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Quintain Steel AGM Information 2021

Aug 16, 2021

51947_rns_2021-08-16_835a0fa8-a11e-48ba-927f-c31522ab67ef.pdf

AGM Information

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Stock Code ： 2017

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2021 Annual Shareholders’ Meeting

Meeting Agenda

Date: 10:00 a.m. (Friday), May 28, 2021

Place: 3F., No. 47, Xinjian Rd., South Dist., Tainan City (Hotel Chateau at Cheng-Yao Hall)

Table of Contents

Page
1. Meeting Procedure ……………………………………………………………………… 1
2. Meeting Agenda
……………………………………………………………………… 2
3. Report Items
…………………………………………………………………………… 3
4. Matters for Ratification
………………………………………………………………… 10
5. Matters for Discussion
………………………………………………………………… 11
6. Extempore Motion ……………………………………………………………………… 11
7. Attachment and Appendix………………………………………………………………… 12
I. Consolidated Independent Auditors’ Report ……………………………………… 12
II. Consolidated Balance Sheets ……………………………………………………… 17
III. Consolidated Statements of Comprehensive Income
…………………………… 18
IV. Consolidated Statements of Changes in Equity
………………………………… 20
V. Consolidated Statements of Cash Flows …………………………………………… 21
VI. Individual Independent Auditors’ Report
……………………………………… 23
VII. Individual Balance Sheets
……………………………………………………… 28
VIII. Individual Statements of Comprehensive Income ………………………………… 29
IX. Individual Statements of Changes in Equity ……………………………………… 31
X. Individual Statements of Cash Flows
…………………………………………… 32
XI. Statements of Deficit Compensated
…………………………………………… 34
XII. Comparison Table of Amended Article of Rules of Procedure for Shareholders Meetings 35
XIII. Comparison Table of Amended Article of Procedures for Election of Directors……… 38
XIV. Articles of Incorporation …………………………………………………………… 42
XV. Rules of Procedure for Shareholder Meetings
………………………………… 50
XVI. Shareholdings of all Directors and Supervisors
………………………………… 58

1. Meeting Procedure

Quintain Steel Co., LTD.

Procedure for the 2021 Annual Shareholders’ Meeting

  • I. Chairman in Position

  • II. Chairman’s Statement

  • III. Report Items

  • IV. Matters for Ratification V. Matters for Discussion

  • VI. Extempore Motion

  • VII. Adjournment

  • 1 -

2. Meeting Agenda

Quintain Steel Co., LTD., 2021 Annual Shareholders’ Meeting Agenda Time: 10:00 a.m. (Friday), May 28, 2021

Place: 3F., No. 47, Xinjian Rd., South Dist., Tainan City (Hotel Chateau at Cheng-Yao Hall) Call the Meeting to Order

  • I. Chairman in Position

  • II. Chairman’s Statement

  • III. Report Items

    • (1) 2020 Business Report and Financial Statements

    • (2) Audit Committee’s Review Report on the 2020 Financial Statements

    • (3) Report on Endorsements and Guarantees and Loaning Funds to Others in 2020

    • (4) Report on the Condition of Shareholders’ Proposal

    • (5) Other Report Items

  • IV. Matters for Ratification

  • (1) Adoption of the 2020 Business Report and Financial Statements

  • (2) Adoption of the Proposal for 2020 Deficit Compensation

  • V. Matters for Discussion

  • (1) Amendment to the Rules of Procedure for Shareholder Meetings

  • (2) Amendment to the Procedures for Election of Directors

  • (3) Capital reserve cash payment

  • VI. Extempore Motion

  • VII. Adjournment

  • 2 -

3. Report Items

I. Business Report

Dear Shareholders,

The global economy in 2020 suffered a severe recession because of the impact from the negative events such as the outbreak of the COVID pandemic, the unsettled China-US trade war, the plunging oil price, and the enacted Hong Kong National Security Law. The economy of the U.S., the E.U. and Japan contracted by 3.4%,7.6%, and 5.4% respectively, and that of the Global market declined by 4%. The global trade has shrunk dramatically, and the global import and export have decreased by nearly 10% respectively. A lot of countries have lowered interest rates to ease corporations’ pain, made monetary policies for the relief efforts, adopted fiscal policies such as giving cash or relief funds to everyone, but these are such a drop in a bucket that the global economy remained sluggish. In 2020, the company's consolidated sales were NT$3,493,012,000, which decreased 11.67% compared to 2019, and the consolidated net profit was NT$374,885,000, an increase of 354% from 2019.

The economy in 2021 is projected to grow significantly due to the low base effect from 2020, when the pandemic led to a severe recession. The economic growth of the U.S., the E.U., Japan, and emerging economies are projected as 3.1~4.2%, 6.1%, 4.1%, and 4.7~7.0% － respectively. However, what we still need to be cautious with are first, the high-level uncertainty related to the development of the pandemic exists; second, US-China relations and tech war-driven frictions; third, the divergence between the asset prices and the economic activities and the rising liquidity risk of corporations are both growing concerns for the upcoming recovering global economy.

The Company’s manufacturing and heat treatment of fastener screws in our plastic-machining plant have launched production in the second quarter of 2020. The upgrade and the integration of the equipment in Madou Factory will also be completed in the second quarter of 2021, and the mass production will be implemented. In 2021, the Company will strive to improve the operational performance of new products such as fasteners, screws, hot-dipped galvanized wires, etc., and the projected production and sales are 168,000 tons. The Company continues to strengthen the research and development of metal or plastic-machined technology, improve quality of manpower and the product quality, expand domestic and international markets channels to increase market shares, procure advanced environmental protection equipment, introduce auxiliary intelligence system in manufacturing process to enhance the product competitiveness and increase the profitability.

Thank you, all shareholders, ladies and gentlemen, for your support and advice.

Wish all shareholders, ladies and gentlemen, good health and good luck

  • 3 -

i. Operating Performance in 2020

  1. Operating Performance in 2020

  2. (1) Individual Financial Statements Unit: NT$ thousands

Item 2020 2019 Percent Change
（%）
Net sales 2,758,192 3,201,427 -14%
Operating costs 2,697,919 3,228,202 -16%
Gross profit (loss) 60,273 (26,775) 325%
Operating expenses 144,489 158,281 -9%
Operating profit (loss) (84,216) (185,056) 54%
Non-operating Income and Expenses 96,735 21,480 350%
Pre-tax income (loss) 12,519 (163,576) 108%
Net income (loss) 14,424 (166,379) 109%
Other comprehensive income 278,170 6,226 4,368%
Total comprehensive income 292,594 (160,153) 283%

  • ① Gross profit grew compared to the previous year, mainly due to the increase in unit selling price and demand for steel products and the increased production in the steel industry as the pandemic started to ebb in the second half of 2020. Also, the Company leased its steel rolling factory and the steel rolling equipment to E-Sheng Steel Industry Co., Ltd in November 2020 to not only cover the applied manufacturing costs and overhead but also gain the leasing income. In brief, even though the sales decreased compared to the previous year, the Company turned a negative gross profit into a positive one in 2020.

  • ② Non-operating Income and Expenses increased, mainly due to the increased contribution from the consolidated subsidiaries and associates accounted for using the equity method in 2020.

  • ③ Other comprehensive income is increased, mainly because of the increment of unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income in 2020.

  • (2) Consolidated Financial Statements Unit: NT$ thousands

Item 2020 2019 Percent Change
（%）
Net sales 3,493,012 3,954,720 -12%
Operatingcosts 3,107,240 3,695,802 -16%
Grossprofit(loss) 385,772 258,918 49%
Operatingexpenses 399,432 442,064 -10%
Operating profit(loss) (13,660) (183,146) 93%
Non-operatingIncome and Expenses 97,542 34,844 180%
Pre-tax income(loss) 83,882 (148,302) 157%
Net income(loss) 65,923 (154,197) 143%
Other comprehensive income 308,962 6,512 4,645%
Total comprehensive income 374,885 (147,685) 354%

  • ① Gross profit increased compared to the previous year, mainly due to the increase in unit selling price and demand for steel products and the increased production in

  • 4 -

the steel industry as the pandemic started to ebb in the second half of 2020. Also, the Company leased its steel rolling factory and the steel rolling equipment to E-Sheng Steel Industry Co., Ltd in November 2020 to not only cover the applied manufacturing costs and overhead but also gain the leasing income. In brief, even though the sales decreased compared to the previous year, the Company turned a negative gross profit into a positive one. Also, the sales and Cost of Goods Sold of the subsidiary, Chateau Investment Co., Ltd decreased compared to the previous year; however, its gross profit increased because of the cost containment.

  • ② Non-operating Income and Expenses increased, mainly due to the increased contribution from the consolidated subsidiaries and associates accounted for using the equity method in 2020.

  • ③ Other comprehensive income is increased, mainly because of the increment of unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income in 2020.

  • Analysis of Cash flow

  • (1) Individual Cash flow Analysis Unit: NT$ thousands

) Individual Cash flow Analysis Unit: N T$ thousands
Item 2020 2019 Amount Change
Net cashprovided by (used in)operatingactivities
(128,285)		 407,284 (535,569)
Net cashprovided by (used in)investingactivities (427,385) (338,086) (89,299)
Net cashprovided by (used in)financingactivities
585,198		 (163,903) 749,101

  • ① Net cash used in operating activities is increased, mainly because of the increment of procurement of raw material compared with 2019, and the amount of net cash used in operating activities is relatively increased compare with the same period last year.

  • ② Net cash used in investing activities increased due to the increase in procurement of property, plant and equipment in 2020 compared to that of 2019.

  • ③ Net cash provided in financing activities increased because the bank loan increased due to the increase in material procurement, and the Company didn’t pay the cash dividend in 2020.

  • (2) Consolidated Cash flow Analysis Unit: NT$ thousands

) Consolidated Cash flow Analysis Unit: N T$ thousands
Item 2020 2019 Amount Change
Net cashprovided by (used in)operatingactivities 109,605 599,588 (489,983)
Net cashprovided by (used in)investingactivities (500,640) (409,882) (90,758)
Net cashprovided by (used in)financingactivities 541,211 (290,553) 831,764

  • ① Net cash provided in operating activities is decreased, mainly because of the increment of procurement of raw material compared with 2019, and the amount of net cash provided in operating activities is relatively decreased compare with the same period last year.

  • ② Net cash used in investing activities increased due to the increase in procurement of property, plant and equipment in 2020 compared to that of 2019.

  • ③ Net cash provided in financing activities increased because the bank loans increased due to the increase in material procurement and the Company didn’t pay the dividend in 2020.

  • Profitability analysis

  • 5 -

  • (1) Individual Profitability Analy

Item 2020 2019
Return on assets(%) 0.7% -2.1%
Return on shareholders’ equity (%) 0.4% -4.3%
Netprofit(%) 0.5% -5.2%

All ratios in 2020 outperformed that of 2019 mainly due to the increased net income in 2020.

  • (2) Consolidated Profitability Analysis
Item 2020 2019
Return on assets(%) 1.2% -1.3%
Return on shareholders’ equity (%) 1.3% -3.0%
Netprofit(%) 1.9% -3.9%

All ratios in 2020 outperformed that of 2019 mainly due to the increased net income in 2020.

ii. Business Plan for 2021

  1. Business objectives

  2. (1) Improve the rate of capacity utilization among factories (OEM included) to strengthen the competitiveness of the products.

  3. (2) Increase sales of the construction screw (threaded rod included) and metal or plastic-machined screw.

  4. (3) Improve the quality level:

    • ① The upgrade and integration for the Spheroidization Factory in Madou and Galvanization Factory in Yong Kang.

    • ② The Corporation signed the leasing contract for a steel mill with E-Sheng Steel Co.in June 2020, and the lease began formally in November of the same year.

    • ③ Reinforce the research and development of metal or plastic-machined screw.

  5. (4) Expand international markets.

  6. Sales forecast

In early years, due to the lack of capacity for high-quality steelmaking, the industry mainly relied on the imports of billet steel or wire rod from Commonwealth of Independent States, Brazil, and Japan, etc. These years, Dragon Steel Co., Ltd (China Steel Corporation’s affiliate) has increased its production volume and quality of steelmaking and rolling steels. However, it has not only helped limit the growth of wire rod importers but also diminished the profit of rerolling-manufacturers. Those who have been relying on imports from Commonwealth of Independent States, Brazil, and Japan, etc. have faced more difficulties for too long because the importers dumped the imported material, which was prompted by the destocking pressure in competitions including the

  • 6 -

ones with oversupply of capacity like Commonwealth of Independent States, South Korea, and China due to the sluggish global economy and weakened domestic demand and the ones that launched new steelmaking productions in the Southeast. The total sales volume of the company for 2021 is projected to be around 168,000 tons.

  1. Sales and production policy

  2. (1) Reduce unit production cost by increasing the product diversity to improve the activation rate of rolling steel factory.

