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YFO AGM Information 2022

Jul 6, 2022

52356_rns_2022-07-06_7e95cbdc-71ae-43f2-acf1-81dcfc3ec170.pdf

AGM Information

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Stock Code: 3622

==> picture [71 x 65] intentionally omitted <==

YOUNGFAST

Young Fast Optoelectronics Co., Ltd.

2022 Annual Shareholders’ Meeting

Meeting Handbook

(Translation)

Stock Code：3622

Type of the shareholders’ meeting: Physical meeting Time and Date: 9:00 a.m, Wednesday, June 29, 2022 Place: No. 32, Jingjian 5th Rd., Guanyin Dist., Taoyuan City

Notice to Readers: For the convenience of readers, the Meeting Handbook has 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 version shall prevail .

Table of content

  1. Meeting Procedures..........................................................................................1 2. Meeting Agenda ............................................................................................ 2 (1) Matters to Report .........................................................................................3 (2) Matters for Acknowledgement ....................................................................4 (3) Matters for Discussion ................................................................................5 (4) Extempore Motions .....................................................................................6 (5) Meeting Adjournment .................................................................................6 3. Attachment .......................................................................................................7 (1) 2021 Business Report ..................................................................................7 (2) 2021 Audit Committee’s review report .......................................................9 (3) Explanation of Directors' Remuneration .................................................. 10 (4) Comparison of the Previous and the amended “Corporate Social Responsibility Principles” ....................................................................... 12 (5) Independent Auditors’ Report and 2021 financial statements (stand-alone and consolidated) ..................................................................................... 18 (6) 2021 Earnings distribution statement ....................................................... 34 (7) Comparison of the Previous and the amended “Procedures for the Acquisition or Disposal of Assets” ....................................................... 35 (8) Comparison of the Previous and the amended “Article of Incorporation” .............................................................................................................. 40 (9) Comparison of the Previous and the amended “Rules of Procedure for Shareholders Meeting” .......................................................................... 42 4. Appendix ....................................................................................................... 55 (1) Article of Incorporation ............................................................................ 55 (2) Rules of Procedure for Shareholders Meeting ......................................... 61 (3) Corporate Social Responsibility Principles .............................................. 70 (4) Procedures for the Acquisition or Disposal of Assets .............................. 78 (5) Remuneration for employees and directors ............................................. 98 (6) Directors’ shareholding ............................................................................ 99

Young Fast Optoelectronics Co., Ltd. 2022 Annual Shareholders’ Meeting Meeting Procedure

  1. Report the total number of shares representd in attendance

  2. Announcement of the Commencement of the Meeting

  3. Chairman’s Address

  4. Matters to Report

  5. Matters for Acknowledgement

  6. Matters for Discussion

  7. Extempore Motions

8. Meeting Adjournment

  • 1 -

Young Fast Optoelectronics Co., Ltd. 2022 Annual Shareholders’ Meeting

Meeting Agenda

Meeting time: June 29, 2022 at 9:00a.m. Place: No. 32, Jingjian 5th Rd., Guanyin Dist., Taoyuan City Chairman: Chih Chiang Pai, Chairman of the Board of Directors

  1. Chairman’s Address

  2. Matters to Report:

  3. (1) Report the business of 2021.

  4. (2) Report the Audit Committee’s review report of 2021.

  5. (3) Report the employees’ profit share and directors’compensation of 2021

  6. (4) Report the amendment to the Company’s “Corporate Social Responsibility Principles”

  7. Matters for Acknowledgement

  8. (1) Acknowledgement of business report and financial statements of 2021

  9. (2) Acknowledgement of earnings distribution of 2021

  10. Matters for Discussion

  11. (1) Discussion on the amendments to the Company’s “Procedures for the Acquisition or Disposal of Assets”

  12. (2) Discussion on the amendments to the Company’s “Article of Incorporation”

  13. (3) Discussion on the amendments to the Company’s “Rules of Procedure for Shareholders’ Meeting”

  14. (4) Discussion on the capital surplus cash distribution proposal.

  15. Extempore Motions

  16. Meeting Adjournment

  17. 2 -

Matters to Report

  1. Subject: To report the business of 2021

Description: Please refer to attachment 1 (page7-8) for Business report of 2021.

  1. Subject: To report the Audit Committee’s review report of 2021

Description: Please refer to attachment 2 (page9) for 2021 Audit Committee’s review report.

  1. Subject: To report the employees’ profit share and directors’compensation of 2021

  2. Description: The Company's 2021 net income before tax and remuneration of employees and directors) after audited by independent auditors were NT$308,198,498. According to Article 24 of the Articles of Incorporation, NT$6,352,956 (2.06%) were allocated as employee remuneration, NT$4,622,977 (1.5%) as director remuneration, all paid in cash. In addition, the remuneration received by the directors is handled in accordance with the Company’s regulation of the remuneration management of the directors, functional Committee members and managers, please refer to attachment 3 (page10-11).

  3. Subject: To report the amendment to the Company’s “Corporate Social Responsibility Principles”

  4. Description: Please refer to attachment 4 (pages 12-17) for the comparison of the previous and the amended provisions.

Matters for Acknowledgement:

  • 3 -

  • Subject: Acknowledgement of business report and financial statements of 2021 (by the Board of Directors)

  • Description: 1. The Company's 2021 business report, stand-alone financial statements and consolidated financial statements were approved by a resolution of the Board of Directors. The CPA firm of KPMG has audited the stand-alone financial statements and the consolidated financial statements and has given an unqualified opinion thereon.

    1. The above-mentioned business report and financial statements have been sent to the Audit Committee, which issued a review report.

    2. Please refer to attachment 1 (page7-8) and attachment 5 (page 18-33) for the Company's 2021 business report and financial statements, and please accept the proposal for ratification.

Resolution:

  1. Subject: Proposal for the ratification of the 2021 earnings distribution proposal (by the Board of Directors)

  2. Description: 1. The Company's 2021 earnings distribution proposal was approved by a resolution of the Board of Directors and reviewed by the Audit Committee, which issued a review report.

    1. The Company’s 2021 net profits after tax were NT$279,431,273, and the cumulative distributable earnings were NT$505,051,732, which are intended to be retained without distribution. Please refer to attachment 6 (page 34) of this handbook for the earnings distribution statement. Please accept the proposal for ratification.

Resolution:

Matters for Discussion

  • 4 -

  • Subject: Amendment to the Company’s “Procedures for the Acquisition or Disposal of Assets”

(by Board of Directors)

Description: In response to amendmants to laws and regulations as well as business needs of the Compnay, it is porposed to amend the Company’s "Procedures for the Acquisition or Disposal of Assets". Please refer to attachment 7 (pages 3539) for the comparison Table of Amendments to "Procedures for the Acquisition or Disposal of Assets".

Resolution:

  1. Subject: Amendment to the Company’s “Article of Incorporation”

(by Board of Directors)

Description: In accordance with the revisions of laws and regulations , some provisions of the " Article of Incorporation " have been amended. Please refer to attachment 8 (pages 40-41) for the comparison of the previous and the amended provisions.

Resolution:

  1. Subject: Amendment to the Company’s “Rules of Procedure for Shareholders Meeting” (by Board of Directors)

  2. Description: In accordance with the revisions of laws and regulations , some provisions of the " Rules of Procedure for Shareholders Meeting " have been amended. Please refer to attachment 9 (pages 42-54) for the comparison of the previous and the amended provisions.

Resolution:

  1. Subject: Cash distribution from capital surplus. Please proceed to discuss.

(by Board of Directors)

  • Description: 1. The Company intends to allocate NTD 75,663,800 from the capital surplus of NTD 2,010,421,956 in excess of par value to distribute cash of NTD 0.5 per share in accordance with the shares held by the Company as recorded in the shareholders roster on the record date for the issuance of shares.

  • After approval at the shareholders' meeting, the chairperson of the board of directors shall, upon the authorization of the board of directors,

  • 5 -

set another payment base date and payment date. Cash distribution is calculated up to NTD. Fractions of NTD are rounded down to zero. The difference is recorded by the Company as "other income".

  1. If any amendment or change is required by law or approved by the competent authorities or by facts, it is intended to be submitted to the shareholders' meeting to authorize the chairperson of the board of directors to handle the matter.

Resolution:

Extempore Motions

Meeting Adjournment

  • 6 -

Attachment 1

Young Fast Optoelectronics Co., Ltd. The Company’s 2021 business report

  1. Business Strategy and It’s Implementation Status

  2. Over the past few years, the Company’s Optoelectronics Business Group has been actively engaged in the research and development of functional touch panel sensors, and the surface printing, profiling, and processing (stain-resistance; anti-glare; anti-reflection; anti-bacteria) for our self-developed glass cover. Meanwhile, we have also expanded our business of edge lamination and full lamination of touch modules and different displays, developed the production capacity for Touch Monitor and FATP and, to protect our R&D achievements, actively filed for patent protection at home and abroad. In 2021, we have branched out into the markets for industrial control, sports equipment, in-vehicle applications, and consumer goods. Our glass process production line has begun mass production of glass sensors. We have also developed surface-coated glass covers. In doing so, we have deeply engaged in the sales market and maintained our market share. In the face of volatilities due to the pandemic, supply chain management was one of our major tasks for 2021. In addition, our Electromechanical Business Group, given its major customer being the Taiwan Power Company, greatly valued product quality, safety, and ability to adapt; as so, it had established a high market entry barrier with its technologies and specifications certification, and therefore derived a stable gross profit. Due to the continuous gains derived by our large- and medium-size touch panels from non-consumer markets such as industrial control, in-vehicle applications, and sports equipment, and also due to stable gains from the domestic market, our electromechanical products derived handsome profits. Meanwhile, we also focused on asset revitalization to diversify our income sources, and in doing so coped with the volatile international market, thereby lowering risk and boosting steady income.

  3. Implementation results of business plan Although the world was troubled by the pandemic, the Company worked hard to limit the pandemic impact. The revenue from our optoelectronics terminal products in 2021 increased by 135% from last year, thanks to that our long-time endeavor in the non-consumer markets started yielding profits, and that a sound management of parts and components facilitated production and sales. In addition, our electromechanical products were all for domestic use, deriving a revenue that was 2.6% higher than the 2020 level. Coupled with steady non-operating income (i.e., investment income), our overall revenue and profits grew from last year. In 2021, the annual consolidated operating revenue stood at NTD 1,449,291 thousand, up 56.43% from last year; net income after taxes attributable to the Company at NTD 279,430 thousand, up NTD 188,309 thousand, or 48.39%, from last year; and earnings per share at NTD 1.85.

  4. Budget implementation status

  5. The 2021 financial forecast was not made public, so there is no question of whether the budget was achieved or not.

  6. Financial income and expenses; profitability analysis

  7. (1) Analysis of receipts and expenditures

The Company has a sound capital structure. Our ratio of long-term capital to fixed assets was 637.28%. The debt ratio increased from 10.21% in 2020 to 12.82% in 2021, mainly due to

  • 7 -

that we increased the long-term borrowings denominated in USD to increase the percentage of natural exchange rate hedging, and that lease liability, though originally had decreased in tandem with the decreasing lease term, increased due to lease contract renewal at the contract expiration date in 2021. Liquidity ratio and quick ratio in 2021 reached 7 times above, to 795.84% and 730.78%, respectively, attesting to the Company’s good solvency.

(2) Analysis of Profitability

The Company’s annual consolidated operating revenue and annual consolidated gross profit in 2021 were NTD 1,449,291 thousand and NTD281,567 thousand, respectively, an increase of 56.43% and 52.42%, respectively, from 2020. This was mainly due to that our efforts invested in the non-consumer large- and medium-size touch panel market began yielding fruits. Coupled with business scale-up and continuous cost streamlining, the operating profit and loss turned from red to black, to NTD54,091 thousand. In terms of non-operating income, the Company skillfully used the assets to earn rental income and dividend income. In 2021, the net income after taxes stood at NTD296,465 thousand, net income after taxes that is attributable to the Company at NTD 279,430 thousand, and earnings per share at NTD 1.85.

Analysis 2021 2020
Capital Structure
analysis		 Debt Ratio 12.82% 10.21%
Longterm funds to fix asset 637.28% 555.10%
Liquidity analysis Current ratio 795.84% 835.29%
Quick ratio 730.78% 784.93%
Profitability analysis Return on total assets(%) 5.30% 3.94%
Return on equity (%) 5.61% 4.00%
Operation incometo capital 3.57% -0.68%
Net income before tax to capital 17.48% 13.99%
Profit ratio 20.46% 21.75%
Earningsper share(NT$) 1.85 1.24

5. R&D

A touch panel mainly serves the role that makes a human-machine interface more convenient. It is developed to suit different applications at different premises and under different environments, and towards a trend that features more a compact body and an even thinner bezel. The films on the surface of our touch control modules are self-developed. In terms of membranes and glass sensors, we adopt metallized films and lithography to effectively produce ultra-thin touch products. In terms of ultra-thin bezel, we use advanced laser processes such as precision exposure and CCD alignment to bring the line width and space width down to 15μm/10μm, so as to provide customers with a high-end product that features both a thinner bezel and a higher sensitivity. Our UV-resistant membranes and glass sensor process production lines can meet the requirements for in-vehicle applications, and for products to be used by our end customers under a lengthy exposure to sunshine. We also develop stain-resistant/anti-glare/anti-reflection/anti-bacteria coating technologies. In addition, we newly perform full lamination of cover glass and touch module for our LCM for use of industrial control, and advance the technology for lamination of electronics paper modules, to satisfy the diverse applications at the customer end.

  • 8 -

Attachment 2

Young Fast Optoelectronics Co., Ltd.

Audit Committee’s Review Report

The Board of Directors prepared the Company’s 2021 business report, financial statements (stand-alone and consolidated) and earnings distribution proposal. CPA Chunxiu Guan and Boshu Huang from KPMG have audited the financial statements (stand-alone and consolidated) and have issued an audit report. The above-mentioned business report, financial statements (stand-alone and consolidated) and earnings distribution proposal have been reviewed by the Audit Committee and no discrepancies have been found and a report was prepared for your review according to Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act.

To

2021 Annual Shareholders’ Meeting of Young Fast Optoelectronics Co., Ltd.

Young Fast Optoelectronics Co., Ltd.

Chairman of the Audit Committee:

May 11, 2022

  • 9 -

Attachment 3

The explanation for the remuneration received by the directors in 2021 is as follows:

  • I. Be handled in accordance with: The Company’s “Articles of Incorporation” and “The Regulation of the Remuneration Management of the Directors, Functional Committee Members and Managers.”

  • II. The Company's standard of paying the director's remuneration is based on the responsibilities, risks, the time that invested in, and other factors, with a comprehensive consideration, the relationship with the payment of the remuneration would be described clearly:

  • (I) According to Article 24 of the Company's Articles of Incorporation, the director's remuneration shall not be more than 1.5% of the annual profit. Also, it shall be based on the self-evaluation performance of each director, the frequency of participating in the board of directors, the hours of receiving the training, etc., and the contribution to the Company's performance. It shall also be referred to the Company’s entire operation performance, operation risks of the industry, and the development trends in the future, etc., and a reasonable remuneration will be paid.

  • (II) The regulation of the remuneration management of the directors, functional Committee members and managers also states the principles for paying the directors' remuneration as follows:

    1. The remuneration for the audit committee member (independent director): NT$ 40,000 dollars per month.

    2. The remuneration for the non-independent directors who participate in the daily operation of the Company: According to Article 21 of the Articles of Incorporation, the board of directors is authorized to receive the remuneration according to the directors’ management responsibilities, the level to participate in the operation and the value of the contributions, and the usual level of the other companies in the industry.

    3. The managers of non-independent directors who participate in the daily operation of the Company: salary, position bonus, allowance, various bonuses and welfare, pension, severance pay and other salaries, are handled in accordance with the Company's salary management measures.

    4. Business conduction related expense: transportation fee is NT$ 10,000 dollars for the independent directors to attend each meeting.

  • 10 -

III. Details of the remuneration

The estimated distribution details of the director's remuneration (including remuneration received by part-time employees) in 2021

Title Name Remuneration for directors Remuneration for directors Remuneration for directors Remuneration for directors A, B, C and D
as a % of the net
profits after tax		 A, B, C and D
as a % of the net
profits after tax		 Remuneration for employees with concurrent positions in the
Companyand other companies		 Remuneration for employees with concurrent positions in the
Companyand other companies		 Remuneration for employees with concurrent positions in the
Companyand other companies		 Remuneration for employees with concurrent positions in the
Companyand other companies		 Remuneration for employees with concurrent positions in the
Companyand other companies		 Remuneration for employees with concurrent positions in the
Companyand other companies		 Remuneration for employees with concurrent positions in the
Companyand other companies		 Remuneration for employees with concurrent positions in the
Companyand other companies		 A, B, C, D, E, F and G
as a % of the net profits
after tax		 A, B, C, D, E, F and G
as a % of the net profits
after tax		 Remuneration from
reinvested enterprises
outside subsidiaries or
from the parent
company
Base
remuneration
(A)		 Severance and
pension (B)		 Remuneration
for directors (C)		 Business
execution
expenses(D)
Remuneration,
bonus, allowance
(E)		 Severance and
pension (F)		 Remuneration for employees
(G)
The
Company		 All
companies
in the
financial
statements		 The
Company		 All
companies
in the
financial
statements		 The
Company		 All
companies
in the
financial
statements
The
Company		 All
companies
in the
financial
statements		 The
Company		 All
companies
in the
financial
statements		 The
Company		 All
companies
in the
financial
statements		 The
Company		 All
companies
in the
financial
statements		 The Company All companies in
the financial
statements		 The Company All companies
in the financial
statements
Cash
amoun		 Stock
amount		 Cash
amoun		 Stock
amount
Chairperson ChihchiangPai 4,667 4,667 0 0 623 623 0 0 1.89% 1.89% 0 0 0 0 0 0 0 0 1.89% 1.89% 0
Director Soy Young
Enterprise Co.,Ltd.		 0 0 500 500 0.18% 0.18% NA NA 0.18% 0.18%
Representative:
Shujuan Xu		 0 0
Director Hold-Key Electric
Wire & Cable Co.,
Ltd.		 0 0 500 500 0.18% 0.18% NA NA 0.18% 0.18%
Representative:
XinzhengLi		 4,118 4,118 1.47% 1.47%
Director Yichuan Hsu 0 0 500 500 0.18% 0.18% 4,288 4,288 1.71% 1.71%
Director Fengyu Ho 0 0 500 500 0.18% 0.18% 3,178 3,178 1.32% 1.32%
Director Menggui Lin 0 0 500 500 0.18% 0.18% 4,298 4,298 1.72% 1.72%
Independent
director		 Chengkun Kuo 480 480 0 0 500 500 60 60 0.37% 0.37% 0 0 0 0 0 0 0 0 0.37% 0.37%
Independent
director		 Wenxiu Zhang 480 480 0 0 500 500 60 60 0.37% 0.37% 0.37% 0.37%
Independent
director		 Xiege Hao 480 480 0 0 500 500 60 60 0.37% 0.37% 0.37% 0.37%

Note: It is approved by the board of directors on May 11th, 2022 to distribute NT$4,623,000 thousand dollars for the directors' remuneration, and NT$6,353,000 thousand dollars for the employees’ remuneration is estimated based on the proportion of the actual distribution amount for 2020 in 2021.

  • 11 -

Attachment 4

Young Fast Optoelectronics Co., Ltd. Comparison of the previous and the amended Corporate Social Responsibility Principles

Content Amendment Provisions before amendment Provisions after amendment basis and reason Corporate Social Responsibility Principles Sustainable Development Principles Make text revision in accordance with laws and regulations. Article 2: Article 2: Make text revision in In fulfilling corporate social In fulfilling sustainable development accordance responsibility initiatives, The corporation initiatives, The corporation shall, in its with laws and shall, in its corporate management corporate management guidelines and regulations. guidelines and business operations, give business operations, give due consideration due consideration to the rights and interests to the rights and interests of stakeholders of stakeholders and, while pursuing and, while pursuing sustainable operations sustainable operations and profits, also give and profits, also give due consideration to due consideration to the environment, the environment, society and corporate society and corporate governance. governance. The Principles applies to the The Principles applies to the corporation, including the entire operations corporation, including the entire operations of each such company and its business of each such company and its business group. group. Article 3: Make text Article 3: To implement corporate social revision in To implement sustainable development responsibility initiatives, The corporation accordance are advised to follow the principles below: initiatives, The corporation are advised to with laws and 1. Exercise corporate governance. follow the principles below: regulations. 2. Foster a sustainable environment. 1. Exercise corporate governance. 3. Preserve public welfare. 2. Foster a sustainable environment. 4. Enhance disclosure of corporate social 3. Preserve public welfare. responsibility information. 4. Enhance disclosure of corporate social responsibility information. Article 4: Article 4: Make text The corporation shall take into The corporation shall take into revision in consideration the correlation between the consideration the correlation between the accordance development of domestic and international development of domestic and international with laws and corporate social responsibility principles sustainable development principles and regulations. and corporate core business operations, and corporate core business operations, and the the effect of the operation of individual effect of the operation of individual

  • 12 -

Amendment basis and reason

Content Amendment Provisions before amendment Provisions after amendment basis and reason companies and of their respective business companies and of their respective business groups as a whole on stakeholders, in groups as a whole on stakeholders, in establishing their policies, systems or establishing their policies, systems or relevant management guidelines, and relevant management guidelines, and concrete promotion plans for corporate concrete promotion plans for sustainable social responsibility programs, which shall development programs, which shall be be approved by the board of directors and approved by the board of directors and then then reported to the shareholders meeting. reported to the shareholders meeting. When a shareholder proposes a motion When a shareholder proposes a motion involving corporate social responsibility, involving sustainable development, the the company's board of directors is advised company's board of directors is advised to to review and consider including it in the review and consider including it in the shareholders meeting agenda. shareholders meeting agenda. Article 6: Article 6: Make text The directors of the corporation shall The directors of the corporation shall revision in exercise the due care of good administrators exercise the due care of good administrators accordance to urge the company to perform its to urge the company to perform its with laws and corporate social responsibility initiatives, sustainable development initiatives, regulations. examine the results of the implementation examine the results of the implementation thereof from time to time and continually thereof from time to time and continually make adjustments so as to ensure the make adjustments so as to ensure the thorough implementation of its corporate thorough implementation of its sustainable social responsibility policies. development policies. The board of directors of the The board of directors of the corporation is advised to give full corporation is advised to give full consideration to the interests of consideration to the interests of stakeholders, including the following stakeholders, including the following matters, in the company's performance of matters, in the company's performance of its corporate social responsibility its sustainable development initiatives: initiatives: 1. Identifying the company's sustainable 1. Identifying the company's corporate development mission or vision, and social responsibility mission or vision, declaring its sustainable development and declaring its corporate social policy, systems or relevant management responsibility policy, systems or guidelines; relevant management guidelines; 2. Making sustainable development the 2. Making corporate social responsibility guiding principle of the company's the guiding principle of the company's operations and development, and operations and development, and ratifying concrete promotional plans for ratifying concrete promotional plans for sustainable development initiatives; and corporate social responsibility 3. Enhancing the timeliness and accuracy initiatives; and of the disclosure of sustainable 3. Enhancing the timeliness and accuracy development information. of the disclosure of corporate social responsibility information.

