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PSC AGM Information 2022

Jul 6, 2022

52209_rns_2022-07-06_c4f44498-2ede-4a5f-9dc2-f6406f2769bb.pdf

AGM Information

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TSE: 2855

==> picture [360 x 39] intentionally omitted <==

2022 General Shareholders’ Meeting Meeting Agenda

Physical shareholders’ meeting June 23, 2022 at 9:00 a.m. No.8, Dongxing Road, SongShan District, Taipei City, Taiwan (R.O.C.)

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

~1~

Table of Contents

Page
1 Meeting Agenda 3
2 Report Items 4
3 Items to be Adopted 4
4 Items for Discussion 5
5 Provisional Motions 5
6 Meeting Adjourned 5
Appendixes
I 2021 Business Report 6
II 2021 Audit Committee's Review Report 8
III 2021 Consolidated Financial Statements and Financial Statements 9
IV 2021 Earnings Distribution Proposal 35
V Comparison table of Amendments to “Articles of Incorporation” 36
VI Comparison table of Amendments to “Procedures for Acquisition or 37
Disposal of Assets”
VII Comparison table of Amendments to “Rules and Procedures of 55
Shareholders’ Meeting”
VIII Rules and Procedures of Shareholders’ Meeting 71
IX Articles of Incorporation 79
X Shareholdings of Directors 83

~2~

President Securities Corp. 2022 Annual Shareholders’ Meeting Agenda

  • (1) Meeting convening method: Physical shareholders’ meeting

  • (2) Time: June 23, 2022 at 9:00 a.m

  • (3) Venue: No.8, Dongxing Road, SongShan District, Taipei City, Taiwan (R.O.C)

  • (4) Agenda for the 2022 General Shareholders’ Meeting

  • 1) Meeting called to order (Report on the total number of shareholders and shareholder representatives in attendance)

  • 2) Opening Remarks from the Chairman

  • 3) Report Items

    • i. 2021 Business Report

    • ii. 2021 Audit Committee's Review Report

    • iii. 2021 Remuneration of Employees and Directors

(5) Items to be Adopted

  • 1) Adoption of the 2021 business report, consolidated financial statements and financial statements 2) Adoption of the Proposal for the 2021 earnings distribution

(6) Items for Discussion

  • 1) Amendment to the Articles of Incorporation, and invites discussion.

  • 2) Amendment to the Procedures for Acquisition or Disposal of Assets, and invites discussion.

  • 3) Amendment to the Articles of Rules and Procedures of Shareholders’ Meeting, and invites discussion.

  • (7) Provisional Motions

  • (8) Meeting Adjourned

~3~

2. Report Items

(1) 2021 Business Report

Explanation: The Company’s Business Report for 2021, please see Appendix I (page 6~7)

  • (2) 2021 Audit Committee's Review Report

Explanation: For 2021 Audit Committee's Review Report, please see Appendix II (page 8)

(3) 2021 Remuneration of Employees and Directors

Explanation:

  • 1) Comply with the Ordinance No. 10402413890(June 11, 2015) and the Ordinance No. 10402427800(October 15, 2015) issued by the Ministry of Economic Affair.

  • 2) In accordance with Article 23 of the Company’s bylaws, the Company will distribute compensation to employees and the Directors from pre-tax profits. Where the company has pre-tax profits, the total value of funds to be distributed among employees shall not be less than 1.6% of pre-tax profits; while the total value of funds to be distributed among the Directors shall not be more than 2% of pre-tax profits. If the company has losses carried forward, compensation should only be paid to employees and Directors after funds have been set aside as reserve for such losses.

  • 3) The proposal of 2021 Remuneration of Employees and Directors has been approved by the 3th meeting of the 5th Remuneration Committee and the 4th meeting of 12th Board of Directors. It is proposed that a total of NT$94,748,034 (2%) to be distributed to employees and NT$94,748,034 (2%) to be distributed to Directors in accordance with the allocation rules of the 2st meeting of the 12th Board of Directors. The above mentioned compensation will be in cash.

3. Items to be Adopted

■ Motion 1 (proposed by the Board of Directors)

Topic: Adoption of the 2021 business report, consolidated financial statements and financial statements

Explanation

  • (1) The 2021 consolidated financial statements and the financial statements have already been successfully audited by CPA Lin, Se-Kai and CPA Lo, Chiao-Sen of PricewaterhouseCoopers Taiwan.

  • (2) The business report, the consolidated financial statements and the financial statements have been reviewed by the Audit Committee and approved by the 4th Meeting of the Twelveth term Board of Directors (March 8, 2022)

  • (3) For the business report, the consolidated financial statements and the financial statements, please see Appendix I (page 6~7) and Appendix III (page 9~34).

■ Motion 2 (Proposed by the Board of Directors)

Topic: Adoption of the Proposal for the 2021 earnings distribution Explanation:

  • (1) The proposal for distribution of 2021 earnings are prepared in accordance with regulations and the Company’s Articles of Incorporation. Please refer to the 2021 Earnings Distribution Proposal as Appendix IV (Page 35).

  • (2) After first being decreased by NT$106,421,343 as a result of remeasurement of defined

~4~

benefit plans, and then setting aside legal reserve(10%) , special reserve(20%), and reversing special reserve 3,413,183 employees’ transformation training expenditure arising from the development of fintech to 2021, according to Jin-Guan-Zheng-Quan Letter No. 1080321644. The unappropriated earnings available for distribution for 2021 is NT$2,755,671,141. Proposed cash dividend is NT$2,751,521,239, which is equivalent to NT$1.89 per share. Upon the approval of Shareholders' Meeting, it is proposed that the Board of Directors be authorized to resolve the ex-dividend date.

  • (3) In the event that the shares outstanding changes, it is proposed that the Board of Directors be authorized to adjust the amount per share to be distributed to shareholders based on the number of actual shares outstanding on the record date for distribution. Dividends of less than NT$1 shall be transferred to the Company's Employee Benefit Council.

4. Items for Discussion

■ Item 1 (Proposed by the Board of Directors)

Topic[：] Amendment to the Articles of Incorporation. Please proceed to vote. Explanation:

  • (1) According to Presidential Order NO.11000115851, which announced the amendment of Company Act Article 172-2. A company may explicitly provide for in its Articles of Incorporation that its shareholders’ meeting can be held by means of visual communication network, partly visual communication network or other methods promulgated by the central competent authority.

  • (2) For chart comparing the changes, please see Appendix V (page 36).

■ Item 2 (Proposed by the Board of Directors)

Topic[：] Amendment to the procedures for Acquisition or Disposal of Assets Explanation:

  • (1) Revised in accordance with the Jin-Guan-Zheng-Quan Letter No. 11103804655.

  • (2) In accordance with the amendments to “ Regulations Governing the Acquisition and Disposal of Assets by Public Companies” issued by the FSC, dated January 28, 2022, the procedures for Acquisition and Disposal of Assets should be amended.

  • (3) For the comparison table of amendments to “ procedures for Acquisition and Disposal of Assets”, please see Appendix VI (page 37~ 54).

■ Item 3 (Proposed by the Board of Directors)

Topic[：] Amendment to the Articles of Rules and Procedures of Shareholders’ Meeting. Please proceed to vote.

Explanation:

  • (1) According to 8 March 2022 Letter No. Taiwan-Stock-Governance-11100042501 of the Taiwan Stock Exchange Corporation.

  • (2) For chart comparing the changes, please see Appendix VII (page 55~70)

5. Provisional Motions

6. Meeting Adjourned

~5~

APPENDIX I

2021 Business Report

[Macroeconomic Environment and Business Plan]

In 2021, the world was still affected by COVID. The TAIEX fell to lowest of the year of 14,720.25 points and went down again in May due to Taiwan COVID outbreak. However, the index continued to maintain at a high level due to proper control of the epidemic, the prosperity in export and private investment, and the continued measures for day trade. Despite the intrusion of new-type variant Omicron at the end of the year, when compared with Delta, the risk of hospitalization and severe case is lower for people who get infected by Omicron. With the increase in vaccine coverage and gradual recovery of economic activities in various countries, the market is full of funds which made Taiwan stock market a bull market. The index hit record high of 18,291.25 points again in December and closed at 18,218.84 points. The index raised 3,486.31 points in the whole year with 23.66% growth rate. In this environment in 2021, the Company’s management team quickly grasped market changes, flexibly adjusted investment strategies, and actively looked for opportunities in various businesses, so as to generate steady profits and achieve excellent results.

[Implementation and Results]

In terms of brokerage business, the TAIEX increased by 3,486.31 points in 2021 with average daily trading volume of NT$477.81 billion, representing a significant increase of around 88.5% as compared to NT$253.467 billion in 2020. There was big profit in the brokerage business. The company acted as lead underwriter or participating underwriter in 58 cases in 2021, ranking as No.3 among peers. In terms of dealer business, the trading team was fully aware of the changes in the global market and industry trends; timely took market opportunity to invest in targets with good prospects and solid business. The performance was outstanding with the effective use of hedge instruments and strict control of position risk. For financial products business, the Company designed and launched a variety of financial products based on the advantages of its dealer business team, providing investors with more choices.

[Profitability Analysis and Operating Income/Expenditure in Budget Execution]

In 2021, the Company continuously implemented transformation, and actively expanded its various businesses. Under the leadership of a high-quality management team with solid and robust operating experience and rigorous risk control mechanism, the Company generated extremely excellent operating results. Its annual revenue was around NT$10.6 billion, and the net income after tax reached NT$4 billion, with earnings per share of NT$2.75, ROA of 4.38% and ROE of 13.12%.

[Future Operations]

The global economy will face a new wave of challenges in the post-epidemic era in 2022, such as inflation, changes in central bank monetary policy, the new US-China relationship and the redeployment of global supply chain, which will affect Taiwan’s economy through trade and financial channels as well. The Company will continue to make good use of its talented operational team, grasp market tend at all times, prudently evaluate investment benefits, strictly implement risk control, and continue to carry out financial technology innovation, develop diverse products, enhance digital services to provide better quality and comprehensive products

~6~

and services. Meanwhile, the Company will continue to strengthen its corporate governance, fulfill its social responsibilities, create corporate value, and safeguard all stakeholders' rights and interests by a stable and pragmatic business strategy.

~7~

APPENDIX II

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Audit Committee’s Review Report

To: The General Meeting of Shareholders as of year 2022

The Board of Directors has prepared the Company's 2021 Business Report, Financial Statements, and Earnings Distribution Plan. The financial statements have been audited and certified by Se-Kai, Lin and Chiao-Sen, Lo of PricewaterhouseCoopers Certified Public Accountants, who issued an auditors' report. The aforementioned Business Report, Financial Statements, and Earnings Distribution Plan have been reviewed and determined to be fairly presented as stated by the Audit Committee members. According to Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Law, we hereby submit this report.

President Securities Corporation Convener of Audit Committee:

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April 21, 2022

~8~

APPENDIX III

INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

PWCR21003286

To the Board of Directors and Shareholders of PRESIDENT SECURITIES CORPORATION

Opinion

We have audited the accompanying consolidated balance sheets of President Securities Corporation and 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, 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 Firms, and Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants, 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 Auditors’ responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgement, 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 provide a separate opinion on these matters.

Key audit matters for the Group’s 2021 consolidated financial statements are stated as follows: Fair value measurement of unlisted stocks without active market

Description

~9~

Please refer to Note 4(8) for the accounting policies on unlisted stocks without active market (shown as “financial assets at fair value through other comprehensive income”) and Note 5(2) for details of critical accounting judgements, estimates and assumption uncertainty. As at December 31, 2021, the unlisted stocks without active market held by the Group totaled 1,137,756 thousand New Taiwan Dollars and were shown as “financial assets at fair value through other comprehensive income” (Level 3 fair value).

Due to the lack of an active market, the fair value of the unlisted stocks held by the Group was determined using valuation method. Management measured their fair value by using comparable listed companies in the market approach. The main assumptions of the market approach are calculated based on the latest published price-to-book ratio of comparable listed companies in similar industries and considering discounts on market liquidity or assessment of risk.

Above-mentioned estimation of fair value involves various assumptions and material unobservable inputs, which has high uncertainty and relies on the subjective judgement of management. Any changes in judgements and estimates may affect the ultimate result of accounting estimates and have an impact on the financial statements of the Group. Thus, we have included the fair value measurement of unlisted stocks without active market as a key audit matter in our audit.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

  1. Obtained an understanding and assessed policy documents, internal control system, fair value measurement models and approval processes that are related to fair value measurement of unlisted stocks;

  2. Ascertained whether the measurement methods used by the management is commonly used by the industry;

  3. Assessed the reasonableness of parameter of similar companies used by management;

  4. Examined inputs and calculation formulas used in valuation models and agreed such data to supporting documents.

~10~

Impairment assessment of investments accounted for under the equity method

Description

Please refer to Note 4(14) for accounting policies on investments accounted for under the equity method and its impairment, Note 5(2) for the uncertainty of accounting estimates and assumptions applied on asset impairment, and Note 6(12) for details of investments accounted for under the equity method.

The Group held 42.49% of equity of Uni-President Asset Management Corp. which was accounted for under the equity method, and the excess of the carrying amount over the share of the investee company’s net assets is mainly goodwill. As of December 31, 2021, the amount was 760,787 thousand New Taiwan Dollars. Impairment assessment is based on the expected future cash flow of the investee, discounted at an appropriate discount rate, to measure the recoverable amount of the cash generating unit.

The recoverable amount of the investee is based on its expected future cash flows which involve multiple estimates and assumptions on discount rate and financial forecast. These are subjective judgements, have a high degree of uncertainties, and are material to the recoverable amount. Thus, we consider the impairment assessment of investments accounted for under the equity method as one of the matters of most significance to our audit.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

  1. Obtained the impairment assessment report prepared by an external valuation expert who was commissioned by the management;

  2. Assessed the reasonableness of expected future cash flows, discount rate and other significant assumptions applied in the cash flow model;

  3. Inspected valuation model parameters, formula setting and the accuracy of calculation.

Other matter – Parent company only financial reports

We have audited and expressed an unqualified opinion on the parent company only financial statements of President Securities Corporation, as at and for the years ended December 31, 2021 and 2020.

~11~

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 Firms, Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants, 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 statement 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 auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the 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 consolidated 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:

~12~

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

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

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

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

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

  6. Obtain sufficient 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.

~13~

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 auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Lin, Se-Kai

Independent Auditors

Lo, Chiao-Sen

For and on behalf of PricewaterhouseCoopers, Taiwan March 8, 2022

------------------------------------------------------------------------------------------------------------------------------------------------The accompanying consolidated financial statements are not intended to present the financial position and finance performance 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.

