Qisda - AGM Information 2020 | FinancialReports.eu

Qisda Corporation

2020 Annual General Shareholders’ Meeting

Time: June 19, 2020

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 2019 .......................................................................................................................................................... 02 (2) Audit Committee’s Review Report .................................................................................................................................................... 03 (3) To report the distribution of employees’ and directors’ remuneration of 2019 ................................................................... 04 (4) To report the cash dividends distribution of 2019 earnings ....................................................................................................... 04 (5) To report the issuance of securities in private placement ........................................................................................................... 04 II. Election Item: To elect seven directors (including three independent directors) .................................................................... 04

III. Recognition and Discussion Items

(1) To accept 2019 Business Report and Financial Statements ......................................................................................................... 05 (2) To accept the proposal for the distribution of 2019 earnings .................................................................................................... 05 (3) To approve the amendment to Articles of Incorporation. .......................................................................................................... 05 (4) 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 preferred 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 (5) To lift non-competition restrictions on newly-elected directors and their representatives .............................................. 09 IV. Extraordinary Motions ............................................................................................................................................................................ 09 V. Meeting Adjourn ........................................................................................................................................................................................ 09 Attachments 1. List of Director Candidates ........................................................................................................................................................................ 10 2. Independent Auditors’ Report and 2019 Financial Statements ......................................................................................................... 12 3. The 2019 Earnings Distribution Proposal ............................................................................................................................................... 32 4. Comparison table for the Articles of Incorporation before and after amendment ..................................................................... 33 5. Terms and Conditions for Issuance of Overseas or Domestic Convertible Bonds in Private Placement (Tentative) ....... 35 6. List of non-competition restrictions on directors ................................................................................................................................ 37 Appendices 1. Rules and Procedures for Shareholders’ Meeting ................................................................................................................................. 39 2. Rules for the Election of Directors .......................................................................................................................................................... 41 3. Articles of Incorporation (Before the amendments) ......................................................................................................................... 42 4. Shareholding of Directors ........................................................................................................................................................................... 45 5. Influence of Proposed Stock Dividend Distribution upon 2020 Operating Performance, Earnings Per Share, and Return on Investment .................................................................................................................................................................................. 45

2  Report Items

I. Report Items

1. To report the business of 2019

Greetings to all of our Valued Shareholders,

Qisda Group’s consolidated sales revenue for 2019 was NT$169.8 billion. The consolidated operating profit was NT$6.2 billion. The consolidated earnings after tax was NT$4.4 billion. The consolidated net income attributed to stockholders of the Company was NT$3.58 billion. The earnings per share after tax was NT$1.82.

In recent years, Qisda has been active in transforming its business. Together with the Group’s core resources as a platform, Qisda consolidates hidden champions to be a grant fleet. This concept is also agreed by domestic public corporations who joined us. Therefore, Qisda’s consolidated sales revenue hitting new record highs in two consecutive years under the uncertain conditions such as fast changes in industries, lackluster demand in displays and projectors and rise in global trade conflict. In 2019, we are dedicated to expand Qisda’s business under the four major operating policies.

(1) Optimization on current business operations: The two major products, flat panel displays and projectors, continuously gain stable results and leading position in the market. The displays outperforms the entire industry and ranks second in the world rankings. Qisda continues to develop high-end, high unit price, professional and medical displays. Qisda not only keeps its global leading position in OEM projectors, maintains the position as the world's leading DLP projector brand, but the only domestic manufacturer with DLP and LCD technical capability.
(2) Fast expansion in medical business: In 2019, the consolidated sales revenue of Qisda in the medical field was approximately NT$12 billion. The revenue of two hospitals in Suzhou and Nanjing continues to grow. In terms of medical appliances and channel expansion, BenQ Qflux Dialyzer successfully breaks into the Korean market and its products are adopted by 20% hospitals in Taiwan. Qisda invested in BenQ Biotech (shanghai) Co., Ltd to develop the Chinese market; self-design and self-manufactured portable ultrasound tablets continue to increase marketshare in the bedside care application; the market expansion in Digital Dentistry application and hearing application will satisfy the demands for global aging population and long-term care.
(3) Acceleration on solution development: In 2019, Qisda invested in partners such as AEWIN Inc., SYSAGE Technology Co., Ltd and ACE PILLAR Co., Ltd. In order to complete its strategic allocation in Information Technology (IT) and Operational Technology (OT). The purpose is to become full-fledged total system integration solution services provider. The consolidated sales revenue of smart solutions in 2019 was NT$15 billion. Qisda continuously satisfying the six main intelligence vertical markets. Qisda worked with National Cheng Kung University to build a smart operating room and its smart factory received the first certification in Taiwan for human-machine collaboration. Qisda also worked with many chain store customers to build next generation of smart restaurant storefront.
(4) Strategic investment in key components: Based on the optimistic forecast in the demand of AIoT solutions such as Internet of Vehicles (IoV) and 5G. Qisda will continue in making strategic investment.

Prospecting in 2020, it brings the long-term opportuniies to enhance automation and accelerate digital transformation. 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:

(1) Optimization on current business operations: We will keep consolidating our global leding position in the display and projector makret and continuously developing towards high-end, high-resolution and high-valued professional applications.
(2) Fast expansion in medical business : BenQ Medical Center takes on the goal to be No.1 private hospital in China. Regarding medical devices, we will prioritize the distribution channel, with focus in Asia and developing countries. Meanwhile, we will focus on self-developed products such as ultrasound, hemodialyzer and intraoral scanner. The Group’s resources will be integrated to develop surgery devices, disposables, integration system of Digital Dentistry and smart dialysis information system. We will also expand the medical industry alliance via win-win merge & acquisition or strategic cooperation model.
(3) Acceleration on solution development: The horizontal integration on internal technology and channels will continue to meet different vertical market demands. We have aggressively accelerated the integration among DFI Inc., Partner Tech Corp. and Aplex Technology Inc. in recent years to exploit synergies. We’ve also linked the well-known top-tier international brand of SYSAGE in IT field with the brand of ACE in OT field, such as Cisco, Citrix, DELL(EMC), IBM, Oracle, Redhat, SAP, Vmware, etc. to deliver the best smart solution for customers, and help them with digital transformation.

Report Items  3

(4) Strategic investment in key components: We will continue to look for opportunities for cooperation based on current demand and future applications as guidance.

Qisda achieves its sustainable competitive advantages through innovation and technical development. Each year, we make effort in product innovation and development, averagely around 2%-3% of sales revenue. We have obtained nearly 1,131 patents worldwide.

