Qisda - AGM Information 2019 | FinancialReports.eu

TSE: 2352 Qisda

Qisda Corporation 2019 Annual General Shareholders’ Meeting Meeting Agenda (Translation) Date: June 21, 2019

2019 Annual General Shareholders’ Meetin g

Qisda Corporation

Time: June 21, 2019

Place: No.300, Sec. 1, Zhuangjing Rd., Taoyuan Dist., Taoyuan City 330 3F Conference Hall / Monarch Plaza Hotel

Agenda

I. Report Items

(1) To report the business of 2018 .......................................................................................................................................................... 02 (2) Audit Committee’s Review Report .................................................................................................................................................... 04 (3) To report the distribution of employees’ and directors’ remuneration of 2018 ................................................................... 04 (4) To report the issuance of securities in private placement ........................................................................................................... 04 II. Recognition and Discussion Items

(1) To accept 2018 Business Report and Financial Statements ......................................................................................................... 05 (2) To accept the proposal for the distribution of 2018 earnings .................................................................................................... 05 (3) To approve issuance of new common shares for cash to sponsor issuance of the overseas depositary shares and/or issuance of new common shares for cash in public offering and/or issuance of new common shares for cash in private placement and/or issuance of overseas or domestic convertible bonds in private placement .............. 05 (4) To approve the amendment to Articles of Incorporation. .......................................................................................................... 08 (5) To approve the amendment to Handling Procedures for Acquisition or Disposal of Assets and Handling Procedures for Conducting Derivative Transactions .................................................................................................................... 08 (6) To approve the amendment to Handling Procedures for Lending Funds to Other Parties and Handling Procedures for Endorsements and Guarantees .............................................................................................................................. 09 (7) To lift non-competition restrictions on current directors and their representatives .......................................................... 09 III. Extraordinary Motions ............................................................................................................................................................................ 09 IV. Meeting Adjourn ........................................................................................................................................................................................ 09

Attachments

Independent Auditors’ Report and 2018 Financial Statements ......................................................................................................... 10 2. The 2018 Earnings Distribution Proposal ............................................................................................................................................... 30 3. Terms and Conditions for Issuance of Overseas or Domestic Convertible Bonds in Private Placement (Tentative) ....... 31 4. Comparison table for the Articles of Incorporation before and after amendment ..................................................................... 33 5. Comparison table for the Handling Procedures for Acquisition or Disposal of Assets before and after amendment ...... 35 6. Comparison table for the Handling Procedures for Conducting Derivative Transactions before and after amendment ...... 42 7. Comparison table for the Handling Procedures for Lending Funds to Other Parties before and after amendment ......... 43 8. Comparison table for the Handling Procedures for Endorsements and Guarantees before and after amendment ........... 44 9. List of non-competition restrictions on current directors and their representatives proposed to be lifted ....................... 45

Appendices

Rules and Procedures for Shareholders’ Meeting ................................................................................................................................. 46 2. Articles of Incorporation (Before the amendments) ........................................................................................................................... 48 3. Shareholding of Directors ........................................................................................................................................................................... 51 4. Influence of Proposed Stock Dividend Distribution upon 2019 Operating Performance, Earnings Per Share, and Return on Investment .................................................................................................................................................................................. 51

2  Report Items

I. Report Items

(1) To report the business of 2018

Greetings to all of our Valued Shareholders,

Qisda’s consolidated sales revenues for 2018 were NT$155.78 billion. The consolidated operating profit was NT$4.58 billion. The consolidated earnings after tax was NT$4.45 billion. The consolidated net income attributed to stockholders of the Company was NT$4.035 billion. The earnings per share after tax was NT$2.05.

Qisda continuously promotes the strategy of grant fleet, concentrating the smaller hidden champions among industries and integrating the Group’s resources for fast growth. Qisda has outperformed its significant growth with its consolidated sales revenue hitting new record highs following the uncertain factors such as fast changes of industries, slower demand in displays and projectors and rise in global trade war. It proves that the efficiencies are gradually visible. In 2018, we built partnership following with the four major operating policies to enlarge Qisda’s wide-ranging businesses.

(i) Optimization on current business operations: The two major products, such as flat panel displays and projectors, continuously gains stable results and leading position. The performance of displays is better than entire industries and is now second in the world rankings. In addition to continuous development towards high-end, high unit price, professional and medical displays, Qisda has also invested in Data Image Corporation for its market deployment in nautical displays. Qisda not only keeps its global leading position in OEM projectors, but the only domestic manufacturer with two main technologies used for projection including DLP and LCD.
(ii) Fast enlargement for medical businesses: Qisda has approached the size of its total consolidated sales revenues in medical fields for 2018 nearly NT$10 billion. The revenues of two hospitals in Suzhou and Nanjing keep growing under normal operation. Regarding medical appliances and channel expansion, by investing in K2 International Medical Inc., a dialysis channel, to access in cross-strait dialysis and medical cosmetic channel, BenQ Dialysis Technology Corp. has acquired the TFDA and KFDA certifications and successfully turned into an export success in Korean market; selfdesign and self-manufacturing tablets and handheld ultrasound keep the expansion on bedside care market; the market expansion in Digital Dentistry and engagement on hearing channels will satisfy the demands for global ageing and longterm care.
(iii) Acceleration on solution development: Qisda has combined the partners such as DFI Inc. and Partner Tech Corp. for the perfection on hardware and distribution channel. The purpose is to develop towards provider integration based on full software and hardware service system. The consolidated sales revenues of smart solutions for 2018 were NT$11 billion. Qisda continuously satisfying the six main intelligence vertical markets. The smart energy service has covered from manufacturing and expanded to service industry. The program of the innovative energy storage has been introduced in chain stores; Qisda has also cooperated with National Cheng Kung University to build a smart campus; the smart factory has also entered in the fields such as semiconductor and automotive industries.
(iv) Market deployment on key components: The investment in Yudi Optics and Alpha Networks Inc. is the preceding market deployment on future AIoT solutions such as Internet of Vehicles (IoV) and 5G.

Prospecting in 2019, Qisda will continue to focus on four major operating directions. We are expecting further advances to create long-term value for the Company. The plans are listed as follows:

(i) Optimization on current business operations: We will continuously develop towards high-end, high-resolution and large-sized display products for professional applications, such as e-Sports, illustrations / designs, medical grade applications. We will expand its proportion and shipment to enhance more profit; we will keep consolidating the projector products in a global leading position and strengthen the market deployment on high-end models with 4K resolution and high brightness.
(ii) Fast enlargement for medical businesses: We will prioritize the distribution channel, especially in China and newly countries. Meanwhile, we will develop the special products and technologies such as ultrasound and hemodialyzer. The Group’s resources will be integrated to develop surgery devices, disposables, integration system of Digital Dentistry and smart operating room information system. We will also expand the medical industry alliance via win-win merge & acquisition or strategic cooperation model.
(iii) Acceleration on solution development: The horizontal integration on internal technology and channels of business will continue to meet different vertical market demands. We’ve aggressively accelerated the investment for exploiting synergies among DFI Inc., Partner Tech Corp. and Aplex Technology Inc. in recent years. We’ve also seeked for cooperation with the first well-known international experts, such as ABB (the leading supplier of industrial robots) and SAP (the leader in Enterprise Resource Planning), to provide the best smart solution for customers.
(iv) Market deployment on key components: We will continue scanning and searching for cooperation opportunities based on current demand and a compass-based future applications.

Report Items  3

Qisda achieves its sustainable competitive advantages through innovation and technical development. Each year, we make effort on product innovation and development, averagely occupying around 2%-3% of sales revenue. We’ve accumulated nearly 1,140 patent counts by country until now.

Qisda has dedicated to the corporate sustainable operation. The sustainable development indicators on economy, environment and society in 2018 still maintained high information transparency. Qisda not only ranked among the Top 50 of “Taiwan Corporate Sustainability Reports” and among the Top 50 of “Comprehensive Performance Award” from “2018 Taiwan corporate sustainability Awards (TCSA)” running by Taiwan Institute for Sustainability Foundation (TAISE) by achieving a record of receiving a Gold Award for the third year, but also received recognition for the Top 100 Global Technology Leaders running by Thomson Reuters. It shows that Qisda has implemented lavishly on sustainable development of economy, environment and society.

At last, we offer our sincerest thanks for your long-term full support and concern. Our management team and all employees will continue striving and seeking for the best interest of the Company and Shareholders.

Finally, we wish everyone good health, good luck and fortune.

Sincerely, Chairman: Peter Chen President: Peter Chen Chief Accountant: David Wang

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4  Report Items

(2) Audit Committee’s Review Report

The Board of Directors has prepared the Company's Financial Statements for the year of 2018. Tang, Tzu-Chieh and Shih, WeiMing Certified Public Accountants of KPMG, have audited the Financial Statements. The 2018 Financial Statements, Business Report, Independent Auditors Report and Earnings Distribution Proposal have been reviewed and determined to be correct and accurate by the Audit Committee of Qisda Corporation. I, as the Chair of the Audit Committee, hereby submit this report according to Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act.

Qisda Corporation 2019 Annual General Shareholders’ Meeting

Chair of the Audit Committee

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王弓 Wang,Gong March 22, 2019

(3) To report the distribution of employees’ and directors’ remuneration of 2018

Distribution of NT$341,480,000 and NT$35,112,000 in cash as remunerations to employees and directors, respectively, have been approved by the meeting of board of directors held on March 21, 2019.

(4)To report the issuance of securities in private placement

(i) It has been approved by the Annual General Shareholders’ Meeting held on June 21, 2018 to authorize the Board of Directors, within the limit of 200,000,000 common shares, depending on the market conditions and the Company’s capital needs, to choose appropriate timing and one or more fund raising instruments to issue new common shares for cash to sponsor issuance of the overseas depositary shares and/or new common shares for cash in public offering and/or new common shares for cash in private placement and/or overseas or domestic convertible bonds in private placement in accordance with the applicable laws and regulations.
(ii) In according to paragraph 7of Article 43-6 of the Securities and Exchange Act, the private placement may be carried out within one year of the date of the resolution of the shareholders meeting.
(iii) In case the amount of the aforementioned fundraising has not been completed until 1 day prior to the 2019 Annual General Shareholders’ Meeting the amount will be cancelled from the date of the 2019 Annual General Shareholders’ Meeting

Recognition and Discussion Items  5

II. Recognition and Discussion Items

(1) To accept 2018 Business Report and Financial Statements (proposed by the Board of Directors)

Explanation:

(1)The 2018 Financial Statements were audited by the independent auditors, Tang, Tzu-Chieh and Shih, Wei-Ming Of KPMG.
(2)For the 2018 Independent Auditors' Report, and the 2018 Financial Statements, please refer to Attachment 1 (pages 10-29).

Resolution:

(2) To accept the proposal for the distribution of 2018 earnings (proposed by the Board of Directors)

Explanation:

(1)The proposed distribution is allocated from the 2018 earnings available for distribution, according to the Company Act and Company’s Article of Incorporation, each common share holder will be entitled to receive a cash dividend of NT$0.85per share. The 2018 Earnings Distribution Proposal please refer to Attachment 2 (page 30).
(2)The cash dividend distribution subject to the approval of the Annual General Shareholders’ Meeting it is proposed that the Chairman of the Board of Directors is authorized to determine the ex-dividend date for the cash dividend distribution and other related matters.
(3)If the dividend distribution ratio is adjusted and need to be modified due to change of the Company's total number of outstanding common shares it is proposed to authorized the Chairman of Board of Directors with full power to adjust the distribution ratio.

Resolution:

(3) To approve issuance of new common shares for cash to sponsor issuance of the overseas depositary shares ("DR Offering") and/or issuance of new common shares for cash in public offering and/or issuance of new common shares for cash in private placement ("Private Placement Shares") and/or issuance of overseas or domestic convertible bonds in private placement ("Private Placement CB") (proposed by the Board of Directors)

Explanation:

(1) Fund raising purpose and size:

In order to enrich working capital, have sound financial structure, purchase of materials from overseas and support the Company’s funding needs for long term development, it is hereby proposed that the shareholders meeting to authorize the Board of Directors ("Board"), within the limit of 200,000,000 common shares, depending on the market conditions and the Company’s capital needs, to choose appropriate timing and fund raising instrument(s), to issue new common shares for cash to sponsor DR Offering and/or issue new common shares for cash in public offering and/or issue Private Placement Shares and/or issue Private Placement CB, in accordance with the applicable laws and regulations and the following fund raising principles. For issuance of Private Placement CB, the number of common shares to be converted within the limit of 200,000,000 common shares shall be calculated in accordance with the conversion price determined at the time of issuance of Private Placement CB.

(2) Fund raising method(s) and handling principles:
I. Issuance of new common shares for cash to sponsor DR Offering:
(i) The issue price of the new common shares will be decided with reference to (a) the closing price of the Company’s

6  Recognition and Discussion Items

common shares on the pricing date or (b) the average of the closing price of the Company’s common shares for 1, 3 or 5 trading days prior to the pricing date (each of (a) and (b) is referred to hereinafter as the "reference price"). The Chairman of the Company is authorized to coordinate with the foreign lead-underwriter(s) of the DR Offering to determine the actual issue price in accordance with market conditions, provided that, the actual issue price shall not be less than 90% of the reference price after adjustment for shares issued as stock dividends, shares cancelled in connection with capital reduction and the cash dividends. The reference price and the actual issue price will be decided in accordance with market practice and applicable law and regulations. In addition, assuming that the Company issues 200,000,000 common shares which is approximately 10.2% of the Company’s total outstanding common shares on the record date for the Company’s 2019 annual shareholders meeting, as the actual issue price shall be no less than 90% of the reference price after adjustment for shares issued as stock dividends, shares cancelled in connection with capital reduction and the cash dividends, it is unlikely that such issuance will have a material dilutive effect on the holding of the current existing shareholders. Thus, determination of the issue price of the new common shares to be issued in connection with the DR Offering should be reasonable and should not have a material adverse effect on the rights and benefits of the current existing shareholders.

