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KINSUS AGM Information 2019

Jun 5, 2019

52304_rns_2019-06-05_42ad5455-2167-4c63-8615-834b871c92c7.pdf

AGM Information

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Stock Code: 3189

(Translation – In case of any discrepancy between the Chinese and English versions, the Chinese version shall prevail.)

KINSUS INTERCONNECT TECHNOLOGY CORP.

Handbook for the 2019 Annual Meeting of Shareholders

Meeting Date: May 29[th] , 2019

Place: No. 1245, ZhongHua Rd., XinWu Dist., Taoyuan City (i.e. Kinsus Shih-Lei plant staff cafeteria)

(Translation – In case of any discrepancy between the Chinese and English versions, the Chinese version shall prevail.)

Table of Contents

I. Meeting Procedure…………………………………………………………….
II. Meeting Agenda………………………………………………………………
1. Items to be reported……………………………………………………………………….
2. Items to be approved………………………………………………………………………
3. Items to be discussed and resolved by shareholders and the Election……………….……
4. Questions and Motions……………………………………………………………..
III. Attachment
1. The 2018 Business Report…………………………………………………………….....
2. Audit Committee’s Review Report……………………………………………………….
3. The 2018 financial statements accompanied with an audit report…………….....……….
4. The distribution schedule of 2018 earnings……………………….…………………
5. Comparison for amendment to Articles of Incorporation…..……………………………...
6. Comparison for amendment to Procedures for Acquisition or Disposal of Assets……….
IV. Reference
1. Rules of Procedure for Shareholder Meetings………………………………………..
2. Articles of Incorporation …………………………………………………………………
3. Procedures for Acquisition or Disposal of Assets ………………………………………..
3. Current Shareholding by Directors……………………………………..……………......
4. Other Information………………………………………………………………………...		 Page
1
2
3
3
4
4
5
8
9
30
31
34
54
57
62
76
77

(Translation – In case of any discrepancy between the Chinese and English versions, the Chinese version shall prevail.)

Kinsus Interconnect Technology Corp.

Procedure for the 2 019 Annual Meeting of Shareholders

  • I. Chairperson Declares the Starting of the Meeting

  • II. Chairperson’s Opening Statements

  • III. Items To Be Reported

  • IV. Items To Be Approved

  • V. Items To Be Discussed and Resolved and The Election

  • VI. Other Questions and Motions

  • VII. Adjournment

1

(Translation – In case of any discrepancy between the Chinese and English versions, the Chinese version shall prevail.)

Kinsus Interconnect Technology Corp. Agenda for the 2019 of Annual Meeting of Shareholders

Time: 9:00 a.m., May 29[th] (Wednesday), 2019

Place: No. 1245, ZhongHua Rd., XinWu Dist., Taoyuan City (Kinsus Shih-Lei plant staff cafeteria)

  • I. Chairperson Declares the Starting of the Meeting

  • II. Chairperson’s Opening Statements

  • III. Items To Be Reported

  • 2018 Business Report

  • Audit Committee’s Review Report on the 2018 Financial Statements

  • To Report 2018 Employees and Directors’ Compensation

  • IV. Items To be Approved

  • To approve 2018 Business Report, Consolidated Financial Statements and Parent-companyonly Financial Statements (Proposed by the Board of Directors)

  • To approve the proposal for 2018 earnings distribution (Proposed by the Board of Directors)

  • V. Items to Be Discussed and Resolved and The Election

  • To Amend the Company’s Article of Incorporation (Proposed by the Board of Directors)

  • To Amend the Company’s Procedures for Acquisition or Disposal of Assets (Proposed by the Board of Directors)

  • VI. Other Questions and Motions

VII. Adjournment

2

I. Items To Be Reported

  1. The 2018 Business Report

Explanatory Notes: Please refer to Attachment I. (Page 5 to 7)

  1. Audit Committee’s Review Report on the 2018 Financial Statements

Explanatory Notes: Please refer to Attachment II. (Page 8)

  1. To report the 2018 employees and directors’ compensation

Explanatory Notes:

  • a. Based on the Company’s Article of Incorporation, article#24, the Company’s board of directors has resolved to pay out 2018 directors’ and employees’ compensation in amount of NT$3,352,285 and NT$55,073,693, respectively.

  • b. The directors’ and employees’ compensation will be paid in cash and the same as those recognized in 2018 financial statements.

II. Items To Be Approved

  1. To approve 2018 Business Report, Consolidated Financial Statements and ParentCompany-Only Financial Statements (Proposed by the Board of Directors)

Explanatory Notes:

  • a. The Company’s Business Report, Consolidated Financial Statements and ParentCompany-Only Financial Statements have been reviewed by Audit Committee and hereby proposed for the shareholders’ approval. Among these documentations, the Parent-Company-Only Financial Statements and Consolidated Financial Statements have been audited by Ernst & Young.

  • b. For details, please refer to page 5-7 of Attachment I and page 9-27 of Attachment III to the Meeting Handbook.

Resolution:

  1. To approve the proposal for 2018 earnings distribution (Proposed by the Board of Directors)

Explanatory Notes:

  • a. The Company makes the earnings distribution in accordance with its Articles of Incorporation based on 2018 net income of NT$349,485,057 and making legal

3

reserve and special reserve in compliance with Company Act and the Articles. The 2018 earnings distribution table is shown in Attachment IV (page 28) to the Meeting Handbook for reference.

  • b. Please authorize the Board of Directors to execute the earnings distribution process in good faith as deemed necessary after the shareholders’ approval on the earnings distribution. Also please include in other income of the company, if too trivial to one NT dollar, to specific shareholders.

  • c. Please authorize the Board of Directors to adjust, in good faith, the ratio of dividend per share, based on the shares outstanding on the record date for distribution, to the extent of no change in the resolved total amount to be distributed to shareholders.

Resolution:

III. Items To Be Discussed and Resolved and The Election

  1. Amendment to the Articles of Incorporation (Proposed by the Board of Directors)

Explanatory Notes: The Amendment is based on the Company’s operating need, and for comparison for amendment to the Article of Incorporation, please refer to Attachment V (Page 29-31).

Resolution:

  1. Amendment to the Company’s Procedures for Acquisition or Disposal of Assets (Proposed by the Board of Directors)

Explanatory Notes: The Amendment is based on the Company’s operating need, and for comparison for amendment to the company’s procedures for acquisition or disposal of assets, please refer to Attachment VI (Page 32-48).

Resolution:

IV. Other Questions and Motions

V. Adjournment

4

Attachment I

(Translation – In case of any discrepancy between the Chinese and English versions, the Chinese version shall prevail.)

2018 Business Report

1. 2018 Business Report

In 2018, new stimulating power from electronic products and semi-conductors market was weak. The virtual currency upsurge did not last too long in beginning of the year. The trend of electronic products development of smart phones transferred from personal computers in recent becomes to a stable and flat stage or even has begun to decline. Before the advancement of electronic products to artificial intelligence AIoT, the semi-conductors industry seems getting into a slowdown stage in the development of terminal products.

In addition to the slow industrial technology development process, the factors that have plagued the global economy in 2018 years are the US-China trade war and technology competition. The United States has two major influences by curbing China’s growing trade war by raising customs duty. Electronic products industry, especially computer and mobile phone related industry chains, worry that high customs duty will cause sales of products in the United States to decrease and, therefore, adjust product and component inventory levels in advance. The overall supply chain performance tends to become very conservative. production costs are also increased, on the other hand, because many processing and assembling companies who originally were located in China have turned their operations to southeast Asia and Europe. The longer term development for the electronics supply chain will be recast and the global supply chain can be clearly divided into two or three supply systems.

The evolution of electronic products and the obstruct of the US-China trade war ultimately affected of semi-conductor and substrate. Negative impacts included falling iOS phone sales and slumping Android phones demand. Though many new wearable devices are trying to stimulate market growth, the overall scale is too small to restore the weakness of mobile phone market. Such an impact occurred in 2018 and will extend to 2019. Positive development is in 5G communication. The base station system component suppliers are trying their best to accelerate product development. 5G communication pilots of various operators, the scale and speed are accelerating. Competition is more intense. 5G communication to get into commercial operation stage in 2020 becomes feasible. The 5G communication not only drives the Company's turnover in the second half of 2018 but also will enhance 2019 performance. Subsequently it will accelerate the business opportunities for AIOT including the cloud and the application. These applications are the ABF FC-BGA substrates that the Company is best at.

The Company’s revenue in parent-company-only basis totaled to NT$17,228,031 thousand in 2018, increased by 5.78% compared to NT$16,286,034 thousand in 2017. Net income in parentcompany-only basis was NT$349,485 thousand in 2018, decreased by 28.92% compared to

5

NT$491,676 thousand in 2017. The Company’s consolidated revenue totaled to NT$23,727,929 thousand in 2018, increased by 6.23% compared to NT$22,335,486 thousand in 2017. The consolidated net income was NT$411,040 thousand in 2018, increased by 22.58% compared to NT$335,322 thousand in 2017.

The increase in operating profit was mainly due to the improvement of product mix and the high proportion of high gross profit margin products while the decline in operating profit was mainly due to the higher operating expenses of Xinfeng Factory resulted from market lost by unexpected slow growth of new products market and price competition.

(In Thousands of New Taiwan Dollars

(In Thousands of New Taiwan Dollars (In Thousands of New Taiwan Dollars (In Thousands of New Taiwan Dollars
Except for Earnings Per Share)
Account
(Inparent-company-onlybasis)		 2018 2017 Growth Rate
(%)
Operatingrevenues 17,228,031 16,286,034 5.78%
Grossprofit 3,615,434 3,077,973 17.46%
Operatingincome 346,545 499,936 -30.68%
Pre-tax income 422,468 617,128 -31.4%
Net income 349,485 491,676 -28.92%
Earningsper share(in NT$) 0.78 1.10

(In Thousands of New Taiwan Dollars

(In Thousands of New Taiwan Dollars (In Thousands of New Taiwan Dollars (In Thousands of New Taiwan Dollars
Except for Earnings Per Share)
Account
(In consolidated basis)		 2018 2017 Growth Rate
(%)
Operatingrevenues 23,727,929 22,335,486 6.23%
Grossprofit 5,386,502 4,162,724 29.40%
Operatingincome 791,650 399,225 98.30%
Pre-tax income 710,522 529,123 34.28%
Net income 411,040 335,322 22.58%
Net income/loss attributable to:
Shareholders of theparent 349,485 491,676
Non-controllinginterests 61,555 -156,354
Earningsper share(In NT$) 0.78 1.10

2. Summary of 2019 business plan:

(1)Business Policy

Since the Company’s establishment, we have been upholding the principle of “Satisfying Customers and Pursuing for Excellence” as our business policy, developing leadership in technique to meet market demand, mastering new generation product demands, investing engineering resources to stay ahead, and striving for better profit to benefit our shareholders

6

under the intense competition.

The IC substrates industry has entered a highly complex product portfolio and structure. Competitive technologies such as Fan-Out WLP have grown rapidly. The Cmpany's R&D department is developing higher-accumulation packaging/assembly substrates, such as SiP modules, integrate antenna modules, CPU/memory multi-chip Wafer substrates, or even soft board modules, and expand the technology capabilities of the substrate industry for many years to create higher value for customers.

(2)2019 Expected Sales and Its Sources

Several foreign-funded and international research advisory agencies predict that global economic growth will slow down in 2019 compared to 2018. In addition to regional geopolitical conflicts and the impact of US-China trade and technology competition, there is also a lack of innovative products in the market. Most electronic products follow 2018 of existing specifications and functions. The products with more obvious growth trends include 5G base station related chips and AI related High Bandwidth Memory. Automotive electronic products, including applications such as assisted autopilot ADAS, autonomous driving environment sensing components, and autopilot learning algorithm processors, are still highly growing. The fastest-growing smartphone-related Wafer components slight decline in 2019.

(3)Significant Production and Marketing Policy

  • A. Continue investing in R&D resources, developing both micro-wire and slim-film processes, providing customers with solutions for 7nm wafer process and multi-chip package modules.

  • B. Expanding the capacity of ABF FC-BGA substrate to match the long-term needs of 5G and AIoT.

  • C. Adjust the production capacity and production equipment of each plant to achieve the 2019 operating plan.

3. Company development strategy

We will aim at application of slim substrates of ABF-FCBGA and memory and the techniques and products of SiP module and Wafer module in short-term, keeping up with the elemental global semiconductor developing trend of continuously miniature line width, aperture, and thickness in medium term, and developing complicated structural technique of active/passive components and direct wafer bonding in long term. By these development strategies, we are confident that the Company will definitely sustain our competitiveness in product market as well as in the technique.

Chairman:

Chief Accountant:

CEO:

7

Attachment II

(Translation – In case of any discrepancy between the Chinese and English versions, the Chinese version shall prevail.)

Kinsus Interconnect Technology Corp.

Audit Committee’s Review Report

The Board of Directors has prepared the Company’s 2018 Business Report, Consolidated Financial Statements, Parent-company-only Financial Statements and the proposal for distribution of earnings. Among these documentation, the financial statements have been audited by the auditors, Ernst & Young, and the audit reports relating to the Financial Statements have been granted. The Business Report, Financial Statements, and earnings distribution proposal have been reviewed and determined to be fairly presented by the Audit Committee members of Kinsus Interconnect Technology Corp. According to Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Law, we hereby submit the review report to the Company’s shareholders.

Kinsus Interconnect Technology Corp.

Chairman of the Audit Committee: Chung-Pao Hwang

February 18[th] , 2019

8

Attachment III

English Translation of an Audit Report Originally Issued in Chinese INDEPENDENT AUDITORS’ REPORT

To: the Board of Directors and Shareholders of Kinsus Interconnect Technology Corp.

Opinion

We have audited the accompanying parent-company-only balance sheets of Kinsus Interconnect Technology Corp. (the “Company”) as of December 31, 2018 and 2017, and the related parentcompany-only statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the parent-company-only financial statements, including the summary of significant accounting policies (together referred as “the parent-company-only financial statements”).

In our opinion, based on the results of our audits and the report of other auditors (please refer to the － Other Matter Making Reference to the Audit of a Component Auditor section of our report), the parent-company-only financial statements referred to above present fairly, in all material respects, the parent-company-only financial position of the Company as of December 31, 2018 and 2017, and their parent-company-only financial performance and cash flows for the years then ended, in conformity with the requirements of 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 Parent-Company-Only Financial Statements section of our report. We are independent of the Company in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China (the “Norm”), and we have fulfilled our other ethical responsibilities in accordance with the Norm. Based on our audits and the reports of other auditor(s), 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 the most significance in our audit of parent-company-only financial statements for the year ended December 31, 2018. These matters were addressed in the context of our audit of the parent-company-only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

9

English Translation of an Audit Report Originally Issued in Chinese

Revenue Recognition

We determine that revenue recognition is one of the key audit matters. The Company’s consolidated revenue amounting to NT$17,228,031 thousand for the year ended December 31, 2018 is a significant account to the Company’s consolidated financial statements. The Company has conducted these sale activities in multi-marketplace, including Taiwan, China, USA, etc. Among these locations, the Company has established hub-warehouse for certain foreign customers’ convenience. Furthermore, the timing of fulfilling performance obligation needs to be determined based on varieties of sale terms and conditions enacted in the main sale contracts or sale orders.Our audit procedures therefore include, but not limit to, evaluating the properness of accounting policy for revenue recognition, assessing and testing the effectiveness of relevant internal controls related to revenue recognition sampling-test of details, including obtaining major sale orders or agreements to inspect the terms and conditions, checking the consistency of the fulfillment timing, and performance obligation for revenue recognition from foreign warehouses with sale agreement or orders, performing analytical review procedures on monthly sale revenues, executing sale cut-off tests, etc. We have also evaluated the appropriateness of the related disclosure in Note 4 and 6 to the consolidated financial statements.

Market valuation on Inventory

We determined the market valuation on inventory one of key audit matters in considering that the amount of inventory was significant and the assessment of sufficiency of inventory loss requires significant management judgement. The Company’s net inventory amounted to NT$1,918,295 thousand as of December 31, 2018. As the application market of substract, the Company’s main products, is characterized by rapid development in technology and the trend of consumers’ preference, management, in timely considering the status of new products development and the demand from clients, has to evaluate the loss due to market value decline as well as write-down on slow-moving inventories to their net realizable value. Our audit procedures therefore include, but not limit to, evaluating the Company’s policy with respect to assessment the loss from slow-moving inventory and phased-out items, (including identification method, testing the accuracy of inventory aging schedule, analysis on inventory movement), performing observation on the Company’s inventory physical-taking, and inspecting the current status of inventory usage, etc. We also assessed the adequacy of the inventory-related disclosures shown in the Note 5 and 6 to the parent-company-only financial statements.

10

English Translation of an Audit Report Originally Issued in Chinese

Other Matter – Making Reference to the Audit of a Component Auditor

We did not audit the financial statements of FuYang Technology Corp., an indirectly invested associate accounted for under the equity method by the Company. The financial statements of FuYang Technology Corp. as of December 31, 2018 and 2017, and for the years then ended were audited by other auditors, whose reports thereon have been furnished to us. Our audit, insofar as it related to the investment in the associate accounted for under the equity method amounting to NT$735,275 thousand and NT$823,380 thousand as of December 31, 2018 and 2017 representing 2.03% and 2.28% of the Company’s total assets, the related shares of income before tax from the associate under the equity method for the year then ended amounting to NT$(99,606) thousand and NT$(77,880) thousand representing (23.58)% and (12.62)% of the Company’s income before tax, and the related shares of other comprehensive income from the associate under the equity method for the years then ended amounting to NT$12,346 thousand and NT$(19,180) thousand representing (47.45)% and 25.22% of the other comprehensive income, are based solely on the audit reports of other auditors.

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

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

In preparing the parent-company-only financial statements, management is responsible for assessing the ability to continue as a going concern of the Company, 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 audit committee, are responsible for overseeing the financial reporting process of the Company.

11

English Translation of an Audit Report Originally Issued in Chinese

Auditor’s Responsibilities for the Audit of the Parent-Company-Only Financial Statements

Our objectives are to obtain reasonable assurance about whether the parent-company-only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s 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 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 parentcompany-only financial statements.

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

  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 internal control of the Company.

  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 ability to continue as a going concern of the Company. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s 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 auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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English Translation of an Audit Report Originally Issued in Chinese

  1. Evaluate the overall presentation, structure and content of the parent-company-only financial statements, including the accompanying notes, and whether the parent-company-only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

  2. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the parent-company-only financial statements. We are responsible for the direction, supervision and performance of the company 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 2018 parent-company-only financial statements and are therefore the key audit matters. We describe these matters in our auditor’s 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.

Ernst & Young February 18[th] , 2019 Taipei, Taiwan, Republic of China

Notice to Readers

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

13

- - English Translation of Parent Company Only Financial Statements Originally Issued in Chinese Kinsus Interconnect Technology Corp.

Parent-Company-Only Balance Sheets As of December 31, 2018 and 2017

(Amounts Expressed in Thousands of New Taiwan Dollars)

Assets Assets Assets 2018 2018 2017 2017
Code Accounts Notes Amount % Amount %
1100
1110
1136
1147
1150
1170
1180
1200
1210
1310
1410
1470
11XX
1550
1600
1780
1840
1915
1995
15XX
1XXX		 Current assets
Cash and cash equivalents
Financial assets at fair value through profit or loss
Financial assets carried at amortized cost
Bond investments with no active market
Notes receivable, net
Accounts receivable, net
Accounts receivable - related parties, net
Other receivables
Other receivables - related parties
Inventories, net
Prepayments
Other current assets
Total current assets
Non-current assets
Investment accounted for under equity method
Property, plant and equipment, net
Intangible assets, net
Deferred tax assets
Prepayment for equipment
Other non-current assets
Total non-current assets
Total Assets		 4, 6(1)
4, 6(2)
4, 6(3)
4, 6(4)
4, 6(5)
4, 6(6)
4, 6(6), 7
7
4, 6(7)
4, 6(8)
4, 6(9), 9
4, 6(10)
4, 6(27)
4, 6(9), 9
6(11)		 $8,709,305
1,005,335
423,057
-
241
2,765,195
1,131
232,701
31,727
1,918,295
128,195
50,504
15,265,686
4,021,997
14,898,668
4,777
9,593
1,972,157
3,787
20,910,979
$36,176,665		 24
3
1
-
-
8
-
1
-
5
-
-
42
11
41
-
-
6
-
58
100		 $8,797,966
1,410,216
-
423,057
1,756
2,382,221
954
156,997
11,656
1,255,598
213,761
47,735
14,701,917
4,121,363
14,406,084
12,796
130,819
2,758,841
3,886
21,433,789
$36,135,706		 24
4
-
1
-
7
-
-
-
4
1
-
41
11
40
-
-
8
-
59
100

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

14

- - English Translation of Parent Company Only Financial Statements Originally Issued in Chinese Kinsus Interconnect Technology Corp.

