CHIPBOND Technology Corporation 2019 Annual General ... Shareholders Meeting Handbook.pdf1. Matters to report (1) Fiscal 2018 Business Report, submitted for review. Explanation: Please

---------------------------Disclaimer------------------------------ THIS ENGLISH HANDBOOK FOR 2019 ANNUAL GENERAL SHAREHOLDERS’ MEETING IS TRANSLATED FROM THE CHINESE VERSION. IT IS INTENDED FOR REFERENCE ONLY. THE COMPANY HEREBY DISCLAIMS ANY AND ALL LIABILITIES FOR THE TRANSLATION. THE CHINESE HANDBOOK SHALL GOVERN ANY AND ALL MATTERS RELATED TO THE INTERPRETATION OF THE SUBJECT MATTER STATED HEREIN.

Stock Code: 6147

CHIPBOND Technology Corporation

2019 Annual General Shareholders’ Meeting

(Translation)

Meeting Handbook

Time: June 14, 2019 (Friday) at 9:00 a.m.

Location: 8F, No. 10, Zhanye 1st Road, Hsinchu Science Park, Hsinchu City, Taiwan

(8F of the Prosperity Planet No.2 of the Company)

CHIPBOND Technology Corporation (the “Company”)

2019 Annual General Meeting of Shareholders

Table of Contents

I. MEETING PROCEDURES ................................................... 1

II. MEETING AGENDA........................................................... 2

1. MATTERS TO REPORT........................................................................ 3

2. ADOPTION MATTERS ........................................................................ 4

3. DISCUSSION MATTERS ...................................................................... 5

4. ELECTION MATTERS ......................................................................... 5

5. OTHER PROPOSALS .......................................................................... 6

6. EXTRAORDINARY MOTIONS ............................................................... 6

III. ATTACHMENT .................................................................. 7

ATTACHMENT 1 ..................................................................................... 7

ATTACHMENT 2 ................................................................................... 12

ATTACHMENT 3 ................................................................................... 13

ATTACHMENT 4 ................................................................................... 25

ATTACHMENT 5 ................................................................................... 38

ATTACHMENT 6 ................................................................................... 39

ATTACHMENT 7 ................................................................................... 40

ATTACHMENT 8 ................................................................................... 41

IV. APPENDIX ...................................................................... 50

APPENDIX 1 ....................................................................................... 50

APPENDIX 2 ....................................................................................... 58

APPENDIX 3 ....................................................................................... 62

APPENDIX 4 ....................................................................................... 65

APPENDIX 5 ....................................................................................... 66

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I. MEETING PROCEDURES

CHIPBOND Technology Corporation

Meeting Procedures for the 2019

Annual General Meeting of Shareholders

1. Call the Meeting to Order

2. Chairperson Remarks

3. Matters to Report

4. Adoption Matters

5. Discussion Matters

6. Election Matters

7. Other Proposals

8. Extraordinary Motions

9. Adjournment

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II. MEETING AGENDA

Chipbond Technology Corporation

Agenda for 2019 Annual General Meeting of Shareholders

1. Call the Meeting to Order 2. Chairperson Remarks 3. Matters to Report

(1) To Report the Business of 2018 (2) Audit Committee's Review Report on the 2018 Audited

Financial Statements (3) To Report 2018 Employees’ Compensation and

Directors’ Remuneration (4) The Details of Endorsement and Guarantee in 2018 (5) The Details of Lending Funds to Other Parties in 2018

4. Adoption Matters (1) Adoption of the Company’s 2018 Business Report and

Financial Statements (2) Adoption of the Company’s 2018 Earnings Distribution

Proposal 5. Discussion Matters

(1) Amendments to the “Operational Procedures for Acquisition and Disposal of Assets”

6. Election Matters (1) Election of an additional Director

7. Other Proposals (1) To release the newly Director from non-competition

restrictions 8. Extraordinary Motions 9. Adjournment

Time: June 14, 2019 (Friday) at 9:00 a.m.

Location: 8F, No. 10, Zhanye 1st Road, Hsinchu Science Park, Taiwan

(8F of the Prosperity Planet No.2 of the Company )

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1. Matters to report

(1) Fiscal 2018 Business Report, submitted for review.

