YFY - AGM Information 2018 | FinancialReports.eu

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2018 Annual General Shareholders Meeting

Meeting Handbook

(Translation Version)

This is a translation version of YFY's 2018 AGM meeting handbook. This translation is intended for reference only and nothing else, the Company here by disclaims any and all liabilities whatsoever for the translation. The Chinese text of the handbook shall govern any and matters related to the interpretation of the subject matter stated herein.

Table of Contents	Table of Contents
Meeting Agenda....................................................................................................................................1
I.	Items to Report
(I)	YFY's 2017 business report....................................................................................................2
(II) Audit Committee's review of 2017 financial statements ......................................................2
(III) YFY's 2017 distribution of remuneration to employees and directors...................................2
(IV) Amendment of "Board of Directors Meeting Procedures”.....................................................2
II.	Ratifications
(I)	The Company's 2017 Financial Statements...........................................................................4
(II) The Company's proposal for 2017 profit distribution............................................................4
III.	Discussions and Elections
(I)	Amendment to the Company's Asset Acquisition and Disposal Procedure ..........................5
(II) Amendment to the Company's Procedure for Processing Derivative Transactions ..............5
(III) Amendment proposal for YFY's Procedure for Lending Funds to Other Parties....................5
(IV) To elect the 27th term of the Board for 6 directors and 3 independent directors.................5
(V) To release the directors elected from non-competition restrictions.....................................6
IV.	Extraordinary Motions...................................................................................................................7
Appendix
1.	Business Report...........................................................................................................................8
2.	Consolidated Balance Sheet.......................................................................................................10
3.	Consolidated Statement of Comprehensive Income..................................................................11
4.	Consolidated Statement of Changes in Shareholders' Equity.....................................................14
5.	Consolidated Statement of Cash Flow........................................................................................15
6.	Individual Balance Sheet............................................................................................................19
7.	Individual Income Statement.....................................................................................................19
8.	Individual Statement of Changes in Shareholders' Equity..........................................................19
9.	Individual Statement of Cash Flow.............................................................................................19
10.	2017 Statement of Earnings Distribution...................................................................................20
11.	Independent Auditor's Report...................................................................................................21
12.	Audit Committee's Review Report.............................................................................................26
13.	Board of Directors Meeting Procedures and amendment chart................................................27
14.	Asset Acquisition and Disposal Procedures and amendment chart...........................................36
15.	Procedures for Processing Derivative Transactions and amendment chart...............................42
16.	Procedure for Lending Funds to Other Parties and amendment chart......................................52
17.	Election Rules for Directors........................................................................................................56
18.	List of Director Candidates.........................................................................................................58
19.	Rules of Procedure for the Shareholders’ Meetings...................................................................59
20.	Articles of Incorporation.............................................................................................................62
21.	Current Shareholdings of Directors............................................................................................67

(Please visit http://mops.twse.com.tw/mops/web/t163sb03 for the complete financial reports)

Meeting Agenda

YFY Inc. 2018 Annual General Shareholders Meeting Agenda

Time: June 21, 2018 (Thursday) 9:00am Venue: 5F, No. 24, Sec. 1, Hangzhou S. Rd., Zhongzheng Dist., Taipei City (GIS MOTC Convention Center)

Meeting procedure:

I. Commencement Announcement

II. Chairman Takes Position

III. Chairman's Remarks

IV. Items to Report
(I) YFY's 2017 business report.
(II) Audit Committee's review of 2017 financial statements.
(III) YFY's 2017 distribution of remuneration to employees and directors.
(IV) Amendment of Board of Directors Meeting Procedures.
V. Ratifications (I) The Company's 2017 Financial Statements.
(II) The Company's proposal for 2017 profit distribution.
VI. Discussions and Elections
(I). Amendment to the Company's Asset Acquisition and Disposal Procedure.
(II). Amendment to the Company's Procedure for Processing Derivative Transactions. (III). Amendment to the Company's Procedure for Lending Funds to Other Parties.
(IV). To elect the 27th term of the Board for 6 directors and 3 independent directors.
(VI) To release the directors elected from non-competition restrictions.
VII. Extraordinary Motions

VIII. Meeting adjourned

I. Items to Report

I. Report on YFY's 2017 business report. Please review. (Proposed by the Board of Directors)
Explanation: (1) YFY's 2017 consolidated gross revenue is reported (in NT$, same below) at 66,769,908 thousand, gross profit at 12,006,570 thousand, operating income at 2,960,426 thousand, income before taxes at 2,839,049 thousand, profit for the current year at 2,132,123 thousand, 2017 combined total income for the current year at 1,358,256 thousand, of which 1,605,510 thousand was attributed to the owner's net profit, 525,613 thousand was attributed to non-controlling equity profits, 900,796 thousand was total comprehensive income attributable to owner, 457,460 thousand was total comprehensive income attributed to non-controlling interests; basic earnings per share was 0.97.
- (2) The Business Report can be found in Appendix 1 of the Handbook (please see pages 8 to9).
- (3) Please review.

II. Report on Audit Committee's review of 2017 financial statements. Please review (Proposed by the Audit Committee)

Explanation: (1) YFY's 2017 consolidated and individual financial statements have been audited certified by CPAs, and have been reviewed and examined by the Audit Committee along with the business report and proposal for profit distribution. Audit and review reports have been submitted and are attached herein as Appendices 11 and 12 (please see pages 21 to 26).

(2) The Audit Committee's convener is requested to read out the review report. Please review.

III. Report on YFY's 2017 distribution of remuneration to employees and directors. Please review. (Proposed by the Board of Directors)

Explanation: (1) According to the terms in the company's Articles of Incorporation, the Company shall distribute NT$1,758,159 as 2017 remuneration for employees and NT$7,000,000 for directors' compensation, which was approved in the 6th meeting held by the 3rd Remuneration Committee and resolved at the 18th board meeting held by the 26th board of directors.
(2) Please review.

IV. Report on YFY's amendment of Board of Directors Meeting Procedures. Please review. (Proposed by the Board of Directors)

Explanation: (1) In response to the competent authority's amendment on "Regulations Governing Procedure for Board of Directors Meetings of Public Companies,"

YFY's 16th board meeting held by the 26th board of directors proceeded with the amendment of the Company’s "Board of Directors Meeting Procedures."

(2) Attached in Appendix 13 are the amended "Board of Directors Meeting Procedures" and amendment chart (please see pages27 to 35).
(3) Please review.

II. Ratifications

I. The Company's 2017 Financial Statements presented for ratification. (Proposed by the Board of Directors)

Explanation: (1) YFY's 2017 consolidated and individual financial statements have been audited by CPAs, and, along with the Business report, have been reviewed and approved by the Audit Committee. Related files (including the business report, Consolidated Balance Sheet, Consolidated Statement of Comprehensive Income, Consolidated Statements of Changes in Stockholders' Equity, Consolidated Statements of Cash Flows, Individual Balance Sheet, Individual Income Statement, Individual Statements of Changes In Stockholders' Equity, and Statements of Cash Flows) can be found in in Appendixes 1-9 (please see pages 8 to 19).

(2) Please Ratify.

Resolution:

II. The Company's proposal for 2017 profit distribution for ratification. (Proposed by the Board of Directors)

Explanation: (1) YFY's 2017 earnings after tax is reported at NT$1,605,509,969, surplus unallocated earnings from the previous year is reported at NT$4,935,840,496, a reduction of NT$129,988,835 accounted for net value of shares held in the investment portfolio; a surplus of NT$196,018,610 for defined benefit plan and reversal of Special Reserve NT$1,392,586 amounts to a total of NT$6,609,772,826 available for allocation. Excluding NT$160,650,997 which must be allocated as legal reserve by law, the distribution of cash dividend is NT$0.6 per share, amounting to NT$996,222,897. The remaining NT$5,452,898,932 is reserved to be allocated for the incoming year.
(2) Following shareholders' approval of cash dividend in the annual general shareholders' meeting, the company proposed the ex-dividend date for July 18, 2018.
(3) In order to coordinate with computer checks and difficulties in currency exchange, the disbursement of cash dividends will be rounded to the nearest dollar. If the total amount of allocated cash dividends is less than NT$1 , the amount will be transferred to YFY staff welfare committee.
(4) The 2017 earnings distribution proposal as can be found in Appendix 10 (please see page 20) for ratification.

Resolution:

III. Discussions and Elections

I. Amendment to the Company's Asset Acquisition and Disposal Procedures .Presented for resolution. (Proposed by the Board of Directors)
Explanation: (1) In compliance with the Financial Supervisory Commission's enactment of "Regulations Governing the Acquisition and Disposal of Assets by Public Companies," and in accordance with the company's current practices, an amendment of YFY's "Asset Acquisition and Disposal Procedures" is proposed.
- (2) Attached in Appendix 14 are the amended "Asset Acquisition and Disposal Procedures" and comparison chart (please see pages 36 to 41).
- (3) For your discussion and resolution.

Resolution:

II. Amendment to the Company's Procedures for Processing Derivative Transactions. Presented for resolution. (Proposed by the Board of Directors)
Explanation: (1) In compliance with the Financial Supervisory Commission's enactment of "Regulations Governing the Acquisition and Disposal of Assets by Public Companies," and in accordance with the company's current practices, an amendment of YFY's "Procedures for Processing Derivative Transactions" is proposed.
- (2) Attached in Appendix 15 are the amended Procedures for Processing Derivative Transactions and comparison chart (please see pages 42 to 51).
- (3) For your discussion and resolution.

Resolution:

III. Amendment to the Company's Procedure for Lending Funds to Other Parties. Presented for resolution. (Proposed by the Board of Directors)
Explanation: (1) In compliance with the Financial Supervisory Commission's enactment of "Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies," and in accordance with the company's current practices, an amendment of YFY's Procedure for Lending Funds to Other Parties is proposed.
- (2) Attached in Appendix 16 are the amended Procedure for Lending Funds to Other Parties and comparison chart (please see pages 52 to 55).
- (3) For your discussion and resolution.

Resolution:

IV. To elect the 27th term of the Board for 6 directors and 3 independent directors. (Proposed by the Board of Directors)

Explanation: (1) YFY's current directors were elected at the shareholders' meeting held on June

30, 2015, so they are coming to the end of their 3-year terms; new elections will be held according to the Company's Articles of Incorporation.

(2) Article 20 of the Company's Articles of Incorporation: YFY's number of directors is set at 9 to 13 people, and the board of directors shall choose candidates within this range. Adopting a candidate nomination system, the shareholders are to elect from the list of candidates as regulated in Article 198 of the Company Act. The number of independent directors should be no less than 3 nor less than one-fifth of the total number of director seats.
(3) To comply with YFY's Articles of Incorporation and in accordance with the current practice and needs of the board of directors, 9 seats will be chosen for the 27th board of directors (including 6 director seats and 3 independent director seats), which will come into effect after the election on June 21, 2018 with a 3 year tenure until June 20, 2021.
(4) YFY's director elections adopt a candidate nomination system. Nominations are proposed by shareholders with at least 1% shareholding; the list of director candidates that has been reviewed and approved by the Company’s board of directors can be found in detail in Appendix 18 (please see page 58).
(5) Please proceed to elect in accordance with YFY's “Election Rules for Directors."

Chairperson announces commencement of elections.

Chairperson announces results of the elections.

V. To release the directors elected from non-competition restrictions. Presented for resolution. (Proposed by the Board of Directors)
Explanation: (1) Process according to Article 209, Paragraph 1 of the Company Act: “A director, who does anything for himself or on behalf of another person that is within the scope of the company's business, shall explain to the meeting of shareholders the essential contents of such an act and secure its approval.”
- (2) YFY's newly elected directors and its representatives may either invest in or operate other companies that are related or similar to the scope of YFY's business. So long as it does not hinder their duties as directors, they may request the shareholders to release non- competition restrictions for the directors and its representatives.
- (3) The directors' scope of duties will be revealed in detail following their election at the shareholders' meeting.

Resolution:

IV. Extraordinary Motions

Appendix 1 YFY INC. Business Report

YFY completed its transition into an investment holding company since October 2012. Over the past three years, we have devoted our full support the continued development of all subsidiaries: formulating business strategies, restructuring groups, streamlining operations, and investing capital to optimize manufacturing processes and reduce costs. In early 2017, YFY made further strategic managerial adjustments to the company’s two core investments — the Containerboard and Packaging Business Group and the Pulp and Fine Paper Business Group — to become better equipped to take on future challenges. Thanks to the hard work of the entire staff, these efforts began to bear fruit in 2017.

Aided by the steady global recovery, world economic growth for the year reached 2.86%, while the Taiwanese economy also performed better than anticipated; mainland China continued to undergo structural economic changes but still exceeded expectations to record an annual growth of 6.9%. The Pulp and Fine Paper Group significantly improved its profits as international pulp prices rebounded from the nadir of 2016; the Containerboard and Packaging Business Group saw a dramatic increase in operating performance under the major deleveraging and environmental policies of the Chinese government. YFY’s consolidated revenue in 2017 was NT$66.77 billion, an increase of 5.4% from 2016 and setting a new record high. Operating income was NT$2.96 billion, pre-tax profit was NT$2.839 billion, and net profit after taxes was NT$1.607 billion, with an EPS of NT$0.97.

The Pulp and Fine Paper Business Group recorded a consolidated revenue of NT$18.168 billion and operating income of NT$822 million, an exponential increase over the previous year. Faced with rising global pulp prices and the continued contraction of the printing and writing paper market, we have sustained our investment in capital expenditures to strengthen the competitiveness of our pulp costs, and increased our R&D spending on fiber and composite materials to develop a new generation of specialty materials and high value-added specialty papers.

The Containerboard and Packaging Business Group has gradually found its footing since commencing structural realignments in 2015, recording a revenue of NT$25.197 billion (16% annual growth) and operating profit of NT$1.311 billion in 2017. Market prices have risen aggressively due to China’s strict environmental policy of shutting down companies that don’t meet regulations and restricting the importation of recycled paper. Following two years of vigorous efforts, the Yangzhou plant has made a sharp turnaround to become an important backup of YFY’s containerboard operations in China. In Taiwan, our new industrial paper machines underwent manufacturing trials and won the trust of clients with their superior quality. Meanwhile, the new Bình Dương plant commenced operations last year and turned a profit within its first 12 months, laying another cornerstone for YFY’s sustained development in Vietnam.

