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Y2012 Far EasTone Telecommunications Co., Ltd. Shareholders’ Meeting Handbook

June 13, 2012 Taipei, Taiwan, R.O.C.

The English version is the translation of the Chinese version and if there is any conflict in the handbook between the meaning of Chinese words of terms in the Chinese version and English words or terms in the English version, the meaning of the Chinese version shall prevail.

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Far Eastone Telecommunications Co., Ltd. Agenda of 2012 Shareholders' Meeting

Time: 9:00 a.m., June 13, 2012 Place: Taipei Hero House, 20 Changsha Street, Sec. 1, Taipei, Taiwan Opening – Chairman Company Presentation – Chairman / President Agenda of Meeting Handbook – Chairman 1. Matters to be reported : (1) Business report of Year 2011……………………………………………….…...…………………………..…..………..……..… 3 (2) Financial report of Year 2011……………………………………………………....…………………………………………....… 5 (3) Review of the Year 2011 closing report by the Supervisors. ……………………………....…………………………………….... 6 2. Matters to be ratified : (1) Ratify Year 2011 financial statements (including business report of Year 2011)…………....……..………...………………… 7 (2) Ratify the proposal for Year 2011 retained earnings distribution……………………...….………………………………….… 8 3. Matters to be discussed and election: (1) Review and approval of the cash distribution from Capital Surplus…………………...….………………………………….…… 9 (2) Review and approval of the amendment to “the Articles of Incorporation” of the Company………………...…………….…...... 10 (3) Review and approval of the amendment to “Handling Procedure for Acquisition and Disposal of Assets” of the Company……. 11 (4) Review and approval of the amendment to “Regulations Governing Shareholders’ Meeting” of the Company…………………. 12 (5) Review and approval of the issuance of common shares by private placement………………... …………………...……....…... 13 (6) Election of new Directors and Supervisors of the Company(The term of the newly elected nine directors and three supervisors,

the newly elected directors including two independent directors shall be elected by adopting a candidate nomination system)...

16 (7) Release of the non-competition restriction on directors in accordance with Article 209 of the Company Law………………....... 18 4. Extempore Motion 19 5. Motion to Adjourn 19

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Attachment 1. Independent Auditors’ Report………………………………………………………........................................................................ 20 2. Balance Sheets in Y2011……………………………………………………………………...……….……....…………………... 21 3. Statements of Income in Y2011……………………………………………….………………………......…………………...….. 22 4. Statements of Changes in Stockholders’ Equity in Y2011………………………………………………...……....…….……..….. 24 5. Statements of Cash Flows in Y2011…………………………………………….…………………………...…....…………..…… 25 6. Consolidated Independent Auditors’ Report…………………………………….……………………...………...………..……… 28 7. Consolidated Balance Sheets in Y2011…………………………………………….……………………………..…....……...…... 29 8. Consolidated Statements of Income in Y2011……………………………………………….……………....………..………...… 30 9. Consolidated Statements of Changes in Stockholders’ Equity in Y2011……………………………………….…...………....….. 32 10. Consolidated Statements of Cash Flows in Y2011……………………………………………….……………………....……….. 33 11. Amendment to Articles of Incorporation of FarEastone Telecommunications Co., Ltd. ………….……………………....……… 37 12. Amendment to Handling Procedure for Acquisition and Disposal of Assets of FarEastone Telecommunications Co., Ltd……… 40 13. Amendment to “Regulations Governing Shareholders’ Meeting” of FarEastone Telecommunications Co., Ltd…………………. 72 14. Fairness Opinion Private Placement of Common Shares Far EasTone Telecommunications Co. Ltd. ………………...………… 74 15. Status of Directors & Supervisors’ shareholding on April 15, 2012……….…………………...…………….………………..….. 84 16. Bonus to Employees, Directors and Supervisors………………………….…………………….………………...……………..... 17. Impact of Stock Dividend Distribution on Business Performance, EPS and Return on Investment……………...…………….....

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Articles 1. Articles of Incorporation of Far Eastone Telecommunication Co., Ltd…………………………………..……………..……...…. 86 2. Handling Procedure for Acquisition and Disposal of Assets of FarEastone Telecommunications Co., Ltd.. …...………...……... 92 3. Rules Governing the Conduct of Shareholders’ Meeting………………..…………………...……………..…….......................... 106 4. Directors and Supervisors Election Guidelines…………………………………...………….………………….………………... 109

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1. Matters to be reported:

1. Business report of Year 2011 Dear Shareholders, As we embark on the new year of 2012, the global economic outlook remains uncertain and the competition within the telecommunications industry of Taiwan looks set to intensify with a myriad of external and internal factors at play. In 2011, as a result of market forces and policies, the telecommunications industry experienced a slowdown in its growth. According to NCC statistics, the telecommunications industry of Taiwan raked in an annual revenue which is 3.9% of the previous year, of which fixed line, long-distance and international fixed calls contributed total 8.8billion revenue with 14% growth on YoY basis while mobile communications contributed only 3.85% growth due to price cuts, the resumption of pricing rights from fixed-line to mobile, plus extensive subsidies for smart devices. Despite the ever-increasing competition, the concerted effort of everyone at Far EasTone helped to turn in a consolidated revenue of NT$75.749 billion for 2011, combined EBITDA (earnings before interest, taxes, depreciation and amortization) of NT$22.471 billion and after-tax earnings of NT$8.881 billion. EPS stands at NT$2.73, consolidated revenue target achievement rate at 102% and net income at 105%. Non-voice service revenue made an impressive showing at 22.3% of total mobile service revenue, as opposed to 16.4% in the previous year and clocked in 40.8% growth. Operating Performance and Results for 2011 � Strengthening infrastructures for a more complete and quality network In response to the rapid growth of smart devices, Far EasTone has been working relentlessly to build high quality network and to accelerate 3G network upgrading around the island. At present, there are 25,000 WiFi locations with Far EasTone coverage, and we are actively setting up direct submarine cable for international services. In addition, the strategic collaboration between Vodafone Group and Conexus Mobile Alliance brought about enhanced benefits for a combined global mobile customer base of more than 600 million. � Quick growing by FET 4 asset bases - One product, two markets In order to retain our leadership in the non-voice services market, Far EasTone spared no efforts in promoting its 4 main asset bases – “FET SMart”, “FET eBook Town”, “Omusic” and “FET Video Store”. FET SMart, in particular, was voted the best “store-in-store” in Mobile Market of China Mobile. FET’s in-house app “Bella” also received the 5th GTA for Digital Publications as presented by the Government Information Office of the Executive Yuan for reinventing reading and thus popularizing it again. Launching FET eBook Town on China Mobile is a strategic move to demonstrate Taiwan’s soft power, both of which will be further strengthened with similar introduction of Omusic and FET Video Store through collaboration with global alliance partners. � Efforts to expand and create 360 degrees full range of services The year 2011 saw Far EasTone consolidating its sales channels via subsidiaries Arcoa Communication and Data Express, resulting in 850 stores island-wide. In this era where there is negligible difference between channels, the only significant difference lies in the quality of service. As such, Far EasTone made it a point to invest time and effort to train service specialists to augment its range of 360 degree services and to set the benchmark for smart service quality in the industry. � FET 8 Enterprise Intelligence services to enhance competitiveness Far EasTone launched the FET 8 Enterprise Intelligence by combining cloud, technology and industry practices to help enterprises in the sectors of medical, transportation, environmental control, management, office, service, business and school. Coupled with the fact that Far EasTone pioneered the first green

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IDC center in Taiwan, we are well geared to give enterprises a customized competitive edge in information and communications. Operational and Strategic Plan for 2012 � Brand new vision and mission focusing on core values In the face of social and market changes, Far EasTone will in the year of 2012 work towards fulfilling the mission of “FET Connects and Enriches Life” and will be best integrate Communication services & Digital contents with footprint in and beyond Taiwan.. With the introduction of this vision and mission, Far EasTone’s core values have been extended to encompass the following: “Trustworthy, Innovative, Proactive, Accountability and Teamwork”. � Continue driving operational efficiency and organizational synergy To prepare the company for the swift competitions, Far EasTone will continue to improve upon its management efficiency and synergy within the organization. In terms of core business, we need to ensure the continued growth of non-voice services, the enterprise and overseas markets. As well, we will continue to invest in high-quality network, focus on the integration of Far EasTone’s various business units and leverage on the resources of our parent company, Far Eastern Group to optimize new opportunities. Additionally, to fulfill our brand value, put the highlight on talent development and retention and attain maximum customer satisfaction. � Playing our part as a socially responsible corporate citizen While we pursue business objectives, we strongly believe we should also contribute positively towards the needs of the society. As a result, a committee to look into social and corporate responsibility was officially set up in Far EasTone in 2011, working to the theme of “Trendy Go Green and Creative Sustainability”. We hope that we can lead by example and demonstrate that participation in social responsibility can be both trendy and creative and that this would spur more people to do likewise. Moving forward in 2012, in tandem with forging ahead with our business goals, we will also remain committed to our corporate social responsibility. We will launch innovative products that will cater to each and everyone of our target audience and consumer, and with the same enthusiasm, Far EasTone will strive to surpass our users’ expectations, be the preferred employer to our employees and create maximum value for our shareholders. Our commitment to corporate social responsibility and environmental sustainability will continue to gain momentum, as will our tenacity and pursuit of excellence for the growth of the company. Lastly, may I extend our most heartfelt thanks to each shareholder and may you, continue to spur us on. Wishing you all the best of health and success in your endeavors.

Chairman President Chief Accountant

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（（（（2））））Financial report of Year 2011

Balance Sheets in Y2011 Statements of Income in Y2011 Statements of Changes in Stockholders’ Equity in Y2011 Statements of Cash Flows in Y2011 Consolidated Balance Sheets in Y2011 Consolidated Statements of Income in Y2011 Consolidated Statements of Changes in Stockholders’ Equity in Y2011 Consolidated Statements of Cash Flows in Y2011

Please see the attachments for Independent Auditors’ Report together with all above financial reports of Y2011. Please refer to page 20~36. For complete financial reports, please download from M.O.P.S. (http://newmops.twse.com.tw/)

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（（（（3））））Review of the Year 2011 closing report by the Supervisors

April 21, 2012

The Board of Directors have prepared and submitted to us the Company's 2011 Business Reports, the Financial Statements, and the Proposal for Profit Distribution ( included the consolidated Financial Reports) audited by the CPAs of Deloitte & Touche Co.

The above reports, financial statements, and proposal have been further examined as conforming the Company Act and related law by the undersigned Supervisors of Far EasTone Telecommunications Co., Ltd. According to Article 219 of the Company Act, we hereby submit this report.

To

FET 2012 Shareholders’ Meeting

Supervisors：Chen-en Ko

Eli Hong

Morton Huang

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2.Matters to be Ratified：：：： (1) Ratify Year 2011 financial statements (including business report of Year 2011) Explanatory Notes： 1. Please discuss and approve the business report of Year 2011 and annual financial statements and consolidated financial statements as of December 31, 2011,

which have been audited by the Company’s auditing CPAs, Ms. Annie Lin and Mr. Tony Chang of Deloitte and Touche. Supervisors of the Company have reviewed the Financial Statements for the fiscal year 2011 and issued audit reports.

2. This proposal has been approved by the 14th meeting of the fifth-term Board of Directors on February 16, 2012. 3. Please approve. Resolution:

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(2) Ratify the proposal for Year 2011 retained earnings distribution Explanatory Notes： 1. It is proposed the Company to distribute cash dividend of NT$8,045,238,500 from the retained earnings at NT$2.469 per share. 2. Please refer to the following for the Company’s Year 2011 appropriation proposal:

Far EasTone Telecommunications Co., Ltd Appropriation Proposal (in NT dollars)

Y2011 Net income after tax $ 8,880,992,739 Less: Legal reserve (888,099,274) Add: Prior year undistributed earnings 55,542,597 Maximum distributable dividends 8,048,436,062 Less: Appropriation

Cash dividends (NT$2.469) (8,045,238,500) Un-appropriated earnings after distribution $3,197,562

Note. Bonuses to employees and remunerations to directors & supervisors were NT$159,857,869 and NT$79,928,935, respectively.

3. In conformity to “Two-tax-in-one”, it is prioritized to distribute the R/E of and after the year 1998 when calculating the shareholders’ deductible tax

according to Article 66-6, 66-9 & 73-2 of Income Tax Law. The “identified method” and “distribution of most recent years’ R/E” provided in the MOF’s regulation (Letter No.871941343, dated on April 30, 1998) were applied when calculating 10% imputing tax according to Article 66-9 of Income Tax Law.

4. If the outstanding shares are impacted due to the Company’s subsequent capital increase or other matters before the ex-cash dividend record date, it is proposed the Board of Directors be authorized by the Shareholders’ Meeting to adjust the ultimate cash to be distributed to each common share based on the number of actual outstanding shares on the ex-cash dividend record date.

5. It is proposed that the Board authorizes the Chairman to fix the record date of ex-cash dividend after the approval by the 2012 annual Shareholders’ Meeting.

6. This proposal has been approved by the 15th meeting of the fifth-term Board of Directors on April 20, 2012. 7. Since the amendment to Article 241 of the Company Act has loosened the constraint on capital surplus, it is proposed to distribute cash of

NT$1,730,263,930 from the capital surplus-additional paid-in capital-share issuance in excess of par value at NT$0.531 per share. If the Shareholders’ Meeting approves to distribute dividends from capital surplus, totally cash NT$3 per share of Year 2011.

8. Please approve. Resolution:

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3. Matters to be discussed and election：：：： (1) Review and approval of the cash distribution from Capital Surplus. Explanatory Notes: 1. Since the amendment to Article 241 of the Company Act has loosened the constraint on capital surplus, it is proposed the Company distributes cash of

NT$1,730,263,930 from the capital surplus-Additional Paid-in Capital-Share Issuance in Excess of Par Value at NT$0.531 per share. 2. If the outstanding shares are impacted due to the Company’s subsequent capital increase or other matters before the ex-cash distribution record date, it is

proposed the Board of Directors be authorized by the Shareholders’ Meeting to adjust the ultimate cash to be distributed to each common share based on the number of actual outstanding shares on the ex-cash distribution record date.

3. It is proposed that the Board authorizes the Chairman to fix the record date of ex-cash distribution after the approval by the 2012 annual Shareholders’ Meeting.

4. This proposal has been approved by the 15th meeting of the fifth-term Board of Directors on April 20, 2012. 5. In Ratification Proposal 2, it is proposed the Company distributes cash of NT$8,045,238,500 from the retained earnings at NT$2.469 per share. With the

cash distribution of NT$0.531 per share from capital surplus, totally cash NT$3 per share of Year 2011. 6. Please approve. Resolution:

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(2) Review and approval of the amendment to “the Articles of Incorporation” of the Company. Explanatory Notes: 1. In response to the amendment of the related regulations and operation needs, it is proposed to amend the Article 13~15 and 31 of the Company’s “Articles

of Incorporation”. Please refer to page 37~39 for the amendment. 2. This proposal has been approved by the 15th meeting of the fifth-term Board of Directors on April 20, 2012. 3. Please approve. Resolution:

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(3) Review and approval of the amendment to “Handling Procedure for Acquisition and Disposal of Assets” of the Company. Explanatory Notes: 1. Pursuant to amended “Regulations Governing the Acquisition and Disposal of Assets by Public Companies” issued by Order No.

Financial-Supervisory-Securities-1010004588 of the Financial Supervisory Commission, Executive Yuan, it is proposed the Company amend Article 4, 6~12, 14, 16 and add Article 9-1 of “Procedures for Handling Acquisition or Disposal of Assets”. Please refer to page 40~71 for the amendment.

2. This proposal has been approved by the 15th meeting of the fifth-term Board of Directors on April 20, 2012. 3. Please approve. Resolution:

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(4) Review and approval of the amendment to “Regulations Governing Shareholders’ Meeting” of the Company. Explanatory Notes: 1. According to Paragraph 1 of Article 177-1 of the Company Law, the Financial Supervisory Commission, Executive Yuan (“FSC”) issued an official letter

No. 1010005306 dated February 20, 2012 requiring that any listed (OTC) company of which the paid-in capital amounts to more than NT$10 billion and the number of shareholders recorded in its roster of shareholder on the date when last transfer suspension takes place attains more than 10,000 persons, shall adopt electronic transmission as one of its methods for exercising voting power at a shareholders meeting.

2. In order to deal with the exercise of voting power via electronic transmission, it is proposed the Company amend Article 2 and Article 11 of the Company’s “Regulations Governing Shareholders’ Meeting” referring to the official letter No.1010004596 dated on March 7, 2012 issued by Taiwan Stock Exchange Corporation. Please refer to page 72~73 for the amendment.

3. This proposal has been approved by the 15th meeting of the fifth-term Board of Directors on April 20, 2012. 4. Please approve. Resolution:

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(5) Review and approval of the issuance of common shares by private placement. Explanatory Notes: 1. Pursuant to paragraph 7 of Article 43-6 of Securities and Exchange Act, the privately placed common shares can be issued in several installments within one

year after the resolution of the Shareholders’ Meeting. It was approved by the Company’s 2011 Shareholders’ meeting on June 9, 2011 to privately place the common shares to a subsidiary of China Mobile Limited. However, as current regulations have not permitted the consummation of the contemplated transaction, the private placement has not completed yet. Since the one-year period for private placement will soon expire, it is proposed that the Y2012 Annual Shareholders’ Meeting discuss and approve the private placement again.

2. It is proposed that the Company issues not more than 444,341,020 common shares at tentative price of NT$40 per share by private placement, with total tentative issuance amount of not more than NT$17,773,640,800 to enhance operational efficiency and market competition (The final privately placed price shall only be set pursuant to the permission of relevant laws and the shareholder’s resolutions; the actual issuance amount will be determined by the Board of Directors within the extent permitted by law), pursuant to Articles 43-6 to 43-8 of the Securities and Exchange Act.

3. The related matters for private placement of common shares: (1) The basis and fairness of the private placement price setting:

(1-1) The basis and fairness of the price setting: The private placement price is tentatively set at NT$40 per share. The private placement price will be no less than 70% of the higher of the following two reference prices. Reference prices are (1) the simple average closing price of the common shares of the Company for either one, three or five consecutive business days before pricing date (exclusive), after adjustment for any distribution of stock dividends, cash dividends or capital reduction, or (2) the simple average closing price of the common shares of the Company for the thirty consecutive business days before pricing date (exclusive), after adjustment for any distribution of stock dividends, cash dividends, or capital reduction. The pricing will be determined by the board of directors pursuant to the shareholders' resolution, after such resolution for pricing principle is adopted by the shareholders' meeting. An independent financial advisor, Yuanta Securities, was engaged to issue the fairness opinion on the pricing basis and reasonableness. However, if the volume weighted average price of the common shares of the Company for the 14 consecutive trading days prior to and including the date on which either the placee’s parent company or the Company sent the notice to the other party, pursuant to the relevant agreements, to notify the settlement date of the private placement, has been beyond the range of NT$35 (inclusive) to NT$50 (inclusive), it is proposed that the Shareholders Meeting hereby authorizes that the Board of Director may discuss in good faith to agree to a new private placement price per share of the Company; provided that any upward or downward adjustment (if any) shall not be more than NT$5 per share of the Company. However, the new private placement price shall be no less than 70% of the Reference Price of the new pricing date.

(1-2) The private placement price is determined in accordance with the relevant regulations of the Competent Authority. Therefore, the basis for pricing is quite reasonable.

(2) The method for selecting the placee(s), purposes, necessities and anticipated benefits in connection with the placee(s), and the relationship between the placee(s) and the Company: The common shares will be privately placed to the specific persons meeting the requirement under Article 43-6 of the Securities and Exchange Act and the ruling with Ref. No. of (2002) Tai-Tsai-Cheng-I-0910003455 issued by Securities and Futures Commission, Ministry of Finance (the current Financial Supervisory Commission) on June 13, 2002; in addition, the specific persons shall be the strategic investors defined under the Directions for Public Companies Conducting Private Placements of Securities. The placee is an indirect 100% subsidiary of China Mobile Limited, and both the

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placee and China Mobile Limited are not affiliates to the Company. The purposes for selecting such placee is for the Company to bring in strategic cooperation partner, which would be necessary for the Company to enhance domestic or global business cooperation. It is anticipated that by cooperating with the placee, the Company may strengthen the new technology needed for future operation, expand market, and cope with the prompt change of the industry and environment.

(3) The reasons for the necessity to conduct the private placement, the use of the funds raised and the anticipated benefits: (3-1) The reasons for not adopting a public offering: To catch up industry development trend and the Company's future operation needs, after

evaluating capital market condition, time efficiency for fund raising and issuance cost, it is proposed that the Company raises the fund through private placement instead of public offering, considering the nature of private placement of quick/simple process and introduction of strategic cooperation partners, which may help the Company increase the funding flexibility.

(3-2) The privately-placed amount: not more than 444,341,020 common shares of the Company. (3-3) The use of fund raised, fund utilization schedule and anticipated benefits:

(3-3-1) The fund raised from private placement will be used to support the Company's domestic/global M&A to meet the Company's capital demand for future growth and challenge. The Company is expected to fully utilize all fund raised in three years. After the completion of the private placement, not only the Company’s financial structure may be strengthened, but also the Company's investment demand for digital convergence era can be supported so that the Company's operation efficiency and market competition can also be enhanced. In addition, future operating revenue and profit capability of the Company should be able to increase gradually.

(3-3-2) By introducing the strategic cooperation partner, the Company can enhance its required future technology and strengthen its global business cooperation to cope with speedy change of industry and macro environment.

4. All the rights and obligations for the privately placed common shares are the same as those for the issued common shares of the Company. However according to the Securities Exchange Act, except for being transferred to a transferee meeting the requirement under Article 43-8 of the Securities Exchange Act, the privately placed common shares cannot be sold within three years after their delivery. After three years from the delivery of privately placed common shares, according to related regulations, the Company shall, after obtaining an approval letter issued by the Taiwan Stock Exchange Corporation (“TSEC” hereafter) acknowledging that the securities have met the listing criteria, apply with the competent authorities for public issuance and TSEC listing of such privately placed common shares.

5. The privately placed common shares will be issued in one tranche within one year of the resolution of the Company's Shareholders’ Meeting. It is proposed that the Shareholders’ Meeting authorizes the Board of Directors with full power and authority to handle related matters.

6. The completion of this private placement is subject to the satisfaction and fulfillment of all the conditions precedent set out in the relevant transaction documents, including without limitation that it is permitted under the relevant laws and regulations and approvals from relevant competent authorities have been obtained.

7. It is proposed that the Shareholders’ Meeting authorizes the Board of Directors with full power and authority to determine the important matters in connection with this private placement, including the number of shares to be issued, the issuing price, terms and conditions of the private placement, placee selecting method, fund utilization plan, detailed plan items, expected process and anticipated benefits and other related issues. If some revision or adjustment has to be made due to amendment to the laws and regulations, the competent authorities’ instruction, market condition change or environment impact, it is also proposed that the Shareholders’ Meeting authorizes the Board of Directors with full power and authority to handle all related matters.

8. Except for aforementioned authorization scope, it is also proposed that the Shareholders’ Meeting authorizes the Chairman to determine the new shares

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issue record date and authorizes the Chairman or any other his designated person to sign and negotiate all related contracts or documents on behalf of the Company and to handle all matters related to this private placement.

9. This proposal has been approved by the 15th meeting of the fifth-term Board of Directors on April 20, 2012. 10. Please refer to page 74~83 for the fairness opinion from an independent financial advisor. 11. Please approve. Resolution:

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(6) Election of new Directors and Supervisors of the Company(The term of the newly elected nine directors and three supervisors, the newly elected directors including two independent directors shall be elected by adopting a candidate nomination system)

Explanatory Notes: 1. The tenure of office of Directors and Supervisors of the Company is three years and the term of Directors and Supervisors of the Fifth term of the Board

will expire on June 15, 2012. According to the Article 195 of the Company Act, new Directors and Supervisors shall be elected at the annual Shareholders’ Meeting of 2012. The term of the newly elected nine Directors (including two independent directors who shall be elected by adopting candidates nomination system) and three Supervisors is three years, effective from June 13, 2012 to June 12, 2015.

2. According to Article 15 of the Articles of Incorporation of the Company, independent directors shall be elected by adopting a candidate nomination system. Regulations governing the professional qualifications, restrictions on shareholdings and concurrent positions held, assessment of independence, method of nomination, and other matters for compliance with respect to independent directors shall be followed.

3. According to the regulations, the candidate of the Independent Directors may be nominated by the current Board of Directors or any shareholder with 1% or above shareholding. Period for proposals and nomination of Independent Directors candidates for shareholders with shareholdings above 1% was from April 7, 2012 to April 16, 2012. During this period, the Board of Directors has received the nomination of two Independent Directors candidates from the major shareholder Yuang Ding Investment Co., Ltd., After the preliminary examination, abovementioned two candidates both meet the requirements and qualifications of Independent Directors. The Company had made public announcement about the qualified Independent Directors candidate roster as underneath after the resolution of Board of Directors dated April 20, 2012.

Candidate Name (ID/ Shareholder No)

Education Major Experience Current Position Holding Shares

Lawrence Juen-Yee Lau (19441212LA)

B.S. in Physics and Economics, Stanford University M.A. and Ph.D. in Economics, University of California at Berkeley

Academician, Academia Sinica, 1982 Kwoh-Ting Li Professor in Economic Development, Stanford University Vice-Chancellor (President) of The Chinese University of Hong Kong

Chairman of CIC International (Hong Kong) Co., Limited Ralph and Claire Landau Professor of Economics, the Chinese University of Hong Kong Vice Chairman of CITIC Capital Holdings Limited in Hong Kong Independent Non-executive Director of CNOOC Limited in Hong Kong Independent Non-executive Director of Semiconductor Manufacturing International Corporation in Hong Kong

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Candidate Name

(ID/ Shareholder No) Education Major Experience Current Position Holding Shares

Kurt Roland Hellström (19431212KU)

Master of Electronics, Royal Institute of Technology and MBA of Stockholm School of Economics

President and CEO of Ericsson Group

Director of International Advisory Board of Altimo (Russia) Director of the Swedish Trade Council (Sweden) and the European Institute for Japanese Studies(Sweden)

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4. Please refer to page 109~110 for “Directors and Supervisors Election Guidelines” of the Company. 5. This proposal has been approved by the 14th & 15th meeting of the fifth-term Board of Directors on February 16, and April 20, 2012. 6. Please approve. Election:

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(7) Release of the non-competition restriction on directors in accordance with Article 209 of the Company Law Explanatory Notes: 1. According to Article 209 of the Company Act, a director who does anything for himself or on behalf of another person that is within the scope of the

Company's business, shall explain to the Shareholders’ Meeting the essential contents of such an act and secure its approval. 2. If the directors elected as the sixth term Board of Directors actually do anything for themselves or on behalf of another person within the scope of the

Company’s business, it is proposed to approve the release of the non-competition restriction for newly elected directors and their representatives at the annual Shareholders’ Meeting of Year 2012.This proposal has been approved by the 15th meeting of the fifth-term Board of Directors on February 20, 2012.

