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Primax AGM Information 2022

Jun 13, 2022

52436_rns_2022-06-13_59012b84-488c-42c0-9e93-95e69be6c430.pdf

AGM Information

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PRIMAX ELECTRONICS LTD. Minutes of 2022Annual General Shareholders' Meeting (Translation)

Time: May 26, 2022 (Thursday) 9 AM

Meeting type: physical shareholders meeting

Venue: 3F., No. 8, Zhifu Road, Jhongshan District, Taipei City (Shimmer Hall, DENWELL Dazhi)

Present: A total of 261,253,302 shares (including 229,661,719 shares represented by shareholders exercising voting rights electronically) are held by shareholders attending the shareholders' meeting in person or by a proxy, who represent 57.38% of the total number of the Company's outstanding 455,235,324 shares.

Present Directors: Li-Sheng Liang, Yung-Chung Pan, Yung-Tai Pan, Ji-Ren Lee,

Chun-Pang Wu (Independent Director, Chairman of the Audit Committee), Chih-Kai Cheng (Independent Director), Jia-Bin Duh (Independent Director), Ying-Chuan Shen (Independent Director, via video conference) , attended by a majority of the directors

Chairman: Li-Sheng Liang, the chairman of the Board of Directors

Recorder: Ting-Chuan Chang

A. Meeting called to order

The total numbers of shares represented by the shareholders present constitute the quorum prescribed by law, hence the Chairman called this meeting to order.

B. Chairperson Remark: (omitted)

C. Report:

Report No. 1: The Company's 2021 Business Report for review, please refer to Schedule 1.

  • Report No. 2: Audit Committee's Review Report on the 2021 Financial Statements for review, please refer to Schedule 2.

Report No. 3: Distribution of employees' and directors' compensation in 2021. Description:

  • (1) The Board of Directors resolved to distribute NT$ 85,798,000 for employees' compensation and NT$ 42,899,000 for directors' compensation for year 2021.

  • (2) According to Article 25 of the Company's "Articles of Incorporation", 2% to 10% of the profit before tax (PBT) (i.e. before deducting the sums of employee's compensation and directors' compensation) shall be distributed as compensation for employees and not more than 2% of the PBT shall be distributed as compensation for directors. The Company's PBT for year 2021 was NT$ 2,677,531,510, the amount before deducting the sums of compensation of directors and employees was NT$ 2,806,228,510. Hence, the aforementioned compensation of employees and directors are respectively3.06% and 1.53% of the said NT$ 2,806,228,510.

  • (3) In the internal financial statements, the employees' compensation was recorded as NT$ 85,798,970 and NT$ 42,899,485 as directors' compensation for year 2021. The discrepancy amount was NT$-970 and NT$-485 respectively. The discrepancies were the difference between the outcomes of an accounting estimate, which will be handled by principles of accounting change.

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D. Adoption

1. (Proposed by the Board)

Proposal: Adoption of the Company's 2021 Business Report and Financial Statements. Description:

The Company has completed the internal preparation of the 2021 Annual Parent Company Only and Consolidated Financial Statements and has provided the reports to MEI-PIN WU CPA and CHI -LUNG YU CPA of KPMG Taiwan for review and audit. The CPAs have completed the audit. Please refer to Schedule 1 and Schedule 3 for the above Financial Statements as well as the Business Report. Resolved: the proposal was approved after voting.

Voting Results: Shares represented at the time of voting: 259,380,825 (Including votes casted electronically: 229,661,719 votes)

Voting Results* % of the total represented
share present
Votes in favor 241,677,762 votes (211,958,656 votes) 93.17%
Votes against 853,331votes (853,331votes) 0.32%
Votes invalid 0 votes 0.00%
Votes abstained 16,849,732votes (16,849,732votes) 6.49%

*Including votes casted electronically (number in brackets)

2.

(Proposed by the Board)

Proposal : Adoption of the Company's 2021 distribution of earnings.

Description:

(1) The Company's net profit of 2021 is NT$ 2,298,282,052, minus this year's remeasurement of defined benefit obligation NT$ 5,573,654, minus legal reserve appropriated NT$ 229,270,840, minus special reserve appropriated NT$ 170,770,082, plus unappropriated retained earnings, beginning of year NT$ 4,199,693,024. The retained earnings available for distribution as of December 31, 2021, are NT$ 6,092,360,500. The 2021 distribution of earnings prepared according to the Articles of Incorporation is as follows:

PRIMAX ELECTRONICS LTD. Earnings Distribution Proposal

Year 2021 Unit: NT$

Earnings Distribution Proposal
Year 2021
Unit: NT$ Unit: NT$
Item Amount
Unappropriated Retained Earnings, beginning ofyear 4,199,693,024
Add : Netprofit of 2021 2,298,282,052
Less:Remeasurement of Defined Benefit Obligation 5,573,654
Less:10% Legal Reserve 229,270,840
Less:Special reserve appropriated 170,770,082
Retained Earnings Available for Distribution as of December 31, 2021 6,092,360,500
Distribution Item:
Cash Dividends(NT$3.1per share) 1,411,229,505
**Unappropriated Retained Earnings ** 4,681,130,995
Chairman:
Li-Sheng Liang
General Manager:
Li-Sheng Liang
Accounting Manager:
Shu-chuan Chang

Note: 1.The per share dividends above are based on the 455,235,324 outstanding shares as of Feb.17, 2022 .

