SINBON Electronics — AGM Information 2017

Jun 16, 2017

SINBON ELECTRONICS CO., LTD. Year 2016 Annual Meeting Minutes of Shareholders

Time: 9:00 a.m. on Friday, Jun. 16, 2017.

Place: 582 KUOHWA ROAD, MIAOLI 360, TAIWAN.

Total outstanding shares: 225,416,137 shares.

Total shares represented by shareholders present in person, by proxy, or via electronic voting: 183,508,891 shares.

The percentage of shares held by shareholders present in person, by proxy, or via electronic voting: 81.40 %.

Chairman: Joseph Wang (Chairman of the Board)

Recorder: Leo Chang

Chairperson Remarks (omitted)

Reports on Company Affairs:

1. 2016 Business Report (appendix 1)

2. Supervisor’s Review Report on the 2016 Financial Statements (appendix 2)

3. The Status of Domestic Unsecured Convertible Bonds

4. Remuneration to Employees, Directors and Supervisors

Proposals:

1. Proposed by the Board

Proposal:

Adoption of the 2016 Business Report and Financial Statements Explanation:

• (1) The Company’s Financial Statements, including the balance sheet, income statement, statement of changes in shareholders’ equity, and statement of cash flows, were audited by independent auditors, Lin, Hong-Kuang and Huang, Tzu-Ping of Ernst & Young CPA Firm. Also

1

Business Report and Financial Statements have been approved by the Board and examined by the supervisors.

• (2) The 2016 Business Report, independent auditors’ audit report, and the above-mentioned Financial Statements are attached as Appendix 1 and 3.

Resolution: Approval votes 175,253,542, disapproval votes 26,871, and abstention votes 8,124,138 of total votes 183,404,551. The proposal was approved.

2. Proposed by the Board

Proposal:

Adoption of the Proposal for Distribution of 2016 Profits Explanation:

• (1) The Board has adopted a Proposal for Distribution of 2016 Profits in accordance with the Company Act and Articles of Incorporation. Please refer to the 2016 PROFIT DISTRIBUTION TABLE below.

• (2) 2016 net profit after tax is NT$1,157,385,815. After setting aside the legal reserve of NT$115,738,582, deducting Other comprehensive profit (Defined benefit plan actuarial profits in 2016) NT$6,638,631, and Special surplus reserve NT$46,577,227 and then adding beginning retained earnings of NT$787,522,296, and the proposed dividend to shareholders is NT$788,956,480, the Unappropriated retained earnings remain NT$ 986,997,191.

• (3) Upon the approval of the Annual Meeting of Shareholders, it is proposed that the Board of Directors be authorized to resolve the ex-dividend date, distribution date, and other relevant issues.

• (4) In the event that, before the distribution record date, the proposed profit distribution is affected by an amendment to relevant laws or regulations, a request by the competent authorities, or a buyback of shares or issuance of new shares for transferring treasury shares to employees or for equity conversion in connection with domestic or overseas convertible corporate bonds or other convertible securities or employee stock options, it is proposed that the Board of Directors be authorized to adjust the cash to be distributed to each share based on the number of actual shares outstanding on the record date for distribution.

• (5) Please refer to the Profit Distribution Table as follows:

2

SINBON ELECTRONICS CO., LTD. PROFIT DISTRIBUTION TABLE

Year 2016

（Unit: NTD）

SINBON ELECTRONICS CO., LTD. PROFIT DISTRIBUTION TABLE Year 2016	（Unit: NTD）
Items	Total
Beginning retained earnings	$787,522,296
Less: Other comprehensive profit(Defined
benefitplan actuarialprofits in 2016)	(6,638,631)
Add: netprofit after tax	1,157,385,815
Less: 10% legal reserve	(115,738,582)
Special surplus reserve	(46,577,227)
Distributable net profit	1,775,953,671
Distributable items:
Cash Dividend to shareholders(NT$3.5/share)	(788,956,480)
Unappropriated retained earnings	$986,997,191

Resolution: Approval votes 175,253,543, disapproval votes 26,875, and abstention votes 8,124,133 of total votes 183,404,551. The proposal was approved.

