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KENDA AGM Information 2021

Sep 10, 2021

51972_rns_2021-09-10_79f41d8a-7d7d-43ae-bb1a-5220ddf87ceb.pdf

AGM Information

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�2106

KENDA RUBBER IND.CO.,LTD.

2021 Annual General Shareholders’ Meeting Handbook

Date� June 18, 2021 at 9:30 a.m.

Place�Auditorium, 1F., No.146, Sec.1, Chung Shan Road, Yuanlin, Taiwan

Table of Contents

Table of Contents
I. Meeting Procedure .......................................................................................................... 1
II. Management Presentation (Company Reports) .............................................................. 2
III. Ratifications .................................................................................................................... 4
IV. Discussions ...................................................................................................................... 6
V. Elections ........................................................................................................................ 12
VI. Other Items .................................................................................................................... 13
VII. Questions and Motions ................................................................................................. 14
VIII. Attachments
(I)
Business Report ...................................................................................................... 15
(II)
Audit Committee’s Review Report ........................................................................ 18
(III)
Independent Auditor’s Report and Financial Statements for the Year 2020 .......... 19
IX. Appendices
(I)
Article of Incorporation (before amendment) ........................................................ 40
(II)
Rules of Procedure for Shareholders Meetings (before amendment) .................. 47
(III)
Rules for Election of Directors ............................................................................ 54
(IV)
Shareholding of All Directors ................................................................................ 57

Meeting Procedures for the 2021 Annual Shareholders' Meeting of Kenda Rubber Ind. Co. Ltd.

Time: June 18, 2021 (Friday) at 9:30 am

Place: No. 146, Sec. 1, Chung Shan Rd., Yuanlin City, Changhua County (Auditorium on the ground floor of the Company)

  1. Meeting begins (report the number of shares present).

  2. Call the Meeting to Order.

  3. Chairperson Remarks.

  4. Management Presentation (Company Reports):

  5. (1) The 2020 Business Report

  6. (2) The 2020 Audit Committee’s Review Report for the Year 2020

  7. (3) Employees' and Directors' Remuneration for the Year 2020

  8. (4) Earning Distribution and Cash Dividends Report for the Year 2020

  9. (5) Endorsement and Guarantee

  10. (6) Other items.

  11. Ratifications:

(1) Adoption of the 2020 Business Report and Financial Statements

  • (2) Adoption of the 2020 Earnings Distribution.

  • Discussions

  • (1) Amendment to the Company’s Article of Incorporation.

  • (2) Amendment to the Company’s Rules of Procedures for Shareholders Meetings

  • Elections:

The re-election of directors (including independent directors) of the Company.

  1. Other items:

Release the prohibition on directors from participation in competitive business.

  1. Questions and Motions

  2. Adjournment

~ 1 ~

Management Presentation (Company Reports)

  1. The 2020 Business Report

Explanation: Please refer to pages 15 to 17 of this Handbook for the Business Report.

  1. The 2020 Audit Committee’s Review Report

Explanation: Please refer to page 18 of this Handbook for the Audit Committee Review Report

  1. Employees' and Directors' Remuneration for the Year 2020 Explanation:

  2. In accordance with Article 27-1 of the Company's Articles of Incorporation, the employees' remuneration shall be distributed at a rate of 0.5% to 1% of the profits for the year; the directors' remuneration shall be distributed at a rate not exceeding 3% of the profits for the year.

  3. The total amount of employee remuneration for the year 2020 was NT$11,188,489; the total amount of director remuneration was NT$16,792,546.

  4. The distribution of the remuneration of the employees and the directors shall be made in cash.

  5. Earning Distribution and Cash Dividends Report for the Year 2020

  6. Explanation:

  7. In accordance with Article 27 of the Articles of Incorporation and the resolution of the Board of Directors of the Company on March 25, 2021.

  8. The Company proposes to distribute NT$909,410,000 in cash as a shareholders' dividend from the earnings for the year 2020, with each share being allocated at NT$1.0. Cash dividends are calculated based on the shareholding percentage of the shareholders as recorded in the shareholders' roster on the dividend distribution record date. Cash dividends are distributed up to the dollar amount (rounded up to the nearest dollar). The total fractional amount is recognized as other income to the Company.

  9. The Chairman is hereby authorized to determine the ex-dividend date and the dividend distribution date, and to adjust the allotment amount per share in the event of any subsequent change in the number of outstanding shares due to the repurchase of the Company's shares or the transfer of treasury shares.

5. Endorsement and Guarantee

Note: The balance of the Company's endorsement and guarantee as of December 31, 2020 is NT$6,977,993,000, as shown in the following statement, which is submitted for review in accordance with the Company's endorsement and guarantee regulations.

~ 2 ~

Kenda Rubber Ind. Co., Ltd.

Statement of Endorsement and Guarantee

Party guaranteed Representative:
Name of the Bank		 The commencement and end
date of the endorsement		 Currency Exchange rate Endorsement Amount Endorsement Amount
Foreign
currency
(thousand
dollars)		 New Taiwan
Dollars
STARCO Europe A/S Yang, Chi Jen Bank SinoPac 2020/08/12~2021/06/30 EUR 34.806225 20,000
696,125,000
STARCO Europe A/S Yang, Chi Jen Mega International
Commercial Bank		 2020/08/12~2021/06/30 EUR 34.806225 19,000
661,318,000
STARCO Europe A/S Yang, Chi Jen UNITED
OVERSEAS BANK
LIMITED		 2020/11/11~2021/06/30 EUR 34.806225 15,000
522,093,000
STARCO Europe A/S
STARCO GmbH
STARCO Polska Sp.z o.o
STARCO SAS
STARCO GS AG
STARCO NV
STARCO GB Ltd
STARCO DML Ltd
STARCO Baltic OÜ		 Yang, Chi Jen Citibank 2020/07/01~2021/06/30 USD 28.483000 20,000
569,660,000
American Kenda Rubber Ind. Co.,
Ltd.		 Yang, Chi Jen Shanghai Commercial
Bank		 2020/07/01~2021/06/30 USD 28.483000 6,000
170,898,000
AMERICANA DEVELOPMENT,
INC.		 Yang, Chi Jen Shanghai Commercial
Bank		 2020/07/01~2021/06/30 USD 28.483000 6,000
170,898,000
PT KENDA RUBBER INDONESIA Chen, Chao
Jung		 Citibank 2020/07/01~2021/06/30 USD 28.483000 5,000
142,415,000
PT KENDA RUBBER INDONESIA Chen, Chao
Jung		 CTBC Bank 2020/07/01~2021/06/30 USD 28.483000 10,000
284,830,000
PT KENDA RUBBER INDONESIA Chen, Chao
Jung		 Standard Chartered
Bank Indonesia
Branch		 2020/07/01~2021/06/30 USD 28.483000 5,000
142,415,000
PT KENDA RUBBER INDONESIA Chen, Chao
Jung		 Shanghai Commercial
Bank		 2020/07/01~2021/06/30 USD 28.483000 6,000
170,898,000
PT KENDA RUBBER INDONESIA Chen, Chao
Jung		 UNITED
OVERSEAS BANK
LIMITED		 2020/11/11~2021/06/30 USD 28.483000 5,000
142,415,000
KENDA RUBBER (VIETNAM)
CO., LTD.		 Yang, Ying
Ming		 Mega International
Commercial Bank		 2020/07/01~2021/06/30 USD 28.483000 10,000
284,830,000
KENDA RUBBER (VIETNAM)
CO., LTD.		 Yang, Ying
Ming		 Mizuho Bank, Ltd. Ho
Chi Minh City Branch
2020/07/01~2021/06/30		 USD 28.483000 10,000
284,830,000
KENDA RUBBER (VIETNAM)
CO.,LTD.		 Yang, Ying
Ming		 Taipei Fubon Bank 2020/07/01~2021/06/30 USD 28.483000 5,000
142,415,000
KENDA RUBBER (VIETNAM)
CO.,LTD.		 Yang, Ying
Ming		 CTBC Bank 2020/08/12~2021/06/30 USD 28.483000 18,000
512,694,000
KENDA RUBBER (VIETNAM)
CO.,LTD.		 Yang, Ying
Ming		 Hua Nan Bank 2020/07/01~2021/06/30 USD 28.483000 10,000
284,830,000
KENDA RUBBER (VIETNAM)
CO.,LTD.		 Yang, Ying
Ming		 Citibank N.A., Ho Chi
Minh Branch
2020/07/01~2021/06/30		 USD 28.483000 3,000
85,449,000
KENDA RUBBER (VIETNAM)
CO., LTD.		 Yang, Ying
Ming		 Bank SinoPac
Ho Chi Minh City
Branch		 2020/07/01~2021/06/30 USD 28.483000 10,000
284,830,000
KENDA RUBBER (VIETNAM)
CO., LTD.		 Yang, Ying
Ming		 Standard Chartered
Bank (Vietnam)
Limited – Ho Chi
Minh CityBranch		 2020/07/01~2021/06/30 USD 28.483000 5,000
142,415,000
KENDA RUBBER (VIETNAM)
CO., LTD.		 Yang, Ying
Ming		 Shanghai Commercial
Bank, Vietnam Dong
Nai Branch		 2020/07/01~2021/06/30 USD 28.483000 9,000
256,347,000
KENDA RUBBER (VIETNAM)
CO.,LTD.		 Yang, Ying
Ming		 Cathay United
Bank-Chu Lai Branch		 2020/07/01~2021/06/30 USD 28.483000 9,000
256,347,000
KENDA RUBBER (VIETNAM)
CO.,LTD.		 Yang, Ying
Ming		 Taishin Bank 2020/11/11~2021/06/30 USD 28.483000 10,000
284,830,000
KENDA RUBBER (TIANJIN)
LIMITED		 Yang, Ying
Ming		 Standard Chartered
Bank(China)Limited		 2020/07/01~2021/06/30 USD 28.483000 5,000
142,415,000
KENDA RUBBER (TIANJIN)
LIMITED		 Yang, Ying
Ming		 Bank SinoPac 2020/11/11~2021/06/30 USD 28.483000 6,000
170,898,000
KENDA RUBBER (TIANJIN)
LIMITED		 Yang, Ying
Ming		 Citibank 2020/07/01~2021/06/30 USD 28.483000 6,000
170,898,000
Total EUR 54,000
6,977,993,000
USD 179,000
  1. Other items: None.

~ 3 ~

Ratifications

Item 1: Proposed by the Board of Directors

Proposal: Adoption of the 2020 Business Report and Financial Statements Explanation:

  1. The Company's financial statements for the year 2020 have been audited by Deloitte & Touche Tohmatsu and an audit report has been issued accordingly. A copy of the audit report, together with the business report, is submitted to the Audit Committee for review and the review report is issued.

  2. Please refer to pages 15 to 17 and pages 19 to 39 of this Handbook for the 2020 Business Report and Financial Statements.

Resolution:

Item 2: Proposed by the Board of Directors

Proposal: Adoption of the 2020 Earnings Distribution.

Explanation:

  1. In accordance with the Company's Articles of Incorporation, the proposed distribution of the Company's 2020 earnings is as follows: The undistributed earnings at the beginning of the period was NT$6,125,575,016, less the remeasurement of the defined benefit plan recognized in retained earnings of NT$24,546,008, plus net income after tax of NT$972,224,651 for 2020, and after setting aside a legal reserve of NT$94,767,864 and a special reserve of NT$270,947,315, the distributable earnings is NT$6,707,538,480. In accordance with the Company's Articles of Incorporation, the Board of Directors resolved to distribute cash dividends in the amount of NT$909,410,000, at NT$1.0 for each share.

  2. The preceding earnings shall be distributed with first priority to the 2020 earnings followed by the previous year's undistributed earnings if there is a shortfall.

  3. Please refer to the following page for the Company's "Earnings Distribution Table".

Resolution:

~ 4 ~

Kenda Rubber Ind. Co., Ltd.