~14~

PRESIDENT SECURITIES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

Assets Notes
6(1)
6(2)
6(3)
6(4)
6(5)
6(6)
6(7)
6(7)
6(8)
6(9)
6(2)
6(3)
6(12)
6(13)
6(14)
6(16)
6(17)
6(48)
6(18)		 December 31, 2021
AMOUNT
%
$
5,757,012
5
33,582,989
29
410,205
-
27,401
-
18,344,751
16
29,930
-
24,933
-
1,581,993
1
21,335,532
18
401,019
-
1,437,295
1
819
-
16,727,693
14
1,147
-
25,012
-
33,289
-
1,974
-
8,962,046
8
108,685,040
92
76,724
-
1,137,756
1
3,123,984
3
2,447,128
2
204,621
-
268,402
1
195,468
-
160,587
-
1,388,189
1
9,002,859
8
$
117,687,899
100		 December 31, 2020 December 31, 2020
AMOUNT
$
5,757,012
33,582,989
410,205
27,401
18,344,751
29,930
24,933
1,581,993
21,335,532
401,019
1,437,295
819
16,727,693
1,147
25,012
33,289
1,974
8,962,046
108,685,040
76,724
1,137,756
3,123,984
2,447,128
204,621
268,402
195,468
160,587
1,388,189
9,002,859
$
117,687,899		 AMOUNT
$
5,124,862

41,611,722
353,510
-
12,248,272

51,532
42,889

1,288,127

21,106,170

240,796

1,007,090

737

18,852,396

875

24,300

23,950

28
3,344,627
105,321,883

67,484

707,616

3,134,766

2,453,712

203,579

270,503

151,765

103,749
1,296,708
8,389,882
$
113,711,765		 %
110000 Current assets
111100
Cash and cash equivalents
112000
Financial assets at fair value through
profit or loss - current
113200
Financial assets at fair value through
other comprehensive income - current
114010
Bonds purchased under resale
agreements
114030
Margin loans receivable
114040
Refinancing security deposits
114050
Receivables from refinance guaranty
114060
Receivable of securities business
money lending
114070
Customer margin account
114090
Receivables from security lending
114100
Security lending deposits
114110
Notes receivable
114130
Accounts receivable
114140
Accounts receivable-related parties
114150
Prepayments
114170
Other receivables
114600
Current tax assets
119000
Other current assets
110000
Total current assets
120000 Non-current assets
122000
Financial assets at fair value through
profit or loss - non-current
123200
Financial assets at fair value through
other comprehensive income - non-
current
124100
Investments accounted for under the
equity method
125000
Property and equipment, net
125800
Right-of-use assets
126000
Investment property
127000
Intangible assets
128000
Deferred tax assets
129000
Other assets - non-current
120000
Total non-current assets
906001
Total Assets		 4
37
-
-
11
-
-
1
19
-
1
-
17
-
-
-
-
3
93
-
1
3
2
-
-
-
-
1
7
100

(Continued)

~15~

PRESIDENT SECURITIES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity Notes
6(19)
6(20)
6(21)
6(22)
6(6)
6(23)
6(24)
6(25)
6(48)
6(26)
6(28)
6(28)
6(28)(29)		 December 31, 2021
AMOUNT
%
$
590,000
1
8,648,558
7
8,172,602
7
9,643,040
8
1,202,587
1
1,559,162
1
1,969,207
2
21,328,174
18
97,996
-
18,338,212
16
4,037
-
5,742,100
5
2,627,923
2
4,983,139
4
647,642
1
70,740
-
83,848
-
85,708,967
73
14,079
-
125,840
-
3,098
-
69,285
-
212,302
-
85,921,269
73
14,558,313
13
91,261
-
3,487,748
3
8,314,199
7
3,922,562
3
1,309,501
1
31,683,584
27
83,046
-
31,766,630
27
$
117,687,899
100		 December 31, 2020 December 31, 2020
AMOUNT
$
590,000
8,648,558
8,172,602
9,643,040
1,202,587
1,559,162
1,969,207
21,328,174
97,996
18,338,212
4,037
5,742,100
2,627,923
4,983,139
647,642
70,740
83,848
85,708,967
14,079
125,840
3,098
69,285
212,302
85,921,269
14,558,313
91,261
3,487,748
8,314,199
3,922,562
1,309,501
31,683,584
83,046
31,766,630
$
117,687,899		 AMOUNT
$
946,276
7,298,896
2,624,419
19,096,165
1,381,470
1,809,955
903,852
21,087,134
28,105
19,178,484
5,142
1,101,065
2,116,413
6,008,310
332,075
86,697
83,230
84,087,688
8,627
111,621
9,933
14,414
144,595
84,232,283
13,998,378
91,261
3,111,013
7,600,316
3,771,859
834,488
29,407,315
72,167
29,479,482
$
113,711,765		 %
210000 Current liabilities
211100
Short-term loans
211200
Commercial papers payable
212000
Financial liabilities at fair value
through profit or loss - current
214010
Bonds sold under repurchase
agreements
214040
Deposits on short sales
214050
Short sale proceeds payable
214070
Guarantee deposit received on
borrowed securities
214080
Futures traders' equity
214090
Equity for each customer in the
account
214130
Accounts payable
214150
Advance receipts
214160
Collections on behalf of third parties
214170
Other payables
214200
Other financial liabilities - current
214600
Current tax liability
216000
Current lease liabilities
219000
Other current liabilities
210000
Total current liabilities
220000 Non-current liabilities
225100
Non-current provisions
226000
Non-current lease liabilities
228000
Deferred tax liabilities
229000
Other liabilities-non-current
220000
Total non-current liabilities
906003
Total Liabilities
300000 Equity attributable to owners of the
parent company
301000
Capital
301010
Common stock
302000
Capital reserve
304000
Retained earnings
304010
Legal reserve
304020
Special reserve
304040
Unappropriated earnings
305000
Other equity interest
300000
Total
306000 Non-controlling interests
906004
Total Equity
906002
Total liabilities and equity		 1
6
2
17
1
2
1
19
-
17
-
1
2
5
-
-
-
74
-
-
-
-
-
74
12
-
3
7
3
1
26
-
26
100

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

~16~

PRESIDENT SECURITIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars, except earnings per share)

Items Year ended December 31
2021
2020
Notes
AMOUNT
%
AMOUNT
%
6(30)
$
5,027,229
43
$
3,331,030
35
6(31)
104,035
1
76,506
1
32,127
-
22,312
-
6(32)
8,731,043
75
3,356,129
35
85,749
1
77,666
1
6(33)
1,198,206
10
1,118,658
12
457,445
4
385,051
4
6(34)
(
831,627) (
7 )
989,219
10
6(35)
(
181,893) (
1 )
268,439
3
6(36)
(
313,159) (
3 ) (
117,021) (
1 )
6(37)
-
-
100,358
1
76,579
1 (
83,151) (
1 )
17,312
-
2,870
-
6(38)
(
2,896,956) (
25 )
95,405
1
6(39)
(
640,393) (
5 )
20,120
-
6(40)
10,976
- (
15,979)
-
6(41)
744,946
6 (
46,340)(
1)
11,621,619
100
9,581,272
100
6(42)
(
755,578) (
7 ) (
548,487) (
6 )
(
6,863)
- (
5,658)
-
6(43)
(
101,287) (
1 ) (
276,884) (
3 )
(
86,289) (
1 ) (
100,691) (
1 )
(
140,732) (
1 ) (
123,083) (
1 )
(
3,062)
- (
26)
-
6(44)
(
4,002,344) (
34 ) (
3,202,336) (
33 )
6(45)
(
227,553) (
2 ) (
209,839) (
2 )
6(46)
(
2,030,357) (
17) (
1,507,158)(
16)
(
7,354,065) (
63) (
5,974,162) (
62)
400000 Revenues
401000 Brokerage handling fee revenue
404000 Revenues from underwriting business
406000 Net gain (loss) on wealth management
410000 Net gain (loss) on sale of operating
securities
421100 Revenue from providing agency
service for stock affairs
421200 Interest income
421300 Dividend income
421500 Net valuation gain (loss) on operating
securities at fair value through profit or
loss
421600 Net gain (loss) on covering of
borrowed securities and bonds with
resale agreements-short sales
421610 Net valuation gain (loss) on borrowed
securities and bonds with resale
agreements-short sales at fair value
through profit or loss
421750 Realized gain (loss) on financial assets
measured at fair value through other
comprehensive income - bonds
422000 Net gain (loss) on issuance of ETNs
422100 Administrative and handling fee
revenues from issuance of ETNs
422200 Net gain (loss) from issuance of call
(put) warrants
424400 Net gain (loss) from derivatives
425300 Impairment loss and reversal of
impairment gain
428000 Other operating income
Total revenues
500000 Expenditures and expenses
501000/
502000/
503000 Handling charges
507000 ETNs administrative expenses
521200 Interest expenses
524100 Futures commission expense
524300 Expense of clearing and settlement
528000 Other operating expenditure
531000 Employee benefits expense
532000 Depreciation and amortization
533000 Other operating expenses
Total expenditures and expenses

(Continued)

~17~

PRESIDENT SECURITIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars, except earnings per share)

Items Year ended December 31
2021
2020
Notes
AMOUNT
%
AMOUNT
$
4,267,554
37
$
3,607,110
6(12)
78,359
-
68,825
6(47)
323,522
3
306,887
4,669,435
40
3,982,822
6(48)
(
658,062) (
5 ) (
368,226) (
$
4,011,373
35
$
3,614,596
($
125,747) (
1 ) ($
21,997)
486,836
4
456,748
29,118
-
8,870
25,149
-
4,399
(
34,891)
-
27,298
-
-
28
$
380,465
3
$
475,346
$
4,391,838
38
$
4,089,942
$
4,007,435
35
$
3,607,518
$
3,938
-
$
7,078
$
4,376,026
38
$
4,080,025
$
15,812
-
$
9,917
6(49)
$
2.75
$
$
2.75
$		 Year ended December 31 Year ended December 31 %
38
1
3
42

4 )
38
-
5
-
-
-
-
5
43
38
-
43
-
2.48
2.47
2021 2020
Operating profit
601000 Share of the profit or loss of associates
and joint ventures accounted for under
the equity method
602000 Other gains and losses
902001Profit before tax
701000 Income tax expense
902005Net income
Other comprehensive income
Components of other comprehensive
income that will not be reclassified to
profit or loss
805510 Remeasurements of defined benefit
plans
805540 Net unrealized gain (loss) from
investments in equity instruments at
fair value through other comprehensive
income
805550 Other comprehensive gain (loss) of
associates and joint ventures accounted
for under the equity method
805599 Income tax benefit relating to
components of other comprehensive
income
Items may be reclassified to profit or
loss subsequently
805610 Translation gain (loss) on the financial
statements of foreign operating entities
805615 Net unrealized gain (loss) from
investments in debt instruments at fair
value through other comprehensive
income
805000 Current other comprehensive income
(post-tax)
902006Total current comprehensive income
Income attributable to:
913100 Parent company
913200 Non-controlling interest
Current comprehensive income
attributable to:
914100 Parent company
914200 Non-controlling interests
Earnings per share
975000 Basic earnings per share (in dollars)
985000 Diluted earnings per share (in dollars)
$

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

~18~

PRESIDENT SECURITIES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

For the year ended December 31, 2020
Balance at January 1, 2020
Net income for the year ended December 31, 2020
Other comprehensive income (loss) for the year ended December 31,
2020
Total comprehensive income (loss)
Appropriations of 2019 earnings:
Legal reserve
Special reserve
Cash dividends
Stock dividends
Disposal of investments in equity instruments designated at fair value
through other comprehensive income
Changes in non-controlling interests
Balance at December 31, 2020
For the year ended December 31, 2021
Balance at January 1, 2021
Net income for the year ended December 31, 2021
Other comprehensive income (loss) for the year ended December 31,
2021
Total comprehensive income (loss)
Appropriations of 2020 earnings:
Legal reserve
Special reserve
Cash dividends
Stock dividends
Changes in non-controlling interests
Balance at December 31, 2021		 Notes Equity attributable Equity attributable to owners ofthe parent to owners ofthe parent to owners ofthe parent Non-
controlling
interests		 Totalequity
Commonstock Capital
reserve		 RetainedEarnings Otherequityinterest Total
Legal reserve Special reserve Unappropriated
earnings		 Translation gain
and loss on the
financial
statements of
foreign operating
entities		 Unrealised gain or
loss on financial
assets measured at
fair value through
other
comprehensive
income
6(29)
6(29)


$ 13,723,900
-
-
-
-
-
-
274,478
-
-
$ 13,998,378
$ 13,998,378
-
-
-
-
-
-
559,935
-
$ 14,558,313		 $ 91,261
-
-
-
-
-
-
-
-
-
$ 91,261
$ 91,261
-
-
-
-
-
-
-
-
$ 91,261		 $ 2,876,769
-
-
-
234,244
-
-
-
-
-
$ 3,111,013
$ 3,111,013
-
-
-
376,735
-
-
-
-
$ 3,487,748		 $ 7,130,830
-
-
-
-
469,486
-
-
-
-
$ 7,600,316
$ 7,600,316
-
-
-
-
713,883
-
-
-
$ 8,314,199		 $ 2,355,105
3,607,518
(
17,197 )
3,590,321
(
234,244 )
(
469,486 )
( 1,372,390 )
(
274,478 )
177,031
-
$ 3,771,859
$ 3,771,859
4,007,435
(
106,422 )
3,901,013
(
376,735 )
(
713,883 )
( 2,099,757 )
(
559,935 )
-
$ 3,922,562		 ($
58,216 )
-
27,298
27,298
-
-
-
-
-
-
($
30,918 )
($
30,918 )
-
(
34,891 )
(
34,891 )
-
-
-
-
-
($
65,809 )		 $
580,031
-
462,406
462,406
-
-
-
-
(
177,031 )
-
$
865,406
$
865,406
-
509,904
509,904
-
-
-
-
-
$ 1,375,310		 $ 26,699,680
3,607,518
472,507
4,080,025
-
-
(
1,372,390 )
-
-
-
$ 29,407,315
$ 29,407,315
4,007,435
368,591
4,376,026
-
-
(
2,099,757 )
-
-
$ 31,683,584		 $ 66,092
7,078
2,839
9,917
-
-
-
-
-
(
3,842 )
$ 72,167
$ 72,167
3,938
11,874
15,812
-
-
-
-
(
4,933 )
$ 83,046		 $ 26,765,772
3,614,596
475,346
4,089,942
-
-
(
1,372,390 )
-
-
(
3,842 )
$ 29,479,482
$ 29,479,482
4,011,373
380,465
4,391,838
-
-
(
2,099,757 )
-
(
4,933 )
$ 31,766,630

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

~19~

PRESIDENT SECURITIES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Income and expenses having no effect on cash flows
Net valuation (gain) loss on operating securities at fair value
through profit or loss

Net valuation (gain) loss on borrowed securities and bonds
with resale agreements-short sales at fair value through profit
or loss

Impairment loss and reversal of impairment gain

Depreciation

Amortization

Interest expense

Interest income (include financial income)

Dividend income
Share of the profit of associates and joint ventures accounted
for under the equity method
(Gain) loss on disposal of property and equipment

(Gain) loss from lease modification
(Gain) loss on valuation of non-operating financial
instrument

Changes in assets/liabilities relating to operating activities
Net changes in operating assets
Financial assets at fair value through profit or loss - current
Financial assets at fair value through other comprehensive
income - current
Bonds purchased under resale agreements
Margin loans receivable
Refinancing security deposits
Receivables from refinance guaranty
Receivable of securities business money lending
Customer margin account
Receivables from security lending
Security lending deposits
Notes receivable
Accounts receivable
Accounts receivable-related parties
Prepayments
Other receivables
Other current assets
Net changes in liabilities relating to operating activities
Financial liabilities at fair value through profit or loss
Bonds sold under repurchase agreements
Deposits on short sales
Short sale proceeds payable
Guarantee deposit received on borrowed securities
Futures traders’ equity
Equity for each customer in the account
Accounts payable
Advance receipts
Collections on behalf of third parties
Other payables
Other financial liabilities - current
Other current liabilities		 Year ended December 31
Notes
2021
2020
$
4,669,435 $
3,982,822
6(2)(34)
831,627 (
989,219 )
6(36)
313,159
117,021
6(40)
(
7,664 )
18,181
6(45)
189,361
181,478
6(45)
38,192
28,361
6(43)
101,287
276,884
6(33)(47)
(
1,309,993 ) (
1,273,261 )
(
487,052 ) (
407,049 )
(
78,359 ) (
68,825 )
6(13)
3
154
(
17 )
-
6(47)
24,318 (
25,279 )
7,161,039
3,904,263
- (
13,884 )
(
27,401 )
-
(
6,085,072 ) (
2,239,117 )
21,602
51,013
17,956
45,870
(
293,866 ) (
770,318 )
(
229,362 ) (
7,370,458 )
(
160,223 ) (
139,753 )
(
430,205 ) (
463,919 )
(
82 ) (
40 )
2,159,195 (
7,111,640 )
(
272 )
128
(
712 ) (
1,743 )
(
8,801 )
73,236
(
5,617,419 ) (
1,722,930 )
5,235,024
1,658,769
(
9,453,125 ) (
1,860,091 )
(
178,883 ) (
177,247 )
(
250,793 ) (
78,877 )
1,065,355
847,848
241,040
7,373,467
69,891
27,472
(
778,723 )
7,115,640
(
1,105 )
2,769
4,641,035
722,772
511,276
769,620
(
1,025,171 )
3,264,444
618
61,337