The Consumer Products Business Group was hit by higher costs driven by the rapidly increasing price of pulp, but product prices were restricted from reasonably reflecting this trend due to market competition. As a result, the group’s annual revenue fell to NT$10.447 billion, a decline of 7.4% from the previous year, with operating income of NT$55 million. Our newly completed Orange House

plant in Taoyuan will go a long way toward implementing the brand’s core values, deepening its presence in Taiwan, and further ensuring the quality of products

YFY’s long-term investments in medtech began reaping rewards one after another in 2017. Taigen Biotechnology (4157.TO) turned an annual profit; its new antibiotic, Taigexyn, gained reimbursement approval from Taiwan’s National Health Insurance program, while its new oral treatment for hepatitis C, co-developed with HEC Pharm (1588.HK), received funding via an equity transfer deal. Somnics, Inc. (6633.TO), our innovative medical device startup, was registered for the Emerging Stock Board (ESB) of the Taipei Exchange and received listing approval in both Taiwan and Malaysia. Meanwhile, Medeon Biodesign (6499.TO) completed clinical trials for its innovative new minimally invasive surgery equipment in the United States.

In the Internet of Things sphere, YFY’s E Ink Holdings exhibited steady growth as new retail applications of electronic shelf labels (ESL) continued to expand rapidly across Europe, America, and mainland China. After a decade of perseverance, Arizon RFID Technology is now one of the most important RFID ODMs in the world with an annual production capacity of 3 billion units, and will continue to invest in higher production capacity to meet vigorous demand.

For YFY, 2017 was a year full of challenges, but also a year in which earlier investments started to harvest results. Our outstanding key executives cultivated throughout the years have led the new generation to advance our technology and management — and brought YFY out of the doldrums of 2016. Sustainable development relies on personnel and teamwork. We will continue to invest in developing our human resources to ensure that each generation is as strong as the one that came before it.

Notwithstanding hopes that the global economy can sustain its 2017 momentum, a large number of uncertainties remain as we look ahead into 2018. In the face of volatile international situations and market challenges, our management team will concentrate on the two core concepts of “investment” and “holding” to facilitate and strengthen YFY’s competitiveness as an “investment holding company”. We shall continue to formulate and implement comprehensive strategies around our investment holdings and asset allocation while keeping an eye on the big picture, and keep turning the three key cogs of sustainable development (employees, society, and the environment) to create fair investment value for our shareholders.

Chairman: CEO: Controller: Ho, Felix Ho, Felix Wu, C. F.

YFY INC. AND SUBSIDIARIES Appendix 2

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2017 AND 2016 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Financial assets at fair value through profit or loss (Notes 4 and 7) Available-for-sale financial assets (Notes 4 and 8) Debt investments with no active market (Notes 4 and 6) Notes receivable (Notes 4, 11 and 28) Accounts receivable (Notes 4, 11 and 27) Inventories (Notes 4 and 12) Biological assets (Notes 4 and 13) Prepayments Other financial assets (Notes 4 and 28) Other current assets (Notes 4, 9 and 27) Total current assets NON-CURRENT ASSETS Available-for-sale financial assets (Notes 4 and 8) Financial assets carried at cost (Notes 4 and 10) Debt investments with no active market (Notes 4 and 27) Investments accounted for using the equity method (Notes 4, 15 and 27) Property, plant and equipment (Notes 4, 5, 16, 21 and 28) Investment properties (Notes 4, 17 and 21) Goodwill (Notes 4 and 14) Deferred tax assets (Notes 4 and 22) Long-term prepayments for leases (Note 21) Prepayments for equipment (Note 16) Other non-current assets (Notes 4, 19, 21 and 28) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 18 and 28) Short-term bills payable (Note 18) Financial liabilities at fair value through profit or loss (Notes 4 and 7) Notes and accounts payable (Note 27) Other payables (Note 16) Current tax liabilities (Notes 4 and 22) Current portion of long-term borrowings (Notes 18 and 28) Other current liabilities (Notes 4 and 9) Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings, net of current portion (Notes 18 and 28) Deferred tax liabilities (Notes 4 and 22) Net defined benefit liabilities (Notes 4 and 19) Other non-current liabilities Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Notes 4 and 20) Share capital Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Total equity attributable to owners of the Company NON-CONTROLLING INTERESTS Total equity TOTAL		2017 Amount % $ 4,144,894 4 325,326 - 4,532,411 4 2,357,256 2 3,775,601 3 10,974,676 10 9,191,130 8 3,280,878 3 1,007,033 1 405,321 - 1,067,851 1 41,062,377 36 8,712,256 8 1,495,143 1 400,000 - 6,307,712 6 47,994,654 43 2,711,707 3 458,555 - 368,246 - 1,314,005 1 1,026,714 1 734,404 1 71,523,396 64 $ 112,585,773 100 $ 11,384,557 10 8,021,936 7 278,060 - 7,748,170 7 2,984,866 3 196,720 - 187,300 - 1,534,976 2 32,336,585 29 31,964,006 28 3,386,650 3 1,134,140 1 238,072 - 36,722,868 32 69,059,453 61 16,603,715 15 1,046,800 1 3,254,722 3 4,030,039 3 6,609,773 6 13,894,534 12 1,686,125 2 33,231,174 30 10,295,146 9 43,526,320 39 $ 112,585,773 100		2016
				Amount % $ 3,710,869 3 1,330,912 1 3,780,274 3 1,724,436 2 2,951,293 3 10,194,758 9 8,288,246 8 3,275,503 3 1,069,855 1 294,041 - 1,035,021 1 37,655,208 34 8,777,617 8 1,555,879 1 400,000 - 6,953,129 6 46,766,595 42 2,748,430 3 498,022 - 564,640 1 1,083,150 1 2,985,675 3 714,576 1 73,047,713 66 $ 110,702,921 100 $ 9,304,726 9 6,964,751 6 10,883 - 7,580,137 7 3,264,141 3 192,329 - 161,564 - 1,256,623 1 28,735,154 26 35,173,100 32 3,385,935 3 1,545,398 1 221,205 - 40,325,638 36 69,060,792 62 16,603,715 15 823,793 1 3,242,110 3 4,031,432 4 4,948,452 4 12,221,994 11 2,532,357 2 32,181,859 29 9,460,270 9 41,642,129 38 $ 110,702,921 100

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

(With Deloitte & Touche audit report dated March 22, 2018)

YFY INC. AND SUBSIDIARIES Appendix 3

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 4 and 27) Sales Other operating revenue Total operating revenue OPERATING COSTS (Notes 12, 19, 21 and 27) Cost of goods sold Other operating cost Total operating costs LOSS ARISING FROM CHANGES IN FAIR VALUE LESS COSTS TO SELL BIOLOGICAL ASSETS (Notes 4 and 13) GROSS PROFIT OPERATING EXPENSES (Notes 19, 21 and 27) Selling and marketing General and administrative Research and development Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Finance costs (Notes 4 and 21) Share of profit of associates (Notes 4 and 15) Interest income Rental income (Notes 17 and 28) Dividend income Other income Gain on disposal of investments (Notes 4 and 24) Foreign exchange gain (loss) Other losses Gain (loss) arising on financial instruments at FVTPL (Notes 4 and 27)		2017 Amount % $ 58,867,920 88 7,901,988 12 66,769,908 100 49,389,885 74 5,365,342 8 54,755,227 82 (8,111 ) - 12,006,570 18 4,863,483 7 3,956,713 6 225,948 1 9,046,144 14 2,960,426 4 (929,244) (1) 319,299 - 226,059 - 68,502 - 422,159 1 326,606 - 41,833 - 398,796 1 (62,798) - (783,844) (1)		2016
				Amount % $ 55,851,439 88 7,502,713 12 63,354,152 100 47,957,893 76 4,868,088 7 52,825,981 83 (13,295 ) - 10,514,876 17 5,408,560 9 3,850,007 6 141,491 - 9,400,058 15 1,114,818 2 (935,866) (1) 457,807 1 221,713 - 56,521 - 532,245 1 292,063 - 182,308 - (1,114,045) (2) (49,605) - 318,341 1 (Continued)

YFY INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Impairment loss recognized on financial assets (Notes 4, 10, 14 and 15) Impairment loss recognized on property, plant and equipment (Notes 4 and 16) Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 22) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME (LOSS) (Notes 4 and 20) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Share of the other comprehensive loss of associates Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations Unrealized gain (loss) on available-for-sale financial assets Cash flow hedges Share of the other comprehensive loss of associates Other comprehensive loss for the year, net of income tax TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE YEAR NET PROFIT ATTRIBUTABLE TO: Owners of the Company Non-controlling interests		2017 Amount % $ (96,916) - (51,829) - (121,377 ) - 2,839,049 4 (706,926 ) (1 ) 2,132,123 3 136,445 - (972 ) - 135,473 - (1,046,254) (2) 384,934 1 (1,558) - (246,462 ) - (909,340 ) (1 ) (773,867 ) (1 ) $ 1,358,256 2 $ 1,606,510 2 525,613 1 $ 2,132,123 3		2016
				Amount % $ (99,717) - (12,882) - (151,117 ) - 963,701 2 (408,594 ) (1 ) 555,107 1 (177,379) - (1,495 ) - (178,874 ) - (1,971,288) (3) (890,545) (1) (25,019) - (336,560 ) (1 ) (3,223,412 ) (5 ) (3,402,286 ) (5 ) $ (2,847,179 ) (4 ) $ 126,117 - 428,990 1 $ 555,107 1

(Continued)

YFY INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO: Owners of the Company Non-controlling interests EARNINGS PER SHARE (Note 23) Basic Diluted		2017 Amount % $ 900,796 1 457,460 1 $ 1,358,256 2 $ 0.97 $ 0.97		2016
				Amount % $ (3,028,403) (5) 181,224 1 $ (2,847,179 ) (4 ) $ 0.08 $ 0.08

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

(With Deloitte & Touche audit report dated March 22, 2018) (Concluded)

YFY INC. AND SUBSIDIARIES Appendix 4

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 (In Thousands of New Taiwan Dollars)

				Equity	Attributable to Owners of the Company
Share Capital Share (Thousands) Amount 1,660,372 $ 16,603,715 - - - - - - - - - - - - - - - - - - 1,660,372 16,603,715 - - - - - - - - - - - - - - - - - - - - 1,660,372 $ 16,603,715		Capital Surplus		Total $ 685,256 - - - 51,965 78,573 7,999 - - - 823,793 - - - 14,242 2,665 (27,859 ) 233,959 - - - $ 1,046,800	Retained Earnings	Total $ 12,723,650 - (498,111 ) - 23,616 - - 126,117 (153,278 ) (27,161 ) 12,221,994 - - - (40,233 ) - - (34,255 ) 1,606,510 140,518 1,747,028 $ 13,894,534		Other Equity	Cash Flow Hedges $ 7,881 - - - - - - - (19,064 ) (19,064 ) (11,183 ) - - - - - - - - (3,688 ) (3,688 ) $ (14,871 )
							Exchange Differences on Translating Foreign Operations $ 2,724,091 - - - - - - - (1,925,435 ) (1,925,435 ) 798,656 - - - - - - - - (1,062,067 ) (1,062,067 ) $ (263,411 )	Unrealized Gain (Loss) on Available-for- sale Financial Assets $ 2,801,627 - - - - - - - (1,056,743 ) (1,056,743 ) 1,744,884 - - - - - - - - 219,523 219,523 $ 1,964,407
Share (Thousands) 1,660,372 - - - - - - - - - 1,660,372 - - - - - - - - - - 1,660,372	Treasury Shares $ 14,947 - - - - - - - - - 14,947 - - - - - - - - - - $ 14,947	Consolidation Excess $ 293,124 - - - - - - - - - 293,124 - - - - - - - - - - $ 293,124	Other $ 377,185 - - - 51,965 78,573 7,999 - - - 515,722 - - - 14,242 2,665 (27,859 ) 233,959 - - - $ 738,729		Unappropriated Legal Reserve Special Reserve Earnings $ 3,191,920 $ 4,031,432 $ 5,500,298 50,190 - (50,190 ) - - (498,111 ) - - - - - 23,616 - - - - - - - - 126,117 - - (153,278 ) - - (27,161 ) 3,242,110 4,031,432 4,948,452 12,612 - (12,612 ) - (1,393 ) 1,393 - - - - - (40,233 ) - - - - - - - - (34,255 ) - - 1,606,510 - - 140,518 - - 1,747,028 $ 3,254,722 $ 4,030,039 $ 6,609,773

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

(With Deloitte & Touche audit report dated March 22, 2018)

YFY INC. AND SUBSIDIARIES Appendix 5

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation and amortization expenses Impairment loss recognized on accounts receivable Net loss (gain) on fair value change of financial instruments at fair value through profit or loss Finance costs Interest income Dividend income Share of profit of associates Loss (gain) on disposal of property, plant and equipment Gain on disposal of investments Impairment loss recognized on financial assets Impairment loss recognized on property, plant and equipment Write-down of inventories (reversed) Net unrealized loss (gain) on foreign currency exchange Loss arising from changes in fair value less cost to sell biological assets Changes in operating assets and liabilities Notes receivable Accounts receivable Inventories Biological assets Prepayments Other current assets Notes and accounts payable Other payables Other current liabilities Net defined benefit liabilities	2017 $ 2,839,049 3,586,009 123,530 783,844 929,244 (226,059) (422,159) (319,299) 6,945 (41,833) 96,916 51,829 12,029 (454,815) 8,111 (1,040,590) (1,130,670) (1,257,755) (79,279) 19,536 (24,058) 656,781 15,724 549,114 (249,062 )	2016 $ 963,701 3,477,016 438,347 (318,341) 935,866 (221,713) (532,245) (457,807) (3,616) (182,308) 99,717 12,882 (39,949) 699,106 13,295 480,153 132,096 1,444,914 44,985 99,260 (90,596) (1,130,405) (81,466) 131,104 (226,532 )