  3. (2) To add the high hot dip galvanized wire products, enhance the quality of each hot dip galvanized wire product, actively explore new product markets, and implement on-site maintenance systems in order to increase the competitiveness of export to Japan and other countries.

  4. (3) Increase the optional new products of spheroidized wire from Madou Factory (e.g., Blast furnace materials or Electric furnace materials)

  5. (4) Effectively leverage the Company’s advantage in the reprocessing of the wire rod to enhance the competitiveness.

  6. (5) Reinforce the research and development of metal or plastic-machined products.

Chairman: Stanley C.T,Wang Manager: Cheng-Cheng, Shieh Accounting Supervisor: Pi-Shan Hu

  • 7 -

II. Audit Committee’s Review Report on the 2020 Financial Statements

Quintain Steel Co., LTD.

Audit Committee’s Consent and Review Report

The Board of Directors has prepared the Company’s 2020 Financial Statements, Business Report, and proposal for deficit compensation audited by the CPA firm of Deloitte & Touche and have been reviewed and determined to be correct and accurate by the Audit Committee members of the Company. According to Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act, we hereby submit this report.

Quintain Steel Co., LTD., 2021 Annual Shareholders’ Meeting

Chairman of the Audit Committee：Zue-Nan Hwang

March 29, 2021

  • 8 -

III. Report on Endorsements and Guarantees and Loaning Funds to Others in 2020

Explanatory Notes：

  • (1) As of December 31, 2020, the Company endorsed and guaranteed that the actual amount used was NT$8,400,000.

  • (2) As of December 31, 2020, the Company loaned funds to others that the actual amount used was NT$95,660,000.

IV. Report on the Condition of Shareholders’ Proposal

Explanatory Notes：There is no shareholder’s proposal at this annual shareholders’ meeting.

  • V. Other Report Items

  • 9 -

4. Matters for Ratification

Proposal 1： To accept the Company’s 2020 Business Report and Financial Statements

Proposed by the Board of Directors

Explanatory Notes：

  • (1) The Company’s 2020 Consolidated Financial Statements and Parent Company Only Financial Statements were audited by independent auditors, Ms. Ji-Zhen Li and Mr. Chao-Qin Yang, of Deloitte & Touche with issuance of reports with unqualified opinion plus other paragraphs.

  • (2) The accompanying Financial Statements and Business Report were audited by Audit Committee and has been approved by the 12th Board meeting of the 17th Board of Directors. (Refer to page 12-33 )

Resolution：

Proposal 2： To accept the Company’s 2020 Deficit Compensation

Proposed by the Board of Directors

Explanatory Notes：

(1) The Company’s accumulated deficit at the beginning of 2020 was NT$173,141,590. 2020 net profit after tax was NT$14,424,850. 2020 remeasurement of defined benefit recognized in retained earnings was NT$(2,128,506). 2020 accumulated profit from disposal of investments in equity instruments at FVTOCI directly transferred to retained earnings was NT$8,864,155. 2020 difference between consideration and carrying amount of subsidiaries’ acquired recognized in retained earnings was NT$(12,665,073). Set aside reversal of special reserve was NT$40,833,142. Accumulated deficits at the end of 2020 was NT$(123,813,022).

(2) Proposal for legal reserve of NT$62,778,115 and capital reserve of NT$61,034,907 to offset the Company’s losses.

  • (3) Statements of Deficit Compensated, please refer to page 34.

Resolution：

  • 10 -

5. Matters for Discussion

Proposal 1： Amendment to the Rules of Procedure for Shareholders Meetings. Please proceed to discuss.

Proposed by the Board of Directors

Explanatory Notes：

  • (1) Proceed to amend in compliance with TWSE reference no. 1090009468 issued on June 3, 2020 and no. 1100001446 issued on January 28, 2021.

  • (2) Please refer to page 35-37 for details of the proposed amendments to the Rules of

Procedure for Shareholders Meetings.

Resolution：

Proposal 2：Amendment to the Procedures for Election of Directors. Please proceed to discuss.

Proposed by the Board of Directors

Explanatory Notes：

  • (1) Proceed to amend in compliance with TWSE reference no. 10900094681 issued on June 3, 2020.

  • (2) Please refer to page 38-41 for details of the proposed amendments to the Procedures for Election of Directors.

Resolution：

Proposal 3： Capital reserve cash payment. Please proceed to discuss.

Proposed by the Board of Directors

Explanatory Notes：

(1) The Company plans to distribute a cash dividend of NT$0.2 per share allocated from Capital Reserve-Treasury Stock Transactions, which amounted to NT$68,373,492. (2) After the approval, the Board of Directors is authorized to set up an ex-dividend date, payment date, and other related matters.

Resolution：

6. Extempore Motion

  • 11 -

7. Attachment and Appendix

Independent Auditors' Report

To the Board of Directors of Quintain Steel Company Ltd.

Opinion

We have audited the accompanying cosolidated financial statements of Quintain Steel Company and its subordinates (Quintain Steel Group), which comprise the consolidated balance sheets as of December 31, 2020 and 2019 and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion,based on the audit report of this auditor and other auditor, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Corporation and its subsidiaries as of December 31, 2020 and 2019, and their consolidated financial performance and their consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission (FSC) of the Republic of China.

Basis for Opinion

We conducted our audit in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are independent of Quintain Steel Group with the Code of Professional Ethics for Certified Public Accountants in the Republic of China and fulfill our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Key Audit Matters

  • 12 -

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2020. 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 of Quintain Steel Group's consolidated financial statements for 2020 are stated as follows:

Evaluation of inventory net realizable value

As of December 31, 2020, inventories of the Corporation amounted to NT $1,081,852 thousands, representing 12% of the Corporation's total assets. Refer to Notes (4.7) at Inventories, Notes (5.1) at Imairment of assets and Notes 12 at Inventories to the Corporation's consolidated financial statements for the related accounting policies and disclosures on inventory valuation.

The aforementioned inventories are measured at lower of cost or net realizable value, on net realizable value is lower than cost, inventory valuation losses shall be recognized. Valuation of net realizable value involves critical accounting estimates and judgement of management level, carrying amounts of inventories are also significant to the entire consolidated financial statement, thus is deemed to be a key audit matter.

We focused on inventory net realizable valuation of inventory, and the audit procedures we performed included the following:

  1. We evaluated the appropriateness applied to the inventory valuation and assumption used by management level, and obtained an understanding and tested the effectiveness of internal control in accordance with understanding of industry and products.

  2. We selected and recalculated samples from the net realizable value to verify the appropriateness of the aforementioned valuation of inventory.

Other matters

Included in consolidated financial statement of Quintain Steel Group, financial reports about Asahi Enterprise Corp. as subsidiary and Castle Applied Inc. as associate are audited by other auditor, thus our auditor’s opinion on the amount of aforementioned financial reports are in accordance with other auditor’s reports. The toatal asset amounts of aforementioned subsidiary were NT $429,633 thousands and NT $338,527 thousands, constituting 4.6% and 4% of total assets for the year ended December 31, 2020 and 2019, respectively; and the amounts of operating income were 0 and NT $2,268 thousands, accounted for less than 1% of total net

13

consolidated operating income for the year ended December 31, 2020 and 2019, respectively. The amounts of investments on associates using equity methods were NT $35,314 thousands and NT $37,958 thousands, accounted for less than 1% of total consolidated assets, and shares of comprehensive losses recognized with equity methods were NT $2,644 thousands and NT $1,042 thousands, accounted for less than 1% of total consolidated comprehensive profit or losses for the year ended December 31, 2020 and 2019, respectively.

We have also audited the individual financial statements of Quintain Steel Group as of and for the years ended December 31, 2020 and 2019 on which we both have issued an unmodified opinion.

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 for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing Quintain Steel Group’s consolidated financial statements, management is responsible for assessing Quintain Steel 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 Quintain Steel Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including the audit committee, are responsible for overseeing Quintain Steel 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.

14

As part of an audit in accordance with ROC GAAS, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

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

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

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

  4. Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on Quintain Steel 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 auditor's 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 auditor's report. However, future events or conditions may cause Quintain Steel Group to cease to continue as a going concern.

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

  6. Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within Quintain Steel Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

  7. We communicate with those charged with governance regarding, among other matters, the

  8. 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

15

with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2020 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.

Deloitte & Touche Engagement partner Chi-Chen Li

Engagement partner Chao-Chin Yang

March 29, 2021

16

Quintain Steel Co., Ltd and Subsidiaries

Consolidated Balance Sheets

(In Thousands of New Taiwan Dollars)

For the years ended December 31, 2020 and 2019

CODE

1100
1110
1120
1136
1150
1170
1200
130X
1470
11XX

1517
1535
1550
1600
1755
1760
1821
1805
1840
1932
1980
1990
15XX
1XXX

CODE

2100
2110
2130
2150
2170
2219
2213
2280
2230
2322
2399
21XX

2540
2570
2580
2640
2645
2670
25XX
2XXX

3110
3200
3310
3320
3350
3300
3400
3500
31XX
36XX

3XXX
 ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 4 and 6)
Financial assets at fair value through profit or loss - current (Notes 4 and
7)
Financial assets at fair value through other comprehensive income -current
(Notes 4, 8, 33)
Financial assets at amortized cost－current (Notes 4 ,9, 33)
Notes receivable (Notes 4 and 11)
Accounts receivable, net (Notes 4, 11, 26, 32)
Other receivables（Notes 4, 8, 11, 28）
Inventories (Notes 4, 5 and 12)
Other current assets (Note 20)
Total current assets
NONCURRENT ASSETS
Financial assets at fair value through other comprehensive income -
noncurrent (Notes 4 and 8)
Financial assets at amortized cost－noncurrent (Notes 4, 9, 33)
Investments accounted for using equity method (Notes 4 ,14, 33)
Property, plant and equipment (Notes 4, 15 ,32, 33)
Right-of-use assets (Notes 4 and 16)
Investment properties (Notes 4,17, 33)
Other intangible assets (Notes 4 and 19)
Goodwill (Notes 4 and 18)
Deferred tax assets (Notes 4, 5, 28)
Long－term receivables (Notes 4 and 8)
Other financial assets - noncurrent (Note 10)
Other noncurrent assets (Notes 4, 20, 32)
Total noncurrent assets
TOTAL ASSETS
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term borrowings (Notes 21 and 33)
Short-term bills payable (Notes 21 and 33)
Contract liabilities－current (Notes 4 and 26)
Notes payable (Note 22)
Accounts payable (Notes 22 and 32)
Other payables (Notes 23 and 32)
Payables of equipment
Lease liabilities - current (Notes 4 and 16)
Current income tax liabilities (Notes 4 and 28)
Long-term liabilities due within one year (Notes 21 and 33)
Other current liabilities (Notes 23 and 32)
Total current liabilities
NONCURRENT LIABILITIES
Long-term bank borrowings (Notes 21 and 33)
Deferred tax liabilities (Notes 4 and 28)
Lease liabilities - noncurrent (Notes 4 and 16)
Net defined benefit liabilities (Notes 4 and 24)
Guarantee deposit received
Other noncurrent liabilities (Note 23)
Total noncurrent liabilities
TOTAL LIABILITIES
Equity attributable to owners of the Corporation（Note 25）
Share capital
Common stock
Capital surplus
Retained earnings
Legal reserve
Special reserve
Accumulated deficit
Total retained earnings
Other equity
Treasury stock
Total equity
NON-CONTROLLING INTERESTS (Note 13)
Total equity
Total liabilities and equity		 December 31, 2020 December 31, 2020
％
3
-
7
1
1
2
1
12
2
29
3
-
5
35
1
17
4
-
1
-
-
5
71
100
8
9
-
-
1
3
-
-
-
4
1
26
17
-
1
-
-
-
18
44
36
5
1
-
2)
1)
3
1)
42
14
56
100		 December 31, 2019 December 31, 2019
AMOUNT
$ 298,459
3,672
666,266
111,222
98,552
203,235
24,546
1,081,852
210,803

2,698,607

298,842
20,000
480,163
3,239,990
87,688
1,638,980
339,391
33,853
87,524
-
-
461,701

6,688,132

$ 9,386,739

$ 785,929
815,218
28,223
3,467
66,155
238,414
36,393
16,054
26,866
357,318
63,581

2,437,618

1,553,113
6,057
64,975
36,102
15,001
2,154

1,677,402

4,115,020

3,418,675

482,947

62,778
40,833
164,647)

61,036)

271,786

115,448)

3,996,924
1,274,795

5,271,719

$ 9,386,739
 AMOUNT
$ 148,283
7,688
364,926
125,368
131,350
183,173
18,120
972,406
80,357

2,031,671

192,046
18,000
429,009
4,063,873
107,050
680,201
385,915
33,853
88,304
17,050
1,955
318,217

6,335,473

$ 8,367,144

$ 778,995
686,835
20,219
12,793
45,418
203,025
61,157
20,728
8,733
226,925
70,944

2,135,772

1,068,760
8,622
80,479
39,442
1,529
2,761

1,201,593

3,337,365

3,418,675

489,770

62,778
40,833
173,141)

