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TMC AGM Information 2023

Jun 12, 2023

52014_rns_2023-06-12_585282fc-af6c-4d8b-bb2b-b2f39748ff7b.pdf

AGM Information

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Taiwan Mask Corporation

Minutes for 2023 Annual General Meeting of Shareholders

Time: May 24, 2023 (Wednesday), 09:00 am

  • Location: No. 1, Industrial East 2nd Road, Hsinchu Science Park (Darwin Hall, 2nd Floor, Science and Technology Living Hall)

  • Attendance: The total number of shares represented by shareholders and proxies in attendance was 151,363,446 (including 72,127,202 shares by electronic means), representing 73.75% of the total number of 205,230,035 issued shares (after deducting 51,216,440 shares without voting rights under Article 179 of the Company Act).

Chairperson: Sean Chen, Chairman Minute Taker: Eve Yang

Directors in Presence: Sean Chen, Chairman, Lidon Chen and Chao-Yi Wu, both directors, and WeiChen Wang (convener of the Audit Committee) and Hui-Fen Chan, both independent directors, for a total of 5 directors, which exceeds half of the 7 seats of the Board of Directors.

Attendance: Eve Yang, CFO, and Ya-Hui Cheng, CPA

  • I. Call the meeting to order: The number of shares present has reached the quorum, and the chairman announced the start of the meeting.

II. Chairperson’s opening remarks: Omitted.

III. Report:

  • (I) Please refer to Attachment 1 for the 2022 business report.

  • (II) Please refer to Attachment 2 for the report on the Audit Committee’s review of the Company’s 2022 business and accounting reports.

  • (III)Report on the Company’s distribution of employees and directors’ profit-sharing remuneration for 2022.

  • The 2022 remuneration for employees and directors has been approved by the board resolution at the meeting held on March 3, 2023. According to the Articles of Incorporation, NT$18,000,000, or 1.77% of the profit, is allocated as director remuneration; NT$102,000,000, or 10.05% of the profit, is allocated as employee remuneration, all of which will be paid in cash.

  • 1 -

  • (IV) Report on the 2022 profit and distribution of cash from capital surplus.

  • According to the provisions of Article 23-1 of the Articles of Incorporation, if the Company distributes all or part of the dividends and bonuses or legal reserve and capital surplus in the form of cash, the Board of Directors is authorized to do so with the presence of at least two-thirds of the directors and the approval of a majority of the directors present, and to report to the shareholders’ meeting.

  • The 2022 profit distribution allocates NT$2.3 per share to be distributed in cash as shareholder dividends. Distribution of cash dividends adopts the calculation method of “round down to the nearest dollar,” fractions that do not amount to a full NT$1 shall be added and recognized by the Company as other income.

  • In accordance with Article 241 of the Company Act, the capital surplus that exceeds the par value of the issued shares is distributed to shareholders in cash, at NT$0.2 per share, which is based on the shareholder register as of the record date of cash distribution, up to the amount of NT$1, with the amount below NT$ rounded off and the total amount less than NT$1 being included in other income of the Company.

  • On the condition that the abovementioned dividends are kept at NT$2.3 per share and NT$0.2 is paid from the capital surplus, if there are regulatory changes by the competent authority or changes to the Company’s capital, such as the conversion of convertible bonds into equity, which affect the number of shares outstanding before the dividends record date, the chairman is authorized to make changes to the profit distribution schedule, dividends record date and payment date and other relevant matters.

  • (V) Report on the endorsement and guarantee of the Company and its subsidiaries for the year ended December 31, 2022.

  • In accordance with the Company’s endorsement and guarantee measures, the Company and its subsidiaries shall submit the endorsement and guarantee conditions during each business year and related matters to the next annual shareholders’ meeting for review.

  • Please refer to Attachment 3 for the endorsement and guarantee of the Company and its subsidiaries for the year ended December 31, 2022.

  • (VI) Report on the Company’s 1st and 2nd series secured corporate bonds.

  • At the board meeting held on August 4, 2022, the Company was approved by the board to issue secured corporate bonds with a limit of no more than NT$1.8 billion to repay loans from financial institutions and raise working capital.

  • In 2022, the Company issued domestic secured corporate bonds in NTD twice, with a total amount of NT$1 billion. The amount and terms of each issue are as follows:

  • 2 -

Bond period Date of issue:
(year/month/day)
Types
of
bonds		 Amount issued
(NTD)		 Maturity
(year)
Annual
interest
rate
(fixed)
(%)

Date of maturity:
(year/month/day)
Guaranteeing bank
1st of 2022 2022/9/28 Bond A NT$300 million
5 years
 1.80% 2027/9/28 Mega International
Commercial Bank
Bond B NT$200 million 1.80% First Commercial
Bankof Taiwan
2nd of 2022 2022/12/27 Bond A NT$200 million
5 years
 2.20% 2027/12/27 Shanghai
Commercial and
SavingsBank
Bond B NT$300 million 2.38% Taichung
Commercial Bank
Interestpayment method Simpleinterestcalculatedandinterestpaid onceayear
Principal repayment method A single repayment ofprincipal at maturity

  • (VII) Report on the status of the issue of common shares by private placement approved by the 1st extraordinary general meeting in 2022.

  • The extraordinary shareholders’ meeting on July 26, 2022 resolved to approve the issuance of no more than 125,000 thousand common shares by private placement. In accordance with the provisions of Article 43-6 of the Securities and Exchange Act, the private placement of negotiable securities should be conducted within one year from the date of the shareholders’ meeting resolution.

  • Considering that the issuance period will soon reach its deadline, the board resolved, on March 3, 2023, to not continue the issue of common shares by private placement which was approved at the 1st extraordinary general meeting in 2022 from now until the deadline.

Present the above content for review.

  • 3 -

IV. Matters for Ratification

No. 1: (Proposed by the Board of Directors) Subject: Present the Company’s 2022 business report and financial statements for ratification.

  • Explanation: (I) The 2022 business report and financial statements were approved by the Audit Committee and the Board of Directors, where the financial statements have been audited and completed by CPAs Ya-Hui Cheng and Chien-Yu Liu from PricewaterhouseCoopers Taiwan.

  • (II) The business report, independent auditor’s report, and financial statements are available in Attachment 1, Attachment 4 and Attachment 5.

Resolution: The voting results of the motion are shown as follows. The number of votes in favor of the motion exceeded the statutory amount, and the motion was approved. The results of the voting are as follows:

Total voting
rights at the
time of voting		 Results of voting Results of voting Results of voting Shares of voting
rights of
shareholders present
(%)
150,078,078
shares		 Number in favor:
(Voting rights exercised by
electronic means:		 129,968,471
52,054,600		 shares
shares)		 86.60%
Number against:
(Voting rights exercised by
electronic means:		 42,449
12,449		 shares
shares)		 0.02%
Invalid: 0 shares 0.00%
Abstention/Did not vote:
(Voting rights exercised by
electronic means:		 20,067,158
20,060,153		 shares
shares)		 13.37%

No. 2: (Proposed by the Board of Directors)

Subject: Present the Company’s 2022 profit distribution for ratification.

Explanation: The Company’s 2022 earnings distribution proposal has been approved by the Audit Committee and the Board of Directors, and please refer to Attachment 6 of this Handbook for the earnings distribution schedule.

Resolution: The voting results of the motion are shown as follows. The number of votes in favor of the motion exceeded the statutory amount, and the motion was approved. The results of the voting are as follows.

  • 4 -
Total voting
rights at the
time of
voting		 Results of voting Results of voting Results of voting Shares of voting
rights of shareholders
present (%)
150,078,078
shares		 Number in favor:
(Voting rights exercised by
electronic means:


129,972,046
52,058,175		 shares
shares)		 86.60%
Number against:
(Voting rights exercised by
electronic means:


50,395
20,395		 shares
shares)		 0.03%
Invalid:
0		 shares 0.00%
Abstention/Did not vote:
(Voting rights exercised by
electronic means:


20,055,637
20,048,632		 shares
shares)		 13.36%

V. Matters for Discussion

No. 1: (Proposed by the Board of Directors)

Subject: The proposal to issue common shares by private placement is hereby submitted for resolution.

  • Explanation: (I) In order to raise working capital, expand the factory and purchase machinery and equipment to increase the scale of operations and repay borrowings to establish a robust financial structure to meet the needs of the Company’s long-term development, the Company intends to increase capital in cash by private placement of new shares in accordance with Article 43-6 of the Securities and Exchange Act. It is estimated that the private placement of commons stock will not exceed 75,000 thousand shares, with a par value of NT$10 per share. It is proposed to have the shareholders’ meeting authorize the board to issue shares in one to multiple rounds (no more than three times) within one year from the date of the resolution of the shareholders’ meeting and to determine the number of shares to be issued each time, depending on the market condition and the Company’s financial position.

  • (II) In accordance with Article 43-6 of the Securities and Exchange Act, the matters that should be explained for private placement are as follows:

  • (1) The basis and reasonableness for the pricing of the private placement:

    • A. The price of common shares in this private placement shall not be lower than 80% of the higher price calculated using any one of the following two bases before the pricing date.

    • a. The simple arithmetic mean of the closing prices of the common shares for either 1, 3, or 5 business days before the pricing date, after adjustment for any

  • 5 -

stock dividends, cash dividends or capital reduction.

  • b. The simple arithmetic mean of the closing prices of the common shares for 30 business days before the pricing date, after adjustment for any stock dividends, cash dividends or capital reduction.

  • B. The actual issue price, within the range of not less than the percentage resolved by the shareholders’ meeting, is authorized to be determined by the Board, depending on the negotiations with specific parties and market conditions in the future. The aforementioned pricing of private placement complies with the provisions of the Directions for Public Companies Conducting Private Placements of Securities, so it is considered reasonable.

  • (2) Selection method, purpose, necessity and expected benefits of specific persons: The placees of this private placement are limited to specific persons who meet the provisions of Article 43-6 of the Securities and Exchange Act. Potential candidates include banks, bills finance enterprises, trust enterprises, insurance enterprises, securities enterprises, or other juristic persons or institutions approved by the competent authority; natural persons, juristic persons or funds and strategic investors meeting the conditions prescribed by the competent authority; and those who have knowledge of the operations or industry development and will directly or indirectly benefit the Company’s future operations. We have not contacted any placees.

The selection of placees is necessary in response to the Company’s operation and development. It is proposed to have placees who can directly or indirectly assist the Company’s finance, business, production, technology, procurement, management, strategy, industry integration, sustainable development, etc., to strengthen the Company’s competitive advantages and improve operational efficiency and long-term development, which will have a positive effect on shareholder equity. It is proposed to authorize the board to review the relevant qualifications of placees.

  • (3) Necessary reasons for private placement:

  • Private placement can be quick and easy in achieving the goal of drawing strategic investors, and there are restrictions on the transfer of private placement stocks, which can ensure a long-term collaborative relationship between the Company and strategic investors. Authorizing the board to conduct private placement in response to the actual needs of the Company can also effectively improve the liquidity and flexibility of the Company’s financing.

  • (4) Use of funds and expected benefits:

  • 6 -

    • Depending on the market condition and the situation of the specific persons, we will organize one to multiple rounds (no more than three times) of private placement within one year after the date of approval by the shareholders’ meeting resolution. The purpose of each private placement is to raise operating capital, expand the factory and purchase machinery and equipment to increase the scale of operations, repay borrowings to build a robust financial structure to meet the needs of the Company’s long-term development. After each round of private placement and the use of funds are completed, it is expected that the Company’s competitiveness and operational efficiency can be improved, which will promote the Company’s stable growth and be beneficial to shareholders’ equity.

  • (III) The rights and obligations of the common shares of the private placement are the same as those of the Company’s issued common shares. However, according to Article 43-8 of the Securities and Exchange Act, the shares of private placement shall be restricted from transfer within three years from the delivery date. After three years from the date of delivery of the private placement, the Company intends to obtain a letter of consent from the Taiwan Stock Exchange to approve the listing and trading in accordance with the relevant laws and regulations before reporting to the competent authorities to complete the public offering procedures and apply for listing and trading.

  • (IV) For this private placement of common shares, it is proposed to request the shareholders’ meeting to authorize the chairman or his designated person to sign and negotiate all contracts and documents related to the private placement on behalf of the Company and handle all matters related to the private placement for the Company.

  • (V) The number of shares, issue price, terms and conditions, planning items and other outstanding matters related to the private placement of common shares are proposed to the shareholders’ meeting to authorize the Board of Directors to determine, depending on the market condition and the needs of the Company’s operations. In the event that the regulations of the competent authorities or objective circumstances require future changes, the Board of Directors shall also be authorized to handle this by following the relevant regulations.

  • Supplementary Note: A letter from shareholder account No. 134862, Securities and Futures Investors Protection Center, requesting the Company to explain to its shareholders the purpose of the private placement and the impact on the managerial control.

  • I. On March 3, 2023, the Board of Directors resolved to conduct a private placement of

  • 7 -

common stock (hereinafter referred to as “the private placement”). The private placement is subject to the approval of the annual general meeting of shareholders on May 24, 2023. The explanation of the purpose of the private placement and that there will not be significant changes to the managerial control is shown as follows:

  1. Purpose of private placement:

  2. The purpose of the private placement is to draw strategic investors, and there are restrictions on the transfer of private placement stocks, which can ensure a long-term collaborative relationship between the Company and strategic investors. Authorizing the board to conduct private placement in one or multiple issues in response to the actual needs of the Company can also effectively improve the liquidity and flexibility of the Company’s financing.

  3. No significant changes to managerial control:

  4. The private placement will issue no more than 75,000 thousand shares, completed in one or multiple issues (no more than three times). If fully raised, the Company’s paid-in capital will reach NT$3.512 billion (including the current paid-in capital, full conversion of convertible bonds, and privately placed common stock). Privately placed equity will only account for 21.36% of the paid-in share capital, and the private placement will be conducted once or in separate issues within one year from the date of the board’s approval, so it will not have a significant change to the managerial control.