Cash generated from operations Interest received Dividends received Interest paid Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of financial instruments at fair value through profit or loss Proceeds from sale of financial instruments at fair value through profit or loss Purchase of available-for-sale financial assets Proceeds from sale of available-for-sale financial assets Purchase of debt investments with no active market	4,433,082 177,723 754,816 (903,431) (535,820 ) 3,926,370 (9,739,466) 10,195,342 (507,304) 162,890 (677,479)	5,687,464 239,935 620,422 (997,622) (355,620 ) 5,194,579 (9,706,063) 9,685,968 (131,024) 856,525 (715,547) (Continued)

YFY INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

(In Thousands of New Taiwan Dollars)

Purchase of financial assets carried at cost Proceeds from sale of financial assets carried at cost Proceeds from the return of capital upon investees' capital reduction on financial assets carried at cost Proceeds on sale of financial assets for hedging Acquisition of associates Proceeds from sale of investments accounted for using the equity method Net cash outflow on disposal of subsidiaries Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Payments for investment properties Proceeds from the disposal of investment properties Increase in other financial assets Decrease in other financial assets Increase in long-term prepayment for leases Increase in other non-current assets Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term borrowings Repayments of short-term borrowings Proceeds from short-term bills payable Repayments of short-term bills payable Proceeds from long-term borrowings Repayments of long-term borrowings Increase in other non-current liabilities Cash dividends paid Increase (decrease) in non-controlling interests	2017 $ (104,334) 5,682 51,005 3,838 - 8,181 (6,787) (4,163,161) 156,579 - 35,640 (139,430) - (221,974) (170,704 ) (5,111,482 ) 2,390,584 - 1,061,267 - - (2,393,150) 93,257 - 570,208	2016 $ - 39,186 - - (36,000) 2,509 - (5,296,484) 72,592 (7,547) 75,350 - 460,379 - (59,313 ) (4,759,469 ) - (987,337) - (4,297,246) 7,099,481 - 87,126 (498,111) (384,742)

Overdue dividends recovered from shareholders

2,665

Net cash generated from financing activities

1,724,831

EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE
OF CASH HELD IN FOREIGN CURRENCIES

(105,694
)

NET INCREASE IN CASH AND CASH EQUIVALENTS
434,025
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
YEAR

3,710,869

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
$ 4,144,894

The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche audit report dated March 22, 2018)

-

1,019,171

(124,056
)
1,330,225

2,380,644
$ 3,710,869
(Concluded)

YFY Inc. Individual Balance Sheets	Appendix 6
YFY Inc. Individual Income Statement	Appendix 7
YFY Inc. Individual Statements Of Changes In Stockholders' Equity	Appendix 8
YFY Inc. Individual Statements of Cash Flows	Appendix 9

The individual financial reports are provided on the MOPS website, please visit http://mops.twse.com.tw/mops/web/t163sb03 for the complete individual financial reports.

YFY INC. Appendix 10

2017 Statement of Earnings Distribution

UNIT:NTD	UNIT:NTD
Item	Amount
Distributable retained earnings
A Distributable retained earnings at beginningof the fiscalyear	4,935,840,496
B Net Profit for theyear ended Dec 31st,2017	1,606,509,969
C Adjustment on retained earnings of changes in equities of investments	(129,988,835)
D Re-measurement of defined benefitplans	196,018,610
E Reversal of special reserve	1,392,586
Total	6,609,772,826

Distribution Items
1 Legal Reserve(B*10%)	12,611,709
2 Cash Dividend(0.6per share)	996,222,897
2 Un-appropriated retained earnings	5,452,898,932
Total	6,609,772,826

Chairman: CEO: Controller: Ho, Felix Ho, Felix Wu, C. F.

INDEPENDENT AUDITORS’ REPORT Appendix 11

The Board of Directors and Shareholders YFY Inc.

Opinion

We have audited the accompanying consolidated financial statements of YFY Inc. and its subsidiaries (the Group), which comprise the consolidated balance sheets as of December 31, 2017 and 2016, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other auditors (refer to Other Matter section), the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2017 and 2016, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2017. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters of the Group’s consolidated financial statements for the year ended December 31, 2017 are stated as follows:

Estimated Impairment of Receivables

In consideration of the business volume and client conditions, the recoverability of receivables is subject to management’s judgment, and the amount of receivables is significant to the Group; thus, the estimated impairment of receivables has been identified as a key audit matter.

For related policies and relevant information on the estimated impairment of receivables, refer to Notes 4, 5 and 11 to the accompanying consolidated financial statements.

For the audit procedures performed in respect of the above area, we:

Assess the reasonableness of the assumptions used by the management through the inspection on the clients’ financial positions and historical payment records, particularly on those with significant outstanding receivables and longer turnover days.
Confirm whether there are any clients with significant amounts of outstanding receivables, reflecting financial difficulties, and ensure that the management has adopted appropriate responses to secure its receivables.
Assess the collections for those past due receivables.

Impairment of Property, Plant and Equipment

The containerboard and packaging segment of the Group has been accumulating losses. Because of the accounting uncertainty and estimations involved in measuring the related impairment loss, this segment is considered significant. According to IAS 36 “Impairment of Assets”, the Group’s management evaluates impairment based on the estimated future cash flows of the related impaired item. The estimation of the future cash flows comprise many assessments and evaluations, which has a significant level of uncertainty; thus, the impairment of property, plant and equipment has been identified as a key audit matter.

For related policies and relevant information on the impairment of property, plant and equipment, refer to Notes 4, 5 and 16 to the accompanying consolidated financial statements.

For the audit procedures performed in respect of the above area, we:

Inquire after the Group management’s major assumptions regarding future cash flows and confirm the reasonableness of the major assumptions used by the Group’s management based on our understanding of the industry and business.
Test for the appropriateness of the major assumptions and compare them with the expected economic situation and the actual operations.
Evaluate the appropriateness of the major assumptions of the discount rate used by the Group’s management.
Perform an observation on the physical count of the idle property, plant and equipment.

Other Matter

We did not audit the financial statements of Jupiter Prestige Group Holdings Limited and its subsidiaries, Lotus Ecoscings & Engineering Co., Ltd., Cupid InfoTech Co., Ltd., YFY Biotech Management Company, Systax Communication (H.K.) Ltd. and Ever Growing Agriculture Biotech Co., Ltd., subsidiaries which are included in the consolidated financial statements of the Group, but such financial statements were audited by other auditors, whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included in the Group’s consolidated financial statements for these subsidiaries, is based solely on the reports of other auditors. The assets of these subsidiaries as of December 31, 2017 and 2016 were about 1% (NT$1,424,127 thousand) and 1% (NT$1,294,932 thousand), respectively, of the total consolidated assets. The net sales of these subsidiaries for the years ended December 31, 2017 and 2016 were about 1% (NT$684,858 thousand) and 1% (NT$611,103 thousand), respectively, of the consolidated net sales. In addition, the financial statements as of and for the years ended December 31, 2017 and 2016 of Taiwan Genome Sciences Co., Ltd., an investment accounted for using the equity method, were audited by other auditors. Thus, our opinion, insofar as it relates to the calculation of the Group’s share in this investee’s profit or loss and other comprehensive income, is based solely on the report of other auditors. As of December 31, 2017 and 2016, the carrying amounts of this investee were NT$17,708 thousand and NT$24,446 thousand, respectively. Included in the Group’s total comprehensive income and loss for the years ended December 31, 2017 and 2016 were a loss of NT$2,145 thousand and a gain of NT$20,484 thousand, respectively, of this investee’s net profit or loss.

We have also audited the parent company only financial statements of YFY Inc. as of and for the years ended December 31, 2017 and 2016 on which we have issued an unmodified opinion, including an other matter, respectively.

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

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

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

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

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

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

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2017 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Chih-Ming Shao and Cheng-Hung Kuo.

Deloitte & Touche Taipei, Taiwan Republic of China March 22, 2018

Notice to Readers

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

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

Appendix 12

YFY INC AUDIT COMMITTEE’S REVIEW REPORT

Date: March 22,2018

The Company’s 2017 business report, financial statements and proposal of earnings distribution have been reviewed and determined to be correct and accurate by the Audit Committee, so according to Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act, we hereby submit this report to the 2018 Annual General Meeting of shareholders of the Company.

YFY Inc. Convener of the Audit Committee: Huang, Wen-cheng

Appendix 13 [Amendment effective as of the shareholders' meeting on November 13, 2017] YFY INC.

Board of Directors Meeting Procedures

Article 1. These Procedures are established in accordance with Article 2 of the Regulations Governing Procedure for Board of Directors Meetings of Public Companies to provide guidance over board meetings, and thereby enhance the supervisory role of the Company's board of directors.
Article 2. All issues related to the company's board of directors meetings, such as agendas, procedures, minutes recording, and announcements, shall be handled in accordance with standards set forth in these Procedures.
Article 3. YFY's board meetings shall be convened at least once every quarter.
When convening a board meeting, the convener shall clearly explain in the meeting notice the purpose of the meeting and shall notify all directors seven days prior to the meeting. However, a board of directors' meeting may be called at any time in the event of an emergency.
The abovementioned meeting notice, following the agreement of the corresponding person, shall be sent via email.
Items under Article 7, Paragraph 1 of these Procedures shall list the reasons for convening a meeting, except in the case of an emergency or with just cause, and the items may not be raised in the form of an extempore motion.
Article 4. Board meetings shall be convened within YFY's premises during office hours or at another suitable time and at a place deemed convenient for the board of directors.
Article 5. YFY's law department is designated by the board of directors to administer board meeting affairs.
The designated department for administering board meeting affairs shall prepare the meeting agenda and provide comprehensive information for the meeting. Such meeting information shall be delivered along with the meeting notice.
Should they consider the existing information to be insufficient, directors may request the designated department for administering board meeting affairs to provide supplemental information. Directors may resolve to postpone certain agendas if they consider the information presented to them to be inadequate.
Article 6. Agenda items for the board of directors' meetings of the Company shall include, at a minimum, the following:
I. Reported items:
- (I) Minutes of the last meeting and implementation status.
- (II) Reports on key financial information.
- (III) Reports on the internal audit progress.
- (IV) Reports on other important issues.
II. Discussions:
- (I) Discussions carried forward from the previous meeting.
- (II) Discussions for the current meeting.
III. Extempore motions:

Article 7. The following issues shall be raised for discussion in the Company's board meetings:

I. YFY's business plans.
II. Annual financial reports and semi-annual financial reports. This, however, shall not include the semi-annual financial reports that, according to law, do not need to be audited by a CPA.
III. According to Article 14-1 of the Securities and Exchange Act, there shall be an establishment and amendment to the internal control system, and an assessment of its effectiveness.
IV. According to Article 36-1 of the Securities and Exchange Act, there shall be an establishment and amendment of procedures governing acquisition or disposal of assets, transaction of derivatives, lending funds to third parties, endorsements and guarantees, or other provisions for the processing of major financial business activities.
V.Public offering, issuance or private offering of equity securities
VI. Appointment or removal of chief officers of finance, accounting and internal audit.
VII. Donations to related parties or major donations to non-related parties. However, charitable donations for emergency rescues due to major natural disasters must be submitted for subsequent ratification at the next board meeting.
VIII.Decisions that shall be resolved through a shareholders' meeting or a board meeting according to Article 14-3 of the Securities and Exchange Act, the Articles of Incorporation or other regulations, and any major issues prompted by the competent authority.

The "related persons" mentioned in Subparagraph 7 of the preceding paragraph refers to

the related persons as defined by the Regulations Governing the Preparation of Financial Reports by Securities Issuers. The mentioned significant donation to non-related persons refers to a single donation or the accumulation within one year of over NT$100 million to the same person; or amounted to 1% of the Company's net income; or over 5% of the Company's paid-in capital as calculated according to the most recent CPA certified financial report.

The above-mentioned "one year" shall date back one year from the date when the current board meeting was convened. Donations already approved by the board of directors at that time shall be excluded.

Paragraph 2 concerning the amount to be 5% of the paid-in capital: if foreign company stock shares have no face value or face value per share is not equivalent to NT$10, the calculation for the amount of 5% should be calculated according to 2.5% of shareholders’ equity.

At least one independent director shall be in attendance at board meetings; in the case of a meeting concerning any matter required to be submitted for a resolution by the board of directors under Paragraph 1, all independent directors shall attend in person; if an independent director is unable to attend in person, he or she shall appoint another independent director to attend as his or her proxy. Any objections or qualified opinions expressed by independent directors shall be recorded in meeting minutes. If an independent director is unable to express objections or qualified opinions personally at the board meeting, the opinion shall be raised in writing in advance unless there is justifiable reason not to do so. Such opinions shall also be recorded in board meeting minutes.

Article 8. Attendance logs shall be provided during board meetings and signed by all directors

present at the meeting.

Directors are required to attend board meetings in person. Those who are unable to attend in person may designate another director as a proxy in accordance with the Company's articles of association. Directors who participate in meetings via video conferencing shall be deemed to have personally attended the meeting.

If a director wishes to seek proxy attendance by another director, a new proxy form shall be issued for each board meeting, and the extent of delegated authority shall be specified for each agenda.

A director may only act as proxy, as mentioned in the 2 preceding Paragraphs, on behalf of one director at a time.

Article 9. The Company's board meetings shall be convened and chaired by the Chairman. However, the first meeting of each newly elected board of directors shall be called and chaired by the director who received votes representing the largest portion of voting rights at the shareholders' meeting in which the directors were elected. If there are two or more directors so entitled to call the meeting, they shall choose one person by and from among themselves to do so.

If the Chairman is on leave or unable to perform his duties, the Chairman shall appoint a director to act on his or her behalf. If the Chairman does not appoint a deputy, the remaining directors shall appoint an acting chairperson from among themselves.