  1. For the distribution of cash dividends, all dollar amounts less than NT$ 1 for fractional shares shall be listed as the Company's other income.

  2. The excepted dividend payout ratio for this distribution of profits is 60.43%

(2) For this distribution of profits, the 2021 earnings will be subject to distribution on a priority basis.

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  • (3) The cash dividends total NT$ 1,411,229,505 and the per share dividends to be distributed are NT$3.1. The dividends will be distributed to the shareholders listed in the shareholders' roster on the ex-dividend date according to their respective shareholding. The above distribution ratio is calculated based on the total 455,235,324 outstanding shares as of Feb. 17, 2022. After the proposal is approved at the regular shareholders' meeting, it is proposed the board of directors shall be authorized to determine the ex-dividend date and relevant matters.

  • (4) For the distribution of earnings, in the event of satisfaction of the vesting conditions on restrictive stock awards, buyback of the Company's shares, assignment or cancellation of treasury stock which influences the ratio of distributable dividends, it is proposed the shareholders' meeting shall authorize the Board of Directors to make proportionate adjustments to the ratio of distributable dividends based on the number of outstanding shares on the ex-dividend date.

  • Resolved: the proposal was approved after voting.

Voting Results: Shares represented at the time of voting: 259,380,825 (Including votes casted electronically: 229,661,719 votes)

Voting Results* % of the total represented
share present
Votes in favor 242,524,762 votes (212,805,656 votes) 93.50%
Votes against 297,331votes (297,331 votes) 0.11%
Votes invalid 0 votes 0.00%
Votes abstained 16,558,732votes (16,558,732 votes) 6.38%

*Including votes casted electronically (number in brackets)

E. Discussion

1. (Proposed by the Board)

Proposal: Resolution of amendments to the Company's " Procedures for Acquisition or Disposal of Assets ".

Description:

  • (1) It is proposed certain provisions of the Company's " Procedures for Acquisition or Disposal of Assets " shall be amended to comply with the amendment to the Regulations Governing the Acquisition and Disposal of Assets by Public Companies.

  • (2) Please refer to Schedule 4 for a comparison of the amendments to the " Procedures for Acquisition or Disposal of Assets ".

  • Resolved: The proposal was approved after voting.

Voting Results: Shares represented at the time of voting: 259,380,825 (Including votes casted electronically: 229,661,719 votes)

Voting Results* % of the total represented
share present
Votes in favor 226,474,475 votes (196,755,369 votes) 87.31%
Votes against 11,831,901votes (11,831,901 votes) 4.56%
Votes invalid 0 votes 0.00%
Votes abstained 21,074,449votes (21,074,449votes) 8.12%

*Including votes casted electronically (number in brackets)

2.

(Proposed by the Board)

Proposal: Resolution of issue of Restricted Employee Stock Award.

Description:

  • (1) In accordance with Article 267 of the Company Act and Regulations Governing the Offering and Issurance of Sercurities by Securities Issuers published by the Financial Supervisory Commission.

  • (2) Expected total amounts(shares) of issuance: 4,500,000 shares.

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  • (3) Expected issue price: NT$0 per share

  • (4) Vesting conditions:

  • I. Vesting conditions:

Divided into four categories: A, B, C and D and the vesting of each is based on achieving performance goals.

  • (I) Vesting for Category A:

  • i. Each award of Restricted Stock shall vest at a rate of 30% at the end of the first twelve months of continuous employment in Compamy or any companies which have a controlling or subordinate relation with the Company after granting the award and achievement of personal performance goals and business performance goals in the previous year.

  • ii. Each award of Restricted Stock shall vest at a rate of 30% at the end of two years of continuous employment in Compamy or any companies which have a controlling or subordinate relation with the Company after granting the award and achievement of personal performance goals and business performance goals in the previous year.

  • iii. Each award of Restricted Stock shall vest at a rate of 40% at the end of three years of continuous employment in Compamy or any companies which have a controlling or subordinate relation with the Company after granting the award and achievement of personal performance goals and business performance goals in the previous year.

  • (II) Vesting for Category B:

  • i. Each award of Restricted Stock shall vest at a rate of 50% at the end of the first twelve months of continuous employment in Compamy or any companies which have a controlling or subordinate relation with the Company after granting the award and achievement of personal performance goals and business performance goals in the previous year.

