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Year 2013 Far EasTone Telecommunications Co., Ltd. Shareholders’ Meeting Handbook

June 13, 2013 Taipei, Taiwan, R.O.C.

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

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Far Eastone Telecommunications Co., Ltd. Agenda of Year 2013 Shareholders' Meeting

Time: 9:00 a.m., June 13, 2013 Place: Taipei Hero House, 20 Changsha Street, Sec. 1, Taipei, Taiwan Opening – Chairman Company Presentation – Chairman / President Agenda of Meeting Handbook – Chairman 1. Matters to be reported: (1)Business report of Year 2012……………………………………………….…...…………………………..…..………..……..….. 3 (2)Financial report of Year 2012……………………………………………………....…………………………………………....…. 7 (3)Review of the Year 2012 closing report by the Supervisors.……………………………....……………………………………...... 8 (4)Review of the amendment to “Regulations for the Board of Directors Meeting”..……....……………………………………....... 9 (5)The adjustments of Retained Earnings and Special Reserve in accordance with the adoption of International Financial

Reporting Standards……………………………………………………....…………………………………………....…………...

10 2. Matters to be ratified : (1)Ratify Year 2012 financial statements (including business report of Year 2012)…………....……..………...…………….……… 11 (2)Ratify the proposal for Year 2012 retained earnings distribution……………………...….………………………………….….… 12 3. Matters to be discussed: (1)Review and approval of the cash distribution from Capital Surplus…………………...…..………………………………….…… 13 (2)Review and approval of the amendment to “the Articles of Incorporation” of the Company….……………...…………….…...... 14 (3)Review and approval of the amendment to “Directors and Supervisors Election Guidelines” of the Company………………..…. 15 (4)Review and approval of the amendment to “Procedure for Capital Lending to Others” of the Company……………………..….. 16 (5)Review and approval of the amendment to “Procedure for Making Endorsements and Guarantees” of the Company…….....…... 17 4. Extempore Motion 17 5. Motion to Adjourn 17

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Attachment 1. Independent Auditors’ Report………………………………………………………........................................................................ 18 2. Balance Sheets in Y2012……………………………………………………………………...……….……....………………....... 19 3. Statements of Income in Y2012……………………………………………….………………………......…………………...….. 20 4. Statements of Changes in Stockholders’ Equity in Y2012………………………………………………...…...…….……..……... 22 5. Statements of Cash Flows in Y2012…………………………………………….………………………...…....…………..……… 23 6. Consolidated Independent Auditors’ Report…………………………………….……………………...……...………..………… 26 7. Consolidated Balance Sheets in Y2012…………………………………………….…………………………..…....……...…....... 27 8. Consolidated Statements of Income in Y2012……………………………………………….……………..………..………...….. 28 9. Consolidated Statements of Changes in Stockholders’ Equity in Y2012……………………………………….…...……….……. 30 10. Consolidated Statements of Cash Flows in Y2012……………………………………………….…………………....………….. 31 11. Amendment to Regulations for the Board of Directors Meeting………………………………….…………………....…………. 34 11. Amendment to Articles of Incorporation of FarEastone Telecommunications Co., Ltd. ………….……………………....……… 40 13. Amendment to “Directors and Supervisors Election Guidelines” of FarEastone Telecommunications Co., Ltd…………………. 42 14. Amendment to “Procedure for Capital Lending to Others” of FarEastone Telecommunications Co., Ltd……………………….. 43 15. Amendment to “Procedure for Making Endorsements and Guarantees” of FarEastone Telecommunications Co., Ltd………….. 50 16. Status of Directors & Supervisors’ shareholding on April 15, 2013……….…………………...………….………………..…….. 56 17. Bonus to Employees, Directors and Supervisors……………………….…………………….………………...……………......... 56 18. Impact of Stock Dividend Distribution on Business Performance, EPS and Return on Investment……………...…………......... 56

Articles 1. Regulations for the Board of Directors Meeting…………………………………………..……………..……………..……...…. 58 2. Articles of Incorporation of Far Eastone Telecommunication Co., Ltd……………………………………..…...………...……... 63 3. Directors and Supervisors Election Guidelines…………………………………...………….………………….………………... 69 4. Procedure for Capital Lending to Others……………….………………...………….………………….………………................ 71 5. Procedure for Making Endorsements and Guarantees…………………………………...………….………………….………… 75 6. Rules Governing the Conduct of Shareholders’ Meeting………………..…………………...……………..…….......................... 79

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1. Matters to be reported:

1. Business report of Year 2012

Stepping into 2013, the global economy is still uncertain, but there have been signs of recovery as a whole. Looking into the new year, FAREASTONE hopes the public power of consumption can increase and it will keep moving towards its goal of service centric, innovation and profitable growth. Despite the lackluster business environment in 2012 as a result of the international political and economic situation and the livelihood and telecom related policies, FAREASTONE continued to launch various innovative products, actively created“360-degree attentive and sincere services” and also invested heavily in the network construction, in a bid to create more superior core communication services.

Along with the rapid growth of smart devices, FAREASTONE’s combined total revenues reached NT$86.745 billion in 2012, with a combined EBITDA (earnings before interest, taxes, depreciation and amortization) of NT$24.36 billion as well as after-tax profits of NT$ 10.6 billion. The EPS was NT$ 3.25. The revenues from mobile non-voice services grew 44.3% in the full year, accounting for 29.8% in the total revenues from mobile services. 【【【【Operating performance and achievements of FAREASTONE in 2012】】】】 Proactively improving networks to provide faster and better services

In view of the fast-growing smart device market, FAREASTONE has been investing heavily in network construction in recent years, in a bid to improve speed and service quality of its mobile networks. Apart from upgrading and expanding base stations, it has been building more Wi-Fi hotspots throughout Taiwan. The group will continue to upgrade its services in Taiwan to cater to different needs of customers. FAREASTONE obtained the SGS service certifications for seven consecutive years and its “360-degree attentive and sincere services” won the Taiwan Service Survey 2012-Gold Award

Two years ago, FAREASTONE took the lead to launch four major attentive services, namely “100% satisfaction and 100% commitment”, “store reservation service”, “door-to-door maintenance service for VIP customers”, and “self-service payment machine in stores”. In 2012, FAREASTONE stuck to the goal and offered advanced services including “60-minute quick maintenance”, “free Wi-Fi” and “monthly free courses”. At the same time, FAREASTONE proactively set up stores with local characteristics in shopping malls, night markets and traffic hubs. The store number of FAREASTONE, Arcoa and Data Express has come close to 900. In addition, “360-degree attentive and sincere services” was granted Taiwan Service Survey 2012-Gold Award by Commercial Times, a well-known newspaper in Taiwan.

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Supporting Taiwan high quality software developers and expanding value-added service market across the Strait

In order to support high quality software developers in Taiwan and enhance soft power of the cultural and creative industry, FET SMart has been active to hold the “FET Partner Conference” since its establishment, inviting software developers to share their experiences. In the third conference held in August 2012, the developers of world-renowned apps “LINE” and “Angry Birds” were invited to share their successful experience. Meanwhile, FET also tried hard to develop new value-added service. FET Video Store had been updated and launched “one-cloud and four-screen” multi-platform service, integrating smart phone, tablet, home PC and smart TV. FET eBook Town also boosted e-book earnings to new highs via O2O (online to offline) marketing activities. As for Omusic, it continued to cooperate with well-known Chinese singers to launch digital music content, which is well received by customers in both Taiwan and mainland China. FAREASTONE grasps corporate cloud business opportunities with FET Super Cloud winning “cloud innovation award 2012”

Following the eight smart services, FAREASTONE teamed up with ASUS to focus on large, medium and small-sized enterprise market and launched the “FET Super Cloud”, a corporate cloud storage service featuring flexibility, integration and security. The service won the “cloud innovation award 2012” organized by Cloud Computing Association in Taiwan and co-organized by Ministry of Economic Affairs, indicating the innovations of FAREASTONE have been recognized by the industrial, governmental and academic communities. As the cloud business booms, FAREASTONE will proactively develop more revolutionary cloud services to expand its market landscape.

The official completion of Cross-Straits Submarine Cable “Taiwan Strait Express-1”””” lays foundation for Taiwan to become telecommunications hub

in Asia-Pacific region

Cross-Straits Submarine “Taiwan Strait Express-1”, the first cross-strait telecommunications submarine cable between mainland China and Taiwan, was officially completed in January 2012. The cable, which directly connects FAREASTONE ’s submarine cable station at Danshuei, Taiwan with Changle, Fuzhou, has become the shortest and most stable submarine cable with the most business opportunities. It will bring new business opportunities for the cross-strait telecom business in the Asia-Pacific market, and help Taiwan become a telecommunications hub in Asia-Pacific region. In addition to investing in international submarine cable construction, FAREASTONE has actively deepened its cloud and network deployment in recent years such as investing in the development of the Taipei Far Eastern Telecom Park and IDCs. Looking into the future, FAREASTONE will center on Taiwan and continuously tap other markets including Asia-Pacific region, Europe, the US, New Zealand and Australia and strengthen the quality of international telecom services and the communication platform services, maximizing the economic benefits of the submarine cable communications and cloud technology. Implementing the philosophy of “eco-fashion and creative responsibility” and sparing no efforts to reward the society

Apart from strengthening corporate governance, FAREASTONE will strive to implement corporate social responsibility in a bid to realize the concept of business continuity and “what’s taken from the society should be given back to the society”. Since the establishment of the corporate social responsibility

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committee, FAREASTONE has been sticking to the philosophy of “eco-fashion and creative responsibility”. According to industrial resources and creative ideas, it launched the “Green Kung-Fu” campaign and designed a special APP to invite the public to shoot environment protection practices in daily life anytime and anywhere and upload them for competition. FAREASTONE fully demonstrated humanistic care by making the best of its communications technology strength, together with environmental awareness. FAREASTONE ’s first corporate social responsibility report was awarded the Outstanding Newcomer Award of the 2012 Taiwan Corporate Sustainability Report Awards by Taiwan Institute for Sustainable Energy (TAISE). 【【【【FAREASTONE Operation Status Quo and Strategic Planning for 2013】】】】 FAREASTONE pledges to provide top-notch ICT and digital application services

Amid the ever-changing global mobile communication market where the smart mobile devices are gaining popularity and driving the development of app

services and cross-platform integration services, FAREASTONE will uphold its vision of “FET Connects and Enriches Life” and keep its commitments of

“Always exceeding customer expectation thru innovation and passion, Becoming the first choice of employee, Maximizing shareholder value, Driving

community engagement and environment sustainability” to meet the diversified demands of customers and fulfill its mission of

To best integrate Communication services, Information Technology & Digital applications with footprint in and beyond Taiwan.

Key to stable growth lies in integration, innovation and foresight

Looking ahead, FAREASTONE will continue to go from strength to strength, develop more creative products and push ahead the development of forward-looking industries through persistent optimization of network construction, exploration of business opportunities in cloud computing industry, vertical integration of ICT industry and deepening into the telecommunications market for household users. FAREASTONE is presently expanding corporate user base and value-added services as part of its efforts to foray into the burgeoning Chinese market. It will continue to take an “re-think, re-built, and re-invent” attitude in the future to ensure stable growth amid multiple challenges. People-oriented; put priority on talent training and strengthen core competence

Facing the rapid development and rat race in the telecom sector, FAREASTONE believes that only talents can help an enterprise consolidate its competitive edge and leading position in the fast-changing business environment, and only a favorable environment can retain talents. So the company will focus on recruiting talents with integrated service and all-round thinking capabilities in the future. With respect to the talent training, the company will put the priority on cultivating key talents, managerial talents and specialized talents in terms of operational strategies, corporation value, core function as well as telecom industry development. The company expects to establish a far-reaching talent output program to reinforce its core competence through a well-established welfare system, full-range skill training scheme and transparent communication channel.

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Looking into 2013, FAREASTONE will uphold its spirit of profession, enthusiasm, sincerity and friendliness to be a company that not only provides quality telecommunication services, but also strives to meet customers’ highest expectations, shoulders corporate social responsibility and pursues sustainable development. Our company attaches great importance to the commitments to brand spirit and value as well as aspires to offer high-quality network services, first-rate customer services, best user experience and excellent corporate solutions, so as to win a leading position on the market, enhance users’ loyalty, boost corporate growth and maximize shareholder value.

Last but not least, we would like to thank you all again, very sincerely, and hope you could continue to support and encourage us. Wish you good health and all the best.

Chairman President Chief Accountant

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（（（（2））））Financial report of Year 2012

Balance Sheets in Y2012 Statements of Income in Y2012 Statements of Changes in Stockholders’ Equity in Y2012 Statements of Cash Flows in Y2012 Consolidated Balance Sheets in Y2012 Consolidated Statements of Income in Y2012 Consolidated Statements of Changes in Stockholders’ Equity in Y2012 Consolidated Statements of Cash Flows in Y2012

Please see the attachments for Independent Auditors’ Report together with all above financial reports of Year 2012. Please refer to page 18~33. For complete financial reports, please download from M.O.P.S. (http://newmops.twse.com.tw/)

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（（（（3））））Review of the Year 2012 closing report by the Supervisors

May 3, 2013

The Board of Directors have prepared and submitted to us the Company's 2012 Business Reports, the Financial Statements, and the Proposal for Profit Distribution ( included the consolidated Financial Reports) audited by the CPAs of Deloitte & Touche.

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

To

FET Year 2013 Shareholders’ Meeting

Supervisors：Chen-en Ko

Eli Hong

C. K. Ong

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（（（（4））））Review of the amendment to “Regulations for the Board of Directors Meeting” 1. In order to comply with the amendment of “Regulations Governing Procedure for Board of Directors Meetings of Public Companies” announced by FSC

official letter No. 1010034136 on August 22, 2012, it is proposed to amend Articles 5, 5-1, 5-2, 9, 11, 16 and 19 of the Company’s “Regulations for the Board of Directors Meeting”. Please refer to page 34~39 for the amendment. Please refer to page 58~62 for the “Regulations for the Board of Directors Meeting” that was resolved by the Board of Directors.

2. This proposal has been approved by the 5th meeting of the sixth-term Board of Directors on April 26, 2013.

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（（（（5））））The adjustments of Retained Earnings and Special Reserve in accordance with the adoption of International Financial Reporting Standards 1. According to the administrative interpretation #1010012865 issued by Financial Supervisory Commission on April 6, 2012, the Company shall report the

adjustments of retained earnings and special reserve in accordance with the adoption of International Financial Reporting Standards (IFRSs) to the Shareholders’ Meeting.

2. The adjustments of retained earnings in accordance with the adoption of IFRSs for Year 2012 were reducing retained earnings by NT$214,316 thousands. 3. According to the above mentioned administrative interpretation, the Company shall not set aside special reserve in accordance with the adoption of IFRSs. 4. This proposal has been reported by the 5th meeting of the sixth-term Board of Directors on April 26, 2013.

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2.Matters to be Ratified：：：： (1) Ratify Year 2012 financial statements (including business report of Year 2012) Explanatory Notes： 1. Please discuss and approve the business report of Year 2012 and annual financial statements and consolidated financial statements as of December 31,

2012, which have been audited by the Company’s auditing CPAs, Ms. Annie Lin and Mr. Tony Chang of Deloitte and Touche. Supervisors of the Company have reviewed the Financial Statements for the fiscal year 2012 and issued audit reports.

2. This proposal has been approved by the 4th meeting of the sixth-term Board of Directors on February 7, 2013. 3. Please approve. Resolution:

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(2) Ratify the proposal for Year 2012 retained earnings distribution Explanatory Notes： 1. It is proposed the Company to distribute cash dividend of NT$9,540,890,372 from the retained earnings at NT$2.928 per share. 2. Please refer to the following for the Company’s Year 2012 appropriation proposal:

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

Year 2012 Net income after tax $ 10,599,908,265 Less: Legal reserve (1,059,990,827) Add: Prior year undistributed earnings 3,197,562 Maximum distributable dividends 9,543,115,000 Less: Appropriation

Cash dividends (NT$2.928) (9,540,890,372) Un-appropriated earnings after distribution $2,224,628 Note. Bonuses to employees and remunerations to directors & supervisors were NT$190,798,349 and NT$95,399,174, respectively.

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

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

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

5. It is proposed that the Board authorizes the Chairman to fix the record date of ex-cash dividend after the approval by the Year 2013 annual Shareholders’ Meeting.

6. This proposal has been approved by the 5th meeting of the sixth-term Board of Directors on April 26, 2013. 7. According to Article 241 of the Company Act“Where a company incurs no loss, it may distribute its legal reserve and capital reserve-Additional Paid-in

Capital-Share Issuance in Excess of Par Value as cash dividend to its original shareholders in proportion to the number of shares being held by each of them.”It is proposed the Company to distribute cash of NT$1,863,862,463 from the capital surplus-Additional Paid-in Capital-Share Issuance in Excess of Par Value at NT$0.572 per share. If the Shareholders’ Meeting approves to distribute dividends from capital surplus, totally cash NT$3.5 per share of Year 2012.

8. Please approve. Resolution:

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3. Matters to be discussed：：：： (1) Review and approval of the cash distribution from Capital Surplus. Explanatory Notes: 1. According to Article 241 of the Company Act“Where a company incurs no loss, it may distribute its legal reserve and capital reserve-Additional Paid-in

Capital-Share Issuance in Excess of Par Value as cash dividend to its original shareholders in proportion to the number of shares being held by each of them.”It is proposed the Company to distribute cash of NT$1,863,862,463 from the capital surplus-Additional Paid-in Capital-Share Issuance in Excess of Par Value at NT$0.572 per share.

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

3. It is proposed that the Board authorizes the Chairman to fix the record date of ex-cash distribution after the approval by the Year 2013 annual Shareholders’ Meeting.

4. This proposal has been approved by the 5th meeting of the sixth-term Board of Directors on April 26, 2013. 5. In Ratification Proposal 2, it is proposed the Company distributes cash of NT$9,540,890,372 from the retained earnings at NT$2.928 per share. With the

cash distribution of NT$0.572 per share from capital surplus, totally cash NT$3.5 per share of Year 2012. 6. Please approve. Resolution:

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

refer to page 40~41 for the amendment. 2. This proposal has been approved by the 5th meeting of the sixth-term Board of Directors on April 26, 2013. 3. Please approve. Resolution:

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(3) Review and approval of the amendment to “Directors and Supervisors Election Guidelines” of the Company. Explanatory Notes: 1. In response to the amendment of the related regulations, it is proposed to amend the Article 3 of the Company’s “Directors and Supervisors Election

Guidelines”. Please refer to page 42 for the amendment. 2. This proposal has been approved by the 5th meeting of the sixth-term Board of Directors on April 26, 2013. 3. Please approve. Resolution:

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(4) Review and approval of the amendment to “Procedure for Capital Lending to others” of the Company. Explanatory Notes: 1. In order to comply with the amendment of “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies”

announced by Financial Supervisory Commission (“FSC”) official letter No. 1010029874 on July 6, 2012 , it is proposed to amend Articles 2~6 and 8~9 of the Company’s “Procedure for Capital Lending to others”. Please refer to page 43~49 for the amendment.