(ii)Except for 10% to 15% of the new common shares shall be allocated for the employees' subscription in accordance with Article 267, Paragraph I of the Company Act, it is proposed for the shareholders meeting to approve the rights to subscribe to the remaining shares to be waived by the shareholders and such remaining shares should be offered to the public under Article 28-1 of the Securities and Exchange Act as the underlying shares of the global depositary shares to be sold in the DR Offering. Any new common shares not subscribed by employees of the Company shall be determined by the Chairman of the Company, depending on the market needs, to be allocated as underlying shares of the global depositary shares or to be subscribed by the designated person(s).
II. Issuance of new common shares for cash in public offering:
(i) The par value of the new common shares to be issued per share is NT$10. It is proposed to authorize the Chairman of the Company to coordinate with the underwriter(s) of the public offering to determine the actual issue price in accordance with the Taiwan Securities Association's Self-regulatory Rules Governing the Provision of Advisory Services by Underwriter Members to Issuing Companies for Offering and Issuing Securities and the market conditions and the issue price shall be reported to, and accepted by the regulatory authority before issuance.
(ii) Except for 10% to 15% of the new shares must be offered to employees in accordance with Article 267, Paragraph I of the Company Act, it is proposed to authorize the Board to choose either of the following methods to sell the new shares in the public offering through the underwriter(s) ：
(a) It is proposed for the shareholders meeting to approve the pre-emptive rights to subscribe to the remaining shares to be waived by the shareholders in accordance with Article 28-1 of the Securities and Exchange Act and such remaining shares will be offered to the public via book building. It is proposed that any new common shares not subscribed by employees of the Company will be sold to the person(s) designated by the Chairman of the Company at the issue price.
(b) It is proposed that 10% of the new shares to be sold to the public through the underwriter(s) in accordance with Article 28-1, Paragraph 2 of the Securities and Exchange Act and the remaining shares will be subscribed to by the existing shareholders of the Company in accordance with their shareholding. It is proposed that any new common shares not subscribed by employees and shareholders of the Company will be sold to the person(s) designated by the Chairman of the Company at the issue price.
III. Issuance of Private Placement Shares and/or Private Placement CB:
(i) Basis and reasonableness for determination of the subscription price of the Private Placement Shares and issue price of Private Placement CB:
(a) The higher of (x) the simple average closing price of the Company’s common shares for either 1, 3 or 5 trading days prior to the pricing date, and (y) the simple average closing price of the Company’s common shares for 30 trading days prior to the pricing date, after adjustment for shares issued as stock dividends, shares cancelled in connection with capital reduction and the cash dividends, as the reference price of the Private Placement Shares.
(b) The issue price of the Private Placement Shares shall be no less than 80% of the reference price. It is proposed to authorize the Board to decide the actual issue price within the range approved by the shareholders meeting, depending on the status of finding specific investor(s) and market conditions. The issue price of the Private Placement CB shall be no less than 80% of the theoretical price.
(c) As aforementioned, subscription price of the Private Placement Shares and issue price of Private Placement CB

Recognition and Discussion Items  7

will be determined with reference to the price of the Company’s common shares and the theoretical price in accordance with the Regulations Governing Public Companies Issuing Securities in Private Placement and which also provide for three years of transfer restrictions thus, the price should be reasonable.

(ii) The method, purpose, necessity and projected benefits to determine specific investor(s):
(a)The investors to subscribe to the Private Placement Shares and/or Private Placement CB must meet the qualifications listed in Article 43-6 of the Securities and Exchange Act and are limited to strategic investor(s). Priority will be given to the investor(s) who could benefit the Company's long term development, competitiveness, and existing shareholders' rights.
(b)The purpose, necessity and projected benefits for choosing strategic investor(s) are to accommodate the Company’s operation and development needs to have the strategic investor(s) to assist the Company, directly or indirectly, in its finance, business, manufacturing, technology, procurement, management, and strategy development, etc. so to strengthen the Company’s competitiveness and enhance its operational efficiency and long term development and positive effect on shareholder’s right and interests.
(c) Currently there is no available specific investor and the Board is fully authorized to determine the specific investor(s).
(iii) The necessity of issuance of Private Placement Shares and/or Private Placement CB:
Considering the effectiveness and convenience for issuance of the Private Placement Shares/Private Placement CB and accommodating the Company’s development planning, including inviting the strategic investor(s), it would be necessary to issue the Private Placement Shares and/or Private Placement CB.
(iv) For the Private Placement Shares and/or the new common shares to be issued upon conversion of Private Placement CB, after expiration of three years following delivery date of the Private Placement Shares/Private Placement CB, the Board is authorized to apply for approval from the Taiwan Stock Exchange ("TSE") acknowledging that the

Private Placement Shares /new common shares to be issued upon conversion of Private Placement CB meet the requirements for TSE listing before the Company submitting application with the Financial Supervisory Commission for retroactive handling of public issuance of such shares and submitting application with TSE for listing such shares on TSE.

(v) The tentative terms and conditions of the Private Placement CB ("Offering Plan") are shown in Attachment 3 (pages 25-26).
(3) Use of proceeds, the schedule and the projected benefits:

The Company plans to use the funds raised from the DR Offering and/or issuance of the new common shares in public offering and/or issuance of the Private Placement Shares and/or Private Placement CB to invest in equipment and technology of high-end product, enrich working capital, strengthen financial structure and/or support the Company’s funding needs for long term development and after completing the fund raising and it is expected that use of such funds will strengthen the Company’s competitiveness and improve operational efficiency.

(4) The new common shares to be issued to sponsor the DR Offering, the new common shares to be issued in public offering, Private Placement Shares and the new common shares to be issued upon conversion of Private Placement CB will be issued in the scriptless form. Except that the Private Placement Shares and the new common shares to be issued upon conversion of Private Placement CB are subject to the selling restrictions within three years after the delivery date of the Private Placement Shares/Private Placement CB under Article 43-8 of the Securities and Exchange Act, the new common shares to be issued to sponsor the DR Offering, the new common shares to be issued in public offering, the Private Placement Shares and the new common shares to be issued upon conversion of Private Placement CB will have the same rights and obligations as the Company’s existing issued and outstanding common shares.
(5) Under the situation where the issue price of the new common shares to be issued to sponsor the DR Offering, the new common shares to be issued in public offering, Private Placement Shares and the conversion price for the Private Placement CB is set at a price less than the par value due to the market change, the reason for the Company not adopt other fund raising method and the reasonableness for such determination: This is mainly based on considerations of the sound operation of the Company and the security of its financial structure and issuing equity related securities for fund raising is more appropriate than pure debt financing. If the Company decides to use the fund raising methods, such as issuing new shares for cash to sponsor the DR Offering, issuing new shares for cash in public offering, and issuing Private Placement Shares, etc. the Company would not incur any interest of the debt in such case not only the Company's financial risk could be reduced, the Company's financial structure could be improved and the flexibility of the Company’s treasury management would also be increased. For issuance of Private Placement CB, if investor

8  Recognition and Discussion Items

converts Private Placement CB into the common shares, such would improve the Company’s financial structure and would benefit the Company’s long term development. Thus, it should be reasonable for the Company to issue the equity related securities. If the issue price and the conversion price is less than the par value, such would be expected to cause decrease of the Company’s capital surplus and retained earnings in which case the Company will, depending on the actual operating conditions in the future, make up for the losses. As the issue price and the conversion price will be determined in accordance with the relevant regulations, thus, after realization of the benefits of the capital increase, the Company's financial structure will be effectively improved which would be favorable to the Company’s long-term development and would not have adverse impact on the rights and benefits of the shareholders.

(6) After the shareholders meeting approves issuance of new common shares to sponsor the DR Offering, new common shares in public offering, the Private Placement Shares and the Private Placement CB, it is proposed for the shareholders meeting to authorize the Board to determine and amend, at the Board’s sole discretion, the terms and condition of the new common shares to be issued for the DR Offering and/or in public offering and/or terms and condition of the Private Placement Shares and/or Offering Plan of the Private Placement CB, the plan for the use of proceeds, the schedule and projected benefits and all matters in connection therewith, in accordance with the Company’s actual needs, market conditions and relevant regulations and if any amendment thereto is required due to any change of the regulations or as requested by the regulator’s order or based on the Company’s operation evaluation or change of the market conditions, the Board is authorized to make the required amendments at the Board’s sole discretion.
(7) To complete the fund raising, the Chairman or the Chairman's designee is authorized, on behalf of the Company, to handle all matters relating to, and sign all agreements and documents in connection with, issuance of the new common shares to sponsor the DR Offering, issuance of new common shares in public offering and issuance of the Private Placement Shares and/or Private Placement CB.
(8) The Board is authorized to handle all matters at the Board’s sole discretion which are not addressed herein in accordance with the applicable laws and regulations.

Resolution:

4. To approve the amendment to the Articles of Incorporation (Proposed by the Board of Directors)

Explanation:

(1) To comply with the article of the “Company Act” amended order No. 10700083291 on August 1, 2018, it is proposed to amend the Articles of Incorporation.
(2) The comparison table for the Articles of Incorporation before and after amendment is attached hereto as Attachment 4 (pages 33-34)

Resolution:

5. To approve the amendment to Handling Procedures for Acquisition or Disposal of Assets and Handling Procedures for Conducting Derivative Transactions (proposed by the Board of Directors)

Explanation:

(1) To comply with the articles of the “Regulations Governing the Acquisition and Disposal of Assets by Public Companies” amended Order No. 1070341072 of the Financial Supervisory Commission on November 26, 2018, it is proposed to amend the Handling Procedures for Acquisition or Disposal of Assets and Handling Procedures for Conducting Derivative Transactions.
(2) The comparison table for before and after the amendment are attached hereto as Attachment 5 and 6(pages 35-42)

Resolution:

Recognition and Discussion Items  9

6. To approve the amendment to Handling Procedures for Lending Funds to Other Parties and Handling Procedures for Endorsements and Guarantees (proposed by the Board of Directors)

Explanation:

(1)To comply with the articles of the“Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by

Public Companies”amended Order No. 1080304826 of the Financial Supervisory Commission on March 7, 2019, it is proposed to amend the Handling Procedures for Lending Funds to Other Parties and Handling Procedures for Endorsements and Guarantees

(2) The comparison table for before and after the amendment are attached hereto as Attachment 7 and 8(pages 43-44)

Resolution:

7. To lift non-competition restrictions on current directors and their representatives (proposed by the Board of Directors)

Explanation:

(1) According to Article 209 of the Company Act, any Director conducting business for himself/herself/itself or on another’s behalf, the scope of which business is within the scope of the Company’s business, shall explain at the Shareholders’ Meeting the essential contents of such conduct, and obtain approval from shareholders in the Meeting.
(2) It is proposed for the 2019 annual shareholders meeting to approve lifting non-competition restrictions on directors as who may invest or operate a business which is similar to the business scope of the Company.
(3) The list of non-competition restrictions proposed to be lifted by the Company on each Director is attached hereto as Attachment 9 (page 45).

Resolution:

Extraordinary Motions

Meeting Adjourn

10  Attachment 1

Attachment I Independent Auditors’ Report and 2018 Financial Statements

2018 Consolidated Financial Statements

Independent Auditors’ Report

The Board of Directors of Qisda Corporation:

Opinion

We have audited the consolidated financial statements of Qisda Corporation (the “Company”) and its subsidiaries (the “Group”), which comprise the consolidated balance sheets as of December 31, 2018 and 2017, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other auditors (please refer to the paragraph on Other Matter of our report), the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2018 and 2017, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and the International Financial Reporting Standards, International Accounting Standards, interpretations, as well as related guidance endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the paragraph on the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements of our report. We are independent of the Group in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. Based on our audits and the reports of other auditors, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Key Audit Matters

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

Key audit matters for the Group’s consolidated financial statements for the year ended December 31, 2018 are stated as follows:

Revenue recognition

Please refer to notes 4(r) and 6(x) for the accounting policy on revenue recognition and “Revenue” for the related disclosures, respectively, of the notes to the consolidated financial statements.

Description of key audit matter:

The Group has several operating segments. Each segment engages in different business activities. In addition, the Group has operations spread globally. The Group recognizes its revenue depending on the various trade terms in each individual sale transaction and service rendered, which are considered to be complex in determining the timing of revenue recognition. Therefore, revenue recognition has been identified as one of the key audit matters.

How the matter was addressed in our audit:

In relation to the key audit matters above, our principal audit procedures included testing the design and operating effectiveness of the Group’s internal controls over financial reporting in the sales and collection cycle; assessing whether revenue is recognized based on the trade terms with customers through reviewing the related sales contracts or other trade documents; performing a sample test on the sales transactions that took place before and after the balance sheet

Attachment 1  11

date to determine whether the performance obligation has been satisfied by transferring control over the goods or services to a customer, and assessing the reasonableness of the timing of revenue recognition; reviewing and understanding the reasonableness for any identified significant sales returns and allowances that took place after the balance sheet date, as well as assessing whether the revenue and related sales returns and allowances is recognized in appropriate period.

2. Valuation of inventories

Please refer to notes 4(h), 5 and 6(g) for the inventory accounting policy, “Critical accounting judgments and key sources of estimation uncertainty” for estimation uncertainty of inventory valuation, and “Inventories” for the related disclosures, respectively, of the notes to the consolidated financial statements.

Description of key audit matter:

Inventories are measured at the lower of cost and net realizable value. Due to the rapid technological innovations and highly competitive environments in the electronic industry, the life cycle of certain products of the Group are short and their market prices fluctuate rapidly, which could possibly result in a price decline and obsolescence of inventory, wherein the inventory cost may exceed its net realizable value. Therefore, the valuation of inventories has been identified as one of the key audit matters.

How the matter was addressed in our audit:

In relation to the key audit matter above, our principal audit procedures included reviewing the inventory of aging report and analyzing the fluctuation of inventory aging; selecting samples to verify the accuracy of the net realizable value of inventories and inventory aging report prepared by the Group; evaluating whether valuation of inventories was accounted for in accordance with the Group’s accounting policies; and assessing the historical reasonableness of management’s estimates on inventory provisions.

3. Impairment of goodwill

Please refer to notes 4(p), 5 and 6(m) for the accounting policy on impairment of non-financial assets, “Critical accounting judgments and key sources of estimation uncertainty”, for the estimation uncertainty of impairment of goodwill, and “Intangible assets”, and for the related disclosures, respectively, of the notes to the consolidated financial statements.

Description of key audit matter:

Goodwill arising from acquisition of subsidiaries are annually subject to impairment test or when there are indications that goodwill may have been impaired. The assessment of the recoverable amount of goodwill involves management’s judgment and estimation. Accordingly, the assessment of impairment of goodwill has been identified as one of the key audit matters.

How the matter was addressed in our audit:

In relation to the key audit matter above, our principal audit procedures included obtaining the assessment of goodwill impairment provided by the management; assessing the appropriateness of the valuation model and key assumptions, including the discount rate, expected growth rate and future cash flow projections, used by the management in measuring the recoverable amount; performing a sensitivity analysis of key assumptions and results; and assessing the adequacy of the Group’s disclosures with respect to the related information.

Other Matter

We did not audit the financial statements of certain subsidiaries of the Group. Those financial statements were audited by other auditors, whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for those subsidiaries, is based solely on the report of other auditors. The financial statements of those subsidiaries reflect the total assets amounting to NT$6,588,263 thousand, constituting 5.50% of the consolidated total assets as of December 31, 2018, and the total operating revenues amounting to NT$5,615,233 thousand, constituting 3.60% of the consolidated total operating revenues for the year ended December 31, 2018.

The Company has additionally prepared its parent-company-only financial statements as of and for the years ended December 31, 2018 and 2017, on which we have audited and issued an unmodified opinion with other matter section for the year ended December 31, 2018, and an unmodified opinion for the year ended December 31, 2017, respectively.

12  Attachment 1

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, interpretation as well as related guidance endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the 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 members of 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 auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

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

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.
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.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
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.
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.
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 remained solely responsible for our audit opinion.

Attachment 1  13

We communicated 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 determined those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2018 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.

The engagement partners on the audit resulting in this independent auditors’ report are Tzu-Chieh Tang and Wei-Ming Shih.

KPMG

Taipei, Taiwan (Republic of China) March 21, 2019

Notes to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with the accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally accepted and applied in the Republic of China. The independent auditors’ report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ report and consolidated financial statements, the Chinese version shall prevail.

