Transcend Information, Inc.
2019 ANNUAL REGULAR SHAREHOLDERS’ MEETING MINUTES(This English version is a translation based on the original Chinese version.
Where any discrepancy arises between the two versions, the Chinese version shall prevail.)
Time: 9:00 a.m., June 12, 2019
Place: Transcend Information, Inc. (No. 70, XingZhong Rd., NeiHu Dist., Taipei 114, Taiwan)
Total share represented by shareholders present in person or by proxy are 337,026,475 shares(including 330,340,701 shares casted electronically), which is 78.23% of the total 430,761,675
outstanding shares.
Attended Directors:
Shu, Chung-Wan, the chairman of Board of Directors, Wang Jen-Ming, and Li Tseng-Ho
Attended Independent Directors:
Wang, Yi-Hsin, the convener of Audit Committee
Attendees:
Lin Chun-Yao, the independent auditors of the Pricewaterhouse Coopers
Li, Dan, the lawyer of World Patent & Trademark Office
Chairman: Shu, Chung-Wan

Recorder: Chen, Hung-Jen

Call meeting to order: The aggregate shareholding of the shareholders present in person or by proxy
constituted a quorum. The Chairman called the meeting to order.
Chairman's Remarks: (Omitted)
I. Report Items(1) To report the business of 2018.
Please refer to Attachment I.
(2) Audit Committee’s review report.
Please refer to Attachment II.
(3) To report 2018 employees’ profit sharing bonus and directors’ compensation.
Explanatory Notes:
A. The remuneration of 2018 profit to employees would be NT$ 26,623,857 (distributed in cash);and that to directors would be NT$ 3,411,000.

~1~B. The estimated remuneration to employees is NT$ 27,572,285 and the different amount should
be NT$ 948,428; the estimated remuneration to directors is NT$ 3,934,539 and the different
amount should be NT$ 523,539.
C. The difference will be recognized as expense in the statement of income in 2019.
(4) The status of guarantees provided by the Company as of the end of 2018.
Explanatory Notes:
The Company provided a guarantee for Transcend Japan Inc. amounting to JPY 2,000,000
thousand, and the actual amount of guarantee draw down is JPY 0 by the end of 2018. Pursuant to
the Company’s “Procedures for Endorsement and Guarantee”, the limit of guarantee was NT$
7,992,121 thousand (approximate JPY 28,700,000 thousand).
II. Proposed Items(1) Adoption of 2018 Business Report and Financial Statements.
(Proposed by the Board of Directors)
Explanatory Notes:
A. The parent company only financial statement and consolidated financial statement of theCompany for the year of 2018 have been audited by independent auditors, Mr. Chun-Yao, Linand Mr. Chien-Hung Chou, of the Pricewaterhouse Coopers.
B. The Business Report, Independent Auditors’ Report and Financial Statements are hereby also
attached. (Please refer to Attachment I, III, and IV)
C. It is submitted for ratification.
Resolution:

Shares represented at the time of voting:(including votes casted electronically

330,474,964
330,340,701 )Voting Results*
Votes in favor:
299,600,729 votes (299,599,729 votes)
Votes against:
45,349 votes (45,349 votes)
Votes invalid:
0 votes (0 votes)
Abstention and no votes: 30,828,886 votes (30,695,623 votes)*including votes casted electronically (number in brackets)
RESOLVED, the above proposal was approved as proposed.

~2~% of the total
represented share present
90.65%
0.01%
0.00%
9.32%

(2) Adoption of the proposal for distribution of 2018 earnings.
(Proposed by the Board of Directors)
Explanatory Notes:
A. For appropriations of 2018 earnings, the Company will distribute cash dividend of NT$
1,895,351,370 (NT$4.40 per share) from the available retained earnings of 2018 after setting
aside legal reserve and special reserve.
B. Please refer to next page for the chart of 2018 earnings distribution.
C. Cash dividends will be distributed proportionately according to shareholders’ sharesownership registered in the Common Stockholders’ Roster as of the date of record. The
dividend will be rounded down to NT$1 (any amount under NT$1 will be discarded), and theremaining fraction will be incorporated into other revenues of the Company.
D. To avoid the change in the total amount of common shares outstanding resulting from buybackof company shares, or transfer or cancellation of treasury stock, it is proposed that the
Chairman of the Board be authorized to adjust the cash to be distributed to each commonshare.
E. It is submitted for ratification.
Resolution:

Shares represented at the time of voting:(including votes casted electronically

330,474,964
330,340,701 )Voting Results*
Votes in favor:
299,604,729 votes (299,603,729 votes)
Votes against:
47,349 votes (47,349 votes)
Votes invalid:
0 votes (0 votes)
Abstention and no votes: 30,822,886 votes (30,689,623 votes)*including votes casted electronically (number in brackets)
RESOLVED, the above proposal was approved as proposed.

~3~% of the total
represented share present
90.65%
0.01%
0.00%
9.32%

Transcend Information, Inc.
The Chart of 2018 Earnings Distribution
For the year ended December 31, 2018
(Expressed in New Taiwan dollar)
Item

AmountUnappropriated retained earnings at beginning

4,698,093,242

Less: Adjustment on unappropriated earnings for 2018

(1,092,026)

Adjusted unappropriated retained earnings

4,697,001,216

Add: Net income for 2018

2,081,995,196

Less: Legal reserve (10%)(208,199,520)

Less: Special reserve(14,323,973)

Retained earnings available for appropriation as ofDecember 31, 2018

6,556,472,919

Less: Items of distribution Cash dividend to shareholders
Unappropriated retained earnings at end

Chairman：Shu, Chung-Wan

Remarks(1,895,351,370)

Cash dividend(NT$4.40 per share)

4,661,121,549

General Manager：Shu, Chung-Cheng~4~

Accounting Supervisor：Chen, Hung-Jen

III. Discussion Items(1) To approve cash distribution from capital surplus.
(Proposed by the Board of Directors)
Explanatory Notes:
A. To comply with Article 241 of the Company Act.
B. The capital surplus derived from the issuance of new shares at a premium totaling NT$
258,457,005 will be distributed in cash of NT$0.60 per share.
C. Cash distribution from capital surplus will be distributed proportionately according toshareholders’ shares ownership registered in the Common Stockholders’ Roster as of the dateof record. The cash distribution will be rounded down to NT$1 (any amount under NT$1 will
be discarded), and the remaining fraction will be incorporated into other revenues of theCompany.
D. To avoid the change in the total amount of common shares outstanding resulting from buybackof company shares, or transfer or cancellation of treasury stock, it is proposed that the
Chairman of the Board be authorized to adjust the cash to be distributed to each commonshare.
E. It is submitted for approval.
Resolution:

Shares represented at the time of voting:(including votes casted electronically

330,474,964
330,340,701 )Voting Results*
Votes in favor:
296,905,613 votes (296,904,613 votes)
Votes against:
44,350 votes (44,350 votes)
Votes invalid:
0 votes (0 votes)
Abstention and no votes: 33,525,001 votes (33,391,738 votes)*including votes casted electronically (number in brackets)% of the total
represented share present
89.84%
0.01%
0.00%
10.14%RESOLVED, the above proposal was approved as proposed.
(2) To approve the amendments to “Articles of Incorporation”.
(Proposed by the Board of Directors)
Explanatory Notes:
A. Due to the amendment of “Company Act”, and to fulfill the requirement of practical operation,
the Company hereby proposes amendments to “Articles of Incorporation”.
B. Please refer to Attachment V: the comparison table for the “Articles of Incorporation”.

~5~

C. It is submitted for approval.
Resolution:

Shares represented at the time of voting:(including votes casted electronically

330,474,964
330,340,701 )Voting Results*
Votes in favor:
296,882,746 votes (296,881,746 votes)
Votes against:
52,202 votes (52,202 votes)
Votes invalid:
0 votes (0 votes)
Abstention and no votes: 33,540,016 votes (33,406,753 votes)*including votes casted electronically (number in brackets)% of the total
represented share present
89.83%
0.01%
0.00%
10.14%RESOLVED, the above proposal was approved as proposed.
(3) To approve the amendments to “Procedures for Election of Director”.
(Proposed by the Board of Directors)
Explanatory Notes:
A. Due to the amendment of “Company Act”, the Company hereby proposes amendments to“Procedures for Election of Director”.
B. Please refer to Attachment VI: the comparison table for the “Procedures for Election of
Director”
C. It is submitted for approval.
Resolution:

Shares represented at the time of voting:(including votes casted electronically

330,474,964
330,340,701 )Voting Results*
Votes in favor:
296,882,757 votes (296,881,757 votes)
Votes against:
52,191 votes (52,191 votes)
Votes invalid:
0 votes (0 votes)
Abstention and no votes: 33,540,016 votes (33,406,753 votes)*including votes casted electronically (number in brackets)
RESOLVED, the above proposal was approved as proposed.

~6~% of the total
represented share present
89.83%
0.01%
0.00%
10.14%

(4) To approve the amendments to “Procedures for Acquisition and Disposal of Assets”.
(Proposed by the Board of Directors)
Explanatory Notes:
A. Due to the amendment of “Regulations Governing the Acquisition and Disposal of Assets by
Public Companies” made on November 26, 2018 by Financial Supervisory Commission, andto fulfill the requirement of practical operation, the Company hereby proposes amendments to“Procedures for Acquisition and Disposal of Assets”.
B. Please refer to Attachment VII: the comparison table for the “Procedures for Acquisition and
Disposal of Assets”.
C. It is submitted for approval.
Resolution:

Shares represented at the time of voting:(including votes casted electronically

330,474,964
330,340,701 )Voting Results*
Votes in favor:
296,882,589 votes (296,881,589 votes)
Votes against:
53,359 votes (53,359 votes)
Votes invalid:
0 votes (0 votes)
Abstention and no votes: 33,539,016 votes (33,405,753 votes)*including votes casted electronically (number in brackets)% of the total
represented share present
89.83%
0.01%
0.00%
10.14%RESOLVED, the above proposal was approved as proposed.

IV. Other Business and Special Motion
There is no other special motion, the meeting was adjourned.

V. Meeting Adjourned

Note: This document is extracted from the meeting; the details are subject to the audio and video recording.

