meeting minutes - lite-on · 1. 2018 financial statements have been audited by certified public...

Lite-On Technology Corporation

Annual General Meeting of Shareholders for 2019

Meeting Minutes Date: June 21, 2019

Stock code

2301

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2019 Annual General Shareholders’ Meeting Minutes

Date: 9:00 a.m., June 21, 2019

Location: 1F, No. 392, Ruey Kuang Road, Neihu Dist., Taipei City

(International Convention Center, Lite-On Technology Building)

Attending shareholders and proxy representing:

1,963,054,847 shares (among them, 1,516,803,459 shares voted via electronic transmission), which accounts for 84.46% of total

2,324,025,532 outstanding shares (excluding 26,841,500 non-voting shares)

Director attendees:

Raymond Soong, Warren Chen, Tom Soong, CH Chen, David Lee, Albert Hsueh

Non-shareholding attendees :

Deloitte Touche Tohmatsu International Taiwan , Meng-Chieh Chiu, CPA

HUANG AND PARTNERS ATTORNEYS-AT-LAW Huang, Kuan Hao, Attorney

Chairman: Raymond Soong

Recorder: Yawen Yang

I. Chairperson Calls Meeting to Order

The aggregate shareholding of the shareholders present in person or by proxy constituted a quorum. The Chairman called the

meeting to order.

II. Opening Remarks by the Chairperson (omitted)

III. Reports on Company Affairs

i. 2018 Business Report (see Attachment 1)

ii. Audit Committee’s Review Report on 2018 Financial Statements (see Attachment 2~4)

iii. Employees and Directors compensation for 2018 (omitted)

iv. Amendment to “Management of Operation of Board Meeting” (omitted)

IV. Proposals and Discussions

Proposed by the Board of Directors

i. Proposal: Adoption of 2018 Financial Statements.

Explanation:

1. 2018 financial statements have been audited by Certified Public Accountant Meng-Chieh Chiu and Certified Public Accountant

Tsai-Cheng Tsai of Deloitte Touche Tohmatsu International Taiwan and were discussed and resolved in the Board of Directors

meeting convened on February 26, 2019.

2. The aforementioned financial statements and business report were reviewed by the Audit Committee.

3. For the business report for Year 2018, please refer to Attachment 1.

4. For the financial statements for Year 2018, please refer to Attachments 2 & attachment 3.

5. Please proceed to adopt.

Resolution:

85.24% voted for the proposal. The proposal was approved as the number of votes supporting the proposal exceeded the number of

votes required by law and company policies.

Item Shares (include shares voted via electronic

transmission)

%

Shares represented at the time of voting 1,963,054,847 shares (1,516,803,459 shares) 100%

Shares voted for the proposal 1,673,370,505 shares (1,227,179,510 shares) 85.24%

Shares voted against the proposal 0,000,117,129 shares (0,000,117,129 shares) 0%

Abstained shares 0,289,567,213 shares (0,289,506,820 shares) 14.75%

Invalid shares 0,000,000,000 shares (0,000,000,000 shares) 0%

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ii. Proposal: Adoption of the Proposal for Appropriation of 2018 Earnings

Explanation:

1. The proposal for Lite-on Technology’s (the Company) 2018 appropriation of earnings was already resolved in the Board of

Directors meeting convened on February 26, 2019.

2. In Fiscal Year 2018, the Company made a net profit of NT$7,956,838,274. By adding unallocated retained earnings of the

previous year of NT$7,499,888,591, adding cumulative effect of the initial application of IFRS9 recognized in retained

earnings of $279,768,597, adding adjustments on the equity method investments recognized in retained earnings of

NT$41,109,640, adding adjustments on re-measurement on define benefit plans recognized in retained earnings of

NT$8,081,619, adding cumulative unrealized gain on investments in equity instruments designated as at fair value through

other comprehensive income (FVTOCI) was transferred directly to retained earnings due to disposal of NT$3,459,902, setting

aside 10% of net profit as legal reserve of NT$795,683,827 and special reserve of NT$682,813,923, total distributable

earnings for the year amounted to NT$14,310,648,873.

3. The profit to be distributed among shareholders shall be NT$ 6,864,531,733 in cash dividends (NT$2.92 per share). The

distribution of cash dividends shall be based on share ratio and rounded off to the integer. Fractional dividend amounts that are

less than NT$1 shall be ranked from high to low in value and from old to new in account number, and then they shall be

adjusted in this order until the total amount of cash dividend distribution is met. For dividend distribution chart and

descriptions, see Attachment 5.

4. In the event of repurchase of the Company’s shares, transfer, conversion or annulment of treasury stocks, and exercise of

employees’ stock options, leading to a change in the number of outstanding shares and a consequent change in dividend yield,

it is proposed that the Chairman is authorized to duly adjust cash payout rates.

5. For distribution of cash dividends, it is proposed that the Chairman be authorized to determine the ex-dividend date and to put

it into promulgation as required by law after resolution is made in this shareholders’ meeting.

6. Please proceed to adopt.

Resolution




transmission)

%







iii. Proposal: Amendment to “Articles of Incorporation”, please discuss and resolve.

Explanation:

1. Pursuant to the amendment of regulations from competent authorities and to satisfy the Company’s needs, an amendment to

“The Articles of Incorporation” is proposed.

2. Please refer to Attachment 6 for a comparison of the contents before and after amendment.

3. Please refer to Appendix 2 for the full contents before amendment.

4. Please discuss and resolve.

Resolution:




transmission)

%



Shares voted against the proposal 0,001,214,208 shares (0,001,214,208 shares) 0.06%




iv. Proposal: Amendment to “Procedures for the Acquisition and Disposal of Assets”, please discuss and resolve.

Explanation:

1. Pursuant to the initial application to IFRS16 「Leases」on January 1, 2019, an amendment to “Procedures for the Acquisition

and Disposal of Assets” is proposed.

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Resolution:




transmission)

%







v. Proposal: Amendment to “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees”, please discuss and resolve.

Explanation:

1. In order to comply with No.1080304826 of the Financial Supervisory Commission, satisfy the Company’s needs and strengthen

the corporate governance, an amendment to “Regulations Governing Loaning of Funds and Making of

Endorsements/Guarantees” is proposed.



Resolution:




transmission)

%







vi. Proposal： Proposal: Amendment to “Rules Governing the Election of Directors”, please discuss and resolve.

Explanation：

1. Pursuant to the amendment of regulations from competent authorities, an amendment to “Rules Governing the Election of

Directors” is proposed.


3. Please refer to Appendix 3 for the full contents before amendment.


Resolution:




transmission)

%






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vii. Proposal: Election of the Board of Directors of the 11th Term.

Explanation:

1. Please duly elect nine directors of the 11th term (including four independent directors). For “Regulations Governing Election of

Directors”, please refer to Attachment 9 and Appendix 3.

2. For candidates of directors and independent directors of the 11th term, please refer to Appendix 4.

3. The directors of the 11th term will serve a three-year term starting from June 21, 2019 to June 20, 2022.

Election result：

Result of

Election

Shareholder

Account

Number

Name Number of votes

received

Director 1 Raymond Soong

1,740,362,937

Director 130589 Warren Chen 1,628,940,568

Director 88 Tom Soong 1,535,633,327

Director 59285

Ta-Sung Investment Co., Ltd.

Representative Keh-Shew Lu 1,220,390,337

Director 59285

Ta-Sung Investment Co., Ltd.

Representative CH Chen 1,200,245,222

Independent

Director 528391 Albert Hsueh 1,602,064,921

Independent

Director 441272 Harvey Chang

1,171,012,879

Independent

Director 435270 Edward Yang

1,156,893,883

Independent

Director 555968 Mike Yang 1,596,845,159


viii. Proposal: Proposal of release of directors from non-competition restrictions, please discuss and resolve.

Explanation:

1. In order to comply with the Article 209 of Company Act, “if a Director’s act on his/her or others’ behalf falls within the scope of

the Company's business, the Director shall illustrate to the shareholders the gist of such act, and obtain the shareholders’

approval.”

2. In view of the diversification needs of the Company’s and that directors (including independent directors) might act in their own

interests on matters within the Company’s business scopes, it is proposed to release the non-competition restrictions on directors

and independent directors with the premise that directors do not have conflicts of the Company’s interests.

3. The detail of release of directors from non-competition restrictions, please refer to Attachment 10.


Resolution:




transmission)

%



Shares voted against the proposal 0,024,760,946 shares (0,024,760,946 shares) 1.26%



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V. Provisional Motions: None

VI. Adjournment

There being no other special motion, upon a motion by the Chairman, the meeting was adjourned.

Chairman: Raymond Soong

Recorder: Yawen Yang

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LITE-ON Technology Corporation Attachment 1

Business Report

Dear Shareholders,

LITE-ON's global consolidated revenue amounted to NT$207.1 billion in 2018. Pre-tax profit was NT$10.78 billion, after-tax profit

was NT$7.96 billion, and earnings per share (EPS) was NT$3.42, representing a 203% year-on-year increase. Net profit for the third

quarter, in particular, grew by 50%, the highest growth in the past two years, showing a return to normal growth in profitability. In

recent years, LITE-ON has been committed to a self-transformation that seeks to elevate profitability with a realistic approach. With

changes in operating models, adjustment to product portfolios, growth in revenue, and even creation of excellent profitability,

LITE-ON is building on sustainable business development to become a centenarian corporation.

Business Performance

In 2018, LITE-ON's two pillars for growth — cloud applications, and LED component/LED vehicle and outdoor lighting — reached

nearly 30% of total revenue, for more than a 20% year-on-year gain. This demonstrates the achievement of LITE-ON's efforts in new

business incubation and self-transformation. LITE-ON will continue to dedicate itself to using strategic perspectives for steady

development of core areas, and will steadily and stably develop promising new business into long-term dynamics for growth.

In the opto-electronics business segment, market share in invisible LED applications and LED components continued to increase,

while LED vehicle lighting shipments have continued smoothly. LED vehicle lighting and sensor components have gradually shown

potential for growth, while vehicular camera modules are scheduled to officially commence mass production by the end of 2019. In

the information technology business segment, high-end cloud computing servers and networked power management systems

experienced steady market growth; market share in keyboards, mice and other computer peripherals rose as well. The storage business

segment also benefited from cloud computing-related applications and grew steadily.

In response to the many changes in the global industrial environment in 2018, we have streamlined and focused LITE-ON’s business

scope and business segments, and have successfully disposed two mobile phone-related businesses. The consistent goal is profitability,

even steadier operations, and higher return on equity. Going forward into 2018, LITE-ON transferred some of the key business

operations and assets in the mobile imaging business segment to LuxVisions Innovation Ltd. through a transfer of business operations.

The transaction price was US$360 million, plus rights to a 10% stake in LuxVisions. In the third quarter of 2018, Lite-On sold 100%

of shares in three mobile device business segment subsidiaries to Top Touch Electronics Co., Ltd., a subsidiary of Zhejiang Firstar

Panel Technology Co., Ltd., which is a listed company based in Shenzhen. The equity transfer price was RMB 530 million.

Corporate Social Responsibility

The global trend of valuing sustainable investment remains in the ascendant. ESG performance has become an important reference for

investors. LITE-ON has been listed as a member of the Dow Jones Sustainability Index (DJSI) for eight years in a row since 2011,

and has had a place on the MSCI ESG Leaders Index for five years in a row. In 2018, LITE-ON was listed in the inaugural Thomson

Reuters Top 100 Global Technology Leaders. In Taiwan, LITE-ON was ranked top 5% in the 2018 Corporate Governance Evaluation

Survey jointly implemented by the Taiwan Stock Exchange (TWSE) and the Taipei Exchange (TPEx); listed as a constituent stock in

the FTSE4Good TIP Taiwan ESG Index; awarded Commonwealth Magazine's Corporate Citizen Award in the large enterprise

category by for the 12th time in 2018; and was awarded the Platinum Award, the highest honor, in the electronic and information

manufacturing category in the 2018 Corporate Sustainability Report Awards from TCSA.

Future Outlook

LITE-ON will continue to push for transformation by developing business areas including cloud computing, LED outdoor lighting,

automobile electronics, smart manufacturing, and the Internet of Things. The pace of LITE-ON’s globalization will also accelerate,

with the establishment of the Kaohsiung Operations Center and the asset expansion of the Huadong Operations Center. The new

factory for automobile electronic and optical core business at the Huadong Operations Center commenced operation at the end of

2018, while the Kaohsiung Operations Center is scheduled to commence production in the middle of 2019. We are continuously

accelerating our improvement of overall smart manufacturing, and strengthening LITE-ON's core competencies, mass production and

the competitiveness and advantages in customer service. We also continue to speed up integration of new technologies, production

line automation and digital transformation, as well as quality manufacturing and supply chain management. We value quality above

cost, and we substantially realize internal system innovation that starts with product development.

Looking forward into 2019, uncertain factors and challenges such as China-U.S. trade negotiations, the highly globalized market

environment, chain reactions brought by political and economic conditions, as well as changes in exchange rates and terminal market

demands, may have unexpected impacts on LITE-ON, our customers, or the technology industry as a whole. LITE-ON hopes to hold

a receptive and open attitude towards the changeable external environment, while taking an entrepreneurial approach to corporate

responsibility and continuing to exploit our strategic capacity to overtake competitors through self-transformation. We strive for

healthy growth and excellent business results under One LITE-ON. We are grateful for the long-term support and recognition from

our shareholders, colleagues, customers, suppliers, and business partners, whom we hope will join LITE-ON in 2019 as we continue

our progress toward becoming a centenarian corporation.

Lite-On Chairman Lite-On Vice Chairman & Group CEO

Raymond Soong Warren Chen

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Attachment 2

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Stockholders


Opinion

We have audited the accompanying consolidated financial statements of Lite-On Technology Corporation and its subsidiaries (collectively

referred to as the Group), which comprise the consolidated balance sheets as of December 31, 2018 and 2017, 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 (collectively referred to as the “consolidated financial statements”).

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of

the Group as of December 31, 2018 and 2017, and its consolidated financial performance and its cash flows for the years then ended in

accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, 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, 2018. 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.

For the year ended December 31, 2018, the key audit matters for the Group’s consolidated financial statements were as follows:

Allowance for Impairment Loss for Trade Receivables

The recoverable amount from the allowance for impairment loss is determined by management’s evaluation of the credit risk of overdue

receivables, and it is affected by management’s assumption of a client’s credit quality. In our audit, we focused on clients with significant trade

receivables and overdue balances, and we evaluated the reasonableness of management’s estimation of the allowance for impairment loss.

Refer to Note 4 to the consolidated financial statements for a summary of significant accounting policies. Refer to Note 13 to the consolidated

financial statements for the carrying amount of trade receivables and impairment loss for trade receivables. Our key audit procedures in respect of

the above area included the following:

We assessed both the trade receivables aging report classified by client’s credit rating and the reasonableness of the percent of impairment loss

allowance; this assessment included the implementation of computer audit sampling procedures to test the correctness of trade receivable aging

reports. We confirmed the recoverability of outstanding trade receivables by testing the after period-end collection of receivables.

Allowance for Inventory Valuation Loss

The value of inventory is affected by the volatility of market demand and ever-changing technology which could make inventory outdated and

obsolete. The allocation of inventory cost elements and estimations of the net realizable value of inventory require management’s subjective

judgment. In our audit, we focused on whether the value of inventory was evaluated according to IAS 2, which is based on the lower of cost or net

realizable value method. We also assessed the reasonableness of management’s estimation of the allowance for inventory valuation loss.

Refer to Note 4 to the consolidated financial statements for a summary of significant accounting policies. Refer to Note 14 to the consolidated

financial statements for the carrying amount of inventory. Our key audit procedures in respect of the above area included the following:

1. We assessed both inventory aging reports classified by business segments and the reasonableness of the percent of allowance for inventory

valuation loss; this assessment included the implementation of computer audit sampling procedures to test the correctness of inventory aging

reports.

2. We obtained information of the year-end allowance for inventory valuation loss and inventory aging reports, and we compared the current

and prior years’ allowances and analyzed any differences. We drew samples from the year-end inventory and compared the most recent price

of goods sold to the carrying amount to ensure that the inventory had been valued by the lower of cost or net realizable value method.

Impairment Loss for Property, Plant and Equipment and Intangible Assets (Including Goodwill)

Management should assess, on the financial statement date, any indication of impairment to property, plant and equipment and intangible assets.

If there is any indication of impairment, management should estimate the recoverable amount of these assets. If it is impossible to do so,

management should estimate the recoverable amount of the cash generating units to which these assets belong. Due to the complexity of this

impairment estimation, in our audit, we focused on whether the estimation was made in accordance with IAS 36 to ensure that all assets’ carrying

amounts did not exceed their respective recoverable amounts.

Refer to Note 4 to the consolidated financial statements for a summary of the significant accounting policies on property, plant and equipment and

intangible assets impairment. Refer to Notes 18 and 20 to the consolidated financial statements for disclosures of property, plant and equipment

and intangible assets. Our key audit procedures performed in respect of the above area included the following:

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1. Through internal control testing, we understood the methods of asset impairment valuation made by management and the associated control

policy’s design and implementation.

2. We obtained the asset impairment valuation table of each cash generating unit from management. We consulted our firm experts on the

reasonableness of management’s impairment assessments and assumptions, including its cash generating unit classifications, cash flow

predictions, discount rates, etc.

Other Matter

We have also audited the parent company only financial statements of Lite-On Technology Corporation as of and for the years ended December

31, 2018 and 2017 on which we have issued an unmodified opinion.

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

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations

Governing the Preparation of Financial Reports by Securities Issuers and IFRS, IAS, IFRIC and SIC endorsed and issued into effect by the

Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the

preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern,

disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to

liquidate the Group or to cease operations, or has no realistic alternative but to do so.

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

Auditors’ Responsibilities for the Audit of the 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 auditing standards generally accepted in the Republic of China, we exercise professional judgment and

maintain professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and

perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our

opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may

involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances,

but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

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

management.

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained,

whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a

going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related

disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based

on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to

continue as a going concern.

5. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the consolidated

financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

6. Obtain sufficient and appropriate audit evidence regarding the financial information of 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 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, 2018 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 Meng-Chieh Chiu and Cheng-Tsai Tsai.

Deloitte & Touche

Taipei, Taiwan

Republic of China

February 26, 2019

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Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and

cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other

jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally applied in the Republic

of China.

