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WPG AGM Information 2019

Jul 3, 2019

52368_rns_2019-07-03_0c786657-ef37-4d4c-ba23-4e5e1364850f.pdf

AGM Information

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WPG HOLDINGS LIMITED

_____________

2019 ANNUAL SHAREHOLDERS’ MEETING

MEETING AGENDA

(Translation)

June 28, 2019

WPG HOLDINGS LIMITED

2019 ANNUAL SHAREHOLDERS’ MEETING

Table of Contents

I. Meeting Procedure..................................................................................................... 1
**II. ** Meeting Agenda......................................................................................................... 2
1.
Report Items ................................................................................................................. 3
2.
Proposals....................................................................................................................... 3
3.
Discussion..................................................................................................................... 5
4.
Other Business and Special Motion ............................................................................. 6
**III. ** Attachment
Attachment I: Business Report .......................................................................................... 7
Attachment II: Audit Committee’s Review Report .......................................................... 10
Attachment III: Independent Auditors’ Report and 2018 Non-Consolidated
Financial Statement .................................................................................. 11
Attachment IV: Independent Auditors’ Report and 2018 Consolidated
Financial Statement .................................................................................. 24
Attachment V: Comparison Table for the Articles of Incorporation Amendments .......... 38
Attachment VI: Comparison Table for the Procedures for the Loaning of
Funds to Others ...................................................................................... 48
Attachment VII: Comparison Table for the Procedure for Acquisition or Disposal of
Assets ........................................................................................................ 49
**IV ** Appendix
Appendix I: Rules Governing the Conduct of Shareholders’ Meeting ............................. 65
Appendix II: Articles of Incorporation ............................................................................... 69
Appendix III: Procedure for the Loaning of Funds to Others ............................................. 78
Appendix IV: Procedures for the Acquisition or Disposal of Assets ................................... 84
Appendix V: The Shareholdings of All Directors ............................................................... 93

1. Meeting Procedures

WPG HOLDINGS LIMITED

Procedure for the 2019 Annual Meeting of Shareholders

  • I. Call the Meeting to Order

  • II. Chairperson Remarks

  • III. Report Items

  • IV. Proposals

  • V. Discussion

  • VI. Other Business and Special Motion

  • VII. Adjournment

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2. Meeting Agenda

WPG HOLDINGS LIMITED

2019 ANNUAL SHAREHOLDERS’ MEETING AGENDA

Time: 9:00 a.m. Friday, June 28, 2019

Place: at B1, 76, Chenggong Rd., Nangang Dist., and Taipei City, Taiwan Chairman: Dr. Huang Wei-Hsiang, Chairman of the Board of Directors

I. Call the Meeting to Order

II. Chairperson Remarks

III. Report Items

  1. To report the business of 2018

  2. Audit Committee’s review report

  3. To report 2018 employees' and directors' compensation

IV. Proposed Resolutions

  1. To accept 2018 Business Report and Financial Statements

  2. To approve the proposal for distribution of 2018 profits

V. Discussion

  1. To revise the Articles of incorporation

  2. To revise the Procedures for the Loaning the Funds to Others

  3. To revise the Procedures for the Acquisition or Disposal of Assets

VI. Other Business and Special Motion

  • VII.Meeting Adjourned

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Report Items

Report No.1

To report the business of 2018

Explanation: Please refer to Attachment I on page 7~9 of this handbook.

Report No.2

Audit Committee’s review report

Explanation: Please refer to Attachment II on page 10 of this handbook.

Report No.3

To report 2018 employees' and directors' compensation

Explanation:

  1. To be conducted in accordance with the regulations stipulated in Article 31 of the Articles of Incorporation.

  2. Board of Directors approved 2018 employees' and directors' compensation on April 30, 2019.

  3. 2018 employees' compensation is NT$18,107,690, and 2018 directors' compensation is NT$42,000,000,Total amount is NT$60,107,690 and is distributed in cash.

Proposed Items

Proposal No.1

To accept 2018 Business Report and Financial Statements (Proposed by the Board of Directors)

Explanation:

  1. WPG HOLDINGS LIMITED 2018 Financial Statements, including Balance Sheets, Statements of Comprehensive Income, Statements of Changes in Equity, and Statements of Cash Flows, were audited by independent auditors, Lin, Chun-Yao and Chou, Chien-hung of PricewaterhouseCoopers, Taiwan.

  2. 2018 Business Report, Independent Auditors’ Report, and the above-mentioned Financial Statements are attached hereto as Attachments I on page 7~9, Attachments III and IV on page 11~37.

  3. Please accept the aforementioned Business Report and Financial Statements.

Resolution:

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Proposal No.2

To approve the proposal for distribution of 2018 profits (Proposed by the Board of Directors)

Explanation:

  1. The Board has adopted Proposal for Distribution of 2018 Profits in accordance with the Act and Articles of Incorporation. Please refer to the 2018 PROFIT DISTRIBUTION TABLE below.

WPG HOLDINGS LIMITED 2018 PROFIT DISTRIBUTION TABLE

（Unit: NTD＄）
Beginning retained earnings 4,043,811,036
LESS：uses IFRS 9 effect for adjustment (49,737,243)
Adjust the later period’s initial undistributed 3,994,073,793
surplus
ADD：2018 Net profit after tax 7,462,010,011
LESS: Adjustments for the retained earnings (139,890,525)
In 2018 (Note 1)
LESS：legal reserve (Note 2) (746,201,001)
ADD：Reversal of Special Reserve (Note 3) 1,522,254,604
Distributable net profit 12,092,246,882
Distributable items：：
Cash Dividends to Common Share Holders(NT$2.70per share) 4,533,453,449
Unappropriated retained earnings (Note 4) 7,558,793,433

Note 1: Refer to the actuarial losses on defined benefit plans, amounted to NT$111,360,825 and difference

between consideration and carrying amount of subsidiaries acquired, amounted to NT$28,529,700.

Note 2: NT$7,462,010,011 * 10% = NT$746,201,001.

Note 3: the special reserve is rotated according to Chin kuan cheng fa tzu 1010012865 rules.

Note 4: this year’s earnings assignment sequence is based on the calculation in Article 66-9 of the Income Tax Act. Thus, the 2018 earnings will be assigned first.

Chairman Manager Accounting supervisor

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  1. From the Company’s accumulated undistributed retained earnings in 2018, NT$4,533,453,449 is proposed to be distributed as dividend. The cash dividend per share reached NT$2.7 (rounded down to the basic unit of currency "Yuan", and the total amount of the fractional sums should be listed as other income in our business's ledger).Upon the approval of the Shareholders Meeting, it is proposed to distribute such amount as cash dividend, and to authorize the Board of Directors to resolve the ex-dividend date and other relevant matters. (Please refer to the circular letter No. 10002407180 issued by Ministry of Economic Affairs, R.O.C. of April 7, 2011).

  2. Adoption of the proposal for authorizing plenary authority to the chairman approved by shareholders' meeting held in accordance with the company acts or relevant laws and regulations to deal with changes in dividend payout ratio, that have been impacted by the number of outstanding shares, whichis caused by the changes in the company’s capital stock (Please refer to the circular letter No. 09800189600 issued by Ministry of Economic Affairs, R.O.C. of January 11, 2010).

  3. Please have the shareholder’s meeting recognize the matter.

Resolution:

Discussion

Proposal No. 1

To revise the Articles of Incorporation. (Proposed by the Board of Directors)

Description:

  1. Amend the Articles of Incorporation to comply with regulations and actual need. For article amendment details and comparison, see Attachment V (page 38~47) of this handbook.

  2. Please have the shareholder’s meeting discuss the matter.

Proposal No. 2

To revise the Procedure for the Loaning of Funds to Others. (Proposed by the Board of Directors)

Description:

  1. Amend the Procedure for the Loaning of Funds to Others, to comply with regulations. For a comparison of the amended articles, see Attachment VI on page 48 of this handbook.

  2. Please have the shareholder’s meeting discuss the matter.

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Proposal No. 3

To revise the Procedures for the Acquisition or Disposal of Assets. (Proposed by the Board of Directors)

Description:

  1. Amend Procedures for the Acquisition or Disposal of Assets to comply with regulations and actual need. For a comparison of the amended articles, see Attachment VII on pages 49~64 in this manual.

  2. Please have the shareholder’s meeting discuss the matter.

Resolution:

Other Business and Special Motions

Meeting Adjourned

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III. Appendix Attachment I

Business Report

We have remained number one in semiconductor component channel revenue in the world in 2018 because of our correct product layout, growing productivity, and continuous operation expansion. This Company’s operating scale is becoming globalized. Currently, our main sales locations are in Taiwan, China, Hong Kong, and South Asia, but we are gradually expanding our sales locations in Northeast Asia, ASEAN countries, India, and North America. Among these locations, sales in Central and North America grew the fastest. Last year, the revenue broke through NT$20 billion and the net profit after tax grew by 25% to reach NT$3.3 million. In 2019, 5G mobile communication, IoT, automobiles, and industrial electronics will be the market mainstay for the global semiconductor revenue and growth in 2019. Through active deployment and cultivation, this Company has sufficiently grasped market growth opportunities. In market application and growth this Company will continue to provide added-value supply chain management service, competitive parts, and turnkey solutions. Our objective is to help our clients develop and invest in future markets and obtain benefits for our suppliers and clients.

1. Review of 2018

Our consolidated revenue was NT$545.13 billion (US$18.1 billion). A record high in operating income, net income were reached at NT$10.6 billion and NT$7.5 billion. Basic EPS was NT$4.22. Return on Working Capital (ROWC), the key performance indicator, was 9.63%, and the parent company’s shareholder’s return on equity (ROE) was 14.10%.

Last year the product structure moved towards diversified development. Core 3C products such as cloud servers and wireless broadband showed stable growth. Non-3C fields such as IoT, automobiles, and industrial use electronics grew rapidly and accounted for 25% of total revenue. We have has approximately 5,400 employees, of which field applications engineers (FAE) account for 16% and provide 223 “solutions online.” WPG has approximately 105 operating locations worldwide, 77 in Asia Pacific and 28 in North America, respectively. Our global supply chain crosses regions and support approximately 464 VMI logistic cases to realize one-stop service, which provide customers with higher added-value services.

For four consecutive years, WPG was in the top 20% of listed companies in the corporate governance evaluation, and has been nominated for the Taiwan Corporate Governance 100 Index. This Company participated in the TCSA Taiwan Corporate Sustainability Award CSR award competition for the first time and won the silver medal in the corporate sustainability report-service group. This indicates that the added-value services in the semiconductor supply chain provided by this Company have been recognized.

2. Outlook for 2019

Facing increasing dynamic changes in global economy, WPG Holdings’ management team has to return to management basics. The management is inspecting the individual production lines in the group based on the return on working capital (ROWC). The team is also continuing to adjust production line combinations, organization, and strengthening operating fund management, in which the priority will be accounts receivable and inventory management. In addition to strengthening basic operation management, WPG Holdings is also continuing to transform in the digital area. In the industry AI introduction trend, customer need, response to customer needs, and creating customer needs, are the direction that WPG Holdings is continuing to work towards.

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  • “WPGDADAWANT” service platform: WPGDADAWANT was initiated in the 2018 digital transformation year and will continue to be promoted in 2019. Different platform information will be linked in real-time. WPG Holdings is also focusing on smart warehouse and logistics service, which is an important digital transformation goal in 2019. After the Hong Kong warehouse has been upgraded and went online at the end of 2018, Shenzhen warehouse will be the next in 2019.

  • Key financial indicators: Increase net income and effectively control operating costs. The ROWC is used as the financial indicator for the group to continuously optimize product mix, improve account receivable and collection, ensure asset quality and liquidity, enhance asset structure and profitability, and inprove shareholders’ return and dividend.

  • Actively deploy and expand the market: In response to integration of upstream factories and to expand market impact, we will actively review related product lines and customer makeup. We will improve information gathering, analysis, and coordination of target markets, as well as integrate the Group’s advantages. Various resource applications and production line/business cooperation will be developed. Systemization and well-organized risk control can optimize the entire business processes. WPG will improve our customer service quality, expand our influence, and increase our global market penetration. We will optimize our management capability for our target customer groups and increase our production value. Business development strategy and schedule and resource allocation for overseas business groups will be strictly controlled to serve global customers.

  • Enhance portfolio management: This Company will discuss the advantages/disadvantages of various product lines and propose corresponding resource allocation and supplier communication strategy. WPG will actively improve production line management efficiency and identify profitable operating models under different gross margin. WPG’s service brand image will be developed and the WPGDADAWANT service platform will be promoted. Internal and external promotions will be conducted online and off line (O2O) to increase brand identification and value-added synergy. Forum management techniques and knowledge sharing groups will be supplemented to cultivate fan loyalty and habitual use. Brands will continuously be promoted to increase perceived quality service, develop market brand and image, increase exchange, and create long-term value for customers.

  • Risk management: in 2017 this Company established the Risk management Service Department to continue corporate governance and sustainable development concepts. The department is conducting WPG Holdings’ enterprise risk management (ERM) according to company operating objectives and risks. By identifying risk items, the Company use quantitative and qualitative evaluation to assess and control risks. In 2018 the following risk management mechanisms has been implemented: automatic abnormal trading alert mechanism, introduction and management of key risk indicators (KRI), emergency response mechanism for main operating locations and self-managed warehouses, promotion of WPG risk management policy/procedure/concept to various groups and related units, and operation risk management mechanism. These are efforts to further improve risk management effectiveness. Important items include the building of human resource risk management indicators and mechanism, optimizing legal procedures and improving awareness of legal risks, integration and improvement of credit management function, and trade compliance management.

  • Integration process and information platform: in response to digitization transformation service, this Company is focusing on the WPGDADAWANT, third-party smart warehousing, mobility upgrading and big data analysis and application. For cross-region transportation and logistics management, the Company will follow strategic objectives and continue to promote work procedure improvements and the building of smart warehouses and smart platforms. This is so that the Company can rapidly respond to a changing environment, achieve improvements in quality and efficiency, and satisfy the Company’s operating needs.

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  • Corporate governance and CSR: continue to increase information transparency. This Company was ranked in the top 20% in the 2018 Corporate Governance Evaluation. In 2019, the objective is to be in the top 5% of listed companies. Board meetings, audit committees, remuneration committees, and new business strategy committees will continue to be implemented. The annual work plan will also be executed. Important work in WPG Holdings’ 2019 Corporate Social Responsibility and Sustainability Report (CSR) include interaction with stakeholders, honest governance, sustainability, talent development and friendly workplace, innovative supply chain partnerships, green management and local care.

In the future, WPG will continue to hold its global leadership position. By using digital transformation, WPG Holdings will continue to expand the healthy development of the product revenue structure, integrate and analyze customer needs, link upstream and downstream, promote supply chain management, create innovative commercial models, and provide customers with higher added-value services.

The management team and colleagues express our deep gratitude for the support and encouragement of our shareholders. We look forward to your guidance and advice in the coming year. WPG will always be consistent in our business philosophy and services. The vision of WPG is “industry first, channel benchmark.” By comprehensively promoting the core value of “team, integrity, professionalism and effectiveness,” we aim to create win-win outcomes for our suppliers, customers and shareholders, and share with you our exceptional business results.

We sincerely welcome all our peers and shareholders to share their concerns and advices with us.

Chairman Huang Wei-Hsiang President Yeh Fu-Hai Accounting supervisor Yuan Hsing-Wen

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Attachment II

AUDIT COMMITTEE’S REVIEW REPORT

The Board of Directors has prepared the 2018 Business Report, Financial Statements, and proposal for allocation of profits. The aforementioned 2018 Business Report, Financial Statements, and proposal for allocation of profits have been reviewed and determined to be correct and accurate by the Audit Committee members of WPG HOLDINGS LIMITED. According to Article 14-4, 14-5 of the Securities and Exchange Act and Article 219 of the Act, we hereby submit this report.

WPG HOLDINGS LIMITED AUDIT COMMITTEE

Independent Director DUH, RONG-RUEY

Independent Director HUANG, JIH-TSAN

Independent Director YU, YUNG HONG

APRIL 30 , 2019

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Attachment III

AUDIT REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

To the Board of Directors and Stockholders of WPG Holdings Limited

Opinion

We have audited the accompanying parent company only balance sheets of WPG Holdings Limited (the “Company”) as at December 31, 2018 and 2017, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2018 and 2017, and its financial performance and its cash flows for the years then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”.

Basis for opinion

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

Key audit matters

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

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The key audit matters in relation to the parent company only financial statements for the year ended December 31, 2018 are outlined as follows:

Impairment assessment of investments accounted for under equity method

Description

Refer to Note 4(10) for accounting policy on investments accounted for under equity method, Note 5(2) for uncertainty of accounting estimates and assumptions in relation to impairment assessment of investments accounted for under equity method, and Note 6(3) for details of investments accounted for under equity method.

In 2010, the Company acquired 100% shareholding of Yosun Industrial Corp. (referred herein as “Yosun Industrial”) amounting to $12,939,060 thousand, and was recognised as investments accounted for under equity method. The Company uses the estimated future cash flows of each cash-generating unit and proper discount rate to assess whether the investment may be impaired. Given that the assumptions used in the calculation of recoverable amount requires significant management judgement with respect to the discount rate and the underlying cash flows, we consider impairment assessment of the investment a key audit matter.

How our audit addressed the matter

Our audit procedures in relation to the above key audit matter included:

  1. Assessing the process in which management evaluates the estimated future cash flows of each cash generating unit, and reconciling the input data used in the valuation model to the approved operational plan by management.

  2. Evaluating the reasonableness of the estimated growth rate, gross rate, discount rate and other significant assumptions used in the valuation model, by:

  3. (1) Comparing estimated growth rate and gross rate with historical data and our knowledge of the business and industry;

  4. (2) Comparing discount rate assumptions with respect to cash generating units’ capital cost and similar return on assets; and

  5. (3) Checking the setting of valuation model’s calculation formula.

  6. Comparing the recoverable value and book value of each cash-generating unit.

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Impairment assessment of investments accounted for under equity method

Description

Refer to Note 4(10) for accounting policy on investments accounted for under equity method, and Note 6(3) for details of investments accounted for under equity method.

As at December 31, 2018, the balance of the Company’s investments in its subsidiaries, World Peace Industrial Co., Ltd. (referred herein as “World Peace Industrial”), Yosun Industrial, Silicon Application Corp. (referred herein as “Silicon Application”) and Asian Information Technology Inc. (referred herein as “Asian Information Technology”) amounted to $23,538,074 thousand, $13,290,333 thousand, $6,836,794 thousand and $5,388,595 thousand, respectively, and the investment income amounted to $3,507,432 thousand, $1,500,434 thousand, $1,059,303 thousand and $1,004,782 thousand, respectively for the year then ended. As the balance of investments accounted for under equity method constituted 84% of the Company’s total assets, and investment income constituted 94% of the Company’s profit before tax, we consider the assessment of investments accounted under using equity method, valuation of allowance for uncollectible accounts receivable, and recognition of purchase discounts and allowances of these subsidiaries as key audit matters as summarised below:

Valuation of allowance for uncollectible accounts receivable - World Peace Industrial, Yosun Industrial, Silicon Application and Asian Information Technology (collectively referred herein as the “Subsidiaries”)

Description

Refer to Note 4(10) of consolidated financial statements for accounting policy on accounts receivable, Note 5(2) of consolidated financial statements for uncertainty of accounting estimates and assumptions in relation to provision for uncollectible accounts receivable, and Note 6(5) of consolidated financial statements for details of accounts receivable and overdue receivables.

The Subsidiaries assess the collectibility of accounts receivable based on historical experience with its customers. As the estimation of allowance for uncollectible accounts is subject to management’s judgment in estimating future recovery, such as management’s assessment of customer’s credit risk, we consider the valuation of allowance for uncollectible accounts receivable a key audit matter.

How our audit addressed the matter

Our audit procedures in relation to the above key audit matter included:

  1. Obtaining an understanding of, and evaluating the formal approval process for the customer’s

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credit limit application.

  1. Checking the provision policy on allowance for uncollectible accounts, and assessing the reasonableness of provision policy.

  2. Checking the adequacy of the loss rate calculation by sampling the historical accounts receivable aging data and verifying the formula for the calculation of expected credit loss rate.

  3. Comparing the classification of accounts receivable aging with current year and prior year, and checking subsequent collections after balance sheet date to confirm recovery of outstanding receivables.

  4. For those accounts receivable specifically identified by management to have been impaired, evaluating propriety of impairment assessment against related supporting documents.

Recognition of purchase discounts and allowances - subsidiaries

Description

Refer to Note 4(13) of the consolidated financial statements for accounting policy on recognition of purchase discounts and allowances.

The Subsidiaries are engaged in operating sales channel for various electronic components. In line with industry practice, the Subsidiaries have entered into purchase discounts and allowances agreements with suppliers for various kinds and quantities of inventories. The Subsidiaries calculate and recognise the amount of purchase discounts and allowances in accordance with the agreement. The Subsidiaries negotiate the amount with the supplier, and after receiving credit note from supplier, the Subsidiaries pay the net amount.

The discounts and allowances from supplier are calculated either automatically by the system or manually. The Subsidiaries have to gather a lot of information to input in the system, such as the items subject to discount and corresponding discount rate, etc. Given that the Subsidiaries have a large volume of purchases, and have entered into various purchase discounts and allowances agreements with terms and conditions that vary with each agreement, we consider the recognition of purchase discounts and allowances a key audit matter.

