HTC - AGM Information 2019 | FinancialReports.eu

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HTC CORPORATION 2019 Annual General Shareholders’ Meeting Agenda Book Table of Contents

Index

Meeting Procedure ··································································································································· 1 Meeting Agenda ······································································································································· 2 Report Items ············································································································································· 3 Matters for Ratification ···························································································································· 4 Matters for Discussion ····························································································································· 6 Elections ··················································································································································· 8 Other Proposals ········································································································································ 8 Extraordinary Motions ····························································································································· 8 Supplements Supplement 1：Fiscal 2018 Business Report ·························································································· 9 Supplement 2：Supervisors Audit Report ····························································································· 14 Supplement 3：Rules of Procedure for Board of Directors Meetings ·················································· 15 Supplement 4：Fiscal 2018 CPA Audit Report and Financial Statements ············································ 21 Supplement 5：Fiscal 2018 CPA Audit Report and Consolidated Financial Statements ······················ 32 Supplement 6：The Chart of 2018 Earnings Distribution ····································································· 43 Supplement 7：Before and After Revision of the Article of Incorporation ·········································· 44 Supplement 8 ： Before and After Revision of Bylaws for the Election of Directors and Supervisors · 49 Supplement 9 ： Before and After Revision of Procedures for the Acquisition or Disposal of Assets ··························································································································· 51 Supplement 10 ： Before and After Revision of Operational Procedures for Lending Funds to Others ························································································································· 84 Supplement 11 ： Before and After Revision of Procedures for the Handling of Derivatives Trading ······················································································································· 88 Supplement 12 ： Director (include Independent Director) Nominee List ············································· 97 Appendixes Appendix 1：Rules of Procedure for Shareholders Meetings ····························································· 101 Appendix 2：Articles of Incorporation ······························································································· 104 Appendix 3：Bylaws for the Election of Directors and Supervisors ·················································· 109 Appendix 4：Shareholding Status and Minimum Shareholding Requirements of Directors and Supervisors ···················································································································· 111

Translation

This English version is a translation based on the original Chinese version. Where any discrepancy arises between the two versions, the Chinese version shall prevail.

HTC CORPORATION

Procedure for 2019 Annual General Shareholders’ Meeting

Call Meeting to Order
Seating of the Chair
Opening Remarks by the Chair
Report Items
Matters for Ratification
Matters for Discussion
Elections
Other Proposals
Extraordinary Motions
Closure of the Meeting
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HTC CORPORATION

Agenda for the 2019 Annual General Shareholders’ Meeting

Time and Date: June 21, 2019 (Friday) at 9:00 a.m.

Location: Chuto Hotel, Jin Long Room (No.398 Taoying Road, Taoyuan City)

Opening Remarks by the Chair
Report Items
Item 1�Fiscal 2018 Business Report
Item 2�Supervisors Audit Report
Item 3�The 2018 Employees, Directors and Supervisors compensation
Item 4�Amendment of the Company’s “Rules of Procedure for Board of Directors Meetings”
Matters for Ratification
Item 1�Adoption of the Fiscal 2018 Business Report and Financial Statements Item 2�Adoption of the Fiscal 2018 Retained Earnings Distribution
Matters for Discussion
Item 1�Discussion on the proposal to amend the Articles of Incorporation
Item 2�Discussion on the proposal to amend the “Bylaws for the Election of Directors and Supervisors”
Item 3�Discussion on the proposal to amend the “Procedures for the Acquisition or Disposal of Assets”
Item 4�Discussion on the proposal to amend the “Operational Procedures for Lending Funds to Others”
Item 5�Discussion on the proposal to amend the “Procedures for the Handling of Derivatives Trading”
Elections: Proposal for the Company’s re-election of Directors (include Independent Director)
Other Proposals: Proposal to release the newly-elected Directors (include Independent Director) from non-competition restrictions
Extraordinary Motions
Closure of the Meeting
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Report Items

Item 1

Fiscal 2018 Business Report, submitted for review. (Proposed by the Board of Directors) Explanation:

(1) Please refer to Supplement 1 of this handbook (page 9) for the Fiscal 2018 Business Report.
(2) Please review.

Item 2

Supervisors Audit Report, submitted for review. (Proposed by the Board of Directors) Explanation:

(1) Please refer to Supplement 2 of this handbook (page 14) for the Supervisors Audit Report.
(2) Please review.

Item 3

The 2018 Employees, Directors and Supervisors compensation. (Proposed by the Board of Directors)

Explanation:

(1) The 2018 compensation distribution to Employees, Directors and Supervisors was approved by the 16th meeting of the 8th Board of Directors on May 10, 2019. The Company has resolved to distribute NT$456,986,817 in cash, and not to distribute to Directors and Supervisors. There are no differences between the amounts decided.
(2) Please review.

Item 4

Amendment of the Company’s “Rules of Procedure for Board of Directors Meetings”, submitted for review. (Proposed by the Board of Directors)

Explanation:

(1) Amendment to the Company's “Rules of Procedure for Board of Directors Meetings” is proposed to establish an audit committee in lieu of a supervisor. Please refer to Supplement 3 of this handbook (page 15) for the revision of the company’s “Rules of Procedure for Board of Directors Meetings” adopted by the board of directors.
(2)Please review.
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Matters for Ratification

Item 1

Title: Adoption of the Fiscal 2018 Business Report and Financial Statements.

(Proposed by the Board of Directors)

Introduction:

(1) The compilation of the Company's Fiscal 2018 Business Report and Financial Statements are completed and has been approved by the Board of Directors. The Financial Statements have been audited and certified by Hsu, Wen-Ya, CPA, and Casey Lai, CPA, of Deloitte & Touche. The Business Report and Financial Statements have been audited by the Supervisors, and are hereby submitted for adoption by this Annual General Shareholders’ Meeting.
(2) Please refer to Supplement 1 (page 9), Supplement 4 (page 21) and Supplement 5 (page 32) of this handbook for the Fiscal 2018 Business Report, the CPA Audit Report issued by Deloitte & Touche and the Financial Statements, respectively.
(3) Adoption requested.

Resolution:

Matters for Ratification

Item 2

Title: Adoption of the Fiscal 2018 Retained Earnings Distribution.

(Proposed by the Board of Directors)

Introduction:

(1) For the 2018 earnings distribution table, Please refer to Supplement 6 of this handbook (page 43).
(2) It is proposed that the cash dividend of NTD 0.38 per common share. Amount of cash dividend is NTD311,148,505, based on 818,811,855 outstanding shares dated March 31, 2019.
(3) If any matter affecting the number of total outstanding shares occur thereafter (including the Company’s purchase of treasury shares, new issuance pursuant to the exercise of employee stock options, transfer of treasure shares to employees, or cancellation of shares, etc.), it is hereby proposed to authorize the chairman of the Company to adjust the distribution ratio of the actual total outstanding shares at ex-dividend date pursuant to the total distribution amount for common share as adopted. The amount of cash dividend shall be calculated to the dollars; amount after decimal point is discarded and will be booked in other income. Board of Directors is authorized to set the ex-dividend date and payment day after the shareholders’ approval of this resolution.
(4) Adoption requested.

Resolution:

Matters for Discussion:

Item 1

Title: Discussion on the proposal to amend the Articles of Incorporation is submitted for discussion. (Proposed by the Board of Directors)

Introduction:

(1) Partial amendment to the Company's Articles of Incorporation is proposed to accommodate with the Company Act and to establish an audit committee in lieu of a supervisor. Please refer to Supplement 7 of this handbook (page 44) for the Before and After Revision of the Articles of Incorporation.
(2) Resolution requested.

Resolution:

Item 2

Title: Discussion on the proposal to amend the “Bylaws for the Election of Directors and Supervisors” is submitted for discussion. (Proposed by the Board of Directors)

Introduction:

(1) Partial amendment to the Company's “Bylaws for the Election of Directors and Supervisors” is proposed to establish an audit committee in lieu of a supervisor, and amend the name of the regulation to “Bylaws for the Election of Directors”. Please refer to Supplement 8 of this handbook (page 49) for the Before and After Revision of the Articles of Incorporation
(2) Resolution requested.

Resolution:

Item 3

Title: Discussion on the proposal to amend the “Procedures for the Acquisition or Disposal of Assets” is submitted for discussion. (Proposed by the Board of Directors)

Introduction:

(1) Partial amendment to the Company's “Procedures for the Acquisition or Disposal of Assets” is proposed to adopt updates made to the “Regulations Governing the Acquisition and Disposal of Assets” by Public Companies by the Financial Supervisory Commission on November 26, 2018 and to establish an audit committee in lieu of a supervisor. Please refer to Supplement 9 of this handbook (page 51) for the Before and After Revision of the Articles of Incorporation
(2) Resolution requested.

Resolution:

Item 4

Title: Discussion on the proposal to amend the “Operational Procedures for Lending Funds to Others” is submitted for discussion. (Proposed by the Board of Directors)

Introduction:

(1) Partial amendment to the Company's “Operational Procedures for Lending Funds to Others” is proposed to establish an audit committee in lieu of a supervisor. Please refer to Supplement 10 of this handbook (page 84) for the Before and After Revision of the Articles of Incorporation
(2) Resolution requested.

Resolution:

Item 5

Title: Discussion on the proposal to amend the “Procedures for the Handling of Derivatives Trading” is submitted for discussion. (Proposed by the Board of Directors)

Introduction:

(1) Partial amendment to the Company's “Procedures for the Handling of Derivatives Trading” is proposed to adopt updates made to the “Regulations Governing the Acquisition and Disposal of Assets” by Public Companies by the Financial Supervisory Commission on November 26, 2018 and to establish an audit committee in lieu of a supervisor. Please refer to Supplement 11 of this handbook (page 88) for the Before and After Revision of the Articles of Incorporation
(2) Resolution requested.

Resolution:

Elections:

Title: Proposal for the Company’s re‐election of Directors (include Independent Director) (Proposed by the Board of Directors)

Introduction:

(1) Members of the 8[th] Board of Directors were elected during the AGM on June 24, 2016 for a 3 year term of office which will expire on June 23, 2019. It is proposed that the directors and supervisors of the 8th board serve until the 2019 shareholders’ meeting, at which time the directors and supervisors of the 9th Board of Directors will be elected.
(2) According to the Securities Regulation, the Company shall establish an Audit Committee to replace the supervisor. It is proposed to elect seven directors for the 9th Board of Directors including three independent directors, for a 3 year term of office, which term shall commence from June 21st, 2019 and continue until June 20th, 2022.
(3) The directors shall be elected by adopting candidates nomination system as specified in Article 192-1 of the Company Law and Article 13 of Article of Incorporation. The directors shall be elected from the nominated candidates, whose education and professional qualifications, experience and relevant information are attached hereto as Supplement 12 (page 97).

Election Results:

Other Proposals:

Title: Proposal to release the newly-elected Directors (include Independent Director) from non-competition restrictions (Proposed by the Board of Directors)

Introduction:

(1) According to Article 209 of the Company Act, a director who acts for himself or herself or on behalf of another person on an opportunity that is within the scope of the company's business, shall first secure approval at a meeting of the shareholders.
(2) It is proposed to request at the 2019 shareholders’ meeting to release the directors of the 9th Board of Directors from the non-competition restrictions imposed by Article 209 of the Company Act.
(3) Please refer to Supplement 12 of this handbook (page 97) for the list of the positions currently held by the newly elected directors in any other company.
(4) Resolution requested.

Resolution:

Extraordinary Motions

Closure of the Meeting

Supplement 1

HTC CORPORATION

Fiscal 2018 Business Report

2018 saw the emergence of a stronger, more agile innovator in HTC. Two significant transitions were set in motion over the year that are revitalizing the Company and providing fresh impetus to move forward as a dynamic technology powerhouse.

First, there has been an alignment across the whole Company around our vision of VIVE Reality, announced last year, whereby key technologies such as virtual and augmented reality, artificial intelligence, high-speed 5G connectivity and emerging technologies like blockchain will be combined in multiple ways to create richer immersive experiences that will change our lives. These fundamental building blocks are increasingly being applied across our product portfolio, and HTC is keenly focused on investing in the technologies and the talent to develop them.

This alignment afforded a unique opportunity to fully integrate the sales, marketing and operations functions for the VIVE and smartphone businesses in the regions, undertaken over the year, which has removed barriers between departments and promoted synergies. The impact has been remarkable: HTC earned a record number of awards at the Consumer Electronics Show (CES) in Las Vegas in January 2019, surpassing our great performance in 2018 by over 20%, and there is a new spirit of innovation and determination across the Company.

The second transition involves HTC being reimagined as a complete ecosystem company, encompassing not only our bedrock expertise in hardware and software integration, and extending our content creation and platform activities, but adding services such as enterprise VR solutions that provide genuine value to our customers, as well as expediting adoption of the technology. In playing a greater role in enabling VIVE Reality, HTC is creating new revenue and margin opportunities over the medium to long term. To achieve this, we are reshaping our hardware development processes with a view to optimizing our returns across software, platform and services, and have increased our skill base and dedicated the necessary resources to achieve this objective.

In 2018, we saw progress across all of these business areas. Alongside the premium VR and smartphone hardware offerings launched over the year, our VIVEPORT VR content store continued to gain traction among headset owners, and our VIVE Wave SDK has started driving our platform across products from partner hardware companies in the VR ecosystem. It is of note that the 36 awards gained at CES 2019 covered hardware, software and platform innovations: a first for HTC. Additionally, we created a new business unit dedicated to the burgeoning enterprise VR market, an offering that goes far beyond our traditional hardware sales model into consultancy and services, serving customers in manufacturing,

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design, retail, automotive, aeronautics, education, healthcare, and location-based entertainment; markets not traditionally addressed by HTC.

HTC continues to invest heavily yet wisely in new technologies and processes to ensure that we retain our leadership in innovation in all key areas, as we believe this is the right strategy to drive the Company forward into the era of VIVE Reality.

Product Strategy

In line with our VIVE Reality vision, HTC has focused on developing and implementing the core technologies of virtual reality, 5G connectivity, blockchain and artificial intelligence across our portfolio.

Smartphones and Connected Devices

HTC smartphones saw numerous feature enhancements in 2018, including to HTC’s innovative Edge Sense ‘squeeze’ technology for more intuitive one-handed interactions, as well as wider-angle front cameras to create better selfies. High-efficiency, low-distortion earphone amplifiers greatly enhance the sound effects of the built-in speakers.

The flagship smartphone of 2018 was the HTC U12+, which was launched in May 2018 to considerable acclaim, and was followed later in the year by the HTC U12 life, incorporating some of the key features of the HTC U12+, including the 18:9 widescreen format, and 4K video capability. For the mid-tier market, the HTC Desire 12 and Desire 12+ phones launched in Q1 2018 in certain target markets; these phones followed the smart design and advanced photographic features of the HTC U series, and the HTC Desire 12+ boasted a large 6” display.

HTC also innovated laterally on the smartphone platform with the HTC EXODUS blockchain phone, enabling consumers to own their digital keys, a vital step in empowering consumers to control their own digital identity, data and virtual creations. This concept continues to be developed, to make the benefits of blockchain technology more accessible to consumers.

Finally, the smartphone and connected devices team has focused considerable R&D resources on 5G communication technologies, the next generation of high-speed connectivity. The large bandwidth and low latency of 5G will be a game-changer for industry and business as well as home applications, and HTC is widely acknowledged as having advanced capabilities in wireless technologies, as demonstrated with numerous industry firsts with communications technologies in our history. The first product in this new line is the HTC 5G Hub, demonstrated in late 2018 and launched at Mobile World Congress (MWC) in February 2019, with some of the world’s leading telecom carriers joining as launch partners, including Sprint in the US, Telstra in Australia, and Deutsche Telekom, Elisa, Sunrise and Three in Europe. This all-new smart sensor hub system provides an all-new user

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experience, and a more intuitive and more convenient operating experience at home, in the office and on the go. We look forward to forging a deeper partnership with carriers as the HTC 5G Hub rolls out globally.

VIVE Virtual Reality

HTC’s VIVE virtual reality business had another bumper year, with numerous targeted hardware, content and platform announcements. For the enterprise market, HTC launched the VIVE Pro at CES 2018, and the VIVE Pro Eye a year later, another VR headset aimed at professional users featuring precision eye-tracking and foveated rendering for optimized performance as well as greater feedback for developers on their content environment.

Early 2019 saw announcements on VIVE Focus Plus, an enhanced model of the standalone VIVE Focus launched the previous year, with 6 degrees of freedom control, and early demonstrations of VIVE Cosmos, the next generation headset with modular functionality, which will be launched later in 2019.

Our VIVEPORT VR content store continued to grow its user and subscriber base over the year, and in early 2019 announced VIVEPORT Infinity, an all-you-can-eat subscription model for VR content, similar to the Netflix model for movies. Across all platforms, there are now over 4,500 titles for VIVE headsets, a 50% increase over the previous year.

2018 was a stellar year for VIVE Studios, with the production of the world’s first feature-length VR film, ‘7 Miracles’, which won best VR film at the Raindance Film Festival at the end of 2018. It published content for entertainment, such as the ‘Ready Player One’ open world titles, and for enterprise, targeting training, healthcare, fitness and education applications. VIVE Studios also launched the VIVE Libraries program in over 110 public libraries in the US, featuring 40 education and experiential titles, to help democratize access to VR.

VIVE ORIGINALS, the Taipei-based VR entertainment content team, saw the co-produced titles ‘The Deserted’, ‘5x1’ (five VR short films directed by Chinese golden-awarded directors) and the ‘Gloomy Eyes’ VR animation featured at numerous international film festivals to great acclaim, while ‘Circus Galactica’ was featured in ‘America’s Got Talent’, the first time for a VR-interactive performance at this reality show.

VIVE Arts continued its important VR outreach work with the world’s leading art galleries, museums and artists. Following the success of the exhibitions at the Tate Modern and the Royal Academy of Arts in London and the National Palace Museum in Taipei, VIVE became the first ever VR partner of Art Basel, the leading international art fair, presenting new works by contemporary artists in both 2018 and 2019. The ‘Up the River During Qingming’ experience at the National Palace Museum and Monet exhibition at Paris’ Orangerie were spectacularly immersive journeys into two of the world’s classic artworks, while

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the T. Rex experience at the American Museum of Natural History brings pre-history back to life. As a teaching tool or an art medium, immersive VR is proving a welcome complement to the traditional art environment.

HTC’s VIVELAND VR arcade program, launched in Taipei in 2016, has extended both within Taiwan and further afield, with a new arcade opening in Hong Kong in January 2019 and another coming to Korea shortly. The VIVELAND concept itself has been successfully transplanted in Japan, China and Hong Kong, with plans to enter the Middle East and Southeast Asia in 2019, bringing this exciting location-based entertainment format to a wider audience around the world.

Finally, the VIVE X accelerator program is now the world’s most active investor in the VR space, with over a hundred companies in the portfolio, and added London to the locations in Taipei, Beijing, ShenZhen, San Francisco and Tel Aviv. Over a third of the companies are involved in enterprise applications, reflecting the importance and potential of this market.

HTC DeepQ Healthcare

The HTC DeepQ Healthcare business unit comprises cross-domain experts and engineers in areas such as computer science, software engineering, medicine, regulations, user experience, design, through virtual and augmented reality, big data and artificial intelligence technology, with the goal of developing and providing precision personalized medical products and services to reduce costs and improve the effectiveness of healthcare. Several AI innovations were launched over the year, including medical service chat robots for general healthcare, epidemic prevention and disease management.

Financial Performance

January 2018 saw the completion of the business cooperation agreement with Google Inc., and the transfer of US$1.1 billion to HTC contributed to a net income for the year of NT$12.0 billion, corresponding to an earnings per share of NT$14.72.

On the operations side, the nascence of the virtual reality market combined with continued intense competition in an ever more saturated smartphone market with longer product replacement cycles, sustained the pressure on business performance over the year, with total revenues coming in at NT$23.7 billion, with a gross margin of 2.2% and an operating margin of –58.8%. The sequential increase in gross margin over the year reflected the change in portfolio mix, as well as our continued focus on reducing operating expenditure across the business.

The integration of the sales, marketing and operations of the VIVE and smartphone businesses in the regions enabled the company to streamline internal expenditure and processes as well as external costs, while further cost-savings were realized by realignment and reorganization across manufacturing

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operations, property management, internal systems and platforms, and administration. The changes put in place over the year will place the company on a stronger financial footing going forward.

Operations

HTC continues to advance factory automation and testing across all product lines, continually improving quality standards and customer satisfaction ratings, at the same time transforming the cost structure of the business; over the latter half of 2018, manufacturing cost reductions have comfortably exceeded strict target levels. Today, there is much closer collaboration between manufacturing and the R&D teams to optimize production and continuously improve manufacturing processes, as well as seeking areas to reduce our emissions and raise our power efficiency.

The transition of our ‘Powered by HTC’ teams to Google early in the year went very smoothly, with Google sharing HTC buildings in both our Taipei and Taoyuan facilities.

As HTC transitions to a full ecosystem company, data security becomes a major objective for the Company, to ensure customer trust and reassurance. Accordingly, our IT and Legal teams executed a full company roll-out of the EU’s strict new data protection directive, the General Data Protection Regulation that came into force in mid-2018, which defines the way consumer data is handled across every sector. The internal roll-out included comprehensive training in all regions and with all relevant functions, and an external audit awarded HTC full compliance with the GDPR requirements as well as BS10012 certification in late 2018.

At the end of a year with significant positives, we wish to express our appreciation to our shareholders, and look forward to your continued support as we complete our transition to a full ecosystem company.

HTC Corporation

Chairwoman and CEO: Cher Wang

Chief Accountant: Hsiu Lai

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Supplement 2

HTC CORPORATION

Supervisors Audit Report

The Board of Directors has prepared the Company’s 2018 Business Report, Financial Statements and proposal for allocation of earnings. HTC Corporation’s Financial Statements have been audited and certified by Hsu, Wen-Ya, CPA, and Casey Lai, CPA, of Deloitte & Touche and an audit report relating to the Financial Statements has been issued. The Business Report, Financial Statements and proposal for allocation of earnings have been reviewed and considered to be complied with relevant rules by the undersigned, the supervisor of HTC Corporation. According to relevant requirements of the Securities and Exchange Act and the Company Law, I hereby submit this report.

