MERRY — AGM Information 2023

Aug 24, 2023

Taiwan Stock Code: 2439

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Merry Electronics Co., Ltd. Notice for Annual Shareholders’ Meeting

(Summary Translation)

Convening Means: Physical shareholders meeting

Time ： June 14, 2023 (Wednesday) at 9:00 am Venue ： Merry Electronics Co., Ltd.’s headquarters

No. 22, 23rd Road, Taichung Industrial Park, Taichung, Taiwan)

1. Meeting Agenda

• I. Matters for Report

  • (1) The Company’s 2022 Business Report

  • (2) Audit Committee’s review report on 2022 Financial Statements

  • (3) Employees’ profit sharing bonus and directors’ compensation of 2022

  • (4) To report 2022 earnings distribution

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

• II. Matters for Approval

  • (1) The Company’s 2022 Business Report and Financial Statements

  • (2) The proposal for distribution of 2022 earnings

• III. Matters for Discussion

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

  • (2) Regulations Governing the issuance of new restricted employee shares of 2023

  • (3) Exemption of restriction on competitive of activities for directors(including independent director)

Ⅳ. Extemporary Motions

1. The proposal for distribution of 2022 earnings adopted at the meeting of the Board of Directors is cash dividend to common shareholders: Each common shareholder will be entitled to receive a cash dividend of NT$4.5 per share.

2. Regulations governing the issuance of new restricted employee shares of 2023, please refer to attachment 1.

3. In accordance with Article 172 of the Company Act any matter that should explain the main content is disclosed on Market Observation Post System

   • (https://mops.twse.com.tw/mops/web/t57sb01_q5). Shareholders can insert our stock code and the year to inquire the reference materials, meeting agenda, and supplementary materials.

Taiwan Stock Code: 2439

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1. Attending notification and proxy form will be attached in the meeting notice. If the shareholder(s) is attending the Meeting in person, please sign or stamp on the attending notification and carry it to the check-in desk on the day of the Meeting (Check-in time is 08:30 am). However, in case that an agent(s) is authorized to attend the Meeting, the shareholder(s) shall sign or stamp the proxy form and personally fill out the name and address of the agent, then deliver the proxy form to the Registrar and Transfer Agency Department of KGI Securities Corporation at least 5 days prior to the day of the Meeting ; if the sign-in card is not received prior to the Meeting, please bring the identification documents and then apply for re-issuance at the venue of the Meeting .

2. Shareholders, solicitors and authorized agents, please bring the identification documents for verification when attending the Annual Shareholders’ Meeting.

3. Pursuant to Article 26-2 of Securities and Exchange Act, the notice of the shareholders meeting to be given by an issuer to shareholders who own less than 1,000 shares of nominal stocks may be given in the form of a public announcement; for a regular shareholders meeting, such public announcements shall be served with thirty days prior notice. Thus, shareholders owning less than 1,000 shares of nominal stocks may not receive this notice.

4. Shareholders may exercise their voting rights through the STOCKVOTE platform of Taiwan Depository & Clearing Corporation (http://www.stockvote.com.tw) following the online instructions during the period from May 13, 2023 to June 11, 2023.

5. The Registrar and Transfer Agency Department of KGI Securities Corporation is the proxy tallying and verification institution for the Annual Shareholders’ Meeting.

6. Principle to distribute souvenirs for the shareholders’ meeting (Earphone P101): For shareholders who hold less than 1,000 shares, the company will not issue souvenirs except those who attend the shareholders meeting in person or exercise their voting rights electronically. Terms to pick up the souvenirs:

• I. In case of open solicitation of proxies in the current shareholders’ meeting, the Company will upload through the website of the Securities & Futures Institute (https://free.sfi.org.tw) before May 12, 2023. For method to look into the details, please refer to the guidelines on the website. A shareholder may deliver his or her proxy to a solicitor as shown through the website where the Company may deliver the souvenir to the solicitor who shall convey to the shareholder.

• II. A shareholder who uses electronic voting system and successfully votes during the period from May 13, 2023 to June 11, 2023 is advised to pick up souvenir through the Company's shareholder services agent, Shareholder Services Department, KGI Securities Co. Ltd. (5F, No. 2, Sec. 1, Chongqing S. Road, Taipei City) with notice of the shareholders’ meeting, identity certificate paper or printed full page of “voting of motions of the meeting” on the webpage of “shareholders’ meeting electronic voting platform- e-voting for shareholders” during the period from July 18, 2023 to July 20, 2023.

Taiwan Stock Code: 2439

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• III.Other than the aforementioned method to pick up the souvenirs, the Company distributes souvenirs only on the date of shareholders’ meeting before closure of the meeting. The souvenirs shall not be distributed by mail or be supplemented after the meeting.

Sincerely,

Board of Directors Merry Electronics Co., Ltd.

Taiwan Stock Code: 2439

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Attachment 1:

It is proposed to issue new restricted employee shares in accordance with Article 267 of the Company Act and Article 60-2 of the "Regulations Governing the Offering and Issuance of Securities by Securities Issuers" (hereafter, the "Issuance Regulations"). The related matters of this topic are stated as follows:

• A. 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.

B. Conditions of issuance:

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

• (B) Vesting conditions:

• (C) 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 2023" without any violation of the said regulations.

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

• C. 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 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 submitted to the board of directors for approval after being confirmed by Chairman. However, when distribution is made to a director or manager, it shall also be subject to a prior consent of remuneration committee, others should consent of the Audit 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

Taiwan Stock Code: 2439

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  - 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. 

• D. The necessity of issuing the said new restricted employee shares: 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.

• E. 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 2023 NT$87.67 per share is used for the calculation, when vesting conditions are all satisfied, the sum of possible costs are estimated to be NT$175,340 (in thousands of dollars), according to the vesting conditions, five years, the cost apportioned each year will be NT$35,068 (in thousands of dollars).

  • (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 217,782,742, the dilution of the earnings per share, five years, each year will be NT$0.16. 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.

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

• G. The issuance shall be handled by submitting application(s) to the competent authority once or several times within two (2) 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 actual date of issuance shall be stipulated by the Chairman under authorization by the board of directors.

• H. If the terms and conditions set out for the said issuance of new restricted employee shares need to

Taiwan Stock Code: 2439

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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.

• I. 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 2023".