4, 2021; the 42st amendment was made on June 29, 2022; the 41st amendment was made on May 28, 2025
Hung Chou Fiber Industrial Co., Ltd.
Chairman Cheng-Tien Chan
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Appendix 2
Shareholders Conference Rules of Hung Chou Fiber Industrial Co., Ltd.
Article 1 This policy has been established in accordance with Article 5 of “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” to promote proper governance over the Company’s shareholder meetings and to enforce supervisory and administrative functions of such meetings.
Article 2 Unless otherwise specified by law or the Articles of Incorporation, shareholder meetings of the Company shall proceed according to the terms of this policy.
Article 3 Unless otherwise specified by law, shareholder meetings are to be convened by the board of directors.
The Company shall prepare 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 election or dismissal of directors and supervisors 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 handbook and supplementary information shall be prepared and posted onto MOPS. Hard copies of the shareholder meeting handbook and supplementary information also have to be prepared at least 15 days before the meeting and made accessible to shareholders at any time. These documents must be made available at the Company’s premises and at the share transfer agent, and distributed on-site at the shareholder meeting.
The meeting advice and announcement shall include a detailed agenda. Advices can be served in electronic form with the recipient’s consent. Issues that involve election or dismissal of directors or supervisors, amendments to the Articles of Incorporation, corporate liquidation, merger, divestment, or any matters listed in Paragraph 1, Article 185 of The Company Act and Articles 26-1 and Article 43-6 of Securities and Exchange Act must be raised as regular motions and can not be raised in the form of extraordinary motion.
Shareholders that own more than 1% of the Company’s outstanding shares are entitled to propose motions for discussion in annual general meetings. However, each shareholder may only propose one motion; proposals above
35
that limit will be excluded from discussion. The board of directors may disregard shareholders' proposals if the proposed motions exhibit any of the conditions described in Paragraph 4, Article 172-1 of The Company Act. The Company shall announce, before the book closure date of annual general meeting, the conditions, places, and time within which shareholders' proposals are accepted. The acceptance period must not be less than ten days.
Shareholders shall limit their proposed motions to 300 words only; proposals that exceed 300 words will not be accepted for discussion. Shareholders who have successfully proposed their motions shall attend the annual general meeting in person or through proxy and participate in the discussion.
The Company shall notify each proposing shareholder the outcomes of their proposed motions before the date the meeting advice is sent. Meanwhile, motions that satisfy the conditions listed in this Article shall be included as part of the meeting advice. With regard to the proposals submitted by shareholders but not included in the agenda of the meeting, the cause of exclusion of such proposals and explanation shall be made by the board of directors at the shareholders' meeting to be convened.
Article 4 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 in-person 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, vote of the proxy attendee shall prevail.
Article 5 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. Independent directors' opinions shall be fully taken into consideration when choosing the meeting venue and time.
Article 6 The meeting advice shall specify details such as the meeting time, venue, and other important issues to take note of.
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Admission of meeting participants shall begin at least 30 minutes before the meeting commences. The reception area must be clearly labeled and stationed with adequate and competent personnel.
Shareholders and proxies thereof (collectively referred to as shareholders) shall attend shareholder meetings by presenting valid conference pass, attendance card or other document of similar nature. Proxy form acquirers are required to bring identity proof for verification.
The Company shall provide an attendance log to record attendance of shareholders or proxies thereof (collectively referred to as shareholders below); alternatively, attendance cards may be presented to signify shareholders' presence at the meeting.
Shareholders who attend the meeting shall be given a copy of the conference handbook, annual report, attendance pass, opinion slip, motion ballot, and any materials relevant to the meeting. Prepare additional ballots if director election is also being held during the meeting.
Shareholders shall attend shareholder meetings by presenting valid conference pass, attendance card, or other document of similar nature. Proxy form acquirers are required to bring identity proof for verification.
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 attendees can only appoint one representative to attend shareholder meeting.
Article 7 Shareholder meetings that are convened by the board of directors shall be chaired by the Chairman. If the Chairman is on leave or is unable to exercise duties for any reason, the Vice Chairman will act on behalf; if there is no Vice Chairman or if the Vice Chairman is also on leave or is unable to exercise duties for any reason, the Chairman may appoint one standing director to assume acting duty; if there is no standing director, one of the directors shall be appointed to perform acting duty; if no delegate is appointed by the Chairman, one shall be appointed among standing directors or directors.
Where the chair described in the preceding Paragraph is to be assumed by a standing director or director, the standing director or director must be on the board for more than six months and possess adequate understanding of the Company's financial and business operations. The same applies if the chair is a representative of a corporate director.
Shareholder meetings that are convened by the board of directors should have more than have of the board attending.
For shareholder meetings convened by any eligible party other than the board of directors, the convener shall serve as the chair. If there are two or
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more conveners at the same time, one shall be appointed among themselves to chair the meeting.
