HOTAI MOTOR - AGM Information 2021

Stock code: 2207

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June 23, 2021

Handbook for the 2021 Annual General Meeting of Shareholders

(For the convenience of readers and for information purposes only, this handbook have been translated into English from the original Chinese-language version prepared and used in the Republic of China. In the event of any discrepancy between the English and Chinese versions, or if there are any differences in interpretation between the two versions, the original Chinese version shall prevail.)

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========================================================== I. Agenda of the Annual General Shareholders ’ Meeting ------------------P1 II. Reports --------------------------------------------------------------------------------------P2 III. Ratifications -------------------------------------------------------------------------------P4 IV. Discussion -----------------------------------------------------------------------------------P5 V. Extemporary Motions -------------------------------------------------------------------P6 VI. Adjournment ------------------------------------------------------------------------------P6 VII.Appendixes 1. 2020 Business Report ----------------------------------------------------------------P7 2. Audit Committee Report --------------------------------------------------------P10 3. 2020 Financial Statements ------------------------------------------------------P11 4. Table of Distribution of 2020 Profits -------------------------------------------P38 5. Comparison of the Current and Amended Provisions of the Rules and Procedures of Shareholders’ Meeting; Current Version of the Rules and Procedures of Shareholders’ Meeting -----------------------P39 6. Details of the Concurrent Positions Held by Directors of the Company Subject to the Release Granted ------------------------------P46 VIII. Exhibits 1. Articles of Incorporation of the Company --------------------------------P47 2. Rules and Procedures of Shareholders’ Meeting -----------------------P54 3. Shareholdings of Directors ------------------------------------------------------P58

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I. Agenda of the Annual General Meeting of Shareholders

Date & Time: 9:00 a.m., June 23, 2021 (Wednesday)

Place: Auditorium in the Xinzhuang Industrial Park of the Company, located at No.10, Mingzhong St., Xinzhuang Dist., New Taipei City 242, Taiwan

Chairman’s Address

2. Reports:

(1) 2020 Business Report
(2) 2020 Audit Committee Report
(3) 2020 Distribution of Profits with Cash Dividends
(4) 2020 Distribution of Employees and Directors Remuneration

3. Ratifications:

(1) Ratification of 2020 Business Report and Financial Statements
(2) Ratification of Proposed Distribution of 2020 Profits
Discussion
(1) Proposal to amend the Company’s Rules and Procedures of Shareholders’ Meetings
(2) Release of Director’s Non-Compete Restrictions

5. Extemporary Motions

Adjournment

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II. Reports

Item No.1 — 2020 Business Report

Explanation: Please see Appendix 1 for the Company’s 2020 Business Report (Pages 7-9).

Item No.2 — 2020 Audit Committee Report

Explanation:

(1) The Company’s 2020 Business Report, Financial Statements, Proposed Profit Distribution and other important financial documents have been reviewed by the Audit Committee. Based on the review, the Audit Committee has issued a report.
(2) Please see Appendix 2 for the Audit Committee Report (Page 10).

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Item No.3 — Distribution of 2020 Profits

Explanation:

(1) The distribution shall be declared and made in accordance with Article 240, Paragraph 5 of the Company Act and Article 35 of the Company’s Articles of Incorporation .
(2) According to Article 35 of the Company’s Articles of Incorporation , the decision to distribute all or part of the dividends and/or bonuses in cash shall be adopted by a resolution of the majority of the Board of Directors in a meeting attended by over two-thirds of the directors and reported to the shareholders’ meeting.
(3) The Company’s 2020 profit was resolved by the 20th term of the Board of Directors at the 16th meeting to approve a dividend of $17 per share, and a total of NT$ 9,285,046,128 in cash dividends will be paid to shareholders; the Chairman of the Board will be authorized to decide on the ex-dividend and payment dates for cash dividends distribution and other relevant matters.

Item No.4 — 2020 Distribution of Employee and Director’s Remuneration

Explanation:

(1) The distribution shall be declared and made in accordance with Article 235-1 of the Company Act and Article 34 of the Company’s Articles of Incorporation .
(2) According to Article 34 of the Company’s Articles of Incorporation , To the extent that the Company has generated annual profits, 1% of which shall be set aside for employee remuneration and no more than 2% for directors’ remuneration; provided, however, independent directors are not eligible to participate in the profit distribution of the Company. Any accumulated losses of the Company shall first be offset.
(3) The Company’s annual profits in 2020 are NT$16,702,698,594 (pretax profits prior to employee and director’s remuneration deductions), 1% of which has been set aside for employee remuneration (totaling NT$ 167,026,986), and 2% of which has been set aside for director remuneration (totaling NT$ 334,053,972).

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III. Ratifications

Item No.1 — Proposed by Board of Directors: Ratification of 2020 Business Report and Financial Statements

Explanation:

(1) The Company’s 2020 Business Report and Financial Statements have been adopted by the resolution of the 20[th] term of the Board of Directors at the 16[th] meeting, audited and certified by PricewaterhouseCoopers Taiwan, and reviewed by the Audit Committee.
(2) Please refer to Appendix 1 (Pages 7-9) and Appendix 3 (Pages 1137) for the Company’s 2020 Business Report and Financial Statements.

Resolution:

Item No.2 — Proposed by Board of Directors: Ratification of Proposed Distribution of 2020 Profits

Explanation:

(1) After setting aside 10% of the 2020 profits as legal reserve, the Company, pursuant to the resolution of the 20[th] term of the Board of Directors at the 16[th] meeting, intends to distribute a cash dividend of NT$ 17 per share.
(2) Please refer to Appendix 4 for the Table of 2020 Profit Distribution (Page 38).

Resolution:

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IV. Discussion

Item No.1 — Proposed by the Board of Directors: Proposal to amend the Company’s Rules and Procedures of Shareholders’ Meeting (“Rules and Procedures”) .

Explanation:

(1) In order to align with current practices of shareholders’ meetings and to create more flexibility for the Company’s operations and governance, the Board proposed to amend parts of the Company’s Rules and Procedures of Shareholders’ Meeting .
(2) Please refer to Appendix 5 for the Comparison of Current and Amended Rules and Procedures of the Company, as well as the Current Rules and Procedures (Pages 39-45).

Resolution:

Item No.2 Proposed by the Board of Directors: Proposal to release the directors from non-compete restrictions.

Explanation:

(1) In the event that a director of the Company engages in any acts specified in Article 209 of the Company Act, it is the Company’s intention to release such directors and his or her appointed representatives from non-compete restrictions on holding concurrent positions in businesses similar to those listed in the Company’s scope of business (to the extent that such positions are held out of business needs), as of the date on which such directors take office, and provided that doing so will not harm the interests of the Company.
(2) The Board proposed to submit to the annual general meeting of the shareholders the proposal to release the directors from noncompete restrictions. Details of the Concurrent Positions held by Directors of the Company can be found in Appendix 6 (Page 46).

Resolution:

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V. Extemporary Motions

VI. Adjournment

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Appendix 1

VII. Appendixes

2020 Business Report

� Taiwan’s Automotive Market �

Despite the impact of the coronavirus (COVID-19) pandemic on the global economy, Taiwan’s economic growth remained steady in 2020, riding high on its success in fighting the pandemic, anticipated boost from stimulus measures, and strong exports. The annual growth rate last year was at 3.11%, up by 0.4 percentage points compared to 2.71% in 2019, and the total sales in the automotive market reached 457,435 units, which is 104% of the number from the previous year, mainly attributed to factors such as the sunset of the subsidy policy by giving trade-ins in excise taxes and the successive launch of new domestic automobile models by various brands, both of which fueled demands for new cars throughout the year. For the first time in 15 years, the total sales in the market topped 450 thousand units.

� Operational Review �

Faced with a rapidly changing market and increasing competition from imported vehicles, Hotai introduced all new car models in 2020, TOYOTA COROLLA CROSS and LEXUS LM 300h, LC 500 CONVERTIBLE, and redesigned models, including TOYOTA ALPHARD, ALTIS, SIENTA, COROLLA SPORT, HILUX, RAV4, PRIUS PHV, and LEXUS ES 250 F- SPORT, IS 300h, with the support of the parent company, Toyota Motor Corporation (“TMC”). As a result, we were able to deliver an impressive annual sales record. By the joint effort of our passenger car and commercial vehicle dealers, the total number of registered vehicles in 2020 was 153 thousand units, which accounted for 33.4% of the market share, putting us at the top among automakers in Taiwan in 19 consecutive years. In addition, TOYOTA continues to be the winner in both domestic-made and imported vehicles. LEXUS had a record-high 22,678 units of registered vehicles, and HINO’s full-size commercial vehicle sales ranked top of the market for 11 consecutive years, both were a startling record in automotive sales.

Since the establishment of the Company, it has accumulated extensive experience in product planning, marketing and customer service, and has continued to grow steadily and invested in diversified operations. In addition to our core business—vehicle sales and services, the Company has proactively expanded the value chain to involve other automobile related business, which puts us in a strong position to drive continuous innovation and growth. For example, Hotai Finance Co., Ltd., a company with growing revenues and profits that offers a broad range of financing services across the Taiwan Strait, remained the top ranked company in the automotive installment market last year. Their efforts in proactively pursuing and evaluating new business and regional development opportunities have also spurred new growth in the overall business of

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installment and leasing. Hotai Leasing Co., Ltd. rides along with the rise and development of sharing economy, and actively promotes “Mobility Solutions” and “Resource Sharing”, and its subsidiary, Hoing Mobility Service Co., Ltd., specializes in short-term rentals and provides real-time integrated mobility services under the brand, iRent , as the leading service provider. Hotai Cyber Connection tapped into the e- commerce industry and continues to grow. With the automotive industry moving towards the trend of Mobility-as-a-Service (MaaS), the company developed a new shared transportation business and launched a new app, yoxi , to provide shared ride service. By utilizing Group resources, the company became the front-runner of MaaS to offer a comprehensive package to drivers, including car purchasing, auto loan, insurance, and maintenance services, while providing passengers quality experience with the comfort of Toyota vehicles, the highest passenger liability insurance coverage available on the market, and a streamlined app to request rides. Carmax Co., Ltd. (“Carmax”), a professional car accessories provider, was joined by TCD (formerly known as J-TACS) to develop businesses in mainland China and continued to impress with high profits. To have a strong footing in a market where companies are constantly rolling out new car accessories, Carmax is fully committed to pouring resources into its business development. Hotai Insurance Co., Ltd. realized the benefits of industry vertical integration by providing one-stop premium car insurance service to customers and delivered a stunning record of over ten billion premium income.

The Group began investing in Toyota China since 1997 and it has been more than 20 years now. The Company’s China operation headquarters, Hotong Motor Investment Co., Ltd., has established the operation system that integrates resources, reduced the Group’s operating costs, increased the overall competitive advantage of the Group, and continued to expand the business scope in China. Although China’s automotive market took a hit at the beginning of 2020 due to disruption of supply chain and labor impacted by the COVID-19 pandemic, production and sales picked up as manufacturing activities resumed across China, and as a result, the total market sales decreased only marginally by 1.8% to 25.31 million units from the previous year. In 2020, Hotai’s recognized revenue in mainland China reached another record high of NT$109.7 million.

� Financial Performance �

In 2020, the Group’s consolidated revenue totaled NT$231.813 billion, the consolidated profit before tax was NT$21.125 billion, and the consolidated net profit was NT$16.535 billion; NT$13.849 billion of the net profit was attributed to the parent company, Hotai Motor. The earnings per share was NT$25.36.