Qisda has dedicated to the corporate sustainable operation. The sustainable development indicators on economy, environment and society in 2019 still maintained high information transparency. Qisda not only got the “Taiwan Corporate Sustainability Reports Platinum Award” of “2019 Taiwan corporate sustainability Awards (TCSA)” running by Taiwan Institute for Sustainability Foundation (TAISE), but also received “Top 50 Comprehensive Performance Award”. 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 to strive and seek 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

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Chief Accountant: Billy Liou
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2. Audit Committee’s Review Report

The Board of Directors has prepared the Company's Financial Statements for the year of 2019. Tang, Tzu-Chieh and Chang, Huei-Chen Certified Public Accountants of KPMG, have audited the Financial Statements. The 2019 Financial Statements, Business Report, Independent and Auditors Report 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 2020 Annual General Shareholders’ Meeting

Chair of the Audit Committee 王弓 Wang,Gong March 27, 2020

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The Board of Directors has prepared the Company's 2019 Earnings Distribution Proposal, which 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 2020 Annual General Shareholders’ Meeting

Chair of the Audit Committee

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王弓 Wang,Gong May 7, 2020

4  Report Items / Election Item

3. To report the distribution of employees’ and directors’ remuneration of 2019

Distribution of NT$322,920,000 and NT$31,463,000 in cash as remunerations to employees and directors, respectively, have been approved by the meeting of board of directors held on March 27, 2020.

4. To report the cash dividends distribution of 2019 earnings

(1) According to Article 16-1 of the Company’s Article of Incorporation, if 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.
(2) The proposed distribution is allocated from the 2019 earnings available for distribution, and cash dividends amounting to NT$1,475,086,469 were distributed to shareholders at NT$0.75 per share. It is approved by the meeting of board of directors held on May 7, 2020, and proposed that the Chairman of the Board of Directors is authorized to determine the ex-dividend date and payment date for the cash dividend distribution and other related matters.
(3) If the cash 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.

5. To report the issuance of securities in private placement

(1) It has been approved by the Annual General Shareholders’ Meeting held on June 21, 2019 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.
(2) 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.
(3) In case the amount of the aforementioned fundraising has not been completed until 1 day prior to the 2020Annual General Shareholders’ Meeting the amount will be cancelled from the date of the 2020 Annual General Shareholders’ Meeting.

II. Election Item

To elect seven directors (including three independent directors) (proposed by the Board of Directors)

Explanation:

(1) The term of the office of the directors will be expired on June 21, 2020. Thus, it is proposed to elect seven directors (including three independent directors) at the 2020 Annual General Shareholders’ Meeting. The term of the office of the new directors (including independent directors) is three years from the date on which the completion of the 2020 Annual General Shareholders’ Meeting.
(2) According to the Company's Articles of Incorporation and the Article 192-1 of the Company Act, the company's directors (including independent directors) shall be elected by adopting candidate nomination system. The list of candidates of the director and independent directors has been approved by the Board on March 27, 2020. For the relevant information of the nominated candidates, please refer to Attachment 1 (pages 10-11).

Recognition and Discussion Items  5

III. Recognition and Discussion Items

1. To accept 2019 Business Report and Financial Statements (proposed by the Board of Directors)

Explanation:

(1) The 2019 Financial Statements were audited by the independent auditors, Tang, Tzu-Chieh and Chang, Huei-Chen of KPMG.
(2) For the 2019 Independent Auditors' Report, and the 2019 Financial Statements, please refer to Attachment 2 (pages 12-31).

Resolution:

2. To accept the proposal for the distribution of 2019 earnings (proposed by the Board of Directors)

Explanation:

The 2019 Earnings Distribution Proposal please refer to Attachment 3 (page 32).

Resolution:

3. 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. 1070037184 on October 26, 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:

4. 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 preferred 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 (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 195,000,000 common shares and preferred 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 195,000,000 common shares shall be calculated in accordance with the conversion price determined at the time of issuance of Private Placement CB.

6  Recognition and Discussion Items

(2) Fund raising method(s) and handling principles:
A. Issuance of new common shares for cash to sponsor DR Offering:
- a. The issue price of the new common shares will be decided with reference to (a) the closing price of the Company’s 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 195,000,000 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.
- b. 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).
B. Issuance of new common shares for cash in public offering:
- a. 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.
- b. 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) ：
- (i) 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.
- (ii) 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.

Recognition and Discussion Items  7

C. Issuance of new preferred shares for cash in public offering:
a. The par value of the new preferred 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.
b. 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) ：
(i) 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 preferred 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.
(ii) 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 preferred 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.
D. Issuance of Private Placement Shares and/or Private Placement CB:
a. Basis and reasonableness for determination of the subscription price of the Private Placement Shares and issue price of Private Placement CB:
(i) 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.
(ii) 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.
(iii) As aforementioned, subscription price of the Private Placement Shares and issue price of Private Placement CB 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.
b. The method, purpose, necessity and projected benefits to determine specific investor(s):
(i) 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.
(ii) 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.

8  Recognition and Discussion Items

(iii) Currently there is no available specific investor and the Board is fully authorized to determine the specific investor(s).
c. 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.
d. 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.
e. The tentative terms and conditions of the Private Placement CB ("Offering Plan") are shown in Attachment 5 (pages 35-36).
(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, the new preferred 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 script less 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. It is proposed to authorize the Board to determine the rights and obligations of the new preferred shares in accordance with the Article of Incorporation and applicable laws and regulations.
(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, new preferred 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 common shares for cash in public offering, issuing new preferred 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 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

Recognition and Discussion Items  9

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, new preferred 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, issuance of new preferred 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:

5. To lift non-competition restrictions on newly-elected 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 2020 annual shareholders meeting to approve lifting non-competition restrictions on newlyelected 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 6 (page 37-38).

Resolution:

IV. Extraordinary Motions

V. Meeting Adjourn

10  Attachment 1

List of Director Candidates

(Nominated by the Company’s Board of Directors)


Types of
	Name	Major Education & Experience	Major Current Positions
Nominee


Director	Kuen-Yao (K.Y.) Lee	- M.B.A., International Institute for Management Development, Switzerland - B.S., Electrical Engineering, National Taiwan University - Chairman, Qisda Corp. - Chairman, AU Optronics Corp.	- Director, Qisda Corp. - Director, AU Optronics Corp. - Director, Darfon Electronics Corp. - Director, BenQ Materials Corp. - Chairman, BenQ Corp. - Chairman, BenQ Foundation - Director, BenQ BM Holding Corp. - Director, BenQ BM Holding Cayman Corp.
Director	Chi-Hong (Peter) Chen	- EMBA, Thunderbird American Graduate School, U.S.A. - Technology Management Program, National Chengchi University - B.S., Electrical Engineering, National Cheng Kung University - EVP of Technology Product Center, BenQ Corp.	- Chairman and President, Qisda Corp. - Chairman, DFI Inc. - Chairman, Partner Tech Corp. - Chairman, BenQ Medical Technology Corporation - Vice Chairman, Alpha Networks Inc. - Director, AU Optronics Corp. - Director, Darfon Electronics Corp. - Director, Hitron Technologies Inc. - Director, BenQ Materials Corp. - Director, BenQ AB DentCare Corp. - Director, NanJing BenQ Hospital Co., Ltd. - Director, Suzhou BenQ Hospital Co., Ltd. - Director, BenQ Healthcare Consulting Corp. - Director, BenQ Hospital Management Consulting (NanJing) Co., Ltd. - Director, BenQ BM Holding Corp. - Director, BenQ BM Holding Cayman Corp. - Director, BenQ Corp. - Director, Darly Venture Inc. - Director, Darly2 Venture, lnc. - Director, Darly Consulting Corporation - Director, Qisda (Hong Kong) Limited - Director, Qisda (L) Corp. - Director, Darly Venture (L) Ltd. - Director, BenQ Foundation