(Continued)

~20~

PRESIDENT SECURITIES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

Cash inflow generated from operations
Interest received
Dividends received
Income tax paid
Net cash flows from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of investments accounted for under equity method
Acquisition of property and equipment

Proceeds from disposal of property and equipment
Acquisition of intangible assets

Proceeds from disposal of intangible assets
(Increase) decrease in other non-current assets
(Increase) decrease in prepayment for equipment
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in short-term loans
Increase (decrease) in commercial papers payable
Increase (decrease) in other non-current liabilities
Payments of lease liabilities
Interest paid
Distribution of cash dividends
Changes in non-controlling interest
Net cash flows used in financing activities
Effect of exchange rate changes
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year		 Year ended December 31
Notes
2021
2020
$
867,113 $
5,809,899
1,219,615
1,353,284
585,425
505,200
(
382,965 ) (
205,923 )
2,289,188
7,462,460
- (
2,481,388 )
6(13)
(
52,406 ) (
36,654 )
54
177
6(17)
(
46,025 ) (
17,887 )
-
31
(
88,658 ) (
99,626 )
(
139,960 ) (
78,687 )
(
326,995 ) (
2,714,034 )
(
356,276 ) (
2,018,684 )
1,350,000 (
2,300,000 )
(
1,982 ) (
2,965 )
(
93,325 ) (
92,782 )
(
108,079 ) (
288,944 )
(
2,099,757 ) (
1,372,390 )
(
4,933 ) (
3,842 )
(
1,314,352 ) (
6,079,607 )
(
15,691 ) (
64,103 )
632,150 (
1,395,284 )
5,124,862
6,520,146
$
5,757,012 $
5,124,862

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

~21~

INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

PWCR21003287

To the Board of Directors and Shareholders of President Securities Corporation

Opinion

We have audited the accompanying parent company only balance sheets of President Securities Corporation 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 parent company only financial position of President Securities Corporation as at December 31, 2021 and 2020, and its parent company only financial performance and its parent company only cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Firms and Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants.

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 the parent company only financial statements section of our report. We are independent of President Securities Corporation in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the parent company’s 2021 only financial statements. 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.

The key audit matters of the parent company’s 2021 only financial statements are stated as follows: Fair value measurement of unlisted stocks without active market

Description

Please refer to Note 4(7) for the accounting policies on unlisted stocks without active market (shown as “financial assets at fair value through other comprehensive income”) and Note 5 for details of significant judgements, estimates and assumption uncertainty. As at December 31, 2021, the unlisted stocks without

~22~

active market held by the President Securities Corporation totaled 258,627 thousand New Taiwan Dollars and were shown as “financial assets at fair value through other comprehensive income” (Level 3 fair value).

Due to the lack of an active market, the fair value of the unlisted stocks held by the President Securities Corporation was determined using valuation method. Management measured its fair value by using comparable listed companies in market approach. The main assumption of market approach is calculating based on the latest published price-book ratio of comparable listed companies in similar industries and considering discounts on market liquidity or risk particularity.

Above-mentioned estimation of fair value involves various assumptions and material unobservable inputs, which has high uncertainty and relies on the subjective judgment of management. Any changes in judgements and estimates may affect the ultimate result of accounting estimates and have an impact on the financial statements of the President Securities Corporation. Thus, we have included the fair value measurement of unlisted stocks without active market as a key audit matter in our audit.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

  1. Obtained an understanding and assessed policy documents, internal control system, fair value measurement models and approval processes that are related to fair value measurement of unlisted stock;

  2. Ascertained whether the measurement methods used by the management is commonly used by the industry;

  3. Assessed the reasonableness of parameter of similar companies used by management;

  4. Examined inputs and calculation formulas used in valuation methods and agreed such data to supporting documents.

~23~

Impairment assessment of investments accounted for under the equity method

Description

Please refer to Note 4(13) for accounting policies on investments accounted for under the equity method and its impairment, Note 5(2) for the uncertainty of accounting estimates and assumptions applied on asset impairment, and Note 6(11) for details of investments accounted for under the equity method.

President Securities Corporation held 42.46% of equity of Uni-President Asset Management Corp. which was accounted for under the equity method, and the excess of the carrying amount over the share of the investee company’s net assets is mainly goodwill. As of December 31, 2021, the amount was 760,171 thousand New Taiwan Dollars. Impairment assessment is based on the expected future cash flow of the investee, discounted at an appropriate discount rate, to measure the recoverable amount of the cash generating unit.

The recoverable amount of the investee is based on its expected future cash flows which involve multiple estimates and assumptions on discount rate and financial forecast. These are subjective judgements, have a high degree of uncertainties, and are material to the recoverable amount. Thus we consider the impairment assessment of investments accounted for under the equity method as one of the matters of most significance to our audit.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

  1. Obtained the impairment assessment report prepared by an external valuation expert who was commissioned by the management;

  2. Assessed the reasonableness of expected future cash flows, discount rate and other significant assumptions applied in the cash flow model; and

  3. Inspected valuation model parameters, formula setting and the accuracy of calculation.

~24~

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, Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants, and for such internal control as management determines is necessary to enable the preparation of parent company only financial statement 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 President Securities Corporation’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 President Securities Corporation or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including audit committee, are responsible for overseeing President Securities Corporation’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 auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the 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:

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

~25~

  1. 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 President Securities Corporation’s internal control.

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

  3. 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 President Securities Corporation’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the 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 auditors’ report. However, future events or conditions may cause President Securities Corporation to cease to continue as a going concern.

  4. 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.

  5. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within President Securities Corporation 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.

~26~

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 auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Lin, Se-Kai

Independent Auditors

Lo, Chiao-Sen

For and on behalf of PricewaterhouseCoopers, Taiwan March 8, 2022

The accompanying parent company only financial statements are not intended to present the financial position and financial performance 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.

~27~

PRESIDENT SECURITIES CORPORATION PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

Assets Notes
6(1)
6(2)
6(3)
6(4)
6(5)
6(6)
6(6)
6(7)
6(8)
6(2)
6(3)
6(11)
6(12)
6(13)
6(15)
6(16)
6(47)
6(17)		 December 31, 2021
AMOUNT
%
$
3,082,958
3
33,286,663
35
410,205
1
27,401
-
18,344,751
19
29,930
-
24,933
-
1,581,993
2
401,019
-
1,437,295
2
470
-
16,549,427
17
4,792
-
21,059
-
5,709
-
7,992,320
8
83,200,925
87
62,774
-
258,627
-
7,518,999
8
2,271,270
3
191,960
-
268,402
1
145,690
-
155,567
-
1,117,438
1
11,990,727
13
$
95,191,652
100		 December 31, 2020 December 31, 2020
AMOUNT
$
3,082,958
33,286,663
410,205
27,401
18,344,751
29,930
24,933
1,581,993
401,019
1,437,295
470
16,549,427
4,792
21,059
5,709
7,992,320
83,200,925
62,774
258,627
7,518,999
2,271,270
191,960
268,402
145,690
155,567
1,117,438
11,990,727
$
95,191,652		 AMOUNT
$
3,507,116
40,831,878
353,510
-
12,248,272
51,532
42,889
1,288,127
240,796
1,007,090
737
17,635,068
4,413
20,463
9,518
2,156,587
79,397,996
67,484
186,334
7,247,316
2,270,322
171,581
270,503
94,479
99,384
1,044,489
11,451,892
$
90,849,888		 %
110000 Current assets
111100
Cash and cash equivalents
112000
Financial assets at fair value through
profit or loss - current
113200
Financial assets at fair value through
other comprehensive income - current
114010
Bonds purchased under resale
agreements
114030
Margin loans receivable
114040
Refinancing security deposits
114050
Receivables from refinance guaranty
114060
Receivable of securities business
money lending
114090
Receivables from security lending
114100
Security lending deposits
114110
Notes receivable
114130
Accounts receivable
114140
Accounts receivable - related parties
114150
Prepayments
114170
Other receivables
119000
Other current assets
110000
Total current assets
120000 Noncurrent assets
122000
Financial assets at fair value through
profit or loss - non-current
123200
Financial assets at fair value through
other comprehensive income - non-
current
124100
Investments accounted for under the
equity method
125000
Property and equipment, net
125800
Right-of-use assets
126000
Investment property
127000
Intangible assets
128000
Deferred tax assets
129000
Other assets - non-current
120000
Total non-current assets
906001
Total Assets		 4
45
-
-
14
-
-
2
-
1
-
19
-
-
-
2
87
-
-
8
3
-
1
-
-
1
13
100

(Continued)

~28~

PRESIDENT SECURITIES CORPORATION PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity Notes
6(18)
6(19)
6(20)
6(21)
6(22)
6(23)
6(24)
6(47)
6(47)
6(25)
6(27)
6(27)
6(27)(28)		 December 31, 2021
AMOUNT
%
$
590,000
1
8,648,558
9
8,171,735
9
9,643,040
10
1,202,587
1
1,559,162
2
1,969,207
2
97,996
-
17,421,499
18
481
-
5,739,850
6
2,499,848
3
4,983,139
5
628,676
1
62,878
-
73,094
-
63,291,750
67
14,079
-
120,489
-
-
-
81,750
-
216,318
-
63,508,068
67
14,558,313
15
91,261
-
3,487,748
4
8,314,199
9
3,922,562
4
1,309,501
1
31,683,584
33
$
95,191,652
100		 December 31, 2020 December 31, 2020
AMOUNT
$
590,000
8,648,558
8,171,735
9,643,040
1,202,587
1,559,162
1,969,207
97,996
17,421,499
481
5,739,850
2,499,848
4,983,139
628,676
62,878
73,094
63,291,750
14,079
120,489
-
81,750
216,318
63,508,068
14,558,313
91,261
3,487,748
8,314,199
3,922,562
1,309,501
31,683,584
$
95,191,652		 AMOUNT
$
578,976
7,298,896
2,622,141
19,096,165
1,381,470
1,809,955
903,852
28,105
18,038,119
332
1,098,674
1,975,239
6,008,310
324,555
61,875
76,474
61,303,138
8,627
103,607
2,813
24,388
139,435
61,442,573
13,998,378
91,261
3,111,013
7,600,316
3,771,859
834,488
29,407,315
$
90,849,888		 %
210000 Current liabilities
211100
Short-term loans
211200
Commercial papers payable
212000
Financial liabilities at fair value
through profit or loss - current
214010
Bonds sold under repurchase
agreements
214040
Deposits on short sales
214050
Short sale proceeds payable
214070
Guarantee deposit received on
borrowed securities
214090
Equity for each customer in the
account
214130
Accounts payable
214150
Advance receipts
214160
Collections on behalf of third parties
214170
Other payables
214200
Other financial liabilities - current
214600
Current tax liability
216000
Current lease liabilities
219000
Other current liabilities
210000
Total current liabilities
220000 Non-current liabilities
225100
Non-current provisions
226000
Non-current lease liabilities
228000
Deferred tax liability
229000
Other liabilities - non-current
220000
Total non-current liabilities
906003
Total Liabilities
301000 Capital
301010
Common stock
302000 Capital reserve
304000 Retained earnings
304010
Legal reserve
304020
Special reserve
304040
Unappropriated earnings
305000
Other equity interest
906004
Total equity
906002
Total liabilities and equity		 1
8
3
21
2
2
1
-
20
-
1
2
7
-
-
-
68
-
-
-
-
-
68
15
-
4
8
4
1
32
100

The accompanying notes are an integral part of these parent company only financial statements.

~29~

PRESIDENT SECURITIES CORPORATION PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

Items Year ended December 31
2021
2020
Notes
AMOUNT
%
AMOUNT
%
6(29)
$
4,153,616
39
$
2,465,522
29
6(30)
104,035
1
76,506
1
32,127
-
22,312
-
6(31)
8,738,972
83
3,351,750
40
85,817
1
77,732
1
6(32)
1,159,210
11
1,052,595
12
451,249
4
382,536
4
6(33)
(
862,680) (
8 )
995,619
12
6(34)
(
181,893) (
2 )
268,439
3
6(35)
(
313,159) (
3 ) (
117,021) (
1 )
6(36)
-
-
100,358
1
76,579
1 (
83,151) (
1 )
17,312
-
2,870
-
6(37)
(
2,896,956) (
27 )
95,405
1
42,884
-
40,206
-
6(38)
(
655,306) (
6 ) (
120,517) (
1 )
6(39)
11,158
- (
15,308)
-
6(40)
615,039
6 (
122,869)(
1)
10,578,004
100
8,472,984
100
6(41)
(
560,293) (
5 ) (
373,105) (
5 )
(
6,863)
- (
5,658)
-
6(42)
(
88,091) (
1 ) (
249,390) (
3 )
(
302)
- (
182)
-
(
14,089)
- (
11,731)
-
(
3,049)
- (
26)
-
6(43)
(
3,615,086) (
34 ) (
2,796,016) (
33 )
6(44)
(
175,565) (
2 ) (
157,405) (
2 )
6(45)
(
1,851,991) (
18) (
1,357,216)(
16)
(
6,315,329) (
60) (
4,950,729)(
59)
4,262,675
40
3,522,255
41
6(11)
213,779
2
303,699
4
6(46)
156,325
2
100,642
1
4,632,779
44
3,926,596
46
6(47)
(
625,344) (
6) (
319,078)(
4)
$
4,007,435
38
$
3,607,518
42
400000Revenues
401000 Brokerage handling fee revenue
404000 Revenues from underwriting business
406000 Net gain (loss) on wealth management
410000 Net gain (loss) on sale of trading
securities
421100 Revenue from providing agency
service for stock affairs
421200 Interest revenue
421300 Dividend revenue
421500 Net valuation gain (loss) on operating
securities at fair value through profit or
loss
421600 Net gain (loss) on covering of
borrowed securities and bonds with
resale agreements-short sales
421610 Net valuation gain (loss) on borrowed
securities and bonds with resale
agreements-short sales at fair value
through profit or loss
421750 Net realised gain (loss) on financial
assets measured at fair value through
other comprehensive income-bonds
422000 Net gain (loss) on issuance of ETNs
422100 Administrative and handling fee
revenues from issuance of ETNs
422200 Net gain (loss) from issuance of call
(put) warrants
424100 Future commission revenue
424400 Net gain (loss) from derivatives
425300 Impairment loss and reversal of
impairment gain
428000 Other operating income
Total revenue
500000Expenditures and expenses
501000/
502000/
503000 Handling charges
507000 ETNs administrative expenses
521200 Interest expenses
524200 Securities commission expense
524300 Expense of clearing and settlement
528000 Other operating expenditure
531000 Employee benefits expense
532000 Depreciation and amortization
533000 Other operating expense
Total expenditure and expense
Operating profit
601100 Share of the profit or loss of associates
and joint ventures accounted for under
the equity method
602000 Other gains and losses
902001Profit or loss before tax
701000 Income tax (expense) benefit
902005Net income (loss)

(Continued)

~30~

PRESIDENT SECURITIES CORPORATION PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

Items Year ended December 31
2021
2020
Notes
AMOUNT
%
AMOUNT
($
127,326) (
1 ) ($
20,158)
6(3)
128,987
1
369,407
376,356
3
91,900
6(47)
25,465
-
4,032
(
34,891)
-
27,298
-
-
28
$
368,591
3
$
472,507
$
4,376,026
41
$
4,080,025
6(48)
$
2.75
$
$
2.75
$		 Year ended December 31 Year ended December 31 %
-
5
1
-
-
-
6
48
2.48
2.47
2021 2020
Other comprehensive income
Components of other comprehensive
income that will not be reclassified to
profit or loss
805510
Remeasurements of defined benefit
plan
805540
Net unrealised gain (loss) from
investments in equity instruments at
fair value through other
comprehensive income
805560
Other comprehensive gain (loss) of
subsidiaries, associates, and joint
ventures accounted for under the
equity method - not reclassified to
profit or loss
805599
Income tax benefit relating to
components of other comprehensive
income that will not be reclassified
to profit or loss
Items may be reclassified to profit or
loss subsequently
805610
Translation gain (loss) on the
financial statements of foreign
operating entities
805615
Net unrealised gain (loss) from
investments in debt instruments at
fair value through other
comprehensive income
805000
Current other comprehensive
income (loss) (post-tax)
902006Total current comprehensive income
Earnings per share
975000
Basic earnings per share (in dollars)
985000
Diluted earnings per share (in
dollars)
$

The accompanying notes are an integral part of these parent company only financial statements.