� Management and Corporate Development �

Despite high uncertainty surrounding the economic outlook at the beginning of 2021 due to the pandemic, Taiwan’s economy is supported by its success in containing the COVID-19 outbreak, and with the possible extension of the policy which gives new car

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buyers with trade-ins in excise taxes, the growth of the automotive market is expected to achieve around 440,000 units. As we continue to pursue innovation and transformation in providing products and services above and beyond customers’ expectations, we will also reinforce the Group value in order to achieve new sales record in the passenger car for the 20th consecutive year and become the new top notch in commercial vehicle segments.

While pursuing sales growth, we also work towards enhancing the “Happiness at TOYOTA” experience and creating a healthy and vibrant workplace for our employees. In addition, we continue to promote the “Sustainable Lifestyle” campaign that encourages a low-carbon, plastic-free, and fun lifestyle. Hotai remains committed to corporate social responsibility (CSR) and strives to give back to the community. With the integration of the Group’s public welfare resources and the expansion of influence, we are inviting the younger generations to join us on our commitment to create a sustainable business and on the way to becoming the benchmark brand of CSR practices in the automotive industry.

In response to a fast-changing auto industry, our business strategies will involve staying ahead of the game, persistently pursuing business opportunities, and the continuous partnership with TMC and our affiliates to monitor future industry trends and create group synergy. Together, we can stand up to the challenge and position ourselves for new breakthroughs, securing the Group's unwavering leading position in the industry.

Huang, Nan-Kuang Su, Chwen-Shing Chen, Ting-Ju

Chairman of the Board Executive Officer Chief Accounting Officer

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Appendix 2

Audit Committee Report

To: The 2021 Annual General Shareholders’ Meeting of Hotai Motor Company Limited (the “Company”)

The Board of Directors has prepared and submitted to the Audit Committee the Company’s 2020 Financial Statements (including the Consolidated Financial Statements), Business Report, and proposal for allocation of profit. The 2020 Financial Statements (including the Consolidated Financial Statements) were audited by CPAs Wu, Yu-Lung and Wang, Fang-Yu from PricewaterhouseCoopers Taiwan, who then issued an audit report based on their review.

We have reviewed the Company’s 2020 Financial Statements (including Consolidated Financial Statements), Business Report, and proposal for allocation of profit and found the contents to be consistent with the information shared with us. We hereby issue this report pursuant to Article 219 of the Company Act of the Republic of China.

The Audit Committee

Independent Director: Shih, Hsien-Fu

Independent Director: Wu, Shih-Hao

Independent Director: Su, Chin-Huo

March 25, 2021

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Appendix 3

HO TAI MOTOR CO., LTD. AND SUBSIDIARIES

Declaration of Consolidated Financial Statements of Affiliated Enterprises

For the year ended December 31, 2020, pursuant to “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises,” the companies that are required to be included in the consolidated financial statements of affiliates, are the same as the company required to be included in the consolidated financial statements of parent and subsidiary companies under International Financial Reporting Standard 10. And if relevant information that should be disclosed in the consolidated financial statements of affiliates has all been disclosed in the consolidated financial statements of parent and subsidiary companies, it shall not be required to prepare separate consolidated financial statements of affiliates.

Hereby declare,

Ho Tai Motor Co., Ltd.

Representative: Huang, Nan-Kuang March 25, 2021

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INDEPENDENT AUDITORS’ REPORT

(TRANSLATED FROM CHINESE)

PWCR20000489 To the Board of Directors and Shareholders of Ho Tai Motor Co., Ltd.

Opinion

We have audited the accompanying consolidated balance sheets of Ho Tai Motor Co., Ltd. and its subsidiaries (the “Group”) as of December 31, 2020 and 2019, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other auditors (please refer to Other matter section), the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2020 and 2019, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, Regulations Governing the Preparation of Financial and Operational Reports by Enterprises Engaging in Insurance and the International Financial Reporting Standards, International Accounting Standards, International Financial Reporting Interpretations Committee (IFRIC) Interpretations, and Standard Interpretations Committee (SIC) Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and generally accepted auditing standards in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained and the reports of other auditors are sufficient and appropriate to provide a basis for our opinion.

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Key audit matters

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

Key audit matters for the consolidated financial statements are stated as follows:

Evaluation of provision for impairment of accounts receivable in Hotai Finance Co., Ltd., the subsidiary

Description

Please refer to Note 4(11) to the consolidated financial statements for accounting policies on provision for impairment of accounts receivable; Note 5(2) C for uncertainty of accounting estimate and assumptions of provisions for impairment of accounts receivable, and Note 6(5) for the details of accounts receivable.

Hotai Finance Co., Ltd. (“Hotai Finance“), a subsidiary of Ho Tai Motor Co., Ltd., is primarily engaged in the installment sales and leases of vehicles. In the supply chain of motor vehicles, the role of Hotai Finance is to provide customers with flexible financing options and to streamline the vehicle delivery process. Therefore, Hotai Finance is responsible for the collection of accounts receivable and manages overdue accounts.

When accounts receivable are past due over 30 days, Hotai Finance already considers the collectability of those accounts in doubt. In addition to enhancing the collection process from customers, management also assesses the probability of overdue accounts becoming impaired over the past years. Impairment is provided for those doubtful accounts receivable depending on the length of overdue days and considering forward-looking factors such as the future economic conditions. Management evaluates the individual circumstances of each overdue amount to decide whether to measure the loss allowance.

The assessment above involves management’s judgement and factors on multiple factors that may be affected by the past events, current conditions, and the future economic conditions. The results will directly influence the amounts recognized. Therefore, the estimation of the loss allowance is identified as a key audit matter.

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How our audit addressed the matter

Our key audit procedures performed in respect of the above matter are summarized as follows:

Understood the policy of provision for impairment of accounts receivable (including relevance to macroeconomic indicators of forward-looking information) and the logic of the aging report.
For those accounts past due over 30 days, Hotai Finance will estimate and recognize the impairment of account receivable based on the probability of overdue accounts becoming impaired over the past years and Hotai Finance’s policy. We understood and assessed the occurrence percentage of actual impairment losses compared to the overdue accounts receivable over the past years, and other forward-looking information. In addition, we sampled and examined the expected credit losses report, and checked system information to ensure the consistency.
Sampled and examined the supporting documents of individual evaluation made by the management to evaluate the reasonableness of the expected credit loss recognized.

Valuation of the provisions for warranty

Description

Please refer to Note 4(30) to the consolidated financial statements for the accounting policies on provisions for warranty, Note 5(2) B for uncertainty of accounting estimate and assumptions of provisions for warranty, and Note 6(23) for details of the provisions for warranty.

In order to enhance customer confidence on product quality, Ho Tai Motor Co., Ltd. provides a warranty for cars being sold in the fourth year or with mileage under 120,000 kilometers. Since the provisions for warranty involves massive historical data as well as complex calculation in respect of maintenance and repair experience, it was identified as a key audit matter.

How our audit addressed the matter

Our key audit procedures performed in respect of the above matter are summarized as follows:

In terms of the agent brands, obtained the car sold information in the last four years that met the warranty items offered by Ho Tai Motor Co., Ltd., such as cars being used in the fourth year or with mileage under 120,000 kilometers and cars’ maintenance details as well as registration forms. Sampled and tested each car’s warranty cost on maintenance records.

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Reviewed the system information in respect of total cars sold in the last four years which qualify for the warranty scheme mentioned above. Evaluated the reasonableness of provision for warranty by considering the average warranty cost claimed from each agent brand.

Claims reserve and ceded claims reserve of Hotai Insurance Co., Ltd., the subsidiary

Description

Please refer to Note 4(37) to the consolidated financial statements for the accounting policies on claims reserve (including ceded claims), Note 5(2) D for uncertainty of accounting estimate and assumptions of claims reserve (including ceded claims), and Note 6(9) for details of claims reserve and ceded claims reserve.

The claims reserve (including ceded claims) of Hotai Insurance Co., Ltd. (“Hotai Insurance”), the subsidiary of Ho Tai Motor Co., Ltd., is derived from the reasonable amount of ultimate claims prior and after reinsurance based on the actuarial department’s historical claims development trend and experience, etc. As of December 31, 2020, the claims reserve and ceded claims reserve of Hotai Insurance Co., Ltd. was NT$3,655,621 thousand and NT$900,591 thousand, respectively.

Since the calculation method and assumptions selection of claims reserve (including those ceded) involve subjective judgement and higher degree of uncertainty, and the estimation results have a material impact on the financial statements, we have thus included claims reserve and ceded claims reserve as the key audit matter in our audit.

How our audit addressed the matter

The procedures that we have conducted in response to specific aspects of the above-mentioned key audit matter are summarized as follows:

Understood and assessed Hotai Insurance’s policies, internal control, and operational procedures related to claims reserve (including those ceded) and sampled and inspected the effectiveness of controls related to claims reserve calculation on a sample basis.
Sampled and examined the consistency of financial values used in calculating claims reserve with the recorded amounts in the books in order to confirm the accuracy and completeness.
Used the work of actuarial expert to assists us in assessing the reasonableness of the claims reserve (including those prior to and after reinsurance). This included the following procedures:

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(1) Examined the reasonableness of the assessment method for the reserves;
(2) Examined the reasonableness of the assumptions used by Hotai Insurance;
(3) Recalculated each assumption adopted by Hotai Insurance for incurred but not report claims reserve in order to confirm the accuracy of the allowances for the reserves.
Examined those significant incurred but not reported cases on a sample basis and assessed the reasonableness of the estimated claims amount.

Other matter – Reference to the audits of other auditors

We did not audit the financial statements of certain investments recognized under the equity method which were audited by other auditors. Therefore, our opinion expressed herein, insofar as it relates to the amounts included in respect of these associates, is based solely on the audit reports of the other auditors. The balance of these investments recognized under the equity method amounted to NT$ 6,215,314 thousand and NT$ 5,929,129 thousand, constituting 2.14% and 2.32% of the consolidated total assets as at December 31, 2020 and 2019, respectively, and the comprehensive income amounted to NT$ 444,268 thousand and NT$ 329,241, constituting 2.57% and 2.19% of the consolidated total comprehensive income for the years then ended, respectively.

Other matter – Parent company only financial reports

We have audited and expressed an unqualified opinion with an Other matter section on the parent company only financial statements of Ho Tai Motor Co., Ltd. as at and for the years ended December 31, 2020 and 2019.

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

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

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either

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intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

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

Auditors’ responsibilities for the audit of the consolidated financial statements

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

As part of an audit in accordance with the generally accepted auditing standards in the Republic of China, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements

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represent the underlying transactions and events in a manner that achieves fair presentation.