HTC CORPORATION

Supervisor:

Huang-Chieh Chu

Way-Chih Investment Co., Ltd. Representative: Shao-Lun Lee

May 10, 2019

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Supplement 3

HTC Corporation

Rules of Procedure for Board of Directors Meetings

Article 1 Basis for the adoption of these rules

To establish a strong governance system and sound supervisory capabilities for the directors meetings of this corporation and strengthen management functions, these rules are adopted pursuant to the provisions of Article 26-3, paragraph 8 of the Securities and Exchange Act and Article 2 of the Regulations Governing Procedure for Board of Directors Meetings of Public Companies issued by the Financial Supervisory Commission.

Article 2 Scope of these rules

The procedural rules for this corporation's board of directors meeting, its main agenda items, operational procedures, required content of meeting minutes, public announcements, and other compliance requirements, shall be handled in accordance with the provisions in these rules.

Article 3 Convening of a board of directors meeting and meeting notification The board of directors shall meet at least quarterly.

Each director shall be given at least seven days advance notice of the reasons for convening a board of directors meeting. In emergency circumstances, however, a meeting may be called on shorter notice.

With the prior consent of the recipients, the meeting notice of the preceding paragraph may be given by electronic means.

All matters set forth in Article 7, paragraph 1, subparagraphs 1 through 8 shall be specified in the notice of the reasons for convening a board of directors meeting; none of those matters may be raised by an extraordinary motion except in the case of an emergency or for legitimate reason.

Article 4 Meeting place and time

A board of directors meeting shall be held at the location and during the business hours of the corporation, or at a place and time convenient for all directors to attend and suitable for holding such a meeting.

Article 5 Meeting notification and pre-meeting materials

The agenda working group of this Corporation shall be the Finance and Accounting Department.

The agenda working group shall prepare agenda items for board of directors meetings and fully provide sufficient pre-meeting materials, to be sent together with the notice of the meeting.

A director of the opinion that the pre-meeting materials provided are insufficient may request the agenda working group to supplement them. If a director is of the opinion that materials concerning any proposal are insufficient, the deliberation of such proposal may be postponed by a resolution of the board of directors.

Article 6 Reports

Agenda items for regular board of directors meetings shall include at least the following:

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Matters to be reported:
(1) Minutes of the last meeting and action taken.
(2) Report on important financial and business matters.
(3) Report on internal audit activities.
(4) Other important matters to be reported.
Matters for discussion:
(1) Items for continued discussion from the last meeting.
(2) Items for discussion at this meeting.
Extraordinary motions.

Article 7 Matters for discussion

The matters listed below as they relate to this corporation shall be raised for discussion at the board of directors meeting:

Corporate business plan.
Annual and semi-annual financial reports, with the exception of semi-annual financial reports which, under laws and regulations, need not be audited and attested by a certified public accountant.
Adoption or amendment of an internal control system pursuant to Article 14-1 of the Securities and Exchange Act, and assessment of the effectiveness of the internal control system.
Adoption or amendment, pursuant to Article 36-1 of the Securities and Exchange Act, of any procedure for handling financial or operational actions of material significance, such as acquisition or disposal of assets, derivatives trading, loans of funds to others, and endorsements or guarantees for others.
The offering, issuance, or private placement of any equity-type securities.
The appointment or discharge of a financial, accounting, or internal audit officer.
A donation to a related party or a major donation to a non-related party, provided that a public-interest donation of disaster relief for a major natural disaster may be submitted to the following board of directors meeting for retroactive recognition.
Any matter required by Article 14-3 of the Securities and Exchange Act or any other law, regulation, or bylaw to be approved by resolution at a shareholders meeting or to be resolved by to a meeting of the board of directors, or any material matter as may be prescribed by the competent authority.
Long-term corporate business strategy.
10.Screening and approval of the corporate budget.
11.Screening and approval of major capital expenditures of the corporation.

The term "related party" in subparagraph 7 of the preceding paragraph, means a related party as defined in the Regulations Governing the Preparation of Financial Reports by Securities Issuers. The term "major donation to a non-related party" means any individual donation, or cumulative donations within a 1-year period to a single recipient, at an amount of NTD100 million or more, or at an amount equal to or greater than 1 percent of net operating revenue or 5 percent of paid-in capital as stated in the certified public accountant-attested financial report for the most recent year.

The term "within a 1-year period" in the preceding paragraph, means a period of 1 year calculated retroactively from the date on which the current board of directors meeting is convened. Amounts already submitted to and passed by a resolution of the board are exempted from inclusion in the calculation. The Company shall have at least one independent director attend the board meeting in person; with respect to a matter required by paragraph 1 to be resolved by a meeting of the board of directors, all

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independent directors of the Company shall attend the board meeting in person, if an independent director is unable to attend in person, the independent director shall appoint other independent directors to attend by proxy. If an independent director objects to or expresses reservations about such matter, it shall be recorded in the board meeting minutes; an independent director intending to express objection or reservations but unable to attend the meeting in person shall, unless there is some legitimate reason to do otherwise, issue a written opinion in advance, which shall be recorded in the board meeting minutes.

Article 8 Board of directors authorization principles

Apart from matters referred to in paragraph 1 of the preceding article, which are required to be submitted for discussion by the board of directors, when the board of directors delegates any exercise of its powers pursuant to laws or regulations or the company's articles of incorporation, matters such as the level and substance of the delegation shall be concretely and specifically set out.

Article 9 Preparation of documents such as the attendance book, and attendance by proxy of a director When a board of directors meeting is held, an attendance book shall be provided for the directors who attend to sign-in, and be available for future reference.

Directors shall attend board meetings in person. If a director is unable to attend in person, the director may, in accordance with the company's articles of incorporation, appoint another director to attend in their place. Attendance via telecommunications is deemed as attendance in person.

A director who appoints another director to attend a board meeting in their place shall in each instance give the appointed director a written proxy stating the scope of authorization with respect to the reasons for convening the meeting.

A person appointed under the second paragraph of this Article may accept a proxy from one person only.

Article 10 Meeting chair and acting chair

Meetings of the board of directors shall be convened and chaired by the chairman of the board. However, the first meeting of each newly elected board of directors shall be called and chaired by the director who received votes representing the largest portion of voting rights at the shareholders meeting in which the directors were elected; if there are two or more directors so entitled to convene the meeting, they shall choose one person by and from among themselves to do so.

When the chairman of the board is on leave or for any reason unable to exercise the powers of the chairman, the vice chairman shall act in place of the chairman; if there is no vice chairman or the vice chairman is also on leave or for any reason unable to exercise those powers, the chairman shall designate one of the directors to do so. Where the chairman does not make such a designation, a director shall be elected by and from among the directors to serve as chair.

Article 11 Non-voting participants

When the corporation convenes a board of directors meeting, the agenda working group shall provide relevant materials to the directors attending the meeting for their reference as necessary.

As merited by the content of a proposal to be put forward at the meeting, the convener of the board of directors meeting may notify relevant personnel of subsidiaries to attend, and when necessary, may also invite certified public accountants, attorneys, or other professionals to attend the meeting as non-voting participants and to make explanatory statements, provided that they shall leave the meeting when

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deliberation or voting takes place.

Article 12 Convening of board of directors meetings

If one-half of all the directors are not in attendance at the appointed meeting time, the meeting chair may announce postponement of the meeting time, provided that the meeting may be postponed two times only. If the quorum is still not met after two postponements, the chair may reconvene the meeting following the procedures provided in Article 3, paragraph 2.

The term "all directors" as used in the preceding paragraph and in Article 18, paragraph 2, subparagraph 2 shall be calculated as the number of directors then actually in office.

Article 13 Discussion of proposals

A board of directors meeting shall be conducted according to the order of the agenda procedure as stated in the meeting notice. However, that order may be changed with the approval of a majority of directors in attendance at the meeting.

The meeting chair may not declare the meeting closed without the approval of a majority of directors in attendance at the meeting.

If at any time during the course of a board of directors meeting the number of directors sitting at the meeting does not constitute a majority of the directors in attendance at the meeting, then upon a motion by the directors sitting at the meeting, the chair shall declare a suspension of the meeting, in which case Section 1 of the preceding article shall apply mutatis mutandis.

Article 14 Voting-I

When the chair at a board of directors meeting is of the opinion that a proposal has been discussed sufficiently to put it to a vote, the chair may announce the discussion closed and call a vote.

When a proposal comes to a vote at a board of directors meeting, if upon inquiry by the chair all directors in attendance voices no objection, that proposal is deemed approved. If upon inquiry by the chair there is an objection, the proposal shall be brought to a vote.

One voting method for proposals at a board of directors meeting shall be selected by the chair from among the provisions below, provided that when one of those in attendance has an objection, the chair shall solicit multiple opinions upon which to make a decision:

Show of hands.
Roll call vote.
Vote by ballot.
Vote by a method selected at the corporation's discretion.

The previous two sections concerning the full body of directors do not apply to the directors who are precluded from the use of voting rights according to Article 17.

Article 15 Voting-II and vote monitoring and counting methods

When there is any amendment or alternative to a proposal, the chair shall place such amended proposal or alternative proposal together with the original proposal and determine their voting order. If any one among them is passed, the other proposals shall thereupon be deemed rejected, and no further voting on them shall be required.

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If a vote on a proposal requires monitoring and counting personnel, the chair shall appoint such personnel, however, all monitoring personnel shall be directors.

Voting results shall be made known immediately and recorded in writing.

If matters put to a resolution constitute material information under law or regulation or the provisions of the Taiwan Stock Exchange Corporation (or GreTai Securities Market) regulations, this corporation shall input the content of such resolution into the Market Observation Post System (MOPS) within the prescribed time period.

Article 16 Voting-III

Except as otherwise provided in the Securities and Exchange Act, the Company Act, or the Article of Incorporation, a resolution on a proposal at a board of directors meeting requires the approval of a majority of the directors in attendance at a meeting attended by a majority of all directors.

Article 17 Recusal system for directors

If an interested party relationship exists for a director, or the juristic person he/she represents, regarding an agenda item, the director shall state the important aspects of the interested party relationship at the respective meeting. When the relationship is likely to prejudice the interests of the corporation, that director may not participate in the discussion and voting on that item, and shall recuse himself/herself during the discussion and voting on the resolution, and also may not exercise voting rights as proxy on behalf of another director.

With respect to a resolution at a board of directors meeting, the provisions of Article 180, paragraph 2, of the Company Act, as applied mutatis mutandis under Article 206, paragraph 3, of that Act, shall apply in cases where a director is prohibited by the preceding paragraph from exercising voting rights.

Article 18 Meeting minutes and sign-in matters

Minutes shall be prepared of the discussions at a board of directors meeting, and the minutes shall record the matters listed below in a detailed and accurate manner:

Session (or year), time, and place of meeting.
Name of the meeting chair.
Attendance of directors at the meeting, specifying the names and number of directors in attendance, excused, and absent.
Names and titles of those attending the meeting as nonvoting participants.
Name of minutes taker.
Matters reported on.
Discussion items: the method of resolution and the result for each proposal; a summary of the comments made by directors, experts, and other persons; the name of any director that is an interested party as referred to in paragraph 1 of the preceding article, an explanation of the important aspects of the relationship of interest, the reasons why the director was required or not required to enter recusal, and the status of their recusal; opinions expressing objections or reservations at the meeting that were included in records or stated in writing; and any opinion issued in writing by an independent director under Article 7, paragraph 4.
Extraordinary motions: the name of the mover; the method of resolution and the result for each motion; a summary of the comments made by directors, experts, and other persons; the name of any director that is an interested party as referred to in paragraph 1 of the preceding article, an explanation of the
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important aspects of the relationship of interest, the reasons why the director was required or not required to enter recusal, and the status of their recusal; and opinions expressing objections or reservations at the meeting that were included in records or stated in writing.

Other matters required to be recorded.

Any of the following matters in relation to a resolution passed at a meeting of the board of directors shall be stated in the meeting minutes, and within two days from the date of the meeting be published on an information reporting website designated by the competent authority:

Any matter about which an independent director expresses an objection or reservation of which there is a record or written statement.
A resolution which is adopted with the approval of two-thirds or more of all directors, without having been passed by the audit committee.

The attendance book forms a part of the minutes for each board of directors meeting and shall be kept appropriately within the corporation during the existence of company.

The minutes of a board of directors meeting shall bear the signature or seal of both the meeting chair and the minutes taker; a copy of the minutes shall be distributed to each director and supervisor within 20 days after the meeting and kept appropriately as important company records during the existence of the company.

The production and distribution of the meeting minutes referred to in paragraph 1 may be done in electronic form.

Article 19 Documentation by audio or video tape

The Corporation shall document proceedings of a board of directors meeting in their entirety via audio or video and keep such documentation for a minimum of 5 years; such documentation may be kept in electronic form.

If before the end of the period for keeping documentation under the preceding paragraph any litigation arises with respect to a resolution of a board of directors meeting, the relevant audio or video documentation shall continue to be kept until the litigation has concluded.

Where a board of directors meeting is held via telecommunications, the video-conferencing of the meeting forms a part of the meeting minutes and shall be retained during the existence of the company.

Article 20 Supplementary provisions

These rules of procedure, and any amendments hereto, shall be adopted by approval of a board of directors meeting, and shall be reported to the shareholders meeting.

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Supplement 4

The Board of Directors and Shareholders HTC Corporation

Opinion

We have audited the accompanying parent company only financial statements of HTC Corporation, which comprise the parent company only balance sheets as of December 31, 2018 and 2017, and the parent company only statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the parent company only financial statements, including a summary of significant accounting policies.

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

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in Taiwan, the Republic of China. Our responsibilities under those standards are further described are independent of HTC Corporation in accordance with The Norm of Professional Ethics for Certified Public Accountant of Taiwan, 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 is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter

As disclosed in Note 3 to the parent company only financial statements, HTC Corporation initially applied the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers. As a result of the retrospective application of the accounting policies, HTC Corporation has performed an assessment of the classification of recognized financial assets and has elected not to restate its parent company only financial statements of the prior reporting period on the basis of the facts and circumstances that existed as of January 1, 2018. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the parent company only financial statements for the year ended December 31, 2018. 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, and we do not provide a separate opinion on these matters.

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The descriptions of the key audit matters of the parent company only financial statements for the year ended December 31, 2018 are as follows:

Valuation of Inventories

focus on the research, design, manufacture and sale of smart mobile devices and virtual reality devices, and the balance of inventories amounted to NT$2,784,808 thousand as of December 31, 2018. Due to the rapid change in technology, the industry is highly competitive; in addition, since the management needs to apply judgment to evaluate the net realizable value of inventories, and as the balance of inventories represents a s of December 31, 2018, the valuation of inventories was deemed to be a key audit matter.

We have obtained an understanding of the processes and controls performed by management in performing the valuation of inventories and evaluated the accounting policy on the assessment of inventory write-downs. We checked the classification of products and tested the original source of net realizable value estimation.

For the accounting policy of the assessment of inventory write-downs, please refer to Note 4; for critical accounting judgments and key sources of estimation uncertainty, please refer to Note 5; and for other relevant disclosures, please refer to Note 13.

Impairment of Property, Plant and Equipment, Prepayments, Intangible Assets and Deferred Tax Assets

As of December 31, 2018, the carrying amounts of property, plant and equipment, prepayments, intangible assets and deferred tax assets were NT$7,638,244 thousand, NT$567,904 thousand, NT$33,668 thousand and NT$3,827,502 thousand, respectively. HTC Corporation operates in a highly competitive environment. In comparison with previous periods, the current period operating conditions and earnings deteriorated significantly, indicating potential impairment of the assets. As the impairment may be material t December 31, 2018, the evaluation of impairment and realizability were deemed to be a key audit matter.

impairment included the following:

We have obtained an understanding of the processes and controls performed by management in evaluation of assessing the indicator of impairment of assets and in testing the impairment of assets.
We evaluated whether the assessment performed by management considered the operating conditions and the industry situation.
We evaluated the reasonableness of comparable information, discount rate and recovery rate used in the report of external expert.

For the accounting policy on the impairment of property, plant and equipment, prepayments, intangible assets and deferred tax assets, please refer to Note 4; for critical accounting judgments and key sources of estimation uncertainty, please refer to Note 5; and for other relevant disclosures, please refer to Notes 14, 16, 18 and 26.

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Revenue Recognition

According to the accounting policy stated in Note 4, revenue from the sale of goods is recognized when the control and risks are transferred to the buyers. Due to the sale conditions applied to operating revenue of the current year, are more complicated than the others, revenue recognition turns to be rather complex for such customer. Because of the significance of sales revenue, revenue recognition was deemed to be a key audit matter.

We have obtained necessary understanding and have verified the accounting policy and the design and implementation of internal controls with respect to HTC We checked compliance with the accounting policy on revenue recognition by reviewing the recognized revenue have been selected to verify if the conditions of revenue recognition were met.

Major Transaction

According to the disclosure in Note 25, HTC Corporation signed a business cooperation agreement to the price of US$1,100,000 thousand. The aforementioned transaction was completed on January 30, 2018, and resulted in a net gain of NT$31,300,655 thousand. Therefore, the upfront royalty is recognized as revenue when the subsequent usage of patents occurs. As the transaction mentioned above may be material to the consolidated financial statements, it was deemed to be a key audit matter.

We have obtained necessary understanding of the accounting policy and the design and implementation of internal controls with respect to the aforementioned major transactions aforementioned. We checked compliance with the accounting policy on revenue recognition by checking the relevant contracts and verified the condition of revenue recognition was satisfied for

Responsibilities of Management and those Charged with Governance for the Parent Company Only Financial Statements

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

In preparing the parent company only financial statements, management is responsible for matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate HTC Corporation or to cease its operations, or has no realistic alternative but to do so.

Those charged with governance, including management and supervisors, are responsible for

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he Parent Company Only Financial Statements

Our objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in Taiwan, 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 parent company only financial statements.

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

Identify and assess the risks of material misstatement of the parent company only financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
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 HTC Corporati
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
s of accounting and, based on the audit evidence obtained, whether a material uncertainty exists continue as a going concern. If we conclude that a material uncertainty exists, we are required financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evid However, future events or conditions may cause HTC Corporation to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within HTC Corporation to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements for the year ended December 31, 2018 and are therefore the key audit matters. We describe these matters 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.

The engagement partners on the audit resulting in t -Yea Shyu and Kwan-Chung Lai.

Deloitte & Touche Taipei, Taiwan Republic of China

March 1, 2019

Notice to Readers

The accompanying parent company only financial statements are intended only to present the financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in Taiwan, the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such parent company only financial statements are those generally applied in Taiwan, the Republic of China.

company only financial statements have been translated into English from the original Chinese version prepared and used in Taiwan, the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinesestatements shall prevail. Also, as stated in Note 4 to the parent company only financial statements, the additional footnote disclosures that are not required under generally accepted accounting principles were not translated into English.

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HTC CORPORATION

PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2018 AND 2017

(In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Note 6) Financial assets at fair value through profit or loss - current (Notes 7 and 31) Trade receivables, net (Note 12) Trade receivables - related parties, net (Notes 12 and 32) Other receivables (Note 12) Current tax assets (Note 26) Inventories (Note 13) Prepayments (Notes 14) Other current financial assets (Notes 11 and 33) Other current assets Total current assets NON-CURRENT ASSETS Financial assets at fair value through other comprehensive income - non-current (Note 9) Available-for-sale financial assets - non-current (Note 31) Financial assets measured at cost - non-current (Notes 10 and 31) Investments accounted for using equity method (Note 15) Property, plant and equipment (Notes 16 and 32) Investment properties, net (Note 17) Intangible assets (Note 18) Deferred tax assets (Note 26) Refundable deposits (Note 31) Net defined benefit asset - non-current (Note 22) Other non-current financial assets (Notes 11 and 33) Other non-current assets (Note 14) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Financial liabilities at fair value through profit or loss - current (Notes 7 and 31) Note and trade payables (Notes 19 and 32) Other payables (Notes 20 and 32) Current tax liabilities (Note 26) Provisions - current (Note 21) Other current liabilities (Note 20) Total current liabilities NON-CURRENT LIABILITIES Deferred tax liabilities (Note 26) Guarantee deposits received (Note 31) Total non-current liabilities Total liabilities EQUITY (Note 23) Share capital - ordinary shares Capital surplus Retained earnings Legal reserve Unappropriated earnings (accumulated deficits) Other equity Total equity TOTAL		2018		2017
		Amount % $ 13,445,203 19 83,411 - 75,940 - 377,736 1 87,323 - 33,312 - 2,784,808 4 536,332 1 10,642,639 15 568 - 28,067,272 40 290,109 1 - - - - 27,399,557 39 7,638,244 11 2,090,226 3 33,668 - 3,827,502 6 89,358 - 270,358 - 153,638 - 31,572 - 41,824,232 60 $ 69,891,504 100 $ 82,156 - 12,121,891 17 9,506,714 14 11,634 - 1,865,066 3 979,467 1 24,566,928 35 32,685 - 123,053 - 155,738 - 24,722,666 35 8,188,135 12 15,576,268 22 18,297,655 26 6,194,337 9 (3,087,557) (4) 45,168,838 65 $ 69,891,504 100		Amount % $ 5,464,879 8 65,199 - 1,247,623 2 946,098 2 38,413 - 41,962 - 6,673,385 10 1,035,501 2 149,195 - 133,103 - 15,795,358 24 - - 91 - 510,292 1 27,704,536 43 9,742,069 15 - - 72,384 - 8,867,425 14 87,727 - 19,811 - - - 2,226,852 3 49,231,187 76 $ 65,026,545 100 $ 75,184 - 15,296,408 24 11,908,114 18 11,306 - 3,187,020 5 817,956 1 31,295,988 48 33,716 - 1,265 - 34,981 - 31,330,969 48 8,208,261 13 15,551,491 24 18,297,655 28 (6,093,403) (9) (2,268,428) (4) 33,695,576 52 $ 65,026,545 100

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

(With Deloitte & Touche audit report dated March 1, 2019)

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HTC CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share)