3

Discussion:

1. Proposed by the Board

Amendment to the Operational procedures for Acquisition and Disposal of Assets, please proceed to discuss.

Explanation:

In order to conform to the needs of commercial practice, the company hereby proposes to amend the Operational procedures for Acquisition and Disposal of Assets. Please refer to Appendix 4 for details.

Resolution: Approval votes 175,252,500, disapproval votes 26,902, and abstention votes 8,125,149 of total votes 183,404,551. The proposal was approved.

2. Proposed by the Board

Proposal for cash dividend through capitalization of Capital Reserve, please proceed to discuss.

Explanation:

• (1) The Board has adopted a Proposal for extra cash dividend through Capital Reserve NTD$45,083,228, which was from the surplus of beyond par value of common stocks, NTD 0.2 per share to original shareholders.

• (2) Upon the approval of the Annual Meeting of Shareholders, it is proposed that the Board of Directors be authorized to resolve the ex-dividend date, distribution date, and other relevant issues.

• (3) In the event that, before the distribution record date, the proposed profit distribution is affected by an amendment to relevant laws or regulations, a request by the competent authorities, or a buyback of shares or issuance of new shares for transferring treasury shares to employees or for equity conversion in connection with domestic or overseas convertible corporate bonds or other convertible securities or employee stock options, it is proposed that the Board of Directors be authorized to adjust the cash to be distributed to each share based on the number of actual shares outstanding on the record date for distribution.

Resolution: Approval votes 175,253,440, disapproval votes 28,049, and abstention votes 8,123,062 of total votes 183,404,551. The proposal was approved.

4

Other Matters: None.

Questions and Motions: None.

Adjournment

5

Appendix 1 The 2016 Business Report

Business Report

Dear Shareholders,

First of all, I would like to thank you for your continuing support throughout the year. SINBON has responded to the changing business climate by adopting an aggressive stance in strengthening our competitiveness. Total consolidated revenue for 2016 was NT$12,925,843 thousand, a 6.73% increase compared with NT$12,111,258 thousand in 2015. Net income increased 21.76% to NT$1,161,735 thousand, compared with 2015 net income of NT$954,103 thousand. Meanwhile, basic earnings per share increased 17.31% to NT$5.15, compared with NT$4.39 a year earlier.

Operating policies and strategies, the operation result in 2016, budget implement, profitability, and research and development (R&D) status are illustrated as follows:

I. Operation Policies and Strategies :

• A. Policies:

• a. To develop a variety of component products and joint design and provide manufacturing integration Service: SINBON is providing one-stop shop services for clients in components designing and manufacturing. In order to reach the target, SINBON is continuously enhancing the R&D team abilities in the development of niche products and actively expanding vertical integration for supplying products to new segment markets, developing new products and serving for new customers.

• b. To extend agency products: Diversification strategy is using for the agency departments by investment or strategic alliances to seek cooperation opportunity through SINBON marketing channels.

• c. Growth via alliance, merge, and acquisition: In order to continuous growth in the future, the Company will seek any opportunities to invest or buy a company, which is in component industry.

6

B. Strategies：

• a. Alliance, merge, and acquisition ： In order to catch component industry high speed changes, we are looking for alliance opportunities with other companies for expanding our scope and enhance ourselves capabilities.

• b. Performance Improvement：Headquarter office has set up a full multi-functional department to evaluate and trace the performance of every individual business unit and assist everyone to upgrade and improve.

• c. Niche Markets Focus ： Continuously focusing on niche markets and high gross profit fields. Medical, Auto, Green, Industrial, and Communication industries had been picked and they will be SINBON target markets.