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

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

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

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

Yu-Lung, Wu Fang-Yu, Wang For and on behalf of PricewaterhouseCoopers, Taiwan March 25, 2021

The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and independent auditors’ report are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice. As the financial statements are the responsibility of management, PricewaterhouseCoopers, Taiwan cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

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HO TAI MOTOR CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Assets	Notes	December 31,2020 Amount % $ 18,525,991 6 5,813,451 2 28,634 - - - 2,145,563 1 23,661 - 8,753,542 3 141,639,465 49 1,498,941 - 11,856,153 4 8,266,805 3 - - 1,600,071 1 200,152,277 69 1,051,390 - 9,690,894 3 16,328,527 6 453,372 - 48,726,030 17 3,085,225 1 2,362,562 1 1,211,245 - 1,805,728 1 5,384,710 2 90,099,683 31 $ 290,251,960 100	December 31,2019
		Amount $ 18,525,991 5,813,451 28,634 - 2,145,563 23,661 8,753,542 141,639,465 1,498,941 11,856,153 8,266,805 - 1,600,071 200,152,277 1,051,390 9,690,894 16,328,527 453,372 48,726,030 3,085,225 2,362,562 1,211,245 1,805,728 5,384,710 90,099,683 $ 290,251,960	Amount % $ 12,023,739 5 4,679,120 2 27,531 - 81,131 - 1,771,190 1 19,643 - 8,307,202 3 123,348,962 48 881,921 - 13,025,026 5 7,141,104 3 15,767 - 1,286,604 1 172,608,940 68 1,000,000 - 9,419,496 4 15,118,829 6 118,925 - 45,743,695 18 2,300,394 1 1,845,315 1 1,232,870 - 1,460,004 - 4,685,587 2 82,925,115 32 $ 255,534,055 100
Current Assets 1100 Cash and cash equivalents 1120 Financial assets at fair value through profit or loss-current 1125 Financial assets at fair value through other comprehensive income-current 1150 Derivative financial assets for hedging-current 1190 Other financial assets-current 1195 Contract assets-current 1201 Notes receivable 1202 Accounts receivable 1203 Other receivables 1270 Inventories 1280 Prepayments 1290 Non-current assets held for sale (or disposal group), net 1310 Reinsurance contract assets, net Total current assets Non-current assets 1410 Financial assets at fair value through profit or loss-non-current 1415 Financial assets at fair value through other comprehensive income-non-current 1470 Investments accounted for using the equity method 1480 Other financial assets-non-current 1500 Property, plant and equipment, net 1595 Right-of-use assets, net 1600 Investment property, net 1700 Intangible assets, net 1800 Deferred income tax assets, net 1900 Other assets Total non-current assets 1XXX Total Assets	6(1) 6(2) 6(3) 6(4) 6(1) and 8 6(28) 6(5), 7 and 8 6(5), 7 and 8 7 6(7) 6(8) 6(9) 6(2) 6(3) 6(10) 6(1) 6(11) 6(12) 6(14) 6(15) 6(33) 6(5)(9)(16)

(Continued)

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HO TAI MOTOR CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Liabilities and equity	Notes	December 31,2020 Amount % $ 48,292,510 17 84,021,875 29 62,171 - 355,051 - 1,442,973 1 698,070 - 10,710,299 4 6,143,160 2 1,115,032 1 435,365 - 495,682 - 19,543 - 2,540,184 1 293,359 - 12,249,530 4 345,629 - 15,501,137 5 184,721,570 64 3,136,165 1 6,851,105 2 6,973,746 2 1,422,072 1 3,261,852 1 108 - 21,645,048 7 206,366,618 71 5,461,792 2 2,818,336 1 12,544,333 4 381,843 - 42,338,324 15 1,933,076 1 65,477,704 23 18,407,638 6 83,885,342 29 $ 290,251,960 100	December 31,2019
		Amount $ 48,292,510 84,021,875 62,171 355,051 1,442,973 698,070 10,710,299 6,143,160 1,115,032 435,365 495,682 19,543 2,540,184 293,359 12,249,530 345,629 15,501,137 184,721,570 3,136,165 6,851,105 6,973,746 1,422,072 3,261,852 108 21,645,048 206,366,618 5,461,792 2,818,336 12,544,333 381,843 42,338,324 1,933,076 65,477,704 18,407,638 83,885,342 $ 290,251,960	Amount % $ 61,183,045 24 53,735,476 21 149,572 - 112,291 - 1,202,758 - 708,449 - 10,447,079 4 5,041,474 2 1,501,372 1 440,989 - 478,159 - 12,231 - 2,187,265 1 233,269 - 7,626,749 3 430,478 - 14,331,959 6 159,822,615 62 3,500,851 1 5,956,311 2 6,274,655 3 1,492,840 1 2,854,911 1 23,245 - 20,102,813 8 179,925,428 70 5,461,792 2 2,816,734 1 11,350,835 4 381,843 - 37,362,029 15 1,213,203 1 58,586,436 23 17,022,191 7 75,608,627 30 $ 255,534,055 100
Current Liabilities 2110 Short-term loans 2120 Short-term notes and bills payable 2140 Financial liabilities at fair value through profit or loss-current 2150 Derivative financial liabilities for hedging-current 2165 Contract liabilities-current 2201 Notes payable 2202 Accounts payable 2203 Accrued expenses 2204 Other payables 2250 Commissions payable 2260 Due to reinsurance and ceding companies 2270 Claims payable 2310 Current income tax liabilities 2320 Advance receipts 2330 Long-term liabilities-current portion 2335 Current lease liabilities 2350 Other current liabilities Total current liabilities Non-current liabilities 2550 Long-term loans 2600 Provisions 2620 Guarantee deposits received 2625 Non-current lease liabilities 2630 Deferred income tax liabilities 2660 Other liabilities Total non-current liabilities 2XXX Total liabilities Equity attributable to shareholders of the parent Share capital 3110 Common stock Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3330 Unappropriated earnings Other equity 3400 Other equity 31XX Total equity attributable to shareholders of the parent 32XX Non-controlling interest 3XXX Total equity Significant contingent liabilities and unrecognized contract commitments Total liabilities and equity	6(17) 6(18) 6(2) 6(4) 6(28) 7 6(21) and 7 7 7 6(19)(20) 7 6(9)(23)(24) 6(20) 6(9)(23) 6(24) 7 6(33) 6(25) 6(26) 6(27) 9 11

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

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HO TAI MOTOR CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019

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


Items	Notes	2020
Revenues 4010 Interest income 4020 Premiums revenue 4040 Reinsurance commission revenue 4050 Fee income 4060 Share of profit of associates and joint ventures accounted for using the equity method 4090 Gain on financial assets (liabilities) at fair value through profit or loss 4105 Realized gains on financial assets at fair value through other comprehensive income 4160 Net sales revenue 4161 Sales revenue 4162 Sales returns 4163 Sales discounts and allowances 4170 Rental revenue 4180 Service revenue 4210 Gains on disposals of property, plant and equipment 4230 Income from investment property 4260 Foreign exchange gains 4270 Other income 4256 Reversal gain on expected credit of investment and impairment loss 4245 Gains on using overlay approach of investment 4280 Unrealized profit from sales 4290 Realized profit from sales Total revenues Expenses 5010 Interest expense 5030 Underwriting expenses 5040 Commission expenses 5050 Claims payment 5070 Net changes in other insurance liabilities 5190 Cost of sales 5200 Cost of rental revenue 5210 Cost of services 5230 Operating expenses 5231 Selling expenses 5232 General and administrative expenses 5233 Research and development expenses 5287 Expected credit impairment loss of non-investment 5240 Loss on disposal of investments 5270 Expenses and losses from investment property 5320 Other expenses Total expenses 6100 Income before income tax from continuing operation 6200 Income tax expense 6500 Profit for the period

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HO TAI MOTOR CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019

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

Items	2020	2019
			%
Other comprehensive income (loss) for the period Components of other comprehensive income (loss) that may not be reclassified to profit or loss 6617 Gain from investments in equity instruments measured at fair value through other comprehensive income 6625 Share of other comprehensive loss of associates and joint ventures accounted for using equity method 6610 Total components of other comprehensive income that may not be reclassified to profit or loss 6650 Components of other comprehensive income (loss) that will be reclassified to profit or loss 6651 Financial statement translation differences of foreign operations 6659 Unrealized gains (loss) from investments in debt instruments measured at fair value through other comprehensive income 6661 Gain (loss) on hedging instrument 6675 Other comprehensive income reclassified by using overlay approach 6665 Share of other comprehensive income of associates and joint ventures accounted for using the equity method - components of other comprehensive income 6689 Income tax related to components of other comprehensive income Total components of other comprehensive income (loss) that will be reclassified to profit or loss 6600 Other comprehensive income (loss) for the period 6700 Total comprehensive income for the period Profit attributable to: 6810 Owners of parent 6820 Non-controlling interests Comprehensive income attributable to: 6910 Owners of parent 6920 Non-controlling interests Earnings per share (in dollars) Basic earnings per share Diluted earnings per share			1 -
			1
			- - - - - -
			-
			1
			7
			5 1
			6
			6 1
			7
			21.55
	$	$	21.54

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

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									Non-	controlling	interests Total equity		$ 8,900,232 $ 58,235,958	1,816,084 13,584,899	47,194 ) 1,464,276	1,768,890 15,049,175		- -	948,715 ) ( 7,502,865 )		- ( 16 )		499,139 663,336	2,360,394 ) -	9,163,039 9,163,039	$ 17,022,191 $ 75,608,627		$ 17,022,191 $ 75,608,627	2,686,340 16,535,210	37,998 725,303	2,724,338 17,260,513		- -	1,499,480 ) ( 9,145,989 )		- ( 1,056 )	2,658 ) -	163,247 163,247	$ 18,407,638 $ 83,885,342
											Total		$49,335,726	11,768,815	1,511,470 (	13,280,285		-	6,554,150 ) (		16 )		164,197	2,360,394 (	-	$58,586,436		$58,586,436	13,848,870	687,305	14,536,175		-	7,646,509 ) (		1,056 )	2,658 (	-	$65,477,704
HO TAI MOTOR CO., LTD. AND SUBSIDIARIES	CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY	YEARS ENDED DECEMBER 31, 2020 AND 2019	(Expressed in thousands of New Taiwan dollars)	Equity attributable to shareholders of the parent	Retained earnings Other equity	Financial Unrealized gains Other	statement on financial assets compre-	translation at fair value hensive income	differences of through other reclassified by Gain (loss)	Unappropriated foreign comprehensive using overlay on hedging	Capital surplus Legal reserve Special reserve earnings operations income approach instruments		$ 292,159 $ 10,348,282 $ 381,843 $ 32,983,752 ($ 327,983 ) $ 524,244 ( $ 288,026 ) ($ 40,337 )	- - - 11,768,815 - - - -	- - - 166,165 ( 359,145 ) 1,267,167 390,078 47,205	- - - 11,934,980 ( 359,145 ) 1,267,167 390,078 47,205		- 1,002,553 - ( 1,002,553 ) - - - -	- - - ( 6,554,150 ) - - - - (		( 16 ) - - - - - - - (		164,197 - - - - - - -	2,360,394 - - - - - - -	- - - - - - - -	$ 2,816,734 $ 11,350,835 $ 381,843 $ 37,362,029 ($ 687,128 ) $ 1,791,411 $ 102,052 $ 6,868		$ 2,816,734 $ 11,350,835 $ 381,843 $ 37,362,029 ($ 687,128 ) $ 1,791,411 $ 102,052 $ 6,868	- - - 13,848,870 - - - -	- - - ( 32,568 ) 190,842 277,689 247,833 3,509	- - - 13,816,302 190,842 277,689 247,833 3,509		- 1,193,498 - ( 1,193,498 ) - - - -	- - - ( 7,646,509 ) - - - - (		( 1,056 ) - - - - - - - (	2,658 - - - - - - -	- - - - - - - -	$ 2,818,336 $ 12,544,333 $ 381,843 $ 42,338,324($ 496,286 ) $ 2,069,100 $ 349,885 $ 10,377	The accompanying notes are an integral part of these consolidated financial statements.
									Share	capital-	common stock		$ 5,461,792	-	-	-		-	-		-		-	-	-	$ 5,461,792		$ 5,461,792	-	-	-		-	-		-	-	-	$ 5,461,792
											Notes								6(27)															6(27)
												For the year ended December 31, 2019	Balance at January 1, 2019	Profit for the year	Other comprehensive income (loss) for the year	Total comprehensive income (loss)	Appropriation and distribution of retained earnings:	Legal reserve	Cash dividends	Changes in equity of associates and joint ventures	accounted for using equity method	Difference between consideration and carrying amount	of subsidiaries disposed	Changes in ownership interests in subsidiaries	Changes in non-controlling interests	Balance at December 31, 2019	For the year ended December 31, 2020	Balance at January 1, 2020	Profit for the year	Other comprehensive income (loss) for the year	Total comprehensive income (loss)	Appropriation and distribution of retained earnings:	Legal reserve	Cash dividends	Changes in equity of associates and joint ventures	accounted for using equity method	Changes in ownership interests in subsidiaries	Changes in non-controlling interests	Balance at December 31, 2020