OPERATING REVENUE (Notes 8, 24 and 32) OPERATING COST (Notes 13, 25 and 32) GROSS LOSS UNREALIZED GAIN REALIZED GAIN REALIZED GROSS LOSS OPERATING EXPENSES (Notes 25 and 32) Selling and marketing General and administrative Research and development Total operating expenses LOSS FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Other income (Note 25) Other gains and losses (Notes 8, 14, 16, 18 and 25) Finance costs Share of the profit or loss of subsidiaries (Note 15) Total non-operating income and expenses PROFIT (LOSS) BEFORE INCOME TAX INCOME TAX (EXPENSE) BENEFIT (Note 26) PROFIT (LOSS) FOR THE YEAR OTHER COMPREHENSIVE INCOME AND LOSS Items that will not be reclassified to profit or loss: Remeasurement of defined benefit plans (Note 22)		2018 Amount % $ 22,205,824 100 22,956,468 103 (750,644) (3) (178,837) (1) 194,475 1 (735,006) (3) 2,901,809 13 2,886,634 13 5,914,498 27 11,702,941 53 (12,437,947) (56) 926,592 4 28,908,025 130 (1,912) - (395,337) (2) 29,437,368 132 16,999,421 76 (4,931,219) (22) 12,068,202 54 179,401 1		2017
				Amount % $ 59,333,893 100 59,902,516 101 (568,623) (1) (194,475) - 688,022 1 (75,076) - 3,354,047 6 2,715,607 5 9,447,095 16 15,516,749 27 (15,591,825) (27) 377,293 1 855,945 1 (31,251) - (3,067,613) (5) (1,865,626) (3) (17,457,451) (30) 551,738 1 (16,905,713) (29) (32,368) - (Continued)

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HTC CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share)

Unrealized loss on investments in equity instruments designated as at fair value through other comprehensive income Share of the profit or loss of subsidiaries - items that will not be reclassified to profit or loss Income tax relating to the components of other comprehensive loss - items that will not be reclassified to profit or loss (Note 26) Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations Unrealized gain on available-for-sale financial assets Share of the profit or loss of subsidiaries - items that may be reclassified to profit or loss Other comprehensive loss for the year, net of income tax TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE YEAR EARNINGS (LOSS) PER SHARE (Note 27) Basic Diluted		2018 Amount % $ (185,240) (1) (671,867) (3) (21,529) - (699,235) (3) 131,129 1 - - - - 131,129 1 (568,106) (2) $ 11,500,096 52 $ 14.72 $ 14.50		2017
				Amount % $ - - (632) - 3,885 - (29,115) - (1,401,850) (2) 5 - 131,387 - (1,270,458) (2) (1,299,573) (2) $ (18,205,286) (31) $ (20.58) $ (20.58)

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

(With Deloitte & Touche audit report dated March 1, 2019)

(Concluded)

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							Total Equity	$ 51,771,506	(16,905,713)		(1,299,573)	545	128,811	33,695,576	(30,932)	33,664,644	12,068,202		(568,106)		60,873	8,121	(43,066)	(21,830)	$ 45,168,838
					Unearned	Employee	Benefit	$ (253,922)	-		-	-	204,332	(49,590)	-	(49,590)	-		-		-	-	-	42,513	$ (7,077)
Other Equity	Unrealized	Losses on	Financial Assets Unrealized	at Fair Value Losses on	Through Other Available-for-sa	Comprehensive le Financial	Income Assets	$ - $ (167,082)	- -		- 131,392	- -	- -	- (35,690)	(171,354) 35,690	(171,354) -	- -		(857,107) -		- -	- -	- -	- -	$ (1,028,461) $ -
			Exchange	Differences on	Translating	Foreign	Operations	$ (781,298)	-		(1,401,850)	-	-	(2,183,148)	-	(2,183,148)	-		131,129		-	-	-	-	$ (2,052,019)
				Unappropriated	Earnings	(Accumulated	Deficits)	$ 10,841,425	(16,905,713)		(29,115)	-	-	(6,093,403)	104,732	(5,988,671)	12,068,202		157,872		-	-	(43,066)	-	$ 6,194,337
							Legal Reserve	$ 18,297,655	-		-	-	-	18,297,655	-	18,297,655	-		-		-	-	-	-	$ 18,297,655
							Capital Surplus	$ 15,614,641	-		-	445	(63,595)	15,551,491	-	15,551,491	-		-		60,873	6,631	-	(42,727)	$ 15,576,268
						Ordinary	Shares	BALANCE, JANUARY 1, 2017 $ 8,220,087	Net loss for the year ended December 31, 2017 -	Other comprehensive income and loss for the year ended December 31,	2017 -	Issuance of share from exercise of employee share options 100	Share-based payments (11,926)	BALANCE, DECEMBER 31, 2017 8,208,261	Effect of retrospective application -	BALANCE, JANUARY 1, 2018 AS RESTATED 8,208,261	Net income for the year ended December 31, 2018 -	Other comprehensive income and loss for the year ended December 31,	2018 -	Changes in capital surplus from investments in associates accounted for	using the equity method -	Issuance of shares from exercise of employee share options 1,490	Changes in percentage of ownership interests in subsidiaries -	Share-based payments (21,616)	BALANCE, DECEMBER 31, 2018 $ 8,188,135

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HTC CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Profit (loss) before income tax Adjustments for: Depreciation expenses Amortization expenses Expected credit loss recognized (reversed) on trade receivables Finance costs Interests income Compensation costs of employee share-based payments (reversed) Share of the profit or loss of subsidiaries Net gain on disposal of property, plant and equipment Net gain on disposal of assets and licensing income (Note 25) Net gain on disposal of subsidiaries Impairment loss on financial assets Impairment loss on non-financial assets Unrealized gain on sales Realized gain on sales Changes in operating assets and liabilities (Increase) decrease in financial instruments held for trading Decrease in trade receivables Decrease in trade receivables - related parties (Increase) decrease in other receivables Decrease in inventories Decrease in prepayments Decrease (increase) in other current assets (Increase) decrease in other non-current assets Decrease in note and trade payables Decrease in other payables (Decrease) increase in provisions Increase (decrease) in other current liabilities Cash used in operations Interest received Interest paid Income tax return Net cash used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Net cash inflow on disposal of subsidiary Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in refundable deposits Decrease in refundable deposits Payments for intangible assets Increase in other current financial assets	2018 $ 16,999,421 444,813 59,143 82,964 1,912 (304,487) (20,812) 395,337 (162,272) (31,285,385) (15,396) - 3,226,337 178,837 (194,475) (11,240) 1,088,719 568,362 (34,966) 2,915,139 499,169 132,535 (126,535) (3,174,517) (2,370,891) (1,321,954) 161,511 (12,268,731) 290,543 (1,912) 95,122 (11,884,978) 410,857 (542,923) 250,199 (1,631) - (29,384) (10,647,082)	2017 $ (17,457,451) 716,572 237,503 (362,870) 31,251 (76,579) 129,647 3,067,613 - - - 5,569 5,757,281 194,475 (688,022) 20,207 4,066,747 5,713,076 44,682 453,086 49,195 (68,404) 336,098 (12,154,713) (5,910,360) 121,431 (1,501,569) (17,275,535) 78,198 (31,251) 138,185 (17,090,403) - (178,538) - - 1,347,664 (566) (36,252) (Continued)

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HTC CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

Dividend received Proceeds from disposal of assets and licensing income (Note 25) Net cash generated from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from guarantee deposits received Refund of guarantee deposits received Proceeds from exercise of employee share options Net cash outflow on acquisition of subsidiaries Capital reduction of subsidiaries Net cash (used in) generated from financing activities NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS, END OF THE YEAR	2018 $ - 31,285,385 20,725,421 121,788 - 8,121 (1,257,159) 267,131 (860,119) 7,980,324 5,464,879 $ 13,445,203	2017 $ 4,421 - 1,136,729 - (203) 545 (225,632) 6,344,570 6,119,280 (9,834,394) 15,299,273 $ 5,464,879

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

(With Deloitte & Touche audit report dated March 1, 2019)

(Concluded)

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Supplement 5

The Board of Directors and Shareholders HTC Corporation

Opinion

We have audited the accompanying consolidated financial statements of HTC Corporation and its subsidiaries, which comprise the consolidated balance sheets as of December 31, 2018 and 2017, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of HTC Corporation and its subsidiaries as of December 31, 2018 and 2017, and its consolidated financial performance and its consolidated cash flows for the years then ended, in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of Taiwan, the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in Taiwan, the Republic of China. Our responsibilities under those standards are further described our report. We are independent of HTC Corporation and its subsidiaries in accordance with The Norm of Professional Ethics for Certified Public Accountant of Taiwan, 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 is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter

As disclosed in Note 3 to the consolidated financial statements, HTC Corporation and its subsidiaries initially applied the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRS, IAS, IFRIC, and SIC endorsed and issued into effect by the FSC. As a result of the retrospective application of the accounting policies, HTC Corporation and its subsidiaries has performed an assessment of the classification of recognized financial assets and has elected not to restate its consolidated financial statements of the prior reporting periods on the basis of the facts and circumstances that existed as of January 1, 2018. Our opinion is not modified in respect of this matter.

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Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2018. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

The descriptions of the key audit matters of the consolidated financial statements for the year ended December 31, 2018 are as follows:

Valuation of Inventories

manufacture and sale of smart mobile and virtual reality devices, and the balance of inventories amounted to NT$3,301,645 thousand as of December 31, 2018. Due to the rapid change in technology, the industry is highly competitive; in addition, since the management needs to apply judgment to evaluate the net realizable value of inventories, and as the balance of inventories represents a significant portion of the consolidated financial statements as of December 31, 2018, the valuation of inventories was deemed to be a key audit matter.

Impairment of Property, Plant and Equipment, Prepayments, Intangible Assets and Deferred Tax Assets

As of December 31, 2018, the carrying amounts of property, plant and equipment, prepayments, intangible assets and deferred tax assets were NT$8,425,886 thousand, NT$1,199,909 thousand, NT$1,181,256 thousand and NT$3,957,060 thousand, respectively. HTC Corporation and its subsidiaries operates in a highly competitive environment. In comparison with previous periods, the current period operating conditions and earnings deteriorated significantly, indicating potential impairment of the assets. As the impairment may be material to the consolidated financial statements for the year ended December 31, 2018, the evaluation of impairment and realizability were deemed to be a key audit matter.

assets for impairment included the following:

We have obtained an understanding of the processes and controls performed by management in evaluation of assessing the indicator of impairment of assets and the tested the impairment of assets.
We evaluated whether the assessment performed by management considered the operating conditions and the industry situation.
We evaluated the reasonableness of comparable information, discount rate and recovery rate used in the report of external expert.

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Revenue Recognition

According to the accounting policy stated in Note 4, revenue from the sale of goods is recognized when the control and risks are transferred to the buyers. The revenue recognition turns to be difficult due to the conditions of part of the customers accounts for 39% of HTC Corporation and general sale transactions. Because of the significance of sales revenue, revenue recognition was deemed to be a key audit matter.

We have obtained necessary understanding and have verified the accounting policy and the design and implementation of internal controls with respect to HTC Corporation and its subsidiaries revenue recognition. We checked compliance with the accounting policy on revenue recognition by with IFRS 15, samples from the recognized revenue have been selected to test if the conditions of revenue recognition were met.

Major transaction

According to the disclosure in Note 27, HTC Corporation and its subsidiaries signed a business tember 21, 2017. was transferred to Google at the price of US$1,100,000 thousand. The aforementioned transaction was completed on January 30, 2018, and resulted in a net gain of NT$31,300,655 thousand. Therefore, the upfront royalty is recognized as revenue when the subsequent usage of patents occurs. As the transaction mentioned above may be material to the consolidated financial statements, it was deemed to be a key audit matter.

We have obtained necessary understanding of the accounting policy and the design and implementation of internal controls with respect to the major transaction aforementioned. We checked compliance with the accounting policy on revenue recognition by checking the relevant contracts and verified the condition of revenue recognition was satisfied for ensuring HTC

Other Matters

We have also audited the parent company only financial statements of HTC Corporation as of and for the years ended December 31, 2018 and 2017 on which we have issued an unmodified opinion with emphasis of matter and unmodified opinion, respectively.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and IFRS, IAS, IFRIC, and SIC endorsed and issued into effect by the Financial Supervisory Commission of Taiwan, the Republic of China, 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.

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

Those charged with governance, including management and supervisors, are responsible for

==> picture [330 x 36] intentionally omitted <==

atements

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 nable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in Taiwan, 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.

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
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on HTC Corporation and its exists, 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 However, future events or conditions may cause HTC Corporation and its subsidiaries 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 represent the underlying transactions and events in a manner that achieves fair presentation.

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Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within HTC Corporation and its subsidiaries 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.

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 for the year ended December 31, 2018 and are therefore the key audit matters. We describe these matters in our 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.

The engagement partners on the audit resulting in this in -Yea, Shyu and Kwan-Chung, Lai.

Deloitte & Touche Taipei, Taiwan Republic of China

March 1, 2019

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in Taiwan, the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally applied in Taiwan, the Republic of China.

For the convenience of readers, the independent and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in Taiwan, the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent and consolidated financial statements shall prevail. Also, as stated in Note 4 to the consolidated financial statements, the additional footnote disclosures that are not required under accounting principles and practices generally applied in Taiwan, the Republic of China were not translated into English.

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HTC CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Note 6) Financial assets at fair value through profit or loss - current (Notes 7 and 35) Financial assets at fair value through other comprehensive income - current (Note 9) Available-for-sale financial assets - current (Note 35) Trade receivables, net (Notes 12 and 36) Other receivables (Note 12) Current tax assets (Note 28) Inventories (Note 13) Prepayments (Note 14) Non-current assets held for sale (Note 15) Other current financial assets (Notes 11 and 37) Other current assets Total current assets NON-CURRENT ASSETS Financial assets at fair value through profit or loss - non-current (Notes 7 and 35) Financial assets at fair value through other comprehensive income - non-current (Note 9) Available-for-sale financial assets - non-current (Note 35) Financial assets measured at cost - non-current (Notes 10 and 35) Investments accounted for using equity method (Note 17) Property, plant and equipment (Notes 18 and 36) Investment properties, net (Note 19) Intangible assets (Note 20) Deferred tax assets (Note 28) Refundable deposits (Note 35) Net defined benefit asset - non-current (Note 24) Other non-current financial assets (Notes 11 and 37) Other non-current assets (Note 14) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Financial liabilities at fair value through profit or loss - current (Notes 7 and 35) Note and trade payables (Notes 21 and 36) Other payables (Note 22) Current tax liabilities (Note 28) Provisions - current (Note 23) Other current liabilities (Note 22) Total current liabilities NON-CURRENT LIABILITIES Deferred tax liabilities (Note 28) Guarantee deposits received (Note 35) Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT (Note 25) Share capital - ordinary shares Capital surplus Retained earnings Legal reserve Unappropriated earnings (accumulated deficits) Other equity Total equity attributable to owners of the parent NON-CONTROLLING INTERESTS Total equity TOTAL		2018		2017
		Amount % $ 24,449,548 36 83,411 - 409,412 1 - - 1,683,150 3 221,707 - 222,387 - 3,301,645 5 1,160,299 2 - - 16,915,835 25 12,812 - 48,460,206 72 236,464 - 2,325,020 3 - - - - 446,133 1 8,425,886 13 2,090,226 3 1,181,256 2 3,957,060 6 124,962 - 270,358 - 153,638 - 39,610 - 19,250,613 28 $ 67,710,819 100 $ 82,156 - 9,812,847 15 9,223,293 14 241,167 - 2,004,190 3 953,447 1 22,317,100 33 43,451 - 130,400 - 173,851 - 22,490,951 33 8,188,135 12 15,576,268 23 18,297,655 27 6,194,337 9 (3,087,557) (4) 45,168,838 67 51,030 - 45,219,868 67 $ 67,710,819 100		Amount % $ 10,443,227 16 65,199 - - - 312,106 - 8,537,096 13 103,497 - 131,901 - 7,381,426 11 1,742,986 3 1,647,763 3 7,988,363 12 135,821 - 38,489,385 58 - - - - 91 - 3,187,240 5 413,120 1 10,798,613 16 - - 2,315,441 3 8,990,648 14 139,016 - 18,119 - - - 2,233,733 3 28,096,021 42 $ 66,585,406 100 $ 75,184 - 14,569,222 22 11,681,890 18 253,240 - 3,377,201 5 2,850,713 4 32,807,450 49 47,147 - 5,681 - 52,828 - 32,860,278 49 8,208,261 12 15,551,491 24 18,297,655 27 (6,093,403) (9) (2,268,428) (3) 33,695,576 51 29,552 - 33,725,128 51 $ 66,585,406 100

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

(With Deloitte & Touche audit report dated March 1, 2019)

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HTC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share)

OPERATING REVENUE (Notes 8, 26 and 36) OPERATING COST (Notes 13, 24, 27 and 36) GROSS PROFIT OPERATING EXPENSES (Notes 27 and 36) Selling and marketing General and administrative Research and development Total operating expenses OPERATING LOSS NON-OPERATING INCOME AND EXPENSES Other income (Note 27) Other gains and losses (Notes 8, 10, 14, 15, 18, 20 and 27) Finance costs Share of the loss of associates (Note 17) Total non-operating income and expenses PROFIT (LOSS) BEFORE INCOME TAX INCOME TAX (EXPENSE) BENEFIT (Note 28) PROFIT (LOSS) FOR THE YEAR OTHER COMPREHENSIVE INCOME AND LOSS, NET OF INCOME TAX Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans (Note 24) Unrealized loss on investments in equity instruments designated as at fair value through other comprehensive income Income tax relating to items that will not be reclassified to profit or loss (Note 28)		2018 Amount % $ 23,740,610 100 23,225,592 98 515,018 2 3,820,225 16 3,588,587 15 7,069,819 30 14,478,631 61 (13,963,613) (59) 1,235,879 5 29,994,218 127 (1,915) - (36,087) - 31,192,095 132 17,228,482 73 (5,203,581) (22) 12,024,901 51 179,401 1 (857,107) (4) (21,529) - (699,235) (3)		2017
				Amount % $ 62,119,814 100 60,780,122 98 1,339,692 2 4,785,172 7 3,559,260 6 10,420,777 17 18,765,209 30 (17,425,517) (28) 673,103 1 (85,851) - (33,315) - (87,255) - 466,682 1 (16,958,835) (27) 38,476 - (16,920,359) (27) (33,129) - - - 4,014 - (29,115) - (Continued)

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HTC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share)

Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations Unrealized gain on available-for-sale financial assets Other comprehensive income and loss for the year, net of income tax TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE YEAR NET PROFIT (LOSS) FOR THE YEAR ATTRIBUTABLE TO Owners of the parent Non-controlling interests TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE YEAR ATTRIBUTABLE TO Owners of the parent Non-controlling interests EARNINGS (LOSS) PER SHARE (Note 29) Basic Diluted		2018 Amount % $ 133,388 - - - 133,388 - (565,847) (3) $ 11,459,054 48 $ 12,068,202 51 (43,301) - $ 12,024,901 51 $ 11,500,096 48 (41,042) - $ 11,459,054 48 $ 14.72 $ 14.50		2017
				Amount % $ (1,401,328) (2) 131,392 - (1,269,936) (2) (1,299,051) (2) $ (18,219,410) (29) $ (16,905,713) (27) (14,646) - $ (16,920,359) (27) $ (18,205,286) (29) (14,124) - $ (18,219,410) (29) $ (20.58) $ (20.58)

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

(With Deloitte & Touche audit report dated March 1, 2019)

(Concluded)

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								Total Equity	$ 51,771,506	(16,920,359)		(1,299,051)	545	128,811	43,676	33,725,128	(30,932)	33,694,196	12,024,901		(565,847)		60,873	8,121	19,454	(21,830)	$ 45,219,868
						Non-	controlling	Interests	$ -	(14,646)		522	-	-	43,676	29,552	-	29,552	(43,301)		2,259		-	-	62,520	-	$ 51,030
								Total	$ 51,771,506	(16,905,713)		(1,299,573)	545	128,811	-	33,695,576	(30,932)	33,664,644	12,068,202		(568,106)		60,873	8,121	(43,066)	(21,830)	$ 45,168,838
						Unearned	Employee	Benefit	$ (253,922)	-		-	-	204,332	-	(49,590)	-	(49,590)	-		-		-	-	-	42,513	$ (7,077)
Equity Attributable to Owners of the Parent	Other Equity	Unrealized	Losses on	RetainedEarnings Exchange Financial Assets Unrealized	Unappropriated Differences on at Fair Value (Losses) Gains on	Earnings Translating Through Other Available-for-	(Accumulated Foreign Comprehensive sale Financial	Legal Reserve Deficits) Operations Income Assets	$ 18,297,655 $ 10,841,425 $ (781,298) $ - $ (167,082)	- (16,905,713) - - -		- (29,115) (1,401,850) - 131,392	- - - - -	- - - - -	- - - - -	18,297,655 (6,093,403) (2,183,148) - (35,690)	- 104,732 - (171,354) 35,690	18,297,655 (5,988,671) (2,183,148) (171,354) -	- 12,068,202 - - -		- 157,872 131,129 (857,107) -		- - - - -	- - - - -	- (43,066) - - -	- - - - -	$ 18,297,655 $ 6,194,337 $ (2,052,019) $ (1,028,461) $ -
							Capital	Surplus	$ 15,614,641	-		-	445	(63,595)	-	15,551,491	-	15,551,491	-		-		60,873	6,631	-	(42,727)	$ 15,576,268
						Share Capital	Ordinary	Shares	BALANCE, JANUARY 1, 2017 $ 8,220,087	Net loss for the year ended December 31, 2017 -	Other comprehensive income and loss for the year ended	December 31, 2017 -	Issuance of stock from exercise of employee stock options 100	Share-based payments (11,926)	Non-controlling interests -	BALANCE, DECEMBER 31, 2017 8,208,261	Effect of retrospective application -	BALANCE, JANUARY 1, 2018 AS RESTATED 8,208,261	Net profit (loss) for the year ended December 31, 2018 -	Other comprehensive income and loss for the year ended	December 31, 2018 -	Changes in capital surplus from investments in associates accounted	for using the equity method -	Issuance of shares from exercise of employee share options 1,490	Changes in percentage of ownership interests in subsidiaries -	Share-based payments (21,616)	BALANCE, DECEMBER 31, 2018 $ 8,188,135	The accompanying notes are an integral part of the consolidated financial statements.	(With Deloitte & Touche audit report dated March 1, 2019)