  • ii. Each award of Restricted Stock shall vest at a rate of 50% at the end of two years of continuous employment in Compamy or any companies which have a controlling or subordinate relation with the Company after granting the award and achievement of personal performance goals and business performance goals in the previous year.

  • (III) Vesting for Category C:

Each award of Restricted Stock shall vest at a rate of 100% at the end of the first twelve months of continuous employment in Compamy or any companies which have a controlling or subordinate relation with the Company after granting the award and achievement of personal performance goals and business performance goals in the previous year.

  • (IV) Vesting for Category D:

  • i. Each award of Restricted Stock shall vest at a rate of 15% at the end of the first twelve months of continuous employment in Compamy or any companies which have a controlling or subordinate relation with the Company after granting the award and achievement of personal performance goals and business performance goals in the previous year.

  • ii. Each award of Restricted Stock shall vest at a rate of 15% at the end of two years of continuous employment in Compamy or any companies which have a controlling or subordinate relation with the Company after granting the award and achievement of personal performance goals and business performance goals in the previous year.

  • iii. Each award of Restricted Stock shall vest at a rate of 20% at the end of three years of continuous employment in Compamy or any companies which have a controlling or subordinate relation with the Company after granting the award and achievement of personal performance goals and business performance goals in the previous year.

  • iv. Each award of Restricted Stock shall vest at a rate of 20% at the end of four years of continuous employment in Company or any companies which have a controlling or

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subordinate relation with the Company after granting the award and achievement of personal performance goals and business performance goals in the previous year.

  • v. Each award of Restricted Stock shall vest at a rate of 30% at the end of five years of continuous employment in Compamy or any companies which have a controlling or subordinate relation with the Company after granting the award and achievement of personal performance goals and business performance goals in the previous year.

  • (V) The aforementioned personal performance goals shall mean the accomplishment of individual performance goals in accordance with the Company's "Performance Review and Development Measures" of the company which the employees work for, including pre-set goals and special contributions. The rating of Year-end performance review should be 3 and above.

  • (VI) The aforementioned business performance goals shall mean the Earnings Per Share (EPS) of the Company for the previous year prior to the scheduled date to vest is not less than NT$4, and the Return On Equity (ROE) and of the Company for the previous year prior to the scheduled date to vest is not less than 13%.

II. The type of shares: new common shares of the Company.

  • III. Measures to be taken when employees fail to meet the vesting conditions or in the event of inheritance: In circumstance where the Restricted Stock was not vested due to failure to meet vesting conditions, such shares will be bought back by the Company without charge and will be written off.

  • (5) Qualification criteria for employees:

  • I. Employees who will be eligible to receive RSA are limited to full-time employees who have registered with the Company or any companies which have a controlling or subordinate relation with the Company and will be limited to the ones who are important to the Company's future success and development; whose individual performance are valuable to the Company; or those who are considered as the valuable new-hires. Employee who has hold over 10% shares of the company should be excluded.

  • II. The actual number of shares to be granted will take into account the rank of the employee, performance, overall contribution and other factors, as well as the Company's operational requirements and business development strategy. Prior approval of the Remuneration Committee shall be obtained for those who are employed as managers.

  • III. The total number of shares each individual employee may acquire by exercising the RSAs, plus the total number of employee stock warrants issued by the Company in accordance with Article 56-1 (1) of Regulations Governing the Offering and Issuance of Securities by Securities Issuers, shall not exceed 0.3% of the total number of issued shares. In addition, the number of shares each individual employee may acquire through the exercise of employee stock warrants issued by the Company in accordance with Article 56-1 (1) of the said Regulations shall not exceed 1% of the total number of issued shares.

  • (6) The necessary reason of the current issuance of RSA:

  • For attracting and retaining outstanding professionals, in order to create long-term Company growth and benefits for employees and shareholders.

  • (7) Calculated expense amount:

  • Estimations are made based on NT$54.62, the average share price during the period of 60 trading days before Feb. 15, 2022, the amount of annual cost sharing for year 2022, 2023, 2024 and 2025 shall be NT$ 50,447,639, NT$117,433,000, NT$56,668,250, and NT$ 21,241,111 respectively, with a total amount of NT$245,790,000.

  • (8) Dilution of the Company's earnings per share (EPS) and other matters affecting shareholder’s equity:

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Estimations are made based on NT$54.62, the average share price during the period of 60 trading days before Feb. 15, 2022, the diluted EPS for year 2022, 2023, 2024, and 2025 shall be NT$0.11, NT$0.26, NT$0.12, and NT$0.05 respectively. No significant impact on shareholder’s equity.

  • (9) Restrictions before employees meet the vesting conditions once the RSA are vested :

  • Restrictions, covenants, or outstanding issues in relation to the establishment of this Plan shall be dealt in accordance with the relevant laws and the Company's Procedures.