2. This proposal has been approved by the 5th meeting of the sixth-term Board of Directors on April 26, 2013. 3. Please approve. Resolution:

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(5) Review and approval of the amendment to “Procedure for Making Endorsements and Guarantees” of the Company. Explanatory Notes: 1. In order to comply with the amendment of “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies”

announced by Financial Supervisory Commission (“FSC”) official letter No. 1010029874 on July 6, 2012 , it is proposed to amend Articles 2~4 and 6~9 of the Company’s “Procedures for Making Endorsements and Guarantees”. Please refer to page 50~55 for the amendment.

2. This proposal has been approved by the 5th meeting of the sixth-term Board of Directors on April 26, 2013. 3. Please approve. Resolution:

4. Extempore Motion 5. Motion to Adjourn

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Attachments English Translation of a Report Originally Issued in Chinese INDEPENDENT AUDITORS’ REPORT The Board of Directors and Stockholders Far EasTone Telecommunications Co., Ltd. We have audited the accompanying balance sheets of Far EasTone Telecommunications Co., Ltd. (“the Company”) as of December 31, 2012 and 2011, and the related statements of income, changes in stockholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Those rules and standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2012 and 2011, and the results of its operations and its cash flows for the years then ended, in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, requirements of the Business Accounting Law and Guidelines Governing Business Accounting relevant to financial accounting standards, and accounting principles generally accepted in the Republic of China. We have also audited the consolidated financial statements of the Company and subsidiaries as of and for the years ended December 31, 2012 and 2011 and have issued thereon an unqualified opinion and modified unqualified opinion, respectively, in our reports dated February 7, 2013 and February 16, 2012, respectively. February 7, 2013

Notice to Readers The accompanying financial statements are intended only to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such financial statements are those generally accepted and applied in the Republic of China. For the convenience of readers, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail. .

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FAR EASTONE TELECOMMUNICATIONS CO., LTD. BALANCE SHEETS DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars, Except Par Value) 2012 2011 2012 2011 ASSETS Amount % Amount % LIABILITIES AND STOCKHOLDERS’ EQUITY Amount % Amount % CURRENT ASSETS CURRENT LIABILITIES

Cash and cash equivalents (Notes 2, 5 and 24) $ 1,696,129 2 $ 1,465,482 2 Short-term bank loans (Note 15) $ 114,000 - $ 1,862,000 2 Available-for-sale financial assets - current (Notes 2 and 6) 281,153 - 270,426 - Notes payable 29,403 - 28,912 - Held-to-maturity financial assets - current (Notes 2 and 10) 100,000 - - - Accounts payable 3,649,457 4 2,709,615 3 Hedging derivative financial assets - current (Notes 2 and 23) 4,650 - - - Accounts payable - related parties (Note 24) 1,138,344 1 1,031,018 1 Notes receivable (Note 2) 18,784 - 3,956 - Income tax payable (Note 2) 2,127,207 2 1,363,270 2 Accounts receivable, net (Notes 2 and 7) 5,891,337 6 5,368,481 6 Accrued expenses (Note 16) 4,003,986 4 3,703,927 4 Accounts receivable - related parties (Notes 2 and 24) 336,543 - 350,315 1 Other payables - related parties (Note 24) 784,524 1 536,924 1 Other receivables - related parties (Notes 2 and 24) 352,016 1 340,117 - Hedging derivative financial liabilities - current (Notes 2 and 23) - - 75 - Inventories, net (Notes 2 and 8) 918,958 1 719,630 1 Payables for acquisition of properties 2,886,522 3 1,241,609 1 Prepaid expenses 750,077 1 611,181 1 Guarantee deposits received - current 325,513 1 394,739 1 Deferred income tax assets - current (Notes 2 and 20) 314,505 - 297,871 - Unearned revenues (Notes 2 and 17) 2,435,330 3 2,561,947 3 Restricted assets - current (Notes 17 and 24) 1,319,763 2 1,195,839 1 Other current liabilities (Note 2) 322,744 - 320,354 - Other current assets (Notes 2 and 24) 20,089 - 34,026 -

Total current liabilities 17,817,030 19 15,754,390 18 Total current assets 12,004,004 13 10,657,324 12

OTHER LIABILITIES LONG-TERM INVESTMENTS Accrued pension costs (Notes 2 and 18) 448,337 1 456,128 -

Equity-method investments (Notes 2, 9 and 24) 32,930,267 35 29,992,792 34 Guarantee deposits received - noncurrent 337,032 - 283,161 - Held-to-maturity financial assets - noncurrent (Notes 2 and 10) 99,871 - 199,768 - Deferred income tax liabilities - noncurrent (Notes 2 and 20) 622,181 1 568,253 1

Deferred revenue (Note 2) 165,638 - 258,453 - Total long-term investments 33,030,138 35 30,192,560 34 Other (Notes 2 and 9) 257,898 - 534,919 1

PROPERTIES (Notes 2, 11 and 24) Total other liabilities 1,831,086 2 2,100,914 2

Cost Land 1,175,798 1 1,175,798 1 Total liabilities 19,648,116 21 17,855,304 20 Buildings and equipment 2,203,498 2 2,181,408 2 Operating equipment 118,124,426 128 114,885,535 128 STOCKHOLDERS' EQUITY Computer equipment 20,510,571 22 19,367,175 22 Capital stock - NT$10.00 par value; authorized - 4,200,000 thousand Office equipment 939,331 1 967,004 1 shares; issued and outstanding 3,258,501 thousand shares 32,585,008 35 32,585,008 36 Leasehold improvements 2,450,724 3 2,014,371 2 Capital surplus Miscellaneous equipment 490,200 1 440,291 1 Additional paid-in capital - share issuance in excess of par value 9,234,438 10 10,964,702 12

Total cost 145,894,548 158 141,031,582 157 From business combination 8,482,381 10 8,482,381 10 Less: Accumulated depreciation 118,172,439 128 111,650,339 125 From long-term equity-method investments 150,515 - 99,527 -

27,722,109 30 29,381,243 32 Total capital surplus 17,867,334 20 19,546,610 22 Construction-in-progress and prepayments for equipment 4,398,290 5 3,484,051 4 Retained earnings

Legal reserve 11,762,957 13 10,874,858 12 Net properties 32,120,399 35 32,865,294 36 Unappropriated earnings 10,603,107 11 8,936,536 10

Total retained earnings 22,366,064 24 19,811,394 22 INTANGIBLE ASSETS Other adjustments

3G concession, net (Notes 1, 2 and 12) 4,384,239 5 5,114,945 6 Cumulative translation adjustments 5,229 - 7,031 - Goodwill, net (Notes 2 and 13) 10,283,031 11 10,283,031 11 Unrealized gains on financial instruments 99,244 - 26,824 -

Total other adjustments 104,473 - 33,855 - Total intangible assets 14,667,270 16 15,397,976 17

Total stockholders’ equity 72,922,879 79 71,976,867 80 OTHER ASSETS

Rental assets, net (Notes 2 and 14) 328,582 - 332,979 - Refundable deposits (Note 24) 393,936 1 349,901 1 Deferred charges, net - - 1,575 - Lease receivables - noncurrent (Notes 2 and 24) 26,666 - 34,562 -

Total other assets 749,184 1 719,017 1

TOTAL $ 92,570,995 100 $ 89,832,171 100 TOTAL $ 92,570,995 100 $ 89,832,171 100 The accompanying notes are an integral part of the financial statements.

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FAR EASTONE TELECOMMUNICATIONS CO., LTD. STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) 2012 2011 Amount % Amount % OPERATING REVENUES (Notes 2 and 24) $ 71,645,648 100 $ 62,408,959 100 OPERATING COSTS (Notes 2, 8, 21 and 24) 40,631,382 56 34,816,146 56 GROSS PROFIT 31,014,266 44 27,592,813 44 OPERATING EXPENSES (Notes 2, 21 and 24)

Marketing 14,760,303 21 12,730,308 21 General and administrative 4,376,960 6 3,873,355 6 Research and development 51,017 - 53,731 -

Total operating expenses 19,188,280 27 16,657,394 27

OPERATING INCOME 11,825,986 17 10,935,419 17 NONOPERATING INCOME AND GAINS

Equity in investees' net gains (Note 2) 1,829,982 3 248,162 1 Government grant (Note 2) 88,645 - 91,494 - Management services revenue (Note 24) 58,730 - 62,485 - Rent (Notes 2 and 24) 56,169 - 48,928 - Interest (Note 24) 36,014 - 37,558 - Other (Note 24) 102,615 - 152,204 -

Total nonoperating income and gains 2,172,155 3 640,831 1

NONOPERATING EXPENSES AND LOSSES

Loss on disposal of properties, net (Note 2) 1,076,455 2 691,606 1 Loss from sale of financial assets, net (Note 2) - - 72,176 - Other (Notes 2, 11 and 21) 15,593 - 25,810 -

Total nonoperating expenses and losses 1,092,048 2 789,592 1

INCOME BEFORE INCOME TAX 12,906,093 18 10,786,658 17 INCOME TAX (Notes 2 and 20) 2,306,185 3 1,905,665 3 NET INCOME $ 10,599,908 15 $ 8,880,993 14

(Continued)

21

FAR EASTONE TELECOMMUNICATIONS CO., LTD. STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) 2012 2011

Before Income

Tax

After Income

Tax

Before Income

Tax

After Income

Tax EARNINGS PER SHARE (NEW TAIWAN

DOLLARS; Note 22) Basic $ 3.96 $ 3.25 $ 3.31 $ 2.73 Diluted $ 3.96 $ 3.25 $ 3.31 $ 2.72

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

22

FAR EASTONE TELECOMMUNICATIONS CO., LTD. STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars, Except Amounts Per Share) Capital Surplus (Notes 2 and 19) Other Adjustments Additional Unrealized Gains Capital Stock Paid-in Capital - Cumulative (Losses) on Issued and Outstanding (Note 19) Share Issuance From Long-term Retained Earnings (Note 19) Translation Financial Total Shares in Excess of From Business Equity-method Unappropriated Adjustments Instruments Stockholders' (Thousands) Amount Par Value Combination Investments Legal Reserve Earnings (Note 2) (Notes 2 and 19) Equity BALANCE, JANUARY 1, 2011 3,258,501 $ 32,585,008 $ 10,964,702 $ 8,482,381 $ 89,285 $ 9,990,002 $ 9,086,651 $ 12,111 $ 70,692 $ 71,280,832 Appropriation of the 2010 earnings

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

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

issuance of capital stock for cash - - - - 10,255 - - - - 10,255 Changes in unrealized gains (losses) on available-for-sale

financial assets - - - - - - - - (3,308) (3,308) Changes in unrealized gains (losses) on cash flow hedge - - - - - - - - (6,920) (6,920) Changes in investees' unrealized gains (losses) on financial assets - - - - - - - - (33,640) (33,640) Translation adjustments of long-term equity-method investments - - - - - - - (5,080) - (5,080) BALANCE, DECEMBER 31, 2011 3,258,501 32,585,008 10,964,702 8,482,381 99,527 10,874,858 8,936,536 7,031 26,824 71,976,867 Appropriation of the 2011 earnings

Legal reserve - - - - - 888,099 (888,099) - - - Cash dividends - NT$2.469 per share - - - - - - (8,045,238) - - (8,045,238)

Cash dividend from capital surplus - additional paid in capital -

NT$0.531 per share - - (1,730,264) - - - - - - (1,730,264) Net income in 2012 - - - - - - 10,599,908 - - 10,599,908 Changes in equity-method investees' stockholders' equity - - - - 11 - - - - 11 Adjustment to changes in ownership percentage due to investees'

issuance of capital stock for cash - - - - 50,977 - - - - 50,977 Changes in unrealized gains (losses) on available-for-sale

financial assets - - - - - - - - 11,159 11,159 Changes in unrealized gains (losses) on cash flow hedge - - - - - - - - 6,579 6,579 Changes in investees' unrealized gains (losses) on financial assets - - - - - - - - 54,682 54,682 Translation adjustments of long-term equity-method investments - - - - - - - (1,802) - (1,802) BALANCE, DECEMBER 31, 2012 3,258,501 $ 32,585,008 $ 9,234,438 $ 8,482,381 $ 150,515 $ 11,762,957 $ 10,603,107 $ 5,229 $ 99,244 $ 72,922,879 The accompanying notes are an integral part of the financial statements. .

23

FAR EASTONE TELECOMMUNICATIONS CO., LTD. STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars) 2012 2011 CASH FLOWS FROM OPERATING ACTIVITIES

Net income $ 10,599,908 $ 8,880,993 Adjustments to reconcile net income to net cash provided by

operating activities Depreciation 8,120,606 8,450,990 Amortization 1,575 3,448 Amortization of 3G concession 730,706 730,706 Allowance for doubtful accounts 249,083 146,723 Allowance for loss on decline in value of inventories 18,803 6,000 Loss from sale of financial assets, net - 72,176 Equity in investees’ net gains (1,829,982) (248,162) Cash dividends from equity-method investees 90,210 77,909 Amortization of discount on held-to-maturity financial assets (103) (102) Loss on disposal of properties, net 1,076,455 691,606 Accrued pension cost (pension benefit payments) (7,791) 7,935 Deferred income on hedging derivative financial assets 1,450 7,100 Deferred income taxes 38,130 325,771 Other (167) - Net changes in operating assets and liabilities

Notes receivable (14,828) 4,735 Accounts receivable (771,939) (325,440) Accounts receivable - related parties 13,772 367 Other receivables - related parties (12,006) 176,325 Inventories (218,131) (214,024) Prepaid expenses (138,896) 21,101 Other current assets 2,150 64,146 Notes payable 491 (28,989) Accounts payable 939,842 (253,054) Accounts payable - related parties 107,326 831,098 Income tax payable 763,937 (339,192) Accrued expenses 300,059 372,951 Other payables - related parties 231,975 157,436 Unearned revenues (126,617) 818,089 Other current liabilities (4,467) 41,502 9,561,643 11,599,151

Net cash provided by operating activities 20,161,551 20,480,144

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of available-for-sale financial assets - (1,274,009) Proceeds of the disposal of available-for-sale financial assets 3,990 1,809,425 Acquisition of equity-method investments (1,393,280) (1,746,808) Proceeds of the disposal of equity-method investments 3,815 - Acquisition of properties (6,788,309) (6,627,740) Proceeds of the disposal of properties 40,211 24,917

(Continued)

24

FAR EASTONE TELECOMMUNICATIONS CO., LTD. STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars) 2012 2011

Increase in refundable deposits $ (44,035) $ (25,655) Decrease in pledged certificates of deposits 2,300 389,700 Increase in restricted assets (123,924) (21,335)

Net cash used in investing activities (8,299,232) (7,471,505)

CASH FLOWS FROM FINANCING ACTIVITIES

Decrease in short-term bank loans (1,748,000) (1,078,000) Decrease in commercial paper payable - (2,848,739) Decrease in guarantee deposits received (15,355) (73,438) Decrease in deferred revenue (92,815) (73,788) Cash dividends paid (9,775,502) (8,146,252)

Cash used in financing activities (11,631,672) (12,220,217)

NET INCREASE IN CASH AND CASH EQUIVALENTS 230,647 788,422 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 1,465,482 669,743 CASH AND CASH EQUIVALENTS, ARISING FROM MERGER - 7,317 CASH AND CASH EQUIVALENTS, END OF YEAR $ 1,696,129 $ 1,465,482 SUPPLEMENTARY CASH FLOW INFORMATION

Interest paid $ 17,714 $ 49,347 Less: Interest capitalized 10,228 21,786 Interest paid, net of capitalized interest $ 7,486 $ 27,561 Income tax paid $ 1,504,119 $ 1,919,389

NONCASH INVESTING AND FINANCING ACTIVITIES

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

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

Increase in properties $ 8,474,480 $ 6,473,851 (Increase) decrease in other payables - related parties (15,625) 1,867 (Increase) decrease in payables for the acquisition of properties (1,644,913) 207,815 (Increase) decrease in other current liabilities (6,857) 12,025 Increase in other liabilities - other (18,776) (67,818) Cash paid for the acquisition of properties $ 6,788,309 $ 6,627,740

(Continued)

25

FAR EASTONE TELECOMMUNICATIONS CO., LTD. STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars) 2012 2011 PROCEEDS OF THE DISPOSAL OF PROPERTIES

Total amount of sold properties $ 26,711 $ 19,940 Decrease (increase) in receivables on properties sold 5,544 (4,796) Decrease (increase) in other receivables - related parties 107 (151) Decrease in lease receivables 7,849 9,924 Cash received on the disposal of properties $ 40,211 $ 24,917

On March 1, 2011, the Company completed the merger with Yuan Cing Infocomm Tech Co., Ltd. (YCIC), with the Company as the surviving entity; the fair values of total assets and total liabilities upon completion of the merger were as follows: YCIC Cash and cash equivalents $ 7,317 Prepaid expenses 82 Other current assets 60,137 Equity-method investments 27,081,916 $ 27,149,452 Accrued expenses $ 383 Other payables - related parties 4,305,563 Other current liabilities 569 $ 4,306,515 The accompanying notes are an integral part of the financial statements. (Concluded)

26

INDEPENDENT AUDITORS’ REPORT The Board of Directors and Stockholders Far EasTone Telecommunications Co., Ltd. We have audited the accompanying consolidated balance sheets of Far EasTone Telecommunications Co., Ltd. (the “Company”) and subsidiaries as of December 31, 2012 and 2011, and the related consolidated statements of income, changes in stockholders’ equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Those rules and standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company and subsidiaries as of December 31, 2012 and 2011, and the consolidated results of their operations and their cash flows for the years then ended, in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and accounting principles generally accepted in the Republic of China. February 7, 2013

Notice to Readers The accompanying consolidated financial statements are intended only to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial are those generally accepted and applied in the Republic of China. For the convenience of readers, the auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language auditors’ report and consolidated financial statements shall prevail.