How our audit addressed the matter

Our audit procedures in relation to the above key audit matter included:

  1. Understanding the process in recognising purchase discounts and allowances, evaluating related

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internal control procedures and testing its effectiveness, checking the basic information set up in the computer system with respect to discount and allowance calculation randomly, and selecting samples to determine whether purchase discounts and allowances recognised were reviewed by an authorised supervisor.

  1. Selecting samples of purchase discounts and allowances, obtaining confirmed documents and approved credit note from supplier for selected commodity’s part number, and checking whether the part number and discount and allowance amount in obtained vouchers were consistent with the amounts recognised.

  2. Performing confirmation of selected material accounts payable, checking whether there is a difference between the amount of purchase discounts and allowances recognised based on credit note from supplier with the amount confirmed by the supplier, and investigating differences, if any. Selecting samples of outstanding accounts payable and checking whether subsequent payments were made after the balance sheet date.

Responsibilities of management and those charged with governance for financial statements

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

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

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

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ROC GAAS will always detect a material misstatement when it

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exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these parent company only financial statements.

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

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

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

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

  4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on 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 auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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

  6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the financial statements to express an opinion on the 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

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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 financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Lin, Chun-Yao Chou, Chien-hung

for and on behalf of PricewaterhouseCoopers, Taiwan March 26, 2019

The accompanying parent company only financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying parent company only financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

As the financial statements are the responsibility of the management, PricewaterhouseCoopers, Taiwan cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

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WPG HOLDINGS LIMITED

PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2018 AND 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Assets Notes
6(1)
7(3)
7(3)
6(2)
12(4)
12(4)
6(3) and 8
6(4)
6(5) and 8
6(6)
6(22)		 December 31, 2018
Amount
%
$
52,637
-
81,425
-
56
-
350,349
1
17,416
-
296
-
502,179
1
547,357
1
-
-
-
1
55,235,857
95
1,181,993
2
715,151
1
7,691
-
12,134
-
5,245
-
57,705,428
99
$
58,207,607
100		 December 31, 2017 December 31, 2017
Amount
$
52,637
81,425
56
350,349
17,416
296
502,179
547,357
-
-
55,235,857
1,181,993
715,151
7,691
12,134
5,245
57,705,428
$
58,207,607		 Amount
$
30,225
32,958
55
186,066
13,528
489
263,321
-
108,710
380,458
52,715,433
938,726
720,620
16,273
10,133
10
54,890,363
$
55,153,684		 %
Current assets
1100
Cash and cash equivalents
1180
Accounts receivable - related
parties, net
1200
Other receivables
1210
Other receivables - related parties
1410
Prepayments
1470
Other current assets
11XX
Total current assets
Non-current assets
1510
Financial assets at fair value
through profit or loss -
non-current
1523
Available-for-sale financial assets
- non-current
1543
Financial assets carried at cost -
non-current
1550
Investments accounted for under
equity method
1600
Property, plant and equipment
1760
Investment property, net
1780
Intangible assets
1840
Deferred income tax assets
1900
Other non-current assets
15XX
Total non-current assets
1XXX
Total assets		 -
-
-
-
-
-
-
-
-
1
96
2
1
-
-
-
100
100

(Continued)

-18-

WPG HOLDINGS LIMITED

PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2018 AND 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Liabilities andEquity December 31, 2018
December 31, 2017
Notes
Amount
%
Amount
%
6(8)
$
1,995,000
3 $
1,745,000
3
6(9)
619,593
1
729,604
1
1,018
-
1,018
-
281,344
1
250,985
1
7(3)
14,685
-
124,205
-
413,503
1
240,695
1
6(10)
55,145
-
55,395
-
3,380,288
6
3,146,902
6
6(10) and 8
358,577
1
404,903
1
6(22)
73,873
-
52,132
-
6(11)
36,100
-
30,774
-
468,550
1
487,809
1
3,848,838
7
3,634,711
7
6(12)
16,790,568
29
18,250,618
33
6(13)
19,454,882
33
19,569,525
35
6(14)
5,274,872
9
4,544,073
8
4,124,936
7
-
-
11,316,193
19
13,279,694
24
6(15)
(
2,602,682) (
4) (
4,124,937) (
7)
54,358,769
93
51,518,973
93
9
$
58,207,607 100 $
55,153,684
100
Current liabilities
2100
Short-term borrowings
2110
Short-term notes and bills payable
2150
Notes payable
2200
Other payables
2220
Other payables - related parties
2230
Current income tax liabilities
2300
Other current liabilities
21XX
Total current liabilities
Non-current liabilities
2540
Long-term borrowings
2570
Deferred income tax liabilities
2600
Other non-current liabilities
25XX
Total non-current liabilities
2XXX
Total liabilities
Equity
Capital
3110
Common stock
Capital reserve
3200
Capital reserve
Retained earnings
3310
Legal reserve
3320
Special reserve
3350
Unappropriated earnings
Other equity interest
3400
Other equity interest
3XXX
Total equity
Significant contingent liabilities
and unrecognized contract
commitments
3X2X
Total liabilities and equity

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

-19-

WPG HOLDINGS LIMITED

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2018 AND 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNINGS PER SHARE DATA)

4000
5000
5900
7010
7020
7050
7000
7900
7950
8200
8311
8330
8349
8310
8361
8362
8380
8399
8360
8300
8500
9750
9850		 2018
2017
Items
Notes
Amount
%
Amount
%
Operating revenues
6(16) and 7(3)
$ 8,212,827
100
$ 7,983,324
100
Operating costs
6(20)(21)and
7(3)
( 697,955
) ( 8
) ( 584,625
) ( 7
)
Gross profit
7,514,872
92
7,398,699
93
Non-operating income and expenses
Other income
6(17)
27,248
-
22,693
-
Other gains or losses
6(18)
( 7,282) - ( 18,075) -
Financial costs
6(19)
( 23,702
) -
( 47,908
) ( 1
)
Total non-operating income and expenses
( 3,736
) -
( 43,290
) ( 1
)
Income before income tax
7,511,136
92
7,355,409
92
Income tax expense
6(22)
( 49,126
) ( 1
) ( 47,422
) -
Profit for the year
$ 7,462,010
91
$ 7,307,987
92
Other comprehensive income / (loss), net
Components of other comprehensive income
(loss) that will not be reclassified to profit or
loss
Loss on remeasurement of defined benefit
plan
6(11)
($ 5,479) - ($ 3,225) -
Share of other comprehensive loss of
subsidiaries, associates and joint ventures
accounted for using equity method
( 107,723) ( 1) ( 49,889) ( 1)
Income tax related to components of other
comprehensive income that will not be
reclassified to profit or loss
6(22)
1,841
-
548
-
Other comprehensive loss that will not be
reclassified to profit or loss
( 111,361
) ( 1
) ( 52,566
) ( 1
)
Components of other comprehensive income
(loss) that will be reclassified to profit or loss
Financial statements translation differences of
foreign operations
( 26,739) - ( 107,910) ( 1)
Unrealized gain (loss) on available-for-sale
financial assets
12(4)
-
-
23,363
-
Share of other comprehensive income (loss) of
subsidiaries, associates and joint ventures
accounted for using equity method
1,683,772
20 ( 4,944,508) ( 62)
Income tax related to components of other
comprehensive income (loss) that will be
reclassified to profit or loss
6(22)
564
-
( 3,945
) -
Other comprehensive income (loss) that
will be reclassified to profit or loss
1,657,597
20
( 5,033,000
) ( 63
)
Other comprehensive income (loss), net
$ 1,546,236
19
($ 5,085,566
) ( 64
)
Total comprehensive income
$ 9,008,246
110
$ 2,222,421
28
Earnings per share (in dollars)
Basic earnings per share
6(23)
$ 4.22
$ 4.10
Diluted earnings per share
6(23)
$ 4.22
$ 4.01

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

-20-

WPG HOLDINGS LIMITED

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2018 AND 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

2017
Balance at January 1, 2017
Net income
Other comprehensive income (loss)
Total comprehensive income (loss)
Appropriation and distribution of 2016
retained earnings (Note 1)
Legal reserve
Cash dividends
Change in capital reserve
Difference between consideration and carrying
amount of subsidiaries acquired or disposed
Exercise of convertible bonds
Balance at December 31, 2017
2018
Balance at January 1, 2018
Effect of retrospective application of new
standards
Balance after restatement on January 1, 2018
Net income
Other comprehensive income (loss)
Total comprehensive income
Appropriation and distribution of 2017
retained earnings (Note 2)
Legal reserve
Special reserve
Cash dividends
Capital reduction payments to shareholders
Disposal of investments accounted for using
equity method
Reorganisation
Difference between consideration and carrying
amount of subsidiaries acquired or disposed
Balance at December 31, 2018		 Notes Share capital capital Capital reserve Retained earnings O ther equityinterest Total equity
Common stock Certificates of bond
conversion		 Legal reserve Special reserve Unappropriated
earnings		 Exchange
differences of
foreign financial
statements
v		 Unrealised gains
(losses) from
financial assets
measured at fair
alue through other
comprehensive
income		 Unrealized gain or
loss or
available-for-sale
financial assets
6(14)
6(13)
6(12)(25)
12(4)
6(14)
6(12)
6(13)
6(13)
6(24)		 $ 17,238,954
-
-
-
-
-
-
-
1,011,664
$ 18,250,618
$ 18,250,618
-
18,250,618
-
-
-
-
-
-
(
1,460,050 )
-
-
-
$ 16,790,568		 $
2,938
-
-
-
-
-
-
-
(
2,938 )
$
-
$
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-		 $ 16,901,053
-
-
-
-
-
112,053
-
2,556,419
$ 19,569,525
$ 19,569,525
-
19,569,525
-
-
-
-
-
-
-
(
112,053 )
(
2,590 )
-
$ 19,454,882		 $
4,012,785
-
-
-
531,288
-
-
-
-
$
4,544,073
$
4,544,073
-
4,544,073
-
-
-
730,799
-
-
-
-
-
-
$
5,274,872		 $
-
-
-
-
-
-
-
-
-
$
-
$
-
-
-
-
-
-
-
4,124,936
-
-
-
-
-
$
4,124,936		 $ 10,734,088
7,307,987
(
52,566 )
7,255,421
(
531,288 )
(
4,178,311 )
-
(
216 )
-
$ 13,279,694
$ 13,279,694
(
49,737 )
13,229,957
7,462,010
(
111,361 )
7,350,649
(
730,799 )
(
4,124,936 )
(
4,380,148 )
-
-
-
(
28,530 )
$ 11,316,193		 $
918,151
-
(
5,172,430 )
(
5,172,430 )

-

-
-

-
-
($
4,254,279 )
($
4,254,279 )

-
(
4,254,279 )
-

1,657,597
1,657,597

-

-

-
-
-
-

-
($
2,596,682 )		 $
-
-
-
-
-
-
-
-
-
$
-
$
-
(
6,000 )
(
6,000 )
-
-
-
-
-
-
-
-
-
-
($
6,000 )		 ($
10,088 )
-
139,430
139,430
-
-
-
-
-
$
129,342
$
129,342
(
129,342 )

-
-
-
-
-
-
-
-
-
-
-
$
-		 $ 49,797,881
7,307,987
(
5,085,566 )
2,222,421
-
(
4,178,311 )
112,053
(
216 )
3,565,145
$ 51,518,973
$ 51,518,973
(
185,079 )
51,333,894
7,462,010
1,546,236
9,008,246
-
-
(
4,380,148 )
(
1,460,050 )
(
112,053 )
(
2,590 )
(
28,530 )
$ 54,358,769
  • Note 1: The directors' and supervisors' remuneration in the amount of $30,000 and employees' compensation in the amount of $11,080 have been deducted in the income statement for 2016 and the difference in employees’ compensation by $9,812 was adjusted in the income statement for the year ended December 31, 2017.

Note 2: The directors' and supervisors' remuneration in the amount of $42,000 and employees' compensation in the amount of $23,334 have been deducted in the income statement for 2017 and the difference in employees’ compensation by $1,058 was adjusted in the income statement for the year ended December 31, 2018.

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

-21-

WPG HOLDINGS LIMITED

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2018 AND 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Cash flows from operating activities
Income before income tax
Adjustments to reconcile net income to net cash provided
by operating activities:
Income and expenses
Depreciation
Amortization
Impairment loss
Interest expense
Interest income
Dividend income
Share of profit of subsidiaries, associates and joint
ventures accounted for under the equity method
Loss on disposal of property, plant and equipment
Gains on financial assets at fair value through profit
or loss
Amortization of bond discount
Changes in assets/liabilities relating to operating
activities
Net changes in assets relating to operating activities
Accounts receivable - related parties, net
Other receivables
Other receivables - related parties
Prepayments
Other current assets
Changes in operating liabilities
Notes payable
Other payables
Other payables - related parties
Other current liabilities
Other non-current liabilities
Cash inflow generated from operations
Interest paid
Income tax paid
Interest received
Dividends received
Net cash provided by operating activities		 Notes
2018
2017


$
7,511,136 $
7,355,409


6(20)
18,611
21,091
6(20)
8,827
9,892
6(7)(18)
-
8,600
6(19)
30,650
29,576
6(17)
(
127 ) (
86 )
6(17)
(
3,900 ) (
1,291 )

(
7,486,801 ) (
7,377,808 )
6(18)
-
91
6(18)
(
2,935 )
-
6(19)
-
20,723



(
48,467 ) (
23,793 )

(
8 )
78

451,045
571,582

(
3,888 ) (
743 )

193
10


- (
529 )

20,947
49,386

480 (
1,606 )

666 (
194 )

(
152 ) (
8,874 )

496,277
651,514

(
20,123 ) (
52,061 )

(
469,496 ) (
708,876 )

127
86

4,691,336
4,715,063

4,698,121
4,605,726

(Continued)

-22-

WPG HOLDINGS LIMITED

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2018 AND 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Cash flows from investing activities
Acquisition of financial assets carried at cost
Acquisition of investments accounted for under the
equity method
Acquisition of property, plant and equipment
Acquisition of intangible assets
Increase in refundable deposits
Acquisiton of available-for-sale financial assets -
non-current
Acquisition of financial assets at fair value through profit
or loss
Proceeds from capital reduction of investments accounted
for using equity method
Proceeds from liquidation of investments accounted for
using equity method
Net cash provided by (used in) investing
activities
Cash flows from financing activities
Increase in short-term borrowings
Decrease in short-term borrowings
Increase in commercial papers payable
Decrease in commercial papers payable
Increase in other payables - related parties
Decrease in other payables - related parties
Decrease in long-term borrowings (including current
portion of long-term borrowings)
Distribution of cash dividends
Repayment of convertible bonds
Capital reduction payments to shareholders
Net cash used in financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year		 Notes
2018
2017


$
- ($
79,026 )
7(3)
- (
197,702 )
6(25)
(
257,524 ) (
927,855 )
6(25)
(
245 ) (
6,017 )

(
5,235 )
-

- (
85,347 )

(
55,254 )
-

1,500,000
-

-
1,271

1,181,742(
1,294,676 )


16,165,000
17,460,000

(
15,915,000 ) (
16,375,000 )

4,457,772
3,914,840

(
4,567,783 ) (
4,084,569 )

-
110,000

(
110,000 ) (
110,000 )

(
47,242 ) (
46,561 )
6(14)
(
4,380,148 ) (
4,178,311 )

- (
4,900 )

(
1,460,050 )
-

(
5,857,451 ) (
3,314,501 )

22,412 (
3,451 )

30,225
33,676

$
52,637$
30,225

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

-23-

Attachment IV

AUDIT REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

To the Board of Directors and Stockholders of WPG Holdings Limited

Opinion

We have audited the accompanying consolidated balance sheets of WPG Holdings Limited and its subsidiaries (the “Group”) as at December 31, 2018 and 2017, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and 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 at December 31, 2018 and 2017, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

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

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in

-24-

the context of our audit of the consolidated financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

The key audit matters in relation to the consolidated financial statements for the year ended December 31, 2018 are outlined as follows:

Impairment assessment of goodwill

Description

Refer to Note 4(19) for accounting policy on goodwill impairment, Note 5(2) for uncertainty of accounting estimates and assumptions in relation to goodwill impairment, and Notes 6(12)(13) for details of goodwill impairment.

The Group acquired shares of stock of target companies by cash or through exchange of shares of stock. The purchase price is allocated to the net identifiable assets acquired at fair value in accordance with the accounting policies on business combinations. The Group uses the estimated future cash flows of each cash-generating unit and proper discount rate to determine recoverable amount of goodwill, and assesses whether goodwill may be impaired. Given that the assumptions used in the calculation of recoverable amount requires significant management judgement with respect to the discount rate and the underlying cash flows, we consider impairment assessment of goodwill a key audit matter.

How our audit addressed the matter

Our audit procedures in relation to the above key audit matter included:

  1. Assessing the process in which management evaluates the estimated future cash flows of each cash generating unit, and reconciling the input data used in the valuation model to the approved operational plan by management.

  2. Evaluating the reasonableness of the estimated growth rate, gross rate, discount rate and other significant assumptions used in the valuation model, by:

  3. (1) Comparing estimated growth rate and gross rate with historical data and our knowledge of the business and industry;

  4. (2) Comparing discount rate assumptions with respect to cash generating units’ capital cost and similar return on assets; and

  5. (3) Checking the setting of valuation model’s calculation formula.

-25-

  1. Comparing the recoverable value and book value of each cash-generating unit.

Valuation of allowance for uncollectible accounts receivable

Description

Refer to Note 4(10) for accounting policy on accounts receivable, Note 5(2) for uncertainty of accounting estimates and assumptions in relation to provision for uncollectible accounts receivable, and Notes 6(5)(14) for details of accounts receivable and overdue receivables.

The Group assesses the collectability of accounts receivable based on historical experience with its customers. As the estimation of allowance for uncollectible accounts is subject to management’s judgment in estimating future recovery, such as management’s assessment of customer’s credit risk, we consider the valuation of allowance for uncollectible accounts receivable a key audit matter.

How our audit addressed the matter

Our audit procedures in relation to the above key audit matter included:

  1. Obtaining an understanding of, and evaluating the formal approval process for the customer’s credit limit application.

  2. Checking the provision policy on allowance for uncollectible accounts, and assessing the reasonableness of provision policy.

  3. Checking the adequacy of the loss rate calculation by sampling the historical accounts receivable aging data and verifying the formula for the calculation of expected credit loss rate.

  4. Comparing the classification of accounts receivable aging with current year and prior year, and checking subsequent collections after balance sheet date to confirm recovery of outstanding receivables.

  5. For those accounts receivable specifically identified by management to have been impaired, evaluating propriety of impairment assessment against related supporting documents.

Recognition of purchase discounts and allowances

Description

Refer to Note 4(13) for accounting policy on recognition of purchase discounts and allowances. The Group is engaged in operating sales channel for various electronic components. In line with

-26-

industry practice, the Group has entered into purchase discounts and allowances agreements with suppliers for various kinds and quantities of inventories. The Group calculates and recognizes the amount of purchase discounts and allowances in accordance with the agreement. The Group negotiates the amount with the supplier, and after receiving credit note from supplier, the Group pays the net amount.

The discounts and allowances from supplier are calculated either automatically by the system or manually. The Group has to gather a lot of information to input in the system, such as the items subject to discount and corresponding discount rate, etc. Given that the Group has a large volume of purchases, and has entered into various purchase discounts and allowances agreements with terms and conditions that vary with each argument, we consider the recognition of purchase discounts and allowances a key audit matter.

How our audit addressed the matter

Our audit procedures in relation to the above key audit matter included:

  1. Understanding the process in recognizing purchase discounts and allowances, evaluating related internal control procedures and testing its effectiveness, checking the basic information set up in the computer system with respect to discount and allowance calculation randomly, and selecting samples to determine whether purchase discounts and allowances recognized were reviewed by an authorized supervisor.

  2. Selecting samples of purchase discounts and allowances, obtaining confirmed documents and approved credit note from supplier for selected commodity’s part number, and checking whether the part number and discount and allowance amount in obtained vouchers were consistent with the amounts recognized.

  3. Performing confirmation of selected material accounts payable, checking whether there is a difference between the amount of purchase discounts and allowances recognized based on credit note from supplier with the amount confirmed by the supplier, and investigating differences, if any. Selecting samples of outstanding accounts payable and checking whether subsequent payments were made after the balance sheet date.

Other matter – Parent company only financial reports

We have audited and expressed an unqualified opinion on the parent company only financial

-27-

statements of WPG Holdings Limited as at and for the years ended December 31, 2018 and 2017.

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

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

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 audit committee, are responsible for overseeing the Group’s financial reporting process.