~31~

PRESIDENT SECURITIES CORPORATION PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

For the year ended December 31, 2020
Balance at January 1, 2020
Net income for the year ended December 31,
2020
Other comprehensive income (loss) for the
year ended December 31, 2020
Total comprehensive income (loss)
Appropriations of 2019 earnings
Legal reserve
Special reserve
Cash dividends
Stock dividends
Disposal of investments in equity instruments
designated at fair value through other
comprehensive income
Balance at December 31, 2020
For the year ended December 31, 2021
Balance at January 1, 2021
Net income for the year ended December 31,
2021
Other comprehensive income (loss) for the
year ended December 31, 2021
Total comprehensive income (loss)
Appropriations of 2020 earnings
Legal reserve
Special reserve
Cash dividends
Stock dividends
Balance at December 31, 2021		 Notes Common stock Capital reserve Retained Earnings Retained Earnings Other equity interest Other equity interest Total equity
Legal reserve Special reserve Unappropriated
earnings		 Exchange
differences on
translation of
foreign financial
statements		 Unrealised gain or
loss on financial
assets measured at
fair value through
other comprehensive
income
6(28)
6(28)		 $
13,723,900
-
-
-
-
-
-
274,478
-
$
13,998,378
$
13,998,378
-
-
-
-
-
-
559,935
$
14,558,313


$
91,261
-
-
-
-
-
-
-
-
$
91,261
$
91,261
-
-
-
-
-
-
-
$
91,261


$
2,876,769
-
-
-
234,244
-
-
-
-
$
3,111,013
$
3,111,013
-
-
-
376,735
-
-
-
$
3,487,748


$
7,130,830
-
-
-
-
469,486
-
-
-
$
7,600,316
$
7,600,316
-
-
-
-
713,883
-
-
$
8,314,199		 $
2,355,105
3,607,518
(
17,197 )
3,590,321
(
234,244 )
(
469,486 )
(
1,372,390 )
(
274,478 )
177,031
$
3,771,859
$
3,771,859
4,007,435
(
106,422 )
3,901,013
(
376,735 )
(
713,883 )
(
2,099,757 )
(
559,935 )
$
3,922,562		 ($
58,216 )
-
27,298
27,298
-
-
-
-
-
($
30,918 )
($
30,918 )
-
(
34,891 )
(
34,891 )
-
-
-
-
($
65,809 )		 $
580,031
-
462,406
462,406
-
-
-
-
(
177,031 )
$
865,406
$
865,406
-
509,904
509,904
-
-
-
-
$
1,375,310		 $
26,699,680
3,607,518
472,507
4,080,025
-
-
(
1,372,390 )
-
-
$
29,407,315
$
29,407,315
4,007,435
368,591
4,376,026
-
-
(
2,099,757 )
-
$
31,683,584

The accompanying notes are an integral part of these parent company only financial statements.

~32~

PRESIDENT SECURITIES CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Net valuation (gain) loss on operating securities at fair value
through profit or loss

Net valuation (gain) loss on borrowed securities and bonds
with resale agreements-short sales at fair value through profit
or loss

Impairment loss and reversal of impairment gain

Depreciation

Amortization

Interest expense

Interest income (include financial income)

Dividend income
Share of profit of subsidiaries, associates and joint ventures
accounted for under the equity method

(Gain) loss on disposal of property and equipment

(Gain) loss on disposal of investments
(Gain) loss from lease modification

(Gain) loss on valuation of non-operating financial
instrument

Changes in operating assets and liabilities
Net changes in operating assets
Financial assets at fair value through profit or loss - current
Financial assets at fair value through other comprehensive
income - current
Bonds purchased under resale agreements
Margin loans receivable
Refinancing security deposits
Receivables from refinance guaranty
Receivable of securities business money lending
Receivables from security lending
Security lending deposits
Notes receivable
Accounts receivable
Accounts receivable - related parties
Prepayments
Other receivables
Other current assets
Net changes in liabilities relating to operating activities
Financial liabilities at fair value through profit or loss
Bonds sold under repurchase agreements
Deposits on short sales
Short sale proceeds payable
Guarantee deposit received on borrowed securities
Equity for each customer in the account
Accounts payable
Advance receipts
Collections on behalf of third parties
Other payable
Other financial liabilities - current
Other current liabilities		 Year ended December 31
Notes
2021
2020
$
4,632,779 $
3,926,596
6(2)(33)
862,680 (
995,619 )
6(35)
313,159
117,021
6(39)
(
7,846 )
17,510
6(44)
150,889
142,494
6(44)
24,676
14,911
6(42)
88,091
249,390
6(32)(46)
(
1,169,070 ) (
1,064,310 )
(
462,602 ) (
390,222 )
6(11)
(
213,779 ) (
303,699 )
6(12)
- (
1 )
-
25,676
6(46)
(
7 )
-
6(46)
4,901
7,352
6,679,835
3,655,513
- (
13,884 )
(
27,401 )
-
(
6,085,072 ) (
2,239,117 )
21,602
51,013
17,956
45,870
(
293,866 ) (
770,318 )
(
160,223 ) (
139,753 )
(
430,205 ) (
463,919 )
267 (
40 )
1,120,283 (
6,291,689 )
(
379 ) (
1,798 )
(
596 ) (
1,999 )
3,739 (
578 )
(
5,835,733 ) (
1,611,663 )
5,236,435
1,656,855
(
9,453,125 ) (
1,860,091 )
(
178,883 ) (
177,247 )
(
250,793 ) (
78,877 )
1,065,355
847,848
69,891
27,472
(
555,071 )
6,964,657
149
22
4,641,176
723,092
524,317
740,631
(
1,025,171 )
3,264,444
(
3,380 )
63,875

(Continued)

~33~

PRESIDENT SECURITIES CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

Cash (outflow) inflow generated from operations
Interest received
Dividends received
Income tax paid
Net cash flows from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Investments accounted for under the equity method
Acquisition of property and equipment

(Gain) loss on disposal of property and equipment
Acquisition of intangible assets

(Increase) decrease in other non-current assets
(Increase) decrease in prepayment for equipment
Acquisition of investments accounted for under the equity
method
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in short-term loans
Increase (decrease) in commercial papers payable
Increase (decrease) in other non-current liabilities
Payments of lease liabilities
Interest paid
Distribution of cash dividends

Net cash flows used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year		 Year ended December 31
Notes
2021
2020
( $
695,022 ) $
6,137,418
1,079,490
1,138,004
713,513
609,128
(
354,754 ) (
161,284 )
743,227
7,723,266
- (
3,844,497 )
6(12)
(
46,729 ) (
23,990 )
-
13
6(16)
(
41,381 ) (
10,032 )
(
84,734 ) (
84,496 )
(
123,975 ) (
69,632 )
-
2,263,273
(
296,819 ) (
1,769,361 )
11,024 (
2,266,526 )
1,350,000 (
2,300,000 )
(
969 ) (
2,537 )
(
67,865 ) (
66,454 )
(
94,833 ) (
261,268 )
6(28)
(
2,099,757 ) (
1,372,390 )
(
902,400 ) (
6,269,175 )
31,834 (
7,265 )
(
424,158 ) (
322,535 )
3,507,116
3,829,651
$
3,082,958 $
3,507,116

The accompanying notes are an integral part of these parent company only financial statements.

~34~

APPENDIX IV

President Securities Corporation 2021 Earnings Distribution Proposal

President Securities Corporation
2021 Earnings Distribution Proposal
Unit:：NT$
Unappropriated earnings as of January 1, 2021 (Note 1) $21,548,521
Add(Less)：Due to remeasurement of defined benefits plan (Note 2) (106,421,343)
Add：Net profit after tax of 2021 4,007,434,826
Subtotal 3,922,562,004
Less：Legal Reserve (10%) (Note 3) (390,101,349)
Special Reserve (20%) (Note 4) (780,202,697)
Reversing Special Reserve(Note 5) 3,413,183
Unappropriated earnings Available for Distribution 2,755,671,141
Distribution items
─ Cash dividend (NT$ 1.89 / per share) 2,751,521,239
Unappropriated earnings as of December 31, 2021 $4,149,902

  • Note 1[：] The amount of unappropriated earnings in the earning distributions resolved by the shareholders’ meeting of 2021

  • Note 2[：] The Company has adopted T-IFRSs and unappropriated earnings was decreased by NT$106,421,343 due to remeasurement of defined benefits plan (included in other comprehensive income).

  • Note 3[：] According to Article 237 of the Company Act, Jingshan Letter No.10802432410 and Article 23-1 of the Company’s Article of Incorporation, 10% were set aside as legal reserve.

  • Note 4[：] According to Article 14 of Regulations Governing Securities Firms, and Article 23-1 of the Company’s Article of Incorporation, 20% were set aside as special reserve.

  • Note 5[：] According to Jin-Guan-Zheng-Quan Letter No. 1080321644 starting from 2019, the special reserve, within the balance of special reserve set aside during 2016 to 2018, could be reversed at the same amount for employee transfer and settlement expenditure, and employees’ transformation training expenditure arising from the development of fintech, securities and futures business.

  • Note 6[：] Prior years’ unappropriated earnings shall not be appropriated unless the current year’s unappropriated earnings is insufficient for distribution.

  • Note 7[：] Total common shares outstanding as of December 31, 2021 was 1,455,831,343 shares.

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APPENDIX V

Comparison table of Amendments to “Articles of Incorporation”

Article Amendment Original Articles Amendment instructions
Article
9-1		 The shareholders’ meeting can
be held by means of visual
communication network, partly
visual communication network
or other methods promulgated
by the central competent
authority. Under the
circumstances of calamities,
incidents, or force majeure, the
central competent authority
may promulgate a ruling that
authorizes a company, within a
certain period of time can hold
its shareholders’ meeting by
means of visual communication
network or other promulgated
methods.
In case a shareholders’
meeting is proceeded via visual
communication network or
partly visual communication
network, the shareholders
taking part in such a visual
communication meeting shall
be deemed to have attended
the meeting in person.
For the preceding two
paragraphs, the Company shall
be subject to prescriptions
provided for by the competent
authority in charge of securities
affairs, including the
prerequisites, procedures, and
other compliance matters.		 According to Presidential
Order NO. 11000115851,
which announced the
amendment of Company
Act Article 172-2. A
company may explicitly
provide for in its Articles of
Incorporation that its
shareholders’ meeting can
be held by means of
visual communication
network, partly visual
communication network or
other methods
promulgated by the
central competent
authority.
Article
26		 These Articles were duly
established on November 26,
1988 and the first amendment
was approved on December
28, 1988; ------------;the thirtieth
amendment on June 23, 2022.		 These Articles were duly
established on November 26,
1988 and the first amendment
was approved on December
28, 1988; ------------; the twenty
ninth amendment on June 17,
2021.		 Amendment date.

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APPENDIX VI

APPENDIX VI APPENDIX VI
Comparison table of Amendments to
“Procedures for Acquisition or Disposal of Assets”
Article Amendment Original Articles
Article 2 Article 2:
These Regulations are adopted in
accordance with the provision of
Regulations Governing the Acquisition
and Disposal of Assets by Public
Companies. The company shall handle
the acquisition or disposal of assets in
compliance with these Regulations.
However, if financial related laws or
regulations provide otherwise, those
laws and regulations shall take
precedence.		 Article 2:
These Regulations are adopted in
accordance with the provision of
Regulations Governing the Acquisition
and Disposal of Assets by Public
Companies. The company shall handle
the acquisition or disposal of assets in
compliance with these Regulations.
However, if financial related laws or
regulations provide otherwise, those
laws and regulations shall take
precedence.
Article 5 Article 5
Professional appraisers and their
officers, certified public accounts,
attorneys, and securities underwriters
that provide public companies with
appraisal reports, certified public
accountant's opinions, attorney's
opinions, or underwriter's opinions
shall meet the following requirements:
1. May not have previously received a
final and unappealable sentence to
imprisonment for 1 year or longer for
a violation of the Act, the Company
Act, the Banking Act of The Republic
of China, the Insurance Act, the
Financial Holding Company Act, or
the Business Entity Accounting Act,
or for fraud, breach of trust,
embezzlement, forgery of
documents, or occupational crime.
However, this provision does not
apply if 3 years have already
passed since completion of service
of the sentence, since expiration of
the period of a suspended sentence,
or since a pardon was received.
2. May not be a related party or de
facto related party of any party to
the transaction.
3. If the company is required to obtain
appraisal reports from two or more
professional appraisers, the different
professional appraisers or appraisal
officers may not be related parties or
defactorelated parties ofeach		 Article 5
Professional appraisers and their
officers, certified public accounts,
attorneys, and securities underwriters
that provide public companies with
appraisal reports, certified public
accountant's opinions, attorney's
opinions, or underwriter's opinions shall
meet the following requirements:
1. May not have previously received a
final and unappealable sentence to
imprisonment for 1 year or longer for
a violation of the Act, the Company
Act, the Banking Act of The Republic
of China, the Insurance Act, the
Financial Holding Company Act, or
the Business Entity Accounting Act,
or for fraud, breach of trust,
embezzlement, forgery of
documents, or occupational crime.
However, this provision does not
apply if 3 years have already passed
since completion of service of the
sentence, since expiration of the
period of a suspended sentence, or
since a pardon was received.
2. May not be a related party or de
facto related party of any party to the
transaction.
3. If the company is required to obtain
appraisal reports from two or more
professional appraisers, the different
professional appraisers or appraisal
officers may not be related parties or
defactorelated parties ofeach