69,530)

352

89,469)

3,749,798
1,279,981

5,029,779

$ 8,367,144
 ％














(
(

(











(
(

(













(
(

(











(
(

(


 2
-
4
1
2
2
-
12
1
24
2
-
5
49
1
8
5
1
1
-
-
4
76
100
9
8
-
-
1
3
1
-
-
3
1
26
13
-
1
-
-
-
14
40
41
6
1
-
2)
1)
-
1)
45
15
60
100

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

（Please refers to Deloitte & Touche’s report at March 29, 2021）

Chairman: Stanley C.T,Wang Manager: Cheng-Cheng, Shieh Accounting Supervisor: Pi-Shan Hu

17

Quintain Steel Co., Ltd and Subsidiaries

Consolidated Statements of Comprehensive Income

(In Thousands of New Taiwan Dollars, except Earnings (Losses) per Share) For the years ended December 31, 2020 and 2019

CODE
4000
OPERATING REVENUE (Notes
4, 26, 32)
5000
OPERATING COSTS (Notes 12,
27, 32)
5900
GROSS PROFIT

OPERATING EXPENSES
(Notes 11, 27, 32)
6100
Selling and marketing
expenses
6200
General and administrative
expenses
6300
Research and development
expenses
6450
Expected credit gain/(loss)

6000
Total operating expenses
6500
OTHER OPERATING INCOME
AND EXPENSES,
NET (Note 27)
6900
LOSS FROM OPERATIONS

NON-OPERATING INCOME
AND EXPENSES
(Notes 4, 27, 32)
7100
Interest income
7010
Other income
7020
Other gains and losses
7060
Share of profit or loss of
subsidiaries, associates and
joint ventures
7050
Finance costs

7000
Total non-operating
income and expenses
7900
PROFIT(LOSS) BEFORE
INCOME TAX
7950
INCOME TAX EXPENSE (Notes
4, 5 and 28)
8200
NET PROFIT(LOSS) FOR THE
YEAR		 2020 ％
100

89

11

2
9
-
1

12

-

1)

-
2
1
2
2)

3

2

-

2
 2019
AMOUNT
$ 3,493,012

3,107,240

385,772

65,934
317,088
6,141
13,272

402,435

3,003


13,660)

166
57,984
19,657
70,560

50,825)

97,542

83,882
17,959

65,923
 AMOUNT
$ 3,954,720

3,695,802

258,918

92,385
332,575
6,951
9,764

441,675


389)


183,146)

337
44,028
10,031
35,303

54,855)

34,844


148,302 )
5,895


154,197)
 ％






(
(





(
(




(
(
(

(

(





(
(

(

(		 100
94
6
2
9
-
-
11
-
5)
-
1
-
1
1)
1

4 )
-
4)

18

CODE
OTHER COMPREHENSIVE
INCOME or LOSSES
Items that will not be
reclassified subsequently to
profit or loss:
8311
Remeasurement of
defined benefit plans
(Note 24)
8316
Unrealized gains and
losses on investments
in
Equity instruments at fair
value through other
comprehensive income
8320
Share of Profit or Loss of
Associates & Joint
Ventures Accounted for
Using Equity Method
8349
Income tax related to
components of other
comprehensive income
that will not be
reclassified to profit or
losses (Note 28)
8310

8300
Other comprehensive
income (loss) for the
year, net of income tax
8500
TOTAL COMPREHENSIVE
INCOME FOR THE YEAR

NET PROFIT (LOSSES)
ATTRIBUTABLE TO:
8610
Owners of the Corporation

8620
Non-controlling interests

8600


TOTAL COMPREHENSIVE
INCOME
ATTRIBUTABLE TO:
8710
Owners of the Corporation

8720
Non-controlling interests

8700


EARNINGS (LOSS) PER SHARE
(Note 29)
9710
Basic

9810
Diluted
The accompanying notes ar		 2020 2019
％
AMOUNT

-
( $ 5,269 )
9
16,638
-
(
5,911 )
-

1,054

9

6,512

9

6,512

11
($ 147,685)

-
( $ 166,379 )
2

12,182

2
($ 154,197)

9
( $ 160,153 )
2

12,468

11
($ 147,685)

( $ 0.50 )
(
0.50 )
financial statements.		 2019
AMOUNT
$ 1,365 )
299,792
10,262
273

308,962

308,962

$ 374,885

$ 14,424
51,499

$ 65,923

$ 292,594
82,291

$ 374,885

$ 0.04
0.04
n integral part of these		 ％
(











e a




(
(

(
(

(
-
-

-
-
-
-
4)

4 )
-
4)

4 )
-
4)

（Please refers to Deloitte & Touche’s report at March 29, 2021）

Chairman: Stanley C.T,Wang Manager: Cheng-Cheng, Shieh Accounting Supervisor: Pi-Shan Hu

19

Quintain Steel Co., Ltd and Subsidiaries

Consolidated Statements of Changes in Equity

Consolidated Statements of Changes in Equity Consolidated Statements of Changes in Equity Consolidated Statements of Changes in Equity Consolidated Statements of Changes in Equity
CODE
A1
BALANCE, JANUARY 1, 2019
Appropriation of 2018 earnings
（Note 25）
B1
Legal reserve
B3
Special reserve
B5
Cash dividends to shareholders
O1
Cash dividends to subsidiary
shareholders
M1
Adjustment on capital surplus through
paying dividend to subsidiaries
M5
Acquisition of equity from subsidiary－
Chateau Company
D1
Netlossfor the year ended December
31, 2019
D3
Other comprehensive loss for the year
ended December 31, 2019, after tax
D5
Total comprehensive profit or losses for
the year ended December 31, 2019
Z1
BALANCE AT DECEMBER 31, 2019
O1
Cash dividends distributed by
subsidiaries
Q1
Disposal of investments in equity
instruments at fair value through other
comprehensive income by subsidiary
M5
Acquisition of equity from subsidiary－
Chateau Company
L5
Acquisition of parent company shares by
subsidiary as treasury stocks
L7
Disposal of parent company shares by
subsidiary as treasury stock
transaction
D1
Net profit for the year ended December
31, 2020
D3
Other comprehensive income or losses
for the year ended December 31,
2020, net of income tax
D5
Total comprehensive income or losses
for the year ended December 31, 2020
Z1
BALANCE AT DECEMBER 31, 2020
 For the years ended December 31, 2020 and 2019
(In Thousands of New Taiwan Dollars)
EquityAttributable to Shareholders oftheParent
CapitalStock -CommonStock
Capital Shares
（Thousand shares）
Amount
341,868
$ 3,418,675
-
-
-
-
-
-
-
-
-
-
-
-
-
-

-

-


-

-

341,868
3,418,675
-
-
-
-
-
-
-
-
-
-
-
-

-

-


-

-


341,868
$ 3,418,675
 CapitalSurplus
$ 486,837


-

-

-

-

3,019
(
86 )

-

-


-


489,770

-

-
(
8,046 )

-

1,223

-

-


-

$ 482,947

Chairman: Stanley		 RetainedEarnings Others
Capital Shares
（Thousand shares）
341,868

-
-
-
-
-
-
-

-


-

341,868
-
-
-
-
-
-

-


-


341,868
 Exchange
differences on
Translating
Foreign
Operations









20

Quintain Steel Co., Ltd and Subsidiaries

Consolidated Statements of Cash Flows

(In Thousands of New Taiwan Dollars)

For the years ended December 31, 2020 and 2019

CODE
CASH FLOWS FROM OPERATING ACTIVITIES
A10000
Income before income tax
A20010
Adjustments for:
A20100
Depreciation expense
A20200
Amortization expense
A23500
Expected credit loss (reversed)
A20400
Net gain on fair value changes of financial
assets and liabilities at
fair value through profit or loss
A21200
Interest income
A21300
Dividend income
A22300
Share of profit of associates and joint ventures
for using equity methods
A20900
Finance costs
A23200
Loss for market price decline and
obsolete and slowmoving inventories
A22500
Loss on disposal of property, plant and
equipment
A22700
Loss on disposal of investment properties
A22800
Loss on disposal of other intangible assets
A24100
Net gain on foreign currency exchange
A29900
Benefit of right-of-use assets disposal
A23000
Value on life insurance cancellation
A30000
Changes in operating assets and liabilities
A31130
Notes receivable
A31150
Trade receivables
A31180
Other receivables
A31200
Inventories
A31240
Other current assets
A32125
Contract liabilities
A32130
Notes payable
A32150
Trade payables
A32180
Other payables
A32230
Other current liabilities
A32240
Net defined benefit liability
A32200
Liabilities reserve
A33000
Cash (used in)/generated from operations
A33500
Income taxes paid (refund)
AAAA
Net cash generated by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
B00010
Acquisition of financial assets at fair value through
other comprehensive profit or losses
B00020
Proceeds from sale of financial assets at fair value
through other comprehensive profit or losses
B00030
Proceeds from capital reduction and return of shares
from financial assets at fair value through other
comprehensive profit or losses
B00100
Acquisition of financial assets at fair value through
other comprehensive profit or losses
B00200
Proceeds from sale of financial assets at fair value
through other comprehensive profit or losses		 2020
$ 83,882
203,799
50,089
13,272

363 )

166 )

19,518 )

70,560 )
50,825
976

1,633 )

3,010 )
67
14,619

3 )

99 )
32,799

33,335 )
10,626

113,026 )

162,967 )
8,004
57
20,737
38,549

7,363 )

4,705 )

607)
110,946

1,341)
109,605

178,398 )
66,422
3,632

8,039 )
12,418		 2019

(
(
(
(
(
(
(
(
(
(
(
(
(
(
(

(
(		 (
(
(
(
(
(
(
(
(
(
(
(
(
(
(

(

(
(		 $ 148,302 )
212,559
54,638
9,764

544 )

337 )

19,754 )

35,303 )
54,855
2,076

2,401 )
-
769

16,453 )
-
45

24,585 )
44,037
36,472
523,654

4,293 )

4,972 )

1,003 )

49,645 )

26,165 )

1,580 )

3,067 )
534
600,999

1,411)
599,588

85,868 )
-
5,444

12,062 )
13,087

21

CODE
B00040
Acquisition of financial assets at amortized cost
B00050
Disposal of financial assets at amortized cost
B02700
Acquisition of property, plant and equipment
B02800
Disposal of property, plant and equity
B03700
Increase in refundable deposits
B04500
Decrease in other receivables
B05400
Acquisition of investment property
B05500
Proceeds from disposal of investment properties
B05350
Acquisition of right-of-use assets
B06700
Increase in other noncurrent assets
B06800
Decrease in other noncurrent assets
B07500
Interest received
B07600
Dividend received from subsidiary, associates and
financial assets at fair value through other
comprehensive profit and losses
B01800
Invest in Associates
B09900
Fund for improvement and expansion
B04100
Surrender value arises from disposal of life
insurance
BBBB
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
C00100
Increase in short-term loans
C00200
Decrease in short-term loans
C01600
Issuance of long-term bank borrowings
C01700
Repayments of long-term bank borrowings
C00500
Increase in short-term notes payable
C00600
Decrease in short-term notes payable
C04500
Dividends paid to owners of Quintain Steel Group
C05600
Interest paid
C03000
Guarantee deposits received
C03100
Guarantee deposits refunded
C04020
Repayment of principal of lease liabilities
C04900
Payments for buy-back of ordinary shares
C05000
Disposal of treasury stocks
C05400
Acquisition of ownership interests in subsidiaries
C05800
(Decrease) increase in non-controlling interests
CCCC
Net cash flows used in financing activities
EEEE
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
E00100
CASH
AND
CASH
EQUIVALENTS
AT
THE
BEGINNING OF THE YEAR
E00200
CASH AND CASH EQUIVALENTS, END OF YEAR		 2020
$ 12,146
-

437,061 )
2,379

16,283 )

3,632 )

434 )
5,661

3,233 )
-
375
167
53,686

4,500 )

8,000 )
2,054

500,640)
4,599,195

4,606,880 )
1,608,207

996,930 )
4,713,500

4,585,000 )
-

49,065 )
13,621

149 )

22,343 )

64,051 )
13,575

67,028 )

15,441)
541,211
150,176
148,283
$ 298,459		 2019

(
(
(
(
(
(
(

(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(

(
(
(
(
(
(
(
(
(
(
(
(

 $ -
13,829

317,191 )
3,310

2,328 )

7,753 )
-
-

9,361 )

2,298 )
-
337
34,197

39,000 )

4,225 )
-

409,882)
2,659,823

2,828,704 )
774,351

689,284 )
3,343,758

3,331,000 )

133,728 )

53,424 )
1,000

2,013 )

19,166 )
-
-

239 )

11,927)

290,553)

100,847 )
249,130
$ 148,283

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

（Please refers to Deloitte & Touche’s report at March 29, 2021）

Chairman: Stanley C.T,Wang Manager: Cheng-Cheng, Shieh Accounting Supervisor: Pi-Shan Hu

22

Independent Auditors' Report

To the Board of Directors of Quintain Steel Company Ltd.

