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MERRY AGM Information 2022

Jun 27, 2022

52085_rns_2022-06-27_c05127d7-5c5c-42a8-a944-113c65fb8344.pdf

AGM Information

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Table of Contents

I. Meeting Procedure ............................................................................................................ 1 II. Meeting Agenda .............................................................................................................. 2 1. Matters for Report .................................................................................................... 4 2. Matters for Approval ................................................................................................ 9 3. Matters for Discussion ........................................................................................... 10 4. Elections ................................................................................................................. 16 5. Other Matters ......................................................................................................... 17 6. Extemporary motions ............................................................................................. 17 Attachment ......................................................................................................................... 18 1. 2021 Business Report ............................................................................................ 18 2. The Audit Committee's Review Report ................................................................. 21 3. Comparison of Amendments to the Corporate Social Responsibility Best Practice Principles ................................................................................................................ 22 4. CPA's Audit Report, Individual Financial Statements and Consolidated Financial Statements .............................................................................................................. 32 5. 2021 Profit Distribution Table ............................................................................. 58 6. Comparison of Amendments to the Rules of Procedure for Shareholders Meetings .................................................................................................................................... 59 7. Comparison of Amendments to the Operation Procedures for the Acquisition or Disposal of Assets ................................................................................................ 83 8. Regulations Governing the issuance of new restricted employee shares of 2022 . 91 9. List of Director Candidates .................................................................................. 98 10. Proposal of removal of the non-competition restrictions on the newly elected Directors…………………………………………………………………………106 Appendix .......................................................................................................................... 108 1. Articles of Incorporation (Before Amendment) ................................................... 108 2. Rules of Procedure for Shareholders Meetings (Before Amendment) ................ 115 3. Operation Procedures for the Acquisition or Disposal of Assets (Before Amendment) ....................................................................................................... 126 4. Procedrues for Election of Directors .................................................................... 149 5. Shareholding Status of Directors ....................................................................... 153 6. Dividend Policy ................................................................................................. 154 7. The impact of the share dividend proposed in this annual shareholders' meeting on the operational performance of the Company and the earnings per share ......... 155 8. Explanation for the proposal excluded from this annual shareholders' meeting 155

I.Meeting Procedure

Merry Electronics Co., Ltd. Meeting Procedure for the 2022 Annual Shareholders' Meeting

  1. Reporting total represented shares

  2. Call the Meeting to Order

  3. Chairperson Remarks

  4. Matters for Report

  5. Matters for Approval

  6. Matters for Discussion

  7. Elections

  8. Other Matters

  9. Extemporary Motions

  10. Meeting Adjourned

1

II. Meeting Agenda

Merry Electronics Co., Ltd.

Meeting Agenda of the 2022 Annual Shareholders' Meeting

Convening Means: Physical shareholders meeting

Time ： 9:00 a.m., June 15, 2022 (Wednesday)

Venue: ： Merry Electronics Co., Ltd.’s headquarters

  • (No. 22, 23rd Road, Taichung Industrial Park, Nantun Dist., Taichung City, Taiwan)

Attendance ： All shareholders or their proxy

Chairperson ： Lu-Lee Liao, Chairperson of the Board of Directors

  1. Chairperson Remarks

  2. Matters for Report

  3. (1) The Company’s 2021 Business Report

  4. (2) Audit Committee’s review report on the 2021 Financial Statements

  5. (3) Employees’ profit sharing bonus and directors’ compensation of 2021

  6. (4) The Company’s 2021 earnings distribution

  7. (5) The performance assessments and compensation levels of directors and managerial officers

  8. (6) The reason and related matters of the issuance of the domestic 3rd unsecured Convertible Bonds

  9. (7) Amendment of the '' Corporate Social Responsibility Best Practice Principles”

  10. (8) To report on the short-form merger between Merry Corporation and Biotest Medical Corporation.

  11. Matters for Approval

  12. (1) The Company’s 2021 Business Report and Financial Statements

  13. (2) The proposal for distribution of 2021 earnings

  14. Matters for Discussion

  15. (1) To revise the Articles of Incorporation

2

  • (2) To revise the '' Rules of Procedure for Shareholders Meetings ''

  • (3) To revise the ''Operation Procedures for the Acquisition or Disposal of Assets ''

  • (4) Regulations Governing the issuance of new restricted employee shares of 2022

  • Elections ： Election of the 20[th] Directors

  • Other Matters ： Discussion to release of restriction on competitive of activities for directors

  • Extemporary motions

  • Meeting adjourned

3

Matters for Report

  1. The Company’s 2021 Business Report, please take note.

(Proposed by the board of directors)

Explanation: For the business report, please refer to Attachment 1. (from page 18 to page 20)

  1. Audit Committee’s review report on the 2021 Financial Statements, please take note.

(Proposed by the board of directors) Explanation: For the Audit Committee’s audit report on the financial statements of 2021, please refer to Attachment 2. (page 21)

  1. Employees’ profit sharing bonus and directors’ compensation of 2021, please take note.

(Proposed by the board of directors)

Explanation:

  • (1) According to the Articles of Incorporation, should the Company be profitable, it shall set aside 5% to 10% as employees' profit sharing bonus and not more than up to 2% as compensation of directors of the Company’s profit (if any) in the fiscal year.

  • (2) With respect to 2021 employee’s profit sharing bonus and directors’ compensation, the board of directors dated 24 February 2022 has resolved that the Company distribute 6.5% (NT$ 95,230,414 in total) as employees’ profit sharing bonus and 1.5% (NT$21,976,250 in total) as directors’ compensation. Both employee’s profit sharing bonus and directors’ compensations will be paid in cash. The above resolved amounts have no difference from the amounts listed in the estimated recognized costs of 2021.

  • To report 2021 earnings in cash distribution, please take note.

(Proposed by the board of directors)

4

Explanation:

  • (1) According to the Articles of Association, it is authorized that the distributable dividends and bonuses in whole or in part 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.

  • (2) Considering the future operation of the Company, for profit distribution of 2021, in addition to the legal reserve provided in accordance with the Articles of Incorporation of the Company, cash dividends NT$866,040,168 in total will be distributed to shareholders. Namely, each common shareholder will be entitled to receive a cash dividend of NT$4.0 per share. The profit of 2021 profits will be distributed first for the above purpose.

  • (3) Cash dividends will be distributed according to the shareholding percentage recorded in the shareholders roster as of the ex-dividend date and rounded down to an integer. The sum of the fractional amount will be listed as other income of the Company. The board of directors determines the ex-dividend date and the related matters at its discretion discretionary.

  • (4) If the total amount of issued shares changes subsequently due to domestic non-secured convertible bonds of the Company, purchase of treasury shares, issuance of new restricted employee shares or other reasons, which will affect the payout ratio, the board of directors determines the payout ratio at its discretion discretionary.

  • To report the performance assessments and compensation levels of directors, and managerial officers, please take note.

(Proposed by the board of directors)

Explanation:

  • (1) The performances of individual directors are appraised according to the Company’s ''Remuneration Committee Charter'' and ''Regulations

5

Governing the directors’ and managers’ remuneration'', and take the result as the calculation basis of directors’ compensation levels.

  • (2) The performances of individual managerial officers are appraised according to the Company’s ''Operating Procedure of the employee performance appraisal'' and take the result as the calculation basis of individual managerial officers' compensation levels.

  • (3) The remuneration committee and Board of Directors have resolved that the reliance and rationality of the individual performance appraisal and compensation levels of directors and managerial officers.

  • To report the reason and related matters of the issuance of the domestic 3rd unsecured Convertible Bonds. Please take note.

To report the reason and related matters of the issuance of the domestic
3rd unsecured Convertible Bonds. Please take note.		 To report the reason and related matters of the issuance of the domestic
3rd unsecured Convertible Bonds. Please take note.
(Proposed by the board of directors)
Explanation: The Company issues domestic 3rd unsecured Convertible
Bonds on August 11, 2021 to add operation capital and payback bank
loan,the issuance terms and conditions is as follows,
Series Domestic 3rd unsecured Convertible Bonds
(Bond Code：24393)
Approved date
bythe Board of Directors		 June 15, 2021
Approved no.
by the Competent Authority		 19 July 2021 Letter No.
Financial-Supervisory-Securities-Corporate-
11003488841;
9 August 2021 Letter No.
Securities-Counter-Bond-11000080671
Issuance Date August 11,2021
Total Issuance Amount NT$3,000,000 thousands
Issuance Period Three years；
Issuance Date：August 11, 2021
MaturityDate：August 11,2024
Denominations NT$100 thousands
Number of Bonds Issued 30,000,000 shares

6

Issue Price 100.5%
Interest No interest will bepayable on the Bond
Initial Conversion Price NT$122.6per share
Latest Conversion Price NT$116.3per share
Conversion Period From Novemer 12,2021 to August 11,2024
Final Redemption Unless previously redeemed, converted or
purchased
and
cancelled
in
the
circumstances referred to articles 10 and 18
in “Terms and Conditions of the domestic
3rd unsecured convertible bonds” by the
holder of the Convertible Bonds (hereinafter
referred to as "the creditor"), the Bonds will
be redeemed at the Principal amount in cash.
  1. To report the amendment of the '' Corporate Social Responsibility Best Practice Principles '', please take note.

(Proposed by the board of directors)

Explanation:

  • (1) It is proposed to make amendment of the “Corporate Social Responsibility Best Practice Principles” in accordance with the Letter No. 1100024173 of Taiwan Stock Exchange issued on December 7, 2021.

  • (2) The Principles is renamed “Corporate Sustainable Development Code of Practices Principles”. Please refer to Attachment 3 (from page 22 to page 31) for the comparison table of amendments.

  • Report on Short-form Merger between Merry Electronics Co., Ltd. and BIOTEST MEDICAL CORPORATION

(Proposed by the board of directors)

Explanation:

The Company merged with its owened subsidiary BIOTEST MEDICAL CORPORATION. The resolution passed by both Boards of Directors held on October 28, 2021. The way is Short-form Merger and the effective date

7

of merger is October 29, 2021. Upon the merger, the Company is the surving company, while BIOTEST MEDICAL CORPORATION is the dissolved company. The merger is approved by the Department of Commerce, MOEA..

8

Matters for Approval

  1. Proposal ： To adopt 2021 Business Report, individual financial statements and consolidated financial statements, please approve.

  2. (Proposed by the board of directors)

Explanation:

  • (1) The Board of Directors has prepared the statements and records of business report, profit distribution table, individual financial statements and consolidated financial statements of 2021, forwarded to the audit committee for review and issue the audit committee's review report for recordation in accordance with the Article 36 and section 3 of Article 14-4 of the Securities and Exchange Act and Articles 219 and 230 of the Company Act.

  • (2) Please refer to Attachment 1 (from page 18 to page 20) for the aforementioned business report, and please refer to Attachment 4 (from page 32 to page 57) for the individual and consolidated financial statements and records.

Resolution:

  1. Proposal ： To adopt the proposal for distribution of 2021 earnings, please approve.

(Proposed by the board of directors)

Explanation:

The profit distribution is to distribute distributable net profit of 2021, and please refer to Attachment 5 (page 58) for the profit distribution table of 2021.

Resolution:

9

Matters for Discussion

  1. Proposal ： To revise the Articles of Incorporation, please Discuss.

(Proposed by the board of directors)

Explanation:

  • (1) The articles of association of the company are amended in accordance with the business item code and business needs of the Letter No. 1100104044 of Health Bureau of Taichung City Government issued on September 2,2021. Besides, The articles are also amended in accordance with Article 172-2 of the Company Act that the Company’s shareholders’ meeting can be held by means of visual communication network or other methods promulgated by the central competent authority.

  • (2) Please refer the comparison table of amendments to the Articles of Incorporation as follows:

Articles after amendment Current Articles Current Articles Explanation
Article 2：The business scopes of the
Company are as follows:
1. CC01030 Electric Appliance and
Audiovisual Electric Products
Manufacturing;
2. CC01070 Telecommunication
Equipment and Apparatus
Manufacturing;
3. CC01080 Electronic Parts and
Components Manufacturing;
4. CC01110 Computers and Computing
Peripheral Equipment Manufacturing;
5. CC01100 Restrained Telecom Radio
Frequency Equipment and Materials
Manufacturing;
6. F108031Wholesale of Drugs, Medical
Goods;		 Article 2：The business scopes of the
Company are as follows:
1. CC01030 Electric Appliance and
Audiovisual Electric Products
Manufacturing;
2. CC01070 Telecommunication
Equipment and Apparatus
Manufacturing;
3. CC01080 Electronic Parts and
Components Manufacturing;
4. CC01110 Computers and
Computing Peripheral Equipment
Manufacturing;
5. CC01100 Restrained Telecom
Radio Frequency Equipment and
Materials Manufacturing;
6. CF01011 Medical Materials and
Equipment Manufacturing;
7. F108031Wholesale of Drugs,
Medical Goods;		 The articles of
association
of
the
company
are amended in
accordance
with
the
business
item
code
and
business needs
of the Letter
No.
1100104044 of
Health Bureau
of
Taichung
City
Government
issued
on
September
2,2021.
Article 8-1：
The company's shareholders meeting		 Conform to the
amendments to

10

Articles after amendment Current Articles Explanation
may be held by video conference or other
methods announced by the competent
authority.		 related
regulations and
business needs.
Article 25：
These Articles of Incorporation were
promulgated on December 13, 1975. The
1st amendment was made on October 25,
1977.........The 41st amendment was
made on July 21, 2021.The 42nd
amendment was made on June 15, 2022.		 Article 25：
These Articles of Incorporation were
promulgated on December 13, 1975.
The 1st amendment was made on
October
25,
1977.........The
41st
amendment was made on July 21,
2021.		 The amendment
is to add the
amendment date
of the Article of
Incorporation
for the above
amended
Articles.

Resolution:

  1. Proposal ： To revise the ''Rules of Procedure for Shareholders Meetings''. Please discuss.

(Proposed by the board of directors)

Explanation:

  • (1) The Rules is amended in consideration of the announcement of amendment in accordance with June 03, 2020 Notice No. TWSE 10900094681 and January 28, 2021 Notice No. TWSE 11000014461 of Taiwan Stock Exchange Corporation and Financial Supervisory Commission Notice No. 1110133385 dated March 07, 2022.

  • (2) Please refer to Attachment 6 (from page 59 to page 82) for comparison table of amendments.

Resolution:

  1. Proposal ： To revise the ''Operation Procedures for the Acquisition or Disposal of Assets'', please discuss.

(Proposed by the board of directors)

Explanation:

  • (1) Certain provisions of the “Operation Procedures for the Acquisition or Disposal of Assets” are proposed to be amended pursuant to Letter NO. 1110380465 issued by Financial Supervisory

11

Commission on January 28, 2022

  • (2) Please refer to Attachment 7 (from page 83 to page 90) for comparison table of amendments.

Resolution:

  1. Proposal ： Regulations governing the issuance of new restricted employee shares of 2022, please discuss.

(Proposed by the board of directors)

Explanation:

  • (1) It is proposed to issue new restricted employee shares in accordance with Article 267 of the Company Act and the "Regulations Governing the Offering and Issuance of Securities by Securities Issuers" (hereafter, the "Issuance Regulations").

  • (2) Total issuance: The total issuance is 2,000,000 shares of new common shares and par value of each share is NT$10, which constitute the total issued amount of NT$20,000,000.

  • (3) Conditions of issuance:

  • (A) Issuance price: The shares are issued gratuitously with an issuance price of NT$0 for each share.

  • (B) Vesting conditions:

The employees who meet the personal performance, company performance and service conditions prescribed in the "Regulations Governing the Issuance of New Restricted Employee Shares of 2022" without any violation of the said regulations.

  • (C) Failure in satisfying of vesting condition: The Company may retrieve, without remuneration, all new restricted employee shares distributed to such employees and cancel such.

  • (4) Qualifications and number of shares distribution:

  • (A) The employees qualified for shares distribution shall be a full-time employee who has been employed on or before the distribution date of the new restricted employee shares. Qualification requirements of employees’ include the employees of parents or

12

subsidiaries of the company meeting certain specific requirements. The employees who already hold 10% or more of the outstanding common shares of the Company is not qualified for distribution.

  • (B) The employees qualified for share distribution shall be any of the following employees:

    • (a). Key personnel related to future development of the Company;

    • (b). Personnel with performance which is fairly valuable to the Company; or

    • (c). New employees who are essential to the Company.

  • (C) The actual number of new restricted employee shares distributed to an employee will be subject to the job tenure, level of position, performance, overall contribution, special credit or any other necessary factor for management reference and shall be confirmed by Chairman and then submitted to the board of directors for approval. However, when distribution is made to a manager, it shall also be subject to a prior consent of remuneration committee.

  • (D) The cumulative number of shares which could be subscribed by the employee stock options issued by the Company to any employee in accordance with Paragraph 1, Article 56-1 of the Issuance Regulations, together with the new restricted employee shares obtained by the same employee, shall not exceed 0.3% of the outstanding number of shares. The above amount, plus the cumulative number of shares which could be subscribed by the employee stock options issued by the Company to any employee in accordance with Paragraph 1, Article 56 of the Issuance Regulations, shall not exceed 1% of the outstanding shares. However, with special approval from the central competent authority of the relevant industry, the total number of employee stock options and new restricted employee shares obtained by a single employee may be exempted from the above-mentioned restriction.

  • (5) The necessity of issuing the said new restricted employee shares: The

13

purposes are to attract and retain the required professionals, inspire the employees and enhance internal cohesion, as well as to discover interests for the Company and the shareholders and to ensure that the interests of the officials and employees of the Company are connected with interests of the shareholders.

  • (6) Possible costs, the dilution of the Company's earnings per share and other possible impacts on shareholders’ equity.

  • (A) Amount of possible costs: If the Company's average close price for 30 business days before 14 April 2022, NT$82.42 per share, is used for the calculation, when vesting conditions are all satisfied, the sum of possible costs is estimated to be NT$164,840 (in thousands of dollars), according to the vesting conditions, the cost apportioned each year will be NT$49,452(in thousands of dollars), NT$49,452 (in thousands of dollars) and NT$65,936 (in thousands of dollars) respectively.

  • (B) The dilution of the Company's earnings per share and other impacts on the rights and interests of shareholders: If it is calculated based on the number of outstanding shares of 216,510,042, the dilution of the earnings per share each year will be NT$0.23, NT$0.23 and NT$0.30 respectively. The dilution of the Company's earnings per share for subsequent years is considered to be limited and has no material impact on shareholders’ equity.

  • (7) Other important agreed matters: The new restricted employee shares issued shall be delivered to a trust for custody before the satisfaction of vesting conditions.

  • (8) The issuance shall be handled by submitting application(s) to the competent authority once or several times within one (1) year after the resolution date of the shareholders' meeting. The shares may be issued at once or in installments, depending on the actual needs of the Company, within one year starting from the date of receipt of the notice of effective registration from the competent authority. The

14

actual date of issuance shall be stipulated by the Chairman under authorization by the board of directors.

  • (9) If the terms and conditions set out for the said issuance of new restricted employee shares need to be amended due to the order(s) from the competent authority, the amendment(s) to relevant laws and regulations, or to respond to the financial market status or objective environment, it is proposed to authorize the board of directors to handle at its discretion after the approval of the shareholders' meeting.

  • (10)Relevant restrictions and important agreed matters or others for the said issuance of new restricted employee shares shall be handled in accordance with relevant laws and regulations, and the Company's "Regulations Governing the Issuance of New Restricted Employee Shares of 2022", please refer to Attachment 8.(from page 91 to page 97)

Resolution:

15

Elections

Proposal ： Election of the 20[th] Directors. Please vote.

(Proposed by the board of directors)

Explanation ：

  • (1) As the term of the incumbent (the 19[th] ) directors of the Company will expire on 18 June 2022, it is proposed nine directors (including three independent directors) of the 20[th ] shall be elected at the 2022 annual shareholders’ meeting in acoordance with the Article 12 of the Articles of Incorporation of the Company.

  • (2) The term of newly directors (including three independent directors) shall be three years from on June 15, 2022 to June 14, 2025, the original directors discharged from the date of the new directors elected.

  • (3) The directors shall be elected by opting candidates’ nomination system as specified in Article 192-1 of the Company Act in acoordance with the Article 12 of the Articles of Incorporation of the Company. The director shall be elected from the nominated candidates, whose academic and professional background and relevant information please refer to Attachment 9. (from page 98 to page 105)

Resolution:

16

Other Matters

Proposal ： Discussion to release of restriction on competitive of activities for directors

(Proposed by the board of directors)

Explanation ：

  • (1) A director who conducts business within the business scope of the Company for himself or others shall explain to the meeting of shareholders the essential contents of such an act and secures its approval in accordance with Article 209 of the Company Act.

  • (2) The term of newly directors (including three independent directors) shall be three years from on June 15, 2022 to June 14, 2025, the original directors discharged from the date of the new directors elected.

  • (3) Proposal of removal of the non-competition restrictions on the newly elected Directors, please refer to Attachment 10. (from page 106 to page 107)

Resolution:

Extemporary motions

Meeting adjourned

17

Attachment 1

Merry Electronics Co., Ltd. 2021 Business Report

  • I. Operational policy

2022 annual operational core: “performance, rally, net zero emissions and focusing on two industries - automotive and medical”.

II. General Condition of Implementation

As the epidemic of COVID-19 continued to spread in 2021, the whole world still can’t extricate itself from the threat of virus, and therefore, the global economics has suffered from a major impact and significantly influenced industrial operation. In the era of the raging epidemic, in response to rapid variation of environment and to satisfy the customers’ needs, Merry Electronics Co. Ltd. continues to develop the core concept of learning organization, expediently adjusts strategical arrangement, flexibly changes, and implements to promote the operating policy “constitutional optimization, digital transformation, integrated innovation and sustainable development” drawn up in 2021, optimizes group organizational structure, further increases operational efficiency, and arranges to develop new business in the future; to respond to the epoch of highly change, introducing omnibearing active digital transformation, such as process robots and global management digitalization of supply chain, etc., increasing organizational work efficiency, and improving management flexibility; the staff flings themselves into ESG sustainable subject in industrial operation, the Company receives various honor, such as Book Prize Gold Award for TCSA Corporate Sustainability Report in 2021, Top 50 of Excellence in Sustainable Corporate Social Responsibility Award and Top 5% of Corporate Governance Evaluation, etc., and became Taiwan’s 13th industry joining in RE 100, strode toward the goal of the lowest carbon electroacoustic industry. Even if we are in the global turmoil caused by the epidemic of COID-19, 2021 revenue of Merry Electronics Co. Ltd. still revealed good growth under close cooperation between the management team and the staff, and we sincerely appreciate shareholders’ and customers' full support and care of and suppliers’ full assistance.

Moving into 2022, there are still various uncertain variables and challenges in the external environment of the market aspect or supply chain caused by the pandemic. Because the company has established a solid foundation from its many years in business, Merry Electronics Co. Ltd. upholds the spirit of practical innovation while considering the group’s long-term development and arrangements, and uses “performance, rally, net zero emissions, and focus on two industries - automotive and medical” as its operational policies in 2022, with a brief explanation below:

18

“Performance”: Continuing internal constitution optimization, enhancing core technology, creating product differentiation value, improving flexibility of capacity configuration, and strengthening managements of all aspects to improve operational constitution, enha nce external opportunity, increase overall profitability and market competitiveness.

“Rally”: Continuing to enhance all business units, factory sites and vertical separation and horizontal integration of the subsidiary’s resources, and supplementing the group’s effort to increase benefits management and perform the best operational synergy.

“Zero emissions”: The world faces the crisis of climate change, and business and governments are encouraged to produce minimal, if not zero carbon emissions, from its operations. MERRY regards industrial sustainable development and fulfillment of net zero emissions as its final goals, thus continues to promote ESG sustainable concept in the company’s culture, and all staff implements sustainable design, energy saving and carbon reduction measures, and gradually moving up to achieve the goal of net zero emissions in order to achieve prosperity and harmonious coexistence together with the community and environment.

“Focusing on two industries - automotive and medical”: Enterprise competitiveness brings about constant innovation and progress. Aside from instantly implementing innovation in the domain of the electroacoustic industry, enhancing partnership with customers, the company further devotes itself to developing car and medical care solutions for positively stepping into new markets, increasing long-term competitive advantage and corporate value, and carrying out the next wave of growth momentum.

To face dilemmas and challenges from the various aspects of the global environment, industry and market in 2022, the management team of MERRY and all its staff uphold a positive and firm belief on teamwork, practical innovation, flexibility and adapting to the current situation, and advancing with a steady pace, to achieve its operational goals in 2022. We sincerely appreciate the shareholders’, customers’, suppliers’ and partners’ full support and trust to the Company, and expect to create a a sustainable value chain for MERRY.

III. Results of Implementation of Business Plan

The consolidated operating income of the company and its subsidiaries was NT$36,182,719 thousand, representing a increase of NT$1,737,900 thousand or 5.05% from the NT$34,444,819 thousand in 2020; the consolidated net profit before tax was NT$1,582,173 thousand, a decrease of NT$120,532 thousand or 7.08% from the NT$1,702,705 thousand of 2020, mainly due to the decrease in other profits.