The board of directors shall appoint The board of directors shall appoint executive-level positions with executive-level positions with responsibility for economic, environmental, responsibility for economic, environmental, and social issues resulting from the business and social issues resulting from the business

  • 13 -

Content Amendment Provisions before amendment Provisions after amendment basis and reason operations of the corporation, and to report operations of the corporation, and to report the status of the handling to the board of the status of the handling to the board of directors. The handling procedures and the directors. The handling procedures and the responsible person for each relevant issue responsible person for each relevant issue shall be concrete and clear. shall be concrete and clear. Following is omitted. Following is omitted. Article 7: Article 7: Make text The corporation is advised to, on a The corporation is advised to, on a revision in regular basis, organize education and regular basis, organize education and accordance training on the implementation of corporate training on the implementation of with laws and social responsibility initiatives, including sustainable development initiatives, regulations. promotion of the matters prescribed in including promotion of the matters paragraph 2 of the preceding article. prescribed in paragraph 2 of the preceding article. Article 8: Article 8: Make text For the purpose of managing For the purpose of management of revision in corporate social responsibility initiatives, sustainable development, The corporation accordance The corporation is advised to establish an should establish a governance structure to with laws and exclusively (or concurrently) dedicated unit promote sustainable development and regulations. to be in charge of proposing and enforcing establish an exclusively (or concurrently) the corporate social responsibility policies, dedicated unit to be in charge of proposing systems, or relevant management and enforcing sustainable development and guidelines, and concrete promotional plans implementation of sustainable development and to report on the same to the board of policies, systems or relevant management directors on a periodic basis. guidelines, and concrete promotional plans The second item is omitted. and to report on the same to the board of It is advised that the employee directors on a periodic basis. performance evaluation system be combined with corporate social The second item is omitted. responsibility policies, and that a clear and It is advised that the employee effective incentive and discipline system be performance evaluation system be established. combined with sustainable development policies, and that a clear and effective incentive and discipline system be established. Article 9: Article 9: Make text The corporation shall, based on respect The corporation shall, based on revision in for the rights and interests of stakeholders, accordance respect for the rights and interests of identify stakeholders of the company, and with laws and establish a designated section for stakeholders, identify stakeholders of the regulations. stakeholders on the company website; company, and establish a designated understand the reasonable expectations and section for stakeholders on the company demands of stakeholders through proper website; understand the reasonable communication with them, and adequately expectations and demands of stakeholders respond to the important corporate social responsibility issues which they are through proper communication with them, concerned about. and adequately respond to the important sustainable development issues which they

  • 14 -
Content Content Content Content Content Amendment
basis and
reason
Provisions before amendment Provisions after amendment
are concerned about.
Article 11:
The corporation is advised to endeavor
Article 11:
The corporation is advised to endeavor



Make text
revision in
accordance
with laws and
regulations.
to utilize all resources more efficiently and


to utilize
energymore efficiently and use
use renewable materials which have a low


renewable materials which have a low
impact on the environment to improve

sustainability of natural resources.
impact on the environment to improve
sustainabilityof natural resources.
Article 16:
The corporation is advised to assess
Article 16:
The corporation is advised to assess














Make text
revision in
accordance
with laws and
regulations.
the current and future potential risks and
the current and future potential risks and
opportunities that climate change may
opportunities that climate change may
present to enterprises and to adopt climate
present to enterprises and to adopt climate
related measures. related measures.
The corporation is advised to adopt
The corporation is advised to adopt
standards or guidelines generally used in
standards or guidelines generally used in
Taiwan and abroad to enforce corporate
Taiwan and abroad to enforce corporate
greenhouse gas inventory and to make
greenhouse gas inventory and to make
disclosures thereof, the scope of which shall
disclosures thereof, the scope of which shall
include the following: include the following:
1. Direct
greenhouse
gas
emissions:
emissions from operations that are
owned or controlled by the company.
2. Indirect greenhouse gas emissions:
emissions resulting from the generation
of externally purchased or acquired
electricity, heating, or steam.
Following isomitted.
1. Direct greenhouse gas emissions:




emissions from operations that are
owned or controlled by the company.
2. Indirect greenhouse gas emissions:：
emissions resulting from the input
electricity, heating, or steam.
3. Other indirect emissions: emissions from
Company activities that are not indirect
energy emissions but come from
emission sources owned or controlled
by other companies.
Following is omitted.		 Company activities that are not indirect

energy emissions but come from

emission sources owned or controlled
Chapter 5 Enhancing Disclosure of
Corporate Social Responsibility		 Chapter 5 Enhancing Disclosure of
Sustainable Development		 Make text
revision in
accordance
with laws and
regulations.
Article 27:
The
corporation
shall
disclose
Article 27:
The
corporation
shall
disclose






Make text
revision in
accordance
with laws and
regulations.
information according to relevant laws,
information according to relevant laws,
regulations and the Corporate Governance
regulations and the Corporate Governance
Best Practice Principles for TWSE/GTSM
Best Practice Principles for TWSE/GTSM
listed Companies and shall fully disclose
listed Companies and shall fully disclose
relevant and reliable information relating to
relevant and reliable information relating to
their
corporate
social
responsibility
their		 sustainable developmentinitiatives to
initiatives
to
improve
information
improve information transparency.
  • 15 -
Content Content Content Content Amendment
basis and
reason
Provisions before amendment Provisions after amendment
transparency. Relevant
information
relating
to
















Relevant
information
relating
to
sustainable
development
which
The
corporate social responsibility which The
corporation shall disclose includes:
corporation shall disclose includes:
















1.
2.
3.
4.
5.
6.		 The
policy,
systems
or
relevant

1. The
policy,
systems
or
relevant
management guidelines, and concrete
promotion plans for corporate social
responsibility initiatives, as resolved by
the board of directors.
2. The risks and the impact on the
corporate operations and financial
condition
arising
from
exercising
corporate
governance,
fostering
a
sustainable environment and preserving
social public welfare.
3. Goals and measures for realizing the
corporate
social
responsibility
initiatives
established
by
the
companies,
and
performance
in
implementation.
4. Major stakeholders and their concerns.
5. Disclosure of information on major
suppliers'
management
and
performance with respect to major
environmental and social issues.
6. Other information relating to corporate
social responsibilityinitiatives.		 management guidelines, and concrete
promotion
plans
for		 sustainable
development y initiatives, as resolved
by the board of directors.
The risks and the impact on the
corporate operations and financial
condition
arising
from
exercising
corporate
governance,
fostering
a
sustainable environment and preserving
social public welfare.
Goals and measures for realizing the
sustainable
development
initiatives
established by the companies, and
performance in implementation.
Major stakeholders and their concerns.
Disclosure of information on major
suppliers'
management
and
performance with respect to major
environmental and social issues.
Other
information
relating
to
sustainable developmentinitiatives.
Article 28:
The
corporation
shall
adopt
Article 28:
The
corporation
shall
adopt











Make text
revision in
accordance
with laws and
regulations.


internationally widely recognized standards

internationally widely recognized standards

or guidelines when producing corporate

or guidelines when producing		 sustainable

social responsibility reports, to disclose the

development reports, to disclose the status

status of their implementation of the

of their implementation of the		 sustainable

corporate social responsibility policy. It

development policy. It also is advisable to

also is advisable to obtain a third-party

obtain
a
third-party
assurance
or

assurance or verification for reports to

verification for reports to enhance the

enhance the reliability of the information in

reliability of the information in the reports.

the reports. The reports are advised to

The reports are advised to include:





1. The
policy,
system,
or
relevant
management guidelines and concrete
promotion plans for implementing
sustainable developmentinitiatives.
Following isomitted.		 The
policy,
system,
or
relevant
include:
management guidelines and concrete
1. The
policy,
system,
or
relevant
management guidelines and concrete
promotion plans for implementing
corporate
social
responsibility
initiatives.
promotion plans for implementing
  • 16 -
Content Content Content Content Amendment
basis and
reason
Provisions before amendment Provisions after amendment
Followingisomitted.
Article 29:
The corporation shall at all times
Article 29:
The corporation shall at all times







Make text
revision in
accordance
with laws and
regulations.

monitor the development of domestic and

monitor the development of domestic and

foreign corporate social responsibility

foreign		 sustainable developmentstandards

standards and the change of business

and the		 change of business environment so

environment so as to examine and improve

as to examine and improve their established

their
established
corporate
social

sustainable development framework and to

responsibility framework and to obtain
obtain
better
results
from
the

better results from the implementation of

implementation
of
the		 sustainable

the corporate social responsibility policy.
development policy.
Article 30:
This Principles was established on Mar. 25,
2013.
The 1st amendment was made on Aug. 11,
2016
The 2nd amendment was made on Mar. 25,
2020.

Article 30:
This Principles was established on Mar. 25,
2013.
The 1st amendment was made on Aug. 11,
2016
The 2nd amendment was made on Mar. 25,
2020.
The 3rd amendment was made on Mar. 11,

Add the date
and number
of
amendment.

2022.
  • 17 -

Attachment 5 Accountants’ Audit Report

To the Board of Directors of Young Fast Optoelectronics Co., Ltd.:

Audit Opinion

We have completed our review of Young Fast Optoelectronics Co. and Subsidiaries (Young Fast Group) Consolidated Balance Sheet for December 31, 2021 and 2020; and Consolidated Statements of Comprehensive Income, Consolidated Statements of Changes in Equity, Consolidated Statements of Cash Flows, and Notes to the Consolidated Financial Statements (including a summary of significant accounting policies) for January 1 – December 31, 2021 and 2020.

In our opinion, the aforementioned consolidated financial statements in all major respects are in compliance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretation, or SIC Interpretation endorsed by the Financial Supervisory Commission. They are sufficient to adequately express the consolidated financial status of Young Fast Group as of December 31, 2021 and 2020 and its consolidated financial performance and consolidated cash flow from January 1 through December 31, 2021 and 2020.

Basis for audit 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 Young Fast Group in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China (the “Norm”), and we have fulfilled our other ethical responsibilities in accordance with the Norm. 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 refer to the most important matters for the audit of Young Fast Group's 2021 consolidated financial statements based on our professional judgment. 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. In our judgment, revenue recognition constitutes a key audit matter to be communicated in the audit report.

  • 18 -

For details of accounting policies regarding revenue recognition, please refer to Note 4 (17) of the consolidated financial statements on Recognition of Revenue; for details of revenue related disclosures, please refer to Note 6 (21) the consolidated financial statements. Explanation of Key Audit Matters:

Sales revenue of Young Fast Group stands as the primary indicator for investors and management in evaluating its financial or business performance. Moreover, as a listed company, Young Fast Group is highly regarded by the investing public. Therefore, we identify revenue recognition as an important item in the audit of current year financial statements. Corresponding Audit Procedures:

Our main audit procedures regarding the above key audit matters include:

  • Testing the effectiveness of internal control design and implementation related to revenue recognition.

  • Conducting trend analysis for the top ten customers in terms of sales, including a comparison of the customer list and sales revenue amounts between the current period and the most recent period and the same period of last year to assess whether there are any significant abnormalities. If there are major changes, the causes are identified and analyzed.

  • Sampling and checking sales transactions of the whole year to evaluate the authenticity of sales transactions, the correctness of the recognized amounts of sales revenue, and the reasonableness of the time of accounting.

  • Testing a sample of sales transactions in the period before and after the end of the year to assess whether the timing of revenue recognition is appropriate.

Other Matters

Young Fast Optoelectronics Co., Ltd. has prepared parent company only financial statements for 2021 and 2020, and the audit reports with unqualified opinions that we have issued are on file for reference.

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

  • 19 -

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

Those charged with governance (including the Audit Committee) are responsible for overseeing the financial reporting process of Young Fast Group.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

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

  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 internal control of Young Fast Group.

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

  5. 20 -

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

  7. Obtain sufficient and appropriate audit evidence for the parent company only financial information within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the audit of the Group. We remain solely responsible for our audit opinion regarding the Group.

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 the governance unit, we have determined key audit matters of Young Fast Group's 2021 consolidated financial statements. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

KPMG Taiwan

Chun-Hsiu Kuan Accountant: Pai-Shu Huang Securities Regulatory Authority (88) Taizaizheng (6) No. 18311 Authorizing Document Number : (88) Taizaizheng 6 Zi No. 0920122026[March 11, 2022 ]

  • 21 -

Young Fast Optoelectronics Co., Ltd. and Subsidiaries

Consolidated balance sheet

December 31, 2021 and 2020

Unit: NTD Thousand

Assets
11xx
Current Assets:
1100
Cash and cash equivalents (Note VI (I))
1110
Current financial assets at fair value through profit or loss (Note 6 (2))
1120
Current financial assets at fair value through other comprehensive income (Note
6 (3))
1136
Financial assets measured at amortized cost - current (Notes 6 (4) and 8)
1150
Notes receivable, net (Note 6 (5) and (21))
1170
Accounts receivable, net (Note 6 (5) and (21))
1180
Accounts receivable due from related parties (Note 6 (5), (21) and 7)
1200
Other receivables (Note 6 (6))
130X
Inventory (Notes 6 (7) and 9)
1460
Non-current assets classified as held for sale, net (Note 6 (8))
1470
Other current assets
Total current assets
15xx
Non-current assets:
1517
Non-current financial assets at fair value through other comprehensive income
(Note 6 (3))
1536
Financial assets measured at amortized cost - current (Notes 6 (4) and 8)
1550
Investments accounted for using equity method, net (Note 6 (9))
1600
Property, plant and equipment (Notes 6 (10) and 9)
1755
Right of use assets (Notes 6 (11), (12), (15) and 7)
1760
Investment real estate, net (Note 6 (11) and (12))
1780
Intangible assets (Note 6 (13))
1840
Deferred tax assets (Note 6 (18))
1915
Prepaid equipment (Note 6 (10))
1990
Other non-current assets (Note 6 (6))
Total non-current assets
1xxx
Total assets		 2021.12.31
Amount
％
$ 358,053
6
57,132
1
3,159,014
52
-
-
111,718
2
159,832
3
15,476 -
3,665 -
327,332
5
-
-
16,754
-		 2020.12.31
Amount
％

412,452
8

60,912
1

2,558,789
49
1,805 -

122,572
2

82,616
2
321 -
4,819 -

197,518
4
21,553 -
12,046
-

3,475,403
66

43,784
1
-
-

296,438
6

864,506
17

89,004
2

320,857
6
-
-

39,707
1
21,393 -

63,853
1

1,739,542
34

5,214,945
100
Liabilities and Equity
21xx
Current liabilities:
2100
Short-term loans (Notes 6 (14) and 9)
2130
Current contract liabilities (Note 6 (21)
2150
Notes payable
2170
Accounts payable
2180
Accounts payable, related parties (Note 7)
2200
Other payables (Note 6 (22) and 7)
2230
Current tax liabilities
2250
Current provisions (Note 6 (16))
2260
Liabilities directly related to non-current assets available for sale (Note 6(8))
2281
Lease liabilities (Notes 6 (15))
2282
Lease liabilities－Related parties (Notes 6 (15) and 7)
2399
Other current liabilities
Total current liabilities
25xx
Non-current liabilities:
2551
Provision for employee benefit liabilities, non-current (Note 6 (17))
2552
Provision for long-term liabilities for warranties (Note 6 (16))
2556
Provision for long-term liabilities for decommissioning, rehabilitation, and
restoration costs (Note 6 (16))
2570
Deferred tax liabilities (Note 6 (18))
2581
Lease liabilities (Notes 6 (15))
2582
Lease liabilities－Related parties (Notes 6 (15) and 7)
2670
Other non current liabilities (Note 7)
Total non-current liabilities
2xxx
Total liabilities
31xx
Owners' equity attributable to the parent company (Notes VI (8), (9), (17),
(18) and
(19)):
3110
Share capital from common stock
3200
Capital reserve
Retained earnings:
3310
Legal reserve
3350
Undistributed surplus earnings
Total retained earnings
3400
Other equity interest
Subtotal of equity attributable to owners of parent company
36xx
Non-controlling interests
3xxx
Total Equity
2-3xxxTotal liabilities and equity		 2021.12.31
Amount
％
$ 132,641
2
6,028 -
675 -
148,099
3
8,675 -
175,032
4
19,604 -
16,104 -
-
-
94 -
17,421 -
4,496
-		 2020.12.31
Amount
％

24,970
1
14,983 -
32 -

122,894
3
7,843 -

158,964
3
13,592 -
56,624
1
318 -
89 -
11,446 -
4,315
-
4,208,976
69
528,869
9

416,070
8
128,266
2
2,632 -
297,329
5
868,016
14
140,683
3
297,285
5
6,060 -
32,981
1
15,842 -
62,500
1
8,405 -
80,284
1
6,131 -
2,003 -
17,254 -
61,622
1
72,505
1
8,740 -

-
-
6,131 -
27 -
17,849 -

12,330 -

71,477
2

248,204
3

116,554
2

777,073
12

532,624
10

1,513,276
25

1,513,276
29

1,851,594
31

2,077,180
34

2,228,508
43

43,385
1
532,991
9

24,523 -

272,466
5

576,376
10

296,989
5

1,062,751
18

599,232
12

5,229,583
87

4,638,005
89

53,914
1

44,316
1

5,283,497
88

4,682,321
90
$
6,060,570
100		 $
6,060,570
100
5,214,945
100

(Please refer to the attached notes to the consolidated financial statements) Manager: Yichuan Hsu

Chairman: Chihchiang Pai

Chief Accountant: Weiju Hsu

  • 22 -

Young Fast Optoelectronics Co., Ltd. and Subsidiaries

Consolidated Statements of Comprehensive Income January 1 to December 31, 2021 and 2020

Young Fast Optoelectronics Co., Ltd. and Subsidiaries
Consolidated Statements of Comprehensive Income
January 1 to December 31, 2021 and 2020
4000
Operating revenue (Note 6 (21) and 7)
5000
Operating costs (Notes 6 (7), (10), (11), (13), (15), (16), (17), 7, and 12)
5900
Gross profit
6000
Operating expenses (Notes 6 (5), (6), (10), (11), (13), (15), (17), (22), 7, and 12):
6100
Marketing expenses
6200
Management expenses
6300
Research and development expenses
6450
Expected credit loss
Total operating expenses
6900
Net operating profit (loss)
7000
Non-operating revenue and expenses (Notes 6 (2), (8), (9), (12), (15), (23), 7 and 12):
7100
Interest income
7010
Other income
7020
Other gains and losses
7050
Finance costs, net
7060
Share of profit of associates accounted for using equity method
Total non-operating revenue and expenses
7900
Net profit from continuing operations before tax
7950
Less: Income tax expense (Note 6 (18))
8000
Net profit from continuing operations
Profit or loss from discontinued operations:
8100
Gain (loss) from discontinued operations, net of tax (Note 6 (8))
8200
Net profit for the period
8300
Other comprehensive income (Note 6 (9), (17), (18), and (19)):
8310
Components of other comprehensive income that will not be reclassified to profit or loss
8311
Remeasurement of defined benefit plan
8316
Unrealized losses from investments in equity instruments measured at fair value through other comprehensive
income
8320
Share of other comprehensive profits and losses of affiliated companies recognized using the equity method
8349
Income tax related to components of other comprehensive
Total items that will not be reclassified to profit or loss
8360
Items that may subsequently be reclassified to profit or loss
8361
Exchange differences on translation of foreign financial statements
8370
Share of other comprehensive profits and losses of affiliated companies recognized using the equity method
8399
Income tax related to components of other comprehensive income that will be reclassified to profit or loss
Total items that may subsequently be reclassified to profit or loss
8300
Other comprehensive income for the current period
8500
Total comprehensive income for the current period
Profit attributable to:
8610
Owners of parent
8620
Non-controlling interests
Comprehensive income attributable to:
8710
Owners of parent
8720
Non-controlling interests
9750
Basic EPS (Unit: New Taiwan Dollars) (Note 6 (20))
Net profit derived from continuing operations
Net profit (loss) derived from discontinued operations
9850
Diluted EPS (Unit: New Taiwan Dollars) (Note 6 (20))
Net profit derived from continuing operations
Net profit (loss) derived from discontinued operations		 Unit: NTD Thousand
2021
2020
Amount
％
Amount
％
$ 1,449,291
100
926,478
100
1,167,724
81
741,745
80
281,567
19
184,733
20
38,561
3
31,215
3
139,071
10
122,567
13
45,049
3
45,508
5
4,795
-
(4,203)
-
227,476
16
195,087
21
54,091
3
(10,354)
(1)
293
-
3,748
-
185,534
13
189,842
21
2,132
-
4,470
-
(3,250)
-
(4,185)
-
25,702
2
28,238
3
210,411
15
222,113
24
264,502
18
211,759
23
29,973
2
7,491
1
234,529
16
204,268
22
61,936
4
(2,760)
-
296,465
20
201,508
22
(50)
-
365
-
574,849
40
(56,184)
(6)
(3)
-
23
-
(10)
-
73
-
574,806
40
(55,869)
(6)
(110,763)
(8)
(65,175)
(7)
(567)
-
1,036
-
-
-
-
-
(111,330)
(8)
(64,139)
(7)
463,476
32
(120,008)
(13)
$
759,941
52
81,500
9
$ 279,430
19
188,309
21
17,035
1
13,199
1
$
296,465
20
201,508
22
$ 742,906
51
68,301
7
17,035
1
13,199
2
$
759,941
52
81,500
9
$ 1.44
1.26
0.41
(0.02)
Amount
$ 1,449,291
1,167,724		 Amount

926,478

741,745

281,567

19

184,733

38,561
139,071
45,049
4,795

3

10

3

-

31,215

122,567

45,508
(4,203)

227,476

16

195,087

54,091

3

(10,354)

293
185,534
2,132
(3,250)
25,702

-

13

-

-

2
3,748

189,842
4,470
(4,185)

28,238

210,411

15

222,113

264,502
29,973

18

2

211,759

7,491

234,529
61,936

16

4

204,268

(2,760)

296,465

20

201,508

(50)
574,849
(3)
(10)

-

40

-

-
365

(56,184)
23
73

574,806

40
(55,869)

(110,763)
(567)
-

(8)

-
-

(65,175)
1,036
-
(111,330)
(8)
(64,139)

463,476


32


(120,008)

$
759,941

52

81,500

$ 279,430
17,035

19

1

188,309

13,199

$
296,465

20

201,508

$ 742,906
17,035

51

1

68,301

13,199

$
759,941

52

81,500

$
1.44
0.41

$ 1.85
1.24
$ 1.43
0.41
1.26
(0.02)
$ 1.84
1.24

(Please refer to the attached notes to the consolidated financial statements) Manager: Yichuan Hsu

Chairman: Chihchiang Pai

Chief Accountant: Weiju Hsu

  • 23 -

Young Fast Optoelectronics Co., Ltd. and Subsidiaries

Consolidated Statements of Changes in Equity

January 1 to December 31, 2021 and 2020

Unit: NTD Thousand

Balance at January 1, 2020
Earnings allocation and distribution:
Provision for legal reserve
Common stock cash dividend
Changes in other capital reserve:
Cash dividends from capital reserve
Net profit for the period
Other comprehensive income, net of tax, for the period
Total comprehensive income for the period
Reduction in non-controlling interests
Balance at December 31, 2020
Earnings allocation and distribution:
Provision for legal reserve
Changes in other capital reserve:
Cash dividends from capital reserve
Net profit for the period
Other comprehensive income, net of tax, for the period
Total comprehensive income for the period
Reduction in non-controlling interests
Balance at December 31, 2021		 Equity attributable to owners of parent Equity attributable to owners of parent Equity attributable to owners of parent Equity attributable to owners of parent Equity attributable to owners of parent Non-
controlling
interests		 Total equity
Share capital
from common
stock		 Capital
reserve		 Retained earnings Total other equity interest
Exchange
differences
on
translation of
foreign
financial
statements
Unrealized gains
(losses) from
financial assets
measured at fair
value through
other
comprehensive
income
Total equity
attributable
to owners of
parent
Total

85,500
634,055
719,555
4,690,766
-
-
-
-

-
-
-
(60,531)
-
-
-
(60,531)

-
-
-
188,309

(64,139)
(56,184)
(120,323)
(120,008)
Exchange
differences
on
translation of
foreign
financial
statements
Unrealized gains
(losses) from
financial assets
measured at fair
value through
other
comprehensive
income

85,500
634,055
-
-

-
-
-
-

-
-

(64,139)
(56,184)
Legal reserve Undistributed
surplus earnings		 Total
$ 1,513,276
-
-
-
-
-
2,289,039
-
-
(60,531)
-
-
11,155
13,368
-

-
-
-
157,741

(13,368)
(60,531)
-
188,309
315
168,896

-

(60,531)
-

188,309

315
36,876
-

-

-

13,199

-
4,727,642
-
(60,531)
(60,531)

201,508
(120,008)
- - - 188,624
188,624


(64,139)
(56,184)



(120,323)
68,301

13,199

81,500
- - -
-

-


-
-


-
-

(5,759)


(5,759)
1,513,276
-
-
-
-
2,228,508
-
(151,328)
-
-
24,523
18,862

-
-
-
272,466

(18,862)
-
279,430
(43)
296,989

-
-

279,430

(43)
21,361
577,871
-
-
-
-

-
-

(111,330)
574,849
599,232
4,638,005
-
-
-
(151,328)
-
279,430

463,519
463,476

44,316
-

-

17,035

-


4,682,321
-
(151,328)

296,465
463,476
- - -
279,387


279,387



(111,330)
574,849



463,519
742,906

17,035

759,941
- - -
-

-


-
-


-
-

(7,437)