Article 10. Members of relevant departments or subsidiaries may be notified to attend a board meeting depending on the agenda.
Certified public accountants, lawyers, or other professionals may also be invited to participate in board meetings if necessary. However, these professionals need to be dismissed during the discussion and voting stage.
Article 11. The Company shall make audio or video recordings of the entire proceedings of board meetings and retain the recordings for at least five years, in electronic form or otherwise. If, before the end of the retention period referred to in the preceding paragraph, any litigation arises in connection with a resolution of a board of directors' meeting, the relevant audio or video recordings shall continue to be retained until the litigation is concluded.
Where meetings are held by way of video conferencing, the recorded video and audio shall be treated as part of the meeting minutes and properly retained during YFY's existence.
Article 12. The chairperson may commence the board meeting when it is time to begin and at least half of all directors are present. If a meeting is due to convene but less than half of all directors are present, the chairperson may postpone the meeting. A meeting may be postponed a maximum of two times. If a meeting is due to convene but less than half of all directors are present, the chairperson may postpone the meeting in accordance with Article 3, Paragraph 2.
The term "all directors" mentioned above and in Article 17, Paragraph 2, Subparagraph 2 of these Procedures shall refer to those who are currently in office.
Article 13. YFY's board meetings shall be conducted in accordance with the order of business on the agenda as specified in the meeting notice. However, the order may be changed with the approval of a majority of directors present at the meeting.

The chairperson may not declare the meeting adjourned without the approval of a majority of directors present at the meeting.

YFY's board meetings shall be conducted in accordance with the order of business on the agenda as specified in the meeting notice.

Article 14. When the chairperson at a board meeting is of the opinion that a matter has been sufficiently discussed to a degree of putting to a vote, the chairperson may announce the end of discussion and bring the matter to vote.
- When a motion is made to resolve a proposal by YFY's board of directors, the matter is deemed approved if the chairperson puts the matter before all directors present at the meeting and none voices an objection. Should an objection be expressed upon a query by the chairperson, the agenda shall proceed to the voting process.
Article 15. Unless otherwise specified in the Securities and Exchange Act and the Company Act, all board resolutions shall be affected with the presence of more than half of the board and the support of more than half of those present at the meeting.
- The chairperson may choose to proceed with voting in any of the following methods, but if there is any objection from any attendants, the chairperson shall proceed according to the opinion of the majority:
I. Vote by a show of hands.
II. Vote by roll call.
III. Ballot votes.
IV. Other voting methods determined by YFY.

"All directors present at the meeting," as mentioned in Article 14, Paragraph 2 and the preceding paragraph, does not include directors who are prohibited from exercising voting rights, as mentioned in Article 16, Paragraph 1.

In cases where there are several amendments or alternative resolutions to a certain agenda item, the chairperson shall determine the order in which the new and original proposals are to be voted on. In the event that one of the cases has already been resolved, however, the other cases shall be considered rejected and no further voting is required.

If it is necessary to appoint personnel to monitor or count the votes, the chairperson shall make such appointments accordingly. The individuals monitoring the votes, however, shall be the directors of the Company.

The results of each vote shall be announced on the spot and recorded in the meeting minutes.

Article 16. If any director or a juristic person represented by a director is an interested party with respect to any agenda item, the director shall state the important aspects of the interested party relationship at the respective meeting. When the relationship is likely to prejudice the interests of the Company, the director may not participate in discussion or voting on that agenda item, and further, shall enter recusal during discussion and voting on that item and may not act as another director's proxy to exercise voting rights on that matter. With respect to a resolution of YFY's board of directors, where a director is forbidden from exercising his/her voting rights pursuant to the preceding paragraph, the provisions of Article 180, Paragraph 2 of the Company Act which applies mutatis mutandis to Article 206, Paragraph 3 of the same Act shall be followed.
Article 17. All meetings of YFY’s board of directors shall be recorded in the meeting minutes, which shall include detailed accounts of the following items:

I. The meeting session (or year), time, and venue.
II. The name of the chairperson.
III. Director attendance, including the names and number of the directors who are attending, on leave, and absent.
IV. The names and titles of the attendees.
V.The name of the recorder.
VI. Reported items:
VII. Discussions: Includes the resolution method and the outcome of the motion, a summary of the comments made by directors, experts, or other persons; the name of any director that is an interested party as referred to in Paragraph 1 of the preceding article, an explanation of the important aspects of the relationship of interest, the reasons why the director was required or not required to enter recusal, and the status of their recusal; objections or qualified opinions expressed at the meeting that were included in records or stated in writing; and any opinions issued in writing by an independent director under Article 7, Paragraph 5.
VIII.Extempore motions: The name of the proposer, the method of resolution and the result for each motion, a summary of the comments made by directors, supervisors, experts, or other persons. The name of any director that is an interested party as referred to in Paragraph 1 of the preceding article, an explanation of the important aspects of the relationship of interest, the reasons why the director was required or not required to enter recusal, and the status of their recusal. Opinions or qualified opinions expressed at the meeting that were included in records or stated in writing.
IX. Other matters that warrant inclusion:
If the board resolution involves any of the following, the details of which shall be addressed in the meeting minutes and reported to the information reporting website designated by the competent authority within two days after the board resolution is made:
I. Objections or qualified opinions expressed by independent directors on record or in writing.
II. Any matters that are not agreed upon by the Audit Committee but passed by more than two-thirds of the full amount of directors.

The attendance book constitutes part of the board meeting minutes and shall therefore be properly retained for the duration of YFY's existence.

The meeting minutes shall be signed or sealed by the chairperson of the meeting and the recorder, issued to each member within 20 days after the meeting, classified as YFY's critical documents, and properly retained during YFY's existence.

The preparation and distribution of meeting minutes as prescribed in Paragraph 1 may be made in electronic form.

Article 18. These Principles shall become effective upon approval by the board of directors and reported in the shareholders meeting.

YFY INC. Amendment chart of the Board of Directors Meeting Procedures

Articles		Amended articles		ExistingArticles	Description
Article 7	The following issues shall be raised for discussion in the Company's board meetings: I. YFY's business plans. II. Annual financial reports and semi-annual financial reports. This, however, shall not include the semi-annual financial reports that, according to law, do not need to be audited by a CPA. III. According to Article 14-1 of the Securities and Exchange act, there shall be an establishment and amendment to the internal control system andan assessment of its effectiveness. IV. According to Article 36-1 of the Securities and Exchange Act, there shall be an establishment and amendment of the acquisition or disposal of assets, transaction of derivative products, capital loan to third parties, endorsement, or the provision of guarantee for the handling procedures of major financial business activities. V. Public offering, issuance, or private offering of equity securities VI. Appointment or removal of chief officers of finance, accounting and internal audit. VII. Donations to related	The following issues shall be	The following issues shall be raised for discussion in the YFY board meetings: I. YFY's business plans. II. Annual financial reports and semi-annual financial reports. This, however, shall not include the semi-annual financial reports that, according to law, do not need to be audited by a CPA. III. Establishment or amendments to the internal control system according to Article 14-1 of the Securities and Exchange Act. IV. V. According to Article 36-1 of the Securities and Exchange Act, there shall be an establishment and amendment of procedures governing acquisition or disposal of assets, transaction of derivatives, lending funds to third parties, endorsements and guarantees, or		1. The Securities and Exchange Act's regulations on the Audit Committee's authority regarding "Assessment of the Effectiveness of Internal Control Systems" is considered a significant matter and should be submitted for discussion during board meetings. This stipulation has been added to Paragraph 1, Subparagrap h 3. 2. Discretionary content adjustment of Paragraph 2 and Paragraph 3. 3. Paragraph 5 has been amended to define the authorityof

parties or major donations other provisions independent to non-related parties. for the processing directors and However, charitable of major financial to donations for emergency business activities. strengthen rescues due to major VI. Public offering, their natural disasters must be issuance or private participation submitted for subsequent offering of equity in board ratification at the next securities meeting board meeting. VII. Appointment or procedures. VIII. Any matter that, under removal of chief Article 14-3 of the officers of finance, Securities and Exchange Act accounting and or any other laws, internal audit. regulations, or the Articles VIII.Donations to of Incorporation of the related parties or Company, must be major donations to approved by a resolution of non-related the shareholders' meeting parties. However, or board meeting, or any charitable material matter as may be donations for prescribed by the emergency rescues competent authority. due to major The "related persons" natural disasters mentioned in Subparagraph 7 of must be submitted the preceding paragraph refers for subsequent to the related persons as defined ratification at the by the Regulations Governing next board the Preparation of Financial meeting. Reports by Securities Issuers. IX. Decisions that shall The mentioned significant be resolved donation to non-related persons through a refers to a single donation or the shareholders' accumulation within one year of meeting or a board over NT$100 million to the same meeting according person; or amounted to 1% of to Article 14-3 of the Company's net income; or the Securities and over 5% of the Company's Exchange Act, the paid-in capital as calculated Articles of according to the most recent Incorporation or CPA certified financial report. other regulations, The above-mentioned "one and any major year" shall date back one year issues prompted from the date when the current by the competent board meeting was convened. authority. Donations already approved by X.The "related the board of directors at that persons" time shall be excluded. mentioned in

Subparagraph 7 of the preceding paragraph refers to the related persons as defined by the Regulations Governing the Preparation of Financial Reports by Securities Issuers. The mentioned significant donation to non-related persons refers to a single donation or the accumulation within one year of over NT$100 million to the same person; or amounted to 1% of the Company's net income; or over 5% of the Company's paid-in capital as calculated according to the most recent CPA certified financial report. quivalent to uivalent to

The above-mentioned "one year" shall date back one year from the date when the current board meeting was convened. Donations already approved by the board of directors at that time shall be excluded.

Paragraph 2 concerning the amount to be 5% of the paid-in capital: if foreign company stock shares have no face value or face value per share is not equivalent to uivalent to

NT$10, the calculation for the amount of 5% should be calculated according to 2.5% of shareholders’ equity. YFY has established independent director seats. When there are matters to be resolved by the board of directors as per Article 14-3 of the Securities and Exchange Act, independent directors must attend personally or appoint other independent directors as proxies. Any objections or qualified opinions expressed by independent directors shall be recorded in meeting minutes. If an independent director is unable to express objections or qualified opinions personally at the board meeting, the opinion shall be raised in writing in advance unless there is justifiable reason not to do so. Such opinions shall also be recorded in board meeting minutes.

Appendix 14

[Amendment effective as of the shareholders' meeting on June 21, 2018]

YFY INC.

Asset Acquisition and Disposal Procedures

(Basis)

Article 1. These Procedures are set in accordance with the "Regulations Governing the Acquisition and Disposal of Assets by Public Companies.”

(Applicable scope of assets)

Article 2. In addition to YFY's transactions with related persons, the acquisition or disposal of assets managed through transactions of derivatives and, according to law, mergers, divisions, acquisitions, or share transfer should be handled in accordance with their respective procedures. The applicable scope of assets mentioned in these Procedures is as follows:
(1) 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.
(2) Real estate (including land, houses and buildings, investment property, permits to use land, and inventory from the construction industry) and equipment.
(3) Memberships.
(4) Patents, copyrights, trademarks, franchise rights, and other intangible assets.
(5) Claims of financial institutions (including receivables, bills purchased and discounted, loans, and overdue receivables).
(6) Other key assets.

(Investment quota)

Article 3. YFY can invest in a variety of assets, with the following quota limitations:

(1) The total value of a real estate asset not intended for operations must not be purchased at more than 10% of the total asset.
(2) Investment amount in Mainland China must not exceed the investment amount upper limits as set by competent authorities.
(3) In accordance with YFY's regulations, foreign long-term securities investment amounts (including investments in Mainland China) are not under restriction to 40% of the paid-in capital. Single portfolio investments must be resolved in shareholders' meetings and must not exceed 75% of the total assets.
(4) The total amount of short-term securities investments must not exceed 100% of the total assets. Therefore, single portfolio investments must not exceed 75% of the total asset.

YFY's subsidiaries may purchase real estate not intended for operations or to be included in the total amount of securities and can invest in individual securities following the same quota set by the parent company.

(Applicable notice standards)

Article 4. Under any of the following circumstances, YFY shall, within 2 days from the date of occurrence of the event, publicly announce the relevant information about the acquisition or disposal of assets on the designated website of the Financial Supervisory Commission, using

the specified format:

(1) The acquisition or disposal of assets categorized as "equipment intended for operations," where the trading counterparty is non-related and the transaction amount exceeds NT$1 billion.
(2) The acquisition or disposal of real estate intended for construction, where the trading counterparty is not related and the transaction amount exceeds NT$500 million.
(3) The acquisition of real estate through the commissioning of construction on the company's own land, commissioning of construction on leased land, joint construction and allocation of housing units, joint construction and allocation of ownership percentages, joint construction and separate sale, where the amount the company expects to invest in the transaction is more than NT$500 million.
(4) Asset transactions other than the ones specified in the three preceding Subparagraphs or investments in Mainland China that amount to 20% of the company's paid-up capital or more than NT$300 million. This shall not apply to the following circumstances:
Trading of government bonds.
With investment as a profession, the trading of security bonds in local or foreign stock exchange markets or in securities dealers' business premises or company bonds subscribed through public offering in the domestic primary market, and financial bonds not involved in equity.
Trading of bonds under repurchase and resale agreements, or subscription or redemption of domestic money market funds that are issued by securities investment trust companies.

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 trading counterparty within the preceding year.
(3) The cumulative transaction amount of real estate acquisitions and disposals (cumulative acquisitions and disposals, respectively) 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.

"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 Procedures need not be counted toward the transaction amount.

(Amount basis for non-New Taiwan Dollar transactions)

Article 5. When transactions are not based on New Taiwan Dollar as the currency, the acquisition or disposal transaction should be based on the equivalent value in US dollars or another foreign currency.

(Calculation of the transaction value)

Article 6. "Transaction value" refers to the agreed upon price of the acquisition or disposal. All other

necessary expenses incurred before reaching the status of use due to acquisition are accounted for as part of the cost of assets but are not included in the calculation basis of this procedure.