Attachment 1  11


Types of
	Name	Major Education & Experience	Major Current Positions
Nominee


Director	Shuang-Lang (Paul) Peng, Representative of AU Optronics Corp.	- M.B.A., Heriot-Watt University, U.K. - President, AU Optronics Corp.	- Director, Qisda Corp. - Chairman and Chief Executive Officer, AU Optronics Corp. - Director, Darwin Precisions Corp. - Chairman, Konly Venture Corp. - Chairman, Ronly Venture Corp. - Chairman, AU Optronics (Xiamen) Corp. - Chairman, AU Optronics (Suzhou) Corp., Ltd - Chairman, AU Optronics (Kunshan) Co., Ltd. - Chairman, AU Optronics Manufacturing (Shanghai) Corp. - Director, AU Optronics (Shanghai) Co., Ltd - Director, AU Optronics Singapore Pte. Ltd. - Director, AU Optronics (L) Corp. - Chairman, AUO Foundation
Director	Han-Chou (Joe) Huang, Representative of BenQ Foundation	- EMBA, Tsing Hua University in Beijing - MBA, Greenwich University - GM of Global Supply Chain, Qisda Corp. - COO, BenQ China - VP of Global Manufacturing, BenQ Corp.	- Director, Qisda Corp. - Chairman, DATA IMAGE CORP. - Chairman, QISDA OPTRONICS CORP. - Director, Qisda America Corp.
Independent Director	Cheng-Ju (Allen) Fan	- B.S., Electrical Engineering, National Taiwan University - GM, WKTechnology Fund - President, Microsoft Taiwan - VP, Twinhead International Corp. - VP, HP Taiwan	- Independent Director, Qisda Corp. - Independent Director, Wistron Information Technology and Services Corp. - Chairman, Yu Xuan Corp. - Director, K KINGDOM INC. - Director, K K INTELLIGENT TECHNOLOGY INC.
Independent Director	Lo-Yu Yen	- Master in Accounting, National Cheng Chi University - President, DELOITTE CONSULTING CO. - CPA, Deloitte Touche Tohmatsu Limited - GM, Vincera Capital - Co-founder, AMMA Taipei Cradle Program	- Independent Director, Chunghwa Telecom - Independent Director, Sinyi Realty Inc. - Independent Director, The Eslite Spectrum Co.(until 2020/6) - Director, Chinese Television System Inc. - Director, Social Enterprise Insights (Taiwan) - Director, Alibaba Entrepreneurs Fund
Independent Director	Jyuo-Min Shyu	- Ph.D. in Electrical Engineering and Computer Science, University of California, Berkeley - Minister, Ministry of Science and Technology - President, Industrial Technology Research Institute - Professor, Department of Computer Science, National Tsing Hua University	- Independent director, Inventec Corp. - Independent director, United Microelectronics Corp. - Director, Iridium Medical Technology Co., Ltd. - Director, GeoThings, Inc. - Director, Modern Classic Ltd.

12  Attachment 2

Independent Auditors’ Report and 2019 Financial Statements

2019 Consolidated Financial Statements

Independent Auditors’ Report

The Board of Directors of Qisda Corporation:

Opinion

We have audited the consolidated financial statements of Qisda Corporation and its subsidiaries (the “Group”), which comprise the consolidated balance sheets as of December 31, 2019 and 2018, 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, 2019 and 2018, 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 audit of the consolidated financial statements as of and for the year ended December 31, 2019 in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants, Rule No. 1090360805 issued by the Financial Supervisory Commission, and auditing standards generally accepted in the Republic of China. Furthermore, we conducted our audit of the consolidated financial statements as of and for the year ended December 31, 2018 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, 2019 are stated as follows:

1. 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 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

Attachment 2  13

a customer, and assessing the accuracy 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 the completeness of the revenue and related sales returns and allowances.

2. Valuation of inventories

Please refer to notes 4(h), 5 and 6(f) 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. Business combination

Please refer to notes 4(v) and 6(h) for the accounting policy on business combination, and “Business Combination” for the related disclosures, respectively, of the notes to the consolidated financial statements.

Description of key audit matter:

The Group acquired 35.04% ownership of Sysage Technology Co., Ltd in 2019, wherein it owned more than half of its total number of directors. Therefore, the Group obtained control over it. To adopt the accounting treatment of business combination, the management needs to determine the fair value of the identifiable assets and liabilities. The assessment is complex and involves significant assumptions and estimation. Accordingly, the assessment of business combination 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 purchase price allocation report with valuation of intangible assets conducted by an external expert engaged by the management; and auditing the acquired assets and liabilities identified by the management including any fair value adjustment at the acquisition date. In doing so, we have consulted internal valuation specialists to assist in evaluating the reasonableness of the valuation model and key assumptions used. We have also confirmed that correct accounting treatment has been applied and appropriate disclosures with respect to the acquisition has been made.

4. Impairment of goodwill

Please refer to notes 4(p), 5 and 6(l) for the accounting policy on impairment of non-financial assets, “Critical accounting judgments and key sources of estimation uncertainty”, for 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.

14  Attachment 2

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$9,195,065 thousand and NT$6,588,263 thousand, respectively, constituting 6.76% and 5.50%, respectively, of the consolidated total assets as of December 31, 2019 and 2018, and the total operating revenues amounting to NT$9,600,253 thousand and NT$5,615,233 thousand, respectively, constituting 5.66% and 3.60%, respectively, of the consolidated total operating revenues for the years ended December 31, 2019 and 2018.

Qisda Corporation has additionally prepared its parent-company-only financial statements as of and for the years ended December 31, 2019 and 2018, on which we have issued an unmodified opinion with other matter section.

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.

Attachment 2  15

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.

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, 2019 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 Huei-Chen Chang.

KPMG

Taipei, Taiwan (Republic of China) March 27, 2020

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’ audit 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’ audit report and consolidated financial statements, the Chinese version shall prevail.