3. Please approve. Resolution:

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4. Extempore Motion 5. Motion to Adjourn

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Attachments English Translation of a Report Originally Issued in Chinese INDEPENDENT AUDITORS’ REPORT The Board of Directors and Stockholders Far EasTone Telecommunications Co., Ltd. We have audited the accompanying balance sheets of Far EasTone Telecommunications Co., Ltd. (“the Company”) as of December 31, 2011 and 2010, and the related statements of income, changes in stockholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Those rules and standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2011 and 2010, and the results of its operations and its cash flows for the years then ended, in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, requirements of the Business Accounting Law and Guidelines Governing Business Accounting relevant to financial accounting standards, and accounting principles generally accepted in the Republic of China. As disclosed in Note 9 to the financial statements, to prepare for service convergence, the Company aims to enhance the business cooperation between its mobile and fixed-line components by group integration to provide more comprehensive telecom services to consumers as well as to achieve long-term synergy in managing operating costs. On June 25, 2010, the boards of directors of Yuan Cing Infocomm Tech Co., Ltd. (YCIC), a 100% subsidiary of the Company, resolved to conduct a tender offer to acquire the common shares of New Century InfoComm Tech Co., Ltd. (NCIC), with the tender offer price at NT$10.93 per share. As of August 16, 2010, the expiry date of the tender offer, YCIC had acquired 1,762,945 thousand shares of NCIC’s common shares. With the Company’s own holding of 695,096 thousand shares, the Company and YCIC jointly own 94.56% of NCIC’s total issued common shares. Moreover, on August 31, 2010, the board of directors of the Company resolved to adopt a two-stage process to acquire NCIC. On March 1, 2011, the two-stage process was completed through the merger between the Company and YCIC; thus, NCIC became a 100% owned subsidiary of the Company. We have also audited the consolidated financial statements of the Company and subsidiaries as of and for the years ended December 31, 2011 and 2010 and have issued thereon a modified unqualified opinion in our reports dated February 16, 2012 and February 18, 2011, respectively. February 16, 2012

Notice to Readers The accompanying financial statements are intended only to present the financial position, results of operations 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 accepted and applied in the Republic of China. For the convenience of readers, the 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 auditors’ report and financial statements shall prevail. .

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FAR EASTONE TELECOMMUNICATIONS CO., LTD. BALANCE SHEETS DECEMBER 31, 2011 AND 2010 (In Thousands of New Taiwan Dollars, Except Par Value) 2011 2010 2011 2010 ASSETS Amount % Amount % LIABILITIES AND STOCKHOLDERS’ EQUITY Amount % Amount % CURRENT ASSETS CURRENT LIABILITIES

Cash and cash equivalents (Notes 2, 5 and 25) $ 1,465,482 2 $ 669,743 1 Short-term bank loans (Note 15) $ 1,862,000 2 $ 2,940,000 3 Available-for-sale financial assets - current (Notes 2 and 6) 270,426 - 526,209 1 Commercial paper payable (Note 16) - - 2,848,739 3 Hedging derivative financial assets - current (Notes 2 and 24) - - 13,820 - Notes payable 28,912 - 57,901 - Notes receivable, net (Note 2) 3,956 - 8,691 - Accounts payable 2,709,615 3 2,962,669 3 Accounts receivable, net (Notes 2 and 7) 5,368,481 6 5,189,764 6 Accounts payable - related parties (Note 25) 1,031,018 1 199,920 - Accounts receivable - related parties (Notes 2 and 25) 350,315 1 350,682 - Income tax payable (Note 2) 1,363,270 2 1,702,462 2 Other receivables - related parties (Notes 2 and 25) 340,117 - 4,761,960 5 Accrued expenses (Note 17) 3,703,927 4 3,330,593 4 Inventories, net (Notes 2 and 8) 719,630 1 511,606 1 Other payables - related parties (Note 25) 536,924 1 381,355 - Prepaid expenses 611,181 1 634,641 1 Hedging derivative financial liabilities - current (Notes 2 and 24) 75 - - - Deferred income tax assets - current (Notes 2 and 21) 297,871 - 394,647 - Payables for acquisition of properties 1,241,609 1 1,449,424 2 Restricted assets - current (Notes 18 and 25) 1,195,839 1 1,174,504 1 Guarantee deposits received - current 394,739 1 488,620 1 Other current assets (Notes 2, 25 and 27) 34,026 - 389,005 - Unearned revenues (Notes 2 and 18) 2,561,947 3 1,743,858 2

Other current liabilities (Note 2) 320,354 - 291,234 - Total current assets 10,657,324 12 14,625,272 16

Total current liabilities 15,754,390 18 18,396,775 20 LONG-TERM INVESTMENTS

Equity-method investments (Notes 2 and 9) 29,992,792 34 23,683,899 26 OTHER LIABILITIES Held-to-maturity financial assets - noncurrent (Notes 2 and 10) 199,768 - 199,666 - Accrued pension costs (Notes 2 and 19) 456,128 - 388,299 1

Guarantee deposits received - noncurrent 283,161 - 262,718 - Total long-term investments 30,192,560 34 23,883,565 26 Deferred income tax liabilities - noncurrent (Notes 2 and 21) 568,253 1 339,081 1

Deferred revenue (Note 2) 258,453 - 332,241 - PROPERTIES (Notes 2, 11 and 25) Other (Notes 2 and 9) 534,919 1 285,770 -

Cost Land 1,175,798 1 1,227,914 1 Total other liabilities 2,100,914 2 1,608,109 2 Buildings and equipment 2,181,408 2 2,286,335 3 Operating equipment 114,885,535 128 111,332,726 122 Total liabilities 17,855,304 20 20,004,884 22 Computer equipment 19,367,175 22 18,221,049 20 Office equipment 967,004 1 1,000,729 1 STOCKHOLDERS' EQUITY Leasehold improvements 2,014,371 2 1,913,554 2 Capital stock - NT$10.00 par value; authorized - 4,200,000 thousand Miscellaneous equipment 440,291 1 422,506 - shares; issued and outstanding 3,258,501 thousand shares 32,585,008 36 32,585,008 36

Total cost 141,031,582 157 136,404,813 149 Capital surplus Less: Accumulated depreciation 111,650,339 125 104,189,191 114 Additional paid-in capital - share issuance in excess of par value 10,964,702 12 10,964,702 12

29,381,243 32 32,215,622 35 From business combination 8,482,381 10 8,482,381 9 Construction-in-progress and prepayments for equipment 3,484,051 4 3,491,952 4 From long-term equity-method investments 99,527 - 89,285 -

Total capital surplus 19,546,610 22 19,536,368 21 Net properties 32,865,294 36 35,707,574 39 Retained earnings

Legal reserve 10,874,858 12 9,990,002 11 INTANGIBLE ASSETS Unappropriated earnings 8,936,536 10 9,086,651 10

3G concession, net (Notes 1, 2 and 12) 5,114,945 6 5,845,651 7 Total retained earnings 19,811,394 22 19,076,653 21 Goodwill, net (Notes 2 and 13) 10,283,031 11 10,283,031 11 Other adjustments

Cumulative translation adjustments 7,031 - 12,111 - Total intangible assets 15,397,976 17 16,128,682 18 Unrealized gains on financial instruments 26,824 - 70,692 -

Total other adjustments 33,855 - 82,803 - OTHER ASSETS

Rental assets, net (Notes 2 and 14) 332,979 - 179,384 - Total stockholders’ equity 71,976,867 80 71,280,832 78 Refundable deposits (Note 25) 349,901 1 324,246 - Deferred charges, net 1,575 - 2,582 - Lease receivables - noncurrent (Notes 2 and 25) 34,562 - 42,411 - Pledged certificates of deposits (Notes 25 and 27) - - 392,000 1

Total other assets 719,017 1 940,623 1

TOTAL $ 89,832,171 100 $ 91,285,716 100 TOTAL $ 89,832,171 100 $ 91,285,716 100 The accompanying notes are an integral part of the financial statements. (With Deloitte & Touche audit report dated February 16, 2012)

22

FAR EASTONE TELECOMMUNICATIONS CO., LTD. STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 2011 AND 2010 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) 2011 2010 Amount % Amount % OPERATING REVENUES (Notes 2 and 25)

Sales of cellular phone equipment and accessories, net $ 7,477,192 12 $ 5,365,491 9

Telecommunications service revenues 54,204,144 87 52,372,563 90 Other 727,623 1 439,289 1

Total operating revenues 62,408,959 100 58,177,343 100

OPERATING COSTS (Notes 2, 8, 22 and 25)

Cost of sales 10,975,529 18 7,492,785 13 Cost of telecommunications services 23,765,155 38 24,851,348 43 Other 75,462 - 21,070 -

Total operating costs 34,816,146 56 32,365,203 56

GROSS PROFIT 27,592,813 44 25,812,140 44 OPERATING EXPENSES (Notes 2, 22 and 25)

Marketing 12,730,308 21 10,507,016 18 General and administrative 3,873,355 6 4,041,868 7 Research and development 53,731 - 58,393 -

Total operating expenses 16,657,394 27 14,607,277 25

OPERATING INCOME 10,935,419 17 11,204,863 19 NONOPERATING INCOME AND GAINS

Equity in investees' net gains (Note 2) 248,162 1 - - Government grant (Note 2) 91,494 - 92,089 - Management services revenue (Note 25) 62,485 - 40,142 - Rent (Notes 2 and 25) 48,928 - 34,816 - Interest (Note 25) 37,558 - 63,092 - Gain from sale of financial assets, net (Note 2) - - 113,163 - Other (Note 25) 152,204 - 131,126 1

Total nonoperating income and gains 640,831 1 474,428 1

NONOPERATING EXPENSES AND LOSSES

Loss on disposal of properties, net (Note 2) 691,606 1 706,678 1 Loss from sale of financial assets, net (Note 2) 72,176 - - - Equity in investees' net losses (Note 2) - - 10,588 - Other (Notes 2, 11 and 22) 25,810 - 38,064 -

Total nonoperating expenses and losses 789,592 1 755,330 1

(Continued)

23

FAR EASTONE TELECOMMUNICATIONS CO., LTD. STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 2011 AND 2010 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) 2011 2010 Amount % Amount % INCOME BEFORE INCOME TAX $ 10,786,658 17 $ 10,923,961 19 INCOME TAX (Notes 2 and 21) 1,905,665 3 2,075,396 4 NET INCOME $ 8,880,993 14 $ 8,848,565 15 2011 2010

Before Income

Tax

After Income

Tax

Before Income

Tax

After Income

Tax EARNINGS PER SHARE (Note 24)

Basic $ 3.31 $ 2.73 $ 3.35 $ 2.72 Diluted $ 3.31 $ 2.72 $ 3.35 $ 2.71

The accompanying notes are an integral part of the financial statements. (With Deloitte & Touche audit report dated February 16, 2012) (Concluded)

24

FAR EASTONE TELECOMMUNICATIONS CO., LTD. STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 2011 AND 2010 (In Thousands of New Taiwan Dollars, Except Amounts Per Share) Capital Surplus (Notes 2 and 20) Additional Other Adjustments Paid-in Capital Unrealized Gains Capital Stock Issued and - Share Cumulative (Losses) on Outstanding (Note 20) Issuance From Long-term Retained Earnings (Note 20) Translation Financial Total Shares In Excess of From Business Equity-method Unappropriated Adjustments Instruments Stockholders' (Thousands) Amount Par Value Combination Investments Legal Reserve Special Reserve Earnings (Notes 2 and 20) (Notes 2 and 20) Equity BALANCE, JANUARY 1, 2010 3,258,501 $ 32,585,008 $ 10,964,702 $ 8,482,381 $ 40,266 $ 9,066,992 $ 21,740 $ 10,263,158 $ 24,285 $ 94,055 $ 71,542,587 Appropriation of the 2009 earnings

Legal reserve - - - - - 923,010 - (923,010) - - - Special reserve - - - - - - (21,740) 21,740 - - - Cash dividends - NT$2.8 per share - - - - - - - (9,123,802) - - (9,123,802)

Net income in 2010 - - - - - - - 8,848,565 - - 8,848,565 Changes in equity-method investees' stockholders' equity - - - - 49,019 - - - - - 49,019 Changes in unrealized loss on available-for-sale financial assets - - - - - - - - - (39,282) (39,282) Changes in unrealized gain on cash flow hedge - - - - - - - - - 3,950 3,950 Changes in subsidiary's unrealized gains on financial assets - - - - - - - - - 11,969 11,969 Translation adjustments of long-term equity-method investments - - - - - - - - (12,174) - (12,174) BALANCE, DECEMBER 31, 2010 3,258,501 32,585,008 10,964,702 8,482,381 89,285 9,990,002 - 9,086,651 12,111 70,692 71,280,832 Appropriation of the 2010 earnings

Legal reserve - - - - - 884,856 - (884,856) - - - Cash dividends - NT$2.5 per share - - - - - - - (8,146,252) - - (8,146,252)

Net income in 2011 - - - - - - - 8,880,993 - - 8,880,993 Changes in equity-method investees' stockholders' equity - - - - (13) - - - - - (13) Adjustment to changes in ownership percentage due to investees'

issuance of capital stock for cash - - - - 10,255 - - - - - 10,255 Changes in unrealized losses on available-for-sale financial assets - - - - - - - - - (3,308) (3,308) Changes in unrealized gains on cash flow hedge - - - - - - - - - (6,920) (6,920) Changes in subsidiary's unrealized losses on financial assets - - - - - - - - - (33,640) (33,640) Translation adjustments of long-term equity-method investments - - - - - - - - (5,080) - (5,080) BALANCE, DECEMBER 31, 2011 3,258,501 $ 32,585,008 $ 10,964,702 $ 8,482,381 $ 99,527 $ 10,874,858 $ - $ 8,936,536 $ 7,031 $ 26,824 $ 71,976,867 The accompanying notes are an integral part of the financial statements. (With Deloitte & Touche audit report dated February 16, 2012) .

25

FAR EASTONE TELECOMMUNICATIONS CO., LTD. STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2011 AND 2010 (In Thousands of New Taiwan Dollars) 2011 2010 CASH FLOWS FROM OPERATING ACTIVITIES

Net income $ 8,880,993 $ 8,848,565 Depreciation 8,450,990 9,272,417 Amortization 3,448 9,686 Amortization of 3G concession 730,706 730,707 Allowance for doubtful accounts 146,723 412,220 Allowance (reversal of allowance) for loss on decline in value of

inventories 6,000 (7,188) Loss (gain) from sale of financial assets, net 72,176 (113,163) Equity in investees’ net losses (gains) (248,162) 10,588 Cash dividends from equity-method investees 77,909 26,809 Amortization of discount on held-to-maturity financial assets (102) (99) Loss on disposal of properties, net 691,606 706,678 Accrued pension cost 7,935 20,559 Deferred income on hedging derivative financial assets 7,100 30,280 Deferred income taxes 325,771 100,949 Net changes in operating assets and liabilities

Notes receivable 4,735 (5,158) Accounts receivable (325,440) (282,148) Accounts receivable - related parties 367 (79,084) Other receivables - related parties 176,325 (269,967) Inventories (214,024) (203,547) Prepaid expenses 21,101 (53,479) Other current assets 64,146 (830) Notes payable (28,989) 14,115 Accounts payable (253,054) 731,575 Accounts payable - related parties 831,098 (105,451) Other payables - related parties 157,436 15,815 Income tax payable (339,192) 424,497 Accrued expenses 372,951 65,465 Unearned revenues 818,089 649,892 Other current liabilities 41,502 (14,951)

Net cash provided by operating activities 20,480,144 20,935,752

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of available-for-sale financial assets (1,274,009) (1,047,679) Proceeds of the disposal of available-for-sale financial assets 1,809,425 2,362,177 Other receivables - related parties - (4,300,000) Proceeds of the disposal of financial assets carried at cost - 164,123 Acquisition of equity-method investments (1,746,808) (15,052,200) Acquisition of properties (6,627,740) (7,595,956) Proceeds of the disposal of properties 24,917 23,448 Decrease (increase) in refundable deposits (25,655) 16,385 Decrease in deferred charges - 418 Decrease in pledged certificates of deposits 389,700 - Increase in restricted assets (21,335) (6,174)

Net cash used in investing activities (7,471,505) (25,435,458)

(Continued)

26

FAR EASTONE TELECOMMUNICATIONS CO., LTD. STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2011 AND 2010 (In Thousands of New Taiwan Dollars) 2011 2010 CASH FLOWS FROM FINANCING ACTIVITIES

Increase (decrease) in short-term bank loans $ (1,078,000) $ 2,740,000 Increase (decrease) in commercial paper payable (2,848,739) 2,848,739 Decrease in guarantee deposits received (73,438) (46,272) Decrease in deferred revenue (73,788) (62,650) Cash dividends paid (8,146,252) (9,123,802)

Net cash used in financing activities (12,220,217) (3,643,985)

NET INCREASE (DECREASE) IN CASH AND CASH

EQUIVALENTS 788,422 (8,143,691) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 669,743 2,576,199 CASH AND CASH EQUIVALENTS, ARISING FROM MERGER 7,317 6,237,235 CASH AND CASH EQUIVALENTS, END OF YEAR $ 1,465,482 $ 669,743 SUPPLEMENTARY CASH FLOW INFORMATION

Interest paid $ 49,347 $ 32,911 Less: Interest capitalized 21,786 13,894 Interest paid, net of capitalized interest $ 27,561 $ 19,017 Income tax paid $ 1,919,389 $ 1,549,951

NONCASH INVESTING AND FINANCING ACTIVITIES

Reclassification of properties to rental assets $ 157,376 $ - Reclassification of properties to deferred charges $ - $ 5,629 Reclassification of credit balance on the carrying value of

long-term equity-method investments to other liabilities - other $ 295,797 $ 114,466 CASH PAID FOR ACQUISITION OF PROPERTIES

Increase in properties $ 6,473,851 $ 7,362,242 Decrease (increase) in other payables - related parties 1,867 (4,061) Decrease in payables for acquisition of properties 207,815 242,982 Decrease (increase) in other current liabilities 12,025 (8,354) Decrease (increase) in other liabilities - other (67,818) 3,147 Cash paid for acquisition of properties $ 6,627,740 $ 7,595,956

PROCEEDS OF THE DISPOSAL OF PROPERTIES

Total amount of sold properties $ 19,940 $ 77,054 Increase in receivables on properties sold (4,796) (1,292) Decrease (increase) in other receivables - related parties (151) 21 Decrease (increase) in lease receivables 9,924 (52,335) Cash received from disposal of properties $ 24,917 $ 23,448

(Continued)

27

FAR EASTONE TELECOMMUNICATIONS CO., LTD. STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2011 AND 2010 (In Thousands of New Taiwan Dollars) On March 1, 2011 and January 1, 2010, the Company completed the mergers with Yuan Cing Infocomm Tech Co., Ltd. (YCIC) and KG Telecommunications Co., Ltd. (KGT), respectively, with the Company as the survivor entity; the fair values of total assets and total liabilities upon completion of the merger were as follows: YCIC KGT Cash and cash equivalents $ 7,317 $ 6,237,235 Available-for-sale financial assets - current - 2,127,789 Hedging derivative assets - current - 2,750 Notes receivable - 73 Accounts receivable, net - 600,538 Accounts receivable - related parties, net - 145,460 Other receivables - related parties - 1,059,254 Inventories, net - 1,698 Prepaid expenses 82 49,500 Deferred income tax assets - current - 107,676 Other current assets 60,137 30,836 Equity-method investments 27,081,916 828,283 Financial assets carried at cost - noncurrent - 150,000 Held-to-maturity financial assets - noncurrent - 199,567 Properties, net - 10,775,486 Goodwill, net - 10,283,031 Refundable deposits - 55,848 Pledged certificates of deposits - 390,000 $ 27,149,452 $ 33,045,024 Notes payable $ - $ 1,438 Accounts payable - 279,126 Accounts payable - related parties - 450,833 Income tax payable - 363,223 Accrued expenses 383 195,604 Other payables - related parties 4,305,563 47,236 Payables for acquisition of properties - 107,306 Guarantee deposits received - current - 86,713 Unearned revenue - 236,567 Lease payable - current - 4,180 Other current liabilities 569 31,569 Guarantee deposits received - noncurrent - 1,969 Deferred income tax liabilities - noncurrent - 629,300 Other liabilities - other - 36,462 $ 4,306,515 $ 2,471,526 The accompanying notes are an integral part of the financial statements. (With Deloitte & Touche audit report dated February 16, 2012) (Concluded)

28

INDEPENDENT AUDITORS’ REPORT The Board of Directors and Stockholders Far EasTone Telecommunications Co., Ltd. We have audited the accompanying consolidated balance sheets of Far EasTone Telecommunications Co., Ltd. (the “Company”) and subsidiaries as of December 31, 2011 and 2010, and the related consolidated statements of income, changes in stockholders’ equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Those rules and standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company and subsidiaries as of December 31, 2011 and 2010, and the consolidated results of their operations and their cash flows for the years then ended, in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and accounting principles generally accepted in the Republic of China. As disclosed in Note 2 to the consolidated financial statements, to prepare for service convergence, the Company aims to enhance the business cooperation between its mobile and fixed-line components by group integration to provide more comprehensive telecom services to consumers as well as to achieve long-term synergy in managing operating costs. On June 25, 2010, the boards of directors of Yuan Cing Infocomm Tech Co., Ltd. (YCIC), a 100% subsidiary of the Company, resolved to conduct a tender offer to acquire the common shares of New Century InfoComm Tech Co., Ltd. (NCIC), with the tender offer price at NT$10.93 per share. As of August 16, 2010, the expiry date of the tender offer, YCIC had acquired 1,762,945 thousand shares of NCIC’s common shares. With the Company’s own holding of 695,096 thousand shares, the Company and YCIC jointly own 94.56% of NCIC’s total issued common shares. Moreover, on August 31, 2010, the board of directors of the Company resolved to adopt a two-stage process to merge NCIC. On March 1, 2011, the two-stage process was completed through the merger between the Company and YCIC; thus, NCIC became a 100% owned subsidiary of the Company. February 16, 2012

Notice to Readers The accompanying consolidated financial statements are intended only to present the financial position, results of operations 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 are those generally accepted and applied in the Republic of China. For the convenience of readers, the auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

29

FAR EASTONE TELECOMMUNICATIONS CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2011 AND 2010 (In Thousands of New Taiwan Dollars, Except Par Value) 2011 2010 2011 2010 ASSETS Amount % Amount % LIABILITIES AND STOCKHOLDERS’ EQUITY Amount % Amount % CURRENT ASSETS CURRENT LIABILITIES

Cash and cash equivalents (Notes 2, 5, and 27) $ 9,905,634 11 $ 9,162,044 9 Short-term bank loans (Notes 16 and 29) $ 2,940,772 3 $ 3,536,100 4 Financial assets at fair value through profit or loss -current (Notes 2 Commercial papers payable (Note 17) 80,000 - 2,848,739 3 and 6) 196,718 - 1,188,405 1 Notes payable 51,438 - 91,477 - Available-for-sale financial assets - current (Notes 2 and 7) 2,688,536 3 2,496,132 3 Accounts payable 5,243,803 6 4,020,819 4 Held to maturity financial assets - current (Notes 2 and 11) 1,000,000 1 - - Accounts payable - related parties (Note 27) 2,950 - 17,160 - Notes receivable (Note 2) 56,809 - 69,328 - Income tax payable (Note 2) 1,421,585 1 1,737,956 2 Accounts receivable, net (Notes 2 and 8) 6,458,140 7 6,088,738 6 Accrued expenses (Note 18) 4,379,446 5 4,118,433 4 Accounts receivable - related parties, net (Notes 2 and 27) 108,572 - 43,601 - Other payables - related parties (Note 27) 149,866 - 227,805 - Other receivables - related parties (Notes 2 and 27) 17,448 - 23,501 - Hedging derivative financial liabilities - current (Notes 2, 26 and 27) 2,667 - - - Hedging derivative financial assets - current (Notes 2, 26 and 27) 1,500 - 78,670 - Payables for acquisition of properties 2,082,239 2 2,246,977 2 Inventories, net (Notes 2 and 9) 1,984,625 2 1,023,065 1 Guarantee deposits received - current 394,738 - 488,620 1 Prepaid expenses 807,692 1 732,059 1 Unearned revenues (Notes 2 and 19) 2,770,983 3 2,029,652 2 Deferred income tax assets - current (Notes 2 and 23) 298,944 - 394,647 1 Current portion of long-term bank loans (Notes 20 and 29) 4,944 - 203,318 - Pledged certificates of deposits - current (Notes 27 and 29) 28,356 - 134,500 - Other current liabilities (Note 2) 559,771 1 571,517 1 Restricted assets - current (Notes 19, 27 and 29) 1,308,420 1 1,302,829 1 Other current assets (Note 8) 306,133 - 577,114 1 Total current liabilities 20,085,202 21 22,138,573 23

Total current assets 25,167,527 26 23,314,633 24 LONG-TERM LIABILITIES, NET OF CURRENT PORTION

Long-term bank loans (Notes 20 and 29) 170,849 - 5,677 - LONG-TERM INVESTMENTS

Equity-method investments (Notes 2 and 10) 341,206 1 239,400 1 OTHER LIABILITIES Held-to-maturity financial assets - noncurrent (Notes 2, 11 and 29) 199,768 - 1,199,666 1 Accrued pension costs (Notes 2 and 21) 502,912 1 491,448 1 Financial assets carried at cost - noncurrent (Notes 2 and 12) 29,188 - 75,758 - Guarantee deposits received - noncurrent 324,475 - 295,345 -

Deferred income tax liabilities - noncurrent (Notes 2 and 23) 488,033 - 242,541 - Total long-term investments 570,162 1 1,514,824 2 Deferred revenue (Note 2) 548,562 1 485,884 1

Other (Note 2) 534,242 1 434,446 - PROPERTIES (Notes 2, 13, 27 and 29)

Cost Total other liabilities 2,398,224 3 1,949,664 2 Land 5,301,986 6 5,317,368 5 Buildings and equipment 6,393,369 7 6,503,267 7 Total liabilities 22,654,275 24 24,093,914 25 Operating equipment 138,828,805 145 133,409,948 137 Computer equipment 22,844,563 24 21,650,325 22 FAR EASTONE’S EQUITY Office equipment 1,331,220 1 1,330,478 1 Capital stocks - NT$10.00 par value; authorized - 4,200,000 thousand shares Leasehold improvements 3,151,716 3 3,052,425 3 Issued and outstanding - 3,258,501 thousand shares 32,585,008 34 32,585,008 33 Miscellaneous equipment 1,720,212 2 1,613,189 2 Capital surplus

Total cost 179,571,871 188 172,877,000 177 Additional paid-in capital - share issuance in excess of par value 10,964,702 11 10,964,702 11 Less: Accumulated depreciation 129,688,793 136 120,755,983 123 From business combination 8,482,381 9 8,482,381 9 Less: Accumulated impairment 2,604,389 3 2,652,327 3 From long-term equity-method investments 99,527 - 89,285 - 47,278,689 49 49,468,690 51 Total capital surplus 19,546,610 20 19,536,368 20 Construction-in-progress and prepayments for equipment 4,378,460 5 4,546,022 4 Retained earnings

Legal reserve 10,874,858 12 9,990,002 10 Net properties 51,657,149 54 54,014,712 55 Unappropriated earnings 8,936,536 9 9,086,651 10

Total retained earnings 19,811,394 21 19,076,653 20 INTANGIBLE ASSETS (Notes 1, 2 and 14) Other adjustments

3G concession, net 5,114,945 5 5,845,651 6 Cumulative translation adjustments 7,031 - 12,111 - Goodwill, net 10,881,018 12 10,806,693 11 Unrealized gains on financial instruments 26,824 - 70,692 - Other 783,817 1 670,649 1 Total other adjustments 33,855 - 82,803 -

Total intangible assets 16,779,780 18 17,322,993 18 Total controlling interest of Far EasTone 71,976,867 75 71,280,832 73

OTHER ASSETS MINORITY INTEREST 799,581 1 2,272,407 2

Rental assets, net (Notes 2 and 15) 421,010 - 239,198 - Idle properties, net (Note 2) 139,262 - 118,586 - Total stockholders' equity 72,776,448 76 73,553,239 75 Refundable deposits (Note 27) 483,223 1 449,731 1 Deferred charges, net (Note 2) 169,100 - 242,182 - Pledged certificates of deposits - noncurrent (Notes 27 and 29) 34,624 - 421,369 - Other (Notes 2 and 21) 8,886 - 8,925 -