(7,437)
$
1,513,276
2,077,180
43,385
532,991
576,376
(89,969)
1,152,720
1,062,751
5,229,583

53,914


5,283,497

(Please refer to the attached notes to the consolidated financial statements) Manager: Yichuan Hsu

Chairman: Chihchiang Pai

Chief Accountant: Weiju Hsu

  • 24 -

Young Fast Optoelectronics Co., Ltd. and Subsidiaries

Consolidated Statements of Cash Flows

January 1 to December 31, 2021 and 2020

Unit: NTD Thousand

Cash flows from operating activities:
Profit (loss) from continuing operations before tax
Pre-tax net profit (loss) from discontinued operations
Net profit before tax for the current period
Adjustments:
Adjustments to reconcile profit (loss)
Depreciation expense
Amortization expense
Expected credit loss
Loss (gain) on financial assets at fair value through profit or loss
Interest expense
Interest income
Dividend income
Share of profit of associates accounted for using equity method
Proceeds from disposal of property, plant and equipment
Lease modification gains
Disposal gain on discontinued operations
Total income and expense items
Changes in operating assets and liabilities:
Changes in operating assets, net:
Notes receivable
Accounts receivable (including related parties)
Other receivables (including related parties)
Inventory
Other current assets
Other non-current assets
Total changes in operating assets, net
Changes in operating liabilities, net:
Contract liabilities
Notes payable
Accounts payable (including related parties)
Other payables
Provisions
Other current liabilities
Non-current net defined benefit liability
Decrease in other operating liabilities
Net changes in operating assets and liabilities
Total adjustments
Cash inflow generated from operations
Interest received
Interest paid
Payment of income tax
Net cash inflow from operating activities
Cash flows from (used in) investing activities:
Acquisition of financial assets at fair value through other comprehensive income
Capital reduction of non-current financial assets at fair value through other comprehensive income
Acquired financial assets measured at amortized cost
Acquisition of property, plant and equipment
Disposal of property, plant and equipment
Increase in refundable deposits
Acquisition of intangible assets
Decrease (increase) in prepaid equipment
Dividends received
Net cash flows (used in) from investing activities
Cash flows from (used in) financing activities:
Increase in short-term borrowings
Decrease in short-term borrowings
Increase (decrease) in deposits received
Payment of lease liabilities
Payment of cash dividends
Change in non-controlling interests
Net cash flows used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents for the period
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Composition of cash and cash equivalents:
Cash and cash equivalents reported in the statement of financial position
Cash and cash equivalents classified into non-current assets held for sale
Cash and cash equivalents at end of period		 2021
$ 264,502
61,936		 2020

211,759

(2,760)

326,438
94,721
331
4,795
3,780
3,250
(351)
(115,581)
(25,702)
(120)
(39)
(65,633)


208,999

85,493

2,697

(4,203)

(8,388)

4,185

(3,766)

(111,445)

(28,238)

(3,863)

-

-

(100,549)

(67,528)

(8,085)
(92,206)
1,930
(129,814)
(4,619)
13,979


(12,713)

10,326

1,264

(82,467)

(7,679)

(290)

(218,815)


(91,559)

(8,955)
643
26,037
12,697
39,764
181
(385)


11,779

(65)

(6,300)

38,759

46,950

3,004

(359)

69,982


93,768

(148,833)


2,209

(249,382)


(65,319)

77,056
351
(3,250)
(14,839)


143,680

3,766

(4,185)

(3,142)

59,318


140,119

(129,276)
19,418
(827)
(73,301)
120
(361)
(6,138)
5,551
139,822


(210,277)

-

(62)

(31,086)

3,863

(814)

-

(17,252)

147,806

(44,992)


(107,822)

797,760
(689,529)
2,625
(17,602)
(151,328)
(7,437)


469,842

(504,675)

(3,013)

(14,252)

(121,062)

(5,759)

(65,511)


(178,919)

(24,635)


(21,547)

(75,820)
433,873


(168,169)

602,042

$
358,053


433,873

$ 358,053
-


412,452
21,421
$
358,053

433,873

(Please refer to the attached notes to the consolidated financial statements) Manager: Yichuan Hsu

Chairman: Chihchiang Pai

Chief Accountant: Weiju Hsu

  • 25 -

Auditing Report of the Certified Accountants

To the Board of Directors of Young Fast Optoelectronics Co., Ltd.:

Audit Opinion

We have completed our review of Young Fast Optoelectronics Co. Balance Sheet for December 31, 2021 and 2020; and Statements of Comprehensive Income, Statements of Changes in Equity, Statements of Cash Flows, and Notes to the Parent Company Only Financial Statements (including a summary of significant accounting policies) for January 1 – December 31, 2021 and 2020.

In our opinion, the aforementioned parent company only financial statements in all material respects are in compliance with Regulations Governing the Preparation of Financial Reports by Securities Issuers. They are sufficient to adequately express the financial status of Young Fast Optoelectronics Co. as of December 31, 2021 and 2020 and its financial performance and cash flows from January 1 through December 31, 2021 and 2020.

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 Young Fast Optoelectronics Co., Ltd. in accordance with the Norm of Professional Ethics for Certified Public Accountants of the Republic of China (the “Norm”), and we have fulfilled our other ethical responsibilities in accordance with the Norm. 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 2021 parent company only financial statements of Young Fast Optoelectronics Co., Ltd. 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. In our judgment, revenue recognition constitutes a key audit matter to be communicated in the audit report.

For details of accounting policies regarding revenue recognition, please refer to Note 4 (17) of the parent company only financial statements on Recognition of Revenue; for details of revenue related disclosures, please refer to Note 6 (20) the parent company only financial statements.

  • 26 -

Explanation of Key Audit Matters:

Sales revenue of Young Fast Optoelectronics Co., Ltd. stands as the primary indicator for investors and management in evaluating its financial or business performance. Moreover, as a listed company, Young Fast Optoelectronics Co., Ltd. is highly regarded by the investing public. Therefore, we identify revenue recognition as an important item in the audit of current year financial statements.

Corresponding Audit Procedures:

Our main audit procedures regarding the above key audit matters include:

  • Testing the effectiveness of internal control design and implementation related to revenue recognition.

  • Conducting trend analysis for the top ten customers in terms of sales, including a comparison of the customer list and sales revenue amounts between the current period and the most recent period and the same period of last year to assess whether there are any significant abnormalities. If there are major changes, the causes are identified and analyzed.

  • Sampling and checking sales transactions of the whole year to evaluate the authenticity of sales transactions, the correctness of the recognized amounts of sales revenue, and the reasonableness of the time of accounting.

  • Testing a sample of sales transactions in the period before and after the end of the year to assess whether the timing of revenue recognition is appropriate.

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 requirements of 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 ability to continue as a going concern of Young Fast Optoelectronics Co., Ltd., disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate Young Fast Optoelectronics Co., Ltd. or to cease operations, or has no realistic alternative but to do so.

Those charged with governance (including the Audit Committee) are responsible for overseeing the financial reporting process of Young Fast Optoelectronics Co., Ltd.

  • 27 -

Auditor’s 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 auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with 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.

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 perform the following tasks:

  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 internal control of Young Fast Optoelectronics Co., Ltd.

  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 ability to continue as a going concern of Young Fast Optoelectronics Co., Ltd. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the 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 auditor's report. However, future events or conditions may cause Young Fast Optoelectronics Co., Ltd. to cease to continue as a going concern.

  5. 28 -

  6. Evaluate the overall presentation, structure and content of the parent company only financial statements, including the accompanying notes, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

  7. Obtain sufficient and appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method to express an opinion on these 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 regarding Young Fast Optoelectronics Co., Ltd.

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 2021 parent company only financial statements of Young Fast Optoelectronics Co., Ltd. and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication

KPMG Taiwan

Chun-Hsiu Kuan

Accountant:

Pai-Shu Huang

Securities Regulatory Authority (88) Taizaizheng (6) No. 18311 Authorizing Document Number : (88) Taizaizheng 6 Zi No. 0920122026 March 11, 2022

  • 29 -

Young Fast Optoelectronics Co., Ltd.

Balance sheet

December 31, 2021 and 2020

Unit: NTD Thousand

Assets
11xx
Current Assets:
1100
Cash and cash equivalents (Notes 6 (1) and 7)
1110
Current financial assets at fair value through profit or loss (Note 6 (2))
1120
Current financial assets at fair value through other comprehensive income
(Note 6 (3))
1150
Notes receivable, net (Note 6 (4) and (20))
1170
Accounts receivable, net (Note 6 (4) and (20))
1180
Accounts receivable due from related parties (Notes 6 (4), (20) and 7)
1200
Other receivables (Note 6 (5))
1210
Other receivables due from related parties, net (Note 6 (5) and 7)
130X
Inventory (Notes 6 (6) and 9)
1460
Non-current assets classified as held for sale, net (Note 6 (7))
1470
Other current assets
Total current assets
15xx
Non-current assets:
1517
Non-current financial assets at fair value through other comprehensive
income (Note 6 (3))
1550
Investments accounted for using equity method, net (Note 6 (8))
1600
Property, plant and equipment (Notes 6 (9), 7, and 9)
1755
Right of use assets (Notes 6 (10), (14), and 7)
1760
Investment real estate, net (Note 6 (11))
1780
Intangible assets (Note 6 (12))
1840
Deferred tax assets (Note 6 (17))
1915
Prepaid equipment
1990
Other non-current assets (Note 6 (5))
Total non-current assets		 2021.12.31
Amount
％
$ 279,313
5
57,132
1
3,159,014
54
111,718
2
159,832
3
15,476
-
1,814
-
122,700
2
221,448
4
-
-
5,637
-		 2020.12.31
Amount
％

316,670
6

60,912
1

2,558,789
51

122,572
2

82,616
2

321
-

2,357
-

179,817
4

110,116
2

21,235
-
6,858
-

3,462,263
68

43,784
1

1,001,368
20

404,773
8

19,420
-

76,544
2

-
-

35,282
1

7,941
-
5,875
-

1,594,987
32
Liabilities and Equity
21xx
Current liabilities:
2100
Short-term loans (Notes 6 (12), 7, and 9)
2130
Current contract liabilities (Note 6 (20))
2150
Notes payable
2170
Accounts payable
2180
Accounts payable, related parties (Note 7)
2200
Other payables (Note 6 (21) and 7)
2230
Current tax liabilities
2250
Current provisions (Note 6 (15))
2282
Lease liabilities－Related parties (Notes 6 (14) and 7)
2399
Other current liabilities
Total current liabilities
25xx
Non-current liabilities:
2551
Provision for employee benefit liabilities, non-current (Note 6 (16))
2552
Provision for long-term liabilities for warranties (Note 6 (15))
2556
Provision for long-term liabilities for decommissioning, rehabilitation, and
restoration costs (Note 6 (15))
2570
Deferred tax liabilities (Note 6 (17))
2582
Lease liabilities－Related parties (Notes 6 (14) and 7)
2670
Other non-current liabilities
Total non-current liabilities
2xxx
Total liabilities
31xx
Equity (Note 6 (7), (8), (16), (17), and (18)):
3110
Share capital from common stock
3200
Capital reserve
Retained earnings:
3310
Legal reserve
3350
Undistributed surplus earnings
Total retained earnings
3400
Other equity interest
3xxx
Total Equity
2-3xxxTotal liabilities and equity		 2021.12.31
Amount
％
$ 41,297
1
6,028 -
675 -
130,801
2
109,192
2
139,174
2
6,076 -
12,551 -
14,574 -
2,856
-		 2020.12.31
Amount
％

5,034 -
14,983 -
32 -

96,565
2

45,910
1

126,546
3
1,347 -
36,165
1
9,781 -
1,862
-

338,225
7
8,740 -

-
-
5,069 -
27 -

9,929 -

57,255
1

81,020
1

419,245
8

1,513,276
30

2,228,508
44

24,523 -

272,466
6

296,989
6

599,232
12

4,638,005
92

5,057,250
100

463,224
7

8,405 -
50,924
2
5,069 -
1,968 -
50,984
1
55,676
1

4,134,084
71

128,266
2
981,411
18
428,237
7
65,340
1
76,365
1
6,060
-
25,752
-
14,126
-
6,192
-

173,026
4

636,250
11

1,513,276
26

2,077,180
35
1,731,749
29
43,385
1
532,991
9

576,376
10

1,062,751
18

5,229,583
89

$
5,865,833
100

1xxx Total assets

$ 5,865,833 100 5,057,250 100

(For details, please refer to the attached notes to the parent company only financial statements) Manager: Yichuan Hsu

Chairman: Chihchiang Pai

Chief Accountant: Weiju Hsu

  • 30 -

Young Fast Optoelectronics Co., Ltd.

Statement of Comprehensive Income

January 1 to December 31, 2021 and 2020

Unit: NTD Thousand

4000
Operating revenue (Note 6 (20) and 7)
5000
Operating costs (Notes 6 (6), (9), (10), (12), (14), (15), (16), 7, and 12)
5900
Operating margin
6000
Operating expenses (Notes 6 (4), (5), (9), (10), (12), (14), (16), (21) 7, and 12):
6100
Marketing expenses
6200
Management expenses
6300
Research and development expenses
6450
Expected credit loss
Total operating expenses
6900
Net operating profit
7000
Non-operating revenue and expenses (Notes 6 (2), (7), (8), (11), (14), (22), 7 and 12):
7100
Interest income
7010
Other income
7020
Other gains and losses
7050
Finance costs
7060
Share of profit or loss of subsidiaries and affiliates accounted for using the equity method
Total non-operating revenue and expenses
7900
Net profit from continuing operations before tax
7950
Less: Income tax expense (benefit) (Note 6 (17))
8200
Net profit for the period
8300
Other comprehensive income (Note 6 (8), (16), (17), and (18)):
8310
Components of other comprehensive income that will not be reclassified to profit or
loss
8311
Remeasurement of defined benefit plan
8316
Unrealized losses from investments in equity instruments measured at fair value
through other comprehensive income
8320
Share of other comprehensive profits and losses of subsidiaries, affiliates, and joint
ventures recognized using the equity method
8349
Less: Income tax related to items that will not be reclassified
Total items that will not be reclassified to profit or loss
8360
Items that may subsequently be reclassified to profit or loss
8361
Exchange differences on translation of foreign financial statements
8380
Share of other comprehensive profits and losses of subsidiaries, affiliates, and joint
ventures recognized using the equity method
8399
Less: Income tax related to items that may be reclassified
Total items that may subsequently be reclassified to profit or loss
8300
Other comprehensive income, net of tax, for the period
8500
Total comprehensive income for the period
9710
Earnings per share (Unit: NTD) (Note 6 (19))
9750
Basic earnings per share
9850
Diluted earnings per share		 2021 ％
100

83		 2020 ％

100

80

20

2

10

5

-

17

3

-

14

(1)

-

4

17

20

-

20

-

(6)

-

-

(6)

(7)

-
-

(7)

(13)

7
1.24
Amount
$ 1,452,295
1,211,193		 Amount

929,178

746,430

241,102

17

182,748

26,279
102,499
45,049
4,795

2

7

3

-

22,613

94,488

45,393
(4,203)

178,622

12

158,291

62,480

5

24,457

490
123,402
57,246
(758)
54,220

-

8

4

-

3
4,031

129,665

(7,142)
(795)

34,795

234,600

15

160,554

297,080
17,650

20

1

185,011

(3,298)

279,430

19

188,309

(50)
574,849
(3)
(10)

-

40

-

-
365

(56,184)
23
73

574,806

40
(55,869)

(110,763)
(567)
-

(8)

-
-

(65,175)
1,036
-
(111,330)
(8)
(64,139)

463,476


32


(120,008)

$
742,906

51

68,301

$
1.85
$ 1.84 1.24

(For details, please refer to the attached notes to the parent company only financial statements) Chairman: Chihchiang Pai Manager: Yichuan Hsu Chief Accountant: Weiju Hsu

Chief Accountant: Weiju Hsu

  • 31 -

Young Fast Optoelectronics Co., Ltd. Statement of Changes in Equity

January 1 to December 31, 2021 and 2020

Unit: NTD Thousand

Balance at January 1, 2020
Earnings allocation and distribution:
Provision for legal reserve
Common stock cash dividend
Changes in other capital reserve:
Cash dividends from capital reserve
Net profit for the period
Other comprehensive income, net of tax, for the period
Total comprehensive income for the period
Balance at December 31, 2020
Earnings allocation and distribution:
Provision for legal reserve
Changes in other capital reserve:
Cash dividends from capital reserve
Net profit for the period
Other comprehensive income, net of tax, for the period
Total comprehensive income for the period
Balance at December 31, 2021		 Share capital
from common
stock		 Capital reserve Retained earnings Retained earnings Retained earnings Total other equity interest Total equity

4,690,766
-
(60,531)
(60,531)
188,309

(120,008)
Exchange
differences on
translation of
foreign financial
statements
Unrealized gains
(losses) from
financial assets
measured at fair
value through
other
comprehensive
income

85,500
634,055
-
-

-
-
-
-

-
-

(64,139)
(56,184)		 Total
Legal reserve Undistributed
surplus earnings		 Total
$ 1,513,276
-
-
-
-
-
2,289,039
-
-
(60,531)
-
-
11,155
13,368
-

-
-
-
157,741

(13,368)
(60,531)
-
188,309
315
168,896

-

(60,531)
-

188,309

315
719,555
-
-
-
-

(120,323)
- - - 188,624
188,624


(64,139)
(56,184)


(120,323)


68,301
1,513,276
-
-
-
-
2,228,508
-
(151,328)
-
-
24,523
18,862

-
-
-

272,466

(18,862)
-
279,430
(43)


296,989

-
-

279,430

(43)



21,361
577,871
-
-
-
-

-
-

(111,330)
574,849


599,232
-
-
-

463,519


4,638,005
-
(151,328)
279,430

463,476
- - -
279,387


279,387



(111,330)
574,849


463,519


742,906
$
1,513,276
2,077,180
43,385

532,991


576,376



(89,969)
1,152,720


1,062,751


5,229,583

(For details, please refer to the attached notes to the parent company only financial statements) Manager: Yichuan Hsu

Chairman: Chihchiang Pai

Chief Accountant: Weiju Hsu

  • 32 -

Young Fast Optoelectronics Co., Ltd.

Statement of Cash Flows

January 1 to December 31, 2021 and 2020

Cash flows from operating activities:
Profit (loss) before tax for the current period
Adjustments:
Adjustments to reconcile profit (loss)
Depreciation expense
Amortization expense
Expected credit loss
Loss (gain) on financial assets at fair value through profit or loss
Interest expense
Interest income
Dividend income
Profit from subsidiaries and affiliates accounted for using the equity method
Proceeds from disposal of property, plant and equipment
Lease modification benefits
Proceeds from disposal of non-current assets held for sale
Total income and expense items
Changes in operating assets and liabilities:
Changes in operating assets, net:
Notes receivable
Accounts receivable (including related parties)
Other receivables (including related parties)
Inventory
Other current assets
Other non-current assets
Total changes in operating assets, net
Changes in operating liabilities, net:
Contract liabilities
Notes payable
Accounts payable (including related parties)
Other payables
Provisions
Other current liabilities
Non-current net defined benefit liability
Decrease in other operating liabilities
Net changes in operating assets and liabilities
Total adjustments
Cash inflow generated from operations
Interest received
Interest paid
Payment of income tax
Net cash inflow from operating activities
Cash flows from (used in) investing activities:
Acquisition of financial assets at fair value through other comprehensive income
Capital reduction of non-current financial assets at fair value through other comprehensive income
Disposal of non-current assets held for sale
Acquisition of property, plant and equipment
Disposal of property, plant and equipment
Increase in refundable deposits
Acquisition of intangible assets
Decrease (increase) in other receivables due from related parties
Increase in prepaid equipment
Dividends received
Net cash inflow (outflow) from investing activities
Cash flows from (used in) financing activities:
Increase in short-term borrowings
Decrease in short-term borrowings
Increase in deposits received
Payment of lease liabilities
Decrease in other non-current liabilities
Payment of cash dividends
Net cash flows used in financing activities
Net decrease in cash and cash equivalents for the period
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period		 Unit: NTD Thousand
2021
2020
$ 297,080
185,011
29,639
22,633
78
-
4,795
(4,203)
3,780
(8,388)
758
795
(490)
(4,031)
(115,581)
(111,445)
(54,220)
(34,795)
(120)
(3,893)
(12)
-
(65,633)
-
(197,006)
(143,327)
(8,085)
(12,713)
(92,206)
36,900
5,406
8,489
(111,332)
(50,363)
1,221
(3,638)
13,979
-
(191,017)
(21,325)
(8,955)
11,779
643
(65)
97,518
15,929
9,971
37,550
27,310
32,899
994
651
(385)
(359)
127,096
98,384
(63,921)
77,059
(260,927)
(66,268)
36,153
118,743
490
4,031
(758)
(795)
(1,030)
(736)
34,855
121,243
(129,276)
(210,277)
19,418
-
17,375
-
(37,477)
(21,731)
120
6,862
(317)
(817)
(6,138)
-
51,844
(44,843)
(6,185)
(5,767)
147,562
153,798
56,926
(122,775)
119,600
392,945
(83,337)
(447,911)
20
-
(12,850)
(9,636)
(1,243)
-
(151,328)
(121,062)
(129,138)
(185,664)
(37,357)
(187,196)
316,670
503,866
$
279,313
316,670

(197,006)

(8,085)
(92,206)
5,406
(111,332)
1,221
13,979

(191,017)

(8,955)
643
97,518
9,971
27,310
994
(385)

127,096

(63,921)

(260,927)

36,153
490
(758)
(1,030)

34,855

(129,276)
19,418
17,375
(37,477)
120
(317)
(6,138)
51,844
(6,185)
147,562

56,926

119,600
(83,337)
20
(12,850)
(1,243)
(151,328)

(129,138)

(37,357)
316,670

$
279,313

(For details, please refer to the attached notes to the parent company only financial statements) Chairman: Chihchiang Pai Manager: Yichuan Hsu

Chief Accountant: Weiju Hsu

  • 33 -

Attachment 6 Young Fast Optoelectronics Co., Ltd. Earnings Distribution Statement Year 2021 UNIT: NT$ NOTES AMOUNT Unappropriated retained earnings, beginning of period 253,603,726 Less: Remeasurements of the defined benefit plan (44,600) Add: Reversal of appropriated retained earnings 279,431,273 Less: Provision for legal reserve（10%） (27,938,667) Net profits for the period 505,051,732 Distribution items: Shareholder cash dividends(NTD0.7/per share) (105,929,320) Unappropriated retained earnings, end of period 399,122,412 Chairperson: Chihchiang Pai Officer: Yichuan Hsu Accounting officer: Weiju Hsu

  • 34 -

Attachment 7

Young Fast Optoelectronics Co., Ltd.

Comparison of the previous and the amended “Procedures for the Acquisition or Disposal of Assets”

Content Amendment basis and Provisions before amendment Provisions after amendment reason Article8: Operational procedures Article8: Operational procedures In accordance for acquiring or disposing of real for acquiring or disposing of real with laws and property, equipment, or right-ofproperty, equipment, or right-ofregulations. use assets use assets I ～ III is omitted. I ～ III is omitted. IV (I) and (II) is omitted. IV (I) and (II) is omitted. (III)Where any one of the following (III)Where any one of the following circumstances applies with respect to circumstances applies with respect to the professional appraiser's appraisal the professional appraiser's appraisal results, unless all the appraisal results results, unless all the appraisal results for the assets to be acquired are higher for the assets to be acquired are higher than the transaction amount, or all the than the transaction amount, or all the appraisal results for the assets to be appraisal results for the assets to be disposed of are lower than the disposed of are lower than the transaction amount, a certified public transaction amount, a certified public accountant shall be engaged to perform accountant shall be engaged to perform the appraisal in accordance with the the appraisal and render a specific provisions of Statement of Auditing opinion regarding the reason for the Standards No. 20 published by the discrepancy and the appropriateness of ROC Accounting Research and the transaction price: Development Foundation (ARDF) and render a specific opinion regarding the reason for the discrepancy and the appropriateness of the transaction price: Following is omitted. Following is omitted. Article9: Operational procedures for Article9: Operational procedures for In accordance acquiring or disposing of securities acquiring or disposing of securities with laws and I is omitted. I is omitted. regulations. II. Appointment of experts to issue opinions II.Appointment of experts to issue opinions (I) If the dollar amount of the transaction (I)If the dollar amount of the transaction for acquiring or disposing of securities is for acquiring or disposing of securities is 20 percent of the company's paid-in 20 percent of the company's paid-in capital or NT$300 million or more, the capital or NT$300 million or more, the company shall additionally engage a company shall additionally engage a certified public accountant prior to the certified public accountant prior to the

  • 35 -

Content Amendment basis and Provisions before amendment Provisions after amendment reason date of occurrence of the event to date of occurrence of the event to provide an opinion regarding the provide an opinion regarding the reasonableness of the transaction price. reasonableness of the transaction price. If the CPA needs to use the report of an This requirement does not apply, expert as evidence, the CPA shall do so however, to publicly quoted prices of in accordance with the provisions of securities that have an active market or Statement of Auditing Standards No. 20 published by the ARDF. This requirement does not apply, however, to publicly quoted prices of securities that have an active market or Following is omitted. Following is omitted.ng is omitted.g is omitted. is omitted.omitted..