Earnings Distribution Table for the Year 2020 Unit: NTD

Earnings Distribution Table for the Ye ar 2020Unit: NTD
Unappropriated retained earnings at the beginning of the period
Net profit after tax for the period
The remeasurement of defined benefit plans recognized in retained
earnings
Net profit after tax plus items excluded from net profit after tax for the period
Unappropriated earnings of the year
Less: Legal reserve (10%)
Less: Special reserve(Note)		 $ 6,125,575,016
972,224,651
(24,546,008)
947,678,643
( 94,767,864)
(270,947,315)
Distributable netprofit for theperiod 6,707,538,480
Distributable items:
Cash Dividend for shareholders’ bonus (at 1.0 per share)
Stock Dividend for shareholders’ bonus		 909,410,000
0
Unappropriated retained earnings $ 5,798,128,480

Note: Special reserve is recognized in accordance with Jin-Guan-Zheng-Fa-Zi No. 1010012865.

Chairman: Yang, Chi Jen Managers: Chen, Chao Jung Accounting Supervisor: Liu, Kuei Chun

~ 5 ~

Discussions

Item 1: Proposed by the Board of Directors

Proposal: Amendment to the Company’s Article of Incorporation. Please proceed to resolve. Explanation:

  1. Amend the items corresponding to the business codes listed in Article 2 of the Company's Articles of Incorporation.

  2. In order to reasonably distribute the profits and motivate the employees, the Company proposes to amend the

proportion of "Employees' Remuneration" in Article 27-1 of the Company's Articles of Incorporation.

  1. Table Comparison of the Amendment to the Articles of Incorporation is as follow:
Article Content of Article before Amendment Content of Article after Amendment Description
Article 2 The business scope of the Company is
as follows:
1.
C804010 Tyres Manufacturing
2.
CD01050 Bicycles and Parts
Manufacturing
3.
C805070 Reinforced Plastic
Products Manufacturing
4.
CB01010 Mechanical Equipment
Manufacturing
The following is omitted.		 The business scope of the Company is
as follows:
1.
C804010 Tyres Manufacturing
2.
CD01050 Bicycles and Parts
Manufacturing
3.
C805070 Reinforced Plastic
Products Manufacturing
4.
CB01010 Mechanical Equipment
Manufacturing
The following is omitted.		 Revised
Business
Items
Article 27-1 The Company shall distribute
remuneration to its employees at a rate
of 0.5% to 1% of the profit for the year.
Item 2 to item 6 are omitted.		 The Company shall distribute
remuneration to its employeesnot less
than 0.5 %of the profit for the year.
Item 2 to item 6 are omitted.		 To encourage
the
company's
employees
and to boost
up their
motivation.
Article 30 These Articles of Incorporation were
established on March 1, 1962; the 48th
amendment was made on June 16, 2020;
these Articles of Incorporation shall be
effective on the date of adoption by the
shareholders' meeting.		 These Articles of Incorporation were
established on March 1, 1962; the 49th
amendment will be made on June 18,
2021; these Articles of Incorporation
shall be effective on the date of
adoption by the shareholders' meeting.		 The
amendment is
made to
Date and
Times.

Resolution:

Item 2: Proposed by the Board of Directors

Proposal: Amendment to the Company’s Rules of Procedures for Shareholders Meeting. Please proceed to resolve. Explanation:

  1. In line with the amendments to Articles 172 and 172-1 of the Company Act and the full adoption of electronic voting and the implementation of the vote casting on each separate proposals, certain clauses of the "Rules of Procedure for Shareholders’ Meeting" of the Company are amended.

  2. Table of Comparison of amendment to the Company’s Rules of Procedures for Shareholders Meetings.

~ 6 ~

Article Content of Article before Amendment Content of Article after Amendment Description
Article 3 Item 1 to Item 3 are omitted.
The matters set forth in Article 172 of
the Company Act, Article 26-1 of the
Securities and Exchange Act and Article
43-6 of the Company Act shall be
enumerated and explained in the notice
to convene the shareholders meeting,
and shall not be raised as extemporary
motions;in addition, the main contents
of Article 172 of the Company Act may
be may be posted on the website
designated by the competent authority in
charge of securities affairs or the
Company, and such website shall be
indicated in the above notice.
None
A shareholder holding one percent or
more of the total number of issued
shares may submit to the Company a
proposal in writingfor discussion at a
regular shareholders meeting. The
number of items soproposedis limited		 Item 1 to Item 3 are omitted.
Election or dismissal of directors,
amendments to the articles of
incorporation, reduction of capital,
application for the approval of ceasing
its status as a public company, approval
of competing with the company by
directors, surplus profit distributed in
the form of new shares, reserve
distributed in the form of new shares,
the dissolution, merger, or demerger of
the corporation, or any matter under
Article 185, paragraph 1 of the
Company Act, Articles 26-1 and 43-6 of
the Securities and Exchange Act,
Articles 56-1 and 60-2 of the
Regulations Governing the Offering and
Issuance of Securities by Securities
Issuers shall be set out and the essential
contents explained in the notice of the
reasons for convening the shareholders
meeting. None of the above matters may
be raised by an extraordinary motion.
Where re-election of all directors as
well as their inauguration date is stated
in the notice of the reasons for
convening the shareholders meeting,
after the completion of the re-election in
said meeting such inauguration date
may not be altered by any extraordinary
motion or otherwise in the same
meeting.
Shareholder(s) holding one percent
(1%) or more of the total number of
outstanding shares of a company may
propose to the company a proposal for
discussion at a regular shareholders’
meeting, provided that onlyone matter		 Amendments are
made in line with
the law.

~ 7 ~

Article

Content of Article before Amendment to one only, and no proposal containing more than one item will be included in the meeting agenda. In addition, if a shareholder proposes one of the circumstances described in paragraph 4 of Article 172-1 of the Act, the board of directors may exclude it from the agenda.

Prior to the book closure date before a regular shareholders meeting is held, the Company shall publicly announce its acceptance of shareholder proposals, and the location and time period for their submission; the period for submission of shareholder proposals may not be less than 10 days.

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 meeting agenda. The shareholder who has submitted a proposal shall attend, in person or by a

Content of Article after Amendment Description 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 addition, if a shareholder proposes one of the circumstances described in paragraph 4 of Article 172-1 of the Act, the board of directors may exclude it from the agenda. A shareholder may propose a recommendation for urging the corporation to promote public interests or fulfill its social responsibilities, provided procedurally the number of items so proposed is limited only to one in accordance with Article 172-1 of the Company Act, and no proposal containing more than one item will be included in the meeting agenda. 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 acceptance of proposal in writing or by way of electronic transmission, 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 meeting agenda. The shareholder who has submitted a proposal shall attend, in person or by a proxy, the regular shareholders’ meeting

~ 8 ~

Article Content of Article before Amendment Content of Article after Amendment Description
proxy, the regular shareholders’ meeting
whereat his 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
proposal 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.		 whereat his 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
proposal 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 9 Item 1 is omitted.
The chair shall call the meeting to order
at the appointed meeting time. However,
when the attending shareholders do not
represent a majority of the total number
of issued shares, the chair may announce
a postponement, provided that no more
than two such postponements, for a
combined total of no more than one
hour, may be made. If the quorum is
not met after two postponements and the
attending shareholders still represent
less than one third of the total number of
issued shares, the chair shall declare the
meeting adjourned.
Below is (omitted).		 Item 1 is omitted.
The chair shall call the meeting to order
at the scheduled meeting time.Also, the
information of the shares with voting
rights and without rights should be
announced at the same time.However,
the chair may have the meeting
postponed if the attending shareholders
do not represent more than half of the
total shares issued. The meeting
postponement is limited to 2 times for a
total of less than 1 hour. If the quorum is
not met after two postponements and the
attending shareholders still represent
less than one third of the total number of
issued shares, the chair shall declare the
meeting adjourned.
Below is(omitted).		 Amendments are
made in line with
the law.

~ 9 ~

Article Content of Article before Amendment Content of Article after Amendment Description
Article 10 If a shareholders’ meeting is called by
the board of directors, the proceedings
of the meeting shall be formulated by
the board of directors, and the meeting
shall be proceeded with in accordance
with the said proceedings.
The proceedings shall not be changed
without a resolution made by the
shareholders meeting.
Below is(omitted).		 If a shareholders’ meeting is convened
by the board of directors, the meeting
agenda shall be set by the board of
directors. Votes shall be cast on each
separate proposal in the agenda
(including extraordinary motions and
amendments to the original proposals
set out in the agenda).The meeting shall
proceed in the order set by the agenda,
which may not be changed without a
resolution of the shareholders meeting.
Below is (omitted).		 Amendments are
made in line with
the law.
Article 13 Item 1 is omitted.
When the Company holds a
shareholder meeting,electronic means
shall be included as one of the means of
exercising the right to vote. When
voting right is exercised by electronic
means,the method of exercise shall be
specified in the shareholders meeting
notice. A shareholder exercising voting
rights by electronic means will be
deemed to have attended the meeting in
person but to have waived his/her rights
with respect to the extraordinary
motions and amendments to original
proposals of that meeting; it is therefore
advisable that the Company avoid the
submission of extraordinary motions and
amendments to original proposals.
Below is(omitted).		 Item 1 is omitted.
When the Company holds a shareholder
meeting, it shalladopt exercise of
voting rights by electronic means and
may adopt exercise of voting rights by
correspondence. When voting rights are
exercised by correspondence or
electronic means, the method of
exercise shall be specified in the
shareholders meeting notice. A
shareholder exercising voting rights by
correspondence or electronic meanswill
be deemed to have attended the meeting
in person but to have waived his/her
rights with respect to the extraordinary
motions and amendments to original
proposals of that meeting; it is therefore
advisable that the Company avoid the
submission of extraordinary motions
and amendments to original proposals.
Below is(omitted).		 Amendments are
made in line with
the law.
Article 14 The election of directors or supervisors
at a shareholders meeting shall be held
in accordance with the applicable
election and appointment rules adopted
by the Company, and the voting results
shall be announced on-site immediately.		 The election of directors at a
shareholders meeting shall be held in
accordance with the applicable election
and appointment rules adopted by the
Company, and the voting results shall
be announced on-site immediately,		 Amendments are
made in line with
the law.

~ 10 ~

Article Content of Article before Amendment Content of Article after Amendment Description
Item 2 is omitted. including the names of those elected as
directors and the numbers of votes with
which they were elected.
Item 2 is omitted.
Article 15 Item 1 to Item 2 are omitted.
The meeting minutes shall accurately
record the year, month, day, and place of
the meeting, the chair's full name, the
methods by which resolutions were
adopted, and a summary of the
deliberations and their voting results.
The minutes shall be retained for the
duration of the existence of the
Company.		 Item 1 to Item 2 are omitted.
The meeting minutes shall accurately
record the year, month, day, and place
of the meeting, the chair's full name, the
methods by which resolutions were
adopted, and a summary of the
deliberations and their voting results
(including the number of voting rights),
anddisclose the number of voting rights
won by the candidates in the event of an
election of directors. The minutes shall
be retained for the duration of the
existence of the Company.		 Amendments are
made in line with
the law.

Resolution:

~ 11 ~

Elections

Item 1: Proposed by the Board of Directors

Proposal: The company’s directors (including independent directors) are to be re-elected after their term of office expires; therefore, it is proposed to re-elected.

Explanation:

  1. The term of office of the 19th Director of the Company will be expired on 10 June 2021 and it is proposed to be re-elected at the Annual General Meeting of Shareholders in 2021.

  2. In accordance with the Company's Articles of Incorporation, 11 directors (including three independent directors) shall be re-elected for a term of three years from 18 June 2021 to 17 June 2024 and shall be eligible for re-election.

  3. The Company shall adopt a candidate nomination system for the election of Directors, and the Shareholders' Meeting shall elect the candidates from the candidates' lists of Directors.

The election of independent directors and non-independent directors will be held together. The number of independent directors and non-independent directors elected shall be calculated separately.