Explanation:

Please refer to Attachment 1 of this handbook.

(2) Audit Committee’s Review Report on the 2018 Audited Financial

Statements

Explanation:


(3) 2018 Report on the employees’ compensation and directors’

remuneration, submitted for review.

Explanation:

The pre-tax profit, prior to deduction of employees’ compensation and

directors’ remuneration, of the Company is NT$ 6,299,502,780 in 2018.

The Company allocated 0.51 % of the pre-tax profit to the directors in the

amount of NT$32,000,000 in cash and 10 % of the pre-tax profit to the

employees in the amount of NT$630,000,000 in cash, pursuant to Article

27-1 of the Articles of Incorporation of the Company. The amounts of

employees’ compensation and directors’ remuneration are consistent

with the amounts recorded in the financial reports.

(4) 2018 Report on the details of Endorsement and Guarantee in 2018

Explanation:


(5) 2018 Report on the details of lending funds to other parties

Explanation:


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2. Adoption Matters

Item 1: Adoption of the Fiscal 2018 Business Report and Financial Statements. (Proposed by the Board of Directors)

Explanation:

(1) The compilation of the Company’s Fiscal 2018 Business Report and

Financial Statements are completed. The Financial Statements have

been audited and certified by independent certified public accountants,

Chiang, Tsai-Yen and Li, Tien-Yi, of PricewaterhouseCoopers Taiwan,

and reviewed by the Audit Committee of the Company.

(2) Please refer to Attachment 1, Attachment 3, and Attachment 4 of this

handbook. Adoption Requested.

Resolution:

Item 2: Adoption of the Company’s 2018 Earnings Distribution Proposal.

(Proposed by the Board of Directors)

Explanation:

(1) Based on the earnings distribution proposal, the Company intends to

distribute cash dividends in the amount of NT$2,289,916,993 at NT$3.5

per ordinary share from the distributable reserved surplus earnings for

the year 2018. Upon the aforementioned proposal approved at the

Annual General Meeting of Shareholders, it is proposed that the Board

of Directors be authorized to resolve the ex-dividend date, payment

date, and other relevant issues.

(2) In the event that the total number of issued and outstanding shares of

the Company affected by a buyback of the shares or transfer of treasury

shares, thereby affecting the distribution to each share, it is proposed

that the Board of Directors be fully authorized to make any adjustment

as necessary.

(3) Please refer to Attachment 7 of this handbook. Adoption Requested.

Resolution:

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3. Discussion Matters

Item 1: Discussion of Amendments to the “Operational Procedures for Acquisition and Disposal of Assets” of the Company. (Proposed by the Board of Directors)

Explanation:

In order to comply with the regulation per 26 November 2018 Order

No. Financial-Supervisory-Securities-Corporate-1070341072 of the

Financial Supervisory Commission, and the need of practical operation, it is

proposed to amend “Operational Procedures for Acquisition and Disposal

of Assets” of the Company. The proposed amendments please refer to

Attachment 8 of this handbook. Discussion requested.

4. Election Matters

Item 1: Election of an additional Director


Explanation:

(1) In order to fulfill the need of operation, it is proposed that election for

additional independent director at the 2019 annual general meetings of

shareholders. After election, there are 8 directors.

(2) The newly director is on board when he/she is elected. The period is

from June 14, 2019 to June 14, 2021.

(3) The directors shall be elected by adopting candidate nomination

system. After reviewed by the board of directors on May 3, 2019, the list

of Director Candidates is as below. Election requested. List of Independent Director Candidates

Name Education & Work Experience Current Position Shareholdings Cheng, Wen-Feng

• Master of Industrial Chemistry, National Tsing Hua University

• Chairman and President, BoardTek Electronics Corp.,

• Chairman, BoardTek Electronics Corp.,

• Director, Sundia Meditech Group

• Director (Representative), Chipboard Technology Corp.,

0

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Election Results:

5. Other Proposals

Item 1: To release the newly Director from non-competition restrictions


Explanation:

(1) Pursuant to Article 209 of the Company Act, it is proposed that the

newly director who engages in any behavior for himself/herself or on

behalf of another person that is within the scope of the company's

business shall explain the essential contents of such an act to the

shareholders’ meeting and obtain its approval.