IV. Financial Revenue and Expenses and Profitability Analysis

19

  • 1.Financial Revenue and Expenses Unit: NT$ in thousands of dollars
Account 2021 2020
Other incomes 365,190 323,158
Othergains and losses (51,420) (182,510)
Financial costs (84,329) (60,817)
Gains and losses of affiliates for using equity
method andjoint ventures accounted		 254,175 482,132
Total 483,616 561,963
  • 2.Profitability Analysis Unit: NT$ in thousands of dollars
Subject Consolidated
number of 2021		 Consolidated
number of 2020
Financial
structure(%)		 Debt to asset ratio 64.11% 64.07%
Solvency (%) Current ratio 139.78% 112.81%
Liquidityratio 107.28% 93.24%
Profitability
(%)		 Return on assets 3.98% 5.42%
Return on shareholders’ equity 11.04% 10.72%
Operating income to paid-in
capital ratio		 50.74% 54.49%
Earnings per share after
tax(NTD)		 5.40 6.39

  • V. Research and development status

  • 1 、 In 2021, a total of 72 new products and extension models were developed.

  • 2 、 In the 2021 year, 84 new patents have been approved and 67 are in review.

  • 3 、 The 2021 consolidated research and development expense was NT$1,699,476 thousand, an decrease of NT$5,160 thousand from the NT$1,704,636 thousand in 2020, accounting for 4.70% of the consolidated sales revenue.

  • VI. Implementation status of operating income and expenditure budget: No financial forecast is issued and therefore not applicable.

20

Attachment 2

Merry Electronics Co., Ltd. The Audit Committee's Review Report

The undersigned, being the Audit Committee of the Company, hereby confirm that the 2021 business report, profit distribution table and individual financial statement and consolidated financial statement, which were audited and issued by certified public accountants Wang, Yu-Juan and Liu, Mei-Lan from PricewaterhouseCoopers Taiwan, are not incorrect and issue a report thereupon in accordance with Article 219 of the Company Act and the Article 14-4 for Securities and Exchange Act for your review.

Merry Electronics Co., Ltd.

Chairman of the Audit Committee: Sher, Jih-Hsin

February 24, 2022

21

Attachment 3

Comparison of Amendments to the

Corporate Social Responsibility Best Practice Principles

Articles after amendment Current Articles Explanation
Sustainable
Development
Best
Practice Principles		 Corporate Social Responsibility
Best Practice Principles		 Referring to the "
Sustainable
Development
Best
Practice
Principles
for
TWSE/GTSM
Listed Companies "
published
on
December 7, 2021,
the
changed
provisions
of
the
Code of Practice.
Article 2
The Principles apply to our
company, including the entire
operations of each such company
and its business group.
The Principles encourage us to
actively fulfill oursustainable
development goals in the course of
our business operations so as to
follow international development
trends and to contribute to the
economic development of the
country, to improve the quality of
life of employees, the community
and
society
by
acting
as
responsible corporate citizens, and
to enhance competitive edges built
onsustainable development.		 Article 2
The Principles applies to our
company, including the entire
operations of each such company
and its business group.
The Principles encourage us to
actively
fulfill
our
corporate
social responsibilityin the course
of our business operations so as to
follow international development
trends and to contribute to the
economic development of the
country, to improve the quality of
life of employees, the community
and
society
by
acting
as
responsible corporate citizens, and
to enhance competitive edges
built
on
corporate
social
responsibility.		 Referring to the "
Sustainable
Development
Best
Practice
Principles
for
TWSE/GTSM
Listed Companies "
published
on
December 7, 2021,
the
changed
provisions
of
the
Code of Practice.
Article 3
In
fulfilling
sustainable
development
initiatives,
Our
company shall, in its corporate
management
guidelines
and
business operations, give due		 Article 3
In
fulfilling
corporate
social
responsibility
initiatives,
our
company shall, in its corporate
management
guidelines
and
business operations, give due		 Referring to the "
Sustainable
Development
Best
Practice
Principles
for
TWSE/GTSM
Listed Companies "

22

Articles after amendment Current Articles Explanation
consideration to the rights and
interests of stakeholders
and,
while
pursuing
sustainable
operations and profits, also give
due
consideration
to
the
environment,
society
and
corporate governance.
Our company shall, in accordance
with the materiality principle,
conduct
risk
assessments
of
environmental,
social
and
corporate
governance
issues
pertaining to company operations
and establish the relevant risk
managementpolicyor strategy.		 consideration to the rights and
interests of stakeholders and,
while
pursuing
sustainable
operations and profits, also give
due
consideration
to
the
environment,
society
and
corporate governance.
Our company shall, in accordance
with the materiality principle,
conduct
risk
assessments
of
environmental,
social
and
corporate
governance
issues
pertaining to company operations
and establish the relevant risk
managementpolicyor strategy.		 published
on
December 7, 2021,
the
changed
provisions
of
the
Code of Practice.
Article 4
To
implement
sustainable
development
initiatives,
our
company is advised to follow the
principles below:
1.Exercise corporate governance.
2.Foster
a
sustainable
environment.
3.Preserve public welfare.
4.Enhance
disclosure
of
sustainable
development
information.		 Article 4
To implementcorporate social
responsibility
initiatives,
our
company is advised to follow the
principles below:
1.Exercise corporate governance.
2.Foster
a
sustainable
environment.
3.Preserve public welfare.
4.Enhance disclosure ofcorporate
social
responsibility
information.		 Referring to the "
Sustainable
Development
Best
Practice
Principles
for
TWSE/GTSM
Listed Companies "
published
on
December 7, 2021,
the
changed
provisions
of
the
Code of Practice.
Article 5
Our company shall take into
consideration
the
correlation
between
the
development
of
domestic
and
international
sustainable
development
principles and corporate core
business operations, and the effect
of the operation of individual
companies and of their respective
business groups as a whole on
stakeholders, in establishing their
policies,
systems
or
relevant		 Article 5
Our company shall take into
consideration
the
correlation
between
the
development
of
domestic
and
international
corporate
social
responsibility
principles and corporate core
business operations, and the effect
of the operation of individual
companies and of their respective
business groups as a whole on
stakeholders, in establishing their
policies,
systems
or
relevant		 Referring to the "
Sustainable
Development
Best
Practice
Principles
for
TWSE/GTSM
Listed Companies "
published
on
December 7, 2021,
the
changed
provisions
of
the
Code of Practice.

23

Articles after amendment Current Articles Explanation
management
guidelines,
and
concrete
promotion
plans
for
sustainable
development
programs,
which
shall
be
approved by the board of directors
and
then
reported
to
the
shareholders meeting.
When a shareholder proposes
a motion involvingsustainable
development,the company's board
of directors is advised to review
and consider including it in the
shareholders meeting agenda.		 management
guidelines,
and
concrete promotion plans for
corporate
social
responsibility
programs,
which
shall
be
approved by the board of directors
and
then
reported
to
the
shareholders meeting.
When a shareholder proposes a
motion involvingcorporate social
responsibility,
the
company's
board of directors is advised to
review and consider including it
in
the
shareholders
meeting
agenda.
Article 7
The directors of our company
shall exercise the due care of good
administrators
to
urge
the
company
to
perform
its
sustainable
development
initiatives, examine the results of
the implementation thereof from
time to time and continually make
adjustments so as to ensure the
thorough implementation of its
sustainable developmentpolicies.
The board of directors of our
company is advised to give full
consideration to the interests of
stakeholders,
including
the
following
matters,
in
the
company's performance of its
sustainable
development
initiatives:
1.Identifying
the
company's
sustainable
development
mission or vision, and declaring
its
sustainable
development
policy,
systems
or
relevant
managementguidelines;		 Article 7
The directors of our company
shall exercise the due care of good
administrators
to
urge
the
company to perform itscorporate
social responsibilityinitiatives,
examine
the
results
of
the
implementation thereof from time
to time and continually make
adjustments so as to ensure the
thorough implementation of its
corporate
social
responsibility
policies.
The board of directors of our
company is advised to give full
consideration to the interests of
stakeholders,
including
the
following
matters,
in
the
company's performance of its
sustainable
development
initiatives:
1.Identifying
the
company's
sustainable
development
mission or vision, and declaring
its
sustainable
development
policy,systems
or
relevant		 Referring to the "
Sustainable
Development
Best
Practice
Principles
for
TWSE/GTSM
Listed Companies "
published
on
December 7, 2021,
the
changed
provisions
of
the
Code of Practice.

24

Articles after amendment Current Articles Explanation
2.Makingsustainable development
the guiding principle of the
company's
operations
and
development,
and
ratifying
concrete promotional plans for
sustainable
development
initiatives; and
3.Enhancing the timeliness and
accuracy of the disclosure of
sustainable
development
information.
The board of directors shall
appoint executive-level positions
with responsibility for economic,
environmental, and social issues
resulting
from
the
business
operations of our company, and to
report the status of the handling to
the
board
of
directors.
The
handling
procedures
and
the
responsible
person
for
each
relevant issue shall be concrete
and clear.		 management guidelines;
2.Making
sustainable
development
the
guiding
principle
of
the
company's
operations and development,
and
ratifying
concrete
promotional
plans
for
sustainable
development
initiatives; and
3.Enhancing the timeliness and
accuracy of the disclosure of
sustainable
development
information.
The board of directors shall
appoint executive-level positions
with responsibility for economic,
environmental, and social issues
resulting
from
the
business
operations of our company, and to
report the status of the handling to
the
board
of
directors.
The
handling
procedures
and
the
responsible
person
for
each
relevant issue shall be concrete
and clear.
Article 8
Our company, on a regular basis,
organizes education and training
on
the
implementation
of
sustainable
development
initiatives, including promotion of
the
matters
prescribed
in
paragraph 2 of the preceding
article.		 Article 8
Our company, on a regular basis,
organizes education and training
on
the
implementation
of
corporate
social
responsibility
initiatives, including promotion of
the
matters
prescribed
in
paragraph 2 of the preceding
article.		 Referring to the "
Sustainable
Development
Best
Practice
Principles
for
TWSE/GTSM
Listed Companies "
published
on
December 7, 2021,
the
changed
provisions
of
the
Code of Practice.
Article 9
For the purpose of managing
sustainable
development
initiatives,
Our
company		 Article 9
For the purpose of managing
corporate
social
responsibility
initiatives,
our
company		 Referring to the "
Sustainable
Development
Best
Practice
Principles

25

Articles after amendment Current Articles Current Articles Explanation
establishes an exclusively (or
concurrently)
dedicated
unit,
Sustainability Team, to be in
charge of proposing and enforcing
the
sustainable
development
policies,
systems,
or
relevant
management
guidelines,
and
concrete promotional plans and to
report on the same to the board of
directors on a periodic basis.
Our company adopts reasonable
remuneration policies, to ensure
that remuneration arrangements
support the strategic aims of the
organization, and align with the
interests of stakeholders.
It is advised that the employee
performance evaluation system be
combined
with
sustainable
development policies, and that a
clear and effective incentive and
discipline system be established.		 establishes an exclusively (or
concurrently)
dedicated
unit,
administration center,to be in
charge of proposing and enforcing
thecorporate social responsibility
policies, systems, or relevant
management
guidelines,
and
concrete promotional plans and to
report on the same to the board of
directors on a periodic basis.
Our company adopts reasonable
remuneration policies, to ensure
that remuneration arrangements
support the strategic aims of the
organization, and align with the
interests of stakeholders.
It is advised that the employee
performance evaluation system be
combined withcorporate social
responsibilitypolicies, and that a
clear and effective incentive and
discipline system be established.		 for
TWSE/GTSM
Listed Companies "
published
on
December 7, 2021,
the
changed
provisions
of
the
Code of Practice.
Article 10
Our company shall, based on
respect for the rights and interests
of
stakeholders,
identify
stakeholders of the company, and
establish a designated section for
stakeholders on the company
website; understand the reasonable
expectations
and
demands
of
stakeholders
through
proper
communication with them, and
adequately
respond
to
the
importantsustainable development
issues which they are concerned
about.		 Article 10
Our company shall, based on
respect for the rights and interests
of
stakeholders,
identify
stakeholders of the company, and
establish a designated section for
stakeholders on the company
website;
understand
the
reasonable
expectations
and
demands of stakeholders through
proper communication with them,
and adequately respond to the
important
corporate
social
responsibilityissues which they
are concerned about.		 Referring to the "
Sustainable
Development
Best
Practice
Principles
for
TWSE/GTSM
Listed Companies "
published
on
December 7, 2021,
the
changed
provisions
of
the
Code of Practice.
Article 12
Our company endeavor toimprove
energy
efficiency
and
use		 Article 12
Our company
usage amount		 endeavor to collect
of all resources to		 Referring to the "
Sustainable
Development
Best

26

Articles after amendment Current Articles Explanation
renewable materials which have a
low impact on the environment to
improve sustainability of natural
resources.		 utilize more efficientlyand use
renewable materials which have a
low impact on the environment to
improve sustainability of natural
resources.		 Practice
Principles
for
TWSE/GTSM
Listed Companies "
published
on
December 7, 2021,
the
changed
provisions
of
the
Code of Practice.
Article 14
Our companyassigns a dedicated
unit for drafting, promoting, and
maintaining relevant environment
management systems and concrete
action plans, and should hold
environment education courses for
their managerial officers and other
employees on a periodic basis.		 Article 14
Our company assigns a dedicated
unit,Human resources department
& Occupational Safety and Health
Administration,
for
drafting,
promoting,
and
maintaining
relevant
environment
management systems and concrete
action plans, and should hold
environment education courses for
their managerial officers and other
employees on aperiodic basis.		 Referring to the "
Sustainable
Development
Best
Practice
Principles
for
TWSE/GTSM
Listed Companies "
published
on
December 7, 2021,
the
changed
provisions
of
the
Code of Practice.
Article 17
Our company assesses the current
and future potential risks and
opportunities that climate change
may present to enterprises and to
adopt related measures.
Our company are advised to adopt
standards or guidelines generally
used in Taiwan and abroad to
enforce corporate greenhouse gas
inventory and to make disclosures
thereof, the scope of which shall
include the following:
1.Direct
greenhouse
gas
emissions:
emissions
from
operations that are owned or
controlled by the company.
2.Indirect
greenhouse
gas
emissions: emissions resulting
from
the
generation
of		 Article 17
Our company assesses the current
and future potential risks and
opportunities that climate change
may present to enterprises and to
adoptclimaterelated measures.
Our company are advised to adopt
standards or guidelines generally
used in Taiwan and abroad to
enforce corporate greenhouse gas
inventory and to make disclosures
thereof, the scope of which shall
include the following:
1.Direct
greenhouse
gas
emissions:
emissions
from
operations that are owned or
controlled by the company.
2.Indirect
greenhouse
gas
emissions: emissions resulting
from
the
generation
of		 Referring to the "
Sustainable
Development
Best
Practice
Principles
for
TWSE/GTSM
Listed Companies "
published
on
December 7, 2021,
the
changed
provisions
of
the
Code of Practice.

27

Articles after amendment Current Articles Current Articles Explanation
electricity, heating, or steam
consumed by the company.
3.Other Indirect greenhouse gas
emissions:
emissions
of
activities from assets not owned
or controlled by the company,
but
that
the
organization
indirectly impacts in its value
chain.		 externally
purchased
or
acquiredelectricity, heating, or
steam.
Article 26
Our company assesses the impact
their procurement has on society
as well as the environment of the
community that they are procuring
from, and shall cooperate with
their
suppliers
to
jointly
implement
the
sustainable
development initiative.
Our company establishes supplier
management policies and request
suppliers to comply with rules
governing
issues
such
as
environmental
protection,
occupational safety and health or
labor rights.
Prior to engaging in commercial
dealings, Our company assesses
whether there is any record of a
supplier’s
impact
on
the
environment and society, and
avoids
conducting
transactions
with those againstsustainable
development policy.
When Our company enter into a
contract with any of their major
suppliers,
the
content
should
include terms stipulating mutual
compliance
with
sustainable
development policy, and that the
contract maybe terminated or		 Article 26
Our company assesses the impact
their procurement has on society
as well as the environment of the
community
that
they
are
procuring
from,
and
shall
cooperate with their suppliers to
jointly implement thecorporate
social responsibilityinitiative.
Our company establishes supplier
management policies and request
suppliers to comply with rules
governing
issues
such
as
environmental
protection,
occupational safety and health or
labor rights.
Prior to engaging in commercial
dealings, Our company assesses
whether there is any record of a
supplier’s
impact
on
the
environment and society, and
avoids conducting transactions
with those againstcorporate social
responsibilitypolicy.
When Our company enter into a
contract with any of their major
suppliers,
the
content
should
include terms stipulating mutual
compliance withcorporate social
responsibilitypolicy, and that the
contract maybe terminated or		 Referring to the "
Sustainable
Development
Best
Practice
Principles
for
TWSE/GTSM
Listed Companies "
published
on
December 7, 2021,
the
changed
provisions
of
the
Code of Practice.

28

Articles after amendment Current Articles Explanation
rescinded any time if the supplier
has violated such policy and has
caused significant negative impact
on the environment and society of
the community of the supply
source.		 rescinded any time if the supplier
has violated such policy and has
caused significant negative impact
on the environment and society of
the community of the supply
source.
Chapter 5 Enhancing Disclosure
of
Sustainable
development
Information		 Chapter 5 Enhancing Disclosure
ofCorporate social responsibility
Information		 Referring to the "
Sustainable
Development
Best
Practice
Principles
for
TWSE/GTSM
Listed Companies "
published
on
December 7, 2021,
the
changed
provisions
of
the
Code of Practice.
Article 28
Our
company
shall
disclose
information according to relevant
laws,
regulations
and
the
Corporate
Governance
Best
Practice
Principles
for
TWSE/GTSM listed Companies
and shall fully disclose relevant
and reliable information relating to
their
sustainable
development
initiatives to improve information
transparency.
Relevant information relating to
sustainable developmentwhich
Our
company
shall
disclose
includes:
1.The policy, systems or relevant
management
guidelines,
and
concrete promotion plans for
sustainable
development
initiatives, as resolved bythe		 Article 28
Our
company
shall
disclose
information according to relevant
laws,
regulations
and
the
Corporate
Governance
Best
Practice
Principles
for
TWSE/GTSM listed Companies
and shall fully disclose relevant
and reliable information relating
to
their
corporate
social
responsibility
initiatives
to
improve information transparency.
Relevant information relating to
corporate
social
responsibility
which our company shall disclose
includes:
1.The policy, systems or relevant
management guidelines,
and
concrete promotion plans for
corporate social responsibility
initiatives, as resolved bythe		 Referring to the "
Sustainable
Development
Best
Practice
Principles
for
TWSE/GTSM
Listed Companies "
published
on
December 7, 2021,
the
changed
provisions
of
the
Code of Practice.

29

Articles after amendment Current Articles Explanation
board of directors.
2.The risks and the impact on the
corporate
operations
and
financial condition arising from
exercising corporate governance,
fostering
a
sustainable
environment
and
preserving
social public welfare.
3.Goals and measures for realizing
the
sustainable
development
initiatives established by the
companies, and performance in
implementation.
4.Major stakeholders and their
concerns.
5.Disclosure of information on
major suppliers' management
and performance with respect to
major environmental and social
issues.
6.Other information relating to
sustainable
development
initiatives.		 board of directors.
2.The risks and the impact on the
corporate
operations
and
financial condition arising from
exercising
corporate
governance,
fostering
a
sustainable environment and
preserving
social
public
welfare.
3.Goals
and
measures
for
realizing thecorporate social
responsibility
initiatives
established by the companies,
and
performance
in
implementation.
4.Major stakeholders and their
concerns.
5.Disclosure of information on
major suppliers' management
and performance with respect to
major environmental and social
issues.
6.Other information relating to
corporate social responsibility
initiatives.
Article 29
Our
company
shall
adopt
internationally widely recognized
standards or guidelines when
producingsustainabilityreports, to
disclose
the
status
of
their
implementation of thesustainable
development policy. It also is
advisable to obtain a third-party
assurance
or
verification
for
reports to enhance the reliability
of the information in the reports.
The reports are advised to include:		 Article 29
Our
company
shall
adopt
internationally widely recognized
standards or guidelines when
producing
corporate
social
responsibilityreports, to disclose
the status of their implementation
of
the
corporate
social
responsibilitypolicy. It also is
advisable to obtain a third-party
assurance
or
verification
for
reports to enhance the reliability
of the information in the reports.		 Referring to the "
Sustainable
Development
Best
Practice
Principles
for
TWSE/GTSM
Listed Companies "
published
on
December 7, 2021,
the
changed
provisions
of
the
Code of Practice.

30

Articles after amendment Current Articles Explanation
1.The policy, system, or relevant
management
guidelines
and
concrete promotion plans for
implementing
sustainable
development initiatives.		 The reports are advised to include:
1.The policy, system, or relevant
management
guidelines
and
concrete promotion plans for
implementingcorporate social
responsibilityinitiatives.
Article 30
Our company shall at all times
monitor
the
development
of
domestic and foreignsustainable
development standards and the
change of business environment so
as to examine and improve their
established
sustainable
development framework and to
obtain better results from the
implementation of thesustainable
development policy.		 Article 30
Our company shall at all times
monitor
the
development
of
domestic and foreigncorporate
social responsibilitystandards and
the
change
of
business
environment so as to examine and
improve our establishedcorporate
social responsibilityframework
and to obtain better results from
the
implementation
of
the
corporate
social
responsibility
policy.		 Referring to the "
Sustainable
Development
Best
Practice
Principles
for
TWSE/GTSM
Listed Companies "
published
on
December 7, 2021,
the
changed
provisions
of
the
Code of Practice.

31

Attachment 4

CPA's Audit Report, Individual Financial Statements and Consolidated Financial Statements

INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of Merry Electronics Co., Ltd.

Opinion

We have audited the accompanying parent company only balance sheets of Merry Electronics Co., Ltd. (the “Company”) as at December 31, 2021 and 2020, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2021 and 2020, and its financial performance and its cash flows for the years then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”.

Basis for opinion

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

Key audit matters

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

32

The key audit matters in relation to the parent company only financial statements for the year ended December 31, 2021 are outlined as follows:

Cut-off on sales revenue from distribution warehouse Description

Refer to Note 4(30) for accounting policy on revenue recognition. The Company recognises revenue upon delivery of goods or pick-up of goods (the transfer of control of ownership) by customers at warehouse. Warehouse sales revenue constitutes 35% of total operating revenue for the year ended December 31, 2021. The Company’s revenue recognition is based on inventory movement records of warehouse based on the reports provided by warehouse custodians or bill of lading reports recorded on network platform. As the hubs are located in various locations and there are numerous custodians, the frequency and contents of statements provided by custodians vary, and customers are from different places, the process of revenue recognition contains numerous manual procedures, which would potentially result in inaccurate timing of revenue recognition and the discrepancy between physical inventory quantities in the hubs and quantities per accounting records. Thus, we consider the cut-off on sales revenue from distribution warehouse a key audit matter.

How our audit addressed the matter

We performed the following audit procedures in relation to the above key audit matter:

  • A. Understood, evaluated and verified the Company’s procedure for warehouse sales revenue and internal control, including:

  • (a) Interviewing the staff from different departments of the sales revenue process from distribution warehouse, and confirming the consistency by comparing interview results with the process of warehouse sales revenue recognition obtained.

  • (b) Verifying the internal control of warehouse distribution (checked the terms of transaction / timing of ownership transfer and dates of supporting documents and verifying transactions recognized in the appropriate period by reconciling the quantities of supporting documents with invoices) to confirm the accuracy of the timing of revenue recognition.

  • B. Performed cut-off procedures on sales revenue from distribution warehouse recognised during a specific period before and after the period-end, including verifying delivery schedule of distribution warehouse and ensuring the movements of inventories contained in the statements and cost of goods sold had been recognised in the appropriate period; and

33

  • C. Performed physical inventory count observation or confirmed the inventory quantities with hub custodian and agreed the results to accounting records.

Investments accounted for using equity method - valuation of inventories

Description

The Company receives orders from customers and the subsidiaries are tasked to manufacture the products. The subsidiaries (shown as investments accounted for using equity method) have a high risk of incurring inventory valuation loss and obsolescence due to fluctuations in market demand and rapidly evolving technology. Further, the measurement of net realisable value of inventories involves subjective judgement resulting in a high degree of estimation uncertainty. Thus, we consider the allowance for inventory valuation loss of the subsidiaries (shown as investments accounted for using equity method) a key audit matter.

How our audit addressed the matter

We performed the following audit procedures in relation to the above key audit matter:

  • A. Understood and assessed the reasonableness of the subsequent inventory valuation and the provision for loss on obsolete and slow-moving inventory.

  • B. Inspected the annual plan of the physical inventory count and observed the inventory count; evaluated the effectiveness of the procedures used to identify and control obsolete inventories.

  • C. Obtained inventory aging report and verified dates of movements with supporting documents, and ensured the accuracy of inventory aging classification and its consistency with the policies.

  • D. Obtained the net realisable value of each kind of inventory and checked whether the applied calculation logic was in agreement with all inventory, tested the supporting documents related to the estimation basis for net realisable value of inventories including verifying the supporting documents of sales and purchase prices, as well as recalculating and assessing the reasonableness of allowance for inventory valuation losses.

Other matter - audits of the other auditors

We did not audit the financial statements of certain consolidated subsidiaries and investments accounted for under the equity method that are included in the consolidated financial statements and disclosures in Note 13. Those financial statements were audited by other auditors, whose reports thereon have been furnished to us, and our opinion expressed herein is based solely on reports of the

34

other auditors. The balance of these investments accounted for under equity method amounted to NT$42,728 thousand, constituting 0.15% of total assets as of December 31, 2021, and comprehensive income (loss) was (NT$7,084) thousand, constituting (3.3%) of total comprehensive income for the years then ended.