For the convenience of readers, the independent auditors’ report and the accompanying consolidated financial statements have been translated

into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version

and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report

and consolidated financial statements shall prevail.

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LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES Attachment 2-1

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2018 AND 2017

(In Thousands of New Taiwan Dollars)

2018 2017

ASSETS Amount % Amount %

CURRENT ASSETS

Cash and cash equivalents (Note 6) $ 63,285,301 32 $ 57,783,860 30

Financial assets at fair value through profit or loss (''FVTPL'') (Note 7) 132,139 - 101,677 - Financial assets at amortized cost (Note 9) 223,738 - - -

Contracts assets 3,024,589 2 - -

Debt instruments with no active market (Note 12) - - 911,783 1 Notes receivable, net (Note 13) 697,671 - 282,316 -

Trade receivables, net (Note 13) 45,484,821 23 52,037,732 27

Trade receivables from related parties (Note 33) 90,095 - 79,288 - Other receivables 10,910,806 6 1,364,028 1

Other receivables from related parties (Note 33) 4,417 - 2,806 -

Inventories, net (Note 14) 31,493,066 16 28,312,572 15 Non-current assets held for sale (Note 16) - - 815,143 -

Other current assets (Note 21) 2,638,275 1 3,372,102 2

Total current assets 157,984,918 80 145,063,307 76

NON-CURRENT ASSETS

Financial assets at FVTPL (Note 7) 111,220 - - -

Financial assets at fair value through other comprehensive income ("FVTOCI") (Note 8) 388,675 - - - Available-for-sale financial assets (Note 11) - - 513,129 -

Financial assets at amortized cost (Note 9) 395,301 - - -

Debt instruments with no active market (Note 12) - - 573,085 - Investments accounted for using the equity method (Note 17) 4,972,609 3 3,681,951 2

Property, plant and equipment, net (Note 18) 20,484,992 10 22,490,411 12

Investment properties, net (Note 19) 1,178,393 1 1,426,134 1 Intangible assets, net (Note 20) 5,914,084 3 9,828,658 5

Deferred tax assets (Note 28) 4,333,202 2 3,614,920 2

Refundable deposits 499,984 - 641,387 - Prepaid investments - - 1,354,950 1

Other non-current assets (Note 21) 872,691 1 807,825 1

Total non-current assets 39,151,151 20 44,932,450 24

TOTAL $ 197,136,069 100 $ 189,995,757 100

LIABILITIES AND EQUITY

CURRENT LIABILITIES

Short-term borrowings (Note 22) $ 30,087,282 15 $ 30,155,790 16

Financial liabilities at FVTPL (Note 7) 51,877 - 147,052 -

Notes payable 18,235 - 38,797 -

Trade payables 52,309,412 27 56,152,649 30

Trade payables to related parties (Note 33) 781,623 - 803,894 -

Other payables 29,388,957 15 21,123,576 11

Other payables to related parties (Note 33) 16,684 - 19,927 -

Current tax liabilities 4,986,079 3 3,221,310 2

Provisions (Note 24) 1,011,238 - 866,119 -

Advance receipts 1,959,041 1 2,049,789 1

Current portion of long-term borrowings (Note 22) 184 - 16,204 -

Finance lease payables (Note 23) 1,469 - 1,600 -

Total current liabilities 120,612,081 61 114,596,707 60

NON-CURRENT LIABILITIES

Long-term borrowings, net of current portion (Note 22) - - 178 -

Deferred tax liabilities (Note 28) 1,605,349 1 1,324,792 1

Finance lease payables, net of current portion (Note 23) 351 - 1,764 -

Net defined benefit liabilities (Note 25) 160,997 - 224,025 -

Guarantee deposits 78,890 - 80,862 -

Total non-current liabilities 1,845,587 1 1,631,621 1

Total liabilities 122,457,668 62 116,228,328 61

EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT COMPANY

Share capital

Ordinary shares 23,508,670 12 23,508,670 12

Capital surplus

Additional paid-in capital from share issuance in excess of par value 3,471,812 2 9,372,488 5

Bond conversions 7,462,138 4 7,462,138 4

Treasury share transactions 477,697 - 400,329 -

Difference between consideration and carrying amounts adjusted arising from changes in percentage of ownership of subsidiaries 47,209 - 49,019 -

Changes in capital surplus from investments in associates accounted for using the equity method 271,367 - 276,782 -

Mergers 10,015,194 5 10,015,194 6

Total capital surplus 21,745,417 11 27,575,950 15

Retained earnings

Legal reserve 12,049,900 6 11,786,967 6

Special reserve 2,705,954 2 1,338,878 1

Unappropriated earnings 15,789,147 8 10,093,753 5

Total retained earnings 30,545,001 16 23,219,598 12

Other equity

Exchange differences on translating foreign operations (2,779,863 ) (2 ) (2,528,893 ) (1 )

Unrealized loss of financial assets at FVTOCI (449,461 ) - - -

Unrealized loss on available-for-sale financial assets - - (18,497 ) -

Gain on financial instruments in cash flow hedging securities 2,714 - 3,372 -

Total other equity (3,226,610 ) (2 ) (2,544,018 ) (1 )

Treasury shares (1,248,722 ) (1 ) (1,248,722 ) (1 )

Total equity attributable to owners of the Parent Company 71,323,756 36 70,511,478 37

NON-CONTROLLING INTERESTS 3,354,645 2 3,255,951 2

Total equity 74,678,401 38 73,767,429 39

TOTAL $ 197,136,069 100 $ 189,995,757 100

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

- 12 -

LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES Attachment 2-2

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

2018 2017

Amount % Amount %

OPERATING REVENUE

Sales (Notes 27 and 33) $ 211,390,341 102 $ 220,857,071 103

Less: Sales allowance 3,102,425 1 5,075,609 2

Sales returns 1,178,828 1 1,217,140 1

Total operating revenue 207,109,088 100 214,564,322 100

COST OF GOODS SOLD (Notes 14, 30 and 33) 180,006,839 87 186,854,505 87

GROSS PROFIT 27,102,249 13 27,709,817 13

OPERATING EXPENSES (Notes 30 and 33)

Selling and marketing expenses 7,084,795 3 6,774,460 3

General and administrative expenses 6,116,248 3 6,175,520 3

Research and development expenses 6,348,444 3 6,415,873 3

Expected credit loss (Note 32) 66,949 - - -

Total operating expenses 19,616,436 9 19,365,853 9

OPERATING INCOME 7,485,813 4 8,343,964 4

NON-OPERATING INCOME AND EXPENSES

Share of profit of associates 178,863 - 170,309 -

Interest income 1,710,052 1 1,365,837 -

Dividend income 39,400 - 39,811 -

Other income (Note 33) 5,265,003 2 1,401,724 1

Net gain on disposal of investments (Note 17) 86,603 - 179,115 -

Net gain (loss) on foreign currency exchange (497,693) - 226,478 -

Net gain on financial assets at FVTPL 1,338,423 1 341,680 -

Finance costs (875,318) (1) (603,844) -

Other expenses (380,339) - (937,955) (1)

Net loss on disposal of property, plant and equipment (20,018) - (96,747) -

Net loss on disposal of intangible asset (6) - - -

Impairment loss (Notes 11, 17, 18 and 20) (3,546,662) (2) (7,058,778) (3)

Total non-operating income and expenses 3,298,308 1 (4,972,370) (3)

PROFIT BEFORE INCOME TAX 10,784,121 5 3,371,594 1

INCOME TAX EXPENSE (Note 28) (2,817,037) (1) (740,463) -

NET PROFIT FOR THE YEAR 7,967,084 4 2,631,131 1

(Continued)

- 13 -

LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES




2018 2017

Amount % Amount %

OTHER COMPREHENSIVE INCOME (LOSS)

(Notes 25, 26 and 28)

Items not reclassified subsequently to profit or loss:

Remeasurement of defined benefit plans $ 3,041 - $ (43,909) -

Unrealized gain (loss) on investments in equity

instruments designated as at FVTOCI (107,838) - - -

Share of other comprehensive loss of associates

accounted for using the equity method (1,770) - (9,920) -

Income tax benefit relating to items not

reclassified subsequently to profit or loss 4,441 - 9,552 -

(102,126) - (44,277) -

Items that may be reclassified subsequently to profit

or loss

Exchange differences on translating foreign

operations (369,243) - (1,591,874) -

Unrealized gain on available-for-sale financial

assets - - 100,061 -

Share of other comprehensive loss of associates

accounted for using the equity method (48,265) - (64,169) -

Income tax benefit relating to items that may be


(246,452) - (1,268,484) -

Other comprehensive loss for the year, net of

income tax (348,578) - (1,312,761) -

TOTAL COMPREHENSIVE INCOME FOR THE

YEAR $ 7,618,506 4 $ 1,318,370 1

NET PROFIT ATTRIBUTABLE TO:

Owners of the Parent Company $ 7,956,838 4 $ 2,629,334 1

Non-controlling interests 10,246 - 1,797 -

$ 7,967,084 4 $ 2,631,131 1

TOTAL COMPREHENSIVE INCOME

ATTRIBUTABLE TO:

Owners of the Parent Company $ 7,602,588 4 $ 1,366,244 1

Non-controlling interests 15,918 - (47,874) -

$ 7,618,506 4 $ 1,318,370 1

(Continued)

- 14 -





2018 2017

Amount % Amount %

EARNINGS PER SHARE (NEW TAIWAN

DOLLARS; Note 29)

From continuing operations

Basic $3.42 $1.13

Diluted $3.38 $1.13

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

- 15 -

Attachment 2-3


CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Equity Attributable to Owners of the Parent Company

Capital Surplus (Note 26)

Additional

Difference

Between

Consideration

and Carrying

Amounts

Adjusted

Changes in

Capital Surplus

from Other Equity (Note 26)

Paid-in Capital Arising from Investments in Exchange Unrealized Gain Unrealized

from Share Changes in Associates Differences on (Loss) on Gain (Loss) on

Issue of Share Capital (Note 26) Issuance in Percentage of Accounted for Retained Earnings (Notes 26 and 28) Translating Financial Assets Available-for- Non-controlling

Shares Excess of Par Bond Treasury Share Ownership in Using Equity Special Unappropriated Foreign Designated as sale Financial Cash Flow Treasury Shares Interests

(In Thousands) Amount Value Conversions Transactions Subsidiaries Method Mergers Total Legal Reserve Reserve Earnings Total Operations FVIOCI Assets Hedges Total (Note 26) (Notes 26) Total Equity

BALANCE AT JANUARY 1, 2017 2,350,867 $ 23,508,670 $ 9,372,488 $ 7,462,138 $ 328,800 $ 45,612 $ 273,487 $ 10,015,194 $ 27,497,719 $ 10,845,332 $ 398,602 $ 16,252,206 $ 27,496,140 $ (1,195,684 ) $ - $ (126,588 ) $ - $ (1,322,272 ) $ (1,248,722 ) $ 3,348,901 $ 79,280,436

Appropriation of the 2016 earnings

Cash dividends - 29.2% - - - - - - - - - - - (6,864,532 ) (6,864,532 ) - - - - - - - (6,864,532 )

Special reserve - - - - - - - - - - 940,276 (940,276 ) - - - - - - - - -

Legal reserve - - - - - - - - - 941,635 - (941,635 ) - - - - - - - - -

Changes in non-controlling interests - - - - - - - - - - - - - - - - - - - (45,076 ) (45,076 )

Changes in percentage of ownership interest in subsidiaries - - - - - 3,407 - - 3,407 - - - - - - - - - - - 3,407

Changes in capital surplus from investments in associates accounted

for by using the equity method - - - - - - 3,295 - 3,295 - - - - - - - - - - - 3,295

Changes in capital surplus from cash dividends of the Parent

Company paid to subsidiaries - - - - 71,529 - - - 71,529 - - - - - - - - - - - 71,529

Net profit for the year ended December 31, 2017 - - - - - - - - - - - 2,629,334 2,629,334 - - - - - - 1,797 2,631,131

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

2017, net of income tax - - - - - - - - - - - (41,344 ) (41,344 ) (1,333,209 ) - 108,091 3,372 (1,221,746 ) - (49,671 ) (1,312,761 )

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

2017 - - - - - - - - - - - 2,587,990 2,587,990 (1,333,209 ) - 108,091 3,372 (1,221,746 ) - (47,874 ) 1,318,370

BALANCE AT DECEMBER 31, 2017 2,350,867 23,508,670 9,372,488 7,462,138 400,329 49,019 276,782 10,015,194 27,575,950 11,786,967 1,338,878 10,093,753 23,219,598 (2,528,893 ) - (18,497 ) 3,372 (2,544,018 ) (1,248,722 ) 3,255,951 73,767,429

Effect of retrospective application (Note 3) - - - - - - - - - - - 279,769 279,769 - (298,266 ) 18,497 - (279,769 ) - - -

BALANCE AT JANUARY 1, 2018 AS RESTATED 2,350,867 23,508,670 9,372,488 7,462,138 400,329 49,019 276,782 10,015,194 27,575,950 11,786,967 1,338,878 10,373,522 23,499,367 (2,528,893 ) (298,266 ) - 3,372 (2,823,787 ) (1,248,722 ) 3,255,951 73,767,429

Appropriation of the 2017 earnings

Legal reserve - - - - - - - - - 262,933 - (262,933 ) - - - - - - - - -

Special reserve - - - - - - - - - - 1,367,076 (1,367,076 ) - - - - - - - - -

Cash dividends - 4.1% - - - - - - - - - - - (963,855 ) (963,855 ) - - - - - - - (963,855 )

Distribution of cash dividends from capital surplus - - (5,900,676 ) - - - - - (5,900,676 ) - - - - - - - - - - - (5,900,676 )

Changes in non-controlling interests - - - - - - - - - - - - - - - - - - - 82,776 82,776

Changes in percentage of ownership interest in subsidiaries - - - - - (1,810 ) - - (1,810 ) - - - - - - - - - - - (1,810 )

Changes in capital surplus from investments in associates accounted

for by using the equity method - - - - - - (5,415 ) - (5,415 ) - - - - - - - - - - - (5,415 )

Changes in capital surplus from cash dividends of the Parent

Company paid to subsidiaries - - - - 77,368 - - - 77,368 - - - - - - - - - - - 77,368

Disposal of investments in equity instruments designated as at

FVTOCI - - - - - - - - - - - 43,182 43,182 - (43,182 ) - - (43,182 ) - - -

Disposal of investments accounted for using the equity method - - - - - - - - - - - - - 4,078 - - - 4,078 - - 4,078

Net profit for the year ended December 31, 2018 - - - - - - - - - - - 7,956,838 7,956,838 - - - - - - 10,246 7,967,084

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

2018, net of income tax - - - - - - - - - - - 9,469 9,469 (255,048 ) (108,013 ) - (658 ) (363,719 ) - 5,672 (348,578 )

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

2018 - - - - - - - - - - - 7,966,307 7,966,307 (255,048 ) (108,013 ) - (658 ) (363,719 ) - 15,918 7,618,506

BALANCE AT DECEMBER 31, 2018 2,350,867 $ 23,508,670 $ 3,471,812 $ 7,462,138 $ 477,697 $ 47,209 $ 271,367 $ 10,015,194 $ 21,745,417 $ 12,049,900 $ 2,705,954 $ 15,789,147 $ 30,545,001 $ (2,779,863 ) $ (449,461 ) $ - $ 2,714 $ (3,226,610 ) $ (1,248,722 ) $ 3,354,645 $ 74,678,401

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

- 16 -

Attachment 2-4


CONSOLIDATED STATEMENTS OF CASH FLOWS



2018 2017

Interest paid $ (852,547) $ (598,421)

Income tax paid (1,492,648) (2,596,455)

Net cash generated from operating activities 13,483,544 11,153,180

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of financial assets at FVTOCI (58,970) -

Proceeds from disposal of financial assets at FVTOCI 176,660 -

Proceeds from disposal of financial assets at amortized costs 868,455 -

Acquisition of available-for-sale financial assets - (15,110)

Proceeds from sale of available-for-sale financial assets - 298,632

Proceeds from sale of debt investments with no active market - 17,548

Proceeds from disposal of investments accounted for using the equity

method 2,849 246,708

Increase in prepaid investments - (1,354,950)

Cash provided by disposal of subsidiaries 5,590 -

Proceeds from disposal of non-current assets held for sale 658,211 -

Acquisition of property, plant and equipment (5,646,424) (4,204,726)

Proceeds from disposal of property, plant and equipment 3,444,871 84,065

Decrease (increase) in refundable deposits 140,857 (140,276)

Acquisition of intangible assets (166,322) (228,654)

Proceeds from disposal of intangible assets 418,442 17,688

Increase in other non-current assets (80,403) (67,148)

Dividend received from associates 101,714 95,057

Net cash used in investing activities (134,470) (5,251,166)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from short-term borrowings - 16,066,496

Repayments of short-term borrowings (476,153) -

Repayments of long-term borrowings (16,645) (19,528,450)

Refunds of guarantee deposits received (1,345) (6,273)

Decrease in finance lease payables (1,617) (1,567)

Cash dividends (6,787,163) (6,793,003)

Changes in non-controlling interests (30,537) (47,305)

Net cash used in financing activities (7,313,460) (10,310,102)

EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE

OF CASH AND CASH EQUIVALENTS HELD IN FOREIGN

CURRENCIES (534,173) (3,016,543)

(Continued)

- 17 -


CONSOLIDATED STATEMENTS OF CASH FLOWS



2018 2017

NET INCREASE (DECREASE) IN CASH AND CASH

EQUIVALENTS $ 5,501,441 $ (7,424,631)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE

YEAR 57,783,860 65,208,491

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR $ 63,285,301 $ 57,783,860

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

- 18 -

Attachment 3 INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders


Opinion

We have audited the accompanying financial statements of Lite-On Technology Corporation (the

Company), which comprise the balance sheets as of December 31, 2018 and 2017, and the statements of

comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the

financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial

position of the Company as of December 31, 2018 and 2017, and its financial performance and its cash

flows for the years then ended, in accordance with the Regulations Governing the Preparation of

Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of

Financial Statements by Certified Public Accountants and 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 Financial Statements section of our report. We are independent of the

Company in accordance with The Norm of Professional Ethics for Certified Public Accountant of the

Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these

requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to

provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our

audit of the financial statements for the year ended December 31, 2018. These matters were addressed in

the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we

do not provide a separate opinion on these matters.