27

FAR EASTONE TELECOMMUNICATIONS CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars, Except Par Value) 2012 2011 2012 2011 ASSETS Amount % Amount % LIABILITIES AND STOCKHOLDERS’ EQUITY Amount % Amount % CURRENT ASSETS CURRENT LIABILITIES

Cash and cash equivalents (Notes 2, 5 and 27) $ 13,002,094 13 $ 9,905,634 11 Short-term bank loans (Notes 16 and 29) $ 939,390 1 $ 2,940,772 3 Financial assets at fair value through profit or loss - current (Notes 2 and 6) 211,608 - 196,718 - Commercial paper payable (Note 17) 199,768 - 80,000 - Available-for-sale financial assets - current (Notes 2 and 7) 2,008,526 2 2,688,536 3 Notes payable 38,838 - 51,438 - Held-to-maturity financial assets - current (Notes 2 and 11) 100,000 - 1,000,000 1 Accounts payable 6,454,333 7 5,243,803 6 Hedging derivative financial assets - current (Notes 2, 26 and 27) 21,962 - 1,500 - Accounts payable - related parties (Note 27) 4,349 - 2,950 - Notes receivable (Note 2) 65,493 - 56,809 - Income tax payable (Note 2) 2,203,865 2 1,421,585 1 Accounts receivable, net (Notes 2 and 8) 7,042,177 7 6,458,140 7 Accrued expenses (Note 18) 4,816,577 5 4,379,446 5 Accounts receivable - related parties, net (Notes 2 and 27) 169,279 - 108,572 - Other payables - related parties (Note 27) 168,429 - 149,866 - Other receivables - related parties (Notes 2 and 27) 16,659 - 17,448 - Hedging derivative financial liabilities - current (Notes 2 and 26) - - 2,667 - Inventories, net (Notes 2 and 9) 2,225,653 2 1,984,625 2 Payables for acquisition of properties 3,440,589 3 2,082,239 2 Prepaid expenses 990,215 1 807,692 1 Guarantee deposits received - current 346,366 - 394,738 - Deferred income tax assets - current (Notes 2 and 23) 323,895 1 298,944 - Unearned revenues (Notes 2 and 19) 2,508,545 3 2,770,983 3 Pledged certificates of deposits - current (Notes 27 and 29) 207,117 - 28,356 - Current portion of long-term bank loans (Notes 20 and 29) 10,745 - 4,944 - Restricted assets - current (Notes 19, 27 and 29) 1,433,747 2 1,308,420 1 Other current liabilities (Note 2) 644,861 1 559,771 1 Other current assets 743,720 1 306,133 -

Total current liabilities 21,776,655 22 20,085,202 21 Total current assets 28,562,145 29 25,167,527 26

LONG-TERM LIABILITIES, NET OF CURRENT PORTION LONG-TERM INVESTMENTS Long-term bank loans (Notes 20 and 29) 96,703 - 170,849 -

Equity-method investments (Notes 2 and 10) 1,055,153 1 341,206 1 Held-to-maturity financial assets - noncurrent (Notes 2 and 11) 99,871 - 199,768 - OTHER LIABILITIES Financial assets carried at cost - noncurrent (Notes 2 and 12) 28,049 - 29,188 - Accrued pension costs (Notes 2 and 21) 495,169 1 502,912 1

Guarantee deposits received - noncurrent 370,025 - 324,475 - Total long-term investments 1,183,073 1 570,162 1 Deferred income tax liabilities - noncurrent (Notes 2 and 23) 622,181 1 488,033 -

Deferred revenue (Note 2) 445,624 - 548,562 1 PROPERTIES (Notes 2, 13, 27 and 29) Other (Note 2) 685,696 1 534,242 1

Cost Land 5,305,647 5 5,301,986 6 Total other liabilities 2,618,695 3 2,398,224 3 Buildings and equipment 7,500,692 8 6,393,369 7 Operating equipment 140,219,220 143 138,828,805 145 Total liabilities 24,492,053 25 22,654,275 24 Computer equipment 26,303,510 27 22,844,563 24 Office equipment 1,265,048 1 1,331,220 1 FAR EASTONE’S EQUITY Leasehold improvements 3,822,471 4 3,151,716 3 Capital stocks - NT$10.00 par value; authorized - 4,200,000 thousand shares Miscellaneous equipment 1,384,855 1 1,720,212 2 Issued and outstanding - 3,258,501 thousand shares 32,585,008 33 32,585,008 34

Total cost 185,801,443 189 179,571,871 188 Capital surplus Less: Accumulated depreciation 137,374,590 140 129,688,793 136 Additional paid-in capital - share issuance in excess of par value 9,234,438 9 10,964,702 11 Less: Accumulated impairment 2,590,848 2 2,604,389 3 From business combination 8,482,381 9 8,482,381 9 45,836,005 47 47,278,689 49 From long-term equity-method investments 150,515 - 99,527 - Construction-in-progress and prepayments for equipment 5,207,950 5 4,378,460 5 Total capital surplus 17,867,334 18 19,546,610 20

Retained earnings Net properties 51,043,955 52 51,657,149 54 Legal reserve 11,762,957 12 10,874,858 12

Unappropriated earnings 10,603,107 11 8,936,536 9 INTANGIBLE ASSETS Total retained earnings 22,366,064 23 19,811,394 21

3G concession, net (Notes 1, 2 and 14) 4,384,239 4 5,114,945 5 Other adjustments Goodwill, net (Notes 2 and 14) 10,884,235 11 10,881,018 12 Cumulative translation adjustments 5,229 - 7,031 - Other (Notes 2 and 14) 733,120 1 783,817 1 Unrealized gains on financial instruments 99,244 - 26,824 -

Total other adjustments 104,473 - 33,855 - Total intangible assets 16,001,594 16 16,779,780 18

Total controlling interest of Far EasTone 72,922,879 74 71,976,867 75 OTHER ASSETS

Rental assets, net (Notes 2 and 15) 459,483 1 421,010 - MINORITY INTEREST 752,300 1 799,581 1 Idle properties, net (Note 2) 113,345 - 139,262 - Refundable deposits (Note 27) 556,068 1 483,223 1 Total stockholders' equity 73,675,179 75 72,776,448 76 Deferred charges, net (Note 2) 113,933 - 169,100 - Deferred income tax assets - noncurrent(Notes 2 and 23) 81,148 - - - Pledged certificates of deposits - noncurrent (Notes 27 and 29) 43,771 - 34,624 - Other (Notes 2 and 21) 8,717 - 8,886 -

Total other assets 1,376,465 2 1,256,105 1

TOTAL $ 98,167,232 100 $ 95,430,723 100 TOTAL $ 98,167,232 100 $ 95,430,723 100 The accompanying notes are an integral part of the consolidated financial statements.

28

FAR EASTONE TELECOMMUNICATIONS CO., LTD. AND SUBSID IARIES CONSOLIDATED STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) 2012 2011 Amount % Amount % OPERATING REVENUES (Notes 2 and 27) $ 86,745,290 100 $ 75,748,831 100 OPERATING COSTS (Notes 2, 9, 24, 27 and 29) 51,491,245 59 45,383,761 60 GROSS PROFIT 35,254,045 41 30,365,070 40 OPERATING EXPENSES (Notes 2, 24 and 27)

Marketing 15,870,999 18 13,743,051 18 General and administrative 5,568,670 7 5,036,342 7 Research and development 65,640 - 69,147 -

Total operating expenses 21,505,309 25 18,848,540 25

OPERATING INCOME 13,748,736 16 11,516,530 15 NONOPERATING INCOME AND GAINS

Interest (Note 27) 155,631 1 128,407 - Gain from sale of financial assets, net (Note 2) 89,779 - - - Government grant (Note 2) 89,352 - 91,494 - Rent (Note 27) 52,984 - 58,108 - Gain on valuation of financial assets, net (Notes

2 and 6) 14,890 - - -

Dividend revenues (Notes 2 and 6) 8,611 - 25,560 - Other 142,315 - 176,261 1

Total nonoperating income and gains 553,562 1 479,830 1

NONOPERATING EXPENSES AND LOSSES

Loss on disposal of properties, net (Note 2) 1,133,303 2 785,198 1 Equity in investees’ net losses (Note 2) 88,882 - 25,629 - Interest (Notes 2, 13 and 27) 46,511 - 61,054 - Impairment loss on financial assets (Note 2) 1,139 - 39,674 - Loss from sale of financial assets, net (Notes 2

and 6) - - 166,263 1

Loss on valuation of financial assets, net (Notes 2 and 6)

- - 16,755 -

Other (Note 24) 27,804 - 27,226 -

Total nonoperating expenses and losses 1,297,639 2 1,121,799 2 (Continued)

29

FAR EASTONE TELECOMMUNICATIONS CO., LTD. AND SUBSID IARIES CONSOLIDATED STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) 2012 2011 Amount % Amount % CONSOLIDATED INCOME BEFORE INCOME

TAX $ 13,004,659 15 $ 10,874,561 14

INCOME TAX (Notes 2 and 23) 2,374,676 3 1,947,745 2 CONSOLIDATED NET INCOME $ 10,629,983 12 $ 8,926,816 12 ATTRIBUTABLE TO:

Controlling interest $ 10,599,908 12 $ 8,880,993 12 Minority interest 30,075 - 45,823 -

$ 10,629,983 12 $ 8,926,816 12 2012 2011 Before

Income Tax

After Income

Tax

Before Income

Tax

After Income

Tax EARNINGS PER SHARE (NEW TAIWAN

DOLLARS; Note 25)

Basic $ 3.96 $ 3.25 $ 3.31 $ 2.73 Diluted $ 3.96 $ 3.25 $ 3.31 $ 2.72

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

30

FAR EASTONE TELECOMMUNICATIONS CO., LTD. AND SUBSID IARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars, Except Amounts Per Share)

Other Adjustments Capital Surplus (Notes 2 and 22) Unrealized Capital Stock Issued and Outstanding Additional Paid-in Cumulative Gains (Losses) (Note 22) Capital - Share From Long-term Retained Earnings (Note 22) Translation on Financial Controlling Total Shares Issuance in Excess From Business Equity-method Unappropriated Adjustments Instruments Interest of Minority Stockholders' (Thousands) Amount of Par Value Combination Investments Legal Reserve Earnings (Note 2) (Notes 2 and 22) Far EasTone Interest Equity BALANCE, JANUARY 1, 2011 3,258,501 $ 32,585,008 $ 10,964,702 $ 8,482,381 $ 89,285 $ 9,990,002 $ 9,086,651 $ 12,111 $ 70,692 $ 71,280,832 $ 2,272,407 $ 73,553,239 Acquisition of NCIC's capital stock in January 2011 - - - - - - - - - - (1,404,696 ) (1,404,696 ) Acquisition of FENCIT's capital stock in April 2011 - - - - - - - - - - 25,787 25,787 Acquisition of KGEx.com's capital stock in December 2011 - - - - - - - - - - (86,451 ) (86,451 ) Acquisition of ADCast's capital stock in December 2011 - - - - - - - - - - (4,195 ) (4,195 ) Appropriation of the 2010 earnings

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

Consolidated net income in 2011 - - - - - - 8,880,993 - - 8,880,993 45,823 8,926,816 Change in equity-method investees' capital surplus - - - - (13 ) - - - - (13 ) - (13 ) Effect of change in ownership percentage due to investees' issuance of capital stock

for cash - - - - 10,255 - - - - 10,255 - 10,255 Changes in unrealized gains (losses) on available-for-sale financial assets - - - - - - - - (3,308 ) (3,308 ) - (3,308 ) Changes in unrealized gains (losses) on cash flow hedge - - - - - - - - (6,920 ) (6,920 ) - (6,920 ) Changes in investee's unrealized gains (losses) on financial assets - - - - - - - - (33,640 ) (33,640 ) (689 ) (34,329 ) Cash dividend of subsidiary - - - - - - - - - - (49,657 ) (49,657 ) Translation adjustments on long-term equity-method investments - - - - - - - (5,080 ) - (5,080 ) 1,252 (3,828 ) BALANCE, DECEMBER 31, 2011 3,258,501 32,585,008 10,964,702 8,482,381 99,527 10,874,858 8,936,536 7,031 26,824 71,976,867 799,581 72,776,448 Acquisition of KGEx.com's capital stock in the six months ended June 30, 2012 - - - - - - - - - - (92,307 ) (92,307 ) Acquisition of ADCast's capital stock in March 2012 - - - - - - - - - - (369 ) (369 ) Q-ware Com's issuance of capital stock for cash in July, 2012 - - - - - - - - - - 73,817 73,817 Appropriation of the 2011 earnings

Legal reserve - - - - - 888,099 (888,099 ) - - - - - Cash dividend - NT$2.469 per share - - - - - - (8,045,238 ) - - (8,045,238 ) - (8,045,238 )

Cash dividend from capital surplus - additional paid in capital - NT$0.531 per share - - (1,730,264 ) - - - - - - (1,730,264 ) - (1,730,264 ) Consolidated net income in 2012 - - - - - - 10,599,908 - - 10,599,908 30,075 10,629,983 Change in equity-method investees' capital surplus - - - - 11 - - - - 11 - 11 Effect of change in ownership percentage due to investee's issuance of capital stock

for cash - - - - 50,977 - - - - 50,977 - 50,977 Changes in unrealized gains (losses) on available-for-sale financial assets - - - - - - - - 11,159 11,159 - 11,159 Changes in unrealized gains (losses) on cash flow hedge - - - - - - - - 6,579 6,579 - 6,579 Changes in investee's unrealized gains (losses) on financial assets - - - - - - - - 54,682 54,682 24 54,706 Cash dividend of subsidiary - - - - - - - - - - (58,235 ) (58,235 ) Translation adjustments on long-term equity-method investments - - - - - - - (1,802 ) - (1,802 ) (286 ) (2,088 ) BALANCE, DECEMBER 31, 2012 3,258,501 $ 32,585,008 $ 9,234,438 $ 8,482,381 $ 150,515 $ 11,762,957 $ 10,603,107 $ 5,229 $ 99,244 $ 72,922,879 $ 752,300 $ 73,675,179 The accompanying notes are an integral part of the consolidated financial statements.

31

FAR EASTONE TELECOMMUNICATIONS CO., LTD. AND SUBSID IARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars) 2012 2011 CASH FLOWS FROM OPERATING ACTIVITIES

Consolidated net income $ 10,629,983 $ 8,926,816 Adjustments to reconcile consolidated net income to net cash

provided by operating activities

Depreciation 9,704,823 10,047,857 Amortization 187,711 187,712 Amortization of 3G concession 730,706 730,706 Allowance for doubtful accounts 267,042 231,052 Allowance for loss on decline in value of inventories 67,328 8,211 Loss (gain) from sale of financial assets, net (89,779) 76,853 Amortization of discount on held-to-maturity financial assets (103) (102) Equity in investees’ net losses 88,882 25,629 Loss (gain) on valuation of financial assets (14,890) 16,755 Impairment loss on financial assets 1,139 39,674 Loss on disposal of properties, net 1,133,303 787,535 Unrealized exchange (gain) loss (4,569) 3,003 Deferred income (loss) on hedging derivative assets 63,708 (4,483) Accrued pension cost (pension benefit payments) (7,574) 7,995 Deferred income taxes 28,885 324,698 Net changes in operating assets and liabilities

Financial assets at fair value through profit or loss - 974,932 Notes receivable (8,684) 12,519 Accounts receivable (851,079) (600,454) Accounts receivable - related parties (60,707) (64,971) Other receivables - related parties 896 6,204 Inventories (308,356) (969,771) Prepaid expenses (182,523) (75,633) Other current assets 10,295 (15,590) Notes payable (12,600) (40,039) Accounts payable 1,210,530 1,222,984 Accounts payable - related parties 1,399 (14,210) Income tax payable 782,280 (316,371) Accrued expenses 406,830 280,832 Other payables - related parties 18,563 (77,513) Unearned revenues (262,438) 888,193 Other current liabilities 65,357 24,717 12,966,375 13,718,924

Net cash provided by operating activities 23,596,358 22,645,740

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of available-for-sale financial assets (207,507) (3,309,159) Proceeds of the disposal of available-for-sale financial assets 621,966 3,367,040 Acquisition of equity-method investments (865,192) (117,114) Redemption of held-to-maturity financial assets 1,000,000 -

(Continued)

32

FAR EASTONE TELECOMMUNICATIONS CO., LTD. AND SUBSID IARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars) 2012 2011

Acquisition of intangible assets $ (41,627) $ - Acquisition of properties (8,751,471) (8,664,857) Proceeds of the disposal of properties 71,152 22,560 Increase in refundable deposits (72,845) (33,522) Decrease (increase) in pledged certificates of deposits (187,908) 492,889 Increase in deferred charges (33,610) (61,650) Increase in restricted assets (125,327) (5,590) Cash payment due to merger - (236,342)

Net cash used in investing activities (8,592,369) (8,545,745)

CASH FLOWS FROM FINANCING ACTIVITIES

Decrease in short-term bank loans (2,001,382) (595,328) Increase (decrease) in commercial paper payable 119,768 (2,768,739) Proceeds of long-term bank loans - 190,014 Repayment of long-term bank loans (63,776) (226,219) Decrease in guarantee deposits received (2,824) (64,752) Decrease in deferred revenue (102,938) (84,184) Decrease in other liabilities - (21,640) Cash dividends paid (9,833,737) (8,195,909) Decrease in minority interest (21,911) (1,638,918)

Net cash used in financing activities (11,906,800) (13,405,675)

EFFECT OF EXCHANGE RATE CHANGES (729) (7,660) NET INCREASE IN CASH AND CASH EQUIVALENTS 3,096,460 686,660 CASH AND CASH EQUIVALENTS ARISING FROM MERGER - 56,930 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 9,905,634 9,162,044 CASH AND CASH EQUIVALENTS, END OF YEAR $ 13,002,094 $ 9,905,634 SUPPLEMENTARY CASH FLOW INFORMATION

Interest paid $ 52,146 $ 83,314 Less: Interest capitalized 10,228 21,786 Interest paid, net of capitalized interest $ 41,918 $ 61,528 Income tax paid $ 1,564,067 $ 1,938,330

NONCASH INVESTING AND FINANCING ACTIVITIES

Current portion of long-term bank loans $ 10,745 $ 4,944 Reclassification of idle properties to properties $ 18,263 $ - Reclassification of properties to rental assets $ 44,968 $ 159,749 Reclassification of properties to idle properties $ - $ 49,228

(Continued)

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FAR EASTONE TELECOMMUNICATIONS CO., LTD. AND SUBSID IARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars) 2012 2011

Reclassification of properties to deferred charges $ - $ 33,929 Reclassification of idle properties to rental assets $ - $ 28,237 Reclassification of deferred charges to properties $ - $ 18,550

CASH PAID FOR THE ACQUISITION OF PROPERTIES

Increase in properties $ 10,297,725 $ 8,580,216 (Increase) decrease in payables for the acquisition of properties (1,358,350) 164,738 Increase in other payables - related parties (15,996) (426) (Increase) decrease in other current liabilities (19,010) 38,973 Increase in other liabilities - other (152,898) (118,644) Cash paid for the acquisition of properties $ 8,751,471 $ 8,664,857

PROCEEDS OF THE DISPOSAL OF PROPERTIES

Total amount of sold properties $ 65,501 $ 27,507 Decrease (increase) in receivables from properties sold 5,544 (4,796) Decrease (increase) in other receivables - related parties 107 (151) Cash received on the disposal of properties $ 71,152 $ 22,560

CASH PAID FOR ACQUISITION OF DEFERRED CHARGES

Increase in deferred charges $ 32,888 $ 61,395 Decrease (increase) in other current liabilities (723) 3,049 Decrease (increase) in other liabilities - other 1,445 (2,794) Cash paid for acquisition of deferred charges $ 33,610 $ 61,650

SUPPLEMENTARY INFORMATION ON SUBSIDIARY ACQUISITIONS: In April 2011, Far Eastern Tech-info Ltd. (Shanghai) (FETI) acquired 55% of FarEastern New Century Information Technology (Beijing) Limited’s (FENCIT) common shares. The fair values of total assets and total liabilities at the time of acquisition were as follows: Amounts Cash $ 56,930 Prepaid expense 257 Other current assets 134 Intangible assets 241,046 Accrued expenses (16) 298,351 Percentage of ownership acquired 55% 164,093 Goodwill 57,615 Cash payment due to merger $ 221,708 The accompanying notes are an integral part of the consolidated financial statements. (Concluded)

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Amendment to Regulations for the board of directors meeting of FarEastone Telecommunications Co., Ltd. Article Original Articles Amended Articles Explanation

Article 5 F&SS division shall prepare agenda items for board of directors meetings and provide sufficient pre-meeting materials, to be sent together with the notice of the meeting. A director of the opinion that the pre-meeting materials provided are insufficient in content may request F&SS division to supplement the materials. If a director is of the opinion that materials concerning any proposal are insufficient in content, the deliberation of such proposal may be postponed by a resolution of the board of directors.

