TongHwa - AGM Information 2024 | FinancialReports.eu

Stock Code：1418

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TongHwa Corporation

(formerly known as

Tong-Hwa Synthetic Fiber Co., Ltd.)

2024 Annual Shareholders’ Meeting

Handbook

June 25, 2024

Contents

I. Meeting Procedure 1

II. Meeting Agenda 2

1. Report Items 3

2. Matters for Ratification 7

3. Matters for Discussion 27

4. Questions and Motions 31

5. Adjournment 32

III. Appendices

Rules of Procedure for Board Meetings 33
Article of Incorporation 38
Rules of Procedure for Shareholders’ Meetings 42

IV. Shareholdings of Directors 45

TongHwa Corporation 2024 Annual Shareholders’ Meeting Procedure

Call the Meeting to Order
Chairperson Remarks
Meeting Agenda

TongHwa Corporation 2024 Annual Shareholders’ Meeting Agenda

Date (Time): June 25, 2024 at 9:00 a.m.

Place: No.1,Section 3,Zhongxiao East Road, Da an District,Taipei City

(GIS TAIPEI TECH CONVENTION CENTER)

Convening Method: Physical Shareholders’ Meeting

Report Items:

(1) 2023 Business Report

(2) Audit Committee’s Review Opinions on the 2023 Annual Final Accounting Books and Statements

(3) Report for Loss Aggregates to One Half of the Paid-in Capital

(4) Report for Amendment of Rules of Procedure for Board Meetings

Matters for Ratification:

(1) 2023 Business Report and Financial Statements

(2) 2023 Loss Off-setting Proposal

Matters for Discussion:

(1) Urban renewal project for the whole industrial area of Hsinchu Plant

(2) Change of business Items

(3) Amendment to Articles of Incorporation

Extempore Motion:
Adjournment:
Report Items:

Report Items

2023 Business Report

A. The annual demand for acrylic staple fibre in the Chinese mainland market in 2023 is about 600,000 tonnes, which is flat compared to last year; No new production capacity. Jilin Chemical Fibre and SPC shifted their development focus to carbon fibre. The proportion of acrylic staple fibre in acrylonitrile applications has dropped to about 20%.

B. The main Raw materials acrylonitrile China added an annual production capacity of 260,000 tonnes, and the annual production capacity of acrylonitrile increased from 3,810,000 tonnes to 4,070,000 tonnes, and will continue to increase to 4,400,000 tonnes in 2024. The annual production of acrylonitrile is 1,040,000 tonnes, ranking first in the world. The demand comes from the new production capacity of ABS and the expansion and construction of the production of nylon 66 Raw materials.

C. The price of acrylic staple fibre at the end of 2023 decreased by US $0.23/kg, about 11%, compared to the beginning of the year. The price of acrylonitrile increased by USD 57/tonne, about 5%. Previously (acrylonitrile price/acrylic staple fibre price) was about 70% for a long time. At the beginning of the year, this ratio decreased to 57.5% due to the falling price of acrylonitrile. However, it has risen to 68.5% in December. It is estimated that it will be reduced to 65% or lower in the first quarter of 2024.

We hereby certify the 2023 production, sales, and operations report as follows.

Production 114 tons

Sales 511 tons

D. In order to pursue the sustainable operation of the Company, the Company intends to diversify its operations, develop diversified businesses, and start the Assets revitalization transformation plan.

Please check and verify.

Chairman: Lin Chuang-Ru　 Manager: Lin Chuang-Ye　 Accounting Supervisor: Yeh Yan-Ling

Report Items

Audit Committee’s Review Opinions on the 2023 Annual Final Accounting Books and Statements

The Audit Committee’s Review Report

The undersigned has duly audited the Business Report, Financial Statements, and Loss Off-setting Proposal prepared by the Board of Directors for the year 2023. The Financial Statements (including the Consolidated Financial Report) had been audited by CPA Wu Xin-Liang and Peng Li-Zhen of Baker Tilly Clock & Co., and the audited reports have been presented.

The aforementioned Business Report, Financial Statements, and Loss Off-setting Proposal are found the same to be true and correct by this Audit Committee. Therefore, the Audit Committee’s Report is hereby issued in accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act.

2024 Annual Shareholders” Meeting

TongHwa Corporation

The Convenor of the Audit Committee Li Zong-Ru

March 31, 2024

Report Items

(3) Report for Loss Aggregates to One Half of the Paid-in Capital

1. Report in accordance with Article 211 of the Company Act.

2. As of December 31, 2023, the accumulated losses of the Company amounted to NTD 777,413,354, which aggregates to one half of the Company’s paid-in capital (NTD 568,343,090).

Report Items

(4) Report for Amendment of Rules of Procedure for Board Meetings

1. According to the Financial Supervisory Commission’s order Jin-Guan-Zheng-Fa-Zi No. 1120383996 issued on January 11, 2024, the Company has amended the establishment of an audit committee and will cooperate accordingly.

2. Please refer to Appendix 1 for the amended Rules of Procedure for Board Meetings.

Matters for Ratification

Matters for Ratification

Case 1:（Proposed by the Board of Directors）

Ratification Proposal for 2023 Business Report and Financial Statements

Explanation:

Business Report (Please refer to Page 3 of this Book)
Auditor’s Report (Please refer to Page 8~10, 17~19 of this Book)
Consolidated Balance Sheets (Please refer to Page 11~12 of this Book)
Consolidated Statements of Comprehensive Income (Please refer to Page 13 of this Book)
Consolidated Statements of Changes in Equity (Please refer to Page 14 of this Book)
Consolidated Statements of Cash Flows (Please refer to Page 15~16 of this Book)
Stand-alone Balance Sheets (Please refer to Page 20~21 of this Book)
Stand-alone Statements of Comprehensive Income (Please refer to Page 22 of this Book)
Stand-alone Statements of Changes in Equity (Please refer to Page 23 of this Book)

10.Stand-alone Statements of Cash Flows (Please refer to Page 24~25 of this Book)

Resolution:

Independent Auditors’ Report

To the Board of Directors and Shareholders of TongHwa Corporation

(formerly known as Tong-Hwa Synthetic Fiber Co., Ltd.)

Opinion

We have audited the accompanying consolidated financial statements of TongHwa Corporation (the “Company”) and its subsidiaries (collectively referred to as the “Group”), which comprise the consolidated balance sheets as of December 31, 2023 and 2022, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2023 and 2022, and its consolidated financial performance and consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with The Norm of Professional Ethics for Certified Public Accountants of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion based on our audits and the reports of other auditors.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the Group for the year ended December 31, 2023. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters of the consolidated financial statements for the year ended December 31, 2023 are as follows:

Fair Value Measurement of Investment Properties

For the accounting policies related to investment property, refer to Notes 4 (11) and 5 to the consolidated financial statements; for the accounting evaluation and assumptions of uncertainty related to investment property, refer to Note 5 to the consolidated financial statements; for more information related to investment property, refer to Notes 6 (10).

The investment property of TongHwa Corporation and its subsidiary was measured using the fair value method. To support the management’s reasonable estimation, the Company used an independent appraisal institution’s valuation report. Due to the selected evaluation method and parameters involved in the appraisal, which requires significant judgment and estimation, it is considered a key audit matter.

We performed the corresponding audit procedures as follows:

We evaluated the professional capability, competency, and independency of the real estate appraisers from the external joint appraiser firm entrusted by the management, and verify their qualifications.
Our firm has appointed a third-party real estate valuation expert to review the appraisal report of fair value, to understand whether the valuation methods and assumptions comply with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the Regulations on Real Estate Appraisal. We have also evaluated the relevance and reliability of the data sources and key parameters used in the appraisal report, such as the capitalization rate and discount rate, and confirmed the reasonableness of the appraisal results.

Other Matter

We have also audited the parent company only financial statements of TongHwa Corporation as of and for the years ended December 31, 2023 and 2022 on which we have issued an unmodified opinion with a paragraph of material uncertainties related to continuing operations.

