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DISCLAIMER

THIS IS A TRANSLATION OF THE AGENDA FOR THE 2020 ANNUAL MEETING OF

SHAREHOLDERS (THE “AGENDA”) OF CHINA METAL PRODUCTS CO., LTD. (THE

“COMPANY” OR ”CMP”). THIS TRANSLATION IS INTENDED FOR REFERENCE

ONLY AND NOTHING ELSE. THE COMPANY HEREBY DISCLAIMS ANY AND ALL

LIABILITIES WHATSOEVER FOR THE TRANSLATION. THE CHINESE TEXT OF

THE AGENDA SHALL GOVERN ANY AND ALL MATTERS RELATED TO THE

INTERPRETATION OF THE SUBJECT MATTER STATED HEREIN.

CHINA METAL PRODUCTS CO., LTD.

2020 Annual Meeting of Shareholders

Table of Contents Page

Agenda: .......................................................................................................................... 1

I. Meeting Called to Order ....................................................................................... 1

II. Chairperson Takes Chair ...................................................................................... 1

III. Chairperson Remarks .......................................................................................... 1

IV. Announcements ................................................................................................... 1

V. Acknowledgements .............................................................................................. 3

VI. Discussion and Elections...................................................................................... 3

VII. Extemporary Motions ........................................................................................... 7

VIII. Adjournment ......................................................................................................... 7

Attachments: .................................................................................................................. 8

I. 2019 Annual Operating Report ............................................................................. 8

II. 2019 Audit Committee’s Review Report ............................................................... 16

III. Comparison Table for the Corporate Social Responsibility Best Practice

Principles ............................................................................................................. 17

IV. Comparison Table for the Rules of Procedure for Board of Directors Meetings .... 21

V. Comparison Table for the Ethical Corporate Management Best Practice

Principles ............................................................................................................. 24

VI. Comparison Table for the Procedures for Ethical Management and Guidelines

for Conduct .......................................................................................................... 30

VII. 2019 Parent Company Only Financial Statements, Consolidated Financial

Statements and Independent Auditors’ Report ..................................................... 37

VIII. 2019 Earnings Appropriation Sheet ...................................................................... 54

IX. Comparison Table for the Articles of Incorporation ................................................ 55

X. Comparison Table for the Rules of Procedure for Meeting of Shareholders .......... 57

Appendices: .................................................................................................................... 59

I. Articles of Incorporation (Before Amendments) .................................................... 59

II. Rules of Procedure for Meeting of Shareholders (Before Amendments) ............... 67

III. Rules for Director Elections .................................................................................. 72

IV. Shareholding by All Directors ............................................................................... 74

V. Impact of Stock Dividend Issuance on Business Performance, Earnings per

Share and Shareholders’ Return on Investment ................................................... 75


Agenda of 2020 Annual Meeting of Shareholders

Time: 9:30 a.m., June 22, 2020 (Monday)

Venue: 2F., Meeting Room, No. 488, Shangkeng Village, Xinfeng Township, Hsinchu County (CMP

Hsinchu Plant)

Agenda: I. Meeting Called to Order

II. Chairperson Takes Chair

III. Chairperson Remarks

IV. Announcements

(I) 2019 Annual Operating Report and Financial Reports (please refer to page 8-

15, Attachment I )

(II) 2019 Audit Committee’s Review Report (please refer to Page 16, Attachment

II )

(III) The Company's appropriations of earnings in cash dividends to shareholders

for 2019

1. The Company's appropriations of earnings in cash dividends to

shareholders for 2019 have been approved by the Board of Directors on

May 12, 2020 as stipulated in Article 27 of the Articles of Incorporation.

The appropriation of earnings in cash dividends is NTD 0.9 per share,

which amounted to NTD 346,726,901.

2. The case was approved by the Board of Directors, authorizing the

Chairman to set the ex-dividend date and other related matters. If there is

a change in the number of common stock causing changes in the ratio of

allotments per share, the Chairman is authorized to process it.

(IV) Report on status of the guarantees and endorsements

Unit: NTD ‘000

Counterparties

Guarantees and Endorsements

Beginning of the Year

Changes During the Year

Guarantees and Endorsements End of the Year

Sunflower Investment Co., Ltd. 110,000 0 110,000

The Splendor Hospitality International Co., Ltd.

2,000,000 -100,000 1,900,000

The Hotel National Co., Ltd. 100,000 0 100,000

Shangri-La Tourism Co., Ltd. 652,500 0 652,500

CMAAN Health Co., Ltd. 62,500 -16,820 45,680

Total 2,925,000 -116,820 2,808,180

1

(V) Report on the distribution of employee compensation and remuneration for

Directors for 2019

1. The Company’s audited net profit before tax in 2019 amounted to NTD

571,679,224 and totaled to NTD 602,401,711 after adding the employee

compensation and remuneration for Directors stated in the financial

reports. In accordance with Article 27-1 of the Company’s Articles of

Incorporation, in consideration of shareholders’ equity, and reference to

the industry norm and the economic environment as a whole, the

Company shall allocate 2.6% and 2.49999% of the net profit as employee

compensation and remuneration for Directors, amounted to NTD

15,662,444 and NTD 15,060,043, respectively.

2. The employee compensation of NTD 15,662,444 and Directors'

remuneration of NTD 15,060,043 allocated are to be paid out in cash and

are the same as the remuneration expenses recognized in 2019. The

aforementioned employee compensation is allocated to employees of the

Company and its subsidiaries.

3. The abovementioned 2019 remuneration for Directors is calculated in

accordance with the Company’s Remuneration Policy for Directors,

Remuneration Committee and Audit Committee Members, and Managers,

and has been submitted to the Remuneration Committee for discussion.

4. The proposed amount and payment methods of employee compensation

and remuneration for Directors, as well as individual Director’s

remuneration allocation, have been discussed and approved by the

Remuneration Committee on March 26, 2020, and submitted to the Board

of Directors for approval in accordance with the law and regulations.

(VI) Report on the proposed amendments to the Company’s Corporate Social

Responsibility Best Practice Principles. For the comparison table, please refer

to page 17-20, Attachment III.

(VII) Report on the proposed amendments to the Company’s Rules of Procedure

for Board of Directors Meetings. For the comparison table, please refer to page

21-23, Attachment IV.

(VIII) Report on the proposed amendments to the Company's Ethical Corporate

Management Best Practice Principles and Procedures for Ethical

Management and Guidelines for Conduct. For the comparison table, please

refer to page 24-36, Attachment V and VI.

2

V. Acknowledgements

(I) To acknowledge the 2019 final accounts (Proposed by the Board of Directors)

1. The 2019 Annual Operating Report has been compiled.

2. The 2019 Parent Company Only Financial Statements and Consolidated

Financial Statements have been compiled.

3. TSENG, Kuo Yang and CHIH, Shih Chin, CPAs of KPMG Taiwan have

audited the aforementioned financial statements and issued an unqualified

audit opinion thereof.

4. This case has been reviewed by the Audit Committee on March 26, 2020

and submitted to the Board of Directors for approval in accordance with the

law and regulations.

5. For the abovementioned statements, please refer to page 8-16, Attachment

I and II, and page 37-53, Attachment VII.

Resolution:

(II) To acknowledge the 2019 earnings appropriation (Proposed by the Board of

Directors)

1. In the Company's 2019 Earnings Appropriation Sheet, legal reserves were

appropriated in accordance with the laws, and retrospective adjustments

were also made to the 2018 beginning net increase amount of retained

earnings due to changes in the version of accounting standards and 2019

earning distribution of cash dividend in NTD 0.9 per share. The Sheet has

been reviewed by the Audit Committee and submitted to the Board of

Directors for resolution according to law. Please refer to page 54 for

Attachment VIII.

2. When calculating the 5 % income tax on unappropriated retained earnings

based on Article 66-9 of the Income Tax Law, 2018 beginning net increase

amount of retained earnings retrospectively adjusted due to changes in the

version of accounting standards should be levied first, then the earnings in

2019.

Resolution:

VI. Discussion and Elections

(I) Amendments to the Articles of Incorporation (Proposed by the Board of

Directors)

In accordance with Order No. 1080311451 issued by the Financial Supervisory

Commission, which requires that the candidate nomination system shall be

3

adopted for the election of directors and supervisors, amendments are made to

the Articles of Incorporation according to MOEA's Letter No. 10802432410,

which explains Company Act Article No. 237 on legal reserve amounts. Please

refer to page 55-56 (Attachment IX) for the comparison table.

Resolution:

(II) Amendments to the Procedures of Shareholders' Meetings (Proposed by the

Board of Directors)

The shareholders' meetings have adopted the electronic voting platform to vote

case by case, and the Rules of Procedure for Shareholders Meetings are

amended according to the Sample Template for XXX Co., Ltd. Rules of

Procedure for Shareholders Meetings of a Corporation based on the Letter No.

1080024221 issued by TWSE. Please refer to page 57-58 (Attachment X) for

the comparison table.

Resolution:

(III) Re-election of the Company's Directors (Proposed by the Board of Directors)

1. The term of the current Directors of the Company will expire on June 18,

2020. In accordance with the provisions for the establishment of directors

in Article 17 of the Company's Articles of Incorporation, nine Directors

(including three Independent Directors) will be elected.

2. The new Directors take office the day after they are elected with the term

of office of 3 years, and they are eligible for re-election. The next term for

the new Directors will be from June 22, 2020 to June 21, 2023.

3. The election is based on the Company's Rules for Director Elections.

4. The list of candidates for Independent Directors of the Company is as

follows:

Nominee

Name

Major Education

/Experience

Have Nominee

served as an

Independent

Director of more

than 3 public

listed companies?

Have Nominee

served as an

Independent

Director of the

Company for more

than 3 terms?

LIAO, Liou

Yi

Department of Statistics,

Feng Chia University

Former Mayor of

Taichung County

No No

4

Nominee

Name

Major Education

/Experience

Have Nominee

served as an

Independent

Director of more

than 3 public

listed companies?

Have Nominee

served as an

Independent

Director of the

Company for more

than 3 terms?

Former Minister of the

Ministry of the Interior

Former Management

Consultant at CTBC

Bank

Current Chairman of

Athletic Edutainment

Co., Ltd.

Current Independent

Director at Feng Hsin

Steel Co., Ltd.

Current Consultant of

Run Long Construction

Co., Ltd.

CHANG,

Ming Jye

International Business,

National Taiwan University

Former President of

Barits Securities

Corporation

Former President of

Mega Securities Co.,

LTD.

Former Consultant at

Fubon Securities

Current Chief Economist

of FULAGAI Capital Co.,

Ltd.

Current Chairman and

President of Service &

Quality Group Co., Ltd.

No No

5

Nominee

Name

Major Education

/Experience

Have Nominee

served as an

Independent

Director of more

than 3 public

listed companies?

Have Nominee

served as an

Independent

Director of the

Company for more

than 3 terms?

LIN, Jung

Chuen

PhD of Business

Administration, National

Chengchi University

Former Director at

DeHwa Construction

Co., Ltd.

Former Executive

Director of the English

Taught Program in

International Business

at Shih Chien University

and Associate Dean of

the School of

Management

Former Consultant at

the Taiwan Academy of

Banking and Finance

Current Independent

Director at Everlight

Electronics Co., Ltd.

Current Independent

Director of DV Biomed

Co., Ltd.

No No

Election Results：

(IV) Discuss the Company's lifting of the restriction on directors serving in competing

companies (Proposed by the Board of Directors)

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.”

6

2. If the new Directors of the Company (if the director is an institutional

shareholder, the institutional shareholder and its representative shall be

included) have investments or operate in other companies with the same

or similar business scope as the Company and serving as Directors or

managers in the best interest of the Company, during his tenure of office,

the restriction to work in such competing companies should be removed

based on the agreement from the Board of Directors.

Resolution:

VII. Extemporary Motions

VIII. Adjournment

7

【Attachment I】


2019 Annual Operating Report

(I) Results of Operation

CMP Group consists of three primary businesses: Metal Manufacturing, Real Estate

Development and Lifestyle Hospitality. In 2019, CMP Group’s operating results were

as follows: the consolidated operating revenues was approximately NTD 13.8 billion,

the consolidated net operating income was approximately NTD 1 billion, and the net

consolidated profit was approximately NTD 0.7 billion. CMP Group’s assets was

approximately NTD 42.9 billion in total.

(II) Status of Budget Implementation: Not Applicable

(III) Financial Revenue and Profitability Analysis

Unit: NTD ‘000

Items 2019 2018

Financial

Income

&Expenditure

Interest Revenue 57,615 62,179

Interest Expense 269,236 264,757

Net Foreign Exchange

Gains(Losses)

5,738 68,694

Profitability

Return on Assets (%) 2.17 6.71

Return on Shareholders'

Equity (%)

4.05 14.65

Ratio of Income to Paid-in

Capital (%)

26.85 63.85

Ratio of Net Profit Before Tax

to Paid-in Capital(%)

23.05 62.48

Net Iratio (%) 4.81 13.17

Earnings per Share (NTD) 1.32 4.76

(IV) Status of Primary Operations, Research and Developments

Metal Manufacturing Segment

CMP Hsinchu Plant:

The overall revenue of the Hsinchu Plant in 2019 was burdened by the US-China trade

war that caused export orders in the agricultural machinery, woodworking machinery,

public works and other industries less robust than expected. Nonetheless, Hsinchu

Plant made constant efforts to develop new products and increase market share,

8

securing a satisfactory result in the domestic sales of spinning products, whose market

share in Taiwan had been increased to 20% from 10%. Thanks to these efforts,

Hsinchu Plant enjoyed an increase in the overall revenue compared with the last year.

Apart from the efforts to expand revenue sources, Hsinchu Plant launched measures

to control manufacture cost and strengthen corporate strength since the latter half of

the year, in an attempt to respond to the changes in the global economic environment.

Looking forward to 2020, we will continue to cut expenditures in Q1 until orders bottom

out and rise. In terms of business, we will focus on the development of new customers

and products on the one hand and make full use of the advantage in production

capacity to win over more orders from our existing customers on the other hand. By

such a two-pronged strategy, we will strive to achieve the expected goals.

China Metal International Holdings Inc. (CMI):

Despite the global economic turmoil following the US-China trade war that led to

reduced revenue in 2019, CMI secured the net profit margin of 2019 comparable to

2018 by continuously striving for excellence, actively strengthening corporate

strength and advancing the circular economy, as well as the contribution of

government subsidies. The key points are as follows:

1. In 2019, over ten video conferences on different themes were held to exchange

experiences of various factories. In the future, such exchanges and seminars will

continue to be held to publicize CMI’s management philosophy and promote inter-

factory technology integration.

2. In December 2019, Suzhou CMS Machinery Co., Ltd. (CMS) and Suzhou CMB

Machinery Co., Ltd. (CMB) were awarded certification as “A-Class Suzhou City

Enterprises Exempted from Discontinued/Limited Production for Staggered Peak

Production during Fall, Winter and Heavy Pollution Weather Emergency Controls.”

CMW (Tianjin) Industry Co., Ltd. (CMW) was also granted the exemption from

discontinued/limited production from the local environmental protection bureau. CMI

factories have been improving themselves in terms of environmental protection and

circular economy, holding a lead in the government’s green indicators. In addition,

efforts are continuously made to improve the working environment and contribute to

9

social environmental protection.

3. The new CMI (Wu Han) Precision Machinery Co., Ltd. (CMH) plant officially started

construction in October 2019. In the first phase of the new plant, two DISA molding

lines are to be constructed. Due to the impact of the coronavirus outbreak, the

project is expected to be completed by the end of 2020. The initial production of

products has been arranged, and the recruitment and training of relevant personnel

reserved for the new plant are also underway in CMB.

Atrans Precision Industries Co., Ltd.:

Despite the negative influence of the US-China trade war, Atrans Precision achieved

slightly higher annual revenue than the previous year due to the benefits from such

positive factors as the strengthening of the US dollar in the first half of the year as well

as price adjustments and urgent orders. Moreover, various internal improvement

measures taken in 2018 have begun to show up their effectiveness, leading to a

significant increase in operating gross profit and net income after tax as compared to

2018.

