Advantech Co.,Ltd. 2017 Annual Shareholders’ Meeting
Meeting Minutes (Translation)
Time : 09:00 AM,May 26,2017
Place : (Neihu Headquarters) B1, No. 1, Line 20, Lane 26, Rueiguang Road,
Neihu District, Taipei City
Total outstanding ACL shares : 633,254,100 shares Total shares represented by shareholders present in person or by proxy : 574,350,035 shares Percentage of outstanding share held by shareholders present in person or by proxy : 90.70%
Chairman: K.C Liu, the Chairman of the Board of Directors
Attendees: Joseph Yu (Independent Director), Donald Chang (Director) ,Thomas Chen (Supervisor), James Wu (Supervisor),Chaney Ho (President),Eric Chen (Vice President), Meng Chieh Chiu, CPA, Deloitte, Villis Yang (Director) The aggregate shareholding of the shareholders present in person or by proxy constituted a quorum. The Chairman called the meeting to order.
Chairman’s Address (omitted)
I. Management Presentations 1.The 2016 Business Report (see appendix I)2.Supervisor’s Review Report on the 2016 Financial Statements (see appendix II) 3. Report of Employees’ compensation and Directors’ compensation of 2016.4. The Status of Endorsement and Guarantee in 2016 (see meeting agenda)
II. Proposals1. Adoption of the 2016 Business Report and Financial Statements
(Proposed by the board of directors )
Explanation:(1) The 2016 business report and standalone financial statements (including consolidated
financial statements) were composed by the Board of Directors. The Company’s financial statements were audited by independent auditors, M.J. Chiou and C.S. Chen, of Deloitte & Touche and were reviewed by the supervisor along with the business report with a written audit report issued.
(2) The Business Report, independent auditor’s report, and Financial Statements are
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enclosed as Attachment I and Attachment III. (3)Please acknowledge.
Voting Results: 574,350,035 shares were represented at the time of voting; 525,513,680 votes were in favor of the proposal (including votes casted electronically: 207,577,803); 228,391 votes were cast against the proposal (including votes castedelectronically: 228,391); 0 votes wereinvalid; 48,607,964 votes were either invalidly cast or abstained (including votes casted electronically: 48,208,129). Approved, that the above proposal be and hereby were accepted as submitted.
2. Adoption of the Proposal for Distribution of 2016 Earnings.(Proposed by the board of directors ) Explanation: (1) Please refer to the 2016 prorofit distribution table in Attachment IV. (2) The net income of the company amounted to NT$5,666,862,329 for 2016. Added the
beginning unappropriated earnings of NT$2,796,896,578 and deducted net of the retained earnings adjustment for NT$3,691,230 due to long-term equity investments, actuarial loss recognized in retained earnings of NT$24,282,918, the legal reserve of NT$566,686,233 and special reserve of NT$85,203,650, the distributable earnings for 2016 amounted to NT$7,783,894,876 resulted to be distributed as follows:
(3) The amounts of NT$3,988,366,830 and NT$633,074,100 out of the 2016 earnings are appropriated for distribution as cash dividends and share dividends to shareholders, respectively.
There were 633,074,100 shares of common stock outstanding on December 31, 2016 that are entitled to the distribution of shareholder’s dividend at NT$7.3 per share.
(4) The distribution of cash dividend is calculated to the dollar (round up to the dollar). The total amount of the odd shares with a distribution of less than NT$1 will be booked as the other income or other expense of the company.
(5) The current distribution of earnings is scheduled before the dividend benchmark date. If there is any change in the yield rate as a result of any change in the Company’s outstanding shares, a request is to be made in the shareholders’ meeting having the Chairman authorized to handle matters related to the changes.
(6) Upon the approval of the Annual General Shareholder’s Meeting, it is proposed that the Chairman is authorized to resolve the ex-dividend date and other relevant issues.
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Voting Results: 574,350,035 shares were represented at the time of voting; 525,740,680 votes were in favor of the proposal (including votes casted electronically: 256,014,323); 1,391 votes were cast against the proposal (including votes castedelectronically: 1,391); 0 votes wereinvalid; 48,607,964 votes were either invalidly cast or abstained (including votes casted electronically: 48,208,129). Approved, that the above proposal be and hereby were accepted as submitted.
III. Discussion and Election1. Issuance of new shares from capital increase by earnings. Please proceed to resolve.
(Proposed by the board of directors)Explanation:(1) In response to the business development, the Company plans to issue 63,307,410 shares
from capital increase by the 2016 dividends distributed to shareholders at the amount of NT$633,074,100, with the par value per share of NT$10. Based on shareholders and their shareholding ratio listed in the shareholders' roster on the target date for distribution of dividends,100 shares per 1000 shares will be distributed free of charge; the fractional shares that is less than 1 share shall be put together by the stock agency appointed by the Company within 5 days after the date on which share transfer registration is suspended. The fractional share that is insufficient to make up the balance or put together by the deadline will be subscribed by a person designated by the chairman of the Board.
(2) When there is a change in the distribution rate due to change in the number of shares circulated outside, the shareholders’ meeting shall authorize the Board of Directors to solely handle such a change.
(3) Rights and obligations arising from the issuance of new shares are same as those arising from the issuance of original shares.
(4) After the issuance of new shares from capital increase is resolved by the annual shareholders’ meeting and reported to the competent authority, the Board of Directors will be authorized to set the ex-right date and announce it separately.
(5) Please proceed to discuss.
Voting Results: 574,350,035 shares were represented at the time of voting; 503,042,495 votes were in favor of the proposal (including votes casted electronically: 185,106,618); 22,484,906 votes were cast against the proposal (including votes castedelectronically: 22,484,906); 0 votes wereinvalid; 48,822,634 votes were either invalidly cast or abstained (including votes casted electronically: 48,422,799). Approved, that the above proposal be and hereby were accepted as submitted.
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2. Amendment to the “ Articles of Incorporation ”(Proposed by the board of directors)
Explanation:(1) In order to comply with the law and relevant regulations and to conform to the needs of
Commercial practice, the Company hereby proposes to amend the Articles of Incorporation. Please refer to Attachment V.
(2) Please proceed to discuss .
Voting Results: 574,350,035 shares were represented at the time of voting; 525,739,580 votes were in favor of the proposal (including votes casted electronically: 207,803,703); 1,391 votes were cast against the proposal (including votes castedelectronically: 1,391); 0 votes wereinvalid; 48,609,064 votes were either invalidly cast or abstained (including votes casted electronically: 48,209,229). Approved, that the above proposal be and hereby were accepted as submitted.
3. Amendment to the “Procedures For Acquisition or Disposal of Assets”(Proposed by the board of directors)Explanation:(1) The proposal is handled according to Financial Supervisory Commission Order
Gin-Guan-Zheng-Fa-Zi No. 1060001296 dated February 9, 2017. (2) In order to comply with the law and relevant regulations and to conform to the needs of
commercial practice, the Company hereby proposes to amend the Procedures For Acquisition or Disposal of Assets . Please refer to Attachment VI.
(3) Please proceed to discuss .
Voting Results: 574,350,035 shares were represented at the time of voting; 525,739,580 votes were in favor of the proposal (including votes casted electronically: 207,803,703); 1,391 votes were cast against the proposal (including votes castedelectronically: 1,391); 0 votes wereinvalid; 48,609,064 votes were either invalidly cast or abstained (including votes casted electronically: 48,209,229). Approved, that the above proposal be and hereby were accepted as submitted.
4. Amendment to the “Procedures for Lending Funds to Other Parties”.(Proposed by the board of directors)Explanation:
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(1) In order to comply with the law and relevant regulations and to conform to the needs of commercial practice, the Company hereby proposes to amend the Procedures for Lending Funds to Other Parties . Please refer to Attachment VII.
(2) Please proceed to discuss .
Voting Results: 574,350,035 shares were represented at the time of voting; 525,739,580 votes were in favor of the proposal (including votes casted electronically: 207,803,703); 1,391 votes were cast against the proposal (including votes castedelectronically: 1,391); 0 votes wereinvalid; 48,609,064 votes were either invalidly cast or abstained (including votes casted electronically: 48,209,229). Approved, that the above proposal be and hereby were accepted as submitted.
5. Amendment to the “Procedures for Endorsement & Guarantee”.(1) In order to comply with the law and relevant regulations and to conform to the needs of
commercial practice, the Company hereby proposes to amend the Procedures for Endorsement & Guarantee . Please refer to Attachment VIII.
(2) Please proceed to discuss .
Voting Results: 574,350,035 shares were represented at the time of voting; 525,739,580 votes were in favor of the proposal (including votes casted electronically: 207,803,703); 1,391 votes were cast against the proposal (including votes castedelectronically: 1,391); 0 votes wereinvalid; 48,609,064 votes were either invalidly cast or abstained (including votes casted electronically: 48,209,229). Approved, that the above proposal be and hereby were accepted as submitted.
6. Amendment to the “ Procedures for Financial Derivatives Transactions”.(Proposed by the board of directors)Explanation:(1) In order to comply with the law and relevant regulations and to conform to the needs of
commercial practice, the Company hereby proposes to amend the Procedures for Financial Derivatives Transactions . Please refer to Attachment IX .
(2) Please proceed to discuss .
Voting Results: 574,350,035 shares were represented at the time of voting; 525,739,580 votes
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were in favor of the proposal (including votes casted electronically: 207,803,703); 1,391 votes were cast against the proposal (including votes castedelectronically: 1,391); 0 votes wereinvalid; 48,609,064 votes were either invalidly cast or abstained (including votes casted electronically: 48,209,229). Approved, that the above proposal be and hereby were accepted as submitted.
7. Amendment to the “ Rules and Procedures of Shareholders’ Meeting ”.(Proposed by the board of directors)Explanation:(1) In order to comply with the law and relevant regulations and to conform to the needs of
commercial practice, the Company hereby proposes to amend the Rules and Procedures of Shareholders’ Meeting . Please refer to Attachment X .
(2) Please proceed to discuss .
Voting Results: 574,350,035 shares were represented at the time of voting; 525,739,580 votes were in favor of the proposal (including votes casted electronically: 207,803,703); 1,391 votes were cast against the proposal (including votes castedelectronically: 1,391); 0 votes wereinvalid; 48,609,064 votes were either invalidly cast or abstained (including votes casted electronically: 48,209,229). Approved, that the above proposal be and hereby were accepted as submitted.
8. Discuss the disposal of Advantech LNC Technology Co., Ltd. Shares.(Proposed by the board of directors)Explanation:(1) In response to the business development of the Company’s subsidiary, Advantech LNC
Technology Co., Ltd. (hereinafter referred to as AdvantechLNC), and the recruitment and retention of professionals required by the Company, theCompany plans to first release 3,000,000 shares of Advantech LNC to thefounding executives of Advantech LNC at the price of NT$18 per share and at the totalamount of NT$54,000,000 in order to improve employees’ coherence and sense ofbelonging, further creating the interest of the Company and shareholders.
(2) Please proceed to discuss.
Voting Results: 574,350,035 shares were represented at the time of voting; 449,428,024 votes were in favor of the proposal (including votes casted electronically: 131,492,147);
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75,886,190 votes were cast against the proposal (including votes castedelectronically: 75,886,190);0 votes wereinvalid; 49,035,821 votes were either invalidly cast or abstained (including votes casted electronically: 48,635,986). Approved, that the above proposal be and hereby were accepted as submitted.
9. Re-election of all directors. Please Vote.Explanation:(1) As the term of the Company’s directors and supervisors is about to expire, the reelection of
directors and supervisors shall be held in the shareholders’meeting this year according to Article 13 of the Company’s Articles of Incorporation.
(2) The Company plans to set up 7~9 directors (including 3 independent directors) according to Article 13 of the Company’s Articles of Incorporation. In the 13th reelection, 7 directors are planned to be set up (including 3 independent directors) with a term of 3 years and they may be eligible for reelection. The Company plans to establish the audit committee, which is composed of all independent directors, according to Article 13-6 of the Company’s Articles of Incorporation. In addition, supervisors are abolished.
(3) According to Article 13 of the Company’s Articles of Incorporation, the candidate nomination system is adopted for the election of directors. After the Board of Directors reviews the qualifications of nominees based on the roster of candidates for directors and independent directors, qualified nominees are enrolled in the final roster of candidates for directors and independent directors and elected by the Board of Directors.
(4) The 3-year term of newly elected directors starts from May 26, 2017 and ends on May 25, 2020.
(5) According to Company’s Article of Incorporation, the Company’s dissectors shall be elected from the nomination list.The qualification of the nominees has been reviewed by Board. Personal information of the nominees is as follows:
Category Name Education Experience Current position Shares Held
Director K.C. Liu Department of Telecommunications Engineering, National Chiao Tung University
Founder of Advantech Chairman of Advantech Corporate Investment、 Chairman of Advanixs Corp.、Chairman of Beijing Yan Hua Xing Ye Electronic Science & Technology Co., Ltd.、Chairman of Advantech Technology (China) Company Ltd.、Chairman of Shanghai Advantech Intelligent Services Co., Ltd、Chairman of Xi’an Advantech Software Ltd、Chairman of Advantech Intelligent Service.、Chairman of K and M Investment Co., Ltd.、 Chairman of AdvanPOS Technology Co., Ltd.、
23,292,484
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Chairman of Advantech-LNC Technology Co., Ltd.、Chairman of Advanixs Kun ShAN Corporaton 、Chairman of Aimobile Co., Ltd.、Chairman of Advantech Foundation、Chairman of Advantech Japan Co., Ltd.、Chairman of B+B Smartworx Inc.Director of AIDC Investment Corp.、Director of Advantech Europe B.V.、Director of DLoG GmbH、 Director of ADVANTECH INTERNATIONAL PT.、Director of Advantech Electronics,S. De R. L. De C.V.Director of Advantech Technology Co., Ltd. Director of HK Advantech Technology Co., Ltd.、Director of Advantech Automation Corp.、Director of Advantech Automation Corp.(HK) Limited.、 Director of Advantech Brazil Ltd.、Director of Advantech Co. Singapore Pte, Ltd.、Director of Advantech Corp.、Director of Advantech Europe Holding B.V.、Director of Advantech Co., Malaysia Sdn.Bhd.、Director of Advantech Poland Sp z.o.o、Director of Advantech KR Co., Ltd.、Director of Advantech Corporation (Thailand) Co., Ltd.、 Director of Advantech Industrial Computing India Private Limited.、Director of Better Auto Holdings Limited.、Director of Famous Now Limited.
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Director Ted Hsu EMBA,National
Chiao Tung University
Chairman of Eeizprise Inc.、Director of ASUSTeK、Director of Asmedia Technology Inc.、Director of Eusol
Biotech Co.,Ltd.
Chief Strategy Officer of ASUSTeK
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Director AIDC Investment Corp. Representative:Donald Chang
Bachelor Chemical Engineering, Chinese Culture University
President, 3M China Region、
Vice President, 3M Southeast Asia Region、
Managing Director, 3M Southeast Asia Region & 3M Singapore
Independent Director of Chung Hwapulp Corp.
74,636,266
Director Advantech Foundation Representative :Chaney Ho
Tatung Institute of Technology,Taiwan
President of Le Wel Co.,Ltd.
Chairman of Advantech Innovative Design Co., Ltd.、Director of Beijing Yan Hua Xing Ye Electronic Science & Technology Co., Ltd、Director of Shanghai Advantech Intelligent Services Co., Ltd、Director of Advantech Technology (China) Company Ltd、Director ofAdvantech Co., Malaysia Sdn.Bhd.Director of Advantech KR Co., Ltd.、Director of Advantech Industrial Computing India Private Limited.
18,244,889
Independent Director
Jeff Chen EMBA,
Northwestern University
Stanley Black & Decker Inc. VP & President of Asia 、 Stanley Works HQ, VP Global Operations、 Stanley Works Asia, President Asia Operations
Independent Director of Advantech Co.,Ltd.
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Independent Director
Benson Liu Master, International Business Administration, University of Northrop, USA
Chairman and President of Bristol-Myers Squibb (Taiwan) Ltd.
Independent Director, Global Unichip Corp Independent Director, Polylite Taiwan Co.,Ltd. Vice Chairman, Chinese Corporate Governance Association、Director, Maywufa Company Ltd.
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Independent Director
Joseph Yu PhD of Business Administration,
Associate Professor, Department of Business
Independent Director, Yuanta Securities Co.,
249
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University of Michigan
Administration, University of Illinois at Urbana–Champaign、Member, Taiwan Ministry of Economic Research and Development Committee、Dean, National Chengchi University, Department of Business Administration; Representative for National Chengchi University School of Business
Ltd、Independent Director,Yuanta Bank Co., Ltd. Professor, Department of Business Administration, National Chengchi University
Voting Results: Declared elected by the Chairman of the list is as follows:
Title Shareholders’
NO
Name Elected voting
number
Director 1 K.C. Liu 529,544,496 votes
Director Q1202***** Ted Hsu 492,114,989 votes
Director 163 Advantech Foundation Representative : Chaney Ho 490,770,320 votes
Director 40 AIDC Investment Corp. Representative :Donald Chang 487,445,565 votes
Independent Director P1002***** Benson Liu 510,738,762 votes
Independent Director 17301 Joseph Yu 509,033,352 votes
Independent Director B1006***** Jeff Chen 507,790,289 votes
10. Exemption of the limitation of non-competition on the directors of the Company.(Proposed by the board of directors)Explanation:
(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 meeting of shareholders the essential contents of such an act and secure its approval.
(2) To take good advantage of the specialties and experience of the Company’s directors, the release of the prohibition on new directors and their representatives, elected in the 2017 annual shareholders’ meeting, from participation in competitive business is proposed in the shareholders’ meeting for approval according to laws.
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Newly appointed directors serve as other positions in other companies are as below:
Title Name Company’s English Name
Director K.C. Liu Chairman of Advantech Corporate Investment、 Chairman of Advanixs Corp.、Chairman of Beijing Yan Hua Xing Ye Electronic Science & Technology Co., Ltd.、Chairman of Advantech Technology (China) Company Ltd.、Chairman of Shanghai Advantech Intelligent Services Co., Ltd、Chairman of Xi’an Advantech Software Ltd、 Chairman of Advantech Intelligent Service.、Chairman of K and M Investment Co., Ltd.、 Chairman of AdvanPOS Technology Co., Ltd.、Chairman of Advantech-LNC Technology Co., Ltd.、Chairman of Advanixs Kun ShAN Corporaton 、Chairman of Aimobile Co., Ltd.、Chairman of Advantech Foundation、Chairman of Advantech Japan Co., Ltd.、Chairman of B+B Smartworx Inc.Director of AIDC Investment Corp.、Director of Advantech Europe B.V.、Director of DLoG GmbH、 Director of ADVANTECH INTERNATIONAL PT.、Director of Advantech Electronics,S. De R. L. De C.V.Director of Advantech Technology Co., Ltd. Director of HK Advantech Technology Co., Ltd.、Director of Advantech Automation Corp.、Director of Advantech Automation Corp.(HK) Limited.、 Director of Advantech Brazil Ltd.、Director of Advantech Co. Singapore Pte, Ltd.、Director of Advantech Corp.、Director of Advantech Europe Holding B.V.、Director of Advantech Co., Malaysia Sdn.Bhd.、Director of Advantech Poland Sp z.o.o、Director of Advantech KR Co., Ltd.、Director of Advantech Corporation (Thailand) Co., Ltd.、 Director of Advantech Industrial Computing India Private Limited.、Director of Better Auto Holdings Limited.、Director of Famous Now Limited.
Director Ted Hsu Chairman of Eeizprise Inc.、Director of ASUSTeK、Director of Asmedia Technology Inc.、Director of Eusol Biotech Co.,Ltd.
Director AIDC Investment Corp. Representative :Donald Chang
Independent Director of Chung Hwapulp Corp.
Director Advantech FoundationRepresentative : Chaney Ho
Chairman of Advantech Innovative Design Co., Ltd.、Director of Beijing Yan Hua Xing Ye Electronic Science & Technology Co., Ltd、Director of Shanghai Advantech Intelligent Services Co., Ltd、Director of Advantech Technology (China) Company Ltd、Director of Advantech Co., Malaysia Sdn.Bhd.Director of Advantech KR Co., Ltd.、Director of Advantech Industrial ComputingIndia Private Limited.
Independent Director Joseph Yu Independent Director, Yuanta Securities Co., Ltd、Independent Director, Yuanta Bank Co., Ltd.
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Independent Director Benson Liu Independent Director, Global Unichip Corp Independent Director, Polylite Taiwan Co.,Ltd. Independent Director, Vanguard International Semiconductor Co. Director, Maywufa Company Ltd.
Voting Results: 574,350,035 shares were represented at the time of voting; 423,000,595 votes were in favor of the proposal (including votes casted electronically: 105,064,718); 95,180,712 votes were cast against the proposal (including votes castedelectronically: 95,180,712);0 votes wereinvalid; 56,168,728 votes were either invalidly cast or abstained (including votes casted electronically: 55,768,893). Approved, that the above proposal be and hereby were accepted as submitted.
V. Extemporary Motion: None. VI. Meeting Adjourned: There was no other business and extemporary motion,
the Chairman announced the meeting adjourned.
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<Attachment I> Business Report
Dear shareholders:
2016 Summary of Results
In 2016, Advantech reported consolidated revenues of NT$ 42 billion, an increase of ten percent over the NT$38 billion of 2015. Net income was NT$5.69 billion and diluted earnings per share were NT$8.96. Gross profit margin was 40.8 percent, compared with 40.4 percent in 2015; and operating profit margin was 15.8 percent, compared with 15.6 percent a year earlier. Net profit margin was 13.54 percent, an increase of 0.05 percentage points from the previous year’s 13.49 percent.
Our Vision for IoT
Advantech has been looking at Internet of Things (IoT) opportunities since 2010, in addition to our foundation in embedded systems and industrial PC segments. We position ourselves as “The Accelerator of the Intelligent Planet”. However, given the complexity of the IoT ecosystem, we believe the broad-based penetration of end-user demands and applications will happen in the next 10 to 15 years, but not today. Since 2016, Advantech has gradually experienced rising demand in industrial IoT and factory applications. Looking forward, in addition to more comprehensive internet infrastructure development, the support and acceleration from industrial companies (like GE, Schneider, Honeywell, Siemens, etc.) and service providers (like Microsoft, Amazon, and Google) are the essential catalysts of the IoT industry.
Advantech recognizes three waves of growth in the IoT industry. The first wave happened in 2010 and will gradually mature in 2020. The major beneficiaries are IoT device providers, such as fabless houses. The second wave began in 2015~2016 and is expected to yield results in 2019~2020. The second wave should mature in 2025, at which time a third wave of IoT growth will begin. Advantech foresees that companies with the capability to provide hardware and software integration services will be the major beneficiaries during the second wave of IoT growth. In the future, Advantech will strengthen its role as an accelerator of the intelligent planet, facilitating system integrators’ activities in each vertical market, providing differentiated customer service, and forming cross-sector alliance and vertical market ecosystems.
Advantech’s Key Strategies to Achieve Our 2020 Vision
Develop the WISE-PaaS platform to form a sharing platform.
In 2015, Advantech’s WISE-PaaS was focused on internal software consolidation andarchitecture development. In 2016, WISE-PaaS successfully launched Edge Intelligence Server
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(EIS) and Solution Ready Platform (SRP), and penetrated into several customer IoT projects in different vertical markets. In 2017, Advantech will focus on cloud services for the WISE-PaaS platform to provide a reliable and improved IoT cloud computing platform.
Make cross-sector alliances to form a vertical market IoT ecosystem.
IoT is an expansion opportunity to Advantech’s current specialty in embedded systems andindustrial PCs. However, the complexities of the IoT system and vertical markets will driveoverall market diversity. Therefore, Advantech intends to form different alliances in focusedareas, including “M2.COM” in the Wireless IoT Sensor Nodes Standard, and Embedded Linux& Android Alliance (ELAA) in the embedded OS area, to provide more comprehensiveservices to our system integrator partners.
Invest, incubate, and cooperate to accelerate IoT development and penetration.
In our 2020 vision, Advantech also identified external cooperation and investment as anothergrowing arm in the future to fulfill the natural complexity of the IoT market and strengthen ourportfolio and service offerings. In January 2016, Advantech fully consolidated B+BSmartWorx into our operations. In January 2017, Advantech announced investment in Kostec,a specialized, Korea-based medical-monitor company. Both investments were in line withAdvantech’s long term strategy in technology centric and vertical development. Also,Advantech initiated more interactions and sponsorship with industrial partners and academicinstitutes. In addition to talent recruitment and business engagement, Advantech intends tofacilitate the development of Taiwan’s IoT supply chain.
2017 Outlook
Advantech reported record high revenues and net income in 2016. The 10.5% revenue growth was
consistent overall with Advantech’s past 10 year CAGR growth. More importantly, Advantech
intends to seek sustainable top-line growth in the long run to optimize investor value.
Looking forward in 2017, Advantech expects to achieve its profitable revenue growth target on the
back of increasing penetration of IoT adoption, our leadership in intelligent systems, and our
differentiated value-added services, which should reduce the uncertainty from macro-economic
impacts.
Strengthening Corporate Governance and Business Leadership
Advantech has marketed itself as an industrial brand since the beginning and now Advantech has operations in 23 countries around the world. In 2016, Advantech was recognized as a Top 6 Taiwan International Brand, and the only B2B company among the Top 10 Taiwan International Brands. To enhance corporate governance and comply with international trends, Advantech will transform its board organization from supervisory systems to independent directors systems starting from 2017.
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Our goal is the pursuit of excellence and sustainable operation. Advantech has established its altruistic spirit at the core of its business culture, along with the pursuit of the best and balanced interests of society, shareholders, customers, and employees.