Opinion

We have audited the accompanying standalone financial statements of Quintain Steel Company (the Corporation), which comprise the standalone balance sheets as of December 31, 2020 and 2019 and the standalone statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the standalone financial statements, including a summary of significant accounting policies.

In our opinion, based on the audit report of this auditor and other auditor, the accompanying standalone financial statements present fairly, in all material respects, the standalone financial position of the Corporation as of December 31, 2020 and 2019 and its standalone financial performance and its standalone 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 in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are independent of Quintain Steel Company with the Code of Professional Ethics for Certified Public Accountants in the Republic of China and fulfill our other ethical responsibilities in accordance with the Code. 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 standalone financial statements for the year ended December 31,

23

  1. These matters were addressed in the context of our audit of the standalone 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 of the Corporation's standalone financial statements for the year ended December 31, 2020 are stated as follows:

Evaluation of inventory net realizable value

As of December 31, 2020, inventories of the Corporation amounted to NT$951,780 thousands, representing 14% of the Corporation's total assets. Refer to Notes (4.5) at Inventories, Notes (5.1) at Imairment of assets and Notes 12 at Inventories to the Corporation's standalone financial statements for the related accounting policies and disclosures on inventory valuation.

The aforementioned inventories are measured at lower of cost or net realizable value, on net realizable value is lower than cost, inventory valuation losses shall be recognized. Valuation of net realizable value of inventory involves critical accounting estimates and judgement of management level, and carrying amounts of inventories are significant to the entire standalone financial statement, thus is deemed to be a key audit matter.

We focused on inventory net realizable valuation of inventory, and the audit procedures we performed included the following:

  1. We evaluated the appropriateness applied to the inventory valuation and assumption used by management level, and obtained an understanding and tested the effectiveness of internal control in accordance with understanding of industry and products.

  2. We selected and recalculated samples from the net realizable value to verify the appropriateness of the aforementioned value of inventory.

Other matters

Part of investments accounted for using equity method are audited by other auditor, thus our auditor’s opinion on the standalone financial statement about aforementioned investment amount and its profit or losses are according to other auditor’s report, the aforementioned amount were NT $165,128 thousands and NT $135,483 thousands, constituting 2% of total assets for the year ended December 31, 2020 and 2019, respectively; and the comprehensive profit or losses share using equity method were NT $19,557 thousands in profit and NT $17,593 thousands in losses, constituting 7% and 11% of total comprehensive profit and losses for the year ended December 31, 2020 and 2019, respectively.

24

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

Management is responsible for the preparation and fair presentation of the individual 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 individual financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the 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 the audit committee, are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Individual Financial Statements

Our objectives are to obtain reasonable assurance about whether the individual 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 individual financial statements.

As part of an audit in accordance with ROC GAAS, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

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

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

25

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

  2. 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 Quintain Steel 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 individual 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 Quintain Steel Company to cease to continue as a going concern.

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

  4. Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Company to express an opinion on the individualfinancial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the individual financial statements for the year ended December 31, 2020 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.

26

Deloitte & Touche Engagement partner Chi-Chen Li

Engagement partner Chao-Chin Yang

March 29, 2021

27

Quintain Steel Co., Ltd

Individual Balance Sheets

(In Thousands of New Taiwan Dollars)

For the years ended December 31, 2020 and 2019

C O D E

1100
1110
1120
1136
1150
1170
1200
130X
1470
11XX

1517
1535
1550
1600
1755
1760
1840
1932
1980
1990
15XX
1XXX

CODE

2100
2110
2150
2170
2219
2213
2230
2280
2322
2399
21XX

2540
2570
2580
2640
2645
2670
25XX
2XXX

3110
3200
3310
3320
3350
3300
3400
3500
3XXX
 A
S
S
E
T
S
CURRENT ASSETS
Cash (Notes 4 and 6)
Financial assets at fair value through profit or loss-current (Notes 4 and 7)
Financial assets at fair value through other comprehensive income -current
(Notes 4 and 8)
Financial assets at amortized cost－current (Notes 4 ,9, 30)
Notes receivable (Notes 4 and 10)
Accounts receivable, net (Notes 4 and 11)
Other receivables（Notes 4, 8, 11, 25, 29）
Inventories (Notes 4, 5 and 12)
Other current assets (Notes 17 and 29)
Total current assets
NONCURRENT ASSETS
Financial assets at fair value through other comprehensive income -
noncurrent (Notes 4 and 8)
Financial assets at amortized cost－noncurrent (Notes 4, 9, 30)
Investments accounted for using equity method (Notes 4 ,13, 30)
Property, plant and equipment (Notes 4, 14 ,29, 30)
Right-of-use assets (Notes 4 and 15)
Investment properties (Notes 4,16, 30)
Deferred tax assets (Notes 4, 5, 25)
Long－term receivables (Notes 4 and 8)
Other financial assets - noncurrent (Note 10)
Other noncurrent assets (Notes 4, 17 ,31)
Total noncurrent assets
TOTAL ASSETS
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term borrowings (Notes 18 and 30)
Short-term bills payable (Notes 18 and 30)
Notes payable (Note 19)
Accounts payable (Notes 19 and 29)
Other payables (Notes 20 and 29)
Payables of equipment
Current tax liabilities (Notes 4 and 25)
Lease liabilities - current (Notes 4 and 15)
Long-term liabilities due within one yea (Notes 18 and 30)
Other current liabilities (Notes 20 and 29)
Total current liabilities
NONCURRENT LIABILITIES
Long-term bank borrowings (Notes 18 and 30)
Deferred tax liabilities (Notes 4 and 25)
Lease liabilities - noncurrent (Notes 4 and 15)
Net defined benefit liabilities (Notes 4 and 21)
Guarantee deposit received
Other noncurrent liabilities (Note 20)
Total noncurrent liabilities
TOTAL LIABILITIES
EQUITY（Note 22）
Share capital
Common stock
Capital surplus
Retained earnings
Legal reserve
Special reserve
Accumulated deficit
Total retained earnings
Other equity
Treasury stock
Total equity
Total liabilities and equity		 December 31,2020 December 31,2020
％

1
-
1
1
1
3
2
14
3
26
1
-
24
29
-
13
1
-
-
6
74
100
8
7
-
1
2
-
-
-
4
-
22
21
-
-
-
-
-
21
43
49
7
1
-
2)
1)
4
2)
57
100		 December 31,2019 December 31,2019
A
M
O
U
N
T
$ 79,604
3,672
74,458
92,700
96,557
189,294
114,819
951,780

197,602


1,800,486

87,984
9,000
1,695,760
1,996,369
15,057
880,980
83,775
-
-

446,164


5,215,089

$ 7,015,575

$ 557,449
474,578
3,467
40,139
152,795
27,751
-
1,996
263,550

6,152


1,527,877

1,431,080
3,491
13,403
27,066
13,580

2,154


1,490,774


3,018,651


3,418,675


482,947

62,778
40,833
(
164,647)

(
61,036)


271,786

(
115,448)


3,996,924

$ 7,015,575
 A m
o
u
n
t
$ 50,076
7,688
73,483
94,100
130,762
162,393
83,178
842,627
63,120

1,507,427

62,252
7,000
1,389,987
2,620,408
16,102
90,491
84,335
17,050
1,955
313,885

4,603,465

$ 6,110,892

$ 699,495
419,507
12,769
17,966
129,527
42,808
3
2,287
105,000
4,847

1,434,209

872,954
6,056
14,011
30,923
180
2,761

926,885

2,361,094

3,418,675

489,770

62,778
40,833
173,141)

69,530)

352

89,469)

3,749,798

$ 6,110,892
 ％














(
(

(











(
(

(













(
(

(











(
(

(

 1
-
1
2
2
3
1
14
1
25
1
-
23
43
-
2
1
-
-
5
75
100
12
7
-
-
2
1
-
-
2
-
24
14
-
-
1
-
-
15
39
56
8
1
1
3)
1)
-
2)
61
100

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

（Please refers to Deloitte & Touche’s report at March 29, 2021）

Chairman: Stanley C.T,Wang Manager: Cheng-Cheng, Shieh Accounting Supervisor: Pi-Shan Hu

28

Quintain Steel Co., Ltd

Individual Statements of Comprehensive Income

(In Thousands of New Taiwan Dollars, except Earnings(Losses) per Share)

For the years ended December 31, 2020 and 2019

CODE
4000
OPERATING REVENUE (Notes
4, 23 and 29)
5000
OPERATING COSTS (Notes 12,
21, 24, 29)
5900
GROSS PROFIT（Losses）

OPERATING EXPENSES
(Notes 11, 21, 24, 29)
6100
Selling and marketing
expenses
6200
General and administrative
expenses
6300
Research and development
expenses
6450
Expected credit gain/(loss)
6000
Total operating
expenses
6900
LOSS FROM OPERATIONS

NON-OPERATING INCOME
AND EXPENSES
(Notes 4, 24, 29)
7100
Interest income
7010
Other income
7020
Other gains and losses
7070
Share of profit or loss of
subsidiaries, associates
and joint ventures
7050
Finance costs

7000
Total non-operating
income and
expenses
7900
PROFIT(LOSS) BEFORE
INCOME TAX
7950
INCOME TAX EXPENSE
(Notes 4, 5 and 25)
8200
NET PROFIT(LOSS) FOR THE
YEAR		 2020 ％
100
98

2

2
3
-
-

5


3)

-
-
1
4

1)

4

1
-

1
 2019
AMOUNT
$ 2,758,192

2,697,919

60,273

49,071
89,229
6,141
48

144,489

84,216)

1,264
12,570
21,939
100,000
39,038)

96,735

12,519
1,905)

14,424
 AMOUNT
$ 3,201,427

3,228,202

26,775)


55,811

95,755

6,951
236)

158,281

185,056)


1,228

9,396

18,122

37,944
45,210)

21,480


163,576 )
2,803

166,379)
 ％





(
(

(




(
(

(



(

(




(

(

(		 100
101
(
1)
2
3
-

-

5
(
6)
-
-
1
1
(
1)

1
(
5 )

-
(
5)

29

CODE
OTHER COMPREHENSIVE
INCOME or LOSSES
8310
Items that will not be
reclassified subsequently
to profit or loss:
8311
Remeasurement of
defined benefit plans
(Note 4 and 21)
8316
Unrealized gains and
losses on
investments in
Equity instruments
at fair value
through other
comprehensive income
8330
Share of Profit or Loss
of Associates &
Joint Ventures
Accounted for Using
Equity Method
8349
Income tax related to
components of other
comprehensive
income that will not
be reclassified to
profit or losses
(Note 4 and 25)
8300
Other comprehensive
income (loss) for the
year, net of income
tax
8500
TOTAL COMPREHENSIVE
INCOME FOR THE YEAR
EARNINGS (LOSS) PER
SHARE (Note 26)
9710
Basic

9810
Diluted		 2020 ％

-
1
9
-

10

11


 2019
AMOUNT
$ 535 )
27,496
251,102
107

278,170

$ 292,594

$ 0.04
0.04		 AMOUNT
$ 4,901 )

15,866

5,719 )
980

6,226

$ 160,153)

$ 0.50 )

0.50 )		 ％
(


(

(


(
(
(



(
-
-

-
-
-

5)

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

（Please refers to Deloitte & Touche’s report at March 29, 2021）

Chairman: Stanley C.T,Wang Manager: Cheng-Cheng, Shieh Accounting Supervisor: Pi-Shan Hu

30

Quintain Steel Co., Ltd Individual Statements of Changes In Equity For the years ended December 31, 2020 and 2019

(In Thousands of New Taiwan Dollars, Except Dividends Per Share)

Quintain Steel Co., Ltd
Individual Statements of Changes In Equity
For the years ended December 31, 2020 and 2019
(In Thousands of New Taiwan Dollars, Except Dividends Per Share)
Code
A1
BALANCE AT JANUARY 1, 2019
Appropriation of 2018 earnings（Note 22）
B1
Legal reserve
B3
Special reserve
B5
Cash dividends distributed by the
Company
M1
Adjustment on capital surplus through
paying dividend to subsidiaries
M7
Acquisition of partial equity from
subsidiary－Chateau Company
D1
Net loss for the year ended December 31,
2019
D3
Other comprehensive loss for the year
ended December 31, 2019, after tax
D5
Total comprehensive income/(loss) for the
year ended December 31, 2019
Z1
BALANCE AT DECEMBER 31, 2019
Q1
Disposal of investments in equity
instruments at fair value through other
comprehensive income by subsidiary
M7
Acquisition of partial equity from
subsidiary－Chateau Company
L5
Parent shares acquired by subsidiary taken
as treasury stocks
L7
Disposal of parent company shares by
subsidiary taken as treasury stock
transaction
D1
Net profit for the year ended December 31,
2020
D3
Other comprehensive income/(loss) for the
year ended December 31,
2020, net of income tax
D5
Total comprehensive income/(loss) for the
year ended December 31, 2020
Z1
BALANCE AT DECEMBER 31, 2020
 Common Share Capital
Amount
$ 3,418,675