  • (10)Other important terms and conditions (including stock trust, etc.):

The new shares issued by the Company through the exercise of Restricted Stock shall be dealt in accordance with measures for stock trust.

(11)Any other matters that need to be specified:

  • I. For the long term retention purpose, the Award shall be issued mainly for Category A and D, Award for Category B and C will be issued subject to the commitment of Remuneration Committee, and for the below purpose:

  • (I) For employment of major talents.

  • (II) For the urgent cases (Retain for main technical talents, main manufacturing process talents and high operational impact managers).

The average number of Restricted Employee Stock Award issued for Category A and Category D in recent years (Y2019 to Y2021) is 88% of the total number of Restricted Employee Stock Award; Category B is 6%; Category C is 6%.

  • II. In circumstance where amendments to the conditions for issuance of Restricted Stock are required by instructions from the competent authorities, the amended of relevant laws and rules, or in response to financial market conditions, the Chairman of the Company is authorized to amend these provisions, which shall become effective upon approval by the Board of Directors.

  • III. Based on t the total number of issued shares (455,263,324 shares) as of Feb. 15, 2022, the 4,500,000 new shares to be issued will account for 0.99% of the total number of issued shares.

Resolved: the proposal was approved after voting.

Voting Results:Shares represented at the time of voting: 259,380,825

(Including votes casted electronically: 229,661,719 votes)

Voting Results* % of the total represented
share present
Votes in favor 235,469,681 votes (205,750,575 votes) 90.78%
Votes against 2,735,322 votes (2,735,322 votes) 1.05%
Votes invalid 0 votes 0.00%
Votes abstained 21,175,822 votes (21,175,822 votes) 8.16%

*Including votes casted electronically (number in brackets)

3. (Proposed by the Board) Proposal: Resolution of removal of the non-compete restrictions on the director Description:

  • (1) According to Article 209 of the Company Act, 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 secure its approval.

  • (2) To draw on the expertise and relevant experience of the Company's directors to the benefit of the Company, as certain director concurrently work for other companies, which may constitute the act restricted under Article 209 of the Company Act, it is proposed for resolution to remove the non-compete restrictions on Director Ji-Ren Lee. Please refer to Schedule 5 for the details.

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Resolved: the proposal was approved after voting.

Voting Results:Shares represented at the time of voting:259,380,825 (Including votes casted electronically: 229,661,719 votes)

Voting Results* % of the total represented
share present
Votes in favor 225,287,169 votes (196,568,063 votes) 86.85%
Votes against 11,989,564 votes (11,989,564 votes) 4.62%
Votes invalid 0 votes 0.00%
Votes abstained 22,104,092 votes (22,104,092 votes) 8.52%

*Including votes casted electronically (number in brackets)

F. Extempore Motion: None.

G. The meeting was adjourned at 9:46 a.m.

(The Minutes record the summary of the essential points of the proceedings and the results of the meeting in accordance with Paragraph 4 of Article 183 of the Company Act. For more details please refer to the audio and video recording of the meeting.)

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【 Schedule 1 】

Business Report

Two years since the onset of the COVID-19 pandemic, the global economy in 2021 is marred with uncertainties, leading to uneven economic growth across countries. However, with COVID-19 gradually coming to an end, post-pandemic consumption has been characterized by a desire to splurge and indulge, fueling a strong increase in demand that eventually led to prolonged component shortages worldwide. The unprecedented disruption of global supply chain combined with excess liquidity from central banks around the world resulted in rising prices and costs. Today, inflation has emerged to become a critical challenge that affects all businesses in the world.

Thanks to operational resilience and a visionary approach of constantly investing in new technologies and products, Primax Electronics (“PRIMAX” or “the Company”) quickly recovered from the pandemic. Precautionary measures were also taken to diversify and secure key component supplies. To further mitigate risks, efforts were made to diversify production sites and supply chain, so that the organization may better adapt to a growing trend of spread out global production in the post-pandemic era.

With regards to business operations and financial performance, PRIMAX once again achieved revenue growth in 2021 and delivered record-high earnings. For its visual technology, PRIMAX has successfully grown the business through sequential revenue growth from automotive electronics, especially from increased shipment of camera modules to leading electric vehicle manufacturers while deepening cooperation with customers on product development. Revenue and profit contributions from police cameras rebounded thanks to a gradual ease of component shortages in 2021, while progress has also been made in expanding into new businesses such as fitness equipment and smart door lock. Over the past year, PRIMAX’s subsidiary TYMPHANY, has been focusing on professional audio and high-end consumer products, as well as video and conferencing solutions. TYMPHANY’s focus on new businesses will pave way for growth in the upcoming years, as mass production of these new products will translate to future revenue and profit growth for the Group. In addition, benefiting from a growing trend of hybrid work, demand for PC and NB peripherals, optoelectronics, and multi-function printers remained strong throughout 2021.