Auditor’s responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ROC GAAS 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 ROC GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

-28-

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

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

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

  4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty 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 auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

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

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

We 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

-29-

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 of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Lin, Chun-Yao[Chou, Chien-hung ]

For and on behalf of PricewaterhouseCoopers, Taiwan

March 26, 2019

----------------------------------------------------------------------------------

The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and audit report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

As the consolidated financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

-30-

WPG HOLDINGS LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2018 AND 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Assets Notes
6(1)
6(2) and 12(4)
12(4)
6(4) and 8
6(5)
6(5)
7(3)
6(7)
7(3)
6(8)
8
6(2) and 8

6(3)
8 and 12(4)
12(4)
6(9)
6(10) and 8
6(11) and 8
6(12)
6(31)
6(14) and 8		 December 31,2018
Amount
%
$
7,116,888
4
28,469
-
-
-
197,942
-
2,884,889
1
95,258,035
49
82,590
-
8,531,684
4
1,610
-
77,016
-
64,772,967
33
1,507,232
1
515,584
-
180,974,906
92
1,276,064
1
32,035
-
-
-
-
-
617,491
-
5,701,436
3
1,107,246
1
5,567,934
3
482,037
-
301,715
-
15,085,958
8
$
196,060,864 100		 December 31,2017 December 31,2017
Amount

$
7,116,888
28,469
-
197,942
2,884,889
95,258,035
82,590
8,531,684
1,610
77,016
64,772,967
1,507,232
515,584
180,974,906
1,276,064
32,035
-
-
617,491
5,701,436
1,107,246
5,567,934
482,037
301,715
15,085,958
$
196,060,864		 Amount

$
7,097,914
2,539
25,508
-
4,088,566
87,020,143
274,728
5,711,413
2,046
35,079
57,473,653
1,492,698
630,261
163,854,548
-
-
495,766
585,837
1,253,615
5,042,824
1,184,367
5,571,769
351,043
327,857
14,813,078
$
178,667,626		 %
Current assets
Cash and cash equivalents
Financial assets at fair value through
profit or loss - current
Available-for-sale financial assets -
current
Current financial assets at amortized
cost
Notes receivable, net
Accounts receivable, net
Accounts receivable - related parties,
net
Other receivables
Other receivables - related parties
Current income tax assets
Inventory
Prepayments
Other current assets
Non-current assets
Financial assets at fair value through
profit or loss - non-current
Non-current financial assets at fair value
through other comprehensive income
Available-for-sale financial assets -
non-current
Financial assets carried at cost -
non-current
Investments accounted for under equity
method
Property, plant and equipment
Investment property - net
Intangible assets
Deferred income tax assets
Other non-current assets
TOTAL ASSETS		 4
-
-
-
2
49
-
3
-
-
32
1
1
92
-
-
-
-
1
3
1
3
-
-
8
100

(Continued)

-31-

WPG HOLDINGS LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2018 AND 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Liabilities and Equity December 31,2018
December 31,2017
Notes
Amount
%
Amount
%
6(15)
$
57,221,436
29
$
53,773,607
30
6(16)
4,957,027
3
3,887,605
2

6(2) and 12(4)
5,660
-
24,765
-
35,497
-
214,347
-
53,161,904
27
48,909,622
27
7(3)
401
-
1,312
-
5,333,973
3
5,040,757
3
803,225
-
751,276
1
6(18)(19)
4,945,142
2
5,559,204
3
126,464,265
64
118,162,495
66
6(18)
13,366,171
7
7,238,010
4
6(31)
496,996
-
414,200
-
909,437
1
797,483
1
14,772,604
8
8,449,693
5
141,236,869
72
126,612,188
71
1 and 6(21)
16,790,568
8
18,250,618
10
6(22)
19,454,882
10
19,569,525
11
6(23)
5,274,872
3
4,544,073
3
4,124,936
2
-
-
11,316,193
6
13,279,694
7
6(24)
(
2,602,682) (
1) (
4,124,937) (
2)
54,358,769
28
51,518,973
29
465,226
-
536,465
-
54,823,995
28
52,055,438
29
7(3) and 9
$
196,060,864 100
$
178,667,626
100
Current liabilities
Short-term borrowings
Short-term notes and bills payable
Financial liabilities at fair value through
profit or loss - current
Notes payable
Accounts payable
Accounts payable - related parties
Other payables
Current income tax liabilities
Other current liabilities
Non-current liabilities
Long-term borrowings
Deferred income tax liabilities
Other non-current liabilities
Total liabilities
Equity Attributable to Owners of Parent
Capital
Common stock
Capital reserve
Capital reserve
Retained earnings
Legal reserve
Special reserve
Unappropriated earnings
Other equity interest
Other equity interest
Total equity attributable to owners of
parent
Non-controlling interest
Total equity
Significant contingent liabilities and
unrecognized contract commitments
TOTAL LIABILITIES AND EQUITY

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

-32-

WPG HOLDINGS LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2018 AND 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNINGS PER SHARE DATA)

2018 2017
Items Notes Amount % Amount %
Sales revenue 6(25), 7(3) and
12(5) $ 545,127,804 100 $ 532,509,958 100
Operating costs 6(8) and 7(3) ( 521,497,383) ( 96) ( 510,358,864) ( 96)
Gross profit 23,630,421 4 22,151,094 4
Operating expenses 6(29)(30) and 7(3)
Selling and marketing ( 9,183,915 ) ( 1) ( 8,762,789) ( 1)
General and administrative ( 3,687,165 ) ( 1) ( 3,435,107) ( 1)
Expected credit impairment loss ( 182,803) - - -
Total operating expenses ( 13,053,883) ( 2) ( 12,197,896) ( 2)
Operating income 10,576,538 2 9,953,198 2
Non-operating income and expenses
Other income 6(26) 336,343 - 372,430 -
Other gains and losses 6(27) 731,477 - 321,627 -
Finance costs 6(28) ( 2,489,578 ) - ( 1,841,661) ( 1)
Share of profit of associates and joint
ventures accounted for under equity
method 46,400 - 74,527 -
Total non-operating income and
expenses ( 1,375,358) - ( 1,073,077) ( 1)
Income before income tax 9,201,180 2 8,880,121 1
Income tax expense 6(31) ( 1,686,163) - ( 1,513,686) -
Consolidated net income $ 7,515,017 2 $ 7,366,435 1

(Continued)

-33-

WPG HOLDINGS LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2018 AND 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNINGS PER SHARE DATA)

Items 2018
Notes
Amount
6(20)
($
150,756 )
(
16 )
6(31)
37,295
(
113,477 )
1,624,228
-
24,929
6(31)
502
1,649,659
$
1,536,182
$
9,051,199
$
7,462,010
53,007
$
7,515,017
$
9,008,246
42,953
$
9,051,199
6(32)
$
$		 2018 2017
%
Amount
%

- ( $
67,036)
-

- (
74)
-
-
11,396
-
- (
55,714)
-
- (
5,162,384) (
1 )

-
139,396
-

- (
35,227)
-
- (
1,194)
-
- (
5,059,409) (
1 )
- ( $
5,115,123) (
1 )
2
$
2,251,312
-

2
$
7,307,987
1
-
58,448
-
2
$
7,366,435
1

2
$
2,222,421
-
-
28,891
-
2
$
2,251,312
-
4.22
$
4.10
4.22
$
4.01
Other comprehensive income
Components of other comprehensive
income that will not be reclassified to
profit or loss
Other comprehensive income before
tax, actuarial losses on defined
benefit plans
Share of other comprehensive loss of
associates and joint ventures
accounted for using equity method
Income tax related to components of
other comprehensive loss that will
not be reclassified to profit or loss
Other comprehensive loss that will
not be reclassified to profit or loss
Components of other comprehensive
income (loss) that will be reclassified
to profit or loss
Exchange differences on translation of
foreign financial statements
Unrealized gain on available-for-sale
financial assets
Share of other comprehensive income
(loss) of associates and joint
ventures accounted for using equity
method
Income tax related to components of
other comprehensive income (loss)
that will be reclassified to profit or
loss
Other comprehensive income (loss)
that will be reclassified to profit or
loss
Total other comprehensive income (loss)
Total comprehensive income
Consolidated net income attributable to:
Owners of parent
Non-controlling interest
Comprehensive income attributable to:
Owners of parent
Non-controlling interest
Earnings per share
Basic earnings per share
Diluted earnings per share
$

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

-34-

WPG HOLDINGS LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2018 AND 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

2017
Balance at January 1, 2017
Total consolidated profit
Net other comprehensive income (loss)
Total comprehensive income (loss)
Appropriation and distribution of 2016 retained earnings
Legal reserve
Cash dividends
Exercise of convertible bonds
Changes in capital reserve
Difference between consideration and carrying amount of
subsidiaries acquired or disposed
Balance at December 31, 2017
2018
Balance at January 1, 2018
Effects of retrospective application of new standards
Balance after restatement on January 1, 2018
Total consolidated profit
Net other comprehensive income (loss)
Total comprehensive income
Appropriation and distribution of 2017 retained earnings
Legal reserve
Special reserve
Cash dividends
Capital reduction payments to shareholders
Disposal of investments accounted for using equity method
Reorganization
Difference between consideration and carrying amount of
subsidiaries acquired or disposed
Acquired non-controlling interest
Change in non-controlling interest
Balance at December 31, 2018		 Notes Equityattributable to Equityattributable to Equityattributable to o wners of theparen t Non-controlling
interest		 Non-controlling
interest		 Totalequity
$ 50,317,449
7,366,435
(
5,115,123 )
2,251,312
-
(
4,178,311 )
3,565,145
112,053
(
12,210 )
$ 52,055,438
$ 52,055,438
(
185,377 )
51,870,061
7,515,017
1,536,182
9,051,199
-
-
(
4,380,148 )
(
1,460,050 )
(
112,053 )
-
(
47,157 )
(
72,714 )
(
25,143 )
$ 54,823,995
Capital Capital reserve Retained Earnings Other EquityInteres t Total
Commonstock Certificates of
bond conversion		 Legal reserve Special reserve Unappropriated
earnings		 Exchange
differences of
foreign financial
statements		 Unrealized gain
(loss) on financial
assets at fair value
through other
comprehensive
income
U		 nrealized gain or
loss on
available-for-
sale financial
assets
6(23)
6(22)
6(22)
6(33)
12(4)
6(23)
6(21)

6(22)
6(22)
6(33)
6(33)		 $ 17,238,954
-
-
-
-
-
1,011,664
-
-
$ 18,250,618
$ 18,250,618
-
18,250,618
-
-
-
-
-
-
(
1,460,050)
-
-
-
-
-
$ 16,790,568		 $
2,938
-
-
-
-
-
(
2,938)
-
-
$
-
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-		 $ 16,901,053
-
-
-
-
-
2,556,419
112,053
-
$ 19,569,525
$ 19,569,525
-
19,569,525
-
-
-
-
-
-
-
(
112,053)
(
2,590)
-
-
-
$ 19,454,882		 $ 4,012,785
-
-
-
531,288
-
-
-
-
$ 4,544,073
$ 4,544,073
-
4,544,073
-
-
-
730,799
-
-
-
-
-
-
-
-
$ 5,274,872		 $
-
-
-
-
-
-
-
-
-
$
-
$
-
-
-
-
-
-
-
4,124,936
-
-
-
-
-
-
-
$ 4,124,936
























$ 10,734,088

7,307,987
(
52,566 )

7,255,421
(
531,288 )
(
4,178,311 )

-

-
(
216 )
$ 13,279,694
$ 13,279,694
(
49,737 )

13,229,957

7,462,010
(
111,361 )

7,350,649
(
730,799 )
(
4,124,936 )
(
4,380,148 )

-

-

-
(
28,530 )

-

-
$ 11,316,193




$
918,151
-
(
5,172,430)
(
5,172,430)
-
-
-
-
-
($ 4,254,279)
($ 4,254,279)
-
(
4,254,279)
-
1,657,597
1,657,597
-
-
-
-
-
-
-
-
-
($ 2,596,682)
























$
-
-
-
-
-
-
-
-
-
$
-
$
-
(
6,000)
(
6,000)
-
-
-
-
-
-
-
-
-
-
-
-
($
6,000)
























($
10,088)
























$ 49,797,881














$
519,568
)

)


)
)



)
)
)
-
139,430		 7,307,987
(
5,085,566)		 58,448
(
29,557
139,430 2,222,421 28,891
-
-
-
-
-		 -
(
4,178,311)
3,565,145
112,053
(
216)		 -
-
-
-
(
11,994
$
129,342		 $ 51,518,973 $
536,465
$
129,342
(
129,342)		 $ 51,518,973
(
185,079)		 $
536,465
(
298
- 51,333,894 536,167
-
-		 7,462,010
1,546,236		 53,007
(
10,054
- 9,008,246 42,953
-
-
-
-
-
-
-
-
-		 -
-
(
4,380,148)
(
1,460,050)
(
112,053)
(
2,590)
(
28,530)
-
-		 -
-
-
-
-
2,590
(
18,627
(
72,714
(
25,143
$
-		 $ 54,358,769 $
465,226

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

-35-

WPG HOLDINGS LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2018 AND 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Cash flows from operating activities
Income before income tax
Adjustments
Income and expenses
Depreciation
Amortization
Expected credit impairment loss
Reversal of provision
Interest expense
Net (gain) loss on financial assets or liabilities at fair
value through profit or loss
Interest income
Dividend income
Share of profit of associates and joint ventures
accounted for under equity method
Loss on disposal of property, plant and equipment
Gain on disposal of investments
Impairment loss
Amortization of bond discount
Changes in assets/liabilities relating to operating activities
Changes in assets relating to operating activities
Financial assets at fair value through profit or loss -
current
Notes receivable, net
Accounts receivable, net
Accounts receivable - related parties, net
Other receivables
Other receivables - related parties
Inventories
Prepayments
Other current assets
Changes in liabilities relating to operating activities
Notes payable
Accounts payable
Accounts payable - related parties
Other payables
Other current liabilities
Other non-current liabilities
Cash inflow generated from operations
Interest paid
Income tax paid
Interest received
Income tax refund
Dividends received
Net cash (used in) provided by operating activities		 Notes
2018
2017
$
9,201,180 $
8,880,121


6(29)
216,436
206,730
6(12)(39)
19,364
25,679
182,803
-
6(26)
-(
113,698 )
6(28)
2,286,498
1,630,134
6(27)
(
499,433 )
40,762
6(26)
(
41,585 ) (
30,143 )
6(26)
(
24,724 ) (
31,766 )
(
46,400 )(
74,527 )
6(27)
10,297
1,306
6(27)
(
57,613 )(
18,530 )
6(27)
-
49,768
6(17)(28)
-
20,723




7,551
14,236
1,293,315
3,392,813
(
6,010,219 )(
1,840,590 )
192,138(
44,810 )
(
2,821,645 )
5,488,774
436
21,373
(
7,300,703 )(
7,548,977 )
(
14,534 )(
231,982 )
137,213(
9,901 )

(
178,850 )(
200,733 )
4,252,282
1,079,671
(
911 )(
11,367 )
244,656
470,068
1,281,210(
336,229 )
119,466(
38,006 )
2,448,228
10,790,899
(
2,241,241 ) (
1,605,247 )
(
1,542,453 )(
1,249,450 )
42,959
29,808
2,681
-
75,131
82,103

(
1,214,695 )
8,048,113

(Continued)

-36-

WPG HOLDINGS LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2018 AND 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Cash flows from investing activities
Acquisition of financial assets carried at cost - non-current
Proceeds from disposal of financial assets carried at cost -
non-current
Acquisition of available-for-sale financial assets -
non-current
Proceeds from disposal of available-for-sale financial assets
- non-current
Proceeds from capital reduction of available-for-sale
financial assets
Acquisition of investments accounted for under equity
method
Proceeds from disposal of investments accounted for under
equity method
Acquisition of property, plant and equipment, investment
property and intangible assets
Proceeds from disposal of property, plant and equipment
Increase in refundable deposits
Decrease in refundable deposits
(Increase) decrease in other financial assets - current
Increase in other financial assets - non-current
Decrease in other financial assets - non-current
(Increase) decrease in other non-current assets
Acquisition of financial assets at fair value through profit or
loss - non-current
Proceeds from disposal of financial assets at fair value
through profit or loss - non-current
Increase in current financial assets at amortized cost
Decrease in current financial assets at amortized cost
Increase in prepayments for investments
Proceeds from capital reduction of investments accounted
for using equity method
Acquisition of subsidiaries
Net cash used in investing activities
Cash flows from financing activities
Increase in short-term borrowings
Decrease in short-term borrowings
Increase in long-term borrowings (including current portion
of long-term liabilities)
Decrease in long-term borrowings (including current portion
of long-term liabilities)
Increase in short-term notes and bills payable
Decrease in short-term notes and bills payable
Increase in guarantee deposit received
Decrease in guarantee deposit received
Shareholders’ cash dividends paid
Repayment of convertible bonds
Capital reduction
Change in non-controlling interest
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year		 Notes
2018
2017
$
- ( $
117,062 )
-
10,178
- (
85,348 )
-
33,155
-
5,665
(
86,663) (
49,000)
183,453
-
6(34)
(
837,503) (
981,021)
3,102
5,733
(
207,923) (
25,436)
275,841
21,830
(
59,240)
730,279
(
12,567) (
42,129)
11,375
52,356
(
71,970)
1,523
(
83,175)
-
791,259
-
(
160,853)
-
15,674
-
- (
21,722)
-
27,211
6(33)
(
119,871 ) (
12,210 )
(
359,061 ) (
445,998 )
716,529,261
668,743,615
(
713,081,432 ) (
667,824,081 )
8,755,065
13,368,536

(
7,223,686 ) (
13,636,079 )

31,336,877
34,398,525
(
30,267,455 ) (
34,713,839 )

82,580
200,055
(
26,797 )(
206,794 )
6(23)
(
4,380,148 )(
4,178,311 )
-(
4,900 )
(
1,460,050 )
-
(
25,143 )
-

239,072(
3,853,273 )
1,353,658(
5,107,840 )
18,974(
1,358,998 )
7,097,914
8,456,912
$
7,116,888 $
7,097,914

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

  • 37-

Attachment V

WPG Holdings Limited

Comparison Table for the Articles of Incorporation Amendments

Original Article Amended Article Reason
Article 3
The total capital stock of the
Company shall be Twenty
Billion New Taiwan Dollars
divided into two billion shares,
with face value of each share at
ten New Taiwan Dollars. The
Board of Directors is authorized
to issue the shares by
installments. Fifty million
shares among the above shall be
reserved for issuance of
warrants of stock warrants,
preferred shares with warrants
or corporate bonds with
warrants issued.
Where We issues share warrants
to its employees, the exercise
prices of such share warrants
issued to the employees might
be lower than the market prices,
provided always that such
warrants shall be issued only
with adoption by a large
majority representing two thirds
of the votes at shareholders'
meetings attended by
shareholders representing a
majority of the total number of
issued shares. Such issue shall
be preceded and reported in
batches within one year from
the date of resolution by a
shareholders’ meeting.
Where We repurchase treasury
stocks, it might transfer the
same to its employees at a price
lower than the average
repurchase price, provided
always that prior to such
transfer, it shall be submitted to
the most recent shareholders’
meeting attended by
shareholders representing a		 Article 3 The total capital stock of the
Company shall be
Two hundred andfive
billion
New Taiwan Dollars divided
into TwentyFive
billion shares,
with face value of each share at
ten New Taiwan Dollars. The
Board of Directors is authorized
to issue the shares by
installments. A portion of which
can bepreferred stock
.Fifty
million shares among the above
shall be reserved for issuance of
warrants of stock warrants,
restricted stock awards
, and
preferred shares with warrants
or corporate bonds with
warrants issued.
Where We issues share warrants
to its employees,acquired by
employees of this Company and
employees of companies
controlled by this Company
(conform to certain conditions),
or employees of subsidiary
companies. Special resolution
by a shareholder’s meeting can
Such issue shall be preceded
and reported in batches within
one year from the date of
resolution by a shareholders’
meeting.
Where We repurchase treasury
stocks, it might transfer the
same to its employees.The
subject of the transfer can
include this Company’s
employees, employees of
domestic/international
controlled companies that meet
certain conditions, and
employees of subsidiary
companies. When the stocks are		 1. Amend
according to
actual need
and in
accordance
with
regulations.
2. Special
resolution is
in Article
15.
  • 38 -
Original Article Amended Article Reason
majority of the total number of
issued shares for adoption by a
large majority representing two
thirds of the votes.		 transferred to employees at a
price lower than the average
purchase price, the transfer
shall be submitted to the most
recent shareholders’ meeting for
special resolution.
When this Company issues new
stocks, it must retain a portion
for purchase by employees
according to Article 267-1 of
the Company Act. This can
include employees from this
Company, subsidiary
companies, or
domestic/international
controlled companies that meet
certain conditions.
Restricted stock awards.
According to Article 267-9 of
the Company Act, new stocks
with attached service conditions
or performance conditions
issued to employees will have
restricted stock rights until the
conditions are met. Restricted
stock awards issued by this
Company shall be approved
through special resolution at
shareholder’s meeting. The
stocks can be issued to
employees from this Company,
subsidiary companies, or
domestic/international
controlled companies that meet
certain conditions. Such issue
shall be preceded and reported
in batches within one year from
the date of resolution by a
shareholders’meeting.
Article 3-1
(Newly added)		 Article 3-1