14  Attachment 1

(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

QISDA CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2018 and 2017

(Expressed in Thousands of New Taiwan Dollars)

December 31, 2018	December 31, 2018	December 2017	31,
Amount	%	Amount	%
$ 9,618,657 405,914 30,380 - 25,012,211 3,097,461 580,936 22,568 25,063,054 2,089,503 273,007 - 66,193,691 731,246 - 19,382,592 21,013,038 2,834,475 4,994,663 1,829,762 260,456 192,698 2,374,662 53,613,592	8 - - - 21 3 - - 21 2 - - 55 1 - 16 18 2 4 2 - - 2 45	6,636,634 1,043,701 - 29,605 23,887,642 4,237,646 222,320 7,412 20,179,338 1,928,422 1,205,612 155,220 59,533,552 - 637,649 16,748,411 19,991,519 2,527,582 5,004,450 1,676,767 153,818 218,089 2,447,579 49,405,864	6 1 - - 22 4 - - 19 2 1 -
			55
			- 1 15 18 2 5 2 - - 2
			45

Total assets $119,807,283 100 108,939,416 100

See accompanying notes to consolidated financial statements.

Attachment 1  15

(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

QISDA CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2018 and 2017

(Expressed in Thousands of New Taiwan Dollars)

December 31, 2018	December 31, 2018	December31,	2017
Amount	%	Amount	%
$ 14,786,555 47,114 876,788 28,443,235 2,260,495 10,025,492 13,394 2,111,070 2,340,508 20,946 410,124 61,335,721 96,721 16,234,476 17,068 620,633 678,632 964,386 18,611,916 79,947,637 19,667,820 2,146,076 10,801,845 (168,422) 32,447,319 7,412,327 39,859,646 $119,807,283	12 - 1 24 2 8 - 2 2 - - 51 - 14 - - 1 1 16 67 16 2 9 - 27 6 33 100	16,262,262 67,531 - 24,243,393 1,626,103 11,064,170 5,946 866,198 1,704,031 27,709 470,787 56,338,130 9,628 13,005,122 31,726 563,666 528,599 918,059 15,056,800 71,394,930 19,667,820 2,173,633 9,501,437 (383,980) 30,958,910 6,585,576 37,544,486 108,939,416	15 - - 22 2 10 - 1 2 - -
			52
			- 12 - 1 - 1
			14
			66
			18 2 9 (1)
			28
			6
			34
			100

See accompanying notes to consolidated financial statements.

16  Attachment 1

(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

QISDA CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income For the years ended December 31, 2018 and 2017

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

4000Operating revenues 5000Operating costs Gross profit Operating expenses: 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6400 Other operating expenses 6450 Expected credit loss Total operating expenses Operating income Non-operating income and loss: 7010 Other income 7020 Other gains and losses－net 7050 Finance costs 7060 Share of profits (losses) of associates and joint ventures Total non-operating income and loss Income before income tax 7950Income tax expense Net income Other comprehensive income: 8310Items that will not be reclassified subsequently to profit or loss 8311 Remeasurements of defined benefit plans 8316 Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income 8320 Share of other comprehensive income of associates 8349 Less: income tax related to items that will not be reclassified subsequently to profit or loss 8360Items that may be reclassified subsequently to profit or loss 8361 Exchange differences on translation of foreign operations 8362 Change in fair value of available-for-sale financial assets 8370 Share of other comprehensive income of associates and joint ventures 8399 Less: income tax related to items that may be reclassified subsequently to profit or loss Other comprehensive income for the year, net of income tax Total comprehensive income for the year Net income attributable to: 8610 Shareholders of the Company 8620 Non-controlling interests Total comprehensive income attributable to: 8710 Shareholders of the Company 8720 Non-controlling interests Earnings per share: 9750 Basic earnings per share 9850 Diluted earnings per share	2018		2017
	Amount	%	Amount	%
	$ 155,783,161 (136,540,185) 19,242,976 (7,963,189) (3,015,215) (3,710,837) 48,673 (26,249) (14,666,817) 4,576,159 453,514 276,633 (848,789) 1,155,594 1,036,952 5,613,111 (1,162,457) 4,450,654 (53,899) 80,429 (68,022) - (41,492) 254,541 - (61,967) - 192,574 151,082 $ 4,601,736 $ 4,035,064 415,590 $ 4,450,654 $ 4,250,635 351,101 $ 4,601,736 $ 2.05 $ 2.03	100 (88) 12 (5) (2) (2) - - (9) 3 - - - 1 1 4 (1) 3 - - - - - - - - - - - 3 3 - 3 3 - 3	136,862,492 (120,529,445) 16,333,047 (6,572,404) (2,731,022) (3,565,713) (62,000) - (12,931,139) 3,401,908 233,562 1,048,133 (660,210) 2,395,799 3,017,284 6,419,192 (762,822) 5,656,370 5,861 - (6,222) - (361) (967,810) (181,851) (126,978) - (1,276,639) (1,277,000) 4,379,370 5,291,387 364,983 5,656,370 4,048,715 330,655 4,379,370 2.69 2.66	100 (88) 12 (5) (2) (3) - - (10) 2 - 1 - 2 3 5 (1) 4 - - - - - (1) - - - (1) (1) 3 4 - 4 3 - 3

See accompanying notes to consolidated financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

QISDA CORPORATION AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the years ended December 31, 2018 and 2017

(Expressed in Thousands of New Taiwan Dollars)

Attributable to shareholders of the Company

Common stock	Capital surplus		Retai	ned earnings			Total	other equity intere	st		Total equity of the Company	Non-controlling interests	Total equity
		Legal reserve	Special reserve	Unappropriated earnings	Total retained earningss	Foreign currency translation differences	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income	Unrealized gains (losses) on available-for-sale financial assets	Remeasurements of defined benefitplans	Total other equity interest
$ 19,667,820	2,177,332	459,607	-	6,346,595	6,806,202	1,018,614	-	131,797	(291,719)	858,692	29,510,046	3,435,285	32,945,331
- -	- -	- -	- -	5,291,387 -	5,291,387 -	- (1,139,104)	- -	- (101,431)	- (2,137)	- (1,242,672)	5,291,387 (1,242,672)	364,983 (34,328)	5,656,370 (1,277,000)
-	-	-	-	5,291,387	5,291,387	(1,139,104)	-	(101,431)	(2,137)	(1,242,672)	4,048,715	330,655	4,379,370
- - - - - - - - -	- - 35,636 (2,706) - - (56,756) 20,127 -	434,227 - - - - - - - -	- - - - - - - - -	(434,227) (2,596,152) - - - - - - -	- (2,596,152) - - - - - - -	- - - - - - - - -	- - - - - - - - -	- - - - - - - - -	- - - - - - - - -	- - - - - - - - -	- (2,596,152) 35,636 (2,706) - - (56,756) 20,127 -	- - - (794) (35,137) 3,673 56,756 2,054 2,793,084	- (2,596,152) 35,636 (3,500) (35,137) 3,673 - 22,181 2,793,084
19,667,820 -	2,173,633 -	893,834 -	- -	8,607,603 (79,500)	9,501,437 (79,500)	(120,490) -	- 30,353	30,366 (30,366)	(293,856) -	(383,980) (13)	30,958,910 (79,513)	6,585,576 (699)	37,544,486 (80,212)
19,667,820	2,173,633	893,834	-	8,528,103	9,421,937	(120,490)	30,353	-	(293,856)	(383,993)	30,879,397	6,584,877	37,464,274
- -	- -	- -	- -	4,035,064 -	4,035,064 -	- 248,819	- 16,637	- -	- (49,885)	- 215,571	4,035,064 215,571	415,590 (64,489)	4,450,654 151,082
-	-	-	-	4,035,064	4,035,064	248,819	16,637	-	(49,885)	215,571	4,250,635	351,101	4,601,736
- - - - - - - - - -	- - - 9,086 - - 5,986 (42,630) 1 -	529,139 - - - - - - - - -	- 383,979 - - - - - - - -	(529,139) (383,979) (2,655,156) - - - - - - -	- - (2,655,156) - - - - - - -	- - - - - - - - - -	- - - - - - - - - -	- - - - - - - - - -	- - - - - - - - - -	- - - - - - - - - -	- - (2,655,156) 9,086 - - 5,986 (42,630) 1 -	- - - - (439,028) 2,289 (1,072) (46,768) (1) 960,929	- - (2,655,156) 9,086 (439,028) 2,289 4,914 (89,398) - 960,929
$ 19,667,820	2,146,076	1,422,973	383,979	8,994,893	10,801,845	128,329	46,990	-	(343,741)	(168,422)	32,447,319	7,412,327	39,859,646

See accompanying notes to consolidated financial statements.

18  Attachment 1

(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

QISDA CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2018 and 2017

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities: Income before income tax Adjustments for: Adjustments to reconcile profit or loss: Depreciation Amortization Expected credit loss / Provision for bad debt expense Interest expense Interest income Dividend income Share-based compensation cost Share of profits of associates and joint ventures Gain on disposal of property, plant and equipment Gain on disposal of non-current assets held for sale Gain on disposal of investments Impairment loss on financial assets Gain on bargain purchase Impairment loss on non-financial assets Impairment loss on investments accounted for using equity method Total adjustments to reconcile profit Changes in operating assets and liabilities: Changes in operating assets: Decrease in financial assets at fair value through profit or loss Increase in notes and accounts receivable Decrease in notes and accounts receivable from related parties Decrease (increase) in other receivable Decrease (increase) in other receivable from related parties Increase in inventories Increase in other current assets Decrease (increase) in other non-current assets Net changes in operating assets Changes in operating liabilities: Decrease in financial liabilities at fair value through profit or loss Increase (decrease) in notes and accounts payable Increase (decrease) in accounts payable to related parties Increase (decrease) in other payable to related parties Decrease in provisions Increase in contract liabilities Increase in other payables and other current liabilities Decrease in other non-current liabilities Net changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash provided by operations Interest received Dividends received Interest paid Income taxes paid Net cash provided by operating activities	2018	2017
	$ 5,613,111 2,018,660 467,629 26,249 848,789 (185,434) (35,321) 2,289 (1,155,594) (10,404) (156,703) (14,727) - (253) 2,815 - 1,807,995 637,787 (274,728) 1,140,185 (254,826) (15,156) (3,945,789) (27,761) (66,632) (2,806,920) (23,365) 3,419,447 634,392 7,448 (4,696) 246,134 326,612 (88) 4,605,884 1,798,964 3,606,959 9,220,070 187,805 1,314,864 (841,475) (922,998) 8,958,266	6,419,192
		1,815,685 262,892 22,563 660,210 (84,640) (93,842) 3,673 (2,395,799) (182,793) - (597,977) 1,755 - 1,455 7,098
		(579,720)
		303,516 (1,958,405) 377,687 21,192 425 (1,948,916) (272,674) 79,427
		(3,397,748)
		(34,480) (1,548,801) (798,153) (15,764) (41,074) - 799,581 (12,761)
		(1,651,452)
		(5,049,200)
		(5,628,920)
		790,272 78,389 624,912 (587,669) (570,095)
		335,809

See accompanying notes to consolidated financial statements.

Attachment 1  19

(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

QISDA CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2018 and 2017

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from investing activities: Purchase of financial assets at fair value through other comprehensive income Purchase of available-for-sale financial assets Proceeds from disposal of available-for-sale financial assets Purchase of investments accounted for using equity method Proceeds from disposal of non-current assets held for sale Additions to property, plant and equipment Proceeds from disposal of property, plant and equipment Additions to intangible assets Additions to investment property Decrease (increase) in other financial assets Acquisition of subsidiary, net of cash used Net cash flows used in investing activities Cash flows from financing activities: Increase in short-term borrowings Decrease in short-term borrowings Increase in long-term debt Repayments of long-term debt Decrease in lease obligation payable Cash dividends distributed to shareholders Cash dividends paid to non-controlling interests Acquisition of subsidiary’s interests from non-controlling interests Capital injection from non-controlling interests Net cash provided by (used in) financing activities Effects of foreign 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	2018	2017
	(11,187) - - (2,870,093) 311,923 (2,849,797) 31,649 (121,694) (22,660) 1,037,911 (189,761) (4,683,709) 5,501,139 (7,748,285) 17,966,813 (14,417,367) (21,421) (2,655,156) (439,028) (89,398) 4,914 (1,897,789) 605,255 2,982,023 6,636,634 $ 9,618,657	- (43,467) 539,525 - - (3,515,652) 281,822 (80,060) (50,623) (410,210) (3,572,131)
		(6,850,796)
		11,207,863 (2,916,514) 12,881,188 (11,234,255) (49,380) (2,596,152) (35,137) (3,500) 22,181
		7,276,294
		(950,026)
		(188,719) 6,825,353
		6,636,634

See accompanying notes to consolidated financial statements.

20  Attachment 1

2018 Parent Company Only Financial Statements

Independent Auditors’ Report

The Board of Directors of Qisda Corporation:

Opinion

We have audited the parent-company-only financial statements of Qisda Corporation (the “Company”), which comprise the parent-company-only balance sheets as of December 31, 2018 and 2017, and the parent-company-only statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the parent-company-only financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other auditors (please refer to the paragraph on Other Matter of our report), the accompanying parent-company-only financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

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

Key Audit Matters

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

Key audit matters for the Company’s parent-company-only financial statements for the year ended December 31, 2018 are stated as follows:

Revenue recognition

Please refer to notes 4(o) and 6(s) for the accounting policy on revenue recognition and “Revenue” for the related disclosures, respectively, of the notes to the parent-company-only financial statements.

Description of key audit matter:

The Company recognizes its revenue depending on the various trade terms in each individual sale transaction and service rendered, which are considered to be complex in determining the timing of revenue recognition. Therefore, revenue recognition has been identified as one of the key audit matters.

How the matter was addressed in our audit:

In relation to the key audit matters above, our principal audit procedures included testing the design and operating effectiveness of the Company’s internal controls over financial reporting in the sales and collection cycle; assessing whether revenue is recognized based on the trade terms with customers through reviewing the related sales contracts or other trade documents; performing a sample test on the sales transactions that took place before and after the balance sheet date to determine whether the performance obligation has been satisfied by transferring control over the goods or services to a customer, and assessing the reasonableness of the timing of revenue recognition; reviewing and understanding the reasonableness for any identified significant sales returns and allowances that took place after the balance sheet date, as well as assessing whether the revenue and related sales returns and allowances is recognized in appropriate period.

Attachment 1  21

2. Valuation of inventories

Please refer to notes 4(g), 5 and 6(g) for the inventory accounting policy, “Critical accounting judgments and key sources of estimation uncertainty” for estimation uncertainty of inventory valuation, and “Inventories” for the related disclosures, respectively, of the notes to the parent-company-only financial statements.

Description of key audit matter:

Inventories are measured at the lower of cost and net realizable value. Due to the rapid technological innovations and highly competitive environments in the electronic industry, the life cycle of certain products of the Company are short and their market prices fluctuate rapidly, which could possibly result in a price decline and obsolescence of inventory, wherein the inventory cost may exceed its net realizable value. Therefore, the valuation of inventories has been identified as one of the key audit matters.

How the matter was addressed in our audit:

In relation to the key audit matter above, our principal audit procedures included reviewing the inventory of aging report and analyzing the fluctuation of inventory aging; selecting samples to verify the accuracy of the net realizable value of inventories and inventory aging report prepared by the Company; evaluating whether valuation of inventories was accounted for in accordance with the Company’s accounting policies; and assessing the historical reasonableness of management’s estimates on inventory provisions.