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HO TAI MOTOR CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Cash flows from operating activities
Consolidated profit before income tax
Adjustments to reconcile profit before tax to net cash
provided by operating activities
Income and expenses having no effect on cash flows
Net gain on financial assets and liabilities at fair
value through profit or loss

Expected credit loss / bad debts expense and
financial guarantee expense
Expected credit impairment loss (gain on reversal) of
investment
Expected credit impairment loss of non-investment
Depreciation

Amortization

Share-based payments
Impairment loss of rental assets

Profit from lease modification
Net gain on disposal of property, plant and equipment
Share of profit of associates accounted for using the
equity method

Interest expense
Interest income

Dividend income
Unrealized profit from sales
Realized profit from sales
Changes in assets and liabilities relating to operating
activities
Net changes in assets relating to operating activities
Financial assets at fair value through profit or loss
Contract assets
Notes and accounts receivable
Other receivables
Inventories
Prepayments
Reinsurance contract assets
Net changes in liabilities relating to operating
activities
Financial liabilities at fair value through profit or
loss
Contract liabilities
Notes and accounts payable
Accrued expenses
Other payables
Commission payable
Due to reinsurance and ceding companies
Claims payable
Advance receipts
Other current liabilities
Provisions
Other liabilities
Cash inflow generated from operations
Cash dividends received
Income tax paid
Interest received
Interest paid
Net cash provided by operating activities

Notes
2020
2019
$ 21,124,885 $ 17,372,986
6(2)
(
751,225 ) (
284,513 )
97,257
769,878
(
52 )
123
1,370,992
1,070,541
6(11)(12)(14)
(31)
9,588,070
8,879,781
6(31)
83,914
65,333
-
17,743
6(11)
199,143
85,046
(
171 )
-

(
30,753 ) (
35,695 )
6(10)
(
1,534,792 ) (
1,153,209 )
1,861,983
2,061,794
6(29)
(
9,877,529 ) (
9,377,005 )
(
350,377 ) (
256,523 )
44,478
48,845
(
48,845 ) (
58,873 )

(
183,200 ) (
229,078 )
(
4,018 ) (
863 )
(
20,205,092 ) (
12,236,656 )
(
617,595 )
528,392
6,206,664
2,795,664
(
1,116,882 ) (
622,173 )
(
361,653 ) (
151,273 )
(
87,401 )
130,525
240,215
127,585
252,841
38,828
1,125,003
238,414
(
386,340 )
53,201
(
5,624 )
80,881
17,523
78,191
7,312 (
849 )
60,090 (
41,596 )
1,281,875
1,027,303
894,794
957,712
(
23,137) (
28,498)
8,872,353
11,951,962
1,002,547
956,888
(
4,183,161 ) (
3,693,260 )
9,878,104
9,368,526
(
1,894,127) (
2,105,421)
13,675,716
16,478,695

(Continued)

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HO TAI MOTOR CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Cash flows from investing activities
Increase in financial assets at fair value through other
comprehensive income
(Increase) decrease in other financial assets
Acquisition of investments accounted for using the equity
method

Acquisition of property, plant and equipment

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

Increase in other assets
Acquisition of investment property

Acquisition of right-of-use assets
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issuance of bonds

Decrease in short-term loans

Increase in short-term notes and bills payable

Proceeds from long-term loans

Repayment of long-term loans

Changes in non-controlling interests
Repayment of principal portion of lease liability

Increase in guarantee deposits received

Cash dividends paid

Cash dividends paid from subsidiaries to non-controlling
interests
Proceeds from disposal of ownership interests in
subsidiaries (without losing control)
Net cash provided by financing activities
Net effect of changes in foreign currency exchange rates
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

Notes
2020
2019
( $ 3,089 ) ( $ 11,123 )
(
708,820 )
390,170
6(10)
(
328,503 ) (
102,554 )
6(11)
(
18,086,828 ) (
18,639,170 )

356,215
423,017
6(15)
(
48,286 ) (
62,194 )
(
607,867 ) (
1,249,868 )
6(14)
(
22,368 ) (
7,824 )
(
974,938 ) (
179,238 )
(
20,424,484 ) (
19,438,784 )
6(19)
7,000,000
-
6(36)
(
12,492,039 ) (
1,371,792 )
6(36)
30,286,399
5,863,562
6(36)
2,649,435
1,851,093
6(36)
(
5,380,000 ) (
2,750,000 )
163,247
9,145,296
6(12)
(
487,892 ) (
455,899 )
6(36)
586,394
531,674
6(27)
(
7,646,509 ) (
6,554,150 )
(
1,499,480 ) (
948,715 )
-
665,056
13,179,555
5,976,125
71,465 (
461,385 )
6,502,252
2,554,651
12,023,739
9,469,088
$ 18,525,991 $ 12,023,739

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

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INDEPENDENT AUDITORS’ REPORT

(TRANSLATED FROM CHINESE)

PWCR20000521

To the Board of Directors and Shareholders Ho Tai Motor Co., Ltd.

Opinion

We have audited the accompanying parent company only balance sheets of Ho Tai Motor Co., Ltd. (the “Company”) as of December 31, 2020 and 2019, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other auditors (please refer to “ other matter ” section), the accompanying parent company only financial statements present fairly, in all material respects, the parent company only financial position of the Company as of December 31, 2020 and 2019, and its parent company only financial performance and its cash flows for the years then ended, in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and generally accepted auditing standards in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ responsibilities for the audit of the parent company only financial statements section of our report. We are independent of the Company in accordance with the Norm of Professional Ethics for Certified Public Accountants of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained and the reports of other auditors are sufficient and appropriate to provide a basis for our opinion.

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Key audit matters

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

The key audit matters of the parent company only financial reports are stated as follows:

Evaluation of provision for impairment of accounts receivable of Hotai Finance Co., Ltd., the investment accounted for using equity method

Description

Hotai Finance Co., Ltd. (“Hotai Finance’’) is an investment by Ho Tai Motor Co., Ltd. accounted for using equity method. Its primary business is providing installment sales and leasing of vehicles. In the supply chain of motor vehicles, the role of Hotai Finance is to provide customers with flexible financing options and to streamline the vehicle delivery process. Therefore, Hotai Finance is responsible for the collections of accounts receivable and managements of overdue accounts.

When accounts receivable are past due over 30 days, Hotai Finance already considers the collectability of those accounts in doubt. In addition to enhancing the collection process from customers, management also assesses the probability of overdue accounts becoming impaired over the past years. Impairment is for those doubtful accounts receivable depending on the length of overdue days and considering forward-looking factors such as the future economic conditions. Management evaluates the individual circumstances of each overdue amount to decide whether to measure the loss allowance.

The assessment mentioned above involves management’s judgement and factors that may be affected by the past events, current condition, and the future economic conditions. The results will directly influence the amounts recognized. Therefore, the estimation of the loss allowance is identified as a key audit matter.

How our audit addressed the matter

Our key audit procedures performed in respect of the above matter are summarized as follows:

Understood the policy of provision for impairment of accounts receivable (including relevance to macroeconomic indicators of forward-looking information) and the logic of the aging report.

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For those accounts past due over 30 days, Hotai Finance will estimate and recognize the impairment of account receivable based on the probability of overdue accounts becoming impaired over the past years and based on Hotai Finance’s policy. In order to evaluate the reasonableness of the provision for impairment policy, we understood and assessed the occurrence percentage of actual impairment losses compared to the overdue accounts receivable over the past years, and other forward-looking information. In addition, we sampled and examined the expected credit losses report, and checked system information to ensure the consistency.
Sampled and examined the supporting documents of individual evaluation made by the management to evaluate the reasonableness of the expected credit loss recognized.

Valuation of the provisions for warranty

Description

Please refer to Note 4(22) of the parent company only financial statements for the accounting policies on provisions for warranty, Note 5(2) B for uncertainty of accounting estimate and assumptions of provisions for warranty, and Note 6(15) for details of the provisions for warranty.

In order to enhance customer’s confidence on product quality, Ho Tai Motor Co., Ltd. provides a warranty for cars being sold in the fourth year or with mileage under 120,000 kilometers. Since the provisions for warranty involves massive historical data as well as complex calculations in respect of maintenance and repair experience, it is identified as a key audit matter.

How our audit addressed the matter

Our key audit procedures performed in respect of the above matter are summarized as follows:

In terms of the agent brands, obtained the car sold information in the last four years that met the warranty items offered by Ho Tai Motor Co., Ltd., such as cars being used in the fourth year or with mileage under 120,000 kilometers and cars’ maintenance details as well as registration forms. Sampled and tested each car’s warranty cost on maintenance records.
Reviewed the system information in respect of total cars sold in the last four years which qualify for the warranty scheme mentioned above. Evaluated the reasonableness of provision for warranty by considering the average warranty cost claimed from each agent brand.

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Claims reserve and ceded claims reserve of Hotai Insurance Co., Ltd., the investment accounted for using equity method

Description

The claims reserve (including ceded claims) of Hotai Insurance Co., Ltd. (“Hotai Insurance”), an investment by Ho Tai Motor Co., Ltd. accounted for using equity method, is the reasonable amount of ultimate claims prior and after reinsurance based on the actuarial department’s historical claims development trend and experience. As of December 31, 2020, the claims reserve and ceded claims reserve of Hotai Insurance Co., Ltd. was NT$3,655,621 thousand and NT$900,591 thousand, respectively.

Since the calculation method and assumptions selection of claims reserve (including those ceded) involve subjective judgement and relatively high degree of uncertainty, and the estimation results have a material impact on the financial statements, we have thus included claims reserve and ceded claims reserve as a key audit matter in our audit.