The Company may summon its lawyers, certified public accountants, and any relevant personnel to be present at shareholder meetings.
Article 8 The Company shall record non-stop, in audio and video, from the time admission is accepted and throughout the entire meeting proceeding, voting process, and vote count.
These recordings must be retained for at least one year. However, should a shareholder raise a litigious claim against the Company in accordance with Article 189 of The Company Act, the above mentioned documents must be retained until the end of the litigation.
Article 9 Shareholders' presence is determined by the number of shares represented during the meeting. The number of shares represented in a meeting is calculated based on attendance log records or the attendance cards collected, plus the number of shares that have voting rights exercised in writing or through electronic means.
The chair should announce commencement of meeting as soon as it is due. However, if current attendees represent less than half of the Company's outstanding shares, the chair may announce to postpone the meeting up to two times, for a period totaling no more than one hour. The chair shall dismiss the meeting if attending shareholders still represent less than one-third of outstanding shares after two postponements.
If attending shareholders still represent more than one-third but less than half of outstanding shares after two postponements, a tentative resolution may be passed in accordance with 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 chair may propose the tentative resolutions for final voting according to Article 174 of The Company Act.
Article 10 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.
The above rule also applies to shareholder meetings that are convened by any entitled party other than the board of directors.
In either of the two situations described above, the chair can not dismiss the meeting while a motion (including extraordinary motion) is still in progress. If the chair violates conference rules by dismissing the meeting when not
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allowed to do so, other members of the board shall immediately assist attending shareholders in electing another chair that has the support of more than half of voting rights represented on-site to continue the meeting.
The chair must allow adequate time to explain and discuss various motions, amendments or extraordinary motions proposed during the meeting. The chair may announce to discontinue further discussions if the issue in question is considered to have been sufficiently discussed to proceed with the voting.
Article 11
Shareholders who wish to speak during the meeting must produce an opinion slip detailing the topic, shareholder ID (or attendance card ID serial), and shareholder's name. The order of shareholders' comments is determined by the chair.
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.
Each shareholder shall speak no more than two times for 5 minutes each on the same motion unless otherwise agreed upon by the chair. The chair may stop shareholders from speaking if they violate any terms of the conference rules or speak outside the discussed topic.
While a shareholder is speaking, other shareholders can not speak simultaneously or interfere in any way unless agreed by the chair and the person speaking. The chair shall restrain any person who violates this process.
Where a corporate shareholder has appointed two or more representatives to attend the shareholder meeting, only one representative may speak per motion.
After a shareholder has finished speaking, the chair may answer the shareholder's queries personally or appoint any relevant personnel to do so.
Article 12
Voting rights in a shareholder meeting are calculated based on the number of shares represented.
The shares held by shareholders having no voting right shall not be counted in the total number of issued shares while adopting a resolution at a meeting of shareholders.
Shareholders can not vote, or vote on behalf of other shareholders, on any motion that presents a conflict between their own interests and interests of the Company.
The number of shares held by shareholders who are not permitted to vote, as described in the preceding Paragraph, shall be excluded from the calculation of total voting rights.
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Except for trust enterprises or stock agencies approved by the competent authority, when a person who acts as the proxy for two or more shareholders, the number of voting power represented by him/her shall not exceed 3% of the total number of voting shares of the company, otherwise, the portion of excessive voting power shall not be counted.
Article 13 Shareholders are entitled to one vote per share, except for shares that are subject to voting restrictions or situations outlined in Paragraph 2, Article 179 of The Company Act.
Voting rights can be exercised in writing or using the electronic method (according to Paragraph 1, Article 177-1 of The Company Act: the Company must give shareholders the option to exercise voting rights in writing or using the electronic method during shareholder meetings). Instructions for exercising voting rights in writing or through electronic means must be stated clearly in writing on the meeting advice. Shareholders who opt to exercise voting rights in writing or using electronic method are considered to have participated in the shareholder meeting in person. However, they are considered to have waived their rights to participate in any extraordinary motion or any amendment to the original discussion that may arise during the shareholder meeting. For this reason, the Company should avoid proposing extraordinary motions or amendments to the original motion where possible. Written and electronic voting instructions, as mentioned in the preceding Paragraph, shall 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, this excludes situations where a proper declaration is issued to withdraw the previous arrangement. 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 a shareholder exercises vote in writing or through electronic means and at the same time delegates a proxy to attend shareholder meeting, the voting decision exercised by the proxy shall prevail. Unless otherwise regulated by The Company Act or stated in the Articles of Incorporation, a motion is passed when supported by shareholders representing more than half of total voting rights in the meeting. When voting, the chair or delegate thereof shall announce the total number of voting rights represented by attending shareholders for every motion discussed, and have shareholders vote on a case-by-case basis. Details including the number of
votes in favor, against, and abstained for each discussion shall be uploaded onto MOPS on the same day the shareholder meeting ends.