(Managing procedures)

Article 7. When acquiring or disposing of assets, managing procedures shall be adopted in accordance with the category of asset it is applicable to, as follows:
(1) Application:
- To acquire or dispose of assets, the relevant asset management department shall assess the gains and losses according to "long- and short-term equity investment evaluation essentials" or "fixed assets management measures" or other methods that are sufficient to ensure the company's investment interests and shall, if necessary, meet relevant departments. According to the authorization level of the company, it shall be processed after it is submitted for verification.
The following listed assets do not require pre investment evaluation, due to the low level of asset transaction risk:
Trading of bonds under repurchase and resale agreements;
Subscription or redemption of domestic money market funds that are issued by securities investment trust companies.
(2) Appraisal:
In acquiring or disposing of real property or equipment where the transaction amount reaches 20% of the company's paid-in capital or exceeds NT$300 million, the company, unless transacting with a government agency, commissioning of construction on the company's own land, commissioning of construction on leased land, or acquiring or disposing of equipment intended for operation, 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:
- (1) If an appraisal conducted by an appraising entity exhibits a discrepancy exceeding 20% of the transaction value, a CPA must be engaged to provide an opinion with regards to the discrepant value and the reasonableness of the transaction price in accordance with Statement on Auditing Standards No. 20, published by the Accounting Research and Development Foundation of the Republic of China (ARDF), except in situations where the appraised price is higher than the acquisition price or lower than the disposal price. The discrepancy between the appraised value and the transaction value mentioned in this procedure is based on the transaction value.
- Where the transaction amount is NT$1 billion or more, appraisals from two or more appraising entities shall be obtained. If an appraisal conducted by an appraising entity exhibits a discrepancy exceeding 10% that of the transaction value, a CPA must be engaged to provide an opinion with regards to the discrepant value and the reasonableness of the transaction price in accordance with Statement on Auditing Standards No. 20, published by the ARDF, except in situations where the appraised price is higher than the acquisition price or lower than the disposal price.
- (3) No more than 3 months may elapse between the date of the appraisal report issued by an appraising entity and the contract execution date; if the publicly announced current value for the same period is used and not more than 6 months have elapsed, an opinion may be issued by the original appraising

entity.

  - (4) When acquiring or disposing of real estate intended for construction or other fixed assets, unless there is a reasonable cause for being unable to obtain an immediate appraisal report, this shall be obtained within two weeks of the occurrence of events and follow CPA suggestions as per (1) and (2), except where a limited price, specific price, or special price is used as reference for the transaction price.

In case of acquisition or disposal of securities, the company shall, prior to the date of occurrence of the event, obtain the financial statements of the issuing company for the most recent period that have been certified or reviewed by a CPA. Such financial statements shall be used as a reference for appraising the transaction price. If the transaction amount has reached 20% of the company's paid-in capital or NT$300 million, the company shall, prior to the date of occurrence of the event, additionally engage a CPA to provide an opinion regarding the reasonableness of the transaction price. If the CPA requires the evidence of an expert report, the CPA shall do so in accordance with the provisions of the Statement of Auditing Standards No. 20 published by the ARDF. This requirement does not apply, however, to securities with publicly quoted prices from an active market, or if it has been otherwise provided by the regulations of the Financial Supervisory Commission (FSC).
If the dollar amount of memberships or intangible assets to be acquired or disposed of by the Company is 20% or more of the Company's paid-in capital or NT$300 million or more, except in transactions with a government agency, the Company shall 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; the certified public accountant shall comply with the provisions of the Statement of Auditing Standards No. 20 published by the ARDF of the ROC.
Where the acquisition or disposal of assets has been through court auction procedures, the evidentiary documentation issued by the court may be used as a substitute for the appraisal report or CPA opinion.
Professional appraisers and their officers, CPAs, attorneys, and securities underwriters that provide the company with appraisal reports, CPA's opinions, attorney's opinions, or underwriter's opinions shall not be a related party of any party to the transaction as defined by the Regulations Governing the Preparation of Financial Reports by Securities Issuers.
The calculation of the transaction amounts should follow the procedures as set forth in Article 4. "Within one year" as used herein refers to the year preceding the date of occurrence of the current transaction. The basis for calculation, however, shall not include any transactions for which a professional appraisal report or CPA’s opinion has been obtained according to the procedures.
(3) Tender price comparison or bargaining:

Following the appraisal, the relevant asset management department shall formulate a bottom price and follow procedures for tendering or price comparison. Should the current situation not allow for tendering or price comparison, the relevant party shall proceed with bargaining.

(4) Contract signing:

The results of the price comparison or bargaining should be adopted when signing a transaction contract with the counterparty and the acting parties shall strive to ensure the interests of the company.

(5) Announcement and reporting:

When acquiring or disposing of assets, if compliant with Article 4 of these Procedures, the undertaking party shall inform the stock department using the stipulated format and nature. The stock department shall announce the relevant information on the reporting website designated by the competent authority within two days of the occurrence of events.

When, at the time of public announcement, there is a necessary correction to an error or omission in an item required by the regulations to be publicly announced, all the items shall be again publicly announced in their entirety within 2 days, commencing immediately from the date on which the error or omission is discovered.

If after the announcement there is an amendment, termination, or call off of the contract related to the signing of the transaction or if there is an amendment to the content of the announcement, relevant information shall be announced on the reporting website designated by the competent authority within two days of the occurrence of events.

(6) Reporting to the board of directors:
Should, for a special reason, the limited price, specific price, or special price be used as a reference for the transaction price, and the transaction's value falls under the announcement criteria as stipulated in Article 4, one-half of the Audit Committee must approve, and it must be submitted to the board of directors for approval; Should one-half of the Audit Committee not approve, an approval of two-thirds of the board of directors is required, and the Audit Committee's resolution should be recorded in the meeting minutes of the board meeting. Should a director express objection and have an audio or written record, this information shall be delivered to the Audit Committee. For future amendment in transaction conditions, comparable procedures should be followed.
In addition to the procedures in the preceding Subparagraph, if the transaction value falls under the criteria stipulated in Article 4 of the announcement, following the acquisition or disposal it should be reported to the board of directors for inspection.
If YFY has established independent directors, according to the procedures stipulated in this paragraph, the opinions of the independent directors shall be taken into full consideration. Any objections or qualified opinions made by independent directors must be detailed in board meeting minutes.
(7) Acceptance or inventory:

The acquisition and disposal of assets shall require the close examination and inspection by item according to the content and conditions of the contract and related documents. If a discrepancy is found, it must be denoted with a signature.

(8) Registration of rights to assets:

In the acquisition of real estate, the rights to assets must be registered to the competent authority within the statutory period. Any changes shall likewise require registration.
(9) The department of general affairs shall handle insurance for the assets in accordance

with its nature and current status.

(Definition of date of occurrence)

Article 8. Refers to the earliest of the signing date, payment date, commission date, date of ownership transfer, board of directors' resolution date, or any other dates when the transaction counterparty and the amount can be verified with certainty (based on the former). However, 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.

(Subsidiary information announcement)

Article 9. YFY's subsidiaries that are not publicly listed companies in the domestic market but have acquired or disposed of assets according to the announcement report criteria should inform YFY is written form immediately after the date of occurrence of events. YFY shall report on the reporting website designated by the competent authority within two days of the occurrence of events.
The subsidiaries mentioned in this procedure shall be defined by the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

(Penalization for dereliction of duty)

Article 10. Relevant staff members who do not follow the procedures of acquisition and disposal of assets shall be penalized.

(Data retention)

Article 11. When acquiring or disposing of assets, the Company shall keep all relevant contracts, meeting minutes, log books, appraisal reports and opinions of the certified public accountant, attorney and securities underwriter at the Company headquarters, where they shall be retained for five years, except where another act provides otherwise.

(Matters not mentioned herein)

Article 12. Other matters not mentioned herein in this procedure shall be conducted in accordance with the procedures stipulated in "Regulations Governing the Acquisition and Disposal of Assets by Public Companies."

YFY's subsidiaries may establish handling procedures for the acquisition or disposal of assets. If no procedures are established, relevant matters shall be handled in accordance with these Procedures.

(Supplemental Provisions)

Article 13. The establishment and amendment of these Procedures shall receive the approval of one-half of the Audit Committee and shall be submitted for approval by the board of directors and the shareholders. Should a director express an objection and provide audio or written record, this shall be delivered to the Audit Committee. Should one-half of the Audit Committee not approve, an approval of two-thirds of the board of directors is required, and the Audit Committee's resolution should be recorded in the meeting minutes of the board meeting.

The Procedures’ definition of "all of the Audit Committee and all directors" refers to those who are currently in office.

Appendix 15 [Amendment effective as of the shareholders' meeting on June 21, 2018] YFY INC.

Procedures for Processing Derivative Transactions

One. Purpose

In order to establish a risk management system for YFY's transaction of derivative products, these Procedures are established according to the "Regulations Governing the Acquisition and Disposal of Assets by Public Companies."

Two. Transaction principles and guidelines

I. Categories of derivative transactions
These Procedures defines "derivatives" as transaction contracts of which values are derived from assets, interest, exchange rates, indexes, or other benefits (such as forward contracts, options contracts, futures, leverage contracts, swap contracts, and any combination of the above).
The term "forward contracts" referenced herein does not include insurance contracts, performance contracts, after-sales service contracts, long-term leasing contracts, or long-term purchase (sales) agreements.

II. Operating or hedging strategies

The purpose should be clearly defined as transaction-driven or non-transaction driven. The main purpose should be to avoid risk and to establish a good internal control system; Transacting counterparties should be financial entities with a healthy organizational structure or with whom the company already has business relations.

III. Roles and responsibilities

Finance department

1) Gather market information and be familiar with derivative products, laws and regulations, and risk appraisal.

2) Execute transactions and risk management within the authorized quota.
3) Provide sufficient and timely information to the financial manager and periodically appraise profit and loss status.
4) Create log books and record detailed information, including categories and amounts of transaction of derivative products, board of directors' approval dates, and board of directors' or financial manager's prudent assessment on matters.
Accounting department
1) Transaction confirmation.
2) Understanding the nature of products, contracts, types of transactions, and appropriate log in.
3) Provide appraisal for positional profit and loss at the end of each month.
4) Provide sufficient exposure when preparing periodical financial reports according to the "Financial Accounting Standards No. 36 - Expression and Exposure of

Financial Products," published by the ARDF.

5) Cross check with the financial department and execute delivery of procedures.
Investment management department

Responsible for assessing, monitoring and controlling relevant risks, periodical review of profit and loss appraisal reports on derivative products, and reporting to the senior executive in charge of the decision making.

IV. Performance evaluation essentials

Following a credible evaluation model and a stable and consistent principle to periodically assess, review, and create a report for the reference and managing purposes of the financial manager.

V. Contract value of the transaction of derivative products
Non-transaction driven: Execute hedging strategy according to YFY's involvement in risky items (such as exchange rates, interest rates, or risks generated from projects). The contract value of hedging positions must not exceed the total value of the hedging position.
Transaction driven: The trader must conduct transactions within the project quotas.
VI. Upper limit of loss amount
The upper limit of individual contract loss is 20% of the contract value. The upper limit of total contract net loss is 10% of the total contract value. If the loss exceeds the upper limit, it shall be announced following these Procedures.
If the contract loss amount exceeds the upper limit of a transaction-driven transaction, the financial manager shall appraise the market's risk and propose a method of disposal. In a non-transaction driven transaction, the contract loss amount should be calculated in consolidation with the hedged position. If the loss exceeds the upper limit, the financial manager shall appraise the market's risk and propose a method of disposal. In a non-transaction driven transaction, the contract loss amount should be calculated in consolidation with the hedged position. If the loss exceeds the upper limit, the financial manager shall appraise the market's risk and propose a method of disposal.

Three. Operating Procedures

I. Authorized quota
The authorized quota of non-transaction driven transactions of derivative products can be found in the following chart. For purpose of business development and in response to market changes or special situations, some cases are not restricted by the authorized quota if approved by the board of directors.

Unit: USD

		Unit: USD
	Single transaction amount	Daily transaction amount
Chairman	Above 5 million	Above 10 million
Financial manager	5 million and below	10 million and below

In accordance with these Procedures, relevant personnel are authorized to execute YFY's non-transaction driven transaction of derivative products. After the occurrence of events, it shall be reported at the next board meeting.
A transaction-driven transaction of derivative products must be reported and approved by the board of directors by project, after which the transaction may proceed.

II. Executing department

The executing department may conduct transactions within the aforementioned authorization or project approval quota.

Four. Announcement procedure

I. YFY shall, in accordance with requirements, compile monthly reports on the status of derivative product transactions (including both transaction and non-transaction driven) engaged in up to the end of the preceding month on its own and its non-domestic publicly listed subsidiaries and shall enter the information in the corresponding format into the information reporting website designated by the Financial Supervisory Commission by the 10th day of each month. When, at the time of public announcement, there is a necessary correction to an error or omission in an item required by the regulations to be publicly announced, all the items shall be again publicly announced in their entirety within 2 days, commencing immediately from the date on which the error or omission is discovered.
II. When engaging in transaction of derivative products and the transaction loss has exceeded the total amount as stipulated in these Procedures or has exceeded the upper limit amount in individual contracts, the relevant information shall be announced to the reporting website designated by the Financial Supervisory Commission within 2 days, commencing immediately from the date of the occurrence of the event.

V. Accounting processing method

I. Set up memo records to log relevant data on the transaction of derivative products.

II. Set up independent accounts to clearly log the profit and loss status.

Six. Internal Control System

I. Risk management measures
Credit risk management

Financial institutions with a healthy organizational structure shall be chosen as transacting counterparties; avoid centralizing a transaction with one single counterparty.

Market price risk management
1) When engaging in the transaction of derivative products, personnel at each level authorized to engage in such transactions must comply with the authorized quota and upper-limit loss restrictions.
2) Implement timely evaluation on potential losses and loss amounts as a result of

market changes in interest rates and exchange rates, and execute the appropriate measures.

Mobility risk management

The product's market size, depth, mobility, and the transaction ability of financial institutions must be regarded in order to maintain mobility.

Cash flow risk management

The company's sufficient operating cash flow to deliver on derivative products must be strictly controlled.