16  Attachment 2

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

QISDA CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars)

December 31, 2019	December 31, 2019	December 31, 2018	December 31, 2018
Amount	%	Amount	%
$ 10,780,507 665,037 134,479 28,904,355 2,395,806 584,859 284,450 27,890,837 1,776,711 4,915,705	8 1 - 21 2 - - 21 1 4 58 - 1 13 18 2 2 4 1 1 - - 42	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 -
78,332,746			55
120,399 1,222,603 17,778,476 23,915,978 3,502,536 3,404,112 5,069,111 1,607,147 817,349 256,036 -			- 1 16 18 - 2 4 2 - - 2
57,693,747			45

See accompanying notes to consolidated financial statements.

$136,026,493 100 119,807,283 100

Total assets

Attachment 2  17

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

QISDA CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2019 and 2018

(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 2300 Other current liabilities 2322 Current portion of long-term debt 2355 Lease obligations payable－current 2280 Lease liabilities－current 2282 Lease liabilities to related parties－current 2250 Provisions－current Total current liabilities Non-current liabilities: 2503 Financial liabilities at fair value through profit or loss－non-current 2540 Long-term debt 2580 Lease liabilities－non-current 2582 Lease liabilities to related parties－non-current 2550 Provisions－non-current 2570 Deferred income tax liabilities 2613 Lease obligations payable－non-current 2670 Other non-current liabilities Total non-current liabilities Total liabilities Equity attributable to shareholders of the Company: 3110 Common stock 3260 Capital surplus 3300 Retained earnings 3400 Other equity Total equity attributable to shareholders of the Company 36XX Non-controlling interests Total equity Total liabilities and equity	December 31,	2019	December 31,	2018
	Amount	%	Amount	%
	$ 19,902,070 50,046 1,559,356 29,010,933 1,836,690 9,875,371 17,388 2,207,500 400,143 - 321,418 85,237 441,084 65,707,236 95,860 16,674,667 1,420,402 186,050 609,373 976,539 - 2,320,772 22,283,663 87,990,899 19,667,820 2,220,653 12,663,994 (608,508) 33,943,959 14,091,635 48,035,594 $136,026,493	15 - 1 21 2 7 - 2 - - - - - 48 - 12 1 - 1 1 - 2 17 65 14 2 9 - 25 10 35 100	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 - - 620,633 678,632 17,068 964,386 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

See accompanying notes to consolidated financial statements.

18  Attachment 2

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) QISDA CORPORATION AND SUBSIDIARIES Consolidated Statements of Comprehensive Income

For the years ended December 31, 2019 and 2018

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

2019		2018
Amount	%	Amount	%
$ 169,754,115 (146,704,246) 23,049,869 (9,413,953) (3,476,106) (3,896,408) - (35,315) (16,821,782) 6,228,087 504,227 1,224,188 (1,011,241) (1,000,270) (283,096) 5,944,991 (1,535,347) 4,409,644 (29,194) 322,863 63,955 - 357,624 (643,639) (231,010) - (874,649) (517,025) $ 3,892,619 $ 3,575,055 834,589 $ 4,409,644 $ 3,139,647 752,972 $ 3,892,619 $	100 (86) 14 (6) (2) (2) - - (10) 4 - 1 (1) - - 4 (1) 3 - - - - - (1) - - (1) (1) 2 2 1 3 2 - 2 1.82 1.80	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	100 (88)
			12
			(5) (2) (2) - -
			(9)
			3
			- - - 1
			1
			4 (1)
			3
			- - - -
			-
			- - -
			-
			-
			3
			3 -
			3
			3 -
			3
			2.05
$			2.03

See accompanying notes to consolidated financial statements.

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) QISDA CORPORATION AND SUBSIDIARIES

Consolidated Statements of Changes in Equity For the years ended December 31, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars)

Attributable to shareholders of the Company

Common stock	Capital surplus		Retained earnings	Retained earnings			Total other equity interest	Total other equity interest			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 benefit plans	Total other equity interest
$ 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 - (42,630) - 5,986 1 -	529,139 - - - - - - - - -	- 383,979 - - - - - - - -	(529,139) (383,979) (2,655,156) - - - - - - -	- - (2,655,156) - - - - - - -	- - - - - - - - - -	- - - - - - - - - -	- - - - - - - - - -	- - - - - - - - - -	- - - - - - - - - -	- - (2,655,156) 9,086 - (42,630) - 5,986 1 -	- - - - (439,028) (46,768) 2,289 (1,072) (1) 960,929	- - (2,655,156) 9,086 (439,028) (89,398) 2,289 4,914 - 960,929
19,667,820 -	2,146,076 -	1,422,973 -	383,979 -	8,994,893 (45,819)	10,801,845 (45,819)	128,329 -	46,990 -	- -	(343,741) -	(168,422) -	32,447,319 (45,819)	7,412,327 (13,868)	39,859,646 (59,687)
19,667,820	2,146,076	1,422,973	383,979	8,949,074	10,756,026	128,329	46,990	-	(343,741)	(168,422)	32,401,500	7,398,459	39,799,959
- -	- -	- -	- -	3,575,055 -	3,575,055 -	- (785,841)	- 367,740	- -	- (17,307)	- (435,408)	3,575,055 (435,408)	834,589 (81,617)	4,409,644 (517,025)
-	-	-	-	3,575,055	3,575,055	(785,841)	367,740	-	(17,307)	(435,408)	3,139,647	752,972	3,892,619
- - - - - - - - - - -	- - - 61,100 - - - 10,242 3,235 - -	403,506 - - - - - - - - - -	- (215,557) - - - - - - - - -	(403,506) 215,557 (1,671,765) - 4,678 - - - - - -	- - (1,671,765) - 4,678 - - - - - -	- - - - - - - - - - -	- - - - (4,678) - - - - - -	- - - - - - - - - - -	- - - - - - - - - - -	- - - - (4,678) - - - - - -	- - (1,671,765) 61,100 - - - 10,242 3,235 - -	- - - 1,631 - (481,403) 109,341 (265,028) (3,235) 5,247 6,573,651	- - (1,671,765) 62,731 - (481,403) 109,341 (254,786) - 5,247 6,573,651
$ 19,667,820	2,220,653	1,826,479	168,422	10,669,093	12,663,994	(657,512)	410,052	-	(361,048)	(608,508)	33,943,959	14,091,635	48,035,594

See accompanying notes to consolidated financial statements.