In cases where several amendment or alternative solutions have been proposed at the same time, the chair shall determine the order in which proposals are to be voted. However, if any solution is passed, all other proposals shall be deemed rejected and no further voting is necessary.
The chair shall appoint ballot examiners and ballot counters to support the voting process. The ballot examiner must be a shareholder.
Motion and election votes are to be counted openly at the shareholder meeting. Results of the vote, including the final tally, shall be announced on-site and recorded in minutes.
Article 14 Shareholder meetings that involve election of director or supervisor shall proceed according to the Company's election policy. Results of the election, including the list of director and supervisor elects and the final tally, must be announced on-site.
All ballots used in the above election shall be sealed and signed by the ballot examiner, and held in proper custody for at least one year. However, should a shareholder raise a litigious claim against the Company in accordance with Article 189 of The Company Act, the above mentioned documents must be retained until the end of the litigation.
Article 15 Shareholder meeting resolutions shall be compiled into detailed minutes, signed or sealed by the chair, 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 announcing details over MOPS.
The minutes shall detail the date and venue of the meeting, the chair's name, the method of resolution, the proceeding, and results of various motions.
Minutes shall be retained for as long as the Company exists.
Article 16 On the day of the shareholder meeting, the Company shall disclose information on the number of shares acquired by proxy form acquirers and the number of shares represented by proxies at the meeting venue using the prescribed format.
The Company shall disclose on MOPS in a timely manner any shareholder meeting resolutions that constitute material information as defined by law or the rules of Taiwan Stock Exchange Corporation (or Taipei Exchange).
Article 17 Officers of the shareholder meeting must wear proper identification or arm badge.
The chair may instruct disciplinary officers (or security staff) to help maintain
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order in the meeting. While maintaining order in the meeting, all disciplinary officers and security staff are required to wear arm badges or identifications that identify their role as "Security."
The chair may stop anyone who attempts to speak using instruments that are not provided by the Company.
The chair may instruct security staff to remove shareholders who continually violate conference rules or obstruct meeting proceeding despite being warned.
Article 18 The chair may put the meeting in recess at appropriate times. In the event of force majeure, the chair may suspend the meeting temporarily and resume at another time.
If the shareholder meeting is unable to conclude all scheduled motions (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.
Article 19 The above rules shall take effect immediately once approved in a shareholder meeting. The same applies to all subsequent amendments.
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Appendix 3
Hung Chou Fiber Industrial Co., Ltd. Directors' and Supervisors' Shareholding Position
| Position | Name | Shareholding position as of the book closure date | |
|---|---|---|---|
| Shares | Shareholding percentage | ||
| Chairman | Cheng-Tien Chan | 5,532,037 | 4.19% |
| Director | Yi Jinn Industrial Co., Ltd. | ||
| Representative: Yu-Ching Cheng | 36,601,000 | 27.70% | |
| Director | Yi Jinn Industrial Co., Ltd. | ||
| Representative: Shang Yu Hsiao | 36,601,000 | 27.70% | |
| Director | Lin-Te Chen | 1,027,516 | 0.78% |
| Director | Bowa International Leasing Corporation | ||
| Representative: Kuan-Ru Chen | 1,171,000 | 0.88% | |
| Independent director | Shou-Po Chao | - | - |
| Independent director | Wei-Chi Huang | - | - |
| Independent director | Hsien-Chang Kuo | - | - |
| Independent director | Chen,Yi-Min | - | - |
Note: 1. As of the book closure date for the annual general meeting, the Company had NT$1,321,124,540 of paid-up capital in 132,112,454 shares.
2. According to Article 26 of the Securities and Exchange Act, the entire board of directors and supervisors are required to maintain the minimum shareholding position below: •Minimum shareholding across all directors: 8,000,000. (Note 3)
3. Pursuant to Article 2 of "Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies," minimum shareholding of non-independent directors and supervisors may be reduced to 80% of the required percentage if the Company has elected at least 2 independent directors
Appendix 4
Other remarks
Acceptance of shareholders' proposals and nominations for the 2025 annual general meeting:
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According to Articles 172-1 and Article 192-1 of The Company Act, shareholders that own more than 1% of the Company's outstanding shares are entitled to propose, in writing, motions to be discussed and a list of director (including independent director) candidates to be elected in the annual general meeting.
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Proposals: Each shareholder may propose one motion only and shall limit text description to no more than 300 words. Proposals that exceed the above limits will not be accepted.
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The Company has made an official announcement over MOPS, as required by laws, to accept shareholders' proposals and nominations for the upcoming annual general meeting between March 13 and March 23 (if using registered mail, the mail must be received within this time).
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The Company has not received any proposal or nomination from shareholders.
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