Operation risk management

Personnel engaging in the transaction of derivative products, personnel confirming, delivering, and involved in other operations cannot hold concurrent posts.

Legal risk management
1) The content of contracts must first be drafted by the legal department.

2) Verify that the transacting counterparty has obtained legal rights and the authority to engage in the transaction of derivative products.

II. Methods for periodical evaluation

The holding position of a derivative product must be evaluated at least once per week, except when engagement of a hedging transaction is required, and then it shall be evaluated at least two times per month. The evaluation reports must be submitted to the financial manager.

Seven. Management principles for the board of directors' supervision

I. Board of directors' supervision principles
1、 The financial manager shall supervise and control the transaction risks of derivative products at all times.
2、 To review whether the performance of the transaction of derivative products from the parent company and its subsidiaries conforms with the established business strategy and whether the risk assumed is within the company's tolerance, the financial manager must implement a periodical evaluation of the consolidated overall financial reports during routine board meetings.
II. Board of directors' management principles
The head of the finance department must periodically evaluate the adequacy of the current risk management measures in use and ensure that they follow the procedures according to the "Regulations Governing the Acquisition and Disposal of Assets by Public Companies" and the Procedures for Processing Derivative Transactions established by the Company.
The financial manager is required to supervise the transaction and profit and loss status. Should an abnormal situation be found, necessary countermeasures must be adopted and immediately reported to the board of directors. If independent directors have been established, they must attend the board meeting and express their opinions.

Eight. Internal audit system

Internal audit personnel must periodically review the adequacy of the internal control for the transaction of derivative products. A monthly inspection must be implemented on the transacting department's complacency situation with the Procedures and an analysis of the trading cycle, which must be written as an audit report. Should a significant violation be found, it must be reported to the Audit Committee in writing.

Nine. Definition of occurrence of events

Refers to the earliest of the signing date, payment date, commission date, date of ownership transfer, the board of directors' resolution date, or any other dates when the transaction counterparty and the amount can be verified with certainty (based on the former) however, 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.

Ten. Control and information announcement of the subsidiaries

In addition to following their own regulations governing the processing of derivative transactions, subsidiaries that wish to engage in the transaction of derivative products shall follow the regulations in these Procedures for Processing Derivative Transactions. Should there be items requiring announcement and reporting for the transaction of derivative goods, the parent company is responsible to announce on behalf of the subsidiary that is not a publicly listed in the domestic market. The subsidiaries mentioned in these Procedures shall be defined by the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Eleven. Penalization for dereliction of duty

When engaging in the transaction of derivative products, relevant staff members who do not follow the regulations in these Procedures shall be penalized.

Twelve. Data retention

When acquiring or disposing of assets, the Company shall keep all relevant contracts, meeting minutes, log books, appraisal reports and opinions of the certified public accountant, attorney and securities underwriter at the Company headquarters, where they shall be retained for five years, except where another act provides otherwise.

Thirteen. Other items

The establishment and amendment of these Procedures shall receive the approval of one-half of the Audit Committee and shall be submitted for approval by the board of directors and the shareholders. Should a director express an objection and provide audio or written record, this shall be delivered to the Audit Committee. Should one-half of the Audit Committee not approve, an approval of two-thirds of the board of directors is required, and the Audit Committee's resolution should be recorded in the meeting minutes of the board meeting. The Procedures’ definition of "all of the Audit Committee and all directors" refers to those who are currently in office.

YFY INC.

Amendment chart of the Procedures for Processing Derivative Transactions

Articles	Amended articles	ExistingArticles	Description
Two	Transaction principles and guidelines ............ III. Roles and responsibilities 1. Finance department 1) Gather market information and be familiar with derivative products, laws and regulations, and risk appraisal. 2) Execute transactions and risk management within the authorized quota. 3) Provide sufficient and timely information to the financial manager and periodically appraise profit and loss status. 4) Create log books and record detailed information, including categories and amounts of transaction of derivative products, board of directors' approval dates, and board of directors' or financial manager's prudent assessment on matters. 2. Accounting department 1) Transaction confirmation. 2) Understanding the nature of products, contracts, types of transactions, and appropriate log ins. 3) Provide appraisal for positional profit and loss at the end of each month. 4) Provide sufficient exposure whenpreparing	Transaction principles and guidelines ............ III. Roles and responsibilities 1. Trading department 1) Gather market information and be familiar with derivative products, laws and regulations, and risk appraisal. 2) Execute transactions and risk management within the authorized quota. 3) Provide sufficient and timely information to the financial manager and periodically appraise profit and loss status. 4) Create log books and record detailed information, including categories and amounts of transaction of derivative products, board of directors' approval dates, and board of directors' or financial manager's prudent assessment on matters. 2. Accounting department 1) Transaction confirmation. 2) Understanding the nature of products, contracts, types of transactions, and appropriate log ins. 3) Provide appraisal for positional profit and loss at the end of each month. 4) Provide sufficient exposure when preparing periodical financial reports	1. Department
			responsible for
			clearly defining
			the transaction,
			delivery, and risk
			control.
			2. Article
			reorganization.

	periodical financial reports according to the "Financial Accounting Standards No. 36 - Expression and Exposure of Financial Products," published by the ARDF. 5) Cross-check with the finance department and execute settlement procedures. 3. Investment management department Responsible for assessing, monitoring and controlling relevant risks, periodical review of profit and loss appraisal reports on derivative products, and reporting to the senior executive in charge of the decision making. ............	according to the "Financial Accounting Standards No. 36 - Expression and Exposure of Financial Products," published by the ARDF. 3. Settlement department Inform the trading department concerning the reception of the transaction, cross-check with the accounting department, and execute settlement. ............	according to the "Financial Accounting Standards No. 36 - Expression and Exposure of Financial Products," published by the ARDF. 3. Settlement department Inform the trading department concerning the reception of the transaction, cross-check with the accounting department, and execute settlement. ............	according to the "Financial Accounting Standards No. 36 - Expression and Exposure of Financial Products," published by the ARDF. 3. Settlement department Inform the trading department concerning the reception of the transaction, cross-check with the accounting department, and execute settlement. ............
			cross-check with the accounting department, and execute settlement. .........
Six	Internal Control System ............ 5. Operation risk management Personnel engaging in the transaction of derivative products, personnel confirming, delivering, and involved in other operations cannot hold concurrent posts. ............	Internal Control System ............ 5. Operation risk management 1) Personnel engaging in the transaction of derivative products, personnel confirming, delivering, or involved in other operations may not hold concurrent posts. Personnel engaged in the measurement of related risks, supervision, and control must be from a department that is different from that of the personnel defined in the preceding Subparagraph. They must report to the board of directors or a senior			Article reorganization.


				risks, supervision, and control must be from a department that is different from that of the personnel defined in
				the preceding Subparagraph. They must report to the board
				of directors or a senior

		..........
Seven	Management principles for the board of directors' supervision I. Board of directors' supervision principles 1.The financial manager shall supervise and control the transaction risks of derivative products at all times. 2. To review whether the performance of the transaction of derivative products from the parent company and its subsidiaries conforms with the established business strategy and whether the risk assumed is within the company's tolerance, the financial manager must implement a periodical evaluation of the consolidated overall financial reports during routine board meetings. ............	Management principles for the board of directors' supervision I. Board of directors' supervision principles 1.The financial manager shall supervise and control the transaction risks of derivative products at all times. 2. The board of directors shall review whether the performance of the transaction of derivative products conform with the established business strategy and whether the risk assumed is within the company's tolerance. ............	Clearly define the
			frequency of review
			implemented by the
			board of directors
			regarding the
			performance of the
			transaction of
			derivative products
			and the range of
			companies covered.

YFY INC.

Amendment chart of Asset Acquisition and Disposal Procedures

Articles	Amended articles	Amended articles	Amended articles	ExistingArticles	Description
Article 7	When acquiring or disposing of assets, procedures shall be adopted in accordance with the category of asset it is applicable to, as follows: (1) Application: To acquire or dispose of assets, the relevant asset management department shall assess the gains and losses according to "long- and short-term equity investment evaluation essentials" or "fixed assets management measures" or other methods that are sufficient to ensure the company's investment interests and shall, if necessary, meet relevant departments. According to the authorization level of the company, it shall be processed after it is submitted for verification. The following listed assets do not require pre-investment evaluation, due to the low level of asset transaction risk: 1. trading of bonds under repurchase and resale agreements; 2. Subscription or redemption of domestic money market funds that are issued by securities investment trust companies. (2) appraisal: ............			When acquiring or disposing of assets, procedures shall be adopted in accordance with the category of asset it is applicable to, as follows: (1) Application: To acquire or dispose of assets, the relevant asset management department shall assess the gains and losses according to "long- and short-term equity investment evaluation essentials" or "fixed assets management measures" or other methods that are sufficient to ensure the company's investment interests and shall, if necessary, meet relevant departments. According to the authorization level of the company, it shall be processed after it is submitted for verification. (2) appraisal: ............	Due to the low
					level of risk,
					transaction of
					conditional
					bonds and
					investment of
					domestic
					money market
					funds do not
					require
					pre-investment
					evaluation.

		not require pre-investment evaluation, due to the low level of asset transaction risk: 1. trading of bonds under repurchase and resale agreements; 2. Subscription or redemption
		1.
		2.
		of domestic money market funds that are issued by securities investment trust companies. appraisal: ........	of domestic money market
			funds that are issued by securities investment trust
Article 12	Other matters not mentioned herein in these Procedures shall be conducted in accordance with			Other matters not mentioned herein in these Procedures shall be conducted in accordance with	Clearly define
					regulations
					subsidiaries

	the provisions stipulated in "Regulations Governing the Acquisition and Disposal of Assets by Public Companies." YFY's subsidiaries may establish handling procedures for the acquisition or disposal of assets. If no procedures are established, relevant matters shall be handled	the provisions stipulated in "Regulations Governing the Acquisition and Disposal of Assets by Public Companies."	should adhere
			to when
			conducting
			asset trading.

	in accordance with these Procedures.

Appendix 16

[Amendment effective as of the shareholders' meeting on June 21, 2018]

YFY Inc.

Procedure for Lending Funds to Other Parties

Article 1. To guarantee the safe recovery of loaned funds, and in accordance with Article 15 of the Company Act and "Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies," YFY's loaning of funds shall be conducted in accordance with this Procedure.
Article 2. YFY's funds may be loaned to the following parties:
(I) companies or businesses with business transactions with YFY; or
(II) Companies and businesses requiring short-term financing. "Short-term" is defined as a period of one year or one business cycle (whichever is longer).
Article 3. When engaging in the loan of funds to companies or businesses with business transactions with YFY, the total loan amount is limited to 40% of YFY's net worth at the end of the previous year. The amount that can be loaned to each individual party is limited to the purchase and sales amount between the two parties in the previous year.
Article 4. Loans due to the need of short-term financing are limited to the following circumstances:
(I) Companies requiring short-term financing due to business needs where YFY and its subsidiaries hold shares individually or hold a combined share of 20% or more.
(II) Other companies and businesses requiring short-term financing due to the purchase of materials or operating needs.
(III) Other parties approved by YFY's board of directors.

Should the funds be loaned by YFY to third parties due to their requirement for short-term financing, the total loan amount is limited to 40% of YFY's net worth at the end of the previous year. The amount that can be loaned to each individual party is limited to 40% of YFY's net worth.

Article 5. The total loan amount is limited to 80% of YFY's net worth at the end of the previous year; loan amounts to each individual party are limited to 80%.
When engaging in loans to foreign companies where YFY, directly or indirectly, holds 100% shares with voting rights, the loans are not subject to the limitations of Articles 2, 3, 4 and the preceding paragraph. Should the engagement in loans result from the nature of the relation of business transactions with YFY and the need for short-term financing, the loan amount is limited to twice the company's net worth at the end of the previous year. Individual parties are limited to twice the company's net worth, and each loan term must not exceed 3 years.
Article 6. Prior to the engagement of loans, YFY shall implement due diligence on the loan amount and party in accordance with the following procedures:
(1) Credit Checks

When processing funding procedures, the borrower shall provide the necessary company and financial information and apply for the financing quota with YFY in writing.

Following YFY's acceptance of the application, the relevant processing department shall investigate and evaluate the borrower's business operation, financial situation, solvency, credit, profitability, and purpose of the loan and draft a report and request the countersignature of the legal and financial departments.

(2) Risk management

The relevant President’s Office and related departments shall evaluate the loan's effect on YFY's operational risks and financial status, and whether it would damage shareholders' equity.

(3) Security

When processing loans, YFY shall require the borrower to provide a collateral and, when necessary, proceed to set pledges on movable or immovable assets to secure its claims. When the debtor of the secured claims, as mentioned in the preceding paragraph, provides an individual or a company with considerable capital and credit as guarantor in place of collateral, the board of directors shall process the loan application by referencing the internal credit report; when a company acts as a guarantor, it must be noted whether the company's articles of incorporation permit it to act as a guarantor.

(4) Approval procedure

Following YFY's internal credit inspection, loans must be approved by the president (or vice president) and submitted to the board of directors for resolution and approval.

When the loan occurs between the parent company and its subsidiary or between subsidiaries, it shall be submitted for the board of directors' approval as stipulated in Subparagraph 4 of the preceding paragraph. Furthermore, the Chairman authorized to oversee the same loan and party shall determine in a board meeting the specific amount and installments or cyclical periods of no more than one year.

In addition to not being subject to the quota limitations set by Article 5, Paragraph 2 on foreign companies where YFY directly or indirectly holds 100$ of shares with voting rights, the specific amount mentioned in the preceding paragraph must not exceed 10% of the parent company's or the subsidiary's net worth, as reported in the most recent financial report, when the parent company or the subsidiary engages in loaning to an individual business.

Article 7. The company's interest on each loan is calculated with reference to market interest rates or capital costs. The term for each loan is limited to one year (included) or below or one business cycle (whichever is longer), except those subject to Article 5, Paragraph 2.