Please be informed of the above supplementary note.

Resolution: The voting results of the motion are shown as follows. The number of votes in favor of the motion exceeded the statutory amount, and the motion was approved. The results of the voting are as follows.

Total voting
rights at the
time of
voting		 Results of voting Results of voting Results of voting Shares of
voting rights
of
shareholders
present(%)
150,078,078
shares		 Number in favor:
(Voting rights exercised by
electronic means:		 106,307,598
28,393,727		 shares
shares)		 70.83%
Number against:
(Voting rights exercised by
electronic means:		 21,965,818
21,935,818		 shares
shares)		 14.63%
Invalid: 0 shares 0.00%
Abstention/Did not vote:
(Voting rights exercised by
electronic means:		 21,804,662
21,797,657		 shares
shares)		 14.52%
  • 8 -

No. 2: (Proposed by the Board of Directors) Subject: Present amendments to provisions of the Company’s Article of Incorporation for deliberation.

Explanation: In response to the Company’s operation, it is proposed to amend the provisions of the Articles of Incorporation. For the comparison table of the amended provisions, please refer to Attachment 7.

Resolution: The voting results of the motion are shown as follows. The number of votes in favor of the motion exceeded the statutory amount, and the motion was approved. The results of the voting are as follows.

Total voting rights
at the time of
voting		 Results of voting Results of voting Results of voting Shares of voting rights
of shareholders
present(%)
150,078,078 shares Number in favor:
(Voting rights
exercised by electronic
means:



128,261,807
50,347,936		 shares
shares)		 85.46%
Number against:
(Voting rights
exercised by electronic
means:



51,731
21,731		 shares
shares)		 0.03%
Invalid:
0		 shares 0.00%
Abstention/Did not
vote:
(Voting rights
exercised by electronic
means:




21,746,540
21,757,535		 shares
shares)		 14.50%

VI. Election

No. 1: (Proposed by the Board of Directors) Subject: It is proposed to hold re-election of directors.

  • Explanation: (I) The term of office of the 12th session of directors will expire on March 17, 2023, and it is proposed to hold re-election at the annual general meeting.

  • (II) 7 seats of directors (including 3 independent directors) will be elected at the general meeting this year. In accordance with Article 15 of the Company’s Articles of Incorporation, the election of directors is based on the candidate nomination system, and the newly elected directors and independent directors will serve from the date of the election until the expiration of the terms, from May 24, 2023 to May 23, 2026.

  • 9 -

  • (III) The list of candidates for the election of directors was approved by the Board of Directors on March 3, 2023. Please refer to Attachment 8 of this Handbook for their academic qualifications, experience, number of shares held and other relevant information.

  • (IV) The election is conducted in accordance with the “Procedures for Election of Directors” of the Company. Please refer to Appendix 2 of the handbook.

  • Election results: The list of elected directors and independent directors and the number of rights elected are as follows:

Account number or
Name of account or person’s Number of rights
Job title personal identification
name elected
number
Director 187613 Sean Chen 126,780,765 votes
Director 224012 Lidon Chen 125,265,347 shares
Director 187750 Chao-Yi Wu 121,492,502 shares
Director 196562 Youe Chung Capital
Corporation, Representative:
Ming-ChungChang		 120,576,822 shares
Independent
Director		 D120** Wei-Chen Wang 115,066,339 shares
Independent
Director		 92965 Huan-Kuei Cheng 114,690,166 shares
Independent
Director		 281862 Hui-Fen Chan 114,618,878 shares

VII. Other motions

No. 1: (Proposed by the Board of Directors) Subject: Propose the lifting of the restrictions on the non-compete clause of new directors and their representatives for deliberation.

  • Explanation: (I) In accordance with Article 209 of the Company Act, “A director who performs acts for himself/herself or others within the scope of the Company’s business shall explain the material content of his/her acts to the shareholders’ meeting and obtain their approval.

  • (II) For the newly elected director of the Company and their representatives holding a position in another company, please refer to Attachment 9 of this Handbook, and it is intended to propose to the 2023 regular shareholders’ meeting to agree to release the director from the non-compete restriction from the date he/she assumes office, provided that the interests of the Company are not prejudiced.

  • 10 -

Supplementary Note: A letter from shareholder account No. 134862, Securities and Futures Investors Protection Center, requesting the Company to explain to its shareholders the content of “Propose the lifting of the restrictions on the noncompete clause of new directors and their representatives for deliberation”, the companies and positions where the directors and the representatives concurrently serve, the main areas of business of the companies, and the possible conflicts of interest arising from holding such positions:

Shareholders are requested to refer to Attachment 9 for the positions held by the new directors and their representatives in other companies and the main areas of business of these companies. The positions held do not create conflicts of interest with the Company.

Please be informed of the above supplementary note.

Resolution: The voting results of the motion are shown as follows. The number of votes in favor of

the motion exceeded the statutory amount, and the motion was approved. The results of the voting are as follows.

Total voting rights
at the time of
voting		 Results of voting Results of voting Results of voting Shares of voting rights
of shareholders present
(%)
150,078,078 shares Number in favor:
(Voting rights exercised
byelectronic means:

128,108,992
50,195,121		 shares
shares)		 85.36%
Number against:
(Voting rights exercised
byelectronic means:

170,173
140,173		 shares
shares)		 0.11%
Invalid:
0		 shares 0.00%
Abstention/Did not
vote:
(Voting rights exercised
byelectronic means:

21,798,913
21,791,908		 shares
shares)		 14.52%

VIII. Extraordinary Motions: None.

There were no questions from shareholders at the meeting.

IX. Ending of meeting: At 09:30 am on the same day, the chairperson announced the

ending of the meeting.

  • 11 -

[Attachment 1]

Taiwan Mask Corporation 2022 Business Report

To begin with, I would like to express my appreciation to all shareholders for their support. Due to the uncertainty in the global situation, changes brought by the pandemic, the impact of inflation and the protectionist strategies employed by many countries, the supply chain has been reorganized and unbalanced, which has also affected the development of the semiconductor industry. With the continuous and stable strategic planning and the timely and appropriate introduction of new production capacity and technologies, the management team and all employees of Taiwan Mask Corporation have been working with our supply chain partners and growing with our strategic clients, and the 2022 revenue has continued to grow and already hit a record high.

TMC’s 2022 parent-only net operating revenue reached NT$3.888 billion, up 40% over the previous year, and net profit after tax was NT$704 million. In terms of operational performance, we continue to upgrade technologies and improve production capacity and manufacturing quality, shortening lead times and improving customer satisfaction by strengthening organizational functions and transforming management systems. Taiwan Mask Corporation has successfully deployed mid-range and high-end photomask manufacturing services and expanded its photomask foundry services to strategic partners, significantly increasing its revenue and profitability.

TMC continues to grow in its core business and expand its strategic deployment. In addition, the group’s subsidiaries also focus on the development of their own core businesses and expand related synergistic businesses in order to create maximum benefits. Looking forward to 2023, in response to the growth of the semiconductor market, TMC will,

  1. Continue to strengthen its operations, quality improvements, improve quality and yield, build the production capacity and order acceptance of high-end process photomasks, lower manufacturing cost, optimize customer service, and to maximize current production line’s performance.

  2. Continue to expand the photomask business required for 40nm technology for 12-inch wafers: After the successful mass production of 65nm photomasks, we will actively expand photomask manufacturing services for 12-inch wafer fabs in 2023, and introduce the mass production of 40nm photomask and plan investment in manufacturing technology and production services for 28nm photomasks.

  3. 12 -

  4. The Group’s synergy integration and full performance: Under the foundation of photomask service by the parent company, combining with its subsidiaries, including Miracle Tech’s foundry management service, Aptos Tech’s packaging and testing service, Xsense Tech’s heat dissipation substrate production, Innova Vision’s contact lens manufacturing and Digital-Can Tech’s laminate manufacturing, there are expectations to create more values for shareholders through the Group’s internal collaborations and the effective sharing of resources and management.

  5. Put ESG-related operations and management into practice: Since the establishment of the Taiwan Mask Charity Foundation, we have continued to pay attention to and commit ourselves to social care and care for the disadvantaged. With the joint participation of the Group and employees, we have been trying to realize the philosophy of “Doing good and causing good” and take actions to co-create a “society with common good”. In addition, the subsidiary Adl Engineering is working toward the goals of energy creation and storage. We also encourage disruptive innovation in our approach for research and development projects, and are committed to solving energy issues and fulfilling our corporate social responsibilities.

Wishing you all

good health, good luck and prosperity.

Chairman: Managerial Officer: Accounting Officer:

==> picture [46 x 48] intentionally omitted <==

  • 13 -

[Attachment 2]

Taiwan Mask Corporation

Audit Committee’s Audit Report

We have reviewed the Company’s 2022 business report, financial statements and earnings distribution proposal prepared by the board of directors. The financial statements have been audited by CPA Ya-Hui Cheng and CPA Chien-Yu Liu of PricewaterhouseCoopers Taiwan, to which the firm has issued an independent auditor’s report. The Audit Committee found no misstatement in the above, and hereby presents this report in accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act.

For

The 2023 Annual General Meeting

==> picture [97 x 93] intentionally omitted <==

Taiwan Mask Corporation

==> picture [59 x 71] intentionally omitted <==

Audit Committee convener: Wei-Chen Wang

March 3, 2023

  • 14 -

[Attachment 3]

Endorsement and guarantee of the Company and its subsidiaries for the year ended December 31, 2022

Table 2
No.
(Note 1)
0
T
C
1
A
2
M
(
.
3
M
C
3
M
C		 Endorser/ guarantor
aiwan Mask
orporation
DL Energy Corp
iko-China Enterprise
Shanghai) Co., Ltd.

iracle Technology
O., LTD.
iracle Technology
O., LTD.		 Name of Guaranteed Party
Relationship
Company
(Note 2)
echnology
D.
2

chnology
3

echnology
D.
3

echnology
ion
aiwan
1

chnology
1
 Limit of
endorsement and
guarantee for a
single enterprise
(Note 3, 4, 5, 6)
$ 229,550
14,374
344,788
178,503
178,503
M		 Taiwan Mask Corporation and Subsi
Endorsements and Guarantees to O
January 1 to December 31, 202
aximum Balance
for the Period
Ending Balance
Amount Actually
Drawn
$ 225,505 $ 214,970 $ -
19,500 19,500 19,500
224,808 224,808 224,808
150,000 150,000 150,000
150,000 - -		 diaries
thers
2
Amount of
Endorsement /
Guarantee
Collateralized by
Properties
$ -
19,500
224,808
150,000
-
Ratio of
Accumulated
Endorsement/
Guarantee to Net
Equity per Latest
Financial
Statements
4.73%
40.70%
65.20%
33.61%
-		 Unit: NT$Thousand
(Unless otherwise specified)
Maximum
Endorsement/
Guarantee Amount
Allowable
(Note 3, 4, 5, 6)
Guarantee
Provided
by Parent
Company
to
Subsidiary
Guarantee
Provided
by
Subsidiary
to Parent
Company
Guarantee
Provided to
Subsidiaries
in Mainland
China
Note
$ 1,818,768
Y
N
N
Note 3
19,166
N
Y
N
Note 4
344,788
N
Y
N
Note 5
178,503
N
N
N
Note 6
178,503
N
N
N
Note 6





Miracle T
CO., LT
Aptos Te
INC.
Miracle T
CO., LT
Xsense T
Corporat
(B.V.I.) T
Branch
Aptos Te
INC.

Note 1: The description of the number columns are as follows:

  • (1). Fill in 0 for the issuer.

  • (2). The investee company is numbered in sequence starting from Arabic numeral 1 according to company type.

Note 2: The relationship between the guarantor and the guarantee are one of the seven types indicated below:

  • (1) A company with which it does business.

  • (2)A company in which the Company directly and indirectly holds more than 50% of the voting shares.

  • (3) A company that directly and indirectly holds more than 50% of the voting shares in the Company.

  • (4) Companies in which the Company holds, directly or indirectly, 90%, or more of the voting shares may make endorsements/guarantees for each other.

  • (5) A company that is mutually insured by a contract between peers or co-founders based on the needs of the contracted work.

  • (6). A company that is guaranteed by all contributing shareholders in proportion to their shareholdings due to a joint investment relationship.

  • (7). Companies that are engaged in joint and several guarantees for the performance guarantee of pre-sale housing sales contracts in accordance with the regulations of the Consumer Protection Act.

Note 3: The Company's endorsement and guarantee practices for others provide that:

  • (1). The total amount of the Company's external endorsement guarantee shall not exceed 30% of the Company's paid-in capital.

  • (2). The amount of business transactions refers to the higher of the amount of goods purchased or sold between the parties.

  • (3). Companies with which the Company has a parent-child relationship: The amount of endorsement and guarantee for a single enterprise shall not exceed 10% of the Company's paid-in capital and the paid-in capital of the company being endorsed and guaranteed. (4). The aggregate amount of the endorsement and guarantee of the Company and its subsidiaries as a whole shall not exceed 40% of the net worth of the Company, of which the endorsement and guarantee of a single subsidiary shall not exceed 20% of the net worth of the Company.

Note 4: Subsidiary - ADL Energy Corp Endorsement and Guarantee Procedures:

  • (1). The aggregate amount of cumulative external endorsement guarantees shall not exceed 40% of the net value of the Company's most recent audited or reviewed financial statements.

  • 2). The amount of the endorsement guarantee for a single enterprise shall not exceed 30% of the net value of the company's most recent audited or reviewed financial statements.