II. The Operation Result in 2016 : (Consolidated)

				Unit: NT$ thousands	Unit: NT$ thousands
	2015		2016		percent change
Net Sales	$12,111,258	100%	$12,925,843	100%	6.73%
Gross Profit	2,722,157	22%	3,209,102	25%	17.89%
OperatingIncome	1,066,789	9%	1,418,204	11%	32.94%
Pre-tax Income	1,370,009	11%	1,597,044	12%	16.57%
Net Income	954,103	8%	1,161,735	9%	21.76%

III. Budget implement:

The Company is not required to make public Company's 2016 financial forecast information; however, overall business revenue and net income reached 93% and 106% respectively of the internal business targets in 2016.

IV. Profitability: (Consolidated)

Profitability: (Consolidated)
Items	2015	2016
Return Of Aessts(%)	9.13	10.68
Return Of Equites(%)	17.80	20.35
Profit before tax to capital(%)	62.95	70.85
Net Profit Rate(%)	7.88	8.99
Basic EPS(NT$Dollar)	4.39	5.15

V. Research and development (R&D) status: (Consolidated)

7

Year	Results of R&D
2009~2010	1. Deeply created more related products and engineering capacities in data capture field including Single & four slot Ethernet Cradle、Vehicle cradle、and Vehicle charger, which is used in industrial terminal devices.
2009~2010	2. For the development and application of GPS module & Zigbee module, using the development of embedded system, from hardware platform design, OS porting to implement software application, and had developed the technology of embedded system for commercial PDA and industrial terminal engineering prototype products.
2011~2012	Successfully developed HDMI, DDR3, DDR4, and USB connectors and deepened photovoltaic (PV) product development, and our junction box, PV connector, and PV cable have passed TÜV and UL certification.
2013~2014	SINBON won a gold prize from iF Design Award 2013 for our latest Brezze® Nebulizer, a portable drug nebulizer developed by DigiO2 International Co., Ltd. (our re-invested enterprise) in collaboration with the NTUH Telehealth Center under the Telecare Service Project.
2015~2016	1. Tablet PC for Shun Feng logistics development to DVT stage. 2. Solar monitoring system developed to DVT stage. 3. Finished development EV charger、charging gun and AC charging pile.

In 2016 we invested a total of NT$429,818 thousand for R&D, with 12% higher than previous year. In the future, SINBON actively develop electronic parts and components for the Internet of Thing (IoT), robots, and smart home applications. At the 4[th] board meeting of 2015, we even passed a joint venture in Ray Service AVA Co., Ltd with Czech Ray Service a. s. company for creating aerospace component products. It is estimated that we will invest at least NT$300 million each year or over 3% of revenue on research and development in the future..

Finally, management team appreciates for shareholders’ greatest support and encouragement, and hope that shareholders will continue to provide us guidance and suggestions in the future. We will do our best to achieve higher profits and returns for all shareholders.

8

Best Regards,

Chairman and Chief Operation Officer Joseph Wang

9

Appendix 2 Supervisor’s Review Report on the 2016 Financial Statements

SUPERVISOR’S REVIEW REPORT

The Board of Directors has prepared the Company’s 2016 Financial Statements. The CPA firm of Ernst & Young, by CPA Lin, Hong-Kuan and Huang, Tzu-Ping, was retained to audit the Company’s Financial Statements and has issued an audited report relating to the Financial Statements. The Financial Statements, Business Report, and the Proposal for Distribution of 2015 Profits have been reviewed and determined to be correct and accurate by Supervisor. According to Article 219 of the Company Law, we hereby submit this report.

Supervisor: Lin, Min-Cheng

Chiu, Te-Chen

Kuo-Shian Investment Co., Ltd.

Representative: Wang, Kuo-Hong

April 7, 2017

10

Appendix 3 2016 Financial Statements

Independent Auditors’ Report

To Sinbon Electronics Co., Ltd.

Opinion

We have audited the accompanying consolidated balance sheets of SINBON Electronics Co., Ltd. and its subsidiaries (the “Company”) as of December 31, 2016, and 2015, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2016 and 2015, and notes to the consolidated financial statements, including the summary of significant accounting policies (together “the consolidated financial statements”).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company and its subsidiaries as of December 31, 2016 and 2015, and their consolidated financial performance and cash flows for the years ended December 31, 2016 and 2015, in conformity with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee as endorsed by Financial Supervisory Commission of the Republic of China.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of 2016 consolidated financial statements. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

11

1. Valuation for inventories

As of December 31, 2106, the Group’s net inventories amounted to NT$2,104,058 thousand. The amount of inventories was significant to the Group’s financial statements. As the fluctuation in market demand and the fast-changing technology could cause losses of obsolete and slow - moving inventories, the assessment of the inventory write-downs require significant management judgement. We therefore determined this a key audit mater.