20  Attachment 2

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

QISDA CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2019 and 2018 (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 Interest expense Interest income Dividend income Share-based compensation cost Share of losses (profits) of associates and joint ventures Loss (gain) on disposal of property, plant and equipment Gain on disposal of non-current assets held for sale Gain on disposal of investments Gain on bargain purchase Impairment loss on non-financial assets 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 Decrease in notes and accounts receivable from related parties Decrease (increase) in other receivable Increase in other receivable from related parties Decrease (increase) in inventories Decrease (increase) in other current assets Decrease (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 Increase (decrease) in notes and accounts payable Increase (decrease) in accounts payable to related parties Increase in other payable to related parties Increase (decrease) in provisions Increase (decrease) in contract liabilities Increase (decrease) 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	2019	2018
	$ 5,944,991 2,849,596 437,162 35,315 1,011,241 (288,657) (55,060) 5,247 1,000,270 16,478 (1,775) (440,789) (26,175) - 4,542,853 (922) 49,251 701,655 12,118 (16,954) 1,606,880 610,357 (460,049) 2,502,336 2,071 (2,232,928) (423,805) 3,994 18,319 (226,513) (504,618) (48,012) (3,411,492) (909,156) 3,633,697 9,578,688 272,616 765,669 (948,558) (1,193,114) 8,475,301	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

See accompanying notes to consolidated financial statements.

Attachment 2  21

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

QISDA CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (Continued) For the years ended December 31, 2019 and 2018 (Expressed in Thousands of New Taiwan Dollars)

Cash flows from investing activities: Purchase of financial assets at fair value through other comprehensive income Proceeds from disposal of financial assets at fair value through other comprehensive income Purchase of financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Purchase of investments accounted for using equity method Proceeds from disposal 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 subsidiaries, net of cash received from (paid for) Net cash flows used in investing activities Cash flows from financing activities: Increase in short-term borrowings Decrease in short-term borrowings Decrease in short-term notes and bills payable Increase in long-term debt Repayments of long-term debt Increase in guarantee deposits received Decrease in lease obligation payable Payment of lease liabilities Cash dividends distributed to shareholders Cash dividends paid to non-controlling interests Acquisition of subsidiary’s interests from non-controlling interests Proceeds from disposal of subsidiary’s interests (without losing control) Capital injection from non-controlling interests Net cash used in financing activities Effects of foreign exchange rate changes Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year	2019	2018
	(265,241) 14,117 (1,285,000) 1,154,900 - 396,967 6,131 (2,533,632) 27,016 (121,414) (98) (4,600,235) 953,871 (6,252,618) 15,207,301 (12,241,274) (130,000) 18,274,062 (20,541,109) 1,288,059 - (450,383) (1,671,765) (481,403) (330,850) 77,734 109,341 (890,287) (170,546) 1,161,850 9,618,657 $ 10,780,507	(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

See accompanying notes to consolidated financial statements.

22  Attachment 2

2019 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, 2019 and 2018, 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, 2019 and 2018, 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 audit of the parent-company-only financial statements as of and for the year ended December 31, 2019 in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants, Rule No. 1090360805 issued by the Financial Supervisory Commission, and auditing standards generally accepted in the Republic of China. Furthermore, we conducted our audit of the parent-company-only financial statements as of and for the year ended December 31, 2018 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, 2019 are stated as follows:

Revenue recognition

Please refer to notes 4(o) and 6(t) 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 accuracy of the timing of revenue recognition; reviewing and understanding the

Attachment 2  23

reasonableness for any identified significant sales returns and allowances that took place after the balance sheet date, as well as assessing the completeness of the revenue and related sales returns and allowances.

2. Valuation of inventories

Please refer to notes 4(g), 5 and 6(f) 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.

Acquisition of subsidiaries

Please refer to notes 4(r) and 6(g) for the accounting policy on business combination, and “Acquisition of subsidiaries” for the related disclosures, respectively, of the notes to the parent-company-only financial statements.

Description of key audit matter:

The Company acquired 35.04% ownership of Sysage Technology Co., Ltd in 2019, wherein it owned more than half of its total number of directors. Therefore, the Company obtained control over it. To adopt the accounting treatment of business combination, the management needs to determine the fair value of the identifiable assets and liabilities. The assessment is complex and involves significant assumptions and estimation. Accordingly, the assessment of acquisition of subsidiaries 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 purchase price allocation report with valuation on intangible assets, conducted by an external expert engaged by the management; and auditing the acquired assets and liabilities identified by the management including any fair value adjustment at the acquisition date. In doing so, we have consulted internal valuation specialists to assist in evaluating the reasonableness of the valuation model and key assumptions used. We have also confirmed that correct accounting treatment has been applied and appropriate disclosures with respect to the acquisition has been made.

Assessment of impairment of goodwill from investments in subsidiaries

Please refer to notes 4(m), 5 and 6(g) 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:

24  Attachment 2

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$4,756,920 thousand and NT$4,396,476 thousand, respectively, constituting 5.64% and 5.41%, respectively, of the total assets as of December 31, 2019 and 2018, and the related shares of profit of subsidiaries, associates and joint ventures amounted to NT$366,655 thousand and NT$251,381 thousand, respectively, constituting 9.54% and 5.84%, respectively, of the total income before income tax for the years ended December 31, 2019 and 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.

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.

Attachment 2  25

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.
Obtain 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.

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, 2019 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 Huei-Chen Chang.

KPMG

Taipei, Taiwan (Republic of China) March 27, 2020

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’ audit 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’ audit report and parent-company-only financial statements, the Chinese version shall prevail.

26  Attachment 2

(English Translation of Financial Statements Originally Issued in Chinese)

QISDA CORPORATION

Parent-Company-Only Balance Sheets

December 31, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars)

Assets Current assets: 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss－current 1170 Notes and accounts receivable, net 1181 Notes and accounts receivable from related parties 1200 Other receivables 1210 Other receivables from related parties 130X Inventories 1470 Other current assets Total current assets Non-current assets: 1520 Financial assets at fair value through other comprehensive income －non-current 1550 Investments accounted for using equity method 1600 Property, plant and equipment 1755 Right-of-use assets 1780 Intangible assets 1840 Deferred income tax assets 1990 Other non-current assets, others 1980 Other financial assets－non-current Total non-current assets	December 31, 2019	December 31, 2019	December 31, 2018	December 31, 2018
	Amount	%	Amount	%
	$ 1,052,856 37,441 10,926,651 14,778,027 819 1,448 5,145,732 136,605 32,079,579 48,438 49,095,776 1,519,417 940,549 10,851 517,564 21,198 40,222 52,194,015	1 - 13 18 - - 6 - 38 - 58 2 1 - 1 - - 62	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

Total assets

See accompanying notes to parent-company-only financial statements.

$ 84,273,594 100 81,283,278 100

Attachment 2  27

(English Translation of Financial Statements Originally Issued in Chinese)

QISDA CORPORATION

Parent-Company-Only Balance Sheets

December 31, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars)

December 31, 2019	December 31, 2019	December 31, 2018	December 31, 2018
Amount	%	Amount	%
$ 7,190,000 - 252,903 1,314,927 25,741,413 1,780,866 9,931 100,000 111,584 4,770 21,516 1,175,263 37,703,173 11,347,582 867,105 4,448 82,009 10,292 315,026 12,626,462 50,329,635 19,667,820 2,220,653 12,663,994 (608,508) 33,943,959 $ 84,273,594	9 - - 2 31 2 - - - - - 1 45 14 1 - - - - 15 60 23 3 15 (1) 40 100	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

See accompanying notes to parent-company-only financial statements.

