INX - AGM Information 2014 | FinancialReports.eu

Stock Symbol：3481

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InnoLux Corporation

（ Originally Named:Chi Mei Optoelectronics Corporation ）

Handbook for 2014 General Shareholders' Meeting

June 19, 2014

INDEX

I.	MeetingProcedures………………………………………………………………..	1
II.	MeetingAgenda……………………………………………………………………	2
	1. ReportingItems……………………………………………………………….....	3
	2. Ratification Items………………………………………………………………..	4
	3. Discussion Items………………………………………………………………...	7
	4. Special Motions……………………………………………………………	14
III.	Attachments
	1. 2013 OperatingReport…………………………………………………………..	15
	2. Supervisor’s Audit Report……………………………………………………….	18
	3. Auditor’s Report and Financial Statements……………………………………...	21
	4. Revised Table of Losses Offsettingof Year 2012 and Supervisors’ Audit Report	38
	5. 2013 Profit Distribution Table…………………………………………………...	42
	6. Comparative table for Amendments to Articles of Incorporation…………….....	43
	7. Comparative table for Amendments to Operating Procedure Governing the Acquisition and Disposal of Assets……………………………………………...	44
IV.	Appendices…………………………………………………………………………
	1. Rules for Shareholders’ Meeting………………………………………………...	61
	2. Articles of Incorporation of the Company………………………………………	67
	3. Shareholdingtable of all Directors and Supervisors…………………………….	72
	4. Impact of instant gratuitous allocation of shares on Company’s operating performance and earning per share……………………………………………...	73

INNOLUX CORPORATION

Procedures of 2014 Annual General Shareholders Meeting

Report of Number of Shares Represented by Attendees
Call the Meeting to Order
Chairperson Remarks
Reporting Items
Ratification Items
Discussion Items
Special Motions
Adjournment

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INNOLUX CORPORATION

Procedures of 2014 Annual General Shareholders Meeting

Time & Date：9:00 a.m. on June 19, 2014

Location：3F, No.36 Ke Yan Rd., Zhunan Township, Miaoli County

The assembly hall of the Administrative Service Center of

Zhunan Park, Hsinchu Science Park

Chairperson Remarks
Reporting Items
(1) Operating report of the year of 2013.
(2) Supervisor’s audit report of the accounts and statements of the Company for the year of 2013.
(3) Supervisor’s audit report in relation to the amendment to the allocation of the profits and making up losses for the year of 2012.
(4) The status of capital increase by cash through private placements of year 2013.
(5) Others.
Ratification Items
(1) Adoption of the allocation of the profits and making up losses for the year of 2012.
(2) Adoption of the Operating Report and Financial Statements for the year of 2013.
(3) Adoption of the Proposal for Distribution of 2013 Profits
Discussion Items
(1) Proposals to process domestic capital increase by cash to issue common shares, to issue new shares as a result of cash capital increase for sponsoring issuance of GDR.
(2) Proposals to distribute cash with Additional Paid-In Capital.
(3) Amendment to Articles of Incorporation of the Company.
(4) Amendment to the Operational procedures for Acquisition and Disposal of Assets.
(5) Others.
Special Motions
Adjournment

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Reporting Items

Operating Report of the year of 2013. Review is respectfully requested. Operating Report of the year 2013 is attached hereto as Attachment 1 (page 15~17)
Supervisor’s audit report of the accounts and statements of the Company for the year of 2013. Review is respectfully requested.
Supervisor’s Audit Report and CPA’s Audit Report are attached hereto as Attachment 2 and 3 (page 18~37)
Supervisor’s audit report in relation to the amendment to the allocation of the profits and making up losses for the year of 2012. Review is respectfully requested.
Supervisor’s audit report are attached hereto as Attachment 4 (page 38~41).
The status of capital increase by cash through private placements of year 2013. Review is respectfully requested.
The shareholders’ meeting dated June 19, 2013 resolved that the Company to raise fund through private placement (including common stock or preferred stock) and to authorize the board of directors to proceed with the private placement according to the market situation and the Company needs within one year from the resolution date of the shareholders’ meeting.

The one year authorization will be expired on June 18, 2014. In consideration of the capital market situation, the Company will not continue with the above private placement.

Others.

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Ratification Items

(Proposed by the Board of Directors)

Proposal 1 : The amendment to the allocation of the profits and making up losses table for the year of 2012. Adoption is respectfully requested.
Explanation : 1. The amendment to the allocation of the profits and making up losses table for the year of 2012 of the Company had been adopted by resolutions of the Board of Directors of the Company and had been duly audited by supervisors.
The preceding statements are attached hereto as Attachment 4 (page 38~41).

Resolution :

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(Proposed by the Board of Directors)

Proposal 2 : 2013 Operating Report and the Financial Statement of the Company. Adoption is respectfully requested.
Explanation : 1. 2013 Operating Report and financial statements of the Company had been adopted by resolutions of the Board of Directors and had been duly audited by supervisors.
The preceding statements are attached hereto as Attachment 1&3 (page 15 and 21 to 37).

Resolution :

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(Proposed by the Board of Directors)

Proposal 3 : Distribution of 2013 Profits. Adoption is respectfully requested.
Explanation : 1. 2013 net profit after tax of the Company is NT$ 5,102,567,772. After setting aside the legal reserve pursuant to the Articles of Incorporation, the proposed profit for distribution is at the amount of NT$90,496,032. The profit distribution table is attached hereto as Attachment 5 (page 42).
Proposed cash dividend distributed to shareholders is NT$ 90,496,032(NT$0.01per share).
Upon the approval of the shareholders’ meeting, it is proposed that the Chairman be authorized to resolve the distribution record date and other relevant matters.
In the event that, before the distribution record date, the proposed profit distribution is affected due to capital variations, it is proposed that the Chairman be authorized by the Shareholders Meeting to adjust the cash and stock to be distributed to each share based on the number of actual shares outstanding on the record date for distribution.
Resolution :

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Discussion Items

(Proposed by the Board of Directors)

Proposal No.1: Proposals to conduct domestic capital increase by cash, to issue new shares by means of capital increase by cash for sponsoring issuance of GDR. Approval is respectfuly requested.

Explanation: To respond to the change of whole operation environment in the future, to enrich working capital, to repay bank loans, to intensify the Company’s financial structure, and to satisfy the Company’s capital requirements for the long-term development, the Company proposes to conduct the fund-raising proposal within the limit of 2 billion (2,000,000,000) new shares through domestic capital increase by cash, offering of new shares by way of capital increase by cash for sponsoring issuance of GDR. The foregoing fund-raising proposal will be submitted to the board of directors to conduct at suitable time by selection of one or collocation of two or more projects, and in one or in several installments according to market situations and capital requirement status of the Company, and in accordance with Articles of Incorporation, the related laws & regulations and the handling principles set forth as below. The main contents described as follows:
I. The handling principles of granting the board of directors to issue ordinary shares by way of domestic capital increase by cash
1. Except for ten to fifteen percent of such new shares reserved for subscription by employees of the Company based on the actual offering price in accordance with Article 267 of Company Act, the original shareholders will forfeit their right to subscription to the remaining new shares in accordance with Article 28-1 of Securities and Exchange Act, and all of the remaining new shares will be made public offering by book-building method. In case the employees of the Company forfeit their rights to subscription or the potion left unsubscribed, it is proposed to authorize Chairperson to seek specific person(s) to subscribe based on offering price.
2. The offering price of new shares as a result of capital increase by cash for sponsoring issuance of GDR will be decided according to Article 7 of the “Autonomy Rules Governing Underwriter Members for Guidance of Offering and Issuance of Securities by Issuing Company” of Taiwan Securities Association, and shall be set by no less than the closing price of the Company’s ordinary shares on Taiwan Stock Exchange Corporation on price determination date, 90% of the simple average closing price of the ordinary shares of the Company for either the one, three, or five business days before price determination date, after adjustment for any distribution of stock dividends and cash dividends. After completion of the duration of book-building method, it is proposed to authorize the chairman of

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the Board of Directors or his/her designated person and to discuss and decide the actual offer price with the lead underwriter in considering the situation of the summary of book-building method, and to issue after reported for the authority’s approval.

The reason and reasonability of issuing the share lower than par value rather than adopting other methods to raise the funds: Until the end of the first quarter of 2014, the Company’s debt ratio has reached 59.84%. To avoid increasing the financial burden, it is not appropriate to raise fund through issuing debt. In consideration that raising fund through issue ordinary shares by way of increase by cash may reduce the interest incurred by loan to decrease the company profit, may reduce the company financial risk, and may increase the flexibility of the Company’s financial deploy. Therefore, in order to improve the financial structure and to increase the investors’ desire in subscribing so as to raise fund smoothly, it is necessary and reasonable for the Company to issue the share lower than par value to increase capital by cash to raise funds. In addition, it is uneasy currently for the Company to increase credit line from the bank. Also, the Company does not conform to requirement prescribed under Article 250 of the Company Act related to issuing coporate bond. Currently, the fund raising vehicles applicable to the Company are mainly pure shareholdings products, such as to conduct capital increase by cash and to sponsor issuance of GDR. Therefore, it is deemed reasonable to adopt the method of issuing ordinary stock through increase capital by cash in order to raise long term stable fund and to improve financial structure of the Company.
This proposal of capital increase in cash has maximum dilution ratio to original shareholders’ equity at a rate of 18.01%. After the beneficial result of the capital increase appears, it may increase the competitive strength of the Company and may promote the operation efficacy, bringing positive result to the shareholders equity; therefore, it shall not bring massive impact to the original shareholders’ equity.
After this plan of capital increase by cash obtaining approval of the competent authority, to authorize the chairman of the board of directors to deal with the matters in relation to the issue of new shares.
In regard to all matters not provided for in the preceding paragraphs, to grant the Chairperson the full authorization to dispose of such matters in accordance with laws and regulations.
II. The handling principles of granting the board of directors to issue new shares by way of capital increase by cash for sponsoring issuance of GDR:
Except for 10 to 15 percent of such new shares reserved for subscription by employees of the Company in accordance with Article 267 of Company Act, the original shareholders will forfeit their right to subscription to the remaining new shares in accordance with Article 28-1 of Securities and Exchange Act, and all of

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the remaining new shares will be made public offering for sponsoring issuance of GDR. In case the employees of the Company forfeit their rights to subscription or the potion left unsubscribed, it is proposed to authorize Chairperson to negotiate with specific person(s) to subscribe or to be included in the original securities for sponsoring issuance of GDR based on market requirements.

The offering price for sponsoring issuance of GDR will be decided according to “Autonomy Rules Governing Underwriter Members for Guidance of Offering and Issuance of Securities by Issuing Company” of Taiwan Securities Association, and shall be set by no less than the closing price of the Company’s ordinary shares on the centralized securities exchange market on price determination date, 90% of the simple average closing price of the ordinary shares of the Company for either the one, three, or five business days before price determination date, after adjustment for any distribution of stock dividends (or ex-rights of capital reduction) and cash dividends; provided however, in case of alternation of domestic related laws & regulations, it also may keep with laws & regulations to adjust pricing method, in view of the frequent occurrence of the violent and short-term fluctuation on the price of the domestic stocks, it is proposed to authorize the Chairperson to negotiate with underwriter for the determination of actual offering price within the preceding range on the basis of international practices, under consideration of international capital market, domestic market price and collection of book-building situations, therefore the determination method of offering price must be reasonable so as to increase the acceptance level of the alien investors. Therefore, the method for determine offering price shall be reasonable. Further, the determination method of GDR’s offering price shall be based on the fair market price of ordinary shares formed on the centralized securities exchange market in domestic territory, the original shareholders may still buy ordinary shares in domestic stock market by a price closer to GDR’s offering price, and it has no need to assume the risks of currency exchange and liquidity; besides, the quota of new shares offering as a result of capital increase in cash for sponsoring issuance of GDR has maximum dilution ratio to original shareholders’ equity at a rate of 18.01%.
The reason and reasonability of issuing the share lower than par value rather than adopting other methods to raise the funds: Until the end of the first quarter of 2014, the Company’s debt ratio has reached 59.84%. To avoid increasing the financial burden, it is not appropriate to raise fund through issuing debt. In consideration that raising fund through issue ordinary shares by way of capital increase by cash for sponsoring issuance of GDR may reduce the interest incurred by loan to decrease the company profit, may reduce the company financial risk, and may increase the flexibility of the Company’s financial deploy. Therefore, in order to improve the financial structure and to increase the investors’ desire in subscribing so as to raise fund smoothly, it is necessary and reasonable for the

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Company to issue the share lower than par value to increase capital by cash to raise funds. In addition, it is uneasy currently for the Company to increase credit line from the bank. Also, the Company does not conform to requirement prescribed under Article 250 of the Company Act related to issuing coporate bond. Currently, the fund raising vehicles applicable to the Company are mainly pure shareholdings products, such as to conduct capital increase by cash and to sponsor issuance of GDR. Therefore, it is deemed reasonable to adopt the method of issue ordinary shares by way of capital increase by cash for sponsoring issuance of GDR in order to raise long term stable fund and to improve financial structure of the Company.

The funds raised from the issuance of ordinary shares as a result of capital increase by cash for sponsoring issuance of GDR is proposed to be used in one or several purposes for extending the factories, purchase of equipments, purchase of raw materials from overseas, replenishing the operation fund, reinvestment, repayment of bank loans, and it is expected to be performed completely within three years after the accomplishment of the fund-raising, the implementation of this plan can intensify the competitiveness of the Company, promote the operation efficiency, and then will have positive support to shareholders’ equity.
It is proposed to authorize the board of directors to adjust, make and deal with the important contents of plans in relation to the issuance of ordinary shares as a result of capital increase by cash for sponsoring issuance of GDR, inclusive of offering price, amount of offering shares (limited amount), offering conditions, plan items, amount of fund-raising, scheduled progress, the anticipated and possible efficiency accrued and other matters related to offering procedures according to the market situation. In future if it is necessary to make change due to approval of the competent authority, operation assessment or objective environment, the chairperson will be granted the full authorization to dispose of such matters.
In coordination with the issue of new shares as a result of capital increase by cash for sponsoring issuance of GDR, to authorize the Chairperson or the persons designated by the Chairperson to approve or sign all of documents and to handle matters in relation to sponsoring of issuance of GDR on behalf of the Company.
After this plan of capital increase by cash obtaining approval of the competent authority, to authorize the board of directors to deal with the matters in relation to the issue of new shares.
In regard to all matters not provided for in the preceding paragraphs, to grant the Chairperson the full authorization to dispose of such matters in accordance with laws and regulations.

Resolution:

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(Proposed by the Board of Directors)

Proposal 2 : To distribute capital reserve by cash. Approval is respectfuly requested.
Explanation : 1. Pursuant to Artice 241 of the Company Act, the Company will distribute the capital reserve of income derived from the issuance of new shares at a premium at the amount of NT$ 1,266,944,445. The distribution will be made according to shareholders and the shares held by the shareholders registered on the shareholders' roster on the distribution record date. Each share will receive the distribution in cash at the amount of NT$0.14.
The distribution of capital reserve by cash together with cash divedend distribution to the shareholders at the amount of NT$0.01 each share, each share will receive the distribution in cash of NT$0.15. The distribution by cash shall be calculated until NT$1. For the amount less than NT$1 shall be completely round down. It is proposed to authorize the Chairman to seek certain person to fully handle the remainder of the distribution less than NT$1.
In the event that there is change in capital of the Company affecting the outstanding shares of the Company, causing the distribution ratio shall be changed and adjusted, it is proposed that the Chairman be authorized to handle this situation.
It is proposed that the Chairman be authorized to decide the distribution record date, the distribution date, and other related matters after this proposal is resovled by the shareholders’ meeting.

Resolution :

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(Proposed by the Board of Directors)

Proposal No. 3 : Amendments to “Articles of Incorporation” of the Company. Approval is respectfuly requested.
Explanation : 1. In accordance with the requirement of the operation of the Company, it is proposed to amend “Articles of Incorporation” of the Company.
The comparative table of the amended provisions is attached hereto as Attachment 6 (page 43).

Resolution :

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(Proposed by the Board of Directors)

Proposal No. 4 : Amendments to “Procedures Governing the Acquisition and Disposal of Assets” of the Company. Approval is respectfuly requested.
Explanation : 1. In accordance with the requirement of the operation of the Company, it is proposed to amend “Procedures Governing the Acquisition and Disposal of Assets” of the Company.
The comparative table of the amended provisions is attached hereto as Attachment 7 (page 44~60).

Resolution :

Proposal No. 5: Others.