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HTC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Profit (loss) before income tax Adjustments for: Depreciation expenses Amortization expenses Expected credit loss recognized (reversed) on trade receivables Finance costs Interests income Dividend income Compensation costs of employee share-based payments (reversed) Share of the profit or loss of associates and joint venture Net (gain) loss on disposal of property, plant and equipment Net gain on disposal of assets and licensing income (Note 27) Net gain on disposal of non-current assets held for sale Net gain on disposal of investments Net gain on disposal of subsidiary Impairment loss on financial assets Impairment loss on non-financial assets Changes in operating assets and liabilities (Increase) decrease in financial instruments held for trading Decrease in trade receivables (Increase) decrease in other receivables Decrease in inventories Decrease in prepayments Decrease (increase) in other current assets (Increase) decrease in other non-current assets Decrease in note and trade payables Decrease in other payables Decrease in provisions Decrease in other current liabilities Cash used in operations Interest received Interest paid Income tax (paid) return Net cash used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of financial assets at fair value through other comprehensive income Purchase of financial assets at fair value through profit or loss Purchase of financial assets measured at cost Proceeds from disposal of financial assets measured at cost Acquisition of associates Net cash inflow on acquisition of subsidiaries	2018 $ 17,228,482 575,573 1,198,288 82,964 1,915 (546,772) - (21,830) 36,087 (245,446) (31,285,385) (1,077,246) - (15,396) - 3,374,551 (11,240) 6,767,396 (18,873) 3,022,777 539,518 123,009 (310,074) (4,756,375) (2,413,211) (1,373,011) (520,745) (9,645,044) 447,435 (1,915) (296,300) (9,495,824) (161,097) (107,067) - - - -	2017 $ (16,958,835) 1,006,481 1,386,637 (362,870) 33,315 (283,574) (47,284) 128,811 87,255 80,397 - - (24,305) - 109,779 6,048,636 20,207 7,787,609 77,814 1,068,702 90,513 (67,407) 396,101 (11,678,506) (6,662,537) (7,110) (1,595,625) (19,365,796) 280,246 (33,315) 109,418 (19,009,447) - - (218,734) 91,107 (6,019) 5,974 (Continued)

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HTC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

Net cash inflow on disposal of subsidiary Payments for non-current assets held for sale Proceeds from disposal of non-current assets held of sale Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment (Decrease) increase in advance receipts - disposal of property Decrease in refundable deposits Payments for intangible assets Increase in other current financial assets Dividend received Proceeds from disposal of assets and licensing income (Note 27) Net cash generated from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from guarantee deposits received Refund of guarantee deposits received Proceeds from exercise of employee share options Change in non-controlling interests Net cash generated from (used in) financing activities EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS, END OF THE YEAR	2018 $ 106,918 - 2,748,931 (575,465) 385,287 (1,374,465) 14,054 (53,725) (9,081,110) - 31,285,385 23,187,646 124,719 - 8,121 19,454 152,294 162,205 14,006,321 10,443,227 $ 24,449,548	2017 $ - (3,830) - (262,375) 17,766 1,388,243 1,362,464 (566) (2,237,913) 47,284 - 183,401 - (16,425) 545 - (15,880) (795,064) (19,636,990) 30,080,217 $ 10,443,227

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

(With Deloitte & Touche review audit dated March 1, 2019)

(Concluded)

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Supplement 6

HTC CORPORATION

The Chart of 2018 Earnings Appropriation

UNIT: NT$

	UNIT: NT$	UNIT: NT$
Item	Amount
	Total
Deficit to be compensated at beginning of 2018 add : Effect of Adoption of IFRS 9	104,730,223	(6,093,403,038)
Adjusted deficit to be compensated at beginning of 2018		(5,988,672,815)
add : Net income of 2018 Net loss of 2017 less : 10% Legal reserve less : Special reserve add : Remeasurement of defined benefit plan less : Retained earnings adjusted for investments accounted for usingequitymethod	12,068,201,506 (597,479,847) (3,080,480,754) 157,873,267 (43,063,577)
Retained Earnings Available for Distribution as of December 31,2018		2,516,377,780
Distribution Item: -Cash Dividends to Common Share Holders (NT$0.38 per share) (Note)	(311,148,505)
Unappropriated Retained Earnings at the end of 2018		2,205,229,275

Note: The Board of Directors may make the required adjustments to the actual earnings distribution ratio on the basis of the number of issued and outstanding stocks registered in the Common Stockholders’ Roster as at the record date.

HTC CORPORATION

Chairwoman and CEO：Cher Wang

Chief Accountant：Hsiu Lai

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Supplement 7

HTC Corporation

Article of Incorporation Before and After Revision

Article no.	Original article	Amended article	Notes
Article 6	Deleted.	Employees of parents or subsidiaries of the Company that meet certain specific requirements shall be entitled to receive treasury stocks acquired by the Company in accordance with the Company Act. Employees of parents or subsidiaries of the Company meet certain specific requirements shall be entitled to receive employee stock option certificates. Employees of parents or subsidiaries of the Company meet certain specific requirements shall be entitled to receive new shares issued by the Company. Employees of parents or subsidiaries of the Company meet certain specific requirements shall be entitled to receive restricted Stock Awards. Qualification of employees in preceding	Amendment in according to the Article 167-1, 167-2, 267 of Company Act.
		four paragraph shall be determined by the Board of Directors.
Article 7	The share certificates of the Company shall without exception be in registered form, signed by, or affixed with the seals of, at least threedirectors, and authenticated by the competent governmental authority or a registration institution authorized thereby before issuance. Shares issued by the Company need not be in certificate form, but shall be registered with a securities depository enterprise.	The share certificates of the Company shall without exception be in registered form, signed by, or affixed with the seals ofthedirectorswho are authorized to represent the company, and authenticated by the competent governmental authority or a registration institution authorized thereby before issuance. Shares issued by the Company need not be in certificate form, but shall be registered with a securities depository enterprise.	Amendment in according to the Article 162 of Company Act.

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HTC Corporation

Article of Incorporation Before and After Revision

Article no.		Original article	Amended article	Notes
Chapter IV	Directors	and Supervisors	Directors	The Company shall set up an audit committee to replace supervisors.
Article 13	The Company shall have five to nine directors includeand two supervisors. The directorsand supervisorsshall be elected by a candidate nomination system. They shall be elected by the shareholders meeting from among the slate of directorand supervisor candidates. The term of office is three years, and they may continue in office if re-elected. The aggregate shareholding percentages of the entire bodies of directorsand supervisorsshall comply with the regulations prescribed by the securities supervisoryauthorities.		The Company shall have five to nine directors. The directors shall be elected by a candidate nomination system. They shall be elected by the shareholders meeting from among the slate of director candidates. The term of office is three years, and they may continue in office if re-elected. The aggregate shareholding percentages of the entire bodies of directors shall comply with the regulations prescribed by the securities supervisory authorities.	The Company shall set up an audit committee to replace supervisors.
Article 14-1	Each directorand supervisorshall be given at least 7 days advance notice of the convening of a board of directors meeting of the Company. In emergency circumstances, however, a meeting may be called on shorter notice. The meeting notice referred to in the preceding paragraph shall specify the reasons for convening the meeting, and shall be made in writing, by e-mail, or by facsimile.		Each director shall be given at least 7 days advance notice of the convening of a board of directors meeting of the Company. In emergency circumstances, however, a meeting may be called on shorter notice. The meeting notice referred to in the preceding paragraph shall specify the reasons for convening the meeting, and shall be made in writing, by e-mail, or byfacsimile.	The Company shall set up an audit committee to replace supervisors.
Article 16	When the Company’s directorsand supervisorsperform Company duties, the Company may pay remuneration regardless of whether the Company operates at a profit or loss. The board of directors is authorized with powers to resolve the rates of such remuneration based on the extent of theirparticipation		When the Company’s directors perform Company duties, the Company may pay remuneration regardless of whether the Company operates at a profit or loss. The board of directors is authorized with powers to resolve the rates of such remuneration based on the extent of their participation in the Company’s business	The Company shall set up an audit committee to replace supervisors.

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HTC Corporation

Article of Incorporation Before and After Revision

Article no.	Original article	Amended article	Notes
	in the Company’s business operations or value of their contribution, at a level consistent with general practices in the industry. If the Company operates at a profit, they also may allocate remuneration in accordance with Article 19. The company may acquire liability insurance for all directorsand supervisors,within the scope of the indemnity liability they bear under law in connection with their business responsibilities, throughout their term to minimize and disperse the risk of material loss or damage to the company and shareholders as a consequence of anyillegal act.	operations or value of their contribution, at a level consistent with general practices in the industry. If the Company operates at a profit, they also may allocate remuneration in accordance with Article 19. The company may acquire liability insurance for all directors, within the scope of the indemnity liability they bear under law in connection with their business responsibilities, throughout their term to minimize and disperse the risk of material loss or damage to the company and shareholders as a consequence of any illegal act.
Article 18	At the end of each fiscal year, the board of directors shall prepare the following documents, which shallbe submitted to the supervisors for auditing 30 days prior	At the end of each fiscal year, the board of directors shall prepare the following documents, which shall submitted to the shareholders' meeting for approval as requiredby law: 1. Business report; 2. Financial report; 3. Proposal for allocating profit or covering loss.	The Company shall set up an audit committee to replace supervisors.
	to the ordinary shareholders meeting, and
	submitted to the shareholders' meeting for approval: 1. Business report; 2. Financial report; 3. Proposal for allocating profit or coveringloss.
Article 19	If the Company makes profit for the current year, Company shall have minimum of 4% of such profit distributable as employees' compensation at in the form of stock or in cash as resolved by the board of directors. Employees of subsidiaries of the Company meeting certain specific requirements shall also be entitled to receive such stock or cash. Board of directors may resolve to distribute up to maximum of 0.25% of theprofit of	If the Company makes profit for the current year, Company shall have minimum of 4% of such profit distributable as employees' compensation at in the form of stock or in cash as resolved by the board of directors.Employees of parents or subsidiaries of the Company meeting certain specific requirements shall also be entitled to receive such stock or cash, certain specific requirements will be determined by the Board of Directors.	1.The Company shall set up an audit committee to replace supervisors. 2.Amendment in according to the Article

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HTC Corporation

Article of Incorporation Before and After Revision

Article no.	Original article	Amended article	Notes
	current year mentioned in preceding paragraph as remuneration to directors and supervisors. Proposed distribution of profit as employees’ compensation and remuneration to directorsand supervisors shall be presented at shareholders’ meeting. If the company has accumulated loss, the profit shall first be used to offset the loss. The remainder of the profit may then be distributed as employees’ compensation and remuneration to directorsand supervisorsbased on preceding proposed ratios.	Board of directors may resolve to distribute up to maximum of 0.25% of the profit of current year mentioned in preceding paragraph as remuneration to directors. Proposed distribution of profit as employees’ compensation and remuneration to directors shall be presented at shareholders’ meeting. If the company has accumulated loss, the profit shall first be used to offset the loss. The remainder of the profit may then be distributed as employees’ compensation and remuneration to directors based on preceding proposed ratios.	235-1 of Company Act.
Article 22	These Articles of Incorporation were adopted on 10 May 1997. The first amendment was made on 1 July 1997. The second amendment was made on 26 February 1998. The third amendment was made on 8 May 1998. The fourth amendment was made on 22 October 1998. The fifth amendment was made on 24 April 2000. The sixth amendment was made on 23 April 2001. The seventh amendment was made on 13 July 2001. The eighth amendment was made on 14 March 2002. The ninth amendment was made on 26 June 2003. The 10th amendment was made on 16 June 2004. The 11th amendment was made on 13 June 2005.	These Articles of Incorporation were adopted on 10 May 1997. The first amendment was made on 1 July 1997. The second amendment was made on 26 February 1998. The third amendment was made on 8 May 1998. The fourth amendment was made on 22 October 1998. The fifth amendment was made on 24 April 2000. The sixth amendment was made on 23 April 2001. The seventh amendment was made on 13 July 2001. The eighth amendment was made on 14 March 2002. The ninth amendment was made on 26 June 2003. The 10th amendment was made on 16 June 2004. The 11th amendment was made on 13 June 2005.	Add the date of amendment in this Article.

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HTC Corporation

Article of Incorporation Before and After Revision

Article no.	Original article	Amended article	Notes
	The 12th amendment was made on 2 May 2006. The 13th amendment was made on 20 June 2007. The 14th amendment was made on 13 June 2008. The 15th amendment was made on 19 June 2009. The 16th amendment was made on 18 June 2010. The 17th amendment was made on 15 June 2011. The 18th amendment was made on 21 June 2013. The 19th amendment was made on 19 June 2014. The 20th amendment was made on 2 June 2015. The 21st amendment was made on 24 June 2016. The 22nd amendment was made on 26 June 2018.	The 12th amendment was made on 2 May 2006. The 13th amendment was made on 20 June 2007. The 14th amendment was made on 13 June 2008. The 15th amendment was made on 19 June 2009. The 16th amendment was made on 18 June 2010. The 17th amendment was made on 15 June 2011. The 18th amendment was made on 21 June 2013. The 19th amendment was made on 19 June 2014. The 20th amendment was made on 2 June 2015. The 21st amendment was made on 24 June 2016. The 22nd amendment was made on 26 June 2018. The 23rd amendment was made on 21 June 2019.

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Supplement 8

HTC Corporation

Bylaws for the Election of Directors and Supervisors Before and After Revision

Article	Original article	Original article	Amended article
	Bylaws for the Election of Directorsand Supervisors		Bylaws for the Election of Directors
Article 1	Unless otherwise provided by the Company Act or the Articles of Incorporation of the Corporation, the election of the directorsand supervisorsof the Corporation shall be conducted in accordance with these Bylaws.		Unless otherwise provided by the Company Act or the Articles of Incorporation of the Corporation, the election of the directors of the Corporation shall be conducted in accordance with these Bylaws.
Article 2	The election of the directorsand supervisors of the Corporation may be carried out separately or simultaneously at a shareholders meeting.Separateelection ballots shall be prepared by the Corporation for directors and supervisors; the ballots shall note the number of election voting rights.	and supervisors	The election of the directors of the Corporation may be carried out separately or simultaneously at a shareholders meeting. Theelection ballots shall be prepared by the Corporation for directors; the ballots shall note the number of election voting rights.
Article 3	In the election of the directorsand supervisorsof the Corporation, in recording the names of the voters, the shareholder attendance identification numbers may be used instead.		In the election of the directors of the Corporation, in recording the names of the voters, the shareholder attendance identification numbers may be used instead.
Article 4	The nomination of candidates for directors and supervisorsof the Corporation shall adopt the candidate nomination system; the election of the directorsand supervisors shall adopt the open-ballot, cumulative voting method. Each share confers election voting rights equal in number to the directorsand supervisorsto be elected; the votes may be cast for a single candidate or distributed among multiple candidates.		The nomination of candidates for directors of the Corporation shall adopt the candidate nomination system; the election of the directors shall adopt the open-ballot, cumulative voting method. Each share confers election voting rights equal in number to the directors to be elected; the votes may be cast for a single candidate or distributed among multiple candidates.
Article 5	In the election for the directorsand supervisorsof the Corporation, the candidates receiving ballots representing the highest number of voting rights sequentially shall be elected.A candidate simultaneously elected as a director and supervisor shall, at the candidate's own discretion, decide to serve as either director or supervisor.The position left vacant bysuch decision shall be		In the election for the directors of the Corporation, the candidates receiving ballots representing the highest number of voting rights sequentially shall be elected. The position left vacant by such decision shall be filled by the candidate with the next most votes in the original election; the same shall apply to any vacancy arising upon review and confirmation that thepersonal data for

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HTC Corporation

Bylaws for the Election of Directors and Supervisors Before and After Revision

Article	Original article	Amended article
	filled by the candidate with the next most votes in the original election; the same shall apply to any vacancy arising upon review and confirmation that the personal data for an elected directoror supervisoris inaccurate, or that such a person's election is invalid under the provisions of any applicable law or regulation. When two or more persons receive the same number of votes and the specified number of positions is exceeded, the two persons receiving the same number of votes shall draw lots to decide who shall serve; the chair shall draw lots on behalf of a non-attendee.	an elected director is inaccurate, or that such a person's election is invalid under the provisions of any applicable law or regulation. When two or more persons receive the same number of votes and the specified number of positions is exceeded, the two persons receiving the same number of votes shall draw lots to decide who shall serve; the chair shall draw lots on behalf of a non-attendee.

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Supplement 9

HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article	Original article	Amended article	Notes
Article 2	Scope of assets and definitions 1.The term "assets" in these Procedures shall apply to the following: (1)Stocks, bonds, corporate bonds, financial bonds, securities representing funds, domestic beneficial interest certificates, overseas mutual funds, depositary receipts, call (put) warrants, beneficial interest securities, and asset-backed securities. (2)Real property and equipment. (3)Membership certificates. (4)Intangible assets such as patents, copyrights, trademark rights, and franchise rights. (5)Claims of financial institutions (including receivables, bills purchased and discounted, loans, and overdue accounts receivable). (6)Derivatives. (7)Assets acquired or disposed of through lawful mergers, demergers, acquisitions, or share transfers. (8)Other material assets. 2.The defined terms in these Procedures are as follows: (1)Derivatives: Refers to forward contracts, options contracts, futures contracts, leverage contracts, and swap contracts, and compound contracts combining the above products, whose value is derived fromassets, interest rates,foreign	Scope of assets and definitions 1.The term "assets" in these Procedures shall apply to the following: (1) Stocks, bonds, corporate bonds, financial bonds, securities representing funds, domestic beneficial interest certificates, overseas mutual funds, depositary receipts, call (put) warrants, beneficial interest securities, and asset-backed securities. (2) Real property(including land, houses and buildings, investment property, and construction enterprise inventory)and equipment. (3) Membership certificates. (4) Intangible assets such as patents, copyrights, trademark rights, and franchise rights. (5) Right-of–use assets. (6)Claims of financial institutions (including receivables, bills purchased and discounted, loans, and overdue accounts receivable). (7)Derivatives. (8)Assets acquired or disposed of through lawful mergers, demergers, acquisitions, or share transfers. (9)Other material assets. 2.The defined terms in these Procedures are as follows: (1)Derivatives: Refers to forward contracts,options	Amended in accordance with the applicable regulations.

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article		Original article		Amended article	Notes
	exchange rates, indexesor other interests. The term "forward contracts" does not include insurance contracts, performance contracts, after-sales service contracts, long-term leasing contracts, or long-term purchase (or sales)agreements. (2)Assets acquired or disposed of through lawful mergers, demergers, acquisitions, or share transfers: Refers to assets acquired or disposed through mergers, demergers, or acquisitions conducted under the Business Mergers and Acquisitions Act, Financial Holding Company Act, Financial Institution Merger Act and other laws, or to transfers of shares from another company for which new shares of its own are issued as consideration (below, "share transfer") under Article 156, paragraph 8of the Company Act. (3)Related party or subsidiary: As defined in the Regulations Governing the Preparation of Financial Reports by Securities Issuers. (4)Professional appraiser: Refers to a real property appraiser or other person duly authorized by law to engage in the value appraisal of real property or equipment. (5)Date of occurrence: Refers to the earliest of the following		contracts, futures contracts, leverage contracts, and swap contracts, and compound contracts combining the above products, whose value is derived froma specified interest rate, financial instrument price, commodity price,foreign exchange rates, indexesof prices or rates, credit rating or credit index, or other variable; or hybrid contracts combining the above contracts; or hybrid contracts or structured products containing embedded derivatives.The term "forward contracts" does not include insurance contracts, performance contracts, after-sales service contracts, long-term leasing contracts, or long-term purchase (or sales)contracts. (2)Assets acquired or disposed of through lawful mergers, demergers, acquisitions, or share transfers: Refers to assets acquired or disposed through mergers, demergers, or acquisitions conducted under the Business Mergers and Acquisitions Act, Financial Holding Company Act, Financial Institution Merger Act and other laws, or to transfers of shares from another company for which new shares of its own are issued as consideration (below,"share transfer")

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article	Original article	Amended article	Notes
	dates: the date of contract signing, date of payment, date of execution of an order, date of transfer, date of a board of directors resolution, or other date from which the counterparty and monetary amount of a transaction can be determined, provided that for investments requiring the approval of the Competent Authority, the earlier of either an abovementioned date or the date of receipt of approval by the Competent Authority shall apply. (6)Mainland area investment: Refers to investments in China approved by the Ministry of Economic Affairs Investment Commission or conducted in accordance with the Regulations Governing Permission for Investment or Technical Cooperation in the Mainland Area.	under Article 156-3of the Company Act. (3)Related party or subsidiary: As defined in the Regulations Governing the Preparation of Financial Reports by Securities Issuers. (4)Professional appraiser: Refers to a real property appraiser or other person duly authorized by law to engage in the value appraisal of real property or equipment. (5)Date of occurrence: Refers to the earliest of the following dates: the date of contract signing, date of payment, date of execution of an order, date of transfer, date of a board of directors resolution, or other date from which the counterparty and monetary amount of a transaction can be determined, provided that for investments requiring the approval of the Competent Authority, the earlier of either an abovementioned date or the date of receipt of approval by the Competent Authority shall apply. (6)Mainland area investment: Refers to investments in China approved by the Ministry of Economic Affairs Investment Commission or conducted in accordance with the Regulations Governing Permission for Investment or Technical Cooperation in the Mainland Area.