~37~

other.
When issuing an appraisal report or
opinion, the personnel referred to in
the preceding paragraph shall comply
withthe self-regulatory rules of their
respective trade council andthe
following:
1. Prior to accepting a case, they shall
prudently assess their own
professional capabilities, practical
experience, and independence.
2. Whenexecutinga 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
appropriatenessand
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 isappropriate and
reasonable, and that they have
complied with applicable laws and
regulations.		 other.
When issuing an appraisal report or
opinion, the personnel referred to in the
preceding paragraph shall comply with
the following:
1. Prior to accepting a case, they shall
prudently assess their own
professional capabilities, practical
experience, and independence.
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 they have
evaluated and found that the
information used is reasonable and
accurate, and that they have
complied with applicable laws and
regulations.
Article 7 Article 7
The procedures and provisions of
“Procedures for the Acquisition or
Disposal of Assets” should be
stipulated in the provisions of Internal
Control System.If the provisions of
Internal Control System cannot meet
the requirements of “Procedures for
the Acquisition or Disposal of Assets”,
the transaction shall be complying with
the provisions of this procedure.
1. Evaluation procedures:
For the acquisition or disposal of		 Article 7
The procedures and provisions of
“Procedures for the Acquisition or
Disposal of Assets” should be stipulated
in the provisions of Internal Control
System.If the provisions of Internal
Control System cannot meet the
requirements of “Procedures for the
Acquisition or Disposal of Assets”, the
transaction shall be complying with the
provisions of this procedure.
1. Evaluation procedures:
For the acquisition or disposal of

~38~

assets, the credit risk, market risk,
liquidity risk, operational risk, legal
risk and efficiency should be
evaluated. The Internal assessment
should be stipulated in accordance
with the internal control system.An
opinion should still be issued by an
expert for reference according to
the following method.
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		 assets, the credit risk, market risk,
liquidity risk, operational risk, legal
risk and efficiency should be
evaluated. The Internal assessment
should be stipulated in accordance
with the internal control system.An
opinion should still be issued by an
expert for reference according to the
following method.
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

~39~

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 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.
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.
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 regardingthe		 results for the assets to be
disposed of are lower than the
transaction amount, a certified
public accountant shall be
engaged toperform 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.
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.
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 certifiedpublic accountant

~40~

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).
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.
(omit the below)		 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).
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.
(omit the below)
Article 8 Article 8
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,		 Article 8
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

~41~

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.
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:
1) For the company whose paid-in
capital is less than NT$10 billion,
the transaction amount reaches
NT$500 million or more.
2) For the company whose paid-in
capital is NT$10 billion or more, the
transaction amount reaches NT$1
billion or more.
5. 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.
6. Where an asset transaction other
than any of those referred to in the
preceding five subparagraphs, a
disposal of receivables by a
financial institution, or an
investment in the mainland China
area reaches 20percent or more of		 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.
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:
1) For the company whose paid-in
capital is less than NT$10 billion, the
transaction amount reaches NT$500
million or more.
2) For the company whose paid-in
capital is NT$10 billion or more, the
transaction amount reaches NT$1
billion or more.
5. 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.
6. Where an asset transaction other
than any of those referred to in the
preceding five subparagraphs, 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 applyto the following

~42~

paid-in capital or NT$300 million;
provided, this shall not apply to the
following circumstances:
1) Trading of domestic government
bondsor foreign government bonds
with a sovereign rating not lower
than the sovereign rating of the
ROC.
2) Where done by professional
investors—securities trading on
securities exchanges or OTC
markets, or subscription offoreign
government 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 subscription
or sellback of exchange traded
notes, 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.
3) Trading of bonds under
repurchase/resale agreements, or
subscription or redemption of
money market funds issued by
domestic securities investment trust
enterprises.
The amount of transactions above
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 trading 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
developmentproject within the		 circumstances:
1) Trading of domestic government
bonds.
2) 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.
3) Trading of bonds under
repurchase/resale agreements, or
subscription or redemption of money
market funds issued by domestic
securities investment trust
enterprises.
The amount of transactions above 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 trading 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.
(omit the below)

~43~

preceding year.
4. The cumulative transaction amount
of acquisitions and disposals
(cumulative acquisitions and
disposals, respectively) of the same
security within the preceding year.
(omit the below)
Article 10 Article 10
Procedure for Related Party
Transactions:
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 Article 7. The
calculation of the transaction
amount shall be made in
accordance with paragraph 2 of
Article 8 herein. When judging
whether a trading counterparty is a
related party, in addition to legal
formalities, the substance of the
relationship shall also be
considered.
2. 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
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		 Article 10
Procedure for Related Party
Transactions:
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
Article 7. The calculation of the
transaction amount shall be made in
accordance with paragraph 2 of
Article 8 herein. When judging
whether a trading counterparty is a
related party, in addition to legal
formalities, the substance of the
relationship shall also be considered.
2. 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 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 followingmatters

~44~

company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by the board of directors and recognized by the supervisors:

1) The purpose, necessity and anticipated benefit of the acquisition or disposal of assets. 2) The reason for choosing the related party as a trading 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 paragraph 3 through 6. 4) The date and price at which the related party originally acquired the real property, the original trading counterparty, and that trading 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 Subparagraph 1 of paragraph 1. 7) Restrictive covenants and other important stipulations associated with the transaction. 8) The calculation of the transaction amounts shall be made in accordance with Article 8, paragraph 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 the shareholders' meeting, board of directors and recognized by the supervisors need not be counted toward the

have been approved by the board of directors and recognized by the supervisors:

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

2) The reason for choosing the related party as a trading 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 paragraph 3 through 6.

4) The date and price at which the related party originally acquired the real property, the original trading counterparty, and that trading 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 Subparagraph 1 of paragraph 1. 7) Restrictive covenants and other important stipulations associated with the transaction. 8) The calculation of the transaction amounts shall be made in accordance with Article 8, paragraph 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 the board of directors and recognized by the supervisors need not be counted toward the transaction amount. 9) Where the position of independent director has been created in accordance with the provisions of the

~45~

transaction amount.
9) Where the position of
independent director has been
created in accordance with the
provisions of the Act, when a matter
is submitted for discussion by the
board of directors pursuant to
paragraph 1, 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.
10)If the Company or its
subsidiaries that are not public
companies in Taiwan are engaged
in the transaction as described in
the first clause, and the transaction
amount reaches 10% or more of the
Company’s total assets, the
Company shall submit the
information listed in the first item to
the shareholders’meeting for
approval prior to entering into a
transaction contract and making a
payment. However, this restriction
does not apply to transactions
between the Company with its
parent and subsidiaries, or between
subsidiaries.
11)With respect to the types of
transactions listed below, when to
be conducted between the
company and its 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 a certain amount and have
the decisions subsequently
submitted to and ratified by the next
board of directors meeting:
A. Acquisition or disposal of
equipment or right-of-use assets
thereof held for business use.
B. Acquisition or disposal of real
propertyright-of-use assets held		 Act, when a matter is submitted for
discussion by the board of directors
pursuant to paragraph 1, 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.
10)With respect to the types of
transactions listed below, when to be
conducted between the company
and its 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 a certain amount
and have the decisions subsequently
submitted to and ratified by the next
board of directors meeting:
A. Acquisition or disposal of
equipment or right-of-use assets
thereof held for business use.
B. Acquisition or disposal of real
property right-of-use assets held
for business use.
3. 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
partyhaspreviouslycreated a

~46~

for business use.
3. 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
trading counterparties.
3) 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 preceding Item.
4) 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 Item 1
and Item 2 shall also engage a CPA
to check the appraisal and render a
specific opinion.		 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 trading
counterparties.
3) 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
preceding Item.
4) 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 Item 1
and Item 2 shall also engage a CPA
to check the appraisal and render a
specific opinion.
4. 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
Subparagraph 2 and Subparagraphs
3 do not apply:
1) The related party acquired the
real property or right-of-use assets
thereof through inheritance or as a
gift.
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
relatedpartyto build realproperty,

~47~

4. 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
Subparagraph 2 and
Subparagraphs 3 do not apply:
1) The related party acquired the
real property or right-of-use assets
thereof through inheritance or as a
gift.
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. When the results of the company's
appraisal conducted in accordance
with Item 1 through 3 of
Subparagraph 3 are uniformly lower
than the transaction price, the
matter shall be handled in
compliance with subparagraph 7.
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 have
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		 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. When the results of the company's
appraisal conducted in accordance
with Item 1 through 3 of
Subparagraph 3 are uniformly lower
than the transaction price, the matter
shall be handled in compliance with
subparagraph 7. 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 have 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:
(1) Where undeveloped land is
appraised in accordance with the
means in the preceding
paragraph, 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.
(2) Completed transactions by
unrelated parties within the
preceding year involving other
floors of the samepropertyor

~48~

following conditions:
(1) Where undeveloped land is
appraised in accordance with
the means in the preceding
paragraph, 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.
(2) 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 right-of-use assets
thereof from a related party
provides evidence that the terms of
the transaction are similar to the
terms of transactions completed for
the acquisition of neighboring or
closely valued parcels of land of a
similar size by unrelated parties
within the preceding year.
6. Completed transactions for
neighboring or closely valued
parcels of land in the preceding
Subparagraph 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 inpubliclyannounced current		 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 right-of-use assets
thereof from a related party provides
evidence that the terms of the
transaction are similar to the terms of
transactions completed for the
acquisition of neighboring or closely
valued parcels of land of a similar
size by unrelated parties within the
preceding year.
6. Completed transactions for
neighboring or closely valued
parcels of land in the preceding
Subparagraph 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; transaction for 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 right-of-use assets
thereof.
7. 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 Subparagraph 3
through 5 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 Securities and
Exchange Act against the difference
between the real property or right-of-
use assets thereof transactionprice

~49~

value; transaction for 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 right-of-use assets thereof.
7. 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 Subparagraph 3
through 5 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 Securities and
Exchange Act against the difference
between the real property or right-
of-use assets thereof transaction
price and the appraised cost, and
may not be distributed or used for
capital increase or issuance of
bonus shares. Where a public
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 and
Exchange Act shall be set aside pro
rata in a proportion consistent with
the share of public company's
equity stake in the other company.
2) Supervisors shall comply with
Article 218 of the Company Act.
Where an audit committee has
been established in accordance
with the provisions of the Act, the
preceding part of this subparagraph
shall apply mutatis mutandis to the
independent director members of
the audit committee.
3) Actions taken pursuant to the
preceding two subparagraphs shall
be reported to a shareholders
meeting, and the details of the
transaction shall be disclosed in the		 and the appraised cost, and may not
be distributed or used for capital
increase or issuance of bonus
shares. Where a public 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 and Exchange Act
shall be set aside pro rata in a
proportion consistent with the share
of public company's equity stake in
the other company.
2) Supervisors shall comply with
Article 218 of the Company Act.
Where an audit committee has been
established in accordance with the
provisions of the Act, the preceding
part of this subparagraph shall apply
mutatis mutandis to the independent
director members of the audit
committee.
3) Actions taken pursuant to the
preceding two subparagraphs shall
be reported to a shareholders
meeting, and the details of the
transaction shall be disclosed in the
annual report and any investment
prospectus.
8. The company that has set aside a
special reserve under the preceding
Subparagraph 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 FSChas given its consent.
9. When the company obtains real
property or right-of-use assets
thereof from a related party, it shall
also comply with the preceding two
Subparagraphs if there is other
evidence indicating that the
acquisition was not an arms length

~50~

annual report and any investment
prospectus.
8. The company that has set aside a
special reserve under the preceding
Subparagraph 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.
9. When the company obtains real
property or right-of-use assets
thereof from a related party, it shall
also comply with the preceding two
Subparagraphs if there is other
evidence indicating that the
acquisition was not an arms length
transaction.		 transaction.
Article 11 Article 11
1. A public 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 a public
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 thepublic companydirectly		 Article 11
1. A public 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
a public 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
indirectlyholds 100percent of the

~51~

or indirectly holds 100 percent of
the respective subsidiaries’ issued
shares or authorized capital.
2. A public 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 in paragraph 1
of the preceding Article 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. 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.
3. 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 provides
otherwise or the FSC is notified in
advance of extraordinary
circumstances and grants consent.
A company participatingin a		 respective subsidiaries’ issued
shares or authorized capital.
2. A public 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 in paragraph 1 of
the preceding Article 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. 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.
3. 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 provides
otherwise or the FSC is notified in
advance of extraordinary
circumstances and grants consent.
A company participating in a transfer
of shares shall call a board of
directors meeting on the day of the
transaction,unless another act

~52~

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.
4. 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. 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, 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 system)		 provides otherwise or the FSC is
notified in advance of extraordinary
circumstances and grants consent.
4. 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. 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, 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 system)
the information set out in
subparagraphs 4 of item 1 and 2 to
theFSCfor recordation.

~53~

the information set out in
subparagraphs 4 of item 1 and 2 to
theFSCfor recordation.
(omit the below)		 (omit the below)

~54~

APPENDIX VII

Comparison table of Amendments to “Rules and Procedures of Shareholders’ Meeting”

Article Amendment Original Articles

Article03 (The above is omitted) Changes to how the Company convenes its shareholders meeting shall be resolved by the board of directors, and shall be made no later than mailing of the shareholders meeting notice.

(The above is omitted) Changes to how the The Company shall prepare Company convenes its electronic files of the shareholders meeting shall meeting announcement, be resolved by the board of proxy form, explanatory directors, and shall be made materials relating to no later than mailing of the proposals for ratification, shareholders meeting matters for deliberation, notice. election or dismissal of The Company shall prepare directors or Independent electronic versions of the Directors, and other matters shareholders meeting notice on the shareholders’ and proxy forms, and the meeting agenda, and origins of and explanatory upload them to the MOPS materials relating to all website thirty (30) days proposals, including prior to a regular proposals for ratification, shareholders’ meeting or matters for deliberation, or fifteen (15) days prior to a the election or dismissal of temporary shareholders’ directors or supervisors, and meeting Twenty-one upload them to the Market (21)days before a company Observation Post System is to convene an ordinary (MOPS) before 30 days shareholders’ meeting, or before the date of a regular fifteen (15) days before an shareholders meeting or temporary shareholders' before 15 days before the meeting, it shall prepare an date of a special electronic file of the shareholders meeting. The shareholders’ meeting Company shall prepare agenda handbook and the electronic versions of the supplemental materials, and shareholders meeting upload it to the MOPS agenda and supplemental website. Fifteen (15) days meeting materials and before a company is to upload them to the MOPS convene a shareholders’ before 21 days before the meeting, it shall prepare the date of the regular shareholders’ meeting shareholders meeting or agenda handbook and before 15 days before the supplemental materials and date of the special make them available for the shareholders meeting. If, shareholders to obtain and however, the Company has review at any time. In the paid-in capital of NT$10 addition, the handbook shall billion or more as of the last be displayed at the day of the most current company and its stock fiscal year, or total registrar and transfer agent, shareholding of foreign and distributed on-site at shareholders and PRC the meeting.

Amended per 8 March 2022 Letter No. Taiwan-StockGovernance11100042501 of the Taiwan Stock Exchange Corporation and the "Rules of Procedures of the Stockholders' Meeting of ○○ Corporation".

