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YC AGM Information 2022

Jun 22, 2022

51960_rns_2022-06-22_5bace440-acb0-4c68-ab98-2db6e5289de0.pdf

AGM Information

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Stock Code: 2034

YC INOX CO., LTD.

2022 Annual General Shareholders’ Meeting

Agenda

D a t e : J u n e 1 6 , 2 0 2 2

( P h y s i c a l S h a r e h o l d e r s M e e t i n g )

(This document is prepared in accordance with the Chinese version and for reference only. In the event of any inconsistency between the English version and the Chinese version, the Chinese version shall prevail.)

YC INOX Co., Ltd.

Table of Contents

Agenda……………………………………………………………………………………………………………….……… 1 Report Items……………………………………………………………………………………………………….……… 2 Proposed Resolutions for Ratification………………………………………………………………………… 3 Proposed Resolutins for Disscussion…………………………………………..……………………………… 3 Extraordinary Motions…………………………………………………………………..…………………………… 4 Appendixes 2021 Business Report………………………………………………………………………………………….……… 5 Audit Committee’s Review Report……………………………………………………………………………… 8 Independent Auditors’ Report…………………………………..…..………………………………………….. 9 2021 Financial Statements…………………………………..…………………..………………………………… 13 Comparison Table for the Rules of Ethical Corporate Management Best Practice Principles Before and After Amendment……………………………………………………………………. 29 Comparison Table for the Procedures for Ethical Management and Guidelines for Conduct Before and After Amendment……………………………………………………………….……… 30 Execution status of issuance of the 3rd Domestic Unsecured Convertible Corporate Bonds.………………………………………………………………………………………………………………………… 31 Execution status of Endorsement, Guarantee and lending Funds to Other Parties………………………………………………………………………………………………………………………… 32 2021 Earnings Distribution Table……………………………………….……….………………………………. 33 Comparison Table for the Articles of Incorporation Before and After Amendment…..… 34 Comparison Table for the Procedures for Acquisition and Disposal of Assets Before and After Amendment…………………………………………………………………………………………………….… 40 Shareholdings Status of Directors…………………………………………………………………………..…… 46 Articles of Incorporation…………………………………………………………………………………..………… 47 Rules of Procedure of Shareholders’ Meetings……………………………………………………….….. 54 Other Instructions………………………………………………………………………………………………………. 61

YC INOX Co., Ltd.

2022 Annual General Shareholders’ Meeting Agenda

(Translation)

The meeting will be held by means of: Physical shareholders meeting

Time: 9:00 a.m. on Thursday, June 16, 2022

Place: 5[th ] Floor of Administration Building, YC INOX’s Headquarters, No.270, Sec. 4, Jungshan Rd., Shijou Township, Chang-Hwa, Taiwan.

  • I. Call Meeting to Order

  • II. Chairman Takes Chair

III. Chairman’s Opening Address

  • IV. Report Items:

  • 2021 Business report

  • 2021 Audit Committee’s review report

  • 2021 employees’ profit sharing and directors’ compensation

  • Amendment of Ethical Corporate Management Best Practice Principles

  • Amendment of Procedures for Ethical Management and Guidelines for Conduct.

  • Execution status of the 3[rd] domestic unsecured convertible corporate bonds

  • Execution status of endorsement, guarantee and lending funds to other parties.

  • V. Proposed Resolutions for Ratification

  • 2021 Financial Statements

  • 2021 Earnings Distribution

  • VI. Proposed Resolutions for Discussion

  • Amendment of Articles of Incorporation.

  • Amendment of Procedures of Acquisition or Disposal of Assets.

  • VII. Extraordinary Motions

VIII. Meeting Adjourned

  • 1 -

Report Items

Item 1: (proposed by the Board of Directors)

Description: The Company’s 2021 Business Report.

Explanation: Regarding the Company’s 2021 Business Report, please refer to page 5.

Item 2: (proposed by the Board of Directors)

Description: The 2021 Audit Committee’s review report.

Explanation: The 2021 financial statements have been audited by the Independent Auditors and reviewed by the Audit Committee. The Audit Committee’s review report and the Independent Auditors’ Audit Report have been issued respectively, please refer to page 8, page 9 to page 28.

Item 3: (proposed by the Board of Directors)

Description: The 2021 employees’ profit sharing and directors’ compensation.

Explanation: 1. The 2021 employees’ profit sharing and directors’ compensation is determined

in accordance with Article 235-1 of the Company Act and the Articles of Incorporation.

  1. The 2021 income before income tax prior to deducting employees’ profit sharing and directors’ compensation is NT$1,695,488,640. 5% of the profit amount of NT$84,774,432 is allocated for employees’ profit sharing and 2% of the profit amount of NT$33,909,773 is allocated for directors’ compensation.

Item 4: (proposed by the Board of Directors)

Description: Amendment of Ethical Corporate Management Best Practice Principles.

Explanation: The amendment was made in accordance with the Corporate Governance Evaluation standards and internal management requirements, please refer to page 29.

Item 5: (proposed by the Board of Directors)

Description: Amendment of Procedures for Ethical Management and Guidelines for Conduct. Explanation: The amendment was made in accordance with the Corporate Governance Evaluation standards and internal management requirements, please refer to page 30.

Item 6: (proposed by the Board of Directors)

Description: Execution status of the 3rd Domestic Unsecured Convertible Corporate Bonds.

Explanation: Regarding the execution status of the 3rd Domestic Unsecured Convertible Corporate Bonds, please refer to page 31.

  • 2 -

Item 7: (proposed by the Board of Directors)

Description: Execution status of endorsement, guarantee and lending funds to other parties Explanation: Regarding the execution status of endorsement, guarantee and lending funds to other parties, please refer to page 32.

Proposed Resolutions for Ratification

Item 1: (proposed by the Board of Directors)

Description: To accept 2021 business report and financial statements.

Explanation: The 2021 business report and financial statements (incl. consolidated financial statement and standalone financial statement) are all prepared, and have been audited by independent auditors of Deloitte & Touche. Please refer to page 9 to page 28.

Resolution:

Item 2: (proposed by the Board of Directors)

Description: To adopt the proposal of 2021 earnings distribution.

Explanation: 1. Please refer the page 33 for the 2021 Earnings Distribution Table.

  1. If the Company subsequently repurchases its outstanding common shares, or transfers or write-off its treasury shares, or the unsecured convertible corporate bonds being converted into common shares, or issues cash capital increase, etc., which leads the change of the total amount of outstanding common shares, and results in changes in cash dividend rates, such power with respect to adjust relevant matters is authorized to the Board of Directors.

  2. Cash dividends with a value less than NT$1.00 will be remitted to the account of the Employee Welfare Committee of the Company.

Resolution:

Proposed Resolutins for Disscussion

Item 1: (proposed by the Board of Directors)

Description: To amend the “Articles of Incorporation”.

Explanation: The draft amendment is stipulated in accordance with the latest amendment of the Company Act and the Company’s business needs, please refer to page 34.

Resolution:

  • 3 -

Item 2: (proposed by the Board of Directors)

Description: To amend the Procedures for Acquisition or Disposal of Assets.

Explanation: The draft amendment is stipulated in accordance with the Financial Supervisory Commission's letter of Jin-Guan-Zheng-Fa-Zi No1100373495 on Dec 06, 2021, please refer to page 40.

Resolution:

Extraordinary Motions

Meeting Adjourned

  • 4 -

2021 Business Report

From 2021, the COVID-19 continues to spread, causing shipping costs to rise higher and higher. However, the United States has passed the infrastructure construction plan, leads the overall global demand to grow. Meanwhile, the raw material supply chain and the sale portfolio of product of the Company has been optimized in a timely manner, these all led to a substantial increase in profitability in 2021. In 2021, the total volume sold was increased by approximately 3.20% (compared to 2020), and sales were therefore increased by approximately 39.79%, while net income before and after income tax were increased by approximately 195.68% and 197.48% respectively.

Moreover, our Turkey mill has entered into the final stage of construction to be completed on time, its production activities are expected to start in the third quarter of 2022. By then, we will be able to supply local customers to avoid tariff barriers, also be able to make best global sales arrangements according to global stainless steel production and global supply/demand condition.

1. 2021 Business Report

1.1 Operation Result:

Unit: NT$ thousands

Items 2021 2020 Variance Growth Rate(%)
Stainless Steel Tube and Pipe 9,478,885 6,841,412 2,637,473 38.55%
Stainless Steel Sheet and Coil 8,047,890 5,644,691 2,403,199 42.57%
Other Stainless Steel Products 251,144 231,049 20,095 8.70%
Total 17,777,919 12,717,152 5,060,767 39.79%

1.2 Budget Execution:

Unit: Metric Ton

Unit: Metric Ton
Items 2021 Actual 2021 Budgeted (Note) Achievement rate (%)
Stainless Steel Tube and Pipe 89,612 92,470 -3.09%
Stainless Steel Sheet and Coil 93,144 94,520 -1.46%
Other Stainless Steel Products 2,441 2,520 -3.13%
Total 185,197 189,510 -2.28%

Note: The updated 2021 annual budget of YC INOX have been adopted by the Board of Directors on December 24, 2021.

  • 5 -

1.3 Condensed Financial Status and Profitability:

Unit: NT$ thousands

Items / Year 2021 2020
Financial Result Operating Revenue 17,777,919 12,717,152
Gross Profit 2,893,140 1,184,615
Operating Income 1,407,183 475,914
Net Income 1,260,047 423,567
Profitability Return on total Assets (%) 8.05% 3.52%
Return on shareholders’ equity (%) 13.63% 5.12%
Ratio of pre-tax income to paid-in capital (%) 35.77% 11.84%
Profit margin (%) 7.09% 3.33%
Earnings per share (dollar) 2.86 1.04

1.4 Progress in Research and Development:

YC INOX engages in stainless steel processing industry, its research and development focus on the improvement of processing techniques, machinery and equipment, and the efficiency of production processes. The Production Department is responsible for the research and development of processing techniques. Years been through, our process techniques are now very proficient. We continue to improve, achieving the goal of automatic production, such as the implementation of laser welding technology, automated pickling process with zero discharge, and automated warehouse systems, etc. Those are YC INOX's innovative technologies that outshine the industry, our product quality and our environmental protection plan are especially affirmed by our customers. In order to make our products more popular in the market, and create high value-added products, we have made magnificent breakthroughs and achievements in stainless steel pipes manufacturing rate and stainless steel plate processing techniques. We believe that these achievements will be of great help and benefit to market development and cost reduction.

2. Summary of 2022 Business Plan

  • 2.1 Operating Strategy

  • A. Development of high value-added products and improvement of processing techniques, to increase the competitiveness of our products.

  • B. Aggressively expand overseas emerging markets to diversify sales risks.

  • C. Improve production efficiency and quality, reduce manufacturing costs.

  • D. Strengthen the implementation of the internal control system to improve the management system.

  • E. Strengthen employee education and training to improve quality of employees and enhance the quality of work and performance.

  • 6 -

  • F. Continue to promote sustainable development strategies and action plans, fulfill corporate social responsibilities, and achieve the goal of sustainable development.

2.2 2022 Budget

Unit: Metric Ton

2.2 2022 Budget
 Unit:Metric Ton
Items 2022 Budget 2021 Actual Growth Rate (%)
Stainless Steel Tube and Pipe 92,650 89,612 3.39%
Stainless Steel Sheet and Coil 103,190 93,144 10.79%
Other Stainless Steel Products 3,560 2,441 45.84%
Total 199,400 185,197 7.67%

Explanation:

As far as the industry is concerned, in 2021, under the continuous spread of COVID-19 and the influence of trade protectionism as well as tariff barriers in various countries, our exporting market is still facing severe conditions. Therefore, not only our turkey mill plans to supply our customers domestically as response, we also try to Increase the added value of our products. In the short term, we moderately optimize the product portfolio for the annual target sales volume to maximize profits.

  • 2.3 Important Policies of Production and Marketing

  • A. Continue to implement automatic equipment, to improve production techniques and efficiency so the manufacturing costs could be reduced.

  • B. Strengthen and integrate domestic and exporting sales channels and develop high value-added products to enhance market competitiveness.

  • C. Continuous evaluation of overseas production bases in response to the trend of regional economics of the world.

  • D. Use financial instruments efficiently and strengthen customer credit inquiries to avoid bad debts and protect the Company’s interests.

Chairman: Chang, Chin-Yu

CEO: Chang, Chin-Yu

Chief Accounting Officer: Chang, Jung-Wei

  • 7 -

Audit Committee’s Review Report

The Board of Directors has prepared the Company’s 2021 Business Report, Financial Statements, and proposal for the profit distribution. The CPA firm of Deloitte & Touche was retained to audit YC INOX’ Financial Statements and has issued an audit report relating to the Financial Statements. The Business Report, Financial Statements, and proposal for the profit distribution have been reviewed and determined to be correct and accurate by the Audit Committee members of YC INOX Co., Ltd. According to relevant requirements of Securities and Exchange Act. and the Company Act, we hereby submit this report.

To:

2022 General Shareholders’ Meeting of YC INOX Co., Ltd.

YC INOX Co., Ltd.

Chairman of the Audit Committee: Chen, Tai-Shan

March 18, 2022

  • 8 -

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders YC Inox Co., Ltd.

Opinion

We have audited the accompanying consolidated financial statements of YC Inox Co., Ltd. and its subsidiaries (the “Group”), which comprise the consolidated balance sheets as of December 31, 2021 and 2020, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2021 and 2020, 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 International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

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

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 for the year ended December 31, 2021. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

  • 9 -

The key audit matter of the Group’s consolidated statements for the year ended December 31, 2021 is described as follows:

Inventory Valuation

The amount of inventory held by the Group is considered material to the consolidated financial statements; and out of this amount, inventory is made based on the lower of cost and net realizable value of inventory. As the inputs and assumptions used in the determination of the net realizable value involve management’s judgment, inventory assessment has been deemed as a key audit matter. For the accounting policies, significant accounting judgments, estimates and uncertainty of assumptions related to inventory assessment as well as other related disclosures, refer to Notes 4, 5, and 10.

The main audit procedures performed with respect to the aforementioned key audit matter are as follows:

  1. We understood and assessed the appropriateness of the Group’s policies on the provision for inventory valuation loss and the related internal control procedures.

  2. We obtained the inventory valuation report and sampled and reviewed the correctness and reasonableness of the net realizable value.

Other Matter

We have also audited the parent company only financial statements of YC Inox Co., Ltd. as of and for the years ended December 31, 2021 and 2020 on which we have issued an unmodified opinion.