-
-
-
-
-

-
-

-

3,418,675
-
-

-
-
-
-

-

$ 3,418,675
 Retained Earnings
Capital Surplus
Legal Reserve
Special Reserve
Unappropriated
Earnings
$ 486,837
$ 45,804
$ 24,947
$ 169,739

-
16,974
-
(
16,974 )
-
-
15,886
(
15,886 )
-
-
-
(
136,747 )
3,019
-
-
-
(
86 )
-
-
-
-
-
-
(
166,379 )

-

-

-
(
6,894)


-

-

-
(
173,273)

489,770
62,778
40,833
(
173,141 )
-
-
-
8,864
(
8,046 )
-
-
(
12,666 )
-
-
-
-
1,223
-
-
-
-
-
-
14,424

-

-

-
(
2,128)


-

-

-

12,296

$ 482,947
$ 62,778
$ 40,833
($ 164,647)

The accompanying notes are an integral part of these financial statements.
（Please refers to Deloitte & Touche’s report at March 29, 2021）		 Other Equity Total Other
Equity

$ 12,768 )
-
-
-
-
-
-
13,120

13,120


352


8,864 )
-
-

-
-
280,298

280,298

$ 271,786
 Treasury Shares
( $ 89,469 )
-
-
-

-
-

-


-


-

(
89,469 )

-
-

(
31,413 )
5,434
-

-


-

($ 115,448)
 Total Equity
Capital Shares
（Thousand
shares）
341,868

-
-
-
-
-
-

-


-

341,868

-
-
-
-
-

-


-


341,868
 Exchange
differences on
Translating
Foreign
Operations
$ 580


-

-

-
-
-

-

-


-


580

-


-
-
-
-

-


-

$ 580
 Unrealized gains
and losses on
investments in
Equity
instruments at
fair value through
other
comprehensive
income
( $ 13,348 )
-
-
-
-
-
-

13,120


13,120

(
228 )
(
8,864 )
-
-
-
-

280,298


280,298

$ 271,206











(


(










(


(
(


 (



(


 (


(

(


(
(
(
(

(

(
(


 $ 4,043,765
-
-

136,747 )
3,019

86 )

166,379 )
6,226

160,153)
3,749,798
-

20,712 )

31,413 )
6,657
14,424
278,170
292,594
$ 3,996,924

Chairman: Stanley C.T,Wang

Manager: Cheng-Cheng, Shieh Accounting Supervisor: Pi-Shan Hu

31

Quintain Steel Co., Ltd

Individual Statements of Cash Flows

(In Thousands of New Taiwan Dollars)

For the years ended December 31, 2020 and 2019

CODE
CASH FLOWS FROM OPERATING ACTIVITIES
A10000
Profit(losses) before income tax
A20010
Adjustments for：
A20100
Depreciation expense
A20200
Anticipated credit impairment losses
(reversed profit)
A20400
Net gain on financial assets at fair value
through profit or loss
A21200
Interest income
A21300
Dividend income
A22400
Share of loss (profit) of subsidiaries and
associates for using equity methods
A20900
Finance costs
A20300
Recognition of inventory valuation and
obsolescence losses
A22500
Gain on disposal or retirement of
property, plant and equipment
A24100
Unrealized foreign exchange net
loss(gain)
A24600
Value on life insurance cancellation
A29900
Gain on disposal of use-of-right asset
A30000
Changes in operating assets and liabilities:
A31130
Notes receivable
A31150
Accounts receivable
A31180
Other receivable
A31200
Inventories
A31240
Other current assets
A32130
Notes payable
A32150
Accounts payable
A32180
Other payable
A32230
Other current liabilities
A32240
Net defined benefit liability
A32200
Liabilities reserve
A33000
Cash generated from operations
A33500
Income taxes paid (refund)
AAAA
Net cash generated by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
B00010
Acquisition of financial assets at fair value
through other comprehensive profit or losses
B00030
Proceeds from the capital reduction of
financial assets at fair value through other
comprehensive profit and losses
B00100
Acquisition of financial assets at fair value
through profit and losses
B00200
Sales of financial assets at fair value through
profit or losses
B00040
Acquisition of financial assets at amortized
cost
B00050
Disposal of financial assets at amortized cost		 2020
$ 12,519
123,616
48

363 )

1,264 )

2,278 )

100,000 )
39,038
976

1,581 )
13,061

99 )

1 )
34,206

26,950 )
15,590

112,733 )

167,003 )
81
22,173
27,411
1,305

4,392 )
1,649)

128,289 )
4
128,285)
-
789

8,039 )
12,418

600 )
-		 2019

(
(
(
(
(
(
(
(
(
(
(
(
(

(
(
(		 (
(
(
(
(
(
(
(
(
(
(
(
(
(

(

(
(		 $ 163,576 )
128,362

236 )

544 )

1,228 )

89 )

37,944 )
45,210
2,076

814 )

16,453 )
45
-

24,001 )
22,971
24,995
510,649

2,733 )

624 )

46,999 )

31,702 )
1,430

2,042 )
534
407,287
3)
407,284

46,260 )
1,644

12,062 )
13,087
-
6,500
  • 32 -
CODE
B01800
Increase investment using equity method (Note
13)
B02700
Acquisition of property, plant and equipment
B02800
Disposal of property, plant and equity
B03700
Increase in refundable deposits
B03800
Decrease in refundable deposits
B04100
Surrender value arises from disposal of life
insurance
B04400
Increase in other receivables
B04500
Decrease in other receivables
B05400
Acquisition of investment property
B06700
Increase in other noncurrent assets
B07500
Interest received
B07600
Dividend received from subsidiary, associates
and financial assets at fair value through
other comprehensive profit and losses
BBBB
Net cash outflows in investment activities
CASH FLOWS FROM FINANCING ACTIVITIES
C00100
Increase in short-term loans
C00200
Decrease in short-term loans
C00500
Increase in short-term notes payable
C00600
Decrease in short-term notes payable
C01600
Issuance of long-term bank borrowings
C01700
Repayments of long-term bank borrowings
C03000
Guarantee deposits received
C04020
Payment of lease liabilities
C04500
Dividends paid
C05600
Interest paid
CCCC
Net cash flows used in financing activities
EEEE
NET INCREASE (DECREASE) IN CASH AND
CASH
EQUIVALENTS
E00100
CASH AND CASH EQUIVALENTS AT THE
BEGINNING OF THE YEAR
E00200
CASH AND CASH EQUIVALENTS, END OF
YEAR		 2020
$ 42,000 )

392,780 )
2,210

16,600 )
-
2,054

39,100 )
-

434 )
375
10,183
44,139
427,385)
4,024,048

4,180,713 )
2,940,000

2,885,000 )
1,319,765

605,000 )
13,400

3,091 )
-
38,211)
585,198
29,528
50,076
$ 79,604		 2019
(
(
(
(
(

(
(
(
(
(
(


 (
(
(
(

(
(
(
(
(
(
(
(
(

 $ 39,000 )

277,847 )
814

2,253 )
254
-
-
430
-

2,298 )
251
18,654
338,086)
2,259,023

2,356,704 )
2,060,258

2,060,000 )
624,351

511,851 )
-

2,722 )

136,747 )
39,511)
163,903)

94,705 )
144,781
$ 50,076

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

（Please refers to Deloitte & Touche’s report at March 29, 2021）

Chairman: Stanley C.T,Wang Manager: Cheng-Cheng, Shieh Accounting Supervisor: Pi-Shan Hu

  • 33 -

Quintain Steel Co., LTD.

2020 Statements of Deficit Compensated

New Taiwan Dollars
Amount
Subtotal
(173,141,590)
14,424,850
(2,128,506)
8,864,155
(12,665,073)
8,495,426
40,833,142
(123,813,022)
62,778,115
61,034,907
0		 New Taiwan Dollars
Amount
Subtotal
(173,141,590)
14,424,850
(2,128,506)
8,864,155
(12,665,073)
8,495,426
40,833,142
(123,813,022)
62,778,115
61,034,907
0
Items Amount Subtotal
Accumulated deficit at the beginning of
2020		 (173,141,590)
Netprofit after tax of 2020 14,424,850
Remeasurement of defined benefit
recognized in retained earnings		 (2,128,506)
Accumulated profit from disposal of
investments in equity instruments at
FVTOCI directly transferred to retained
earnings		 8,864,155
Difference between consideration and
carrying amount of subsidiaries’ acquired
recognized in retained earnings		 (12,665,073)
Amount of current net profit after tax plus
items other than current net profit
recognized in current retained earnings		 8,495,426
Reversal of special reserve 40,833,142
Accumulated deficit (123,813,022)
Items for compensating：
Legal reserve 62,778,115
Capital reserve-treasury stock
transactions		 61,034,907
Accumulated deficit of 2020 after
compensated		 0

Chairman: Stanley C.T,Wang

Manager: Cheng-Cheng, Shieh

Accounting Supervisor: Pi-Shan Hu

  • 34 -

Rules of Procedure for Shareholders Meetings

of Quintain Steel Co., LTD.

Comparison Table of Amended Articles

Amended Articles Current Articles ExplanatoryNotes
Article 3
Paragraph 1, 2, 3 are
omitted.
Election or dismissal of
directors or supervisors,
amendments to the articles
of incorporation, reduction
of capital, application for
the approval of ceasing its
status as a public company,
approval of competing with
the company by directors,
surplus profit distributed in
the form of new shares,
reserve distributed in the
form of new shares, the
dissolution, merger, or
demerger of the
corporation, or any matter
under Article 185,
paragraph 1 of the
Company Act,Act 26-1 and
Act 43-6 of theSecurities
Exchange Law,Act 56-1
and Act 60-2 ofRegulations
Governing the Offereing
and Issuance of Securities
by Issuers,shall be set out
and the essential contents
explained in the notice of
the reasons for convening
the shareholders meeting.
None of the above matters
may be raised by an
extraordinary motion; the
essential contents may be
posted on the website
designated by the
competent authority in
charge of securities affairs
or the corporation, and such
website shall be indicated
in the above notice.		 Article 3
Paragraph 1, 2, 3 are
omitted.
Election or dismissal of
directors or supervisors,
amendments to the articles
of incorporation, reduction
of capital, application for
the approval of ceasing its
status as a public company,
approval of competing with
the company by directors,
surplus profit distributed in
the form of new shares,
reserve distributed in the
form of new shares, the
dissolution, merger, or
demerger of the
corporation, or any matter
under Article 185,
paragraph 1 of the
Company Act,shall be set
out and the essential
contents explained in the
notice of the reasons for
convening the shareholders
meeting. None of the above
matters may be raised by an
extraordinary motion; the
essential contents may be
posted on the website
designated by the
competent authority in
charge of securities affairs
or the corporation, and such
website shall be indicated
in the above notice.		 1. To prevent TWSE Listed
Companies from
misunderstanding that all
matters other than Act 185,
paragraph 1 of the
Company Act can be raised
by extempore motions, it is
proposed to include other
regulations and provisions
that cannot be raised by
extempore motions other
than the Company Act
listed in the original
provisions before the
amendment.
  • 35 -
Paragraph 5 is omitted.
A shareholder holding one
percent or more of the total
number of issued shares
may submit to this
Corporation a proposal for
discussion at a regular
shareholders meeting. The
number of items so
proposed is limited to one
only, and no proposal
containing more than one
item will be included in the
meeting agenda. When the
circumstances of any
subparagraph of Article
172-1, paragraph 4 of the
Company Act apply to a
proposal put forward by a
shareholder, the board of
directors may exclude it
from the agenda. Provided a
shareholder proposal for
urging the corporation to
promote public interests or
fulfill its social
responsibilities may be
submitted complying with
the procedure of one
limited item in accordance
with the relevant provisions
of Article 172-1 of the
Company Act. No proposal
containing more than one
item will be included.
Following is omitted.		 Paragraph 5 is omitted.
A shareholder holding one
percent or more of the total
number of issued shares
may submit to this
Corporation a written
proposal for discussion at a
regular shareholders
meeting. The number of
items so proposed,
however, is limited to one
only, and no proposal
containing more than one
item will be included in the
meeting agenda, provided a
shareholder proposal for
urging the corporation to
promote public interests or
fulfill its social
responsibilities may still be
included in the agenda by
the board of directors. In
addition, when the
circumstances of any
subparagraph of Article
172-1, paragraph 4 of the
Company Act apply to a
proposal put forward by a
shareholder, the board of
directors may exclude it
from the agenda.
Following is omitted.		 Paragraph 6 is amended
cooperated with the
amendment of Article 172,
paragraph 5, no.
10700105410 of Company
Act.
Article 7
Paragraph 1 is omitted.
The chair shall call the
meeting to order at the
appointed meeting time and
announce the relevant
information such as the
number of non-voting
rights and the number of
sharespresented. However,		 Article 7
Paragraph 1 is omitted.
The chair shall call the
meeting to order at the
appointed meeting time.
However, when the
attending shareholders do
not represent a majority of
the total number of issued
shares,the chair may		 Paragraph 2 is amended to
improve the Company
governance and protect the
rights and interests of
shareholders.
  • 36 -
when the attending
shareholders do not
represent a majority of the
total number of issued
shares, the chair may
announce a postponement,
provided that no more than
two such postponements,
for a combined total of no
more than one hour, may be
made. If the quorum is not
met after two
postponements and the
attending shareholders still
represent less than one third
of the total number of
issued shares, the chair
shall declare the meeting
adjourned.
Followingis omitted.		 announce a postponement,
provided that no more than
two such postponements,
for a combined total of no
more than one hour, may be
made. If the quorum is not
met after two
postponements and the
attending shareholders still
represent less than one third
of the total number of
issued shares, the chair
shall declare the meeting
adjourned.
Followingis omitted.
Article 12
The election of directors
or supervisors at a
shareholders meeting
shall be held in
accordance with the
applicable election and
appointment rules
adopted by this
Corporation, and the
voting results shall be
announced on-site
immediately and
recorded, including the
names of those elected as
directors and supervisors
and the numbers of votes
with which they were
elected and failed to be
elected.
Paragraph 2 is omitted.		 Article 12
The election of directors
or supervisors at a
shareholders meeting
shall be held in
accordance with the
applicable election and
appointment rules
adopted by this
Corporation, and the
voting results shall be
announced on-site
immediately and
recorded, including the
names of those elected as
directors and supervisors
and the numbers of votes
with which they were
elected.
Paragraph 2 is omitted.		 Paragraph 1 is amended to
improve the Company
governance and protect the
rights and interests of
shareholders.
  • 37 -