Total other assets 1,256,105 1 1,479,991 1

TOTAL $ 95,430,723 100 $ 97,647,153 100 TOTAL $ 95,430,723 100 $ 97,647,153 100 The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche audit report dated February 16, 2012)

30

FAR EASTONE TELECOMMUNICATIONS CO., LTD. AND SUBSID IARIES CONSOLIDATED STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 2011 AND 2010 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) 2011 2010 Amount % Amount % OPERATING REVENUES (Notes 2 and 27)

Sales of cellular phone equipment and accessories, net

$ 11,471,725 15 $ 6,343,488 10

Telecommunications service revenues 63,120,614 83 56,362,209 89 Other 1,156,492 2 730,208 1

Total operating revenues 75,748,831 100 63,435,905 100

OPERATING COSTS (Notes 2, 9, 24, 27 and 29)

Cost of sales 14,654,884 19 8,508,103 14 Cost of telecommunications services 30,327,276 40 28,035,060 44 Other 401,601 1 236,127 -

Total operating costs 45,383,761 60 36,779,290 58

GROSS PROFIT 30,365,070 40 26,656,615 42 OPERATING EXPENSES (Notes 2, 24 and 27)

Marketing 13,743,051 18 10,996,581 18 General and administrative 5,036,342 7 4,406,050 7 Research and development 69,147 - 79,646 -

Total operating expenses 18,848,540 25 15,482,277 25

OPERATING INCOME 11,516,530 15 11,174,338 17 NONOPERATING INCOME AND GAINS

Interest (Note 27) 128,407 - 84,432 - Government grant (Note 2) 91,494 - 92,089 - Rent (Note 27) 58,108 - 41,446 - Dividend revenues (Notes 2 and 6) 25,560 - 13,298 - Gain from sale of financial assets, net (Note 2) - - 226,328 1 Gain on valuation of financial assets, net (Note

2) - - 36,080 -

Other (Note 27) 176,261 1 144,144 -

Total nonoperating income and gains 479,830 1 637,817 1 NONOPERATING EXPENSES AND LOSSES

Loss on disposal of properties, net (Note 2) 785,198 1 724,567 1 Loss from sale of financial assets, net (Notes 2

and 6) 166,263 1 - -

Interest (Notes 2, 13 and 27) 61,054 - 47,118 - Impairment loss (Note 2) 39,674 - 10,390 -

(Continued)

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FAR EASTONE TELECOMMUNICATIONS CO., LTD. AND SUBSID IARIES CONSOLIDATED STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 2011 AND 2010 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) 2011 2010 Amount % Amount %

Equity in investees’ net losses (Notes 2 and 6) $ 25,629 - $ 36,644 - Loss on valuation of financial assets (Notes 2

and 6) 16,755 - - -

Other (Note 24) 27,226 - 27,931 -

Total nonoperating expenses and losses 1,121,799 2 846,650 1 COMBINED INCOME BEFORE INCOME TAX 10,874,561 14 10,965,505 17 INCOME TAX (Notes 2 and 23) 1,947,745 2 2,102,137 3 COMBINED NET INCOME $ 8,926,816 12 $ 8,863,368 14 ATTRIBUTABLE TO:

Controlling interest $ 8,880,993 12 $ 8,848,565 14 Minority interest 45,823 - 14,803 -

$ 8,926,816 12 $ 8,863,368 14 2011 2010 Before

Income Tax

After Income

Tax

Before Income

Tax

After Income

Tax EARNINGS PER SHARE (Note 25)

Basic $ 3.31 $ 2.73 $ 3.35 $ 2.72 Diluted $ 3.31 $ 2.72 $ 3.35 $ 2.71

The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche audit report dated February 16, 2012) (Concluded)

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FAR EASTONE TELECOMMUNICATIONS CO., LTD. AND SUBSID IARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 2011 AND 2010 (In Thousands of New Taiwan Dollars, Except Amounts Per Share)

Capital Surplus (Notes 2 and 22) Other Adjustments Additional Unrealized Capital Stock Issued and Paid-in Capital - From Cumulative Gains (Losses) Outstanding (Note 22) Share Issuance Long-term Retained Earnings (Note 22) Translation on Financial Controlling Total Shares in Excess of From Business Equity-method Special Unappropriated Adjustments Instruments Interest of Minority Stockholders' (Thousands) Amount Par Value Combination Investments Legal Reserve Reserve Earnings (Note 2) (Notes 2 and 22) Far EasTone Interest Equity BALANCE, JANUARY 1, 2010 3,258,501 $ 32,585,008 $ 10,964,702 $ 8,482,381 $ 40,266 $ 9,066,992 $ 21,740 $ 10,263,158 $ 24,285 $ 94,055 $ 71,542,587 $ 832,554 $ 72,375,141 Acquired controlling interest in NCIC in August 2010 - - - - - - - - - - - 1,389,521 1,389,521 Incorporated O-music in October 2010 - - - - - - - - - - - 25,000 25,000 Acquired controlling interest in DE Infotech in November 2010 - - - - - - - - - - - 25,299 25,299 Appropriation of the 2009 earnings

Legal reserve - - - - - 923,010 - (923,010 ) - - - - - Special reserve - - - - - - (21,740 ) 21,740 - - - - - Cash dividend - NT$2.8 per share - - - - - - - (9,123,802 ) - - (9,123,802 ) - (9,123,802 )

Combined net income in 2010 - - - - - - - 8,848,565 - - 8,848,565 14,803 8,863,368 Changes in capital surplus in investees - - - - 49,019 - - - - - 49,019 - 49,019 Changes in unrealized gains (losses) on available-for-sale financial assets - - - - - - - - - (39,282 ) (39,282 ) - (39,282 ) Changes in unrealized gains on cash flow hedge - - - - - - - - - 3,950 3,950 - 3,950 Changes in subsidiary's unrealized gains (losses) on financial assets - - - - - - - - - 11,969 11,969 2,545 14,514 Cash dividend of subsidiary - - - - - - - - - - - (17,088 ) (17,088 ) Translation adjustments on long-term equity-method investments - - - - - - - - (12,174 ) - (12,174 ) (227 ) (12,401 ) BALANCE, DECEMBER 31, 2010 3,258,501 32,585,008 10,964,702 8,482,381 89,285 9,990,002 - 9,086,651 12,111 70,692 71,280,832 2,272,407 73,553,239 Acquisition of NCIC's capital stock in March 2011 - - - - - - - - - - - (1,404,696 ) (1,404,696 ) Acquisition of FENCIT's capital stock in April 2011 - - - - - - - - - - - 25,787 25,787 Acquisition of KGEx.com's capital stock in December 2011 - - - - - - - - - - - (86,451 ) (86,451 ) Acquisition of ADCast's capital stock in December 2011 - - - - - - - - - - - (4,195 ) (4,195 ) Appropriation of the 2010 earnings

Legal reserve - - - - - 884,856 - (884,856 ) - - - - - Cash dividend - NT$2.5 per share - - - - - - - (8,146,252 ) - - (8,146,252 ) - (8,146,252 )

Combined net income in 2011 - - - - - - - 8,880,993 - - 8,880,993 45,823 8,926,816 Changes in capital surplus in investees - - - - (13 ) - - - - - (13 ) - (13 ) Adjustment to changes in ownership percentage due to investees'

issuance of capital stock for cash - - - - 10,255 - - - - - 10,255 - 10,255 Changes in unrealized gains (losses) on cash flow hedge - - - - - - - - - (6,920 ) (6,920 ) - (6,920 ) Changes in unrealized gains (losses) on available-for-sale financial assets - - - - - - - - - (3,308 ) (3,308 ) - (3,308 ) Changes in subsidiary's unrealized gains (losses) on financial assets - - - - - - - - - (33,640 ) (33,640 ) (689 ) (34,329 ) Cash dividend of subsidiary - - - - - - - - - - - (49,657 ) (49,657 ) Translation adjustments on long-term equity-method investments - - - - - - - - (5,080 ) - (5,080 ) 1,252 (3,828 ) BALANCE, DECEMBER 31, 2011 3,258,501 $ 32,585,008 $ 10,964,702 $ 8,482,381 $ 99,527 $ 10,874,858 $ - $ 8,936,536 $ 7,031 $ 26,824 $ 71,976,867 $ 799,581 $ 72,776,448 The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche audit report dated February 16, 2012)

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FAR EASTONE TELECOMMUNICATIONS CO., LTD. AND SUBSID IARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2011 AND 2010 (In Thousands of New Taiwan Dollars) 2011 2010 CASH FLOWS FROM OPERATING ACTIVITIES

Combined net income $ 8,926,816 $ 8,863,368 Depreciation 10,047,857 10,035,505 Amortization 187,712 87,320 Amortization of 3G concession 730,706 730,707 Allowance for doubtful accounts 231,052 434,760 Provision (reversal ) of loss on decline in value of inventories 8,211 (1,054) Loss (gain) from sale of financial assets, net 76,853 (115,094) Amortization of discount on held-to-maturity financial assets (102) (99) Equity in investees’ net losses 25,629 36,644 Loss (gain) on valuation of financial assets 16,755 (36,080) Impairment loss on financial assets 39,674 10,390 Loss on disposal of properties, net 785,198 724,567 Loss on disposal of deferred charges 2,337 2,420 Unrealized exchange loss 3,003 - Deferred (loss) income on hedging derivative assets (4,483) 79,770 Accrued pension cost 7,995 3,460 Deferred income taxes 324,698 100,948 Net changes in operating assets and liabilities

Financial assets at fair value through profit or loss 974,932 329,995 Notes receivable 12,519 (6,971) Accounts receivable (600,454) (149,562) Accounts receivable - related parties (64,971) 287,717 Other receivables - related parties 6,204 201,208 Inventories (969,771) (252,752) Prepaid expenses (75,633) (37,442) Other current assets (15,590) 171,750 Notes payable (40,039) 21,523 Accounts payable 1,222,984 667,509 Accounts payable - related parties (14,210) (260,328) Other payables - related parties (77,513) (217,060) Income tax payable (316,371) 429,091 Accrued expenses 280,832 (18,949) Unearned revenues 888,193 605,511 Other current liabilities 24,717 (34,581)

Net cash provided by operating activities 22,645,740 22,694,191

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of available-for-sale financial assets (3,309,159) (1,522,359) Proceeds of the disposal of available-for-sale financial assets 3,367,040 4,049,354 Acquisition of equity-method investments (117,114) - Redemption of held-to-maturity financial assets - 800,000 Proceeds of the disposal of financial assets carried at cost - 164,123 Acquisition of properties (8,664,857) (8,215,656)

(Continued)

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FAR EASTONE TELECOMMUNICATIONS CO., LTD. AND SUBSID IARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2011 AND 2010 (In Thousands of New Taiwan Dollars) 2011 2010

Proceeds of the disposal of properties $ 22,560 $ 32,731 Decrease (increase) in refundable deposits (33,522) 16,441 Decrease in pledged certificates of deposits 492,889 27,863 Increase in deferred charges (61,650) (23,914) Decrease (increase) in restricted assets (5,590) 8,492 Decrease in other assets - 1,307 Cash payment due to merger (236,342) (19,403,064)

Net cash used in investing activities (8,545,745) (24,064,682)

CASH FLOWS FROM FINANCING ACTIVITIES

Increase (decrease) in short-term bank loans (595,328) 2,649,600 Increase (decrease) in commercial papers payable (2,768,739) 2,848,739 Proceeds from long-term bank loans 190,014 - Repayment of long-term bank loans (226,219) (19,523) Decrease in guarantee deposits received (64,752) (51,905) Decrease in deferred revenue (84,184) (63,937) Decrease in other liabilities (21,640) (41,968) Cash dividends paid (8,195,909) (9,140,890) Increase (decrease) in minority interest (1,638,918) 40,550

Net cash used in financing activities (13,405,675) (3,779,334)

EFFECT OF EXCHANGE RATE CHANGES (7,660) (11,478) NET INCREASE (DECREASE) IN CASH AND CASH

EQUIVALENTS 686,660 (5,161,303)

CASH AND CASH EQUIVALENTS ARISING FROM MERGER 56,930 4,649,779 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 9,162,044 9,673,568 CASH AND CASH EQUIVALENTS, END OF YEAR $ 9,905,634 $ 9,162,044 SUPPLEMENTARY CASH FLOW INFORMATION

Interest paid $ 83,314 $ 57,501 Less: Interest capitalized 21,786 13,894 Interest paid, net of capitalized interest $ 61,528 $ 43,607 Income tax paid $ 1,938,330 $ 1,560,736

NONCASH INVESTING AND FINANCING ACTIVITIES

Current portion of long-term bank loans $ 4,944 $ 203,318 Reclassification of properties to deferred charges $ 33,929 $ 24,633 Reclassification of properties to rental assets $ 159,749 $ - Reclassification of properties to idle properties $ 49,228 $ -

(Continued)

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FAR EASTONE TELECOMMUNICATIONS CO., LTD. AND SUBSID IARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2011 AND 2010 (In Thousands of New Taiwan Dollars) 2011 2010

Reclassification of idle properties to rental assets $ 28,237 $ - Reclassification of deferred charges to properties $ 18,550 $ - Reclassification of rental assets to idle properties $ - $ 20,438 Reclassification of idle properties to properties $ - $ 134,766

CASH PAID FOR ACQUISITION OF PROPERTIES

Increase in properties $ 8,580,216 $ 8,203,173 Decrease in payables for acquisition of properties 164,738 57,310 Increase in other payables - related parties (426) (4,061) Decrease (increase) in other current liabilities 38,973 (50,693) Decrease (increase) in other liabilities - other (118,644) 9,927 Cash paid for acquisition of properties $ 8,664,857 $ 8,215,656

PROCEEDS OF THE DISPOSAL OF PROPERTIES

Total amount of sold properties $ 27,507 $ 34,002 Increase in receivables from properties sold (4,796) (1,292) Decrease (increase) in other receivables - related parties (151) 21 Cash received from disposal of properties $ 22,560 $ 32,731

CASH PAID FOR ACQUISITION OF DEFERRED CHARGES

Increase in deferred charges $ 61,395 $ 35,651 Decrease (increase) in other current liabilities 3,049 (3,049) Increase in other liabilities - other (2,794) (8,688) Cash paid for acquisition of deferred charges $ 61,650 $ 23,914

SUPPLEMENTARY INFORMATION ON SUBSIDIARY ACQUISITIONS: In April 2011, Far Eastern Tech-info Ltd. (Shanghai) (“FETI”) acquired 55% of FarEastern New Century Information Technology (Beijing) Limited’s (“FENCIT”) common shares. In November 2010, ARCOA Communication Co., Ltd. (“ARCOA”) acquired 70% of DataExpress Infotech Co., Ltd. (“DataExpress”) common shares. In August 2010, Yuan Cing Infocomm Tech Co., Ltd. acquired 67.82% of New Century InfoComm Tech Co., Ltd. (“NCIC”) common shares. The fair values of total assets and total liabilities at the time of acquisitions were as follows: FENCIT Data Express NCIC Cash and cash equivalents $ 56,930 $ 26,258 $ 4,623,521 Financial assets at fair value through profit or loss

- current - -

1,678,379

Available-for-sale financial assets - current - - 1,573,567 Held-to-maturity financial assets - current - - 800,000 Notes receivable - 39 46,320 Accounts receivable, net - 80,327 843,165

(Continued)

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FAR EASTONE TELECOMMUNICATIONS CO., LTD. AND SUBSID IARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2011 AND 2010 (In Thousands of New Taiwan Dollars) FENCIT Data Express NCIC Accounts receivable - related parties, net $ - $ - $ 175,455 Other receivables - related parties - - 59,128 Other financial assets - current - - 1,297,860 Inventories, net - 141,124 122,057 Prepaid expense 257 15,911 90,825 Restricted assets - current - 29,000 113,991 Other current assets 134 70,976 204,907 Equity-method investments - - 21,362 Held-to-maturity financial assets - noncurrent - - 1,007,478 Financial assets carried at cost - noncurrent - - 4,500 Properties, net - 3,921 17,345,899 Intangible assets 241,046 104,660 904,000 Rental assets, net - - 169,995 Idle properties, net - - 7,219 Refundable deposits - 8,805 86,032 Deferred charge, net - 23,614 125,927 Pledged certificates of deposits - noncurrent - 19,009 124,675 Other assets - - 48,357 Short-term bank loans - (170,000) - Notes payable - (5,682) (7,349) Accounts payable - (53,258) (652,829) Accounts payable - related parties - - (139,915) Income tax payable - (4,700) - Accrued expenses (16) (7,865) (727,629) Other payables - related parties - - (197,579) Payables for acquisition of properties - - (605,343) Hedging derivative financial liabilities - current - - (5,830) Unearned revenue - (20,324) (300,887) Other current liabilities - (653) (187,263) Long-term bank loans - (9,470) - Accrued pension cost - - (141,043) Deferred revenue - - (154,930) Guarantee deposits received - noncurrent - (970) (29,525) Other liabilities - other - (61,731) (309,084) 298,351 188,991 28,015,413 Percentage of ownership acquired 55% 70% 67.82% 164,093 132,292 19,000,044 Goodwill 57,615 9,458 275,904 Cash payment due to merger $ 221,708 $ 141,750 $ 19,275,948 The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche audit report dated February 16, 2012) (Concluded)

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Amendment to Articles of Incorporation of FarEastone Telecommunications Co., Ltd. Article Current Articles Amended Articles Explanation

Article 13

In case a shareholder is unable to attend the Shareholders’ meeting, he/she may make another person his/her proxy to attend the meeting. They proxy document for this purpose must be affixed with the shareholder’s chop, a specimen of which shall be kept with the Corporation, provided, however, in the event the same proxy acts for two or more shareholders, his delegated voting power shall not exceed three percent (3%) of the total voting power of the Company’s total issued shares and such portion of shares exceeding three percent (3%) shall not be counted for vote purposes. This limitation shall not apply to holders of proxies engaged in the trust business or the shares transfer agency.

In case a shareholder is unable to attend the Shareholders’ meeting, he/she may make another person his/her proxy to attend the meeting. They proxy document for this purpose must be provided, however, in the event the same proxy acts for two or more shareholders, his delegated voting power shall not exceed three percent (3%) of the total voting power of the Company’s total issued shares and such portion of shares exceeding three percent (3%) shall not be counted for vote purposes. This limitation shall not apply to holders of proxies engaged in the trust business or the shares transfer agency.

According to the “Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies Regarding”, it’s proposed to delete the wording “affixed with the shareholder’s chop, a specimen of which shall be kept with the Corporation”.

Article 14

Resolutions adopted at a meeting of the shareholders shall be recorded in the minutes of the proceedings which shall be prepared in English and in Chinese and shall be signed and sealed by the chairman of the meeting. The minutes of proceedings shall also include the time and place of the meeting, name of the chairman, number of shares represented by attending shareholders (or proxies) and the manner in which resolutions had been adopted, as well as other essentials of the proceedings. The minutes shall be given to each shareholder within twenty (20) days after the meeting and shall be duly filed according to law along with a list of shareholders present at the meeting and the proxies.

Resolutions adopted at a meeting of the shareholders shall be recorded in the minutes of the proceedings which shall be prepared in English and in Chinese and shall be signed and sealed by the chairman of the meeting. The minutes of proceedings shall also include the time and place of the meeting, name of the chairman, number of shares represented by attending shareholders (or proxies) and the manner in which resolutions had been adopted, as well as other essentials of the proceedings. The minutes shall be given to each shareholder within twenty (20) days after the meeting and may be effected by means of a public notice and shall be duly filed according to law along with a list of shareholders present at the meeting and the proxies.

According to Article 183 Paragraph 3 of Company Act, the distribution of the minutes of shareholders' meeting may be effected by means of a public notice.

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Article 15

The Corporation shall have nine (9) to eleven (11) Directors and Three (3) Supervisors, to be elected who are competent persons at shareholders’ meeting. The tenure of office of Directors and Supervisors will be three (3) year(s) and they will be eligible for re-election. The Company’s independent directors shall not be less than two in number and should not less than one-fifth of directors seats, independent directors shall be elected by adopting candidate nomination system. Regulations governing the professional qualifications, restrictions on shareholdings and concurrent positions held, assessment of independence, method of nomination, and other matters for compliance with respect to independent directors shall be prescribed by the Competent Authority. As to the compensation for Chairman and Vice Chairman, it is proposed to authorize the Board of Directors with consideration of industry and listing companies’ compensation level. The total registered shares held by all Directors, Supervisors shall be determined pursuant to “Regulations Governing Percentage of Shares Held by Directors, Supervisors of Public Offering Companies”.

The Corporation shall have nine (9) to eleven (11) Directors and Three (3) Supervisors, to be elected who are competent persons at shareholders’ meeting. The tenure of office of Directors and Supervisors will be three (3) year(s) and they will be eligible for re-election. The Company’s independent directors shall not be less than two in number and should not less than one-fifth of directors seats, independent directors shall be elected by adopting candidate nomination system. Regulations governing the professional qualifications, restrictions on shareholdings and concurrent positions held, assessment of independence, method of nomination, and other matters for compliance with respect to independent directors shall be prescribed by the Competent Authority. The recommendations in connection with remuneration for directors and supervisors shall be submitted for resolution by Remuneration Committee and the Board of Directors. The total registered shares held by all Directors, Supervisors shall be determined pursuant to “Regulations Governing Percentage of Shares Held by Directors, Supervisors of Public Offering Companies”.

According to Article 7 of the “Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Stock Exchange or Traded Over the Counter”, the recommendations in connection with remuneration for directors and supervisors shall be submitted for resolution by Remuneration Committee and the Board of Directors.

Article 31

These Articles of Incorporation were agreed upon and signed on Mar. 7, 1997. First amended on Jun. 6, 1997; Second amended on Aug. 20, 1998; Third amended on Apr. 28, 1999; Fourth amended on Apr. 21, 2000; Fifth amended on Dec. 28, 2000; Sixth amended on May. 15, 2001; Seventh amended on Jun. 25, 2002;

These Articles of Incorporation were agreed upon and signed on Mar. 7, 1997. First amended on Jun. 6, 1997; Second amended on Aug. 20, 1998; Third amended on Apr. 28, 1999; Fourth amended on Apr. 21, 2000; Fifth amended on Dec. 28, 2000; Sixth amended on May. 15, 2001; Seventh amended on Jun. 25, 2002;

Add the date of the last amendment.

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Eighth amended on May 23, 2003; Ninth amended on Feb. 18, 2004; Tenth amended on Jun. 30,2004; Eleventh amended on May 20, 2005; Twelfth amended on May 26, 2006. Thirteenth amended on June 12, 2007. Fourteenth amended on June 15, 2010. Fifteenth amended on June 9, 2011

Eighth amended on May 23, 2003; Ninth amended on Feb. 18, 2004; Tenth amended on Jun. 30,2004; Eleventh amended on May 20, 2005; Twelfth amended on May 26, 2006. Thirteenth amended on June 12, 2007. Fourteenth amended on June 15, 2010. Fifteenth amended on June 9, 2011. Sixteenth amended on June 13, 2012.

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Amendment to Handling Procedure for Acquisition and Disposal of Assets of FarEastone Telecommunications Co., Ltd.

Article Current Articles Amended Articles Explanation Article 4 Where the acquisition and disposal of assets by this

company is required by the Procedure and other laws to be approved by the Board, any director may raise his or her objection thereto. In case the aforesaid objection has been made in written form or recorded, the same shall be delivered to each supervisor. If this company has an independent director, the opinion of each independent director shall be fully taken into consideration when the transaction of acquisition and disposal of assets is under discussion for approval. The opinions thereof and the reasons therefore shall be recorded in the Minutes of Board Meeting.

Where the acquisition and disposal of assets by this company is required by the Procedure and other laws to be approved by the Board, any director may raise his or her objection thereto. In case the aforesaid objection has been made in written form or recorded, the same shall be delivered to each supervisor. If this company has an independent director, the opinion of each independent director shall be fully taken into consideration. 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.

Minor amendment of the scope to comply with Article 8 of “Regulations Governing the Acquisition and Disposal of Assets by Public Companies” (“Regulations” hereafter)

Article 6 Handling Procedures for Acquisition and Disposal of Securities I. Evaluation Process

(A) Where this company is involved in the investment in securities, its Finance & Administration Division shall make a financial analysis of the object of investment and prospective financial gains there from and at the same time, conduct an evaluation of the risks thereof.

(B) The securities transactions of this company in stock exchange or over the counter shall be studied and determined by responsible units in light of the market trends. For those transactions not conducted in the stock exchange or over the counter, the latest financial statement of the company issued the shares concerned, which has been made public

Handling Procedures for Acquisition and Disposal of Securities I. Evaluation Process

(A) Where this company is involved in the investment in securities, its Finance & Shared Services Division shall make a financial analysis of the object of investment and prospective financial gains there from and at the same time, conduct an evaluation of the risks thereof.

(B) The securities transactions of this company in stock exchange or over the counter shall be studied and determined by responsible units in light of the market trends. For those transactions not conducted in the stock exchange or over the counter, the latest financial statement of the company issued the shares concerned, which has been made public

I. To update the Finance & Shared Services Division from Finance & Administration Division.

II. To comply with Article 10 of the “Regulations”, the Company formulated financial statement or CPA’s opinion Timing.

41

and reviewed and signed by accountant, shall be referenced for evaluation of net value of per share, profit making capability and the potentials thereof.

II. Obtaining professional opinions (A) A public company acquiring or disposing

of securities shall first obtain financial statements of the issuing company for the most recent period, certified or reviewed by a certified public accountant, for reference in appraising the transaction price, and if the dollar amount of the transaction is 20 percent of the company's paid-in capital or NT$300 million or more, the company shall also engage a certified public accountant to provide an opinion regarding the reasonableness of the transaction price. This requirement does not apply, however, to publicly quoted prices of securities that have an active market, or where otherwise provided by regulations of the Executive Yuan's Financial Supervisory Commission (FSC).

(B) In case the assets acquired or disposed by this company through the auction procedures held by a court, the certificates issued by the court may substitute the evaluation report or the opinion of an accountant

III. Authorization and the units in charge of execution The relevant material of acquisition and disposal securities by this company shall be submitted by the Finance & Administration Division to the Board for review and approval

and reviewed and signed by accountant, shall be referenced for evaluation of net value of per share, profit making capability and the potentials thereof.

II. Obtaining professional opinions (A) A public company acquiring or disposing

of securities shall, prior to the date of occurrence of the event , obtain financial statements of the issuing company for the most recent period, certified or reviewed by a certified public accountant, for reference in appraising the transaction price, and if the dollar amount of the transaction is 20 percent of the company's paid-in capital or NT$300 million or more, the company shall also engage a certified public accountant prior to the date of occurrence of the event to provide an opinion regarding the reasonableness of the transaction price. If the CPA needs to use the report of an expert as evidence, the CPA shall do so in accordance with the provisions of Statement of Auditing Standards No. 20 published by the Accounting R&D Foundation. This requirement does not apply, however, to publicly quoted prices of securities that have an active market, or where otherwise provided by regulations of the Executive Yuan's Financial Supervisory Commission (FSC).