With respect to production, PRIMAX’s Thailand plant achieved higher production and shipment capacity in 2021. The construction of PRIMAX’s Thailand plant has been completed by 2021 year-end, and the new plant will be an integral part of the Company’s future success as it increases production capacity.

The following is an overview of the Company's 2021 performance.

I. 2021 business operation performance

(I) Overview of financial results in 2021

The Company generated worldwide consolidated net revenues of NT$71,649,849 thousand in 2021, representing a 5.0% growth over the NT$68,240,939 thousand in 2020. Consolidated net income totaled NT$2,393,221 thousand in 2021, representing a 23.1% increase compared to the NT$1,944,267 thousand in 2020.

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(II) Cash flow analysis

Unit : NT$ thousand

Unit:NT$ thousand
Item 2021 2020 Net Change
Net cash inflow (outflow) from
operating activities
1,673,476 4,816,243 (3,142,767)
Net cash inflow (outflow) from
investing activities
(3,873,658) (3,651,154) (222,504)
Net cash inflow (outflow) from
financing activities
227,249 (974,633) 1,201,882
  • (III) Profitability analysis
Profitability analysis
Item 2021 2020
Return on shareholders’ equity (%)
14.98 12.96
Ratio of operating profit to paid-in capital (%)
61.78 51.00
Ratio of income before tax to paid-in capital (%)
66.55 54.97
Net profit margin (%)
3.34 2.85
Earnings per share (NT$)
5.13 4.30
  • (IV) Research and development

To further maintain its technological lead and enhance competitiveness, the Company invested NT$2,907,911 thousand in R&D in 2021 for the development of new technologies and products, while resources were also allocated for automation to upgrade and improve the production process.

II. 2022 business plans and business development strategies

PRIMAX will continue to enhance its technology by continuous investments into new technologies and by vertically integrating its global R&D resources. The technology enhancement projects will ensure PRIMAX maintains its leadership for core technology products, while at the same time strengthen the Company’s system integration capabilities and ability to develop higher value-add products for its customers.

Through its unique and visionary Three-Senses-In-One (vision, audio and interface) strategy, PRIMAX will continue to provide high quality and value-add products to its customers. Looking forward, PRIMAX expects automotive electronics, Internet of Things, and smart home solutions to be the key post-pandemic technology trends and the next leg of revenue and profit growth for the Company. For visual technology, PRIMAX is actively exploring new applications for its camera module with emphasis on car ADAS, biometrics, fitness equipment, content creation, and augmented and virtual reality. For audio, TYMPHANY will continue its focus on professional audio and high-end consumer solutions, while new products such as video conferencing and car audio will further boost revenue and profit growth. TYMPHANY’s investments into next generation technologies would enhance its product development and integrated solutions ability, and expand its lead over competitors. As for its interface business, PRIMAX’s focus will be smart home related products such as door lock and surveillance and security related products.

For its production strategy, PRIMAX will continue to upgrade its manufacturing capabilities in line with the concepts of smart manufacturing and Industry 4.0. With an increased adoption of

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artificial intelligence, the Company expects continuous improvement in employee productivity. Meanwhile, with aims of expanding its global footprint, the Company will be continue to ramp up production in Thailand, and expand and solidify its supply chain. The Group will diversify its supply chain to lower costs while at the same time, ensure products are manufactured with high quality and yield.

Lastly, the Company is placing strong emphasis on ESG by aligning its strategies with United Nations’ Sustainable Development Goals (SDGs). Definitive goals will be set at the Group level to enforce carbon reduction and energy conservation, while also actively participate in charities and support for underprivileged in remote areas. Moreover, attention will be directed to employee welfare and corporate governance in support of PRIMAX's goal as a best employer and to achieve a sustainable business development.

Chairman and President Li-Sheng Liang

Head of Accounting Shu-chuan Chang

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【 Schedule 2 】

Audit Committee’s Review Report

  • To: Shareholders' Meeting of Primax Electronics Ltd.

Among the Company's 2021 Business Report, Financial Statements and Proposal for Distribution of Earnings prepared and submitted by the Board of Directors, the Financial Statements have been fully audited by KPMG Taiwan which has issued the audit report.

The Audit committee members have audited the above Business Report, Financial Statements and Proposal for Distribution of Earnings and determined they are in compliance with the Company Act and other applicable laws and regulations and therefore issue this report pursuant to the provisions of Article 219 of the Company Act. I hereby submit this report.

Chairman of the Audit Committee: Chun-Pang Wu

Date: February 25, 2022

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Schedule 3 【 】

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28

【 Schedule 4 】

PRIMAX ELECTRONICS LTD.