Parent-Company-Only Balance Sheets (Continued) As of December 31, 2018 and 2017

(Amounts Expressed in Thousands of New Taiwan Dollars)

Liabilities and Equity Liabilities and Equity Liabilities and Equity 2018 2018 2017 2017
Code Accounts Notes Amount % Amount %
2100
2130
2150
2170
2180
2200
2230
2300
2365
21XX
2540
2570
2600
25XX
2XXX
3100
3110
3200
3300
3310
3320
3350
3400
3500
3XXX		 Current liabilities
Short-term loans
Contract liability
Notes payable
Accounts payable
Accounts payable - related parties
Other payables
Current income tax liabilities
Other current liabilities
Refund liability
Total current liabilities
Non-current liabilities
Long-term loans
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
Capital
Common stock
Capital surplus
Retained earnings
Legal capital reserve
Special reserve
Unappropriated earnings
Other components of equity
Treasury Stock
Total equity
Total liabilities and equity		 6(12)
4, 6(21)
7
6(13), 7
4, 6(27)
6(14)
6(15)
6(16), 8
4, 6(27)
4, 6(17), 6(18)
6(19)
6(19)
6(19)
6(19)		 $2,136,671
1,082
38,326
1,336,203
163,500
1,947,831
140,435
594,000
12,300
6,370,348
1,998,125
886
25,156
2,024,167
8,394,515
4,508,410
6,140,942
3,612,556
77,677
13,646,659
(203,356)
(738)
27,782,150
$36,176,665		 6
-
-
4
1
5
-
2
-
18
6
-
-
6
24
12
17
10
-
38
(1)
-
76
100		 $2,263,117
-
41,687
1,331,417
201,977
2,292,456
293,685
318,373
-
6,742,712
1,365,625
846
27,962
1,394,433
8,137,145
4,460,000
5,956,519
3,563,389
613
14,095,717
(77,677)
-
27,998,561
$36,135,706		 6
-
-
4
1
6
1
1
-
19
4
-
-
4
23
12
16
10
-
39
-
-
77
100

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

15

- - English Translation of Parent Company Only Financial Statements Originally Issued in Chinese Kinsus Interconnect Technology Corp.

Parent-Company-Only Statements of Comprehenstve Income

For the Years Ended December 31, 2018 and 2017

(Amounts Expressed in Thousands of New Taiwan Dollars, Except Earnings Per Share)

Code Accounts Notes 2018 2018 2017 2017
Amount % Amount %
4000
5000
5900
6000
6100
6200
6300
6450
6900
7000
7010
7020
7050		 Operating revenues
Operating costs
Gross profit
Operating expenses
Selling
General and administrative
Research and development
Expected credit gains (losses)
Operating expenses total
Operating income
Non-operating income and expenses
Other income
Other gains and losses
Finance costs
Share of profit or loss of subsidiaries, associates and joint ventures
Non-operating income and expense total
Income from continuing operations before income tax
Income tax
Net income
Other comprehensive income (loss)
Item that may not be reclassified subsequently to profit or loss
Actuarial gain (loss) on defined benefit plains
Items that may be reclassified subsequently to profit or loss
Share of other comprehensive income (loss) of subsidiaries, associates and joint ventures
Total other comprehensive income, net of tax
Total comprehensive income
Earnings per share - basic (in NT$)
Earnings per share - diluted (in NT$)		 4, 6(21), 7
7
7
4, 6(22)
6(25), 7
6(25), 7
6(25)
4, 6(27)
6(26)
6(28)
6(28)		 $17,228,031
(13,612,597)
3,615,434
(595,067)
(931,815)
(1,738,225)
(3,782)
(3,268,889)
346,545
205,701
10,469
(64,432)
(75,815)
75,923
422,468
(72,983)
349,485
(3,312)
(22,706)
(26,018)
$323,467
$0.78
$0.78		 100
(79)
21
(3)
(6)
(10)
-
(19)
2
1
-
-
-
1
3
(1)
2
-
-
-
2		 $16,286,034
(13,208,061)
3,077,973
(347,294)
(1,246,491)
(984,252)
-
(2,578,037)
499,936
199,082
45,375
(39,078)
(88,187)
117,192
617,128
(125,452)
491,676
1,004
(77,064)
(76,060)
$415,616
$1.10
$1.10		 100
(81)
19
(2)
(8)
(6)
-
(16)
3
1
-
-
-
1
4
(1)
3
-
-
-
3
7070
7900
7950
8200
8300
8310
8311
8360
8370
8500
9750
9850

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

16

- - English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

Kinsus Interconnect Technology Corp.

Parent-Company-Only Statements of Changes in Equity

For the Years Ended December 31, 2018 and 2017

(Amounts Expressed in Thousands of New Taiwan Dollars)

Items Capital Capital
Surplus		 Retained Earnings Retained Earnings Retained Earnings Other Components of equity Other Components of equity Treasury
Stock		 Total
Equity
Legal
Reserve		 Special
Reserve		 Unappropriated
Earnings		 Exchange differences
arising on translation
of foreign operations		 Unearned Employee
Benefit
Code 3100 3200 3310 3320 3350 3410 3490 3500 3XXX
A1
B1
B3
B5
C7
D1
D3
D5
N1
A1
B1
B3
B5
C7
D1
D3
D5
T1
Z1		 Balance as of January 1, 2017
Appropriation and distribution of 2016 earnings:
Legal reserve
Special reserve
Cash dividends - common shares
Change in associates and joint ventures accounted for using equity method
Net income for 2017
Other comprehensive income (loss) for 2017
Total comprehensive income
Share-based payment transactions
Balance as of December 31, 2017
Appropriation and distribution of 2017 earnings:
Legal reserve
Special reserve
Cash dividends - common shares
Change in associates and joint ventures accounted for using equity method
Net income for 2018
Other comprehensive income (loss) for 2018
Total comprehensive income
Employee restricted shares for cancellation and others
Balance as of December 31, 2018		 $4,460,000
-
4,460,000
-
48,410
$4,508,410		 $5,939,819
8,329
-
8,371
5,956,519
(845)
-
185,268
$6,140,942		 $3,340,018
223,371
-
3,563,389
49,167
-
$3,612,556		 $-
613
-
613
77,064
-
$77,677		 $15,163,371
(223,371)
(613)
(1,336,350)
491,676
1,004
492,680
14,095,717
(49,167)
(77,064)
(669,000)
349,485
(3,312)
346,173
$13,646,659		 $(613)
(77,064)
(77,064)
(77,677)
(22,706)
(22,706)
($100,383)		 $-
-
-
-
(102,973)
$(102,973)		 $(32,885)
-
32,885
-
-
(738)
$(738)		 $28,869,710
-
-
-
(1,336,350)
8,329
491,676
(76,060)
415,616
41,256
27,998,561
-
-
(669,000)
(845)
349,485
(26,018)
323,467
129,967
$27,782,150

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

NOTE: The employees' bonuses of NT$55,074 and the directors' and supervisors' remuneration of NT$3,352 thousand for the year ended December 31, 2018 had been deducted from comprehensive income for the year ended December 31, 2018.

The employees' bonuses of NT$80,693 and the directors' and supervisors' remuneration of NT$4,912 thousand for the year ended December 31, 2017

had been deducted from comprehensive income for the year ended December 31, 2017.

17

- - English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

Kinsus Interconnect Technology Corp.

Parent-Company-Only Statements of Cash Flows

For the Years Ended December 31, 2018 and 2017

(Amounts Expressed in Thousands of New Taiwan Dollars)

Code Items 2018 2017 Code Items 2018 2017
AAAA
A10000
A20000
A20010
A20100
A20200
A20300
A20400
A20900
A21200
A21900
A22300
A22500
A23800
A30000
A31110
A31130
A31150
A31160
A31180
A31190
A31200
A31230
A31240
A32125
A32130
A32150
A32160
A32180
A32210
A32230
A32240
A32990
A33000
A33100
A33100
A33300
A33500
AAAA		 Cash flows from operating activities:
Net income before tax
Adjustments:
Profit or loss not effecting cash flows:
Depreciation
Amortization
Expected credit losses (gain on recovery)
Net loss (gain) of financial assets (liabilities) at fair value through profit or loss
Interest expense
Interest income
Share of profit or loss of subsidiaries, associates and joint ventures
Loss on disposal of property, plant and equipment
Gain on reversal of impairment loss
Changes in operating assets and liabilities:
Financial Assets at fair value through profit or loss
Notes receivable
Accounts receivable
Accounts receivable - related parties
Other receivable
Other receivable - related parties
Inventories
Prepayment
Other current assets
Decrease (increase) in contract liabilities
Notes payable
Accounts payable
Accounts payable - related parties
Other payable
Advance receipts
Other current liabilities
Net pension liability under defined benefit plan
Refund liability
Cash generated from operations
Dividend received
Interest received
Interest paid
Income tax paid
Net cash provided by (used in) operating activities
Cost of share based payment		 $422,468
2,974,964
18,663
3,782
(5,200)
64,432
(47,973)
82,525
75,815
(724)
-
410,081
1,515
(386,756)
(177)
(75,788)
(20,071)
(662,697)
85,566
(2,769)
1,082
(3,361)
4,786
(38,477)
(122,275)
-
(1,786)
(4,118)
12,300
2,785,807
-
48,057
(61,219)
(104,967)
2,667,678		 $617,128
2,343,599
23,069
(29,010)
(6,700)
39,078
(52,634)
8,371
88,187
4,092
(17,100)
1,435,817
1,274
160,235
32,776
86,230
302,371
62,660
(139,819)
(17,924)
-
(1,811)
256,556
(5,900)
(181,486)
(1,507)
535
(4,043)
-		 BBBB Cash flows from investing activities:
Acquisition of investment accounted for under equity method
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Decrease (increase) in refundable deposits
Acquisition of intangible assets
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Increase in (repayment of) short-term loans
Increase in long-term loans
Repayment of long-term loans
Increase in guarantee deposits received
Payment of cash dividends
Issuance of common stock for cash
Treasury stock purchased
Net cash provided by (used in) financing activities
Net Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period		 -
(2,916,134)
9,463
99
(10,644)
(2,917,216)
(126,446)
1,200,000
(290,087)
(2,000)
(669,000)
48,410
-
160,877
(88,661)
8,797,966
$8,709,305		 (600,000)
(5,356,287)
23
(48)
(30,657)
(5,986,969)
986,017
870,000
(298,088)
-
(1,336,350)
-
32,885
254,464
(1,035,484)
9,833,450
$8,797,966
B01800
B02700
B02800
B03800
B04500
BBBB
CCCC
C00100
C01600
C01700
C03000
C04500
C04600
C05100
CCCC
EEEE
E00100
E00200
5,004,044
100,000
52,838
(38,237)
(421,624)
4,697,021

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

18

English Translation of Financial Statements and a Report Originally Issued in Chinese

MANAGEMENT REPRESENTATION LETTER

The entities that are required to be included in the combined financial statements of Kinsus Interconnect Technology Corp. as of December 31, 2018 and for the year then ended under the Criteria Governing the 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, Kinsus Interconnect Technology Corp. and Subsidiaries do not prepare a separate set of combined financial statements.

Very truly yours,

Kinsus Interconnect Technology Corp.

By

Guo, Ming-Dong Chairman February 18[th] , 2019

19

English Translation of Financial Statements and a Report Originally Issued in Chinese INDEPENDENT AUDITORS’ REPORT

To: the Board of Directors and Shareholders Kinsus Interconnect Technology Corp.

Opinion

We have audited the accompanying consolidated balance sheets of Kinsus Interconnect Technology Corp. (the “Company”) and its subsidiaries as of December 31, 2018 and 2017, the related consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including the summary of significant accounting policies (together referred as “the consolidated financial statements”).

In our opinion, based on our audits and the reports of other auditor (please refer to the Other Matter – Making Reference to the Audit of a Component Auditor section of our report), the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2018 and 2017, and its consolidated financial performance and cash flows for the years then ended, in conformity with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, Interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee as endorsed by 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 Company and its subsidiaries in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China (the “Norm”), and we have fulfilled our other ethical responsibilities in accordance with the Norm. Based on our audits and the reports of other auditor(s), we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

20

English Translation of Financial Statements and a Report Originally Issued in Chinese

Key Audit Matters

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

Revenue Recognition

We determine that revenue recognition is one of the key audit matters. The Company’s consolidated revenue amounting to NT$23,727,929 thousand for the year ended December 31, 2018 is a significant account to the Company’s consolidated financial statements. The Company has conducted these sale activities in multi-marketplace, including Taiwan, China, USA, etc. Among these locations, the Company has established hub-warehouse for certain foreign customers’ convenience. Furthermore, the timing of fulfilling performance obligation needs to be determined based on varieties of sale terms and conditions enacted in the main sale contracts or sale orders. Our audit procedures therefore include, but not limit to, evaluating the properness of accounting policy for revenue recognition, assessing and testing the effectiveness of relevant internal controls related to revenue recognition, sampling-test of details, including obtaining major sale orders or agreements to inspect the terms and conditions, checking the consistency of the fulfillment timing, and performance obligation for revenue recognition from foreign warehouses with sale agreement or orders, performing analytical review procedures on monthly sale revenues, executing sale cut-off tests, etc. We have also evaluated the appropriateness of the related disclosure in Note 4 and 6 to the consolidated financial statements.

Market valuation on Inventory

We determined the market valuation on inventory one of key audit matters in considering that the amount of inventory was significant and the assessment of sufficiency of inventory loss requires significant management judgement. The Company’s net inventory amounted to NT$3,269,317 thousand as of December 31, 2018. As the application market of substract, the Company’s main products, is characterized by rapid development in technology and the trend of consumers’ preference, management, in timely considering the status of new products development and the demand from clients, has to evaluate the loss due to market value decline as well as write-down on slow-moving inventories to their net realizable value. Our audit procedures therefore include, but not limit to, evaluating the Company’s policy with respect to assessment the loss from slow-moving inventory and phased-out items, (including identification method, testing the accuracy of inventory aging schedule, analysis on inventory movement), perfroming observation on the Company’s inventory physical-taking, and inspecting the current status of inventory usage, etc. We also assessed the adequacy of the inventory-related disclosures shown in the Note 5 and 6 to the consolidated financial statements.

21

English Translation of Financial Statements and a Report Originally Issued in Chinese

Other Matter – Making Reference to the Audit of a Component Auditor

We did not audit the financial statements of FuYang Technology Corp., an invested associate accounted for under the equity method. The financial statements of FuYang Technology Corp. as of December 31, 2018 and 2017 and for the years then ended were audited by other auditors, whose reports thereon have been furnished to us. Our audit, insofar as it related to the investment in the associate accounted for under the equity method amounting to NT$735,275 thousand and NT$823,380 thousand as of December 31, 2018 and 2017 representing 1.72% and 1.95% of the Company’s consolidated total assets, the related shares of income before tax from the associate under the equity method for the years then ended amounting to NT$(99,606) thousand and NT$(77,880) thousand representing (14.02)% and (14.72)% of the Company’s consolidated income before tax, and the related shares of other comprehensive income from the associate under the equity method for the years then ended amounting to NT$12,346 thousand and NT$(19,180) thousand representing (32.80)% and 17.37% of the consolidated other comprehensive income, are based solely on the audit reports of other auditors.

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 requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, Interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee as endorsed by 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 ability to continue as a going concern of the Company, 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 audit committee or supervisors, are responsible for overseeing the financial reporting process of the Company.

22

English Translation of Financial Statements and a Report Originally Issued in Chinese

Auditor’s 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 auditor’s 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 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 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 internal control of the Company.

  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 ability to continue as a going concern of the Company. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s 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 auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

23

English Translation of Financial Statements and a Report Originally Issued in Chinese

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

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

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of 2018 consolidated financial statements and are therefore the key audit matters. We describe these matters in our auditor’s 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.

We have audited and expressed an unqualified opinion on the parent-company-only financial statements of the Company as of and for the years then ended December 31, 2018 and 2017.

Ernst & Young February 18[th] , 2019 Taipei, Taiwan, Republic of China

Notices to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, results of operations 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 review such consolidated financial statements are those generally accepted and applied in the Republic of China.

24

English Translation of Consolidated Financial Statements Originally Issued in Chinese

Kinsus Interconnect Technology Corp. and Subsidiaries

Consolidated Balance Sheets

As of December 31, 2018 and 2017

(Amounts Expressed In Thousands of New Taiwan Dollars)

Assets Assets Assets As of December 31,2018 As of December 31,2018 As of December 31,2017 As of December 31,2017
Code Accounts Notes Amount ％ Amount ％
1100
1110
1136
1147
1150
1170
1180
1200
1210
1310
1410
1470
11xx
1517
1543
1550
1600
1780
1840
1900
1915
15xx
1xxx		 Current assets
Cash and cash equivalents
Financial assets at fair value through profit or loss
Financial assets carried at amortized cost
Bond investments with no active market
Notes receivable, net
Accounts receivable, net
Accounts receivable - related parties
Other receivables
Other receivables - related parties
Inventories, net
Prepayments
Other current assets
Total current assets
Non-current assets
Financial asset at fair value through OCI
Financial assets carried at cost
Investment accounted for under equity method
Property, plant and equipment, net
Intangible
Deferred income tax assets
Other non-current assets
Prepayment for acquiring machinery
Total non-current assets
Total Assets		 4, 6(1)
4, 6(2)
4, 6(3)
4, 6(4)
4, 6(7)
4, 6(8)
6(8), 7
7
4, 6(9)
4, 6(5)
4, 6(6)
4, 6(10)
4, 6(11), 8, 9
4, 6(12)
4, 6(29)
6(13), 7, 8
6(11), 9		 $10,068,669
1,017,095
498,338
-
241
3,472,879
349,315
264,785
5,781
3,269,317
158,390
189,759
19,294,569
50,000
-
735,275
19,737,268
14,529
12,411
316,354
2,463,548
23,329,385
$42,623,954		 24
2
1
-
-
8
1
1
-
8
-
-
45
-
-
2
46
-
-
1
6
55
100		 $10,342,012
1,553,833
-
423,057
1,756
3,353,060
333,700
208,485
6,243
2,127,714
260,566
163,976
18,774,402
-
50,000
823,380
19,151,653
22,850
131,090
314,024
3,010,078
23,503,075
$42,277,477		 24
4
-
1
-
8
1
-
-
5
1
-
44
-
-
2
46
-
-
1
7
56
100

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

25

English Translation of Consolidated Financial Statements Originally Issued in Chinese

Kinsus Interconnect Technology Corp. and Subsidiaries

Consolidated Balance Sheets-(Continued)

As of December 31, 2018 and 2017

(Amounts Expressed In Thousands of New Taiwan Dollars)

Liabilities and Equity Liabilities and Equity Liabilities and Equity As of December 31, 2018 As of December 31, 2018 As of December 31, 2017 As of December 31, 2017
Code Accounts Notes Amount ％ Amount ％
2100
2130
2150
2170
2200
2230
2300
2365
21xx
2540
2570
2600
25xx
2xxx
31xx
3100
3110
3200
3300
3310
3320
3350
3400
3500
36xx
3xxx		 Current liabilities
Short-term loans
Contract liability
Notes payable
Accounts payable
Other payables
Current income tax liabilities
Other current liabilities
Refund liability
Total current liabilities
Non-current liabilities
Long-term loans
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
Equity attributable to shareholders of the parent
Capital
Common stock
Capital surplus
Retained earnings
Legal reserve
Special reserve
Unappropriated earnings
Other components of equity
Treasury Stock
Non-controlling interests
Total equity
Total liabilities and equity		 6(14)
4, 6(23)
6(15), 7
4, 6(29)
6(16)
4, 6(17)
6(18), 8
4, 6(29)
6(19)
6(21)
6(21)
6(21)
6(21)
6(21)		 $3,340,483
134,800
39,505
2,233,609
3,110,009
361,313
931,741
47,739
10,199,199
2,600,806
5,563
69,864
2,676,233
12,875,432
4,508,410
6,140,942
3,612,556
77,677
13,646,659
(203,356)
(738)
1,966,372
29,748,522
$42,623,954		 8
-
-
6
7
1
2
-
24
6
-
-
6
30
11
14
8
-
32
-
-
5
70
100		 $3,297,397
-
44,804
2,526,036
3,597,985
352,272
719,393
-
10,537,887
1,746,800
1,253
76,539
1,824,592
12,362,479
4,460,000
5,956,519
3,563,389
613
14,095,717
(77,677)
-
1,916,437
29,914,998
$42,277,477		 8
-
-
6
8
1
2
-
25
4
-
-
4
29
11
14
8
-
33
-
-
5
71
100