In 2019, various aspects of Atrans Precision were continuously perfected. In addition

to equipment replacement and performance optimization, we cooperated with CMP

Group to introduce PLM, MES and other systems to provide immediate and preventive

management, with the goal of improving our software and hardware strengths in a

phased planning method and ultimately come true the transformation and upgrading

plan.

However, it can be expected that the new coronavirus disease will cast a negative

impact on the business climate and industry supply and demand in 2020. Apart from

assisting existing customers in making corresponding preparations, Atrans Precision

will continue to strengthen its strengths and develop new products with high added

value and customers to buffer the adverse effects of the disease and contribute to the

CMP Group’s profit.

10

China Metal Japan Co., Ltd. (CMJ):

In 2019, CMJ managed to achieve the sales and profit targets once again. The

transmission shaft products and assembly parts exported to the U.S. through triangular

trade performed noticeably well in 2019. Coupled with the delayed purchases from

Indonesia, CMJ secured a sales profit exceeding the original target.

Our subsidiary SST also achieved remarkable sales performance exceeding

expectation in gear and camshaft components.

CMJ continued to carry out CMP Group's specific project business, including the

development of businesses including cast iron parts, differential carriers, engine parts,

and brake calipers, finally contributing to the sales in 2019.

Looking forward to 2020, CMJ will be celebrating its 20th anniversary. Despite the

slight influence of the coronavirus outbreak on the business, CMJ will uphold a prudent

attitude as always, develop long-term and medium-term plans, and set up a strategic

basis to facilitate the implementation of related operation and management measures.

China Metal Automotive International Co., Ltd. (CMAI):

Due to the unfavorable factors including more than a year’s US-China trade war,

punitive tariff measures, and General Motors’ nationwide strike lasting nearly one and

a half months since the mid-September, the sales of exhaust pipes had been

significantly affected, leading to reduced profit of CMAI in 2019 compared to 2018.

In terms of operations, in order to cooperate with CMI to expand customer business

and avoid high punitive tariffs under the Section 301, CMAI established satellite

warehouses in Ames, Iowa, USA, and Toronto, Canada, in February and August 2019

respectively. These two warehouses have successfully replicated the logistics supply

chain and connected to the main system, laying the foundation for the future expansion

to other North American states or European countries.

Looking forward to 2020, the US-China trade war appears to become a new normal,

neither deteriorating nor cooling down. As such, to seek new markets outside the U.S.

11

for existing Chinese suppliers and to seek new suppliers outside China for existing

American customers turn into two main development directions of CMAI. Efforts have

been made in this respect since the second half of 2019, and fruits are to be yielded in

2020. In addition, business personnel are also paying sustained attention to the

development of the EV industry and keep in touch with relevant procurement personnel.

It is expected to enter the industry at an appropriate time, in the hope of occupying a

place in the new energy vehicle market.

Furthermore, in order to improve organizational efficiency and reduce operating

expenses, CMAI has launched a lean organization plan and taken actions to rationalize

processes to enhance competitiveness since the beginning of 2020.

Real Estate Development Segment

PUJEN Land Development Co., Ltd. (PUJEN):

Taiwan's real estate market in 2019 was in the bottoming stage as a whole. Corporate

brand force turned out to be the most critical factor that contributed to the noticeable

performance of PUJEN. The real estate project PUJEN Yongji has been sold out by

our own salespersons within 5 months since launching. The project PUJEN Yifang in

Jing Lane, Dunhua North Road is to be launched at the end of the year, and it is

expected to be open for sales soon. In addition, the project CMP Midtown, another

masterpiece of CMP Group in Taichung has also been released in March 2019 and

secured high market recognition and sales success under joint efforts of working

partners.

Although the overall downturn in the luxury housing market weighed on the selling of

“CMPJ Residence de L’aqua” that features high unit price and high total price, the

project still won extensive praises from customers by virtue of its excellent planning,

high quality and rareness despite of the decreased overall revenue in 2019.

PUJEN seems poised to earn much in land development in 2020. Concrete progress

12

is to be made in an array of urban renewal and joint construction projects, including

Qingcheng St Project, Renai Rd Project, Xinyi Rd Project, Jinan Rd Project, Roosevelt

Rd Project, and Zhongshan Project 2. Some new projects developed in response to

the government's vigorous promotion of the laws and regulations governing the

renovation of old and dilapidated houses, such as Ronghua 2nd Rd Project and

Qingcheng No. 1 Project, are to complete construction and be open for sales. The

projects under construction including CMP Midtown, Ching-Geng Yanji, PUJEN

Yangmu and PUJEN Yongji all are underway with quality as planned, with the goal of

providing our customers with the best housing quality.

Looking forward to 2020, despite the fact that the real estate market has entered the

era of low profits and the recent coronavirus outbreak presumably adds variables to

the market, the Company still adheres to the three operating strategies, namely “stable

operation,” “operational transformation,” and “operational excellence.” Remaining true

to our original aspiration, we devote ourselves to the urban environment where we live

by developing lands, focusing on seeking the harmonious relationship between the

land and human feelings.

Lifestyle Hospitality Segment

Park Lane by CMP:

Park Lane by CMP completed the renovation of the street stores in the west light food

area in July 2019, and introduced Sarutahiko Coffee shop and FLIPPER'S light food

store, with the seating area further expanded to enhance business performance. In

September, the remodeling of the Eslite Bookstore and Eslite Wine Cellar at the 3rd

floor was completed, elevating the overall brightness of the stores, adding light food

and retail sales, and introducing the Yonshin Tea & Cake Selection Ba in an attempt

to drive the performance growth of the whole floor. The 14th and 15th floors were

leased to Star Hostel as hotels, which started business in October, with the goal of

attracting different customer groups for the mall.

13

Since 2019, a new edition of Parklane Membership APP has been officially launched

to provide more complete membership information and higher convenience of use, in

a bid to improve the loyalty of members. The parking lot was performed wall finishing

and painting to significantly uplift the impression and degree of identification of

customers when using the parking lot.

The Hotel National Co., Ltd. (The Hotel National):

In response to the situation in 2019, the Hotel National made great efforts to

develop OTA customer sources and was granted the“Golden Ring Award”

from the hotel booking website Agoda, receiving highly positive comments from

customers.

Looking forward to 2020, the Hotel National will strengthen training courses for

employees to enhance their professional competence and bring better services to

guests, thus improving its performance. Meanwhile, the control on manpower and

catering costs is getting rigorous to improve the Hotel National’s profit situation. Due

to the impact of the coronavirus outbreak, the revenue is expected to decrease in the

first half of 2020 compared with the same period of last year. Given this situation, guest

rooms and catering operations will be adjusted to increase revenue, and the number

of employees will be downsized to save labor costs, in the hope of reducing operating

losses caused by the epidemic.

Shangri-La Tourism Co., Ltd. (Shangri-La):

In 2019, Shangri-La continued to accumulate the brand strength of CMP Village and

won the recognition of index awards such as foreign and domestic tourism experience

and architectural art, with the goal of stepping out of Taiwan and developing overseas

high-end Chinese markets with CMP's brand, the Forest BIG.

Looking forward to 2020, Shangri-La will transform the brand marketing momentum,

invite cooperative brand partners, and launch new collaboration programs and

14

operating models. By these actions, Shangri-La strives to extend its tentacles

horizontally to the elite in the industry, so as to maintain flexibility for the service

business model during the future transformation. Concurrently, Shangri-La has also

entered the stage of application of design proposals for approval, hoping that once the

transition is completed, the operating status will improve and swing back to profit.

Chairman :LIN, Ting Fung

President :KING, Fong Tien

Accounting Manager : WANG, Pei Chang

15

【Attachment II】

2019 Audit Committee's Review Report

The Board of Directors has prepared the Company's 2019 Business Report, Financial Statements

and Proposal for Earnings Appropriation, among which the Financial Statements have been audited

by KPMG, Taiwan, by whom an audit report has been issued accordingly. The above statements and

reports have been examined and reviewed by the Audit Committee, and no irregularities were found.

According to the Securities and Exchange Act and the Company Act, we hereby submit this report.

China Metal Products Co., Ltd.

Convener of the Audit Committee CHANG, Ming Jye

March 30, 2020

16

【Attachment III】


Comparison Table for the Corporate Social Responsibility Best Practice

Principles

Amended Articles Original Articles Explanations

Article 3. The Company fulfills its corporate social responsibility and pays attention to the rights and interests of stakeholders. While pursuing sustainable development and profit, the Company values topics pertaining to the environment, society, and corporate governance and incorporates them into its management approaches and operating activities. The Company shall perform risk assessments on environmental, social, and corporate governance issues related to its operations in accordance with the materiality principle, and establish relevant risk management policies or strategies.

Article 3. The Company fulfills its corporate social responsibility and pays attention to the rights and interests of stakeholders. While pursuing sustainable development and profit, the Company values topics pertaining to the environment, society, and corporate governance and incorporates them into its management approaches and operating activities.

In response to the new Corporate Governance Roadmap (2018-2020), the Company intended to improve the disclosures of non-financial information in its annual report and included paragraph 2 with reference to significant international development and Item for Assessment 1 in the Table 2-2-2 "The State of the Company's Performance of Social Responsibilities, Any Variance from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies, and the Reason for Any Such Variance" under the Regulations Governing Information to be Published in Annual Reports of Public Companies promulgated by the competent authority.

Article 17. The Company shall assess the potential risks and opportunities arising from climate change for its current and future operations and undertake response measures with respect to climate change. The Company shall adopt standards or guidelines generally accepted in Taiwan and abroad to enforce corporate greenhouse gas inventory and make disclosures accordingly. The scope of disclosure shall include: I. Direct greenhouse gas

emissions: Sources of emissions are owned or controlled by the Company.

Article 17. The Company shall adopt standards or guidelines generally accepted in Taiwan and abroad to enforce corporate greenhouse gas inventory and make disclosures accordingly. The scope of disclosure shall include: I. Direct greenhouse gas

emissions: Sources of emissions are owned or controlled by the Company.

II. Indirect greenhouse gasemissions: Emissionsresulting from the utilizingelectricity acquiredexternally, heating, orsteam.

The Company shall pay attention to the impact of

I. Amended the former part of paragraph 2 of the current article and rearranged it as paragraph 1. In response to the new Corporate Governance Roadmap (2018-2020), the Company intended to improve the disclosures of non-financial information in its annual report and amended the content of the paragraph with reference to significant international development and Item for Assessment 3(3) in the Table 2-2-2 "The State of the Company's Performance of Social Responsibilities, Any Variance from the

17


II. Indirect greenhouse gasemissions: Emissionsresulting from the utilizingelectricity acquiredexternally, heating, orsteam.

The Company shall prepare statistics for the emissions of greenhouse gases, water usage, and the total weight of wastes, establish policies to manage the reduction of greenhouse gases, water usage, or other wastes, include the acquisition of carbon rights into the planning for its carbon reduction strategy, and implement the strategy accordingly to mitigate the impact of the Company's operating activities on climate change.

climate change on operating operations, formulate energy conservation and carbon reduction as well as greenhouse gas reduction strategies based on its business operations and results of greenhouse gas inventory. The Company shall also include the acquisition of carbon rights into the planning for its carbon reduction strategy and implement the strategy accordingly to mitigate the impact of the Company's operating activities on climate change.

Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies, and the Reason for Any Such Variance" under the Regulations Governing Information to be Published in Annual Reports of Public Companies promulgated by the competent authority.

II. Rearranged paragraph 1of the current article asparagraph 2 and noamendment was made tothe content.

III. Amended the latter partof paragraph 2 of thecurrent article andrearranged it asparagraph 3. In responseto the new CorporateGovernance Roadmap(2018-2020), theCompany intended toimprove the disclosuresof non-financialinformation in its annualreport and amended thecontent of the paragraphwith reference tosignificant internationaldevelopment and Item forAssessment 3(4) in theTable 2-2-2 "The State ofthe Company'sPerformance of SocialResponsibilities, AnyVariance from theCorporate SocialResponsibility BestPractice Principles forTWSE/GTSM ListedCompanies, and theReason for Any SuchVariance" under theRegulations GoverningInformation to bePublished in AnnualReports of PublicCompanies promulgatedby the competentauthority.

18


Article 21. The Company shall create a favorable environment for the development of employees' careers and establish effective training programs to foster career skills. The Company shall establish and implement reasonable employee benefit measures (including compensation, vacation, and other benefits), and appropriately reflect the corporate operating performance or achievements in the employee remuneration policy, to ensure the recruitment, retention, and motivation of human resources, and achieve the objective of sustainable operations.

Article 21. The Company shall create a favorable environment for the development of employees' careers and establish effective training programs to foster career skills. The Company shall appropriately reflect the corporate operating performance or achievements in the employee remuneration policy, to ensure the recruitment, retention, and motivation of human resources, and achieve the objective of sustainable operations.

In response to the new Corporate Governance Roadmap (2018-2020), the Company intended to improve the disclosures of non-financial information in its annual report and amended the content of paragraph 2 with reference to significant international development and Item for Assessment 4(2) in the Table 2-2-2 "The State of the Company's Performance of Social Responsibilities, Any Variance from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies, and the Reason for Any Such Variance" under the Regulations Governing Information to be Published in Annual Reports of Public Companies promulgated by the competent authority.

Article 24. The Company shall ensure the quality of its products and services by complying with the laws and regulations of the government and relevant standards of its industry. The Company shall adhere to related regulations and international standards for customer's health and safety, customer's privacy, marketing and labeling regarding its product and service. The Company shall not engage in any activities involving deceptive or misleading behaviors, frauds, or other actions that may diminish the trust of consumers or damage consumer interest.

Article 24. The Company shall ensure the quality of its products and services by following the laws and regulations of the government and relevant standards of its industry. The Company shall adhere to related regulations and international standards for marketing and labeling regarding its product and service. The Company shall not engage in any activities involving deceptive or misleading behaviors, frauds, or other actions that may diminish the trust of consumers or damage consumer interest.

In response to the new Corporate Governance Roadmap (2018-2020), the Company intended to improve the disclosures of non-financial information in its annual report and amended the content of paragraph 2 with reference to significant international development and Item for Assessment 4(5) in the Table 2-2-2 "The State of the Company's Performance of Social Responsibilities, Any Variance from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies, and the Reason for Any Such Variance" under the Regulations Governing Information to be Published in Annual Reports of Public Companies promulgated by the competent authority.

Article 26. The Company shall assess the impact its procurement has on society as well as the environment of the community that it is purchasing from and

Article 26. The Company shall assess the impact its procurement has on society as well as the environment of the community that it is purchasing from and

In response to the new Corporate Governance Roadmap (2018-2020), the Company intended to improve the disclosures of non-financial information in its

19


shall cooperate with suppliers to jointly implement its corporate social responsibility. The Company shall establish its supplier management policy to require suppliers to comply with relevant regulations regarding issues of environmental protection, occupational safety and health, or worker's human rights. Prior to engaging in commercial dealings, the Company shall assess whether there is any record of a supplier's impact on the environment and society and avoid conducting transactions with suppliers that violate its corporate social responsibility policy. When the Company enters into a contract with a major supplier, the content should include terms stipulating mutual compliance with corporate social responsibility policies and specify that the contract may be terminated or rescinded any time if the supplier has violated such policies and has caused significant influences on the environment and society of the community of the supply source.

shall cooperate with suppliers to jointly implement its corporate social responsibility. Prior to engaging in commercial dealings, the Company shall assess whether there is any record of a supplier's impact on the environment and society and avoid conducting transactions with suppliers that violate its corporate social responsibility policy. When the Company enters into a contract with a major supplier, the content should include terms stipulating mutual compliance with corporate social responsibility policies and specify that the contract may be terminated or rescinded any time if the supplier has violated such policies and has caused significant influences on the environment and society of the community of the supply source.

annual report and amended the content of paragraph 2 with reference to significant international development and Item for Assessment 4(6) in the Table 2-2-2 "The State of the Company's Performance of Social Responsibilities, Any Variance from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies, and the Reason for Any Such Variance" under the Regulations Governing Information to be Published in Annual Reports of Public Companies promulgated by the competent authority.