(2) The additional independent director of the Company, elected this year

may, may engage in operation of another company whose scope of

business is the same or similar to that of the Company, we hereby

request the meeting of shareholders to approve that in case of the

above mentioned situation, the non-competition restriction imposed

on the director and the entity they represent (including the legal

representative of the entity if the entity is elected as the Director) be

removed in accordance with above mentioned Article 209 of the

Company Act.

(3) The current position and company name of the Director candidates are

as follows:

Title Name Current Position

Independent Director

Cheng, Wen-Feng • Chairman, BoardTek Electronics Corp., • Director, Sundia Meditech Group • Director (Representative), Chipboard

Technology Corp.,

Resolution:

6. Extraordinary Motions

Adjournment

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III. Attachment

Attachment 1

2018 Business Report

1. Results of Execution of 2018 Business Plan

Looking back on 2018, the global economy kept growing based on the prosperous

economy in 2017 due to the strong US economy and the increasing prices of the

materials and supplies. In the second half of the year, US-China trade war was

escalating and the violation of the international financial market became severe.

Those factors led the growth rate of exports of major economies getting lower.

Because uncertain factors increased, the whole world’s economy became

conservative. Taiwan economy is influenced by the global economy, so the first

three quarters performed well and the fourth quarter was impacted by US-China

trade war, the growth became sluggish.

Although the global economy became conservative in the second half of 2018, the

global semiconductor market kept growing. Based on the statistics of Gartner, the

global semiconductor revenue is US$ 476.7 billion in 2018, and the growth rate is

13.4% increase from 2017 due to the strong memory market. It maintained its

position as the largest semiconductor category. Besides, according to the

statistics of IEK, Taiwan IC packaging and testing industry revenue is NT$494

billion, and the growth rate is 3.6% increase from 2017. The revenue of IC

packaging industry is NT$346.5 billion, and the growth rate is 4.0% increase from

2017. The revenue of IC testing industry is NT$147.5 billion, and the growth rate

is 2.6% increase from 2016. Overall, the IC industry in Taiwan grew steadily in

2018.

Both Company’s consolidated operating revenue and profit in 2018 are growing,

so do the gross margin and operating profit margin. The growth is primarily

because the Company consistently enhances the efficiency of the production, the

performance of operation, and reduces the cost. The Company’s consolidated

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revenue of 2018 was NT$18.73 billion, and the revenue of 2017 was NT$16.09

billion and its growth rate was 16.39%. The Company’s consolidated net profit

was NT$4.54 billion, and the net profit of 2017 was NT$2.31 billion and its growth

rate was 96.44%. The net profit doubled mainly because the Company had steady

operation and also recognized the disposal of equity interests. The results of the

execution of our 2018 and 2017 Business Plan are summarized as below:

Unit: NT$ thousand; Except EPS in NT$; %

Item 2018 2017 Growth Rate

Operating Revenue 18,725,270 16,088,340 16.39%

Operating Costs (13,360,180) (12,538,478) 6.55%

Gross Profit 5,365,090 3,549,862 51.14%

Operating Income 3,899,569 2,663,413 46.41%

Pre-Tax Income 3,565,873 2,266,132 57.36%

Income Tax Expenses (878,915) (452,029) 94.44%

Net Profit (Note) 4,541,783 2,312,078 96.44%

Earnings Per Share NT$6.95 NT$3.47 100.29%

Note: The net profit attributable to owners of the parent was NT$4.52 billion and NT$2.25

billion for the years ended December 31, 2018 and 2017, respectively.

2. 2018 Financial Position and Profitability Analysis

As for cash flow of the Company in 2018, cash provided by operating activities was

NT$6.13 billion; cash used in investing activities was NT$4.77 billion and cash

used in financing activities was NT$1.38 billion. The balance for cash and cash

equivalents for the year ended December 31, 2018 was NT$6.06 billion. Overall,

the Company had sound financial structure and proper uses of operating funds.