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Specail Motions

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Attachment 1

INNOLUX CORPORATION

2013 Operating Report

Dear Shareholders,

Below are our 2013 business performance report and 2014 business plan summary:

1. Business Performance in 2013:

The outstanding effect of merger of the Company has been shown in year 2013. Through the effective consolidation of the manpower, production capacity, and research technology, and through the succes both in development of new products and the strategy on products differntiation, we have established our competitiveness among the global panel market. In 2013 our total yearly revenue was NT$ 419.7 billion, which reduced 11% by compared with the 2012 yearly revenue of NT$ 471.5 billion and the operating revenue has slightly dropped in year 2013 due to the business in system assembling and touch attaching has been terminated so that the Company may focus more on core panel business. If excluding the business revenue in system assembling and touch attaching, the consolidated revenue of liquid crystal panel and touch panel reduced 2.7% comparing to last year. Sales by volume of large size of year 2013 reduced 6.8% respectively YOY compared with year 2012; sales by volume of medium-small size of year 2013 grew 4.9% respectively YOY compared with year 2012. The gross profit of year 2013 is NT$ 27.5 billion and the gross profit margin of year 2013 is 7%, which is massively improved compared with the 1% gross loss margin of year 2012. The net operating income of year 2013 is NT$ 11.3 billion and the net operating income ratio of year is 3%. Both are greatly improved comparing to the NT$ 24.2 billion operating loss or 5% operating loss ratio for the year 2012. The annual profit after tax is NT$ 5.1 billion for year 2013, the annual earnings per share is NT$ 0.57. The performance of the Company in the year of 2013 has surpassed the same line of work in Taiwan, which demonstated our resolutions to operate the Company and the results of turnning the tide.

The eurozone debt crisis is temporarily relieved since year 2013 and the the economy of European and American regions has started to recover slowly. Because United States government and President Obama activly facing problems by conducting negotiations between the political parties and studying the solutions to the financial problems, the economy has started to warm up.

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As for the PRC and the emerging market, although the economy growth was not as strong as the past few years, it still maintained possitive growth as a whole.

As for the research development and market segmentation, we deem the continuous development of the technology as the key to our business operation. We are highly recognized by the market with outstanding growth for our products in the aspect of ultra high resolution, ultra thin, wide viewing angle, narrow frame, low power consumption, wide color gamut, and LED backlight. Moreover, with the innovative thought brought by the Company, we have introduced the whole new LCD TV panels in size 39 inches, 50 inches, 58 inches, 65inches, and panels in 4K2K ultra high resolution. Such products are highly preferred by the consumers. We therefore successfully set the products and specifications of the market, created market segmentation, surpassed and came out first in the same line of work.

As 2013 draws to a close, we will continue to endeavor, to concentrate, and to innovate for the best interest of our shareholders.

2. Summary of 2014 business plan

In view of the year 2014, we will exert more of our strength on technique and products strategy, strengthen the strategy on market and clients, install and level up the production capacity and quality management. Together with the effect of merger, the positive influence is even more appearent. Through highly vertical integration of our “ streamlined “ production, we may provide our client with total solution to their needs and may inaugurate a win-win operation model. (1) Technology products layout:

Fortify the development in key technology: IPS / IGZO / AMOLED/ 4K2K/ GOG/ PA.
The product lines of middle and small size products: enlarge “high level “ (high PPI/ high colour saturation / TOD smart phone’s power of growth.)
Large size products: To enhance the differentiation of the products. The key points of the application development of each product are as follow:

TV (Television): 4K2K (Ultra High Definition)

MNT (Monitor): AIO (all-in-one machine)

(2)Market client strategy:

To enhance and to develop the tablet PC applicational products and tablet business.
Through combining touch sensor (sensor glass) and thin-film transistor LCD (TFT), to

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intensify the touch total solution, and to cooperate with clients of terminal brand.

To optimize the clients’ distribution of products in middle and small sizes and to enhance the cooperation with important clients.
(3) Establishment and improvement of production capacity:
To build vertical integration product line of touch and tablet products.
To keep optimizing the combination of the strategic products of every factory area to promote the production capacity.
(4)Back-end module automatic production engineering：
While re-updating the equipment (from manual to automatic), the WT (Assembly Times) of the Company still requires to be reduced.
To establish production model hard to be copied so as to improve the competition advantages.
(5)Quality Control：
To enhance the operation of improving cost/ abandonment/ quality.
The key point of the improvement is to improve the yield rate of middle and small size products.

In year 2014, the entire staff will also to fully devote themselves to work. Please continue to give us your support and encouragement. Lastly, I wish everyone a good health and the best of luck. Thank you.

President: Manager： Chief Accountant：

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Attachment 2

INNOLUX CORPORATION

Supervisors’ Audit Report

The Board of Directors has duly submitted the 2013 operating report, financial statements, and table of profit distribution. The financial statements has been duly reviewd and approved by CPA Mr. Hsiao Chun-Yuan and CPA Mr. Wu Han-Chi of PwC Taiwan with the issuance of Indepeden Auditor’s Report. I, as the supervisor of the Company, have completed the audit and review, and had found nothing inconsistent with any of the above. Therefore, I issue this audit report for acknowledgment in accordance with Article 219 of the Company Act.

To

General Shareholders Meeting of the Company in 2014

Supervisor: Lin, Ren-Guang

Date: March 25, 2014

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Supervisors’ Audit Report

General Shareholders Meeting of the Company in 2014

Supervisor: Chen, Yi-Fang

Date: March 25, 2014

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Supervisors’ Audit Report

General Shareholders Meeting of the Company in 2014

Supervisor: I-Chen Investment Ltd.

Representative: Te-Tsai Huang

Date: March 25, 2014

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Attachment 3

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and Stockholders:

Innolux Corporation

We have audited the accompanying consolidated balance sheets of Innolux Corporation and subsidiaries as of January 1, 2012, December 31, 2012, and December 31, 2013, and the related consolidated statements of comprehensive income, and consolidated statements changes in equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of certain consolidated subsidiaries, which statements reflect total assets (include Investments accounted for under equity method) of $17,988,644,000, $5,662,004,000 and $5,130,451,000, constituting 3%, 1% and 1% of the consolidated total assets as of January 1, 2012, December 31, 2012, and December 31, 2013, respectively, and total operating revenues of $2,238,286,000 and $0, constituting 0.5% and 0% of the consolidated total operating revenues for the years then ended, respectively. Those statements were audited by other auditors, whose reports thereon have been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts included for these subsidiaries and investee companies and certain information disclosed in Note 13, is based solely on the reports of other auditors.

We conducted our audits in accordance with the “Rules Governing the Examination of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the reports of other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Innolux Corporation and its subsidiaries as of January 1, 2012, December 31, 2012, and December 31, 2013, and the results of their financial performances and their cash flows for the years then ended in conformity with the “Rules Governing the Preparation of Financial Statements by Securities Issuers” and International Financial Reporting Standards (“IFRSs”) , International Accounting Standards, and Interpretations/bulletins as endorsed by the Financial Supervisory Commission (“FSC”)

Innolux Corporation and subsidiaries’ current liabilities have exceeded its current assets by NT$128,884,782,000 as of December 31, 2013. As set forth in Note 12(4), management has designed a

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turnaround plan which aims to improve the Company’s operations and financial position.

For the reference, Innolux Corporation has complied the individual financial reports for the year of 2012 and 2013 as we have expressed unqualified-modified opinions on these reports.

February 17 , 2014

=====================================================

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

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

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INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS YEARS ENDED DECEMBER 31

(In Thousands of New Taiwan Dollars)

Assets	Notes	December31,2012 AMOUNT % $ 40,897,977 7 68,248 - 40,230 - 74,716,998 13 8,550,228 2 2,625,273 1 42,067,569 7 968,195 - 423,596 - 2,608,917 - 172,168 - 173,139,399 30 145,879 - 5,008,711 1 198,490 - 5,380,385 1 332,525,859 58 720,023 - 22,909,059 4 17,819,097 3 12,416,790 2 1,199,465 1 398,323,758 70 $ 571,463,157 100	January1,2012
		AMOUNT $ 40,897,977 68,248 40,230 74,716,998 8,550,228 2,625,273 42,067,569 968,195 423,596 2,608,917 172,168 173,139,399 145,879 5,008,711 198,490 5,380,385 332,525,859 720,023 22,909,059 17,819,097 12,416,790 1,199,465 398,323,758 $ 571,463,157	AMOUNT $ 53,718,219 642,441 17,484 67,634,362 6,994,452 7,094,087 59,301,056 1,265,207 655,314 13,904,451 642,156 211,869,229 361,689 4,310,787 243,190 4,786,639 405,585,223 718,874 24,789,538 15,931,939 12,320,033 3,205,645 472,253,557 $ 684,122,786	%
Current Assets Cash and cash equivalents Financial assets at fair value through profit or loss - current Available-for-sale financial assets - current Accounts receivable, net Accounts receivable - related parties Other receivables Inventory Prepayments Non-current assets held for sale - net Other current financial assets Other current assets, others Current Assets Non-current assets Financial assets at fair value through profit or loss - noncurrent Available-for-sale financial assets - noncurrent Financial assets carried at cost - noncurrent Investments accounted for under equity method Property, plant and equipment Investment property - net Intangible assets Deferred income tax assets Total other non-current financial assets Total other non-current assets, others Non-current assets Total assets	6(1) 6(2) 6(3) 6(6) 7 6(6) and 7 6(7) 6(12) 8 6(2) 6(3) 6(4) 6(8) 6(9), 7 and 8 6(10) 6(11) 6(29) 8			8 - - 10 1 1 9 - - 2 -
				31
				- 1 - 1 59 - 4 2 2 -
				69
				100

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INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS YEARS ENDED DECEMBER 31

(In Thousands of New Taiwan Dollars)

						December31,2013				December31,2012				January1,2012
	Liabilities andEquity		Notes			AMOUNT	%			AMOUNT	%			AMOUNT	%
	Current Liabilities
2100	Short-term borrowings	6(13)			$	31,179,767		6	$	45,521,548		8	$	84,193,661	12
2110	Short-term notes and bills	6(14)
	payable					-		-		699,430		-		2,298,527		-
2120	Financial liabilities at fair value	6(2)
	through profit or loss - current					689,097		-		1,238,305		-		73,656		-
2170	Accounts payable					65,435,586	13			81,501,720	14			99,946,999	15
2180	Accounts payable - related	7
	parties					8,756,243		2		13,714,317		3		19,407,765		3
2200	Other payables	7	and 9			20,372,113		4		20,953,991		4		22,190,872		3
2230	Current income tax liabilities					454,482		-		423,071		-		296,366		-
2250	Provisions for liabilities -	6(19)
	current					2,292,511		1		1,134,776		-		506,397		-
2320	Total long-term liabilities,	6(16)
	current portion					169,097,708	33			70,649,844	13			189,328,035	28
2399	Other current liabilities, others					2,309,244		-		1,729,937		-		1,139,365		-
21XX	Current Liabilities					300,586,751	59			237,566,939	42			419,381,643	61
	Non-current liabilities
2500	Financial liabilities at fair value	6(2)
	through profit or loss -
	noncurrent					-		-		289		-		-		-
2510	Derivative financial liabilities	6(5)
	for hedging - noncurrent					21,918		-		391,630		-		736,952		-
2530	Corporate bonds payable	6(15)				-		-		-		-		2,000,000		-
2540	Long-term borrowings	6(16)				-		-		152,097,405	27			52,925,910		8
2570	Deferred income tax liabilities	6(29)				909,708		-		1,088,566		-		519,578		-
2600	Other non-current liabilities	6(17) and 9				12,104,654		3		8,961,303		1		10,274,500		2
25XX	Non-current liabilities					13,036,280		3		162,539,193	28			66,456,940	10
2XXX	Total Liabilities					313,623,031	62			400,106,132	70			485,838,583	71
	Equity attributable to owners of
	the parent
	Share capital	6(20)
3110	Share capital - common stock					91,094,288	18			79,129,708	14			73,129,708	11
	Capital surplus	6(18)(21)
3200	Capital surplus					96,058,741	19			119,677,980	21			191,846,638	28
	Retained earnings	6(22)
3310	Legal reserve					2,328,981		-		2,328,981		-		2,328,981		-
3350	Total unappropriated retained
	earnings (accumulated deficit)					5,092,716		1 (		27,308,220) (		5) (		69,283,833) (	10)
	Other equity	6(23)
3400	Other equity interest			(		1,531,497)		- (		4,004,589)		- (		2,216,179)		-
31XX	Equity attributable to
	owners of the parent					193,043,229	38			169,823,860	30			195,805,315	29
36XX	Non-controlling interest					1,534,625		-		1,533,165		-		2,478,888		-
3XXX	Total equity					194,577,854	38			171,357,025	30			198,284,203	29
	New Item	9
	New Item	6(16) and 11
	Total liabilities and equity				$	508,200,885	100		$	571,463,157	100		$	684,122,786	100

The accompanying notes are an integral part of these consolidated financial statements. See report of independent accountants dated February 17, 2014.

～ 24 ～

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Items	YearendedDecember31 2013 2012 Notes AMOUNT % AMOUNT % 7 $ 422,730,500 100 $ 483,609,931 100 6(7)(27)(28) and 7 ( 384,971,385) ( 91) ( 479,109,996) ( 99) 37,759,115 9 4,499,935 1 6(27)(28) ( 2,974,223) ( 1) ( 3,570,998) ( 1) ( 7,169,974) ( 2) ( 8,495,887) ( 2) ( 12,265,650) ( 3) ( 12,182,704) ( 2) ( 22,409,847) ( 6) ( 24,249,589) ( 5) 15,349,268 3 ( 19,749,654) ( 4) 6(24) 2,627,868 1 3,280,431 1 6(2)(3)(8)(9)(12)(25) ( 7,166,774) ( 2) ( 6,030,992) ( 1) 6(5)(6)(26) ( 5,103,230) ( 1) ( 8,051,142) ( 2) ( 63,779) - ( 262,818) - ( 9,705,915) ( 2) ( 11,064,521) ( 2) 5,643,353 1 ( 30,814,175) ( 6) 6(29) ( 548,334) - 646,892 - $ 5,095,019 1 ($ 30,167,283) ( 6) $ 2,712,774 1 ($ 2,962,319) ( 1) 6(3) 16,772 - 874,320 - 6(5) 79,477 - 226,109 - 6(17) ( 11,870) - ( 583) - 36,122 - ( 28,085) - 6(29) 26,242 - ( 85,105) - $ 2,859,517 1 ($ 1,975,663) ( 1) $ 7,954,536 2 ($ 32,142,946) ( 7) $ 5,102,568 1 ($ 29,899,236) ( 6) ( 7,549) - ( 268,047) - $ 5,095,019 1 ($ 30,167,283) ( 6) $ 7,953,076 2 ($ 31,688,130) ( 7) 1,460 - ( 454,816) - $ 7,954,536 2 ($ 32,142,946) ( 7) 6(30) $ 0.57 ($ 4.00) $ 0.57 ($ 4.00)
4000 Sales revenue 5000 Operating costs 5900 Net operating margin Operating expenses 6100 Selling expenses 6200 General & administrative expenses 6300 Research and development expenses 6000 Total operating expenses 6900 Operating profit (loss) Non-operating revenue and expenses 7010 Other income 7020 Other gains and losses 7050 Finance costs 7060 Share of profit/(loss) of associates and joint ventures accounted for under equity method 7000 Total non-operating revenue and expenses 7900 Profit (loss) before income tax 7950 Income tax expense (benefit) 8200 Profit (loss) for the year Other comprehensive income (net) 8310 Financial statements translation differences of foreign operations 8325 Unrealized gain on valuation of available-for-sale financial assets 8330 Cash flow hedges 8360 Actuarial loss on defined benefit plan 8370 Share of other comprehensive income of associates and joint ventures accounted for uner equity method 8399 Income tax relating to the components of other comprehensive income 8300 Total other comprehensive income for the year 8500 Total comprehensive income for the year Profit (loss) attributable to: 8610 Owners of the parent 8620 Non-controlling interest New Item Other comprehensive income attributable to: 8710 Owners of the parent 8720 Non-controlling interest New Item Basic earnings per share 9750 Total basic earnings per share 9850 Total diluted earnings per share

Items

YearendedDecember31
2013
2012
Notes
AMOUNT
%
AMOUNT
%
7
$ 422,730,500
100
$ 483,609,931
100
6(7)(27)(28) and 7
(
384,971,385) (
91) (
479,109,996) (
99)
37,759,115
9
4,499,935
1
6(27)(28)
(
2,974,223) (
1) (
3,570,998) (
1)
(
7,169,974) (
2) (
8,495,887) (
2)
(
12,265,650) (
3) (
12,182,704) (
2)
(
22,409,847) (
6) (
24,249,589) (
5)
15,349,268
3
(
19,749,654) (
4)

6(24)
2,627,868
1
3,280,431
1
6(2)(3)(8)(9)(12)(25) (
7,166,774) (
2) (
6,030,992) (
1)
6(5)(6)(26)
(
5,103,230) (
1) (
8,051,142) (
2)
(
63,779)
-
(
262,818)
-
(
9,705,915) (
2) (
11,064,521) (
2)
5,643,353
1
(
30,814,175) (
6)
6(29)
(
548,334)
-
646,892
-
$ 5,095,019
1
($ 30,167,283) (
6)
$ 2,712,774
1
($ 2,962,319) (
1)
6(3)
16,772
-
874,320
-
6(5)
79,477
-
226,109
-
6(17)
(
11,870)
-
(
583)
-
36,122
-
(
28,085)
-
6(29)
26,242
-
(
85,105)
-
$ 2,859,517
1
($ 1,975,663) (
1)
$ 7,954,536
2
($ 32,142,946) (
7)
$ 5,102,568
1
($ 29,899,236) (
6)
(
7,549)
-
(
268,047)
-
$ 5,095,019
1
($ 30,167,283) (
6)
$ 7,953,076
2
($ 31,688,130) (
7)
1,460
-
(
454,816)
-
$ 7,954,536
2
($ 32,142,946) (
7)
6(30)
$ 0.57
($ 4.00)
$ 0.57
($ 4.00)

4000
Sales revenue
5000
Operating costs
5900
Net operating margin
Operating expenses
6100
Selling expenses
6200
General & administrative expenses
6300
Research and development
expenses
6000
Total operating expenses
6900
Operating profit (loss)
Non-operating revenue and expenses
7010
Other income
7020
Other gains and losses
7050
Finance costs
7060
Share of profit/(loss) of associates
and joint ventures accounted for
under equity method
7000
Total non-operating revenue
and expenses
7900
Profit (loss) before income tax
7950
Income tax expense (benefit)
8200
Profit (loss) for the year
Other comprehensive income (net)
8310
Financial statements translation
differences of foreign operations
8325
Unrealized gain on valuation of
available-for-sale financial assets
8330
Cash flow hedges
8360
Actuarial loss on defined benefit
plan
8370
Share of other comprehensive
income of associates and joint
ventures accounted for uner equity
method
8399
Income tax relating to the
components of other comprehensive
income
8300
Total other comprehensive income
for the year
8500
Total comprehensive income for the
year
Profit (loss) attributable to:
8610
Owners of the parent
8620
Non-controlling interest
New Item
Other comprehensive income
attributable to:
8710
Owners of the parent
8720
Non-controlling interest
New Item
Basic earnings per share
9750
Total basic earnings per share
9850
Total diluted earnings per share

The accompanying notes are an integral part of these consolidated financial statements. See report of independent accountants dated February 17, 2014.