~7~

Attachment I

TRANSCEND INFORMATION INC.
BUSINESS REPORTIn 2018, the memory market was divergent in the first half of the year. The prices of 3D NAND
flash kept on dropping as the 3D NAND technology was mature with an improving yield rate, leading
to an oversupply. On the other hand, DRAM price kept on the rise due to tight supply, reaching a
climax in Q2. In the second half of the year, however, as key DRAM manufacturers began to haveproductive output and the end-user market demand decreased, supply gradually exceeded demand,
leading to the price reversal in Q3. As a consequence, the prices of DRAM and NAND flash dropped
in the second half of the year, and it was expected to keep on dropping in 2019. Transcend, notengaging in the price war, focuses on maximizing its brand value by deepening the embedded productmarket and expanding the strategic one. Meanwhile, Transcend endeavors to improve product quality
and continues to increase customers’ satisfaction by enhancing value-added services and increasing
product differentiation in the market. Hereby, we would like to thank our valued shareholders, clients,
suppliers and employees for your continued supports for Transcend.
Transcend’s consolidated revenue totaled NT$17.6 billion in 2018. Consolidated gross profit
totaled NT$3.53 billion. Gross profit rate is 20.0 percent. Operating income totaled 2.14 billion.
Income before tax totaled 2.65 billion. Net income totaled 2.08 billion. EPS is NT$4.83 calculated at
the weighted average of outstanding share capital amounting to 4.3 billion.
With excellent brand management, Transcend has received many prestigious awards by its
exceptional product design and brand image. For the twelfth year in a row, Transcend has been ranked
as Interbrand’s Top 20 Best Taiwan Global Brands. Transcend also won Taiwan Excellence Awards
for the fifteenth consecutive year and Japan’s Good Design Award for the fourth year, demonstratingthat Transcend’s outstanding product design is internationally recognized.
While keeping a consistent, stable business strategy in a quickly changing market, Transcend also
actively seeks any potential chances. With our professional R&D expertise, we continue developing
innovative products. We have successfully expanded into embedded market in recent years. For the
first time, we adapted 3D TLC NAND flash into our embedded solutions, enhancing transfer speeds,
performance, and reliability for use in various embedded applications. For the consumer market thisyear, we expanded our strategic products and successfully enlarged our dashcam and body camera
series. In addition, Apple Solutions has been the pillar of the strategic product lines. We also released arange of innovative upgrade solutions this year for Apple users looking for greater performance and~8~reliability. Moreover, we aim to enhance our customers’ user experience by satisfying their various
needs.
Transcend focuses not only on sales performance, but also on corporate governance. We aim todisclose adequate information in order to provide comprehensive corporate information to ourshareholders and investors. For cooperate social responsibility, we have sponsored sport activities inhigh school and universities, including the High School Basketball League (HBL), University
Basketball Association (UBA) and the Black Panther High School Baseball Tournament. We
continued to execute the long-term Baseball Mentoring Program aimed at underprivileged school
baseball teams for the fourth year, expecting to serve as a platform for young promising athlete tofulfill their dreams. As a result, we received “Sports Activists Award” from the Sports Affairs Council
this year as our continuing contribution to promote sports in Taiwan.
Looking to 2019, demand for memory market is expected to remain on a downward trend due toinventory pressure, decreased end-user demand, US-China Trade War, and unsure market trend. The
estimated demand for the first half of year 2019 is relatively low; prices of DRAM and NAND flash
will keep on dropping. In the face of price fluctuation, stable supply and effective inventory
management are vital. In the past year, Transcend has worked on building an efficient inventory
management system and reviewing overall inventory level. To enhance production capacity andproduct quality, we have implemented new manufacturing processes, optimized manufacturingsystems, upgraded equipment, and expanded production capability. Transcend will continue tomaintain a healthy inventory level, reinforce purchasing and sales management, keep long-term,
collaborative relationship with our partners, integrate internal and external resources, and elevateoverall corporate efficiency.

Here again we sincerely thank all of our shareholders for your continued support and for theconfidence that you have placed in us. We will make every effort to keep Transcend operational
excellence and look forward to sharing our progress with you.

Chairman：Shu, Chung-Wan
General Manager：Shu, Chung-Cheng
Accounting Supervisor：Chen, Hung-Jen~9~

Attachment II

Audit Report of Audit Committee

The Board of Directors has prepared the Company’s 2018 Business Report, Financial Statements andEarnings Distribution Proposal. Transcend Corporation’s Financial Statements have been audited andcertified by Mr. Chun-Yao, Lin and Mr. Chien-Hung Chou, the CPA of the Pricewaterhouse Coopers.
The Business Report, Financial Statements and Earnings Distribution Proposal have been reviewed
and considered to be complied with relevant rules by the undersigned, the audit committee ofTranscend Corporation. Pursuant to Article 14-4 of the Securities and Exchange Act and Article 219 of
the Company Act, we hereby submit this report.

The audit Committee of Transcend Corporation

Chairman of the audit Committee: Wang, Yi-ShinMarch 07, 2019~10~

Attachment III

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of Transcend Information, Inc.

OpinionWe have audited the accompanying balance sheets of Transcend Information, Inc. (the“Company”) as
at December 31, 2018 and 2017, and the related statements of comprehensive income, of changes inequity and of cash flows for the years then ended, and notes to the financial statements, including asummary of significant accounting policies.
In our opinion, the accompanying financial statements present fairly, in all material respects, thefinancial position of the Company as at December 31, 2018 and 2017, and its financial performanceand its cash flows for the years then ended in accordance with the “Regulations Governing the
Preparations of Financial Reports by Securities Issuers”.

Basis for opinion
We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of
Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the
Republic of China (ROC GAAS). Our responsibilities under those standards are further described in
the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are
independent of the Company in accordance with the Code of Professional Ethics for Certified Public
Accountants in the Republic of China (the “Code”), and we have fulfilled our other ethicalresponsibilities in accordance with the Code. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.

~11~Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial statements of the current period. These matters were addressed in the context
of our audit of the financial statements as a whole and, in forming our opinion thereon, we do notprovide a separate opinion on these matters.
Key audit matters for the Company’s financial statements of the current period are stated as follows:
Evaluation of inventories
Description
Refer to Notes 4(12), 5(2) and 6(4) to the financial statements for the information on the Company’s
inventory accounting policy, estimates and assumptions and allowance for inventory evaluation losses.
The percentage of the Company’s inventories to total assets is material and the Company applies
judgements and estimates in determing the net realizable value of inventories at balance sheet date.
The Company mainly produces DRAM and flash memory. As these products have a short life cycle
and belong to a highly competitive industry, the market prices change frequently. Since the Company’s
inventories and the allowance for inventory valuation losses are material to the financial statements,
the evaluation of inventories has been identified as a key audit matter.

How our audit addressed the matter
We performed the following audit procedures in respect of the above key audit matter:
A. Obtained an understanding of the Company’s operations and industry. Assessed the reasonablenessof the policy and procedures to recognize allowance for inventory valuation losses.
B. Obtained an understanding of the Company’s inventory control procedures. Reviewed annual
inventory count plan and observed the annual physical count of inventory in order to assess theeffectiveness of internal controls over inventory.
C. Obtained relevant evaluation reports of inventory and tested the logic and accuracy of information
to assess the reasonableness of allowance for inventory valuation losses.

~12~Estimation of allowance for sales discountDescription
In consideration of business volume, the Company provides a variety of business incentives to specificcustomers or products, and based on that, the Company can estimate the allowance for sales discountmonthly. Refer to Note 4(23) and 6(3) to the financial statements for the information on the estimationof allowance for sales discount.
Since the contracts are numerous and the result could affect the net revenue in the financial statements,
the estimation of allowance for sales discount has been identified as a key audit matter.
How our audit addressed the matter
We performed the following audit procedures in respect of the above key audit matter:
A. Obtained an understanding of the Company’s operations, industry and the procedures to recognise
allowance for sales discount.
B. Obtained an understanding of the Company’s sales procedures and interviewed management toassess the appropriateness of sales allowance contracts and internal control over estimation ofallowance.
C. Obtained the evaluation list of allowance for sales discount, and tested material sales allowance
contracts and recalculated it to assess the reasonableness of allowance determined by theCompany.

Responsibilities of management and those charged with governance for the financial
statements
Management is responsible for the preparation and fair presentation of the financial statements inaccordance with the “Regulations Governing the Preparations of Financial Reports by Securities
Issuers”, and for such internal control as management determines is necessary to enable thepreparation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, management is responsible for assessing the Company’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless management either intends to liquidate the Company or
to cease operations, or has no realistic alternative but to do so.
Those charged with governance, including audit committee, are responsible for overseeing theCompany’s financial reporting process.

~13~

Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that anaudit conducted in accordance with ROC GAAS will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in theaggregate, they could reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.
As part of an audit in accordance with ROC GAAS, we exercise professional judgement and maintainprofessional skepticism throughout the audit. We also:
A. Identify and assess the risks of material misstatement of the financial statements, whether due tofraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of notdetecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the overrideof internal control.
B. Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the Company’s internal control.
C. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
D. Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Company’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’sreport to the related disclosures in the financial statements or, if such disclosures are inadequate, tomodify our opinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor’s report. However, future events or conditions may cause the Company to cease to continue
as a going concern.
E. Evaluate the overall presentation, structure and content of the financial statements, including thedisclosures, and whether the financial statements represent the underlying transactions and eventsin a manner that achieves fair presentation.
F. Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Company to express an opinion on the financial statements. We areresponsible for the direction, supervision and performance of the audit. We remain solely
responsible for our audit opinion.

~14~

We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships andother matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with those charged with governance, we determine those matters thatwere of most significance in the audit of the financial statements of the current period and are therefore
the key audit matters. We describe these matters in our auditor’s report unless law or regulationprecludes public disclosure about the matter or when, in extremely rare circumstances, we determinethat a matter should not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of such communication.

March 7, 2019----------------------------------------------------------------------------------------------------------------------------- -------------------The accompanying consolidated financial statements are not intended to present the financial position and results ofoperations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions otherthan the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of suchfinancial statements may differ from those generally accepted in countries and jurisdictions other than the Republic ofChina. Accordingly, the accompanying consolidated financial statements and report of independent accountants are notintended for use by those who are not informed about the accounting principles or auditing standards generally accepted in
the Republic of China, and their applications in practice.
As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability
for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from thetranslation.

~15~

TRANSCEND INFORMATION, INC
BALANCE SHEETS(Expressed in thousands of New Taiwan Dollars)
December 31, 2018
AMOUNT%

Assets

December 31, 2017
AMOUNT%

Current assets
Cash and cash equivalents$

1,052,350

59,084,731

active market - current
Notes receivable, net$

3,241,924

14

41

-

-

-

-

738,877

3

872

-

5,862

-

1,437,231

6

1,718,543

7

Accounts receivable - related parties, net

559,835

3

796,093

4

Other receivables

78,279-100,120-

Inventories, net

3,045,740

14

5,050,568

22

-

-

6,840,736

30

10,675

-

9,960

-

15,269,713

69

18,502,683

80

163,155

1

-

-

-

-

68,874-

method2,374,787

11

2,427,143

11

Property, plant and equipment, net

1,712,699

8

1,724,494

7

Investment property, net

2,567,451

11

207,730

1

Deferred tax assets

73,670-120,018

1

Other non-current assets

50,895-

103,636-

6,942,657

31

4,651,895

20

22,212,370

100

23,154,578

100

Current financial assets at amortised cost,net
Investment in debt instrument without

Accounts receivable, net

Other current financial assets
Other current assets
Total Current Assets
Non-current assets
Non-current financial assets at fair value
through other comprehensive income
Available-for-sale financial assets non-current
Investments accounted for using equity

Total Non-current Assets
Total Assets$(Continued)

~16~

$

TRANSCEND INFORMATION, INC
BALANCE SHEETS(Expressed in thousands of New Taiwan Dollars)
December 31, 2018
AMOUNT%

Liabilities and Equity

December 31, 2017
AMOUNT%

Current liabilities
Accounts payable$

1,180,956

5

Accounts payable - related parties

461,306

Other payables

1,226,819

5

2

537,1292

234,866

1

292,582

1

Other payables - related parties

16,875

-

3,641

-

Current tax liabilities

129,8731

415,193

2

Other current liabilities

3,692

-

4,900

-

2,027,568

92,480,264

10Deferred tax liabilities

179,600

1

158,072

1

Other non-current liabilities

24,900-17,947-

204,500

1

176,01912,232,068

10

2,656,283

11

4,307,617

19

4,307,617

19

4,605,233

21

4,691,385

20

Legal reserve

4,302,782

19

4,037,210

17

Special reserve47,247-

145,6891

6,778,995

31

7,363,641

32

47,247)-

20,498,295

89

23,154,578

100

Total Current Liabilities$

Non-current liabilities

Total Non-current Liabilities
Total Liabilities
Equity attributable to owners of parent
Share capital
Common stock
Capital surplus
Capital surplus
Retained earnings

Unappropriated retained earnings
Other equity interest
Other equity interest(

61,572) (Total Equity

1) (19,980,302

90

22,212,370

100

Significant contingent liabilities andunrecognized contract commitments
Significant events after the balance sheet
date
Total Liabilities and Equity$$