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 IFRS, IAS, IFRIC, and SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

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

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of 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 communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2023 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Baker Tilly Clock & CO

CPA: Peng Li-Chen

CPA: Wu Hsin-Liang

Approval number: No. Financial-Supervisory-Securities-VI- 09600000880

No. Financial-Supervisory-Securities-Auditing-1050025873

March 11, 2024

TongHwa Corporation (formerly known as Tong-Hwa Synthetic Fiber Co., Ltd.) and its Subsidiaries

Consolidated Balance Sheets

For The Years Ended December 31, 2023, and 2022

Unit: Thousands of New Taiwan Dollars


Assets		Notes	2023/12/31		202212/31
Code	Item	Amount	%	Amount	%
	Current assets
1100	Cash	IV, VI (I)	$ 827,635	19	$ 447,724	12
1110	Current financial assets at fair value through profit or loss	4, 6 (2)	1,186	－	－	－
1120	Current financial assets at fair value through other comprehensive income	IV, VI (III)	－	－	3,728	－
1200	Other receivables		94	－	248	－
1220	Income tax assets for the current period	4, 6 (24)	218	－	34	－
130x	Inventories	IV, VI (IV)	3,459	－	7,474	－
1410	Prepayments	VI (V)	5,309	－	8,370	－
1470	Other current assets		89	－	52	－
11xx	Total current assets		837,990	19	467,630	12
	Non-current assets
1510	Non-current financial assets at fair value through profit or loss	4, 6 (2)	103,785	2	95,094	3
1517	Non-current financial assets at fair value through other comprehensive income	IV, VI (III)	5,181	－	3,603	－
1550	Investments accounted for using equity method	IV, VI (VI)	9,586	－	8,245	－
1600	Property, plant and equipment	4, 6 (7), 8	686,167	15	637,176	16
1755	Assets	IV, VI (VIII)	12,900	－	14,765	－
1760	Investment property	4, 6 (10), 8	2,796,985	63	2,635,533	68
1975	Net defined benefit Assets-non-current	IV, VI (15)	18,157	1	17,129	1
1990	Guarantee deposits paid		7,338	－	7,338	－
15xx	Total Non-Current Assets		3,640,099	81	3,418,883	88
1xxx	Total Assets		$ 4,478,089	100	$ 3,886,513	100

(Continued)

TongHwa Corporation (formerly known as Tong-Hwa Synthetic Fiber Co., Ltd.) and its Subsidiaries

Consolidated Balance Sheets (Continued)

For The Years Ended December 31, 2023 and 2022

Unit: Thousands of New Taiwan Dollars


Liabilities and Equity		Notes	2023/12/31		2022/12/31
Code	Item	Amount	%	Amount	%
	Current liabilities
2100	Short-term borrowings	VI (11) XVIII	$ 100,000	3	$ －	－
2150	Notes payable	VII	61	－	105	－
2200	Other payables	VI (12)	13,959	－	11,552	－
2280	Liabilities-current	IV, VI (VIII)	1,873	－	1,831	－
2320	Long-term borrowings due within one year	VI (13), VIII	2,602,000	58	2,052,000	53
2399	Other current liabilities	VI (14)	1,763	－	2,926	－
21xx	Total current liabilities		2,719,656	61	2,068,414	53
	Non-current liabilities
2540	Long-term borrowings	VI (13), VIII	－	－	100,000	3
2570	Deferred tax liabilities	4, 6 (24)	475,109	11	475,036	12
2580	Liabilities-Non-current	IV, VI (VIII)	11,344	－	13,217	－
2670	Other non-current liabilities	VI (14)	429	－	315	－
25xx	Total non-current liabilities		486,882	11	588,568	15
2xxx	Liabilities Total		3,206,538	72	2,656,982	68
	Equity	VI (16)
3100	Share capital		568,343	12	568,343	15
3200	Capital surplus		8,008	－	8,006	－
	Retained earnings
3320	Special reserve		1,560	－	1,560	－
3350	Unappropriated accumulated deficit		(777,414)	(17)	(819,583)	(21)
3400	Other equity interest		1,551,377	35	1,551,860	40
3500	Treasury shares		(80,333)	(2)	(80,651)	(2)
31xx	Total equity attributable to owners of parent		1,271,541	28	1,229,535	32
36xx	Non-controlling interests		10	－	(4)	－
3xxx	Equity Total		1,271,551	28	1,229,531	32
	Total Liabilities and Equity		$ 4,478,089	100	$ 3,886,513	100

（Please refer to the Note accompanying to the consolidated financial statements）

Chairman: Lin Chuang-Ru　　　Manager: Lin Chuang-Ye　　Accounting Supervisor: Yeh Yan-Ling

TongHwa Corporation (formerly known as Tong-Hwa Synthetic Fiber Co., Ltd.) and its Subsidiaries

Consolidated Statements of Comprehensive Income

For The Years Ended December 31, 2023 and 2022

Unit: Thousands of New Taiwan Dollars


Code	Item	Notes	2023		2022
Amount	%	Amount	%
4000	Operating revenue	IV, VI (17)	$ 20,587	100	$ 20,754	100
5000	Operating costs	6 (4, 23), 7	(16,674)	(81)	(27,919)	(135)
5900	Gross profit from operations (loss)		3,913	19	(7,165)	(35)
6000	Operating expenses	6 (23), 7
6100	Selling expenses		(24,858)	(121)	(24,045)	(116)
6200	Administrative expenses		(52,664)	(256)	(51,496)	(248)
	Total operating expenses		(77,522)	(377)	(75,541)	(364)
6500	Other income and net expenses	VI (18)	(966)	(5)	2,596	13
6900	Net operating loss		(74,575)	(363)	(80,110)	(386)
7000	Non-operating income and expenses
7100	Interest revenue	VI (19)	3,690	18	321	2
7010	Other income	VI (20)	26,311	127	5,629	27
7020	Other gains and losses	VI (XXI)	154,127	749	137,720	664
7050	Finance costs	VI (XXII)	(70,747)	(344)	(44,149)	(213)
7060	Share of profit of associates accounted for using Equity	IV, VI (VI)	1,341	7	1,754	8
	Total non-operating income and expenses		114,722	557	101,275	488
7900	Net profit before tax		40,147	194	21,165	102
7950	income tax (expense)	4, 6 (24)	(173)	(1)	645	3
8200	Net Profit		39,974	193	21,810	105
8300	Other comprehensive income
8310	Item that will not be reclassified to profit or loss:
8311	Remeasurement of defined benefit plans	VI (15)	403	2	5,353	25
8316	Unrealized gains (losses) from investments in Other comprehensive income based on Fair value’s Equity	VI (16)	1,511	7	(4,207)	(20)
8349	Amendments to Item in relation to income tax that will not be reclassified to profit or loss	4, 6 (24)	(81)	－	(1,070)	(5)
	Other comprehensive income		1,833	9	76	－
8500	Total comprehensive income		41,807	202	21,886	105
8600	Net income (loss) attributable to:
8610	Owners of parent company		$ 39,981	193	$ 21,817	105
8620	Non-controlling interests		$ (7)	－	$ (7)	－
8700	Comprehensive income attributable to:
8710	Owners of parent company		$ 41,814	202	$ 21,893	105
8720	Non-controlling interests		$ (7)	－	$ (7)	－
	Earnings per share (NT $)	VI (XXV)
9750	Basic earnings per share		$0.74		$0.40

（Please refer to the Note accompanying to the consolidated financial statements）

Chairman: Lin Chuang-Ru　　　Manager: Lin Chuang-Ye　　Accounting Supervisor: Yeh Yan-Ling

TongHwa Corporation (formerly known as Tong-Hwa Synthetic Fiber Co., Ltd.) and its Subsidiaries

Consolidated Statements of Changes in Equity

For The Years Ended December 31, 2023 and 2022

Unit: Thousands of New Taiwan Dollars


Item	Equity attributable to owners of parent								Non-controlling interests	Equity Total
Share capital	Capital surplus	Retained earnings		Other equity interest Item.		Treasury shares	Total
Special Surplus reserves	Unappropriated accumulated deficit	Fair value through Other comprehensive income Fair value measurement using Assets Unrealized profit or loss	Real estate Revaluation surplus
Balance at January 1,2022	$ 568,343	$ 8,006	$ 1,560	$ (845,683)	$ (225,924)	$ 1,781,991	$ (80,651)	$ 1,207,642	$ 3	$ 1,207,645
Net Profit	－	－	－	21,817	－	－	－	21,817	(7)	21,810
Other comprehensive income	－	－	－	4,283	(4,207)	－	－	76	－	76
Total comprehensive income	－	－	－	26,100	(4,207)	－	－	21,893	(7)	21,886
Balance as of December 31,2022	$ 568,343	$ 8,006	$ 1,560	$ (819,583)	$ (230,131)	$ 1,781,991	$ (80,651)	$ 1,229,535	$ (4)	$ 1,229,531
Balance at January 1,2023	$ 568,343	$ 8,006	$ 1,560	$ (819,583)	$ (230,131)	$ 1,781,991	$ (80,651)	$ 1,229,535	$ (4)	$ 1,229,531
Net Profit	－	－	－	39,981	－	－	－	39,981	(7)	39,974
Other comprehensive income	－	－	－	322	1,511	－	－	1,833	－	1,833
Total comprehensive income	－	－	－	40,303	1,511	－	－	41,814	(7)	41,807
Disposal of parent company shares by subsidiaries Transaction of treasury shares	－	－	－	(128)	－	－	318	190	21	211
Disposal of investments accounted for under Other comprehensive income Fair value-Equity	－	－	－	1,994	(1,994)	－	－	－	－	－
Arising from exercise of right of inclusion	－	2	－	－	－	－	－	2	－	2
Balance at December 31,2023	$ 568,343	$ 8,008	$ 1,560	$ (777,414)	$ (230,614)	$ 1,781,991	$ (80,333)	$ 1,271,541	$ 10	$ 1,271,551

