Stock  Code:  2312 

  

Kinpo Electronics, Inc.          

2018 Annual Meeting of Shareholders 

Meeting Handbook                

June 11, 2017  

Table of Contents 

I.  Meeting Procedure .............................................................................................. 1 

II.  Meeting Agenda .................................................................................................. 2 

(I)  Report Items ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 3 

(II)  Ratification Items ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 22 

(III) Discussion Items ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 25 

(IV)  Incidental Motions ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 29 

(V)  Adjournment ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 30 

III.  Annex 

(I)  Rules of Procedures for the Meetings of Board of Directors: Articles   Before and After Amendment ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 31 

(II)  2017 Standalone Financial Statements and Consolidated Financial   Statements ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 35 

(III) Overview of Other Key Positions Concurrently Held by Directors ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 43 

IV.  APPENDIX 

(I)  Articles of Incorporation ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 45 

(II)  The Rules of Procedures for Shareholders’ Meeting ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 53 

(III) Rules of Procedures for the Meetings of the Board of Directors ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 56 

(IV) Shareholding Facts by All Directors of the Company ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 64 

(V)  The impact by the present issuance of bonus shares upon the   Company’s business performance, earnings per share (EPS) and   rate of investment return to shareholders ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 65 

(VI)  Information relevant to proposals by a shareholder (s) holding over 1%   of the aggregate total outstanding shares ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ 66 

   

                      

Meeting Procedure  

‐ 1 ‐ 

Kinpo Electronics, Inc. Procedure for the 2018 Annual Meeting of Shareholders 

  

1. Call the Meeting to Order 

2. Chairman’s Remarks 

3. Report Items 

4. Ratification Items 

5. Discussion Items 

6. Incidental Motions   

7. Adjournment 

   

‐ 2 ‐ 

                      

Meeting Agenda  

‐ 2 ‐ 

Kinpo Electronics, Inc. Agenda of 2018 Annual Meeting of Shareholders 

 

Time: June 11, 2018 (Monday), 9:00 AM 

Place: No. 147, Beishen Rd. Sec. 3, Shenkeng District, New Taipei City   

Report attending shares and call the meeting to order. 

1. Chairman’s Remarks   

2. Report Items 

(1) 2017 Business Report 

(2) Audit Committee’s Review Report 

(3) Report on 2017 Distribution of Renumerations to Employees and Directors 

(4) Report on Amendments to the Rules of Procedures for the Meetings of Board of 

Directors 

(5) Report on the Execution of Company Stock Buybacks 

3. Ratification Items 

(1) 2017 Business Report and financial Statements of the Company 

(2) 2017 Earnings Distribution Proposal of the Company 

4. Discussion Items 

(1) Proposal  for an  Initial Public Offering of Shares  in Kinpo Subsidiary Cal‐Comp 

Technology (Philippine), Inc., Denominated in Philippine Pesos and Listed on the 

Philippine Stock Exchange   

(2) Proposal  for  Release  of  the  Prohibition  on  Directors  from  Participating  in 

Competitive Business 

5. Incidental Motions 

6. Adjournment 

   

‐ 3 ‐ 

                      

Report Items  

‐ 3 ‐ 

Report Item 1   Proposed by the Board 

Subject: 2017 Business Report   

Explanation:   

Kinpo Electronics, Inc. 

2017 Business Report  Dear shareholders:  First of all, Kinpo Electronics would like to extend appreciation to all our shareholders for the support. Looking back to the year of 2017, Kinpo Electronics spared no efforts in achieving product innovation and quality enhancement for its new business lines. At the  same  time, we  constantly  conducted  precise  tuning  product  positioning while pursuing our new endeavors in the fields of intelligent robots, 3D printing and beauty electronics.      In 2017, Kinpo received numerous recognitions for its innovative products from those renowned  international  players  including  HP, Western  Digital,  Texas  Instruments, Ricoh, Konica Minolta and Toshiba. Kinpo's subsidiaries won two Innovation Awards in the 2018 CES, the consumer technology show held in Las Vegas, USA. XYZprinting won the Innovation Award by Da Vinci Color AiO, its latest full color desk‐top 3D printer, in the 2018 CES yet again, brining one more award to its five‐year consecutive winning record in this prestigious industry exhibition. HiMirror Mini, a smart beauty mirror that analyzes user's skin condition, won the Innovation Award at CES in 2018, for Kinpo as well.            Even with these recognitions  from  the  international communities, Kinpo Electronics understands  it  still  needs  to  address  the  tough  challenges  that  require  all  hi‐tech companies  to  seek  total  transformation  so  as  to  capture  the newest  technological trend.  Despite  the  external  challenges,  the  entire management  team  and  all  the employees at Kinpo possess the courage and spirit to work in solidarity. We believe we will fight our way out and head into the bright future to come.      At  the moment,  the  international politics and  global economy have  stopped being hugely volatile. According to the IMF's most recent forecast on the economy outlook for 2018, the global economy is expected to grow by 3.9%, much higher than the 3.6% growth in 2017, while in 2017 the US grew by 2.3%, the Euro Zone 2.1%, Japan 1.5%, China 6.8%, and Taiwan by 2.58%. Kinpo's consolidated revenues for 2017 reached NT$ 119,200 million, a slight decline if compared to the revenues of previous year at NT$ 123,000 million; the consolidated net income after tax was NT$ 686 million.      

‐ 4 ‐ 

For the year of 2017, Kinpo's revenues  in the  lines of  imaging products and storage devices  saw  slight  increase.  The  same  results  also  revealed  that  Kinpo's  efforts  in developing and investing smart appliances have been reaping clear effects, and these new business lines will become the growth momentum for Kinpo in 2018. The market scale of hard disk drive  is still shrinking, while the business  lines  in SSD which Kinpo started to build two years ago are gaining stronger sales on a stable basis. It is expected that SSD will become a significant source for Kinpo's revenues in storage product lines. With its efforts in product restructuring and acquisition of new customers, Kino expects that the sales of Netcom products will recover to the reasonable level as in the past after it weathered the record low in the year of 2017. Furthermore, Kinpo will pick up the  speed  moving  the  manufacturing  of  consumer  electronics  to  its  Philippine factories.  Kinpo  is  also  planning  to  adopt  a  dual  policy  by  developing  own‐brand products and ODM model in light of its first successful endeavor in the beauty industry in 2017.    In order to capture the trends of the IOT and AI, Kinpo injected substantial resources in the AI industry. The service robot XYZrobot has been launched to hospitals, banks, and hotels to provide services to retail customers. HiMirror, world's first smart beauty mirror created by Kinpo, has been launched in the US, Europe, Japan and Taiwan since 2017. Kinpo will continue to develop its owned technology and products in semantic analysis,  human  face  recognition  and  medical  beauty.  Overall,  Kinpo  has  been harvesting  gratifying  results  in  its  newly  invested  business  lines  including  service robots, 3D printing and beauty electronics. Kinpo will keep its own pace dealing with the changes arising  in the  industry and actively tackle with the challenges and trials coming forward.              In the prospect of 2018, the trend of technology revolution that has been stirring up our world can be interpreted as a crisis but an opportunity at the same time. In order to adapt  itself to the ever‐changing environment of the  industry and global market, Kinpo will proceed at a firm and sound pace continuingly with a focus on its operational philosophy "innovation, harmony and surpassing." Meanwhile, Kinpo will do its best to optimize its technology, products, brands, distribution channels and after‐sale services, expecting  itself to establish the new business model combining the development of own brand products and ODM with technology highly concentrated. Last but not least, we  sincerely  appreciate  the  support  and  recognition  provided  by  our  customers, suppliers and the general public. Once again, we would like to express our thanks to all the shareholders who have kindly shown their support along the years. The support from  our  shareholders  not  only means  a  great  deal  to  us,  but  also  gives  us  the motivation to achieve greater! Please  join us moving forward with Kinpo Electronics altogether and embracing the bright future of success.     

‐ 5 ‐ 

 Kinpo Electronics, Inc.   Chairman: Hsu, Sheng‐Hsiung   President: Shen, Shyh‐Yong   Chief Accountant: Yu Chien‐Hui 

   

‐ 6 ‐ 

Report Item 2   Proposed by the Board  Subject:  2017 Audit Committee’s Review Report  Explanations:  The  2017  standalone  and  consolidated  financial  statements  of  the 

Company have been audited by CPAs who have issued the independent auditors’ report thereon. We, as the audit committee of the Company, have  completed  the  review  of  these  financial  statements,  business reports  and  earrings  distribution  proposal,  and  therefore  issue  our review report as detailed in pages 7‐18.     

  

The CPA is requested for reading: Independent Auditors’ Report  The convener of the audit committee is requested for reading: Audit Committee’s Review Report  

 

‐ 7 ‐ 

INDEPENDENT AUDITORS’ REPORT

English Translation of a Report Originally Issued in Chinese To: Kinpo Electronics, Inc. Opinion We have audited the accompanying parent company only balance sheets of Kinpo Electronics, Inc. (the “Company”) as of December 31, 2017 and 2016, and the related parent company only statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2017 and 2016, and notes to the financial statements including a summary of significant accounting policies. In our opinion, based on our audits and the reports of other auditors (please refer to the Other Matter – Making Reference to the Audits of Component Auditors section of our report), the parent company only financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and financial performance and its cash flows for the years ended December 31, 2017 and 2016, in conformity with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers. Basis for Opinion We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China (the “Norm”), and we have fulfilled our other ethical responsibilities in accordance with the Norm. Based on our audits and the reports of other auditors, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of 2017 financial statements. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Revenue Recognition The operating revenue of the Company in 2017 was recognized at NTD 9,014,746 thousand. As the Company had a large number of customers and engaged in sales involving a variety of commercial terms, we have therefore considered the correctness and revenue recognition timing significant and is one of the key audit matters.

‐ 8 ‐ 

For the revenue recognition, we have conducted audit procedures including but not limited to evaluating and testing the internal controls with respect to the revenue cycle, selecting representative samples to test the operation of the designed controls and to examine supporting documents for actual sales transactions, and conducting analytical processes such as gross margin analysis and analysis of changes in the top-ten sales customers list. In addition, we reviewed credit notes the Company issued after the period end in confirmation of the timing and correctness of revenue recognition. We also considered the appropriateness of the disclosure in respect of operating revenue in Note 6 of the parent company only financial statement. Investments accounted for using equity method

As of December 31, 2017, the investment accounted for under the equity method amounted to NTD 19,531,884 thousand, which accounted for 65% of the total assets, which is deemed significant to the parent company only financial statements. We reviewed whether the Company had substantive control over its investees. For those investees that the Company had substantive control over, we then reviewed if the investee had been deemed as a consolidated entity. For the long-term equity investments that the Company made significant impact on such investees, we reviewed if the investment was accounted for under the equity method. The appropriateness of the accounting treatment mentioned above had significant impact to the parent company only financial statements, and thus we considered this a key audit matter. We have conduct audit procedures including but not limited to, obtaining the most recent group investment structure chart of the Company; reviewing the changes in group structure and understanding the recognition basis and classification of investments accounted for under the equity method; analyzing the composition of the board of directors and management and the investment contracts to determine whether the investments of the Company were accounted for according to IFRS; verifying whether the Company had obtained audited financial statements when recognizing investment income and other comprehensive income under the equity method. In addition to understanding the impact the investees’ significant events made on the Company’s individual financial statements, we further evaluated whether the measurement of the investment accounted for under the equity method complied with IFRS and IAS. Meanwhile, we verified the existence and ownership of the investment by confirmation or physical count procedures. We also considered the appropriateness of the investments accounted for under the equity method disclosed in Note 6 of the parent company only financial statement. Other Matter – Making Reference to the Audits of Component Auditors We did not audit the financial statements of certain investments accounted for using equity method whose statements are based solely on the reports of other auditors. These investments accounted for using equity method amounted to NTD 3,915,168 thousand and NTD 4,662,351 thousand, representing 13% and 15% of the total assets as of December 31, 2017 and 2016, respectively. The related share of profit (loss) of subsidiaries, associates and joint ventures accounted for using equity method amounted to NTD (130,889) thousand and NTD 375,667

‐ 9 ‐ 

thousand, representing (25)% and 25% of the net income before tax for the years ended December 31, 2017 and 2016, respectively, and the related shares of other comprehensive income of subsidiaries, associates and joint ventures accounted for using equity method amounted to NTD (122,797) thousand and NTD (189,470) thousand, representing (32)% and 14% of the other comprehensive income for the years ended December 31, 2017 and 2016, respectively. Responsibilities of Management and Those Charged with Governance for the Parent company only Financial Statements Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the parent company only financial statements, management is responsible for assessing the ability to continue as a going concern of the Company, 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 or supervisors, are responsible for overseeing the financial reporting process of the Company. Auditor’s Responsibilities for the Audit of the Parent company only Financial Statements Our objectives are to obtain reasonable assurance about whether the parent company only 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 an audit conducted in accordance with auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these parent company only financial statements. As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

‐ 10 ‐ 

1. Identify and assess the risks of material misstatement of the parent company only financial statements, whether due to fraud 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 not detecting 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 override of internal control.

2. 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 internal control of the Company.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by management.

4. 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 ability to continue as a going concern of the Company. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company and its subsidiaries to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the parent company only financial statements, including the accompanying notes, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities

or business activities within the Company to express an opinion on the parent company only 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 in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

‐ 11 ‐ 

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of 2017 the parent company only financial statements and are 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 of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Ernst & Young March 20, 2018 Taipei, Taiwan Republic of China

Notice to Readers

The accompanying financial statements are intended only to present the financial position, results of operations

and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China

and not those of any other jurisdictions. The standards, procedures and practices to audit such financial statements

are those generally accepted and applied in the Republic of China.

‐ 12 ‐ 

INDEPENDENT AUDITORS’ REPORT

English Translation of a Report Originally Issued in Chinese

To: Kinpo Electronics, Inc.

Opinion

We have audited the accompanying consolidated balance sheets of Kinpo Electronics, Inc. (the

“Company”) and its subsidiaries as of December 31, 2017 and 2016, and the related

consolidated statements of comprehensive income, changes in equity and cash flows for the

years ended December 31, 2017 and 2016, and notes to the consolidated financial statements

including the summary of significant accounting policies (collectively referred to “the

consolidated financial statements”).