F&SS division shall prepare agenda items for board of directors meetings and provide sufficient pre-meeting materials, to be sent together with the notice of the meeting. A director of the opinion that the pre-meeting materials provided are insufficient in content may request F&SS division to supplement the materials. If a director is of the opinion that materials concerning any proposal are insufficient in content, the deliberation of such proposal may be postponed by a resolution of the board of directors.

To amend the division name of the Chinese version.

Article 5-1 Agenda items for regular board of directors meetings shall include at least the following: 1. Reports:

(1) Minutes of the last meeting and actions arising.

(2) Reporting on important financial and business matters.

(3) Reporting on internal audit activities. (4) Other important matters to be reported.

2.Discussions: (1) Items discussed and continued from the

last meeting. (2) (2) Items for discussion at this meeting.

3. Extempore motions.

Agenda items for regular board of directors meetings shall include at least the following: 1. Reports:

(1) Minutes of the last meeting and actions arising.

(2) Reporting on important financial and business matters.(including the first, second, and third quarters financial report)

(3) Reporting on internal audit activities. (4) Other important matters to be reported.

2. Matters to be Ratified 3. Matters to be discussed:

(1) Items discussed and continued from the last meeting.

(2) Items for discussion at this meeting. 4. Extempore motion.

1. According to Paragraph 1-2 of Article 36 of the Securities and Exchange Act, the first, second, and third quarters financial report shall reported to the board of directors. The wording of “semi-annual” shall be deleted in Paragraph 1-2 of Article 5-2 of the meeting procedure in the amendment of this time in conjunction with the amendment to Paragraph 1-1-2 of the same procedure.

2. Points of recognition are proposed to be included in the addition of the exception clause of “a public-interest donation of disaster relief for a major natural disaster may be submitted to the following board of directors meeting” in conjunction with

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Paragraph 1-7 of Article 7 of the “Rules Governing Procedure for Board of Directors Meeting of Public Companies” (hereinafter referred to as “Meeting Procedure Regulation”) in consideration of the practice of the provision. Therefore, it is proposed to add “Matters to be Ratified”. The initial Paragraphs 1-2, 1-3 are changed to Paragraphs 1-3, 1-4.

Article 5-2 The company shall submit the following items for discussion by the board of directors: 1. Corporate business plan. 2. Annual and semi-annual financial reports. 3. Adoption or amendment of an internal control

system pursuant to Article 14-1 of the Act. 4. Adoption or amendment, pursuant to Article

36-1 of the Act, of handling procedures for financial or operational actions of material significance, such as acquisition or disposal of assets, derivatives trading, extension of monetary loans to others, and endorsements or guarantees for others.

5. The offering, issuance, or private placement of any equity-type securities.

6. The appointment or discharge of a financial, accounting, or internal audit officer.

7. Any matter required by Article 14-3 of the Act or any other law, regulation, or bylaw to be approved by resolution at a shareholders' meeting or a meeting of the board of directors, or any such significant matter as may be prescribed by the competent authority.

With respect to a matter required by Article 14-3

The company shall submit the following items for discussion by the board of directors: 1. Corporate business plan. 2. Annual financial reports. 3. Adoption or amendment of an internal control

system pursuant to Article 14-1 of the Act. 4. Adoption or amendment, pursuant to Article

36-1 of the Act, of handling procedures for financial or operational actions of material significance, such as acquisition or disposal of assets, derivatives trading, extension of monetary loans to others, and endorsements or guarantees for others.

5. The offering, issuance, or private placement of any equity-type securities.

6. The appointment or discharge of a financial, accounting, or internal audit officer.

7. A donation to a related party or a major donation to a non-related party provided that a public-interest donation of disaster relief for a major natural disaster may be submitted to the following board of directors meeting for ratification.

8. Any matter required by Article 14-3 of the Act

1. According to Paragraph 1-2 of Article 36 of the newly amended Securities and Exchange Act, and Paragraph 1-7 of Article 7 of Meeting Procedure Regulation, the semi-annual report shall be presented to the Board of Directors and being reviewed by certified public accountants. This shall mean that the report goes to the Board of Directors and not the discussion in the Board meeting. Accordingly, Paragraph 1-2 of this Article shall be subject to amendment.

2. According to the Paragraph 1-7 of Article 7 of Meeting Procedure Regulation, to amend Paragraph 1-7 of this Article, due to a donation to related party or non-related party shall discussion by the board of directors. If natural disaster may be submitted to the following board of directors

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of the Act to be resoluted by board of directors, each independent director shall attend the meeting in person, or give a proxy to an independent director. If an independent director objects to or expresses reservations about the matter, it shall be recorded in the board meeting minutes; an independent director intending to express objection or reservations but unable to attend the meeting in person shall, unless there is some legitimate reason to do otherwise, issue a written opinion in advance, which shall be recorded in the meeting minutes. All matters set out in preceding paragraph shall be specified in the notice of the reasons for calling a board of directors meeting; none of them may be raised by an extempore motion except in the case of an emergency or legitimate reason.

or any other law, regulation, or bylaw to be approved by resolution at a shareholders' meeting or a meeting of the board of directors, or any such significant matter as may be prescribed by the competent authority.

The term "related party" in subparagraph 7 of the preceding paragraph means a related party as defined in the Regulations Governing the Preparation of Financial Reports by Securities Issuers. The term "major donation to a non-related party" means any individual donation, or cumulative donations within a 1-year period to a single recipient, at an amount of NTD100 million or more, or at an amount equal to or greater than 1 percent of net operating revenue or 5 percent of paid-in capital as stated in the CPA-attested financial report for the most recent year. The term "within a 1-year period" in the preceding paragraph means a period of 1 year calculated retroactively from the date on which the current board of directors meeting is convened. Amounts already submitted to and passed by a resolution of the board are exempted from inclusion in the calculation. With respect to a matter required by Article 14-3 of the Act to be resoluted by board of directors, each independent director shall attend the meeting in person, or give a proxy to an independent director. If an independent director objects to or expresses reservations about the matter, it shall be recorded in the board meeting minutes; an independent director intending to express objection or reservations but unable to attend the meeting in person shall, unless there is some legitimate reason to do otherwise, issue a written opinion in advance, which shall be recorded in the

meeting for retroactive recognition. Therefore, the initial Paragraph 1-7 shall be changed to Paragraph 1-8.

3. Pursuant to Paragraphs 2 and 3 of Article 7 of the Meeting Procedure Regulation, Paragraphs 2 and Paragraph 3 were added to this Article to explicitly define related parties and the standards and methods of calculation for major donation. The initial Paragraphs 2 and 3 shall be changed to Paragraphs 4 and 5.

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meeting minutes. All matters set out in preceding paragraph shall be specified in the notice of the reasons for calling a board of directors meeting; none of them may be raised by an extempore motion except in the case of an emergency or legitimate reason.

Article 9 The Chairman may, in line with the needs of the contents of the meeting, appoint managers of the departments concerned to attend the meeting as an observer to help directors better understand the Company’s situations and, in turn, come to decisions as appropriate. When necessary, the company may also invite certificated public accounts, attorneys, or other professionals to attend as nonvoting participants. The supervisors may attend the board of directors meeting to speak their opinions but shall have no voting power there.

The Chairman may, in line with the needs of the contents of the meeting, appoint personnel of relevant departments or subsidiaries concerned to attend the meeting as an observer to help directors better understand the Company’s situations and, in turn, come to decisions as appropriate. When necessary, the company may also invite certificated public accounts, attorneys, or other professionals to attend as nonvoting participants and to make explanatory statements, provided that they shall leave the meeting when deliberation or voting takes place. The supervisors may attend the board of directors meeting to speak their opinions but shall have no voting power there.

1. Paragraph 1 of this Article is amended pursuant to Paragraph 1 of Article 16 of the Meeting Procedure Regulation for reinforcing the monitoring of the Company over the operation of the subsidiaries and broadens the scope of observers from related departments of the Company in the meeting.

2. Paragraph 12 of this Article is amended pursuant to Paragraph 2 of Article 11 of the Meeting Procedure Regulation

Article 11 All directors shall strictly discipline themselves and may express their own opinions and response to inquiries but shall take the initiative to withdraw themselves from an issue which involves his/her personal or represented company shareholder’s interests and is likely to jeopardize the Company either on discussion or on voting for that issue, nor shall a director exercise voting powers on behalf of another director. In the event that a director violates the principle of withdrawal and joins the voting, his/her voting power is null and void.

All directors shall strictly discipline themselves and if any director or a juristic person represented by a director is an interested party with respect to any agenda item, the director shall state the important aspects of the interested party relationship at the respective meeting. When the relationship is likely to prejudice the interests of the Company, the director may not participate in discussion or voting on that agenda item, and further, shall enter recusal during discussion and voting on that item and may not act as another director's proxy to exercise voting rights on that matter. In the event that a director violates the principle of withdrawal and joins the voting, his/her voting

The addition of Paragraph 2 of Article 206 in conjunction with the Company Act, and amended Paragraph 1 of this Article pursuant to Paragraph 1 of Article 16 of the Meeting Procedure Regulation.

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power is null and void. Article 16 Minutes shall be prepared of the discussions at

board of directors meetings; the meeting minutes shall record the following: 1. Session (or year), time, and place of meeting. 2. Name of the meeting chair. 3. Attendance of directors at the meeting,

specifying the names and number of members present, excused, and absent.

4. Names and titles of those attending the meeting as nonvoting participants.

5. Name of minutes taker. 6. Matters reported on. 7. Agenda items: specify the resolution method

and result for each proposal, and summarize the comments made by, and specify any objections or reservations expressed by, directors, supervisors, experts, or any others at the meeting that has been included in records or stated in writing, and any opinion issued in writing by an independent director under Article 5-2, paragraph 2.

8. Extempore motions: specify the name of the mover, the resolution method and result for each motion, and summarize the comments made by, and specify any objections or reservations expressed by, directors, supervisors, experts, or any others at the meeting that has been included in records or stated in writing.

9. Other matters required to be recorded. Any matter about which an independent director expresses an objection or reservation that has been included in records or stated in writing shall be stated in the meeting minutes and within two days of the meeting be published on an information

Minutes shall be prepared of the discussions at board of directors meetings; the meeting minutes shall record the following: 1. Session (or year), time, and place of meeting. 2. Name of the meeting chair. 3. Attendance of directors at the meeting,

specifying the names and number of members present, excused, and absent.

4. Names and titles of those attending the meeting as nonvoting participants.

5. Name of minutes taker. 6. Matters reported on. 7. Agenda items: the method of resolution and

the result for each proposal; a summary of the comments made by directors, supervisors, experts, or other persons; the name of any director that is an interested party as referred to in paragraph 1 of the article 11, an explanation of the important aspects of the relationship of interest, the reasons why the director was required or not required to enter recusal, and the status of their recusal; opinions expressing objections or reservations at the meeting that were included in records or stated in writing; and any opinion issued in writing by an independent director under Article 5-2, paragraph 2.

8. Extraordinary motions: the name of the mover; the method of resolution and the result for each motion; a summary of the comments made by directors, supervisors, experts, or other persons; the name of any director that is an interested party as referred to in paragraph 1 of the preceding article, an explanation of the important aspects of the relationship of

The amendment to 1-7 and 1-8 of this Article pursuant to Paragraphs 1-7 and 1-8 of Article 17 of the Meeting Procedure Regulation for reinforcing the disclosure of the participation of the directors in motions involving their personal interests.

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reporting website designated by the competent authority. The attendance book forms a part of the minutes for each board of directors meeting. Minutes of the board of directors meeting shall be duly signed or sealed by the Chairman and the secretary, served to all directors, supervisors and observers within twenty days after the meeting, and shall be archived as major files of the Company throughout the period that the Company exists. The production and distribution of the meeting minutes may be done in electronic form.

interest, the reasons why the director was required or not required to enter recusal, and the status of their recusal; opinions expressing objections or reservations at the meeting that were included in records or stated in writing.

9. Other matters required to be recorded. Any matter about which an independent director expresses an objection or reservation that has been included in records or stated in writing shall be stated in the meeting minutes and within two days of the meeting be published on an information reporting website designated by the competent authority. The attendance book forms a part of the minutes for each board of directors meeting. Minutes of the board of directors meeting shall be duly signed or sealed by the Chairman and the secretary served to all directors, supervisors and observers within twenty days after the meeting, and shall be archived as major files of the Company throughout the period that the Company exists. The production and distribution of the meeting minutes may be done in electronic form.

Article 19 These Regulations and amendment hereof shall come into enforcement after being resolved in the board of directors and reported to the shareholders’ meeting.

These Regulations and amendment hereof shall come into enforcement after being resolved in the board of directors, and any future amendments to these Rules.

According to the Meeting Procedure Regulation, any amendment to this regulation not explicitly stated shall be reported to the General Meeting of Shareholders. For the simplification of the meeting procedure, the Board Meeting Procedure of the Company is amended thereby the Board is authorized to execute any motion being resolved without reporting to the General Meeting of Shareholders.

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

Article 15 The Corporation shall have nine (9) to eleven (11) Directors and Three (3) Supervisors, to be elected who are competent persons at shareholders’ meeting. The tenure of office of Directors and Supervisors will be three (3) year(s) and they will be eligible for re-election. The Company’s independent directors shall not be less than two in number and should not less than one-fifth of directors seats, independent directors shall be elected by adopting candidate nomination system. Regulations governing the professional qualifications, restrictions on shareholdings and concurrent positions held, assessment of independence, method of nomination, and other matters for compliance with respect to independent directors shall be prescribed by the Competent Authority. The recommendations in connection with remuneration for directors and supervisors shall be submitted for resolution by Remuneration Committee and the Board of Directors. The total registered shares held by all Directors, Supervisors shall be determined pursuant to “Regulations Governing Percentage of Shares Held by Directors, Supervisors of Public Offering Companies”.

The Company shall have nine (9) to eleven (11) Directors and Three (3) Supervisors, to be elected who are competent persons at shareholders’ meeting. The tenure of office of Directors and Supervisors will be three (3) year(s) and they will be eligible for re-election. The Company’s independent directors shall not be less than two in number and should not less than one-fifth of directors seats. Directors and Supervisors shall be elected by adopting candidate nomination system according to article 192-1 of the Company Act. Regulations governing the professional qualifications, restrictions on shareholdings and concurrent positions held, assessment of independence, method of nomination, and other matters for compliance with respect to independent directors shall be prescribed by the Competent Authority. The recommendations in connection with remuneration for directors and supervisors shall be submitted for resolution by Remuneration Committee and the Board of Directors. The total registered shares held by all Directors, Supervisors shall be determined pursuant to “Regulations Governing Percentage of Shares Held by Directors, Supervisors of Public Offering Companies”.

Amend paragraph 3 of this article pursuant to article 192-1 of the Company Act to comply with the mandatory electronic voting system requested by the securit ies competent authority.

Article 31 These Articles of Incorporation were agreed upon and signed on Mar. 7, 1997. First amended on Jun. 6, 1997; Second amended on Aug. 20, 1998; Third amended on Apr. 28, 1999;

These Articles of Incorporation were agreed upon and signed on Mar. 7, 1997. First amended on Jun. 6, 1997; Second amended on Aug. 20, 1998; Third amended on Apr. 28, 1999;

Add the date of the last amendment.

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Fourth amended on Apr. 21, 2000; Fifth amended on Dec. 28, 2000; Sixth amended on May. 15, 2001; Seventh amended on Jun. 25, 2002; Eighth amended on May 23, 2003; Ninth amended on Feb. 18, 2004; Tenth amended on Jun. 30,2004; Eleventh amended on May 20, 2005; Twelfth amended on May 26, 2006. Thirteenth amended on June 12, 2007. Fourteenth amended on June 15, 2010. Fifteenth amended on June 9, 2011. Sixteenth amended on June 13, 2012.

Fourth amended on Apr. 21, 2000; Fifth amended on Dec. 28, 2000; Sixth amended on May. 15, 2001; Seventh amended on Jun. 25, 2002; Eighth amended on May 23, 2003; Ninth amended on Feb. 18, 2004; Tenth amended on Jun. 30,2004; Eleventh amended on May 20, 2005; Twelfth amended on May 26, 2006; Thirteenth amended on June 12, 2007; Fourteenth amended on June 15, 2010; Fifteenth amended on June 9, 2011; Sixteenth amended on June 13, 2012; Seventeenth amended on June 13, 2013.

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Amendment to Directors and Supervisors Election Guidelines of FarEastone Telecommunications Co., Ltd. Article Current Articles Amended Articles Explanation

Article 3 For the seats of the Company’s Directors and Supervisors, the Company’s independent directors, non-independent directors and supervisors shall be elected in the same election, but the ballots shall be calculated separately and respectively. And the ones winning more ballots shall be elected to fill up the seats separately. In the event two or more candidates win the same ballots beyond the seat quota, the ones who win the same ballots shall determine the seat by drawing the lots. If anyone of them is absent, the president shall represent the absent voter to draw the lot. Independent directors shall be elected by candidate nomination system in accordance with Article 192-1 of Company Law and regarding the qualification, independent condition and other matters, “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies” and other related laws and regulations should be followed.

For the seats of the Company’s Directors and Supervisors, the Company’s independent directors, non-independent directors and supervisors shall be elected in the same election, but the ballots shall be calculated separately and respectively. And the ones winning more ballots shall be elected to fill up the seats separately. In the event two or more candidates win the same ballots beyond the seat quota, the ones who win the same ballots shall determine the seat by drawing the lots. If anyone of them is absent, the president shall represent the absent voter to draw the lot. Directors and Supervisors shall be elected by candidate nomination system in accordance with Article 192-1 of Company Act and independent directors regarding the qualification, independent condition and other matters, “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies” and other related laws and regulations should be followed.

Amend paragraph 2 of this article pursuant to article 192-1 of the Company Act to comply with the mandatory electronic voting system requested by the securities competent authority.