（Please refer to the Note accompanying to the consolidated financial statements）

Chairman: Lin Chuang-Ru Manager: Lin Chuang-Ye　　 Accounting Supervisor: Yeh Yan-Ling

TongHwa Corporation (formerly known as Tong-Hwa Synthetic Fiber Co., Ltd.) and its Subsidiaries

Consolidated Statements of Cash Flows

For The Years Ended December 31, 2023 and 2022

Unit: Thousands of New Taiwan Dollars


Item	2023	2022
Cash flows from operating activities:
Profit before tax	$ 40,147	$ 21,165
Adjustments:
Item
Depreciation expense	4,225	3,011
Financial assets at fair value through profit or loss Fair value Assets (Gain) loss	(10,114)	4,906
Interest expense	70,747	44,149
Interest revenue	(3,690)	(321)
Dividend revenue	(3,174)	(126)
Share of profit of associates accounted for using Equity	(1,341)	(1,754)
Impairment loss on non-financial assets	2,181	－
Gains on disposals of property, plant and equipment	(1,215)	(2,596)
Unrealized foreign exchange loss	－	7
Gain on fair value adjustment of investment property	(144,066)	(142,577)
Other income	－	(269)
Net changes in operating Assets and Liabilities
Other receivables	160	(248)
Inventories	4,015	8,450
Prepayments	3,061	(2,541)
Other current assets	(37)	37
Assets	(625)	(473)
Notes payable	(44)	77
Other payables	681	(1,370)
Other current liabilities	(1,163)	1,068
Other non-current liabilities	114	(11)
Deferred tax liabilities	(181)	－

(Continued)

TongHwa Corporation (formerly known as Tong-Hwa Synthetic Fiber Co., Ltd.) and its Subsidiaries

Consolidated Statements of Cash Flows (Continued)

For The Years Ended December 31, 2023 and 2022

Unit: Thousands of New Taiwan Dollars


Item	2023	2022
Cash outflow generated from operations	(40,319)	(69,416)
Interest received	3,690	321
Interest paid	(69,021)	(42,758)
Income taxes paid	(184)	(30)
Net cash flows used in operating activities	(105,834)	(111,883)
Cash flows from (used in) investing activities
Acquisition of Fair value Assets	(20,493)	(100,000)
Disposal of Fair value Assets	20,730	－
Disposal Other comprehensive income is accounted for as Fair value Assets	3,661	－
Acquisition of property, plant and equipment	(53,594)	(4,570)
Acquisition of investment properties	(17,386)	－
Proceeds from disposal of property, plant and equipment	1,277	2,596
Dividends received	3,168	126
Net cash flows used in investing activities	(62,637)	(101,848)
Cash flows from financing activities
Increase in short-term loans	100,000	－
Proceeds from long-term debt	2,502,000	310,000
Repayments of long-term debt	(2,052,000)	－
Repayment of lease principal	(1,831)	(1,390)
Proceeds from sale of treasury shares	211	－
Other financing activities (disgorgement)	2	－
Net cash flows from financing activities	548,382	308,610
Effect of exchange rate changes on cash and cash equivalents	－	(7)
Net increase in cash and cash equivalents	379,911	94,872
Cash and cash equivalents at beginning of period	447,724	352,852
Cash and cash equivalents at end of period	$ 827,635	$ 447,724

（Please refer to the Note accompanying to the consolidated financial statements）

Chairman: Lin Chuang-Ru　　　Manager: Lin Chuang-Ye　　 Accounting Supervisor: Yeh Yan-Ling

Independent Auditors’ Report

To the Board of Directors and Shareholders of TongHwa Corporation

(formerly known as Tong-Hwa Synthetic Fiber Co., Ltd.)

Opinion

We have audited the accompanying stand-alone financial statements of TongHwa Corporation (the “Company”), which comprise the stand-alone balance sheets as of December 31, 2023 and 2022, and the stand-alone statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the stand-alone financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2023 and 2022, and its stand-alone financial performance and stand-alone cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuer.

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. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Stand-alone Financial Statements section of our report. We are independent of the Company in accordance with The Norm of Professional Ethics for Certified Public Accountants of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion based on our audits and the reports of other auditors.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the stand-alone financial statements of the Company for the year ended December 31, 2023. These matters were addressed in the context of our audit of the stand-alone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters of the stand-alone financial statements for the year ended December 31, 2023 are as follows:

Fair Value Measurement of Investment Properties

For the accounting policies related to investment property, refer to Notes 4 (9) and 5 to the stand-alone financial statements; for the accounting evaluation and assumptions of uncertainty related to investment property, refer to Note 5 to the stand-alone financial statements; for more information related to investment property, refer to Notes 6 (10).

The investment property of TongHwa Corporation was measured using the fair value method. To support the management’s reasonable estimation, the Company used an independent appraisal institution’s valuation report. Due to the selected evaluation method and parameters involved in the appraisal, which requires significant judgment and estimation, it is considered a key audit matter.

We performed the corresponding audit procedures as follows:

We evaluated the professional capability, competency, and independency of the real estate appraisers from the external joint appraiser firm entrusted by the management, and verify their qualifications.
Our firm has appointed a third-party real estate valuation expert to review the appraisal report of fair value, to understand whether the valuation methods and assumptions comply with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the Regulations on Real Estate Appraisal. We have also evaluated the relevance and reliability of the data sources and key parameters used in the appraisal report, such as the capitalization rate and discount rate, and confirmed the reasonableness of the appraisal results.

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

Management is responsible for the preparation and fair presentation of the stand-alone financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal control as management determines is necessary to enable the preparation of stand-alone financial statements that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance, including the audit committee, are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Stand-alone Financial Statements

Our objectives are to obtain reasonable assurance about whether the stand-alone financial statements as a whole are free from material misstatement, whether due to fraud or error and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with the auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

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

Identify and assess the risks of material misstatement of the stand-alone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure, and content of the stand-alone financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Company to express an opinion on the stand-alone financial statements. We are responsible for the direction, supervision, and performance of the company audit. We remain solely responsible for our audit opinion.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the stand-alone financial statements for the year ended December 31, 2023 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Baker Tilly Clock & CO

CPA: Peng Li-Chen

CPA: Wu Hsin-Liang

Approval number: No. Financial-Supervisory-Securities-VI- 09600000880

No. Financial-Supervisory-Securities-Auditing-1050025873

March 11, 2024

TongHwa Corporation (formerly known as Tong-Hwa Synthetic Fiber Co., Ltd.)

Standalone Balance Sheets

December 31, 2023 and 2022

Unit: Thousands of New Taiwan Dollars


Assets		Notes	2023/12/31		2022/12/31
Code	Item	Amount	%	Amount	%
	Current assets
1100	Cash	IV, VI (I)	$ 361,218	8	$ 447,692	12
1110	Current financial assets at fair value through profit or loss	4, 6 (2)	1,186	－	－	－
1120	Current financial assets at fair value through other comprehensive income	IV, VI (III)	－	－	3,728	－
1200	Other receivables	VII	594	－	248	－
1220	Income tax assets for the current period	4, 6 (24)	216	－	34	－
130x	Inventories	IV, VI (IV)	3,459	－	7,474	－
1410	Prepayments	VI (V)	5,307	－	8,370	－
1470	Other current assets		89	－	52	－
11xx	Total current assets		372,069	8	467,598	12
	Non-current assets
1510	Non-current financial assets at fair value through profit or loss	4, 6 (2)	103,785	2	95,094	3
1517	Non-current financial assets at fair value through other comprehensive income	IV, VI (III)	5,181	－	3,603	－
1550	Investments accounted for using equity method	IV, VI (VI)	475,376	11	8,245	－
1600	Property, plant and equipment	4, 6 (7), 8	686,167	17	637,176	16
1755	Assets	IV, VI (VIII)	12,900	－	14,765	－
1760	Investment property	4, 6 (10), 8	2,796,985	62	2,635,533	68
1975	Net defined benefit Assets-non-current	IV, VI (15)	18,157	－	17,129	1
1990	Guarantee deposits paid		7,338	－	7,338	－
15xx	Total non-current assets		4,105,889	92	3,418,883	88
1xxx	Assets Total		$ 4,477,958	100	$ 3,886,481	100

(Continued)

TongHwa Corporation (formerly known as Tong-Hwa Synthetic Fiber Co., Ltd.)