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

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

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

Those charged with governance, including independent directors and supervisors, are responsible for overseeing the Company’s financial reporting process.

Auditors’ 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 the generally accepted auditing standards in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these parent company only financial statements.

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

35

  • A. 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.

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

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

  • D. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the parent company only 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.

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

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

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.

36

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements of the current period 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.

Wang, Yu-Chuan

Liu, Mei-Lan

For and on behalf of PricewaterhouseCoopers, Taiwan February 24, 2022

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

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

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44

INDEPENDENT AUDITORS ’ REPORT TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of Merry Electronics Co., Ltd.

Opinion

We have audited the accompanying consolidated balance sheets of Merry Electronics Co., Ltd. and its subsidiaries (the “Group”) as at December 31, 2021 and 2020, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the report of other auditors (please refer to the Other matter section), the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

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

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Group’s 2021 consolidated financial statements. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and, in forming our opinion thereon, we do not

45

provide a separate opinion on these matters.

Key audit matters for the Group’s 2021 consolidated financial statements are stated as follows:

Cut-off on sales revenue from distribution warehouse

Description

Refer to Note 4(30) for accounting policy on revenue recognition.

The Group recognizes revenue upon delivery or pick-up of goods (the transfer of control of ownership) by customers at warehouses. Warehouse sales revenue constitutes 27% of total operating revenue for the year ended December 31, 2021. The Group’s revenue recognition is based on inventory movement records of warehouses based on the reports provided by warehouse custodians or bill of lading reports recorded on network platform. As the hubs are located in various locations and there are numerous custodians, the frequency and contents of statements provided by custodians vary, and customers are from different places, the process of revenue recognition contains numerous manual procedures, which would potentially result in inaccurate timing of revenue recognition and the discrepancy between physical inventory quantities in the hubs and quantities per accounting records. Thus, we consider the cut-off on sales revenue from distribution warehouses a key audit matter.

How our audit addressed the matter

We performed the following audit procedures in relation to the above key audit matter:

  • A. Understood, evaluated and verified the Group’s procedure for warehouse sales revenue and internal control, including:

  • (a) Interviewing the staff from different departments of the sales revenue process from distribution warehouse, and confirming the consistency by comparing interview results with the process of warehouse sales revenue recognition obtained.

  • (b) Verifying the internal control of warehouse distribution (checked the terms of transaction / timing of ownership transfer and dates of supporting documents and verifying transactions recognized in the appropriate period by reconciling the quantities of supporting documents with invoices) to confirm the accuracy of the timing of revenue recognition.

  • B. Performed cut-off procedures on sales revenue from distribution warehouses recognized during a specific period before and after the period-end, including verifying delivery schedule of distribution warehouses and ensuring the movements of inventories contained in the statements and cost of goods sold had been recognized in the appropriate period;

46

  • C. Performed physical inventory count observation or confirmed the inventory quantities with hub custodian and agreed the results to accounting records.

Valuation of inventories

Description

Refer to Note 4(13) for accounting policies on inventory valuation, Note 5(1) for significant accounting estimates and assumptions related to inventory valuation, and Note 6(6) for details of allowance for inventory valuation losses. As of December 31, 2021, the balances of inventories and allowance for inventory valuation losses were NT$5,371,108 thousand and NT$(225,066) thousand, respectively.

The Group has a high risk of incurring inventory valuation loss or obsolescence due to fluctuations in market demand and rapidly evolving technology. Further, the measurement of net realizable value of inventories involves subjective judgement resulting in a high degree of estimation uncertainty. Thus, we consider the allowance for inventory valuation loss a key audit matter.

How our audit addressed the matter

We performed the following audit procedures in relation to the above key audit matter:

  • A. Understood and assessed the reasonableness of the subsequent inventory valuation and the provision for loss on obsolete and slow-moving inventory.

  • B. Inspected the annual plan of the physical inventory count and observed the inventory count; evaluated the effectiveness of the procedures used to identify and control obsolete inventories.

  • C. Obtained inventory aging report and verified dates of movements with supporting documents, and ensured the accuracy of inventory aging classification and its consistency with the policies.

  • D. Obtained the net realizable value of each kind of inventory and checked whether the applied calculation logic was in agreement with all inventory, tested the supporting documents related to the estimation basis for net realizable value of inventories including verifying the supporting documents of sales and purchase prices, as well as recalculating and assessing the reasonableness of allowance for inventory valuation losses.

Other matter - audits of other independent auditors

We did not audit the financial statements of certain consolidated subsidiaries and investments accounted for under the equity method that are included in the consolidated financial statements and disclosures in Note 13. Those financial statements were audited by other independent auditors, whose reports thereon have been furnished to us, and our opinion expressed herein is based solely on reports of

47

the other independent auditors. The balance of these investments accounted for under equity method amounted to NT$42,728 thousand, constituting 0.13% of total assets as of December 31, 2021, and comprehensive income (loss) was (NT$7,084) thousand, constituting (1.91%) of total comprehensive income for the years then ended.

Other matter - parent company only financial reports

We have audited and expressed an unqualified opinion on the parent company only financial statements of Merry Electronics Co., Ltd. as at and for the years ended December 31, 2021 and 2020.

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

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

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

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

Auditors ’ responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an 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 the generally accepted auditing standards in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the

48

aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

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

  • A. 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.

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

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

  • D. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our 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 Group to cease to continue as a going concern.

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

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

49

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

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

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

Wang, Yu-Chuan

Liu, Mei-Lan

For and on behalf of PricewaterhouseCoopers, Taiwan February 24, 2022

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

50

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57

Attachment 5

Merry Electronics Co., Ltd. 2021 Profit Distribution Table

Merry Electronics Co., Ltd.
2021 Profit Distribution Table
Subject Amount (NTD)
Beginning retained earnings 2,218,692,816
add: 2021 net profit after tax 1,128,484,678
add: adjustments on re-measurement on define benefit plans
recognized in retained earnings
2,498,875
add: Disposal in equity instruments measured at fair value
through other comprehensivegains and losses.
0
less: 10% legal reserve (113,098,355)
less: set aside or reversed special reserve (479,784,847)
Distributable net profit 2,756,793,167
Subject for distribution
less: cash bonus for shareholders (2021 retained earnings) (866,040,168)
Unappropriated retained earnings 1,890,752,999

58

Attachment 6

Comparison of Amendments to the

Rules of Procedure for Shareholders Meetings

Amendment Article Current Article Description
5.1.1. Unless otherwise provided by
law
or
regulation,
this
Corporation's
shareholders
meetings shall be convened
by the board of directors; the
change
to
convene
a
shareholders'meeting shall
be resolved by the Board of
Directors and no later than
the notice of the meeting of
shareholders'is sent.		 5.1.1. Unless otherwise provided
by law or regulation, this
Corporation's shareholders
meetings shall be convened
by the board of directors.		 In
order
for
shareholders
to
be
informed the change
in the convening, the
changing
shall
be
resolved by the Board
of Directors and no
later than the notice of
the
shareholders'
meeting is sent, so to
amend the §5.1.1.
5.1.2 This
Corporation
shall
prepare electronic versions of
the
shareholders
meeting
notice and proxy forms, and
the
origins
of
and
explanatory materials relating
to all proposals, including
proposals
for
ratification,
matters for deliberation, or
the election or dismissal of
directors or supervisors, and
upload them to the Market
Observation
Post
System
(MOPS)
before
30
days
before the date of a regular
shareholders
meeting
or
before 15 days before the
date of a special shareholders
meeting. This Corporation
shall
prepare
electronic
versions of the shareholders
meeting
agenda
and
supplemental
meeting		 5.1.2.
This
Corporation
shall
prepare electronic versions
of the shareholders meeting
notice and proxy forms,
and the origins of and
explanatory
materials
relating to all proposals,
including
proposals
for
ratification,
matters
for
deliberation, or the election
or dismissal of directors or
supervisors,
and
upload
them
to
the
Market
Observation Post System
(MOPS) before 30 days
before the date of a regular
shareholders
meeting or
before 15 days before the
date
of
a
special
shareholders meeting. This
Corporation shall prepare
electronic versions of the
shareholders
meeting		 According to Article 6
of the Measures for the
Recording
and
Compliance
of
the
Shareholders' Meeting
Manual of a Public
Offering
Company
amended and issued on
March 4, 2022, so to
amend the §5.1.2.

59

Amendment Article

Current Article

Description

Amendment Article Amendment Article Current Article Description
materials and upload them to
the MOPS before 21 days
before the date of the regular
shareholders
meeting
or
before 15 days before the
date
of
the
special
shareholders
meeting.
However, if the Company's
paid-up capital at the end of
the most recent fiscal year
reaches NT$10 billion or
more, or the total Investors of
foreign
and
Mainland
Chinese shareholding ratios
recorded in its shareholders'
book at the ordinary meeting
of shareholders in the most
recent fiscal year reaches
more
than
30%,
the
transmission
of
electronic
files
shall
be
completed
before the General meeting
of shareholders is completed
30 days ago. In addition,
before 15 days before the
date
of
the
shareholders
meeting,
this
Corporation
shall also have prepared the
shareholders meeting agenda
and supplemental meeting
materials and made them
available
for
review
by
shareholders at any time. The
meeting
agenda
and
supplemental materials shall
also be displayed at this
Corporation
and
the
professional
shareholder
services agent designated.
The
Handbook
and		 agenda and supplemental
meeting
materials
and
upload them to the MOPS
before 21 days before the
date
of
the
regular
shareholders
meeting or
before 15 days before the
date
of
the
special
shareholders meeting.
In addition, before 15 days
before the date of the
shareholders meeting, this
Corporation shall also have
prepared the shareholders
meeting
agenda
and
supplemental
meeting
materials and made them
available for review by
shareholders at any time.
The meeting agenda and
supplemental
materials
shall also be displayed at
this Corporation and the
professional
shareholder
services agent designated
thereby as well as being
distributed on-site at the
meeting place.

60

Amendment Article Amendment Article Current Article Description
Supplementary
Information
for the Meeting shall be
provided to shareholders for
reference by the Company on
the day of the meeting of
shareholders
in
the
followings:
(1). When the physical
shareholders'meeting
is convened, it shall be
issued
at
the
shareholders'meeting.
(2). When a video-assisted
shareholders'meeting
is held, it shall be
distributed On-site of
the
shareholders'
meeting
and
transmitted
to
the
video
conference
platform by electronic
files.
(3).
When
a
video
shareholders'meeting
is held, the electronic
file shall be uploaded
to the video conference
platform.

(1).

(2).

(3).
5.1.4. Matters pertaining to election
or discharge of directors,
alteration of the Articles of
Incorporation, reduction of
capital, application for the
approval of ceasing its status
as
a
public
company,
approval of competing with
the company by directors,
surplus profit distributed in
the form of new shares,		 5.1.4. Matters pertaining to election
or discharge of directors,
alteration of the Articles of
Incorporation, reduction of
capital, application for the
approval of ceasing its status
as
a
public
company,
approval of competing with
the company by directors,
surplus profit distributed in
the form of new shares,		 In order to clarify the
provisions of the statute
that
may
not
be
proposed by way of
provisional motion and
to cooperate with some
proposals, which still
need to be listed and
stated in the notice of
meeting, so to amend
the §5.1.4.

61

Amendment Article Current Article Description
reserve distributed in the
form
of
new
shares,
dissolution, merger, spin-off,
or any matters as set forth in
Paragraph I, Article 185,
26-1
and
43-6
of
the
Securities Exchange Law,
Articles 56-1 and 60-2 of the
Guidelines for the Handling
of Securities Offering and
Issuance by Issuers, hereof
shall be itemized in the
causes or subjects to be
described and the essential
contents shall be explained in
the notice to convene a
meeting of shareholders, and
shall not be brought up as
extemporary motions.		 reserve distributed in the
form
of
new
shares,
dissolution, merger, spin-off,
or any matters as set forth in
Paragraph I, Article 185
hereof shall be itemized in
the causes or subjects to be
described and the essential
contents shall be explained in
the notice to convene a
meeting of shareholders, and
shall not be brought up as
extemporary
motions;
the
essential contents may be
posted
on
the
website
designated by the competent
authority
in
charge
of
securities
affairs
or
the
company, and such website
shall be indicated in the
above notice.
5.1.6 A shareholder holding 1
percent or more of the total
number of issued shares may
propose
a
proposal
to
Corporation for discussion at
a
regular
shareholders
meeting.
Such
proposals,
however, are limited to one
item only, and no proposal
containing more than one
item will be included in the
meeting agenda. In addition,
if
the
proposal
of
the
shareholder has one of the
circumstances
of
the
paragraphs of Item 4 of
Article
172-1
of
the
Company Law, the board of		 5.1.6 A shareholder holding 1
percent or more of the total
number of issued shares
may propose a proposal to
Corporation for discussion
at a regular shareholders
meeting. Such proposals,
however, are limited to one
item only, and no proposal
containing more than one
item will be included in the
meeting
agenda.
Shareholders
propose
a
motionisto urge the
company to promote public
interest or fulfill its social
responsibilities. The board
of directors must include		 In conjunction with the
amendment to Item 5 of
Article
172
of
the
Company Law and the
letter No. 10700105410
of
the
Ministry
of
Economic Affairs, so to
amend the §5.1.6.

62

Amendment Article Current Article Description
directors may not be listed as
a proposal.Shareholdersmay
put forward aproposal to
urge the company to promote
the public interest or fulfill
its social responsibilities, and
the procedure shall be limited
to one item in accordance
with the relevant provisions
of Article 172-1 of the
Company Law, and if there is
more than one proposal, it
shall not be included in the
proposal.		 the proposal. In addition,
when the circumstances of
any subparagraph of Article
172-1, paragraph 4 of the
Company Act apply to a
proposal put forward by a
shareholder, the board of
directors may exclude it
from the agenda.
5.2.4. After proxy is delivered to
the Company, the shareholder
who wishes to attend the
shareholders'
meeting
by
video
shall
notify
the
company in writing to revoke
the proxy two days before the
meeting of the shareholders'
meeting; In the event of
revocation within the time
limit, the voting rights of the
proxy representative shall be
present and exercised.		 1.
2.		 New to this article.
In order to clarify
that when the proxy
has been changed to
attend by video, so
to amend the §5.24.
5.3. Principles determining the time
and place of a shareholders
meeting
5.3.1.
The
venue
for
a
shareholders meeting
shall be the premises
of this Corporation, or
a
place
easily
accessible
to
shareholders
and
suitable
for
a		 5.3. Principles determining the
time
and
place
of
a
shareholders meeting
The venue for a shareholders
meeting shall be the premises
of this Corporation, or a
place easily accessible to
shareholders and suitable for
a shareholders meeting. The
meeting may begin no earlier
than 9 a.m. and no later than
3p.m. Full consideration		 Adjust
the
article
number to add new
content.

63

Amendment Article Current Article Description
shareholders meeting.
The
meeting
may
begin no earlier than
9 a.m. and no later
than
3
p.m.
Full
consideration shall be
given to the opinions
of the independent
directors with respect
to the place and time
of the meeting.		 shall be given to the opinions
of the independent directors
with respect to the place and
time of the meeting.
5.3.2. When the Company convenes
a
video
shareholders'
meeting, it shall not be
subject to the restrictions on
the place of convening in
the preceding paragraph.		 1.
2.		 New to this article.
In order to specify
that
when
the
company holds a
video shareholders'
meeting, it is not
subject
to
the
restrictions on the
place of the meeting
5.4. Preparation of documents such
as the attendance bookand
matters to be included in the
notice of convocation of the
video
meeting
of
the
shareholders'meeting		 5.4. Preparation of documents such
as the attendance book		 To cooperate with the
Company's measures to
respond to the holding
of
shareholders'
meetings by means of
video conferences.
5.4.1 The Company shall specify in
its
shareholders
meeting
notices
the
time
during
which
shareholder,
solicitors,
and
trustees
(hereinafter referred to as the
shareholders)
attendance
registrations
will
be
accepted,
the
place
to
register for attendance and
other matters for attention.		 5.4.1.
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.		 Text modification.
5.4.2. In【5.4.1.】the time during 5.4.2. In【5.4.1.】the time during Amendment
of
the

64

Amendment Article Current Article Description
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; The video
meeting of the shareholders'
meeting shall be accepted
and registered on the video
meeting
platform
of
the
shareholders'
meeting
30
minutes before the start of
the
meeting,
and
the
shareholders who complete
the
registration
shall
be
deemed to be present at the
shareholders'
meeting
in
person.		 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.		 §5.4.2. for the purpose
of specifying the time
and procedure for the
registration
of
shareholders present at
the video.
5.4.3. Shareholders hall attend
shareholders meetings based
on attendance cards, sign-in
cards, or other certificates of
attendance. This Corporation
may
not
arbitrarily
add
requirements
for
other
documents
beyond
those
showing eligibility to attend
presented by shareholders.
Solicitors soliciting proxy
forms
shall
also
bring
identification documents for
verification.		 5.4.3.
Shareholders
and
their
proxies
(collectively,
"shareholders") shall attend
shareholders meetings based
on attendance cards, sign-in
cards, or other certificates of
attendance. This Corporation
may
not
arbitrarily
add
requirements
for
other
documents
beyond
those
showing eligibility to attend
presented by shareholders.
Solicitors soliciting proxy
forms
shall
also
bring
identification documents for		 Text modification.

65

Amendment Article Current Article Description
verification.
5.4.6. If the Shareholders meeting
is
convened
by
video
conference, shareholders who
wish to attend by video
should
register
with
the
Company two days before
the meeting of shareholders.		 1.
2.		 New to this article.
Shareholders
who
wish to attend the
shareholders'
meeting by video
should register with
the company 2 days
before the meeting.
5.4.7. For the convening of the
video
meeting
of
the
shareholders'meeting, the
Company shall upload the
meeting
manual,
annual
report and other relevant
materials
to
the
video
meeting
platform
of
the
shareholders'meeting at least
30 minutes before the start of
the meeting and continue to
disclose them until the end of
the meeting.		 1.New to this article.
2. In order to enable
shareholders present
by video to read the
relevant information
such as the handbook
and annual report, the
Company
should
upload it to the video
meeting platform of
the
shareholders'
meeting.
5.4.8. 1. New to this article.
2.In order to specify
that the notice of
convocation of the
shareholders' meeting
should include the
method
of
shareholders'
participation in the
video meeting and the
exercise of related
rights, the handling of
the video conference
platform caused by
natural
disasters,
incidents
or
other
force
majeure

66

Amendment Article Amendment Article Current Article Description
participation includes at least
the following matters:
(a) The above-mentioned
ongoing
and
non-removable
obstacles result in the
postponement
or
renewal of the meeting
time and the date of the
meeting if it is to be
postponed or renewed.
(b).Shareholders who are
not
registered
to
participate
in
the
original
shareholders'
meeting by video shall
not participate in the
postponement
or
renewal of the meeting.
(c)
The
holding
of
a
video-assisted
shareholders'meeting, if
it is not possible to
renew
the
video
meeting, after deducting
the number of shares
present
at
the
shareholders'meeting by
video, the total number
of shares present at the
shareholders'
meeting
reaches
the
statutory
quota
of
the
shareholders'
meeting,
the
shareholders'
meeting shall continue,
and
the
number
of
shares participating in
the
shareholders
by
video shall be included		 circumstances, or the
handling of obstacles
to participation in the
video
meeting
by
video, to add new
article of §5.4.8.

(a)

(c)

67

Amendment Article Current Article Description
(3) (d)
The		 (d)
5.6.3. If the shareholders'meeting
is
convened
by
video
meeting, the Company shall
keep
records
of
the
shareholders'
registration,
enrollment,
check-in,
put
questions, voting and the
results of the company's vote
count, and record the whole
process
of
the
video
conference continuously and
uninterruptedly.		 1. New to this article.
2. In order to clearly
stipulate that if the
company’s
shareholders meeting
is convened by video
meeting, shall keep
the records, so to add
new
article
of
§5.6.3.
5.6.4【5.6.3.】The Company shall
properly store the data and
audio and video recordings
during
its
duration,
and
provide the audio and video
recordings to those entrusted
with the handling of video		 1. New to this article.
2. In order to clearly
stipulate that if the
company’s
shareholders meeting
is convened by video
meeting,shall keep

68

Amendment Article Amendment Article Current Article Description
conferencing
services
for
safekeeping.		 the records, so to add
new article of §5.6.4.
5.6.5. If the shareholders'meeting
is
convened
by
video
conference,
the
Company
shall make audio and video
recordings of the background
operation interface of the
video conference platform.		 1. New to this article.
2. In order to clearly
stipulate that if the
company’s
shareholders meeting
is convened by video
meeting, shall keep
the records, so to add
§5.6.5.
5.7.1. Attendance at shareholders
meetings shall be calculated
based on numbers of shares.
The number of shares in
attendance shall be calculated
according
to
the
shares
indicated by the attendance
book
and
sign-in
cards
handed inand the number of
shares registered on the video
conferencing platformplus
the number of shares whose
voting rights are exercised by
correspondence
or
electronically.		 5.7.1. Attendance at shareholders
meetings shall be calculated
based on numbers of shares.
The number of shares in
attendance shall be calculated
according
to
the
shares
indicated by the attendance
book
and
sign-in
cards
handed in plus the number of
shares whose voting rights
are
exercised
by
correspondence
or
electronically.		 Text modification.
5.7.2. The chair shall call the
meeting to order at the
appointed meeting time, and
announce the number of
non-voting rights and the
number of shares present
simultaneously.
However,
when
the
attending
shareholders
do
not
represent a majority of the
total
number
of
issued
shares,
the
chair
may
announce apostponement,		 5.7.2. The chair shall call the
meeting to order at the
appointed
meeting
time.
However,
when
the
attending shareholders do
not represent a majority of
the total number of issued
shares,
the
chair
may
announce a postponement,
provided that no more than
two such postponements,
for a combined total of no
more than 1 hour, maybe		 Text modification.

69

Amendment Article Current Article Description
provided that no more than
two such postponements,
for a combined total of no
more than 1 hour, may be
made. If the quorum is not
met
after
two
postponements
and
the
attending shareholders still
represent less than one third
of the total number of
issued shares, the chair shall
declare
the
meeting
adjourned;
If
the
shareholders'
meeting
is
convened by video meeting,
the Company shall also
announce
the
meeting
adjourned on the video
meeting platform of the
shareholders'meeting.		 made. If the quorum is not
met
after
two
postponements
and
the
attending shareholders still
represent less than one third
of the total number of
issued shares, the chair shall
declare
the
meeting
adjourned.
5.7.3. In【5.7.2.】if the quorum is
not
met
after
two
postponements as referred
to
in
the
preceding
paragraph, but the attending
shareholders represent one
third or more of the total
number of issued shares, a
tentative resolution may be
adopted pursuant to Article
175, paragraph 1 of the
Company
Act;
all
shareholders
shall
be
notified of the tentative
resolution
and
another
shareholders meeting shall
be
convened
within
1
month; If the shareholders'
meeting is convened by
video meeting, and the		 5.7.3. In【5.7.2.】if the quorum is
not
met
after
two
postponements as referred
to
in
the
preceding
paragraph, but the attending
shareholders represent one
third or more of the total
number of issued shares, a
tentative resolution may be
adopted pursuant to Article
175, paragraph 1 of the
Company
Act;
all
shareholders
shall
be
notified of the tentative
resolution
and
another
shareholders meeting shall
be
convened
within
1
month.		 Text modification.

70

Amendment Article Current Article Description
shareholders
wish
to
participate in the meeting by
video, they shall re-register
with
the
Company
in
accordance with【5.4.6.】.
5.9.7. The
shareholders
who
convene the video meeting
of the shareholders'meeting
and the shareholders who
participate by video may put
questions in text on the
video meeting platform of
the shareholders'meeting
after
the
chairman
announces the meeting and
before the announcement of
the adjournment of the
meeting, and the number of
questions asked on each
proposal shall not exceed
two times, each time limited
to 200 words, and the
provisions of【5.9.1.】to
【5.9.5.】shall not apply.		 1. New to this article.
2. In order to specify
the
put
questions,
procedure
and
restrictions
for
shareholders
participating in video
meeting, so to add
the §5.9.7.
5.9.8. 【5.9.7.】. If the question
does
not
violate
the
regulations or does not
exceed the scope of the
proposal, it is advisable to
disclose the question on the
video meeting platform of
the shareholders'meeting
for information.		 1. New to this article.
2.In order to help other
shareholders
understand
the
content
of
the
questions asked by
the shareholders, so
to add §5.9.8.
5.10.9. After a shareholder has
exercised voting rights by
correspondence
or
electronic means, in the
event
the
shareholder
intends
to
attend
the		 5.10.9. After a shareholder has
exercised voting rights by
correspondence
or
electronic means, in the
event
the
shareholder
intends
to
attend
the		 Text modification.