~55~

shareholders reaches 30% (Omitted below) or more as recorded in the register of shareholders of the shareholders meeting held in the immediately preceding year, transmission of these electronic files shall be made by 30 days before the regular shareholders meeting. In addition, before 15 days before the date of the shareholders meeting, the Company shall also have prepared the shareholders meeting agenda and supplemental meeting materials and made them available for review by shareholders at any time. The meeting agenda and supplemental materials shall also be displayed at the Company and the professional shareholder services agent designated thereby. This Corporate shall make the meeting agenda and supplemental meeting materials in the preceding paragraph available to shareholders for review in the following manner on the date of the shareholders meeting:

  1. For physical shareholders meetings, to be distributed on-site at the meeting. 2. For hybrid shareholders meetings, to be distributed on-site at the meeting and shared on the virtual meeting platform. 3. For virtual-only shareholders meetings, electronic files shall be

~56~

shared on the virtual
meeting platform.
(Omitted below)
Article04 (The above is omitted)
If, after a proxy form is
delivered to the Company, a
shareholder wishes to
attend the shareholders
meeting online, a written
notice of proxy cancellation
shall be submitted to the
Company two business
days before the meeting
date. If the cancellation
notice is submitted after that
time, votes cast at the
meeting by the proxy shall
prevail.		 (The above is omitted) Amended per 8
March 2022 Letter
No. Taiwan-Stock-
Governance-
11100042501 of the
Taiwan Stock
Exchange
Corporation and the
"Rules of Procedures
of the Stockholders'
Meeting of ○○
Corporation".
Article05 (The above is omitted)
The restrictions on the place
of the meeting shall not
apply when the Company
convenes a virtual-only
shareholders meeting.		 (The above is omitted) Amended per 8
March 2022 Letter
No. Taiwan-Stock-
Governance-
11100042501 of the
Taiwan Stock
Exchange
Corporation and the
"Rules of Procedures
of the Stockholders'
Meeting of ○○
Corporation".
Article06 The Company shall specify
in its shareholders meeting
notices the time during
which attendance
registrations for
shareholders, solicitors and
proxies (collectively
"shareholders") will be
accepted, the place to
register for attendance, and
other matters for attention.
The time during which
shareholder attendance
registrations will be
accepted, as stated in the
preceding paragraph, shall
be at least 30 minutes prior
to the time the meeting
commences. Theplace at		 The company shall, in the
meeting notice, state the
reporting time, reporting
venue and other items of
importance for accepting
shareholders.
The abovementioned
accepted shareholders shall
report at least 30 minutes
before the start of the
meeting; the reporting
venue shall be clearly
identifiable and managed by
an adequate number of staff
who are adequately
competent.
Shareholders or agents
authorized by shareholders
(hereinafter referred to as		 Amended per 8
March 2022 Letter
No. Taiwan-Stock-
Governance-
11100042501 of the
Taiwan Stock
Exchange
Corporation and the
"Rules of Procedures
of the Stockholders'
Meeting of ○○
Corporation".

~57~

which attendance
registrations are accepted
shall be clearly marked and
a sufficient number of
suitable personnel assigned
to handle the registrations.
For virtual shareholders
meetings, shareholders may
begin to register on the
virtual meeting platform 30
minutes before the meeting
starts. Shareholders
completing registration will
be deemed as attend the
shareholders meeting in
person.
Shareholders shall attend
shareholders meetings
based on attendance cards,
sign-in cards, or other
certificates of attendance.
Solicitors soliciting proxy
forms shall also bring
identification documents for
verification.
(Section 4 to Section 6 is
omitted)
In the event of a virtual
shareholders meeting,
shareholders wishing to
attend the meeting online
shall register with the
Company two days before
the meeting date.
In the event of a virtual
shareholders meeting, the
Company shall upload the
meeting agenda book,
annual report and other
meeting materials to the
virtual meeting platform at
least 30 minutes before the
meeting starts, and keep
this information disclosed
until the end of the meeting.		 shareholders) shall present
their attendance ID,
attendance cards or other
attendance certificates at
the shareholders' meeting;
solicitors soliciting proxy
forms shall bring along their
identification documents for
verification purposes.
(Omitted below)
Article
6-1		 To convene a virtual
shareholders meeting, the
Company shall include the
follow particulars in the
shareholders meeting
notice:		 Amended per 8
March 2022 Letter
No. Taiwan-Stock-
Governance-
11100042501 of the
TaiwanStock

~58~

1. How shareholders attend
the virtual meeting and
exercise their rights.
2. Actions to be taken if the
virtual meeting platform or
participation in the virtual
meeting is obstructed due to
natural disasters, accidents
or other force majeure
events, at least covering the
following particulars:
A. To what time the meeting
is postponed or from
what time the meeting
will resume if the above
obstruction continues and
cannot be removed, and
the date to which the
meeting is postponed or
on which the meeting will
resume.
B. Shareholders not having
registered to attend the
affected virtual
shareholders meeting
shall not attend the
postponed or resumed
session.
C. In case of a hybrid
shareholders meeting,
when the virtual meeting
cannot be continued, if
the total number of
shares represented at the
meeting, after deducting
those represented by
shareholders attending
the virtual shareholders
meeting online, meets
the minimum legal
requirement for a
shareholder meeting,
then the shareholders
meeting shall continue.
The shares represented
by shareholders
attending the virtual
meeting online shall be
counted towards the total
number of shares
represented by		 Exchange
Corporation and the
"Rules of Procedures
of the Stockholders'
Meeting of ○○
Corporation".

~59~

shareholders present at
the meeting, and the
shareholders attending
the virtual meeting online
shall be deemed
abstaining from voting on
all proposals on meeting
agenda of that
shareholders meeting.
D. Actions to be taken if the
outcome of all proposals
have been announced
and extraordinary motion
has not been carried out.
3. To convene a virtual-only
shareholders meeting,
appropriate alternative
measures available to
shareholders with difficulties
in attending a virtual
shareholders meeting online
shall be specified.
Article08 (The above is omitted)
Where a shareholders
meeting is held online, the
Company shall keep records
of shareholder registration,
sign-in, check-in, questions
raised, votes cast and
results of votes counted by
the Company, and
continuously audio and
video record, without
interruption, the proceedings
of the virtual meeting from
beginning to end.
The information and audio
and video recording in the
preceding paragraph shall
be properly kept by the
Company during the entirety
of its existence, and copies
of the audio and video
recording shall be provided
to and kept by the party
appointed to handle matters
of the virtual meeting.
In case of a virtual
shareholders meeting, the
Companyis advised to		 (The above is omitted) Amended per 8
March 2022 Letter
No. Taiwan-Stock-
Governance-
11100042501 of the
Taiwan Stock
Exchange
Corporation and the
"Rules of Procedures
of the Stockholders'
Meeting of ○○
Corporation".

~60~

audio and video record the
back-end operation interface
of the virtual meeting
platform.
Article09 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, and the
shares checked in on the
virtual meeting platform,
plus the number of shares
whose voting rights are
exercised by
correspondence or
electronically.
The chair shall call the
meeting to order at the
appointed meeting time and
disclose information
concerning the number of
nonvoting shares and
number of shares
represented by
shareholders attending the
meeting.
However, when the
attending shareholders do
not represent a majority of
the total number of issued
shares, the chair may
announce a postponement,
provided that no more than
two such postponements,
for a combined total of no
more than one hour, may be
made. If the quorum is not
met after two
postponements and the
attending shareholders still
represent less than one third
of the total number of issued
shares, the chair shall
declare the meeting
adjourned. In the event of a
virtual shareholders
meeting, the Company shall		 Whether the shareholders’
meeting meets the quorum
shall be determined based
on the total amount of
shares represented at the
meeting which shall be
counted according to the
numbers of attendance
cards received plus voting
power exercised by way of
electronic transmission.
The chairperson shall call
the meeting to order as
scheduled, provided that
where the number of shares
represented at the meeting
accounts for less than the
majority of the total issued
shares, the chairperson
may announce to postpone
calling the meeting to order
twice and only twice for a
total duration of not more
than one hour. If the
quorum is still not met after
the above postponement
duration has expired and
the total number of shares
represented at the meeting
still accounts for less than
one third of the total issued
shares of the Company, the
chairperson shall announce
to abort the meeting.
If the quorum is still not met
after the meeting has been
twice postponed as
provided in the preceding
paragraph but the number
of shares represented at the
meeting exceeds one third
of the total issued shares of
the Company, temporary
resolutions may be adopted
in accordance with the first
paragraph of Article 175 of
the CompanyAct,in which		 Amended per 8
March 2022 Letter
No. Taiwan-Stock-
Governance-
11100042501 of the
Taiwan Stock
Exchange
Corporation and the
"Rules of Procedures
of the Stockholders'
Meeting of ○○
Corporation".

~61~

also declare the meeting
adjourned at the virtual
meeting platform.
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 one
month. In the event of a
virtual shareholders
meeting, shareholders
intending to attend the
meeting online shall re-
register to the Company in
accordance with Article 6.
(Omitted below)		 case, the temporary
resolutions adopted shall be
notified to all shareholders
and the shareholders
meeting shall reconvene
within one month.
(Omitted below)
Article11 (The above is omitted)
Where a virtual
shareholders meeting is
convened, shareholders
attending the virtual meeting
online may raise questions
in writing at the virtual
meeting platform from the
chair declaring the meeting
open until the chair
declaring the meeting
adjourned. No more than
two questions for the same
proposal may be raised.
Each question shall contain
no more than 200 words.
The regulations in
paragraphs 1 to 5 do not
apply.
As long as questions so
raised in accordance with
the preceding paragraph are
not in violation of the
regulations orbeyond the		 (The above is omitted) Amended per 8
March 2022 Letter
No. Taiwan-Stock-
Governance-
11100042501 of the
Taiwan Stock
Exchange
Corporation and the
"Rules of Procedures
of the Stockholders'
Meeting of ○○
Corporation".

~62~

scope of a proposal, it is
advisable the questions be
disclosed to the public at the
virtual meeting platform.
Article13 (The above is omitted)
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 or online, a written
declaration of intent to
retract the voting rights
already exercised under the
preceding paragraph shall
be made known to the
Company, by the same
means by which the voting
rights were exercised,
before two business days
before the date of the
shareholders meeting. If the
notice of retraction is
submitted after that time, the
voting rights already
exercised by
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.
(Section 5 to Section 8 is
omitted)
When the Company
convenes a virtual
shareholders meeting, after
the chair declares the
meeting open, shareholders
attending the meeting online
shall cast votes on
proposals and elections on
the virtual meeting platform
before the chairannounces		 (The above is omitted)
In case a shareholder who
has exercised his/her voting
power by way of electronic
transmission intends to
attend the shareholders'
meeting in person, he/she
shall serve a separate
declaration of intention to
rescind his/her previous
declaration of intention
made in exercising the
voting power two days prior
to the meeting date of the
scheduled shareholders'
meeting and in the same
manner previously used in
exercising his/her/its voting
power. In the absence of a
timely rescission of the
previous declaration of
intention, the voting power
exercised by way of
electronic transmission shall
prevail.
(Section 5 to Section 8 is
omitted)		 Amended per 8
March 2022 Letter
No. Taiwan-Stock-
Governance-
11100042501 of the
Taiwan Stock
Exchange
Corporation and the
"Rules of Procedures
of the Stockholders'
Meeting of ○○
Corporation".

~63~

the voting session ends or
will be deemed abstained
from voting.
In the event of a virtual
shareholders meeting, votes
shall be counted at once
after the chair announces
the voting session ends, and
results of votes and
elections shall be
announced immediately.
When the Company
convenes a hybrid
shareholders meeting, if
shareholders who have
registered to attend the
meeting online in
accordance with Article 6
decide to attend the physical
shareholders meeting in
person, they shall revoke
their registration two days
before the shareholders
meeting in the same manner
as they registered. If their
registration is not revoked
within the time limit, they
may only attend the
shareholders meeting
online.
When shareholders exercise
voting rights by
correspondence or
electronic means, unless
they have withdrawn the
declaration of intent and
attended the shareholders
meeting online, except for
extraordinary motions, they
will not exercise voting
rights on the original
proposals or make any
amendments to the original
proposals or exercise voting
rights on amendments to the
originalproposal.
Article15 (The above is omitted)
Where a virtual
shareholders meeting is
convened, in addition to the
particulars to beincludedin		 (The above is omitted) Amended per 8
March 2022 Letter
No. Taiwan-Stock-
Governance-
11100042501ofthe

~64~

the meeting minutes as
described in the preceding
paragraph, the start time
and end time of the
shareholders meeting, how
the meeting is convened,
the chair's and secretary's
name, and actions to be
taken in the event of
disruption to the virtual
meeting platform or
participation in the meeting
online due to natural
disasters, accidents or other
force majeure events, and
how issues are dealt with
shall also be included in the
minutes.
When convening a virtual-
only shareholder meeting,
other than compliance with
the requirements in the
preceding paragraph, the
Company shall specify in
the meeting minutes
alternative measures
available to shareholders
with difficulties in attending
a virtual-only shareholders
meeting online.		 Taiwan Stock
Exchange
Corporation and the
"Rules of Procedures
of the Stockholders'
Meeting of ○○
Corporation".
Article16 On the day of a
shareholders meeting, the
Company shall compile in
the prescribed format a
statistical statement of the
number of shares obtained
by solicitors through
solicitation, the number of
shares represented by
proxies and the number of
shares represented by
shareholders attending the
meeting by correspondence
or electronic means, and
shall make an express
disclosure of the same at
the place of the
shareholders meeting. In the
event a virtual shareholders
meeting, the Company shall
upload the abovemeeting		 The Company shall count
the number of shares
represented by the
requesters and proxies
present at the meeting,
produce and clearly display
at the meeting a statistic
statement thereof according
to the required form.
(Omitted below)		 Amended per 8
March 2022 Letter
No. Taiwan-Stock-
Governance-
11100042501 of the
Taiwan Stock
Exchange
Corporation and the
"Rules of Procedures
of the Stockholders'
Meeting of ○○
Corporation".

~65~

materials to the virtual
meeting platform at least 30
minutes before the meeting
starts, and keep this
information disclosed until
the end of the meeting.
During the Company's
virtual shareholders
meeting, when the meeting
is called to order, the total
number of shares
represented at the meeting
shall be disclosed on the
virtual meeting platform. The
same shall apply whenever
the total number of shares
represented at the meeting
and a new tally of votes is
released during the meeting.
(Omitted below)
Article19 In the event of a virtual
shareholders meeting, the
Company shall disclose
real-time results of votes
and election immediately
after the end of the voting
session on the virtual
meeting platform according
to the regulations, and this
disclosure shall continue at
least 15 minutes after the
chair has announced the
meeting adjourned.		 Amended per 8
March 2022 Letter
No. Taiwan-Stock-
Governance-
11100042501 of the
Taiwan Stock
Exchange
Corporation and the
"Rules of Procedures
of the Stockholders'
Meeting of ○○
Corporation".
Article20 When the Company
convenes a virtual-only
shareholders meeting, both
the chair and secretary shall
be in the same location, and
the chair shall declare the
address of their location
when the meeting is called
to order.		 Amended per 8
March 2022 Letter
No. Taiwan-Stock-
Governance-
11100042501 of the
Taiwan Stock
Exchange
Corporation and the
"Rules of Procedures
of the Stockholders'
Meeting of ○○
Corporation".
Article21 In the event of a virtual
shareholders meeting, the
Company may offer a
simple connection test to
shareholders prior to the
meeting, and provide		 Amended per 8
March 2022 Letter
No. Taiwan-Stock-
Governance-
11100042501 of the
Taiwan Stock

~66~

relevant real-time services before and during the meeting to help resolve communication technical issues. In the event of a virtual shareholders meeting, when declaring the meeting open, the chair shall also declare, unless under a circumstance where a meeting is not required to be postponed to or resumed at another time under Article 44-20, paragraph 4 of the Regulations Governing the Administration of Shareholder Services of Public Companies, if the virtual meeting platform or participation in the virtual meeting is obstructed due to natural disasters, accidents or other force majeure events before the chair has announced the meeting adjourned, and the obstruction continues for more than 30 minutes, the meeting shall be postponed to or resumed on another date within five days, in which case Article 182 of the Company Act shall not apply. For a meeting to be postponed or resumed as described in the preceding paragraph, shareholders who have not registered to participate in the affected shareholders meeting online shall not attend the postponed or resumed session. For a meeting to be postponed or resumed under the second paragraph, the number of shares represented by, and voting rights and election

Exchange Corporation and the "Rules of Procedures of the Stockholders' Meeting of ○○ Corporation".