Comparison of Amendments to the Procedures for Acquisition or Disposal of Assets

Amended Content Current Content Reason for Amendment
and Explanation
VI. Evaluation Procedures on Acquisition
or Disposal of Assets, Equipment or
Right-of-Use Assets
In acquiring or disposing of real
property, equipment or right-of-use
assets where the transaction amount
reaches 20 percent of the company's
paid-in capital or NT$300 million or
more, the company, unless
transacting with a domestic
government agency, engaging others
to build on its own land, engaging
others to build on rented land, or
acquiring or disposing of equipment
for business use or its right-of-use
assets, 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:
i. 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, and the same
procedure shall be followed for any
future changes to the terms and
conditions of the transaction.
ii. Where the transaction amount is
NT$1 billion or more, appraisals
from two or more professional
appraisers shall be obtained.
iii. 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
VI. Evaluation Procedures on Acquisition
or Disposal of Assets, Equipment or
Right-of-Use Assets
In acquiring or disposing of real
property, equipment or right-of-use
assets where the transaction amount
reaches 20 percent of the company's
paid-in capital or NT$300 million or
more, the company, unless
transacting with a domestic
government agency, engaging others
to build on its own land, engaging
others to build on rented land, or
acquiring or disposing of equipment
for business use or its right-of-use
assets, 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:
i. 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, and the same
procedure shall be followed for
any future changes to the terms
and conditions of the transaction.
ii. Where the transaction amount is
NT$1 billion or more, appraisals
from two or more professional
appraisers shall be obtained.
iii. 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
Article 5 of the parent law
has been amended to
require that an external
auditor shall exercise the
self-discipline practices
applicable to his/her trade
association, which cover
the procedures to be
executed by the external
auditor when he/she is
issuing the written opinion.
Article 33 of the Act also
follows the parent law.
Therefore, the wording
included in sub-paragraph
3 of Paragraph 1 herein
regarding the provisions of
the Statement of Auditing
Standards No. 20
published by the ROC
Accounting Research and
Development Foundation,
is deleted, in accordance
with the parent law.

29

Amended Content

to perform the appraisal and render a specific opinion regarding the reason for the discrepancy and the appropriateness of the transaction price:

  1. The discrepancy between the appraisal result and the transaction amount is 20 percent or more of the transaction amount.

  2. The discrepancy between the appraisal results of two or more professional appraisers is 10 percent or more of the transaction amount.

  3. iv. 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.

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.

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.

Current Content

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 (hereafter referred to as ARDF) and render a specific opinion regarding the reason for the discrepancy and the appropriateness of the transaction price:

  1. The discrepancy between the appraisal result and the transaction amount is 20 percent or more of the transaction amount.

  2. The discrepancy between the appraisal results of two or more professional appraisers is 10 percent or more of the transaction amount.

  3. iv. 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. 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. 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.

Reason for Amendment and Explanation

30

Reason for Amendment and Explanation The cause is the same as that of the amendments to Article 6 hereof.

Amended Content

Current Content

Amended Content Current Content Current Content Current Content Reason for Amendment
and Explanation
VII. When acquiring or disposing
securities the company 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. 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
(hereinafter referred to as “FSC”).
VII. When acquiring or disposing
securities the company 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 certified
public accountant needs to use the
report of an expert as evidence, said
accountant 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
(hereinafter referred to as“FSC”).
The cause is the same as
that of the amendments to
Article 6 hereof.
IIX. Where the company acquires or
disposes of intangible assets or its
right-of-use assets, 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 calculation of the transaction
amounts referred to in the preceding
three paragraphs shall be done in
accordance with (ii) of article XXIX
herein, 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
IIX. Where the company acquires or
disposes of intangible assets or its
right-of-use assets, 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 certified public
accountant shall comply with the
provisions of Statement of Auditing
Standards No. 20 published by the
ARDF.
The calculation of the transaction
amounts referred to in the preceding
three paragraphs shall be done in
accordance with (ii) of article XXIX
The cause is the same as
that of the amendments to
Article 6 hereof.

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Amended Content

appraisal report from a professional appraiser or a certified public accountant's opinion has been obtained need not be counted toward the transaction amount.

XIV. Appraisal Procedures

When the company intends to acquire or dispose of real property or its right-of-use assets from or to a related party, or when it intends to acquire or dispose of assets other than real property or its right-of-use assets 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 repurchase 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 submitted to the Audit Committee with approval from over half of all committee members, followed by approval from the board of directors:

  • i. The purpose, necessity and anticipated benefit of the acquisition or disposal of assets.

  • ii. The reason for choosing the related party as a trading counterparty.

  • iii. With respect to the acquisition of real property or right-of-use assets from a related party, information regarding appraisal of the reasonableness of the preliminary transaction terms in accordance with articles XV and XVI.

  • iv. The date and price at which the related party originally acquired the real property, the original

Reason for Amendment and Explanation

Current Content

herein, 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 certified public accountant's opinion has been obtained need not be counted toward the transaction amount.