Standalone Balance Sheets (Continued)

December 31, 2023 and 2022

Unit: Thousands of New Taiwan Dollars


Liabilities and Equity		Notes	2023/12/31		2022/12/31
Code	Item	Amount	%	Amount	%
	Current liabilities
2100	Short-term borrowings	VI (11) XVIII	$ 100,000	3	$ －	－
2150	Notes payable	VII	61	－	105	－
2200	Other payables	VI (12)	13,834	－	11,482	－
2280	Liabilities-current	IV, VI (VIII)	1,873	－	1,831	－
2320	Long-term borrowings due within one year	VI (13), VIII	2,602,000	58	2,052,000	53
2399	Other current liabilities	VI (14) XVII	1,763	－	2,926	－
21xx	Total current liabilities		2,719,531	61	2,068,344	53
	Non-current liabilities
2540	Long-term borrowings	VI (13), VIII	－	－	100,000	3
2570	Deferred tax liabilities	4, 6 (24)	475,109	11	475,036	12
2580	Liabilities-Non-current	IV, VI (VIII)	11,344	－	13,217	－
2650	Credit balance of investments accounted for using equity method	IV, VI (VI)	－	－	34	－
2670	Other non-current liabilities	VI (14)	433	－	315	－
25xx	Total non-current liabilities		486,886	11	588,602	15
2xxx	Liabilities Total		3,206,417	72	2,656,946	68
	Equity	VI (16)
3100	Share capital		568,343	12	568,343	15
3200	Capital surplus		8,008	－	8,006	－
	Retained earnings
3320	Special reserve		1,560	－	1,560	－
3350	Unappropriated accumulated deficit		(777,414)	(17)	(819,583)	(21)
3400	Other equity interest		1,551,377	35	1,551,860	40
3500	Treasury shares		(80,333)	(2)	(80,651)	(2)
3xxx	Equity Total		1,271,541	28	1,229,535	32
	Total Liabilities and Equity		$ 4,477,958	100	$ 3,886,481	100

（Please refer to the Note accompanying to the standalone financial statements）

Chairman: Lin Chuang-Ru　　Manager: Lin Chuang-Ye　 Accounting Supervisor: Yeh Yan-Ling

TongHwa Corporation (formerly known as Tong-Hwa Synthetic Fiber Co., Ltd.)

Standalone Statements of Comprehensive Income

For The Years Ended December 31, 2023 and 2022

Unit: Thousands of New Taiwan Dollars


Code	Item	Notes	2023		2022
Amount	%	Amount	%
4000	Operating revenue	IV, VI (17)	$ 20,587	100	$ 20,754	100
5000	Operating costs	6 (4, 23), 7	(16,674)	(81)	(27,919)	(135)
5900	Gross profit from operations (loss)		3,913	19	(7,165)	(35)
6000	Operating expenses	6 (23), 7
6100	Selling expenses		(24,858)	(121)	(24,045)	(116)
6200	Administrative expenses		(52,152)	(253)	(51,421)	(248)
	Total operating expenses		(77,010)	(374)	(75,466)	(364)
6500	Other income and net expenses	VI (18)	(966)	(5)	2,596	13
6900	Net operating loss		(74,063)	(360)	(80,035)	(386)
7000	Non-operating income and expenses
7100	Interest revenue	VI (19)	1,854	9	321	2
7010	Other income	VI (20), VII	26,827	130	5,629	27
7020	Other gains and losses	VI (XXI)	154,127	749	137,720	664
7050	Finance costs	VI (XXII)	(70,747)	(344)	(44,149)	(213)
7060	Share of profit of subsidiaries and associates accounted for using Equity	IV	1,975	10	1,686	8
	Total non-operating income and expenses		114,036	554	101,207	488
7900	Net profit before tax		39,973	194	21,172	102
7950	income tax	4, 6 (24)	8	－	645	3
8200	Net Profit		39,981	194	21,817	105
8300	Other comprehensive income
8310	Item that will not be reclassified to profit or loss:
8311	Remeasurement of defined benefit plans	VI (15)	403	2	5,353	26
8316	Unrealized gains (losses) from investments in Other comprehensive income based on Fair value’s Equity	VI (16)	1,511	7	(4,207)	(20)
8349	Amendments to Item in relation to income tax that will not be reclassified to profit or loss	4, 6 (24)	(81)	－	(1,070)	(5)
	Other comprehensive income		1,833	9	76	1
8500	Total comprehensive income		41,814	203	21,893	106
	Earnings per share (NT $)	VI (XXV)
9750	Basic earnings per share		$0.74		$0.40

（Please refer to the Note accompanying to the standalone financial statements）

Chairman: Lin Chuang-Ru　　 Manager: Lin Chuang-Ye　　Accounting Supervisor: Yeh Yan-Ling

TongHwa Corporation (formerly known as Tong-Hwa Synthetic Fiber Co., Ltd.)

Standalone Statements of Changes in Equity

For The Years Ended December 31, 2023 and 2022

Unit: Thousands of New Taiwan Dollars


Item	Share capital	Capital surplus	Retained earnings		Other equity interest Item.		Treasury shares	Equity Total
Special Surplus reserves	Unappropriated accumulated deficit	Through Other total Financial assets at fair value through profit or loss Fair value Assets Unrealized profit or loss	Real estate Revaluation surplus
Balance at 1 January 2022	$ 568,343	$ 8,006	$ 1,560	$ (845,683)	$ (225,924)	$ 1,781,991	$ (80,651)	$ 1,207,642
Net Profit	－	－	－	21,817	－	－	－	21,817
Other comprehensive income	－	－	－	4,283	(4,207)	－	－	76
Total comprehensive income	－	－	－	26,100	(4,207)	－	－	21,893
Balance as of 31 December 2022	$ 568,343	$ 8,006	$ 1,560	$ (819,583)	$ (230,131)	$ 1,781,991	$ (80,651)	$ 1,229,535
Balance at 1 January 2023	$ 568,343	$ 8,006	$ 1,560	$ (819,583)	$ (230,131)	$ 1,781,991	$ (80,651)	$ 1,229,535
Net Profit	－	－	－	39,981	－	－	－	39,981
Other comprehensive income	－	－	－	322	1,511	－	－	1,833
Total comprehensive income	－	－	－	40,303	1,511	－	－	41,814
Disposal of parent company shares by subsidiaries Transaction of treasury shares	－	－	－	(128)	－	－	318	190
Disposal of investments accounted for under Other comprehensive income Fair value-Equity	－	－	－	1,994	(1,994)	－	－	－
Arising from exercise of right of inclusion	－	2	－	－	－	－	－	2
Balance at 31 December 2023	$ 568,343	$ 8,008	$ 1,560	$ (777,414)	$ (230,614)	$ 1,781,991	$ (80,333)	$ 1,271,541

（Please refer to the Note accompanying to the consolidated financial statements）

Chairman: Lin Chuang-Ru　　　　　　　Manager: Lin Chuang-Ye　 Accounting Supervisor: Yeh Yan-Ling

TongHwa Corporation (formerly known as Tong-Hwa Synthetic Fiber Co., Ltd.)

Standalone Statements of Cash Flows

For The Years Ended December 31, 2023 and 2022

Unit: Thousands of New Taiwan Dollars


Item	2023	2022
Cash flows from operating activities:
Profit before tax	$ 39,973	$ 21,172
Adjustments:
Item
Depreciation expense	4,225	3,011
Fair value-Assets-Financial (gain) loss	(10,114)	4,906
Interest expense	70,747	44,149
Interest revenue	(1,854)	(321)
Dividend revenue	(3,174)	(126)
Share of profit of subsidiaries and associates accounted for using Equity	(1,975)	(1,686)
Impairment loss on non-financial assets	2,181	－
Gains on disposals of property, plant and equipment	(1,215)	(2,596)
Unrealized foreign exchange loss	－	7
Gain on fair value adjustment of investment property	(144,066)	(142,577)
Other income	－	(269)
Net changes in operating Assets and Liabilities
Other receivables	(340)	(248)
Inventories	4,015	8,450
Prepayments	3,063	(2,541)
Other current assets	(37)	37
Assets	(625)	(473)
Notes payable	(44)	77
Other payables	626	(1,370)
Other current liabilities	(1,163)	1,068
Other non-current liabilities	114	(11)
Cash outflow generated from operations	(39,663)	(69,341)

〈Continued〉

TongHwa Corporation (formerly known as Tong-Hwa Synthetic Fiber Co., Ltd.) and its Subsidiaries

Standalone Statements of Cash Flows (Continued)

For The Years Ended December 31, 2023 and 2022

Unit: Thousands of New Taiwan Dollars


Item	2023	2022
Interest received	1,854	321
Interest paid	(69,021)	(42,758)
Income taxes paid	(182)	(30)
Net cash flows used in operating activities	(107,012)	(111,808)
Cash flows from (used in) investing activities
Acquisition of Fair value Assets	(20,493)	(100,000)
Disposal of Fair value Assets	20,730	－
Proceeds from disposal of financial assets at fair value through other comprehensive income	3,661	－
Acquisition of property, plant and equipment	(53,594)	(4,570)
Acquisition of investment properties	(17,386)	－
Acquisition of investments accounted for using equity method	(465,000)	－
Proceeds from disposal of property, plant and equipment	1,277	2,596
Dividends received	3,168	126
Net cash flows used in investing activities	(527,637)	(101,848)
Cash flows from financing activities
Increase in short-term loans	100,000	－
Proceeds from long-term debt	2,502,000	310,000
Repayments of long-term debt	(2,052,000)	－
Increase in guarantee deposits received	4	－
Repayment of lease principal	(1,831)	(1,390)
Other financing activities (disgorgement)	2	－
Net cash flows from financing activities	548,175	308,610
Effect of exchange rate changes on cash and cash equivalents	－	(7)
(Decrease) increase in Cash and cash equivalents	(86,474)	94,947
Cash and cash equivalents at beginning of period	447,692	352,745
Cash and cash equivalents at end of period	$ 361,218	$ 447,692