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

~17~

TRANSCEND INFORMATION, INC.
STATEMENTS OF COMPREHENSIVE INCOME(Expressed in thousands of New Taiwan Dollars, except earnings per share)
Years ended December 31
2018
2017
Items
AMOUNT%AMOUNT
Operating Revenue
20,007,792$
16,809,530
100 $Operating Costs
15,301,168) ((13,975,063) (83) (Gross Profit
2,834,467
17
4,706,624
Unrealized gross profit on sales to(20,596)
48,746)
subsidiaries- (Realized gross profit on sales to94,548subsidiaries
48,746Gross Profit, net
2,862,617
17
4,752,426
Operating Expenses
Sales and marketing expenses(
373,788) (3) (446,113) (Administrative expenses(
188,972) (1) (179,009) (Research and development expenses(
158,518) (1) (169,238) (Impairment loss determined in accordancewith IFRS 9(
599)
Total operating expenses(
721,877) (5) (794,360) (Operating Profit
2,140,740
12
3,958,066
Non-operating Income and Expenses
Other income
195,823
1
152,323
Other gains and losses
347,9172 (
734,243) (Net gain from derecognizing financial
assets measured at amortised cost
16,691
Finance costs- (297)
Share of loss of associates and joint
ventures accounted for under equity
method(70,292)- (87,619) (Total non-operating income andexpenses
490,1393 (669,836) (Profit before Income Tax
2,630,879
15
3,288,230
Income tax expense(
548,884) (3) (632,513) (Profit for the Year$
2,081,995
12 $2,655,717
Other Comprehensive Income (Loss)
Components of other comprehensive
income (loss) that will not bereclassified to profit or loss
Gains (losses) on remeasurements ofdefined benefit plans($
1,632)- $2,402
Unrealized loss on financial assets at fairvalue through other comprehensive
income(6,047)
Share of other comprehensive income(loss) of associates and joint ventures
accounted for under equity method
2,164
- (
630)
Components of other comprehensive
income (loss) that will be reclassified to
profit or loss
Exchange differences on translation offoreign financial statements(
12,378)- (30,179)Unrealized gain on available-for-salefinancial assets
123,490
Income tax related to components of othercomprehensive income that will bereclassified to profit or loss
2,475
5,131
Other comprehensive (loss) income for theyear($
15,418)- $100,214
Total Comprehensive Income$
2,066,577
12 $2,755,931
Earnings Per Share
Basic earnings per share
Diluted earnings per share

$
$

4.83
4.83

$
$

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

~18~

%
100
76)
24
24
2)
1)
1)
4)
20
1
4)
1)
4)
16
3)
13

-

1
1

6.17
6.16

TRANSCEND INFORMATION, INC.
STATEMENTS OF CHANGES IN EQUITY(Expressed in thousands of New Taiwan dollars)
Equity attributable to owners of the parent
Retained Earnings

Capital ReservesYear ended December 31, 2017
Balance at January 1, 2017
Net income for the year
Other comprehensive income (loss)
Total comprehensive income
Appropriation and distribution of 2016
earnings
Legal reserve
Special reserve
Cash dividends
Cash payment from capital surplus
Balance at December 31, 2017
Year ended December 31, 2018
Balance at January 1, 2018
Effects of retrospective application andretrospective restatement
Balance after adjustments at January 1,
2018
Net income for the year
Other comprehensive income (loss)
Total comprehensive income
Appropriation and distribution of 2017
earnings
Legal reserve
Cash dividends
Reversal of special reserve
Cash payment from capital surplus
Net loss on disposal of financial assets
at fair value through othercomprehensive income
Balance at December 31, 2018

Common stock

Additional paid-in
capitalDonated assets
received

Net assets frommergerLegal reserve

Special reserve

Unappropriatedretained earnings

Other Equity Interest
Unrealized gain or
Exchangeloss on financial
differences on
assets at fair value Unrealized gain ortranslation ofthrough otherloss onforeign financial
comprehensive
available-for-salestatements
incomefinancial assets

$

$

$

$

$

$

21,691
-

$

($

(
(
(

4,307,617-$

4,307,617$

4,307,617$

4,759,841-($

107,690 )
4,652,151$

4,652,151

4,106
-

$

4,106

$

4,106

35,128-$35,128$35,1283,748,946-$

288,264
4,037,210$

123,998
145,689$

4,037,210$

145,689

7,595,294
2,655,717
1,772
2,657,489((

42,214 )25,048 )25,048 )$288,264 )
123,998 )2,476,880 )
7,363,641($

67,262 )$7,363,641($

67,262 )

-

-

-

-

-

-

30,0004,307,617-

4,652,151
-

4,106
-

35,128-4,037,210-

145,689-

7,393,641
2,081,995
532
2,082,527--

265,572-

98,442 )-((47,247($-(4,307,617$

86,152 )4,565,999

$

4,106

$

35,128$4,302,782

(

$

(
(
(

265,572 )2,498,418 )
98,442
31,625 )6,778,995

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

~19~

67,262 )9,903 )
9,903 )$

77,165 )($103,475 )
123,490
123,490$ 20,326,934
2,655,717
100,2142,755,931(
2,476,880 )(
107,690 )$ 20,498,295$ 20,498,295

$

-

$

20,015$-$20,015(9,985 )(

20,015 )(9,985 )
6,047 )
6,047 )

-

-

-

(
(

-

($

-

$

31,625
15,593$

Total equity

-

-

(

(
(

20,498,295
2,081,995
15,418 )2,066,577

2,498,418 )
86,152 )$ 19,980,302

TRANSCEND INFORMATION, INC.
STATEMENTS OF CASH FLOWS(Expressed in thousands of New Taiwan Dollars)

2018Years ended December 31
2017

CASH FLOWS FROM OPERATING ACTIVITIESProfit before tax
Adjustments
Adjustments to reconcile profit (loss)
Unrealized gross profit on sales to subsidiaries
Realized gross profit on sales to subsidiaries
Loss on disposal of investments
Share of loss of associates and joint ventures accounted for using equity
methodExpected credit loss/(Gain on reversal of bad debts)
Depreciation
Interest income
Interest expense
Dividend income
Gain on disposal of property, plant and equipment
Changes in operating assets and liabilities
Changes in operating assets
Notes and accounts receivable
Other receivables
Inventories
Other current assets
Changes in operating liabilities
Accounts payable
Other payables
Other payables - related parties
Other current liabilities
Other non-current liabilities
Cash inflow generated from operations
Dividends received
Interest received
Interest paid
Income tax paid
Net cash flows from operating activities$

2,630,879(

20,596
48,746 )-(((70,292599
133,897
173,118 )3,558 )
775 )(

521,961
25,4322,004,828
715 )

(
(

121,686 )
57,716 )13,234
1,208 )
5,321
5,019,517
3,558
169,527
763,853 )4,428,749(($

3,288,230
48,746
94,548 )106,075(

87,6199,874
120,657
143,570297
8,973
10,273

(
(
(
(

)
)
)
)

494,691
44,959231,642 )
2,520

(
(
(

508,583
43,008
3,317
734
855
3,146,519
8,973
139,725297
378,327
2,916,953

(

(
(

)
)
)

)
)

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of available-for-sale financial assets
Acquisition of financial assets at amortised cost
Proceeds from disposal of financial assets at amortised cost
Increase in other current financial assets
Decrease in other current financial assets
Acquisition of investment in debt instrument without active markets
Proceeds from disposal of investment in debt instrument without active
markets
Acquisition of financial assets at fair value through other comprehensive
incomeProceeds from disposal of financial assets at fair value through othercomprehensive income
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Acquisition of investment property
Decrease (increase) in other non-current financial assets
Net cash flows (used in) from investing activities

6,631,733 )
5,126,615-(

128,121
2,112,846 )
3,910,845
2,734,320 )(((

2,361,738

105,480 )
5,152
120,056 )
4,038
2,365,030 )
52,741
4,033,753 )(((

195,539 )16,482
25,417 )1,349,064((

CASH FLOWS FROM FINANCING ACTIVITIESCash dividends paid (including cash payment from capital surplus )Net cash flows used in financing activities
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

~20~

(
(
(
$

2,584,570 )2,584,570 )
2,189,574 )
3,241,924
1,052,350(($

2,584,570 )2,584,570 )
1,681,087
1,560,837
3,241,924

Attachment IV

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE
PWCR18000374
To the Board of Directors and Shareholders of Transcend Information, Inc.

OpinionWe have audited the accompanying consolidated balance sheets of Transcend Information, Inc. and its
subsidiaries (the “Group”) as at December 31, 2018 and 2017, and the related consolidated statementsof comprehensive income, of changes in equity and of cash flows for the years then ended, and notes
to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at December 31, 2018 and 2017, and its
consolidated financial performance and its consolidated cash flows for the years then ended inaccordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”
and the International Financial Reporting Standards, International Accounting Standards, IFRICInterpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion
We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of
Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the
Republic of China (ROC GAAS). Our responsibilities under those standards are further described in
the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of ourreport. We are independent of the Group in accordance with the Code of Professional Ethics for
Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our otherethical responsibilities in accordance with the Code. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.

~21~

Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the consolidated financial statements of the current period. These matters were addressedin the context of our audit of the consolidated financial statements as a whole and, in forming our
opinion thereon, we do not provide a separate opinion on these matters.
Key audit matters for the Group’s consolidated financial statements of the current period are stated asfollows:
Evaluation of inventories
Description
Refer to Notes 4(13), 5(2) and 6(5) to the consolidated financial statements for the information on theGroup’s inventory accounting policy, estimates and assumptions and allowance for inventory
evaluation losses.
The percentage of the Group’s inventories to total assets is material and the Group applies judgements
and estimates in determining the net realisable value of inventories at balance sheet date. The Group
mainly produces DRAM and flash memory. As these products have a short life cycle and belong to ahighly competitive industry, the market prices change frequently. Since the Group’s inventories and theallowance for inventory valuation losses are material to the financial statements, the evaluation of
inventories has been identified as a key audit matter.

How our audit addressed the matter
We performed the following audit procedures in respect of the above key audit matter:
A. Obtained an understanding of the Group’s operations and industry. Assessed the reasonableness ofthe policy and procedures to recognize allowance for inventory valuation losses.
B. Obtained an understanding of the Group’s inventory control procedures. Reviewed annual
inventory count plan and observed the annual physical count of inventory in order to assess theeffectiveness of internal controls over inventory.
C. Obtained relevant evaluation reports of inventory and tested the logic and accuracy of information
to assess the reasonableness of allowance for inventory valuation losses.

~22~Estimation of allowance for sales discountDescription
In consideration of business volume, the Group provides a variety of business incentives to specificcustomers or products, and based on that, the Group can estimate the allowance for sales discountmonthly. Refer to Notes 4(25) and 6(4) to the consolidated financial statements for the information on
the estimation of allowance for sales discount.
Since the contracts are numerous and the result could affect the net revenue in the consolidated
financial statements, the estimation of allowance for sales discount has been identified as a key audit
matter.

How our audit addressed the matter
We performed the following audit procedures in respect of the above key audit matter:
A. Obtained an understanding of the Group’s operations, industry and the procedures to recognize
allowance for sales discount.
B. Obtained an understanding of the Group’s sales procedures and interviewed management to assess
the appropriateness of sales allowance contracts and internal control over estimation of allowance.
C. Obtained the evaluation list of allowance for sales discount, and tested material sales allowance
contracts and recalculated it to assess the reasonableness of allowance determined by the Group.

Other matter –Parent company only financial reports
We have audited and expressed an unqualified opinion on the parent company only financial
statements of Transcend Information, Inc. as at and for the years ended December 31, 2018 and 2017.