In our opinion, based on our audits and the reports of other auditors (please refer to the Other

Matter – Making Reference to the Audits of Component Auditors section of our report), the

consolidated financial statements referred to above present fairly, in all material respects, the

consolidated financial position of the Company and its subsidiaries as of December 31, 2017

and 2016, and their consolidated financial performance and cash flows for the years ended

December 31, 2017 and 2016, in conformity with the requirements of the Regulations

Governing the Preparation of Financial Reports by Securities Issuers and International

Financial Reporting Standards, International Accounting Standards, Interpretations developed

by the International Financial Reporting Interpretations Committee or the former Standing

Interpretations Committee as endorsed by Financial Supervisory Commission of the Republic

of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and

Attestation of Financial Statements by Certified Public Accountants and auditing standards

generally accepted in the Republic of China. Our responsibilities under those standards are

further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial

Statements section of our report. We are independent of the Company and its subsidiaries in

accordance with the Norm of Professional Ethics for Certified Public Accountant of the

Republic of China (the “Norm”), and we have fulfilled our other ethical responsibilities in

accordance with the Norm. Based on our audits and the reports of other auditors, we believe

that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our

opinion.

‐ 13 ‐ 

Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of 2017 consolidated financial statements. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Revenue Recognition The operating revenue of the Company and its subsidiaries in 2017 was recognized at NTD 119,204,764 thousand. As the Company and its subsidiaries had a large number of customers and engaged in sales involving a variety of commercial terms, we have therefore considered the correctness and revenue recognition timing significant and is one of the key audit matters. For the revenue recognition, we have conducted audit procedures including but not limited to evaluating and testing the internal controls with respect to the revenue cycle, selecting representative samples to test the operation of the designed controls and to examine supporting documents for actual sales transactions, and conducting analytical processes such as gross margin analysis and analysis of changes in the top-ten sales customers list. In addition, we reviewed credit notes the Company issued after the period end in confirmation of the timing and correctness of revenue recognition. We also considered the appropriateness of the disclosure in respect of operating revenue in Note 6 of the consolidated financial statement. Impairment of Trade Receivables As at December 31, 2017, the net trade receivables of the Company and its subsidiaries was NTD 25,732,509 thousand, accounted 29% of the consolidated total assets. To determine the allowance for doubtful accounts in respect of trade receivables on account, the management needed to make judgement upon aging profile of outstanding debts, past collection history and the financial condition of the clients. Therefore, we consider the reasonableness of the impairment assessment as one of the key audit matters. We have conducted audit procedures including but not limited to understanding the internal control in respect of determining allowance for trade receivables through inquiring, assessing the rationality of the assumptions and basis applied by management in determining such allowance for doubtful accounts. In addition, we conducted analytical procedures on collection periods and debtors movements. We further selected samples from the aging analysis provided by the management to test the correctness of the account and to identify and analyze the reason for occurrence of overdue. To assess the possibility of collecting receivables, we sent out confirmations and tested the subsequent collection for selected samples. We also considered the appropriateness of the disclosure in respect of trade receivables and relevant risk in Note 5 and Note 6 of the consolidated financial statement.

‐ 14 ‐ 

Business Combination

According to IFRS 10, regardless of the nature of the investment, it is necessary for the investor to re-assess whether or not it controls an investee when deciding whether the investor is the parent company. Since the Group holds less than 50% of the shares of some consolidated entities, whether the Company has substantive control over the consolidated entities would directly affect the consolidated financial statements. Therefore, we consider business combination as one of the key audit matters. We have conducted audit procedures including but not limited to obtaining the Company’s latest organizational chart of the affiliates and review the related changes. In addition, we reviewed the overall shareholding percentage of each consolidated entity and analyzed the composition of the board of directors and management, the holding percentages of the top ten shareholders, the level of ownership dispersion, attendance rate in shareholders’ meetings, and the related investment contracts to confirm the appropriateness of the Company’s evaluation of the substative control over its consolidated entities. We also considered the appropriateness of the disclosure in respect of business combination in Notes 4 and 5 of the consolidated financial statement. Other Matter – Making Reference to the Audits of Component Auditors We did not audit the financial statements of certain consolidated subsidiaries, which statements reflect total assets of NTD 5,679,625 thousand and NTD 4,917,615 thousand, constituting 6% and 6% of consolidated total assets as of December 31, 2017 and 2016, respectively, and total operating revenues of NTD 4,150,827 thousand and NTD 2,788,752 thousand, constituting 3% and 2% of consolidated operating revenues for the years ended December 31, 2017 and 2016, respectively. Those financial statements were audited by other auditors, whose reports thereon have been furnished to us, and our opinions expressed herein are based solely on the audit reports of the other auditors. We did not audit the financial statements of certain associates and joint ventures accounted for using equity method whose statements are based solely on the reports of other auditors. These associates and joint ventures for using equity method to NTD 3,296,385 thousand and NTD 3,468,495 thousand, representing 4% and 4% of consolidated total assets as of December 31, 2017 and 2016, respectively. The related shares of profits from the associates and joint ventures for using equity method amounted to NTD 103,068 thousand and NTD 309,571 thousand, representing 11% and 13% of the consolidated net income before tax for the years ended December 31, 2017 and 2016, respectively, and the related shares of other comprehensive income from the associates and joint ventures for using equity method amounted to NTD (94,526) thousand and NTD (174,231) thousand, representing (18)% and 10% of the consolidated other comprehensive income for the years ended December 31, 2017 and 2016, respectively.

‐ 15 ‐ 

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 requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, Interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee as endorsed by Financial Supervisory Commission of the Republic of China and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the ability to continue as a going concern of the Company and its subsidiaries, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company and its subsidiaries or to cease operations, or has no realistic alternative but to do so. Those charged with governance, including audit committee or supervisors, are responsible for overseeing the financial reporting process of the Company and its subsidiaries. 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’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: 1. Identify and assess the risks of material misstatement of the consolidated financial

statements, whether due to fraud 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 not detecting 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 override of internal control.

‐ 16 ‐ 

2. 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 internal control of the Company and its subsidiaries.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of

accounting estimates and related disclosures made by management. 4. 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 ability to continue as a going concern of the Company and its subsidiaries. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company and its subsidiaries to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the consolidated financial

statements, including the accompanying notes, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

6. Obtain sufficient appropriate audit evidence regarding the financial information of the

entities or business activities within the Company and its subsidiaries 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 in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of 2017 consolidated financial statements and are 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 of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

‐ 17 ‐ 

Others We have audited and expressed an unqualified opinion on the parent company only financial statements of the Company as of and for the years ended December 31, 2017 and 2016. Ernst & Young March 20, 2018 Taipei, Taiwan Republic of China Notice to Readers The accompanying financial statements are intended only to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such financial statements are those generally accepted and applied in the Republic of China.

   

‐ 18 ‐ 

 

Audit Committee’s Revew Report   

The 2017 standalone and consolidated financial statements of the Company prepared 

by the Board have been audited by CPAs Hsiao Tsui‐Hui and Lin Su‐Wen of Ernst & 

Young, who have issued the independent auditors’ report. These financial statements, along with the business report and earnings distribution proposal, have been reviewed by us, as the audit committee of the Company. We deem no discrepancy. Therefore, 

this report is presented in accordance with Article 14‐4 of the Securities and Exchange Act and Article 219 of the Company Act for approval.  To: Kinpo Electronics Inc. 2018 Annual Shareholders’ Meeting      

Convener of Audit Committee: Chiang Ping‐kun 

 March 20, 2018 

                

‐ 19 ‐ 

Report Item 3   Proposed by the Board  

 

Subject: Report on 2017 Distribution of Remunerations to Employees and Directors 

Explanations: 

(1) The 2017 remunerations to employees and directors were adopted by the 

resolution  in  the  first 2018 board meeting on March 20, 2018. The 7.5% 

remunerations  to  employees  amounting  to  NT$  43,329,000  will  be 

provided, as will  the 1.5%  remunerations  to directors amounting  to NT$ 

8,665,800. 

(2) The remunerations will be paid by cash, and the chairman is authorized to 

conduct the payment with  full powers to the extent of the remuneration 

amount so resolved. 

‐ 20 ‐ 

Report Item 4 Proposed by the Board  Subject: Report on amendments to the Rules of Procedures for the Meetings of Board of Directors.  Explanations: 

(1) Pursuant to the Financial Supervisory Commission’s order number Jin‐guan‐zheng‐fa‐zi #1060027112 dated July 28, 2017, the Company amended some provisions  of  the  “Rules  of  Procedures  for  the  Meetings  of  Board  of Directors” in response. 

(2) For a comparison table of the provisions of the Rules of Procedures for the Meetings of Board of Directors before and after amendment, please refer to Annex 1 on pages 31~34. 

‐ 21 ‐ 

Report Item 5  Proposed by the Board of Directors  Subject: Report on the Execution of Company Stock Buybacks 

Explanation: 

(1)  This buyback has been conducted in accordance with Article 28‐2 of the 

Securities and Exchange Act. 

(2)  Information related to this buyback is presented below. 

Buyback Number  8 

Board Approval Date  March 20, 2018 

Purpose of Buyback  Transfer to employees 

Result  Buybacks in progress 

Reason Not Completed  N/A 

Buyback Period  March 21, 2018 to May 18, 2018 

Buyback Price Range  NT$7.3 to NT$15.5 

Type and Quantity of Stocks Bought Back 

Common stocks 29,912,000 shares 

Value of Stocks Bought Back NT$ 309,527,673 

Number of Shares Cancelled and Transferred 

0 shares 

Accumulated Company Shares Held and Percentage of Issued Shares 

33,488,000 shares 2.30% 

 

 

‐ 22 ‐ 

                      

Ratification Items 

‐ 22 ‐ 

Ratification Items  

Item 1  Proposed by the Board 

Subject:  The Company’s 2017 business report and financial statements are submitted 

for ratification. 

Explanations: 

(1)  The  2017  business  report  and  financial  statements  (including 

consolidated and standalone financial statements) of the Company have 

been prepared and adopted by resolution of the Board, then submitted 

to  and  reviewed  by  the  audit  committee  (the  earnings  distribution 

proposal is itemized as Ratification Item 2). 

(2)  The  business  report  and  consolidated  financial  statements  (including 

standalone financial statements) as detailed in Report Item 1 (pages 3‐5) and Annex 2 (pages 35‐42) are attached for ratification. 

(For details of notes  to  financial  statements  in Annex 2, please go  to  the 

website http://mops.twse.com.tw/mops/web/index  “Market Observation 

Post  System”   →   basic  information  →   electronic  book  →   financial 

statements  →   company  code:  2312,  year:  2017  →   search  →   year  of 

information:  Q4  of  2017,  detailed  explanation  of  information:  IFRSs 

consolidated financial statements, IFRSs standalone financial statement  → 

inquiry) 

 

Resolution:   

   

‐ 23 ‐ 

Item 2  Proposed by the Board 

Subject:  The 2017 earnings distribution proposal of  the Company  is  submitted  for 

ratification. 

Explanations: 

(1)  For distributing 2017 earnings, The Board has prepared  the  following 

earnings  distribution  table  in  accordance  with  relevant  laws  and 

regulations and the Company’s articles of incorporation. 

(2)  It  is  proposed  that  NT$435,624,364  be  appropriated  from  the 

distributable earnings for the year of 2016 to distribute as dividends, all 

of which is to be paid in cash. Each share will receive NT$0.3, and every 

thousand  shares  will  receive  NT$300  in  cash  dividends  without 

consideration. After the proposal is adopted at the annual shareholders’ 

meeting, the shareholders’ meeting is requested to authorize the Board 

to set the ex‐dividend date. The distribution will be made according to 

the number of shares held by shareholders entered in the shareholders’ 

registry on the ex‐dividend date. 

(3)  If there subsequently occurs any change of  laws, any change approved 

by  the  competent authority, or any  change of  common  shares of  the 

Company  (e.g.  transfer  or  cancellation  of  the  Company’s  shares 

repurchased, domestic capital  increase  in cash, exercise of employees’ 

stock  warrants  etc.)  or  other  factors  would  affect  the  number  of 

outstanding shares and, in turn, cause a change in dividend distribution 

ratio  approved  by  the  annual  shareholders’  meeting  requiring  a 

correction,  it  is proposed that the shareholders’ meeting authorize the 

Board of Directors with full powers to make adjustment depending on 

the actual number of outstanding shares. 

(4)  The cash dividend distributed to each shareholder will be rounded down 

to  the  nearest whole  number;  all  numbers  after  the  decimal will  be 

truncated. The total of the truncated NTD amounts will be recognized in 

“other income.” 

The below is proposed for ratification: 

‐ 24 ‐ 

Kinpo Electronics, Inc. 

Earnings Distribution Proposal for the Year 2017  

 

Item  Amount 

Unappropriated retained earning of previous years  1,384,680,110 元 

Add: Net income of 2017  382,629,176 元 

Add: Confirmed Acturial Gains and Losses from Benefits Plan in 2017 ‐25,826,883 元 

Appropriated items:   

Less: 10% legal reserve  38,262,918 元 

Retained earnings available for distribution in 2017  1,703,219,485 元 

Distributable items:   

Less: Dividend to shareholders (NT$0.3 cash per share)  435,624,364 元 

Unappropriated retained earnings of 2017  1,267,595,121 元 

      

Chairman:   General Manager:   Accounting Manager:  

 

 

Resolution: 

‐ 25 ‐ 

                       

Discussion Items 

‐ 25 ‐ 

Discussion Items  

Item 1  Proposed by the Board 

Subject:  The proposal for an initial public offering of shares in Kinpo subsidiary Cal‐

Comp  Technology  (Philippine),  Inc.,  denominated  in  Philippine  pesos  and 

listed  on  the  Philippine  stock  exchange,  is  submitted  for  discussion  and 

resolution. 

Explanation:  I.  Purpose of Public Offering: 

An application to the Philippine stock exchange will be made for the 

public  offering  and  listing  of  shares  in  Cl‐Comp  Technology 

(Philippine), Inc. (CCPH), a Kinpo subsidiary in the Philippines. This is 

in  response  to  the  rapid  economic  growth  of  the  Philippines  and 

ASEAN countries. The offering will increase the visibility of the Kinpo 

group in the Philippines, expand the group’s presence in the Philippine 

market,  and  help  attract  and  motivate  local  professional  talent, 

helping Kinpo become more competitive in the global market. 