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Amendment to Procedure for Capital Lending to others of FarEastone Telecommunications Co., Ltd. Article Current Articles Amended Articles Explanation

Article 2 (Limitation of the total loans and individual targets) The total funds loaned to the Borrowers under Paragraph I shall not exceed 50% of the Company’s net worth as last reviewed or checked by CPA (Hereinafter referred to as the Latest Net Worth). The loan to an individual Transaction Counterpart shall not exceed the amount of business transaction between both parties. The term “amount of business transaction” as set forth herein denotes the amount of actual purchase, sale amounts in the year preceding execution of the loan contract, or the transaction amount anticipated for the year. The total loan to a Short-term Finances shall not exceed 15% of the Latest Net Worth. The loan to an individual Short-term Finance shall not exceed 10% of the Latest Net Worth. The restriction of this Article shall not apply to inter-company loans of funds between foreign companies in which the public company holds, directly or indirectly, 100% of the voting shares.

(Limitation of the total loans and individual targets) The total funds loaned to the Borrowers under Paragraph I shall not exceed 50% of the net worth as last reviewed or checked by CPA (Hereinafter referred to as the Latest Net Worth of the Company). The loan to an individual Transaction Counterpart shall not exceed the amount of business transaction between both parties. The term “amount of business transaction” as set forth herein denotes the amount of actual purchase, sale amounts in the year preceding execution of the loan contract, or the transaction amount anticipated for the year. The total loan to a Short-term Finances shall not exceed 15% of the Latest Net Worth of the Company. The loan to an individual Short-term Finance shall not exceed 10% of the Latest Net Worth of the Company. The accumulated balance of short-term loan of funds provided between overseas affiliate companies of which the Company holds, directly or indirectly, 100% of the voting shares, shall not exceed 40% of the net worth of the latest quarter of the Company. Where the Company’s financial reports are prepared according to the International Financial Reporting Standards, "net worth" in these Regulations means the balance sheet equity attributable to the owners of the parent company under the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

1. In order to consistent of the procedure, amend paragraphs 1 and 3 of the Article.

2. Amendment of wording in accordance with Article 3 and 4 of ”Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies ” (“Regulations” hereafter), the restriction shall not apply to inter-company loans of funds between foreign companies in which the public company holds, directly or indirectly, 100% of the voting shares. However, the setting of the amount limits of loans shall still apply.

3. The public company has adopted the International Financial Reporting Standards (“IFRSs” hereafter) step by step, and add paragraph 5 of this Article in accordance with Article 6 of the Regulations.

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Article 3 (Causes and necessity of loaning capital to others) FET may lend funds as required for short-term financing only in the following events: (I) Where the following targets to which FET may

grant endorsement are in need of short-term financing:

1. A firm of which the Company owns directly and indirectly more than 50 percent voting right shares.

2. A firm of which owns directly and indirectly more than 50 percent of the Company voting right shares.

(II)Other cases where FET’s board of directors agrees to lend funds.

The terms “subsidiary” and “parent company” as set forth herein shall be duly defined in accordance with Financial & Accounting Rule Gazettes #V and #VII promulgated by the Accounting Research & Development Foundation, Republic of China.

(Causes and necessity of capital lending to others) FET may lend funds as required for short-term financing only in the following events: (I) Where the following targets to which FET may

grant endorsement are in need of short-term financing:

1. A firm of which the Company owns directly and indirectly more than 50 percent voting right shares.

2. A firm of which owns directly and indirectly more than 50 percent of the Company voting right shares.

(II)Other cases where FET’s board of directors agrees to lend funds.

The terms “subsidiary” and “parent company” as referred to in these Regulations shall be as determined under the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

The public company has adopted the IFRSs step by step, and add paragraph 2 of this Article in accordance with Article 6 of the Regulations.

Article 4 (Loaning capital to others and handling procedures) Where FET grants a loan, the borrower shall first provide the financial papers as required and apply to FET’s Finance & Shared Services Division for financing limit. The Finance & Shared Services Division shall conduct prudent assessment to confirm that it lives up to the requirements set forth in the “Guiding Rules for Loan & Endorsement by Public Offering Companies” (hereinafter referred to as the Guiding Rules), these Procedures and the following. The assessment results shall be submitted to the Board of Directors for a decision beforehand. The Board of Directors shall not authorize any others to make such decision.

(Capital lending to others and handling procedures) Where FET grants a loan, the borrower shall first provide the financial papers as required and apply to FET’s Finance & Shared Services Division for financing limit. The Finance & Shared Services Division shall conduct prudent assessment to confirm that it lives up to the requirements set forth in the “Guiding Rules for Loan & Endorsement by Public Offering Companies” (hereinafter referred to as the Guiding Rules), these Procedures and the following. The assessment results shall be submitted to the Board of Directors for a decision beforehand. The Board of Directors shall not authorize any others to make such decision.

1. To amend the division name of the Chinese version.

2. Amendment of wording in paragraph 7 of this Article.

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I. Necessity and rationality of the endorsement. II. Creditability and risk assessment of the

borrower. III. Impact upon FET operation risk, financial

standing and shareholders’ equity. IV. Whether collateral is required and the value

assessed for the collateral. The inter-company loans of funds between the Company and its subsidiaries or among its subsidiaries shall be resolved by the Board of Directors of the Company , as well as to authorize the Chairman to grant one borrower to drawdown by tranche within specific approved ceiling amount and one year. As for the aforementioned ceiling amount, except those regulated in accordance with the Item 4 of Article 2, the authorized loan amount to a single party by the Company or together with its subsidiaries, shall not exceed 10% of the latest net worth. of the Company. After financing limit is determined, the borrower shall apply to the Finance & Administration Division with “Application for Appropriation”. The loan shall not be disbursed until approved by FET’s responsible person or the board of directors authorized representative. For the enforcement of the loan, the Finance & Administration Division shall report to the board of directors for information. The borrower shall, upon applying for disbursement of the fund, provide standby instrument of equivalent amount or other collateral or guarantor(s) satisfactory to FET as collateral of the loan. Where FET has set independent directors, and while the board of directors are discussing these

I. Necessity and rationality of the endorsement. II. Creditability and risk assessment of the

borrower. III. Impact upon FET operation risk, financial


assessed for the collateral. The inter-company loans of funds between the Company and its subsidiaries or among its subsidiaries shall be resolved by the Board of Directors of the Company , as well as to authorize the Chairman to grant one borrower to drawdown by tranche within specific approved ceiling amount and one year. As for the aforementioned ceiling amount, except those regulated in accordance with the Item 4 of Article 2, the authorized loan amount to a single party by the Company or together with its subsidiaries, shall not exceed 10% of the latest net worth. of the Company. After financing limit is determined, the borrower shall apply to the Finance & Administration Division with “Application for Appropriation”. The loan shall not be disbursed until approved by FET’s responsible person or the board of directors authorized representative. For the enforcement of the loan, the Finance & Administration Division shall report to the board of directors for information. The borrower shall, upon applying for disbursement of the fund, provide standby instrument of equivalent amount or other collateral or guarantor(s) satisfactory to FET as collateral of the loan. Where FET has set independent directors, and while the board of directors are discussing these

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procedures or granting loans to others, the opinions of the independent directors shall be taken into adequate account. Their opinions, pros and cons as well as the reasons of cons shall be entered into the minutes of the board of directors meeting. In the event that the target of Loaning capital does not comply with the Regulations or Precedure or amount of the loan so granted exceeds the limit, a plan of corrective action shall be established and submitted to the supervisors and shall also finish improvement by the schedule planned.

procedures or granting loans to others, the opinions of the independent directors shall be taken into adequate account. Their opinions, pros and cons as well as the reasons of cons shall be entered into the minutes of the board of directors meeting. If, as a result of a change in circumstances, an entity for which an endorsement/guarantee is made does not meet the requirements of these Regulations or the loan balance exceeds the limit, the Company shall adopt rectification plans and submit the rectification plans to all the supervisors, and shall complete the rectification according to the timeframe set out in the plan.

Article 5 （Period of loan and interest calculation） The Funds loaned by the Company shall not exceed one year or the operating cycle of Short-term Finances if the Company’s operating cycle exceeds one year. The restriction on period of loan in preceding paragraph shall not apply to inter-company loans of funds between foreign companies in which the public company holds, directly or indirectly, 100% of the voting shares. Interest on loans extended by the Corporation shall be calculated at the floating interest rate, and shall be adjusted from time to time in accordance with the Corporation’s cost of capital. Any adjustment of interest shall first be proposed by the F&SS to the president of the Corporation for his approval and then, upon such approval, be implemented by the Treasury. Interest shall be settled on a monthly basis.

（Period of loan and interest calculation） The Funds loaned by the Company shall not exceed one year or the operating cycle of Short-term Finances if the Company’s operating cycle exceeds one year. The period of loan depend on borrower’s demand of the capital, and term of each such loan shall not exceed 3 years of inter-company loans of funds between foreign companies in which the public company holds, directly or indirectly, 100% of the voting shares. Interest on loans extended by the Corporation shall be calculated at the floating interest rate, and shall be adjusted from time to time in accordance with the Corporation’s cost of capital. Any adjustment of interest shall first be proposed by the F&SS to the president of the Corporation for his approval and then, upon such approval, be implemented by the Treasury. Interest shall be settled on a monthly basis.

1. Amendment of wording in accordance with Article 3 and 4 of Regulations, the restriction shall not apply to inter-company loans of funds between foreign companies in which the public company holds, directly or indirectly, 100% of the voting shares. However, the setting of the durations of loans shall still apply.


Article 6 （Subsequent control measures and procedures to （Subsequent control measures and procedures to To amend the division name of the Chinese version.

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deal with the overdue credits） For loans granted, the Company shall establish a record book to bear all details of the borrowers, amounts, dates while the board of directors resolves the decisions, dates while the loans are granted and prudent assessment conducted pursuant to Article IV, Paragraph I. The Company’s Internal Audit Department shall audit these Procedures and the enforcement on a quarterly basis minimum and shall work out records in writing and further keep the supervisors informed in writing immediately upon a critical offense noticed. The borrowers and guarantors’ financial, business and credit standing shall be closely watched after the loan is granted. In case of collateral provided, the collateral shall be closely watched regarding a change in its value. In case of a significant change, report shall be made to the general manager forthwith with due actions taken as instructed. The borrower shall repay the principal and interest forthwith when due unless the borrower applied for and obtained the Board’s prior approval for renewal. In case of violation, the Company may dispose the provided collateral or claim on the guarantor(s) for repayment without a notice.

deal with the overdue credits） For loans granted, the Company shall establish a record book to bear all details of the borrowers, amounts, dates while the board of directors resolves the decisions, dates while the loans are granted and prudent assessment conducted pursuant to Article IV, Paragraph I. The Company’s Internal Audit Department shall audit these Procedures and the enforcement on a quarterly basis minimum and shall work out records in writing and further keep the supervisors informed in writing immediately upon a critical offense noticed. The borrowers and guarantors’ financial, business and credit standing shall be closely watched after the loan is granted. In case of collateral provided, the collateral shall be closely watched regarding a change in its value. In case of a significant change, report shall be made to the general manager forthwith with due actions taken as instructed. The borrower shall repay the principal and interest forthwith when due unless the borrower applied for and obtained the Board’s prior approval for renewal. In case of violation, the Company may dispose the provided collateral or claim on the guarantor(s) for repayment without a notice.

Article 8 (Procedures for declaration through public announcement) FET shall, not later than the 10th of every month, put into public announcement the balance of the loans granted by FET and its subsidiary(ies) in the preceding month. Where the balance of the loans lives up to any of the following, FET shall further declares through public announcement within two days from

(Procedures for declaration through public announcement) FET shall, not later than the 10th of every month, put into public announcement the balance of the loans granted by FET and its subsidiary(ies) in the preceding month. Where the balance of the loans lives up to any of the following, FET shall further declares through public announcement within two days

1. In order to consistent of the procedure, and to clarify the definition in accordance with the paragraph 1 of Article 22 of the Regulations and amend paragraph 2 of the Article.

2. Financial Supervisory Commission, Executive Yuan. has restructured Financial Supervisory

48

occurrence of the facts: I. FET and its subsidiary(ies) where the total

balance of the loans granted exceeds 20% of the net worth shown on FET’s latest financial statements .

II. FET and its subsidiary(ies) where here balance of the loans granted to any single business concern exceeds 10% of the net worth shown on FET’s latest financial statements.

III. FET and its subsidiary(ies) where the newly conducting amount exceeds NT$10 million and the balance exceeds 2% of the net worth shown on FET’s latest financial statements.

Where a subsidiary is not in public offering in the Republic of China, the declaration through public announcement for such subsidiary as required under the aforementioned paragraphs 3 shall be handled by FET. The term “declaration through public announcement” as set forth herein denotes input into the information declaration website established by the Financial Supervisory Commission, Executive Yuan. FET shall, pursuant to generally accepted accounting principles, assess the loans and provide adequate allowance for bad debts and shall disclose the relevant information appropriately in the financial statements and shall further provide data concerned to the auditing CPA for auditing procedures as necessary.

commencing immediately from the date of occurrence: I. FET and its subsidiary(ies) where the total

balance of the loans granted exceeds 20% of the Latest Net Worth of the Company.

II. FET and its subsidiary(ies) where here balance of the loans granted to any single business concern exceeds 10% of the Latest Net Worth of the Company.

III. FET and its subsidiary(ies) where the newly conducting amount exceeds NT$10 million and the balance exceeds 2% of the Latest Net Worth of the Company.

Where a subsidiary is not in public offering in the Republic of China, the declaration through public announcement for such subsidiary as required under the aforementioned paragraphs 3 shall be handled by FET. The term “declaration through public announcement” as set forth herein denotes input into the information declaration website established by the Financial Supervisory Commission, R.O.C. “Date of occurrence” in these Regulations means the date of contract signing, date of payment, dates of boards of directors resolutions, or other date that can confirm the counterparty and monetary amount of the transaction, whichever date is earlier. FET shall evaluate the status of its loans of funds and reserve sufficient allowance for bad debts, and shall adequately disclose relevant information in its financial reports and provide certified public accountants with relevant information for implementation of necessary auditing procedures.

Commission, R.O.C. from July, 1. 2012. Amendment of wording paragraph 4 of the Article.

3. According to the paragraph 2 of the Article 7 of the Regulations, it is proposed to amend the definition of “Date of occurrence”, of the paragraph 5 of the Article. The initial paragraph 5 shall be changed to paragraph 6.

4. Public companies adopting International Financial Reporting Standard or the domestic Statement of Financial Accounting Standard shall comply with relevant rules for the preparation of financial statements by securities issuers or for recognition of contingent loss for appropriate disclosure in the financial statement if guarantee through endorsement has been undertaken, and amendment to 6 of this Article shall be made pursuant to Article 23 of the standard.

Article 9 (Procedures to control subsidiary(ies) regarding (Procedures to control subsidiary(ies) regarding To amend the division name of the

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loans granted to others) A subsidiary of the Company shall, if desirous to grant loans to others, duly enact the Loaning capital to others Procedures in accordance with the Guiding Rules and propose to Finance & Shared Services Division of the Company. Finance & Shared Services Division shall propose the list of the subsidiary for the Board of Directors’ ratification. The Company’s subsidiary(ies) shall conduct according to their own procedures. The Company’s subsidiary(ies) as public offering companies in the Republic of China shall conduct declaration through public announcements individually. The Company’s subsidiary(ies) shall submit detailed statements of loans granted in the preceding month to the Company for assembling not later than the 5th day of every month. Each subsidiary of the Company shall review whether its applying procedures for loaning capital to others are in compliance with the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies”. The Company’s auditor shall reexamine the check reports for such matters made by each subsidiary of the Company.

loans granted to others) A subsidiary of the Company shall, if desirous to grant loans to others, duly enact the capital lending to others Procedures in accordance with the Guiding Rules and propose to Finance & Shared Services Division of the Company. Finance & Shared Services Division shall propose the list of the subsidiary for the Board of Directors’ ratification. The Company’s subsidiary(ies) shall conduct according to their own procedures. The Company’s subsidiary(ies) as public offering companies in the Republic of China shall conduct declaration through public announcements individually. The Company’s subsidiary(ies) shall submit detailed statements of loans granted in the preceding month to the Company for assembling not later than the 5th day of every month. Each subsidiary of the Company shall review whether its applying procedures for capital lending to others are in compliance with the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies”. The Company’s auditor shall reexamine the check reports for such matters made by each subsidiary of the Company.

Chinese version.

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Amendment to Procedure for Making Endorsements and Guarantees of FarEastone Telecommunications Co., Ltd.

Article Current Articles Amended Articles Explanation Article 2 The targets of FET endorsement services shall be

limited to the following: I. A firm in business transaction with FET. II. A firm of which the Company owns directly

and indirectly more than 50 percent voting right shares.

III. A firm which owns directly and indirectly more than 50 percent of the Company voting right shares.

The subsidiaries of the Company which the Company owns directly and indirectly more than 90% voting right shares can provide endorsements and/or guarantees to each other but the total amount of endorsements and/or guarantees shall not exceed 10% of its net worth of the Company as stated in its latest financial report. However the endorsements and/or guarantees between the subsidiaries of the Company which the Company owns directly and indirectly 100% are not limited within the preceding regulated scope. In the event that FET is in inter-endorsement guarantee in line with the needs to undertake projects with fellow firms or joint builders or that the whole investing shareholders endorse an investee pro rata to the investment ratio, FET may render endorsement free of the restrictions set forth in the preceding paragraph. The investment in the preceding paragraph implies capital contribution directly owned by the Company or indirectly owned through a 100% shareholding subsidiary. The terms “subsidiary” and “parent company” as set forth herein shall be duly defined in accordance with Financial & Accounting Rule Gazettes #V and #VII promulgated by the Accounting Research & Development

The targets of FET endorsement services shall be limited to the following: I. A firm in business transaction with FET. II. A firm of which the Company owns directly

and indirectly more than 50 percent voting right shares.

III. A firm which owns directly and indirectly more than 50 percent of the Company voting right shares.

The subsidiaries of the Company which the Company owns directly and indirectly more than 90% voting right shares can provide endorsements and/or guarantees to each other but the total amount of endorsements and/or guarantees shall not exceed 10% of its net worth as last reviewed or checked by CPA (Hereinafter referred to as the Latest Net Worth of the Company). However the endorsements and/or guarantees between the subsidiaries of the Company which the Company owns directly and indirectly 100% are not limited within the preceding regulated scope. In the event that FET is in inter-endorsement guarantee in line with the needs to undertake projects with fellow firms or joint builders or that the whole investing shareholders endorse an investee pro rata to the investment ratio, FET may render endorsement free of the restrictions set forth in the preceding paragraph. The investment in the preceding paragraph implies capital contribution directly owned by the Company or indirectly owned through a 100% shareholding subsidiary. The terms “subsidiary” and “parent company” as referred to in these Regulations shall be as determined under the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

1. In order to consistent of the procedure, amend paragraph 2 of the Article.

2. The public company has adopted the International Financial Reporting Standards (“IFRSs” hereafter) step by step, and add paragraph 5 of this Article in accordance with Article 6 of the ”Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies ” (“Regulations” hereafter)

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Foundation, Republic of China. Article 3 The total amount of endorsements and/or

guarantees made by the Corporation shall not exceed 100% of its net worth as stated in its latest financial report. The total amount of endorsements and/or guarantees provided for any single enterprise shall not exceed 50% of its net worth as stated in its latest financial report. The total amount of endorsements and/or guarantees made by the Corporation and its subsidiaries shall not exceed 100% of its net worth as stated in its latest financial report. The total amount of endorsements and/or guarantees provided for any single enterprise shall not exceed 50% of its net worth as stated in its latest financial report. The Company shall explain its necessity and rationality in the Shareholders’ Meeting, if the ceiling of the total amount of endorsements and/or guarantees made by the Corporation and its subsidiaries have exceeded 50% of its net worth as stated in its latest financial report.