～ 25 ～

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

(In Thousands of New Taiwan Dollars, Except Dividends Per Share)

				Equity attributable to owners of the parent	Equity attributable to owners of the parent	Equity attributable to owners of the parent	Equity attributable to owners of the parent						Non-contro lling interest
	Capital		Reserves		Retained Earnings Legal reserve Total unappropriat ed retained earnings (accumulated deficit) $ 2,328,981 ( $69,283,833) - - - 71,983,820 - - - - - ( 108,487) - ( 29,899,236) - ( 484) - - $2,328,981 ( $27,308,220) $ 2,328,981 ( $27,308,220) - 27,308,220 - - - - - - - - - - - -			Other equity interest				Total
Total capital surplus, additional paid-in capital	Change in net equity of associates and joint ventures accounted for under equity method		Employee stock warrants	Capital Surplus, restricted stock	Legal reserve		Financial statement s translati on differenc es of foreign operation s	Unrealized gain or loss on available- for-sale financial assets	Hedging instrumen t gain (loss) on effective hedge of cash flow hedges		Other equity - others
		$ - - - - - 24,241 - - - $24,241 $ 24,241 - - - - - - 32,062	$1,247,372 - - 348,321 ( 7,946) - - - - $1,587,747 $1,587,747 - - - - 147,713 ( 37,525) -	$ - - - - - - - - - $ - $ - - - 187,212 10,680 - - -	$ 2,328,981 - - - - - - - - $2,328,981 $ 2,328,981 - - - - - - -	( $69,283,833) - 71,983,820 - - ( 108,487) ( 29,899,236) ( 484) - ( $27,308,220) ( $27,308,220) 27,308,220 - - - - - -	$ - - - - - - - ( 2,818,705) - ($2,818,705) ($ 2,818,705) - - - - - - -	( $ 2,446,219) - - - - - - 836,706 - ( $1,609,513) ( $ 1,609,513) - - - - - - -	$ 230,040 - - - - - - 193,589 - $423,629 $ 423,629 - - - - - - -	$ - - - - - - - - - $ - $ - - - ( 754,166) - 366,898 - -		$195,805,315 5,400,000 - 390,921 - ( 84,246 ) ( 29,899,236 ) ( 1,788,894 ) - $169,823,860 $169,823,860 - 14,519,051 158,306 - 556,874 - 32,062	$2,478,888 - - - - - ( 268,047 ) ( 186,769 ) ( 490,907 ) $1,533,165 $1,533,165 - - - - - - -

The accompanying notes are an integral part of these consolidated financial statements. See report of independent accountants dated February 17, 2014.

～ 26 ～

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

(In Thousands of New Taiwan Dollars, Except Dividends Per Share)

Share capital - common stock					Equity attributable to owners of the parent	Equity attributable to owners of the parent	Equity attributable to owners of the parent	Equity attributable to owners of the parent							Non-contro lling interest	Amount
		Capital		Reserves		Retained Earnings				Other equity interest				Total
	Total capital surplus, additional paid-in capital	Change in net equity of associates and joint ventures accounted for under equity method		Employee stock warrants	Capital Surplus, restricted stock	Legal reserve	Total unappropriat ed retained earnings (accumulated deficit)	Financial statement s translati on differenc es of foreign operation s		Unrealized gain or loss on available- for-sale financial assets	Hedging instrumen t gain (loss) on effective hedge of cash flow hedges		Other equity - others
- - $ 91,094,288	- - $ 94,106,611		- - $ 56,303	- - $1,697,935	- - $ 197,892	- - $2,328,981	5,102,568 ( 9,852) $ 5,092,716	- 2,740,631 ($ 78,074)	- 65,168 ( $1,544,345)		- 54,561 $478,190	- - ($ 387,268 )		5,102,568 2,850,508 $193,043,229	( 7,549 ) 9,009 $1,534,625	5,095,019 2,859,517
																$194,577,854

The accompanying notes are an integral part of these consolidated financial statements. See report of independent accountants dated February 17, 2014.

～ 27 ～

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31

(In Thousands of New Taiwan Dollars)

			2013		2012
CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated profit (loss) before tax for the year		$	5,643,353	($	30,814,175 )
Adjustments to reconcile net income to net cash (used in) provided
by operating activities
Income and expenses having no effect on cash flows
Depreciation and amortization			77,851,438		86,799,064
Compensation related to share-based payment			556,874		390,921
Reversal of allowance for doubtful accounts			453	(	56,887 )
Evaluation of benefits on financial assets held for
trading	(		582,748 )		15,810
Share of profit (loss) of associates and joint ventures
accounted for under equity method			63,779		262,818
(Gain) loss from disposal of investments	(		1,977,799 )	(	361,381 )
Gain from disposal of financial assets held for
trading			16,024		-
Loss on disposal of property, plant and equipment			138,658		141,544
Impairment loss			921,828		1,002,740
Interest expense			5,051,960		7,535,758
Interest income	(		293,741 )	(	923,971 )
Dividend income	(		58,897 )	(	183,630 )
Unrealized foreign exchange losses	(		310,450 )		45,170
Changes in assets/liabilities relating to operating activities
Net changes in assets relating to operating activities
Financial assets /liabilities at fair value through profit
or loss	(		708,952 )		1,739,131
Accounts receivable			8,336,807	(	8,464,403 )
Accounts receivable - related parties			6,500,243	(	2,012,451 )
Other receivables			734,595		4,054,066
Inventories	(		8,456,587 )		16,212,381
Prepayments	(		226,676 )		218,197
Other current assets	(		123,046 )		469,988
Net changes in liabilities relating to operating activities
Derivative financial liabilities for hedging	(		399,357 )	(	119,213 )
Accounts payable	(		16,066,134 )	(	18,174,274 )
Accounts payable - related parties	(		4,958,074 )	(	5,459,615 )
Other payables			405,568	(	1,442,874 )
Provisions for liabilities - current			1,157,735		628,379
Other current liabilities			513,119		581,709
Other non-current liabilities			3,133,498	(	1,285,086)
Cash provided by generated from operations			76,863,471		50,799,716
NewItem	(		974,312)	(	534,284)
Net cash provided by operating activities			75,889,159		50,265,432

(Continued)

～ 28 ～

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31

(In Thousands of New Taiwan Dollars)

			2013			2012
CASH FLOWS FROM INVESTING ACTIVITIES
Acquistion of available-for-sale financial assets	($		916,909 )		$	-
Payment of bonds payable			-			200,000
Proceeds from disposal of available-for-sale financial assets			3,963,684			877,154
Proceeds from disposal of financial assets carried at cost -
noncurrent			192,758			-
Proceeds from disposal of non-current assets held for sale			279,312			-
Acquisition of investments accounted for under equity method			-	(		150,692 )
Proceeds from disposal of investments accounted for under equity
method			136,185			130,005
Proceeds from capital reduction of investments accounted for under
equity method			-			22,194
Decrease in other financial assets			941,407			10,969,362
Acquistion of property, plant and equipment	(		18,370,343 )	(		19,804,858 )
Proceeds from disposal of property, plant and equipment			1,174,898			2,518,021
Acquistion of intangible assets	(		157,781 )			-
Decrease (increase) in other non-current assets			29,586			529
Net cash inflow from merger			-	(		2,775,400 )
Interest received			364,391			1,112,893
Dividend received			201,765			319,737
Net cash used in investing activities	(		12,161,047 )	(		6,581,055 )
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in short-term loans	(		14,499,547 )	(		29,570,180 )
Decrease in short-term bills	(		699,430 )	(		1,599,097 )
Increase in long-term loans			-			977,808
Payment of long-term loans	(		51,589,030 )	(		19,528,489 )
Payment of bond payable	(		2,000,000 )	(		2,000,000 )
Decrease in accrued lease payments	(		980,000 )	(		1,980,000 )
Stock issued for cash			14,519,051			5,400,000
Proceeds from issuance of common stock for employee stock options			181,315			-
Proceeds from share reduction of common stock for employee stock
options	(		8,260 )			-
Interest paid	(		5,586,134 )	(		7,675,061 )
Net cash used in financing activities	(		60,662,035 )	(		55,975,019 )
Effect of changes in foreign currency exchange			173,764	(		529,600 )
Increase (decrease) in cash and cash equivalents			3,239,841	(		12,820,242 )
Cash and cash equivalents at beginning of year			40,897,977			53,718,219
Cash and cash equivalents at end of year		$	44,137,818		$	40,897,977

～ 29 ～

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and Stockholders:

Innolux Corporation

We have audited the accompanying parent company only balance sheets of Innolux Corporation as of January 1, 2012, December 31, 2012, and December 31, 2013, and the related parent company only statements of comprehensive income, the parent company only statements of changes in equity and cash flows for the years ended December 31, 2012, and December 31, 2013. These parent company only financial statements are the responsibility of the Company’s management. Our responsibility is to issue a conclusion on these financial statements based on our audits. We did not audit the financial statements of certain Investments accounted for equity method accounted for under the equity method. These Investments accounted for equity method amounted to $4,778,074,000, $2,736,102,000 and $2,618,196,000 as of January 1, 2012, December 31, 2012, and December 31, 2013, respectively, and the related comprehensive income (include share of profit (loss) of associates and joint ventures accounted for using equity method, net and total share of other comprehensive income of associates and joint ventures accounted for using equity method) was loss $203,347,000 and gain $451,716,000.

We conducted our audits in accordance with the “Rules Governing the Examination of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China. Those standard s require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the reports of other auditors, the parent company only financial statements referred to above present fairly, in all material respects, the parent company only financial position of Innolux Corporation as of January 1, 2012, December 31, 2012 and 2013, and the results of their financial performances and their cash flows for the years then ended in conformity with the “Rules Governing the Preparation of Financial Statements by Securities Issuers”.

Innolux Corporation’s current liabilities have exceeded its current assets by NT$149,139,242,000 as of December 31, 2013. As set forth in Note 12(4), management has designed a turnaround plan which aims to improve the Company’s operations and financial position.

～ 30 ～

February 17 , 2014

=====================================================

～ 31 ～

INNOLUX CORPORATION

PARENT COMPANY ONLY BALANCE SHEETS YEARS ENDED DECEMBER 31

(In Thousands of New Taiwan Dollars)

1100 1110 1125 1170 1180 1200 1210 130X 1410 1460 1476 1479 11XX 1523 1543 1550 1600 1760 1780 1840 1980 1990 15XX 1XXX	Assets	Notes	December31,2013 AMOUNT % $ 27,604,892 6 227,703 - - - 63,763,265 13 2,409,842 - 609,036 - 787,951 - 39,510,209 8 849,108 - - - 2,485,841 1 26,684 - 138,274,531 28 1,824,122 - - - 67,860,212 14 233,557,614 47 706,850 - 21,114,443 4 17,835,399 4 12,327,722 3 57,553 - 355,283,915 72 $ 493,558,446 100 (Continued)	December31,2012 AMOUNT % $ 24,936,316 5 68,248 - 40,230 - 69,222,047 12 12,554,977 2 786,475 - 1,335,842 - 35,377,118 6 269,100 - - - 2,547,108 1 16,812 - 147,154,273 26 1,852,935 1 198,490 - 67,574,495 12 287,051,335 52 720,023 - 22,796,701 4 17,359,814 3 12,355,936 2 179,021 - 410,088,750 74 $ 557,243,023 100	January1,2012
				AMOUNT $ 24,936,316 68,248 40,230 69,222,047 12,554,977 786,475 1,335,842 35,377,118 269,100 - 2,547,108 16,812 147,154,273 1,852,935 198,490 67,574,495 287,051,335 720,023 22,796,701 17,359,814 12,355,936 179,021 410,088,750 $ 557,243,023	AMOUNT % $ 24,594,328 4 639,995 - 17,484 - 52,192,726 8 18,888,171 3 2,610,880 1 942,260 - 50,714,103 8 269,398 - 541,633 - 3,338,525 1 100,740 - 154,850,243 25 1,580,583 - 198,490 - 68,355,315 11 344,369,258 55 718,874 - 24,546,275 4 15,048,359 3 12,319,333 2 114,013 - 467,250,500 75 $ 622,100,743 100
	Current assets Cash and cash equivalents Financial assets at fair value through profit or loss - current Available-for-sale financial assets - current Accounts receivable, net Accounts receivable - related parties Other receivables Other receivables - related parties Inventory Prepayments Non-current assets held for sale - net Other current financial assets Other current assets, others Current Assets Non-current assets Available-for-sale financial assets - noncurrent Financial assets carried at cost - noncurrent Investments accounted for under equity method Property, plant and equipment Investment property - net Intangible assets Deferred income tax assets Other non-current financial assets Other non-current assets, others Non-current assets Total assets	6(1) 6(2) 6(3) 6(6) 7 6(6) 7 6(7) 6(12) 8 6(3) 6(4) 6(8) 6(9), 7 and 8 6(10) 6(11) 6(29) 8

～ 32 ～

INNOLUX CORPORATION

PARENT COMPANY ONLY BALANCE SHEETS YEARS ENDED DECEMBER 31

(In Thousands of New Taiwan Dollars)

						December31,2013				December31,2012				January1,2012
	Liabilities andEquity		Notes			AMOUNT	%			AMOUNT	%			AMOUNT	%
	Current liabilities
2100	Short-term borrowings	6(13)			$	1,943,565		-	$	-		-	$	9,981,000		2
2110	Short-term notes and bills	6(14)
	payable					-		-		699,430		-		1,999,246		-
2120	Financial liabilities at fair value	6(2)
	through profit or loss - current					689,097		-		1,235,546		-		46,311		-
2170	Accounts payable					29,023,925		6		51,719,716	10			62,300,436	10
2180	Accounts payable - related	7
	parties					81,977,746	17			89,300,098	16			102,762,436	16
2200	Other payables	7	and 9			14,747,469		3		24,399,808		5		15,797,398		3
2250	Provisions for liabilities -	6(19)
	current					2,292,511		-		1,134,776		-		506,397		-
2320	Long-term liabilities, current	6(16)
	portion					155,569,218	32			68,323,741	12			186,324,243	30
2399	Other current liabilities, others					1,170,242		-		1,352,311		-		783,665		-
21XX	Current Liabilities					287,413,773	58			238,165,426	43			380,501,132	61
	Non-current liabilities
2500	Financial liabilities at fair value	6(2)
	through profit or loss -
	noncurrent					-		-		289		-		-		-
2510	Derivative financial liabilities	6(5)
	for hedging - noncurrent					21,918		-		391,630		-		736,952		-
2530	Corporate bonds payable	6(15)				-		-		-		-		2,000,000		1
2540	Long-term borrowings	6(16)				-		-		138,916,148	25			31,169,610		5
2570	Deferred income tax liabilities	6(29)				909,708		-		1,130,767		-		518,894		-
2670	Other non-current liabilities,	6(17) and 9
	others					12,169,818		3		8,814,903		2		11,368,840		2
25XX	Non-current liabilities					13,101,444		3		149,253,737	27			45,794,296		8
2XXX	Total Liabilities					300,515,217	61			387,419,163	70			426,295,428	69
	Equity
	Share capital	6(20)
3110	Share capital - common stock					91,094,288	18			79,129,708	14			73,129,708	12
	Capital surplus	6(18)(21)
3200	Capital surplus					96,058,741	19			119,677,980	21			191,846,638	31
	Retained earnings	6(22)
3310	Legal reserve					2,328,981		1		2,328,981		-		2,328,981		-
3350	Total unappropriated retained
	earnings (accumulated deficit)					5,092,716		1 (		27,308,220) (		5) (		69,283,833) (	11)
	Other equity interest	6(23)
3400	Other equity interest			(		1,531,497)		- (		4,004,589)		- (		2,216,179)(		1)
3XXX	Total equity					193,043,229	39			169,823,860	30			195,805,315	31
	New Item	9
	New Item	6(16) and 11
	Total liabilities and equity				$	493,558,446	100		$	557,243,023	100		$	622,100,743	100

The accompanying notes are an integral part of these financial statements. See report of independent accountants dated February 17, 2014.