（Please refer to the Note accompanying to the standalone financial statements）

Chairman: Lin Chuang-Ru　　　Manager: Lin Chuang-Ye　 Accounting Supervisor: Yeh Yan-Ling

Matters for Ratification

Case 2:（Proposed by the Board of Directors）

2023 Loss Off-setting Proposal

Explanation: The 2023 final accounts have been audited by the Audit Committee and CPAs, and the 2023 loss off-setting is set out below:

TongHwa Corporation

2023 Loss Off-setting Proposal

Unit: NT Dollar


Item	total
Opening accumulated losses Transferred to Retained earnings through Other comprehensive income for the benefit of Fair value’s financial Assets The remeasurement of defined benefit plans after tax is listed in Retained earnings Disposal of company's share by subsidiaries recognised as treasury share transactions Accumulated losses after adjustment Net Profit Accumulated losses, end of period	( $819,582,949 ) 1,993,681 322,524 ( $ 128,015 )
( $817,394,759 ) 39,981,405
( $777,413,354 )

Chairman: Lin Chuang-Ru　　 Manager: Lin Chuang-Ye　 Accounting Supervisor: Yeh Yan-Ling

Resolution:

Matters for Discussion

Matters for Discussion

Case 1: （Proposed by the Board of Directors）

The urban renewal project of the whole industrial area of the Hsinchu Plant, please deliberate .

Explanation:

It is proposed to apply for the urban renewal of the whole industrial area of the

Hsinchu Plant, and the implementer is Taike Construction and Development Co., Ltd.

The project is handled in accordance with the urban renewal regulations,

implementation rules and relevant laws and regulations.

Subject to the approval of the shareholders' meeting, the chairman shall have

full authority to handle and sign the relevant documents.

The final result of the application is subject to the approval of the competent authority.

Resolution:

Matters for Discussion

Case 2: （Proposed by the Board of Directors）

To change the business of Item, please deliberate .

Explanation: In response to the Company's diversified operations and the development of diversified business entities, it is proposed to change the business of Item as follows:

C801120 manmade fibre manufacturing.
F401010 International Trade.
F102030 Tobacco and wine wholesale business.
F203020 Tobacco and wine retail industry.
F203040 cigar retail business.
F207200 Chemical Raw materials Retail.
G202010 Parking Garage Business
G801010 Warehousing.
H201010 Investment
H701010 Housing and Building Development and Rental.
H701020 Industrial Factory Buildings Lease Construction and Development.
H701040 development of specific professional areas.
H701050 Investment, Construction and Public Construction.
H701080 Urban Renewal Reconstruction.
H701090 Urban Renewal Reconstruction and Maintenance.
H703090 Real estate trading business.
H703100 Real Estate Leasing.
ZZ99999 All business items that are not prohibited or restricted by law, except those

that are subject to special approval.

Resolution:

Matters for Discussion

Case 3: （Proposed by the Board of Directors）

Amendments to the Articles of Incorporation, please deliberate .

Explanation: Due to the change of the company's business Item, the comparison table of the provisions before and after the amendment of the Articles of Association is as follows.

Comparison Table for Amendments to TongHwa Corporation Articles of Incorporation

Session	Article before amendment	Amended Articles	Reason for the revision
Article 2	The Company's business is as follows: (1) Polyester acrylonitrile synthetic fibre Polyester acrylonitrile comb wool strip (Top) manufacturing and domestic and export sales. (2) Production of poly acrylonitrile yarn for export. (3) Manufacturing, processing, domestic and foreign sales of polycarbonate fibre and its Raw materials. (4) ZZ99999 Other All business items that are not prohibited or restricted by law, except those that are subject to special approval.	The Company's business lines are as follows: (1)C801120 manmade fibre manufacturing. (2) F401010 International trading. (3) F102030 Tobacco and wine wholesale business. (4) F203020 Tobacco and wine retail business. (5) F203040 cigar retail business. (6) F207200 Chemical Raw materials Retail. (7) G202010 Parking lot business. (8) G801010 Warehousing. (9) H201010 General investment business. (10) H701010 Housing and Building Development and Rental. (11) H701020 Industrial plant development and lease. (12) H701040 specific professional area development. (13) H701050 Investment, construction and public construction. (14) H701080 Urban Renewal Reconstruction. (15) H701090 Urban Renewal Reconstruction and Maintenance. (16) H703090 Real estate trading business. (17) H703100 Real Estate Leasing. (18) ZZ99999 may engage in any business not prohibited or restricted by law, except for those subject to special approval.	Revision and revision of text, size, and content based on actual operational needs
Article 35	These Articles of Incorporation were adopted on 26 December 1969 and were first amended on 10 May 1972 and second amended on 23 March 1973. Amended on 30 June 2015 The 40th amendment was made on 24 June 2016. The amendment was made on 20 June 2018. The amendment was made on 17 June 2020. The amendment was made on 27 June 2022.	These Articles of Incorporation were adopted on 26 December 1969 and were first amended on 10 May 1972 and second amended on 23 March 1973. Amended on 30 June 2015 The 40th amendment was made on 24 June 2016. The amendment was made on 20 June 2018. The amendment was made on 17 June 2020. The amendment was made on 27 June 2022. The forty-four th amendment was made on 25 June 2024.

Resolution:

4.Extempore Motion:

5.Adjournment:

Appendix I

TongHwa Corporation

Rules of Procedures of Board Meetings

Established on 28 December 2006

The 1st amendment was made on 21 March 2008

The 2nd amendment was made on 20 December 2012

The 3rd amendment was made on 19 March 2015

The 4th amendment was made on 3 August 2017

The 5th amendment was made on 23 March 2018

The 6th amendment was made on 23 March 2020

The 7th amendment was made on 8 August 2022

The 8th amendment was made on 23 March 2023

The 9th amendment was made on 11 March 2024

Article 1 To establish a healthy governance system, optimize the supervisory functions, and reinforce the management function of the Board, the Company has established the Rules of Procedures according to the requirements of the Regulations Governing Procedure for Board of Directors Meetings of Public Companies.

Article 2 The Rules of Procedures of the Company’s Board, the major content of procedures, operating procedures, and meeting minutes shall set out matters, announcements, and other matters of compliance in accordance with the requirements of the Rules of Procedures.

Article 3 The Company shall convene Board meetings at least once every quarter.

A notice setting out the reasons for the convening of a Board meeting shall be sent to the Directors seven days prior to the meeting; however, a Board meeting may be convened at any time due to emergencies.

The convening notice in the preceding paragraph may be made electronically when receiving the consent of the counterparties.

Matters set out in subparagraphs under paragraph 1, Article 12 of the Rules of Procedures shall be set out in the reasons for convening Board meetings and shall not be proposed as extempore motions.

Article 4 The Company’s Board has appointed the Secretariat as the department for the affairs related to the procedures.

The department for the procedures shall formulate the content of the Board meeting’s procedures and provide sufficient meeting data for dispatching at the same time with the convening notice.

If any Director considers that the data on the meeting is insufficient, he or she may request supplementation from the department for the affairs related to the procedures. If any Director considers that the data on a proposal is insufficient, a delay in the review and discussion may be made upon being resolved by the Board.

Article 5 A signing book shall be provided for the attending Directors for signing in when convening a Board meeting of the Company for future reference.

Directors shall attend Board meetings in person; if a Director is unable to attend in person, it may engage another Director to attend the meeting on its behalf according to the requirements of the Company’s Articles.

If a Director engages another Director to attend a Board meeting on its behalf, it shall present a proxy form that sets out the scope of authorization regarding the reasons for convening the meeting.

The proxy stated in paragraph 2 may only be engaged by one person.

Article 6 The venue and time of the Company’s Board meeting shall be at the location of the Company and during the office hour or at venues and times suitable for Directors to attend and for convening the Board meeting.

Article 7 Board meetings of the Company shall be convened and chaired by the Chairman. However, the first Board meeting of each session of the Board shall be convened by the Director who received votes that represent the most voting rights at the shareholders’ meeting, and the chairperson of the meeting shall be the person with the convening rights; if there are two or more persons with convening rights, one person shall be elected among themselves as the chairperson.

If a Board meeting is convened by over half of the Directors according to the requirements under paragraph 4 of Article 203 or paragraph 3 of Article 203 of the Company Act, a chairperson shall be elected among the Directors.

If the Chairman is on leave or is unable to exercise its functions due to other causes, the Chairman shall designate a Director to act on his behalf. If the Chairman fails to designate any proxy, a Director shall be elected among the Directors to act on the Chairman’s behalf.