The rights and obligations of
this Company’s preferred stock
and related issuing conditions
are as follows:
1.
Preferred stock dividend is
limited to an annual rate of
8%, calculated based on
the issuing price of each
share. The dividend can be
issued in a cash lump sum
each year. After the annual
shareholders’meeting		 Amend
according to
actual need.
1.
  • 39 -
Original Article Amended Article Amended Article Reason
2.
3.
4.		 recognizes the financial
report, the board of
directors shall set a
benchmark date to issue
the previous year’s
dividend. The issuing of
the issuing year and the
recovery year dividend is
based on the calculation of
the current year’s actual
issuing days.
This Company’s preferred
stock dividend distribution
has autonomous discretion.
If this Company’s annual
final account shows no
earnings or the earnings
are insufficient for
distribution, the preferred
stock dividend or others
must be considered. If the
shareholder’s meeting
decides not to distribute
preferred stock dividend,
this is not a violation of the
contract. If the issued
preferred stock is of the
non-cumulative type, and
the resolution is not to
distribution or to distribute
insufficient dividend, this
is not accumulated as
deferred payment in future
earnings years.
In addition to receiving
dividend described in Item
one, the holder of
preferred stocks shall not
participate in the
distribution of common
stock earnings, capital
reserve for cash, and
capitalization.
The holder of this
Company’s preferred
stocks has priority over
holders of common stocks
in the distribution of this
Company’s remaining
asset. Holders of preferred
stock also have the same
payment priority sequence
  • 40 -
Original Article Amended Article Amended Article Reason
5.
6.
7.		 as the holder of other
preferred stocks issued by
this Company, and are
only second to ordinary
creditors. However, this is
limited to the amount
calculated based on the
number of circulating
preferred stock and the
issuing price.
The holders of preferred
stock do not have voting or
election rights in the
shareholder’s meeting.
However, holders of
preferred stocks have
voting rights in the
preferred stock
shareholder’s meeting and
regarding issues in the
shareholders’meeting that
is unfavorable to the rights
and obligations of
preferred stock holders.
Preferred stock cannot be
converted to common
stock.
Preferred stock has no
expiration date. Holders of
preferred stock cannot
request this Company to
buy back their preferred
stocks. However, this
Company can buy back
part or all preferred stock
on the following day of the
five year anniversary of
the issuing based on the
actual issuing price. The
unrecovered preferred
stock will continue to have
the aforementioned issuing
conditions and rights and
obligations. If the
Company decides to issue
dividend for the current
year, the dividend that
should be issued up to the
recovery date shall be
calculated according to the
current year’s actual
number of issuing days.
  • 41 -
Original Article Amended Article Reason
8.
The paid-in-capital that the
preferred stock premium is
issued from shall not be
used for capitalization
during the preferred stock
issuing period other than to
make up for losses.
The name of the preferred
stock, the issuing date, and
specific issuing conditions shall
be determined by the board of
directors based on actual market
situation and investor’s
willingness to purchase the
stocks at the time of issuing.
The directors’authorization is
according to the Articles of
Incorporation and related
regulations.
Article 4
The share certificates of We
shall all be name-bearing, be
signed or sealed by more than 3
directors of We and serially
numbered, and shall be handled
in accordance with the
requirements of the competent
securities authority. We might
issue shares without printing
share certificates, or with
printing a consolidated share
certificate representing the total
number of shares of each issue
provided that such are
registered or kept in custody by
a centralized securities
depository enterprise.		 Article 4 The share certificates of We
shall all be name-bearing, be
signed or sealed by directors
representing the company and
numbered in accordance with
the requirements of the
competent securities authority.
We might issue shares without
printing share certificates, that
such are registered or kept in
custody by a centralized
securities depository enterprise.		 Amend
according to
regulations.
Article 9
Shareholders' meeting shall be
divided into regular meeting of
shareholders and special
meeting of shareholders.The
regular meeting of shareholders
shall be convened within six
months after close of each fiscal
year:A special meeting of
shareholders shall be held when
necessary in accordance with
the requirements of Company
Act.
A shareholders meeting shall,
unless otherwise provided in		 Article 9 Shareholders' meeting shall be
divided into regular meeting of
shareholders and special
meeting of shareholders. The
regular meeting of shareholders
shall be convened within six
months after close of each fiscal
year: A special meeting of
shareholders shall be held when
necessary in accordance with
the requirements of Company
Act.
A shareholders meeting shall,
unless otherwise provided in		 Amend
according to
actual need.
  • 42 -
Original Article Amended Article Reason
Company Act and other acts, be
convened by the Board of
Directors.		 Company Act and other acts, be
convened by the Board of
Directors.
The preferred stock
shareholder’s meeting shall be
convened when needed
according to related regulations.
Article 10
A notice to convene a regular
meeting shall be given no later
than 30 days prior to the
scheduled meeting date.
Where a special meeting of
shareholders is convened,
notice shall be given no later
than 15 days prior to the
scheduled meeting date. The
cause(s) or subject(s) of a
meeting of shareholders to be
convened shall be notified to
each shareholder and be
announced. Such notice of a
meeting of shareholders might
be given by means of electronic
transmission, after obtaining a
prior consent from the
recipient(s) thereof.		 Article 10
A notice to convene a regular
meeting shall be given no later
than 30 days prior to the
scheduled meeting date.
Where a special meeting of
shareholders is convened,
notice shall be given no later
than 15 days prior to the
scheduled meeting date.Public
notification can be used as the
shareholder meeting convening
method for shareholders that
hold less than 1000 shares.
Such notice of a meeting of
shareholders might be given by
means of electronic
transmission, after obtaining a
prior consent from the
recipient(s) thereof.		 Amend
according to
regulations.
Article 12
Each shareholder of WPG shall
have one voting power in
respect of each share; except
the circumstances where there
shall be no voting power as set
out in the second paragraphs of
Article 179 of Company Act.
Where a government agency or
a juristic person acts as the
shareholder, the voting rights of
such representatives shall be
exercised based on their
combined shareholding. Where
there are more than two
representatives, such
representatives shall jointly
exercise their voting rights.
Where a shareholder holds
shares for others, such
shareholder may exercise his
voting right separately. The
qualifications and methods of
exercise shall comply with the		 Article 12 Each shareholder of WPG shall
have one voting power in
respect of each share; except
the circumstances where the
preferred stock with no voting
rights issued by this Company
or those with no right to vote as
stipulated by Article 179-2 of
the
Where a government agency
or a juristic person acts as the
shareholder, the voting rights of
such representatives shall be
exercised based on their
combined shareholding. Where
there are more than two
representatives, such
representatives shall jointly
exercise their voting rights.
Where a shareholder holds
shares for others, such
shareholder may exercise his
voting right separately. The
qualifications and methods of		 Amend
according to
actual need.
  • 43 -
Original Article Amended Article Reason
regulation of the competent
authorities		 exercise shall comply with the
regulation of the competent
authorities
Article 15
Resolutions at a shareholders'
meeting shall, unless otherwise
provided in Company Act or
other acts, be adopted by a
majority vote of the attending
shareholders, who represent
more than one-half of the total
number of voting shares.		 Article 15 Resolutions at a shareholders'
meeting shall, unless otherwise
provided in Company Act or
other acts, be adopted by a
majority vote of the attending
shareholders, who represent
more than one-half of the total
number of voting shares.
The“special resolution”in this
charter refers to resolution
passed by shareholder’s
meeting attended by
shareholders that represent over
2/3 of the total issued shares,
and the resolution was passed
by over half the present votes.
Or, according to regulations,
when the number of shares
represented by attending
shareholders does not reach the
aforementioned amount,
attending shareholders must
represent over half of the total
issued shares and over 2/3 of
the attending shareholders must
agree to the resolution.
However, if other regulations
stipulate shares held by
attending shareholders or the
votes of attending shareholders,
follow the regulation.		 Amend
according to
actual need.
Article 17
The Board of Directors of We
shall have 9 to 19 directors.
The number of directors shall
be determined by the Board of
Directors and shall be in
accordance with the
requirements of the relevant
acts. Directors shall be elected
from among persons having
legal capacity.
Started from the 4th term, the
election of the Board of
Directors, pursuant to Article
192-1 of Company Act, shall
adopt the candidate nomination
measure. The shareholders shall		 Article 17
The Board of Directors of We
shall have 9 to 13
directors. The
number of directors shall be
determined by the Board of
Directors and shall be in
accordance with the
requirements of the relevant
acts.The election of the Board
of Directors, pursuant to Article
192-1
of Company Act, shall
adopt the candidate nomination
measure. The shareholders shall
elect the directors from the list
of candidates.
The percentage of
shareholdings of all the		 Amend
according to
actual need.
  • 44 -
Original Article Amended Article Amended Article Reason
elect the directors from the list
of candidates.
The percentage of
shareholdings of all the
directors shall be subject to the
provisions prescribed by the
competent securities authority.
Among the number of directors
specified in the first paragraph,
there shall be at least three
independent directors, whom
shall be elected from lists of
candidates by shareholders’
meetings in candidate
nomination system. The
professional qualifications,
shareholdings, restrictions on
concurrent positions, manners
of nomination and election and
other matters to be adhered to
shall be handled in accordance
with the requirements of the
competent securities authority.		 directors shall be subject to the
provisions prescribed by the
competent securities authority.
Among the number of directors
specified in the first paragraph,
there shall be at least three
independent directors, whom
shall be elected from lists of
candidates by shareholders’
meetings in candidate
nomination system. The
professional qualifications,
shareholdings, restrictions on
concurrent positions, manners
of nomination and election and
other matters to be adhered to
shall be handled in accordance
with the requirements of the
competent securities authority.
Article 19-1
(New Addition)		 Article 19-1
Other than the first board of
directors, which shall be
convened by the director with
the most representative votes,
the board of directors shall be
convened by the chairman.
Over half of the directors must
use written proposal and reason
to request the chairman to
convent the board of directors.
If the chairman does not
convene a board meeting within
15 days of the submission of the
aforementioned request, a board
with over half the directors can
be convened on their own.		 Amend
according to
regulations.
Article 31
Where the financial results for
the fiscal year show a profit, We
may, by a resolution adopted by
the meeting of Board of
Directors, have not less than
0.1% and not more than 5% of
the profit distributable as
employees’ compensation and
have not more than 3% of the
foresaid profit distributable as
remuneration to directors and		 Article 31 Where the financial results for
the fiscal year show a profit, We
may, by a resolution adopted by
the meeting of Board of
Directors, have not less than
0.1% and not more than 5% of
the profit distributable as
employees’ compensation and
have not more than 3% of the
foresaid profit distributable as
remuneration to directors .		 Amend
according to
actual need.
  • 45 -
Original Article Amended Article Reason
supervisors. Reports of such
distribution as employees’
compensation and remuneration
to directors and supervisors
shall be submitted to the
shareholders’ meeting.
However, in case of the
accumulated losses, certain
profits shall first be reserved to
cover them.
The employees’ compensation
could be distributed in the form
of shares or in cash and the
employees of subsidiaries of
We meeting certain specific
requirements shall be entitled to
receive shares or cash.
The profits stated in the first
paragraph represent the pre-tax
income of current year before
deducting distributed
remunerations to employees,
directors and supervisors.
In case there is no surplus
earnings, We shall not distribute
dividend and bonus. Where
there are profits in the year-end
financial statement of We, after
paying all taxes and duties;
offsetting its losses in the past
years; setting aside a legal
capital reserve at 10% of the
profits; and setting aside special
capital reserve in accordance
with the requirements of the
relevant acts, the Board of
Directors shall propose a
distribution plan for the
accumulated distributable
profits, which shall, upon
resolutions by a shareholders’
meeting, be distributed as
dividends and bonus. Cash
dividends of We shall not be
lower than 20% of the total
shareholders’ dividends
distributed in the current year.		 Reports of such distribution as
employees’ compensation and
remuneration to directors shall
be submitted to the
shareholders’ meeting.
However, in case of the
accumulated losses, certain
profits shall first be reserved to
cover them.
The employees’ compensation
could be distributed in the form
of shares or in cash and the
employees of subsidiaries of
We meeting certain specific
requirements shall be entitled to
receive shares or cash.
The profits stated in the first
paragraph represent the pre-tax
income of current year before
deducting distributed
remunerations to employees,
directors .
In case there is no surplus
earnings, We shall not distribute
dividend and bonus. Where
there are profits in the year-end
financial statement of We, after
paying all taxes and duties;
offsetting its losses in the past
years; setting aside a legal
capital reserve at 10% of the
profits;
If there is a residual amount
after provisions are set aside
according to law or turned to
special reserve, the residual
shall bedistributed as the year’s
dividend for preferred stocks
first. The remaining amount
(hereafter referred to as the
current year’s earnings) shall be
added to the initial
undistributed surplus to be
distributed as
earnings. The
board of directors shall draft the
distribution proposal. After the
shareholder’s meeting agrees,
the amount shall be distribution
as shareholders’ dividend and
bonus.
This Company’s dividend
policy and dividend distribution
  • 46 -
Original Article Amended Article Reason
shall consider the Company’s
profitability, future operation
funding needs, and changes in
industry environment, as well
as the shareholders’rights and
the Company’s long-term
financial plans.
This Company’s
yearly totaldividend
distribution amount shall not be
less than 50% of the year’s
earnings. The distributed cash
dividend shall not be less than
20% of the total dividend
distribution amount.
Article 34
This Article was formulated on
14th June, 2005.
Its first amendment was made
on 14th June, 2006.
Its second amendment was
made on 13th June, 2007.
Its third amendment was made
on 25th June, 2008.
Its fourth amendment was made
on 16th June, 2009a.
Its fifth amendment was made
on 21st June, 2010.
Its sixth amendment was made
on 22nd June, 2012.
Its seventh amendment was
made on 19th June, 2013.
Its eighth amendment was made
on 18th June, 2014.
Its ninth amendment was made
on 22th June, 2016.		 Article 34 This Article was formulated on
14th June, 2005.
Its first amendment was made
on 14th June, 2006.
Its second amendment was
made on 13th June, 2007.
Its third amendment was made
on 25th June, 2008.
Its fourth amendment was made
on 16th June, 2009a.
Its fifth amendment was made
on 21st June, 2010.
Its sixth amendment was made
on 22nd June, 2012.
Its seventh amendment was
made on 19th June, 2013.
Its eighth amendment was made
on 18th June, 2014.
Its ninth amendment was made
on 22th June, 2016.
Its tenth amendment was made
on 28th June, 2019.		 Add
amendment
date.
  • 47 -

Attachment VI

WPG Holdings Limited

WPG Holdings Limited WPG Holdings Limited WPG Holdings Limited WPG Holdings Limited
Comparison Table for the Procedures for the Loaning of Funds to Others
Original Article Amended Article Reason
Article 3-1：Foreign companies that this
Company directly or indirectly owns 100%
of the shares that engages in loans is not
restricted by short-term funding and
amount limitations stated in Articles 2 and
3. However, loan amount and loan terms
shall still be set according to regulations.		 Article 3-1: foreign companies that this
Company directly or indirectly owns 100%
of the shares that engages in loans or
foreign company thatthis Company
directly or indirectly holds 100% of the
shares that loan of funds to this Company
is not restricted by short-term funding and
amount limitations stated in Articles 2 and
3.
However, loan amount and loan terms
shall still be set according to regulations.		 Amend
according
to
regulations.
  • 48 -