Responsibilities of management and those charged with governance for the consolidated financial
statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with the “Regulations Governing the Preparation of Financial Reports by
Securities Issuers” and the International Financial Reporting Standards, International AccountingStandards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory
Commission, and for such internal control as management determines is necessary to enable thepreparation of consolidated financial statements that are free from material misstatement, whether due
to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing theGroup’s ability to continue as a going concern, disclosing, as applicable, matters related to going~23~

concern and using the going concern basis of accounting unless management either intends to liquidate
the Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance, including audit committee, are responsible for overseeing the Group’s
financial reporting process.

Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’sreport that includes our opinion. Reasonable assurance is a high level of assurance, but is not aguarantee that an audit conducted in accordance with ROC GAAS will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ROC GAAS, we exercise professional judgement and maintainprofessional skepticism throughout the audit. We also:A.

Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The riskof not detecting a material misstatement resulting from fraud is higher than for one resulting fromerror, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or theoverride of internal control.

B.

Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’sreport to the related disclosures in the consolidated financial statements or, if such disclosures are

C.
D.

E.

inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group tocease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

~24~

F.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group audit.
We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships andother matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with those charged with governance, we determine those matters thatwere of most significance in the audit of the consolidated financial statements of the current period andare therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of such
communication.

Lin, Chun-Yao

Chou, Chien-Hung

For and on behalf of PricewaterhouseCoopers, Taiwan
March 7, 2019----------------------------------------------------------------------------------------------------------------------------- -------------------The accompanying consolidated financial statements are not intended to present the financial position and results ofoperations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions otherthan the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of suchfinancial statements may differ from those generally accepted in countries and jurisdictions other than the Republic ofChina. Accordingly, the accompanying consolidated financial statements and report of independent accountants are notintended for use by those who are not informed about the accounting principles or auditing standards generally accepted in
the Republic of China, and their applications in practice.
As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability
for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from thetranslation.

~25~

TRANSCEND INFORMATION, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Expressed in thousands of New Taiwan Dollars)
Assets

December 31, 2018
AMOUNT%

Notes

December 31, 2017
AMOUNT%

Current assets
Cash and cash equivalents

6(1)

$

1,429,737

7

89,457$3,645,914

16

-

-

-

9,145,557

42

-

-

-

-

738,877

3

872

-

5,862

-

2,147,556

10

2,499,773

11

Financial assets at fair value through profit 6(2)or loss - current
Current financial assets at amortised cost,

6(3)

net
Investment in debt instrument without

12(4)active market - current
Notes receivable, net

6(4)Accounts receivable, net

6(4) and 12(4)Other receivables

7

87,295-

114,346

1

Inventories, net

6(5)3,184,188

15

5,241,150

23

Other current financial assets

12(4)

-

-

6,899,661

30

31,121-

44,210-

16,115,783

74

19,189,793

84

163,155

1

-

-

-

-

68,874-105,322-173,122

1

Other current assets
Total Current Assets
Non-current assets
Non-current financial assets at fair value

6(6)through other comprehensive income
Available-for-sale financial assets -12(4)non-current
Investments accounted for using equity

6(7)methodProperty, plant and equipment, net

6(8), 7 and 8

2,599,493

12

2,706,923

12

Investment property, net

6(9)2,623,579

12

269,462

1

Deferred tax assets

6(20)90,301-

133,954

1

Other non-current assets

6(10)166,8791

228,3531

5,748,729

26

3,580,688

16

21,864,512

100

22,770,481

100

Total Non-current Assets
Total Assets$(Continued)

~26~

$

TRANSCEND INFORMATION, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Expressed in thousands of New Taiwan Dollars)

Liabilities and Equity

December 31, 2018
AMOUNT%

Notes

December 31, 2017
AMOUNT%

Current liabilities
Accounts payable$

1,237,552

5-

37,454-

265,1321

347,619

2

97

-

233

-

Current tax liabilities

133,5081

412,345

2

Other current liabilities

23,376-

31,414-

1,649,287

8

2,066,617

9

Accounts payable - related parties

7

Other payables
Other payables - related parties

Total Current Liabilities

1,187,300

639,874$Non-current liabilities
Deferred tax liabilities

6(20)179,6311

158,463

1

Other non-current liabilities

6(11)55,292-

47,106-234,923

1

205,5691

1,884,210

92,272,186

10

4,307,617

20

4,307,617

19

4,605,233

21

4,691,385

20

Legal reserve

4,302,782

20

4,037,210

18

Special reserve47,247-

145,6891

6,778,995

31

7,363,641

32

47,247)-

20,498,295

90

22,770,481

100

Total Non-current Liabilities
Total Liabilities
Equity attributable to owners of parent
Share capital6(12)Common stock
Capital surplus

6(13)Capital surplus
Retained earnings

6(14)Unappropriated retained earnings
Other equity interest6(15)Other equity interest(

61,572) (Total Equity
Significant contingent liabilities and1) (19,980,302

91

21,864,512

100

9unrecognized contract commitments
Significant events after the balance sheet

11

date
Total Liabilities and Equity$$

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

~27~

TRANSCEND INFORMATION, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(Expressed in thousands of New Taiwan Dollars, except earnings per share)

Items
Notes
Operating Revenue
6(16), 7 and 12(5)Operating Costs
6(5)(19) and 7
Gross Profit
Operating Expenses
6(19)Sales and marketing expenses
Administrative expenses
Research and development expenses
Impairment loss determined in accordance 6(4)with IFRS 9
Total operating expenses
Operating Profit
Non-operating Income and Expenses
Other income6(17)Other gains and losses
6(18)Net gain from derecognizing financial
6(3)assets measured at amortised cost
Finance costs
Share of loss of associates and joint
6(7)ventures accounted for under equity
methodTotal non-operating income andexpensesProfit before Income Tax
Income tax expense
6(20)Profit for the Year
Other Comprehensive Income (Loss)
Components of other comprehensive
income (loss) that will not bereclassified to profit or loss
Gains (losses) on remeasurements of
6(11)defined benefit plans
Unrealized loss on financial assets at fair 6(6)(15)
value through other comprehensive
incomeShare of other comprehensive income(loss) of associates and joint ventures
accounted for under equity method
Components of other comprehensive
income (loss) that will be reclassified to
profit or loss
Exchange differences on translation of
6(15)foreign financial statements
Unrealized gain on available-for-sale
6(15) and 12(4)financial assets
Income tax related to components of other 6(15)(20)comprehensive income that will bereclassified to profit or loss
Other comprehensive (loss) income for theyear
Total Comprehensive Income
Net profit attributable to:
Owners of parent
Comprehensive income attributable to:
Owners of parent
Earnings Per Share
Basic earnings per share
Diluted earnings per share$(

Years ended December 31
2018
2017
AMOUNT%AMOUNT
17,615,965
100 $
20,964,853
14,085,715) (80) (15,438,009) (3,530,250
20
5,526,844

%
100
74)
26

(
(
(

844,708) (387,262) (158,518) (

5) (
2) (
1) (

945,861) (414,097) (169,238) (

4)
2)
1)

(
(

8)
1,390,496) (2,139,7548) (12

1,529,196) (3,997,648

7)
19

208,041
359,0251
2 (

163,495
739,406) (1
4)

16,691
-

- (

297)

-

69,964)- (108,858)-$

513,7932,653,547
571,552) (2,081,995

3 (
15
3) (
12 $

685,066) (3,312,582
656,865) (2,655,717

3)
16
3)
13

($

1,632)

-

2,402

-

(

6,047)

-

-

-

2,164

- (

630)

-

12,378)- (30,179)---123,490

-

2,475

-

5,131

-

($
$

15,418)2,066,577

12$$

100,2142,755,931

13$

2,081,995

12$

2,655,717

13$

2,066,577

12$

2,755,931

13

4.83
4.83

$
$

(

(

(

$

6(21)
$
$

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

~28~

6.17
6.16

TRANSCEND INFORMATION, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(Expressed in thousands of New Taiwan dollars)
Equity attributable to owners of the parent
Retained Earnings

Capital Reserves

Notes
Year ended December 31, 2017
Balance at January 1, 2017
Net income for the year
Other comprehensive income (loss)
Total comprehensive income
Appropriation and distribution of 2016 6(14)earnings
Legal reserve
Special reserve
Cash dividends
Cash payment from capital surplus
6(14)Balance at December 31, 2017
Year ended December 31, 2018
Balance at January 1, 2018
Effects of retrospective application and 12(4)retrospective restatement
Balance after adjustments at January 1,
2018
Net income for the year
Other comprehensive income (loss) 6(15)Total comprehensive income
Appropriation and distribution of 2017 6(14)earnings
Legal reserve
Cash dividends
Reversal of special reserve
Cash payment from capital surplus
6(14)Net loss on disposal of financial assets 6(6)(15)
at fair value through othercomprehensive income
Balance at December 31, 2018

Common stock

Additional paid-in
capitalDonated assets
received

Net assets frommergerLegal reserve

Special reserve

Unappropriatedretained earnings

Other Equity Interest
Unrealized gain or
Exchangeloss on financial
differences on
assets at fair value Unrealized gain ortranslation ofthrough otherloss onforeign financial
comprehensive
available-for-salestatements
incomefinancial assets

$

$

$

$

$

$

21,691
-

$

($

(
(
(

4,307,617-$

4,307,617$

4,307,617$

4,759,841-($

107,690 )
4,652,151$

4,652,151

4,106
-

$

4,106

$

4,106

35,128-$35,128$35,1283,748,946-$

288,264
4,037,210$

123,998
145,689$

4,037,210$

145,689

7,595,294
2,655,717
1,772
2,657,489((

42,214 )25,048 )25,048 )$288,264 )
123,998 )2,476,880 )
7,363,641($

67,262 )$7,363,641($

67,262 )

-

-

-

-

-

-

30,0004,307,617-

4,652,151
-

4,106
-

35,128-4,037,210-

145,689-

7,393,641
2,081,995
532
2,082,527--

265,572-

98,442 )-((47,247($-(4,307,617$

86,152 )4,565,999

$

4,106

$

35,128$4,302,782($

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

~29~

(
(
(

265,572 )2,498,418 )
98,442
31,625 )6,778,995

67,262 )9,903 )
9,903 )$

77,165 )($103,475 )
123,490
123,490$ 20,326,934
2,655,717
100,2142,755,931(
2,476,880 )(
107,690 )$ 20,498,295$ 20,498,295

$

-

$

20,015$-$20,015(9,985 )(

20,015 )(9,985 )
6,047 )
6,047 )

-

-

-

(
(

-

($

-

$

31,625
15,593$

Total equity

-

-

(

(
(

20,498,295
2,081,995
15,418 )2,066,577

2,498,418 )
86,152 )$ 19,980,302

TRANSCEND INFORMATION, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(Expressed in thousands of New Taiwan dollars)
Years ended December 31
Notes

2018

2017

CASH FLOWS FROM OPERATING ACTIVITIESProfit before tax
Adjustments
Adjustments to reconcile profit (loss)
Share of loss of associates and joint ventures accounted for using equity method
Expected credit loss/(Gain on reversal of bad debts)
Loss on disposal of investments
Gain on disposal of property, plant and equipment
Depreciation
Interest income
Interest expense
Dividend income
Changes in operating assets and liabilities
Changes in operating assets
Financial assets mandatorily measured at fair value through profit or loss
Notes receivable
Accounts receivable
Accounts receivable - related parties
Other receivables
Inventories
Other current assets
Changes in operating liabilities
Accounts payable
Accounts payable - related parties
Other payables
Other payables - related parties
Other current liabilities
Other non-current liabilities
Cash inflow generated from operations
Dividends received
Interest received
Interest paid
Income tax paid
Net cash flows from operating activities$

6(7)6(4) and 12(4)
12(4)
6(18)
6(19)
6(17)
6(18)