Article 32 The Principles were adopted on May 10, 2016. The first revised version of the Principles was adopted on March 30, 2020.

Article 32 The Principles were adopted on May 10, 2016.

Amended in accordance with changes made.

20

【Attachment IV】


Comparison Table for the Rules of Procedure for

Board of Directors Meetings

Article After Amendment Before Amendment Explanations

Article 3. The Board meetings of the Company shall be convened every 3 months, and those meetings convened by the Chairman shall be chaired by him. However, the first Board meeting of each term shall be convened and chaired by the Director whose ballots represent the most voting rights at the Shareholders' meeting. When there are two or more persons with the right to convene, they shall elect one among themselves as the chair. For any Board meeting convened by the majority of Directors themselves according to the requirements under the Company Act, the Directors shall elect one among themselves as the chair. Where the Chairman is on leave or for any reason unable to exercise his/her functional authority, the Vice Chairman shall act on his/her behalf. Where the Vice Chairman is also on leave or for any reason unable to exercise his/her functional authority, the Chairman shall appoint one of the Directors to act on his/her behalf. Where no authorized agent is appointed by the Chairman, the Directors shall elect a person from among themselves to act on the Chairman's behalf.

The Board meeting of the Company shall be convened every 3 months and shall be convened and chaired by the Chairman. However, the first Board meeting of each term shall be convened and chaired by the Director whose ballots represent the most voting rights at the Shareholders' meeting. When there are two or more persons with the right to convene, they shall elect one among themselves as the chair. Where the Chairman is on leave or for any reason unable to exercise his/her functional authority, the Vice Chairman shall act on his/her behalf. Where the Vice Chairman is also on leave or for any reason unable to exercise his/her functional authority, the Chairman shall appoint one of the Directors to act on his/her behalf. Where no authorized agent is appointed by the Chairman, the Directors shall elect a person from among themselves to act on the Chairman's behalf.

Amended according to the amendments to Article 10 of Regulations Governing Procedure for Board of Directors Meetings of Public Companies.

Article 10. Directors shall be highly disciplined. When proposals outlined by the Shareholders' meeting have direct or indirect interests with Directors or legal entities they represent, they shall explain the important contents of the interests at the Board meeting. Where it may be harmful to the interests of the Company, they shall not participate in the discussion and voting and shall abstain from discussion and voting. Also, they shall not exercise any

Directors shall be highly disciplined. When proposals outlined by the Shareholders' meeting have direct or indirect interests with Directors or legal entities they represent, they shall explain the important contents of the interests at the Board meeting. Where it may be harmful to the interests of the Company, they shall not participate in the discussion and voting and shall abstain from discussion and

Amended according to the amendments to Article 16 of Regulations Governing Procedure for Board of Directors Meetings of Public Companies.

21


voting rights on behalf of other Directors. Where the spouse, a relative within the second degree of kinship of a Director, or any company which has a controlling or subordinate relation with a Director has any interests in the matters under discussion at the meeting, the Director shall be deemed as having a personal interest in such matters. The Directors shall exercise discipline among themselves, and may not support each other. In the event that a Director violates the principle of recusal and joins the voting session, his/her voting right shall be null and void.

voting. Also, they shall not exercise any voting rights on behalf of other directors. The Directors shall exercise discipline among themselves, and may not support each other. In the event that a Director violates the principle of recusal and joins the voting session, his/her voting right shall be null and void.

Article 15. The following matters of the Company shall be submitted to the BOD for discussion I. The Company's operating

plan. II. Annual financial report and

financial report for thesecond quarter. With theexception of financial reportsfor the second quarter thatneed not be audited andattested by Certified PublicAccountants (CPA) underrelevant laws andregulations.

III. Establishment or amendmentof the internal control systemand examination of theeffectiveness of the internalcontrol system in accordancewith Article 14-1 of theSecurities and Exchange Act.

IV. Establishment or amendmentof procedures for materialfinancial operations such asacquisition or disposal ofassets, derivativestransactions, providing loansto others, or providingendorsements or guaranteesfor others in accordance withArticle 36-1 of the SecuritiesExchange Act.

V. Offering, issuance or privateplacement of any equity-based securities.

VI. Appointment or discharge of

The following matters of the Company shall be submitted to the BOD meeting for discussion I. The Company's operating

plan. II. Annual and semi-annual

financial reports. With theexception of semi-annualfinancial reports that neednot be audited and attestedby Certified PublicAccountants (CPA) underrelevant laws andregulations.

III. Establishment oramendment of the internalcontrol system andexamination of theeffectiveness of the internalcontrol system inaccordance with Article 14-1 of the Securities andExchange Act.

IV. Establishment oramendment of proceduresfor material financialoperations such asacquisition or disposal ofassets, derivativestransactions, providingloans to others, or providingendorsements orguarantees for others inaccordance with Article 36-1 of the Securities ExchangeAct.

V. Offering, issuance or private

Amended according to the amendments to Article 6 of the Audit Committee Charter of the Company.

22


any chief finance, accounting or internal auditing officer.

VII. Donations to related partiesor major donations to non-related parties. However,public-interest donations ofdisaster relief for a majornatural disaster may besubmitted to the next BODMeeting for ratification.

VIII. Any matters required byArticle 14-3 of the Securities and Exchange Act, and other laws and regulations or the Articles of Incorporation to be approved by resolution at a Shareholders’ meeting or BOD meeting, or any significant matter required by the competent authorities.

(Omitted)

placement of any equity-based securities.

VI. Appointment or discharge ofany chief finance,accounting or internalauditing officer.

VII. Donations to related partiesor major donations to non-related parties. However,public-interest donations ofdisaster relief for a majornatural disaster may besubmitted to the next Boardmeeting for ratification.

VIII. Any matters required byArticle 14-3 of the Securities and Exchange Act, andother laws and regulationsor the Articles ofIncorporation to beapproved by resolution at ashareholders’ meeting orBoard meeting, or anysignificant matter requiredby the competentauthorities.

(Omitted)

23

【Attachment V】


Comparison Table for the Ethical Corporate Management Best Practice

Principles

Articles Proposed Amendments to the

Article Original Article Explanation

Article 5. The Company shall abide by the operational philosophies of honesty, transparency, and responsibility, as well as formulating policies based on the principles of integrity and approved by the Board. The Company shall also establish healthy corporate governance and risk control systems to create an operating environment for its sustainable development.

The Company shall abide by the operational philosophies of honesty, transparency, and responsibility, as well as formulating policies based on the principles of integrity. The Company shall also establish healthy corporate governance and risk control systems to create an operating environment for its sustainable development.

Amended with reference to paragraph 3.7 and 5.1.1 under the ISO 37001 Anti-bribery Management Systems issued by the International Organization for Standardization (ISO) in Oct. 2016 after the Board had approved the formulation of the anti-bribery management policy; the ethical corporate management policies have been approved by the Board.

Article 7. The Company shall establish a risk assessment mechanism against unethical conduct, analyze and assess on a regular basis business activities within our business scope, which are at a higher risk of being involved in unethical conduct, and establish prevention programs accordingly and review their adequacy and effectiveness on a regular basis. The Company shall refer to prevailing domestic and foreign standards or guidelines in establishing the prevention programs, which shall at least include preventive measures against the following: I. Offering and acceptance

of bribery. II. Illegal political donations.III. Improper charitable

When establishing the prevention program, the Company shall analyze business activities within their business scope, which may be at a higher risk of being involved in unethical conduct, and strengthen the preventive measures. The prevention program established by the Company shall at least include preventive measures against the following conducts: I. Offering and acceptance of

bribery. II. Illegal political donations.III. Improper charitable

donations or sponsorship.IV. Offering or acceptance of

unreasonable presents orhospitality, or otherimproper benefits.

V. Misappropriation of trade

Amended according to the Letter Tai-Zheng-Chi-Li-Zi No. 1080008378.

24



donations or sponsorship. IV. Offering or acceptance of

unreasonable presents orhospitality, or otherimproper benefits.

V. Misappropriation of trade secrets and infringement of trademark rights, patent rights, copyrights and other intellectual property rights.

VI. Engaging in unfaircompetitive practices.

VII. Damage directly orindirectly caused to therights and interests,health and safety ofconsumers or otherstakeholders in thecourse of research anddevelopment,procurement,manufacture, provision, orsales of products andservices.

secrets and infringement of trademark rights, patent rights, copyrights and other intellectual property rights.

VI. Engaging in unfaircompetitive practices.

VII. Damage directly orindirectly caused to therights and interests, healthand safety of consumers orother stakeholders in thecourse of research anddevelopment, procurement,manufacture, provision, orsales of products andservices.

Article 8. The Company shall require Directors and the senior management to issue declarations for their compliance with the ethical corporate management policies, and shall require the employees to comply with the ethical corporate management policies in their employment terms The Company and its subsidiaries shall clearly specify the ethical corporate management policies and the commitment by the Board and senior management on the rigorous and thorough implementation of such policies in their rules, external documents, and on the company website and shall carry out the policies in internal management and in commercial activities. The Company shall compile documented information on the ethical corporate management policy, statement, commitment, and implementation mentioned

The Company and its subsidiaries shall clearly specify the ethical corporate management policies and the commitment by the Board and senior management on the rigorous and thorough implementation of such policies in their rules and external documents and shall carry out the policies in internal management and in commercial activities.

1. Addedparagraph 1. With reference to paragraph 7.2.2.2 (c) in relation to the organization shall require members of the senior management and Directors to provide statements on the compliance with anti-bribery policies and paragraph 7.2.2.1 (a) in relation to the organization shall require employees to comply with anti-bribery policies in the employment conditions under the ISO 37001, the employment contracts therefore shall contain and

25



in paragraphs 1 and 2 and retain said information properly.

emphasize terms related to ethical corporate management.

Article 17. The Directors, managerial personnel, employees, mandataries, and substantial controllers of the Company shall exercise the due care of good administrators to urge the company to prevent unethical conduct, always review the results of the preventive measures and continually make adjustments so as to ensure thorough implementation of its ethical corporate management policies. To achieve sound ethical corporate management, the Company shall establish a dedicated unit that is under the Board and avail itself of adequate resources and staff itself with competent personnel; the unit shall be responsible for establishing and supervising the implementation of the ethical corporate management policies and prevention programs. The dedicated unit shall be in charge of the following matters, and shall report to the Board on a regular basis:

I. Assisting in incorporating ethics and moral values into the Company's business strategy and adopting appropriate prevention measures against corruption and malfeasance to ensure ethical corporate management in compliance with the requirements of laws and regulations.

II. Analyzing and assessingon a regular basis the risk of involvement in

The Directors, managerial personnel, employees, mandataries, and substantial controllers of the Company shall exercise the due care of good administrators to urge the company to prevent unethical conduct, always review the results of the preventive measures and continually make adjustments so as to ensure thorough implementation of its ethical corporate management policies. To achieve sound ethical corporate management, the Company shall establish a dedicated unit that is under the Board; the unit shall be responsible for establishing and supervising the implementation of the ethical corporate management policies and prevention programs. The dedicated unit shall be in charge of the following matters, and shall report to the Board on a regular basis:

I. Assisting in incorporating ethics and moral values into the Company's business strategy and adopting appropriate prevention measures against corruption and malfeasance to ensure ethical corporate management in compliance with the requirements of laws and regulations.

II. Establishing programs toprevent unethical conduct,and setting out in eachprogram the standardoperating procedures andconduct guidelines withrespect to the operationsand business.

III. Planning the internal

Amended the Article and texts according to the Letter No.1080008378 issued by TWSE.

26



unethical conduct within the business scope, adopting corresponding programs to prevent unethical conduct, and setting out in each program the standard operating procedures and conduct guidelines with respect to the operations and business.

III. Planning the internalorganization, structureand allocation ofresponsibilities andsetting up check-and-balance mechanisms formutual supervision of thebusiness activities withinthe business scope,which are possibly at ahigher risk for unethicalconduct.

IV. Promoting andcoordinating awarenessand educational activitieswith respect to ethicspolicy.

V. Developing a whistle-blowing system and ensuring its operating effectiveness.

VI. Assisting the Board andmanagement in auditingand assessing whetherthe prevention measurestaken for the purpose ofimplementing ethicalcorporate managementare effectively operating,and preparing reports onthe regular assessment ofcompliance with ethicalcorporate management inoperating procedures.

organization, structure and allocation of responsibilities and setting up check-and-balance mechanisms for mutual supervision of the business activities within the business scope, which are possibly at a higher risk for unethical conduct.

IV. Promoting and coordinatingawareness and educationalactivities with respect toethics policy.

V. Developing a whistle-blowing system and ensuring its operating effectiveness.

VI. Assisting the Board andmanagement in auditingand assessing whether theprevention measures takenfor the purpose ofimplementing ethicalcorporate management areeffectively operating, andpreparing reports on theregular assessment ofcompliance with ethicalcorporate management inoperating procedures.

Article 20. The Company shall establish effective accounting systems and internal control systems for business activities possibly at a higher risk of being involved in unethical conduct, not have under-the-table accounts or keep secret accounts, and conduct reviews regularly so as to ensure that

The Company shall establish effective accounting systems and internal control systems for business activities possibly at a higher risk of being involved in unethical conduct, not have under-the-table accounts or keep secret accounts, and conduct reviews regularly so as to ensure that the design and


27



the design and enforcement of the systems are showing results. The internal audit unit of the Company shall, based on the results of assessment for the risk of involvement in unethical conduct, devise relevant audit plans, including audit targets, audit scope, audit items, and audit frequency, and examine the compliance with the prevention programs accordingly. The internal audit unit may engage a certified public accountant (CPA) to carry out the audit, and may engage professionals to assist when necessary. Notify the senior management and the dedicated unit for ethical corporate management regarding the results of the foregoing examination and prepare audit reports and submit the same to the Board.

enforcement of the systems are showing results. The internal audit unit of the Company shall periodically examine the Company's compliance with the foregoing systems and prepare audit reports and submit the same to the Board. The internal audit unit may engage a certified public accountant to carry out the audit, and may engage professionals to assist if necessary.

Article 23. The Company shall establish a solid reporting system and duly implement the system, which shall cover at least the following matters: I. Establish an independent

mailbox or hotline, either internally or provided by an independent external institution, and open for internal and external parties to submit reports.

II. Appoint the dedicatedpersonnel or unit tohandle the whistle-blowing system. Any tipinvolving a Director orsenior management shallbe reported to theindependent Directors.Categories of reportedmisconduct shall bedelineated and standardoperating procedures forthe investigation of eachshall be adopted.

III. Adopt follow-up measuresdepending on the severityof the circumstances after

The Company shall establish a solid reporting system and duly implement the system, which shall cover at least the following matters: I. Establish an independent

mailbox or hotline, either internally or provided by an independent external institution, and open for internal and external parties to submit reports.

II. Appoint the dedicatedpersonnel or unit to handlethe whistle-blowing system.Any tip involving a Directoror senior managementshall be reported to theindependent Directors.Categories of reportedmisconduct shall bedelineated and standardoperating procedures forthe investigation of eachshall be adopted.

III. Documentation of caseacceptance, investigationprocesses, investigationresults, and relevant


28



investigations of cases reported are completed. Where necessary, a case shall be reported to the competent authority or referred to the judicial authority.

IV. Documentation of caseacceptance, investigationprocesses, investigationresults, and relevantdocuments.

V. Confidentiality of the identity of whistle-blowers and the content of reported cases, and an undertaking regarding anonymous reporting.

VI. Measures for protectingwhistle-blowers frominappropriate disciplinaryactions due to theirwhistle-blowing.

VII. Whistle-blowing incentivemeasures.

If a serious violation is found or the Company is in danger of severe losses, the Company personnel or unit responsible for accepting the case shall immediately notify the independent Directors in a written report.

documents. IV. Confidentiality of the

identity of whistle-blowersand the content of reportedcases.