Attachment VII

WPG Holdings Limited

Comparison Table for the Procedure for the Acquisition or Disposal of Assets

Original Article Amended Article Amended Article Reason
Article2 Scope of Assets Applicable
1.
Securities:
including
stocks,
government
bonds,
corporate
bonds, financial bonds, securities
representing interest in a fund,
depositary
receipts,
call
(put)
warrants,
beneficial
interest
securities, asset-backed securities
and investment in unissued stock
shares.
2.
Real property (including inventory
of construction industry) and other
fixed assets.
3.
Memberships
4.
Intangibleassets:includingpatents,
copyrights,trademarks,
franchise
rights, and other intangible assets.
5.
Claims of financial institutions
(including
receivables,
bills
purchased and discounted, loans,
and overdue receivables).
6.
Derivatives
7.
Assets acquired or disposed of in
connection
with
mergers,
demergers, acquisitions, or transfer
of shares in accordance with acts of
laws.
8.
Other major assets.		 Article2 Scope of Assets Applicable
1.
Securities:
including
stocks,
government
bonds,
corporate
bonds, financial bonds, securities
representing interest in a fund,
depositary
receipts,
call
(put)
warrants,
beneficial
interest
securities, asset-backed securities
and investment in unissued stock
shares.
2.
Real property (including inventory
of construction industry) and other
fixed assets.
3.
Memberships
4.
Intangibleassets:includingpatents,
copyrights,trademarks,
franchise
rights, and other intangible assets.
5.
Right of use assets
6.
Claims of financial institutions
(including
receivables,
bills
purchased and discounted, loans,
and overdue receivables).
7.
Derivatives
8.
Assets acquired or disposed of in
connection
with
mergers,
demergers, acquisitions, or transfer
of shares in accordance with acts of
laws.
9.
Other major assets.		 Amend
according
to
regulations
Article 3 Definitions
1.
"Derivatives": Forward contracts,
options contracts, futures contracts,
leverage
contracts,
and
swap
contracts, and compound contracts
combining the above products,
whose value is derived from assets,
interest rates, foreign exchange
rates, indexes or other interests. The
term"forwardcontracts"doesnot
includeinsurancecontracts,
performance contracts, after-sales
service contracts, long-term leasing
contracts, or long-term purchase
(sales) agreements.		 Article
1.		 3 Definitions
“Derivative”: Forward contracts,
options contracts, futures contracts,
leverage
contracts,
or
swap
contracts, whose value is derived
from aspecified
interest rate,
financial
instrument
price
,
commodity price
,foreign exchange
rate, index of prices or rates,credit
rating or credit index, or other
variable;
or
hybrid
contracts
combining the above contracts; or
hybrid
contracts
or
structured
products
containing
embedded
derivatives.
The term "forward
contracts"
does
not
include
insurance contracts, performance
contracts,
after-sales
service		 Amend
according to
regulations
  • 49 -
Original Article Amended Article Reason
2.
"Subsidiary": As defined in the
Generally
Accepted
Accounting
Principles (GAAP).
3.
“Professional appraiser. Refers to a
real property appraiser or other
person duly authorized by the law
to engage in the value appraisal of
real property or other fixed assets.
4.
"Date of Occurrence": Refers to the
date of contract signing, date of
payment,
date
of
consignment
trade, date of transfer, dates of
boards of directors resolutions, or
other date that can confirm the
counterpart and monetary amount
of the transaction, whichever date is
earlier; provided, for investment for
which approval of the Competent
Authority is required, the earlier of
the above date or the date of receipt
of approval by the Competent
Authority shall apply.
5.
“Within one year” means the year
preceding
the
base
date
of
occurrence of the acquisition or
disposal of assets. The announced
period shall be exempted from the
calculation
6.
“The latest financial statement”
shall mean the financial statement
attested or audited openly by a
certified public accountant before
the acquisition or disposal of assets
by the Company.
7.
The
Company
has
prepared
financial
reports
using
the
International Financial Reporting
Standards since January 1, 2013.
Therefore, the total assets referred
to in this procedure refer to the
most recent individual or individual
financial statements in accordance
with the financial issuer's financial
reporting standards.
8.
Terms not defined in this Procedure
shall be defined by the“Regulations		 contracts,
long-term
leasing
contracts, or long-term purchase
(sales)contracts
.
2.
"Subsidiary": As defined in the
Generally
Accepted
Accounting
Principles (GAAP)
3.
“Professional appraiser. Refers to a
real property appraiser or other
person duly authorized by the law
to engage in the value appraisal of
real property or other fixed assets.
4.
"Date of Occurrence": Refers to the
date of contract signing, date of
payment,
date
of
consignment
trade, date of transfer, dates of
boards of directors resolutions, or
other date that can confirm the
counterpart and monetary amount
of the transaction, whichever date is
earlier; provided, for investment for
which approval of the Competent
Authority is required, the earlier of
the above date or the date of receipt
of approval by the Competent
Authority shall apply.
5.
“Within one year” means the year
preceding
the
base
date
of
occurrence of the acquisition or
disposal of assets. The announced
period shall be exempted from the
calculation
6.
“The latest financial statement”
shall mean the financial statement
attested or audited openly by a
certified public accountant before
the acquisition or disposal of assets
by the Company.
7.
The
Company
has
prepared
financial
reports
using
the
International Financial Reporting
Standards since January 1, 2013.
Therefore, the total assets referred
to in this procedure refer to the
most recent individual or individual
financial statements in accordance
with the financial issuer's financial
reporting standards.
8.
Terms not defined in this Procedure
shall be defined by the “Regulations
  • 50 -
Original Article Amended Article Reason
Governing
the
Acquisition
or
Disposal of Assets by Public
Companies” formulated by the
competent securities authority or
the requirements by the relevant
acts.		 Governing
the
Acquisition
or
Disposal of Assets by Public
Companies” formulated by the
competent securities authority or
the requirements by the relevant
acts.
Article 4 Where this company acquires or
disposes of assets, unless it is otherwise
provided, the operating procedure and limit
shall be as follows:
1.
In acquiring or disposing of real
estate, the execution unit shall
conduct the appraisal. Where the
transaction amount is NT$150
million or less, it shall be submitted
to
the
General
Manager
for
approval; if it exceeds NT$150
million, it shall not be executed
unless it is submitted to and passed
by the Board of Directors after it is
approved by the General Manager.
2.
The acquisition or disposal of other
fixed assets shall be evaluated by
operating
department.
The
transactions amounting less than
(including) NT$100 million shall be
approved
within
each
given
boundaries
governed
by
authorization regulation. For the
transactions amounting more than
NT$100 million, the approval by
the General Manager and the
submission
to
the
Board
of
Directors for their approval are
needed before execution.
3.
In acquiring or disposing of long
term Securities, the execution unit
shall conduct the appraisal and
execute it after it is submitted to
and approved by the Board of
Directors.		 Article 4 Where this company acquires or
disposes of assets, unless it is otherwise
provided, the operating procedure and limit
shall be as follows:
1.
In acquiring or disposing of real
estate orright-of-use assets
, the
execution unit shall conduct the
appraisal. Where the transaction
amount is NT$150 million or less, it
shall be submitted to the General
Manager for approval; if it exceeds
NT$150 million, it shall not be
executed unless it is submitted to
and passed by the Board of
Directors after it is approved by the
General Manager.
2.
The acquisition or disposal of other
fixed assets orright-of-use assets
shall be evaluated by operating
department.
The
transactions
amounting less than (including)
NT$100 million shall be approved
within
each
given
boundaries
governed
by
authorization
regulation. For the transactions
amounting more than NT$100
million, the approval by the General
Manager and the submission to the
Board
of
Directors
for
their
approval
are
needed
before
execution.
3.
The acquisition or disposal of
long-term
securities,
after
the
evaluation by the executing unit,
the amount of which is less than
NT$50
million
(inclusive),
approved by the chairman of the
board. The amount exceeds NT$50
million and not reach NT$300
million will be approved step by
step according to the relevant
measures for investment review;
those
whose
amount
reaches
NT$300 million or more will be
submitted to the board of directors
for approval.		 Amend
according
to actual
need and in
accordance
with
regulations.
  • 51 -
Original Article Amended Article Reason
4.
In acquiring or disposing of short
term Securities, the execution unit
shall
conduct
the
appraisal.
Thereafter, where the amount is
NT300 million or less, and that it
does not exceed 10% of the subject
company’s equity, it shall be
approved by the General Manager;
where the amount exceeds NT$300
million, or it exceeds 10% of the
subject company’s equity, it shall
not executed until it is further
submitted to and passed by the
Board of Directors. In addition, the
transaction
shall
be
conducted
within
the
limits
set
out
in
sub-clause
9
in
this
Article.
However, such requirement s are
exempted
under
the
following
circumstances:
where it belongs to daily fund
appropriation activities or short
term investment operation like
transaction
of
bonds
with
conditions for repurchase, bond
fund etc., and the amount is
NT$300
million
or
less,
the
responsible
unit(s)
is/are
authorized to execute.Where
the
amount exceeds NT$300 million,
the responsible unit shall submit to
the General Manager for approval
before execution.
where it belongs to daily fund
appropriation activities or short
term investment operation like
transaction
of
bonds
with
conditions for repurchase, bond
fund etc., and the amount is
NT$300
million
or
less,
the
responsible
unit(s)
is/are
authorized to execute.Where
the
amount exceeds NT$300 million,
the responsible unit shall submit to
the General Manager for approval
before execution.
5.
In
acquiring
or
disposing
of
Memberships, the execution unit
shall conduct the appraisal. Where
the amount is less than 1% of the		 4.
5.		 In acquiring or disposing of short
term Securities, the execution unit
shall
conduct
the
appraisal.
Thereafter, where the amount isless
than
NT300 million, and that it does
not exceed 10% of the subject
company’s equity, it shall be
approved by the General Manager;
where the amount exceeds NT$300
million, or it exceeds 10% of the
subject company’s equity, it shall
not executed until it is further
submitted to and passed by the
Board of Directors. In addition, the
transaction
shall
be
conducted
within
the
limits
set
out
in
sub-clause
9
in
this
Article.
However, such requirements are
exempted
under
the
following
circumstances:
where it belongs to daily fund
appropriation activities or short
term investment operation like
transaction
of
bonds
with
conditions for repurchase, bond
fund etc., and the amount isless
than
NT$300
million,
the
responsible
unit(s)
is/are
authorized to execute.Where
the
amount exceeds NT$300 million,
the responsible unit shall submit to
the General Manager for approval
before execution.
where it belongs to daily fund
appropriation activities or short
term investment operation like
transaction
of
bonds
with
conditions for repurchase, bond
fund etc., and the amount is
NT$300
million
or
less,
the
responsible
unit(s)
is/are
authorized to execute.Where
the
amount exceeds NT$300 million,
the responsible unit shall submit to
the General Manager for approval
before execution.
In
acquiring
or
disposing
of
Memberships, the execution unit
shall conduct the appraisal. Where
the amount is less than 1% of the
paid-up capital or NT$5 million, it
shall be submitted to the General
  • 52 -
Original Article Amended Article Reason
paid-up capital or NT$5 million, it
shall be submitted to the General
Manager for approval and shall
thereafter be filed to the most recent
Board Meeting for recordation.
6.
In
acquiring
or
disposing
of
intangible assets, the execution unit
shall conduct the appraisal. Where
the amount is less than 10% of the
paid of capital or NT$20 million, it
shall be approved layer by layer in
accordance with the regulations on
authorization.
The
Audit
Committee shall require that where
a certain amount is exceeded, it
shall thereafter be filed to the most
recent
Board
meeting
for
recordation. Where the amount
exceeds NT$20 million, it shall not
be executed until it is submitted to
and passed by the Board of
Directors.
7.
In principle, this Company shall not
participate in transactions involving
the acquisition or disposal of the
debentures of financial institutions.
Where this Company decides to
participate
in
the
transactions
involving
the
acquisition
or
disposal of debentures of financial
institutions, it shall be submitted to
the
Board
of
Directors
for
re-formulation of its procedures of
appraisals and operations.
8.
Execution units
The execution units for acquisition
and disposal of Securities and
Derivatives shall be finance and
accounting units. With respect to
acquisition or disposal of other
assets, the execution units shall be
regulated
and
recognized
in
accordance with the division of
responsibilities
within
this
company.
9.
The limits for the acquisitions of
the above assets for this Company
and each of its Subsidiary shall be
as follows:
(1) For
real
estate
not
for
operational uses, the total		 Manager for approval and shall
thereafter be filed to the most recent
Board Meeting for recordation.
6.
In
acquiring
or
disposing
of
intangible assets, the execution unit
shall conduct the appraisal. Where
the amount is less than 10% of the
paid of capital or NT$20 million, it
shall be approved layer by layer in
accordance with the regulations on
authorization.
The
Audit
Committee shall require that where
a certain amount is exceeded, it
shall thereafter be filed to the most
recent
Board
meeting
for
recordation. Where the amount
exceeds NT$20 million, it shall not
be executed until it is submitted to
and passed by the Board of
Directors.
7.
In principle, this Company shall not
participate in transactions involving
the acquisition or disposal of the
debentures of financial institutions.
Where this Company decides to
participate
in
the
transactions
involving
the
acquisition
or
disposal of debentures of financial
institutions, it shall be submitted to
the
Board
of
Directors
for
re-formulation of its procedures of
appraisals and operations.
8.
Execution units
The execution units for acquisition
and disposal of Securities and
Derivatives shall be finance and
accounting units. With respect to
acquisition or disposal of other
assets, the execution units shall be
regulated
and
recognized
in
accordance with the division of
responsibilities
within
this
company.
9.
The limits for the acquisitions of
the above assets for this Company
and each of its Subsidiary shall be
as follows:
(1) For non-commercial real estate
andright-of-use assets
, the
total amount should not be
  • 53 -
Original Article Amended Article Reason
amount shall not be more than
30% of their net values;
(2) Total amount of investment in
long-term
and
short-term
Securities shall not exceed
300% of the net value.
10. Where
this
Article
requires
submission
to
the
Board
of
Directors for resolutions, consent
by the Audit Committee shall be
sought in accordance with the
relevant regulations.		 more
than
30%
of
the
earnings.
(2) Total amount of investment in
long-term
and
short-term
Securities shall not exceed
300% of the net value.
10. Where
this
Article
requires
submission
to
the
Board
of
Directors for resolutions, consent
by the Audit Committee shall be
sought in accordance with the
relevant regulations.
Article5 The procedures for appraisal of
acquisition or disposal of assets of this
Company shall be as follows:
1. In acquiring or disposing of real
property or other fixed assets where
the transaction amount reaches 20%
of the Company's paid-in capital or
NT$300 million or more, the
Company, unless transacting with a
government agency, engaging others
to build on its own land, engaging
others to build on rented land, or
acquiring or disposing of machinery
and equipment for business use,
shall obtain an appraisal report from
a professional appraiser prior to the
transaction and shall further comply
with the following provisions:
i.
Where
due
to
special
circumstances it is necessary to
give a limited price, specified
price, or special price as a
reference
basis
for
the
transaction price, the transaction
shall be submitted for approval
in advance by the board of
directors,
and
the
same
procedure shall be followed for
any future changes to the terms
and
conditions
of
the
transaction.
ii.
Where the discrepancy between
the
appraisal
results
of
professional appraisers and the
transaction amount is more than
20
percent,
except
the
circumstances where the		 Article5 The procedures for appraisal of
acquisition or disposal of assets of this
Company shall be as follows:
1. The
company’s
acquisition
or
disposal of real estate, equipmentor
its right-to-use assets
, except for
transactions
with
domestic
government agencies, construction
of local land, construction of land
leases, or acquisition or disposal of
equipment for business use orits
right-to-use assets.
If the transactions
amount of the company's paid-up
capital is 20% or NT$300 million or
more, the valuation report issued by
the professional valuer shall be
obtained before the date of the fact,
and the following provisions shall
be met:
i.
Where
due
to
special
circumstances it is necessary to
give a limited price, specified
price, or special price as a
reference
basis
for
the
transaction
price,
the
transaction shall be submitted
for approval in advance by the
board of directors, and the
same
procedure
shall
be
followed
for
any
future
changes to the terms and
conditions of the transaction.
ii.
Where
the
discrepancy
between the appraisal results of
professional appraisers and the
transaction amount is more
than 20 percent, except the
circumstances where the
  • 54 -
Original Article Amended Article Reason
valuation of acquiring asset is
higher
than
the
transaction
amount or the valuation of
disposing asset is lower than
transaction amount, a certified
public
accountant
shall
be
engaged to perform the appraisal
in
accordance
with
the
provisions
of
Statement
of
Auditing
Standards
No.
20
published by the ARDF and
render
a
specific
opinion
regarding the reason for the
discrepancy
and
the
appropriateness
of
the
transaction price.
iii. Where the transaction amount is
NT$1 billion or more, appraisals
from two or more professional
appraisers shall be obtained.
Where the discrepancy between
the appraisal result and the
transaction amount is 20 percent
or more of the transaction
amount,
except
the
circumstances
where
the
valuation of acquiring asset is
higher
than
the
transaction
amount or the valuation of
disposing asset is lower than
transaction amount, a certified
public
accountant
shall
be
engaged to perform the appraisal
in
accordance
with
the
provisions
of
Statement
of
Auditing
Standards
No.
20
published by the ARDF and
render
a
specific
opinion
regarding the reason for the
discrepancy
and
the
appropriateness
of
the
transaction price.
iv. No more than 3 months may
elapse between the date of the
appraisal report issued by a
professional appraiser and the
contract
execution
date;
provided, where the publicly
announced current value for the
same period is used and not
more than 6 months have
elapsed, an opinion may still be		 valuation of acquiring asset is
higher than the transaction
amount or the valuation of
disposing asset is lower than
transaction amount, a certified
public accountant shall be
engaged
to
perform
the
appraisal in accordance with
the provisions of Statement of
Auditing Standards No. 20
published by the ARDF and
render
a
specific
opinion
regarding the reason for the
discrepancy
and
the
appropriateness
of
the
transaction price.
iii.
Where the transaction amount
is NT$1 billion or more,
appraisals from two or more
professional appraisers shall be
obtained.
Where
the
discrepancy
between
the
appraisal
result
and
the
transaction
amount
is
20
percent
or
more
of
the
transaction amount, except the
circumstances
where
the
valuation of acquiring asset is
higher than the transaction
amount or the valuation of
disposing asset is lower than
transaction amount, a certified
public accountant shall be
engaged
to
perform
the
appraisal in accordance with
the provisions of Statement of
Auditing Standards No. 20
published by the ARDF and
render
a
specific
opinion
regarding the reason for the
discrepancy
and
the
appropriateness
of
the
transaction price.
iv.
No more than 3 months may
elapse between the date of the
appraisal report issued by a
professional appraiser and the
contract
execution
date;
provided, where the publicly
announced current value for the
same period is used and not
more than 6 months have		 Amend
according to
regulations
  • 55 -
Original Article Amended Article Reason
issued
by
the
original
professional appraiser.
2.
Where the Company acquires or
disposes of securities and the
transaction amount is 20 percent of
the company's paid-in capital or
NT$300 million or more, the
company shall engage a certified
public accountant to provide an
opinion
regarding
the
reasonableness of the transaction
price. If the CPA requires an
expert's opinion, it must be sought
in accordance with the Statement on
Auditing
Standards
No.
20
announced
by
the
Accounting
Research
and
Development
Foundation. This requirement does
not apply, however, to publicly
quoted prices of securities that have
an
active
market,
or
where
otherwise provided by regulations
of
the
Financial
Supervisory
Commission (FSC).
3.
In
acquiring
or
disposing
of
memberships or other intangible
assets where the transaction amount
reaches 20% of the Company's
paid-in capital or NT$300 million
or more, the Company, shall engage
a certified public accountant to
provide an opinion regarding the
reasonableness of the transaction
price prior to the transaction. The
accountant must conduct it in
accordance with the Statement on
Auditing Standards No. 20.
4.
Acquisition or disposal of assets
from or to a related party where the
transaction amount
reaches
10
percent or more of the Company’s
total assets, the company shall
engage a certified public accountant
prior to the date of occurrence of
the event to render an opinion on
the
reasonableness
of
the
transaction price; the CPA shall
comply with the provisions of
Statement of Auditing Standards		 2.
3.
4.		 elapsed, an opinion may still be
issued
by
the
original
professional appraiser
Where the Company acquires or
disposes of securities and the
transaction amount is 20 percent of
the company's paid-in capital or
NT$300 million or more, the
company shall engage a certified
public accountant to provide an
opinion
regarding
the
reasonableness of the transaction
price. If the CPA requires an
expert's opinion, it must be sought
in accordance with the Statement on
Auditing
Standards
No.
20
announced
by
the
Accounting
Research
and
Development
Foundation. This requirement does
not apply, however, to publicly
quoted prices of securities that have
an
active
market,
or
where
otherwise provided by regulations
of
the
Financial
Supervisory
Commission (FSC).
In
acquiring
or
disposing
of
memberships or other intangible
assets where the transaction amount
reaches 20% of the Company's
paid-in capital or NT$300 million
or more, except of transactions
between domestic Governments
,
the Company, shall engage a
certified
public
accountant
to
provide an opinion regarding the
reasonableness of the transaction
price prior to the transaction. The
accountant must conduct it in
accordance with the Statement on
Auditing Standards No. 20.
Acquisition or disposal of assets
from or to a related party where the
transaction amount
reaches
10
percent or more of the Company’s
total assets, the company shall
engage a certified public accountant
prior to the date of occurrence of
the event to render an opinion on
the
reasonableness
of
the
transaction price; the CPA shall
comply with the provisions of
Statement of Auditing Standards
  • 56 -
Original Article Amended Article Reason
NO 20 published by the ARDF.
5.
The calculations in the above four
transactions must comply with
Article
30-2
of
“Regulations
Governing the Acquisition and
Disposal of Assets by Public
Companies”.
The
one-year
timeframe counts back from the day
the
transaction
occurred.
Transactions which have already
been
supported
by
expert's
valuation or CPA's opinions can be
excluded.
6.
Where the Company acquires or
disposes of assets through court
auction procedures, the evidentiary
documentation issued by the court
may be substituted for the appraisal
report or CPA opinion.
7.
Professional appraisers and their
officers, certified public accounts,
attorneys,
and
securities
underwriters that provide public
companies with appraisal reports,
certified
public
accountant's
opinions, attorney's opinions, or
underwriter's opinions shall not be a
related party of any party to the
transaction.		 5.
6.
7.		 NO 20 published by the ARDF.
The calculations in the above four
transactions must comply with the
Securities Authority
and comply
with Article 30-2 of “Regulations
Governing the Acquisition and
Disposal of Assets by Public
Companies”.
The
one-year
timeframe counts back from the day
the
transaction
occurred.
Transactions which have already
been
supported
by
expert's
valuation or CPA's opinions can be
excluded.
Where the Company acquires or
disposes of assets through court
auction procedures, the evidentiary
documentation issued by the court
may be substituted for the appraisal
report or CPA opinion.
Professional appraisers and their
officers, certified public accounts,
attorneys,
and
securities
underwriters that provide public
companies
with
appraisal
reports,certified public accountant's
opinions, attorney's opinions, or
underwriter's opinionsshall comply
with
the
“Guidelines
for
the
Acquisition or Disposal of Assets of
Public Offering Companies”or
relevant laws and regulations as
determined
by
the
Securities
Authorities
.
  • 57 -
Original Article Amended Article Reason
Article8 The Company’s acquisition or
disposal of assets from or to a related party
Where the Company’s acquiring or
disposing of assets from related parties,
in addition to handling in accordance
with this Procedure, it shall comply with
the
“Regulations
Governing
the
Acquisition and Disposal of Assets by
Public Companies” formulated by the
competent securities authority or the
requirements by the relevant acts.		 Article8 The Company’s acquisition or
disposal of assets from or to a related party
Where the Company’s acquiring or
disposing of assets from related parties,
in addition to handling in accordance
with this Procedure, And should be in
accordance with the provisions of the
securities
authority
“Regulations
Governing the Acquisition and Disposal
of
Assets
by
Public
Companies”
formulated by the competent securities
authority or the requirements by the
relevant acts.		 Amend
according to
regulations
Article 11 Handling procedure for the
acquisition or disposal of Derivatives
I.
Trading Principles and Strategies
(1) Types of Transactions
1.
The Derivatives traded by
this Company mean those
products
the
value
of
which is derived from
assets,
interest
rates,
foreign
exchange
rates,
indexes or other interests
(such as forward contracts,
options, futures, interests
or exchange rates, swap, as
well
as
compound
contracts combining the
above products.)
2.
In relation to the matters
relevant to transactions of
bond deposits, it shall be
handled in accordance with
the relevant regulations in
this
Procedure.
This
Procedure shall not be
applicable
to
the
transactions of bonds with
repurchase conditions.		 Article 11 Handling procedure for the
acquisition or disposal of Derivatives
I.
Trading Principles and Strategies
(1) Types of Transactions
1.
Derivative
financial
products engaged by the
Company are transaction
contracts whose value is
derived
from
specific
interest
rates,
financial
instrument
prices,
commodity
prices,
exchange rates, prices or
rate indices, credit ratings,
or credit indices, or other
variables (eg Forward
contracts, options, futures,
interest rates or exchange
rates,
exchanges,
combinations
of
the
above-mentioned contracts,
or combined contracts or
structured goods embedded
in derivative goods, etc.)
2.
In relation to the matters
relevant to transactions of
bond deposits, it shall be
handled in accordance with
the relevant regulations in
this
Procedure.
This
Procedure shall not be
applicable
to
the
transactions of bonds with
repurchase conditions.		 Amend
according to
regulations
  • 58 -
Original Article Amended Article Reason
(2) Operation (Hedging) Strategy:
The Derivatives traded by this
Company shall in principle be
for hedging the risks incurred in
the course of business of the
Company with respect to the net
parts after mutual cancellation
out of the amounts receivable
and payable, or assets and
liabilities, having regard to the
due
dates,
amount
and
currencies.
It
shall
be
ascertained before a transaction
that it is a hedging operation.
(3) Segregation of Duties
1.
Financing and Accounting
Departments
(1) Trading Personnel
i. Responsible for drawing
up the trading strategies
of Derivatives ofthe
whole Company.
ii. Trading personnel shall
collect
market
information,
conduct
estimation on trend and
risk appraisal, draw up
operation strategies, and
to conduct transactions
within
the
authorized
limits in accordance with
Company’s policy.
iii. Where
the
financial
market
has
changed
materially
that
the
trading personnel decide
that
the
existing
strategies are no longer
applicable,
they
shall
promptly
submit
appraisal report and draw
upnew strategies, which		 (2) Operation (Hedging) Strategy:
The Derivatives traded by this
Company shall in principle be
for hedging the risks incurred in
the course of business of the
Company with respect to the net
parts after mutual cancellation
out of the amounts receivable
and payable, or assets and
liabilities, having regard to the
due
dates,
amount
and
currencies.
It
shall
be
ascertained before a transaction
that it is a hedging operation.
(3) Segregation of Duties
1.
Financing and Accounting
Departments
(1) Trading Personnel
i. Responsible for drawing
up the trading strategies
of Derivatives ofthe
whole Company.
ii. Trading personnel shall
collect
market
information,
conduct
estimation on trend and
risk appraisal, draw up
operation strategies, and
to conduct transactions
within
the
authorized
limits in accordance with
Company’s policy.
iii. Where
the
financial
market
has
changed
materially
that
the
trading personnel decide
that
the
existing
strategies are no longer
applicable,
they
shall
promptly
submit
appraisal report and draw
upnew strategies, which
  • 59 -
Original Article Amended Article Reason
shall, after approval by
the General Manager,
become the basis for
conducting transactions.
(2) Personnel to Appropriate
Funds
Coordinate the use of
banking facilities, detailed
calculation of cash flow
and
handle
settlement
matters.
(3) Accounting Personnel
i. Confirm
execution
of
transactions.
ii. Verify
whether
the
transactions
are
conducted in accordance
with
the
authorized
limits
and
existing
strategies.
iii. Handle the accounting
entries.
iv. Conduct
Reports
and
announcements
in
accordance
with
the
regulations by competent
securities authority.
2.
Limits of Authority for
Derivatives
Financial
officers
are
authorized
to
execute
single
transactions
of
amount
under
USD2
million
(including
equivalent
amounts
in
other
currencies).
Transactions of more than
USD2 million (including
equivalent
amounts
in
other currencies) shall not
be
conducted
unless		 shall, after approval by
the General Manager,
become the basis for
conducting transactions.
(2) Personnel to Appropriate
Funds
Coordinate the use of
banking facilities, detailed
calculation of cash flow
and
handle
settlement
matters.
(3) Accounting Personnel
i. Confirm
execution
of
transactions.
ii. Verify
whether
the
transactions
are
conducted in accordance
with
the
authorized
limits
and
existing
strategies.
iii. Handle the accounting
entries.
iv. Conduct
Reports
and
announcements
in
accordance
with
the
regulations by competent
securities authority.
2.
Limits of Authority for
Derivatives
Financial
officers
are
authorized
to
execute
single
transactions
of
amount
under
USD2
million
(including
equivalent
amounts
in
other
currencies).
Transactions of more than
USD2 million (including
equivalent
amounts
in
other currencies) shall not
be
conducted
unless
  • 60 -
Original Article Amended Article Reason
approved by the General
Manager.
(4) Performance Evaluation
i. The
performance
of
hedging operations shall
be
evaluated
and
appraised in accordance
with hedging strategies.
ii. Transactional Operations
This Company shall not
be involved transactional
operations
(5) The
Determination
of
Maximum Loss Limit
i. Hedging Operations
Regarding the regulation
that maximum loss limit
shall not be more than 20
percent of the contract
amount,
it
shall
be
applied
to
individual
contracts
and
to
all
contracts
ii. Transactional Operations
This company shall not
be
involved
in
Transactional
Operations.
II.
Risk Management Measures
(1) Credit Risk Management
The trading partners of this
Company shall in principle be
limited to correspondent banks
and internationally renowned
financial
institutions,
which
may
provide
professional
information.
(2) Market Risk Management
This Company shall from time
to time take control measures on
the risks on Derivatives created
by variation of interest rates,