Assessment of impairment of goodwill from investments in subsidiaries

Please refer to notes 4(m), 5 and 6(h) for the accounting policy on impairment of non-financial assets, “Critical accounting judgments and key sources of estimation uncertainty”, for the estimation uncertainty of impairment of goodwill, and “Investments accounted for using equity method,” and for the related disclosures, respectively, of the notes to the parent-company-only financial statements.

Description of key audit matter:

Goodwill arising from acquisition of subsidiaries, which are included in the carrying amount of investments accounted for using equity method. Goodwill are annually subject to impairment test or when there are indications that goodwill may have been impaired. The assessment of the recoverable amount of goodwill involves management’s judgment and estimation. Accordingly, the assessment of impairment of goodwill has been identified as one of the key audit matters.

How the matter was addressed in our audit:

In relation to the key audit matter above, our principal audit procedures included obtaining the assessment of goodwill impairment provided by the management; assessing the appropriateness of the valuation model and key assumptions, including the discount rate, expected growth rate and future cash flow projections, used by the management in measuring the recoverable amount; performing a sensitivity analysis of key assumptions and results; and assessing the adequacy of the Company’s disclosures with respect to the related information.

Other Matter

We did not audit the financial statements of certain investees accounted for using equity method of the Company. Those financial statements were audited by other auditors, whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for those investees, is based solely on the report of other auditors. Those investments accounted for using equity method amounted to NT$4,396,476 thousand, constituting 5.41% of the total assets as of December 31, 2018, and the related shares of profit of subsidiaries, associates and joint ventures amounted to NT$251,381 thousand, constituting 5.84% of the total income before income tax for the year ended December 31, 2018.

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

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

22  Attachment 1

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

Those charged with governance (including members of the Audit Committee) are responsible for overseeing the Company’s financial reporting process.

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

Our objectives are to obtain reasonable assurance about whether the parent-company-only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an 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 auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these parent-company-only financial statements.

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.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the parent-company-only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
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.
Obtaine sufficient appropriate audit evidence regarding the financial information of the investees accounted for using equity method to express an opinion on the parent-company-only financial statements. We are responsible for the direction, supervision and performance of the audit. We remained solely responsible for our audit opinion.

Attachment 1  23

From the matters communicated with those charged with governance, we determined those matters that were of most significance in the audit of the parent-company-only financial statements for the year ended December 31, 2018 and are therefore the key audit matters. We described 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.

The engagement partners on the audit resulting in this independent auditors’ report are Tzu-Chieh Tang and Wei-Ming Shih.

KPMG

Taipei, Taiwan (Republic of China) March 21, 2019

Notes to Readers

The accompanying parent-company-only financial statements are intended only to present the financial position, financial performance and cash flows in accordance with the accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such parent-company-only financial statements are those generally accepted and applied in the Republic of China. The independent auditors’ report and the accompanying parent-company-only financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ report and parent-company-only financial statements, the Chinese version shall prevail.

24  Attachment 1

(English Translation of Financial Statements Originally Issued in Chinese)

QISDA CORPORATION

Parent-Company-Only Balance Sheets

December 31, 2018 and 2017

(Expressed in Thousands of New Taiwan Dollars)

December 2018	31,	December 2017	31,
Amount	%	Amount	%
$ 1,127,971 13,749 10,198,272 16,720,699 226,656 - 4,283,816 99,927 32,671,090 33,750 - 46,312,026 1,481,977 6,595 706,171 29,591 42,078 48,612,188	1 - 13 21 - - 5 - 40 - - 57 2 - 1 - - 60	1,794,339 1,824 11,292,878 14,240,434 313 1,180 3,381,551 64,371 30,776,890 - 35,000 42,957,769 1,493,157 7,931 830,116 26,572 36,964 45,387,509	2 - 15 19 - - 4 -
			40
			- - 57 2 - 1 - -
			60

See accompanying notes to parent company only financial statements.

$81,283,278 100 76,164,399 100

Total assets

Attachment 1  25

(English Translation of Financial Statements Originally Issued in Chinese)

QISDA CORPORATION

Parent-Company-Only Balance Sheets

December 31, 2018 and 2017

(Expressed in Thousands of New Taiwan Dollars)

Liabilities and Equity Current liabilities: 2100 Short-term borrowings 2120 Financial liabilities at fair value through profit or loss－current 2130 Contract liabilities－current 2170 Notes and accounts payable 2180 Accounts payable to related parties 2200 Other payables 2220 Other payables to related parties 2322 Current portion of long-term debt 2250 Provisions－current 2300 Other current liabilities Total current liabilities Non-current liabilities: 2540 Long-term debt 2550 Provisions－non-current 2570 Deferred income tax liabilities 2600 Other non-current liabilities Total non-current liabilities Total liabilities Equity: 3110 Common stock 3200 Capital surplus 3300 Retained earnings 3400 Other equity Total equity Total liabilities and equity	December 2018	31,	December 2017	31,
	Amount	%	Amount	%
	$ 5,150,000 2,388 384,821 2,081,679 24,522,696 1,862,729 6,738 1,900,000 20,445 1,098,814 37,030,310 11,371,325 85,381 2,479 346,464 11,805,649 48,835,959 19,667,820 2,146,076 10,801,845 (168,422) 32,447,319 $ 81,283,278	7 - 1 3 30 2 - 2 - 1 46 14 - - - 14 60 24 3 13 - 40 100	5,827,600 14,850 - 2,094,550 24,616,014 3,094,992 7,076 1,500,000 22,947 341,619 37,519,648 7,262,800 94,515 3,088 325,438 7,685,841 45,205,489 19,667,820 2,173,633 9,501,437 (383,980) 30,958,910 76,164,399	8 - - 3 32 4 - 2 - - 49 10 - - - 10 59 26 3 12 - 41 100

See accompanying notes to parent company only financial statements.

26  Attachment 1

(English Translation of Financial Statements Originally Issued in Chinese)

QISDA CORPORATION

Parent-Company-Only Statements of Comprehensive Income For the years ended December 31, 2018 and 2017

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

2018		2017
Amount	%	Amount	%
$ 99,033,057 (94,213,796) 4,819,261 (71,557) 4,747,704 (1,022,710) (513,183) (2,045,683) (22,897) (3,604,473) 1,143,231 31,847 43,850 (362,611) 3,448,279 3,161,365 4,304,596 (269,532) 4,035,064 (39,077) (1,250) 7,079 - (33,248) 248,819 - - - 248,819 215,571 $ 4,250,635 $ 2.05 $ 2.03	100 (95) 5 - 5 (1) (1) (2) - (4) 1 - - - 3 3 4 - 4 - - - - - - - - - - - 4	88,869,603 (85,094,519) 3,775,084 78,512 3,853,596 (967,745) (564,890) (2,151,889) - (3,684,524) 169,072 71,547 407,644 (234,791) 5,111,045 5,355,445 5,524,517 (233,130) 5,291,387 7,013 - (9,150) - (2,137) (1,139,104) (61,062) (40,369) - (1,240,535) (1,242,672) 4,048,715 2.69 2.66	100 (96)
			4 -
			4
			(1) (1) (2) -
			(4)
			-
			- - - 6
			6
			6 -
			6
			- - - -
			-
			(1) - - -
			(1)
			(1)
			5

(English Translation of Financial Statements Originally Issued in Chinese)

QISDA CORPORATION

Parent-Company-Only Statements of Changes in Equity

For the years ended December 31, 2018 and 2017

(Expressed in Thousands of New Taiwan Dollars)

Common stock	Capital surplus		Retained	earnings			Total	other equity inter	est		Total equity
		Legal reserve	Special reserve	Unappropriate d earnings	Total retained earningss	Foreign currency translation differences	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income	Unrealized gains (losses) on available-for- sale financial assets	Remeasuremen ts of defined benefitplans	Total other equity interest
$ 19,667,820	2,177,332	459,607	-	6,346,595	6,806,202	1,018,614	-	131,797	(291,719)	858,692	29,510,046
- -	- -	- -	- -	5,291,387 -	5,291,387 -	- (1,139,104)	- -	- (101,431)	- (2,137)	- (1,242,672)	5,291,387 (1,242,672)
-	-	-	-	5,291,387	5,291,387	(1,139,104)	-	(101,431)	(2,137)	(1,242,672)	4,048,715
- - - -	- - (993) (2,706)	434,227 - - -	- - - -	(434,227) (2,596,152) - -	- (2,596,152) - -	- - - -	- - - -	- - - -	- - - -	- - - -	- (2,596,152) (993) (2,706)
19,667,820 -	2,173,633 -	893,834 -	- -	8,607,603 (79,500)	9,501,437 (79,500)	(120,490) -	- 30,353	30,366 (30,366)	(293,856) -	(383,980) (13)	30,958,910 (79,513)
19,667,820	2,173,633	893,834	-	8,528,103	9,421,937	(120,490)	30,353	-	(293,856)	(383,993)	30,879,397
- -	- -	- -	- -	4,035,064 -	4,035,064 -	- 248,819	- 16,637	- -	- (49,885)	- 215,571	4,035,064 215,571
-	-	-	-	4,035,064	4,035,064	248,819	16,637	-	(49,885)	215,571	4,250,635
- - - - -	- - - 15,073 (42,630)	529,139 - - - -	- 383,979 - - -	(529,139) (383,979) (2,655,156) - -	- - (2,655,156) - -	- - - - -	- - - - -	- - - - -	- - - - -	- - - - -	- - (2,655,156) 15,073 (42,630)
$ 19,667,820	2,146,076	1,422,973	383,979	8,994,893	10,801,845	128,329	46,990	-	(343,741)	(168,422)	32,447,319

See accompanying notes to parent company only financial statements.

28  Attachment 1

(English Translation of Financial Statements Originally Issued in Chinese)

QISDA CORPORATION

Parent-Company-Only Statements of Cash Flows For the years ended December 31, 2018 and 2017 (Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities: Income before income tax Adjustments for: Adjustments to reconcile profit or loss: Depreciation Amortization Expected credit loss / (Reversal of) bad debt expense Interest expense Interest income Dividend income Share of profits of subsidiaries, associates and joint ventures Loss (gain) on disposal of property, plant and equipment Gain on disposal of investments Unrealized (realized) profit on sales to subsidiaries, associates and joint ventures Total adjustments to reconcile profit Changes in operating assets and liabilities: Changes in operating assets: Decrease (increase) in financial assets at fair value through profit or loss Decrease (increase) in notes and accounts receivable Increase in notes and accounts receivable from related parties Decrease (increase) in other receivable Decrease (increase) in other receivable from related parties Increase in inventories Decrease (increase) in other current assets Increase in other non-current assets Net changes in operating assets Changes in operating liabilities: Increase (decrease) in financial liabilities at fair value through profit or loss Decrease in notes and accounts payable Increase (decrease) in accounts payable to related parties Increase (decrease) in other payable to related parties Decrease in provisions Increase in contract liabilities Increase (decrease) in other current liabilities Decrease in other non-current liabilities Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash used in operations Interest received Dividends received Interest paid Income taxes paid Net cash provided by (used in) operating activities	2018	2017
	$ 4,304,596 77,951 4,839 22,897 362,611 (17,192) (1,250) (3,448,279) 621 - 71,557 (2,926,245) (11,925) 1,030,601 (2,480,265) (226,483) 1,180 (902,265) (35,556) (10,227) (2,634,940) (12,462) (12,871) (93,318) (338) (11,636) 74,975 (228,783) (18,049) (302,482) (2,937,422) (5,863,667) (1,559,071) 17,332 2,650,125 (345,460) (92,578) 670,348	5,524,517
		76,568 6,520 (776) 234,791 (8,891) (47,298) (5,111,045) (1,580) (320,046) (78,512)
		(5,250,269)
		87,286 (109,594) (1,441,363) 780 (213) (794,464) 19,851 (10,802)
		(2,248,519)
		14,850 (1,031,348) 48,433 2,037 (35,718) - 295,390 (1,925)
		(708,281)
		(2,956,800)
		(8,207,069)
		(2,682,552) 8,751 1,501,804 (217,126) (61,416)
		(1,450,539)

See accompanying notes to parent company only financial statements.

Attachment 1  29

(English Translation of Financial Statements Originally Issued in Chinese)

QISDA CORPORATION

Parent-Company-Only Statements of Cash Flows For the years ended December 31, 2018 and 2017 (Expressed in Thousands of New Taiwan Dollars)

Cash flows from investing activities: Proceeds from disposal of available-for-sale financial assets Purchase of investments accounted for using equity method Proceeds from investees' capital reduction Additions to property, plant and equipment Proceeds from disposal of property, plant and equipment Additions to intangible assets Increase in other financial assets Net cash flows used in investing activities Cash flows from financing activities: Increase (decrease) in short-term borrowings Increase in long-term debt Repayments of long-term debt Cash dividends distributed to shareholders Net cash provided by financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year	2018	2017
	- (2,681,134) 244,658 (71,592) 4,200 (3,503) (5,114) (2,512,485) (677,600) 12,208,525 (7,700,000) (2,655,156) 1,175,769 (666,368) 1,794,339 $ 1,127,971	137,286 (4,089,090) - (69,297) 2,425 (3,000) (1,775)
		(4,023,451)
		5,827,600 7,560,595 (5,973,045) (2,596,152)
		4,818,998
		(654,992) 2,449,331
		1,794,339

See accompanying notes to parent company only financial statements.

30  Attachment 2

Attachment 2

The 2018 Earnings Distribution Proposal

	Unit: NTS
Net income of 2018 Less: Provisioned as legal reserve Add: Reversal of Special Reserve Retained earnings available for distribution in 2018 Add: Unappropriated retained earnings from previous years Less: Adjustments to the first-time adoption of International Financial Reporting Standards Retained earnings available for distribution as of December 31, 2018 Distributable Items Cash Dividend（NT$850 for every 1,000 common shares） Unappropriated retained earnings after earnings distribution	4,035,064,518 (403,506,452) 215,557,119
	3,847,115,185
	5,039,329,973 (79,500,532)
	8,806,944,626
	(1,671,764,664)
	7,135,179,962

Note:

The cash dividend distribution to each shareholder will be paid to the rounded-down full NT dollar. Amounts less than one whole NT dollar are rounded-down to the nearest NT dollar. The aggregate unpaid cash dividend resulting from the above rounded-down, will be distributed to shareholders in the descending order of decimal point and the ascending order of shareholder account numbers, until the total amount of the approved cash dividend has been fully distributed.

Attachment 3  31

Attachment 3

Qisda Corporation

Terms and Conditions for Issuance of Overseas or Domestic Convertible Bonds in Private Placement (Tentative)

1. Issuer

Qisda Corporation (“Issuer” or “Qisda”).

2. Issuance Size

The Board of Directors (“Board”) is authorized, within the limit of 200,000,000 common shares to issue new common shares for cash to sponsor issuance of the overseas depositary shares (“DRs”) and/or issue new common shares for cash in public offering and/or issue new common shares in private placement and/or issue overseas or domestic convertible bonds in private placement (“Private Placement CB”). For issuance of Private Placement CB, the number of common shares to be converted within the limit of 200,000,000 common shares shall be calculated in accordance with the conversion price determined at the time of issuance of Private Placement CB.