Article 8 When convening a Board meeting of the Company, the Secretariat shall duly prepare relevant data and provide it to the Directors who participate in the meeting for reference at any time.

When convening a Board meeting, the Company may notify personnel of relevant departments or subsidiaries based on the content of proposals for presenting at the meeting. If necessary, the Company may invite CPAs, lawyers, or other professionals to present at the meeting for explanations. However, they shall leave the meeting during discussion and voting.

The chairperson shall call for the meeting when there are over half of the Directors attending the meeting upon the time of the meeting. The chairperson may declare the delay of the meeting when less than half of the Directors are present at the meeting upon the meeting time; however, the meeting may only be delayed for up to two times. If the quota is not met after delaying the meeting two times, the chairperson may reconvene the meeting according to the procedures set out in the requirements under paragraph 2 of Article 3.

Directors in the preceding paragraph refer to those who are currently in office.

Article 9 Audio or video recordings shall be made during the course of the Board meetings of the Company, and such recordings shall be preserved for at least five years; the recordings may be preserved through electronic means.

Before the expiry of the preservation period in the preceding paragraph, if any litigation related to relevant resolutions made at the Board meeting occurs, relevant audio or video recordings shall be preserved until the end of the litigation.

If a Board meeting is convened by way of a video conference, the video and audio data of the video conference shall be a part of the meeting minutes and shall be duly preserved during the duration of the Company.

Article 10 The content of the regular procedures of the Board meeting shall at least include the following matters:

Reporting items:

(I) Meeting minutes and execution status of the preceding meeting.

(II) Material financial and business reports.

(III) Internal audit reports.

(IV) Other material reporting items.

Discussion items:

(I) Discussion items preserved from the preceding meeting.

(II) Discussion matters intended for the current meeting.

Extempore motion.

Article 11 The Board meeting of the Company shall be processed according to the agenda in the meeting notice; however, such agenda may be changed when receiving the consent of over half of the attending Directors.

Without the consent of over half of the attending Directors, the chairperson may not announce the adjournment of the meeting.

During the Board meeting, if the presenting Directors are less than half of the attending Directors, the chairperson shall suspend the meeting upon the proposal of the presenting Directors, and the requirements under paragraph 3 of Article 8 shall apply.

During the proceedings of the board of directors, if the chairman cannot preside over the meeting

or fails to announce the meeting according to the second paragraph, the election of his proxy shall

be subject to the third paragraph of Article 7.

Article 12 The following matters shall be proposed at the Board meeting of the Company for discussion:

Business plan of the Company.
Annual financial reports and interim financial reports. However, this shall not apply to interim financial reports that are not required to be certified by CPAs according to the requirements of laws and regulations.
The establishment of or amendment to the internal control system in accordance with the requirements under Article 14-1 of the Securities and Exchange Act (the “Securities and Exchange Act”) and the evaluation of the effectiveness of the internal control system.
The establishment of or amendment to the procedures for the acquisition or disposal of assets, derivative transactions, loans to others, provision of endorsements or guarantees to others, or other material financial or business conducts.
Offering, issuance, or private offering of securities of equity natures.
The appointment or dismissal of the chief of finance, accounting, or internal audit.
Donations to related parties or material donations to non-related parties. However, donations in the nature of public welfare due to emergency relief for natural disasters may be proposed at the upcoming Board meeting for ratification.
Matters to be resolved by the shareholders’ meeting or the Board meeting according to Article 14-3 of the Securities and Exchange Act, other laws and regulations, or the Articles or material matters stated by the competent authority.
The appointment or dismissal of the Chairman.

The related parties in subparagraph 7 of the preceding paragraph refer to related parties specified in the Regulations Governing the Preparation of Financial Reports by Securities Issuers. The material donations to non-related parties, as mentioned, refer to the amount of each entry of donation or the amount of donation to the same counterparty, in accumulation, within one year reaching NT$100 million or above or reaching 1% of the net operating income or 5% of the paid-in capital as set out in the financial report of the most recent year that is certified by CPAs or above.

“Within one year” in the preceding paragraph shall be one year from the convening date of the current Board meeting; those approved by the Board as resolutions shall be excluded.

For Independent Directors, at least one Independent Director shall attend a Board meeting in person. For matters proposed at the Board meeting for resolution stated in paragraph 1, all Independent Directors shall attend the Board meeting; if an Independent Director is unable to attend in person, it shall engage another Independent Director to attend the meeting on its behalf. If an Independent Director has any opposing or qualified opinions, such opinions shall be stated in the minutes of the Board meeting. If an Independent Director is unable to attend the Board meeting to express its opposing or qualified opinions, except when having justifiable reasons, it shall present its opinions in writing in advance, and such opinions shall be stated in the minutes of the Board meeting.

Article 13 When the chairperson is of the opinion that a proposal has been discussed sufficiently to put it to a vote, the chairperson may announce the discussion closed and call a vote.

When a proposal comes to a vote at a Board meeting, if no attending Director voices an objection following an inquiry by the chairperson, the proposal will be deemed approved. If there is an objection following an inquiry by the chairperson, the proposal shall be brought to a vote.

One voting method for proposals at a Board meeting shall be selected by the chairperson from among those below, provided that when an attending Director has an objection, the chairperson shall seek the opinion of the majority to make a decision:

A show of hands or a vote by a voting machine.
A roll call vote.
A vote by ballot.

“Attending Directors” in the preceding two paragraphs excludes Directors who may not exercise their voting rights pursuant to paragraph 1 under Article 15.

Article 14 Except for otherwise stated in the Securities and Exchange Act and the Company Act, a resolution made at the Board meeting of the Company shall receive the consent of over half of the attending Directors at a meeting attended by over half of the Directors.

When there is an amendment or alternative to a proposal, the chairperson shall present the amended or alternative proposal together with the original proposal and decide the order in which they will be put to the vote. If any among them is passed, the other proposals shall then be deemed rejected, and no further voting on them shall be required.

If a vote on a proposal requires monitoring and counting personnel, the chairperson shall appoint such personnel, providing that all monitoring personnel shall be Directors.

Voting results shall be made known on-site immediately and recorded in writing.

Article 15 If a Director or a juristic person that the Director represents is an interested party in relation to an agenda item, the Director shall state the important aspects of the interested party relationship at the respective meeting. When the relationship is likely to prejudice the interest of the Company, the Director may not participate in discussion or voting on that agenda item and shall recuse itself from the discussion or the voting on the item and may not exercise voting rights as a proxy for another Director.

The spouse, blood relatives within the second degree of kinship of the Director, or companies under the control of or subordinated to the Director with interest in proposals at the meeting stated in the preceding paragraph shall be deemed as the interest of the Director in such proposal.

Where a Director is prohibited by the preceding paragraph from exercising voting rights with respect to a resolution at a Board meeting of the Company, the requirements under paragraph 2, Article 180 of the Company Act apply mutatis mutandis in accordance with paragraph 3, Article 206 of the same Act.

Article 16 Discussions at a Board meeting of the Company shall be recorded in the meeting minutes, and the minutes shall fully and accurately state the matters listed below:

The meeting session (or year) and the time and place of the meeting.
The name of the chairperson.
The Directors’ attendance at the meeting, including the names and the number of Directors in attendance, excused, and absent.
The names and titles of those presenting at the meeting.
The name of the minute taker.
Reporting items.
Discussion items: The method of resolution and the result for each proposal; a summary of the comments made by Directors, experts, or other persons; the name of any Director that is an interested party as referred to in paragraph 1 of the preceding article, an explanation of the important aspects of the relationship of interest, the reasons why the Director was required or not required to enter recusal, and the status of their recusal; opposing or qualified opinions at the meeting that were included in records or stated in writing.
Extempore motions: The name of the proposer, the method of resolution and the result, a summary of the comments of any Director, expert, or other persons; the name of any Director that is an interested party as referred to in paragraph 1 of the preceding article, an explanation of the important aspects of the relationship of interest, the reasons why the Director was required or not required to enter recusal, and the status of their recusal; opposing or qualified opinions at the meeting that were included in records or stated in writing.
Other matters to be recorded.

For resolutions made at the Board meeting, if any Independent Director has any opposing or qualified opinions that were included in records or stated in writing, except for stating in the meeting minutes, such opinions shall be announced and declared on MOPS designated by the Financial Supervisory Commission.

The attendance book constitutes a part of the minutes for each Board meeting and shall be retained for the duration of the existence of the Company.

The minutes of a Board meeting shall bear the signature or seal of both the chairperson and the minute taker, and a copy of the minutes shall be distributed to each Director within 20 days from the meeting. The minutes shall be deemed important files of the Company and appropriately preserved during the existence of the Company.

The meeting minutes of paragraph 1 may be produced and distributed in electronic form.