71

Amendment Article Current Article Description
shareholders
meeting
in
personor by video, a
written declaration of intent
to retract the voting rights
already exercised under the
preceding paragraph shall
be made known to this
Corporation, by the same
means by which the voting
rights
were
exercised,
before
2
business
days
before the date of the
shareholders meeting. If the
notice
of
retraction
is
submitted after that time,
the voting rights already
exercised
by
correspondence
or
electronic
means
shall
prevail. When a shareholder
has exercised voting rights
both by correspondence or
electronic means and by
appointing a proxy to attend
a shareholders meeting, the
voting rights exercised by
the proxy in the meeting
shall prevail.		 shareholders
meeting
in
person, a written declaration
of intent to retract the
voting
rights
already
exercised
under
the
preceding paragraph shall
be made known to this
Corporation, by the same
means by which the voting
rights
were
exercised,
before
2
business
days
before the date of the
shareholders meeting. If the
notice
of
retraction
is
submitted after that time,
the voting rights already
exercised
by
correspondence
or
electronic
means
shall
prevail. When a shareholder
has exercised voting rights
both by correspondence or
electronic means and by
appointing a proxy to attend
a shareholders meeting, the
voting rights exercised by
the proxy in the meeting
shall prevail.
5.10.14.The Company convenes A
video
meeting
of
the
Shareholders meeting, and
the
shareholders
who
participate by video shall,
after
the
Meeting
announced
by
the
Chairman, vote on the
proposals and the voting
on the election proposals
through
the
video		 1. New to this article.
2. In order to clearly
stipulate the voting if
the
company’s
shareholders meeting
is convened by video
meeting, so to add
the §5.10.14.

72

Amendment Article Amendment Article Current Article Description
conferencing platform, and
shall complete them before
the Chairman announces
the closing of the voting,
and shall be deemed to
have abstained if they are
overdue.
5.10.15.
If
the
meeting
of
shareholders is convened
by video conference, the
voting shall be counted in
one lump sum after the
Chairman announces the
completion of the voting,
and the voting and election
results shall be announced.		 1. New to this article.
2. In order to clearly
stipulate the voting if
the
company’s
shareholders meeting
is convened by video
meeting, so to add the
§5.10.15.
5.10.16.
When
the
Company
convenes a video-assisted
shareholders'meeting, a
shareholder
who
has
registered to attend the
shareholders'meeting by
video in accordance with
the provisions of【5.4.6.】
shall deregister in the same
way as the registration two
days before the meeting of
the shareholders'meeting;
Those who withdraw after
the
deadline
can
only
attend the shareholders'
meeting by video.		 1. New to this article.
2. In order to clearly
stipulate the register
if
the
company’s
shareholders meeting
is
convened
by
video-assisted
meeting, so to add the
§5.10.16.
5.10.17. A shareholder who
exercises the right to vote
in writing or electronically,
without
revoking
his
expression of intent, and
participates in a meeting of		 1. New to this article.
2. In order to clearly
stipulate the voting if
the
company’s
shareholders meeting
is convened byvideo

73

Amendment Article Amendment Article Current Article Description
shareholders
by
video,
shall not exercise the right
to vote on the original
proposal
or
propose
amendments to the original
proposal or to exercise the
right to exercise the right
to vote on the original
proposal,
except
for
provisional motions.		 meeting, so to add the
§5.10.17.
5.11.1. The election of directors at
a
shareholders
meeting
shall be held in accordance
with
the
applicable
election and appointment
rules
adopted
by
this
Corporation,
and
the
voting results shall be
announced
on-site
immediately, including the
names of those elected as
directors and the numbers
of votes with which they
were electedand the list of
fail to be elected directors
and the number of voting
rights.		 5.11.1. The election of directors at
a
shareholders
meeting
shall be held in accordance
with
the
applicable
election and appointment
rules
adopted
by
this
Corporation,
and
the
voting results shall be
announced
on-site
immediately, including the
names of those elected as
directors and the numbers
of votes with which they
were elected.		 Text modification.
5.12.4. In addition to the matters to
be recorded in accordance
with
the
provisions
of
【5.12.3.】, the minutes of
the shareholders'meeting
shall record the time from
the
meeting
of
the
shareholders'meeting, the
manner of convening the
meeting, the name of the
chairman and the record,
and the handling method		 1. New to this article.
2. In order to facilitate
shareholders
to
understand
the
handling method in
the event of obstacles
due
to
natural
disasters, incidents or
other force majeure
circumstances, so to
add the §5.12.4.

74

Amendment Article Current Article Description
and handling situation of the
video conference platform
or the video participation in
the event of obstacles due to
natural disasters, incidents
or
other
force
majeure
circumstances.
5.12.5. The Company shall convene
a
video
shareholders'
meeting, in addition to the
provisions of【5.12.4.】,
and shall indicate in the
Proceedings
to
provide
alternative measures for
shareholders
who
may
have
difficulties
participating by video.		 1. New to this article.
2. In order to facilitate
shareholders
to
understand
the
handling method in
the
event
of
obstacles
due
to
natural
disasters,
incidents or other
force
majeure
circumstances, so to
add the §5.12.5.
5.13.1.
On
the
day
of
a
shareholders meeting, this
Corporation shall compile
in the prescribed format a
statistical statement of the
number of shares obtained
by
solicitors
through
solicitation and the number
of shares represented by
proxiesand the number of
shares
attended
by
shareholders in writing or
electronically,
and
shall
make an express disclosure
of the same at the place of
the shareholders meeting; if
the shareholders'meeting is
convened
by
video
conference, the Company
shall
upload
the
above		 5.13.1.
On
the
day
of
a
shareholders meeting, this
Corporation shall compile
in the prescribed format a
statistical statement of the
number of shares obtained
by
solicitors
through
solicitation and the number
of shares represented by
proxies, and shall make an
express disclosure of the
same at the place of the
shareholders meeting.		 Text modification.

75

Amendment Article Current Article Description
information to the video
meeting platform of the
shareholders'
meeting
at
least 30 minutes before the
start of the meeting and
continue to disclose it until
the end of the meeting.
5.13.2.
When
the
Company
convenes a video meeting of
the Shareholders'Meeting
and announces the meeting,
the
total
number
of
shareholders'shares present
shall be disclosed on the
Video Meeting Platform.
The same shall apply if the
total number of shares and
voting
rights
of
the
shareholders present at the
meeting is also counted.		 1. New to this article.
2. In order to specify
that
the
company
should disclose the
number
of
shareholders'
attendance rights on
the
video
meeting
platform, so to add
the §5.13.2.
5.13.3. If matters put to a resolution
at a shareholders meeting
constitute
material
information
under
applicable
laws
or
regulations or under Taiwan
Stock
Exchange
Corporation
regulations,
this
Corporation
shall
upload the content of such
resolution to the MOPS
within the prescribed time
period.		 5.13.2. If matters put to a resolution
at a shareholders meeting
constitute
material
information
under
applicable
laws
or
regulations or under Taiwan
Stock
Exchange
Corporation
regulations,
this
Corporation
shall
upload the content of such
resolution to the MOPS
within the prescribed time
period.		 Adjust
the
article
number to add new
content.
5.16. Disclosure of information on
video conferencing
If the shareholders'meeting
is
convened
by
video
meeting, the Company shall		 1. New to this article.
2. In order to enable
shareholders
participating in the
video meetingof the

76

Amendment Article Amendment Article Current Article Description
immediately
disclose
the
voting
results
of
each
proposal and the election
results on the video meeting
platform of the shareholders'
meeting in accordance with
the
regulations
after
the
voting is completed, and
shall continue to disclose
them for at least 15 minutes
after the chairman announces
the
adjournment
of
the
meeting.		 shareholders' meeting
to be immediately
informed
of
the
voting status of the
proposals
and
the
election results, the
sufficient information
disclosure
time
is
regulated, so to add
the §5.16.
5.17. The location of the chairman
and record-keeper of the
video shareholders'meeting
When
the
Company
convenes
a
video
shareholders'meeting, the
Chairman
and
the
record-keeper shall be at the
same
place,
and
the
Chairman shall announce the
address of that place at the
time of the meeting.		 1. New to this article.
2.
When
the
shareholders' meeting
is a video meeting
and
there
is
no
physical
meeting
place, the Chairman
shall preside over the
meeting locally, and
in
order
for
the
shareholders to know
the
location,
the
Chairman
shall
announce the address
at the time of the
meeting.
5.18. Handling for Disconnection 1. New to this article.
5.18.1. For the convener of a video
conference
at
a
shareholders'meeting, the
Company may provide a
simplified connection test
for shareholders before the
meeting
and
provide
relevant
services
immediately
before
and		 1. New to this article.
2. In view of the
shareholders' meeting
to be convened by
video conference, the
handling
for
disconnection.

77

Amendment Article Current Article Description
during the meeting to assist
in the handling of technical
issues of communication.
5.18.2. If the shareholders'meeting
is
convened
by
video
meeting,
the
Chairman
shall,
at
the
time
of
announcing the meeting,
separately announce that,
except
for
the
matter
stipulated
in
Article
44-24(4) of the Standard for
the Handling of Shares of
Publicly Issued Companies,
shall postpone or renew the
meeting within five days
except for the date of
postponing or renewing the
meeting
before
the
Chairman announces the
adjournment of the meeting,
due to acts of God, events
or
other
force
majeure
circumstances, and if an
obstacle
to
the
video
conference
platform
or
participation in the video
conference by means of
video has occurred, and the
date of the meeting shall be
postponed
or
resumed
within five days, and the
provisions of Article 182 of
the Company Law shall not
apply.		 1. New to this article.
2. In response to the
holding
of
the
shareholders' meeting
by video conference,
the
handling
for
disconnection.
5.18.3. Occurrence【5.18.2.】A
shareholder who is due to
postpone
or
renew
a
meeting shall not participate		 1. New to this article.
2. In response to the
holding
of
the
shareholders' meeting

78

Amendment Article Current Article Description
in an extended or renewed
meeting if he or she has not
registered to participate in
the original shareholders'
meeting by video.		 by video conference,
the
handling
for
disconnection
5.18.4. In accordance with the
provisions of【5.18.2.】, the
number of shares, voting
rights and voting rights
exercised by shareholders
present
at
the
original
shareholders'meeting shall
be included in the total
number of shares, voting
rights and voting rights of
the shareholders present at
the postponed or renewed
meeting
of
shareholders
who have registered to
participate in the original
shareholders'meeting by
video
and
who
have
completed the registration.		 1. New to this article.
2. In response to the
holding
of
the
shareholders' meeting
by video conference,
the
handling
for
disconnection.
5.18.5.
In
accordance
with
【5.18.2. 】, when the
shareholders'
meeting
is
postponed or renewed, there
is no need to re-discuss and
resolve the proposal that has
completed the voting and
counting, and announces the
voting result or the election
list
of
directors
and
supervisors.		 1. New to this article.
2. In response to the
holding
of
the
shareholders' meeting
by video conference,
the
handling
for
disconnection.
5.18.6. In the event that the
Company
convenes
a
video-assisted shareholders'
meeting and【5.18.2.】
cannot be renewed, if the		 1. New to this article.
2. In response to the
holding
of
the
shareholders' meeting
byvideo conference,

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Amendment Article Current Article Description
total
number
of
shares
present at the shareholders'
meeting
by
video
is
deducted, the total number
of shares present at the
shareholders'meeting by
video
still
reaches
the
statutory
quota
for
the
shareholders'meeting, the
shareholders'meeting shall
continue without the need to
postpone or continue the
meeting in accordance with
【5.18.2.】.		 the h handling for
disconnection.
5.18.7.
In
the
event
of
【5.18.6.】,the number of
shares
present
at
the
shareholders'meeting shall
be included in the total
number of shares of the
shareholders present in the
event of【5.18.6.】the
shareholders who should
continue to participate in the
shareholders'meeting by
video, but shall be regarded
as an abstention in respect
of all the proposals of the
shareholders'meeting.		 1. New to this article.
2. In response to the
holding
of
the
shareholders' meeting
by video conference,
the
handling
for
disconnection.
5.18.8.
The
Company
shall
postpone
or
renew
the
assembly
in
accordance
with
the
provisions
of
【5.18.2.】, and shall handle
the relevant pre-operations
in
accordance
with
the
provisions of Item 7 of
Article
44-20
of
the
Standard for the Handling		 1. New to this article.
2. In response to the
holding
of
the
shareholders' meeting
by video conference,
the
handling
for
disconnection.

80

Amendment Article Current Article Description
of Shares of Publicly Issued
Stock
Companies,
in
accordance with the date of
the original shareholders'
meeting and the provisions
of each article.
5.18.9.
The
Company
shall
postpone or renew the date
of the shareholders'meeting
in accordance with the date
of the shareholders'meeting
specified in article 2 of the
rules for the use of the
power
of
attorney
and
article 13, item 3 of Article
13, item 2 of Article 44-5,
article 44-15 and article
44-17 of the Guidelines for
the Handling of Shares of
Publicly
Offering
Companies.		 1. New to this article.
2. In response to the
holding
of
the
shareholders' meeting
by video conference,
the
handling
for
disconnection.
5.19. Handling for Digital Divide
When
the
Company
convenes
a
video
shareholders'meeting, it shall
provide
appropriate
alternative
measures
to
shareholders who will have
difficulties in attending the
shareholders by video.		 1. New to this article.
2.Considering
the
digital
drop,
the
Company
should
provide
the
appropriate
alternative
with
shareholders
5.20.Other Matters 5.16.Other Matters Adjust
the
article
number to add new
content.
5.20.1. The attendance list bearing
the
signatures
of
shareholders present at the
meeting and the powers of
attorneyof theproxies shall		 5.16.1. The attendance list bearing
the
signatures
of
shareholders present at the
meeting and the powers of
attorneyof theproxies shall		 Adjust
the
article
number to add new
content.

81

Amendment Article Current Article Description
be kept by the Company for
a minimum period of at
least one year. However, if
a lawsuit has been instituted
by
any
shareholder
in
accordance
with
the
provisions of Article 189 of
Company Act, the minutes
of the shareholders' meeting
involved shall be kept by
the company until the legal
proceedings
of
the
foregoing lawsuit have been
concluded.		 be kept by the Company for
a minimum period of at
least one year. However, if
a lawsuit has been instituted
by
any
shareholder
in
accordance
with
the
provisions of Article 189 of
Company Act, the minutes
of the shareholders' meeting
involved shall be kept by
the company until the legal
proceedings
of
the
foregoing lawsuit have been
concluded.
5.20.2. Where any matter is not
stipulated in these Rules, it
shall
be
handled
in
accordance with Company
Act and other relevant laws
and regulations and the
article of incorporation of
the Company.		 5.16.2. Where any matter is not
stipulated in these Rules, it
shall
be
handled
in
accordance with Company
Act and other relevant laws
and regulations and the
article of incorporation of
the Company.		 Adjust
the
article
number to add new
content.
5.20.3.
These
Rules,
any
amendments hereto, shall be
implemented after adoption
byshareholders' meetings.		 5.16.3.
These
Rules,
any
amendments hereto, shall be
implemented after adoption
byshareholders' meetings.		 Adjust
the
article
number to add new
content.

82

Attachment 7

Comparison of Amendments to the

Operation Procedures for the Acquisition or Disposal of Assets

Amendment Article Current Article Description
5.2.1.In acquiring or disposing of
real property, equipment, or
right-of-use assets thereof
where the transaction amount
reaches 20 percent of the
company's paid-in capital or
NT$300 million or more, the
company, unless transacting
with a domestic government
agency, engaging others to
build
on
its
own
land,
engaging others to build on
rented land, or acquiring or
disposing of equipment or
right-of-use assets thereof
held for business use, shall
obtain an appraisal report
prior
to
the
date
of
occurrence of the event from
a professional appraiser and
shall further comply with the
following provisions:
(3).Where any one of the
following circumstances
applies with respect to
the
professional
appraiser's
appraisal
results, unless all the
appraisal results for the
assets to be acquired are
higher
than
the
transaction amount, or all		 5.2.1.In acquiring or disposing of
real property, equipment, or
right-of-use
assets
thereof
where the transaction amount
reaches 20 percent of the
company's paid-in capital or
NT$300 million or more, the
company, unless transacting
with a domestic government
agency, engaging others to
build
on
its
own
land,
engaging others to build on
rented land, or acquiring or
disposing of equipment or
right-of-use assets thereof held
for business use, shall obtain
an appraisal report prior to the
date of occurrence of the event
from a professional appraiser
and shall further comply with
the following provisions:
(3).Where any one of the
following
circumstances
applies with respect to the
professional
appraiser's
appraisal results, unless all
the appraisal results for the
assets to be acquired are
higher than the transaction
amount, or all the appraisal
results for the assets to be
disposed of are lower than		 Since
the
specifications to be
followed by external
experts
had
been
established
in
【5.2.6.】,the extra
words are deleted.

83

Amendment Article Current Article Description
the appraisal results for
the assets to be disposed
of are lower than the
transaction
amount,
a
certified
public
accountant
shall
be
engaged to perform the
appraisal and render a
specific
opinion
regarding the reason for
the discrepancy and the
appropriateness of the
transaction price:		 the transaction amount, a
certified public accountant
shall
be
engaged
to
perform the appraisalin
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
transactionprice:
5.2.2.The Company acquiring or
disposing of securities shall,
prior
to
the
date
of
occurrence of the event,
obtain financial statements of
the issuing company for the
most recent period, certified
or reviewed by a certified
public
accountant,
for
reference in appraising the
transaction price, and if the
dollar
amount
of
the
transaction is 20 percent of
the company's paid-in capital
or NT$300 million or more,
the
Company
shall
additionally
engage
a
certified public accountant
prior
to
the
date
of
occurrence of the event to
provide an opinion regarding		 5.2.2.The Company acquiring or
disposing of securities shall,
prior to the date of occurrence
of the event, obtain financial
statements
of
the
issuing
company for the most recent
period, certified or reviewed
by
a
certified
public
accountant, for reference in
appraising
the
transaction
price, and if the dollar amount
of the transaction is 20 percent
of
the
company's
paid-in
capital or NT$300 million or
more,
the
Company
shall
additionally engage a certified
public accountant prior to the
date of occurrence of the event
to
provide
an
opinion
regarding the reasonableness
of the transactionprice.If the		 Considering that it has
been clearly stipulated
that external experts
should
follow
the
self-discipline norms
of the associations to
which they belong, the
relevant extra words
are deleted.

84

Amendment Article Current Article Description
the reasonableness of the
transaction
price.
This
requirement does not apply,
however, to publicly quoted
prices of securities that have
an active market, or where
otherwise
provided
by
regulations of the Financial
Supervisory
Commission
(FSC).		 CPA needs to use the report of
an expert as evidence, the CPA
shall do so in accordance with
the provisions of Statement of
Auditing Standards No. 20
published by the ARDF.This
requirement does not apply,
however, to publicly quoted
prices of securities that have
an active market, or where
otherwise
provided
by
regulations of the Financial
Supervisory
Commission
(FSC).
5.2.3.Where the Company acquires
or disposes of intangible
assets or right-of-use assets
thereof or memberships and
the
transaction
amount
reaches 20 percent or more of
paid-in capital or NT$300
million or more, except in
transactions with a domestic
government
agency,
the
Company shall engage a
certified public accountant
prior
to
the
date
of
occurrence of the event to
render an opinion on the
reasonableness
of
the
transaction price.		 5.2.3.Where the Company acquires
or disposes of intangible assets
or right-of-use assets thereof
or
memberships
and
the
transaction amount reaches 20
percent or more of paid-in
capital or NT$300 million or
more, except in transactions
with a domestic government
agency, the Company shall
engage
a
certified
public
accountant prior to the date of
occurrence of the event to
render an opinion on the
reasonableness
of
the
transaction price; the CPA
shall
comply
with
the
provisions of Statement of
Auditing Standards No. 20
published by the ARDF.		 Considering that it has
been clearly stipulated
that external experts
should
follow
the
self-discipline norms
of the associations to
which they belong, the
relevant extra words
are deleted.

85

Amendment Article Current Article Description
5.2.6. When issuing an appraisal
report
or
opinion,
the
personnel referred to in the
provision of【5.2.5.】shall
comply
with
the
self-discipline norms of the
trade associations to which
they
belong
and
the
following:
(2). Whenexecuting 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
appropriateness
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		 5.2.6. When issuing an appraisal
report
or
opinion,
the
personnel referred to in the
provision of【5.2.5.】shall
comply with the following:
(2). Whenexamininga 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
theyhave evaluated and found		 1.Clarify
the
procedures
and
responsibilities that
external
experts
should follow.
2. Modify the text as
appropriate.

86

Amendment Article Current Article Description
they have evaluated and
found that the information
used
is
appropriate
and
reasonable, and that they
have
complied
with
applicable
laws
and
regulations.		 that the information used is
reasonableand accurate,and
that they have complied with
applicable
laws
and
regulations.
5.4.1. Under any of the following
circumstances, the Company
acquiring or disposing of
assets
shall
publicly
announce and report the
relevant information on the
FSC's designated website in
the appropriate format as
prescribed
by
regulations
within
2
days
counting
inclusively from the date of
occurrence of the event:
(7). Where an asset transaction
other than any of those
referred to in the Article
【5.4.1.(1).】to Article
【5.4.1.(6).】, a disposal
of
receivables
by
a
financial institution, or
an investment in the
mainland
China
area
reaches 20 percent or
more of paid-in capital
or
NT$300
million;
provided, this shall not
apply to the following
circumstances:
(a). Trading of domestic
government bonds		 5.4.1. Under any of the following
circumstances, the Company
acquiring
or
disposing
of
assets shall publicly announce
and
report
the
relevant
information
on
the
FSC's
designated
website
in
the
appropriate
format
as
prescribed
by
regulations
within
2
days
counting
inclusively from the date of
occurrence of the event:
(7). Where an asset transaction
other than any of those
referred to in the Article
【5.4.1.(1).】to Article
【5.4.1.(6).】, a disposal
of
receivables
by
a
financial institution, or an
investment
in
the
mainland
China
area
reaches 20 percent or
more of paid-in capital or
NT$300
million;
provided, this shall not
apply to the following
circumstances:
(a).Trading of domestic
government bonds.		 In line with laws to
relax the disclosure of
information on certain
transactions.

87

Amendment Article Amendment Article Current Article Description
(b). or foreign bonds
with credit ratings
that are not lower
than our country’s
sovereign rating.
Where
done
by
professional
investors-securities
trading
on
securities
exchanges or OTC
markets,
or
subscription
of
foreign bonds or
ordinary corporate
bonds or general
bank
debentures
without
equity
characteristics
(excluding
subordinated debt)
that are offered and
issued
in
the
primary market, or
subscription
or
redemption
of
securities
investment
trust
funds
or
futures
trust
funds,
or
Exchange
Traded
Note,ETN,
or
subscription by a
securities firm of
securities
as
necessitated by its
undertaking		 (b).Where
done
by
professional
investors-securities
trading on securities
exchanges
or
OTC
markets,
or
subscription
of
ordinary
corporate
bonds or general bank
debentures
without
equity
characteristics
(excluding
subordinated debt) that
are offered and issued
in the primary market,
or
subscription
or
redemption
of
securities
investment
trust funds or futures
trust
funds,
or
subscription
by
a
securities
firm
of
securities
as
necessitated
by
its
undertaking
business
or
as
an
advisory
recommending
securities firm for an
emerging
stock
company,
in
accordance with the
rules of the Taipei

88

Amendment Article Current Article Description Description
business or as an
advisory
recommending
securities firm for
an emerging stock
company,
in
accordance
with
the rules of the
Taipei Exchange.		 Exchange.
5.6.5. The
calculation of the
transaction amount referred
to in Article【5.6.4.】and
【5.6.17.】shall be made in
accordance
with
Article
[5.4.2.] herein, and "within
the preceding year" shall be
based
on
the
date
of
occurrence
of
the
transaction,
retroactively
calculated one year,and has
been
submitted
to
the
shareholders'meeting,the
board
of
directors
for
approval
and
the
audit
committee torecognize,is
exempt from re-counting.		 5.6.5.
The
calculation
of
the
transaction amounts referred to
in Article【5.6.4.】shall be
made
in
accordance
with
Article【5.4.2.】herein, and
"within the preceding year" as
used herein refers to the year
preceding
the
date
of
occurrence
of
the
current
transaction. Items that have
been approved bymore than
half of all audit committee
members and the board of
directors need not be counted
toward the transaction amount.		 In accordance with the
amendment [5.6.17.],
the calculation of the
revised
transaction
amount is included in
the
transaction
submitted
to
the
shareholders' meeting
for approval.
5.6.17.If the Company or its
subsidiaries that are not
domestic
public
offering
companies
have
[5.6.4.]
transactions,
and
the
transaction amount reaches
more than 10% of the total
assets of the Company, the
Company shall submit the
information listed in [5.6.4.]
to the shareholders'meeting		 3.
4.		 New to this article.
In line with laws
to strengthen the
management
of
transactions
between
related
parties.

89

Amendment Article Current Article Description
for approval before signing
the transaction contract and
making
payments.
However, this does not
apply to the extent that the
Company deals with its
parent
company,
subsidiaries,
or
its
subsidiaries.

90

Attachment 8

Regulations Governing the Issuance of New Restricted Employee Shares of 2022

1. Purpose

The purposes are to attract and retain the required professionals, inspire the employees and enhance internal cohesion, as well as to discover interests for the Company and the shareholders and to ensure that the interests of the officials and employees of the Company are connected with interests of the shareholders. The following Regulations Governing the Issuance of New Restricted Employee Shares are stipulated for the Company in accordance with Article 267 of the Company Act and the Regulations Governing the Offering and Issuance of Securities by Securities Issuers of the Financial Supervisory Commission under the Executive Yuan (“FSC Regulations”).

  1. Scope

Nil.

  1. Responsibilities & Authorities

  2. 3.1 Human Resources Unit: The in-charge unit for establishment/revision, drafting, implementation, revocation and application of the Regulations and relevant documents.

  3. 3.2 Other units shall serve as the cooperation departments for implementation of the Regulations.

  4. Terms and Definitions

New Restricted Employee Shares: The shares provided by the Company to the employees in accordance with Paragraph 9, Article 267 of the Company Act, with vesting requirements of service period or performance. Before the said requirements are satisfied, the rights of such shares are restricted, and the Company may retrieve the issued new shares of the restricted employee shares when the employees fail to satisfy the said requirements.