2,653,547

69,9648
1,204 )
210,873
175,210 )3,558 )((((

89,457 )
4,990
351,519
30,642
2,056,962
13,089(50,252 )2,420
82,487 )136 )8,038 )
6,554
4,990,226
3,558
171,619
783,093 )4,382,310

(
(
(

(

$

3,312,582

108,858
6,353 )
106,075
10,421 )205,723
145,127 )297
8,973 )

(
(
(
(

514 )
349,976
21,36936,11874,329 )7,821 )

(

(
(
(
(
(

502,714 )
10,764 )42,914 )233
13,001 )27,225 )3,291,075
8,973
141,282297 )
401,076 )3,039,957

(
(

(
(

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of available-for-sale financial assets
Acquisition of financial assets at amortised cost
Proceeds from disposal of financial assets at amortised cost
Increase in other current financial assets
Decrease in other current financial assets
Proceeds from disposal of investment in debt instrument without active markets
Acquisition of investment in debt instrument without active markets
Acquisition of financial assets at fair value through other comprehensive income
Proceeds from disposal of financial assets at fair value through other comprehensive
incomeAcquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Acquisition of investment property
Decrease (increase) in other non-current financial assets
Net cash flows (used in) from investing activities

6,692,559 )
5,185,540
105,480 )((128,121
2,112,846 )
3,915,775
2,361,738
2,734,320 )
-

(

(

6(6)
6(8)

(

6(9)

(

5,152
116,294 )18,9822,365,030 )
61,4744,008,215 )(

195,132 )
16,725
24,103 )1,355,958((

CASH FLOWS FROM FINANCING ACTIVITIESCash dividends paid (including cash payment from capital surplus )Net cash flows used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

6(14)

(
(
(
(
$

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

~30~

2,584,570 )2,584,570 )
5,702 )
2,216,177 )3,645,914
1,429,737

(
(
(

$

2,584,570 )2,584,570 )
8,101 )
1,803,244
1,842,670
3,645,914

Attachment V
TRANSCEND INFORMATION INC.
COMPARISON TABLE FOR THE “ARTICLES OF INCORPORATION”
Proposed Amendment

Currently in EffectExplanation

Article 6-1：

Article 6-1：

To comply with amendments

If the Corporation issue employee stock options

If the Corporation issue employee stock options

to Company Act, widen theon the exercise price under the market price, iton the exercise price under the market price, itapplication

shall be issued after the resolution of theshall be issued after the resolution of the

rewards.

Shareholders’ meetings in accordance with

Shareholders’ meetings in accordance with

relevant rules and regulations of the Republic ofrelevant rules and regulations of the Republic ofChina.

China.

ofemployee

Employees, including the employees of parents
or subsidiaries of the company meeting certain
specific requirements, are entitled to receive
employeestock

options.

Suchspecificrequirements shall be prescribed by the board of
directors.

Article 13：

Article 13：

The Corporation shall have seven to eleven

The Corporation shall have seven to elevento comply with Company

Directors. The Board of Directors is authorized

Directors. The Board of Directors is authorizedAct.

to determine the number of Directors, to be

to determine the number of Directors, to beelected by the shareholders meeting fromelected by the shareholders meeting fromStock

Exchangeamong candidates with legal capacity. The termamong candidates with legal capacity. The term

Corporation

Operationof office for Directors shall be 3 years, and allof office for Directors shall be 3 years, and all

DirectionsforDirectors shall be eligible for re-election. Once

Directors shall be eligible for re-election. Once

Appointment

the term of office is expired and it can’t electthe term of office is expired and it can’t electIndependent Directors bydirectors immediately, directors can extend anddirectors immediately, directors can extend andTWSEcontinue the performance of their duties untilcontinue the performance of their duties until

Companies”

andthe election of directors to take office. The

the election of directors to take office. The“Corporate

Governanceaggregate shareholding percentages of the entire

aggregate shareholding percentages of the entire

Best Practice Principles

bodies of directors shall comply with thebodies of directors shall comply with thefor TWSE/TPEx Listed

regulations

regulations

securities

Companies”, stipulate thesupervisory authorities. The board of directors

supervisory authorities. The board of directors

Company should acquireis authorized to resolve the rates of directors’is authorized to resolve the rates of directors’

liability insurance for all

remuneration based on the extent of theirremuneration based on the extent of theirdirectors, and report toparticipation

participationprescribed

in

the

by

the

Company’s

securities

business

operations or value of their contribution, at a1.

prescribed

in

the

by

the

Company’s

business

operations or value of their contribution, at a

~31~

2.

Modify Chinese wording

To comply with “Taiwan

Board
resolution.

theof

ListedinsteadofProposed Amendment

Currently in EffectExplanationlevel consistent with general practices in thelevel consistent with general practices in theindustry. The company shall acquire liability

industry. The company may acquire liability

insurance for all directors within their term of

insurance for all directors within their term ofoffice, and report to Board at the next board

office, and the board of directors is authorized

meeting.

to resolute the scope of insurance.

Article 15：

Article 15：

Modify wording to comply

Board of Directors Meetings shall be convened

Board of Directors Meetings shall be convened

with Company Act.

by the Chairman of the Board of Directors.

by the Chairman of the Board of Directors.

Except as otherwise provided in the Company

Except as otherwise provided in the Company

Act, resolutions of the Board of Directors shall

Law of the Republic of China, a meeting of thebe adopted by a majority of the directors at a

Board of Directors may be held if attended by ameeting attended by a majority of the directors.

majority of total Directors and resolutions shallbe adopted with the concurrence of the majorityof the Directors present at the meeting.

Article 17：

Article 17：

Modify wording to comply

Duties of the Board of the Directors are as

The Board of the Directors is organized bywith Company Act.

follows:

directors, the duties are as follows:

1.To propose concerning appropriation of net

1.To propose concerning appropriation of net

profits or covering of losses.

profits or covering of losses.

2.To propose increasing or decreasing capital

2.To propose increasing or decreasing capital

3.To establish or dissolve branches

3.To establish or dissolve branches

4.To approve budget and final reports

4.To approve budget and final reports

5.Other duties in accordance with Company Act

5.Other duties in accordance with Company Act

or given by the resolution of shareholders’or given by the resolution of shareholders’meeting

meeting

Article 20：

Article 20：

The Company may have managerial officers,

The Company may have managerial officers,

whose

whose

appointment,

dismissal,

andModify Chinese wording.

appointment,

dismissal,

andremuneration shall be handled in accordance

remuneration shall be handled in accordancewith Article 29 of the Company Act.

with Article 29 of the Company Act.

Article 22：

Article 22：

To comply with amendments

If the Company has earnings after the annual

If the Company has earnings after the annual

to Company Act, widen the

final accounting, it shall pay remuneration to

final accounting, it shall pay remuneration toapplication

employees at the minimum of 1% of the profit,

employees at the minimum of 1% of the profit,

rewards.

~32~

ofemployeeProposed Amendment

Currently in EffectExplanationand pay remuneration to directors at theand pay remuneration to directors at the

maximum of 0.2% of the profit. However, themaximum of 0.2% of the profit. However, theCompany's accumulated losses shall have been

Company's accumulated losses shall have been

covered.

covered.

Employees’ remuneration could be paid by cash

Employees’ remuneration could be paid by cash

or stock. Employees shall mean the employees

or stock, and in the event of stock payment,of parents or subsidiaries of the company

employees

shall

mean

meeting certain specific requirements. Suchemployees

andemployees

specific requirements shall be prescribed by theaffiliates who meet specific requirements. Suchboard of directors.

specific requirements shall be prescribed by theCompany’s

theservingwithboard of directors.

Article 22-1：

Article 22-1：

If the Company has earnings after the annual

If the Company has earnings after the annual

amendments to Company

final accounting, it shall be allocated in the

final accounting, it shall be allocated in theAct,following order:

following order:board

1.To pay taxes.

1.To pay taxes.

resolution to distribute

2.To cover accumulated losses, if any.

2.To cover accumulated losses, if any.

dividend in cash and3.To appropriate 10% legal reserve unless the

3.To appropriate 10% legal reserve unless thereport to shareholders’

total legal reserve accumulated has alreadytotal legal reserve accumulated has alreadyreached the amount of the Company’s

reached the amount of the Company’s

authorized capital.

authorized capital.

4.To appropriate or reverse special reserve inaccordance with the regulations

1.

4.To set aside special reserve in accordancewith the regulations

5.To reserve certain amount, on the premise that

5.To reserve certain amount, on the premise that

there is no effect on the Company’s normal

there is no effect on the Company’s normal

operations and no violation of regulations, for

operations and no violation of regulations, formaintaining stability of dividends.

maintaining stability of dividends.

6.For any remainder, adding on accumulated

6.For any remainder, the board of directors shallunappropriated retained earnings, the board of

propose allocation ratios and propose them at

directors

the shareholders’ meeting.

shall

proposetheearnings

distribution proposal and shall handle inRegardingtheaccordance with the following provision: thesubparagraphs 4, the Company shall set asideboard of directors is authorized to distribute

special reserve, equal to the debit balance which

dividends and bonuses or legal reserve andhappens at the current year on other equity

capital reserve in whole or in part which beitems (including Unrealized loss on financial

paid in cash after a resolution has been

instrument, cumulative translation adjustment,

adopted by a majority vote at a meeting of theand unrecognized pension cost, which can be~33~

specialreserve

underTo

complywithauthorizingofthedirectors’

meeting.
2.

Modify Chinese wording.

Proposed Amendment

Currently in Effectboard of directors attended by two-thirds of

combined if there are unrealized gain.), fromthe total number of directors; and in addition

thethereto a report of such distribution shall beunappropriated retained earnings prior year. If

submitted to the shareholders’ meeting in

the debit balance is cumulative before, theaccordance with Section 5 of Article 240 andCompany shall set aside special reserve not to

Article 241 of the Company Act. In case of

distribute it from the unappropriated retained

the dividends and bonuses or legal reserveearnings prior year. When debit balance onand capital reserve in whole or in part beother equity items is reversed subsequently, thedistributed in the form of new shares to bereversed amount could be included in theissued by the company, shall be proposed to

distributable earnings.

current

earnings

afterExplanation
tax

and

the shareholders' meeting for review andapproval by a resolution in accordance with
Article 240 of the Company Act.
Regardingthespecialreserve

undersubparagraphs 4, the Company shall set aside
special reserve, equal to the debit balance whichhappens at the current year on other equity
items (including Unrealized loss on financial
instrument, cumulative translation adjustment,
and unrecognized pension cost, which can be
combined if there are unrealized gain.), fromthecurrent

earnings

after

tax

and

unappropriated retained earnings prior year. If
the debit balance is cumulative before, theCompany shall set aside special reserve not to
distribute it from the unappropriated retained
earnings prior year. When debit balance onother equity items is reversed subsequently, thereversed amount could be included in the
distributable earnings.

Article 24：

Article 24：

Added date and times of

These Articles of Incorporation were adopted

These Articles of Incorporation were adopted

amendment of Articles ofon August 23, 1989. The first amendment wason August 23, 1989. The first amendment was

Incorporation.

made on January 28, 1991. The second

made on January 28, 1991. The second

amendment was made on May 25, 1992. The

amendment was made on May 25, 1992. The

third amendment was made on September 1,

third amendment was made on September 1,

1992. The fourth amendment was made on July

1992. The fourth amendment was made on July

~34~

Proposed Amendment

Currently in Effect30, 1994. The fifth amendment was made on

30, 1994. The fifth amendment was made on

June 8, 1995. The sixth amendment was madeJune 8, 1995. The sixth amendment was madeon July 8, 1997. The seventh amendment wason July 8, 1997. The seventh amendment wasmade on August 15, 1997. The eighth

made on August 15, 1997. The eighthamendment was made on September 12, 1997.

amendment was made on September 12, 1997.