28  Attachment 2

(English Translation of Financial Statements Originally Issued in Chinese) QISDA CORPORATION

Parent-Company-Only Statements of Comprehensive Income For the years ended December 31, 2019 and 2018

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

2019		2018
Amount	%	Amount	%
$ 98,496,920 (92,860,543) 5,636,377 (89,249) 5,547,128 (1,094,220) (672,893) (1,980,680) (4,033) (3,751,826) 1,795,302 173,968 242,948 (434,209) 2,062,876 2,045,583 3,840,885 (265,830) 3,575,055 (21,181) 14,688 356,926 - 350,433 (785,841) - (785,841) (435,408) $ 3,139,647 $	100 (94) 6 - 6 (1) (1) (2) - (4) 2 - - - 2 2 4 - 4 - - - - - (1) - (1) (1) 3 1.82 1.80	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	100 (95)
			5 -
			5
			(1) (1) (2) -
			(4)
			1
			- - - 3
			3
			4 -
			4
			- - - -
			-
			- -
			-
			-
			4
			2.05
$			2.03

See accompanying notes to parent-company-only financial statements.

(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, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars)

Common stock	Capital surplus	R	etained earnings	etained earnings		To	tal other equity in	terest		Total other equity interest	Total equity
		Legal reserve	Special reserve	Unappropriated earnings	Total retained earnings	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 benefit plans
$ 19,667,820 -	2,173,633 -	893,834 -	- -	8,607,603 (79,500)	9,501,437 (79,500)	(120,490) -	- 30,353 30,353 - 16,637 16,637 - - - - - 46,990 - 46,990 - 367,740 367,740 - - - - (4,678) - 410,052	30,366 (30,366)	(293,856) - (293,856) - (49,885) (49,885) - - - - - (343,741) - (343,741) - (17,307) (17,307) - - - - - - (361,048)	(383,980) (13)	30,958,910 (79,513)
19,667,820	2,173,633	893,834	-	8,528,103	9,421,937	(120,490)		-		(383,993)	30,879,397
- -	- -	- -	- -	4,035,064 -	4,035,064 -	- 248,819		- -		- 215,571	4,035,064 215,571
-	-	-	-	4,035,064	4,035,064	248,819		-		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 (45,819)	10,801,845 (45,819)	128,329 -		- -		(168,422) -	32,447,319 (45,819)
19,667,820	2,146,076	1,422,973	383,979	8,949,074	10,756,026	128,329		-		(168,422)	32,401,500
- -	- -	- -	- -	3,575,055 -	3,575,055 -	- (785,841)		- -		- (435,408)	3,575,055 (435,408)
-	-	-	-	3,575,055	3,575,055	(785,841)		-		(435,408)	3,139,647
- - - - - -	- - - 64,335 - 10,242	403,506 - - - - -	- (215,557) - - - -	(403,506) 215,557 (1,671,765) - 4,678 -	- - (1,671,765) - 4,678 -	- - - - - -		- - - - - -		- - - - (4,678) -	- - (1,671,765) 64,335 - 10,242
$ 19,667,820	2,220,653	1,826,479	168,422	10,669,093	12,663,994	(657,512)		-		(608,508)	33,943,959

See accompanying notes to parent-company-only financial statements.

30  Attachment 2

(English Translation of Financial Statements Originally Issued in Chinese) QISDA CORPORATION

Parent-Company-Only Statements of Cash Flows

For the years ended December 31, 2019 and 2018

(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 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 Gain on bargain purchase Unrealized profit on sales to subsidiaries, associates and joint ventures Total adjustments to reconcile profit Changes in operating assets and liabilities: Changes in operating assets: Increase in financial assets at fair value through profit or loss Decrease (increase) in notes and accounts receivable Decrease (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 Increase in other current assets 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 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 (decrease) in contract liabilities Increase (decrease) 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 (used in) operations Interest received Dividends received Interest paid Income taxes paid Net cash provided by operating activities	2019	2018
	$ 3,840,885 209,757 13,877 4,033 434,209 (19,759) (2,250) (2,062,876) (1,485) (19,175) (20,958) 89,249 (1,375,378) (23,692) (732,412) 1,942,672 225,837 (1,448) (861,916) (36,678) (4,144) 508,219 (2,388) (766,752) 1,218,717 3,193 (2,301) (131,918) 76,748 (52,619) 342,680 850,899 (524,479) 3,316,406 19,759 2,324,826 (428,178) (122,729) 5,110,084	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

See accompanying notes to parent-company-only financial statements.

Attachment 2  31

(English Translation of Financial Statements Originally Issued in Chinese) QISDA CORPORATION

Parent-Company-Only Statements of Cash Flows (Continued)

For the years ended December 31, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from investing activities: 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 Decrease (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 Payment of lease liabilities Cash dividends distributed to shareholders Net cash provided by (used in) 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	2019	2018
	(3,473,583) 2,628 (125,035) 6,943 (18,133) 1,856 (3,605,324) 2,040,000 16,835,882 (18,659,625) (124,367) (1,671,765) (1,579,875) (75,115) 1,127,971 $ 1,052,856	(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

See accompanying notes to parent-company-only financial statements.

32  Attachment 3

The 2019 Earnings Distribution Proposal

Unit: NT$

Net income of 2019 Less: Provisioned as legal reserve Less: Provisioned as Special Reserve Retained earnings available for distribution in 2019 Add: Unappropriated retained earnings from previous years Add: Disposal of financial assets measured at fair value through other comprehensive income in subsidiaries Less: Adjustments to the first-time adoption of International Financial Reporting Standards Retained earnings available for distribution as of December 31, 2019 Distributable Items Cash Dividend（NT$750 for every 1,000 common shares） Unappropriated retained earnings after earnings distribution	3,575,055,447 (357,505,545) (440,086,289)
	2,777,463,613
	7,135,179,962 4,678,018 (45,819,605)
	9,871,501,988
	(1,475,086,469)
	8,396,415,519