Advantech Co., Ltd. Chairman K.C. Liu President Chaney Ho Chief Financial officer Rorie Kang
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< Attachment II>
Supervisor’s Review Report
The supervisors have reviewed the 2016 annual business reports, profit distribution proposals and individual financial statements and consolidated financial statements prepared and presented by the Company’s Board of Directors, and the independent auditor’s report issued by CPA Meng Chieh Chiu and CAP Chin Hsiang Chen of Deloitte & Touche with an independent auditor’s report issued.
The supervisor’s report is hereby issued in accordance with Article 219 of the Company Law after reviewing the annual business reports, financial statements, and profit distribution proposals without any nonconformity identified.
Sincerely yours,
The 2017 General Shareholders’ Meeting of Advantech Co., Ltd.
Supervisor: AIDC Investment Corp. Representative: Gary Tseng
March 06, 2017
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Supervisor’s Review Report
The supervisors have reviewed the 2016 annual business reports, profit distribution proposals and individual financial statements and consolidated financial statements prepared and presented by the Company’s Board of Directors, and the independent auditor’s report issued by CPA Meng Chieh Chiu and CAP Chin Hsiang Chen of Deloitte & Touche with an independent auditor’s report issued.
The supervisor’s report is hereby issued in accordance with Article 219 of the Company Law after reviewing the annual business reports, financial statements, and profit distribution proposals without any nonconformity identified.
Sincerely yours,
The 2017 General Shareholders’ Meeting of Advantech Co., Ltd.
Supervisor: Thomas Chen
March 06, 2017
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Supervisor’s Review Report
The supervisors have reviewed the 2016 annual business reports, profit distribution proposals and individual financial statements and consolidated financial statements prepared and presented by the Company’s Board of Directors, and the independent auditor’s report issued by CPA Meng Chieh Chiu and CAP Chin Hsiang Chen of Deloitte & Touche with an independent auditor’s report issued.
The supervisor’s report is hereby issued in accordance with Article 219 of the Company Law after reviewing the annual business reports, financial statements, and profit distribution proposals without any nonconformity identified.
Sincerely yours,
The 2017 General Shareholders’ Meeting of Advantech Co., Ltd.
Supervisor: James Wu
March 06, 2017
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INDEPENDENT AUDITORS’ REPORT
The Board of Directors and Shareholders Advantech Co., Ltd.
Opinion
We have audited the accompanying consolidated financial statements of Advantech Co., Ltd. (the “Company”) and its subsidiaries (collectively referred to as the “Group”), which comprise the consolidated balance sheets as of December 31, 2016 and 2015, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2016 and 2015, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.
Basis for Opinion
We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2016. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matters on the consolidated financial statements for the year ended December 31, 2016 were as follows:
Business acquisitions
Due to the operation plan of 2016, the Group acquired 100% of the shares of B+B SmartWorx, Inc. (B+B) for NT$3,296,048 thousand on January 4, 2016.
<Attachment III >
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The evaluation on fair value of the assets, liabilities, and the amount of goodwill as of the date of acquisition of B+B was based on a specialists’ Purchase Price Allocation Report that involved several financial assumptions and inputs. The judgment of related accounting estimates will affect the presentation of accounts on the financial statements. Since the acquisition is considered to be a significant event and was transacted during the period of the financial statements and should have a material impact on the financial statements, the accuracy of the acquisition transaction of B+B conducted by the Group was deemed to be a key audit matter.
Our key audit procedures performed in respect of the above area included the following:
1. Tested the acquisition balance sheet prepared by management in accordance with the requirements of IFRS3 Business Combinations by:
a. Checking that the record matched against the fair value of the assets and liabilities as of the date ofacquisition.
b. Recalculating the value of goodwill recognized on the acquisition balance sheet.
2. Evaluated and tested the management’s judgments, through the engagement of valuation experts by:
a. Testing the completeness of the identification, recognition, and valuation of the potential intangibleassets of B+B and the fixed assets of its subsidiaries.
b. Testing the valuation methodologies and assumptions used to value each identified intangible asset,fixed asset, and goodwill.
B+B obtained the specialists’ Purchase Price Allocation Report in December 2016. Through the above performed procedures, B+B recognized goodwill at NT$1,768,139 thousand and intangible assets, including client relationships, core techniques, trademarks and software, at NT$1,294,933 thousand in total.
Impairment loss recognized on goodwill
If an asset has an indefinite useful life or there is any indication that an asset is impaired, the management should assess if the carrying amount of the assets is impaired. We have expressed our concerns on the related risks since the impairment assessment of goodwill is based on the management’s significant judgment that involves assumptions of the future profitability and costs of equity and debts; the impairment of goodwill is hence recognized as a critical accounting estimate in Note 5 to the consolidated financial statements.
The consolidated balance of goodwill amounted to NT$2,845,831 thousand as of December 31, 2016. We are mainly concerned about the addition of cash-generating units from the acquisition of B+B, from which thegoodwill from the cash-generating units amounted to NT$1,768,139 thousand. Since the actual operations condition of B+B was not to the level as was evaluated as of the date of acquisition, which might cause an impairment of goodwill, the assessment of impairment of goodwill was deemed to be a key audit matter.
Our key audit procedures performed in respect of the above area included the following:
When evaluating the impairment assessment, we tested management’s assumptions and inputs used for testing the impairment for goodwill, including cash flow projections and discount rates.
Other Matter
We have also audited the parent company only financial statements of Advantech Co., Ltd as of and for the years ended December 31, 2016 and 2015 on which we have issued an unmodified opinion.
20
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance, including supervisors, are responsible for overseeing the Group’s financial reporting process.
Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with the auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether dueto fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidencethat is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error, as fraud may involvecollusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness ofthe Group’s internal control.
3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimatesand related disclosures made by management.
4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, basedon the audit evidence obtained, whether a material uncertainty exists related to events or conditions thatmay cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that amaterial uncertainty exists, we are required to draw attention in our auditors’ report to the relateddisclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report.However, future events or conditions may cause the Group to cease to continue as a going concern.
21
5. Evaluate the overall presentation, structure and content of the consolidated financial statements, includingthe disclosures, and whether the consolidated financial statements represent the underlying transactions andevents in a manner that achieves fair presentation.
6. Obtain sufficient and appropriate audit evidence regarding the financial information of entities or businessactivities within the Group to express an opinion on the consolidated financial statements. We areresponsible for the direction, supervision, and performance of the group audit. We remain solelyresponsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2016 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partners on the audit resulting in this independent auditors’ report are Meng-Chieh Chiu and Chin-Hsiang Chen.
Deloitte & Touche Taipei, Taiwan Republic of China
March 6, 2017
Notice to Readers
The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally applied in the Republic of China.
For the convenience of readers, the independent auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and consolidated financial statements shall prevail.
22
ADVANTECH CO., LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2016 AND 2015(In Thousands of New Taiwan Dollars)
2016 2015ASSETS Amount % Amount %
CURRENT ASSETSCash and cash equivalents (Notes 4 and 6) $ 4,637,577 12 $ 4,358,259 13Financial assets at fair value through profit or loss - current (Notes 4, 7 and 30) 113,028 - 176,389 1Available-for-sale financial assets - current (Notes 4, 8 and 30) 2,956,586 8 1,755,843 5Debt investments with no active market - current (Notes 4 and 9) 10,007 - 3,171 -Notes receivable (Notes 4, 10 and 31) 965,081 3 970,722 3Trade receivables (Notes 4 and 10) 6,384,834 17 5,428,574 16Trade receivables from related parties (Note 31) 13,957 - 26,775 -Other receivables 13,775 - 40,811 -Inventories (Notes 4 and 11) 5,597,236 15 4,868,860 14Other current assets (Note 17) 489,630 1 456,342 1
Total current assets 21,181,711 56 18,085,746 53
NONCURRENT ASSETSAvailable-for-sale financial assets - noncurrent (Notes 4, 8 and 30) 1,712,578 4 1,747,598 5Investments accounted for using the equity method (Notes 4 and 13) 598,454 2 477,984 2Property, plant and equipment (Notes 4 and 14) 10,089,836 26 9,576,879 28Goodwill (Notes 4, 5 and 15) 2,845,831 7 1,139,559 3Other intangible assets (Notes 4, 5 and 16) 1,317,440 3 227,686 1Deferred tax assets (Notes 4 and 23) 369,156 1 217,989 1Prepayments for business facilities 47,578 - 65,753 -Prepayments for investments (Note 26) - - 2,279,881 7Long-term prepayments for leases (Note 17) 325,224 1 100,875 -Other noncurrent assets (Note 28) 51,145 - 59,183 -
Total noncurrent assets 17,357,242 44 15,893,387 47
TOTAL $ 38,538,953 100 $ 33,979,133 100
LIABILITIES AND EQUITY
CURRENT LIABILITIESShort-term borrowings (Notes 18 and 30) $ 483,750 1 $ 880,625 3Financial liabilities at fair value through profit or loss - current (Notes 4, 7 and 30) 10,231 - 6,352 -Trade payables (Note 31) 4,983,381 13 3,226,069 9Other payables (Notes 19 and 22) 3,902,499 10 3,380,317 10Current tax liabilities (Notes 4 and 23) 1,229,400 3 1,057,226 3Short-term warranty provisions (Note 4) 167,122 - 145,646 -Other current liabilities 659,228 2 546,295 2
Total current liabilities 11,435,611 29 9,242,530 27
NONCURRENT LIABILITIESDeferred tax liabilities (Notes 4 and 23) 1,362,687 4 938,491 3Net defined benefit liabilities (Notes 4 and 20) 212,360 1 183,540 1Other noncurrent liabilities 141,398 - 160,795 -
Total noncurrent liabilities 1,716,445 5 1,282,826 4
Total liabilities 13,152,056 34 10,525,356 31
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANYShare capital
Ordinary shares 6,330,741 16 6,318,531 19Advance receipts for share capital 100 - - -
Total share capital 6,330,841 16 6,318,531 19Capital surplus 6,058,884 16 5,587,555 16Retained earnings
Legal reserve 4,473,276 12 3,962,842 12Unappropriated earnings 8,435,785 22 7,098,449 21
Total retained earnings 12,909,061 34 11,061,291 33Other equity
Exchange differences on translation of foreign financial statements (197,633) - 271,859 1Unrealized gains on available-for-sale financial assets 112,429 - 68,265 -
Total other equity (85,204) - 340,124 1
Total equity attributable to owners of the Company 25,213,582 66 23,307,501 69
NON-CONTROLLING INTERESTS 173,315 - 146,276 -
Total equity 25,386,897 66 23,453,777 69
TOTAL $ 38,538,953 100 $ 33,979,133 100
The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche audit report dated March 6, 2017)
23
ADVANTECH CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)
2016 2015Amount % Amount %
OPERATING REVENUE (Note 31)Sales $ 40,839,800 97 $ 36,978,961 97Other operating revenue 1,162,398 3 1,021,621 3
Total operating revenue 42,002,198 100 38,000,582 100
OPERATING COSTS (Notes 11, 22 and 31) 24,884,649 59 22,655,592 59
GROSS PROFIT 17,117,549 41 15,344,990 41
OPERATING EXPENSES (Notes 22 and 31)Selling and marketing expenses 4,260,554 10 3,889,856 10General and administrative expenses 2,576,210 6 1,982,879 5Research and development expenses 3,649,292 9 3,543,748 10
Total operating expenses 10,486,056 25 9,416,483 25
OPERATING PROFIT 6,631,493 16 5,928,507 16
NONOPERATING INCOMEShare of the profit of associates accounted for using
the equity method (Notes 4 and 13) 65,562 - 110,226 -Interest income 15,989 - 40,613 -Gains (losses) on disposal of property, plant and
equipment (Note 4) 289,633 1 (5,410) -Gains (losses) on disposal of investments (Note 4) (4,873) - 202,458 1Foreign exchange gains (losses), net (Notes 4, 22
and 33) (205,812) - (186,889) -Gains on financial instruments at fair value through
profit or loss (Note 4) 150,982 - 83,798 -Dividend income 132,472 - 139,725 -Other income (Note 8) 78,855 - 121,329 -Finance costs (Note 22) (11,556) - (10,041) -Losses on financial instruments at fair value through
profit or loss (Note 4) (43,324) - (130,409) -Other losses (2,056) - (4,372) -
Total nonoperating income 465,872 1 361,028 1
PROFIT BEFORE INCOME TAX 7,097,365 17 6,289,535 17
INCOME TAX EXPENSE (Notes 4 and 23) 1,408,411 3 1,162,560 3
NET PROFIT FOR THE YEAR 5,688,954 14 5,126,975 14(Continued)
24
ADVANTECH CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)
2016 2015Amount % Amount %
OTHER COMPREHENSIVE INCOME (LOSS)Items that will not be reclassified subsequently to
profit or loss (Notes 20, 21 and 23):Remeasurement of defined benefit plans $ (31,247) - $ (19,303) -Share of the other comprehensive income (loss) of
associates accounted for using the equity method 1,574 - (2,424) -
Income tax related to items that will not be reclassified 5,312 - 3,281 -
Items that may be reclassified subsequently to profit or loss (Notes 4, 21 and 23):Exchange differences on translating foreign
operations (576,926) (1) (101,490) -Unrealized gains (losses) on available-for-sale
financial assets 44,164 - (495,012) (2)Share of the other comprehensive income of
associates (4,135) - 2,449 -Income tax related to items that may be
reclassified subsequently to profit or loss 96,161 - 13,620 -
Other comprehensive income (loss) for the year, net of income tax (465,097) (1) (598,879) (2)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR $ 5,223,857 12 $ 4,528,096 12
NET PROFIT ATTRIBUTABLE TO:Owners of the Company $ 5,666,862 13 $ 5,104,346 13Non-controlling interests 22,092 - 22,629 -
$ 5,688,954 14 $ 5,126,975 13
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:Owners of the Company $ 5,217,251 12 $ 4,524,603 12Non-controlling interests 6,606 - 3,493 -
$ 5,223,857 12 $ 4,528,096 12(Continued)
25
ADVANTECH CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)
2016 2015Amount % Amount %
EARNINGS PER SHARE (NEW TAIWAN DOLLARS; Note 24)Basic $ 8.96 $ 8.08Diluted $ 8.90 $ 8.05
The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche audit report dated March 6, 2017) (Concluded)
26
AD
VA
NT
EC
H C
O.,
LT
D. A
ND
SU
BSI
DIA
RIE
S
CO
NSO
LID
AT
ED
ST
AT
EM
EN
TS
OF
CH
AN
GE
S IN
EQ
UIT
Y
FOR
TH
E Y
EA
RS
EN
DE
D D
EC
EM
BER
31,
2016
AN
D20
15(I
n T
hous
ands
of N
ew T
aiw
an D
olla
rs)
Equ
ity A
ttri
buta
ble
to O
wne
rs o
f the
Com
pany
Oth
er E
quity
(Not
e 21
)Is
sued
Cap
ital (
Not
es 2
1an
d 25
)E
xcha
nge
Unr
ealiz
ed G
ain
Adv
ance
Rec
eipt
sC
apita
l Sur
plus
Ret
aine
d E
arni
ngs (
Not
es 2
1an
d 27
)D
iffer
ence
s on
(Los
s) o
nN
on-c
ontr
ollin
gfo
r O
rdin
ary
(Not
es 2
1, 2
5U
napp
ropr
iate
dT
rans
latin
gA
vaila
ble-
for-
sale
Inte
rest
sSh
are
Cap
ital
Shar
esT
otal
and
27)
Leg
al R
eser
veE
arni
ngs
Tot
alFo
reig
n O
pera
tions
Fina
ncia
l Ass
ets
Tot
al(N
otes
21
and
27)
Tot
al E
quity
BA
LAN
CE
AT
JAN
UA
RY
1, 2
015
$6,
301,
031
$11
,060
$6,
312,
091
$5,
306,
958
$3,
472,
064
$6,
353,
273
$9,
825,
337
$33
8,35
6$
563,
277
$22
,346
,019
$18
7,00
0$
22,5
33,0
19
App
ropr
iatio
n of
the
2014
ear
rings
Lega
l res
erve
--
--
490,
778
(490
,778
)-
--
--
-C
ash
divi
dend
s on
ordi
nary
sha
res
--
--
-(3
,787
,255
)(3
,787
,255
)-
-(3
,787
,255
)-
(3,7
87,2
55)
Rec
ogni
tion
of e
mpl
oyee
shar
e op
tions
by
the
Com
pany
17,5
00(1
1,06
0)6,
440
24,4
38-
--
--
30,8
78-
30,8
78
Com
pens
atio
n co
st re
cogn
ized
for e
mpl
oyee
shar
e op
tions
--
-26
1,87
7-
--
--
261,
877
-26
1,87
7
Cha
nge
in c
apita
l sur
plus
from
inve
stm
ents
in a
ssoc
iate
s acc
ount
ed fo
r usi
ng th
e eq
uity
met
hod
--
-2,
172
--
--
-2,
172
-2,
172
Diff
eren
ce b
etw
een
cons
ider
atio
n pa
id a
nd c
arry
ing
amou
nt o
f sub
sidi
arie
s acq
uire
d-
--
(11,
457)
-(6
2,90
3)(6
2,90
3)-
-(7
4,36
0)(4
4,21
7)(1
18,5
77)
Cha
nges
in p
erce
ntag
e of
ow
ners
hip
inte
rest
in s
ubsi
diar
ies
--
-3,
567
--
--
-3,
567
-3,
567
Net
pro
fit fo
r the
yea
r end
ed D
ecem
ber 3
1, 2
015
--
--
-5,
104,
346
5,10
4,34
6-
-5,
104,
346
22,6
295,
126,
975
Oth
er c
ompr
ehen
sive
loss
for t
he y
ear e
nded
Dec
embe
r 31,
201
5, n
et o
f inc
ome
tax
--
--
-(1
8,23
4)(1
8,23
4)(6
6,49
7)(4
95,0
12)
(579
,743
)(1
9,13
6)(5
98,8
79)
Tota
l com
preh
ensi
ve in
com
e fo
r the
yea
r end
ed D
ecem
ber 3
1, 2
015
--
--
-5,
086,
112
5,08
6,11
2(6
6,49
7)(4
95,0
12)
4,52
4,60
33,
493
4,52
8,09
6
BA
LAN
CE
AT
DEC
EMBE
R 3
1, 2
015
6,31
8,53
1-
6,31
8,53
15,
587,
555
3,96
2,84
27,
098,
449
11,0
61,2
9127
1,85
968
,265
23,3
07,5
0114
6,27
623
,453
,777
App
ropr
iatio
n of
the
2015
ear
rings
Lega
l res
erve
--
--
510,
434
(510
,434
)-
--
--
-C
ash
divi
dend
s on
ordi
nary
sha
res
--
--
-(3
,791
,118
)(3
,791
,118
)-
-(3
,791
,118
)-
(3,7
91,1
18)
Rec
ogni
tion
of e
mpl
oyee
shar
e op
tions
by
the
Com
pany
12,2
1010
012
,310
104,
758
--
--
-11
7,06
8-
117,
068
Com
pens
atio
n co
st re
cogn
ized
for e
mpl
oyee
shar
e op
tions
--
-33
8,19
4-
--
--
338,
194
-33
8,19
4
Cha
nge
in c
apita
l sur
plus
from
inve
stm
ents
in a
ssoc
iate
s acc
ount
ed fo
r usi
ng th
e eq
uity
met
hod
--
-10
,533
--
--
-10
,533
-10
,533
Diff
eren
ce b
etw
een
cons
ider
atio
n pa
id a
nd c
arry
ing
amou
nt o
f sub
sidi
arie
s acq
uire
d-
--
17,8
44-
(3,6
91)
(3,6
91)
--
14,1
5320
,433
34,5
86
Net
pro
fit fo
r the
yea
r end
ed D
ecem
ber 3
1, 2
016
--
--
-5,
666,
862
5,66
6,86
2-
-5,
666,
862
22,0
925,
688,
954
Oth
er c
ompr
ehen
sive
inco
me
for y
ear e
nded
Dec
embe
r 31,
201
6, n
et o
f inc
ome
tax
--
--
-(2
4,28
3)(2
4,28
3)(4
69,4
92)
44,1
64(4
49,6
11)
(15,
486)
(465
,097
)
Tota
l com
preh
ensi
ve in
com
e fo
r the
yea
r end
ed D
ecem
ber 3
1, 2
016
--
--
-5,
642,
579
5,64
2,57
9(4
69,4
92)
44,1
645,
217,
251
6,60
65,
223,
857
BA
LAN
CE
AT
DEC
EMBE
R 3
1, 2
016
$6,
330,
741
$10
0$
6,33
0,84
1$
6,05
8,88
4$
4,47
3,27
6$
8,43
5,78
5$
12,9
09,0
61$
(197
,633
)$
112,
429
$25
,213
,582
$17
3,31
5$
25,3
86,8
97
The
acco
mpa
nyin
g no
tes a
re a
n in
tegr
al p
art o
f the
con
solid
ated
fina
ncia
l sta
tem
ents
.
(With
Del
oitte
& T
ouch
e au
dit r
epor
t dat
ed M
arch
6, 2
017)
27
ADVANTECH CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)
2016 2015
CASH FLOWS FROM OPERATING ACTIVITIESIncome before income tax $ 7,097,365 $ 6,289,535Adjustments for:
Depreciation expenses 582,040 568,241Amortization expenses 238,048 97,953Amortization expenses for prepayments of lease obligations 6,606 2,577Impairment loss recognized (reversal of impairment loss) on trade
receivables (24,032) 23,360Net loss (gain) on financial assets or liabilities at fair value through
profit or loss (107,658) 46,611Compensation cost of employee share options 338,194 261,877Finance costs 11,556 10,041Interest income (15,989) (40,613)Dividend income (132,472) (139,725)Share of profit of associates (65,562) (110,226)Loss (gain) on disposal of property, plant and equipment (289,633) 5,410Loss (gain) on disposal of investments 4,873 (202,458)
Changes in operating assets and liabilitiesFinancial assets held for trading 174,898 (59,944)Notes receivable 5,641 (20,861)Trade receivables (738,014) (495,148)Trade receivables from related parties 12,807 (21,375)Other receivables 31,402 (1,724)Inventories (446,618) (87,310)Other current assets (8,478) 57,051Other financial assets - 18,650Trade payables 1,569,097 59,874Net defined benefit liabilities (2,427) (1,191)Other payables 600,572 147,567Short-term warranty provisions 21,476 4,292Other current liabilities 112,933 47,395Other noncurrent liabilities (17,857) 36,812
Cash generated from operations 8,958,768 6,496,671Interest received 15,989 38,076Dividends received 132,472 139,725Interest paid (6,285) (1,467)Income tax paid (1,086,369) (850,763)
Net cash generated from operating activities 8,014,575 5,822,242
CASH FLOWS FROM INVESTING ACTIVITIESAcquisition of available-for-sale financial assets (6,491,968) (9,713,717)Proceeds from sale of available-for-sale financial assets 5,364,552 11,766,699Acquisition of investments with no active market (6,945) 1,805Acquisition of investments accounted for using the equity method (135,000) -
(Continued)
28
ADVANTECH CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)
2016 2015
Increase in prepayments for investments $ - $ (2,279,881)Net cash flow on the acquisition of subsidiaries (1,369,432) -Dividends received from associates 88,313 81,917Acquisition of property, plant and equipment (1,448,423) (1,333,481)Proceeds from disposal of property, plant and equipment 587,468 22,867Decrease (increase) in refundable deposits 8,038 (16,567)Acquisition of intangible assets (73,435) (73,145)Increase in prepayments for business facilities 46,599 (18,015)
Net cash used from investing activities (3,430,233) (1,561,518)
CASH FLOWS FROM FINANCING ACTIVITIESIncrease (decrease) in short-term loans (396,875) 877,545Decrease in guarantee deposits received (1,540) (602)Payment of cash dividends (3,791,118) (3,787,255)Exercise of employee share options 117,068 30,878Increase (decrease) in non-controlling interests 34,586 (118,577)
Net cash used in financing activities (4,037,879) (2,998,011)
EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES (267,145) (26,461)
NET INCREASE IN CASH AND CASH EQUIVALENTS 279,318 1,236,252
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 4,358,259 3,122,007
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR $ 4,637,577 $ 4,358,259
The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche audit report dated March 6, 2017) (Concluded)
29
INDEPENDENT AUDITORS’ REPORT
The Board of Directors and the Shareholders Advantech Co., Ltd.
Opinion
We have audited the accompanying financial statements of Advantech Co., Ltd. (the “Company”), which comprise the balance sheets as of December 31, 2016 and 2015, and the statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2016 and 2015, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.
Basis for Opinion
We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2016. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matters on the financial statements for the year ended December 31, 2016 were as follows:
Investments accounted for using the equity method
The Company and its subsidiaries acquired 100% share of B+B SmartWorx, Inc. (B+B) for NT$3,296,048 thousand in January 4, 2016 and recognized the acquisition as investment accounted for using the equity method.
30
The evaluation on fair value of the assets, liabilities, and amount of goodwill as of the date of acquisition was based on the specialists’ Purchase Price Allocation Report that involved several financial assumptions and inputs. The judgment of related accounting estimates will affect the presentation of accounts on the financial statements. After considering that the acquisition was a significant event and was transacted during the period of financial statements with a material impact on the financial statements, accuracy of merger transaction of B+B conducted by the Company was deemed to be a key audit matter.
Our key audit procedures performed in respect of the assets and liabilities as of the date of acquisition included the following:
1. Tested the acquisition balance sheet prepared by the management and checked the record bymatching against the fair value of the assets and liabilities as of the date of acquisition.