V. Measures for protecting whistle-blowers from inappropriate disciplinary actions due to their whistle-blowing.

VI. Whistle-blowing incentivemeasures.

If a serious violation is found or the Company is in danger of severe losses, the Company personnel or unit responsible for accepting the case shall immediately notify the independent Directors in a written report.

Article 28. The Principles were established on May 10, 2016. The 1st amendment was approved on March 16, 2017; the 2nd amendment was approved on March 30, 2020.

The Principles were established on May 10, 2016. The first amendment was approved on March 16, 2017, effective from the date of establishment of the Audit Committee.

Amended the course of history.

29

【Attachment VI】


Comparison Table for the Procedures for Ethical Management and

Guidelines for Conduct

Article Proposed Amendments to the


Article 5. The Company designates the Audit Office as the ethical management promotion responsible unit, under the Board of Directors, and provides adequate resources and competent personnel for the unit; the unit is in charge of managing amendments, implementation, interpretation, and advisory services, the recording and filing of reports, and the monitoring of the implementation of this Guideline. The responsible unit shall be in charge of the following matters and will regularly report to the Board of Directors: I. Assisting in incorporating

ethics and moral values into the Company's business strategy and adopting appropriate prevention measures against corruption and malfeasance to ensure ethical corporate management in compliance with the requirements of laws and regulations.

II. Analyzing and assessing ona regular basis the risk ofinvolvement in unethicalconduct within the businessscope, adoptingcorresponding programs toprevent unethical conduct,and setting out in eachprogram the standardoperating procedures andconduct guidelines withrespect to the operations andbusiness.

III. Planning the internalorganization, structure, andallocation of responsibilitiesand setting up check-and-balance mechanisms formutual supervision of thebusiness activities within thebusiness scope, which are

The Company designates the Audit Office as the ethical management promotion responsible unit, under the Board of Directors, and is in charge of managing amendments, implementation, interpretation, and advisory services, the recording and filing of reports, and the monitoring of the implementation of this Guideline. The responsible unit shall be in charge of the following matters and will regularly report to the Board of Directors: I. Assisting in incorporating

ethics and moral values into the Company's business strategy and adopting appropriate prevention measures against corruption and malfeasance to ensure ethical corporate management in compliance with the requirements of laws and regulations.

II. Promoting the establishmentof programs to preventunethical conduct and settingout in each program thestandard operatingprocedures and conductguidelines with respect to theoperations and business.

III. Planning the internalorganization, structure, andallocation of responsibilitiesand setting up check-and-balance mechanisms formutual supervision of thebusiness activities within thebusiness scope, which arepossibly at a higher risk forunethical conduct.


V. Developing a whistleblowingsystem and ensuring its

In compliance with Article 17 of the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies

30



possibly at a higher risk for unethical conduct.


V. Developing a whistleblowingsystem and ensuring itsoperating effectiveness.

VI. Assisting the Board ofDirectors and management inauditing and assessingwhether the preventionmeasures taken for thepurpose of implementingethical corporatemanagement are effectivelyoperating, and preparingreports on the regularassessment of compliancewith ethical corporatemanagement in operatingprocedures.

VII. Compiling documentedinformation on the ethicalcorporate managementpolicy, compliance statement,execution commitment, and implementation and retaining said information properly.

operating effectiveness. VI. Assisting the Board of

Directors and management inauditing and assessingwhether the preventionmeasures taken for thepurpose of implementingethical corporatemanagement are effectivelyoperating, and preparingreports on the regularassessment of compliancewith ethical corporatemanagement in operatingprocedures.

Article 11. Regarding the Directors, managerial personnel, and other stakeholders of the Company attending or presenting at the Board meeting, when proposals outlined by the Board meeting have direct or indirect interests with legal entities they represent, they shall explain the important contents of the interests at the Board meeting. Where it may be harmful to the interests of the Company, they shall not participate in the discussion and voting and shall abstain from discussion and voting. Also, they shall not exercise any voting rights on behalf of other Directors. The Directors shall exercise discipline among themselves, and may not support each other in improper dealings. Where the spouse, a relative within the second degree of kinship of a Director, or any company which has a controlling or subordinate

Regarding the Directors, managerial personnel, and other stakeholders of the Company attending or presenting at the Board meeting, when proposals outlined by the Board meeting have direct or indirect interests with legal entities they represent, they shall explain the important contents of the interests at the Board meeting. Where it may be harmful to the interests of the Company, they shall not participate in the discussion and voting and shall abstain from discussion and voting. Also, they shall not exercise any voting rights on behalf of other Directors. The Directors shall exercise discipline among themselves, and may not support each other in improper dealings. If in the course of conducting company business, any employee of the Company discovers that a potential conflict of interest exists

Amended in accordance with paragraph 1, Article 16 of Regulations Governing Procedure for Board of Directors Meetings of Public Companies and added in accordance with paragraph 3, Article 206 of the Company Act.

31



relation with a Director has any interests in the matters under discussion at the meeting, the Director shall be deemed as having a personal interest in such matters. If in the course of conducting company business, any employee of the Company discovers that a potential conflict of interest exists involving themselves or the juristic person that they represent, or that they or their spouse, parents, children, or a person with whom they have a relationship of interest is likely to obtain improper benefits, the employee shall report the relevant matters to both his or her direct supervisor and the Audit Office, and the direct supervisor shall provide the employee with proper instructions. No personnel of the Company may use company resources on commercial activities other than those of the Company, nor may any personnel's job performance be affected by his or her involvement in the commercial activities other than those of the Company.

involving themselves or the juristic person that they represent, or that they or their spouse, parents, children, or a person with whom they have a relationship of interest is likely to obtain improper benefits, the employee shall report the relevant matters to both his or her direct supervisor and the Audit Office, and the direct supervisor shall provide the employee with proper instructions. No personnel of the Company may use company resources on commercial activities other than those of the Company, nor may any personnel's job performance be affected by his or her involvement in the commercial activities other than those of the Company.

Article 16. The Company shall require

Directors and the senior

management to issue declarations

for their compliance with the

ethical corporate management

policies, and shall require the

employees to comply with the

ethical corporate management

policies in their employment terms.

The Company shall disclose its

policy of ethical management in its

internal rules, annual reports, on

the company website, and in other

promotional materials, and shall

make timely announcements of the

policy in events held for outside

parties such as roadshows, to

allow its suppliers, customers, and

other business-related institutions

and personnel to fully understand

its principles and rules with respect

to ethical management.

The Company shall disclose its

policy of ethical management in its

internal rules, annual reports, on

the company website, and in other

promotional materials, and shall

make timely announcements of the

policy in events held for outside

parties such as roadshows, to

allow its suppliers, customers, and

other business-related institutions

and personnel to fully understand

its principles and rules with respect

to ethical management.

Amended in

accordance

with Article 8 of

the Ethical

Corporate

Management

Best Practice

Principles for

TWSE/GTSM

Listed

Companies

32



Article 21. The Company encourages internal and external personnel to report unethical or inappropriate behavior. A reward shall be given to the reporting personnel based on the severity of the reported violations. Where any internal personnel falsely report violations or make malicious accusations, punishments shall be imposed according to regulations. In severe cases, the personnel may be dismissed. The Company holds high moral standards in relation to ethical management, and provides a whistleblowing system for employees to raise unethical and immoral behaviors for the Company and its subsidiaries. The responsible unit is the Audit Office. However, if the matter involves any Director or senior management, it should be reported to an Independent Director. The Company shall establish and publicly announce on its website and the intranet, an independent whistleblowing mailbox, for Company insiders and outsiders to submit reports. A whistleblower can submit a report via mail or E-mail: I. Contact address: 4F., No.85,

Sec.4, Ren-ai Rd., Da-an District, Taipei City 106, Taiwan (R.O.C.) To the attention of the Chief Auditor.

II. E-mail address:[email protected] whistleblower shall at leastfurnish the followinginformation:I. The whistleblower’s

name and I.D. number, and an address, telephone number, and e-mail address where it can be reached; anonymous whistleblowing is also available.

II. The informed party'sname or otherinformation that issufficient to distinguish

The Company encourages internal and external personnel to report unethical or inappropriate behavior. A reward shall be given to the reporting personnel based on the severity of the reported violations. Where any internal personnel falsely report violations or make malicious accusations, punishments shall be imposed according to regulations. In severe cases, the personnel may be dismissed. The Company holds high moral standards in relation to ethical management, and provides a whistleblowing system for employees to raise unethical and immoral behaviors for the Company and its subsidiaries. The responsible unit is the Audit Office. However, if the matter involves any Director or senior management, it should be reported to an Independent Director. The Company shall establish and publicly announce on its website and the intranet, an independent whistleblowing mailbox, for Company insiders and outsiders to submit reports. A whistleblower can submit a report via mail or E-mail: I. Contact address: 4F., No.85,

Sec.4, Ren-ai Rd., Da-an District, Taipei City 106, Taiwan (R.O.C.) To the attention of the Chief Auditor.

II. E-mail address:[email protected] whistleblower shall at leastfurnish the followinginformation:I. The whistleblower’s

name and I.D. number, and an address, telephone number, and e-mail address where it can be reached.

II. The informed party'sname or otherinformation that issufficient to distinguishits identifying features.

III. Specific facts availablefor investigation.

1. Permittedanonymous whistleblowing according to paragraph 8.9 (c) under ISO 37001. 2. Amendedthe text of subparagraph 2, paragraph 3 of the Article for the consistency of terms. 3. Addedsubparagraph 4, paragraph 3 of the Article and adjusted the current subparagraph 4 to 7, paragraph 3 as subparagraph 5 to 8 with reference to the content in relation to the subsequent actions to be taken by an organization after completing an investigation on a bribery case under paragraph A.18.8, Annex A of ISO 37001.

33



its identifying features. III. Specific facts available

for investigation.IV. Circumstances not

accepted:(1) Whistleblowing

made under a false name, and no contact method of the whistleblower is provided.

(2) After investigation, the reported case is inconsistent with the truth or is purely fabricated.

The Company's personnel handling whistleblowing matters shall keep the whistleblowers’ identity and contents of information confidential. The Company also undertakes to protect the whistleblowers from improper treatment due to their whistleblowing. The procedures for handling the reported events shall include the following matters: I. The manager of the handling

unit shall be responsible for initiate and handle the cases, and ensure the confidentiality of the whistleblower's information. The identity and information of the whistleblower and the content shall be strictly confidential, and anonymous reporting shall be permitted.

II. Any tip involving a generalemployee shall be reported tothe direct supervisor. Any tipinvolving a Director or seniormanagement shall bereported to the IndependentDirectors or the AuditCommittee.

III. The managerial personnel,Independent Directors, or theAudit Committee mentionedabove shall investigate thetruth, and shall appointdedicated personnel forhandling different issues,including audit manager, HR

IV. Circumstances notaccepted:(1) Whistleblowing

made anonymously or under a false name, and no contact method of the whistleblower is provided.

(2) After investigation, the reported case is inconsistent with the truth or is purely fabricated.

The Company's personnel handling whistleblowing matters shall keep the whistleblowers’ identity and contents of information confidential. The Company also undertakes to protect the whistleblowers from improper treatment due to their whistleblowing. The procedures for handling the reported events shall include the following matters: I. The manager of the handling

unit shall be responsible for initiate and handle the cases, and ensure the confidentiality of the whistleblower's information. The identity and information of the whistleblower and the content shall be strictly confidential.

II. Any tip involving a generalemployee shall be reported tothe direct supervisor. Any tipinvolving a Director or seniormanagement shall bereported to the IndependentDirectors or the AuditCommittee.

III. The managerial personnel,Independent Directors, or theAudit Committee mentionedabove shall investigate thetruth, and shall appointdedicated personnel forhandling different issues,including audit manager, HRmanager, legal affairsmanager; or the Presidentshall call upon aninvestigation team to carry

34



manager, legal affairs manager; or the President shall call upon an investigation team to carry out the investigation. Relevant personnel handling the whistleblowing cases shall be responsible for keeping such cases confidential.

IV. Adopt follow-up measuresdepending on the severity ofthe circumstances afterinvestigations of casesreported are completed.Where necessary, a caseshall be reported to thecompetent authority orreferred to the judicialauthority.

V. If the person being informed is confirmed to have violated the relevant laws and regulations or the Company's policy and regulations of ethical management, the Company shall immediately require the violator to cease the conduct and shall make an appropriate disposition. When necessary, the Company may resort to legal proceedings and seek damage compensation to safeguard its reputation and interests. However, where no actual evidence is found through investigation, the case shall be closed.

VI. Documentation of caseacceptance, investigationprocesses, investigationresults, and relevantdocuments shall be kept for aterm of 5 years, and made bemade in the electronic forms.In the event of a suit inrespect of the whistleblowingcase before the retentionperiod expires, the relevantinformation shall continue tobe retained until theconclusion of the litigation.

VII. Where the reported violationshave been verified, the

out the investigation. Relevant personnel handling the whistleblowing cases shall be responsible for keeping such cases confidential.

IV. If the person being informedis confirmed to have violatedthe relevant laws andregulations or the Company'spolicy and regulations ofethical management, theCompany shall immediatelyrequire the violator to ceasethe conduct and shall makean appropriate disposition.When necessary, theCompany may resort to legalproceedings and seekdamage compensation tosafeguard its reputation andinterests. However, where noactual evidence is foundthrough investigation, thecase shall be closed.

V. Documentation of case acceptance, investigation processes, investigation results, and relevant documents shall be kept for a term of 5 years, and made be made in the electronic forms. In the event of a suit in respect of the whistleblowing case before the retention period expires, the relevant information shall continue to be retained until the conclusion of the litigation.

VI. Where the reported violationshave been verified, theCompany’s related units shallbe instructed to discussrelevant internal controlsystems and operatingprocedures, and proposeimprovement measures toensure that the samebehavior is not repeated.

VII. The dedicated unit of theCompany shall compile all the reported cases, the handlingmethod, and subsequentreview and improvementmeasures, and report to the

35



Company’s related units shall be instructed to discuss relevant internal control systems and operating procedures, and propose improvement measures to ensure that the same behavior is not repeated.

VIII. The dedicated unit of theCompany shall compile all the reported cases, the handlingmethod, and subsequentreview and improvementmeasures, and report to theBoard of Directors regularlyor from time to time.

Board of Directors regularly or from time to time.

Article 25. This Procedure was first amended on March 16, 2017, effective on June 19, 2017. The 2nd amendment was approved on November 14, 2018. The 3rd amendment was approved on March 28, 2019. The 4th amendment was approved on March 30, 2020.

This Procedure was first amended on March 16, 2017, effective on June 19, 2017. The 2nd amendment was approved on November 14, 2018. The 3rd amendment was approved on March 28, 2019.

Amended the course of history.

36

Independent Auditors’ Report

To the Board of Directors of China Metal Products Co., Ltd.:

Opinion

We have audited the financial statements of China Metal Products Co., Ltd.(“the Company”), which comprisethe balance sheets as of December 31, 2019 and 2018, and the statement of comprehensive income, changes inequity and cash flows for the years then ended, and notes to the financial statements, including a summary ofsignificant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the balance sheetsof the Company as of December 31, 2019 and 2018, and its financial performance and its cash flows for theyears ended December 31, 2019 and 2018 in accordance with the Regulations Governing the Preparation ofFinancial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Certification of FinancialStatements by Certified Public Accountants and the auditing standards generally accepted in the Republic ofChina. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for theAudit of the Financial Statements section of our report. We are independent of the Company in accordance withthe Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we havefulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis of our opinion.

Key Audit Matters

Based on our professional judgment, key audit matters pertain to the most important matters in the audit of financial statements for the year ended December 31, 2019 of the Company. Those matters have been addressedin our audit opinion on the said financial statements and during the formation of our audit opinion. However, wedo not express an opinion on these matters individually. The key audit matters that, in our professionaljudgment, should be communicated are as follows:

1. Revenue recognition

For the revenue recognition account policy, please refer to Note 4(r); for the details of the revenuerecognition during the years, please refer to Note 6(u).