～ 33 ～

INNOLUX CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Items	YearendedDecember31 2013 2012 Notes AMOUNT % AMOUNT % 7 $ 419,738,269 100 $ 471,524,374 100 6(7)(27)(28) and 7 ( 392,206,451)( 93)( 478,640,532)( 101) 27,531,818 7 ( 7,116,158)( 1) 6(27)(28) ( 1,105,609) - ( 1,427,910) ( 1) ( 3,997,111) ( 1) ( 4,851,907) ( 1) ( 11,128,979)( 3)( 10,853,307)( 2) ( 16,231,699)( 4)( 17,133,124)( 4) 11,300,119 3 ( 24,249,282)( 5) 6(24) 1,222,075 - 1,650,043 - 6(2)(3)(8)(9)(12) (25) ( 8,950,438) ( 2) ( 6,097,210) ( 1) 6(5)(6)(26) ( 4,369,834) ( 1) ( 5,565,043) ( 1) 5,233,229 1 2,580,530 - ( 6,864,968)( 2)( 7,431,680)( 2) 4,435,151 1 ( 31,680,962) ( 7) 6(29) 667,417 - 1,781,726 1 $ 5,102,568 1 ($ 29,899,236)( 6) $ 2,703,765 1 ($ 2,775,550) ( 1) 6(3) ( 223,008) - 275,477 - 6(5) 79,477 - 226,109 - 6(17) ( 11,870) - ( 583) - 275,902 - 568,477 - 6(29) 26,242 - ( 82,824) - $ 2,850,508 1 ($ 1,788,894)( 1) $ 7,953,076 2 ($ 31,688,130)( 7) 6(30) $ 0.57 ($ 4.00) $ 0.57 ($ 4.00)
4000 Sales revenue 5000 Operating costs 5900 Net operating margin Operating expenses 6100 Selling expenses 6200 General & administrative expenses 6300 Research and development expenses 6000 Total operating expenses 6900 Operating profit (loss) Non-operating income and expenses 7010 Other income 7020 Other gains and losses 7050 Finance costs 7070 Share of profit of associates and joint ventures accounted for using equity method, net 7000 Total non-operating revenue and expenses 7900 Profit (loss) before income tax 7950 Income tax (expense) benefit 8200 Profit (loss) for the year Other comprehensive income 8310 Financial statements translation differences of foreign operations 8325 Unrealized (loss) gain on valuation of available-for-sale financial assets 8330 Cash flow hedges 8360 Actuarial loss on defined benefit plan 8380 Total share of other comprehensive income of associates and joint ventures accounted for using equity method 8399 Income tax relating to the components of other comprehensive income 8300 Other comprehensive income for the year 8500 Total comprehensive income for the year Basic earnings per share 9750 Total basic earnings per share 9850 Total diluted earnings per share

Items

YearendedDecember31
2013
2012
Notes
AMOUNT
%
AMOUNT
%
7
$ 419,738,269
100
$ 471,524,374
100
6(7)(27)(28) and 7 (
392,206,451)(
93)(
478,640,532)(
101)
27,531,818
7 (
7,116,158)(
1)
6(27)(28)
(
1,105,609)
- (
1,427,910) (
1)
(
3,997,111) (
1) (
4,851,907) (
1)
(
11,128,979)(
3)(
10,853,307)(
2)
(
16,231,699)(
4)(
17,133,124)(
4)
11,300,119
3 (
24,249,282)(
5)
6(24)
1,222,075
-
1,650,043
-
6(2)(3)(8)(9)(12)
(25)
(
8,950,438) (
2) (
6,097,210) (
1)
6(5)(6)(26)
(
4,369,834) (
1) (
5,565,043) (
1)

5,233,229
1
2,580,530
-
(
6,864,968)(
2)(
7,431,680)(
2)
4,435,151
1 (
31,680,962) (
7)
6(29)
667,417
-
1,781,726
1
$ 5,102,568
1 ($ 29,899,236)(
6)
$ 2,703,765
1 ($ 2,775,550) (
1)
6(3)
(
223,008)
-
275,477
-
6(5)
79,477
-
226,109
-
6(17)
(
11,870)
- (
583)
-
275,902
-
568,477
-
6(29)
26,242
- (
82,824)
-
$ 2,850,508
1 ($ 1,788,894)(
1)
$ 7,953,076
2 ($ 31,688,130)(
7)
6(30)

$ 0.57 ($ 4.00)
$ 0.57 ($ 4.00)

4000
Sales revenue
5000
Operating costs
5900
Net operating margin
Operating expenses
6100
Selling expenses
6200
General & administrative
expenses
6300
Research and development
expenses
6000
Total operating expenses
6900
Operating profit (loss)
Non-operating income and
expenses
7010
Other income
7020
Other gains and losses
7050
Finance costs
7070
Share of profit of associates and
joint ventures accounted for
using equity method, net
7000
Total non-operating
revenue and expenses
7900
Profit (loss) before income tax
7950
Income tax (expense) benefit
8200
Profit (loss) for the year
Other comprehensive income
8310
Financial statements translation
differences of foreign
operations
8325
Unrealized (loss) gain on
valuation of available-for-sale
financial assets
8330
Cash flow hedges
8360
Actuarial loss on defined
benefit plan
8380
Total share of other
comprehensive income of
associates and joint ventures
accounted for using equity
method
8399
Income tax relating to the
components of other
comprehensive income
8300
Other comprehensive income for
the year
8500
Total comprehensive income for
the year
Basic earnings per share
9750
Total basic earnings per share
9850
Total diluted earnings per
share

The accompanying notes are an integral part of these financial statements. See report of independent accountants dated February 17, 2014.

～ 34 ～

INNOLUX CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

(In Thousands of New Taiwan Dollars, Except Dividends Per Share)

Share capital - common stock 2012 Balance at January 1, 2012 $ 73,129,708 Stock issued for cash 6,000,000 Capital surplus of undistributed earnings - Compensation related share based payment - Employee stock options expired - Changes in net equity of long-term equity investments - Net loss for 2012 - Other comprehensive income for the year - Balance at December 31, 2012 $ 79,129,708 2013 Balance at January 1, 2013 $ 79,129,708 Capital surplus of undistributed earnings - GDR issued for cash 11,250,000 Grant restricted stock reclassified to cost 725,260 Compensation related to share-based payment ( 10,680 ) Changes in net equity of long-term equity investments - Employee stock options expired - Changes in net equity of long-term equity investments - Net income for 2013 - Other comprehensive income for the year - Balance at December, 2013 $ 91,094,288	Share capital - common stock		Capital	Capital	Reserves				Retained Earnings	Retained Earnings		Other equity	interest	interest			Amount $ 195,805,315 5,400,000 - 390,921 - ( 84,246 ) ( 29,899,236 ) ( 1,788,894 ) $169,823,860 $ 169,823,860 - 14,519,051 158,306 - 556,874 - 32,062 5,102,568 2,850,508 $193,043,229
		Total capital surplus, additional paid-in capital	Change in net equity of associates and joint ventures accounted for under equity method		Employee stock warrants		Capital Surplus, restricted stock		Legal reserve	Total unappropriate d retained earnings (accumulated deficit)	Financial statements translation differences of foreign operations	Unrealized gain or loss on available-fo r-sale financial assets		Hedging instrumen t gain (loss) on effective hedge of cash flow hedges		Other equity - others
		$ 190,599,266 ( 600,000 ) ( 71,983,820 ) 42,600 7,946 - - - $118,065,992 $ 118,065,992 ( 27,308,220 ) 3,269,051 - - 42,263 37,525 - - - $ 94,106,611		$ - - - - - 24,241 - - $24,241 $ 24,241 - - - - - - 32,062 - - $ 56,303	$ 1,247,372 - - 348,321 ( 7,946 ) - - - $1,587,747 $ 1,587,747 - - - - 147,713 ( 37,525 ) - - - $1,697,935		$ - - - - - - - - $ - $ - - - 187,212 10,680 - - - - - $ 197,892		$ 2,328,981 - - - - - - - $2,328,981 $ 2,328,981 - - - - - - - - - $2,328,981	($ 69,283,833 ) - 71,983,820 - - ( 108,487 ) ( 29,899,236 ) ( 484 ) ($27,308,220 ) ($ 27,308,220 ) 27,308,220 - - - - - - 5,102,568 ( 9,852 ) $ 5,092,716	$ - - - - - - - ( 2,818,705 ) ($2,818,705 ) ($ 2,818,705 ) - - - - - - - - 2,740,631 ($ 78,074 )	($ 2,446,219 ) - - - - - - 836,706 ($1,609,513 ) ($ 1,609,513 ) - - - - - - - - 65,168 ($1,544,345 )		$ 230,040 - - - - - - 193,589 $423,629 $ 423,629 - - - - - - - - 54,561 $478,190	$ - - - - - - - - $ - $ - - - ( 754,166 ) - 366,898 - - - - ($ 387,268 )

The accompanying notes are an integral part of these financial statements. See report of independent accountants dated February 17, 2014.

～ 35 ～

INNOLUX CORPORATION PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31

(In Thousands of New Taiwan Dollars)

			2013		2012
CASH FLOWS FROM OPERATING ACTIVITIES
Profit (loss) before tax for the year		$	4,435,151	($	31,680,962 )
Adjustments to reconcile net income to net cash (used in) provided
by operating activities
Income and expenses having no effect on cash flows
Depreciation and amortization			71,068,428		77,078,294
Compensation related to share-based payment			556,874		390,921
Share of profit (loss) of associates and joint ventures
accounted for under equity method	(		5,233,229 )	(	2,580,530 )
(Gain) loss from disposal of investments	(		18,366 )		224,892
Impairment loss			204,721		908,696
Loss on disposal of property, plant and equipment			6,065		32,138
Interest income	(		112,782 )	(	77,448 )
Dividend income	(		43,822 )	(	67,444 )
Interest expense			4,318,564		5,049,659
Unrealized foreign exchange losses	(		468,215 )	(	204,272 )
Changes in assets/liabilities relating to operating activities
Net changes in assets relating to operating activities
Financial assets /liabilities at fair value through profit
or loss	(		706,193 )		1,761,271
Accounts receivable			5,437,335	(	17,029,321 )
Accounts receivable - related parties			10,145,135		6,333,194
Other receivables			194,789		1,829,244
Inventories	(		4,133,091 )		15,336,985
Prepayments	(		580,008 )	(	78,517 )
Other current assets	(		9,872 )		83,928
Net changes in liabilities relating to operating activities
Derivative financial liabilities for hedging	(		290,235 )	(	119,213 )
Accounts payable	(		22,695,791 )	(	10,580,720 )
Accounts payable - related parties	(		7,322,352 )	(	13,462,338 )
Other payables	(		9,287,093 )		7,693,298
Provisions for liabilities - current			1,157,735		628,379
Other current liabilities	(		248,257 )		559,783
Other non-current liabilities			3,361,094	(	1,283,677)
Cash provided by generated from operations			49,736,585		40,746,240
Net cash provided by operating activities			49,736,585		40,746,240

(Continued)

～ 37 ～

INNOLUX CORPORATION PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31

(In Thousands of New Taiwan Dollars)

			2013			2012
CASH FLOWS FROM INVESTING ACTIVITIES
Other receivables - related parties		$	547,891	($		393,582 )
Acquisition of available-for-sale financial assets	(		292,854 )			-
Proceeds from disposal of available-for-sale financial assets			201,107			-
Proceeds from disposal of financial assets carried at cost -
noncurrent			192,758			-
Acquisition of investments accounted for under equity method	(		1,381,019 )	(		1,424,520 )
Proceeds from disposal of investments accounted for under equity
method			3,557			-
Proceeds from capital reduction of investments accounted for under
equity method			3,278,146			22,194
Acquistion of property, plant and equipment	(		16,072,136 )	(		16,483,798 )
Decrease in other financial assets			877,470			525,399
Proceeds from disposal of property, plant and equipment			111,287			47,502
Decrease (increase) in other non-current assets	(		13,819 )			3,799
Interest received			113,894			76,456
Dividend received			5,859,537			196,249
Net cash used in investing activities	(		6,574,181 )	(		17,430,301 )
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in short-term loans			1,943,565	(		2,666,215 )
Decrease in short-term bills	(		699,430 )	(		1,299,816 )
Increase in long-term loans			-			977,808
Payment of long-term loans	(		49,210,951 )	(		16,216,772 )
Payment of bond payable	(		2,000,000 )	(		2,000,000 )
Decrease in accrued lease payments	(		980,000 )	(		1,980,000 )
Stock issued for cash			14,519,051			5,400,000
Proceeds from issuance of common stock for employee stock options			181,315			-
Proceeds from share reduction of common stock for employee stock
options	(		8,260 )			-
Interest paid	(		4,239,118 )	(		5,188,956 )
Net cash used in financing activities	(		40,493,828 )	(		22,973,951 )
Increase in cash and cash equivalents			2,668,576			341,988
Cash and cash equivalents at beginning of year			24,936,316			24,594,328
Cash and cash equivalents at end of year		$	27,604,892		$	24,936,316

～ 37 ～

Attachment 4

INNOLUX CORPORATION

Table of Losses Offsetting of Year 2012

Items	Unit: NT$ Amount
The losses yet to be compensated at the start of the year Plus: Net loss of this year Net value variation of the investee company evaluated under equity method Item of losses offsetting Legal Reserve Capital Reserve-The premium of ordinary shares The accumulated losses after offsetting	0 (29,205,348,763) (108,487,206)
	(29,313,835,969) 2,328,981,091 24,979,238,762
	(2,005,616,116)

Chairman: General Manager: Senior Accountant:

～ 38 ～

INNOLUX CORPORATION

Supervisors’ Audit Report

The Board of Directors has duly submitted the amendment of table of losses off-setting of year 2012, I, as the supervisor of the Company, has completed the audit and review, and had found nothing inconsistent with any of the above. Therefore, I issue this audit report for acknowledgment in accordance with Article 219 of the Company Act.

General Shareholders Meeting of the Company in 2014

Supervisor: Lin, Ren-Guang Date: March 25, 2014

～ 39 ～

INNOLUX CORPORATION

Supervisors’ Audit Report

General Shareholders Meeting of the Company in 2014

Supervisor: Chen, Yi-Fang Date: March 25, 2014

～ 40 ～

INNOLUX CORPORATION

Supervisors’ Audit Report

General Shareholders Meeting of the Company in 2014

Supervisor: I-Chen Investment Ltd. Representatvie: Te-Tsai Huang Date: March 25, 2014

～ 41 ～

Attachment 5

INNOLUX CORPORATION

The Profit Distribution Table of Year 2013

Unit: NT$

		Unit: NT$
Item	Amount	Explenation
Accumulated loss at the start of theyear	(2,005,616,116)
Adjustments of first-time adoption of International Financial ReportingStandards	2,005,616,116
Ajusted accumulated loss at the start of theyear	0
Ajusted retained earnings ofyear 2013	(9,852,220)
Ajusted accumulated loss	(9,852,220)
Profit after tax of Year 2013	5,102,567,772
Minus: Legal reserve (10%)	(509,271,555)
Minus:Sepecial reserve	(1,144,228,508)
Profit distributable	3,439,215,489

Distribution Item
Cash dividends to sharholders	90,496,032	To distribute NT$ 0.01per share
Subtotal of dividends to shareholders	90,496,032

Unappropriated retained earnings to date	3,348,719,457

Note 1： To appropriate renumuneration of the directors and supervisors at the amount of

NT$90,587 and the employee bonus at the amount of NT$ 343,921,549 according to the Articles of Incorporation.

Note 2： In considering the related rules prescribed under the Articles of Incorporation and to encourage our employee, it is proposed to distribute employee bonus and renumuneration of the directors and supervisors of the year of 2013, the total distributed amount has a difference of NT$ 167,791,294 between the estimated listed expenses of the year of 2013. Such difference will be handled by changes in accounting estimate and will be listed as the expense of the year of 2014 after such proposal has been passed and resolved by the shareholders meeting.