Our audit procedures included, but not limited to, evaluating the adequacy of accounting policy around obsolete and slow-moving inventories, including historical analysis of loss ratio of scrapped inventories; evaluating stocktaking plan and selecting important storage locations to observe inventory counts to ensure inventory quantities and status; obtaining inventory aging schedule to test whether inbound and outbound records are accurate; re-calculating the unit cost of inventories; and evaluating and testing net realized value adopted by management. We also assessed the adequacy of disclosures of financial assets. Please refer to Notes 5 and 6 to the Group’s consolidate financial statements.

2. Impairment of accounts receivable

As of December 31, 2106, gross accounts receivable and allowance for bad debts by the Group amounted to NT$2,890,994 thousand and NT$31,041 thousand, respectively. Net accounts receivable represented 26% of consolidates total assets that could have significant impacts on consolidated statements. Since the collection of accounts receivable is the key factor in the working capital management of the Group, the provision for bad debts would reflect the credit risk of accounts receivable. As the adequacy of provision policy requires significant management judgement, we therefore determined this a key audit mater.

Our audit procedures included, but not limited to, evaluating and testing the design and operating effectiveness of internal controls around accounts receivable management; assessing the appropriateness of provision for bad debts; testing the correctness of the accounts receivable aging schedule, including selecting samples to check whether they were recorded in appropriate periods; analyzing the aging changes and assessing the reasonable of the accounts receivable long overdue; analyzing the trend of bad debt expense and accounts receivable turnover ratio; Selecting samples to perform the accounts receivable confirmation; and reviewing the collection of receivable in subsequent period to assess their recoverability. We also assessed the adequacy of disclosures of financial assets. Please refer to Notes 5 and 6 to the Group’s consolidate financial statements.

12

Other Matter– Making Reference to the Audits of Component Auditors

We did not audit the financial statements of certain consolidated subsidiaries, which statements reflected total assets of NT$1,516,036 thousand and NT$1,838,832 thousand, constituting 14% and 17% of consolidated total assets as of December 31, 2016 and 2015, respectively, and total operating revenues of NT$2,606,702 thousand and NT$2,720,914 thousand, constituting 20% and 22% of consolidated operating revenues for the years ended December 31 2016 and 2015, respectively. Those financial statements were audited by other auditors, whose reports thereon have been furnished to us, and our opinions expressed herein are based solely on the audit reports of the other auditors. We did not audit the financial statements of certain associates and joint ventures accounted for under the equity method whose statements are based solely on the reports of other auditors. These associates and joint ventures under equity method amounted to NT$344,367 thousand and NT$391,898 thousand, representing 3% and 4% of consolidated total assets as of December 31, 2016 and 2015, respectively. The related shares of profits from the associates and joint ventures under the equity method amounted to NT$49,003 thousand and NT$21,992 thousand, representing 3% and 2% of the consolidated net income before tax for the years ended December 31 2016 and 2015, respectively, and the related shares of other comprehensive income from the associates and joint ventures under the equity method amounted to NT$(7,099) thousand and NT$17,321 thousand, representing 2% and (27)% of the consolidated other comprehensive income for the years ended December 31, 2016 and 2015, respectively.

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 requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, Interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee as endorsed by Financial Supervisory Commission of the Republic of China and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

13

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

Those charged with governance, including audit committee or supervisors, are responsible for overseeing the financial reporting process of the Company and its subsidiaries.

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

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

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

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

14

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 the ability to continue as a going concern of the Company and its subsidiaries. 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 the Company and its subsidiaries to cease to continue as a going concern.