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 4  33

Comparison table for the Articles of Incorporation before and after amendment

				Reason for
Article No	After amendment		Before amendment
				Amendments

Article 5-3	The rights and obligations of the Company’s preferred share and related issuing conditions are as follows: I. 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 legal reserve and recognize or reverse special reserve return earnings in accordance with Article 16 of the Company’s Articles of Incorporation and applicable laws and regulations. If there is a residual amount after provisions are set aside, the residual shall be distributed as the year’s dividend for preferred share first. 2. Dividend on preferred share is limited to an annual rate of 8%, calculated based on the issuing price of each share. The dividend can be issued in a cash lump sum each year. After the annual shareholders’meeting recognizes the financial report and earnings distribution, the board of directors shall set a benchmark date to issue the previous year’s dividend. The issuing of the issuing year and the recovery year dividend is based on the calculation of the current year’s actual issuing days. The issuing date is defined as the benchmark date to issue the preferred share. 3. The Company’s preferred share dividend distribution has autonomous discretion. If this Company’s annual final account shows no earnings or the earnings are insufficient for distribution, the preferred share dividend or others must be considered. If the shareholder’s meeting decides not to distribute preferred share dividend, this is not a violation of the contract. If the issued preferred share is of the non-cumulative type, and the resolution is not to distribution or to distribute insufficient dividend, this is not accumulated as deferred payment in future earnings years. 4. In addition to receiving dividend described in Item one, the holder of preferred share shall not participate in the distribution of common share earnings, capital reserve for cash, and capitalization. 5. The holder of this Company’s preferred share has priority over holders of common share in the distribution of this Company’s remaining asset. Holders of preferred share also have the same payment priority sequence as the holder of other preferred share issued by the Company, and are only second to ordinary creditors. However, this is limited to the amount calculated based on the number of circulating preferred share and the issuing price. 6. The holders of preferred share do not have voting or election rights in the shareholder’s meeting. However, holders of preferred share have voting rights in the preferred share shareholder’s meeting and regarding issues in the shareholders’meeting that is related to the rights and obligations of preferred shareholders. 7. Preferred share cannot be converted to common share. 8. Preferred share has no expiration date. Holders of preferred stock cannot request this Company to buy back their preferred share. However, the Company can buy back part or all preferred share on the following day of the five-year anniversary of the issuing based on the actual issuing price. The unrecovered preferred share will continue to have the aforementioned issuing conditions and rights and obligations. If the Company decides to issue dividend for the current year, the		(New Addition)	amend according to actual need

		of the five-year anniversary of the issuing based on the actual issuing price. The unrecovered preferred share will continue to have the aforementioned issuing conditions and rights and obligations. If the Company decides to issue dividend for the current year, the

34  Attachment 4

				Reason for
Article No		After amendment	Before amendment
				Amendments

	dividend that should be issued up to the recovery date shall be calculated according to the current year’s actual number of issuing days. 9. The paid-in-capital that the preferred share premium is issued from shall not be used for capitalization during the preferred share issuing period other than to make up for losses. I0. The Board is authorized to determine the name, issuance date and terms of the preferred share in accordance with market conditions and investors’ expectation, in accordance with the Company’s Articles of Incorporation and applicable laws and regulations.

Article 6	(Delete) 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.		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.	pursuant to laws and regulations
Article 8	(Omitted) The preferred shareholders’meeting may be convened when it deemed necessary in accordance with applicable laws and regulations.		(Omitted) (New addition)	amend according to actual need
Article 10	(Omitted) Each shareholder of the Company is entitled to one vote per share, unless otherwise provided by applicable law or regulationor the preferred share with no voting rights issued by the Company.		(Omitted) Each shareholder of the Company is entitled to one vote per share, unless otherwise provided by applicable law or regulation.	amend according to actual need
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,as the earnings available for distributing to common and preferred shareholders,the Board shall propose the earnings distribution plan and submit to the Shareholders’ Meeting for approval by resolution before the distribution. The rights, obligations and distribution sequence of the Company’s preferred share is executed in accordance with		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. (New Addition) 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.	amend according to actual need
	the Company’s Articles of Incorporation and applicable laws and regulations. Where the aforesaid earnings distribution planor dividend on preferred shareis 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.
Article 19	These Articles of Incorporation were enacted on March 23, 1984, and amended on March 29, 1984 for the first time, (Omitted) amended on June 21, 2019 for the forty-first time, amended on June 19, 2020 for the forty-second time.		These Articles of Incorporation were enacted on March 23, 1984, and amended on March 29, 1984 for the first time, (Omitted) amended on June 21, 2019 for the forty-first time.	Added amendment date

Attachment 5  35

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 195,000,000 common shares and preferred 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 preferred 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 195,000,000 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 2020 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.

36  Attachment 5

(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 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 and adjust 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 6  37

List of non-competition restrictions on directors

Director	Released restriction items
Kuen-Yao (K.Y.) Lee	- Director, AU Optronics Corp. - Director, Darfon Electronics Corp. - Director, BenQ Materials Corp. - Director, BenQ BM Holding Corp. - Director, BenQ BM Holding Cayman Corp.
Chi-Hong (Peter) Chen	- Chairman, DFI Inc. - Chairman, Partner Tech Corp. - Chairman, BenQ Medical Technology Corporation - Vice Chairman, Alpha Networks Inc. - Director, AU Optronics Corp. - Director, Darfon Electronics Corp. - Director, Hitron Technologies Inc. - Director, BenQ Materials Corp. - Director, BenQ AB DentCare Corp. - Director, NanJing BenQ Hospital Co., Ltd. - Director, Suzhou BenQ Hospital Co., Ltd. - Director, BenQ Healthcare Consulting Corp. - Director, BenQ Hospital Management Consulting (NanJing) Co., Ltd. - Director, BenQ BM Holding Corp. - Director, BenQ BM Holding Cayman Corp.
AU Optronics Corp.	- Director, Darwin Precisions Corp. - Director, Lextar Electronics Corp. - Director, Star Shining Energy Corp. - Director, Space Money Inc. - Director, U-Fresh Technology Inc. - Director, AUO Crystal Corp. - Director, Konly Venture Corp. - Director, Ronly Venture Corp. - Director, Star Shining Energy Corp.
Shuang-Lang (Paul) Peng, Representative of AU Optronics Corp.	- Chairman and Chief Executive Officer, AU Optronics Corp. - Director, Darwin Precisions Corp. - Chairman, Konly Venture Corp. - Chairman, Ronly Venture Corp. - Chairman, AU Optronics (Xiamen) Corp. - Chairman, AU Optronics (Suzhou) Corp., Ltd - Chairman, AU Optronics (Kunshan) Co., Ltd. - Chairman, AU Optronics Manufacturing (Shanghai) Corp. - Director, AU Optronics (Shanghai) Co., Ltd - Director, AU Optronics Singapore Pte. Ltd. - Director, AU Optronics (L) Corp. - Chairman, AUO Foundation
BenQ Foundation	- Director, AU Optronics Corp.
Han-Chou (Joe) Huang, Representative of BenQ Foundation	- Chairman, DATA IMAGE CORP.