Chairman: General Manager: Senior Accountant:

～ 42 ～

Attachment 6

Comparative table for Amendments to

Articles of Incorporation

Article No.	The current Article	The Amended Article	Reasons for Amendment
Article 4	The registered capital of the Company shall be one hundred and ten billion (NT$110,000,000,000), divided into eleven billion (11,000,000,000) shares (of which five billion to be reserved for the use of employees’ share subscription warrants), and may issue special shares, with a par value of ten New Taiwan Dollars, to authorize Board of Directors at their discretion to issue separately ordinary shares or special shares.	The registered capital of the Company shall be one hundred andtwenty billion (NT$120,000,000,000), divided into twelve billion (12,000,000,000) shares (of which five billion to be reserved for the use of employees’ share subscription warrants), and may issue special shares, with a par value of ten New Taiwan Dollars, to authorize Board of Directors at their discretion to issue separately ordinary shares or special shares.	For the operational purepose, to revise the registered capital.
Article 26	This Articles of Incorporation was made by all promoters on November 21, 2002. The first amendment was made on March 21, 2003, the second amendment was made on May 19, 2004, the third amendment was made on December 10, 2004, the fourth amendment was made on June 28, 2005, the fifth amendment was made June 16, 2006. The sixth amendment was made on June 13, 2007. The seventh amendment was made on June 13, 2008. The eighth amendment was made on June 19, 2009. The ninth amendment was made on January 6, 2010. The tenth amendment was made on June 29, 2010. The eleventh amendment was made on June 28, 2011. The twelfth amendment was made on June 29, 2012. The thirteenth amendment was made on November 14, 2012.	This Articles of Incorporation was made by all promoters on November 21, 2002. The first amendment was made on March 21, 2003, the second amendment was made on May 19, 2004, the third amendment was made on December 10, 2004, the fourth amendment was made on June 28, 2005, the fifth amendment was made June 16, 2006. The sixth amendment was made on June 13, 2007. The seventh amendment was made on June 13, 2008. The eighth amendment was made on June 19, 2009. The ninth amendment was made on January 6, 2010. The tenth amendment was made on June 29, 2010. The eleventh amendment was made on June 28, 2011. The twelfth amendment was made on June 29, 2012. The thirteenth amendment was made on November 14, 2012. The fourteenth amendment was made on June 19, 2014.	Explanation on the amendment history of the Articles of Incorporation
		June 19, 2014.

～ 43 ～

Attachment 7

Comparative table for Amendments to

Operating Procedure Governing the Acquisition and Disposal of Assets

Article No.	The current Article	The Amended Article	Reasons for Amendment
Article 3	Asset Scope 1. Investments in stocks, government bonds, corporate bonds, financial bonds, securities representing interest in a fund, depositary receipts, call (put) warrants, beneficial interest securities, and asset-backed securities. 2. Real property and other fixed assets. 3. Memberships. 4. Patents, copyrights, trademarks, franchise rights, and other intangible assets. 5. Claims of financial institutions (including receivables, bills purchased and discounted, loans, and overdue receivables). 6. Derivatives. 7. Assets acquired or disposed of in connection with mergers, demergers, acquisitions, or transfer of shares in accordance with law. 8. Other major assets.	Asset Scope 1. Investments in stocks, government bonds, corporate bonds, financial bonds, securities representing interest in a fund, depositary receipts, call (put) warrants, beneficial interest securities, and asset-backed securities. 2. Real property(including land, houses and buildings, investment property, rights to use land, and construction enterprise inventory) andequipment . 3. Memberships. 4. Patents, copyrights, trademarks, franchise rights, and other intangible assets. 5. Claims of financial institutions (including receivables, bills purchased and discounted, loans, and overdue receivables). 6. Derivatives. 7. Assets acquired or disposed of in connection with mergers, demergers, acquisitions, or transfer of shares in accordance with law. 8. Other major assets	In reference to the amendment of Article 3 of the Regulations Governing the Acquisition and Disposal of Assets by Public Companies.
Article 4	Terms Definition 1. (No amendment to the content) 2. Assets acquired or disposed through mergers, demergers, acquisitions, or transfer of shares in accordance with law: Refers to assets acquired or disposed through mergers, demergers, or acquisitions conducted under the Business Mergers and Acquisitions Act,Financial	Terms Definition 1. (No amendment to the content) 2. Assets acquired or disposed through mergers, demergers, acquisitions, or transfer of shares in accordance with law: Refers to assets acquired or disposed through mergers, demergers, or acquisitions conducted under the Business Mergers and Acquisitions Act,	In reference to the amendment of Article 4 of the Regulations Governing the Acquisition and Disposal of Assets by Public Companies.

～ 44 ～

Holding Company Act, Financial Institution Merger Act and other acts, or to transfer of shares from another company through issuance of new shares of its own as the consideration therefor (hereinafter "transfer of shares") under Article 156, paragraph 6 of the Company Act. 3. Related party: As defined in the Statement of Financial Accounting Standards No. 6 announced by Accounting Research and Development Fundation (hereinafter refers to as ARDF). ~~4. Subsidiary: As defined in the Statement of Financial Accounting Standards No. 5 and No. 7 announced by ARDF.~~

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 other fixed asset.
Date of occurrence: Refers to the date of contract signing, date of payment, date of consignment trade, date of transfer, dates of boards of directors resolutions, or other date that can confirm the counterpart and monetary amount of the transaction, whichever date is earlier; provided, for investment for which approval of the competent authority is required, the earlier of the above date or the date of receipt of approval by the competent authority shall apply. 7. Mainland China area investment: Refers to investments in the mainland China area approved by the Ministry of Economic Affairs Investment

Financial Holding Company Act, Financial Institution Merger Act and other acts, or to transfer of shares from another company through issuance of new shares of its own as the consideration therefor (hereinafter "transfer of shares") under Article 156, paragraph 8 of the Company Act. 3. Related party or subsidiary : As defined in the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

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.
Date of occurrence: Refers to the date of contract signing, date of payment, date of consignment trade, date of transfer, dates of boards of directors resolutions, or other date that can confirm the counterpart and monetary amount of the transaction, whichever date is earlier; provided, for investment for which approval of the competent authority is required, the earlier of the above date or the date of receipt of approval by the competent authority shall apply.
Mainland China area investment: Refers to investments in the mainland China area approved by the Ministry of Economic Affairs Investment Commission or conducted in accordance with the provisions of the Regulations Governing Permission for Investment

～ 45 ～

	Commission or conducted in accordance with the provisions of the	or Technical Cooperation in the Mainland Area.
Article 7	Operating procedure governing the acquisition and disposal of real property and other fixed asset 1. Evaluation Procedure For the evaluation of the acquisition and disposal of real property and other fixed asset of the Company, the asset responsible department shall proceed with feasibility evaluation report and to be reviewed and signed by the business executives department. Such acquisition and disposal may be conducted after the approval according to the “Rules of Level of Authority” according to the Company. 2. Operating procedure for the acquisition and disposal of real property and other fixed assets (I) In acquiring or disposing of real property or other fixed assets where the transaction amount reaches 20 percent of the company's paid-in capital or NT$300 million or more, the Company, unless transacting with a government agency, engaging others to build on rented land, engaging others to build on its own land, or acquiring or disposing of equipment for business use, shall obtain an report prior to the date of occurrence of the event from a professional appraisal institute and shall further comply with the following provisions: 1. Where due to special circumstances it is necessary to give a limited price, specified price, or special price as a reference basis for the	Operating procedure governing the acquisition and disposal of real property andequipments 1. Evaluation Procedure For the evaluation of the acquisition and disposal of real property and equipments of the Company, the asset responsible department shall proceed with feasibility evaluation report and to be reviewed and signed by the business executives department. Such acquisition and disposal may be conducted after the approval according to the “Rules of Level of Authority” according to the Company. 2. Operating procedure for the acquisition and disposal of real property and equipments (I) In acquiring or disposing of real property orequipments where the transaction amount reaches 20 percent of the company's paid-in capital or NT$300 million or more, the Company, unless transacting with a government agency, engaging others to build on rented land, engaging others to build on its own land, or acquiring or disposing of equipment for business use, shall obtain anappraisal report prior to the date of occurrence of the event from a professionalappraiser and shall further comply with the following provisions: 1. Where due to special circumstances it is necessary to give a limitedprice,specified	In reference to the amendment of Article 9 of the Regulations Governing the Acquisition and Disposal of Assets by Public Companies.

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	transaction price, the transaction shall be submitted for approval in advance by the board of directors, and the same procedure shall be followed for any future changes to the terms and conditions of the transaction. 2. Where the transaction amount is NT$1 billion or more, appraisals from two or more professional appraisers shall be obtained. 3. Where any one of the following circumstances applies with respect to the professional appraiser's appraisal results, unless all the appraisal results for the assets to be acquired are higher than the transaction amount, or all the appraisal results for the assets to be disposed of are lower than the transaction amount, a certified public accountant shall be engaged to perform the appraisal in accordance with the provisions of Statement of Auditing Standards No. 20 published by the Accounting Research and Development Foundation and render a specific opinion regarding the reason for the discrepancy and the appropriateness of the transaction price: (1) The discrepancy between the appraisal result and the transaction amount is 20 percent or more of the transaction amount. (2)The discrepancy	2. 3.	price, or special price as a reference basis for the transaction price, the transaction shall be submitted for approval in advance by the board of directors, and the same procedure shall be followed for any future changes to the terms and conditions of the transaction. Where the transaction amount is NT$1 billion or more, appraisals from two or more professional appraisers shall be obtained. Where any one of the following circumstances applies with respect to the professional appraiser's appraisal results, unless all the appraisal results for the assets to be acquired are higher than the transaction amount, or all the appraisal results for the assets to be disposed of are lower than the transaction amount, a certified public accountant shall be engaged to perform the appraisal in accordance with the provisions of Statement of Auditing Standards No. 20 published by the ROC Accounting Research and Development Foundation(ARDF )and render a specific opinion regarding the reason for the discrepancy and the appropriateness of the transaction price: (1) The discrepancy between the appraisal result and the transaction amount is 20percent

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		between the appraisal results of two or more professional appraisers is 10 percent or more of the transaction amount. 4. No more than 3 months may elapse between the date of the appraisal report issued by a professional appraiser and the contract execution date; provided, where the publicly announced current value for the same period is used and not more than 6 months have elapsed, an opinion may still be issued by the original professional appraiser. (II) After the acquisition of the assets, it shall register, administer, and use according to the Fixed Asset Management Operating Procedure. 3. The determination procedure of transaction term and the amount of authority delegated (1)Method of Price Determination and References For acquiring or disposing of real property or other fixed assets, the department which propose to such demand shall submitted the explanation the reasons, the referring current assessed value, actual real estate transaction price nearby, etc for signed and approval, and the price shall be determined after price inquiring, price negotiation, or bidding. (2) The degree of authority delegated (i) In acquiring or disposing of real property or other fixed assets, where the transaction amount less than or equal to NT$300	or more of the transaction amount. (2) The discrepancy between the appraisal results of two or more professional appraisers is 10 percent or more of the transaction amount. 4. No more than 3 months may elapse between the date of the appraisal report issued by a professional appraiser and the contract execution date; provided, where the publicly announced current value for the same period is used and not more than 6 months have elapsed, an opinion may still be issued by the original professional appraiser. (II) After the acquisition of the assets, it shall register, administer, and use according to the Fixed Asset Management Operating Procedure. 3. The determination procedure of transaction term and the amount of authority delegated (1) Method of Price Determination and References For acquiring or disposing of real property orequipments , the department which propose to such demand shall submitted the explanation the reasons, the referring current assessed value, actual real estate transaction price nearby, etc for signed and approval, and the price shall be determined after price inquiring, price negotiation, or bidding. (2) The degree of authority delegated (i)In acquiringor disposing

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	million, to grant the responsible unit to make a decision; where the transaction amount more thanNT$300 million, such transaction shall be submitted to the board of directors for approval before entering into this transaction. (ii) However, if the asset type to be acquired or disposed is for business-use machinery and equipment, and the transaction party is not a related party, the procedure shall be processed according to the Level of Authority. (iii) When entering into purchase contract with the opposite party, in order to cooperate with the business requirement and for the sake of efficiency, the board of directors may authorize the Chairman to approve, after approval the contract can be entered into in advance, and after the occurrence of the transaction, subsequently to submit it for rectification by the last board of directors meeting. 4.Transaction Procedure The transaction procedure of the Company in acquiring or disposing of real property and other fixed assets shall proceed according to fixed asset cycle related procedure of the internal control system.	of real property or equipments ,where the transaction amount less than or equal to NT$300 million, to grant the responsible unit to make a decision; where the transaction amount more thanNT$300 million, such transaction shall be submitted to the board of directors for approval before entering into this transaction. (ii) However, if the asset type to be acquired or disposed is for business-useequipment , and the transaction party is not a related party, the procedure shall be processed according to the Level of Authority. (iii) When entering into purchase contract with the opposite party, in order to cooperate with the business requirement and for the sake of efficiency, the board of directors may authorize the Chairman to approve, after approval the contract can be entered into in advance, and after the occurrence of the transaction, subsequently to submit it for rectification by the last board of directors meeting. 4.Transaction Procedure The transaction procedure of the Company in acquiring or disposing of real property and equipments shall proceed according to fixed asset cycle related procedure of the internal control system.
Article 8	Operating procedure governing the acquisition and disposal of securities 1. Evaluation Procedure (1)The Companyacquiring	Operating procedure governing the acquisition and disposal of securities 1. Evaluation Procedure (1)The Companyacquiring	In reference to the amendment of Article 10 of the Regulations Governingthe

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	(2) (3) (4)	or disposing of securities shall, prior to the date of occurrence of the event, obtain financial statements of the issuing company for the most recent period, certified or reviewed by a certified public accountant, for reference in appraising the transaction price. If the dollar amount of the transaction is 20 percent of the company's paid-in capital or NT$300 million or more, the company shall additionally engage a certified public accountant prior to the date of occurrence of the event to provide an opinion regarding the reasonableness of the transaction price. If the CPA needs to use the report of an expert as evidence, the CPA shall do so in accordance with the provisions of Statement of Auditing Standards No. 20 published by the ARDF. This requirement does not apply, however, to publicly quoted prices of securities that have an active market, or where otherwise provided by regulations of the Financial Supervisory Commission of the ~~Administrative Yuan~~ ~~.~~ For acquiring or disposing of the securities traded on the exchanged or OTC market, the price shall be decided by the current price of the stock or bond. For acquiring or disposing of the securities note traded on	or disposing of securities shall, prior to the date of occurrence of the event, obtain financial statements of the issuing company for the most recent period, certified or reviewed by a certified public accountant, for reference in appraising the transaction price. (2) If the dollar amount of the transaction is 20 percent of the company's paid-in capital or NT$300 million or more, the company shall additionally engage a certified public accountant prior to the date of occurrence of the event to provide an opinion regarding the reasonableness of the transaction price. If the CPA needs to use the report of an expert as evidence, the CPA shall do so in accordance with the provisions of Statement of Auditing Standards No. 20 published by the ARDF. This requirement does not apply, however, to publicly quoted prices of securities that have an active market, or where otherwise provided by regulations of the Financial Supervisory Commission. (3) For acquiring or disposing of the securities traded on the exchanged or OTC market, the price shall be decided by the current price of the stock or bond. (4) For acquiring or disposing of the securities note traded on the exchanged or OTC	Acquisition and Disposal of Assets by Public Companies.

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	the exchanged or OTC market, it is required to submit the reference or calculation basis of the transaction price and transaction terms to the Board of Directors for approval and further hanlding. (No amendment to the content below,omitted)	market, it is required to submit the reference or calculation basis of the transaction price and transaction terms to the Board of Directors for approval and further hanlding. (No amendment to the content below, omitted)
Article 9	Operating procedure governing the acquisition and disposal of intangible assets For evaluation of the acquisition and disposal of intangible assets of the Company, the proposed department shall proceed with feasibility evaluation report and to submit and report to the intellectual property department. 1. Operation Procedure For the acquisition and diposal of intangible assets, the transaction amount reaches 20 percent or more of paid-in capital or NT$300 million or more, the company shall engage a certified public accountant prior to the date of occurrence of the event to render an opinion on the reasonableness of the transaction price; the CPA shall comply with the provisions of Statement of Auditing Standards No. 20 published by the ARDF. 2. The procedure for deciding the transaction terms and amount of authority delegated (1) Price determination method and reference basis: The proposed department to submit and report the market trading price of similar type of the intangible assets and to engage professional appraisal institute for issuing report. (No amendment to the content below,omitted)	Operating procedure governing the acquisition and disposal of intangible assets For evaluation of the acquisition and disposal of intangible assets of the Company, the proposed department shall proceed with feasibility evaluation report and to submit and report to the intellectual property department. 1. Operation Procedure For the acquisition and diposal of intangible assets, the transaction amount reaches 20 percent or more of paid-in capital or NT$300 million or more,except in transactions with a government agency ,the company shall engage a certified public accountant prior to the date of occurrence of the event to render an opinion on the reasonableness of the transaction price; the CPA shall comply with the provisions of Statement of Auditing Standards No. 20 published by the ARDF. 2. The procedure for deciding the transaction terms and amount of authority delegated (1) Price determination method and reference basis: The proposed department to submit and report the market trading price of similar type of the intangible assets and to engage professional appraiser for issuing	In reference to the amendment of Article 11 of the Regulations Governing the Acquisition and Disposal of Assets by Public Companies.