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

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

Those charged with governance (including members of the audit committee) are responsible for overseeing the Group’s financial reporting process.

  • 10 -

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

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

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

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

  2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the 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 auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.

  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 and 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.

  7. 11 -

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2021 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audits resulting in this independent auditors’ report are Done-Yuin Tseng and Shu-Chin Chiang.

Deloitte & Touche Taipei, Taiwan Republic of China

March 18, 2022

Notice to Readers

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

For the convenience of readers, the independent auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and consolidated financial statements shall prevail.

  • 12 -

YC INOX CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

ASSETS
CURRENT ASSETS
Cash (Notes 4 and 6)
Financial assets at fair value through profit or loss - current (Notes 4 and 7)
Notes receivable (Notes 4 and 27)
Trade receivables (Notes 4, 9 and 27)
Other receivables (Note 4)
Inventories (Notes 4, 5 and 10)
Prepayments
Other current assets (Notes 4 and 28)
Total current assets
NON-CURRENT ASSETS
Financial assets at fair value through other comprehensive income - non-current (Notes 4 and 8)
Property, plant and equipment (Notes 4 and 12)
Right-of-use assets (Notes 4 and 13)
Computer software (Notes 4 and 14)
Deferred tax assets (Notes 4 and 22)
Prepayments for equipment
Other non-current assets
Total non-current assets
TOTAL
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term borrowings (Note 15)
Contract liabilities - current (Note 20)
Notes payable
Trade payables
Other payables (Notes 17 and 18)
Current tax liabilities (Notes 4 and 22)
Lease liabilities - current (Notes 4 and 13)
Current portion of long-term borrowings (Note 15)
Other current liabilities
Total current liabilities
NON-CURRENT LIABILITIES
Financial liabilities at fair value through profit or loss - non-current (Notes 4 and 16)
Bonds payable (Notes 4 and 16)
Long-term borrowings (Note 15)
Deferred tax liabilities (Notes 4 and 22)
Lease liabilities - non-current (Notes 4 and 13)
Net defined benefit liabilities - non-current (Notes 4 and 18)
Guarantee deposits received
Total non-current liabilities
Total liabilities
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY
Share capital
Ordinary shares
Registered capital (pending change)
Capital surplus
Retained earnings
Legal reserve
Special reserve
Unappropriated earnings
Other equity
Total equity
TOTAL		 2021
Amount
%
$ 1,396,077
7
267,852
1
166,220
1
1,241,870
7
296,636
2
6,514,836
34
574,375
3

3,011

-

10,460,877
55
2,666,411
14
4,789,937
25
3,631
-
6,360
-
384,474
2
536,002
3

231,052

1

8,617,867
45
$ 19,078,744
100
$ 5,559,180
29
518,204
3
14,557
-
771,356
4
565,116
3
372,226
2
2,466
-
119,643
1

32,079

-

7,954,827
42
966
-
775,775
4
780,357
4
62,053
-
814
-
71,257
1

30,630

-

1,721,852

9

9,676,679
51
4,445,345
23
1,080
-
1,994,700
10
1,166,385
6
-
-
1,276,096
7

518,459

3

9,402,065
49
$ 19,078,744
100		 2020




























Amount
%
$ 1,354,142
10
-
-
60,333
1
962,951
7
250,061
2
3,012,232
23
50,742
-

2,988

-

5,693,449
43
2,397,355
18
4,644,058
35
8,597
-
187
-
83,771
1
331,997
3

53,149

-

7,519,114
57
$ 13,212,563
100
$ 1,516,550
11
290,364
2
181
-
121,084
1
331,429
3
42,517
-
4,647
-
87,500
1

45,224

-

2,439,496
18
1,500
-
954,978
7
587,500
5
14,262
-
3,427
-
78,885
1

43,140

-

1,683,692
13

4,123,188
31
4,371,307
33
-
-
1,882,352
14
1,124,194
9
185,661
1
522,557
4

1,003,304

8

9,089,375
69
$ 13,212,563
100

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

  • 13 -

YC INOX CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 4, 20 and 27)
OPERATING COSTS (Notes 5, 10 and 21)
GROSS PROFIT
OPERATING EXPENSES (Note 21)
Selling and marketing expenses
General and administrative expenses
Expected credit loss (Notes 4 and 9)
Total operating expenses
INCOME FROM OPERATIONS
NON-OPERATING INCOME AND EXPENSES (Note 4)
Interest income
Other gains and losses, net (Note 27)
Foreign exchange gain (loss), net
Interest expense (Notes 4 and 21)
Loss on disposal of property, plant and equipment
Gain (loss) on fair value changes of financial instruments
at fair value through profit or loss
Total non-operating income and expenses
INCOME BEFORE INCOME TAX
INCOME TAX EXPENSE (Notes 4 and 22)
NET INCOME
OTHER COMPREHENSIVE INCOME (LOSS) (Note 4)
Items that will not be reclassified subsequently to profit or
loss:
Remeasurement of defined benefit plans (Note 18)
Unrealized gain on investments in equity instruments at
fair value through other comprehensive income
Income tax related to items that will not be reclassified
subsequently to profit or loss (Note 22)
Items that may be reclassified subsequently to profit or
loss:
Exchange differences on translating the financial
statements of foreign operations
Income tax related to items that may reclassified
subsequently to profit or loss (Note 22)		 2021
Amount
%
$ 17,777,919
100

14,884,779
84

2,893,140
16
1,221,866
7
281,233
1

820

-

1,503,919

8

1,389,221

8
644
-
12,453
-
395,470
2
(38,308)
-
(22,788)
-

(9,181)

-

338,290

2
1,727,511
10

467,464

3

1,260,047

7
3,069
-
217,718
1

76,895

1

297,682

2
(971,011)
(6)

194,202

1

(776,809)

(5)		 2020


























Amount
%
$ 12,717,152
100

11,532,537
91

1,184,615

9
517,820
4
202,166
1

-

-

719,986

5

464,629

4
3,295
-
76,571
-
(1,960)
-
(29,502)
-
(12,783)
-

11,876

-

47,497

-
512,126
4

88,559

1

423,567

3
(2,068)
-
1,362,843
11

414

-

1,361,189
11
(217,348)
(2)

43,470

1

(173,878)

(1)
(Continued)
  • 14 -

YC INOX CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Other comprehensive income (loss) for the year, net
of income tax
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
EARNINGS PER SHARE (Note 23)
Basic
Diluted		 2021
Amount
%

(479,127)

(3)
$ 780,920
4
$ 2.86
$ 2.66		 2020






Amount
%

1,187,311
10
$ 1,610,878
13
$ 1.04
$ 0.95

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

(Concluded)

  • 15 -

YC INOX CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

BALANCE AT JANUARY 1, 2020
Appropriation of 2019 earnings
Legal reserve
Special reserve
Cash dividends
Equity component of convertible bonds issued by the Company
Issuance of cash dividends from capital surplus
Net profit for the year ended December 31, 2020
Other comprehensive income (loss) for the year ended December 31, 2020, net
of income tax
Total comprehensive income (loss) for the year ended December 31, 2020
Issuance of ordinary shares for cash
BALANCE AT DECEMBER 31, 2020
Appropriation of 2020 earnings
Legal reserve
Cash dividends
Reversal of special reserve
Net profit for the year ended December 31, 2021
Other comprehensive income (loss) for the year ended December 31, 2021, net
of income tax
Total comprehensive income (loss) for the year ended December 31, 2021
Convertible bonds converted to ordinary shares
Disposal of investments in equity instruments at fair value through other
comprehensive income by subsidiaries
BALANCE AT DECEMBER 31, 2021		 Ordinary Shares (Note 19)
Registered
Capital Stock
Ordinary Shares
Capital (Pending
Change)
Capital Surplus
(Note 19)
$ 4,071,307
$ -
$ 1,663,578

-

-

-

-

-

-

-

-

-

-

-

40,913

-

-

(122,139)
-
-
-

-

-

-

-

-

-

300,000

-

300,000

4,371,307

-

1,882,352

-

-

-

-

-

-

-

-

-
-
-
-

-

-

-

-

-

-

74,038

1,080

112,348

-

-

-
$ 4,445,345
$ 1,080
$ 1,994,700		 Retained Earnings (Note 19)
Legal Reserve
Special Reserve
Unappropriated
Earnings
$ 1,061,821
$ -
$ 837,235

62,373

-

(62,373)

-

185,661

(185,661)

-

-

(488,557)

-

-

-

-

-

-
-
-
423,567

-

-

(1,654)

-

-

421,913

-

-

-

1,124,194

185,661

522,557

42,191

-

(42,191)

-

-

(655,696)

-

(185,661)

185,661
-
-
1,260,047

-

-

2,455

-

-

1,262,502

-

-

-

-

-

3,263
$ 1,166,385
$ -
$ 1,276,096		 Other Equity (Note 4)
Unrealized Gain
(Loss) on
Exchange
Differences on
Financial Assets
at Fair Value
Translating
through Other
Foreign
Operations
Comprehensive
Income
$ (61,777)
$ (123,884)


-

-


-

-


-

-


-

-


-

-

-
-

(173,878)

1,362,843


(173,878)

1,362,843


-

-


(235,655)

1,238,959


-

-


-

-


-

-

-
-

(776,809)

295,227


(776,809)

295,227


-

-


-

(3,263)

$ (1,012,464)
$ 1,530,923
 Total Equity
$ 7,448,280

-

-

(488,557)

40,913

(122,139)
423,567

1,187,311

1,610,878

600,000

9,089,375

-

(655,696)

-
1,260,047

(479,127)

780,920

187,466

-
$ 9,402,065

















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

  • 16 -

YC INOX CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax

Adjustments for:
Depreciation expense
Amortization expense
Expected credit loss
Loss (gain) on financial instruments at fair value through profit or loss, net
Interest expense
Interest income
Dividend income
Loss on disposal of property, plant and equipment
Write-down (reversal of write-down) of inventories
Loss on foreign currency exchange, net
Changes in operating assets and liabilities:
Notes receivable
Trade receivables
Other receivables
Inventories
Prepayments
Other current assets
Contract liabilities
Notes payable
Trade payables
Other payables
Other current liabilities
Net defined benefit liabilities

Cash generated from (used in) operations
Interest received
Dividends received
Interest paid
Income tax paid

Net cash generated from (used in) operating activities

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of financial assets at fair value through other comprehensive income
Disposal of financial assets at fair value through other comprehensive income
Purchase of financial assets at fair value through profit or loss
Disposal of financial assets at fair value through profit or loss
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Increase in refundable deposits
Acquisition of intangible assets
(Increase) decrease in other non-current assets
Increase in prepayments for equipment

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from (repayments of) short-term borrowings
 2021
$ 1,727,511

275,196
2,547
820
9,181
38,308
(644)
(4,000)
22,788
52,900
1,194
(105,887)
(280,426)
(46,969)
(3,555,504)
(631,749)
(28)
227,840
14,376
650,272
134,008
(10,017)

(4,559)

(1,482,842)
644
4,000
(27,698)

(81,460)


(1,587,356)

(56,970)
5,632
(324,306)
46,739
(629,541)
77,386
(115)
(7,395)
(271,233)

(461,551)


(1,621,354)

$ 4,042,630
 2020
$ 512,126
270,317
5
-
(11,876)
29,502
(3,295)
-
12,783
(131,500)
9,122
(14,481)
255,672
572,569
346,505
(6,536)
(485)
111,473
(10,020)
(67,892)
(24,542)
22,232

(4,212)
1,867,467
3,295
-
(29,302)

(90,181)

1,751,279
(157,655)
-
-
39,276
(248,912)
54,060
(32)
-
28,307

(357,050)

(642,006)
$ (1,442,238)
(Continued)
  • 17 -

YC INOX CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

Proceeds from issuance of convertible bonds
Proceeds from long-term borrowings
Repayments of long-term borrowings
(Decrease) increase in guarantee deposits received
Repayments of the principal portion of lease liabilities
Cash dividends distributed
Proceeds from issuance of ordinary shares

Net cash generated from (used in) financing activities

EFFECT OF EXCHANGE RATE CHANGES ON CASH

NET INCREASE IN CASH
CASH AT THE BEGINNING OF THE YEAR

CASH AT THE END OF THE YEAR
 2021
-
600,000
(375,000)
(12,510)
(4,525)
(655,696)

-


3,594,899


(344,254)

41,935

1,354,142

$ 1,396,077
 2020
998,000
500,000
(625,000)
26,380
(2,973)
(610,696)

600,000

(556,527)

9,470
562,216

791,926
$ 1,354,142

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

(Concluded)

  • 18 -

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders YC Inox Co., Ltd.

Opinion

We have audited the accompanying parent company only financial statements of YC Inox Co., Ltd. (the “Company”), which comprise the parent company only balance sheets as of December 31, 2021 and 2020, the parent company only statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the parent company only 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 parent company only financial position of the Company as of December 31, 2021 and 2020, and its parent company only financial performance and its parent company only 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 auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Parent Company Only Financial Statements section of our report. We are independent of the Company in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the parent company only financial statements for the year ended December 31, 2021. 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, and we do not provide a separate opinion on these matters.

  • 19 -

The key audit matter of the Company’s parent company only financial statements for the year ended December 31, 2021 is described as follows:

Inventory Valuation

The amount of inventory held by the Company is considered material to the parent company only financial statements; and out of this amount, inventory is made based on the lower of cost and net realizable value of inventory. As the inputs and assumptions used in the determination of the net realizable value involve management’s judgment, inventory assessment has been deemed as a key audit matter. For the accounting policies, significant accounting judgments, estimates and uncertainty of assumptions related to inventory assessment as well as other related disclosures, refer to Notes 4, 5, and 10.

The main audit procedures performed with respect to the aforementioned key audit matter are as follows:

  1. We understood and assessed the appropriateness of the Company’s policies on the provision for inventory valuation loss and the related internal control procedures.

  2. We obtained the inventory valuation report and sampled and reviewed the correctness and reasonableness of the net realizable value.

Responsibilities of Management and Those Charged with Governance for the Parent Company Only Financial Statements

Management is responsible for the preparation and fair presentation of the parent company only 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 parent company only financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the parent company only 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 members of the Audit Committee) are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Parent Company Only Financial Statements

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

  • 20 -

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

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

  2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the 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 auditors’ report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ 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 parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements for the year ended December 31, 2021 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

  • 21 -

The engagement partners on the audits resulting in this independent auditors’ report are Done-Yuin Tseng and Shu-Chin Chiang.

Deloitte & Touche Taipei, Taiwan Republic of China

March 18, 2022

Notice to Readers

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

For the convenience of readers, the independent auditors’ report and the accompanying parent company only financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and financial statements shall prevail.