  • (3). The Company and its subsidiaries shall state in the shareholders' meeting the necessity and reasonableness of any endorsement or guarantee of more than 50% of the net value of the Company's most recent audited or reviewed financial statements. Note 5: Miko-China Enterprise (Shanghai) Co., Ltd. Endorsement and Guarantee Procedures: The total amount of endorsement guarantee liability is limited to RMB 30 million, and the amount of endorsement guarantee for a single enterprise shall not exceed RMB 30 million; however, for the parent company that directly or indirectly holds, through a subsidiary, more than 50% of the common stock equity of a company, it may endorse up to its net value.

Note 6: Subsidiary - Miracle Technology Co., Ltd. Endorsement and Guarantee Procedures:

The aggregate amount of cumulative external endorsement guarantees shall not exceed 40% of the net value of the Company's most recent audited or reviewed financial statements.

  • 15 -

[Attachment 4]

Independent Auditors’ Report

(112) Tsai-Sheng-Bao-Zi No. 22004222

To Taiwan Mask Corporation,

Opinions

We have audited the accompanying consolidated balance sheets of Taiwan Mask Corporation and its subsidiaries (the “Group”) as of December 31, 2022 and 2021, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years ended December 31, 2022 and 2021, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of the other independent auditors, as described in the Other matters section of our report, the accompanying consolidated financial statements present fairly, in all material aspects, the consolidated financial position of the Group as of December 31, 2022 and 2021, and its consolidated financial performance and its consolidated cash flows for the years ended December 31, 2022 and 2021 in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in Taiwan. Our responsibilities under those standards are further described in the Independent Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. Based on our audits and the reports of the other independent auditors, 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 the consolidated financial statements of fiscal year 2022. These matters were addressed in the context of our audit of the consolidated financial statements as a

  • 16 -

whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

Key audit matters for the TMC Group’s consolidated financial statements in fiscal year 2022 are stated as follows:

Evaluation of Inventories

Explanation

Refer to Note 4(14) for the accounting policies on the evaluation of inventories, Note 5(2) for the uncertainty of accounting estimations and assumptions for evaluation of inventories, and Note 6(5) for the detailed description of inventory accounts. The inventory amount and allowance for inventory valuation loss as of December 31, 2022 were NT$515,289 thousand and NT$132,759 thousand, respectively.

The Group is primarily engaged in mask and integrated circuit services in the semiconductor industry. Due to rapid technological innovations, short life-cycle and competition within the mask industry, the risk of price fluctuations, Loss on decline in value of inventories and obsolescence is higher than that of other industries. Management evaluates inventories stated at the lower of cost and net realizable value. Since the evaluation of inventories is subject to management’s judgment and the accounting estimations will have significant influence on the inventory values, the evaluation of inventories has been identified as one of the key audit matters.

How our audit addressed the matter

We have performed primary audit procedures for the above matter as follows:

  1. Understand and evaluate the accounting policy for the provision of allowance for losses on decline in value of inventories.

  2. Perform test to evaluate the ageing statement of inventories and the statement of lower of cost and net realizable value of inventories, including validating the supporting documents related to the date of inventory movement to confirm the correct ageing classification, and validating the supporting documents related to the net realizable value to assess and confirm the reasonableness of the net realizable value determination.

  3. Verify the reasonableness of allowance for inventory valuation loss.

Income recognition

Explanation

  • 17 -

For the accounting policy on income recognition, please refer to Note 4(29) of the financial report. For sales revenue, please refer to Note 6(22); the operating income in fiscal year 2022 was NT$7,741,118 thousand.

The Group mainly produces and sells products such as masks and integrated circuits used in semiconductors, and has a large and diversified sales base. Trading conditions vary according to market conditions and customer needs. Considering that sales revenue is a major transaction that has a significant impact on the consolidated financial statements, we believe that the recognition of sales revenue is one of the most important matters to be considered in this year’s audit.

How our audit addressed the matter

We have performed primary audit procedures for the above matter as follows:

  1. Understand the type of major income and assess internal operations, review revenue recognition and accounting treatment.

  2. Obtain the sales revenue statement, sample the sales transactions, and verify the relevant documents to determine the appropriateness of the sales revenue.

  3. Execute the cut-off test for the sales receipts transaction for a certain period of time before and after the closing date, and confirm that the account is correct at the time of entry.

Other matters–Parent company only financial reports

We have audited and expressed an unmodified opinion on the parent company only standalone financial statements of Taiwan Mask Corporation as of and for the years ended December 31, 2022 and 2021.

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 the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed and issued into effect by the Financial Supervisory Commission, 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.

  • 18 -

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

Those charged with governance, including the Audit Committee, are responsible for overseeing the Group’s financial reporting process.

Independent 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 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 ROC AS 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 conducted in accordance with ROC AS, we exercise professional judgment and professional skepticism throughout the audit. We also conduct the following undertakings:

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

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

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

  4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty - 19 -

exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our 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 report. However, future events or conditions may cause the Group to cease to continue as a going concern.

  1. 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.

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

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

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 2022 consolidated financial statements of the current period and are therefore deemed 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 auditor’s report because the adverse consequences of doing so would reasonable are expected to outweigh the public interest benefits of such communication.

  • 20 -

PricewaterhouseCoopers Taiwan

Ya-Hui Cheng

Accountant

Chien-Yu Liu

Securities and Futures Bureau of Financial

Supervisory Commission of the Executive Yuan Approval Certificate No. 0960072936 Financial Supervisory Commission of the

Executive Yuan

Approval Document for Attestation: Jin-GuanZheng-Shen-Zi No. 1090350620

March 3, 2023

  • 21 -

Taiwan Mask Corporation and Subsidiaries Consolidated Balance Sheets December 31, 2022 and 2021

Assets Notes
6(1)
6(2) and 8
6(3) and 8
6(22)
6(4) and 7
6(4)
6(4) and 7
7
6(5)
6(2) and 8
6(3) and 8
6(6)
6(7) and 8
6(8)
6(10) and 8
6(11)
6(29)
6(12)		 December31,2022

Amount

%
$ 1,749,957
10
1,584,598
9
160,465
1
140,231
1
1,361
-
1,501,012
8
2,346
-
13,751
-
42,652
-
382,530
2
280,245
2
44,734
-
5,903,882
33
2,896,557
16
507,602
3
124,565
1
5,883,661
33
550,611
3
170,346
1
497,180
3
9,365
-
1,349,137
7
11,989,024
67
$ 17,892,906
100		 Unit: NT$Thousand
December31,2021
Amount

%
$ 2,681,819
17
3,603,920
22
38,338
-
155,763
1
63
-
1,263,748
8
16,812
-
68,997
-
22,600
-
403,717
3
121,866
1
29,897
-
8,407,540
52
1,433,752
9
39,925
-
164,707
1
4,086,361
26
652,652
4
173,614
1
496,804
3
8,060
-
690,980
4
7,746,855
48
$ 16,154,395
100
Amount

$ 1,749,957
1,584,598
160,465
140,231
1,361
1,501,012
2,346
13,751
42,652
382,530
280,245
44,734
5,903,882
2,896,557
507,602
124,565
5,883,661
550,611
170,346
497,180
9,365
1,349,137
11,989,024
$ 17,892,906		 Amount

$ 2,681,819
3,603,920
38,338
155,763
63
1,263,748
16,812
68,997
22,600
403,717
121,866
29,897
8,407,540
1,433,752
39,925
164,707
4,086,361
652,652
173,614
496,804
8,060
690,980
7,746,855
$ 16,154,395
Current assets
1100
Cash and Cash Equivalents
1110
Financial Assets at Fair Value
Through Profit or Loss - Current
1136
Financial Assets at Amortized Cost -
Current
1140
Contract Asset - Current
1150
Notes Receivables (Net)
1170
Accounts Receivables (Net)
1180
Accounts Receivables - Related
Parties (Net)
1200
Other Receivables
1220
Tax Assets
130X
Inventories
1410
Prepayments
1470
Other Current Assets
11XX
Total Current Assets
Non-Current Assets
1510
Financial Asset at Fair Value Through
Profit or Loss - Non Current
1535
Financial Assets at Amortized Cost -
Non Current
1550
Investment under Equity Method
1600
Property, plant and equipment
1755
Right-of-use Asset
1760
Investment property (Net)
1780
Intangible assets
1840
Deferred Income Tax Assets
1900
Other Non-Current Assets
15XX
Total Non-Current Assets
1XXX
Total Assets

(Continued)

  • 22 -

Taiwan Mask Corporation and Subsidiaries Consolidated Balance Sheets December 31, 2022 and 2021

Liabilities and Equities Notes
6(13)
6(2)
6(22)
7
6(14)
6(16)
6(15)
6(16)
6(29)
6(18)
6(19)
6(20)
6(21)
6(18)


9
11		 December 31,2022
Amount

%
$ 4,624,525
26
5,697
-
232,778
1
81
-
417,175
2
284
-
837,213
5
178,854
1
-
-
32,571
-
611,473
4
39,114
-
6,979,765
39
2,609,044
14
3,167,974
18
121,124
1
527,098
3
16,512
-
34,754
-
2,428
-
6,478,934
36
13,458,699
75
2,564,465
14
1,251,681
8
769,952
4
1,729,293
10
10,508
-
(
1,778,979) (
10 )
4,546,920
26
(
112,713) (
1 )
4,434,207
25
$ 17,892,906
100		 Unit: NT$Thousand
December 31,2021
Amount

%
$ 4,376,766
27
-
-
179,315
1
66
-
477,232
3
-
-
742,008
5
186,481
1
10,964
-
31,758
-
70,391
1
39,281
-
6,114,262
38
1,657,049
10
2,651,808
16
110,989
1
623,883
4
14,999
-
6,908
-
100,646
1
5,166,282
32
11,280,544
70
2,556,735
16
1,315,828
8
656,037
4
1,470,151
9
4,032
-
(
941,423) (
6)
5,061,360
31
(
187,509) (
1)
4,873,851
30
$ 16,154,395
100
Amount

$ 4,624,525
5,697
232,778
81
417,175
284
837,213
178,854
-
32,571
611,473
39,114
6,979,765
2,609,044
3,167,974
121,124
527,098
16,512
34,754
2,428
6,478,934
13,458,699
2,564,465
1,251,681
769,952
1,729,293
10,508
(
1,778,979)
4,546,920
(
112,713)
4,434,207
$ 17,892,906		 Amount

$ 4,376,766
-
179,315
66
477,232
-
742,008
186,481
10,964
31,758
70,391
39,281
6,114,262
1,657,049
2,651,808
110,989
623,883
14,999
6,908
100,646
5,166,282
11,280,544
2,556,735
1,315,828
656,037
1,470,151
4,032
(
941,423)
5,061,360
(
187,509)
4,873,851
$ 16,154,395
Current liabilities
2100
Short Term Loans
2120
Financial liabilities at fair value
through profit or loss - Current
2130
Contract Liabilities - Current
2150
Notes Payable
2170
Accounts Payable
2180
Accounts payable - Related party
2200
Other Payables
2230
Current Income Tax Liabilities
2250
Provision for Liabilities - Current
2280
Lease Liability - Current
2320
Long-term liabilities due within one
year or one business cycle
2399
Other Current Liabilities - Other
21XX
Total Current Liabilities
Non-current liabilities
2530
Corporate bonds payable
2540
Long-term Loans
2570
Deferred Income Tax
2580
Lease liability - Non Current
2640
Defined Benefit Liabilities - Non
Current
2645
Guarantee Deposits Received
2670
Other Non-Current Liabilities - Other
25XX
Total Non-Current Liabilities
2XXX
Total Liabilities
Equity attributable to shareholders of
the parent company
Capital
3110
Capital stock
Capital surplus
3200
Capital surplus
Retained earnings
3310
Legal reserve
3350
Unappropriated earnings
Other equity interests
3400
Other equity interests
3500
Treasury stock
31XX
Total Equities Attributable to
Parent Company
36XX
Non-controlling Interests
3XXX
Total Equities
Major Commitments and Contingencies
Major Events after Financial Statement
Date
3X2X
Total Liabilities and Equities

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

Chairman: Sean Chen

Managerial Officer: Lidon Chen

Accounting Supervisor: Eve Yang

-23-

Taiwan Mask Corporation and Subsidiaries Consolidated Statement of Comprehensive Income January 1 to December 31 of 2022 and 2021

Unit: NT$Thousand (Except for earnings per share)

Items 2022
2021
Notes
Amount
%
Amount
%
6(22) and 7
$ 7,741,118
100
$ 6,077,362
100
6(5)
(
5,642,493 ) (
73) (
4,667,982 ) (
77)
2,098,625
27
1,409,380
23
6(27)
(28)
(
209,947 ) (
3) (
150,235 ) (
2)
(
375,754 ) (
5) (
656,228 ) (
11)
(
254,090 ) (
3) (
170,245 ) (
3)
12(2)
(
10,558 )
-
1,340
-
(
850,349 ) (
11) (
975,368 ) (
16)
1,248,276
16
434,012
7
6(23)
25,271
-
4,858
-
6(24)
258,255
4
115,294
2
6(25)
(
619,247 ) (
8)
765,676
13
6(26)
(
177,546 ) (
2) (
100,524 ) (
2)
6(6)
(
61,296 ) (
1) (
80,385 ) (
1)
(
574,563 ) (
7)
704,919
12
673,713
9
1,138,931
19
6(29)
(
228,081 ) (
3) (
291,537 ) (
5)
$ 445,632
6
$ 847,394
14
4000
Operating revenue
5000
Operating costs
5900
Gross profit
Operating expenses
6100
Selling Expenses
6200
Administrative Expenses
6300
R&D Expenses
6450
Expected Credit Impairment
(Loss) Gain
6000
Total Operating Expenses
6900
Operating profit
Non-operating income and
expenses
7100
Interest income
7010
Other Incomes
7020
Other Gains and Losses
7050
Financial Costs
7060
The share of affiliates and joint
venture profits and losses
recognized by the equity method
7000
Total Non-Operating Incomes
and Losses
7900
Earnings Before Tax
7950
Income Tax Expense
8200
Net Income