3. Issuance Date

The Private Placement CB will be issued in one tranche within one year after the 2019 annual general shareholders’ meeting.

4. Issuance Method

The Private Placement CB will be issued in accordance with Article 43-6 of the Securities and Exchange Act and the regulations of the jurisdiction where the Private Placement CB is issued. The investors subscribing to the Private Placement CB must meet the qualifications listed in Article 43-6 of the Securities and Exchange Act and are limited to strategic investor(s). Priority will be given to the investor(s) who could benefit the Company's long term development, competitiveness, and existing shareholders' rights. The Board is fully authorized to determine the specific investor(s). The purpose, necessity and projected benefits for having strategic investor(s) are to accommodate the Company’s operation and development needs to have the strategic investor(s) to assist the Company, directly or indirectly, in its finance, business, manufacturing, technology, procurement, management, and strategy development, etc. so to strengthen the Company’s competitiveness and enhance its operational efficiency and long term development.

5. Form, Denomination and Issuance Price

The Private Placement CB will be issued in registered form in denomination of US$10,000 or multiples thereof or NT$100,000 or multiples thereof and the issue price shall be no less than 80% of the theoretical price.

6. Coupon Rate

To be determined by the Board based on the dynamics of the financial market.

7. Term

The term of the Private Placement CB shall not exceed seven years.

8. Redemption

Unless previously redeemed, converted, or purchased and cancelled, the Private Placement CB will be redeemed by the Issuer at the maturity date in cash at a price equal to the par value or the par value plus interest.

9. Conversion Securities

The Private Placement CB will be convertible into Qisda’s common shares.

10. Conversion

(1) Conversion Period:

Unless previously redeemed, purchased, cancelled or converted, except during the closed period the holders are not permitted to convert under the Indenture, a holder of the Private Placement CB may request the Issuer to convert the Private Placement CB into Qisda’s common shares at any time after a designated period of time following the issuance date of the Private Placement CB and until certain days prior to the maturity date in accordance with applicable rules and regulations and terms of the Indenture.

(2) Conversion Procedure:

To exercise the relevant conversion rights attached to the Private Placement CB, the holder thereof must deposit with the Issuer a notice of conversion together with the Private Placement CB and any other documents or certificates

32  Attachment 3

required by R.O.C. laws.

(3) Conversion Price Determination:

The conversion price of the Private Placement CB shall be no less than 80% of (x) the simple average closing price of the Issuer’s common shares for either 1, 3 or 5 trading days prior to the pricing date, after adjustment for shares issued as stock dividends, shares cancelled in connection with capital reduction and the cash dividends, or (y) the simple average closing price of the Issuer’s common shares for 30 trading days prior to the pricing date, after adjustment for shares issued as stock dividends, shares cancelled in connection with capital reduction and the cash dividends. It is proposed for the shareholders meeting to authorize the Board to determine the actual conversion price in accordance with applicable rules and regulations.

(4) Dividend Entitlement at Conversion

Prior to conversion of the Private Placement CB, holders are not entitled to receive any dividend distribution. Following the conversion of the Private Placement CB, the rights to receive dividend payments will be the same as the other common shareholders of the Issuer.

(5) Rights and Obligations after Conversion
Except that the Private Placement CB is subject to a three-year holding period after the delivery date of the Private Placement CB under Article 43-8 of the Securities and

Exchange Act, the new common shares to be issued upon conversion of Private Placement CB will have the same rights and obligations as the common shares.

11. Early Redemption at the Option of the Issuer

To be determined by the Board.

12. Holders’ Put Option

The Issuer may elect not to grant holders’ put option, or after expiry of a designated period following issuance of the Private Placement CB, holders may require the Issuer to redeem all or part of the Private Placement CB at a price that would result in certain annual yield on the Private Placement CB.

13. Others

The Board is authorized to determine and amend, at its sole discretion, the terms and conditions of the Private Placement CB and other matters which are not addressed herein.

Attachment 4  33

Attachment 4 Comparison table for the Articles of Incorporation before and after amendment

					Reason for
Article No	After amendment		Before amendment
					Amendments

Article 1	The Company is organized in accordance with the Company Act of R.O.C. and named Qisda Corporation (the "Company"). The Company Name in English shall beQisda Corporation.		The Company is organized in accordance with the Company Act of R.O.C. and named Qisda Corporation (the "Company").		pursuant to laws and regulations
Article 5-1			The Company could ask for Large Denomination Securities if it is necessary to send the stocks to Taiwan Depository and Clearing Corporation.		delete pursuant to laws and regulations
			Securities if it is
			Depository and
Article 5-2	Regarding the Shares purchased by the Company pursuant to Securities and Exchange Act, the transferee shall include certain qualified employees of the Company’s Subsidiaries. The recipients of employee stock warrants of the Company shall include certain qualified employees of the Company’s Subsidiaries. In the issuance of new shares by the Company, the recipients of new shares for subscription shall include certain qualified employees of the Company’s Subsidiaries. In the issuance of restricted employee stock by the Company, the recipients of such shares shall include certain qualified employees of the Company’s Subsidiaries.				added pursuant to laws and regulations
	certain qualified
Chapter 4	Directors and	Audit Committees	Directors and	Supervisors	pursuant to laws and regulations

Article 11	The Company shall have seven to nine directors. The term for which a Director will hold office shall be three (3) years. The directors shall be elected from among the list of candidates for directors by the Shareholders’ Meeting and are eligible for re-election. The total shares held by the entire body of either directors shall not be less than a specified percentage in accordance with the regulation prescribed by the Competent Authority. A company shall haveat leastthree Independent Directors. Regulations governing the professional qualifications, restrictions on shareholdings and concurrent positions held, assessment of independence, methods of nomination and election, and other matters for compliance with respect to Independent Directors shall be followed in accordance with the Rules for election of Directors and relevant laws.		The Company shall have seven to nine directors. The term for which a Director will hold office shall be three (3) years. The directors shall be elected from among the list of candidates for directors by the Shareholders’ Meeting and are eligible for re-election. The total shares held by the entire body of either directors shall not be less than a specified percentage in accordance with the regulation prescribed by the Competent Authority. A company shall have three Independent Directors. Regulations governing the professional qualifications, restrictions on shareholdings and concurrent positions held, assessment of independence, methods of nomination and election, and other matters for compliance with respect to Independent Directors shall be followed in accordance with the Rules for election of Directors and relevant laws.		pursuant to laws and regulations
Article 16-1	If after the annual closing of books there is a profit, the Company shall, after having provided for taxes and offset the accumulated losses of previous years, appropriate the 10% legal reserve and recognize or reverse special reserve return earnings in accordance with laws and regulations. The Board may set aside certain percentage of the proposal for retained earnings distribution. Where there is remainder balance, together with the undistributed profits of previous years, the Board shall propose the earnings distribution plan and submit to the Shareholders’ Meeting for approval by resolution before the distribution. Where the aforesaid earnings distribution plan is performed by means of cash dividends, it is proposed the Board of Directors be authorized for resolution. The resolution thereof shall be reported in the Shareholders’ Meeting.		If after the annual closing of books there is a profit, the Company shall, after having provided for taxes and offset the accumulated losses of previous years, appropriate the 10% legal reserve and recognize or reverse special reserve return earnings in accordance with laws and regulations. The Board may set aside certain percentage of the proposal for retained earnings distribution. Where there is remainder balance, together with the undistributed profits of previous years, the Board shall propose the earnings distribution plan and submit to the Shareholders’ Meeting for approval by resolution before the distribution.		pursuant to laws and regulations
Article 16-2	The Company may distribute new shares or cash by way of legal reserve or capital reserve in accordance with Article 241 of the Company Act. Where the means of cash is performed in the preceding paragraph, it is proposed the Board of Directors be authorized for resolution. The resolution thereof shall be reported in the Shareholders’Meeting.				pursuant to laws and regulations

34  Attachment 4

			Reason for
Article No	After amendment	Before amendment
			Amendments

Article 19	These Articles of Incorporation were enacted on March 23, 1984, and amended on March 29, 1984 for the first time, ……………………………………. ……………………………………. amended on June 17, 2015 for the Thirty-ninth time, amended on June 15, 2016 for the Fortieth time. amended on June 21, 2019 for the Fortieth one time.	These Articles of Incorporation were enacted on March 23, 1984, and amended on March 29, 1984 for the first time, ……………………………………. ……………………………………. amended on June 17, 2015 for the Thirty-ninth time, amended on June 15, 2016 for the Fortieth time.	Added amendment date

Attachment 5  35

Attachment 5 Comparison table for the Handling Procedures for Acquisition or Disposal of Assets before and after amendment

			Reason for
Article No	After amendment	Before amendment
			Amendments

Article 2	Applicable subjects I. Stocks, government bonds, corporate bonds, financial bonds, securities representing interest in a fund, depositary receipts, call (put) warrants, beneficial interest securities and asset-backed securities, etc.; II. Real property (including land, housing and construction, investment property, inventories of construction enterprises) and equipment; III. Membership; IV. Patent, copyright, trademark, charter right, any intangible assets, etc; V.Right-of-use asset; VI. Claims of Financial Institution (including receivables, bills purchased and discounted, loans and overdue receivables.); VII. Derivatives products; VIII. Assets that are acquired or disposed through merger, spin-off, acquisition or share transfer in accordance with the laws; IX. Other major assets.	Applicable subjects I. Stocks, government bonds, corporate bonds, financial bonds, securities representing interest in a fund, depositary receipts, call (put) warrants, beneficial interest securities and asset-backed securities, etc.; II. Real property (including land, housing and construction, investment property,land use right,inventories of construction enterprises) and equipment; III. Membership; IV. Patent, copyright, trademark, charter right, any intangible assets, etc; V. Claims of Financial Institution (including receivables, bills purchased and discounted, loans and overdue receivables.); VI. Derivatives products; VII. Assets that are acquired or disposed through merger, spin-off, acquisition or share transfer in accordance with the laws; VIII Other major assets.	pursuant to laws and regulations
Article 4	Public disclosure of information I. If any of the following conditions relating to the Company and its Subsidiaries’ acquisition or disposal of assets, the relevant information shall be announced and reported in the appropriate format as prescribed by regulations within two days commencing immediately from the Date of occurrence of the Event: (1) Acquisition of real estateor right-of-use assets thereof from or to a Related Party, or acquisition or disposal of assets other than real estateor right-of-use assets thereoffrom or to a Related Party where the transaction amount reaches 20% or more of paid-in capital, 10% or more of the Company's total assets, or NT$300 million or more; provided, however, that this shall not apply to the trading ofdomesticgovernment bonds or bonds under repurchase and resale agreements and the purchase or redemption of domestic money market funds in Taiwan; (2) Merger, demerger, acquisitions or transfer of shares; (3) The loss of derivatives trading reaches the limit for all or individual contract set forth in the Procedures for Financial Derivatives Transactions; (4) Where equipmentor right-of-use assets thereofheld for business use are acquired or disposed of, and furthermore the transaction counterparty is not a Related Party, and the transaction amount is more than NT$1 billion. (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,the transaction counterparty is not a Related Party, and the amount the Company expects to invest in the transaction is more than NT$500 million. (6) Where there is an asset transaction (other than any such transactions referred to in the preceding five subparagraphs), a disposal of receivables to a financial institution, or an investment in mainland China area that reaches 20% or more ofpaid-in capital or NT$300	Public disclosure of information I. If any of the following conditions relating to the Company and its Subsidiaries’ acquisition or disposal of assets, the relevant information shall be announced and reported in the appropriate format as prescribed by regulations within two days commencing immediately from the Date of occurrence of the Event: (1) Acquisition of real estate from or to a Related Party, or acquisition or disposal of assets other than real estate from or to a Related Party where the transaction amount reaches 20% or more of paid-in capital, 10% or more of the Company's total assets, or NT$300 million or more; provided, however, that this shall not apply to the trading of government bonds or bonds under repurchase and resale agreements and the purchase or redemption of domestic money market funds in Taiwan; (2) Merger, demerger, acquisitions or transfer of shares; (3) The loss of derivatives trading reaches the limit for all or individual contract set forth in the Procedures for Financial Derivatives Transactions; (4) Wherethe kinds of assets is the equipment held for business use are acquired or disposed of, and furthermore the transaction counterparty is not a Related Party, and the transaction amount is more than NT$1 billion. (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 the amount of the Company expects to invest in the transaction is more than NT$500 million. (6) Where there is an asset transaction (other than any such transactions referred to in the preceding five subparagraphs), a disposal of receivables to a financial institution, or an investment in mainland China area that reaches 20% or more of paid-in capital or NT$300 million; the cumulative amount of transactions shall be	pursuant to laws and regulations

36  Attachment 5

				Reason for
Article No	After amendment		Before amendment
				Amendments

	million; provided, this shall not apply to the following circumstances: 1.Trading of bonds under repurchase/resale agreements and the purchase or redemption of domestic money market funds in Taiwan. 2.Trading of domestic government bonds. Abovementioned amount of transactions 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 real estate acquisitions and disposals (cumulative acquisitions and disposals, respectively) 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. II. (Ignored.)	calculated of any individual transaction, or of the same type of underlying asset with the same trading counterparty within the preceding year, or.the transaction amount of acquisitions and disposals of the same security within the preceding year,.provided, this shall not apply to the following circumstances: 1.Trading of bonds under repurchase/resale agreements and the purchase or redemption of domestic money market funds in Taiwan. 2.Trading of government bonds. II. (Ignored.)
Article 5	An appraisal report shall be obtained for acquisition or disposal of real estate or equipmentor right-of-use assets thereof. I. Except transactions withdomesticgovernment institutions, contracting third parties to construct on land owned or rented by the Company, or acquisition of equipment for operation purpose, for acquisition or disposal of real estate, equipmentor right-of-use assets thereofheld by the Company whose amount reaches 20% of the Company's paid-in capital or NT$300 million, an appraisal report issued by a Professional Appraiser shall be obtained prior to the Date of the Event and the following provisions should be complied with: (1) If for any special reason, restricted price, specific price, or special price must be used as a reference for the transaction price, the transaction should be approved by the Board in advance.The above procedures should also be followed in case the transaction terms are changed subsequently. (2) (Ignored.)	An appraisal report shall be obtained for acquisition or disposal of real estate or equipment. I. Except transactions with government institutions, contracting third parties to construct on land owned or rented by the Company, or acquisition of equipment for operation purpose, for acquisition or disposal of real estate, equipment held by the Company whose amount reaches 20% of the Company's paid-in capital or NT$300 million, an appraisal report issued by a Professional Appraiser shall be obtained prior to the Date of the Event and the following provisions should be complied with: (1) If for any special reason, restricted price, specific price, or special price must be used as a reference for the transaction price, the transaction should be approved by the Board in advance.The above procedures should also be followed in case the transaction terms are changed in the future. (2) (Ignored.)		pursuant to laws and regulations
Article 6	The CPA’s opinion shall be obtained for acquisition or disposal of securities, membership and intangible assetsor right-of-use assets thereof. (Ignored.) II. Except for transactions withdomesticgovernment institutions, if the Company's acquisition or disposal of intangible assetsor right-of-use assets thereofor membership reaches 20% of the Company's paid-in capital or NT$300 million, opinions in respect of a rational transaction price shall be sought from certified public accountant prior to the Date of the Event. Certified public accountant shall handle the matter in accordance with the provision of Auditing Standard No. 20 published by the ARDF. (Ignored.)	The CPA’s opinion shall be obtained for acquisition or disposal of securities, membership and intangible assets. (Ignored.) II. Except for transactions with government institutions, if the Company's acquisition or disposal of intangible assets or membershipreaches 20% of the Company's paid-in capital or NT$300 million, opinions in respect of a rational transaction price shall be sought from certified public accountant prior to the Date of the Event. Certified public accountant shall handle the matter in accordance with the provision of Auditing Standard No. 20 published by the ARDF. (Ignored.)		pursuant to laws and regulations
Article 7	Exclusion clauses about related party Any Professional Appraiser and its appraisal personnel, certified public accountants, lawyers, or securities underwriters whom the Company has acquired appraisal reports and opinions from,shall comply with following provisions:	Exclusion clauses about related party Any Professional Appraiser and its appraisal personnel, certified public accountants, lawyers, or securities underwriters whom the Company has acquired appraisal reports and opinions from,may not be a related party to the transaction.		pursuant to laws and regulations