(B) In case the assets acquired or disposed by this company through the auction procedures held by a court, the certificates issued by the court may substitute the evaluation report or the

42

prior the conduction thereof. In case of the impossibilities of prior review and approval thereby due to time, the acquisition or disposal securities by the Company with the value under NTD 10,000,000, shall be determined by the authorized President (if the President sub-delegates the authorization, the sub-delegation shall apply thereto); where the amount is under NTD 500,000,000, the same shall be determined by the authorized Chairman of the Board (if the Chairman sub-delegates the authorization, the sub-delegation shall apply thereto); however, such transaction shall be confirmed by the Board immediately after the completion thereof. While the amount is over NTD 500,000,000, the same shall be determined by the Board prior to the execution.

opinion of an accountant III. Authorization and the units in charge of

execution The relevant material of acquisition and disposal securities by this company shall be submitted by the Finance & Shared Services Division to the Board for review and approval prior the conduction thereof. In case of the impossibilities of prior review and approval thereby due to time, the acquisition or disposal securities by the Company with the value under NTD 10,000,000, shall be determined by the authorized President (if the President sub-delegates the authorization, the sub-delegation shall apply thereto); where the amount is under NTD 500,000,000, the same shall be determined by the authorized Chairman of the Board (if the Chairman sub-delegates the authorization, the sub-delegation shall apply thereto); however, such transaction shall be confirmed by the Board immediately after the completion thereof. While the amount is over NTD 500,000,000, the same shall be determined by the Board prior to the execution.

Article 7 Handling Procedures for Acquisition and Disposal of Real Estate or Other Fixed Assets I. Evaluation Process

(A) The investment of this company in real estate and other fixed assets shall be assessed prudently by the Finance & Administration Division or relevant unit regarding its beneficial result and risks involved in light of its current operation, financial status and future planning.

Handling Procedures for Acquisition and Disposal of Real Estate or Other Fixed Assets I. Evaluation Process

(A) The investment of this company in real estate and other fixed assets shall be assessed prudently by the Finance & Shared Services Division or relevant unit regarding its beneficial result and risks involved in light of its current operation, financial status and future planning.

I. To update the Finance & Shared Services Division from Finance & Administration Division.

II. To comply with Article 9 of the “Regulations”, the Company formulated appraisal report or professional appraisers’ opinion Timing.

43

(B) An analysis report on the acquisition or disposal of assets shall be made by making reference to its announced current value, appraised value, actual dealing price of its neighboring real estate as well as putting forward conditions and prices for transaction.

(C) Acquisition or disposal of fixed assets shall be conducted by means of inquiries, price comparison, price negotiation or invitation to bid.

II. Evaluation Report On Real estate and other fixed assets If and whenever the amount of the acquisition or disposal of real estate or other fixed assets by this company, unless the same is transacted with government agency, entrusted construction on self-owned land or leased land, or machine or equipment for business use, has reached 20% of the paid-in capital of the company or NTD0.3 billion, the professional appraiser shall be invited to make evaluation report in advance (see detailed content as per appendix 1) and meanwhile the following stipulations shall be complied with: (A) In case a transaction must be conducted

with reference to limited price, specific price or special price due to special reasons, the board meeting in advance shall approve the same. If the conditions thereof were changed in the future, the prices mentioned herein above shall be still made as references.

(B) In case the transaction value reaches NTD 1 billion, the same shall be assessed by at least two professional appraisers.

(B) An analysis report on the acquisition or disposal of assets shall be made by making reference to its announced current value, appraised value, actual dealing price of its neighboring real estate as well as putting forward conditions and prices for transaction.

(C) Acquisition or disposal of fixed assets shall be conducted by means of inquiries, price comparison, price negotiation or invitation to bid.

II. Evaluation Report On Real estate and other fixed assets If and whenever the amount of the acquisition or disposal of real estate or other fixed assets by this company, unless the same is transacted with government agency, entrusted construction on self-owned land or leased land, or machine or equipment for business use, has reached 20% of the paid-in capital of the company or NTD0.3 billion, the professional appraiser shall be invited to make evaluation report prior to the date of occurrence of the event (see detailed content as per appendix 1) and meanwhile the following stipulations shall be complied with: (A) In case a transaction must be conducted

with reference to limited price, specific price or special price due to special reasons, the board meeting in advance shall approve the same. If the conditions thereof were changed in the future, the prices mentioned herein above shall be still made as references.

(B) In case the transaction value reaches NTD 1 billion, the same shall be assessed

1. To comply with Article 9 of the “Regulations”, if the appraisal results for the assets to be acquired are higher than the transaction amount, or all the appraisal results for the assets to be disposed of are lower than the transaction amount, it is necessary to get CPA’s opinion.

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(C) If the results of appraisal thereof have one of the following circumstances, accounts shall be invited to handle the differences in accordance with the Statement of Financial Audit Standards, No. 20 announced by the Accounting R&D Foundation. Meanwhile, the accounts shall explain the reasons thereof and the reasonableness of dealing prices. (a) The gap between the results of

appraisal and the dealing price represents at least 20% of the latter.

(b) The gap between the results of appraisal conducted by the two professional appraisers or over represents at least 10% of the dealing price.

(D) In case the appraisal is conducted prior to the date of conclusion of transaction, the latter shall not be later by over three months than the date of report thereon. However, if the same current value announced may be applied thereto and the time does not exceed six months, the opinions may be given by the original professional appraisal.

(E) In case the assets acquired or disposed by this company through the auction procedures held by a court, the certificates issued by the court may substitute the evaluation report or the opinion of an accountant.

III. Authorization and the units in charge of execution The acquisition of real estate or fixed assets shall be determined as follows:

by at least two professional appraisers. (C) If the results of appraisal thereof have

one of the following circumstances, unless all the appraisal results for the assets to be acquired are higher than the transaction amount, or all the appraisal results for the assets to be disposed of are lower than the transaction amount, accounts shall be invited to handle the differences in accordance with the Statement of Financial Audit Standards, No. 20 announced by the Accounting R&D Foundation. Meanwhile, the accounts shall explain the reasons thereof and the reasonableness of dealing prices. (a) The gap between the results of

appraisal and the dealing price represents at least 20% of the latter.

(b) The gap between the results of appraisal conducted by the two professional appraisers or over represents at least 10% of the dealing price.

(D) In case the professional appraiser is conducted prior to the date of conclusion of transaction, the latter shall not be later by over three months than the date of report thereon. However, if the same current value announced may be applied thereto and the time does not exceed six months, the opinions may be given by the original professional appraisal.

(E) In case the assets acquired or disposed by this company through the auction procedures held by a court, the certificates issued by the court may

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(A) Any transaction within and under the scope of the annual budget approved by the Board shall be determined by the authorized Chairman (if the Chairman sub-delegates the authorization, the sub-delegation shall apply thereto);

(B) Any transaction not within or above the scope of the annual budget approved by the Board: if the amount is under NTD 10,000,000, it shall be determined by the authorized President (if the President sub-delegates the authorization, the sub-delegation shall apply thereto); if the amount is over NTD10,000,000 but under NTD 500,000,000, the same shall be determined by the authorized Chairman of the Board (if the Chairman sub-delegates the authorization, the sub-delegation shall apply thereto); However, all the aforesaid transactions shall be confirmed by the Board immediately after the completion thereof.

(C) Any transaction no-within or above the scope of the annual budget approved by the Board and the amount is over NTD 500,000,000 shall be determined by the Board prior to the execution.

The disposal of real estate or fixed assets shall be determined as follows:

(A) Any transaction which book value is under NTD 10,000,000,:shall be determined by the authorized President (if the President sub-delegates the authorization, the sub-delegation shall apply thereto); any transaction which book value is over NTD10,000,000 but

substitute the evaluation report or the opinion of an accountant.

III. Authorization and the units in charge of execution The acquisition of real estate or fixed assets shall be determined as follows: (A) Any transaction within and under the

scope of the annual budget approved by the Board shall be determined by the authorized Chairman (if the Chairman sub-delegates the authorization, the sub-delegation shall apply thereto);

(B) Any transaction not within or above the scope of the annual budget approved by the Board: if the amount is under NTD 10,000,000, it shall be determined by the authorized President (if the President sub-delegates the authorization, the sub-delegation shall apply thereto); if the amount is over NTD10,000,000 but under NTD 500,000,000, the same shall be determined by the authorized Chairman of the Board (if the Chairman sub-delegates the authorization, the sub-delegation shall apply thereto); However, all the aforesaid transactions shall be confirmed by the Board immediately after the completion thereof.

(C) Any transaction no-within or above the scope of the annual budget approved by the Board and the amount is over NTD 500,000,000 shall be determined by the Board prior to the execution.

The disposal of real estate or fixed assets shall be determined as follows:

(A) Any transaction which book value is

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under NTD 500,000,000 shall be determined by the authorized Chairman of the board (if the Chairman sub-delegates the authorization, the sub-delegation shall apply thereto); However, all the aforesaid transactions shall be confirmed by the Board immediately after the completion thereof.

(B) Any transaction which book value is over NTD 500,000,000 shall be determined by the Board prior to the execution.

Finance & Administration Division or relevant units will be in charge of the execution upon receiving the authorization aforementioned.

under NTD 10,000,000,:shall be determined by the authorized President (if the President sub-delegates the authorization, the sub-delegation shall apply thereto); any transaction which book value is over NTD10,000,000 but under NTD 500,000,000 shall be determined by the authorized Chairman of the board (if the Chairman sub-delegates the authorization, the sub-delegation shall apply thereto); However, all the aforesaid transactions shall be confirmed by the Board immediately after the completion thereof.

(B) Any transaction which book value is over NTD 500,000,000 shall be determined by the Board prior to the execution.

Finance & Shared Services Division or relevant units will be in charge of the execution upon receiving the authorization aforementioned.

Article 8 Handling Procedures for Acquisition of Real Estate from Associated Persons I The acquisition or swap of real estate from

associated persons by this company shall follow the procedures for decisions and evaluation of reasonableness of conditions for transaction described in this article as well as those in the preceding article. When determining whether the dealing counterpart is an associated person, the material relationship thereof shall be examined as well as its legal form.

II Evaluation and Operation Process The following material regarding the acquisition

Handling Procedures for Related Party Transactions I. When a public company engages in any

acquisition or disposal of assets from or to a related party, in addition to ensuring that the necessary resolutions are adopted and the reasonableness of the transaction terms is appraised, if the transaction amount reaches 10 percent or more of the company's total assets, the company shall also obtain an appraisal report from a professional appraiser or a CPA's opinion in compliance with the provisions of the preceding Section and this Section. When determining whether the dealing counterpart is an

I. To comply with Article 13 of the “Regulations”, add if the transaction amount reaches 10 percent or more of the company's total assets, the company shall also obtain an appraisal report from a professional appraiser or a CPA's opinion

II. To comply with Article 14 of the “Regulations”, no matter what the

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of real estate from associated persons by this company shall be submitted to the Board of Directors and supervisor for confirm prior to the conduction thereof. (A) The objective, necessity and estimated

benefits of acquisition of real estate concerned.

(B) Reasons for adopting an associate person as the dealing counterpart

(C) Relevant material for evaluating the reasonableness of conditions for transactions in accordance with the first and fourth subparagraph of the third paragraph in this article.

(D) The original date, price, dealing counterpart of associated persons and the relationship between this company and the associated person, etc.

(E) Forecasted statement of cash deposit and withdraw in each month of the next one year as of the month of proposed conclusion thereof, evaluation of the necessity of dealing and the reasonableness of utilization of capital.

(F) Constraints on and other important matters agreed of this transaction.

III Evaluation of reasonableness of transaction cost (A) The following methods shall be applied in

evaluation of the reasonableness of the transaction cost of the acquisition of real estate from associated person.

(a) Dealing price of associated persons plus necessary capital interest and the cost for the buyer’s account as stipulated by laws. The necessary capital interest and cost shall be the

associated person, the material relationship thereof shall be examined as well as its legal form.

II. Evaluation and Operation Process When a public 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, the company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by the board of directors and recognized by the supervisors:

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

(B) Reasons for adopting an associate person as the dealing counterpart

(C) With 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 the first and fourth subparagraph of the third paragraph in this article.

(D) The original date, price, dealing counterpart of associated persons and the relationship between this company and the associated person, etc.

(E) Forecasted statement of cash deposit and withdraw in each month of the next one year as of the month of proposed conclusion thereof, evaluation of the

transaction amount of acquire or dispose of real property from or to a related party or acquire or dispose of assets other than real property from or to a related party and the transaction amount reaches significant standard, the company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by the board of directors and recognized by the supervisors.

III. To comply with Article 14 of the “Regulations”, consideration to it is normal business conduct of the acquisition or disposal of business-use machinery and equipment between the company and its parent or subsidiaries, the company's board of directors may delegate to the 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

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weighted average of the loan borrowed in the year of acquisition of the assets provided it shall not be higher than the highest rate of loan of non-financial institution as announced by the Ministry of Finance.

(b) In case the associated person obtains loans from the financial institution by mortgaging the object concerned, the total value thereof for loan assessed by the said financial institution provided cumulative loans account for 70% of the total assessed value and the term of loan has exceeded one year. However, this will not apply if the financial institution is an associated person with either party to the transaction and vice versa.

(B) In case of combined purchase of land and house of the same object, the cost of transaction of land or house may be assessed individually by adopting any one of the aforesaid methods.

(C) The methods described in the preceding two paragraphs shall be applied in evaluation of the cost of real estate acquired from associated person. In addition, accountants shall be invited to review the same and give their specific opinions thereof.

(D) The methods described in the first and second subparagraph of this article shall be applied in evaluation of the cost of real estate acquired from associated person if one of the following circumstances are present and the preceding three paragraphs

necessity of dealing and the reasonableness of utilization of capital.

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

(G) Constraints on and other important matters agreed of this transaction.

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 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.

III. Evaluation of reasonableness of transaction cost (B) The following methods shall be applied in

evaluation of the reasonableness of the transaction cost of the acquisition of real estate from associated person (a) Dealing price of associated persons

plus necessary capital interest and the cost for the buyer’s account as stipulated by laws. The necessary capital interest and cost shall be the weighted average of the loan borrowed in the year of acquisition of the assets provided it shall not be higher than the highest rate of loan of non-financial institution as announced by the Ministry of Finance.

(b) In case the associated person obtains loans from the financial institution by

board of directors meeting.

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of this article regarding the evaluation of the reasonableness of cost of transaction: (a)The associated person acquires the real

estate by inheritance or donation. (b) The time gap between the time of

acquisition of real estate by the associated person between the date of conclusion of the transaction concerned has exceeded over five (5) years.

(C) The associated person acquires the real estate by conclusion of a contract for joint construction.

(E) In case the results of evaluation in accordance with the first and second subparagraph of this paragraph have been proven to be lower than dealing price, the provisions in the sixth and seventh subparagraph of this paragraph herein shall be applied. However, the following circumstances shall be excluded provided competent evidences thereof have been provided and the opinions rendered by the professional appraiser of real estate or accountants so described.

(a) The reconstruction on the fountain or leased land acquired by the associated person shall meet the following conditions:

i. The fountain may be appraised with methods stipulated herein above and the house shall be assessed by construction cost plus reasonable construction profit, the aggregate thereof is higher than the actual dealing price. The reasonable

mortgaging the object concerned, the total value thereof for loan assessed by the said financial institution provided cumulative loans account for 70% of the total assessed value and the term of loan has exceeded one year. However, this will not apply if the financial institution is an associated person with either party to the transaction and vice versa.

(C) In case of combined purchase of land and house of the same object, the cost of transaction of land or house may be assessed individually by adopting any one of the aforesaid methods.

(D) The methods described in the preceding two paragraphs shall be applied in evaluation of the cost of real estate acquired from associated person. In addition, accountants shall be invited to review the same and give their specific opinions thereof.

(E) The methods described in the first and second subparagraph of this article shall be applied in evaluation of the cost of real estate acquired from associated person if one of the following circumstances are present and the preceding three paragraphs of this article regarding the evaluation of the reasonableness of cost of transaction: (a) The associated person acquires the real

estate by inheritance or donation. (b) The time gap between the time of

acquisition of real estate by the associated person between the date of conclusion of the transaction concerned

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construction profit shall mean the average gross profit margin of the construction department of the associated person in the recent three years or the latest gross profit margin in construction industry announced by the Ministry of Finance, whichever is lower.

ii. The successful transaction concluded within one (1) year by other non-associated persons of real estate on the other floor of the same object or in the neighboring area, provided the area and the conditions thereof has been identified as similar after appraisal of variance in prices allowing for the specific floor and region in accordance with the dealing practices of real estate.

iii. The successful rental concluded within one (1) year by other non-associated persons of real estate on the other floor of the same object, provided the conditions thereof has been identified as similar after appraisal of variance in prices allowing for the region in accordance with the rental practices of real estate.

(b) This company will induce evidences to establish that the transaction of the real estate acquired by the associated person

has exceeded over five (5) years. (c) The associated person acquires the real

estate by conclusion of a contract for joint construction.

(F) In case the results of evaluation in accordance with the first and second subparagraph of this paragraph have been proven to be lower than dealing price, the provisions in the sixth and seventh subparagraph of this paragraph herein shall be applied. However, the following circumstances shall be excluded provided competent evidences thereof have been provided and the opinions rendered by the professional appraiser of real estate or accountants so described. (a) The reconstruction on the fountain or

leased land acquired by the associated person shall meet the following conditions: i. The fountain may be appraised

with methods stipulated herein above and the house shall be assessed by construction cost plus reasonable construction profit, the aggregate thereof is higher than the actual dealing price. The reasonable construction profit shall mean the average gross profit margin of the construction department of the associated person in the recent three years or the latest gross profit margin in construction industry announced by the Ministry of Finance,

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is similar to the successful transaction concluded within one year in the neighboring region by other non-associated person in terms of the conditions therefore and the area thereof. The successful transaction in the neighboring region shall mean the real estate thereof is in the same or neighboring street and is less than 500 meters far from the object or the current value thereof announced is similar to that of the object; That the area is similar shall mean the area of the real estate acquired by the non-associated person is not less than that of the object by 50% in area.

(F) In case the results of evaluation of the real estate acquired by the associated person in accordance with the fifth subparagraph of this paragraph have been proven to be lower than dealing price, the following provisions herein below shall be applied.

(a) The difference between the dealing prices of the real estate appraised cost thereof shall be allocated to Appropriated Retained Earnings in accordance with Article 41.1 of Securities Exchange Act and shall not be distributed or converted into new shares. In case an investor adopting equity appraisal methods towards its investment in this company is a public company, the same shall allocate a certain percentage in proportion to its proportion of shares held to Appropriated Retained Earnings in

whichever is lower. ii. The successful transaction

concluded within one (1) year by other non-associated persons of real estate on the other floor of the same object or in the neighboring area, provided the area and the conditions thereof has been identified as similar after appraisal of variance in prices allowing for the specific floor and region in accordance with the dealing practices of real estate.

iii. The successful rental concluded within one (1) year by other non-associated persons of real estate on the other floor of the same object, provided the conditions thereof has been identified as similar after appraisal of variance in prices allowing for the region in accordance with the rental practices of real estate.

(b) This company will induce evidences to establish that the transaction of the real estate acquired by the associated person is similar to the successful transaction concluded within one year in the neighboring region by other non-associated person in terms of the conditions therefore and the area thereof. The successful transaction in the neighboring region shall mean the real estate thereof is in the same or

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accordance with laws. (b) The supervisor shall handle the matter

in accordance with Article 218 of Company Act.

(c) The circumstances specified in 1 and 2 of this subparagraph shall be reported to the shareholders meeting and the details thereof shall be disclosed in the annual report and prospectus.

(G) The Appropriated Retained Earnings reserved according to the preceding paragraph shall be used to compensate appropriately or recover or dispose the assets with the losses due to price reduction, which was purchased at high price, or the same may be used for the purpose with proven reasonableness after being approved by the Financial Supervisory Commission (hereinafter called FSC).

甲、 In case of other proofs indicating any unusual circumstances occurred to the acquisition of real estate from the associated person, the same shall be handled according to the sixth and seventh sub-paragraph hereof.

neighboring street and is less than 500 meters far from the object or the current value thereof announced is similar to that of the object; That the area is similar shall mean the area of the real estate acquired by the non-associated person is not less than that of the object by 50% in area.

(G) In case the results of evaluation of the real estate acquired by the associated person in accordance with the fifth subparagraph of this paragraph have been proven to be lower than dealing price, the following provisions herein below shall be applied. (a) The difference between the dealing

prices of the real estate appraised cost thereof shall be allocated to Appropriated Retained Earnings in accordance with Article 41.1 of Securities Exchange Act and shall not be distributed or converted into new shares. In case an investor adopting equity appraisal methods towards its investment in this company is a public company, the same shall allocate a certain percentage in proportion to its proportion of shares held to Appropriated Retained Earnings in accordance with laws.

(b) The supervisor shall handle the matter in accordance with Article 218 of Company Act.

(c) The circumstances specified in 1 and 2 of this subparagraph shall be reported to the shareholders meeting and the details thereof shall be disclosed in the annual

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report and prospectus. (H) The Appropriated Retained Earnings

reserved according to the preceding paragraph shall be used to compensate appropriately or recover or dispose the assets with the losses due to price reduction, which was purchased at high price, or the same may be used for the purpose with proven reasonableness after being approved by the Financial Supervisory Commission (hereinafter called FSC).

(I) In case of other proofs indicating any unusual circumstances occurred to the acquisition of real estate from the associated person, the same shall be handled according to the sixth and seventh sub-paragraph hereof.

IV. With respect to the acquisition or disposal of business-use machinery and equipment between the Company and its parent or subsidiaries, shall be submitted by the Finance & Shared Services Division to the Board for review and approval prior the conduction thereof. In case of the impossibilities of prior review and approval thereby due to time, the acquisition or disposal business-use machinery and equipment by the Company with the value under NTD 10,000,000, shall be determined by the authorized President (if the President sub-delegates the authorization, the sub-delegation shall apply thereto); where the amount is under NTD 500,000,000, the same shall be determined by the authorized Chairman of the Board (if the Chairman sub-delegates the authorization, the sub-delegation shall apply thereto); however, such transaction shall be

54

confirmed by the Board immediately after the completion thereof. While the amount is over NTD 500,000,000, the same shall be determined by the Board prior to the execution.

Article 9 Handling Procedures on Acquisition and Disposal of Membership or Intangible assets I. Evaluation and Operation Process

(A) The acquisition or disposal of membership shall make reference to the fair market value, proposed conditions for transaction and the dealing price and subsequent an analysis report shall be made. Where the amount thereof is less than NTD3000,000, the same shall be submitted to the General Manager for review and approval and be reviewed by and filed with the board meeting. In case the amount is over 3,000,000, the board meeting shall approve the same.

(B) The acquisition or disposal of intangible assets shall make reference to the evaluation report rendered by the professional appraiser, fair market value, proposed conditions for transaction and the dealing price and subsequent an analysis report shall be made and submitted to the board meeting for approval.

II. Evaluation Report on membership and intangible assets (A) This company shall obtain evaluation

Report prepared by professional appraisals prior to acquisition and disposal of intangible assets.

(B) If and whenever the acquisition and disposal of membership or intangible

Handling Procedures on Acquisition and Disposal of Membership or Intangible assets I. Evaluation and Operation Process

(A) The acquisition or disposal of membership shall make reference to the fair market value, proposed conditions for transaction and the dealing price and subsequent an analysis report shall be made. Where the amount thereof is less than NTD3000,000, the same shall be submitted to the General Manager for review and approval and be reviewed by and filed with the board meeting. In case the amount is over 3,000,000, the board meeting shall approve the same.

(B) The acquisition or disposal of intangible assets shall make reference to the evaluation report rendered by the professional appraiser, fair market value, proposed conditions for transaction and the dealing price and subsequent an analysis report shall be made and submitted to the board meeting for approval.

II. Evaluation Report on membership and intangible assets (A) This company shall obtain evaluation

Report prepared by professional appraisals prior to acquisition and disposal of intangible assets.

(B) If and whenever the acquisition and disposal of membership or intangible

I. To comply with Article 11 of the “Regulations”, the Company formulated to getting the CPA’s opinion Timing.

II. To amend the execution unit.

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assets by this company has the following circumstances, or the amount thereof has reached 20% of the paid-in capital of the company or NTD0.3 billion, the account shall be invited to give opinions on the reasonableness of the dealing price in accordance with the Statement of Financial Audit Standards, No. 20 announced by the Accounting R&D Foundation

(C) In case the assets acquired or disposed by this company through the auction procedures held by a court, the certificates issued by the court may substitute the evaluation report or the opinion of an accountant.

III. Unit in charge of execution The acquisition and disposal membership or intangible assets by this company shall, in accordance with the first subparagraph, be submitted by the Accounting Division for review and approval prior to the conduction thereof.

assets by this company has the following circumstances, or the amount thereof has reached 20% of the paid-in capital of the company or NTD0.3 billion, the account shall be invited to give opinions on the reasonableness of the dealing price prior to the date of occurrence of the event in accordance with the Statement of Financial Audit Standards, No. 20 announced by the Accounting R&D Foundation

(C) In case the assets acquired or disposed by this company through the auction procedures held by a court, the certificates issued by the court may substitute the evaluation report or the opinion of an accountant.

III. Unit in charge of execution The acquisition and disposal membership or intangible assets by this company shall, in accordance with the first subparagraph, be submitted by the Finance & Shared Services Division for review and approval prior to the conduction thereof.

Article 9-1 The calculation of the transaction amounts referred to in the preceding articles besides Article 8, paragraph 2 shall be done in accordance with Article 12, paragraph 1-5 herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items for which an appraisal report from a professional appraiser or a CPA's opinion has been obtained need not be counted toward the transaction amount. The calculation of the transaction amounts referred to in the Article 8, paragraph 2 shall be done in accordance with Article 12, paragraph 1-5 herein, and

To comply with Article 11-1 & 13 and 14 of the “Regulations”, the Company give a definition of the transaction amount must be to accumulate calculation.

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"within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items that have been approved by the board of directors and recognized by the supervisors need not be counted toward the transaction amount.

Article 10 Handling Procedures for Acquisition and Disposal of Derivative Products I Principles and Guidelines for transaction

(A) Type of transaction (a) The derivative products of this

company may deal in refers to the items specified in Article 3.1 hereof.

(b) The so-called “for the purpose of transaction” shall mean for the purpose of activities of business transactions whereby the holding and issuing of derivative products is aimed at making profit from variance in prices of dealings, including measuring and identifying the current losses and gains in terms of fair price, whereas the so-called “not for the purpose of transaction” shall mean for the purpose of activities other than stated herein above.

(B) Strategies for operation or hedging (a) For the purpose of transactions:

adopting flexible strategies in operation

(b) Not for the purpose of transactions: adopting prudent and conservative strategies in operation

(C) Rights and duties (a) Signing of contracts and relevant

documents for dealings: The

Handling Procedures for Acquisition and Disposal of Derivative Products I Principles and Guidelines for transaction

(A) Type of transaction (a) The derivative products of this

company may deal in refers to the items specified in Article 3.1 hereof.

(b) The so-called “for the purpose of transaction” shall mean for the purpose of activities of business transactions whereby the holding and issuing of derivative products is aimed at making profit from variance in prices of dealings, including measuring and identifying the current losses and gains in terms of fair price, whereas the so-called “not for the purpose of transaction” shall mean for the purpose of activities other than stated herein above.

(B) Strategies for operation or hedging (a) For the purpose of transactions:

adopting flexible strategies in operation

(b) Not for the purpose of transactions: adopting prudent and conservative strategies in operation

(C) Rights and duties (a) Signing of contracts and relevant

documents for dealings: The

To amend the execution unit.

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chairman or the person designated thereof shall sign the aforesaid documents for and on behalf of this company.

(b) Execution of the transaction and the evaluation of losses and gains:

(i) The Finance & Administration Division – Procurement shall be responsible for the products relating to the materials whereas the Finance & Administration Division – Treasury responsible for matters relating to finance.

(ii) Opening account, transaction, confirmation, split: The supervisor of each relevant department shall be responsible for authorization thereof.