The ninth amendment was made on June 20,

The ninth amendment was made on June 20,

1998. The 10th amendment was made on

1998. The 10th amendment was made on

September 15, 1998. The 11th amendment was

September 15, 1998. The 11th amendment wasmade on June 12, 1999. The 12th amendment

made on June 12, 1999. The 12th amendment

was made on April 15, 2000. The 13thwas made on April 15, 2000. The 13th

amendment was made on April 9, 2001. The

amendment was made on April 9, 2001. The

14th amendment was made on June 10, 2002.

14th amendment was made on June 10, 2002.

The 15th amendment was made on June 3,

The 15th amendment was made on June 3,

2003. The 16th amendment was made on June

2003. The 16th amendment was made on June11, 2004. The 17th amendment was made on

11, 2004. The 17th amendment was made on

June 13, 2005. The 18th amendment was madeJune 13, 2005. The 18th amendment was madeon June 14, 2006. The 19th amendment wason June 14, 2006. The 19th amendment wasmade on June 11, 2007. The 20th amendment

made on June 11, 2007. The 20th amendment

was made on June 13, 2008. The 21thwas made on June 13, 2008. The 21th

amendment was made on June 16, 2009. The

amendment was made on June 16, 2009. The

22th amendment was made on June 17, 2010.

22th amendment was made on June 17, 2010.

The 23th amendment was made on June 10,

The 23th amendment was made on June 10,

2011. The 24th amendment was made on

2011. The 24th amendment was made on

January 5, 2012. The 25th amendment was

January 5, 2012. The 25th amendment wasmade on June 13, 2013. The 26th amendment

made on June 13, 2013. The 26th amendment

was made on June 12, 2014. The 27th

was made on June 12, 2014. The 27th

amendment was made on June 14, 2016. The

amendment was made on June 14, 2016.

28th amendment was made on June 12, 2019.

~35~

Explanation

Attachment VI
TRANSCEND INFORMATION INC.
COMPARISON TABLE FOR THE “PROCEDURES FOR ELECTION OF DIRECTOR”
Proposed Amendment

Currently in EffectExplanation

Article 1 ： Elections of directors shall be

Article 1 ： Elections of directors shall be

To comply with amendments

conducted in accordance with these Procedures.

conducted in accordance with these Procedures.

to Company Act, simplify

Elections of directors at this Corporation shallElectionsnominate

procedure

andbe conducted in accordance with the candidate

independent directors) at this Corporation shallmodifywordingasnominationthebe conducted in accordance with the candidate“Corporate Governance Best

qualifications of a nominated candidate and thenomination system and procedures set out inPractice Principles for TWSE/

existence of any other matters set forth in

Article 192-1 of the Company Act. This

TPEx Listed Companies”.

Article 30 of the Company Act, and act inCorporation shall review the qualifications,accordance with Article 192-1 of the Company

education, working experience, background,Act.

and the existence of any other matters set forth

The professional qualifications, restrictions on

in Article 30 of the Company Act with respect

both shareholding and concurrent positions

to nominee directors and may not arbitrarily add

held, determination of independence, method of

requirements

nomination and other requirements with regard

qualifications. It shall further provide the results

to the independent directors shall be set forth inof the review to shareholders for their reference,

accordance with the Securities and Exchange

so that qualified directors will be elected.

system,carefully

review

of

both

for

Act, the Regulations Governing Appointment of
Independent Directors and Compliance Matter
for Public Companies, and the rules andregulations of the Taiwan Stock Exchange.

~36~

directors

documentation(including

of

other

Attachment VII
TRANSCEND INFORMATION INC.
COMPARISON TABLE FOR THE “PROCEDURES FOR ACQUISITION AND DISPOSAL OF ASSETS”
Proposed Amendment

Currently in EffectExplanation

Article 3：Scope of assets

Article 3：Scope of assets

Add right-of-use assets to

1.Investments in stocks, government bonds,

1.Investments in stocks, government bonds,

complycorporate bonds, financial bonds, securities

corporate bonds, financial bonds, securities

Governing

representing interest in a fund, depositary

representing interest in a fund, depositaryand Disposal of Assets byreceipts, call (put) warrants, beneficial interest

receipts, call (put) warrants, beneficial interest

Public Companies”.

securities, and asset-backed securities.

securities, and asset-backed securities.

2.Real property (including land, houses andinvestment

property,andbuildings, investment property, rights to use

construction

enterpriseinventory)

andland, and construction enterprise inventory)

equipment.

and equipment.

3.Memberships.

3.Memberships.
assets:includingPatents,

copyrights, trademarks, and franchise rights.
5.Right-of-use assets.

the“Regulations
Acquisition

2.Real property (including land, houses andbuildings,

4.Intangible

with4.Intangible

assets:includingPatents,

copyrights, trademarks, and franchise rights.
5.Claims of financial institutions (including

6.Claims of financial institutions (including
receivables, bills purchased and discounted,
loans, and overdue receivables).

receivables, bills purchased and discounted,
loans, and overdue receivables).
6.Derivatives.

7.Derivatives.

7.Assets acquired or disposed of in connection

8.Assets acquired or disposed of in connection
with mergers, demergers, acquisitions, ortransfer of shares in accordance with law.

with mergers, demergers, acquisitions, ortransfer of shares in accordance with law.
8.Other major assets.

9.Other major assets.

Article 4：Definitions of Term

Article 4：Definitions of Term

1. Derivatives: Forward contracts, options

1.Derivatives:contracts,

futures

contracts,

leveragecontracts,

Forwardfutures

contracts,
contracts,

Modify wording to comply
optionswith “Regulations Governingleverage

the Acquisition and Disposal

contracts, or swap contracts, whose value iscontracts, and swap contracts, and compoundofderived from a specified interest rate,

contracts combining the above products,

Companies”.

financial instrument price, commodity price,

whose value is derived from assets, interest

foreign exchange rate, index of prices or rates,

rates, foreign exchange rates, indexes or othercredit rating or credit index, or other variable;interests. The term "forward contracts" doesor hybrid contracts combining the above

not include insurance contracts, performance

contracts; or hybrid contracts or structured

contracts,

products containing embedded derivatives.

long-term leasing contracts, or long-term

The term "forward contracts" does not include

purchase (sales) agreements.

after-sales~37~

servicecontracts,

Assetsby

PublicProposed Amendment

Currently in Effectinsurance contracts, performance contracts,

Explanation(omitting)after-sales service contracts, long-term leasing
contracts, or long-term purchase (sales)
contracts.
(omitting)

Article 5：Limitation of investment amount

Article 5：Limitation of investment amount

Add right-of-use assets to

The acquisition of real estate and right-of-use

The acquisition of real estate by this Company

complyassetsforfor non-operating purpose should not exceed

Governing

non-operating purpose should not exceed 30%

30% of this Company's net worth. The total

and Disposal of Assets byof this Company's net worth. The total amountamountPublic Companies”.

of security investments by this Company should

Company should not exceed 20% of thisnot exceed 20% of this Company's net worth.

Company's

The amount of investment by this Company ininvestment by this Company in each respective

each respective security should not exceed 10%

security should not exceed 10% of thisof this Company's net worth.

Company's net worth.

Article 6：Authority to approve

Article 9：Authority to approve

1.In acquiring and disposing of assets, except in

In acquiring and disposing of assets, except inand clarify the exemption

trading of domestic government bonds, bonds

trading of bonds under repurchase and resale

to domestic government

under repurchase and resale agreements, oragreements, or subscription or redemption ofbonds to comply with

subscription or redemption of money market

money market funds issued by domestic“Regulations Governing

funds

securities

securities investment trust enterprises, whichtheinvestment trust enterprises, which should beshould be approved by financial supervisor, theDisposal of Assets byapproved

Company shall submit the transaction to

Public Companies”.

thereofissued

by

by

by

this

Company

domestic

financialsupervisor,

the

of

securitynetorinvestments

worth.

Chairman

The

amountthis

Acquisition

of

1.

and

acquiring or disposing of real property from or

fulfill the requirement of

2.Following transactions shall be submitted to

to a related party, or assets other than realpractical operation.

Audit Committee and Board of directors forproperty from or to a related party and theapproval:transaction amount reaches 20 percent or more

(1) In acquiring or disposing of real propertyof paid-in capital or NT$300 million or more,

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

except in trading of bonds under repurchase andrelated party.

resaleor(2) In acquiring assets and right-of-use assets

redemption of money market funds issued bythereof other than real property from or todomestic securities investment trust enterprises,

a related party and the transaction amountthe Company shall submit the transaction toreaches 20 percent or more of paid-in

Audit Committee and Board for approval.

capital or NT$300 million or more.

~38~

2.

Acquisition

President or Chairman for approval.

subscriptionIn

Add right-of-use assets

Presidentorapproval.

the“Regulations

Company shall submit the transaction toagreements,

for

by

with

Arrange the article toProposed Amendment

Currently in EffectExplanation(3) In acquiring assets from or to a non-related
party and the transaction amount reaches
20 percent or more of paid-in capital or
NT$300 million or more.

Article 7：The procedures for acquisition or

Article 7：Appraisal procedures

disposal of Investments in Securities

1.For acquisition or disposal of securities not

1.Appraisal procedures

1.

fulfill the requirement oftraded on the centralized securities exchange(1) For acquisition or disposal of securities

market or an OTC market, the price shall be

Arrange the article topractical operation.
2.

Add right-of-use assets

not traded on the centralized securities

determinedthroughnegotiation

after

and clarify the exemption

exchange market or an OTC market, theconsideration

of

worth

share,

to domestic government

price

profitability,

anddevelopment

agency to comply withnegotiation after consideration of net

potential, taking current market prices as a

“Regulations Governing

worth per share, profitability, and futurereference, or by negotiation after reference tothedevelopment

current market interest rates, bond coupon

Disposal of Assets byrates, and debtor creditworthiness.

Public Companies”.

shall

be

determined

potential,

takingthroughcurrent

market prices as a reference, or bynet

futureper

2.For acquisition or disposal of securities tradedmarket interest rates, bond coupon rates,on the centralized securities exchange market

procedures

and debtor creditworthiness.

or an OTC market, the price shall becontrol of the Company.

tradedonthecentralized

securities

determined according to the current trading

4.

price.

Referenceandnegotiation after reference to current(2)For acquisition or disposal of securities

3.

Acquisition

Stipulate

operatingtotheinternal

appraisal

procedure for intangible

exchange market or an OTC market, the3.To acquire or dispose of other fixed assets, theprice shall be determined according to theCompany shall make a price determination

assetscurrent trading price.

through one of three methods, either pricemembership, and otherenquiry, price comparison, price negotiation,assets.

2.Operating procedures
The operating procedures for acquisition oror call for tenders. Prices for the acquisition

disposal of securities shall be implemented inoraccordance with investment cycle of internal

determined

control system of the Company.

reference to the announced current value anddisposal of real property shall bethroughnegotiation,

with

3. Responsible unit

assessed value of the property and the actual

The responsible unit for implementation oftransaction

security investments is financial department.

properties. If the transaction amount reaches

4.Professional opinion

the amount required to publicly announce in

In acquiring or disposing of Securities, shall,accordance with this procedures, it shall referprior to the date of occurrence of the event,to an appraisal report from a professional

obtain financial statements of the issuing

appraiser

pricesofneighboring

company for the most recent period, certified
or reviewed by a certified public accountant,

Article 8：Operating procedures

~39~

real

assets and right-of-use

5.

Modify wording.

thereof,Proposed Amendment

Currently in Effectfor reference in appraising the transaction

1.Acquisition or disposition of all assets shall be

price, and if the transaction amount reaches 20

approved in accordance with the "approval

percent of the company's paid-in capital or

authority table for Purchase Requisition andNT$300 million or more, the company shall

Procurement". If the asset is real estate or

additionallyother fixed asset, registration, management

engageacertifiedpublicaccountant prior to the date of occurrence of

and

use

shall bein accordance

the event to provide an opinion regarding the“Guideline for Assets management”.