approved by the General
Manager.
(4) Performance Evaluation
i. The
performance
of
hedging operations shall
be
evaluated
and
appraised in accordance
with hedging strategies.
ii. Transactional Operations
This Company shall not
be involved transactional
operations
(5) The
Determination
of
Maximum Loss Limit
i. Hedging Operations
Regarding the regulation
that maximum loss limit
shall not be more than 20
percent of the contract
amount,
it
shall
be
applied
to
individual
contracts
and
to
all
contracts
ii. Transactional Operations
This company shall not
be
involved
in
Transactional
Operations.
II.
Risk Management Measures
(1) Credit Risk Management
The trading partners of this
Company shall in principle be
limited to correspondent banks
and internationally renowned
financial
institutions,
which
may
provide
professional
information.
(2) Market Risk Management
This Company shall from time
to time take control measures on
the risks on Derivatives created
by variation of interest rates,
  • 61 -
Original Article Amended Article Reason
exchange
rates
and
other
factors.
(3) Liquidity Risk Management
To ensure market liquidity, the
selection of financial products
shall predominantly be those of
high liquidity (namely that it
can be squeezed in the market at
any
time).
The
financial
institutions
entrusted
for
transactions
shall
possess
adequate information and ability
to conduct transactions in the
market at any time.
(4) Cash flow Risk Management
This Company shall maintain
sufficient quick assets and fund
raising facilities to meet the
capital
requirements
of
settlement.
(5) Operation Risk Management
1.
Operational risk shall be
averted
by
faithful
adherence to the limits of
amount
authorized,
operational procedures and
incorporation of internal
control.
2.
Personnel
engaged
in
derivatives trading may not
serve concurrently in other
operations
such
as
confirmation
and
settlement.
3.
The Finance Units shall
evaluate derivative trading
positions at least twice per
month, which shall be
reported to the General
Manager.
(6) Commodity Risk Management
Internal trading personnel shall
have comprehensive and proper
professional
knowledge
on
Derivatives, and shall require
banks to adequately disclose
risks to avert risks of misuse of
Derivatives.
(7) Legal Risk Management
Documents executed by this
Company and trading partners
shall not be executed unless		 exchange
rates
and
other
factors.
(3) Liquidity Risk Management
To ensure market liquidity, the
selection of financial products
shall predominantly be those of
high liquidity (namely that it
can be squeezed in the market at
any
time).
The
financial
institutions
entrusted
for
transactions
shall
possess
adequate information and ability
to conduct transactions in the
market at any time.
(4) Cash flow Risk Management
This Company shall maintain
sufficient quick assets and fund
raising facilities to meet the
capital
requirements
of
settlement.
(5) Operation Risk Management
1.
Operational risk shall be
averted
by
faithful
adherence to the limits of
amount
authorized,
operational procedures and
incorporation of internal
control.
2.
Personnel
engaged
in
derivatives trading may not
serve concurrently in other
operations
such
as
confirmation
and
settlement.
3.
The Finance Units shall
evaluate derivative trading
positions at least twice per
month, which shall be
reported to the General
Manager.
(6) Commodity Risk Management
Internal trading personnel shall
have comprehensive and proper
professional
knowledge
on
Derivatives, and shall require
banks to adequately disclose
risks to avert risks of misuse of
Derivatives.
(7) Legal Risk Management
Documents executed by this
Company and trading partners
shall not be executed unless
  • 62 -
Original Article Amended Article Reason
perused
by
internal
legal
personnel or legal consultants to
avert legal risks.
III. Internal Audit System
Internal
audit
personnel
shall
periodically make a determination of
the suitability of internal controls on
derivatives and conduct a monthly
audit of how faithfully derivative
trading by the trading department
adheres to this Procedure, and to
analyze the trade cycles in order to
prepare an audit report. If any material
violation is discovered, the Audit
Committee
shall
be
notified
in
writing.
IV. Periodic Evaluations and Handling
Irregular Circumstances
For the hedge trades required by the
business need of financial department,
the
transaction
and
profit-loss
circumstances shall be evaluated at
least twice per month and the report
shall be submitted to the general
manager. The board of directors shall
authorize the general manager to
monitor
and
control
derivatives
trading risk and shall periodically
evaluate whether derivatives trading
performance
is
consistent
with
established operational strategy and
whether the risk undertaken is within
the Company's permitted scope of
tolerance.
The
general
manager
authorized by the board of directors
shall periodically evaluate whether the
risk management measures currently
employed are appropriate and are
faithfully conducted in accordance
with this Procedure. When irregular
circumstances are found, a report shall
be made immediately to the board
chairman or the board of directors,
and appropriate measures shall be
adopted.
V.
Where this Company conducts trade
on Derivatives, a log book shall be
established to record related matters in
accordance with the relevant acts.		 perused
by
internal
legal
personnel or legal consultants to
avert legal risks.
III. Internal Audit System
Internal
audit
personnel
shall
periodically make a determination of
the suitability of internal controls on
derivatives and conduct a monthly
audit of how faithfully derivative
trading by the trading department
adheres to this Procedure, and to
analyze the trade cycles in order to
prepare an audit report. If any material
violation is discovered, the Audit
Committee
shall
be
notified
in
writing.
IV. Periodic Evaluations and Handling
Irregular Circumstances
For the hedge trades required by the
business need of financial department,
the
transaction
and
profit-loss
circumstances shall be evaluated at
least twice per month and the report
shall be submitted to the general
manager. The board of directors shall
authorize the general manager to
monitor
and
control
derivatives
trading risk and shall periodically
evaluate whether derivatives trading
performance
is
consistent
with
established operational strategy and
whether the risk undertaken is within
the Company's permitted scope of
tolerance.
The
general
manager
authorized by the board of directors
shall periodically evaluate whether the
risk management measures currently
employed are appropriate and are
faithfully conducted in accordance
with this Procedure. When irregular
circumstances are found, a report shall
be made immediately to the board
chairman or the board of directors,
and appropriate measures shall be
adopted.
V. Where this Company conducts trade
on Derivatives, a log book shall be
established to record related matters in
accordance with the relevant acts.
  • 63 -
Original Article Amended Article Reason
Article12
Procedure
for
Handling
Mergers,
Demergers, Acquisitions, and Transfer of
Shares Where this Company acquires or
disposes of assets by mergers, demergers,
acquisitions or transfer of shares in
accordance with the law, the regulations in
this Procedure shall apply, and in addition,
it shall be handled in accordance with
“Regulations Governing the Acquisition
and
Disposal
of
Assets
by
Public
Companies” formulated by the competent
securities authority or the relevant law.		 Article12
Procedure
for
Handling
Mergers,
Demergers, Acquisitions, and Transfer of
Shares Where this Company acquires or
disposes of assets by mergers, demergers,
acquisitions or transfer of shares in
accordance with the law, the regulations in
this Procedure shall apply, and in addition,
it shall be handled in accordance with
“Regulations Governing the Acquisition
and
Disposal
of
Assets
by
Public
Companies” formulated by the competent
securities authority or the relevant law.		 Amend
according to
regulations
Article 13 Procedure for Public Disclosure
of Information
1.
Where this Company acquires or
disposes of assets, and where it is
required to be reported to the
competent authority or announced,
this
Company
shall
handle
in
accordance
with
the
relevant
regulations. Where a Subsidiary of
this Company is not a domestic public
company, and where there are matters
required to be announced or reported,
this Company shall announce or report
such on its behalf.
2.
The Company shall handle matters
and comply with the “Guidelines for
the Acquisition or Disposal of Assets
of Public Offering Companies” or
relevant laws as determined by the
competent securities authority		 Article 13 Procedure for Public Disclosure
of Information
1.
Where this Company acquires or
disposes of assets, and where it is
required to be reported to the
competent authority or announced,
this
Company
shall
handle
in
accordance
with
the
relevant
regulations. Where a Subsidiary of
this Company is not a domestic public
company, and where there are matters
required to be announced or reported,
this Company shall announce or report
such on its behalf.
2.
The Company shall handle matters in
accordance
with
the
Securities
Authority
,
comply
with
the
“Guidelines for the Acquisition or
Disposal of Assets of Public Offering
Companies” or relevant laws as
determined
by
the
competent
securities authority.		 Amend
according to
regulations
Article 13-1
The Company acquiring or disposing of
assets shall keep all relevant contracts,
meeting minutes, log books, appraisal
reports and CPA, attorney, and securities
underwriter opinions at the company, the
retained duration shall comply with the
“Regulations Governing the Acquisition
and
Disposal
of
Assets
by
Public
Companies” formulated by the competent
securities authority or the requirements by
the relevant acts.		 Article 13-1
The Company acquiring or disposing of
assets shall keep all relevant contracts,
meeting minutes, log books, appraisal
reports and CPA, attorney, and securities
underwriter opinions at the company, the
retained duration shall comply with the
“Regulations Governing the Acquisition
and
Disposal
of
Assets
by
Public
Companies” formulated by the competent
securities authority or the requirements by
the relevant acts.		 Amend
according to
regulations
  • 64 -

IV. Appendix Appendix I

WPG Holdings Limited

WPG Holdings Limited
Rules Governing the Conduct of Shareholders’ Meeting
Article 1 Where the Company conducts shareholders’ meetings, unless otherwise required
by Company Act and the Articles of Incorporation (“Articles”) of We, it shall be
implemented in accordance with this Procedure.
Article 2 The attending shareholders (or proxies) shall hand in attendance cards in lieu of
signing on the attendance book. The number of shares of the attending
shareholders in the meeting shall be calculated based on the attendance cards
handed in.
Article 3 The presence of shareholders in a shareholders’ meeting and their voting thereof
shall be calculated based on the number of shares.
Article 4 The place of convening a shareholders’ meeting for we shall be held inside the
premises of We, or at any other place convenient for shareholders to attend, and
suitable for holding such meeting. The time of commencing such meeting shall
not be earlier than 9 o’clock in the morning or later than 3 o’clock in the
afternoon.
Article 5 If a shareholders’ meeting is called by the board of directors, the board chairman
shall preside at the said shareholder meeting. In case the chairman is on leave or
absence, or cannot exercise his power and authority, the person act in lieu of him
shall be determined by the requirements of Company Act. If a shareholders’
meeting is called by any person other than the board of directors, who has the right
to call the meeting, such person shall preside at the meeting. Where there are
two or more such persons with right to call the meeting, they shall elect among
themselves a person to preside at the meeting.
Article 6 We may designate its lawyer, certified public accountant or other relevant persons
to attend the shareholders’ meeting. Those handling the affairs of the
shareholders’ meeting shall wear an identification card or a badge.
Article 7 We shall record with an audio or videotapethe whole proceedings of the
shareholders’ meeting, and such video tape or audio tape shall be kept for at least
one year.
Article 8 When it is time to convene a shareholders meeting, the chairman shall
immediately convene the meeting, provided, however, that if the attending
  • 65 -

shareholders do not represent a majority of the total amount of issued shares, the chairman may postpone the meeting, and provided, however, that the postponement of such meeting shall be limited to two times, and the total time postponed shall not exceed one hour. If the meeting has been postponed for two times, but the attending shareholders still do not represent a majority of the total amount of issued shares, a tentative resolution may be adopted in accordance with Paragraph 1 of Article 175 of Company Act by shareholders representing one-third of the total amount of issued shares.

By the end of such meeting if the attending shareholders represent a majority of the total amount of issued shares, the chairman may submit the tentative resolution to the meeting for approval in accordance with the provisions of Article 174 of Company Act.

  • Article 9 If a shareholders meeting is called by the board of directors, the agenda of the meeting shall be formulated by the board of directors, and the meeting shall be conducted based on the agenda. The agenda shall not be changed without a resolution made by the shareholders meeting.

  • If a shareholders meeting shall be called by any person other than the board of directors, the preceding provisions shall apply mutatis mutandis to such meeting. The chairman shall not adjourn a meeting without resolution adopted by shareholders if the motions (including extraordinary motions) covered in the agenda so arranged in the above two Paragraphs shall not have been resolved. By the end of such meeting, shareholders shall not elect another chairman to hold another meeting at the same place or at any other place.

  • Provided where the Chairman closes the meeting in breach of the Rules, the attending shareholders might elect, by more than half of the voting rights, another person to serve as the chairman and continue the meeting.

  • Article 10 A shareholder wishing to speak in a shareholders meeting shall first fill out with a speech note, specifying therein the major points of his speech, his serial number as a shareholder (or number of attendance) and his name, and the chairman shall determine his order of giving a speech.

  • A shareholder who submits his speech note for a speech but does not actually speak shall be considered as not having given a speech. If the contents of his speech shall be different from those specified on the speech note, the contents of his speech shall prevail.

  • 66 -

  • When a shareholder is giving a speech, the other shareholders shall not interrupt unless they have obtained the prior consent from the chairman and such shareholder, and the chairman may prevent others from interrupting.

  • Article 11 A shareholder shall not speak more than two times for one motion, unless he has obtained the prior consent from the chairman, and each speech shall not exceed 5 minutes. If a shareholder violates the above provisions or his speech exceeds the scope of the motion, the chairman may prevent him from doing so.

  • Article 12 A corporate shareholder being entrusted to attend in a shareholders meeting may designate only one representative to represent it in the meeting. If a corporate shareholder who designates two or more representatives to represent it at the shareholders meeting, only one of the representatives so designated may speak on any one motion.

  • Article 13 After a shareholder has given a speech, the chairman may respond personally or designate relevant person to respond.

  • Article 14 When the chairman considers that the discussion for a motion has reached the extent for making a resolution, he may announce discontinuance of the discussion and submit the motion for resolution.

  • Article 15 The persons for supervising the casting of votes and the counting thereof for resolutions shall be designated by the chairman, provided, however, that the person supervising the casting of votes shall be a shareholder. The results of resolution(s) shall be announced in the meeting, and recorded in the meeting minutes.

  • Article 16 During the proceedings of a meeting, the chairman may consider the schedule and announce for a break. Where events of force majeure arise, the chairman shall declare that the meeting is adjourned, and announce time for restoration of the meeting after having considered the circumstances, or by resolution of the shareholders’ meeting restore the meeting within 5 days without notice and announcement.

  • If the motions (including extraordinary motions) set forth in the shareholders’ meeting are not concluded, and the meeting cannot be continued to be convened in the place, the shareholders’ meeting might resolve to restore the meeting in another place.

Article 17 Unless otherwise specifically provided in Company Act or the Articles of

  • 67 -

  • Incorporation of We, resolutions shall be adopted by a majority vote at a meeting attended by the shareholders. When a motion is to be voted for, it shall be deemed adopted if the chairman consults all shareholders and none of them voice the objection, and its effect shall be the same as a motion adopted by ballots.

  • Article 18 If there shall be an amendment or alternative to one motion, the chairman may combine the amendment or alternative into the original motion, and determine their orders for resolution. If any one of the above shall be resolved, the others shall be considered as rejected, upon which no further resolution shall be required.

  • Article 19 The chairman may direct disciplinary personnel (or security personnel) to maintain the order of the meeting. For doing so they shall wear a badge marked "disciplinary personnel". Where a shareholder violate the Rules and does not submit to the correction of the chairman, causing interruptions to the conduct of the meeting and disobeying after being restrained, the chairman might direct disciplinary personnel (or security personnel) to ask him to leave the place of meeting.

  • Article 20 Matters not fully provided for in this Procedure shall be handled in accordance with the relevant acts and the Articles.

  • Article 21 (Deleted)

  • Article 22 This Procedure shall be implemented upon passage by shareholders’ meeting. The same applies to its amendments.

  • Article 23 This Procedure was formulated on 14th June, 2005.

  • Its first amendment was made on 25[th] June, 2008.

  • Its second amendment was made on 22[th] June, 2012.

  • 68 -

Appendix II

WPG Holdings Limited

Articles of Incorporation

Chapter 1 General Provisions

  • Article 1 We shall be incorporated in accordance with Expertise Merger and Acquisition Law, Company Act and the requirements of the relevant acts, and its name shall be WPG Holdings Limited.

  • Article 2 The headquarters of We shall be in Taipei City. Where it is necessary for business, We might set up branch companies and representative offices in appropriate locations within and outside the territory upon resolutions by the Board of Directors.

Chapter 2 Shares

  • Article 3 The total capital stock of We shall be Twenty Billion New Taiwan Dollars divided into two billion shares, with face value of each share at ten New Taiwan Dollars. The Board of Directors is authorized to issue the shares by installments. Fifty million shares among the above shall be reserved for issuance of warrants of stock warrants, preferred shares with warrants or corporate bonds with warrants issued.

  • Where We issues share warrants to its employees, the exercise prices of such share warrants issued to the employees might be lower than the market prices, provided always that such warrants shall be issued only with adoption by a large majority representing two thirds of the votes at shareholders' meetings attended by shareholders representing a majority of the total number of issued shares. Such issue shall be preceded and reported in batches within one year from the date of resolution by a shareholders’ meeting. Where We repurchase treasury stocks, it might transfer the same to its employees at a price lower than the average repurchase price, provided always that prior to such transfer, it shall be submitted to the most recent shareholders’ meeting attended by shareholders representing a majority of the total number of issued shares for adoption by a large majority representing two thirds of the votes.

  • Article 4 The share certificates of We shall all be name-bearing, be signed or sealed by more than 3 directors of We and serially numbered, and shall be handled in accordance with the requirements of the competent securities authority. We might issue shares without printing share certificates, or with printing a consolidated share certificate representing the total number of shares of each issue provided that such are registered or kept in custody by a centralized securities depository enterprise.

  • 69 -

Article 5 Shareholder services of We shall be administered in accordance with the “Regulations Governing the Administration of Shareholder Services of Public Companies” enacted by the competent securities authority and the requirements of other relevant acts.

Chapter 3 Scope of Business

Article 6 The business operated by We: H201010 General Investment.

Article 7 This Company’s expertise is on investment, provided that the total amount of investment shall not be limited to forty percent of the paid-in capital of We by virtue of first paragraph of Article 13 of Company Act.

  • Article 8 With respect to guarantees to the external parties necessary for business or to the projects invested by We, the Board of Directors is authorized to formulate separate regulations.

Chapter 4 Shareholders’ Meeting

  • Article 9 Shareholders' meeting shall be divided into regular meeting of shareholders and special meeting of shareholders. The regular meeting of shareholders shall be convened within six months after close of each fiscal year: A special meeting of shareholders shall be held when necessary in accordance with the requirements of Company Act.

  • A shareholders meeting shall, unless otherwise provided in Company Act and other acts, be convened by the Board of Directors.

  • Article 10 A notice to convene a regular meeting shall be given no later than 30 days prior to the scheduled meeting date. Where a special meeting of shareholders is convened, notice shall be given no later than 15 days prior to the scheduled meeting date. The cause(s) or subject(s) of a meeting of shareholders to be convened shall be notified to each shareholder and be announced. Such notice of a meeting of shareholders might be given by means of electronic transmission, after obtaining a prior consent from the recipient(s) thereof.