2. Recalculated the value of goodwill recognized in the acquisition balance sheet.
Impairment assessment of investments accounted for using the equity method
The excess of cost of acquisition of investments accounted for using the equity method over the fair value of investees’ identifiable assets and liability as of the dates of acquisition should be recognized as goodwill. If there is any indication that goodwill is impaired, the management should assess if the carrying amount of goodwill is impaired. We have expressed our concerns on the related risks of impairment assessment on goodwill arising from acquisition of B+B since the impairment assessment of goodwill is based on the management’s significant judgment that involved assumptions of the future profitability and costs of equity and debts; the impairment of goodwill is hence recognized as a critical accounting estimate in Note 5 to the financial statements.
Our key audit procedures performed in respect of the above area included the following:
When evaluating the impairment assessment, we tested the management’s assumptions and inputs used for testing the impairment for goodwill, including cash flow projections and discount rates.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance, including supervisors, are responsible for overseeing the Company’s financial reporting process.
31
Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
1. Identify and assess the risks of material misstatement of the financial statements, whether dueto fraud or error, design and perform audit procedures responsive to those risks, and obtainaudit evidence that is sufficient and appropriate to provide a basis for our opinion. The riskof not detecting a material misstatement resulting from fraud is higher than for one resultingfrom error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,or the override of internal control.
2. Obtain an understanding of internal control relevant to the audit in order to design auditprocedures that are appropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the Company's internal control.
3. Evaluate the appropriateness of accounting policies used and the reasonableness of accountingestimates and related disclosures made by management.
4. Conclude on the appropriateness of management’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty existsrelated to events or conditions that may cast significant doubt on the Company’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we arerequired to draw attention in our auditors’ report to the related disclosures in the financialstatements or, if such disclosures are inadequate, to modify our opinion. Our conclusions arebased on the audit evidence obtained up to the date of our auditors’ report. However, futureevents or conditions may cause the Company to cease to continue as a going concern.
5. Evaluate the overall presentation, structure and content of the financial statements, includingthe disclosures, and whether the financial statements represent the underlying transactions andevents in a manner that achieves fair presentation.
6. Obtain sufficient and appropriate audit evidence regarding the financial information of entitiesor business activities within the Company to express an opinion on the financial statements.We are responsible for the direction, supervision and performance of the audit. We remainsolely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
32
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements for the year ended December 31, 2016 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partners on the audit resulting in this independent auditors’ report are Meng-Chieh Chiu and Chin-Hsiang Chen.
Deloitte & Touche Taipei, Taiwan Republic of China
March 6, 2017
Notice to Readers
The accompanying financial statements are intended only to present the financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such financial statements are those generally applied in the Republic of China.
For the convenience of readers, the independent auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and financial statements shall prevail.
33
ADVANTECH CO., LTD.
BALANCE SHEETS DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)
2016 2015ASSETS Amount % Amount %
CURRENT ASSETSCash and cash equivalents (Notes 4 and 6) $ 2,008,247 6 $ 815,293 3Financial assets at fair value through profit or loss - current (Notes 4, 7 and 25) 34,348 - 7,391 -Available-for-sale financial assets - current (Notes 4, 8 and 25) 700,269 2 - -Notes receivable (Notes 4, 9 and 26) 67,223 - 55,480 -Trade receivables (Notes 4 and 9) 1,543,604 5 1,135,240 4Trade receivables from related parties (Notes 4 and 26) 3,908,448 11 3,977,999 13Other receivables 105,929 - 113,056 -Other receivables from related parties (Note 26) 19,002 - 15,596 -Inventories (Notes 4 and 10) 1,935,873 6 1,673,156 5Other current assets 38,361 - 60,318 -
Total current assets 10,361,304 30 7,853,529 25
NONCURRENT ASSETSAvailable-for-sale financial assets - noncurrent (Notes 4, 8 and 25) 1,694,801 5 1,700,814 6Investments accounted for using the equity method (Notes 4 and 11) 15,208,839 44 13,138,225 42Property, plant and equipment (Notes 4 and 12) 6,938,084 20 6,278,109 20Goodwill (Notes 4 and 13) 111,599 - 111,599 -Other intangible assets (Note 4) 78,321 - 74,049 -Deferred tax assets (Notes 4 and 18) 136,130 1 114,710 1Prepayments for business facilities 22,676 - 15,489 -Prepayment for investments - - 1,968,044 6Other noncurrent assets 5,661 - 10,837 -
Total noncurrent assets 24,196,111 70 23,411,876 75
TOTAL $ 34,557,415 100 $ 31,265,405 100
LIABILITIES AND EQUITY
CURRENT LIABILITIESFinancial liabilities at fair value through profit or loss - current (Notes 4, 7 and 25) $ 8,845 - $ 6,352 -Trade payables 1,550,969 4 899,480 3Trade payables to related parties (Note 26) 2,610,642 8 2,687,130 9Other payables (Notes 14 and 17) 2,699,374 8 2,255,915 7Current tax liabilities (Notes 4 and 18) 1,036,650 3 853,769 3Short-term warranty provision (Note 4) 49,155 - 41,410 -Other current liabilities 153,992 - 72,312 -
Total current liabilities 8,109,627 23 6,816,368 22
NONCURRENT LIABILITIESDeferred tax liabilities (Notes 4 and 18) 988,099 3 927,732 3Net defined benefit liabilities (Notes 4, 15 and 17) 211,170 1 182,172 -Other noncurrent liabilities 34,937 - 31,632 -
Total noncurrent liabilities 1,234,206 4 1,141,536 3
Total liabilities 9,343,833 27 7,957,904 25
EQUITYShare capital
Ordinary shares 6,330,741 18 6,318,531 20Advance receipts for share capital 100 - - -
Total share capital 6,330,841 18 6,318,531 20Capital surplus 6,058,884 18 5,587,555 18Retained earnings
Legal reserve 4,473,276 13 3,962,842 13Unappropriated earnings 8,435,785 24 7,098,449 23
Total retained earnings 12,909,061 37 11,061,291 36Other equity
Exchange differences on translating foreign operations (197,633) - 271,859 1Unrealized gains (losses) on available-for-sale financial assets 112,429 - 68,265 -
Total other equity (85,204) - 340,124 1
Total equity 25,213,582 73 23,307,501 75
TOTAL $ 34,557,415 100 $ 31,265,405 100
The accompanying notes are an integral part of the financial statements.
(With Deloitte & Touche audit report dated March 6, 2017)
34
ADVANTECH CO., LTD.
STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)
2016 2015Amount % Amount %
OPERATING REVENUE (Notes 4 and 26)Sales $ 30,173,747 99 $ 28,673,906 99Other operating revenue 327,352 1 321,746 1
Total operating revenue 30,501,099 100 28,995,652 100
OPERATING COSTS (Notes 10, 17 and 26) 21,604,247 70 20,758,574 72
GROSS PROFIT 8,896,852 30 8,237,078 28
UNREALIZED LOSS ON TRANSACTIONS WITH SUBSIDIARIES AND ASSOCIATES (Note 4) (264,679) (1) (330,254) (1)
REALIZED GAIN ON TRANSACTIONS WITH SUBSIDIARIES AND ASSOCIATES (Note 4) 330,254 1 240,811 1
REALIZED GROSS PROFIT 8,962,427 30 8,147,635 28
OPERATING EXPENSES (Notes 17 and 26)Selling and marketing expenses 659,619 2 704,299 3General and administrative expenses 884,172 3 693,290 2Research and development expenses 2,641,219 9 2,568,723 9
Total operating expenses 4,185,010 14 3,966,312 14
OPERATING PROFIT 4,777,417 16 4,181,323 14
NONOPERATING INCOMEShare of the profit of subsidiaries and associates
accounted for using the equity method (Notes 4 and 11) 1,581,818 5 1,344,991 5
Interest income (Note 4) 539 - 1,665 -Gains (losses) on disposal of property, plant and
equipment (Note 4) 146,954 1 (161) -Gains on disposal of investments (Notes 4 and 16) 1,431 - 198,848 1Foreign exchange losses, net (Notes 4, 17 and 28) (140,689) - (88,859) -Gains on financial instruments at fair value through
profit or loss (Note 4) 121,348 - 83,798 -Dividend income (Note 4) 98,800 - 105,445 -Other income (Notes 8 and 26) 101,777 - 112,567 -Finance costs (Note 17) (4,163) - - -
(Continued)
35
ADVANTECH CO., LTD.
STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)
2016 2015Amount % Amount %
Losses on financial instruments at fair value through profit or loss (Note 4) $ (41,381) - $ (67,063) -
Other losses (155) - (53) -
Total nonoperating income 1,866,279 6 1,691,178 6
PROFIT BEFORE INCOME TAX 6,643,696 22 5,872,501 20
INCOME TAX EXPENSE (Notes 4 and 18) 976,834 3 768,155 2
NET PROFIT FOR THE YEAR 5,666,862 19 5,104,346 18
OTHER COMPREHENSIVE INCOMEItems that will not be reclassified subsequently to
profit or loss:Remeasurement of defined benefit plans (Note 15) (31,039) - (18,736) -Share of the other comprehensive loss of
subsidiaries and associates accounted for using the equity method (Note 11) 1,479 - (2,683) -
Income tax relating to items that will not be reclassified subsequently to profit or loss (Note 18) 5,277 - 3,185 -
(24,283) - (18,234) -Items that may be reclassified subsequently to profit
or loss:Exchange differences on translating foreign
operations (Notes 4 and 16) (561,518) (2) (82,566) -Unrealized gains (losses) on available-for-sale
financial assets (Notes 4 and 16) (5,765) - (557,594) (2)Share of other comprehensive income (loss) of
subsidiaries and associates accounted for using the equity method (Notes 4, 11 and 16) 45,794 - 65,031 -
Income tax relating to item that may be reclassified subsequently to profit or loss (Notes 4, 16 and 18) 96,161 - 13,620 -
(425,328) (2) (561,509) (2)
Other comprehensive income (loss) for the year, net of income tax (449,611) (2) (579,743) (2)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR $ 5,217,251 17 $ 4,524,603 16
(Continued)
36
ADVANTECH CO., LTD.
STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)
2016 2015Amount % Amount %
EARNINGS PER SHARE (Note 19)Basic $8.96 $8.08Diluted $8.90 $8.05
The accompanying notes are an integral part of the financial statements.
(With Deloitte & Touche audit report dated March 6, 2017) (Concluded)
37
AD
VA
NT
EC
H C
O.,
LT
D.
STA
TE
ME
NT
S O
F C
HA
NG
ES
IN E
QU
ITY
FO
R T
HE
YE
AR
S E
ND
ED
DE
CE
MB
ER
31,
201
6 A
ND
201
5 (I
n T
hous
ands
of N
ew T
aiw
an D
olla
rs)
Oth
er E
quity
(Not
es 4
and
16)
Exc
hang
e D
iffer
ence
s on
Unr
ealiz
ed G
ain
Issu
ed C
apita
l (N
otes
16
and
20)
Cap
ital S
urpl
us
Ret
aine
d E
arni
ngs (
Not
es 4
,16
and
17)
Tra
nsla
ting
(Los
s) o
n A
dvan
ce R
ecei
pts
(Not
es 4
, 16
Una
ppro
pria
ted
Fore
ign
Ava
ilabl
e-fo
r-sa
le
Shar
e C
apita
lfo
r Sh
are
Cap
ital
Tot
alan
d 20
)L
egal
Res
erve
Ear
ning
sT
otal
Ope
ratio
nsFi
nanc
ial A
sset
sT
otal
Equ
ity
BA
LAN
CE
AT
JAN
UA
RY
1, 2
015
$6,
301,
031
$11
,060
$6,
312,
091
$5,
306,
958
$3,
472,
064
$6,
353,
273
$9,
825,
337
$33
8,35
6$
563,
277
$22
,346
,019
App
ropr
iatio
n of
the
2014
ear
rings
Lega
l res
erve
--
--
490,
778
(490
,778
)-
--
-C
ash
divi
dend
s dis
tribu
ted
by th
e C
ompa
ny-
--
--
(3,7
87,2
55)
(3,7
87,2
55)
--
(3,7
87,2
55)
Issu
e of
ord
inar
y sh
ares
und
er e
mpl
oyee
shar
e op
tions
17,5
00(1
1,06
0)6,
440
24,4
38-
--
--
30,8
78
Com
pens
atio
n co
st re
cogn
ized
for e
mpl
oyee
shar
e op
tions
--
-26
1,87
7-
--
--
261,
877
Cha
nge
in c
apita
l sur
plus
from
inve
stm
ents
in a
ssoc
iate
s acc
ount
ed fo
r usi
ng
equi
ty m
etho
d-
--
2,17
2-
--
--
2,17
2
Diff
eren
ce b
etw
een
cons
ider
atio
ns a
nd c
arry
ing
amou
nts o
f sub
sidi
arie
s acq
uire
d or
disp
osed
of
--
-(1
1,45
7)-
(62,
903)
(62,
903)
--
(74,
360)
Cha
nges
in p
erce
ntag
e of
ow
ners
hip
inte
rest
in su
bsid
iarie
s-
--
3,56
7-
--
--
3,56
7
Net
pro
fit fo
r the
yea
r end
ed D
ecem
ber 3
1, 2
015
--
--
-5,
104,
346
5,10
4,34
6-
-5,
104,
346
Oth
er c
ompr
ehen
sive
inco
me
for t
he y
ear e
nded
Dec
embe
r 31,
201
5, n
et o
f in
com
e ta
x-
--
--
(18,
234)
(18,
234)
(66,
497)
(495
,012
)(5
79,7
43)
Tota
l com
preh
ensi
ve in
com
e fo
rthe
yea
r end
ed D
ecem
ber 3
1, 2
015
--
--
-5,
086,
112
5,08
6,11
2(6
6,49
7)(4
95,0
12)
4,52
4,60
3
BA
LAN
CE
AT
DEC
EMB
ER 3
1, 2
015
6,31
8,53
1-
6,31
8,53
15,
587,
555
3,96
2,84
27,
098,
449
11,0
61,2
9127
1,85
968
,265
23,3
07,5
01
App
ropr
iatio
n of
the
2015
ear
rings
Lega
l res
erve
--
--
510,
434
(510
,434
)-
--
-C
ash
divi
dend
s dis
tribu
ted
by th
e C
ompa
ny-
--
--
(3,7
91,1
18)
(3,7
91,1
18)
--
(3,7
91,1
18)
Issu
e of
ord
inar
y sh
ares
und
er e
mpl
oyee
shar
e op
tions
12,2
1010
012
,310
104,
758
--
--
-11
7,06
8
Com
pens
atio
n co
st re
cogn
ized
for e
mpl
oyee
shar
e op
tions
--
-33
8,19
4-
--
--
338,
194
Cha
nge
in c
apita
l sur
plus
from
inve
stm
ents
in a
ssoc
iate
s acc
ount
ed fo
r usi
ng
equi
ty m
etho
d-
--
10,5
33-
--
--
10,5
33
Diff
eren
ce b
etw
een
cons
ider
atio
ns a
nd c
arry
ing
amou
nts o
f sub
sidi
arie
s acq
uire
d or
disp
osed
of
--
-17
,844
-(3
,691
)(3
,691
)-
-14
,153
Net
pro
fit fo
r the
yea
r end
ed D
ecem
ber 3
1, 2
016
--
--
-5,
666,
862
5,66
6,86
2-
-5,
666,
862
Oth
er c
ompr
ehen
sive
inco
me
for t
he y
ear e
nded
Dec
embe
r 31,
201
6, n
et o
f in
com
e ta
x-
--
--
(24,
283)
(24,
283)
(469
,492
)44
,164
(449
,611
)
Tota
l com
preh
ensi
ve in
com
e fo
r the
yea
r end
ed D
ecem
ber 3
1, 2
016
--
--
-5,
642,
579
5,64
2,57
9(4
69,4
92)
44,1
645,
217,
251
BA
LAN
CE
AT
DEC
EMB
ER 3
1, 2
016
$6,
330,
741
$10
0$
6,33
0,84
1$
6,05
8,88
4$
4,47
3,27
6$
8,43
5,78
5$
12,9
09,0
61$
(197
,633
)$
112,
429
$25
,213
,582
The
acco
mpa
nyin
g no
tes a
re a
n in
tegr
al p
art o
f the
fina
ncia
l sta
tem
ents
.
(With
Del
oitte
& T
ouch
e au
dit r
epor
t dat
ed M
arch
6, 2
017)
38
ADVANTECH CO., LTD.
STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)
2016 2015
CASH FLOWS FROM OPERATING ACTIVITIESIncome before income tax $ 6,643,696 $ 5,872,501Adjustments for:
Depreciation expenses 239,135 242,916Amortization expenses 78,294 74,874Impairment loss recognized (reversal of impairment loss) of trade
receivables 96 (2,203)Net gain on financial assets or liabilities at fair value through profit
or loss (79,967) (16,735)Finance costs 4,163 -Interest income (539) (1,665)Dividend income (98,800) (105,445)Compensation cost of employee share options 338,194 261,877Share of profit of subsidiaries and associates accounted for using the
equity method (1,581,818) (1,344,991)Loss (gain) on disposal of property, plant and equipment (146,954) 161Gain on disposal of investments (1,431) (198,848)Realized loss (gain) on the transactions with subsidiaries and
associates (65,575) 89,443Changes in operating assets and liabilities
Financial assets held for trading 55,503 21,877Notes receivable (11,743) (10,161)Trade receivables (408,460) (139,295)Trade receivables to related parties 69,551 36,412Other receivables 7,127 (26,992)Other receivables to related parties (3,406) 45Inventories (262,717) (268,954)Other current assets 21,957 (8,670)Other financial assets - 18,650Trade payables 651,489 121,548Trade payables to related parties (76,488) 253,194Other payables 357,649 185,158Short-term warranty provision 7,745 5,291Net defined benefit liabilities (2,041) (813)Other current liabilities 81,680 11,088Other noncurrent liabilities 3,305 (1,975)
Cash generated from operations 5,819,645 5,068,288Interest received 539 1,665Dividend received 98,800 105,445Interest paid (4,163) -Income tax paid (653,568) (542,066)
Net cash generated from operating activities 5,261,253 4,633,332(Continued)
39
ADVANTECH CO., LTD.
STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)
2016 2015
CASH FLOWS FROM INVESTING ACTIVITIESPurchase of available-for-sale financial assets (4,128,000) (3,710,080)Proceeds from sale of available-for-sale financial assets 3,429,410 5,754,213Acquisition of investments accounted for using equity method (293,281) (688,577)Proceeds from disposal of investments accounted for using the equity
method 336,958 -Prepayment for investments - (1,968,044)Proceeds of the capital reduction of investments accounted for using
the equity method 232,330 42,927Payments for property, plant and equipment (930,598) (1,181,375)Proceeds from disposal of property, plant and equipment 239,507 294Decrease in refundable deposits 5,176 187Payments for intangible assets (76,875) (62,714)Proceeds from disposal of intangible assets 58 31Decrease in prepayments for equipment 11,809 14,609Dividends received from subsidiaries and associates 779,257 687,589
Net cash used in investing activities (394,249) (1,110,940)
CASH FLOWS FROM FINANCING ACTIVITIESIncrease in guarantee deposits received - (119)Cash dividends paid (3,791,118) (3,787,255)Exercise of employee share options 117,068 30,878
Net cash used in financing activities (3,674,050) (3,756,496)
NET INCREASE (DECREASE) IN CASH AND CASHEQUIVALENTS 1,192,954 (234,104)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 815,293 1,049,397
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR $ 2,008,247 $ 815,293
The accompanying notes are an integral part of the financial statements.
(With Deloitte & Touche audit report dated March 6, 2017) (Concluded)
40
<Attachment IV>
Advantech Co., Ltd.
2016 Profit Distribution Table
Item Total
Unappropriated retained earnings - beginning 2,796,896,578
Less: Long-term equity investments (3,691,230)
Less: Actuarial loss recognized in retained earnings (24,282,918)
Add: Net income 5,666,862,329
Less: 10% legal reserve appropriated (566,686,233)
Less: Special reserve appropriated (85,203,650)
Current earnings available for distribution 7,783,894,876
Distributions:
Common stock cash dividend ( Dividends Per Share $6.3) (3,988,366,830)
Share dividends ( Dividends Per Share $1 ) (633,074,100)
Unappropriated retained earnings - ending 3,162,453,946
Chairman: K.C. Liu President: Chaney Ho Chief Financial officer: Rorie Kang
41
< A
ttach
men
t V>
A
dvan
tech
Co.
, Ltd
.C
orpo
rate
Cha
rter (
Arti
cles
of I
ncor
pora
tion)
Arti
cle A
men
dmen
ts T
able
N
o.
Aft
er a
men
dm
ent
Bef
ore
amen
dm
ent
Rem
ark
Arti
cle
13
The
com
pany
has
sev
en ~
nin
e di
rect
ors.N
omin
ated
for
a te
rm o
f th
ree
year
s an
d th
ey a
re e
lect
ed f
rom
the
ca
pabl
e ca
ndid
ates
in
the
shar
ehol
ders
’ m
eetin
g; a
lso,
th
ey c
an b
e re
-ele
cted
. Th
ere
mus
t be
at
leas
t tw
o in
depe
nden
t dire
ctor
s (no
t les
s tha
n on
e fif
th o
f the
tota
l nu
mbe
r of
dire
ctor
s) o
ut o
f th
e nu
mbe
r of
dire
ctor
s re
ferr
ed t
o ab
ove.
The
ind
epen
dent
dire
ctor
s ar
e to
be
elec
ted
from
th
e ca
ndid
ates
in
th
e sh
areh
olde
rs’
mee
ting.
Th
e pr
ofes
sion
al
qual
ifica
tions
of
th
e in
depe
nden
t di
rect
ors,
shar
ehol
ding
s, lim
itatio
n of
pa
rt-tim
e jo
b, th
e no
min
atio
n an
d ap
poin
tmen
t met
hod,
an
d ot
her
mat
ters
to
be
co
mpl
ied
with
m
ust
be
proc
esse
d ac
cord
ing
to t
he r
elev
ant
prov
isio
ns o
f th
e co
mpe
tent
aut
horit
ies.
The
com
pany
ha
s se
ven
~ ni
ne
dire
ctor
s an
d th
ree
supe
rvis
ors
who
are
nom
inat
ed f
or a
term
of
thre
e ye
ars
and
elec
ted
from
th
e ca
pabl
e ca
ndid
ates
in
th
e sh
areh
olde
rs’ m
eetin
g; a
lso,
they
can
be
re-e
lect
ed. T
here
m
ust b
e at
leas
t tw
o in
depe
nden
t dire
ctor
s (n
ot le
ss th
an
one
fifth
of
the
tota
l nu
mbe
r of
dire
ctor
s) o
ut o
f th
e nu
mbe
r of
dire
ctor
s re
ferr
ed t
o ab
ove.
The
ind
epen
dent
di
rect
ors
are
to b
e el
ecte
d fr
om t
he c
andi
date
s in
the
sh
areh
olde
rs’
mee
ting.
The
pro
fess
iona
l qu
alifi
catio
ns o
f th
e in
depe
nden
t di
rect
ors,
shar
ehol
ding
s, lim
itatio
n of
pa
rt-tim
e jo
b, t
he n
omin
atio
n an
d ap
poin
tmen
t m
etho
d,
and
othe
r m
atte
rs to
be
com
plie
d w
ith m
ust b
e pr
oces
sed
acco
rdin
g to
the
rel
evan
t pr
ovis
ions
of
the
com
pete
nt
auth
oriti
es.
Sep
up th
e Aud
it C
omm
ittee
.
Arti
cle
13.2
The
exer
cise
of p
ower
by
the
audi
t com
mitt
ee is
as
follo
ws:
1.
Rev
iew
ing
the
oper
atio
ns a
nd fi
nanc
ial c
ondi
tion
ofth
e C
ompa
ny.
2.A
uditi
ng th
e ac
coun
ting
book
s and
doc
umen
ts o
f the
Com
pany
. 3.
Oth
er r
espo
nsib
ilitie
s as
sign
ed i
n ac
cord
ance
with
the
law
and
regu
latio
ns.
The
exer
cise
of p
ower
by
the
supe
rvis
ors i
s as f
ollo
ws:
1.
Rev
iew
ing
the
oper
atio
ns a
nd fi
nanc
ial c
ondi
tion
of th
eC
ompa
ny.
2.A
uditi
ng th
e ac
coun
ting
book
s and
doc
umen
ts o
f the
Com
pany
. 3.
Oth
er r
espo
nsib
ilitie
s as
sign
ed i
n ac
cord
ance
with
the
law
and
regu
latio
ns.
Sep
up th
e Aud
it C
omm
ittee
.
42
No.
A
fter
am
end
men
t B
efor
e am
end
men
t R
emar
k
Arti
cle
13.3
The
tota
l sha
res o
f the
Com
pany
hel
d by
all
dire
ctor
s to
be p
roce
ssed
in a
ccor
danc
e w
ith th
e “R
ules
and
Rev
iew
Pr
oced
ures
for D
irect
or a
nd S
uper
viso
r Sha
re
Ow
ners
hip
Rat
ios a
t Pub
lic C
ompa
nies
” pu
blis
hed
by
the
com
pete
nt a
utho
ritie
s.
The
tota
l sha
res o
f the
Com
pany
hel
d by
all
dire
ctor
s and
su
perv
isor
s are
to b
e pr
oces
sed
in a
ccor
danc
e w
ith th
e “R
ules
and
Rev
iew
Pro
cedu
res f
or D
irect
or a
nd
Supe
rvis
or S
hare
Ow
ners
hip
Rat
ios a
t Pub
lic C
ompa
nies
” pu
blis
hed
by th
e co
mpe
tent
aut
horit
ies.
Sep
up th
e Aud
it C
omm
ittee
.