Article 17 Except for discussion items that shall be proposed at the Board meeting of the Company stated in paragraph 1 of Article 12, the Company may authorize the Chairman to exercise the functions of the Board according to the requirements of the Articles of Association; the content of the authorization is as follows:

Approval of various material contracts.
Approval of borrowings by pledging real estate and other borrowings.
Approval of the acquisition and disposal of the general properties and real estate of the Company.
Appointment of the directors and supervisors of investees.
Approval of matters related to the base date of a capital increase or capital decrease, the base date of capital decrease through share conversion, the base date of cash dividend distribution, and the base date of share distribution or subscription.

Article 18 The establishment of and amendment to the Rules of Procedures shall be approved by the Company’s Board and reported at the shareholders’ meeting.

Appendix II

TongHwa Corporation

Articles of Association

Chapter 1 General Provisions

Article 1 The Company was established and named “TongHwa Corporation” according to the requirements of the Company Act. The Company’s English name is TongHwa Corporation.

Article 2 The scope of business of the Company is as follows:

Manufacture and domestic/export sales of acrylic staple and tow and Top.
Production of “acrylic yarn” for domestic/export sales.
Manufacture, processing, and domestic/export sales of polyurethane fiber and its raw materials.
All business activities that are not prohibited or restricted by law, except those that are subject to special approval.

Article 2-1 The investment amount of the Company may exceed 40% of its paid-in capital. The Company may provide endorsements and guarantees according to the “Procedures for Endorsements and Guarantees” due to its business requirements.

Article 3 The headquarters of the Company is in Taipei City, and it may establish branches, offices, and other business departments at other appropriate locations when necessary.

Article 4 (Deleted)

Chapter 2 Share Capital

Article 5 The total capital of the Company is NT$2,638,552,610, divided into 263,855,261 shares with a par value of NT$10, issued in batches.

Article 6 The share certificates of the Company are registered ordinary shares. After the registration is approved, three Directors or above shall sign and affix their seals on the share certificates, and such share certificates shall be issued after being certified by the competent authority or the institution that granted the approval. The Company is exempted from printing share certificates for the issuance of new shares; however, it shall register the share certificates with a centralized securities depository enterprise.

Article 7 The administration of shareholder services of the Company shall be subject to the requirements of the “Regulations Governing the Administration of Shareholder Services” promulgated by the competent authority.

Article 8 The transfer registration of share certificates shall be suspended 60 days before an annual shareholders’ meeting, 30 days before an extraordinary shareholders’ meeting, or 5 days before the base date on which the Company determines to distribute dividends and bonuses or other benefits.

Article 9 (Deleted)

Chapter 3 Shareholders’ Meetings

Article 10 Shareholders’ meetings of the Company are divided into annual shareholders’ meetings and extraordinary shareholders’ meetings. A shareholders’ meeting may be held by way of a video conference or other methods announced by the competent authority. An annual shareholders’ meeting is convened once a year by the Board within six months from the end of a fiscal year. An extraordinary shareholders’ meeting is convened according to the law when necessary.

Article 11 Shareholders shall be notified 30 days before an annual shareholders’ meeting and 15 days before an extraordinary shareholders’ meeting, and announcements shall be made according to the requirements.

Article 12 (Deleted)

Article 13 The Chairman shall be the chairperson of shareholders’ meetings.

If the Chairman is unable to perform its duties due to other causes, the Vice Chairman shall act on its behalf; if the Vice Chairman is also unable to perform its duties due to other causes or if there is no Vice Chairman, the Director designated by the Chairman shall act on its behalf; if the Chairman failed to designate any person to act on its behalf, one person shall be elected among the Directors.

Article 14 Except for otherwise stated in relevant laws and regulations, resolutions made at a shareholders’ meeting shall receive the consent of over half of the attending shareholders with voting rights at a meeting attended by shareholders or their proxies who represent over half of the total issued shares.

Article 15 Except for otherwise required by the Company Act, a shareholder of the Company possesses one vote for each share it holds.

Article 16 If a shareholder engages a proxy to attend a shareholders’ meeting, it shall submit a proxy form printed and issued by the Company five days before the meeting. Except for trust enterprises or stock affairs agencies approved by the competent authority of securities, if a proxy is engaged by two shareholders or above, the voting rights it represents shall not exceed 3% of the voting rights under the total issued shares; if exceeding the ratio, the exceeding voting rights will not be included for calculation.

A shareholder may only engage one proxy by presenting a proxy form.

Article 17 Meeting minutes shall be made for the resolutions made at a shareholders’ meeting, with the signature or seal of the chairperson affixed, and be kept by the Company, and shall be distributed to the shareholders within 20 days after the meeting. The distribution of the meeting minutes stated above may be made by way of announcements.

Chapter 4 Directors and Board of Directors

Article 18 The Company has seven to nine Directors. The total shareholding ratio of all Directors shall be subject to the requirements of the securities management agency.

Within the number of Directors in the preceding paragraph, the number of Independent Directors shall not be less than two persons and shall not be less than one-fifth of the number of Directors.

A candidate nomination system is adopted for the Directors (including Independent Directors) of the Company, and they shall be elected by the shareholders’ meeting from the candidate list of Directors (including Independent Directors).

Article 19 The term of office of a Director is three years, and they may be re-elected and re-appointed.

The term of office of Directors who are elected for supplementing vacancies or due to the increase in the number of Directors shall be the same with the remaining period of the former Directors or other current Directors.

Article19-1 The Board is authorized to determine the remuneration of the Directors based on the general standards within the industry.

Article 20 Except for otherwise stated in the Company Act, the Board shall review and discuss the following matters:

Amendments to the Articles
Business plan
Budgets and final accounts
Distribution of earnings or losses
Investments in external parties and their disposals
Appointment and dismissal of material employees
Acquisition and transfer of material assets
Establishment and dissolution of branches
Increases or decreases in the capital
Other matters stated in the Company Act or the Articles

Article 21 The meeting notice of a Board meeting shall be delivered to the Directs seven days prior to the meeting by way of e-mail or facsimile.

Article 22 Except for otherwise stated in the Company Act, a Board meeting shall be convened and chaired by the Chairman. If the Chairman is unable to perform its duties due to other causes, the Vice Chairman shall act on its behalf; if the Vice Chairman is also unable to perform its duties due to other causes or if there is no Vice Chairman, the Director designated by the Chairman shall act on its behalf; if the Chairman failed to designate any person to act on its behalf, one person shall be elected among the Directors.

Article 23 Except for otherwise stated in the Company, for which such requirements shall precede, a resolution made at the Board meeting shall receive the consent of over half of the attending Directors at a meeting attended by over half of the Directors.

A Director may engage another Director to attend a Board meeting on its behalf; however, one Director may only be engaged as a proxy by one Director.

Article 24 A Chairman shall be elected by receiving the consent of over half of the attending Directors at a Board meeting attended by over two-thirds of the Directors.

The Chairman shall guide all businesses of the Company and represent the Company.

A Vice Chairman of the Company may be elected among Directors by way of the abovementioned method.

The Vice Chairman shall assist the Chairman; if the Chairman is unable to perform its duties due to other causes, the Vice Chairman shall act on its behalf.

Chapter 5 Audit Committee

Article 25 Deleted

Article 26 Deleted

Article 26-1 Deleted

Article 27 Deleted

Article 27-1 The Company has established its Audit Committee according to Article 14-4 of the Securities and Exchange Act. The Audit Committee composes all Independent Directors, and the exercise of functions and relevant matters of the Audit Committee and its members shall be subject to the requirements under laws and regulations related to the Securities and Exchange Act.

Chapter 6 Managers

Article 28 The Company may have multiple Presidents and Vice presidents, whose appointment, dismissal, and remuneration shall be subject to the requirements under Article 29 of the Company Act; the Board is authorized to determine their functions, and the Board may authorize the Chairman to make such decisions.

Article 29 Under the orders of the Chairman, Presidents shall coordinate all businesses of the Company, and Vice Presidents shall assist the Presidents.

Chapter 7 Accounting

Article 30 The fiscal year of the Company is from 1 January to 31 December each year, and a final account is performed at the end of each fiscal year.

Article 31 The distribution of earnings shall be subject to the shareholders set out in the shareholders’ register on the base date set by the Company.

Article 32 If the Company records any annual profit, it shall compensate prior losses and appropriate remunerations of employees and Directors from the remaining balance; however, the remuneration of Directors shall not exceed 5% of the distribution amount, and the remuneration of employees shall not be lower than 1% of the distribution amount.

To seek sustainable operations and continual growth, and in response to the long-term financial planning based on the overall environment and the characteristics of the industrial development, the Company adopts a fixed, residual dividend policy.

If the Company has any earnings after its final account of the year, it shall pay taxes, compensate prior losses, appropriate 10% as the statutory reserve, and appropriate the special surplus reserve discretionally. For the remaining earnings, the Board shall formulate a distribution proposal and submit it to the shareholders’ meeting for discussion and determination. For the distribution of shareholder dividends, the cash dividends shall range from 30% to 70%; however, adjustments may be made according to the changes in the internal and external business environments.