Procedures for Election of Directors

Procedures for Election of Directors Procedures for Election of Directors Procedures for Election of Directors
of Quintain Steel Co., LTD.
Comparison Table of AmendedArticles
Amended Articles Current Articles Explanatory Notes
Article 3
Elections of directors at this
Corporation shall be
conducted in accordance
with the candidate
nomination system and
procedures set out in Article
192-1 of the Company Act.
When the number of
independent directors falls
below that required under
the proviso of Article 14-2,
paragraph 1 of the Securities
and Exchange Act, a
by-election shall be held at
the next shareholders
meeting to fill the vacancy.
When the independent
directors are dismissed en
masse, a special
shareholders meeting shall
be called within 60 days
from the date of occurrence
to hold a by-election to fill
the vacancies.		 Article 3
Elections of directors at this
Corporation shall be
conducted in accordance
with the candidate
nomination system and
procedures set out in Article
192-1 of the Company Act.		 It is revised in accordance
with the requirement of
setting up independent
directors for TWSE/GTSM
Listed Companies, set out in
No. 1070345233 of
Financial Superviory
Securities Corportate issued
on December 19, 2018.
Article 4
Before the election begins,
the chair shall appoint a
number of persons with
shareholder status to
perform the respective
duties of vote monitoring
and counting personnel. The
ballot boxes shall be
prepared by the board of
directors and publicly
checked by the vote
monitoring personnel before
votingcommences.		 Article 4
Before the election begins,
the chair shall appoint a
number of persons to
perform the respective
duties of vote monitoring
and counting personnel.		 It is revised that the vote
monitoring personnel shall
be with shareholder status.
Article 5
The number of directors will		 Article 5
The number of directors will		 Independent directors listed
  • 38 -
be as specified in this
Corporation's articles of
incorporation, with voting
rights separately calculated
for independent and
non-independent director
positions. Those receiving
ballots representing the
highest numbers of voting
rights will be elected
sequentially according to
their respective numbers of
votes. When two or more
persons receive the same
number of votes, thus
exceeding the specified
number of positions, they
shall draw lots to determine
the winner, with the chair
drawing lots on behalf of
any person not in
attendance.		 be as specified in this
Corporation's articles of
incorporation, with voting
rights separately calculated
for independent and
non-independent director
positions. Those receiving
ballots representing the
highest numbers of voting
rights will be elected
sequentially according to
their respective numbers of
votes. When two or more
persons receive the same
number of votes, thus
exceeding the specified
number of positions, they
shall draw lots to determine
the winner, with the chair
drawing lots on behalf of
any person not in
attendance.
If the independent directors
receiving the highest
numbers of voting rights are
not with accounting or
financial expertise, the
number of votes obtained by
candidates with accounting
or financial expertise shall
be counted separately, and
the person with the highest
number of votes shall be
elected. The remaining
number of elected positions
shall be determined in
accordance with the
aforesaid provisions.
Independent and
non-independent directors
shall be elected at the same
time, but in separately
calculated numbers elected.		 in candidates in that a
candidate nomination
system adopted, shall
possess professional
qualifications and examined
by the board of directors
before the shareholders
meetings.
Paragraph 2 is no longer
applicable and deleted.
Deleted. Article 7
If a candidate is a
shareholder, a voter must
enter the candidate's account
name and shareholder
account number in the
"candidate"column of the		 Since 2021, the candidate
nomination system is
adopted for the directors and
supervisors’ election of
TWSE/GTSM Companies,
in accordance with No.
  • 39 -
ballot; for a
non-shareholder, the voter
shall enter the candidate's
full name and identity card
number. However, when the
candidate is a governmental
organization or
juristic-person shareholder,
the name of the
governmental organization
or juristic-person
shareholder shall be entered
in the column for the
candidate's account name in
the ballot paper, or both the
name of the governmental
organization or
juristic-person shareholder
and the name of its
representative may be
entered. When there are
multiple representatives, the
names of each respective
representative shall be
entered.		 1080311451 of Financial
Supervisory Securities
Corporate issued on April
25, 2019. The candidates
nominated are well learnt by
shareholders their names,
academic experience and
other information before the
shareholders meetings. It is
not necessary to identify the
candidate’s identity with the
shareholder’s account
number or indentity card
number.
This Article is deleted.
Article 7
A ballot is invalid under any
of the following
circumstances:
1. The ballot was not
prepared by a person with
the right to convene.
2. A blank ballot is placed in
the ballot box.
3. The writing is unclear and
indecipherable or has been
altered.
4. The candidate whose
name is entered in the ballot
does not conform to the
director candidate list.
5. Other words are entered
in addition to the number of
voting rights allotted.		 Article 8
A ballot is invalid under any
of the following
circumstances:
1. A ballot was not put in the
ballot box.
2. The ballot was not
prepared by the
Corporation.
3. A blank ballot is
presented.
4. The candidate whose
name is entered in the ballot
is a shareholder, but the
candidate’s account name
and shareholder account
number does not conform
with those given in the
shareholder register, or the
candidate whose name is
entered in the ballot is a
non-shareholder, and a
cross-check that the
candidate’s name and
identitycard number do not		 Article number changes as
Article 7 is deleted.
Shareholders under certain
circumstances (such as the
board of directors fails to
give a notice for convening)
can call a meeting after
obtaining an approval from
the competent authority
according to the Article 173
of Company Act. This is
proposed to coordinate and
revise the first Clause of this
Article. In addition, the
candidate nomination
system is adopted for the
directors and supervisors’
election of TWSE/GTSM
Companies, in accordance
with No. 1080311451 of
Financial Supervisory
Securities Corporate issued
on April 25, 2019. Clause 4
and 5 of this Article is
  • 40 -
match.
5. Other words or marks are
entered in addition to the
candidate’s account name or
shareholder account number
(or identity card number).
6. The writing is unclear and
indecipherable
7. The writing or
information is failed to fill
in in accordance with
Article 7.
8. The writing or
information filled in in
accordance with Article 7
has been altered.
9. The writing or
information filled in in
accordance with Article 7
does not conform to the
actual identity after a
cross-check.
10. Other words or marks
are entered in addition to the
writing or information
required in accordance with
Article 7.
11. A ballot is written with
more than 2 candidates.		 revised, and Clause 6, 7, 8,
9, 10, 11 are deleted.
Article 8
Omitted.		 Article 9 Article number changes as
Article 7 is deleted.
Article 9
Omitted.		 Article 10 Article number changes as
Article 7 is deleted.
Article 10
Omitted.		 Article 11 Article number changes as
Article 7 is deleted.
Article 11
Omitted.		 Article 12 Article number changes as
Article 7 is deleted.
  • 41 -

Effective on May 30, 2019

Articles of Incorporation of Quintain Steel Co., LTD.

Chapter 1 General Provisions

A r t i c l e 1 ： The Corporation shall be incorporated, as a company limited by shares, under the Company Act, and its name shall be Quintain Steel Co., LTD. A r t i c l e 2 ： The business of the Corporation shall be as follows:

  1. CA01060 Steel Wires and Cables Manufacturing

  2. CB01010 Mechanical Equipment Manufacturing

  3. A401010 Livestock Farm Management

  4. A102040 Recreational Agriculture

  5. F501060 Restaurants

  6. F401010 International Trade

  7. H701010 Housing and Building Development and Rental

  8. CA05010 Powder Metallurgy

  9. CA02010 Manufacture of Metal Structure and Architectural Components

  10. 10.CA01070 Scrapped Car and Boat Dismantling and Scrap Lron and Steel Metal Processing 11.CA01020 Steel Rolling

12.CH01030 Stationery Goods Manufacturing 13.C901050 Cement and Concrete Products Manufacturing 14.F107100 Wholesale of Chemical Feedstock

15.C901040 Manufacture of Ready-mix Concrete 16.ZZ99999 All business items that are not prohibited or restricted by law, except those that are subject to special approval.

  • A r t i c l e 3 ： The Corporation may reinvest other companies due to business needs. The total amount of the Corporation’s reinvestment shall not be subject to the restriction of not more than forty percent of the Corporation’s paid-up capital as provided in Paragraph 1, Article 13 of the Company Act. Any matters regarding the reinvestment shall be fully handled in accordance with the authority of the Board of Directors.

  • A r t i c l e 4 ： The Corporation may provide endorsement and quarantee due to business needs in accordance with the Procedures for Endorsements and

  • 42 -

Guarantees of the Corporation.

A r t i c l e 5 ： The Corporation shall have its head office in Tainan, Taiwan, Republic of China, and shall be free, upon approval of the resolutions of the Board of Directors, to set up branch offices at various locations within and without the territory of the Republic of China. A r t i c l e 6 ： Public announcements of the Corporation shall be made in the prominent part of the daily or evening newspaper and circular letter where the head office is located unless specified otherwise by the Company Act and other relevant rules and regulations of the Republic of China.

Chapter 2 Stock

A r t i c l 7 ： The total capital stock of the Corporation shall be in the amount of 4,507,940,360 New Taiwan Dollars, divided into 450,794,036 shares, at ten New Taiwan Dollars, and may be paid-up in installments. A r t i c l e 8 ： The share certificates and shareholder services affairs of the Corporation are handled in accordance with the relevant rules and regulations of the Republic of China. A r t i c l e 9 ： Shareholder services affairs and rights, including all transfer of stocks, pledge of rights, loss, succession, gift, loss of seal, amendment of seal, change of address conducted by shareholders of the Corporation shall follow the “Guidelines for Stock Operations for Public Companies” unless specified otherwise by law and securities regulations. Art i cl e 1 0 ： For the transfer of shares, an application form shall be filled in, signed and sealed by the transferor and transferee, and applied to the Corporation for transfer, unless it is recorded in the Corporation shareholders list, the transfer shall not be used against the Corporation. Art i cl e 1 1 ： Any of loss or damage of the share certificates shall be handled in accordance with the regulations of the competent authority. Art i cl e 1 2 ： The transfer of shares may be suspended within sixty (60) days immediately before the date of regular meeting of shareholders, and thirty (30) days immediately before the date of any special meeting of shareholders, or within five (5) days before the day on which dividend, bonus, or any other benefit is scheduled to be paid by the Corporation.

Chapter 3 Shareholders’ Meetings

  • 43 -

Art i cl e 1 3 ： Shareholders’ meetings of the Corporation are of two types, regular meetings and special meetings, shall be convened by the Board of Directors, unless specified otherwise by Company Act. Regular meetings shall be convened one time annually within six (6) months after the close of each fiscal year; it is however not limited to one time if there is a legitimate cause and has been approved by the competent authority. Special meetings shall be convened when necessary, in accordance with the Company Act and relevant rules and regulations of the Republic of China. Art i cl e 1 4 ： If a shareholder is unable to attend a meeting, he/she may appoint a representative to attend it on his/her behalf with the rights written in the power of attorney printed by the Corporation. The representative shall follow “Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies” promulgated by the competent authority unless specified otherwise by Article 177 of the Company Act. Art i cl e 1 5 ： For a shareholders' meeting convened by the board of directors, the chairman of the meeting shall be appointed in accordance with the provisions of Paragraph 3, Article 208 of the Company Act; whereas as for a shareholders' meeting convened by any other person having the convening right, he/she shall act as the chairman of that meeting provided, however, that if there are two or more persons having the convening right, the chairman of the meeting shall be elected from among themselves. Art i cl e 1 6 ： Except in the circumstances otherwise provided for in the Company Act, a shareholder shall have one voting power in respect of each share in his/her/its possession and exercise the voting power in writing or by way of electronic transmission. Art i cl e 1 7 ： Resolutions at a shareholders' meeting shall, unless otherwise provided for in the Company Act and relevant rules and regulations of the Republic of China, be adopted by a majority vote of the shareholders present, who represent more than one-half of the total number of voting shares. Art i cl e 1 8 ： The resolutions of the shareholders’ meeting shall be recorded in the minutes in accordance with Article 183 of the Company Act.