(Continued)

-24-

Taiwan Mask Corporation and Subsidiaries Consolidated Statement of Comprehensive Income January 1 to December 31 of 2022 and 2021

Unit: NT$Thousand (Except for earnings per share)

Items 2022
2021
Notes
Amount
%
Amount
%
( $ 2,656 )
-
$ 1,189
-
(
2,656 )
-
1,189
-
6(21)
6,476
-
3,143
-
6,476
-
3,143
-
$ 3,820
-
$ 4,332
-
$ 449,452
6
$ 851,726
14
$ 703,519
9
$ 1,146,610
19
(
257,887 ) (
3) (
299,216 ) (
5)
$ 445,632
6
$ 847,394
14
$ 707,339
9
$ 1,150,942
19
(
257,887 ) (
3) (
299,216 ) (
5)
$ 449,452
6
$ 851,726
14
6(30)
$ 3.37
$ 5.47
6(30)
$ 3.12
$ 5.37
Other Comprehensive Incomes
(Net)
Components of other
comprehensive income that will
not be reclassified to profit or
loss
8311
Re-measurements of defined
benefit plan
8310
Total items that will not be
reclassified subsequently to
profit or loss
Components of other
comprehensive income that will
be reclassified to profit or loss
8361
Financial statement translation
differences of foreign operations
8360
Total Components of other
comprehensive income that
will be reclassified to profit or
loss
8300
Other Comprehensive Incomes
(Net)
8500
Total comprehensive income for
the year
Net Incomes (Losses) Attributable
to:
8610
Parent Company
8620
Non-controlling Interests
Total
Total Comprehensive Incomes
(Losses) Attributable to:
8710
Parent Company
8720
Non-controlling Interests
Total
Earnings per share
9750
Net Income
Diluted Earnings per share
9850
Net Income

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

Chairman: Sean Chen

Managerial Officer: Lidon Chen

Accounting Supervisor: Eve Yang

-25-

Taiwan Mask Corporation and Subsidiaries Consolidated Statement of Changes in Equity January 1 to December 31 of 2022 and 2021

Unit: NT$Thousand

Notes
2021
Balance as of 2021/1/1
Net Income
Other Comprehensive Profit or Loss
6(21)
Total comprehensive income for the year
Distribution and appropriation of earnings for 2020
6(20)
Legal capital reserve
Reversal of Special reserve
Cash dividends
6(19)
Conversion of convertible bonds
6(19)
Adjustment of capital reserve by dividends paid to subsidiaries
Changes in shares of affiliates and joint ventures recognized
under the equity method
6(19)
Share-based payment transaction
6(19)
Treasury Stock Buyback
Treasury stocks transfer to employees
Capital surplus - convertible bond stock options
Acceptance of gifts from shareholders
Payment of overdue unclaimed dividends to shareholders
Cash increase of non-controlling equity in Subsidiaries
Balance as of 2021/12/31
2022
Balance January 1, 2022
Net Income
Other Comprehensive Profit or Loss
6(21)
Total comprehensive income for the year
Distribution and appropriation of earnings for 2021
6(20)
Legal capital reserve
Cash dividends
Conversion of convertible bonds
Distribution of cash from capital surplus
6(19)
Adjustment of capital reserve by dividends paid to subsidiaries 6(19)
Changes in ownership interests in subsidiaries recognized
6(19)
Changes in shares of affiliates and joint ventures recognized
under the equity method
6(19)
Share-based payment transaction
6(19)
Treasury Stock Buyback
Treasury stock donation
Cash increase of non-controlling equity in Subsidiaries
Balance December 31, 2022		 Notes Equity attributableto shareholder Equity attributableto shareholder Equity attributableto shareholder Equity attributableto shareholder s of the parentcompany s of the parentcompany s of the parentcompany Non-
controlling
Interests		 Total Equity
Capital stock Capital surplus R etained earnings Otherequityinterests Treasurystock Total
Legal
reserve		 Special
reserve		 Unappropriated
earnings		 Financial
statement
translation
differences of
foreign operations		 Unrealized gain
(loss) on
investments on
financial assets at
fair value through
other
comprehensive
income
$ 2,527,136
-
-
-
-
-
-
29,599
-
-
-
-
-
-
-
-
-
$ 2,556,735
$ 2,556,735
-
-
-
-
-
7,730
-
-
-
-
-
-
-
-
$ 2,564,465		 $ 439,898
-
-
-
-
-
-
216,415
55,622
27,526
169,174
-
-
406,616
586
(
9 )
-
$ 1,315,828
$ 1,315,828
-
-
-
-
-
55,472
(
241,189 )
73,463
10,169
21,107
16,831
-
-
-
$ 1,251,681		 $ 587,990
-
-
-
68,047
-
-
-
-
-
-
-
-
-
-
-
-
$ 656,037
$ 656,037
-
-
-
113,915
-
-
-
-
-
-
-
-
-
-
$ 769,952		 $ 2,666
-
-
-
-
(
2,666 )
-
-
-
-
-
-
-
-
-
-
-
$ -
$ -
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$ -		 $ 814,617
1,146,610
1,189
1,147,799
(
68,047 )
2,666
(
379,071 )
-
-
(
47,813 )
-
-
-
-
-
-
-
$ 1,470,151
$ 1,470,151
703,519
(
2,656 )
700,863
(
113,915 )
(
241,189 )
-
-
-
(
86,617 )
-
-
-
-
-
$ 1,729,293		 $ 3,555
-
3,143
3,143
-
-
-
-
-
-
-
-
-
-
-
-
-
$ 6,698
$ 6,698
-
6,476
6,476
-
-
-
-
-
-
-
-
-
-
-
$ 13,174		 ($ 2,666 )
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
($ 2,666 )
($ 2,666 )
-
-
-
-
-
-
-
-
-
-
-
-
-
-
($ 2,666 )		 ($ 834,598 )
-
-
-
-
-
-
-
-
-
-
(
828,884 )
722,059
-
-
-
-
($ 941,423 )
($ 941,423 )
-
-
-
-
-
-
-
-
-
-
-
(
842,536 )
4,980
-
($ 1,778,979 )		 $ 3,538,598
1,146,610
4,332
1,150,942
-
-
(
379,071 )
246,014
55,622
(
20,287 )
169,174
(
828,884 )
722,059
406,616
586
(
9 )
-
$ 5,061,360
$ 5,061,360
703,519
3,820
707,339
-
(
241,189 )
63,202
(
241,189 )
73,463
(
76,448 )
21,107
16,831
(
842,536 )
4,980
-
$ 4,546,920














($ 90,165 )
(
299,216 )
-
(
299,216 )
-
-
-
-
-
161,737
7,806
-
-
-
-
-
32,329
($ 187,509 )
($ 187,509 )
(
257,887 )
-
(
257,887 )
-
-
-
-
-
-
130,213
2,230
-
-
200,240
($ 112,713 )		 $ 3,448,433
847,394
4,332
851,726
-
-
(
379,071 )
246,014
55,622
141,450
176,980
(
828,884 )
722,059
406,616
586
(
9 )
32,329
$ 4,873,851
$ 4,873,851
445,632
3,820
449,452
-
(
241,189 )
63,202
(
241,189 )
73,463
(
76,448 )
151,320
19,061
(
842,536 )
4,980
200,240
$ 4,434,207

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

Chairman: Sean Chen

Managerial Officer: Lidon Chen

Accounting Supervisor: Eve Yang

-26-

Taiwan Mask Corporation and Subsidiaries Consolidated Statements of Cash Flows January 1 to December 31 of 2022 and 2021

Unit: NT$Thousand

Cash Flow from Operating Activities
Net Income(Loss) Before Tax
Adjustments to Reconcile Net Income to Net Cash
Flow from Operating Activities
Revenues and Expenses
Depreciation
Amortization
Expected Credit Impairment loss (reversal
gain)
Interest income
Interest Incomes
Treasury stock donation expenses
Net Profit of Financial Asset at Fair Value
Through Loss (Profit)
Impairment Loss of Financial Assets
Gain (loss) on disposal of investments
Dividend income
Share-based payment transaction
Share of losses of affiliated companies
recognized under the equity method
Loss (gain) on disposal of property, plant
and equipment
Property, plant and equipment reclassified
as expenses
The Changes of Assets/ Liabilities related to
Operating Activities
The Changes of Assets/ Liabilities related to
Operating Activities
Mandatory financial assets at fair value
through profit or loss
Contract Assets
Notes Receivables
Accounts Receivables
Accounts Receivables－Related Parties
Other Receivables
Other Receivables－Related Parties
Inventories
Prepayments
Other Current Assets
Other Non-Current Assets
Net Changes of Liabilities related to
Operating Activities
Contract Liabilities
Notes Payable
Accounts Payable
Accounts payable - Related party
Other Payables
Provisions
Other Current Liabilities
Defined Benefit Liabilities
Other Current Liabilities
Net Cash In-Flow (Out-Flow) from
Operating
Interest Received
Dividends Received
Interest Paid
Income Tax Paid
Cash In-Flow (Out-Flow) from Operating
Activities		 Notes
January 1 to
December31,2022
January 1 to
December31,2021
$ 673,713 $ 1,138,931
6(27)
568,193
483,274
6(27)
45,391
18,236
12(2)
10,558 (
1,340 )
6(23)
(
25,271 ) (
4,858 )
6(26)
177,546
100,524
4,980
-
6(25)
801,122 (
559,714 )
6(23)
-
11,737
6(25)
(
123,552 ) (
287,760 )
(
194,598 ) (
85,104 )
6(18)
19,061
176,980
6(6)
61,296
80,385
6(24)
(
5,024 )
1,927
1,186
-
(
115,356 ) (
2,071,523 )
15,532 (
61,954 )
(
1,298 )
1,018
(
247,822 ) (
345,858 )
14,466 (
10,213 )
55,246 (
14,606 )
-
3,068
21,187 (
182,382 )
(
158,379 ) (
33,317 )
(
14,837 )
40,111
671
104,166
53,463
78,360
15 (
4,263 )
(
60,057 )
64,213
284
-
144,840
211,059
(
10,964 )
-
(
167 )
10,526
4,169 (
2,026 )
(
98,218)
51,396
1,617,376 (
1,089,007 )
25,271
4,825
194,598
85,104
(
177,546 ) (
101,583 )
(
246,930) (
165,546)
1,412,769(
1,266,207)

-27-

Taiwan Mask Corporation and Subsidiaries Consolidated Statements of Cash Flows January 1 to December 31 of 2022 and 2021

Unit: NT$Thousand

Cash Flow from Investment Activities
Acquisition of Amortized Cost Financial Assets
Disposal of Amortized Cost Financial Assets
Acquisition of investment property by the Equity
Method
Cash inflows from changes in consolidated
entities
Acquisition of Property, Plants and Equipment
Disposal of Property, Plants and Equipment
Acquisition of Intangible Assets
Decrease (Increase) of Refundable Deposits
Net Cash Outflow from Investing
Activities
Cash Flows from Financing Activities
Increase of Short Term Loan
Redemption of Short Term Loan
Increase of Long Term Loan
Redemption of Long Term Loan
Issuance of ordinary/convertible corporate bonds
Distribution of cash dividends (including capital
surplus distribution cash)
Treasury stocks transfer to employees
Treasury stock buyback cost
Redemption of Lease Principal
Increase in Guarantee Deposits Received
Cash increase of non-controlling equity in
Subsidiaries
Payment of overdue unclaimed dividends
Net Cash In-Flow (Out-Flow) from
Funding Activities
Adjustments of Exchange Rate
Net increase (decrease) in cash and cash equivalents
Beginning Balance of Cash and Cash Equivalents
Ending Balance of Cash and Cash Equivalents		 Notes
January 1 to
December31,2022
January 1 to
December31,2021
( $ 610,686 ) ( $ 8,397 )
20,882
24,868
- (
188,072 )
6(31)
-
46,854
6 (32)
(
2,911,204 ) (
1,883,332 )
6,020
79,905
(
45,767 ) (
13,089 )
(
36,932 )
2,680
(
3,577,687 ) (
1,938,583 )
6 (33)
16,200,182
8,552,978
6 (33)
(
15,952,423 ) (
6,515,430 )
6 (33)
4,569,424
1,936,952
6 (33)
(
3,512,177 ) (
954,679 )
6(31)
997,095
2,297,099
(
408,915 ) (
323,449 )
-
722,059
(
842,536 ) (
828,884 )
6 (33)
(
55,556 ) (
63,982 )
6 (33)
27,846
1,779
200,240
32,329
- (
9 )
1,223,180
4,856,763
9,876 (
6,812 )

(
931,862 )
1,645,161
6(1)
2,681,819
1,036,658
6(1)
$ 1,749,957 $ 2,681,819

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

Chairman: Sean Chen

Managerial Officer: Lidon Chen Accounting Supervisor: Eve Yang

-29-

[Attachment 5] 

‧

Independent Auditors’ Report

(112) Tsai-Sheng-Bao-Zi No. 22003018

To Taiwan Mask Corporation,

Opinions

We have audited the accompanying parent-only balance sheets of Taiwan Mask Corporation as of December 31, 2022 and 2021, and the related parent-only statements of comprehensive income, changes in equity and of cash flows for the years ended December 31, 2022 and 2021, and notes to the parent-only financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of the other independent auditors, as described in the Other matters section of our report, the parent-only financial statements present fairly, in all material respects, the standalone financial position of Taiwan Mask Corporation as of December 31, 2022 and 2021, and its financial performance and its cash flows for the years ended December 31, 2022 and 2021, in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in Taiwan. Our responsibilities under those standards are further described in the Independent Auditor’s Responsibilities for the Audit of the Parent Only Financial Statements section of our report. We are independent of Taiwan Mask Corporation in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. Based on our audits and the reports of the other independent auditors, 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 the parent-only financial statements of Taiwan Mask Corporation of fiscal year 2022. These matters were addressed in the context of our audit of the parent only financial statements as a whole and, in forming our opinion thereon, we do not provide a parent only opinion on these matters.