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

26

English Translation of Consolidated Financial Statements Originally Issued in Chinese Kinsus Interconnect Technology Corp. and Subsidiaries

Consolidated Statements Of Comprehensive Incomes For the Years Ended December 31, 2018 and 2017

(Amounts Expressed in Thousands of New Taiwan Dollars, Except for Earnings per Share)

Code Items Notes 2018 2017
Amount % Amount %
4000
5000
5900
6000
6100
6200
6300
6450
6900
7000
7010
7020
7050
7060
7900
7950
8200
8300
8310
8311
8360
8361
8370
8500
8600
8610
8620
8700
8710
8720
9750
9850		 Operating revenues
Operating costs
Gross profit
Operating expenses
Sales and marketing
General and administrative
Research and development
Expected credit gains (losses)
Total operating expenses
Operating income
Non-operating incomes and expenses
Other incomes
Other gains or losses
Finance costs
Share of the profit or loss of associates and joint ventures
Total non-operating incomes and expenses
Income before income tax
Income tax expenses
Net income
Other comprehensive income (loss)
Item that may not be reclassified to profit or loss
Actuarial gain (loss) from defined benefit plans
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations
Share of the other comprehensive profit or loss of joint ventures
Total other comprehensive income (loss), net of tax
Total comprehensive income
Net income (loss) attributable to:
Stockholders of the parent
Non-controlling interests
Comprehensive income (loss) attributable to:
Stockholders of the parent
Non-controlling interests
Earnings per share-basic (in NTD)
Earnings per share-diluted (in NTD)		 4, 6(23), 7
7
7
4, 6(24)
6(27), 7
6(27), 7
6(27)
6(10)
4, 6(29)
6(28)
6(30)
6(30)		 $23,727,929
(18,341,427)
5,386,502
(1,020,613)
(1,349,219)
(2,218,438)
(6,582)
(4,594,852)
791,650
242,177
(102,465)
(121,234)
(99,606)
(81,128)
710,522
(299,482)
411,040
(3,312)
(46,672)
12,346
(37,638)
$373,402
$349,485
61,555
$411,040
$323,467
49,935
$373,402
$0.78
$0.78		 100
(77)
23
(4)
(6)
(10)
-
(20)
3
1
-
(2)
-
(1)
2
(1)
1
-
-
-
-
1
1
-
1
1
-
1		 $22,335,486
(18,172,762)
4,162,724
(706,746)
(1,611,376)
(1,445,377)
-
(3,763,499)
399,225
237,046
49,878
(79,146)
(77,880)
129,898
529,123
(193,801)
335,322
1,004
(92,241)
(19,180)
(110,417)
$224,905
$491,676
(156,354)
$335,322
$415,616
(190,711)
$224,905
$1.10
$1.10		 100
(81)
19
(3)
(7)
(7)
-
(17)
2
1
-
(1)
-
-
2
(1)
1
-
-
-
-
1
2
(1)
1
2
(1)
1

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

27

English Translation of Consolidated Financial Statements Originally Issued in Chinese

Kinsus Interconnect Technology Corp. and Subsidiaries

Consolidated Statements of Changes in Equity

For the Years Ended December 31, 2018 and 2017

(Amounts Expressed In Thousands of New Taiwan Dollars)

Code Items Equity Attri butable to Sharehold ers of the Parent Non-controlling
Interests		 Total Equity
Capital Capital Surplus Retained Earnings Other s Treasury Stock Total
Legal Reserve Special reserve Unappropriated
Earnings		 Exchange differences
arising on translation
of foreign operations		 Unearned
Employee Benefit
3100 3200 3310 3320 3350 3410 3490 3500 31XX 36XX 3XXX
A1
B1
B3
B5
C7
D1
D3
D5
N1
O1
Z1
A1
B1
B3
B5
C7
D1
D3
D5
T1
Z1		 Balance as of January 1, 2017
Appropriation and distribution of 2016 earnings
Legal reserve
Special reserve
Cash dividends-common shares
Change in joint ventures accounted for using equity method
Net income (loss) for 2017
Other comprehensive income (loss), net of tax, for 2017.
Total comprehensive income
Share-based payment transaction
Non-controlling interests increase (decrease)
Balance as of December 31, 2017
Balance as of January 1, 2018
Appropriation and distribution of 2017 earnings
Legal reserve
Special reserve
Cash dividends-common shares
Change in joint ventures accounted for using equity method
Net income (loss) for 2018
Other comprehensive income (loss), net of tax, for 2018.
Total comprehensive income
Employee restricted shares for cancellation and others
Balance as of December 31, 2018		 $4,460,000
-
$4,460,000
$4,460,000
-
48,410
$4,508,410		 $5,939,819
8,329
-
8,371
$5,956,519
$5,956,519
(845)
-
185,268
$6,140,942		 $3,340,018
223,371
-
$3,563,389
$3,563,389
49,167
-
$3,612,556		 $-
613
-
$613
$613
77,064
-
$77,677		 $15,163,371
(223,371)
(613)
(1,336,350)
491,676
1,004
492,680
$14,095,717
$14,095,717
(49,167)
(77,064)
(669,000)
349,485
(3,312)
346,173
$13,646,659		 $(613)
(77,064)
(77,064)
$(77,677)
$(77,677)
(22,706)
(22,706)
$(100,383)		 $-
-
$-
$-
-
(102,973)
$(102,973)		 $(32,885) $28,869,710
-
-
(1,336,350)
8,329
491,676
(76,060)
415,616
41,256
$27,998,561
$27,998,561
-
-
(669,000)
(845)
349,485
(26,018)
323,467
129,967
$27,782,150		 $2,145,059
(156,354)
(34,357)
(190,711)
(37,911)
$1,916,437
$1,916,437
61,555
(11,620)
49,935
$1,966,372		 $31,014,769
-
-
(1,336,350)
8,329
335,322
(110,417)
224,905
41,256
(37,911)
$29,914,998
$29,914,998
-
-
(669,000)
(845)
411,040
(37,638)
373,402
129,967
$29,748,522
-
32,885
$-
$-
-
(738)
$(738)

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

28

English Translation of Consolidated Financial Statements Originally Issued in Chinese

Kinsus Interconnect Technology Corp. and Subsidiaries

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2018 and 2017

(Amounts Expressed in Thousands of New Taiwan Dollars)

Code Items 2018 2017 Code Items 2018 2017
AAAA
A10000
A20000
A20010
A20100
A20200
A20300
A20400
A20900
A21200
A21900
A22300
A22500
A23800
A30000
A31110
A31130
A31150
A31160
A31180
A31190
A31200
A31220
A31240
A31990
A32125
A32130
A32150
A32160
A32180
A32210
A32230
A32240
A32990
A33000
A33100
A33300
A33500
AAAA		 Cash flows from operating activities:
Income before income tax
Adjustments:
Income and expense adjustments:
Depreciation
Amortization
Expected credit losses (gain on recovery)
Net gain of financial assets at fair value through P/L
Interest expense
Interest income
Cost of share based payment
Share of profit or loss of associates and joint ventures
Loss on disposal of property, plant and equipment
Gain on reversal of impairment loss
Changes in operating assets and liabilities:
Financial assets at fair value through profit or loss
Notes receivable
Accounts receivable
Accounts receivable - related parties
Other receivables
Other receivables - related parties
Inventories
Prepayments
Other current assets
Long-term prepaid rents
Decrease (increase) in contract liabilities
Notes payable
Accounts payable
Accounts payable - related parties
Other payables
Unearned sales revenue
Other current liabilities
Accrued pension liabilities
Refund liability
Cash generated from (used in) operations
Interest received
Interest paid
Income tax paid
Net cash provided by (used in) operating activities		 $710,522
4,187,071
25,898
6,582
(5,383)
121,234
(62,377)
82,525
99,606
(1,014)
49,770
542,121
1,515
(126,400)
(15,615)
(55,310)
462
(1,141,603)
102,176
(25,783)
10,075
(2,148)
(5,299)
(292,427)
-
64,786
-
8,636
(4,118)
47,739		 $529,123
3,413,416
30,655
(29,065)
(7,140)
79,146
(62,316)
8,371
77,880
5,847
(19,598)
1,721,742
1,274
(125,900)
66,036
80,053
301,403
130,530
(125,890)
(41,639)
11,094
-
(3,288)
399,551
(16,059)
13,984
55,899
(652)
(4,043)
-		 BBBB
B00040
B01800
B02700
B02800
B03800
B04500
BBBB
CCCC
C00100
C01600
C01700
C03000
C04500
C04600
C05100
C05800
CCCC
DDDD
EEEE
E00100
E00200		 Cash flows from investing activities:
Acquisition of financial assets measured at amortized cost
Acquisition of investment accounted for under equity method
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Decrease (increase) in refundable deposits
Acquisition of intangible assets
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Increase in (repayment of) short-term loans
Increase in long-term loans
Repayments of long-term loans
Increase (decrease) in deposits received
Cash dividends
Issuance of common stock for cash
Treasury stock sold to emplayees
Increase (decrease) in non-controlling interests
Net cash provided by (used in) financing activities
Effect of exchange rate changes
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period		 (75,281)
-
(4,814,540)
9,753
(12,405)
(17,644)		 -
(479,422)
(6,261,465)
239
(29,733)
(34,980)
(4,910,117) (6,805,361)
43,086
1,800,000
(621,450)
(5,869)
(669,000)
48,410
-
-		 1,068,919
870,000
(595,038)
(8,542)
(1,336,350)
-
32,885
(37,911)
595,177 (6,037)
(60,982) (61,870)
(273,343)
10,342,012		 (870,634)
11,212,646
$10,068,669 $10,342,012
4,323,241 6,490,414
61,385
(114,595)
(167,452)		 63,254
(78,328)
(472,706)
4,102,579 6,002,634

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

29

Attachment IV

(Translation – In case of any discrepancy between the Chinese and English versions, the Chinese version shall prevail.)

Kinsus Interconnect Technology Corp. Earnings Distribution Proposal

For The Year Ended December 31, 2018

Item Amount
(In: NT$)
Beginning retained earnings
Less: Other comprehensive income (loss) in 2018
-Actuarial gain/loss of defined benefit
Add: Net profit after tax in 2018
Distributable earnings
Less: 10% legal reserve
Special reserve
Cash dividend to shareholders (NT$1.5 per share)
Subtotal
Unappropriated retained earnings		 $13,300,485,569
(3,312,039)
349,485,057
13,646,658,587
(34,948,506)
(22,706,349)
(676,261,500)
(733,916,355)
$12,912,742,232

Chairman: CEO:

Chief Accountant:

30

Attachment V

(Translation – In case of any discrepancy between the Chinese and English versions, the Chinese version shall prevail.)

Kinsus Interconnect Technology Corp.

Comparison for amendment to Articles of Incorporation

After amendment Before amendment Explanation
Article 5:
The authorized capital of the Company is
NTD 6,000,000,000, divided into
600,000,000 shares, at a par value of NTD
10 per share. The shares may be issued in
installments, and the shares which have not
been issued would be issued in installments
pursuant to the resolution of board of
directors.The registered capital keeps NTD
300,000,000 divided into 30,000,000
shares provided for exercise of the option of
stock option certificates, preferred shares
with warrants and warrants attached to
corporate bonds, which may be issued in
installments pursuant to the resolution of
board of directors.		 Article 5:
The authorized capital of the
Company is NTD5,500,000,000,
divided into550,000,000shares,
at a par value of NTD 10 per
share. The shares may be issued
in installments, and the shares
which have not been issued would
be issued in installments pursuant
to the resolution of board of
directors.		 Raise
authorized
capital and
add the
provision of
the option of
stock
Article 5-1:
When the Company transfer to the
employees at a price lower than the average
price of the actual bought-back shares, or
lower than “Regulations Governing the
Offering and Issuance of Securities by
Securities Issuers” exercise price issue
employee stock warrants, it shall be resolved
by two-thirds of the votes at a shareholders'
meeting attended by shareholders
representing a majority of the total number
of issued shares.		 Add this article. Add the
provision of
buying back
shares and
transferring
to employees.
Article 5-2:
The company of reward tools include stock
repurchase, qualification requirements of
employees, an issuance of new shares and
shares of restricted stock for employees with
Company Act and Securities and Exchange
Act. Qualification requirements of
employees, and subscription by employees
including the employees of parents or
subsidiaries of the company meeting certain
specific requirements, provide for the board
of directors.		 Add this article. Stipulated the
target of
issuing the
reward with
“Company
Act’’ and
“Securities
and
Exchange
Act”.
Article 15-3:
The board of directors of a company may
have anyother functional committees.		 Add this article. Cooperate
with the
Company’s

31

After amendment Before amendment Explanation
Any other functional committees shall
establish exercise power rules and be
enforced after resolving them in the board of
directors		 business
demand
according to
“Corporate
Governance
Best Practice
Principles for
Listed
Companies”.
Article 24:
The Company, if making profits in current
year, shall provide the ratio of employee
compensation to “income before tax and the
employee and directors’ compensation to be
provided” at less than 10% and the ratio of
directors’ compensation to “income before
tax and the employee and directors’
compensation to be provided” at be more
than 1%, provided that all accumulated
deficits, if any, are fully offset.
The employees’ compensation can be
distributed in cash or stocks. The employees
receiving the stock dividends may include
employees in affiliated or control companies
who met certain conditions stipulated by the
Board of Directors authorized.
Employee and directors’ compensation is to
report in the shareholders’ meeting.		 Article 24:
The Company, if making profits
in current year, shall provide the
ratio of employee compensation
to “income before tax and the
employee and directors’
compensation to be provided” at
less than 10% and the ratio of
directors’ compensation to
“income before tax and the
employee and directors’
compensation to be provided” at
be more than 1%, provided that
all accumulated deficits, if any,
are fully offset.
The employees’ compensation can
be distributed in cash or stocks.
The employees receiving the
stock dividends may include
employees in affiliated companies
who met certain conditions
stipulated by the Board of
Directors.
Employee and directors’
compensation is to report in the
shareholders’ meeting.		 Stipulated the
target of
issuing the
employees’
compensation
with
“Company
Act’’.
Article 24-1:
The Company, if making profits in current
year, shall distribute the earnings in the
following order:
1. Payment of all taxes and dues;
2. Offset prior years’ operation losses;
3. Set aside 10% of the remaining amount
after deducting items (a) and (b) as legal
reserve;
4. Set aside or reverse special reserve in
accordance with law and regulations;
5. The distribution of the remaining portion,
if any, will be recommended by the Board of
Directors and resolved in the shareholders’		 Article 24-1:
The Company, if making profits
in current year, shall distribute the
earnings in the following order:
1. Payment of all taxes and dues;
2. Offset prior years’ operation
losses;
3. Set aside 10% of the remaining
amount after deducting items
(a) and (b) as legal reserve;
4. Set aside or reverse special
reserve in accordance with law
and regulations;
5. The distribution of the		 Strengthen
the dividend
policy.

32

After amendment Before amendment Explanation
meeting.
To authorize the distributable dividends and
bonuses in whole may be paid in cash after a
resolution has been adopted by a majority
vote at a meeting of the 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..
The Company is in an industry with
versatile environment. For long-term finance
planning requirements and to meet the
shareholders’ demand for cash, dividend
policy aims for a steady balance.
Shareholder extra dividend each year cannot
be less than 10% of distributed surplus
earnings and cash dividends distributed each
year cannot be less than 10% of the gross
amount of dividends.		 remaining portion, if any, will
be recommended by the Board
of Directors and resolved in the
shareholders’ meeting.
The Company is in an industry
with versatile environment. For
long-term finance planning
requirements and to meet the
shareholders’ demand for cash,
dividend policy aims for a steady
balance.Cash and Stock
dividends distributed each year
cannot be less than 10% of the
total dividends paid.
Article 28
he Article was agreed by all the promoters in
founder’s meeting in September 1, 2000.
The first revised was June 28, 2003. The
second revised was August 26, 2003. The
third revised was April 16, 2004. The fourth
time revised was April 16, 2004. The fifth
time revised was June 14, 2005. The sixth
time revised was June 14, 2005. The seventh
revised was June 19, 2006. The eighth
revised was May 30, 2007. The ninth
revised was May 30, 2008. The tenth revised
was June 18, 2010. The eleventh revised
was June 22, 2011. The twelfth revised was
June 18, 2012. The thirteenth revised was
May 27, 2016. The fourteenth revised was
May 26, 2017.The fifteenth revised was
May 29, 2019.		 Article 28:
The Article was agreed by all the
promoters in founder’s meeting in
September 1, 2000. The first
revised was June 28, 2003. The
second revised was August 26,
2003. The third revised was April
16, 2004. The fourth time revised
was April 16, 2004. The fifth time
revised was June 14, 2005. The
sixth time revised was June 14,
2005. The seventh revised was
June 19, 2006. The eighth revised
was May 30, 2007. The ninth
revised was May 30, 2008. The
tenth revised was June 18, 2010.
The eleventh revised was June 22,
2011. The twelfth revised was
June 18, 2012. The thirteenth
revised was May 27, 2016. The
fourteenth revised was May 26,
2017.		 Additional
revision date.

33

Attachment VI

Kinsus Interconnect Technology Corp.

Acquisition and disposal of assets amendment table

After amendment Before amendment Explanation
Article 3:
1. Investments in stocks, government
bonds, corporate bonds, financial bonds,
securities representing interest in a
fund, depositary receipts, call (put)
warrants, beneficial interest securities,
and asset-backed securities.
2.Real estate (including land, houses and
buildings,
property
for
investment
purpose, and inventory of construction
companies) and equipment.
3.Memberships.
4.Patents, copyrights, trademarks, charter
rights, and other intangible assets.
5.The right-of-use asset.
6.Claims
of
financial
institutions
(including receivables, bills purchased
and discounted, loans, and overdue
receivables)
7.Derivatives products.
8.Assets acquired or disposed of in
connection
with
mergers,
spin-off,
acquisitions,
or
share
transfer
in
accordance with acts of law
9.Other major assets		 Article 3:
1.Investments in stocks, government bonds,
corporate bonds, financial bonds,
securities representing interest in a fund,
depositary receipts, call (put) warrants,
beneficial interest securities, and asset-
backed securities.
2.Real estate (including land, houses and
buildings,
property
for
investment
purpose,rights to use land,and inventory
of
construction
companies)
and
equipment.
3.Memberships.
4.Patents, copyrights, trademarks, charter
rights, and other intangible assets.
5.Claims of financial institutions (including
receivables,
bills
purchased
and
discounted,
loans,
and
overdue
receivables)
6.Derivatives products.
7.Assets acquired or disposed of in
connection
with
mergers,
spin-off,
acquisitions,
or
share
transfer
in
accordance with acts of law
8.Other major assets		 1.Add the
paragraph 5
according to
IFRS16 “Leases”
and Words to be
moved.
2.From the
paragraph 5 to 8
are moved to the
paragraph 6 to 9.
Article 4:
1.Derivatives: Forward contracts, options
contracts, futures contracts, leverage
contracts, or swap contracts, whose
value is derived from aspecified interest
rate,
financial
instrument
price,
commodity price, foreign exchange rate,
index of prices or rates, credit rating or
credit index, or other variable;or hybrid
contracts combining theabove contracts;
or
hybrid
contracts
or
structured
products
containing
embedded
derivatives.
The
term
"forward
contracts" does not include insurance
contracts, performance contracts, after-
sales service contracts, long-term leasing
contracts, or long-term purchase (sales)
contracts.
2.Assets acquired or disposed through		 Article 4:
1.”Derivatives”: Forward contracts, options
contracts, futures contracts, leverage
contracts, swap contracts, and compound
contracts combining theabove products,
whose value is derived from assets,
interest rates, foreign exchange rates,
indexes or other interests.The term
"forward contracts" does not include
insurance
contracts,
performance
contracts, after-sales service contracts,
long-term leasing contracts, or long-term
purchase (sales) agreements.
2.Assets acquired or disposed through
mergers, demergers, acquisitions, or
transfer of shares in accordance with law:
Refers to assets acquired or disposed
through
mergers,
demergers,
or
acquisitions conducted under the Business		 1.It is amended
the paragraph 1
according to
IFRS9“Financial
Instruments” and
revised words.
2.it is revised the
paragraph 8 of
Article 156, to
Article 156-3
according to
the Company
Act.
3.Add the
paragraph 7 to
stipulate the
range of
Investment
professional.