Attachment 5  37

			Reason for
Article No	After amendment	Before amendment
			Amendments

	I. 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. II. May not be a related party or de facto related party of any party to the transaction. III. If the Company is required to obtain appraisal reports from two or more professional appraisers, the different professional appraisers or appraisal officers may not be related parties or de facto related parties of each other. When issuing an appraisal report or opinion, the personnel referred to in the preceding paragraph shall comply with the following: I. Prior to accepting a case, they shall prudently assess their own professional capabilities, practical experience, and independence. II. When examining a case, they shall appropriately plan and execute adequate working procedures, in order to produce a conclusion and use the conclusion as the basis for issuing the report or opinion. The related working procedures, data collected, and conclusion shall be fully and accurately specified in the case working papers. III. 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. IV.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 9	Related person transactions (Ignored.) II. When the Company acquires or disposes of real estateor right-of-use assets thereoffrom a Related Party or when it intends to acquire or dispose of assets other than real estateor right-of-use assets thereoffrom or to a Related Party and the transaction amount reaches 20% or more of the Company’s paid-in capital, 10% or more of the Company's total assets, or NT$300 million or more, except for tradingdomesticgovernment bonds or bonds under repurchase/resale agreements and purchasing or redeeming domestic money market funds in Taiwan, the Company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by the Audit Committee and recognized by the Board of Directors. Where the position of Independent Director has been established, when submitting these Regulations to the Board of Directors for discussion as set forth in the preceding paragraph, the opinions of Independent Director(s) shall be taken into consideration. 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. Where an audit committee has been established,the dissentingopinion in the	Related person transactions (Ignored.) II. When the Company acquires or disposes of real estate from a Related Party or when it intends to acquire or dispose of assets other than real estate from or to a Related Party and the transaction amount reaches 20% or more of the Company’s paid-in capital, 10% or more of the Company's total assets, or NT$300 million or more, except for tradinggovernmentbonds or bonds under repurchase/resale agreements and purchasing or redeeming domestic money market funds in Taiwan, the Company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by the Audit Committee and recognized by the Board of Directors. Where the position of Independent Director has been established, when submitting these Regulations to the Board of Directors for discussion as set forth in the preceding paragraph, the opinions of Independent Director(s) shall be taken into consideration. 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. Where an audit committee has been established, the dissenting opinion in the preceding paragraph shall bepassed byhalf of all Audit	pursuant to laws and regulations

38  Attachment 5

			Reason for
Article No	After amendment	Before amendment
			Amendments

	preceding paragraph shall be passed by half of all Audit Committee members or more and submitted to the board of directors for a resolution and shall be subject to mutatis mutandis application of the provisions of Paragraph 4 and Paragraph 5 of Article 15: (1) The purpose, necessity and anticipated benefit of the property acquisition or disposal. (2) The reason for choosing the Related Party as a trading counterparty. (3) With respect to the acquisition of real estateor right- of-use assets thereoffrom a Related Party, information regarding appraisal of the reasonableness of the preliminary transaction terms in accordance with the provisions of Paragraph 3 through 6 of this Article. (Ignored.) With respect to the acquisition or disposal of equipment or right-of-use assets thereof held for business use and real property right-of-use assets held for business use within NT$500 million 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 Chairman may facilitate execution and such endorsement / guarantee shall be submitted to the next Audit Committee and Board of Directors' Meeting for ratification. III.The Company that acquires real propertyor right-of-use assets thereoffrom a related party shall evaluate the reasonableness of the transaction costs by the following means (Where land and structures thereupon are combined as a single property purchased orleasedin one transaction, the transaction costs for the land and the structures may be separately appraised in accordance with either of the means listedas follows.). (Ignored.) IV.The Company that acquires real propertyor right-of-use assets thereoffrom a related party and appraises the cost of the real propertyor right-of-use assets thereofin accordance with the provisions of Paragraph 3 shall also engage a CPA to check the appraisal and render a specific opinion. V. Where the Company acquires real propertyor right-of-use assets thereoffrom a related party and one of the following circumstances exists, the acquisition shall be conducted in accordance with provisions of Paragraph 2 herein, and the provisions of Paragraph 3 and Paragraph 4 do not apply: (1) The related party acquired the real propertyor right- of-use assets thereofthrough 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 propertyor right-of-use assets thereofto 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 arelatedparty 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 inwhichit directly or indirectly holds 100 percent of the issued shares or authorized capital. VI.When the results of the Company's appraisal conducted in accordance with the provisions of Paragraph 3 of this Article are uniformly lower than the transaction price, the matter shall be handled in compliance with theprovisions	Committee members or more and submitted to the board of directors for a resolution and shall be subject to mutatis mutandis application of the provisions of Paragraph 4 and Paragraph 5 of Article 15: (1) The purpose, necessity and anticipated benefit of the property acquisition or disposal. (2) The reason for choosing the Related Party as a trading counterparty. (3) With respect to the acquisition of real estate from a Related Party, information regarding appraisal of the reasonableness of the preliminary transaction terms in accordance with the provisions of Paragraph 3 through 6 of this Article. (Ignored.) With respect to the acquisition or disposal of equipment within NT$500 million between the Company and its subsidiaries, the Chairman may facilitate execution and such endorsement / guarantee shall be submitted to the next Audit Committee and Board of Directors' Meeting for ratification. III.The Company that acquires real property from a related party shall evaluate the reasonableness of the transaction costs by the following means (Where land and structures thereupon are combined as a single property purchased in one transaction, the transaction costs for the land and the structures may be separately appraised in accordance with either of the means listed.). (Ignored.) IV.The Company that acquires real property from a related party and appraises the cost of the real property in accordance with the provisions of Paragraph 3 shall also engage a CPA to check the appraisal and render a specific opinion. V. Where the Company acquires real property from a related party and one of the following circumstances exists, the acquisition shall be conducted in accordance with provisions of Paragraph 2 herein, and the provisions of Paragraph 3 and Paragraph 4 do not apply: (1) The related party acquired the real property through inheritanceor as a gift. (2) More than 5 years will have elapsed from the time the relatedparty signed the contract to obtain the real property 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 throughengaging a related party to build real property, either on the Company's own land or on rented land. VI.When the results of the Company's appraisal conducted in accordance with the provisions of Paragraph 3 of this Article are uniformly lower than the transaction price, the matter shall be handled in compliance with theprovisions

Attachment 5  39

			Reason for
Article No	After amendment	Before amendment
			Amendments

	of Paragraph 7 of this Article. However, where the following circumstances exist, objective evidence has been submitted and specific opinions on reasonableness have been obtained from a professional real estate appraiser and a CPA has been obtained, this restriction shall not apply: (1) Where the Related Party acquired undeveloped land or leased land for development, it may submit proof of compliance with one of the following conditions: 1. (Ignored.) 2. Completedtransactionsby 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 saleor leasingpractices. 3. Deleted. (2) Where the Company acquiring real propertyor obtaining real property right-of-use assetsthrough leasing,from a related party provides evidence that the terms of the transaction are similar to the terms of completedtransactionsinvolving neighboring or closely valued parcels of land of a similar size by unrelated parties within the preceding year. Completedtransactionsinvolving neighboring or closely valued parcels of land in the preceding paragraph in principle refers to parcels on the same or an adjacent block and within a distance of no more than 500 meters or parcels close in publicly announced current value; transactions involving similarly sized parcels in principle refers to transactions completed by unrelated parties for parcels with a land area of no less than 50 percent of the property in the planned transaction; within the preceding year refers to the year preceding the date of occurrence of the acquisition of the real property or obtainment of theright-of-use assets thereof. VII.Where the Company acquires real propertyor right-of- use assets thereoffrom a related party and the results of appraisals conducted in accordance with the provisions of this Article are uniformly lower than the transaction price, the following steps shall be taken: (1) A special reserve shall be set aside in accordance with Paragraph 1, Article 41 of the Securities and Exchange Act against the difference between the real property or right-of-use asset 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 Paragraph 1, Article 41 of the Securities and Exchange Act shall be set aside pro rata in a proportion consistent with the share of the public company's equity stake in the other company. (2) Supervisors shall comply with the provisions of Article 218 of the Company Act.For a company that has established an Audit Committee, the provisions	of Paragraph 7 of this Article. However, where the following circumstances exist, objective evidence has been submitted and specific opinions on reasonableness have been obtained from a professional real estate appraiser and a CPA has been obtained, this restriction shall not apply: (1) Where the Related Party acquired undeveloped land or leased land for development, it may submit proof of compliance with one of the following conditions: 1. (Ignored.) 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 practices. 3. Completed leases by unrelated parties within the preceding year involving other floors of the same propertyorneighboring 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 practices. (2) Where the Company acquiring real property from a related party provides evidence that the terms of the transaction are similar to the terms of completed transactions involving neighboring or closely valued parcels of land of a similar size by unrelated parties within the preceding year. Completed transactions involving neighboring or closely valued parcels of land in the preceding paragraph in principle refers to parcels on the same or an adjacent block and within a distance of no more than 500 meters or parcels close in publicly announced current value; transactions involving similarly sized parcels in principle refers to transactions completed by unrelated parties for parcels with a land area of no less than 50 percent of the property in the planned transaction; within the preceding year refers to the year preceding the date of occurrence of the acquisition of the real property. VII.Where the Company acquires real property from a related party and the results of appraisals conducted in accordance with the provisions of this Article are uniformly lower than the transaction price, the following steps shall be taken: (1) A special reserve shall be set aside in accordance with Paragraph 1, Article 41 of the Securities and Exchange Act against the difference between the real property or right-of-use asset 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 Paragraph 1, Article 41 of the Securities and Exchange Act shall be set aside pro rata in a proportion consistent with the share of the public company's equity stake in the other company. (2) Supervisors shall comply with the provisions of Article 218 of the Company Act.

40  Attachment 5

				Reason for
Article No		After amendment	Before amendment
				Amendments

	(3) (4)	regarding Independent Director members of the Audit Committee in the first sentence of this Subparagraph shall apply mutatis mutandis. Actions taken pursuant to the Subparagraph 1 and Subparagraph 2 shall be reported to a shareholders’ meeting, andthedetails of the transaction shall be disclosed in the annual report and any investment prospectus. The public companies that have set aside a special reserve under this Article may not utilize the special reserve until it has recognized a loss on decline in market value of the assets it purchasedor leasedat 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 got the Taiwan authority’s consent. When the public companies obtain real estateor right-of-use assets thereoffrom a Related Party, it shall also comply with the provisions of this Article if there is other evidence indicating that the acquisition was not an arm’s length transaction.	(3) Actions taken pursuant to the Subparagraph 1 and Subparagraph 2 shall be reported to a shareholders’ meeting, and the details of the transaction shall be disclosed in the annual report and any investment prospectus. (4) The public companies that have set aside a special reserve under this Article may not utilize the special reserve until it has recognized a loss on decline in market value of the assets it purchased at a premium, or they have been disposed of, or adequate compensation has been made, or the status quo ante has been restored, or there is other evidence confirming that there was nothing unreasonable about the transaction, and got the Taiwan authority’s consent. When the public companies obtain real estate from a Related Party, it shall also comply with the provisions of this Article if there is other evidence indicating that the acquisition was not an arm’s length transaction.
Article 14	Others (Ignored.) III. The paid-in capital or total assets of the Company shall be the standard for determining whether or not a Company's Subsidiary is required to make a "Announcement and Report" with the authority with respect to requirements regarding paid-in capital or total assets applicable for the Company's Subsidiary referred to in the Subparagraph 5, Paragraph 1, Article 4 of the provisions. (Ignored.) VIII.Deleted.		Others (Ignored.) III. The20% of paid-in capital or 10% of total assets of theCompany shall be the standard for determining whether or not a Company's Subsidiary is required to make a "Announcement and Report" with the authority with respect to requirements regarding paid-in capital or total assets applicable for the Company's Subsidiary referred to in the Subparagraph 5, Paragraph 1, Article 4 of the provisions. (Ignored.) VIII. For a company that the Audit Committee has been set up, the provisions of Article 9-2, Article 15 and Article 16 of the Supervisors shall be subject to the Audit Committee. If an Audit Committee has been set up, the provisions of Article 9-7-2 shall be subject to the Independent Directors of the Audit Committee.	pursuant to laws and regulations
Article 16	Where the Company's acquisition or disposal of assets requires the approval of the Board of Directors pursuant to theprescribedProcedures or the applicable laws, rules, and regulations, if a Director expresses dissent and this is contained in the minutes or a written statement, the Company shall submit the Director's dissenting opinion to each Supervisor. For a company that has established an Audit Committee, an important transaction of assets required by approval from the Board of Directors shall be approved by half of all Audit Committee members or more and submitted to the Board of Directors for resolution and shall be subject to mutatis mutandis application of the provisions of Paragraph 4 and Paragraph 5 of Article 15. For the Company’s total amounts of investment in securities, ceiling for individual investment and total amount of real estate for non-operating purposeand right-of-use real property,the limits shall, after being determined by the Board of Directors, be specified in the Procedures.		Where the Company's acquisition or disposal of assets requires the approval of the Board of Directors pursuant to theprescribedProcedures or the applicable laws, rules, and regulations, if a Director expresses dissent and this is contained in the minutes or a written statement, the Company shall submit the Director's dissenting opinion to each Supervisor. For a company that has established an Audit Committee, an important transaction of assets required by approval from the Board of Directors shall be approved by half of all Audit Committee members or more and submitted to the Board of Directors for resolution and shall be subject to mutatis mutandis application of the provisions of Paragraph 4 and Paragraph 5 of Article 15. For the Company’s total amounts of investment in securities, ceiling for individual investment and total amount of real estate for non-operating purpose, the limits shall, after being determined by the Board of Directors, be specified in the Procedures.	pursuant to laws and regulations

Attachment 5  41

											Reason for
Article No		After amendment					Before amendment
											Amendments