Description of key audit matter:

China Metal Products Co., Ltd.’s revenue from the sale of the steel products is recognized when the controlof the goods has been transferred to the customer and there is no continuing management involvement andeffective control with the goods. The revenue is recognized when the control of the goods has beentransferred which is deemed by transaction terms in each sales contract stipulated by the customer and ChinaMetal Products Co., Ltd.. The operating revenue from the sale of the steel products is easily affected by thelaw of supply and demand principal and other factors in the market. Therefore, the revenue recognition isconsidered as one of the key audit matters.

【Attachment VII】

37

Corresponding audit procedure:

Our main audit procedures for the above key audit matters includes: understanding and testing the design,operation and implantation of the effectiveness of internal control on revenue recognition of China MetalProducts Co., Ltd.; understanding the major types of revenue, contract terms and transaction terms todetermine the appropriateness timing of revenue recognition, also sampling the major customers andreviewing the contracts and sales orders to evaluate the revenue recognition; sampling the transaction recordsof sales around the balance sheet date and obtaining the transaction documents to evaluate theappropriateness timing of revenue recognition; understanding if there is significant allowance for sales returnand discount for the days before and after the reporting date.

2. Impairment assessment of investments accounted for using equity method

For the accounting policy of investments accounted for using equity method’s impairment assessment pleaserefer to the Note 4(i) Investment in associates ; for the details of investments accounted for using equitymethod’s impairment assessment, please refer to Note 6(f) Investments accounted for using equity method.


Sunflower Investment Co., Ltd., the subsidiary of the Company, had sought administrative remedies for theadministrative penalties arose from enterprise income tax, value-added tax, and undistributed earning tax ofthe Daguangsan non-performing receivable case, which the total amount of tax and penalties amounted to$564,452 thousand. As of the reporting date, the Company has paid $46,174 thousand and estimated theregarding litigation provision at $236,052 thousand.

The estimation of litigation contingent liabilities is based on the management's assessment of the result oflitigation which is likely to be unfavorable to the Company. However, there are significant uncertainties inthe litigation. Therefore, the litigation provision estimation is considered as one of the key audit matters.


Our main audit procedures for the above key audit matters include: interviewing the Company's managementto understand the method of assessment; obtaining management's major litigation memorandum and itsprovision assessment documents, and reviewing the latest court verdict documents of the major litigation toassess the reasonableness of their estimates; obtaining auditors' legal confirmation letters from externallawyers to verify the progress of pending litigation; assessing whether the Company’ s pending litigationcases and contingent liabilities have been properly disclosed.

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 accordancewith Regulations Governing the Preparation of Financial Reports by Securities Issuers and for such internalcontrol as management determines is necessary to enable the preparation of financial statements that are freefrom material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing China Metal Products Co., Ltd.’sability to continue as a going concern, disclosing, as applicable, matters related to going concern and using thegoing concern basis of accounting unless management either intends to liquidate China Metal Products Co., Ltd.or to cease operations, or has no realistic alternative but to do so.

Those charged with governance (including the Audit Committee or supervisors) are responsible for overseeingChina Metal Products Co., Ltd.'s financial reporting process.

38

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are freefrom material misstatement, whether due to fraud or error, and to issue an auditor’ s report that includes ouropinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted inaccordance with the auditing standards generally accepted in the Republic of China will always detect a materialmisstatement 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 userstaken on the basis of these financial statements.

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, weexercise professional judgment and maintain professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud orerror, design and perform audit procedures responsive to those risks, and obtain audit evidence that issufficient 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 involve collusion,forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness ofChina Metal Products Co., Ltd.’s internal control.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated 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 that maycast significant doubt on China Metal Products Co., Ltd.’ s ability to continue as a going concern. If weconclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to therelated disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,future events or conditions may cause China Metal Products Co., Ltd. to cease to continue as a goingconcern.

5. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures,and whether the financial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

6. Obtain sufficient and appropriate audit evidence regarding the financial information of the entities orbusiness activities within China Metal Products Co., Ltd. to express an opinion on the financial statements.We are responsible 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 andtiming of the audit and significant audit findings, including any significant deficiencies in internal control thatwe identify during our audit.

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

39

From the matters communicated with those charged with governance, we determine those matters that were ofmost significance in the audit of the financial statements of the current period and are therefore the key auditmatters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosureabout the matter or when, in extremely rare circumstances, we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonably be expected tooutweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Kuo-Yang Tseng andShih-Chin Chih.

KPMG

Taipei, Taiwan (Republic of China)March 30, 2020

Notes to Readers

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

The independent auditors’ audit report and the accompanying financial statements are the English translation of the Chinese versionprepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English andChinese language independent auditors’ audit report and financial statements, the Chinese version shall prevail.

40

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41

(English Translation of Financial Statements Originally Issued in Chinese)CHINA METAL PRODUCTS CO., LTD.

Statements of Comprehensive IncomeFor the years ended December 31, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Common Share)

2019 2018

Amount % Amount %

4000 Operating revenues (Notes 6(u) and 7) $ 1,191,690 100 1,383,562 1005000 Operating costs (Notes 6(d) and 7) (667,419) (56) (852,237) (62)

Gross profit from operations 524,271 44 531,325 38Operating expenses (Note 7):

6100 Selling expenses (28,299) (2) (37,680) (3)6200 Administrative expenses (549,676) (46) (616,899) (44)6300 Research and development expenses (75) - - -6450 Expected credit loss (Note 6(c)) (2,573) - (1,893) -

　　Total operating expenses (580,623) (48) (656,472) (47)6500 Net other income and expenses (Note 6(w)) 3,007 - 2,508 -

Net operating loss (53,345) (4) (122,639) (9)Non-operating income and expenses:

7010 Other income (Notes 6(x) and 7) 97,143 8 101,967 77020 Other gains and losses (Note 6(x)) 3,355 - 30,250 27050 Finance costs (Note 6(x)) (80,528) (7) (47,175) (3)7070 Share of profit of subsidiaries, associates and joint ventures accounted for using equity

method (Note 6(f))605,054 51 1,575,954 114

　　Total non-operating income and expenses 625,024 52 1,660,996 1207900 Profit from continuing operations before tax 571,679 48 1,538,357 1117950 Less: Tax expenses (Note 6(r)) (62,952) (5) (63,755) (4)8000 Profit from continuing operations 508,727 43 1,474,602 1078100 Profit from discontinued operations (Notes 6(e) and 12(d)) - - 360,970 26

Profit 508,727 43 1,835,572 133

8300 Other comprehensive income:

8310 Items that may not be classified subsequently to profit or loss

8311 Gains (losses) on remeasurements of defined benefit plans 3,843 - (1,415) -

8316 Unrealized gains from investments in equity instruments measured at fair value throughother comprehensive income (Notes 6(q) and (y))

17,861 1 16,309 1

8330 Share of other comprehensive income of subsidiaries, associates and joint venturesaccounted for using equity method

(1,657) - (15,995) (1)

Total items that may not be classified subsequently to profit or loss 20,047 1 (1,101) -

8360 Items that may be classified subsequently to profit or loss

8361 Exchange differences on translation of foreign financial statements (280,040) (22) (255,991) (19)

Total items that may be classified subsequently to profit or loss (280,040) (22) (255,991) (19)

8300 Other comprehensive income (after tax) (259,993) (21) (257,092) (19)

8500 Comprehensive income $ 248,734 22 1,578,480 114Earnings per share (Note 6(t))Basic earnings per share

9710 　From continuing operations $ 1.32 3.829720 　From discontinued operations - 0.94

$ 1.32 4.76Diluted earnings per share

9810 　From continuing operations $ 1.32 3.819820 　From discontinued operations - 0.94

$ 1.32 4.75

See accompanying notes to financial statements.

42

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43

(English Translation of Financial Statements Originally Issued in Chinese)CHINA METAL PRODUCTS CO., LTD.

Statements of Cash FlowsFor the years ended December 31, 2019 and 2018(Expressed in Thousands of New Taiwan Dollars)

2019 2018Cash flows from operating activities:

Profit from continuing operations before tax $ 571,679 1,538,357Profit from discontinued operations before tax - 372,045Profit before tax 571,679 1,910,402Adjustments:

Adjustments to reconcile profit (loss):Depreciation expense 266,546 72,871Amortization expense 4,449 3,977Interest expense 80,528 47,175Expected credit loss 2,573 1,893Interest income (33,443) (35,689)Dividend income (28,196) (38,939)Share of profit of subsidiaries, associates and joint ventures accounted for using equity method (605,054) (1,575,954)(Gain) loss on disposal of property, plant and equipment (1,922) 1,243Property, plant and equipment transferred to expenses 152 196Gain on disposal of discontinued operations and non-current assets held for sale - (375,757)

Total adjustments to reconcile profit (314,367) (1,898,984)Changes in operating assets and liabilities:

Changes in operating assets:Notes and accounts receivable, net 92,577 99,098Accounts receivable due from related parties, net 8,760 (2,626)Other receivables 10,324 (8,343)Inventories (73,102) (21,191)Prepayments (18,173) 1,040Other current financial assets 441 (6,236)

Total changes in operating assets 20,827 61,742Changes in operating liabilities:

Notes and accounts payable (including related parties), net (32,802) (68,311)Other payables (59,419) 54,534Contract liabilities (1,536) (9,978)Other current liabilities (1,409) 9,017Net defined benefit liability (7,992) (9,900)Advance receipts 368 -

Total changes in operating liabilities (102,790) (24,638)Total changes in operating assets and liabilities (81,963) 37,104

Total adjustments (396,330) (1,861,880)Cash inflow generated from operations 175,349 48,522Interest received 20,031 20,556Dividends received 808,369 376,589Interest paid (77,771) (46,719)Income taxes paid (31,785) (46,920)Net cash flows generated from operating activities 894,193 352,028

Cash flows from investing activities:Proceeds from capital reduction of financial assets at fair value through other comprehensive income 9,614 1,947Proceeds from capital reduction of investments accounted for using equity method - 2,970Proceeds from disposal of non-current assets held for sale - 616,480Acquisition of property, plant and equipment (51,292) (91,113)Proceeds from disposal of property, plant and equipment 2,090 798Acquisition of intangible assets (3,212) (5,563)Acquisition of investment properties (2,304,149) -Decrease in other financial assets 857 524Increase in other non-current assets (116,939) (164,199)

Net cash flows (used in) generated from investing activities (2,463,031) 361,844Cash flows from financing activities:

Increase in short-term borrowings 2,150,000 1,800,000Decrease in short-term borrowings (2,100,000) (1,751,024)(Decrease) increase in short-term notes and bills payable (199,779) 199,754Proceeds from long-term borrowings 7,744,234 4,119,976Repayments of long-term borrowings (5,209,000) (4,401,000)Increase in other non-current liabilities 1,195 100Cash dividends paid (1,040,181) (577,878)Payment of lease liabilities (172,381) -

Net cash flows generated from (used in) financing activities 1,174,088 (610,072)Net (decrease) increase in cash and cash equivalents (394,750) 103,800Cash and cash equivalents at beginning of year 1,195,412 1,091,612Cash and cash equivalents at end of year $ 800,662 1,195,412

See accompanying notes to financial statements.

44

Independent Auditors’ Report

To the Board of Directors of China Metal Products Co., Ltd.:

Opinion

We have audited the consolidated financial statements of China Metal Products Co., Ltd. and its subsidiaries(“CMP Group”), which comprise the consolidated balance sheets as of December 31, 2019 and 2018, and theconsolidated statements of comprehensive income, changes in equity and cash flows for the years then ended,and 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, theconsolidated balance sheets of CMP Group as at December 31, 2019 and 2018, and its consolidated financialperformance and its consolidated cash flows for the years ended December 31, 2019 and 2018 in accordancewith the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with theInternational Financial Reporting Standards (“ IFRSs” ), International Accounting Standards (“ IASs” ), IFRICInterpretations (“ IFRIC” ), and SIC Interpretations (“ SIC” ) endorsed and issued into effect by the FinancialSupervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audit in accordance with the Regulations Governing Auditing and Certification of FinancialStatements by Certified Public Accountants and the auditing standards generally accepted in the Republic ofChina. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for theAudit of the Consolidated Financial Statements section of our report. We are independent of CMP Group inaccordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (the“Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Other Matter

China Metal Products Co., Ltd. has additionally prepared its parent company only financial statements as of andfor the years ended December 31, 2019 and 2018, on which we have issued an unqualified opinion.

Key Audit Matters

Based on our professional judgment, key audit matters pertain to the most important matters in the audit ofconsolidated financial statements for the year ended December 31, 2019 of CMP Group. Those matters havebeen addressed in our audit opinion on the said consolidated financial statements and during the formation ofour audit opinion. However, we do not express an opinion on these matters individually. The key audit mattersthat, in our professional judgment, should be communicated are as follows:

1. Revenue recognition

For the revenue recognition account policy, please refer to Note4(r); for the details of the revenuerecognition during the years, please refer to Note 6(y).

45


The revenue recognition of CMP Group’s product selling is the timing of the transfer of control varied by theindividual terms of the sales agreement, which is mainly at the time when the goods are loading to the exportship and to the determined shipping point. The recognition of revenue is also varied by the terms ofacceptance and return of goods in the sale contracts between CMP Group and the clients who are largevehicle parts suppliers and manufacturers. CMP Group evaluates the terms of the sale contracts individuallyto determine the timing of revenue recognition.

There is risk of misstatement when the timing of revenue recognition is earlier than the transfers of control.The revenue from cast iron products selling is recognized when customers collect the goods from theshipping warehouse (the transfer of control). CMP Group’s revenue recognition is based on the regardingdocuments or other information provided by custodian of the shipping warehouse. Due to the shippingwarehouse is located in Atlanta, USA, the providing schedule and contents of information from the custodianusually involves human factors. It may result in inappropriate revenue recognition or inconsistent inventoryrecord. Therefore, the revenue recognition is considered as one of the key audit matters.


Our main audit procedures for the above key audit matters include: understanding and evaluating the design,operation and implantation of the effectiveness of internal control on revenue recognition; understanding themajor types of revenue, contract terms and transaction terms to determine the appropriateness timing ofrevenue recognition, also sampling the major customers and reviewing the contracts and sales orders toevaluate the revenue recognition; sampling the transaction records of sales around the balance sheet date andobtaining the transaction documents (i.e. delivery order signed by the recipient, bill of lading, documentsfrom the warehouse custodian) to evaluate the appropriateness timing of revenue recognition; comparing theactual sales return and discount after the financial reporting date with the estimated allowance for salesreturn and discount on the financial reporting date and the previous financial reporting period to evaluate thereasonableness of the estimation; evaluating whether the recognition period of inventory and cost of goodssold is appropriate; performing inventory observation and checking the inventory quantity with the records.

2. Allowance for accounts receivable

For the estimation of allowance for bad debt accounting policy, please refer to Note 4(g); for the significantassumptions and judgments, and major sources of estimation uncertainty of the loss allowance of accountsreceivable, please refer to Note 5; for the details of the loss allowance of accounts receivable during theyears, please refer to Note 6(d).


The loss allowance of accounts receivable for CMP Group is based on the management’s judgments of theestimation of the expected credit loss which comprised of the credit reliability of the customers, the currentmarket, forward-looking estimation and customer-specific terms. The estimation involves subjectivejudgment. The balance of accounts receivable is significant and the current economic and environment riskincrease the risk of recovering. Therefore, the estimation of accounts receivable loss allowance is consideredas one of the key audit matters.

46


Our main audit procedures for the above key audit matters include: understanding and evaluating the design,operation and implementation of the effectiveness of internal control on management’ s credit control ofcustomers, recovery of the receivables and the estimations of allowance for receivables; evaluating theappropriateness of the accounting policies regarding the allowance for receivables, sampling sales invoicesand comparing them with other transaction documents to check the accuracy of receivable aging;understanding and recalculating the rolling rates of overdue accounts receivable and expected loss rates toevaluate whether the management estimation of the loss allowance is considered the customers’ industrystatus, the receivables overdue status, forward-looking estimation and payment records; sampling thereceivables for cash collecting after the balance sheet date.