  1. The list of candidates for Directors (including independent Directors) was approved by the Board of

Directors of the Company and the relevant information is as follows:

Serial
No.
Name		 Number of
shares held		 Education Work experience Nominated
by Category
1 Yang, Ying Ming
65,555,015		 Syracuse University (New
York), USA
Master of Chemical
Engineering		 Kenda Rubber Ind., Co., Ltd.
President and Chairman		 Director
2 Yang, Chi Jen 91,622,924 City University of New York
MBA		 Kenda Rubber Ind., Co., Ltd.
President and Vice President		 Director
3 Yang, Shin Nan 16,007,518 State University of New York
at Stony Brook, PhD in
Physics		 Professor, Department of Physics, National
Taiwan University		 Director
4 Chang, Hong
Der		 7,661,040 Cornell University
PhD in Mechanical Engineering		 Kenda Rubber Ind., Co., Ltd.
President		 Director
5 Sz Ruei
Investment Co.,
Ltd.		 7,268,753 - - Director
6 Yang, Chia Ling
28,668,065		 School of Pharmacy, China
Medical University		 Kenlight Trading Corp.
President		 Director
7 Lin Tsung Yi 10,413,403 Graduate Institute of
Communication Engineering,
National Taiwan University		 OBERLIN TECH. CO., LTD.
Chairman		 Director
8 Kenjou Co., Ltd.
66,002		 - Kenda Rubber Ind., Co., Ltd.
Director		 Director
9 Hsieh,Chun-Mou - Department of Chemistry,
National Cheng Kung
University		 Kenda Rubber Ind., Co., Ltd.
Vice President		 Independent
Director
10 Su, Ching Yang - National Cheng Kung
University
Department of Mechanical
Engineering		 China Motor Corporation
President		 Independent
Director
11 Cho, Shih-Chao - University of Louisville
MBA		 Director, Bureau of Foreign Trade;
Administrative Vice Minister; Political
Vice Minister of the Ministry of Economic
Affairs		 Independent
Director
  1. Please refer to pages 54 to 56 of this Handbook for the rules for election of Directors.

Voting Results:

~ 12 ~

Other items

Item 1: Proposed by the Board of Directors

Proposal: Release the prohibition on directors from participation in competitive business.

Explanation:

  1. In accordance with the provisions of Article 209 of the Company Act which states that “A director who does anything for himself or on behalf of another person that is within the scope of the company's business, shall explain to the meeting of shareholders the essential contents of such an act and secure its approval”.

  2. If the 20th term of directors elected in the company’s 2021 regular shareholders meeting have any non-compete act prohibited by Article 209 of the Company Act, under the precondition of not jeopardizing the company’s best interests, they may propose to the shareholders meeting to have the prohibition on directors from participation in competitive business released.

  3. The contents of releasing the prohibition on directors from participation in competitive business are as follows.

Candidate Name Company Title
Director Yang, Ying
Ming		 KENDA RUBBER(CHINA)CO.,LTD. Chairman
KENDA RUBBER(SHENZHEN)CO.,LTD. Chairman
KENDA RUBBER(TIANJIN)LIMITED Chairman
KENDA RUBBER(HK)CO.,LTD. Chairman
KENDA GLOBAL HOLDING(CHINA)CO.,LTD. Chairman
KENDA RUBBER(VIETNAM)CO.,LTD. Chairman
KENDA INTERNATIONAL CORPORATION Chairman
KENDA GLOBAL INVESTMENT CORPORATION Chairman
KENDA GLOBAL HOLDING CO.,LTD. Chairman
STARCO EUROPE A/S Director
KENJOU IND. CO.,LTD. Chairman
Director Yang, Chi
Jen		 KENDA RUBBER(CHINA)CO.,LTD. Director
KENDA RUBBER(SHENZHEN)CO.,LTD. Director
KENDA RUBBER(TIANJIN)LIMITED Director
KENDA GLOBAL HOLDING(CHINA)CO.,LTD. Director
KENDA RUBBER(VIETNAM)CO.,LTD. Director
AMERICAN KENDA RUBBER IND. CO.,LTD. Chairman
AMERICANA DEVELOPMENT,INC. Chairman
KENDA Rubber Industrial Co,Europe GmbH Chairman
KENDA INTERNATIONAL CORPORATION Director
KENDA GLOBAL HOLDING CO.,LTD. Director
STARCO EUROPE A/S Chairman
KENJOU IND. CO.,LTD. Director
Director Chang,
Hong Der		 KENDA RUBBER(CHINA)CO.,LTD. Director
KENDA RUBBER(VIETNAM)CO.,LTD. Director
KENJOU IND. CO.,LTD. Director
Director Yang, Chia
Ling		 KENLIGHT TRADING CORP. Director and
President

Resolution:

~ 13 ~

Questions and Motions

Adjournment

~ 14 ~

[Attachment 1]

Business Report

In 2020, the COVID-19 pandemic changed the supply chain as well as transition of economy and trade in this world. In addition, the U.S. Department of Commerce imposed a high anti-dumping duty on Taiwan tires sold to the U.S., which severely affected the competitiveness of Taiwan’s tire manufacturers in the U.S. market. In response to market changes, the Company shifted the tires for passenger cars and light trucks exported from the factory in Taiwan to the United States to be produced in Vietnam and then sold to the United States, in order to avoid the risk of being subject to high anti-dumping duties. As for the car and light truck tires produced by Taiwanese manufacturers, we have switched the focus on the "non-US markets", including Europe, the Middle East and Asia to reduce such impacts. Despite a 5.8% decline in revenue in 2020 compared to 2019, the newly developed car and SUV tires at the US R&D centre won the IDA International Design Award and were well received after their launch into the market; thus, their market share was among the top 10 in the market and, together with higher selling prices, so the profitability grew and the operating performance was better than that of the industry.

Looking ahead to the coming year, given the impacts arising from the trade war between the US and China, the COVID-19 pandemic, exchange rate fluctuations, raw material price increases and industry supply chain restructuring, the Company continues to invest in expanding the production scale in Phase III of Vietnam Plant 2 and expanding the production capacity of Indonesia Plant in order to provide timely supply to meet the increasing orders from car and bicycle tire buyers when container and shipping logistics gradually return to normal. We expect the Group's turnover will grow rapidly. In response to the COVID-19 pandemic, we have strengthened the occupational safety and health management to ensure workplace safety, and continued to promote the Productivity 4.0 smart manufacturing and MES production monitoring system to ensure the quality and increase the production capacity. Our global R&D headquarters was opened in 2020; it will expand the Group's R&D team, integrate the resources from the US and European R&D centers, and take advantage of the industry-government-university cooperation to enhance the overall R&D capacity and launch more tires with high cost performance. In addition, the Shenzhen plant's urbanization development project has been successfully launched, the benefits of which will be highly beneficial to the company's overall operating performance, thereby fulfilling the expectations of shareholders.

~ 15 ~

The 2020 Business Report

(1) Results of the 2020 Business Plan Implementation

1. Production and Sales:

In thousand units; %

Year
Product		 Production in
2020		 Sales in 2020 Sales in 2019 Percentage of
increase/decrease
(%)
Bicycle tires 44,519 43,153 41,750 3.36
Tires for motorbikes and other
bias tires		 29,629 34,597 40,433 -14.43
Radial tires 7,411 5,878 6,387 -7.97
Inner tube 81,818 80,229 78,802 1.81

2. Operational Status:

Consolidated Unit: NTD Thousand; %

Year
Item		 2020 2019 Percentage of
increase/decrease
(%)
Net operating income 30,260,185 32,127,436 -5.81%
Operating cost 22,910,212 25,570,683 -10.40%
Operating expenses 4,876,452 5,302,222 -8.03%
Profit from operations 1,535,939 1,254,531 22.43%
Profit after tax 972,225 1,013,559 -4.08%

Standalone Unit: NTD Thousand; %

Year
Item		 2020 2019 Percentage of
increase/decrease
(%)
Net operating income 5,946,286 5,947,113 -0.01%
Operating cost 3,993,110 4,360,674 -8.43%
Operating expenses 1,185,245 1,172,746 1.07%
Profit from operations 744,618 386,582 92.62%
Profit after tax 972,225 1,013,562 -4.08%

(2) Budget implementation

The Company's actual revenues for the year 2020 were NT$30.26 billion, representing an achievement of 81.34% compared to the forecasted target of NT$37.2 billion for the year 2020.

~ 16 ~

(3) Analysis of receipts, expenditures, and profitability

Consolidated

Unit: NTD Thousand

Item Year 2020 2019 Increase (decrease) %
Receipts
and
expenditures		 Operating income 30,260,185 32,127,436
-5.81%
Gross profit 7,349,973 6,556,753
12.10%
Profit after tax 972,225 1,013,559
-4.08%
Profitability
(%)
Analysis		 Ratio of Return on Total Assets (%) 2.69 2.98 -7.38%

Ratio of Return on Equity (%)		 5.13 5.36 -4.29%
Ratio of income before tax to paid-in
capital(%)		 14.20 14.35 -1.05%
Profit ratio (%) 3.21 3.15 1.90%
Earnings per share (NT$) 1.07 1.16 -7.76%

Standalone Unit: NTD Thousand

Item Year 2020 2019 Increase (decrease) %
Receipts
and
expenditures		 Operating income 5,946,286 5,947,113 -0.01%
Gross profit 1,929,863 1,559,328 23.76%
Profit after tax 972,225 1,013,562 -4.08%
Profitability
(%)
Analysis		 Ratio of Return on Total Assets (%) 3.19 3.37 -5.48%

Ratio of Return on Equity (%)		 5.13 5.36 -4.26%
Ratio of income before tax to paid-in
capital(%)		 12.92 12.36 4.53%
Profit ratio (%) 16.35 17.04 -4.05%
Earnings per share (NT$) 1.07 1.16 -7.76%

Chairman: Yang, Chi Jen Manager: Chen, Chao Jung Accounting Supervisor: Liu, Kuei Chun

~ 17 ~

[Attachment 2]

Audit Committee’s Audit Report

The Board of Directors has prepared and submitted the Company's 2020 annual business report, financial statements and profit distribution proposal. The financial statements have been audited and attested by CPA Wang, Yi-Wen and CPA Tseng, Tung-Yun from Deloitte Taiwan. An Independent’s audit report has been issued. The above-mentioned business report, financial statements and proposal for earnings distribution have been audited by the Audit Committee and found to be in order; therefore, we hereby report the above in accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act for your review.

To

The 2021 Regular Shareholders Meeting

Kenda Rubber Ind. Co., Ltd.

Convener of the Audit Committee: HSIEH, CHUN-MOU

March 25, 2021

~ 18 ~

[Attachment 3]

KENDA RUBBER IND. CO., LTD.

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

The entities that are required to be included in the combined financial statements of Kenda Rubber Ind. Co., Ltd. as of and for the year ended December 31, 2020, under the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” are the same as those included in the consolidated financial statements prepared in conformity with the International Financial Reporting Standard No. 10, “Consolidated Financial Statements.” In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, Kenda Rubber Ind. Co., Ltd. and subsidiaries do not prepare a separate set of combined financial statements.

Very truly yours,

KENDA RUBBER IND. CO., LTD.

By

YANG CHI JEN March 25, 2021

==> picture [137 x 51] intentionally omitted <==

~ 19 ~

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Kenda Rubber Ind. Co., Ltd.

Opinion

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

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2020 and 2019, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2020. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

~ 20 ~

The key audit matter of the Group’s consolidated financial statements for the year ended December 31, 2020 is stated as follows:

Appropriateness of the Revenue Cutoff

The Group has worldwide sales network, and the terms of sales are different by customer or geography. Revenue is recognized when performance obligations are satisfied by the transfer of the promised goods to customers but the timing of the transfer may be based on the time of actual delivery or on the time of actual receipt of the goods. The Group’s revenue recognition process involves manual inspection of relevant documents, or an estimate of arrival time of the goods shipped to customers based on historical experience to determine the timing of the transfer of control of the promised goods to customers. Therefore, mistakes may occur in the evaluation process, and revenue could be recorded in the incorrect reporting period.

The main audit procedures that we performed in respect of the cutoff of revenue recognition included the following:

  1. We obtained an understanding of and reviewed the sales contracts and the terms between the Group and its customers to identify the appropriate point of revenue recognition.

  2. We obtained an understanding of and evaluated the process and related controls over revenue recognition.

  3. We performed cutoff testing procedures covering a certain period before and after the balance sheet date and examined relevant supporting documents. We determined that revenue was recognized in the correct reporting period, as evidenced by sales terms.