Explanation

withreasonableness of the transaction price. If the

2.For acquisition or disposition of all assets, the

CPA needs to use the report of an expert as

host department shall evaluate feasibility

evidence, the CPA shall do so in accordance

basedwith the provisions of Statement of Auditing

counterparty, transfer price, payment terms

Standards No. 20 published by the ARDF.

and price basis, and send the report toThis requirement does not apply, however, toauthority unit for approval. The acquisition or

publicly quoted prices of securities that havedisposition of all assets will be implemented

an active market, or where otherwise provided

by management department after approval.

by regulations of the Financial Supervisory

All matter will be in accordance with the rules

Commission (FSC).

of company’s internal control and this

on

the

reason,subject

item,

procedure.
Article 8：The procedures for acquisition or

3. The responsible unit for implementation of

disposal of assets other than investments inLong-term and Short-term investments insecurities

securities is financial department; and of Real

1.Appraisal procedures

property and other fixed assets is the unit

(1) To acquire or dispose of real property,
equipments,

andright-of-use

assetsthereof, the Company shall make a pricedetermination
methods,

througheither

price

one

of

three

enquiry,

pricespecifically responsible for such matters.
Other assets should be appraised by the
responsible unit before implement.
4.For the acquisition of the real estate, it should
immediately apply for insurance.

comparison, price negotiation, or call for

5.Acquisition or disposition of all assets will betenders. Prices for the acquisition orin accordance with the rules of company’s

disposalbeinternal control. If there is a detection ofwithmaterial violation, the Company will penalize

reference to the announced current value

the related personnel based on the situation ofand assessed value of the property and theviolation.

ofdeterminedreal
throughproperty

shallnegotiation,

actual transaction prices of neighboring
real properties. If the transaction amount

Article 10：In acquiring or disposing of realreaches the amount required to publicly

property or equipment where the transaction

announce

thisamount reaches 20 percent of the company's

procedures, it shall refer to an appraisal

paid-in capital or NT$300 million or more, theinaccordance

with

~40~

Proposed Amendment

Currently in Effectreport from a professional appraiser.

company, except transacting with a government(2) To acquire or dispose of intangible assets

agency, engaging others to build on its own

orright-of-use

memberships,

assetsor

other

thereof,assets,Explanation

land, engaging others to build on rented land, ortheacquiring or disposing of equipment for

Company shall take the future expectedbusiness use, shall obtain an appraisal reportbenefit into consideration.

prior to the date of occurrence of the event from

2.Operating proceduresa professional appraiser and shall further(1) The operating procedures for acquisition

comply with theor disposal of assets shall be implemented

following provisions:in accordance with fixed assets cycle of

1. Where due to special circumstances it isinternal control system of the Company.

necessary to give a limited price, specified(2) For acquisition or disposition of all assets,

price, or special price as a reference basis for

the

host

department

shall

evaluate

the transaction price, the transaction shall be

feasibility based on the reason, subject

submitted for approval in advance by theitem, counterparty, transfer price, paymentboard of directors, and the same procedureterms and price basis, and send the reportshall be followed for any future changes to theto authority unit for approval. The

terms and conditions of the transaction.

acquisition or disposition of all assets willbe

implementedbymanagement

department after approval. All matter will
be in accordance with the rules ofcompany’s

internal

controlandthisprocedure.

2. Where the transaction amount is NT$1 billion
or more, appraisals from two or more
professional appraisers shall be obtained.
3. Where

any

one

of

the

following

circumstances applies with respect to theprofessional

appraiser's

appraisal

results,(3) For the acquisition of the real estate, it

unless all the appraisal results for the assets toshould immediately apply for insurance.

be acquired are higher than the transaction(4) Acquisition or disposition of all assets willamount, or all the appraisal results for the

be in accordance with the rules ofassets to be disposed of are lower than thecompany’s internal control. If there is atransaction

detectionoftheaccountant shall be engaged to perform theCompany

will

relatedappraisal in accordance with the provisions of

personnel based on the situation ofStatement of Auditing Standards No. 20

violation.

published by the ROC Accounting Research

3.Responsible unit

and Development Foundation (ARDF) and

The responsible unit for implementation ofrender a specific opinion regarding the reason

Real property and other fixed assets is the unit

for the discrepancy and the appropriateness of

specifically responsible for such matters.

the transaction price:

Other assets should be appraised by the

A.The discrepancy between the appraisalmaterial
penalizeviolation,theresponsible unit before implement.

amount,acertifiedpublicresult and the transaction amount is 20~41~

Proposed Amendment

Currently in Effect

4.Professional opinion

Explanation

percent or more of the transaction amount.

In acquiring or disposing of real property,

B.The discrepancy between the appraisal

equipment, or right-of-use assets thereof,

results of two or more professional

where the transaction amount reaches 20

appraisers is 10 percent or more of thepercent of the company's paid-in capital ortransaction amount.

NT$300 million or more, the company, except

4. No more than 3 months may elapse between

transacting with a domestic government

the date of the appraisal report issued by aagency, engaging others to build on its own

professionalland, engaging others to build on rented land,

execution date; provided, where the publicly

or acquiring or disposing of equipment or

announced current value for the same periodright-of-use assets thereof for business use,

is used and not more than 6 months haveshall obtain an appraisal report prior to theelapsed, an opinion may still be issued by thedate of occurrence of the event from a

original professional appraiser.

professional

appraiser

and

shall

appraiser

and

the

contract

furthercomply with the following provisions:

Article 11：The procedures for Acquisition or(1)Where due to special circumstances it is

Disposal of Investments in Securities

necessary to give a limited price, specified

In acquiring or disposing of Securities, shall,

price, or special price as a reference basis

prior to the date of occurrence of the event,for the transaction price, the transaction

obtain financial statements of the issuingshall be submitted for approval in advancecompany for the most recent period, certified orby the board of directors, and the same

reviewed by a certified public accountant, forprocedure shall be followed for any futurereference in appraising the transaction price,changes to the terms and conditions of theand if the transaction amount reaches 20 percent

transaction.

of the company's paid-in capital or NT$300(2) Where the transaction amount is NT$1

million or more, the company shall additionallybillion or more, appraisals from two or

engage a certified public accountant prior to themore professional appraisers shall bedate of occurrence of the event to provide an

obtained.

opinion regarding the reasonableness of the

(3)

Where

any onefollowingtransaction price. If the CPA needs to use thecircumstances applies with respect to thereport of an expert as evidence, the CPA shallprofessional appraiser's appraisal results,

do so in accordance with the provisions ofunless all the appraisal results for theStatement of Auditing Standards No. 20

assets to be acquired are higher than the

published by the ARDF. This requirement doestransaction amount, or all the appraisal

not apply, however, to publicly quoted prices ofresults for the assets to be disposed of are

securities that have an active market, or where

lower than the transaction amount, aotherwise provided by regulations of thecertifiedFinancial Supervisory Commission (FSC).

publicoftheaccountant

shall

be

engaged to perform the appraisal in~42~Proposed Amendment

Currently in EffectofArticle 13：The procedures for acquisition orStatement of Auditing Standards No. 20

disposition of memberships and intangible

publishedassetsaccordance

with

by

the

the

provisions

ROC

Accounting

Research and Development Foundation

In acquiring or disposing of memberships or(ARDF) and render a specific opinion

intangible assets where the transaction amountregarding the reason for the discrepancy

reaches 20 percent of the company's paid-in

and the appropriateness of the transaction

capital or NT$300 million or more, theprice:

company, except transacting with a government

A. The discrepancy between the appraisal

agency, the company shall additionally engage

result and the transaction amount is 20

a certified public accountant prior to the date ofpercent or more of the transaction

occurrence of the event to provide an opinion

amount.

regarding the reasonableness of the transaction

B. The discrepancy between the appraisal

price. CPA shall do so in accordance with theresults of two or more professional

provisions of Statement of Auditing Standards

appraisers is 10 percent or more of theNo. 20 published by the ARDF.

transaction amount.
(4) No more than 3 months may elapse
between the date of the appraisal reportissued by a professional appraiser and thecontract execution date; provided, where
the publicly announced current value forthe same period is used and not more than
6 months have elapsed, an opinion may
still be issued by the original professional
appraiser.
In acquiring or disposing of intangible assets
or right-of-use assets thereof, memberships, orother assets, where the transaction amountreaches 20 percent of the company's paid-in
capital or NT$300 million or more, thecompany, except transacting with a domestic
government

agency,thecompany

shall

additionallyengageacertifiedpublicaccountant prior to the date of occurrence ofthe event to provide an opinion regarding thereasonableness of the transaction price. CPA
shall do so in accordance with the provisionsof Statement of Auditing Standards No. 20~43~

Explanation

Proposed Amendment

Currently in EffectExplanation

published by the ARDF.

Article 9：The amount of transactions shall be

Article 13-1：The calculation of the transaction

calculated as follows:amounts referred to in the preceding four

fulfill the requirement of

1.The amount of any individual transaction.

articles shall be done in accordance with Article

practical operation.

2.The

19 herein, and "within the preceding year" as

acquisitions and disposals of the same type ofused herein refers to the year preceding the dateof amount of transactions

underlying asset with the same transactionof occurrence of the current transaction. Items

clearlyinaccordancecounterparty within the preceding year.

for

with

“

Regulations
thecumulativeacquisitionstransaction

amountwhich

anappraisal

reportfrom2.

Arrange the article to

of

3.The

cumulative

1.

aDescribe the calculationtransaction

amountofprofessional appraiser or a CPA's opinion has

Governing

disposals(cumulative

been obtained need not be counted toward theAcquisition and Disposaltransaction amount.

of

and

acquisitions and disposals, respectively) of

Assetsby

PublicCompanies”.

real property or right-of-use assets thereof
within the same development project within
the preceding year.
4.The

cumulativeacquisitionstransaction

amountdisposals(cumulative

and

of

acquisitions and disposals, respectively) of thesame security within the preceding year.
“Within the preceding year” as used in thepreceding paragraph refers to the year preceding
the date of occurrence of the current transaction.
Items for which an appraisal report from a
professional appraiser or a CPA's opinion has
been obtained need not be counted toward thetransaction amount.

Article 10：Professional appraisers and their

Article 6 ： Professional appraisers and theirofficers, certified public accounts, attorneys,

officers, certified public accounts, attorneys,

fulfill the requirement ofand securities underwriters that provide theand securities underwriters that provide thepractical operation.

companies with appraisal reports, certified

companies with appraisal reports, certified

publicpublic accountants ’accountants’opinions,

attorney's

opinions, attorney's

1.

2.

Arrange the article to

Stipulate the qualificationof external experts inopinions, or underwriter's opinions shall meet

opinions, or underwriter's opinions shall not be

accordancewiththe requirements in accordance with Article 5 ofa related party of any party to the transaction.

“ Regulations Governing“Regulations Governing the Acquisition andthe

Disposal of Assets by Public Companies”

Disposal of Assets by

Acquisition

Public Companies”.

~44~

and

Proposed Amendment

Currently in EffectExplanation

Article 11：Where the Company acquires orArticle 14：Where the Company acquires or

Arrange the article to fulfill

disposes of assets through court auction

disposes of assets through court auction

the requirement of practicalprocedures,procedures,operation.

theevidentiary

documentation

theevidentiary

documentation

issued by the court may be substituted for theissued by the court may be substituted for theappraisal report or CPA opinion.

appraisal report or CPA opinion.

Article 12：The procedures for Related Party

Article 12：The procedures for Related Party

Transactions

Transactions

1.Appraisal procedures

1.WhenWhen

theCompany

engages

in

the

1.