The total amount of endorsements and/or guarantees made by the Corporation shall not exceed 100% of the Latest Net Worth of the Company. The total amount of endorsements and/or guarantees provided for any single enterprise shall not exceed 50% of the Latest Net Worth of the Company. The total amount of endorsements and/or guarantees made by the Corporation and its subsidiaries shall not exceed 100% of the Latest Net Worth of the Company. The total amount of endorsements and/or guarantees provided for any single enterprise shall not exceed 50% of the Latest Net Worth of the Company. The Company shall explain its necessity and rationality in the Shareholders’ Meeting, if the ceiling of the total amount of endorsements and/or guarantees made by the Corporation and its subsidiaries have exceeded 50% of the Latest Net Worth of the Company. Where the Company’s financial reports are prepared according to the International Financial Reporting Standards, "net worth" in these Regulations means the balance sheet equity attributable to the owners of the parent company under the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

1. In order to consistent of the procedure, amend paragraphs 1 to 3 of the Article.

2. The public company has adopted the IFRSs step by step, and add paragraph 4 of this Article in accordance with Article 6 of the Regulations.

Article 4 Before FET renders endorsement or provide guarantee to another party, the Finance Administration Division shall conduct prudent assessment to confirm that it lives up to the requirements set forth in the “Guiding Rules for Loan & Endorsement by Public Offering Companies” (hereinafter referred to as the Guiding Rules), these Procedures and the following. The assessment results shall be submitted to the board of directors for a decision beforehand. To meet time efficiency, nevertheless, the board of directors may authorize

Before FET renders endorsement or provide guarantee to another party, the Finance Administration Division shall conduct prudent assessment to confirm that it lives up to the requirements set forth in the “Guiding Rules for Loan & Endorsement by Public Offering Companies” (hereinafter referred to as the Guiding Rules), these Procedures and the following. The assessment results shall be submitted to the board of directors for a decision beforehand. To meet time efficiency, nevertheless, the board of directors may authorize the chairman to act within the


2. To Consider the subsidiary with shares having no par value or a par value other than NT$10, and add paragraph 7 of this Article in accordance with the paragraph 2 of Article 12 of the Regulations.

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the chairman to act within the authority set forth in Article III before reporting to the board of directors for approval retrospectively. I. Necessity and rationality of the

endorsement. II. Creditability and risk assessment of the

endorsement targets. III. Impact upon FET operation risk, financial


assessed for the collateral. The subsidiaries of the Company of voting shares are held 90% directly or indirectly by the Company, based on Item 2 of Article 2 of the procedure, shall provide endorsements and/or guarantees to another party only after resolved by the board of directors of the Company, except the endorsements and/or guarantees are made between the subsidiaries of the Company of voting shares are held 100% directly or indirectly by the Company. Where FET renders endorsement in line of business needs, the endorsement amount shall be assessed to stay commensurate with the amount of business transaction. The term “amount of business transaction” as set forth herein denotes the amount of actual purchases, sales or trading with the endorsement target concluded in the preceding year. Where it is necessary that the endorsement exceeds the maximum limit set forth in the preceding article and it lives up to the prerequisites set forth in these Procedures, a decision shall be resolved by the board of directors and a majority of the directors shall jointly guarantee for the risk which may be incurred by the excess and these Procedures shall be amended and be acknowledged by the shareholders’ meeting retrospectively. In the event that the target of Making Endorsements and Guarantees does not comply

authority set forth in Article III before reporting to the board of directors for approval retrospectively. I. Necessity and rationality of the endorsement. II. Creditability and risk assessment of the

endorsement targets. III. Impact upon FET operation risk, financial


assessed for the collateral. The subsidiaries of the Company of voting shares are held 90% directly or indirectly by the Company, based on Item 2 of Article 2 of the procedure, shall provide endorsements and/or guarantees to another party only after resolved by the board of directors of the Company, except the endorsements and/or guarantees are made between the subsidiaries of the Company of voting shares are held 100% directly or indirectly by the Company. Where FET renders endorsement in line of business needs, the endorsement amount shall be assessed to stay commensurate with the amount of business transaction. The term “amount of business transaction” as set forth herein denotes the amount of actual purchases, sales or trading with the endorsement target concluded in the preceding year. Where it is necessary that the endorsement exceeds the maximum limit set forth in the preceding article and it lives up to the prerequisites set forth in these Procedures, a decision shall be resolved by the board of directors and a majority of the directors shall jointly guarantee for the risk which may be incurred by the excess and these Procedures shall be amended and be acknowledged by the shareholders’ meeting retrospectively. In the event that the target of Making Endorsements and Guarantees does not comply with the Regulations or procedure or amount of the loan so granted exceeds the limit, a plan of corrective action shall be established and submitted

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with the Regulations or procedure or amount of the loan so granted exceeds the limit, a plan of corrective action shall be established and submitted to the supervisors and shall also finish improvement by the schedule planned. The Company and its subsidiaries shall pay attention to the finance, business and related credit of the endorsed or guaranteed subsidiary of which net worth is lower than half of its paid-in-capital. If aforementioned company has provided collaterals, the Company and its subsidiaries shall pay attention to the changes in the value of its collateral. The Company and its subsidiaries shall terminate the endorsements and/or guarantees or take the appropriate action when the collaterals have material adverse changes.

to the supervisors and shall also finish improvement by the schedule planned. The Company and its subsidiaries shall pay attention to the finance, business and related credit of the endorsed or guaranteed subsidiary of which net worth is lower than half of its paid-in-capital. If aforementioned company has provided collaterals, the Company and its subsidiaries shall pay attention to the changes in the value of its collateral. The Company and its subsidiaries shall terminate the endorsements and/or guarantees or take the appropriate action when the collaterals have material adverse changes. In the case of a subsidiary with shares having no par value or a par value other than NT$10, for the paid-in capital in the calculation under the preceding paragraph, the sum of the share capital plus paid-in capital in excess of par shall be substituted.

Article 6 The Company chop should be entrusted to the custody of designated keeper(s). While the Company provides a guarantee for a foreign company, the Guarantee letter produced by the Company shall be signed by a representative authorized by the Board of Directors.

The dedicated chop for endorsements/guarantees shall be kept in the custody of a designated person and may be used to seal or issue negotiable instruments only as the Company’s procedures. The preceding article of the designated person shall, after being resolved in the board of directors, the same shall be required in case of amendment. While the Company provides a guarantee for a foreign company, the Guarantee letter produced by the Company shall be signed by a representative authorized by the Board of Directors.

To Consider the business needs, amend paragraphs 1 and 2 of this Article.

Article 7 The FET endorsement shall be established on grounds of the “endorsement application” filled out by the endorsement Company. A record book shall be established to enter all details of the endorsement targets, amounts, the dates when the board of directors resolves or the chairman enforces, dates of endorsement, prudent assessments under Article IV, Paragraph I, all details of the endorsement matters, name(s) of the endorsement business concern(s), results of risk assessment, amounts of endorsement, contents of collateral obtained and terms and conditions as

The FET endorsement shall be established on grounds of the “endorsement application” filled out by the endorsement Company. A record book shall be established to enter all details of the endorsement targets, amounts, the dates when the board of directors resolves or the chairman enforces, dates of endorsement, prudent assessments under Article IV, Paragraph I, all details of the endorsement matters, name(s) of the endorsement business concern(s), results of risk assessment, amounts of endorsement, contents of collateral obtained and terms and conditions as


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well as dates to release endorsement. FET’s Audit Division shall audit these Procedures and the enforcement on a quarterly basis minimum and shall work out records in writing and further keep the supervisors informed in writing immediately upon a critical offense noticed.

well as dates to release endorsement. The Company’s Internal Audit Department shall audit these Procedures and the enforcement on a quarterly basis minimum and shall work out records in writing and further keep the supervisors informed in writing immediately upon a critical offense noticed.

Article 8 FET shall, not later than the 10th of every month, put into public announcement the endorsement balance rendered by FET and its subsidiary(ies) in the preceding month. Where the FET endorsement balance lives up to any of the following, FET shall further declares through public announcement within two days from occurrence of the facts: I. FET and its subsidiary(ies) where the total

endorsement balance exceeds 50% of the net worth shown on FET’s latest financial statements.

II. FET and its subsidiary(ies) where endorsement balance rendered to any single business concern exceeds 20% of the net worth shown on FET’s latest financial statements.

III. FET and its subsidiary(ies) where endorsement balance rendered to any single business concern exceeds NT$10 million and the total of the endorsement, long-term investment and loan exceeds 30% of the net worth shown on FET’s latest financial statements.

IV. FET and its subsidiary(ies) where the newly conducting amount exceeds NT$30 million and the balance exceeds 5% of the net worth shown on FET’s latest financial statements.

Where a subsidiary is not in public offering in the Republic of China, the declaration through public announcement for such subsidiary, as required under the aforementioned fourth paragraphs, shall be handled by FET. The term “declaration through public

FET shall, not later than the 10th of every month, put into public announcement the endorsement balance rendered by FET and its subsidiary(ies) in the preceding month. Where the FET endorsement balance lives up to any of the following, FET shall further declares through public announcement within two days from occurrence of the facts: I. FET and its subsidiary(ies) where the total

endorsement balance exceeds 50% of the Latest Net Worth of the Company.

II. FET and its subsidiary(ies) where endorsement balance rendered to any single business concern exceeds 20% of the Latest Net Worth of the Company.

III. FET and its subsidiary(ies) where endorsement balance rendered to any single business concern exceeds NT$10 million and the total of the endorsement, long-term investment and loan exceeds 30% of the Latest Net Worth of the Company.

IV. FET and its subsidiary(ies) where the newly conducting amount exceeds NT$30 million and the balance exceeds 5% of the Latest Net Worth of the Company.

Where a subsidiary is not in public offering in the Republic of China, the declaration through public announcement for such subsidiary, as required under the aforementioned fourth paragraphs, shall be handled by FET. The term “declaration through public announcement” as set forth herein denotes input into the information declaration website established by the Financial Supervisory

1. In order to consistent of the procedure, and to clarify the definition, the public company has adopted the IFRSs don’t list “Long Investment”, in accordance with the paragraph 1 of Article 25 of the Regulations and amend paragraph 2 of the Article.

2. Financial Supervisory Commission, Executive Yuan has restructured Financial Supervisory Commission, R.O.C. from July, 1. 2012. Amendment of wording paragraph 4 of the Article.

3. According to the paragraph 2 of the Article 7 of the Regulations, it is proposed to amend the definition of “Date of occurrence”, of the paragraph 5 of the Article. The initial paragraph 5 shall be changed to paragraph 6.

4. Public companies adopting International Financial Reporting Standard or the domestic Statement of Financial Accounting Standard shall comply with relevant rules for the preparation of financial statements by securities issuers or for recognition of contingent loss for appropriate disclosure in the financial statement if guarantee through endorsement has been undertaken, and amendment to 6

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announcement” as set forth herein denotes input into the information declaration website established by the Financial Supervisory Commission, Executive Yuan. FET shall, pursuant to Financial & Accounting Rule Gazette #IX, assess or recognize the appropriate the contingent loss in the endorsement and shall disclose the endorsement information appropriately in the financial statements and shall further provide data concerned to the auditing CPA for auditing procedures as necessary.

Commission, R.O.C. “Date of occurrence” in these Regulations means the date of contract signing, date of payment, dates of boards of directors resolutions, or other date that can confirm the counterparty and monetary amount of the transaction, whichever date is earlier. FET shall, evaluate or record the contingent loss for endorsements/guarantees, and shall adequately disclose information on endorsements/guarantees in its financial reports and provide certified public accountants with relevant information for implementation of necessary audit procedures.

of this Article shall be made pursuant to Article 26 of the standard.

Article 9 A subsidiary of the Company shall, if desirous to endorse or provide guarantee to another, duly enact the Endorsement Procedures in accordance with the Guiding Rules and propose to Finance & Shared Services Division of the Company. Finance & Shared Services Division shall propose the list of the subsidiary for the Board of Directors’ ratification. The Company’s subsidiary(ies) shall conduct according to their own procedures. The Company’s subsidiary(ies) as public offering companies in the Republic of China shall conduct declaration through public announcements individually. The Company ’s subsidiary(ies) shall submit detailed statements of endorsement and guarantees of the preceding month to the Company for assembling not later than the 5th day of every month. Each subsidiary of the Company shall review whether its respective applying procedures for making endorsements and guarantees are in compliance with the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies.” The Company’s auditor shall reexamine the check report for such matters made by each subsidiary of the Company.

A subsidiary of the Company shall, if desirous to endorse or provide guarantee to another, duly enact the Endorsement Procedures in accordance with the Guiding Rules and propose to Finance & Shared Services Division of the Company. Finance & Shared Services Division shall propose the list of the subsidiary for the Board of Directors’ ratification. The Company’s subsidiary(ies) shall conduct according to their own procedures. The Company’s subsidiary(ies) as public offering companies in the Republic of China shall conduct declaration through public announcements individually. The Company ’s subsidiary(ies) shall submit detailed statements of endorsement and guarantees of the preceding month to the Company for assembling not later than the 5th day of every month. Each subsidiary of the Company shall review whether its respective applying procedures for making endorsements and guarantees are in compliance with the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies.” The Company’s auditor shall reexamine the check report for such matters made by each subsidiary of the Company.


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Status of Directors & Supervisors’ shareholding on April 15, 2013 The list of the Sixth Term Board of Directors of Far Eastone Telecommunications Co., Ltd.

Title Name Shares %

Chairman Douglas Hsu, Representative of Yuan Ding Construction Company 4,163,500 0.13

Independence Director & Managing Director

Lawrence Juen-Yee LAU -- --

Independence Director Kurt Roland Hellström -- -- Managing Director Jan Nilsson, Representative of Yuang Ding Investment Co., Ltd.

Champion Lee, Representative of Yuang Ding Investment Co., Ltd. Toon Lim, Representative of Yuang Ding Investment Co., Ltd.

1,066,657,614 32.73

Johnny Shih, Representative of Yuan Ding Construction Company 4,163,500 0.13 Peter Hsu, Representative of Ding Yuan Investment Co., Ltd. 919,653 0.03

Director

Michiya Shinagawa, Representative of U-Ming Marine Transport Co., Ltd. 331,000 0.01 Total shares owned by all Directors 1,072,071,767 32.90

The total legal registered shares owned by all Directors 78,204,019 2.40 Independence Supervisor Chen-en Ko -- --

Ei Hong, Representative of Far Eastern International Leasing Corp. 26,650,908 0.82 Supervisor

C. K. Ong, Representative of Asia investment Corp. 986,303 0.03 Total shares owned by all Supervisors 27,637,211 0.85

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

Bonues to Employees, Directors and Supervisors Year 2012 retained earnings distribution has been approved by the 5th meeting of the sixth-term Board of Directors on April 26, 2013. The information regarding bonues to employees, Directors and supervisors are as underneath: (1) It is proposed to distribute NT$190,798,349 for employee bonus and NT$95,399,174 for Directors and supervisors remuneration. (2) As the employee bonus and remuneration of Directors and supervisors are different from recognized estimated amount, the difference, reasons, and

measures should be disclosed: Not applicable. Impact of Stock Dividend Distribution on Business Performance, EPS and Return on Investment The Company has approved totally cash NT$3.5 per share ,including the retained earnings at NT$2.928 per share, and from the capital surplus-Additional Paid-in Capital-Share Issuance in Excess of Par Value at NT$0.572 per share, no stock dividend. Impact of Stock Dividend Distribution on Business Performance, EPS and Return on Investment: Not applicable.

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ARTICLES

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REGULATIONS FOR THE BOARD OF DIRECTORS MEETING Approved by Board of Directors Meeting on 2013/4/26

Article 1 These Regulations governing the Company’s board of directors meeting shall comply with these Rules unless otherwise provided for in laws or the Company’s Articles of Incorporation.

Article 2 The board of directors shall call a meeting at least quarterly. The notices to the meeting shall, bearing subjects of the meeting, be served to all directors and supervisors seven days in advance. The meeting may be held at anytime in case of an emergency. The meeting notice provided in preceding paragraph could be issued by email or fax.

Article 3 The board of directors meeting shall be called and chaired by the chairman, provided that the first board of directors meeting of every session shall be called and chaired by the director who won most ballots in the election; if there are two or more directors so entitled to call the meeting, they shall choose one person by and from among themselves to do so.

Article 4 In case the Chairman of the board of directors is on leave or absent or can not exercise his power and authority for any cause, the Vice Chairman shall act on his behalf. If there is no vice Chairman or in case of absence or unavailability of the Vice Chairman as well, the Chairman of the board of directors shall designate one of the managing directors. If there is no managing director, the Chairman of the board of directors shall designate one director. In the absence of such a designation, the managing directors or the directors shall elect from among themselves an acting Chairman of the board of directors.

Article 5 F&SS division shall prepare agenda items for board of directors meetings and provide sufficient pre-meeting materials, to be sent together with the notice of the meeting. A director of the opinion that the pre-meeting materials provided are insufficient in content may request F&SS division to supplement the materials. If a director is of the opinion that materials concerning any proposal are insufficient in content, the deliberation of such proposal may be postponed by a resolution of the board of directors.

Article 5-1 Agenda items for regular board of directors meetings shall include at least the following: 1. Matters to be reported: (1) Minutes of the last meeting and actions arising. (2) Reporting on important financial and business matters.(including the first, second, and third quarters financial report) (3) Reporting on internal audit activities. (4) Other important matters to be reported. 2. Matters to be ratified 3. Matters to be discussed: (1)Items discussed and continued from the last meeting.

(2)Items for discussion at this meeting. 4. Extempore motions.

Article 5-2 The company shall submit the following items for discussion by the board of directors: 1. Corporate business plan. 2. Annual and semi-annual financial reports.