Following is omitted.ng is omitted.g is omitted. is omitted.omitted.. Article10: Related Party Transactions In accordance II. When the company intends to acquire or with laws and dispose of real property or right-of-use regulations. assets thereof from or to a related party, or when it intends to acquire or dispose of assets other than real property or right-of-use assets thereof from or to a related party and the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or NT$300 million or more, except in trading of domestic government bonds or bonds under repurchase and resale agreements, or subscription or redemption of money market funds issued by domestic securities investment trust enterprises, the company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by the board of directors and recognized by the supervisors: Following is omitted. III. If the company or a subsidiary thereof that is not a domestic public company will have a transaction set out in paragraph 2 and the transaction amount will reach 10 percent or more of the company’s total assets, the company

Article10: Related Party Transactions II. Appraisal and operating procedures

When the company intends to acquire or dispose of real property or right-of-use assets thereof from or to a related party, or when it intends to acquire or dispose of assets other than real property or rightof-use assets thereof from or to a related party and the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or NT$300 million or more, except in trading of domestic government bonds or bonds under repurchase and resale agreements, or subscription or redemption of money market funds issued by domestic securities investment trust enterprises, the company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by the board of directors and recognized by the supervisors: Following is omitted.

  • 36 -
Content Content Content Amendment
basis and
reason
Provisions before amendment Provisions after amendment
III. When the procedures for the acquisition
and disposal of assets are submitted for
discussion by the board of directors
pursuant to the preceding paragraph, 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.
Following isomitted.
IV. Assessment of reasonableness of
transaction costs
Following isomitted.
shall submit the materials in all the
subparagraphs of paragraph 2 to the
shareholders meeting for approval
before the transaction contract may be
entered into and any payment made.
However, this restriction does not apply
to transactions between the company
and its parent company or subsidiaries
or between its subsidiaries.
IV.The calculation of the transaction		 shall submit the materials in all the




























subparagraphs of paragraph 2 to the

shareholders meeting for approval

before the transaction contract may be

entered into and any payment made.

However, this restriction does not apply

to transactions between the company

and its parent company or subsidiaries








amounts referred to in paragraph 2 and
the preceding paragraph shall be made
in
accordance
with
Article
15,
paragraph 1 herein, and"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
shareholders meeting or board of
directors and
recognized by the
supervisors need not be counted toward
the transaction amount.
V.When the procedures for the acquisition
and disposal of assets are submitted for
discussion by the board of directors
pursuant to the preceding paragraph,
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.
Following isomitted.
VI.Assessment of reasonableness of
transaction costs
Followingisomitted.		 amounts referred to in paragraph 2 and

the preceding paragraph shall be made

in
accordance
with
Article
15,

paragraph 1 herein, and"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

shareholders meeting or board of
directors and
recognized by the

supervisors need not be counted toward
Article11: Operational procedures for
acquiring or disposing of intangible assets
or right-of-use assets thereof or
memberships
I~III is omitted		 Article11: Operational procedures for
acquiring or disposing of intangible assets
or right-of-use assets thereof or
memberships
I~III is omitted		 In accordance
with laws and
regulations.
  • 37 -
Content Content Content Amendment
basis and
reason
Provisions before amendment Provisions after amendment
IV.
(I) In acquiring or disposing of right-of-
use assets or memberships thereof
where the transaction amount reaches
1 percent of the company's paid-in
capital or NT$3 million or more, shall
obtain an appraisal report prior to the
date of occurrence of the event from a
professional appraiser.
(II) In acquiring or disposing of intangible
assets thereof where the transaction
amount reaches 10 percent of the
company's paid-in capital or NT$20
million or more, shall obtain an
appraisal report prior to the date of
occurrence of the event from a
professional appraiser.
(III) Where the company acquires or
disposes 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
NT$300 million or more, except in
transactions
with
a
domestic
government agency, the company shall
engage a certified public accountant
prior to the date of occurrence of the
event to render an opinion on the
reasonableness of the transaction
price; the CPA shall comply with the
provisions of Statement of Auditing
Standards No. 20 published by the
ARDF.


























IV.
(I) In
acquiring
or
disposing
of
memberships
thereof
where
the
transaction amount reaches 1 percent
of the company's paid-in capital or
NT$3 million or more, shall obtain an
appraisal report prior to the date of
occurrence of the event from a
professional appraiser.
(II) In acquiring or disposing of intangible
assetsor right-of-use assets thereof
where the transaction amount reaches
10 percent of the company's paid-in
capital or NT$20 million or more,
shall obtain an appraisal report prior
to the date of occurrence of the event
from a professional appraiser.
(III) Where the company acquires or
disposes 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
NT$300 million or more, except in
transactions
with
a
domestic
government agency, the company
shall engage a certified public
accountant prior to the date of
occurrence of the event to render an
opinion on the reasonableness of the
transaction price.























Article15: Procedures for public disclosure
of information
I.(I)~(VII) is 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



Article15: Procedures for public disclosure
of information
I.(I)~(VII) is omitted
provided, this shall not apply to the
following circumstances:
1. Trading of domestic government bonds
or foreign government bonds with a
rating that is not lower than the
sovereign rating of Taiwan.




In accordance
with laws and
regulations.

rating that is not lower than the

sovereign rating of Taiwan.
  • 38 -
Content Content Content Amendment
basis and
reason
Provisions before amendment Provisions after amendment
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.
Followingisomitted.











2. Where done by professional investors—
securities
trading
on
securities
exchanges
or
OTC
markets,
or
subscriptionof foreign government
bonds, or 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 or redemption of exchange
traded notes, 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.
Followingisomitted.		 Where done by professional investors—
securities
trading
on
securities
exchanges
or
OTC
markets,
or
subscriptionof foreign government
bonds, or 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 or redemption of exchange














Article20:This Procedures was established on Nov.
16, 2007.
The 1st amendment was made on Jun. 15, 2011.
The 2nd amendment was made on Jun. 21, 2012.
The 3rd amendment was made on Jun. 27, 2014.
The 4th amendment was made on Jun. 14, 2017.
The 5th amendment was made on Jun. 19, 2019.
The 6th amendment was made on Jun. 30, 2020.		 Article20:This Procedures was established on Nov.
16, 2007.
The 1st amendment was made on Jun. 15, 2011.
The 2nd amendment was made on Jun. 21, 2012.
The 3rd amendment was made on Jun. 27, 2014.
The 4th amendment was made on Jun. 14, 2017.
The 5th amendment was made on Jun. 19, 2019.
The 6th amendment was made on Jun. 30, 2020.
The 7th amendment was made on Jun. 29, 2022.		 Add the date
and number of
amendment.
  • 39 -

Attachment 8

Young Fast Optoelectronics Co., Ltd.

Comparison of the previous and the amended “Article of Incorporation”

Content Amendment basis and Provisions before amendment Provisions after amendment reason Article 10: Article 10: In accordance There are two types of shareholder There are two types of shareholder with laws and meeting: regular and special. The regular meeting: regular and special. The regular regulations. meeting is held once a year and shall be meeting is held once a year and shall be convened by the Board of Directors in convened by the Board of Directors in accordance with the law within six months accordance with the law within six after the end of each fiscal year. A special months after the end of each fiscal year. meeting can be convened according to the A special meeting can be convened law when necessary. according to the law when necessary; shareholders’ meeting can be held by means of visual communication network or other methods promulgated by the central competent authority. Article 24-1: Article 24-1: In accordance

Article 24-1: Article 24-1: In accordance If a surplus exists in the Company's yearly If a surplus exists in the Company's yearly with laws and final accounts, taxes should first be paid to final accounts, taxes should first be paid regulations. offset any prior deficits and 10% of the to offset any prior deficits and 10% of the current surplus is to be set aside as legal current surplus is to be set aside as legal reserve. In addition and in accordance with reserve. In addition and in accordance Paragraph 1, Article 41 of the Securities with Paragraph 1, Article 41 of the and Exchange Act, for net deductions in Securities and Exchange Act, for net other shareholders’ equity incurred in the deductions in other shareholders’ equity current year (such as exchange differences incurred in the current year (such as on translation of foreign financial exchange differences on translation of statements, unrealized gains and losses of foreign financial statements, unrealized financial assets available for sale, benefits gains and losses of financial assets from hedging tools that are used in available for sale, benefits from hedging effective cash flow hedging, accumulated tools that are used in effective cash flow balance of losses, etc.) a special reserve is hedging, accumulated balance of losses, provided withdrawing the same amount of etc.) The same amount of the special the current year's after-tax surplus and reserve shall be set aside but shall not be previous undistributed surplus. For the distributed. Items other than the net profit amount of other deductions from the after tax of the current year are added to shareholders’ equity accumulated in the net profit after tax of the current year, previous periods, distribution shall not be and be accounted in the amount of

  • 40 -
Content Content Amendment
basis and
reason
Provisions before amendment Provisions after amendment
made of the same amount of special reserve
from the undistributed surplus from the
previous periods. If there is a subsequent
reversal of the amount of deduction from
the shareholders' equity, the reversed
portion of the surplus may be distributed.
Following isomitted.
undistributed surplus of the current period



















to set aside. If there is still a shortage,



shall set aside from the undistributed



surplus of the previous period.If the
amount belongs to the deduction of other
shareholders' equity accumulated in the
previous period, then it shall be set aside
the same amount of the special reserve
from the undistributed surplus from the
previous period.If there is still a shortage,
items other than the net profit after tax of

the current period are added to the net

profit after tax, and be accounted in the

amount of undistributed surplus of the

current year to set aside.If there is a
subsequent reversal of the amount of
deduction from the shareholders' equity,
the reversed portion of the surplus may be
distributed.
Followingisomitted.
Artilce 27: This Article was established on July 22,
2002.
The 1st amendment was made on May 2, 2003.
The 2nd amendment was made on July 15, 2003.
The 3rd amendment was made on Feb. 6, 2006.
The 4th amendment was made on June 21, 2006.
The 5th amendment was made on Nov. 23, 2007.
The 6th amendment was made on May 30, 2008.
The 7th amendment was made on Apr. 15, 2009.
The 8th amendment was made on Apr 30, 2010.
The 9th amendment was made on June 21, 2012.
The 10th amendment was made on June 13, 2016.
The 11th amendment was made on June 14, 2017.
The 12th amendment was made on June 19, 2019.
The 13th amendment was made on June 30, 2020.		 Artilce 27: This Article was established on July 22,
2002.
The 1st amendment was made on May 2, 2003.
The 2nd amendment was made on July 15, 2003.
The 3rd amendment was made on Feb. 6, 2006.
The 4th amendment was made on June 21, 2006.
The 5th amendment was made on Nov. 23, 2007.
The 6th amendment was made on May 30, 2008.
The 7th amendment was made on Apr. 15, 2009.
The 8th amendment was made on Apr 30, 2010.
The 9th amendment was made on June 21, 2012.
The 10th amendment was made on June 13, 2016.
The 11th amendment was made on June 14, 2017.
The 12th amendment was made on June 19, 2019.
The 13th amendment was made on June 30, 2020.
The 14th amendment was made on June 29, 2022.
Add the date
and number of
amendment.
  • 41 -

Attachment 9

Young Fast Optoelectronics Co., Ltd.

Comparison of the previous and the amended “Rules of Procedure for

Shareholders Meeting”

Content Amendment basis and Provisions before amendment Provisions after amendment reason Article 3: Article 3: In accordance Unless otherwise provided by law or Unless otherwise provided by law or with laws and regulation, the corporation's shareholders regulation, the corporation's shareholders regulations. meetings shall be convened by the board of meetings shall be convened by the board of directors. directors. Changes to how the corporation convenes its shareholders meeting shall be resolved by the board of directors, and shall be made no later than mailing of the shareholders meeting notice. The corporation shall prepare electronic The corporation shall prepare electronic versions of the shareholders meeting notice versions of the shareholders meeting notice and proxy forms, and the origins of and and proxy forms, and the origins of and explanatory materials relating to all explanatory materials relating to all proposals, including proposals for proposals, including proposals for ratification, matters for deliberation, or the ratification, matters for deliberation, or the election or dismissal of directors or election or dismissal of directors or supervisors, and upload them to the Market supervisors, and upload them to the Market Observation Post System (MOPS) before Observation Post System (MOPS) before 30 days before the date of a regular 30 days before the date of a regular shareholders meeting or before 15 days shareholders meeting or before 15 days before the date of a special shareholders before the date of a special shareholders meeting. The corporation shall prepare meeting. The corporation shall prepare electronic versions of the shareholders electronic versions of the shareholders meeting agenda and supplemental meeting meeting agenda and supplemental meeting materials and upload them to the MOPS materials and upload them to the MOPS before 21 days before the date of the regular before 21 days before the date of the regular shareholders meeting or before 15 days shareholders meeting or before 15 days before the date of the special shareholders before the date of the special shareholders meeting. In addition, before 15 days before meeting. If, however, the corporation has - the date of the shareholders meeting, the the paid in capital of NT$10 billion or more corporation shall also have prepared the as of the last day of the most current fiscal shareholders meeting agenda and year, or total shareholding of foreign

  • 42 -
Content Content Content Amendment
basis and
reason
Provisions before amendment Provisions after amendment
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 corporation and the
professional shareholder 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. With the
consent of the addressee, the meeting notice
may be given in electronic form
Followingisomitted.
shareholders and PRC shareholders reaches


























30% or more as recorded in the register of



shareholders of the shareholders meeting



held in the immediately preceding year,



transmission of these electronic files shall


be made by 30 days before the regular








shareholders meeting. In addition, before
15 days before the date of the shareholders
meeting, the corporation 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 corporation and the
professional shareholder services agent
designated thereby.
The corporate shall make the meeting

agenda and supplemental meeting materials

in the preceding paragraph available to

shareholders for review in the following

manner on the date of the shareholders
meeting:
1. For physical shareholders meetings, to be

distributed on-site at the meeting.
2. For hybrid shareholders meetings, to be

distributed on-site at the meeting and
shared on the virtual meeting platform.
3. For virtual-only shareholders meetings,
distributed on-site at the meeting and

electronic files shall be shared on the
virtual meeting platform.
Followingisomitted.
electronic files shall be shared on the
Article 4:
I.~III. is omitted		 Article 4:
I.~III. is omitted
If, after a proxy form is delivered to the







In accordance
with laws and
regulations.

corporation, a shareholder wishes to attend

the shareholders meeting online, a written

notice of proxy cancellation shall be

submitted to the corporation two business

days before the meeting date. If the

cancellation notice is submitted after that
time, votes cast at the meeting by the proxy
  • 43 -

Content Amendment basis and Provisions before amendment Provisions after amendment reason shall prevail. Article 5: Principles determining the time Article 5: Principles determining the time In accordance and place of a shareholders meeting and place of a shareholders meeting with laws and I. is omitted I. is omitted regulations. The restrictions on the place of the meeting shall not apply when the corporation convenes a virtual-only shareholders meeting. Article 6: Preparation of documents such as Article 6: Preparation of documents such as In accordance the attendance book the attendance book with laws and The corporation shall specify in its The corporation shall specify in its regulations. shareholders meeting notices the time shareholders meeting notices the time during which shareholder attendance during which attendance registrations for registrations will be accepted, the place to shareholders, solicitors and proxies register for attendance, and other matters for (collectively "shareholders") will be attention. accepted, the place to register for attendance, and other matters for attention. The time during which shareholder The time during which shareholder attendance registrations will be accepted, as attendance registrations will be accepted, as stated in the preceding paragraph, shall be stated in the preceding paragraph, shall be at least 30 minutes prior to the time the at least 30 minutes prior to the time the meeting commences. The place at which meeting commences. The place at which attendance registrations are accepted shall attendance registrations are accepted shall be clearly marked and a sufficient number be clearly marked and a sufficient number of suitable personnel assigned to handle the of suitable personnel assigned to handle the registrations. registrations. For virtual shareholders meetings, shareholders may begin to register on the virtual meeting platform 30 minutes before the meeting starts. Shareholders completing registration will be deemed as attend the shareholders meeting in person.

Shareholders and their proxies (collectively, Shareholders shall attend shareholders "shareholders") shall attend shareholders meetings based on attendance cards, sign-in meetings based on attendance cards, sign-in cards, or other certificates of attendance. cards, or other certificates of attendance. Thw corporation may not arbitrarily add The corporation may not arbitrarily add requirements for other documents beyond requirements for other documents beyond those showing eligibility to attend presented those showing eligibility to attend presented by shareholders. Solicitors soliciting proxy

  • 44 -
Content Content Content Content Amendment
basis and
reason
Provisions before amendment Provisions after amendment
by shareholders. Solicitors soliciting proxy
forms
shall also
bring identification
documents for verification.
IV.~VI. is omitted

forms shall also bring identification
documents for verification.
IV.~VI. is omitted
In the event of a virtual shareholders










meeting, shareholders wishing to attend the

meeting online shall register with the

corporation two days before the meeting

date.
In the event of a virtual shareholders
meeting, the corporation shall upload the

meeting agenda book, annual report and

other meeting materials to the virtual

meeting platform at least 30 minutes before

the
meeting
starts,
and
keep
this



information disclosed until the end of the
meeting.
Article 6-1: Convening virtual shareholders



















In accordance
with laws and
regulations.

meetings and particulars to be included in

shareholders meeting notice
I. To convene a virtual shareholders
meeting, the corporation shall include
the follow particulars in the shareholders
meeting notice:
How shareholders attend the virtual
meeting and exercise their rights.
II. Actions to be taken if the virtual meeting
platform or participation in the virtual
meeting is obstructed due to natural
disasters, accidents or other force
majeure events, at least covering the
following particulars:
(I) To what time the meeting is
postponed or from what time the
meeting will resume if the above
obstruction continues and cannot be
removed, and the date to which the
meeting is postponed or on which
the meeting will resume.
(II) Shareholders not having registered
to attend the affected virtual
shareholders meeting shall not

I.
II.
meeting, the corporation shall include

the follow particulars in the shareholders

meeting notice:
How shareholders attend the virtual
meeting and exercise their rights.
Actions to be taken if the virtual meeting

platform or participation in the virtual

meeting is obstructed due to natural

disasters, accidents or other force

majeure events, at least covering the

following particulars:
(I) To what time the meeting is
postponed or from what time the
meeting will resume if the above
obstruction continues and cannot be
removed, and the date to which the
meeting is postponed or on which
the meeting will resume.
(II) Shareholders not having registered
to attend the affected virtual
shareholders meeting shall not

(I)
(II)

postponed or from what time the

meeting will resume if the above

obstruction continues and cannot be
removed, and the date to which the

meeting is postponed or on which

the meeting will resume.
Shareholders not having registered

to attend the affected virtual
shareholders meeting shall not
- 45 -
Content Content Content Amendment
basis and
reason
Provisions before amendment Provisions after amendment
attend the postponed or resumed
session.
(III) In case of a hybrid shareholders
meeting, when the virtual meeting
cannot be continued, if the total
number of shares represented at the
meeting, after deducting those
represented
by
shareholders
attending the virtual shareholders
meeting online, meets the minimum
legal requirement for a shareholder
meeting, then the shareholders
meeting shall continue. The shares
represented
by
shareholders
attending the virtual meeting online
shall be counted towards the total
number of shares represented by
shareholders present at the meeting,
and the shareholders attending the
virtual meeting online shall be
deemed abstaining from voting on
all proposals on meeting agenda of
that shareholders meeting.
(IV) Actions to be taken if the outcome
of
all
proposals
have
been
announced
and
extraordinary
motion has not been carried out.
III. To convene a virtual-only shareholders		 attend the postponed or resumed



























session.
In case of a hybrid shareholders

meeting, when the virtual meeting

cannot be continued, if the total

number of shares represented at the

meeting, after deducting those

represented
by
shareholders


attending the virtual shareholders

meeting online, meets the minimum

legal requirement for a shareholder

meeting, then the shareholders

meeting shall continue. The shares

represented
by
shareholders


attending the virtual meeting online

shall be counted towards the total
number of shares represented by

shareholders present at the meeting,

and the shareholders attending the

virtual meeting online shall be

deemed abstaining from voting on

all proposals on meeting agenda of

that shareholders meeting.
Actions to be taken if the outcome
of
all
proposals
have
been

announced
and
extraordinary

meeting,
appropriate
alternative


measures available to shareholders with
difficulties
in
attending
a
virtual

shareholders meeting online shall be

specified.
Article 8: Documentation of a shareholders
meeting by audio or video
I.~II. is omitted.
Article 8: Documentation of a shareholders
meeting by audio or video
I.~II. is omitted.
Where a shareholders meeting is held






In accordance
with laws and
regulations.

online, the corporation shall keep records of

shareholder registration, sign-in, check-in,

questions raised, votes cast and results of

votes counted by the corporation, and

continuously audio and video record,
  • 46 -

Content Amendment basis and Provisions before amendment Provisions after amendment reason without interruption, the proceedings of the virtual meeting from beginning to end. The information and audio and video recording in the preceding paragraph shall be properly kept by the corporation during the entirety of its existence, and copies of the audio and video recording shall be provided to and kept by the party appointed to handle matters of the virtual meeting. In case of a virtual shareholders meeting, the corporation is advised to audio and video record the back-end operation interface of the virtual meeting platform. Article 9 Article 9 In accordance Attendance at shareholders meetings shall Attendance at shareholders meetings shall with laws and be calculated based on numbers of shares. be calculated based on numbers of shares. regulations. The number of shares in attendance shall be The number of shares in attendance shall be calculated according to the shares indicated calculated according to the shares indicated by the attendance book and sign-in cards by the attendance book and sign-in cards handed in plus the number of shares whose handed in, and the shares checked in on the voting rights are exercised by virtual meeting platform, plus the number correspondence or electronically. of shares whose voting rights are exercised by correspondence or electronically. II is omitted. II is omitted. However, when the attending shareholders However, when the attending shareholders do not represent a majority of the total do not represent a majority of the total number of issued shares, the chair may number of issued shares, the chair may announce a postponement, provided that no announce a postponement, provided that no more than two such postponements, for a more than two such postponements, for a combined total of no more than one hour, combined total of no more than one hour, may be made. If the quorum is not met after may be made. If the quorum is not met after two postponements and the attending two postponements and the attending shareholders still represent less than one shareholders still represent less than one third of the total number of issued shares, third of the total number of issued shares, the chair shall declare the meeting the chair shall declare the meeting adjourned. adjourned. In the event of a virtual If the quorum is not met after two shareholders meeting, the corporation shall postponements as referred to in the also declare the meeting adjourned at the preceding paragraph, but the attending virtual meeting platform. shareholders represent one third or more of If the quorum is not met after two the total number of issued shares, a tentative postponements as referred to in the resolution may be adopted pursuant to preceding paragraph, but the attending

  • 47 -
Content Content Amendment
basis and
reason
Provisions before amendment Provisions after amendment
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.
Following isomitted.