34

After amendment Before amendment Explanation
mergers, demergers, acquisitions, or
transfer of shares in accordance with
law: Refers to assets acquired or
disposed through mergers, demergers, or
acquisitions
conducted
under
the
Business Mergers and Acquisitions Act,
Financial
Holding
Company
Act,
Financial Institution Merger Act and
other acts, or to transfer of shares from
another company through issuance of
new
shares
of
its
own
as
the
consideration
therefor
(hereinafter
"transfer of shares") under Article 156-3
of the Company Act.
3.~6. Omit.
7.Investment professional: Refers to
financial holding companies, banks,
insurance
companies,
bill
finance
companies, trust enterprises, securities
firms operating proprietary trading or
underwriting
business,
futures
commission
merchants
operating
proprietary trading business, securities
investment trust enterprises, securities
investment consulting enterprises, and
fund management companies, that are
lawfully incorporated and are regulated
by the competent financial authorities of
the jurisdiction where they are located.
8.Securities
exchange:
"Domestic
securities exchange"refers to the Taiwan
Stock Exchange Corporation;"foreign
securities exchange"refers to any
organized securities exchange market
that is regulated by the competent
securities authorities of the jurisdiction
where it is located.
9.Over-the-counter venue ("OTC venue",
"OTC"):"Domestic OTC venue"refers
to a venue for OTC trading provided by
a securities firm in accordance with the
Regulations
Governing
Securities
Trading
on
the Taipei
Exchange;
"foreign OTC venue"refers to a venue at
a financial institution that is regulated by
the foreign competent authority and that
is permitted to conduct securities
business.		 Mergers and Acquisitions Act, Financial
Holding
Company
Act,
Financial
Institution Merger Act and other acts, or
to transfer of shares from another
company through issuance of new shares
of its own as the consideration therefor
(hereinafter "transfer of shares") under
Article 156,paragraph 8of the Company
Act.
3.~6. Omit.
7.”Latest financial statements”: Refers to the
financial statements of the company
audited or examined by certified public
accountant (“CPA”) which has been
published in accordance with applicable
regulation before the subject acquisition
or disposal of assets		 4.Stipulated the
range of the
domestic/foreign
securities
exchange and
OTC venue.
5.Deleted the
term “Latest
financial
statements”.
Article 5:
Limits of amounts for the Company and
each subsidiaryin acquisition of non-		 Article 5:
Limits of amounts for the Company and
each subsidiaryin acquisition of non-		 According to
IFRS16 “Leases”,
non-operating

35

After amendment Before amendment Explanation
operating related real estate,right-of-use
assetsand securities investment:
1.The acquisition of real estate andright-
of-use assetsfor non-operating purpose
shall not exceed 50% of its paid-in
capital.
2.~3. Omit.		 operating related real estate and securities
investment:
1.The acquisition of real estate for non-
operating purpose shall not exceed 50% of
its paid-in capital.
2.~3. Omit.		 related real estate
and the right of
use assets
incorporated in
the procedures
which company
formulated to
calculate the
limit.
Article 6:
Professional appraisers and their officers,
certified public accounts, attorneys, and
securities underwriters that provide public
companies with appraisal reports, certified
public accountant's opinions, attorney's
opinions, or underwriter's opinionsshall
meet the following requirements:
1.May not have previously received a final
and
unappealable
sentence
to
imprisonment for 1 year or longer for a
violation of the Act, the Company Act,
the Banking Act of The Republic of
China, the Insurance Act, the Financial
Holding Company Act, or the Business
Entity Accounting Act, or for fraud,
breach of trust, embezzlement, forgery
of documents, or occupational crime.
However, this provision does not apply if
3 years have already passed since
completion of service of the sentence,
since expiration of the period of a
suspended sentence, or since a pardon
was received.
2. May not be a related party or de facto
related party of any party to the
transaction.
3.If the company is required to obtain
appraisal reports from two or more
professional appraisers, the different
professional appraisers or appraisal
officers may not be related parties or de
facto related parties of each other.
When issuing an appraisal report or
opinion, the personnel referred to in the
preceding paragraph shall comply with the
following:
1.Prior to accepting a case, they shall
prudently assess their own professional
capabilities, practical experience, and
independence.		 Article 6:
Professional appraisers and their officers,
CPA, attorneys, and securities underwriters
that provide the Company with appraisal
reports, CPA's opinions, attorney's opinions,
or underwriter's opinionsshall not be a
related party of any party to the transaction.		 1.lt is stipulated
the qualification
of the related
professional.
2.Confirmed the
responsibility of
the external
professional and
allotted appraisal
reports, opinions
or
representation
matter which
the related
professional
provide.

36

After amendment Before amendment Explanation
2.When examining a case, they shall
appropriately plan and execute adequate
working procedures, in order to produce
a conclusion and use the conclusion as
the basis for issuing the report or
opinion.
The
related
working
procedures,
data
collected,
and
conclusion shall be fully and accurately
specified in the case working papers.
3.They shall undertake an item-by-item
evaluation of the comprehensiveness,
accuracy, and reasonableness of the
sources of data used, the parameters, and
the information, as the basis for issuance
of the appraisal report or the opinion.
4.They shall issue a statement attesting to
the
professional
competence
and
independence of the personnel who
prepared the report or opinion, and that
they have evaluated and found that the
information used is reasonable and
accurate, and that they have complied
with applicable laws and regulations.
Article 7:
Procedures for acquisition or disposal of
real estate,equipment orright-of-use assets
are as follows:
1. Evaluation and operating procedures
Acquisition or disposal of real estate and
equipmentor right-of-use assets thereof
shall follow the Company’s internal
control procedures of fixed assets.
2.Terms and conditions of the transaction
and level of authorization
(1)The transaction price of acquisition
or disposal of real estateor right-of-
use assets thereofshall reference the
publicly announced value, appraised
price, and actual transaction price in
neighboring area to determine
conditions and price.
Final transaction price shall be
approved in accordance with the
level of authorization.
Where each transaction price exceeds
10% of the Company’s net worth,		 Article 7:
Procedures for acquisition or disposal of real
estate or equipment are as follows:
1.Evaluation and operating procedures
Acquisition or disposal of real estate and
equipment shall follow the Company’s
internal control procedures of fixed assets.
2.Terms and conditions of the transaction
and level of authorization
(1)The transaction price of acquisition or
disposal of real estate shall reference the
publicly announced value, appraised
price, and actual transaction price in
neighboring area to determine conditions
and price.
Final transaction price shall be approved
in accordance with the level of
authorization.
Where each transaction price exceeds
10% of the Company’s net worth,
approval from the Audit Committee and a
resolution of the Board of Directors.
(2)The transaction price of acquisition or
disposal of equipment shall be determined		 1.Add the right-
use-assets to
Article 7
according to
IFRS16“Leases”.
2.The government
agency in the
item 4 means our
Central and
Local
Government.
Consider that
having the
business with the
government
agency needs to
bid against each
other, so the
price is less
likely to be
manipulated, and
absolved from
the professional’s
opinions. In
addition,
the foreign

37

After amendment Before amendment Explanation
approval from the Audit Committee
and a resolution of the Board of
Directors.
(2)The transaction price of acquisition
or disposal of equipmentor right-of-
use assets thereofshall be determined
either by price quotation, price
comparison, price negotiation or
tender. Final transaction price shall
be approved in accordance with the
level of authorization. Where each
transaction price exceeds 10% of the
Company’s net worth, an approval
from Audit Committee and a
resolution of the Board of Directors
shall be obtained.
(3)Omit.
3.Where the Company acquires or disposes
real estate or equipment, appropriate
approval or right-of-use assets thereof
shall be obtained in accordance with the
level of authorization and responsible
department shall execute accordingly.
4.Appraisal report of real estate, equipment
or right-of-use assets thereof:
In acquiring or disposing real estate,
equipment or right-of-use assets thereof
where the transaction price reaches 20%
of the Company's paid-in capital or
NT$300 million or more, the Company
shall obtain an appraisal report prior to
the
date
of
occurrence
from
a
professional appraiser and shall further
comply with the following provisions,
except trading with a government
agency, contracting third parties to build
on
the land owned or rented by the
Company, or acquiring or disposing of
machinery and equipment or right-of-use
assets thereof for operating purposes.
(1)Where due to special circumstances
and it is necessary to give a restricted
price, specified price, or special price
as a reference basis for the transaction
price,
the
transaction
shall
be
submitted for approval from the Audit		 either
by
price
quotation,
price
comparison, price negotiation or tender.
Final transaction price shall be approved
in
accordance
with
the
level
of
authorization. Where each transaction
price exceeds 10% of the Company’s net
worth, an approval from Audit Committee
and a resolution of the Board of Directors
shall be obtained.
(3)Omit.
3.Where the Company acquires or disposes
real estate or equipment, appropriate
approval shall be obtained in accordance
with the level of authorization and
responsible department shall execute
accordingly.
4.Appraisal report of real estate and
equipment:
In acquiring or disposing real estate or
equipment where the transaction price
reaches 20% of the Company's paid-in
capital or NT$300 million or more, the
Company shall obtain an appraisal report
prior to the date of occurrence from a
professional appraiser and shall further
comply with the following provisions,
except trading with a government agency,
contracting third parties to build on
the land owned or rented by the Company,
or acquiring or disposing of machinery
and equipment for operating purposes.
(1)Where due to special circumstances
and it is necessary to give a restricted
price, specified price, or special price
as a reference basis for the transaction
price, the transaction shall be submitted
for approval from the Audit Committee
and the Board of Directors in advance,
and the same procedure shall be
followed for any future changes to the
terms and conditions of the transaction.
(2)~(5).Omit.		 governments
aren’t include in
the exempt range
of Article 7
because the
related
regulation and
bargaining
policy aren’t
definite.
Revised the item
4 words.
3.Revised words.

38

After amendment Before amendment Explanation
Committee and the Board of Directors
in advance, and the same procedure
shall be followed for any future
changes to the terms and conditions of
the transaction.
(2)~(5).Omit.
Article 8:
1.~3. Omit.
4. Professional opinions:
(1)In acquiring or disposing securities
where the transaction price reaches
20% of the Company’s paid-in capital
or exceeds NT$300 million, opinions
regarding the transaction price from
CPA shall be obtained prior to the date
of occurrence. Where CPA’s opinion
is based on the professional opinions,
it
shall be prepared in accordance with
the provisions of Statement of
Auditing Standards No. 20 published
by the ARDF. Where the transaction
price is available in the open market
or
otherwise
regulated
by
the
Financial Supervisory Commission
(“SFC”) under the Executive Yuan,
the limitation shall not apply.
(2)Omit.		 Article 8:
1.~3. Omit.
4. Professional opinions:
(1)In acquiring or disposing securities
where the transaction price reaches
20% of the Company’s paid-in capital
or exceeds NT$300 million, opinions
regarding the transaction price from
CPA shall be obtained prior to the date
of occurrence. Where CPA’s opinion is
based on the professional opinions, it
shall be prepared in accordance with the
provisions of Statement of Auditing
Standards No. 20 published by the
ARDF. Where the transaction price is
available in the open market or
otherwise regulated by the Financial
Supervisory
Commission
(“SFC”)
under
the
Executive
Yuan,
the
limitation shall not apply.
(2)Omit.		 Revised words.
Article 9:
1.When acquiring or disposing assets from
a related party, in addition to the
procedures set forth or right-of-use
assets thereofin the preceding
paragraphs, if the transaction price
reaches 10% or more of the
Company’s total assets, an appraisal
report from a professional appraiser
or a CPA’s opinion shall be obtained
to ensure necessary resolutions are
adopted and the reasonableness of
the transaction terms is appraised.
When judging whether a trading
counterparty is a related party, in
addition to legal formalities, the
substance of the relationship shall
also be considered.
2. Evaluation and operating procedures:		 Article 9:
1.When acquiring or disposing assets from a
related party, in addition to the procedures
set forth in the preceding paragraphs, if the
transaction price reaches 10% or more of
the Company’s total assets, an appraisal
report from a professional appraiser or a
CPA’s opinion shall be obtained to ensure
necessary resolutions are adopted and the
reasonableness of the transaction terms is
appraised. When judging whether a
trading counterparty is a related party, in
addition to legal formalities, the substance
of
the
relationship
shall
also
be
considered.
2. Evaluation and operating procedures:
When acquiring or disposing real estate
with a related party regardless of its
transactionprice,or acquiringor		 1.The government
bond in the item
2 means the
domestic bond.
Consider that
domestic bonds
are definite and
easy to inquire,so
they absolved
from the
approval by the
Board of
Directors
In addition, the
foreign
governments’
bonds aren’t
include in the
exempt range of
Article 9 because
their bonds aren’t
definite. Add the

39

After amendment

When acquiring or disposing real estate or right-of-use assets thereof with a related party regardless of its transaction price, or acquiring or disposing assets or right-of-use assets thereof other than real estate with a related party for the transaction price over 20% of the Company’s paid-in capital, 10% of the Company’s total assets, NT$300 million, except in trading of domestic government bonds government bonds, bonds with call/put option, and money market funds issued by domestic security/investment/trust institutions, the transaction may not be proceeded until the following matters have been approved by the Audit Committee and resolved by the Board of Directors. Contracts and payments shall only be signed and paid upon the approval from board of directors. When acquiring or disposing equipment for production purpose with a related party, board of directors can authorize the chairman to exercise the duty within the prescribed limit and report to the board of directors upon completion of the transactions.

(1)~(2) Omit.

(3)Information regarding the reasonableness of the preliminary transaction terms or right-of-use assets thereof in accordance with subparagraph 1 and 4 of paragraph 3, Article 9. (4)~(7) Omit. With respect to the types of transactions listed below, when to be conducted between the company and its parent or subsidiaries, or between its subsidiaries in which it directly or indirectly holds 100 percent of the issued shares or authorized capital, the company's board of directors

Before amendment

Explanation right-use-assets to Article 7 according to IFRS16“Leases”. 2.Due to the overall planning of the business, there is a need to transfer the equipment which collectively purchase or lease for business use, or the real estate would probably subleased, and the trade risk is low. That company acquires or disposes the equipments and real estate for business use,or the right-of-use assets, it may be authorized by the chairman of the board of directors.

disposing assets other than real estate with a related party for the transaction price over 20% of the Company’s paid-in capital, 10% of the Company’s total assets, NT$300 million, except for buying/selling government bonds, bonds with call/put option, and money market funds issued by domestic security/investment/trust institutions, the transaction may not be proceeded until the following matters have been approved by the Audit Committee and resolved by the Board of Directors. Contracts and payments shall only be signed and paid upon the approval from board of directors. When acquiring or disposing equipment for production purpose with a related party, board of directors can authorize the chairman to exercise the duty within the prescribed limit and report to the board of directors upon completion of the transactions.

  • (1)~(2) Omit.

  • (3)Information regarding the reasonableness of the preliminary transaction terms in accordance with subparagraph 1 and 4 of paragraph 3, Article 9.

Article 9. 3.To cooperate (4)~(7) Omit. with factory 3.Evaluation of the reasonableness of the workshop, real transaction costs: estate leasing (1)When acquiring real estate from a practice and related party, the reasonableness of the extend transaction costs shall be evaluated by acquisition of the following means: real property (a).~(b).Omit. right-of-use (2)Where land and structures thereupon assets from a are combined as a single property related party, purchased in one transaction, the may set and transaction costs for the land and the estimate structures may be separately appraised transaction price in accordance with either of the means that is reasonable listed in the preceding paragraph. references and (3)While the cost of the real estate update acquired from a related party shall be transaction case appraised in accordance with theppraised in accordance with theraised in accordance with the involving

  • 3.Evaluation of the reasonableness of the transaction costs:

  • (1)When acquiring real estate from a related party, the reasonableness of the transaction costs shall be evaluated by the following means: (a).~(b).Omit.

  • (3)While the cost of the real estate acquired from a related party shall be appraised in accordance with theppraised in accordance with theraised in accordance with the

40

After amendment Before amendment Explanation
may delegate the board chairman to decide
such matters when the transaction is within
a certain amount and have the decisions
subsequently submitted to and ratified by
the next board of directors meeting:
(1)Acquisition or disposal of
oequipment or right-of-use assets
thereof held for business use.
(2)Acquisition or disposal of real
property right-of-use assets held for
business use.
3. Evaluation of the reasonableness of the
transaction costs:
(1) When acquiring real estate from a
related partyor right-of-use assets
thereof,the reasonableness of the
transaction costs shall be evaluated by
the following means:
(a).~(b).Omit.
(2)Where land and structures thereupon
are combined as a single property
purchasedor leasedin one transaction,
the transaction costs for the land and
the structures may be separately
appraised in accordance with either of
the means listed in the preceding
paragraph.
(3) While the cost of the real estateor
right-of-use assets thereof acquired
from a related party shall be appraised
in accordance with the provisions of
the subparagraph (1) of paragraph 3,
Article 1, CPA shall also be engaged
to review the appraisal and render a
specific opinion.
(4) Where the real estateor right-of-use
assets thereofis acquired from a
related party, it shall be appraised in
accordance with the provisions of the
subparagraph (1) of paragraph 3,
Article 9, and if the appraised cost is
lower than the actual transaction cost,
the paragraph (5) of Item 3, Article 9
shall apply. However, where the
following
circumstances
exist,
objective
evidence
has
been
submitted and specific opinions on
reasonableness have been obtained
from a professional real estate
appraiser and a CPA, this restriction
shall not apply:		 provisions of the subparagraph (1) of
paragraph 3, Article 1, CPA shall also
be engaged to review the appraisal and
render a specific opinion.
(4)Where the real estate is acquired from a
related party, it shall be appraised in
accordance with the provisions of the
subparagraph (1) of paragraph 3,
Article 9, and if the appraised cost is
lower than the actual transaction cost,
the paragraph (5) of Item 3, Article 9
shall apply. However, where the
following
circumstances exist, objective evidence
has been submitted and specific
opinions on reasonableness have been
obtained from a professional real estate
appraiser and a CPA, this restriction
shall not apply:
(a)Where the related party acquires
undeveloped land or leased land for
development and in compliance with
one of the following conditions:
a. Omit.
b.Where the recent transactions by
unrelated
parties
within
the
preceding year involving other
floors of the same property or
neighboring or closely valued
parcels of land, and the land area
and the transaction terms are
similar in consideration of the
reasonable price discrepancies in
floor or land prices in per
property market practices.
c.Where the recent leasing
transactions by unrelated parties
for other floors of the same
property within the preceding
year, and the transaction terms are
similar in consideration of the
reasonable price discrepancies
among floors per property leasing
market practices.
(b).Where the Company acquiring real
estate from a related party and the
terms of the transaction are similar
to
the
terms
of
the
recent
transactions
for
acquisition
of
neighboring
or
closely
valued
parcels of land of a similar size by		 neighboring by
unrelated parties
within the
preceding year.
4. In addition to
the overall
planning of the
Group's business,
there is the
possibility of
coordinating
collective leasing
of real estate,
sub-lease, and
the risk of non-
conventional
transactions is
relatively low.
Add the third of
the six paragraph
of four order .
The provisions
for assessing the
reasonableness
of the transaction
costs (the price at
which the
acquirer obtains
the price of the
real estate
transaction or the
price paid for the
lease of the real
estate) are
assessed in
accordance with
this section
5.Revised words.

41

  • After amendment Before amendment Explanation (a)Where the related party acquires unrelated parties within the undeveloped land or leased land preceding year. Where the recent for development and in transactions for neighboring or compliance with one of the closely valued parcels of land following conditions: mentioned in the preceding a. Omit. paragraph in principle refers to b.Where the recent transactions by parcels on the same or an adjacent unrelated parties within the block and within a distance of no preceding year involving other more than 500 meters or parcels floors of the same property or close in publicly announced current neighboring or closely valued value; transaction for similarly sized parcels of land, and the land parcels in principle refers to area and the transaction case transactions completed by unrelated terms are similar in parties for parcels with a land area of consideration of the reasonable no less than 50 percent of the price or Lease convention property in the planned transaction; discrepancies in floor or land within one year refers to one year prices in per property market from the actual date of acquisition of practices. the real estate.