Arti
cle
13.4
The
Com
pany
may
pur
chas
e lia
bilit
y in
sura
nce
for
dire
ctor
s thr
ough
out t
he te
nure
bas
ed o
n th
eir s
cope
of
resp
onsi
bilit
y.
The
Com
pany
may
pur
chas
e lia
bilit
y in
sura
nce
for
dire
ctor
s and
supe
rvis
ors t
hrou
ghou
t the
tenu
re b
ased
on
thei
r sco
pe o
f res
pons
ibili
ty.
Sep
up th
e Aud
it C
omm
ittee
.
Arti
cle
13.5
The
boar
d of
dire
ctor
s is
aut
horiz
ed t
o de
liber
ate
and
dete
rmin
e th
e re
mun
erat
ion
of a
ll di
rect
ors
acco
rdin
g to
th
eir p
artic
ipat
ion
in a
nd c
ontri
butio
n to
the
Com
pany
’s
busi
ness
ope
ratio
n an
d by
refe
rrin
g to
the
rem
uner
atio
n st
anda
rd o
f the
dom
estic
indu
stry
.
The
boar
d of
dire
ctor
s is
aut
horiz
ed t
o de
liber
ate
and
dete
rmin
e th
e re
mun
erat
ion
of
all
dire
ctor
s an
d su
perv
isor
s ac
cord
ing
to
thei
r pa
rtici
patio
n in
an
d co
ntrib
utio
n to
the
Com
pany
’s b
usin
ess
oper
atio
n an
d by
re
ferr
ing
to t
he r
emun
erat
ion
stan
dard
of
the
dom
estic
in
dust
ry.
Sep
up th
e Aud
it C
omm
ittee
.
Arti
cle
13.6
The
Com
pany
ha
s an
A
udit
Com
mitt
ee
setu
p in
ac
cord
ance
with
Arti
cle
14.4
of t
he S
ecur
ities
Exc
hang
e A
ct,
whi
ch
is
orga
nize
d by
al
l th
e in
depe
nden
t di
rect
ors.
The
exer
cise
of
po
wer
by
th
e A
udit
Com
mitt
ee a
nd it
s m
embe
rs a
nd th
e re
late
d m
atte
rs a
re
to b
e pr
oces
sed
in a
ccor
danc
e w
ith th
e pr
ovis
ions
of t
he
com
pete
nt a
utho
ritie
s.
The
Com
pany
ha
s an
A
udit
Com
mitt
ee
setu
p in
ac
cord
ance
with
Arti
cle
14.4
of
the
Secu
ritie
s Ex
chan
ge
Act
, whi
ch is
org
aniz
ed b
y al
l the
inde
pend
ent d
irect
ors.
The
exer
cise
of
pow
er b
y th
e A
udit
Com
mitt
ee a
nd i
ts
mem
bers
and
the
rel
ated
mat
ters
are
to
be p
roce
ssed
in
acco
rdan
ce
with
th
e pr
ovis
ions
of
th
e co
mpe
tent
au
thor
ities
. Sup
ervi
sors
will
be
disc
harg
ed o
n th
e da
te th
e A
udit
Com
mitt
ee e
stab
lishe
d, w
hich
will
be
in e
ffect
on
the
expi
ry d
ate
of th
e te
rm o
f offi
ce in
201
7.
Sep
up th
e Aud
it C
omm
ittee
.
Arti
cle
14.1
The
Com
pany
may
at
any
time
in c
ase
of e
mer
genc
y co
nven
e a
boar
d m
eetin
g an
d w
ith
the
dire
ctor
s
The
Com
pany
may
at
any
time
in c
ase
of e
mer
genc
y co
nven
e a
boar
d m
eetin
g an
d w
ith t
he d
irect
ors
and
Sep
up th
e Aud
it C
omm
ittee
.
43
No.
A
fter
am
end
men
t B
efor
e am
end
men
t R
emar
k
info
rmed
in w
ritin
g or
by
E-m
ail o
r fax
. su
perv
isor
s inf
orm
ed in
writ
ing
or b
y E-
mai
l or f
ax.
Arti
cle
18
The
Com
pany
’s b
oard
of
dire
ctor
s sh
all
at t
he e
nd o
f ea
ch f
isca
l ye
ar h
ave
the
follo
win
g co
mpo
sed
(1)
Bus
ines
s R
epor
t (2
) Fi
nanc
ial
Rep
orts
(3
) Pr
ofit
Dis
tribu
tion
Prop
osal
s fo
r ac
know
ledg
emen
t in
th
e sh
areh
olde
rs’ m
eetin
g.
The
Com
pany
’s b
oard
of
dire
ctor
s sh
all
at t
he e
nd o
f ea
ch
fisca
l ye
ar
have
th
e fo
llow
ing
com
pose
d (1
) B
usin
ess
Rep
ort
(2)
Fina
ncia
l R
epor
ts
(3)
Prof
it D
istri
butio
n Pr
opos
als
for t
he a
udit
of th
e su
perv
isor
s 30
da
ys
prio
r to
th
e sh
areh
olde
rs’
mee
ting
and
for
ackn
owle
dgem
ent i
n th
e sh
areh
olde
rs’ m
eetin
g.
Sep
up th
e Aud
it C
omm
ittee
.
Arti
cle
22
The
Cor
pora
te C
harte
r (A
rticl
e of
Inc
orpo
ratio
n) w
as
esta
blis
hed
on S
epte
mbe
r 25
, 19
81 (
the
first
tim
e ~
Twen
tieth
are
om
itted
). Th
e 21
st a
men
dmen
t of
the
Cor
pora
te C
harte
r (A
rticl
e of
Inco
rpor
atio
n) w
as m
ade
on M
ay 2
, 200
3.
The
22nd
am
endm
ent o
f the
Cor
pora
te C
harte
r (A
rticl
e of
Inco
rpor
atio
n) w
as m
ade
on M
ay 2
7, 2
003.
Th
e 23
rd a
men
dmen
t of
the
Cor
pora
te C
harte
r (A
rticl
e of
Inco
rpor
atio
n) w
as m
ade
on M
ay 2
4, 2
005.
Th
e 24
th a
men
dmen
t of
the
Cor
pora
te C
harte
r (A
rticl
e of
Inco
rpor
atio
n) w
as m
ade
on N
ovem
ber 1
8, 2
005.
Th
e 25
th a
men
dmen
t of
the
Cor
pora
te C
harte
r (A
rticl
e of
Inco
rpor
atio
n) w
as m
ade
on Ju
ne 1
6, 2
006.
Th
e 26
th a
men
dmen
t of
the
Cor
pora
te C
harte
r (A
rticl
e of
Inco
rpor
atio
n) w
as m
ade
on Ju
ne 1
5, 2
007.
Th
e 27
th a
men
dmen
t of
the
Cor
pora
te C
harte
r (A
rticl
e of
Inco
rpor
atio
n) w
as m
ade
on Ju
ne 1
2, 2
008.
Th
e 28
th a
men
dmen
t of
the
Cor
pora
te C
harte
r (A
rticl
e of
Inco
rpor
atio
n) w
as m
ade
on M
ay 1
5, 2
009.
Th
e 29
th a
men
dmen
t of
the
Cor
pora
te C
harte
r (A
rticl
e of
Inco
rpor
atio
n) w
as m
ade
on M
ay 1
8, 2
010.
Th
e 30
th a
men
dmen
t of
the
Cor
pora
te C
harte
r (A
rticl
e of
Inco
rpor
atio
n) w
as m
ade
on M
ay 2
5, 2
011.
The
Cor
pora
te C
harte
r (A
rticl
e of
Inc
orpo
ratio
n) w
as
esta
blis
hed
on S
epte
mbe
r 25
, 19
81 (
the
first
tim
e ~
Twen
tieth
are
om
itted
). Th
e 21
st a
men
dmen
t of t
he C
orpo
rate
Cha
rter (
Arti
cle
of
Inco
rpor
atio
n) w
as m
ade
on M
ay 2
, 200
3.
The
22nd
am
endm
ent
of t
he C
orpo
rate
Cha
rter
(Arti
cle
of In
corp
orat
ion)
was
mad
e on
May
27,
200
3.
The
23rd
am
endm
ent o
f the
Cor
pora
te C
harte
r (A
rticl
e of
In
corp
orat
ion)
was
mad
e on
May
24,
200
5.
The
24th
am
endm
ent o
f the
Cor
pora
te C
harte
r (A
rticl
e of
In
corp
orat
ion)
was
mad
e on
Nov
embe
r 18,
200
5.
The
25th
am
endm
ent o
f the
Cor
pora
te C
harte
r (A
rticl
e of
In
corp
orat
ion)
was
mad
e on
June
16,
200
6.
The
26th
am
endm
ent o
f the
Cor
pora
te C
harte
r (A
rticl
e of
In
corp
orat
ion)
was
mad
e on
June
15,
200
7.
The
27th
am
endm
ent o
f the
Cor
pora
te C
harte
r (A
rticl
e of
In
corp
orat
ion)
was
mad
e on
June
12,
200
8.
The
28th
am
endm
ent o
f the
Cor
pora
te C
harte
r (A
rticl
e of
In
corp
orat
ion)
was
mad
e on
May
15,
200
9.
The
29th
am
endm
ent o
f the
Cor
pora
te C
harte
r (A
rticl
e of
In
corp
orat
ion)
was
mad
e on
May
18,
201
0.
The
30th
am
endm
ent o
f the
Cor
pora
te C
harte
r (A
rticl
e of
In
corp
orat
ion)
was
mad
e on
May
25,
201
1.
Upd
ate
the
date
of
the
amen
dmen
t
44
No.
A
fter
am
end
men
t B
efor
e am
end
men
t R
emar
k
The
31st
am
endm
ent o
f th
e C
orpo
rate
Cha
rter
(Arti
cle
of In
corp
orat
ion)
was
mad
e on
June
13,
201
2.
The
32nd
am
endm
ent o
f the
Cor
pora
te C
harte
r (A
rticl
e of
Inco
rpor
atio
n) w
as m
ade
on Ju
ne 1
8, 2
014.
Th
e 33
rd a
men
dmen
t of
the
Cor
pora
te C
harte
r (A
rticl
e of
Inco
rpor
atio
n) w
as m
ade
on M
ay 2
8, 2
015.
Th
e 34
rd a
men
dmen
t of
the
Cor
pora
te C
harte
r (A
rticl
e of
Inco
rpor
atio
n) w
as m
ade
on M
ay 2
5, 2
016.
Th
e 35
rd a
men
dmen
t of
the
Cor
pora
te C
harte
r (A
rticl
e of
Inco
rpor
atio
n) w
as m
ade
on M
ay 2
6, 2
017.
The
31st
am
endm
ent o
f the
Cor
pora
te C
harte
r (A
rticl
e of
In
corp
orat
ion)
was
mad
e on
June
13,
201
2.
The
32nd
am
endm
ent
of t
he C
orpo
rate
Cha
rter
(Arti
cle
of In
corp
orat
ion)
was
mad
e on
June
18,
201
4.
The
33rd
am
endm
ent o
f the
Cor
pora
te C
harte
r (A
rticl
e of
In
corp
orat
ion)
was
mad
e on
May
28,
201
5.
The
34rd
am
endm
ent o
f the
Cor
pora
te C
harte
r (A
rticl
e of
In
corp
orat
ion)
was
mad
e on
May
25,
201
6.
45
< A
ttach
men
t V
I >
Adv
ante
ch C
o., L
td.
Proc
edur
es fo
r the
Acq
uisi
tion
or D
ispo
sal o
f Ass
ets
No.
A
fter
am
end
men
t B
efor
e am
end
men
t R
emar
k
Arti
cle
3 Th
e te
rm “
asse
ts”
as u
sed
in t
hese
Pro
cedu
res
incl
udes
th
e fo
llow
ing:
1.
Inve
stm
ents
in
stoc
ks,
gove
rnm
ent
bond
s, co
rpor
ate
bond
s, fin
anci
al b
onds
, sec
uriti
es re
pres
entin
g in
tere
st in
a
fund
, dep
osita
ry re
ceip
ts, c
all (
put)
war
rant
s, be
nefic
ial
inte
rest
secu
ritie
s, an
d as
set-b
acke
d se
curit
ies.
2.R
eal
prop
erty
(in
clud
ing
land
, ho
uses
and
bui
ldin
gs,
inve
stm
ent p
rope
rty, r
ight
s to
use
land
, and
con
stru
ctio
n en
terp
rise
inve
ntor
y) a
nd e
quip
men
t. 3.
Mem
bers
hips
.4.
Pate
nts,
copy
right
s, tra
dem
arks
, fr
anch
ise
right
s, an
dot
her i
ntan
gibl
e as
sets
. 5.
Cla
ims
of fi
nanc
ial i
nstit
utio
ns (i
nclu
ding
rec
eiva
bles
,bi
lls
purc
hase
d an
d di
scou
nted
, lo
ans,
and
over
due
rece
ivab
les)
. 6.
Der
ivat
ives
.7.
Ass
ets
acqu
ired
or d
ispo
sed
of i
n co
nnec
tion
with
mer
gers
, dem
erge
rs, a
cqui
sitio
ns, o
r tra
nsfe
r of s
hare
s in
ac
cord
ance
with
law
8.
Oth
er m
ajor
ass
ets.
The
term
“as
sets
” as
use
d in
thes
e Pr
oced
ures
incl
udes
the
follo
win
g:
1.In
vest
men
ts i
n st
ocks
, go
vern
men
t bo
nds,
corp
orat
ebo
nds,
finan
cial
bon
ds, s
ecur
ities
repr
esen
ting
inte
rest
in a
fu
nd,
depo
sita
ry r
ecei
pts,
call
(put
) w
arra
nts,
bene
ficia
l in
tere
st se
curit
ies,
and
asse
t-bac
ked
secu
ritie
s. 2.
Rea
l pr
oper
ty (
incl
udin
g la
nd,
hous
es a
nd b
uild
ings
,in
vest
men
t pr
oper
ty,
right
s to
use
lan
d, a
nd c
onst
ruct
ion
ente
rpris
e in
vent
ory)
and
equ
ipm
ent.
3.M
embe
rshi
ps.
4.Pa
tent
s, co
pyrig
hts,
trade
mar
ks,
fran
chis
e rig
hts,
and
othe
r int
angi
ble
asse
ts.
5.D
eriv
ativ
es.
6.A
sset
s ac
quire
d or
dis
pose
d of
in
conn
ectio
n w
ithm
erge
rs,
dem
erge
rs,
acqu
isiti
ons,
or t
rans
fer
of s
hare
s in
ac
cord
ance
with
law
7.
Oth
er m
ajor
ass
ets.
Acc
ordi
ng to
the
gove
rnin
g la
w
and
regu
latio
ns
Arti
cle
6 A
fter
thes
e Pr
oced
ures
hav
e be
en a
ppro
ved
by m
ore
than
hal
f of a
ll A
udit
Com
mitt
ee m
embe
rs a
nd th
e B
oard
of
Dire
ctor
s, th
ey s
hall
be s
ubm
itted
to th
e sh
areh
olde
rs'
mee
ting
for
appr
oval
; th
e sa
me
appl
ies
whe
n th
ese
Thes
e Pr
oced
ures
are
est
ablis
hed
in a
ccor
danc
e w
ith t
he
Reg
ulat
ions
Gov
erni
ng t
he A
cqui
sitio
n an
d D
ispo
sal
of
Ass
ets
by P
ublic
Com
pani
es p
rom
ulga
ted
by t
he F
SC.
Afte
r th
ese
Proc
edur
es h
ave
been
app
rove
d by
the
Boa
rd
Acc
ordi
ng to
the
actu
al p
ract
ice
46
Proc
edur
es a
re a
men
ded.
Whe
n th
ese
Proc
edur
es a
re
repo
rted
to t
he B
oard
of
Dire
ctor
s fo
r di
scus
sion
, th
e B
oard
of D
irect
ors
shal
l tak
e in
to fu
ll co
nsid
erat
ion
each
in
depe
nden
t di
rect
or's
opin
ions
. If
an
in
depe
nden
t di
rect
or o
bjec
ts t
o or
exp
ress
es r
eser
vatio
ns a
bout
any
m
atte
r, it
shal
l be
reco
rded
in th
e m
inut
es o
f the
boa
rd o
f di
rect
ors m
eetin
g. W
hen
thes
e Pr
oced
ures
are
ado
pted
or
amen
ded,
they
shal
l be
appr
oved
by
mor
e th
an h
alf o
f all
Aud
it C
omm
ittee
mem
bers
and
sub
mitt
ed to
the
Boa
rd
of D
irect
ors f
or a
reso
lutio
n.
If a
ppro
val
of m
ore
than
hal
f of
all
Aud
it C
omm
ittee
m
embe
rs a
s re
quire
d in
the
prec
edin
g pa
ragr
aph
is n
ot
obta
ined
, th
ese
Proc
edur
es m
ay b
e im
plem
ente
d if
appr
oved
by
mor
e th
an tw
o-th
irds
of a
ll di
rect
ors,
and
the
reso
lutio
n of
the
Aud
it C
omm
ittee
sha
ll be
reco
rded
in
the
min
utes
of
the
boar
d m
eetin
g. T
he t
erm
s “a
ll A
udit
Com
mitt
ee m
embe
rs”
and
“all
dire
ctor
s” s
hall
be
coun
ted
as t
he a
ctua
l nu
mbe
r of
per
sons
cur
rent
ly
hold
ing
thos
e po
sitio
ns.
of D
irect
ors,
they
sha
ll be
sub
mitt
ed t
o ea
ch s
uper
viso
r, an
d th
en to
a s
hare
hold
ers'
mee
ting
for a
ppro
val;
the
sam
e ap
plie
s w
hen
the
proc
edur
es a
re a
men
ded.
If a
ny d
irect
or
expr
esse
s di
ssen
t an
d it
is c
onta
ined
in
the
min
utes
or
a w
ritte
n st
atem
ent,
the
com
pany
sha
ll su
bmit
the
dire
ctor
's di
ssen
ting
opin
ion
to e
ach
supe
rvis
or.
Whe
n th
ese
Proc
edur
es a
re s
ubm
itted
to
the
Boa
rd o
f D
irect
ors
for
disc
ussi
on
purs
uant
to
th
e pr
eced
ing
para
grap
h, t
he B
oard
of
Dire
ctor
s sh
all
take
int
o fu
ll co
nsid
erat
ion
each
ind
epen
dent
dire
ctor
's op
inio
ns. I
f an
in
depe
nden
t di
rect
or o
bjec
ts t
o or
exp
ress
es r
eser
vatio
ns
abou
t any
mat
ter,
it sh
all b
e re
cord
ed in
the
min
utes
of t
he
boar
d m
eetin
g.
Arti
cle
8 Th
e C
ompa
ny’s
acq
uisi
tion
or d
ispo
sal o
f ass
ets
shal
l be
appr
oved
by
th
e B
oard
of
D
irect
ors
unde
r th
e C
ompa
ny’s
pro
cedu
res
or o
ther
law
s or
regu
latio
ns. I
f a
dire
ctor
exp
ress
es d
isse
nt a
nd i
t is
con
tain
ed i
n th
e m
inut
es o
r a
writ
ten
stat
emen
t, th
e C
ompa
ny s
hall
subm
it th
e di
rect
or's
diss
entin
g op
inio
n to
the
Aud
it C
omm
ittee
.
The
Com
pany
's ac
quis
ition
or
disp
osal
of
asse
ts t
hat
is
subj
ect t
o th
e ap
prov
al o
f the
Boa
rd o
f Dire
ctor
s und
er th
e C
ompa
ny's
proc
edur
es o
r ot
her
law
s or
reg
ulat
ions
, if
a di
rect
or e
xpre
sses
dis
sent
and
it
is c
onta
ined
in
the
min
utes
or a
writ
ten
stat
emen
t, th
e C
ompa
ny s
hall
subm
it th
e di
rect
or's
diss
entin
g op
inio
n to
eac
h su
perv
isor
. W
hen
a tra
nsac
tion
invo
lvin
g th
e ac
quis
ition
or
disp
osal
Acc
ordi
ng to
the
actu
al p
ract
ice
47
Whe
n a
trans
actio
n in
volv
ing
the
acqu
isiti
on o
r dis
posa
l of
ass
ets
is s
ubm
itted
to
the
Boa
rd o
f D
irect
ors
for
disc
ussi
on p
ursu
ant
to t
he p
rece
ding
par
agra
ph,
the
Boa
rd o
f Dire
ctor
s sh
all t
ake
into
full
cons
ider
atio
n ea
ch
inde
pend
ent
dire
ctor
's op
inio
ns.
If
an
inde
pend
ent
dire
ctor
obj
ects
to
or e
xpre
sses
res
erva
tions
abo
ut a
ny
mat
ter,
it sh
all b
e re
cord
ed in
the
min
utes
of t
he b
oard
of
dire
ctor
s mee
ting.
M
ajor
as
sets
or
de
rivat
ives
tra
nsac
tions
sh
all
be
appr
oved
by
mor
e th
an h
alf
of a
ll A
udit
Com
mitt
ee
mem
bers
and
rep
orte
d to
the
Boa
rd o
f D
irect
ors
for
reso
lutio
n.
If a
ppro
val
of m
ore
than
hal
f of
all
Aud
it C
omm
ittee
m
embe
rs i
s no
t ob
tain
ed,
thes
e pr
oced
ures
may
be
impl
emen
ted
if ap
prov
ed b
y m
ore
than
two-
third
s of
all
dire
ctor
s, an
d th
e re
solu
tion
of t
he A
udit
Com
mitt
ee
shal
l be
rec
orde
d in
the
min
utes
of
the
boar
d m
eetin
g.
The
term
s “a
ll A
udit
Com
mitt
ee m
embe
rs”
and
“all
dire
ctor
s” s
hall
be c
ount
ed a
s th
e ac
tual
num
ber
of
pers
ons c
urre
ntly
hol
ding
thos
e po
sitio
ns.
of a
sset
s is
sub
mitt
ed t
o th
e B
oard
of
Dire
ctor
s fo
r di
scus
sion
pur
suan
t to
the
prec
edin
g pa
ragr
aph,
the
Boa
rd
of
Dire
ctor
s sh
all
take
in
to
full
cons
ider
atio
n ea
ch
inde
pend
ent d
irect
or's
opin
ions
. If a
n in
depe
nden
t dire
ctor
ob
ject
s to
or
expr
esse
s re
serv
atio
ns a
bout
any
mat
ter,
it sh
all b
e re
cord
ed in
the
min
utes
of
the
boar
d of
dire
ctor
s m
eetin
g.
Arti
cle
9 In
acq
uirin
g or
dis
posi
ng o
f re
al p
rope
rty o
r eq
uipm
ent
whe
re
the
trans
actio
n am
ount
re
ache
s 20
%
of
the
Com
pany
’s p
aid-
in c
apita
l or
NT$
300
mill
ion
or m
ore,
th
e C
ompa
ny,
unle
ss t
rans
actin
g w
ith a
gov
ernm
ent
agen
cy,
enga
ging
ot
hers
to
bu
ild
on
its
own
land
,en
gagi
ng o
ther
s to
bui
ld o
n re
nted
land
, or
acqu
iring
or
disp
osin
g of
equ
ipm
ent f
or b
usin
ess
use,
sha
ll ob
tain
an
Proc
edur
es fo
r Acq
uisi
tion
or D
ispo
sal o
f Rea
l Pro
perty
or
Equi
pmen
t
1.Ev
alua
tion
and
Ope
ratin
g Pr
oced
ures
The
trans
actio
n pr
oces
ses
of
real
pr
oper
ty
and
equi
pmen
t sha
ll be
han
dled
in a
ccor
danc
e w
ith th
e op
erat
ing
proc
edur
es f
or f
ixed
ass
et c
ircul
atio
n in
th
e C
ompa
ny’s
inte
rnal
con
trol s
yste
m.
Acc
ordi
ng to
the
gove
rnin
g la
w
and
regu
latio
ns
48
appr
aisa
l re
port
prio
r to
the
dat
e of
occ
urre
nce
of t
he
even
t fr
om a
pro
fess
iona
l ap
prai
ser
and
shal
l fu
rther
co
mpl
y w
ith th
e fo
llow
ing
prov
isio
ns:
1.W
here
due
to s
peci
al c
ircum
stan
ces
it is
nec
essa
ry to
give
a li
mite
d pr
ice,
spe
cifie
d pr
ice,
or s
peci
al p
rice
asa
refe
renc
e ba
sis
for
the
trans
actio
n pr
ice,
th
etra
nsac
tion
shal
l be
subm
itted
for
appr
oval
in a
dvan
ceby
the
Boa
rd o
f D
irect
ors,
and
the
sam
e pr
oced
ure
shal
l be
follo
wed
for
any
fut
ure
chan
ges
to th
e te
rms
and
cond
ition
s of t
he tr
ansa
ctio
n.2.
Whe
re th
e tra
nsac
tion
amou
nt is
NT$
1 bi
llion
or m
ore,
appr
aisa
ls f
rom
tw
o or
mor
e pr
ofes
sion
al a
ppra
iser
ssh
all b
e ob
tain
ed.