For the year ended December 31, 2018, the key audit matters to the Company’s financial statements were

as follows:

Allowance for Impairment Loss for Trade Receivables

The recoverable amount from the allowance for impairment loss is determined by management’s

evaluation of the credit risk of overdue receivables, and it is affected by management’s assumption of a

client’s credit quality. In our audit, we focused on clients with significant trade receivable balances and

overdue balances, and we evaluated the reasonableness of management’s estimation of the allowance for

impairment loss.

Refer to Note 4 to the Company’s financial statements for the summary of the significant accounting

policies on trade receivables and impairment loss for trade receivables. Refer to Note 12 to the

Company’s financial statements for the carrying amount of trade receivables and allowance for

impairment loss for trade receivables. Our key audit procedures performed in respect of the above area

included the following:

We assessed both the trade receivables aging report classified by client credit rating and the

reasonableness of the percent of impairment loss allowance; this assessment included the implementation

- 19 -

of computer audit sampling procedures to test the correctness of trade receivable aging reports. We

confirmed the recoverability of outstanding trade receivables by testing the after period-end collection of

receivables.

Allowance for Inventory Valuation Loss

The value of inventory is affected by the volatility of market demand and ever-changing technology

which could make inventory outdated and obsolete. The allocation of inventory cost elements and

estimations of the net realizable value of inventory require management’s subjective judgment. In our

audit, we focused on whether the value of inventory was evaluated according to IAS 2, which is based on

the lower of cost or net realizable value method. We also assessed the reasonableness of management’s

estimation of the allowance for inventory valuation loss.

Refer to Note 4 to the Company’s financial statements for the summary of the significant accounting

policies on inventory valuation. Refer to Note 13 to the Company’s financial statements for the carrying

amount of inventory. Our key audit procedures performed in respect of the above area included the

following:

1. We assessed both the inventory aging reports classified by business segments and the reasonableness

of the percent of allowance for inventory valuation loss; this assessment included the implementation

of computer audit sampling procedures to test the correctness of the inventory aging reports.

2. We obtained information of the year-end allowance for inventory valuation loss and inventory aging

reports, compared the current and prior years’ allowances and analyzed any differences. We drew

samples from the year-end inventory and compared the most recent price of goods sold to the

carrying amount to that ensure the inventory had been valued by the lower of cost or net realizable

value method.

Impairment Loss for Property, Plant and Equipment, Intangible Assets (Including Goodwill) and

Investments Accounted for Using the Equity Method

Management should assess, on the date of the balance sheets, any indication of impairment to property,

plant and equipment, intangible assets and investments accounted for using the equity method. If there is

any indication of impairment, management should estimate the recoverable amount of these assets. The

estimation would assume that management incorporates diversification or sustainability into business

operation. If it is impossible to do so, management should estimate the recoverable amount of the cash

generating units to which these assets belong. Due to the complexity of this impairment estimation, in our

audit, we focused on whether the estimation was made in accordance with IAS 36 to ensure that all

assets’ carrying amounts did not exceed their respective recoverable amounts.

Refer to Note 4 to the Company’s financial statements for a summary of the significant accounting

policies on impairment loss. Refer to Notes 15, 16 and 17 to the Company’s financial statements for

disclosures of property, plant and equipment, intangible assets (including goodwill) and investments

accounted for using the equity method. Our key audit procedures performed in respect of the above area

included the following:

1. Through internal control testing, we understood the methods of asset impairment valuation made by

management and the associated control policy’s design and implementation.

2. We obtained the asset impairment valuation table of each cash generating unit from management. We

consulted our firm experts on the reasonableness of management’s impairment assessments and

assumptions, including its cash generating unit classifications, cash flow predictions, discount rates,

etc.

- 20 -

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

Management is responsible for the preparation and fair presentation of the financial statements in

accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers,

and for such internal control as management determines is necessary to enable the preparation of financial

statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to

continue as a going concern, disclosing, as applicable, matters related to going concern and using the

going concern basis of accounting unless management either intends to liquidate the Company or to cease

operations, or has no realistic alternative but to do so.

Those charged with governance, including the audit committee, are responsible for overseeing the

Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are

free from material misstatement, whether due to fraud or error, and to issue an 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 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:

1. Identify and assess the risks of material misstatement of the financial statements, whether due to

fraud or error, design and perform audit procedures responsive to those risks, and obtain audit

evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting

a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may

involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal

control.

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures

that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the Company’s internal control.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by management.

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and,

based on the audit evidence obtained, whether a material uncertainty exists related to events or

conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If

we conclude that a material uncertainty exists, we are required to draw attention in our auditors’

report to the related disclosures in the financial statements or, if such disclosures are inadequate, to

modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our

auditors’ report. However, future events or conditions may cause the Company to cease to continue

as a going concern.

5. Evaluate the overall presentation, structure and content of the financial statements, including the

disclosures, and whether the financial statements represent the underlying transactions and events in

a manner that achieves fair presentation.

- 21 -

6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or

business activities within the Company to express an opinion on the parent company only financial

statements. We are responsible for the direction, supervision and performance of the audit. We

remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope

and timing of the audit and significant audit findings, including any significant deficiencies in internal

control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant

ethical requirements regarding independence, and communicate with them all relationships and other

matters that may reasonably be thought to bear on our independence, and where applicable, related

safeguards.

From the matters communicated with those charged with governance, we determine those matters that

were of most significance in the audit of the financial statements for the year ended December 31, 2018

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 Meng-Chieh Chiu

and Cheng-Tsai Tsai.

Deloitte & Touche

Taipei, Taiwan

Republic of China

February 26, 2019

Notice to Readers

The accompanying financial statements are intended only to present the financial position, financial

performance and cash flows in accordance with accounting principles and practices generally accepted

in the Republic of China and not those of any other jurisdictions. The standards, procedures and

practices to audit such financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ report and the accompanying financial

statements have been translated into English from the original Chinese version prepared and used in the

Republic of China. If there is any conflict between the English version and the original Chinese version

or any difference in the interpretation of the two versions, the Chinese-language independent auditors’

report and financial statements shall prevail.

- 22 -

Attachment 3-1

LITE-ON TECHNOLOGY CORPORATION

BALANCE SHEETS

DECEMBER 31, 2018 AND 2017


2018 2017

ASSETS Amount % Amount %

CURRENT ASSETS

Cash and cash equivalents (Note 6) $ 7,082,108 5 $ 7,536,265 6

Financial assets at fair value through profit or loss (''FVTPL'') (Note 7) 2,857 - - -


Contracts assets 629,585 - - -

Notes receivable, net (Note 12) 1,203 - 1,436 -

Trade receivables, net (Note 12) 27,686,332 19 27,927,833 20

Trade receivables from related parties (Note 28) 11,098,911 7 11,950,083 9

Other receivables 932,490 1 469,072 -

Other receivables from related parties (Note 28) 413,982 - 255,156 -

Inventories, net (Note 13) 9,644,127 7 7,783,026 6

Prepayments 643,755 - 571,383 -

Total current assets 58,140,030 39 56,494,254 41

NON-CURRENT ASSETS

Financial assets at FVTPL (Note 7) 56,333 - - -

Financial assets at fair value through other comprehensive income ("FVTOCI") (Note 8) 213,473 - - -

Available-for-sale financial assets (Note 14) - - 225,698 -


Debt instruments with no active market (Note 11) - - 303,997 -

Investments accounted for using the equity method (Note 15) 73,960,509 50 64,705,045 47

Property, plant and equipment, net (Note 16) 7,640,678 5 6,654,089 5

Intangible assets, net (Note 17) 5,496,986 4 5,995,675 4

Deferred tax assets (Note 24) 3,595,595 2 2,632,621 2

Refundable deposits 99,697 - 106,050 -

Prepaid investments - - 1,624,770 1

Other non-current assets 6,470 - 6,470 -

Total non-current assets 91,373,751 61 82,254,415 59

TOTAL $ 149,513,781 100 $ 138,748,669 100

LIABILITIES AND EQUITY

CURRENT LIABILITIES

Short-term borrowings (Note 18) $ 17,264,395 11 $ 17,291,220 12

Financial liabilities at FVTPL (Note 7) 3,997 - 43,447 -

Notes payable 2,571 - 630 -

Trade payables 6,599,857 4 6,641,532 5

Trade payables to related parties (Note 28) 35,361,931 24 28,659,451 21

Other payables 12,838,742 9 10,420,554 7

Other payables to related parties (Note 28) 93,444 - 121,456 -

Current tax liabilities 2,936,430 2 1,706,487 1

Provisions (Note 19) 851,041 1 715,037 1

Advance receipts 744,113 - 1,301,833 1

Total current liabilities 76,696,521 51 66,901,647 48

NON-CURRENT LIABILITIES

Deferred tax liabilities (Note 24) 1,399,170 1 1,131,711 1

Net defined benefit liabilities (Note 20) 78,236 - 126,851 -

Guarantee deposits 15,979 - 16,018 -

Credit balance of investments accounted for using the equity method (Note 15) 119 - 60,964 -

Total non-current liabilities 1,493,504 1 1,335,544 1

Total liabilities 78,190,025 52 68,237,191 49

EQUITY

Share capital

Ordinary shares 23,508,670 16 23,508,670 17

Capital surplus

Additional paid-in capital from share issuance in excess of par value 3,471,812 3 9,372,488 7

Bond conversions 7,462,138 5 7,462,138 6

Treasury share transactions 477,697 - 400,329 -

Difference between consideration and carrying amounts adjusted arising from changes in percentage of ownership of subsidiaries 47,209 - 49,019 -

Changes in capital surplus from investments in associates accounted for using the equity method 271,367 - 276,782 -

Mergers 10,015,194 7 10,015,194 7

Total capital surplus 21,745,417 15 27,575,950 20

Retained earnings

Legal reserve 12,049,900 8 11,786,967 9

Special reserve 2,705,954 2 1,338,878 1

Unappropriated earnings 15,789,147 10 10,093,753 7

Total retained earnings 30,545,001 20 23,219,598 17

Other equity

Exchange differences on translating foreign operations (2,779,863) (2) (2,528,893) (2)

Unrealized loss of financial assets at FVTOCI (449,461) - - -

Unrealized loss on available-for-sale financial assets - - (18,497) -

Gain on financial instruments in cash flow hedging securities 2,714 - 3,372 -

Total other equity (3,226,610) (2) (2,544,018) (2)

Treasury shares (1,248,722) (1) (1,248,722) (1)

Total equity 71,323,756 48 70,511,478 51

TOTAL $ 149,513,781 100 $ 138,748,669 100

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

- 23 -

LITE-ON TECHNOLOGY CORPORATION Attachment 3-2

STATEMENTS OF COMPREHENSIVE INCOME



2018 2017

Amount % Amount %

OPERATING REVENUE

Sales (Notes 22 and 28) $ 140,583,612 103 $ 143,873,976 103

Less: Sales returns 864,980 1 808,758 -

Sales allowance 2,549,242 2 3,822,614 3

Total operating revenue 137,169,390 100 139,242,604 100

COST OF GOODS SOLD (Notes 13, 23 and 28) 124,808,157 91 124,507,607 89

GROSS PROFIT 12,361,233 9 14,734,997 11

UNREALIZED GAIN ON TRANSACTIONS WITH

SUBSIDIARIES AND ASSOCIATES 113,044 - - -

REALIZED GAIN ON TRANSACTIONS WITH

SUBSIDIARIES AND ASSOCIATES - - 143,082 -

GROSS PROFIT, NET 12,248,189 9 14,878,079 11

OPERATING EXPENSES (Notes 23 and 28)

Selling and marketing expenses 3,002,405 2 2,815,608 2

General and administrative expenses 4,655,078 3 4,790,239 3

Research and development expenses 3,748,991 3 3,841,727 3

Expected credit loss (Note 27) 5,847 - - -

Total operating expenses 11,412,321 8 11,447,574 8

OPERATING INCOME 835,868 1 3,430,505 3

NON-OPERATING INCOME AND EXPENSES

Share of profit of subsidiaries and associates 10,463,878 7 2,119,142 1

Interest income 67,046 - 83,785 -

Dividend income 6,599 - 6,968 -

Other income (Note 28) 1,386,003 1 820,996 1

Net gain on disposal of property, plant and

equipment 28,258 - 28,385 -

Net gain on disposal of investments 86,603 - 151,047 -

Net gain (loss) on foreign currency exchange (525,188) - 491,036 -

Net gain (loss) on financial assets at FVTPL 175,715 - (94,466) -

Finance costs (450,762) - (386,589) -

Other expenses (50,472) - (44,615) -

Impairment loss (Notes 14, 15 and 16) (3,394,351) (3) (5,186,588) (4)

Total non-operating income and expenses 7,793,329 5 (2,010,899) (2)

(Continued)

- 24 -





2018 2017

Amount % Amount %

PROFIT BEFORE INCOME TAX $ 8,629,197 6 $ 1,419,606 1

INCOME TAX BENEFIT (EXPENSE) (Note 24) (672,359) - 1,209,728 1

NET PROFIT FOR THE YEAR 7,956,838 6 2,629,334 2

OTHER COMPREHENSIVE INCOME (LOSS)

(Notes 20, 21 and 24)

Items not reclassified subsequently to profit or loss:

Remeasurement of defined benefit plans 3,050 - (38,263) -

Unrealized loss on investments in equity

instruments designated as at FVTOCI (78,200) - - -

Share of other comprehensive loss of subsidiaries

and associates accounted for using the equity

method (28,426) - (9,586) -

Income tax benefit relating to items not


(98,544) - (41,344) -

Items that may be reclassified subsequently to profit

or loss:

Exchange differences on translating foreign

operations (372,739) - (1,571,489) (1)

Unrealized gain on available-for-sale financial

assets - - 156,525 -

Share of other comprehensive loss of subsidiaries

and associates accounted for using the equity

method (47,500) - (83,495) -

Income tax benefit relating to items that may be


(255,706) - (1,221,746) (1)

Other comprehensive loss for the year, net of

income tax (354,250) - (1,263,090) (1)

TOTAL COMPREHENSIVE INCOME FOR THE

PERIOD $ 7,602,588 6 $ 1,366,244 1

(Continued)

- 25 -





2018 2017

Amount % Amount %

EARNINGS PER SHARE (NEW TAIWAN

DOLLARS; Note 25)

From continuing operations

Basic $3.42 $1.13

Diluted $3.38 $1.13

The accompanying notes are an integral part of the financial statements. (Concluded)

- 26 -

LITE-ON TECHNOLOGY CORPORATION Attachment 3-3 STATEMENTS OF CHANGES IN EQUITY



Capital Surplus (Note 21)

Additional

Difference

Between

Consideration and

Carrying

Amounts

Adjusted

Changes in

Capital Surplus

from Other Equity (Note 21)

Paid-in Capital Arising from Investments in Exchange Unrealized Unrealized

Issue of Share Capital (Note 21)

from Share

Issuance in

Changes in

Percentage of

Associates

Accounted for Retained Earnings (Note 21)

Differences on

Translating

Gain (Loss) on

Financial Assets

Gain (Loss) on

Available-for-

Shares

(In Thousands) Amount

Excess of Par

Value Bond Conversions

Treasury Share

Transactions

Ownership of

Subsidiaries

Using the Equity

Method Mergers Total Legal Reserve Special Reserve

Unappropriated

Earnings Total

Foreign

Operations

Designated as

FVTOCI

sale Financial

Assets Cash Flow Hedges Total

Treasury Shares

(Note 21) Total Equity

BALANCE AT JANUARY 1, 2017 2,350,867 $ 23,508,670 $ 9,372,488 $ 7,462,138 $ 328,800 $ 45,612 $ 273,487 $ 10,015,194 $ 27,497,719 $ 10,845,332 $ 398,602 $ 16,252,206 $ 27,496,140 $ (1,195,684 ) $ - $ (126,588 ) $ - $ (1,322,272 ) $ (1,248,722 ) $ 75,931,535

Appropriation of 2016 earnings Legal reserve - - - - - - - - - 941,635 - (941,635 ) - - - - - - - -

Special reserve - - - - - - - - - - 940,276 (940,276 ) - - - - - - - -

Cash dividends - 29.2% - - - - - - - - - - - (6,864,532 ) (6,864,532 ) - - - - - - (6,864,532 )

Changes in percentage of ownership interest in subsidiaries - - - - - 3,407 - - 3,407 - - - - - - - - - - 3,407

Changes in capital surplus from investments in associates

accounted for using the equity method - - - - - - 3,295 - 3,295 - - - - - - - - - - 3,295

Changes in capital surplus from cash dividends of the

Company paid to subsidiaries - - - - 71,529 - - - 71,529 - - - - - - - - - - 71,529

Net profit for the year ended December 31, 2017 - - - - - - - - - - - 2,629,334 2,629,334 - - - - - - 2,629,334

Other comprehensive income (loss) for the year ended

December 31, 2017, net of income tax - - - - - - - - - - - (41,344 ) (41,344 ) (1,333,209 ) - 108,091 3,372 (1,221,746 ) - (1,263,090 )

Total comprehensive income (loss) for the year ended

December 31, 2017 - - - - - - - - - - - 2,587,990 2,587,990 (1,333,209 ) - 108,091 3,372 (1,221,746 ) - 1,366,244

BALANCE AT DECEMBER 31, 2017 2,350,867 23,508,670 9,372,488 7,462,138 400,329 49,019 276,782 10,015,194 27,575,950 11,786,967 1,338,878 10,093,753 23,219,598 (2,528,893 ) - (18,497 ) 3,372 (2,544,018 ) (1,248,722 ) 70,511,478

Effect of retrospective application (Note 3) - - - - - - - - - - - 279,769 279,769 - (298,266 ) 18,497 - (279,769 ) - -

BALANCE AT JANUARY 1, 2018 AS RESTATED 2,350,867 23,508,670 9,372,488 7,462,138 400,329 49,019 276,782 10,015,194 27,575,950 11,786,967 1,338,878 10,373,522 23,499,367 (2,528,893 ) (298,266 ) - 3,372 (2,823,787 ) (1,248,722 ) 70,511,478

Appropriation of 2017 earnings

Legal reserve - - - - - - - - - 262,933 - (262,933 ) - - - - - - - -

Special reserve - - - - - - - - - - 1,367,076 (1,367,076 ) - - - - - - - -

Cash dividends - 4.1% - - - - - - - - - - - (963,855 ) (963,855 ) - - - - - - (963,855 )

Distribution of cash dividends from capital surplus - - (5,900,676 ) - - - - - (5,900,676 ) - - - - - - - - - - (5,900,676 )