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		appraisal report. (No amendment to the content below,omitted)
Article 10	Related party transaction 1. Regarding the Company’s acquisition or disposition of the assets with the related party,other than handling according to the procedure in relation to real estates prescribed under Article 7, it is also required to follow the related decision making procedure and transaction reasonableness evaluation process set forth below. For transaction amount reaching 10 percent of the total assets of the Company, it is required to obtain appraisal report issued by the professional appraiser or CPA’s opinion according to the preceding Paragraph. In addition, when judging whether the transaction counterparty is a related party, other than taking notice to its legal forms, the actual relationship shall also be included into consideration. 2. Evaluation and operation procedure When the Company intends to acquire or dispose of real property from or to a related party, or when it intends to acquire or dispose of assets other than real property from or to a related party and the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or NT$300 million or more, the company may not proceed to enter into a transaction contract or make apayment until the	Related party transaction 1. Regarding the Company’s acquisition or disposition of the assets with the related party,other than handling according to the procedure in relation to real estates prescribed under Article 7, it is also required to follow the related decision making procedure and transaction reasonableness evaluation process set forth below. For transaction amount reaching 10 percent of the total assets of the Company, it is required to obtain appraisal report issued by the professional appraiser or CPA’s opinion according toArticle 7, Article 8, and Article 9 hereof . For the calculation of 10 percent of total assets under the preceding Section, the total assets stated in the most recent parent company only financial report or individual financial report of the Company shall be used. In addition, when judging whether the transaction counterparty is a related party, other than taking notice to its legal forms, the actual relationship shall also be included into consideration. 2. Evaluation and operation procedure When the Company intends to acquire or dispose of real property from or to a related party, or when it intends to acquire or dispose of assets other than real	In reference to the amendment of Article 14, Artice 15, and Artice 33-2 of the Regulations Governing the Acquisition and Disposal of Assets by Public Companies.

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		following matters have been approved by the board of directors and recognized by the supervisors: (1) The purpose, necessity and anticipated benefit of the acquisition or disposal of assets. (2) The reason for choosing the related party as a trading counterparty. (3) With respect to the acquisition of real property from a related party, information regarding appraisal of the reasonableness of the preliminary transaction terms under Subsection (1) and (4), Section 3 of this Article. (4) The date and price at which the related party originally acquired the real property, the original trading counterparty, and that trading counterparty's relationship to the company and the related party. (5) Monthly cash flow forecasts for the year commencing from the anticipated month of signing of the contract, and evaluation of the necessity of the transaction, and reasonableness of the funds utilization. (6) An appraisal report from a professional appraiser or a CPA's opinion obtained in compliance with the preceding article. (7) Restrictive covenants and other important stipulations associated with the transaction. 3. The appraisal of the	property from or to a related party and the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or NT$300 million or more, except in trading of government bonds or bonds under repurchase and resale agreements, or subscription or redemption of domestic money market funds ,the company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by the board of directors and recognized by the supervisors.It is also required to consider the opinion of each independent director, the dissenting opinion or reserving opinion of the independent directors shall be clearly stated in the meeting minutes of the board of directors: (1) The purpose, necessity and anticipated benefit of the acquisition or disposal of assets. (2) The reason for choosing the related party as a trading counterparty. (3) With respect to the acquisition of real property from a related party, information regarding appraisal of the reasonableness of the preliminary transaction terms under Subsection (1) and (4), Section 3 of this Article. (4) The date and price at which the related party originallyacquired the

(1) The purpose, necessity and anticipated benefit of the acquisition or disposal of assets.

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		reasonableness of the transaction cost (No amendment from (1) to (5)below, omitted) (6) Where the Company acquires real property from a related party and one of the following circumstances exists, the acquisition shall be conducted in accordance with Section 1 and Section 2 of this Article in relation to evaluation and operation procedure and (1), (2), (3) of Section 3 of this Article in relation to appraisal of the reasonableness of the transaction cost do not apply: (i) The related party acquired the real property through inheritance or as a gift. (ii) More than 5 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. (iii) The real property is acquired through signing of a joint development contract with the related party. (7) If there is any evidence showing that the Company’s acquisition of real property from the related party does not conform to the regular business practice, it shall be handled according to (5) of Section 3 of this Article. 4.With respect to the acquisition or disposal of business-use machinery equipment between the Companyand its	real property, the original trading counterparty, and that trading counterparty's relationship to the company and the related party. (5) Monthly cash flow forecasts for the year commencing from the anticipated month of signing of the contract, and evaluation of the necessity of the transaction, and reasonableness of the funds utilization. (6) An appraisal report from a professional appraiser or a CPA's opinion obtained in compliance with the preceding article. (7) Restrictive covenants and other important stipulations associated with the transaction. 3. The appraisal of the reasonableness of the transaction cost (No amendment from (1) to (5)below, omitted) (6) Where the Company acquires real property from a related party and one of the following circumstances exists, the acquisition shall be conducted in accordance with Section 1 and Section 2 of this Article in relation to evaluation and operation procedure and (1), (2), (3) of Section 3 of this Article in relation to appraisal of the reasonableness of the transaction cost do not apply: (i) The related party acquired the real property through inheritance or as a gift. (ii)More than 5years will

reasonableness of the transaction cost (No amendment from (1) to (5)below, omitted)

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	subsidiaries, the Company's board of directors may delegate the board chairman to decide such matters and have the decisions subsequently submitted to and ratified by the next board of directors meeting.	have elapsed from the time the related party signed the contract to obtain the real property to the signing date for the current transaction. (iii) 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 . (7) If there is any evidence showing that the Company’s acquisition of real property from the related party does not conform to the regular business practice, it shall be handled according to (5) of Section 3 of this Article. 4.With respect to the acquisition or disposal of business-use equipment between the Company and its subsidiaries, the Company's board of directors may delegate the board chairman to decide such matterswithin the amount of NT$600 million and have the decisions subsequently submitted to and ratified by the next board of directors meeting.
Article 13	Procedure of Public Disclosure of Information 1. Deadline for Public Announcement and Report The Company acquiring or disposing of assets which reaches the items to be announced or transaction amount standards prescribed under Section 2 of this Article shall publicly announce and report the relevant information on the	Procedure of Public Disclosure of Information 1. Deadline for Public Announcement and Report Announcement and Report The Company acquiring or disposing of assets which reaches the items to be announced or transaction amount standards prescribed under Section 2 of this Article shall publicly announce and report the	In reference to the amendment of Article 30 of the Regulations Governing the Acquisition and Disposal of Assets by Public Companies.

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	FSC's designated website within 2 days commencing immediately from the date of occurrence of the event. 2. The Items and Standards Requried for Public Announcement and Report (1) Acquisition or disposal of real property from or to a related party, or acquisition or disposal of assets other than real property from or to a related party where the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or NT$300 million or more; provided, this shall not apply to trading of government bonds or bonds under repurchase or resale agreements. (2) Merger, demerger, acquisition, or transfer of shares. (3) Losses from derivatives trading reaching the limits on aggregate losses or losses on individual contracts set out in the procedures adopted by the company. (4) Where an asset transaction other than any of those referred to in the preceding three subparagraphs, a disposal of receivables by a financial institution, or an investment in the mainland China area reaches 20 percent or more of paid-in capital or NT$300 million; provided, this shall not apply to the following circumstances: A. Trading of government bonds. ~~B.~~ ~~Securities trading by~~ ~~investment~~ ~~professionals on~~	relevant information on the FSC's designated website within 2 days commencing immediately from the date of occurrence of the event. 2. The Items and Standards Requried for Public Announcement and Report (1) Acquisition or disposal of real property from or to a related party, or acquisition or disposal of assets other than real property from or to a related party where the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or NT$300 million or more; provided, this shall not apply to trading of government bonds or bonds under repurchase, resale agreements,or subscription or redemption of domestic money market funds. (2) Merger, demerger, acquisition, or transfer of shares. (3) Losses from derivatives trading reaching the limits on aggregate losses or losses on individual contracts set out in the procedures adopted by the company. (4) Where an asset transaction other than any of those referred to in the preceding three subparagraphs, a disposal of receivables by a financial institution, or an investment in the mainland China area reaches 20 percent or more of paid-in capital or NT$300 million; provided, this shall not apply to the following circumstances: A. Tradingof

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	~~foreign or domestic~~ ~~securities exchanges or~~ ~~over~~ ~~-~~ ~~the~~ ~~-~~ ~~counter~~ ~~markets, or~~ ~~subscription of~~ ~~securities by a~~ ~~securities firm.~~ C. Trading of bonds under repurchase/resale agreements D. Where the type of asset acquired or disposed is equipment/~~machiery~~ for business use, the trading counterparty is not a related party, and the transaction amount is less than NT$500 million. E. Where land is acquired under an arrangement on engaging others to build on the company's own land, engaging others to build on rented land, joint construction and allocation of housing units, joint construction and allocation of ownership percentages, or joint construction and separate sale, and the amount the company expects to invest in the transaction is less than NT$500 million. (5) The transaction amount prescribed under Paragraph (4) above shall be calculated as below. Also, "within the preceding year" as used in the preceding paragraph refers to the year preceding the date of occurrence of the current transaction. Items duly announced in accordance	government bonds. B .Trading of bonds under repurchase/resale agreements,or subscription or redemption of domestic money market funds. C .Where the type of asset acquired or disposed is equipment for business use, the trading counterparty is not a related party, and the transaction amount is less than NT$500 million. E .Where land is acquired under an arrangement on engaging others to build on the company's own land, engaging others to build on rented land, joint construction and allocation of housing units, joint construction and allocation of ownership percentages, or joint construction and separate sale, and the amount the company expects to invest in the transaction is less than NT$500 million. (5) The transaction amount prescribed under Paragraph (4) above shall be calculated as below. Also, "within the preceding year" as used in the preceding paragraph refers to the year preceding the date of occurrence of the current transaction. Items duly announced in accordance with these Regulations need not be counted toward the transaction amount.

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	with these Regulations need not be counted toward the transaction amount. A. The amount of any individual transaction. B. The cumulative transaction amount of acquisitions and disposals of the same type of underlying asset with the same trading counterparty within the preceding year. C. The cumulative transaction amount of real property acquisitions and disposals (cumulative acquisitions and disposals, respectively) within the same development project within the preceding year. D. The cumulative transaction amount of acquisitions and disposals (cumulative acquisitions and disposals, respectively) of the same security within the preceding year. (6) The transaction amount set forth in Article 7, Article 8, and Article 9 shall be calculated and handled under the preceding Paragraph. "Within the preceding year" as used in the preceding paragraph refers to the year preceding the date of occurrence of the current transaction. Items which obtained appraisal report issued by the professional appraiser or CPA’s	A. The amount of any individual transaction. B. The cumulative transaction amount of acquisitions and disposals of the same type of underlying asset with the same trading counterparty within the preceding year. C. The cumulative transaction amount of real property acquisitions and disposals (cumulative acquisitions and disposals, respectively) within the same development project within the preceding year. D. The cumulative transaction amount of acquisitions and disposals (cumulative acquisitions and disposals, respectively) of the same security within the preceding year. (6) The transaction amount set forth in Article 7, Article 8, and Article 9 shall be calculated and handled under the preceding Paragraph. "Within the preceding year" as used in the preceding paragraph refers to the year preceding the date of occurrence of the current transaction. Items which obtained appraisal report issued by the professional appraiser or CPA’s opinion according to the Operational Procedure need not be counted toward the transaction amount. 3.(No amendment to the

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	opinion need not be counted toward the transaction amount. 3. (No amendment to the content,omitted)	content , omitted)
Article 14	Related Rules of Acquisition and Disposal of Assets by Subsidiary 1. (No amendment to the content , omitted) 2.(No amendment to the content , omitted) 3. If the subsidiary is non-public company, the assets acquired or disposed reach the standards to be announced or reported set forth in Article 12 of the “Regulations Governing the Acquisition and Disposal of Assets by Public Companies”, the Company shall announce and report for the subsidiary. 4.(No amendment to the content,omitted)	Related Rules of Acquisition and Disposal of Assets by Subsidiary 1.(No amendment to the content , omitted) 2.(No amendment to the content , omitted) 3. If the subsidiary is non-public company, the assets acquired or disposed reach the standards to be announced or reported set forth inArticle 30 and Article 31 of the “Regulations Governing the Acquisition and Disposal of Assets by Public Companies”, the Company shall announce and report for the subsidiary. 4.(No amendment to the content,omitted)	To review the error of the Article number under Paragraph 3.
Article 16	Enforcement and Amendment ~~1.~~ ~~A~~fter this Procedure has been resolved by the Board of Directors, they shall be submitted to each supervisor, and then to a shareholders' meeting for approval; the same applies when the procedures are amended. If any director expresses dissent and it is contained in the minutes or a written statement, the company shall submit the director's dissenting opinion to each supervisor.~~In addition,~~ ~~w~~ ~~here the position of~~ ~~independent director has~~ ~~been created in~~ ~~the~~ ~~Company~~ ~~, when the~~ ~~procedures for the~~ ~~acquisition and disposal of~~ ~~assets are submitted for~~ ~~discussion by the board of~~ ~~directors,~~ the board of directors shall take into full consideration each independent director's opinions. If an independent director objects to or	Enforcement and Amendment After this Procedure has been resolved by the Board of Directors, they shall be submitted to each supervisor, and then to a shareholders' meeting for approval; the same applies when the procedures are amended. If any director expresses dissent and it is contained in the minutes or a written statement, the company shall submit the director's dissenting opinion to each supervisor.Also, the board of directors shall take into full consideration each independent director's opinions. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors meeting.	Revise according to the Company’s practice.
	~~.~~

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	expresses reservations about
	any matter, it shall be
	recorded in the minutes of
	the board of directors
	meeting.
~~2.~~	~~This Procedures was made~~
	~~on May 19, 2004. The first~~
	~~amendment was made on~~
	~~June 16, 2006. The second~~
	~~amendment was made on~~
	~~June 19, 2007.~~ ~~The third~~
	~~amendment was made on~~
	~~June 29, 2010. The fourth~~
	~~amendment was made on~~
	~~June 19, 2011.~~

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Appendix 1 Innolux Corporation

Rules of Shareholders’ Meeting

Article 1 : In order to establish the good governance system for the shareholders’ meeting of the Company, to construct supervision function and intensify management efficiency, to draw up this Rules in accordance with Section 5 of Corporate Governance Best-Practice Principles for Listed and OTC Companies for compliance with.
Article 2 Except as otherwise provided for in laws or Articles of Incorporation, the meeting rules of shareholders meeting of the Company shall be in accordance with these Rules.
Article 3 : (To convene shareholders meeting and meeting notice) A shareholders meeting of the Company shall, unless otherwise provided for in laws and regulations, be convened by the board of directors.
The convention of a general shareholders meeting shall compile meeting agenda which shall be given to each shareholder no later than 30 days prior to the scheduled meeting date, for each registered stock shareholders whose shareholding is less than one thousand shares, a public notice may, as an alternative, be given by means of entering into MOPS; a notice to convene a special shareholders meeting shall be given to each shareholder no later than 15 days, a public notice may, as an alternative, be given by means of inputting into MOPS to each registered share shareholders whose shareholding is less than one thousand shares.
The cause(s) or subject(s) of a meeting of shareholders to be convened shall be indicated in the individual notice; and the notice may, as an alternative, be given by means of electronic transmission, after obtaining a prior consent from the recipient(s) thereof.
Matters pertaining to election or discharge of directors and supervisors, alteration of the Articles of Incorporation, and dissolution, merger, spin-off, or any matters as set forth in Paragraph I, Article 185 of the Company Act, Article 26-1 & 43-6 of Securities & Exchange Act hereof shall be itemized in the causes or subjects to be described in the notice to convene a meeting of shareholders, and shall not be brought up as extemporary motions.
Shareholder(s) holding one percent (1%) or more of the total number of outstanding shares of the Company may propose to the Company a proposal for discussion at a regular shareholders' meeting, provided that only one matter shall be allowed in each single proposal, and in case a proposal contains more than one matter, such proposal shall not be included in the agenda.
In case any proposal submitted by shareholders has any of the circumstances provided in Article 172-2, paragraph 4 of the Company Act, the board of directors may exclude the proposal submitted by a shareholder from the list of proposals to be discussed at a regular meeting of shareholders.
Prior to the date on which share transfer registration is suspended before the convention of a regular shareholders' meeting, the Company shall give a public notice announcing the place and the period for shareholders to submit proposals to be discussed at the meeting; and the period for accepting such proposals shall not be less than ten (10) days.
The number of words of a proposal to be submitted by a shareholder shall be limited to not more than three hundred (300) words, and any proposal containing more than 300 words shall not be included in the agenda of the shareholders' meeting. The shareholder who has submitted a proposal shall attend, in person or by a proxy, the regular shareholders' meeting where at his/her proposal is to be discussed and shall take part in the discussion of such proposal.