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

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

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 2016 consolidated

15

financial statements and are therefore the key audit matters. We describe these matters in our auditor’s 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.

We have also audited and expressed an unqualified opinion on the parent company only financial statements of the Company as of and for the years ended December 31, 2016 and 2015.

Lin, Hung Kang

Huang, Tzu Ping

Ernst & Young, Taiwan

March 9, 2017

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally accepted and applied in the Republic of China.

16

==> picture [481 x 660] intentionally omitted <==

17

==> picture [494 x 667] intentionally omitted <==

18

==> picture [527 x 669] intentionally omitted <==

19

==> picture [507 x 681] intentionally omitted <==

20

==> picture [510 x 670] intentionally omitted <==

21

==> picture [513 x 677] intentionally omitted <==

22

Appendix 4 Amendment to the Operational procedures for Acquisition and Disposal of Assets

After Before Explanation Article 9 Disposition procedures for Article 9 Disposition procedures for To be amended in acquisition or disposal of real property acquisition or disposal of real property accordance with the from or to a related party from or to a related party amendment of ….. ….. “Regulations 2.Appraisal and operating procedures 2.Appraisal and operating procedures Governing the When the Company intends to acquire When the Company intends to acquire Acquisition and or dispose of real property from or to a or dispose of real property from or to a Disposal of Assets related party, or when it intends to acquire related party, or when it intends to acquire by Public or dispose of assets other than real or dispose of assets other than real Companies”. property from or to a related party and the property from or to a related party and the transaction amount reaches 20 percent or transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more more of paid-in capital, 10 percent or more of the Company’s total assets, or NT$300 of the Company’s total assets, or NT$300 million or more, except in trading of million or more, except in trading of government bonds or bonds under government bonds or bonds under repurchase and resale agreements, or repurchase and resale agreements, or subscription or buyback of domestic subscription or redemption of domestic money market funds, which issued by money market funds, the company may securities trust companies , the company not proceed to enter into a transaction may not proceed to enter into a contract or make a payment until the transaction contract or make a payment following matters have been approved by until the following matters have been the Board of Directors and recognized by approved by the Board of Directors and the supervisors: recognized by the supervisors: …. …. Article 13 Disposition procedures for Article 13 Disposition procedures for To be amended in mergers, demergers, acquisitions, or mergers, demergers, acquisitions, or accordance with the transfer of shares transfer of shares amendment of 1.Appraisal and operating procedures 1.Appraisal and operating procedures “Regulations (1) When conducting a merger, (1) When conducting a merger, Governing the demerger, acquisition, or transfer of demerger, acquisition, or transfer of Acquisition and shares, the Company shall engage shares, the Company shall engage Disposal of Assets certified public accounts, attorneys, certified public accounts, attorneys, by Public and securities underwriters to jointly and securities underwriters to jointly Companies” reviewed the expected timetable of reviewed the expected timetable of statutory procedures and form a task statutory procedures and form a task force to implement it in accordance force to implement it in accordance with the statutory procedures. Prior with the statutory procedures. Prior to convening the Board of Directors to convening the Board of Directors to resolve on the matter, it shall to resolve on the matter, it shall engage a CPA, attorney, or securities engage a CPA, attorney, or securities underwriter to give an opinion on underwriter to give an opinion on the reasonableness of the share the reasonableness of the share exchange ratio, acquisition price, or exchange ratio, acquisition price, or