Chapter 8 Supplementary Provisions

Article 33 The organization rules and bylaws of the Company shall be otherwise established by the Board.

Article 34 Unaddressed matters in the Articles shall be subject to the requirements of the Company Act.

Article 35 The Articles were established on 26 December 1969. The 1st amendment was made on 10 May 1972. The 2nd amendment was made on 23 March 1973. The 3rd amendment was made on 8 April 1974. The 4th amendment was made on 3 September 1974. The 5th amendment was made on 25 April 1975. The 6th amendment was made on 15 December 1975. The 7th amendment was made on 17 February 1976. The 8th amendment was made on 30 March 1977. The 9th amendment was made on 18 May 1978. The 10th amendment was made on 15 June 1979. The 11th amendment was made on 30 July 1980. The 12th amendment was made on 15 May 1981. The 13th amendment was made on 25 May 1982. The 14th amendment was made on 31 May 1983. The 15th amendment was made on 18 June 1984. The 16th amendment was made on 20 June 1985. The 17th amendment was made on 30 May 1986. The 18th amendment was made on 25 May 1987. The 19th amendment was made on 26 May 1988. The 20th amendment was made on 26 May 1989. The 21st amendment was made on 6 June 1990. The 22nd amendment was made on 3 May 1991. The 23rd amendment was made on 26 May 1992. The 24th amendment was made on 28 May 1993. The 25th amendment was made on 25 May 1994. The 26th amendment was made on 31 May 1995. The 27th amendment was made on 31 May 1996. The 28th amendment was made on 26 May 2000. The 29th amendment was made on 31 May 2001. The 30th amendment was made on 18 June 2002. The 31st amendment was made on 11 June 2004. The 32nd amendment was made on 14 June 2005. The 33rd amendment was made on 14 June 2006. The 34th amendment was made on 13 June 2008. The 35th amendment was made on 19 June 2009. The 36th amendment was made on 3 May 2010. The 37th amendment was made on 22 June 2012. The 38th amendment was made on 11 June 2013. The 39th amendment was made on 30 June 2015. The 40th amendment was made on 24 June 2016. The 41st amendment was made on 20 June 2017. The 42nd amendment was made on 17 June 2020. The 43rd amendment was made on 27 June 2022.

Appendix III

TongHwa Corporation

Rules of Procedure for Shareholders’ Meetings

Established on 30 August 1976

The 1st amendment was made on 27 May 1998

The 2nd amendment was made on 19 June 2002

Article 1 The shareholders’ meeting of the Company shall be held according to the rules herein.

Article 2 Shareholders (or by proxies) attending the meeting shall have attendance cards, sign-in cards issued by the Company.

Article 3 Unless otherwise stipulated in the Company Act, the chair shall call the meeting to order when the attending shareholders represent more than half of the total number of issued shares. However, if the attending shareholders do not represent the majority of the total number of issued shares by the meeting time, the chair may announce a postponement, provided that no more than two such postponements, for a combined total of no more than one hour, may be made. If the quorum is not met after two postponements, but the attending shareholders represent one-third or more of the total number of issued shares, a tentative resolution may be adopted when the affirmative votes exceed the negative votes by a majority of the voting rights present in the meeting pursuant to Article 175 of the Company Act. When, prior to the conclusion of the meeting, the attending shareholders represent a majority of the total number of issued shares, the chair may call the meeting to order at any time and submit the tentative resolution for a ratification by the shareholders meeting.

Article 4 The venue for a shareholders meeting shall be the premises of the Company, or a place easily accessible to shareholders and suitable for a shareholders meeting. The meeting may begin no earlier than 9 a.m. and no later than 3 p.m.

Article 5 If a shareholders meeting is convened by the board of directors, the meeting shall be chaired by the chairperson of the board. When the chairperson of the board is on leave or for any reason unable to exercise the powers of the chairperson, the vice chairperson shall act in place of the chairperson; if there is no vice chairperson or the vice chairperson also is on leave or for any reason unable to exercise the powers of the vice chairperson, the chairperson shall appoint one of the managing directors to act as chair, or, if there are no managing directors, one of the directors shall be appointed to act as chair. Where the chairperson does not make such a designation, the managing directors or the directors shall select from among themselves one person to serve as chair.

If a shareholders meeting is convened by a party with power to convene but other than the board of directors, the convening party shall chair the meeting. When there are two or more such convening parties, they shall mutually select a chair from among themselves.

Article 6 The Company may appoint its attorneys, certified public accountants, or related persons retained by it to attend a shareholders’ meeting in a non-voting capacity.

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

Article 7 The Company shall make an uninterrupted audio or video recording for the entire proceedings of the shareholders meeting, and retain such recorded materials for at least one year.

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

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

The chair may not declare the meeting adjourned prior to completion of deliberation on the meeting agenda of the preceding two paragraphs (including extraordinary motions), except by a resolution of the shareholders meeting. If the chair declares the meeting adjourned in violation of the rules of procedure, the attending shareholders shall elect a new chair in accordance with statutory procedures, by agreement of a majority of the votes represented by the attending shareholders, and then continue the meeting.

After the adjournment of the meeting, shareholders shall not elect a new chair to continue the meeting at the original location or another place, except for the circumstances specified in the preceding paragraph.

Article 9 When an attending shareholder is speaking, an attending shareholder must specify on a speaker’s slip the subject of the speech, his/her shareholder account number (or attendance card number), and account name. Such slip should be submitted to the service center to hand to the chair in sequence, and the speak order will be set by the chair. An attending shareholder who has submitted a speaker’s slip but does not actually speak shall be deemed to have not spoken. When the content of the speech does not correspond to the subject given on the speaker’s slip, the spoken content shall prevail.

Article 10 When an attending shareholder is speaking, a shareholder may not speak more than 5 minutes, he or she may speak for another 5 minutes with the consent of the chair. If the shareholder’s speech exceeds the time limit or the scope of the agenda item, the chair may terminate the speech.

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

Article 11 A shareholder (or by proxies) may not speak more than twice on the same proposal.

Article 12 During the discussion of motions, the chair may declare the end of the discussion at an appropriate time and may also declare a suspension of the discussion if necessary. After declaring the end or suspension of the discussion, the chair shall put the matter to a vote.

Article 13 Except as otherwise provided in the Company Act and in the Company’s articles of association, the passage of a proposal shall require an affirmative vote of a majority of the voting rights represented by the attending shareholders. At the time of a vote, if there are no objections to the chair’s inquiry, the motion shall be considered passed, and its effect is the same as that of a vote.

Article 14 After an attending shareholder has spoken, the chair may respond in person or direct relevant personnel to respond.

Article 15 Vote monitoring and counting personnel for the voting on a proposal shall be appointed by the chair, provided that all monitoring personnel shall be shareholders of the Company. The results of the voting shall be announced on-site at the meeting, and a record made of the vote.

Article 16 When there is an amendment or an alternative to a proposal, the chair shall present the amended or alternative proposal together with the original proposal and decide the order in which they will be put to a vote. When any one among them is passed, the other proposals will then be deemed rejected, and no further voting shall be required.

Article 17 A shareholder shall be entitled to one vote for each share held. When one person is concurrently appointed as proxy by two or more shareholders, the voting rights represented by that proxy may not exceed three percent of the voting rights represented by the total number of issued shares. If that percentage is exceeded, the voting rights in excess of that percentage shall not be included in the calculation.

Article 18 When a shareholder is an interested party in relation to an agenda item, and there is the likelihood that such a relationship would prejudice the interests of the Company, that shareholder may not vote on that item, and may not exercise voting rights as proxy for any other shareholder.

Article 19 When a juristic person 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.

Article 20 The chair may direct the proctors or security personnel to help maintain order at the meeting place. When proctors or security personnel help maintain order at the meeting place, they shall wear an identification card or armband bearing the word “Proctor.”

Article 21 When a meeting is in progress, the chair may announce a break based on time considerations.

Article 22 For matters not governed by the rules specified herein, shall be governed according to Company Act, and the Company’s Article of Association.

Article 23 The rules herein take effect after approval at the stockholders’ meeting, the same apply for any amendments.

IV. Shareholdings of Directors

Book closure date: April 27, 2024

Current Shareholding Details of Directors


Title	Name	Number of shares held at Book closure date
Chairman	Lin Chuang-Ru	375,121
Director	Lin Chuang-Ye	387,044
Director	Chung Ling Co., Ltd. Representative: Lin He-Hui	20,917,364
Director	Jiang Zhi-Heng	65,227
Director	Ninghan Development Co., Ltd. Representative: Huang You-Qing	3,890,445
Independent Director	Li Zong-Ru	0
Independent Director	Qiu Zheng-Yi	0
Independent Director	Chen Wei-Tai	0

The Minimum Shareholdings of Total Directors by Law and Actual Shareholding:


Title	Shareholdings by Law	Actual Shareholdings
Directors	4,546,744	25,635,201

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TongHwa AGM Information 2024

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