Key audit matters for the parent-only financial statements in fiscal year 2022 are stated as

-29-

follows:

Evaluation of Inventories

Explanation

With respect to the accounting policy for inventory valuation, please refer to Note 4 (12) of the parent-only financial statements. For the uncertainty of accounting estimates and assumptions applied in inventory valuation, please refer to Note 5 (2). For the accounting entries of inventory, please refer to Note 6 (5). The inventory and the loss from inventory writeoff as of December 31, 2022 are NT$123,824 thousand and NT$5,115 thousand, respectively.

Taiwan Mask Corporation is primarily engaged in mask and integrated circuit services in the semiconductor industry. Due to rapid technological innovations, short life-cycle and competition within the mask industry, the risk of price fluctuations, loss on decline in value of inventories and obsolescence is higher than that of other industries. Management evaluates inventories stated at the lower of cost and net realizable value. Since the evaluation of inventories is subject to management’s judgment and the accounting estimations will have significant influence on the inventory values, the evaluation of inventories has been identified as one of the key audit matters.

How our audit addressed the matter

We have performed primary audit procedures for the above matter as follows:

  1. Understand and evaluate the accounting policy for the provision of allowance for losses on decline in value of inventories.

  2. Perform test to evaluate the ageing statement of inventories and the statement of lower of cost and net realizable value of inventories, including validating the supporting documents related to the date of inventory movement to confirm the correct ageing classification, and validating the supporting documents related to the net realizable value to assess and confirm the reasonableness of the net realizable value determination.

  3. Verify the reasonableness of allowance for inventory valuation loss.

Income recognition

Explanation

For the accounting policy on income recognition, please refer to Note 4(27) of the financial report. For sales revenue please refer to Note 6(21); the operating income in fiscal year 2022 is NT$3,887,648 thousand.

Taiwan Mask Corporation mainly produces and sells products such as masks and integrated

-30-

circuits used in semiconductors, and has a large and diversified sales base. Trading conditions vary according to market conditions and customer needs. Considering that sales revenue is a major transaction that has a significant impact on the standalone financial statements, we believe that the recognition of sales revenue is one of the most important matters to be considered in this year’s audit.

How our audit addressed the matter

We have performed primary audit procedures for the above matter as follows:

  1. Understand the type of major income and assess internal operations, review revenue recognition and accounting treatment.

  2. Obtain the sales revenue statement, sample the sales transactions and verify the relevant documents to determine the appropriateness of the sales revenue.

  3. Execute the cut-off test for the sales receipts transaction for a certain period of time before and after the closing date, and confirm that the account is correct at the time of entry.

Responsibilities of management and those charged with governance for the standalone financial statements

Management is responsible for the preparation and fair presentation of the standalone financial statements in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission, and for such internal control as management determines is necessary to enable the preparation of standalone financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, management is responsible for assessing Taiwan Mask Corporation’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate Taiwan Mask Corporation 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 Taiwan Mask Corporation’s financial reporting process.

Independent auditor’s responsibilities for the audit of the standalone financial statements

Our objectives are to obtain reasonable assurance about whether the parent only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors’ Report that includes our opinion. Reasonable assurance is a high level of

-31-

assurance, but is not a guarantee that an audit conducted in accordance with ROC AS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, Individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these parent only financial statements.

As part of an audit conducted in accordance with ROC AS, we exercise professional judgment and professional skepticism throughout the audit. We also conduct the following undertakings:

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

  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 Taiwan Mask Corporation’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 Taiwan Mask Corporation’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report to the related disclosures in the parent only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our report. However, future events or conditions may cause Taiwan Mask Corporation to cease to continue as a going concern.

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

  6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within Taiwan Mask Corporation to express an opinion on the parent only financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

-32-

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent-only financial statements for the year ended December 31, 2022, 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 auditor’s report because the adverse consequences of doing so would reasonable are expected to outweigh the public interest benefits of such communication.

PricewaterhouseCoopers Taiwan

Ya-Hui Cheng

Accountant

Chien-Yu Liu

Securities and Futures Bureau of Financial Supervisory Commission of the Executive Yuan Approval Certificate No. 0960072936 Financial Supervisory Commission of the

Executive Yuan

Approval Document for Attestation: Jin-GuanZheng-Shen-Zi No. 1090350620

March 3, 2023

-33-

Taiwan Mask Corporation Parent Only Balance Sheets December 31, 2022 and 2021

Assets Notes
6(1)
6(2)
6(3) and 8
6(4)
6(4) and 7
7
6(5)
6(2)
6(3) and 8
6(6)
6(7) and 8
6(8)
6(10) and 8
6(28)
6(11)		 December31,2022

Amount

%
$ 1,211,411
9
307,448
2
3,000
-
90,642
1
800,431
6
9,525
-
4,566
-
17,443
-
118,709
1
104,427
1
803
-
2,668,405
20
925,006
7
222,774
2
1,897,832
15
4,762,328
37
541,438
4
683,746
5
41,720
-
1,780
-
1,331,600
10
10,408,224
80
$ 13,076,629
100		 Unit: NT$Thousand
December31,2021
Amount

%
$ 1,798,841
16
824,558
7
3,000
-
115,854
1
592,967
5
5,112
-
3,826
-
14,870
-
109,889
1
36,959
-
973
-
3,506,849
30
296,800
3
35,425
-
2,560,741
22
3,178,465
28
563,415
5
703,953
6
8,518
-
-
-
650,211
6
7,997,528
70
$ 11,504,377
100
Amount

$ 1,211,411
307,448
3,000
90,642
800,431
9,525
4,566
17,443
118,709
104,427
803
2,668,405
925,006
222,774
1,897,832
4,762,328
541,438
683,746
41,720
1,780
1,331,600
10,408,224
$ 13,076,629		 Amount

$ 1,798,841
824,558
3,000
115,854
592,967
5,112
3,826
14,870
109,889
36,959
973
3,506,849
296,800
35,425
2,560,741
3,178,465
563,415
703,953
8,518
-
650,211
7,997,528
$ 11,504,377
Current assets
1100
Cash and Cash Equivalents
1110
Financial Assets at Fair Value
Through Profit or Loss - Current
1136
Financial Assets at Amortized Cost -
Current
1140
Contract Asset - Current
1170
Accounts Receivables (Net)
1180
Accounts Receivables - Related
Parties (Net)
1200
Other Receivables
1210
Other Receivables - Related Parties
130X
Inventories
1410
Prepayments
1470
Other Current Assets
11XX
Total Current Assets
Non-Current Assets
1510
Financial Asset at Fair Value Through
Profit or Loss - Non Current
1535
Financial Assets at Amortized Cost -
Non Current
1550
Investment under Equity Method
1600
Property, plant and equipment
1755
Right-of-use Asset
1760
Investment property (Net)
1780
Intangible assets
1840
Deferred Income Tax Assets
1900
Other Non-Current Assets
15XX
Total Non-Current Assets
1XXX
Total Assets

(Continued)

-34-

Taiwan Mask Corporation Parent Only Balance Sheets December 31, 2022 and 2021

Unit: NT$Thousand

Liabilities and Equities Notes
6(12)
6(2)
6(21)
6(13)
6(15)
6(14)
6(15)
6(28)
6(16)
6(17)
6(18)
6(19)
6(20)
6(17)

9
11		 December 31, 2022
Amount
%
$ 1,054,934
8
5,697
-
57,323
1
109,004
1
520,173
4
150,791
1
30,682
-
484,737
4
29,182
-
2,442,523
19
2,609,044
20
2,905,263
22
3,850
-
518,641
4
16,514
-
33,874
-
6,087,186
46
8,529,709
65
2,564,465
20
1,251,681
10
769,952
6
-
-
1,729,293
13
10,508
-
(
1,778,979) (
14 )
4,546,920
35
$ 13,076,629
100		 December 31, 2021
Amount
%
$ 860,000
7
-
-
7,660
-
81,451
1
446,349
4
119,062
1
28,054
-
60,000
1
32,567
-
1,635,143
14
1,657,049
14
2,590,000
23
59
-
540,421
5
15,540
-
4,805
-
4,807,874
42
6,443,017
56
2,556,735
22
1,315,828
11
656,037
6
-
-
1,470,151
13
4,032
-
(
941,423) (
8)
5,061,360
44
$ 11,504,377
100
Amount
$ 1,054,934
5,697
57,323
109,004
520,173
150,791
30,682
484,737
29,182
2,442,523
2,609,044
2,905,263
3,850
518,641
16,514
33,874
6,087,186
8,529,709
2,564,465
1,251,681
769,952
-
1,729,293
10,508
(
1,778,979)
4,546,920
$ 13,076,629		 Amount
$ 860,000
-
7,660
81,451
446,349
119,062
28,054
60,000
32,567
1,635,143
1,657,049
2,590,000
59
540,421
15,540
4,805
4,807,874
6,443,017
2,556,735
1,315,828
656,037
-
1,470,151
4,032
(
941,423)
5,061,360
$ 11,504,377
Current liabilities
2100
Short Term Loans
2120
Financial liabilities at fair value
through profit or loss - Current
2130
Contract Liabilities - Current
2170
Accounts Payable
2200
Other Payables
2230
Current Income Tax Liabilities
2280
Lease Liability - Current
2320
Long-term liabilities due within one
year or one business cycle
2399
Other Current Liabilities - Other
21XX
Total Current Liabilities
Non-current liabilities
2530
Corporate bonds payable
2540
Long-term Loans
2570
Deferred Income Tax
2580
Lease liability - Non Current
2640
Defined Benefit Liabilities - Non
Current
2645
Guarantee Deposits Received
25XX
Total Non-Current Liabilities
2XXX
Total Liabilities
Capital
3110
Capital stock
Capital surplus
3200
Capital surplus
Retained earnings
3310
Legal reserve
3320
Special reserve
3350
Unappropriated earnings
Other equity interests
3400
Other equity interests
3500
Treasury stock
3XXX
Total Equities
Major Commitments and Contingencies
Major Events after Financial Statement
Date
3X2X
Total Liabilities and Equities

The attached notes to the standalone financial statements are part of the standalone financial report.

Chairman: Sean Chen

Managerial Officer: Lidon Chen

Accounting Supervisor: Eve Yang

-35-

Taiwan Mask Corporation Parent Only Statement of Comprehensive Income January 1 to December 31 of 2022 and 2021

Unit: NT$Thousand (Except for earnings per share)

Items 2022
2021
Notes
Amount
%
Amount
%
6 (21) and 7
$ 3,887,648
100
$ 2,773,339
100
6(5)
(
1,796,579 ) (
46)(
1,454,152 )(
52)
2,091,069
54
1,319,187
48
6(26)
(27)
(
63,495 ) (
2) (
56,719 ) (
2)
(
272,202 ) (
7) (
459,279 ) (
17)
(
92,972 ) (
2) (
64,936 ) (
2)
12(2)
(
821 )
-
(
117 )
-
(
429,490 ) (
11)(
581,051 )(
21)
1,661,579
43
738,136
27
6(22)
11,798
-
3,264
-
6(23)
195,387
5
153,506
6
6(24)
(
205,013 ) (
5)
81,799
3
6(25)
(
91,694 ) (
2) (
55,918 ) (
2)
(
676,888 ) (
18)
403,041
14
(
766,410 ) (
20)
585,692
21
895,169
23
1,323,828
48
6(28)
(
191,650 ) (
5)(
177,218 )(
6)
$ 703,519
18
$ 1,146,610
42
6(16)
( $ 2,721 )
-
$ 1,011
-
65
-
178
-
(
2,656 )
-
1,189
-
6(20)
6,476
-
3,143
-
6,476
-
3,143
-
6(26)
$ 3,820
-
$ 4,332
-
$ 707,339
18
$ 1,150,942
42
6(29)
$ 3.37
$ 5.47
6(29)
$ 3.12
$ 5.37
4000
Operating revenue
5000
Operating costs
5900
Gross profit
Operating expenses
6100
Selling Expenses
6200
Administrative Expenses
6300
R&D Expenses
6450
Expected loss on credit impairment
6000
Total Operating Expenses
6900
Operating profit
Non-operating income and expenses
7100
Interest income
7010
Other Incomes
7020
Other Gains and Losses
7050
Financial Costs
7070
The share of subsidiaries, affiliates
and joint venture profits and losses
recognized by the equity method
7000
Total Non-Operating Incomes and
Losses
7900
Earnings Before Tax
7950
Income Tax Expense
8200
Net Income
Other Comprehensive Incomes (Net)
Components of other comprehensive
income that will not be reclassified
to profit or loss
8311
Re-measurements of defined benefit
plan
8330
Profit and loss of subsidiaries,
associates and joint ventures
recognized by using equity method -
Items that will not be reclassified to
profit or loss
8310
Total items that will not be
reclassified subsequently to profit
or loss
Components of other comprehensive
income that will be reclassified to
profit or loss
8361
Financial statement translation
differences of foreign operations
8360
Total Components of other
comprehensive income that will
be reclassified to profit or loss
8300
Other Comprehensive Incomes (Net)
8500
Total comprehensive income for the
year
Earnings per share
9750
Net Income (Loss)
Diluted Earnings per share
9850
Net Income (Loss)

The attached notes to the standalone financial statements are part of the standalone financial report.