Changes in percentage of ownership interests in subsidiaries - - - - - (1,810 ) - - (1,810 ) - - 39,722 39,722 - (39,722 ) - - (39,722 ) - (1,810 )

Changes in capital surplus from investments in associates

accounted for using the equity method - - - - - - (5,415 ) - (5,415 ) - - - - - - - - - - (5,415 )

Changes in capital surplus from cash dividends of the

Company paid to subsidiaries - - - - 77,368 - - - 77,368 - - - - - - - - - - 77,368

Disposal of investments in equity instruments designated as

FVTOCI - - - - - - - - - - - 3,460 3,460 - (3,460 ) - - (3,460 ) - -

Disposal of investments accounted for using the equity method - - - - - - - - - - - - - 4,078 - - - 4,078 - 4,078

Net profit for the year ended December 31, 2018 - - - - - - - - - - - 7,956,838 7,956,838 - - - - - - 7,956,838

Other comprehensive income (loss) for the year ended

December 31, 2018, net of income tax - - - - - - - - - - - 9,469 9,469 (255,048 ) (108,013 ) - (658 ) (363,719 ) - (354,250 )

Total comprehensive income (loss) for the year ended

December 31, 2018 - - - - - - - - - - - 7,966,307 7,966,307 (255,048 ) (108,013 ) - (658 ) (363,719 ) - 7,602,588

BALANCE AT DECEMBER 31, 2018 2,350,867 $ 23,508,670 $ 3,471,812 $ 7,462,138 $ 477,697 $ 47,209 $ 271,367 $ 10,015,194 $ 21,745,417 $ 12,049,900 $ 2,705,954 $ 15,789,147 $ 30,545,001 $ (2,779,863 ) $ (449,461 ) $ - $ 2,714 $ (3,226,610 ) $ (1,248,722 ) $ 71,323,756

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

1

Attachment 3-4


STATEMENTS OF CASH FLOWS



2018 2017

CASH FLOWS FROM OPERATING ACTIVITIES

Income before income tax $ 8,629,197 $ 1,419,606

Adjustments for:

Depreciation expenses 598,560 662,204

Amortization expenses 280,321 385,326

Expected credit loss recognized on trade receivables 5,847 -

Impairment loss reversed on trade receivables - (12,190)

Net loss (gain) on fair value change of financial assets designated as

at FVTPL (175,715) 94,466

Finance costs 450,762 386,589

Interest income (67,046) (83,785)

Dividend income (6,599) (6,968)

Share of profit of subsidiaries and associates (10,463,878) (2,119,142)

Net gain on disposal of property, plant and equipment (28,258) (28,385)

Net gain on disposal of available-for-sale financial assets - (49,598)

Net gain on disposal of investments accounted for using the equity

method (86,603) (101,449)

Impairment loss recognized on financial assets - 10,662

Impairment loss recognized on non-financial assets 3,439,561 4,822,143

Unrealized gain on the transactions with subsidiaries and associates 113,044 -

Realized gain on the transactions with subsidiaries and associates - (143,082)

Unrealized net loss (gain) on foreign currency exchange 278,612 (208,823)

Recognition of provisions 406,941 144,788

Changes in operating assets and liabilities

Financial instruments held for trading - 62,935

Contract assets (629,585) -

Notes receivable 233 (192)

Trade receivables 235,654 (255,314)

Trade receivables from related parties 851,172 2,721,891

Other receivables (473,608) (163,349)

Other receivables from related parties (158,826) 134,691

Inventories (1,906,311) 1,568,443

Prepayments (72,372) (28,248)

Notes payable 1,941 628

Trade payables (41,675) (1,366,169)

Trade payables to related parties 6,702,480 (3,728,529)

Other payables 2,223,433 (174,543)

Other payables to related parties (28,012) (78,424)

Provisions (270,937) (286,927)

Advance receipts (557,720) 6,517

Net defined benefit liabilities (45,565) 25,330

Cash generated from operations 9,205,048 3,611,102

Interest received 67,652 93,142

Dividends received 6,599 6,968

(Continued)

2


STATEMENTS OF CASH FLOWS



2018 2017

Interest paid $ (437,433) $ (378,097)

Income tax paid (219,506) (862,359)

Net cash generated from operating activities 8,622,360 2,470,756

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of financial assets at FVTOCI (18,713) -

Acquisition of financial assets at amortized costs (4,693) -

Acquisition of available-for-sale financial assets - (15,110)

Proceeds from sale of available-for-sale financial assets - 298,632

Proceeds from sale of debt investments with no active market - 6,360

Acquisition of investments accounted for using the equity method (1,350,950) (7,286,445)

Proceeds from disposal of investments accounted for using the equity

method 8,439 195,899

Increase in prepaid investments - (1,624,770)

Proceeds from capital reduction of investments accounted for using the

equity method - 35,261

Acquisition of property, plant and equipment (1,485,369) (656,183)

Proceeds from disposal of property, plant and equipment 103,268 33,510

Decrease in refundable deposits 6,353 11,793

Acquisition of intangible assets (130,933) (192,711)

Proceeds from disposal of intangible assets 378,438 -

Increase in other non-current assets - (71)

Decrease in other non-current assets 8 -

Dividends received from subsidiaries and associates 309,030 18,153,782

Net cash generated from (used in) investing activities (2,185,122) 8,959,947

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from short-term borrowings - 7,164,540

Repayments of short-term borrowings (26,825) -

Repayments of long-term borrowings - (12,000,000)

Refund of guarantee deposits received (39) (3,643)

Cash dividends (6,864,531) (6,864,532)

Net cash used in financing activities (6,891,395) (11,703,635)

NET DECREASE IN CASH AND CASH EQUIVALENTS (454,157) (272,932)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE

YEAR 7,536,265 7,809,197

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR $ 7,082,108 $ 7,536,265

The accompanying notes are an integral part of the financial statements. (Concluded)

3

Attachment 4

AUDIT COMMITTEE REPORT

To: Shareholders’ Annual General Meeting for Year 2019, Lite-On Technology Corporation

The Board of Directors has prepared and submitted to the undersigned, Audit Committee of Lite-On

Technology Corporation the 2018 Business Report, Financial Statements and the proposal of

distribution of earnings. The Financial Statements have been duly audited by Certified Public

Accountants Meng-Chieh Chiu and Tsai-Cheng Tsai of Deloitte Touche Tohmatsu International

Taiwan. The above Business Report, Financial Statements and the proposal of distribution of earnings

have been examined and determined to be correct by the undersigned. This Report is duly submitted in

accordance with Article 14-4 of Securities and Exchange Law and Article 219 of the Company Law.

The Audit Committee, Chairman:

Mr. Albert Hsueh February 26 2019

4

Attachment 5


Statement of Earnings Appropriation

Year 2018

Amount (NT$)

Unallocated earnings, beginning of year

Add: cumulative effect of the initial application

Adjusted unallocated earnings, beginning of year

Add: adjustments on equity method investments

Add: adjustments on re-measurement on define

benefit plans recognized in retained earnings

Add: cumulative unrealized gain on investments in

equity instruments designated as at FVTOCI was

transferred directly to retained earnings due to

disposal.

Adjusted unallocated earnings

7,499,888,591

279,768,597

7,779,657,188

41,109,640

8,081,619

3,459,902

7,832,308,349

Add: Net profit 7,956,838,274

Less: Legal reserve (10%)

Less: Special reserve

(795,683,827)

(682,813,923)

Distributable earnings 14,310,648,873

Distribution:

(1) Cash dividends: (NT$2.92/per share) (6,864,531,733)

Unallocated earnings, end of year 7,446,117,140

Remarks:

1. The Company elects to apply IFRS 9 retrospectively with the cumulative effect of the initial

application of this standard recognized in retained earnings, an increase of $279,768,597, on

January 1, 2018.

2. Under the Integrated Income Tax System (Imputation Tax System), upon calculating the

deductible tax in accordance with Article 66-6 of the Income Tax Act, earnings of 1998 and

thereafter should be distributed first. When unallocated earnings on which 5% surtax is levied in

accordance with Article 66-9 of the Income Tax Act is calculated, earnings of the latest year

should be distributed first as required under Tai-Cai-Shui No. 871941343 of the Ministry of

Finance dated April 30, 1998.

3. Special reserve is appropriated in accordance with Article 41 paragraph 1 of Securities and

Exchange Act and Financial-Supervisory-Securities, No. 1010012865 of the Financial Supervisory

Commission dated April 6, 2012 and No. 1010047490 of the Financial Supervisory Commission

dated November 21, 2012.

5

Attachment 6


Comparative Table of Articles of Incorporation

(The table below compares the Amended Articles and Original Articles.)

Amended

Article No. Amended Article

Original

Article No. Original Article Note

Article III The Company is headquartered in Taipei

City and may have branches set elsewhere

at home and abroad as resolved by the

Board of Directors.

The Company may invest outward with

the total amount of investment free of

restrictions as set forth in Article 13 of the

Company Law.

The Company may act as a guarantor

when required for business operations

and follow Operational Procedures for

Endorsements/Guarantees of the

Company.

Article XXX The Company is headquartered

in Taipei City and may have

branches set elsewhere at home

and abroad as resolved by the

Board of Directors.

The Company may invest

outward with the total amount

of investment free of restrictions

as set forth in Article 13 of the

Company Law.

The Company may act as a

guarantor externally as required

for business.

⚫ Wording

adjustment

Article V For the shares issued by the Company, the

Company may be exempted from printing

share certificates but shall have the shares

so issued duly registered with the

centralized securities depository

enterprise and follow the regulations of

that enterprise.

Article V The Company’s shares are

registered ones, which shall be

duly signed and sealed by a

minimum of three directors and

issued after duly authenticated

by the competent authority or

the issuance registry entity

approved by the competent

authority. For the shares issued

by the Company, the Company

may be exempted from printing

share certificates but shall have

the shares so issued duly

registered with the centralized

securities depository enterprise.

⚫ The

Company is

a listed

company

with

non-physical

stock,

therefore,

the initial

part are

deleted

⚫ Wording

adjustment

to later part

Article

XXIII

The Company shall allocate the following

compensation from the profit of each

fiscal year (The “profit” means “profit

before income tax and employees’ and

directors’ compensation"), however, the

Company shall have reserved a sufficient

amount from such profit to offset its

accumulated losses (including

unappropriated earnings adjustment if

any):

Article XXIII The Company shall allocate the

following compensation from

the profit of each fiscal year (The

“profit” means “profit before

income tax and employees’ and

directors’ compensation"),

however, the Company shall

have reserved a sufficient

amount from such profit to

offset its accumulated losses

⚫ In

accordance

with the

amendment

of Article

235-1 of the

Company

Act that the

Company

may

6

Amended


Original


1. Employees’ compensation：no less

than 1%

2. Directors’ compensation：no more

than 1.5%

The employees’ compensation under the

preceding paragraph will be distributed by

shares or cash. The employees of parents

or subsidiaries of the Company meeting

certain specific requirements may also be

entitled to such compensation. The Board

of Directors is authorized with full powers

to determine the terms and methods of

appropriation and the Directors’

compensation may only be distributed by

cash.

The Company shall, upon a resolution of

the Board of Directors, distribute

employees' and director’s compensation

in the preceding two paragraphs, and

report to the shareholders’ meeting for

such distribution. While the Company

distributes surplus earnings at the close of

each quarter in accordance with the

Article 24 paragraph 5, the Company shall

estimate and reserve the employees’

compensation and directors’

compensation according to the preceding

paragraph. If the Company has

accumulated losses, the Company shall

estimate and reserve the accumulated

losses to be made up first before

estimating and reserving the employees’

compensation and directors’

compensation.

Qualification requirement of employees in

the preceding second paragraph shall

comply with the provisions otherwise

prescribed by the competent authority in

charge of securities affairs.

(including unappropriated

earnings adjustment if any):

1. Employees’ compensation：

no less than 1%

2. Directors’ compensation：no

more than 1.5%

The employees’ compensation

under the preceding paragraph

will be distributed by shares or

cash. The employees of the

Company’s subsidiaries may

also be entitled to such

compensation. The Board of

Directors is authorized with full

powers to determine the terms

and methods of appropriation.

The Directors’ compensation


may only be distributed by cash.

The Company shall, upon a

resolution of the Board of

Directors, distribute employees'

and director’s compensation in

the preceding two paragraphs,

and report to the shareholders’

meeting for such distribution.

distribute

employee

bonus in

two-way for

the

controlling

and

subordinate

companies.

Therefore,

amending

second

paragraph

and adding

fourth

paragraph

⚫ In

accordance

with the

amendment

of Article

228-1 of the

Company

Act that the

surplus

earning

distribution

or loss

off-setting

proposal of

the

Company

may be

proposed at

the close of

each quarter

or each half

fiscal year.

Therefore,

the later part

of third

paragraph

are added

Article

XXIV

If there is net profit after tax upon the

final settlement of account of each fiscal

year, the Company shall first to offset any

previous accumulated losses (including

unappropriated earnings adjustment if

any) and set aside a legal reserve at 10% of

the net profits, unless the accumulated

Article XXIV If there is net profit after tax

upon the final settlement of

account of each fiscal year, the

Company shall first to offset any

previous accumulated losses

(including unappropriated

earnings adjustment if any) and

⚫ In

accordance

with the

amendment

of Article

228-1 and

240 of the

7

Amended


Original


legal reserve amounts reach to the total

capital of the Company; then set aside

special reserve in accordance with

relevant laws or regulations or as

requested by the authorities in charge.

The remaining net profit, plus the

beginning unappropriated earnings

(including adjustment of unappropriated

earnings if any), shall be distributed into

dividends to shareholders according to the

distribution plan proposed by the Board

of Directors and submitted to the

shareholders’ meeting for approval.

Where the Company distributes preceding

surplus earning, legal reserve and capital

reserve in the form of cash, such

distribution is authorized to be made after

a resolution has been adopted by a

majority vote at a meeting of the board of

directors attended by two-thirds of the

total number of directors; and in addition

thereto a report of such distribution shall

be submitted to the shareholders’

meeting; if such distribution is in the form

of new shares to be issued, it shall be

approved by shareholders meetings

according to the regulations.

In consideration of business development

plan, investing environment, demand for

funds, global competiveness and the

shareholders’ interest, the Dividend Policy

of the Company is the distribution to

shareholders with the appropriation of the

amount which shall be no less than 70% of

the net profit after income tax under the

circumstance that there is no cumulated

loss in prior years. The distribution may

be executed in cash dividend and/or share

dividend, and the cash dividend shall be

no less than 90% of the total distributed

dividends.

In case there are no earnings for

distribution in a certain year, or the

earnings of a certain year are significantly

less than the earnings actually distributed

by the Company in the previous year, or

considering the financial, business or

operational factors of the Company, the

Company may allocate a portion or all of

its reserves for distribution in accordance

set aside a legal reserve at 10%

of the net profits, unless the

accumulated legal reserve is

equal to the total capital of the

Company; then set aside special

reserve in accordance with

relevant laws or regulations or

as requested by the authorities

in charge. The remaining net

profit, plus the beginning

unappropriated earnings

(including adjustment of

unappropriated earnings if any),

shall be distributed into

dividends to shareholders

according to the distribution

plan proposed by the Board of

Directors and submitted to the

shareholders’ meeting for

approval.

In consideration of business

development plan, investing

environment, demand for funds,

global competiveness and the

shareholders’ interest, the

Dividend Policy of the Company

is the distribution to

shareholders with the

appropriation of the amount

which shall be no less than 70%

of the net profit after income tax

under the circumstance that

there is no cumulated loss in

prior years. The distribution

may be executed in cash

dividend and/or share dividend,

and the cash dividend shall be

no less than 90% of the total

distributed dividends.

In case there are no earnings for

distribution in a certain year, or

the earnings of a certain year are

significantly less than the

earnings actually distributed by

the Company in the previous

year, or considering the

financial, business or

operational factors of the

Company, the Company may

allocate a portion or all of its

Company

Act, adding

second and

fourth

paragraphs

regarding

the surplus

earning

distribution

or loss

off-setting

proposal of

the

Company

may be

proposed at

the close of

each quarter

or each half

fiscal year

and the

meeting of

the board of

directors is

authorized

to approve

cash

dividends

8

Amended


Original


with relevant laws or regulations or the

orders of the authorities in charge.

The Company may distribute the surplus

earnings or off-set losses at the close of

each quarter in accordance with the

Company Act. While distributing surplus

earning, the Company shall estimate and

reserve the taxes and duties to be paid, the

losses to be covered, the legal reserve to

be set aside, and the special surplus

reserve to be raised or revolved. Where

such legal reserve amounts reach to the

total paid-in capital, this provision shall

not apply. If the Company distribute

surplus earning in the form of cash, it

shall be approved by a meeting of the

board of directors; if such surplus earning

is distributed in the form of new shares to

be issued, it shall be approved by

shareholders meetings according to the

regulations.

reserves for distribution in

accordance with relevant laws or

regulations or the orders of the

authorities in charge.

Article

XXIV-1

Qualification requirements of employees

entitled to receive treasury shares, share

subscription warrant, new shares and

restricted stock issued by the Company

may include the employees of parents or

subsidiaries of the Company meeting

certain specific requirements.

Qualification requirement of employees in

the preceding paragraph shall comply

with the provisions otherwise prescribed

by the competent authority in charge of

securities affairs.

⚫ New article

added

⚫ Adding

employee

reward

mechanism

in

accordance

with the

amendment

of Article

167-1、167-2

and 267 of

the

Company

Act.

Therefore,

adding

Article

XXIV-1 to

retain

flexibility

Article

XXVI

(Delete) Article XXVI The Taiwan Depository &

Clearing Corporation (TDCC)

may request that the Company

consolidate the shares to issue

large denomination share

certificates.

⚫ The

Company

issues

non-physical

stocks,

therefore

9

Amended


Original


deleting this

Article

Article

XXIX

The Articles were duly stipulated on

March 13, 1989.

The Articles were duly amended on March

20, 1990 as the 1st amendment.

The Articles were duly amended on May

11, 1991 as the 2nd amendment.


20, 1992 as the 3rd amendment.

The Articles were duly amended on June

27, 1992 as the 4th amendment.



The Articles were duly amended on

December 18, 1993 as the 6th

amendment.



The Articles were duly amended on April










The Articles were duly amended on April




The Articles were duly amended on

August 5, 2002 as the 15th amendment.