II.  Effects on Kinpo’s Finances and Business: 

1. Effects on Finances: 

(1) Once  the  CCPH  offering  is  fully  funded,  the  company’s 

production capacity in southeast Asia can be increased. This will 

provide a source of higher income and profit for the Company 

and  Group,  as  we  can  better  serve  the  global  strategic 

considerations of international clients.     

(2) A  successful public offering  in  the Philippines will provide an 

additional  channel  for  raising  capital,  helping  improve 

fundraising to meet the Company’s future operational funding 

and capital expenditure needs. 

(3) A  successful  public  offering  for  CCPH  in  the  Philippines  will 

significantly increase the Company and Group’s total assets and 

net assets, providing more capital for the Company and Group 

to pursue shareholder interests. 

2. Effects on Business: 

The  development  of  the  Company  and  Group’s  business  in  the 

Philippines will effectively reduce the trade barriers Kinpo faces in 

the  ASEAN  trade  region,  allowing  us  to  reap  the  benefits  of 

participating  in  the  region’s  economic development.  In  addition, 

‐ 26 ‐ 

the Philippines has a young and large workforce that is beneficial to 

the  Company  and Group’s  global manufacturing  strategy.  Public 

listing and fundraising on the Philippine stock market will help the 

Company  and  Group  increase  manufacturing  capacity  in  the 

Philippines in response to growing business in the country, as well 

as  increase name recognition for the Group to further expand  its 

presence  in  the  Philippines.  This will  become  another  source  of 

growth momentum for the Company and Group. 

III. Distribution of Equity: 

An initial public offering of CCPH shares is planned, to be denominated 

in the Philippine peso and listed on the Philippine stock exchange. The 

face  value  of  a  single  share  will  be  1  peso.  Approximately  25% 

(provisional) of total CCPH shares will be made available in this initial 

offering. It is proposed for the board to authorize the CCPH board or 

its authorized agents to determine the final number of shares to be 

issued, in conjunction with the lead underwriter, in accordance with 

Philippine laws and regulations, funding needs, and communications 

with Philippine regulators. 

IV. Use of funds raised in the offering: 

The  funds  raised  in  this  offering  will  mainly  be  invested  in  the 

following ways: 

1. Expanding manufacturing  plants  and  purchasing machinery  and 

equipment,  increasing production capacity to respond to growing 

orders 

2. Repaying bank loans 

3. Providing additional liquidity 

V.  Basis for Equity Distribution Price: 

The price of CCPH’s offering on the stock exchange will be determined 

based on inquiries in accordance with Philippine laws and regulations, 

or  based  on  other  means  approved  by  the  Philippine  securities 

regulator. 

VI. Equity Assignees: 

The  shares will  be  assigned  to  eligible  inquirers,  natural  and  legal 

persons  required  by  Philippine  laws  and  regulations,  and  other 

investors (except those prohibited by Philippine laws and regulations). 

‐ 27 ‐ 

VII.  Effect on continued public trading in Taiwan: 

As CCPH’s public offering  in Philippines complies with all  relevant 

laws and regulations, and CCPH remains an important subsidiary of 

Kinpo, the continued public trading of Kinpo shares in Taiwan will be 

unaffected. 

VIII.  In  support  of  the  initial  public  offering  of  CCPH  shares  on  the 

Philippine market, and the application for  listing on the Philippine 

stock  exchange,  it  is  proposed  that  the  Board  authorize  the 

Chairman or an authorized agent, and/or authorize the CCPH board 

or an authorized agent (as applicable) to act with full discretion  in 

matters relevant to this public offering, making adjustments based 

on  the progress of  the plan,  the opinions of  relevant government 

agencies,  market  conditions,  or  other  factors  applicable  to  the 

situation.  Relevant  matters  include  but  are  not  limited  to  the 

appointment of professional  consultants, decisions on  the  terms, 

time,  amount,  target  investor,  issuance method,  pricing method, 

issuance price  (including  the price range and  final price),  issuance 

date, whether  to employ strategic allotment, use of  raised  funds, 

issuance of commitment letters, and all other matters related to this 

public offering. 

 

Resolution: 

   

‐ 28 ‐ 

Item 2  Proposed by the Board 

Subject:  The proposal for release of the prohibition on directors from participation in 

competitive business is submitted for discussion and resolution. 

Explanations: 

(1)  For Directors of the Company who invest in or operate other companies 

engaging  in  the  same  or  a  similar  business  to  Kinpo, we  propose  to 

release  the  prohibition  on  them  from  participation  in  competitive 

business  in accordance with Article 209 of  the Company Act, with  the 

precondition that the interest of Kinpo should not be undermined. 

(2)  For an overview of positions at other companies held concurrently by the 

existing directors of the Company, please refer to Annex 3, page 43 of 

this handbook. The proposal is submitted for discussion and resolution. 

 

Resolution: 

   

‐ 29 ‐ 

                       

Incidental Motions 

‐ 30 ‐ 

                       

Adjournment    

‐ 31 ‐ 

                     

ANNEX   

‐ 31 ‐ 

Rules of Procedures for the Meetings of the Board of Directors

of

Kinpo Electronics, Inc.

Article Before and After Amendment (Draft)

Article No. Article After Amendment Article Before Amendment Remarks

Article 12 The following matters shall be submitted to the Company's Board meetings for discussion: 1. The business plan of the Company 2. Annual and semi-annual financial reports, with the exception of semi-annual financial reports which, under relevant laws and regulations, do not require to be audited and attested by a certified public accountant with the exception of semi-annual financial reports which, under relevant laws and regulations, do not require to be audited and attested by a certified public accountant 3. The establishment or amendment of an internal control system pursuant to the Article 14-1 of the Securities and Exchange Act (the "SEA"), and the assessment of the effectiveness of the internal control system. 4. The establishment or amendment, pursuant to the Article 36-1 of the SEA, of the handling procedures for significant financial and business activities including the acquisition or disposal of assets, trading of derivatives, loans of funds to others, and endorsement or guarantee to others 5. The offering, issuance or private placement of equity securities

The following matters shall be submitted to the Company's Board meetings for discussion: 1. The business plan of the Company 2. Annual and semi-annual financial reports, with the exception of semi-annual financial reports which, under relevant laws and regulations, do not require to be audited and attested by a certified public accountant 3. The establishment or amendment of an internal control system pursuant to the Article 14-1 of the Securities and Exchange Act (the "SEA") 4. The establishment or amendment, pursuant to the Article 36-1 of the SEA, of the handling procedures for significant financial and business activities including the acquisition or disposal of assets, trading of derivatives, loans of funds to others, and endorsement or guarantee to others 5. The offering, issuance or private placement of equity securities 6. The appointment and dismissal of financial, accounting or internal auditing officers 7. Donation to a related party or significant donation to a non-related party; provided, however, that a charitable donation to the

Amendment

done in

compliant with

statutory

regulations,

and slight

wording

editing.

ANNEX I

‐ 32 ‐ 

Article No. Article After Amendment Article Before Amendment Remarks 6. The appointment and dismissal of financial, accounting or internal auditing officers 7. Donation to a related party or significant donation to a non-related party; provided, however, that a charitable donation to the cause of natural disaster relief may be submitted to the next Board meeting for ratification 8. Matters to be resolved by a shareholders' meeting or a Board meeting pursuant to the Article 14-3 of the SEA, other applicable laws or regulations or the Articles of Incorporation, or matters as required by the competent authority concerned The "related party," as afore-mentioned in the seventh subparagraph in the preceding paragraph, refers to the related party as defined in the Regulations Governing the Preparation of Financial Reports by Securities Issuers; the "significant donation to a non-related party" refers to any donation or a series of donations to a single recipient within the period of one year, on an individual basis or cumulatively, reaching or exceeding the amount of one hundred million New Taiwan Dollars, or the amount of one percent of the Company's net operating revenue or the amount of five percent of the Company's paid-in capital as stated in the CPA-attested financial report of the most recent year. As stated in the preceding paragraph, the term "within the period of one year" shall

cause of natural disaster relief may be submitted to the next Board meeting for ratification 8. Matters to be resolved by a shareholders' meeting or a Board meeting pursuant to the Article 14-3 of the SEA, other applicable laws or regulations or the Articles of Incorporation, or matters as required by the competent authority concerned The "related party," as afore-mentioned in the seventh subparagraph in the preceding paragraph, refers to the related party as defined in the Regulations Governing the Preparation of Financial Reports by Securities Issuers; the "significant donation to a non-related party" refers to any donation or a series of donations to a single recipient within the period of one year, on an individual basis or cumulatively, reaching or exceeding the amount of one hundred million New Taiwan Dollars, or the amount of one percent of the Company's net operating revenue or the amount of five percent of the Company's paid-in capital as stated in the CPA-attested financial report of the most recent year. As stated in the preceding paragraph, the term "within the period of one year" shall refer to a period of one year calculated retroactively from the date of current Board meeting convened. The portion of the donations that has been submitted and

‐ 33 ‐ 

Article No. Article After Amendment Article Before Amendment Remarks refer to a period of one year calculated retroactively from the date of current Board meeting convened. The portion of the donations that has been submitted and approved by the Board of Directors shall be exempted from the calculation. If the Company appoints independent directors in the Board, at least one of the independent directors shall attend the Board meeting in person when the meeting is convened. With respect to the matters which shall be resolved in the Board meeting as aforementioned in the first paragraph, all of the independent directors shall attend the Board meeting. The independent director who is unavailable to attend the meeting in person shall authorize another independent director to do so on his or her behalf. Any objection or reservation expressed by an independent director shall be recorded in the minutes of a Board meeting. In the situation where an independent director wishing to express objection or reservation is unable to attend a Board meeting in person, such director shall present his or her view regarding the relevant matters in written form in advance and such statement shall be recorded in the meeting minutes, unless there is legitimate reason to do otherwise.

approved by the Board of Directors shall be exempted from the calculation.

With respect to the matters

which shall be resolved at a

Board meeting pursuant to

the Article 14-3 of the SEA,

the independent directors, if

appointed by the Company,

shall attend a Board meeting

in person or authorize

another independent director

to attend the meeting on his

or her behalf. Any objection

or reservation expressed by

an independent director shall

be recorded in the minutes

of a Board meeting. In the

situation where an

independent director wishing

to express objection or

reservation is unable to

attend a Board meeting in

person, such director shall

present his or her view

regarding the relevant

matters in written form in

advance and such statement

shall be recorded in the

meeting minutes, unless

there is legitimate reason to

do otherwise.

A r t i c le19 The establishment and amendment of these Rules shall be approved by the Board of Directors of the

These Rules of Procedures

were taken into effect on

January 1, 2007. The

Dates for

admendments

added.

‐ 34 ‐ 

Article No. Article After Amendment Article Before Amendment Remarks Company. These Rules of Procedures were taken into effect on January 1, 2007, and amended for the first time on April 20, 2007, amended for the second time on March 24, 2008, amended for the third time on October 31, 2012,

and amended for the fourth

time on March 20, 2018.

establishment and

amendment of these Rules

shall be approved by the

Board of Directors of the

Company.

  

‐ 35 ‐ 

2017 % 2016 % 2017 % 2016 %Current assets Current liabilities

Cash and cash equivalents 4,6 $629,066 2 $920,076 3 Short-term borrowings 4,6 $3,105,000 11 $3,435,000 12Current financial assets at fair value through profit or loss 4,6 - - 4,372 - Short-term notes and bills payable 6 1,109,119 4 1,603,388 5Current avalable-for-sale financial assets, net 4,6 208,850 1 195,376 1 Current financial liabilities at fair value through profit or loss 4,6 - - 2,330 - Current investments in debt instrument without active market 4,6 150,000 1 150,000 - Notes payable 52 - 52 - Notes receivable, net 4 - - 729 - Accounts payable 76 - 57 - Accounts receivable, net 4,6 1,064,960 3 807,428 3 Accounts payable to related parties 7 985,403 3 898,840 3Accounts receivable due from related parties, net 4,6,7 349,584 1 832,316 3 Other payables 6 237,838 1 480,794 2Other receivables, net 4 7,210 - 5,694 - Other payables to related parties 7 41,823 - 39,065 - Other receivables due from related parties, net 4,7 92,871 - 546,703 2 Current tax liabilities 4,5 62,034 - 73,932 - Current tax assets 4 - - 1,708 - Current provisions 4,6 12,838 - 14,509 - Inventories 4 1,591 - 2,335 - Long-term liabilities, current portion 4,6 390,000 1 75,000 - Prepayments 4 18,280 - 23,410 - Other current liabilities, others 60,091 - 59,862 - Other current assets 4 8,480 - 7,583 - Total current liabilities 6,004,274 20 6,682,829 22

Total current assets 2,530,892 8 3,497,730 12Non-current liabilities

Non-current assets Long-term borrowings 4,6 4,685,000 15 4,945,000 16Non-current available-for-sale financial assets, net 4,6 4,331,751 15 3,917,398 13 Deferred tax liabilities 4,6 1,742,172 6 1,678,202 6Non-current financial assets at cost, net 4,6 27,240 - 32,552 - Net defined benefit liability, non-current 4,6 558,715 2 549,689 2Non-current investments in debt instrument without active market 4,6 150,000 1 300,000 1 Other non-current liabilities, others 161 - 211 - Investments accounted for using equity method, net 4,6 19,531,884 65 19,104,243 63 Total non-current liabilities 6,986,048 23 7,173,102 24Property, plant and equipment 4,6 1,199,155 4 1,233,334 4 Total liabilities 12,990,322 43 13,855,931 46Intangible assets 4,6 27,087 - 2,571 - Deferred tax assets 4,6 2,076,591 7 2,084,604 7 EquityOther non-current assets 8,169 - 169 - Share capital 4,6

Total non-current assets 27,351,877 92 26,674,871 88 Ordinary share 14,556,572 49 14,556,572 48Capital surplus 6 668,917 2 600,097 2Retained earnings 6

Legal reserve 251,551 1 133,902 - Special reserve 255,058 1 255,058 1Unappropriated reatained earnings 1,741,483 6 1,932,699 7

　　 Total retained earnings 2,248,092 8 2,321,659 8Total other equity interest 533,051 2 118,933 - Treasury shares 4,6 (1,114,185) (4) (1,280,591) (4)Total equity 16,892,447 57 16,316,670 54

Total assets $29,882,769 100 $30,172,601 100 Total liabilities and equity $29,882,769 100 $30,172,601 100

KINPO ELECTRONICS, INC.PARENT COMPANY ONLY BALANCE SHEETS

December 31, 2017 and 2016(Expressed in Thousands of New Taiwan Dollars)

The accompanying notes are an integral part of financial statements.