(b)Where the Company acquiring real (5)Where the Company acquires real estate or real property right-of-use estate from a related party and the assets from a related party and the results of appraisals conducted in terms of the transaction are similar accordance with the provisions of the to the terms of the recent subparagraph (1) and (2) of paragraph transactions case for acquisition of 3, Article 9, are uniformly lower than neighboring or closely valued the transaction price , the following parcels of steps shall be taken: land of a similar size by unrelated (a) A special reserve shall be set aside parties within the preceding year. in accordance with the provisions Where the recent transactions case of Article 41, paragraph 1 of the for neighboring or closely valued Act against the difference between parcels of land mentioned in the the real estate transaction price preceding paragraph in principle and the appraised cost, and may refers to parcels on the same or an not be distributed or used for adjacent block and within a capital increase or issuance of distance of no more than 500 bonus shares. Where the meters or parcels close in publicly Company uses the equity method announced current value; to account for its investment in transaction case for similarly another public company, then the sized parcels in principle refers to special reserve called for under transactions completed by Article 41, paragraph of the Act unrelated parties for parcels with a shall be set aside pro rata in a land area of no less than 50 percent proportion consistent with the of the property in the planned share of the Company's equity transaction case; within one year stake in the other company refers to one year from the actual (b)~(c).Omit. date of acquisition of the real estate Where a public company uses the or right-of-use assets thereof. equity method and a public company (5)Where the Company acquires real that has set aside a special reserve estate or right-of-use assets thereof under the preceding paragraph may from a related party and the results of not utilize the special reserve until it

42

  • After amendment Before amendment Explanation appraisals conducted in accordance has recognized a loss on decline in with the provisions of the market value of the assets it subparagraph (1) and (2) of paragraph purchased or, they have been disposed 3, Article 9, are uniformly lower than of, adequate compensation has been the transaction price , the following made, or the status quo ante has been steps shall be taken: restored, or there is other evidence

  • (a) A special reserve shall be set aside confirming that there was nothing in accordance with the provisions unreasonable about the transaction, of Article 41, paragraph 1 of the and the FSC has given its consent. Act against the difference between (6)Where the Company acquires real the real estate transaction or rightestate from a related party and one of of-use assets thereof price and the the following circumstances exists, appraised cost, and may not be the acquisition shall be conducted in distributed or used for capital accordance with the provisions increase or issuance of bonus paragraph 1 and 2 of Article 9, while shares. Where the Company uses subparagraph 1, 2 and 3 of paragraph the equity method to account for its 3 shall not apply: investment in another public a.The related party acquired the real company, then the special reserve estate through inheritance or as a called for under Article 41, gift. paragraph of the Act shall be set b.More than five years had elapsed aside pro rata in a proportion from the time the related party consistent with the share of the signed the contract to obtain the real Company's equity stake in the estate to the signing date for the other company. current transaction.

  • (b)~(c).Omit. c.The real property is acquired Where a public company uses the through signing of a joint equity method and a public company development contract with the that has set aside a special reserve related party, or through engaging a under the preceding paragraph may related party to build property, not utilize the special reserve until it either on the company’s own land or on rented land.

Where a public company uses the equity method and a public company that has set aside a special reserve under the preceding paragraph may not utilize the special reserve until it has recognized a loss on decline in market value of the assets it purchased or leased at a premium, or they have been disposed of, or the leasing contract has been terminated, or adequate compensation has been made, or the status quo ante has been restored, or there is other evidence confirming that there was nothing unreasonable about the transaction, and the FSC has given its consent.

  • (7)Where the Company obtains real estate from a related party, it shall also comply with the provisions set forth in the subparagraph (5) of paragraph 3,

Article 9, if there is other evidence indicating that the acquisition was not an arms length transaction.

  • (6)Where the Company acquires real estate or right-of-use asset from a related party and one of the following circumstances exists, the acquisition shall be conducted in accordance with the provisions paragraph 1 and 2 of Article 9, while subparagraph 1, 2 and 3 of paragraph 3 shall not apply: a.The related party acquired the real

43

After amendment Before amendment Explanation
estateor right-of-use assetthrough
inheritance or as a gift.
b.More than five years had elapsed
from the time the related party
signed the contract to obtain the real
estateor right-of-use assetto the
signing
date
for
the
current
transaction.
c.Omit.
d.The real property right-of-use assets
for business use are acquired by the
public company with its parent or
subsidiaries, or by its subsidiaries in
which it directly or indirectly holds
100 percent of the issued shares or
authorized capital.
(7)Where the Company obtains real
estateor right-of-use assetfrom a
related party, it shall also comply
with the provisions set forth in the
subparagraph (5) of paragraph 3,
Article 9, if there is other evidence
indicating that the acquisition was
not an arms length transaction.
Article 10:
Procedures for acquisition or disposal of
Membership, intangible assetsor
right-of-use assets
1.Evaluation and operating procedures
The Company’s acquisition or
disposal of Membership, Intangible
assetsor right-of-use assetsshall be
dealt with in accordance with the
applicable laws,rules, and
regulations.
2.Terms and conditions of the transaction
and level of authorization
(1) Omit.
(2) The transaction price of acquisition
or disposal of intangible assetsor
right-of-use assetsshall reference
the publicly announced value and
appraised price. Final transaction
price shall be make an analysis to
report chairman. The chairman is
authorized
to
approve
any
transaction
amounting
to
NT$20,000,000 or below and over
10% of the Company’s paid-in
capital while such transaction shall		 Article 10:
Procedures for acquisition or disposal of
membership orintangible assets
1. Evaluation and operating procedures
The Company’s acquisition or disposal
ofmembership orintangible assets shall
be dealt with in accordance with the
applicable laws, rules, and regulations.
2. Terms and conditions of the transaction
and level of authorization
(1) Omit.
(2)The transaction price of acquisition or
disposal of intangible assets shall
reference the publicly announced
value and appraised price. Final
transaction price shall be make an
analysis to report chairman. The
chairman is authorized to approve any
transaction
amounting
to
NT$20,000,000 or below and over
10% of the Company’s paid-in capital
while such transaction shall be
reported to the following board
meeting and executed in accordance
with the level of authorization. For		 Add rights to use
for IFRS#16
purpose.

44

After amendment Before amendment Explanation
be reported to the following board
meeting and executed in accordance
with the level of authorization. For
any transaction in amount exceeding
NT$20,000,000,
either
a
pre-
approval or an approval in a
retroactive
basis
from
borad
meeting is needed.
3. The execution
The Company’s financial, using
department and administration is
responsible for the execution regarding
the acquisition or disposal of
membership or intangible assets or
right-of-use assets upon completion of
procedures mentioned above.
4.CPA’s opinion is required under the
following circumstances
(1)Where the transaction price of
acquiring or disposing membership,
intangible assets or right-of-use assets
reaches 20% of the Company’s paid-
in capital orexceeds NT$300 million,
except for those transactions dealed
with domestic government, CPA’s
opinion, in compliance with the
Provisions of Statement of Auditing
Standards No. 20 published by the
ARDF, shall be obtained prior to the
date of occurrence.
(2)Where the company acquires or
disposes ofmembership,intangible
assets orright-of-use assetsthrough
court
auction
procedures,
the
evidentiary documentation issued by
the court may be substituted for the
appraisal report or CPA opinion.		 any transaction in amount exceeding
NT$20,000,000, either a pre-approval
or an approval in a retroactive basis
from borad meeting is needed.
3. The execution
The Company’s financial, using
department and administration is
responsible for the execution regarding
the acquisition or disposal of
membership orintangible assets upon
completion of procedures mentioned
above.
4.CPA’s opinion is required under the
following circumstances
(1) Where the transaction price of
acquiring or disposingmembership
orintangible assets reaches 20% of
the Company’s paid-in capital
orexceeds NT$300 million, except
for those transactions dealed with
government, CPA’s opinion, in
compliance with the Provisions of
Statement of Auditing Standards No.
20 published by the ARDF, shall be
obtained prior to the date of
occurrence.
(2) Where the company acquires or
disposes ofmembership or
intangible assets through court
auction procedures, the evidentiary
documentation issued by the court
may be substituted for the appraisal
report or CPA opinion.
Article 12:
Procedures for acquisition or disposal of
financial derivatives
1. Trading principles and strategies.
(1)~(2) Omit.
(3) Authorization and delegation
A. Financial department
a.Trading		 Article 12:
Procedures for acquisition or disposal of
financial derivatives
1.Trading principles and strategies.
(1)~(2) Omit.
(3) Authorization and delegation
A. Financial department
a.Trading		 1. revising words
related to
authority, loss
ceiling, etc. for
derivative
purpose.
2.Revised
duplicate words

45

After amendment After amendment After amendment Before amendment Explanation
(a)~(c) omit.
(d) Shall material incident occur
in the financial market and
existing strategies is no
longer
applicable,
new
trading strategies shall be
proposed and used as the
basis for trading upon
approval from the general
managerand chairman.
b.Accounting
(a)~(b) omit.
(c)To proceed monthly
evaluation and submit the
report to the general manager
and chairman for their review
and approval.
(d) Omit.
(e) Declaration and
announcement in
accordance with the
regulations of the FSC.
c.Omit.
d.Level of approval
(a) Level of approval required
for each transaction of
hedging purpose
Level of
approval
Delegation
of each
transaction
Delegation
of each
accumulat
ed net
position
Fina nce
Director
Up to
US$0.5
million
(Included)
General
Manager
From
US$0.5mil
lion up to
US$2
million
(Included)
From
US$10
million up
to US$30
million
(Included)
Chairman
Above
US$2
million
Up to US$ 30 million
(b) Omit.		 (a)~(c) omit.
(d) Shall material incident occur
in the financial market and
existing strategies is no
longer
applicable,
new
trading strategies shall be
proposed and used as the
basis
for
trading
upon
approval from the general
manager.
b.Accounting
(a)~(b) omit.
(c)To proceed monthly
evaluation and submit the report
to the general manager for
review and approval.
(d) Omit.
(e) Declaration and
announcement in accordance
with the regulations of the
FSC.
c.Omit.
d.Level of approval
(a) Level of approval required
for each transaction of
hedging purpose
Level of
approval
Delegation
of each
transaction
Delegation of
each
accumulated
netposition
Finance
Director
Up to
US$0.5
million
(Included)
Up to US$1.5
million
(Included)
General
Manager
From
US$0.5mil
lion up to
US$2
million
(Included)
Up to US$5
million
(Included)
Chairman
Above
US$2
million
Up to US$ 10
million
(Included)
(b) Omit.
B. Internal Audit
Internal audit shall be aware of the
Level of
approval		 Delegation
of each
transaction		 Delegation
of each
accumulat
ed net
position
Fina nce
Director		 Up to
US$0.5
million
(Included)
General
Manager		 From
US$0.5mil
lion up to
US$2
million
(Included)		 From
US$10
million up
to US$30
million
(Included)
Chairman Above
US$2
million		 Up to US$ 30 million
(b) Omit.

46

After amendment Before amendment Explanation
B. Internal Audit
Internal audit shall be aware of
the adequacy of the derivative
transaction on a periodic basis and
should issue monthly audit
report based on the compliance of
the derivative transaction. Shall
there be any material violation; a
written notice shall be sent to
the Independent Director.
C. Performance Evaluation
a.Trading with hedging purpose
(a)~(b) omit.
(c)The Finance department
shall provide evaluation of the
foreign currency based
position, the market trend and
analysis of foreign currency to
the general general manager
and chairmanfor their review.
b.Omit.
D. Total transaction amount, and the
maximum limit of loss
a.The Contract Amount
(a)Transaction amount for
hedging purpose
The Finance Department shall be
in control of the currency based
position to avoid any transaction
risks. The transaction amount for
hedging
purpose
shall
not
exceed the two-third net trading
position position within the
Company.Chairman’sapproval
is required if the transaction
amount
exceeded
the
aforementioned limit.
(b)Omit
b. Maximum Limit of Loss
(a)The purpose of hedging is
to avoid risks andthe total
aggregated loss amount of
transactions based on
hedging purpose shall not
exceed US$500,000.
(b)The loss of transaction		 adequacy of the derivative
transaction on a periodic basis and
should issue monthly audit
report based on the compliance of
the derivative transaction. Shall
there be any material violation; a
written notice shall be sent to
theAudit Committee.
C. Performance Evaluation
a. Trading with hedging purpose
(a)~(b) omit.
(c)The Finance department shall
provide evaluation of the
foreign currency based position,
the market trend and
analysis of foreign currency to
the general general manager for
review.
b. Omit.
D. Total transaction amount, and the
maximum limit of loss
a. The Contract Amount
(a)Transaction amount for
hedging purpose
The
Finance
Department
shall be in control of the
currency based position to
avoid any transaction risks.
The transaction amount for
hedging purpose shall not
exceed the two-third net
trading
position
position
within the Company. General
manager’s
approval
is
required if the transaction
amount
exceeded
the
aforementioned limit.
(b)Omit
b. Maximum Limit of Loss
(a) The purpose of hedging is to
avoid risks and therefore
there is no need to setup a
ceiling of loss.
(b)The loss of transaction based
on specific purpose shall not
exceed 10% of trading
amount. If the loss amount

47

After amendment Before amendment Explanation
based on specific purpose
shall not exceed 10% of
trading amount. If the loss
amount exceeds the limit,
the General managerand
Chairmanshall be notified
and responsive actions shall
be discussed in the Board of
Directors meeting.
(c)Loss amount per individual
contract shall not exceed
US$50,000.
(d)Omit
2. Measures of Risk management
(1)~(3)Omit.
(4) Cash-Flow Risk Control
To maintain stable turnover of the
working capital of the Company,
the source of the capital for
derivative transaction shall be self
funded, and the transaction shall
take
capital
needs
into
consideration.
(5)Operating Risk Control
a~c Omit.
3. Internal Audit system
(1) Internal auditors shall check the
suitability of internal control of
derivative transactions periodically
and inspect monthly the compliance
of the trading departments with the
"Handling Procedure to Engage in the
Transaction of Derivative Products"
and analyze the trading cycle in order
to make the auditing report. Shall
there be any material violation; a
written notice shall be sent to
theIndependent director.
(2)Omit.
4. Periodic evaluation system
(1)The Board of Directors shall
authorize the management to
monitor and review the
compliance of the derivative
transaction with internal
procedures periodically. If any
abnormity detected in the market
value evaluation report, the Board		 exceeds the limit, the
General manager shall be
notified and responsive
actions shall be discussed in
the Board of Directors
meeting.
(c)Loss amount per individual
contract shall not exceed
US$20,000 or 5%of trading
contract.
(d)Omit
2. Measures of Risk management
(1)~(3)Omit.
(4) Cash-Flow Risk Control
To maintain stable turnover of the
working capital of the Company, the
source of the capital for derivative
transaction shall be self funded, and
the transaction shall take capital
needs into considerationfor next
three months.
(5) Operating Risk Control
a~c Omit.
d.The position held under the
derivative trading shall be
evaluated once a
week, while transaction
associated with hedging purpose
shall be evaluated twice per
month, and the evaluation reports
shall
be
submitted
to
the
management authorized by the
Board of Directors.
3. Internal Audit system
(1)Internal auditors shall check the
suitability of internal control of
derivative transactions periodically
and inspect monthly the compliance
of the trading departments with the
"Handling Procedure to Engage in
the Transaction of Derivative
Products" and analyze the trading
cycle in order to make the auditing
report. Shall there be any material
violation; a written notice shall be
sent to theAudit Committee.
(2)Omit.
4. Periodic evaluation system

48

After amendment Before amendment Explanation
of Directors shall be informed
immediately and responsive
actions shall also be taken
accordingly.
(2)The position held under the
derivative trading shall be
evaluated once a week, while
transaction associated with
hedging purpose shall be
evaluated twice per month, and
the evaluation reports shall be
submitted to the management
authorized by the Board of
Directors.
5. Auditing principle by the Board of
Directors
(1)Board of Directors shall assign the
management to constantly monitor
and control the risks of
derivative transaction with the
following principles:
a. To conduct periodic review and
check if the risk management
measures are adequate and in
compliance with the internal
procedures.
b.Omit.
(2)Omit.
(3)Derivative transaction shall be
conducted in accordance with the
relevant procedures and reported
to Board of Directors afterwards.
(4)Omit.		 (1)The Board of Directors shall
authorize the management to
monitor and review the compliance
of the derivative transaction with
internal procedures periodically. If
any abnormity detected in the
market value evaluation report, the
Board of Directors shall be
informed immediately and
responsive actions shall also be
taken accordingly.
(2)The position held under the
derivative trading shall be evaluated
once a week, while transaction
associated with hedging purpose
shall be evaluated twice per month,
and the evaluation reports shall be
submitted to the management
authorized by the Board of
Directors.
5. Auditing principle by the Board of
Directors
(1) Board of Directors shall assign
the management to constantly
monitor and control the risks of
derivative transaction with the
following principles:
a. To conduct periodic review and
check if the risk management
measures are adequate and in
compliance with the internal
procedures.
b. Omit.
(2)Omit.
(3)Derivative transaction shall be
conducted in accordance with the
relevant procedures and reported
to Board of Directors afterwards.
(4) Omit.
Article 14:
Procedures for public disclosure of
Information
1. Disclosure items and standards
(1)Acquisition or disposal of real estate
or right-of-use assetswith a related		 Article 14:
Procedures for public disclosure of
Information
1. Disclosure items and standards
(1)Acquisition or disposal of real estate
with a relatedpartyregardless of its		 1. adding rights
to use for
IFRS#16
purpose.
2. revising certain
words to exempt
domestic bond

49

After amendment

Before amendment

Explanation due to its simplicity. 3. revising item#1-4 of Article#1. 4. revising certain words related to investing company and related bond and funds transactions 5. revising words

After amendment After amendment Before amendment Explanation
party regardless of its transaction
price, or of assets other than real
estateor right-of-use assetswith a
related party for the transaction price
over 20% of the Company’s paid-in
capital, 10% of the Company’s total
assets, NT$300 million. Trading of
domesticgovernment bonds, bonds
with call or put options and
subscription or redemption of money
market funds issued by securities
investment trust companies are
excluded herein.
(2)Omit.
(3)Losses from derivative transaction
reaching the maximum limits of
aggregated losses or losses on
individual contracts set forth in The
Procedures adopted by the Company.
(4)Any transaction, other than those
referred in the preceding three
subparagraphs, such as disposal of
receivables by a financial institution
or investment in mainland China that
reaches 20% of the Company’s paid-
in capital or exceeds NT$300 million.
However, the following
circumstances shall not apply:
A.Trading ofdomesticgovernment
bonds.
B.Securities trading by Investmen
professionals on securitie
exchanges or over-the-counter
markets, general corporate bonds
or general financial bonds without
equity issued/outstanding
(excluding subordinated debt)in
domestic preliminary markets,or
subscription or redemption of
securities investment trust funds,
or marketable securities		 transaction price, or of assets other
than real estate with a related party
for the transaction price over 20% of
the Company’s paid-in capital, 10%
of the Company’s total assets,
NT$300 million. Trading of
government bonds, bonds with call or
put options and subscription or
redemption of money market funds
issued by securities investment trust
companies are excluded herein.
(2)Omit.
(3)Losses from derivative transaction
reaching the maximum limits of
aggregated losses or losses on
individual contracts set forth in The
Procedures adopted by the Company.
(4)Any transaction, other than those
referred in the preceding three
subparagraphs, such as disposal of
receivables by a financial institution
or investment in mainland China that
reaches 20% of the Company’s paid-
in capital or exceeds NT$300 million.
However, the following circumstances
shall not apply:
A.Trading of government bonds.
B.Securities trading by investment
professionals on foreign or
domestic securities exchanges or
over-the-counter markets, general
corporate bonds or general
financial bonds without equity
issued/outstanding indomestic
preliminary markets, or marketable
securities subscribed by security
companies due to the underwriting
needs and being designated as
underwriters in accordance with
related regulations of Taipei
Exchange.		 due to its
simplicity.
3. revising
item#1-4 of
Article#1.
4. revising certain
words related to
investing
company and
related bond and
funds
transactions
5.
revising
words