  1. Operating Procedures

  2. 5.1 Issuance Period

The shares may be issued at once or in installments, depending on the actual needs of the Company, within one year starting from the date of receipt of the notice of effective registration from the competent authority. The actual date of issuance shall be stipulated by the Chairman under authorization by the board of directors.

  • 5.2 Total Issuance

The total issuance is 2,000,000 shares of common shares and par value of each share is NT$10, which constitute the total issued amount of NT$20,000,000.

91

  • 5.3 Type of Shares

Upon issuance of the shares, rights of the new restricted employee shares shall be the same as the other issued common shares of the Company, except for the shares under trust in accordance with the Regulations or the rights under restriction set forth in the Regulations before satisfaction of vesting conditions.

  • 5.4 Issuance Price

The shares are issued with an issuance price of NT$0 for each share.

  • 5.5 Qualification for Shares Distribution

  • 5.5.1. The employees qualified for shares distribution shall be a full-time employees who have been employed on or before the distribution date of the new restricted employee shares. Qualification requirements of employees include the employees of parents or subsidiaries of the company meeting certain specific requirements.The so-called controlled or subordinate company is the one that meets the interpretation Letter No. 1070121068 of Financial Supervision Commission.

  • 5.5.2. The employees qualified for shares distribution shall be any of the following: (1). Key personnel related to future development of the Company; (2). Personnel with performance which is fairly valuable to the Company; or

    • (3). New employees who are essential to the company.

  • 5.5.3. The actual number of new restricted employee shares distributed to an employee will be subject to the job tenure, performance, overall contribution, special credit or any other necessary factor for management reference and shall be confirmed by the Chairman and then submitted to the board of directors for approval. However, when distribution is made to a manager, it shall also be subject to a prior consent of remuneration committee.

  • 5.5.4. Any individual who already holds 10% or more of the outstanding common shares of the Company is not qualified for distribution.

  • 5.5.5. Any member of the remuneration committee or any member of the board of directors, who is not an employee, is not qualified for distribution.

  • 5.5.6. The cumulative number of shares which could be subscribed by the employee stock options issued by the Company to any employee in accordance with Paragraph 1, Article 56-1 of the FSC Regulations, together with the new restricted employee shares obtained by the same employee, shall not exceed 0.3% of the outstanding number of shares. The above amount, plus the cumulative number of shares which could be subscribed by the employee stock options issued by the Company to any employee in accordance with Paragraph 1, Article 56 of the FSC Regulations, shall not exceed 1% of the outstanding shares. However, with special approval from the central competent authority of the relevant industry, the total number of employee

92

stock options and new restricted employee shares obtained by a single employee may be exempted from the above-mentioned restriction.

  • 5.6 Vesting Conditions

  • 5.6.1. The performance of an employee shall be level B or above since such employee has obtained the new restricted employee shares. The vesting conditions shall be deemed as unsatisfied when performance of such employee is lower than level B.

  • 5.6.2. The conditions for company performance:

    • (1). The grade of employee equal to or lower than level 8:

The conditions for company performance will be set forth as follows, on basis of the operation income and operating profits listed in the consolidated financial statement of the latest year:

  • (a). The first year: The one of operation income or operating profit growth is 5% or more from the previous year;

  • (b). The second year: The one of operation income or operating profit growth is 5% or more from the previous year;

  • (c). The third year: The one of operation income or operating profit growth is 5% or more from the previous year.

  • (d). The vesting conditions shall be deemed as unsatisfied when the above conditions for company performance are not satisfied.

  • (2). The grade of employee equal to or above than level 9:

The conditions for company performance will be set forth as follows, on basis of the operation income and operating profits listed in the consolidated financial statement of 【 5.6.2.(1). 】

  • (a). The first year: The one of operation income or operating profit growth is 5% or more from the previous year;

  • (b). The second year: The one of operation income or operating profit growth is 5% or more from the previous year;

  • (c). The third year: The one of operation income or operating profit growth is 5% or more from the previous year.

  • (d). The vesting conditions shall be deemed as unsatisfied when the above conditions for company performance are not satisfied; however, when either of the accumulated operation income or operating profit in the third year is reached. (That is in 【 5.6.2. (2).(a). 】 one of the operation income or operating profit in the consolidated financial statements of the previous year in 【 5.6.2.(2).(a).], assuming TWD 1 billion for example, the figures will be settled after the expiration of the three-year vesting period, more than TWD

93 

  - 1 billion*[1*(1+5%)*(1+5%)*(1+5%)]=1.1576 billion or above.) Then, it is deemed to have met the vested conditions in the first to third years.

  • (3). The operating profit after adjustment shall be the operating profit listed in a financial statement audited and issued by a certified public accountant plus the non-operating income related to the major business of the Company.

  • 5.6.3. If the conditions for personal performance in 【 5.6.1. 】 and company performance in 【 5.6.2. 】 are both satisfied, the highest amount an employee may obtain from the shares distribution in each year shall be as follows:

  • (1). The grade of employee equal to or lower than level 8:

Depending on the conditions, each year will obtain from the shares distribution in each year shall be as follows:

  • (a). 30% of the distributed number of shares to such employee, whereas the employee has served for over one year after the distribution;

  • (b). 30% of the distributed number of shares to such employee, whereas the employee has served for over two years after the distribution;

  • (c). 40% of the distributed number of shares to such employee, whereas the employee has served for over three years after the distribution.

  • (2). The grade of employee equal to or above than level 9:

Depending on the conditions, the employee has served for over three years after the distribution will obtain from the shares distribution one-time accumulated in the third year shall be as follows:

  • (a). Satisfied 【 5.6.2.(2).(a). 】 , 30% of the distributed number of shares to such employee;

  • (b). Satisfied 【 5.6.2.(2).(b). 】 , 30% of the distributed number of shares to such employee;

  • (c). Satisfied 【 5.6.2.(2).(c). 】 , 40% of the distributed number of shares to such employee.

  • (d). If 【 5.6.2.(2).(a). 】 - 【 5.6.2.(2).(c). 】 are not satisfied; however, when 【 5.6.2. (2).(d). 】 is satisfied, it still accumulates 100% of the distributed number of shares to such employee.

  • 5.7 Failure of Satisfaction of Vesting Conditions

When any employee fails to satisfy the vesting conditions, the Company may retrieve, without remuneration, all new restricted employee shares distributed to such employee and cancel such.

  • 5.8 Resignation, retirement, suffering occupational injury or resulted disability or death, transferring to affiliate company, or leave of absence of employees:

94

  • 5.8.1 With regard to any employee who voluntarily resigns, is laid off or dismissed by the Company, such employee shall be deemed as incapable of satisfying the vesting conditions starting from the date when such employee resigns. The shares for which the vesting conditions are not satisfied shall be retrieved by the Company without remuneration.

  • 5.8.2. With regard to any employee who are unable to continue their employment due to retirement or physical disability due to occupational injuries have not yet met the vesting conditions to restricted employee shares, his/ her shares shall be deemed to have fulfilled all the vesting conditions from the effective date of employee resignation.

  • 5.8.3. With regard to any employee dies during his tenure with the company on the condition that he/she has not yet met the vesting conditions to restricted employee shares, his/her shares will be deemed to have fulfilled all the vesting conditions from the date of death of the employee.

    • After the facts occurrs, the legal heir will inherit the relevant rights of the relevant provisions of the Civil Code and the relevant provisions of the public offering company and must complete the statutory necessary procedures and provide relevant supporting documents, and obtain the transfer shares in accordance with the trust indenture.

  • 5.8.4. Employee of the Company is transferred to an affiliate company:

    • (1). In 【 5.6.1. 】 the performance of employee: Based on the performance of the employee's is transferred to an affiliate company assessment.

    • (2). In 【 5.6.2. 】 the performance of company: Still based on the performance conditions of the company.

    • (3). In 【 5.6.3. 】 the seniority of employee: When any employee of the Company is transferred to an affiliate company, the seniority of employee shall be calculated into 【 5.6.3. 】 .

  • 5.8.5. With regard to any employee who takes a leave of absence under approval of the Company, if the vesting conditions in 【 5.6.3. 】 for the year in which the leave date occurs have been satisfied, the new restricted employee shares which are not yet vested shall be calculated by the job tenure in 【 5.6.3. 】 with deduction of the actual days of the leave.

  • 5.8.6. The new restricted employee shares retrieved by the Company without remuneration shall be cancelled.

  • 5.9 Restriction on the Shares before Satisfaction of Vesting Conditions

95

  • 5.9.1. The employees, immediately upon obtaining the new restricted employee shares issued by the Company, shall place such shares in trust with a trustee designated by the Company. The employees may not, for any purposes or in any manner, request the trustee for return of such new restricted employee shares.

  • 5.9.2. Before the vesting conditions are satisfied, the relevant restricted employee shares shall be entitled to bonus shares, share dividend or participation in capital increase in cash.

  • 5.9.3. The shares shall not be sold, pledged, transferred, given as gift, set as subject of any right or obligation or disposed in any other manner, before the vesting conditions are satisfied.

  • 5.9.4. Before the vesting conditions are satisfied, the rights of shareholder of the holding employees, including attendance, making proposal, raising opinion or voting in the shareholders' meeting of the Company or other relevant matters shall be authorized to the trustee to exercise.

5.10. Other Agreed Matters

  • 5.10.1. The employees shall place the new restricted employee shares, which such employee obtained in accordance with the Regulations, in trust before the vesting conditions are satisfied. Within one month from the date when the vesting conditions are satisfied, the relevant shares shall be appropriated from the trust account to the centralized depository account of such employee.

  • 5.10.2. Agreement and Confidentiality

  • (1). When the number to be issued, subscription price, principles for distribution and the list of the personnel for distribution are confirmed, the employees shall sign on the “HR2-122-001 Consent Form for Receipt of the New Restricted Employee Shares of 2022”. Any employee who fails to sign on such form in accordance with the Regulations shall be deemed as abandon such qualification for distribution of the new restricted employee shares.

  • (2). The employee who obtains the new restricted employee shares shall comply with the confidentiality provisions and shall not disclose the number of distributed shares or any other relevant information, unless otherwise required by the laws or regulations or a competent authority.

  • (3). Whereas any employee is in violation of the above requirements which is deemed as a material violation by the Company, such employee shall be immediately disqualified for distribution of the new restricted employee shares for which the vesting conditions are not satisfied yet. The Company may retrieve shares from such employee without remuneration and cancel such shares.

96

  • 5.10.3. Whereas any employee who obtains the new restricted employee shares is in violation of the provisions in the “HR2-122-001 Consent Form for Receipt of the New Restricted Employee Shares of 2022” regarding good faith or integrity, the Company may retrieve the new restricted employee shares which are not yet vested, if any, and cancel such shares.

5.10.4. Taxation

The taxation incurred from the new restricted employee shares shall be declared and paid by such employee in accordance with relevant laws and regulations in Taiwan.

  • 5.11. The Regulations shall be approved by a board meeting where two third or more of the directors attended and over half of the attending directors voted for approval of the Regulations, and shall also be approved by a shareholders meeting where the shareholders representing two third or more of the outstanding shares attended and over half of the attending shares present voted for approval of the Regulations (or where shareholders representing over half of the outstanding shares attended and two third or more of the attending shares were voted for approval of the Regulations). The Regulations enter into effect after being submitted to and approved by the competent authority. The above applies to amendment to the Regulations. If upon review by the competent authority, any amendment is required by the competent authority, the Chairman is authorized to amend the Regulations. The issuance can only be made after recognition by the board meeting.

  • 5.12. Any other matter not stipulated above in the Regulations shall be subject to the relevant laws or regulations.

6. Forms

  • 6.1. HR2-122-001 Consent Form for Receipt of the New Restricted Employee Shares of 2022.

97

Attachment 9

List of Director Candidates

Title Name of
Candidates		 Shares Education Experience and current position
Director Zong Cyuan
Investment Co.,
Ltd.
Representative:
LIAO, LU-LEE		 1,632,025 Bachelor of
Electronical
Engineering,
Tatung
University		 Experience:
Engineer , Tatung Company .
Technical section supervisor,
Taishing Electric-Machine Co.,
Ltd.
Co-Founder and Chairman, Merry
Electronics Co., Ltd.
Current Position:
Chairman, Merry Electronics Co.,
Ltd.
Chairman, JHENG-JYUE-TANG
Legal Foundation
Chairman, Taiwan Reading and
Culture Foundation
Director, DIAREX ENTERPRISE
CO., LTD.
Director, SIWARD Crystal
Technology Co., Ltd.
Director if Representative of
juristic personr, Legal
representative (Danny Dynamics
Ltd appointed), Universal Capital
Investment Ltd.
Chairman, Zong Cyuan
Investment Co.,Ltd.
Director WEI,
WEN-CHIEH		 9,617,475 Bachelor of
Mechanical
Engineering,
Tatung
University		 Experience:
Equipment director of Section
Manager, TAISHING ELECTRIC
CO.,LTD.
Co-Founder and Vice-Chairman,
Merry Electronics Co., Ltd.
Current Position:

98

Title Name of
Candidates		 Shares Education Experience and current position
Vice Chairman, Merry Electronics
Co., Ltd.
Chairman, Shu-Cheng Investment
Ltd.
Director of Representative of
Juristic Person (Danny Dynamics
Ltd appointed), Universal Capital
Investment Ltd.
Director LIN,
SHIH-CHIEH		 366,876 MBA,
Wisconsin
International
University		 Experience:
Storehouse Section Manager,
Merry Electronics Co., Ltd.
Deputy Manager, Manager,
MERRY ELECTRONICS
(HK) CO., LTD.
General Manager, MERRY
ELECTRONICS
(SHENZHEN) CO., LTD.
General Manager, Vice Chairman,
Vice General Manager, MERRY
ELECTRONICS (HUIZHOU)
CO., LTD.
Guangdong Luxshare & Merry
Electronics Co., Ltd Vice
Chairman, Vice General Manager
Merry Electronics Co., Ltd. South
China Administration Office
General Manager
Current Position:
Director, Merry Electronics Co.,
Ltd.
Director and Secretary, MERRY
ELECTRONICS
(HK) CO., LTD.
Legal Representative, Executive
Director (MERRY
ELECTRONICS

99

Title Name of
Candidates		 Shares Education Experience and current position
(HK) CO., LTD. appointed) and
General Manager, MERRY
ELECTRONICS
(SHENZHEN) CO., LTD.
Director and Secretary,
MERRYTECH (HK) CO.
LIMITED
Vice-Chairman, MERRY
ELECTRONICS
(HUIZHOU) CO., LTD.
Director, MERRY
ELECTRONICS(SUZHOU) CO.,
LTD.
Vice-Chairman and Vice General
Manager, Guangdong Luxshare &
Merry Electronics Co., Ltd.
Director, MERRY &
LUXSHARE (VIETNAM)
CO.,LTD.
Director Sander
Investment Co.,
Ltd.
Representative:
HUANG,
CHAO-LI		 802,135 Master of
Business
Administration,
Feng Chia
University		 Experience:
Vice General Manager, Wealth
management and trust
Department, Mega Securities Co.,
Ltd.
Current Position:
General Menager and Director,
Merry Electronics Co., Ltd.
Chairman, Sander Investment
Co., LTD.
Supervisor, Power Forest
Technology Co., Ltd.
Director of Representative of
juristic person (Sander investment
Co., LTD. appointed), Amulaire
Thermal Technology, Inc.
Director of Representative of

100

Title Name of
Candidates		 Shares Education Experience and current position
juristic person (Sander investment
Co., LTD. appointed), Maxecho
Technology Corp.
CEO and Director, MERRY
ELECTRONICS(U.S.A) CO. LTD
Director, MERRY
ELECTRONICS(HK) CO., LTD.
Director of Representative of
juristic person , Merry Electronics
(Thailand) Co.,Ltd.
Director, DANNY DYNAMICS
LIMITED
Director of Representative of
juristic person, MERRYTECH
(HK) CO. LIMITED.
Director of Representative of
juristic person, MERRY
ELECTRONICS
(THAILAND)CO.,LTD.
Director, DANNY DYNAMICS
LIMITED
Director of Representative of
juristic person, MERRYTECH
(HK) CO. LIMITED
Director, Austar Hearing Science
And Technology（Xiamen) Co. ,
Ltd
Supervisor, MERRY
ELECTRONICS
(SHANGHAI) CO., LTD.
Director of Representative of
juristic person (Merry Electronics
Co., LTD. appointed), Leohab
Enterprise Co.,Ltd.
Director, MERRY &
LUXSHARE(VIETNAM)

101

Title Name of
Candidates		 Shares Education Experience and current position
CO.,LTD.
Director TONG-
CIAN
Investment Co.,
Ltd.
Representative:
LIAO,
KENG-PIN		 5,578,061 MBA,
Woodbury
University		 Experience:
Director and General Manager
DIAREX ENTERPRISE CO.,
LTD.
Current Position:
Supervisor of Representative
juridical person (TONG-CIAN
Investment Co., Ltd. appointed),
Merry Electronics Co., Ltd.
Chairman, TONG-CIAN
Investment Co., Ltd.
Director and General Manager,
DIAREX ENTERPRISE CO.,
LTD.
Supervisor of Representative
juridical person (TONG-CIAN
Investment Co., Ltd. appointed),
Leohab Enterprise Co.,Ltd.
Director SOH,
YONG-SENG		 144,617 University of
Essex, UK
/Electronics and
Telecommunicat
ion		 Experience:
Executive Director, Singapore.
MERRY ELECTRONICS
(Singapore) PTE LTD.
Current Position:
Senior Vice President, Merry
Electronics Co., Ltd.
Director and Executive Director,
Singapore. MERRY
ELECTRONICS (Singapore) PTE
LTD.
Director, Indigo Enterprise Inc.
Director and Chairman, Sonavox
Canada Inc.
Director and Chairman, Sonavox
Canada Holding Company Inc.
Director and Chairman,SEAS

102

Title Name of
Candidates		 Shares Education Experience and current position
FABRIKKER AS
Independent
Director		 WU,
HUEI-HUANG		 0 Bachelor of
Electronic
Engineering,
National Chiao
Tung University		 Experience:
Director and General Manager
Universal Scientific Industrial Co.,
Ltd.
Director and Chairman, Logah
Technology Co., Ltd.Director,
TAILYN Co., Ltd.
Current Position:
Independent Director, Merry
Electronics Co., Ltd.
Independent Director, KINSUS
INTERCONNECT
TECHNOLOGY CORP
Independent Director,
UNIVERSAL
MICROELECTRONICS CO.,LTD.
Independent
Director		 SHER,
JIH-HSIN		 0 PhD in
Marketing and
Strtegic
Management,
Warwick
Business
School,
University of
Waraick, UK		 Experience:
Chairman, Corporate Synergy
Development Center
Distinguished Professor, Dept. of
International Business Studies &
Dept. of Information
Management, National Chi Nan
University
Chief Operating Officer, National
Applied Research Laboratories
Director, Business Development
Office, National Applied
Research Laboratories
Director, Research Center for
Asia-Pacific Cultural and Creative
Industry, National Chi Nan
University
Director, Entrepreneur Incubator,
National Chi Nan University

103

Title Name of
Candidates		 Shares Education Experience and current position
Director
Dean, College of Management,
National Chi Nan University
Professor, Department of
International Business Studies,
National Chi Nan University
Professor, Institute of Law for
Science and Technology, National
Chung Hsing University
Director, Induatrial development
research center, National Chung
Hsing University
Professor, Dept. of Business
Administration, National Chung
Hsing University
Director, Technology Licensing
Office, National Chung Hsing
University
Associate Professor, Dept. of
Business Administration,
National Chung Hsing University
Associate Professor, Dept. of
International Business Studies,
National Chi Nan University
Lecturer, Dept. of International
Business Studies, National Chi
Nan University
Ministry of Economic Affairs
Head, Patent Examination, Dept.
of Patent, Intellectual Property
Office
Ministry of Economic Affairs
Patent Examiner, Dept. of Patent,
Intellectual Property Office
Current Position:
Independent Director,Merry

104

Title Name of
Candidates		 Shares Education Experience and current position
Electronics Co., Ltd.
Dean, d. School, Feng-Chia
University Chair Professor,
Department of Business
Administration, Feng-Chia
University
Independent Director, Mobiletron
Co.,Ltd.
Independent
Director		 I,
CHANG-YUN		 0 Master of
Business
Management,
Feng Chia
University
Bachelor of
accounting,
Feng Chia
University		 Experience:
Director of KPMG audit team
Current Position:
Independent Director, Merry
Electronics Co., Ltd.
Director, Changhua Branch of
Jianzhi United Certified Public
Accountants
Independent Director, Shuz Tung
Machinery Industrial Co., Ltd.
Independent Director, TURVO
INTERNATIONAL CO., LTD.
Independent Director, UVAT
TECHNOLOGY CO.,LTD.

105

Attachment 10

Proposal of removal of the non-competition restrictions on the

newly elected Directors

Title Name Current Position in other companies
Director Zong Cyuan Investment Co.,
Ltd.		 NA
Repressive: LIAO, LU-LEE Director, DIAREX ENTERPRISE CO., LTD.
Director, SIWARD Crystal Technology Co., Ltd.
Chairman,ZongCyuan Investment Co.,Ltd.
Director WEI,WEN-CHIEH Chairman,Shu-ChengInvestment Ltd.
Director LIN, SHIH-CHIEH Vice-Chairman, MERRY ELECTRONICS
(HUIZHOU) CO., LTD.
Director, MERRY ELECTRONICS(SUZHOU)
CO., LTD.
Vice-Chairman and Vice General Manager,
Guangdong Luxshare & Merry Electronics Co.,
Ltd.
Director, MERRY & LUXSHARE (VIETNAM)
CO.,LTD.
Director Sander Investment Co., LTD. Director of Representative of juristic person,
Amulaire Thermal Technology, Inc.
Director of Representative of juristic person,
Maxecho TechnologyCorp.
HUANG, CHAO-LI Chairman, Sander Investment Co., LTD.
Supervisor, Power Forest Technology Co., Ltd.
Director of Representative of juristic person
(Sander investment Co., LTD. appointed),
Amulaire Thermal Technology, Inc.
Director of Representative of juristic person
(Sander investment Co., LTD. appointed),
Maxecho Technology Corp.
CEO and Director, MERRY
ELECTRONICS(U.S.A) CO. LTD
Director of Representative of juristic person ,
Merry Electronics (Thailand) Co.,Ltd.
Director, Austar Hearing Science And
Technology（Xiamen)Co.,Ltd

106

Title Name Current Position in other companies
Supervisor, MERRY ELECTRONICS
(SHANGHAI) CO., LTD.
Director of Representative of juristic person
(Merry Electronics Co., LTD. appointed), Leohab
Enterprise Co.,Ltd.
Director, MERRY & LUXSHARE (VIETNAM)
CO.,LTD.
Director TONG-CIAN
Investment
Corporation		 Director, SUNBEEN TECHNOLOGY INC.
Representative:
LIAO, KENG-PIN		 Chairman, TONG-CIAN Investment Co., Ltd.
Director and General Manager, DIAREX
ENTERPRISE CO., LTD.
Supervisor of Representative of juristic person
(TONG-CIAN Investment Corporation
appointed),Leohab Enterprise Co.,Ltd.
Director SOH,YONG-SENG NA
Independent
Director		 WU, HUEI-HUANG Independent Director, KINSUS
INTERCONNECT TECHNOLOGY CORP
Independent Director, UNIVERSAL
MICROELECTRONICS CO.,LTD.
Independent
Director		 SHER, JIH-HSIN Independent Director, Mobiletron Co.,Ltd.
independent
director		 I, CHANG-YUN Independent Director, Shuz Tung Machinery
Industrial Co., Ltd.
Independent Director, TURVO
INTERNATIONAL CO., LTD.
Independent Director, UVAT TECHNOLOGY
CO.,LTD

107

Appendix 1

Articles of Incorporation ( Before Amendments )

CHAPTER I GENERAL PROVISIONS

Article 1:

This Company is duly organized under the Company Act, bearing the name of Merry Electronics Co., Ltd.

The company's English name is Merry Electronics Co., Ltd.

Article 2: The business scopes of the Company are as follows:

  • A. CC01030 Electric Appliance and Audiovisual Electric Products Manufacturing;

  • B. CC01070 Telecommunication Equipment and Apparatus Manufacturing;

  • C. CC01080 Electronic Parts and Components Manufacturing;

  • D. CC01110 Computers and Computing Peripheral Equipment Manufacturing;

  • E. CC01100 Restrained Telecom Radio Frequency Equipment and Materials Manufacturing;

  • F. CF01011 Medical Materials and Equipment Manufacturing;

  • G. F108031Wholesale of Drugs, Medical Goods;

Article 3:

In response to its business requirements, the Company may conduct mutual guarantee business with affiliates or entities of the same industry.

The Company shall not be a shareholder of unlimited liability in another company or the partner

of a partnership. When the Company becomes a shareholder of limited liability in other companies,

the total amount of its investments may exceed forty percent of the amount of paid-up capital of the Company.

Article 4:

The Headquarter of the Company is located in the Taichung City. If necessary, with the resolution of the Board of Directors, the Company may establish branch offices or representative offices onshore or offshore in accordance with laws.

CHAPTER II SHARES

Article 5:

108

The total amount of capital of the Company is NTD 4,000,000,000, divided into 400,000,000 shares (in which the number of shares for employee stock options is 5,000,000 shares), with a par value of NTD 10 per share, to be issued in installments, and the relevant matters of issuance shall be stipulated by the Board of Directors.