3.W
here
any
one
of t
he fo
llow
ing
circ
umst
ance
s ap
plie
sw
ith r
espe
ct t
o th
e pr
ofes
sion
al a
ppra
iser
's ap
prai
sal
resu
lts, u
nles
s al
l the
app
rais
al re
sults
for t
he a
sset
s to
be a
cqui
red
are
high
er th
an th
e tra
nsac
tion
amou
nt, o
ral
l the
app
rais
al re
sults
for t
he a
sset
s to
be
disp
osed
of
are
low
er t
han
the
trans
actio
n am
ount
, a
certi
fied
publ
ic a
ccou
ntan
t sh
all
be e
ngag
ed t
o pe
rfor
m t
heap
prai
sal
in
acco
rdan
ce
with
th
e pr
ovis
ions
of
Stat
emen
t of
Aud
iting
Sta
ndar
ds N
o. 2
0 an
d re
nder
asp
ecifi
c op
inio
n re
gard
ing
the
reas
on
for
the
disc
repa
ncy
and
the
appr
opria
tene
ss o
f th
e tra
nsac
tion
pric
e:(1
) Th
e di
scre
panc
y be
twee
n th
e ap
prai
sal
resu
lt an
dth
e tra
nsac
tion
amou
nt i
s 20
per
cent
or
mor
e of
th
e tra
nsac
tion
amou
nt.
(2)
The
disc
repa
ncy
betw
een
the
appr
aisa
l re
sults
of
two
or m
ore
prof
essi
onal
app
rais
ers
is 1
0 pe
rcen
t or
mor
e of
the
trans
actio
n am
ount
. 4.
No
mor
e th
an 3
mon
ths
may
ela
pse
betw
een
the
date
of th
e ap
prai
sal r
epor
t iss
ued
by a
pro
fess
iona
l app
rais
er
2.Pr
oced
ures
fo
r D
eter
min
ing
Trad
ing
Term
s an
dC
ondi
tions
and
Aut
horiz
atio
n Li
mit
(1) W
hen
acqu
iring
or d
ispo
sing
of r
eal p
rope
rty, t
he
Com
pany
sha
ll de
term
ine
the
tradi
ng t
erm
s an
d co
nditi
ons
and
tradi
ng
pric
es
base
d on
th
e cu
rren
t va
lue,
ass
esse
d va
lue,
and
rea
l tra
ding
pr
ice
of
near
by
real
pr
oper
ty
and
have
th
e an
alys
is
repo
rt su
bmitt
ed
to
the
Boa
rd
of
Dire
ctor
s. If
the
amou
nt o
f the
tran
sact
ion
is le
ss
than
NT$
300
mill
ion,
this
sha
ll be
app
rove
d by
th
e C
hairm
an o
f th
e B
oard
and
rep
orte
d to
the
la
test
boa
rd m
eetin
g af
terw
ard;
if th
e am
ount
of
the
trans
actio
n is
mor
e th
an N
T$30
0 m
illio
n, th
is
shal
l be
appr
oved
by
the
Boa
rd o
f Dire
ctor
s.
(2) T
he a
cqui
sitio
n or
dis
posa
l of e
quip
men
t sha
ll be
pe
rfor
med
th
roug
h en
quiry
, co
mpa
rison
, ba
rgai
ning
, or
bid
ding
. If
the
am
ount
of
the
trans
actio
n is
le
ss
than
N
T$30
0 m
illio
n (in
clus
ive)
, thi
s sha
ll be
app
rove
d pu
rsua
nt to
the
auth
oriz
atio
n lim
it;
if th
e am
ount
of
th
e tra
nsac
tion
is m
ore
than
NT$
300
mill
ion,
thi
s sh
all b
e ap
prov
ed b
y th
e Pr
esid
ent a
nd th
e B
oard
of
Dire
ctor
s. 3.
Uni
ts R
espo
nsib
le fo
r Im
plem
enta
tion
Afte
r th
e ac
quis
ition
or
disp
osal
of
real
pro
perty
or
equi
pmen
t is
app
rove
d ba
sed
on t
he a
utho
rizat
ion
limit
stip
ulat
ed
in
the
prec
edin
g pa
ragr
aph,
th
e de
partm
ent u
sing
such
real
pro
perty
or e
quip
men
t and
A
dmin
istra
tion
Dep
artm
ent
is
resp
onsi
ble
for
impl
emen
tatio
n.
4.A
ppra
isal
Rep
ort
on R
eal
Prop
erty
or
Oth
er F
ixed
Ass
ets In
ac
quiri
ng
or
disp
osin
g of
re
al
prop
erty
or
eq
uipm
ent
whe
re t
he t
rans
actio
n am
ount
rea
ches
49
and
the
cont
ract
exe
cutio
n da
te;
prov
ided
, w
here
the
pu
blic
ly a
nnou
nced
cur
rent
val
ue f
or th
e sa
me
perio
d is
us
ed a
nd n
ot m
ore
than
6 m
onth
s ha
ve e
laps
ed,
an
opin
ion
may
stil
l be
issu
ed b
y th
e or
igin
al p
rofe
ssio
nal
appr
aise
r.
NT$
300
mill
ion
or m
ore,
the
Com
pany
, un
less
tra
nsac
ting
with
a g
over
nmen
t ag
ency
, en
gagi
ng
othe
rs to
bui
ld o
n its
ow
n la
nd, e
ngag
ing
othe
rs to
bu
ild o
n re
nted
lan
d, o
r ac
quiri
ng o
r di
spos
ing
of
equi
pmen
t for
bus
ines
s use
, sha
ll ob
tain
an
appr
aisa
l re
port
prio
r to
the
dat
e of
occ
urre
nce
of t
he e
vent
fr
om
a pr
ofes
sion
al
appr
aise
r an
d sh
all
furth
er
com
ply
with
the
follo
win
g pr
ovis
ions
: (1
) W
here
du
e to
sp
ecia
l ci
rcum
stan
ces
it is
ne
cess
ary
to g
ive
a lim
ited
pric
e, s
peci
fied
pric
e,
or s
peci
al p
rice
as a
ref
eren
ce b
asis
for
the
tra
nsac
tion
pric
e,
the
trans
actio
n sh
all
be
subm
itted
for
app
rova
l in
adva
nce
by th
e B
oard
of
Dire
ctor
s, an
d th
e sa
me
proc
edur
e sh
all
be
follo
wed
for a
ny fu
ture
cha
nges
to th
e te
rms
and
cond
ition
s of t
he tr
ansa
ctio
n.
(2) W
here
the
trans
actio
n am
ount
is N
T$1
billi
on o
r m
ore,
app
rais
als
from
tw
o or
mor
e pr
ofes
sion
al
appr
aise
rs sh
all b
e ob
tain
ed.
(3)
Whe
re a
ny o
ne o
f th
e fo
llow
ing
circ
umst
ance
s ap
plie
s w
ith
resp
ect
to
the
prof
essi
onal
ap
prai
ser's
ap
prai
sal
resu
lts,
unle
ss
all
the
appr
aisa
l res
ults
for t
he a
sset
s to
be
acqu
ired
are
high
er t
han
the
trans
actio
n am
ount
, or
all
the
appr
aisa
l res
ults
for
the
asse
ts to
be
disp
osed
of
are
low
er th
an th
e tra
nsac
tion
amou
nt, a
cer
tifie
d pu
blic
acc
ount
ant
shal
l be
eng
aged
to
perf
orm
th
e ap
prai
sal
in a
ccor
danc
e w
ith t
he p
rovi
sion
s of
St
atem
ent
of
Aud
iting
St
anda
rds
No.
20
pu
blis
hed
by th
e R
OC
Acc
ount
ing
Res
earc
h an
d D
evel
opm
ent
Foun
datio
n (A
RD
F) a
nd r
ende
r a
spec
ific
opin
ion
rega
rdin
g th
e re
ason
for
the
di
scre
panc
y an
d th
e ap
prop
riate
ness
of
th
e tra
nsac
tion
pric
e:
50
A.
The
disc
repa
ncy
betw
een
the
appr
aisa
l re
sult
and
the
trans
actio
n am
ount
is
20
perc
ent
or
mor
e of
th
e tra
nsac
tion
amou
nt.
B.
The
disc
repa
ncy
betw
een
the
appr
aisa
l re
sults
of
tw
o or
m
ore
prof
essi
onal
ap
prai
sers
is
10 p
erce
nt o
r m
ore
of t
he
trans
actio
n am
ount
. (4
) N
o m
ore
than
3 m
onth
s m
ay e
laps
e be
twee
n th
eda
te
of
the
appr
aisa
l re
port
issu
ed
by
apr
ofes
sion
al a
ppra
iser
and
the
cont
ract
exe
cutio
nda
te;
prov
ided
, w
here
the
pub
licly
ann
ounc
edcu
rren
t val
ue fo
r the
sam
e pe
riod
is u
sed
and
not
mor
e th
an 6
mon
ths
have
ela
psed
, an
opi
nion
may
stil
l be
iss
ued
by t
he o
rigin
al p
rofe
ssio
nal
appr
aise
r. (5
) W
here
the
Com
pany
acq
uire
s or
dis
pose
s of
asse
ts
thro
ugh
cour
t au
ctio
n pr
oced
ures
, th
eev
iden
tiary
doc
umen
tatio
n is
sued
by
the
cour
tm
ay b
e su
bstit
uted
for
the
app
rais
al r
epor
t or
CPA
opi
nion
. A
rticl
e 11
W
here
th
e C
ompa
ny
acqu
ires
or
disp
oses
of
m
embe
rshi
ps o
r in
tang
ible
ass
ets
and
the
trans
actio
n am
ount
rea
ches
20%
of
the
Com
pany
’s p
aid-
in c
apita
l or
NT$
300
mill
ion
or m
ore,
exc
ept i
n tra
nsac
tions
with
a
gove
rnm
ent
agen
cy,
the
Com
pany
sha
ll en
gage
a
certi
fied
publ
ic
acco
unta
nt
prio
r to
th
e da
te
of
Proc
edur
es fo
r Acq
uisi
tion
or D
ispo
sal o
f Mem
bers
hips
or
Inta
ngib
le A
sset
s 1.
Eval
uatio
n an
d O
pera
ting
Proc
edur
esTh
e tra
nsac
tion
proc
esse
s of
m
embe
rshi
ps
or
inta
ngib
le a
sset
s sh
all
be h
andl
ed i
n ac
cord
ance
w
ith
the
oper
atin
g pr
oced
ures
fo
r fix
ed
asse
t ci
rcul
atio
n in
th
e C
ompa
ny’s
in
tern
al
cont
rol
syst
em.
2.Pr
oced
ures
fo
r D
eter
min
ing
Trad
ing
Term
s an
d
Acc
ordi
ng to
the
gove
rnin
g la
w
and
regu
latio
ns
51
occu
rren
ce o
f th
e ev
ent
to r
ende
r an
opi
nion
on
the
reas
onab
lene
ss o
f th
e tra
nsac
tion
pric
e; t
he C
PA s
hall
com
ply
with
the
pro
visi
ons
of S
tate
men
t of
Aud
iting
St
anda
rds N
o. 2
0.
Con
ditio
ns a
nd A
utho
rizat
ion
Lim
it (1
) Th
e tra
ding
ter
ms
and
cond
ition
s an
d pr
ices
of
acqu
isiti
on o
r di
spos
al o
f m
embe
rshi
ps s
hall
be
dete
rmin
ed b
y th
e C
ompa
ny b
ased
on
the
mar
ket
fair
pric
e, w
ith t
he a
naly
sis
repo
rt su
bmitt
ed t
o th
e Pr
esid
ent
for
appr
oval
. The
am
ount
of
each
tra
nsac
tion
less
th
an
1%
of
the
Com
pany
’s
paid
-in
capi
tal
or
NT$
300
mill
ion
shal
l be
re
porte
d to
the
Boa
rd o
f D
irect
ors
for
appr
oval
an
d th
e so
ones
t bo
ard
mee
ting
for
futu
re
refe
renc
e;
the
amou
nt
of
each
tra
nsac
tion
exce
edin
g N
T$30
0 m
illio
n sh
all
be r
epor
ted
to
the
Boa
rd o
f Dire
ctor
s for
app
rova
l. (2
) The
trad
ing
term
s an
d co
nditi
ons
and
pric
es o
f ac
quis
ition
or
disp
osal
of
inta
ngib
le a
sset
s sh
all
be d
eter
min
ed b
y th
e C
ompa
ny b
ased
on
the
appr
aisa
l re
port
or m
arke
t fa
ir pr
ice,
with
the
an
alys
is r
epor
t su
bmitt
ed t
o th
e Pr
esid
ent
for
appr
oval
. Th
e am
ount
of
each
tra
nsac
tion
less
th
an 1
0% o
f th
e C
ompa
ny’s
pai
d-in
cap
ital
or
NT$
300
mill
ion
shal
l be
re
porte
d to
th
e C
hairm
an o
f th
e B
oard
for
app
rova
l an
d th
e so
ones
t bo
ard
mee
ting
for
futu
re r
efer
ence
; th
e am
ount
of
each
tra
nsac
tion
exce
edin
g N
T$30
0 m
illio
n sh
all
be
repo
rted
to
the
Boa
rd
of
Dire
ctor
s for
app
rova
l. 3.
Uni
ts R
espo
nsib
le fo
r Im
plem
enta
tion
Afte
r the
acq
uisi
tion
or d
ispo
sal o
f m
embe
rshi
ps o
r in
tang
ible
as
sets
is
ap
prov
ed
base
d on
th
e au
thor
izat
ion
limit
stip
ulat
ed
in
the
prec
edin
g pa
ragr
aph,
the
depa
rtmen
t usi
ng s
uch
mem
bers
hips
or
int
angi
ble
asse
ts a
nd F
inan
ce D
epar
tmen
t or
A
dmin
istra
tion
Dep
artm
ent
are
resp
onsi
ble
for
impl
emen
tatio
n.
52
4.A
ppra
isal
Rep
ort o
n M
embe
rshi
ps o
r Int
angi
ble
Ass
ets
Whe
re
the
Com
pany
ac
quire
s or
di
spos
es
of
mem
bers
hips
or
in
tang
ible
as
sets
an
d th
e tra
nsac
tion
amou
nt re
ache
s N
T$30
mill
ion
or m
ore,
ex
cept
in
trans
actio
ns w
ith a
gov
ernm
ent
agen
cy,
the
Com
pany
sh
all
enga
ge
a ce
rtifie
d pu
blic
ac
coun
tant
prio
r to
the
dat
e of
occ
urre
nce
of t
he
even
t to
rend
er a
n op
inio
n on
the
reas
onab
lene
ss o
f th
e tra
nsac
tion
pric
e; t
he C
PA s
hall
com
ply
with
th
e pr
ovis
ions
of
Stat
emen
t of
Aud
iting
Sta
ndar
ds
No.
20
publ
ishe
d by
the
AR
DF.
A
rticl
e 14
W
hen
the
Com
pany
inte
nds
to a
cqui
re o
r dis
pose
of r
eal
prop
erty
fro
m o
r to
a r
elat
ed p
arty
, re
gard
less
of
the
amou
nt,
or w
hen
it in
tend
s to
acq
uire
or
disp
ose
of
asse
ts o
ther
than
real
pro
perty
from
or t
o a
rela
ted
party
at
the
am
ount
rea
chin
g 20
% o
f th
e C
ompa
ny’s
pai
d-in
ca
pita
l, 10
% o
f its
tota
l ass
ets o
r NT$
300
mill
ion,
exc
ept
in
tradi
ng
of
gove
rnm
ent
bond
s or
bo
nds
unde
r re
purc
hase
and
res
ale
agre
emen
ts,
or s
ubsc
riptio
n or
re
purc
hase
of
dom
estic
mon
ey m
arke
t fu
nds
issu
ed b
y se
curit
ies i
nves
tmen
t tru
st e
nter
pris
es, t
he C
ompa
ny m
ay
not p
roce
ed to
ent
er in
to a
tran
sact
ion
cont
ract
or m
ake
a pa
ymen
t unt
il th
e fo
llow
ing
mat
ters
hav
e be
en a
ppro
ved
by m
ore
than
hal
f of a
ll A
udit
Com
mitt
ee m
embe
rs a
nd
the
Boa
rd o
f Dire
ctor
s:
1.Th
e pu
rpos
e, n
eces
sity
and
ant
icip
ated
ben
efit
of th
e
Whe
n th
e C
ompa
ny in
tend
s to
acq
uire
or
disp
ose
of r
eal
prop
erty
from
or t
o a
rela
ted
party
and
whe
n it
inte
nds
to
acqu
ire o
r di
spos
e of
ass
ets
othe
r th
an r
eal p
rope
rty f
rom
or
to a
rel
ated
par
ty, r
egar
dles
s of
the
amou
nt a
nd e
xcep
t in
trad
ing
of g
over
nmen
t bon
ds o
r bon
ds u
nder
repu
rcha
se
and
resa
le a
gree
men
ts,
or s
ubsc
riptio
n or
red
empt
ion
of
dom
estic
mon
ey m
arke
t fu
nds,
the
Com
pany
may
not
pr
ocee
d to
ent
er i
nto
a tra
nsac
tion
cont
ract
or
mak
e a
paym
ent
until
the
fol
low
ing
mat
ters
hav
e be
en a
ppro
ved
by
the
Boa
rd
of
Dire
ctor
s an
d re
cogn
ized
by
th
e su
perv
isor
s:
1.Th
e pu
rpos
e, n
eces
sity
and
ant
icip
ated
ben
efit
of t
heac
quis
ition
or d
ispo
sal o
f ass
ets.
2.Th
e re
ason
for
cho
osin
g th
e re
late
d pa
rty a
s a
tradi
ngco
unte
rpar
ty.
Acc
ordi
ng to
the
gove
rnin
g la
w
and
regu
latio
ns
53
acqu
isiti
on o
r dis
posa
l of a
sset
s. 2.
The
reas
on fo
r cho
osin
g th
e re
late
d pa
rty a
s a
tradi
ngco
unte
rpar
ty.
3.W
ith re
spec
t to
the
acqu
isiti
on o
f rea
l pro
perty
from
are
late
d pa
rty,
info
rmat
ion
rega
rdin
g ap
prai
sal
of t
here
ason
able
ness
of t
he p
relim
inar
y tra
nsac
tion
term
s in
acco
rdan
ce w
ith A
rticl
e 15
and
Arti
cle
16.
4.Th
e da
te
and
pric
e at
w
hich
th
e re
late
d pa
rtyor
igin
ally
acq
uire
d th
e re
al p
rope
rty,
the
orig
inal
tra
ding
cou
nter
party
, an
d th
at t
radi
ng c
ount
erpa
rty's
rela
tions
hip
to th
e co
mpa
ny a
nd th
e re
late
d pa
rty.
5.M
onth
ly c
ash
flow
fore
cast
s fo
r the
yea
r com
men
cing
from
the
antic
ipat
ed m
onth
of s
igni
ng o
f the
con
tract
,an
d ev
alua
tion
of th
e ne
cess
ity o
f the
tran
sact
ion,
and
reas
onab
lene
ss o
f the
fund
s util
izat
ion.
6.A
n ap
prai
sal r
epor
t fro
m a
pro
fess
iona
l app
rais
er o
r aC
PA's
opin
ion
obta
ined
in
co
mpl
ianc
e w
ith
the
prec
edin
g ar
ticle
.7.
Res
trict
ive
cove
nant
s an
d ot
her i
mpo
rtant
stip
ulat
ions
asso
ciat
ed w
ith th
e tra
nsac
tion.
The
calc
ulat
ion
of th
e tra
nsac
tion
amou
nts
refe
rred
to in
th
e pr
eced
ing
para
grap
h sh
all
be m
ade
in a
ccor
danc
e w
ith A
rticl
e 30
her
ein,
and
“w
ithin
the
prec
edin
g ye
ar”
as u
sed
here
in r
efer
s to
the
yea
r pr
eced
ing
the
date
of
occu
rren
ce o
f th
e cu
rren
t tra
nsac
tion.
Ite
ms
that
hav
e be
en a
nnou
nced
in
acco
rdan
ce w
ith t
hese
Pro
cedu
res
3.W
ith r
espe
ct to
the
acqu
isiti
on o
f re
al p
rope
rty f
rom
are
late
d pa
rty,
info
rmat
ion
rega
rdin
g ap
prai
sal
of t
here
ason
able
ness
of
the
prel
imin
ary
trans
actio
n te
rms
inac
cord
ance
with
Arti
cle
15 a
nd A
rticl
e 16
.4.
The
date
and
pric
e at
whi
ch th
e re
late
d pa
rty o
rigin
ally
acqu
ired
the
real
pr
oper
ty,
the
orig
inal
tra
ding
coun
terp
arty
, an
d th
at
tradi
ng
coun
terp
arty
'sre
latio
nshi
p to
the
com
pany
and
the
rela
ted
party
.5.
Mon
thly
cas
h flo
w f
orec
asts
for
the
year
com
men
cing
from
the
ant
icip
ated
mon
th o
f si
gnin
g of
the
con
tract
,an
d ev
alua
tion
of th
e ne
cess
ity o
f th
e tra
nsac
tion,
and
reas
onab
lene
ss o
f the
fund
s util
izat
ion.
6.A
n ap
prai
sal r
epor
t fro
m a
pro
fess
iona
l app
rais
er o
r a
CPA
's op
inio
n ob
tain
ed
in
com
plia
nce
with
th
epr
eced
ing
artic
le.
7.R
estri
ctiv
e co
vena
nts
and
othe
r im
porta
nt s
tipul
atio
nsas
soci
ated
with
the
trans
actio
n.Th
e ca
lcul
atio
n of
the
trans
actio
n am
ount
s re
ferr
ed to
in
the
prec
edin
g pa
ragr
aph
shal
l be
mad
e in
acc
orda
nce
with
Pa
ragr
aph
2 of
A
rticl
e 27
he
rein
, an
d “w
ithin
th
e pr
eced
ing
year
” as
use
d he
rein
refe
rs to
the
year
pre
cedi
ng
the
date
of
occu
rren
ce o
f th
e cu
rren
t tra
nsac
tion.
Ite
ms
that
hav
e be
en a
ppro
ved
by t
he B
oard
of
Dire
ctor
s an
d re
cogn
ized
by
the
supe
rvis
ors
need
not
be
coun
ted
tow
ard
the
trans
actio
n am
ount
. W
ith re
spec
t to
the
acqu
isiti
on o
r dis
posa
l of b
usin
ess-
use
54
need
not
be
coun
ted
tow
ard
the
trans
actio
n am
ount
. W
ith
resp
ect
to
the
acqu
isiti
on
or
disp
osal
of
bu
sine
ss-u
se e
quip
men
t be
twee
n th
e C
ompa
ny a
nd i
ts
pare
nt c
ompa
ny o
r sub
sidi
arie
s, th
e C
ompa
ny’s
Boa
rd o
f D
irect
ors
may
pu
rsua
nt
to
Arti
cle
9 de
lega
te
the
Cha
irman
of t
he B
oard
to d
ecid
e su
ch m
atte
rs w
hen
the
trans
actio
n is
with
in a
cer
tain
am
ount
and
hav
e th
e de
cisi
ons
subs
eque
ntly
sub
mitt
ed to
and
rat
ified
by
the
next
boa
rd o
f dire
ctor
s mee
ting.
W
hen
a m
atte
r is
subm
itted
to th
e B
oard
of D
irect
ors
for
disc
ussi
on p
ursu
ant
to t
he p
rece
ding
par
agra
ph,
the
Boa
rd o
f Dire
ctor
s sh
all t
ake
into
full
cons
ider
atio
n ea
ch
inde
pend
ent
dire
ctor
's op
inio
ns.
If
an
inde
pend
ent
dire
ctor
obj
ects
to
or e
xpre
sses
res
erva
tions
abo
ut a
ny
mat
ter,
it sh
all b
e re
cord
ed in
the
min
utes
of t
he b
oard
of
dire
ctor
s mee
ting.
If
app
rova
l of
mor
e th
an h
alf
of a
ll A
udit
Com
mitt
ee
mem
bers
as
requ
ired
in th
e pr
eced
ing
para
grap
h is
not
ob
tain
ed,
thes
e pr
oced
ures
may
be
impl
emen
ted
if ap
prov
ed b
y m
ore
than
two-
third
s of
all
dire
ctor
s, an
d th
e re
solu
tion
of th
e A
udit
Com
mitt
ee s
hall
be re
cord
ed
in t
he m
inut
es o
f th
e bo
ard
mee
ting.
The
ter
ms
“all
Aud
it C
omm
ittee
mem
bers
” an
d “a
ll di
rect
ors”
sha
ll be
co
unte
d as
the
act
ual
num
ber
of p
erso
ns c
urre
ntly
ho
ldin
g th
ose
posi
tions
.
equi
pmen
t bet
wee
n th
e C
ompa
ny a
nd it
s su
bsid
iarie
s, th
e C
ompa
ny's
Boa
rd o
f Dire
ctor
s m
ay p
ursu
ant t
o Pa
ragr
aph
2 of
Arti
cle
9 de
lega
te t
he C
hairm
an o
f th
e B
oard
to
deci
de s
uch
mat
ters
whe
n th
e tra
nsac
tion
is w
ithin
a
certa
in
amou
nt
and
have
th
e de
cisi
ons
subs
eque
ntly
su
bmitt
ed t
o an
d ra
tifie
d by
the
nex
t bo
ard
of d
irect
ors
mee
ting.
W
hen
a m
atte
r is
subm
itted
to th
e B
oard
of D
irect
ors
for
disc
ussi
on
purs
uant
to
th
e pr
eced
ing
para
grap
h,
the
Boa
rd o
f Dire
ctor
s sh
all t
ake
into
full
cons
ider
atio
n ea
ch
inde
pend
ent
dire
ctor
's op
inio
ns.
If
an
inde
pend
ent
dire
ctor
obj
ects
to
or e
xpre
sses
res
erva
tions
abo
ut a
ny
mat
ter,
it sh
all b
e re
cord
ed in
the
min
utes
of t
he b
oard
of
dire
ctor
s mee
ting.