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article	Original article		Amended article	Notes
			(7) Investment professional: Refers to financial holding companies, banks, insurance companies, bill finance companies, trust enterprises, securities firms operating proprietary trading or underwriting business, futures commission merchants operating proprietary trading business, securities investment trust enterprises, securities investment consulting enterprises, and fund management companies, that are lawfully incorporated and are regulated by the competent financial authorities of the jurisdiction where they are located. (8)Securities exchange: "Domestic securities exchange"means the Taiwan Stock Exchange Corporation; "foreign securities exchange" means any organized securities exchange market that is regulated by the competent securities authorities of the jurisdiction where it is located. (9)Over-the-counter venue ("OTC venue","OTC"): "Domestic OTC venue" means any venue for OTC trading provided by a securities firm in accordance with the Regulations Governing Securities Trading

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article	Original article		Amended article	Notes
			on the Taipei Exchange; "foreign OTC venue"means any venue at a financial institution that is regulated by
			the foreign competent authority and that is permitted to conduct securities business.
Article 3	Appraisal procedures The methods and reference criteria for determining the price at which the Company acquires or disposes of assets shall comply with the following: 1. Securities investments: To acquire or dispose of securities, before the actual date of transaction, the Company shall first obtain, for reference in appraising the transaction price, a financial statement of the subject company for the most recent period that has been audited and certified or reviewed by a certified public accountant (CPA), or an investor memorandum, prospectus, or financial information regarding the subject securities, and shall determine the transaction price using the following methods: (1) For acquisition or disposal of securities traded on the centralized securities exchange market or an OTC market, the price shall be determined according to the current trading price. (2) For acquisition or disposal of securities not traded on the centralized securities	Appraisal procedures The methods and reference criteria for determining the price at which the Company acquires or disposes of assets shall comply with the following: 1. Securities investments: To acquire or dispose of securities, before the actual date of transaction, the Company shall first obtain, for reference in appraising the transaction price, a financial statement of the subject company for the most recent period that has been audited and certified or reviewed by a certified public accountant (CPA), or an investor memorandum, prospectus, or financial information regarding the subject securities, and shall determine the transaction price using the following methods: (1) For acquisition or disposal of securities traded on the centralized securities exchange market or an OTC market, the price shall be determined according to the current trading price. (2) For acquisition or disposal of securities not traded on the centralized securities		1.Amended in accordance with the applicable regulations. 2.The Company shall set up an audit committee to replace supervisors.

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article	Original article	Amended article	Notes
	exchange market or an OTC market, the price shall be determined through negotiation after consideration of net worth per share, profitability, and future development potential, taking current market prices as a reference, or by negotiation after reference to current market interest rates, bond coupon rates, and debtor creditworthiness. In addition, when the amount of a transaction reaches 20 percent of paid-in capital or NT$300 million or more, before the actual date of transaction, the Company shall obtain an opinion from a CPA on the reasonableness of the trading price. If the CPA needs to adopt an expert's report, the Statements on Auditing Standards No. 20 announced by the ROC Accounting Research and Development Foundation (ARDF) will apply. This requirement does not apply, however, to publicly quoted prices of securities that have an active market or that are subject to the Financial Supervisory Commission's Interpretation concerning the Article 10 proviso in the Regulations Governing the Acquisition or Disposal of Assets by Public Companies. 2. Real propertyorequipment: Prices for the acquisition or	exchange market or an OTC market, the price shall be determined through negotiation after consideration of net worth per share, profitability, and future development potential, taking current market prices as a reference, or by negotiation after reference to current market interest rates, bond coupon rates, and debtor creditworthiness. In addition, when the amount of a transaction reaches 20 percent of paid-in capital or NT$300 million or more, before the actual date of transaction, the Company shall obtain an opinion from a CPA on the reasonableness of the trading price. If the CPA needs to adopt an expert's report, the Statements on Auditing Standards No. 20 announced by the ROC Accounting Research and Development Foundation (ARDF) will apply. This requirement does not apply, however, to publicly quoted prices of securities that have an active market or that are subject to the Financial Supervisory Commission's Interpretation concerning the Article 10 proviso in the Regulations Governing the Acquisition or Disposal of Assets by Public Companies. 2. Real property,equipment, or right-of-use assets:

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article Original article Amended article Notes disposal of real property shall be Prices for the acquisition or determined through negotiation, disposal of real property shall be with reference to the announced determined through negotiation, current value and assessed value with reference to the announced of the property and the actual current value and assessed value transaction prices of neighboring of the property and the actual real properties; in acquisition or transaction prices of neighboring disposal of equipment, the real properties; in acquisition or Company shall first collect disposal of equipment, the relevant price information and Company shall first collect make a price determination relevant price information and through one of three methods, make a price determination either price comparison, price through one of three methods, negotiation, or call for tenders. either price comparison, price negotiation, or call for tenders. When the Company acquires or disposes of real property or When the Company acquires or equipment, if the transaction disposes of real property, amount reaches 20 percent of equipment, or right-of-use paid-in capital or NT$300 assets, if the transaction amount million or more, except in reaches 20 percent of paid-in transactions with government capital or NT$300 million or entity, hiring others to build on more, except in transactions its own land, hiring others to with a domestic government build on rented land, or entity, hiring others to build on acquiring or disposing of its own land, hiring others to equipment for business use, build on rented land, or before the actual date of acquiring or disposing of transaction, it shall first obtain equipment or right-of-use assets an appraisal report from a thereof held for business use, professional appraiser and shall before the actual date of further comply with the transaction, it shall first obtain following provisions: an appraisal report from a (1)Where due to special professional appraiser and shall circumstances it is necessary further comply with the to use a limited price, following provisions: specified price, or special (1)Where due to special price as reference criteria for circumstances it is necessary the transaction price, the to use a limited price, transaction shall first be specified price, or special submitted for approval by the price as reference criteria for

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article Original article Amended article Notes board of directors, and the the transaction price, the same procedure shall be transaction shall first be followed for any future submitted for approval by the changes to the terms and Audit Committee and the conditions of the transaction. board of directors, and the ((2)~ (4) omitted) same procedure shall be followed for any future changes to the terms and conditions of the transaction. 3. Membership certificates or ((2)~ (4) omitted) intangible assets 3. Intangible assets or right-of-use When acquiring or disposing of assets thereof or memberships membership certificates, the When acquiring or disposing of Company shall first collect membership certificates, the relevant price information and Company shall first collect use one of two methods, price relevant price information and comparison or price negotiation, use one of two methods, price to effect acquisition or disposal. comparison or price negotiation, When acquiring or disposing of to effect acquisition or disposal. intangible assets, the Company When acquiring or disposing of shall also collect relevant price intangible assets or right-of-use information, and shall make a assets thereof or memberships, careful assessment of the the Company shall also collect relevant laws and regulations relevant price information, and and the content of the contract in shall make a careful assessment order to decide the transaction of the relevant laws and price. regulations and the content of When a transaction amount for the contract in order to decide acquisition or disposal of the transaction price. membership certificates or When a transaction amount for intangible assets reaches 20 acquisition or disposal of percent of paid-in capital or membership certificates or NT$300 million or more, except intangible assets reaches 20 in transactions with a percent of paid-in capital or government entity, before the NT$300 million or more, except actual date of transaction, the in transactions with a domestic Company shall seek an opinion government entity, before the from a CPA on the actual date of transaction, the reasonableness of the transaction Company shall seek an opinion price. The CPA shall issue its from a CPA on the opinion in accordance with the inion in accordance with the reasonableness of the transaction

When a transaction amount for acquisition or disposal of membership certificates or intangible assets reaches 20 percent of paid-in capital or NT$300 million or more, except in transactions with a government entity, before the actual date of transaction, the Company shall seek an opinion from a CPA on the reasonableness of the transaction price. The CPA shall issue its opinion in accordance with the

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article	Original article	Amended article	Notes
	provisions of the Statement of Auditing Standards No. 20 issued by the ARDF. (4 and 5 omitted)	price. The CPA shall issue its opinion in accordance with the provisions of the Statement of Auditing Standards No. 20 issued by the ARDF. (4 and 5 omitted)
Article 4	Operating procedures 1. Levels of authorization (1)When the Company acquires or disposes of assets with non-related parties, the unit handling the transaction shall compile information on each asset to be transacted, including the reasons for the proposed acquisition or disposal, the target asset, the trading counterparty, the transfer price, the terms of payment, and the price reference criteria, and submit them to the unit with overall authority for a decision on the transaction. (1. Omitted) 2. Acquisitions or disposals of real property: 2.1 Acquisition or disposal of real property for use in business operations: (2.1.1 to 2.1.3 Omitted) 2.2 The acquisition or disposal of real property not for use in business operations, within the limits for transaction amounts set out in paragraph 2 of this article, may be executed after submission to and	Operating procedures 1. Levels of authorization (1)When the Company acquires or disposes of assets with non-related parties, the unit handling the transaction shall compile information on each asset to be transacted, including the reasons for the proposed acquisition or disposal, the target asset, the trading counterparty, the transfer price, the terms of payment, and the price reference criteria, and submit them to the unit with overall authority for a decision on the transaction. (1. Omitted) 2. Acquisitions or disposals of real propertyor right-of-use assets thereof: 2.1 Acquisition or disposal of real property for use in business operations: (2.1.1 to 2.1.3 Omitted) 2.2 The acquisition or disposal of real propertyand right-of-use assets thereofnot for use in business operations, within the limits for transaction amounts set out inparagraph 2 of	1.Amended in accordance with the applicable regulations. 2.The Company shall set up an audit committee to replace supervisors.

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article	Original article		Amended article	Notes
	approval by the board of directors. 3. Acquisition or disposal of equipment: 3.1 Acquisition or disposal of assets for use in business operations: (3.1.1 to 3.1.3 Omitted) 3.2 Acquisitions or disposals of assets that are not intended for use in business operations shall be submitted to and approved by the board of directors prior to their execution. (4. to 6. Omitted) (2)When the Company acquires or disposes of assets with related parties, the unit handling the transaction shall compile information on each asset to be transacted, including the reasons for the proposed acquisition or disposal, the target asset, the trading counterparty, the transfer price, the terms of payment, and the price reference criteria, and submit them to the unit with overall authority for a decision on the transaction. 1. Chapter 3 of this Procedure shall apply to acquisition or disposal of real estate from or to related parties. Relevant documents shall be submitted to the board of directors for approvaland the supervisors for	this article, may be executed after submission to and approval by the board of directors. 3. Acquisition or disposal of equipmentor right-of-use assets thereof: 3.1 Acquisition or disposal of assets or right-of-use assets thereoffor use in business operations: (3.1.1 to 3.1.3 Omitted) 3.2 Acquisitions or disposals of assets or right-of-use assets thereofthat are not intended for use in business operations shall be submitted to and approved by the board of directors prior to their execution. (4. to 6. Omitted) (2)When the Company acquires or disposes of assets with related parties, the unit handling the transaction shall compile information on each asset to be transacted, including the reasons for the proposed acquisition or disposal, the target asset, the trading counterparty, the transfer price, the terms of payment, and the price reference criteria, and submit them to the unit with overall authority for a decision on the transaction.

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article		Original article		Amended article	Notes
	2.	recognitionbefore execution of agreements and make payments. To acquire or dispose of assets other than real estate from or to related parties: 2.1. The transaction including in trading of government bonds or bonds under repurchase and resale agreements, or subscription or redemption of domestic money market funds issued by securities investment trust enterprise shall only be executed after it is submitted for approval by responsible officers as determined based of the amount and procedures for its approval prescribed by "Financial Investment Approval Matrix" submitted by the financial unit and approved by the chairman. 2.2. For the transactions between the Company and its subsidiaries for the equipment for the operation needs with the transaction price less than NT$600 million, the board of directors authorizes the Chairman of the board to approve and execute	1. 2.	Chapter 3 of this Procedure shall apply to acquisition or disposal of real estateor right-of-use assets thereof from or to related parties. Relevant documents shall be submittedto the Audit Committee and submitted toboard of directors for approval before execution of agreements and make payments. To acquire or dispose of assetsor right-of-use assets thereofother than real estate from or to related parties: 2.1. The transaction including in trading of domesticgovernment bonds or bonds under repurchase and resale agreements, or subscription or redemption of domestic money market funds issued by securities investment trust enterprise shall only be executed after it is submitted for approval by responsible officers as determined based of the amount and procedures for its approval prescribed by "Financial Investment Approval Matrix" submitted by the financial unit and approved bythe

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article	Original article	Amended article	Notes
	the transaction, who shall then report to the next meeting of the board of directors for ratification. 2.3. All transactions other than those described in sections 2.1 and 2.2 shall proceed in accordance with the followings: 2.3.1. To acquire or dispose of assets with the transaction price reaching 20% of the Company's paid-in capital, 10% of the Company's total assets or NT$300 million, relevant documents shall be submitted to the board of directors for approvaland the supervisors for recognitionbefore execution of agreements and make payments. 2.3.2. To acquire or dispose of assets with the transaction price less than 20% of the Company's paid-in capital, 10% of the Company's total	chairman. 2.2. For the transactions between the Company and its subsidiaries for the equipment for the operation needs with the transaction price less than NT$600 million, the board of directors authorizes the Chairman of the board to approve and execute the transaction, who shall then report to the next meeting of the board of directors for ratification. 2.3. All transactions other than those described in sections 2.1 and 2.2 shall proceed in accordance with the followings: 2.3.1. To acquire or dispose of assets with the transaction price reaching 20% of the Company's paid-in capital, 10% of the Company's total assets or NT$300 million, relevant documents shall be submitted to the Audit Committee and then submitted to the board of directors for

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article	Original article	Original article	Amended article	Notes
	(3)	assets or NT$300 million, if transactions is between the Company and its subsidiaries, the board of directors authorizes the Chairman of the board to approve and execute such transaction and Chairman shall report to board of directors of the status of execution afterwards; if transactions is not between the Company and its subsidiaries, relevant document shall be submitted to two uninterested directors for approvaland the supervisors for recognitionbefore execution of agreements and make payments. The status of execution shall be reported to the board of directors afterwards. In any acquisition or disposal of	approval before execution of agreements and make payments. 2.3.2. To acquire or dispose of assets with the transaction price less than 20% of the Company's paid-in capital, 10% of the Company's total assets or NT$300 million, if transactions is between the Company and its subsidiaries, the board of directors authorizes the Chairman of the board to approve and execute such transaction and Chairman shall report to board of directors of the status of execution afterwards; if transactions is not between the Company and its subsidiaries, relevant document shall be submitted to two uninterested directors for approval and the

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article	Original article	Original article	Amended article	Notes
		assets by the Company that requires the approval of the board of directors pursuant to the articles of in Company or other provisions of law, when a director expresses dissent and such dissent is on record or in a written statement, the Company shall distribute the materials expressing the director's dissenting opinion to each supervisor. After the Company has created independent director position(s), in accordance with the Securities and	supervisors for recognition before execution of agreements and make payments. The status of execution shall be reported to the board of directors afterwards. (3) In any acquisition or disposal of assets by the Company that requires the approval of the board of directors pursuant to the articles of in Company or other provisions of law, If the transaction has not received approval from one-half of the total number of audit committee members, it may be carried out with the approval of two-thirds or more of the total number of directors, and the resolution of the audit committee shall be recorded in the minutes of the board of directors meeting.
		Exchange Act, when asset acquisition or disposal transactions are reported for deliberation by the board of directors in

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Original article	Amended article	Amended article
accordance with the preceding paragraph, adequate consideration shall be given to the opinions of each independent	The "total number of audit committee members" and "total number of directors" shall be calculated only with respect to those actually currently serving in those positions. 2. Amount limits (1) The total amount of any real propertyor right-of-use assets thereofpurchased by the Company not for use in business operations may not exceed 20 percent of the Company's net worth; the total amount of any real propertyor right-of-use assets thereofpurchased by a subsidiary of the Company not for use in business operations may not exceed 20 percent of the Company's net worth, and may not exceed the subsidiary's net
director, and where an independent director has dissenting or qualified opinion,
such opinion shall
be entered into the minutes of the
board of directors		thereofpurchased by the Company not for use in business operations may not exceed 20 percent of the Company's net worth; the total amount of any real propertyor right-of-use assets
meeting. Subsequent to the
Company's establishment of an audit committee pursuant to the Securities and Exchange Act, material asset transactions shall
		thereofpurchased by a subsidiary of the Company not for use in business operations may not exceed 20 percent of the Company's net worth, and may not exceed the subsidiary's net
be approved by one-half or more of the total number of audit committee members and shall be submitted
for a resolution by the board of directors.If the transaction has

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article	Original article	Amended article	Notes
	not received approval from one-half of the total number of audit committee members, it may be carried out with the approval of two-thirds or more of the total number of directors, and the resolution of the audit committee shall be recorded in the minutes of the board of directors meeting. The "total number of audit committee members" and "total number of directors" shall be calculated only with respect to those actually currently serving in those positions. 2. Amount limits (1) The total amount of any real property purchased by the Company not for use in business operations may not exceed 20 percent of the Company's net	worth. (2) Unless with the approval of a shareholders meeting, the total amount of investment by the Company in securities may not exceed its net worth; the total amount of investment in securities by a subsidiary of the Company may not exceed the subsidiary's net worth. (3) Unless with the approval of a shareholders meeting, the amount of the Company's investment in any single security may not exceed 50 percent of its net worth; the amount of investment by a subsidiary of the Company in any single security may not exceed 50 percent of the Company's net worth and may not exceed the subsidiary's net

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article	Original article	Amended article	Amended article	Notes
	worth; the total amount of any real property purchased by a subsidiary of the Company not for use in business operations may not exceed 20 percent of the Company's net worth, and may not exceed the subsidiary's net worth. (2) Unless with the approval of a shareholders meeting, the total amount of investment by the Company in securities may not exceed its net worth; the total amount of investment in securities by a subsidiary of the Company may not exceed the subsidiary's net worth. (3) Unless with the approval of a shareholders meeting, the amount of the Company's investment in any single security	worth. (4) Securities acquired by the Company or a subsidiary for the purpose of short-term allocation of funds, or acquired through the conduct of M&A activities such as mergers, demergers, acquisitions, or share transfers carried out in accordance with relevant domestic or foreign laws, shall not be subject to the restrictions on amounts in (2) and (3) above. 3. Units executing transactions (1) For acquisition or disposal of securities: the financial unit or related unit. (2) For acquisition or disposal of real property, equipment, or right-of-use assets thereofand other fixed assets: the general affairs unit,financial
			thereofand other fixed assets: the general affairs unit,financial

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article	Original article	Amended article	Notes
	may not exceed 50 percent of its net worth; the amount of investment by a subsidiary of the Company in any single security may not exceed 50 percent of the Company's net worth and may not exceed the subsidiary's net worth. (4) Securities acquired by the Company or a subsidiary for the purpose of short-term allocation of funds, or acquired through the conduct of M&A activities such as mergers, demergers, acquisitions, or share transfers carried out in accordance with relevant domestic or foreign laws, shall not be subject to the restrictions on amounts in (2) and (3) above. 3. Units executingtransactions	unit, or other related unit. 4. Transaction procedures Procedures and operations in relation to the acquisition or disposal of assets shall be carried out in accordance with relevant provisions of laws and regulations and the internal rules of the Company.

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article		Amended article	Amended article	Notes
	(1) For acquisition or disposal of securities: the financial unit or related unit. (2) For acquisition or disposal of real propertyand other fixed assets: the general affairs unit, financial unit, or other related unit. 4. Transaction procedures Procedures and operations in relation to the acquisition or disposal of assets shall be carried out in accordance with relevant provisions of laws and regulations and the internal rules of the Company.
Article 5	Other material assets For any appraisal report or any written opinion from a CPA, attorney, or securities underwriter obtained by the Company, the professional appraiser and appraiser's officers, CPA, attorney, or securities underwritermay not be a related party of the trading counterparty.	Other material assets For any appraisal report or any written opinion from a CPA, attorney, or securities underwriter obtained by the Company, the professional appraiser and appraiser's officers, CPA, attorney, or securities underwriter shall meet the following requirements: 1. May not have previously received a final and unappeasable sentence to imprisonment for 1 year or longer for a violation of the Act, the Company Act, the Banking Act of The Republic of China, the Insurance Act, the Financial Holding Company Act, or the Business Entity Accounting Act, or for fraud, breach of trust, embezzlement, forgery of documents, or occupational crime. However, this provision does not apply if 3 years have already passed since completion		Amended in accordance with the applicable regulations.

			the Company Act, the Banking Act of The Republic of China, the Insurance Act, the Financial Holding Company Act, or the Business Entity Accounting Act,
			or for fraud, breach of trust, embezzlement, forgery of documents, or occupational crime. However, this provision does not apply if 3 years have already passed since completion

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article	Original article		Amended article	Notes
		2.	of service of the sentence, since expiration of the period of a suspended sentence, or since a pardon was received. May not be a related party or de
		3.	facto related party of any party to the transaction. If the company is required to obtain appraisal reports from two or more professional appraisers, the different professional appraisers or appraisal officers may not be related parties or de facto related
		comply with the following: 1. Prior to accepting a case, the appraiser shall prudently assess their own professional capabilities, practical experience, and independence. 2. When examining a case, the appraiser shall appropriately plan and execute adequate working procedures, in order to produce a conclusion and use the conclusion as the basis for issuing the report or opinion. The related working procedures, data collected, and conclusion shall be fully and accurately specified in the case working papers. 3. The appraiser shall undertake an
		1.
		2.
		3.
			data collected, and conclusion shall be fully and accurately specified in the case working papers. The appraiser shall undertake an
			item-by-item evaluation of the comprehensiveness, accuracy,

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article	Original article		Amended article	Notes
		4.	and reasonableness of the sources of data used, the parameters, and the information,
			as the basis for issuance of the appraisal report or the opinion. The appraiser shall issue a statement attesting to the professional competence and independence of the personnel who prepared the report or opinion, and the appraiser have evaluated and found that the information used is reasonable and accurate, and that the appraiser have complied with applicable laws and regulations.

Article 7	Resolution procedures When the Company acquires real property from or disposes of real estate to a related party, or acquires other assets from or dispose of other assets to a related party at the transaction price reaching 20% of the Company's paid-in capital, 10% of the Company's total assets or NT$300 million, except in trading of government bonds or bonds under repurchase and resale agreements, or subscription or redemption of domestic money market funds issued by securities investment trust enterprise, it shall submit the following materialsfor passage by the board of directorsand recognition by the supervisors before executing agreements or making payments: 1. The purpose, necessity, and anticipated benefit of the real propertyacquisition or disposal.	Resolution procedures When the Company acquires real propertyor right-of-use assets thereoffrom or disposes of real estateor right-of-use assets thereof to a related party, or acquires other assets from or dispose of other assets to a related party at the transaction price reaching 20% of the Company's paid-in capital, 10% of the Company's total assets or NT$300 million, except in trading ofdomesticgovernment bonds or bonds under repurchase and resale agreements, or subscription or redemption of domestic money market funds issued by securities investment trust enterprise, it shall submit the following materialsto the Audit Committee andthe board of directorsfor approvalbefore executing agreements or making payments: 1.Thepurpose,necessity,and		1.Amended in accordance with the applicable regulations. 2.The Company shall set up an audit committee to replace supervisors.