3. Litigation provision assessment

For the accounting policy of litigation provision assessment, please refer to the Note 4(q) Provisions; for theaccounting estimate and uncertain hypothesis, please refer to Note 5; for the details of estimated litigation,please refer to Note 6(s).


Sunflower Investment Co., Ltd. had sought administrative remedies for the administrative penalties arosefrom enterprise income tax, value-added tax, and undistributed earning tax of the Daguangsan non-performing receivable case, which the total amount of tax and penalties amounted to $564,452 thousand. Asof the reporting date, CMP Group has paid $46,174 thousand and estimated the regarding litigation provisionat $236,052 thousand.

The estimation of litigation contingent liabilities is based on the management's assessment of the result oflitigation, which is likely to be unfavorable to CMP Group. However, there are significant uncertainties inthe litigation. Therefore, the litigation provision estimation is considered as one of the key audit matters.


Our main audit procedures for the above key audit matters include: interviewing CMP Group's managementto understand the method of assessment; obtaining management's major litigation memorandum and itsprovision assessment documents, and reviewing the latest court verdict documents of the major litigation toassess the reasonableness of their estimates; obtaining auditors' legal confirmation letters from externallawyers to verify the progress of pending litigation; assessing whether CMP Group’s pending litigation casesand contingent liabilities have been properly disclosed.

Responsibilities of Management and Those Charged with Governance for the Consolidated FinancialStatements

Management is responsible for the preparation and fair presentation of the consolidated financial statements inaccordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs,IASs, IFRIC, SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic ofChina, and for such internal control as management determines is necessary to enable the preparation ofconsolidated 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 CMP Group’ sability to continue as a going concern, disclosing, as applicable, matters related to going concern and using thegoing concern basis of accounting unless management either intends to liquidate CMP Group or to ceaseoperations, or has no realistic alternative but to do so.

Those charged with governance (including the Audit Committee or supervisors) are responsible for overseeingCMP Group’s financial reporting process.

47

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

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as awhole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report thatincludes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an auditconducted in accordance with the auditing standards generally accepted in the Republic of China will alwaysdetect a material misstatement when it exists. Misstatements can arise from fraud or error and are consideredmaterial if, individually or in the aggregate, they could reasonably be expected to influence the economicdecisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, weexercise 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 involve collusion,forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness ofCMP Group’s internal control.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated 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 that maycast significant doubt on CMP Group’s ability to continue as a going concern. If we conclude that a materialuncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in theconsolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Ourconclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, futureevents or conditions may cause CMP Group to cease to continue as a going concern.

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 the entities orbusiness activities within CMP Group to express an opinion on the consolidated financial statements. Weare responsible 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 andtiming of the audit and significant audit findings, including any significant deficiencies in internal control thatwe identify during our audit.

48

We also provide those charged with governance with a statement that we have complied with relevant ethicalrequirements regarding independence, and to communicate with them all relationships and other matters thatmay 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 ofmost significance in the audit of the consolidated financial statements of the current period and are therefore thekey audit matters. We describe these matters in our auditors’ report unless law or regulation precludes publicdisclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonably be expected tooutweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Kuo-Yang Tseng andShih-Chin Chih.

KPMG

Taipei, Taiwan (Republic of China)March 30, 2020

Notes to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financialperformance and cash flows in accordance with the accounting principles and practices generally accepted in the Republic of China andnot those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are thosegenerally accepted and applied in the Republic of China.

The independent auditor’s audit report and the accompanying consolidated financial statements are the English translation of the Chineseversion prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the Englishand Chinese language independent auditor’s audit report and consolidated financial statements, the Chinese version shall prevail.

49

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50

(English Translation of Consolidated Financial Statements Originally Issued in Chinese)CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Comprehensive IncomeFor the Years Ended December 31, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars, Except for Earnings Per Common Share)

2019 2018

Amount % Amount %

4000 Operating revenues (Notes 6(y) and 7) $ 13,770,124 100 18,085,535 1005000 Operating costs (Note 6(e) and 7) (10,526,020) (76) (13,067,317) (73)

Gross profit from operations 3,244,104 24 5,018,218 27Operating expenses (Note 7):

6100 Selling expenses (601,388) (4) (812,196) (4)6200 Administrative expenses (1,604,384) (12) (1,737,754) (10)6300 Research and development expenses (9,399) - (14,248) -6450 Expected credit loss (Note 6(d)) (4,884) - (493) -

　　Total operating expenses (2,220,055) (16) (2,564,691) (14)6500 Net other income and expenses (Note 6(aa)) 10,470 - 6,360 -

Net operating income 1,034,519 8 2,459,887 13Non-operating income and expenses:

7010 Other income (Notes 6(ab) and 7) 196,048 1 196,787 17020 Other gains and losses (Notes 6(f) and (ab)) (45,529) - 65,731 -7050 Finance costs (Note 6(ab)) (269,236) (2) (264,757) (1)7375 Share of loss of associates and joint ventures accounted for using equity method

(Note 6(g)) (27,768) - (50,653) -　　Total non-operating income and expenses (146,485) (1) (52,892) -Profit from continuing operations before tax 888,034 7 2,406,995 13

7950 Less: Tax expense (Note 6(v)) (226,350) (2) (386,424) (2)8000 Profit from continuing operations 661,684 5 2,020,571 118100 Profit from discontinued operations (Notes 6(f) and 12(d)) - - 360,970 28200 Net profit 661,684 5 2,381,541 138300 Other comprehensive income: 8310 Items that may not be reclassified subsequently to profit or loss:8311 Gains (losses) on remeasurements of defined benefit plans (Note 6(u)) 1,814 - (17,744) -8316 Unrealized gains from investments in equity instruments measured at fair value through

other comprehensive income (Notes 6(w) and (ac)) 17,861 - 16,309 -Total items that may not be reclassified subsequently to profit or loss 19,675 - (1,435) -

8360 Items that may be reclassified subsequently to profit or loss:8361 Exchange differences on translation of foreign financial statements (Note 6(w)) (342,848) (3) (297,551) (1)

Total items that may be reclassified subsequently to profit or loss (342,848) (3) (297,551) (1)8300 Other comprehensive income (after tax) (323,173) (3) (298,986) (1)8500 Comprehensive income $ 338,511 2 2,082,555 12

Net profit, attributable to:8610 Owners of parent $ 508,727 4 1,835,572 108620 Non-controlling interests 152,957 1 545,969 3

$ 661,684 5 2,381,541 13Comprehensive income attributable to:

8710 Owners of parent $ 248,734 2 1,578,480 98720 Non-controlling interests 89,777 - 504,075 3

$ 338,511 2 2,082,555 12Earnings per share (Note 6(x))Basic earnings per share

9710 From continuing operations $ 1.32 3.829720 From discontinued operations - 0.94

$ 1.32 4.76Diluted earnings per share

9810 From continuing operations $ 1.32 3.819820 From discontinued operations - 0.94

$ 1.32 4.75

See accompanying notes to consolidated financial statements.

51

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52

(English Translation of Consolidated Financial Statements Originally Issued in Chinese)CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Cash FlowsFor the Years Ended December 31, 2019 and 2018(Expressed in Thousands of New Taiwan Dollars)

2019 2018Cash flows from operating activities:

Profit from continuing operations before tax $ 888,034 2,406,995Profit from discontinued operations before tax - 372,045Profit before tax 888,034 2,779,040Adjustments:

Adjustments to reconcile profit (loss):Depreciation expense 1,005,397 793,288Amortization expense 28,281 41,962Expected credit loss 4,884 493Net gain on financial assets or liabilities at fair value through profit or loss (528) (14,321)Interest expense 269,236 264,757Interest income (57,615) (62,179)Dividend income (28,196) (38,980)Share of loss of associates and joint ventures accounted for using equity method 27,768 50,653Loss on disposal of property, plant and equipment 5,363 11,711Property, plant and equipment transferred to expenses 152 196Impairment loss on property, plant and equipment 447 1,891Gain on disposal of discontinued operations and non-current assets held for sale - (372,758)Increase in deferred gain (214) (268)Reversal of employee benefit liabilities - (5,673)Other losses 44,700 452Other income (2,660) (1,300)

Total adjustments to reconcile profit 1,297,015 669,924Changes in operating assets and liabilities:

Changes in operating assets:Current financial assets at fair value through profit or loss (47,952) 42,422Notes and accounts receivable, net 268,654 255,758Accounts receivable due from related parties, net 320,599 (115,362)Other receivables 14,829 7,587Inventories (2,751,409) 659,770Prepayments (26,038) 260,468Other current assets (45,015) (175,010)Other financial assets (365,778) 70,138Incremental costs of obtaining contracts (49,902) 115,624

Total changes in operating assets (2,682,012) 1,121,395Changes in operating liabilities:

Notes and accounts payable (including related parties), net (107,415) 463,907Other payables (201,544) 97,449Current contract liabilities 833,854 (1,036,103)Other current liabilities (29,235) (26,258)Other non-current liabilities - 3,136

Total changes in operating liabilities 495,660 (497,869)Total changes in operating assets and liabilities (2,186,352) 623,526

Total adjustments (889,337) 1,293,450 Cash (outflow) inflow generated from operations (1,303) 4,072,490 Interest received 44,509 47,047 Dividends received 28,240 39,612 Interest paid (315,059) (320,442) Income taxes paid (162,299) (474,569)

Net cash flows (used in) generated from operating activities (405,912) 3,364,138Cash flows from investing activities:

Proceeds from capital reduction of financial assets at fair value through other comprehensive income 9,614 1,947Proceeds from disposal of financial assets designated at fair value through profit or loss - 13,911Acquisition of investments accounted for using equity method (20,843) -Proceeds from disposal of investments accounted for using equity method - 1,990Proceeds from capital reduction of investments accounted for using equity method - 36,516Proceeds from disposal of non-current assets held for sale - 653,575Acquisition of property, plant and equipment (846,088) (789,077)Proceeds from disposal of property, plant and equipment 18,988 19,775Acquisition of intangible assets (3,212) (6,782)Decrease in other financial assets 45,441 348,110Increase in other non-current assets (542,839) (396,021)Net cash flows from loss of control of subsidiary - (7,210)

Net cash flows used in investing activities (1,338,939) (123,266)Cash flows from financing activities:

Increase in short-term borrowings 5,799,840 5,360,771Decrease in short-term borrowings (4,216,132) (6,599,184)(Decrease) increase in short-term notes and bills payable (224,734) 219,754Proceeds from long-term borrowings 7,753,647 4,622,476Repayments of long-term borrowings (5,829,982) (5,680,775)Increase in other non-current liabilities 1,229 -Cash dividends paid (1,040,181) (577,878)Payments of lease liabilities (190,129) -Cash dividends paid to non-controlling interests (424,901) (160,635)Change in non-controlling interests (10,958) (135,183)

Net cash flows generated from (used in) financing activities 1,617,699 (2,950,654)Effect of exchange rate changes on cash and cash equivalents (68,991) (23,540)Net (decrease) increase in cash and cash equivalents (196,143) 266,678Cash and cash equivalents at beginning of year 3,896,690 3,630,012Cash and cash equivalents at end of year $ 3,700,547 3,896,690

See accompanying notes to consolidated financial statements.

53

【Attachment VIII】


2019 Earnings Appropriation Sheet

Unit: NTD

Balance as at Beginning of the Year 4,314,231,315

Add (Less): IFRS net conversion adjustment amount -58,289,975

Balance as at Beginning of the Year (Restated) 4,255,941,340

Add (Less): adjustment items for current period

Net profit after tax for the year 508,727,078

Current period changes in remeasurements for Defined Benefit Plan

2,186,071

Changes in share of associates and joint ventures accounted for using equity method

-2,400,956

Earnings Available for Appropriation 4,764,453,533

Less: legal reserve appropriation -45,022,222

Less: Amount appropriated as special reserve -7,028,160

Appropriated items:

Cash dividend (NTD 0.9 per share) (Note 3) -346,726,901

Unappropriated earnings at the End of the Year 4,365,676,250

Note 1. Pre-appropriation share number: 385,252,112

shares.

Note 2. Cash dividend is rounded to the nearest NTD.

Sum of fractional share amounts are calculated as

Other Income for the Company.

Note 3. According to the ruling issued by MOF's Letter

No. 10904558730, retrospective adjustments were

made to the 2018 beginning increase amount of

retained earnings due to changes in the version of

accounting standards distribution amounted to

NTD 77,176,149; 2019 earnings distribution was

proposed as NTD 269,550,752.

Chairman: LIN, Ting Fung Manager: KING, Fong Tien Accounting Supervisor: WANG, Pei Chang

54

【Attachment IX】


Comparison Table for the Articles of Incorporation

Article After Amendment Before Amendment Explanation

Article 17. The Company has established nine Director seats with a three -year office term; a nomination system is adopted. The Directors are elected at the Meeting of Shareholders among those with legal capacity and may continue in office if successfully re-elected. The aggregate shareholding percentages of the entire bodies of Directors shall conform with the regulations prescribed by the competent securities authorities. The above Director seats shall be taken by at least three Independent Directors who shall constitute no less than one-fifth of the total number of Directors. The shareholders' meeting shall select and appoint the Independent Directors from the list of candidates. The professional qualifications, shareholding, part-time restrictions, nomination and selection methods of Independent Directors and other matters shall comply with the relevant provisions prescribed by the competent securities authorities.

The Company has established nine (9) Director seats with a three-year office term. The Directors are elected at the Meeting of Shareholders among those with legal capacity and may continue in office if successfully re-elected. The aggregate shareholding percentages of the entire bodies of Directors shall conform with the regulations prescribed by the competent securities authorities. The BOD shall comprise of at least three (3) Independent Directors who shall constitute no less than one-fifth (1/5) of the total number of Directors. The AMS adopts a nomination system and shall select and appoint the Independent Directors from the list of candidates. The professional qualifications, shareholding, part-time restrictions, nomination and selection methods of Independent Directors and other matters shall comply with the relevant provisions prescribed by the competent securities authorities.

Proposed the amendment to the Article in accordance with the Order No. 1080311451 promulgated by the FSC, stating that a nomination system shall be adopted for Directors and Supervisors' election of TWSE/TPEx Listed companies, and shall set out the adoption of a nomination system in their articles of incorporation.

Article 27. The annual earnings of the Company shall be first appropriated to pay taxes and offset accumulated losses before allocating ten percent ( 10%) of the remaining earning for the year, together with the net profit after tax for the period plus items other than the net profit after tax for the period, to the legal reserve (not applicable where accumulated legal reserve has reached the amount required by law and regulations) and a special reserve in accordance to the Company’s operating needs and pursuant to the applicable law and

The annual earnings of the Company shall be first appropriated to pay taxes and offset accumulated losses before allocating ten percent (10%) of the remaining earning to the legal reserve (not applicable where accumulated legal reserve has reached the amount required by law and regulations) and a special reserve in accordance to the Company’s operating needs and pursuant to the applicable law and regulations. Any retained earnings available for distribution together with the accumulated undistributed retained earnings may be proposed by the BOD to appropriate and be resolve at the

Proposed the amendments to the Article based on the explanations for the question regarding the appropriation of the legal reserve under Article 237 of the Company Act set out in the Letter No. 10802432410 issued by the

55


regulations. Any retained earnings available for distribution together with the accumulated undistributed retained earnings may be proposed by the BOD to appropriate and be resolve at the Meeting of Shareholders. Proposed earnings appropriation either in the form of dividend or bonus, or in the form of cash as with normal practice, the BOD is authorized to determine by a majority of the attending Directors with a quorum of two-thirds of all Directors, and submit to the Meeting of Shareholders for adoption. The Company is currently at a developing stage with steady profit and stable future cash flow with major investment plans in the future, hence the dividend distribution policy is subject to the Company’s future capital needs and long-term financial strategies. Thus, dividends are distributed based on a “residual dividend policy,” where both cash dividends and stock dividends are distributed, in which the stock dividend shall be less than seventy percent (70%) of the total dividends.