Arti
cle
17
Whe
re t
he C
ompa
ny a
cqui
res
real
pro
perty
fro
m a
W
here
the
Com
pany
acq
uire
s re
al p
rope
rty fr
om a
rela
ted
Acc
ordi
ng to
the
55
rela
ted
party
and
the
res
ults
of
appr
aisa
ls c
ondu
cted
in
acco
rdan
ce w
ith A
rticl
e 15
and
Arti
cle
16 a
re u
nifo
rmly
lo
wer
than
the
trans
actio
n pr
ice,
the
follo
win
g st
eps s
hall
be ta
ken:
1.
A sp
ecia
l res
erve
shal
l be
set a
side
in a
ccor
danc
e w
ithPa
ragr
aph
1,
Arti
cle
41
of
the
Secu
ritie
s an
dEx
chan
ge A
ct a
gain
st th
e di
ffer
ence
bet
wee
n th
e re
alpr
oper
ty tr
ansa
ctio
n pr
ice
and
the
appr
aise
d co
st, a
ndm
ay n
ot b
e di
strib
uted
or
used
for
cap
ital i
ncre
ase
oris
suan
ce o
f bo
nus
shar
es.
Whe
re a
pub
lic c
ompa
nyus
es th
e eq
uity
met
hod
to a
ccou
nt fo
r its
inve
stm
ent i
nan
othe
r co
mpa
ny, t
hen
the
spec
ial
rese
rve
calle
d fo
run
der
Para
grap
h 1,
Arti
cle
41 o
f th
e Se
curit
ies
and
Exch
ange
A
ct
shal
l be
se
t as
ide
pro
rata
in
a
prop
ortio
n co
nsis
tent
w
ith
the
shar
e of
pu
blic
com
pany
's eq
uity
stak
e in
the
othe
r com
pany
.2.
The
Aud
it C
omm
ittee
sha
ll co
mpl
y w
ith A
rticl
e 21
8of
the
Com
pany
Act
.3.
Act
ions
ta
ken
purs
uant
to
su
bpar
agra
ph
1 an
dsu
bpar
agra
ph 2
sha
ll be
rep
orte
d to
a s
hare
hold
ers
mee
ting,
and
the
det
ails
of
the
trans
actio
n sh
all
be
disc
lose
d in
the
ann
ual
repo
rt an
d an
y in
vest
men
t pr
ospe
ctus
. Th
e C
ompa
ny th
at h
as s
et a
side
a s
peci
al r
eser
ve u
nder
th
e pr
eced
ing
para
grap
h m
ay n
ot u
tiliz
e th
e sp
ecia
l re
serv
e un
til i
t ha
s re
cogn
ized
a l
oss
on d
eclin
e in
party
an
d th
e re
sults
of
ap
prai
sals
co
nduc
ted
in
acco
rdan
ce w
ith A
rticl
e 15
and
Arti
cle
16 a
re u
nifo
rmly
lo
wer
than
the
trans
actio
n pr
ice,
the
follo
win
g st
eps
shal
l be
take
n:
1.A
spe
cial
res
erve
sha
ll be
set
asi
de in
acc
orda
nce
with
Para
grap
h 1,
Arti
cle
41 o
f the
Sec
uriti
es a
nd E
xcha
nge
Act
aga
inst
the
diff
eren
ce b
etw
een
the
real
pro
perty
trans
actio
n pr
ice
and
the
appr
aise
d co
st, a
nd m
ay n
ot b
edi
strib
uted
or
used
for
cap
ital
incr
ease
or
issu
ance
of
bonu
s sh
ares
. Whe
re a
pub
lic c
ompa
ny u
ses
the
equi
tym
etho
d to
ac
coun
t fo
r its
in
vest
men
t in
an
othe
rco
mpa
ny,
then
the
spe
cial
res
erve
cal
led
for
unde
rPa
ragr
aph
1, A
rticl
e 41
of t
he S
ecur
ities
and
Exc
hang
eA
ct s
hall
be s
et a
side
pro
rata
in a
pro
porti
on c
onsi
sten
tw
ith th
e sh
are
of p
ublic
com
pany
's eq
uity
sta
ke in
the
othe
r com
pany
.2.
Supe
rvis
ors
shal
l co
mpl
y w
ith A
rticl
e 21
8 of
the
Com
pany
Act
. 3.
Act
ions
ta
ken
purs
uant
to
su
bpar
agra
ph
1 an
dsu
bpar
agra
ph 2
sha
ll be
rep
orte
d to
a s
hare
hold
ers
mee
ting,
and
the
det
ails
of
the
trans
actio
n sh
all
be
disc
lose
d in
the
ann
ual
repo
rt an
d an
y in
vest
men
t pr
ospe
ctus
. Th
e C
ompa
ny t
hat
has
set
asid
e a
spec
ial
rese
rve
unde
r th
e pr
eced
ing
para
grap
h m
ay
not
utili
ze
the
spec
ial
rese
rve
until
it h
as re
cogn
ized
a lo
ss o
n de
clin
e in
mar
ket
actu
al p
ract
ice
56
mar
ket v
alue
of t
he a
sset
s it
purc
hase
d at
a p
rem
ium
, or
they
hav
e be
en d
ispo
sed
of, o
r ad
equa
te c
ompe
nsat
ion
has
been
mad
e, o
r the
sta
tus
quo
ante
has
bee
n re
stor
ed,
or t
here
is
othe
r ev
iden
ce c
onfir
min
g th
at t
here
was
no
thin
g un
reas
onab
le a
bout
the
trans
actio
n, a
nd th
e FS
C
has g
iven
its c
onse
nt.
Whe
n th
e C
ompa
ny o
btai
ns re
al p
rope
rty fr
om a
rela
ted
party
, it
shal
l al
so c
ompl
y w
ith t
he p
rece
ding
tw
o pa
ragr
aphs
if th
ere
is o
ther
evi
denc
e in
dica
ting
that
the
acqu
isiti
on w
as n
ot a
n ar
m’s
leng
th tr
ansa
ctio
n.
valu
e of
the
asse
ts it
pur
chas
ed a
t a p
rem
ium
, or t
hey
have
be
en d
ispo
sed
of,
or a
dequ
ate
com
pens
atio
n ha
s be
en
mad
e, o
r the
sta
tus
quo
ante
has
bee
n re
stor
ed, o
r the
re is
ot
her
evid
ence
co
nfirm
ing
that
th
ere
was
no
thin
g un
reas
onab
le a
bout
the
trans
actio
n, a
nd th
e FS
C h
as g
iven
its
con
sent
. W
hen
the
Com
pany
obt
ains
rea
l pr
oper
ty f
rom
a r
elat
ed
party
, it
shal
l al
so
com
ply
with
th
e pr
eced
ing
two
para
grap
hs i
f th
ere
is o
ther
evi
denc
e in
dica
ting
that
the
ac
quis
ition
was
not
an
arm
’s le
ngth
tran
sact
ion.
A
rticl
e 21
Th
e C
ompa
ny e
ngag
ing
in d
eriv
ativ
es t
radi
ng s
hall
esta
blis
h a
log
book
in
whi
ch d
etai
ls o
f th
e ty
pes
and
amou
nts
of d
eriv
ativ
es t
radi
ng e
ngag
ed i
n, B
oard
of
Dire
ctor
s’ a
ppro
val d
ates
, and
the
mat
ters
requ
ired
to b
e ca
refu
lly e
valu
ated
und
er S
ubpa
ragr
aph
4 of
Arti
cle
19
and
Subp
arag
raph
2 o
f Par
agra
ph 1
and
Sub
para
grap
h 1
of P
arag
raph
2 o
f Arti
cle
20 sh
all b
e re
cord
ed in
det
ail i
n th
e lo
g bo
ok.
A
publ
ic
com
pany
's in
tern
al
audi
t pe
rson
nel
shal
l pe
riodi
cally
mak
e a
dete
rmin
atio
n of
the
sui
tabi
lity
of
inte
rnal
con
trols
on
deriv
ativ
es a
nd c
ondu
ct a
mon
thly
au
dit o
f how
faith
fully
der
ivat
ives
trad
ing
by th
e tra
ding
de
partm
ent
adhe
res
to t
he p
roce
dure
s fo
r en
gagi
ng i
n de
rivat
ives
tra
ding
, and
pre
pare
an
audi
t re
port.
If
any
mat
eria
l vi
olat
ion
is d
isco
vere
d, t
he A
udit
Com
mitt
ee
shal
l be
notif
ied
in w
ritin
g.
The
Com
pany
en
gagi
ng
in
deriv
ativ
es
tradi
ng
shal
l es
tabl
ish
a lo
g bo
ok i
n w
hich
det
ails
of
the
type
s an
d am
ount
s of
der
ivat
ives
tra
ding
eng
aged
in,
Boa
rd o
f D
irect
ors’
app
rova
l dat
es, a
nd th
e m
atte
rs r
equi
red
to b
e ca
refu
lly e
valu
ated
und
er S
ubpa
ragr
aph
4 of
Arti
cle
19
and
Subp
arag
raph
2 o
f Par
agra
ph 1
and
Sub
para
grap
h 1
of
Para
grap
h 2
of A
rticl
e 20
sha
ll be
reco
rded
in d
etai
l in
the
log
book
. A
pu
blic
co
mpa
ny's
inte
rnal
au
dit
pers
onne
l sh
all
perio
dica
lly m
ake
a de
term
inat
ion
of t
he s
uita
bilit
y of
in
tern
al c
ontro
ls o
n de
rivat
ives
and
con
duct
a m
onth
ly
audi
t of
how
fai
thfu
lly d
eriv
ativ
es tr
adin
g by
the
tradi
ng
depa
rtmen
t ad
here
s to
the
pro
cedu
res
for
enga
ging
in
deriv
ativ
es t
radi
ng,
and
prep
are
an a
udit
repo
rt. I
f an
y m
ater
ial
viol
atio
n is
dis
cove
red,
all
supe
rvis
ors
shal
l be
no
tifie
d in
writ
ing.
Acc
ordi
ng to
the
actu
al p
ract
ice
57
Arti
cle
22
The
Com
pany
th
at
cond
ucts
a
mer
ger,
dem
erge
r, ac
quis
ition
, or t
rans
fer o
f sha
res,
prio
r to
conv
enin
g th
e bo
ard
of d
irect
ors t
o re
solv
e on
the
mat
ter,
shal
l eng
age
a C
PA,
atto
rney
, or
sec
uriti
es u
nder
writ
er t
o gi
ve a
n op
inio
n on
the
rea
sona
blen
ess
of t
he s
hare
exc
hang
e ra
tio, a
cqui
sitio
n pr
ice,
or
dist
ribut
ion
of c
ash
or o
ther
pr
oper
ty to
sha
reho
lder
s, an
d su
bmit
it to
the
Boa
rd o
f D
irect
ors
for
delib
erat
ion
and
pass
age.
How
ever
, an
op
inio
n re
nder
ed b
y an
exp
ert o
n th
e re
ason
able
ness
of
a m
erge
r w
ith s
ubsi
diar
ies
who
se 1
00%
of
shar
es
issu
ed o
r to
tal c
apita
l are
dire
ctly
or i
ndire
ctly
hel
d by
th
e C
ompa
ny o
r a
mer
ger
betw
een
subs
idia
ries
who
se
100%
of
shar
es i
ssue
d or
tot
al c
apita
l ar
e di
rect
ly o
r in
dire
ctly
hel
d by
the
Com
pany
may
be
exem
pted
.
The
Com
pany
th
at
cond
ucts
a
mer
ger,
dem
erge
r, ac
quis
ition
, or
trans
fer
of s
hare
s, pr
ior
to c
onve
ning
the
boar
d of
dire
ctor
s to
reso
lve
on th
e m
atte
r, sh
all e
ngag
e a
CPA
, at
torn
ey,
or s
ecur
ities
und
erw
riter
to
give
an
opin
ion
on t
he r
easo
nabl
enes
s of
the
sha
re e
xcha
nge
ratio
, ac
quis
ition
pric
e, o
r di
strib
utio
n of
cas
h or
oth
er
prop
erty
to
shar
ehol
ders
, and
sub
mit
it to
the
Boa
rd o
f D
irect
ors f
or d
elib
erat
ion
and
pass
age.
Acc
ordi
ng to
th
e go
vern
ing
law
and
re
gula
tions
Arti
cle
30
Proc
edur
es fo
r Pub
lic D
iscl
osur
e of
Info
rmat
ion
Und
er a
ny o
f the
follo
win
g ci
rcum
stan
ces,
the
Com
pany
ac
quiri
ng o
r dis
posi
ng o
f ass
ets
shal
l pub
licly
ann
ounc
e an
d re
port
the
rele
vant
in
form
atio
n on
th
e FS
C's
desi
gnat
ed
web
site
in
th
e ap
prop
riate
fo
rmat
as
pr
escr
ibed
by
regu
latio
ns w
ithin
2 d
ays
com
men
cing
im
med
iate
ly fr
om th
e da
te o
f occ
urre
nce
of th
e ev
ent:
1.A
cqui
sitio
n or
dis
posa
l of
real
pro
perty
fro
m o
r to
are
late
d pa
rty, r
egar
dles
s of
the
amou
nt, o
r acq
uisi
tion
or d
ispo
sal o
f as
sets
oth
er th
an r
eal p
rope
rty f
rom
or
to
a re
late
d pa
rty
whe
re
the
trans
actio
n am
ount
reac
hes
20 p
erce
nt o
r m
ore
of p
aid-
in c
apita
l, 10
perc
ent
or m
ore
of t
he c
ompa
ny's
tota
l as
sets
, or
NT$
300
mill
ion
or m
ore;
pro
vide
d, t
his
shal
l no
tap
ply
to tr
adin
g of
gov
ernm
ent b
onds
or b
onds
und
er
Proc
edur
es fo
r Pub
lic D
iscl
osur
e of
Info
rmat
ion
Und
er a
ny o
f th
e fo
llow
ing
circ
umst
ance
s, th
e C
ompa
ny
acqu
iring
or
disp
osin
g of
ass
ets
shal
l pu
blic
ly a
nnou
nce
and
repo
rt th
e re
leva
nt
info
rmat
ion
on
the
FSC
's de
sign
ated
web
site
in th
e ap
prop
riate
form
at a
s pr
escr
ibed
by
reg
ulat
ions
with
in 2
day
s co
mm
enci
ng i
mm
edia
tely
fr
om th
e da
te o
f occ
urre
nce
of th
e ev
ent:
1.A
cqui
sitio
n or
dis
posa
l of
rea
l pr
oper
ty f
rom
or
to a
rela
ted
party
, or
acqu
isiti
on o
r di
spos
al o
f as
sets
oth
erth
an r
eal p
rope
rty f
rom
or
to a
rel
ated
par
ty w
here
the
trans
actio
n am
ount
rea
ches
20
perc
ent
or m
ore
ofpa
id-in
cap
ital,
10 p
erce
nt o
r m
ore
of t
he c
ompa
ny's
tota
l ass
ets,
or N
T$30
0 m
illio
n or
mor
e; p
rovi
ded,
this
shal
l not
app
ly to
trad
ing
of g
over
nmen
t bon
ds o
r bon
dsun
der r
epur
chas
e an
d re
sale
agr
eem
ents
, or s
ubsc
riptio
n
Acc
ordi
ng to
th
e go
vern
ing
law
and
re
gula
tions
58
repu
rcha
se a
nd r
esal
e ag
reem
ents
, or
subs
crip
tion
or
repu
rcha
se o
f dom
estic
mon
ey m
arke
t fun
ds is
sued
by
secu
ritie
s inv
estm
ent t
rust
ent
erpr
ises
. 2.
Mer
ger,
dem
erge
r, ac
quis
ition
, or t
rans
fer o
f sha
res.
3.Lo
sses
from
der
ivat
ives
trad
ing
reac
hing
the
limits
on
aggr
egat
e lo
sses
or
loss
es o
n in
divi
dual
con
tract
s se
tou
t in
the
proc
edur
es a
dopt
ed b
y th
e C
ompa
ny.
4.W
here
the
typ
e of
ass
et a
cqui
red
or d
ispo
sed
iseq
uipm
ent
for
busi
ness
use
, the
tra
ding
cou
nter
party
is
not
a r
elat
ed p
arty
, an
d th
e tra
nsac
tion
amou
nt
mee
ts o
ne o
f the
follo
win
g re
quire
men
ts:
(1) T
he p
aid-
in c
apita
l is
less
than
NT$
10 b
illio
n an
d th
e tra
nsac
tion
amou
nt is
mor
e th
an N
T$50
0 m
illio
n.
(2) T
he p
aid-
in c
apita
l is m
ore
than
NT$
10 b
illio
n an
d th
e tra
nsac
tion
amou
nt is
mor
e th
an N
T$1
billi
on.
5.W
here
lan
d is
acq
uire
d un
der
an a
rran
gem
ent
onen
gagi
ng o
ther
s to
bui
ld o
n th
e C
ompa
ny's
own
land
, en
gagi
ng
othe
rs
to
build
on
re
nted
la
nd,
join
t co
nstru
ctio
n an
d al
loca
tion
of h
ousi
ng u
nits
, jo
int
cons
truct
ion
and
allo
catio
n of
ow
ners
hip
perc
enta
ges,
or jo
int c
onst
ruct
ion
and
sepa
rate
sale
, and
the
amou
nt
the
Com
pany
exp
ects
to
inve
st i
n th
e tra
nsac
tion
is
less
than
NT$
500
mill
ion.
6.
Whe
re a
n as
set
trans
actio
n ot
her
than
any
of
thos
ere
ferr
ed t
o in
the
pre
cedi
ng f
ive
subp
arag
raph
s, a
disp
osal
of r
ecei
vabl
es b
y a
finan
cial
inst
itutio
n, o
r an
or re
dem
ptio
n of
dom
estic
mon
ey m
arke
t fun
ds.
2.M
erge
r, de
mer
ger,
acqu
isiti
on, o
r tra
nsfe
r of s
hare
s.3.
Loss
es f
rom
der
ivat
ives
trad
ing
reac
hing
the
limits
on
aggr
egat
e lo
sses
or
loss
es o
n in
divi
dual
con
tract
s se
tou
t in
the
proc
edur
es a
dopt
ed b
y th
e C
ompa
ny.
4.W
here
an
asse
t tra
nsac
tion
othe
r th
an a
ny o
f th
ose
refe
rred
to
in t
he p
rece
ding
thr
ee s
ubpa
ragr
aphs
, a
disp
osal
of
rece
ivab
les
by a
fin
anci
al in
stitu
tion,
or
an
inve
stm
ent
in t
he m
ainl
and
Chi
na a
rea
reac
hes
20
perc
ent o
r m
ore
of p
aid-
in c
apita
l or
NT$
300
mill
ion;
pr
ovid
ed,
this
sh
all
not
appl
y to
th
e fo
llow
ing
circ
umst
ance
s:
(1) T
radi
ng o
f gov
ernm
ent b
onds
. (2
) Se
curit
ies
tradi
ng
by
inve
stm
ent
prof
essi
onal
s on
fo
reig
n or
do
mes
tic
secu
ritie
s ex
chan
ges o
r ov
er-th
e-co
unte
r m
arke
ts, o
r su
bscr
iptio
n of
sec
uriti
es
by a
sec
uriti
es fi
rm, e
ither
in th
e pr
imar
y m
arke
t or i
n ac
cord
ance
with
rele
vant
regu
latio
ns.
(3)
Trad
ing
of b
onds
und
er r
epur
chas
e/re
sale
agr
eem
ents
, or
sub
scrip
tion
or r
edem
ptio
n of
dom
estic
mon
ey
mar
ket f
unds
. (4
) W
here
the
typ
e of
ass
et a
cqui
red
or d
ispo
sed
is
equi
pmen
t/mac
hine
ry f
or b
usin
ess
use,
the
tra
ding
co
unte
rpar
ty is
not
a r
elat
ed p
arty
, and
the
trans
actio
n am
ount
is le
ss th
an N
T$50
0 m
illio
n.
(5)
Whe
re l
and
is a
cqui
red
unde
r an
arr
ange
men
t on
en
gagi
ng o
ther
s to
bui
ld o
n th
e C
ompa
ny's
own
land
, en
gagi
ng
othe
rs
to
build
on
re
nted
la
nd,
join
t co
nstru
ctio
n an
d al
loca
tion
of h
ousi
ng u
nits
, jo
int
cons
truct
ion
and
allo
catio
n of
ow
ners
hip
perc
enta
ges,
59
inve
stm
ent
in t
he m
ainl
and
Chi
na a
rea
reac
hes
20
perc
ent o
r mor
e of
pai
d-in
cap
ital o
r NT$
300
mill
ion;
pr
ovid
ed,
this
sh
all
not
appl
y to
th
e fo
llow
ing
circ
umst
ance
s:
(1) T
radi
ng o
f gov
ernm
ent b
onds
. (2
) Se
curit
ies
tradi
ng b
y in
vest
men
t pr
ofes
sion
als
on
fore
ign
or
dom
estic
se
curit
ies
exch
ange
s or
over
-the-
coun
ter
mar
kets
, or
su
bscr
iptio
n of
co
rpor
ate
bond
s an
d ge
nera
l fin
anci
al b
onds
not
in
volv
ing
no e
quity
in
the
dom
estic
prim
ary
mar
ket
or s
ecur
ities
by
a se
curit
ies
firm
due
to
busi
ness
ne
eds
or a
sec
uriti
es f
irm r
ecom
men
ded
for
liste
d co
mpa
nies
at
th
e em
ergi
ng
stoc
k m
arke
t in
ac
cord
ance
with
the
regu
latio
ns o
f Tai
pei E
xcha
nge.
(3) T
radi
ng o
f bon
ds u
nder
repu
rcha
se/re
sale
agr
eem
ents
, or
sub
scrip
tion
or r
epur
chas
e of
dom
estic
mon
ey
mar
ket
fund
s is
sued
by
secu
ritie
s in
vest
men
t tru
st
ente
rpris
es.
The
amou
nt o
f tra
nsac
tions
abo
ve s
hall
be c
alcu
late
d as
fo
llow
s an
d “W
ithin
the
pre
cedi
ng y
ear”
as
used
in
the
prec
edin
g pa
ragr
aph
refe
rs to
the
year
pre
cedi
ng th
e da
te
of o
ccur
renc
e of
the
cur
rent
tra
nsac
tion.
Ite
ms
duly
an
noun
ced
in a
ccor
danc
e w
ith t
he r
egul
atio
ns n
eed
not
be c
ount
ed to
war
d th
e tra
nsac
tion
amou
nt.
1.
The
amou
nt o
f any
indi
vidu
al tr
ansa
ctio
n.2.
The
cum
ulat
ive
trans
actio
n am
ount
of a
cqui
sitio
ns a
nddi
spos
als
of th
e sa
me
type
of u
nder
lyin
g as
set w
ith th
esa
me
tradi
ng c
ount
erpa
rty w
ithin
the
prec
edin
g ye
ar.
3.Th
e cu
mul
ativ
e tra
nsac
tion
amou
nt o
f re
al p
rope
rty
acqu
isiti
ons a
nd d
ispo
sals
(cum
ulat
ive
acqu
isiti
ons a
nddi
spos
als,
resp
ectiv
ely)
with
in t
he s
ame
deve
lopm
ent
proj
ect w
ithin
the
prec
edin
g ye
ar.
or jo
int c
onst
ruct
ion
and
sepa
rate
sal
e, a
nd th
e am
ount
th
e C
ompa
ny e
xpec
ts to
inve
st in
the
trans
actio
n is
less
th
an N
T$50
0 m
illio
n.
The
amou
nt o
f tra
nsac
tions
abo
ve s
hall
be c
alcu
late
d as
fo
llow
s an
d “W
ithin
the
pre
cedi
ng y
ear”
as
used
in
the
prec
edin
g pa
ragr
aph
refe
rs to
the
year
pre
cedi
ng th
e da
te
of
occu
rren
ce
of
the
curr
ent
trans
actio
n.
Item
s du
ly
anno
unce
d in
acc
orda
nce
with
the
regu
latio
ns n
eed
not b
e co
unte
d to
war
d th
e tra
nsac
tion
amou
nt.
1.
The
amou
nt o
f any
indi
vidu
al tr
ansa
ctio
n.2.
The
cum
ulat
ive
trans
actio
n am
ount
of
acqu
isiti
ons
and
disp
osal
s of
the
sam
e ty
pe o
f un
derly
ing
asse
t with
the
sam
e tra
ding
cou
nter
party
with
in th
e pr
eced
ing
year
.3.
The
cum
ulat
ive
trans
actio
n am
ount
of
real
pro
perty
acqu
isiti
ons
and
disp
osal
s (c
umul
ativ
e ac
quis
ition
s an
ddi
spos
als,
resp
ectiv
ely)
with
in t
he s
ame
deve
lopm
ent
proj
ect w
ithin
the
prec
edin
g ye
ar.
4.Th
e cu
mul
ativ
e tra
nsac
tion
amou
nt o
f ac
quis
ition
s an
ddi
spos
als
(cum
ulat
ive
acqu
isiti
ons
and
disp
osal
s,re
spec
tivel
y) o
f th
e sa
me
secu
rity
with
in th
e pr
eced
ing
year
.“W
ithin
the
pre
cedi
ng y
ear”
as
used
in
the
prec
edin
g pa
ragr
aph
refe
rs
to
the
year
pr
eced
ing
the
date
of
oc
curr
ence
of
th
e cu
rren
t tra
nsac
tion.
Ite
ms
duly
an
noun
ced
in a
ccor
danc
e w
ith th
ese
Proc
edur
es n
eed
not
be c
ount
ed to
war
d th
e tra
nsac
tion
amou
nt.