Other Matter

We have also audited the parent company only financial statements of Kenda Rubber Ind. Co., Ltd. as of and for the years ended December 31, 2020 and 2019, on which we have issued an unmodified opinion.

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

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRS, IAS, IFRIC, and SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

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

~ 21 ~

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

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

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

  1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

  2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

  3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

  4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.

  5. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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

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

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

~ 22 ~

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2020, and are therefore the key audit matters. We describe the matter in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audits resulting in this independent auditors’ report are Yi-Wen Wang and Done-Yuin Tseng.

Deloitte & Touche Taipei, Taiwan Republic of China

March 25, 2021

Notice to Readers

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

For the convenience of readers, the independent auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and consolidated financial statements shall prevail.

~ 23 ~

KENDA RUBBER IND. CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(In Thousands of New Taiwan Dollars)

ASSETS
CURRENT ASSETS
Cash and cash equivalents (Note 6)
Financial assets at fair value through profit or loss - current (Note 23)
Notes receivable, net (Notes 8 and 24)
Accounts receivable, net (Notes 8, 24 and 25)
Inventories (Notes 9 and 25)
Prepayments
Other financial assets - current (Notes 10 and 25)
Other current assets
Total current assets
NON-CURRENT ASSETS
Financial assets at fair value through other comprehensive income - non-current (Notes 7 and 23)
Investments accounted for using the equity method
Property, plant and equipment (Notes 12 and 25)
Right-of-use assets (Note 13)
Investment properties (Note 14)
Intangible assets (Note 25)
Deferred tax assets (Note 20)
Other non-current assets (Notes 10 and 12)
Total non-current assets
TOTAL
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term borrowings (Note 15)
Contract liabilities - current (Note 18)
Notes payable
Accounts payable (Note 24)
Lease liabilities - current (Note 13)
Other payables (Note 24)
Current tax liabilities
Current portion of long-term borrowings (Note 14)
Other current liabilities (Note 18)
Total current liabilities
NON-CURRENT LIABILITIES
Long-term borrowings (Note 15)
Deferred tax liabilities (Note 20)
Lease liabilities - non-current (Note 13)
Net defined benefit liabilities (Note 16)
Other non-current liabilities (Note 26)
Total non-current liabilities
Total liabilities
EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY (Note 17)
Share capital
Capital surplus
Retained earnings
Legal reserve
Special reserve
Unappropriated earnings
Total retained earnings
Other equity
Equity attributable to shareholders of the parent
NON-CONTROLLING INTERESTS
Total equity
TOTAL		 2020 2019






Amount
%
$ 8,485,408
20
973
-
430,967
1
3,413,863
8
7,689,491
18
409,003
1
1,840,620
4

302,148

1
22,572,473
53
578,419
1
102,320
-
14,543,978
34
1,534,070
4
29,186
-
60,826
-
613,084
2

2,355,683

6
19,817,566
47
$ 42,390,039
100
$ 2,399,948
6
273,652
1
41,116
-
2,725,960
7
88,484
-
1,695,073
4
167,673
-
2,517,453
6
129,160
-
10,038,519
24
11,844,336
28
316,927
1
363,273
1
254,583
-
462,674
1
13,241,793
31
23,280,312
55
9,094,100
22
41
-
3,213,262
7
1,330,054
3
7,073,254
17
11,616,570
27
(1,601,002)
(4)
19,109,709
45
18
-
19,109,727
45
$ 42,390,039
100





Amount
%
$ 7,626,509
18
1,019
-
315,758
1
3,372,114
8
7,930,788
19
512,559
1
3,178,117
8

203,492

-
23,140,356
55
515,415
1
72,690
-
14,246,939
34
1,737,558
4
-
-
74,095
-
441,892
1

1,790,840

5
18,879,429
45
$ 42,019,785
100
$ 2,372,653
6
220,603
1
159,852
-
2,556,061
6
98,239
-
1,586,122
4
72,891
-
1,291,805
3
115,550

-
8,473,776
20
13,061,895
31
547,324
1
452,527
1
251,574
1
449,921

1
14,763,241
35
23,237,017
55
8,744,300
21
41

-
3,113,042
8
968,955
2
7,286,466
17
11,368,463
27
(1,330,054)

(3)
18,782,750
45
18

-
18,782,768
45
$ 42,019,785
100

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

~ 24 ~

KENDA RUBBER IND. CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

NET REVENUE (Notes 18 and 24)
COST OF REVENUE (Notes 9, 19 and 24)
GROSS PROFIT
OPERATING EXPENSES (Notes 19 and 24)
Selling and marketing expenses
General and administrative expenses
Research and development expenses
Expected credit loss (Note 8)
Total operating expenses
OTHER OPERATING INCOME AND EXPENSES
(Note 19)
INCOME FROM OPERATIONS
NON-OPERATING INCOME AND EXPENSES
(Notes 19 and 24)
Interest income
Other income
Other gains and losses
Finance costs
Share of profit of associates
Total non-operating income and expenses
PROFIT BEFORE INCOME TAX
INCOME TAX EXPENSE (Note 20)
NET PROFIT FOR THE YEAR		 2020
Amount
%
$ 30,260,185
100
22,910,212
76

7,349,973
24

2,304,290
8
1,216,493
4
1,326,430
4

29,239

-


4,876,452
16


(937,582)
(3)

1,535,939

5

108,171
-
250,339
1
(363,884)
(1)
(241,442)
(1)

2,340

-


(244,476)
(1)

1,291,463
4
(319,238)
(1)

972,225

3
 2019




























Amount
%
$ 32,127,436
100

25,570,683
80

6,556,753
20

2,534,489
8

1,356,141
4

1,403,681
4

7,911

-

5,302,222
16

-

-

1,254,531

4

162,833
-

246,543
1

(18,993)
-

(281,907)
(1)

3,971

-

112,447

-

1,366,978
4

(353,419)
(1)

1,013,559

3
(Continued)

~ 25 ~

KENDA RUBBER IND. CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OTHER COMPREHENSIVE INCOME (LOSS)
(Notes 16 and 20)
Items that will not be reclassified subsequently to
profit or loss:
Remeasurement of defined benefit plans
Unrealized gain on investments in equity
instruments at fair value through other
comprehensive income
Income tax related to items that will not be
reclassified subsequently to profit or loss
Items that may be reclassified subsequently to profit
or loss:
Exchange differences on translation of the
financial statements of foreign operations
Income tax related to items that may be
reclassified subsequently to profit or loss
Other comprehensive loss for the year, net of
income tax
TOTAL COMPREHENSIVE INCOME FOR THE
YEAR
NET INCOME (LOSS) ATTRIBUTABLE TO:
Shareholders of the Company
Non-controlling interests
TOTAL COMPREHENSIVE INCOME (LOSS)
ATTRIBUTABLE TO:
Shareholders of the Company
Non-controlling interests
EARNINGS PER SHARE (Note 21)
Basic
Diluted		 2020
Amount
%
$ (29,832)
-
73,938
-
5,286
-
(431,107)
(1)

86,221

-

(295,494)
(1)

$ 676,731

2

$ 972,225
3

-

-

$ 972,225

3

$ 676,731
2
-

-

$ 676,731

2

$ 1.07
$ 1.07		 2019


















Amount
%
$ (13,769)
-

243,902
1

2,407
-

(756,251)
(2)

151,250

-

(372,461)
(1)
$ 641,098

2
$ 1,013,562
3

(3)

-
$ 1,013,559

3
$ 641,101
2

(3)

-
$ 641,098

2
$ 1.11
$ 1.11
$
$
$
$ $
$ $


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

(Concluded)

~ 26 ~

Total Equity $ 19,016,100 - - (874,430) 1,013,559 (372,461) (372,461) 641,098 641,098 18,782,768 - - (349,772) - 972,225 (295,494) (295,494) 676,731 676,731 $ 19,109,727 $ 19,109,727
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Dividends Per Share) Equity Attributable to Shareholders of theParent Other Equity Unrealized Exchange
Valuation Gain		 Differences on
on Financial		 Translation of
Assets at Fair		 the Financial
Value Through		 Retained Earnings
Statements of
Other		 Unappropriated
Foreign
Comprehensive
Non-controlling		 Share Capital Capital Surplus Legal Reserve
Special Reserve
Earnings
Operations
Income
Total
Interests		 BALANCE AT JANUARY 1, 2019
$ 8,744,300 $ 41 $ 3,044,125
$ 1,077,394
$ 7,119,174
$ (1,092,360)
$ 123,405 $ 19,016,079 $ 21		 Appropriations of 2018 earnings Legal reserve
-
-
68,917
-
(68,917)
-
-
-
-		 Special reserve
-
-
-
(108,439)
108,439
-
-
-
-		 Cash dividends to shareholders - NT$1.00 per share
-
-
-
-
(874,430)
-
-
(874,430)
-		 Net profit for the year ended December 31, 2019
-
-
-
-
1,013,562
-
-
1,013,562
(3)		 Other comprehensive income (loss) for the year ended December 31, 2019, net of income tax

-
-

-
-
(11,362)
(605,001)
243,902

(372,461)

-		 Total comprehensive income (loss) for the year ended December 31, 2019

-
-

-
-
1,002,200
(605,001)
243,902

641,101

(3)		 BALANCE AT DECEMBER 31, 2019
8,744,300
41
3,113,042
968,955
7,286,466
(1,697,361)
367,307
18,782,750
18		 Appropriations of 2019 earnings Legal reserve
-
-
100,220
-
(100,220)
-
-
-
-		 Special reserve
-
-
-
361,099
(361,099)
-
-
-
-		 Cash dividends to shareholders - NT$0.4 per share
-
-
-
-
(349,772)
-
-
(349,772)
-		 Share dividends to shareholders - NT$0.4 per share
349,800
-
-
-
(349,800)
-
-
-
-		 Net income for the year ended December 31, 2020
-
-
-
-
972,225
-
-
972,225
-		 Other comprehensive income (loss) for the year ended December 31, 2020, net of income tax

-
-

-
-
(24,546)
(344,886)
73,938

(295,494)

-		 Total comprehensive income (loss) for the year ended December 31, 2020

-
-

-
-
947,679
(344,886)
73,938

676,731

-		 BALANCE AT DECEMBER 31, 2020
$ 9,094,100
$ 41
$ 3,213,262
$ 1,330,054
$ 7,073,254
$ (2,042,247)
$ 441,245
$19,109,709
$ 18
~ 27 ~

KENDA RUBBER IND. CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before income tax

Adjustments for:
Depreciation expense
Amortization expense
Expected credit loss
Net (gain) loss on fair value changes of financial assets and
liabilities at fair value through profit or loss
Finance costs
Interest income
Dividend income
Share of profit of associates
Net loss on disposal of property, plant and equipment
Net loss on disposal of intangible assets
Write-down (reversal of write-down) of inventories
Impairment loss recognized on property, plant and equipment
Net loss on foreign currency exchange
Changes in operating assets and liabilities
Notes receivable
Accounts receivable
Other receivables
Inventories
Prepayments
Other current assets
Other non-current assets
Contract liabilities
Notes payable
Accounts payable
Other payables
Other current liabilities
Net defined benefit liabilities

Cash generated from operations
Interest received
Dividends received
Interest paid
Income tax paid

Net cash generated from operating activities

CASH FLOWS FROM INVESTING ACTIVITIES
Return of capital from financial assets at fair value through other
comprehensive income
Increase in investments accounted for using the equity method
Payments for property, plant and equipment
Proceeds from disposal of property, plant and equipment		 2020
$ 1,291,463
1,469,596
23,697
29,239
46
241,442
(108,171)
(53,483)
(2,340)
38,003
-
(23,933)
16,040
705,350
(115,209)
(429,009)
(33,032)
(42,328)
103,556
(3,601)
140,948
53,049
(118,736)
169,899
128,638
13,610
(26,823)

3,467,911
111,704
53,483
(244,155)
(599,764)


2,789,179

3,942
(33,733)
(539,276)
23,808		 2019
$ 1,366,978

1,449,512

19,533

7,911

(2)

281,907

(162,833)

(65,256)

(3,971)

1,809

55

45,420

-

100,616

(202,687)

115,950

21,211

(613,002)

(98,783)

(14,822)

(162,434)

(1,636)

(34,842)

(60,127)

(70,779)

(11,301)

(19,419)

1,889,008

164,660

65,256

(282,612)

(456,959)

1,379,353

4,024

-

(1,023,893)

153,572
(Continued)

~ 28 ~

KENDA RUBBER IND. CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

Increase in refundable deposits

Payments for intangible assets
Decrease (increase) in other financial assets
Increase in prepayments for equipment

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Proceeds from guarantee deposits received
Repayment of the principal portion of lease liabilities
Cash dividends

Net cash generated from (used in) financing activities

EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE
OF CASH HELD IN FOREIGN CURRENCIES

NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
YEAR
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
 2020
$ (48,529)
(11,075)
61,535
(800,969)

(1,344,297)

75,347
3,995,525
(3,958,700)
7,641
(90,763)
(349,772)

(320,722)


(265,261)

858,899
7,626,509

$ 8,485,408
 2019
$ (714)

(18,613)

(1,817,544)

(2,033,971)

(4,737,139)

1,177,364

5,616,938

(4,841,945)

1,229

(91,334)

(874,430)

987,822

(194,013)

(2,563,977)

10,190,486
$ 7,626,509

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

(Concluded)

~ 29 ~

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Kenda Rubber Ind. Co., Ltd.