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article	Original article	Amended article	Notes
	2. The reason for choosing the related party as a trading counterparty. 3. To acquire real estate from a related party, information regarding appraisal of the reasonableness of the preliminary transaction terms in accordance with the provisions of Articles 8 through 10. (4. to 7. Omitted) The transaction price specified in the preceding article shall be calculated according to Paragraph 2, Article 17. The term "within one year" shall refer to one year prior to the actual date of transaction. The transactions that have been approved by the board of directorsand recognized by the supervisorsaccording to this Procedure may be excluded. For the acquisition or disposal of the business-use equipment between the Company and its subsidiaries, the Chairman of board may approve and execute the transactions according to Article 4.1.2.2.2 and then report to the next meeting of the board of directors for ratification. Subsequent to the creation of independent director(s) by this Company in accordance with the Securities and Exchange Act, when asset acquisition or disposal transactions are reported for deliberation by the board of directors in accordance with the	anticipated benefit of the real property acquisition or disposal. 2.The reason for choosing the related party as a trading counterparty. 3.To acquire real estate from a related partyor right-of-use assets thereof,information regarding appraisal of the reasonableness of the preliminary transaction terms in accordance with the provisions of Articles 8 through 10. (4. to 7. Omitted) The transaction price specified in the preceding article shall be calculated according to Paragraph 2, Article 17. The term "within one year" shall refer to one year prior to the actual date of transaction. The transactions that have beensubmitted to Audit Committee andapproved by the board of directors according to this Procedure may be excluded. The Company and its subsidiaries, or by its subsidiaries, or by its subsidiaries in which it directly or indirectly holds 100 percent of the
		issued shares or authorized capital,
		the Chairman of board may approve and execute the transactions according to Article 4.1.2.2.2 and then report to the next meeting of the board of directors for ratification. If the transaction has not received

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article	Original article	Amended article	Notes
	first paragraph, adequate consideration shall be given to the	approval from one-half of the total number of audit committee members, it may be carried out with the approval of two-thirds or more of the total number of directors, and the resolution of the audit committee shall be recorded in the minutes of the board of directors meeting. The "total number of audit committee members" and "total number of directors" shall be calculated only with respect to those actually currently serving in those positions.
	opinions of each independent director, and their dissenting or qualified opinions, if any, and the reasons for them shall be entered into the minutes of the board of directors meeting. Subsequent to this Company's establishment of an audit committee pursuant to the Securities and Exchange Act, matters that shall be subject to recognition by the supervisors pursuant to paragraph 1 shall first be approved by one-half or more of the total number of audit committee members and shall be submitted for a resolution by the board of directors.If the transaction has not received approval from one-half of the total number of audit committee members, it may be carried out with the approval of two-thirds or more of the total number of directors, and the resolution of the audit committee shall be recorded in the minutes of the board of directors meeting. The "total number of audit committee members" and "total number of directors" shall be calculated only with respect to those actually currently serving in those positions.
Article 8	Appraisal procedures When acquiring real property from a related party, the Company shall assess the reasonableness of the	Appraisal procedures When acquiring real property from a related partyor right-of-use assets thereof,the Companyshall	Amended in accordance with the applicable regulations.

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article	Original article	Amended article	Notes
	transaction costs by the following methods: 1.Based upon the related party transaction price plus necessary interest on funding and the costs to be borne by the buyer in accordance with the law. "Necessary interest on funding" is the imputed weighted average interest rate on borrowing in the year the company purchases the property. That rate, however, may not be higher than the maximum lending rate for non-financial enterprises announced by the Ministry of Finance. 2.Where the related party has previously created a mortgage on the property as security for a loan, based on the total loan value appraisal from the financial institution. The actual cumulative value of the financial institution's loan shall have reached 70 percent of more of the appraised loan value of the property and the loan period shall have been one year or more, provided that this shall not apply when the financial institution and one of the trading counterparties are related parties. When land and structures thereon are combined as a single property purchase,separate appraisals of	assess the reasonableness of the transaction costs by the following methods: 1.Based upon the related party transaction price plus necessary interest on funding and the costs to be borne by the buyer in accordance with the law. "Necessary interest on funding" is the imputed weighted average interest rate on borrowing in the year the company purchases the property. That rate, however, may not be higher than the maximum lending rate for non-financial enterprises announced by the Ministry of Finance. 2.Where the related party has previously created a mortgage on the property as security for a loan, based on the total loan value appraisal from the financial institution. The actual cumulative value of the financial institution's loan shall have reached 70 percent of more of the appraised loan value of the property and the loan period shall have been one year or more, provided that this shall not apply when the financial institution and one of the trading counterparties are related parties. When land and structures thereon are combined as a single property purchaseor leased,separate

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article	Original article	Amended article	Notes
	the transaction costs for the land and the structures may be carried in accordance with either of the means listed in the preceding paragraph. When the Company acquires real property from a related party and appraises the cost of the real property in accordance with the provisions of paragraph 1 and paragraph 2, it shall also engage a CPA to conduct a secondary review and render a specific opinion. When the Company acquires real property from a related party and one of the following circumstances exists, the acquisition shall be conducted in accordance with the provisions of Article 9 and the provisions of the preceding three paragraphs shall not apply: 1.The related party acquired the real property through inheritance or as a gift. 2.More than five years will have elapsed from the time the related party signed the contract to obtain the real property to the signing date for the current transaction. 3.The real property is acquired through signing of a joint development contract with the related party, or through engaging a related party to build real property, either on the company's own land or on rented land.	appraisals of the transaction costs for the land and the structures may be carried in accordance with either of the means listed in the preceding paragraph. When the Company acquires real property or right-of-use assets thereoffrom a related party and appraises the cost of the real property in accordance with the provisions of paragraph 1 and paragraph 2, it shall also engage a CPA to conduct a secondary review and render a specific opinion. When the Company acquires real property or right-of-use assets thereoffrom a related party and one of the following circumstances exists, the acquisition shall be conducted in accordance with the provisions of Article 9 and the provisions of the preceding three paragraphs shall not apply: 1.The related party acquired the real propertyor right-of-use assets thereofthrough inheritance or as a gift. 2.More than five years will have elapsed from the time the related party signed the contract to obtain the real propertyor right-of-use assets thereofto the signing date for the current transaction. 3.The real property is acquired through signing of a joint development contract with the related party, or through engaging a related party to build

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article	Original article		Amended article	Notes
		4.	real property, either on the company's own land or on rented land. The real property right-of-use assets for business use are acquired by the Company with its parent or subsidiaries, or by its subsidiaries in which it directly or indirectly holds 100 percent of the issued shares or authorized capital.

Article 9	Procedures for handling appraised prices lower than the proposed transaction price (1) When the results of the Company's appraisals under paragraph 1 and paragraph 2 of the preceding Article are all lower than the proposed transaction price, the matter shall be handled in accordance with Article 10. Where the following circumstances exist, however, and the Company puts forward objective evidence and obtains specific opinions on reasonableness from a professional real property appraiser and a CPA, the above condition shall not apply: 1.Where the related party has acquired undeveloped land or leased land for development, it may submit proof that the transaction complies with one of the following conditions: (1)The undeveloped land has been appraised in accordance with the means in thepreceding	Procedures for handling appraised prices lower than the proposed transaction price (1) When the results of the Company's appraisals under paragraph 1 and paragraph 2 of the preceding Article are all lower than the proposed transaction price, the matter shall be handled in accordance with Article 10. Where the following circumstances exist, however, and the Company puts forward objective evidence and obtains specific opinions on reasonableness from a professional real property appraiser and a CPA, the above condition shall not apply: 1. Where the related party has acquired undeveloped land or leased land for development, it may submit proof that the transaction complies with one of the following conditions: (1)The undeveloped land has been appraised in accordance with the means		Amended in accordance with the applicable regulations.

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article	Original article	Amended article	Notes
	Article, but the structures have been valued based on the related party's construction costs plus reasonable profit from construction, and in combination with the land, are valued in excess of the actual transaction price. "Reasonable profit from construction" shall be the lower of the average gross operating profit margin of the related party's construction division over the most recent three years or the gross profit margin for the construction industry for the most recent period as announced by the Ministry of Finance. (2)There are cases of completed transactions by unrelated parties within the preceding year involving other floors of the same property or property in an adjacent area in which the properties are similar in area and the terms of the transactions in those cases are found to be similar after assessment of reasonable discrepancies in the prices of different floors or districts in accordance with standard property market practices. (3)There are cases of leasing transactions completed by unrelated parties for other floors of the same property within the preceding year in which the transaction terms	in the preceding Article, but the structures have been valued based on the related party's construction costs plus reasonable profit from construction, and in combination with the land, are valued in excess of the actual transaction price. "Reasonable profit from construction" shall be the lower of the average gross operating profit margin of the related party's construction division over the most recent three years or the gross profit margin for the construction industry for the most recent period as announced by the Ministry of Finance. (2)There are cases of completed transactions by unrelated parties within the preceding year involving other floors of the same property or property in an adjacent area in which the properties are similar in area and the terms of the transactions in those cases are found to be similar after assessment of reasonable discrepancies in the prices of different floors or districts in accordance with standard property market practicesor leasing practices. (3)There are cases of leasing transactions completed by unrelatedparties for other

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article	Original article	Amended article	Notes
	are estimated to be similar based on reasonable price discrepancies among floors in accordance with standard property leasing market practices. 2. The Company provides evidence that, for the real property it purchases from a related party, the terms of the transaction are similar to cases of transactions completed in adjacent areas by unrelated parties within the preceding year and the property involved is also similar in area. "Cases of transactions completed in adjacent areas" in the preceding paragraph in principle refers to property on the same or an adjacent block and within a distance of no more than 500 meters or property whose publicly announced current value is similar. "Similar in area" in principle refers to transactions completed by unrelated parties for property with an area of no less than 50 percent of the property in the planned transaction. "Within the preceding year" refers to a preceding period of one year calculated from the actual date of occurrence of the real property acquisition.	floors of the same property within the preceding year in which the transaction terms are estimated to be similar based on reasonable price discrepancies among floors in accordance with standard property leasing market practices. 2.The Company provides evidence that, for the real property it purchases from a related party, the terms of the transaction are similar to cases of transactions completed in adjacent areas by unrelated parties within the preceding year and the property involved is also similar in area. "Cases of transactions completed in adjacent areas" in the preceding paragraph in principle refers to property on the same or an adjacent block and within a distance of no more than 500 meters or property whose publicly announced current value is similar. "Similar in area" in principle refers to transactions completed by unrelated parties for property with an area of no less than 50 percent of the property in the planned transaction. "Within the preceding year" refers to a preceding period of one year calculated from the actual date of occurrence of the realpropertyacquisition.
Article 10	Procedures for handling appraised prices lower than theproposed	Procedures for handling appraised prices lower than theproposed	1.Amended in accordance

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article	Original article	Amended article	Notes
	transaction price (2) When the Company acquires real property from a related party and the results of the appraisals under Articles 8 and 9 are all lower than the proposed transaction price, the following steps shall be taken: 1.A special reserve shall be set aside in accordance with the provisions of Article 41, paragraph 1 of the Securities and Exchange Act against the difference between the real property transaction price and the appraised cost, which may not be distributed or used for capital increase or issuance of bonus shares. Where the Company uses the equity method to account for its investment in another company, then the special reserve called for under Article 41, paragraph of the Securities and Exchange Act shall be set aside pro rata in a proportion consistent with the share of the Company's equity stake in the other company. 2.Supervisorsshall comply with the provisions of Article 218 of the Company Act. 3.Actions taken pursuant to subparagraphs 1 and 2 shall be reported to the shareholders meeting, and the details of the transaction shall be disclosed in the annual report and in prospectuses.	transaction price (2) When the Company acquires real propertyor right-of-use assets thereoffrom a related party and the results of the appraisals under Articles 8 and 9 are all lower than the proposed transaction price, the following steps shall be taken: 1.A special reserve shall be set aside in accordance with the provisions of Article 41, paragraph 1 of the Securities and Exchange Act against the difference between the real propertyor right-of-use assets thereoftransaction price and the appraised cost, which may not be distributed or used for capital increase or issuance of bonus shares. Where the Company uses the equity method to account for its investment in another company, then the special reserve called for under Article 41, paragraph of the Securities and Exchange Act shall be set aside pro rata in a proportion consistent with the share of the Company's equity stake in the other company. 2.Audit Committeeshall comply with the provisions of Article 218 of the Company Act. 3.Actions taken pursuant to subparagraphs 1 and 2 shall be reported to the shareholders meeting, and the details of the transaction shall be disclosed	with the applicable regulations. 2.The Company shall set up an audit committee to replace supervisors.

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article	Original article	Amended article	Notes
	When the Company sets aside a special reserve under the preceding paragraph, it may not utilize the special reserve until it has recognized a loss on decline in market value of the assets it purchased at a premium, or they have been disposed of, or adequate compensation has been made, or the status quo ante has been restored, or there is other evidence to confirm there was nothing unreasonable in the transaction, and the Financial Supervisory Commission of the Executive Yuan has given its consent. When the Company acquires real property from a related party and other evidence indicates that the acquisition was a non-arms length transaction, it shall also comply with the provisions of the preceding two paragraphs.	in the annual report and in prospectuses. When the Company sets aside a special reserve under the preceding paragraph, it may not utilize the special reserve until it has recognized a loss on decline in market value of the assets it purchasedor leasedat a premium, or they have been disposed of, or adequate compensation has been made,or the status quo ante has been restored,or the status quo ante has been restored, or there is other evidence to confirm there was nothing unreasonable in the transaction, and the Financial Supervisory Commission of the Executive Yuan has given its consent. When the Company acquires real property or right-of-use assets thereoffrom a related party and other evidence indicates that the acquisition was a non-arms length transaction, it shall also comply with the provisions of the precedingtwoparagraphs.
Article 17	Procedures for public announcement and reporting When the Company acquires or disposes of assets under any of the following circumstances, it shall publicly announce and report the relevant information, in accordance with the type of disposal or acquisition, on the FSC's designated website in the	Procedures for public announcement and reporting When the Company acquires or disposes of assets under any of the following circumstances, it shall publicly announce and report the relevant information, in accordance with the type of disposal or acquisition, on the FSC's designated website in the	Amended in accordance with the applicable regulations.

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article	Original article	Amended article	Notes
	appropriate format as prescribed by regulations within two days from the date of occurrence: 1.An acquisition of real property from or a disposal of real estate to a related party, a transaction with a related parties for the assets other than real estate with the transaction price reaching 20% of the Company's paid-in capital, 10% of the total assets, and NT$300 million, excluding the transactions of treasury bonds or repurchase or reverse sell of bonds, or subscription or redemption of issued by securities investment trust enterprise, domestic money market funds. (2. to 6. Omitted) 7.Where the amount of an asset transaction other than any of those referred to in the preceding six subparagraphs, a disposal of receivables by a financial institution, or investments in China reaches 20 percent or more of paid-in capital or NT$300 million. This restriction shall not apply, however, under the following circumstances: (1) Trades in government bonds. (2) Securities trading by investment professionals on foreign or domestic securities exchanges or domestic over-the-counter markets, or subscription of ordinary	appropriate format as prescribed by regulations within two days from the date of occurrence: 1. An acquisition of real property or right-of-use assets thereof from or a disposal of real estate or right-of-use assets thereofto a related party, a transaction with a related parties for the assets other than real estate with the transaction price reaching 20% of the Company's paid-in capital, 10% of the total assets, and NT$300 million, excluding the transactions of treasury bonds or repurchase or reverse sell of bonds, or subscription or redemption of issued by securities investment trust enterprise, domestic money market funds. (2. to 6. Omitted) 7.Where the amount of an asset transaction other than any of those referred to in the preceding six subparagraphs, a disposal of receivables by a financial institution, or investments in China reaches 20 percent or more of paid-in capital or NT$300 million. This restriction shall not apply, however, under the following circumstances: (1) Trades in government bonds. (2) Securities trading by investment professionals on foreign or domestic securities exchanges or domestic over-the-counter markets, or subscription of ordinary

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article	Original article	Amended article	Notes
	corporate bonds and securities that do not involve shareholding rights in the primary market, or security firms, for the purpose of underwriting services, becomes an advisory recommending securities firm and purchases securities according to the regulations of Taipei Exchange. (3) Trades of bonds under repurchase/resale agreements, or subscription or redemption of domestic money market funds issued by securities investment trust enterprise. The amounts of the transactions in the preceding paragraph shall be calculated as follows: 1. As the amount of any individual transaction. 2. As the cumulative transaction amount of acquisitions and disposals of the same type of asset with the same trading counterparty within one year. 3. As the cumulative transaction amount of real property acquisitions and disposals (respective cumulative amounts for acquisitions and for disposals) in the same development project within one year. 4. As the cumulative transaction amount of acquisitions and disposals (respective cumulative amounts for	corporate bonds and securities that do not involve shareholding rights in the primary market, or security firms, for the purpose of underwriting services, becomes an advisory recommending securities firm and purchases securities according to the regulations of Taipei Exchange. (3) Trades of bonds under repurchase/resale agreements, or subscription or redemption of domestic money market funds issued by securities investment trust enterprise. The amounts of the transactions in the preceding paragraph shall be calculated as follows: 1. As the amount of any individual transaction. 2. As the cumulative transaction amount of acquisitions and disposals of the same type of asset with the same trading counterparty within one year. 3. As the cumulative transaction amount of real propertyor right-of-use assets thereof acquisitions and disposals (respective cumulative amounts for acquisitions and for disposals) in the same development project within one year. 4. As the cumulative transaction amount of acquisitions and disposals(respective

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HTC Corporation Procedures for the Acquisition or Disposal of Assets Before and After Revision

Article	Original article	Amended article	Notes
	acquisitions and for disposals) of the same security within one year. "Within one year," as used in the preceding paragraph, refers to a preceding period of one-year calculated from the date of occurrence of the current transaction. Items duly announced in accordance with the Procedures need not be entered. (below omitted)	cumulative amounts for acquisitions and for disposals) of the same security within one year. "Within one year," as used in the preceding paragraph, refers to a preceding period of one-year calculated from the date of occurrence of the current transaction. Items duly announced in accordance with the Procedures need not be entered. (below omitted)

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Supplement 10

HTC Corporation

Operational Procedures for Lending Funds to Others Before and After Revision

Article	Original article	Amended article
Article 13	Handling of changes in circumstances When as a result of a change in circumstances a loan recipient is not in compliance with the requirements of these Operational Procedures or the balance of a loan(s) exceeds the limit, the Company shall adopt a corrective plan and submit the corrective plan toall the supervisors, and shall complete the corrections in compliance with theplan schedule.	Handling of changes in circumstances When as a result of a change in circumstances a loan recipient is not in compliance with the requirements of these Operational Procedures or the balance of a loan(s) exceeds the limit, the Company shall adopt a corrective plan and submit the corrective plan toAudit Committee,and shall complete the corrections in compliance with theplan schedule.
Article 15	Auditing The internal audit personnel of the Company shall handle the following matters. If any material violation is found, it shall immediately be reported in writing toall of the supervisors: 1. At least quarterly, audit the Company's operational procedures for loans of funds to others and the status of implementation thereof, and prepare a written record. 2. Review the self-inspection reports of subsidiaries.	Auditing The internal audit personnel of the Company shall handle the following matters. If any material violation is found, it shall immediately be reported in writing toAudit Committee: 1. At least quarterly, audit the Company's operational procedures for loans of funds to others and the status of implementation thereof, and prepare a written record. 2. Review the self-inspection reports of subsidiaries.
Article 17	Amendments to these Procedures After passage by the Board of Directors, these Procedures shall besent to all supervisors andsubmitted to the shareholders meeting for approval. If any director expresses an objection and there is a record or written statement of the objection, the Company shallforward the director's objection to all supervisors andsubmit it to the shareholders meeting for discussion. The same procedures shall apply to any amendments to these Procedures. If the Company has appointed an independent director(s), the opinions of each	Amendments to these Procedures After passage by the Board of Directors, these Procedures shall be submitted to the shareholders meeting for approval. If any director expresses an objection and there is a record or written statement of the objection, the Company shall submit it to the shareholders meeting for discussion. The same procedures shall apply to any amendments to these Procedures. The amendment of these Procedures should be approved by more than half of all Audit Committee members firstly before be submitted to the Board for a resolution. If the requirement above is not obtained, these Procedures may be implemented if approved
	independent director shall be given full consideration when the matter is submitted for discussion by the board of directors, and each independent director's explicit
		by more than two-thirds of all directors, and the resolution of the Audit Committee shall

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HTC Corporation

Operational Procedures for Lending Funds to Others Before and After Revision

Article	Original article	Amended article
	assenting or dissenting opinion and reasons for dissent shall be recorded in the board of directors meeting minutes. The aforesaid Procedures shall be complied with when lending funds to others.	be recorded in the minutes of the Board of Directors.

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Supplement 10

HTC Corporation

Rules for Endorsements and Guarantees Before and After Revision

Article	Original article	Amended article
Article 11	Handling of changes in circumstances When as a result of a change in circumstances the recipient of an endorsement or guarantee no longer meets the requirements of these Rules, or the amount of the endorsement or guarantee exceeds the limit, the Company shall adopt a corrective plan and submit the corrective plan toall the supervisors, and shall complete the corrections in compliance with the plan schedule.	Handling of changes in circumstances When as a result of a change in circumstances the recipient of an endorsement or guarantee no longer meets the requirements of these Rules, or the amount of the endorsement or guarantee exceeds the limit, the Company shall adopt a corrective plan and submit the corrective plan toAudit Committee, and shall complete the corrections in compliance with the plan schedule.
Article 14	Auditing The internal audit personnel of the Company shall handle the following matters. If any material violation is found, it shall immediately be reported in writing toall of the supervisors: 1. At least quarterly, audit the Company's operational procedures for endorsements and guarantees and the status of implementation thereof, and prepare a written record. 2. Review the self-inspection reports of subsidiaries.	Auditing The internal audit personnel of the Company shall handle the following matters. If any material violation is found, it shall immediately be reported in writing toAudit Committee: 1. At least quarterly, audit the Company's operational procedures for endorsements and guarantees and the status of implementation thereof, and prepare a written record. 2. Review the self-inspection reports of subsidiaries.
Article 16	Amendments to these Rules After passage by the Board of Directors, these Rules shall besent to all supervisors andsubmitted to the shareholders meeting for approval. If any director expresses an objection and there is a record or written statement of the objection, the Company shallforward the director's objection to all supervisors andsubmit it to the shareholders meeting for discussion. The same procedures shall apply to any amendments to these Rules. If the Company has appointed an independent director(s), the opinions of each	Amendments to these Rules After passage by the Board of Directors, these Rules shall be submitted to the shareholders meeting for approval. If any director expresses an objection and there is a record or written statement of the objection, the Company shall submit it to the shareholders meeting for discussion. The same procedures shall apply to any amendments to these Rules. The amendment of these Procedures should be approved by more than half of all Audit Committee members firstly before be submitted to the Board for a resolution. If

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HTC Corporation

Rules for Endorsements and Guarantees Before and After Revision

Article	Original article	Amended article
	independent director shall be given full consideration when the matter is submitted for discussion by the board of directors, and each independent director's explicit assenting or dissenting opinion and reasons for dissent shall be recorded in the board of directors meeting minutes. The aforesaid Rules shall also be complied with when providing endorsements and guarantees to others.	the requirement above is not obtained, these Procedures may be implemented if approved
		by more than two-thirds of all directors, and the resolution of the Audit Committee shall be recorded in the minutes of the Board of Directors.