50

After amendment Before amendment Explanation
subscribed by security companies
due to the underwriting needs and
being designated as underwriters
in accordance with
relatedregulations of Taipei
Exchange.
C.Omit.
D.Acquisition or disposal
of equipment/machineryor right-
of-use assets used for operation,
the trading counterparty is not a
related party, and the transaction
amount is above and inclusive of
NT$5 billion.
E.Acquisition or disposal
by a company in the construction
business of real property or right-
of-use assets thereof for
construction use, and furthermore
thetransaction counterparty is not
a related party, and the transaction
amount reaches NT$500 million
F. Land acquired under an
arrangement for commissioned
construction on self-owned or
rented land, joint construction and
allocation of housing units, joint
construction and allocation of
ownership percentages, or joint
construction and separate sale,and
furthermore the transaction
counterparty is not a related party,
and the amount the company
expects to invest in the transaction
is above and inclusive of NT$5
million.
(1)The amount of transactions
mentioned above shall be
calculated as follows and
“within the preceding year” as
used in the following		 C.Omit.
D. Acquisition or disposal of
equipment/machinery used for
operation, the trading counterparty
is not a related party, and the
transaction amount is above and
inclusive of NT$5 billion.
E. Acquisition or disposal
Of equipment/machinery or right-
of-use assets used for operation,
the trading counterparty is not a
related party, and the transaction
amount is above and inclusive of
NT$5 billion.
F. Land acquired under an
arrangement for commissioned
construction on self-owned or
rented land, joint construction
and allocation of housing units,
joint construction and allocation
of ownership percentages, or joint
construction and separate sale,
and the amount the company
expects to invest in the transaction
is above and inclusive of NT$5
million.
(1)The amount of transactions
mentioned above shall be
calculated as follows and
“within the preceding year” as
used in the following
subparagraphs refers to the year
preceding the date of
occurrence of the current
transaction. Items duly
announced in accordance with
these regulations need not be
counted toward the transaction
amount :
A.~B. Omit
C. The cumulative
transaction amount of real

51

After amendment Before amendment Explanation
subparagraphs refers to the year
preceding the date of
occurrence of the current
transaction. Items duly
announced in accordance with
these regulations need not be
counted toward the transaction
amount :
A.~B. Omit
C. The cumulative
transaction amount of
real estateor right-of-
use assetsacquisitions
and disposals
(cumulative acquisitions and
disposals, respectively)
within the same development
project within the preceding
year.
D. Omit.
2. Omit.
3. Disclosure procedures
(1)Omit.
(2)The Company and on behalf of its
non-public subsidiaries shall
compile monthly reports on the
status of derivatives trading up to
the end of the preceding month and
enter the information in the
prescribed format into the reporting
website designated by the FSC by
the tenth day of each month.
(3)Omit.
(4)The Company acquiring or
disposing of assets shall keep all
relevant contracts, meeting minutes,
reference books, appraisal reports
and CPA, attorney, and securities
underwriter’s opinions at the
Company headquarters, where they
shall be retained for five years
except where another Act provides
otherwise.		 estate acquisitions and
disposals (cumulative
acquisitions and
disposals, respectively)
within the same
development project
within the preceding year.
D. Omit.
2. Omit.
3. Disclosure procedures
(1)Omit.
(2)The Company and on behalf of its
non-public subsidiaries shall compile
monthly reports on the status of
derivatives trading up to the
end of the preceding month and enter
the information in the prescribed
format into the reporting website
designated by the FSC by the tenth
day of each month.
(3)Omit.
(4)The Company acquiring or disposing
of assets shall keep all relevant
contracts, meeting minutes, reference
books, appraisal reports and CPA,
attorney, and securities underwriter’s
opinions at the Company
headquarters, where they shall be
retained for five years except where
another Act provides otherwise.
(5)Omit.

52

After amendment Before amendment Explanation
(5)Omit.
Article 15:
The subsidiaries of the Company shall
comply with the followings:
1~2. Omit.
3. The Company shall disclose
information on behalf of subsidiaries
that are not publicly listed in the
domestic market.
4. The paid-in capital or total asset of the
Company shall be the standard for
determining whether or not the
Company shall disclose information on
behalf of a subsidiary in the event of the
type of transaction.		 Article 15:
The subsidiaries of the Company shall
comply with the followings:
1~2. Omit.
3. The Company shall disclose information
on behalf of subsidiaries that are
not publicly listed in the domestic market.
4.The paid-in capital or total asset of the
Company shall be the standard for
determining whether or not the Company
shall disclose information on behalf of a
subsidiary in the event of the type of
transaction specified thereinreaches 20 %
of the paid-in capital or 10% of the total
asset.		 1. Requirement
for subsidiaries to
press release and
submission shall
be consistent with
the parent
company’s.
2. Revise words
to meet legal
operation
Article 17:
Implementation and amendment
1. Omit
2. Any acquisition or disposal of assets
made according to item#1 mentioned
above and the Procedures or the
regulations shall be agreed by a majority
votes
from
audit
committee
and
proposed to the board meeting for final
approval. While two-thirds of votes
from board meeting be needed if no
majority vote from audit committee is
obtained. Such resolution of audit
committee shall be specified in the
meeting minutes of board. The board
shall take into considerations of the
opinions from independent directors
when resolving the Procedures. The
board meeting minutes shall be specified
of any objection from independent
directors if any.
3. Omit		 Article 17:
Implementation and amendment
1. Omit
2. Any acquisition or disposal of assets made
according to item#1 mentioned above and
the Procedures or the regulations shall be
agreed by a majority votes from audit
committee and proposed to the board
meeting for final approval. While two-
thirds of votes from board meeting be
needed if no majority vote from audit
committee is obtained. Such resolution of
audit committee shall be specified in the
meeting minutes of board. The board shall
take into considerations of the opinions
from
independent
directors
when
resolving the Procedures. The board
meeting minutes shall be specified of any
objection from independent directors if
any.
3. Omit		 Revise words to
meet legal
operation.

53

Appendix I

(Translation – In case of any discrepancy between the Chinese and English versions, the Chinese version shall prevail.)

Kinsus Interconnect Technology Corp. Rules of Procedure for Shareholder Meetings

Article 1

Unless otherwise required by laws and regulations, the shareholders meeting of the Company shall be held in accordance with these Rules.

Article 2

This Corporation 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 number of shares present shall be calculated based on the attendance sheet or the attendance cards delivered.

Article 3

The attendance and voting at the shareholders’ meeting shall be calculated based on the shares.

Article 4

The place of the shareholders meeting shall be at the office of the Company or at a location convenient to the shareholders and suitable for convening a shareholders meeting. The time of the meeting may not be earlier than 9 a.m. or later than 3 p.m.

Article 4-1

This Corporation shall specify in its shareholders meeting notices the time during which shareholder attendance registrations will be accepted, the place to register for attendance, and other matters for attention. The time during which shareholder attendance registrations will be accepted, as stated in the preceding paragraph, shall be at least 30 minutes prior to the time the meeting commences. The place at which attendance registrations are accepted shall be clearly marked and a sufficient number of suitable personnel assigned to handle the registrations. 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.

Article 5

When the shareholders meeting was convened by the Board of Directors, the shareholders' meeting shall be presided by the Chairman of the Board of Directors. If the Chairman is absent or is unable to exercise the duties for certain reasons, the vice-Chairman shall act on his/her behalf. If the vice-Chairman is absent or is unable to exercise the duties for certain reasons, the Chairman may designate the managing director to act on his/her behalf; if there is no managing director, one of the directors may be designated to act on his/her behalf. Where the Chairman does not designate a proxy, the managing director or directors may elect a person among themselves to act on behalf of the Chairman. When the shareholders meeting was convened by other persons who have the convening right, the shareholders' meeting shall be presided by the convener. When a managing director or a director serves as chair, as referred to in the preceding paragraph, the managing director or director shall be one who has held that position for six months or more and who understands the financial and business conditions of the company. The same shall be true for a representative of a juristic person director that serves as chair.

Article 6

The Company may designate the attorneys, accountants or relevant personnel engaged to present in the shareholders meeting. The staffs handling the shareholders meeting shall wear identification cards or arm-band.

54

Article 7

This Corporation, beginning from the time it accepts shareholder attendance registrations, shall make an uninterrupted audio and video recording of the registration procedure, the proceedings of the shareholders meeting, and the voting and vote counting procedures.

The recorded materials of the preceding paragraph shall be retained for at least 1 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 8

Upon the starting time of the meeting, the chairman shall order the meeting to begin. However, where the shareholders present represent half or less than half of the total outstanding shares, the chairman may postpone the meeting for a total of two times. The postponed time may not in total exceed one hour. Where after two postponements, the shareholders present still do not meet the quorum but represent one-third or more of the total outstanding shares, a tentative resolution may be passed in accordance with Paragraph 1, Article 175 of the Company Act. If the shares present represent more than half of the total outstanding shares before the end of the meeting, the chairman may propose the tentative resolution to the shareholders meeting for voting in accordance with Article 174 of the Company Act.

Article 9

If the shareholders meeting is convened by the Board of Directors, its agenda shall be stipulated by the Board of Directors, and the meeting shall be held in accordance with the agenda and may not be changed without the resolution of the shareholders meeting. When the shareholders meeting was convened by other persons who have the convening right, the above paragraph shall apply mutatis mutandis. Before the closing of the discussions (including provisional motions) stipulated in the agenda under the above two paragraphs, the chairman may not announce the adjournment of the meeting without resolution. After the adjournment of the meeting, the shareholders may not elect a chairman to continue the meeting at the original address or at another location.

Article 10

Before a shareholder makes a statement, he/she must complete a statement slip stating the subject of the statement, the shareholder number (or attendance card number) and shareholder name, and the chairman shall determine the order of his/her statement. Where a shareholder present only completed a statement slip but did not make a statement, he/she will be deemed to not have made a statement. Where the statement made is inconsistent with that stated on the statement slip, the statement made will prevail. When a shareholder present makes a statement, the other shareholders may not make a statement and interfere, unless consent is obtained from the chairman and the shareholder making the statement. The chairman shall restrain such interfering shareholder.

Article 11

For each proposal, a shareholder may not make more than two statements, unless consent is obtained from the chairman. Each statement may not exceed five minutes. The chairman may restrain the shareholder form making the statement if he/she violates the above provisions or has exceeded the scope of the proposal.

Article 12

Where an institution is delegated to attend the shareholders meeting, it may only appoint one representative to attend.

Where the institution appoints two or more representatives to attend the shareholders meeting, only one person may make a statement for each proposal.

Article 13

After a shareholder makes a statement, the chairman may respond him/herself or designate a relevant person to respond.

55

Article 14

Where the chairman believes that the proposal discussed may be resolved, he/she mayannounce the ending of the discussion and propose that votes be made.

Article 15

If the Chairman adjourns the Meeting in violation of these Rules and Procedures, the shareholders may designate, by a majority of votes represented by shareholders attending the Meeting, one person as chairman to continue the Meeting.

Article 16

The personnel supervising and calculating the votes for the proposals shall be designated by the chairman, but the supervising personnel shall be a shareholder. Vote counting for shareholders meeting proposals or elections shall be conducted in public at the place of the shareholders meeting. Immediately after vote counting has been completed, the results of the voting, including the statistical tallies of the numbers of votes and the numbers of votes with which they were elected, shall be announced on-site at the meeting, and a record made of the vote.

Article 17

During the meeting, the chairman may announce recesses at his/her own discretion.

Article 18

Unless otherwise specified in the Company Act and the Articles of Incorporation, resolutions at a shareholders' meeting shall be adopted by a majority vote of the shareholders present.

Article 19

When a proposal has an amendment or a replacement, the chairman may combine it with the original proposal and determine the order of resolution. If one of the proposals is resolved, the other proposals will be deemed as rejected and there is no need to make another resolution.

Article 20

The chairman may instruct the security officer to assist in maintaining the order of the meeting. The security officer shall wear an arm-band with the word "Security" when assisting in the maintenance of the order of the meeting.

Article 21

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

Article 22

These Rules and Procedures of Shareholders' Meeting were made on June 28, 2003. The first amendment was on June 17, 2013.

56

Appendix II

(Translation – In case of any discrepancy between the Chinese and English versions, the Chinese version shall prevail.)

Articles of Incorporation of Kinsus Interconnect Technology Corp.

CHAPTER 1 GENERAL PROVISIONS

Article 1

This Company is incorporated under the Company Act, with the name of KINSUS INTERCONNECT TECHNOLOGY CORP, and the English name of KINSUS INTERCONNECT TECHNOLOGY CORP.

Article 2

The business scope of the Company is as following:

  1. CC01080 Electronic Parts and Components Manufacturing

  2. F119010 Wholesale of Electronic Materials

  3. F219010 Retail Sale of Electronic Materials

  4. I103060 Management consultation

  5. CQ01010 Die Manufacturing

  6. CC01990 Electrical Machinery, Supplies Manufacturing

  7. CB01990 Other Machinery Manufacturing Not Elsewhere Classified

  8. F401010 International Trade

  9. C801010 Basic Industrial Chemical Manufacturing

  10. ZZ99999 All business items that are not prohibited or restricted by laws and egulations, except for those subject to special approval.

Article 3

The Company has its head office in Taoyuan City, and the Company may establish branches in and out of this country.

Article 4

The method of the public announcement of the Company shall be made in accordance with Article 28 of the Company Act.

CHAPTER II SHARES

Article 5

The authorized capital of the Company is NTD 5,500,000,000, divided into 550,000,000 shares, at a par value of NTD 10 per share. The shares may be issued in installments, and the shares which have not been issued would be issued in installments pursuant to the resolution of board of directors.

Article 6

Share certificates of the Company shall be in registered form, signed or sealed by at least three directors, and issued after the authentication in accordance with laws. The issued shares may be exempted from printing any share certificate, provided that such issuance shall be duly registered or kept with the securities depository and clearing agent.

Article 7

The shareholders of the Company shall conduct shares related affairs or exercise other relevant rights in accordance with the Regulations Governing the Administration of Shareholder Services of Public

57

Companies unless the laws, regulations or securities regulation rules provide otherwise.

Article 8

The shareholders' register shall be closed during 60 days prior to the date of an ordinary shareholders' meeting, 30 days prior to the date of an extraordinary shareholders' meeting, or five days period prior to the record dates for distribution of dividends, bonuses or other benefits of the Company.

CHAPTER III SHAREHOLDER'S MEETING

Article 9

The shareholders' meeting of the Company is as following ：

  1. Ordinary shareholders' meeting shall be convened within six months after close of each fiscal year by the branches.

  2. Extraordinary shareholders' meeting shall be convened when necessary in accordance with the relevant laws and regulations.

Article 10

When the shareholders meeting was convened by the Board of Directors, the shareholders' meeting shall be presided by the Chairman of the Board of Directors. If the Chairman is absent, the Chairman may designate one of the directors to act on his/her behalf. Where the Chairman does not designate a proxy, the directors may elect a person among themselves to act as the chairman of the meeting. When the shareholders meeting was convened by other persons who has the convening right, the shareholders' meeting shall be presided by the convener. When there are two or more conveners, the conveners shall elect among themselves to act as the chairman of the meeting.

Article 11

A notice to convene an ordinary meeting of shareholders shall be given to each shareholder no later than 30 days prior to the scheduled meeting date, and a notice to convene an extraordinary meeting of shareholders shall be given to each shareholder no later than 15 days prior to the scheduled meeting date. Such notice shall specify the meeting date, meeting venue, and proposed matters and be sent to the shareholders in writing.

Article 12

When a shareholder for any reasons cannot attend the shareholders' meeting in person, he/she/it may attend the meeting by proxy by executing a power of attorney printed by the Company stating therein the scope of power authorized to the proxy.

Article 13

Except in the circumstances set forth in the Company Act where there is no voting right for a share, each shareholder of the Company shall have one vote for each share held.

Article 14

Unless otherwise specified in the Company Act, resolutions at a shareholders' meeting shall be adopted by a majority vote of the shareholders present in person or through proxy, who represent more than one-half of the total number of voting shares. When the shareholders meeting was convened by the Board of Directors, it shall be handled in accordance with Article 183 of the Company Act.

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CHAPTER IV DIRECTORS, AUDIT COMMITTEE AND MANAGERS

Article 15

The Company set up five to nine directors with three-year term in adopting the system of nominating candidates. The shareholders elect the directors from the list of candidates and the directors can be reelected for next term.

During the directors' term, the Company shall buy sufficient insurance for all its directors to cover the legal liability that might incur in mal-practice of its Company’s business.

Article 15-1

The Company may have independent directors within the aforementioned number of directors and the number of independent directors shall be no less than one-fifth of the total number of directors and shall not be less than two. The election of independent directors shall adopt the candidate nomination system, and the shareholders shall elect the independent directors from the list of the candidates of the independent directors. The professional qualifications, shareholdings, restrictions on concurrent position, nomination, and other compliance matters shall be handled in accordance with relevant regulations of the securities authorities.

Article 15-2

Pursuant to Article 14 -4 of the Securities and Exchange Act, the Company shall establish an Audit Committee. The Audit Committee shall be composed of the entire number of Independent Directors.

Article 16

The board of directors is composed of directors. The functions and responsibilities of the board of directors shall be as follows:

  1. To determine the business plans and financial statements,

  2. To propose distribution of profit or appropriation of losses,

  3. To propose capital increase or decrease,

  4. To enact important rules and organizational regulations of the Company,

  5. To engage and terminate the general manager and principal manager of the Company

  6. To determine the establishment and winding-up of branches,

  7. To produce the budget and the final accounts, and

  8. To perform other duties authorized by the Company Act or the resolution of the shareholders' meeting(s).

Article 17

The Chairman will be elected from among directors by a majority vote at a board meeting at which at least two-thirds (2/3) of directors are present. The Chairman shall be the representative of the Company externally.

Article 18

Convening the board meeting shall be handled in accordance with Article 204 of the Company Act. In order to convene the board meeting, notice may be made by written notice, e-mail or fax. Unless otherwise provided for in the Company Act, resolutions of the board of directors shall be adopted by a majority of the directors at a meeting attended by a majority of the directors.

Article 19

The Chairman will preside at the board meetings. If the Chairman is on leave or unable to perform his/her duties, the Chairman may designate one of the directors to act on his/her behalf. Where the

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Chairman does not designate a proxy, the directors may elect a person among themselves to act as the chairman of the meeting. The directors shall personally attend the board meeting, and if the directors cannot attend the board meeting for certain reasons, he/she may appoint another director as his/her proxy. The board meeting may be convened via video conference, and the directors who attend the board meeting via video conference shall be deemed to have attended the meeting in person. The Chairman appoint another director as his/her proxy each time with a power of attorney stating the scope of authority with reference to the subjects to be discussed at the meeting and powers granted; provided that a director may act as the proxy for only one another director.

Article 20

The authority of the Audit Committee and the other compliance issues shall be made according to the Securities and Exchange Act and other relevant laws and regulations.

Article 21

The Company may have various managers. The appointment, discharge and the remuneration of the managers shall be handled in accordance with Article 29 of the Company Act.

CHAPTER V ACCOUNTING

Article 22

The fiscal year of the Company commences from January 1 to December Final accounts shall be handled at the end of each fiscal year.

Article 23

After the end of each fiscal year, the following documents and statements should be approved by the board of directors, and then submit the same to the ordinary shareholders' meeting for recognition:

  1. Business Report,

  2. Financial Statements, and

  3. Proposal for distribution of profit or appropriation of losses

Article 24

The Company, if making profits in current year, shall provide the ratio of employee compensation to “income before tax and the employee and directors’ compensation to be provided” at less than 10% and the ratio of directors’ compensation to “income before tax and the employee and directors’ compensation to be provided” at be more than 1%, provided that all accumulated deficits, if any, are fully offset.

The employees’ compensation can be distributed in cash or stocks. The employees receiving the stock dividends may include employees in affiliated companies who met certain conditions stipulated by the Board of Directors.

Employee and directors’ compensation is to report in the shareholders’ meeting.

Article 24-1

The Company, if making profits in current year, shall distribute the earnings in the following order:

  1. Payment of all taxes and dues;

  2. Offset prior years’ operation losses;

  3. Set aside 10% of the remaining amount after deducting items (a) and (b) as legal reserve;

  4. Set aside or reverse special reserve in accordance with law and regulations;

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  1. The distribution of the remaining portion, if any, will be recommended by the Board of Directors and resolved in the shareholders’ meeting.