  • Article 11 A shareholder might appoint a proxy to attend a shareholders' meeting on his/her/its behalf by executing a power of attorney printed by We stating therein the scope of power authorized to the proxy. Except for trust enterprises or stock agencies approved by the competent authority, when a person who acts as the proxy for two or more shareholders, the number of voting power represented by him/her shall not exceed 3% of the total number of voting shares of We, otherwise, the portion of excessive voting power shall not be counted. A shareholder may only execute one power of attorney and appoint one proxy only, and shall serve such written proxy to We no later than 5 days prior to the meeting date of the shareholders' meeting. In case two or more written

  • 70 -

proxies are received from one shareholder, the first one received by We shall prevail; unless an explicit statement to revoke the previous written proxy is made in the proxy which comes later.

Where a shareholder appoints a proxy to attend a shareholders' meeting on his/her/its behalf by a power of attorney printed by We, the appointment shall be invalid.

As We holds the shareholders' meeting, a shareholder, except attending the meeting in person, could also exercise his voting right in writing or by way of electronic transmission, which shall be exercised in accordance with the information in the meeting notice. Those who exercise his voting right in writing or by way of electronic transmission shall be deemed as participation in person, while deemed as abstention for the Questions and Motions, and the amendment to the original agenda. In case a shareholder elects to exercise his voting right in writing or by way of electronic transmission, his declaration of intention shall be delivered to We two days prior to the scheduled meeting date of the shareholders' meeting, whereas if two or more declarations of the same intention are delivered to We, the first declaration of such intention received shall prevail, unless an explicit statement to rescind the previous declaration is made in the declaration which comes later. In case a shareholder who has exercised his voting right in writing or by way of electronic transmission intends to attend the shareholders' meeting in person, he shall, two days prior to the meeting date of the scheduled shareholders' meeting and in the same manner previously used in exercising his voting right, deliver a separate declaration of intention to rescind his previous declaration of intention made in exercising the voting right under the preceding paragraph. In the absence of a timely rescission of the previous declaration of intention, the voting right exercised in writing or by way of electronic transmission shall prevail. In case a shareholder has exercised his voting right in writing or by way of electronic transmission, and has also authorized a proxy to attend the shareholders' meeting on his behalf, then the voting right exercised by the authorized proxy for the said shareholder shall prevail.

Article 12 Each shareholder of We shall have one voting power in respect of each share; except the circumstances where there shall be no voting power as set out in the second paragraphs of Article 179 of Company Act.

Where a government agency or a juristic person acts as the shareholder, the voting rights of such representatives shall be exercised based on their combined shareholding. Where there are more than two representatives, such representatives shall jointly

  • 71 -

exercise their voting rights. Where a shareholder holds shares for others, such shareholder may exercise his voting right separately. The qualifications and methods of exercise shall comply with the regulation of the competent authorities

Article 13 Except that the acts require otherwise, the following matters shall be determined by shareholders’ meetings:

  1. Formulation and amend of the Articles of Incorporation of We.

  2. Election of Directors.

  3. Examination and Approval of statements and reports prepared by the Board of Directors and the reports by the Audit Committee.

  4. Resolutions on the increase/decrease of the total capital stock.

  5. Distribution of profits or covering of losses.

  6. Dissolution, merger or split of We.

  7. Other matters to be resolved by shareholders’meetings in accordance with the acts.

Article 14 For a shareholders' meeting convened by the board of directors, the chairman of the meeting shall be the Chairman of the Board of Directors. In case the Chairman of the Board of Directors is on leave or absent or cannot exercise his power and authority for any cause, the Vice-Chairman shall act on his behalf. In case the Vice Chairman is also on leave or absent or unable to exercise his power and authority for any cause, the Chairman of the Board of Directors shall designate one of the directors to act on his behalf. In the absence of such designation, the directors shall elect from among themselves a director to act for him. Where a shareholders' meeting is convened by a person with convening rights outside the Board of Directors, such person with convening right shall act as the chairman; where two or more persons having the convening right, the chairman of the meeting shall be elected from among themselves.

  • Article 15 Resolutions at a shareholders' meeting shall, unless otherwise provided in Company Act or other acts, be adopted by a majority vote of the attending shareholders, who represent more than one-half of the total number of voting shares.

  • Article 16 Resolutions adopted at a shareholders' meeting shall be recorded in the minutes of the meeting, which shall be affixed with the signature or seal of the chairman of the meeting and shall be distributed to all shareholders of We within twenty (20) days after the close of the meeting.

The preparation and distribution of the minutes of shareholders' meeting as required in the preceding Paragraph may be made by means of electronic transmission. The distribution of the minutes of shareholders' meeting as required in the preceding

  • 72 -

paragraph to the registered stock shareholders whose shareholding is less than one thousand shares may be made by means of a public notice.

Chapter 5 Directors and the Audit Committee

  • Article 17 The Board of Directors of We shall have 9 to 19 directors. The number of directors shall be determined by the Board of Directors and shall be in accordance with the requirements of the relevant acts. Directors shall be elected from among persons having legal capacity.

  • Started from the 4[th] term, the election of the Board of Directors, pursuant to Article 192-1 of Company Act, shall adopt the candidate nomination measure. The shareholders shall elect the directors from the list of candidates.

  • The percentage of shareholdings of all the directors shall be subject to the provisions prescribed by the competent securities authority.

  • Among the number of directors specified in the first paragraph, there shall be at least three independent directors, whom shall be elected from lists of candidates by shareholders’ meetings in candidate nomination system. The professional qualifications, shareholdings, restrictions on concurrent positions, manners of nomination and election and other matters to be adhered to shall be handled in accordance with the requirements of the competent securities authority.

  • Article 18 Directors shall each hold office for a term not exceeding three years; but he/she may be eligible for re-election.

In case no election of new directors is effected after expiration of the term of existing directors, the term of out-going directors shall be extended until the new directors have been elected and assumed their office. However, the competent authority may, ex officio, order the Company to elect new directors within a given time limit; and if no re-election is effected after expiry of the given time limit, the out-going directors shall be discharged ipso facto from such expiration date.

  • Within the terms of the directors, the Company might by resolution of the Board of Directors purchase liability insurance for the directors.

  • Article 19 We shall have one Chairman of Board of Director, whom shall be elected by more than half of the directors present at a meeting attended by more than two third of all directors, and where necessary, a Vice-Chairman of the Board of Directors shall be elected among themselves.

The Chairman of the Board of Directors shall internally preside the shareholders' meeting, the meeting of the board of directors; and shall externally represent the

  • 73 -

Company.

  • Article 20 In calling a meeting of the board of directors, a notice setting forth therein the subject(s) to be discussed at the meeting shall be given to each director and supervisor no later than 7 days prior to the scheduled meeting date, which might be given by ways of facsimile or electronic mails. However, in the case of emergency, the meeting may be convened at any time.

  • Unless otherwise provided in Company Act, Enterprise Merger and Acquisition Law or other acts, resolutions of the Board of Directors shall be adopted by a majority vote of the directors at a meeting attended by a majority of the directors.

  • Article 21 In case the Chairman of the Board of Directors is on leave or absent or cannot exercise his power and authority for any cause, where there is a Vice-Chairman, the Vice-Chairman shall act on his behalf. In case the Vice Chairman is also on leave or absent or unable to exercise his power and authority for any cause, the Chairman of the Board of Directors shall designate one of the directors to act on his behalf. In the absence of such designation, the directors shall elect from among themselves a director to act on his behalf.

  • Article 22 Each director shall attend the meeting of the Board of Directors in person. Where a director cannot attend a meeting of the Board of Directors, he shall in each time appoint another director to attend a meeting of the Board of Directors on his behalf by issuing a written proxy and state therein the scope of authority with reference to the subjects to be discussed at the meeting.

A director may accept the appointment to act as the proxy referred to in the above of one other director only.

In case a meeting of the Board of Directors is proceeded via visual communication network, the directors participate in such visual communication meeting shall be deemed as participation in person.

Article 23 The powers of the Board of Directors shall be as follows:

  1. Determination of guiding principles of business.

  2. Approval of budgets and examination of final accounts.

  3. Approval of material internal regulations.

  4. Drafting proposals on increase/decrease of total capital stock.

  5. Drafting proposals on distribution of profits and covering of losses.

  6. Resolutions on the issue of company bonds.

  7. Resolutions on the purchase of the shares of We.

  8. 74 -

  9. Ratification of the appointment, dismissal and remuneration of the Chief Manager.

  10. Designation of directors and supervisors of subsidiaries.

  11. Other powers stipulated by acts to be exercised by the Board of Directors and matters authorized by shareholders’ meetings.

  12. The Board of Directors of We might establish various specialized functional committees, each of which shall be accountable to the Board of Directors and shall submit its proposals to the Board of Directors for resolutions. The committees shall establish the regulations governing the exercise of their power, which shall be approved by the Board of Directors.

  13. We shall, in accordance with Article 14-4 of Securities and Exchange Law, establish an Audit Committee, which or the members of which shall be responsible for exercising the powers of supervisors stipulated by Company Act, Securities and Exchange Law and other acts. The Audit Committee shall be composed of all independent directors. The relevant Articles of Association shall be formulated by resolutions of the Board of Directors.

  14. Article 24 (Deleted)

Article 25 (Deleted)

  • Article 26 Where a director of We fulfill duties for We, without regard to the operational profits or losses, We shall pay remuneration considering his degree of participation into the operation of We and the value he contributes, and with reference with the industrial standards within and outside the territory. The Board of Directors is authorized to determine such remunerations. The remuneration of independent directors might be determined reasonably higher than and different to the remuneration of non-independent directors. Where the Company makes profits, remunerations shall also be allocated in accordance with Article 31.

  • Article 27 Directors of the Company might serve concurrently as directors and supervisors of its subsidiaries.

Chapter 6 Chief Managers

  • Article 28 The Company shall, in accordance with the resolutions by the Board of Directors, appoint a General Manager or Chief Executive Officer and several chief managers. The appointment, dismissal and remuneration of whom shall be submitted for resolutions by more than half of the directors present at a Board meeting attended by more than half of all directors. The General Manager or Chief Executive Officer shall be accountable to the Board of Directors, and shall fulfill the duties designated

  • 75 -

by the Chairman of the Board of Directors or the Board of Directors.

The appointment and dismissal of the General Manager or Chief Executive Officer in the preceding paragraph shall be submitted by the Chairman to the Board of Directors for handing in accordance with the requirements of the preceding paragraph.

The appointment and dismissal of other chief managers shall be submitted by the General Manager or Chief Executive Officer to the Board of Directors for handling in accordance with the first paragraph.

Article 29 In addition to the powers conferred by the acts or the Articles of Incorporation of We, the regulations and authorizations with respect to the division of powers and responsibilities between the Board of Directors, General Manager or Chief Executive Officer and each department shall be determined and executed by the Board of Directors.

Chapter 7 Accounting

Article 30 The fiscal year for the Company shall be from January 1[st] to December 31[st] of each year. After the closing of each fiscal year, the Board of Directors shall prepare the following statements and records the consolidate reports of the Company and all its subsidiaries. Such consolidated statements shall be forwarded to the Audit Committee for their auditing not later than the 30[th] day prior to the meeting date of a general meeting of shareholders.

  1. Business Reports.

  2. Financial Statements.

  3. The surplus earning distribution or loss off-setting proposals.

The documents in the preceding paragraph and the preparation, audition, declaration and reference of the items required by the competent authority shall comply with Company Act, Securities and Exchange Act and other relevant regulations. The financial statement in the first item, surplus earnings distribution or loss make-up proposal, after presented at a shareholders’ meeting for acceptance, shall be distributed to the shareholders. The distribution may be made by means of public announcement.

Article 31 Where the financial results for the fiscal year show a profit, We may, by a resolution adopted by the meeting of Board of Directors, have not less than 0.1% and not more than 5% of the profit distributable as employees’ compensation and have not more than 3% of the foresaid profit distributable as remuneration to directors and supervisors. Reports of such distribution as employees’ compensation and remuneration to directors and supervisors shall be submitted to the shareholders’ meeting. However, in case of

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the accumulated losses, certain profits shall first be reserved to cover them.

The employees’ compensation could be distributed in the form of shares or in cash and the employees of subsidiaries of We meeting certain specific requirements shall be entitled to receive shares or cash.

The profits stated in the first paragraph represent the pre-tax income of current year before deducting distributed remunerations to employees, directors and supervisors.

In case there is no surplus earnings, the Company shall not distribute dividend and bonus. Where there are profits in the year-end financial statement of We, after paying all taxes and duties; offsetting its losses in the past years; setting aside a legal capital reserve at 10% of the profits; and setting aside special capital reserve in accordance with the requirements of the relevant acts, the Board of Directors shall propose a distribution plan for the accumulated distributable profits, which shall, upon resolutions by a shareholders’ meeting, be distributed as dividends and bonus. Cash dividends of We shall not be lower than 20% of the total shareholders’ dividends distributed in the current year.

Chapter 8 Supplementary Provisions

Article 32 The Board of Directors is authorized to formulate the Articles of Association, detail procedures of operation and management rules for We.

  • Article 33 Matters not fully provided for by this Articles shall be handled in accordance with Company Act, Securities and Exchange Law, Expertise Merger and Acquisition Law and the requirements of other relevant acts.

Article 34 This Article was formulated on 14[th] June, 2005.

Its first amendment was made on 14[th] June, 2006.

Its second amendment was made on 13[th] June, 2007. Its third amendment was made on 25[th] June, 2008. Its fourth amendment was made on 16[th] June, 2009a. Its fifth amendment was made on 21[st] June, 2010. Its sixth amendment was made on 22nd June, 2012. Its seventh amendment was made on 19th June, 2013. Its eighth amendment was made on 18th June, 2014. Its ninth amendment was made on 22th June, 2016.

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Appendix III

WPG Holdings Limited

Procedure for the Loaning of Funds to Others

Article 1: Purpose and Basis of Formulation

Wherever this Company loan funds to others, it shall handle such in accordance with this Procedure. Matters not fully provided for in this Procedure shall be handled in accordance with the relevant acts.

Article 2: Scope of Applicability

Entitles to which this Company loans funds shall be limited to:

  1. Companies with which it does business. “Doing business”means companies selling goods to or buying goods from this Company; or

  2. Companies with short-term needs of financing facility. “Short term”means a period of one year.

Where this Company loan funds to a company with which it does business, the limit shall be those needed by such company to circulate and operate; where this Company loans funds to a company with short-term needs of financing facility, it shall be limited to its subsidiaries of which it holds directly or indirectly more than 50% of the voting shares.

Article 3: Limits on Amount of Funds Loaned and Individual Entity

The amount of funds loaned by this Company shall not exceed 40% of its net value. Limits of amounts for individual loans shall be as follows:

  1. For a company with which this Company does business with, the amount of the individual loan shall not exceed the total amount of business turnover between both parties in the most recent year. “Amount of business turnover” means the higher among the amount of purchase and amount of sale between the parties.

  2. For a company with short-term needs of financing facility, the amount of individual loan shall not exceed 10% of the net value of this Company.

  3. Article 3.1: The restrictions in Article 2 and Article 3 shall not apply to inter-company loans of fund between foreign companies to which this Company has to be involved in loans of fund due to need to raise funds, and in which it holds, directly or indirectly, 100% of the voting shares.

  4. Article 3.2: Before making a loan to others, this Company shall handle it only after resolution by the Board of Directors. Other than this Procedure, no one shall be authorized to make such decisions.

For a loan of funds between this Company and its subsidiaries pursuant to Article

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3.1, the Board of Directors shall, after it passes the resolution, authorizes its Chairperson, for a specific borrowing counterparty, within a certain monetary limit resolved by the Board of Directors, and within a period not to exceed one year, to give loans in installments or to make a revolving credit line available for the counterparty to draw down.

The “certain monetary limit” mentioned in the preceding paragraph shall adhere to the requirements in Article 3.1, and in addition, the loan of funds to a single enterprise by this Company or its subsidiaries shall not exceed 10% of their net value in their most recent financial statements.

Article 4: The Time Limit and Calculation of Interests for Loans of Funds

  1. Each loan of funds shall, in principle, not exceed one year from the date of the release of fund, save that for loans of funds to company with business relationship, it might be held over once (for one year) upon passage by resolutions of the Board of Directors.

  2. The interests on the loans of fund shall be calculated on daily interest basis by the multiplying the aggregate of the balances of the funds released (i.e. the total accrued sum) with its annual interest rate, and thereafter divided by 365 to obtain the amount of interest. The annual interest rate shall, in principle, not be lower than the average bank loan interest rate.

Article 5: Procedure for Handling and Examination

  1. Application Procedure

  2. Where a borrower apply for a loan of funds to this Company, it shall provide its basic information and financial information, and at the same time submit its application by completing an application form to state information including the use of the loan, the period and amount of the loan.

  3. Investigation on Credit Status

  4. (1) For first time loan, the borrower shall provide basic information and financial information for the handling of credit statement assessments.

  5. (2) For continual borrower, in principle credit status shall be re-assessed and re-investigated before holding over. For material or urgent matters, it shall be handled from time to time wherever there are needs.

  6. (3) Where the financial condition of the borrower is sound, and that it has appointed accountant to complete the fund raising certification for its annual financial statement, the investigation not older than one year might be adopted in

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conjunction with the latest certification report by the accountant for reference of the release of loans.

  1. Procedure for Appraisal and Examination

  2. (1)The handling officers of this Company shall, having regard to the information obtained as mentioned above, examine in details on the necessity and reasonableness of the endorsements/ guarantees, credit status and risk assessment of the entity for which the endorsement/guarantee is made, the impact on the company’s business operations, financial condition and shareholders’ equity, and whether collaterals are required and the appraisal of value thereof. Where an endorsement/guarantee is made due to the needs arising from business dealings, evaluation shall be made as to whether the total amount of loans is commensurate with the total amount of trading.

  3. (2)Before making of loan of funds to others, this Company shall carefully evaluate whether the loan is in compliance with the requirements of the criteria formulated by the competent securities authority, and such shall be handled in accordance with the limit of authority set out in Article 3.2. Before the abovementioned is submitted for a resolution of the Board of Directors, consent of the Audit Committee shall be sought in accordance with the relevant regulations.

  4. Appraisal of the Collaterals and Determination of Rights

  5. (1)Where a borrower applies for loans in accordance with the requirements, and where after appraisal collaterals are required to be provided, the borrower shall provide an equivalent amount of cashier order, collaterals and/or other securities required by this Company.

  6. (2)Where a borrower provides collaterals in accordance with the preceding paragraph, this Company shall appraise the value of the collaterals and, after considering the adequacy of the collaterals, demand for proceeding with the procedures to establish rights of mortgage and/or charge or seek for other guarantors to guarantee the rights of this Company toward its debts.

  7. Insurance

Other than land and securities, all collaterals shall be covered by fire insurance and other necessary insurances. The insured amount shall be sufficient to cover the collaterals themselves, and in principle, it shall not be less than the cost value to repurchase the collaterals or the mortgaged amount. The item names, quantity ,place of storage, insurance conditions, insurance endorsement and so on stated in the insurance policy

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shall correspond to the conditions that this Company approve the loans.

  1. Giving of Loans

Upon the approval of the loan conditions and upon the borrower execute the contract(s) or the loan agreement(s), complete the registration of the establishment of right of (charge and) mortgages over the collaterals, and after it is checked up that there is no error, the loans might be given.

Article 6: Repayment

After the giving of loans, the borrower shall be informed one month prior to the due date of the loan to repay the principal and interests on the due date.

  1. Upon the due date of the repayment of the loan, the borrower shall first calculate the interests payable, and until it is repaid together with the principal, certificates for settlements including cashier orders, loan agreements shall not be cancelled and returned to the borrower.

  2. Where the borrower applies for cancellation of charge/mortgage, it shall be ascertained no loan is outstanding before deciding whether or not to agree on proceeding with the cancellation of charge/mortgage.

Article 7: Continuous Measures of Supervision for Amounts Loaned, Procedure for Handling Loans Overdue

  1. Credit Control

After the giving of loans, the financial, business and credit conditions of the borrower and the guarantee shall be monitored frequently. Where collaterals are provided, it shall also be monitored whether there are changes of circumstances on its guaranteed value.

  1. Extension

Where fund is loaned to companies to which there is business relationship, and where it is necessary, the borrower shall before the loan becomes due, apply for extension one month before the due date. It shall thereafter be submitted for approval with reference to the loan application procedure.

  1. Registration and Custody of Cases

  2. (1)Where this Company handles matters of loaning of funds, it shall prepare a memorandum book, and record in detail the relevant items to be recorded under the relevant acts such as the entity for which the fund is loaned, the date of passage by the Board of Directors or Chairperson of Board of Directors, the date the loans are given, and the matters to be carefully evaluated under this Procedure.

  3. (2) Where collaterals are obtained, a memorandum book shall be prepared and they shall

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be maintained properly.

  1. Handling of Loans Overdue

  2. A borrower shall repay the principal and interest upon the loan becomes due. Where it is not repaid when it becomes due and that after demand the debts remain unrecovered, this Company shall take further claim actions against the borrower to protect the rights of this Company.

  3. Internal Audit

The internal auditors of this Company shall audit the Procedure for the Loaning of Funds and the implementation thereof no less frequently than quarterly and prepare written records accordingly. They shall promptly notify the Audit Committee in writing of any material violation found.

  1. Change of Circumstances

  2. Where as a result of changes of condition the entity to which funds are loaned no longer meets the requirements or the balance exceeds the limits, rectification plan shall be set out and submitted to the Audit Committee, and shall complete the rectification according to the timeframe set out in the plan.