How our audit addressed the matter

The procedures that we have conducted in response to specific aspects of the key audit matter mentioned above are summarized as follows:

Understood and assessed Hotai Insurance’s policies, internal control, and operational procedures related to claims reserve (including those ceded). Sampled and inspected the effectiveness of controls related to claims reserve calculation.
Sampled and examined the consistency of financial values used in calculating claims reserve with the recorded amounts in the books in order to confirm the accuracy and completeness.
Used the work of actuarial expert to assists us in assessing the reasonableness of the claims reserve (including those prior to and after reinsurance). This included the following procedures:
(1) Examined the reasonableness of the assessment method for the reserves;
(2) Examined the reasonableness of the assumptions used by Hotai Insurance;
(3) Recalculated each assumption adopted by Hotai Insurance for incurred but not reported claims reserve in order to confirm the accuracy of the allowances for the reserves.
Examined those significant incurred but not paid cases on a sample basis and assessed the reasonableness of the estimated claims amount.

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Other matter – Reference to the audits of other auditors

We did not audit the financial statements of certain investments recognized under the equity method which were audited by other auditors. Therefore, our opinion expressed herein, insofar as it relates to the amounts included in respect of these associates, is based solely on the audit reports of the other auditors. The balance of these investments recognized under the equity method amounted to NT$ 6,215,314 thousand and NT$ 5,929,129 thousand, constituting 7.42% and 7.75% of the total assets as at December 31, 2020 and 2019, respectively, and the comprehensive income amounted to NT$ 444,268 thousand and NT$ 329,241 thousand, constituting 3.06% and 2.48% of the total comprehensive income for the years then ended, respectively.

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

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

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

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

Auditors’ responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the generally accepted auditing standards in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of financial reporting users.

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A. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls.
B. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
C. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
D. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.
E. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
F. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

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

Yu-Lung, Wu Fang-Yu, Wang For and on behalf of PricewaterhouseCoopers, Taiwan March 25, 2021

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

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

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HO TAI MOTOR CO., LTD. PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

				December 31, 2020			December 31, 2019
	Assets	Notes		Amount	%		Amount	%
	Current Assets
1100	Cash and cash equivalents	6(1)	$	4,079,705	5	$	1,028,230	1
1110	Financial assets at fair value through	6(2)
	profit or loss – current			121,132	-		-	-
1150	Notes receivable, net	6(4)		194	-		8,679	-
1170	Accounts receivable, net	6(4)		35,196	-		35,277	-
1180	Accounts receivable – related parties, net	6(4) and 7		875,481	1		2,209,087	3
1200	Other receivables	7		775,166	1		589,829	1
130X	Inventories, net	6(5)		6,892,711	8		7,225,714	10
1410	Prepayments			535,843	1		377,952	-
11XX	Total current assets			13,315,428	16		11,474,768	15
	Non-current assets
1510	Financial assets at fair value through	6(2)
	profit or loss-non-current			500,000	1		500,000	1
1517	Financial assets at fair value through	6(3)
	other comprehensive income-non-current			8,050,052	10		7,804,554	10
1550	Investments accounted for using equity	6(6)
	method			54,766,276	65		49,779,288	65
1600	Property, plant and equipment	6(7)		3,655,402	4		4,023,217	5
1755	Right-of-use assets, net	6(8)		1,461	-		7,306	-
1760	Investment property, net	6(10)		2,451,228	3		1,965,743	3
1840	Deferred income tax assets	6(25)		522,187	1		427,112	-
1900	Other non-current assets			457,740	-		487,970	1
15XX	Total non-current assets			70,404,346	84		64,995,190	85
1XXX	Total Assets		$	83,719,774	100	$	76,469,958	100
		(Continued)

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HO TAI MOTOR CO., LTD. PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Liabilities and equity	Notes	December 31, 2020 Amount % $ 1,204,156 1 62,172 - 3,018,477 4 5,378,676 6 2,682,059 3 1,293,129 2 747,058 1 1,472 - 103,887 - 14,491,086 17 2,271,345 3 1,478,821 2 - - 818 - 3,750,984 5 18,242,070 22 5,461,792 7 2,818,336 3 12,544,333 15 381,843 - 42,338,324 51 1,933,076 2 65,477,704 78 $ 83,719,774 100	December 31, 2019
			Amount % $ 1,951,407 3 149,572 - 1,714,046 2 6,603,010 9 2,514,857 3 1,177,022 1 720,784 1 5,861 - 85,507 - 14,922,066 19 1,699,732 2 1,259,504 2 1,472 - 748 - 2,961,456 4 17,883,522 23 5,461,792 7 2,816,734 3 11,350,835 15 381,843 1 37,362,029 49 1,213,203 2 58,586,436 77 $ 76,469,958 100
Current Liabilities 2100 Short-term loans 2120 Financial liabilities at fair value through profit or loss-current 2170 Accounts payable 2180 Accounts payable – related parties 2200 Other payables 2230 Current income tax liabilities 2250 Provisions-current 2280 Current lease liabilities 2300 Other current liabilities 21XX Total current liabilities Non-current liabilities 2550 Provisions-non-current 2570 Deferred income tax liabilities 2580 Non-current lease liabilities 2600 Other non-current liabilities 25XX Total non-current liabilities 2XXX Total liabilities Equity Share capital 3110 Common stock Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated earnings Other equity 3400 Other equity 3XXX Total equity Significant contingent liabilities and unrecognized contract commitments Significant events after balance sheet date 3X2X Total liabilities and equity	6(11) 6(2) 6(12) 6(12) and 7 6(13) and 7 6(15) 6(15) 6(25) 6(16) 6(17) 6(18) 9 11

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

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HO TAI MOTOR CO., LTD. PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

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

Items	Notes	2020
4000 Operating revenue 5000 Operating costs 5900 Gross profit before realized (unrealized) profit from sales to subsidiaries and associates 5910 Unrealized profit from sales 5920 Realized profit from sales 5950 Gross profit Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6000 Total operating expenses 6900 Operating profit Non-operating income and expenses 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs 7070 Share of profit of subsidiaries, associates and joint ventures accounted for using equity method 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8200 Profit for the year Other comprehensive income (loss) for the year, net of tax Components of other comprehensive income (loss) that may not be reclassified to profit or loss 8316 Unrealized gain from investments in equity instruments measured at fair value through other comprehensive income 8330 Share of other comprehensive income (loss) of subsidiaries, associates and joint ventures accounted for using equity method 8310 Total components of other comprehensive income (loss) that may not be reclassified to profit or loss Components of other comprehensive income (loss) that will be reclassified to profit or loss 8361 Financial statement translation differences of foreign operations 8380 Share of other comprehensive income (loss) of subsidiaries, associates and joint ventures accounted for using equity method 8399 Income tax related to components of other comprehensive income 8360 Total components of other comprehensive income (loss) that will be reclassified to profit or loss 8300 Other comprehensive income (loss) for the year, net of tax 8500 Total comprehensive income for the year Earnings per share (in dollars) 9750 Basic earnings per share 9850 Diluted earnings per share	6(19) and 7 6(5) and 7 6(23) and 7 6(20) and 7 6(21) and 7 6(22) 6(6) 6(25) 6(3) 6(26) 6(26)
		$

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

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											Total equity		49,335,726	11,768,815	1,511,470	13,280,285		-	6,554,150 )		16 )		164,197		2,360,394	58,586,436		58,586,436	13,848,870	687,305	14,536,175		-	7,646,509 )		1,056 )	2,658	65,477,704
													$						(		(					$		$						(		(		$
				Other equity	Unrealized gains	(loss) on	financial assets	at fair value	through other Gain (loss) on	compre- hedging	hensive income instruments		$ 236,218 ( $ 40,337 )	- -	1,657,245 47,205	1,657,245 47,205		- -	- -		- -		- -		- -	$ 1,893,463 $ 6,868		$ 1,893,463 $ 6,868	- -	525,522 3,509	525,522 3,509		- -	- -		- -	- -	$ 2,418,985 $ 10,377
HO TAI MOTOR CO., LTD.	PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY	FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019	(Expressed in thousands of New Taiwan Dollars)	Retained earnings					Financial statement	Share-capital common Unapproprated translation differences	stock Capital surplus Legal reserve Special reserve earnings of foreign operations		$ 5,461,792 $ 292,159 $ 10,348,282 $ 381,843 $ 32,983,752 ($ 327,983 )	- - - - 11,768,815 -	- - - - 166,165 ( 359,145 )	- - - - 11,934,980 ( 359,145 )		- - 1,002,553 - ( 1,002,553 ) -	- - - - ( 6,554,150 ) -		- ( 16 ) - - - -		- 164,197 - - - -		- 2,360,394 - - - -	$ 5,461,792 $ 2,816,734 $ 11,350,835 $ 381,843 $ 37,362,029 ($ 687,128 )		$ 5,461,792 $ 2,816,734 $ 11,350,835 $ 381,843 $ 37,362,029 ($ 687,128 )	- - - - 13,848,870 -	- - - - ( 32,568 ) 190,842	- - - - 13,816,302 190,842		- - 1,193,498 - ( 1,193,498 ) -	- - - - ( 7,646,509 ) -		- ( 1,056) - - - -	- 2,658 - - - -	$ 5,461,792 $ 2,818,336 $ 12,544,333 $ 381,843 $ 42,338,324($ 496,286 )
											Notes	For the year ended December 31, 2019	Balance at January 1, 2019	Profit for the year	Other comprehensive income (loss) for the year	Total comprehensive income (loss)	Appropriation and distribution of retained earnings: 6(18)	Legal reserve	Cash dividends	Changes in equity of associates and joint ventures	accounted for using equity method	Difference between consideration and carrying	amount of subsidiaries disposed	Participation of capital increase of subsidiaries not	proportionately to ownership	Balance at December 31, 2019	For the year ended December 31, 2020	Balance at January 1, 2020	Profit for the year	Other comprehensive income (loss) for the year	Total comprehensive income (loss)	Appropriation and distribution of retained earnings: 6(18)	Legal reserve	Cash dividends	Changes in equity of associates and joint ventures	accounted for using equity method	Changes in ownership interests in subsidiaries 6(6)	Balance at December 31, 2020

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HO TAI MOTOR CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Cash flows from operating activities
Profit before income tax
Adjustments to reconcile profit before tax to net cash provided by
operating activities
Income and expenses having no effect on cash flows
Net (gain) loss on financial assets and liabilities at fair value through
profit or loss

Depreciation

Net (loss) gain on disposal of property, plant and equipment

Loss on abandonment of property, plant and equipment

Share of profit of associates accounted for using equity method

Dividend income
Interest expense
Interest income

Unrealized profit from sales
Realized profit from sales
Changes in assets and liabilities relating to operating activities
Net changes in assets relating to operating activities
Financial assets at fair value through profit or loss
Notes receivable
Accounts receivable
Other receivables
Inventories
Prepayments
Net changes in liabilities relating to operating activities
Notes and accounts payable
Other payables
Other current liabilities
Other non-current liabilities
Cash inflow generated from operations
Cash dividends received
Interest paid
Interest received
Income tax paid
Net cash provided by operating activities
Cash flows from investing activities
Acquisition of investments accounted for using equity method

Acquisition of property, plant and equipment

Acquisition of investment property

Proceeds from disposal of property, plant and equipment

Decrease in other non-current assets
Net cash used in investing activities
Cash flows from financing activities
(Decrease) increase in short-term loans

Cash dividends paid

Repayments of principal portion of lease liability

Net cash used in financing activities
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

Notes
2020
2019
$ 16,201,618 $ 13,737,316
6(22)
(
132,411 )
117,446
6(23)
96,972
97,423
6(22)
(
1,303 )
773
6(22)
5
139
6(6)
(
6,270,255 ) (
5,376,506 )
(
252,700 ) (
250,185 )
23,036
44,743
6(20)
(
65,925 ) (
63,416 )
136,549
219,755
(
219,755 ) (
106,759 )
(
76,121 )
17,250
8,485 (
837 )
1,333,687
443,979
(
185,970 )
176,701
333,003 (
1,989,374 )
(
158,041 ) (
53,974 )
80,097
14,755
167,842 (
122,841 )
18,380 (
3,860 )
597,957
696,056
11,635,150
7,598,584
2,948,108
2,757,140
(
23,528 ) (
44,878 )
66,558
63,558
(
2,112,399) (
1,845,898 )
12,513,889
8,528,506
6(6)
(
885,524 ) (
718,591 )
6(7)
(
211,545 ) (
341,685 )
6(10)
(
149 ) (
269 )
6(7)
4,195
8,762
30,230 (
91,094 )
(
1,062,793 ) (
1,142,877)
6(27)
(
747,251 )
70,593
6(18)(27)
(
7,646,509 ) (
6,554,150 )
6(27)
(
5,861 ) (
5,818 )
(
8,399,621 ) (
6,489,375 )
3,051,475
896,254
1,028,230
131,976
$ 4,079,705$ 1,028,230

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

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Appendix 4

Hotai Motor Co., Ltd.