The Company is in an industry with versatile environment. For long-term finance planning requirements and to meet the shareholders’ demand for cash, dividend policy aims for a steady balance. Cash dividends distributed each year cannot be less than 10% of the total dividends paid.

ARTICLE VI SUPPLEMENTARY PROVISIONS

Article 25

The Company is allowed to make investment in an amount exceeding 40% of its paid-in capital and authorizes the Board of directors to execute the investment.

Article 25-1

The Company may provide guarantee as necessary for the business.

Article 26

The organizational rules and operating rules of the Company shall be enacted separately by the Board of Directors remuneration.

Article 27

If there is any matter not covered herein, the Company Act and the relevant laws and regulations shall govern.

Article 28

The Article was agreed by all the promoters in founder’s meeting in September 1, 2000. The first revised was June 28, 2003. The second revised was August 26, 2003. The third revised was April 16, 2004. The fourth time revised was April 16, 2004. The fifth time revised was June 14, 2005. The sixth time revised was June 14, 2005. The seventh revised was June 19, 2006. The eighth revised was May 30, 2007. The ninth revised was May 30, 2008. The tenth revised was June 18, 2010. The eleventh revised was June 22, 2011. The twelfth revised was June 18, 2012. The thirteenth revised was May 27, 2016. The fourteenth revised was May 26, 2017.

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Appendix III

(Translation – In case of any discrepancy between the Chinese and English versions, the Chinese version shall prevail.)

Kinsus Interconnect Technology Corp. Procedures for Acquisition or Disposal of Assets

Article 1

The purpose of the procedures is for Kinsus Interconnect Technology Corp. (“the Company”) to protect its assets and to comply with relevant laws, rules and regulations. Any acquisition or disposal of assets conducted by the Company shall comply with the regulations set forth.

Article 2

The procedures are set forth in accordance with provisions of Article 36-1 of the Securities and Exchange Act (“the Act”), “Regulations Governing the Acquisition and Disposal of Assets by Public Companies” and other applicable laws, rules and regulations.

Article 3

The term "assets" as used in the procedures includes the following:

  1. Investments in stocks, government bonds, corporate bonds, financial bonds, domestic beneficiary certificate, foreign mutual fund, depositary receipts, call (put) warrants, beneficial interest securities, and asset-backed securities;

  2. Property (including land, houses and buildings, property for investment purpose, rights to use land, and inventory of construction companies) and equipment;

  3. Memberships;

  4. Intangible assets: Patents, copyrights, trademarks, charter rights, and other intangible assets;

  5. Claims of financial institutions (including receivables, bills purchased and discounted, loans, and overdue receivables);

  6. Derivatives products;

  7. Assets acquired or disposed of in connection with mergers, spin-off, acquisitions, or share transfer in accordance with acts of law;

  8. Other major assets.

Article 4

Terms used in the procedures are defined as follows:

  1. “Derivatives”: Forward contracts, options contracts, futures contracts, leverage contracts, swap contracts, and compound contracts combining the 2 above products, whose value is derived from assets, interest rates, foreign exchange rates, indexes or other interests. The term "forward contracts" does not include insurance contracts, performance contracts, after-sales service contracts, long-term leasing contracts, or long-term purchase (sales) agreements.

  2. Assets acquired or disposed through mergers, demergers, acquisitions, or transfer of shares in accordance with law: Refers to assets acquired or disposed through mergers, demergers, or acquisitions conducted under the Business Mergers and Acquisitions Act, Financial Holding Company Act, Financial Institution Merger Act and other acts, or to transfer of shares from another company through issuance of new shares of its own as the consideration therefor (hereinafter "transfer of shares") under Article 156, paragraph 8 of the Company Act.

  3. “Related party” or “Subsidiary”: As defined in the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

  4. Professional appraiser: Refers to a real property appraiser or other person duly authorized by law to engage in the value appraisal of real property or equipment.

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  1. “Date of occurrence”: Refers to the date of contract signing, date of payment, date of consignment trade, date of transfer, date of Boards of Directors resolutions, or other date that can confirm the counterparty and monetary amount of the transaction, whichever date is earlier; provided, for investment for which approval of the Competent Authority is required, the earlier of the above date or the date of receipt of approval by the Competent Authority shall apply.

  2. “Investment in mainland China”: Refers to investments in China approved by the Ministry of Economic Affairs Investment Commission or conducted in accordance with the provisions of the Regulations Governing Permission for Investment or Technical Cooperation in the Mainland Area.

  3. “Latest financial statements”: Refers to the financial statements of the company audited or examined by certified public accountant (“CPA”) which has been published in accordance with applicable regulation before the subject acquisition or disposal of assets.

Article 5

Limits of amounts for the Company and each subsidiary in acquisition of non-operating related real estate and securities investment:

  1. The acquisition of real estate for non-operating purpose shall not exceed 50% of its paid-in capital.

  2. The total amount of securities investment shall not exceed 120% of its net worth.

  3. The amount of investment in each respective security should not exceed 60% of its net worth.

Article 6

Professional appraisers and their officers, CPA, attorneys, and securities underwriters that provide the Company with appraisal reports, CPA's opinions, attorney's opinions, or underwriter's opinions shall not be a related party of any party to the transaction.

Article 7

Procedures for acquisition or disposal of real estate or equipment

  1. The Company acquisition or disposal of property and equitments shall follow the Company’s internal control procedures of fixed assets.

  2. Terms and conditions of the transaction and level of authorization

  3. (1) The transaction price of acquisition or disposal of real estate shall reference the publicly announced value, appraised price, and actual transaction price in neighboring area to determine conditions and price. Final transaction price shall be approved in accordance with the level of authorization. Where each transaction price exceeds 10% of the Company’s net worth, approval from the Audit Committee and a resolution of the Board of Directors.

  4. (2) The transaction price of acquisition or disposal of equipment shall be determined either by price quotation, price comparison, price negotiation or tender. Final transaction price shall be approved in accordance with the level of authorization. Where each transaction price exceeds 10% of the Company’s net worth, approval from the Audit Committee and a resolution of the Board of Directors.

  5. (3) It is allowed for the chairman to approve an agreement requiring the Board’s pre-approval mentioned above and submit it to Board for adoption later in case of urgent business needs.

  6. Execution

  7. Where the Company acquires or disposes property or equipment, appropriate approval shall be obtained in accordance with the level of authorization and responsible department shall execute accordingly.

  8. Appraisal report of property and equipment

In acquiring or disposing real estate or equipment where the transaction price reaches 20% of the Company's paid-in capital or NT$300 million or more, the Company shall obtain an appraisal report prior to the date of occurrence from a professional appraiser and shall further comply with the following provisions, except trading with a government agency, contracting third parties to build on the land owned or rented by the Company, or acquiring or disposing of machinery and

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equipment for operating purposes:

  • (1) Where due to special circumstances and it is necessary to give a restricted price, specified price, or special price as a reference basis for the transaction price, the transaction shall be submitted for approval from the Board of Directors in advance, and the same procedure shall be followed for any future changes to the terms and conditions of the transaction.

  • (2) Where the transaction price equals to or exceeds NT$1 billion, appraisals from two or more professional appraisers shall be obtained.

  • (3) Where any one of the following circumstances applies with respect to the professional appraiser's appraisal results, except the actual acquisition price is lower than the appraised price or the actual disposal 5 price is higher than the appraised price, a CPA shall be engaged to perform the appraisal in accordance with the provisions of Statement of Auditing Standards No. 20 published by the ROC Accounting Research and Development Foundation (ARDF) and render a specific opinion regarding the reason for the discrepancy and the appropriateness of the transaction price: a. The difference between the appraised price and the actual transaction price equals to or exceeds 20% of the transaction price. b. The difference between the appraised prices of two or more professional appraisers equals to or exceeds 10 % of the transaction price.

  • (4) Where a professional appraisal is conducted prior to the contract date, the appraisal report should have been issued within 3 months of the contract date. However, if the object’s publicly announced value is still the same and the appraisal report, and the report was issued no longer than 6 months, then the original professional appraiser may provide opinions.

  • (5) Where the Company acquires or disposes assets through court auction, the certificate issued by the court can be used to replace appraisal report or CPA opinions.

Article 8

Procedures for acquisition or disposal of securities Investment

  1. The Company acquisition or disposal of securities investment shall follow the Company’s internal control procedures of investment.

  2. Terms and conditions of the transaction and level of authorization

  3. (1) Where the securities are traded in the centralized exchanged markets, the trading price shall be approved in accordance with the level of authorization. Where each transaction price exceeds 10% of the Company’s net worth, an approval from Audit Committee and a resolution of the Board of Directors shall be obtained.

  4. (2) Where the securities are traded in the non-centralized markets, the subject matter’s most recent financial statements audited by CPA shall be obtained prior to the date of occurrence, and used as the reference of its transaction price for the considerations of its net value per share, profitability and future potential. Where each transaction price exceeds 10% of the Company’s net worth, an approval from Audit Committee and a resolution of the Board of Directors shall be obtained. Financial instruments such as bonds with call and put options, security funds and currency based instruments are not restricted by preceding paragraph and shall be executed in accordance with the level of authorization.

  5. The execution

  6. The Company’s financial and accounting department is responsible for the execution regarding the investment in marketable security upon completion of procedures mentioned above.

  7. Professional opinions

  8. (1) In acquiring or disposing securities where the transaction price reaches 20% of the Company’s paid-in capital or exceeds NT$300 million, opinions regarding the transaction price from CPA shall be obtained prior to the date of occurrence. Where CPA’s opinion is based on the professional opinions, it shall be prepared in accordance with the provisions of Statement of Auditing Standards No. 20 published by the ARDF. Where the transaction price is available in the open market or otherwise regulated by the Financial Supervisory Commission (“SFC”) under the Executive Yuan, the limitation shall not apply.

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  • (2) Where the Company acquires or disposes assets through court auction, the certificate issued by the court can be used to replace appraisal report for CPA’s opinions.

Article 9

Procedures for related parties’ transactions are as follows:

  1. When acquiring or disposing assets from a related party, in addition to the procedures set forth in the Article 7, if the transaction price reaches 10% or more of the Company’s total assets, an appraisal report from a professional appraiser or a CPA’s opinion shall be obtained to ensure necessary resolutions are adopted and the reasonableness of the transaction terms is appraised. When judging whether a trading counterparty is a related party, in addition to legal formalities, the substance of the relationship shall also be considered.

  2. Evaluation and operating procedures When acquiring or disposing real estate with a related party regardless of its transaction price, or acquiring or disposing assets other than real estate with a related party for the transaction price over 20% of the Company’s paid-in capital, 10% of the Company’s total assets, NT$300 million or more, except in trading of government bonds or bonds with call or put options, or subscription or redemption of domestic money market funds, the transaction may not be proceeded until the following matters have been approved by the Audit Committee and the Board of Directors. Contracts and payments shall only be signed and paid upon the approval from Board of Directors. When acquiring or disposing equipment for production purpose with a related party, Board of Directors can authorize the chairman to exercise the duty within the prescribed limit and report to the Board of Directors upon completion of the transactions.

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

  4. (2) The reason for choosing the related party as a trading counterparty.

  5. (3) Information regarding the reasonableness of the preliminary transaction terms in accordance with subparagraph 1 and 4 of paragraph 3, Article 9.

  6. (4) The date and the price at which the related party originally acquired the real estate, the original trading counterparty, and that trading counterparty's relationship to the Company and the related party.

  7. (5) Monthly cash flow forecasts for the year commencing from the anticipated month of signing of the contract, and evaluation of the necessity of the transaction, and reasonableness of the funds utilization.

  8. (6) An appraisal report from a professional appraiser or a CPA’s opinion obtained in compliance with the preceding article.

  9. (7) Restrictive covenants and other important stipulations associated with the transaction.

  10. Evaluation of the reasonableness of the transaction costs (1) When acquiring real estate from a related party, the reasonableness of the transaction costs shall be evaluated by the following means:

    • A. Based upon the related party's transaction price plus necessary interest on funding and the costs to be duly borne by the buyer. "Necessary interest on funding" is imputed as the weighted average interest rate on borrowing in the year the Company purchases the property; it may not be higher than the maximum non-financial industry lending rate announced by the Ministry of Finance.

    • B. Total loan value appraisal from a financial institution where the related party has previously created a mortgage on the property as 8 security for a loan; provided the actual cumulative amount loaned by the financial institution shall have been 70% or more of the financial institution's appraised loan value of the property and the period of the loan shall have been one year or more. However, this shall not apply where the financial institution is a related party of one of the trading counterparties.

  11. (2) Where land and structures thereupon are combined as a single property purchased in one transaction, the transaction costs for the land and the structures may be separately appraised

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in accordance with either of the means listed in the preceding paragraph.

  • (3) While the cost of the real estate acquired from a related party shall be appraised in accordance with the provisions of the subparagraph (1) of paragraph 3, Article 1, CPA shall also be engaged to review the appraisal and render a specific opinion.

  • (4) Where the real estate is acquired from a related party, it shall be appraised in accordance with the provisions of the subparagraph (1) of paragraph 3, Article 9, and if the appraised cost is lower than the actual transaction cost, the paragraph (5) of Item 3, Article 9 shall apply. However, where the following circumstances exist, objective evidence has been submitted and specific opinions on reasonableness have been obtained from a professional real estate appraiser and a CPA, this restriction shall not apply:

  • A. Where the related party acquires undeveloped land or leased land for development and in compliance with one of the following conditions:

    • a. Where undeveloped land is appraised in accordance with the means in the preceding Article, and the actual transaction price is lower than the related party’s construction cost plus reasonable construction profit. The "reasonable construction profit" shall be deemed the average gross operating profit margin of the related party's construction division over the most recent three years or the gross profit margin for the construction industry for the most recent period as announced by the Ministry of Finance, whichever is lower.

    • b. Where the recent transactions by unrelated parties within the preceding year involving other floors of the same property or neighboring or closely valued parcels of land, and the land area and the transaction terms are similar in consideration of the 9 reasonable price discrepancies in floor or land prices in per property market practices.

    • c. Where the recent leasing transactions by unrelated parties for other floors of the same property within the preceding year, and the transaction terms are similar in consideration of the reasonable price discrepancies among floors per property leasing market practices.

  • B. Where the Company acquiring real estate from a related party and the terms of the transaction are similar to the terms of the recent transactions for acquisition of neighboring or closely valued parcels of land of a similar size by unrelated parties within the preceding year.

  • (5) Where the Company acquires property from a related party and the results of appraisals conducted in accordance with the provisions of the subparagraph (1) and (2) of paragraph 3, Article 9, are uniformly lower than the transaction price while no evidence can be provided that subparagraph (4) of paragraph 3 is not applicable to the transaction, the following steps shall be taken:

  • A. A special reserve shall be set aside in accordance with the provisions of Article 41, paragraph 1 of the Act against the difference between the real estate transaction price and the appraised cost, and may not be distributed or used for capital increase or issuance of bonus shares. Where the Company uses the equity method to account for its investment in another public company, then the special reserve called for under Article 41, paragraph of the Act shall be set aside pro rata in a proportion consistent with the share of the Company's equity stake in the other company.

  • B. The Audit Committee shall comply with the provisions of Article 10 218 of the Company Act.

  • C. Actions taken pursuant to subparagraph 1 and 2 shall be reported to a shareholders meeting, and the details of the transaction shall be disclosed in the annual report and any investment prospectus.

The Company and A public company investing the Company accounted for under equity method that have set aside a special reserve under the preceding paragraph may not utilize

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the special reserve until it has recognized a loss on decline in market value of the assets it purchased at a premium, or they have been disposed of, or adequate compensation has been made, or the status quo ante has been restored, or there is other evidence confirming that there was nothing unreasonable about the transaction, and the FSC has given its consent.

  • (6) Where the Company acquires real estate from a related party and one of the following circumstances exists, the acquisition shall be conducted in accordance with the provisions paragraph 1 and 2 of Article 9, while subparagraph 1, 2 and 3 of paragraph 3 shall not apply: A. The related party acquired the real estate through inheritance or as a gift.

  • B. More than five years had elapsed from the time the related party signed the contract to obtain the real estate to the signing date for the current transaction.

  • C. The property is acquired through signing of a joint development contract with the related party, or through engaging a related party to build property, either on the company’s own land or on rented land.

  • (7) Where the Company obtains property from a related party, it shall also comply with the provisions set forth in the subparagraph (5) of paragraph 3, Article 9, if there is other evidence indicating that the acquisition was not an arms length transaction.

Article 10

Procedures for acquisition or disposal of membership or intangible assets are as follows:

  1. Evaluation and operating procedures Acquisition or disposal of membership or intangible assets shall according to the relevant laws and regulations.

  2. Terms and conditions of the transaction and level of authorization

  3. (1) The transaction price of acquisition or disposal of membership shall refer to the market value, terms and conditions and transaction price and a report shall be prepared for submission to the general manager. Where the transaction price exceeds 1% of the Company’s paid-in capital or under NT$3 million, shall be submitted to the General Manager for approval and shall be filed in the last meeting of the Board of Directors and if the transaction price exceeds NT$3 million, must be approved by the Board of Directors.

  4. (2) The transaction price of acquisition or disposal of intangible assets shall refer to professional opinion or the market value, terms and conditions and transaction price and a report shall be prepared for submission to the chairman. Where the transaction price exceeds 10% of the Company’s paid-in capital or under NT$20 million, shall be submitted to Chairman for approval and shall be filed in the last meeting of the Board of Directors and if the transaction price exceeds NT$20 million, must be approved by the Board of Directors.

  5. Execution

  6. Where the Company acquires or disposes membership or intangible assets, appropriate approval shall be obtained in accordance with the level of authorization and responsible departments shall execute accordingly.

  7. CPA’s opinion is required under the following circumstances:

  8. (1) Where the transaction price of acquiring or disposing membership or intangible assets reaches 20% of the Company’s paid-in capital or exceeds NT$300 million, except trading with the Government organizations, CPA’s opinion, in compliance with the Provisions of Statement of Auditing Standards No. 20 published by the ARDF, shall be obtained prior to the date of occurrence.

  9. (2) Where the Company acquires or disposes of memberships or intangible assets through court auction procedures, the evidentiary documentation issued by the court may be substituted for the appraisal report or CPA opinion.

Article 10-1

The calculation of the transaction price referred to in the preceding four articles shall be done in accordance with the subparagraph (5) of paragraph 1, Article 16, and “within the preceding year” as

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used herein refers to the year preceding the date of occurrence of the current transaction. Items for which an appraisal report from a professional appraiser or a CPA’s opinion has been obtained need not be counted toward the transaction amount.

Article 11

Procedures for acquisition or disposal of Claims of financial institutions. In principle, the Company does not conduct any trading regarding acquisition or disposal of claims of financial institutions. Where the trading is intended in the future, relevant operating procedures shall by the Board of Directors.

Article 12

Procedures for acquisition or disposal of financial derivatives are as follows:

  1. Trading principles and strategies

  2. (1) Types of instrument

    • A. Financial derivatives referred herein are broadly defined as instruments that derive their value from the performance of underlying assets, interest or currency exchange rates or other instrument such as swaps, options, futures, forwards and various combinations thereof.

    • B. Claims of financial institutions shall be conducted in accordance with The Procedures set forth. The transactions for redeemable bonds may be exempted from the regulations of the Procedures.

  3. (2) Strategies

Financial derivatives are mainly used for hedging purpose and the selection of instruments shall correlate or associate with the business operation. In order to reduce the overall currency exposures and hedging cost, the currency of the position held shall be the same as the one used for business activities, and the position of the currency (account receivable and payable in foreign currency) shall be balanced. The transaction of specific purpose shall be evaluated carefully and prior approval from the Board of Directors.

  • (3) Authorization and delegation

  • A. Finance departments

    • a. Trading

      • (a) To establish financial derivative strategies for the Company.

      • (b) To evaluate holding of the positions periodically, establish trading strategies based on the judgment of the market intelligence and submit for approval.

      • (c) To execute the trading in accordance with the level of authorization.

      • (d) Shall material incident occur in the financial market and existing strategies. is no longer applicable, new trading strategies shall be proposed and used as the basis for trading upon approval from the ganeral manager.

    • b. Accounting staff

      • (a) Executing the confirmation of transaction.

      • (b) Examining if the transactions are executed in accordance with authorization and existing strategy.

      • (c) Performing monthly assessment and submitting the assessment report to general manager.