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Supplement 11

HTC Corporation

Procedures for the Handling of Derivatives Trading Before and After Revision

Article	Original article	Amended article	Notes
Article 2	Transaction principles and policy 1.Transaction types The term "derivatives" in these Procedures means products such as forward contracts, options contracts, futures contracts, leverage contracts, and swap contracts whose value is derived fromassets, interest rates, foreign exchange rates, indices, or otherinterests, and compound derivatives formed by combinations of the aforesaid products. The term "forward contracts" does not include insurance contracts, performance contracts, after-sales service contracts, long-term leasing contracts, or long-term purchase (sales) agreements. Matters relating to bond margin transactions shall be conducted in accordance with the relevant provisions of these Procedures. 2.Operational or hedging strategy: The purpose of derivatives transactions shall be to ensure the operating profits of the Company's business and avert risks caused by fluctuations in exchange rates, interest rates, or asset prices, and not to profit from speculation. If other transactions are required, the approval of the chairman of the board shall be obtained. 3.Division of authority and duties: (1)Financial unit: obtain market	Transaction principles and policy 1.Transaction types The term "derivatives" in these Procedures means products such as forward contracts, options contracts, futures contracts, leverage contracts, and swap contracts whose value is derived froma specified interest rate, financial instrument price, commodity price, foreign exchange rates, indicesof prices or rates, or other interests, credit rating or credit index, or other variables ; or hybrid contracts combining the above contracts; or hybrid contracts or structured products containing embedded derivatives. The term "forward contracts" does not include insurance contracts, performance contracts, after-sales service contracts, long-term leasing contracts, or long-term purchase (sales) contracts. Matters relating to bond margin transactions shall be conducted in accordance with the relevant provisions of these Procedures. 2.Operational or hedging strategy: The purpose of derivatives transactions shall be to ensure the operating profits of the Company's business and avert risks caused by fluctuations in exchange rates, interest rates, or asset prices, and not to profit from speculation. If other	1.Amended in accordance with the applicable regulations. 2.The Company shall set up an audit committee to replace supervisors.

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HTC Corporation

Procedures for the Handling of Derivatives Trading Before and After Revision

Article	Original article	Amended article	Notes
	information, determine trends and risks, be familiar with financial products and the relevant laws and operational skills, and handle transactions according to the instructions of the authorized executive and to position authorizations, to avert risk from market price volatility. At regular intervals, also evaluate position risks and make public announcements and file reports in accordance with regulations. (2) Accounting unit: provide information regarding risk exposure positions at regular intervals, keep accounts according to generally accepted accounting principles, and prepare financial statements. (3) Audit unit: assess at regular intervals whether derivatives transactions conform with regulations regarding transaction procedures and whether risks are within the Company's tolerable range. 4.Performance assessments: hedging transactions shall be assessed on a regularly scheduled basis once every two weeks; financial transactions shall be assessed on a regularly scheduled basis once per week. Performance assessments shall make a comparison on the assessment date with a predetermined assessment basis,as a reference	transactions are required, the approval of the chairman of the board shall be obtained. 3.Division of authority and duties: (1) Financial unit: obtain market information, determine trends and risks, be familiar with financial products and the relevant laws and operational skills, and handle transactions according to the instructions of the authorized executive and to position authorizations, to avert risk from market price volatility. At regular intervals, also evaluate position risks and make public announcements and file reports in accordance with regulations. (2) Accounting unit: provide information regarding risk exposure positions at regular intervals, keep accounts according to generally accepted accounting principles, and prepare financial statements. (3) Audit unit: assess at regular intervals whether derivatives transactions conform with regulations regarding transaction procedures and whether risks are within the Company's tolerable range. 4.Performance assessments: hedging transactions shall be assessed on a regularly scheduled basis once every two weeks; financial transactions shall be assessed on

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HTC Corporation

Procedures for the Handling of Derivatives Trading Before and After Revision

Article	Original article	Original article	Amended article	Notes
	for future decision-making. 5.Total contract amount: The Company engages in derivatives transactions based on the principle of risk hedging, and not for the purpose of generating profit. Derivatives trading must therefore be based on substantive transactions, and the total balance of all hedging contracts at any time may not exceed the hedging needs resulting from identifiable foreign currency commitments or derived from substantive transactions. 6.Ceiling amount for losses on all contracts and on individual contracts: for derivatives transactions in which the Company engages, the ceiling amount for losses on all contracts and on individual contracts is set at 15 percent of the principal amount of all contracts. When losses on all contracts or any contract reach the aforesaid ceiling, the Company shall immediately notify thesupervisorsand convene the relevant personnel to respond.After the Company has set up an audit committee pursuant to the Securities and Exchange Act, provisions regarding supervisors shall apply mutatis mutandis to the audit committee.		a regularly scheduled basis once per week. Performance assessments shall make a comparison on the assessment date with a predetermined assessment basis, as a reference for future decision-making. 5.Total contract amount: The Company engages in derivatives transactions based on the principle of risk hedging, and not for the purpose of generating profit. Derivatives trading must therefore be based on substantive transactions, and the total balance of all hedging contracts at any time may not exceed the hedging needs resulting from identifiable foreign currency commitments or derived from substantive transactions. 6.Ceiling amount for losses on all contracts and on individual contracts: for derivatives transactions in which the Company engages, the ceiling amount for losses on all contracts and on individual contracts is set at 15 percent of the principal amount of all contracts. When losses on all contracts or any contract reach the aforesaid ceiling, the Company shall immediately notify theAudit Committeeand convene the relevant personnel to respond.
		mutatis mutandis to the audit committee.
Article 6	Internal control system 1.Risk management measures		Internal control system 1.Risk management measures	The Company has set up Independent

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HTC Corporation

Procedures for the Handling of Derivatives Trading Before and After Revision

Article	Original article	Amended article	Notes
	(1) Credit risk considerations: Transaction counterparties shall be confined to Company-designated banks. After the transaction, bookkeeping personnel shall promptly make an entry in the credit limit control table and reconcile accounts with the Company-designated bank at regular intervals. (2) Market price risk considerations: bookkeeping personnel shall check total transaction amounts on an ongoing basis to see whether they conforms to the ceilings set under these Procedures. The accounting department shall assess market prices on an ongoing basis, and note the possible impact of future market price volatility on profits and losses from all holdings. (3) Liquidity considerations: to ensure liquidity, before conducting a transaction, it shall be confirmed with financing personnel that the transaction amount will not cause insufficient liquidity. (4) Operational considerations: transactions must be in full compliance with the authorized ceiling amount and operational procedures. (5) Legal considerations: documents to be signed with a bank must be reviewed by	(1) Credit risk considerations: Transaction counterparties shall be confined to Company-designated banks. After the transaction, bookkeeping personnel shall promptly make an entry in the credit limit control table and reconcile accounts with the Company-designated bank at regular intervals. (2) Market price risk considerations: bookkeeping personnel shall check total transaction amounts on an ongoing basis to see whether they conforms to the ceilings set under these Procedures. The accounting department shall assess market prices on an ongoing basis, and note the possible impact of future market price volatility on profits and losses from all holdings. (3) Liquidity considerations: to ensure liquidity, before conducting a transaction, it shall be confirmed with financing personnel that the transaction amount will not cause insufficient liquidity. (4) Operational considerations: transactions must be in full compliance with the authorized ceiling amount and operational procedures. (5) Legal considerations: documents to be signed with a bank must be reviewed by	Directors.

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HTC Corporation

Procedures for the Handling of Derivatives Trading Before and After Revision

Article	Original article	Amended article	Notes
	legal affairs personnel before they can be formally signed. (6) Cash flow considerations: a prerequisite for a transaction is that it must not cause future cash flow concerns. 2.Internal controls (1) The Financial unit's transaction personnel and confirmation and settlement operations personnel may not concurrently serve in more than one of those positions. (2) Transaction personnel shall hand over transaction vouchers or contracts to bookkeeping personnel for account keeping. (3) Bookkeeping personnel shall at regular intervals reconcile accounts or records with the trading counterparty. (4) Transaction risk measurement, monitoring, and control personnel shall be members of a different department than the personnel of the previous subparagraph, and shall report to the board of directors or a senior executive not responsible for decision making regarding transactions or positions. 3.Periodic evaluation methods (1) The designated personnel appointed by the board of directors to monitor and control derivatives trading risks on an ongoingbasis	legal affairs personnel before they can be formally signed. (6) Cash flow considerations: a prerequisite for a transaction is that it must not cause future cash flow concerns. 2.Internal controls (1) The Financial unit's transaction personnel and confirmation and settlement operations personnel may not concurrently serve in more than one of those positions. (2) Transaction personnel shall hand over transaction vouchers or contracts to bookkeeping personnel for account keeping. (3) Bookkeeping personnel shall at regular intervals reconcile accounts or records with the trading counterparty. (4) Transaction risk measurement, monitoring, and control personnel shall be members of a different department than the personnel of the previous subparagraph, and shall report to the board of directors or a senior executive not responsible for decision making regarding transactions or positions. 3.Periodic evaluation methods (1) The designated personnel appointed by the board of directors to monitor and control derivatives trading risks on an ongoingbasis

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HTC Corporation

Procedures for the Handling of Derivatives Trading Before and After Revision

Article	Original article	Amended article	Notes
	shall also at regular intervals evaluate whether trading performance accords with established operational strategies, and whether risks assumed are within a tolerable range. (2) They shall at regular intervals evaluate whether the risk management procedures currently in use are appropriate and scrupulously conducted in accordance with these Procedures. (3) Derivatives transaction positions shall be evaluated at least once a week. However, hedging transactions for business needs shall be evaluated at least twice a month. The evaluation reports shall be submitted to the senior executive authorized by the board of directors to review and sign. (4) When the market price evaluation report shows any irregularity, it shall immediately be reported to the board of directors and the necessary response measures shall be adopted. (5) The chief financial officer shall monitor the trading and profit and loss situation. When any irregularity is discovered, the chief financial officer shall report to the board of directors.If	shall also at regular intervals evaluate whether trading performance accords with established operational strategies, and whether risks assumed are within a tolerable range. (2) They shall at regular intervals evaluate whether the risk management procedures currently in use are appropriate and scrupulously conducted in accordance with these Procedures. (3) Derivatives transaction positions shall be evaluated at least once a week. However, hedging transactions for business needs shall be evaluated at least twice a month. The evaluation reports shall be submitted to the senior executive authorized by the board of directors to review and sign. (4) When the market price evaluation report shows any irregularity, it shall immediately be reported to the board of directors and the necessary response measures shall be adopted. (5) The chief financial officer shall monitor the trading and profit and loss situation. When any irregularity is discovered, the chief financial officer shall report to the board of directors.The

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HTC Corporation

Procedures for the Handling of Derivatives Trading Before and After Revision

Article		Amended article	Notes
	independent director(s) have been appointed, the board of directors shall have the independent director(s) attend and express an opinion. 4.Handling of irregularities Trading or internal audit personnel who discover any irregularity shall immediately notify the chief financial officer to take appropriate action.	board of directors shall have the independent director(s) attend and express an opinion. 4.Handling of irregularities Trading or internal audit personnel who discover any irregularity shall immediately notify the chief financial officer to take appropriate action.
Article 8	Internal audit system An internal auditor shall regularly review the appropriateness of the derivatives transaction internal control system, conduct monthly checks on how well the trading unit is complying with these Procedures, analyze transaction cycles, and include their findings in an audit report. Where a material violation is discovered, they shall notify the supervisorsin writing.After the Company has set up an audit committee pursuant to the Securities	Internal audit system An internal auditor shall regularly review the appropriateness of the derivatives transaction internal control system, conduct monthly checks on how well the trading unit is complying with these Procedures, analyze transaction cycles, and include their findings in an audit report. Where a material violation is discovered, they shall notify the Audit Committeein writing.	The Company shall set up an audit committee to replace supervisors.
	and Exchange Act, provisions regarding supervisors shall apply mutatis mutandis to the audit committee.
Article 9	Control of subsidiaries 1.The Company shall ensure that its subsidiaries adopt handling procedures for the conduct of financial derivatives transactions in accordance with the Regulations Governing the Acquisition and Disposal of Assets by Public Companies issued bythe Securities and	Control of subsidiaries 1.The Company shall ensure that its subsidiaries adopt handling procedures for the conduct of financial derivatives transactions in accordance with the Regulations Governing the Acquisition and Disposal of Assets by Public Companies issued bythe Securities and	The Company shall set up an audit committee to replace supervisors.

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HTC Corporation

Procedures for the Handling of Derivatives Trading Before and After Revision

Article	Original article	Amended article	Notes
	Futures Commission of the Ministry of Finance. 2.A subsidiary shall carry out self-inspections to determine whether its adopted procedures are in compliance with the provisions of the applicable regulations, and whether asset acquisition and disposal transactions are carried out in accordance with its adopted handling procedures. 3.An internal auditor of the Company shall review the self-inspection reports of subsidiaries, and if a material violation is found shall inform thesupervisorsin writing.After the Company has set up an audit committee pursuant to the Securities and Exchange Act, provisions regarding supervisors shall apply mutatis mutandis to the audit committee. 4.If any circumstance contemplated under these Procedures occurs at a subsidiary of the Company, the subsidiary shall first notify the Company, and subsequently take action to handle the circumstance. In addition, a subsidiary is required each month to furnish the Company with relevant detailed statements for the previous month to facilitate corporate oversight.	Futures Commission of the Ministry of Finance. 2.A subsidiary shall carry out self-inspections to determine whether its adopted procedures are in compliance with the provisions of the applicable regulations, and whether asset acquisition and disposal transactions are carried out in accordance with its adopted handling procedures. 3.An internal auditor of the Company shall review the self-inspection reports of subsidiaries, and if a material violation is found shall inform theAudit Committeein writing. 4.If any circumstance contemplated under these Procedures occurs at a subsidiary of the Company, the subsidiary shall first notify the Company, and subsequently take action to handle the circumstance. In addition, a subsidiary is required each month to furnish the Company with relevant detailed statements for the previous month to facilitate corporate oversight.
Article 11	Amendment After these Procedures have been approvedby the board of directors, they shall be delivered to each	Amendment These Proceduresare adopted in accordance with the laws and regulations, andhave beenadopted	The Company shall set up an audit committee to replace supervisors.
		regulations, andhave been

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HTC Corporation

Procedures for the Handling of Derivatives Trading Before and After Revision

Article	Original article	Amended article	Notes
	supervisorand submitted to a shareholders meeting for approval; the same applies when the Procedures are amended.If any director expresses dissent and it is on record or in a written statement, the director's dissenting opinion shall be delivered to each supervisor.	with the approval of one half or more of the entire membershipof theAudit Committee, and submitted it toboard of directors, and submitted to a shareholders meeting for approval; the same applies when the Procedures are amended. Where the position of independent director(s) has been created, when these Procedures are submitted for deliberation by the board of directors, each independent director's opinions shall be taken into full consideration; theAudit Committeespecific opinions of assent or dissent and the reasons therefore shall be included in the minutes of the board of directors meeting.
	Where the position of independent director(s) has been created, when these Procedures are submitted for deliberation by the board of directors, each independent director's opinions shall be taken into full consideration; the independent directors' specific opinions of assent or dissent and the reasons therefore shall be included in the minutes of the board of directors meeting.After the Company has set up an audit committee pursuant to the Securities
	and Exchange Act, provisions regarding supervisors shall apply mutatis mutandis to the audit committee.

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Supplement 12

HTC Corporation

	Director (including Independent	Director (including Independent	Director) Nominee List
Candidate	Name	Education & Major Past Positions	Current Positions	Shareholdings (shares)
Director	Cher Wang	�Bachelor in Economics, University of California, Berkeley �General Manager of the PC Division, First International Computer, Inc. (FIC)	�Chairwoman (Representative), H.T.C. (B.V.I) Corp. �Chairwoman (Representative), HTC Investment One (BVI) Corporation �Chairwoman, HTC Investment Corporation �Director, High Tech Computer Asia Pacific Pte. Ltd. �Director, VIA Technologies, Inc. �Director, Formosa Plastics Corporation �Director, Way-Chih Investment Co., Ltd. �Director, Hsin-Tong Investment Co., Ltd. �Director, Kun-Chang Investment Co, Ltd. �Director, (Representative), Xander International Corp.	32,272,427
Director	HT Cho	�Electronic Engineering, National Taipei Institute of Technology �EMBA, National Chiao Tung University �President & CEO, HTC Corporation. �Consulting Engineer, Digital Equipment Corporation �Director, China University of Technology �Chairman, Taiwan Chief Executive Officer Club for Social Benefit	�Chairman, HTC Social Welfare Foundation. �Chairman, HTC Education Foundation. �Director, Chunghwa Telecom Foundation. �General Manager, Atrust Corporation �Director, Asia Pacific Fuel Cell Technologies, Ltd.	96,530

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Candidate	Name	Education & Major Past Positions	Current Positions	Shareholdings (shares)
Director	Wen-Chi Chen	�MSCS, California Institute of Technology �President, Symphony Laboratories	�Chairman & President, VIA Technologies, Inc. �Chairman (Representative), Xander International Corp. �Chairwoman (Representative), Chander Electronics Corp. �Chairman (Representative), VIA Labs, Inc.Non-executive �Director, Television Broadcasts Limited �Director(Representative), TVBS Media Inc. �Director, Way-Chih Investment Co., Ltd. �Director, Hsin-Tong Investment Co., Ltd. �Director, Kun-Chang Investment Co, Ltd.	22,391,389
Director	David Bruce Yoffie	�B.A. Brandeis University �M.A.,Ph.D. Stanford University for academic qualification �Director, Charles Schwab �Director, Spotfire �Director, E Ink �Director, Intel Corporation �Director, Financial Engines, Inc.	�Max and Doris Starr Professor at Harvard Business School �Director, The National Bureau of Economic Research	0
Independent Director	Chen-Kuo Lin	�Bachelor in Economics, NationalTaiwan University �Advanced study at the Department ofEconomics, Oklahoma State University �Advanced study at the Departmentof Economics, Harvard University �Chairman, Board of Tunghai University �Minister, Ministry of Finance, Executive Yuan �Chairman, Taiwan External Trade	�Chairman, Angel Hearts Family Social Welfare Foundation �Chairman, New Mainstream Cultural Foundation	0

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Candidate	Name	Education & Major Past Positions	Current Positions	Shareholdings (shares)
		�Development Council.(TAITRA) �Chairman, Taiwan Asset Management Corporation �Professor, Department of Economics in National Taiwan University �Chairman, Taiwan-Hong Kong Economic and Cultural Cooperation Council �Independent director and Compensation Committee member, Taiwan High Speed Rail Corporation
Independent Director	Josef Felder	�Graduate of Advanced Management Program (AMP), Harvard Business School, Boston �Deputy Director, Crossair �Chief Executive Officer, FIG (Flughafen Immobilien Gesellschaft) �Chief Executive Officer, Unique (Flughafen Zurich AG) �Chairman, The Nuance Group AG Chairman, Zino Davidoff SA, Fribourg �Independent director, Careal Holding AG, Zurich �Independent director, AMAG, Zurich �Independent Director, Zino Davidoff SA, Fribourg	�Chairman, Gutsbetrieb Oetlishausen AG, Hohentannen �Chairman, Flaschenpost Services AG, Zurich �Chairman, Stockli Swiss Sports AG, Wolhusen �Chairman, Pro Juventute, Zurich �Independent Vice-Chairman of AMAG Automobil und Motoren AG Zurich �Independent director, Edelweiss Air AG, Kloten �Independent Vice-Chairman of Luzerner Kantonalbank AG, Luzern �Independent Director , Flughafen Zurich AG, Zurich �Independent Vice-Chairman of AMAG Group AG, Zurich �Independent Vice-Chairman of AMAG Import AG �Independent Director Careal Property Group AG, Zurich	500,000

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Candidate	Name	Education & Major Past Positions	Current Positions	Shareholdings (shares)
Independent Director	Vincent Thai	�UC Berkeley, Ca., USA �USC Undergrad Marketing, Ca., USA �Founder of Fun Creation, Inc �President of Placo Toys, Inc �General Manager of Best Consumer Products, Inc �Manager of M & D Toys, Inc	�Founder & Chairman of Playmind Ltd �Founder & Chairman of National Products Ltd �Founder & Chairman of Sweet N Fun Ltd, world leader in gumball banks �Chairman of Toy Plus Far East Ltd	0

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Appendix 1 HTC Corporation

Rules of Procedure for Shareholders Meetings

Article 1

The proceedings of shareholders meetings of the Corporation shall be conducted in accordance with these Rules of Procedure. Matters on which these Rules of Procedure are silent shall be handled in accordance with applicable laws and regulations.

Article 2

Shareholders who attend a shareholders meeting shall hand in an attendance card at the meeting in lieu of signing in. The number of shares in attendance shall be calculated based on the number of attendance cards that are handed in.

Article 3

The venue for the shareholders meeting shall be the location of the Corporation, or a place convenient for shareholders to attend and suited to convening a shareholders meeting. The time at which the meeting begins may not be earlier than 9 a.m. or later than 3 p.m.