Article XXIX The Articles were duly stipulated

on March 13, 1989.

The Articles were duly amended

on March 20, 1990 as the 1st

amendment.


on May 11, 1991 as the 2nd

amendment.


on May 20, 1992 as the 3rd

amendment.


on June 27, 1992 as the 4th

amendment.



amendment.


on December 18, 1993 as the 6th

amendment.


on May 30, 1995 as the 7th

amendment.


on April 2, 1996 as the 8th

amendment.



amendment.



amendment.



amendment.



amendment.


on April 19, 2001 as the 13th

amendment.



amendment.


⚫ Adding the

date for the

29th

amendment

10

Amended


Original


25, 2008 as the 21st amendment.


15, 2010 as the 22nd amendment.














21, 2019, 2019 as the 29th amendment

on August 5, 2002 as the 15th

amendment.



amendment.



amendment.



amendment.



amendment.



amendment.


on June 25, 2008 as the 21st

amendment.


on June 15, 2010 as the 22nd

amendment.


on June 19, 2012 as the 23rd

amendment.


on June 19, 2013 as the 24rd

amendment.



amendment.



amendment.



amendment.



amendment.

11

Attachment 7


Comparative Table of Procedures for the Acquisition and Disposal of Assets

(The table below compares the Amended Articles and Original Articles.)

Amended Article Original Article Note

2.Scope of Application & Domain of

Applications

2.1 Scope of Application

2.1.2 Real property (including land, houses

and buildings, investment property, and

construction enterprise inventory) and

equipment.

2.1.5 Right-of-use assets.

2.1.6 Claims of financial institutions

(including receivables, bills purchased

and discounted, loans, and overdue

receivables).

2.1.7 Derivatives.

2.1.8 Assets acquired or disposed of in

connection with mergers,

demergers,acquisitions,or transfer or shares

in accordance with law.

2.1.9 Other major assets.

2.Scope of Application & Domain of

Applications

2.1 Scope of Application

2.1.2 Real property (including land,

houses and buildings, investment

property, rights to use land, and

construction enterprise inventory) and

equipment.

NA

2.1.5 Claims of financial institutions

(including receivables, bills purchased

and discounted, loans, and overdue

receivables).

2.1.6 Derivatives.

2.1.7 Assets acquired or disposed of in

connection with mergers,

demergers,acquisitions,or transfer or

shares in accordance with law.

2.1.8 Other major assets.

1.To move 2.1.2

rights to use land

to 2.1.5

specification.

2. To add 2.1.5

Right-of-use

assets accordance

with revision of

regulation.

3.To move

2.1.5~2.1.8 to

2.1.6~2.1.9

3.1 Financial Derivatives: Derivatives as

defined in this procedure shall refer to

Forward contracts, options contracts,

futures contracts, leverage contracts,

and swap contracts, whose value is

derived from a specified interest rate

,financial instrument price,commodity

price, foreign exchange rates, index of

price or rates , credit rating or credit

index, or other variable;or hybrid

contracts combining the above

contracts;or hybrid contracts or

structured products containing

embedded derivatives. The term

"forward contracts" does not include

insurance contracts, performance

contracts, after-sales service contracts,

long-term leasing contracts, or

3.1 Financial Derivatives: Derivatives as

defined in this procedure shall refer to

Forward contracts, options contracts,

futures contracts, leverage contracts,

and swap contracts, and compound

contracts combining the above

products, whose value is derived from

assets, interest rates, foreign exchange

rates, indexes or other interests. The

term "forward contracts" does not

include insurance contracts,

performance contracts, after-sales

service contracts, long-term leasing

contracts, or long-term purchase

(sales) agreements.

3.1 To

amend ”Financial

Derivatives

definition

accordance with

revision of

regulation.

12


long-term purchase (sales) contracts.

3.2 Assets acquired or disposed through

mergers, demergers, acquisitions, or

transfer of shares in accordance with

law: Refers to assets acquired or

disposed through mergers, demergers,

or acquisitions conducted under the

Business Mergers and Acquisitions Act,

Financial Holding Company Act,

Financial Institution Merger Act and

other acts, or to transfer of shares from

another company through issuance of

new shares of its own as the

consideration therefore (hereinafter

"transfer of shares") under Article 156-3

of the Company Act.

3.3 Related party or subsidiary: As defined

in the Regulations Governing the

Preparation of Financial Reports by

Securities Issuers.

3.4 Professional appraisers: Refers to a real

property appraiser or other person duly

authorized by law to engage in the value

appraisal of real property or equipment.

Professional appraisers and their

officers, certified public accounts,

attorneys, and securities underwriters

that provide the Company with

appraisal reports, certified public

3.2 Assets acquired or disposed through

mergers, demergers, acquisitions, or

transfer of shares in accordance with

law: Refers to assets acquired or

disposed through mergers, demergers,

or acquisitions conducted under the

Business Mergers and Acquisitions

Act, Financial Holding Company Act,

Financial Institution Merger Act and

other acts, or to transfer of shares from

another company through issuance of

new shares of its own as the

consideration therefore (hereinafter

"transfer of shares") under Article 156,

paragraph 8 of the Company Act.

3.3 Related party or subsidiary: As

defined in the Regulations Governing

the Preparation of Financial Reports

by Securities Issuers. Professional

appraisers, certified public

accountants, lawyers or security

underwriters who issue the appraisal

reports, accountant’s reports, and

statement of the legal counsel or

security underwriters in favor of the

Company shall not be concerned with

any of the parties involved in the trade.

3.4 Professional appraisers: Refers to a real

property appraiser or other person duly

authorized by law to engage in the

value appraisal of real property or

equipment.

3.2 To amend

accordance with

revision of

regulation.

3.3 To move

Professional

appraisers,etcdesc

ription to 3.4.

3.3 To move

Professional

13


accountant's opinions, attorney's

opinions, or underwriter's opinions shall

meet the following requirements:

3.4.1 May not have previously received a

final and unappealable sentence to

imprisonment for 1 year or longer for a

violation of the Act, the Company Act,

the Banking Act of The Republic of

China, the Insurance Act, the Financial

Holding Company Act, or the Business

Entity Accounting Act, or for fraud,

breach of trust, embezzlement, forgery

of documents, or occupational crime.

However, this provision does not apply

if 3 years have already passed since

completion of service of the sentence,

since expiration of the period of a

suspended sentence, or since a pardon

was received.

3.4.2 May not be a related party or de facto

related party of any party to the

transaction.

3.4.3 If the company is required to obtain

appraisal reports from two or more

professional appraisers, the different

professional appraisers or appraisal

officers may not be related parties or de

facto related parties of each other.

3.4.4 When issuing an appraisal report or

opinion, the personnel referred to in the

3.4 paragraph shall comply with the

following:

3.4.4.1 Prior to accepting a case, they shall

prudently assess their own professional

capabilities, practical experience, and

independence.

3.4.4.2 When examining a case, they shall

appropriately plan and execute adequate

working procedures, in order to produce

a conclusion and use the conclusion as

NA

NA

NA

NA

NA

appraisers,etcdesc

ription to 3.4.

To add

3.4.1~3.4.3&3.4.4

~3.4.4.4

accordance with

revision of

regulation.

14


the basis for issuing the report or

opinion. The related working

procedures, data collected, and

conclusion shall be fully and accurately

specified in the case working papers.

3.4.4.3 They shall undertake an

item-by-item evaluation of the

comprehensiveness, accuracy, and

reasonableness of the sources of data

used, the parameters, and the

information, as the basis for issuance of

the appraisal report or the opinion.

3.4.4.4 They shall issue a statement

attesting to the professional competence

and independence of the personnel who

prepared the report or opinion, and that

they have evaluated and found that the

information used is reasonable and

accurate, and that they have complied

with applicable laws and regulations.

3.7 Securities exchange: "Domestic

securities exchange" refers to the

Taiwan Stock Exchange Corporation;

"foreign securities exchange" refers to

any organized securities exchange

market that is regulated by the

competent securities authorities of the

jurisdiction where it is located.

3.8 Over-the-counter venue ("OTC venue",

"OTC"): "Domestic OTC venue" refers

to a venue for OTC trading provided by

a securities firm in accordance with the

Regulations Governing Securities

Trading on the Taipei Exchange;

"foreign OTC venue" refers to a venue

at a financial institution that is regulated

by the foreign competent authority and

that is permitted to conduct securities

business.

NA

NA

NA

NA

NA

15


To add 3.7~3.8

accordance with

revision of

regulation.

4. Limits on the investments of realty not

for business use or right-of-use assets

thereof and marketable securities

the Company and respective subsidiary

may acquire the aforementioned assets

in accordance with the following limits:

The

Compa

ny

Inves

tment

holdi

ng

Com

pany

Other

subsid

iaries

Realty not

for

business

use or

right-of

-use

assets

thereof

15% of

net

worth

5% of the net

worth of

parent

Investmen

t of

marketabl

e

securities

150%

of the

net

worth

100%

of the

net

worth

of

subsi

diary

10%

of the

net

worth

of

parent

Amount

of

investmen

t on

individual

security

50% of

the net

worth

100%

of the

net

worth

of

subsi

diary

5% of

the net

worth

of

parent

4. Limits on the investments of realty not

for business use and marketable

securities

the Company and respective

subsidiary may acquire the

aforementioned assets in accordance

with the following limits:

The

Compa

ny

Inves

tment

holdi

ng

Com

pany

Other

subsid

iaries

Realty not

for

business

use

15% of

net

worth

5% of the net

worth of

parent

Investmen

t of

marketabl

e

securities

150%

of the

net

worth

100%

of the

net

worth

of

subsi

diary

10%

of the

net

worth

of

parent

Amount

of

investmen

t on

individual

security

50% of

the net

worth

100%

of the

net

worth

of

subsi

diary

5% of

the net

worth

of

parent

To amend

accordance with

revision of

regulation.

6. Acquisition or disposal of realty ,

equipment or right-of-use assets

thereof

6.1 Evaluation and Operation Process

Process

The Company may buy or sell realty

, equipment or right-of- use assets

thereof in accordance with the

regulations governing the Property,

6. Acquisition or disposal of realty or

equipment


The Company may buy or sell

realty and equipment in accordance

with the regulations governing the

Property, Plant and Equipment

cycle under the Company’s internal

6&6.1&6.2.2&6.3

To add

right-of-use assets

thereof

accordance with

revision of

regulation.

16


Plant and Equipment cycle under the

Company’s internal control system.

6.2.2 For the acquisition or disposition of

right-of-use assets and equipment, the

respective department shall make an

inquiry, compare the offer, negotiate on

the price or submit to bidding. The limit

shall be based on the line of authority.

6.3 In acquiring or disposing of real

property , equipment , or right-

of-use assets thereof where the

transaction amount reaches 20

percent of the Company's paid-in

capital or NT$300 million or more,

the Company, unless transacting

with a domestic government agency,

engaging others to build on its own

land, engaging others to build on

rented land, or acquiring or

disposing of equipment or

right-of-use assets thereof held for

business use, shall obtain an

appraisal report prior to the date of

occurrence of the event from a

professional appraiser and shall

further comply with the following

provisions:

6.3.1 Where due to special circumstances it

is necessary to give a limited price,

specified price, or special price as a

reference basis for the transaction price,

the transaction shall be submitted for

approval in advance by the board of

directors, the same procedure shall also

be followed whenever there is any

subsequent changes to the terms and

conditions of the transaction.

control system.

6.2.2 For the acquisition or disposition of

equipment, the respective department

shall make an inquiry, compare the

offer, negotiate on the price or submit

to bidding. The limit shall be based on

the line of authority.

6.3 In acquiring or disposing of real

property or equipment where the

transaction amount reaches 20

percent of the Company's paid-in

capital or NT$300 million or more,

the Company, unless transacting

with a government agency,

engaging others to build on its own

land, engaging others to build on

rented land, or acquiring or

disposing of equipment for

business use, shall obtain an

appraisal report prior to the date of

occurrence of the event from a

professional appraiser and shall

further comply with the following

provisions:

6.3.1 Where due to special circumstances

it is necessary to give a limited price,

specified price, or special price as a

reference basis for the transaction

price, the transaction shall be

submitted for approval in advance by

the board of directors, and the same

procedure shall be followed for any

future changes to the terms and

conditions of the transaction.

6.3.1 To amend

accordance with

revision of

regulation.

17


7. The Acquisition or Disposition of

memberships or Intangible Assets or

right-of-use assets thereof



memberships or intangible assets or

right-of-use assets thereof with the

presentation of relevant appraisal reports

and carried out in accordance with the

line of authority of the Company and the

following procedure.

7.2.1 In acquiring or disposing of

memberships, the respective department

shall consult the fair market price for

determining the terms and conditions of

the deal and the price. An analysis report

for such purpose shall be compiled and

submitted for the Group CEO’s

approval. If the amount of transaction

falls below NT$3 million, it shall be

submitted for approval by the board

chairman and presented to the nearest

board session for recognition. For

transaction values exceeding NT$3

million, submit for the approval from

the board in advance.

7.2.2 In acquiring or disposing of intangible

assets or right-of-use assets thereof, the

respective department shall consult the

appraisal reports issued by professional

appraisers or the fair market price for

determining the terms and conditions of

the deal and the price. An analysis

report for such purpose shall be

compiled and submitted for approval by

the board chairman. If the transaction

amount falls below NT$20 million,

submit for the board chairman’s

7. The Acquisition or Disposition of

memberships or Intangible Assets

7.1 Evaluation and Operation process


memberships or intangible assets with

the presentation of relevant appraisal

reports and carried out in accordance

with the line of authority of the

Company and the following procedure.


memberships, the respective

department shall consult the fair

market price for determining the terms

and conditions of the deal and the

price. An analysis report for such

purpose shall be compiled and

submitted for the Group CEO’s

approval. If the amount of transaction

falls below 1% of the Company’s paid

in capital or NT$3 million, it shall be

submitted for approval by the board

chairman and presented to the nearest



million, submit for the approval from

the board in advance.


intangible assets, the respective

department shall consult the appraisal

reports issued by professional

appraisers or the fair market price for

determining the terms and conditions

of the deal and the price. An analysis

report for such purpose shall be

compiled and submitted for approval

by the board chairman. If the

transaction amount falls below 10% of

the Company’s paid in capital or

7&7.1&7.2.2&7.3

To add

right-of-use assets

thereof

accordance with

revision of

regulation.

7.2.1&7.2.2 To

amend

accordance with

revision of

regulation.

18


approval and present to the nearest



million, submit for the approval of the

board in advance.

7.3 The Company acquires or disposes of

memberships or intangible assets or

right-of-use assets thereof and the

transaction amount reaches 20 percent

or more of paid-in capital or NT$300

million or more, except in transactions

with a domestic government agency, the

Company shall engage a certified public

accountant prior to the date of

occurrence of the event to render an

opinion on the reasonableness of the

transaction price; the CPA shall comply

with the provisions of Statement of

Auditing Standards No. 20 published by

the ARDF.

NT$20 million, submit for the board

chairman’s approval and present to the

nearest board session for recognition.

For transaction values exceeding

NT$20 million, submit for the

approval of the board in advance.

7.3 The Company acquires or disposes of

memberships or intangible assets and

the transaction amount reaches 20

percent or more of 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

render an opinion on the

reasonableness of the transaction

price; the CPA shall comply with the

provisions of Statement of Auditing

Standards No. 20 published by the

ARDF.


The Company intends to acquire or

dispose of real property or right of- use

assets thereof from or to a related party,

or when it intends to acquire or dispose

of assets other than real property or right

of- use assets thereof from or to a

related party and the transaction amount

reaches 20 percent or more of paid-in

capital, 10 percent or more of the

Company's total assets, or NT$300

million or more, except in trading of

domestic government bonds or bonds

under repurchase and resale agreements,

or subscription or redemption of money

market funds issued by domestic

securities investment trust enterprises

(SITE), the Company may not proceed

to enter into a transaction contract or


The Company intends to acquire or

dispose of real property from or to a

related party, or when it intends to

acquire or dispose of assets other than

real property from or to a related party

and the transaction amount reaches 20

percent or more of paid-in capital, 10

percent or more of the Company's total

assets, or NT$300 million or more,

except in trading of government bonds

or bonds under repurchase and resale

agreements, or subscription or

redemption of money market funds

issued by domestic securities

investment trust enterprises (SITE),

the Company may not proceed to enter

into a transaction contract or make a

payment until the following matters

9.2 To add

right-of-use assets

thereof

accordance with

revision of

regulation

19


make a payment until the following

matters have been and approved by the

audit committee and resolved by the

board of directors:

9.2.3With respect to the acquisition of real

property or right of- use assets thereof

from a related party, information

regarding appraisal of the

reasonableness of the preliminary

transaction terms in accordance with

section 9.3.

9.2.7 Restrictive covenants and other

important stipulations associated with

the transaction.

With respect to the types of transactions

listed below , when to be conducted

between the Company and its parent or

subsidiaries , or between its subsidiaries

in which it directly or indirectly holds

100 percent of the issued shares or

authorized capital, the Company's board

of directors may delegate the board

chairman to decide such matters when

the transaction is within a certain

amount and have the decisions

subsequently submitted to and ratified

by the next board of directors meeting：

1.Acquisition or disposal of equipment

or right-of-use assets thereof held for

business use.

2.Acquisition or disposal of real

property right-of-use assets held for

business use.

Where the position of independent director

has been created in accordance with the

provisions of the Act, when a matter is

submitted for discussion by the board of

directors pursuant to the preceding

paragraph, the board of directors shall

take into full consideration each

have been and approved by the audit

committee and resolved by the board

of directors:

9.2.3With respect to the acquisition of real

property from a related party,

information regarding appraisal of the

reasonableness of the preliminary

transaction terms in accordance with

section 9.3.

9.2.7 Restrictive covenants and other

important stipulations associated with

the transaction.

With respect to the acquisition or disposal

of business-use equipment between the

Company and its parent or

subsidiaries, the Company's board of

directors may delegate the board

chairman to decide such matters when

the transaction is within a certain

amount and have the decisions

subsequently submitted to and ratified

by the next board of directors meeting.

Where the position of independent director

has been created in accordance with

the provisions of the Act, when a

matter is submitted for discussion by

the board of directors pursuant to the

preceding paragraph, the board of

9.2.3 To add

right-of-use assets

thereof

accordance with

revision of

regulation.

9.2.7 To amend

accordance with

revision of

regulation.