The
Com
pany
sha
ll co
mpi
le m
onth
ly re
ports
on
the
stat
us
of d
eriv
ativ
es t
radi
ng e
ngag
ed i
n up
to
the
end
of t
he
prec
edin
g m
onth
by
itsel
f and
any
subs
idia
ries t
hat a
re n
ot
dom
estic
pub
lic c
ompa
nies
and
ent
er t
he i
nfor
mat
ion
in
the
pres
crib
ed
form
at
into
th
e in
form
atio
n re
porti
ng
60
4.Th
e cu
mul
ativ
e tra
nsac
tion
amou
nt o
f acq
uisi
tions
and
disp
osal
s (c
umul
ativ
e ac
quis
ition
s an
d di
spos
als,
resp
ectiv
ely)
of t
he s
ame
secu
rity
with
in th
e pr
eced
ing
year
.“W
ithin
the
pre
cedi
ng y
ear”
as
used
in
the
prec
edin
g pa
ragr
aph
refe
rs t
o th
e ye
ar p
rece
ding
the
dat
e of
oc
curr
ence
of
th
e cu
rren
t tra
nsac
tion.
Ite
ms
duly
an
noun
ced
in a
ccor
danc
e w
ith th
ese
Proc
edur
es n
eed
not
be c
ount
ed to
war
d th
e tra
nsac
tion
amou
nt.
The
Com
pany
sha
ll co
mpi
le m
onth
ly r
epor
ts o
n th
e st
atus
of d
eriv
ativ
es tr
adin
g en
gage
d in
up
to th
e en
d of
th
e pr
eced
ing
mon
th b
y its
elf
and
any
subs
idia
ries
that
ar
e no
t do
mes
tic
publ
ic
com
pani
es
and
ente
r th
e in
form
atio
n in
the
pres
crib
ed fo
rmat
into
the
info
rmat
ion
repo
rting
web
site
des
igna
ted
by th
e FS
C b
y th
e 10
th d
ay
of e
ach
mon
th.
Whe
n th
e C
ompa
ny a
t the
tim
e of
pub
lic a
nnou
ncem
ent
mak
es a
n er
ror
or o
mis
sion
in
an i
tem
req
uire
d by
re
gula
tions
to b
e pu
blic
ly a
nnou
nced
and
so
is r
equi
red
to c
orre
ct i
t, al
l th
e ite
ms
shal
l be
aga
in p
ublic
ly
anno
unce
d an
d re
porte
d in
the
ir en
tiret
y w
ithin
2 d
ays
com
men
cing
im
med
iate
ly f
rom
the
dat
e of
kno
win
g of
th
e er
ror o
r om
issi
on.
The
Com
pany
acq
uirin
g or
disp
osin
g of
ass
ets s
hall
keep
al
l re
leva
nt
cont
ract
s, m
eetin
g m
inut
es,
log
book
s, ap
prai
sal
repo
rts
and
CPA
, at
torn
ey,
and
secu
ritie
s un
derw
riter
op
inio
ns
at
the
com
pany
he
adqu
arte
rs,
web
site
des
igna
ted
by t
he F
SC b
y th
e 10
th d
ay o
f ea
ch
mon
th.
Whe
n th
e C
ompa
ny a
t th
e tim
e of
pub
lic a
nnou
ncem
ent
mak
es a
n er
ror
or o
mis
sion
in
an i
tem
req
uire
d by
re
gula
tions
to b
e pu
blic
ly a
nnou
nced
and
so
is re
quire
d to
co
rrec
t it,
all t
he it
ems
shal
l be
agai
n pu
blic
ly a
nnou
nced
an
d re
porte
d in
thei
r ent
irety
.
61
whe
re t
hey
shal
l be
ret
aine
d fo
r 5
year
s ex
cept
whe
re
anot
her a
ct p
rovi
des o
ther
wis
e.
Arti
cle
30
Thes
e Pr
oced
ures
wer
e es
tabl
ishe
d on
May
3, 1
997.
The
1st a
men
dmen
t was
mad
e on
Nov
embe
r 29,
199
9.
The
2nd a
men
dmen
t was
mad
e on
May
30,
200
2.
The
3rd a
men
dmen
t was
mad
e on
May
2, 2
003.
Th
e 4th
am
endm
ent w
as m
ade
on M
ay 2
7, 2
004.
Th
e 5th
am
endm
ent w
as m
ade
on Ju
ne 1
6, 2
006.
Th
e 6th
am
endm
ent w
as m
ade
on Ju
ne 1
5, 2
007.
Th
e 7th
am
endm
ent w
as m
ade
on Ju
ne 1
3, 2
012.
Th
e 8th
am
endm
ent w
as m
ade
on Ju
ne 1
8, 2
014.
Th
e 9th
am
endm
ent w
as m
ade
on M
ay 2
6, 2
017.
Thes
e Pr
oced
ures
wer
e es
tabl
ishe
d on
May
3, 1
997.
Th
e 1st
am
endm
ent w
as m
ade
on N
ovem
ber 2
9, 1
999.
Th
e 2nd
am
endm
ent w
as m
ade
on M
ay 3
0, 2
002.
Th
e 3rd
am
endm
ent w
as m
ade
on M
ay 2
, 200
3.
The
4th a
men
dmen
t was
mad
e on
May
27,
200
4.
The
5th a
men
dmen
t was
mad
e on
June
16,
200
6.
The
6th a
men
dmen
t was
mad
e on
June
15,
200
7.
The
7th a
men
dmen
t was
mad
e on
June
13,
201
2.
The
8th a
men
dmen
t was
mad
e on
June
18,
201
4.
Upd
ate
the
date
of t
he
amen
dmen
t
62
< A
ttach
men
t V
II>
Adv
ante
ch C
o., L
td.
Proc
edur
es fo
r Len
ding
Fun
ds to
Oth
er P
artie
s
No.
A
fter
am
end
men
t B
efor
e am
end
men
t R
emar
k
Arti
cle
3 Le
ndin
g C
ount
erpa
rts
Lend
ing
coun
terp
arts
in
need
of
shor
t-ter
m f
inan
cing
sh
all b
e lim
ited
to a
sub
sidi
ary
in w
hich
the
Com
pany
ho
lds 5
0% o
f the
vot
ing
shar
es o
r com
pani
es w
ith th
e de
fa
cto
cont
rol
havi
ng t
he n
eed
of s
hort-
term
fin
anci
ng
due
to b
usin
ess n
eeds
. Th
e ph
rase
“sh
ort-t
erm
” m
entio
ned
abov
e sh
all
mea
nw
ithin
one
yea
r or a
bus
ines
s cyc
le (w
hich
ever
is lo
nger
).Fo
reig
n co
mpa
nies
, of
whi
ch t
he C
ompa
ny d
irect
ly o
r in
dire
ctly
hol
ds 1
00%
of t
he v
otin
g sh
ares
, if e
ngag
ed in
th
e le
ndin
g bu
sine
ss,
will
be
ex
empt
fr
om
the
rest
rictio
ns re
ferr
ed to
in th
e fir
st p
arag
raph
of A
rticl
e 4.
Lend
ing
Cou
nter
parts
C
ompa
nies
or f
irms i
n ne
ed o
f sho
rt-te
rm fi
nanc
ing.
Le
ndin
g co
unte
rpar
ts i
n ne
ed o
f sh
ort-t
erm
fin
anci
ng
shal
l be
lim
ited
to a
sub
sidi
ary
in w
hich
the
Com
pany
ho
lds
50%
of t
he v
otin
g sh
ares
or c
ompa
nies
with
the
de
fact
o co
ntro
l hav
ing
the
need
of s
hort-
term
fina
ncin
g du
e to
bus
ines
s nee
ds.
The
phra
se “
shor
t-ter
m”
men
tione
d ab
ove
shal
l m
ean
with
in o
ne y
ear o
r a b
usin
ess c
ycle
(whi
chev
er is
long
er).
Fore
ign
com
pani
es,
of w
hich
the
Com
pany
dire
ctly
or
indi
rect
ly h
olds
100
% o
f the
vot
ing
shar
es, i
f eng
aged
in
the
lend
ing
busi
ness
, will
be
exem
pt fr
om th
e re
stric
tions
re
ferr
ed to
in th
e fir
st p
arag
raph
of A
rticl
e 4.
Acc
ordi
ng to
th
e ac
tual
pr
actic
e
Arti
cle
4 Le
ndin
g A
mou
nt a
nd F
inan
cing
Lim
it Th
e to
tal a
mou
nt le
nt to
oth
ers (
loan
able
fund
s) sh
all n
ot
exce
ed 2
0% o
f th
e ne
t val
ue o
f th
e C
ompa
ny. T
he to
tal
lend
ing
amou
nt o
f an
ind
ivid
ual
borr
ower
sha
ll no
t ex
ceed
50%
of t
he to
tal a
mou
nt o
f loa
nabl
e fu
nds.
Lend
ing
Am
ount
and
Fin
anci
ng L
imit
1.Th
e to
tal a
mou
nt le
nt to
oth
ers
(loan
able
fun
ds)
shal
lno
t exc
eed
20%
of t
he n
et v
alue
of t
he C
ompa
ny. T
heto
tal
lend
ing
amou
nt o
f an
ind
ivid
ual
borr
ower
sha
llno
t exc
eed
50%
of t
he to
tal a
mou
nt o
f loa
nabl
e fu
nds.
2.In
the
cas
e of
len
ding
fun
ds t
o co
mpa
nies
or
firm
sw
ho h
ave
a bu
sine
ss r
elat
ions
hip
with
the
Com
pany
, th
e to
tal
lend
ing
amou
nt o
f an
ind
ivid
ual
borr
ower
sh
all n
ot e
xcee
d 50
% o
f th
e to
tal a
mou
nt o
f lo
anab
le
Acc
ordi
ng to
th
e ac
tual
pr
actic
e
63
fund
s or
the
tota
l am
ount
of
the
busi
ness
tran
sact
ions
be
twee
n th
e C
ompa
ny a
nd th
e bo
rrow
er, w
hich
ever
is
low
er,
and
the
max
imum
am
ount
stip
ulat
ed i
n th
e pr
eced
ing
para
grap
h.
Arti
cle
8 Pr
oced
ures
for F
und
Lend
ing
and
Det
aile
d R
evie
w
1.A
pplic
atio
n:A
. W
hen
appl
ying
for
a l
oan
with
the
Com
pany
, a
borr
ower
sh
all
subm
it th
e ap
plic
atio
n fo
rm
or
an
offic
ial l
ette
r sp
ecify
ing
the
amou
nt, t
erm
and
pur
pose
of
the
loan
to th
e C
ompa
ny’s
Fin
ance
Dep
artm
ent.
B
. W
here
a l
oan
is g
iven
due
to
need
s ar
isin
g fr
om
busi
ness
de
alin
gs,
the
finan
ce
unit
shal
l ev
alua
te
whe
ther
the
amou
nt o
f th
e lo
an is
com
men
sura
te w
ith
the
amou
nt o
f tra
nsac
tions
and
in c
ompl
ianc
e w
ith th
ese
Ope
ratio
nal P
roce
dure
s.
C.
Whe
re a
bor
row
er i
n ne
ed o
f sh
ort-t
erm
fin
anci
ng
appl
ies
for
a lo
an,
the
Com
pany
sha
ll ev
alua
te t
he
nece
ssity
of
finan
cing
and
inv
estig
ate
the
borr
ower
’s
cred
it st
atus
.
D.
The
loan
, af
ter
bein
g ve
rifie
d to
be
feas
ible
upo
n an
alys
is,
shal
l be
sub
mitt
ed t
o th
e C
hairm
an o
f th
e B
oard
and
the
boar
d m
eetin
g fo
r app
rova
l.
2.C
redi
t Inv
estig
atio
n an
d R
isk
Ass
essm
ent
A. F
or a
firs
t-tim
e bo
rrow
er, t
he b
orro
wer
sha
ll pr
ovid
e ba
sic
info
rmat
ion
and
finan
cial
info
rmat
ion
to fa
cilit
ate
the
cred
it in
vest
igat
ion.
Proc
edur
es fo
r Fun
d Le
ndin
g an
d D
etai
led
Rev
iew
1.
App
licat
ion:
A.
Whe
n ap
plyi
ng f
or a
loa
n w
ith t
he C
ompa
ny,
a bo
rrow
er s
hall
subm
it th
e ap
plic
atio
n fo
rm o
r an
offi
cial
le
tter
spec
ifyin
g th
e am
ount
, te
rm a
nd p
urpo
se o
f th
e lo
an to
the
Com
pany
’s F
inan
ce D
epar
tmen
t.
B.
Whe
re a
loa
n is
giv
en d
ue t
o ne
eds
aris
ing
from
bu
sine
ss d
ealin
gs, t
he fi
nanc
e un
it sh
all e
valu
ate
whe
ther
th
e am
ount
of t
he lo
an is
com
men
sura
te w
ith th
e am
ount
of
tran
sact
ions
and
in c
ompl
ianc
e w
ith th
ese
Ope
ratio
nal
Proc
edur
es.
C
. W
here
a b
orro
wer
in
need
of
shor
t-ter
m f
inan
cing
ap
plie
s fo
r a
loan
, th
e C
ompa
ny s
hall
eval
uate
the
ne
cess
ity o
f fin
anci
ng a
nd i
nves
tigat
e th
e bo
rrow
er’s
cr
edit
stat
us.
D
. Th
e lo
an,
afte
r be
ing
verif
ied
to b
e fe
asib
le u
pon
anal
ysis
, sha
ll be
sub
mitt
ed to
the
Cha
irman
of t
he B
oard
an
d th
e bo
ard
mee
ting
for a
ppro
val.
2.
Cre
dit I
nves
tigat
ion
and
Ris
k A
sses
smen
tA
. For
a f
irst-t
ime
borr
ower
, the
bor
row
er s
hall
prov
ide
basi
c in
form
atio
n an
d fin
anci
al i
nfor
mat
ion
to f
acili
tate
th
e cr
edit
inve
stig
atio
n.
Acc
ordi
ng to
th
e ac
tual
pr
actic
e
64
B. F
or a
sub
sequ
ent
borr
ower
, the
cre
dit
inve
stig
atio
n sh
all b
e ca
rrie
d ou
t whe
n th
e bo
rrow
er a
pplie
s fo
r th
e re
new
al. I
n ca
se o
f a
maj
or o
r ur
gent
eve
nt, t
he c
redi
t in
vest
igat
ion
shal
l be
carr
ied
out a
t any
tim
e de
pend
ing
on th
e ac
tual
nee
ds.
C. I
f the
bor
row
er is
in g
ood
finan
cial
con
ditio
n an
d ha
s ha
d th
e an
nual
fin
anci
al s
tate
men
ts a
udite
d by
CPA
s, th
e in
vest
igat
ion
repo
rt m
ade
for
less
tha
n a
year
and
th
e au
dito
rs’ r
epor
t may
be
adop
ted
as th
e re
fere
nce.
D
. W
hen
carr
ying
out
the
cre
dit
inve
stig
atio
n, t
he
Com
pany
sha
ll m
ake
a de
taile
d as
sess
men
t of
the
im
pact
of
th
e lo
an
on
the
Com
pany
’s
busi
ness
op
erat
ions
, fin
anci
al
cond
ition
s, an
d sh
areh
olde
rs’
equi
ty.
3.C
ontra
ct S
igni
ng a
nd Id
entit
y Ve
rific
atio
nA
. The
per
son
in c
harg
e of
lend
ing
fund
s sha
ll fil
l in
the
loan
con
tract
bas
ed o
n th
e ap
prov
ed c
ondi
tions
to
proc
eed
with
the
cont
ract
sign
ing.
B
. Afte
r th
e bo
rrow
er a
nd th
e jo
int g
uara
ntor
sig
n th
e lo
an c
ontra
ct,
the
pers
on i
n ch
arge
sha
ll pe
rfor
m t
he
proc
edur
es fo
r ver
ifyin
g th
eir i
dent
ities
.
4.A
ppra
isal
of C
olla
tera
l Val
ue a
nd S
ettin
g of
Rig
hts
Whe
n ap
plyi
ng f
or a
loa
n, a
bor
row
er,
afte
r be
ing
verif
ied
to p
rovi
de c
olla
tera
l, sh
all p
rovi
de a
ple
dge
on
equi
vale
nt r
eal p
rope
rty o
r se
curit
ies
or th
e pr
omis
sory
no
te, w
hich
mat
ures
on
the
expe
cted
dat
e of
repa
ymen
t
B.
For
a su
bseq
uent
bor
row
er,
the
cred
it in
vest
igat
ion
shal
l be
car
ried
out
whe
n th
e bo
rrow
er a
pplie
s fo
r th
e re
new
al.
In c
ase
of a
maj
or o
r ur
gent
eve
nt,
the
cred
it in
vest
igat
ion
shal
l be
carr
ied
out a
t any
tim
e de
pend
ing
on th
e ac
tual
nee
ds.
C. I
f the
bor
row
er is
in g
ood
finan
cial
con
ditio
n an
d ha
s ha
d th
e an
nual
fina
ncia
l sta
tem
ents
aud
ited
by C
PAs,
the
inve
stig
atio
n re
port
mad
e fo
r le
ss t
han
a ye
ar a
nd t
he
audi
tors
’ rep
ort m
ay b
e ad
opte
d as
the
refe
renc
e.
D.
Whe
n ca
rryi
ng
out
the
cred
it in
vest
igat
ion,
th
e C
ompa
ny s
hall
mak
e a
deta
iled
asse
ssm
ent o
f the
impa
ct
of
the
loan
on
th
e C
ompa
ny’s
bu
sine
ss
oper
atio
ns,
finan
cial
con
ditio
ns, a
nd sh
areh
olde
rs’ e
quity
. 3.
Con
tract
Sig
ning
and
Iden
tity
Verif
icat
ion
A. T
he p
erso
n in
cha
rge
of le
ndin
g fu
nds
shal
l fill
in th
e lo
an
cont
ract
ba
sed
on
the
appr
oved
co
nditi
ons
to
proc
eed
with
the
cont
ract
sign
ing.
B
. A
fter
the
borr
ower
and
the
joi
nt g
uara
ntor
sig
n th
e lo
an c
ontra
ct,
the
pers
on i
n ch
arge
sha
ll pe
rfor
m t
he
proc
edur
es fo
r ver
ifyin
g th
eir i
dent
ities
.
4.A
ppra
isal
of C
olla
tera
l Val
ue a
nd S
ettin
g of
Rig
hts
Whe
n ap
plyi
ng
for
a lo
an,
a bo
rrow
er,
afte
r be
ing
verif
ied
to p
rovi
de c
olla
tera
l, sh
all
prov
ide
a pl
edge
on
equi
vale
nt r
eal
prop
erty
or
secu
ritie
s or
the
pro
mis
sory
no
te, w
hich
mat
ures
on
the
expe
cted
dat
e of
rep
aym
ent
and
is s
igne
d by
the
join
t gua
rant
or, f
or th
e C
ompa
ny a
s
65
and
is si
gned
by
the
join
t gua
rant
or, f
or th
e C
ompa
ny a
s se
curit
y. W
hen
the
join
t gu
aran
tor
is a
com
pany
or
a fir
m, t
he C
ompa
ny s
hall
exam
ine
whe
ther
its
artic
les
of
inco
rpor
atio
n an
d m
inut
es o
f th
e bo
ard
mee
ting
perm
it th
e gu
aran
tee.
5.
Insu
ranc
eEx
cept
fo
r la
nd
and
secu
ritie
s, fir
e in
sura
nce
and
rela
ted
insu
ranc
e sh
all
be
purc
hase
d fo
r ot
her
colla
tera
ls a
t the
am
ount
not
less
than
the
colla
tera
l in
pled
ge.
The
Com
pany
sh
all
be
spec
ified
as
th
e be
nefic
iary
in th
e in
sura
nce
polic
y. T
he n
ame,
qua
ntity
, pl
ace
of
stor
age,
an
d in
sura
nce
cond
ition
s an
d en
dors
emen
ts o
f th
e su
bjec
t sp
ecifi
ed i
n th
e in
sura
nce
polic
y sh
all
be c
onsi
sten
t w
ith t
he l
oan
cond
ition
s ap
prov
ed b
y th
e C
ompa
ny.
Th
e pe
rson
in
char
ge s
hall
notif
y th
e bo
rrow
er o
f a
rene
wal
bef
ore
the
term
of t
he in
sura
nce
expi
res.
6.A
ppro
pria
tion
The
loan
will
be
appr
opria
ted
afte
r a b
orro
wer
sig
n th
e co
ntra
ct, s
ubm
it th
e pr
omis
sory
not
e, s
et th
e m
ortg
age,
an
d pu
rcha
se th
e in
sura
nce.
7.
Acc
ount
Kee
ping
Whe
n th
e C
ompa
ny
com
plet
es
the
proc
edur
es
for
lend
ing
each
fun
d, F
inan
ce D
epar
tmen
t sh
all
mak
e an
en
try fo
r col
late
ral o
r cre
dit g
uara
ntee
obt
aine
d.
8.Th
e C
ompa
ny s
hall
esta
blis
h a
log
book
for
its
loan
secu
rity.
Whe
n th
e jo
int
guar
anto
r is
a c
ompa
ny o
r a
firm
, the
Com
pany
sha
ll ex
amin
e w
heth
er it
s ar
ticle
s of
in
corp
orat
ion
and
min
utes
of
the
boar
d m
eetin
g pe
rmit
the
guar
ante
e.
5.In
sura
nce
Exce
pt f
or la
nd a
nd s
ecur
ities
, fire
insu
ranc
e an
d re
late
d in
sura
nce
shal
l be
pur
chas
ed f
or o
ther
col
late
rals
at
the
amou
nt
not
less
th
an
the
colla
tera
l in
pl
edge
. Th
e C
ompa
ny s
hall
be s
peci
fied
as t
he b
enef
icia
ry i
n th
e in
sura
nce
polic
y. T
he n
ame,
qua
ntity
, pl
ace
of s
tora
ge,
and
insu
ranc
e co
nditi
ons a
nd e
ndor
sem
ents
of t
he su
bjec
t sp
ecifi
ed in
the
insu
ranc
e po
licy
shal
l be
cons
iste
nt w
ith
the
loan
con
ditio
ns a
ppro
ved
by th
e C
ompa
ny.
Th
e pe
rson
in
char
ge s
hall
notif
y th
e bo
rrow
er o
f a
rene
wal
bef
ore
the
term
of t
he in
sura
nce
expi
res.
6.A
ppro
pria
tion
The
loan
will
be
appr
opria
ted
afte
r a
borr
ower
sig
n th
e co
ntra
ct,
subm
it th
e pr
omis
sory
not
e, s
et t
he m
ortg
age,
an
d pu
rcha
se th
e in
sura
nce.
7.
Acc
ount
Kee
ping
Whe
n th
e C
ompa
ny c
ompl
etes
the
proc
edur
es fo
r len
ding
ea
ch f
und,
Fin
ance
Dep
artm
ent
shal
l m
ake
an e
ntry
for
co
llate
ral o
r cre
dit g
uara
ntee
obt
aine
d.
8.Th
e C
ompa
ny s
hall
esta
blis
h a
log
book
for
its
loa
nac
tiviti
es a
nd r
ecor
d in
det
ail
the
follo
win
g in
form
atio
n fo
r fut
ure
refe
renc
e: th
e en
tity
to w
hich
the
loan
is g
iven
,
66
activ
ities
and
reco
rd in
det
ail t
he fo
llow
ing
info
rmat
ion
for
futu
re r
efer
ence
: th
e en
tity
to w
hich
the
loa
n is
gi
ven,
the
amou
nt, t
he d
ate
of p
assa
ge b
y th
e B
oard
of
Dire
ctor
s, th
e da
te th
e lo
an is
app
ropr
iate
d, a
nd m
atte
rs
to b
e ev
alua
ted
in a
ccor
danc
e w
ith A
rticl
e 7.
9.
If,
due
to c
hang
es o
f ci
rcum
stan
ces,
the
party
to
who
m th
e C
ompa
ny g
ives
a lo
an n
o lo
nger
sat
isfie
s th
e cr
iteria
set f
orth
her
ein,
or t
he b
alan
ce o
f a lo
an e
xcee
ds
the
limits
, a
corr
ectiv
e pl
an s
hall
be p
rovi
ded
to t
he
Aud
it C
omm
ittee
and
the
prop
osed
cor
rect
ions
sha
ll be
im
plem
ente
d w
ithin
the
perio
d sp
ecifi
ed in
the
plan
.
the
amou
nt,
the
date
of
pa
ssag
e by
th
e B
oard
of
D
irect
ors,
the
date
the
loan
is a
ppro
pria
ted,
and
mat
ters
to
be
eval
uate
d in
acc
orda
nce
with
Arti
cle
7.
9.If
, due
to c
hang
es o
f circ
umst
ance
s, th
e pa
rty to
who
mth
e C
ompa
ny g
ives
a lo
an n
o lo
nger
sat
isfie
s th
e cr
iteria
se
t fo
rth h
erei
n, o
r th
e ba
lanc
e of
a l
oan
exce
eds
the
limits
, a
corr
ectiv
e pl
an
shal
l be
pr
ovid
ed
to
all
supe
rvis
ors
and
the
prop
osed
co
rrec
tions
sh
all
be
impl
emen
ted
with
in th
e pe
riod
spec
ified
in th
e pl
an.
Arti
cle
13
Impl
emen
tatio
n an
d A
men
dmen
t Th
ese
Ope
ratio
nal P
roce
dure
s sh
all b
e ap
prov
ed b
y th
e B
oard
of D
irect
ors a
nd th
en se
nt to
the
Aud
it C
omm
ittee
an
d pr
opos
ed a
t the
sha
reho
lder
s’ m
eetin
g fo
r ap
prov
al.