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.In the event of a virtual
shareholders
meeting,
shareholders










intending to attend the meeting online shall

re-register to the corporation in accordance

with Article 6.
Followingisomitted.
Article 11: Shareholder speech
I.~VI. is omitted.		 Article 11: Shareholder speech
I.~VI. is omitted.
Where a virtual shareholders meeting is














In accordance
with laws and
regulations.

convened,
shareholders
attending
the


virtual meeting online may raise questions

in writing at the virtual meeting platform

from the chair declaring the meeting open

until the chair declaring the meeting

adjourned. No more than two questions for

the same proposal may be raised. Each

question shall contain no more than 200

words. The regulations in paragraphs I to V

do not apply.
As long as questions so raised in accordance

with the preceding paragraph are not in

violation of the regulations or beyond the

scope of a proposal, it is advisable the

questions be disclosed to the public at the

virtual meeting platform.
Article 13
I~III is omitted.
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 corporation,bythe same






Article 13
I~III is omitted.
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
or online,a written declaration of intent to
retract the voting rights already exercised
under the preceding paragraph shall be
made known to the corporation,bythe same







In accordance
with laws and
regulations.
  • 48 -
Content Content Amendment
basis and
reason
Provisions before amendment Provisions after amendment
means by which the voting rights were
exercised, before two business days before
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.
V~VIII is omitted.










means by which the voting rights were
exercised, before two business days before
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.
V~VIII is omitted.
When the corporation convenes a virtual




































shareholders meeting, after the chair

declares the meeting open, shareholders

attending the meeting online shall cast votes

on proposals and elections on the virtual

meeting
platform
before
the
chair


announces the voting session ends or will be

deemed abstained from voting.
In the event of a virtual shareholders
meeting, votes shall be counted at once after

the chair announces the voting session ends,

and results of votes and elections shall be
announced immediately.
When the corporation convenes a hybrid

shareholders meeting, if shareholders who

have registered to attend the meeting online

in accordance with Article 6 decide to
attend the physical shareholders meeting in

person, they shall revoke their registration

two days before the shareholders meeting in

the same manner as they registered. If their

registration is not revoked within the time

limit, they may only attend the shareholders

meeting online.
When shareholders exercise voting rights

by correspondence or electronic means,

unless they have withdrawn the declaration

of intent and attended the shareholders
meeting online, except for extraordinary
  • 49 -
Content Content Content Amendment
basis and
reason
Provisions before amendment Provisions after amendment
motions, they will not exercise voting rights



on the original proposals or make any

amendments to the original proposals or

exercise voting rights on amendments to the

original proposal.
Article 15
I~III is omitted.		 Article 15
I~III is omitted.
Where a virtual shareholders meeting is

















In accordance
with laws and
regulations.

convened, in addition to the particulars to be

included in the meeting minutes as

described in the preceding paragraph, the

start time and end time of the shareholders
meeting, how the meeting is convened, the

chair's and secretary's name, and actions to

be taken in the event of disruption to the

virtual meeting platform or participation in

the meeting online due to natural disasters,

accidents or other force majeure events, and

how issues are dealt with shall also be
included in the minutes.
When convening a virtual-only shareholder

meeting, other than compliance with the

requirements in the preceding paragraph,

the corporation shall specify in the meeting

minutes alternative measures available to
shareholders with difficulties in attending a

virtual-only shareholders meeting online
Article 16: Public disclosure
On the day of a shareholders meeting, the
corporation shall compile in the prescribed
format a statistical statement of the number
of shares obtained by solicitors through
solicitation and the number of shares
represented by proxies, and shall make an
express disclosure of the same at the place
of the shareholders meeting.





Article 16: Public disclosure
On the day of a shareholders meeting, the
corporation shall compile in the prescribed
format a statistical statement of the number
of shares obtained by solicitors through
solicitation,
the
number
of
shares
represented by proxiesand the number of
shares
represented
by
shareholders













In accordance
with laws and
regulations.

by
shareholders


attending the meeting by correspondence or

electronic means,and shall make an express
disclosure of the same at the place of the
shareholders meeting.In the event a virtual
shareholders meeting, the corporation shall

upload the above meeting materials to the

virtual meeting platform at least 30 minutes
  • 50 -
Content Content Amendment
basis and
reason
Provisions before amendment Provisions after amendment
Following isomitted. before the meeting starts, and keep this









information disclosed until the end of the
meeting.
During
the
corporation's
virtual


shareholders meeting, when the meeting is

called to order, the total number of shares

represented at the meeting shall be

disclosed on the virtual meeting platform.

The same shall apply whenever the total

number of shares represented at the meeting
and a new tally of votes is released during

the meeting.
Followingisomitted.
Article 19: Disclosure of information at







In accordance
with laws and
regulations.
virtual meetings
In the event of a virtual shareholders
meeting, the corporation shall disclose real-

time
results
of
votes
and
election
immediately after the end of the voting

session on the virtual meeting platform

according to the regulations, and this

disclosure shall continue at least 15 minutes
after the chair has announced the meeting

adjourned.
Article 20: Location of the chair and





In accordance
with laws and
regulations.
secretary
of
virtual-only
shareholders


meeting
When the corporation convenes a virtual-

only shareholders meeting, both the chair

and secretary shall be in the same location,

and the chair shall declare the address of
their location when the meeting is called to

order.
Article 21: Handling of disconnection
In the event of a virtual shareholders





In accordance
with laws and
regulations.
meeting, the corporation may offer a simple

connection test to shareholders prior to the

meeting, and provide relevant real-time

services before and during the meeting to

help resolve communication technical

issues.
In the event of a virtual shareholders
  • 51 -
Content Content Amendment
basis and
reason
Provisions before amendment Provisions after amendment
meeting, when declaring the meeting open,






































the chair shall also declare, unless under a

circumstance where a meeting is not

required to be postponed to or resumed at

another time under Article 44-20, paragraph

4 of the Regulations Governing the

Administration of Shareholder Services of
Public Companies, if the virtual meeting

platform or participation in the virtual

meeting is obstructed due to natural

disasters, accidents or other force majeure

events before the chair has announced the
meeting adjourned, and the obstruction

continues for more than 30 minutes, the

meeting shall be postponed to or resumed

on another date within five days, in which

case Article 182 of the Company Act shall

not apply.
For a meeting to be postponed or resumed

as described in the preceding paragraph,

shareholders who have not registered to

participate in the affected shareholders

meeting online shall not attend the

postponed or resumed session.
For a meeting to be postponed or resumed

under the second paragraph, the number of

shares represented by, and voting rights and

election
rights
exercised
by
the


shareholders who have registered to

participate in the affected shareholders

meeting and have successfully signed in the

meeting, but do not attend the postpone or

resumed
session,
at
the
affected

shareholders meeting, shall be counted

towards the total number of shares, number

of voting rights and number of election

rights represented at the postponed or

resumed session.
During a postponed or resumed session of a

shareholders meeting held under the second

paragraph,
no
further
discussion
or

resolution is required for proposals for
  • 52 -
Content Content Amendment
basis and
reason
Provisions before amendment Provisions after amendment
which votes have been cast and counted and




































results have been announced, or list of

elected directors and supervisors.
When the corporation convenes a hybrid

shareholders meeting, and the virtual

meeting cannot continue as described in

second paragraph, if the total number of

shares represented at the meeting, after

deducting
those
represented
by



shareholders
attending
the
virtual

shareholders meeting online, still meets the

minimum
legal
requirement
for
a


shareholder meeting, then the shareholders

meeting
shall
continue,
and
not


postponement or resumption thereof under

the second paragraph is required.
Under the circumstances where a meeting

should continue as in the preceding

paragraph, the shares represented by

shareholders attending the virtual meeting

online shall be counted towards the total
number
of
shares
represented
by


shareholders present at the meeting,

provided these shareholders shall be

deemed abstaining from voting on all

proposals on meeting agenda of that

shareholders meeting.
When postponing or resuming a meeting

according to the second paragraph, the

corporation shall handle the preparatory

work based on the date of the original

shareholders meeting in accordance with

the requirements listed under Article 44-20,

paragraph 7 of the Regulations Governing

the Administration of Shareholder Services
of Public Companies.
For dates or period set forth under Article

12, second half, and Article 13, paragraph 3

of Regulations Governing the Use of

Proxies for Attendance at Shareholder
Meetings of Public Companies, and Article

44-5, paragraph 2, Article 44-15, and
  • 53 -
Content Content Amendment
basis and
reason
Provisions before amendment Provisions after amendment
Article
44-17,
paragraph
1
of
the






Regulations Governing the Administration

of
Shareholder
Services
of
Public
Companies, the corporations hall handle the

matter based on the date of the shareholders
meeting that is postponed or resumed under

the second paragraph.
Article 22: Handling of digital divide
When
convening
a
virtual-only




In accordance
with laws and
regulations.


shareholders meeting, the corporation shall

provide appropriate alternative measures

available to shareholders with difficulties in
attending a virtual shareholders meeting

online.
Article 20:
This Rules was established on Nov. 16, 2007.
The 1st amendment was made on June 15, 2011.
The 2nd amendment was made on June 21, 2012.
The 3rd amendment was made on June 28, 2013.
The 4th amendment was made on June 18, 2015.
The 5th amendment was made on June 14, 2017.
The 6th amendment was made on June 30, 2020.
The 7th amendment was made on Aug. 3, 2021.		 Article 24:
This Rules was established on Nov. 16, 2007.
The 1st amendment was made on June 15, 2011.
The 2nd amendment was made on June 21, 2012.
The 3rd amendment was made on June 28, 2013.
The 4th amendment was made on June 18, 2015.
The 5th amendment was made on June 14, 2017.
The 6th amendment was made on June 30, 2020.
The 7th amendment was made on Aug. 3, 2021.
The 8th amendment was made on June. 29, 2022.		 Add the date
and number of
amendment.
  • 54 -

Appendix 1

Young Fast Optoelectronics Co., Ltd.

Article of Incorporation

Chapter 1 General principles

  • Article 1: The Company is organized in accordance with the provisions of the Company Act and is named Young Fast Optoelectronics Co., Ltd.

  • Article 2: The Company’s scope of business is as follows:

  • CB01010 Mechanical Equipment Manufacturing

  • 2.CC01010 Manufacture of Power Generation, Transmission and Distribution Machinery

  • 3.CC01020 Electric Wires and Cables Manufacturing

  • CC01070 Wireless Communication Mechanical Equipment Manufacturing

  • CC01080 Electronics Components Manufacturing

  • E603010 Cable Installation Engineering

  • E604010 Machinery Installation

  • F113010 Wholesale of Machinery

  • 9.F113020 Wholesale of Electrical Appliances

  • F106010 Wholesale of Hardware

  • F206010 Retail Sale of Hardware

  • F213010 Retail Sale of Electrical Appliances

  • F213060 Retail Sale of Telecommunication Apparatus

  • F213080 Retail Sale of Machinery and Tools

  • F401010 International Trade

  • CC01110 Computer and Peripheral Equipment Manufacturing

  • CC01120 Data Storage Media Manufacturing and Duplicating

  • F119010 Wholesale of Electronic Materials

  • F219010 Retail Sale of Electronic Materials

  • E603050 Automatic Control Equipment Engineering

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

  • Article 3: The total reinvestment of the Company is not subject to the restriction that it may not exceed 40% of the Company's paid-in capital as stipulated in Article 13 of the Company Act. The Company can provide guarantee externally.

  • Article 4: The Company has its head office in Taoyuan City. When necessary, branches may be established domestically and abroad by the resolution of the Board of Directors.

  • Article 5: The Company’s announcement method shall be handled in accordance with Article 28 of the Company Act.

  • 55 -

Chapter 2 Shares

  • Article 6: The total capital of the Company is set at NT$2,000 million, divided into NT$200 million shares, each with a denomination of NT$10, issued in installments, and unissued shares are subject to actual needs by resolution of the Board of Directors.

  • 6 million shares of the total capital in the first paragraph are reserved for the issuance of stock option certificates.

  • Article 7: The shares issued by the Company may be exempted from printing stocks in accordance with the Company Act, but the shares should be registered with the centralized securities depository institution. If the Company prints stocks, the stocks are all registered, signed or sealed by the directors representing the Company, and issued after obtaining a certification from a bank permitted by law for issuance and certification of stocks.

  • Article 8: Unless otherwise required by laws and regulations, the handling of the Company's stock affairs shall be in accordance with the “Regulations Governing the Administration of Shareholder Services of Public Companies”.

  • Article 9: The changes to the Company's shareholder roster shall cease within 30 days before a regular shareholder meeting, within 15 days before a special shareholder meeting, or within 5 days before the base date when the Company decides to distribute dividends and bonuses or other benefits.

  • After public offering, the changes to the Company's shareholder roster shall cease within 60 days before a regular shareholder meeting, within 30 days before a special shareholder meeting, or within 5 days before the base date when the Company decides to distribute dividends and bonuses or other benefits.

Chapter 3 shareholder meeting

  • Article 10: There are two types of shareholder meeting: regular and special. The regular meeting is held once a year and shall be convened by the Board of Directors in accordance with the law within six months after the end of each fiscal year. A special meeting can be convened according to the law when necessary.

  • Article 11: A shareholder that will be absent at the meeting for a particular reason may appoint a proxy to attend the meeting by filling up the proxy form issued by this Company and stating the scope of the proxy’s authorization. Except as provided by Article 177 of the Company Act, shareholder proxy attendance measures shall in all cases be handled in accordance with the regulations stipulated by the "Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies."

  • Article 12: Shareholders of the Company shall have one voting right per share unless otherwise provided by laws and regulations. However, no voting rights are provided if the Company is subject to the circumstances stipulated in Article 179 of the Company Act.

  • Article 13: Unless otherwise required by the Company Act, a resolution in a shareholder meeting

  • 56 -

should be made with the presence of shareholders representing a majority of the total number of outstanding shares and with the consent of a majority of the voting rights of the shareholders present. In accordance with the regulations of the competent authority, the shareholders of the Company may also exercise their voting rights in writing or electronically. Shareholders who exercise their voting rights in writing or electronically are considered to be present in person, and their relevant matters shall be handled in accordance with the provisions of laws and regulations.

  • Article 14: Matters relating to the resolutions of a shareholders meeting shall be recorded in the meeting minutes. The meeting minutes shall be signed or sealed by the chair of the meeting and a copy distributed to each shareholder within 20 days after the conclusion of the meeting.

  • The meeting minutes may be produced and distributed in electronic form.

    • If the Company has a proposal to cancel a public offering in the future, this should be mentioned as a matter for resolution of the Shareholders' meeting and this provision will not be changed during the period of listing or future period of listing on the main board (over-the-counter market, emerging market board).

Chapter 4 Directors and Supervisor

  • Article 15: The Company is to have between nine and eleven directors. The Board of Directors shall determine the number of candidates to be elected within this range and shall adopt a candidate nomination system. The list of candidates for directors shall be selected by the Shareholders' Meeting in accordance with Article 198 of the Company Act for a term of three years and a re-election may be allowed.

  • The total shareholding ratio of all directors selected in accordance with the preceding paragraph shall be in accordance with the regulations of the securities regulatory authority.

  • From the seventh session of the Company (with comprehensive re-election in 2020), an Audit Committee has been established in accordance with Article 14-4 of the Securities and Exchange Act. Comprising all independent directors, the members of the Audit Committee shall not be less than three and the exercise of their powers and related matters shall be handled in accordance with the relevant regulations of the securities regulatory authority. The positions of supervisors were abolished on the date of the establishment of the Audit Committee, with such to be applicable when their terms of office expired in 2020.

  • Article 16: After a public offering of the Company, among the above-mentioned number of directors, the number of independent directors shall not be less than three and shall not be less than one-fifth of the number of directors. In addition, a candidate nomination system is adopted and the Shareholders' Meeting shall select them from the list of candidates for independent directors. Regarding independent directors' professional qualifications, shareholdings, part-time restrictions, nomination and selection methods and other

  • 57 -

compliance matters, they shall be handled in accordance with the relevant regulations of the securities regulatory authority.

  • Article 17: The board meeting is organized by directors and a chairperson shall be elected to represent the Company externally from among the directors by a majority vote at a meeting attended by more than two-thirds of the directors

  • Article 18: The convening of the Board of Directors shall be handled in accordance with Article 204 of the Company Act and the convening notice can be delivered in person, by post, by email or by fax. Except where otherwise provided by the laws and regulations, the passage of a proposal at a Board meeting shall require the approval of a majority of the directors in attendance at a Board of Directors meeting attended by a majority of all directors. When a director fails to attend the Board of Directors’ meeting in person, another director may be appointed to attend the Board of Directors as a proxy in accordance with the provisions of Article 205 of the Company Act. A director who appoints another director to attend a board meeting shall in each instance shall file a proxy form stating the scope of authorization with respect to the reasons for convening the meeting.

  • If the Board of Directors uses a video conference when meeting, the directors who participate in the conference by video shall be deemed to be present in person.

  • Article19: The Company may purchase liability insurance for the directors and supervisors during their term of office for the scope of business performed by the directors and supervisors.

  • Article20: If the chairperson asks for leave or is unable to exercise the powers of office for some reason, his or her proxy shall handle affairs in accordance with Article 208 of the Company Act.

  • Article 21: With respect to the remuneration expenses of directors and supervisors of the Company, the Board of Directors is authorized to make decisions based on a director’s or supervisor’s degree of participation and contribution to the operations of the Company and on the agreed expenditures in line with the standard levels in the industry. Regarding the remuneration of independent directors, a reasonable remuneration different from that of non-independent directors may be determined.

Chapter 5 Managerial officer

  • Article 22: The Company may have a number of managerial officers whose appointment, dismissal and remuneration are governed by Article 29 of the Company Act.

Chapter 6 Accounting

  • Article 23: The final accounts shall be processed at the end of the year. The Board of Directors shall prepare (i) business report (ii)financial statements (iii)earnings distribution or loss offsetting proposal, present it to the shareholder meeting for ratification.

  • Article 24: If the Company makes a profit during the year (i.e., pre-tax profit before deducting the remuneration of employees and of directors and supervisors), no less than 2% of the current year's profit shall be allocated for employee remuneration and no more than 1.5%

  • 58 -

shall be allocated to remuneration of directors and supervisors. However, when the Company still has accumulated losses, it should reserve the compensation amount in advance. In addition, employee remuneration can be paid in stock or cash, and the recipients may include employees of controlling or affiliated companies who meet certain conditions.

  • Article 24-1: If a surplus exists in the Company's yearly final accounts, taxes should first be paid to offset any prior deficits and 10% of the current surplus is to be set aside as legal reserve. In addition and in accordance with Paragraph 1, Article 41 of the Securities and Exchange Act, for net deductions in other shareholders’ equity incurred in the current year (such as exchange differences on translation of foreign financial statements, unrealized gains and losses of financial assets available for sale, benefits from hedging tools that are used in effective cash flow hedging, accumulated balance of losses, etc.) a special reserve is provided withdrawing the same amount of the current year's aftertax surplus and previous undistributed surplus. For the amount of other deductions from the shareholders’ equity accumulated in previous periods, distribution shall not be made of the same amount of special reserve from the undistributed surplus from the previous periods. If there is a subsequent reversal of the amount of deduction from the shareholders' equity, the reversed portion of the surplus may be distributed.

The dividends policy of the Company aligns with current and future development plans and considers the investment environment, capital needs and domestic and foreign competition and takes into account the interests of shareholders and other factors. No less than 20% of the available surplus shall be allocated to distribute shareholder dividends each year. However, if the cumulative distributable surplus is less than 100% of the paid-in share capital, distribution may not be made.

If all or part of the dividends and bonuses are to be distributed in cash, it shall be authorized by a resolution of the Board of Directors with at least two-thirds votes of the directors present and more than half of the attending directors in agreement and this shall be reported to the shareholders’ meeting.

  • Article 25: The Company shall consider the environment and growth stage of the company, respond to future capital needs and long-term financial planning and meet shareholders’ demand for cash inflows in formulating a surplus distribution plan based on the distributable surplus as stipulated in Article 24 and this shall be submitted to the Shareholders' Meeting for resolution. The total amount of cash dividends shall not be less than 10% of the total amount of dividends issued to shareholders and the maximum shall be 100%.

Chapter 7 Supplementary provisions

  • Artilce 26: Matters not covered in this Article of Incorporation shall be handled in accordance with the provisions of the Company Act.

  • Artilce 27: This Article was established on July 22, 2002. The 1st amendment was made on May 2, 2003.

  • 59 -

The 2nd amendment was made on July 15, 2003. The 3rd amendment was made on Feb. 6, 2006. The 4th amendment was made on June 21, 2006. The 5th amendment was made on Nov. 23, 2007. The 6th amendment was made on May 30, 2008. The 7th amendment was made on Apr. 15, 2009. The 8th amendment was made on Apr 30, 2010. The 9th amendment was made on June 21, 2012. The 10th amendment was made on June 13, 2016. The 11th amendment was made on June 14, 2017. The 12th amendment was made on June 19, 2019. The 13th amendment was made on June 30, 2020.

  • 60 -

Appendix 2

Young Fast Optoelectronics Co., Ltd. Rules of Procedure for Shareholders Meeting

  • Article 1: To establish a strong governance system and sound supervisory capabilities for the corporation's shareholders meetings, and to strengthen management capabilities, these Rules are adopted pursuant to Article 5 of the Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies.

  • Article 2: The rules of procedures for the corporation's shareholders meetings, except as otherwise provided by law, regulation, or the articles of incorporation, shall be as provided in these Rules.

  • Article 3: Unless otherwise provided by law or regulation, the corporation's shareholders meetings shall be convened by the board of directors.

  • The corporation shall prepare electronic versions of the shareholders meeting notice and proxy forms, and the origins of and explanatory materials relating to all proposals, including proposals for ratification, matters for deliberation, or the election or dismissal of directors or supervisors, and upload them to the Market Observation Post System (MOPS) before 30 days before the date of a regular shareholders meeting or before 15 days before the date of a special shareholders meeting. The corporation shall prepare electronic versions of the shareholders meeting agenda and supplemental meeting materials and upload them to the MOPS before 21 days before the date of the regular shareholders meeting or before 15 days before the date of the special shareholders meeting. In addition, before 15 days before the date of the shareholders meeting, the corporation 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 corporation and the professional shareholder 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. With the consent of the addressee, the meeting notice may be given in electronic form.

Election or dismissal of directors or supervisors, 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, surplus profit distributed in the form of new shares, reserve distributed in the form of new shares, the dissolution, merger, or demerger of the corporation, or any matter under Article 185, paragraph 1 of the Company Act, Articles 26-1 and 436 of the Securities Exchange Act, Articles 56-1 and 60-2 of the Regulations Governing the Offering and Issuance of Securities by Securities Issuers shall be

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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 motione.

Where re-election of all directors and supervisors as well as their inauguration date is stated in the notice of the reasons for convening 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. A shareholder holding one percent or more of the total number of issued shares may submit to the corporation a proposal for discussion at a regular shareholders meeting. The number of items so proposed is limited to one only, and no proposal containing more than one item will be included in the meeting agenda. When the circumstances of any subparagraph of Article 172-1, paragraph 4 of the Company Act apply to a proposal put forward by a shareholder, the board of directors may exclude it from the agenda. A shareholder may propose a recommendation for urging the corporation to promote public interests or fulfill its social responsibilities, provided procedurally the number of items so proposed is limited only to one in accordance with Article 172-1 of the Company Act, and no proposal containing more than one item will be included in the meeting agenda.

Prior to the book closure date before a regular shareholders meeting is held, the corporation shall publicly announce its acceptance of shareholder proposals in writing or electronically, and the location and time period for their submission; the period for submission of shareholder proposals may not be less than 10 days. Shareholder-submitted proposals are limited to 300 words, and no proposal containing more than 300 words will be included in the meeting agenda. The shareholder making the proposal shall be present in person or by proxy at the regular shareholders meeting and take part in discussion of the proposal.

Prior to the date for issuance of notice of a shareholders meeting, the corporation shall inform the shareholders who submitted proposals of the proposal screening results, and shall list in the meeting notice the proposals that conform to the provisions of this article. At the shareholders meeting the board of directors shall explain 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 by providing the proxy form issued by the corporation and stating the scope of the proxy's authorization.

A shareholder may issue only one proxy form and appoint only one proxy for any given shareholders meeting, and shall deliver the proxy form to the corporation before five days before the date of the shareholders meeting. When duplicate proxy forms are delivered, the one received earliest shall prevail unless a declaration is made to cancel the previous proxy appointment.

After a proxy form has been delivered to the corporation, if the shareholder

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intends to attend the meeting in person or to exercise voting rights by correspondence or electronically, a written notice of proxy cancellation shall be submitted to the corporation before two business days before the meeting date. If the cancellation notice is submitted after that time, votes cast at the meeting by the proxy shall prevail.

  • Article 5: Principles determining the time and place of a shareholders meeting

The venue for a shareholders meeting shall be the premises of the corporation, or a place easily accessible to shareholders and suitable for a shareholders meeting. The meeting may begin no earlier than 9 a.m. and no later than 3 p.m. Full consideration shall be given to the opinions of the independent directors with respect to the place and time of the meeting.