38  Attachment 6

Director	Released restriction items
Cheng-Ju (Allen) Fan	- Independent Director, Wistron Information Technology and Services Corp. - Chairman, Yu Xuan Corp. - Director, K KINGDOM INC. - Director, K K INTELLIGENT TECHNOLOGY INC.
Lo-Yu Yen	- Independent Director, Chunghwa Telecom - Independent Director, Sinyi Realty Inc. - Director, Chinese Television System Inc. - Director, Social Enterprise Insights (Taiwan)
Jyuo-Min Shyu	- Independent director, Inventec Corp. - Independent director, United Microelectronics Corp. - Director, Iridium Medical Technology Co., Ltd. - Director, GeoThings, Inc. - Director, Modern Classic Ltd.

Appendix 1  39

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.

40  Appendix 1

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

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.

Appendix 2  41

Rules for the Election of Directors

June 12, 2012

		June 12, 2012
Article	1	Unless otherwise provided in applicable laws and regulations or the Articles of Incorporation of the Company,
		the Rules specified herein shall govern the election of the Company’s directors.
Article	2	The Company’s directors shall be elected at the Shareholders’ Meeting.
Article	3	The Company’s directors should be elected through single-named cumulative voting.
Article	4	In election of the Company’s directors, each share is entitled to the voting rights equivalent to the number of
		directors to be elected. The voting rights may be concentrated to one candidate or be allocated among several
		candidates. The candidates who receive the most votes for the position of director shall win the election.
Article	5	The directors of the Company shall be elected by the shareholders' meeting from among the persons with
		disposing capacity. The candidates who receive the most votes for the position of director shall win the election,
		and such number shall be in compliance with the number of positions for director provided for in the Articles of
		Incorporation. If two or more candidates receive the same number of votes beyond a quota, the winner shall be
		determined through lot-drawing. The lot may be drawn by the Chairman on behalf of the absentees.
Article	6	The Board of Directors shall, upon preparing the ballots, enter the voting rights on each ballot. The ballot box
		shall be prepared by the Board of Directors and shall be checked in public by the inspector before voting.
Article	7	At the beginning of the election, the chairman shall appoint the inspector and counter to take charge of
		monitoring and counting of the votes.
Article	8	The Company shall announce publicly the nomination submission period, the number of directors to be elected,
		the place for eligible shareholders to submit their nomination, and other relevant information prior to the
		commencement of the book closed period prior to the Shareholders’ meeting.
		The Company adopts the Nomination System for the nomination of candidates to serve as directors. The Board
		or the shareholders holding 1% or more of the Company’s total issued and outstanding shares are entitled to
		submit a slate of candidates for consideration as directors in pursuant to the Company Act.
		The qualifications of the candidates for consideration as directors shall be in compliance with applicable laws and
		regulations.
Article	9	The shareholders shall elect the directors from among the nominees listed in the roster of director candidates.
		If the candidate is a shareholder of the Company, voters shall fill the candidate’s name and shareholder’s number
		in the“candidate” column of the ballot; if the candidate is not a shareholder of the Company, voters shall fill the
		candidate’s name and ID number in the “candidate” column. If the candidate is a government agency or a legal
		entity, voters shall fill the name of the government agency or the legal entity or the name of their representative
		in the column. In the event that several candidates represent a government agency or a legal entity, the names of
		the representatives shall be filled separately in the column.
Article	10	A ballot shall be deemed void if such a ballot:
		1. is not a ballot provided under the Rules;
		2. is placed into the ballot box blank;
		3. contains illegible words or corrections;
		4. contains a name in the “candidate”column which is inconsistent of the nominees list;
		5. contains any words or marks other than those specified in Article 10;
		6. is not filled out in accordance with Article 10 or is filled incompletely;
		7. contains two or more candidates.
Article	11	The ballots should be counted during the meeting right after the vote casting under supervision of the inspector,
		and the results of the election should be announced by the Chairman at the meeting.
Article	12	The Rules and any amendment thereof shall become effective after approval by the Shareholders’ Meeting.

42  Appendix 3

Articles of Incorporation (Before the amendments)

Chapter 1 General Provisions

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 be Qisda Corporation.

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 (Cancel)
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
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.

Appendix 3  43

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.
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 Directors and Audit Committees

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 have at least 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.
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.

44  Appendix 3

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 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.
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.
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.
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 15, 2016 for the Fortieth time, amended on June 21, 2019 for the Forty-first time.

Appendix 4 / Appendix 5  45

Appendix 4:

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 21, 2020, 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	Chi-Hong (Peter) Chen	309,919	0.02
Director	AU Optronics Corp. (Representative: Shuang-Lang (Paul) Peng)	335,230,510	17.04
Director	BenQ Foundation (Representative: Han-Chou (Joe) Huang)	608,083	0.03
Independent Director	Kane K. Wang	0	0
Independent Director	Cheng-Ju (Allen) Fan	0	0
Independent Director	Jeffrey Y.C. Shen	0	0
Total		345,868,052	17.59

Appendix 5:

Influence of Proposed Stock Dividend Distribution upon 2020 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 2019.

AI assistant

Qisda — AGM Information 2020

52023_rns_2020-07-06_3eb42c76-ac30-4a29-b83c-0786c059646e.pdf

Qisda Corporation

Agenda

I. Report Items

III. Recognition and Discussion Items

I. Report Items

1. To report the business of 2019

2. Audit Committee’s Review Report

3. To report the distribution of employees’ and directors’ remuneration of 2019

5. To report the issuance of securities in private placement

II. Election Item

To elect seven directors (including three independent directors) (proposed by the Board of Directors)

Explanation:

III. Recognition and Discussion Items

Explanation:

Resolution:

Explanation:

Resolution:

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

Explanation:

Resolution:

Explanation:

6  Recognition and Discussion Items

8  Recognition and Discussion Items

Resolution:

Explanation:

Resolution:

IV. Extraordinary Motions

V. Meeting Adjourn

List of Director Candidates

Independent Auditors’ Report and 2019 Financial Statements

2019 Consolidated Financial Statements

Independent Auditors’ Report

Opinion

Basis for Opinion

Key Audit Matters

1. Revenue recognition

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. Business combination

Description of key audit matter:

How the matter was addressed in our audit:

4. 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, 2019 and 2018

(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, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars)

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) QISDA CORPORATION AND SUBSIDIARIES Consolidated Statements of Comprehensive Income

For the years ended December 31, 2019 and 2018

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

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) QISDA CORPORATION AND SUBSIDIARIES

Consolidated Statements of Changes in Equity For the years ended December 31, 2019 and 2018

Attributable to shareholders of the Company

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

QISDA CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2019 and 2018 (Expressed in Thousands of New Taiwan Dollars)

QISDA CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (Continued) For the years ended December 31, 2019 and 2018 (Expressed in Thousands of New Taiwan Dollars)

2019 Parent Company Only Financial Statements

Independent Auditors’ Report

The Board of Directors of Qisda Corporation:

Opinion

Basis for Opinion

Qisda AGM Information 2020