TMC — Proxy Solicitation & Information Statement 2022

Aug 5, 2022

Notice of Meeting

• I. The 2022 First Extraordinary Shareholders’ Meeting will be held on Thursday, July 26, 2022 at 9:00 a.m. (Registration time for shareholders will be 30 minutes prior to the meeting) at No. 1, Industrial East Road 2, Hsinchu Science Park (Darwin Hall, 2F, Science and Technology Life Center), with the following main content: (I) Report: Report on the execution of the Company’s 29th share repurchase. (II) Discussion: I It is proposed to issue common shares by private placement. (III) Extempore motions.

• II. It is proposed to conduct private placement of common shares. Description is as follows：

• In order to raise working capital to build a robust financial structure, expand the factory and purchase machinery and equipment to increase the scale of operations, and draw long-term strategic partners to meet the needs of the Company's long-term development, and consider the timeliness and convenience of raising funds, it is proposed to conduct cash capital increase by private placement of new shares. It is estimated that the private placement will not exceed 125,000 thousand shares, with a par value of NT$10 per share. It is proposed to have the shareholder meeting authorize the board to consider the actual fund-raising situation and conduct the private placement one time to three times within one year after the date of shareholder meeting resolution, and the board is authorized to determine the number of shares to be issued each time.

• 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 setting of the price:

    • A. The pricing 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 calculation basis before the pricing date.

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

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

    • B. The actual issue price within the range of not less than the percentage resolved by the shareholder meeting is determined by the board, depending on the status of specific persons and market condition 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:

    • A. Method and purpose selecting specific persons:They are selected in accordance with the provisions of Paragraph 1, Article 43-6 of the Securities and Exchange Act and other relevant orders. The selection of placees is limited to the strategic investors in the electronics industry who can assist the Company in expanding the scale of operations

and complement one another without causing major changes in the Company's future managerial control.

• B. Necessity: In order to integrate the Company's business and reinforce the competitiveness, it is a necessary strategy for the Company's long-term development to incorporate complementary strategic investors in the electronics industry who can expand the Company's future scale of operations.

• C. Expected benefits: 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 be beneficial to shareholders' equity.

• D. So far, we have not contacted specific placees.

• (3) Necessary reasons for private placement:

• Compared with public offering, the requirement of restricted transfer of securities in private placement within three years will better ensure long-term cooperative relationship between the Company and strategic investment partners. Considering the timeliness of fundraising, we choose not to take the public offering but private placement to issue new shares for cash capital increase.

• (4) Use of funds and expected benefits:

• Depending on the market condition and the situation of the specific persons, we will organize one to three rounds of private placement. The purpose of each private placement is to raise working capital to build a robust financial structure, expand the factory and purchase machinery and equipment to increase the scale of operations, and draw long-term strategic partners 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.

• One to three rounds of private placement of common shares will be used to maintain flexibility within the quota. It is expected to improve the opportunity to draw different strategic investors and diversify the subscription as much as possible. This can further reduce the probability of changes in managerial control caused by the private placement, and protect the rights and interests of current shareholders. In the future, we will also discuss with placees in advance when looking for strategic investors, so that there will be no major changes in managerial control.

• 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 and not transferred within three years from the delivery date.Three years after the date of delivery of the shares by private placement, and after obtaining a letter of consent to public offering from the Taiwan Stock Exchange Corporation in accordance with relevant laws and regulations, we may apply to the competent authority for the supplementary issue procedures to have the shares available for public trading.

• For this private placement of common shares, it is proposed to request the shareholder meeting to authorize the chairman or his designated person to sign and discuss all contracts and documents related to the private placement on behalf of the Company and handle all matters related to the private placement plan for the Company.

• The number of shares, issue price, issue criteria, plan matters and other outstanding matters related to the private placement of common shares are to be determined by the board authorized by the shareholder meeting and depending on the market condition and the needs of the Company's operations. Any changes to be made subject to the regulations of the competent authority or the impact of the market environment will also be handled by the board.

• Any significant change in the managerial control during the period from 1 year before the board's resolution on the private placement of securities to 1 year from the delivery date of the securities from private placement: None.

• Objections or qualified opinions from independent directors? None.

• For the information about the private placement of securities, please refer to the "Private Placement Section" on the Market Observation Post System (Link:

  • https://mops.twse.com.tw/mops/web/t116sb01)

• III. If the causes and subjects of the s Extraordinary Shareholders' meeting are under Article 172 of the Company Act, please go to the Market Observation Post System (https://mops.twse.com.tw) and click "Annual Report and Shareholders' Meeting Related Information" in the "eBook" under "Basic Information", enter the company code / or abbreviation and year, and click "Supplementary Information for the Meeting" or "Reference Information for the Shareholders' Meeting". Click on "Meeting Handbook and Supplementary Information for Meetings" or "Reference Information for Shareholders' Meeting".

• IV. In accordance with Article 165 of the Company Act, the stock transfer was suspended from June 27, 2022 to July 26, 2022.

• V. In addition to the announcement on the Market Observation Post System, a shareholder attendance card and a proxy form were issued to shareholders to attend the meeting. If you are attending the meeting in person, please fill out the attendance card of the 3rd copy (no need to send it back) and bring it to the meeting location on the day of the meeting. If you appoint a proxy to attend the meeting, please fill out the proxy form of the 4th copy and send it to the stock affairs agency department of Grand Fortune Securities, the Company’s shareholder services provider, 5 days before the meeting. After the department has stamped the attendance card with the registration seal, it will be sent to you or your proxy. If you or your proxy has not received the attendance card by the day before the meeting, please bring your ID card and seal to the meeting location on the day of the meeting to attend the meeting.

• VI. If there is a proxy solicitor for the shareholders' meeting, the Company intends to submit the written information of the proxy solicitation to the Securities and Futures Institute of the R.O.C. (URL: https://www.free.sfi.org.tw) by July 8, 2022, in accordance with the regulations. After accessing the website, investors should enter the stock code/company in the "Free Inquiry

System for Proxy Forms".

• VII. At the shareholders' meeting, you can exercise your voting rights electronically during the period from July 9, 2022 to July 2

• VIII.3, 2022. Please visit the "Stockvote Platform" website of Taiwan Depository & Clearing

• Corporation and follow the relevant instructions to vote [URL: https://www.stockvote.com.tw].

• IX. The verification institution of proxy forms for the shareholders' meeting is the Stock Affairs Agency Department of Grand Fortune Securities.

• X. Please follow the instructions.

Yours sincerely

The Board of Directors of Taiwan Mask Corporation,