The Group’s gross margin of 2018 was 28.65% and it was comparable to the gross

margin of 2017, which was 22.06%. The operating income was NT$3.9 billion in

2018, a nearly 50% increase, compared to NT$2.66 billion in 2017. The basic

after-tax earnings per share was NT$6.95 in 2018, a double increase, compared to

NT$3.47 in 2017. Due to the stronger growth of COF, TDDI, RFIC and etc. and the

recognition of non-operation income, the Company had a better profitability not

only in operation but also non-operation this year.

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3. Research and Development in 2018

The Company made steady improvements in the areas of packaging, testing and

OEM. The management focused not only on the development of technology, but

also on market demand, improving manufacturing efficiency while dedicating

efforts to the R&D of advanced driver IC mass production and advanced

processing, and continuing developing the technology for copper redistribution

layer (Cu/CuNi Au RDL), wafer level chip scale packaging (WLCSP), and 3D-IC

stacked packaging. By integrating Cu RDL and Cu pillar bump processing,

advanced power management IC can be applied, which effectively increases the

competitiveness of our clients’ products. WLCSP can satisfy the market demand

for miniature IC processing and light-weight and thin products. Besides, the

Company also expanded the scope of the bumping processing and WLCSP

technology to GaAs, GaN, SiGe, and SOI, to satisfy the clients’ demand in the scope

of the high frequency wireless communication, high performance and low-power

consumption application.

4. Outline of 2019 Business Plan

Looking forward to 2019, the major forecast institutions such as World Bank

considered that the tardy pace of the global economy growth is slower than the

expectation. The global financing conditions are tightening. The recovery of Euro

Area is weak and its political factors are unclear. The emerging markets face the

outflows of capital and the violation of the financial market. The global politics

are uncertain along with the severe situation of the international trades.

Therefore, the major forecast institutions estimated that the growth rate of 2019

is lower than that of previous years. Among the risks leading to the downward

growth of global economy, the most severe one is US-China trade war, which

resulted in the decreasing trade volume and hurting the global economy. IEK

estimated that the growth of Taiwan manufacturing industry is slow and it is

influenced by the sluggish global economy and the weak external needs. Besides,

the trade protectionism continuously interfere the global economy and

international trade, and the uncertainties keep impact on the business

confidence. Those factors may shrink the growth of the economy.

As for the market demand, though the market of smart phones are getting mature,

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designs of full screen and borderless display stimulates the need of Touch with

Display Driver Integration (TDDI) and COF and also spurs the growth of driver IC

OEM volume. As 4G mobile communications become more popularized,

technologies like copper bumping that the Company has been developing over

years become mature, the output and revenue grow year by year, and also benefit

the Company’s profits efficiently. Moreover, the Company co-operates with

China strategic partners to help expand the business in China. In addition, the

solid partnership with the strategic partners helps the Company to maintain its

high market share in panel driver IC packaging and testing industry. The Company

expects to obtain more purchase orders and expand the production. In the

meantime, the Company actively seeks the target of merger and acquisition to

expand the operation substantially.

The Company is dedicated to improving the quality of products, developing the

advanced processing technology, and managing production effectively. The goal

of the Company is to provide entire processing service and timely service via

flexible market strategy.

The volume forecast for our OEM services in 2019 are as follows:

Bumping: 2 million wafers

Chip-on-film (COF): 1,100 million pcs

Chip-on-glass (COG): 925 million pcs

Wafer level chip scale packaging (WLCSP): 4,076 million pcs

Tape carrier package board (Tape): 672 million pcs

Key production and distribution policy:

Strictly monitoring product quality, continuously improving;

Expanding manufacturing scale and increasing equipment capacity

utilization to reduce costs and gain competitive advantage;

Proactively expanding our customer base and market share.