20


independent director's opinions. If an

independent director objects to or

expresses reservations about any matter,

it shall be recorded in the minutes of the

board of directors meeting.

Where an audit committee has been

established shall first be approved by

more than half of all audit committee

members and then submitted to the

board of directors for a resolution. If

approval of more than half of all audit

committee members as required is not

obtained, the procedures may be

implemented if approved by more than

two-thirds of all directors, and the

resolution of the audit committee shall

be recorded in the minutes of the board

of directors meeting. The terms "all

audit committee members" and "all

directors" shall be counted as the actual

number of persons currently holding

those positions.

directors shall take into full

consideration each independent

director's opinions. If an independent

director objects to or expresses

reservations about any matter, it shall


of directors meeting.

Where an audit committee has been

established in accordance with the

provisions of the Act, the matters

which requires recognition by the

supervisors shall first be approved by

more than half of all audit committee

members and then submitted to the

board of directors for a resolution. If

approval of more than half of all audit

committee members as required is not

obtained, the procedures may be

implemented if approved by more than

two-thirds of all directors, and the

resolution of the audit committee shall


of directors meeting. The terms "all

audit committee members" and "all

directors" shall be counted as the

actual number of persons currently

holding those positions.

Since audit

committee was

established，delete

related regulation

of supervisors.

9.3.1 The Company that acquires real

property or right-of-use assets thereof

from a related party shall evaluate the

reasonableness of the transaction costs

by the following means:

Where land and structures thereupon are

combined as a single property purchased

or leased in one transaction, the

transaction costs for the land and the

structures may be separately appraised

in accordance with either of the means

listed in section 9.3.1.1 and 9.3.1.2.

9.3.1 The Company that acquires real

property from a related party shall

evaluate the reasonableness of the

transaction costs by the following

means:

Where land and structures thereupon are

combined as a single property

purchased in one transaction, the

transaction costs for the land and the

structures may be separately appraised

in accordance with either of the means

9.3.1&9.3.1.2.1&

9.3.1.2.2 To add

right-of-use assets

thereof

accordance with

revision of

regulation.

21


The Company that acquires real property or

right-of-use assets thereof from a related

party and appraises the cost of the real

property or right-of-use assets thereof in

accordance with first two paragraphs

shall also engage a CPA to check the

appraisal and render a specific opinion.

Where the Company acquires real property

or right-of-use assets thereof from a

related party and one of the following

circumstances exists, the acquisition

shall be conducted in accordance with

section 9.2 and do not apply the first

three paragraphs:

9.3.1.2.1 The related party acquired the real

property or right-of-use assets

thereof through inheritance or as a

gift.

9.3.1.2.2 More than 5 years will have

elapsed from the time the related

party signed the contract to obtain

the real property or right-of-use

assets thereof to the signing date for

the current transaction.

9.3.1.2.4 The real property right-of-use

assets for business use are acquired

by the Company with its parent or

subsidiaries, or by its subsidiaries in

which it directly or indirectly holds

100 percent of the issued shares or

authorized capital.

9.3.2.1.2 Completed transactions by

unrelated parties within the

preceding year involving other

floors of the same property or

neighboring or closely valued

parcels of land, where the land

area and transaction terms are

similar after calculation of

reasonable price discrepancies in

listed in section 9.3.1.1 and 9.3.1.2.

The Company that acquires real property

from a related party and appraises the

cost of the real property in accordance

with 9.3.1.1 and 9.3.1.2 shall also

engage a CPA to check the appraisal

and render a specific opinion.

Where the Company acquires real property

from a related party and one of the

following circumstances exists, the

acquisition shall be conducted in

accordance with section 9.2 and do not

apply the paragraph 1~3 of the section

9.3.1.1 and section 9.3.1.2:

9.3.1.2.1 The related party acquired the real

property through inheritance or as

a gift.

9.3.1.2.2 More than 5 years will have

elapsed from the time the related

party signed the contract to obtain

the real property to the signing

date for the current transaction.

NA

9.3.2.1.2 Completed transactions by

unrelated parties within the

preceding year involving other

floors of the same property or


parcels of land, where the land

9.3.1.2.4 To

amend

accordance with

revision of

regulation.

9.3.2.1.2 To

amend

accordance with

revision of

regulation.

22


floor or area land prices in

accordance with standard property

market sale or leasing practices.

NA

9.3.2.2 Where the Company acquiring real

property, or obtaining real

property right-of-use assets

through leasing , from a related

party provides evidence that the

terms of the transaction are similar

to the terms of completed

transactions involving neighboring

or closely valued parcels of land

of a similar size by unrelated

parties within the preceding year.

9.3.2.3 Completed transactions involving


parcels of land in the preceding

paragraph in principle refers to

parcels on the same or an adjacent

block and within a distance of no

more than 500 meters or parcels

close in publicly announced current

value; transactions involving

similarly sized parcels in principle

refers to transactions completed by

unrelated parties for parcels with a

land area of no less than 50 percent

of the property in the planned

transaction; within the preceding

area and transaction terms are

similar after calculation of

reasonable price discrepancies in

floor or area land prices in

accordance with standard

property market sale practices.

9.3.2.1.3 Completed leasing transactions

by unrelated parties for other

floors of the same property from

within the preceding year, where

the transaction terms are similar

after calculation of reasonable

price discrepancies among floors

in accordance with standard

property leasing market

practices.

9.3.2.2 Where the Company acquiring

real property from a related party

provides evidence that the terms

of the transaction are similar to

the terms of transactions

completed for the acquisition of


parcels of land of a similar size

by unrelated parties within the

preceding year.

9.3.2.3 Completed transactions for


parcels of land in the

preceding paragraph in

principle refers to parcels on

the same or an adjacent block

and within a distance of no

more than 500 meters or

parcels close in publicly

announced current value;

transaction for similarly sized

9.3.2.1.3 To

delete accordance

with revision of

regulation.

9.3.2.2 To amend

accordance with

revision of

regulation.

9.3.2.3 To amend

accordance with

revision of

regulation.

23


year refers to the year preceding the

date of occurrence of the

acquisition of the real property or

obtainment of the right-of-use

assets thereof.

9.3.3 Where the Company acquires real


thereof from a related party and

the results of appraisals conducted

in accordance with section 9.3.1

and section 9.3.2 are uniformly

lower than the transaction price,

the following steps shall be taken:

9.3.3.1 A special reserve shall be set aside

in accordance with Article 41,

paragraph 1 of the Act against the

difference between the real property

or right-of-use assets thereof

transaction price and the appraised

cost, and may not be distributed or

used for capital increase or issuance

of bonus shares. Where the

Company uses the equity method to

account for its investment in

another company, then the special

reserve called for under Article 41,

paragraph of the Act shall be set

aside pro rata in a proportion

consistent with the share of public

company's equity stake in the other

company.

parcels in principle refers to

transactions completed by

unrelated parties for parcels

with a land area of no less

than 50 percent of the

property in the planned

transaction; within the

preceding year refers to the

year preceding the date of

occurrence of the acquisition

of the real property.

9.3.3 Where the Company acquires real

property from a related party and

the results of appraisals

conducted in accordance with

section 9.3.1 and section 9.3.2

are uniformly lower than the

transaction price, the following

steps shall be taken:

9.3.3.1 A special reserve shall be set

aside in accordance with

Article 41, paragraph 1 of the

Act against the difference

between the real property

transaction price and the

appraised cost, and may not

be distributed or used for

capital increase or issuance

of bonus shares. Where the

Company uses the equity

method to account for its

investment in another

company, then the special

reserve called for under

Article 41, paragraph of the

Act shall be set aside pro rata

in a proportion consistent

9.3.3 To amend

accordance with

revision of

regulation.

9.3.3.1 To amend

accordance with

revision of

regulation.

24


with the share of public

company's equity stake in the

other company.

The Company that has set aside a special

reserve under the preceding paragraph may

not utilize the special reserve until it has

recognized a loss on decline in market

value of the assets it purchased or leased at

a premium, or they have been disposed of,

or the leasing contract has been terminatd,

or adequate compensation has been made,

or the status quo ante has been restored, or

there is other evidence confirming that

there was nothing unreasonable about the

transaction, and the FSC has given its

consent.

When the Company obtains real property or

right-of-use assets thereof from a related

party, it shall also comply with the

preceding two paragraphs if there is other

evidence indicating that the acquisition was

not an arms length transaction.

The Company that has set aside a special

reserve under the preceding paragraph

may not utilize the special reserve until it

has recognized a loss on decline in market

value of the assets it purchased at a

premium, or they have been disposed of,

or adequate compensation has been made,

or the status quo ante has been restored, or

there is other evidence confirming that

there was nothing unreasonable about the

transaction, and the FSC has given its

consent.

When the Company obtains real property

from a related party, it shall also comply

with the preceding two paragraphs if there

is other evidence indicating that the

acquisition was not an arms length

transaction.

To amend

accordance with

revision of

regulation.

11.1.3.1 Hedge Trade:

A. Qualify for hedge accounting:

Booking the transaction with hedge

accounting principle when it follows the

hedge IFRS standards.


A. Qualify for hedge accounting:

Booking the transaction with hedge

accounting principle when it follows

the hedge accounting standards(Note

1)

(Note 1) “Hedge accounting” is

defined in accordance with the R.O.C.

Statement of Financial Accounting

Standards (SFAS) No. 34 before

December 31, 2012 and then in

accordance with the International

Accounting Standard 39 since January

1, 2013.

To amend

accordance with

IFRS.


A.Access the efficiency of hedging:

In order to apply to hedge

accounting, the hedge is expected to


A.Access the efficiency of hedging: In

order to apply to hedge accounting, the

hedge is expected to be highly

To amend

accordance with

IFRS.

25


be highly effective in achieving

offsetting changes in fair value or

cash flows attributable to the hedged

risk.

effective (80%~125%) in achieving

offsetting changes in fair value or cash

flows attributable to the hedged risk.

11.5.3.1 The board shall appoint the head of

internal audit to conduct an audit on the

supervision of derivative trade and the

suitability of the internal control

procedure in accordance with this

procedure and the “Implementation

Procedure of Internal Audit” for

compliance. If any discrepancy is

discovered, request the top officer of the

Financial Division to take necessary

measures and immediately report to the

board and the audit committee.

11.6 Internal Audit System

All internal auditors shall be fully aware

of the suitability of the internal control

of financial derivative trade regularly in

accordance with this procedure and the

“Implementation Procedure of Internal

Audit”, and shall base on the audit

findings from the trading department on

compliance and the analysis of the

transaction cycle to prepare an audit

report. Where materiality may be

discovered, notify the audit committee

in writing.

11.5.3.1 The board shall appoint the head

of internal audit to conduct an audit on

the supervision of derivative trade and

the suitability of the internal control

procedure in accordance with this


Procedure of Internal Audit” for

compliance. If any discrepancy is

discovered, request the top officer of

the Financial Division to take

necessary measures and immediately

report to the board and the audit

committee.

11.6 Internal Audit System

All internal auditors shall be fully

aware of the suitability of the internal

control of financial derivative trade

regularly in accordance with this


Procedure of Internal Audit”, and shall

base on the audit findings from the

trading department on compliance and

the analysis of the transaction cycle to

prepare an audit report. Where

materiality may be discovered, notify

the audit committee in writing.

11.5.3.1&11.6 To

amend in

Chinese

version,English

version no change

for same

translation.

E.Where any of the companies participating

in a merger, demerger, acquisition, or

transfer of another company's shares is

neither listed on an exchange nor has its

shares traded on an OTC market, the

Company(s) so listed or traded shall sign an

agreement with such company whereby the

latter is required to abide by the provisions

of section 12.2.A~12.2.D.

E.Where any of the companies

participating in a merger, demerger,

acquisition, or transfer of another

company's shares is neither listed on

an exchange nor has its shares traded

on an OTC market, the Company(s) so

listed or traded shall sign an agreement

with such company whereby the latter

is required to abide by the provisions

of section 12.2.C and 12.2.D.

To amend article

name.

26


13. Enforcement, Punishment and Reward

Investment and Finance are the

departments in charge of the execution

of securities investments. Users and

relevant departments shall be in charge

of the acquisition or disposition of

realty, equipment , or right-of-use

assets thereof and other assets.

Relevant personnel who defy this

procedure shall be liable for

punishment in accordance with the

“Regulation for Reward and

Punishment” or other related

regulations.

13. Enforcement, Punishment and Reward

Investment and Finance are the

departments in charge of the

execution of securities investments.

Users and relevant departments shall

be in charge of the acquisition or

disposition of realty and equipment.

Relevant personnel who defy this

procedure shall be liable for

punishment in accordance with the

“Regulation for Reward and

Punishment” or other related

regulations.

To amend

accordance with

revision of

regulation.

14.1 Acquisition or disposal of real property

or right-of-use assets thereof from or to a

related party, or acquisition or disposal

of assets other than real property or

right-of-use assets thereof from or to a

related party where the transaction

amount reaches 20 percent or more of

paid-in capital, 10 percent or more of the


million or more; provided, this shall not

apply to trading of domestic government

bonds or bonds under repurchase and

resale agreements, or subscription or


issued by domestic securities investment

trust enterprises (SITE).

14.3 Losses from derivatives trading

reaching the limits on aggregate losses

or losses on individual contracts set

out in the procedures adopted by the

Company.

14.4 Where equipment or right-of-use

assets thereof for business use are

acquired or disposed of , and

furthermore the transaction

counterparty is not a related party, and

14.1 Acquisition or disposal of real

property from or to a related party, or

acquisition or disposal of assets other

than real property from or to a related

party where the transaction amount

reaches 20 percent or more of paid-in

capital, 10 percent or more of the


million or more; provided, this shall

not apply to trading of government

bonds or bonds under repurchase and

resale agreements, or subscription or


issued by domestic securities

investment trust enterprises (SITE).

14.3 Losses from derivatives trading

reaching the limits on aggregate

losses or losses on individual

contracts set out in the procedures

adopted by the Company.

14.4 Where the type of asset acquired or

disposed is equipment for business

use, the trading counterparty is not a

related party, and the transaction

14.1&14.3&&14.

4&14.5&14.6.1&

14.6.2&14.7.3&1

4.8 To amend

accordance with

revision of

regulation.

27


the transaction amount meets any of

the following criteria:

14.5 Where land is acquired under an

arrangement on engaging others to

build on the Company's own land,

engaging others to build on rented

land, joint construction and allocation

of housing units, joint construction and

allocation of ownership percentages, or

joint construction and separate sale,

and furthermore the transaction

counterparty is not a related party, and

the amount the Company expects to

invest in the transaction reaches

NT$500 million.

14.6 Where an asset transaction other than

any of those referred to Section 14.1 to

14.5, a disposal of receivables by a

financial institution, or an investment

in the mainland China area reaches 20

percent or more of paid-in capital or

NT$300 million; provided, this shall

not apply to the following

circumstances:

14.6.1Trading of domestic

government bonds

14.6.2 Investment is taken as a profession

and conduct trade of marketable

securities in stock exchanges or

OTC markets, or subscription of

ordinary corporate bonds or general

bank debentures without equity

characteristics (excluding

subordinated debt)that are offered

and issued in the primary market, or

subscription or redemption of

securities investment trust funds of

futurs trust funds,or subdcription by

a securities firm of securities as

necessitated by its undertaking

amount meets any of the following

criteria:

14.5 Where land is acquired under an

arrangement on engaging others to

build on the Company's own land,

engaging others to build on rented

land, joint construction and allocation

of housing units, joint construction

and allocation of ownership

percentages, or joint construction and

separate sale, and the amount the

Company expects to invest in the

transaction reaches NT$500 million.

14.6 Where an asset transaction other

than any of those referred to Section

14.1 to 14.5, a disposal of receivables

by a financial institution, or an

investment in the mainland China

area reaches 20 percent or more of

paid-in capital or NT$300 million;

provided, this shall not apply to the

following circumstances:

14.6.1Trading of government bonds

14.6.2 Investment is taken as a

profession and conduct trade of

marketable securities in

domestic or overseas stock

exchanges or OTC markets, or

subscription by investment

professionals of ordinary

corporate bonds or of general

bank debentures without equity

characteristics that are offered

and issued in the domestic

primary market, or subscription

by a securities firm of

securities as necessitated by its

undertaking business or as an

28


business or as an advisory

recommending securities firm for

an emerging stock company, in

accordance with relevant

regulations.

14.7.3 The cumulative transaction amount

of acquisitions and

disposals(cumulative acquisitions

and disposals,respectively)of real


thereof within the same

development project within the

preceding year.

14.8 “Within the precding year” as used in

the preceding paragraph refers to the

year preceding the date of occurrence of

the current transaction.Items duly

announced in accordance with these

Regulations need not be counted toward

the transaction amount.the Company

shall compile monthly reports on the

status of derivatives trding engaged in up

to the end of the preceding month by the

company and any subsidiaries that are

not domestic public companies and enter

the information in the prescribed format

into the information reporting website

designated by the FSC by the 10th day of

each month.When the Company at the

time of public announcement makes an

error or omission in an item required by

regulations to be publicly announced and

so is required to correct it, all the items

shall be again publicly announced and

reported in their entirety within two days

counting inclusively from the date of

knowing of such error or omission.the

Company acquiring or disposing of

assets shall keep all relevant

contracts,meeting minutes,log

advisory recommending

securities firm for an emerging

stock company, in

accordance with relevant

regulations.

14.7.3 The amount of the same

development project accumulated

from disposition or acquisition

(counted separately) in one year.

14.8 One year shall be defined as the

period from the day of transaction

to calendar year in retrospect.

Transactions already announced

under the “Criteria for The

Acquisition or Disposition of

Assets by Public Companies”

shall not be included. the

Company shall report to the FSC

the status of derivative trade

conducted by the Company and its

subsidiaries which are not public

company in the country of the

month in the required format to

the required website by the 10th

day of the next month. When the

company at the time of public

announcement makes an error or

omission in an item required by

regulations to be publicly

announced and so is required to

correct it, all the items shall be

again publicly announced and

reported in their entirety within

two days counting inclusively

from the date of knowing of such

error or omission. The Company

shall retain related contracts,

29


books,appraisal reports and

CPA,attorney, and securities underwriter

opinions at the company,where they

shall be retained for five years except

where another act provides otherwise.

meeting minutes, record books,

appraisal reports, statements of

opinions expressed by public

auditors, lawyers and/or security

underwriters in its office for five

years unless otherwise required by

law.