Managerial Officer: Lidon Chen

Chairman: Sean Chen

Accounting Supervisor: Eve Yang

-36-

Taiwan Mask Corporation Parent Only Changes of Equity Statements January 1 to December 31 of 2022 and 2021

Unit: NT$Thousand

Notes
2021
Balance as of 2021/1/1
Net Income
Other Comprehensive Profit or Loss
6(20)
Total comprehensive income for the year
Distribution and appropriation of earnings for 2020
Legal capital reserve
Reversal of Special reserve
Cash dividends
6(19)
Conversion of convertible bonds
6(17)
Adjustment of capital reserve by dividends paid to subsidiaries
6(18)
Changes in shares of affiliates and joint ventures recognized under the
equity method
6(18)
Share-based payment transaction
6(18)
Treasury Stock Buyback
6(17)
Treasury stocks transfer to employees
6(17)
Capital surplus - convertible bond stock options
6(18)
Acceptance of gifts from shareholders
6(18)
Payment of overdue unclaimed dividends to shareholders
6(18)
Balance as of 2021/12/31
2022
Balance January 1, 2022
Net Income
Other Comprehensive Profit or Loss
6(20)
Total comprehensive income for the year
Distribution and appropriation of earnings for 2021
Legal capital reserve
Cash dividends
6(19)
Conversion of convertible bonds
6(17)
Distribution of cash from capital surplus
6(18)
Adjustment of capital reserve by dividends paid to subsidiaries
6(18)
Changes in ownership interests in subsidiaries recognized
6(18)
Changes in shares of affiliates and joint ventures recognized under the
equity method
6(18)
Share-based payment transaction
6(18)
Treasury Stock Buyback
6(17)
Treasury stock donation
Balance December 31, 2022		 Notes Capital stock
$ 2,527,136
-
-
-
-
-
-
29,599
-
-
-
-
-
-
-
-

$ 2,556,735
$ 2,556,735
-
-
-
-
-
7,730
-

-
-
-
-
-
-
$ 2,564,465		 Capital surplus Capital surplus Retained earnings Retained earnings Retained earnings Other equity interests Other equity interests Other equity interests Treasury stock Total Equity
Legal reserve
Special reserve
$ 2,666
-
-
-
-

(
2,666 )
-

-
-
-

-
-
-
-
-
-
$ -
$ -
-
-

-
-

-

-
-
-
-

-
-
-
-
$ -		 Unappropriated
earnings		 Financial
statement
translation
differences of
foreign
operations		 Unrealized gain
or loss on
financial assets
measured at fair
value through
other
comprehensive
income
$
439,898
-
-
-
-
-
-
216,415
55,622
27,526
169,174
-
-
406,616
586
9 )

1,315,828

1,315,828
-
-
-
-
-
55,472
241,189 )
73,463
10,169
21,107
16,831
-
-

1,251,681		 $
587,990
-
-
-
68,047
-

-
-
-
-
-
-
-
-
-
-

656,037

656,037
-
-
-
113,915
-
-
-
-
-
-
-
-
-

769,952		 $ 814,617

1,146,610
1,189
1,147,799
(
68,047 )
2,666
(
379,071 )
-
-
(
47,813 )
-
-
-
-
-
-
$ 1,470,151

$ 1,470,151

703,519
(
2,656 )
700,863
(
113,915 )
(
241,189 )
-
-
-
(
86,617 )
-
-
-
-
$ 1,729,293
 $ 3,555

-
3,143
3,143
-
-
-
-
-
-
-
-
-
-
-
-
6,698

6,698

-
6,476
6,476
-
-
-
-
-
-
-
-
-
-
13,174
 ($
(
$ $ $ ($
$ $ $ ($
(
$ $ $ ($

Chairman: Sean Chen

The attached notes to the standalone financial statements are part of the standalone financial report. Managerial Officer: Lidon Chen

Accounting Supervisor: Eve Yang

-37-

Taiwan Mask Corporation Parent Only Statements of Cash Flow January 1 to December 31 of 2022 and 2021

Cash Flow from Operating Activities
Net Income(Loss) Before Tax
Adjustments to Reconcile Net Income to Net Cash
Flow from Operating Activities
Revenues and Expenses
Depreciation
Amortization
Expected loss on credit impairment
Dividend income
Interest income
Interest Incomes
Net Profit of Financial Asset at Fair Value
Through Loss (Profit)
Loss on disposal of investments
Share-based payment transaction
The Share of Subsidiaries and Affiliates
Profits and Losses Recognized by the Equity
Method
Property, plant and equipment reclassified as
expenses
The Changes of Assets/ Liabilities related to
Operating Activities
The Changes of Assets/ Liabilities related to
Operating Activities
Mandatory financial assets at fair value
through profit or loss
Contract Assets
Notes Receivables
Accounts Receivables
Accounts Receivables－Related Parties
Other Receivables
Inventories
Prepayments
Other Current Assets
Net Changes of Liabilities related to
Operating Activities
Contract Liabilities
Accounts Payable
Other Payables
Other Current Liabilities
Defined Benefit Liabilities
Net Cash In-Flow from Operating
Dividends Received
Interest Received
Interest Paid
Income Tax Paid
Net Cash In-Flow from Operating Activities		 Unit: NT$Thousand
Notes
January 1 to
December31,2021
January 1 to
December31,2020
$ 895,169 $ 1,323,828
6(26)
513,116
355,573
6(26)
6,284
6,105
12(2)
821
117
6(23)
(
33,682 ) (
3,288 )
6(22)
(
11,799 ) (
3,264 )
6(25)
91,694
55,918
6(24)
114,183 (
85,115 )
6(24)
119,316 (
393 )
6(17)
14,131
119,544
676,888 (
403,041 )
6(7)
116
-
(
357,348 ) (
888,218 )
25,212 (
36,957 )
-
29
(
208,285 ) (
168,078 )
(
4,413 )
3,891
(
1,580 ) (
3,756 )
(
8,820 )
967
(
67,468 )
26,745
170 (
323 )
49,663
1,529
27,553 (
27,592 )
29,844
168,192
(
3,385 )
25,271
(
1,749 ) (
2,013 )
1,865,631
465,671
70,496
26,243
10,066
3,245
(
90,670 ) (
56,986 )
(
157,909 ) (
106,485 )

1,697,614
331,688

(Continued)

-38-

Taiwan Mask Corporation Parent Only Statements of Cash Flow January 1 to December 31 of 2022 and 2021

Cash Flow from Investment Activities
Acquisition of Amortized Cost Financial Assets
Acquisition of investment property by the Equity
Method
Return of capital by investee company
Other Receivables－Related Parties
Acquisition of Property, Plants and Equipment
Acquisition of Intangible Assets
Increase in refundable deposit
Net Cash Outflow from Investing
Activities
Cash Flows from Financing Activities
Increase of Short Term Loan
Redemption of Short Term Loan
Increase of Long Term Loan
Redemption of Long Term Loan
Issuance of ordinary/convertible corporate bonds
Distribution of cash dividends (including capital
surplus distribution cash)
Treasury stocks transfer to employees
Cost of treasury stock buyback
Redemption of Lease Principal
Increase in Guarantee Deposits Received
Payment of overdue unclaimed dividends
Net Cash In-Flow (Out-Flow) from
Funding Activities
Net increase (decrease) in cash and cash equivalents
Beginning Balance of Cash and Cash Equivalents
Ending Balance of Cash and Cash Equivalents		 Unit: NT$Thousand
Notes
January 1 to
December31,2021
January 1 to
December31,2020
( $ 187,349 ) ( $ 3 )
- (
367,671 )
-
180,000
-
609,195
6(30)
(
2,662,286 ) (
1,562,684 )
(
39,486 ) (
12,257 )
(
2,370 ) (
4,956 )
(
2,891,491 ) (
1,158,376 )
6(31)
5,662,100
2,960,484
6(31)
(
5,467,166 ) (
3,549,084 )
6(31)
4,624,737
1,891,000
6(31)
(
3,884,737 ) (
962,427 )
6(31)
997,095
2,297,099
6(19)
(
482,378 ) (
379,071 )
-
722,059
(
842,536 ) (
828,884 )
6(31)
(
29,737 ) (
19,912 )
6(31)
29,069
436
- (
9 )
606,447
2,131,691

(
587,430 )
1,305,003
1,798,841
493,838
$ 1,211,411 $ 1,798,841

The attached notes to the standalone financial statements are part of the standalone financial report.

Managerial Officer: Lidon Chen

Chairman: Sean Chen

Accounting Supervisor: Eve Yang

-39-

[Attachment 6]

Taiwan Mask Corporation 2022 Annual Profit Distribution Table

Unit: NTD

Items
Amount
Undistributed earnings at the beginning of the period
Add: Total amount of cash dividends distributed being adjusted due to the
repurchase of treasury stocks
Adjusted undistributed earnings at the beginning of the period
The remeasurement of the defined benefit plan recognized in retained
earnings.
Changes in shares of affiliates and joint ventures recognized under the equity
method
Adjusted undistributed earnings
Net Income (Loss)
Less: Legal reserve
Less: Cash dividends (NT$2.3 per share)
Undistributed earnings at the end of the period		 1,139,728,973
14,485,000
1,154,213,973
(2,656,507)
(125,784,005)
1,025,773,461
703,519,178
(57,507,867)
(556,511,393)
1,115,273,379

Note:

  1. Pursuant to Article 23-1 of the Company’s Articles of Incorporation, the Company may authorize the board to distribute stock dividends and cash dividends wholly or partially in cash.

  2. The distribution of cash dividends this time adopts the calculation method of “round down to the nearest dollar,” fractions that do not amount to a full NT$1 shall be added and recognized by the Company as other income.

  3. While the distribution of earnings is kept at NT$2.3 per share, if there are regulatory changes by the competent authority or changes to the Company’s capital, such as conversion of convertible bonds into equity, which affect the number of shares outstanding before the dividends record date, the chairman is authorized to make changes to the profit distribution schedule, dividends record date and payment date and other relevant matters.

Chairman:

==> picture [43 x 43] intentionally omitted <==

Managerial Officer: Accounting Officer:

==> picture [45 x 48] intentionally omitted <==

  • 40 -

[Attachment 7]

Taiwan Mask Corporation

Comparison of Amendments to the Articles of Incorporation

Amended Articles

Article 15

The Company shall have seven to nine directors (including at least three independent directors and not less than one-fifth of the number of directors), whose terms of office shall be three years, and whose election shall be made by the candidate nomination system. The Company may purchase liability insurance for the Directors by resolution of the Board of Directors.

Article 26

The Articles of Incorporation were established on October 7, 1988. The 1st amendment was made on May 29, 1990. The 2nd amendment was made on April 2, 1991, and the 3rd amendment was made on May 4, 1992. The 4th amendment was made on April 26, 1994. The 5th amendment was made on May 28, 1994. The 6th amendment was made on June 6, 1995. The 7[th] amendment was made on June 1, 1996. The 8[th] amendment was made on May 21, 1997. The 9th amendment was made on May 21, 1998. The 10th amendment was made on May 5, 1999. The 11th amendment was made on June 12, 2000. The 12[th] amendment was made on April 24, 2001. The 13th amendment was made on May 28, 2002. The 14th amendment was made on June 3, 2003. The 15th amendment was made on June 24, 2004. The 16th amendment was made on June 12, 2006. The 17[th] amendment was made on June 18, 2010. The 18[th] amendment was made on June 22, 2011. The 19th amendment was made on

Current provisions Explanation Article 15 Amended The Company shall have five to seven in directors (including at least three accordance independent directors and not less than with one-fifth of the number of directors), practical whose terms of office shall be three needs. years, and whose election shall be made by the candidate nomination system The Company may purchase liability insurance for the Directors by resolution of the Board of Directors. Article 26 Added the The Articles of Incorporation were date of established on October 7, 1988. The 1st amendment amendment was made on May 29, 1990. The 2nd amendment was made on April 2, 1991, and the 3rd amendment was made on May 4, 1992. The 4th amendment was made on April 26, 1994. The 5th amendment was made on May 28, 1994. The 6th amendment was made on June 6, 1995. The 7[th] amendment was made on June 1, 1996. The 8[th] amendment was made on May 21, 1997. The 9th amendment was made on May 21, 1998. The 10th amendment was made on May 5, 1999. The 11th amendment was made on June 12, 2000. The 12[th] amendment was made on April 24, 2001. The 13th amendment was made on May 28, 2002. The 14th amendment was made on June 3, 2003. The 15th amendment was made on June 24, 2004. The 16th amendment was made on June 12, 2006. The 17[th]

  • 41 -
Amended Articles Current provisions Explanation
June 23, 2016. The 20th amendment was
made on June 23, 2017. The 21st amendment
was made on June 11, 2019. The 22nd
amendment was made on June 10, 2020. The
23rd amendment was made on May 26, 2022.
The 24th amendment was made on May 24,
2023.		 amendment was made on June 18, 2010.
The 18thamendment was made on June
22, 2011. The 19th amendment was
made on June 23, 2016. The 20th
amendment was made on June 23, 2017.
The 21st amendment was made on June
11, 2019. The 22nd amendment was
made on June 10, 2020. The 23rd
amendment was made on May26,2022.
  • 42 -

[Attachment 8]