The Company shall, prior to preparing and delivering the shareholders' meeting notice, inform, by a notice, all the proposals submitting shareholders of the proposal screening results, and shall list in the shareholders' meeting notice the proposals conforming to the requirements set out in this Article. With regard to the proposals submitted by shareholders but not included in the agenda of the meeting, the cause of exclusion of such proposals and explanation shall be made by the board of directors at the shareholders' meeting to be convened.

Article 4 : (To appoint a proxy to attend a shareholders' meeting and authorization) A shareholder may appoint a proxy to attend a shareholders' meeting on his/her/its behalf by executing

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a power of attorney printed by the Company stating therein the scope of power authorized to the proxy. A shareholder may only execute one power of attorney and appoint one proxy only, and shall serve such written proxy to the company no later than five (5) days prior to the meeting date of the shareholders' meeting. In case two or more written proxies are received from one shareholder, the first one received by the Company shall prevail; unless an explicit statement to revoke the previous written proxy is made in the proxy which comes later.

After the service of the power of attorney of a proxy to the Company, in case the shareholder intends to attend the shareholders' meeting in person, a proxy rescission notice shall be filed with the Company at least two (2) day prior to the date of the shareholders' meeting as scheduled in the shareholders' meeting notice so as to rescind the proxy at issue, otherwise, the voting power exercised by the authorized proxy at the meeting shall prevail.

Article 5 : (Principle of convention place and time of shareholders’ meeting) The place for convention of shareholders’ meeting shall be within a county or city where the Company is located, or a place where is convenient for attendance by shareholders and appropriate for convention of shareholders’ meeting. The time for commencement of a meeting may not be earlier than 9:00 AM or after 3:00 PM.

Article 6 : (The preparation of an attendance book) Attending shareholders or the proxy appointed by a shareholder shall submit their attendance cards in substitution for signing of attendance. The number of attending shares shall be calculated based on the attendance cards submitted. The Company shall submit to attending shareholders the meeting agenda, annual report, attendance card, comment slip, vote and other meeting materials; if there is an election of directors and supervisors, shall attach separately ballot. The shareholder shall have attendance card, a register of attendance or other attendance certificate to attend shareholders’ meeting; Proxy solicitor of proxy solicitation shall take along identity certificate for checkup. When the government or a juristic person is a shareholder, its proxy shall not be limited to one person. When a juristic person acts as the proxy to attend a shareholders’ meeting, it can only appoint one person to attend the meeting. Article 7 : (Chairperson of Shareholders meeting, person as a guest) Where the shareholders’ meeting is convened by the board of directors, the Chairperson of the board of directors shall serve as Chairperson of the meeting. Where the Chairperson is on leave or is unable to exercise his/her powers for any cause, the vice chairperson shall act on his behalf. In case there is no vice chairperson, or the vice chairperson is also on leave or absent or unable to exercise his power and authority for any cause, the Chairperson of the board of directors shall designate one of the managing directors, or where there is no managing directors, one of the directors to act on his behalf. In the absence of such a designation, the managing directors or the directors shall elect from among themselves an acting chairperson of the board of directors. Where as for a shareholders' meeting convened by any other person having the convening right, he/she shall act as the Chairperson of that meeting provided, however, that if there are two or more persons having the convening right, the Chairperson of the meeting shall be elected from among themselves. The Company may appoint its attorney, accountant or other related personnel to attend a shareholders’ meeting. Article 8 : (Sound or video recording of Shareholders’ meeting procedure) The Company shall make full sound or video recording of the procedure of the shareholders meeting, which shall be preserved for a minimum period of at least one year. However, if a lawsuit has been instituted by any shareholder in accordance with the provisions of Article 189 of the Company Act, the Company shall keep minutes of the shareholders' meeting involved until the legal proceedings of the foregoing lawsuit have been concluded. Article 9 : (The calculation of attending shares of shareholders meeting, and the calling for meeting) Attendance of shareholders meeting shall be calculated based on shares. The number of attending shares shall be calculated based on the attendance register or the attendance cards submitted, and the shares exercised in writing or by way of electronic transmission. The Chairperson shall immediately announce the opening of the meeting when the starting time for the meeting arrives. However, where fewer than the number of the shareholders representing more than

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half of issued shares of the Company are in attendance, the Chairperson may announce that the meeting is postponed, and such postponed may not exceed two (2) times, total time for postponement may not exceed one (1) hour. Where the quorum is still not met after two (2) postponements, but shareholders representing more than one-third of issued shares of the Company attend the meeting, tentative resolution may be passed in accordance with Article 175, Paragraph 1 of the Company Act. A notice of such tentative resolution shall be given to each of the shareholders, and reconvene a Shareholders' meeting within one month

In the event that the number of shareholders representing more than half of issued shares attends before the end of the said meeting, the Chairperson may submit the tentative resolution made for re-voting by the meeting in accordance with Article 174 of the Company Act.

Article 10 : (Discussion of proposals) Where the shareholders meeting is convened by the board of directors, the agenda shall be set by the board of directors. A meeting shall be proceeded in accordance with the determined agenda, which may not be altered except by a resolution of the shareholders meeting.

The preceding paragraph applies on a mutatis mutandis basis where a shareholders meeting is convened by a person other than the board of directors who has right to convene a meeting.

Unless otherwise resolved at the Meeting, the Chairperson cannot announce the adjournment of the meeting before all discussion items (including extempore motions) listed in the agenda are resolved; if the chairperson declares the adjournment of the meeting in a manner in violation of such rules governing the proceedings of meetings, other members of the board of directors shall immediately assist the attending shareholders in accordance with statutory procedures to designate, by a majority of the voting rights represented by the shareholders attending the said meeting, one person as chairperson to continue the proceedings of the meeting. The shareholders cannot designate another person to server as chairperson and continue the meeting in the same or other place after the meeting is adjourned.

The Chairperson shall give full explanations and discussions on proposals and amendments or extempore motions submitted by shareholders, and the Chairperson may announce to end the discussion of any resolution and going into voting if the Chairperson deems it appropriate.

Article 11 : (To make a speech by shareholder) When a shareholder present at the meeting wishes to speak, a Speech Note shall be filled out with summary of speech, the shareholder’s number (or the number of attendance card) and the name of the shareholder. The sequence of speeches by shareholders shall be decided by the Chairperson. If any shareholder presents at the meeting submits a Speech Note but does not speak, no speech shall be deemed to have been made by such shareholder. In case the contents of the speech of a shareholder are inconsistent with contents of a Speech Note, the contents of actual speech shall prevail.
Unless otherwise permitted by the Chairperson, each shareholder shall not speak more than two times for each discussion item, each time not exceeding five (5) minutes. In case the speech of any shareholder violates the above provision or exceeds the scope of the discussion item, the Chairperson may stop the speech of such shareholder.

Unless otherwise permitted by the Chairperson and the shareholder in speaking, no shareholder shall interrupt the speeches of other shareholders; otherwise, the Chairperson may stop such interruption. If a corporate shareholder designates two or more representatives to attend the meeting, only one representative can speak for each discussion item.

After the speech of a shareholder, the Chairperson may respond himself/herself or appoint appropriate person to respond.
Article 12 : (Calculation of voting shares, avoidance) Voting of shareholders meeting shall be calculated on basis of shares.

Resolution of shareholders meeting, the shares held by shareholders having no voting right shall not be counted in the total number of issued shares.

A shareholder who has a personal interest in the matter under discussion at a meeting, which may impair the interest of the company, shall not vote nor exercise the voting right on behalf of another shareholder.

Shares for which voting right cannot be exercised as provided in the foregoing Paragraph shall not be counted in the number of votes of shareholders present at the meeting.

Except for trust enterprises or stock agencies approved by the competent authority, when a person who acts as the proxy for two or more shareholders, the number of voting power represented by him/her

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shall not exceed 3% of the total number of voting shares of the company, otherwise, the portion of excessive voting power shall not be counted.

Article 13 : (Voting of proposals, Voting monitoring and Voting Counting) Each shareholder shall have one voting power in respect of each share in his/her/its possession; but the shares shall have no voting power under limitation or provided for in Article 179, Paragraph 2 of the Company Act.

When the Company convenes the shareholders’ meeting, the voting power at a shareholders' meeting may be exercised in writing or by way of electronic transmission, provided, however, that the method for exercising the voting power shall be described in the shareholders' meeting notice to be given to the shareholders if the voting power will be exercised in writing or by way of electronic transmission (Company being required to adopt the electronic transmission as method for exercising the voting power according to Paragraph 1, Article 177-1 of the Company Act: The Company shall adopt the electronic transmission as well as in writing as method for exercising the voting power). A shareholder who exercises his/her/its voting power at a shareholders meeting in writing or by way of electronic transmission shall be deemed to have attended the said shareholders' meeting in person, but shall be deemed to have waived his/her/its voting power in respective of any extemporary motion(s) and/or the amendment(s) to the contents of the original proposal(s) at the said shareholders' meeting.

Under the foregoing Paragraph, in case a shareholder elects to exercise his/her/its voting power in writing or by way of electronic transmission, his/her/its declaration of intention shall be served to the company no later than two (2) days prior to the scheduled meeting date of the shareholders' meeting, whereas if two or more declarations of the same intention are served to the company, the first declaration of such intention received shall prevail; unless an explicit statement to revoke the previous declaration is made in the declaration which comes later.

In case a shareholder attends the shareholders' meeting in person, he/she/it shall, at least two (2) day prior to the meeting date of the scheduled shareholders' meeting and in the same manner previously used in exercising his/her/its voting power, serve a separate declaration of intention to rescind his/her/its previous declaration of intention made in exercising the voting power under the preceding Paragraph. In the absence of a timely rescission of the previous declaration of intention, the voting power exercised in writing or by way of electronic transmission shall prevail. In case a shareholder has exercised his/her/its voting power in writing or by way of electronic transmission, and has also authorized a proxy to attend the shareholders' meeting in his/her/its behalf, then the voting power exercised by the authorized proxy for the said shareholder shall prevail.

Resolutions at a shareholders' meeting shall, unless otherwise provided for in Company Act and Articles of Incorporation of the Company, be adopted by a majority vote of the shareholders present, who represent more than one-half of the total number of voting shares. In the process of resolution, the Chairperson or other person designated by the Chairperson shall announce the total number of voting shares of the attending shareholders for each discussion item.

A resolution shall be deemed adopted and shall have the same effect as if it was voted by casting ballot if no objection is voiced after solicitation by the Chairperson. In case of arising objection, shall be adopted by voting method according to the foregoing Paragraph. Except the proposals included in agenda, other proposals or amendments to original proposals or alternative proposals submitted by shareholder shall have support of other shareholders, the number of shares of the proposer together with the supporting person shall reach to 1% of total number of issued voting shares.

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

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

The counting of votes shall be proceeded publicly at the place of shareholders meeting, the result of voting shall be announced at the meeting and placed on record.

Article 14 : The reporting items and non-proposals shall not be put to discussion or resolution. The Chairperson may announce to end the discussion of any resolution and go into voting if the Chairperson deems it appropriate.
Article 15 : (Election Items)

The election of directors and supervisors at the shareholders meeting shall be in accordance with the

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related rules governing the election made by the Company, and shall announce the election results on the spot.

The ballots for the preceding election items shall be sealed and signed by monitoring staff, and shall be kept properly for a minimum period of at least one year. However, if a lawsuit has been instituted by any shareholder in accordance with the provisions of Article 189 of the Company Act, the company shall keep the minutes of the shareholders’ meeting involved until the legal proceedings of the foregoing lawsuit have been concluded.

Article 16 : (Meeting minutes and signing items) Resolutions adopted at a shareholders' meeting shall be recorded in the minutes of the meeting, which shall be affixed with the signature or seal of the chairperson of the meeting and shall be distributed to all shareholders of the company within twenty (20) days after the close of the meeting. The preparation and distribution of the minutes of shareholders' meeting may be effected by means of electronic transmission.

With regard to the Company offering its shares to the public, the distribution of the minutes of shareholders' meeting as required in the preceding Paragraph may be effected by means of a public notice through entering into MOPS.

The minutes of shareholders' meeting shall record the date and place of the meeting, the name of the chairperson, the method of adopting resolutions, and a summary of the essential points of the proceedings and the results of the meeting. The minutes shall be kept persistently throughout the life of the company.

The preceding resolution method, the Chairperson has asked shareholders for their opinion, in case shareholder has no objection on proposal(s), the meeting minutes shall record “pass a resolution without demur after the Chairperson solicits comment from all attending shareholders”. In case a shareholder raises objection to proposal(s), the meeting minutes shall record the voting method, the ratio of the number of voting shares for passing a resolution to issued shares

Article 17 : (To make external announcement) The number of shares solicited by Proxy Solicitor and the number of shares entitled to Proxy Agent; the Company shall, on the date of shareholders meeting, compile a statistical statement according to the statutory form, and shall make an express disclosure of the same at the site of the shareholders meeting.

If a resolution adopted by shareholders meeting is Material Information provided for in laws & regulations, Taiwan Stock Exchange Corporation, the Company shall within statutory time-limit to inputting the information into MOPS.

Article 18 : (To keep order in the Meeting Place) Administrative staff in charge of organizing the shareholders meeting shall wear identification badges. The Chairperson may conduct the disciplinary officers or the security guards to assist in keeping order of the meeting place. Such disciplinary officers or the security guards shall wear “Disciplinary Officers” badges or identification cards.

If the meeting place is equipped with amplifier, the Chairperson may restrain shareholder from speaking when he/she make speech by means of other equipment, which is not equipped by the Company.

When a shareholder violates these Rules and disobeys the Chairperson’s correction, interferes with the proceeding of the meeting and disobeys after being prohibited, the Chairperson may direct disciplinary officers or the security guards to take the person away from the meeting place.

Article 19 : (Intermission, Continuance of Meeting) During the meeting, the Chairperson may, at his/her discretion, set time for intermission. In case of incident of force majeure, the Chairperson may decide to temporarily suspend the meeting and announce, depending on the situation, when the meeting will resume.
Before all discussion items (including extempore motions) listed in the agenda are resolved, if the meeting place cannot be continually used, the shareholders meeting may seek for other place to continue the meeting.

In accordance with Article 182 of the Company Act, the shareholders meeting may resolve to postpone the meeting for not more than, or to reconvene the meeting within, five days.

The Chairperson may conduct the disciplinary officers or the security guards to assist in keeping order of the meeting place. Such disciplinary officers or the security guards shall wears badges marked

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“Disciplinary Officers” for identification purpose.

Article 20 : All matters not fully provided for in these Rules shall be in accordance with the provisions of the Company Act and other related laws and regulations.
Article 21 : The Rules shall be enforced by resolution of shareholders’ meeting; the same shall apply to any amendment hereto.

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Appendix 2

Articles of Incorporation of Innolux Corporation

Chapter I—General Provisions

Article 1 : The Company is organized under the provisions of company limited by shares in accordance with the Company Act and is named "群創光電股份有限公司". The English name of the Company is Innolux Corporation.
Article 2 : The scope of business of the Company shall be as follows: (1) CC01080 Electronic Parts and Components Manufacturing (2) F401010 International Trade
(3) CC01010Electric Power Supply, Electric Transmission and Power Distribution Machinery Manufacturing
(4) CC01090 Batteries Manufacturing
(5) IG03010 Energy Technical Services
(6) CC01030 Electric Appliance and Audiovisual Electric Products Manufacturing
(7) I501010 Product Designing
(8) F401021 Restrained Telecom Radio Frequency Equipments and Materials Import 【1.Wireless launch manager. 2. Wireless Transmitter-Receive. 3. Wireless Receiver. 4. Industrial, scientific and medical irradiation machines. 5 other machines can be used for the manufacture of wireless radiant energy.】
(9) CF01011 Medical Materials and Equipment Manufacturing
(10) C901020 Glass and glass made products manufacturing
(11) C801100 Synthetic Resin & Plastic Manufacturing
(12) C805070 Strengthened Plastic Products Manufacturing
(13) C801990 Other Chemical Materials Manufacturing
(14) ZZ99999 The Company may conduct business other than those specified ones, as long as such business is not prohibited or restricted by laws or regulations.
(No 9 to 13 are limited to done within the Science Park)
【To research, develop, design, manufacture and sell the products as follows:
TFT-LCD panel
LCD module
LTPS TFT-LCD panel and module
OLED panel and module
Touch panel and its parts
LED backlight source
Thin Film Solar Cells, module and system
Wafers, cells and module of Silicon Wafers Solar Cells
Liquid Crystal Display and its system
Mobile Display Module
Color Filter
Low temperature poly-silicon -Si Thin Film Transistors: LTPS TFT LCD
Amorphous silicon: a-Si TFT LCD and system
The import and export trade business in relation to the above-mentioned products.
Article 3 : The headquarter of the Company is located in Shinchu Science-based Industrial Park and the Company may establish branch offices within or outside the territory of the Republic of China pursuant to resolution of board of directors’ meeting and the approval of the competent authority, if necessary.