  • 22 -

YC INOX CO., LTD.

PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2021 AND 2020

(In Thousands of New Taiwan Dollars)

ASSETS
CURRENT ASSETS
Cash (Notes 4 and 6)

Financial assets at fair value through profit or loss - current (Notes 4 and 7)
Notes receivable (Notes 4 and 27)
Trade receivables (Notes 4, 9 and 27)
Other receivables (Note 4)
Inventories (Notes 4, 5 and 10)
Prepayments
Other current assets (Notes 4 and 28)

Total current assets

NON-CURRENT ASSETS
Financial assets at fair value through other comprehensive income - non-current (Notes 4 and 8)
Investments accounted for using the equity method (Note 4 and 11)
Property, plant and equipment (Notes 4 and 12)
Right-of-use assets (Notes 4 and 13)
Computer software (Notes 4 and 14)
Deferred tax assets (Notes 4 and 22)
Prepayments for equipment
Other non-current assets (Note 4)

Total non-current assets

TOTAL

LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term borrowings (Note 15)

Contract liabilities - current (Note 20)
Notes payable
Trade payables
Other payables (Notes 17 and 18)
Current tax liabilities (Notes 4 and 22)
Lease liabilities - current (Notes 4 and 13)
Current portion of long-term borrowings (Note 15)
Other current liabilities

Total current liabilities

NON-CURRENT LIABILITIES
Financial liabilities at fair value through profit or loss - non-current (Notes 4 and 16)
Bonds payable (Notes 4 and 16)
Long-term borrowings (Note 15)
Deferred tax liabilities (Notes 4 and 22)
Lease liabilities - non-current (Notes 4 and 13)
Net defined benefit liabilities - non-current (Notes 4 and 18)
Guarantee deposits received

Total non-current liabilities

Total liabilities

EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY
Share capital
Ordinary shares
Registered capital (pending change)
Capital surplus
Retained earnings
Legal reserve
Special reserve
Unappropriated earnings
Other equity

Total equity

TOTAL
 2021
Amount
%
$ 728,661
4
267,852
1
166,220
1
1,241,870
7
296,636
1
6,514,836 35
378,218
2

3,001

-


9,597,294
51

2,328,150 12
1,951,085 10
4,238,219 23
3,079
-
6,078
-
380,725
2
271,762
2

52,404

-


9,231,502
49

$ 18,828,796
100

$ 5,489,180 29
518,204
3
14,557
-
771,356
4
464,281
2
299,201
2
2,292
-
119,643
1

26,165

-


7,704,879
41

966
-
775,775
4
780,357
4
62,053
-
814
-
71,257
1

30,630

-


1,721,852

9


9,426,731
50

4,445,345 24
1,080
-
1,994,700 10
1,166,385
6
-
-
1,276,096
7

518,459

3


9,402,065
50

$ 18,828,796
100
 2020
Amount
%
$ 479,934
4

-
-

60,333
-

962,951
7

250,061
2

3,012,232 23

18,163
-

2,985

-

4,786,659
36

2,124,359 16

1,686,625 13

4,320,288 33

6,533
-

187
-

83,771
1

128,763
1

53,093

-

8,403,619
64
$ 13,190,278
100
$ 1,496,550 11

290,364
2

181
-

121,084
1

330,866
3

42,517
-

3,486
-

87,500
1

44,984

-

2,417,532
18

1,500
-

954,978
7

587,500
5

14,262
-

3,106
-

78,885
1

43,140

-

1,683,371
13

4,100,903
31

4,371,307 33

-
-

1,882,352 14

1,124,194
9

185,661
1

522,557
4

1,003,304

8

9,089,375
69
$ 13,190,278
100




























































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

  • 23 -

YC INOX CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 4, 20 and 27)

OPERATING COSTS (Notes 5, 10 and 21)

GROSS PROFIT

OPERATING EXPENSES (Note 21)
Selling and marketing expenses
General and administrative expenses
Expected credit loss (Notes 4 and 9)

Total operating expenses

INCOME FROM OPERATIONS

NON-OPERATING INCOME AND EXPENSES (Note 4)
Share of profits of subsidiaries (Notes 4 and 11)
Interest income
Other gains and losses, net (Note 27)
Interest expense (Notes 21)
Loss on disposal of property, plant and equipment
Foreign exchange loss, net
Gain (loss) on fair value changes of financial instruments
at fair value through profit or loss
Total non-operating income and expenses

INCOME BEFORE INCOME TAX
INCOME TAX EXPENSE (Notes 4 and 22)

NET INCOME

OTHER COMPREHENSIVE INCOME (LOSS) (Note 4)
Items that will not be reclassified subsequently to profit or
loss:
Remeasurement of defined benefit plans (Note 18)
Unrealized gain on investments in equity instruments at
fair value through other comprehensive income
Share of other comprehensive income of subsidiaries
accounted for using the equity method
Income tax related to items that will not be reclassified
subsequently to profit or loss (Note 22)

Items that may be reclassified subsequently to profit or
loss:
Exchange differences on translating the financial
statements of foreign operations		 2021
Amount
%
$ 17,777,919 100

14,884,779
84


2,893,140
16

1,221,866
7
263,271
1

820

-


1,485,957

8


1,407,183

8

237,844
1
256
-
12,519
-
(37,474)
-
(22,788)
-
(11,554)
-

(9,181)

-


169,622

1

1,576,805
9

316,758

2


1,260,047

7

3,069
-
203,791
1
17,676
-

73,146

1


297,682

2

$ (971,011)
(6)		 2020




































Amount
%
$ 12,717,152 100

11,532,537
91

1,184,615

9

517,820
4

190,881
1

-

-

708,701

5

475,914

4

52,952
-

938
-

76,636
1

(29,072)
-

(12,783)
-

(65,746)
(1)

1,000

-

23,925

-

499,839
4

76,272

1

423,567

3

(2,068)
-

1,205,124 10

157,719
1

414

-

1,361,189
11
$ (217,348)
(2)
(Continued)
  • 24 -

YC INOX CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Income tax related to items that may be reclassified
subsequently to profit or loss (Note 22)

Other comprehensive income (loss) for the year, net
of income tax
TOTAL COMPREHENSIVE INCOME FOR THE YEAR

EARNINGS PER SHARE (Note 23)
Basic

Diluted
 2021
Amount
%

194,202

1


(776,809)

(5)


(479,127)

(3)

$ 780,920

4

$ 2.86

$ 2.66
 2020










Amount
%

43,470

1

(173,878)

(1)

1,187,311
10
$ 1,610,878
13
$ 1.04
$ 0.95

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

(Concluded)

  • 25 -

YC INOX CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)


BALANCE AT JANUARY 1, 2020

Appropriation of 2019 earnings
Legal reserve

Special reserve

Cash dividends

Equity component of convertible bonds issued by the Company

Issuance of cash dividends from capital surplus

Net profit for the year ended December 31, 2020
Other comprehensive income (loss) for the year ended December 31, 2020, net
of income tax

Total comprehensive income (loss) for the year ended December 31, 2020

Issuance of ordinary shares for cash

BALANCE AT DECEMBER 31, 2020

Appropriation of 2020 earnings
Legal reserve

Cash dividends

Reversal of special reserve

Net profit for the year ended December 31, 2021
Other comprehensive income (loss) for the year ended December 31, 2021, net
of income tax

Total comprehensive income (loss) for the year ended December 31, 2021

Convertible bonds converted to ordinary shares

Disposal of investments in equity instruments at fair value through other
comprehensive income by subsidiaries

BALANCE AT DECEMBER 31, 2021

The accompanying notes are an integral part of the financial statements.		 Ordinary Shares (Note 19)
Registered
Capital Stock
Capital
Capital Surplus
Ordinary Shares
(Pending
Change)
(Note 19)
$ 4,071,307
$ -
$ 1,663,578


-

-

-


-

-

-


-

-

-


-

-

40,913


-

-

(122,139)

-
-
-

-

-

-


-

-

-


300,000

-

300,000


4,371,307

-

1,882,352


-

-

-


-

-

-


-

-

-

-
-
-

-

-

-


-

-

-


74,038

1,080

112,348


-

-

-

$ 4,445,345
$ 1,080
$ 1,994,700
 Retained Earnings (Note 19)
Unappropriated
Legal Reserve
Special Reserve
Earnings
$ 1,061,821
$ -
$ 837,235


62,373

-

(62,373)


-

185,661

(185,661)


-

-

(488,557)


-

-

-


-

-

-


-
-
423,567

-

-

(1,654)


-

-

421,913


-

-

-


1,124,194

185,661

522,557


42,191

-

(42,191)


-

-

(655,696)


-

(185,661)

185,661


-
-
1,260,047

-

-

2,455


-

-

1,262,502


-

-

-


-

-

3,263

$ 1,166,385
$ -
$ 1,276,096
 Other Equity (Note 4)
Unrealized
Gain (Loss) on
Exchange
Financial Assets
Differences on
at Fair Value
Translating
through Other
Foreign
Comprehensive
Operations
Income
$ (61,777)
$ (123,884)


-

-


-

-


-

-


-

-


-

-


-
-

(173,878)

1,362,843


(173,878)

1,362,843


-

-


(235,655)

1,238,959


-

-


-

-


-

-


-
-

(776,809)

295,227


(776,809)

295,227


-

-


-

(3,263)

$ (1,012,464)
$ 1,530,923
 Total Equity
$ 7,448,280

-

-

(488,557)

40,913

(122,139)

423,567

1,187,311

1,610,878

600,000

9,089,375

-

(655,696)

-

1,260,047

(479,127)

780,920

187,466

-
$ 9,402,065




















Capital Stock
Ordinary Shares
$ 4,071,307


-


-


-


-


-

-

-


-


300,000


4,371,307


-


-


-

-

-


-


74,038


-

$ 4,445,345




















  • 26 -

YC INOX CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax

Adjustments for:
Depreciation expense
Amortization expense
Expected credit loss
Dividend income
Loss (gain) on financial instruments at fair value through profit or loss, net
Interest expense
Interest income
Share of profit of subsidiaries
Loss on disposal of property, plant and equipment
Write-down (reversal of write-down) of inventories
Loss on foreign currency exchange, net
Changes in operating assets and liabilities:
Notes receivable
Trade receivables
Other receivables
Inventories
Prepayments
Other current assets
Contract liabilities
Notes payable
Trade payables
Other payables
Other current liabilities
Net defined benefit liabilities

Cash generated from (used in) operations
Interest received
Dividends received
Interest paid
Income tax paid

Net cash generated from (used in) operating activities

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of financial assets at fair value through profit or loss
Disposal of financial assets at fair value through profit or loss
Acquisition of subsidiaries
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Decrease (increase) in refundable deposits
Acquisition of intangible assets
Decrease in other non-current assets
Increase in prepayments for equipment

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from (repayments of) short-term borrowings
 2021
$ 1,576,805
274,004
2,403
820
(4,000)

9,181
37,474
(256)
(237,844)
22,788
52,900
1,194
(105,887)
(280,426)
(46,969)
(3,555,504)
(360,055)
(16)
227,840
14,376
650,272
132,509
(18,819)

(4,559)

(1,611,769)
256
4,000
(26,949)

(41,889)


(1,676,351)

(324,306)
46,739
(979,951)
(207,557)
77,386
10
(6,821)
473

(226,787)


(1,620,814)

$ 3,992,630		 2020
$ 499,839

269,392

5

-

-

(1,000)

29,072

(938)

(52,952)

12,783

(131,500)

9,122

(14,481)

255,672

244,151

346,505

25,929

(485)

111,473

(10,020)

(67,892)

(25,453)

22,365

(4,212)

1,517,375

938

-

(28,639)

(31,092)

1,458,582

(90,675)

-

(726,146)

(216,757)

54,060

(1)

-

28,307

(133,982)

(1,085,194)
$ (1,462,238)
(Continued)
  • 27 -

YC INOX CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

Proceeds from issuance of convertible bonds
Proceeds from long-term borrowings
Repayments of long-term borrowings
(Decrease) increase in guarantee deposits received
Repayments of the principal portion of lease liabilities
Cash dividends distributed
Proceeds from issuance of ordinary shares

Net cash generated from (used in) financing activities

NET INCREASE (DECREASE) IN CASH
CASH AT THE BEGINNING OF THE YEAR

CASH AT THE END OF THE YEAR
 2021
-
600,000
(375,000)
(12,510)
(3,532)
(655,696)

-


3,545,892

248,727

479,934

$ 728,661
 2020

998,000

500,000

(625,000)

26,380

(1,648)

(610,696)

600,000

(575,202)

(201,814)

681,748
$ 479,934

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

(Concluded)

  • 28 -

YC INOX Co., Ltd.

Comparison Table for the Rules of Ethical Corporate Management Best Practice Principles Before and After Amendment

Amended Articles Articles Before Amendment Description
Article 17: (Organizations and Duties)
The directors, managers, employees,
mandataries, and substantial controllers of the
Company shall exercise the due care of good
administrators to urge the Company to prevent
unethical conduct, always review the results of
the preventive measures and continually make
adjustments so as to ensure thorough
implementation of its ethical corporate
management policies.
To achieve sound ethical corporate
management, the Administration Department
is designated as the dedicated unit, who shall
avail itself of adequate resources and staff
itself with competent personnel, responsible
for establishing the implementation of the
ethical corporate management policies and
prevention programs.The Finance Department
is responsible for the supervision, who mainly
in charge of the following matters, and shall
report to the board of directors on a regular
basis (at least once a year):
(Following contents which have not been
amended have omitted.)		 Article 17: (Organizations and Duties)
The directors, managers, employees,
mandataries, and substantial controllers of the
Company shall exercise the due care of good
administrators to urge the Company to prevent
unethical conduct, always review the results of
the preventive measures and continually make
adjustments so as to ensure thorough
implementation of its ethical corporate
management policies.
To achieve sound ethical corporate
management, the Administration Department
is designated as the dedicated unit, who shall
avail itself of adequate resources and staff
itself with competent personnel, responsible
for establishing the implementation of the
ethical corporate management policies and
prevention programs.~~The Internal Audit Office~~
is responsible for the supervision, who mainly
in charge of the following matters, and shall
report to the board of directors on a regular
basis (at least once a year):
(Following contents which have not been
amended have omitted.)		 Amendment
in
compliance
with
competent
rules and
laws.
Article 28：
These articles of the Rules of Ethical Corporate
Management Best Practice Principles are
stipulated on November 03, 2015, the first
amendment was approved on August 09, 2019,
the second amendment on March 6, 2020,and
the third amendment on September 03, 2021.		 Article 28：
These articles of the Rules of Ethical Corporate
Management Best Practice Principles are
stipulated on November 03, 2015, the first
amendment was approved on August 09, 2019,
and the second amendment on March 6, 2020.		 Update the
date of
amendment.
  • 29 -

YC INOX Co., Ltd.