(iii) The certificate for transaction, request of payment and deposit of income shall be made by the operator and the supervisor at all levels shall take charge the review thereof. Meanwhile, the same shall be submitted to the Finance & Administration Division - Accounting and Treasury.

(iv) The assistant director from each relevant department shall conduct the evaluation of losses and gains and the statement thereof shall be submitted to Audit Department.

(c) Accounting: The Accounting Division shall be responsible for reconciling various certificate to the book by making vouchers and preparing

chairman or the person designated thereof shall sign the aforesaid documents for and on behalf of this company.

(b) Execution of the transaction and the evaluation of losses and gains: (i) The Finance & Shared Services

Division– Procurement shall be responsible for the products relating to the materials whereas the Finance & Shared Services Division – Treasury & Credit Management responsible for matters relating to finance.

(ii) Opening account, transaction, confirmation, split: The supervisor of each relevant department shall be responsible for authorization thereof.

(iii)The certificate for transaction, request of payment and deposit of income shall be made by the operator and the supervisor at all levels shall take charge the review thereof. Meanwhile, the same shall be submitted to the Finance & Shared Services Division - Accounting and Treasury & Credit Management.

(iv) The assistant director from each relevant department shall conduct the evaluation of losses and gains and the statement thereof shall be submitted to Audit Department.

(c) Accounting: The Accounting Division shall be responsible for reconciling

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relevant statement according to the accounting periods.

(d) Audit: The Audit Division shall be responsible for internal auditing conducted on a periodical and non-periodical basis.

(e) Legal affairs: The personnel above the level of legal professional shall be responsible for the review of the contract for dealings.

(f) Unless otherwise stipulated, the transactions of derivative products shall be executed by the personnel above the level of specialist.

(D) Evaluation of performance The evaluation of performance shall be based on the net value of loss and gain at the end of the year.

(E) Total amount of contract and authorization (a) For the purpose of transactions: The

total amount of contract for each individual object at any time shall not exceed 10% of the net amount of this company in the previous year. Where the amount thereof is less than 5%, the same may be determined by supervisors in each relevant department and shall be reviewed by and filed with the board meeting after transaction. In case the amount is over 5% the same shall be approved by the board meeting.

(b) Not for the purpose of transaction: The activities with the amount under the value of assets or liabilities held

various certificate to the book by making vouchers and preparing relevant statement according to the accounting periods.

(d) Audit: The Audit Division shall be responsible for internal auditing conducted on a periodical and non-periodical basis.

(e) Legal affairs: The personnel above the level of legal professional shall be responsible for the review of the contract for dealings.

(f) Unless otherwise stipulated, the transactions of derivative products shall be executed by the personnel above the level of specialist.

(D) Evaluation of performance The evaluation of performance shall be based on the net value of loss and gain at the end of the year.

(E) Total amount of contract and authorization (a) For the purpose of transactions: The

total amount of contract for each individual object at any time shall not exceed 10% of the net amount of this company in the previous year. Where the amount thereof is less than 5%, the same may be determined by supervisors in each relevant department and shall be reviewed by and filed with the board meeting after transaction. In case the amount is over 5% the same shall be approved by the board meeting.

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or to be transacted may be determined by supervisors in each relevant department and shall be reviewed by and filed with the board meeting after transaction.

(F) The upper limit of losses (a) For the purpose of transaction: The

upper limit of losses shall be based on the contract of the same object instead of an individual contract. The upper limit of losses of all the contracts shall be determined respectively in light of different instruments thereof.

(i) Forwards or futures: 5% of average cost

(ii) Option: 5%of the total contract value if this company is the buyer and the price plus 5% of the total contract value if this company is the seller.

(iii) Swap and other combined instruments: less than 5% of total contract value.

(b) Not for the purpose of transactions: no upper limit of losses is described due to the offset of losses and gains and those of hedge position.

II. Measures for risk management (A) Credit risk of the dealing counterpart: the

counterpart shall be a financial institution with good credit rating.

(B) The market risk of price reversion: see the subparagraph 1.6 of this article.

(C) Risk of market liquidity: any commodity shall be quoted to at least two financial

(b) Not for the purpose of transaction: The activities with the amount under the value of assets or liabilities held or to be transacted may be determined by supervisors in each relevant department and shall be reviewed by and filed with the board meeting after transaction.

(F) The upper limit of losses (a) For the purpose of transaction: The

upper limit of losses shall be based on the contract of the same object instead of an individual contract. The upper limit of losses of all the contracts shall be determined respectively in light of different instruments thereof. (i) Forwards or futures: 5% of

average cost (ii) Option: 5%of the total contract

value if this company is the buyer and the price plus 5% of the total contract value if this company is the seller.

(iii) Swap and other combined instruments: less than 5% of total contract value.

(b) Not for the purpose of transactions: no upper limit of losses is described due to the offset of losses and gains and those of hedge position.

II. Measures for risk management (A) Credit risk of the dealing counterpart: the

counterpart shall be a financial institution with good credit rating.

(B) The market risk of price reversion: see the

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institutions before transaction thereof. (D) Risk of cash flows: The fair market price of

the financial derivatives shall be disclosed on a periodical basis so as to properly indicate the prospective cash flows thereof.

(E) The risk of internal operation: see the subparagraph 1.3 of this article.

(F) Legal risks involved in signing contracts and relevant documents: The Legal Affairs Office shall provide necessary legal opinion thereof.

(G) The operator for dealing in derivative products shall not engaged in confirmation or split, etc. concurrently.

(H) The personnel for measuring, supervising and controlling of risks shall be in the different department from those described herein above and shall report to the board meting or the senior director not in charge of transactions or positions.

(I) The positions held by a derivatives exchange shall be assessed at least once a week except that the hedge transactions needed in the business operation shall be evaluated at least twice a month. The evaluation reports thereof shall be submitted to the senior executives authorized by the board meeting.

III. Internal audit The internal auditor of this company shall make out the appropriateness of internal control on the derivative products on a periodical basis and the audit department shall make an audit report on the compliance of The Procedures each month. In case of any major violations, the same shall be notified in writing

subparagraph 1.6 of this article. (C) Risk of market liquidity: any commodity

shall be quoted to at least two financial institutions before transaction thereof.

(D) Risk of cash flows: The fair market price of the financial derivatives shall be disclosed on a periodical basis so as to properly indicate the prospective cash flows thereof.

(E) The risk of internal operation: see the subparagraph 1.3 of this article.

(F) Legal risks involved in signing contracts and relevant documents: The Legal Affairs Office shall provide necessary legal opinion thereof.

(G) The operator for dealing in derivative products shall not engaged in confirmation or split, etc. concurrently.

(H) The personnel for measuring, supervising and controlling of risks shall be in the different department from those described herein above and shall report to the board meting or the senior director not in charge of transactions or positions.

(I) The positions held by a derivatives exchange shall be assessed at least once a week except that the hedge transactions needed in the business operation shall be evaluated at least twice a month. The evaluation reports thereof shall be submitted to the senior executives authorized by the board meeting.

III. Internal audit The internal auditor of this company shall make out the appropriateness of internal control on the derivative products on a periodical basis and the audit department shall

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to each supervisor. IV. Ways of periodical evaluation and handling of

abnormal conditions (A) The board meeting shall designate a

supervisor of the audit department to see to supervision and control of risks involved in the transactions of derivative products at any time.

(B) The board meeting shall designate persons specially in charge of periodical of whether the performance of transactions of derivative products is in compliance with the strategies for operation and whether the risks involved are bearable for this company

(C) The supervisor of the audit department shall conduct periodical evaluation of whether the measures on risk management is appropriate and dealt with according to handling procedures prescribed herein and shall supervise the transaction and the losses and gains. In case of any abnormal circumstances, the supervisor shall take necessary corresponding measures and report immediately to the board meeting. Where the independent director exists, the same shall attend the board meeting and be entitled to express its opinions.

(D) This company shall, when dealing in derivative products, establish a reference book, in which the type, amount of the transaction of derivative products, date of approval by board meeting, matters to be evaluated prudently in accordance with the ninth subparagraph of the second paragraph and the second and third

make an audit report on the compliance of The Procedures each month. In case of any major violations, the same shall be notified in writing to each supervisor.

IV. Ways of periodical evaluation and handling of abnormal conditions (A) The board meeting shall designate a

supervisor of the audit department to see to supervision and control of risks involved in the transactions of derivative products at any time.

(B) The board meeting shall designate persons specially in charge of periodical of whether the performance of transactions of derivative products is in compliance with the strategies for operation and whether the risks involved are bearable for this company

(C) The supervisor of the audit department shall conduct periodical evaluation of whether the measures on risk management is appropriate and dealt with according to handling procedures prescribed herein and shall supervise the transaction and the losses and gains. In case of any abnormal circumstances, the supervisor shall take necessary corresponding measures and report immediately to the board meeting. Where the independent director exists, the same shall attend the board meeting and be entitled to express its opinions.

(D) This company shall, when dealing in derivative products, establish a reference book, in which the type, amount of the transaction of derivative products, date of

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subparagraph of this paragraph, shall be specified in detail.

approval by board meeting, matters to be evaluated prudently in accordance with the ninth subparagraph of the second paragraph and the second and third subparagraph of this paragraph, shall be specified in detail.

Article 11 Handling Procedures for Merger, Division,

Acquisition or Stock transfer I. Evaluation and Operation Process

(A)The accounts, attorneys or underwriters shall be invited, before the decision of the board meeting by the Accounting Division give their opinions on reasonableness of swap rate, price of purchase or cash distributed to the shareholders or other properties prior to the merger, division, acquisition or stock transfer by this company. The said opinions shall be submitted to the board meeting for discussion and approval.

(B) The public companies engaged in merger, division or acquisition shall, prior to the shareholders meeting, make written document of important and related matters thereof and deliver the same together with opinions of the aforesaid professionals and the notices of meeting to shareholders for the latter’s reference in determining whether approval will be given thereof except where the law stipulates that no decision of shareholders meeting is needed therein.

(C) In case of the failure of any company participating in merger, division or acquisition to hold the shareholders meeting due to the inadequacy in attendance, number of votes or other restrictions imposed by

Handling Procedures for Merger, Division, Acquisition or Stock transfer I. Evaluation and Operation Process

(A)The accounts, attorneys or underwriters shall be invited, before the decision of the board meeting by Finance & Shared Services Division give their opinions on reasonableness of swap rate, price of purchase or cash distributed to the shareholders or other properties prior to the merger, division, acquisition or stock transfer by this company. The said opinions shall be submitted to the board meeting for discussion and approval.

(B) The public companies engaged in merger, division or acquisition shall, prior to the shareholders meeting, make written document of important and related matters thereof and deliver the same together with opinions of the aforesaid professionals and the notices of meeting to shareholders for the latter’s reference in determining whether approval will be given thereof except where the law stipulates that no decision of shareholders meeting is needed therein.

(C) In case of the failure of any company participating in merger, division or acquisition to hold the shareholders meeting due to the inadequacy in attendance, number

I. To amend the execution unit.

II. To comply with Article 24 of the “Regulations”, set more precise date for related responsible act.

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laws or that the proposal thereof has been declined thereby, the company concerned shall announce the reasons thereof in public and follow-up measures and estimated date for shareholders meeting.

II. Matters needing attention (A) Unless otherwise required by laws or due to

special conditions which render necessary prior approval of FSC, the company participating in merger, division or acquisition shall hold the board meeting and shareholders meeting on the same day to determine matters relating thereto. Unless otherwise required by laws or due to special conditions, which render necessary prior approval of FSC, the company participating in transfer of stock shall hold the board meeting on the same day. When participating in a merger, de-merger, acquisition, or transfer of another company's shares, the Company shall prepare a full written record of the following information and retain it for five years for reference: (a)Basic identification data for personnel:

Including the occupational titles, names, and national ID numbers (or passport numbers in the case of foreign nationals) of all persons involved in the planning or implementation of any merger, de-merger, acquisition, or transfer of another company's shares prior to disclosure of the information.

(b)Dates of material events: Including the signing of any letter of intent or memorandum of understanding, the hiring of a financial or legal advisor, the execution of a contract, and the convening of a board

of votes or other restrictions imposed by laws or that the proposal thereof has been declined thereby, the company concerned shall announce the reasons thereof in public and follow-up measures and estimated date for shareholders meeting.

II. Matters needing attention (A) Unless otherwise required by laws or due to

special conditions which render necessary prior approval of FSC, the company participating in merger, division or acquisition shall hold the board meeting and shareholders meeting on the same day to determine matters relating thereto. Unless otherwise required by laws or due to special conditions, which render necessary prior approval of FSC, the company participating in transfer of stock shall hold the board meeting on the same day. When participating in a merger, de-merger, acquisition, or transfer of another company's shares, the Company shall prepare a full written record of the following information and retain it for five years for reference: (a)Basic identification data for personnel:

Including the occupational titles, names, and national ID numbers (or passport numbers in the case of foreign nationals) of all persons involved in the planning or implementation of any merger, de-merger, acquisition, or transfer of another company's shares prior to disclosure of the information.

(b)Dates of material events: Including the signing of any letter of intent or memorandum of understanding, the hiring of a financial or legal advisor, the execution

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of directors meeting. (c)Important documents and minutes:

Including merger, de-merger, acquisition, and share transfer plans, any letter of intent or memorandum of understanding, material contracts, and minutes of board of directors meetings.

When participating in a merger, de-merger, acquisition, or transfer of another company's shares, the Company shall, within two days of passage of a resolution by the board of directors, report (in the prescribed format and via the Internet-based information system) “Basic identification data for personnel” and “Dates of material events” to the FSC for recordation. Where any of the companies participating in a merger, de-merger, 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 shall sign an agreement with such company and comply with regulations prescribed.

(B) Prior commitment of confidentiality: All the persons participating in or informed of the programs of merger, division, acquisition or transfer of stock shall make commitment of confidentiality in writing and shall not disclose it to the outside or buy or sell in his or her own name or have others buy or sell on his or her behalf stocks or securities in the nature of stock equity of all the company relating thereto.

(C) Conclusion of swap proportion or the price of purchase: In case of merger, division, acquisition or transfer of stock by this

of a contract, and the convening of a board of directors meeting.

(c)Important documents and minutes: Including merger, de-merger, acquisition, and share transfer plans, any letter of intent or memorandum of understanding, material contracts, and minutes of board of directors meetings.

When participating in a merger, de-merger, acquisition, or transfer of another company's shares, the Company shall, within two days commencing immediately from the date of passage of a resolution by the board of directors, report (in the prescribed format and via the Internet-based information system) “Basic identification data for personnel” and “Dates of material events” to the FSC for recordation. Where any of the companies participating in a merger, de-merger, 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 shall sign an agreement with such company and comply with regulations prescribed.

(B) Prior commitment of confidentiality: All the persons participating in or informed of the programs of merger, division, acquisition or transfer of stock shall make commitment of confidentiality in writing and shall not disclose it to the outside or buy or sell in his or her own name or have others buy or sell on his or her behalf stocks or securities in the nature of stock equity of all the company relating thereto.

(C) Conclusion of swap proportion or the price of

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company, he swap proportion or purchase price shall not be modified and the conditions for modifications thereof shall be specified in the contract thereof unless the following provisions apply thereto. (a) Handling capital increase in cash, issuing

convertible corporate debentures, gratuitous rationed shares, corporate debentures with share warrant, preferred stock with share warrant, share warrant and other marketable securities in the nature of stock equity.

(b) Behaviors affecting the financial status of the company such as disposal of major assets, etc.

(c) Circumstances affecting the rights and interests of the shareholders or price of securities such as major calamities, significant innovation in technology, etc.

(d) Adjustment of buyback of treasury stock in accordance with laws by any one party participating in merger, division, acquisition or stock transfer.

(e) Alteration, addition or reduction of the subjects participating in merger, division, acquisition or stock transfer or of the number thereof.

(f) The conditions for modification have been specified in the contract and disclosed to the outside.

(D) Necessary items in the contract: The contract for merger, division, acquisition or stock transfer shall be in compliance with Article 317.1 of Company Act and Article 22 of Law on Merger And Acquisition of Enterprises with the following matters specified therein:

purchase: In case of merger, division, acquisition or transfer of stock by this company, he swap proportion or purchase price shall not be modified and the conditions for modifications thereof shall be specified in the contract thereof unless the following provisions apply thereto. (a) Handling capital increase in cash, issuing

convertible corporate debentures, gratuitous rationed shares, corporate debentures with share warrant, preferred stock with share warrant, share warrant and other marketable securities in the nature of stock equity.

(b) Behaviors affecting the financial status of the company such as disposal of major assets, etc.

(c) Circumstances affecting the rights and interests of the shareholders or price of securities such as major calamities, significant innovation in technology, etc.

(d) Adjustment of buyback of treasury stock in accordance with laws by any one party participating in merger, division, acquisition or stock transfer.

(e) Alteration, addition or reduction of the subjects participating in merger, division, acquisition or stock transfer or of the number thereof.

(f) The conditions for modification have been specified in the contract and disclosed to the outside.

(D) Necessary items in the contract: The contract for merger, division, acquisition or stock transfer shall be in compliance with Article 317.1 of Company Act and Article 22 of Law

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(a) Settlement of breach. (b) Principles on the handling of treasury

stock bought back or the marketable securities in the nature of stock equity issued by the company merged or divided.

(c) The number and handling of treasury stock bought back in accordance with laws by any participating company after calculation of the benchmark of swap proportion.

(d) Methods for handling alteration, addition or reduction of the participating subjects or the number thereof.

(e) Schedule of the program and estimated date of completion.

(f) Relating handling procedures on scheduled date of shareholders meeting in case of delay in the completion of the program.

(E) Any company participated in merger, division, acquisition or transfer of stock may be exempted from decision of shareholders meeting in case the same intends to be involved in merger, division, acquisition or transfer of stock with another company after the disclosure of information of the former actions unless the participants have been decreased and the board meeting has been authorized by shareholders meeting to make appropriate changes whereas the procedures or legal acts completed in the formal actions should be redone by all the participants.

(F) This company shall form an agreement with the company participated in merger, division, acquisition or stock transfer who is not a public

on Merger And Acquisition of Enterprises with the following matters specified therein: (a) Settlement of breach. (b) Principles on the handling of treasury

stock bought back or the marketable securities in the nature of stock equity issued by the company merged or divided.

(c) The number and handling of treasury stock bought back in accordance with laws by any participating company after calculation of the benchmark of swap proportion.

(d) Methods for handling alteration, addition or reduction of the participating subjects or the number thereof.

(e) Schedule of the program and estimated date of completion.

(f) Relating handling procedures on scheduled date of shareholders meeting in case of delay in the completion of the program.

(E) Any company participated in merger, division, acquisition or transfer of stock may be exempted from decision of shareholders meeting in case the same intends to be involved in merger, division, acquisition or transfer of stock with another company after the disclosure of information of the former actions unless the participants have been decreased and the board meeting has been authorized by shareholders meeting to make appropriate changes whereas the procedures or legal acts completed in the formal actions should be redone by all the participants.

(F) This company shall form an agreement with the

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company in accordance with the first, second, fifth subparagraph of this paragraph hereof.

company participated in merger, division, acquisition or stock transfer who is not a public company in accordance with the first, second, fifth subparagraph of this paragraph hereof.

Article 12 Procedures for Disclosure of Information I. Items for public announcement and declaration

and its standard (A) Acquisition of real estate from associated

persons (B) Investment in the Mainland (C) Merger, division, acquisition or stock

transfer (D) The loss incurred in the dealing of

derivatives reach the upper limit of losses of all or individual contracts specified in Subparagraph 5 of Paragraph 1 of Article 10.

(E) The amount of transactions other than those stated in the preceding four subparagraphs reach 20% of paid-in capital of this company or NTD0.3 billion. The following circumstances shall be excluded therein. (a) Transactions of public bond. (b) Transactions of debentures with

conditions for redemption and selling off.

(c) The assets acquired or disposed are equipment or machines for business use and the counter part of the transaction are not associated persons and amount thereof is under NTD 0.5 billion.

(d) The assets are acquired by means of entrusted construction on one’s own land, joint construction with separate ownership, portioning, sale and

Procedures for Disclosure of Information I. Items for public announcement and declaration

and its standard (A) 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 company's total assets, or NT$300 million or more; provided, this shall not apply to trading of government bonds or bonds under repurchase and resale agreements.

(B) Merger, division, acquisition or stock transfer

(C) The loss incurred in the dealing of derivatives reach the upper limit of losses of all or individual contracts specified in Subparagraph 5 of Paragraph 1 of Article 10.

(D) The amount of transactions other than those stated in the preceding three subparagraphs or an investment in the mainland China reach 20% of paid-in capital of this company or NTD0.3 billion. The following circumstances shall be excluded therein. (a) Transactions of public bond. (b) Transactions of debentures with

conditions for redemption and selling off.

(c) The assets acquired or disposed are equipment or machines for business use

I. To comply with Article 30 of the “Regulations”, to amend the disclosure standard of related party transactions and investment in the mainland China, it will follow the precedent of general acquisition or disposal asset, and it shall be announced if the Company build on rented land transaction amount reach NT500 million.

I. To comply with Article 31 of the “Regulations”, if the Company change to the originally publicly announced and reported information, it will make an announcement within two days commencing immediately from the date of the event.

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proposed amount thereof is under NTD 0.5 billion.

(F) The calculations for the dealing amount in the preceding subparagraph (a) Amount of each transaction (b) Cumulative amount of acquisition or

disposal of the objects of the same nature with the same counterpart within a year

(c) Cumulative amount of acquisition or disposal of the objects of the same nature with the same counterpart within a year

(d) Respective cumulative amount of acquisition and disposal of the same security within a year

II. Time for public announcement and declaration In case of any circumstances specified in Subparagraph 1 to 5 of Paragraph 1, the same shall be handled for public announcement and declaration within two (2) days after the occurrence of the event.

III Procedures for public announcement and

declaration (A) This company shall handle public

announcement and declaration of relating information in the website designated by the FSC.

(B) This company shall, within first ten (10) days in each month, input the information about the dealings in derivatives as of the end of last month by this company and the subsidiaries, which are not affiliated to domestic public companies, into the website designated by the FSC.

and the counter part of the transaction are not associated persons and amount thereof is under NTD 0.5 billion.

(d) 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 is less than NT$500 million.

(E) The calculations for the dealing amount in the preceding four subparagraph (a) Amount of each transaction (b) Cumulative amount of acquisition or

disposal of the objects of the same nature with the same counterpart within a year

(c) Cumulative amount of acquisition or disposal of the objects of the same nature with the same counterpart within a year

(d) Respective cumulative amount of acquisition and disposal of the same security within a year

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

II. Time for public announcement and declaration In case of any circumstances specified in Subparagraph 1 to 4 of Paragraph 1, the same shall be handled for public announcement and

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(C) In case of any mistakes or omissions of necessary items therein, appropriate corrections shall be made and the entire items shall be re-announced publicly and re-declared.

(D) This company shall, within two (2) days after the occurrence of the events, handle public announcement and declaration of relating information in the website designated by FSC after the transaction announced and declared as required. (a) Termination or cancellation of,

alteration to relevant contracts to the original transactions.

(b) Failure to complete merger, division, acquisition or stock transfer in accordance with contracts.

IV Format of Public Announcements The necessary items and contents of public announcement which the Company shall comply with are referred to the appendixes of “Regulations Governing the Acquisition or Disposition of Assets by Public Companies”.

declaration within two (2) days commencing immediately from the date of the event.

III Procedures for public announcement and

declaration (B) This company shall handle public

announcement and declaration of relating information in the website designated by the FSC.

(C) This company shall, within first ten (10) days in each month, input the information about the dealings in derivatives as of the end of last month by this company and the subsidiaries, which are not affiliated to domestic public companies, into the website designated by the FSC.

(D) In case of any mistakes or omissions of necessary items therein, appropriate corrections shall be made and the entire items shall be re-announced publicly and re-declared.

(E) This company shall, within two (2) days commencing immediately from the date of the events, handle public announcement and declaration of relating information in the website designated by FSC after the transaction announced and declared as required. (a) Termination or cancellation of,

alteration to relevant contracts to the original transactions.

(b) Failure to complete merger, division, acquisition or stock transfer in accordance with contracts.

(c) Change to the originally publicly announced and reported information.

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IV Format of Public Announcements The necessary items and contents of public announcement which the Company shall comply with are referred to the appendixes of “Regulations Governing the Acquisition or Disposition of Assets by Public Companies”.

Article 14 The following provisions apply to the subsidiary of this company: I. The subsidiaries shall, in accordance with

Guidelines for Handling Acquisition and Disposal of Assets of Public Companies, establish the Procedures of Acquisition or disposal of Assets, which shall be approved by the board meeting and shareholders meeting and subsequently reviewed by and deposited with the board meeting of this company. The same procedures shall apply to the amendments thereto.

II. The limit of amount for individual purchase of real estate for non-business use or securities or investment in each individual security by the subsidiaries, shall be determined in the board meeting.

III. In case of acquisition or disposal of assets by the subsidiary, which is not domestic public company, reach the standard stipulated in Guidelines for Handling Acquisition and Disposal of Assets of Public Companies, the same shall be handled by this company for public announcement or declaration.

IV. “Reach 20% of paid-in capital” as mentioned in the public announcement or declaration shall be based on the paid in capital of this company.

V. Each subsidiary of the Company shall review whether its applying procedure related to the

The following provisions apply to the subsidiary of this company: II The subsidiaries shall, in accordance with

Guidelines for Handling Acquisition and Disposal of Assets of Public Companies, establish and execute the Procedures of Acquisition or disposal of Assets, which shall be approved by the board meeting and shareholders meeting and subsequently reviewed by and deposited with the board meeting of this company. The same procedures shall apply to the amendments thereto.

III The limit of amount for individual purchase of real estate for non-business use or securities or investment in each individual security by the subsidiaries, shall be determined in the board meeting.

IV In case of acquisition or disposal of assets by the subsidiary, which is not domestic public company, reach the standard stipulated in Guidelines for Handling Acquisition and Disposal of Assets of Public Companies, the same shall be handled by this company for public announcement or declaration.

V “Reach 20% of paid-in capital” or 10% of the company's total assets as mentioned in the public announcement or declaration shall be based on the paid in capital or total assets of this company.

VI Each subsidiary of the Company shall review

Amendment of wording in accordance with Article 7 & 33 of the Regulations

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acquisition or disposition of assets is in compliance with the “Regulations Governing the Acquisition or Disposition of Assets by Public Companies”. The Company’s auditor shall reexamine the check report made by each subsidiary of the Company.

whether its applying procedure related to the acquisition or disposition of assets is in compliance with the “Regulations Governing the Acquisition or Disposition of Assets by Public Companies”. The Company’s auditor shall reexamine the check report made by each subsidiary of the Company.

Article 16 The Procedures shall, after approved by the board meeting, be submitted to each supervisor and to shareholders meeting for approval. The same shall apply to the amendments hereto. In case of any objections raised by directors, which have been made in written form or recorded, the same shall be delivered to each supervisor.

The Procedures shall, after approved by the board meeting, be submitted to each supervisor and to shareholders meeting for approval. The same shall apply to the amendments hereto. In case of any objections raised by directors, which have been made in written form or recorded, the same shall be delivered to each supervisor. 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 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.

To comply with the Company to set up independent director, 2rd paragraph of Article 16 is amended accordingly.