Liabilities and Equity NotesAs of December 31,

NotesAssetsAs of December 31,

ANNEX II 

‐ 36 ‐ 

Item Notes

Operating revenue 4,6,7 $9,014,746 100 $12,036,018 100

Operating costs 6,7 (8,369,188) (93) (11,285,897) (94)

Gross profit from operations 645,558 7 750,121 6

Operating expenses 6

Selling expenses (153,672) (2) (199,105) (2)

Administrative expenses (266,203) (3) (318,090) (2)

Research and development expenses (194,488) (2) (207,790) (2)

Total operating expenses (614,363) (7) (724,985) (6)

Net operating income 31,195 - 25,136 -

Non-operating income and expenses 6,7

Other income 227,202 3 1,894,347 16

Other gains and losses, net (86,829) (1) (713,635) (6)

Finance costs, net (126,511) (1) (129,280) (1)

Share of profit (loss) of subsidiaries, associates and joint ventures accounted 480,668 5 436,058 4

for using equity method, net

Total non-operating income and expenses 494,530 6 1,487,490 13

Profit before tax 525,725 6 1,512,626 13

Total tax expense 4,6 (143,096) (2) (336,132) (3)

Profit 382,629 4 1,176,494 10

Other comprehensive income, net 6

Components of other comprehensive income that will not be reclassified to profit or loss

　 Gains (losses) on remeasurements of defined benefit plans (21,577) - 3,192 -

Share of other comprehensive income of subsidiaries, associates and joint ventures (8,967) - 3,163 -

accounted for using equity method, components of other comprehensive income

that will not be reclassified to profit or loss

Income tax related to components of other comprehensive income that will not 4,717 - (2,141) -

be reclassified to profit or loss

Components of other comprehensive income that will be reclassified to profit or loss:

Unrealised gains (losses) on valuation of available-for-sale financial assets 434,866 4 56,024 -

Share of other comprehensive income of subsidiaries, associates and joint ventures (29,345) - (1,652,416) (14)

accounted for using equity method, components of other comprehensive income

that will be reclassified to profit or loss

Income tax related to components of other comprehensive income that will 430 - 277,857 3

be reclassified to profit or loss

Other comprehensive income, net 380,124 4 (1,314,321) (11)

Total comprehensive income $762,753 8 $(137,827) (1)

Earnings per share 6

Basic earnings per share $0.28 $0.87

The accompanying notes are an integral part of financial statements.

KINPO ELECTRONICS, INC.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

For the years ended December 31, 2017 and 2016

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

2017 % 2016 %

‐ 37 ‐ 

Retained earnings

Balance on January 1, 2016 $14,581,132 $426,996 $- $255,058 $1,310,262 $588,932 $885,539 $(37,003) $(1,312,714) $16,698,202

Appropriation and distribution of 2015 retained earnings:

Legal reserve appropriated - - 133,902 - (133,902) - - - - -

Cash dividends - - - - (424,369) - - - - (424,369)

Other changes in capital surplus:

Changes in equity of associates and joint ventures accounted - (10,908) - - - - - - - (10,908)

for using equity method

Profit for the year ended December 31, 2016 - - - - 1,176,494 - - - - 1,176,494

Other comprehensive income for the year ended December 31, 2016 - - - - 4,214 (1,294,087) (40,660) 16,212 - (1,314,321)

Total comprehensive income for the year ended December 31, 2016 - - - - 1,180,708 (1,294,087) (40,660) 16,212 - (137,827)

Purchase of treasury share - - - - - - - - (172,700) (172,700)

Retirement of treasury share (24,560) 6,911 - - - - - - 17,649 -

Adjustments of capital surplus for company's cash dividends - 18,883 - - - - - - - 18,883

received by subsudiaries

Changes in ownership interests in subsidiaries - 48,200 - - - - - - - 48,200

Share-based payments - 110,015 - - - - - - 187,174 297,189

Balance on December 31, 2016 $14,556,572 $600,097 $133,902 $255,058 $1,932,699 $(705,155) $844,879 $(20,791) $(1,280,591) $16,316,670

Balance on January 1, 2017 $14,556,572 $600,097 $133,902 $255,058 $1,932,699 $(705,155) $844,879 $(20,791) $(1,280,591) $16,316,670

Appropriation and distribution of 2016 retained earnings:

Legal reserve appropriated - - 117,649 - (117,649) - - - - -

Cash dividends - - - - (430,369) - - - - (430,369)

Other changes in capital surplus:

Changes in equity of associates and joint ventures accounted - (5,534) - - - - - - - (5,534)

for using equity method

Profit for the year ended December 31, 2017 - - - - 382,629 - - - - 382,629

Other comprehensive income for the year ended December 31, 2017 - - - - (25,827) (35,220) 441,276 (105) - 380,124

Total comprehensive income for the year ended December 31, 2017 - - - - 356,802 (35,220) 441,276 (105) - 762,753

Adjustments of capital surplus for company's cash dividends - 18,883 - - - - - - - 18,883

received by subsudiaries

Changes in ownership interests in subsidiaries - (15,511) - - - - - - - (15,511)

Share-based payments - 70,705 - - - - - - 166,406 237,111

Others - 277 - - - - - 8,167 - 8,444

Balance on December 31, 2017 $14,556,572 $668,917 $251,551 $255,058 $1,741,483 $(740,375) $1,286,155 $(12,729) $(1,114,185) $16,892,447

KINPO ELECTRONICS, INC.

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

(Expressed in Thousands of New Taiwan Dollars)

For the years ended December 31, 2017 and 2016

Treasuryshares

Total equity

Other equity

The accompanying notes are an integral part of financial statements.

Unrealized gain(loss) on

available-for-salefinancial assets

Item

Exchangedifferences ontranslation of

foreign financialstatements

Share capital Capital surplus Legal reserve Special reserveUnappropriated

retainedearnings

Others

‐ 38 ‐ 

KINPO ELECTRONICS, INC.PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

For the years ended December 31, 2017 and 2016(Expressed in Thousands of New Taiwan Dollars)

$525,725 $1,512,626

Adjustments to reconcile profit:Depreciation expense 34,231 37,287Amortization expense 10,174 2,174Net loss (gain) on financial assets or liabilities at fair value through profit or loss 2,042 (2,383)Interest expense 120,290 122,806Interest income (25,676) (23,345)Dividend income (184,408) (186,031)Share-based payments 57,933 97,343Share of loss (profit) of subsidiaries, associates and joint ventures accounted for using equity (480,668) (436,058)Property, plant and equipment transferred to expenses - 53Loss (gain) on disposal of investments (1,143) - Loss (gain) on disposal of investments accounted for using equity method - 724,270Impairment loss on finacial assets 511 9,490Reversal of impairment loss on financial assets - (5,728)Gain on bargain purchase - (1,677,832)

Changes in operating assets and liabilities:Decrease (increase) in notes receivable 729 (729)Decrease (increase) in notes receivable due from related parties - 36Decrease (increase) in accounts receivable (257,532) 87,842Decrease (increase) in accounts receivable due from related parties 482,732 264,239Decrease (increase) in other receivable (1,712) 4,593Decrease (increase) in other receivable due from related parties 453,832 (63,260)Decrease (increase) in inventories 744 (2,335)Decrease (increase) in prepayments 5,130 (14,143)Decrease (increase) in other current assets (831) 620Increase (decrease) in notes payable - (1,319)Increase (decrease) in accounts payable 19 (148)Increase (decrease) in accounts payable to related parties 86,563 (1,764,531)Increase (decrease) in other payable (243,148) 209,108Increase (decrease) in other payable to related parties 2,758 9,051Increase (decrease) in provisions (1,671) 4,970Increase (decrease) in other current liabilities 229 43,405Increase (decrease) in net defined benefit liability (12,551) (11,145)

574,302 (1,059,074)Interest received 25,872 23,188Interest paid (119,090) (123,174)Income taxes refund (paid) (76,155) (243)

Net cash flows from (used in) operating activities 404,929 (1,159,303)

Proceeds from disposal of available-for-sale financial assets 7,671 5,728Proceeds from repayments of investments in debt instrument without active market 150,000 150,000Proceeds from capital reduction of financial assets at cost 5,312 2,034Acquisition of investments accounted for using equity method (359,348) (2,201,526)Increase in prepayments for investments (8,000) - Acquisition of property, plant and equipment (832) (6,805)Proceeds from disposal of property, plant and equipment 780 - Acquisition of intangible assets (34,690) (2,504)Increase in other non-current assets - 21Dividends received 577,680 2,538,710

Net cash flows from (used in) investing activities 338,573 485,658

Increase in short-term loans - 165,875Decrease in short-term loans (330,000) - Increase in short-term notes and bills payable - 280,000Decrease in short-term notes and bills payable (495,000) - Proceeds from long-term debt 9,850,000 6,370,000Repayments of long-term debt (9,795,000) (6,150,000)Decrease in other non-current liabilities (50) (90)Cash dividends paid (430,369) (424,369)Payments to acquire treasury shares - (172,700)Treasury shares sold to employees 165,907 186,639

Net cash flows from (used in) financing activities (1,034,512) 255,355

(291,010) (418,290)920,076 1,338,366

$629,066 $920,076

The accompanying notes are an integral part of financial statements.

Cash flows from (used in) financing activities:

Net increase (decrease) in cash and cash equivalentsCash and cash equivalents at the beginning of periodCash and cash equivalents at the end of period

Adjustments:

Cash inflow (outflow) generated from operations:

2017

Cash flows from (used in) investing activities:

2016Cash flows from operating activities:

Profit before tax

Item

equity method

‐39‐

KINPO ELECTRONICS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2017 and 2016

(Expressed in Thousands of New Taiwan Dollars)

Assets Notes 2017 % 2016 % Liabilities and Equity Notes 2017 % 2016 %

Current assets Current liabilities

Cash and cash equivalents 4,6 $7,475,163 8 $6,441,055 8 Short-term borrowings 4,6 $21,379,200 24 $14,285,990 17

Current financial assets at fair value through profit or loss 4,6 - - 8,612 - Short-term notes and bills payable 6 1,175,071 1 1,799,813 2

Current avalable-for-sale financial assets, net 4,6 262,272 - 245,352 - Current financial liabilities at fair value through profit or loss 4,6 6,872 - 63,056 -

Current investments in debt instrument without active market 4,6 202,211 - 182,241 - Notes payable 3,963 - 11,588 -

Notes receivable, net 4,6 86,048 - 22,960 - Accounts payable 21,663,136 24 22,475,433 27

Accounts receivable, net 4,6 25,732,509 29 23,000,909 28 Accounts payable to related parties 7 54,947 - 104,051 -

Accounts receivable due from related parties, net 4,6,7 242,037 - 272,770 - Other payables 6 2,684,471 3 3,456,869 4

Other receivables, net 4 1,854,796 2 987,128 1 Other payables to related parties 7 704 - 526 -

Other receivables due from related parties, net 4,7 258 - 9 - Current tax liabilities 4,5 310,768 - 391,838 1

Current tax assets 4 4,893 - 4,474 - Current provisions 4,6 30,911 - 63,570 -

Inventories 4,6 15,051,086 17 14,806,803 18 Long-term liabilities, current portion 4,6 476,436 1 2,396,310 3

Prepayments 473,278 1 499,498 1 Other current liabilities 502,249 1 708,021 1

Other current assets 4,6 736,443 1 967,486 1 Total current liabilities 48,288,728 54 45,757,065 55

Total current assets 52,120,994 58 47,439,297 57

Non-current liabilities

Non-current assets Long-term borrowings 4,6 10,284,859 12 8,476,965 10

Non-current available-for-sale financial assets, net 4,6 4,363,451 5 4,109,663 5 Deferred tax liabilities 4,6 1,805,903 2 1,725,104 2

Non-current financial assets at cost, net 4,6 549,998 1 488,995 1 Net defined benefit liability, non-current 4,6 771,443 1 709,206 1

Non-current investments in debt instrument without active market 4,6 150,000 - 300,000 - Other non-current liabilities 418,426 - 2,399 0

Investments accounted for using equity method, net 4,6 3,296,385 4 3,468,495 4 Total non-current liabilities 13,280,631 15 10,913,674 13

Property, plant and equipment 4,6 23,831,631 27 23,261,744 28 Total liabilities 61,569,359 69 56,670,739 68

Investment property, net 4,6 187,976 - 160,386 -

Intangible assets 4,6 358,914 - 299,404 - Equity attributable to owners of parent

Deferred tax assets 4,6 2,351,332 3 2,321,471 3 Share capital 4,6

Other non-current assets 6 2,128,556 2 1,837,613 2 Ordinary share 14,556,572 16 14,556,572 17

Total non-current assets 37,218,243 42 36,247,771 43 Capital surplus 6 668,917 1 600,097 1

Retained earnings 6

Legal reserve 251,551 - 133,902 -

Special reserve 255,058 - 255,058 -

Unappropriated reatained earnings 1,741,483 2 1,932,699 2

Total retained earnings 2,248,092 2 2,321,659 2

Total other equity interest 6 533,051 1 118,933 -

Treasury shares 4,6 (1,114,185) (1) (1,280,591) (1)

Total equity attributable to owners of the parent 16,892,447 19 16,316,670 19

Non-controlling interest 6 10,877,431 12 10,699,659 13

Total equity 27,769,878 31 27,016,329 32

Total asset $89,339,237 100 $83,687,068 100 Total liabilities and equity $89,339,237 100 $83,687,068 100

The accompanying notes are an integral part of financial statements.