The treasury shares purchase by the Company in accordance with the Company Act may be transferred to the employees of parents or subsidiaries of the Company who meet certain specific requirements set by the Board of Directors.

The share subscription warrant may be transferred to the employees of parents or subsidiaries of the company who meet certain specific requirements set by the Board of Directors.

The new shares issued by the company may be transferred to the employees of parents or subsidiaries of the company who meet certain specific requirements set by the Board of Directors. The new restricted employee shares may be transferred to the employees of parents or subsidiaries of the company who meet certain specific requirements set by the Board of Directors.

Article 6:

The Company's share services shall be handled in accordance with the “Regulations Governing the Administration of Shareholder Services of Public Companies” and the relevant laws and regulations.

Article 7:

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

The shares issued by the Company may be exempted from printing any share certificate, provided that the shares being issued shall be recorded with the centralized securities custody enterprise.

CHAPTER III SHAREHOLDERS' MEETING

Article 8: A shareholders' meeting can be divided into two types:

A. Annual shareholders' meeting, to be convened within six months after close of each fiscal year.

B. Special shareholders' meeting, to be convened when necessary according to relevant law and regulations.

Article 9:

The shareholder of the Company shall have one voting power in respect of each share in his/her possession. The Company has no voting power in respect of the shares in its own possession in accordance with the Company Act. When the shareholder cannot attend the shareholders' meeting

109

for any cause, he/she/it may execute a power of attorney and appoint a proxy to attend the shareholders' meeting on his/her/its behalf in accordance with Article 177 of the Company Act and the Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies announced by the competent authority. The Chairperson shall preside at the shareholders' meetings. In the event that the Chairperson is absent, the Vice Chairperson shall act on his/her behalf. If the Vice Chairperson is also absent, the Chairperson shall designate one of the directors to act on his/her behalf. If there is no such designation, the directors shall elect a chairperson to act on his/her behalf from among themselves. For the shareholders' meeting convened by any other person having the convening right, he/she shall act as the chairperson of that meeting, provided, however, that if there are two or more conveners, the chairperson of the meeting shall be elected from among themselves.

Article 10:

Resolutions at a shareholders' meeting shall, unless otherwise provided for in the Company Act, be adopted by a majority vote of the shares represented by the attending shareholders, who represent more than one-half of the total number of voting shares.

Article 11:

Resolutions adopted at a shareholders' meeting shall be recorded in the minutes of the meeting, which shall be signed or bear the seal of the chairperson of the meeting and shall be distributed to all shareholders within 20 days after the close of the meeting.

The preparation and distribution of the minutes of shareholders' meeting as required in the preceding Paragraph may be effected by means of electronic transmission; the distribution of the minutes of shareholders' meeting may also be effected by means of a public notice.

CHAPTER IV DIRECTORS

Article 12:

This Company shall have seven 7 to ten 10 directors, and the Board of Directors is authorized to determine the number of Directors. The term of their office is three (3) years and they are eligible for re-election. The company adopts the candidate’s nomination system stipulated by Article 192-1 of the Company Act as election of the directors of the company and the shareholders shall elect the directors among the nominees listed in the roster for director candidates. The amount of total shares owned by the directors will be handled in accordance with the "Rules and Review Procedures for Director and Supervisor Share Ownership Ratios of Public Companies" issued by the competent authority.

When the numbers of vacancies in the Board of Directors shall be elected in accordance with laws,

110

the Board of Directors shall call a shareholders' meeting to elect succeeding directors to fill the vacancies, and the term shall be limited to fulfilling the remaining term of office of the predecessors. If the term of office of the directors expires and the new election cannot be held in time, their term will be extended until the new directors are elected and have assumed the office. Article 13:

Amongst the directors of the Company, at least 3 independent directors shall be elected by the shareholders’ meeting from the independent directors’ andidates list, and the candidate nomination system shall be adopted. The professional qualification, shareholding, restriction on theconcurrent post, the means if nomination and electionof independent directorsand other matters to be compiled with, shall all ve in accordance with the relevant rules of the competent authority of securities.

Article 14:

A Chairperson and a Vice Chairperson shall be elected amongst the directors. The Chairperson represents the Company in external affairs, be the Chairperson of the shareholders' meeting and the board meeting in internal affairs, and executes all the affairs of the Company in accordance with laws, regulations, Articles of Incorporation and the resolutions of shareholders' meeting and the Board of Directors. In the event that the Chairperson cannot attend the meetings for any cause, the Vice Chairperson shall act on his/her behalf; and if the Vice Chairperson also cannot attend the meetings, the Chairperson shall designate one of directors to act on his/her behalf, and if there is no such designation, the directors shall elect a chairperson to act on his/her behalf among themselves.

Article 15:

Directors shall exercise their powers and duties in accordance with the resolutions adopted by the Board of Directors and the shareholders' meeting.

Article 16:

In calling a meeting of the Board of Directors, a notice setting forth therein the subject(s) to be discussed at the meeting shall be given to each director no later than 7 days prior to the scheduled meeting date. However, in the case of emergency, the meeting may be convened at any time.

The notice of convening meetings of the Board of Directors of the Company may be given by the means of written notice, e-mail or fax.

Unless otherwise provided for in the Company Act, meetings of the Board of Directors shall be adopted by a majority vote of the directors present at a meeting where a majority of the directors attend. In case a director cannot attend the meeting for any cause, a proxy setting forth therein the scope of authority with reference to the subject(s) to be discussed at the meeting may be submitted to delegate the attendance to other directors, provided that one director may accept the delegation

111

of one other director only.

The meeting of the Board of Directors may be proceeding by video conference. The directors participating by video conference shall be deemed to have attended the meeting in person. Article 17:

The Company establishes audit committee, which is composed of all the independent directors in accordance with Article 14-4 of the Securities and Exchange Act. The exercise of power and related matters by audit committee and independent directors shall complywith the Company Act, the Securities and Exchange Act, and relevant laws and regulations prescribed by the competent authority.

Article 18:

The directors may receive transportation allowance and related business implementation costs, the amount of which is decided by the resolution at the meetings of the Board of Directors.

The Board of Directors is authorized to determine the remuneration of directors based on the level of participation and the value of devotion to the operation of the Company, with reference to the standard of other entities in the same industry.

Article 19:

The Company may purchase liability insurance for the directors within the scope of the business he/she conducts during his/her term and in addition thereto a report of insurance contents and relative details shall be submitted to the Board of the Directors.

CHAPTER V MANAGER

Article 20:

The Company may have managers, and his/her appointment, discharge and remuneration shall be handled in accordance with the Company Act.

The managers shall be empowered to manage the operation of the company and to sign relevant business documents for the company, subject to the scope of his/her duties and power, and the relevant authorization measures shall be set by the Board of Directors.

CHAPTER VI ACCOUNTING

Article 21:

The fiscal year of the Company is annually from 1 January until 31 December. The Company shall act in accordance with Article 228 of the Company Act, upon close of each fiscal year, the following reports and statements by the Board of Directors and the following reports and statements shall be given to the audit committee for auditing no later than 30 days prior to the date of the annual meeting of shareholders, and the audit committee shall submit the report to the

112

annual meeting of shareholders for ratification:

A. The business report;

B. The financial statements;

C. The proposed of the earnings distribution or loss make-up.

Article 22:

The industrial environment of the Company is apt to change, and the enterprise life cycle stays in a stage of stable growth, and it is necessary to consider the budget for the future capital expenditure and funding requirement, and measure the necessity to cope with funding requirement by earnings, to determine the amount for retaining or distributing the earnings and the distribution amount of shareholder bonus in cash. The net profit after final accounting, except for withholding of income tax in accordance with laws, shall be utilized for make-up of the loss of previous years, and secondly setting aside 10% of the remaining earnings as a legal reserve. After setting aside or reversing special reserve in accordance with laws when necessary, the balance after adding the undistributed earnings of the previous year will be the accumulated distributable earnings. The board of directors shall propose an earning distribution proposal for the shareholders’ meeting to resolve the distribution. For the earning distribution proposal proposed by the board of directors, in accordance with financial, business and operational factors, allocate within the limit of not less than 30% of the new distributable surplus in the current period and not more than 80% of the accumulated distributable earning, and the distribution of the shareholder bonus shall be given priority in cash dividends and shall also be distributed in the form of stock dividends, provided that the proportion of cash dividends distributed shall not be less than 30% of the total dividend. To authorize the distributable dividends and bonuses in whole or in part 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.

To inspire the employees and management team, if the Company makes profits in the said year, it shall set aside: A. 5% to 10% as employees’ profit sharing bonus; B. up to 2% as compensation of directors and supervisors, provided that if the Company has accumulated losses, the amount to make up the accumulated losses shall be reserved in advance.Where the employees' profit sharing bonus will be distributed in the form of stocks or in cash, it shall be resolved by a resolution adopted by a majority vote at a meeting of board of directors attended by two-thirds or more of the total number of directors; and in addition thereto a report shall be submitted to the shareholders' meeting.

The employees’ profit sharing bonus distributed by stocks or cash may be made to the employees of subsidiaries meeting certain specific requirements..

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CHAPTER VII ANCILLARY PROVISIONS

Article 23: The organic regulations and the operational regulations of the Company are stipulated by the board of directors.

Article 24: Any items that are not specified herein shall be dealt with in accordance with the Company Act and any other laws or rules.

Article 25: These Articles of Incorporation were promulgated on December 13, 1975. The 1st amendment was made on October 25, 1977. The 2nd amendment was on October 12, 1981. The 3rd amendment was on December 30, 1981. The 4th amendment was on December 15, 1984. The 5th amendment was on December 9, 1985. The 6th amendment was on December 20, 1985. The 7th amendment was on September 15, 1987. The 8th amendment was on December 10, 1988. The 9th amendment was on November 15, 1989. The 10th amendment was on May 10, 1990. The 11th amendment was on June 25, 1990. The 12th amendment was on December 15, 1990. The 13th amendment was on January 23, 1991. The 14th amendment was on March 1, 1991. The 15th amendment was on April 2, 1991. The 16th amendment was on July 12, 1991. The 17th amendment was on June 10, 1995. The 18th amendment was on July 26, 1996. The 19th amendment was on May 31, 1997. The 20th amendment was on March 25, 1998. The 21st amendment was on May 18, 1999. The 22nd amendment was on May 16, 2000. The 23rd amendment was on May 3, 2001. The 24th amendment was on August 28, 2001. The 25th amendment was on May 27, 2002. The 26th amendment was on May 20, 2004. The 27th amendment was on May 19, 2005. The 28th amendment was on October 18, 2005. The 29th amendment was on June 16, 2006. The 30th amendment was on June 13, 2007. The 31st amendment was on June 13, 2008. The 32nd amendment was on June 16, 2009. The 33rd amendment was on 14 June 2010. The 34th amendment was on June 22, 2012. The 35th amendment was on June 11, 2014. The 36th amendment was on June 12, 2015. The 37th amendment was made on January 22, 2016. The 38th amendment was made on June 29, 2016. The 39th amendment was made on June 13, 2018. The 40th amendment was made on June 19, 2019. The 41st amendment was made on July 21, 2021.

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Appendix 2

Rules of Procedure for Shareholders Meetings

(Before Amendments)

1. Purpose

To establish a strong governance system and sound supervisory capabilities for this Corporation's shareholders meetings, and to strengthen management capabilities, these Rules are adopted pursuant to Article 5 of the “BM0-006 Corporate Governance Best-Practice Principles”.

  1. Scope

The rules of procedures for this Corporation's shareholders meetings, except as otherwise provided by law, regulation, or the articles of incorporation, shall be as provided in these Rules.

  1. Responsibilities & Authorities

  2. 3.1. Financial Division: The sponsoring unit that formulates modifies or abolishes this specification.

3.2. Other units: Coordination unit for this specification.

  1. Terms and Definitions: Nil.

  2. Operational Procedures:

  3. 5.1. Convening shareholders meetings and shareholders meeting notices

    • 5.1.1. Unless otherwise provided by law or regulation, this Corporation's shareholders meetings shall be convened by the board of directors.

5.1.2. This Corporation shall prepare electronic versions of the shareholders meeting notice and proxy forms, and the origins of and explanatory materials relating to all proposals, including proposals for ratification, matters for deliberation, or the election or dismissal of directors or supervisors, and upload them to the Market Observation Post System (MOPS) before 30 days before the date of a regular shareholders meeting or before 15 days before the date of a special shareholders meeting. This Corporation shall prepare electronic versions of the shareholders meeting agenda and supplemental meeting materials and upload them to the MOPS before 21 days before the date of the regular shareholders meeting or before 15 days before the date of the special shareholders meeting. In addition, before 15 days before the date of the shareholders meeting, this Corporation shall also have prepared the shareholders meeting agenda and supplemental meeting materials and made them available for review by shareholders at any time. The meeting agenda and supplemental materials shall also be displayed at this Corporation and the

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professional shareholder services agent designated thereby as well as being distributed on-site at the meeting place.

  • 5.1.3. The reasons for convening a shareholders meeting shall be specified in the meeting notice and public announcement. With the consent of the addressee, the meeting notice may be given in electronic form.

  • 5.1.4. Matters pertaining to election or discharge of directors, alteration of the Articles of Incorporation, reduction of capital, application for the approval of ceasing its status as a public company, approval of competing with the company by directors, surplus profit distributed in the form of new shares, reserve distributed in the form of new shares, dissolution, merger, spin-off, or any matters as set forth in Paragraph I, Article 185 hereof shall be itemized in the causes or subjects to be described and the essential contents shall be explained in the notice to convene a meeting of shareholders, and shall not be brought up as extemporary motions; the essential contents may be posted on the website designated by the competent authority in charge of securities affairs or the company, and such website shall be indicated in the above notice.

  • 5.1.5. The convening of the shareholders 'meeting has stated the full re-election of directors and the date of appointment. After the election of the shareholders' meeting is completed, the same meeting shall not change its appointment date by temporary motion or other means.

  • 5.1.6 A shareholder holding 1 percent or more of the total number of issued shares may propose a proposal to Corporation for discussion at a regular shareholders meeting. Such proposals, however, are limited to one item only, and no proposal containing more than one item will be included in the meeting agenda. Sharehoders propose a motion is to urge the company to promote public interest or fulfill its social responsibilities. The board of directors must include the proposal. In addition, when the circumstances of any subparagraph of Article 172-1, paragraph 4 of the Company Act apply to a proposal put forward by a shareholder, the board of directors may exclude it from the agenda.

  • 5.1.7. Prior to the book closure date before a regular shareholders meeting is held, this Corporation shall publicly announce that it will receive shareholder proposals, written proposal or electronic, the location and time period for their submission; the period for submission of shareholder proposals may not be less than 10 days.

  • 5.1.8. Shareholder-submitted proposals are limited to 300 words, and no proposal containing more than 300 words will be included in the meeting agenda. The

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shareholder making the proposal shall be present in person or by proxy at the regular shareholders meeting and take part in discussion of the proposal.

  • 5.1.9. Prior to the date for issuance of notice of a shareholders meeting, this Corporation shall inform the shareholders who submitted proposals of the proposal screening results, and shall list in the meeting notice the proposals that conform to the provisions of this article. At the shareholders meeting the board of directors shall explain the reasons for exclusion of any shareholder proposals not included in the agenda.

  • 5.2. Principles determining the proxy's authorization to attend the meeting.

  • 5.2.1. For each shareholders meeting, a shareholder may appoint a proxy to attend the meeting by providing the proxy form issued by this Corporation and stating the scope of the proxy's authorization.

  • 5.2.2. A shareholder may issue only one proxy form and appoint only one proxy for any given shareholders meeting, and shall deliver the proxy form to this Corporation before 5 days before the date of the shareholders meeting. When duplicate proxy forms are delivered, the one received earliest shall prevail unless a declaration is made to cancel the previous proxy appointment.

  • 5.2.3. After a proxy form has been delivered to this Corporation, if the shareholder intends to attend the meeting in person or to exercise voting rights by correspondence or electronically, a written notice of proxy cancellation shall be submitted to this Corporation before 2 business days before the meeting date. If the cancellation notice is submitted after that time, votes cast at the meeting by the proxy shall prevail.

  • 5.3. Principles determining the time and place of a shareholders meeting

  • The venue for a shareholders meeting shall be the premises of this Corporation, or a place easily accessible to shareholders and suitable for a shareholders meeting. The meeting may begin no earlier than 9 a.m. and no later than 3 p.m. Full consideration shall be given to the opinions of the independent directors with respect to the place and time of the meeting.

  • 5.4. Preparation of documents such as the attendance book

  • 5.4.1. 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.

  • 5.4.2. In 【5.4.1.】 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

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accepted shall be clearly marked and a sufficient number of suitable personnel assigned to handle the registrations.

  • 5.4.3. Shareholders and their proxies (collectively, "shareholders") shall attend shareholders meetings based on attendance cards, sign-in cards, or other certificates of attendance. This Corporation may not arbitrarily add requirements for other documents beyond those showing eligibility to attend presented by shareholders. Solicitors soliciting proxy forms shall also bring identification documents for verification.

  • 5.4.4. 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. This Corporation shall furnish attending shareholders with the meeting agenda book, annual report, attendance card, speaker's slips, voting slips, and other meeting materials. Where there is an election of directors, pre-printed ballots shall also be furnished.

  • 5.4.5. When the government or a juristic person is a shareholder, it may be represented by more than one representative at a shareholders meeting. When a juristic person is appointed to attend as proxy, it may designate only one person to represent it in the meeting.

  • 5.5. The chair and non-voting participants of a shareholders meeting

  • 5.5.1. If a shareholders meeting is convened by the board of directors, the meeting shall be chaired by the chairperson of the board. When the chairperson of the board is on leave or for any reason unable to exercise the powers of the chairperson, the vice chairperson shall act in place of the chairperson; if there is no vice chairperson or the vice chairperson also is on leave or for any reason unable to exercise the powers of the vice chairperson, the chairperson shall appoint one of the managing directors to act as chair, or, if there are no managing directors, one of the directors shall be appointed to act as chair. Where the chairperson does not make such a designation, the managing directors or the directors shall select from among themselves one person to serve as chair.

  • 5.5.2. In 【5.5.1.】 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.

  • 5.5.3. It is advisable that shareholders meetings convened by the board of directors be

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chaired by the chairperson of the board in person and attended by a majority of the directors, at least one independent directorr in person, and at least one member of each functional committee on behalf of the committee. The attendance shall be recorded in the meeting minutess.

  • 5.5.4. If a shareholders meeting is convened by a party with power to convene but other than the board of directors, the convening party shall chair the meeting. When there are two or more such convening parties, they shall mutually select a chair from among themselves.

  • 5.5.5. This Corporation may appoint its attorneys, certified public accountants, or related persons retained by it to attend a shareholders meeting in a non-voting capacity.

  • 5.6. Documentation of a shareholders meeting by audio or video

  • 5.6.1. 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.

  • 5.6.2. In 【5.6.1.】 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.

  • 5.7. Total numbers of attendance shares and Call the meeting

  • 5.7.1. Attendance at shareholders meetings shall be calculated based on numbers of shares. The number of shares in attendance shall be calculated according to the shares indicated by the attendance book and sign-in cards handed in plus the number of shares whose voting rights are exercised by correspondence or electronically.

  • 5.7.2. The chair shall call the meeting to order at the appointed meeting time. However, when the attending shareholders do not represent a majority of the total number of issued shares, the chair may announce a postponement, provided that no more than two such postponements, for a combined total of no more than 1 hour, may be made. If the quorum is not met after two postponements and the attending shareholders still represent less than one third of the total number of issued shares, the chair shall declare the meeting adjourned.

  • 5.7.3. In 【5.7.2.】 if the quorum is not met after two postponements as referred to in the preceding paragraph, but the attending shareholders represent one third or more of the total number of issued shares, a tentative resolution may be adopted pursuant to Article 175, paragraph 1 of the Company Act; all shareholders shall be notified of

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the tentative resolution and another shareholders meeting shall be convened within 1 month.

  • 5.7.4. When, prior to conclusion of the meeting, the attending shareholders represent a majority of the total number of issued shares, the chair may resubmit the tentative resolution for a vote by the shareholders meeting pursuant to Article 174 of the Company Act.

  • 5.8. Discussion of proposals

  • 5.8.1. If a shareholders meeting is convened by the board of directors, the meeting agenda shall be set by the board of directors. Relevant motions (including extraordinary motions and amendments to the original proposals) should be voting by poll. The meeting shall proceed in the order set by the agenda, which may not be changed without a resolution of the shareholders meeting.

  • 5.8.2. The provisions of the preceding paragraph apply mutatis mutandis to a shareholders meeting convened by a party with the power to convene that is not the board of directors.

  • 5.8.3. In 【5.8.1.】 and 【5.8.2.】 the chair may not declare the meeting adjourned prior to completion of deliberation on the meeting agenda of the preceding two paragraphs (including extraordinary motions), except by a resolution of the shareholders meeting. If the chair declares the meeting adjourned in violation of the rules of procedure, the other members of the board of directors shall promptly assist the attending shareholders in electing a new chair in accordance with statutory procedures, by agreement of a majority of the votes represented by the attending shareholders, and then continue the meeting.

  • 5.8.4. The chair shall allow ample opportunity during the meeting for explanation and discussion of proposals and of amendments or extraordinary motions put forward by the shareholders; when the chair is of the opinion that a proposal has been discussed sufficiently to put it to a vote, the chair may announce the discussion closed and call for a vote and arrange adequate voting time.

5.9. Shareholder speech

  • 5.9.1. Before speaking, an attending shareholder must specify on a speaker's slip the subject of the speech, his/her shareholder account number (or attendance card number), and account name. The order in which shareholders speak will be set by the chair.

  • 5.9.2. A shareholder in attendance who has submitted a speaker's slip but does not actually speak shall be deemed to have not spoken. When the content of the speech does not

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correspond to the subject given on the speaker's slip, the spoken content shall prevail.

  • 5.9.3. Except with the consent of the chair, a shareholder may not speak more than twice on the same proposal, and a single speech may not exceed 5 minutes. If the shareholder's speech violates the rules or exceeds the scope of the agenda item, the chair may terminate the speech.

  • 5.9.4. When an attending shareholder is speaking, other shareholders may not speak or interrupt unless they have sought and obtained the consent of the chair and the shareholder that has the floor; the chair shall stop any violation.

  • 5.9.5. When a juristic person shareholder appoints two or more representatives to attend a shareholders meeting, only one of the representaties so appointed may speak on the same proposal.

  • 5.9.6. After an attending shareholder has spoken, the chair may respond in person or direct relevant personnel to respond.

  • 5.10. Calculation of voting shares and recusal system

  • 5.10.1. Voting at a shareholders meeting shall be calculated based the number of shares.

  • 5.10.2. With respect to resolutions of shareholders meetings, the number of shares held by a shareholder with no voting rights shall not be calculated as part of the total number of issued shares.

  • 5.10.3. When a shareholder is an interested party in relation to an agenda item, and there is the likelihood that such a relationship would prejudice the interests of this Corporation, that shareholder may not vote on that item, and may not exercise voting rights as proxy for any other shareholder.

  • 5.10.4. In 【5.10.3.】 the number of shares for which voting rights may not be exercised under the preceding paragraph shall not be calculated as part of the voting rights represented by attending shareholders.

  • 5.10.5. With the exception of a trust enterprise or a shareholder services agent approved by the competent securities authority, when one person is concurrently appointed as proxy by two or more shareholders, the voting rights represented by that proxy may not exceed 3 percent of the voting rights represented by the total number of issued shares. If that percentage is exceeded, the voting rights in excess of that percentage shall not be included in the calculation.

  • 5.10.6. A shareholder shall be entitled to one vote for each share held, except when the shares are restricted shares or are deemed non-voting shares under Article 179, paragraph 2 of the Company Act.

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  • 5.10.7. When this Corporation holds a shareholders meeting, it may allow the shareholders to exercise voting rights by correspondence or electronic means. When voting rights are exercised by correspondence or electronic means, the method of exercise shall be specified in the shareholders meeting notice. A shareholder exercising voting rights by correspondence or electronic means will be deemed to have attended the meeting in person, but to have waived his/her rights with respect to the extraordinary motions and amendments to original proposals of that meeting; it is therefore advisable that this Corporation avoid the submission of extraordinary motions and amendments to original proposals.

  • 5.10.8.In 【5.10.7.】 a shareholder intending to exercise voting rights by correspondence or electronic means under the preceding paragraph shall deliver a written declaration of intent to this Corporation before 2 days before the date of the shareholders meeting. When duplicate declarations of intent are delivered, the one received earliest shall prevail, except when a declaration is made to cancel the earlier declaration of intent.

  • 5.10.9. After a shareholder has exercised voting rights by correspondence or electronic means, in the event the shareholder intends to attend the shareholders meeting in person, a written declaration of intent to retract the voting rights already exercised under the preceding paragraph shall be made known to this Corporation, by the same means by which the voting rights were exercised, before 2 business days before the date of the shareholders meeting. If the notice of retraction is submitted after that time, the voting rights already exercised by correspondence or electronic means shall prevail. When a shareholder has exercised voting rights both by correspondence or electronic means and by appointing a proxy to attend a shareholders meeting, the voting rights exercised by the proxy in the meeting shall prevail.