~67~

rights exercised by the shareholders who have registered to participate in the affected shareholders meeting and have successfully signed in the meeting, but do not attend the postpone or resumed session, at the affected shareholders meeting, shall be counted towards the total number of shares, number of voting rights and number of election rights represented at the postponed or resumed session. During a postponed or resumed session of a shareholders meeting held under the second paragraph, no further discussion or resolution is required for proposals for which votes have been cast and counted and results have been announced, or list of elected directors and supervisors. When the Company convenes a hybrid shareholders meeting, and the virtual meeting cannot continue as described in second paragraph, if the total number of shares represented at the meeting, after deducting those represented by shareholders attending the virtual shareholders meeting online, still meets the minimum legal requirement for a shareholder meeting, then the shareholders meeting shall continue, and not postponement or resumption thereof under the second paragraph is required. Under the circumstances

~68~

where a meeting should continue as in the preceding paragraph, the shares represented by shareholders attending the virtual meeting online shall be counted towards the total number of shares represented by shareholders present at the meeting, provided these shareholders shall be deemed abstaining from voting on all proposals on meeting agenda of that shareholders meeting. When postponing or resuming a meeting according to the second paragraph, the Company shall handle the preparatory work based on the date of the original shareholders meeting in accordance with the requirements listed under Article 44-20, paragraph 7 of the Regulations Governing the Administration of Shareholder Services of Public Companies. For dates or period set forth under Article 12, second half, and Article 13, paragraph 3 of Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies, and Article 44-5, paragraph 2, Article 44-15, and Article 4417, paragraph 1 of the Regulations Governing the Administration of Shareholder Services of Public Companies, the Company hall handle the matter based on the date of the shareholders meeting that is postponed or resumed under the second

~69~

paragraph.
Article22 When convening a virtual-
only shareholders meeting,
the Company shall provide
appropriate alternative
measures available to
shareholders with difficulties
in attending a virtual
shareholders meeting
online.		 Amended per 8
March 2022 Letter
No. Taiwan-Stock-
Governance-
11100042501 of the
Taiwan Stock
Exchange
Corporation and the
"Rules of Procedures
of the Stockholders'
Meeting of ○○
Corporation".
Article23 (The above is omitted)
These Rules were duly
established on April
16th,1998 and the first
amendment was approved
on June 25th,2010. The
second amendment was
approved on June
24th,2011. The third
amendment was approved
on June 22th,2012. The
fourth amendment was
approved on June
19th,2013.
The fifth amendment was
approved on June
18th,2014. The sixth
amendment was approved
on June 22th,2017. The
seventh amendment was
approved on July 20th,2021.
The eighth amendment was
approved on June
23th,2022.		 (The above is omitted)
These Rules were duly
established on April
16th,1998 and the first
amendment was approved
on June 25th,2010. The
second amendment was
approved on June
24th,2011. The third
amendment was approved
on June 22th,2012. The
fourth amendment was
approved on June
19th,2013.
The fifth amendment was
approved on June
18th,2014. The sixth
amendment was approved
on June 22th,2017. The
seventh amendment was
approved on July 20th,2021.		 Add the eighth
amendment time.

~70~

APPENDIX VIII

President Securities Corporation Rules and Procedures of Shareholders’ Meeting

Article01 These Rules are prescribed in accordance with Article 5 of the Corporate Governance Best-Practice Principles for TSE/GTSM Listed Companies for the purpose of establishing good governance, strengthening the supervisory functions and administration by the shareholders’ meeting.

Article02 Except as otherwise provided by the laws and regulations or the Articles of Incorporation of the Company, the shareholders’ meetings of the Company shall be in accordance with these Rules.

Article03 Except as otherwise provided by the laws and regulations, the shareholders’ meeting of the Company shall be convened by the Board of Directors.

The company shall prepare electronic files of the meeting announcement, proxy form, explanatory materials relating to proposals for ratification, matters for deliberation, election or dismissal of directors or Independent Directors, and other matters on the shareholders’ meeting agenda, and upload them to the MOPS website thirty (30) days prior to a regular shareholders’ meeting or fifteen (15) days prior to a temporary shareholders’ meeting Twenty-one (21)days before a company is to convene an ordinary shareholders’ meeting, or fifteen (15) days before an temporary shareholders' meeting, it shall prepare an electronic file of the shareholders’ meeting agenda handbook and the supplemental materials, and upload it to the MOPS website. Fifteen (15) days before a company is to convene a shareholders’ meeting, it shall prepare the shareholders’ meeting agenda handbook and supplemental materials and make them available for the shareholders to obtain and review at any time. In addition, the handbook shall be displayed at the company and its stock registrar and transfer agent, and distributed on-site at the meeting.

The meeting notice and the public announcement of the shareholders meeting shall expressly indicate the reasons for convening the meeting.

The meeting notice can be served by means of electricity facilities if agreed by the noticed party.

Election or dismissal of directors, supervisors, proposed amendment to the Articles of Incorporation, proposed dissolution, merger, or split of the Company, event(s) of the conditions provided in the first paragraph of Article 185 of the Company Act, or Article 26-1, or Article 43-6 of the Securities And Exchange Act must be indicated item by item in the reasons for convening the meeting in the meeting notice and none of them can be proposed by way of extempore motion.

Where re-election of all directors and supervisors as well as their inauguration date is stated in the notice of the reasons for convening the shareholders meeting, after the completion of the re-election in said meeting such inauguration date may not be altered by any extraordinary motion or otherwise in the same meeting.

A shareholder who holds 1% or more of the total issued shares of the Company may

~71~

propose in writing one and only one proposal in advance to be included in the agenda for discussion and resolution at the shareholders meeting. All additional proposals, if any, proposed by the shareholder shall be excluded from the agenda. A shareholder proposal is provided for urging the corporation to promote public interests or fulfill its social responsibilities may still be included in the agenda by the board of directors. The Board of Directors may decide to exclude from the agenda any proposal proposed by the shareholder which runs into any of the conditions provided in the fourth paragraph of Article 172 -1 of the Company Act.

The Company shall make public announcement about when and where to submit proposal prior to the commencement date of the suspension of transfer of shares in the Company and the opening period for proposal acceptance shall not less than 10 days.

The proposal proposed by the shareholder shall be written in not more than 300 Chinese characters or shall otherwise be excluded from the agenda. The shareholder who has proposed a proposal shall personally attend the general shareholders meeting and participate in the discussion of his/her proposal or he/she may duly designate a proxy to act on his/her behalf at the meeting.

The Company shall give a notice to the shareholder prior to the meeting date regarding the Company’s handling of the proposal he/she has proposed. The Company shall, item by item, indicate in the meeting notice all of the proposals submitted in conformity to this Article and the reasons why the other proposals are excluded from the agenda.

  • Article04 The shareholder may designate a proxy to attend the shareholders meeting on his/her behalf by signing and indicating the scope of authority in the proxy form prepared by the Company.

Each shareholder may sign one and only one proxy form to designate one and only one proxy. The signed proxy form must be served to the Company five days prior to the meeting day. In case of multiple signed proxies from the same shareholder, the first one served to the Company shall prevail except when the shareholder has expressed to cancel the proxy.

The shareholder who, after his/her signed proxy has been served to the Company, is to attend the meeting in person or to exercise his/her voting power by way of electronic transmission shall notify the Company in writing no later than two days prior to the meeting day of his/her intention to cancel his/her signed proxy or the ballots cast by his/her designated proxy present at the meeting shall govern for the purpose of vote counting.

  • Article05 The shareholders meeting shall be convened at the place where the Company is located or any other appropriate place convenient for shareholders to attend and shall commence no earlier than 9:00AM and no later than 3:00PM on the meeting date. The venue, date and hour of the meeting shall be determined in consideration of the opinion of the independent director.

Article06 The company shall, in the meeting notice, state the reporting time, reporting venue and

~72~

other items of importance for accepting shareholders.

The abovementioned accepted shareholders shall report at least 30 minutes before the start of the meeting; the reporting venue shall be clearly identifiable and managed by an adequate number of staff who are adequately competent.

Shareholders or agents authorized by shareholders (hereinafter referred to as shareholders) shall present their attendance ID, attendance cards or other attendance certificates at the shareholders' meeting; solicitors soliciting proxy forms shall bring along their identification documents for verification purposes.

The shareholder or his/her proxy who attends the meeting may turn in his/her signed attendance card instead of signing in the attendance book.

The Company shall deliver to each shareholder the agenda, annual report, attendance ID, speaking request form, ballots, other meeting materials and, where applicable, the ballots for election of directors and/or Independent Directors.

The shareholder shall present his/her attendance ID, signed attendance card or other pre-approved attendance documentation to attend the meeting. Those to attend the meeting as requesters shall also present their identification paper for verification.

A government agency shareholder or an institutional shareholder may be represented at the shareholders’ meeting by one or more proxies. An institution acting as the proxy for a shareholder may appoint one and only one representative to act on behalf of the principal of the proxy at the meeting.

  • Article07 Where the shareholders meeting is convened by the Board of Directors, the meeting shall be presided by the chairman of the Board of Directors. If the chairman is for whatever reason unable to carry out his/her functions at the meeting, the vice chairman shall act in his/her stand. If the Company has no vice chairman or the vice chairman is for whatever reason unable to carry out the function at the meeting either, the chairman shall appoint a standing director to act in his/her stand at the meeting. If the Company has no standing director, the chairman shall appoint a director to act in his/her stand. If above are not applicable, the directors or standing directors (if any) shall elect one from among themselves to preside the meeting.

If the abovementioned position of chairman be filled by a managing director or director, said managing director or director shall be one who has held office for more than six months and understands the company's financial and business conditions. The same applies if the position of chairman is held by a corporate director’s representative.

Where the shareholders meeting is convened by any person legally authorized to do so other than the Board of Directors, the meeting shall be presided by the convener.

Where there are two or more conveners, they shall elect one from among themselves to preside the meeting.

The Company may appoint legal counsel(s), certified public accountant(s) and/or the relevant personnel to attend the shareholders’ meeting without the right to vote.

~73~

Article08 The company, beginning from the time it accepts shareholder attendance registrations, shall make an uninterrupted audio and video recording of the registration procedure, the proceedings of the shareholders meeting, and the voting and vote counting procedures.

The abovementioned video and audio materials shall be kept for at least one year. However, in the event that a lawsuit has been filed by shareholder(s) in accordance with Article 189 of the Company Act, said video and audio recordings shall be kept until the end of said lawsuit.

  • Article09 Whether the shareholders’ meeting meets the quorum shall be determined based on the total amount of shares represented at the meeting which shall be counted according to the numbers of attendance cards received plus voting power exercised by way of electronic transmission.

The chairperson shall call the meeting to order as scheduled, provided that where the number of shares represented at the meeting accounts for less than the majority of the total issued shares, the chairperson may announce to postpone calling the meeting to order twice and only twice for a total duration of not more than one hour. If the quorum is still not met after the above postponement duration has expired and the total number of shares represented at the meeting still accounts for less than one third of the total issued shares of the Company, the chairperson shall announce to abort the meeting.

If the quorum is still not met after the meeting has been twice postponed as provided in the preceding paragraph but the number of shares represented at the meeting exceeds one third of the total issued shares of the Company, temporary resolutions may be adopted in accordance with the first paragraph of Article 175 of the Company Act, in which case, the temporary resolutions adopted shall be notified to all shareholders and the shareholders meeting shall reconvene within one month.

If, before the meeting ends, the total shares represented at the meeting account for half or more of the total issued shares of the Company, the chairperson may submit the temporary resolution adopted to the meeting for voting pursuant to Article 174 of the Company Act.

  • Article10 Where the shareholders’ meeting is convened by the Board of Directors, the agenda shall be determined by the Board of Directors and the meeting shall proceed according to the agenda except otherwise changed by the resolution adopted by the shareholders’ meeting.

Where the shareholders’ meeting is convened by any person legally authorized to do so other than the Board of Director, the preceding paragraph shall apply.

The chairperson shall not forthwith announce to adjourn the meeting before the agenda provided in the two preceding paragraphs (including extempore motions) is duly completed except on the resolution adopted by the shareholders’ meeting for him/her to do so. In the event the chairperson announces to adjourn the meeting in contravention to these Rules, the other members of the Board of Directors present shall promptly assist the shareholders present at the meeting to duly elect, by a

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majority vote, one from among the directors present to preside to continue the meeting.

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

  • Article11 The shareholder shall fill out the speaking request form floor before making statement at the meeting and he/she will indicate the gist of his/her statement to make, shareholder account number (or attendance card number) and shareholder name. The chairperson will decide the order for the shareholders to make their statement.

The shareholder who has only filled out the speaking request form floor without actually doing so shall be deemed not having made any statement. In case of any discrepancy between the gist of statement indicated in the shareholder’s speaking request and the actual statement made, the actual statement made shall govern.

The shareholder may speak on each proposal twice and only twice for not more than five minutes each except otherwise approved by the chairperson, provided that the chairperson may stop at any time the shareholder from taking the floor if such shareholder has acted in contravention of these Rules or is making statement out of the scope of the proposal being discussed.

No shareholder may interrupt the shareholder taking the floor without the consent of both of the chairperson and the shareholder taking the floor. The chairperson shall restrain any shareholder from acting in breach of the above.

An institutional shareholder who is represented by two or more appointed representatives at the meeting will have its statement on the same proposal made (if any) by one and only one of its appointed representatives.

The chairperson may personally respond to the statement made by the shareholder or appoint the relevant personnel to do so.

  • Article12 The votes at the shareholders’ meeting will be counted based on the number of shares.

The non-voting shares represented at the meeting shall be disregarded for the purpose of counting votes for adopting the resolution.

Shareholders who have personal conflict of interests against the Company on certain proposal shall not vote on that proposal, either for himself/herself or for another shareholder by proxy.

The non-voting shares provided in the preceding paragraph shall be excluded from the calculation of voting shares represented at the meeting.

Except trust businesses or stock affair agency approved by the competent securities

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authority, a proxy acting on behalf of two or more shareholders at the meeting will have the voting right by proxy representing not exceeding 3% of the total issued shares of the Company. Any vote cast by the proxy in excess of the said representation limit will be ignored.

Article13 The shareholder will have one vote for each share held except where there is limitation on the voting right or the voting right is denied by operation of the second paragraph of Article 179 of the Company Act.

The voting power at a shareholders' meeting may be exercised by way of electronic transmission described in the shareholders' meeting notice. A shareholder who exercises his/her voting power at a shareholders meeting by way of electronic transmission shall be deemed to have attended the said shareholders' meeting in person, but shall be deemed to have waived his/her voting power in respective of any extemporary motion(s) and/or the amendment(s) to the contents of the original proposal(s) at the said shareholders' meeting.

In case a shareholder elects to exercise his/her/its voting power by way of electronic transmission, his/her declaration of intention shall be served to the company two days prior to the scheduled meeting date of the shareholders' meeting, whereas if two or more declarations of the same intention are served to the company, the first declaration of such intention received shall prevail; unless an explicit statement to revoke the previous declaration is made in the declaration which comes later.

In case a shareholder who has exercised his/her voting power by way of electronic transmission intends to attend the shareholders' meeting in person, he/she shall serve a separate declaration of intention to rescind his/her previous declaration of intention made in exercising the voting power two days prior to the meeting date of the scheduled shareholders' meeting and in the same manner previously used in exercising his/her/its voting power. In the absence of a timely rescission of the previous declaration of intention, the voting power exercised by way of electronic transmission shall prevail.

In case a shareholder has exercised his/her voting power by way of electronic transmission, and has also authorized a proxy to attend the shareholders' meeting in his/her behalf, then the voting power exercised by the authorized proxy for the said shareholder shall prevail.