  • Article 6: Preparation of documents such as the attendance book

The corporation shall specify in its shareholders meeting notices the time during which shareholder attendance registrations will be accepted, the place to register for attendance, and other matters for attention.

The time during which shareholder attendance registrations will be accepted, as stated in the preceding paragraph, shall be at least 30 minutes prior to the time the meeting commences. The place at which attendance registrations are accepted shall be clearly marked and a sufficient number of suitable personnel assigned to handle the registrations.

Shareholders and their proxies (collectively, "shareholders") shall attend shareholders meetings based on attendance cards, sign-in cards, or other certificates of attendance. The corporation may not arbitrarily add requirements for other documents beyond those showing eligibility to attend presented by shareholders. Solicitors soliciting proxy forms shall also bring identification documents for verification.

The corporation shall furnish the attending shareholders with an attendance book to sign, or attending shareholders may hand in a sign-in card in lieu of signing in. The corporation shall furnish attending shareholders with the meeting agenda book, annual report, attendance card, speaker's slips, voting slips, and other meeting materials. Where there is an election of directors or supervisors, preprinted ballots shall also be furnished.

Shareholders and their proxies (collectively, "shareholders") shall attend shareholders meetings based on attendance cards, sign-in cards, or other certificates of attendance. Solicitors soliciting proxy forms shall also bring identification documents for verification.

When the government or a juristic person is a shareholder, it may be represented by more than one representative at a shareholders meeting. When a juristic person is appointed to attend as proxy, it may designate only one person to represent it in the meeting.

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Article 7: The chair and non-voting participants of a shareholders meeting If a shareholders meeting is convened by the board of directors, the meeting shall be chaired by the chairperson of the board. When the chairperson of the board is on leave or for any reason unable to exercise the powers of the chairperson, one of the directors shall be appointed to act as chair. Where the chairperson does not make such a designation, the directors shall select from among themselves one person to serve as chair.

When a managing director or a director serves as chair, as referred to in the preceding paragraph, the managing director or director shall be one who has held that position for six months or more and who understands the financial and business conditions of the company. The same shall be true for a representative of a juristic person director that serves as chair.

  • It is advisable that shareholders meetings convened by the board of directors be chaired by the chairperson of the board in person and attended by a majority of the directors, at least one supervisor 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 but other than the board of directors, the convening party shall chair the meeting. When there are two or more such convening parties, they shall mutually select a chair from among themselves.

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

  • Article 8: Documentation of a shareholders meeting by audio or video The corporation, 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.

  • The recorded materials of the preceding paragraph shall be retained for at least one year. If, however, 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 meetings 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 and sign-in cards handed in plus the number of shares whose voting rights are exercised by correspondence or electronically.

  • The chair shall call the meeting to order at the appointed meeting time and disclose information concerning the number of nonvoting shares and number of shares represented by shareholders attending the meeting.

However, when the attending shareholders do not represent a majority of the total number of issued shares, the chair may announce a postponement, provided that

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no more than two such postponements, for a combined total of no more than one hour, may be made. If the quorum is not met after two postponements and the attending shareholders still represent less than one third of the total number of issued shares, the chair shall declare the meeting adjourned.

If the quorum is 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.

When, prior to conclusion of the meeting, the attending shareholders represent a majority of the total number of issued shares, the chair may resubmit the tentative resolution for a vote by the shareholders meeting pursuant to Article 174 of the Company Act.

Article 10: Discussion of proposals

If a shareholders meeting is convened by the board of directors, the meeting agenda shall be set by the board of directors. Votes shall be cast on each separate proposal in the agenda (including extraordinary motions and amendments to the original proposals set out in the agenda). The meeting shall proceed in the order set by the agenda, which may not be changed without a resolution of the shareholders meeting.

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

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

The chair shall allow ample opportunity during the meeting for explanation and discussion of proposals and of amendments or extraordinary motions put forward by the shareholders; when the chair is of the opinion that a proposal has been discussed sufficiently to put it to a vote, the chair may announce the discussion closed, call for a vote, and schedule sufficient time for voting.

Article 11:

  • Shareholder speech

Before speaking, an attending shareholder must specify on a speaker's slip the subject of the speech, his/her shareholder account number (or attendance card number), and account name. The order in which shareholders speak will be set by

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the chair.

A shareholder in attendance who has submitted a speaker's slip but does not actually speak shall be deemed to have not spoken. When the content of the speech does not correspond to the subject given on the speaker's slip, the spoken content shall prevail.

Except with the consent of the chair, a shareholder may not speak more than twice on the same proposal, and a single speech may not exceed 5 minutes. If the shareholder's speech violates the rules or exceeds the scope of the agenda item, the chair may terminate the speech.

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

When a juristic person shareholder appoints two or more representatives to attend a shareholders meeting, only one of the representatives so appointed may speak on the same proposal.

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

  • Article 12: Calculation of voting shares and recusal system

Voting at a shareholders meeting shall be calculated based the number of shares. With respect to resolutions of shareholders meetings, the number of shares held by a shareholder with no voting rights shall not be calculated as part of the total number of issued shares.

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

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

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

Article 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 corporation 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

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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 corporation avoid the submission of extraordinary motions and amendments to original proposals.

A shareholder intending to exercise voting rights by correspondence or electronic means under the preceding paragraph shall deliver a written declaration of intent to the corporation before two days before 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 corporation, by the same means by which the voting rights were exercised, before two business days before 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 corporation's articles of incorporation, the passage of a proposal shall require an affirmative vote of a majority of the voting rights represented by the attending shareholders. At the time of a vote, for each proposal, the chair or a person designated by the chair 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 it is held, 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 chair shall present the amended or alternative proposal together with the original proposal and decide the order in which they will be put to a vote. When any one among them is passed, the other proposals will then be deemed rejected, and no further voting shall be required.

Vote monitoring and counting personnel for the voting on a proposal shall be appointed by the chair, provided that all monitoring personnel shall be shareholders of the corporation.

Vote counting for shareholders meeting proposals or elections shall be conducted

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in public at the place of the shareholders meeting. Immediately after 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 a record made of the vote.

  • Article 14: Election of directors and supervisors The election of directors or supervisors at a shareholders meeting shall be held in accordance with the applicable election and appointment rules adopted by the corporation, and the voting results shall be announced on-site immediately, including the names of those elected as directors and supervisors and the numbers of votes with which they were elected, and the names of directors and supervisors not elected and number of votes they received.

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

  • Article 15: Matters relating to the resolutions of a shareholders meeting shall be recorded in the meeting minutes. The meeting minutes shall be signed or sealed by the chair of the meeting and a copy distributed to each shareholder within 20 days after the conclusion of the meeting. The meeting minutes may be produced and distributed in electronic form.

The corporation may distribute the meeting minutes of the preceding paragraph by means of a public announcement made through the MOPS.

The meeting minutes shall accurately record the year, month, day, and place of the meeting, the chair's full name, the methods by which resolutions were adopted, and a summary of the deliberations and their voting results (including the number of voting rights), and disclose the number of voting rights won by each candidate in the event of an election of directors or supervisors. The minutes shall be retained for the duration of the existence of the corporation.

Article 16: Public disclosure

On the day of a shareholders meeting, the corporation shall compile in the prescribed format a statistical statement of the number of shares obtained by solicitors through solicitation and the number of shares represented by proxies, and shall make an express disclosure of the same at the place of the shareholders meeting.

If matters put to a resolution at a shareholders meeting constitute material information under applicable laws or regulations or under Taiwan Stock Exchange Corporation (or GreTai Securities Market) regulations, the corporation shall upload the content of such resolution to the MOPS within the prescribed time period.

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Article 17: Maintaining order at the meeting place
Staff handling administrative affairs of a shareholders meeting shall wear
identification cards or arm bands.
The chair may direct the proctors or security personnel to help maintain order at
the meeting place. When proctors or security personnel help maintain order at the
meeting place, they shall wear an identification card or armband bearing the word
"Proctor."

At the place of a shareholders meeting, if a shareholder attempts to speak through any device other than the public address equipment set up by the corporation, the chair may prevent the shareholder from so doing. When a shareholder violates the rules of procedure and defies the chair's correction, obstructing the proceedings and refusing to heed calls to stop, the chair may direct the proctors or security personnel to escort the shareholder from the meeting. Article 18: Recess and resumption of a shareholders meeting When a meeting is in progress, the chair may announce a break based on time considerations. If a force majeure event occurs, the chair may rule the meeting temporarily suspended and announce a time when, in view of the circumstances, the meeting will be resumed.

  • If the meeting venue is no longer available for continued use and not all of the items (including extraordinary motions) on the meeting agenda have been addressed, the shareholders meeting may adopt a resolution to resume the meeting at another venue.

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

  • Article 19: These Rules shall take effect after having been submitted to and approved by a shareholders meeting. Subsequent amendments thereto shall be effected in the same manner.

  • Article 20: This Rules was established on Nov. 16, 2007. The 1st amendment was made on June 15, 2011 The 2nd amendment was made on June 21, 2012. The 3rd amendment was made on June 28, 2013. The 4th amendment was made on June 18, 2015. The 5th amendment was made on June 14, 2017. The 6th amendment was made on June 30, 2020. The 7th amendment was made on Aug. 3, 2021.

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Appendix 3

Young Fast Optoelectronics Co., Ltd. Corporate Social Responsibility Principles

Chapter I General Principles

  • Article 1: To fulfill their corporate social responsibility and to manage economic, environmental, and social advancement for purposes of sustainable development, the corporation adopt the Principles to be followed.

  • Article 2: In fulfilling corporate social responsibility initiatives, The corporation shall, in its corporate management guidelines and business operations, give due consideration to the rights and interests of stakeholders and, while pursuing sustainable operations and profits, also give due consideration to the environment, society and corporate governance.

  • The Principles applies to the corporation, including the entire operations of each such company and its business group.

  • The corporation shall, in accordance with the materiality principle, conduct risk assessments of environmental, social and corporate governance issues pertaining to company operations and establish the relevant risk management policy or strategy.

  • Article 3: To implement corporate social responsibility initiatives, The corporation are advised to follow the principles below:

  • Exercise corporate governance.

  • Foster a sustainable environment.

  • Preserve public welfare.

  • Enhance disclosure of corporate social responsibility information.

  • Article 4: The corporation shall take into consideration the correlation between the development of domestic and international corporate social responsibility principles and corporate core business operations, and the effect of the operation of individual companies and of their respective business groups as a whole on stakeholders, in establishing their policies, systems or relevant management guidelines, and concrete promotion plans for corporate social responsibility programs, which shall be approved by the board of directors and then reported to the shareholders meeting.

  • When a shareholder proposes a motion involving corporate social responsibility, the company's board of directors is advised to review and consider including it in the shareholders meeting agenda.

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Chapter 2 Exercising Corporate Governance

Article 5: The corporation are advised to follow the Corporate Governance Best Practice Principles for TWSE/GTSM Listed Companies, the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, and the Code of Ethical Conduct for TWSE/GTSM Listed Companies to establish effective corporate governance frameworks and relevant ethical standards so as to enhance corporate governance.

Article 6: The directors of the corporation shall exercise the due care of good administrators to urge the company to perform its corporate social responsibility initiatives, examine the results of the implementation thereof from time to time and continually make adjustments so as to ensure the thorough implementation of its corporate social responsibility policies.

The board of directors of the corporation is advised to give full consideration to the interests of stakeholders, including the following matters, in the company's performance of its corporate social responsibility initiatives:

  1. Identifying the company's corporate social responsibility mission or vision, and declaring its corporate social responsibility policy, systems or relevant management guidelines;

  2. Making corporate social responsibility the guiding principle of the company's operations and development, and ratifying concrete promotional plans for corporate social responsibility initiatives; and

  3. Enhancing the timeliness and accuracy of the disclosure of corporate social responsibility information.

The board of directors shall appoint executive-level positions with responsibility for economic, environmental, and social issues resulting from the business operations of the corporation, and to report the status of the handling to the board of directors. The handling procedures and the responsible person for each relevant issue shall be concrete and clear.

Article 7: The corporation is advised to, on a regular basis, organize education and training on the implementation of corporate social responsibility initiatives, including promotion of the matters prescribed in paragraph 2 of the preceding article.

Article 8: For the purpose of managing corporate social responsibility initiatives, The corporation is advised to establish an exclusively (or concurrently) dedicated unit to be in charge of proposing and enforcing the corporate social responsibility policies, systems, or relevant management guidelines, and concrete promotional plans and to report on the same to the board of directors on a periodic basis. The corporation is advised to adopt reasonable remuneration policies, to ensure that remuneration arrangements support the strategic aims of the organization, and

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align with the interests of stakeholders.

It is advised that the employee performance evaluation system be combined with corporate social responsibility policies, and that a clear and effective incentive and discipline system be established.

  • Article 9: The corporation shall, based on respect for the rights and interests of stakeholders, identify stakeholders of the company, and establish a designated section for stakeholders on the company website; understand the reasonable expectations and demands of stakeholders through proper communication with them, and adequately respond to the important corporate social responsibility issues which they are concerned about.

Chapter 3 Fostering a Sustainable Environment

  • Article 10: The corporation shall follow relevant environmental laws, regulations and international standards to properly protect the environment and shall endeavor to promote a sustainable environment when engaging in business operations and internal management.

  • Article 11: The corporation is advised to endeavor to utilize all resources more efficiently and use renewable materials which have a low impact on the environment to improve sustainability of natural resources.

  • Article 12: The corporation is advised to establish proper environment management systems based on the characteristics of their industries. Such systems shall include the following tasks:

  • Collecting sufficient and up-to-date information to evaluate the impact of the company's business operations on the natural environment.

  • Establishing measurable goals for environmental sustainability, and examining whether the development of such goals should be maintained and whether it is still relevant on a regular basis.

  • Adopting enforcement measures such as concrete plans or action plans, and examining the results of their operation on a regular basis.

  • Article 13: The corporation is advised to establish a dedicated unit or assign dedicated personnel for drafting, promoting, and maintaining relevant environment management systems and concrete action plans, and should hold environment education courses for their managerial officers and other employees on a periodic basis.

  • Article 14: The corporation is advised to take into account the effect of business operations on ecological efficiency, promote and advocate the concept of sustainable consumption, and conduct research and development, procurement, production, operations, and services in accordance with the following principles to reduce the

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impact on the natural environment and human beings from their business operations:

  1. Reduce resource and energy consumption of their products and services.

  2. Reduce emission of pollutants, toxins and waste, and dispose of waste properly.

  3. Improve recyclability and reusability of raw materials or products.

  4. Maximize the sustainability of renewable resources.

  5. Enhance the durability of products.

  6. Improve efficiency of products and services.

Article 15:

To improve water use efficiency, The corporation shall properly and sustainably use water resources and establish relevant management measures.

The corporation shall construct and improve environmental protection treatment facilities to avoid polluting water, air and land, and use their best efforts to reduce adverse impact on human health and the environment by adopting the best practical pollution prevention and control measures.

Article 16: The corporation is advised to assess the current and future potential risks and opportunities that climate change may present to enterprises and to adopt climate related measures.

The corporation is advised to adopt standards or guidelines generally used in Taiwan and abroad to enforce corporate greenhouse gas inventory and to make disclosures thereof, the scope of which shall include the following:

  1. Direct greenhouse gas emissions: emissions from operations that are owned or controlled by the company.

  2. Indirect greenhouse gas emissions: emissions resulting from the generation of externally purchased or acquired electricity, heating, or steam.

The corporation is advised to compile statistics on greenhouse gas emissions, volume of water consumption and total weight of waste and to establish policies for energy conservation, carbon and greenhouse gas reduction, reduction of water consumption or management of other wastes. The companies' carbon reduction strategies should include obtaining carbon credits and be promoted accordingly to minimize the impact of their business operations on climate change.

Chapter 4 Preserving Public Welfare

Article 17: The corporation shall comply with relevant laws and regulations, and the International Bill of Human Rights, with respect to rights such as gender equality, the right to work, and prohibition of discrimination.

The corporation, to fulfill its responsibility to protect human rights, shall adopt relevant management policies and processes, including:

  1. Presenting a corporate policy or statement on human rights.

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  3. Evaluating the impact of the company's business operations and internal management on human rights, and adopting corresponding handing processes.

  4. Reviewing on a regular basis the effectiveness of the corporate policy or statement on human rights.

  5. In the event of any infringement of human rights, the company shall disclose the processes for handling of the matter with respect to the stakeholders involved.

The corporation shall comply with the internationally recognized human rights of labor, including the freedom of association, the right of collective bargaining, caring for vulnerable groups, prohibiting the use of child labor, eliminating all forms of forced labor, eliminating recruitment and employment discrimination, and shall ensure that their human resource policies do not contain differential treatments based on gender, race, socioeconomic status, age, or marital and family status, so as to achieve equality and fairness in employment, hiring conditions, remuneration, benefits, training, evaluation, and promotion opportunities. The corporation shall provide an effective and appropriate grievance mechanism with respect to matters adversely impacting the rights and interests of the labor force, in order to ensure equality and transparency of the grievance process. Channels through which a grievance may be raised shall be clear, convenient, and unobstructed. A company shall respond to any employee's grievance in an appropriate manner.

  • Article 18: The corporation shall provide information for their employees so that the employees have knowledge of the labor laws and the rights they enjoy in the countries where the companies have business operations.

  • Article 19: The corporation is advised to provide safe and healthful work environments for their employees, including necessary health and first-aid facilities and shall endeavor to curb dangers to employees' safety and health and to prevent occupational accidents.

The corporation is advised to organize training on safety and health for their employees on a regular basis.

  • Article 20: The corporation is advised to create an environment conducive to the development of their employees' careers and establish effective training programs to foster career skills.

The corporation shall establish and implement reasonable employee welfare measures (including remuneration, leave and other welfare etc.) and appropriately reflect the business performance or achievements in the employee remuneration, to ensure the recruitment, retention, and motivation of human resources, and achieve the objective of sustainable operations.

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Article 21: The corporation shall establish a platform to facilitate regular two-way communication between the management and the employees for the employees to obtain relevant information on and express their opinions on the company's operations, management and decisions. The corporation shall respect the employee representatives' rights to bargain for the working conditions, and shall provide the employees with necessary information and hardware equipment, in order to improve the negotiation and cooperation among employers, employees and employee representatives. The corporation shall, by reasonable means, inform employees of operation changes that might have material impacts.

Article 21-1: The corporation is advised to treat customers or consumers of its products or services in a fair and reasonable manner, including according to the following principles: fairness and good faith in contracting, duty of care and fiduciary duty, truthfulness in advertising and soliciting, fitness of products or services, notification and disclosure, commensuration between compensation and performance, protection of the right to complain, professionalism of salespersons etc. Said company shall also develop the relevant strategies and specific measures for implementation.

Article 22: The corporation shall take responsibility for their products and services, and take marketing ethics seriously. In the process of research and development, procurement, production, operations, and services, the company shall ensure the transparency and safety of their products and services. They further shall establish and disclose policies on consumer rights and interests, and enforce them in the course of business operations, in order to prevent the products or services from adversely impacting the rights, interests, health, or safety of consumers. Article 23: The corporation shall ensure the quality of their products and services by following the laws and regulations of the government and relevant standards of their industries. The corporation shall follow relevant laws, regulations and international guidelines in regard to customer health and safety and customer privacy involved in, and marketing and labeling of, their products and services and shall not deceive, mislead, commit fraud or engage in any other acts which would betray consumers' trust or damage consumers' rights or interests.

Article 24: The corporation is advised to evaluate and manage all types of risks that could cause interruptions in operations, so as to reduce the impact on consumers and society.

The corporation is advised to provide a clear and effective procedure for accepting consumer complaints to fairly and timely handle consumer complaints, shall comply with laws and regulations related to the Personal Information Protection

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Act for respecting consumers' rights of privacy and shall protect personal data provided by consumers.

Article 25: The corporation is advised to assess the impact their procurement has on society as well as the environment of the community that they are procuring from, and shall cooperate with their suppliers to jointly implement the corporate social responsibility initiative.

The corporation is advised to establish supplier management policies and request suppliers to comply with rules governing issues such as environmental protection, occupational safety and health or labor rights. Prior to engaging in commercial dealings, The corporation is advised to assess whether there is any record of a supplier's impact on the environment and society, and avoid conducting transactions with those against corporate social responsibility policy.

When The corporation enter into a contract with any of their major suppliers, the content should include terms stipulating mutual compliance with corporate social responsibility policy, and that the contract may be terminated or rescinded any time if the supplier has violated such policy and has caused significant negative impact on the environment and society of the community of the supply source.

Article 26: The corporation shall evaluate the impact of their business operations on the community, and adequately employ personnel from the location of the business operations, to enhance community acceptance.

The corporation is advised to, through equity investment, commercial activities, endowments, volunteering service or other charitable professional services etc., dedicate resources to organizations that commercially resolve social or environmental issues, participate in events held by citizen organizations, charities and local government agencies relating to community development and community education to promote community development.

Chapter 5 Enhancing Disclosure of Corporate Social Responsibility Information

  • Article 27: The corporation shall disclose information according to relevant laws, regulations and the Corporate Governance Best Practice Principles for TWSE/GTSM listed Companies and shall fully disclose relevant and reliable information relating to their corporate social responsibility initiatives to improve information transparency.

Relevant information relating to corporate social responsibility which The corporation shall disclose includes:

  1. The policy, systems or relevant management guidelines, and concrete promotion plans for corporate social responsibility initiatives, as resolved by the board of directors.

  2. The risks and the impact on the corporate operations and financial condition

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arising from exercising corporate governance, fostering a sustainable environment and preserving social public welfare.

  1. Goals and measures for realizing the corporate social responsibility initiatives established by the companies, and performance in implementation.

  2. Major stakeholders and their concerns.

  3. Disclosure of information on major suppliers' management and performance with respect to major environmental and social issues.

  4. Other information relating to corporate social responsibility initiatives.

Article 28:

The corporation shall adopt internationally widely recognized standards or guidelines when producing corporate social responsibility reports, to disclose the status of their implementation of the corporate social responsibility policy. It also is advisable to obtain a third-party assurance or verification for reports to enhance the reliability of the information in the reports. The reports are advised to include:

  1. The policy, system, or relevant management guidelines and concrete promotion plans for implementing corporate social responsibility initiatives.

  2. Major stakeholders and their concerns.

  3. Results and a review of the exercising of corporate governance, fostering of a sustainable environment, preservation of public welfare and promotion of economic development.

  4. Future improvements and goals.

Chapter 6 Supplementary Provisions

  • Article 29: The corporation shall at all times monitor the development of domestic and foreign corporate social responsibility standards and the change of business environment so as to examine and improve their established corporate social responsibility framework and to obtain better results from the implementation of the corporate social responsibility policy.

  • Article 30: This Principles was established on Mar. 25, 2013.

The 1st amendment was made on Aug. 11, 2016 The 2nd amendment was made on Mar. 25, 2020.

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Appendix 4

Young Fast Optoelectronics Co., Ltd. Procedures for the Acquisition or Disposal of Assets

Article1: Purpose

These Procedures have been specially drawn up in order to protect assets and implement information disclosures.

Article2: Legal basis

The Company has established these Procedures in accordance with Article 36-1 of the Securities and Exchange Act and the provisions of the "Regulations Governing the Acquisition and Disposal of Assets by Public Companies " as promulgated by the Financial Supervisory Commission of the Executive Yuan.

Article3: The term "assets" as used in these Procedures includes the following:

  • I. Investments in stocks, government bonds, corporate bonds, financial bonds, securities representing interest in a fund, depositary receipts, call (put) warrants, beneficial interest securities, and asset-backed securities.

  • II. Real property (including land, houses and buildings, investment property, and construction enterprise inventory) and equipment.

  • III. Memberships.

  • IV. Patents, copyrights, trademarks, franchise rights, and other intangible assets.

  • V. Right-of-use assets.

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

  • VII. Derivatives.

  • VIII. Assets acquired or disposed of in connection with mergers, demergers, acquisitions, or transfer of shares in accordance with law.

  • IX. Other major assets.

Article4: Terms used in these Procedures are defined as follows:

  • I. Derivatives: Forward contracts, options contracts, futures contracts, leverage contracts, or swap contracts, whose value is derived from a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable; or hybrid contracts combining the above contracts; or hybrid contracts or structured products containing embedded derivatives. The term "forward contracts" does not include insurance contracts, performance contracts, after-sales service contracts, long-term leasing contracts, or long-term purchase (sales) contracts.