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Amendment to “Regulations Governing Shareholders’ Meeting” of FarEastone Telecommunications Co., Ltd. Article Current Articles Amended Articles Explanation

Article 2

The Company’s shareholders’ meeting shall be held at a place where the Company is headquartered or a place facilitating and appropriate to shareholders (or proxies thereof), and shall be held not earlier than 9:00 the morning or later than 3:00 in the afternoon. The attending shareholders (or proxies thereof) shall wear attendance certificates, surrender sign-in cards instead of sign-in on book. The Company may appoint the retained Attorneys-at-Law, CPAs or other people concerned to attend a shareholders’ meeting as an observer. The shareholders’ meeting staff shall wear identity certificates or sashes. A shareholders’ meeting shall be chaired by the chairman if it is called by the chairman. In absence of the Chairman or his being unable to exercise his functions, the Vice Chairman shall act in his place. In absence of a Vice Chairman or while the Vice Chairman is unable to exercise his functions, the Chairman shall appoint a Director to act in the place otherwise a Director shall be elected from among themselves to act in the place. Where the Board of Directors meeting is called by a person beyond the Board of Directors, the meeting shall be chaired by the convener. Where there are two or more qualified conveners, one shall be elected from among themselves to chair the meeting. The Company shall record in sound or videotape the shareholders’ meeting throughout the process and shall keep the videotape or record for a minimum of one year.

The Company’s shareholders’ meeting shall be held at a place where the Company is headquartered or a place facilitating and appropriate to shareholders (or proxies thereof), and shall be held not earlier than 9:00 the morning or later than 3:00 in the afternoon. The attending shareholders (or proxies thereof) shall wear attendance certificates, surrender sign-in cards instead of sign-in on book. When calling a shareholders’ meeting, the Company shall adopt electronic transmission as one of the methods for exercising voting power, and such exercise shall be specified in the meeting notice. Shareholders who exercise their voting power via electronic transmission shall be deemed as attending the shareholders' meeting in person, but they shall be deemed as having waived their exercise of voting power with respect to any temporary motions and amendments/alternates to original motions, proposed at the shareholders’ meeting. The attendance at a shareholders' meeting shall be counted based on the quantity of shares. The number of shares shall be counted based on the certificate of attendance as furnished plus the quantity of shares for which the voting power is exercised via electronic transmission. The Company may appoint the retained Attorneys-at-Law, CPAs or other people concerned to attend a shareholders’ meeting as an observer. The shareholders’ meeting staff shall wear identity certificates or sashes. A shareholders’ meeting shall be chaired by the chairman if it is called by the chairman. In absence of the Chairman or his being unable to exercise his functions, the Vice Chairman shall act in his place. In absence of a Vice

I. In order to deal with the Company’s adoption of electronic transmission as one of the methods for exercising voting power at a shareholders’ meeting pursuant to laws, amend Paragraph 1 and also add Paragraph 2 and Paragraph 3.

II. Therefore, the initial Paragraphs 2-5 are changed to Paragraphs 4-7.

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Chairman or while the Vice Chairman is unable to exercise his functions, the Chairman shall appoint a Director to act in the place otherwise a Director shall be elected from among themselves to act in the place. Where the Board of Directors meeting is called by a person beyond the Board of Directors, the meeting shall be chaired by the convener. Where there are two or more qualified conveners, one shall be elected from among themselves to chair the meeting. The Company shall record in sound or videotape the shareholders’ meeting throughout the process and shall keep the videotape or record for a minimum of one year.

Article 11

Unless otherwise provided for in law or Articles of Incorporation, decisions in the shareholders' meeting shall be resolved by a majority vote of the attending shareholders (proxies). A proposal is deemed officially resolved in the validity same as the one resolved through voting if no shareholders (proxies) object in response to inquiry by the chairman. In case of an amendment or alternative to a same proposal, the chairman will determine the order of voting. Where one among them is resolved, all others shall be deemed vetoed and call for no more voting process. The results of voting shall be reported on-the-spot and entered into the minutes.

Unless otherwise provided for in law or Articles of Incorporation, decisions in the shareholders' meeting shall be resolved by a majority vote of the attending shareholders (proxies). Where any shareholder who exercises voting power via electronic transmission does not object to the motion, and neither does the other present shareholders upon the chairperson’s inquiry, the motion shall be deemed as ratified as validly as if voted by ballot. Where any shareholder objects to the motion, a vote by ballot shall be applied, and the chairperson may decide to vote on a case by case basis, or adopt a package vote or split vote against various motions (including the motion for election), and count votes separately. In case of an amendment or alternative to a same proposal, the chairman will determine the order of voting. Where one among them is resolved, all others shall be deemed vetoed and call for no more voting process. The results of voting shall be reported on-the-spot and entered into the minutes.

I. In order to deal with the Company’s adoption of electronic transmission as one of the methods for exercising voting power at a shareholders’ meeting pursuant to laws and to promote the parliamentary efficiency, amend Paragraph 1 and also add Paragraph 2 and Paragraph 3.

II. Therefore, the initial Paragraphs 2-3 are changed to Paragraphs 4-5.

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Fairness Opinion Private Placement of Common Shares

Far EasTone Telecommunications Co. Ltd.

Yuanta Securities Company, Ltd. April 11, 2012

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Disclaimer

Yuanta Securities Company Ltd. (“Yuanta”) has been engaged by Far EasTone Telecommunications Company Ltd. (“Far EasTone”) to issue a fairness opinion, regarding the pricing reasonableness of Far EasTone’s common shares issuance via private placement. This fairness opinion is solely intended for Far EasTone’s Board Meeting, Shareholders’ Meeting or submission to the competent authorities. This fairness opinion shall not be used for other purposes such as citation, perusal, referencing or mentioning in part or as a whole.

The assessment and analysis of this fairness opinion are based on the reference date as of April 11, 2012, and the sources that used for the assessment and analysis, such as data, stock information, domestic and foreign securities firms’ research/industry reports and audited financial reports, are obtained from Far EasTone, Market Observation Post System’s (MOPS), database of Taiwan Economic Journal (TEJ), Taiwan Stock Exchange (“Exchange” or “TWSE”), GreTai Securities Market (“GTSM” or “OTC”) and Bloomberg. Yet, the preceding data and information might change due to the timeliness of some of the sources, which may also cause the usefulness and effectiveness of this fairness opinion. This fairness opinion has provided its best knowledge and accuracy in formulating its assessment based upon preceding data and information, and Yuanta does not guarantee such data and information’s accuracy and prudence. Hence Yuanta is not liable and responsible for any misleading or false data and information that have been provided to Yuanta.

Additionally, this fairness opinion’s assessment is based on the scope of work that has been engaged by Far EasTone, therefore, this fairness opinion might not include certain essential evaluation procedures that readers of this fairness opinion consider to be necessary. Yuanta does not indicate, or liable and responsible for the evaluation of the placee’s legitimacy and candidacy for the private placement.

This fairness opinion is provided in both Mandarin and English versions, any differences in the English version from the Mandarin version will be disregarded, and the Mandarin version shall prevail. Executive Summary

In order to introduce a strategic partner, Far EasTone proposes to discuss the issuance of common shares via private placement in 2012 Annual Shareholders’ Meeting. Yuanta has been engaged by Far EasTone to issue a fairness opinion regarding the private placement pricing rationale and reasonableness. The conclusion and calculation of the pricing range of this fairness opinion are derived by using the following valuation methods: Market Price Analysis Method, Price to Earnings Ratio Analysis Method (PER), Price to Book Ratio Analysis Method (PBR), and Enterprise Value to Sales Analysis Method (EV/Sales), Enterprise Value to Earnings Before Interest, Taxes, Depreciation and Amortization Analysis Method (EV/EBITDA). After comprehensive assessment of abovementioned valuation methods and the potential liquidity risk consideration, with the fact that the pricing of the private placement share price is no less than 70% of the reference price (“Reference Price”); in addition, Far EasTone reserves the right to adjust the issuance price under certain circumstances, and the adjusted price shall not be less than 70% of the new Reference Price, Yuanta concludes that Far EasTone’s private placement mechanism is fair and reasonable. ONE. Background

Far EasTone was established on April 11, 1997, its major business is telecommunications services

and sales of mobile devices and related products. In order to introduce a strategic partner – a 100% owned subsidiary of China Mobile Ltd. (not a related company of Far EasTone), Far EasTone’s Annual Shareholders’ Meeting had approved and authorized its Board of Directors of the issuance of common shares via private placement in one year after the approval, with total of 444,341,020 shares or less on June 9, 2011. The tentative common share price for private placement was NT$40 per share with the condition of no less than 70% of the Reference Price. In addition, if the volume weighted average price of the common shares of Far EasTone for the 14 consecutive trading days prior to and including the date on which either the placee’s parent company or Far EasTone sent the notice to the other party, pursuant to the relevant agreements, to notify the settlement date of the private placement, was beyond the range

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of NT$35 (inclusive) to NT$50 (inclusive), it was proposed that the Shareholders’ Meeting hereby authorized that the Board of Directors may discuss in good faith to agree to a new private placement price per share of Far EasTone; provided that any upward or downward adjustment (if any) shall not be more than NT$5 per share of Far EasTone. However, the new private placement price shall be no less than 70% of the Reference Price of the new pricing date. Yet, current regulations have not permitted such transaction, and the one-year period for private placement will soon be expired, Far EasTone now proposes to discuss and re-obtain the approval in 2012’s Annual Shareholders’ Meeting.

Pursuant to Article 43-6 of Securities and Exchange Act and Article 2 of Directions for Public

Companies Conducting Private Placements of Securities, any TWSE-listed or OTC-listed companies that arrange to issue common shares in the means of private placement, shall obtain the approval from Shareholders’ Meeting and authorization to the Board of Directors for the pricing. Any TWSE-listed or OTC-listed companies shall determine their private placement price in reference to higher of the following two calculations: (1) the simple average closing price of the common shares of the TWSE-listed or OTC-listed company for either the one, three, or five business days before the price determination date (exclusive), after adjustment for any distribution of stock dividends, cash dividends or capital reduction, or (2) the simple average closing price of the common shares of the TWSE-listed or OTC-listed company for the thirty business days before the price determination date (exclusive), after adjustment for any distribution of stock dividends, cash dividends, or capital reduction. A fairness opinion by an independent expert needs to be provided for reference to shareholders in Shareholders’ Meeting, if the price is less than 80% of the Reference Price.

Yuanta has been engaged by Far EasTone to issue a fairness opinion regarding the pricing reasonableness of the private placement, the following are the relevant valuation and assessment: TWO. Valuation Model

There are various valuation methods when assessing a company’s value; different method comes

with different advantage and disadvantage. Some of the methods that have been frequently used are Market Approach, Income Approach and Cost Approach, which have their benefit and limitation when applying. The following are the brief descriptions of the aforementioned methods:

Valuation Model Description Applicability

Market Price Analysis Method

Fair market value can be assessed on listing companies.

Far EasTone is a TWSE-listed company, this fairness opinion has chosen its average market price for a certain period of time to conduct a market price.

Mar

ket A

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Comparable Company Analysis Method

The assessment is based on analyzing a target’s comparable ratios such as PER, PBR, EV/Sales, EV/EBITDA or other financial ratios.

Comparable Company Analysis Method is usually adopted when a target has relevant market comparables. Far EasTone’s listing peers are ChungHwa Telecom Co Ltd. and Taiwan Mobile Co Ltd. This fairness opinion has selected the two as the comparable.

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App

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Discounted Cash Flow Analysis Method (DCF)

The present value of future expected free cash flow.

DCF is a determination of EV by discounting the estimated future unlevered free cash flows with the weighted average cost of capital. Since there are many variables and factors involved when using DCF, and a fraction of change will alter the outcome, hence Yuanta does not apply the method in this fairness opinion.

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Book Value Analysis Method

By using audited financial report’s book value as the assessment basis.

Net Realizable Value Analysis Method

By using the selling price as the assessment basis.

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Replacement Cost Analysis Method

The amount that an entity would have to pay to replace an asset at present time.

More appropriate for targets that have specific assets and companies that mainly focused on investing, therefore, Yuanta does not apply this method in this fairness opinion.

THREE. Estimation of Far EasTone’s Value Per Share

This fairness opinion has selected five of the following appropriate assessment methods to analyze Far EasTone’s fair value per share: Market Price Analysis Method, Price to Earnings Ratio Analysis Method (PER), Price to Book Ratio Analysis Method (PBR), Enterprise Value to Sales Analysis Method (EV/Sales) and Enterprise Value to Earnings Before Interest, Taxes, Depreciation and Amortization Analysis Method (EV/EBITDA).

1. Market Price Analysis Method The following table shows Far EasTone’s average closing price for 65-consecutive-trading-day, as of April 10, 2012 (inclusive):

Unit: NT$

Far EasTone

Price Per Share 58.02 Source: Taiwan Economic Journal (TEJ)

Owing to 65-consecutive-trading-day is approximately a period of one quarter, so Yuanta has chosen the average closing price for 65-consecutive-trading-day of Far EasTone prior to April 10, 2012 (inclusive) to estimate its fair value per share. As illustrated from the table above, Far EasTone’s theoretical fair value per share is NT$58.02.

2. Comparable Company Analysis Method Far EasTone’s TWSE-listed peers are ChungHwa Telecom Company Ltd. (CHT) and Taiwan

Mobile Company Ltd. (Taiwan Mobile). Therefore, Yuanta has selected the two as the comparables. The following are the aforementioned companies’ financial data for the year ended 2011:

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Unit: Thousands of NT$

Far EasTone CHT Taiwan Mobile*

Sales 75,748,831 217,493,067 81,369,183

Gross Profit 30,365,070 85,961,866 32,713,725

Operating Profit 11,516,530 55,084,717 17,589,805

EBITDA 21,901,890 89,035,628 25,866,231

Net Profit After Tax 8,880,993 47,068,375 13,468,763

Total Assets 95,430,723 442,920,282 91,794,368 Total Liabilities 22,654,275 69,877,634 41,730,483 Net Equity 71,976,867 368,731,026 48,948,011

Common Shares 32,585,008 77,574,465 34,208,328

Fully Diluted EPS (NT$) 2.72 6.03 4.69

Book Value Per Share (NT$) 22.09 47.53 18.20 Source: Audited 2011 financial report, TEJ *The subsidiaries of Taiwan Mobile hold total 730,725,849 shares of treasury stock of Taiwan Mobile

(1)Price to Earnings Ratio Analysis Method (PER)

Hereby using aforementioned three companies’ average closing price for

65-consecutive-trading-day as of April 10, 2012 (inclusive), around one quarter, and net profit after tax for the year ended 2011, to estimate the PER range, illustrated as the following table:

Unit: Thousands of NT$

Far EasTone CHT Taiwan Mobile Average

Price Per Share (NT$)* 58.02 93.95 90.01

Paid-in Capital** 32,585,008 77,574,465 26,901,070

Market Cap 189,058,216 728,812,099 242,136,531

Net Profit After Tax 8,880,993 47,068,375 13,468,763

PER (x) 21.29 15.48 17.98 18.25 Source: Audited 2011 financial report, TEJ * Price per share is calculated by average closing price for 65-consecutive-trading-day as of April 10, 2012 (inclusive), around one quarter. **Taiwan Mobile’s outstanding shares have been adjusted for the total treasury shares of 730,725,849 shares that held by its subsidiaries.

As illustrated from the table above, three companies’ PER is ranging from 15.48~21.29x, and the average is 18.25x. If calculated by Far EasTone’s net profit after tax of NT$8,880,993 thousands in 2011 with average PER of 18.25x, it derives Far EasTone’s theoretical fair value per common share is NT$49.74.

(2)Price to Book Value Ratio Analysis Method (PBR)

The following table shows three companies’ average closing price for 65-consecutive-trading-day as of April 10, 2012 (inclusive), around one quarter, and net shareholders’ equity for the year ended 2011:

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Unit: Thousands of NT$

Far EasTone CHT Taiwan Mobile Average Per Share Price (NT$)* 58.02 93.95 90.01

Paid-in Capital** 32,585,008 77,574,465 26,901,070

Market Cap 189,058,216 728,812,099 242,136,531 Net Equity 71,976,867 368,731,026 48,948,011

PBR (x) 2.63 1.98 4.95 3.18 Source: Audited 2011financial report, TEJ * Price per share is calculated by average closing price for 65-consecutive-trading-day as of April 10, 2012 (inclusive), around one quarter. **Taiwan Mobile’s outstanding shares have been adjusted for the total treasury shares of 730,725,849 shares that held by its subsidiaries.

As illustrated from the table above, three companies’ PBR is ranging from 1.98~4.95x, and the

average is 3.18x. If calculated by Far EasTone’s net shareholders’ equity of NT$71,976,867 thousands in 2011 with average PBR of 3.18x, it derives Far EasTone’s theoretical fair value per common share is NT$70.24.

(3)EV/Sales Analysis Method

The following table shows the calculation of EV/Sales by three companies’ average closing price for 65-consecutive-trading-day as of April 10, 2012 (inclusive), around one quarter, and sales for the year ended 2011:

Unit: Thousands of NT$

Far EasTone CHT Taiwan Mobile Average

EV* 183,148,728 667,569,424 254,457,686

Sales 75,748,831 217,493,067 81,369,183

EV/Sales (x) 2.42 3.07 3.13 2.87 Source: Audited 2011 financial report, TEJ *EV = Company’s Market Capitalization – Cash and Cash Equivalent + Interest Bearing Debt + Minority Interest; among which the calculation for Market Capitalization is the same for aforementioned PER Analysis Method and PBR Analysis Method

As illustrated from the table above, three companies’ EV/Sales is ranging from 2.42~3.13x, and the

average is 2.87x. If calculated by Far EasTone’s 2011 sales of NT$75,748,831 thousands with average 2.87x of EV/Sales, it derives Far EasTone’s theoretical fair value per common share is NT$68.53.

(4)EV/EBITDA Analysis Method

The following table shows the calculation of EV/EBITDA by three companies’ average closing price for 65-consecutive-trading-day as of April 10, 2012 (inclusive), around one quarter, and EBITDA for the year ended 2011:

Unit: Thousands of NT$

Far EasTone CHT Taiwan Mobile Average EV* 183,148,728 667,569,424 254,457,686 EBITDA 21,901,890 89,035,628 25,866,231

EV/EBITDA (x) 8.36 7.50 9.84 8.57 Source: Audited 2011 financial report, TEJ *EV = Company’s Market Capitalization – Cash and Cash Equivalent + Interest Bearing Debt + Minority Interest; among which the calculation for Market Capitalization is the same for aforementioned PER Analysis Method and PBR Analysis Method

As illustrated from the table above, three companies’ EV/EBITDA is ranging from 7.50~9.84x,

and the average is 8.57x. If calculated by Far EasTone’s 2011 EBITDA of NT$21,901,890 thousands

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with average 8.57x of EV/Sales, it derives Far EasTone’s theoretical fair value per common share is NT$59.42. FOUR. Relevant Adjustment Factors

1. Liquidity Discount for Privately Placed Shares After the completion of the private placement, the common shares that the intended strategic

partner subscribes will have a three-year mandatory, non-transferable lockup period immediately following the issuance (unless otherwise waived by regulations). In order for the shares to be publicly traded post three-year lockup, the privately placed shares will need to comply with Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings, before the application with Securities and Futures Bureau, Financial Supervisory Commission, Executive Yuan. When assessing the fair value of Far EasTone’s privately placed common shares, the liquidity risk shall be taken into consideration. Consequently, the private placement “discount” has been applied. According to the data of “Private Placement Information” from Market Observation Post System (MOPS), there were total of 70 TWSE-listed companies issued privately placed common shares for the past three years (2009 to 2011). Among which 63 of them were issued at a discount, and the discount range from 10% (inclusive) to 30% (inclusive) were 51 deals, which accounted for around 81% of abovementioned discount deals and 73% of the total discount deals, these discounted deals were the majority of total privately placed transactions. Therefore, the usual acceptable discount range for privately placed common shares is presumably around 10% to 30%. Thus, this fairness opinion applies 10% to 30% discount when assessing the fair value of Far EasTone’s private placement of common shares.

2. Adjustment for Strategic Synergy

According to Far EasTone’s public announcement and press release, it plans to collaborate with China Mobile Ltd. post the completion of private placement. Both companies will enhance and strengthen their procurement, voice and roaming services, value-added services and other technological research and development. Both companies agree that they will establish a joint venture under applicable laws and rules, and/or after the permission from the competent authorities, to structure collaboration with the consent of both companies. Therefore, it is expected that the private placement will bring benefit and strategically advantageous results to both companies. Since the anticipated outcome is mutually beneficial, this fairness opinion does not apply and adjust the premium/discount factor to the strategic effectiveness. FIVE. Summary of Pricing Range

1. Theoretical Pricing Range

Since every valuation model has its significance and usefulness, therefore, this fairness opinion applies five different valuation methods to comprehensively analyze the fair value of Far EasTone. In order to derive an objective weighted average pricing range, this fairness opinion also applies different weights to different methods. Far EasTone is a TWSE-listed company, presumably market price method can better reflect a company’s value, hence it applies the highest weight. PER and EV/EBITDA Analysis Methods both involve the factor of profitability, and they also closely reflect a company’s value, thus they apply relatively higher weights. Consequently, PBR and EV/Sales Analysis Methods apply relatively lower weights. The following table shows the theoretical pricing range from NT$58.50~59.56 per common share after the application of different sets of weight:

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Unit: NT$

Valuation Method Theoretical

Price Weight A Weight B

Weighted Average Pricing Range

Market Price 58.02 35% 30% PER 49.74 25% 20% PBR 70.24 10% 12.5% EV/Sales 68.53 10% 12.5% EV/EBITDA 59.42 20% 25%

58.50~59.56

2.Pricing Range Adjustment

As indicates in the aforementioned “Relevant Adjustment Factors” section, the common practice for

giving TWSE-listed companies’ private placement liquidity discount is from 10% to 30% for the past three years, thus this fairness opinion adopts such practice and gives 10% to 30% discount to the weighted average pricing range. After the adjustment, the reasonable pricing range for the private placement of common shares is from NT$40.95~53.60 per share. SIX. Conclusion of the Valuation

After comprehensive quantitative assessment by Market Price Analysis Method, PER Analysis Method, PBR Analysis Method, EV/Sales and EV/EBITDA Analysis Methods, plus the consideration of objective market data, the liquidity risk of three-year lockup of private placement, with the appropriate pricing adjustment, the reasonable private placement pricing range is from NT$40.95~53.60 per share. As indicates in the aforementioned “Relevant Adjustment Factor” section, the common practice for giving TWSE-listed companies’ private placement liquidity discount is from 10% to 30% for the past three years in order to compensate strategic investor the liquidity risk for the three year lockup period. Further, in order to determine the final private placement price, the Board of Directors must obtain authorization from Shareholders’ Meeting resolution. Therefore, Far EasTone’s private placement for common shares at no less than 70% of the Reference Price is considered to be reasonable.

In addition, with regard to Far EasTone’s proposed agenda for the Board Meeting on April 20, 2012: “The basis and reasonableness of the price…if the volume weighted average price of the common shares of the Company for the 14 consecutive trading days prior to and including the date on which either the placee’s parent company or Far EasTone send the notice to the other party, pursuant to the relevant agreements, to notify the settlement date of the private placement, is beyond the range of NT$35 (inclusive) to NT$50 (inclusive), it is proposed that the Shareholders’ Meeting hereby authorizes that the Board of Directors may discuss in good faith to agree to a new private placement price per share of Far EasTone; provided that any upward or downward adjustment (if any) shall not be more than NT$5 per share of Far EasTone. However, the new private placement price shall be no less than 70% of the Reference Price of the new pricing date”.

If computing Far EasTone’s weighted average common share price volatility as of April 10, 2012 (inclusive), it is clear that its share price has been trading over NT$50 per share for 108 consecutive trading days. If the private placement Reference Date is set at the issuance of this fairness opinion, April 11, 2012, with regard to the aforementioned pricing restriction and limitation, the possible pricing range is between NT$41.55~NT$45 per common share, and the range falls within this fairness opinion’s reasonable private placement range between NT$40.95~53.60.

In conclusion, this fairness opinion uses comprehensive quantitative valuation by Market Price Analysis Method, PER and PBR Analysis Methods, EV/Sales and EV/EBITDA Analysis Methods and the potential liquidity risk consideration to determine Far EasTone’s reasonable pricing range per common share. Yuanta concludes that Far EasTone’s private placement share price with the condition of no less than 70% of the Reference Price to introduce the strategic partner, and Far EasTone reserves the

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right to adjust the issue price under certain circumstances, with the new private placement price per common share no less than 70% of the new Reference Price, is fair and reasonable. Date: April 11, 2012 Yuanta Securities Company, Ltd. Representative: Ting Chien Shen The official seal page of this fairness opinion is for the use of Far EasTone Telecommunications Company’s (Limited) proposed private placement of common shares only.

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Independent Expert’s Declaration Date: April 11, 2012 Yuanta Securities Company Ltd. (“Yuanta”) has been engaged by Far EasTone Telecommunications

Company Ltd. (“Far EasTone”) to issue a fairness opinion, regarding the pricing reasonableness of Far EasTone’s common shares issuance via private placement.

In order to conduct the aforementioned engagement, Yuanta hereby states that it does not have the

following status:

1. Yuanta is presently employed by Far EasTone and acting as a full time employee, also receiving regular wages.

2. Yuanta and Far EasTone are related parties in accordance with the Statement of Financial Accounting Standard Number Six.

3. Yuanta and Far EasTone have common interest in investment or profit sharing relations. Yuanta has performed independently when issuing this fairness opinion for Far EasTone’s private

placement of common shares Yuanta Securities Company, Ltd. Representative: Ting Chien Shen

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Status of Directors & Supervisors’ shareholding on April 15, 2012 The list of the Fifth Term Board of Directors of Far Eastone Telecommunications Co., Ltd.

Title Name Shares %

Chairman Douglas Hsu, Representative of Yuang Ding Investment Co., Ltd.

Vice Chairman Jan Nilsson, Representative of Yuang Ding Investment Co., Ltd. Champion Lee, Representative of Yuang Ding Investment Co. Ltd.

1,066,657,614 32.73

Peter Hsu, Representative of Yuan Ding Construction Company Johnny Shih, Representative of Yuan Ding Construction Company

4,163,500 0.13

Michiya Shinagawa, Representative of Yue Ding Industry Co., Ltd. Director

Toon Lim, Representative of Yue Ding Industry Co., Ltd. 837,940 0.03

Independence Director & Managing Director

Lawrence Juen-Yee LAU -- --

Independence Director Kurt Roland Hellström -- -- Total shares owned by all Directors 1,071,659,054 32.89

The total legal registered shares owned by all Directors 78,204,019 2.40 Ei Hong, Representative of Far Eastern International Leasing Corp. 26,650,908 0.82 Supervisor Morton Huang, Representative of Asia investment Corp. 986,303 0.03

Independence Supervisor Chen-en Ko -- -- Total shares owned by all Supervisors 27,637,211 0.85

The total legal registered shares owned by all Supervisors 7,820,402 0.24

Bonues to Employees, Directors and Supervisors Year 2011 retained earnings distribution has been approved by the 15th meeting of the fifth-term Board of Directors on April 20, 2012. The information regarding bonues to employees, Directors and supervisors are as underneath: (1) It is proposed to distribute NT$159,857,869 for employee bonus and NT$79,928,935 for Directors and supervisors remuneration. (2) As the employee bonus and remuneration of Directors and supervisors are different from recognized estimated amount, the difference, reasons, and

measures should be disclosed: Not applicable. Impact of Stock Dividend Distribution on Business Performance, EPS and Return on Investment The Company has approved totally cash NT$3 per share ,including the retained earnings at NT$2.469 per share, and from the capital surplus-Additional Paid-in Capital-Share Issuance in Excess of Par Value at NT$0.531 per share, no stock dividend. Impact of Stock Dividend Distribution on Business Performance, EPS and Return on Investment: Not applicable.