I. Subject to the amendments to the parent law, Paragraphs 3~5 of the existing provisions are changed to Paragraphs 2~4 of the amended provisions.

XIV. Appraisal Procedures

  • When the company intends to parent law, Paragraphs acquire or dispose of real property or 3~5 of the existing its right-of-use assets from or to a provisions are changed related party, or when it intends to to Paragraphs 2~4 of acquire or dispose of assets other the amended than real property or its right-of-use provisions. assets from or to a related party and II. Addition of Paragraph the transaction amount reaches 20 5: percent or more of paid-in capital, 10 (1) Per the requirements percent or more of the company's under the parent law, total assets, or NT$300 million or this Paragraph is more, except in trading of domestic added in order to government bonds or bonds under improve the repurchase and resale agreements, or management of subscription or repurchase of money transactions with market funds issued by domestic related parties, protect securities investment trust the minority enterprises, the company may not shareholders’ rights to proceed to enter into a transaction state their opinion contract or make a payment until the toward the following matters have been transactions with submitted to the Audit Committee related parties and with approval from over half of all prevent any material committee members, followed by transactions with approval from the board of directors: related parties i. The purpose, necessity and conducted via any anticipated benefit of the subsidiary that is not acquisition or disposal of assets. itself a public

  • ii. The reason for choosing the company in Taiwan. related party as a trading Any matters that shall counterparty. be submitted to a

  • iii. With respect to the acquisition of shareholders’ meeting real property or right-of-use for approval by a assets from a related party, subsidiary that is not information regarding appraisal itself a public of the reasonableness of the company in Taiwan preliminary transaction terms in shall be done by the accordance with articles XV and parent company that is XVI. a public company.

  • iv. The date and price at which the (2) In consideration of the related party originally acquired overall business

  • iii. With respect to the acquisition of real property or right-of-use assets from a related party, information regarding appraisal of the reasonableness of the preliminary transaction terms in accordance with articles XV and XVI.

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Amended Content

trading counterparty, and the trading counterparty's relationship to the company and the related party.

  • v. 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.

  • vi. An appraisal report from a professional appraiser or a certified public accountant's opinion obtained in compliance with the preceding article.

  • vii. Restrictive covenants and other important stipulations associated with the transaction.

With respect to the types of transactions listed below, when to be conducted between a the company and its parent or subsidiaries, or between its subsidiaries in which it directly or indirectly holds 100 percent of the issued shares or authorized capital, the company's board of directors may delegate the chairman to decide such matters when the transaction is within a certain amount and have the decisions subsequently submitted to and ratified by the next board of directors meeting:

  1. Acquisition or disposal of 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.

When a matter is submitted for discussion by the board of directors pursuant to the preceding paragraph, the board of directors shall take into full consideration each independent director's opinions. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors meeting. Article I of this procedure shall be recognized by the Audit Committee,

Current Content

the real property, the original trading counterparty, and the trading counterparty's relationship to the company and the related party.

  • v. 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.

  • vi. An appraisal report from a professional appraiser or a certified public accountant's opinion obtained in compliance with the preceding article.

  • vii. Restrictive covenants and other important stipulations associated with the transaction.

The calculation of the transaction amounts referred to in the preceding paragraph shall be made in accordance with (ii) of article IXXX 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 submitted to the Audit Committee with approval from the board of directors need not be counted toward the transaction amount.

With respect to the types of transactions listed below, when to be conducted between a the company and its parent or subsidiaries, or between its subsidiaries in which it directly or indirectly holds 100 percent of the issued shares or authorized capital, the company's board of directors may delegate the chairman to decide such matters when the transaction is within a certain amount and have the decisions subsequently submitted to and ratified by the next board of directors meeting:

  1. Acquisition or disposal of equipment or right-of-use assets thereof held for business use.

  2. Acquisition or disposal of real

Reason for Amendment and Explanation planning needs between the public company and its parent company/ subsidiary or its subsidiaries, the proviso is set forth to provide that the transactions between the public company and its parent company/ subsidiary or its subsidiaries, may be exempted from being submitted to a shareholders’ meeting for resolution.

(3) Further, where said material transaction with a related party satisfies the circumstances referred to in sub-paragraphs 1~3, Paragraph 1 of Article 185 of the Company Act, it shall be subject to a special resolution rendered by a shareholders’ meeting under Article 185 of the Company Act, as well as said requirements and related provisions under the Company Act.

  • III. The existing paragraph is changed to Paragraph 6 of the amended provision. Meanwhile, in response to the addition of Paragraph 5, it is amended to provide that the calculation of transaction amount should be incorporated into the transaction information to be submitted to a shareholders’ meeting

33

Amended Content

and it shall first be approved by more than half of all Audit Committee members and then submitted to the board of directors for a resolution. If approval by more than half of all Audit Committee members is not acquired, it shall be approved of by more than two-thirds of the board of directors, and the resolution of the Audit Committee shall be recorded in the board of directors meeting minutes.