Except as otherwise provided by the Company Act or the Articles of Incorporation of the Company, the resolution of a shareholders meeting shall be adopted by the majority vote represented at the meeting. For the purpose of voting, the chairperson shall announce the total number of votes represented and currently present at the meeting or appoint a personnel to do so each time before calling for voting on each proposal. The resolutions, whether agreement/disagreement/waiver, shall be uploaded to the MOPS website on the day which shareholder’ meeting was held.

Upon voting for resolution on a proposal, if no opposition is expressed by shareholders present at the meeting, and shareholders either through electronic or written form, in response to the chairperson’s invitation for opinion on that proposal, the resolution shall be deemed adopted unanimously and operate as one adopted by voting. In case an opposition is expressed, the proposal shall be voted in accordance with the preceding paragraph.

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Where there is revision or substitute proposal on the same proposal, the chairperson shall combine them with that proposal for the purpose of determining their order of voting. If one of the proposals is adopted, the other proposals shall be deemed vetoed and no voting on them will be necessary.

The chairperson shall appoint vote supervisor and vote counter during the voting and the vote supervisor shall also be a shareholder. The vote counting for voting or election motions at the shareholders' meeting shall be conducted publicly at the meeting venue, after vote counting has been completed, the voting results shall be announced on the spot (including the tallied number of votes) and recorded accordingly.

  • Article14 The election of a director and or supervisor shall be in accordance with the relevant bylaw of the Company and the result of the election, including list of elected directors and Independent Directors and the number of votes they received, shall be announced on site.

The ballots of the election provided in the preceding paragraph shall be sealed and signed by the personnel supervising the voting and properly kept for at least one year or up through the conclusion of the shareholder action (if any) initiated under Article 189 of the Company Act.

  • Article15 Each resolution adopted by the shareholders’ meeting must be taken down in the meeting minutes which must be signed or impressed with the seal of the chairperson with a copy thereof sent to the shareholders each within twenty (20) after the end of the meeting.

The Company may publish the meeting minutes provided in the preceding paragraph on the MOPS website.

The meeting minutes shall accurately record the year, month, day, and place of the meeting, the chair's full name, the methods by which resolutions were adopted, and a summary of the deliberations and their voting results (including the number of voting rights), and disclose the number of voting rights won by each candidate in the event of an election of directors or supervisors.

  • Article16 The Company shall count the number of shares represented by the requesters and proxies present at the meeting, produce and clearly display at the meeting a statistic statement thereof according to the required form.

For each resolution adopted the publication of which is required by law or which belongs to the TWSE-required material information, the Company shall, within the applicable time limit, transmit it to the MOPS.

Article17 The working staff of the meeting shall each wear an ID tag or badge.

The chairperson may direct the order-maintaining personnel or security guard to maintain the order of the meeting. The order-maintaining personnel or security guard shall each wear a badge or ID tag bearing their designation when performing their

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functions at the meeting.

The chairperson may stop the shareholder from making statements by using any equipment other than those readily facilitated by the meeting (if any).

If the shareholder ignores the chairperson’s request for him/her to retrain himself/herself from acting in contravention of these Rules at the cost of the proceeding of the meeting, the chairperson may direct the order-maintaining personnel or security guard at the meeting to escort such shareholder out of the venue of the meeting.

  • Article18 The chairperson may call the meeting to a break as he/she sees fit. In the event of force majeure, the chairperson may suspend the meeting and announce the appropriate date and hour to resume the meeting. In the event that the venue of the shareholders’ meeting is kept from being available for use before the agenda (including extempore motions) is discussed in full, the shareholders’ meeting may adopt the resolution for continuing the meeting elsewhere. The shareholders’ meeting may adopt the resolution pursuant to Article 182 of the Company Act to re-schedule or resume the meeting within five days.

  • Article19 These Rules and all subsequent amendments shall come into force after being adopted by the shareholders’ meeting.

These Rules were duly established on April 16[th] ,1998 and the first amendment was approved on June 25[th] ,2010. The second amendment was approved on June 24[th] ,2011. The third amendment was approved on June 22[th] ,2012. The fourth amendment was approved on June 19[th] ,2013.

The fifth amendment was approved on June 18[th] ,2014. The sixth amendment was approved on June 22[ th] ,2017. The seventh amendment was approved on July 20[th] ,2021.

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APPENDIX IX

ARTICLES OF INCORPORATION OF PRESIDENT SECURITIES CORP.

Chapter I General Provisions

Article 1:

This Company is duly incorporated under the provisions set forth Company Law regarding companies limited by shares in the full name of PRESIDENT SECURITIES CORPORATION (Hereinafter referred to as the Company).

Article 2:

The Company shall engage in the following business:

  1. H301011, a securities dealer.

  2. H408011, an aid on futures transaction

  3. H401011, a futures dealer

  4. H105011, a trustee

  5. H304011, a securities investment consulting enterprise

Article 2-1:

The scope of business of the Corporation shall be as follows:

  1. To underwriter valuable securities

  2. To buy and sell valuable securities in centralized trading markets as a principal;

  3. To be consigned to buy and sell valuable securities in centralized trading markets;

  4. To buy and sell valuable securities in its own business location;

  5. To be consigned to buy and sell valuable securities in its own business location;

  6. To act as an agent for stock affairs in valuable securities;

  7. To engage in short-buy and margin sales for trading in valuable securities;

  8. To render aid in futures trading;

  9. To be consigned to buy and sell foreign valuable securities;

  10. To engage concurrently in proprietary futures trading.

  11. To engage concurrently in trustee

  12. To be consigned to buy and sell foreign valuable securities;

  13. To operate securities-related business of foreign exchange and permit by the Central Bank of Republic of China. (Taiwan)

  14. To engage in other securities related businesses as approved by the competent authorities.

Article 2-2:

The Company may, within the scope as permitted by law, render guarantee services to subsidiaries. Article 3:

The Company is headquartered in Taipei and may have branches duly set in appropriate locations elsewhere as approved by the government.

Article 4:

This article was deleted.

Chapter II Shares

Article 5:

The Company has New Taiwan Dollars Fifteen Billion Only, divided into 1.5 billion shares at Ten New Taiwan Dollars par value for which the board of directors is authorized with full powers to issue in installments.

Article 5-1:

When the Company acts as a shareholder of limited liabilities, the total amount of external investment by the Company is free of the maximum limitation at 40% of the paid-in capital as set forth in Article 13 of the Company Law.

Article 6:

The company issuing and printing shares shall assign its share certificates with serial numbers, and the share certificates shall be affixed with the signatures or personal seals of the director representing the company, and shall be duly certified or authenticated by the bank which is competent to certify shares under the laws before issuance thereof.

The company may be exempted from printing any share certificate or it may either print a single share

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certificate or a consolidated share certificate for the shares issued. The Company shall appoint a centralized securities custody institution to make recordation of the issue of such shares. Article 7:

For transfer of the Company’s shares, both the shareholder and the transferee shall jointly apply hereto for transfer procedures and entry into roster of shareholders, provided, that no transfer of shares shall be made within one month prior to a shareholders' regular meeting or fifteen days prior to an extraordinary meeting or within five days prior to allocation of dividend, bonus or other interests. Article 8:

The share certificates hereof are the registered ones. The shareholders hereof shall have their names and addresses duly registered into roster of shareholders and have their impression cards of registered seals filed herein. The same is required in case of a change. The stock affairs of the Company shall be duly handled according to “Regulations Governing Stock Affairs of Public Offering Companies” promulgated by the competent authorities of the government except as otherwise provided by the laws and securities regulations.

Chapter III Shareholders' meeting Article 9:

The shareholders' meeting hereof is in regular and extraordinary ones. The former is called once per annum within six months from closing of each fiscal year. The latter may be duly called when considering it is necessary. Article 10:

The notices to a shareholders’ meeting shall be duly served to shareholders in accordance with Company Law or other laws concerned.

Article 11:

Each share hereof is entitled to one voting power. A shareholder who is unavailable to attend a shareholders' meeting may duly issue a power of attorney with the Company provided form with scope of authorized power to appoint a proxy for the meeting. In the event a proxy is authorized by two or more shareholders, the voting power exceeding 3% of the total issued shares shall be discarded.

The aforementioned power of attorney shall be served to the Company five days in advance of the Company. In case of multiple authorization, it shall be taken on the first come first served basis unless the preceding authorization is declared withdrawn.

Article 12:

The following issues are subject to resolutions to be adopted in the shareholders’ meeting:

  1. Establishment and amendment of the Articles of Incorporation.

  2. Election of directors.

  3. Approval of reports worked out by the board of directors and profit allocation of profit and coverage of loss.

  4. Increase, decrease of capital.

  5. Major affairs otherwise and issues as required by the Company.

Unless otherwise provided for in the Company Law, resolutions in the shareholders' meeting shall be adopted by a majority vote in the meeting attended by shareholders representing a majority of the total issued shares.

Chapter IV Directors Article 13:

The Company has nineteen directors (four independent and fifteen non-independent directors), to be elected by shareholders’ meeting from among the persons with disposing capacity, both having threeyear tenure of office and eligible for reelection. The candidates’ qualifications shall live up to requirements of Company Law, Securities and Exchange Law and related regulations. Directors shall be elected from among the nominees listed in the roster of candidates by adopting candidate nomination system.

The election of independent and non-independent shall be held together but the votes shall be calculated separately.

Article 13-1:

The Company according to Article14-4, Securities and Exchange Law, establish the Audit Committee, composed of the entire number of independent directors.

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Audit Committee and among independent directors shall compliance and follow by internal rules in this company and the Government related regulations. Article 14:

The total registered shares held by all directors shall not be less than specified percentage and the

shareholding and auditing shall be subject to requirements promulgated by the competent authorities of the government.

Article 15:

By attendance of two-thirds majority of directors and a majority vote of the attending directors, three~five managing directors shall be elected and, in the same manner, one chairman shall be duly elected. In case of no managing directors, one chairman and one vice chairman shall be elected from among directors in the same manner. The chairman shall chair the shareholders’ meeting, board of directors meeting and board of managing directors meeting internally, and represent the Company externally. Article 16:

Meetings of the board of directors shall be convened by the chairman of the board of directors. Unless otherwise provided for in the Company Law, the resolutions in the board of directors meeting shall be adopted by a majority vote in the meeting attended by a majority of directors.

The Convene Notice of the meeting of board may serve to the directors by writing, E-mail or facsimile. In the chairman’s absence, the vice chairman shall act in the place. In absence of both, the chairman shall appoint a managing director to act in place otherwise one managing director shall be elected from among themselves to act in the place. A director unavailable to the meeting may duly authorize another director to attend a board meeting on his behalf. Article 17:

The board of directors shall have the following functions:

  1. To work out the Company’s business plans;

  2. To work out organizational regulations, major articles and contracts;

  3. To work out budgeting and account closing;

  4. To propose for capital increase, decrease;

  5. To propose profit allocation or loss coverage;

  6. To appoint, discharge managerial officers and key staff;

  7. To resolve establishment and dissolution of a branch;

  8. To resolve major business affairs otherwise;

  9. To exercise other functions endowed by laws and shareholders’ meeting.

Article 17-1:

The Board of Directors may, complying with the law or taking into account the necessity, set up any functional committees whose functions, responsibilities, qualifications of committee members, process of exercising the power and so forth to be formulated by the board of directors. Article 18:

This article was deleted.

Article 19:

The board of directors is authorized to determine the remuneration for directors taking into account the extent and value of the participation for the management of the Corporation and the standards of the industry. Independent directors receive fixed monthly compensation and shall not participate in the allocation of remuneration to directors and supervisors set forth in Article 23. Article 19-1

The Company may act as a policyholder of liability insurance for the benefit of directors, supervisors, and managers. The board of directors is authorized to determine the limit of liability and the related matters.

Chapter V Managerial officers Article 20:

The Company has one president to enforce issues as resolved in the board of directors and take charge of overall business operation of the Company, to be nominated by the chairman and duly appointed and discharged in the board of directors. The Company has a certain number of vice president, be nominated by the president and duly appointed and discharged in the board of directors.

Chapter VI Accounting Article 21:

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The fiscal year hereof is beginning January 1 until December 31 each calendar year. Article 22:

Upon closing of each fiscal year, the board of directors shall work out the following documents according to Article 228 of the Company Law to be audited by Audit Committee thirty days in advance of shareholders' regular meeting and the Audit Committee shall issue a report accordingly to be approved by the shareholders' meeting:

  1. Business report

  2. Financial statements

  3. Proposals of profit allocation or loss coverage

Article 23:

In an effort to encourage employees and management, the Company will distribute compensation to employees and the Directors from pre-tax profits. Where the company has pre-tax profits, the total value of funds to be distributed among employees shall not be less than 1.6% of pre-tax profits; while the total value of funds to be distributed among the Directors shall not be more than 2% of pre-tax profits. If the company has losses carried forward, compensation should only be paid to employees and Directors after funds have been set aside as reserve for such losses.

Employees’ compensation should be paid in the form of cash or company shares. A resolution regarding compensation to be distributed should be passed at a Board of Director’s meeting by a majority vote at a meeting attending by two-thirds or more of the Directors, after which the results should be reported to the shareholders.

Only those individuals meeting the specific criteria of employees shall be considered employees for the purposes of the employees’ compensation distributions. Article 23-1:

If there are surplus profits after the closing of the books in a given fiscal year, then, after paying applicable taxes and making up losses from previous years, the company should set aside 10% of remaining profits as legal reserve, 20% as special reserve, and any other reserves as required by applicable laws or regulations, and, if any profits still remain, the board of directors shall put forth a motion to the shareholders for distribution of the remaining profits to shareholders.

In the event that the remaining profits represent less than 5% of the value of the company’s paid-in capital, then no such distribution is necessary.

The Company’s dividend policy should be based on the long-term financial structure and stability of the Company so as to allow for continued growth, which creates the best value for shareholders. The dividend distribution in a given year shall not be less than 70% of the surplus profits available for distribution. Stock dividends should not account for less than 10% of the total dividend distributed, and cash shall not account for more than 50% of the total dividend distributed. However, the Company may take into consideration the actual status of the Company’s operations and future capital needs when determining an appropriate ratio of cash and shares for the dividend distribution.

Chapter VII Bylaws Article 24:

The organizational rules and operational rules shall be separately worked out by the board of directors. Article 25:

Any matters inadequately provided for herein shall be subject to Company Law and managerial regulations concerned.

Article 26:

These Articles were duly established on November 26, 1988 and the first amendment was approved on December 28, 1988; ------------; the twenty ninth amendment on July 20, 2021.

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APPENDIX X

Shareholdings of Directors

  1. In accordance with Article 26 of the Securities and Exchange Act:

  2. The aggregate minimum shareholding for all directors is 34,939,952 shares.

  3. As of the date of record for the General Shareholder Meeting, i.e., April 25, 2022, the total shareholdings of directors were as follows:

Title Name Shares Held Shares Ratio%
Chairman KAI NAN INVESTMENT CO.,LTD 42,253,212
2.90
Director LEG HORN INVESTMENT CO.,LTD 13,162,425
0.91
Director DUH, BOR-TSANG 4,444,693
0.31
Director HUI TUNG INVESTMENT CO.,LTD 10,819,675
0.74
Director TA LE INVESTMENT HOLDING CO.,LTD 7,505,749
0.52
Director JUANG, JING-YAU 3,182
0
Director CANKING INVESTMENT CORP.,LTD 17,947,517
1.23
Director CHUNA F.R.P. CORPORATION. 10,400,000
0.71
Independent
Director		 LIANG, YANN-PING 0
0
Independent
Director		 HORNG , YUAN-CHUAN 0
0
Independent
Director		 PAI , CHUN-NAN 0
0
Independent
Director		 SONG, YUNG-FONG 0
0
TOTAL 106,536,453
7.32

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