Table of Distribution of 2020 Profits

Unit: NT$

		Unit: NT$
Item Unappropriated earnings from previous period Profit before income tax of current year Less: Income tax Plus: Profit of current year Plus: 2020 retained earnings adjustment After–tax net income for the period and other items other than after-tax net income for the period Less: 10% set aside for legal reserve Distributable earnings of current period Distributable Items Cash dividends (NT$17 per share) Unappropriated earnings at the end of period	Subtotal 16,201,617,636 2,352,747,729	Total
		28,522,022,360 13,848,869,907 (32,568,234)
		13,816,301,673 1,381,630,167
		12,434,671,506 9,285,046,128
		31,671,647,738

Huang, Nan-Kuang Su, Chwen-Shing Chen, Ting-Ju Chairman of the Board Executive Officer Chief Accounting Officer

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Appendix 5

Comparison of the Current and Amended Provisions of the Company’s Rules and Procedures of Shareholders’ Meeting

	Amended Provisions	Current Provisions	Commentary
Article 9	The agenda of the Meeting shall be set by the Board of Directors if the Meeting is convened by the Board of Directors. Unless otherwise resolved at the Meeting, the Meeting shall proceed in accordance with the agenda. The above provision applies mutatis mutandis to cases where the Meeting is convened by any person, other than the Board of Directors, who is entitled to convene such Meeting. Unless otherwise resolved at the Meeting, the chairman cannot announce adjournment of the Meeting before all the discussion items (including special motions) listed in the agenda are resolved. In the event that the Chairman adjourns the Meeting in violation of these Rules and Procedures, the shareholders may designate, by a majority of votes represented by shareholders attending the Meeting, one person as chairman to continue the Meeting. The shareholders cannot designate any other person as chairman and	The agenda of the Meeting shall be set by the Board of Directors if the Meeting is convened by the Board of Directors. Unless otherwise resolved at the Meeting, the Meeting shall proceed in accordance with the agenda. The above provision applies mutatis mutandis to cases where the Meeting is convened by any person, other than the Board of Directors, who is entitled to convene such Meeting. Unless otherwise resolved at the Meeting, the chairman cannot announce adjournment of the Meeting before all the discussion items (including special motions) listed in the agenda are resolved. In the event that the Chairman adjourns the Meeting in violation of these Rules and Procedures, the shareholders may designate, by a majority of votes represented by shareholders attending the Meeting, one person as chairman to continue the Meeting. The shareholders cannot designate any other person as chairman and continue the Meeting in the same or other place	Paragraph changes.

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	Amended Provisions	Current Provisions	Commentary
	continue the Meeting in the same or other place after the Meeting is adjourned.	after the Meeting is adjourned.
Article 15	Except otherwise specified in Company Law of Republic of China or the Articles of Incorporation of the Company, a resolution shall be adopted by a majority of the votes represented by the shareholders present at the Meeting. The resolution shall be deemed adopted if no objection is voiced after solicitation by the chairman and shall have the same effect as if it was voted. The result of voting shall be announced at the Meeting and placed on record. The minutes shall be recorded and preserved in accordance with Article 18 of the Articles of Incorporation of the Company.	Except otherwise specified in Company Law of Republic of China or the Articles of Incorporation of the Company, a resolution shall be adopted by a majority of the votes represented by the shareholders present at the Meeting. The resolution shall be deemed adopted if no objection is voiced after solicitation by the chairman. If there is an objection, the resolution shall be deemed adopted as if the chairman achieves the requirement that the present shareholders deduct the objected shareholders pass majority of the votes. The above two ways shall be deemed adoptedand shall have the same effect as if it was voted. The result of voting shall be announced at the Meeting and placed on record. The minutes shall be recorded and preserved in accordance with Article 18 of the Articles of Incorporation of the Company.	The provision is revised to align with common practices of shareholders’ meetings.

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	Amended Provisions	Current Provisions	Commentary
Article 20	These Rules and Procedures shall be effective from the date it is approved by the Shareholders' Meeting. The same applies in case of revision.	These Rules and Procedures shall be effective from the date it is approved by theAnnual Shareholders' Meeting. The same applies in case of revision.	The provision is revised to create more flexibility for the Company’s operations and governance.

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HOTAI MOTOR CO., LTD.

Rules and Procedures of Shareholders’ Meeting (Before Amendment)

June 21, 2012

Article 1

Shareholders' Meeting of the Company (the Meeting) shall be conducted in Accordance with these Rules and Procedures. Any matter not provided in these Rules and Procedures shall be handled in accordance with relevant laws and regulations.

Article 2

The shareholders of this Rules and Procedures mean and equal to shareholders themselves or his/her representative.

Article 3

Shareholders attending the Meeting shall be with attendance certification and submit the attendance card for the purpose of signing in. The number of shares represented by shareholders attending the Meeting shall be calculated in accordance with the attendance cards submitted by the shareholders.

Article 4

The Meeting shall be held at the head office of the Company or at any other appropriate place that is convenient for the shareholders to attend. The time to start the Meeting shall not be earlier than 9:00 a.m. or later than 3:00 p.m.

Article 5

The Chairman of Board of Directors shall be the chairman presiding at the Meeting in the case that the Meeting is convened by the Board of Directors. If, for any reason, the Chairman of Board of Directors cannot preside at the Meeting, the Vice Chairman of Board of Directors shall preside at the Meeting. If, for any reason, the Vice Chairman of Board of Directors cannot preside at the Meeting, the Chairman shall appoint one of the Directors to represent him/her. If the Chairman of Board of Directors do not appoint one, the managing directors or the Directors should elect one person from amongst themselves.

If the Meeting is convened by any other person entitled to convene the Meeting, such person shall be the chairman to preside at the Meeting.

If there are more than one person entitled to convene the Meeting, they should elect each other themselves.

Article 6

The Company may appoint designated counsel, CPA or other related persons to attend the Meeting.

Persons handling affairs of the Meeting shall wear identification cards.

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Article 7

The process of the Meeting shall be tape recorded or videotaped and these tapes shall be preserved for at least one year.

Article 8

Chairman shall call the Meeting to order at the time scheduled for the Meeting. If the number of shares represented by the shareholders present at the Meeting has not yet constituted the quorum at the time scheduled for the Meeting, the chairman may postpone the time for the Meeting. The postponements shall be limited to two times at the most and Meeting shall not be postponed for longer than one hour in the aggregate. If after two postponements no quorum can yet be constituted but the shareholders present at the Meeting represent more than one - third of the total outstanding shares, tentative resolutions may be made in accordance with Section 1 of Article 175 of Company Law of Republic of China. The aforesaid tentative resolutions shall be executed in accordance with relevant provisions of Company Law of Republic of China. If during the process of the Meeting the number of outstanding shares Represented by the shareholders present becomes sufficient to constitute the quorum, the chairman may submit the tentative resolutions to the Meeting for approval in accordance with Article 174 of Company Law of Republic of China.

Article 9

The agenda of the Meeting shall be set by the Board of Directors if the Meeting is convened by the Board of Directors. Unless otherwise resolved at the Meeting, the Meeting shall proceed in accordance with the agenda. The above provision applies mutatis mutandis to cases where the Meeting is convened by any person, other than the Board of Directors, who is entitled to convene such Meeting.

Unless otherwise resolved at the Meeting, the chairman cannot announce adjournment of the Meeting before all the discussion items (including special motions) listed in the agenda are resolved. In the event that the Chairman adjourns the Meeting in violation of these Rules and Procedures, the shareholders may designate, by a majority of votes represented by shareholders attending the Meeting, one person as chairman to continue the Meeting.

The shareholders cannot designate any other person as chairman and continue the Meeting in the same or other place after the Meeting is adjourned.

Article 10

When a shareholder present at the Meeting wishes to speak, a Speech Note should be filled out with summary of the speech, the shareholder's number (or the number of Attendance Card) and the name of the shareholder. The sequence of speech by shareholders should be decided by the chairman.

If any shareholder present at the Meeting submits a Speech Note but does not speak, no speech should be deemed to have been made by such shareholder. In case the contents of the speech of a shareholder are inconsistent with the contents of the Speech Note, the contents of actual speech shall prevail.

Article 11

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shareholder shall not, for each discussion item, speak more than once, each time not exceeding 3 minutes. For other items, each shareholder shall not speak more than two times, each time not exceeding 5 minutes.

If a corporate shareholder designates two or more representatives to attend the Meeting, only one representative can speak for each discussion item.

In case the speech of any shareholder violates the above provision or exceeds the scope of the discussion item, inappropriately influence the Meeting, the chairman may stop the speech of such shareholder. The shareholders who disobey the chairman’s instruction might be forced to leave the Meeting by disciplinary officers involuntary.

Unless otherwise permitted by the chairman and the shareholder in speaking, no shareholder shall interrupt the speeches of the other shareholders, otherwise the chairman shall stop such interruption.

Article 12

After the speech of a shareholder, the chairman may respond himself/herself or appoint an appropriate person to respond.

Article 13

The chairman may announce to end the discussion of any resolution and go into voting if the chairman deems it appropriate.

Article 14

The person(s) to check and the person(s) to record the ballots during a vote by casting ballots shall be appointed by the chairman. The person(s) checking the ballots shall be a shareholder(s).

Article 15

Except otherwise specified in Company Law of Republic of China or the Articles of Incorporation of the Company, a resolution shall be adopted by a majority of the votes represented by the shareholders present at the Meeting. The resolution shall be deemed adopted if no objection is voiced after solicitation by the chairman. If there is an objection, the resolution shall be deemed adopted as if the chairman achieve the requirement that the present shareholders deduct the objected shareholders pass majority of the votes. The above two ways shall be deemed adopted and shall have the same effect as if it was voted.

The result of voting shall be announced at the Meeting and placed on record. The minutes shall be recorded and preserved in accordance with Article 18 of the Articles of Incorporation of the Company.

Article 16

If there is amendment to or substitute for a discussion item, the chairman shall decide the sequence of voting for such discussion item, the amendment or the substitute. If any one of them has been adopted, the others shall be deemed vetoed and no further voting is necessary.