Meeting of Shareholders. Proposed earnings appropriation either in the form of dividend or bonus, or in the form of cash as with normal practice, the BOD is authorized to determine by a majority of the attending Directors with a quorum of two-thirds of all Directors, and submit to the Meeting of Shareholders for adoption. The Company is currently at a developing stage with steady profit and stable future cash flow with major investment plans in the future, hence the dividend distribution policy is subject to the Company’s future capital needs and long-term financial strategies. Thus, dividends are distributed based on a “residual dividend policy”, where both cash dividend and stock dividend are distributed, in which the stock dividend shall be less than seventy percent (70%) of the total dividends.

Ministry of Economic Affairs.

Article 29. ...The 40th amendment was approved on June 24, 2019. The 41th amendment was approved on June 22, 2020.

... The 40th amendment was approved on June 24, 2019.

Amended in accordance with the revision.

56

【Attachment X】

China Metal Products Co., Ltd.

Comparison Table for the Rules of Procedure for Meeting of

Shareholders


Article 6. The BOD is responsible for compiling the agenda for the Meeting of Shareholders convened by the BOD. The relevant motions (including extemporary motions and amendments to the original motions) shall be determined by voting on a case-by-case basis. The meeting shall proceed in the order of scheduled agenda items and may not be altered without a resolution adopted at the Meeting of Shareholders. The preceding paragraph shall apply mutatis mutandis to the Meeting of Shareholders convened by a convening authority other than the BOD. Unless otherwise resolved at the Meeting of Shareholders, the chairperson may not adjourn the meeting prior to concluding all scheduled agenda items set forth in the preceding paragraphs (including extemporary motions).

The BOD is responsible for compiling the agenda for the Meeting of Shareholders convened by the BOD. The meeting shall proceed in the order of scheduled agenda items and may not be altered without a resolution adopted at the Meeting of Shareholders. The preceding paragraph shall apply mutatis mutandis to the Meeting of Shareholders convened by a convening authority other than the BOD. Unless otherwise resolved at the Meeting of Shareholders, the chairperson may not adjourn the meeting prior to concluding all scheduled agenda items set forth in the preceding paragraphs (including extemporary motions).

The Company's shareholders' meeting has adopted voting on a case-by-case basis for motions; the Article was amended with reference to the Letter No. 1080024221 issued by TWSE, which revised the Article 10 under the template of Rules of Procedure for Shareholders' Meetings.

Article 13. The chairperson may respond or designate others to respond to the speech delivered by the attending shareholder. The chairperson may, at his/her discretion, close the discussion and call for a vote when he/she is of the opinion that the motion was sufficiently discussed; and the chairperson shall arrange sufficient time for voting.

The chairperson may respond or designate others to respond to the speech delivered by the attending shareholder. The chairperson may, at his/her discretion, close the discussion and call for a vote when he/she is of the opinion that the motion was sufficiently discussed.

The Article was amended with reference to the Letter No. 1080024221 issued by TWSE, which revised the Article 10 under the template of Rules of Procedure for Shareholders' Meetings.

Article 16. Unless otherwise prescribed by the Company Act, resolutions shall be adopted with a majority of affirmative votes represented by the attending shareholders. At the time of a vote, for each motion, the chair or the personnel designated by the chairperson shall first announce the total number of

Unless otherwise prescribed by the Company Act, resolutions shall be adopted with a majority of affirmative votes represented by the attending shareholders. However, the resolution shall be deemed adopted with the same effect, when no objection was voiced against the motion at

Article was amended since the Company's shareholders' meeting has adopted voting on a case-by-case basis for motions.

57


voting rights represented by the attending shareholders, and the shareholders shall vote for the motions on a case-by-case basis. After the conclusion of the shareholders' meeting, on the same day it is held, the results for each motion, based on the numbers of votes for and against and the number of abstentions, shall be uploaded to Market Observation Post System. Where amendments or alternatives are proposed for the original motion, the chairperson shall decide the sequence of voting for such motion. Once any version of the aforementioned motion is adopted, other versions shall be deemed vetoed and no further voting shall proceed. Shareholders who are exercising their voting rights in the written or electronic format shall be deemed to abstain from the extemporary motions and amendments to the original motions at that Meeting of the Shareholders.

chairperson’s call for votes. Where amendments or alternatives were proposed for the original motion, the chairperson shall decide the sequence of voting for such motion. Once any version of the aforementioned motion was adopted, other versions shall be deemed vetoed and no further voting shall proceed. Shareholders who are exercising their voting rights in the written or electronic format shall be deemed to abstain from the extemporary motions and amendments to the original motions at that Meeting of the Shareholders.

Article 18. Matters relating to the resolutions of the Meeting of Shareholders shall be recorded in the meeting minutes. The meeting minutes shall be signed or sealed by the chairperson and distribute to the shareholders after the meeting. The Company may distribute the meeting minutes through publicly announcement by uploading to the Market Observation Post System. The meeting minutes shall accurately record the year, month, day, and venue of the meeting, the chair's full name, the methods by which resolutions were adopted, and a summary of the deliberations and their results (including the statistical weights), and shall disclose the number of votes received by each candidate for any Director election. The meeting minutes shall be retained for the duration of the existence of the Company.

Matters relating to the resolutions of the Meeting of Shareholders shall be recorded in the meeting minutes. The meeting minutes shall be signed or sealed by the chairperson and distribute to the shareholders after the meeting. The Company may distribute the meeting minutes through publicly announcement by uploading to the Market Observation Post System.

The Company's shareholders' meeting has adopted voting on a case-by-case basis for motions; the Article was amended with reference to the Letter No. 1080024221 issued by TWSE, which revised the Article 15 under the template of Rules of Procedure for Shareholders' Meetings and stated the items to be recorded in the meeting minutes and its time of keeping.

58

【Appendix I】


Articles of Incorporation

Chapter 1. General Provisions

Article 1: The Company shall be incorporated, as a company limited by shares, under the

Company Act of the Republic of China, and its name shall be 勤美股份有限公司 in the

Chinese language, and “China Metal Products Co., Ltd.” in the English language.

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

1. CA01010 Iron and steel refining

2. CA01030 Iron and steel casting

3. CA01050 Iron and steel rolling, drawing, and extruding

4. CA01090 Aluminum casting manufacturing

5. CA01100 Aluminum material rolls over extends and crowding

6. CA01120 Copper casting

7. CA01130 Copper material rolls over extends and crowding

8. CB01990 Other machinery manufacturing not elsewhere classified

9. F106010 Wholesale of ironware

10. F108031 Wholesale of medical equipment

11. F110020 Wholesale of spectacles

12. F111090 Wholesale of building materials

13. F119010 Wholesale of electronic materials

14. F199990 Wholesale of other materials

15. F206010 Retail sale of ironware

16. F208031 Retail sale of medical equipment

17. F208050 Retail sale of the second type patent medicine

18. F210020 Retail sale of spectacles

19. F211010 Retail sale of building materials

20. F219010 Retail sale of electronic materials

21. F299990 Retail sale of other materials

22. F399040 Retail business without shops

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23. H701010 Residence and buildings lease construction and development

24. H701020 Industrial factory buildings lease construction and development

25. HZ02010 Financial institution creditor's right (money) purchase

26. ZZ99999 In addition to the above licensed businesses, the Company may

operate any other businesses that are not prohibited or restricted by law, except

for those that are subject to special approvals.

Article 3: The Company may provide endorsements and guarantees and act as a guarantor.

Article 4: The Company may invest in other companies as a shareholder with limited liabilities

and all investment affairs shall subject to the resolution of the Board of Directors

(“BOD”). The total amount of the Company’s investment in other companies may

exceed forty percent (40%) of the Company’s paid-in capital.

Article 5: The Company is headquartered in Taipei City and may establish domestic or overseas

branches according to BOD resolutions when necessary.

Article 6: Any public announcements of the Company shall be made in accordance with Article

28 of the Company Act.

Chapter 2. Capital and Shares

Article 7: The authorized capital of the Company is NTD 5 billion, consisting of 500 million shares

with a par value of NTD 10 per share. The shares may be issued in separate

allotments. The Company hereby authorizes the BOD to allot the unissued shares as

needed upon the BOD’s resolution.

Article 8: Shares issued by the Company need not be in physical forms but shall register with the

security depository and clearance institution (Taiwan Depository & Clearing

Corporation, “TDCC”). Any physical shares issued by the Company shall confirm with

the provisions stipulated in the Company Act and other related law and regulations.

Article 9: Registration for transfer of shares shall be suspended sixty (60) days immediately

before the date of the Annual Meeting of Shareholders, and thirty (30) days

immediately before the date of any special Meeting of Shareholders, or within five (5)

days before the day on which dividend, bonus, or any other benefit is scheduled to be

paid by the Company.

Article 10: Upon transferring shares, the transferor and the transferee shall jointly sign or seal and

submit an application to the Company or its share registrar agent for registration of title

transfer. The Company may consider that the rights of the shares still rests with the

original shareholder prior to the completion of the aforementioned registration of title

transfer. Upon pledging or un-pledging of shares, both the pledger and the pledgee

shall jointly sign or seal and submit an application to the Company or its share registrar

60

agent for registration of the pledge/un-pledge. The pledgee shall not confront the

Company prior to the completion of the aforementioned registration.

Chapter 3. Meeting of Shareholders

Article 11: There are two types of Meeting of Shareholders: annual Meeting of Shareholders

(hereinafter referred to as “AMS”) and special Meeting of Shareholders. The annual

Meeting of Shareholders is convened once per year within six (6) months after the

closing of the fiscal year. Special Meeting of Shareholders may be convened in

accordance with applicable law and regulations when necessary.

Article 12: The shareholder may appoint a proxy to attend the Meeting of Shareholders by

presenting a proxy form specifying the scope of proxy. The proxy attendance shall be

conducted according to Article 177 of the Company Act and other related regulations.

Article 13: (Deleted).

Article 14: Each shareholder of the Company is entitled to one vote per share. However, the

voting right is nullified upon situations stipulated in Article 179 of the Company Act.

Article 15: The Chairman of BOD shall chair the Meeting of Shareholders and may delegate to

one of the Directors during his/her absence. The Directors may elect one among

themselves to chair if the Chairman of the BOD fails to delegate. For meetings

convened by a convening authority other than the BOD, the convener (or with two or

more conveners, one shall be elected amongst themselves) shall chair the meeting.

Article 16: Unless otherwise required by other law or regulations of a higher attendance and

voting weight or more stringent resolution terms, a resolution of the Meeting of

Shareholders shall be adopted by the consent of a majority of votes represented by the

attending shareholders, in person or by proxy, by shareholders who constituted a

majority of the total issued shares.

Chapter 4. Directors and Functional Committees

Article 17: The Company has established nine (9) Director seats with a three-year office term. The

Directors are elected at the Meeting of Shareholders among those with legal capacity

and may continue in office if successfully re-elected. The aggregate shareholding

percentages of the entire bodies of Directors shall conform with the regulations

prescribed by the competent securities authorities. The BOD shall comprise of at least

three (3) Independent Directors who shall constitute no less than one-fifth (1/5) of the

total number of Directors. The AMS adopts a nomination system and shall select and

appoint the Independent Directors from the list of candidates. The professional

qualifications, shareholding, part-time restrictions, nomination and selection methods of

Independent Directors and other matters shall comply with the relevant provisions

prescribed by the competent securities authorities.

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Article 17-1: The Company hereby authorizes the BOD to determine the remuneration package for

the Chairman and the Directors after taking the extent and value of the services

contributed to the management of the Company as well as the industry norm into

consideration.

Article 17-2: The Company shall establish an Audit Committee in accordance with Article 14-4 of

the Securities and Exchange Act that comprise of all Independent Directors. The roles

and responsibilities of the Audit Committee and its members and related matters shall

comply with the decrees of the competent authorities and the provisions of the

Company's rules and regulations.

Article 18: The Directors of the Company constitutes the BOD. The Chairman and the Vice-

Chairman of the BOD are elected by a majority of the attending Directors with a

quorum of two-thirds (2/3) of all Directors. The Chairman shall have the authority to

represent the Company. The BOD may establish various functional committees

whereas the BOD shall define the members' qualifications, roles and responsibilities,

and related matters in accordance with the associated law and regulations.

Article 19: The BOD and the Audit Committee shall meet every quarter. The meeting convening

notice and agenda shall be delivered to each Director no later than seven (7) days prior

to the scheduled meeting date. However, in cases of emergency, the meeting may be

convened at any time. The BOD convening notice may be delivered to each Director in

writing, by E-mail or by facsimile.

Article 20: When the Chairman has taken leave or could not exercise his/her authorities, the

delegation of his/her roles and responsibilities shall comply with Article 208 of the

Company Act. A Director may, during his/her absence, delegate another Director by a

written authorization to attend the BOD meeting on his/her behalf and to vote for all

matters presented at such meeting. However, one (1) Director may not act as a proxy

for more than one (1) Director at the same meeting. In addition, any Directors attending

the BOD meeting via video conferencing is deemed to participate the meeting in

person.

Article 21: Unless otherwise required by other law or regulations of a higher attendance and

voting weight or more stringent resolution terms, a resolution of the BOD meeting shall

be adopted by the consent of a majority of votes represented by the attending

Directors, in person or by proxy, by Directors who constituted a majority of the BOD.

Article 22: The roles and responsibilities of the BOD:

(1) Establishment and dissolution of the branch offices;

(2) Establishment of the organizational structures and compilation of major operating

regulations for the Company;

(3) Appointment and dismissal of the Company’s public accountants;

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(4) Proposal of the acquisition and disposal of the Company’s major assets;

(5) Endorse, guarantee and accept in the name of the Company;

(6) Appointment and dismissal of the managerial personnel;

(7) Compilation and resolution of any external investments;

(8) Proposal and discussion on the amendments to the Articles of Incorporation;

(9) Reviewal and approval of the annual budget and final accounts, including the

reviewal of the annual operating plans;

(10) Proposal to increase or decrease the Company’s capital;

(11) Proposal of the earnings appropriation or loss offsetting;

(12) Proposal of major contracts with external parties;

(13) Convene the Meeting of Shareholders;

(14) Proposal to capitalize the Company’s dividend, bonus or reserves; and

(15) Any other roles and responsibilities as prescribed by Article 202 of the Company

Act.

Article 23: (Deleted)

Article 24: The Company may purchase liability insurance for Directors during their term of office

for the legal liability which they shall bear in respect of the scope of their Directorship.

Chapter 5. Managers

Article 25: The Company may appoint one President, several senior Vice-Presidents and

Assistant Vice-Presidents, whose appointment, dismissal and remuneration shall

comply with Article 29 of the Company Act.

Chapter 6. Accounting

Article 26: At the end of each fiscal year, the following reports shall be compiled by the BOD and

submit to the Meeting of Shareholders for acknowledgement:

(1) Operating Reports;

(2) Financial Statements; and

(3) Proposed earnings appropriation or loss off-setting.

Article 27: The annual earnings of the Company shall be first appropriated to pay taxes and offset

accumulated losses before allocating ten percent (10%) of the remaining earning to the

legal reserve (not applicable where accumulated legal reserve has reached the amount

63

required by law and regulations) and a special reserve in accordance to the Company’s

operating needs and pursuant to the applicable law and regulations. Any retained

earnings available for distribution together with the accumulated undistributed retained

earnings may be proposed by the BOD to appropriate and be resolve at the Meeting of

Shareholders.

Proposed earnings appropriation either in the form of dividend or bonus, or in the form

of cash as with normal practice, the BOD is authorized to determine by a majority of the

attending Directors with a quorum of two-thirds of all Directors, and submit to the

Meeting of Shareholders for adoption.

The Company is currently at a developing stage with steady profit and stable future

cash flow with major investment plans in the future, hence the dividend distribution

policy is subject to the Company’s future capital needs and long-term financial

strategies. Thus, dividends are distributed based on a “residual dividend policy”, where

both cash dividend and stock dividend are distributed, in which the stock dividend shall

be less than seventy percent (70%) of the total dividends.