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ARTICLES

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Articles of Incorporation of Far Eastone Telecommunication Co., Ltd

Approved by Annual Shareholder’s Meeting on 2011/6/9 Chapter I. General Provisions

Article 1 The Corporation shall be named Far EasTone Telecommunication Co., Ltd. and be incorporated as a company limited by shares in accordance with the Company Law of the Republic of China.

Article 2 The scope of business of the Corporation shall be as follows: 1. To operate G901011 Type I Telecommunications Business; 2. To operate G902011 Type II Telecommunications Business; 3. To operate F213060 Retail Sale of Telecom Instruments; 4. To operate F113070 Wholesale of Telecom Instruments; 5. To operate JA02010 Electric Appliance and Audiovisual Electric Products Repair Shops; 6. To operate E701030 Restrained Telecom Radio Frequency Equipments and Materials Construction; 7. To operate F401010 International Trade; 8. To operate F204110 Retail sale of Cloths, Clothes, Shoes, Hat, Umbrella and Apparel, Clothing Accessories and Other Textile Products; 9. To operate CC01070 Telecommunication Equipment and Apparatus Manufacturing; 10. To operate I301020 Data Processing Services; 11. To conduct IZ11010 overdue receivables management service business; 12. To operate F201070 retail business of flowers; 13. To operate F209060 Retail sale of Stationery Articles, Musical Instruments and Educational Entertainment Articles; 14. To operate F213030 Retail sale of Computing and Business Machinery Equipment; 15. To operate F218010 retail business of information software; 16. To conduct IZ12010 manpower outsourcing business; 17. To conduct JZ99050 Agency Services; 18. To conduct I301030 Digital Information Supply Services; 19. To conduct I401010 general advertising service business; 20. To conduct IZ99990 Other Industry and Commerce Services Not Elsewhere Classified; 21. To conduct JE01010 Rental and Leasing Business; 22. To conduct I199990 other consulting; 23. To conduct IE 01010 Telecommunications Number Agencies; 24. To conduct JA02990 other repair Shops; 25. To conduct F401021 Restrained Telecom Radio Frequency Equipments and Materials Import; 26. To conduct ZZ99999 Other than the business lines as permitted, engage in all business operation not banned or restricted by laws.

Article 3 The Corporation may provide guarantees for third parties by the regulation of Procedure for Making Endorsements and Guarantees. The

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Corporation may also act as a shareholder with limited liability of another company. Upon approval of the Board Directors, its investment may exceed forty percent (40%) of the paid-in capital of the Corporation, notwithstanding Article 13 of the Company Law, but the Company shall follow the Company’s “Procedures for Handling Acquisition or Disposal of Assets” for acquiring assets.

Article 4 The head office of the Corporation shall be located in Taipei, Taiwan, ROC. The Board of Directors may decide to establish branch offices within or outside the territory of the Republic of China.

Chapter II. Shares Article 5 The registered capital of the Company is NT$42,000,000,000 and is divided into 4,200,000,000 common shares with a par value of NT$10

each share. The Board is authorized, at different stage, to issue the shares that are not outstanding.

Article 6 Prior to issuance, the share certificates of the Corporation shall bear the shareholders’ names, shall be numbered serially, shall be signed or sealed by three or more Directors of the Board, and certified by the competent government agent. The share certificates may not be printed to represent the Company’s shares. Registration with the Taiwan Securities Central Depository Co., Ltd. is necessary. On the total number of shares, the Company may, as well, consolidate share certificates for printing, provided that the share certificates shall be put into the Taiwan Securities Central Depository Co., Ltd. for deposit. The Company may, while requested by the Taiwan Securities Central Depository Co., Ltd., consolidate shares to issue share certificates of large denomination. The Company may issue preferred stocks. Where the Company is merged with another company, the Company is not required to come to resolution through a preferred stocks shareholders’ extraordinary meeting.

Article 7 The Company shall handle equity affairs in compliance with “Regulations Governing Equity Affairs of Public Offering Companies” and other laws concerned.

Article 8 No transfer of share certificates shall be permitted within sixty days prior to a regular meeting of shareholders, thirty days prior to a special meeting of shareholders, or within five days prior to the date fixed for distributing dividends, bonuses, or other benefits.

Chapter III. Shareholders’ Meetings Article 9 Shareholders’ meetings shall be as follows:

(1) Regular meeting –to be called by the Board of Directors within six months from closing of every fiscal year; and (2) Special meeting – to be called by the Board of Directors whenever necessary, or with written requests from shareholders representing three

percent (3%) or more of total issued shares which have been continuously held by the same shareholders for one year or longer. Other than the event when the Board of Directors fails or is unable to call a shareholders’ meeting, the supervisors may, to assure the Company interests, call a shareholders’ meeting. Where the Board of Directors fails or is unable to call a shareholders’ meeting due to transfer of shares or other reasons, the shareholders’ meeting may be called as proposed by shareholders holding over 3% of the total issued shares as approved by the competent authorities of the

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government. Article 10 Unless otherwise provided for in the Company Law and these Articles of Incorporation, the shareholders’ meeting shall be duly called pursuant

to the Company’s Regulations Governing Shareholders’ Meetings. Article 11 A notice to convene a regular meeting of shareholders shall be given to each shareholder thirty days in advance. A notice to convene a special

meeting of shareholders shall be given to each shareholder fifteen days in advance. The notice shall state the time, place and purpose of the meeting to be convened.

Article 12 Resolutions at a Shareholders’ meeting shall, unless otherwise provided for in the Company Law, be adopted by a majority vote of shareholders present in person or by proxy, who represent a majority of the total number of outstanding shares.

Article 13 In case a shareholder is unable to attend the Shareholders’ meeting, he/she may make another person his/her proxy to attend the meeting. They proxy document for this purpose must be affixed with the shareholder’s chop, a specimen of which shall be kept with the Corporation, provided, however, in the event the same proxy acts for two or more shareholders, his delegated voting power shall not exceed three percent (3%) of the total voting power of the Company’s total issued shares and such portion of shares exceeding three percent (3%) shall not be counted for vote purposes. This limitation shall not apply to holders of proxies engaged in the trust business or the shares transfer agency.

Article 14 Resolutions adopted at a meeting of the shareholders shall be recorded in the minutes of the proceedings which shall be prepared in English and in Chinese and shall be signed and sealed by the chairman of the meeting. The minutes of proceedings shall also include the time and place of the meeting, name of the chairman, number of shares represented by attending shareholders (or proxies) and the manner in which resolutions had been adopted, as well as other essentials of the proceedings. The minutes shall be given to each shareholder within twenty (20) days after the meeting and shall be duly filed according to law along with a list of shareholders present at the meeting and the proxies.

Chapter IV. Directors, Supervisors, Officers Article 15 The Corporation shall have nine (9) to eleven (11) Directors and Three (3) Supervisors, to be elected who are competent persons at

shareholders’ meeting. The tenure of office of Directors and Supervisors will be three (3) year(s) and they will be eligible for re-election. The Company’s independent directors shall not be less than two in number and should not less than one-fifth of directors seats, independent directors shall be elected by adopting candidate nomination system. Regulations governing the professional qualifications, restrictions on shareholdings and concurrent positions held, assessment of independence, method of nomination, and other matters for compliance with respect to independent directors shall be prescribed by the Competent Authority. As to the compensation for Chairman and Vice Chairman, it is proposed to authorize the Board of Directors with consideration of industry and listing companies’ compensation level. The total registered shares held by all Directors, Supervisors shall be determined pursuant to “Regulations Governing Percentage of Shares Held by Directors, Supervisors of Public Offering Companies”.

Article 16 A corporate shareholder of this Corporation shall have the right to designate a number of representatives to be elected as Director(s) and/or Supervisor(s) of the Corporation and the right to designate representatives as substitutes or successors of such Director(s) or Supervisor(s).

Article 17 The Managing Directors shall be selected from among the directors. He Directors shall form a Board of Directors. The chairman or the vice chairman of the board shall be elected from the managing directors. He Managing Directors shall form a Board of Managing Directors. During the recess of the board of directors, the managing directors shall regularly exercise the power and authority of the board of directors

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accordingly. Article 18 A meeting of the Board of Directors shall be called by its Chairman, provided that the initial meeting of each term of the Board of Directors

shall be called by the Director who receives the number of ballots representing the largest of votes. Directors may attend the meeting in person or by proxy. A Director cannot represent more than one absent Director for a meeting of the board of Directors. A Director residing in a foreign country may appoint, in writing, a Director residing within the Republic of China as his alternate to attend the meetings of the Board of Directors regularly provided, however the appointment shall be registered with competent government authority. In case a meeting of the Board of Directors is proceeded via visual communication network, then the Directors taking part in such a visual communication meeting shall be deemed to have attended the meeting in person. The notice for the Board Meeting shall state the reasons and agenda of the meeting, and shall be sent to each Directors and Supervisors seven (7) days prior to the meeting, provided, however, that in case of emergency the Meeting may be convened at any time. The meeting notice provided in preceding paragraph could be issued by email or fax.

Article 19 The Chairman of the Board of Directors shall preside at meetings of the Board of Directors. In case the Chairman of the Board of Directors is on leave or absent or cannot exercise his power and authority for any cause, the Vice Chairman shall act on his behalf. In case of absent of or unavailability of the Vice Chairman as well, the Chairman of the Board of Directors shall designate one of the managing directors to act on his behalf. In the absence of such a designation, the managing directors or the directors shall elect from among themselves an acting chairman of the Board of Directors.

Article 20 The powers of the Board of Directors shall be as follows: (1) make business plans; (2) review and examine important rules; (3) appoint and dismiss officers; (4) determine the establishment, change or revocation of any domestic or foreign branch offices; (5) review and examine budget and financial reports; (6) establish audit committee or any other functional committees; review and approve regulations governing the exercise of power and duty of

these functional committees. (7) implement any other matters designated by resolution of the shareholders or in accordance with the Company Law, and determine any other

important matters. Article 21 The powers of the Supervisors shall be as follows:

(1) supervise the Company in business operation. (2) investigate the business and financial conditions of the Corporation; (3) investigate and review the books and documentation of the Corporation; (4) any other authority in accordance with the law.

Article 22 The Company has one President, one General Auditor and several Executives Vice Presidents and Vice Presidents. All managerial officers shall be duly appointed, discharged by the Board of Directors through a majority vote of the attending Directors who represent a majority of the

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total Directors. Article 23 The President shall take charge of all affairs of the Corporation in accordance with the order of the Chairman of the Board. The Executive Vice

Presidents shall assist the President. Chapter V. Accounting

Article 24 The business year of the Corporation shall begin on January 1st and end on December 31st of each year. Annual closing of books shall be made at the closing date / end of each business year.

Article 25 At the end of each business year, the Board of Directors shall prepare the following reports, and forward them on to the Supervisor(s) for examination thirty days prior to the regular meeting of shareholders: (1) Report on operations; (2) Financial reports; and (3) Proposal concerning distribution of net profits or action to deal with losses. The appointment, dismissal and compensation of the accountant responsible for auditing the above books shall be determined by the Board of Directors through a majority vote of the attending Directors who represent a majority of the total Directors.

Article 26 From the profit earned by the Company as shown through the annual account closing, the sum to pay all taxes and to make good previous loss, if any, shall be first withheld, then 10% for legal reserve and then for special reserve as required by law. The final surplus, if any, shall have 1%~2% taken for bonus to employees, and 1% taken as remuneration to the directors and supervisors. The further surplus, if any, shall be consolidated with the earning unallocated and accumulated in the preceding year as allocable earning to be allocated as dividend and bonus or retained as resolved by the shareholders’ meeting.

Article 27 The dividend payout ratio each fiscal year shall be no less than fifty percent （50%）of the final surplus which is the sum of after-tax profit of the fiscal year to withhold previous loss, if any, legal reserve and special reserve as required by law; while cash dividend declared by the Corporation shall be no less than fifty percent (50%) of the total dividends distributed that year; provided, however, depending on whether the Corporation has any financial structure improvement or major capital expenditure plans in the year, the earning unallocated and accumulated in the preceding year may be distributed, and the payout ratio and percentage of cash dividend may be raised or lowered by a resolution adopted at the shareholders’ meeting.

Article 28 Dividends will be paid only to those shareholders whose names are recorded on the shareholders’ register on the date fixed for distributing dividends.

Chapter VI. Appendix Article 29 Other rules of the Corporation shall be set up separately by the Board of Directors. Article 30 Provisions of the Company law shall be referred to for matters not provided for in these Articles of Incorporation. Article 31 These Articles of Incorporation were agreed upon and signed on Mar. 7, 1997.

First amended on Jun. 6, 1997; Second amended on Aug. 20, 1998; Third amended on Apr. 28, 1999;

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Fourth amended on Apr. 21, 2000; Fifth amended on Dec. 28, 2000; Sixth amended on May. 15, 2001; Seventh amended on Jun. 25, 2002; Eighth amended on May 23, 2003; Ninth amended on Feb. 18, 2004; Tenth amended on Jun. 30,2004; Eleventh amended on May 20, 2005; Twelfth amended on May 26, 2006. Thirteenth amended on June 12, 2007. Fourteenth amended on June 15, 2010. Fifteenth amended on June 9, 2011.

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Far EasTone Telecommunications Co., Ltd Handling Procedure for Acquisition and Disposal of Assets

Approved by Annual Shareholder’s Meeting on 2007/6/12 Chapter I. General Principle

Article 1 The acquisition and disposal of any assets of this company shall follow the Handling Procedure on Acquisition and Disposal of Assets (hereinafter called as the Procedure) unless the rules on the management of assets of this company and other relevant regulations shall apply thereto.

Article 2 The scope of assets referred to in the Procedures refers to: I. Marketable securities: shares, public bond, corporate bond, financial debenture, securities representing interest in a fund, deposit receipt, call

(put) warrant, beneficiary securities and assets backed securities. II. Real estate and other fixed assets III. Membership IV. Patent, Copyright, Trademark Right, Franchise and other intangible assets V. Derivative products VI. Assets acquired or disposed by means of merger, division, acquisition or stock transfer in accordance with the laws VII. Other important assets

Article 3 Definitions: I. Derivative products shall mean forward, option, future, leverage contract, swap contract, whose value are derived from such items as assets,

interest rate, exchange rate, index and other interest, as well as the plural contracts for combination of the aforesaid items. The forward as mentioned shall not include insurance agreement, performance agreement, after sale service agreement, long-term lease agreement and long-term purchase or sales agreement.

II. Assets acquired or disposed by means of merger, division, acquisition or stock transfer in accordance with the laws shall mean those assets acquired or disposed by means of merger, division or acquisition in accordance with the Law on Acquisition and Merger of Enterprises, Law on Financial Holding Companies and other relevant laws or the stock obtained from the transfer or issued for initial public offering in accordance with Article 156.1 of Company Act.

III. Associated persons shall mean those persons prescribed in the Statement of Financial Accounting Standards, No. 6 announced by the Accounting Research and Development Foundation of R.O.C (hereinafter called as Accounting R&D Foundation).

IV. Subsidiary shall mean those prescribed in the Statement of Financial Accounting Standards, No. 5 and No. 7 announced by the Accounting R&D Foundation.

V. Professional appraiser shall mean valuator of real estate or other persons engaged in appraising real estate, other fixed assets in accordance with law.

VI. Date of occurrence of events shall mean those date, whichever is earlier, such as the date of conclusion of transactions, date of payment, date of entrusted dealing, date of stock transfer, date of decision of the Board or other date when the dealing counterpart and amount of dealing can be determined. In case the investment is required to be approved by the competent authority and the date of approval thereof is earlier than those

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described in the preceding paragraph, the former shall be adopted. VII. Investments in the Mainland shall mean the investments prescribed in the Rules on the Approval of Investment and Technological Cooperation

In the Mainland enacted by the Investment Commission, Ministry of Economy. Article 4 Where the acquisition and disposal of assets by this company is required by the Procedure and other laws to be approved by the Board, any director

may raise his or her objection thereto. In case the aforesaid objection has been made in written form or recorded, the same shall be delivered to each supervisor. If this company has an independent director, the opinion of each independent director shall be fully taken into consideration when the transaction of acquisition and disposal of assets is under discussion for approval. The opinions thereof and the reasons therefore shall be recorded in the Minutes of Board Meeting.

Article 5 The total amount of securities investment of this company shall not exceed 150% of shareholders’ equity as stated in the latest financial statement of this company and the investment in each individual security shall not exceed 80% of shareholders’ equity therein. The total book value of real estate for non-business purpose and other fixed assets shall not exceed 50% of total assets therein. The total amount of equity investment of this company and its subsidiaries shall not exceed 150% of shareholders’ equity as stated in the latest financial statement of this company. The calculation of the said rate shall be referred to the provisions of detailed rules on stock companies of Taiwan securities exchange and other relevant laws and decrees. The latest financial statement mentioned herein shall mean the financial statement made public and reviewed and signed by accountant prior to the acquisition and disposal thereof.

Chapter II. Handling Procedures Article 6 Handling Procedures for Acquisition and Disposal of Securities

I. Evaluation Process (A) Where this company is involved in the investment in securities, its Finance & Administration Division shall make a financial analysis of the

object of investment and prospective financial gains there from and at the same time, conduct an evaluation of the risks thereof. (B) The securities transactions of this company in stock exchange or over the counter shall be studied and determined by responsible units in light

of the market trends. For those transactions not conducted in the stock exchange or over the counter, the latest financial statement of the company issued the shares concerned, which has been made public and reviewed and signed by accountant, shall be referenced for evaluation of net value of per share, profit making capability and the potentials thereof.

II. Obtaining professional opinions (A) A public company acquiring or disposing of securities shall first obtain financial statements of the issuing company for the most recent period,

certified or reviewed by a certified public accountant, for reference in appraising the transaction price, and if the dollar amount of the transaction is 20 percent of the company's paid-in capital or NT$300 million or more, the company shall also engage a certified public accountant to provide an opinion regarding the reasonableness of the transaction price. This requirement does not apply, however, to publicly quoted prices of securities that have an active market, or where otherwise provided by regulations of the Executive Yuan's Financial Supervisory Commission (FSC).

(B) In case the assets acquired or disposed by this company through the auction procedures held by a court, the certificates issued by the court may substitute the evaluation report or the opinion of an accountant.

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III. Authorization and the units in charge of execution The relevant material of acquisition and disposal securities by this company shall be submitted by the Finance & Administration Division to the Board for review and approval prior the conduction thereof. In case of the impossibilities of prior review and approval thereby due to time, the acquisition or disposal securities by the Company with the value under NTD 10,000,000, shall be determined by the authorized President (if the President sub-delegates the authorization, the sub-delegation shall apply thereto); where the amount is under NTD 500,000,000, the same shall be determined by the authorized Chairman of the Board (if the Chairman sub-delegates the authorization, the sub-delegation shall apply thereto); however, such transaction shall be confirmed by the Board immediately after the completion thereof. While the amount is over NTD 500,000,000, the same shall be determined by the Board prior to the execution.

Article 7 Handling Procedures for Acquisition and Disposal of Real Estate or Other Fixed Assets I. Evaluation Process

(A) The investment of this company in real estate and other fixed assets shall be assessed prudently by the Finance & Administration Division or relevant unit regarding its beneficial result and risks involved in light of its current operation, financial status and future planning.

(B) An analysis report on the acquisition or disposal of assets shall be made by making reference to its announced current value, appraised value, actual dealing price of its neighboring real estate as well as putting forward conditions and prices for transaction.

(C) Acquisition or disposal of fixed assets shall be conducted by means of inquiries, price comparison, price negotiation or invitation to bid. II. Evaluation Report On Real estate and other fixed assets

If and whenever the amount of the acquisition or disposal of real estate or other fixed assets by this company, unless the same is transacted with government agency, entrusted construction on self-owned land or leased land, or machine or equipment for business use, has reached 20% of the paid-in capital of the company or NTD0.3 billion, the professional appraiser shall be invited to make evaluation report in advance (see detailed content as per appendix 1) and meanwhile the following stipulations shall be complied with: (A) In case a transaction must be conducted with reference to limited price, specific price or special price due to special reasons, the board

meeting in advance shall approve the same. If the conditions thereof were changed in the future, the prices mentioned herein above shall be still made as references.

(B) In case the transaction value reaches NTD 1 billion, the same shall be assessed by at least two professional appraisers. (C) If the results of appraisal thereof have one of the following circumstances, accounts shall be invited to handle the differences in accordance

with the Statement of Financial Audit Standards, No. 20 announced by the Accounting R&D Foundation. Meanwhile, the accounts shall explain the reasons thereof and the reasonableness of dealing prices. i. The gap between the results of appraisal and the dealing price represents at least 20% of the latter.

ii. The gap between the results of appraisal conducted by the two professional appraisers or over represents at least 10% of the dealing price.

(D) In case the appraisal is conducted prior to the date of conclusion of transaction, the latter shall not be later by over three months than the date of report thereon. However, if the same current value announced may be applied thereto and the time does not exceed six months, the opinions may be given by the original professional appraisal.

(E) In case the assets acquired or disposed by this company through the auction procedures held by a court, the certificates issued by the court

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may substitute the evaluation report or the opinion of an accountant. III. Authorization and the units in charge of execution The acquisition of real estate or fixed assets shall be determined as follows:

(A)Any transaction within and under the scope of the annual budget approved by the Board shall be determined by the authorized Chairman (if the Chairman sub-delegates the authorization, the sub-delegation shall apply thereto);

(B)Any transaction not within or above the scope of the annual budget approved by the Board: if the amount is under NTD 10,000,000, it shall be determined by the authorized President (if the President sub-delegates the authorization, the sub-delegation shall apply thereto); if the amount is over NTD10,000,000 but under NTD 500,000,000, the same shall be determined by the authorized Chairman of the Board (if the Chairman sub-delegates the authorization, the sub-delegation shall apply thereto); However, all the aforesaid transactions shall be confirmed by the Board immediately after the completion thereof.

(C)Any transaction no-within or above the scope of the annual budget approved by the Board and the amount is over NTD 500,000,000 shall be determined by the Board prior to the execution.

The disposal of real estate or fixed assets shall be determined as follows: (A)Any transaction which book value is under NTD 10,000,000,:shall be determined by the authorized President (if the President sub-delegates

the authorization, the sub-delegation shall apply thereto); any transaction which book value is over NTD10,000,000 but under NTD 500,000,000 shall be determined by the authorized Chairman of the board (if the Chairman sub-delegates the authorization, the sub-delegation shall apply thereto); However, all the aforesaid transactions shall be confirmed by the Board immediately after the completion thereof.

(B) Any transaction which book value is over NTD 500,000,000 shall be determined by the Board prior to the execution. Finance & Administration Division or relevant units will be in charge of the execution upon receiving the authorization aforementioned.

Article 8 Handling Procedures for Acquisition of Real Estate from Associated Persons V The acquisition or swap of real estate from associated persons by this company shall follow the procedures for decisions and evaluation of

reasonableness of conditions for transaction described in this article as well as those in the preceding article. When determining whether the dealing counterpart is an associated person, the material relationship thereof shall be examined as well as its legal form

VI Evaluation and Operation Process The following material regarding the acquisition of real estate from associated persons by this company shall be submitted to the Board of Directors and supervisor for confirm prior to the conduction thereof. (A) The objective, necessity and estimated benefits of acquisition of real estate concerned. (B) Reasons for adopting an associate person as the dealing counterpart (C) Relevant material for evaluating the reasonableness of conditions for transactions in accordance with the first and fourth subparagraph of

the third paragraph in this article. (D) The original date, price, dealing counterpart of associated persons and the relationship between this company and the associated person, etc. (E) Forecasted statement of cash deposit and withdraw in each month of the next one year as of the month of proposed conclusion thereof,

evaluation of the necessity of dealing and the reasonableness of utilization of capital. (F) Constraints on and other important matters agreed of this transaction.

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VII Evaluation of reasonableness of transaction cost (A) The following methods shall be applied in evaluation of the reasonableness of the transaction cost of the acquisition of real estate from

associated person. (a) Dealing price of associated persons plus necessary capital interest and the cost for the buyer’s account as stipulated by laws. The

necessary capital interest and cost shall be the weighted average of the loan borrowed in the year of acquisition of the assets provided it shall not be higher than the highest rate of loan of non-financial institution as announced by the Ministry of Finance.

(b) In case the associated person obtains loans from the financial institution by mortgaging the object concerned, the total value thereof for loan assessed by the said financial institution provided cumulative loans account for 70% of the total assessed value and the term of loan has exceeded one year. However, this will not apply if the financial institution is an associated person with either party to the transaction and vice versa.

(B) In case of combined purchase of land and house of the same object, the cost of transaction of land or house may be assessed individually by adopting any one of the aforesaid methods.

(C) The methods described in the preceding two paragraphs shall be applied in evaluation of the cost of real estate acquired from associated person. In addition, accountants shall be invited to review the same and give their specific opinions thereof.

(D) The methods described in the first and second subparagraph of this article shall be applied in evaluation of the cost of real estate acquired from associated person if one of the following circumstances are present and the preceding three paragraphs of this article regarding the evaluation of the reasonableness of cost of transaction: The associated person acquires the real estate by inheritance or donation. The time gap between the time of acquisition of real estate by the associated person between the date of conclusion of the transaction

concerned has exceeded over five (5) years. The associated person acquires the real estate by conclusion of a contract for joint construction.

(E) In case the results of evaluation in accordance with the first and second subparagraph of this paragraph have been proven to be lower than dealing price, the provisions in the sixth and seventh subparagraph of this paragraph herein shall be applied. However, the following circumstances shall be excluded provided competent evidences thereof have been provided and the opinions rendered by the professional appraiser of real estate or accountants so described.

(a) The reconstruction on the fountain or leased land acquired by the associated person shall meet the following conditions: i. The fountain may be appraised with methods stipulated herein above and the house shall be assessed by construction cost plus

reasonable construction profit, the aggregate thereof is higher than the actual dealing price. The reasonable construction profit shall mean the average gross profit margin of the construction department of the associated person in the recent three years or the latest gross profit margin in construction industry announced by the Ministry of Finance, whichever is lower.

ii. The successful transaction concluded within one (1) year by other non-associated persons of real estate on the other floor of the same object or in the neighboring area, provided the area and the conditions thereof has been identified as similar after appraisal of variance in prices allowing for the specific floor and region in accordance with the dealing practices of real estate.

iii. The successful rental concluded within one (1) year by other non-associated persons of real estate on the other floor of the same

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object, provided the conditions thereof has been identified as similar after appraisal of variance in prices allowing for the region in accordance with the rental practices of real estate.

(b) This company will induce evidences to establish that the transaction of the real estate acquired by the associated person is similar to the successful transaction concluded within one year in the neighboring region by other non-associated person in terms of the conditions therefore and the area thereof. The successful transaction in the neighboring region shall mean the real estate thereof is in the same or neighboring street and is less than 500 meters far from the object or the current value thereof announced is similar to that of the object; That the area is similar shall mean the area of the real estate acquired by the non-associated person is not less than that of the object by 50% in area.

(F) In case the results of evaluation of the real estate acquired by the associated person in accordance with the fifth subparagraph of this paragraph have been proven to be lower than dealing price, the following provisions herein below shall be applied.

(a) The difference between the dealing prices of the real estate appraised cost thereof shall be allocated to Appropriated Retained Earnings in accordance with Article 41.1 of Securities Exchange Act and shall not be distributed or converted into new shares. In case an investor adopting equity appraisal methods towards its investment in this company is a public company, the same shall allocate a certain percentage in proportion to its proportion of shares held to Appropriated Retained Earnings in accordance with laws.

(b) The supervisor shall handle the matter in accordance with Article 218 of Company Act. (c) The circumstances specified in 1 and 2 of this subparagraph shall be reported to the shareholders meeting and the details thereof shall be

disclosed in the annual report and prospectus. (G) The Appropriated Retained Earnings reserved according to the preceding paragraph shall be used to compensate appropriately or recover

or dispose the assets with the losses due to price reduction, which was purchased at high price, or the same may be used for the purpose with proven reasonableness after being approved by the Financial Supervisory Commission (hereinafter called FSC).