Article 8: Supervisory Procedure for Subsidiary Loaning Funds to Others

  1. Where a subsidiary of this Company decides to loan funds to others, this Company shall cause such subsidiary to formulate its operation procedure for the loaning of funds. Such procedures shall be implemented after they are submitted for a resolution by its Board of Directors and/or shareholders’meeting in accordance with the requirements of the relevant acts.

  2. Where the internal auditors of this Company conduct audit in its subsidiaries during its annual audit plans, they shall at the same time check up the implementation of the operation procedure for the loaning of funds. Where material violation is discovered, they shall continuously supervise its progress of rectifications and prepare and submit to this Company a supervisory report.

  3. Where a subsidiary of this Company decides to loan funds to others, it shall submit the relevant information to this Company for examination.

Article 9: Disclosure of Information

  1. With respect to the endorsements/guarantees made, where they are required to be reported to the competent authority or announced, this Company shall handle such in accordance with the relevant regulations. This Company shall announce and report of any subsidiary thereof that is not a domestic public company any matters that such subsidiary

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is required to announce and report in accordance with the regulations.

  1. This Company shall evaluate the status of its loans of funds and reserves sufficient allowance for bad debts in compliance with the Generally Accepted Accounting Principles, and shall adequately disclose relevant information in its financial reports and provide certified public accountants with relevant information for implementation of necessary auditing procedures.

  2. Article 10: Penalty

Where the managers and responsible persons of this Company handle matters in connection with the loaning of funds, they shall adhere to the requirements in this Procedure in order to avoid losses by improper operations of this Company. Where violations of the relevant acts or this Procedure arise, penalty shall be administered in accordance with the employees’ regulations of this Company.

Article 11: Implementation and Amendments

The formulation of and amendments to this Procedure shall be passed by resolutions of Board of Directors upon approval by the Audit Committee. Thereafter, it shall be submitted to shareholders’ meetings for approval.

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Appendix IV

WPG Holdings Limited

Procedures for the Acquisition and Disposal of Assets

Article 1 Purpose and Basis of Formulation

Where this Company acquires or disposes of assets, it shall be handled in accordance to this Procedure. Matters not fully provided for in this Procedure shall be handled in accordance with the relevant acts.

Article2 Scope of Assets Applicable

  1. Securities: including stocks, government bonds, corporate bonds, financial bonds, securities representing interest in a fund, depositary receipts, call (put) warrants, beneficial interest securities, asset-backed securities and investment in unissued stock shares.

  2. Real property (including inventory of construction industry) and other fixed assets.

  3. Memberships.

  4. Intangible assets: including patents, copyrights, trademarks, franchise rights, and other intangible assets.

  5. Claims of financial institutions (including receivables, bills purchased and discounted,loans, and overdue receivables).

  6. Derivatives

  7. Assets acquired or disposed of in connection with mergers, demergers, acquisitions, or transfer of shares in accordance with acts of laws.

  8. Other major assets.

Article3 Definitions

  1. "Derivatives": Forward contracts, options contracts, futures contracts, leverage contracts, and swap contracts, and compound contracts combining the above products, whose value is derived from assets, interest rates, foreign exchange rates, indexes or other interests. The term "forward contracts" does not include insurance contracts, performance contracts, after-sales service contracts, long-term leasing contracts, or long-term purchase (sales) agreements.

  2. "Subsidiary": As defined in the Generally Accepted Accounting Principles (GAAP).

  3. "Professional appraiser": Refers to a real property appraiser or other person duly authorized by law to engage in the value appraisal of real property or other fixed assets.

  4. "Date of Occurrence": Refers to the date of contract signing, date of payment, date of consignment trade, date of transfer, dates of boards of directors resolutions, or other date that can confirm the counterpart and monetary amount of the transaction, whichever date is earlier; provided, for investment for which approval of the Competent Authority is required, the earlier of the above date or the date of receipt of approval by the Competent Authority shall apply.

  5. “Within one year” means the year preceding the base date of occurrence of the acquisition or

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disposal of assets. The announced period shall be exempted from the calculation.

  1. “The latest financial statement” shall mean the financial statement attested or audited openly by a certified public accountant before the acquisition or disposal of assets by the Company.

Terms not defined in this Procedure shall be defined by the “Regulations Governing the Acquisition and Disposal of Assets by Public Companies” formulated by the competent securities authority or the requirements by the relevant acts.

  • Article4 Where this Company acquires or disposes of assets, unless it is otherwise provided, the operating procedure and limit shall be as follows:

  • In acquiring or disposing of real estate, the execution unit shall conduct the appraisal. Where the transaction amount is NT$150 million or less, it shall be submitted to the General Manager for approval; if it exceeds NT$150 million, it shall not be executed unless it is submitted to and passed by the Board of Directors after it is approved by the General Manager.

  • The acquisition and disposal of other fixed assets shall be evaluated by operating department. The transactions amounting less than (including) NT$100 million shall be approved within each given boundaries governed by authorization regulation. For the transactions amounting more than NT$100 million, the approval by the General Manager and the submission to the Board of Directors for their approval are needed before execution.

  • In acquiring or disposing of long term Securities, the execution unit shall conduct the appraisal and execute it after it is submitted to and approved by the Board of Directors.

  • In acquiring or disposing of short term Securities, the execution unit shall conduct the appraisal. Thereafter, where the amount is NT$300 million or less, and that it does not exceed 10% of the subject company’s equity, it shall be approved by the General Manager; where the amount exceeds NT$300 million, or it exceeds 10% of the subject company’s equity, it shall not executed until it is further submitted to and passed by the Board of Directors. In addition, the transaction shall be conducted within the limits set out in sub-clause 9 in this Article. However, such requirement s are exempted under the following circumstances: where it belongs to daily fund appropriation activities or short term investment operation like transaction of bonds with conditions for repurchase, bond fund etc., and the amount is NT$300 million or less, the responsible unit(s) is/are authorized to execute. Where the amount exceeds NT$300 million, the responsible unit shall submit to the General Manager for approval before execution.

  • In acquiring or disposing of Memberships, the execution unit shall conduct the appraisal. Where the amount is less than 1% of the paid-up capital or NT$5 million, it shall be submitted to the General Manager for approval and shall thereafter be filed to the most recent Board Meeting for recordation.

  • In acquiring or disposing of intangible assets, the execution unit shall conduct the appraisal. Where the amount is less than 10% of the paid of capital or NT$20 million, it shall be

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approved layer by layer in accordance with the regulations on authorization. The Audit Committee shall require that where a certain amount is exceeded, it shall thereafter be filed to the most recent Board meeting for recordation. Where the amount exceeds NT$20 million, it shall not be executed until it is submitted to and passed by the Board of Directors.

  1. In principle, this Company shall not participate in transactions involving the acquisition or disposal of the debentures of financial institutions. Where this Company decides to participate in the transactions involving the acquisition or disposal of debentures of financial institutions, it shall be submitted to the Board of Directors for re-formulation of its procedures of appraisals and operations.

  2. Execution Units The execution units for acquisition and disposal of Securities and Derivatives shall be finance and accounting units. With respect to acquisition or disposal of other assets, the execution units shall be regulated and recognized in accordance with the division of responsibilities within this Company.

  3. The limits for the acquisitions of the above assets for this Company and each of its Subsidiary shall be as follows:

    • (1) For real estate not for operational uses, the total amount shall not be more than 30% of their net values;

    • (2) Total amount of investment in long-term and short-term Securities shall not exceed 300% of the net value.

  4. 10.Where this Article requires submission to the Board of Directors for resolutions, consent by the Audit Committee shall be sought in accordance with the relevant regulations.

  5. Article5 The procedures for appraisal of acquisition or disposal of assets of this Company shall be as follows:

  6. In acquiring or disposing of real property or other fixed assets where the transaction amount reaches 20% of the Company's paid-in capital or NT$300 million or more, the Company, unless transacting with a government institution, engaging others to build on its own land, engaging others to build on rented land, or acquiring or disposing of machinery and equipment for business use, shall obtain an appraisal report from a professional appraiser prior to the transaction and shall further comply with the following provisions:

    • (1) Where due to special circumstances it is necessary to give a limited price, specified price, or special price as a reference basis for the transaction price, the transaction shall be submitted for approval in advance by the board of directors, and the same procedure shall be followed for any future changes to the terms and conditions of the transaction.

    • (2) Where the discrepancy between the appraisal results of professional appraisers and the transaction amount is more than 20 percent, except the circumstances where the valuation of acquiring asset is higher than the transaction amount or the valuation of disposing asset is lower than transaction amount, a certified public accountant shall be engaged to perform the appraisal in accordance with the provisions of Statement of

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    • Auditing Standards No. 20 published by the ARDF and render a specific opinion regarding the reason for the discrepancy and the appropriateness of the transaction price.

  8. (3) Where the transaction amount is NT$1 billion or more, appraisals from two or more professional appraisers shall be obtained. Where the discrepancy between the appraisal result and the transaction amount is 20 percent or more of the transaction amount, except the circumstances where the valuation of acquiring asset is higher than the transaction amount or the valuation of disposing asset is lower than transaction amount, a certified public accountant shall be engaged to perform the appraisal in accordance with the provisions of Statement of Auditing Standards No. 20 published by the ARDF and render a specific opinion regarding the reason for the discrepancy and the appropriateness of the transaction price.

  9. (4) No more than 3 months may elapse between the date of the appraisal report issued by a professional appraiser and the contract execution date; provided, where the publicly announced current value for the same period is used and not more than 6 months have elapsed, an opinion may still be issued by the original professional appraiser.

  10. Where the Company acquires or disposes of securities and the transaction amount is 20 percent of the company's paid-in capital or NT$300 million or more, the company shall engage a certified public accountant to provide an opinion regarding the reasonableness of the transaction price. If the CPA requires an expert's opinion, it must be sought in accordance with the Statement on Auditing Standards No. 20 announced by the Accounting Research and Development Foundation. This requirement does not apply, however, to publicly quoted prices of securities that have an active market, or where otherwise provided by regulations of the Financial Supervisory Commission (FSC).

  11. In acquiring or disposing of memberships or other intangible assets where the transaction amount reaches 20% of the Company's paid-in capital or NT$300 million or more, the Company, shall engage a certified public accountant to provide an opinion regarding the reasonableness of the transaction price prior to the transaction. The accountant must conduct it in accordance with the Statement on Auditing Standards No. 20.

  12. Acquisition or disposal of assets from or to a related party where the transaction amount reaches 10 percent or more of the company's total assets, the company shall engage a certified public accountant prior to the date of occurrence of the event to render an opinion on the reasonableness of the transaction price; the CPA shall comply with the provisions of Statement of Auditing Standards No. 20 published by the ARDF.

  13. The calculations in the above four transactions must comply with Article 30-2 of “Regulations Governing the Acquisition and Disposal of Assets by Public Companies”. The one-year timeframe counts back from the day the transaction occurred. Transactions which have already been supported by expert's valuation or CPA's opinions can be excluded.

  14. Where the Company acquires or disposes of assets through court auction procedures, the

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evidentiary documentation issued by the court may be substituted for the appraisal report or CPA opinion.

  1. Professional appraisers and their officers, certified public accounts, attorneys, and securities underwriters that provide public companies with appraisal reports, certified public accountant's opinions, attorney's opinions, or underwriter's opinions shall not be a related party of any party to the transaction.

Article6 (Deleted)

Article7 (Deleted)

Article8 The Company’s acquisition or disposal of assets from or to a related party

  • Where the Company’s acquiring or disposing of assets from related parties, in addition to handling in accordance with this Procedure, it shall comply with the “Regulations Governing

the Acquisition and Disposal of Assets by Public Companies” formulated by the competent

securities authority or the requirements by the relevant acts.

Article9 (Deleted)

Article10 (Deleted)

Article11 Handling Procedure for the acquisition or disposal of Derivatives

I. Trading Principles and Strategies

  1. Types of Transactions

  2. (1) The Derivatives traded by this Company mean those products the value of which is derived from assets, interest rates, foreign exchange rates, indexes or other interests (such as forward contracts, options, futures, interests or exchange rates, swap, as well as compound contracts combining the above products.)

  3. (2) In relation to the matters relevant to transactions of bond deposits, it shall be handled in accordance with the relevant regulations in this Procedure. This Procedure shall not be applicable to the transactions of bonds with repurchase conditions.

  4. Operation (Hedging) Strategy

  5. The Derivatives traded by this Company shall in principle be for hedging the risks incurred in the course of business of the Company with respect to the net parts after mutual cancellation out of the amounts receivable and payable, or assets and liabilities, having regard to the due dates, amount and currencies. It shall be ascertained before a transaction that it is a hedging operation.

  6. Segregation of Duties

  7. (1) Finance and Accounting Departments

  8. 1)Trading Personnel

    • i. Responsible for drawing up the trading strategies of Derivatives of the whole Company.

ii.Trading personnel shall collect market information, conduct estimation on

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trend and risk appraisal, draw up operation strategies, and to conduct transactions within the authorized limits in accordance with Company’s policy. 

  - iii. Where the financial market has changed materially that the trading personnel decide that the existing strategies are no longer applicable, they shall promptly submit appraisal report and draw up new strategies, which shall, after approval by the General Manager, become the basis for conducting transactions.

  • 2) Personnel to Appropriate Funds

    • Coordinate the use of banking facilities, detailed calculation of cash flow and handle settlement matters.

  • 3) Accounting Personnel

    • i. Confirm execution of transactions.

    • ii. Verify whether the transactions are conducted in accordance with the authorized limits and existing strategies.

    • iii. Handle the accounting entries.

    • iv. Conduct Reports and announcements in accordance with the regulations by competent securities authority.

  • (2) Limits of Authority for Derivatives

    • Financial officers are authorized to execute single transactions of amount under USD2 million (including equivalent amounts in other currencies). Transactions of more than USD2 million (including equivalent amounts in other currencies) shall not be conducted unless approved by the General Manager.

  • Performance Evaluation

  • (1) Hedging Operations

The performance of hedging operations shall be evaluated and appraised in

accordance with hedging strategies.

  • (2) Transactional Operations

This Company shall not be involved in transactional operations.

  1. The Determination of Maximum Loss Limit

  2. (1) Hedging Operations

Regarding the regulation that maximum loss limit shall not more than 20 percent of the

contract amount, it shall be applied to individual contracts and to all contracts.

  • (2) Transactional Operations

This Company shall not be involved in transactional operations.

  • II. Risk Management Measures

  • Credit Risk Management

The trading partners of this Company shall in principle be limited to correspondent banks

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and internationally renowned financial institutions, which may provide professional information.

  1. Market Risk Management

  2. This Company shall from time to time take control measures on the risks on Derivatives created by variation of interest rates, exchange rates and other factors.

  3. Liquidity Risk Management

  4. To ensure market liquidity, the selection of financial products shall predominantly be those of high liquidity (namely that it can be squeezed in the market at any time). The financial institutions entrusted for transactions shall possess adequate information and ability to conduct transactions in the market at any time.

  5. Cash Flow Risk Management

  6. This Company shall maintain sufficient quick assets and fund raising facilities to meet the capital requirements of settlement.

  7. Operation Risk Management

  8. (1) Operational risk shall be averted by faithful adherence to the limits of amount authorized, operational procedures and incorporation of internal control.

  9. (2) Personnel engaged in derivatives trading may not serve concurrently in other operations such as confirmation and settlement.

  10. (3) The Finance Units shall evaluate derivative trading positions at least twice per month, which shall be reported to the General Manager.

  11. Commodity Risk Management

  12. Internal trading personnel shall have comprehensive and proper professional knowledge on Derivatives, and shall require banks to adequately disclose risks to avert risks of misuse of Derivatives.

  13. Legal Risk Management

Documents executed by this Company and trading partners shall not be executed unless perused by internal legal personnel or legal consultants to avert legal risks.

  • III. Internal Audit System

  • Internal audit personnel shall periodically make a determination of the suitability of internal controls on derivatives and conduct a monthly audit of how faithfully derivative trading by the trading department adheres to this Procedure, and to analyze the trade cycles in order to prepare an audit report. If any material violation is discovered, the Audit Committee shall be notified in writing.

  • IV. Periodic Evaluations and Handling Irregular Circumstances

  • For the hedge trades required by the business need of financial department, the transaction and profit-loss circumstances shall be evaluated at least twice per month and the report shall be submitted to the general manager. The board of directors shall authorize the general manager to monitor and control derivatives trading risk and shall

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periodically evaluate whether derivatives trading performance is consistent with established operational strategy and whether the risk undertaken is within the Company's permitted scope of tolerance. The general manager authorized by the board of directors shall periodically evaluate whether the risk management measures currently employed are appropriate and are faithfully conducted in accordance with this Procedure. When irregular circumstances are found, a report shall be made immediately to the board chairman or the board of directors, and appropriate measures shall be adopted.

  • V. Where this Company conducts trade on Derivatives, a log book shall be established to record related matters in accordance with the relevant acts. Article12 Procedure for Handling Mergers, Demergers, Acquisitions, and Transfer of Shares Where this Company acquires or disposes of assets by mergers, demergers, acquisitions or transfer of shares in accordance with the law, the regulations in this Procedure shall apply, and in addition, it shall be handled in accordance with “Regulations Governing the Acquisition and Disposal of Assets by Public Companies” formulated by the competent securities authority or the relevant law.

Article13 Procedure for Public Disclosure of Information

  1. Where this Company acquires or disposes of assets, and where it is required to be reported to the competent authority or announced, this Company shall handle in accordance with the relevant regulations. Where a Subsidiary of this Company is not a domestic public company, and where there are matters required to be announced or reported, this Company shall announce or report such on its behalf.

  2. When this Company is required to announce certain items shall be handled in accordance with“Regulations Governing the Acquisition and Disposal of Assets by Public Companies” formulated by the competent securities authority or the relevant law.

  3. (Deleted)

  4. Article 13-1: The Company acquiring or disposing of assets shall keep all relevant contracts, meeting minutes, log books, appraisal reports and CPA, attorney, and securities underwriter opinions at the company, the retained duration shall comply with the “Regulations Governing the Acquisition and Disposal of Assets by Public Companies” formulated by the competent securities authority or the requirements by the relevant acts.

Article14 All Subsidiaries of this Company shall adhere to the following requirements:

  1. Where a Subsidiary of this Company decides to acquire or dispose of assets, this Company shall cause such Subsidiary to formulate procedures for acquisition or disposal of assets in accordance with the regulations. Such procedures shall be implemented upon submission to and approval by its Board of Directors and/or Shareholders’ meetings.

  2. Where a Subsidiary of this Company decides to acquire or dispose of assets, it shall submit the relevant information to this Company for examination.

  3. 91 -

Article15 Penalty

Where the managers and responsible persons of this Company handle matters in connection with the acquisition and disposal of assets, they shall adhere to the requirements in this Procedure in order to avoid losses by improper operations of this Company. Where violations of the relevant acts or this Procedure arise, penalty shall be administered in accordance with the employees’ regulations of this Company. Article16 Implementation and Amendments The formulation of and amendments to this Procedure shall be passed by resolutions of Board of Directors upon approval by the Audit Committee. Thereafter, it shall be submitted to shareholders’ meetings for approval. Article17 (Deleted)

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Appendix V

WPG Holdings Limited

The Shareholdings of All Directors

Base Day ： April 30, 2019

Position Name Date
elected		 Term Shareholding while
elected		 Shareholding while
elected		 Share holdings in the shareholders
roster within the share transfer
prohibition period		 Share holdings in the shareholders
roster within the share transfer
prohibition period
Shares Shareholding
ratio (%)
(note 1)		 Shares Shareholding
ratio (%)
(note 1)
Chairman HUANG, WEI-HSIANG 2017/06/19 3 years
46,512,508
2.66
41,411,507
2.47
Vice Chairman TSUNG, KUO-TUNG 2017/06/19 3 years
10,494,000
0.60
9,654,480
0.57
Director CHANG, JUNG-KANG 2017/06/19 3 years
27,358,674
1.57
25,112,020
1.50
Director LIN, TSAY-LIN 2017/06/19 3 years
24,951,707
1.43
20,195,570
1.20
Director CHEN-KOU-YUAN 2017/06/19 3 years
5,015,933
0.29
4,614,658
0.27
Director Fullerton Technology Co.,
(Representative : WU,
CHANG-CHING)		 2017/06/19 3 years
45,135,951		 2.59
35,930,074
2.14
Director
YEH, FU-HAN		 2017/06/19 3 years
1,300,584
0.07
1,196,537
0.07
Director SHAW,SHUNG-HO 2017/06/19 3years
406,618		 0.02
636,888
0.04
Independent
Director		 RONG-RUEY DUH 2017/06/19 3 years
－		 － － －
Independent
Director		 Jack, J. T. Huang 2017/06/19 3 years
－		 － － －
Independent
Director		 YUNG-HONG YU 2017/06/19 3 years
－		 － － －
Total
Shareholdings
of
the Directors		 161,175,975
9.23		 138,751,734
8.26

Note 1: Total issued shares on June 19, 2017: 1,745,420,665 shares

Note 2: Total Issued shares on April 30, 2019 (book closure date): 1,679,056,833 shares

Notes :

  1. The minimum required combined shareholding ratio of all directors by law: 3%

  2. The minimum required combined shareholding of all directors by law: 40,297,363 shares; As of April 30, 2019, the total shareholding of all directors was138,751,734 shares (not including the shareholding of Independent Director)

  3. We has established the Audit Committee; hence there is no applicable legal requirement for supervisor shareholding.

  4. 93 -

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