Article 27-1: For earnings generated during the fiscal year, the Company shall allocate a minimum

of 2.5% as employee compensation, and a maximum of 2.5% shall be allocated as the

Director’s remuneration. However, current earning shall offset the accumulated losses,

if any, before appropriate to the Directors and employees based on the percentages

stipulated in the Articles of Incorporation.

Proposed employee compensation and Directors remuneration appropriation shall be

submitted to the BOD for resolution, and to the Meeting of Shareholders for adoption.

Candidates for employee compensation, issuance of restricted shares awards,

issuance of employee shares option certificates, issuance of subscription of new

shares, and transfer of shares are employees of the CMP Group subject to the criteria

set by the BOD.

Chapter 7. Supplementary Provisions

Article 28: Any matters not stipulated in the Articles of Incorporation shall be processed in

accordance with the Company Act.

Article 29: The Articles of Incorporation was enacted on September 1, 1972.

The 1st amendment was approved on June 21, 1973.

The 2nd amendment was approved on May 20, 1974.

The 3rd amendment was approved on February 16, 1976.

The 4th amendment was approved on November 15, 1978.

The 5th amendment was approved on May 17, 1979.

64

The 6th amendment was approved on March 25, 1981.

The 7th amendment was approved on November 14, 1983.

The 8th amendment was approved on July 28, 1985.

The 9th amendment was approved on April 18, 1988.

The 10th amendment was approved on September 1, 1988.

The 11th amendment was approved on October 20, 1988.

The 12th amendment was approved on January 13, 1989.




The 16th amendment was approved on June 2, 1991.


The 18th amendment was approved on December 22, 1992.




The 22nd amendment was approved on June 8, 1996.

The 23rd amendment was approved on June 7, 1997.









The 32nd amendment was approved on June 13, 2007.

The 33rd amendment was approved on June 10, 2009.



65


The 37th amendment was approved on October 30, 2015.




66

【Appendix II】


Rules of Procedure for Meeting of Shareholders

Article 1: Unless otherwise stipulated by law and regulations or by the Company’s Articles of

Incorporation, Meeting of Shareholders shall be conducted in accordance with these

rules.

Article 2: The Chairman of the Board of Directors (BOD) shall chair all Meetings of Shareholders

convened by the BOD. The Vice-Chairman shall chair the meetings when the Chairman

has taken leave or when the Chairman is unable to exercise his/ her authorities. Upon

situations where no Vice-Chairman was elected, or when the Vice-Chairman has also

taken leave or is unable to exercise his/her authorities, the Chairman may delegate to

one of the Directors. The Directors may elect one among themselves to chair if the

Chairman of the BOD fails to delegate.

The Director who chairs the meeting as prescribed in the preceding paragraph, as a

natural person or as a representative of the juristic person Director, shall have served

for more than six (6) months at the Company and who understands the financial and

operating conditions of the Company.

For any Meeting of Shareholders convened by the BOD, attendance by a majority of

Directors is preferred.

For meetings convened by a convening authority other than the BOD, the convener (or

upon two or more conveners, one shall be elected among themselves) shall chair the

meeting.

Article 3: The Company’s notice of meeting shall clearly state the registration time, venue and

other matters that requires attention of the shareholders.

The registration time of the preceding paragraph shall allow at least thirty (30) minutes

before commencing the meeting. The venue of registration shall be clearly marked and

aided by adequate number of competent personnel.

The Company shall furnish an attendance log for shareholders to sign-in, or an

attendance card may be used in lieu of sign-ins.

The total attendance of the Meeting of Shareholders shall be calculated based on the

number of shares in accordance with the signed attendance log or the attendance

67

cards turned-in during registration, plus the number of shares with voting rights

exercised in writing or electronically.

Article 4: The Company may appoint designated attorneys, Certified Public Accountant (CPA) or

other relevant persons to attend Meeting of Shareholders.

Personnel in charge of the affairs for the Meeting of Shareholders shall wear an

identification badge or armbands during the meeting.

Article 5: The chairperson shall call the meeting to order at the scheduled time. Meeting may

only be postponed, up to a maximum of two (2) times for an aggregate period of less

than an hour, upon the number of shares represented by the shareholders present at

the meeting has not constituted the quorum (equivalent to the majority of the total

number of issued shares). Meeting shall be adjourned by the chairperson after two (2)

postponements and the number of shares represented by the shareholders present at

the meeting has not constituted the quorum (equivalent to one third (1/3) of the total

number of issued shares).

Where the quorum has not met after two (2) postponements as referred to in the

preceding paragraph whilst the attending shareholders represented one third (1/3) or

more of the total number of issued shares, a tentative resolution may be adopted

pursuant to Article 175 Paragraph 1 of the Company Act. All shareholders shall be

notified of the tentative resolution and a subsequent meeting within one (1) month shall

be convened.

If attending shareholders represented a majority of the total number of issued shares

prior to concluding the subsequent meeting as prescribed in the preceding paragraph,

the chairperson shall resubmit the tentative resolution for a vote pursuant to Article 174

of the Company Act

Article 6: The BOD is responsible for compiling the agenda for the Meeting of Shareholders

convened by the BOD. The meeting shall proceed in the order of scheduled agenda

items and may not be altered without a resolution adopted at the Meeting of

Shareholders.

The preceding paragraph shall apply mutatis mutandis to the Meeting of Shareholders

convened by a convening authority other than the BOD.

Unless otherwise resolved at the Meeting of Shareholders, the chairperson may not

adjourn the meeting prior to concluding all scheduled agenda items set forth in the

preceding paragraphs (including extemporary motions).

68

Article 7: The shareholders may not elect for a new chairperson and continue the meeting, at the

same venue or other, once the meeting has concluded. However, upon where the

chairperson adjourning the meeting was in violation of the Rules, a majority votes from

the attending shareholders may elect a new chairperson to continue the meeting as is.

Article 8: The chairperson may announce a recess during the meeting based on time

considerations. Upon force majeure events, the chairperson may suspend the meeting

temporarily and announce the meeting resuming time based on the circumstances.

Article 9: Any attending shareholders who wished to speak shall complete a speaker’s slip

detailing the a) summary of speech, b) shareholder account number (or attendance

card number) and c) account name. The chairperson shall decide on the sequence of

shareholders’ speeches. The attending shareholder who submitted a speaker’s slip

without delivering an actual speech shall be deemed to have not spoken. Where the

contents of a shareholder’s speech differed from the speaker’s slip, the contents of the

actual speech shall prevail.

Unless otherwise permitted by the chairperson and speaking shareholder, no

shareholder shall interrupt the speaking shareholder and the chairperson shall refrain

such violations.

Article 10: Unless otherwise permitted by the chairperson, a shareholder may not speak more

than twice on the same motion and each speech shall not exceed five (5) minutes. The

chairperson shall refrain any shareholder who violates this Article or when the contents

of the shareholder’s speech surpassed the scope of the motion.

Article 11: Any legal entity designated as proxy by shareholder(s), may only appoint one

representative to attend the Meeting of Shareholders. When the juristic person

shareholder appointed two (2) or more representatives to attend the Meeting of

Shareholders, only one (1) representative may speak for one (1) particular motion.

Article 12: Shareholder(s) shall not vote on motions with conflict of interest against the Company

nor act as a proxy for other shareholder(s) and vote on that particular motion.

69

Article 13: The chairperson may respond or designate others to respond to the speech delivered

by the attending shareholder. The chairperson may, at his/her discretion, close the

discussion and call for a vote when he/she is of the opinion that the motion was

sufficiently discussed.

Article 14: The chairperson shall designate monitors and tellers of the votes, where the vote

monitors shall also be shareholders of the Company. The counting of the votes or

ballots shall be conducted publicly at the meeting venue. The result of votes or ballots

shall be announced at the meeting and documented in detail (including the statistical

tallies of the numbers of votes).

Any election of Directors at the Meeting of Shareholders shall be conducted in

accordance with the relevant regulations stipulated by the Company. The result of

ballots (including the list of elected Directors and the related statistical tallies) shall be

announced at the meeting.

Article 15: The chairperson may administer proctors or security guards to maintain order at the

meeting venue and who shall wear an identification badge or armband marked with

"Proctor."

Article 16: Unless otherwise prescribed by the Company Act, resolutions shall be adopted with a

majority of affirmative votes represented by the attending shareholders. However, the

resolution shall be deemed adopted with the same effect, when no objection was

voiced against the motion at chairperson’s call for votes. Where amendments or

alternatives were proposed for the original motion, the chairperson shall decide the

sequence of voting for such motion. Once any version of the aforementioned motion

was adopted, other versions shall be deemed vetoed and no further voting shall

proceed. Shareholders who are exercising their voting rights in the written or electronic

format shall be deemed to abstain from the extemporary motions and amendments to

the original motions at that Meeting of the Shareholders.

Article 17: The Company shall audio and video record the entire processes of the shareholders

registration, meeting, voting and counting thereof.

The aforementioned recorded materials shall be retained for at least one (1) year.

However, upon any litigation filed by a shareholder in accordance with Article 189 of the

Company Act, the recorded material shall be preserved until the end of the litigation.

70

Article 18: Matters relating to the resolutions of the Meeting of Shareholders shall be recorded in

the meeting minutes. The meeting minutes shall be signed or sealed by the

chairperson and distribute to the shareholders after the meeting. The Company may

distribute the meeting minutes through publicly announcement by uploading to the

Market Observation Post System.

Article 19: Any matters not stipulated in the Rules shall conform to the Company Act, the

Company’s Articles of Incorporation and other law and regulations. The Rules shall be

implemented after the approval by the Meeting of Shareholders and the same shall

follow for any subsequent amendments.

71

【Appendix III】


Rules for Director Elections

Article 1: The election of the Company’s Directors shall be conducted in accordance with the

Procedures.

Article 2: The cumulative voting method shall be used for the election of the Company’s

Directors. The name of the candidates may be replaced with the attendance card

number printed on the ballot. Each share will have voting rights in number equal to

that of the Directors to be elected, and may be all cast for a single candidate or split

among multiple candidates.

Article 3: The number of directors and supervisors has been specified in the Company's

Articles of Incorporation. Candidates who acquire more votes should be elected as

Directors. When two or more persons receive the same number of votes, thus

exceeding the specified number of positions, they shall draw lots to determine the

winner, with the chair drawing lots on behalf of any person not in attendance. The

votes of the Directors are elected according to the election of Independent Directors

and non-independent Directors.

Shareholders who are elected as Directors in accordance with the preceding

paragraph shall, at their discretion, serve as Directors, and their vacancies shall be

replenished by the majority of the electors.

Article 4: Before the election begins, two vote monitoring personnel shall be selected among

the shareholders, and the chair shall appoint vote counting personnel.

Article 5: The Board of Directors shall prepare separate ballots for Directors in numbers

corresponding to the directors to be elected.

Article 6: The ballot boxes shall be prepared by the Board of Directors and publicly checked by

the vote monitoring personnel before voting commences.

Article 7: If a candidate is a shareholder, a voter must enter the candidate's account name and

shareholder account number in the "candidate" column of the ballot. However, when

the candidate is a governmental organization or juristic-person shareholder, the name

of the governmental organization or juristic-person shareholder shall be entered in the

column for the candidate's account name in the ballot paper, or both the name of the

governmental organization or juristic-person shareholder and the name of its

representative may be entered. When there are multiple representatives, the names

of each respective representative shall be entered.

Article 8: A ballot is invalid under any of the following circumstances:

(I) Ballots which do not comply with the regulations stated in the Procedures.

(II) A blank ballot is placed in the ballot box.

(III) The writing is unclear and indecipherable.

72

(IV) The candidate's account name and shareholder account number do not conform

to those given in the shareholder register.

(V) Other words or marks are entered in addition to the candidate's account name or

shareholder account number (or identity card number) and the number of voting

rights allotted.

(VI) The name of the candidate entered in the ballot is identical to that of another

shareholder, but no shareholder account number or identity card number is

provided in the ballot to identify such individual.

Article 9: The voting rights shall be calculated on site immediately after the end of the poll, and

the results of the calculation shall be announced by the chair on the site.

Article 10: The Board of Directors of the Company shall issue notifications to the persons

elected as Directors.

Article 11: For outstanding matters not stipulated by the method, the provisions of the Company

Act, Articles of Incorporation and relevant laws shall prevail.

Article 12: These Procedures and any amendments hereto shall be implemented after approval

by a shareholders meeting. The Procedures were enacted on June 19, 2017.

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【Appendix IV】

Shareholding by All Directors

The statutory required minimum number of shares to be held and the number of shares currently

held by Directors

I. The Company's paid-in capital as of April 24, 2020 was NTD 3,852,521,120, and the number

of shares issued was 385,252,112.

II. In accordance with Article 26 of the Securities Exchange Law and the Rules and Review

Procedures for Director and Supervisor Share Ownership Ratios at Public Companies, all

Directors shall hold a minimum of 5% of registered shares, i.e., a minimum of 19,262,605

shares.

III. The Company has elected 3 Independent Directors, and the share ownership figure

calculated at the rates set in the preceding paragraph for all Directors other than

Independent Directors shall be decreased by 20%. Therefore, the minimum number of

shares to be held by all Directors shall be 15,410,084.

IV. The Company has established an Audit Committee, so rules stipulating the number of

shares legally owned by the Supervisors do not apply.

V. As of the date of book closure for the Annual General Meeting (April 24, 2020), the

shareholding by all Directors and each of them is recorded in the shareholder register as

follows:

April 24, 2020

Title Name Tenure Shares %

Chairman Lucent Source., Ltd.

Representative: LIN, Ting Fung 2017.06.19~2020.06.18 634,000 0.16

Director Chain-Yuan Investment Co., Ltd.

Representative: CHEN, Pen Fa 2017.06.19~2020.06.18

47,491,965 12.33

Director Chain-Yuan Investment Co., Ltd.

Representative: HO, Pei Fen 2017.06.19~2020.06.18

Director TSAO, Ming Hong 2017.06.19~2020.06.18 6,092,879 1.58

Director WU, Shu Chuan 2017.06.19~2020.06.18 5,702,198 1.48

Director HO, Cheng Yu 2017.06.19~2020.06.18 4,056,384 1.05

Independent

Director LIAO, Liou Yi 2017.06.19~2020.06.18 0 0.00

Independent

Director CHANG, Ming Jye 2017.06.19~2020.06.18 0 0.00

Independent

Director LIN, Jung Chuen 2017.06.19~2020.06.18 0 0.00

Shareholding by All Directors (excluding Independent Directors) 63,977,426 16.60

74

【Appendix V】

Impact of Stock Dividend Issuance on Business Performance, Earnings per Share and Shareholders' Return on Investment

Unit: NTD

Item Year Estimated in 2020

(Distribution of surplus in 2019)

Beginning paid-in capital 3,852,521,120

Distribution of dividends this year

Cash dividends per share (NTD) 0.9

Capital increase out of surplus allotment per share (NTD) 0.00

Capital increase out of capital reserve allotment per share (NTD)

0.00

Change in operating performance

Operating Profit Note

Operating profit increase (decrease) ratio over the same period last year

Note

Net income after tax Note

Net income after tax increase (decrease) ratio over the same period last year

Note

Earnings per share (NTD) Note

Earnings per share increase (decrease) ratio over the same period last year

Note

Average annual return on investment (reciprocal of annual average PE ratio)

Note

Pro-forma earnings per share and P/E ratio

If capital increase by retained earnings is entirely replaced by cash dividend distribution.

Pro-forma earnings per share (NTD)

Note

Pro-forma average annual return on investment

Note

If capital reserve is not used for capital increase.


Note


Note

If capital reserve to capital increase has not yet been undertaken and the surplus to capital increase is changed to cash dividend distribution.


Note


Note

Note: In accordance with the Regulations Governing the Publication of Financial Forecasts of

Public Companies, the Company didn't disclose its financial forecast information for 2020,

so the forecast data for 2020 is not available.

(V) Effects of the Proposed Issuance of Bonus Shares of the Annual

General Meeting on the Company's Business Performance,

Earnings per Share and Return On Investment

(IX) Effects of the Proposed

Issuance of Bonus Shares

of the Annual General

Meeting on the Company's

Business Performance,

Earnings per Share and

75

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