17.The paid-in capital or total assets of the

Company shall be the standard

applicable to a subsidiary referred to in

the preceding paragraph in determining

whether, relative to paid-in capital or

total assets,it reaches a threshold

requiring public announcement and

regulatory filing under section 14.

17. The paid-in capital or total assets of

the Company shall be the standard for

determining whether or not a

subsidiary referred to in the preceding

paragraph is subject to section

14requiring a public announcement

and regulatory filing in the event the

type of transaction specified therein

reaches 20 percent of paid-in capital or

10 percent of the total assets.

To amend

accordance with

revision of

regulation.

20.The Measures were established on Feb

6th, 2003.

The First Amendment was made on

June 14th, 2005.

The Second Amendment was made on

June 21st, 2006.

The Thrid Amendment was made on June

21st, 2007.

The Fourth Amendment was made on

June 19nd, 2012.

The Fifth Amendment was made on June

19nd, 2014.

The Sixth Amendment was made on June

22nd, 2017.

The Seventh Amendment was made on

June 21st, 2019.

NA Addition of date

of amendment

30

Attachment 8


“Regulations Governing Loaning of Funds and Making of Endorsements/guarantees”

Contents before and after Amendment in Comparison

Contents after Amendment Contents before Amendment Explanation

1.1 Purpose

This Regulations Governing Loaning of

Funds and Making Endorsements/

Guarantees (“the Regulation” hereinafter)

are based on the " Regulations Governing

Loaning of Funds and Making

Endorsements/ Guarantees by Public

Companies" promulgated by the

Financial Supervisory Commission. All

loaning and endorsements/ guarantees by

the Company must be carried out in

accordance with this Regulation, unless

otherwise stipulated in the Financial law.

1.1 Purpose

This Regulations Governing Loaning of

Funds and Making Endorsements/

Guarantees (“the Regulation” hereinafter)

are based on the " Regulations Governing

Loaning of Funds and Making

Endorsements/ Guarantees by Public

Companies" promulgated by the Financial

Supervisory Commission. All loaning and

endorsements/ guarantees by the Company

must be carried out in accordance with this

Regulation, unless otherwise stipulated in

the law.

Duly

amended in

accordance

with the

law.

1.2 Loaned Party and Conditions

A borrower of the company shall meet one of the

following eligibility conditions:

1.2.1 Having inter-company or inter-firm business

transaction with the company; or

1.2.2 Being a subsidiary of the company where the

company holds more than 50% of its common

shares directly or indirectly, and a subsidiary of

the company where the company holds less than

50% of its common shares directly or indirectly

but have significant influence on the subsidiary,

and where an inter-company or inter-firm

short-term financing facility is necessary; or

1.2.3 In addition to the previous 2 items, Being a

company or proprietor who has good credit record

and is in need of short-term facility as a fund for

the purchase of materials, as short-term facility

leverage, as capital spending or as working capital

The term "short-term" as used in the preceding

paragraph means one year.

1.2 Loaned Party and Conditions

A borrower of the company shall meet one

of the following eligibility

conditions:

1.2.1 Having inter-company or inter-firm

business transaction with the

company; or

1.2.2 Being a subsidiary of the company

where the company holds more than

50% of its common shares directly

or indirectly, and where an

inter-company or inter-firm

short-term financing facility is

necessary; or

1.2.3 In addition to the previous 2 items,

Being a company or proprietor who

has good credit record and is in need

of short-term facility as a fund for

the purchase of materials, as

short-term facility leverage, as

capital spending or as working

capital

The term "short-term" as used in the

preceding paragraph means one year.

1. Duly

amended in

accordance

with the

operation

needs and

the law

31

2.2.4 In financing between the company’s

100% directly or indirectly owned foreign

subsidiaries, or the company’s 100% directly or

indirectly owned foreign subsidiaries finance to

the company, the aggregate amount of loans and

the maximum amount permitted to such a

company will not be subject to the limitation of

40% of the net worth of the lender as stated in the

most recent financial statement, but still needs to

establish a lending limit.

2.2.4 In financing between the

company’s 100% directly or indirectly

owned foreign subsidiaries, the aggregate

amount of loans and the maximum amount

permitted to such a company will not be

subject to the limitation of 40% of the net

worth of the lender as stated in the most

recent financial statement, but still needs to

establish a lending limit.

Duly

amended in

accordance

with the

law.

2.2.5 If the company processed the loans and

breach the regulation of 1.2 and 2.2, in accordance

with clause sixth set in the " Regulations

Governing Loaning of Funds and Making of

Endorsements/Guarantees by Public Companies”,

the chairman of the company shall be jointly and

severally liable to the borrower, and if the

company is injured, it shall also be liable for

damages."

N/A Duly

amended in

accordance

with the

law. (Newly

added)

2.6.2 In case of endorsements / guarantees by

the Company to a firm where the Company holds

over 50% of the voting power either directly or

indirectly, or by the firm directly or indirectly

holds more than 50% of the voting shares of the

Company. (1.3.2.2 and 1.3.2.3) or endorsements /

guarantees with companies where the Company

holds over 90% of the voting power either directly

or indirectly (1.3.2.4), the total amount of

individual endorsements / guarantees shall not

exceed 10% of the net worth shown through the

Company’s latest financial statements.

2.6.2 In case of endorsements /

guarantees by the Company to a firm

where the Company holds over 50% of the

voting power either directly or indirectly

(1.3.2.2 and 1.3.2.3) or endorsements /

guarantees with companies where the

Company holds over 90% of the voting

power either directly or indirectly

(1.3.2.4), the total amount of individual

endorsements / guarantees shall not exceed

10% of the net worth shown through the

Company’s latest financial statements.

1. Duly

amended in

accordance

with the

operation

needs and

the law

2.6.3 The total amount of individual

endorsements/guarantees granted by the Company

to a single company or among the Company and

companies where the Company holds over 90% of

the voting power either directly or indirectly shall

not exceed 10% of the net worth shown through

the Company’s latest term financial statements.

Where the Company grants endorsements /

guarantees to a corporation where the Company

maintains a business relationship, unless otherwise

prescribed in other Regulations, the amount of

individual endorsements / guarantees shall be

confined to the total amount of business

transaction accumulated over the past twelve

months and shall not exceed 10% of the net worth

shown through the Company’s latest financial

statements.

2.6.3 The total amount of individual

endorsements/guarantees granted by the

Company to a single company or among

the Company and companies where the

Company holds over 90% of the voting

power either directly or indirectly shall not

exceed 10% of the net worth shown

through the Company’s latest term

financial statements. Where the

Company grants endorsements / guarantees

to a corporation where the Company

maintains a business relationship, unless

otherwise prescribed in other Regulations,

the amount of individual endorsements /

guarantees shall be confined to the total

amount of business transaction

accumulated over the past twelve months

and shall not exceed 5% of the paid-in

capital of the guaranteed beneficiary.

Duly

amended in

accordance

with the

law.

32

3.2.3 The Company shall notify the Independent

Director in writing of any major irregularities, and

shall also send to the independent Director the

improvement plan stipulated in the breach of

governing loaning of funds and making of

endorsements/guarantees

N/A Duly

amended in

accordance

with the

law. (Newly

added)

5.2 Date of occurrence” in these Regulations

means the date of contract signing, date of

payment, dates of boards of directors resolutions,

or other date that can confirm the counterparty and

monetary amount of the loaning of funds and

endorsements/guarantees, whichever date is

earlier. The company whose loans reach one of the

following levels shall announce and report such

event within two days commencing immediately

from the date of occurrence.

5.2 Date of occurrence” in these

Regulations means the date of contract

signing, date of payment, dates of boards

of directors resolutions, or other date that

can confirm the counterparty and monetary

amount of the transaction, whichever date

is earlier. The company whose loans reach

one of the following levels shall announce

and report such event within two days

commencing immediately from the date of

occurrence.

Duly

amended in

accordance

with the

law.

5.2.2.3 The aggregate balance of

endorsements/guarantees by the Company and its

subsidiaries for a single enterprise reaches NT$10

million or more and the aggregate amount of all

endorsements/guarantees for, book value of the

equity method long term investment, and balance

of loans to, such enterprise reaches 30 percent or

more of the Company's net worth as stated in its

latest financial statement.

5.2.2.3 The aggregate balance of

endorsements/guarantees by the Company

and its subsidiaries for a single enterprise

reaches NT$10 million or more and the

aggregate amount of all

endorsements/guarantees for, investment of

a long-term nature in, and balance of loans

to, such enterprise reaches 30 percent or

more of the Company's net worth as stated

in its latest financial statement.

Duly

amended in

accordance

with the

law.

6 Announcement of implementation and

amendment

6.1 This Regulation should be approved by the

Board of Directors, and then forwarded to

Supervisors and recognized in shareholders’

meeting before implementation.

Amendments to this Regulation should be

approved by more than half of the members

of the Audit Committee, and forwarded to the

Board of Directors for its resolution. If the

approval from more than half of the Audit

Committee’s members is not obtained, the

amendments may be approved by more than

two-thirds of all the Directors, but the Audit

Committee’s resolution should be recorded in

the Board of Directors’ meeting minutes.

The Amendments should be implemented

only after they are approved by the Board of

Directors and then recognized in

shareholders’ meeting; where any director

expresses dissent and it is contained in the

minutes or a written statement, the company

shall submit the dissenting opinion to the

audit committee and for discussion by the

6 Announcement of implementation

and amendment

6.1 This Regulation should be approved by

the Board of Directors, and then

forwarded to Supervisors and

recognized in shareholders’ meeting

before implementation.

Amendments to this Regulation should

be approved by more than half of the

members of the Audit Committee, and

forwarded to the Board of Directors for

its resolution. If the approval from more

than half of the Audit Committee’s

members is not obtained, the

amendments may be approved by more

than two-thirds of all the Directors, but

the Audit Committee’s resolution

should be recorded in the Board of

Directors’ meeting minutes.

The Amendments should be

implemented only after they are

approved by the Board of Directors and

then recognized in shareholders’

meeting.

Duly

amended in

accordance

with the

law.

33

shareholders' meeting.

The aforementioned members of the Audit

Committee and Directors refer to those who

are incumbent.

The aforementioned members of the

Audit Committee and Directors refer to

those who are incumbent.

6.2 Where the members of the BoD may have

different opinions assent or dissent to the

amendment of this regulation, their opinions shall

be duly observed and stated in the resolution of

the BoD.

6.2 Where the members of the BoD may

have different opinions for or against

making this regulation or any amendment

thereafter, their opinions shall be duly

observed and stated in the resolution of the

BoD.

Duly

amended in

accordance

with the

law.

7

The Measures were established on May 13, 2003.

The First Amendment was made on June 15, 2004.

The Second Amendment was made on June 21, 2006.

The Third Amendment was made on June 21, 2007.

The Fourth Amendment was made on June 22, 2009.

The Fifth Amendment was made on June 15, 2010.

The Sixth Amendment was made on June 19, 2012.

The Seventh Amendment was made on June 19, 2013.

The Eighth Amendment was made on June 24, 2015.

The Ninth Amendment was made on June 22, 2017.

The Tenth Amendment was made on June 21, 2019.

7

The Measures were established on May 13th, 2003.

The First Amendment was made on June 15th, 2004.

The Second Amendment was made on June 21st, 2006.

The Third Amendment was made on June 21st, 2007.

The Fourth Amendment was made on June 22nd, 2009.

The Fifth Amendment was made on June 15nd, 2010.

The Sixth Amendment was made on June 19nd, 2012.

The Seventh Amendment was made on June 19nd, 2013.

The Eighth Amendment was made on June 24nd, 2015.

The Ninth Amendment was made on June 22nd, 2017.

Addition of

date of

amendment

34

Attachment 9

Lite-On Technology Corporation Comparison Table of Amendments to the Rules Governing the Election of

Directors AFTER Amendment BEFORE Amendment Description

Article 1 The cumulative voting method shall be

used for election of Lite-On Technology

Corporation's directors. Each share will

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. Shareholder numbers

or attendance card numbers printed on the

ballots may be used instead of recording

the names of voting shareholders.

The overall composition of the board of

directors shall be taken into consideration

in the selection of the Company's

directors. The composition of the board of

directors shall be determined by taking

diversity into consideration and

formulating an appropriate policy on

diversity based on Lite-On Technology

Corporation's business operations,

operating dynamics, and development

needs. It is advisable that the policy

include, without being limited to, the

following two general standards:

A. Basic requirements and values:

Gender, age, nationality, race or

ethnicity, and culture.

B. Professional knowledge and skills: A

professional background (e.g., law,

accounting, industry, finance,

marketing, or technology),

professional skills, and industry

experience.

Each board member shall have the

necessary knowledge, skill, and

experience to perform his/her duties. The

abilities that must be present in the board

as a whole are as follows:

A. Ability to make sound business

judgments.

B. Ability to perform accounting and

financial analysis.

C. Ability to manage a business.

D. Ability to handle crisis management.

E. Knowledge of the industry.

Article 2 The cumulative voting method shall be

used for election of Lite-On Technology

Corporation's directors. Each share will

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. Shareholder numbers

or attendance card numbers printed on the

ballots may be used instead of recording

the names of voting shareholders.

The overall composition of the board of

directors shall be taken into consideration

in the selection of the Company's

directors. The composition of the board of

directors shall be determined by taking

diversity into consideration and

formulating an appropriate policy on

diversity based on Lite-On Technology

Corporation's business operations,

operating dynamics, and development

needs. It is advisable that the policy

include, without being limited to, the

following two general standards:

C. Basic requirements and values:

Gender, age, nationality, and culture.

D. Professional knowledge and skills: A

professional background (e.g., law,

accounting, industry, finance,

marketing, or technology),

professional skills, and industry

experience.

Each board member shall have the

necessary knowledge, skill, and

experience to perform his/her duties. The

abilities that must be present in the board

as a whole are as follows:

I. Ability to make sound business

judgments.

J. Ability to perform accounting and

financial analysis.

K. Ability to manage a business.

L. Ability to handle crisis management.

M. Knowledge of the industry.

N. An international market perspective.

Amendments

pursuant to

strength the

board diversity

35

F. An international market perspective.

G. Leadership ability.

H. Decision-making ability.

O. Leadership ability.

P. Decision-making ability.

Article 4

During the two years before being elected

or during the term of office, independent

directors of Lite-On Technology

Corporation may not have been or be any

of the following:

A. An employee of Lite-On

Technology Corporation or any

of its affiliates.

B. A director or supervisor of

Lite-On Technology

Corporation or any of its

affiliates. Exception shall apply

to independent directors

established by Lite-On

Technology Corporation or its

subsidiary pursuant to the

Securities and Exchange Act or

local laws and regulations.

C. A natural-person shareholder

who holds shares, together with

those held by the person's

spouse, minor children, or held

by the person under others'

names, in an aggregate amount

of one percent or more of the

total number of issued shares of

Lite-On Technology

Corporation, or ranks among

the ten largest natural-person

shareholders.

D. Personnel listed in Subparagraph 2 and 3 and a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship of the managerial officer of the Company or affiliate company.

E. A director, supervisor, or

employee of a corporate

shareholder that directly holds

five percent or more of the total

number of issued shares of

Lite-On Technology

Corporation or of a corporate

Article 4

During the two years before being elected

or during the term of office, independent

directors of Lite-On Technology

Corporation may not have been or be any

of the following:

A. An employee of Lite-On

Technology Corporation or any

of its affiliates.

B. A director or supervisor of

Lite-On Technology

Corporation or any of its

affiliates. Exception shall apply

to independent directors

established by Lite-On

Technology Corporation or its

subsidiary pursuant to the

Securities and Exchange Act or

local laws and regulations.

C. A natural-person shareholder

who holds shares, together with

those held by the person's

spouse, minor children, or held

by the person under others'

names, in an aggregate amount

of one percent or more of the


Lite-On Technology

Corporation, or ranks among

the ten largest natural-person

shareholders.

D. A spouse, relative within the

second degree of kinship, or

lineal relative within the third

degree of kinship, of any of the

persons in the preceding three

subparagraphs.

E. A director, supervisor, or

employee of a corporate

shareholder that directly holds

five percent or more of the total

number of issued shares of

Lite-On Technology

Corporation or of a corporate

shareholder that ranks among

the top five in shareholdings.

Amendments

pursuant to the

Regulations

Governing

Appointment of

Independent

Directors and

Compliance

Matters for

Public

Companies.

36

shareholder that ranks among

the top five in shareholdings.

F. A director, supervisor, officer,

or shareholder holding five

percent or more of the shares,

of a specified company or

institution that has a financial or

business relationship with

Lite-On Technology

Corporation.

A professional individual who,

provides auditing services for

the Company or to any affiliate

of the company, or an owner,

partner, director, supervisor, or

officer of a sole proprietorship,

partnership, company, or

institution that, provides

commercial, legal, financial,

accounting services or

consultation to the company or

to any affiliate of the company,

or a spouse thereof that received

cumulative compensation

totaling over NT$500,000 within

two years. However, this

excludes members of the

Remuneration Committee who

exercise power in accordance

with the Regulations Governing

Appointment of Independent

Directors and Compliance

Matters for Public Companies.

The requirement of the preceding

paragraph in relation to "during the two

years before being elected" does not

apply where an independent director of

Lite-On Technology Corporation has

served as an independent director of

Lite-On Technology Corporation or any

of its affiliates, or of a specified company

or institution that has a financial or

business relationship with Lite-On

Technology Corporation, as stated in

subparagraph 2 or 6 of the preceding

paragraph, but is currently no longer in

that position.

A. The term "specified company or

institution" as used in

paragraph 1, subparagraph 6,

means a company or institution

that has one of the following

relationships with the

F. A director, supervisor, officer,

or shareholder holding five

percent or more of the shares,

of a specified company or

institution that has a financial or

business relationship with

Lite-On Technology

Corporation.

G. A professional individual who,

or an owner, partner, director,

supervisor, or officer of a sole

proprietorship, partnership,

company, or institution that,

provides commercial, legal,

financial, accounting services or

consultation to the company or

to any affiliate of the company,

or a spouse thereof. However,

this excludes members of the

Remuneration Committee who

exercise power in accordance

with the Regulations Governing

Appointment of Independent

Directors and Compliance

Matters for Public Companies.

The requirement of the preceding

paragraph in relation to "during the two

years before being elected" does not

apply where an independent director of

Lite-On Technology Corporation has

served as an independent director of

Lite-On Technology Corporation or any

of its affiliates, or of a specified company

or institution that has a financial or

business relationship with Lite-On

Technology Corporation, as stated in

subparagraph 2 or 6 of the preceding

paragraph, but is currently no longer in

that position.