  • II. Assets acquired or disposed through mergers, demergers, acquisitions, or transfer of shares in accordance with law: Refers to assets acquired or disposed through mergers, demergers, or acquisitions conducted under the Business Mergers and Acquisitions Act, Financial Holding Company Act, Financial Institution Merger Act and other acts, or to transfer of shares from another company through issuance of new shares of its own as the consideration therefor (hereinafter "transfer of shares") under Article 156-3 of the Company Act.

  • III. Related party or subsidiary: As defined in the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

  • IV. Professional appraiser: Refers to a real property appraiser or other person duly authorized by law to engage in the value appraisal of real property or equipment.

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

  • VI. Mainland China area investment: Refers to investments in the mainland China area approved by the Ministry of Economic Affairs Investment Commission or conducted in accordance with the provisions of the Regulations Governing.

    • (I) "Within the preceding year" refers to the year preceding the date of acquisition or disposal of assets. Items duly announced in accordance with these Regulations need not be counted toward the transaction amount.

    • (II) "Most recent financial statements" refers to financial statements that the Company has made publicly available and that have been audited, certified, or reviewed by an accountant before the acquisition or disposal of assets.

  • Article5: Professional appraisers and their officers, certified public accounts, attorneys, and securities underwriters that provide the companies with appraisal reports, certified public accountant's opinions, attorney's opinions, or underwriter's opinions shall meet the following requirements:

  • I. May not have previously received a final and unappealable sentence to imprisonment for 1 year or longer for a violation of the Act, the Company Act, the Banking Act of The Republic of China, the Insurance Act, the Financial Holding Company Act, or the Business Entity Accounting Act, or for fraud, breach of trust, embezzlement, forgery of documents, or occupational crime. However, this provision does not apply if 3 years have already passed since completion of service of the sentence, since expiration of the period of a suspended sentence, or since a pardon was received.

  • II. May not be a related party or de facto related party of any party to the transaction.

  • III. If the company is required to obtain appraisal reports from two or more professional appraisers, the different professional appraisers or appraisal officers may not be related parties or de facto related parties of each other.

  • Article6: The company shall establish its procedures for the acquisition or disposal of assets in accordance with the provisions of these Regulations or other Regulations. After the procedures have been approved by the board of directors, they shall be submitted to each supervisor, and then to a shareholders' meeting for approval; the same applies when the procedures are amended. 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 each supervisor.

When the procedures for the acquisition and disposal of assets are submitted for discussion by the board of directors pursuant to the preceding paragraph, 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.

When the procedures for the acquisition and disposal of assets are adopted or amended they shall be approved by one-half or more of all audit committee members and submitted to the board of directors for a resolution.

If approval of one-half or more of all audit committee members as required in the preceding paragraph is not obtained, the procedures may be implemented if approved by two-thirds or more of all directors, and the resolution of the audit committee shall be recorded in the minutes of the board of directors meeting.

The terms "all audit committee members" in paragraph 3 and "all directors" in the preceding

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paragraph shall be counted as the actual number of persons currently holding those positions.

  • Article7: Regarding limits on investment in real property and right-of-use assets thereof not for business use and on marketable securities

The respective limits for the Company and its subsidiaries in acquiring the

  • aforementioned assets are determined as follows:

  • I. The limits on acquiring real property and right-of-use assets thereof not for business use are as follows:

  • (I) The total carrying amount of real property and right-of-use assets thereof not for business use acquired by the Company shall not exceed 50% of the Company's net value.

  • (II) The total carrying amount of real property and right-of-use assets thereof not for business use acquired by a subsidiary of the Company shall not exceed 100% of the net value of each such subsidiary.

  • II. Limits on the acquisition of securities are as follows:

  • (I) When the Company acquires securities in which the Group's companies comprehensively holds more than 50% of equity:

    1. The amount of individual marketable securities shall not exceed 80% of the net value of the Company's most recent financial statements.

    2. The aggregate amount of securities acquired shall not exceed 160% of the net value of the Company's most recent financial statements.

  • (II) When the Company acquires securities not specified in item (I):

    1. The amount of individual marketable securities shall not exceed 30% of the net value of the Company's most recent financial statements.

      1. The aggregate amount of securities acquired shall not exceed 80% of the net value of the Company's most recent financial statements.

  • (III) The amount of individual marketable securities acquired by subsidiaries of the Company shall not exceed 150% of the net value of the most recent financial statements of each such subsidiary.

  • (IV)The aggregate amount of securities acquired by subsidiaries of the Company shall not exceed 200% of the net value of the most recent financial statements of each such subsidiary.

  • (V) When the Company undertakes a reorganization of the organizational structure of the Group via the Board of Directors, each affected subsidiary shall not be subject to the aforementioned limitations under (III) and (IV) during the course of said process when acquiring securities.

Article8: Procedures for acquiring or disposing of real property, equipment, or right-of-use assets

  • I. Appraisal and operating procedures

The Company's acquisition or disposal of property, plant and equipment or right-of-use assets thereof shall be handled in accordance with the property, plant and equipment cycle procedures of the Company's internal control system.

  • II. Determination procedures of transaction term and the degree of authority delegated transaction process

  • (I) In acquiring or disposing of real property or right-of-use assets thereof, reference shall be made to the announced present value, assessed value, the actual transaction prices of adjacent real estate, etc., to determine transaction conditions and the transaction price; and an analysis report shall be prepared and submitted to the Chairperson. If the amount is less than NT$20,000,000, it shall be submitted to the Chairperson for approval and afterward reported in the next upcoming meeting of

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the Board of Directors; for amounts exceeding NT$20,000,000, approval of the Board of Directors shall be additionally obtained.

  • (II) In acquiring or disposing of equipment or right-of-use assets thereof, selection shall be made by means of inquiry, price comparison, negotiation, or bidding. If the amount is less than NT$10,000,000 (inclusive), progressive approval shall be obtained using authorized procedures. For cases exceeding NT$10,000,000, these may only be initiated after submission to the President and Chairperson for approval and to the Board of Directors for approval.

  • III. The units responsible for implementation

    • When the Company acquires or disposes of property, plant and equipment or right-ofuse assets thereof, the utilizing department and management department shall be responsible for implementation following the submission for approval to the approval authority as stipulated in the preceding paragraphs.

  • IV. The appraisal report of real property, equipment, or right-of-use assets

  • In acquiring or disposing of real property, equipment, or right-of-use assets thereof where the transaction amount reaches 20 percent of the company's paid-in capital or NT$300 million or more, the company, unless transacting with a domestic government agency, engaging others to build on its own land, engaging others to build on rented land, or acquiring or disposing of equipment or right-of-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 provisions:

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

  • (II) Where the transaction amount is NT$1 billion or more, appraisals from two or more professional appraisers shall be obtained.

  • (III) 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 certified public accountant shall be engaged to perform the appraisal in accordance with the provisions of Statement of Auditing Standards No. 20 published by the ROC Accounting Research and Development Foundation (ARDF) and render 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.

 2. The discrepancy between the appraisal results of two or more professional appraisers is 10 percent or more of the transaction amount.

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

     1. The calculation of the transaction amounts referred to in the preceding three articles shall be done in accordance with Article 15, paragraph 1 herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items for which an appraisal report from a professional appraiser or a CPA's opinion has been obtained need not be counted toward the transaction amount.

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  • Where the company acquires or disposes of assets through court auction procedures, the evidentiary documentation issued by the court may be substituted for the appraisal report or CPA opinion.

Article9: Procedures for acquiring or disposing of securities

  • I. The means of price determination and supporting reference materials

  • 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 certified public accountant, for reference in appraising the transaction price:

  • (I) The acquisition or disposal of securities traded on a centralized exchange or in the business office of a securities firm shall be determined according to the prevailing market prices.

  • (II) For the acquisition or disposal of securities not traded on a centralized exchange or in the business office of a securities firm, reference shall be made to the most recent financial statements of the target company that have been audited, certified, or reviewed by an accountant in evaluating the transaction price before the date of fact; and consideration shall be made of its net value per share, profitability, future development potential, market interest rates, bond coupon rates, creditworthiness, and negotiations with reference to the current transaction price.

  • II. Appointment of experts to issue opinions

  • (I) If the dollar amount of the transaction for acquiring or disposing of securities is 20 percent of the company's paid-in capital or NT$300 million or more, the company shall additionally engage a certified public accountant 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 use the report of an expert as evidence, the CPA shall do so in accordance with the provisions of Statement of Auditing Standards No. 20 published by the ARDF. This requirement does not apply, however, to publicly quoted prices of securities that have an active market or

    1. Securities are acquired via cash investment in the initiation of establishment or solicitation of establishment in accordance with the law, and the rights obtained by the acquisition of the securities are equivalent to the proportion of shipments.

    2. Participation in the subscription of securities issued by the target company in accordance with relevant laws and regulations for cash capital increase and issued at par.

    3. Participation in the subscription of direct or indirect 100% investment companies to handle cash capital increase and issue securities, or 100%-owned subsidiaries participate in mutual subscription of cash capital increase and issuance of marketable securities.

    4. Listed, over-the-counter and emerging securities traded on stock exchanges or the business offices of securities firms.

    5. Constitutes a domestic government bond or bond under repurchase and resale agreements.

    6. Public offering of fund.

    7. Acquisition or disposal of listed (over-the-counter) company stocks in accordance with the listed (over-the-counter) securities bidding regulations or auction regulations of the Taiwan Stock Exchange Corporation or the Taipei Exchange.

    8. Participation in domestic public offering companies with cash capital increase subscription or domestic subscription of corporate bonds (including financial bonds), and the acquired securities are not private placement securities.

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    1. For those subscribing for domestic private equity funds before the establishment of the fund in accordance with Article 11, Paragraph 1 of the Securities Investment Trust and Consulting Act, for or domestic private equity funds purchased or repurchased, the investment strategy stated in the trust deed is the same as the investment scope of the public fund except for securities credit transactions and unwritten securities-related commodity positions held.

    or where otherwise provided by regulations of the Financial Supervisory Commission (FSC).

  • (II) The calculation of the transaction amounts referred to in the preceding three articles shall be done in accordance with Article 15, paragraph 1 herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items for which an appraisal report from a professional appraiser or a CPA's opinion has been obtained need not be counted toward the transaction amount.

  • (III) Where the company acquires or disposes of assets through court auction procedures, the evidentiary documentation issued by the court may be substituted for the appraisal report or CPA opinion.

  • III. Authorization amounts and levels

  • (I) For the acquisition or disposal of securities traded on a centralized exchange or in the business office of a securities firm, if the transaction amount is less than NT$10,000,000 (inclusive), it shall be approved by the President; if the transaction amount ranges from more than NT$10,000,000 to NT$20,000,000 (inclusive), it shall be submitted to the Chairperson for approval; if the transaction amount exceeds NT$20 million, it shall be approved by the Board of Directors.

  • (II) For the acquisition or disposal of securities not traded on a centralized exchange or in the business office of a securities firm, approval shall be granted by the Board of Directors. However, the Board of Directors may authorize the Chairperson to make an internal decision for amounts within NT$20,000,000 and then report to the Board of Directors for ratification.

  • IV. The units responsible for implementation

  • The Company's acquisition and disposal of securities investments is carried out by the Department of Finance.

  • V. Transaction process

  • Regarding the transaction process of the Company's acquisition or disposal of securities, all shall be handled in accordance with the provisions of the Company's internal control system for investment cycle-related operations.

Article10: Related Party Transactions

  • I. When the Company engages in acquisition or disposal of assets from a related party, except in accordance with the procedures given in Articles 8, 9 and 11, and 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 the regulations. Also, when judging whether a transaction counterparty is a related party, in addition to legal formalities, the substance of the relationship shall also be considered.

  • The calculation of the transaction amounts referred to in the preceding three articles shall be done in accordance with Article 15, paragraph 1 herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items for which an appraisal report from a professional appraiser or a CPA's opinion has been obtained need not be counted toward the transaction amount.

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  • II. Appraisal and operating procedures

When the company intends to acquire or dispose of real property or right-of-use assets thereof from or to a related party, or when it intends to acquire or dispose of assets other than real property or right-of-use assets thereof from or to a related party and the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or NT$300 million or more, except in trading of domestic government bonds or bonds under repurchase and resale agreements, or subscription or redemption of money market funds issued by domestic securities investment trust enterprises, the company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by the board of directors and recognized by the supervisors:

  • (I) The purpose, necessity and anticipated benefit of the acquisition or disposal of assets.

  • (II) The reason for choosing the related party as a transaction counterparty.

  • (III) With respect to the acquisition of real property or right-of-use assets thereof from a related party, information regarding appraisal of the reasonableness of the preliminary transaction terms in accordance with Article 16 and Article 17.

  • (IV) The date and price at which the related party originally acquired the real property, the original transaction counterparty, and that transaction counterparty's relationship to the company and the related party.

  • (V) Monthly cash flow forecasts for the year commencing from the anticipated month of signing of the contract, and evaluation of the necessity of the transaction, and reasonableness of the funds utilization.

  • (VI) An appraisal report from a professional appraiser or a CPA's opinion obtained in compliance with the preceding article.

  • (VII) Restrictive covenants and other important stipulations associated with the transaction.

  • III. When the procedures for the acquisition and disposal of assets are submitted for discussion by the board of directors pursuant to the preceding paragraph, 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.

  • When the procedures for the acquisition and disposal of assets are adopted or amended they shall be approved by one-half or more of all audit committee members and submitted to the board of directors for a resolution, and shall apply mutatis mutandis to the Article 6 paragraph 4 and paragraph 5.

  • IV. Assessment of reasonableness of transaction costs

  • (I) The company that acquires real property or right-of-use assets thereof from a related party shall evaluate the reasonableness of the transaction costs by the following means:

    1. Based upon the related party's transaction price plus necessary interest on funding and the costs to be duly borne by the buyer. "Necessary interest on funding" is imputed as the weighted average interest rate on borrowing in the year the company purchases the property; provided, it may not be higher than the maximum non-financial industry lending rate announced by the Ministry of Finance.

    2. Total loan value appraisal from a financial institution where the related party has previously created a mortgage on the property as security for a loan; provided, the actual cumulative amount loaned by the financial institution shall have been 70 percent or more of the financial institution's appraised loan value of the property and the period of the loan shall have been 1 year or more. However, this shall not apply where the financial institution is a related party

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of one of the transaction counterparties.

  • (II) Where land and structures thereupon are combined as a single property purchased or leased in one transaction, the transaction costs for the land and the structures may be separately appraised in accordance with either of the means listed in the preceding paragraph.

  • (III) The company that acquires real property or right-of-use assets thereof from a related party and appraises the cost of the real property or right-of-use assets thereof in accordance with the preceding two paragraphs shall also engage a CPA to check the appraisal and render a specific opinion.

  • (IV) Where the company acquires real property or right-of-use assets thereof from a related party and one of the following circumstances exists, the acquisition shall be conducted in accordance with the paragraph 1 to paragraph 3, and the paragraph 4 (I)~(IV) do not apply:

  • The related party acquired the real property or right-of-use assets thereof through inheritance or as a gift.

  • More than 5 years will have elapsed from the time the related party signed the contract to obtain the real property or right-of-use assets thereof to the signing date for the current transaction.

  • The real property is acquired through signing of a joint development contract with the related party, or through engaging a related party to build real property, either on the company's own land or on rented land.

  • (V) When the results of the company's appraisal conducted in accordance with paragraph 4 (I) and (II) are uniformly lower than the transaction price, the matter shall be handled in compliance with paragraph 4 (VI). However, where the following circumstances exist, objective evidence has been submitted and specific opinions on reasonableness have been obtained from a professional real property appraiser and a CPA have been obtained, this restriction shall not apply:

  • Where the related party acquired undeveloped land or leased land for development, it may submit proof of compliance with one of the following conditions:

    • (1) Where undeveloped land is appraised in accordance with the means in the preceding Article, and structures according to the related party's construction cost plus reasonable construction profit are valued in excess of the actual transaction price. The "Reasonable construction profit" shall be deemed the average gross operating profit margin of the related party's construction division over the most recent 3 years or the gross profit margin for the construction industry for the most recent period as announced by the Ministry of Finance, whichever is lower.

    • (2) Completed transactions by unrelated parties within the preceding year involving other floors of the same property or neighboring or closely valued parcels of land, where the land area and transaction terms are similar after calculation of reasonable price discrepancies in floor or area land prices in accordance with standard property market sale or leasing practices.

    • (3) Transactions by unrelated parties within the preceding year involving other floors of the same property, where the transaction terms are estimated to be equivalent after calculation of reasonable price discrepancies in floor price in accordance with standard leasing practices.

  • Where a public company acquiring real property, or obtaining real property right-of-use assets through leasing, from a related party provides evidence that the terms of the transaction are similar to the terms of completed transactions involving neighboring or closely valued parcels of land of a similar size by

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unrelated parties within the preceding year.

Completed transactions involving neighboring or closely valued parcels of land in the preceding paragraph in principle refers to parcels on the same or an adjacent block and within a distance of no more than 500 meters or parcels close in publicly announced current value; transactions involving similarly sized parcels in principle refers to transactions completed by unrelated parties for parcels with a land area of no less than 50 percent of the property in the planned transaction; within the preceding year refers to the year preceding the date of occurrence of the acquisition of the real property or obtainment of the right-of-use assets thereof.

  • (VI) Where the company acquires real property or right-of-use assets thereof from a related party and the results of appraisals conducted in accordance with the paragraph 4 (I)~(V) are uniformly lower than the transaction price, the following steps shall be taken. In addition, if the Company and public companies that use the equity method to evaluate the Company's investments have set aside special reserves in accordance with the aforementioned provisions, they may not utilize the special reserve until it has recognized a loss on decline in market value of the assets it purchased or leased at a premium, or they have been disposed of, or the leasing contract has been terminated, or adequate compensation has been made, or there is other evidence confirming that there was nothing unreasonable about the transaction, and the Financial Supervisory Commission has given its approval.

  • A special reserve shall be set aside in accordance with Article 41, paragraph 1 of the Securities and Exchange Act against the difference between the real property transaction price and the appraised cost, and may not be distributed or used for capital increase or issuance of bonus shares. Where a public company uses the equity method to account for its investment in another company, then the special reserve called for under Article 41, paragraph of the Securities and Exchange Act shall be set aside pro rata in a proportion consistent with the share of public company's equity stake in the other company.

  • Supervisors shall comply with Article 218 of the Company Act. Where an audit committee has been established in accordance with the provisions of the Act, the preceding part of this subparagraph shall apply mutatis mutandis to the independent director members of the audit committee.

  • Actions taken pursuant to the paragraph 4 (VI) 1 and 2 shall be reported to a shareholders meeting, and the details of the transaction shall be disclosed in the annual report and any investment prospectus.

  • (VII)When the company obtains real property or right-of-use assets thereof from a related party, it shall also comply with the paragraph 4 (VI), if there is other evidence indicating that the acquisition was not an arms length transaction.

  • (VIII) Among companies in the Group where the Company holds more than 50% of total shares, when acquiring or disposing of machinery and equipment for business use or right-to-use assets thereof and real property right-to-use assets for business use, the amount shall be submitted to the Chairperson for approval within an equivalent limit of NT$100 million.

Article11: Procedures for acquiring or disposing of intangible assets or right-of-use assets thereof or memberships

  • I. Appraisal and operating procedures

  • The Company's acquisition or disposal of intangible assets or right-of-use assets thereof or memberships shall be handled in accordance with the fixed asset cycle

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procedures of the Company's internal control system.

  • II. Determination procedures of transaction term and the degree of authority delegated transaction process

  • (I) In acquiring or disposing of right-of-use assets or memberships, reference shall be made to fair market prices to determine transaction conditions and the transaction price; and an analysis report shall be prepared and submitted to the President and Chairman. If the amount is less than 1% of paid-in capital or less than NT$3,000,000, it shall be submitted to the President and the Chairperson for approval and afterward reported in the next upcoming meeting of the Board of Directors; for amounts exceeding NT$3,000,000, approval of the Board of Directors shall be additionally obtained.

  • (II) In acquiring or disposing of intangible assets, reference shall be made to expert evaluation reports or to fair market prices to determine transaction conditions and the transaction price; and an analysis report shall be prepared and submitted to the Chairperson. If the amount is less than 10% of paid-in capital or less than NT$20,000,000, it shall be submitted to the Chairperson for approval and afterward reported in the next upcoming meeting of the Board of Directors; for amounts exceeding NT$20,000,000, approval of the Board of Directors shall be additionally obtained.

  • (III)The company shall establish its procedures for the acquisition or disposal of assets in accordance with the provisions of these Regulations or other Regulations. After the procedures have been approved by the board of directors, they shall be submitted to each supervisor, and then to a shareholders' meeting for approval; the same applies when the procedures are amended. 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 each supervisor. When the procedures for the acquisition and disposal of assets are submitted for discussion by the board of directors pursuant to the preceding paragraph, 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. When the procedures for the acquisition and disposal of assets are adopted or amended they shall be approved by one-half or more of all audit committee members and submitted to the board of directors for a resolution, and shall apply mutatis mutandis to the Article 6 paragraph 4 and paragraph 5.

  • III. The units responsible for implementation

  • When the Company acquires or disposes of intangible assets or right-of-use assets thereof or memberships, the utilizing department and Department of Finance or Administration Department shall be responsible for implementation following the submission for approval to the approval authority as stipulated in the preceding paragraphs.

  • IV. The appraisal report from a professional appraiser of intangible assets or right-of-use assets thereof or memberships

  • (I) In acquiring or disposing of right-of-use assets or memberships thereof where the transaction amount reaches 1 percent of the company's paid-in capital or NT$3 million or more, shall obtain an appraisal report prior to the date of occurrence of the event from a professional appraiser.

  • (II) In acquiring or disposing of intangible assets thereof where the transaction amount reaches 10 percent of the company's paid-in capital or NT$20 million or more, shall obtain an appraisal report prior to the date of occurrence of the event from a professional appraiser.

  • (III) Where the company acquires or disposes of intangible assets or right-of-use

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assets thereof or memberships and the transaction amount reaches 20 percent or more of paid-in capital or NT$300 million or more, except in transactions with a domestic government agency, the company shall engage a certified public accountant prior to the date of occurrence of the event to render an opinion on the reasonableness of the transaction price; the CPA shall comply with the provisions of Statement of Auditing Standards No. 20 published by the ARDF.

  • (IV) The calculation of the transaction amounts referred to in the preceding three articles shall be done in accordance with Article 15, paragraph 1 herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items for which an appraisal report from a professional appraiser or a CPA's opinion has been obtained need not be counted toward the transaction amount.

  • (V) Where the company acquires or disposes of assets through court auction procedures, the evidentiary documentation issued by the court may be substituted for the appraisal report or CPA opinion.

Article12: Procedures for acquiring or disposing of claims of financial institutions

In principle, the Company does not engage in transactions to acquire or dispose of claims of financial institutions. If it intends to engage in transactions to acquire or dispose of claims of financial institutions in the future, it will report to the Board of Directors for approval before formulating its evaluation and operating procedures.

Article13: Procedures for Engaging in Derivatives Trading

  • I. Trading principles and strategies

  • (I) The types of derivatives

    1. The company engaging in derivatives trading refer to Forward contracts, options contracts, futures contracts, leverage contracts, or swap contracts, whose value is derived from a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable; or hybrid contracts combining the above contracts; or hybrid contracts or structured products containing embedded derivatives. The term "forward contracts" does not include insurance contracts, performance contracts, after-sales service contracts, long-term leasing contracts, or long-term purchase (sales) contracts.

    2. Matters related to bond margin trading shall be handled in accordance with the relevant provisions of these Procedures. The provisions of these Procedures may not apply to bond transactions having repurchase conditions.

  • (II) Operating or hedging strategies 

     - The Company engages in derivative transactions for hedging purposes. Trading commodities shall be selected to avoid the risk arising from the Company's business operations or from special purpose transactions, and currencies held shall align with the Company's actual foreign currency needs. This is based on the principle of self-balancing among the overall Company's internal components (referring to foreign currency income and expenses) in order to reduce the foreign exchange risk of the Company as a whole and save foreign exchange operating costs. Non-hedging transactions shall be carefully evaluated and submitted to the Board of Directors for approval.