Opinion

We have audited the accompanying financial statements of Kenda Rubber Ind. Co., Ltd. (the “Company”), which comprise the balance sheet as of December 31, 2020 and 2019, and the statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies (collectively referred to as the “financial statements”).

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2020. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

~ 30 ~

The key audit matter of the Company’s financial statements for the year ended December 31, 2020 is stated as follows:

Appropriateness of the Revenue Cutoff

The Company has worldwide sales network, and the terms of sales are different by customer or geography. Revenue is recognized when performance obligations are satisfied by the transfer of the promised goods to customers but the timing of the transfer may be based on the time of actual delivery or on the time of actual receipt of the goods. The Company’s revenue recognition process involves manual inspection of relevant documents, or an estimate of arrival time of the goods shipped to customers based on historical experience to determine timing of the transfer of control of the promised goods to customers. Therefore, mistakes may occur in the evaluation process, and revenue could be recorded in the incorrect reporting period.

The main audit procedures that we performed in respect of the cutoff of revenue recognition included the following:

  1. We obtained an understanding of and reviewed the sales contracts and the terms between the Company and its customers to identify the appropriate point of revenue recognition.

  2. We obtained an understanding of and evaluated the process and related controls over revenue recognition.

  3. We performed cutoff testing procedures covering a certain period before and after the balance sheet date and examined relevant supporting documents. We determined that revenue was recognized in the correct reporting period, as evidenced by sales terms.

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

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

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

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

Auditors’ Responsibilities for the Audit of the Financial Statements

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

~ 31 ~

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

  1. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

  2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

  3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

  4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

  5. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements for the year ended December 31, 2020, and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

~ 32 ~

The engagement partners on the audits resulting in this independent auditors’ report are Yi Wen Wang and Done Yuin Tseng.

Deloitte & Touche Taipei, Taiwan Republic of China

March 25, 2021

Notice to Readers

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

For the convenience of readers, the independent auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and financial statements shall prevail.

~ 33 ~

KENDA RUBBER IND. CO., LTD.

BALANCE SHEETS

DECEMBER 31, 2020 AND 2019

(In Thousands of New Taiwan Dollars)

ASSETS
CURRENT ASSETS
Cash and cash equivalents (Note 6)
Financial assets at fair value through profit or loss - current (Note 7)
Notes receivable (Notes 9 and 22)
Accounts receivable from unrelated parties (Note 9)
Accounts receivable from related parties (Notes 9 and 24)
Other receivables (Note 24)
Inventories (Note 10)
Other current assets
Total current assets
NON-CURRENT ASSETS
Financial assets at fair value through other comprehensive income - non-current (Note 8)
Investments accounted for using the equity method (Note 11)
Property, plant and equipment (Notes 12 and 24)
Right-of-use assets (Notes 13 and 24)
Intangible assets
Deferred tax assets (Note 20)
Other financial assets - non-current (Note 14)
Other non-current assets
Total non-current assets
TOTAL
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term borrowings (Note 15)
Contract liabilities - current (Note 18)
Notes payable
Accounts payable (Note 24)
Other payables (Note 24)
Current tax liabilities (Note 20)
Lease liabilities (Notes 13 and 24)
Current portion of long-term borrowings (Note 15)
Other current liabilities
Total current liabilities
NON-CURRENT LIABILITIES
Long-term borrowings (Note 15)
Deferred tax liabilities (Note 20)
Lease liabilities - non-current (Notes 13 and 24)
Net defined benefit liabilities - non-current (Note 14)
Other non-current liabilities
Total non-current liabilities
Total liabilities
EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY (Note 17)
Share capital
Capital surplus
Retained earnings
Legal reserve
Special reserve
Unappropriated earnings
Other equity
Total equity
TOTAL		 2020 2019





Amount
%
$ 1,393,602
4
973
-
22,802
-
292,808
1
929,378
3
270,429
1
852,900
2
16,686

-

3,779,578
11
451,523
1
23,531,238
70
4,031,537
12
21,955
-
4,969
-
419,743
1
1,268,181
4
161,075

1

29,890,221
89
$ 33,669,799
100
$ 200,000
1
24,316
-
685
-
376,963
1
470,432
2
95,441
-
5,141
-
1,795,070
5
14,422
-
2,982,470
9
11,093,789
33
216,190
-
16,843
-
244,791
1
6,007
-
11,577,620
34
14,560,090
43
9,094,100
27
41
-
3,213,262
10
1,330,054
4
7,073,254
21
(1,601,002)
(5)
19,109,709
57
$ 33,669,799
100




Amount
%
$ 653,707
2
1,019
-
10,586
-
263,819
1
1,041,552
3
980,095
3
791,518
2

22,098

-

3,764,394
11
393,435
1
24,679,402
74
4,191,659
13
-
-
10,469
-
316,811
1
-
-

94,960

-

29,686,736
89
$ 33,451,130
100
$ 350,000
1
9,277
-
1,003
-
337,139
1
431,439
1
9,731
-
-
-
1,276,062
4
13,400

-
2,428,051

7
11,535,185
35
456,907
1
-
-
248,187
1
50

-
12,240,329
37
14,668,380
44
8,744,300
26
41
-
3,113,042
9
968,955
3
7,286,466
22
(1,330,054)
(4)
18,782,750
56
$ 33,451,130
100

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

~ 34 ~

KENDA RUBBER IND. CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

NET REVENUE (Notes 18 and 24)
COST OF REVENUE (Notes 10, 19 and 24)
GROSS PROFIT
UNREALIZED GAIN ON TRANSACTIONS WITH
SUBSIDIARIES
REALIZED GROSS PROFIT
OPERATING EXPENSES (Notes 19 and 24)
Selling and marketing expenses
General and administrative expenses
Research and development expenses
Expected credit loss (Note 9)
Total operating expenses
INCOME FROM OPERATIONS
NON-OPERATING INCOME AND EXPENSES
(Notes 19 and 24)
Interest income
Other income
Other gains and losses
Finance costs
Share of profit of subsidiaries
Total non-operating income and expenses
PROFIT BEFORE INCOME TAX
INCOME TAX EXPENSE (Note 20)
NET PROFIT FOR THE YEAR		 2020
Amount
%
$ 5,946,286
100
3,993,110
67

1,953,176
33
(23,313)

-


1,929,863
33

595,528
10
193,162
3
390,596
7

5,959

-


1,185,245
20

744,618
13

7,947
-
98,279
2
(149,814)
(3)
(120,940)
(2)
595,287
10

430,759

7

1,175,377
20
203,152

4

972,225
16
 2019




























Amount
%
$ 5,947,113
100

4,360,674
73

1,586,439
27

(27,111)
(1)

1,559,328
26

590,751
10

204,099
4

373,031
6

4,865

-

1,172,746
20

386,582

6

4,300
-

99,339
2

(18,295)
-

(141,181)
(2)

750,383
12

694,546
12

1,081,128
18

67,566

1

1,013,562
17
(Continued)

~ 35 ~

KENDA RUBBER IND. CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OTHER COMPREHENSIVE INCOME (LOSS)
Items that will not be reclassified subsequently to
profit or loss:
Remeasurement of defined benefit plans (Note 16)
Unrealized gain on investments in equity
instruments at fair value through other
comprehensive income
Share of other comprehensive income of
subsidiaries
Income tax related to items that will not be
reclassified subsequently to profit or loss
(Note 20)
Items that may be reclassified subsequently to profit
or loss:
Exchange differences on translation of the
financial statements of foreign operations
Income tax related to items that may be
reclassified subsequently to profit or loss
(Note 20)
Other comprehensive loss for the year, net of
income tax
TOTAL COMPREHENSIVE INCOME FOR THE
YEAR
EARNINGS PER SHARE (Note 21)
Basic
Diluted		 2020
Amount
%
$ (26,430)
-
62,030
1
8,506
-

5,286

-

49,392

1

(431,107)
(7)

86,221

1

(344,886)
(6)

(295,494)
(5)

$ 676,731
11

$ 1.07
$ 1.07		 2019












Amount
%
$ (12,034)
-

228,127
4

14,040
-

2,407

-

232,540

4

(756,251)
(13)

151,250

3

(605,001)
(10)

(372,461)
(6)
$ 641,101
11
$ 1.11
$ 1.11

$ $


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

(Concluded)

~ 36 ~

STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
(In Thousands of New Taiwan Dollars, Except Dividends Per Share)		 Other Equity
Unrealized
Exchange
Differences on
Valuation Gain
on Financial
Translation of Assets at Fair
The Financial Value Through
Retained Earnings
Statements of
Other
Unappropriated
Foreign
Comprehensive
Capital Stock
Share Surplus
Legal Reserve
Special Reserve
Earnings
Operations
Income
Total Equity
BALANCE AT JANUARY 1, 2019
$ 8,744,300
$ 41
$ 3,044,125
$ 1,077,394
$ 7,119,174 $ (1,092,360) $ 123,405
$ 19,016,079
Appropriations of 2018 earnings
Legal reserve
-
-
68,917
-
(68,917)
-
-
-
Special reserve
-
-
-
(108,439)
108,439
-
-
-
Cash dividends to shareholders - NT$1.00 per share
-
-
-
-
(874,430)
-
-
(874,430)
Net income for the year ended December 31, 2019
-
-
-
-
1,013,562
-
-
1,013,562
Other comprehensive income (loss) for the year ended December 31, 2019, net of income tax
-
-
-
-
(11,362)

(605,001)
243,902
(372,461)
Total comprehensive income (loss) for the year ended December 31, 2019

-
-
-
-
1,002,200

(605,001)
243,902
641,101
BALANCE AT DECEMBER 31, 2019
8,744,300
41
3,113,042
968,955
7,286,466
(1,697,361)
367,307
18,782,750
Appropriations of 2019 earnings
Legal reserve
-
-
100,220
-
(100,220)
-
-
-
Special reserve
-
-
-
361,099
(361,099)
-
-
-
Cash dividends to shareholders - NT$0.4 per share
-
-
-
-
(349,772)
-
-
(349,772)
Share dividends to shareholders - NT$0.4 per share
349,800
-
-
-
(349,800)
-
-
-
Net income for the year ended December 31, 2020
-
-
-
-
972,225
-
-
972,225
Other comprehensive income (loss) for the year ended December 31, 2020, net of income tax
-
-
-
-
(24,546)

(344,886)
73,938
(295,494)
Total comprehensive income (loss) for the year ended December 31, 2020, net of income tax
-
-
-
-
947,679

(344,886)
73,938
676,731
BALANCE AT DECEMBER 31, 2020
$ 9,094,100
$ 41
$ 3,213,262
$ 1,330,054
$ 7,073,254
$(2,042,247)
$ 441,245
$ 19,109,709

~ 37 ~

KENDA RUBBER IND. CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before income tax