      • (d) Accounting.

      • (e) Public announcement and filing in accordance with regulations of FSC.

    • c. Settlement: To execute the settlement

    • d. Level of approval

      • (a) Level of approval required for each transaction of hedging purpose
Level of
approval		 Delegation of daily
transaction		 Delegation of each
accumulated netposition
Finance
Manager		 Below of US$0.5M Below of US$1.5M

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Gangeral
Manader		 US$0.5M-2M Below of US$5M
Chairman US$2M and more Below of US$10M

  • (b) Transaction of other purposes shall only be preceded upon approval from the Audit Committee and the Board of Directors.

  • B. Internal Audit

The Company's internal audit personnel shall periodically make a determination of the suitability of internal controls on derivatives and conduct a monthly audit of how faithfully derivatives trading by the trading department adheres to the procedures for engaging in derivatives trading, and prepare an audit report. If any material violation is discovered, all supervisors shall be notified in writing. 

  - C. Performance Evaluation

     - a. Trading with hedging purpose

        - (a) The evaluation basis is the profit/loss between cost of the currency on the book and derivative transaction.

        - (b) To fully comprehend the risks of evaluation, the Company shall conduct evaluation based on the monthly closing.

        - (c) The Finance department shall provide evaluation of the foreign currency based position, the market trend and analysis of foreign currency to the president and chairman for their review.

     - b. Trading with specific purpose

        - The evaluation shall be conducted based on the actual profit/loss and the Finance personnel shall prepare financial statements based on the position held for management’s review on a periodic basis.

  - D. Total transaction amount, and the maximum limit of loss

     - a. The Contract Amount

        - (a) Transaction amount for hedging purpose

           - In order to control transaction risk, the financial department shall closely monitorthe overall risk exposure. The transaction amount for hedging shall not exceed two-thirds of the Company’s net overall risk exposure or otherwise an approval from the general manager be needed.

        - (b) Transaction for specific purpose

           - This can only be executed upon the financial department completing a proper strategy based on a good forecast toward market fluctuations and the board of directors approving such transaction. The accumulated contract amount of transactions for specific purpose shall not exceed USD10 million or otherwise an approval from the board of directors and compliance with the enacted policy be needed.

     - b. Maximum Limit of Loss

        - (a) There is no need to set up the maximum limit of loss for the transaction for hedging purpose as it is entered into for reducing risks.

        - (b) Maximum limit of loss shall be established for the transaction contract for specific purpose once being entered into. Its maximum limit of loss shall not exceed 10% of the transaction contract amount or otherwise it shall be reported to the general manager as well as the board meeting for taking necessary responding actions.

        - (c) The maximum limit of loss for individual contract shall not exceed the lower of USD20,000 or 5% of the contract.

        - (d) The annual accumulated maximum limit of loss of the transaction contracts for specific purpose shall no exceed USD300,000.

  1. Measures of Risk management

  2. (1) Credit Risk Control

The management over market risks shall be executed in accordance with following guidance

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due to the fact that engaging in financial derivatives is sensitive to market fluctuations and operating risks:

Counterparty: shall be of domestic or international reputable financial institutions.

Financial tools: shall be provided by domestic or international reputable financial institutions.

Transaction amount: the unsettled transaction amount for a same counterparty shall not exceed 10% of total authorized amount, except for those specially approved by the general manager.

  • (2) Market Risk Control

    • Primarily the open currency market provided by the banks, excluding the option market.

  • (3) Liquidity Risk Control

    • To ensure liquidity, financial instruments with high liquidity shall be chosen, and financial institutions responsible for trading shall provide sufficient information and have the capability to trade in any markets over any time zone.

  • (4) Cash-Flow Risk Control

    • To maintain stable turnover of the working capital of the Company, the source of the capital for derivative transaction shall be self-funded, and the demand in cash flows for future 3 months shall be taken into consideration in determining the operated amount.

  • (5) Operating Risk Control

    • A. To comply with the authorized amount, procedures and internal audit processes.

    • B. Different personnel shall be assigned for trading, confirmation and settlement.

    • C. Personnel who is in charge of risk evaluation, monitoring and controlling shall not be in same department as those described in the preceding paragraph, and reporting shall be made to the Board of Directors or the management who is not responsible for trading or determination of position.

    • D. The Company shall review the net exposure of derivatives at least once a week and at least twice a month for those entered into for specific purpose. The result of review shall be submitted and reported to the general manager or the authorized person by the board.

  • (6) Financial Instrument Risk Control

    • Personnel, who is in charge of the trading, shall have sufficient knowledge and professional skills of the financial instrument and shall 16 request the banks to fully disclose associated risks.

  • (7) Legal Risk Control

    • Any documents with financial institutions can only be signed after reviewing by the legal department or legal counsels.

  • Internal audit

  • (1) The Company's internal audit personnel shall periodically make a determination of the suitability of internal controls on derivatives and conduct a monthly audit of how faithfully derivatives trading by the trading department adheres to the procedures for engaging in derivatives trading, and prepare an audit report. If any material violation is discovered, all supervisors shall be notified in writing.

  • (2) The Company's internal audit personnel shall file the internal audit reports and the executing details of internal auditing by the end of February of the following year and also the improvement actions with respect to any deficiencies found by the end of May of the following year to FSC.

  • Periodic evaluation system

  • (1) The Board of Directors shall authorize the management to monitor and review the compliance of the derivative transaction with internal procedures periodically. If any abnormity detected in the market value evaluation report, the Board of Directors shall be informed immediately and responsive actions shall also be taken accordingly.

  • (2) The position held under the derivative trading shall be evaluated once a week, while transaction associated with hedging purpose shall be evaluated twice per month, and the

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evaluation reports shall be submitted to the management authorized by the Board of Directors.

  1. Auditing principle by the Board of Directors

  2. (1) Board of Directors shall assign the management to constantly monitor and control the risks of derivative transaction with the following principles:

    • A. To conduct periodic review and check if the risk management measures are adequate and in compliance with the internal procedures.

    • B. To monitor the trading and its performance. Shall there be any material event, Board of Directors shall be informed and necessary actions shall be taken.

  3. (2) To check if the performance meets the business strategy and to determine if the risks are within the corporate tolerance level periodically.

  4. (3) Derivative transaction shall be conducted in accordance with the relevant procedures and reported to Board of Directors afterwards.

  5. (4) To establish a reference book for derivative transaction with detailed information, including its type, amount, approval date from Board of Director and evaluation items listed in the paragraph 2 of Article 4, the paragraph 1 and 2 of Article 5.

Article 13

Procedures for mergers, spin-off, acquisition and share transfer are as follows:

  1. Evaluation and operating procedures

  2. (1) CPA, attorney, and securities underwriter shall be engaged to schedule 17 project timetable and a task force shall be formed to execute the project according to statutory rules and regulations. Prior to convening the Board of Directors to resolve on the matter, a CPA, attorney, or securities underwriter shall give an opinion on the reasonableness of the share exchange ratio, acquisition price, or distribution of cash or other property to shareholders, and submit it to the Board of Directors for deliberation and passage. However , the fairness opinion from above-mentioned expert may be exempted if the Company merges its directly or indirectly wholly-owned subsidiaries or the merger is among the Company’s directly or indirectly wholly-owned subsidiaries.

  3. (2) The Company shall issue a public report to shareholders detailing important contractual content and matters relevant to the merger, spin-off, or acquisition prior to the shareholders meeting. The report shall include the expert’s opinion referred to in the preceding paragraph when sending shareholders meeting notification provided, where a provision of another Act exempts the Company from convening a shareholders meeting to approve the merger, spinoff, or acquisition, this restriction shall not apply.

    • Where the shareholders meeting of any one of the companies participating in a merger, spinoff, or acquisition fails to convene or pass a resolution due to lack of a quorum, insufficient votes, or other legal restriction, or the proposal is rejected by the shareholders meeting, the companies participating in the merger, spin-off or acquisition shall immediately make public announcement regarding their reasons, the follow-up measures, and the preliminary date of the next shareholders meeting.

  4. (3) A full written record of the following information shall be prepared and retained for five years for reference:

    • A. Personnel information

      • Including the occupational titles, names, and national ID numbers (or passport numbers in the case of foreign nationals) of all persons involved in the planning or implementation of any merger, spin-off acquisition, or transfer of another company's shares prior to disclosure of the information.

    • B. Dates of material events

      • Including the signing of any letter of intent or memorandum of understanding, the hiring of a financial or legal advisor, the execution of a contract, and the convening of a Board of Directors meeting.

    • C. Important documents and minutes

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Including merger, spin-off, acquisition, and share transfer plans, 18 any letter of intent or memorandum of understanding, material contracts, and minutes of Board of Directors meetings.

  1. Others

  2. (1) Board of Director meeting date:

    • Companies participating in a merger, spin-off, or acquisition shall convene a Board of Directors meeting and shareholders meeting on the day of the transaction to resolve matters relevant to the merger, spin-off, or acquisition, unless another Act provides otherwise or the FSC is notified in advance of extraordinary circumstances and grants consent. Companies participating in a share transfer shall call a Board of Directors meeting on the day of the transaction, unless another Act provides otherwise or the FSC is notified in advance of extraordinary circumstances and grants consent.

  3. (2) Non-disclosure commitment:

    • Every person participating in or privy to the plan for merger, spin-off, acquisition, or share transfer shall issue a written undertaking of confidentiality and may not disclose the content of the plan prior to public disclosure of the information and may not trade, in their own name or under the name of another person, in any stock or other equity security of any company related to the plan for merger, spin-off, acquisition, or transfer of shares.

  4. (3) Pricing principles for transfer or acquisition of shares: Companies participating in a share transfer shall engage a CPA, attorney, or securities underwriter to give an opinion on the reasonableness of the share exchange ratio, acquisition price, or distribution of cash or other property to shareholders, and submit it to the shareholders’ meeting. Acquisition or share transfer may not arbitrarily alter the share exchange ratio or acquisition price unless under the below-listed circumstances, and shall stipulate the circumstances permitting alteration in the contract for the merger, spin-off, acquisition, or transfer of shares:

    • A. Cash capital increase, issuance of convertible corporate bonds, or the issuance of bonus shares, issuance of corporate bonds with warrants, preferred shares with warrants, stock warrants, or other equity based securities.

    • B. An action, such as a disposal of major assets that affects the Company's financial operations.

    • C. An event, such as a major disaster or major change in technology 19 that affects equity or share price.

    • D. An adjustment where any of the companies participating in the merger, demerger, acquisition, or transfer of shares from another company, buys back treasury stock.

    • E. An increase or decrease in the number of entities or companies participating in the merger, spin-off, acquisition, or transfer of shares.

    • F. Other terms and conditions that the contract stipulates may be altered and that have been publicly disclosed.

  5. (4) Content of contract

The contract of the companies participating in the merger, spin-off, acquisition, or share transfer shall be under Article 371-1 of Company Act and Article 22 of Business Mergers and Acquisitions Act and shall also record the followings:

  • A. Handling of breach of contract

  • B. Principles for the handling of equity-type securities previously issued or treasury stock previously bought back by any company that is extinguished in a merger or its spin-off.

  • C. The amount of treasury stock participating companies are permitted under law to buy back after the record date of calculation of the share exchange ratio, and the principles for handling thereof.

  • D. The manner of handling changes in the number of participating entities or companies.

  • E. Preliminary progress schedule for plan execution, and anticipated completion date.

  • F. Scheduled date for convening the legally mandated shareholders meeting if the plan

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exceeds the deadline without completion, and relevant procedures.

  • (5) Changes of companies participating in mergers, spin-off, acquisition and share transfer: After public disclosure of the information, if any company participating in the merger, spinoff, acquisition, or share transfer intends further to carry out a merger, spin-off, acquisition, or share transfer with another company, all of the participating companies shall carry out anew the procedures or legal actions that had originally been completed toward the merger, spin-off, acquisition, or share transfer; except that where the number of participating companies is decreased and a participating company's shareholders meeting has adopted a 20 resolution authorizing the Board of Directors to alter the limits of authority, such participating company may be exempted from calling another shareholders meeting to resolve on the matter anew.

  • (6) Where any of the companies participating in a merger, spin-off, acquisition, or share transfer is not a public company, the Company shall sign an agreement with the counterparty whereby the latter is required to abide by the provisions of preceding paragraphs.

  • (7) Upon the resolution by the Board of Directors, material information shall be disclosed via internet-based information system to the FSC for recordation within two days of the Board of Director resolution.

Article 14

Procedures for public disclosure of information are as follows:

  1. Disclosure items and standards

  2. (1) Acquisition or disposal of real estate with a related party regardless of its transaction price, or of assets other than real estate with a related party for the transaction price over 20% of the Company’s paid-in capital, 10% of the Company’s total assets, NT$300 million. Trading of government bonds, bonds with call or put options and subscription or redemption of money market funds issued by securities investment trust companies are excluded herein.

  3. (2) Merger, spin-off, acquisition, or share transfer.

  4. (3) Losses from derivative transaction reaching the maximum limits of aggregated losses or losses on individual contracts set forth in The Procedures adopted by the Company.

  5. (4) Any transaction, other than those referred in the preceding three subparagraphs, such as disposal of receivables by a financial institution or investment in mainland China that reaches 20% of the Company’s paid-in capital or exceeds NT$300 million. However, the following circumstances shall not apply:

    • A. Trading of government bonds.

    • B. Securities trading by investment professionals on foreign or domestic securities exchanges or over-the-counter markets, general corporate bonds or general financial bonds without equity issued/outstanding in domestic preliminary markets, or marketable securities subscribed by security companies due to the underwriting needs and being designated as underwriters in accordance with related regulations of Taipei Exchange.

    • C. Trading of bonds with call or put options, subscription or redemption of money market funds issued by securities investment trust companies.

    • D. Where the type of asset acquired or disposed is equipment/machinery for operational use, the trading counterparty is not a related party, and the transaction price is less than NT$500 million.

    • E. Where the type of asset acquired or disposed is real estate for operational use, the trading counterparty is not a related party, and the transaction price is less than NT$500 million.

    • F. Where land is acquired under an arrangement for commissioned construction on selfowned or rented land, joint construction and allocation of housing units, joint construction and allocation of ownership percentages, or joint construction and separate sale, and the amount the company expects to invest in the transaction is less than NT$500 million.

  6. (5) The amount of transactions mentioned above shall be calculated as follows: A. The amount of any individual transaction

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  - B. The cumulative transaction amount of acquisitions and disposals of the same type of underlying asset with the same trading counterparty within one year.

  - C. The cumulative transaction amount of real estate acquisitions and disposals (cumulative acquisitions and disposals, respectively) within the same development project within one year.

  - D. The cumulative transaction amount of acquisitions and disposals (cumulative acquisitions and disposals, respectively) of the same security within one year.

  1. Timeline and standards for public disclosure of information Should acquisition or disposal of assets meet the standards for public disclosure of information, the Company needs to file and make public announcement within two days from the date of the event.

  2. Disclosure procedures

  3. (1) The Company shall disclose information into the reporting website designated by the FSC in accordance with the statutory regulations.

  4. (2) The Company and on behalf of its non-public subsidiaries shall compile monthly reports on the status of derivatives trading up to the end of the preceding month and enter the information in the prescribed format into the reporting website designated by the FSC by the tenth day of each month.

  5. (3) Where an error or omission occurs at the time of public announcement, it is required to correct the error, and all the items shall be publicly announced again within two days from the date of notification.

  6. (4) The Company acquiring or disposing of assets shall keep all relevant contracts, meeting minutes, reference books, appraisal reports and CPA, attorney, and securities underwriter’s opinions at the Company headquarters, where they shall be retained for five years except where another Act provides otherwise.

  7. (5) Where any of the following circumstances occurs with respect to a transaction that the Company has already publicly announced and reported in accordance with the following paragraph, a public report of relevant information shall be made on the reporting website designated by the FSC within two days from the date of occurrence:

    • A. Change, termination, or rescission of a contract signed in regard to the original transaction.

    • B. The merger, spin-off, acquisition, or share transfer is not completed by the scheduled date set forth in the contract.

    • C. Change of the publicly disclosed information.

Article 14-1

For the calculation of 10% of the total assets under the Regulations, the total assets stated in the most recent parent company only financial report or individual financial report prepared under the Regulations Governing the Preparation of Financial Reports by the Securities Issuers shall be used.

Article 15

The subsidiaries of the Company shall comply with the followings:

  1. The subsidiaries shall establish the Procedures in accordance with the “Regulation Governing the Acquisition and Disposal of Assets by Public Companies” and obtain approval from the subsidiaries’ Board of Directors and its shareholders’ meetings and execute in accordance with the enacted procedures.

  2. The subsidiaries shall comply with the provisions set forth in The Procedures, in addition to their own procedures, when acquiring or disposing assets.

  3. Information required to be publicly announced and reported in accordance with the provisions of acquisitions and disposals of assets by a subsidiary of the Company that is not itself a public company in Taiwan shall be reported by the parent company.

  4. The paid-in capital or total asset of the Company shall be the standard for determining whether or not the Company shall disclose information on behalf of a subsidiary in the event of the type of transaction specified therein reaches 20 % of the paid-in capital or 10% of the total asset.

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Article 16

Penalties are as follows: Where the employees of the Company violate the provisions set forth, appropriate penalties shall be carried out in accordance with the relevant human resource management procedures and employees handbook of the Company.

Article 17 : Implementation and amendment

  1. The Procedures for acquiring and disposing assets have been agreed by audit committee, approved by the meeting of board of directors and proposed to the Company’s shareholders’ meeting for final approval. The Company shall follow with the same procedures for any future amendment.

  2. Any acquisition or disposal of assets made according to item#1 mentioned above and the Procedures or the regulations shall be agreed by a majority votes from audit committee and proposed to the board meeting for final approval. While two-thirds of votes from board meeting be needed if no majority vote from audit committee is obtained. Such resolution of audit committee shall be specified in the meeting minutes of board. The board shall take into considerations of the opinions from independent directors when resolving the Procedures. The board meeting minutes shall be specified of any objection from independent directors if any.

  3. The terms "all members of Audit Committee " or "all directors" mentioned in the preceding paragraphs shall include the actual number of persons currently holding those positions then.

Article 18 : Others

Anything not prescribed in this Procedures shall be executed in accordance with related rules or regulations.

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Appendix IV

(Translation – In case of any discrepancy between the Chinese and English versions, the Chinese version shall prevail.)

Shareholding of Directors

  1. Paid-in capital of the Company is NTD$4,513,608,600, with a total of 451,360,860 outstanding shares.

  2. According to Article 26 of the Securities and Exchange Act, the minimum number of shares to be held by the entire directors is 16,000,000 shares.

  3. As of the date for suspending the share transfer for this shareholders meeting, the shareholding of each individual and entire directors stipulated in the shareholders roster is as follows:

Book closure date: March 31, 2019

Position Name Shareholding when
elected		 Shareholding when
elected		 Current shareholding Current shareholding
Shares Shareholding
ratio(%)		 Shares Shareholding
ratio(%)
Chairman Guo, Ming-Dong 1,069,795 0.24% 1,069,795 0.24%
Director Tong, Zi-Xian 200,000 0.04% 200,000 0.04%
Director Chen, Ho-Shu 361,002 0.08% 361,002 0.08%
Director Asustek Investment Co. Ltd. 58,233,091 13.06% 58,233,091 12.90%
Representative: Su, Yan-Xue - - - -
Director Asuspower Investment Co. Ltd. 55,556,221 12.46% 55,556,221 12.31%
Representative: Wu, Xiang-Xiang - - - -
Director Cheng, Zhong-Ren - - - -
Independent
Director		 Chen, Jin-Cai - - - -
Independent
Director		 Hwang, Chung-Pao - - - -
Independent
Director		 Wu, Hui-Huang - - - -
Total 115,420,109 25.88% 115,420,109 25.57%

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Appendix V

(Translation – In case of any discrepancy between the Chinese and English versions, the Chinese version shall prevail.)

Other Explanation Item

The acceptance of the shareholders' proposals for the shareholders meeting this year:

  1. According to Article 172-1 of the Company Act, 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 shareholders' general meeting.

  2. 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 more than one proposal or any proposal containing more than 300 words shall not be included in the agenda of the shareholders' meeting.

  3. The period for acceptance of shareholders' proposal: From March 29, 2019 to April 8, 2019; the information has been announced on the Market Observation Post System.

  4. The Company did not receive any shareholders' proposal during the aforesaid period.

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