Chapter II—Shares

Article 4 : The registered capital of the Company shall be one hundred and ten billion (NT$110,000,000,000), divided into eleven billion (11,000,000,000) shares (of which five billion to be reserved for the use of

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employees’ share subscription warrants), and may issue special shares, with a par value of ten New Taiwan Dollars, to authorize Board of Directors at their discretion to issue separately ordinary shares or special shares.

Article4-1 : The rights, obligations and other main issue conditions regarding the issued registered Class A convertible special/preferred shares are as follows:

The dividend rate is 3.8% per annum which shall be calculated based on the actual issue price and will be distributed in cash once a year, and after the ratification of financial statements by annual shareholders’ meeting, the board of directors will set a record date for the distribution of dividend to be entitled in last year. Dividend entitled in issuance year and buyback year shall be calculated and distributed based on the number of actual issue days.
In the year that the Company has earned surplus after it makes payment of taxes, makes up losses, and set aside legal profit reserve and special reserve, the Class A shareholders of Class A convertible special shares shall have preferential right to distribution of special/preferred shares’ dividends for the remaining sum. In addition to the special/preferred shares’ dividends above, the shareholders of special/preferred shares shall not participate in the allocation of other surplus of the Company.
In the years that the Company has no surplus earnings or the surplus earnings is not sufficient for distribution of all dividends to Class A special shares, undistributed and insufficient dividends of such year shall be made up preferentially based on compound interest in the following year in which the Company has surplus earnings, together with the dividends of that year. But upon the expiration of issuance period, the accumulated outstanding dividends of special/preferred shares shall be made up at a time on the expiration of issuance period.
The issuance period of special/preferred shares is three years, at maturity these special/preferred shares will be redeemed in cash at a time based on issue price plus accumulated outstanding dividends. In case when the expiration date comes the Company is unable to redeem all or partial of special/preferred shares due to objective causes or force majeure, the rights attached to unredeemed special/preferred shares shall be still in accordance with issue conditions of this Issuance Rules until the Company completes all redemption, and the dividends will be calculated upon the original dividend rate during the actual extended period.
The shareholders of special/preferred shares may convert their special/preferred shares into ordinary shares with the same number of shares in accordance with “Issuance and Conversion Rules of Class A Registered Convertible Special Shares” determined by the oard of directors at the time of issue. In that current year that special/preferred shares converted, such shareholder shall not be entitled to participate in the allocation of special/preferred shares’ dividends.
This special/preferred shares’ right to allocation of residual assets shall rank before that of ordinary shares, to the extent that dissolution preference shall not exceed the total issuance amount.
The shareholders of special/preferred shares are not entitled to vote or to elect directors, supervisors in a general meeting of shareholders; but such shareholders can be elected as director or supervisor.
When the Company capitalizes its capital reserve derived from cash capital increase of ordinary shares at a premium, the shareholders of special/preferred shares shall not participate in the allocation of such capitalization of capital reserve. But when the Company capitalizes it capital reserve derived from special/preferred shares issued at premium, the shareholders of special/preferred shares may allocate jointly with shareholders of ordinary shares in proportion to their respective shareholding
The board of directors is authorized to determine “Issuance and Conversion Rules of Class A Registered Convertible Special Shares” at the time of actual issuance for governing other related matters.
Article : If the Company proposes to issue employee stock option at a price less than market price, such 4-2 issuance shall be in accordance with “Regulations Governing the Offering and Issuance of Securities by Securities Issuers” and shall be adopted by a resolution of shareholders’ meeting.

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Article : If the Company proposes to transfer the buyback shares to its employees at a price less than average 4-3 price of actual buyback price, such transfer shall be in accordance with related regulations and shall be adopted by a resolution of its latest shareholders’ meeting.
Article 5 : The total amount of investment of the Company shall not be subject to the restrictions of 40% of the amount of its own paid-in capital under Article 13 of the Company Act.
Article 6 : The shares of the Company shall be in registered form, serially numbered, shall be affixed with the signatures or personal seals of three or more directors, and shall be duly certified or authenticated by the competent authority or a certifying institution appointed by the competent authority before issuance thereof. The Company may be exempted from printing any share certificate for the shares issued, but shall appoint a centralized securities custody enterprise/institution to make recordation of the issue of such shares.
Article 7 : The shareholder services of the Company shall be coped with in accordance with “Regulations Governing the Administration of Shareholder Services of Public Companies” proclaimed by the competent authority.

Chapter III: Shareholders’ Meeting

Article 8 : Shareholders' meeting of the Company shall be of the following two kinds: 1. Regular meeting of shareholders: shall be convened within six months after close of each fiscal year
Special meeting of shareholders: to be held when necessary.
Article 9 : The Chairperson of the Company shall act as the chairperson of the shareholders’ meeting. In case the chairperson of the board of directors is on leave or absent or cannot exercise his/her power and authority for any cause, he/she shall designate one of the directors to act on his/her behalf. In the absence of such a designation by the Chairperson, the directors shall elect from among themselves an acting chairperson of the board of directors.
Article 10 : In case a shareholder is unable to attend shareholders’ meeting for any cause, a shareholder may appoint a proxy to attend a shareholders' meeting on his/her/its behalf by executing a power of attorney printed by the company stating therein the scope of power authorized to the proxy. Unless as prescribed in the Company Act, the rules for the shareholder to appoint a proxy to attend the shareholders' meeting shall be in accordance with “Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies”
Article 11 ; Resolutions at a shareholders' meeting shall, unless otherwise provided for in the Company Act, be adopted by a majority vote of the shareholders present, who represent more than one-half of the total number of voting shares.

Chapter IV: Directors, Supervisors and Managerial Personnel

Article 12 : The Company shall have five to seven directors and two to three supervisors for a term of three years. The candidates nomination system is adopted by the Company, the directors and supervisor shall be elected by shareholders’ meeting from the roster of candidates, and he/she may be eligible for re-election. The number of directors and supervisors shall be decided by the board of directors. In the process of electing directors or supervisors at a shareholders' meeting, the number of votes exercisable in respect of one share shall be the same as the number of directors or supervisor to be elected, and the total number of votes per share may be consolidated for election of one candidate or may be split for election of two or more candidates. A candidate to whom the ballots cast represent a prevailing number of votes shall be deemed a director/supervisor elect.
Article : In accordance with Article 14-2 & 183 of Securities and Exchange Act, among of the number of 12-1 directors above, at least two of which shall be independent directors, and not less than one-fifth of the total number of directors. In case a candidates nomination system is adopted, the shareholders’ meeting shall elect the directors from among the nominees listed in the roster of director candidates
Article 13 : The board of directors is organized by directors, having their duties and powers as follows: 1. To compile operating plans
To submit the surplus earning distribution or loss off-setting proposals 3. To submit capital increase or decrease proposal

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		4. To compile the important by-laws and organization rules of the Company 5. The appointment or discharge of general manager and managerial personnel. 6. To approve the execution of the important contracts 7. To check and ratify the purchase and disposal of the important assets of the Company 8. To establish or dissolve branches 9. To compile the budget and final accounting Other authorities under the Company Act or resolutions of shareholders’ meeting. The Company may purchase liability insurance for its directors so as to decrease the risks of accusation against them by shareholders or other related parties arising out of the performance of their duty in conformity with laws and regulations. The paragraph set forth herein shall apply to the supervisors of theCompany.
Article 13-1	:	The remuneration of directors and supervisors shall be determined by the board of directors according to their participation level and contribution value, and shall compare standard of the same industry. However,in no event shall the totalpaymentper month exceed NT$500,000.
Article 13-2	:	In calling a meeting of the board of directors, a notice shall be given to each director and supervisor no later than 7 days prior to the scheduled meeting date in writing, by way of e-mail or facsimile. In the case of emergency,the meetingmaybe convened at anytime.
Article 14	:	The board of directors shall elect a chairperson from among the directors by a majority vote at a meeting attended by over two-thirds of the directors. The chairperson represents the Company externally.
Article 14-1	:	The board of directors may institute a position of vice-chairperson who shall be elected from among the directors bya majorityvote at a meetingattended byover two-thirds of the directors.
Article 15	:	A meeting of board of directors shall, unless otherwise provided for in the Company Act, be convened by the chairperson of the board of directors. Unless otherwise provided for in the Company Act, resolutions of the board of directors shall be adopted by a majority of the directors at a meeting attended bya majorityof the directors.
Article 16	:	The chairperson shall preside the meeting of the board of directors; in case the chairperson of the board of directors is on leave or absent or cannot exercise his/her power and authority for any cause, the chairperson of the board of directors shall designate one of the directors to act on his/her behalf. In the absence of such a designation by the chairperson, the directors shall elect from among themselves an acting chairperson of the board of directors. Each director shall attend the meeting of the board of directors in person, in case a director is unable to attend the meeting of the board of directors for any cause, he/she may appoints another director to attend a meeting of the board of directors in his/her behalf. A director may accept the appointment to act as the proxy referred to in the preceding Paragraph of one other director only. A meeting of the board of directors can be held via visual communication network, and then the directors taking part in such a visual communication meeting shall be deemed to have attended the meetinginperson.
Article 17	:	The duties and powers of supervisors as below: 1. To investigate business and financial situations of the Company 2. To audit accounts, books and documents of the Company 3. To supervise the performance of business of the Company 4. To audit and review the budget and final accounts 5. To audit the surplus earning distribution or loss off-setting proposals 6. Other duties andpowers entitled under the CompanyAct.
Article 18	:	The Company may have managerial personnel, the appointment and discharge and the remuneration of the managerialpersonnel shall be decided in accordance with theprovisions of the CompanyAct.

Chapter V:		Accounting
Article 19	:	The fiscal year of the Company shall be from January 1 to December 31 every year. At the close of each fiscalyear,the Companyshall deal with final accounts.
Article 20	:	In accordance with Article 228 of the Company Act, at the close of each fiscal year, the board of directors of the Company shall prepare the following statements and records and shall forward the same to supervisors for their audit not later than the 30th day prior to the meetingdate of ageneral

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meeting of shareholders, and then the supervisors shall submit reports which shall be forwarded to general meeting of shareholders for ratification:

The operating report
The financial statements; and
The surplus earning distribution or loss off-setting proposals
Article 21 : The annual net profits of final accounts of the Company shall be allocated according to the following orders:
To make up for the loss.
To appropriate 10% of profit as legal reserve.
To make an appropriation of another sum as special reserve or make an reversal of special reserve in accordance with laws and regulations
Dividend for special/preferred shares
Employees’ bonus shall not less than 5%, the scope of employees shall be entitled to dividend & bonus may include the qualified employees of affiliated companies, the board of directors is authorized to determine the related rules.
In accordance with the dividend policy under this Article, paragraph 2, the board of directors will draw up proposal of surplus earnings allocation of which the remuneration of directors and supervisors shall have 0.1%; the rest is shareholders’ dividend.

The Company is an emerging company of growing rapidly, capital intensive business, and is at the stage of stable growth, in order to match up the long-term financial plan of the Company in the future, investment environment and business competition situation, the allocation of dividends shall consider the future capital expenditure budget and capital requirement of the Company, and allocation proposal shall be prepared by the board of director, and then shall be allocated after a resolution adopted by shareholders’ meeting. However, for the allocation of shareholders’ dividends, the stock dividends shall not exceed two-thirds of distributable dividends in that current year.

Article 22 : The allocation of shareholders’ dividends shall be given to shareholders whose name are registered in shareholders’ roster within 5 days prior to the record date fixed for distribution of dividends and bonus.

Chapter VI: Supplementary Provisions

Article 23 : Under the business requirement, the Company may handle external guaranty affairs in accordance with Procedures for Endorsements and Guarantees of the Company.
Article 24 : The organization rules of the Company and procedure guidelines of business operation shall be made separately.
Article 25 : In regard to all matters not provided for in this Articles of Incorporation, the Company Act shall govern.
Article 26 : This Articles of Incorporation was made by all promoters on November 21, 2002. The first amendment was made on March 21, 2003, the second amendment was made on May 19, 2004, the third amendment was made on December 10, 2004, the fourth amendment was made on June 28, 2005, the fifth amendment was made June 16, 2006. The sixth amendment was made on June 13, 2007. The seventh amendment was made on June 13, 2008. The eighth amendment was made on June 19, 2009. The ninth amendment was made on January 6, 2010. The tenth amendment was made on June 29, 2010. The eleventh amendment was made on June 28, 2011. The twelfth amendment was made on June 29, 2012. The thirteenth amendment was made on November 14, 2012.

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Appendix 3 Innolux Corporation

Shareholding Table of All Directors and Supervisors

Details of the minimum shareholding requirements of all directors and supervisors:

The minimum shareholding requirements of all directors and supervisors, and shareholdings recorded on shareholders register by April 21, 2014.

Unit: per share

			Unit:per share
Title	Requisite Number of Shares Held	Number of Shares Recorded in Shareholders Register	Shareholding Ratio
Director	145,750,860	190,112,563	2.09
Supervisor	14,575,086	25,611,545	0.28

Shareholding of All Directors and Supervisors

Base Date: April 21, 2014

Unit: per share

Title	Name	Number of Shares Recorded in Shareholders Register	Shareholding Ratio
Chairman	Hsing-Chien Tuan	16,196,567	0.18％
Director	Hung Yang Venture Capital Ltd. Co., Representative: Chuang Hong Jen	163,989,223	1.80％
Director	Jia Lian Investment Ltd. Co., Representative: Wang,Jyh Chau	9,926,773	0.11％
Independent Director	Chi Hsieh	－	－
Independent Director	Stanley Yuk Lun Yim	－	－
Supervisor	Lin, Ren-Guang	－	－
Supervisor	Chen, Yi-Fang	－	－
Supervisor	I-Chen Investment Ltd. Representative:Te-Tsai Huang	25,611,545	0.28％

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Appendix 4

Impact of instant gratuitous allocation of shares on Company’s operating performance, earning per share, and shareholders return on investment; information relating to employees bonus and remuneration to directors and supervisors:

Impact of instant gratuitous allocation of shares discussed by the shareholders’ meeting on the operating performance and earnings per share of the Company:
The Company will not allocate gratuitous shares in the current year. Therefore this section does not apply.
Information relating to employees bonus and remuneration to directors and supervisors:

The remuneration to directors and supervisors and employees bonus to be distributed proposed by the board of directors of the Company dated March 24, 2014 is set forth below. After the above proposal has been resolved by the June 19, 2014 shareholders meeting, it shall be handled according to the related regulations.

(1). The remuneration to directors and supervisors is at the amount of NT$90,587.
(2). The employees bonus is at the amount of NT$343,921,549.
(3). The total amount of the above renumuneration of the directors and supervisors and the employee bonus has a difference of NT$ 167,791,294 between the estimated listed expenses of the year of 2013. Such difference will be handled by changes in accounting estimate and will be listed as the expense of the year of 2014 after the proposal is passed by the shareholders meeting.

～ 73 ～

AI assistant

INX — AGM Information 2014

52330_rns_2014-07-01_04719fe2-8627-4dee-a462-d6667ca8318d.pdf

InnoLux Corporation

Handbook for 2014 General Shareholders' Meeting

INDEX

INNOLUX CORPORATION

Procedures of 2014 Annual General Shareholders Meeting

INNOLUX CORPORATION

Procedures of 2014 Annual General Shareholders Meeting

Reporting Items

Ratification Items

(Proposed by the Board of Directors)

(Proposed by the Board of Directors)

(Proposed by the Board of Directors)

Discussion Items

(Proposed by the Board of Directors)

(Proposed by the Board of Directors)

(Proposed by the Board of Directors)

(Proposed by the Board of Directors)

Specail Motions

Attachment 1

INNOLUX CORPORATION

2013 Operating Report

1. Business Performance in 2013:

2. Summary of 2014 business plan

(2)Market client strategy:

INNOLUX CORPORATION

Supervisors’ Audit Report

To

Supervisors’ Audit Report

Supervisors’ Audit Report

Attachment 3

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and Stockholders:

Innolux Corporation

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS YEARS ENDED DECEMBER 31

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS YEARS ENDED DECEMBER 31

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and Stockholders:

Innolux Corporation

INNOLUX CORPORATION

PARENT COMPANY ONLY BALANCE SHEETS YEARS ENDED DECEMBER 31

INNOLUX CORPORATION

PARENT COMPANY ONLY BALANCE SHEETS YEARS ENDED DECEMBER 31

INNOLUX CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31

INNOLUX CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

INNOLUX CORPORATION PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31

INNOLUX CORPORATION PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31

Attachment 4

INNOLUX CORPORATION

Table of Losses Offsetting of Year 2012

INNOLUX CORPORATION

Supervisors’ Audit Report

INNOLUX CORPORATION

Supervisors’ Audit Report

INNOLUX CORPORATION

Supervisors’ Audit Report

INNOLUX CORPORATION

Attachment 6

Comparative table for Amendments to

Articles of Incorporation

Attachment 7

Comparative table for Amendments to

Operating Procedure Governing the Acquisition and Disposal of Assets

Appendix 1

Innolux Corporation

Rules of Shareholders’ Meeting

Articles of Incorporation of Innolux Corporation

Chapter I—General Provisions

Chapter II—Shares

INX AGM Information 2014