Adjustments for:
Depreciation expense
Amortization expense
Expected credit loss
Net (gain) loss on fair value changes of financial assets at fair value
through profit or loss
Finance costs
Interest income
Dividend income
Share of profit of subsidiaries
Net loss (gain) on disposal of property, plant and equipment
Write-down (reversal of write-down) of inventories
Unrealized gain on transactions with subsidiaries
Net loss on foreign currency exchange
Transfer of prepayments for equipment to expenses
Changes in operating assets and liabilities
Notes receivable
Accounts receivable
Other receivables
Inventories
Prepayments
Other current assets
Other non-current assets
Contract liabilities
Notes payable
Accounts payable
Other payables
Other current liabilities
Net defined benefit liabilities

Cash generated from operations
Interest received
Dividends received
Interest paid
Income tax paid

Net cash generated from operating activities

CASH FLOWS FROM INVESTING ACTIVITIES
Return of capital from financial assets at fair value through other
comprehensive income
Return of capital from investments accounted for using the equity
method
Payments for property, plant and equipment		 2020
$ 1,175,377

302,935
15,002
5,959
46
120,940
(7,947)
(36,402)
(595,287)
(310)
(14,872)
23,313
23,568
18,587
(12,216)
61,806
850,326
(46,510)
7,140
2,203
(5,029)
15,039
(318)
40,218
33,440
1,022

(29,826)

1,948,204
8,653
1,528,753
(119,498)
(373,513)


2,992,599

3,942
-
(42,732)		 2019
$ 1,081,128
282,503
14,651
4,865
(2)
141,181

(4,300)

(36,237)

(750,383)

552

14,507
27,111
23,150
10,854

2,961
(144,552)
16,143

8,972
(2,548)
(2,382)

-
(7,630)

(730)
(44,266)
53,773
54

(31,453)
657,922
4,300
601,342

(143,244)

(161,233)

959,087
4,024
669,940

(67,245)
(Continued)

~ 38 ~

KENDA RUBBER IND. CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

Proceeds from disposal of property, plant and equipment

Increase in refundable deposits
Payments for intangible assets
Decrease (increase) in other financial assets

Increase in prepayments for equipment

Net cash generated from (used in) investing activities

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings
Repayments of short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings

Proceeds from guarantee deposits received
Repayment of the principal portion of lease liabilities
Cash dividends
Acquisition of subsidiaries

Net cash used in financing activities

NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
YEAR
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
 2020
$ 9,040

(340)
(9,083)
(1,268,181)

(178,486)

(1,485,840)

600,000
(750,000)
3,779,686
(3,703,918)
5,957
(1,660)
(349,772)
(347,157)

(766,864)

739,895
653,707

$ 1,393,602
 2019
$ 6,229

(31)

(14,353)

50,000

(158,972)

489,592
150,000

(350,000)
5,372,720
(4,773,928)
-

-

(874,430)
(1,393,530)
(1,869,168)
(420,489)

1,074,196
$ 653,707

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

(Concluded)

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[Appendix 1]

Article of Incorporation of Kenda Rubber Ind. Co., Ltd.

Resolved on June 16, 2020 at the Annual Meeting of Shareholders

CHAPTER I General Provisions

  • Article 1 The Company shall be incorporated, as a company limited by shares, under the Company Act of the Republic of China, and its name shall be 建大工業股份有限公司 in the Chinese language, and KENDA RUBBER IND. CO., LTD., in the English language.

  • Article 2 The scope of the business of the Company is as follows:

  • C804010 Tyres Manufacturing

  • CD01050 Bicycles and Parts Manufacturing

  • C805070 Reinforced Plastic Products Manufacturing

  • CB01010 Mechanical Equipment Manufacturing

  • F401010 International Trade

  • F114030 Wholesale of Motor Vehicle Parts and Motorcycle Parts, Accessories

  • F114040 Wholesale of Bicycle and Component Parts Thereof

  • F114050 Wholesale of Tires

  • F214030 Retail Sale of Motor Vehicle Parts and Motorcycle Parts, Accessories

  • F214040 Retail Sale of Bicycle and Component Parts Thereof

  • F214050 Retail Sale of Tires

  • ZZ99999 All business items that are not prohibited or restricted by law, except those that are subject to special approval.

  • Article 3 The total amount of the Company’s reinvestment in other companies shall not be subject to the restriction of not more than forty percent of the Company’s paid-up capital as provided in Article 13 of the Company Act.

  • Article 4 The Company is located in Changhua County, Taiwan, and may establish branches, offices or sales offices in Taiwan and abroad by resolution of the Board of Directors, if necessary.

  • Article 5 Any and all public announcements to be made by the Company shall comply with Article 28 of the Company Act.

  • Article 5-1 The Company may act as guarantor for the purposes of providing guarantees among the Associates.

Chapter 2 Capital Stock

  • Article 6 The total capital of the Company is set at NT$9,100 million, divided into 910 million shares at NT$10 each, of which the unissued shares are authorized to be issued by the Board of Directors in installments.

  • Article 7 The share certificates of the Company shall be in the form of name-bearing certificates, shall be affixed with the signatures or personal seals of the director representing the

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Company, and shall be duly certified or authenticated by the bank which is competent to certify shares under the laws before the issuance thereof.

  • The Company may issue shares without printing share certificate(s), provided that the Company shall register the issued shares with a centralized securities depositary enterprise

  • Article 8 All transfer of stocks, pledge of rights, loss, succession, gift, loss of seal, amendment of seal, change of address or similar stock transaction conducted by shareholders of the Company and exercising all the rights of the shareholders shall follow the “Regulations Governing the Administration of Shareholder Services of Public Companies” unless specified otherwise by law and securities regulations.

  • Article 9 No share shall be transferred within 60 days prior to the convening date of a regular shareholders' meeting, or within 30 days prior to the convening date of a special shareholders' meeting, or within 5 days prior to the record date fixed by the Company for distribution of dividends, bonus or other benefits.

  • CHAPTER 3 Shareholders’ Meeting Article 10 The Company has two kinds of shareholders' meetings: regular and special meetings. Regular meetings are held once a year, and shall be convened within six months after the close of the fiscal year with 30 days' notice to shareholders; special meetings shall be convened when necessary with 15 days' notice to shareholders.

  • The preceding notice shall indicate the date and venue and the cause(s) or subject(s) of a meeting of shareholders to be convened. A shareholders meeting shall, unless otherwise provided for in the Company Act, be convened by the Board of Directors.

convened when necessary with 15 days' notice to shareholders.
The preceding notice shall indicate the date and venue and the cause(s) or subject(s) of a
meeting of shareholders to be convened.
A shareholders meeting shall, unless otherwise provided for in the Company Act, be
convened by the Board of Directors.
Article 11 If a shareholder is unable to attend a shareholders' meeting for any reason, in addition to the
provisions of Article 177 of the Company Act, the "Regulations Governing the Use of
Proxies for Attendance at Shareholder Meetings of Public Companies" promulgated by the
competent authority shall be followed.
Article 12 The chairman shall chair the shareholders’ meeting. When the chairman of the board is on
leave or is unable to perform the duties of the chairman, the vice chairman shall act in
place of the chairman; if the vice chairman also is on leave or is unable to perform the
duties of the vice chairman, the chairman shall appoint one of the directors to act as chair.
Where the chairman does not make such a designation, the directors shall select from
among themselves one person to serve as chair.
Article 13 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.
Article 14 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 chairman of the meeting

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and shall be distributed to all shareholders of the company within twenty (20) days after the close of the meeting. The minutes of shareholders' meeting shall record the date and place of the meeting, the name of the chairman, the method of adopting resolutions, and a summary of the essential points of the proceedings and the results of the meeting. (The minutes shall be kept together with the attendance list bearing the signatures of shareholders present at the meeting and the powers of attorney of the proxies). The preceding minutes shall be distributed in accordance with the provisions of the Companies Act.

CHAPTER 4 The Board of Directors and Committees

  • Article 15 The Company shall have seven to eleven Directors who shall be elected by the shareholders’ meeting from among the persons with disposing capacity. All terms of office are for three years and the directors are eligible for re-election.

Of the preceding number of directors, at least three shall be independent directors; the election of directors shall be conducted by the candidate nomination system in accordance with Article 192 of the Company Act. The election of independent directors and non-independent directors shall be held together; provided, however, that the number of independent directors and non-independent directors elected shall be calculated separately. Matters regarding professional qualification, shareholdings, restrictions on concurrent positions held, method of nomination and election and other matters for compliance with respect to independent directors shall be subject to the regulations prescribed by the securities governing authorities. The total registered shares owned by the directors of the Company are determined in accordance with the standards set forth in the "Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies" promulgated by the Securities and Futures Bureau of the Financial Supervisory Commission, Executive Yuan. Article 16 When the number of vacancies in the board of directors of a company equals one-third of the total number of directors, the board of directors shall call a special meeting of shareholders to elect succeeding directors to fill the vacancies. The new Directors shall serve the remaining term of the predecessors Article 17 The Board of Directors shall be constituted by the Directors and shall elect from among themselves a Chairman and a Deputy Chairman. The Chairman shall represent the Company externally. If the Chairman of the Board of Directors is unable to exercise his or her duties and responsibilities for any reason, the Vice Chairman shall act in place of the Chairman; if the Vice Chairman also is unable to excise his or her duties and responsibilities for any reason, the Chairman of the Board of Directors shall designate one

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  • of the Directors to act on his or her behalf, or if no such designation is made, the Directors shall elect one from among themselves to act as Chairman.

  • Article 17-1 The board of directors meeting of the Company shall be convened quarterly and the reasons for calling a board of directors meeting shall be notified to each director at least seven days in advance. In emergency circumstances, however, a meeting may be called on shorter notice.

  • The preceding notice of convening a meeting shall state the reason in writing, and may be made by electronic means such as email or facsimile.

  • Article 18 The Board of Directors' meeting shall be convened by the Chairman of the Board to determine the Company's business policies and other important matters. The Chairman of the Board shall be the Chair of the meeting; when the Chairman is absent, the provisions of the preceding Article shall apply. Other important matters referred to in the preceding paragraph include the acquisition and disposal of the Company's general assets and real estate, and the provision of guarantees for the associates.

  • Article 19 The resolutions of the Board of Directors shall be adopted by a majority of the directors at a meeting attended by a majority of the directors. Each director shall attend the meeting of the board of directors in person. However, if the Director is unable to attend the meeting due to special circumstances, such director may designate another director to attend as a proxy. In case a meeting of the board of directors is proceeded via visual communication network, then the directors taking part in such a visual communication meeting shall be deemed to have attended the meeting in person. In case a director appoints another director to attend a meeting of the board of directors in his/her behalf, he/she shall, in each time, issue a written proxy and state therein the scope of authority with reference to the subjects to be discussed at the meeting. A director may accept the appointment to act as the proxy referred to in the preceding Paragraph of one other director only. A director residing in a foreign country may appoint in writing a shareholder residing domestically as his/her proxy to attend the meetings of the board of directors on a regular basis.

  • Article 20 The Company has established an Audit Committee in accordance with Article 14-4 of the Securities and Exchange Act. The audit committee shall consist of all independent directors.

The number, term of office, powers and rules of procedure of the Audit Committee shall be in accordance with the Company's Audit Committee Charter.