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3. Adoption or amendment of an internal control system pursuant to Article 14-1 of the Act. 4. Adoption or amendment, pursuant to Article 36-1 of the Act, of handling procedures for financial or operational actions of material significance,

such as acquisition or disposal of assets, derivatives trading, extension of monetary loans to others, and endorsements or guarantees for others. 5. The offering, issuance, or private placement of any equity-type securities. 6. The appointment or discharge of a financial, accounting, or internal audit officer. 7. A donation to a related party or a major donation to a non-related party provided that a public-interest donation of disaster relief for a major

natural disaster may be submitted to the following board of directors meeting for ratification. 8. Any matter required by Article 14-3 of the Act or any other law, regulation, or bylaw to be approved by resolution at a shareholders' meeting or

a meeting of the board of directors, or any such significant matter as may be prescribed by the competent authority. The term "related party" in subparagraph 7 of the preceding paragraph means a related party as defined in the Regulations Governing the Preparation of Financial Reports by Securities Issuers. The term "major donation to a non-related party" means any individual donation, or cumulative donations within a 1-year period to a single recipient, at an amount of NTD100 million or more, or at an amount equal to or greater than 1 percent of net operating revenue or 5 percent of paid-in capital as stated in the CPA-attested financial report for the most recent year. The term "within a 1-year period" in the preceding paragraph means a period of 1 year calculated retroactively from the date on which the current board of directors meeting is convened. Amounts already submitted to and passed by a resolution of the board are exempted from inclusion in the calculation. With respect to a matter required by Article 14-3 of the Act to be resoluted by board of directors, each independent director shall attend the meeting in person, or give a proxy to an independent director. If an independent director objects to or expresses reservations about the matter, it shall be recorded in the board meeting minutes; an independent director intending to express objection or reservations but unable to attend the meeting in person shall, unless there is some legitimate reason to do otherwise, issue a written opinion in advance, which shall be recorded in the meeting minutes. All matters set out in preceding paragraph shall be specified in the notice of the reasons for calling a board of directors meeting; none of them may be raised by an extempore motion except in the case of an emergency or legitimate reason.

Article 5-3 Except the matters which shall be discussed by the board of directors under paragraph 1 of the preceding article, with respect to the level and content of delegation by the board of directors in accordance with laws and regulations or the company's articles of incorporation, shall be concrete and specific.

Article 6 Upon a board of directors meeting, the sign-in book shall be prepared for the attending directors, and all data concerned shall be prepared available to the attending directors for their reference.

Article 7 All directors shall attend a board of directors meeting in person. A director who is unavailable to attend the meeting in person may authorize another director to attend as a proxy on his/her behalf. A director who attends the meeting through a video meeting shall be deemed present in person.

Article 8 A director who authorizes another director to attend a board of directors meeting on his/her behalf shall duly issue the power of attorney for each meeting, specifying the scope of the authorized powers. A director who acts as a proxy may represent only one other director.

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Article 9 The Chairman may, in line with the needs of the contents of the meeting, appoint personnel of relevant departments or subsidiaries concerned to attend the meeting as an observer to help directors better understand the Company’s situations and, in turn, come to decisions as appropriate. When necessary, the company may also invite certificated public accounts, attorneys, or other professionals to attend as nonvoting participants and to make explanatory statements, provided that they shall leave the meeting when deliberation or voting takes place. The supervisors may attend the board of directors meeting to speak their opinions but shall have no voting power there.

Article 9-1 When the time of a meeting has arrived and one-half all board directors are not present, the meeting chairman may announce postponement of the meeting time, provided that only two postponements may be made. If the quorum is still not met after two such delays, the chairman shall re-call the meeting following the procedures provided in Article 2. The term "all board directors " as used in the preceding paragraph shall be calculated as the number of directors then in office.

Article 9-2 The proceedings of a board meeting shall be conducted in a predetermined order of agenda items as stated in the meeting notice. However, the order may be changed with the approval of a majority of directors present at the meeting. The meeting Chairman may not declare the meeting closed unless with the approval of a majority of directors present at the meeting. If at any time during the proceeding of a board of directors meeting the directors sitting at the meeting are not more than half of the directors present at the meeting, then upon motion by the directors sitting at the meeting, the Chairman shall declare a suspension of meeting, in which case the preceding article shall apply mutatis mutandis.

Article 10 Where the chairman considers it the right timing to come to the final decision through voting, the chairman may announce discontinuation of discussion and refer the issue into the final decision through voting.

Article 11 All directors shall strictly discipline themselves and if any director or a juristic person represented by a director is an interested party with respect to any agenda item, the director shall state the important aspects of the interested party relationship at the respective meeting. When the relationship is likely to prejudice the interests of the Company, the director may not participate in discussion or voting on that agenda item, and further, shall enter recusal during discussion and voting on that item and may not act as another director's proxy to exercise voting rights on that matter. In the event that a director violates the principle of withdrawal and joins the voting, his/her voting power is null and void.

Article 12 Each director holds one voting power unit. Unless otherwise provided for in the Company Law, the decisions in the board of directors meeting shall be resolved by a majority vote in the meeting that is attended by a majority of directors.

Article 13 Where no objection is heard by all attending directors in response to the inquiry by the Chairman in the meeting, the issue is deemed having been resolved. The Chairman shall choose either one method underneath when encountering preceding voting except for proposals with no objection heard by all attending directors; but if there is objection, the method of voting shall be determined by a majority vote: 1. Voting by raising hands or by ballot system. 2. Voting by announcing names. 3. Voting by ballots.

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Aforementioned attending directors are not included those who should not vote according to the paragraph 1 of Article 11. Article 14 In the event that a same issue is accompanied with an amendment or an alternative, the chairman shall determine the order of voting in line with

the original issue. In the event that any one among them is officially resolved, other issues are deemed vetoed and call for no voting process. Article 15 Where necessary, the chairman shall appoint personnel to count the balloting. All attending directors shall monitor the balloting. Article 16 Minutes shall be prepared of the discussions at board of directors meetings; the meeting minutes shall record the following:

1. Session (or year), time, and place of meeting. 2. Name of the meeting chair. 3. Attendance of directors at the meeting, specifying the names and number of members present, excused, and absent. 4. Names and titles of those attending the meeting as nonvoting participants. 5. Name of minutes taker. 6. Matters reported on. 7. Agenda items: the method of resolution and the result for each proposal; a summary of the comments made by directors, supervisors, experts,

or other persons; the name of any director that is an interested party as referred to in paragraph 1 of the article 11, an explanation of the important aspects of the relationship of interest, the reasons why the director was required or not required to enter recusal, and the status of their recusal; opinions expressing objections or reservations at the meeting that were included in records or stated in writing; and any opinion issued in writing by an independent director under Article 5-2, paragraph 2.

8. Extraordinary motions: the name of the mover; the method of resolution and the result for each motion; a summary of the comments made by directors, supervisors, experts, or other persons; the name of any director that is an interested party as referred to in paragraph 1 of the preceding article, an explanation of the important aspects of the relationship of interest, the reasons why the director was required or not required to enter recusal, and the status of their recusal; opinions expressing objections or reservations at the meeting that were included in records or stated in writing.

9. Other matters required to be recorded. Any matter about which an independent director expresses an objection or reservation that has been included in records or stated in writing shall be stated in the meeting minutes and within two days of the meeting be published on an information reporting website designated by the competent authority. The attendance book forms a part of the minutes for each board of directors meeting. Minutes of the board of directors meeting shall be duly signed or sealed by the Chairman and the secretary, served to all directors, supervisors and observers within twenty days after the meeting, and shall be archived as major files of the Company throughout the period that the Company exists. The production and distribution of the meeting minutes may be done in electronic form.

Article 17 A company shall record on audio or video tape the entire proceedings of a board of directors meeting, and preserve the recordings for at least five years, in electronic form or otherwise. If before the end of the preservation period referred to in the preceding paragraph a lawsuit arises with respect to a resolution of a board of

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directors meeting, the relevant audio or video recordings shall be preserved for a further period until the end of the lawsuit. Where a board of directors meeting is held via video-conference, the video recordings of the meeting form a part of the meeting minutes and shall be preserved throughout the period that the Company exists. Where a decision resolved in the board of directors meeting proves to be against the law or the Company’s Articles of Incorporation, and thus injures the Company, the director who objects the decision, as proven by the minutes or written declaration, is free of the responsibility of indemnity.

Article 18 Any matters inadequately provided for herein shall be subject to Company Law, the Company’s Articles of Incorporation and other laws and regulations concerned.

Article 19 These Regulations and amendment hereof shall come into enforcement after being resolved in the board of directors, and any future amendments to these Rules.

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Articles of Incorporation of Far Eastone Telecommunication Co., Ltd

Approved by Annual Shareholder’s Meeting on 2012/6/13 Chapter I. General Provisions

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Article 17 The Managing Directors shall be selected from among the directors. He Directors shall form a Board of Directors. The chairman or the vice chairman of the board shall be elected from the managing directors. He Managing Directors shall form a Board of Managing Directors. During

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the recess of the board of directors, the managing directors shall regularly exercise the power and authority of the board of directors accordingly.

Article 18 A meeting of the Board of Directors shall be called by its Chairman, provided that the initial meeting of each term of the Board of Directors shall be called by the Director who receives the number of ballots representing the largest of votes. Directors may attend the meeting in person or by proxy. A Director cannot represent more than one absent Director for a meeting of the board of Directors. A Director residing in a foreign country may appoint, in writing, a Director residing within the Republic of China as his alternate to attend the meetings of the Board of Directors regularly provided, however the appointment shall be registered with competent government authority. In case a meeting of the Board of Directors is proceeded via visual communication network, then the Directors taking part in such a visual communication meeting shall be deemed to have attended the meeting in person. The notice for the Board Meeting shall state the reasons and agenda of the meeting, and shall be sent to each Directors and Supervisors seven (7) days prior to the meeting, provided, however, that in case of emergency the Meeting may be convened at any time. The meeting notice provided in preceding paragraph could be issued by email or fax.

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

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

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

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

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

Article 22 The Company has one President, one General Auditor and several Executives Vice Presidents and Vice Presidents. All managerial officers

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shall be duly appointed, discharged by the Board of Directors through a majority vote of the attending Directors who represent a majority of the total Directors.

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

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

at the closing date / end of each business year. Article 25 At the end of each business year, the Board of Directors shall prepare the following reports, and forward them on to the Supervisor(s)

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

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

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

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

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

First amended on Jun. 6, 1997; Second amended on Aug. 20, 1998;

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Third amended on Apr. 28, 1999; Fourth amended on Apr. 21, 2000; Fifth amended on Dec. 28, 2000; Sixth amended on May. 15, 2001; Seventh amended on Jun. 25, 2002; Eighth amended on May 23, 2003; Ninth amended on Feb. 18, 2004; Tenth amended on Jun. 30,2004; Eleventh amended on May 20, 2005; Twelfth amended on May 26, 2006. Thirteenth amended on June 12, 2007. Fourteenth amended on June 15, 2010. Fifteenth amended on June 9, 2011. Sixteenth amended on June 13, 2012.

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Directors and Supervisors Election Guidelines Approved by Annual Shareholder’s Meeting on 2007/6/12

Article 1 These guidelines shall apply to the election of directors and supervisors of the Corporation, unless the laws and Company’s articles of incorporation other relevant regulations shall apply thereto.

Article 2 The election of the Corporation’s directors/supervisors shall be on the basis of accumulation of votes. Ballot of the eligible voter shall be assigned with code of certificate of present voter. The ballots to be prepared by Board of directors shall indicate serial number of present voter and the number of votes he represented.

Article 3 For the seats of the Company’s Directors and Supervisors, the Company’s independent directors, non-independent directors and supervisors shall be elected in the same election, but the ballots shall be calculated separately and respectively. And the ones winning more ballots shall be elected to fill up the seats separately. In the event two or more candidates win the same ballots beyond the seat quota, the ones who win the same ballots shall determine the seat by drawing the lots. If anyone of them is absent, the president shall represent the absent voter to draw the lot. Independent directors shall be elected by candidate nomination system in accordance with Article 192-1 of Company Law and regarding the qualification, independent condition and other matters, “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies” and other related laws and regulations should be followed.

Article 4 In the beginning of the election, the chairman shall designate two canvassers and two tally clerks to carry out relevant missions. The canvasser shall be limited to shareholder of the Corporation.

Article 5 The canvasser shall perform the following missions: I. Prior to casting of votes, open the vote box to the participants and have a seal attached onto the cover of box. II. Maintain good order for vote casting and prevent any negligence or irregularities in voting. III. Upon completion of voting, remove the seal from box cover, take out the ballots and count the number of ballots. IV. Check to see if there are any invalid votes and have the valid votes hand over to tally clerk. V. Conduct supervision over the votes recorded by tally clerk and votes won by the eligible directors/supervisors.

Article 6 Where a candidate is a natural person, the voters shall expressly enter the candidate’s account name and shareholder account number on the ballots if he is a shareholder, and shall expressly enter the candidate’s name and ID document number on the ballots if he is not a shareholder. Where a candidate is a government or a corporate shareholder, other than the shareholder account number, the voters may enter as well the name of the government or a corporate shareholder and name of the representative. In case of several representatives, the names of representatives shall be entered.

Article 7 A ballot is null and void if: I. Not in the ballot form as required under the Regulations; II. Bearing two or more candidates on a same ballot; III. Remaining blank bearing no entries from the vote; IV. Bearing entries not satisfactory to Article VI or bearing other irrelevant wording; V. Bearing vague, illegible wording; VI. Bearing a candidate who proves nonconforming in qualifications.

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Article 8 Provide two ballot boxes each for the directors and supervisors, which shall be opened for ballot count. Article 9 After all ballots are cast into ballot box, the canvasser shall join the tally clerk in opening of ballot box. Article 10 The canvasser shall supervise over the count of ballots of tally clerk. Article 11 In case of any doubts about the ballots, the canvasser shall be requested to conduct a verification to see the validity of the ballots. The invalid

ballots shall be segregated from the valid ones and be certified as invalid ballots by the canvasser after having counted number of ballots and the voting rights.

Article 12 According to results of the votes, the canvasser shall conduct a check on the valid ballots and invalid ballots and produce a record indicating the number of valid ballots and voting rights, the invalid ballots and the voting rights and then the chairman shall announce the names of the elected Directors and Supervisors.

Article 13 Board of Directors shall issue notice of the elected directors and supervisors. Article 14 These guidelines shall become effective upon having been approved by meeting of shareholders and the same provision shall also apply to

revision thereto.

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Procedure for Capital Lending to others Approved by Annual Shareholder’s Meeting on 2010/6/15

Article 1 （Target Borrowers） The target Borrowers of the Company’s fund (Hereinafter referred to as the Borrowers) are limited to the following: (1) Companies in transaction with the Company (Hereinafter referred to as Transaction Counterparts); (2) Companies being in need of short-term financing (Hereinafter referred to as Short-term Finances) The term “short-term” as set forth in the two preceding paragraphs means one year, or where the company's operating cycle exceeds one year, one operating cycle.

Article 2. (Limitation of the total loans and individual targets) The total funds loaned to the Borrowers under Paragraph I shall not exceed 50% of the Company’s net worth as last reviewed or checked by CPA (Hereinafter referred to as the Latest Net Worth). The loan to an individual Transaction Counterpart shall not exceed the amount of business transaction between both parties. The term “amount of business transaction” as set forth herein denotes the amount of actual purchase, sale amounts in the year preceding execution of the loan contract, or the transaction amount anticipated for the year. The total loan to a Short-term Finances shall not exceed 15% of the Latest Net Worth. The loan to an individual Short-term Finance shall not exceed 10% of the Latest Net Worth. The restriction of this Article shall not apply to inter-company loans of funds between foreign companies in which the public company holds, directly or indirectly, 100% of the voting shares.

Article 3. (Causes and necessity of loaning capital to others) FET may lend funds as required for short-term financing only in the following events: (I) Where the following targets to which FET may grant endorsement are in need of short-term financing: 1. A firm of which the Company owns directly and indirectly more than 50 percent voting right shares. 2. A firm of which owns directly and indirectly more than 50 percent of the Company voting right shares. (II) Other cases where FET’s board of directors agrees to lend funds. The terms “subsidiary” and “parent company” as set forth herein shall be duly defined in accordance with Financial & Accounting Rule Gazettes #V and #VII promulgated by the Accounting Research & Development Foundation, Republic of China.

Article 4 （Loaning capital to others and handling procedures） Where FET grants a loan, the borrower shall first provide the financial papers as required and apply to FET’s Finance & Shared Services Division for financing limit. The Finance & Shared Services Division shall conduct prudent assessment to confirm that it lives up to the requirements set forth in the “Guiding Rules for Loan & Endorsement by Public Offering Companies” (hereinafter referred to as the Guiding Rules), these Procedures and the following. The assessment results shall be submitted to the Board of Directors for a decision beforehand. The Board of Directors shall not authorize any others to make such decision. I. Necessity and rationality of the endorsement.

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II. Creditability and risk assessment of the borrower. III. Impact upon FET operation risk, financial standing and shareholders’ equity. IV. Whether collateral is required and the value assessed for the collateral. The inter-company loans of funds between the Company and its subsidiaries or among its subsidiaries shall be resolved by the Board of Directors of the Company , as well as to authorize the Chairman to grant one borrower to drawdown by tranche within specific approved ceiling amount and one year. As for the aforementioned ceiling amount, except those regulated in accordance with the Item 4 of Article 2, the authorized loan amount to a single party by the Company or together with its subsidiaries, shall not exceed 10% of the latest net worth. of the Company. After financing limit is determined, the borrower shall apply to the Finance & Administration Division with “Application for Appropriation”. The loan shall not be disbursed until approved by FET’s responsible person or the board of directors authorized representative. For the enforcement of the loan, the Finance & Administration Division shall report to the board of directors for information. The borrower shall, upon applying for disbursement of the fund, provide standby instrument of equivalent amount or other collateral or guarantor(s) satisfactory to FET as collateral of the loan. Where FET has set independent directors, and while the board of directors are discussing these procedures or granting loans to others, the opinions of the independent directors shall be taken into adequate account. Their opinions, pros and cons as well as the reasons of cons shall be entered into the minutes of the board of directors meeting. In the event that the target of Loaning capital does not comply with the Regulations or Precedure or amount of the loan so granted exceeds the limit, a plan of corrective action shall be established and submitted to the supervisors and shall also finish improvement by the schedule planned.

Article 5 （Period of loan and interest calculation） The Funds loaned by the Company shall not exceed one year or the operating cycle of Short-term Finances if the Company’s operating cycle exceeds one year. The restriction on period of loan in preceding paragraph shall not apply to inter-company loans of funds between foreign companies in which the public company holds, directly or indirectly, 100% of the voting shares. Interest on loans extended by the Corporation shall be calculated at the floating interest rate, and shall be adjusted from time to time in accordance with the Corporation’s cost of capital. Any adjustment of interest shall first be proposed by the F&SS to the president of the Corporation for his approval and then, upon such approval, be implemented by the Treasury. Interest shall be settled on a monthly basis.

Article 6 （Subsequent control measures and procedures to deal with the overdue credits） For loans granted, the Company shall establish a record book to bear all details of the borrowers, amounts, dates while the board of directors resolves the decisions, dates while the loans are granted and prudent assessment conducted pursuant to Article IV, Paragraph I. The Company’s Internal Audit Department shall audit these Procedures and the enforcement on a quarterly basis minimum and shall work out records in writing and further keep the supervisors informed in writing immediately upon a critical offense noticed. The borrowers and guarantors’ financial, business and credit standing shall be closely watched after the loan is granted. In case of collateral provided, the collateral shall be closely watched regarding a change in its value. In case of a significant change, report shall be made to the general manager forthwith with due actions taken as instructed.