23

	After	Before	Explanation
…..	distribution of cash or other property to shareholders, and submit it to the Board of Directors for deliberation and passage.But the merger of the subsidiaries,	distribution of cash or other property to shareholders, and submit it to the Board of Directors for deliberation and passage. …..
	which are directly or indirectly
	100% held by the Company, or the
	merger between the said
	subsidiaries shall be exempted from
	the reasonableness opinion reports.
Article 14 Public disclosure of information 1. Items required to be publicly announced and standard for public announcement and regulatory filing (1) When acquiring or disposing of real property from or to a related party, or when acquiring or disposing of assets other than real property from or to a related party and the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or NT$300 million or more; provided, this shall not apply to trading of government bonds or bonds under repurchase and resale agreements, or subscription or buyback of domestic money market funds, which issued by securities trust companies. (2) Merger, demerger, acquisition, or transfer of shares (3) Losses from derivatives trading reaching the limits on aggregate losses or losses on individual contracts set out in the procedures adopted by the company. (4) The types of acquired or disbursed assets are used for business purposes and the counterparty is not related to the		Article 14 Public disclosure of information 4. Items required to be publicly announced and standard for public announcement and regulatory filing (1) When acquiring or disposing of real property from or to a related party, or when acquiring or disposing of assets other than real property from or to a related party and the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or NT$300 million or more; provided, this shall not apply to trading of government bonds or bonds under repurchase and resale agreements, or subscription or redemption of domestic money market funds. (2) Merger, demerger, acquisition, or transfer of shares (3) Losses from derivatives trading reaching the limits on aggregate losses or losses on individual contracts set out in the procedures adopted by the company. (4) Where an asset transaction other than any of those referred to in the preceding three (3) subparagraphs, a disposal of receivables by a financial institution,or an investment in	To be amended in accordance with the amendment of “Regulations Governing the Acquisition and Disposal of Assets by Public Companies”

24

	After	Before	Explanation
(5) (6) (7)	Company, the amount of the transaction reached following one of: A. NT$500 million or more for the Companies’ paid-in capital below 10 billion, B. NT$1 billion or more for the Companies’ paid-in capital over 10 billion. Acquisition or disposal by the Company in the construction business of real property for construction use, where the trading counterparty is not a related party, and the transaction amount is less than NT$500 million. Where land is acquired under an arrangement on engaging others to build on the company’s own land, engaging others to build on rented land, joint construction and allocation of housing units, joint construction and allocation of ownership percentages, or joint construction and separate sale, and the amount the company expects to invest in the transaction is less than NT$500 million. Where an asset transaction other than any of those referred to in the preceding six (6) subparagraphs, a disposal of receivables by a financial institution, or an investment in the mainland China area reaches 20 percent or more of paid-in capital or NT$300 million; provided, this shall not apply to the following circumstances: A. Trading of government bonds. B. Securities trading by investment professionals on foreign or domestic securities exchanges or over-the-counter	the mainland China area reaches 20 percent or more of paid-in capital or NT$300 million; provided, this shall not apply to the following circumstances: A. Trading of government bonds. B. Securities trading by investment professionals on foreign or domestic securities exchanges or over-the-counter markets, or subscription of securities by a securities firm, either in the primary market or in accordance with relevant regulations. C. Trading of bonds under repurchase/resale agreements, or subscription or redemption of domestic money market funds. D. Where the type of asset acquired or disposed is equipment/machinery for business use, the trading counterparty is not a related party, and the transaction amount is less than NT$500 million. E. Acquisition or disposal by the Company in the construction business of real property for construction use, where the trading counterparty is not a related party, and the transaction amount is less than NT$500 million. F. Where land is acquired under an arrangement on engaging others to build on the company’s own land, engaging others to build on rented land, joint construction and allocation of housing units, joint construction and allocation of ownership