‐ 40 ‐ 

KINPO ELECTRONICS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the years ended December 31, 2017 and 2016(Expressed in Thousands of New Taiwan Dollars except for earnings per share)

Item Notes 2017 % 2016 %Operating revenue 4,6,7 $119,204,764 100 $122,970,192 100Operating costs 6,7 (111,767,255) (94) (115,314,278) (94)Gross profit from operations 7,437,509 6 7,655,914 6Operating expenses 6,7

Selling expenses (1,143,195) (1) (1,180,492) (1)Administrative expenses (2,418,015) (2) (2,856,027) (2)Research and development expenses (2,646,432) (2) (2,484,058) (2)　Total operating expenses (6,207,642) (5) (6,520,577) (5)

Net operating income 1,229,867 1 1,135,337 1

Non-operating income and expenses 6,7 Other income 722,940 1 2,477,601 2

Other gains and losses, net (355,797) - (903,309) (1)Finance costs, net (778,172) (1) (665,378) (1)Share of profit (loss) of associates and joint ventures 103,068 - 309,571 -

　accounted for using equity method, net Total non-operating income and expenses (307,961) - 1,218,485 -

Profit before tax 921,906 1 2,353,822 1Total tax expense 4,6 (235,629) - (633,628) - Profit 686,277 1 1,720,194 1Other comprehensive income, net 6

Components of other comprehensive income that will not be reclassified to profit or loss:

Gains (losses) on remeasurements of defined benefit plans (34,817) - 23,774 -

　 Share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss

(2,278) - (6,293) -

Income tax related to components of other comprehensive income that will not be reclassified to profit or loss

4,717 - (2,141) -

Components of other comprehensive income that will be reclassified to profit or loss:

Exchange differences on translation 266,323 - (2,024,568) (1)

Unrealised gains (losses) on valuation of available-for-sale financial assets 384,640 - 94,890 -

Share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will be reclassified to profit or loss

(92,248) - (167,938) -

Other components of other comprehensive income that will be reclassified to profit or loss

(281) - 9,905 -

Income tax related to components of other comprehensive income that will be reclassified to profit or loss

430 - 277,857 -

Other comprehensive income, net 526,486 - (1,794,514) (1)Total comprehensive income $1,212,763 1 $(74,320) -

Profit, attributable to:Profit, attributable to owners of parent $382,629 1 $1,176,494 1Profit, attributable to non-controlling interests 303,648 - 543,700 - 　Total $686,277 1 $1,720,194 1

Comprehensive income attributable to:Comprehensive income, attributable to owners of parent $762,753 1 $(137,827) - Comprehensive income, attributable to non-controlling interests 450,010 - 63,507 - 　Total $1,212,763 1 $(74,320) -

Earnings per share 6Basic earnings per share $0.28 $0.87

The accompanying notes are an integral part of financial statements.

‐ 41 ‐ 

KINPO ELECTRONICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the years ended December 31, 2017 and 2016

(Expressed in Thousands of New Taiwan Dollars)

Equity attributable to owners of the parent

Retained earnings

Item

Balance on January 1, 2016 $14,581,132 $426,996 $- $255,058 $1,310,262 $588,932 $885,539 $(37,003) $(1,312,714) $16,698,202 $530,357 $17,228,559

Appropriation and distribution of 2015 retained earnings

Legal reserve appropriated - - 133,902 - (133,902) - - - - - - -

Cash dividends - - - - (424,369) - - - - (424,369) - (424,369)Other changes in capital surplus:

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

- (10,908) - - - - - - - (10,908) - (10,908)

Profit for the year ended December 31, 2016 - - - - 1,176,494 - - - - 1,176,494 543,700 1,720,194

Other comprehensive income for the year ended December 31, 2016

- - - - 4,214 (1,294,087) (40,660) 16,212 - (1,314,321) (480,193) (1,794,514)

Total comprehensive income for the year ended December 31, 2016

- - - - 1,180,708 (1,294,087) (40,660) 16,212 - (137,827) 63,507 (74,320)

Purchase of treasury share - - - - - - - - (172,700) (172,700) (172,700)

Retirement of treasury share (24,560) 6,911 - - - - - - 17,649 - - -

Adjustments of capital surplus for company's cash dividends received by subsudiaries

- 18,883 - - - - - - - 18,883 - 18,883

Changes in ownership interests in subsidiaries - 48,200 - - - - - - - 48,200 36,621 84,821

Share-based payments - 110,015 - - - - - - 187,174 297,189 12,932 310,121

Others - - - - - - - - - - 10,056,242 10,056,242

Balance on December 31, 2016 $14,556,572 $600,097 $133,902 $255,058 $1,932,699 $(705,155) $844,879 $(20,791) $(1,280,591) $16,316,670 $10,699,659 $27,016,329

Balance on January 1, 2017 $14,556,572 $600,097 $133,902 $255,058 $1,932,699 $(705,155) $844,879 $(20,791) $(1,280,591) $16,316,670 $10,699,659 $27,016,329

Appropriation and distribution of 2016 retained earnings:

Legal reserve appropriated - - 117,649 - (117,649) - - - - - - -

Cash dividends - - - - (430,369) - - - - (430,369) - (430,369)

Other changes in capital surplus:

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

- (5,534) - - - - - - - (5,534) - (5,534)

Profit for the year ended December 31, 2017 - - - - 382,629 - - - - 382,629 303,648 686,277

Other comprehensive income for the year ended December 31, 2017

- - - - (25,827) (35,220) 441,276 (105) - 380,124 146,362 526,486

Total comprehensive income for the year ended December 31, 2017

- - - - 356,802 (35,220) 441,276 (105) - 762,753 450,010 1,212,763

Adjustments of capital surplus for company's cash dividends received by subsudiaries

- 18,883 - - - - - - - 18,883 - 18,883

Changes in ownership interests in subsidiaries - (15,511) - - - - - - - (15,511) 33,751 18,240

Share-based payments - 70,705 - - - - - - 166,406 237,111 12,956 250,067

Others - 277 - - - - - 8,167 - 8,444 (318,945) (310,501)

Balance on December 31, 2017 $14,556,572 $668,917 $251,551 $255,058 $1,741,483 $(740,375) $1,286,155 $(12,729) $(1,114,185) $16,892,447 $10,877,431 $27,769,878

The accompanying notes are an integral part of financial statements.

Non-controllinginterests

Total equity

Other equity

Share capital Capital surplus Legal reserve Special reserveUnappropriated

retainedearnings

Exchange differenceson translation offoreign financial

statements

Unrealized gain(loss) on available-for-sale financial

assets

Others Treasury shares

Total equityattributable toowners of the

parent

‐ 42 ‐ 

KINPO ELECTRONICS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31, 2017 and 2016(Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities:Profit before tax $921,906 $2,353,822Adjustments:

Adjustments to reconcile profit:Depreciation expense 2,790,942 2,875,668Amortization expense 84,181 37,787Net loss (gain) on financial assets or liabilities at fair value through profit or loss (51,812) 119,652Interest expense 616,485 511,510Interest income (54,933) (101,819)Dividend income (196,813) (200,290)Share-based payments 92,016 176,681Share of loss (profit) of associates and joint ventures accounted for using equity method (103,068) (309,571)Loss (gain) on disposal of property, plant and equipment 7,796 (83,064)Loss (gain) on disposal of investments (12,004) 1,245Loss (gain) on disposal of investments accounted for using equity method - 866,972Impairment loss on finacial assets 511 24,095Reversal of provision for loss on financial assets - (5,728)Impairment loss on non-finacial assets 23,153 258,925Gain on bargain purchase - (1,929,831)

Changes in operating assets and liabilities:Decrease (increase) in notes receivable (63,088) 7,228Decrease (increase) in accounts receivable (2,731,600) 7,354,672Decrease (increase) in accounts receivable due from related parties 30,733 (2,001)Decrease (increase) in other receivable (858,053) 957,573Decrease (increase) in other receivable due from related parties (249) 383,802Decrease (increase) in inventories (244,283) 780,690Decrease (increase) in prepayments 26,220 (322,745)Decrease (increase) in other current assets 231,120 258,558Decrease (increase) in other financial assets (11) 53,091Increase (decrease) in notes payable (7,625) 8,549Increase (decrease) in accounts payable (812,297) (2,250,059)Increase (decrease) in accounts payable to related parties (49,104) (128,967)Increase (decrease) in other payable (781,048) 365,413Increase (decrease) in other payable to related parties 178 (73,793)Increase (decrease) in provisions (32,659) 42,978Increase (decrease) in other current liabilities (205,772) (424,315)Increase (decrease) in net defined benefit liability 27,420 28,605

Cash inflow (outflow) generated from operations: (1,351,758) 11,635,333Interest received 44,263 94,615Interest paid (627,365) (466,715)Income taxes paid (268,845) (121,766)

Net cash flows from (used in) operating activities (2,203,705) 11,141,467

Cash flows from (used in) investing activities: Proceeds from disposal of financial assets at fair value through profit or loss, designated as upon initial recognition 2,833 - Proceeds from disposal of available-for-sale financial assets 127,836 116,618Acquisition of investments in debt instrument without active market (14,857) (31,685)Proceeds from repayments of investments in debt instrument without active market 150,000 150,000Acquisition of financial assets at cost (69,226) - Proceeds from capital reduction of financial assets at cost 5,312 2,034Acquisition of investments accounted for using equity method (38,305) (263,026)Proceeds from disposal of investments accounted for using equity method - 2,283Proceeds from capital reduction of investments accounted for using equity method (10,000) - Acquisition of property, plant and equipment (3,214,257) (3,731,090)Proceeds from disposal of property, plant and equipment 454,678 573,292Acquisition of intangible assets (147,916) (71,423)Net cash inflows from business combination - 3,766,471Acquisition of investment properties (70,976) - Increase in other financial assets - (25,412)Decrease in other financial assets 20,274 - Increase in other non-current assets (351,647) - Decrease in other non-current assets - 27,295Increase in prepayments for business facilities (153,015) (552,531)Dividends received 430,198 410,500

Net cash flows from (used in) investing activities (2,879,068) 373,326

Cash flows from (used in) financing activities:Increase in short-term loans 9,704,974 2,454,184Decrease in short-term loans (2,766,123) (7,461,419)Increase in short-term notes and bills payable - 330,000Decrease in short-term notes and bills payable (625,500) (44,000)Proceeds from long-term debt 15,612,440 8,289,995Repayments of long-term debt (15,213,413) (10,143,241)Increase in other non-current liabilities - 1,582Decrease in other non-current liabilities (7,479) - Cash dividends paid (411,486) (405,486)Exercise of employee share options 7,675 - Payments to acquire treasury shares - (172,700)Treasury shares sold to employees 165,908 186,639Change in non-controlling interests (316,303) (22,737)

Net cash flows from (used in) financing activities 6,150,693 (6,987,183)Effect of exchange rate changes on cash and cash equivalents (33,812) (1,461,342)Net increase (decrease) in cash and cash equivalents 1,034,108 3,066,268Cash and cash equivalents at the beginning of period 6,441,055 3,374,787Cash and cash equivalents at the end of period $7,475,163 $6,441,055

The accompanying notes are an integral part of financial statements.

Item 2017 2016

    

‐ 43 ‐ 

Kinpo Electronics, Inc.

Overview of Other Key Positions Concurrently Held by Directors

Position  Name  Key Positions Held in Other Companies 

Chairman Hsu, Sheng‐

Hsiung 

NTNU Innovation Investment Holding Company 

Chairman 

Compal Smart Device (Chongqing) Co., Ltd. 

Chairman 

Kinpo International (Singapore) Pte. Ltd. 

Director 

Director  Shen, Shyh‐Yong  New Era AI Robotic Limited  Chairman 

iHELPER Inc.    Chairman 

Ruten Singapore Pte. Ltd.  Director 

Kinpo International (Singapore) Pte. Ltd. 

Director 

Cal‐Comp Big Data International Ltd.  Director 

New Era AI Robotic Limited  Chairman 

Cal‐Com (India) Private Limited  Director 

Nexa3D Inc.  Director 

Director  Chen, Jui‐Tsung   Ruihe Biotech Ltd.  Chairman 

Raycore Biotech Co., Ltd.  Director 

Director  Hsu, Chieh‐Li  AcTel Electronic(Dong Guan) Co., Ltd.  Director 

AcBel Electronic(Dong Guan) Co., Ltd.  Director 

AcBel Electronic (Wuhan) Co., Ltd.  Director 

AcBel Electronic (Wuhan) Co., Ltd.  General Manager

Acbel (USA) Polytech Inc.  Director 

AcBel Polytech (SAMOA) Investment Inc. 

Director 

Acbel Polytech (Singapore) Pte Ltd.  Director 

Acbel Polytech (UK) Limited  Director 

AcBel Polytech Japan Inc.  Director 

Power Station Holdings Ltd.  Director 

The Eslite Spectrum Corporation  Director 

   

A N N E X I I I

‐ 44 ‐ 

                    

APPENDIX 

‐ 44 ‐ 

 Articles of Incorporation 

of 

Kinpo Electronics, Inc. 

 

Chapter One General Provisions  

Article 1 

The Company is incorporated as a company limited by shares under the provisions set forth in the 

Company Act in the full name of Kinpo Electronics, Inc (the “Company”).  

Article 2 

The lines of business of the Company shall include the following: 

1. CB01020  Office Machine Manufacturing 

2. CB01990  Other Machinery Manufacturing Not Elsewhere Classified 

3. CC01030  Electric Appliance and Audiovisual Electric Products Manufacturing 

4. CC01060  Wired Communication Equipment and Apparatus Manufacturing 

5. CC01070  Telecommunication Equipment and Apparatus Manufacturing 

6. CC01080  Electronic Parts and Components Manufacturing 

7. CC01110  Computers and Computing Peripheral Equipment Manufacturing 

8. CF01011  Medical Materials and Equipment Manufacturing 

9. E601020  Electric Appliance Installation 

10. E603050 Cybernation Equipment Construction 

11. E604010 Machinery Installation Construction 

12. E605010 Computing Equipment Installation 

13. F111090 Wholesale of Building Materials 

14. F113010 Wholesale of Machinery 

15. F113020 Wholesale of Household Appliance 

16. F113030 Wholesale of Precision Instruments 

17. F113050 Wholesale of Computing and Business Machinery Equipment 

18. F113070 Wholesale of Telecom Instruments 

19. F113110 Wholesale of Batteries 

20. F113990 Wholesale of Other Machinery and Equipment 

21. F118010 Wholesale of Computer Software 

22. F119010 Wholesale of Electronic Materials 

23. F211010  Retail Sale of Building Materials 

24. F213010  Retail Sale of Household Appliance 

25. F213030  Retail Sale of Computing and Business Machinery Equipment 

26. F213040  Retail Sale of Precision Instruments 

27. F213060  Retail Sale of Telecom Instruments 

28. F213080  Retail Sale of Machinery and Equipment 

APPENDIX I

‐ 45 ‐ 

29. F213110 Retail Sale of Batteries 

30. F218010  Retail Sale of Computer Software 

31. F219010  Retail Sale of Electronic Materials 

32. F213990  Retail Sale of Other Machinery and Equipment 

33. F401010  International Trade 

34. I199990  Other Consultancy 

35. I301010  Software Design Services 

36. I301020  Data Processing Services 

37. I301030  Digital Information Supply Services 

38. IG02010  Research Development Service 

39. JA02010  Electric Appliance and Audiovisual Electric Products Repair Shops 

40. H703100 Real Estate Rental and Leasing 

41. F108031 Wholesale of Drugs, Medical Goods 

42. F208031  Retail Sale of Medical Equipment 

43. CC01101 Retrained Telecom Radio Frequency Equipment and Materials Manufacturing 

44. F401021  Retrained Telecom Radio Frequency Equipment and Materials Import 

45. ZZ99999  All business items that are not prohibited or restricted by law, except those are subject 

to special approval  

Article 3 

The Company may, in line with its business needs, provide guarantees externally. 