Article 8. Following loan allocation, timely attention shall be given to the borrower and guarantor's financial, business, and relevant credit situation. If collateral is provided, attention shall be given to its changes in value. Should there be a significant change, it must be immediately reported to the Chairman and managed as instructed.

Should the borrower return the loan at or before maturity, the interest rates shall first be calculated and returned along with the principal, after which will be the return of the collateral to the borrower or cancellation of claims.

The borrower shall immediately return the principal and interest at the loan's expiry period. YFY shall take action against violators with the provided collateral or guarantor to penalize and recover.

Article 9. When processing the loaning of funds, YFY shall create log books to record detail information concerning the borrower, amount, date of board approval, date of loan allocation, and items requiring careful evaluation; furthermore, bad debts shall be listed and related information shall be adequately exposed in financial reports. Related information shall then be provided to the CPA to execute necessary audit procedures.

YFY's internal audit personnel shall execute quarterly audits on the procedures of lending funds to other parties and the status of execution, and these shall be made into written records. Should a significant violation be found, it shall be immediately reported in writing to the Audit Committee.

Article 10. Should the borrower not qualify for the criteria of this procedure, or if there is a balance excess due to circumstantial changes, an improvement plan shall be devised and submitted to the Audit Committee, and the improvement shall be completed within the planned schedule.
Article 11. YFY shall announce before the 10th day of each month the preceding month's fund loan balance of the parent company and the subsidiaries.

Should YFY's fund loan balance meet one of the following criteria, it shall be announced immediately within 2 days of the occurrence of the event:

(1) YFY's and its subsidiaries' loan balance to third parties is more than 20% of YFY's net worth reported in the most recent financial report.
(2) YFY's and its subsidiaries' loan balance to an individual business is more than 10% of YFY's net worth reported in the most recent financial report.
(3) YFY's or its subsidiaries' newly added loan balance exceeds NT$10 million and 2% of YFY's net worth reported in the most recent financial report.

Should the subsidiary have items to announce as stipulated in Subparagraph 3 of the preceding paragraph, the parent company is responsible for announcing on behalf of a subsidiary that is not publicly listed in the domestic market.

The subsidiary and parent company mentioned in this Procedure shall be defined by the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

The net worth mentioned shall be defined by Regulations Governing the Preparation of Financial Reports by Securities Issuers on the equity attributed to the parent company's balance sheet.

The date of occurrence mentioned in this Procedure refers to the earliest of the signing date, payment date, the board of directors' resolution date, or any other dates when the transaction counterparty and the amount can be verified with certainty.

The announcement website mentioned in this Procedure refers to the reporting website designated by the Financial Supervisory Commission.

Article 12. In addition to following their own procedures for fund loaning, YFY's subsidiaries shall follow the regulations stipulated in this Procedure when lending funds to other parties.

Article 13. YFY's managers or authorized personnel shall be subject to penalty if they violate the regulations stipulated in this Procedure.
Article 14. Any matters not covered in this Procedure shall be handled in accordance with the "Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies."
Article 15. This Procedure shall receive the approval of one-half or more of the Audit Committee and shall require the board of directors' resolution and shareholders' approval. Should a director express objection and provide audio or written record, this shall be delivered to the Audit Committee and be submitted for shareholders' discussion. Amendments shall follow the same procedure. Should one-half or more of the Audit Committee not approve, an approval of two-thirds of the board of directors is required, and the Audit Committee's resolution should be recorded in the meeting minutes of the board meeting.

This Procedure's definition of all of the Audit Committee and all directors refers to those who are currently in office.

According to the procedures stipulated in the preceding paragraph, if YFY has established independent directors, the opinions of the independent directors shall be taken into full consideration. Any objection, reasons for objection, or qualified opinions made by independent directors must be detailed in board meeting minutes.

Appendix 17 [Amendment effective as of the shareholders' meeting on June 30, 2018] YFY INC.

Election Rules for Directors

I. YFY conducts the election of directors in accordance with the Rules.
II. The disclosed cumulative voting method shall be used for the election of directors. Each share shall have voting rights in number equal to the directors to be elected, and may be cast for a single candidate or split among multiple candidates. The attendance pass number printed on the ballot is deemed the voter's name.
III. YFY's directors are elected by shareholders’ meetings using a candidate nomination system. Directors are elected from the list of candidates in accordance with YFY's Articles of Incorporation and with the number of directors set by the board of directors in YFY's Articles of Incorporation; votes of independent and non-independent directors are counted separately, and the seats are to be filled with candidates with the highest election weight until all seats are filled. When two or more candidates have the same number of votes and there is only one seat remaining, the outcome shall be determined via a draw. The absentee shall be represented at the draw by the chairperson.
IV. Before the election begins, the chairperson shall appoint a certain number of persons to perform the respective duties of vote monitoring and vote tallying.
V. The board of directors shall prepare ballots for the election of directors, numbering them by order of attendance pass number and determining the election weight.
VI. YFY shall prepare the ballot box which shall, before the election begins, be opened for inspection by the vote monitoring personnel.
VII. If the candidate is a shareholder, the voter must fill in the candidate's account name and shareholder account number in the “candidate” column of the ballot; if the candidate is not a shareholder, the voter must fill in the candidate's full name and National ID number. If the candidate is an institutional shareholder, the name of the institution shall be entered in the “candidate” column of the ballot; the name of the institution along with the personal name of its representative may also be provided.
VIII. A ballot shall become invalid under any of the following circumstances:
(I) It is not a ballot specified under these Rules.
(II) The ballot has been cast into the ballot box as a blank ballot.
(III) The ballot has been marked with illegible writing.
(IV) When the candidate is a shareholder, the stated account name and shareholder account number do not match information on the shareholders' list; when the candidate is not a shareholder, the stated full name and National ID number do not match after verification.
(V) Other text entered has been entered aside from the candidate's account name (full name) and shareholder account number (National ID number).
(VI) When the candidate's name is similar to that of another shareholder and the following are

not marked for the purpose of further identification: shareholder's account number or National ID number.

(VII) Two or more candidates are specified on a single ballot.
IX.After the elections have concluded, ballots shall be immediately tallied on site, and the results of the vote shall be announced by the chairperson on site.
X. Newly-elected directors shall be notified of their appointment by the board of directors.
XI.These Rules shall come into effect following the approval of the shareholders meeting. Amendments shall follow the same procedure.

Appendix 18

YFY INC.

List of Director (Including Independent Director) Candidates

	Title	ID	Candidate`（`Director`）`	Experiences	Shareholdings (Note)
1	Director	5	Shin-Yi Enterprise Co., Ltd. RepresentativeHo, Felix	MBA ,MIT Sloan School of Management, /Chairman of YFY INC.	77,794,610
2	Director	5	Shin-Yi Enterprise Co., Ltd. RepresentativeHo, S. C.	Master of Mechanical Engineering, Univ. of Wisconsin/ Director of YFY INC.	77,794,610
3	Director	5	Shin-Yi Enterprise Co., Ltd. RepresentativeHo, Richard	Economics, University of Washington, / Assistant Vice President of YFY INC.	77,794,610
4	Director	17	Yuen Foong Paper Co., Ltd. RepresentativeHuang, Kirk	Ph.D, University of Wisconsin, / Chairman Chung Hwa PulpCorporation	18,268,073
5	Director	17	Yuen Foong Paper Co., Ltd. RepresentativeWang, Chin-San	Master's degree of The curriculum of Accounting Group of EMBA, National Taiwan University/ Independent Director of Taiwan Cement Corporation	18,268,073
6	Director	17	Yuen Foong Paper Co., Ltd. RepresentativeChien, Jung-Tsung	Master's degree of Department of Law, Soochow University/Founding Partner of Wise Team attorneys at law	18,268,073
7	Independent Director		Huang, Wen-Cheng	MBA, National Chengchi University /Chairman, Guo Fu Management Consulting Corporation.	0
8	Independent Director		Lu, Hsi-Peng	Ph.D. in Industrial Engineering, University of Wisconsin - Madison / Professor, National Taiwan University of Science and Technology	0
9	Independent Director		Chen, Thomas	MBA, Indiana University, USA Business Management /Independent director of YFY INC.	0

Note: Shareholdings of the director on the book closure date April 23,2018.

Appendix 19

YFY INC.

Rules of Procedure for the Shareholders' Meeting

I. The Shareholders' Meeting of the Company shall be conducted in accordance with the Rules specified herein.
II. Attendance books shall be provided for the shareholders' meeting and signed by the shareholders present. Alternatively, shareholders attending the meeting shall submit an attendance card for the purpose of signing in.
III. The attendance and votes of a shareholders' meeting shall be calculated based on the number of shares represented by the shareholders present at the meeting.
IV. Shareholders' meetings shall be held at locations that are suitable and convenient for shareholders to attend. Meetings shall not begin earlier than 9 AM or later than 3 PM.
V. Shareholders' meetings that are convened by the Board of Directors shall be chaired by the Chairman. If the Chairman is unable to perform such duties due to leave of absence or any other reason, the Vice Chairman shall act on the Chairman's behalf. If the Vice Chairman is unavailable or if the Vice Chairman is also unable to perform such duties due to leave of absence or any other reason, the Chairman may appoint a standing director to act on behalf. If there are no standing directors, one of the directors shall be appointed to act as chair. Where the Chairman does not make such a designation, the standing directors or the directors shall select from among themselves one person to serve as chair.

If a shareholders meeting is convened by someone having the right to convene a meeting, but who is not a member of the Board of Directors, the said person shall chair the meeting. If more than one person has the right to convene the meeting, one shall be elected to chair the meeting.

VI. The Company may designate retained lawyers, certified public accountants or relevant personnel to attend the shareholders' meeting. Staff handling administrative affairs of the shareholders’ meeting shall wear identification badges or arm-bands.
VII. ASE shall record the whole course of the shareholders’ meeting on audio tape or video tape, and shall keep the tapes on file for at least one year.
VIII. The Chairman shall announce the commencement of the meeting as soon as the appointed time arrives. However, if those in attendance represent less than half of the company's outstanding shares, the Chairman may announce to postpone the meeting up to two times, for a period totaling no more than one hour. If after two postponements the number of

shareholders present is still insufficient while representing at least one third of the total issued shares, provisional resolutions may be adopted in accordance with Article 175 Paragraph 1 of the Company Act.

If during the process of the meeting the number of issued shares represented by the shareholders present are sufficient to constitute the quorum, the chairman may submit the tentative resolutions to the meeting for approval in accordance with Article 174 of the Company Act.

IX. Agenda of a shareholders meeting called by the board shall be decided by the board. The meeting shall proceed according to the agenda unless changed by a shareholders meeting resolution.

The above provision applies mutatis mutandis to cases where the meeting is convened by any person, other than the Board of Directors, entitled to convene such meeting.

Unless by the resolution of the shareholders' meeting, the chairperson may not declare the meeting ended until all items on the agenda (including extemporaneous motions) arranged in the preceding two paragraphs have been completed. However, in the event that the Chairman adjourns the meeting in violation of rules of the meeting, the shareholders may designate, by a majority of votes represented by shareholders attending the meeting, one person as chairman to continue with the meeting. The shareholders cannot designate any other person as chairman and continue the meeting in the same or other place after the meeting is adjourned.

X. Shareholders who wish to speak during the meeting must produce an opinion slip detailing the topics and the shareholder's account number (or the attendance ID serial). The order of shareholders' comments shall be determined by the Chairman.

If any shareholder present at the meeting submits a Speech Note but does not speak, no speech shall be deemed to have been made by such a shareholder. If the contents of the statement do not conform to the contents of the statement slip, the contents of the statement shall govern.

XI. Unless otherwise permitted by the chairman, each shareholder shall not, for each discussion item, speak more than two times (each time not exceeding 5 minutes).
XII. In the event an institutional shareholder assigns two or more representatives to attend the shareholders’ meeting, only one of the representatives may speak on any single agenda item.
XIII. After a shareholder present at the meeting speaks, the chairperson may reply in person or assign relevant personnel to reply.

XIV. The meeting chairperson may announce to discontinue further discussions if the agenda is considered to have been sufficiently discussed to proceed with the voting.
XV. The chairperson shall appoint monitors and ballot counters for voting on proposals. For qualifications, monitors must be shareholders.
XVI. While the shareholders’ meeting is in session, the chairperson may at his/her discretion allocate and announces time for breaks.
XVII. Unless otherwise provided by the Company Act or the Company's Articles of Incorporation, a proposal shall be approved by the consent of more than half of the votes of shares represented by shareholders present.

In voting, a proposal is considered approved if the chairperson receives no dissenting opinions after requesting, which has the same effect as voting by ballot.

XVIII. Where there is an amendment or an alternative for a proposal, the chairperson shall determine the order in which they are to be voted on with the original proposal. If any of these proposals is approved, alternative proposals shall be treated as rejected and not be voted on separately.
XIX. The chairperson may instruct the inspectors (or security personnel) to assist in maintaining order in the meeting venue. While assisting in maintaining order at the venue, the inspectors (or security personnel) shall wear arm-bands read “Inspector.”
XX. Matters not addressed in these Rules shall be governed by the Company Act, the Articles of Incorporation of the Company, and other relevant laws and regulations.
XXI. These Rules shall come into force on the approval of the shareholders’ meeting, as shall any amendment.

Appendix 20

YFY INC. Articles of Incorporation

Chapter I General Rules

Article 1: The Company shall be incorporated as a company limited by shares under the Company Act and it shall be named: Yuen Foong Yu Investment Holding Co., Ltd.
Article 2: The business scope of the Company is as follows:
H201010 General Investment.
Article 2-1: The Company may provide external guarantees.
Article 2-2: The Company shall be exempt from the restrictions on total investment amount, which shall not exceed forty percent of the paid-up capital.
Article 3: The head office of the Company is established in Kaohsiung and may, subject to business requirement, set up branch office(s) at other appropriate locations, either locally or abroad.
Article 4: Public announcements of the Company shall be made in accordance with the Company Act.