  • Article 21 The Audit Committee or members of the Audit Committee are responsible for carrying out the powers conferred by the Company Act, the Securities and Exchange Act, any other law

~ 43 ~

to be exercised by supervisors.
Article 22 The Directors of the Company shall be entitled to receive remuneration and allowances at
such level as generally adopted by the enterprises of the same industry, no matter whether
the Company is in a loss or not, as the shareholders may authorize the Board to determine
the amount of such remuneration and allowances.
CHAPTER 5 Managerial Personnel
Article 23 The Company shall have one President and several Managers who shall be decided by a
resolution to be adopted by a majority vote of the directors at a meeting of the board of
directors attended by at least a majority of the entire directors of the company.
Article 24 The remuneration to the President and the Managers shall be decided by a resolution to be
adopted by a majority vote of the directors at a meeting of the board of directors attended
by at least a majority of the entire directors of the company.
Article 25 The President shall conduct the daily operations as ordered by the Chairman and by
resolution of the Board of Directors for the Company.
CHAPTER 6 Accounting
Article 26 The Company's fiscal year shall commence on January 1 and end on December 31. At the
close of each fiscal year, the Board of Directors shall prepare and submit the following
statements to the general meeting for acceptance.
1.The business report.
2. Balance sheet.
3. Inventory of property.
4. Income statement.
5. Cash flow statement.
6. Statement of changes in shareholders’ equity.
7. Proposals for earnings distribution and loss make-up.
Article 27 If there is any retained earnings in the year-end, the Company shall first pay tax and make
up for the accumulated deficits, and then set aside 10% of such earnings as a legal reserve,
unless the legal reserve has reached the Company's total capital. If necessary, the special
reserve shall be set aside or reversed as required by law or by the competent authority.
The Company will take into account the environment and growth of the Company, its
future capital requirements and long-term financial planning, as well as the shareholders'
need for cash, and will propose by the Board of Directors, together with the accumulated
undistributed earnings from the previous year, to set aside 10% to 80% of the available
earnings for distribution. When new shares are issued, a resolution shall be submitted to
the shareholders' meeting to distribute dividends to shareholders. However, the ratio of
new shares to be issued for the earnings distribution may be adjusted by a resolution of the

~ 44 ~

shareholders' meeting, depending on the actual profitability and capital position of the year; of which the cash dividends shall not be less than 10% of the total dividends. The Company authorizes the Board of Directors, with the presence of at least two-thirds of the Directors and a resolution of a majority of the Directors present, to distribute all or part of the dividends and bonuses, legal reserve and capital reserve in the form of cash and report the same to the shareholders' meeting.

Article 27-1 The Company shall distribute remuneration to its employees at a rate of 0.5% to 1% of the profit for the year.

The Company shall distribute the Directors' remuneration not exceeding 3% of the profit for the year.

Where the Company has accumulated losses as provided in the preceding two paragraphs, an amount to cover the losses shall first be set aside.

Employees' remuneration may be paid in shares or in cash to employees of the Company and to employees of controlled or associated companies who meet certain requirements as determined by the Board of Directors.

The earnings for the year referred to in paragraphs 1 and 2 are the earnings before taxation for the year excluding the remuneration to employees and directors.

The distribution of remuneration to employees and directors shall be resolved by a majority vote at a meeting of board of directors attended by two-thirds of the total number of directors, and in addition thereto a report of such distribution shall be submitted to the shareholders’ meeting.

CHAPTER 7 Supplemental Provisions

  • Article 28 The Company’s charter and operational regulations shall be separately adopted by the board of directors.

  • Article 29 Matters not addressed by these Articles of Incorporation shall be governed by the Company Act and other applicable laws and regulations.

  • Article 30 These Articles of Incorporation were first adopted on March 1, 1962 and were first amended on March 20, 1966. The 2nd Amendment was made on March 26, 1967. The 3rd Amendment was made on December 30, 1967. The 4th Amendment was made on March 5, 1970. The 5th Amendment was made on October 22, 1973. The 6th Amendment was made on November 15, 1974. The 7th Amendment was made on November 15, 1975. The 8th Amendment was made on April 12, 1977. The 9th Amendment was made on July 15, 1978. The 10th Amendment was made on July 15, 1979. The 11th Amendment was made on

~ 45 ~

June 15, 1980. The 12th Amendment was made on July 30, 1981. The 13th Amendment was made on June 17, 1984. The 14th Amendment was made on February 10, 1985. The 15th Amendment was made on May 25, 1986. The 16th Amendment was made on June 15, 1988. The 17th Amendment was made on June 30, 1988. The 18th Amendment was made on August 1, 1989. The 19th Amendment was made on March 20, 1990. The 20th Amendment was made on May 3, 1991. The 21st Amendment was made on May 16, 1992. The 22nd Amendment was made on May 4, 1993. The 23rd amendment was made on June 7, 1994. The 24th Amendment was made on June 15, 1995. The 25th Amendment was made on May 29, 1996. The 26th Amendment was made on May 23, 1997. The 27th Amendment was made on May 16, 1998. The 28th Amendment was made on May 23, 2000. The 29th Amendment was made on May 25, 2001. The 30th Amendment was made on June 11, 2002. The 31st Amendment was made on June 20, 2003. The 32nd Amendment on June 15, 2004. The 33rd Amendment was made on May 26, 2005. The 34th Amendment was made on June 14, 2006. The 35th Amendment was made on June 21, 2007. The 36th amendment was made on June 13, 2008. The 37th amendment was made on June 16, 2009. The 38th amendment was made on June 15, 2010. The 39th amendment was made on June 15, 2011. The 40th amendment was made on June 13, 2012. The 41st amendment was made on June 27, 2013. The 42nd amendment was made on June 24, 2014. The 43rd amendment was made on June 23, 2015. The 44th amendment was made on June 14, 2016. The 45th amendment was made on June 15, 2017. The 46th amendment was made on June 11, 2018. The 47th Amendment was made on June 11, 2019 and the 48th Amendment was made on June 16, 2020. These Articles of Incorporation shall be effective as of the date of adoption by the shareholders' meeting.

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[Appendix 2]

Kenda Rubber Inc. Co., Ltd.’s “Rules of Procedures for Shareholders Meetings”

Resolved on June 11, 2019 at the Annual Meeting of Shareholders Article 1 To establish a strong governance system and sound supervisory capabilities for the Company's shareholders meetings, and to strengthen management capabilities, these Rules are adopted pursuant to Article 5 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies. Article 2 The rules of procedures for the Company's shareholders meetings, except as otherwise provided by law, regulation, or the articles of incorporation, shall be as provided in these Rules. Article 3 Unless otherwise provided by law or regulation, the Company's shareholders meetings shall be convened by the board of directors. The Company shall prepare electronic versions of the shareholders meeting notice and proxy forms, and the origins of and explanatory materials relating to all proposals, including proposals for ratification, matters for deliberation, or the election or dismissal of directors, and upload them to the Market Observation Post System (MOPS) before 30 days before the date of a regular shareholders meeting or before 15 days before the date of a special shareholders meeting. The Company shall prepare electronic versions of the shareholders meeting agenda and supplemental meeting materials and upload them to the MOPS before 21 days before the date of the regular shareholders meeting or before 15 days before the date of the special shareholders meeting. In addition, before 15 days before the date of the shareholders meeting, the Company shall also have prepared the shareholders meeting agenda and supplemental meeting materials and made them available for review by shareholders at any time. The meeting agenda and supplemental materials shall also be displayed at the Company and the shareholder services agent as well as being distributed on-site at the meeting place. The reasons for convening a shareholders’ meeting shall be specified in the meeting notice and public announcement. With the consent of the addressee, the meeting notice may be given in electronic form. The matters set forth in Article 172 of the Company Act, Article 26-1 of the Securities and Exchange Act and Article 43-6 of the Company Act shall be enumerated and explained in the notice to convene the shareholders meeting, and shall not be raised as extemporary motions; in addition, the main contents of Article 172 of the Company Act may be may be posted on the website designated by the competent authority in charge of securities affairs or the Company, and such website shall be indicated in the above notice.

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A shareholder holding one percent or more of the total number of issued shares may submit to the Company a proposal in writing for discussion at a regular shareholders meeting. The number of items so proposed is limited to one only, and no proposal containing more than one item will be included in the meeting agenda. In addition, if a shareholder proposes one of the circumstances described in paragraph 4 of Article 172-1 of the Act, the board of directors may exclude it from the agenda. Prior to the book closure date before a regular shareholders meeting is held, the Company shall publicly announce its acceptance of shareholder proposals, and the location and time period for their submission; the period for submission of shareholder proposals may not be less than 10 days.

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 meeting agenda. The shareholder who has submitted a proposal shall attend, in person or by a proxy, the regular shareholders’ meeting whereat his 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 proposal 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 For each shareholders meeting, a shareholder may appoint a proxy to attend the meeting by providing the proxy form issued by the Company and stating the scope of the proxy's authorization. A shareholder may issue only one proxy form and appoint only one proxy for any given shareholders meeting, and shall deliver the proxy form to the Company no later than five days prior to the date of the shareholders meeting. When duplicate proxy forms are delivered, the one received earliest shall prevail unless a declaration is made to cancel the previous proxy appointment. After a proxy form has been delivered to the Company, if the shareholder intends to attend the meeting in person or to exercise voting rights by correspondence or electronically, a written notice of proxy cancellation shall be submitted to this Corporation before two business days before the meeting date. If the cancellation notice is submitted after that time, votes cast at the meeting by the proxy shall prevail. Article 5 The venue for a shareholders meeting shall be the premises of the Company, or a place easily accessible to shareholders and suitable for a shareholders meeting. The meeting may begin no earlier than 9 a.m. and no later than 3 p.m.

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Article 6 Shareholders and their proxies (collectively, "shareholders") shall attend shareholders meetings based on attendance cards, sign-in cards, or other certificates of attendance. Solicitors soliciting proxy forms shall also bring identification documents for verification. The Company shall furnish the attending shareholders with an attendance book to sign, or attending shareholders may hand in a sign-in card in lieu of signing in. The Company shall furnish attending shareholders with the meeting agenda book, annual report, attendance card, speaker's slips, voting slips, and other meeting materials. Where there is an election of directors, pre-printed ballots shall also be furnished. When the government or a juristic person is a shareholder, it may be represented by more than one representative at a shareholders meeting. When a juristic person is appointed to attend as proxy, it may designate only one person to represent it in the meeting. Article 7 If a shareholders’ meeting is convened by the board of directors, the meeting shall be chaired by the chairperson of the board. When the chairperson of the board is on leave or for any reason unable to exercise the powers of the chairperson, the vice chairperson shall act in place of the chairperson; if there is no vice chairperson or the vice chairperson also is on leave or for any reason unable to exercise the powers of the vice chairperson, the chairperson shall appoint one of the directors to act as chair. Where the chairperson does not make such a designation, the directors shall select from among themselves one person to serve as chair. A meeting of the shareholders convened by the board of directors should be attended by a majority of the directors. If a shareholders’ meeting is convened by a party with power to convene but other than the board of directors, the convening party shall chair the meeting. When there are two or more such convening parties, they shall mutually select a chair from among themselves. The Company may appoint its attorneys, certified public accountants, or related persons to attend the meeting in a non-voting capacity. Article 8 The Company shall make an audio and video recording of the proceedings of the shareholders meeting. The recorded materials shall be retained for at least one year. If, however, a shareholder files a lawsuit pursuant to Article 189 of the Company Act, the recording shall be retained until the conclusion of the litigation. Article 9 Attendance at shareholders meetings shall be calculated based on numbers of shares. The number of shares in attendance shall be calculated according to the shares indicated by the attendance book and sign-in cards handed in plus the number of shares whose voting rights are exercised by correspondence or electronically. The chair shall call the meeting to order at the appointed meeting time. However, when the attending shareholders do not represent a majority of the total number of issued shares, the chair may announce a postponement, provided that no more than two such postponements, for a combined total of no more than one hour, may be made. If the quorum is not met after two postponements and the attending shareholders still represent less than one third of the total number of issued shares, the chair shall declare the meeting adjourned.