	Asset Item	Approval Personnel	Approval and Decision	Total Amount of Investment	Limits for Individual Investment	Asset Item	Approval Personnel	Approval and Decision	Total Amount of Investment	Limits for Individual Investment
	Real estate and right- of-use assetsfor non- operating purpose	Board	of Directors	30% of net equity	15% of net equity	Real estate for non- operating purpose	Board	of Directors	30% of net equity	15% of net equity
	Equity investment	Board of Directors Chairman	Above NT$100,000,000 Under NT$100,000,00 0(incl.)	Net equity	50% of net equity	Equity investment	Board of Directors Chairman	Above NT$100,000,000 Under NT$100,000,00 0(incl.)	Net equity	50% of net equity
	Long-term Guaranteed or Collateraliz ed Bonds	Chairman President	Above NT$100,000,000 Under NT$100,000,00 0(incl.)	30% of net equity	15% of net equity	Long-term Guaranteed or Collateraliz ed Bonds	Chairman President	Above NT$100,000,000 Under NT$100,000,00 0(incl.)	30% of net equity	15% of net equity
	Short-term bonds and money market fund	Chief financial officer Financial manager	Above NT$50,000,000 Under NT$50,000,000 (incl.)	30% of net equity	15% of net equity	Short-term bonds and money market fund	Chief financial officer Financial manager	Above NT$50,000,000 Under NT$50,000,000 (incl.)	30% of net equity	15% of net equity
	Other securities	Chairman President	Above NT$50,000,000 Under NT$50,000,000 (incl.)	10% of net equity	5% of net equity	Other securities	Chairman President	Above NT$50,000,000 Under NT$50,000,000 (incl.)	10% of net equity	5% of net equity

Article 17	The Procedures were adopted on June 7, 1991. The 1st amendment was made on April 17, 1993. ……….. The 11th amendment was made on June 22, 2017. The 12th amendment was made on June 21, 2019.					The Procedures were adopted on June 7, 1991. The 1st amendment was made on April 17, 1993. ……….. The 11th amendment was made on June 22, 2017.					Added amendment date

42  Attachment 6

Attachment 6 Comparison table for Handling Procedures for Conducting Derivative Transactions

before and after amendment

				Reason for
Article No		After amendment	Before amendment
				Amendments

Article 2	(1)	The categories of derivatives trading used herein refers to forward contracts, options contracts, futures contracts, leverage contracts, and swap contracts, and compound contracts combining the above products or hybrid contractsor structured products containing embedded derivatives,whose value is derived from specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, a credit rating or credit index, or other variable.The margin trading shall also follow it as mentioned above.	(1) The categories of derivatives trading used herein refers to forward contracts, options contracts, futures contracts, leverage contracts, and swap contracts, and compound contracts combining the above products or hybrid contracts, whose value is derived from assets,interest rate, foreign exchange rate, index of prices or rates or other interest of commodity price. The margin trading shall also follow it as mentioned above.	pursuant to laws and regulations
Article 9	The with		The accountingdepartmentshall handle the matter in accordance with the Business Entity Accounting Act, Financial Accounting Standards Bulletinand relevant regulator rulings; in case of no related regulations, the detailed statement shall be adopted for registration, and the realized and unrealized income statement shall be calculated on a monthlybasis.	pursuant to laws and regulations
Article 11	(1) Internal audit personnel shall, in accordance with the regulations prescribed in the “Internal Control Systems”, evaluate the suitability of the internal control system in connection with financial derivative transactions on a regular basis, conduct auditing on how well the related departments follow the “Procedures for Financial Derivatives Transactions”, and produce written auditing reports on a monthly basis. Should there be any violation found, a written report is needed to notify eachIndependent Director. (2) Pursuant to the “Guidelines for the Establishment of Internal Control Systems for Public Companies”, the preceding auditing reports and improvement status of abnormal events shall be regularly reported to Financial Supervisory Commission of Executive Yuan (hereinafter referred to as the “FSC”) for recordation.		(1) Internal audit personnel shall, in accordance with the regulations prescribed in the “Internal Control Systems”, evaluate the suitability of the internal control system in connection with financial derivative transactions on a regular basis, conduct auditing on how well the related departments follow the “Procedures for Financial Derivatives Transactions”, and produce written auditing reports on a monthly basis. Should there be any violation found, a written report is needed to notify eachSupervisors. (2) Pursuant to the “Guidelines for the Establishment of Internal Control Systems for Public Companies”, the preceding auditing reports and improvement status of abnormal events shall be regularly reported to Financial Supervisory Commission of Executive Yuan (hereinafter referred to as the “FSC”) for recordation.	pursuant to laws and regulations
Article 15	Others (1) "Subsidiaries" as used in the Procedures should mean the subsidiaries as defined in theInternational Financial Reporting Standards. (2) The term "Announcement and Report" as used in the Procedures means the process of entering data to the information reporting website designated by the Taiwan Financial SupervisoryCommission.		Others (1)"Subsidiaries" as used in the Procedures should mean the subsidiaries as defined in theNo.5 and No.7 of the Financial Accounting Standards Bulletin by Accounting Research and Development Foundation. (2) The term "Announcement and Report" as used in the Procedures means the process of entering data to the information reporting website designated by the Taiwan Financial SupervisoryCommission.	pursuant to laws and regulations
Article 16	The Procedures were adopted on October 1, 1998. The 1st amendment was made on September 6, 2001. The 2nd amendment was made on May 22, 2003. The 3rd amendment was made on June 15, 2007. The 4th amendment was made on June 16, 2009. The 5th amendment was made on June 15, 2010. The 6th amendment was made on June 21, 2019.		The Procedures were adopted on October 1, 1998. The 1st amendment was made on September 6, 2001. The 2nd amendment was made on May 22, 2003. The 3rd amendment was made on June 15, 2007. The 4th amendment was made on June 16, 2009. The 5th amendment was made on June 15, 2010.	Added amendment date

Attachment 7  43

Attachment 7 Comparison table for Handling Procedures for Lending Funds to Other Parties before and after amendment

			Reason for
Article No	After amendment	Before amendment
			Amendments

Article 2	Total Amount of Loan and Limits to Individual Subjects I. The total value of the fund-lending to other parties by the Company shall not exceed forty percent (40%) of the Company’s net worth as stated in its latest financial statement. The inter-company loans of funds between foreign subsidiaries in which the Company holds, directly or indirectly, 100% of the voting sharesand/or subsidiaries whose voting shares are 100% owned, directly or indirectly, by the Company,shall not be subject to the restrictions on total amount and duration of margin purchase, provided that each of the subsidiaries shall still voluntarily set the limit of the fund-lending to other partiesand financing period. II.The limit of fund- lending to the same party shall be respectively specified based on the considerations as follows: (1) The amount of an individual loan granted by the Company to a company or business with business relationship with the Company shall not exceed the business transaction amount between the parties. Business transactional amount refers to the amount of purchase or sale between the parties, whichever is higher. (2) Where a subsidiary of the Company has business needs for short-term financing, such financing amount shall not exceed 20 percent of the Company’s net worth as stated in its latest financial statement.	Total Amount of Loan and Limits to Individual Subjects I. The total value of the fund-lending to other parties by the Company shall not exceed forty percent (40%) of the Company’s net worth as stated in its latest financial statement. The inter-company loans of funds between foreign subsidiaries in which the Company holds, directly or indirectly, 100% of the voting shares shall not be subject to the restrictions on total amount and duration of margin purchase, provided that each of the subsidiaries shall still voluntarily set the limit of the fund-lending to other parties. II.The limit of fund- lending to the same party shall be respectively specified based on the considerations as follows: (1) The amount of an individual loan granted by the Company to a company or business with business relationship with the Company shall not exceed the business transaction amount between the parties. Business transactional amount refers to the amount of purchase or sale between the parties, whichever is higher. (2) Where a subsidiary of the Company has business needs for short-term financing, such financing amount shall not exceed 20 percent of the Company’s net worth as stated in its latest financial statement.	pursuant to laws and regulations
Article 10	Others VI. “Date of Event” in the Procedures should mean the date of contract signing, date of payment, date of a Boards resolution or other date that can confirm the counterparty ofloans toand amount of the transaction, whichever date is earlier.	Others VI. “Date of Event” in the Procedures should mean the date of transaction contract signing, date of payment, date of a Boards resolution or other date that can confirm the trading partnersand amount of the transaction, whichever date is earlier.	pursuant to laws and regulations
Article 11	The Procedures were adopted on June 7, 1991. The 1st amendment was made on August 17, 1995. The 2nd amendment was made on May 22, 2003. The 3rd amendment was made on June 13, 2008. The 4th amendment was made on June 16, 2009. The 5th amendment was made on June 15, 2010. The 6th amendment was made on June 14, 2013. The 7th amendment was made on June 21, 2019.	The Procedures were adopted on June 7, 1991. The 1st amendment was made on August 17, 1995. The 2nd amendment was made on May 22, 2003. The 3rd amendment was made on June 13, 2008. The 4th amendment was made on June 16, 2009. The 5th amendment was made on June 15, 2010. The 6th amendment was made on June 14, 2013.	Added amendment date

44  Attachment 8

Attachment 8 Comparison table for Handling Procedures for Endorsements and Guarantees

before and after amendment

			Reason for
Article No	After amendment	Before amendment
			Amendments

Article 10	Public disclosure of information II. The Company and its subsidiaries whose balance of endorsements/guarantees reaches one of the following levels shall announce and report such event within two days commencing immediately from the date of occurrence: (3) The balance of endorsements/guarantees by the Company and its subsidiaries for a single enterprise reaches NT$10 million or more and the aggregate amount of all endorsements/guarantees for,book value of investments in equity-accounted investees in, and balance of loans to, such enterprise reaches 30 percent or more of the Company's net worth as stated in its latest financial statements.	Public disclosure of information II. The Company and its subsidiaries whose balance of endorsements/guarantees reaches one of the following levels shall announce and report such event within two days commencing immediately from the date of occurrence: (3) The balance of endorsements/guarantees by the Company and its subsidiaries for a single enterprise reaches NT$10 million or more and the aggregate amount of all endorsements/guarantees forLong- term investment,and balance of loans to, such enterprise reaches 30 percent or more of the Company's net worth as stated in its latest financial statements.	pursuant to laws and regulations
Article 15	The Procedures were adopted on June 7, 1991. The 1st amendment was made on April 17, 1993. The 2nd amendment was made on August 17, 1995. The 3rd amendment was made on April 30, 1997. The 4th amendment was made on April 16, 1998. The 5th amendment was made on May 22, 2003. The 6th amendment was made on June 14, 2006. The 7th amendment was made on June 13, 2008. The 8th amendment was made on June 16, 2009. The 9th amendment was made on June 15, 2010. The 10th amendment was made on June 14, 2013. The 11th amendment was made on June 21, 2019.	The Procedures were adopted on June 7, 1991. The 1st amendment was made on April 17, 1993. The 2nd amendment was made on August 17, 1995. The 3rd amendment was made on April 30, 1997. The 4th amendment was made on April 16, 1998. The 5th amendment was made on May 22, 2003. The 6th amendment was made on June 14, 2006. The 7th amendment was made on June 13, 2008. The 8th amendment was made on June 16, 2009. The 9th amendment was made on June 15, 2010. The 10th amendment was made on June 14, 2013.	Added amendment date

Attachment 9  45

Attachment 9 List of non-competition restrictions on current directors and their representatives

proposed to be lifted

Dierctor	Released restriction items
Kuen-Yao (K.Y.) Lee	Director, Konly Venture Corp. (Subsidiary of AU Optronics Corp., which is one of Qisda's associates) Director, Ronly Venture Corp. (Subsidiary of AU Optronics Corp., which is one of Qisda's associates) Chairman, BenQ Foundation
Peter Chen	Director, BenQ Foundation Chairman, DFI Inc. (Subsidiary of Qisda Corporation) Director, Alpha Networks Inc. (Associate of Qisda Corporation) Director,BenQ Guru Holding Limited (Subsidiary of Qisda Corporation)
AU Optronics Corp.	Director, Star Shining Energy Corporation (Associate of AU Optronics Corp. , which is one of Qisda's associates)
Paul Peng , Representative of AU Optronics Corp.	Director, BenQ Foundation
Joe Huang , Representative of BenQ Foundation	Chairman, DATA IMAGE CORPORATION(Subsidiary of Qisda Corporation)

46  Appendix 1

Appendix 1 . Rules and Procedures for Shareholders’ Meeting

Enacted on May 15, 1990 The 1st amendment was made on June 19, 1993. The 2nd amendment was made on April 16, 1998.

Qisda Corporation (the “Company”) shall convene the shareholders’ meeting in accordance with these Rules of Procedures (the “Rules”)
Shareholders or their proxies attending the shareholders’ meeting (the “Meeting”) shall submit the attendance card for the purpose of signing in. The number of shares represented by shareholders or their proxies attending the Meeting shall be calculated in accordance with the attendance cards submitted by the shareholders or their proxies plus the number of shares exercised by correspondence or electronic means.
The attendance and the voting shall be calculated based on the number of shares represented by the shareholders attending the shareholders’ meeting.
The shareholders’ meeting shall be convened at a venue where the Company is located or a venue convenient for shareholders’ attendance and suitable for the convention. The shareholders’ meeting shall not begin earlier than 9:00 a.m. or later than 3:00 p.m.
The Chairman of the Company shall preside as the chairperson at a shareholders’ meeting if the meeting is convened by the Board of the Directors of the Company. In the situation where the Chairman is on leave or unavailable to perform his or her duty and power for any cause, the Vice Chairman of the Company shall act as the chairperson for the meeting. In the situation where there is no vice chairman or the Vice Chairman of the Company is on leave or unavailable to perform his or her duty and power for any cause, the Chairman shall designate a Managing Director to act as the chairperson on his or her behalf. In the situation where there is no managing director, the Chairman shall designate one Director from the Board of Directors to act as the chairperson for the meeting. In the absence of such designation, the Managing Directors or Directors of the Board shall elect one from among themselves an acting chairperson for the shareholders’ meeting. Where the shareholders’ meeting is convened by a person who is entitled to convene the meeting but is not a member of the Board of Directors, such person shall perform the duty as the chairperson for the shareholders’ meeting. In the situation where there are two or more people who are entitled to convene the meeting, a chairperson shall be elected from among themselves.
The Company may appoint its lawyers, accountants or any other people relevant to the meeting to be present at the shareholders’ meeting.
The supporting staff for the proceeding of a shareholders’ meeting shall wear an identification badge or armband.
The Company shall video-tape or audio-tape the entire proceeding of a shareholders’ meeting, and the recording shall be kept for at least one year.
The chairperson of a shareholders’ meeting shall call the meeting to order at the time when the meeting is scheduled to commence. If the number of shares represented by the attending shareholders has not yet constituted more than an aggregate of one-half of the total outstanding shares issued, the chairperson may postpone the time for the meeting. The postponements shall only reach two times at most, and the meeting shall not be postponed for more than one hour in total. If after two postponements the shares represented by attending shareholders has not reached the quorum but has constituted more than one third of the total of outstanding shares issued, a tentative resolution may be passed in accordance with the Article 175-1 of the Company Act. Before the end of such meeting, if the shares represented by the attending shareholders has constituted more than one half of the total of outstanding shares issued, the chairperson may bring the already passed resolution for voting again in accordance with the Article 174 of the Company Act.
The agenda of a shareholders’ meeting shall be established by the Board of Directors if the meeting is convened by the Board of Directors of the Company. Unless otherwise approved in the shareholders’ meeting, the meeting shall proceed in accordance with the pre-arranged agenda.
The preceding paragraph applies in the situation where a shareholders’ meeting is convened by a person, other than a member of the Board of Directors, entitled to convene such a meeting.