  • 5.10.10. Except as otherwise provided in the Company Act and in this Corporation's articles of incorporation, the passage of a proposal shall require an affirmative vote of a majority of the voting rights represented by the attending shareholders. At the time of a vote, for each proposal, the chair or a person designated by the chair shall first announce the total number of voting rights represented by the attending shareholders, followed by a poll of the shareholders. After the conclusion of the meeting, on the same day it is held, the results for each proposal, based on the numbers of votes for and against and the number of abstentions, shall be entered into the MOPS.

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  • 5.10.11. When there is an amendment or an alternative to a proposal, the chair shall present the amended or alternative proposal together with the original proposal and decide the order in which they will be put to a vote. When any one among them is passed, the other proposals will then be deemed rejected and no further voting shall be required.

  • 5.10.12. Vote monitoring and counting personnel for the voting on a proposal shall be appointed by the chair, provided that all monitoring personnel shall be shareholders of this Corporation.

  • 5.10.13. 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, shall be announced on-site at the meeting and a record made of the vote.

5.11. Elections

  • 5.11.1. The election of directors at a shareholders meeting shall be held in accordance with the applicable election and appointment rules adopted by this Corporation, and the voting results shall be announced on-site immediately, including the names of those elected as directors and the numbers of votes with which they were elected.

  • 5.11.2. The ballots for the election referred to in the preceding paragraph shall be sealed with the signatures of the monitoring personnel and kept in proper custody for at least 1 year. If, however, a shareholder files a lawsuit pursuant to Article 189 of the Company Act, the ballots shall be retained until the conclusion of the litigation.

  • 5.12. The meeting minutes

  • 5.12.1. Matters relating to the resolutions of a shareholders meeting shall be recorded in the meeting minutes. The meeting minutes shall be signed or sealed by the chair of the meeting and a copy distributed to each shareholder within 20 days after the conclusion of the meeting. The meeting minutes may be produced and distributed in electronic form.

  • 5.12.2. In 【5.12.1.】 this Corporation may distribute the meeting minutes of the preceding paragraph by means of a public announcement made through the MOPS.

  • 5.12.3. The meeting minutes shall accurately record the year, month, day, and place of the meeting, the chair's full name, the methods by which resolutions were adopted,

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and a summary of the deliberations and their voting results (including statistical weight), the number of votes for each candidate should be disclosed when there has a election of directors, and shall be retained for the duration of the existence of this Corporation.

  • 5.13. Public disclosure

  • 5.13.1. On the day of a shareholders meeting, this Corporation shall compile in the prescribed format a statistical statement of the number of shares obtained by solicitors through solicitation and the number of shares represented by proxies, and shall make an express disclosure of the same at the place of the shareholders meeting.

  • 5.13.2. If matters put to a resolution at a shareholders meeting constitute material information under applicable laws or regulations or under Taiwan Stock Exchange Corporation regulations, this Corporation shall upload the content of such resolution to the MOPS within the prescribed time period.

  • 5.14. Maintaining order at the meeting place

  • 5.14.1. Staff handling administrative affairs of a shareholders meeting shall wear identification cards or arm bands.

  • 5.14.2. The chair may direct the proctors or security personnel to help maintain order at the meeting place. When proctors or security personnel help maintain order at the meeting place, they shall wear an identification card or armband bearing the word "Proctor."

  • 5.14.3. At the place of a shareholders meeting, if a shareholder attempts to speak through any device other than the public address equipment set up by this Corporation, the chair may prevent the shareholder from so doing.

  • 5.14.4. When a shareholder violates the rules of procedure and defies the chair's correction, obstructing the proceedings and refusing to heed calls to stop, the chair may direct the proctors or security personnel to escort the shareholder from the meeting.

  • 5.15. Recess and resumption of a shareholders meeting

  • 5.15.1. When a meeting is in progress, the chair may announce a break based on time considerations. If a force majeure event occurs, the chair may rule the meeting temporarily suspended and announce a time when, in view of the circumstances, the meeting will be resumed.

  • 5.15.2. When a meeting is in progress, the chair may announce a break based on time considerations. If a force majeure event occurs, the chair may rule the meeting

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temporarily suspended and announce a time when, in view of the circumstances, the meeting will be resumed.

  • 5.15.3. A resolution may be adopted at a shareholders meeting to defer or resume the meeting within 5 days in accordance with Article 182 of the Company Act.

  • 5.16. Other Matters

  • 5.16.1. The attendance list bearing the signatures of shareholders present at the meeting and the powers of attorney of the proxies shall be kept by the Company for a minimum period of at least one year. However, if a lawsuit has been instituted by any shareholder in accordance with the provisions of Article 189 of Company Act, the minutes of the shareholders' meeting involved shall be kept by the company until the legal proceedings of the foregoing lawsuit have been concluded.

  • 5.16.2. Where any matter is not stipulated in these Rules, it shall be handled in accordance with Company Act and other relevant laws and regulations and the article of incorporation of the Company.

  • 5.16.3. These Rules, any amendments hereto, shall be implemented after adoption by shareholders' meetings.

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Appendix 3

Operation Procedures for the Acquisition or Disposal of Assets (Before Amendments)

1. Purpose

The Procedures are created according to the Article 6 of the Regulations Governing the Acquisition and Disposal of Assets by Public Companies (hereinafter referred to as these Regulations)

2. Scope

  • 2.1. The Company shall handle the acquisition or disposal of assets in compliance with these Regulations; provided, where financial laws or regulations provide otherwise, such provisions shall govern.

  • Responsibilities & Authority

  • 3.1. Financial Division: The organizer for the formulation, modification and abolition of these Procedures.

  • 3.2. Other units: Coordination department for these Procedures.

  • Terms and Definitions

  • 4.1. Derivatives: Forward contracts, options contracts, futures contracts, leverage contracts, or swap contracts, whose value is derived from a specified 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 the above contracts; or hybrid contracts or structured products containing embedded derivatives. The term "forward contracts" does not include insurance contracts, performance contracts, after-sales service contracts, long-term leasing contracts, or long-term purchase (sales) contracts.

  • 4.2. 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 156-3 of the Company Act.

  • 4.3. Related party: As defined in the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

  • 4.4. Subsidiary: As defined in the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

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  • 4.5. 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.

  • 4.6. Date of occurrence: Refers to the date of contract signing, date of payment, date of consignment trade, date of transfer, dates of boards of directors resolutions, or other date that can confirm the counterpart and monetary amount of the transaction, whichever date is earlier; provided, for investment for which approval of the competent authority is required, the earlier of the above date or the date of receipt of approval by the competent authority shall apply.

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

  • 4.8. 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.

  • 4.9. 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.

  • 4.10. 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.

  • Operating Procedures

  • 5.1. The term "assets" includes the following:

    • 5.1.1. 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.

    • 5.1.2. Real property (including land, houses and buildings, investment property, and construction enterprise inventory) and equipment.

    • 5.1.3. Memberships.

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  • 5.1.4. Patents, copyrights, trademarks, franchise rights, and other intangible assets.

  • 5.1.5. Right-of-use assets.

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

  • 5.1.7. Derivatives.

  • 5.1.8. Assets acquired or disposed of in connection with mergers, demergers, acquisitions, or transfer of shares in accordance with law.

  • 5.1.9. Other major assets.

  • 5.2. Evaluation procedures:

  • 5.2.1. In acquiring or disposing of real property, equipment, or right-of-use assets thereof where the transaction amount reaches 20 percent of the company's paid-in capital or NT$300 million or more, the company, unless transacting with a domestic government agency, engaging others to build on its own land, engaging others to build on rented land, or acquiring or disposing of equipment or right-of-use assets thereof held for business use, shall obtain an appraisal report prior to the date of occurrence of the event from a professional appraiser and shall further comply with the following provisions:

    • (1). Where due to special circumstances it is necessary to give a limited price, specified price, or special price as a reference basis for the transaction price, the transaction shall be submitted for approval in advance by the board of directors; the same procedure shall also be followed whenever there is any subsequent change to the terms and conditions of the transaction.

    • (2). Where the transaction amount is NT$1 billion or more, appraisals from two or more professional appraisers shall be obtained.

    • (3). Where any one of the following circumstances applies with respect to the professional appraiser's appraisal results, unless all the appraisal results for the assets to be acquired are higher than the transaction amount, or all the appraisal results for the assets to be disposed of are lower than the transaction amount, a certified public accountant shall be engaged to perform the appraisal in accordance with the provisions of Statement of Auditing Standards No. 20 published by the 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 discrepancy between the appraisal result and the transaction amount is 20 percent or more of the transaction amount.

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  - (b). The discrepancy between the appraisal results of two or more professional appraisers is 10 percent or more of the transaction amount.

  • (4). No more than 3 months may elapse between the date of the appraisal report issued by a professional appraiser and the contract execution date; provided, where the publicly announced current value for the same period is used and not more than 6 months have elapsed, an opinion may still be issued by the original professional appraiser.

  • 5.2.2. The Company acquiring or disposing of securities shall, prior to the date of occurrence of the event, obtain financial statements of the issuing company for the most recent period, certified or reviewed by a certified public accountant, for reference in appraising the transaction price, and if the dollar amount of the transaction is 20 percent of the company's paid-in capital or NT$300 million or more, the Company shall additionally engage a certified public accountant prior to the date of occurrence of the event to provide an opinion regarding the reasonableness of the transaction price. If the CPA needs to use the report of an expert as evidence, the CPA shall do so in accordance with the provisions of Statement of Auditing Standards No. 20 published by the ARDF. This requirement does not apply, however, to publicly quoted prices of securities that have an active market, or where otherwise provided by regulations of the Financial Supervisory Commission (FSC).

  • 5.2.3. Where the Company acquires or disposes of intangible assets or right-of-use assets thereof or memberships and the transaction amount reaches 20 percent or more of paid-in capital or NT$300 million or more, except in transactions with a domestic government agency, the Company shall engage a certified public accountant prior to the date of occurrence of the event to render an opinion on the reasonableness of the transaction price; the CPA shall comply with the provisions of Statement of Auditing Standards No. 20 published by the ARDF.

  • 5.2.4. The calculation of the transaction amounts referred to in the Article 【 5.2.1. 】 to 【 5.2.3. 】 shall be done in accordance with Article 【 5.4.2. 】 , and "within the preceding year" as 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.

  • 5.2.5. Professional appraisers and their officers, certified public accounts, attorneys, and securities underwriters that provide the Company with appraisal reports, certified public accountant's opinions, attorney's opinions, or underwriter's opinions shall meet the following requirements:

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  - (1). May not have previously received a final and unappealable sentence to imprisonment for 1 year or longer for a violation of Securities and Exchange 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.

  • 5.2.6. When issuing an appraisal report or opinion, the personnel referred to in the provision of 【 5.2.5. 】 shall comply with the following:

    • (1). Prior to accepting a case, they shall prudently assess their own professional capabilities, practical experience, and independence.

    • (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.

  • 5.2.7. Where the Company acquires or disposes of assets through court auction procedures, the evidentiary documentation issued by the court may be substituted for the appraisal report or CPA opinion.

  • 5.3. Operating procedures:

  • 5.3.1. For the acquisition or disposal of real property, it is required to consider the publicly announced current value, appraised value and the actual transaction price of the neighboring real property to determine the transaction terms and price and then

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prepare an analysis report and submit to the chairperson. If the amount does not exceed NT$ 300 million, such transaction shall be submitted to the chairperson for approval and reported in the latest following board meeting. If the amount exceeds NT$ 300 million, such transaction shall not be commenced until it is approved by the board of directors.

  • 5.3.2. For the acquisition or disposal of other fixed assets, it shall be done by one of the following: price inquiry, price survey, price negotiation or bidding. If the amount does not exceed NT$ 300 million (inclusive), such transaction shall be properly approved in accordance with the authorization rules. If the amount exceeds NT$ 300 million, such transaction shall be submitted to the board of directors for approval.

  • 5.3.3. With respect to the Company's acquisition or disposal of assets that is subject to the approval of the board of directors under the procedures or other laws or regulations, if a director expresses dissent and it is contained in the minutes or a written statement, the company shall submit the director's dissenting opinion to audit committee.

  • 5.3.4. Where the Audit Committee has been established in accordance with the provisions of the Securities and Exchange Act, any transaction involving major assets or derivatives shall be approved by more than half of all audit committee members and submitted to the board of directors for a resolution, and shall be subject to mutatis mutandis application of Article 【 5.11.5. 】 and 【 5.11.6. 】

  • 5.4. Procedure for public announcement

  • 5.4.1. Under any of the following circumstances, the Company acquiring or disposing of assets shall publicly announce and report the relevant information on the FSC's designated website in the appropriate format as prescribed by regulations within 2 days counting inclusively from the date of occurrence of the event:

    • (1). Acquisition or disposal of real property or right-of-use assets thereof from or to a related party, or acquisition or disposal of assets other than real property or right-of-use assets thereof from or to a related party where the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or NT$300 million or more; provided, this shall not apply to trading of domestic government bonds or bonds under repurchase and resale agreements, or subscription or redemption of money market funds issued by domestic securities investment trust enterprises.

    • (2). Merger, demerger, acquisition, or transfer of shares.

    • (3). Losses from derivatives trading reaching the limits on aggregate losses or losses on individual contracts set out in the procedures adopted by the company.

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  • (4). Where equipment or right-of-use assets thereof for business use are acquired or disposed of, and furthermore the transaction counterparty is not a related party, and the transaction amount meets any of the following criteria:

  • (a). For a public company whose paid-in capital is less than NT$10 billion, the transaction amount reaches NT$500 million or more.

  • (b). For a public company whose paid-in capital is NT$10 billion or more, the transaction amount reaches NT$1 billion or more.

  • (5). Acquisition or disposal by a public company in the construction business of real property or right-of-use assets thereof for construction use, and furthermore the transaction counterparty is not a related party, and the transaction amount reaches NT$500 million; among such cases, if the public company has paid-in capital of NT$10 billion or more, and it is disposing of real property from a completed construction project that it constructed itself, and furthermore the transaction counterparty is not a related party, then the threshold shall be a transaction amount reaching NT$1 billion or more.

  • (6). Where land is acquired under an arrangement on engaging others to build on the company's own land, engaging others to build on rented land, joint construction and allocation of housing units, joint construction and allocation of ownership percentages, or joint construction and separate sale, and furthermore the transaction counterparty is not a related party, and the amount the company expects to invest in the transaction reaches NT$500 million.

  • (7). Where an asset transaction other than any of those referred to in the Article 【 5.4.1.(1). 】 to Article 【 5.4.1.(6). 】 , a disposal of receivables by a financial institution, or an investment in the mainland China area reaches 20 percent or more of paid-in capital or NT$300 million; provided, this shall not apply to the following circumstances:

  • (a). Trading of domestic government bonds.

  • (b). Where done by professional investors-securities trading on securities exchanges or OTC markets, or subscription of ordinary corporate bonds or general bank debentures without equity characteristics (excluding subordinated debt) that are offered and issued in the primary market, or subscription or redemption of securities investment trust funds or futures trust funds, or subscription by a securities firm of securities as necessitated by its undertaking business or as an advisory recommending securities firm for an emerging stock company, in accordance with the rules of the Taipei Exchange.

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  - (c). Trading of bonds under repurchase and resale agreements, or subscription or redemption of money market funds issued by domestic securities investment trust enterprises.

  • 5.4.2. The amount of transactions as the provisions of 【 5.4.1. 】 shall be calculated as follows:

  • (1). The amount of any individual transaction.

  • (2). The cumulative transaction amount of acquisitions and disposals of the same type of underlying asset with the same transaction counterparty within the preceding year.

  • (3). The cumulative transaction amount of acquisitions and disposals (cumulative acquisitions and disposals, respectively) of real property or right-of-use assets thereof within the same development project within the preceding year.

  • (4). The cumulative transaction amount of acquisitions and disposals (cumulative acquisitions and disposals, respectively) of the same security within the preceding year.

  • 5.4.3. "Within the preceding year" as used in the Article 【 5.4.2. 】 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.

  • 5.4.4. The Company shall compile monthly reports on the status of derivatives trading engaged in up to the end of the preceding month by the Company and any subsidiaries that are not domestic public companies and enter the information in the prescribed format into the information reporting website designated by the FSC by the 10th day of each month.

  • 5.4.5. When the Company at the time of public announcement makes an error or omission in an item required by regulations to be publicly announced and so is required to correct it, all the items shall be again publicly announced and reported in their entirety within two days counting inclusively from the date of knowing of such error or omission.

  • 5.4.6. A public company acquiring or disposing of assets shall keep all relevant contracts, meeting minutes, log books, appraisal reports and CPA, attorney, and securities underwriter opinions at the Company, where they shall be retained for 5 years except where another act provides otherwise.

  • 5.4.7. 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 Article 【 5.4.1. 】 to 【 5.4.6. 】 , a public report of relevant information shall be made on

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the information reporting website designated by the FSC within 2 days counting inclusively from the date of occurrence of the event: 

  - (1). Change, termination, or rescission of a contract signed in regard to the original transaction.

  - (2). Merger, demerger, acquisition, or transfer of shares is not completed by the scheduled date set forth in the contract.

  - (3). Change to the originally publicly announced and reported information.

  • 5.4.8. Information required to be publicly announced and reported in accordance with the provisions of 【 5.4.1. 】 to 【 5.4.7. 】 on acquisitions and disposals of assets by the Company's subsidiary that is not itself a public company in Taiwan shall be reported by the Company.

  • 5.4.9. The paid-in capital or total assets of the Company shall be the standard applicable to a subsidiary referred to in the Article 【 5.4.8. 】 in determining whether, relative to paid-in capital or total assets, it reaches a threshold requiring public announcement and regulatory filing under Article 【 5.4.1. 】

  • 5.5. Total amounts of real property and right-of-use assets thereof or securities acquired by the company and each subsidiary for business use, and limits on individual securities:

  • 5.5.1. For investment in real property and right-of-use assets thereof not for business use, the total investment amount shall not exceed 50 percent of the assets.

  • 5.5.2. For the investment in securities, the total investment amount shall not exceed 70 percent of the assets.

  • 5.5.3. For the investment in individual security, the investment amount shall not exceed 50 percent of the assets.

  • 5.6. Relative Party Transactions:

  • 5.6.1. When the Company engages in any acquisition or disposal of assets from or to a related party, in addition to ensuring that the necessary resolutions are adopted and the reasonableness of the transaction terms is appraised, if the transaction amount reaches 10 percent or more of the Company 's total assets, the Company shall also obtain an appraisal report from a professional appraiser or a CPA's opinion in compliance with the provisions of the Article 【 5.2. 】

  • 5.6.2. The calculation of the transaction amount referred to in the Article 【 5.6.1. 】 shall be made in accordance with Article 【 5.2.4. 】

  • 5.6.3. When judging whether a transaction counterparty is a related party, in addition to legal formalities, the substance of the relationship shall also be considered.

  • 5.6.4. When the Company intends to acquire or dispose of real property or right-of-use assets thereof from or to a related party, or when it intends to acquire or dispose of

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assets other than real property or right-of-use assets thereof from or to a related party and the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or NT$300 million or more, except in trading of domestic government bonds or bonds under repurchase and resale agreements, or subscription or redemption of money market funds issued by domestic securities investment trust enterprises, the company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by more than half of all audit committee members and the board of directors:

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

  • (2). The reason for choosing the related party as a transaction counterparty.

  • (3).With respect to the acquisition of real property or right-of-use assets thereof from a related party, information regarding appraisal of the reasonableness of the preliminary transaction terms in accordance with Article 【 5.6.3. 】 and 【 5.6.4. 】 .

  • (4). The date and price at which the related party originally acquired the real property, the original transaction counterparty, and that transaction counterparty's relationship to the company and the related party.

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

  • (6). An appraisal report from a professional appraiser or a CPA's opinion obtained in compliance with Article 【 5.6.3. 】 .

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

  • 5.6.5. The calculation of the transaction amounts referred to in Article 【 5.6.4. 】 shall be made in accordance with Article 【 5.4.2. 】 herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items that have been approved by more than half of all audit committee members and the board of directors need not be counted toward the transaction amount.

  • 5.6.6. With respect to the types of transactions listed below, when to be conducted between a public 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 may delegate the board chairman to decide such matters when the transaction is within NT$300 million and have the decisions subsequently submitted to and ratified by the next board of directors meeting:

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  • (1).Acquisition or disposal of equipment 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.

  • 5.6.7. Where an audit committee has been established in accordance with the provisions of the Securities and Exchange Act shall be subject to mutatis mutandis application of Article 【 5.11.5. 】 and 【 5.11.6. 】

  • 5.6.8. The Company that acquires real property or right-of-use assets thereof from a related party shall evaluate the reasonableness of the transaction costs by the following means:

  • (1). 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; provided, it may not be higher than the maximum non-financial industry lending rate announced by the Ministry of Finance.

  • (2). Total loan value appraisal from a financial institution where the related party has previously created a mortgage on the property as security for a loan; provided, the actual cumulative amount loaned by the financial institution shall have been 70 percent or more of the financial institution's appraised loan value of the property and the period of the loan shall have been 1 year or more. However, this shall not apply where the financial institution is a related party of one of the transaction counterparties.

  • 5.6.9. Where land and structures thereupon are combined as a single property purchased or leased in 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 Article 【 5.6.8. 】 .

  • 5.6.10. The Company that acquires real property or right-of-use assets thereof from a related party and appraises the cost of the real property or right-of-use assets thereof in accordance with Article 【 5.6.8. 】 and 【 5.6.9. 】 shall also engage a CPA to check the appraisal and render a specific opinion.

  • 5.6.11. Where the Company acquires real property or right-of-use assets thereof from a related party and one of the following circumstances exists, the acquisition shall be conducted in accordance with Article 【 5.6.4. 】 to Article 【 5.6.7. 】 , and Article 【 5.6.8. 】 to Article 【 5.6.10. 】 do not apply:

  • (1). The related party acquired the real property or right-of-use assets thereof through inheritance or as a gift.

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  • (2). More than 5 years will have elapsed from the time the related party signed the contract to obtain the real property or right-of-use assets thereof to the signing date for the current transaction.

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

  • (4). The real property right-of-use assets for business use are acquired by the Company with its parent or subsidiaries, or by its subsidiaries in which it directly or indirectly holds 100 percent of the issued shares or authorized capital.

  • 5.6.12. When the results of the Company 's appraisal conducted in accordance with Article 【 5.6.8. 】 and 【 5.6.9. 】 are uniformly lower than the transaction price, the matter shall be handled in compliance with Article 【 5.6.14. 】 . However, where the following circumstances exist, objective evidence has been submitted and specific opinions on reasonableness have been obtained from a professional real property appraiser and a CPA has been obtained, this restriction shall not apply:

  • (1). Where the related party acquired undeveloped land or leased land for development, it may submit proof of compliance with one of the following conditions:

    • (a). Where undeveloped land is appraised in accordance with the means in the preceding Article, and structures according to the related party's construction cost plus reasonable construction profit are valued in excess of the actual transaction price. The "Reasonable construction profit" shall be deemed the average gross operating profit margin of the related party's construction division over the most recent 3 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). Completed transactions by unrelated parties within the preceding year involving other floors of the same property or neighboring or closely valued parcels of land, where the land area and transaction terms are similar after calculation of reasonable price discrepancies in floor or area land prices in accordance with standard property market sale or leasing practices.

  • (2). Where the Company acquiring real property, or obtaining real property right-of-use assets through leasing, from a related party provides evidence that the terms of the transaction are similar to the terms of completed transactions involving neighboring or closely valued parcels of land of a similar size by unrelated parties within the preceding year.

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  • 5.6.13. Completed transactions involving neighboring or closely valued parcels of land in the Article 【 5.6.12. 】 in principle refers to parcels on the same or an adjacent block and within a distance of no more than 500 meters or parcels close in publicly announced current value; transactions involving similarly sized parcels in principle refers to transactions completed by unrelated parties for parcels with a land area of no less than 50 percent of the property in the planned transaction; within the preceding year refers to the year preceding the date of occurrence of the acquisition of the real property or obtainment of the right-of-use assets thereof.

  • 5.6.14. Where the Company acquires real property or right-of-use assets thereof from a related party and the results of appraisals conducted in accordance with Article 【 5.6.8. 】 to 【 5.6.13. 】 are uniformly lower than the transaction price, the following steps shall be taken:

    • (1). A special reserve shall be set aside in accordance with Article 41, paragraph 1 of the Act against the difference between the real property 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 company, then the special reserve called for under Article 41, paragraph of the Securities Exchange Act shall be set aside pro rata in a proportion consistent with the share of the Company 's equity stake in the other company.

    • (2). The independent director as members of the audit committee shall comply with Article 218 of the Company Act.

    • (3). Actions taken pursuant to Article 【 5.6.14.(1). 】 and 【 5.6.14.(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.

  • 5.6.15. The 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.

  • 5.6.16. When the Company obtains real property or right-of-use assets thereof from a related party, it shall also comply with Article 【 5.6.14. 】 and 【 5.6.15. 】 if there is other evidence indicating that the acquisition was not an arm ’ s length transaction.

  • 5.7. Operation Procedures of engaging in Derivatives Trading:

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  • 5.7.1. The Company engaging in derivatives trading shall pay strict attention to control of the following important risk management and auditing matters, and incorporate them into their Procedures:

  • (1). Trading principles and strategies:

    • (a). Trading types:

Derivatives, the Company shall engage in , as the provisions of 【 4.1. 】 .

  • (b). Operating or hedging strategies:

The Company shall engage in derivatives transaction for the purpose of hedging and shall choose the transaction products to hedge the risks generate from the operation of the Company's business. The currencies held by the Company shall meet the demand of the Company for foreign currencies in import and export transactions. Transaction for other specific purpose shall be carefully assessed and shall not commence until it has been submitted to the board of directors for approval.