List of director (including independent director) candidates

No. of

Candidate		 Account
Order Name Academic Qualification Experience Current Position shares

type		 No.
held
1 Director 187613 Sean Chen Department of Physics at Director, Tachun Venture Capital Co., Ltd. Chairman, Taiwan Mask Corporation 2.000.000
National Central University Director, Antario Corporation Chief Executive Officer, USA’s N2
Physics Chief Executive Officer, xFuture Ltd. Connectivity Inc
Syracuse University, MS. Executive Vice President, GLMS Group Chairman, Jaas data inc.
Computer Science (NTT Com Asia Partner) Director, Xsense Technology
Director of Business Unit, AVerMedia Corporation (B.V.I.) Taiwan Branch
Technologies, Inc. Director, BKS Tec Corp.
Chief Executive Officer and Co-Founder, President, Ontario Capital Co., Ltd.
Goosean Media Inc.
Assistant Vice President, Sales
Consultation, Oracle Corporation Asia
Pacific, Greater China region
Manager, Application Software
Development Group, Oracle Corporation
USA Headquarter
IT Manager, Taiwan Semiconductor
ManufacturingCompanyLimited
2 Director 224012 Lidon Chen Bachelor’s degree from
Department of Physics at
Tamkang University
Master’s degree from
Department of Atmospheric
Sciences at National Central
University		 General Manager of Xintec Inc.
General Manager of DelSolar Co., Ltd.		 Director and President of Taiwan
Mask Corporation
Chairman, Xsense Technology
Corporation (B.V.I.) Taiwan Branch
Director of Digital-Can Tech. Co., Ltd.
Director, Aptos Technology INC.
Director of Weida Hi-Tech Co., Ltd.
Director of Moment Semiconductor,
Inc.
2,750,000
3 Director 187750 Chao-Yi Wu Bachelor, National Chiao Tung Manufacturing and Engineering
Department, Wintec Industries Inc.
Management Department, Sinyi Realty
Inc., Japan
Account Manager, Browave Corporation
President,Browave Corporation Japan		 Chairperson, Taiwan Mask
Corporation
President, Browave Corporation Japan
Director, Browave Corporation
Chairman, Ontario Capital Co., Ltd.		 9,907,000
University
Master’s degree, Cornell
University, USA
  • 43 -
No. of

Candidate		 Account
Order Name Academic Qualification Experience Current Position shares

type		 No.
held
4 Director 196562 Youe Chung
Capital
Corporation
Representative:
Ming-Chung
Chang		 EMBA from National Central Senior Vice President, Delta Electronics
Co., Ltd.
Director, Delta Electronics Co., Ltd.
Director, Delta Electronics Foundation		 36,731,440
University
5 Independence
Director
Non-
shareholder
Wei-Chen
Wang		 Department of Accounting, CPA, PwC Taiwan Independent director, Taiwan Mask
Corporation
Independent director, Ennostar Inc.
Independent director, Feature
Integration Technology Inc.
Independent director, Etron
Technology
CPA,ZhichengHexingCPA Firm		 0
National Chengchi University
6 Independence
Director
92965		 Huan-Kuei
Cheng		 Master of Business Director, National Chung-Shan Institute of
Science and Technology
Director, Browave Corporation
Supervisor, National Chung-Shan Institute
of Science and Technology
Assistant Professor, Graduate Institute of
Accounting, Soochow University		 Independent director, Taiwan Mask
Corporation
Director, National Chung-Shan
Institute of Science and Technology
Executive Committee Member of the
Performance Evaluation of Outside
Board of Directors of the Taiwan
Corporate Governance Association
Assistant Professor, Graduate Institute
of Accounting,Soochow University		 6,051
Administration, Saginaw Valley
State University, Michigan, USA
7 Independence
Director
281862		 Hui-Fen Chan Master of Law, Boston Taiwan Attorney and New York State
Attorney Qualification
Chief Legal Officer, Altek Corporation
Head of Legal Affairs, Siliconware
Precision
Partner Attorney, H. L. Partners
Attorney, Lee and Li		 Independent director, Taiwan Mask
Corporation
Independent director, ITEQ
Corporation,
Independent director, Chipmos
Technologies Inc.
Independent Director, Formosa I Wind
Power Co., Ltd.(Note 1)
Chairman of Keep Enlightment
Management Consulting Co., Ltd.
Chairman, Keep Enlightment
MarketingCorp.		 7,000
University
National Taiwan University
Bachelor of Law

Note 1: Formosa I Wind Power Co., Ltd. is not a public company.

  • 44 -

[Attachment 9]

List of newly-appointed directors and their representatives concurrently holding positions in other companies

Category Director Name of other company and position
held there		 Description of main
businesses
Director Sean Chen Chief Executive Officer, USA’s N2
ConnectivityInc		 Wire distributor
Chairman, Jaas data inc. Wholesale of computer
software and consulting
Director, Xsense Technology
Corporation(B.V.I.)Taiwan Branch		 Electronics Components
Manufacturing
Director, BKS Tec Corp. Trading of electronic
materials and instruments
President, Ontario Capital Co., Ltd. General investment
Director Lidon Chen Chairman, Xsense Technology
Corporation(B.V.I.)Taiwan Branch		 Electronics Components
Manufacturing
Director of Digital-Can Tech. Co.,
Ltd.		 Mechanical equipment and
electronic parts
manufacturing
Director, Aptos Technology INC. Electronics Components
Manufacturing
Director of Weida Hi-Tech Co., Ltd. Design of control IC for
touch panels
Director of Moment Semiconductor,
Inc.		 Trading of electronic
materials
Director Chao-Yi Wu President, Browave Corporation
Japan		 Trading of electronic
materials
Director, Browave Corporation Trading of electronic
materials and instruments
Chairman, Ontario Capital Co., Ltd. General investment
Independent
Director		 Wei-Chen
Wang		 Independent director, Feature
Integration TechnologyInc.		 Computer IC products
Independent director, Etron
Technology		 IC design
Independent director, Ennostar Inc. General investment
Independent
Director		 Huan-Kuei
Cheng		 Director, National Chung-Shan
Institute of Science and Technology		 National scientific research
Independent
Director		 Hui-Fen
Chan		 Independent director, ITEQ
Corporation,		 Printed circuit board
  • 45 -

Independent director, Chipmos IC packaging and testing Technologies Inc. Independent Director, Formosa I Wind power generation Wind Power Co., Ltd. Chairman of Keep Enlightment Management consulting Management Consulting Co., Ltd. Chairman, Keep Enlightment General investment Marketing Corp.

  • 46 -

[Appendix 1]

Taiwan Mask Corporation Articles of Incorporation (before amendment) May 26, 2022 The amendment was approved by the 2022 general meeting. Chapter 1 General provisions

  • Article 1 The Company shall be organized under the provisions of the Company Act and shall be known in English as TAIWAN MASK CORPORATION.

  • Article 2 The business of the Company shall be as follows:

    • CC01080 Electronics Components Manufacturing.

    • F401010 International trade

    • I. Research and development, production, manufacturing and sales of photomask. II. To provide technical assistance, consulting, testing and certification, maintenance and repair services relating to the aforesaid products.

  • Article 2-1 When the Company is a limited liability shareholder of another company, the total amount of its investment shall not exceed 40% of the paid-in capital as provided in Article 13 of the Company Act.

  • Article 3 The Company shall establish its head office in the Hsinchu Science Park, and may establish branches outside of Taiwan only with the resolution of the Board of Directors and the consent of the competent authorities when necessary.

  • Article 4 The Company may act as a guarantor to external parties.

  • Article 5 Deleted

    • Chapter 2 Shares

  • Article 6 The total capital of the Company is set at NT$5 billion, divided into 500 million shares (including 20 million shares of employee stock options), all of which are common shares with an amount of NT$10 per share, of which the unissued shares are authorized to be issued by the Board of Directors in installments.

  • Article 6-1 Deleted

  • Article 7 Deleted

  • Article 8 The shares of the Company shall be in registered form, numbered, signed or sealed by the directors representing the Company, and issued after obtaining a certification from a bank permitted by the competent authority for issuance and certification of stocks. The shares issued by the Company may be exempted from printing stocks in accordance with the Company Act, but the shares should be registered with the centralized securities depository institution.

  • Article 9 Changes in the shareholder roster of the Company shall cease not later than 60 days prior to the date of the regular shareholders’ meeting, not later than 30 days prior to the date of the special shareholders’ meeting, or not later than five days prior to the date on which the Company decides to distribute dividends and bonuses or other benefits.

  • 47 -

Article 10 Deleted

Chapter 3 Shareholders’ meeting

  • Article 11 There shall be two types of shareholders’ meetings: regular meetings shall be held once a year, within six months after the end of each fiscal year, convened by the board of directors in accordance with law, and extraordinary meetings shall be convened when necessary in accordance with law.

  • I. An regular shareholders’ meeting shall be held at least once a year, within six months after the end of each fiscal year, by the Board of Directors in accordance with the law..

  • II. The special shareholders’ meeting may be convened when necessary in accordance with the law..

  • III. The Company’s shareholders’ meeting can be held by means of visual communication network or other methods promulgated by the central competent authority.

  • Article 12 When a shareholder is unable to attend the shareholder meeting for some reason, the proxy form issued by the Company shall be provided, specifying the scope of authorization, and a proxy shall be appointed to attend.

  • Article 13 The shareholders of the Company shall have one voting right per share unless otherwise provided for in the relevant laws.

  • Article 14 Unless otherwise required by the Company Act, a resolution in a shareholder meeting should be made with the presence of shareholders representing a majority of the total number of outstanding shares and with the consent of a majority of the voting rights of the shareholders present.

Chapter 4 Directors and Audit Committee

  • Article 15 The Company shall have five to seven directors (including at least three independent directors and not less than one-fifth of the number of directors), whose terms of office shall be three years, and whose election shall be made by the candidate nomination system The Company may purchase liability insurance for the Directors by resolution of the Board of Directors.

  • Article 15-1 The Company shall have an audit committee consisting of all independent directors, the number of which shall not be less than three, one of whom shall be the convener, and at least one of whom shall have accounting or financial expertise.

  • Artcle 16 The total amount of shares held by all directors of the Company shall be subject to the provisions of Article 26, Paragraph 2 of the Securities and Exchange Act and the Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies.

  • Article 17 The Board of Directors shall be organized by the Directors, and the Directors shall attend the Board of Directors’ meetings in person, or if they are unable to attend for any reason, they may appoint another Director to attend by proxy.

    • At a meeting of the Board of Directors, two-thirds or more of the Directors shall attend and a majority of the Directors present shall agree to elect from among themselves a

  • 48 -

chairman of the Board of Directors, who shall represent the Company externally. The Board of Directors shall meet at least once a quarter. The Company’s Board of Directors shall convene a meeting by giving seven days’ notice to each Director. However, in case of emergency, the Board of Directors may meet at any time. The foregoing notice shall be given in writing, by e-mail or by facsimile, stating the causes and subjects of the meeting.

  • Article 18 Resolutions regarding significant matters of the Company shall be passed by a majority of the Board of Directors with at least two-thirds of the Directors present, and the significant matters that shall be specially resolved in accordance with this Article are as follows:

  • I. Change of the Articles of Incorporation.

  • II. Review of budget and final business and accounting reports.

  • III Proposal for dissolution, division or merger of the Company with other companies.

  • IV. Proposal for a resolution to distribute earnings or to make up losses.

  • V. The approval of endorsements, acceptances, guarantees and commitments in the name of the Company.

  • VI. Approval for financing, guarantees, acceptances, and other external advances and loans from financial institutions.

  • VII. Approval to invest in other businesses.

If the resolution of the Board of Directors on the significant issues mentioned above is also subject to the resolution of the shareholders’ meeting, the resolution of the Board of Directors shall be submitted to the shareholders’ meeting for resolution afterwards.

  • Article 19 If the chairman of the board of directors is absent from office or is unable to exercise his or her duties for any reason, his or her proxy shall be governed by Article 208 of the Company Act.

  • Article 20 The remuneration of the Company’s directors shall be determined by the Board of Directors with reference to the extent of each director’s participation in the Company’s operations and the value of his or her contribution, and with reference to the usual level of domestic and foreign industry payment standards.

    • Chapter 5 Managerial Officer

  • Article 21 The Company may have a number of managerial officers whose appointment, dismissal and remuneration shall be in accordance with Article 29 of the Company Act. 

     - Chapter 6 Accounting

  • Article 22 At the end of each fiscal year, the Company’s Board of Directors shall prepare:

  • I. Business Report:

  • II. Financial statements

  • III. Earnings distribution or losses make-up proposal

  • The business and accounting reports shall be submitted to the shareholders for adoption in accordance with the law.

  • Article 23 The Company shall distribute not less than 10% of the current year’s profit situation for employee remuneration and not more than 2% of current year’s profit situation for director remuneration. However, profits must first be taken to offset against

  • 49 -

cumulative losses, if any.

Employee remuneration, as mentioned above, can be paid in cash or in shares. Qualified employees of subsidiaries are also included in the payment.

Current year profit situation as mentioned in the first paragraph refers to the profit which is the current year’s pre-tax profit before distribution of employee remuneration and directors remuneration.

The distribution of employee and director remuneration shall be executed after the resolution approval at the Board meeting with more than two-thirds of directors attending and of more than half of the attending directors agreed and passed the resolution, and reported to the shareholders meeting.

  • Article 23-1 If the Company has any surplus in earnings after annual accounting close, the Company shall first pay tax, make up for accumulated loss of previous years and then set aside 10% as legal reserve. However, if legal reserve balance has reached the Company’s paid-in capital, no more legal reserve should be provided for, and the remainder may be appropriated or reversed as a special reserve in accordance with the law or the regulations of the competent authorities. If there is still surplus, the remainder shall be added to the accumulated undistributed earnings and the board of directors shall prepare an earnings distribution proposal. If the distribution is made by issuing new shares, the distribution shall be approved by the shareholders’ meeting;

If the Company distributes all or part of the dividends and bonuses or legal reserve and capital surplus in the form of cash, the Board of Directors is authorized to do so with the presence of at least two-thirds of the directors and the approval of a majority of the directors present, and to report to the shareholders’ meeting.