(H) In case of other proofs indicating any unusual circumstances occurred to the acquisition of real estate from the associated person, the same shall be handled according to the sixth and seventh sub-paragraph hereof.

Article 9 Handling Procedures on Acquisition and Disposal of Membership or Intangible assets I. Evaluation and Operation Process

(A) The acquisition or disposal of membership shall make reference to the fair market value, proposed conditions for transaction and the dealing price and subsequent an analysis report shall be made. Where the amount thereof is less than NTD3000,000, the same shall be submitted to the General Manager for review and approval and be reviewed by and filed with the board meeting. In case the amount is over 3,000,000, the board meeting shall approve the same.

(B) The acquisition or disposal of intangible assets shall make reference to the evaluation report rendered by the professional appraiser, fair market value, proposed conditions for transaction and the dealing price and subsequent an analysis report shall be made and submitted to the board meeting for approval.

II. Evaluation Report on membership and intangible assets (A) This company shall obtain evaluation Report prepared by professional appraisals prior to acquisition and disposal of intangible assets. (B) If and whenever the acquisition and disposal of membership or intangible assets by this company has the following circumstances, or the

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amount thereof has reached 20% of the paid-in capital of the company or NTD0.3 billion, the account shall be invited to give opinions on the reasonableness of the dealing price in accordance with the Statement of Financial Audit Standards, No. 20 announced by the Accounting R&D Foundation

(C) In case the assets acquired or disposed by this company through the auction procedures held by a court, the certificates issued by the court may substitute the evaluation report or the opinion of an accountant.

III. Unit in charge of execution The acquisition and disposal membership or intangible assets by this company shall, in accordance with the first subparagraph, be submitted by the Accounting Division for review and approval prior to the conduction thereof.

Article 10 Handling Procedures for Acquisition and Disposal of Derivative Products I Principles and Guidelines for transaction

(A) Type of transaction (a)The derivative products of this company may deal in refers to the items specified in Article 3.1 hereof. (b) The so-called “for the purpose of transaction” shall mean for the purpose of activities of business transactions whereby the holding and

issuing of derivative products is aimed at making profit from variance in prices of dealings, including measuring and identifying the current losses and gains in terms of fair price, whereas the so-called “not for the purpose of transaction” shall mean for the purpose of activities other than stated herein above.

(B) Strategies for operation or hedging (a)For the purpose of transactions: adopting flexible strategies in operation (b)Not for the purpose of transactions: adopting prudent and conservative strategies in operation

(C) Rights and duties (a)Signing of contracts and relevant documents for dealings: The chairman or the person designated thereof shall sign the aforesaid

documents for and on behalf of this company. (b)Execution of the transaction and the evaluation of losses and gains:

(i) The Finance & Administration Division – Procurement shall be responsible for the products relating to the materials whereas the Finance & Administration Division – Treasury responsible for matters relating to finance.

(ii) Opening account, transaction, confirmation, split: The supervisor of each relevant department shall be responsible for authorization thereof.

(iii) The certificate for transaction, request of payment and deposit of income shall be made by the operator and the supervisor at all levels shall take charge the review thereof. Meanwhile, the same shall be submitted to the Finance & Administration Division - Accounting and Treasury. The assistant director from each relevant department shall conduct the evaluation of losses and gains and the statement thereof shall be submitted to Audit Department.

(c)Accounting: The Accounting Division shall be responsible for reconciling various certificate to the book by making vouchers and preparing relevant statement according to the accounting periods.

(d)Audit: The Audit Division shall be responsible for internal auditing conducted on a periodical and non-periodical basis.

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(e)Legal affairs: The personnel above the level of legal professional shall be responsible for the review of the contract for dealings. (f) Unless otherwise stipulated, the transactions of derivative products shall be executed by the personnel above the level of specialist.

(D) Evaluation of performance The evaluation of performance shall be based on the net value of loss and gain at the end of the year.

(E) Total amount of contract and authorization (a)For the purpose of transactions: The total amount of contract for each individual object at any time shall not exceed 10% of the net

amount of this company in the previous year. Where the amount thereof is less than 5%, the same may be determined by supervisors in each relevant department and shall be reviewed by and filed with the board meeting after transaction. In case the amount is over 5% the same shall be approved by the board meeting.

(b)Not for the purpose of transaction: The activities with the amount under the value of assets or liabilities held or to be transacted may be determined by supervisors in each relevant department and shall be reviewed by and filed with the board meeting after transaction.

(F) The upper limit of losses (a)For the purpose of transaction: The upper limit of losses shall be based on the contract of the same object instead of an individual

contract. The upper limit of losses of all the contracts shall be determined respectively in light of different instruments thereof. (i) Forwards or futures: 5% of average cost. (ii) Option: 5%of the total contract value if this company is the buyer and the price plus 5% of the total contract value if this

company is the seller. (iii) Swap and other combined instruments: less than 5% of total contract value.

(b)Not for the purpose of transactions: no upper limit of losses is described due to the offset of losses and gains and those of hedge position.

II. Measures for risk management (A) Credit risk of the dealing counterpart: the counterpart shall be a financial institution with good credit rating. (B) The market risk of price reversion: see the subparagraph 1.6 of this article. (C) Risk of market liquidity: any commodity shall be quoted to at least two financial institutions before transaction thereof. (D) Risk of cash flows: The fair market price of the financial derivatives shall be disclosed on a periodical basis so as to properly indicate the

prospective cash flows thereof. (E) The risk of internal operation: see the subparagraph 1.3 of this article. (F) Legal risks involved in signing contracts and relevant documents: The Legal Affairs Office shall provide necessary legal opinion thereof. (G) The operator for dealing in derivative products shall not engaged in confirmation or split, etc. concurrently. (H) The personnel for measuring, supervising and controlling of risks shall be in the different department from those described herein above and

shall report to the board meting or the senior director not in charge of transactions or positions. (I) The positions held by a derivatives exchange shall be assessed at least once a week except that the hedge transactions needed in the business

operation shall be evaluated at least twice a month. The evaluation reports thereof shall be submitted to the senior executives authorized by the board meeting.

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III. Internal audit The internal auditor of this company shall make out the appropriateness of internal control on the derivative products on a periodical basis and the audit department shall make an audit report on the compliance of The Procedures each month. In case of any major violations, the same shall be notified in writing to each supervisor.

IV. Ways of periodical evaluation and handling of abnormal conditions (A) The board meeting shall designate a supervisor of the audit department to see to supervision and control of risks involved in the

transactions of derivative products at any time. (B) The board meeting shall designate persons specially in charge of periodical of whether the performance of transactions of derivative

products is in compliance with the strategies for operation and whether the risks involved are bearable for this company (C) The supervisor of the audit department shall conduct periodical evaluation of whether the measures on risk management is appropriate

and dealt with according to handling procedures prescribed herein and shall supervise the transaction and the losses and gains. In case of any abnormal circumstances, the supervisor shall take necessary corresponding measures and report immediately to the board meeting. Where the independent director exists, the same shall attend the board meeting and be entitled to express its opinions.

(D) This company shall, when dealing in derivative products, establish a reference book, in which the type, amount of the transaction of derivative products, date of approval by board meeting, matters to be evaluated prudently in accordance with the ninth subparagraph of the second paragraph and the second and third subparagraph of this paragraph, shall be specified in detail.

Article 11 Handling Procedures for Merger, Division, Acquisition or Stock transfer I. Evaluation and Operation Process

(A)The accounts, attorneys or underwriters shall be invited, before the decision of the board meeting by the Accounting Division give their opinions on reasonableness of swap rate, price of purchase or cash distributed to the shareholders or other properties prior to the merger, division, acquisition or stock transfer by this company. The said opinions shall be submitted to the board meeting for discussion and approval.

(B) The public companies engaged in merger, division or acquisition shall, prior to the shareholders meeting, make written document of important and related matters thereof and deliver the same together with opinions of the aforesaid professionals and the notices of meeting to shareholders for the latter’s reference in determining whether approval will be given thereof except where the law stipulates that no decision of shareholders meeting is needed therein.

(C) In case of the failure of any company participating in merger, division or acquisition to hold the shareholders meeting due to the inadequacy in attendance, number of votes or other restrictions imposed by laws or that the proposal thereof has been declined thereby, the company concerned shall announce the reasons thereof in public and follow-up measures and estimated date for shareholders meeting.

II. Matters needing attention (A) Unless otherwise required by laws or due to special conditions which render necessary prior approval of FSC, the company participating in

merger, division or acquisition shall hold the board meeting and shareholders meeting on the same day to determine matters relating thereto. Unless otherwise required by laws or due to special conditions, which render necessary prior approval of FSC, the company participating in

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transfer of stock shall hold the board meeting on the same day. When participating in a merger, de-merger, acquisition, or transfer of another company's shares, the Company shall prepare a full written record of the following information and retain it for five years for reference: (a)Basic identification data for personnel: Including the occupational titles, names, and national ID numbers (or passport numbers in the case

of foreign nationals) of all persons involved in the planning or implementation of any merger, de-merger, acquisition, or transfer of another company's shares prior to disclosure of the information.

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

(c)Important documents and minutes: Including merger, de-merger, acquisition, and share transfer plans, any letter of intent or memorandum of understanding, material contracts, and minutes of board of directors meetings.

When participating in a merger, de-merger, acquisition, or transfer of another company's shares, the Company shall, within two days of passage of a resolution by the board of directors, report (in the prescribed format and via the Internet-based information system) “Basic identification data for personnel” and “Dates of material events” to the FSC for recordation. Where any of the companies participating in a merger, de-merger, 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 shall sign an agreement with such company and comply with regulations prescribed.

(B) Prior commitment of confidentiality: All the persons participating in or informed of the programs of merger, division, acquisition or transfer of stock shall make commitment of confidentiality in writing and shall not disclose it to the outside or buy or sell in his or her own name or have others buy or sell on his or her behalf stocks or securities in the nature of stock equity of all the company relating thereto.

(C) Conclusion of swap proportion or the price of purchase: In case of merger, division, acquisition or transfer of stock by this company, he swap proportion or purchase price shall not be modified and the conditions for modifications thereof shall be specified in the contract thereof unless the following provisions apply thereto. (a) Handling capital increase in cash, issuing convertible corporate debentures, gratuitous rationed shares, corporate debentures with share

warrant, preferred stock with share warrant, share warrant and other marketable securities in the nature of stock equity. (b) Behaviors affecting the financial status of the company such as disposal of major assets, etc. (c) Circumstances affecting the rights and interests of the shareholders or price of securities such as major calamities, significant

innovation in technology, etc. (d) Adjustment of buyback of treasury stock in accordance with laws by any one party participating in merger, division, acquisition or

stock transfer. (e) Alteration, addition or reduction of the subjects participating in merger, division, acquisition or stock transfer or of the number thereof. (f) The conditions for modification have been specified in the contract and disclosed to the outside.

(D) Necessary items in the contract: The contract for merger, division, acquisition or stock transfer shall be in compliance with Article 317.1 of Company Act and Article 22 of Law on Merger And Acquisition of Enterprises with the following matters specified therein:

(a) Settlement of breach.

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(b) Principles on the handling of treasury stock bought back or the marketable securities in the nature of stock equity issued by the company merged or divided.

(c) The number and handling of treasury stock bought back in accordance with laws by any participating company after calculation of the benchmark of swap proportion.

(d) Methods for handling alteration, addition or reduction of the participating subjects or the number thereof. (e) Schedule of the program and estimated date of completion. (f) Relating handling procedures on scheduled date of shareholders meeting in case of delay in the completion of the program.

(E) Any company participated in merger, division, acquisition or transfer of stock may be exempted from decision of shareholders meeting in case the same intends to be involved in merger, division, acquisition or transfer of stock with another company after the disclosure of information of the former actions unless the participants have been decreased and the board meeting has been authorized by shareholders meeting to make appropriate changes whereas the procedures or legal acts completed in the formal actions should be redone by all the participants.

(F) This company shall form an agreement with the company participated in merger, division, acquisition or stock transfer who is not a public company in accordance with the first, second, fifth subparagraph of this paragraph hereof.

Article 12 Procedures for Disclosure of Information I. Items for public announcement and declaration and its standard

(A) Acquisition of real estate from associated persons (B) Investment in the Mainland (C) Merger, division, acquisition or stock transfer (D) The loss incurred in the dealing of derivatives reach the upper limit of losses of all or individual contracts specified in Subparagraph 5 of

Paragraph 1 of Article 10. (E) The amount of transactions other than those stated in the preceding four subparagraphs reach 20% of paid-in capital of this company or

NTD0.3 billion. The following circumstances shall be excluded therein. (a) Transactions of public bond. (b) Transactions of debentures with conditions for redemption and selling off. (c) The assets acquired or disposed are equipment or machines for business use and the counter part of the transaction are not associated

persons and amount thereof is under NTD 0.5 billion. (d) The assets are acquired by means of entrusted construction on one’s own land, joint construction with separate ownership, portioning,

sale and proposed amount thereof is under NTD 0.6 billion. (F) The calculations for the dealing amount in the preceding subparagraph

(a) Amount of each transaction<0} (b) Cumulative amount of acquisition or disposal of the objects of the same nature with the same counterpart within a year (c) Respective cumulative amount of acquisition and disposal of the real properties in the same program within a year (d) Respective cumulative amount of acquisition and disposal of the same security within a year

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II. Time for public announcement and declaration In case of any circumstances specified in Subparagraph 1 to 5 of Paragraph 1, the same shall be handled for public announcement and declaration within two (2) days after the occurrence of the event.

III. Procedures for public announcement and declaration (J) This company shall handle public announcement and declaration of relating information in the website designated by the FSC. (K) This company shall, within first ten (10) days in each month, input the information about the dealings in derivatives as of the end of last

month by this company and the subsidiaries, which are not affiliated to domestic public companies, into the website designated by the FSC.

(L) In case of any mistakes or omissions of necessary items therein, appropriate corrections shall be made and the entire items shall be re-announced publicly and re-declared.

(M) This company shall, within two (2) days after the occurrence of the events, handle public announcement and declaration of relating information in the website designated by FSC after the transaction announced and declared as required.

(a) Termination or cancellation of, alteration to relevant contracts to the original transactions. (b) Failure to complete merger, division, acquisition or stock transfer in accordance with contracts.

IV. Format of Public Announcements The necessary items and contents of public announcement which the Company shall comply with are referred to the appendixes of “Regulations

Governing the Acquisition or Disposition of Assets by Public Companies”. Article 13 Deposit and preservation of material relating to acquisition or disposal of assets

The contracts, memorandum, reference books, evaluation reports, opinions rendered by accountants, attorneys or underwriters relating to the acquisition or disposal of assets by this company shall be deposited with this company and preserved for at least five (5) years unless otherwise required by other laws.

Article 14 The following provisions apply to the subsidiary of this company: I. The subsidiaries shall, in accordance with Guidelines for Handling Acquisition and Disposal of Assets of Public Companies, establish the

Procedures of Acquisition or disposal of Assets, which shall be approved by the board meeting and shareholders meeting and subsequently reviewed by and deposited with the board meeting of this company. The same procedures shall apply to the amendments thereto.

II. The limit of amount for individual purchase of real estate for non-business use or securities or investment in each individual security by the subsidiaries, shall be determined in the board meeting.

III. In case of acquisition or disposal of assets by the subsidiary, which is not domestic public company, reach the standard stipulated in Guidelines for Handling Acquisition and Disposal of Assets of Public Companies, the same shall be handled by this company for public announcement or declaration.

IV. “Reach 20% of paid-in capital” as mentioned in the public announcement or declaration shall be based on the paid in capital of this company. V. Each subsidiary of the Company shall review whether its applying procedure related to the acquisition or disposition of assets is in compliance

with the “Regulations Governing the Acquisition or Disposition of Assets by Public Companies”. The Company’s auditor shall reexamine the check report made by each subsidiary of the Company.

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Article 15 Penalties In case of any major damages or serious acts on the part of the employees in this company who have violated relevant regulations on acquisition and disposal of assets, the employees concerned shall be punished by this company in accordance with relevant regulations on human affairs or the rules on reward and punishment of employees.

Article 16 The Procedures shall, after approved by the board meeting, be submitted to each supervisor and to shareholders meeting for approval. The same shall apply to the amendments hereto. In case of any objections raised by directors, which have been made in written form or recorded, the same shall be delivered to each supervisor.

Article 17 OthersAny matters unspecified herein shall be handled in accordance with relevant laws, decrees and other regulations of this company.

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Appendix 1 Necessary items in the evaluation report (1) Necessary items specified in the technical rules on the evaluation of real estate (2) Relating matters to professional appraising institution and appraiser (A) Name, capital amount, organizational structure and personnel structure of the professional appraising institution (B) Name, age, educational background (with certificates) of the appraisers and their working years and period in evaluation, number of cases of evaluation

handled. (C) Relationship between professional appraising institution and appraiser and the principal (D) Declaration of “no falsehood and concealment in items specified in the evaluation report” (E) Date of render of the evaluation report (3) Profiles of the object evaluated, at least including name, nature, location and area of the object (4) Instances of the comparison between the dealings of real estate in the region where the object is located. (5) Conditions for limited or specific prices, whether the aforesaid conditions are met, reasons for or of difference from normal price, whether the prices may

be adopted as a references (if the evaluation adopts limited or specific prices) (6) Reasonable proportions for a joint construction agreement (7) Evaluation of Land Appreciation Tax (8) In case of variance of over 20% between the evaluations of different evaluator at the same date, whether the same has been dealt with according to Article

41 of Decree on Real Estate Evaluator. (9) The thereto including details of evaluation, registration material, cadastral plan, sketch map of urban planning, location map of the object, zoning

certificate, photos of the objects at status quo.

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Far EasTone Telecommunications Co., Ltd.

Rules Governing the Conduct of Shareholders’ Meeting Approved by Annual Shareholder’s Meeting on 2000/6/25

Article 1. These Rules governing all affairs of the Company’s shareholders’ meetings. Article 2. The Company’s shareholders’ meeting shall be held at a place where the Company is headquartered or a place facilitating and

appropriate to shareholders (or proxies thereof), and shall be held not earlier than 9:00 the morning or later than 3:00 in the afternoon. The attending shareholders (or proxies thereof) shall wear attendance certificates, surrender sign-in cards instead of sign-in on book. The Company may appoint the retained Attorneys-at-Law, CPAs or other people concerned to attend a shareholders’ meeting as an observer. The shareholders’ meeting staff shall wear identity certificates or sashes. A shareholders’ meeting shall be chaired by the chairman if it is called by the chairman. In absence of the Chairman or his being unable to exercise his functions, the Vice Chairman shall act in his place. In absence of a Vice Chairman or while the Vice Chairman is unable to exercise his functions, the Chairman shall appoint a Director to act in the place otherwise a Director shall be elected from among themselves to act in the place. Where the Board of Directors meeting is called by a person beyond the Board of Directors, the meeting shall be chaired by the convener. Where there are two or more qualified conveners, one shall be elected from among themselves to chair the meeting. The Company shall record in sound or videotape the shareholders’ meeting throughout the process and shall keep the videotape or record for a minimum of one year.

Article 3. The chairman may call to order to the meeting where a shareholders’ meeting is attended by shareholders (or proxies thereof) representing a majority of the total issued shares. The chairman may announce extension of the time if the attendance is below the specified quorum within the specified time limit. The chairman may announce two extensions in maximum and the total period of extension shall not exceed an hour. In the event the total attendance is still below the specified quorum with two extensions but represents up to one-third of the total issued shares through shareholders (or proxies thereof), decision may be resolved on ordinary issues through a quasi-resolution by a majority vote of the attending shareholders (or proxies thereof). In the event the total number of shares represented by shareholders (or proxies thereof) is up to the specified quorum after the quasi-resolution is made, the chairman shall bring the quasi-resolution to the shareholders’ meeting for acknowledgement retroactively.

Article 4. The shareholders’ meeting’s agenda shall be determined by the Board of Directors if the meeting is called by the Board of Directors. The meeting shall be handled according to the established agenda, which shall not be changed unless resolved by the shareholders’ meeting. The preceding provision is applicable mutatis mutandis to a shareholders’ meeting called by another person entitled to call the shareholders’ meeting beyond the Board of Directors The chairman shall not announce adjournment of the meeting until the issues set forth in the two preceding paragraphs (including occasional motion) unless duly resolved. Where the Chairman announces adjournment against the aforementioned provision at a shareholders’ meeting, one may be elected by a majority vote of the attending shareholders to chair and continue the meeting.

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After the meeting is adjourned as resolved, shareholders shall not elect a new chairman to continue the shareholders’ meeting at the same location or a location elsewhere.

Article 5. A shareholder (or proxy) shall submit floor requisition, bearing attendance certificate code, shareholder account number and subjects so that the chairman will appoint the floor order before speaking in floor. A shareholder (or proxy) who does not speak up shall be deemed having not spoken up even he has submitted the floor requisition. Where the contents actually spoken are found differing from the entry in the floor requisition, only the contents of the verified speech shall govern.

Article 6. A proposal shall be posed in writing. Except the proposals enumerated on the agenda, a proposal posed by a shareholder to amend the provided proposals, alternatives or other proposals by means of occasional motion shall be seconded by other shareholders (proxies). This same is applicable to a proposal to change agenda, to adjourn. The total number represented by the proposing shareholder and seconding shareholders shall be up to 100,000 shares minimum.

Article 7. Explanation to a proposal shall not exceed five minutes. Speech as an inquiry or in reply shall not exceed three minutes per person and may be extended for another three minuets if permitted by chairman. The chairman may stop a shareholder (or proxy) from speaking if he speaks beyond the specified time limit, specified issues or permitted times. When a shareholder (or proxy) speaks in floor, other shareholders (proxies) shall not interrupt unless agreed upon by the chairman and the speaking shareholder (or proxy) otherwise the chairman shall stop the interruption. Article 15 shall apply if such shareholder (or proxy) objects the chairman in stopping the interruption.

Article 8. On the same issue, each shareholder shall not speak more than twice. Where a corporation is authorized to attend a shareholders’ meeting, such corporation shall appoint only one proxy to attend the meeting. Where a corporation appoints more than two proxies to the meeting, only one proxy may speak in floor.

Article 9. After an attending shareholder (or proxy) speaks, the chairman may reply himself or by appointing another person. Amidst discussion of a proposal, the chairman may, in due time, announce conclusion of the discussion or announce discontinuation of the discussion as necessary.

Article 10. On a proposal the discussion process of which is announced concluded or discontinued, the chairman shall announce voting pursuant to the number of shares represented. The staff to monitor resolution and to tally votes shall be appointed by the chairman and shall be subject to consent by attending shareholders (proxies). The staff to monitor voting shall only be shareholders.

Article 11. Unless otherwise provided for in law or Articles of Incorporation, decisions in the shareholders' meeting shall be resolved by a majority vote of the attending shareholders (proxies). A proposal is deemed officially resolved in the validity same as the one resolved through voting if no shareholders (proxies) object in response to inquiry by the chairman. In case of an amendment or alternative to a same proposal, the chairman will determine the order of voting. Where one among them is resolved, all others shall be deemed vetoed and call for no more voting process. The results of voting shall be reported on-the-spot and entered into the minutes.

Article 12. During the process of the meeting, the chairman may announce an intermission as the actual situation may justify. Article 13. In case of an air-raid alarm during process of a meeting, the meeting shall be discontinued forthwith for evacuation. The meeting may

be resumed an hour after the “all-clear” announcement.

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Article 14. The chairman may command security guards or discipline personnel to help maintain the order of the meeting. Such security guards or discipline personnel shall wear armbands to identify their capacity while on duty to maintain the order.

Article 15. The shareholders (proxies) shall accept instructions by the chairman, the security guards or discipline personnel in maintaining the order. The chairman, the security guards or discipline personnel may expel those who interfere with the shareholders’ meeting.

Article 16. Any matters insufficiently provided for herein shall be subject to the Company Law, Securities Trading Law and other laws concerned. Article 17. These Regulations and amendment hereof shall come into enforcement after binge resolved in the shareholders’ meeting.

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Far EasTone Telecommunications Co., Ltd. Directors and Supervisors Election Guidelines

Approved by Annual Shareholder’s Meeting on 2007/6/12 Article 1 These guidelines shall apply to the election of directors and supervisors of the Corporation, unless the laws and Company’s articles of

incorporation other relevant regulations shall apply thereto. Article 2 The election of the Corporation’s directors/supervisors shall be on the basis of accumulation of votes. Ballot of the eligible voter shall be

assigned with code of certificate of present voter. The ballots to be prepared by Board of directors shall indicate serial number of present voter and the number of votes he represented.

Article 3 For the seats of the Company’s Directors and Supervisors, the Company’s independent directors, non-independent directors and supervisors shall be elected in the same election, but the ballots shall be calculated separately and respectively. And the ones winning more ballots shall be elected to fill up the seats separately. In the event two or more candidates win the same ballots beyond the seat quota, the ones who win the same ballots shall determine the seat by drawing the lots. If anyone of them is absent, the president shall represent the absent voter to draw the lot. Independent directors shall be elected by candidate nomination system in accordance with Article 192-1 of Company Law and regarding the qualification, independent condition and other matters, “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies” and other related laws and regulations should be followed.

Article 4 In the beginning of the election, the chairman shall designate two canvassers and two tally clerks to carry out relevant missions . The canvasser shall be limited to shareholder of the Corporation.

Article 5 The canvasser shall perform the following missions: I. Prior to casting of votes, open the vote box to the participants and have a seal attached onto the cover of box. II. Maintain good order for vote casting and prevent any negligence or irregularities in voting. III. Upon completion of voting, remove the seal from box cover, take out the ballots and count the number of ballots. IV. Check to see if there are any invalid votes and have the valid votes hand over to tally clerk. V. Conduct supervision over the votes recorded by tally clerk and votes won by the eligible directors/supervisors.

Article 6 Where a candidate is a natural person, the voters shall expressly enter the candidate’s account name and shareholder account number on the ballots if he is a shareholder, and shall expressly enter the candidate’s name and ID document number on the ballots if he is not a shareholder. Where a candidate is a government or a corporate shareholder, other than the shareholder account number, the voters may enter as well the name of the government or a corporate shareholder and name of the representative. In case of several representatives, the names of representatives shall be entered.

Article 7 A ballot is null and void if: I. Not in the ballot form as required under the Regulations; II. Bearing two or more candidates on a same ballot; III. Remaining blank bearing no entries from the vote; IV. Bearing entries not satisfactory to Article VI or bearing other irrelevant wording;

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V. Bearing vague, illegible wording; VI. Bearing a candidate who proves nonconforming in qualifications.

Article 8 Provide two ballot boxes each for the directors and supervisors, which shall be opened for ballot count. Article 9 After all ballots are cast into ballot box, the canvasser shall join the tally clerk in opening of ballot box. Article 10 The canvasser shall supervise over the count of ballots of tally clerk. Article 11 In case of any doubts about the ballots, the canvasser shall be requested to conduct a verification to see the validity of the ballots. The invalid

ballots shall be segregated from the valid ones and be certified as invalid ballots by the canvasser after having counted number of ballots and the voting rights.

Article 12 According to results of the votes, the canvasser shall conduct a check on the valid ballots and invalid ballots and produce a record indicating the number of valid ballots and voting rights, the invalid ballots and the voting rights and then the chairman shall announce the names of the elected Directors and Supervisors.

Article 13 Board of Directors shall issue notice of the elected directors and supervisors. Article 14 These guidelines shall become effective upon having been approved by meeting of shareholders and the same provision shall also apply to

revision thereto.