E. The term "specified company or

institution" as used in

paragraph 1, subparagraph 6,

means a company or institution

that has one of the following

relationships with the

Company: It holds 20 percent

or more and no more than 50

percent of the total number of

issued shares of Lite-On

Technology Corporation.

F. It holds shares, together with

those held by any of its

directors, supervisors, and

37

Company: It holds 20 percent

or more and no more than 50

percent of the total number of

issued shares of Lite-On

Technology Corporation.

B. It holds shares, together with

those held by any of its

directors, supervisors, and

shareholders holding more than

10 percent of the total number

of shares, in an aggregate total

of 30 percent or more of the


the Company, and there is a

record of financial or business

transactions between it and the

Company. The shareholdings of

any of the aforesaid persons

include the shares held by the

spouse or any minor child of

the person or by the person

under others' names.

C. It and its group companies are

the source of 30 percent or

more of the operating revenue

of the Company.

D. It and its group companies are


more of the total volume or

total purchase amount of

principal raw materials (those

that account for 30 percent or

more of total procurement

costs, and are indispensable and

key raw materials in product

manufacturing) or principal

products (those accounting for

30 percent or more of total

operating revenue) of the

Company.

For the purposes of the preceding

paragraph, the terms "subsidiary" and

"group" shall have the meanings as

determined under International Financial

Reporting Standards 10.

No independent director may

concurrently serve as an independent

director of more than three other public

companies.

shareholders holding more than

10 percent of the total number

of shares, in an aggregate total

of 30 percent or more of the


the Company, and there is a

record of financial or business

transactions between it and the

Company. The shareholdings of

any of the aforesaid persons

include the shares held by the

spouse or any minor child of

the person or by the person

under others' names.

G. It and its group companies are


more of the operating revenue

of the Company.

H. It and its group companies are


more of the total volume or

total purchase amount of

principal raw materials (those

that account for 30 percent or

more of total procurement

costs, and are indispensable and

key raw materials in product

manufacturing) or principal

products (those accounting for

30 percent or more of total

operating revenue) of the

Company.

For the purposes of the preceding

paragraph, the terms "subsidiary" and

"group" shall have the meanings as

determined under International Financial

Reporting Standards 10.

No independent director may

concurrently serve as an independent

director of more than three other public

companies.

Article 5

The election of directors (including

Article 5

The election of directors (including

Amendments

pursuant to the

38

independent directors) of Lite-On

Technology Corporation is subject to the

provisions of Article 192-1 of the

Company Act in that a candidate

nomination system shall be adopted, that

such system shall be expressly stated in

the Articles of Incorporation of the

Lite-On Technology Corporation, and

that shareholders shall elect directors

(including independent directors) from

among the those listed in the slate of

director candidates. Regarding review of

director (and independent director)

candidate qualifications, education,

experience, circumstances in Article 30 of

the Company Act exists, documentary

proof of other qualifications cannot be

additionally listed without completing the

appropriate procedures. Review results

shall be presented to the shareholders as a

basis for the consideration and election of

suitable directors (including independent

directors).

Where the number of independent

directors falls below the minimum

specified in the proviso under Article

14-2, Paragraph 1 of the Securities and

Exchange Act and fails to satisfy the

provisions in the Taiwan Stock Exchange

Corporation Rules Governing Review of

Securities Listings, a by-election shall be

held at the next shareholders’ meeting. In

the event that all the independent

directors have been discharged, an

extraordinary shareholders’ meeting shall

be convened to hold a by-election within

sixty days from the date of such

occurrence.

Lite-On Technology Corporation shall

prior to the book closure date before the

convening of the shareholders' meeting,

publish a notice specifying a period for

receiving nominations of director

(including independent director)

candidates, the number of directors

(including independent directors) to be

elected, the place for receiving such

nominations, and other necessary matters;

the period for receiving nominations shall

be not less than 10 days.

Lite-On Technology Corporation may

present a slate of director (including

independent director) candidates

independent directors) of Lite-On

Technology Corporation is subject to the

provisions of Article 192-1 of the

Company Act in that a candidate

nomination system shall be adopted, that

such system shall be expressly stated in

the Articles of Incorporation of the

Lite-On Technology Corporation, and

that shareholders shall elect directors

(including independent directors) from

among the those listed in the slate of

director candidates. Regarding review of

director (and independent director)

candidate qualifications, education,

experience, circumstances in Article 30 of

the Company Act exists, documentary

proof of other qualifications cannot be

additionally listed without completing the

appropriate procedures. Review results

shall be presented to the shareholders as a

basis for the consideration and election of

suitable directors (including independent

directors).

Where the number of independent

directors falls below the minimum

specified in the proviso under Article

14-2, Paragraph 1 of the Securities and

Exchange Act and fails to satisfy the

provisions in the Taiwan Stock Exchange

Corporation Rules Governing Review of

Securities Listings, a by-election shall be

held at the next shareholders’ meeting. In

the event that all the independent

directors have been discharged, an

extraordinary shareholders’ meeting shall

be convened to hold a by-election within

sixty days from the date of such

occurrence.

Lite-On Technology Corporation shall

prior to the book closure date before the

convening of the shareholders' meeting,

publish a notice specifying a period for

receiving nominations of director


candidates, the number of directors

(including independent directors) to be

elected, the place for receiving such

nominations, and other necessary matters;

the period for receiving nominations shall

be not less than 10 days.

Lite-On Technology Corporation may

present a slate of director (including

independent director) candidates

provisions of

Article 192-1 of

the Company

Act and the

Regulations

Governing

Appointment of

Independent

Directors and

Compliance

Matters for

Public

Companies.

39

nominated by the methods set out below,

and, upon evaluation by the board of

directors that all candidates so nominated

are qualified director (including

independent director) candidates, submit

it to the shareholders' meeting for

elections:

A. A shareholder holding one

percent or more of the total

number of issued shares may

present a slate of director


candidates in writing to the

Company; the number of

nominees may not exceed the

number of directors (including

independent directors) to be

elected.

B. The board of directors presents

a slate of director (including

independent director)

candidates; the number of




elected.

C. Otherwise as designated by the

competent authority.

When providing a recommended slate of

candidates under the preceding

paragraph, a shareholder or the board of

directors shall specify include in the

documentation attached thereto each

nominee's name, educational

background, work experience, a written

undertaking indicating the nominee's

consent to serve as a director (or

independent director) if elected as such, a

written statement that none of the

circumstances in Article 30 of the

Company Act exists, and other relevant

documentary proof. independent director

nominees in the preceding paragraph and

provide documents specified in Article 3,

Paragraph 1 and Article 4 regarding

qualifications of the nominees and other

certification documents

If independent directors are nominated,

the board of directors, or other person

having the authority to call a

shareholders' meeting, shall review the

qualifications of each director (including

independent director) nominee; except

nominated by the methods set out below,

and, upon evaluation by the board of

directors that all candidates so nominated

are qualified director (including

independent director) candidates, submit

it to the shareholders' meeting for

elections:

A. A shareholder holding one

percent or more of the total

number of issued shares may

present a slate of director


candidates in writing to the

Company; the number of




elected.

B. The board of directors presents

a slate of director (including

independent director)

candidates; the number of




elected.

C. Otherwise as designated by the

competent authority.

When providing a recommended slate of

candidates under the preceding

paragraph, a shareholder or the board of

directors shall include in the

documentation attached thereto each

nominee's name, educational

background, work experience, a written

undertaking indicating the nominee's

consent to serve as a director (or

independent director) if elected as such, a

written statement that none of the

circumstances in Article 30 of the

Company Act exists, and other relevant

documentary proof.

The board of directors, or other person

having the authority to call a

shareholders' meeting, shall review the

qualifications of each director (including

independent director) nominee; except

under any of the following

circumstances, all qualified nominees

shall be included in the slate of director


candidates:

40

under any of the following

circumstances, all qualified nominees

shall be included in the slate of director


candidates:

A. Where the nominating

shareholder submits the

nomination at a time not within

the published period for

receiving nominations.

B. Where the shareholding of the

nominating shareholder is less

than one percent at the time of

book closure by the Company

under Article 165, paragraph 2

or 3 of the Company Act.

C. Where the number of nominees

exceeds the number of directors

(including independent

directors) to be elected.

D. Where the nominating

shareholder fails to specify the

name, education, and

experience of the nominee.

E. Where the relevant

documentary proof for

independent directors required


is not attached.

If an independent director candidate

included by the Company under the

provisions of the preceding paragraph

has already served as an independent

director of the Company for three

consecutive terms or more, Lite-On

Technology Corporation shall publicly

disclose, together with the slate of

candidates the review results under the

preceding paragraph, the reasons why the

candidate is nominated again for the

independent directorship, and present the

aforementioned reasons to the

shareholders at the time of the election at

the shareholders’ meeting.

The process of reviewing director


nominees in the preceding paragraph

shall be recorded, and the records shall

be retained for a minimum of one year.

However, in situations where a

shareholder makes a litigious claim

against the director (including

independent director) election process,

A. Where the nominating

shareholder submits the

nomination at a time not within

the published period for

receiving nominations.

B. Where the shareholding of the

nominating shareholder is less

than one percent at the time of

book closure by the Company

under Article 165, paragraph 2

or 3 of the Company Act.

C. Where the number of nominees

exceeds the number of directors

(including independent

directors) to be elected.

D. Where the relevant

documentary proof required


is not attached.

If an independent director candidate

included by the Company under the

provisions of the preceding paragraph

has already served as an independent

director of the Company for three

consecutive terms or more, Lite-On

Technology Corporation shall publicly

disclose, together with the review results

under the preceding paragraph, the

reasons why the candidate is nominated

again for the independent directorship,

and present the aforementioned reasons

to the shareholders at the time of the

election at the shareholders’ meeting.

The process of reviewing director


nominees in the preceding paragraph

shall be recorded, and the records shall

be retained for a minimum of one year.

However, in situations where a

shareholder makes a litigious claim

against the director (including

independent director) election process,

the records shall be retained until the

litigation is concluded.

The Company shall announce the slate of

director (including independent director)

candidates and their education and

experience as well as the number of

shares held by each candidate at least 40

days prior to the upcoming shareholders’

meeting or 25 days prior to the upcoming

extraordinary shareholders’ meeting,

inform the nominating shareholders of

41

the records shall be retained until the

litigation is concluded.

The Company shall announce the slate of


candidates and their education and

experience as well as the number of

shares held by each candidate at least 40

days prior to the upcoming shareholders’

meeting or 25 days prior to the upcoming

extraordinary shareholders’ meeting,

inform the nominating shareholders of

the review results, and, where applicable,

provide detailed reasons for not

including nominees on the slate of


candidates.

A spousal relationship or a familial

relationship within the second degree of

kinship may not exist among more than

half of the directors on the board.

the review results, and, where applicable,

provide detailed reasons for not

including nominees on the slate of


candidates.

A spousal relationship or a familial

relationship within the second degree of

kinship may not exist among more than

half of the directors on the board.

Article 6

Independent and non-independent

directors shall be elected at the same time,

but the numbers of independent or

non-independent directors to be elected

shall be calculated separately. A candidate

to whom the ballots cast represent a

prevailing number of votes shall be

deemed an independent or

non-independent director elect. When two

or more persons receive the same number

of votes, thus exceeding the specified

number of positions, they shall draw lots

to determine the winner, with the chair

drawing lots on behalf of any person not

in attendance.

If the outcome shows that none of the

independent directors candidates with the

highest numbers of votes has accounting

or financial expertise, those candidates

with accounting or financial expertise

shall have their votes counted separately

and one seat shall be awarded to the

candidate with the highest number of

Article 6

Independent and non-independent

directors shall be elected at the same time,

but the numbers of independent or

non-independent directors to be elected

shall be calculated separately. A candidate

to whom the ballots cast represent a

prevailing number of votes shall be

deemed an independent or

non-independent director elect. When two

or more persons receive the same number

of votes, thus exceeding the specified

number of positions, they shall draw lots

to determine the winner, with the chair

drawing lots on behalf of any person not

in attendance.

If the outcome shows that none of the

independent directors candidates with the

highest numbers of votes has accounting

or financial expertise, those candidates

with accounting or financial expertise

shall have their votes counted separately

and one seat shall be awarded to the

candidate with the highest number of

Amendments

pursuant to the

Regulations

Governing

Appointment of

Independent

Directors and

Compliance

Matters for

Public

Companies.

42

votes. The remaining positions shall be

filled as described in the preceding

paragraph.

If an independent director elected at a

shareholders’ meeting is required to be

dismissed ipso facto during the term of

office for reason of a violation of Article

3 or 4 herein, it is prohibited to change

the status of the person from independent

director to non-independent director. A

non-independent director elected at a

shareholders’ meeting likewise may not

be arbitrarily changed from a

non-independent director to an

independent director during the term of

office.

votes. The remaining positions shall be

filled as described in the preceding

paragraph.

If an independent director elected at a

shareholders’ meeting is required to be

dismissed during the term of office for

reason of a violation of Article 3 or 4

herein, it is prohibited to change the status

of the person from independent director to

non-independent director. A

non-independent director elected at a

shareholders’ meeting likewise may not

be arbitrarily changed from a

non-independent director to an

independent director during the term of

office.

Article 17

The rules were established on March 13,

1989.

The first amendment was made on May

19, 1998.

The second amendment was made on

May 21, 2002.

The third amendment was made on June

21, 2007.

The fourth amendment was made on June

19, 2012.

The fifth amendment was made on June

19, 2013.

The sixth amendment was made on June

24, 2015.

The seventh amendment was made on

June 24, 2016.

The eighth amendment was made on June

22XX, 2018.

The 9th amendment was on June 21,

2019.

Article 17

The rules were established on March 13,

1989.

The first amendment was made on May

19, 1998.

The second amendment was made on

May 21, 2002.

The third amendment was made on June

21, 2007.

The fourth amendment was made on June

19, 2012.

The fifth amendment was made on June

19, 2013.

The sixth amendment was made on June

24, 2015.

The seventh amendment was made on

June 24, 2016.

The eighth amendment was made on June

22XX, 2018.

Add new date of

amendment

43

Lite-On Technology Corporation Attachment 10

Details of Discussion of release of directors from non-competition restrictions:

No Position Name Release of Directors from non-competition restrictions

1 Director Raymond

Soong

◼ Chairman of Lite-On Semiconductor Corp.,

DIODES,INC, Lite-On Semi (Wuxi) Co., Ltd.,

Lite-On Semi Electronics (Wuxi) Co., Ltd. and G-Pro

Electronics (SH) Co., Ltd.

◼ Chairman, representative of Silitech Technology

Corp., Co-tech Copper Foil Corporation and

SUZHOU LITE-ON STORAGE CO., LTD.

◼ Director of DYNA International Holding Co.,Ltd.,

DYNA International Co. Ltd, Lite-On Semiconductor

(HK) LTD and On-Bright Electronics Incorporated

◼ Director, representative of Silitech (Hong Kong)

Holding Ltd., Silitech Technology (Su Zhou) Ltd.,

Xurong Electroinc (Shenzhen) Co., Ltd., Silitech

(BVI) Holding Ltd., Silitech (Bermuda) Holding Ltd.,

Silitech Technology Corp. Ltd., Silitech Technology

Corp. Sdn. Bhd. and SKYLA CORPORATION

2 Director Warren Chen

◼ Director of Lite-On Semiconductor Corp., Lite-On

Japan Ltd., KBW-LITEON Jordan Private

Shareholding Limited and KBW-LEOTEK Jordan

Private Shareholding Limited

◼ Director, representative of Philips & Lite-On Digital

Solutions Corporation, Silitech Technology Corp.,

Silitech (BVI) Holding Ltd., Silitech (Bermuda)

Holding Ltd., Silitech Technology Corp. Ltd.,

Silitech Technology Corp. Sdn. Bhd., Silitech (Hong

Kong) Holding Ltd., Silitech Technology (Su Zhou)

Ltd., Xurong Electroinc (Shenzhen) Co., Ltd.,

SKYLA CORPORATION, SUZHOU LITE-ON

STORAGE CO., LTD.

3 Director Tom Soong

◼ Vice Chairman of KBW-LITEON Jordan Private

Shareholding Limited, KBW-LEOTEK Jordan

Private Shareholding Limited and LEOTEK, PSC

◼ Director of Co-tech Copper Foil Corporation

4 Director Keh-Shew Lu

◼ Director of Lorenz Co., Ltd. and Diodes Incorporated

◼ Director, representative of Nuvoton Technology

Corp.

◼ President and CEO of Diodes Incorporated

5 Director CH Chen

◼ Chairman, representative of Lite-On Semiconductor

(Philippines)

◼ Vice Chairman of DIODES, INC. and Lite-On

Semiconductor Corp.

◼ Director of Smart Power Holding Group Co.Ltd.,

G-Pro Electronics (SH) Co., Ltd., DYNA

International Holding Co., Ltd., DYNA International

Co., Ltd., Lite-On Semi (Wuxi) Co., Ltd., Lite-On

44

Semi Electronics (Wuxi) Co., Ltd., Lite-On

Semiconductor (HK) LTD and Smart Power Holding

Group Co. Ltd.

◼ Director, representative of Kwong Lung Enterprise

Co, Ltd.

6 Independent

Director Albert Hsueh

◼ Independent Director of , Yuanta Financial Holding

Co., Ltd. and Yuanta Bank, Walsin Lihwa Corp. and

TTY Biopharmaceutial Manufacturers Association

7 Independent

Director Harvey Chang

◼ Chairman of TVBS, Via On Demand and IC

Broadcasting Co., Ltd.

8 Independent

Director Edward Yang

◼ iD Ventures America, LLC Partner

◼ Chairman of GVT Fund

◼ Director of Sifotonics Technologies, Bandwidth 10

and Neurostim OAB

9 Independent

Director Mike Yang

◼ Chairman of Quanta Cloud Technology Japan Inc.

◼ Director & President of QCT Korea Inc.

◼ Senior Vice President of Quanta Computer Inc.

Cloud Computing Business Unit

◼ President of Quanta Cloud Technology Inc.,

Cloud-Tech (Chongqing) Technology Co., Ltd. and

QCT LLC President

◼ Managing Director of Quanta Cloud Technology

Germany GmbH and QCG Computer GmbH

meeting minutes - lite-on · 1. 2018 financial statements have been audited by certified public...

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