  • 44 -

Chapter 4 Directors

Art i cl e 1 9 ： The Corporation shall have nine (9) to thirteen (13) Directors, and three (3) of them are Independent Directors. The number of Directors of every term is determined by the Board of Directors, and the term of office for Directors shall be three (3) years, and all Directors shall be eligible for re-election. The candidates nomination system is adopted for election of directors of the Corporation by Article 192-1 of the Company Act; and the shareholders shall elect the directors from among the nominees listed in the roster of director candidates. The election of independent directors and non-independent directors shall be held together; provided, however, the number of independent directors and non-independent directors elected shall be calculated separately. Art i cl e 2 0 ： In compliance with Articles 14-4 of the ROC Securities and Exchange Law, the Corporation shall establish an Audit Committee, which shall consist of all independent directors. The duties and power of the Audit Committee or the members of Audit Committee are specified in the Securities and Exchange Law and other relevant regulations. Art i cl e 2 1 ： The Board of Directors is organized by Directors, and the Directors shall elect from among themselves a Chairman of the Board of Directors, and may elect a Vice Chairman of the Board of Directors, by a majority in a meeting attended by over two-thirds of the Directors. Chairman and Vice Chairman shall conduct all affairs pertaining to the business of the Corporation in accordance with the Law, Articles of Incorporation, and the resolutions of the shareholders meetings and the Board of Directors. The Chairman of the Board of Directors shall have the authority to represent the Corporation. The powers of the Board of Directors are as follows： 1. Establishment of company operating policy.

  1. Formulation and change of company organization and establishment and abolition of branches.

  2. Examination of critical regulations and contracts.

  3. Decision of investments and reinvestments.

  4. 45 -

  5. Approval of the appointment, discharge and remuneration of managers, financial, accounting and internal audit officer of the Corporation.

  6. The appointment and discharge of the certified public accountant and other important staff and consultants.

  7. Approval, within the scope of authorized capital, of that shareholders use currency claim or the technology and goodwill demanded by the Corporation to offset the amount of equity.

  8. Approval, within the scope of authorized capital, of that the Corporation may issue new shares as the consideration payable for its acquisition of the shares of another company.

  9. Resolution of issuing the share subscription warrant for employees. 10. Resolution of buying back the shares of the Corporation for transferring to employees or eliminating equity. 11. Resolution of all other critical affairs, and power and obligations conferred by the shareholders meetings in accordance with the regulations.

  10. Art i cl e 2 2 ： The Corporation may obtain liability insurance for directors and important staff. The Board of Directors is authorized to handle all matters concerning insurance.

  11. Art i cl e 2 3 ： The Board of Directors is to determine the salary of the Directors of the Corporation, recommended and submitted by the Corporation’s Remuneration Committee, taking into account the extent and value of the services provided for the management of the Corporation and the standards of the industry domestic and oversea. The organizational procedures and power exercising methods of the aforesaid Remuneration Committee shall be determined by the Board of Directors in accordance with Article 14-6 of the Securities and Exchange Act, other laws or regulations and the orders of the authorities in charge.

  12. Art i cl e 2 4 ： Except otherwise specified in the Company Act, the directors meeting shall be adopted by a majority of the directors at the meeting attended by a majority of the directors. A Director may, by written authorization specified the scope of, appoint another Director to attend on his behalf any meeting of the Board of Directors, but no Director

  13. 46 -

may act as proxy for more than one other Director.

Art i cl e 2 5 ： The powers of the Audit Committee are as follows ：

  1. The adoption of or amendments to the internal control system pursuant to Article 14-1 of the Securities and Exchange Act.

  2. Assessment of the effectiveness of the internal control system.

  3. The adoption or amendment, pursuant to Article 36-1 of the Securities and Exchange Act, of the procedures for handling financial or business activities of a material nature, such as acquisition or disposal of assets, derivatives trading, loaning of funds to others, and endorsements or guarantees for others.

  4. Matters in which a director is an interested party.

  5. Asset transactions or derivatives trading of a material nature.

  6. Loans of funds, endorsements, or provision of guarantees of a material nature.

  7. The offering, issuance, or private placement of equity-type securities.

  8. The hiring or dismissal of a certified public accountant, or their compensation.

  9. The appointment or discharge of a financial, accounting, or internal audit officer.

  10. Annual Financial Statements and semiannual Financial Statements. 11. Other material matters as may be required by the Corporation or by the competent authority.

The matters under the preceding paragraph shall be subject to the approval of one half or more of the entire membership of the Committee and shall be submitted to the Board of Directors for a resolution. Any matter in the paragraph 1, with the exception of subparagraph 10, that has not been approved by one half or more of the entire membership of the Committee may be adopted with the approval of two thirds or more of the entire Board of Directors.

Chapter 5 Accounting

Art i cl e 2 6 ： The fiscal year for the Corporation shall be from January 1 of each year to December 31 of the same year. At the close of each fiscal year, final accounts shall be processed, submitted and agreed by one half or more of the entire Audit Committee members and approved by the Board of

  • 47 -

Directors. The following reports shall be prepared by the Board of Directors, according to the Company Act, and submitted to the regular shareholders’ meeting for acceptance: 1. the Business Report; 2. the Financial Statements; 3. the surplus earning distribution or loss off-setting proposals. Art i cl e 2 7 ： When there is profit for each fiscal year, the Corporation shall set aside not less than 1% employees’ compensation, which distributed in the form of shares or in cash by a resolution adopted by the Board of Directors. The Board of Directors is authorized to determine the qualification requirements of employees, including the employees of parents or subsidiaries of the Corporation meeting certain specific requirements. The Corporation may, by a resolution adopted by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors, have the aforesaid profit set aside not more than 1% as bonus to directors and supervisors. A report of such distribution of employees’ compensation and bonus to directors and supervisors shall be submitted to the shareholders’ meeting. The profit shall be reserved for the Corporation’s accumulated losses, and the distribution of employees’ compensation and bonus to directors and supervisors shall be set aside by ratio in the proceeding subparagraph. Article 27-1 ： When there is profit for each fiscal year, the Corporation shall set aside 10% of said profits as legal reserve after having paid all taxes and dues and accumulated losses been covered. Where such legal reserve amounts to the total paid-in capital, this provision shall not apply. The rest shall be set aside in accordance with the laws and regulations or as reversal of special reserve. If there is a balance left, combined accumulated unappropriated earnings, the surplus earning distribution proposal shall be submitted by the Board of Directors, and the resolution of cash dividend distribution for shareholders shall be made by the shareholders’ meeting. This Corporation dividend policy is implemented current and future developing programs, taking into consideration of investment environment, capital demand, domestic and international competition

  • 48 -

and shareholders’ interest. In principle, the profit distribution of shareholders dividend shall be based on changes of internal and external operating environment and changes of the Corporation current cash flow adjustments, and of that, the cash dividend is not less than 10%.

Chapter 6 Supplementary Provisions

  • Art i cl e 2 8 ： The organizational regulations of the Corporation and the detailed procedures of business operation shall be determined by the Board of Directors.

  • Art i cl e 2 9 ： In regard to all matters not provided for in these Articles of Incorporation, the Company Act and other rules and regulations shall govern.

  • Art i cl e 3 0 ： These Articles of Incorporation are drawn up on July 13, 1973, after the revision of the resolution of the shareholders meetings, have been submitted to the competent authority for approval and registration. The thirty-first Amendment revised by the shareholders’ meeting was approved and implemented on May 30, 2019.

  • 49 -

Effective on June 22, 2015 Quintain Steel Co., LTD. Rules of Procedure for Shareholder Meetings

  • Article 1: The convening of Shareholders' Meeting of the Corporation (the "Meeting") and the relevant proceeding matters, except as otherwise provided by law, regulation, or the Articles of Incorporation, shall be as provided in these Rules.

  • Article 2: The Meeting shall be held at the head office of the Corporation or at any other appropriate place that is convenient for the shareholders to attend. The time to start the Meeting shall not be earlier than 9:00 a.m. or later than 3:00 p.m. The time during which shareholder attendance registrations will be accepted shall be at least 30 minutes prior to the time the meeting commences. The place at which attendance registrations are accepted shall be clearly marked and a sufficient number of suitable personnel assigned to handle the registrations.

  • Article 3: Unless otherwise provided by law or regulation, the Corporation’s shareholders meetings shall be convened by the board of directors.

  • Each shareholder shall be informed 30 days before the convening of a regular shareholders meeting. For those shareholders holding less than 1,000 registered shares shall be informed by upload it to the Market Observation Post System (“MOPS”) 30 days before the meeting. Each shareholder shall be informed 15 days before the convening of a special shareholders meeting. For those shareholders holding less than 1,000 registered shares shall be informed by upload it to the MOPS 15 days before the meeting. The reasons for convening a shareholders meeting, the time during which shareholder attendance registrations will be accepted, the place to register for attendance and other matters for attention, shall be specified in the meeting notice and public announcement. With the consent of the addressee, the meeting notice may be given in electronic form. Election or dismissal of directors, amendments to the Articles of Incorporation, dissolution, merger, demerger, or any matter under Article 185, paragraph 1 of the Company Act, Articles 26-1 and 43-6 of the Securities Exchange Act shall be set out and the essential contents explained in the notice of the reasons for convening the shareholders meeting. None of the above matters may be raised by an extempore motion.

  • A shareholder holding one percent or more of the total number of issued shares may submit to the Corporation a written proposal for discussion at a regular shareholders meeting. The number of items so proposed, however, is limited to one only, and no proposal containing more than one item will be included in the meeting agenda. In addition, when the circumstances of any subparagraph of Article 172-1, paragraph 4 of

  • 50 -

the Company Act apply to a proposal put forward by a shareholder, the Board of Directors may exclude it form the agenda.

Prior to the book closure date before a regular shareholders meeting is held, the Corporation shall publicly announce its acceptance of shareholder proposals, and the location and time period for their submission. Where there is an election of directors at the meeting, the Corporation shall publicly announce its acceptance of the time period and number of directors candidates will be nominated. The period for submission of shareholder proposals may not be less than 10 days.

Shareholder-submitted proposals are limited to 300 words, and no proposal containing more than 300 words will be included in the meeting agenda. The shareholder making the proposal shall be present in person or by proxy at the regular shareholders meeting and take part in discussion of the proposal.

Prior to the date for issuance of notice of a shareholders meeting, the Corporation shall inform the shareholders who submitted proposals of the proposal screening results, and shall list in the meeting notice the proposals that conform to the provisions of this article. At the shareholders meeting the board of directors shall explain the reasons for exclusion of any shareholder proposals not included in the agenda.

Article 4: For each shareholders meeting, a shareholder may appoint a proxy to attend the meeting

by providing the proxy form issued by the Corporation and stating the scope of the proxy’s authorization.

A shareholder may issue only one proxy form and appoint only one proxy for any given shareholders meeting, and shall deliver the proxy from to the Corporation 5 days before the date of the shareholders meeting. When duplicate proxy forms are delivered, the one received earliest shall prevail unless a declaration is made to cancel the previous proxy appointment. After a proxy form has been delivered to the Corporation, if the shareholder intends to attend the meeting in person, the proxy cancellation shall be submitted according to the laws and regulations. If the cancellation notice is submitted overdue, votes cast at the meeting by the proxy shall prevail.

  • Article 5: The Corporation shall furnish the attending shareholders or their proxies (collectively, “shareholders”) with an attendance book to sign, or attending shareholders may hand in a sign-in card in lieu of signing in.

The Corporation shall furnish attending shareholders with the meeting agenda book, annual report, attendance card, speaker’s slips, voting slips, and other meeting materials. Where there is an election of directors or supervisors, pre-printed ballots shall also be furnished.

  • 51 -

Shareholders shall attend shareholders meetings based on attendance cards, sign-in cards, or other certificates of attendance. Solicitors soliciting proxy forms shall also bring identification documents for verification.

When the government or a juristic person is a shareholder, it may be represented by more than one representative at a shareholders meeting. When a juristic person is appointed to attend as a proxy, it may designate only one person to represent it in the meeting.