Article 4

The chair shall call the meeting to order at the appointed meeting time. However, when the shareholders in attendance do not represent a majority of the total number of issued shares, the chair may announce the postponement of the meeting time; no more than two such postponements, for a combined total of not more than one hour, may be made. If the quorum is not met after two postponements and the shareholders in attendance represent one third or more of the total number of issued shares, a tentative resolution may be approved pursuant to the Company Act. The execution of a tentative resolution referred to in this paragraph shall be handled in accordance with the applicable provisions of the Company Act.

When the number of shares represented by the shareholders in attendance reaches the statutory number before the end of the meeting, the chair may resubmit the tentative resolution for a vote by the meeting in accordance with the provisions of the Company Act.

Article 5

If a shareholders meeting is convened by the board of directors, the chairman of the board shall chair the meeting. If the chairman of the board is unable to exercise powers for some reason, the chairman may designate one director to do so on the chairman's behalf. If the chairman does not designate a representative, the directors shall mutually select a chair from among themselves. If a shareholders meeting is convened by a party with convening power other than the board of directors, the convening party shall chair that meeting. When two or more parties meet this description, they shall mutually select a chair from among themselves.

Article 6

The Corporation may appoint retained attorneys or certified public accountants, or relevant personnel, to attend a shareholders meeting in a non-voting capacity. Staff handling administrative affairs of a

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shareholders meeting shall wear identification cards or arm bands.

Article 7

If a shareholders meeting is convened by the board of directors, the board of directors shall adopt the shareholders meeting agenda, compile and print a meeting agenda book, and distribute it to the attending shareholders or proxies. The meeting proceedings shall follow the order set in the agenda, which may not be changed without a shareholders meeting resolution.

If a shareholders meeting is convened by a party with convening power other than the board of directors, the provisions of the preceding paragraph shall apply mutatis mutandis.

Unless by resolution of the meeting, the chair may not declare the meeting closed before all of the items (including extraordinary motions) on the meeting agenda have been concluded. After the meeting is closed, shareholders may not separately elect a chair and resume the meeting at the original or another venue.

Article 8

Shareholders in attendance have the duty to comply with the meeting rules of procedure, abide by resolutions, and maintain order in the meeting place.

Article 9

Before speaking, shareholders in attendance must record the main points of their speech, their attendance number (or shareholder account number) and account name on a speaker's slip. The order in which they speak will be set by the chair. A shareholder in attendance who submits a speaker's slip but does not speak shall be deemed to have not spoken. Where the content of the speech and that recorded on the speaker's slip do not correspond, the spoken content shall prevail. When a shareholder in attendance is speaking, other shareholders may not speak or interrupt unless they have sought and obtained the permission of the chair and the shareholder that has the floor; the chair shall stop any violation. A shareholder may not speak more than twice on the same proposal, and a single speech may not exceed five minutes, provided that with the chair's permission, these restrictions shall not apply.

If a shareholder's speech violates the provisions of the preceding paragraph or exceeds the scope of the agenda item, the chair may terminate the speech.

Article 10

When a proposal is under discussion, the chair may at an appropriate time declare the discussion closed, and when necessary, may also suspend discussion and speeches.

Article 11

The chair shall appoint scrutineers and ballot counters for votes on proposals; however, the scrutineers shall be shareholders. The results of the vote shall be made known immediately and recorded in writing.

Article 12

During a shareholders meeting, if the chair declares the meeting closed in violation of the meeting rules of procedure, one person may be elected as chair with the agreement of a majority of the shareholder voting rights in attendance, and the meeting may continue.

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Article 13

The corporation shall document the proceedings of a shareholders meeting in their entirety via audio or video, and preserve such documentation for at least one year.

Article 14

Except for special resolutions as specified in the Company Act and the Articles of Incorporation that shall comply with the provisions therein, passage of a vote on a proposal shall require the consent of a majority of the voting rights of shareholders in attendance. If before a vote a non-ballot voting method is adopted and upon inquiry by the chair there is no objection, it is deemed passed, and its effectiveness shall be the same as a vote by ballot.

Article 15

While a meeting is in progress, the chair may consider the time schedule and announce a break. If a force majeure event occurs, the chair may rule for a temporary suspension of the meeting, and announce the time when the meeting will be reconvened depending on the circumstances, or the shareholders meeting may make a resolution to reconvene the meeting within five days without notification or public announcement.

Article 16

The chair may direct the sergeant-at-arms (or security personnel) to help maintain order at the meeting place. When the sergeant-at-arms (or security personnel) help maintain order at the meeting place, they shall wear an arm band bearing the words "sergeant-at-arms".

Article 17

Matters on which these Rules of Procedure are silent shall be handled in accordance with the Company Act and the Article of Incorporation of the Corporation.

Article 18

These Rules of Procedure, and any amendments hereto, shall be implemented after being adopted as a resolution by the board of directors and passed by a shareholders meeting.

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Appendix 2 HTC Corporation

Articles of Incorporation

Chapter I General Provisions

Article 1

This Company, organized under the Company Act as a company limited by shares, shall be named HTC Corporation. (hereinafter, "the Company").

Article 2

The scope of business of the Company is as follows:

1.CC01080 Electronic Parts and Components Manufacturing.
2.CC01101 Controlled Telecommunications Radio Frequency Equipment and Materials Manufacturing.
3.CC01110 Computers and Computing Peripheral Equipment Manufacturing.
4.C805050 Industrial Plastic Products Manufacturing.
5.CC01120 Data Storage Media Manufacturing and Duplicating.
6.E605010 Computing Equipment Installation.
7.E701040 Basic Telecommunications Equipment Construction.
8.E701020 Satellite Television Equipment and Materials Installation for Channels KU and C.
9.E701030 Controlled Telecommunications Radio Frequency Equipment and Materials Installation and Construction
10.F113030 Wholesale of Precision Instruments.
11.F113050 Wholesale of Computing and Business Machinery Equipment.

12.F113070 Wholesale of Telecommunications Equipment.

13.F118010 Wholesale of Computer Software.
14.F119010 Wholesale of Electronics Materials.
15.F213030 Retail sale of Computing and Business Machinery Equipment.

16.F213040 Retail Sale of Precision Instruments.

17.F213060 Retail Sale of Telecommunications Equipment.
18.F218010 Retail Sale of Computer Software.
19.F219010 Retail Sale of Electronics Materials.
20.F401010 International Trade.

21.F401021 Controlled Telecommunications Radio Frequency Equipment and Materials Import.

22.G801010 Warehousing and Storage.

23.I301010Software Design Services.
24.I301020Data Processing Services.
25.I301030Digital Information Supply Services.
26.F399040Retail Business Without Shop
27.CF01011Medical Materials and Equipment Manufacturing
28.F108031Wholesale of Drugs, Medical Goods
29.F208031Retail sale of Medical Equipments
30.ZZ99999All business items that are not prohibited or restricted by law, except those that are subject to special approval.

Article 2~1

The Company may act as a guarantor and may invest in other companies. The total amount of the

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Company's investment in other companies is exempted from the prohibition against exceeding 40 percent of paid-in capital set out in Article 13 of the Company Act.

Article 3

The Company is headquartered in Taoyuan City, Taiwan and when necessary may establish branches at home and abroad as resolved by the board of directors.

Article 4 Deleted.

Chapter II Shares

Article 5

The authorized capital of the Company is NT$ 10 billion consisting of 1 billion, shares, all of common stock, with a par value of NT$10 per share. The Board of directors is authorized to issue the shares in separate installments as required. Among these shares, 80 million shares are reserved for the holders of stock warrants, preferred shares with warrants, or corporate bonds with warrants to exercise their stock warrants.

Article 5~1

In the event that the Company becomes duly entitled to purchase back its own shares, the board of directors is authorized to do so in accordance with laws and regulations.

Article 6 Deleted.

Article 7

The share certificates of the Company shall without exception be in registered form, signed by, or affixed with the seals of, at least three directors, and authenticated by the competent governmental authority or a registration institution authorized thereby before issuance.

Shares issued by the Company need not be in certificate form, but shall be registered with a securities depository enterprise.

Article 8

All entries in the shareholders register due to share transfers shall be suspended for 60 days prior to an ordinary shareholders meeting, or for 30 days prior to an extraordinary shareholders meeting, or for 5 days prior to the record date fixed for distributing dividends, bonus, or any other benefit.

Chapter III Shareholders Meeting

Article 9

Shareholders meetings of the Company are of two kinds: ordinary shareholders meetings and extraordinary shareholders meetings. The ordinary shareholders meeting is called once per year within six months from the close of the fiscal year. Extraordinary shareholders meetings may be called in accordance with applicable laws and regulations whenever necessary.

Article 10

For any shareholders meeting, a shareholder may appoint a proxy to attend the meeting by using the proxy form issued by the Company and specifying the scope of proxy. Shareholder attendance by proxy shall be

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subject to the Company Act and also to the Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies issued by the competent authority.

Article 11

Each shareholder of the Company is entitled to one vote per share, except under circumstances in which shares have no voting power as set out in the applicable regulations.

Article 12

Unless otherwise provided by applicable law or regulation, a resolution of the shareholders meeting shall be adopted by consent of a majority of the votes represented by those in attendance at a meeting attended, in person or by proxy, by shareholders who represent a majority of the total issued shares.

Chapter IV Directors and Supervisors

Article 13

The Company shall have five to nine directors and two supervisors. The directors and supervisors shall be elected by a candidate nomination system. They shall be elected by the shareholders meeting from among the slate of director and supervisor candidates. The term of office is three years, and they may continue in office if re-elected. The aggregate shareholding percentages of the entire bodies of directors and supervisors shall comply with the regulations prescribed by the securities supervisory authorities.

Article 13-1

There shall be at least two independent directors among the Company's directors, and the independent directors shall represent at least one-fifth of the directors seats. The relevant regulations of the competent securities authority shall be followed regarding the professional qualifications, shareholding, moonlighting restrictions, nomination and election, and other compliance requirements regarding independent directors.

Article 14

The board of directors shall consist of the directors of the company, and the chairman of the board of directors shall be elected from among the directors by a majority of directors in attendance at a meeting attended by at least two-thirds of the directors. The chairman of the board of directors shall represent the Company in external matters.

Directors shall attend meetings of the board of directors in the preceding paragraph in person. In the event that a board of directors meeting is held through video conference, a director who participates in the meeting by means of video system shall be deemed to have attended in person. If a director is unavailable to attend a meeting in person, the director may issue a power of attorney for the given meeting specifying the scope of the authorized powers to authorize another director to attend the meeting on the director's behalf, provided that a director may represent only one other director at a meeting.

Article 14-1

Each director and supervisor shall be given at least 7 days advance notice of the convening of a board of directors meeting of the Company. In emergency circumstances, however, a meeting may be called on shorter notice.

The meeting notice referred to in the preceding paragraph shall specify the reasons for convening the meeting, and shall be made in writing, by e-mail, or by facsimile.

Article 15

If the chairman of the board of directors is on leave or cannot exercise powers or perform duties for any

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reason, an acting chairman shall be designated in accordance with Article 208 of the Company Act.

Article 16

When the Company’s directors and supervisors perform Company duties, the Company may pay remuneration regardless of whether the Company operates at a profit or loss. The board of directors is authorized with powers to resolve the rates of such remuneration based on the extent of their participation in the Company’s business operations or value of their contribution, at a level consistent with general practices in the industry. If the Company operates at a profit, they also may allocate remuneration in accordance with Article 19.

The company may acquire liability insurance for all directors and supervisors, within the scope of the indemnity liability they bear under law in connection with their business responsibilities, throughout their term to minimize and disperse the risk of material loss or damage to the company and shareholders as a consequence of any illegal act .

Chapter V Managerial Officers

Article 17

The Company may have managerial officers, whose appointment, dismissal, and remuneration shall be handled in accordance with Article 29 of the Company Act.

Chapter VI Accounting

Article 18

At the end of each fiscal year, the board of directors shall prepare the following documents, which shall be submitted to the supervisors for auditing 30 days prior to the ordinary shareholders meeting, and submitted to the shareholders' meeting for approval:

Business report;
Financial report;
Proposal for allocating profit or covering loss.

Article 19

If the Company makes profit for the current year, Company shall have minimum of 4% of such profit distributable as employees' compensation at in the form of stock or in cash as resolved by the board of directors. Employees of subsidiaries of the Company meeting certain specific requirements shall also be entitled to receive such stock or cash. Board of directors may resolve to distribute up to maximum of 0.25% of the profit of current year mentioned in preceding paragraph as remuneration to directors and supervisors. Proposed distribution of profit as employees’ compensation and remuneration to directors and supervisors shall be presented at shareholders’ meeting.

If the company has accumulated loss, the profit shall first be used to offset the loss. The remainder of the profit may then be distributed as employees’ compensation and remuneration to directors and supervisors based on preceding proposed ratios.

Article 20

If the Company has earnings after the annual final accounting, it shall be allocated in the following order: 1. To pay taxes.
To cover accumulated losses, if any.
To appropriate 10% legal reserve unless the total legal reserve accumulated has already reached the amount of the Company’s authorized capital.
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To recognize or reverse special reserve return earnings.
The board of directors shall propose allocation ratios for any remainder profit after withholding the amounts under subparagraphs 1 to 4 above plus any unappropriated retained earnings of previous years based on the dividend policy set forth in paragraph 2 of this Article and propose such allocatioin ratio at the shareholders’ meeting.

Because the Company is a technology and capital-intensive enterprise in its growing phase, the Company sets a policy to allocate dividends with consideration to factors such as the Company’s current and future investment climate, demand for working capital, competitive environment at home and globally, capital budget, as well as the interests of the shareholders, balanced dividends, and long-term financial planning of the Company. Every year, the board of directors shall propose the allocation ratio and propose it at the shareholders’ meeting. The earnings may be allocated in cash dividends or stock dividends, provided that the ratio of cash dividends may not be less than 50% of the total dividends.

Chapter Seven Bylaws

Article 21

Any matters insufficiently provided for in these Articles of Incorporation shall be handled in accordance with the Company Act.

Article 22

These Articles of Incorporation were adopted on 10 May 1997. The first amendment was made on 1 July 1997. The second amendment was made on 26 February 1998. The third amendment was made on 8 May 1998. The fourth amendment was made on 22 October 1998. The fifth amendment was made on 24 April 2000. The sixth amendment was made on 23 April 2001. The seventh amendment was made on 13 July 2001. The eighth amendment was made on 14 March 2002. The ninth amendment was made on 26 June 2003. The 10[th] amendment was made on 16 June 2004. The 11[th] amendment was made on 13 June 2005. The 12[th] amendment was made on 2 May 2006. The 13[th] amendment was made on 20 June 2007. The 14[th] amendment was made on 13 June 2008. The 15[th] amendment was made on 19 June 2009. The 16[th] amendment was made on 18 June 2010. The 17[th] amendment was made on 15 June 2011. The 18[th] amendment was made on 21 June 2013. The 19[th] amendment was made on 19 June 2014. The 20[th] amendment was made on 2 June 2015. The 21[st] amendment was made on 24 June 2016. The 22[nd] amendment was made on 26 June 2018.

HTC CORPORATION

Chairwoman: Cher Wang

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Appendix 3 HTC Corporation

Bylaws for the Election of Directors and Supervisors

Article 1

Unless otherwise provided by the Company Act or the Articles of Incorporation of the Corporation, the election of the directors and supervisors of the Corporation shall be conducted in accordance with these Bylaws.

Article 2

The election of the directors and supervisors of the Corporation may be carried out separately or simultaneously at a shareholders meeting. Separate election ballots shall be prepared by the Corporation for directors and supervisors; the ballots shall note the number of election voting rights.

Article 3

In the election of the directors and supervisors of the Corporation, in recording the names of the voters, the shareholder attendance identification numbers may be used instead.

Article 4

The nomination of candidates for directors and supervisors of the Corporation shall adopt the candidate nomination system; the election of the directors and supervisors shall adopt the open-ballot, cumulative voting method. Each share confers election voting rights equal in number to the directors and supervisors to be elected; the votes may be cast for a single candidate or distributed among multiple candidates.

Article 5

In the election for the directors and supervisors of the Corporation, the candidates receiving ballots representing the highest number of voting rights sequentially shall be elected. A candidate simultaneously elected as a director and supervisor shall, at the candidate's own discretion, decide to serve as either director or supervisor. The position left vacant by such decision shall be filled by the candidate with the next most votes in the original election; the same shall apply to any vacancy arising upon review and confirmation that the personal data for an elected director or supervisor is inaccurate, or that such a person's election is invalid under the provisions of any applicable law or regulation. When two or more persons receive the same number of votes and the specified number of positions is exceeded, the two persons receiving the same number of votes shall draw lots to decide who shall serve; the chair shall draw lots on behalf of a non-attendee.

Article 6

When voting commences, the chair shall appoint a certain number of scrutineers and ballot counters to carry out related duties. The scrutineers may be appointed from among the shareholders in attendance.

Article 7

The ballot box used for voting shall be prepared by the Corporation, and shall be publicly opened and inspected by a scrutineer before the casting of ballots

Article 8

If a candidate is a shareholder, a voter must fill in the candidate's account name and shareholder account number in the "Candidate" box of the ballot; for a non-shareholder, the voter shall fill in the candidate's full name and identification card number. However, when the candidate is a governmental organization or juristic person shareholder, the name of the governmental organization or juristic person shareholder shall be

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filled in the box for the candidate's account name on the ballot; or both the name of the governmental organization or juristic person shareholder and the name of their representative may also be filled in; when there are multiple representatives, the names of the representatives shall additionally be filled in separately.

Article 9

A ballot is invalid under any of the circumstances listed below, and the number of voting rights conferred therein may not be credited to that candidate:

The ballot was not cast in the ballot box.
A ballot prepared by the Corporation was not used.
A blank ballot that was not filled in by the voter.
Other words or marks are written in addition to the candidate name, shareholder account number, or ID card or government uniform invoice (GUI) number.
The handwriting is unclear and indecipherable.
Any element of the name, shareholder account number, or ID card or GUI number of the candidate that was already filled in has been altered.
The ballot has not been filled out in accordance with Article 8 of these Bylaws.
The candidate filled in on the ballot is a shareholder, but their identity and shareholder account number do not conform with the shareholders register; or where the candidate filled in on the ballot is not a shareholder, and a cross-check shows that their name and identity card number do not match.
Two or more candidates are filled in on the same ballot.

Article 10

After the casting of ballots is completed, the ballots shall be counted on the spot under the supervision of the scrutineer(s), and the results announced on the spot by the chair.

Article 11

Matters on which these Bylaws are silent shall be handled in accordance with the Articles of Incorporation of the Corporation, the Company Act, and applicable laws and regulations.

Article 12

These Bylaws, and any amendments hereto, shall be implemented after being approved by a shareholders meeting.

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Appendix 4

HTC CORPORATION

Shareholding of all Directors and Supervisors and Minimum Required Shareholding

Company’s current Directors and Supervisors’ shareholding are as follows: Total common shares outstanding 818,811,855 shares Minimum Required Shareholding by all Directors 26,201,979 shares Minimum Required Shareholding by all Supervisors 2,620,197 shares

Total common shares outstanding Minimum Required Shareholding by all Directors Minimum Required Shareholding by all Supervisors .	Total common shares outstanding Minimum Required Shareholding by all Directors Minimum Required Shareholding by all Supervisors .	818,811,855 shares 26,201,979 shares 2,620,197 shares	818,811,855 shares 26,201,979 shares 2,620,197 shares
		Record Date: April 23,2019 Current Shareholding Percentage 32,272,427 3.94% 22,391,389 2.73% 96,530 0.01% 0 0.00% 0 0.00% 500,000 0.06% 43,819,290 5.35% 0 0.00% 54,760,346 6.69% 43,819,290 5.35%
Title	Name	Current Shareholding	Percentage
Chairperson	Cher Wang	32,272,427	3.94%
Director	Wen-Chi Chen	22,391,389	2.73%
Director	HT Cho	96,530	0.01%
Director	David Bruce Yoffie	0	0.00%
Independent Director	Chen-Kuo Lin	0	0.00%
Independent Director	Josef Felder	500,000	0.06%
Supervisor	Way-Chih Investment Co., Ltd.	43,819,290	5.35%
Supervisor	Huang-Chieh Chu	0	0.00%
Total Directors (excluding Independent Directors)		54,760,346	6.69%
Total Supervisors		43,819,290	5.35%

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AI assistant

HTC — AGM Information 2019

52128_rns_2019-07-09_47bec420-7ffb-4524-9c1a-6cef931f1a67.pdf

HTC CORPORATION 2019 Annual General Shareholders’ Meeting Agenda Book Table of Contents

Index

Translation

HTC CORPORATION

Procedure for 2019 Annual General Shareholders’ Meeting

HTC CORPORATION

Agenda for the 2019 Annual General Shareholders’ Meeting

Report Items

Item 1

Item 2

Item 3

Item 4

Matters for Ratification

Item 1

Matters for Ratification

Item 2

Matters for Discussion:

Item 1

Item 2

Item 3

Item 4

Item 5

Elections:

Other Proposals:

Extraordinary Motions

Closure of the Meeting

Supplement 1

HTC CORPORATION

Fiscal 2018 Business Report

Product Strategy

Smartphones and Connected Devices

VIVE Virtual Reality

HTC DeepQ Healthcare

Financial Performance

Operations

Supplement 2

HTC CORPORATION

Supervisors Audit Report

HTC CORPORATION

Supplement 3

HTC Corporation

Rules of Procedure for Board of Directors Meetings

Article 1 Basis for the adoption of these rules

Article 2 Scope of these rules

Article 4 Meeting place and time

Article 5 Meeting notification and pre-meeting materials

Article 6 Reports

Article 7 Matters for discussion

Article 8 Board of directors authorization principles

Article 10 Meeting chair and acting chair

Article 11 Non-voting participants

deliberation or voting takes place.

Article 12 Convening of board of directors meetings

Article 13 Discussion of proposals

Article 14 Voting-I

Article 16 Voting-III

Article 17 Recusal system for directors

Supplement 4

Opinion

Basis for Opinion

Emphasis of Matter

Key Audit Matters

Valuation of Inventories

Revenue Recognition

Major Transaction

Responsibilities of Management and those Charged with Governance for the Parent Company Only Financial Statements

he Parent Company Only Financial Statements

Notice to Readers

HTC CORPORATION

HTC CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share)

HTC CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share)

HTC CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

HTC CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

HTC AGM Information 2019