Comparison Table for the Procedures for Ethical Management and Guidelines for Conduct Before and After Amendment

Amended Articles Articles Before Amendment Description
Article 5:
The Company has designated the
Administration Department as the dedicated
unit (hereinafter "dedicated unit") and avail it
with sufficient resources and competent
personnel. The Administration Department is
responsible for the amendment, interpretation,
advisory services with respect to these
Procedures and Guidelines, the recording and
filing of reports.The Finance Departmentis
responsible for supervising of the
implementation, who mainly in charge of the
following matters, and shall report to the board
of directors on a regular basis (at least once a
year):
(Following contents which have not been
amended have omitted.)		 Article 5:
The Company has designated the
Administration Department~~and the Internal~~
~~Audit Office~~as the dedicated unit (hereinafter
"dedicated unit") and avail it with sufficient
resources and competent personnel. The
Administration Department is responsible for
the amendment, interpretation, advisory
services with respect to these Procedures and
Guidelines, the recording and filing of reports.
~~The Internal Audit Office~~is responsible for
supervising of the implementation, who mainly
in charge of the following matters, and shall
report to the board of directors on a regular
basis (at least once a year):
(Following contents which have not been
amended have omitted.)		 Amendment
in
compliance
with
competent
rules and
laws.
Article 25：
These articles of the Procedures for Ethical
Management and Guidelines for Conduct are
stipulated on Nov 03, 2015, the first
amendment was approved on Aug 09, 2019,
the second amendment on Mar 6, 2020,and
the third amendment on Sep 03, 2021.		 Article 25：
These articles of the Procedures for Ethical
Management and Guidelines for Conduct are
stipulated on Nov 03, 2015, the first
amendment was approved on Aug 09, 2019,
and the second amendment on Mar 6, 2020.		 Update the
date of
amendment.
  • 30 -

YC INOX Co., Ltd.

Execution status of issuance of the 3rd Domestic Unsecured Convertible Corporate Bonds

Type of Corporate Bond The 3rd Domestic Unsecured Convertible Corporate Bonds
Date and document No. of
the approval issued by
competent authority		 Letter of Jin-Guan-Zheng-Fa-Zi No.10903737121 of the Financial
Supervisory Commission on November 25, 2020
Date of Issuance December 15, 2020
Face Value per Bond NT$100,000
Issue Price At 100% of par value
Total Amount issued NT$1,000,000,000
Coupon Rate 0%
Issuance Period Five Years, the Maturity Date is December 15, 2025
Conversion price at
issuance		 NT$26.5
Latest conversion price NT$25.0
Methods of Redemption Except the holders of the convertible corporate bonds convert it
into the Company’s common shares in accordance with Article 10
of Rules and Conditions of Issuance and Conversion of the 3rd
Domestic Unsecured Convertible Bonds (“the Rule”), or the
Company redeems the bond prior to maturity or repurchases the
bond from the securities firm for write-off in accordance with
Article 18 of the Rule, redemption payment will be made by cash
at par value upon maturity.
Unpaid Balance NT$ 789,800,000 (As of Mar 31, 2022)

As of March 31, 2022, the 3rd Domestic Unsecured Convertible Corporate Bonds valued at NT$210,200,000 has been converted into 8,111,784 common shares.

  • 31 -

YC INOX Co., Ltd.

Execution status of Endorsement, Guarantee and lending Funds to Other Parties

  1. Endorsement and Guarantee:

  2. 1.1 According to the Procedures of Endorsement and Guarantee of the Company, the total amount of endorsement/guarantee shall not exceed 40% of total equity of the Company's most recent financial statements. The maximun limit of endorsement/guarantee conducted by the Company toward a single enterprise shall not exceed 20% of total equity of the Company's most recent financial statement.

  3. 1.2 As of March 31, 2022, the balance of endorsement/guarantee is NT$286,250,000, which does not exceed the limit specified by the Company. (On March 31, 2022, total equity of the Company’s most rencent financial statements NT$9,432,078,000 * 40% = NT$3,772,831,000; NT$9,432,078,000 * 20% = NT$1,886,415,000.) Details are as follows:

Unit: thousands

Unit: thousands
Endorsed/Guaranteed Party YC INOX TR Çelik Sanayi ve Ticaret A.Ş.
Consolidated Shareholding ratio 100%
Balance Amount USD$ 10,000 → NTD$ 286,250
Date of adopted by the Board 110.12.24 3rdmeeting of the 17th session
Actual Amount Used 0
Type Financing Guarantee

2. Lending Funds to Other Parties:

The Company has not lent any funds to other parties, as of March 31, 2022.

  • 32 -

YC INOX Co., Ltd.

2021 Earnings Distribution Table

Unit: NT$
Item
Beginning Balance of Unappropriated Retained
Earnings 10,331,739
2021 Net Income 1,260,046,926
Remeasurement of Defined Benefit Obligation
Recognized in Retained Earnings 2,454,934
Adjustment
amount
of
disposal		 of
investments in equity instruments at fair value
through other comprehensive income -
subsidiaries 3,262,964
2021 Net Income Plus Other Items Designated
to be Included in Unappropriated Retained
Earnings 1,265,764,824
10% Legal Reserve (126,576,482)
Retained Earnings Available for Distribution 1,149,520,081
Distribution item:
Cash Dividends (666,963,791)
Ending Balance of Unappropriated Retained
Earnings 482,556,290

Chairman: Chang, Chin-Yu CEO: Chang, Chin-Yu

Chief Accounting Officer: Chang, Jung-Wei

  • 33 -

YC INOX Co., Ltd.

Comparison Table for the Articles of Incorporation Before and After Amendment

Amended Articles Articles Before Amendment Description
Article 2-1:
Once the Company becomes a limited liability
shareholder of other company, the total amount
of all of its investmentsis not subject to the
upper limit of forty percent of the Company’s
paid-in capital as set forth in Article 13 of the
Company Act, provided that such investment
shall be approved by the Board of Directors.		 Article 2-1:
~~In order to strengthen business development,~~
the Company~~’s reinvestment~~is not subject to
the upper limit of forty percent of the
Company’s paid-in capital as set forth in Article
13 of the Company Act, provided that such
~~re~~investment shall be approved by the Board of
Directors.		 Minor
corrections
Article 5:
The total capital of the Company issix billion six
hundredmillion New Taiwan Dollars
(NT$6,600,000,000), which can be divided into
six hundred sixtymillion shares (660,000,000
shares), at a par value of ten New Taiwan
Dollars (NT$10) per share. The Company shall
issue shares in installments according to its
actual needs upon the approval of the Board of
Directors.		 Article 5:
The total capital of the Company is~~four billion~~
~~nine hundred and ninety~~million New Taiwan
Dollars (NT$~~4,990,000,000)~~, which can be
divided into~~four hundred and ninety-nine~~
million shares (~~499,000,000 s~~hares), at a par
value of ten New Taiwan Dollars (NT$10) per
share. The Company shall issue shares in
installments according to its actual needs upon
the approval of the Board of Directors.		 Modifications
to meet
operational
needs.
Article 12:
There are two types of shareholders’ meeting:
generalshareholders’meeting and
extraordinaryshareholders’meeting.Unless
otherwise provided by the Company Act, the
meeting shall be convened by the Board of
Directors.
The Board of Directors shall convene the
generalshareholders’meeting once per annum
within six months from the end of each fiscal
year, by notifying all shareholders thirty days
prior to the general shareholders’ meeting
date. The extraordinaryshareholders’meeting
may be convened whenever deemed necessary
by notifying all shareholders fifteen days prior
to the extraordinary shareholders’ meeting
date.		 Article 12:
There are two types of shareholders’ meeting:
general meeting and extraordinary meeting.
The Board of Directors shall convene the
general meeting once per annum within six
months from the end of each fiscal year, by
notifying all shareholders thirty days prior to
the general shareholders’ meeting date. The
extraordinary meeting may be convened
whenever deemed necessary by notifying all
shareholders fifteen days prior to the
extraordinary shareholders’ meeting date.		 Minor
corrections
Article 12:
The Company may convene shareholders’
meetings by means of visual communication
network or other methods promulgated by the
central competent authority.		 Addition in
compliance
with
competent
rules and
laws.
Article 14:
In the time of convening the shareholders’
meeting,the meetingshall be chaired bythe		 Article 14:
In the time of convening the shareholders’
meeting,the meetingshall be chaired bythe		 Minor
corrections
  • 34 -
Amended Articles Articles Before Amendment Description
Chairman of the Board of Directors. In case the
Chairmanon leave or can not exercise his power
and authority for any cause, he/she shall
appoint a Director to act on his/her behalf. In
the absence of such appointment, the Directors
shall elect one person from among themselves
to chair the meeting.		 Chairman of the Board of Directors. In case the
Chairman~~is absence,~~he/she shall appoint a
Director to act on his/her behalf. In the
absence of such appointment, the Directors
shall elect one person from among themselves
to chair the meeting.
Article 17:
Resolutions adopted at a shareholders’
meeting shall be recorded in the Meeting
Minutes. The Meeting Minutes shall be signed
or sealed by the chairman of the Meeting, and
a copy shall be distributed to each shareholder
within twenty days after the conclusion of the
Meeting.
The Meeting Minutes may be prepared and
distributed by means of electronic formor
public announcement.
The items to be recorded in the minutes for
shareholders' meeting, the preparation of
attendance book bearing the signatures of
attending shareholders, and retention period
of the proxy forms, such matters shall follow
the provisions of Article 183 of the Company
Act.		 Article 17:
Resolutions adopted at a shareholders’
meeting shall be recorded in the Meeting
Minutes. The Meeting Minutes shall be signed
or sealed by the chairman of the Meeting, and
a copy shall be distributed to each shareholder
within twenty days after the conclusion of the
Meeting. The Meeting Minutes may be
prepared and distributed by means of
electronic form.
~~The Meeting Minutes as required in the~~
~~preceding paragraph may be distributed by~~
~~means of a public announcement through~~
~~MOPS.~~The items to be recorded in the minutes
for shareholders' meeting, the preparation of
attendance book bearing the signatures of
attending shareholders, and retention period
of the proxy forms, such matters shall follow
the provisions of Article 183 of the Company
Act.		 Minor
corrections
Article 18:
The Board of Directors of the Company consists
of nine to eleven directors. (Following contents
which have not been amended have omitted.)
The election of independent directors shall be
conducted by nomination mechanism,
shareholders may elect the independent
directors from the list of independent Director
nominees.
(Following contents which have not been
amended have omitted.)		 Article 18:
The Board of Directors of the Company consists
of nine to eleven directors. (Following contents
which have not been amended have omitted.)
The election of independent directors shall be
conducted by nomination mechanism,
shareholders may elect the independent
directors from the list of independent Director
nominees.
(Following contents which have not been
amended have omitted.)		 Minor
corrections
Article 21:
The directors form the Board of Directors. The
directors shall elect a Chairman of the Board
Directors from among themselves by a majority
at a meeting attended by over two-thirds of the
directors. The Chairman of the Board of
Directors shall internally chair the
Shareholders’ Meeting and the Board of
Directors,and externallyhave the authorityto		 Article 21:
The directors form the Board of Directors. The
directors shall elect a Chairman of the Board
Directors from among themselves by a majority
at a meeting attended by over two-thirds of the
directors. The Chairman of the Board of
Directors shall internally chair the
Shareholders’ Meeting and the Board of
Directors,and externallyhave the authorityto		 Provisions
minor
corrections
  • 35 -
Amended Articles Articles Before Amendment Description
represent the Company. The Chairman
executes all affairs of the Company in
accordance with the provisions of laws and
regulations, the Articles of Incorporations of
the Company, and the resolutions adopted by
the Shareholders’ Meetings and the Board of
Directors.
In case the Chairman on leave or can not
exercise his power and authority for any cause,
he/she shall appoint a Director to act on his/her
behalf. In the absence of such appointment, the
Directors shall elect one person from among
themselves to chair the meeting.		 represent the Company. The Chairman
executes all affairs of the Company in
accordance with the provisions of laws and
regulations, the Articles of Incorporations of
the Company, and the resolutions adopted by
the Shareholders’ Meetings and the Board of
Directors.
Article 22:
The Company’s operating strategy and other
important matters, except those that shall be
adopted by the Shareholders’ Meeting in
accordance with the laws, shall be adopted by
the Board of Directors.
Except for the first meeting of each term of the
Board of Directors shall be convened in
compliance with the provisions of Article 203 of
the Company Act, others board meetings shall
be convened by the Chairman.
The convening of a Board Meeting shall be
notified to all directors seven days in advance
with convening reasons stated.In urgent
circumstances, Board Meeting may be
convened at any time.
Aforementioned notice may be made by means
of electronic transmission with the prior consent
of the recipients.		 Article 22:
The Company’s operating strategy and other
important matters, except those that shall be
adopted by the Shareholders’ Meeting in
accordance with the laws, shall be adopted by
the Board of Directors. Except for the first
meeting of each term of the Board of Directors
shall be convened in compliance with the
provisions of Article 203 of the Company Act,
others board meetings shall be convened~~and~~
~~chaired~~by the Chairman.~~In case the Chairman~~
~~of the Board of Directors is unable to exercise~~
~~the power of Chairman for any cause, the~~
~~Chairman shall appoint one of the directors to~~
~~act on behalf of the Chairman. In the absence~~
~~of such an appointee, the directors shall elect~~
~~one person from among themselves to act on~~
~~behalf of the chairman.~~The convening of a
Board Meeting shall be notified to all directors
seven days in advance~~by written, E-mail or fax~~.
In urgent circumstances, Board Meeting may
be convened~~by means of written, E-mail or fax~~
~~as well~~at any time.		 Provisions
and text
minor
corrections
Article 23:
Except for otherwise specified in the Company
Act, the resolution/adoption of a proposed
resolution shall be made by a majority of those
directors present at a meeting by a majority of
all directors.
In case a director has a personal interest
conflict, he/she shall explain their own interests
at the respective meeting. Oncethat may
impair the interests of the Company, he/she
shall notjoin the discussion and votingof such		 Article 23:
Except for otherwise specified in the Company
Act, the resolution/adoption of a proposed
resolution shall be made by a majority of those
directors present at a meeting by a majority of
all directors.~~In case a director is unable to~~
~~attend the meeting for any cause, he/she may~~
~~appoint any other director to attend on his/her~~
~~behalf by issuing a proxy form stating the scope~~
~~of authorization, provided that one appointee~~
~~shall notproxy for more than one director.~~		 Minor
corrections
  • 36 -
Amended Articles Articles Before Amendment Description
matter, nor exercise the right to vote on behalf
of other directors.
Where the spouse of a Director, a blood
relative having a second or closer degree of
kinship of a Director, or any company which
controls or is controlled by a Director who has
interest in the matter under discussion at the
meeting, such Director shall be deemed to
have a personal interest in the matter.
Every time a director appoints another director
to attend the Board Meeting on behalf of
him/her shall issue a proxy, stating the scope of
authorization with respect to the meeting
convening reasons.
The appointee referred to preceding paragraph
shall not be appointed as proxy for more than
one director.		 In case a director has a personal interest
conflict that may impair the interests of the
Company, he/she shall not join the discussion
and voting of such matter, nor exercise the
right to vote on behalf of other directors.
Where the spouse of a Director, a blood
relative having a second or closer degree of
kinship of a Director, or any company which
controls or is controlled by a Director who has
interest in the matter under discussion at the
meeting, such Director shall be deemed to
have a personal interest in the matter.
Article 24:
The Company’s resolutions of every Board
Meeting shall be recorded in the meeting
minutes, which shall be signed or chopped by
the chairman of the meeting, then distributed
to each Director within 20 days after the
meeting.
The matterstobe recordedinthe meeting
minutes, the preservation of the attendance
book for the attending Directors and the proxy
forms, shall follow the provisions in the Article
183of the Company Act.		 Article 24:
The Company’s resolutions of every Board
Meeting shall be recorded in the meeting
minutes, which shall be signed or chopped by
the chairman of the meeting, then distributed
to each Director within 20 days after the
meeting. The matters~~shall~~be recorded~~of~~the
meeting minutes,~~and~~the preservation of the
attendance book for the attending Directors
and the proxy forms, shall~~both~~follow the
provisions in the Article~~207~~of the Company
Act.		 Minor
corrections
Article 25-2:
The Company shall insure its Directors, and
important employees who currently involved in
the Company’s decision-making, against
liability insurance, which shall cover legally-
binding compensation liability of their business
scopes.
(Following contents which have not been
amended have omitted.)		 Article 25-2:
The Company shall insure its Directors, and
important employees who currently involved in
the Company’s decision-making, against
liability insurance, which shall cover legally-
binding compensation liability of their business
scopes.
(Following contents which have not been
amended have omitted.)		 Minor
corrections
Article 26:
The Company shall appoint one General
Manager, whose appointment, dismissal and
remuneration shall comply with the Company
Act and the Procedures of Organization
Management.		 Article 26:
The Company shall appoint one General
Manager, whose appointment, dismissal and
remuneration shall comply with the Company
Act and the Procedures of Organization
Management.		 Minor
corrections
  • 37 -
Amended Articles Articles Before Amendment Description
Article 30:
In case the Company results profits for the year,
it shall reserve2% to 6%of profits as
employees’ profit sharing, and the Board of
Directors shall determine said profits shall be
distributed by way of share or cash, which can
also be distributed to employees of affiliations
who meet certain conditions; Board of
Directors may also adopt a resolution to
reserve up to 2% of said profits as Directors’
compensation. The resolution of distribution of
employees’ profit sharing and directors’
compensation shall be reported to the
Shareholders’ Meeting.
In case the Company still has accumulated
losses, a certain amount of the earnings
corresponding to accumulated losses shall be
retained, then the employees’ profit sharing
and directors’ compensation shall be reserved
by the percentage specified in the preceding
paragraph.		 Article 30:
In case the Company results profits for the year,
it shall reserve~~5%~~of profits as employees’
profit sharing, and the Board of Directors shall
determine said profits shall be distributed by
way of share or cash, which can also be
distributed to employees of affiliations who
meet certain conditions; Board of Directors
may also adopt a resolution to reserve up to
2% of said profits as Directors’ compensation.
The resolution of distribution of employees’
profit sharing and directors’ compensation shall
be reported to the Shareholders’ Meeting.
In case the Company still has accumulated
losses, a certain amount of the earnings
corresponding to accumulated losses shall be
retained, then the employees’ profit sharing
and directors’ compensation shall be reserved
by the percentage specified in the preceding
paragraph.		 Modifications
to meet
operational
needs.
Article 30-1:
In case the Company results profits in annual
accounts finalization, after tax is paid in
accordance with laws and deficits is offset, the
Company shall reserve 10% legal reserve of the
remaining earnings. However, such reservation
may no longer need to be made once the
amount of accumulated legal reserve has
reached the amount of paid-in capital of the
Company. The remaining earnings shall be
reserved as special reserves or the special
reserves shall reverse as an add-on to
remaining earnings in accordance with
applicable laws.When reserving the special
reserves, once the unappropriated earnings
balance carried from the preceding period is
insufficient, it shall reserve from the amount of
current net income plus other items designated
to be included in unappropriated retained
earnings.In case there are still remaining
amounts of earnings, the Board of Directors
may draft a proposal of earnings distribution to
distribute such earnings (together with the
retained earnings available) as dividends,
submit to the Shareholders’ Meeting for
adoption.
(Following contents which have not been
amended have omitted.)		 Article 30-1:
In case the Company results profits in annual
accounts finalization, after tax is paid in
accordance with laws and deficits is offset, the
Company shall reserve 10% legal reserve of the
remaining earnings. However, such reservation
may no longer need to be made once the
amount of accumulated legal reserve has
reached the amount of paid-in capital of the
Company. The remaining earnings shall be
reserved as special reserves or the special
reserves shall reverse as an add-on to
remaining earnings in accordance with
applicable laws. In case there are still remaining
amounts of earnings, the Board of Directors
may draft a proposal of earnings distribution to
distribute such earnings (together with the
retained earnings available) as dividends,
submit to the Shareholders’ Meeting for
adoption.
(Following contents which have not been
amended have omitted.)
When distributing dividend, the Company may
consider its financial situation, business and
operational factors to determine the
distribution of part or all of the surplus in
accordance with applicable laws or regulations
of competent authority.		 Amendment
in
compliance
with
competent
rules and
laws; Minor
corrections.
  • 38 -
Amended Articles Articles Before Amendment Description
When distributing dividend, the Company may
consider its financial situation, business and
operational factors to determine the
distribution of part or all of the surplus in
accordance with applicable laws or regulations
of competent authority.
Article 33：
These Articles of Incorporation are stipulated
on January 9, 1973, (omitted), the thirtieth
amendment on June 18, 2020, andthe thirty-
first amendment on XX XX, 2022.		 Article 33：
These Articles of Incorporation are stipulated
on January 9, 1973, (omitted), and the thirtieth
amendment on June 18, 2020.		 Update the
date of
amendment.
  • 39 -