If a
ny d
irect
or e
xpre
sses
obj
ectio
n on
the
reco
rd o
r in
a
writ
ten
stat
emen
t, th
e C
ompa
ny
shal
l su
bmit
the
obje
ctio
n to
the
Aud
it C
omm
ittee
and
the
shar
ehol
ders
’ m
eetin
g fo
r dis
cuss
ion
any
amen
dmen
t her
eto
is s
ubje
ct
to th
e sa
me
proc
edur
es.
If t
he C
ompa
ny h
as e
stab
lishe
d in
depe
nden
t di
rect
ors,
whe
n su
bmitt
ing
thes
e O
pera
tiona
l Pr
oced
ures
to
the
Boa
rd
of
Dire
ctor
s fo
r di
scus
sion
pu
rsua
nt
to
the
prec
edin
g pa
ragr
aph,
it
shal
l co
nsid
er t
he d
isse
ntin
g op
inio
ns fr
om a
ll in
depe
nden
t dire
ctor
s fu
lly a
nd li
st th
e co
nsen
ting
and
obje
ctin
g op
inio
ns a
nd t
heir
reas
ons
in
the
mee
ting
min
utes
of t
he B
oard
of D
irect
ors.
Impl
emen
tatio
n an
d A
men
dmen
t Th
ese
Ope
ratio
nal
Proc
edur
es s
hall
be a
ppro
ved
by t
he
Boa
rd o
f D
irect
ors
and
then
sen
t to
all
supe
rvis
ors
and
prop
osed
at t
he s
hare
hold
ers’
mee
ting
for a
ppro
val.
If a
ny
dire
ctor
exp
ress
es o
bjec
tion
on th
e re
cord
or
in a
writ
ten
stat
emen
t, th
e C
ompa
ny s
hall
subm
it th
e ob
ject
ion
to th
e su
perv
isor
s an
d th
e sh
areh
olde
rs’
mee
ting
for
disc
ussi
on
any
amen
dmen
t her
eto
is su
bjec
t to
the
sam
e pr
oced
ures
. If
the
Com
pany
has
est
ablis
hed
inde
pend
ent
dire
ctor
s, w
hen
subm
ittin
g th
ese
Ope
ratio
nal
Proc
edur
es t
o th
e B
oard
of
D
irect
ors
for
disc
ussi
on
purs
uant
to
th
e pr
eced
ing
para
grap
h,
it sh
all
cons
ider
th
e di
ssen
ting
opin
ions
fro
m a
ll in
depe
nden
t dire
ctor
s fu
lly a
nd li
st th
e co
nsen
ting
and
obje
ctin
g op
inio
ns a
nd th
eir r
easo
ns in
the
mee
ting
min
utes
of t
he B
oard
of D
irect
ors.
Acc
ordi
ng to
th
e ac
tual
pr
actic
e
Arti
cle
14
Proc
edur
es fo
r Man
agin
g Fu
nds L
ent t
o Su
bsid
iarie
s:
1.Fo
r a su
bsid
iary
in w
hich
the
Com
pany
dire
ctly
or
Proc
edur
es fo
r Man
agin
g Fu
nds L
ent t
o Su
bsid
iarie
s:
For a
subs
idia
ry in
whi
ch th
e C
ompa
ny d
irect
ly o
r A
ccor
ding
to
the
actu
al
67
indi
rect
ly h
olds
mor
e th
an 5
0% o
f the
vot
ing
shar
es a
nd
whi
ch is
not
a p
ublic
com
pany
of t
he R
epub
lic o
f Chi
na,
thes
e O
pera
tiona
l Pro
cedu
res s
hall
be fo
llow
ed. T
he n
et
valu
e sh
all b
e ca
lcul
ated
bas
ed o
n th
e C
ompa
ny’s
net
va
lue.
The
Com
pany
shal
l sub
mit
the
prev
ious
mon
th's
bala
nce
of it
s loa
ned
fund
s to
Fina
nce
Dep
artm
ent b
y th
e 5t
h da
y of
eac
h m
onth
.
2.In
tern
al a
udito
rs o
f the
Com
pany
shal
l per
form
the
audi
t on
the
lend
ing
of fu
nds o
f the
subs
idia
ries b
ased
on
the
annu
al a
udit
plan
. In
the
case
that
a m
ater
ial
viol
atio
n is
foun
d, in
tern
al a
udito
rs sh
all c
ontin
uous
ly
follo
w u
p th
e im
prov
emen
ts a
nd su
bmit
the
follo
w-u
p re
port
to th
e B
oard
of D
irect
ors a
nd th
e A
udit
Com
mitt
ee.
indi
rect
ly h
olds
mor
e th
an 5
0% o
f the
vot
ing
shar
es a
nd
whi
ch is
not
a p
ublic
com
pany
of t
he R
epub
lic o
f Chi
na,
thes
e O
pera
tiona
l Pro
cedu
res s
hall
be fo
llow
ed. T
he n
et
valu
e sh
all b
e ca
lcul
ated
bas
ed o
n th
e C
ompa
ny’s
net
va
lue.
The
Com
pany
shal
l sub
mit
the
prev
ious
mon
th's
bala
nce
of it
s loa
ned
fund
s to
Fina
nce
Dep
artm
ent b
y th
e 5t
h da
y of
eac
h m
onth
.
Inte
rnal
aud
itors
of t
he C
ompa
ny sh
all p
erfo
rm th
e au
dit
on th
e le
ndin
g of
fund
s of t
he su
bsid
iarie
s bas
ed o
n th
e an
nual
aud
it pl
an. I
n th
e ca
se th
at a
mat
eria
l vio
latio
n is
fo
und,
inte
rnal
aud
itors
shal
l con
tinuo
usly
follo
w u
p th
e im
prov
emen
ts a
nd su
bmit
the
follo
w-u
p re
port
to th
e B
oard
of D
irect
ors a
nd a
ll su
perv
isor
s.
prac
tice
Arti
cle
15
Thes
e Pr
oced
ures
wer
e es
tabl
ishe
d on
May
3, 1
997.
Th
e 1s
t am
endm
ent w
as m
ade
on M
ay 3
0, 2
002.
Th
e 2n
d am
endm
ent w
as m
ade
on M
ay 2
, 200
3.
The
3rd
amen
dmen
t was
mad
e on
May
15,
200
9.
The
4th
amen
dmen
t was
mad
e on
May
18,
201
0.
The
5th
amen
dmen
t was
mad
e on
June
13,
201
3.
The
6th
amen
dmen
t was
mad
e on
May
26,
201
7.
Thes
e Pr
oced
ures
wer
e es
tabl
ishe
d on
May
3, 1
997.
Th
e 1s
t am
endm
ent w
as m
ade
on M
ay 3
0, 2
002.
Th
e 2n
d am
endm
ent w
as m
ade
on M
ay 2
, 200
3.
The
3rd
amen
dmen
t was
mad
e on
May
15,
200
9.
The
4th
amen
dmen
t was
mad
e on
May
18,
201
0.
The
5th
amen
dmen
t was
mad
e on
June
13,
201
3.
Upd
ate
the
date
of
the
amen
dmen
t
68
< A
ttach
men
t V
III>
Adv
ante
ch C
o., L
td.
Proc
edur
es fo
r End
orse
men
t & G
uara
ntee
N
o.
Aft
er a
men
dm
ent
Bef
ore
amen
dm
ent
Rem
ark
Arti
cle
5.1
Leve
l of A
utho
rizat
ion
Endo
rsem
ents
and
/or g
uara
ntee
s m
ade
by th
e C
ompa
ny
shal
l be
con
duct
ed a
fter
rece
ivin
g ap
prov
al f
rom
the
C
hairm
an a
nd th
e B
oard
of D
irect
ors.
A p
rede
term
ined
lim
it (5
%
of
the
Com
pany
’s
net
valu
e)
may
be
de
lega
ted
to th
e C
hairm
an b
y th
e B
oard
of D
irect
ors
to
faci
litat
e ex
ecut
ion
and
such
en
dors
emen
t an
d/or
gu
aran
tee
shal
l be
repo
rted
to th
e m
ost u
pcom
ing
boar
d m
eetin
g fo
r ra
tific
atio
n an
d to
th
e sh
areh
olde
rs’
mee
ting
for f
utur
e re
fere
nce.
In
ca
se
the
abov
e lim
its
have
to
be
ex
ceed
ed
to
acco
mm
odat
e bu
sine
ss n
eeds
, app
rova
l by
a re
solu
tion
of t
he B
oard
of
Dire
ctor
s sh
all
be o
btai
ned
and
over
ha
lf of
al
l th
e di
rect
ors
shal
l jo
intly
en
dors
e th
e po
tent
ial l
oss
that
may
be
brou
ght a
bout
by
exce
edin
g th
e lim
its. T
he B
oard
of D
irect
ors s
hall
also
revi
se th
ese
proc
edur
es a
nd h
ave
them
rat
ified
at t
he s
hare
hold
ers’
mee
ting.
If th
e re
vise
d pr
oced
ures
are
not
ratif
ied
at th
e sh
areh
olde
rs’
mee
ting,
the
Boa
rd o
f D
irect
ors
shal
l
Leve
l of A
utho
rizat
ion
Endo
rsem
ents
and
/or
guar
ante
es m
ade
by t
he C
ompa
ny
shal
l be
con
duct
ed a
fter
rece
ivin
g ap
prov
al f
rom
the
C
hairm
an a
nd t
he B
oard
of
Dire
ctor
s. A
pre
dete
rmin
ed
limit
(5%
of t
he C
ompa
ny’s
net
val
ue) m
ay b
e de
lega
ted
to t
he C
hairm
an b
y th
e B
oard
of
Dire
ctor
s to
fac
ilita
te
exec
utio
n an
d su
ch e
ndor
sem
ent
and/
or g
uara
ntee
sha
ll be
rep
orte
d to
the
mos
t up
com
ing
boar
d m
eetin
g fo
r ra
tific
atio
n an
d to
the
sha
reho
lder
s’ m
eetin
g fo
r fu
ture
re
fere
nce.
In
ca
se
the
abov
e lim
its
have
to
be
ex
ceed
ed
to
acco
mm
odat
e bu
sine
ss n
eeds
, app
rova
l by
a re
solu
tion
of
the
Boa
rd o
f Dire
ctor
s sh
all b
e ob
tain
ed a
nd o
ver h
alf o
f al
l th
e di
rect
ors
shal
l jo
intly
end
orse
the
pot
entia
l lo
ss
that
may
be
brou
ght a
bout
by
exce
edin
g th
e lim
its. T
he
Boa
rd o
f Dire
ctor
s sh
all a
lso
revi
se th
ese
proc
edur
es a
nd
have
the
m r
atifi
ed a
t th
e sh
areh
olde
rs’
mee
ting.
If
the
revi
sed
proc
edur
es a
re n
ot r
atifi
ed a
t th
e sh
areh
olde
rs’
mee
ting,
the
Boa
rd o
f D
irect
ors
shal
l fu
rnis
h a
plan
Acc
ordi
ng to
the
actu
al p
ract
ice
69
No.
A
fter
am
end
men
t B
efor
e am
end
men
t R
emar
k
furn
ish
a pl
an c
onta
inin
g a
timet
able
to
with
draw
the
ex
cess
por
tion.
If
, due
to c
hang
es o
f circ
umst
ance
s, th
e pa
rty to
who
m
the
Com
pany
pr
ovid
es
an
endo
rsem
ent
and/
or
guar
ante
e no
lo
nger
sa
tisfie
s th
e cr
iteria
se
t fo
rth
here
in, o
r th
e am
ount
of
endo
rsem
ent a
nd/o
r gu
aran
tee
exce
eds t
he li
mits
, a c
orre
ctiv
e pl
an sh
all b
e pr
ovid
ed to
th
e A
udit
Com
mitt
ee a
nd th
e pr
opos
ed c
orre
ctio
ns s
hall
be im
plem
ente
d w
ithin
the
perio
d sp
ecifi
ed in
the
plan
.
cont
aini
ng a
tim
etab
le to
with
draw
the
exce
ss p
ortio
n.
If, d
ue to
cha
nges
of c
ircum
stan
ces,
the
party
to w
hom
the
Com
pany
pro
vide
s an
end
orse
men
t an
d/or
gua
rant
ee n
o lo
nger
sat
isfie
s th
e cr
iteria
set
forth
her
ein,
or t
he a
mou
nt
of e
ndor
sem
ent
and/
or g
uara
ntee
exc
eeds
the
lim
its,
a co
rrec
tive
plan
shal
l be
prov
ided
to a
ll su
perv
isor
s and
the
prop
osed
cor
rect
ions
sha
ll be
im
plem
ente
d w
ithin
the
pe
riod
spec
ified
in th
e pl
an.
Arti
cle
11
Inte
rnal
aud
itors
of
the
Com
pany
sha
ll pe
rfor
m t
he
audi
t on
the
Com
pany
’s e
ndor
sem
ent a
nd/o
r gu
aran
tee
prof
ile a
t le
ast
once
per
qua
rter
and
prod
uce
writ
ten
audi
ting
repo
rts. I
n th
e ca
se th
at a
mat
eria
l vio
latio
n is
fo
und,
inte
rnal
aud
it sh
all i
mm
edia
tely
not
ify th
e A
udit
Com
mitt
ee in
writ
ing.
Inte
rnal
aud
itors
of
the
Com
pany
sha
ll pe
rfor
m th
e au
dit
on th
e C
ompa
ny’s
end
orse
men
t and
/or g
uara
ntee
pro
file
at
leas
t on
ce
per
quar
ter
and
prod
uce
writ
ten
audi
ting
repo
rts.
In t
he c
ase
that
a m
ater
ial
viol
atio
n is
fou
nd,
inte
rnal
aud
it sh
all i
mm
edia
tely
not
ify th
e su
perv
isor
s in
w
ritin
g.
Acc
ordi
ng to
the
actu
al p
ract
ice
Arti
cle
12
Thes
e Pr
oced
ures
sha
ll be
im
plem
ente
d up
on a
ppro
val
of th
e B
oard
of
Dire
ctor
s, th
e A
udit
Com
mitt
ee a
nd th
e sh
areh
olde
rs’
mee
ting.
If
an
y di
rect
or
expr
esse
s ob
ject
ion
on t
he r
ecor
d or
in
a w
ritte
n st
atem
ent,
the
Com
pany
sh
all
subm
it th
e ob
ject
ion
to
the
Aud
it C
omm
ittee
and
the
shar
ehol
ders
’ mee
ting
for d
iscu
ssio
n.
Any
am
endm
ent h
eret
o is
subj
ect t
o th
e sa
me
proc
edur
esIf
the
Com
pany
has
est
ablis
hed
inde
pend
ent
dire
ctor
s, w
hen
subm
ittin
g th
ese
Proc
edur
es t
o th
e B
oard
of
Dire
ctor
s fo
r di
scus
sion
pu
rsua
nt
to
the
prec
edin
g
Thes
e Pr
oced
ures
sha
ll be
impl
emen
ted
upon
app
rova
l of
the
Boa
rd
of
Dire
ctor
s, al
l su
perv
isor
s an
d th
e sh
areh
olde
rs’ m
eetin
g. If
any
dire
ctor
exp
ress
es o
bjec
tion
on th
e re
cord
or i
n a
writ
ten
stat
emen
t, th
e C
ompa
ny s
hall
subm
it th
e ob
ject
ion
to
the
supe
rvis
ors
and
the
shar
ehol
ders
’ m
eetin
g fo
r di
scus
sion
. A
ny a
men
dmen
t he
reto
is su
bjec
t to
the
sam
e pr
oced
ures
. If
the
Com
pany
has
est
ablis
hed
inde
pend
ent d
irect
ors,
whe
n su
bmitt
ing
thes
e Pr
oced
ures
to th
e B
oard
of
Dire
ctor
s for
dis
cuss
ion
purs
uant
to th
e pr
eced
ing
Acc
ordi
ng to
the
actu
al p
ract
ice
70
No.
A
fter
am
end
men
t B
efor
e am
end
men
t R
emar
k
para
grap
h, it
shal
l con
side
r the
dis
sent
ing
opin
ions
from
al
l in
depe
nden
t di
rect
ors
fully
and
lis
t th
e co
nsen
ting
and
obje
ctin
g op
inio
ns a
nd th
eir r
easo
ns in
the
mee
ting
min
utes
of t
he B
oard
of D
irect
ors.
para
grap
h, it
shal
l con
side
r the
dis
sent
ing
opin
ions
from
al
l ind
epen
dent
dire
ctor
s ful
ly a
nd li
st th
e co
nsen
ting
and
obje
ctin
g op
inio
ns a
nd th
eir r
easo
ns in
the
mee
ting
min
utes
of t
he B
oard
of D
irect
ors.
Arti
cle
13
Thes
e Pr
oced
ures
wer
e es
tabl
ishe
d on
May
3, 1
997.
Th
e 1s
t am
endm
ent w
as m
ade
on M
ay 2
, 200
3.
The
2nd
amen
dmen
t was
mad
e on
June
16,
200
6.
The
3rd
amen
dmen
t was
mad
e on
May
15,
200
9.
The
4th
amen
dmen
t was
mad
e on
May
18,
201
0.
The
5th
amen
dmen
t was
mad
e on
May
26,
201
7.
Thes
e Pr
oced
ures
wer
e es
tabl
ishe
d on
May
3, 1
997.
Th
e 1s
t am
endm
ent w
as m
ade
on M
ay 2
, 200
3.
The
2nd
amen
dmen
t was
mad
e on
June
16,
200
6.
The
3rd
amen
dmen
t was
mad
e on
May
15,
200
9.
The
4th
amen
dmen
t was
mad
e on
May
18,
201
0.
Upd
ate
the
date
of
the
amen
dmen
t
71
< A
ttach
men
t IX
>
Adv
ante
ch C
o., L
td.
Proc
edur
es fo
r Fin
anci
al D
eriv
ativ
es T
rans
actio
ns
No.
A
fter
am
end
men
t B
efor
e am
end
men
t R
emar
k
Arti
cle
8 Im
plem
enta
tion
and
Am
endm
ent
Thes
e Pr
oced
ure
shal
l be
su
bmitt
ed
to
the
Aud
it C
omm
ittee
and
the
shar
ehol
ders
’ m
eetin
g fo
r ap
prov
al
afte
r the
reso
lutio
n of
the
Boa
rd o
f Dire
ctor
s; th
e sa
me
proc
edur
e sh
all
appl
y w
ith a
ny a
men
dmen
t. If
any
di
rect
or e
xpre
sses
dis
sent
and
it
is c
onta
ined
in
the
min
utes
or
a w
ritte
n st
atem
ent,
the
Com
pany
sha
ll su
bmit
the
dire
ctor
's di
ssen
ting
opin
ion
to t
he A
udit
Com
mitt
ee. W
here
the
posi
tion
of in
depe
nden
t dire
ctor
ha
s be
en
crea
ted
by
the
Com
pany
, th
e B
oard
of
D
irect
ors
shal
l ta
ke
into
fu
ll co
nsid
erat
ion
each
in
depe
nden
t di
rect
or's
opin
ions
. If
an
in
depe
nden
t di
rect
or o
bjec
ts to
or
expr
esse
s re
serv
atio
ns a
bout
any
m
atte
r, it
shal
l be
reco
rded
in th
e m
inut
es o
f th
e bo
ard
mee
ting.
Impl
emen
tatio
n an
d A
men
dmen
t Th
ese
Proc
edur
e sh
all b
e su
bmitt
ed to
eac
h su
perv
isor
and
th
e sh
areh
olde
rs’ m
eetin
g fo
r app
rova
l afte
r the
reso
lutio
n of
the
Boa
rd o
f Dire
ctor
s; th
e sa
me
proc
edur
e sh
all a
pply
w
ith a
ny a
men
dmen
t. If
any
dire
ctor
exp
ress
es d
isse
nt a
nd
it is
con
tain
ed i
n th
e m
inut
es o
r a
writ
ten
stat
emen
t, th
e C
ompa
ny s
hall
subm
it th
e di
rect
or's
diss
entin
g op
inio
n to
ea
ch
supe
rvis
or.
Whe
re
the
posi
tion
of
inde
pend
ent
dire
ctor
has
bee
n cr
eate
d by
the
Com
pany
, the
Boa
rd o
f D
irect
ors
shal
l ta
ke
into
fu
ll co
nsid
erat
ion
each
in
depe
nden
t dire
ctor
's op
inio
ns. I
f an
inde
pend
ent d
irect
or
obje
cts
to o
r ex
pres
ses
rese
rvat
ions
abo
ut a
ny m
atte
r, it
shal
l be
reco
rded
in th
e m
inut
es o
f the
boa
rd m
eetin
g.
Acc
ordi
ng to
the
actu
al p
ract
ice
Arti
cle
9 Th
ese
Proc
edur
es w
ere
esta
blis
hed
on M
ay 3
, 199
7.
The
1st a
men
dmen
t was
mad
e on
Apr
il 18
, 199
8.
The
2nd
amen
dmen
t was
mad
e on
May
2, 2
003.
Th
e 3r
d am
endm
ent w
as m
ade
on M
ay 2
4, 2
005.
Thes
e Pr
oced
ures
wer
e es
tabl
ishe
d on
May
3, 1
997.
Th
e 1s
t am
endm
ent w
as m
ade
on A
pril
18, 1
998.
Th
e 2n
d am
endm
ent w
as m
ade
on M
ay 2
, 200
3.
The
3rd
amen
dmen
t was
mad
e on
May
24,
200
5.
Upd
ate
the
date
of
the
amen
dmen
t
72
The
4th
amen
dmen
t was
mad
e on
May
18,
201
0 Th
e 5t
h am
endm
ent w
as m
ade
on Ju
ne 1
8, 2
014.
Th
e 6t
h am
endm
ent w
as m
ade
on M
ay 2
6, 2
017.
The
4th
amen
dmen
t was
mad
e on
May
18,
201
0 Th
e 5t
h am
endm
ent w
as m
ade
on Ju
ne 1
8, 2
014.
73
< A
ttach
men
t X
>
Adv
ante
ch C
o., L
td.
Rul
es a
nd P
roce
dure
for S
hare
hold
ers’
Mee
tings
N
o.
Aft
er a
men
dm
ent
Bef
ore
amen
dm
ent
Rem
ark
Arti
cle
14.1
Th
e el
ectio
n of
dire
ctor
s, if
any,
in
the
shar
ehol
ders
’ m
eetin
g sh
ould
be
hand
led
in a
ccor
danc
e w
ith t
he
rele
vant
nor
ms
of t
he C
ompa
ny a
nd t
he e
lect
ion
resu
lt sh
ould
be
an
noun
ced
imm
edia
tely
in
th
e m
eetin
g,
incl
udin
g th
e na
me
of
the
elec
ted
dire
ctor
s an
d su
perv
isor
s and
the
resp
ectiv
e nu
mbe
r of v
otin
g rig
hts.
The
ballo
ts c
aste
d in
the
elec
tion
refe
rred
to a
bove
sha
ll be
se
aled
an
d si
gned
by
th
e ba
llot
insp
ecto
rs
for
safe
keep
ing
for
at le
ast o
ne y
ear;
how
ever
, the
y sh
ould
be
res
erve
d un
til th
e en
d of
the
lega
l pro
ceed
ing
that
is
filed
by
the
shar
ehol
ders
in a
ccor
danc
e w
ith A
rticl
e 18
9 of
the
Com
pany
Law
.
The
elec
tion
of d
irect
ors
and
supe
rvis
ors,
if an
y, i
n th
e sh
areh
olde
rs’
mee
ting
shou
ld b
e ha
ndle
d in
acc
orda
nce
with
the
rele
vant
nor
ms
of th
e C
ompa
ny a
nd th
e el
ectio
n re
sult
shou
ld b
e an
noun
ced
imm
edia
tely
in
the
mee
ting,
in
clud
ing
the
nam
e of
th
e el
ecte
d di
rect
ors
and
supe
rvis
ors a
nd th
e re
spec
tive
num
ber o
f vot
ing
right
s. Th
e ba
llots
cas
ted
in th
e el
ectio
n re
ferr
ed to
abo
ve s
hall
be
seal
ed
and
sign
ed
by
the
ballo
t in
spec
tors
fo
r sa
feke
epin
g fo
r at l
east
one
yea
r; ho
wev
er, t
hey
shou
ld b
e re
serv
ed u
ntil
the
end
of th
e le
gal p
roce
edin
g th
at is
file
d by
the
shar
ehol
ders
in a
ccor
danc
e w
ith A
rticl
e 18
9 of
the
Com
pany
Law
.
Acc
ordi
ng to
the
actu
al p
ract
ice
Arti
cle
19
Thes
e Pr
oced
ures
wer
e es
tabl
ishe
d on
May
3, 1
997.
Th
e 1s
t am
endm
ent w
as m
ade
on A
pril
24, 1
999.
Th
e 2n
d am
endm
ent w
as m
ade
on M
ay 3
0, 2
002.
Th
e 3r
d am
endm
ent w
as m
ade
on Ju
ne 1
6, 2
006.
Th
e 4t
h am
endm
ent w
as m
ade
on M
ay 1
8, 2
010
The
5th
amen
dmen
t was
mad
e on
June
13,
201
2.
The
6th
amen
dmen
t was
mad
e on
May
26,
201
7.
Thes
e Pr
oced
ures
wer
e es
tabl
ishe
d on
May
3, 1
997.
Th
e 1s
t am
endm
ent w
as m
ade
on A
pril
24, 1
999.
Th
e 2n
d am
endm
ent w
as m
ade
on M
ay 3
0, 2
002.
Th
e 3r
d am
endm
ent w
as m
ade
on Ju
ne 1
6, 2
006.
Th
e 4t
h am
endm
ent w
as m
ade
on M
ay 1
8, 2
010
The
5th
amen
dmen
t was
mad
e on
June
13,
201
2.
Upd
ate
the
date
of
the
amen
dmen
t
74
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