Arrange the article tofulfill the requirement ofCompany

engagesinanypractical operation.

anyacquisition or disposal of assets from or to aacquisition or disposal of assets from or to a

related party, in addition to ensuring that theand clarify the exemption

related party, in addition to ensuring that thenecessary resolutions are adopted and theto domestic government

necessary resolutions are adopted and thereasonableness of the transaction terms isagency to comply withreasonableness of the transaction terms isappraised, if the transaction amount reaches“Regulations Governing

appraised, if the transaction amount reaches

10 percent or more of the company's total

the

10 percent or more of the company's total

assets, the company shall also obtain an

Disposal of Assets byassets, the company shall also obtain an

appraisal report from a professional appraiser

Public Companies”.

appraisal report from a professional appraiser

or a CPA's opinion in compliance with theor a CPA's opinion in compliance with theprovisions of Article 10 and this Article.

acquisition of property

provisions of Article 8 and this Article. When

When judging whether a trading counterparty

held for business use

judging whether a trading counterparty is a

is a related party, in addition to legal

betweenrelated party, in addition to legal formalities,

formalities, the substance of the relationshipsubsidiaries, or between

the substance of the relationship shall also be

shall also be considered.

its subsidiaries in which

considered.

2.

3.

2.The Company that acquires real property from

2.Operating proceduresarelated

party

shall

evaluate

Add right-of-use assets

Acquisition

andWiden the transaction forparentorit directly or indirectly

theholds 100 percent of the

In acquiring or disposing of real property andreasonableness of the transaction costs based

issuedright-of-use assets thereof from or to a related

the related requirement. When the following

authorized capital, to be

party, or assets and right-of-use assets thereof

conditions

happens,

thecompany

shall

approvedother than real property from or to a related

additionallyengageacertifiedpublicspecific limitation by the

party and the transaction amount reaches 20

accountant to review the reasonableness andchairman to comply withpercent or more of paid-in capital or NT$300

to provide an opinion:“Regulations Governing

million or more, except in trading of domestic

A.The related party acquired the real property

thegovernment bonds, bonds under repurchasethrough inheritance or as a gift.

and resale agreements, or subscription or

B.More than 5 years will have elapsed fromredemption of money market funds issued by

the time the related party signed thedomestic

contract to obtain the real property to thesecurities

investment

trust

enterprises, the company may not proceed tosigning date for the current transaction.

enter into a transaction contract or make a

C.The real property is acquired through~45~

sharesfirst

Acquisition

or

with

and

Disposal of Assets by
Public Companies”.
4.

Modify wording.

Proposed Amendment

Currently in EffectExplanation

payment until the following matters have beensigning of a joint development contract

approved by the Audit Committee and thewith the related party, or through engaging

Board:

the related party to develop the real

(1)The purpose, necessity and anticipatedproperty, either on the Company's own

benefit of the acquisition or disposal of
assets.

land or on rented land.
3. Appraisal and Operating procedures(2)The reason for choosing the related party
as a trading counterparty.

In acquiring or disposing of real property
from or to a related party, or assets other than(3)With respect to the acquisition of real

real property from or to a related party and theproperty from a related party, informationtransaction amount reaches 20 percent orregarding appraisal of the reasonablenessmore of paid-in capital or NT$300 million orof the preliminary transaction terms in

more, except in trading of bonds underaccordance with Article 15 and Article 16.

repurchase(4)The date and price at which the related

andresaleagreements,

orsubscription or redemption of money market

party originally acquired the real property,

funds

the original trading counterparty, and thatinvestment trust enterprises, the company may

trading counterparty's relationship to thenot proceed to enter into a transaction contract

company and the related party.

or make a payment until the following matters(5)Monthly cash flow forecasts for the year

issuedbydomestic

securities

have been approved by the Audit Committee

commencing from the anticipated monthand the Board:of signing of the contract, and evaluation

A.The purpose, necessity and anticipatedof the necessity of the transaction, andbenefit of the acquisition or disposal ofreasonableness of the funds utilization.

assets.

(6)An appraisal report from a professional
appraiser or a CPA's opinion obtained in

B.The reason for choosing the related party asa trading counterparty.

compliance with the preceding article.

C.With respect to the acquisition of real(7)Restrictive covenants and other important

property from a related party, information

stipulations

associated

with

the

transaction.

regarding appraisal of the reasonablenessof the preliminary transaction terms in

For acquisition or disposition of equipment or

accordance with Article 15 and Article 16.

right-of-use assets thereof and real property

D.The date and price at which the related

right-of-use assets held for business use

party originally acquired the real property,

between the Company and its parent or

the original trading counterparty, and thatsubsidiaries, or between its subsidiaries in

trading counterparty's relationship to thewhich it directly or indirectly holds 100

company and the related party.

percent of the issued shares or authorized

E.Monthly cash flow forecasts for the year

capital, it is permissible to be approved firstcommencing from the anticipated month ofwith specific limitation by the chairman andsigning of the contract, and evaluation of~46~

Proposed Amendment

Currently in EffectExplanation

then ratified at the next board of directors

the necessity of the transaction, andmeeting by submitting the proposal.

reasonableness of the funds utilization.

3.Evaluation on the reasonableness of theF.An appraisal report from a professionaltransaction cost

appraiser or a CPA's opinion obtained in(1)The Company that acquires real property

compliance with the preceding article.

or right-of-use assets thereof from a related

G.Restrictive covenants and other importantparty shall evaluate the reasonableness of

stipulations associated with the transaction.

the transaction costs based the related

For acquisition or disposition of equipment

requirement.

following

between the Company and its subsidiaries, it

conditions happens, the company shallis permissible to be approved first withadditionally engage a certified public

specific limitation by the chairman and thenaccountant to review the reasonablenessratified at the next board of directors meetingand to provide an opinion:

by submitting the proposal.

When

the

A. The related party acquired the real

4.Evaluation on the reasonableness of theproperty or right-of-use assets thereoftransaction costthrough inheritance or as a gift.

Where the Company acquires real property

B. More than 5 years will have elapsed

from a related party and the results offrom the time the related party signed

appraisals conducted in accordance with thethe contract to obtain the real property

procedures are uniformly lower than theor right-of-use assets thereof to thetransaction price, the following steps shall besigning date for the current transaction.

taken:

C. The real property is acquired throughA.A special reserve shall be set aside insigning of a joint development contract

accordance with the regulations against thewith the related party, or throughdifference between the real property

engaging the related party to build thetransaction price and the appraised cost,real property, either on the Company's

and may not be distributed or used forown land or on rented land.

capital increase or issuance of bonus

D. The real property right-of-use assets forshares. Where a public company uses thebusiness use are acquired by theequityCompanyorinvestment in another company, then thesubsidiaries, or by its subsidiaries in

special reserve called for under thewhich it directly or indirectly holds

regulations shall be set aside pro rata in a

100 percent of the issued shares or

proportion consistent with the share of

authorized capital.

public company's equity stake in the other

with

its

parent(2)Where the Company acquires real property
or right-of-use assets thereof from a related
party

and

the

resultsofconducted

inaccordance

appraisals
with

the

methodtoaccountforits

company.
B.Audit Committee shall comply with Article
218 of the Company Act.
C.Actions taken pursuant to subparagraph 1~47~

Proposed Amendment

Currently in Effectprocedures are uniformly lower than theand subparagraph 2 shall be reported to atransaction price, the following steps shallshareholders meeting, and the details of thebe taken:transaction shall be disclosed in the annual

A.A special reserve shall be set aside inreport and any investment prospectus.

accordance with the regulations against

The Company that has set aside a special

the

real

reserve under the preceding paragraph may

property or right-of-use assets thereof

not utilize the special reserve until it has

transaction price and the appraised

recognized a loss on decline in market valuecost, and may not be distributed orof the assets it purchased at a premium, orused for capital increase or issuance of

they have been disposed of, or adequate

bonus shares. Where a public company

compensation has been made, or the statususes the equity method to account forquo ante has been restored, or there is otherits investment in another company,

evidence confirming that there was nothing

then the special reserve called for

unreasonable about the transaction, and theunder the regulations shall be set aside

FSC has given its consent.

pro rata in a proportion consistent with

When the Company obtains real property

the share of public company's equityfrom a related party, it shall also comply withstake in the other company.

the preceding two paragraphs if there is other

difference

betweenthe

B.Audit Committee shall comply with
Article 218 of the Company Act.

evidence indicating that the acquisition was
not an arm length transaction.

C.Actions taken pursuant to preceding 2
subparagraphs shall be reported to ashareholders meeting, and the detailsof the transaction shall be disclosed in
the annual report and any investment
prospectus.
(3)The Company that has set aside a special
reserve under the preceding paragraph may
not utilize the special reserve until it hasrecognized a loss on decline in market
value of the assets it purchased or leased at
a premium, or they have been disposed of,or the leasing contract has been terminated,or adequate compensation has been made,or the status quo ante has been restored, or
there is other evidence confirming that
there was nothing unreasonable about thetransaction, and the FSC has given its~48~

Explanation

Proposed Amendment

Currently in EffectExplanation

Article 13：The procedures for acquisition or

Article 15：The procedures for acquisition or

Arrange the article to fulfill

disposition of Derivatives

disposition of Derivatives

the requirement of practical(omitting)(omitting)operation.

Article 14 ： The procedures for assets in

Article 16 ： The procedures for assets in

Arrange the article to fulfill

connection

connection

the requirement of practicalconsent.
(4)When the Company obtains real property
or right-of-use assets thereof from a related
party, it shall also comply with thepreceding subparagraphs if there is otherevidence indicating that the acquisition
was not an arm length transaction.

withmergers,

demergers,

withmergers,

demergers,

acquisitions, or transfer of sharesacquisitions, or transfer of shares(omitting)(omitting)

Article 15：The Company participating in a

Article 17：The Company participating in a

Arrange the article to fulfill

merger, demerger, acquisition, or transfer ofmerger, demerger, acquisition, or transfer ofthe requirement of practicalshares may not arbitrarily alter the share

shares may not arbitrarily alter the shareoperation.

exchange ratio or acquisition price unless under

exchange ratio or acquisition price unless under

the

the

below-listed

circumstances,

and

shall

below-listed

operation.

circumstances,

and

shall

stipulate the circumstances permitting alteration

stipulate the circumstances permitting alterationin the contract for the merger, demerger,

in the contract for the merger, demerger,

acquisition, or transfer of shares:

acquisition, or transfer of shares:(omitting)(omitting)

Article 16：Subsidiaries of the Company shall

Article 18：Subsidiaries of the Company shallbehave according to following regulations:behave according to following regulations:fulfill the requirement of(omitting)(omitting)practical operation.

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

3.The paid-in capital or total assets of the publicCompany

shall

be

the

standardforcompany

shall

be

the

standard

for

1.

2.

Arrange the article toModifywordingcomplytowithdetermining whether or not a subsidiary

determining whether or not a subsidiary“Regulations Governing

requiring

requiringtheapublicregulatory filing.
(omitting)announcement

andapublicannouncement

andAcquisition

andregulatory filing in the event the type of

Disposal of Assets bytransaction specified therein reaches 20

Public Companies”.

percent of paid-in capital or 10 percent of thetotal assets.

~49~

Proposed Amendment

Currently in EffectExplanation

Article 17：Information Disclosure Procedures

Article 19：Information Disclosure Procedures

Arrange the article to fulfill(omitting)(omitting)the requirement of practical(omitting)operation.

Article 18：Penalty

Article 20：Penalty

Arrange the article to fulfill(omitting)(omitting)the requirement of practicaloperation.

Article 19：Implementation and Revision

Article 21：Implementation and Revision

Arrange the article to fulfill(omitting)(omitting)the requirement of practicaloperation.

~50~