YC INOX Co., Ltd.

Comparison Table for the Procedures for Acquisition and Disposal of Assets Before and After Amendment

Amended Articles

Article 5:

The acquisition or disposal of assets by the Company shall be handled within the following scope of authorization by responsible party: (Following contents which have not been amended have omitted.)

  1. The Company and its Subsidiaries may respectively acquire non-business use real properties or related right-of-use assets, or security investments, within the limit of half of its paid-in capital respectively, where the limit of each security investment transaction is TWD 100 million. If the amount of a transaction exceeds said limit, the transaction shall be reported by the Chairman to the Board and executed upon the approval by the Board. Subsidiaries that are Investment-oriented are not subject to the foregoing limits.

Article 7:

In acquiring or disposing of real properties, equipment, or right-of-use assets thereof where the transaction amount reaches 20 percent of the Company's paid-in capital or TWD 300 million or more, the Company, unless transacting with a national government institutions, engaging others to build on its own land, engaging others to build on rented land, or acquiring or disposing of equipment or rightof-use assets thereof held for business use, shall obtain an appraisal report prior to the date of occurrence of the event from a professional appraiser and shall further comply with the following regulations:

Articles Before Amendment Description Article 5: Adjust the The acquisition or disposal of assets by the article Company shall be handled within the following number to scope of authorization by responsible party: Article 11. (Following contents which have not been amended have omitted.)

  1. ~~With respect to the acquisition or disposal of following assets between the Company and its Subsidiaries, or between Subsidiaries whose shares or capital are 100% owned, directly or indirectly, by the Company, the Board can authorize the Chairman to decide such matters and report to the Board for ratification on an after-the-event basis when the price of assets is within TWD 500 million: (1) Acquiring or disposing of equipment or related right-of-use assets for business use. (2) Acquiring or disposing of the right-of-use assets of real property for business use. 4.~~ The Company and its Subsidiaries may respectively acquire non-business use real properties or related right-of-use assets, or security investments, within the limit of half of its paid-in capital respectively, where the limit of each security investment transaction is TWD 100 million. Once the amount of a transaction exceeds said limit, the transaction shall be reported by the Chairman to the Board and executed upon the approval by the Board. Subsidiaries that are Investment-oriented are not subject to the foregoing limits. Article 7: Amendment In acquiring or disposing of real properties, in equipment, or right-of-use assets thereof compliance where the transaction amount reaches 20 with percent of the Company's paid-in capital or competent TWD 300 million or more, the Company, unless rules and transacting with a national government laws. institutions, engaging others to build on its own land, engaging others to build on rented land, or acquiring or disposing of equipment or rightof-use assets thereof held for business use, shall obtain an appraisal report prior to the date of occurrence of the event from a professional appraiser and shall further comply with the following regulations:

  2. 40 -

Amended Articles Articles Before Amendment Description
1. If for any special reason, restricted price,
(Following contents which have not been
amended have omitted.)
3. Where any one of the following
circumstances applies with respect to the
professional appraiser's appraisal results,
unless all the appraisal results for the assets to
be acquired are higher than the transaction
amount, or all the appraisal results for the
assets to be disposed of are lower than the
transaction amount, a CPA shall be engaged to
provide a specific opinion regarding the reason
for the discrepancy and the appropriateness of
the transaction price:
(1) The discrepancy between the appraisal
result and the transaction amount is 20 percent
or more of the transaction amount.
(Following contents which have not been
amended have omitted.)		 1. If for any special reason, restricted price,
(Following contents which have not been
amended have omitted.)
3. Where any one of the following
circumstances applies with respect to the
professional appraiser's appraisal results,
unless all the appraisal results for the assets to
be acquired are higher than the transaction
amount, or all the appraisal results for the
assets to be disposed of are lower than the
transaction amount, a CPA shall be engaged to
provide a specific opinion~~in accordance with~~
~~the provisions of the Bulletin No. 20 of the~~
~~Auditing Standards issued by the Accounting~~
~~Research and Development Foundation of the~~
~~Republic of China, r~~egarding the reason for the
discrepancy and the appropriateness of the
transaction price:
(1) The discrepancy between the appraisal
result and the transaction amount is 20 percent
or more of the transaction amount.
(Following contents which have not been
amended have omitted.)
Article 7-1:
Professional appraisers and their officers, CPA,
attorneys, and securities underwriters that
provide the Company with appraisal reports,
CPA’s opinions, attorney's opinions, or
underwriter's opinions shall meet the following
requirements:
(Following contents which have not been
amended have omitted.)
When issuing an appraisal report or opinion,
the personnel in the preceding paragraph shall
comply withthe self-regulatory rules of the
corresponding trade associations andthe
following:
1. Prior to accepting a case, they shall
prudently assess their own professional
capabilities, practical experience, and
independence.
2. Whenexecutinga case, they shall
appropriately plan and execute adequate
working procedures, in order to produce a
conclusion and use the conclusion as the basis
for issuing the report or opinion. The related
working procedures, data collected, and
conclusion shall be fully and accurately
specified in the case working papers.
3. Theyshall undertake an item-by-item		 Article 7-1:
Professional appraisers and their officers, CPA,
attorneys, and securities underwriters that
provide the Company with appraisal reports,
CPA’s opinions, attorney's opinions, or
underwriter's opinions shall meet the following
requirements:
(Following contents which have not been
amended have omitted.)
When issuing an appraisal report or opinion,
the personnel in the preceding paragraph shall
comply with the following:
1. Prior to accepting a case, they shall
prudently assess their own professional
capabilities, practical experience, and
independence.
2. When~~examining~~a case, they shall
appropriately plan and execute adequate
working procedures, in order to produce a
conclusion and use the conclusion as the basis
for issuing the report or opinion. The related
working procedures, data collected, and
conclusion shall be fully and accurately
specified in the case working papers.
3. They shall undertake an item-by-item
evaluation of the~~comprehensiveness, accuracy,~~
and reasonableness of the sources of data		 Amendment
in
compliance
with
competent
rules and
laws.
  • 41 -
Amended Articles Articles Before Amendment Description
evaluation of theappropriatenessand
reasonableness of the sources of data used, the
parameters, and the information, as the basis
for issuance of the appraisal report or the
opinion.
4. They shall issue a statement attesting to the
professional competence and independence of
the personnel who prepared the report or
opinion, and that they have evaluated and
found that the information used isappropriate
andreasonable, and that they have complied
with applicable laws and regulations.		 used, the parameters, and the information, as
the basis for issuance of the appraisal report or
the opinion.
4. They shall issue a statement attesting to the
professional competence and independence of
the personnel who prepared the report or
opinion, and that they have evaluated and
found that the information used is reasonable
and~~accurate,~~and that they have complied with
applicable laws and regulations.
Article 8:
In acquiring or disposing of securities shall,
prior to the date of occurrence of the event,
obtain financial statements of the issuing
company for the most recent period, certified
or reviewed by a CPA, for reference in
appraising the transaction price, and if the
dollar amount of the transaction is 20 percent
of the Company's paid-in capital or TWD 300
million or more, the Company shall additionally
engage a CPA prior to the date of occurrence of
the event to provide an opinion regarding the
reasonableness of the transaction price.
This requirement does not apply, however, to
publicly quoted prices of securities that have
an active market, or where otherwise provided
by regulations ofthe Financial Supervisory
Commission.		 Article 8:
In acquiring or disposing of securities shall,
prior to the date of occurrence of the event,
obtain financial statements of the issuing
company for the most recent period, certified
or reviewed by a CPA, for reference in
appraising the transaction price, and if the
dollar amount of the transaction is 20 percent
of the Company's paid-in capital or TWD 300
million or more, the Company shall additionally
engage a CPA prior to the date of occurrence of
the event to provide an opinion regarding the
reasonableness of the transaction price.~~If the~~
~~CPA needs to refer to the report of an expert,~~
~~the CPA shall do so in accordance with the~~
~~provisions of the Bulletin No. 20 of the Auditing~~
~~Standards issued by the Accounting Research~~
~~and Development Foundation of the Republic~~
~~of China.~~
This requirement does not apply, however, to
publicly quoted prices of securities that have an
active market, or where otherwise provided by
regulations of~~competent authority.~~		 Amendment
in
compliance
with
competent
rules and
laws.
Article 8-1:
In acquiring or disposing of intangible assets or
right-of-use assets thereof or memberships and
the transaction amount reaches 20 percent or
more of paid-in capital or TWD 300 million or
more, except in transactions with a national
government institution, the Company shall
engage a CPA prior to the date of occurrence of
the event to render an opinion on the
reasonableness of the transaction price.		 Article 8-1:
In acquiring or disposing of intangible assets or
right-of-use assets thereof or memberships and
the transaction amount reaches 20 percent or
more of paid-in capital or TWD 300 million or
more, except in transactions with a national
government institution, the Company shall
engage a CPA prior to the date of occurrence of
the event to render an opinion on the
reasonableness of the transaction pric~~e; the~~
~~CPA shall comply with the provisions of the~~
~~Bulletin No. 20 of the Auditing Standards issued~~
~~by the Accounting Research and Development~~
~~Foundation of the Republic of China.~~		 Amendment
in
compliance
with
competent
rules and
laws.
Article 10:
When the Companyengages in anyacquisition		 Article 10:
When the Companyengages in anyacquisition		 Minor
corrections
  • 42 -
Amended Articles Articles Before Amendment Description
or disposal of assets from or to a related party,
in addition to ensuring that the necessary
resolutions are adopted and the
reasonableness of the transaction terms is
appraised, if the transaction amount reaches
10 percent or more of the Company's total
assets, the Company shall also obtain an
appraisal report from a professional appraiser
or a CPA's opinion in compliance with related
regulations.
The transaction amount referred to in the
preceding paragraph shall be made in
accordance with Article 8-2 herein.
When judging whether a transaction
counterparty is a related party, in addition to
legal formalities, the substance of the
relationshipshall also be considered.		 or disposal of assets from or to a related party,
in addition to ensuring that the necessary
resolutions are adopted and the
reasonableness of the transaction terms is
appraised, if the transaction amount reaches
10 percent or more of the Company's total
assets, the Company shall also obtain an
appraisal report from a professional appraiser
or a CPA's opinion in compliance with related
regulations.
When judging whether a transaction
counterparty is a related party, in addition to
legal formalities, the substance of the
relationship shall also be considered.
Article 11:
In case the Company intends to acquire or
dispose of real property or right-of-use assets
thereof from or to a related party, (Following
contents which have not been amended have
omitted.)
With respect to the types of transactions listed
below, when the Company and its subsidiaries,
or between it subsidiaries in which it directly or
indirectly holds 100 percent of the issued shares
or authorized capital, the Board of Directors
authorizes the chairman to make a decision
within TWD 500 million, and then submit it to
the next Board of Directors for ratification:
1. Acquisition or disposal of equipment or right-
of-use assets thereof held for business use.
2. Acquisition or disposal of real property right-
of-use assets held for business use.
When a matter is submitted for discussion by
the Board of Directors pursuant to paragraph 1,
the Board of Directors shall take into full
consideration each independent director's
opinions. If an independent director objects to
or expresses reservations about any matter, it
shall be recorded in the minutes of the Board of
Directors meeting.
The matters for which paragraph 1 requires shall
first be approved by one-half or more of all
audit committee members and then submitted
to the Board of Directors for a resolution, and
shall be subject to mutatis mutandis application
of Article 27, paragraphs 3 and 4.
If the Companyor a subsidiaryof a non-		 Article 11:
In case the Company intends to acquire or
dispose of real property or right-of-use assets
thereof from or to a related party, (Following
contents which have not been amended have
omitted.)
The transaction amount referred to in the
preceding paragraph shall be made in
accordance with Article 23, paragraph 2 herein,
and said "within the preceding year" as used
herein refers to the year preceding the date of
occurrence of the current transaction. Items
that have been approved by~~the Audit~~
~~Committee and submitted to~~the Board of
Directors~~for approval~~need not be counted
toward the transaction amount.		 Amendment
in
compliance
with
competent
rules and
laws.
  • 43 -
Amended Articles Articles Before Amendment Description
domestic public offering company has the first
transaction, and the transaction amount is more
than 10% of the Company's total assets, the
Company shall submit the documents listed in
the first paragraph to the shareholders' meeting
for approval before signing the contract for
payment. However, this shall not apply to
trading between the Company and its
subsidiaries, or between its subsidiaries.
The transaction amounts referred to in the 1st
and preceding paragraph shall be made in
accordance with Article 23, paragraph 2 herein,
and said "within the preceding year" as used
herein refers to the year preceding the date of
occurrence of the current transaction. Items
that have beensubmitted to the shareholders’
meeting,approved by the Board of Directors
and ratified by the Audit Committeeneed not
be counted toward the transaction amount.
Article 23:
Under any of the following circumstances, the
Company acquiring or disposing of assets shall
publicly announce and report the relevant
information on the website designated by
competent authority in appropriate format as
prescribed by regulations within 2 days
counting inclusively from the date of
occurrence of the event:
(Following contents which have not been
amended have omitted.)
Provided, this shall not apply to the following
circumstances:
1. Trading of domestic government bondsor
government bonds issued by foreign
government with a sovereign rating not lower
than the sovereign rating of the ROC.
2. Where done by professional investors-
securities trading on securities exchanges or
OTC markets, or subscription ofgovernment
bonds issued by foreign government, or
ordinary corporate bonds or general bank
debentures without equity characteristics
(excluding subordinated debt) that are offered
and issued in the primary market, or
subscription or redemption of securities
investment trust funds or futures trust funds,
or subscription or redemption of exchange
traded note,or subscription by a securities firm
of securities as necessitated by its undertaking
business or as an advisoryrecommending		 Article 23:
Under any of the following circumstances, the
Company acquires or disposes of assets shall
publicly announce and report the relevant
information on the website designated by
competent authority in appropriate format as
prescribed by regulations within 2 days
counting inclusively from the date of
occurrence of the event:
(Following contents which have not been
amended have omitted.)
Provided, this shall not apply to the following
circumstances:
1. Trading of domestic government bonds.
2. Where done by professional investors-
securities trading on securities exchanges or
OTC markets, or subscription of ordinary
corporate bonds or general bank debentures
without equity characteristics (excluding
subordinated debt) that are offered and issued
in the primary market, or subscription or
redemption of securities investment trust
funds or futures trust funds, or subscription by
a securities firm of securities as necessitated by
its undertaking business or as an advisory
recommending securities firm for an emerging
stock company, in accordance with the rules of
the Taipei Exchange.
(Following contents which have not been
amended have omitted.)		 Amendment
in
compliance
with
competent
rules and
laws.
  • 44 -
Amended Articles Articles Before Amendment Description
securities firm for an emerging stock company,
in accordance with the rules of the Taipei
Exchange.
(Following contents which have not been
amended have omitted.)
Article 27: Enforcement and Revision
This Procedures and any amendments
thereafter shall become effective with the
consent of more than half of all members of
the Audit Committees and after being
submitted to the Board of Directors for a
resolution and approved by shareholders in a
shareholders’ meeting.
In accordance with the provisions of the
preceding paragraph, this procedure shall be
(Following contents which have not been
amended have omitted.)		 Article 27: Enforcement and Revision
This Procedures and any amendments
thereafter shall become effective with the
consent of more than half of all members of
the Audit Committees and after being
submitted to the Board of Directors for a
resolution and approved by shareholders in a
shareholders’ meeting.~~If any director~~
~~expresses dissent and it is contained in the~~
~~minutes or a written statement, the Company~~
~~shall submit the director's dissenting opinion to~~
~~the Audit Committees.~~
In accordance with the provisions of the
preceding paragraph, this procedure shall be
(Following contents which have not been
amended have omitted.)		 Minor
corrections
Article 28: Enforcement Date
These articles of the Rules of Procedures for
Acquisition and Disposal of Assets are
stipulated on June 18, 1997, the first
amendment was approved on March 26, 1999,
(omitted), the eighth amendment on June 14,
2019, the ninth amendment on XX XX,XXXX.		 Article 28: Enforcement Date
These articles of the Rules of Procedures for
Acquisition and Disposal of Assets are
stipulated on June 18, 1997, the first
amendment was approved on March 26, 1999,
(omitted), the eighth amendment on June 14,
2019.		 Update the
date of
amendment.
  • 45 -

YC INOX Co., Ltd.

Shareholdings Status of Directors

As of the book closure date on April 18[th] , 2022, the Company has issued 445,354,527 common shares, according to Article 26 of Securities and Exchange Act, all directors shall collectively hold at least 16,000,000 common shares

A/C NO. Name Current Shareholding
(Shares)
21 Chang, Chin-Yu 6,029,632
41 Tai Chyang Investment Co., LTD. 59,909,508
7811 Chin Ying Fa Mechanical Ind Co., Ltd. 6,898,000
28 Hsieh, Ming-Hong 2,452,072
10927 Chang, Po-Kai 2,370,264
39854 Pan, Cheng-Hsiung 271,458
22460 Chen, Tai-Shan 135,513
46140 Kuo, Chao-Sung 417,884
142055 Chang, Wei-Lun 0
Total 78,484,331

  • Note 1: Refers to the number of shares stated in shareholder register on April 18, 2022, the book closure date for the 2022 shareholders’ meeting.

  • Note 2: As the Company has established the audit committee that satisfies the requirements of the Securities and Exchange Act, the minimum shareholding requirement for supervisors does not apply.

  • Note 3: The total shares held by the directors of the Company has already met the statutory standard of Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies.

  • 46 -

YC INOX Co., Ltd. Articles of Incorporation

Chapter I: General Provisions

Article 1:

This Company is duly incorporated under the provisions governing company limited by shares as set forth in the Company Act, its full name is 允強實業股份有限公司 in Chinese, and YC INOX Co., Ltd. in English (hereinafter referred to as “the Company”).

Article 2:

The business scope of the Company are as follows:

  1. CA01050 Steel Secondary Processing;

  2. CA01990 Other Non-ferrous Metal Basic Industries;

  3. CA02990 Other Metal Products Manufacturing;

  4. CA03010 Heat Treatment;

  5. CA04010 Surface Treatment;

  6. E599010 Piping Engineering;

  7. F106010 Wholesale of Hardware;

  8. F401010 International Trade;

  9. ZZ99999 All business items that are not prohibited or restricted by law, except those that are subject to special approval.

Article 2-1:

In order to strengthen business development, the Company’s reinvestment is not subject to the upper limit of forty percent of the Company’s paid-in capital as set forth in Article 13 of the Company Act, provided that such reinvestment shall be approved by the Board of Directors.

Article 2-2:

The Company may endorse and guarantee other party in accordance with "Procedures of Endorsement and Guarantee" stipulated by the Company according to its business needs.

Article 3:

The Company is headquartered in Changhua County. If necessary, the Company may establish branches domestically and abroad upon the approval of the Board of Directors.

Article 4:

Public announcement of the Company shall be made in accordance with the provisions in Article 28 of Company Act.

Chapter II: Shares

Article 5:

The total capital of the Company is four billion nine hundred and ninety million New Taiwan Dollars (NT$4,990,000,000), which can be divided into four hundred and ninety-nine million shares (499,000,000 shares), at a par value of ten New Taiwan Dollars (NT$10) per share. The Company shall issue shares in installments according to its actual needs upon the approval of the Board of Directors.

Article 5-1:

The Company may grant its employees (including employees of affiliations) who are qualified for certain conditions with the Company’s treasury stocks, employee stock option certificates, new shares subscriptions, and new restricted employee shares.

  • 47 -

Article 6:

The Company's shares shall be registered and serial numbered, and shall be signed or sealed by the directors who have the right to represent the Company, and its issuance shall be duly certified and authenticated by the bank authorized under applicable laws and regulations. The Company may issue shares without printing the share certificates, provided that the issued shares shall be registered to TDCC, and its process shall follow TDCC’s regulations.

Article 7:

Except as otherwise prescribed by other laws and regulations, the Company’s share affairs shall follow the provisions under the “Regulations Governing the Administration of Shareholder Services of Public Companies”.

Article 8:

Registered share certificates issued by the Company shall only be transferred by assignors to assignees only by way of endorsement; the name or title of the assignee shall be stated on the share certificates. The name or title and address of residence of the assignee shall be recorded in the shareholders’ roster, may the assignees claim their rights against the Company.

Article 9:

In case shareholders lose or damage their share certificates, shareholders shall apply to the Company for reissuance of share certificates in written form under stipulated procedures in accordance with laws and regulations.

Article 10:

(Deleted)

Article 11:

During the book closure period, share affairs of the Company shall follow the Company Act and other applicable laws and regulations.

Chapter III: Shareholders’ Meeting

Article 12:

There are two types of shareholders’ meeting: general meeting and extraordinary meeting. The Board of Directors shall convene the general meeting once per annum within six months from the end of each fiscal year, by notifying all shareholders thirty days prior to the general shareholders’ meeting date. The extraordinary meeting may be convened whenever deemed necessary by notifying all shareholders fifteen days prior to the extraordinary shareholders’ meeting date.

Article 13:

In case a shareholder is unable to attend a shareholders’ meeting for any cause, the shareholder may appoint a proxy to attend the meeting on his/her behalf by executing a proxy form in accordance with the Article 177 of the Company Act. Except as otherwise prescribed in the Company Act, a shareholder may also appoint a proxy in accordance with the provisions set forth in the “Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies” published by the competent authority. With the exception of a trust enterprises or stock affairs agency institutions approved by the competent securities authority, in case one person is concurrently appointed as proxy by two or more shareholders, the voting rights represented by that proxy may not exceed three percent of the voting rights represented by the total number of issued shares. Once the percentage is exceeded, the voting rights in excess of that percentage shall not be included in the calculation.

Article 14:

  • 48 -

In the time of convening the shareholders’ meeting, the meeting shall be chaired by the Chairman of the Board of Directors. In case the Chairman is absence, he/she shall appoint a Director to act on his/her behalf. In the absence of such appointment, the Directors shall elect one person from among themselves to chair the meeting.

Article 15:

Except in case of not entitled to voting rights prescribed in the Article 179 of the Company Act, each share held by the shareholders of the Company shall be entitled to one vote.