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If the quorum is not met after two postponements but the attending shareholders represent one third or more of the total number of issued shares, a tentative resolution may be adopted pursuant to Article 175, paragraph 1 of the Company Act; all shareholders shall be notified of the tentative resolution and another shareholders meeting shall be convened within one month. When, prior to the conclusion of the meeting, the attending shareholders represent a majority of the total number of issued shares, the chair may resubmit the tentative resolution for a vote by the shareholders meeting pursuant to Article 174 of the Company Act. Article 10 If a shareholders’ meeting is convened by the board of directors, the meeting agenda shall be set by the board of directors. The meeting shall proceed in the order set by the agenda, which may not be changed without a resolution of the shareholders meeting. If the meeting of shareholders is convened by an authorized person other than the board of directors, the provision referred to above is applicable. The chair may not declare the meeting adjourned prior to completion of deliberation on the meeting agenda of the preceding two paragraphs (including extraordinary motions), except by a resolution of the shareholders meeting. If the chair declares the meeting adjourned in violation of the rules of procedure, the other members of the board of directors shall promptly assist the attending shareholders in electing a new chair in accordance with statutory procedures, by agreement of a majority of the votes represented by the attending shareholders, and then continue the meeting. The chair shall allow ample opportunity during the meeting for explanation and discussion of proposals and of amendments or extraordinary motions put forward by the shareholders; when the chair is of the opinion that a proposal has been discussed sufficiently to put it to a vote, the chair may announce the discussion closed, call for a vote, and schedule sufficient time for voting. Article 11 Before speaking, an attending shareholder must specify on a speaker's slip the subject of the speech, his/her shareholder account number (or attendance card number), and account name. The order in which shareholders speak will be set by the chair. A shareholder in attendance who has submitted a speaker's slip but does not actually speak shall be deemed to have not spoken. When the content of the speech does not correspond to the subject given on the speaker's slip, the spoken content shall prevail. A shareholder may not speak more than twice on the same proposal, except with the chair's consent, and a single speech may not exceed 5 minutes. However, if the shareholder's speech violates the rules or exceeds the scope of the agenda item, the chair may terminate the speech. Attending shareholders may not interfere with the speaking shareholders without the Chairman's consent and the speaking shareholders. The Chairman will have the violating shareholders stopped.

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When a juristic person shareholder appoints two or more representatives to attend a shareholders’ meeting, only one of the representatives so appointed may speak on the same proposal. After an attending shareholder has spoken, the chair may respond or direct relevant personnel to respond. Article 12 Voting at a shareholders meeting shall be calculated based the number of shares. The shares held by shareholders having no voting right shall not be counted in the total number of issued shares while adopting a resolution at a meeting of shareholders. 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. The number of shares for which voting rights may not be exercised under the preceding paragraph shall not be calculated as part of the voting rights represented by attending shareholders. Except for trust enterprises or stock agencies approved by the competent authority, when a person who acts as the proxy for two or more shareholders, the number of voting power represented by him/her shall not exceed 3% of the total number of voting shares of the company, otherwise, the portion of excessive voting power shall not be counted. Article 13 A shareholder shall be entitled to one vote for each share held, except when the shares are restricted shares or are deemed non-voting shares under Article 179, paragraph 2 of the Company Act. When the Company holds a shareholder meeting, electronic means shall be included as one of the means of exercising the right to vote. When voting right is exercised by electronic means, the method of exercise shall be specified in the shareholders meeting notice. A shareholder exercising voting rights by electronic means will be deemed to have attended the meeting in person but to have waived his/her rights with respect to the extraordinary motions and amendments to original proposals of that meeting; it is therefore advisable that the Company avoid the submission of extraordinary motions and amendments to original proposals. A shareholder intending to exercise voting rights by electronic means under the preceding paragraph shall deliver a written declaration of intent to the Company before two days before the date of the shareholders meeting. When duplicate declarations of intent are delivered, the one received earliest shall prevail, except when a declaration is made to cancel the earlier declaration of intent. After a shareholder has exercised voting rights by electronic means, in the event the shareholder intends to attend the shareholders meeting in person, a declaration of intent to retract the voting rights already exercised under the preceding paragraph shall be made known to the Company, by the same means by which the voting rights were exercised, two business days before the date of the shareholders meeting. If the notice of retraction is submitted after that time, the voting rights already exercised by electronic means shall

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prevail. When a shareholder has exercised voting rights both by electronic means and by appointing a proxy to attend a shareholders’ meeting, the voting rights exercised by the proxy in the meeting shall prevail. For the resolution of proposals, unless otherwise provided in the Company Act and the Articles of Incorporation of the Company, the consent of a majority vote of the attending shareholders shall prevail. When there is an amendment or an alternative to a proposal, the chair shall present the amended or alternative proposal together with the original proposal and decide the order in which they will be put to a vote. When any one among them is passed, the other proposals will then be deemed rejected, and no further voting shall be required. Vote monitoring and counting personnel for the voting on a proposal shall be appointed by the chair, provided that all monitoring personnel shall be shareholders of the Company. Vote counting shall be conducted in public at the place of the shareholders meeting. The outcome of a vote at the audit committee meeting shall be reported on the spot and be recorded accordingly. Article 14 The election of directors or supervisors at a shareholders meeting shall be held in accordance with the applicable election and appointment rules adopted by the Company, and the voting results shall be announced on-site immediately. The ballots for the election referred to in the preceding paragraph shall be sealed with the signatures of the monitoring personnel and kept in proper custody for at least one year. If, however, a shareholder files a lawsuit pursuant to Article 189 of the Company Act, the recording shall be retained until the conclusion of the litigation. Article 15 Matters relating to the resolutions of a shareholders meeting shall be recorded in the meeting minutes. The meeting minutes shall be signed or sealed by the chair of the meeting and a copy distributed to each shareholder within 20 days after the conclusion of the meeting. The meeting minutes may be produced and distributed in electronic form. The Company may distribute the meeting minutes of the preceding paragraph by means of a public announcement made through the MOPS. The meeting minutes shall accurately record the year, month, day, and place of the meeting, the chair's full name, the methods by which resolutions were adopted, and a summary of the deliberations and their voting results. The minutes shall be retained for the duration of the existence of the Company. Article 16 On the day of a shareholders meeting, the Company shall compile in the prescribed format a statistical statement of the number of shares obtained by the number of shares represented by proxies, and shall make an express disclosure of the same at the place of the shareholders meeting. If matters put to a resolution at a shareholders meeting constitute material information under applicable laws or regulations or under Taiwan Stock Exchange Corporation regulations, the Company shall upload the content of such resolution to the MOPS within the prescribed time period.

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Article 17 Staff handling administrative affairs of a shareholders meeting shall wear identification cards or arm bands. The chair may direct the proctors or security personnel to help maintain order at the meeting place. When proctors or security personnel help maintain order at the meeting place, they shall wear an identification card or armband bearing the word "Proctor." At the place of a shareholders meeting, if a shareholder attempts to speak through any device other than the public address equipment set up by the Company, the chair may prevent the shareholder from so doing. When a shareholder violates the rules of procedure and defies the chair's correction, obstructing the proceedings and refusing to heed calls to stop, the chair may direct the proctors or security personnel to escort the shareholder from the meeting. Article 18 When a meeting is in progress, the chair may announce a break based on time considerations. If a force majeure event occurs, the chair may rule the meeting temporarily suspended and announce a time when, in view of the circumstances, the meeting will be resumed. If the meeting venue is no longer available for continued use and not all of the items (including extraordinary motions) on the meeting agenda have been addressed, the shareholders meeting may adopt a resolution to resume the meeting at another venue. A resolution may be adopted at a shareholders meeting to defer or resume the meeting within five days in accordance with Article 182 of the Company Act. Article 19 These Rules shall take effect after having been submitted to and approved by a shareholders meeting. Subsequent amendments thereto shall be effected in the same manner.

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[Appendix 3]

Rules for Election of Directors of KENDA RUBBER IND. CO., LTD.

Amended on June 11, 2018 at the Annual Meeting of Shareholders Article 1: Unless otherwise provided in the laws or the Articles of Incorporation of this Company, the directors of this Company shall be elected in accordance with the rules specified herein. Article 2: Election of directors of this Company shall be held at the shareholders' meeting. Article 3: In the election of directors of this Company, each share shall have voting rights equivalent to the number of seats to be elected and such voting rights can be combined to vote for one person or divided to vote for several persons. The Company’s directors shall be elected by adopting the candidate nomination system specified in Article 192-1 of the ROC Company Act. The election of independent directors and non-independent directors shall be held together; provided, however, that the number of independent directors and non-independent directors elected shall be calculated separately. The eligibility and election of independent directors are governed by the Securities and Exchange Act and the "Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies" issued by the Financial Supervisory Commission. Article 4: In the election of directors of the Company, candidates who acquire more votes should win the seats of independent directors and non independent directors. If two or more persons acquire the same number of votes and the number of such persons exceeds the specified seats available, such persons acquiring the same votes shall draw lots to decide who should win the seats available, and the Chairman shall draw lots on behalf of the candidate who is not present. Article 5: deleted. Article 6: The Board of Directors shall prepare the same number of ballot as the number of directors to be elected, note the voting rights and distribute them to the shareholders present at the shareholders' meeting; the names of the voters shall be replaced by the attendance numbers printed on the ballot. No separate ballot will be issued to those

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who exercise their right to vote electronically.
Article 7: The ballot box used for voting shall be prepared by the Board of Directors and
checked in public by the person to check the ballots before voting.
Article 8: At the beginning of the election, the Chairman shall appoint several persons each to
check and record the ballots.
Article 9: If the candidate is a shareholder of the Company, voters shall fill in the "candidate"
column the candidate's name and shareholder's number. If the candidate is not a
shareholder of the Company, voters shall fill in the "candidate" column the candidate's
name and the candidate's ID number.
If the candidate is a government agency or a legal entity, the full name of the
government agency and the legal entity or the name(s) of their representative(s) should
be filled in the column. Where there are several representatives, the names of the
representatives should be added separately.
Article 10: Ballots shall be deemed void under the following conditions:
1. Ballots not used in accordance with these Rules.
2. Blank ballots not completed by the voter.
3. Illegible writing on the ballots.
4. If the candidate is a shareholder of the Company, the name or shareholder's
number of the candidate filled in the ballot inconsistent with the shareholders'
register. If the candidate is not a shareholder of the Company, the name or ID
number of the candidate filled in the ballot is incorrect.
5. Ballots with other written characters or symbols in addition to candidate's name,
shareholder's number (ID number) and the number of votes cast for the candidate.
6. Any of the candidate's name, shareholder's number (ID number) or the number of
votes cast for such candidate being erased, changed or leave it blank.
7. Where two or more candidates are listed on the same ballot.
Article 11: The ballots should be calculated during the meeting right after the vote casting and the
results of the election should be announced by the Chairman at the meeting.
Article 12: The Company shall issue notifications to the directors elected.
Article 13: Matters not provided in these Rules shall be handled in accordance with the relevant
provisions of the Company Act, the Company’s Articles of Incorporation and other
relevant laws and regulations.
Article 14: Failure to comply with the provisions of Article 26-3, Paragraph 3, Item 4 of the

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Securities and Exchange Act shall be deemed to be ineffective for the election.

  • Article 15: These Rules, and any amendments hereto, shall be implemented from the date it is adopted by the Shareholders' Meeting.

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[Appendix 4]

Kenda Rubber Ind. Co., Ltd.

Shareholding of All Directors

April 20, 2021 April 20, 2021 April 20, 2021 April 20, 2021
Title Name Date elected Terms At the time of election Number of shares held
as recorded in the
shareholders' roster on
the book closure date
Number of
Share		 Shares
Ratio
%		 Number of
Share		 Shares
Ratio
%
Chairman Yang,Chi Jen 2018.06.11 3years 88,188,695 10.09% 91,622,924 10.07%
Vice
Chairman		 Chang, Hong Der 2018.06.11 3 years 5,464,465 0.62% 7,661,040 0.84%
Director Yang,YingMing 2018.06.11 3years 66,005,282 7.55% 65,555,015
7.21%
Director Hsiao,Ru Po 2018.06.11 3years 24,761,343 2.83% 15,701,546
1.73%
Director Chen,Chao Jung 2018.06.11 3years 13,900,789 1.59% 7,228,842 0.79%
Director KENJOU CO.,LTD. 2018.06.11 3years 63,464 0.01% 66,002 0.01%
Director Yang,Chia Ling 2018.06.11 3years 27,033,017 3.09% 28,668,065 3.15%
Director Lin,TsungYi 2018.06.11 3years 10,012,857 1.15% 10,413,403 1.15%
Independent
Director		 Hsieh, Chun Mou 2018.06.11 3 years 0 0.00% 0 0.00%
Independent
Director		 Su, Ching Yang 2018.06.11 3 years 0 0.00% 0 0.00%
Independent
Director		 Lin, Sheng Chung 2018.06.11 3 years 0 0.00% 0 0.00%
Shareholdingof All Directors 235,429,912 26.92% 226,916,837 24.95%

Total issued shares: 874,430,000 shares on June 11, 2020

Total issued shares: 909,410,000 shares on April 20, 2021

The minimum required combined shareholding of all directors by law: 29,101,120 shares

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