  • (c). Segregation of duties:
personnel Content
Trading
personnel		 Responsible to propose the strategy and execute transaction on
financialproducts
Accountant Responsible to handle accounting and books and to conduct
report and announcement according to the requirements of the
FSC.
Settlement
personnel		 To execute settlements.
Internal
Auditor		 Responsible to evaluate the suitability of the internal control
system in connection with financial derivative transactions, to
conduct auditing on how well the related departments follow the
Procedures, and to produce report with trading cycle analysis.
Should there be any violation found, a written report is needed to
notifythe board of directors.

The authorization to approve transaction:

Total
amount
of
the
contract		 Hedging transaction Non-hedging
transaction
Chief Financial Officer US$2MM and above -
Managerial personnel in
accordance with the article
US$10 MM and above		 US$1MM and above
Board of directors US$10 MM and above US$1MM and above

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Note: The above mentioned amount shall not include the purchase and sale of the contracts with the same tenor and same amount on the same day.

(d). Essentials of performance evaluation:

Hedging
transaction		 Take the profits and losses generated between the cost of
foreign exchange rate from the Company's books and the
transaction of derivatives as the basis for performance
assessment. In order to fully control and express the
transaction risks assessed, the Company will assess profits
and losses based on the monthlybalance.
Transaction
for
specific purposes		 It shall take the actual profits and losses as the basis to
assess performance and the financial division shall compile
the positions into a statement on a regular basis for the
management's reference.

(e). Total amount of derivatives contracts that may be traded:

Hedging
transaction		 The financial division shall control the total positions of
the Company in order to hedge transaction risks. The
amount of hedging transaction shall not exceed the
Company's total exposure, where exceeded, it shall be
reported to the managerial personnel in accordance with
the article for approval.
Transaction
for
specific purposes		 Based on the assessment on the market change, the
financial division may propose strategy when needed and
submit to the managerial personnel in accordance with the
article for approval and execution. The total amount of the
contracts of the net accumulated positions the Company
holds for transaction for specific purposes shall not exceed
US$10 million. Once the total amount exceeds US$10
million, it shall not be executed until it is approved by the
board of directors and executed in accordance with policy
instruction.

(f). Limits on aggregate losses or losses on individual contracts

Hedging
transaction		 Limits on aggregate losses or losses on individual
contracts shall not exceed 50% of the contract.
Transaction
contract for
specific purposes		 When the position is held by the Company, it is required to
set the stop loss point to avoid excess of loss.
The setting of stop loss point shall not excess of 10% of
the total transaction contract amount. If the loss amount

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exceeds 10% of the transaction amount, it shall be reported
to the managerial personnel in accordance with the article
immediately and reported to the board of directors to
discuss the necessarymeasures to deal with it.
The loss amount of individual contract shall not exceed
US$20,000 or 5% of the transaction contract amount,
whichever is lower.
The Company’s annual
maximum
loss limit
for
transactional
operation
for
specific
purposes
is
US$300,000.

  • (2). Risk management measures:

  • (a). Management of credit risk:

Counterparties The Company shall mainly deal with reputational local or
foreign financial institutions.
Transaction
products		 The Company shall only transact the products provided by
reputational local or foreign financial institutions
Transaction
amount		 Hedging shall be centralized to deal with a single
counterparty, unless such transaction is approved by the
general manager.

  • (b).Management of market risks: The Company shall mainly deal on the public foreign exchange trading market provided by banks.

  • (c). Management of liquidity risk: To ensure the market liquidity, the Company shall choose the financial products with higher liquidity (which means the position can be covered on the market at any time) and the financial institutions accept trading orders shall maintain adequate information and the ability to engage in transaction on any market at any time.

  • (d). Management of cash flow risk: To ensure the stability of the turnover of the Company's operational fund, the funding for the Company to engage in derivatives transaction shall be the Company's self-owned capital and it shall also consider the demand for fund based on the estimation of cash inflow and outflow for the next three months to decide the transaction amount.

  • (e). Management of operational risk:

Items Content
1 It is required to strictly follow the Company's authorized quota and
operationalprocedures,which shall be adopted into the internal audit to

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avoid operational risk.
2 The trading personnel for derivative products shall not concurrently act
as the operational personnel such as the persons handling confirmation
or settlement.
3 The personnel of risk assessment, supervision and control shall belong
to departments other than the department of personnel mentioned in the
preceding paragraph and shall report to the board of directors or to the
high-level managers not responsible for decision making of transactions
orpositions.

  • (f). Management of product risk: The internal trading personnel shall equip with complete and correct professional knowledge of the financial products and shall request banks to fully disclose risks to avoid the risk of misuse of financial products.

  • (g). Management of legal risk: The documents to be executed with financial institutions shall not be executed unless they have been reviewed by legal department or legal counsels to avoid legal risk.

  • (3).Internal audit system:

  • (a). The 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, the audit committee shall be notified in writing.

  • (b). The internal auditor shall file the audit report, together with the annual internal auditing condition, to the FSC by the end of February of the following year, and shall file the improvement to the irregular circumstance by the end of May of the following year at the latest.

  • (4). Regular evaluation methods and the handling of irregular circumstances ：

  • (a). The board of directors shall authorize senior management personnel to periodically monitor and evaluate whether the derivatives trades are faithfully conducted in accordance with the trading procedure stipulated by the Company and whether the risk undertaken is within the Company's permitted scope of tolerance. Where the irregular circumstance is found in the evaluation report of market price (such as the holding position has exceeded the upper limit of the loss), a report shall be immediately made to the board of directors and the corresponding measures shall be adopted.

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  - (b). The holding position of derivatives trades shall be evaluated at least once per week. If the hedging transaction was made in consideration of business necessity, the evaluation shall be made at least twice per month.

  • 5.7.2. The company engaged in derivative transactions, the following risk management should be implemented:

  • (1).The scope of risk management should include 【 5.7.1.(2).(a). 】 to 【 5.7.1.(2).(g). 】 .

  • (2). The trading personnel for derivative products shall not concurrently act as the operational personnel such as the persons handling confirmation or settlement.

  • (3). The personnel of risk assessment, supervision and control shall belong to departments other than the department of personnel mentioned in the preceding paragraph and shall report to the board of directors or to the high-level managers not responsible for decision making of transactions or positions.

  • (4). The holding position of derivatives trades shall be evaluated at least once per week. If the hedging transaction was made in consideration of business necessity, the evaluation shall be made at least twice per month.

  • (5). Other important risk management measures.

  • 5.7.3. The Company engaging in derivatives trading, its board of directors shall faithfully supervise and manage such trading in accordance with the following principles:

  • (1). Designate senior management personnel to pay continuous attention to monitoring and controlling derivatives trading risk

  • (2). Periodically evaluate whether derivatives trading performance is consistent with established operational strategy and whether the risk undertaken is within the Company's permitted scope of tolerance.

  • 5.7.4. Senior management personnel authorized by the board of directors shall manage derivatives trading in accordance with the following principles:

  • (1). Periodically evaluate whether the risk management measures currently employed is appropriate and whether the regulations and the procedures for engaging in derivatives trading stipulated by the Company are faithfully complied with.

  • (2). When irregular circumstances are found in the course of supervising trading and profit-loss circumstances, appropriate measures shall be adopted and a report shall be immediately made to the board of directors. Where the Company has independent directors, an independent director shall be present at the meeting and express an opinion.

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  • 5.7.5. The Company shall report to the latest board meeting if it authorizes the relevant personnel to handle derivatives trading in accordance with its procedures for engaging in derivatives trading.

  • 5.7.6. The Company engaging in derivatives trading shall establish a log book in which details of the types and amounts of derivatives trading engaged in, board of directors approval dates, and the matters required to be carefully evaluated under Article 【 5.7.2.(4). 】 , 【 5.7.3.(2). 】 and 【 5.7.4.(1). 】 shall be recorded in detail in the log book.

  • 5.8. Mergers and Consolidations, Demergers, Acquisitions, and Assignment of Shares ：

  • 5.8.1. The Company that conducts a merger, demerger, acquisition, or transfer of shares, prior to convening the board of directors to resolve on the matter, 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 board of directors for deliberation and passage. However, the requirement of obtaining an aforesaid opinion on reasonableness issued by an expert may be exempted in the case of a merger by The Company of a subsidiary in which it directly or indirectly holds 100 percent of the issued shares or authorized capital, and in the case of a merger between subsidiaries in which the public company directly or indirectly holds 100 percent of the respective subsidiaries' issued shares or authorized capital.

  • 5.8.2. The Company participating in a merger, demerger, acquisition, or transfer of shares shall prepare a public report to shareholders detailing important contractual content and matters relevant to the merger, demerger, or acquisition prior to the shareholders meeting and include it along with the expert opinion referred to provisions of 【 5.8.1. 】 when sending shareholders notification of the shareholders meeting for reference in deciding whether to approve the merger, demerger, or acquisition. Provided, where a provision of another act exempts a company from convening a shareholders meeting to approve the merger, demerger, or acquisition, this restriction shall not apply.

  • 5.8.3. Where the shareholders meeting of any one of the companies participating in a merger, demerger, 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, demerger or acquisition shall immediately publicly explain the reason, the follow-up measures, and the preliminary date of the next shareholders meeting.

  • 5.8.4. A company participating in a merger, demerger, 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, demerger, or acquisition, unless another act

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provides otherwise or the FSC is notified in advance of extraordinary circumstances and grants consent.

  • 5.8.5. A company participating in a transfer of shares 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.

  • 5.8.6. When participating in a merger, demerger, acquisition, or transfer of another company's shares, a company that is listed on an exchange or has its shares traded on an OTC market shall prepare a full written record of the following information and retain it for 5 years for reference:

  • (1). Basic identification data for personnel: 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, demerger, acquisition, or transfer of another company's shares prior to disclosure of the information.

  • (2). 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.

  • (3). Important documents and minutes: Including merger, demerger, acquisition, and share transfer plans, any letter of intent or memorandum of understanding, material contracts, and minutes of board of directors meetings.

  • 5.8.7. When participating in a merger, demerger, acquisition, or transfer of another company's shares that is listed on an exchange or has its shares traded on an OTC market shall, within 2 days counting inclusively from the date of passage of a resolution by the board of directors, report in the prescribed format and via the Internet-based information set out in 【 5.8.6.(1). 】 and 【 5.8.6.(2). 】 .

  • 5.8.8. Where any of the companies participating in a merger, demerger, acquisition, or transfer of another company's shares is neither listed on an exchange nor has its shares traded on an OTC market, the company(s) so listed or traded shall sign an agreement with such company whereby the latter is required to abide by the provisions of Article 【 5.8.6. 】 and 【 5.8.7. 】

  • 5.8.9. Every person participating in or privy to the plan for merger, demerger, acquisition, or transfer of shares 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, demerger, acquisition, or transfer of shares.

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  • 5.8.10. The Company participating in a merger, demerger, acquisition, or transfer of shares 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, demerger, acquisition, or transfer of shares:

  • (1). 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.

  • (2). An action, such as a disposal of major assets, that affects the company's financial operations.

  • (3). An event, such as a major disaster or major change in technology, that affects shareholder equity or share price.

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

  • (5). An increase or decrease in the number of entities or companies participating in the merger, demerger, acquisition, or transfer of shares.

  • (6). Other terms/conditions that the contract stipulates may be altered and that have been publicly disclosed.

  • 5.8.11. The contract for participation by a public company in a merger, demerger, acquisition, or of shares shall record the rights and obligations of the companies participating in the merger, demerger, acquisition, or transfer of shares, and shall also record the following:

  • (1). Handling of breach of contract.

  • (2). 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 that is demerged.

  • (3). 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.

  • (4). The manner of handling changes in the number of participating entities or companies.

  • (5). Preliminary progress schedule for plan execution, and anticipated completion date.

  • (6). Scheduled date for convening the legally mandated shareholders meeting if the plan exceeds the deadline without completion, and relevant procedures.

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  • 5.8.12. After public disclosure of the information, if any company participating in the merger, demerger, acquisition, or share transfer intends further to carry out a merger, demerger, 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, demerger, acquisition, or share transfer; except that where the number of participating companies is decreased and a participating company's shareholders meeting has adopted a 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.

  • 5.8.13. Where any of the companies participating in a merger, demerger, acquisition, or transfer of shares is not a public company, the Company shall sign an agreement with the non-public company whereby the latter is required to abide by the provisions of 【 5.8.4. 】 to 【 5.8.9. 】 and 【 5.8.12. 】 .

  • 5.9. Control procedures for the acquisition and disposal of assets by subsidiaries.

  • 5.9.1. The Company shall urge its subsidiaries to prescribe and enforce procedures for the disposal of assets in accordance with the provisions of these Regulations.

  • 5.10. Penalties for personnel violating these Regulations or the procedures for the acquisition or disposal of assets. ：

  • 5.10.1. Managers and persons-in-charge whose violate this operating procedure shall compensate the company for the damage suffered as a result.

  • 5.11. Other important matters:

  • 5.11.1. For the calculation of 10 percent of total assets under these 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 Securities Issuers shall be used.

  • 5.11.2. In the case of a company whose shares have no par value or a par value other than NT$10-for the calculation of transaction amounts of 20 percent of paid-in capital under these Regulations, 10 percent of equity attributable to owners of the parent shall be substituted; for calculations under the provisions of these Regulations regarding transaction amounts relative to paid-in capital of NT$10 billion, NT$20 billion of equity attributable to owners of the parent shall be substituted.

  • 5.11.3. The Company shall establish its procedures for the acquisition or disposal of assets in accordance with the provisions of these Regulations. After the procedures have been approved by the board of directors, it shall be submitted to audit committee, and then to a shareholders' meeting for approval; the same applies when the procedures are amended. If any director expresses dissent and it is contained in the

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minutes or a written statement, the Company shall submit the director's dissenting opinion to audit committee.

  • 5.11.4. Where an audit committee has been established in accordance with the provisions of the Securities and Exchange Act, when the Procedures are adopted or amended they shall be approved by more than half of all audit committee members and submitted to the board of directors for a resolution.

  • 5.11.5. If approval of more than half of all audit committee members as required in Article 【 5.11.4. 】 is not obtained, the procedures may be implemented if approved by more than two-thirds of all directors, and the resolution of the audit committee shall be recorded in the minutes of the board of directors meeting.

  • 5.11.6. The terms "all audit committee members" in Article 【 5.11.4. 】 and "all directors" in Article 【 5.11.5. 】 shall be counted as the actual number of persons currently holding those positions.

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Appendix 4

Procedures for Election of Directors

1. Purpose

To ensure a just, fair, and open election of directors and supervisors, these Procedures are adopted pursuant to Articles 21 of the “BM0-006 Corporate Governance Best-Practice Principles”.

  1. Applicable scope

Except as otherwise provided by law and regulation or by this Corporation's Articles of Incorporation, elections of directors and supervisors shall be conducted in accordance with these Procedures.

3. Authority:

  • 3.1. General Finance Division: The responsible department of establishment, amendment and revocation of the Regulation.

  • 3.2. Other Departments: Supporting departments of the Regulations.

  • Terms and Definitions

None.

5. Operational contents:

  • 5.1. The composition of the board:

  • 5.1.1. The overall composition of the board of directors shall be taken into consideration in the selection of this Corporation's directors. The composition of the board of directors shall be determined by taking diversity into consideration and formulating an appropriate policy on diversity based on the company's business operations, operating dynamics, and development needs. It is advisable that the policy include, without being limited to, the following two general standards:

    • (1). Basic requirements and values: Gender, age, nationality, and culture.

    • (2). Professional knowledge and skills: A professional background (e.g., law, accounting, industry, finance, marketing, technology), professional skills, and industry experience.

  • 5.1.2. Each board member shall have the necessary knowledge, skill, and experience to perform their duties; the abilities that must be present in the board as a whole are as follows ：

    • (1).The ability to make judgments about operations.

    • (2).Accounting and financial analysis ability.

    • (3).Business management ability.

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  • (4).Crisis management ability.

  • (5).Knowledge of the industry.

  • (6).An international market perspective.

  • (7).Leadership ability.

(8).Decision-making ability.

  • 5.1.3. More than half of the directors shall be persons who have neither a spousal relationship nor a relationship within the second degree of kinship with any other director.

  • 5.1.4. The board of directors of this Corporation shall consider adjusting its composition based on the results of performance evaluation.

  • 5.2. The qualifications for the independent directors:

  • 5.2.1. The qualifications for the independent directors of this Corporation shall comply with Articles 2, 3, and 4 of the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies.

  • 5.2.2. The election of independent directors of this Corporation shall comply with Articles 5, 6, 7, 8, and 9 of the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies, and shall be conducted in accordance with Article 24 of the “BM0-006 Corporate Governance Best-Practice Principles”.

  • 5.3. Candidate Nomination System:

  • 5.3.1. Elections of directors at this Corporation shall be conducted in accordance with the candidate nomination system and procedures set out in Article 192-1 of the Company Act. This Corporation shall review the qualifications, education, working experience, background, and the existence of any other matters set forth in Article 30 of the Company Act with respect to nominee directors and supervisors and may not arbitrarily add requirements for documentation of other qualifications. It shall further provide the results of the review to shareholders for their reference, so that qualified directors and supervisors will be elected.

  • 5.3.2. When the number of directors falls below five due to the dismissal of a director for any reason, this Corporation shall hold a by-election to fill the vacancy at its next shareholders meeting. When the number of directors falls short by one third of the total number prescribed in this Corporation's articles of incorporation, this Corporation shall call a special shareholders meeting within 60 days from the date of occurrence to hold a by-election to fill the vacancies.

  • 5.3.3. When the number of independent directors falls below that required under the proviso of Article 14-2, paragraph 1 of the Securities and Exchange Act, or the

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related provisions of the Taiwan Stock Exchange Corporation rules governing the review of listings, or subparagraph 8 of the Standards for Determining Unsuitability for GTSM Listing under Article 10, Paragraph 1 of the GreTai Securities Market Rules Governing the Review of Securities for Trading on the GTSM, a by-election shall be held at the next shareholders meeting to fill the vacancy. When the independent directors are dismissed en masse, a special shareholders meeting shall be called within 60 days from the date of occurrence to hold a by-election to fill the vacancies.

  • 5.4. The cumulative voting method shall be used for election of the directors and supervisors at this Corporation. Each share will have voting rights in number equal to the directors or supervisors to be elected, and may be cast for a single candidate or split among multiple candidates.

  • 5.5. The board of directors shall prepare separate ballots for directors in numbers corresponding to the directors to be elected. The number of voting rights associated with each ballot shall be specified on the ballots, which shall then be distributed to the attending shareholders at the shareholders meeting. Attendance card numbers printed on the ballots may be used instead of recording the names of voting shareholders.

  • 5.6. The number of directors will be as specified in this Corporation's articles of incorporation, with voting rights separately calculated for independent and non-independent director positions. Those receiving ballots representing the highest numbers of voting rights will be elected sequentially according to their respective numbers of votes. When two or more persons receive the same number of votes, thus exceeding the specified number of positions, they shall draw lots to determine the winner, with the chair drawing lots on behalf of any person not in attendance.

  • 5.7. Before the election begins, the chair shall appoint a number of persons with shareholder status to perform the respective duties of vote monitoring and counting personnel. The ballot boxes shall be prepared by the board of directors and publicly checked by the vote monitoring personnel before voting commences.

  • 5.8. If a candidate is a shareholder, a voter must enter the candidate's account name and shareholder account number in the "candidate" column of the ballot; for a non-shareholder, the voter shall enter the candidate's full name and identity card number. However, when the candidate is a governmental organization or juristic-person shareholder, the name of the governmental organization or juristic-person shareholder shall be entered in the column for the candidate's account name in the ballot paper, or both the name of the governmental organization or juristic-person shareholder and the name of its representative may be entered. When there are multiple representatives, the names of each respective representative shall be entered.

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  • 5.9. A ballot is invalid under any of the following circumstances:

  • 5.9.1. The ballot was not prepared by the board of directors.

  • 5.9.2. A blank ballot is placed in the ballot box.

  • 5.9.3. The writing is unclear and indecipherable or has been altered.

  • 5.9.4. The candidate whose name is entered in the ballot is a shareholder, but the candidate's account name and shareholder account number do not conform with those given in the shareholder register, or the candidate whose name is entered in the ballot is a non-shareholder, and a cross-check shows that the candidate's name and identity card number do not match.

  • 5.9.5. Other words or marks are entered in addition to the candidate's account name or shareholder account number (or identity card number) and the number of voting rights allotted.

  • 5.9.6. Other words or marks are entered in addition to the candidate's account name or shareholder account number (or identity card number) and the number of voting rights allotted.

  • 5.10. Election result

  • 5.10.1. The voting rights shall be calculated on site immediately after the end of the poll, and the results of the calculation, including the list of persons elected as directors or supervisors and the numbers of votes with which they were elected, shall be announced by the chair on the site.

  • 5.10.2. 【 5.10.1. 】 The ballots for the election referred to in the preceding paragraph shall be sealed with the signatures of the monitoring personnel and kept in proper custody for at least one year. If, however, a shareholder files a lawsuit pursuant to Article 189 of the Company Act, the ballots shall be retained until the conclusion of the litigation.

  • 5.11. The Board of Directors of this Corporation shall issue notifications to the persons elected as directors.

  • 5.12. These procedures and any amendments hereto, shall be implemented after approval by a shareholders’ meeting.

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Appendix 5

Merry Electronics Co., Ltd.

Shareholding Status of Directors

  1. The paid-in capital of the Company is NT$ 2,165,100,420 on 17 April 2022. The issued and outstanding shares are 216,510,042 shares.

  2. According to Article 26 of Securities and Exchange Act, the minimum shareholding of all of the directors is 12,000,000 shares.

  3. As of the book closure date of this annual shareholders' meeting, the shareholding of all of directors in the shareholders book, which complies with the requirement under Article 26 of Securities and Exchange Act, are as follows:

Title Name Shareholdings in the shareholders
book as of 17 April 2022(share)
Chairperson LIAO,LU-LEE 2,430,821
Director WEI,WEN-CHIEH 9,617,475
Director LIN,SHU-CHUN 212,251
Director LIN,SHIH-CHIEH 366,876
Director HUANG,CHAO-LI 79,205
Director TONG-CIAN Investment Corporation
Representative:
Liao,Keng-Pin		 5,578,061
Independent Director WU,HUEI-HUANG 0
Independent Director SHER,JIH-HSIN 0
Independent Director I, CHANG-YUN 0
Total shares of all directors 18,284,689
  1. The name, shareholding and discharged reason of the discharged director as of 17 April 2022: None 。

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Appendix 6

Dividend Policy

  1. The industrial environment of the Company is apt to change, and the enterprise life cycle stays in a stage of stable growth, and it is necessary to consider the budget for the future capital expenditure and funding requirement, and measure the necessity to cope with funding requirement by earnings, to determine the amount for retaining or distributing the earnings and the distribution amount of shareholder bonus in cash..

  2. The net profit after final accounting, except for withholding of income tax in accordance with laws, shall be utilized for make-up of the loss of previous years, and secondly setting aside 10% of the remaining earnings as a legal reserve; however, when the legal reserve has reached paid in capital of the Company, it will not be listed. After setting aside or reversing special reserve in accordance with laws when necessary, the balance after adding the undistributed earnings of the previous year will be the accumulated distributable earnings. The board of directors shall propose an earning distribution proposal for the shareholders’ meeting to resolve the distribution. For the earning distribution proposal proposed by the board of directors, in accordance with financial, business and operational factors, allocate within the limit of not less than 30% of the new distributable surplus in the current period and not more than 80% of the accumulated distributable earning, and the distribution of the shareholder bonus shall be given priority in cash dividends and shall also be distributed in the form of stock dividends, provided that the proportion of cash dividends distributed shall not be less than 30% of the total dividend. To authorize the distributable dividends and bonuses in whole or in part 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.

  3. If the Company makes profits in the said year, it shall set aside: A. 5% to 10% as employees’ profit sharing bonus; B. up to 2% as compensation of directors, provided that if the Company has accumulated losses, the amount to make up the accumulated losses shall be reserved in advance.

Decision on the ratio of employees’ profit sharing bonus and directors’ compensation and which the employees' profit sharing bonus will be distributed in the form of stocks or in cash, shall be resolved by a resolution adopted by a majority vote at a meeting of Board of Directors attended by two-thirds or more of the total number of directors; and in addition thereto a report shall be submitted to the shareholders' meeting.

Employees’ profit sharing bonus may be distributed to the employees of parents or subsidiaries of the company who meet certain specific requirements set by the Board of Directors.

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Appendix 7

The impact of the share dividend proposed in this annual shareholders' meeting on the operational performance of the Company and the earnings per share :

There is no share dividend this year and thus it is not applicable.

Appendix 8

Explanation for the proposal excluded from this annual shareholders' meeting

The explanation for handling of proposals in this annual shareholders' meeting:

Explanation:

  1. According to Article 172-1 of the Company Act, any shareholder holding one percent or more of the total number of outstanding shares may propose to the Company a written proposal for discussion at an annual shareholders' meeting, provided that only one agenda shall be allowed, and such proposal shall be elaborated by 300 words or less.

  2. The period for collecting proposals from shareholders for this annual shareholders' meeting is from April 8 to April 18 in 2022 and announcement was made at the Market Observation Post System in accordance with the relevant laws and regulations.

  3. The Company had not received any proposal from shareholders.

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