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The borrower shall repay the principal and interest forthwith when due unless the borrower applied for and obtained the Board’s prior approval for renewal. In case of violation, the Company may dispose the provided collateral or claim on the guarantor(s) for repayment without a notice.

Article 7 (Penalty upon a breach) FET shall faithfully comply with the Guiding Rules and these Procedures for loans granted to others. A manager or person in charge of endorsement who violates these requirements and thus leads to critical damage to FET or in a critical offense shall be subject to penalty in accordance with Award & Penalty Policy and Human Resources Policy concerned.

Article 8. (Procedures for declaration through public announcement) FET shall, not later than the 10th of every month, put into public announcement the balance of the loans granted by FET and its subsidiary(ies) in the preceding month. Where the balance of the loans lives up to any of the following, FET shall further declares through public announcement within two days from occurrence of the facts: I. FET and its subsidiary(ies) where the total balance of the loans granted exceeds 20% of the net worth shown on FET’s latest financial

statements . II. FET and its subsidiary(ies) where here balance of the loans granted to any single business concern exceeds 10% of the net worth shown on

FET’s latest financial statements. III. FET and its subsidiary(ies) where the newly conducting amount exceeds NT$10 million and the balance exceeds 2% of the net worth shown

on FET’s latest financial statements. Where a subsidiary is not in public offering in the Republic of China, the declaration through public announcement for such subsidiary as required under the aforementioned paragraphs 3 shall be handled by FET. The term “declaration through public announcement” as set forth herein denotes input into the information declaration website established by the Financial Supervisory Commission, Executive Yuan. FET shall, pursuant to generally accepted accounting principles, assess the loans and provide adequate allowance for bad debts and shall disclose the relevant information appropriately in the financial statements and shall further provide data concerned to the auditing CPA for auditing procedures as necessary.

Article 9 (Procedures to control subsidiary(ies) regarding loans granted to others) A subsidiary of the Company shall, if desirous to grant loans to others, duly enact the Loaning capital to others Procedures in accordance with the Guiding Rules and propose to Finance & Shared Services Division of the Company. Finance & Shared Services Division shall propose the list of the subsidiary for the Board of Directors’ ratification. The Company’s subsidiary(ies) shall conduct according to their own procedures. The Company’s subsidiary(ies) as public offering companies in the Republic of China shall conduct declaration through public announcements individually. The Company’s subsidiary(ies) shall submit detailed statements of loans granted in the preceding month to the Company for assembling not later than the 5th day of every month. Each subsidiary of the Company shall review whether its applying procedures for loaning capital to others are in compliance with the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies”. The Company’s auditor shall reexamine the check

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reports for such matters made by each subsidiary of the Company. Article 10 (Validity and update)

These Procedures shall, after being resolved in the board of directors, be submitted to the supervisors and to the shareholders’ meeting for consent. In case of objection by a director as supported by the minutes or written declaration, FET shall submit the objection to the supervisors and shareholders’ meeting for discussion. The same shall be required in case of amendment.

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Procedure for Making Endorsements and Guarantees Approved by Annual Shareholder’s Meeting on 2010/6/15

Article 1 When providing endorsements or guarantees, the Corporation shall comply with this “Procedure for Making Endorsements and Guarantees” (hereinafter referred to as the “Procedure”). The endorsements or guarantees mentioned herein refer to the following: 1. Endorsements or guarantees made for financing needs, including:

(a) Endorsements made for discounting bills; (b) Endorsements or guarantees made for the financing needs of other companies; and (c) Guarantees in the form of negotiable instruments issued and provided to non-financial institutions for the Corporation’s financing needs;

2. Customs Duty Endorsements or Guarantees, which denote endorsements or guarantees concerning customs duty matters provided for the Corporation itself or other companies; and

3. Other endorsements or guarantees, which denote any other endorsements or guarantees that do not fall into the above two categories of this article.

The Corporation shall also comply with this Procedure when pledging or mortgaging its chattels or real estate as security for loans to other companies.

Article 2 The targets of FET endorsement services shall be limited to the following: IV. A firm in business transaction with FET. V. A firm of which the Company owns directly and indirectly more than 50 percent voting right shares. VI. A firm which owns directly and indirectly more than 50 percent of the Company voting right shares. The subsidiaries of the Company which the Company owns directly and indirectly more than 90% voting right shares can provide endorsements and/or guarantees to each other but the total amount of endorsements and/or guarantees shall not exceed 10% of its net worth of the Company as stated in its latest financial report. However the endorsements and/or guarantees between the subsidiaries of the Company which the Company owns directly and indirectly 100% are not limited within the preceding regulated scope. In the event that FET is in inter-endorsement guarantee in line with the needs to undertake projects with fellow firms or joint builders or that the whole investing shareholders endorse an investee pro rata to the investment ratio, FET may render endorsement free of the restrictions set forth in the preceding paragraph. The investment in the preceding paragraph implies capital contribution directly owned by the Company or indirectly owned through a 100% shareholding subsidiary. The terms “subsidiary” and “parent company” as set forth herein shall be duly defined in accordance with Financial & Accounting Rule Gazettes #V and #VII promulgated by the Accounting Research & Development Foundation, Republic of China.

Article 3 The total amount of endorsements and/or guarantees made by the Corporation shall not exceed 100% of its net worth as stated in its latest financial report. The total amount of endorsements and/or guarantees provided for any single enterprise shall not exceed 50% of its net worth as stated in its latest financial report. The total amount of endorsements and/or guarantees made by the Corporation and its subsidiaries shall not exceed 100% of its net worth as stated in

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its latest financial report. The total amount of endorsements and/or guarantees provided for any single enterprise shall not exceed 50% of its net worth as stated in its latest financial report. The Company shall explain its necessity and rationality in the Shareholders’ Meeting, if the ceiling of the total amount of endorsements and/or guarantees made by the Corporation and its subsidiaries have exceeded 50% of its net worth as stated in its latest financial report.

Article 4 Before FET renders endorsement or provide guarantee to another party, the Finance Administration Division shall conduct prudent assessment to confirm that it lives up to the requirements set forth in the “Guiding Rules for Loan & Endorsement by Public Offering Companies” (hereinafter referred to as the Guiding Rules), these Procedures and the following. The assessment results shall be submitted to the board of directors for a decision beforehand. To meet time efficiency, nevertheless, the board of directors may authorize the chairman to act within the authority set forth in Article III before reporting to the board of directors for approval retrospectively. V. Necessity and rationality of the endorsement. VI. Creditability and risk assessment of the endorsement targets. VII. Impact upon FET operation risk, financial standing and shareholders’ equity. VIII. Whether collateral is required and the value assessed for the collateral. The subsidiaries of the Company of voting shares are held 90% directly or indirectly by the Company, based on Item 2 of Article 2 of the procedure, shall provide endorsements and/or guarantees to another party only after resolved by the board of directors of the Company, except the endorsements and/or guarantees are made between the subsidiaries of the Company of voting shares are held 100% directly or indirectly by the Company. Where FET renders endorsement in line of business needs, the endorsement amount shall be assessed to stay commensurate with the amount of business transaction. The term “amount of business transaction” as set forth herein denotes the amount of actual purchases, sales or trading with the endorsement target concluded in the preceding year. Where it is necessary that the endorsement exceeds the maximum limit set forth in the preceding article and it lives up to the prerequisites set forth in these Procedures, a decision shall be resolved by the board of directors and a majority of the directors shall jointly guarantee for the risk which may be incurred by the excess and these Procedures shall be amended and be acknowledged by the shareholders’ meeting retrospectively. In the event that the target of Making Endorsements and Guarantees does not comply with the Regulations or procedure or amount of the loan so granted exceeds the limit, a plan of corrective action shall be established and submitted to the supervisors and shall also finish improvement by the schedule planned. The Company and its subsidiaries shall pay attention to the finance, business and related credit of the endorsed or guaranteed subsidiary of which net worth is lower than half of its paid-in-capital. If aforementioned company has provided collaterals, the Company and its subsidiaries shall pay attention to the changes in the value of its collateral. The Company and its subsidiaries shall terminate the endorsements and/or guarantees or take the appropriate action when the collaterals have material adverse changes.

Article 5 The chops to be used for making endorsement and guarantees should be the company chop registered at Minister of Economics Affairs. Article 6 The Company chop should be entrusted to the custody of designated keeper(s).

While the Company provides a guarantee for a foreign company, the Guarantee letter produced by the Company shall be signed by a representative authorized by the Board of Directors.

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Article 7 The FET endorsement shall be established on grounds of the “endorsement application” filled out by the endorsement Company. A record book shall be established to enter all details of the endorsement targets, amounts, the dates when the board of directors resolves or the chairman enforces, dates of endorsement, prudent assessments under Article IV, Paragraph I, all details of the endorsement matters, name(s) of the endorsement business concern(s), results of risk assessment, amounts of endorsement, contents of collateral obtained and terms and conditions as well as dates to release endorsement. FET’s Audit Division shall audit these Procedures and the enforcement on a quarterly basis minimum and shall work out records in writing and further keep the supervisors informed in writing immediately upon a critical offense noticed.

Article 8 FET shall, not later than the 10th of every month, put into public announcement the endorsement balance rendered by FET and its subsidiary(ies) in the preceding month. Where the FET endorsement balance lives up to any of the following, FET shall further declares through public announcement within two days from occurrence of the facts: V. FET and its subsidiary(ies) where the total endorsement balance exceeds 50% of the net worth shown on FET’s latest financial statements. VI. FET and its subsidiary(ies) where endorsement balance rendered to any single business concern exceeds 20% of the net worth shown on FET’s

latest financial statements, VII. FET and its subsidiary(ies) where endorsement balance rendered to any single business concern exceeds NT$10 million and the total of the

endorsement, long-term investment and loan exceeds 30% of the net worth shown on FET’s latest financial statements. VIII. FET and its subsidiary(ies) where the newly conducting amount exceeds

NT$30 million and the balance exceeds 5% of the net worth shown on FET’s latest financial statements. Where a subsidiary is not in public offering in the Republic of China, the declaration through public announcement for such subsidiary, as required under the aforementioned fourth paragraphs, shall be handled by FET. The term “declaration through public announcement” as set forth herein denotes input into the information declaration website established by the Financial Supervisory Commission, Executive Yuan. FET shall, pursuant to Financial & Accounting Rule Gazette #IX, assess or recognize the appropriate the contingent loss in the endorsement and shall disclose the endorsement information appropriately in the financial statements and shall further provide data concerned to the auditing CPA for auditing procedures as necessary.

Article 9 A subsidiary of the Company shall, if desirous to endorse or provide guarantee to another, duly enact the Endorsement Procedures in accordance with the Guiding Rules and propose to Finance & Shared Services Division of the Company. Finance & Shared Services Division shall propose the list of the subsidiary for the Board of Directors’ ratification. The Company’s subsidiary(ies) shall conduct according to their own procedures. The Company’s subsidiary(ies) as public offering companies in the Republic of China shall conduct declaration through public announcements individually. The Company ’s subsidiary(ies) shall submit detailed statements of endorsement and guarantees of the preceding month to the Company for assembling not later than the 5th day of every month. Each subsidiary of the Company shall review whether its respective applying procedures for making endorsements and guarantees are in compliance with the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies.” The Company’s auditor shall

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reexamine the check report for such matters made by each subsidiary of the Company. Article 10 FET shall faithfully comply with the Guiding Rules and these Procedures for external endorsement. A manager or person in charge of endorsement

who violates these requirements and thus leads to critical damage to FET or in a critical offense shall be subject to penalty in accordance with Award & Penalty Policy and Human Resources Policy concerned.

Article 11 These Procedures shall, after being resolved in the board of directors, be submitted to the supervisors and to the shareholders’ meeting for consent. In case of objection by a director as supported by the minutes or written declaration, FET shall submit the objection to the supervisors and shareholders’ meeting for discussion. The same shall be required in case of amendment.

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Regulations Governing Shareholders’ Meetings Approved by Annual Shareholder’s Meeting on 2012/6/13

Article 1 These Regulations governing all affairs of the Company’s shareholders’ meetings. Article 2 The Company’s shareholders’ meeting shall be held at a place where the Company is headquartered or a place facilitating and appropriate to

shareholders (or proxies thereof), and shall be held not earlier than 9:00 the morning or later than 3:00 in the afternoon. The attending shareholders (or proxies thereof) shall wear attendance certificates, surrender sign-in cards instead of sign-in on book. When calling a shareholders’ meeting, the Company shall adopt electronic transmission as one of the methods for exercising voting power, and such exercise shall be specified in the meeting notice. Shareholders who exercise their voting power via electronic transmission shall be deemed as attending the shareholders' meeting in person, but they shall be deemed as having waived their exercise of voting power with respect to any temporary motions and amendments/alternates to original motions, proposed at the shareholders’ meeting. The attendance at a shareholders' meeting shall be counted based on the quantity of shares. The number of shares shall be counted based on the certificate of attendance as furnished plus the quantity of shares for which the voting power is exercised via electronic transmission. The Company may appoint the retained Attorneys-at-Law, CPAs or other people concerned to attend a shareholders’ meeting as an observer. The shareholders’ meeting staff shall wear identity certificates or sashes. A shareholders’ meeting shall be chaired by the chairman if it is called by the chairman. In absence of the Chairman or his being unable to exercise his functions, the Vice Chairman shall act in his place. In absence of a Vice Chairman or while the Vice Chairman is unable to exercise his functions, the Chairman shall appoint a Director to act in the place otherwise a Director shall be elected from among themselves to act in the place. Where the Board of Directors meeting is called by a person beyond the Board of Directors, the meeting shall be chaired by the convener. Where there are two or more qualified conveners, one shall be elected from among themselves to chair the meeting. The Company shall record in sound or videotape the shareholders’ meeting throughout the process and shall keep the videotape or record for a minimum of one year.

Article 3 The chairman may call to order to the meeting where a shareholders’ meeting is attended by shareholders (or proxies thereof) representing a majority of the total issued shares. The chairman may announce extension of the time if the attendance is below the specified quorum within the specified time limit. The chairman may announce two extensions in maximum and the total period of extension shall not exceed an hour. In the event the total attendance is still below the specified quorum with two extensions but represents up to one-third of the total issued shares through shareholders (or proxies thereof), decision may be resolved on ordinary issues through a quasi-resolution by a majority vote of the attending shareholders (or proxies thereof). In the event the total number of shares represented by shareholders (or proxies thereof) is up to the specified quorum after the quasi-resolution is made, the chairman shall bring the quasi-resolution to the shareholders’ meeting for acknowledgement retroactively.

Article 4 The shareholders’ meeting’s agenda shall be determined by the board of directors if the meeting is called by the board of directors. The meeting shall be handled according to the established agenda, which shall not be changed unless resolved by the shareholders’ meeting. The preceding provision is applicable mutatis mutandis to a shareholders’ meeting called by another person entitled to call the shareholders’ meeting beyond the board of directors The chairman shall not announce adjournment of the meeting until the issues set forth in the two preceding paragraphs (including occasional

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motion) unless duly resolved. Where the Chairman announces adjournment against the aforementioned provision at a shareholders’ meeting, one may be elected by a majority vote of the attending shareholders to chair and continue the meeting. After the meeting is adjourned as resolved, shareholders shall not elect a new chairman to continue the shareholders’ meeting at the same location or a location elsewhere.

Article 5 A shareholder (or proxy) shall submit floor requisition, bearing attendance certificate code, shareholder account number and subjects so that the chairman will appoint the floor order before speaking in floor. A shareholder (or proxy) who does not speak up shall be deemed having not spoken up even he has submitted the floor requisition. Where the contents actually spoken are found differing from the entry in the floor requisition, only the contents of the verified speech shall govern.

Article 6 A proposal shall be posed in writing. Except the proposals enumerated on the agenda, a proposal posed by a shareholder to amend the provided proposals, alternatives or other proposals by means of occasional motion shall be seconded by other shareholders (proxies). This same is applicable to a proposal to change agenda, to adjourn. The total number represented by the proposing shareholder and seconding shareholders shall be up to 100,000 shares minimum.

Article 7 Explanation to a proposal shall not exceed five minutes. Speech as an inquiry or in reply shall not exceed three minutes per person and may be extended for another three minuets if permitted by chairman. The chairman may stop a shareholder (or proxy) from speaking if he speaks beyond the specified time limit, specified issues or permitted times. When a shareholder (or proxy) speaks in floor, other shareholders (proxies) shall not interrupt unless agreed upon by the chairman and the speaking shareholder (or proxy) otherwise the chairman shall stop the interruption. Article 15 shall apply if such shareholder (or proxy) objects the chairman in stopping the interruption.

Article 8 On the same issue, each shareholder shall not speak more than twice. Where a corporation is authorized to attend a shareholders’ meeting, such corporation shall appoint only one proxy to attend the meeting. Where a corporation appoints more than two proxies to the meeting, only one proxy may speak in floor.

Article 9 After an attending shareholder (or proxy) speaks, the chairman may reply himself or by appointing another person. Amidst discussion of a proposal, the chairman may, in due time, announce conclusion of the discussion or announce discontinuation of the discussion as necessary.

Article 10 On a proposal the discussion process of which is announced concluded or discontinued, the chairman shall announce voting pursuant to the number of shares represented. The staff to monitor resolution and to tally votes shall be appointed by the chairman and shall be subject to consent by attending shareholders (proxies). The staff to monitor voting shall only be shareholders.

Article 11 Unless otherwise provided for in law or Articles of Incorporation, decisions in the shareholders' meeting shall be resolved by a majority vote of the attending shareholders (proxies).

Where any shareholder who exercises voting power via electronic transmission does not object to the motion, and neither does the other present shareholders upon the chairperson’s inquiry, the motion shall be deemed as ratified as validly as if voted by ballot.

Where any shareholder objects to the motion, a vote by ballot shall be applied, and the chairperson may decide to vote on a case by case basis, or

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adopt a package vote or split vote against various motions (including the motion for election), and count votes separately.

In case of an amendment or alternative to a same proposal, the chairman will determine the order of voting. Where one among them is resolved, all others shall be deemed vetoed and call for no more voting process. The results of voting shall be reported on-the-spot and entered into the minutes.

Article 12 During the process of the meeting, the chairman may announce an intermission as the actual situation may justify. Article 13 In case of an air-raid alarm during process of a meeting, the meeting shall be discontinued forthwith for evacuation. The meeting may be resumed an

hour after the “all-clear” announcement. Article 14 The chairman may command security guards or discipline personnel to help maintain the order of the meeting. Such security guards or discipline

personnel shall wear armbands to identify their capacity while on duty to maintain the order. Article 15 The shareholders (proxies) shall accept instructions by the chairman, the security guards or discipline personnel in maintaining the order. The

chairman, the security guards or discipline personnel may expel those who interfere with the shareholders’ meeting. Article 16 Any matters insufficiently provided for herein shall be subject to the Company Law, Securities Trading Law and other laws concerned. Article 17 These Regulations and amendment hereof shall come into enforcement after binge resolved in the shareholders’ meeting.

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