Article 16:

Except otherwise provided in the Company Act, the adoption of a proposal shall be made by a majority of shareholders present at a meeting attended by a majority of all shareholders.

Article 17:

Resolutions adopted at a shareholders’ meeting shall be recorded in the Meeting Minutes. The Meeting Minutes shall be signed or sealed by the chairman of the Meeting, and a copy shall be distributed to each shareholder within twenty days after the conclusion of the Meeting. The Meeting Minutes may be prepared and distributed by means of electronic form.

The Meeting Minutes as required in the preceding paragraph may be distributed by means of a public announcement through MOPS. The items to be recorded in the minutes for shareholders' meeting, the preparation of attendance book bearing the signatures of attending shareholders, and retention period of the proxy forms, such matters shall follow the provisions of Article 183 of the Company Act.

Chapter IV: Board of Directors and Audit Committee

Article 18:

The Board of Directors of the Company consists of nine to eleven directors. The Board of Directors of the Company shall determine the number of directors to be elected within this range. The directors’ election shall be conducted by nomination mechanism; shareholders may elect the directors from the list of Director nominees.

The numbers of directors referred to in the preceding paragraph shall at least contain three independent directors. The independent directors and non-independent directors shall be elected at the same election, provided that the seats elected shall be calculated separately. The election of independent directors shall be conducted by nomination mechanism, shareholders may elect the independent directors from the list of independent Director nominees.

The candidates’ qualifications for running for the independent directors, restrictions on his/her shareholding and bywork conditions, method of nomination and election, and other related matters shall follow the Company Act, the Securities and Exchange Act, and any other applicable laws and regulations.

The total registered shares held by all directors shall meet the required percentage prescribed in the competent securities authority.

Article 18-1:

The Company shall establish an Audit Committee, composed of the all independent directors, one of whom shall be the convener, and at least one of whom shall possess of accounting or financial expertise.

An adoption of resolution by the Audit Committee shall be approved by a majority of all members. From the date of establishment, the Audit Committee is responsible for

  • 49 -

implementing the supervisor’s duties prescribed in the Company Act, the Securities and Exchange Act and other applicable laws and regulations.

Article 19:

In case the number of directors falls short by one third of the total number of seats available, the Company shall convene an extraordinary shareholders’ meeting within 60 days from the date of occurrence to conduct a by-election to fill the vacancy(ies), and the tenure of the byelected director(s) shall be limited to the tenure of the original directors. However, in case a director elected is a juristic shareholder or its representative, such representative may be reappointed to satisfy the requirement the position in any time during the original tenure.

Article 20:

The tenure of a director shall be three years and may be eligible for re-election. In case the new directors’ election is not conducted when current tenure expires, such tenure shall be extended until the inauguration of new elected directors.

Article 21:

The directors form the Board of Directors. The directors shall elect a Chairman of the Board Directors from among themselves by a majority at a meeting attended by over two-thirds of the directors. The Chairman of the Board of Directors shall internally chair the Shareholders’ Meeting and the Board of Directors, and externally have the authority to represent the Company. The Chairman executes all affairs of the Company in accordance with the provisions of laws and regulations, the Articles of Incorporations of the Company, and the resolutions adopted by the Shareholders’ Meetings and the Board of Directors.

Article 22:

The Company’s operating strategy and other important matters, except those that shall be adopted by the Shareholders’ Meeting in accordance with the laws, shall be adopted by the Board of Directors. Except for the first meeting of each term of the Board of Directors shall be convened in compliance with the provisions of Article 203 of the Company Act, others board meetings shall be convened and chaired by the Chairman. In case the Chairman of the Board of Directors is unable to exercise the power of Chairman for any cause, the Chairman shall appoint one of the directors to act on behalf of the Chairman. In the absence of such an appointee, the directors shall elect one person from among themselves to act on behalf of the chairman. The convening of a board meeting shall be notified to all directors seven days in advance by written, E-mail or fax. In urgent circumstances, Board Meeting may be convened by means of written, E-mail or fax as well at any time.

Article 23:

Except for otherwise specified in the Company Act, the resolution/adoption of a proposed resolution shall be made by a majority of those directors present at a meeting by a majority of all directors. In case a director is unable to attend the meeting for any cause, he/she may appoint any other director to attend on his/her behalf by issuing a proxy form stating the scope of authorization, provided that one appointee shall not proxy for more than one director. In case a director has a personal interest conflict that may impair the interests of the Company, he/she shall not join the discussion and voting of such matter, nor exercise the right to vote on behalf of other directors.

Where the spouse of a Director, a blood relative having a second or closer degree of kinship of a Director, or any company which controls or is controlled by a Director who has interest conflict in the matter under discussion at the meeting, such Director shall be deemed to have a personal interest conflict in the matter.

  • 50 -

Article 24:

The Company’s resolutions of every Board Meeting shall be recorded in the meeting minutes, which shall be signed or chopped by the chairman of the meeting, then distributed to each Director within 20 days after the meeting. The matters shall be recorded of the meeting minutes, and the preservation of the attendance book for the attending Directors and the proxy forms, shall both follow the provisions in the Article 207 of the Company Act.

Article 25:

(Deleted)

Article 25-1:

The traveling expenditures, the salary and other allowances of Directors who executing businesses for the Company, shall be paid in accordance with the standard which is stipulated by the Board of Directors by referring to the arms’ length range of the same industry regardless of profit or loss.

Article 25-2:

The Company shall insure its Directors, and important employees who currently involved in the Company’s decision-making, against liability insurance, which shall cover legally-binding compensation liability of their business scopes.

The Company shall report important information of said insurance, such as insured amounts, coverage and rates, to the next Board Meeting after such insurances (or renewal) is completed.

Chapter V: Managerial Officers and Employees

Article 26:

The Company shall appoint one General Manager, whose appointment, dismissal and remuneration shall comply with the Company Act and the Procedures of Organization Management.

Article 27:

The Company may employ a consultant or appoint/dismiss important employees by a resolution of the Board of Directors in accordance with the provisions of Article 23 of Articles of Incorporation.

Article 28:

Other employees of the Company other than the those in preceding articles shall be appointed/dismissed by the General Manager in accordance with the relevant internal management measures of the Company.

Chapter VI: Finalization of Accounts

Article 29:

After the end of each fiscal year, the Board of Directors of the Company shall prepare the following documents and submit them to the Audit Committee for audit 30 days before the General Shareholders’ Meeting. The Audit Committee shall issue an audit report and propose it to the General Shareholders’ Meeting for approval.

  1. Business Report,

  2. Financial statements, and

  3. Proposals of earnings distribution or deficits offset.

Article 30:

In case the Company results profits for the year, it shall reserve 5% of profits as employees’ profit sharing, and the Board of Directors shall determine said profits shall be distributed by way

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of share or cash, which can also be distributed to employees of affiliations who meet certain conditions; Board of Directors may also adopt a resolution to reserve up to 2% of said profits as Directors’ compensation. The resolution of distribution of employees’ profit sharing and directors’ compensation shall be reported to the Shareholders’ Meeting.

In case the Company still has accumulated losses, a certain amount of the earnings corresponding to accumulated losses shall be retained, then the employees’ profit sharing and directors’ compensation shall be reserved by the percentage specified in the preceding paragraph.

Article 30-1:

In case the Company results profits in annual accounts finalization, after tax is paid in accordance with laws and deficits is offset, the Company shall reserve 10% legal reserve of the remaining earnings. However, such reservation may no longer need to be made once the amount of accumulated legal reserve has reached the amount of paid-in capital of the Company. The remaining earnings shall be reserved as special reserves or the special reserves shall reverse as an add-on to remaining earnings in accordance with applicable laws. In case there are still remaining amounts of earnings, the Board of Directors may draft a proposal of earnings distribution to distribute such earnings (together with the retained earnings available) as dividends, submit to the Shareholders’ Meeting for adoption.

The dividend policy of the Company shall be consistent with factors such as its current and future development plans, investment environment, capital needs, domestic and overseas competition and the interests of shareholders. The Company may annually distribute more than fifty percent of retained earnings available as dividends. In case dividend per share is less than NT$0.5, it may be retained for not distributing in the current year. The Company is in a traditional industry and its operation has reached maturity and stability, therefore its dividends shall be preferentially distributed by way of cash dividend, however, it may also be distributed by way of share dividend, provided that the part of cash dividend shall not be less than 20%. When distributing dividend, the Company may consider its financial situation, business and operational factors to determine the distribution of part or all of the surplus in accordance with applicable laws or regulations of competent authority.

Chapter VII: Supplementary Provisions

Article 31:

The organizational rules and the enforcement rules of the Company shall be otherwise stipulated by the Board of Directors.

Article 32:

Any matters not provided for in these Articles of Incorporation, the Company Act and other applicable laws shall govern.

Article 33 ：

These Articles of Incorporation are stipulated on January 9, 1973, the first amendment was approved on January 22, 1973, the second amendment on March 20, 1974, the third amendment on September 27, 1975, the fourth amendment on October 30, 1978, the fifth amendment on February 18, 1982, the sixth amendment on October 25, 1983, the seventh amendment on June 24, 1987, the eighth amendment on May 3, 1988, the ninth amendment on September 26, 1994, the tenth amendment on March 7, 1995, the eleventh amendment on June 23, 1995, the twelfth amendment on July 29, 1995, the thirteenth amendment on October 21, 1995, the fourteenth amendment on February 1, 1996, the fifteenth amendment on

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September 20, 1997, the sixteenth amendment on May 28, 1998, the seventeenth amendment on April 12, 2000, the eighteenth amendment on June 7, 2002, the nineteenth amendment on June 14, 2006, the twentieth amendment on June 15, 2007, the twenty-first amendment on June 19, 2009, the twenty-second amendment on June 17, 2010, the twenty-third amendment on June 22, 2011, the twenty-fourth amendment on June 18, 2012, the twenty-fifth amendment on June 18, 2013, the twenty-sixth amendment on June 18, 2014, the twentyseventh amendment on June 17, 2015, the twenty-eighth amendment on June 15, 2016, the twenty-ninth amendment on June 14, 2019, and the thirtieth amendment on June 18, 2020.

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YC INOX Co., Ltd. Rules of Procedure of Shareholders’ Meetings

Article 1:

To establish a strong governance system and sound supervisory capabilities for the Company's Shareholders’ Meetings, and to strengthen management capabilities, these Rules are adopted pursuant to the Article 5 of the Corporate Governance Best Practice Principles for Taiwan Stock Exchange Corp (“TWSE”)/ Taipei Exchange (“TPEx”) Listed Companies.

Article2:

Except as otherwise specified by laws, regulations or Articles of Incorporation of YC INOX Co., Ltd. (herein referred to as "the Company"), the rules of procedure at Shareholders’ Meeting shall be as prescribed in these Rules.

Article 3:

Except as otherwise stipulated in laws and regulations, the Company’s Shareholders’ Meeting shall be convened by the Board of Directors.

The Company shall prepare electronic versions of the shareholders meeting notice and proxy forms, and the origins of and explanatory materials relating to all proposals, including proposed resolutions for ratification, proposed resolutions for discussion, or the election or dismissal of directors, and upload them to the Market Observation Post System (MOPS) prior to 30 days before the date of a general shareholders’ meeting or prior to 15 days before the date of an extraordinary shareholders’ meeting. The Company shall prepare electronic versions of the shareholders meeting agenda and supplemental meeting materials and upload them to the MOPS prior to 21 days before the date of the general shareholders’ meeting or prior to 15 days before the date of the extraordinary shareholders’ meeting. Prior to 15 days before the date of the shareholders meeting, The Company shall also have prepared the shareholders meeting agenda and supplemental meeting materials and made them available for review by shareholders at any time. The meeting agenda and supplemental materials shall also be displayed at The Company and the professional stock affairs services agent designated thereby as well as being distributed on-site at the meeting place.

The reasons for convening a shareholders’ meeting shall be specified in the meeting notice and public announcement; Said notice may be made by means of electronic transmission with the prior consent of the recipients.

Election or dismissal of directors, amendments to the Articles of Incorporation, reduction of capital, application for the approval of ceasing its status as a public company, approval of competing with the Company by Directors, earnings distributed in the form of new shares, reserve distributed in the form of new shares, the dissolution, merger, or demerger of the Company, any matter under Article 185, paragraph 1 of the Company Act, Article 26-1 and Article 43-6 of the Securities and Exchange Act, or Article 56-1 and Article 60-2 of the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, shall be set out and the essential contents explained in the notice of the reasons for convening the shareholders meeting. None of the above matters may be raised by an extraordinary motion. Once the resolution of re-election of all Directors as well as their inauguration date is stated in the notice of the convening reasons of the Shareholders Meeting, after the completion of the re-election in said Meeting, such inauguration date may not be altered by any extraordinary motion or otherwise in the same Meeting.

Shareholders holding one percent or more of the total number of issued shares may submit a proposal to the Company for discussion at a General Shareholders’ Meeting, provided only one

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item shall be allowed in each single proposal, and in case a proposal contains more than one item, such proposal shall not be included in the agenda. Proposals that are under the circumstances as specified in Article 172-1, paragraph 4 of the Company Act, the Board of Directors may not include such proposals in the agenda. Shareholders may submit a proposal which is to urge the Company to promote public interests or fulfill its social responsibilities. Such proposal shall be procedurally done in compliance with Article 172-1 of the Company Act that, only one item shall be allowed in each single proposal, and in case a proposal contains more than one item, such proposal shall not be included in the agenda.

Prior to the book closure date before the General Shareholders’ Meeting is held, the Company shall publicly announce the location and the time period for shareholders to submit proposals in writing or electronic transmission. The period for submission of shareholder proposals may not be less than ten days.

Proposals submitted by shareholders are limited to no more than three hundred words, and no proposal containing more than three hundred words will be included in the agenda. The shareholder who submitting a proposal shall attend the Shareholders’ Meeting in person or by proxy, and shall take part in the discussion of such proposal.

Prior to the date of Meeting notice issuance date, the Company shall inform the proposal submitting shareholders of the proposal screening results, and shall list in the Meeting notice that conform to the requirements set out in this Article. At the Shareholders’ Meeting, the Board of Directors shall state the reasons for exclusion of any shareholder proposals not included in the agenda.

Article 4:

For each Shareholders’ Meeting, a shareholder may appoint a proxy to attend the Meeting in his/her behalf by executing a proxy form issued by the Company, stating the scope of power authorized to the proxy.

A shareholder may only execute one proxy form and appoint one proxy only, and shall deliver such written proxy form to the Company no later than five days prior to the date of the Meeting. When one single shareholder executes two or more written proxy forms, the first one received by the Company shall prevail, unless an explicit statement is made to rescind the previous written proxy form.