  • Article 23-2 The Company takes into account the overall business environment, industrial growth, and the Company’s long-term financial planning for stable operation and development to adopt a residual dividend policy, which is mainly based on the Company’s future capital budgeting plan to measure the annual capital needs. After using the retained earnings for funding, the remaining surplus will be distributed in the form of dividends.

Steps for distribution as below:

  • I. Decide on the best capital budget.

  • II. Decide on the financing required for one of the capital budgeting items. III. Decide on the amount of the financing to be supported by retained earnings (methods such as cash capital increase or corporate bonds and so on can be adopted as support).

  • IV. After retaining the portion required for operation needs out of the earnings remainder, the rest should be distributed to shareholders in the form of dividends. Cash dividends distribution proportion should not be lower than 20% of the total amount of dividends for the distribution proportion of the Company’s dividends.

Chapter 7 Supplementary Provisions

  • Article 24 The directors, managerial officers and employees of the Company shall not disclose or divulge to others the confidential documents of the Company or the confidential

  • 50 -

information on technology, markets, products, etc. obtained through their participation in the operation of the Company.

Detailed confidential information on technology, markets, products, etc. of the Company shall not be reported to the shareholders’ meeting without the consent of a majority of the shareholders present and voting on behalf of at least two-thirds of the total number of issued shares.

  • Article 25 Matters not provided for in these Articles of Incorporation shall be governed by the provisions of the Company Act and other relevant laws and regulations.

  • Article 26 The Articles of Incorporation were established on October 7, 1988. The 1st amendment was made on May 29, 1990. The 2nd amendment was made on April 2, 1991, and the 3rd amendment was made on May 4, 1992. The 4th amendment was made on April 26, 1994. The 5th amendment was made on May 28, 1994. The 6th amendment was made on June 6, 1995. The 7[th] amendment was made on June 1, 1996. The 8[th] amendment was made on May 21, 1997. The 9th amendment was made on May 21, 1998. The 10th amendment was made on May 5, 1999. The 11th amendment was made on June 12, 2000. The 12[th] amendment was made on April 24, 2001. The 13th amendment was made on May 28, 2002. The 14th amendment was made on June 3, 2003. The 15th amendment was made on June 24, 2004. The 16th amendment was made on June 12, 2006. The 17[th] amendment was made on June 18, 2010. The 18[th] amendment was made on June 22, 2011. The 19th amendment was made on June 23, 2016. The 20th amendment was made on June 23, 2017. The 21st amendment was made on June 11, 2019. The 22nd amendment was made on June 10, 2020. The 23rd amendment was made on May 26, 2022.

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Taiwan Mask Corporation
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Sean Chen, Chairman

  • 51 -

[Appendix 2]

Taiwan Mask Corporation

Procedures for Election of Directors

  • Article 1: The election and appointment of the Company’s Directors shall be handled in accordance with these regulations, unless otherwise provided by laws or regulations.

  • Article 2: The overall composition of the Board of Directors shall be taken into consideration in the selection of the Company’s Directors. The composition of the Board of Directors shall be determined by taking diversity into consideration and formulating an appropriate policy on diversity based on the Company’s business operations, operating dynamics, and development needs. It is advisable that the policy include, without being limited to, the following two general standards:

  • I. Basic requirements and values: Gender, age, nationality, and culture.

  • II. Professional knowledge and skills: A professional background (e.g., law, accounting, industry, finance, marketing, technology), professional skills, and industry experience.

Each Board member shall have the necessary knowledge, skill, and experience to perform their duties; the abilities that must be present in the Board as a whole are as follows:

  • I. The ability to make judgments about operations.

  • II. Accounting and financial analysis ability.

  • III. Business management ability.

  • IV. Crisis management ability.

  • V. Knowledge of the industry.

  • VI. An international market perspective.

  • VII. Leadership ability.

  • VIII. Decision-making ability.

More than half of the Directors shall be persons who have neither a spousal

relationship nor a relationship within the second degree of kinship with any other Director.

The Board of Directors of the Company shall consider adjusting its composition based on the results of performance evaluation.

  • Article 3: The qualifications for the independent Directors of the Company shall comply with Articles 2, 3, and 4 of the “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies”.

  • 52 -

The election of independent Directors of the Company shall comply with Articles 5, 6, 7, 8, and 9 of the “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies”, and shall be conducted in accordance with Article 24 of the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”.

  • Article 4: Elections of both Directors at the Company shall be conducted in accordance with the candidate nomination system and procedures set out in Article 192-1 of the Company Act.

If for any reason the number of Directors is less than five, the Company shall hold a by-election at the most recent Shareholders’ Meeting. However, if the number of Directors’ vacancies reaches one-third of the number of seats set forth in the Articles of Incorporation, the Company shall convene an interim meeting of shareholders to hold a by-election within 60 days from the date of occurrence of the fact.

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 5: The cumulative voting method shall be used for election of the directors at the Company. Each share will have voting rights in number equal to the directors to be elected, and may be cast for a single candidate or split among multiple candidates.

  • Article 6: The Board of Directors shall prepare separate ballots for Directors in numbers corresponding to the directors to be elected. The number of voting rights associated with each ballot shall be specified on the ballots, which shall then be distributed to the attending shareholders at the Shareholders Meeting. Attendance card numbers printed on the ballots may be used instead of recording the names of voting shareholders.

  • Article 7: The number of Directors will be as specified in the Company’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 chairperson drawing lots on behalf of any person not in attendance.

  • Article 8: Before the election begins, the chairperson shall appoint a number of persons with shareholder status to perform the respective duties of vote monitoring and counting personnel, among other assigned duties. The ballot boxes shall be prepared by the Board

  • 53 -

of Directors and publicly checked by the vote monitoring personnel before voting commences.

  • Article 9: The person to be elected as a Director shall be a person of capacity. 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 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.

  • Article 10: A ballot is invalid under any of the following circumstances:

  • The ballots prepared by the person with the right to convene are not used.

  • A blank ballot is placed in the ballot box,

  • The writing is unclear and indecipherable or has been altered.

  • The name of the candidate does not match the list of nominated candidates for Director.

  • Other words or marks are entered in addition to the candidate’s account name or shareholder account number (or identity card number) and the number of voting rights allotted.

  • Article 11: Ballots will be opened on the spot after voting, and the result of the balloting shall be announced by the chairman.

The ballots for the election referred to in the preceding paragraph shall be sealed with the signatures of the monitoring personnel and kept 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 12: The Procedures shall be adopted and implemented after approval in the Shareholders’ Meeting and shall be amended in the same manner.

§ Versions §

Version 1 Entered into effect on June 15, 2007.

Version 2 Amended on June 25, 2015.

Version 3 Amended on June 23, 2017.

Version 4 Amended on May 31, 2021.

  • 54 -

[Appendix 3]

Taiwan Mask Corporation

Rules of Procedure for Shareholders’ Meetings

July 5, 2021 The amendment was approved by the 2021 regular shareholders’ meeting

  • I. The shareholders’ meetings of the Company shall be conducted in accordance with the rules unless otherwise provided by law.

  • II. The Company should furnish a signature book for attending shareholders, or the attending shareholders may hand in a sign-in card instead.

  • The number of shares present shall be calculated based on the signature book or the sign-in card submitted.

  • III. Voting in a shareholders’ meeting should be calculated based on numbers of shares. The shareholders’ meeting shall be held at the Company’s location or at a place convenient for shareholders to attend and suitable for the shareholders’ meeting, and the meeting shall commence no earlier than 9:00 a.m. or later than 3:00 p.m.

  • V. The chairman should chair the meeting convened by the chairperson. Vice-chairman is to chair the meeting on behalf of the chairman if the chairman takes the day off or for any reason cannot exercise the power. The chairman is to appoint a managing director on behalf of the vice-chairman if the vice-chairman cannot attend the meeting due to the aforementioned reasons. A director is assigned if there is no managing director. In the event that the chairman does not appoint anyone, the managing director or the directors are to recommend one person.

  • If the shareholders’ meeting is convened by someone with the convening right but other than the Board of Directors, the chairperson of the meeting shall be the person with the convening right, and if there are more than two such persons, one of them shall be elected as the chairperson of the meeting.

  • VI. The Company may appoint lawyers, CPAs or related personnel to sit in the shareholders’ meetings.

  • The personnel administering the shareholders’ meeting should wear identification cards or armbands.

  • VII. Proceedings of a board meeting shall be recorded in their entirety in audio or video, and the recording shall be retained for a minimum of 1 year

  • VIII. The chairperson should call the meeting to order at the scheduled meeting time. However, when the attending shareholders do not represent a majority of the total number of issued shares, the chairperson may announce a postponement. No more than two such postponements, for a combined total of no more than one hour, may be made. When there are still insufficient attending shareholders representing more than one-third of the total issued shares after two postponements, a tentative resolution may be adopted in accordance with Article 175, Paragraph 1 of the Company Act

  • Before the conclusion of the meeting, if the attending shareholders represent a majority of the total number of issued shares, the chairperson may submit a tentative resolution for voting by the shareholder meeting in accordance with Article 174 of the Company Act.

  • IX. If a shareholders meeting is convened by the Board of Directors, the meeting agenda shall be set by the Board of Directors. The meeting should proceed in the order set by the agenda, which may not be changed without a resolution of the shareholder meeting.

  • 55 -

If a shareholder meeting is convened by someone with the convening right but other than the Board of Directors, the provisions of the preceding paragraph shall apply mutatis mutandis. The chairperson must not declare the meeting adjourned before conclusion of the meeting agenda of the preceding two paragraphs (including extraordinary motions), except by a resolution of the shareholder meeting.

  • X. When discussing proposals, the proposals shall be discussed in the order of the agenda. The chairperson shall stop any speaker who violates the procedures. In addition to the motions listed on the agenda, any other motions, amendments or substitutions of original motions proposed by the shareholders shall be seconded by other shareholders, and the shares represented by the proposer and the seconder shall reach 10% of the total number of issued common shares.

  • XI. Before speaking, an attending shareholder must specify the subject of the speech on a speaker slip , his or her shareholder account number (or attendance card number) and account name. The order in which shareholders speak will be set by the chairperson. Shareholders who have just prepared the speech memo without taking the floor for delivery of speech shall be deemed no delivery of speech. In case the content of the speech delivered on the floor is irrelevant with the content in the speech memo, the latter shall prevail. When a shareholder is having the floor, all other shareholders shall not interfere unless at the consent of the chairperson or the shareholder who is taking the floor. Any unrestrained action shall be discouraged by the chair.

  • XII. A shareholder may not speak more than twice on the same proposal and each time shall not exceed five minutes.

  • If the shareholder’s speech violates the rules or exceeds the scope of the topic, the chairperson may terminate the speech.

  • XIII. When an institution is appointed to attend as proxy, it may designate only one person to represent it in the meeting. When a juristic person shareholder appoints two or more representatives to attend a shareholders’ meeting, only one of the representatives so appointed may speak on the same proposal.

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

  • XV. When the chairperson is of the opinion that a proposal has been discussed sufficiently to put it to voting, the chairperson may announce the discussion closed, call for voting, and schedule sufficient time for voting.

  • XVI. Monitoring and counting personnel for voting on a proposal shall be appointed by the chairperson, but all monitoring personnel should be shareholders. Voting results shall be made known on-site immediately and recorded in writing.

  • XVII. When a meeting is in progress, the chairperson may announce a break based on time considerations

  • XVIII. Unless otherwise required by the Company Act and by the Company’s Article of Incorporation, the approval of a proposal shall require an affirmative vote of a majority of the voting rights of the attending shareholders.

  • For the motion that the chairperson consults every attending shareholder without any objection, it is considered passed with the same effectiveness as the voting.

  • XIX. For the amendment or substitute of the same motion, the chairperson is to combine it with the original motion to determine the vote order. If one of the proposals has been passed, the

  • 56 -

other proposals are viewed as denied and no more voting will be conducted.

  • XX. The chairperson may direct proctors (or security personnel) to help maintain order in the meeting place. The proctors (or security personnel) help maintaining order at the meeting place shall wear an identification card or armband bearing the word “Proctor.”

  • XXI. The rules shall come into force after approved by the shareholders’ meeting, and the same applies to any amendment.

  • 57 -

[Appendix 4]

Taiwan Mask Corporation Shareholding of all directors

  • I. The Company has a paid-in capital of NT$2,564,464,750 and has issued 256,446,475 shares of common stock, and has an audit committee with all independent directors in place of supervisors in accordance with Article 14-4 of the “Securities and Exchange Act”.

II. In accordance with Article 26 of the Securities and Exchange Act and the “ Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies”, if two or more independent directors are elected, the shareholding percentage of all directors other than independent directors shall be reduced to 80%, and the minimum number of shares to be held by all directors other than independent directors of the Company shall be 12,000,000 shares.

III. As of March 26, 2023, the date of stock transfer suspension of the shareholders’ meeting, the number of shares held by each individual and all directors as recorded in the shareholder roster is as follows:

is as follows: is as follows:
As of 2023.03.26
No. of shares held
Holding
percentage(%)
2,000,000
0.78
2,750,000
1.07
9,907,000
3.86

4,364,000
1.70
0
0.00
6,051
0.00
7,000
0.00
19,021,000
7.41
Holding
Job title Name No. of shares held
percentage(%)
Chairman Sean Chen 2,000,000
0.78
Director Lidon Chen 2,750,000
1.07
Director Chao-Yi Wu 9,907,000
3.86
Director Fushuo Investment Co., Ltd.
Representative: Martin Chu
4,364,000
1.70
Independent Director Wei-Chen Wang 0
0.00
Independent Director Huan-Kuei Cheng 6,051
0.00
Independent Director Hui-Fen Chan 7,000
0.00
Overall Directors’ Shareholding Position
19,021,000
7.41
(ExcludingIndependent Directors)

IV. The total number of shares held by all directors of the Company, other than independent directors, has reached the legally required percentage.

  • 58 -

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