25

	After	Before	Explanation
markets, or subscription of securities by a securities firm, either indomestic primary market or in accordance with relevant regulations, such as trading domestic corporate bonds, financial bonds, or underwriting business needed to trading securities. C. Trading of bonds under repurchase/resale agreements, or subscription or buyback of domestic money market funds, which issued by securities trust companies. (8) The calculation of the transaction amount referred to Subparagraph 5 in the preceding paragraph shall be made as follows, and “within the preceding year” as used herein refers to the year preceding the date of occurrence of the current transaction. Items that have been publicly announced as required by regulations need not be counted toward the transaction amount. A. The amount of any individual transaction. B. The cumulative transaction amount of acquisitions and disposals of the same type of underlying asset with the same trading counterparty within the preceding year. C. The cumulative transaction amount of real property acquisitions and disposals (cumulative acquisitions and disposals, respectively) within the same development project within the preceding year. D. The cumulative transaction amount of acquisitions and disposals (cumulative acquisitions and disposals,		percentages, or joint construction and separate sale, and the amount the company expects to invest in the transaction is less than NT$500 million. (5) The calculation of the transaction amount referred to Subparagraph 5 in the preceding paragraph shall be made as follows, and “within the preceding year” as used herein refers to the year preceding the date of occurrence of the current transaction. Items that have been publicly announced as required by regulations need not be counted toward the transaction amount. A. The amount of any individual transaction. B. The cumulative transaction amount of acquisitions and disposals of the same type of underlying asset with the same trading counterparty within the preceding year. C. The cumulative transaction amount of real property acquisitions and disposals (cumulative acquisitions and disposals, respectively) within the same development project within the preceding year. D. The cumulative transaction amount of acquisitions and disposals (cumulative acquisitions and disposals, respectively) of the same security within the preceding year. 5. Time limit for public announcement and regulatory filing The Company acquiring or disposing of assets with items required to be publicly announced and the

26

After Before Explanation respectively) of the same transaction amount reaching the security within the preceding standard for public announcement year. under this Article shall publicly 2. Time limit for public announce and report the relevant information within two (2) days announcement and regulatory filing commencing immediately from the The Company acquiring or disposing of date of occurrence of the event. assets with items required to be 6. Public announcement and publicly announced and the regulatory filing procedures transaction amount reaching the (1) The Company shall publicly standard for public announcement announce and report the relevant under this Article shall publicly information on the Securities and announce and report the relevant Futures Commission’s designated information within two (2) days website commencing immediately from the (2) The Company shall compile date of occurrence of the event.

• (2) The Company shall compile monthly reports on the status of derivatives trading engaged in up to the end of the preceding month by itself and any subsidiaries that are not domestic public companies and enter the information in the prescribed format into the information reporting website designated by the FSC by the 10th day of each month.

• Public announcement and regulatory filing procedures

• (1) The Company shall publicly announce and report the relevant information on the Securities and Futures Commission’s designated website

• (2) The Company shall compile monthly reports on the status of derivatives trading engaged in up to the end of the preceding month by itself and any subsidiaries that are not domestic public companies and enter the information in the prescribed format into the information reporting website designated by the FSC by the 10th day of each month.

• (3) When the Company at the time of public announcement makes an error or omission in an item required by regulations to be publicly announced and so is required to correct it, all the items shall be again publicly announced and reported in their entirety.

• (4) The Company acquiring or disposing of assets shall keep all relevant contracts, meeting minutes, log books, appraisal reports and CPA, attorney, and securities underwriter opinions at the company headquarters, where they shall be retained for five (5) years except where another act provides otherwise.

• (5) Where any of the following circumstances occurs with respect

• (3) When the Company at the time of public announcement makes an error or omission in an item required by regulations to be publicly announced and so is required to correct it in 2 days when knew , all the items shall be again publicly announced and reported in their entirety.

• (4) The Company acquiring or disposing of assets shall keep all

27

After	Before	Explanation
relevant contracts, meeting minutes, log books, appraisal reports and CPA, attorney, and securities underwriter opinions at the company headquarters, where they shall be retained for five (5) years except where another act provides otherwise. (5) Where any of the following circumstances occurs with respect to a transaction that the Company has already publicly announced and reported in accordance with the preceding article, a public report of relevant information shall be made on the information reporting website designated by the FSC within 2 days commencing immediately from the date of occurrence of the event: A. Change, termination, or rescission of a contract signed in regard to the original transaction. B. The merger, demerger, acquisition, or transfer of shares is not completed by the scheduled date set forth in the contract.	to a transaction that the Company has already publicly announced and reported in accordance with the preceding article, a public report of relevant information shall be made on the information reporting website designated by the FSC within 2 days commencing immediately from the date of occurrence of the event: A. Change, termination, or rescission of a contract signed in regard to the original transaction. B. The merger, demerger, acquisition, or transfer of shares is not completed by the scheduled date set forth in the contract.

28