The total amount of the Company's reinvestment may exceed 40% of the Company's paid‐in capital.  

Article 4 

The head office of the Company is located in Taipei, Taiwan. The Company may, as approved by the 

resolution of the Board of Directors, set up branch offices or factories in compliance with applicable 

laws and regulations in Taiwan or abroad when necessary.  

Article 5 

(Deleted.)  

Chapter Two Shares  

Article 6 

The total amount of the Company's authorized capital shall be two billion New Taiwan Dollars (NT$ 

2,000,000,000) divided into two billion shares with a par value of ten New Taiwan Dollars (NT$ 10) 

per share, to be issued in installments, including one hundred fifty million shares retained for the 

exercise of share subscriptions from the rights of stock warrants or bonds attached with warrants .

‐ 46 ‐ 

Article 7 

The share certificates of the Company shall be serial numbered, signed by or affixed with the seals 

of no less than three Directors of the Company, and be validated pursuant to the law before they 

are issued. 

The  Company may  issue  shares  without  printing  share  certificates,  but  shall  have  the  shares 

registered with Taiwan Depository and Clearing Corporation. 

 

Article 8 

Shareholders shall provide their real names and residential addresses to the Company or the agent 

of  the  Company's  shareholder  services,  and  they  should  also  provide  the  specimens  of  their 

signatures  or  seals  to  the  Company  or  the  agent  of  the  Company's  shareholder  services  for 

documentation. 

 

Article 9 

The  shareholder  services of  the Company,  including  the  transferring,  inheritance, and gifting of 

shares, reporting of  loss of share certificates, pledging of stock rights, and other matters such as 

reporting of loss or change of signatures or seals, change of address, and collection of dividends or 

other  interests,  shall  be  conducted  in  accordance  with  the  Regulations  Governing  the 

Administration of Shareholder Services of Public Companies unless otherwise prescribed by other 

applicable laws and regulations. 

 

Article 10 

Registration  for  transfer  of  shares  shall  be  suspended  for  a  period  of  sixty  days  before  the 

convention  of  an  annual  general meeting  of  shareholders,  thirty  days  before  an  extraordinary 

general meeting of shareholders, or within five days before the base date on which the dividends, 

bonuses, or other interests to be paid out by the Company. 

 

Chapter Three Shareholders' Meeting 

 

Article 11 

Shareholders' meeting shall be of two types, namely the annual and extraordinary general meeting 

of shareholders, with the former convened by the Board of Directors, in accordance with the law, 

regularly once a year within six months after the close of each fiscal year, and the later convened, 

in accordance with the law, when necessary. 

 

Article 12 

In case a shareholder is unable to attend a shareholders' meeting for any cause, such shareholder 

may issue a proxy, specifying the scope of authorization for a representative to be present on the 

shareholder's  behalf,  in  accordance  with  the  Regulations  Governing  the  Use  of  Proxies  for 

Attendance at Shareholder Meeting of Public Companies.   

‐ 47 ‐ 

Article 13 

A  shareholders' meeting  shall  be  presided  over  by  the  Chairman  of  the  Company.  In  case  the 

Chairman is on leave or unable to perform his or her duty and power for any cause, the Chairman 

shall designate one director to act as the chairperson for the meeting; if no such designation is made, 

the directors of the Board shall elect one among themselves. 

 

Article 14 

A shareholder of the Company shall have one vote for each share held. 

 

Article 15 

Unless otherwise provided for under the Company Act, a resolution shall be made at a shareholders' 

meeting  by  the  shareholders  holding  and  representing  a  majority  of  the  total  number  the 

outstanding shares issued and at which meeting a majority of the shareholders present shall vote in 

favor of it. 

 

Chapter Four Directors and Functional Committees 

 

Article 16 

The Company shall have eleven to sixteen directors whom shall be elected by shareholders through 

candidate nomination system from the list of nominees. The number of independent directors shall 

not be less than three and shall not be less than one fifth of the seats in the Board of Directors. 

The professional qualifications, shareholding, restrictions on concurrent positions held, method of 

nomination and election, and other compliance matters with respect to independent directors shall 

be conducted in accordance with applicable laws and regulations. 

The  total  number  of  registered  shares  owned  by  all  directors  of  the  Board  of Directors  of  the 

Company shall be in compliance with the Rules and Review Procedures for Director and Supervisor 

Share Ownership Ratios at Public Companies as promulgated by the Securities and Futures Bureau 

of the Financial Supervisory Commission. 

 

Article 17 

A director shall be elected for a term of three years and may be re‐elected for consecutive terms. In 

the situation when a director's term of office has reached expiration but the next election has not 

yet to take place, such director's service shall be extended till the following term of directors assume 

office. 

The Company may purchase liability insurance for the directors during their term of office to cover 

the indemnity which may arise from within the scope of their business duty and responsibilities in 

accordance with laws. 

   

‐ 48 ‐ 

Article 18 

In the situation when the vacancy in the Board of Directors has reached one third of the number of 

total members,  or when  all  independent  directors  are  dismissed,  the  Board  of  Directors  shall 

convene  an extraordinary  shareholders' meeting within  sixty days  to elect  succeeding directors 

whose term of office shall be limited to fulfill the remaining period of their predecessors. 

 

Article 19 

The Board of Directors  is organized by directors. The Chairman of the Board of Directors shall be 

elected from among the attending directors by a majority vote and with the attendance over two 

thirds of the seats in a meeting of the Board of Directors. The Chairman shall execute all business 

matters  in  accordance with  applicable  laws  and  regulations,  and  the  resolutions made  at  the 

meetings of shareholders and the Board of Directors. 

Directors shall attend the meetings of the Board of Directors in person. A director, when unavailable 

to  attend  the meeting  in person, may  issue  a proxy  specifying  the  scope of  authorization with 

respect to the subject of the meeting to authorize another director to attend the meeting on his or 

her behalf. Nevertheless, a director  is  limited  to receive such authorization  from only one other 

director each time. 

At  the  time when a meeting of  the Board of  the Directors  is  conducted  in  the  form of a video 

conference, a director shall be deemed as attending  in person  if attending  the meeting  through 

video conferencing system. 

 

Article 20 

The duty and power of the Board of Directors are specified as below: 

1. To appoint, dismiss, and approve the compensations of managerial officers and to approve the 

non‐competition clause on managerial officers 

2. To decide and amend the Company's business policy 

3. To review the Company's budgetary plan and financial statement 

4. To determine the distribution of earnings or the loss offsetting proposal 

5. Upon the amount of endorsement, guarantee, and acceptance provided to the related parties in 

excess of the  limit prescribed by the Board of Directors, any excess shall be submitted to the 

Board of Directors for approval. 

6. Upon the amount of borrowing from external sources and credits offered to external parties in 

excess of the  limit prescribed by the Board of Directors, any excess shall be submitted to the 

Board of Directors for approval. 

7. To establish, adjust and remove any important internal body of the Company and to formulate 

and amend the content of the Articles of Incorporation. 

8. To decide  the prices of  securities  for private equity placement and  the method  for  selecting 

specific placees 

9. To exercise other duties and powers granted in accordance with laws and regulations and by the 

shareholders' meetings   

‐ 49 ‐ 

Article 21 

In order  to ensure  its performance  in monitoring and strengthen  its management,  the Board of 

Directors may set up various functional committees with their organizational charters be separately 

formulated in accordance with applicable laws and regulations and the Company's guidelines. 

The Company shall set up the Audit Committee organized by all of the  independent directors  in 

accordance with the Article 14‐4 of the Securities and Exchange Act. 

The Audit Committee shall be responsible of exercising a supervisor's duty and power as provided 

in the Company Act, the Securities and Exchange Act and other applicable laws and regulations. 

 

Article 22 

Regardless whether  the  Company makes  profits  or  suffers  losses,  the  Company  shall  pay  the 

directors remunerations for their services for the Company. The aforesaid remunerations of all the 

directors shall be determined based on the extent of their participation in the Company's operation 

and their contribution, at the same time with reference to the general level in the industry, by the 

Company's Remuneration Committee and submitted to the Board of Directors for discussion and 

approval. 

 

Article 23 

Prior to the convention of a meeting of the Board of Directors, a meeting notice in which specifies 

the subject shall be sent to directors seven days in advance. However, a meeting may be called at 

anytime under urgent circumstances. 

The afore‐mentioned meeting notice may be sent via fax or email. 

 

Chapter Five Managerial Officer 

 

Article 24 

The Company may appoint a multiple number of managerial officers whose appointment, dismissal 

and compensations shall be conducted in accordance with the Article 29 of the Company Act. 

 

Chapter Six Distribution of Earnings after Closing 

 

Article 25 

The Company's fiscal year is determined as the dates of solar calendar. After the close of each fiscal 

year,  the Board of Directors shall provide and submit  the  following  reports  to  the shareholders' 

meeting for acceptance in accordance with the legal procedures. 

1. Business Report 

2. Financial Statement 

3. Proposals regarding earning distribution or loss offsetting   

‐ 50 ‐ 

Article 26 

The Company, if profitable in the year, shall set aside no less than 2% of the profit as compensation 

for the employees and no higher than 2% as remuneration for the directors.  However, the Company, 

when accumulated losses remain on the account, shall reserve a portion of its earnings to offset the 

losses first. 

The afore‐mentioned profit of the year refers to the earnings before tax excluding the deduction of 

compensations for the employees and remunerations for the directors. 

The proposals with respect to the distribution percentages of the employees' compensation and the 

directors' remunerations and the employees' compensation to be paid in cash or by stock shall be 

consented by a majority of the attending directors with the attendance of over two thirds of the 

seats  in a meeting of  the Board of Directors. The  resolutions made by  the Board  shall  then be 

reported to the shareholders' meeting. 

Employees'  compensation  in  the  form  of  cash  or  stock  shall  only  be  paid  to  the  Company's 

employees who meet certain qualifications. 

 

Article 26‐1 

The  Company's  earnings  of  the  year,  if  any,  shall  be  allocated  to  pay  taxes  and  offset  the 

accumulated losses from previous years first, and then set aside 10% as legal reserve. The Company 

shall then appropriate or reverse a certain amount as special reserve in compliance with applicable 

laws or  regulatory  requirements. The  remaining earnings,  if any, may be put  together with  the 

retained earnings from previous years and the adjustment amount of the undistributed earnings of 

the year; the sum of the above may be appropriated as dividends and bonuses according to the 

distribution proposal prescribed by  the Board of Directors based on  the  actual needs  after  the 

proposal is submitted to and approved at the shareholders' meeting. 

With respect to the afore‐mentioned distribution of dividends, the earnings distributable of the year 

may be paid out  in  full  in  consideration of  the Company's financial, business  and management 

arrangements. The cash dividends  shall not be  less  than 10% of  the  total of  the cash and  stock 

dividends distributed of the year. 

 

Chapter Seven Supplementary Provisions 

 

Article 27 

With regard to the matters not provided for in these Articles of Incorporations, the Company Act, 

the Securities and Exchange Act and other applicable laws and regulations shall govern. 

 

Article 28 

The Company's  internal organizational  charter  and operational procedures  shall be  additionally 

determined by the resolutions of the Board of Directors. 

   

‐ 51 ‐ 

Article 29 

These Articles of Incorporation were enacted on March 29, 1973, and 

amended on June 30, 1975 for the first time, 

amended on August 2, 1975 for the second time, 

amended on July 25, 1976 for the third time, 

amended on June 6, 1977 for the fourth time, 

amended on July 25, 1978 for the fifth time, 

amended on November 26, 1979 for the sixth time, 

amended on June 1, 1980 for the seventh time, 

amended on January 25, 1981 for the eighth time, 

amended on February 26, 1981 for the ninth time, 

amended on November 18, 1981 for the tenth time, 

amended on December 13, 1981 for the eleventh time, 

amended on March 24, 1982 for the twelfth time, 

amended on December 27, 1982 for the thirteenth time, 

amended on January 3, 1983 for the fourteenth time, 

amended on November 30, 1983 for the fifteenth time, 

amended on February 20, 1984 for the sixteenth time, 

amended on April 6, 1986 for the seventeenth time, 

amended on May 7, 1987 for the eighteenth time, 

amended on February 1, 1988 for the nineteenth time, 

amended on November 26, 1988 for the twentieth time, 

amended on April 2, 1989 for the twenty‐first time, 

amended on April 23, 1989 for the twenty‐second time, 

amended on April 16, 1990 for the twenty‐third time, 

amended on April 9, 1991 for the twenty‐forth time, 

amended on April 15, 1992 for the twenty‐fifth time, 

amended on April 16, 1993 for the twenty‐sixth time, 

amended on March 31, 1994 for the twenty‐seventh time, 

amended on April 8, 1995 for the twenty‐eighth time, 

amended on April 11, 1996 for the twenty‐ninth time, 

amended on June 6, 1997 for the thirtieth time, 

amended on April 15, 1998 for the thirty‐first time, 

amended on May 25, 1999 for the thirty‐second time, 

amended on April 18, 2000 for the thirty‐third time, 

amended on April 10, 2001 for the thirty‐forth time, 

amended on April 10, 2001 for the thirty‐fifth time, 

amended on May 28, 2002 for the thirty‐sixth time, 

amended on May 27, 2003 for the thirty‐seventh time, 

amended on May 27, 2004 for the thirty‐eighth time, 

‐ 52 ‐ 

amended on May 31, 2005 for the thirty‐ninth time, 

amended on June 14, 2006 for the fortieth time, 

amended on June 12, 2007 for the forty‐first time, 

amended on June 16, 2008 for the forty‐second time, 

amended on June 10, 2009 for the forty‐third time, 

amended on June 15, 2010 for the forty‐fourth time, 

amended on June 15, 2011 for the forty‐fifth time, 

amended on June 19, 2012 for the forty‐sixth time, 

amended on June 13, 2013 for the forty‐seventh time, 

amended on June 24, 2014 for the forty‐eighth time, 

amended on June 22, 2015 for the forty‐ninth time, 

and on June 22, 2016 for the fiftieth time. 