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Article 17

During the Meeting, the chairman may, at his/her discretion, set time for intermission. In case of incident of force majeure such as Air raid warning, earthquakes and outbreak of fire, the chairman may decide to temporarily suspend the Meeting until the emergency is being solved for an hour and announce when the Meeting will resume.

Article 18

The chairman may conduct the disciplinary officers or the security guard to assist in keeping order of the Meeting place. Such disciplinary officers or security guards shall wear badges marked "Disciplinary Officers" for identification purpose. The shareholders shall obey the chairman and Disciplinary Officers’ instructions. The person who intervene or disturb the Meeting and do not obey instructions shall be remove as obstacles by disciplinary officers.

Article 19

Any matter not provided in these Rules and Procedures shall be handled in accordance with Company Law, Securities and Exchange Act and relevant laws and regulations.

Article 20

These Rules and Procedures shall be effective from the date it is approved by the Shareholders' Meeting. The same applies in case of revision.

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Appendix 6

Details of the Concurrent Positions Held by Directors of the Company Subject to the Release Granted

Title	Name	Current Positions at Other Companies
Director	Li Gang Enterprise Co., Ltd. represented by Mr. Su, Chwen-Shing	Director, Hotong Motor Investment Co., Ltd. Vice Chairman, Kuozui Motors Co., Ltd. Director, Shanghai Fengyi Construction Decoration Limited Company Managing Director, Toyota Tsusho (Taiwan) Co., Ltd.
Director	Toyota Motor Corporation represented by Mr. Kazuo Naganuma	Chairman, Kuozui Motors Co., Ltd.
Director	Yuan Tuo Investment Co., Ltd., represented by Mr. Ko, Junn-Yuan	Chairman, Hotai Coachwork Manufacturing Co., Ltd. Chairman, Yuan Tuo Investment Co., Ltd.,
Director	Chun Yung Investment Co., Ltd. represented by Mr. Huang, Chih- Cheng	Chairman, Toyota Material Handling Taiwan Ltd. Director, Taiyuan Zhong Du Heling Lexus Motor Sales & Service Co., Ltd. Director, Shanghai Fengyi Construction Decoration Limited Company
Director	Yong Hui Development Co., Ltd. represented by Mr. Leon Soo	Director, Kuozui Motors Co., Ltd. Director, Hoyu Investment Co., Ltd. Vice Chairman, Hotong Motor Investment Co., Ltd. Director, Taiyuan Zhong Du Heling Lexus Motor Sales & Service Co., Ltd. Managing Director, Shanghai Zhongxin Traffic Facility Engineering Co., Ltd. Chairman, Shanghai Fengyi Construction Decoration Limited Company Director and President, Tianjin Yongda Communication Technology Co., Ltd

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Exhibit 1

VIII. Exhibits

HOTAI MOTOR CO., LTD.

Articles of Incorporation

June 19, 2020

Section I - General Provisions

Article 1

The Company shall be incorporated, as a company limited by shares, under the Company Law of the Republic of China, and its name is Hotai Motor Company Limited.

Article 2

The scope of business of the Company shall be as follows:

Manufacture, assemble and sell all kinds of Motors (include chassis and car body) and components.
Import and export all kinds of Motor Vehicles (include chassis and car body) and components.
Manufacture and maintain Special Vehicles (trailers, rubbish trucks, cranes, cement mixing vehicles, tankers and etc.)
Manufacture, assemble and sell all kinds of Industry Vehicles (tractors, bucket cars and hand lift cars) and components.
Car fix and Maintenance.
Import, export, and sell automotive measurement of Motor Vehicles.
Agency Business for all countries.
Broker Business.
Import and Export business.
10.Manufacture, assemble and sell heating and cooling machines for Motor Vehicles and the components.
11.Import and export heating and cooling machines for Motor Vehicles and the components.
12.Manufacture, assemble, sell, import and export radio equipment.
13.G801010 Warehousing.
14.In addition to business outside an operating license other laws prohibiting or restricting the non- business.

Article 3

The Company may provide endorsement and guarantee and act as a guarantor.

Article 4

The Company shall not be subject to the restriction of not more than forty percent of the Company’s paid-up capital as provided in Article 13 of the Company Law if the Company is as shareholders with limited liability.

Article 5

The Company has its head office in Taipei City Taiwan, Republic of China, and shall be free, upon approval of Board of Director to set up, terminate or change representative and branch offices at various locations within and without the territory of the Republic of China, wherever and whenever the Company deems it necessary or advisable to

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carry out any or all of its activities.

Article 6

Public announcements of the Company shall be made in accordance with Article 28 of Company Law of the Republic of China.

Section II - Capital Stock

Article 7

The total capital stock of the Company shall be in the amount of 6,000,000,000 New Taiwan Dollars, divided into 600,000,000 shares, at ten New Taiwan Dollars each, and may be issued in installments under approval of the Board of Directors.

Article 8

The Company could ask for Large Denomination Securities if it is necessary to send the stocks to Taiwan Depository and Cleaning Corporation.

Article 9

The share certificates of the Company shall all be name-bearing and numbered share certificates signed by or sealed with the chop by the director representing the Company, and issued by a bank legally competent to serve as the attester for the issuance of share certificates in accordance with Company Law and relevant regulations of the Republic of China. The Company may issue shares without printing share certificates, but should log the shares with Taiwan Depository and Cleaning Corporation.

Article 10

All transfer of stocks, pledge of rights, loss, succession, gift, loss of seal, amendment of seal, change of address or similar stock transaction conducted by shareholders of the Company shall follow the “Guidelines for Stock Operations for Public Companies” unless specified otherwise by law and securities regulations.

Article 11

The entries in the shareholders' roster shall not be altered within 60 days prior to the convening date of a regular shareholders' meeting, or within 30 days prior to the convening date of a special shareholders' meeting, or within 5 days prior to the target date fixed by the Company for distribution of dividends, bonus or other benefits.

Article 12

The Company could charge handling fee whilst a stock certificate needs replacement because it is lost or because of other reasons.

Section III – Shareholders’ Meeting

Article 13

Shareholders’ meetings of the Company are of two types, namely: (1) regular meeting and (2) special meeting. Regular meeting holds every year and shall be convened within six months after the close of each fiscal year. Special meeting shall be convened if necessary.

The meeting shall be convened by Board of Directors unless there are relevant laws,

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rules and regulations of the Republic of China.

Article 14

Each share of stock shall be entitled to one vote.

Article 15

Except as otherwise provided in the Company Law of the Republic of China, the chairman of shareholders’ meeting should follow Article 23 of Articles of Incorporation.

Article 16

If a shareholder is unable to attend a shareholders’ meeting, he/she may appoint a representative to attend it, and to exercise, on his/her behalf, under his/her permission for all rights at the meeting, in accordance with Article 177 of Company Law of the Republic of China. The way to use proxies shall follow Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies unless there are other regulation by Company Law of Republic of China.

Article 17

Except as provided in Company Law of the Republic of China, resolutions shall be adopted at the meeting with the concurrence of a majority of the votes held by shareholders present at the meeting, and shareholders’ meetings may be held if attended shareholders more than one half of the total issued and outstanding capital stock of the Company.

Article 18

The resolutions of the shareholders’ meeting shall be recorded in the minutes, and such minutes shall record the date, place, chairman’s name, the way of resolutions, meeting process and result of shareholders’ meeting. Such minutes shall be signed by or sealed with the chop of the chairman of the meeting and sent to all shareholders in 20 days and kept during the continuance of existence of the Company.

The delivery of such minutes could be a public announcement.

The attendance list and proxies of the meetings shall be filed and kept at least a year, but if a shareholder raise a suit in accordance with Article 189 of Company Law of Republic of China, the attendance list and proxies of the meetings shall be filed and kept until the suit is over.

Section IV - Directors and Board of Directors

Article 19

The Company shall have thirteen to fifteen directors. The aforesaid Board of Directors shall have three independent directors, and ten to twelve non-independent directors. Directors shall be elected by adopting candidates nomination system as specified of Company Law of Republic of China. The term of office for Directors shall be three years, and all Directors shall be eligible for re-election.

The election of independent directors and non-independent directors shall be held together; however, the number of independent directors and non-independent directors elected shall be calculated separately. The ones with more votes are the ones

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being independent or non-independent directors.

Article 20

The directors shall elect from among themselves a Chairman of Board of Directors, by a majority in a meeting attended by over two-thirds of the Directors. The Company shall have a Vice Chairman through the same way if necessary.

Article 21

The Chairman of Board of Directors shall have the authority to represent the Company and execute all management complied with the relevant regulations, Articles of Incorporation, Resolutions of shareholders’ meeting and Board of Directors.

Article 22

In the case that vacancies on the Board of Directors exceed, for any reason, one third of the total number of the Directors, then the Board of Directors shall convene a shareholders’ meeting to elect new Directors to fill such vacancies in 60 days.

Article 23

Except the first Board meeting of every term of the newly elected Board of Directors, which shall be convened by the Director who has received the largest number of votes after such new election, meetings of Board of Directors shall be convened by the Chairman of Board of Directors.

The Chairman of Board of Directors shall have the authority to represent the Company and shall chair the of shareholders’ meeting and Board of Directors’ meeting. In case the Chairman of the Board of Directors is on leave or unable to exercise his power and authority for any cause, the Vice Chairman shall act on his behalf. In case there is no Vice Chairman, or the Vice Chairman is also on leave or absent or unable to exercise his power and authority for any cause, the Chairman of Board of Directors shall designate one of the managing directors, or where there is no managing directors, one of the directors to act on his behalf. The Chairman of Board of Directors could also be elected by directors themselves if there is no appointed Chairman of Board of Directors. Notices of Board of Directors’ meetings could be through written, fax or electronic.

Article 24

Except as otherwise provided in Company Law of the Republic of China, a meeting of Board of Directors may be held if attended by a majority of total Directors and resolutions shall be adopted with the concurrence of the majority of the Directors present at the meeting.

Article 25

A Director shall attend the meetings of Board of Directors in person, if he/she may not attend, he/she shall by written authorization, appoint another Director to attend on his/her behalf of meetings of the Board of Directors, and to vote for him on all matters presented at such meeting, but no Director may act as proxy for more than one other Director.

Article 26

The resolutions of Board meetings shall be recorded in the minutes, and such minutes

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shall record the date, place, chairman’s name, the way of resolutions, meeting process and result of Board meetings. Such minutes shall be signed by or sealed with the chop of the chairman of the meeting and sent to all directors in 20 days.

The production and delivery of such minutes could be through electronic.

The minutes, attendance list of the meetings shall be kept during the continuance of existence of the Company.

Article 27

In compliance with regulation, the Company shall establish an Audit Committee, which shall consist of all independent directors.

The Audit Committee shall be responsible for those responsibilities of Supervisors specified under Company Law, Securities and Exchange Law and other relevant regulations of the Republic of China.

In addition to the establishment of an Audit Committee, the Company’s Board of Directors may also establish other functional committees, and their regulations shall be enacted by the Board of Directors.

Article 28

The Board of Directors is authorized to determine the salary for Directors, the standards of the industry shall take into account. The company may take out liability insurance for directors with respect to liabilities resulting from exercising their duties during their terms of occupancy.

Article 29

The total registered shares owned by Directors of the Company shall in accordance with Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies.

Section V – Management

Article 30

The Company shall appoint one President, and such other Vice Presidents and Directors.