  • (III)segregation of duties

    1. Department of Finance

      • (1) Trader

After collecting market information, conducting analysis, and undertaking evaluation and risk assessment, an operating strategy will be formulated that

  • 88 -

is to be used as a basis for engaging in transactions after being approved by the responsible supervisor.

  • (2) Validating personnel

Check whether transactions are conducted according to authorized scope of authority and established policies and conduct transaction confirmations.

  • (3) Delivery personnel

Responsible for account opening and delivery tasks before trading.

  1. Department of Account

  2. (1) Accountant

    • A. Create and record accounting subpoenas in accordance with the transaction list of the financial unit transaction personnel and the Bulletin of Accounting Principles and Standards. (The presence of special commodities requires consultation with a CPA.)

    • B. At the end of period settlement of profit and loss (monthly, quarterly, semi-annual, or annual), items under the same subject (such as exchange profits and losses) shall separately list the respective profits and losses of the hedged target and the hedged transaction, as well as the total net profit and loss, and the profit and loss of the non-hedged transaction shall be listed separately.

    • C. The disclosure of derivative transactions in financial reports (quarterly, semi-annual, or annual) shall comply with the relevant accounting standards and financial reporting standards issued by the Financial Supervisory Commission followed by these Procedures.

    • D. Reports and announcements are to be made in accordance with the regulations of the Financial Supervisory Commission of the Executive Yuan.

  3. (2) Delivery personnel: performance of delivery tasks.

  4. Derivative verification authority

  5. (1) Approval authority for hedging transactions: All derivative transactions shall be approved by the Chairperson.

  6. (2) Non-hedging transactions may only be undertaken after submission to the Board of Directors for approval.

  7. Department of Audit

Responsible for understanding the adequacy of internal controls for derivatives trading, checking the trading department's compliance with the operating procedures, analyzing the trading cycle, making audit reports, and reporting to the Board of Directors when there are major deficiencies.

  1. Performance evaluation

  2. (1) Hedge trades

    • A.Performance evaluation is based on the exchange rate costs on the Company's books and on the gains and losses arising from engaging in derivative transactions.

    • B.In order to fully grasp and express transaction valuation risks, the Company adopts a monthly valuation method to evaluate profits and losses.

    • C.The Department of Finance shall provide the President with foreign exchange position evaluation, foreign exchange market trends, and market analysis for the sake of management reference and instruction.

  3. (2) Non-hedge trades

Performance evaluation is to be based on actual profits and losses, and accountants shall regularly prepare reports for the management level.

  1. Total amount of derivatives contracts that may be traded, and the maximum loss

  2. 89 -

limit on total trading and for individual contracts

  • (1) Total amount of derivatives contracts

  • A. Quota of hedge trades

For the total amount of the Company's overall hedging contracts at any point in time, the cumulative total outstanding contract balance shall not exceed 50% of the Company's current net value. 

        - B. Quota of non-hedge trades

           - Based on forecast changes in the market, the Department of Finance may formulate strategies as needed and submit them to the President and the Chairperson for approval before proceeding. The total contractual amount of the Company's net accumulated position in special purpose transactions of the Company is limited to US$10 million. Exceeding the above amount shall be approved by the Board of Directors and can only be done in accordance with policy instructions.

     - (2) The maximum loss limit

        - A. The maximum contract loss limit for hedging transactions shall not exceed 10% of the contract amount, applicable to individual contracts and contracts overall.

        - B. If it is a non-hedging trading contract, then after the position is established a stop loss point shall be set to prevent excess losses. The setting of the stop loss point shall not exceed 10% of the transaction contract amount as the upper limit.

        - C. If drastic short-term changes in the financial environment make it impossible to execute the stop-loss operation and the loss amount exceeds the upper limit specified above, the President and the Chairman shall be immediately informed to facilitate necessary countermeasures, and a relevant review report shall be submitted to the next Board of Directors meeting.

  • II. Risk management measures

  • (I) The scope of Risk Management

    1. Credit risk - Transaction counterparties shall be domestic and foreign financial institutions having good credit and that can provide professional information as a principle. The finance supervisor shall be responsible for controlling transaction limits of financial institutions, and they shall not be excessively concentrated. In accordance with changes in market conditions, the transaction limits of financial institutions can be adjusted at any time.

    2. Market risk - Choose markets where quotation information can be fully disclosed.

    3. Liquidity risk - To ensure liquidity, trading financial institutions shall have sufficient equipment, information and trading capabilities, and be able to trade in any market.

    4. Cash flow risk - In order to ensure the stability of the Company's working capital turnover, the Company's funds for derivatives trading shall consider the source of funds for future performance.

    5. Operational risk - The authorization limits, operating procedures and other regulations set by the Company shall be strictly followed to avoid operational risks.

    6. Legal risk - Any documents and contracts signed with financial institutions shall be reviewed by legal personnel in advance, and the senior executives who authorize the contract shall make final recommendations before they can be formally signed to avoid legal risks.

  • (II) Personnel engaged in derivatives trading may not serve concurrently in other

  • 90 -

operations such as confirmation and settlement.

  • (III) Risk measurement, monitoring, and control personnel shall be in department of Account and assigned to a different department that the personnel in the preceding subparagraph and shall report to the board of directors or senior management personnel with no responsibility for trading or position decision-making.

  • (IV) Positions held by the derivatives exchange shall be periodically evaluated in accordance with the provisions of Paragraph 4, Subparagraph 2 of this Article.

  • III. Internal audit system

    • Internal auditors shall regularly understand the appropriateness of the internal controls for derivatives transactions. Furthermore, they shall audit the transaction department's compliance with the Procedures for engaging in derivative transactions on a monthly basis, and prepare an audit report. If any major violation is found, the supervisor shall be notified in writing and independent directors shall be notified in writing.

    • If the Company has established an audit committee in accordance with the provisions of this Act, provisions for supervisors in the preceding paragraph shall apply mutatis mutandis to the audit committee.

  • IV. Regular evaluation methods and the handling of irregular circumstances.

  • (I) The Board of Directors shall authorize senior executives to regularly supervise and evaluate whether derivative transactions are conducted in accordance with the transaction procedures set forth by the Company, and whether the risks borne are within the allowable scope. When there is an abnormal situation in the market price assessment report (e.g., the position held has exceeded the loss limit), such shall be immediately reported to the Board of Directors and appropriate measures taken.

  • (II) Derivatives trading positions held shall be evaluated at least once per week; however, positions for hedge trades required by business shall be evaluated at least twice per month. Evaluation reports shall be submitted to senior management personnel authorized by the board of directors.

  • V. Board of directors shall faithfully supervise and manage when Engaging in derivatives trading

  • (I) Where the company engaging in derivatives trading, board of directors shall faithfully supervise and manage such trading in accordance with the following principles

    1. Designate senior management personnel to pay continuous attention to monitoring and controlling derivatives trading risk.

    2. Periodically evaluate whether derivatives trading performance is consistent with established operational strategy and whether the risk undertaken is within the company's permitted scope of tolerance.

  • (II) Senior management personnel authorized by the board of directors shall manage derivatives trading in accordance with the following principles:

    1. Periodically evaluate the risk management measures currently employed are appropriate and are faithfully conducted in accordance with the " Regulations Governing the Acquisition and Disposal of Assets by Public Companies " as promulgated by the Financial Supervisory Commission of the Executive Yuan and the procedures for engaging in derivatives trading formulated by the company.

    2. When irregular circumstances are found in the course of supervising trading and profit-loss circumstances, appropriate measures shall be adopted and a report immediately made to the board of directors; where a company has independent directors, an independent director shall be present at the meeting and express an opinion.

  • 91 -

    • (III) A company shall report to the soonest meeting of the board of directors after it authorizes the relevant personnel to handle derivates trading in accordance with its Procedures for Engaging in Derivatives Trading.

  • VI. The company engaging in derivatives trading shall establish a log book in which details of the types and amounts of derivatives trading engaged in, board of directors approval dates, and the matters required to be carefully evaluated under subparagraph 2 of paragraph 4, subparagraph 1 (2) and 2 (1) of paragraph 5, shall be recorded in detail in the log book.

  • Article14: Procedures for Mergers and Consolidations, Splits, Acquisitions, and Assignment of Shares

  • I. Decision method and reference basis for transaction consideration When the Company conducts a merger, demerger, acquisition, or share transfer, it shall comprehensively consider the past and future financial and business conditions of the participating companies, the expected future benefits, and the fair manner in which the market determines the transaction price. Furthermore, it shall consult the professional opinions of accountants, lawyers, or securities underwriters, and negotiate the price with the counterparty participating in the merger, demerger, acquisition, or share transfer.

  • II. Appointment of experts to issue opinions The company that conducts a merger, demerger, acquisition, or transfer of shares, prior to convening the board of directors to resolve on the matter, shall engage a CPA, attorney, or securities underwriter to give an opinion on the reasonableness of the share exchange ratio, acquisition price, or distribution of cash or other property to shareholders, and submit it to the board of directors for deliberation and passage. However, the requirement of obtaining an aforesaid opinion on reasonableness issued by an expert may be exempted in the case of a merger by a public company of a subsidiary in which it directly or indirectly holds 100 percent of the issued shares or authorized capital, and in the case of a merger between subsidiaries in which the public company directly or indirectly holds 100 percent of the respective subsidiaries’ issued shares or authorized capital.

  • III. Decision hierarchy 

     - When the Company handles mergers, demergers, acquisitions, or share transfers, its resolutions shall be handled in accordance with the provisions of the Company Act and relevant laws and regulations.

  • IV. Submission of relevant information and disclosure of information when it cannot be approved by the Shareholders' Meeting

    • (I) A public company participating in a merger, demerger, acquisition, or transfer of shares shall prepare a public report to shareholders detailing important contractual content and matters relevant to the merger, demerger, or acquisition prior to the shareholders meeting and include it along with the expert opinion referred to in paragraph 1 of the preceding Article when sending shareholders notification of the shareholders meeting for reference in deciding whether to approve the merger, demerger, or acquisition. Provided, where a provision of another act exempts a company from convening a shareholders meeting to approve the merger, demerger, or acquisition, this restriction shall not apply.

    • (II) Where the shareholders meeting of any one of the companies participating in a merger, demerger, or acquisition fails to convene or pass a resolution due to lack of a quorum, insufficient votes, or other legal restriction, or the proposal is rejected by the shareholders meeting, the companies participating in the merger, demerger or acquisition shall immediately publicly explain the reason, the follow-up measures, and the preliminary date of the next shareholders meeting.

  • 92 -

  • V. Date of convene a board of directors meeting and shareholders meeting

  • (I) The company participating in a merger, demerger, or acquisition shall convene a board of directors meeting and shareholders meeting on the day of the transaction to resolve matters relevant to the merger, demerger, or acquisition, unless another act provides otherwise or the FSC is notified in advance of extraordinary circumstances and grants consent.

  • (II) The company participating in a transfer of shares shall call a board of directors meeting on the day of the transaction, unless another act provides otherwise or the FSC is notified in advance of extraordinary circumstances and grants consent.

  • (III) When participating in a merger, demerger, acquisition, or transfer of another company's shares, the company shall prepare a full written record of the following information and retain it for 5 years for reference:

    1. Basic identification data for personnel: Including the occupational titles, names, and national ID numbers (or passport numbers in the case of foreign nationals) of all persons involved in the planning or implementation of any merger, demerger, acquisition, or transfer of another company's shares prior to disclosure of the information.

    2. Dates of material events: Including the signing of any letter of intent or memorandum of understanding, the hiring of a financial or legal advisor, the execution of a contract, and the convening of a board of directors meeting.

    3. Important documents and minutes: Including merger, demerger, acquisition, and share transfer plans, any letter of intent or memorandum of understanding, material contracts, and minutes of board of directors meetings.

  • (IV)When participating in a merger, demerger, acquisition, or transfer of another company's shares, the company shall, within 2 days counting inclusively from the date of passage of a resolution by the board of directors, report (in the prescribed format and via the Internet-based information system) the information set out in subparagraphs 1 and 2 of the preceding paragraph to the FSC for recordation.

  • VI. Confidentiality obligations and prevention of insider trading

  • Every person participating in or privy to the plan for merger, demerger, acquisition, or transfer of shares shall issue a written undertaking of confidentiality and may not disclose the content of the plan prior to public disclosure of the information and may not trade, in their own name or under the name of another person, in any stock or other equity security of any company related to the plan for merger, demerger, acquisition, or transfer of shares.

  • VII. Principles for changes in share exchange ratio or purchase price

  • The company participating in a merger, demerger, acquisition, or transfer of shares may not arbitrarily alter the share exchange ratio or acquisition price unless under the below-listed circumstances, and shall stipulate the circumstances permitting alteration in the contract for the merger, demerger, acquisition, or transfer of shares:

  • (I) Cash capital increase, issuance of convertible corporate bonds, or the issuance of bonus shares, issuance of corporate bonds with warrants, preferred shares with warrants, stock warrants, or other equity based securities.

  • (II) An action, such as a disposal of major assets, that affects the company's financial operations.

  • (III) An event, such as a major disaster or major change in technology, that affects shareholder equity or share price.

  • (IV) An adjustment where any of the companies participating in the merger, demerger, acquisition, or transfer of shares from another company, buys back treasury stock.

  • (V) An increase or decrease in the number of entities or companies participating in

  • 93 -

the merger, demerger, acquisition, or transfer of shares.

  • (VI) Other terms/conditions that the contract stipulates may be altered and that have been publicly disclosed.

  • VIII. Matters to be stipulated in contracts

The contract for participation by the company in a merger, demerger, acquisition, or of shares shall record the rights and obligations of the companies participating in the merger, demerger, acquisition, or transfer of shares, and shall also record the following:

  • (I) Handling of breach of contract.

  • (II) Principles for the handling of equity-type securities previously issued or treasury stock previously bought back by any company that is extinguished in a merger or that is demerged.

  • (III) The amount of treasury stock participating companies are permitted under law to buy back after the record date of calculation of the share exchange ratio, and the principles for handling thereof.

  • (IV) The manner of handling changes in the number of participating entities or companies.

  • (V) Preliminary progress schedule for plan execution, and anticipated completion date.

  • (VI) Scheduled date for convening the legally mandated shareholders meeting if the plan exceeds the deadline without completion, and relevant procedures.

  • IX. After public disclosure of the information, if any company participating in the merger, demerger, acquisition, or share transfer intends further to carry out a merger, demerger, acquisition, or share transfer with another company, all of the participating companies shall carry out anew the procedures or legal actions that had originally been completed toward the merger, demerger, acquisition, or share transfer; except that where the number of participating companies is decreased and a participating company's shareholders meeting has adopted a resolution authorizing the board of directors to alter the limits of authority, such participating company may be exempted from calling another shareholders meeting to resolve on the matter anew.

  • X. Where any of the companies participating in a merger, demerger, acquisition, or transfer of shares is not a public company, the company shall sign an agreement with the non-public company whereby the latter is required to abide by the provisions of the paragraph5, paragraph 6 and paragraph 9.

Article15: Procedures for public disclosure of information

  • I. Items to be publicly announced and reported, and standards for public announcement and reporting

  • (I) Acquisition or disposal of real property or right-of-use assets thereof from or to a related party, or acquisition or disposal of assets other than real property or right-of-use assets thereof from or to a related party where the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or NT$300 million or more; provided, this shall not apply to trading of domestic government bonds or bonds under repurchase and resale agreements, or subscription or redemption of money market funds issued by domestic securities investment trust enterprises.

  • (II) Merger, demerger, acquisition, or transfer of shares.

  • (III) Losses from derivatives trading reaching the limits on aggregate losses or losses on individual contracts set out in the procedures adopted by the company.

  • (IV) Where equipment or right-of-use assets thereof for business use are acquired or disposed of, and furthermore the transaction counterparty is not a related party, and the transaction amount meets any of the following criteria:

  • 94 -

  • For a public company whose paid-in capital is less than NT$10 billion, the transaction amount reaches NT$500 million or more.

  • For a public company whose paid-in capital is NT$10 billion or more, the transaction amount reaches NT$1 billion or more.

  • (V) Acquisition or disposal by a public company in the construction business of real property or right-of-use assets thereof for construction use, and furthermore the transaction counterparty is not a related party, and the transaction amount reaches NT$500 million; among such cases, if the public company has paid-in capital of NT$10 billion or more, and it is disposing of real property from a completed construction project that it constructed itself, and furthermore the transaction counterparty is not a related party, then the threshold shall be a transaction amount reaching NT$1 billion or more.

  • (VI) Where land is acquired under an arrangement on engaging others to build on the company's own land, engaging others to build on rented land, joint construction and allocation of housing units, joint construction and allocation of ownership percentages, or joint construction and separate sale, and furthermore the transaction counterparty is not a related party, and the amount the company expects to invest in the transaction reaches NT$500 million.

  • (VII) Where an asset transaction other than any of those referred to in the preceding six subparagraphs, a disposal of receivables by a financial institution, or an investment in the mainland China area reaches 20 percent or more of paid-in capital or NT$300 million; provided, this shall not apply to the following circumstances:

  • Trading of domestic government bonds.

  • 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.

  • Trading of bonds under repurchase and resale agreements, or subscription or redemption of money market funds issued by domestic securities investment trust enterprises.

The amount of transactions above shall be calculated as follows:

  1. The amount of any individual transaction.

  2. The cumulative transaction amount of acquisitions and disposals of the same type of underlying asset with the same transaction counterparty within the preceding year.

  3. The cumulative transaction amount of acquisitions and disposals (cumulative acquisitions and disposals, respectively) of real property or right-of-use assets thereof within the same development project within the preceding year.

  4. The cumulative transaction amount of acquisitions and disposals (cumulative acquisitions and disposals, respectively) of the same security within the preceding year.

  5. "Within the preceding year" as used in the preceding paragraph refers to the year preceding the date of occurrence of the current transaction. Items duly announced in accordance with these Regulations need not be counted toward the transaction amount.

  6. II. Time limits for public announcement and reporting

When assets are acquired or disposed of by the Company, if there are items that shall

  • 95 -

be announced in as per Paragraph 1 of this Article and the transaction amount reaches the standards that shall be announced and reported as per this Article, announcement and reporting shall be made within 2 days of the date of occurrence in accordance with in its nature and the prescribed format.

  • III. Announcement and reporting procedures

  • (I) The Company shall submit relevant information to the website designated by the Financial Supervisory Commission of the Executive Yuan for announcement and reporting.

  • (II) The company shall compile monthly reports on the status of derivatives trading engaged in up to the end of the preceding month by the company and any subsidiaries that are not domestic public companies and enter the information in the prescribed format into the information reporting website designated by the FSC by the 10th day of each month.

  • (III) When the company at the time of public announcement makes an error or omission in an item required by regulations to be publicly announced and so is required to correct it, all the items shall be again publicly announced and reported in their entirety within two days counting inclusively from the date of knowing of such error or omission.

  • (IV) The company acquiring or disposing of assets shall keep all relevant contracts, meeting minutes, log books, appraisal reports and CPA, attorney, and securities underwriter opinions at the company, where they shall be retained for 5 years except where another act provides otherwise.

  • (V) Where any of the following circumstances occurs with respect to a transaction that the company has already publicly announced and reported in accordance with the paragraph 1, a public report of relevant information shall be made on the information reporting website designated by the FSC within 2 days counting inclusively from the date of occurrence of the event:

    1. Change, termination, or rescission of a contract signed in regard to the original transaction.

    2. The merger, demerger, acquisition, or transfer of shares is not completed by the scheduled date set forth in the contract.

    3. Change to the originally publicly announced and reported information.

  • (VI) Information required to be publicly announced and reported in accordance with the provisions of the paragraph 1 on acquisitions and disposals of assets by the company's subsidiary that is not itself a public company in Taiwan shall be reported by the company.

    • The paid-in capital or total assets of the company shall be the standard applicable to a subsidiary referred to in the preceding paragraph in determining whether, relative to paid-in capital or total assets, it reaches a threshold requiring public announcement and regulatory filing under paragraph 1.

  • (VII) For the calculation of 10 percent of total assets under these Procedures, the total assets stated in the most recent parent company only financial report or individual financial report prepared under the Regulations Governing the Preparation of Financial Reports by Securities Issuers shall be used.

    • In the case of a company whose shares have no par value or a par value other than NT$10—for the calculation of transaction amounts of 20 percent of paid-in capital under these Procedures, 10 percent of equity attributable to owners of the parent shall be substituted; for calculations under the provisions of these Procedures regarding transaction amounts relative to paid-in capital of NT$10 billion, NT$20 billion of equity attributable to owners of the parent shall be substituted.

  • 96 -

Article16: Procedures for the Acquisition or Disposal of Assets by Subsidiaries

  • I. The Company shall urge all subsidiaries to formulate procedures for acquiring or disposing of assets in accordance with the Guidelines for the Acquisition or Disposal of Assets by Public Offering Companies as promulgated by the Financial Supervisory Commission. After being approved by the board of directors of each subsidiary, they shall be submitted to the shareholders' meetings of each subsidiary for approval, and the same shall apply to amendments thereof.

  • II.Internal auditors of the Company should prepare audit reports in accordance with the annual audit plan regarding the compliance of subsidiaries' procedures for loans of funds to others. If deficiencies are found, the subsidiary under investigation shall be notified to improve and follow-up reports shall be regularly prepared and submitted to the Chairman, independent directors, and Audit Committee.

  • Article17: Penalty

In the acquisition or disposal of assets by the relevant personnel of the Company, if there is a violation of the Guidelines for the Acquisition or Disposal of Assets by Public Offering Companies of the Financial Supervisory Commission, or of the Company's Procedures for the Acquisition or Disposal of Assets, then disciplinary action shall be meted out according to the severity of the circumstances and in accordance with regular submission and assessment stipulate by the payroll cycle of the internal control system.

Article18: Enforced and amendment

In formulating the Procedures for the Acquisition or Disposal of Assets and submitting them to the Board of Directors for discussion, the Company shall take into full consideration each independent director's opinions. If an independent director objects to or expresses reservations about any matter, this shall be sent to supervisors and submitted to the Shareholders' Meeting for approval; and the same shall apply for amendments. 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 each supervisor. Where an audit committee has been established in accordance with the provisions of the Act, when the procedures for the acquisition and disposal of assets are adopted or amended they shall be approved by one-half or more of all audit committee members and submitted to the board of directors for a resolution.

If approval of one-half or more of all audit committee members as required in the preceding paragraph is not obtained, the procedures may be implemented if approved by two-thirds or more of all directors, and the resolution of the audit committee shall be recorded in the minutes of the board of directors meeting.

The terms "all audit committee members" in paragraph 3 and "all directors" in the preceding paragraph shall be counted as the actual number of persons currently holding those positions.

Article19: Supplementary provisions

If there are any issues that are not covered in these Procedures, they are to be handled in accordance with relevant laws and regulations.

Article20: This Procedures was established on Nov. 16, 2007. The 1st amendment was made on Jun. 15, 2011. The 2nd amendment was made on Jun. 21, 2012. The 3rd amendment was made on Jun. 27, 2014. The 4th amendment was made on Jun. 14, 2017. The 5th amendment was made on Jun. 19, 2019. The 6th amendment was made on Jun. 30, 2020.

  • 97 -

Appendix 5

Remuneration for employees and directors

Unit:NTD
Item Amount distributed
proposed by Board of
Directors(A)		 The estimated figure
for the fiscal year
(B)		 Discrepancy
(A-B)
Employee
compensation		 6,352,956 6,352,956 0
Directors and
supervisors
compensation		 4,622,977 4,764,717 (141,740)
  • 98 -

Appendix 6

Directors’ shareholding

  1. The total issued capital stock of the Company is 151,327,600 shares.

  2. According to Article 26 of the Securities and Exchange Act:

The minimum number of shares that all directors should hold is 9,079,656 shares.

The number of shares held by all directors of the Company as recorded in the shareholder roster on the date for suspension of share transfer for the 2022 regular shareholder meeting

Tll N Shhldi
te ame aresong
Chairperson Chihchiang Pai 137,245
Director Soy Young Enterprise Co., Ltd. 29,761,114
Director Hold-Key Electric Wire & Cable Co.,
Ltd.		 20,414,832
Director Yichuan Hsu 1,820
Director Fengyu Ho 512
Director Menggui Lin 0
Independent
director		 Chengkun Kuo 0
Independent
director		 Wenxiu Zhang 0
Independent
director		 Xiege Hao 0
Total 50,315,523
  • 99 -

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