 

   

‐ 53 ‐ 

 The Rules of Procedures for the Shareholders’ Meeting 

of 

Kinpo Electronics, INC. 

 

Effective by the resolution of the Annual General Meeting of Shareholders 

on May 28, 2002 

 

1. Kinpo Electronics, Inc. (the “Company”) shall convene the shareholders’ meeting in accordance 

with these Rules of Procedures (the “Rules”) unless otherwise prescribed by other applicable laws 

and regulations.   

2. The Company shall provide a signature book for the attending shareholders to sign in, or instead 

the attending shareholders shall submit sign‐in cards to complete the registration process to be 

admitted to the shareholders’ meeting.   

3. The attendance and the voting shall be calculated based on the number of shares represented by 

the shareholders attending the shareholders’ meeting.     

4. A shareholders’ meeting shall be convened at a venue where the Company is located or a venue 

convenient  for  shareholders’  attendance  and  suitable  for  the  convention.  A  shareholders’ 

meeting shall not begin earlier than 9:00 a.m. or later than 3:00 p.m.   

5. The Chairman of the Company shall preside as the chairperson at a shareholders’ meeting if the 

meeting is convened by the Board of the Directors of the Company. In the situation where the 

Chairman is on leave or unavailable to perform his or her duty and power for any cause, the Vice 

Chairman of the Company shall act as the chairperson for the meeting. In the situation where 

there  is no vice chairman or  the Vice Chairman of  the Company  is on  leave or unavailable  to 

perform his or her duty  and power  for  any  cause,  the Chairman  shall designate a Managing 

Director to act as the chairperson on his or her behalf. In the situation where there is no managing 

director,  the Chairman shall designate one Director  from  the Board of Directors  to act as  the 

chairperson  for  the meeting.  In  the  absence of  such designation,  the Managing Directors or 

Directors of  the Board  shall elect one  from among  themselves an acting  chairperson  for  the 

shareholders’ meeting.   

Where the shareholders’ meeting is convened by a person who is entitled to convene the meeting 

but  is  not  a member  of  the  Board  of Directors,  such  person  shall  perform  the  duty  as  the 

chairperson for the shareholders’ meeting. In the situation where there are two or more people 

who are entitled to convene the meeting, a chairperson shall be elected from among themselves.   

6. The Company may appoint its lawyers, accountants or any other people relevant to the meeting 

to be present at the shareholders’ meeting.   

The supporting staff for the proceeding of a shareholders’ meeting shall wear an identification 

badge or armband.   

7. The Company shall video‐tape or audio‐tape the entire proceeding of a shareholders’ meeting, 

and the recording shall be kept for at least one year.    

APPENDIX II

‐ 54 ‐ 

8. The chairperson of a shareholders’ meeting shall call the meeting to order at the time when the 

meeting  is  scheduled  to  commence.  If  the  number  of  shares  represented  by  the  attending 

shareholders has not yet constituted more than an aggregate of one‐half of the total outstanding 

shares issued, the chairperson may postpone the time for the meeting. The postponements shall 

only reach two times at most, and the meeting shall not be postponed for more than one hour in 

total.  If  after  two postponements  the  shares  represented by  attending  shareholders has not 

reached the quorum but has constituted more than one third of the total of outstanding shares 

issued, a tentative resolution may be passed in accordance with the Article 175‐1 of the Company 

Act. Before the end of such meeting, if the shares represented by the attending shareholders has 

constituted more than one half of the total of outstanding shares  issued, the chairperson may 

bring the already passed resolution  for voting again  in accordance with the Article 174 of the 

Company Act.   

9. The  agenda of  a  shareholders’ meeting  shall be  established by  the Board of Directors  if  the 

meeting is convened by the Board of Directors of the Company. Unless otherwise approved in the 

shareholders’ meeting, the meeting shall proceed in accordance with the pre‐arranged agenda.   

The preceding paragraph applies in the situation where a shareholders’ meeting is convened by 

a person, other than a member of the Board of Directors, entitled to convene such a meeting.   

Unless otherwise  resolved  at  the  shareholders’ meeting,  the  chairperson  shall not  announce 

adjournment  until  the  agenda  prescribed  in  the  preceding  two  paragraphs  (including 

extraordinary motions) are resolved.   

After  the meeting  is  adjourned,  shareholders  shall  not  elect  a  chairperson  and  resume  the 

meeting at the same or another venue. 

In  the  situation where  the chairperson adjourns  the meeting  in violation of  the Rules, a new 

chairperson may be elected by more than half of the votes from the shares represented by the 

attending shareholders so that the meeting is able to be continued.   

10. When a shareholder attending a shareholders’ meeting wishes to speak, he or she should fill out 

a speech note with a summary of the speech, shareholder’s account number (or the number of 

attendance  card)  and  the  account  name  of  the  shareholder  in  advance.  The  sequence  of 

speeches shall be determined by the chairperson.   

If any attending shareholder at the shareholders’ meeting submits a speech note but does not 

speak, no speech shall be deemed to have been made by such shareholder. In case content of 

the speech of a shareholder are inconsistent with the content of the speech note, the content 

of actual speech shall be taken into account.   

The speech of a shareholder shall remain concrete, clear, and relevant to the agenda otherwise 

the chairperson may stop the speech of such shareholder. 

Unless otherwise permitted by the chairperson and the speaking shareholder, no shareholder 

shall interrupt the speech of other shareholders. The chairperson shall stop such interruption.   

11. No shareholder shall speak more than twice regarding the same item without the chairperson’s 

consent, and the time of each speech shall not exceed five minutes. Nevertheless, the speech 

may extend for three minutes if permitted by the chairperson. 

In case the speech of any shareholder violates the preceding paragraph or exceeds the scope of 

the agenda item, the chairperson may stop the speech of such shareholder   

‐ 55 ‐ 

12. A  corporate  shareholder  should  only  appoint  one  person  as  its  representative  to  attend  a shareholders’ meeting.   

In the situation where a corporate shareholder has appointed two or more representatives to 

attend  the  shareholders’  meeting,  an  appointment  letter  shall  be  provided  and  only  one 

representative can speak for each agenda item. 

13. After the speech of a shareholder, the chairperson may make responses by him or herself or 

appoint an appropriate person to respond.   

14. The chairperson may announce end of discussion of an item listed in the agenda and submit the 

item for voting if the chairperson deems that the item is ready for voting.   

15. With respect to the voting of each proposal, the people who conduct ballot examination and 

counting shall be designated by the chairperson. At the same time, the ballot examiners also 

have to be shareholders.   

The result of each vote shall be announced at the meeting immediately and shall be recorded 

into the minute.   

16. The chairperson may, at his or her own discretion, set time for intermission during the course of 

a shareholders’ meeting. 

17. Unless otherwise provided for under the Company Act, the Articles of Incorporation and other 

applicable  laws  and  regulations,  a  proposal  put  to  vote  shall  be  approved  by  consent  of  a 

majority of  shares  represented by attending  shareholders at  the meeting. During  the voting 

process, a proposal which proves to meet no objection from the attending shareholders after 

the inquiry made by the chairperson shall be deemed passed in the validity same as a proposal 

resolved through balloting process.   

In the situation when a person who acts as the proxy for two or more shareholders concurrently, 

the number of votes represented by such person shall not exceed  three percent of  the  total 

number of votes of the Company and the portion of excessive votes represented by such proxy 

shall not be counted. Any shareholder who bears a personal interest that may conflict with and 

impair the interest of the Company in respect of any proposed matter shall abstain from voting 

and shall not act as a proxy for other shareholders to exercise voting with respect to the said 

matter.   

18. In the case of an amendment or alternative to an original proposal, the chairperson shall decide 

on the order of voting together with the original proposal. However, if one of such proposals has 

been approved, the others shall be deemed overruled and no further vote is required.   

19. The chairperson may request picketers (or security guards) to assist in maintaining the order at 

the meeting venue. Members of the picket (or security guards) shall wear armbands with the 

word "Picket" when maintaining the order at the meeting venue.   

20. Any matters which are not adequately provided for herein shall be subject to the Company Act, 

the  Securities  and  Exchange Act,  the Articles  of  Incorporation  or  other  applicable  laws  and 

regulations.   

21. The  Rules  and  any  amendment  shall  take  effect  after  being  approved  at  the  shareholders’ 

meeting.     

‐ 56 ‐ 

Rules of Procedures for the Meetings of the Board of Directors 

of 

Kinpo Electronics, Inc. 

 

Effective as approved by the meeting of the Board of Directors on December 28, 2006, 

amended as approved by the meeting of the Board of Directors on April 20, 2007, 

amended as approved by the meeting of the Board of Directors on March 24, 2008, 

and amended as approved by the meeting of the Board of Directors on October 31, 2012. 

 

Article 1 

Basis of the Establishment 

To  establish  a  strong  governance  system  and  sound  supervisory  capabilities  for  the  Board  of 

Directors of Kinpo Electronics,  Inc. (the "Company") and to strengthen management capabilities, 

these Rules of Procedures for the Meetings of the Board of Directors (the "Rules") are established 

pursuant to the Article 2 of the Regulations Governing Procedure for Board of Directors Meetings 

of Public Companies. 

 

Article 2 

Scope 

With respect to the Board of Directors' meetings (the "Board meetings") of the Company, the main 

agenda items, working procedures, required content of meeting minutes, public announcements, 

and  other  compliance  requirements  shall  be  handled  in  accordance  with  these  Rules  unless 

otherwise prescribed in other applicable laws or regulations. 

 

Article 3 

Convention and Notice of Board Meetings 

The Board of Directors of the Company shall meet at least once every quarter. 

Prior to the convention of a Board meeting, a meeting notice in which specifies the subject shall be 

sent  to directors and  supervisors  seven days  in advance; provided, however, a meeting may be 

called at anytime under urgent circumstances. 

All of the matters set forth in the Article 12 of these Rules shall be specified in the meeting notice, 

and none shall be raised as an extraordinary motion in a Board meeting unless in an emergency or 

based on a legitimate reason. 

 

Article 4 

Meeting Notice and Meeting Materials 

The  Company’s  Executive  Secretary  of  the  Board  of  Directors  is  designated  to  handle  the 

administrative matters relating to the Company’s Board meetings. 

APPENDIX III

‐ 57 ‐ 

The unit handling the Board meeting matters  is responsible of drafting the agenda, proposals, or 

discussion items for a Board meeting and preparing sufficient meeting materials to be sent with the 

meeting notice altogether. 

A meeting notice and meeting materials may be produced and sent out in electronic form. 

Where a director finds the meeting materials as mentioned in the preceding paragraph insufficient, 

he  or  she may  request  the  Executive  Secretary  to  provide  additional  information. If  a  director 

believes  the materials  for  the  agenda  are  incomplete,  the  discussion  of  the matters may  be 

postponed upon approval of the Board. 

 

Article 5 

Preparation of Signature Book and Other Document and Director's attendance by Proxy 

When the Company’s Board meeting is convened, a signature book shall be prepared for attending 

directors to sign in to the meeting as record. 

A director shall attend a Board meeting in person. In the event where a director is unable to attend 

in person, he or  she may authorize another director  to attend as proxy  in accordance with  the 

Articles  of  Incorporation  of  the  Company.  Attendance  via  video‐conferencing  is  deemed  as 

attendance in person. 

In the situation where a director authorizes another director to attend a Board meeting as proxy, 

he or she shall, each time, issue a proxy in which specifies the scope of authorization with respect 

to the meeting subject. 

The proxy as mentioned  in the second paragraph  is  limited to act as the proxy of only one other 

director. 

 

Article 6 

Venue and Time of Board Meeting 

The Company's Board meeting shall be convened at a venue where the Company is located and at 

a time within business hours or at the venue and time convenient  for directors' attendance and 

suitable for the convention of a Board meeting. 

 

Article 7 

Chairperson of the Board of Directors and Acting Chairperson 

The Company's Board meetings shall be convened and chaired by the Chairman of the Company. 

The first Board meeting of each term, however, shall be convened by the director who received the 

votes representing the largest portion of voting right at a general meeting of shareholders in which 

the  election  of  directors was  held,  and  shall  be  chaired  by  the  person who  is  entitled  to  the 

convention of the meeting. In the situation where there are two or more people entitled to such 

right, they shall elect from among themselves to act as the chairperson for the meeting. 

In the situation where the Chairman is on leave or unavailable to perform his or her duty and power 

for any cause, the Vice Chairman of the Company shall act as the chairperson for the meeting. In 

the situation where there is no vice chairman or the Vice Chairman of the Company is on leave or 

unavailable to perform his or her duty and power  for any cause, the Chairman shall designate a 

Managing Director to act as the chairperson on his or her behalf. In the situation where there is no 

‐ 58 ‐ 

managing director, the Chairman shall designate one Director from the Board of Directors to act as 

the chairperson  for  the meeting.  In  the absence of such designation,  the Managing Directors or 

Directors  of  the  Board  shall  elect  one  from  among  themselves  an  acting  chairperson  for  the 

shareholders' meeting. 

 

Article 8  

Reference Materials, Non‐voting Participants and the Convention of a Board Meeting 

At  the  time  when  the  Company's  Board  meeting  is  convened,  the  management  or  the  unit 

responsible  for  the  Board meetings  shall  prepare  relevant  information  ready  for  the  attending 

directors' reference. 