Article 6: If a shareholders meeting is convened by the board of directors, the meeting shall be chaired by the Chairman of the Board of Directors. When the Chairman of the Board of Directors is on leave or for any reason unable to exercise the powers, it shall be handled according to relevant laws and regulations. When a managing director or a director serves as chair, as referred to in the preceding paragraph, the managing director or director shall be one who has held that position for six months or more and who understands the financial and business conditions of the Corporation. The same shall be true for a representative of a juristic person director that serves as chair. If a shareholders meeting is convened by a party with power to convene but other than the Board of Directors, the convening party shall chair the meeting. When there are two or more such convening parties, they shall mutually select a chair from among themselves.

The Corporation may appoint its attorneys, certified public accountants, or related persons retained by it to attend a shareholders meeting in a non-voting capacity.

Article 7: Attendance at shareholders meetings shall be calculated based on numbers of shares.

The chair shall call the meeting to order at the appointed meeting time. However, when the attending shareholders do not represent a majority of the total number of issued shares, the chair may announce a postponement, provided that no more than two such postponements, for a combined total of no more than one hour, may be made.

If the quorum is not met after two postponements and the attending shareholders still represent less than one third of the total number of issued shares, a tentative resolution may be adopted pursuant to Article 175, paragraph 1 of the Company Act; all shareholders shall be notified of the tentative resolution and another shareholders meeting shall be convened within one (1) month.

When, prior to conclusion of the meeting, the attending shareholders represent a majority of the total number of issued shares, the chair may resubmit the tentative resolution for a vote by the shareholders meeting pursuant to Article 174 of the

  • 52 -

Company Act.

If the quorum is not met after two postponements and the attending shareholders still represent less than one third of the total number of issued shares, the chair shall declare the meeting adjourned.

Article 8: If a shareholders meeting is convened by the Board of Directors, the meeting agenda shall be set by the Board of Directors. The meeting shall proceed in the order set by the agenda, which may not be changed without a resolution of the shareholders meeting.

The provisions of the preceding paragraph apply mutatis mutandis to a shareholders meeting convened by a party with the power to convene that is not the board of directors.

The chair may not declare the meeting adjourned prior to completion of deliberation on the meeting agenda (including extempore motions), except by a resolution of the shareholders meeting. If the chair declares the meeting adjourned in violation of the rules of procedure, the other members of the board of directors shall promptly assist the attending shareholders in electing a new chair in accordance with statutory procedures, by agreement of a majority of the votes represented by the attending shareholders, and then continue the meeting.

The shareholders cannot designate any other person as chairman and continue the Meeting in the same or other place after the Meeting is adjourned.

  • Article 9: Before speaking, an attending shareholder must specify on a speaker's slip his/her shareholder account number (or attendance card number), account name, and the subject of the speech. The order in which shareholders speak will be set by the chair, and who may speak after the chair (or the designated person) calls the name.

A shareholder in attendance who has submitted a speaker's slip but does not actually speak shall be deemed to have not spoken. When the content of the speech does not correspond to the subject given on the speaker's slip, the spoken content shall prevail. Except with the consent of the chair, a shareholder (including a natural person and juristic person) may not speak more than twice on the same proposal, and a single speech may not exceed 5 minutes. If the shareholder's speech violates the rules or exceeds the scope of the agenda item, the chair may terminate the speech.

When an attending shareholder is speaking, other shareholders may not speak or interrupt unless they have sought and obtained the consent of the chair and the shareholder that has the floor; the chair shall stop any violation.

When a juristic person shareholder appoints two or more representatives to attend a

  • 53 -

shareholders meeting, only one of the representatives so appointed may speak on the same proposal. The chairman may appoint one of the representatives to speak when causing disputes or undecided issues among them.

After an attending shareholder has spoken, the chair may respond in person or direct relevant personnel to respond.

Anyone who violates the provisions on speech shall be deemed to have not spoken, and the chair may terminate the speech, and the speech shall not be included in the meeting minute and shall be handled in accordance with the provisions of Article 15.

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

Article 10: Voting at a shareholders meeting shall be calculated based the number of shares.

With respect to resolutions of shareholders meetings, the number of shares held by a shareholder with no voting rights shall not be calculated as part of the total number of issued shares.

When a shareholder is an interested party in relation to an agenda item, and there is the likelihood that such a relationship would prejudice the interests of this Corporation, that shareholder may not vote on that item, and may not exercise voting rights as proxy for any other shareholder.

The number of shares for which voting rights may not be exercised under the preceding paragraph shall not be calculated as part of the voting rights represented by attending shareholders.

With the exception of a trust enterprise or a shareholder services agent approved by the competent securities authority, when one person is concurrently appointed as proxy by two or more shareholders, the voting rights represented by that proxy may not exceed three percent of the voting rights represented by the total number of issued shares. If that percentage is exceeded, the voting rights in excess of that percentage shall not be included in the calculation.

Article 11: The shares issued by the Corporation, unless otherwise provided by law, a shareholder shall be entitled to one vote for each share held.

When the Corporation holds a shareholder meeting, it shall adopt exercise of voting rights by correspondence or electronic means. When voting rights are exercised by correspondence or electronic means, the method of exercise shall be specified in the

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shareholders meeting notice. A shareholder exercising voting rights by correspondence or electronic means will be deemed to have attended the meeting in person, but to have waived his/her rights with respect to the extempore motions and amendments to original proposals of that meeting.

A shareholder intending to exercise voting rights by correspondence or electronic means under the preceding paragraph shall deliver a written declaration of intent to the Corporation two days before the date of the shareholders meeting. When duplicate declarations of intent are delivered, the one received earliest shall prevail, except when a declaration is made to cancel the earlier declaration of intent.

After a shareholder has exercised voting rights by correspondence or electronic means, in the event the shareholder intends to attend the shareholders meeting in person, a written declaration of intent to retract the voting rights already exercised under the preceding paragraph shall be made known to this Corporation, by the same means by which the voting rights were exercised two business days before the date of the shareholders meeting. If the notice of retraction is submitted after that time, the voting rights already exercised by correspondence or electronic means shall prevail. When a shareholder has exercised voting rights both by correspondence or electronic means and by appointing a proxy to attend a shareholders meeting, the voting rights exercised by the proxy in the meeting shall prevail.

Except as otherwise provided in the Company Act and in these Articles of Incorporation, the passage of a proposal shall require an affirmative vote of a majority of the voting rights represented by the attending shareholders.

The proposal is deemed approved by the chair’s consultation with all shareholders present, and its effect is the same as that of voting; if there is any objection, it shall be voted in accordance with the provisions of the preceding paragraph.

When there is an amendment or an alternative to a proposal, the chair shall present the amended or alternative proposal together with the original proposal and decide the order in which they will be put to a vote. When any one among them is passed, the other proposals will then be deemed rejected, and no further voting shall be required. Vote monitoring and counting personnel for the voting on a proposal shall be appointed by the chair, provided that all monitoring personnel shall be shareholders of the Corporation.

Vote counting for shareholders meeting proposals or elections shall be conducted in public at the place of the shareholders meeting. Immediately after vote counting has been completed, the results of the voting, including the statistical tallies of the

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numbers of votes, shall be announced on-site at the meeting, and a record made of the vote.

  • Article 12: The election of directors at a shareholders meeting shall be held in accordance with the applicable election and appointment rules adopted by the Corporation, and the voting results shall be announced on-site immediately, including the names of those elected as directors and the numbers of votes with which they were elected, and a record made of the vote.

The ballots together with the electronic voting material for the election shall be sealed with the signatures or stamps of the monitoring personnel, hand them over to the Corporation and keep in proper custody for at least one year. If, however, a shareholder files a lawsuit pursuant to Article 189 of the Company Act, the ballots shall be retained until the conclusion of the litigation.

  • Article 13: Matters relating to the resolutions of a shareholders meeting shall be recorded in the meeting minutes. The meeting minutes shall be signed or sealed by the chair of the meeting and a copy distributed to each shareholder within 20 days after the conclusion of the meeting.

The meeting minutes shall accurately record the year, month, day, and place of the meeting, the chair's full name, the methods by which resolutions were adopted, and a summary of the deliberations and their voting results, and shall be retained for the duration of the existence of this Corporation.

”It is approved with no objection is voiced after solicitation by the chair to all the shareholders present.” shall be recorded based on the resolution method in the preceding paragraph, that there is no objection for the proposal after the chair solicits shareholders’ opinion. The number of voting rights passed shall be indicated if voting method is adopted.

Article 14: On the day of a shareholders meeting, the Corporation shall compile in the prescribed format a statistical statement of the number of shares obtained by solicitors through solicitation and the number of shares represented by proxies, and shall make an express disclosure of the same at the place of the shareholders meeting.

If matters put to a resolution at a shareholders meeting constitute material information under applicable laws or regulations or under Taiwan Stock Exchange Corporation regulations, the Corporation shall upload the content of such resolution to the MOPS within the prescribed time period.

Article 15: Staff handling administrative affairs of a shareholders meeting shall wear identification cards or arm bands.

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The chair may direct the proctors or security personnel to help maintain order at the meeting place. When proctors or security personnel help maintain order at the meeting place, they shall wear an identification card or armband bearing the word "Proctor."

At the place of a shareholders meeting, if a shareholder attempts to speak through any device other than the public address equipment set up by the Corporation, the chair may prevent the shareholder from so doing.

When a shareholder violates the rules of procedure and defies the chair's correction, obstructing the proceedings and refusing to heed calls to stop, the chair may direct the proctors or security personnel to escort the shareholder from the meeting.

  • Article 16: When a meeting is in progress, the chair may announce a break based on time considerations. If a force majeure event occurs, the chair may rule the meeting temporarily suspended and announce a time when, in view of the circumstances, the meeting will be resumed.

If the meeting venue is no longer available for continued use and not all of the items (including extempore motions) on the meeting agenda have been addressed, the shareholders meeting may adopt a resolution to resume the meeting at another venue. A resolution may be adopted at a shareholders meeting to defer or resume the meeting within five (5) days in accordance with Article 182 of the Company Act.

  • Article 17: Any matters not provided in accordance with these Rules and Procedures shall be handled in accordance with the Company Act and other relevant laws and regulations. These Rules shall take effect after having been submitted to and approved by a shareholders meeting. Subsequent amendments thereto shall be effected in the same manner.

  • Article 18: The process of the Meeting shall be uninterrupted tape-recorded and videotaped by the Corporation.

These aforesaid audiovisual materials shall be preserved for at least one year. If, however, a shareholder files a lawsuit pursuant to Article 189 of the Company Act, they shall be retained until the conclusion of the litigation.

  • Article 19: These Rules are first amended on May 9, 1998.

The second Amendment on May 30, 2002.

The third Amendment on June 30, 2006.

The fourth Amendment on May 18, 2012. The fifth Amendment on June 27, 2013. The sixth Amendment on June 6, 2014.

The seventh Amendment on June 22, 2015.

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Quintain Steel Co., LTD. Shareholdings of All Directors

  1. The total paid in capital of the Corporation is NT$3,418,674,620 and the total issued and outstanding capital stock is 341,867,462 shares.

  2. According to Article 26 of the Securities and Exchange Act, the minimum number of shares that all directors should hold is 17,093,374 shares (5%).

  3. The Corporation has established an Audit Committee, the minimum shareholding requirements for supervisors do not apply.

  4. As of the closing date of the regular shareholders’ meeting of the current year (March 30,

2021), shareholdings of individual and all Directors in the shareholder roster are as follows:

Position Name Date
elected		 Term Shareholding while elected Shareholding while elected
Current shareholding
Current shareholding
Shares Shareholding
ratio %
Shares		 Shareholding
ratio %
Chairman Stanley C.T,Wang 1080530 3 years 97,263
0.03		 97,263 0.03
Directors Chia Chi SDRY Enterprise Co.,
LTD.		 1080530 3 years 9,810,820
2.87		 11,800,820 3.45
Representative:
Pi-Shan Hu		 1100201 3 years 42,635
0.01		 42,635 0.01
Directors Baulidu Investment Co.,Ltd 1080530 3years 40,775,833
11.93		 53,220,833 15.56
Representative:
Cheng-ChengShieh		 1080530 3 years 49,741
0.01		 49,741 0.01
Representative:
Chien-Jen Chen		 1100201 3 years 46,188
0.01		 46,188 0.01
Directors Aaron Chen 1080530 3years 11,079,430
3.24		 11,079,430 3.24
Directors Fu-Tsai Liu 1080530 3years 2,131,799
0.62		 2,131,799 0.62
Directors Taiwan Steel Group Holding
Company		 1080530 3 years 29,876,609
8.74		 29,876,609 8.73
Representative:
Chun-Yi Huang		 1100317 3 years 0
0.00		 0 0.00
Representative:
Ching-Li Yan		 1080530 3 years 0
0.00		 0 0.00
Representative:
Chi-Tai Chen		 1080530 3 years 0
0.00		 0 0.00
Independent
Directors
Zue-Nan Hwang		 1080530 3 years 81,157
0.02		 81,157 0.02
Independent
Directors
Chien-Hsen Chen		 1080530 3 years 133,237
0.04		 133,237 0.04
Independent
Directors
Ming-Bang Cha		 1080530 3 years 0
0.00		 0 0.00
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