After a proxy form has been delivered to the Company, in case the shareholder intends to attend the Meeting in person or to exercise his/her voting rights in writing or by electronic transmission, a written notice of proxy cancellation shall be submitted to the Company two days prior to the date of the Meeting. Otherwise, the voting rights exercised by the proxy at the Meeting shall prevail.

Article 5:

The Shareholders’ Meeting shall be convened at the headquarters or at an appropriate place that facilitates the attendance of shareholders, and shall begin no earlier than 9:00AM and no later than 3:00PM of the meeting date. The venue and time of the meeting shall be fully considered by the Independent Directors.

Article 6:

The Company shall specify in the Meeting notice the time during which shareholder attendance registrations will be accepted, and location for shareholders’ attendance registration, and other matters for attention.

Said time for shareholders’ attendance registration will be accepted shall be at least thirty minutes prior to the time scheduled to begin the Meeting. The Company shall set clear sign and

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assign sufficient numbers of qualified personnel to handle attendance registrations at the location.

The Company shall set up an attendance book for shareholders themselves or the proxies designated by the shareholders (hereinafter, "shareholders") to sign in, or the attending shareholders shall hand in the sign-in card as a sign in replacement.

The Company shall provide the agenda, the annual report, the attendance badge, the comments slip, the blank voting slips and other Meeting materials to shareholders who attend the Meeting; In case there will be a Directors election, the blank election ballots should also be provided for voting.

Shareholders shall attend the Meeting based on the attendance badge, the attendance sign-in card, or other certificates of attendance. No arbitrary requirements shall be imposed on shareholders to provide additional certificates of attendance beyond those showing eligibility to attend. Solicitors soliciting proxy forms shall also carry identification and for verification.

Government or juristic shareholders may appoint more than one representative to attend the Shareholders’ Meeting. However, a juristic person attending the Shareholders’ Meeting as a proxy may only appoint one representative to attend.

Article 7:

In case a Shareholders’ Meeting is convened by the Board of Directors, the Meeting shall be chaired by the Chairman of the Board of Directors. In case the Chairman is on leave or for any reason unable to exercise the power of the chairman, the Vice-Chairman shall act on the Chairman’s behalf. In case there is no Vice-Chairman or the Vice-Chairman is on leave or for any reason unable to exercise his/her power as well, the Chairman shall appoint a Managing Director to act on his/her behalf at the meeting. In case the Company doesn’t set Managing Director, the Director shall be appointed to act as agent. In the absence of such appointee appointed by the chairman, the Managing Directors or Director shall elect one person from among themselves to chair the meeting.

Said a Managing Director or a Director appointed to act as the aforementioned chairman of the Meeting, this person shall be one who has held that position for at least six months and understands the financial and business conditions of the Company. The same provision shall apply mutatis mutandis to the case that the chairman of the Meeting is acted by the representative of a Juristic Director.

It is recommended that Shareholders’ Meeting convened by the Board of Directors be chaired by the Chairman in person and attended by a majority of the Directors, at least one Independent Director in person, and at least one member of each functional committee on behalf of the committee. The attendance shall be recorded in the Meeting Minutes.

If a Shareholders’ Meeting is convened by a party with power to convene other than the Board of Directors, the convening party shall chair the meeting. When there are two or more such convening parties, they shall elect a chairman from among themselves.

The Company may appoint its attorneys, certified public accountants, or other relevant personnel to attend the Shareholders’ Meeting in a non-voting capacity

Article 8:

The Company, beginning from the time it accepts shareholder attendance registrations, shall make an uninterrupted audio and video recording of the registration procedure, the proceedings of the Shareholders’ Meeting, and the voting and vote counting procedures.

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The recorded materials of the preceding paragraph shall be retained for at least one year. However, in case a shareholder files a lawsuit pursuant to Article 189 of the Company Act, the recording shall be retained until the conclusion of the litigation.

Article 9:

Attendance at Shareholders’ Meeting shall be calculated based on numbers of shares. The number of shares in attendance shall be calculated according to the shares indicated by the attendance book or sign-in cards handed in, plus the number of shares whose voting rights are exercised by correspondence or electronically.

The chairman shall call the meeting to order at the scheduled meeting time, and shall simultaneously announce relevant information such as the number of non-voting shares and the number of shares in attendance. However, when the attending shareholders do not represent a majority of the total number of issued shares, the chairman may announce a postponement, provided that no more than two such postponements, for a combined total of no more than one hour, may be made. In case the quorum is not met after two postponements and the attending shareholders still represent less than one third of the total number of issued shares, the chairman shall announce the meeting adjourned.

If the quorum is still not met after two postponements as referred to in the preceding paragraph, but the attending shareholders represent one third or more of the total number of issued shares, a tentative resolution may be adopted pursuant to Article 175, paragraph 1 of the Company Act; all shareholders shall be notified of the tentative resolution and another shareholders meeting shall be convened within one month.

Prior to the conclusion of the current Meeting, once the number of shares represented by the shareholder’s present reaches a majority of outstanding shares, the chairman of the Meeting may resubmit tentative resolutions already made for a vote by the shareholders in accordance with the provisions of Article 174 of the Company Act.

Article 10:

For Shareholders’ Meetings convened by the Board of Directors, the Meeting agenda shall be set by the Board of Directors. Votes shall be case on each proposal in the agenda (including extraordinary motions and amendments to the original proposal set out in the agenda). Meetings shall proceed in order set by the agenda, which must not be changed without a resolution of the Shareholders’ Meeting.

For Shareholders’ Meetings convened by a party with power to convene other than the Board of Directors, the provisions of the preceding paragraph shall apply mutatis mutandis.

Prior to the conclusion of proceedings for the arranged agendas in the preceding two paragraphs (including extraordinary motions), the chairman must not declare meeting adjourned without a resolution; in case the chairman declares meeting adjourned in violation of these Rules, other members of the Board of Directors shall promptly assist the attending shareholders in electing a new chairman in accordance with statutory procedures, by agreement of a majority of the votes represented by the attending shareholders, and then continue the meeting.

The chairman shall provide ample opportunities for adequate explanation and discussion of original proposals, amendments and extraordinary motions submitted by shareholders. The chairman may announce to finalize the discussion of any resolution and call for a vote once the chairman deems it appropriate, and arrange sufficient time for voting.

Article 11:

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Prior to speaking, attending shareholders shall specify on a comments slip the subject to be expressed, his/her shareholder account number (or attendance badge number) and his/her name. The sequence of the shareholders’ speeches will be arranged by the chairman. Attending shareholders who submit comments slips without speaking shall be deemed to have not spoken. In case the content expressed does not correspond to the subject of the comments slip, the expressed content shall prevail.

Without the consent of the chairman, each shareholder may not speak more than twice on a same proposal, and a single speech may not exceed five minutes. In case the shareholders’ speech violates the Rules or exceeds the scope of the agenda, the chairman may terminate the speech.

When an attending shareholder is speaking, other shareholders shall not speak to/or interrupt unless they have solicited and obtained the consent of the chairman and the shareholder who is speaking; the chairman shall stop any violation.

In case a juristic shareholder appoints two or more representatives to attend the Meeting, only one of the representatives may speak on the same proposal.

After an attending shareholder has spoken, the chairman may respond in personal or appoint relevant personnel to respond.

Article 12:

Voting at Shareholders’ Meeting shall be calculated based on the number of shares.

With respect to resolutions of Shareholders’ Meeting, the number of shares held by shareholders with no voting rights shall be excluded from the calculation of the total number of issued shares.

When a shareholder is an interested party in relation to a proposal, and such relationship may damage the Company's interest, the shareholder may not vote on that proposal, and may not exercise voting rights on behalf of any other shareholders.

The number of shares for which voting rights may not be exercised in the preceding paragraph shall not be counted as part of the voting rights represented by attending shareholders.

With the exception of a trust enterprise or stock affairs agency institutions approved by the competent securities authority, in case one person is concurrently appointed as proxy by two or more shareholders, the voting rights represented by that proxy may not exceed three percent of the voting rights represented by the total number of issued shares. Once the percentage is exceeded, the voting rights in excess of that percentage shall not be included in the calculation.

Article 13:

A shareholder shall be entitled to one vote for each share held, except when the shares are restricted shares or are deemed non-voting shares under Article 179, paragraph 2 of the Company Act.

When the Company holds a shareholder meeting, it shall adopt exercise of voting rights by electronic means and may adopt exercise of voting rights by correspondence. When voting rights are exercised by correspondence or electronic means, the method of exercise shall be specified in the shareholders’ meeting notice. A shareholder exercising voting rights by correspondence or electronic means will be deemed to have attended the meeting in person, but to have waived his/her rights with respect to the extraordinary motions and amendments to original proposals of that meeting; it is therefore advisable that the Company avoid the submission of extraordinary motions and amendments to original proposals.

A shareholder intends to exercise voting rights by correspondence or electronic means under the preceding paragraph shall deliver a written declaration of intent to the Company before two

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days prior to the date of the Shareholders’ Meeting. When duplicate declarations of intent are delivered, the one received earliest shall prevail, except when a declaration is made to cancel the earlier declaration of intent.

After a shareholder has exercised voting rights by correspondence or electronic means, in the event the shareholder intends to attend the shareholders’ meeting in person, a written declaration of intent to retract the voting rights already exercised under the preceding paragraph shall be made known to the Company, by the same means by which the voting rights were exercised, before two business days prior to the date of the shareholders’ meeting. If the notice of retraction is submitted after that time, the voting rights already exercised by correspondence or electronic means shall prevail. When a shareholder has exercised voting rights both by correspondence or electronic means and by appointing a proxy to attend a shareholders’ meeting, the voting rights exercised by the proxy in the meeting shall prevail.

Except as otherwise provided in the Company Act and, in the Company’s, Articles of Incorporation, the adoption of a proposal shall require an affirmative vote of a majority of the voting rights represented by the attending shareholders. At the time of a vote, for each proposal, the chairman or a person designated by the chairman shall first announce the total number of voting rights represented by the attending shareholders, followed by a poll of the shareholders. After the conclusion of the meeting, on the same day of Shareholders’ Meeting, the results for each proposal, based on the numbers of votes for and against and the number of abstentions, shall be entered into the MOPS.

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

Personnel who monitor and count the voting of a proposal shall be appointed by the chairman, provided that such personnel shall be shareholders of the Company.

Vote counting for Shareholders’ Meeting proposals or elections shall be conducted in public at the place of the Shareholders’ Meeting. Once vote counting has been completed, the results of the voting, including the statistical tallies of the numbers of votes, shall be announced on-site at the meeting, and the vote record shall be made for reference.

Article 14:

The election of directors at a Shareholders’ Meeting shall be held in compliance with the applicable election and appointment rules adopted by the Company and the voting results shall be announced immediately, including the list of elected directors, the number of votes they were elected, the list of unsuccessful candidates and the number of votes they obtained.

The ballots for the election referred to in the preceding paragraph shall be sealed with the signatures of the monitoring personnel and kept in proper custody for at least one year. However, in case a shareholder files a lawsuit pursuant to Article 189 of the Company Act, the ballots shall be retained until the conclusion of the litigation.

Article 15:

Resolutions adopted at a Meeting shall be recorded in the Meeting Minutes. The Meeting Minutes shall be signed or sealed by the chairman of the Meeting, and a copy shall be distributed to each shareholder within twenty days after the conclusion of the Meeting. The Meeting Minutes may be prepared and distributed by means of electronic form.

The Meeting Minutes as required in the preceding paragraph may be distributed by means of a public announcement through MOPS.

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The Meeting Minutes shall accurately record the date and place of the Meeting, the name of the chairman, the method of resolution adopting, and a summary of the deliberations and the results of the voting (including the total number of voting rights). In the event of election of Directors, the number of voting rights won by each candidate shall be disclosed. The Meeting Minutes shall be retained permanently throughout the life of the Company.

Article 16:

On the date of the Meeting, the Company shall draw up a statistics statement of the number of shares obtained by solicitors through solicitation and the number of shares represented by proxies in compliance with the required format, and shall make an express disclosure of the same at the place of the shareholders’ meeting. If matters resolved/adopted at the Shareholders’ Meetings constitute material under applicable laws or regulations or under Taiwan Stock Exchange Corporation (or Taipei Exchange) regulations, the Company shall upload such contents to the MOPS within the prescribed time period.

Article 17:

Meeting affairs personnel shall wear identification badges or armbands.

The chairman may direct the sergeants at arms or security guards to assist in maintaining order at the Meeting venue. When assist in maintaining order at the Meeting venue, the sergeants at arms or security guards shall wear identification badges or armbands bearing the word “Sergeant at Arms”.

At the place of a shareholders’ meeting, in case a shareholder attempts to speak through any device other than the public address equipment set up by the Company, the chairman may prevent the shareholder from doing so.

In case a shareholder violates these Rules and defies the chairman’s corrections, thereby obstructing the proceedings and refusing to heed calls to stop, the chairman may direct the sergeants at arms or security guards to escort such shareholder from the Meeting venue.

Article 18:

During the Meeting, the chairman may announce a break based on time considerations; In case a force majeure event occurs, the chairman may rule the meeting temporarily suspended and announce a resume time when, in view of the circumstances, the meeting will be resumed. In case the Meeting venue is no longer available before the agenda (including extraordinary motions) have been addressed, the Shareholders’ Meeting may resolve to resume the Meeting at another venue.

A resolution may be adopted at a shareholders meeting to postpone or resume the Meeting within five days in compliance with Article 182 of the Company Act.

Article 19:

The adoption of these Rules, and any amendments, shall be proposed to the Board of Directors for adoption, and shall be effective after proposed to the Shareholders’ Meeting for approval. Article 20:

These Rules are stipulated on June 18, 2013.

The first amendment was approved on June 17, 2015.

The second amendment on June 18, 2020.

And the third amendment on August 23, 2021.

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Other Instructions

Reporting of the progress of processing shareholders’ proposals at this General Shareholders’ Meeting:

  1. Shareholder(s) holding one percent or more of the total number of issued shares of the Company may submit a proposal to the Company for discussion at a General Shareholders’ Meeting, provided that only one item shall be allowed in each single proposal in accordance with Article 172-1 of the Company Act. Total number of words in said proposal shall not exceed three hundred (including punctuation).

  2. The Company will receive shareholders’ proposal for the General Shareholders’ Meeting from 2022/04/11 to 2022/04/21, such information has been announced on MOPS.

  3. However, the Company has not yet received any shareholders’ proposal.

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