At  the  time  when  a  Board  meeting  is  convened,  personnel  from  relevant  departments  or 

subsidiaries  may  be  informed  to  be  present  depending  on  the  content  of  meeting 

agenda. Accountants, lawyers or other types of professionals may also be invited to be present to 

provide explanations when necessary, provided, however, that they shall leave the meeting when 

deliberation and voting take place. 

The chairperson of a Board meeting shall call the meeting to order at the time when the meeting is 

scheduled to commence and the majority of directors are present. In the situation where fewer than 

half of all directors are present, the chairperson may announce postponement of the meeting not 

more than twice. If a quorum has not been reached after the second postponement, the chairperson 

may convene a new meeting in accordance with the procedure prescribed under the Article 3‐2 of 

the Rules. 

"All directors" as mentioned in the preceding paragraph shall refer to those actually in the office at 

the time. 

 

Article 9  

Documentation of a Board Meeting by Audio or Video Taping 

The Company shall video‐tape or audio‐tape  the entire proceeding of a Board meeting, and  the 

recording shall be kept for at least five years; the recording may be preserved in electronic form. 

If any litigation with respect to a resolution of a Board meeting arises before the end of the retention 

period mentioned in the preceding paragraph, the relevant audio or video recordings shall be kept 

until the conclusion of the litigation. 

Where a Board meeting is convened by videoconference, the audio and video documentation shall 

constitute  as  part  of meeting minutes  and  shall  be  properly  retained  for  the  duration  of  the 

Company. 

 

Article 10  

Meeting Agenda 

The agenda of the Company's regular Board meetings shall include at least the following: 

1. Matters to be reported: 

(1) Minutes of the last meeting and action taken 

(2)  Important financial and business reports 

(3)  Internal audit reports 

‐ 59 ‐ 

(4) Other important reports 

2. Matters for discussion: 

(1)  Items carried from the previous meeting 

(2)  Items to be discussed in the current meeting 

3.  Extraordinary motions 

 

Article 11 Discussion of Agenda 

The Company's Board meeting shall proceed in accordance with the meeting procedures set forth 

in the meeting notice but  is subject to change upon the consent of the majority of the attending 

directors. 

Unless otherwise consented by the majority of the attending directors, the chairperson shall not 

announce adjournment. 

At anytime during the course of a Board meeting, if the number of directors sitting at the meeting 

does  not  constitute  the  majority  of  the  attending  directors,  the  chairperson  shall  announce 

suspension of the meeting upon the motion made by any sitting director, in which case the Article 

8‐3 shall apply. 

 

Articles 12 

Matters Requiring Discussion at Board Meeting 

The following matters shall be submitted to the Company's Board meetings for discussion: 

1.  The business plan of the Company 

2.  Annual and semi‐annual  financial reports, with the exception of semi‐annual  financial reports 

which, under  relevant  laws  and  regulations, do not  require  to be  audited  and  attested by  a 

certified public accountant 

3.  The establishment or amendment of an internal control system pursuant to the Article 14‐1 of 

the Securities and Exchange Act (the "SEA") 

4.  The  establishment  or  amendment,  pursuant  to  the  Article  36‐1  of  the  SEA,  of  the  handling 

procedures for significant financial and business activities including the acquisition or disposal of 

assets, trading of derivatives, loans of funds to others, and endorsement or guarantee to others 

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

6.  The appointment and dismissal of financial, accounting or internal auditing officers 

7.  Donation to a related party or significant donation to a non‐related party; provided, however, 

that a charitable donation to the cause of natural disaster relief may be submitted to the next 

Board meeting for ratification 

8. Matters to be resolved by a shareholders' meeting or a Board meeting pursuant to the Article 14‐

3 of the SEA, other applicable laws or regulations or the Articles of Incorporation, or matters as 

required by the competent authority concerned 

The "related party," as afore‐mentioned in the seventh subparagraph in the preceding paragraph, 

refers  to  the  related party as defined  in  the Regulations Governing  the Preparation of Financial 

Reports  by  Securities  Issuers;  the  "significant  donation  to  a  non‐related  party"  refers  to  any 

donation or a series of donations to a single recipient within the period of one year, on an individual 

‐ 60 ‐ 

basis or cumulatively, reaching or exceeding the amount of one hundred million New Taiwan Dollars, 

or the amount of one percent of the Company's net operating revenue or the amount of five percent 

of the Company's paid‐in capital as stated in the CPA‐attested financial report of the most recent 

year. 

As stated in the preceding paragraph, the term "within the period of one year" shall refer to a period 

of one year calculated retroactively from the date of current Board meeting convened. The portion 

of the donations that has been submitted and approved by the Board of Directors shall be exempted 

from the calculation. 

With respect to the matters which shall be resolved at a Board meeting pursuant to the Article 14‐

3 of the SEA, the independent directors, if appointed by the Company, shall attend a Board meeting 

in person or authorize another independent director to attend the meeting on his or her behalf. Any 

objection or reservation expressed by an independent director shall be recorded in the minutes of 

a Board meeting. In the situation where an  independent director wishing to express objection or 

reservation is unable to attend a Board meeting in person, such director shall present his or her view 

regarding the relevant matters in written form in advance and such statement shall be recorded in 

the meeting minutes, unless there is legitimate reason to do otherwise. 

 

Article 13 

Voting (1) 

The chairperson may announce end of discussion of a proposal listed in the agenda and submit the 

proposal for voting if the chairperson deems that it is ready for voting. 

When a proposal comes to a vote at a Board meeting, a proposal which proves to meet no objection 

from  all of  the  attending directors  after  the  inquiry made by  the  chairperson  shall be deemed 

approved.   If there  is an objection following an  inquiry by the chairperson, the proposal shall be 

brought to vote. 

The term "all of the attending directors" mentioned in the preceding paragraph does not include 

the directors who shall not exercise voting right in accordance with the Article 15‐1 of these Rules. 

The chairperson shall select one of the voting methods from the following listed below, provided 

that, however, when an attending director voices objection the chairperson shall seek the opinion 

of the majority and make a decision accordingly: 

1.  A show of hands or a vote by voting machine 

2.  A roll‐call vote 

3.  A vote by ballots 

4.  Any other voting method selected by the Company 

 

Article 14 

Voting (2) Ballot Examination and Counting Method 

Unless otherwise provided for under the SEA and the Company Act, a proposal to be resolved at the 

Company's Board meeting shall be approved by the consent of a majority of the directors present 

at the meeting which is attended by a majority of all directors. 

‐ 61 ‐ 

In the case of an amendment or alternative to an original proposal, the chairperson shall decide on 

the order of voting together with the original proposal. However, if one of these proposals has been 

approved, the others shall be deemed overruled and no further vote is required. 

If a vote on a proposal requires ballot examination and counting, the people who conduct ballot 

examination  and  counting  shall  be  designated  by  the  chairperson,  providing  that  the  ballot 

examiners have to be directors. 

The result of each vote shall be announced at the meeting  immediately and shall be recorded  in 

writing. 

 

Article 15  

Director's Avoidance of Conflict of Interest 

With  respect  to any proposal  in which a director or  the  legal person he or she  represents  is an 

interested party, the director shall explain the important aspects of his or her interest at the Board 

meeting where  the said proposal  is brought up  in  the agenda.  In  the situation where his or her 

interest is likely to compromise the interest of the Company, the director shall not participate in the 

discussion  and  the  voting  regarding  the  proposal.  The  director  shall  avoid  from  the  session  of 

discussion and voting and shall not exercise voting right on behalf of another director. 

As stated in the preceding paragraph where a director is prohibited from exercising his or her voting 

right with respect to a resolution at a Board meeting, the Article 180‐2 of the Company Act shall 

apply in accordance with the Article 206‐3 of the same Act. 

 

Article 16 

Meeting Minutes and Signatures 

The proceedings of the Company's Board meetings shall be recorded in the meeting minutes which 

shall fully and accurately include the following items: 

1.  Year, time and venue of the meeting 

2.  Name of the chairperson 

3.  The attendance of directors, including the names and number of the directors who are present, 

present under proxy, excused, and absent 

4.  Names and titles of those attending the meeting as non‐voting participants 

5.  Name of minutes taker 

6. Matters to be reported 

7. Matters for discussion,  including the method how each proposal  is resolved and their results, 

summary of the speeches from directors, supervisors, experts and other attendees, the name of 

the director who is an interested party as referred to in paragraph one in the preceding article, 

an explanation regarding such director's relationship of interest, the reason that such director is 

required  to  abstain  or  not,  the  actual  situation  whether  such  director  has  abstained,  any 

director's opinion expressing objection or reservation that is recorded or issued in writing, and 

the opinion issued in writing by any independent director pursuant to the Article 12‐4 of these 

Rules.   

‐ 62 ‐ 

8.  Extraordinary motions, including the name of a person submitting a proposal, the method how 

each proposal is resolved and their results, summary of the speeches from directors, supervisors, 

experts and other attendees, the name of the director who is an interested party as referred to 

in paragraph one in the preceding article, an explanation regarding such director's relationship 

of  interest,  the  reason  that  such  director  is  required  to  abstain  or  not,  the  actual  situation 

whether  such  director  has  abstained,  and  any  director's  opinion  expressing  objection  or 

reservation that is recorded or issued in writing. 

9.  Other matters to be included 

In the situation where either of the following occurs to the resolutions made at a Board meeting, 

the fact of such event shall be stated  in the meeting minutes and be publicly announced on the 

information reporting website designated by the competent authority within two days since the 

date of the Board meeting: 

1.  An independent director expresses objection or reservation on a certain subject and such opinion 

has been recorded or issued in a written statement. 

2.  A resolution is adopted with the approval of more than two thirds of all directors, without having 

been passed by the audit committee which is established by a company. 

The  signature book of a Board meeting  constitutes part of  the meeting minutes and  should be 

properly kept for the duration of the Company. 

The meeting minutes shall be signed or sealed by the chairperson and the minutes taker and a copy 

shall  be  distributed  to  each  director  and  supervisor within  twenty  days  after  the meeting. The 

meeting minutes shall be deemed as  important document of the Company and properly kept for 

the duration of the Company. 

The production and distribution of the meeting minutes as mentioned in the first paragraph may be 

done electronically. 

 

Article 17  

The Principles of Authorization by the Board 

Except for the matters that should be submitted to the Company's Board meeting for discussion 

pursuant to the Article 12 of these Rules, the following matters are to be executed by the Chairman 

of the Company during the recess period as fully authorized by the Board of Directors: 

1.  The establishment, adjustment and removal of any important internal body of the Company and 

the formulation and amendment of the content of the Articles of Incorporation 

2.  The approval  for  the base dates of  the Company's capital  injection or capital  reduction, cash 

dividend payout, stock allotment or stock option 

 

Article 18  

The Board of Managing Directors 

The provisions set forth under the Article 2, the Article 3‐2, the Articles 4 to 6, the Articles 8 to 11, 

and  the Articles 13  to 16 shall apply  to  the meetings of  the Board of Managing Directors of  the 

Company. 

 

‐ 63 ‐ 

Article 19 

Supplementary Provisions 

These  Rules  of  Procedures were  taken  into  effect  on  January  1,  2007.  The  establishment  and 

amendment of these Rules shall be approved by the Board of Directors of the Company. 

   

‐ 64 ‐ 

 Shareholding Facts by All Directors of the Company 

 1. Requirements as expressly provided for in Article 26 of Securities and Exchange Act and Rules and 

Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies:  

Here  at  the  Company,  other  than  independent  directors,  the minimum  shareholding  by  all directors shall be 34, 935, 773 shares.    As of April 25, 2017, their actual shareholding was in total number of 82, 110, 952 shares.     

 2.  As of the date to discontinue share transfer registration on April 13, 2018, the shareholding facts 

as shown through the shareholders register are: 

Position title  Name 

Number of shares held when elected 

Number of shares held currently 

Aggregate total shares 

held 

Shareholding ratio 

Aggregate total shares 

held 

Shareholding ratio 

Chairman  Hsu, Sheng‐Hsiung  27,183,942 1.86% 13,683,942  0.94%

Director  Hsu, Sheng‐Chieh  4,498,985 0.31% 4,498,985  0.31%

Director  Shen, Shyh‐Yong  14,253,000 0.98% 21,253,000  1.46%

Director  Ko, Charng‐Chyi  4,707,915 0.32% 4,707,915  0.32%

Director  Chen, Jui‐Tsung  2,143,952 0.15% 2,143,952  0.15%

Director  Hsu, Chieh‐Li  1,456,230 0.10% 3,106,230  0.21%

Director  Chou, Yen‐Chia  4,240,289 0.29% 4,240,289  0.29%

Director  Chen, Yi‐Chang  2,432,592 0.17% 2,432,592  0.17%

Director  Hsu, Wei‐Yang  999,804 0.07% 999,804  0.07%

Director  Chen, Pei‐Yuan  2,238,372 0.15% 2,238,372  0.15%

Director  Huang, Yu‐Hui  2,847,382 0.20% 3,447,382  0.24%

Director Peng Pao Technology 

Co., Ltd. 23,172,489 1.59% 23,172,489  1.59%

Independent director 

Chiang, Ping‐Kun  0 0.00% 0  0.00%

Independent director 

Ho, Mei‐Yueh  0 0.00% 0  0.00%

Independent director 

Huang, Chih‐Peng  0 0.00% 0  0.00%

The number and percentage of shares held by all directors 

90,174,952 6.19% 85,924,952  5.90%

Note 1:  Date when elected June 22, 2016. Note 2:  Upon the date when elected, the aggregate total outstanding shares came to 1,458,113,211 

shares. Note 3:  As of April 13, 2018, the aggregate total outstanding shares came to 1,455,657,211 shares 

in number. 

   

APPENDIX IV

‐ 65 ‐ 

 

 The impact by the present issuance of bonus shares upon the Company’s 

business performance, earnings per share (EPS) and rate of investment return to shareholders 

  

Not applicable.    No issuance of bonus shares by the Company in the present shareholders’ meeting.    

   

APPENDIX V

‐ 66 ‐ 

 

 

Information relevant to proposals by a shareholder (s) holding over   1% of the aggregate total outstanding shares 

 

I.  Pursuant to Article 172~1 of the Company Act, proposals posed by shareholders for the 

regular shareholders' meeting were accepted from March 30 to April 9, 2018. 

 

II. During the aforementioned period, no shareholder holding over 1% of the aggregate total 

outstanding shares submitted a proposal. 

APPENDIX VI