Unless otherwise resolved at the shareholders’ meeting, the chairperson shall not announce adjournment until the agenda prescribed in the preceding two paragraphs (including extraordinary motions) are resolved.

After the meeting is adjourned, shareholders shall not elect a chairperson and resume the meeting at the same or another venue.

In the situation where the chairperson adjourns the meeting in violation of the Rules, a new chairperson may be elected by

Appendix 1  47

more than half of the votes from the shares represented by the attending shareholders so that the meeting is able to be continued.

When a shareholder attending a shareholders’ meeting wishes to speak, he or she should fill out a speech note with a summary of the speech, shareholder’s account number (or the number of attendance card) and the account name of the shareholder in advance. The sequence of speeches shall be determined by the chairperson.
If any attending shareholder at the shareholders’ meeting submits a speech note but does not speak, no speech shall be deemed to have been made by such shareholder. In case content of the speech of a shareholder are inconsistent with the content of the speech note, the content of actual speech shall be taken into account.
The speech of a shareholder shall remain concrete, clear, and relevant to the agenda otherwise the chairperson may stop the speech of such shareholder.
Unless otherwise permitted by the chairperson and the speaking shareholder, no shareholder shall interrupt the speech of other shareholders. The chairperson shall stop such interruption.
No shareholder shall speak more than twice regarding the same item without the chairperson’s consent, and the time of each speech shall not exceed five minutes. Nevertheless, the speech may extend for three minutes if permitted by the chairperson.

In case the speech of any shareholder violates the preceding paragraph or exceeds the scope of the agenda item, the chairperson may stop the speech of such shareholder

A corporate shareholder should only appoint one person as its representative to attend a shareholders’ meeting.
In the situation where a corporate shareholder has appointed two or more representatives to attend the shareholders’ meeting, an appointment letter shall be provided and only one representative can speak for each agenda item.
After the speech of a shareholder, the chairperson may make responses by him or herself or appoint an appropriate person to respond.
The chairperson may announce end of discussion of an item listed in the agenda and submit the item for voting if the chairperson deems that the item is ready for voting.
With respect to the voting of each proposal, the people who conduct ballot examination and counting shall be designated by the chairperson. At the same time, the ballot examiners also have to be shareholders.
The result of each vote shall be announced at the meeting immediately and shall be recorded into the minute.
Unless otherwise provided for under the Company Act, the Articles of Incorporation and other applicable laws and regulations, a proposal put to vote shall be approved by consent of a majority of shares represented by attending shareholders at the meeting. During the voting process, a proposal which proves to meet no objection from the attending shareholders after the inquiry made by the chairperson shall be deemed passed in the validity same as a proposal resolved through balloting process.
In the case of an amendment or alternative to an original proposal, the chairperson shall decide on the order of voting together with the original proposal. However, if one of such proposals has been approved, the others shall be deemed overruled and no further vote is required.
The chairperson may request picketers (or security guards) to assist in maintaining the order at the meeting venue. Members of the picket (or security guards) shall wear armbands with the word "Picket" when maintaining the order at the meeting venue.
In case of incident due to force majeure, the chair may rule the meeting temporarily suspended or resume the meeting at another venue.
Any matters which are not adequately provided for herein shall be subject to the Company Act, the Articles of Incorporation.
The Rules and any amendment shall take effect after being approved at the shareholders’ meeting.

48  Appendix 2

Appendix 2 Articles of Incorporation

Chapter 1 General Provisions

Article 1 The Company is incorporated as a company limited by shares under the provisions set forth in the Company Act in the full name of Qisda Corporation (the “Company”).
Article 2 The lines of business of the Company shall include the following:
1 、 CC01030 Electric Appliance and Audiovisual Electric Products Manufacturing
2 、 CC01110 Computers and Computing Peripheral Equipment Manufacturing
3 、 CC01070 Telecommunication Equipment and Apparatus Manufacturing
4 、 CC01101 Retrained Telecom Radio Frequency Equipment and Materials Manufacturing
5 、 F401021 Retrained Telecom Radio Frequency Equipment and Materials Import
6 、 CC01040 Lighting Facilities Manufacturing
7 、 CF01011 Medical Materials and Equipment Manufacturing
8 、 F108031 Wholesale of Drugs, Medical Goods
9 、 F208031 Retail Sale of Medical Equipment
10 、 F401010 International Trade
11 、 ZZ99999 All business items that are not prohibited or restricted by law, except those are subject to special approval
Article 3 The head office of the Company is located in Taoyuan, Taiwan. The Company may, as approved by the resolution of the Board of Directors, set up branch offices or factories in compliance with applicable laws and regulations in Taiwan or abroad when necessary.
Article 4 The Company may, in line with its business needs, provide guarantees externally.

The total amount of the Company's investment is not subject to the restriction of Article 13 of the Company Act.

Chapter 2 Shares

Article 5 The total capital of the Company is Fifty Billion New Taiwan Dollars (NT$50,000,000,000), divided into Five Billion (5,000,000,000) shares with a par value of Ten New Taiwan Dollars (NT$10) each. The Board of Directors is authorized to issue in installments.
The Company may issue preferred shares amount the above total capital and a total of 200,000,000 shares among the above total capital stock should be reserved for issuing employee stock options. The Company may issue employee stock options at a price that is lower than the market price or the Company may transfer treasury stock to employees at a price that is lower than the average actual share repurchase price pursuant to a resolution approved by the majority (at least 50%) of total issued shares represented at the shareholders’ meeting and the consent of more than two-thirds of the attending shareholders’ voting rights.
Article 5-1 The Company could ask for Large Denomination Securities if it is necessary to send the stocks to Taiwan Depository and Clearing Corporation.
Article 6 The share certificates of the Company shall be all in registered form. The share certificates, after due registration with the competent authority, shall be signed or sealed by at least three directors and shall be legally authenticated prior to issue. The Company may, pursuant to the applicable laws and regulations, deliver shares or other securities in book-entry form, instead of delivering physical certificates evidencing shares or other securities.
Article 7 Registration for transfer of shares shall be suspended for a period of sixty days before the convention of an annual general meeting of shareholders, thirty days before an extraordinary general meeting of shareholders, or within five days before the base date on which the dividends, bonuses, or other interests to be paid out by the Company.

Chapter 3 Shareholders' Meetings

Article 8 Shareholders' meeting shall be of two types, namely the annual and extraordinary general meeting of shareholders, with the former convened by the Board of Directors, in accordance with the law, regularly once a year within six months after the close of each fiscal year, and the later convened, in accordance with the law, when necessary.

Appendix 2  49

Article 9 Unless otherwise provided in applicable law and regulations, a resolution shall be adopted at a meeting attended by the shareholders holding and representing a majority of the total issued and outstanding shares and at which meeting a majority of the attending shareholders shall vote in favor of the resolution. In case a shareholder is unable to attend a shareholders' meeting, such shareholder may issue a proxy in the form issued by the Company, setting forth the scope of authorization by signing and affixing such shareholder's seal on the proxy form for the representative to be present on such shareholder's behalf. Except for trust enterprises or other stock transfer agencies approved by the securities authorities, if a person is designated as proxy by more than two shareholders, any of such person’s voting rights representing in excess of 3% of the total issued and outstanding shares shall not be considered. The relevant matters related to the use and rescission of the proxy shall be conducted in accordance with the Company Act.
Article 10 Directors shall be elected by adopting candidates’ nomination system. In these articles, the directors mean including independent directors.
Each shareholder of the Company is entitled to one vote per share, unless otherwise provided by applicable law or regulation.

Chapter 4 Board of Directors and Supervisor

Article 11 The Company shall have seven to nine directors, the term of office for all directors shall be three years and the directors shall be elected from a slate of director candidates at shareholders' meetings. The directors are eligible for re-election. The aggregate shareholding percentages of the entire bodies of directors shall comply with the regulations prescribed by the securities supervisory authorities. The Company shall have three independent directors on the Board, independent directors shall be elected from a slate of independent director candidates at shareholders' meetings. The professional qualifications, restrictions on both shareholding and concurrent positions held, determination of independence, the method of nomination and election or other requirements with regard to the independent directors shall be set forth in accordance with the Qisda Director Election Rules and applicable regulations.
Article 11-1 The Company may take out liability insurance for the directors with respect to the liabilities resulting from exercising their duties during their terms of office. The Board is authorized to determine the compensation for the directors, taking into account the extent and value of the services provided for the Company’s operation and with reference to the standards of local and overseas industry.
Article 11-2 The Company shall set up the Audit Committee organized by all of the independent directors in accordance with the Securities and Exchange Act. The composition of the audit committee, duties, rules of meeting procedure and other compliance matters shall comply with the regulations prescribed by the securities supervisory authorities
Article 12 The Board of Directors is organized by directors.. The Chairman of the Board of Directors shall be elected from among the attending directors by a majority vote and with the attendance over two thirds of the seats in a meeting of the Board of Directors. As necessary, a Vice Chairman may be elected among the attending directors in the same manner. The Chairman of the Board shall externally have the authority to represent the Company.
Article 13 In case the Chairman of the Board asks for leave or for other reason cannot exercise his power and authority, he may appoint another director to represent him by proxy in accordance with Article 208 of the Company Act. Where a director is unable to attend a meeting of the Board, he may appoint another director to represent him by proxy. Each director may act as a proxy for one other director only. The meeting of the Board of Directors shall be convened in accordance with the Company Act. In calling a meeting of the Board of Directors, a notice may be given to each director by means of electronic mail or facsimile.

Chapter 5 Managerial Officer

Article 14 The Company may appoint a multiple number of managerial officers whose appointment, dismissal and compensations shall be conducted in accordance with the Company Act.

Chapter 6 Accounting

Article 15 After the close of each fiscal year, the Board of Directors shall provide and submit the following reports to the shareholders' meeting for acceptance in accordance with the legal procedures.
1.Business Report 2.Financial Statement 3.Proposals regarding earning distribution or loss offsetting

50  Appendix 2

It shall be not later than the 30th day prior to the ordinary shareholders meeting and the Audit Committee submit the report to the shareholders at the ordinary shareholders meeting for their acceptance.

Article 16 The Company, if profitable in the year, shall set aside 5~20% of the profit as compensation for the employees and no higher than 1% as remuneration for the directors. However, the Company, when accumulated losses remain on the account, shall reserve a portion of its earnings to offset the losses first.
The Company may allocate employees’ remuneration prescribed in the preceding paragraph in the form of stock or cash to employees of an affiliated company meeting certain conditions. The Board or the person duly designated by the Board is authorized to decide the conditions and allocation method.
Article 16-1 The Company's earnings of the year, if any, shall be allocated to pay taxes and offset the accumulated losses from previous years first, and then set aside 10% as legal reserve. The Company shall then appropriate or reverse a certain amount as special reserve in compliance with applicable laws or regulatory requirements. The remaining earnings, if any, may be put together with the retained earnings from previous years and the adjustment amount of the undistributed earnings of the year; the sum of the above may be appropriated as dividends and bonuses according to the distribution proposal prescribed by the Board of Directors based on the actual needs after the proposal is submitted to and approved at the shareholders' meeting.
Article 17 The Company is in a technology-intensive and capital-intensive technology industry at a developing stage coordinating with long-term capital planning and taking into account the shareholders’ cash flow requirement, the Company's dividend policy is to pay dividends from surplus considering factors to improve the growth and sustainable operation of the Company.
Dividend distribution is to consider the expanding the scale of operations and cash flow requirements in the future, every year the cash portion of the dividend shall not be less than 10% of the total dividend in the form of cash and stock.

Chapter 7 Supplementary Provisions

Article 18 With regard to the matters not provided for in these Articles of Incorporations, the Company Act shall govern. Article 19 These Articles of Incorporation were enacted on March 23, 1984, and

amended on March 29, 1984 for the first time,

…………………………………….

amended on June 17, 2015 for the Thirty-ninth time, amended on June 15, 2016 for the Fortieth time.

Appendix 3 /Appendix 4  51

Appendix 3 Shareholding of Directors

The Company has issued capital of the Company is NT$19,667,819,580 representing 1,966,781,958 common shares. According to Article 26 of the Securities and Exchange Act, the minimum number of shares that shall be held by all directors of the company is 47,202,766.

As of April 23, 2019, the number of shares held by all directors is 345,868,052 shares. The actual collective shareholding of directors was shown as below:

Title	Name	No. of Shareholding	Shareholding %
Honorary Chairman	Kuen-Yao (K.Y.) Lee	9,719,540	0.49
Chairman	Peter Chen	309,919	0.02
Director	AU Optronics Corp.（Paul Peng）	335,230,510	17.04
Director	BenQ Foundation( Joe Huang )	608,083	0.03
Independent Director	Kane K. Wang	0	0
Independent Director	Allen Fan	0	0
Independent Director	Jeffrey Y.C. Shen	0	0
Total		345,868,052	17.59

Appendix 4 Influence of Proposed Stock Dividend Distribution upon 2019 Operating Performance, Earnings Per Share,and Return on Investment

Not applicable because the Company’s Board of Directors did not propose stock dividend distribution for the year of 2018.

AI assistant

Qisda — AGM Information 2019

52023_rns_2019-07-05_86f6b007-2857-46fd-98ca-a0b379264107.pdf

Qisda Corporation

Agenda

I. Report Items

Attachments

Appendices

I. Report Items

(1) To report the business of 2018

4  Report Items

(2) Audit Committee’s Review Report

(3) To report the distribution of employees’ and directors’ remuneration of 2018

(4)To report the issuance of securities in private placement

II. Recognition and Discussion Items

(1) To accept 2018 Business Report and Financial Statements (proposed by the Board of Directors)

(2) To accept the proposal for the distribution of 2018 earnings (proposed by the Board of Directors)

6  Recognition and Discussion Items

8  Recognition and Discussion Items

4. To approve the amendment to the Articles of Incorporation (Proposed by the Board of Directors)

Resolution:

Resolution:

Explanation:

Resolution:

Explanation:

Resolution:

Attachment I Independent Auditors’ Report and 2018 Financial Statements

2018 Consolidated Financial Statements

Independent Auditors’ Report

Opinion

Basis for Opinion

Key Audit Matters

Description of key audit matter:

How the matter was addressed in our audit:

2. Valuation of inventories

Description of key audit matter:

How the matter was addressed in our audit:

3. Impairment of goodwill

Description of key audit matter:

How the matter was addressed in our audit:

Other Matter

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Notes to Readers

(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

QISDA CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2018 and 2017

(Expressed in Thousands of New Taiwan Dollars)

(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

QISDA CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2018 and 2017

(Expressed in Thousands of New Taiwan Dollars)

(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

QISDA CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income For the years ended December 31, 2018 and 2017

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

(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

QISDA CORPORATION AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the years ended December 31, 2018 and 2017

Attributable to shareholders of the Company

(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

QISDA CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2018 and 2017

(Expressed in Thousands of New Taiwan Dollars)

(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

QISDA CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2018 and 2017

2018 Parent Company Only Financial Statements

Independent Auditors’ Report

Opinion

Basis for Opinion

Key Audit Matters

Description of key audit matter:

How the matter was addressed in our audit:

2. Valuation of inventories

Qisda AGM Information 2019