Where the Company or any subsidiary of the Company that is not itself a public company in Taiwan is engaged in any transactions referred to in Paragraph 1 and the transaction amount is equivalent to 10% or more of the Company’s total assets, the Company shall submit the information referred to in Paragraph 1 to a shareholders’ meeting for approval and then may be allowed to execute the contract and make the payment, unless the transaction refers to that between the Company and its parent company/subsidiary or between its subsidiaries. The calculation of the transaction amounts referred to in Paragraph 1 and the preceding paragraph shall be done in accordance with Paragraph 2 of Article 29 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 submitted to the shareholders’ meeting, Audit Committee and Board of Directors for approval need not be counted toward the transaction amount.

XXIX. Announce and Report Procedures:

  • i. Under any of the following circumstances, upon acquiring or disposing of assets the company shall publicly announce and report the relevant information on the governing body's designated website in the appropriate format

Reason for Amendment and Explanation for approval.

Current Content

property right-of-use assets held for business use.

When a matter is submitted for discussion by the board of directors pursuant to the preceding paragraph, the board of directors shall take into full consideration each independent director's opinions. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors meeting. Article I of this procedure shall be recognized by the Audit Committee, and it shall first be approved by more than half of all Audit Committee members and then submitted to the board of directors for a resolution. If approval by more than half of all Audit Committee members is not acquired, it shall be approved of by more than two-thirds of the board of directors, and the resolution of the Audit Committee shall be recorded in the board of directors meeting minutes.

XXIX. Announce and Report Procedures:

  • XXIX. Announce and Report Procedures: Considering that currently a public company may be

  • i. Under any of the following exempted from the circumstances, upon acquiring or announcement and report disposing of assets the company procedure when trading shall publicly announce and domestic government report the relevant information on bonds, the sub-paragraph the governing body's designated 6-1, Paragraph 1 of the website in the appropriate format parent law is amended to

34

Amended Content Current Content Reason for Amendment
and Explanation
as prescribed by regulations
within 2 days commencing
immediately from the date of
occurrence of the event:

6. Where an asset transaction
other than any of those referred
to in the preceding 5
subparagraphs, a disposal of
receivables by a financial
institution, or an investment in
the mainland China region
reaches 20 percent or more of
paid-in capital or NT$300
million; provided, this shall not
apply to the following
circumstances:
(1) Trading of domestic
government bonds or
foreign government bonds
with the credit rating no
lower than Taiwan’s
sovereign rating.
(2) Trading of bonds under
repurchase/resale
agreements, or
subscription or redemption
of domestic money market
funds.
as prescribed by regulations
within 2 days commencing
immediately from the date of
occurrence of the event:

6. Where an asset transaction
other than any of those referred
to in the preceding 5
subparagraphs, a disposal of
receivables by a financial
institution, or an investment in
the mainland China region
reaches 20 percent or more of
paid-in capital or NT$300
million; provided, this shall not
apply to the following
circumstances:
(1) Trading of domestic
government bonds.
(2) Trading of bonds under
repurchase/resale
agreements, or
subscription or redemption
of domestic money market
funds.
allow the trading of
foreign government
bonds with the credit
rating no lower than
Taiwan’s sovereign rating
which may also be
exempted from the
announcement and report
procedure.
XXXIV. This corporate document was
created on 2008/11/7.
First-time amendments were made on
2009/6/4.
Second-time amendments were made on
2012/6/19.
Third-time amendments were made on
2013/6/25.
Fourth-time amendments were made on
2014/6/24.
Fifth-time amendments were made on
2015/6/29.
Sixth-time amendments were made on
2018/10/25.
Seventh-time amendments were made on
2019/06/18.
Eighth-time amendments were made on
2022/05/26.
XXXIV. This corporate document was
created on 2008/11/7.
First-time amendments were made on
2009/6/4.
Second-time amendments were made on
2012/6/19.
Third-time amendments were made on
2013/6/25.
Fourth-time amendments were made on
2014/6/24.
Fifth-time amendments were made on
2015/6/29.
Sixth-time amendments were made on
2018/10/25.
Seventh-time amendments were made on
2019/06/18.
The addition of the date of
the most recent
amendments.

35

【 Schedule 5 】

Proposal of removal of the non-competition restrictions on the Director

Title Name Current Position in the other companies
Director Green Land
Investment Limited
Representative:
Ji-Ren Lee
- Social Enterprise Insights / Director
- DELTA ELECTRONICS, INC. / Indenpend Director
- Acer Incorporated / Indenpend Director
- VIVOTEK INC. / Indenpend Director
- CommonWealth Eduation Media and Publishing Co., Ltd. /
Director
- CommonWealth Magazine Co., Ltd. / Director

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