Chapter II Shares

Article 5: The total authorized capital of the Company shall be NT$22 billion, divided into 22 billion shares with a par value of NT$10 each. Such shares may be issued by installments.
Article 6: Stocks of the Company shall be registered, signed or sealed by at least three directors. The stocks shall be issued after proper certification by the competent authority or its authorized registration institutes. Stocks issued by the Company as well as other securities are not required to be printed. The Company shall contact the centralized securities depository enterprise institution for registration of the share certificates.
Article 7: Shareholders shall fill in and submit to the Company a seal specimen card for safe keep. Such seal specimen shall serve as proof when collecting shares dividends or exercising other rights.
Article 8: The Company shall handle share matters in accordance with the Regulations Governing the Administration of Shareholder Services of Public Companies.
Article 9: (Omitted )
Article 10: (Omitted )
Article 11: (Omitted )
Article 12: Transfer of title for the stocks is not permitted within sixty days prior to the annual meeting of shareholders; or within thirty days prior to the special meeting of shareholders, and within five days prior to the cut-off date determined for the distribution of dividends, bonus or other benefits.

Chapter III Shareholders' Meeting

Article 13: The Company holds general and extraordinary shareholders' meetings, the general meeting shall be convened at least once a year. It shall be convened by the Board of Directors within six months after the close of each fiscal year. The extraordinary meeting shall be held in accordance with the relevant statutory requirements whenever deemed necessary. Shareholders' meetings are convened in accordance with the Company's Rules of Procedure for the Shareholders' Meeting. Article 14: Notices shall be sent to all shareholders for the convening of shareholders' meetings, at least thirty (30) days in advance, in case of regular meetings; and at least fifteen (15) days in advance, in case of special meetings. For shareholders holding less than one thousand (1000) registered shares, the notice of meeting may be publicly announced on the Market Observation Post System. Agenda items must be explained in detail in the meeting notices and announcements. Subject to agreement by the receiving party, meeting notices may also be delivered electronically. Article 15: A shareholder who cannot attend shareholders' meeting may appoint a proxy to attend on his/her behalf by executing a power of attorney printed and issued by the Company, stating clearly the scope of the authorization. The regulations governing proxy attendance shall be pursuant to the Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies, in addition to Article 177 of the Company Act. Article 16: Unless otherwise provided by the Company Act, a shareholders' meeting shall be chaired by the Chairman of the Board. If the Chairman is unable to perform such duties due to leave of absence or any other reason, the Vice Chairman shall act on the Chairman's behalf. If the Vice Chairman is unavailable or no delegate is appointed by the Chairman, one shall be elected from among the directors to act on the Chairman's behalf. Article 17: Unless otherwise regulated by the Company Act, a shareholders' meeting resolution is passed when more than 50% of all outstanding shares are represented in the meeting, and voted in favor by more than 50% of all voting rights represented at the meeting. Article 18: Unless otherwise prescribed by law, a shareholder shall have one voting right per share he or she is in possession of. Voting rights can be exercised electronically or in writing during a shareholders' meeting. If the voting right is exercised in writing or by way of electronic transmission, the method for exercising the voting power shall be described in the shareholders' meeting notice to be given to the shareholders. Shareholders who exercise their voting rights by electronic means are considered to have attended the meeting in person. The aforesaid shareholders shall also be considered to have forfeited the voting rights on extempore motions and resolution amendments. Article 19: Shareholders' meeting resolutions shall be compiled into minutes with details including the date and place of the meeting, the name of Chairman, method of resolution, a summary of the essential points of the proceedings and the results of the meeting. The minutes shall be signed or sealed by the Chairman and disseminated to each

shareholder no later than 20 days after the meeting. Preparation and distribution of meeting minutes can be made in electronic form. The distribution of the meeting minutes mentioned in the preceding paragraph may be effected by way of public announcement on the Market Observation Post System.

The minutes mentioned in the preceding paragraph must be retained for as long as the company exists. Shareholders' attendance cards and proxy forms shall be kept by the Company for duration of at least one year; however, in situations where a shareholder makes a litigious claim against the company according to Article 189 of the Company Act, the records shall be kept until the litigation is concluded.

Chapter IV Directors and Managers

Article 20: The Company shall have 9 to 13 directors. The Board meeting is authorized to approve the number of directors. A candidate nomination system shall be adopted. Candidates shall be nominated and elected at the shareholders' meeting from the list of candidates in accordance with Article 198 of the Company Act. The term of office shall be three years, and the director may be eligible for re-election.

The number of independent directors shall be at least two and shall not be less than one-fifth of the total number of directors specified in the preceding paragraph. Regarding other requirements on independent directors including professional qualifications, restrictions on shareholdings and concurrent positions held, assessment of independence, method of nomination, and other compliance matters, the Company shall observe the regulations announced by the competent authority for the securities industry.

Article 20-1: The Company has established an Audit Committee at the 26th board meeting. The committee shall be composed of independent directors only, with no fewer than three members, one of whom shall be the convener and at least one of them shall have expertise in accounting or finance. The authorities, organizational regulations, and other requirements pertaining to the Audit Committee shall be specified in related laws or the Company's Articles of Incorporation.

Article 21: The the percentage of shareholdings of all of the Company's directors shall be based on the regulations of competent authority in charge of the securities industry. Article 22: The directors shall organize the board meeting. The chairman shall be elected from among the directors with at least two thirds in attendance and over half of those attending voting for him/her. A vice chairman may be elected in the same way. The Chairman of the Board shall represent the Company and handle all .business affairs. If the Chairman is unable to perform such duties due to leave of absence or any other reason, the Vice Chairman shall act on the Chairman's behalf. If the Vice Chairman is unavailable or no delegate is appointed by the Chairman, one shall be elected from among the directors to act on the Chairman's behalf. Article 23: A board meeting shall be convened once every three (3) months, and an impromptu board meeting may be held where necessary. Notifications of board meetings may be

delivered electronically. If a director is unable to attend a meeting, he/she may appoint

a proxy to attend the meeting by completing the company's proxy forms for each meeting, specifying the scope of delegation.

Each proxy may only represent one absent director.

In case a board meeting is proceeded via visual communication network, then the directors taking part in such a visual communication meeting shall be deemed to have attended the meeting in person.

Article 24: Board meeting shall be chaired by the Chairman of the Board. If the Chairman is absent, the Vice Chairman shall act on the Chairman's behalf. If the Vice Chairman is unavailable or no delegate is appointed by the Chairman, one shall be elected from among the directors to act on the Chairman's behalf.
Article 25: Unless otherwise prescribed in the Company Act, the resolutions made by the Board of Directors shall be passed by a majority vote at a meeting of the Board of Directors attended by more than half of all directors on the Board.
Article 26: The Board of Director shall be authorized to decide the directors' remunerations based on their level of engagement in and contribution to the Company as well as the standards adopted by the industry.
Article 27: (Omitted )
Article 28: The Company shall have manager, whose title, appointment, dismissal, and

remuneration shall be handled in accordance with Article 29 of the Company Act.

Chapter V Accounting

Article 29: The fiscal year for the Company shall be from January 1 of each year to December 31 of the same year. After the close of each fiscal year, the following reports shall be prepared by the Board of Directors, and submitted to the regular shareholders' meeting for acceptance:
Business report.
Financial reports.
Proposals for distribution of earnings or make-up of deficit.
Article 30: If the Company sustains profit every year, 0.001% or more of the income shall be set aside as remunerations to employees, and 2% or less shall be distributed as director remuneration. However, an amount shall be set aside first to compensate cumulative losses, if any.
Directors' remuneration may be distributed by way of cash dividend, and employees' remuneration may be distributed by way of cash dividend or stock dividend. The Board of Director shall be authorized to define the qualification requirements of employees, including the employees of subsidiaries of the company meeting certain specific requirements, entitled to receive shares or cash. The distribution ratio of directors' remunerations and the method of distribution and ratio of employees' remunerations shall be resolved by a majority vote at a meeting attended by more than two thirds of the directors and shall be reported at the shareholders' meeting.

Employee and director remunerations are calculated deducting the cumulative losses from the profit for the year (i.e., the profit before employee and director remunerations are deducted from profit before tax).

Article 30-1: If the Company has any surplus at the end of a year, it shall first be applied to pay income taxes according to the law and cover losses from the previous years. Then 10% of the balance will be allocated to a statutory surplus reserve, and a special surplus reserve shall be allocated or reserved according to the law. A special surplus reserve or retained earnings are set aside if needed. Any remaining balance shall be distributed as dividends and bonus by the total number of shares.
Article 30-2: In consideration of external factors and the objectives of long term financial planning and in the interest of stable business growth, the Company's dividend policy measures future cash flows based on the capital budget and uses retained earnings to meet the cash flow requirements. An appropriate percentage of the remaining surplus will be retained as needed to support the ongoing business operations, and a minimum of 20% of the remaining surplus will be distributed in the form of cash dividends and the rest in share dividends. However, for the purpose of meeting other capital expenditure requirements, the company may distribute the aforementioned remaining surplus in the form of share dividends only.
Article 31: If there are any issues not covered in the Articles of Incorporation, the Company shall follow the provisions prescribed in the Company Act.
Article 32: These Articles of Incorporation were established on January 20, 1950. The 66th amendment was approved by the shareholders' meeting on June 15, 2016.

Current Shareholding of Directors of YFY Inc. Appendix 21

The shareholdings of individual and all directors as recorded in the shareholder registry up until the book closure date (April 9, 2017) of the current shareholders' meeting are as follows:

Title	Name	Date of appointment	Shares held upon appointment	Shares held upon appointment	Shares held upon appointment	Shareholdings as recorded in the shareholder registry as of April 23, 2018	Shareholdings as recorded in the shareholder registry as of April 23, 2018	Notes
				Number of shares	Shareholding ratio	Number of shares	Shareholding ratio (%)
Chairman	Ho, Felix Y	2015/6/30	Common shares	77,794,610	4.69	77,794,610	4.69	Elected as rep. from ShinYi Enterprise Co., Ltd.
Director	Ho, S. C.	2015/6/30	Common shares	77,794,610	4.69	77,794,610	4.69	Elected as rep. from ShinYi Enterprise Co., Ltd.
Director	Chiu, Melody	2015/6/30	Common shares	77,794,610	4.69	77,794,610	4.69	Elected as rep. from ShinYi Enterprise Co., Ltd.
Director	Huang, Kirk	2015/6/30	Common shares	30,000	0.00	30,000	0.00	Elected as rep. from Han Tang Management Co., Ltd.
Director	Chen, Hsianmin	2015/6/30	Common shares	30,000	0.00	30,000	0.00	Elected as rep. from Han Tang Management Co., Ltd.
Director	Ho, Richard	2015/6/30	Common shares	30,000	0.00	30,000	0.00	Elected as rep. from Han Tang Management Co., Ltd.
Independent Directors	Huang, Wen-Cheng	2015/6/30	Common shares	0	0.00	0	0.00
Independent Directors	Chen, Ten-Chun	2015/6/30	Common shares	0	0.00	0	0.00
Independent Directors	Lu, Hsipeng,	2015/6/30	Common shares	0	0.00	0	0.00
Total				77,824,610	4.69	77,824,610	4.69

The Company's paid-in capital was NT$16,603,714,950, and the total number of issued shares was 1,660,371,495.
According to Article 26 of the Securities Exchange Act, all directors of the Company shall hold at least 39,848,916 shares (2.4%). The total number of shares held by all directors of the Company (excluding those of independent directors) was 77,824,610 shares, meeting the statutory requirement.
The Company has set up an audit committee and therefore the provisions on the minimum percentage requirements for the shareholding of supervisors shall not apply.

AI assistant

YFY — AGM Information 2018

51935_rns_2018-07-04_c79f1815-cc2a-4e82-89e0-c3943fa87d99.pdf

Meeting Handbook

(Translation Version)

Table of Contents

Meeting Agenda

YFY Inc. 2018 Annual General Shareholders Meeting Agenda

I. Items to Report

II. Ratifications

III. Discussions and Elections

IV. Extraordinary Motions

Appendix 1

YFY INC. Business Report

YFY INC. AND SUBSIDIARIES Appendix 2

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2017 AND 2016 (In Thousands of New Taiwan Dollars)

YFY INC. AND SUBSIDIARIES Appendix 3

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

YFY INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

YFY INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 (In Thousands of New Taiwan Dollars)

YFY INC. AND SUBSIDIARIES Appendix 5

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 (In Thousands of New Taiwan Dollars)

YFY INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

(In Thousands of New Taiwan Dollars)

YFY INC. Appendix 10

2017 Statement of Earnings Distribution

INDEPENDENT AUDITORS’ REPORT Appendix 11

Opinion

Basis for Opinion

Key Audit Matters

Estimated Impairment of Receivables

Impairment of Property, Plant and Equipment

Other Matter

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Notice to Readers

YFY INC AUDIT COMMITTEE’S REVIEW REPORT

Appendix 13 [Amendment effective as of the shareholders' meeting on November 13, 2017] YFY INC.

Board of Directors Meeting Procedures

Article 7. The following issues shall be raised for discussion in the Company's board meetings:

YFY INC. Amendment chart of the Board of Directors Meeting Procedures

Appendix 14

YFY INC.

Asset Acquisition and Disposal Procedures

(Applicable scope of assets)

(Investment quota)

(Applicable notice standards)

(Managing procedures)

(8) Registration of rights to assets:

with its nature and current status.

(Definition of date of occurrence)

(Subsidiary information announcement)

(Penalization for dereliction of duty)

(Data retention)

(Matters not mentioned herein)

(Supplemental Provisions)

Procedures for Processing Derivative Transactions

One. Purpose

IV. Performance evaluation essentials

Three. Operating Procedures

II. Executing department

Four. Announcement procedure

V. Accounting processing method

Six. Internal Control System

Eight. Internal audit system

Nine. Definition of occurrence of events

Ten. Control and information announcement of the subsidiaries

Eleven. Penalization for dereliction of duty

Twelve. Data retention

Thirteen. Other items

YFY INC.

YFY INC.

Amendment chart of Asset Acquisition and Disposal Procedures

Appendix 16

YFY Inc.

Procedure for Lending Funds to Other Parties

YFY AGM Information 2018