Article 31

The decision to engage with, terminate and pay for the managers shall be held in the meeting of Board of Directors if attended by a majority of total Directors and resolutions shall be adopted with the concurrence of the majority of the Directors present at the meeting.

Section - VI Account

Article 32

The fiscal year for the Company shall be from January 1 of each year to December 31 of the same year.

Article 33

After the close of each fiscal year, the following reports shall be prepared by the Board of Directors, and submitted to the Audit Committee before 30 days of regular

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shareholders’ meeting:

Business Report;
Financial Statements;
The surplus earning distribution or loss offsetting proposals.

Article 34

To the extent that the Company has generated annual profits, 1% of which shall be set aside for employee remuneration and no more than 2% for directors’ remuneration; provided, however, independent directors are not eligible to participate in the profit distribution of the Company. Any accumulated losses of the Company shall first be offset. Employee remuneration may be paid in the form of stocks or cash and shall be approved by over half of the directors present at the Board meeting attended by at least two-thirds of the directors, and shall be reported at the shareholders’ meeting. Employee remuneration may be paid in the form of stocks or cash and shall be approved by over half of the directors present at a Board meeting attended by at least two-thirds of the director; in addition thereto, such distribution shall be reported at the shareholders’ meeting.

Article 35

The Company is in a constantly evolving industry and has entered into the maturity stage of its life cycle. In order to fulfill the need of shareholders’ cash inflow and take the Company’s funding requirement and long-term financial plan into consideration, when allocating the net profits for each fiscal year, the Company shall first offset its losses in previous years under relevant regulations and set aside a legal capital reserve at 10% of the profits left over. Besides, after appropriating or returning to special capital reserve pursuant to applicable law or regulation, combine the shareholder earnings available for appropriation including accumulated un-appropriated earnings and earnings available for appropriation of this year. The ratio for dividend shall not fewer than 50% of current year earnings available for distribution; distribution of cash dividend shall not fewer than 10% of total dividend.

The way and ratio of distribution of profits shall take profit status and financial factors into consideration; the proposal shall be prepared by the Board of Directors, and then submitted to shareholders’ meeting asking for recognition.

The decision to distribute all or part of the dividends and/or bonuses in cash shall be adopted by a resolution of the majority of the Board of Directors in a meeting attended by over two-thirds of the directors and reported to the shareholders’ meeting; the requirement to obtain shareholders’ approval in the preceding paragraph does not apply.

Section VII Supplementary Provisions

Article 36

The internal organization of the Company and the detailed procedures of business operation shall be determined by the Board of Directors.

Article 37

In regard to all matters not provided for in these Articles of Incorporation, the Company

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Law and other related regulations of the Republic of China shall govern.

Article 38

These Articles of Incorporation are agreed to and signed on January 1, 1955, and the first Amendment was on February 28, 1959, the second Amendment on February 6,1960, the third Amendment on August 15, 1966, the fourth Amendment on May 12,1967, the fifth Amendment on October 1, 1967, the sixth Amendment on March 15,1970, the seventh Amendment on December 5, 1970, and the eighth Amendment on September 30, 1971, the ninth Amendment on February 28, 1974, the tenth Amendment on June 18,1974, the eleventh Amendment on June 26, 1976, the twelfth Amendment on March 15, 1977, the thirteenth Amendment on March 17, 1978, the Fourteenth Amendment on April 25, 1979, the fifteenth Amendment on May 10, 1981, the sixteenth Amendment on September 7, 1982, the seventeenth Amendment on October 27, 1983, the eighteenth Amendment on March 17, 1988, the nineteenth Amendment on May 18, 1990, the twentieth Amendment on April 24, 1991, the twentyfirst Amendment on May 22, 1992, the twenty-second Amendment on March 26, 1993, the twenty-third Amendment on May 27, 1994, the twenty-fourth Amendment on June 13, 1995, the twenty-fifth Amendment on May 10, 1996, the twenty-sixth Amendment on May 16, 1997, the twenty-seventh Amendment on May 15, 1998, the twenty-eighth Amendment on May 24, 2000, the twenty-ninth Amendment on May 11, 2001, thirty Amendment on June 20, 2002, thirty-first Amendment on June 18, 2004, thirty-second Amendment on June 13, 2007,thirty-third Amendment on June 21, 2012, thirty-fourth Amendment on June 25, 2015, thirty-fifth Amendment on June 21, 2016, thirty-sixth Amendment on June 20, 2019, and thirty-seventh Amendment on June 19, 2020.

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Exhibit 2

HOTAI MOTOR CO., LTD.

Rules and Procedures of Shareholders’ Meeting

June 21, 2012

Article 1

Article 2

The shareholders of this Rules and Procedures mean and equal to shareholders themselves or his/her representative.

Article 3

Article 4

Article 5

If the Meeting is convened by any other person entitled to convene the Meeting, such person shall be the chairman to preside at the Meeting.

If there are more than one person entitled to convene the Meeting, they should elect each other themselves.

Article 6

The Company may appoint designated counsel, CPA or other related persons to attend the Meeting.

Persons handling affairs of the Meeting shall wear identification cards.

Article 7

The process of the Meeting shall be tape recorded or videotaped and these tapes

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shall be preserved for at least one year.

Article 8

Article 9

The shareholders cannot designate any other person as chairman and continue the Meeting in the same or other place after the Meeting is adjourned.

Article 10

Article 11

The inquiries related to the report items set forth in the agenda from the shareholders or their representatives shall only be raised after the chairman or his/her representative finishes the reading or reporting of such report items. Each shareholder shall not, for each discussion item, speak more than once, each time not exceeding 3 minutes. For other items, each shareholder shall not speak more

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than two times, each time not exceeding 5 minutes.

If a corporate shareholder designates two or more representatives to attend the Meeting, only one representative can speak for each discussion item.

Unless otherwise permitted by the chairman and the shareholder in speaking, no shareholder shall interrupt the speeches of the other shareholders, otherwise the chairman shall stop such interruption.

Article 12

After the speech of a shareholder, the chairman may respond himself/herself or appoint an appropriate person to respond.

Article 13

The chairman may announce to end the discussion of any resolution and go into voting if the chairman deems it appropriate.

Article 14

The person(s) to check and the person(s) to record the ballots during a vote by casting ballots shall be appointed by the chairman. The person(s) checking the ballots shall be a shareholder(s).

Article 15

The result of voting shall be announced at the Meeting and placed on record. The minutes shall be recorded and preserved in accordance with Article 18 of the Articles of Incorporation of the Company.

Article 16

Article 17

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announce when the Meeting will resume.

Article 18

Article 19

Any matter not provided in these Rules and Procedures shall be handled in accordance with Company Law, Securities and Exchange Act and relevant laws and regulations.

Article 20

These Rules and Procedures shall be effective from the date it is approved by the Annual Shareholders' Meeting. The same applies in case of revision.

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Exhibit 3

Shareholdings of Directors

Shareholdings of Directors	Shareholdings of Directors	Shareholdings of Directors	Shareholdings of Directors	Shareholdings of Directors
As of April 25,2021; Unit: Share
Title	Name	Authorized Representative	Shareholding	%
Chairman	Chun Yung Investment Co., Ltd.	Huang, Nan-Kuang	��	��
Director	Li Gang Enterprise Co., Ltd. Co., Ltd.	Su, Chwen-Shing	��	��
Director	Toyota Motor Corporation	Kazuo Naganuma	��	��
Director	Chun Yung Investment Co., Ltd.	Lin, Li-Hua	��	��
Director	Li Gang Enterprise Co., Ltd.	Su, Jean	��	��
Director	Chun Yung Investment Co., Ltd.	Huang, Chih-Cheng	��	��
Director	Yong Hui Development Co., Ltd.	Su, Yi-Chung	��	��
Director	Yuan Tuo Investment Co., Ltd.	Ko, Junn-Yuan	��	��
Director	Gui Long Investment Co., Ltd.	Chang, Shih-Yieng	��	��
Director	Chun Yung Investment Co., Ltd.	Huang, Wen-Jui	��	��
Director	Yong Hui Development Co., Ltd.	Leon Soo	��	��
Independent Director	Shih, Hsien-Fu	-	�	��
Independent Director	Su, Chin-Huo	-	�	��
Independent Director	Wu, Shih-Hao	-	�	��
Total			��	��

Paid-up capital: NT$5,461,791,840 Total shares issued: 546,179,184 common shares. According to Article 26 of Securities Exchange Act of the Republic of China, the minimum required percentage of shares held by all directors is as follows:

Share ownership of directors required by law: 17,477,734 shares

The share ownership of directors has met the minimum legal requirement.

The Audit Committee of the Company will replace the functions of supervisors. Therefore, the minimum legal requirement of supervisor shareholding does not apply.

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8-14F, No. 121, Sung Chiang Rd., Taipei, Taiwan, R.O.C. TEL:(02)2506-2121 / FAX:(02)2504-1749 www.hotaimotor.com.tw

AI assistant

HOTAI MOTOR — AGM Information 2021

51981_rns_2021-08-25_60e3dd36-f05f-4563-a0a5-9980847e9e94.pdf

Handbook for the 2021 Annual General Meeting of Shareholders

Table of Contents

I. Agenda of the Annual General Meeting of Shareholders

2. Reports:

3. Ratifications:

5. Extemporary Motions

II. Reports

Item No.2 — 2020 Audit Committee Report

Explanation:

Item No.3 — Distribution of 2020 Profits

Explanation:

Item No.4 — 2020 Distribution of Employee and Director’s Remuneration

Explanation:

III. Ratifications

Explanation:

Resolution:

Explanation:

Resolution:

IV. Discussion

Explanation:

Resolution:

Explanation:

Resolution:

V. Extemporary Motions

VI. Adjournment

VII. Appendixes

2020 Business Report

� Taiwan’s Automotive Market �

� Operational Review �

� Financial Performance �

� Management and Corporate Development �

Audit Committee Report

HO TAI MOTOR CO., LTD. AND SUBSIDIARIES

Declaration of Consolidated Financial Statements of Affiliated Enterprises

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for opinion

Key audit matters

Evaluation of provision for impairment of accounts receivable in Hotai Finance Co., Ltd., the subsidiary

Description

How our audit addressed the matter

Valuation of the provisions for warranty

Description

How our audit addressed the matter

Claims reserve and ceded claims reserve of Hotai Insurance Co., Ltd., the subsidiary

Description

How our audit addressed the matter

Other matter – Reference to the audits of other auditors

Other matter – Parent company only financial reports

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

Auditors’ responsibilities for the audit of the consolidated financial statements

HO TAI MOTOR CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2020 AND 2019

HO TAI MOTOR CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019

HO TAI MOTOR CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019

HO TAI MOTOR CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019

HO TAI MOTOR CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019

HO TAI MOTOR CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for opinion

Key audit matters

Evaluation of provision for impairment of accounts receivable of Hotai Finance Co., Ltd., the investment accounted for using equity method

Description

How our audit addressed the matter

Valuation of the provisions for warranty

Description

How our audit addressed the matter

Claims reserve and ceded claims reserve of Hotai Insurance Co., Ltd., the investment accounted for using equity method

Description

How our audit addressed the matter

Other matter – Reference to the audits of other auditors

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

Auditors’ responsibilities for the audit of the financial statements

HO TAI MOTOR CO., LTD. PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019

HO TAI MOTOR CO., LTD. PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019

HO TAI MOTOR CO., LTD. PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

HOTAI MOTOR AGM Information 2021