5. Key Strategies for Future Development

The technologies of mobile devices are evolving rapidly. In order to provide our

clients with an all-around OEM services, the Company integrates the industry

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resources through merger and acquisition, continuously injects funds into R&D

and invests new machinery to develop technologies of other product applications,

maintains the advantage of leading position of the technologies and production,

and monitors the market trend. In the meantime, the Company expands its

advantage of market competitiveness by cooperating with companies in the

industry to develop new applied technologies and seeking opportunities to work

with strategic partners. Looking forward to the future, the Company will develop

its operation strategy steadily and strengthen its competitiveness of the

management team to achieve the goal of becoming a leading company of the

global semiconductor packaging and testing industry.

Wu, Fei-Jain Gou, Huoo-Wen Wang, Chao-Yie

Chairman of the Board President Accounting Manager

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Attachment 2

Audit Committee’s Review Report

To the 2019 AGM of Shareholders of Chipbond Technology Corporation:

The Board of Directors has prepared and submitted the Company’s 2018

Business Report, Financial Statements and Profit Allocation Proposal to the

Audit Committee for review, among which the Financial Statements are

audited by PricewaterhouseCoopers Taiwan, from which a report has been

issued. We have reviewed each of the aforementioned documents, and

have not found any inaccuracies. Therefore, the Audit Committee hereby

submits this report in compliance with Article 14-4 of the Securities and

Exchange Act and Article 219 of the Company Act.

Date: May 3, 2019

Hsu, Cha-Hwa

Chairman

Audit Committee

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Attachment 3

REPORT OF INDEPENDENT ACCOUNTANTS

PWCR18000257

To the Board of Directors and Shareholders of Chipbond Technology Co., Ltd.

Opinion

We have audited the accompanying balance sheets of Chipbond Technology Co., Ltd.

(the “Company”) as at December 31, 2018 and 2017, and the related statements of

comprehensive income, of changes in equity and of cash flows for the years then

ended, and notes to the financial statements, including a summary of significant

accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material

respects, the financial position of the Company as at December 31, 2018 and 2017,

and its financial performance and its cash flows for the years then ended in

accordance with the “Regulations Governing the Preparation of Financial Reports by

Securities Issuers”.

Basis for opinion

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

Attestation of Financial Statements by Certified Public Accountants” and generally

accepted auditing standards in the Republic of China (“ROC GAAS”). Our

responsibilities under those standards are further described in the Auditor’s

Responsibilities for the Audit of the Financial Statements section of our report. We are

independent of the Company in accordance with the Code of Professional Ethics for

Certified Public Accountants in the Republic of China (the “Code”), and we have

fulfilled our other ethical responsibilities in accordance with the Code. We believe

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

basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most

significance in our audit of the financial statements of the current period. These

matters were addressed in the context of our audit of the financial statements as a

whole and, in forming our opinion thereon, we do not provide a separate opinion on

these matters.

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The key audit matters in relation to the parent company only financial statements for

the year ended December 31, 2018 are outlined as follows:

Disposal of equity interest

Description

Refer to Note 4(14) for accounting policy on investments accounted for using equity

method, and Note 6(5) for details of investments accounted for using equity method.

On December 14, 2017, the Board of Directors resolved to indirectly dispose

43.0767% equity interest of Chipmore Technology (SuZhou) Co., Ltd. through the

subsidiary, Chipmore Holding Company Limited, and the transfer of above equity

interest was completed in mid-July 2018. For the year ended December 31, 2018, the

Company recognised profit of subsidiaries accounted for using equity method and the

effect of income tax from this transaction amounting to NT$1,741,712 thousand. As

this transaction during the reporting period is significant to the financial statements,

we considered the disposal of equity interest a key audit matter.

How our audit addressed the matter

We performed the following audit procedures in respect of the above key audit matter:

1. Interviewed with management to obtain an understanding on the purpose,

transaction process and determination of the consideration of the disposal of

equity interest.

2. Reviewed the Board of Directors’ meeting minutes and the agreement of disposal

of equity interest and verified that the resolved matters in the meeting were

consistent with the contents of the agreement, and that the appropriate accounting

treatment was applied on the terms of the agreement and respective financial

reporting.

3. Evaluated the competency and objectivity of the independent experts engaged by

management and reviewed the fairness opinion, as provided by management, of

the consideration issued by the independent experts.

4. Reviewed the presentation and disclosure in relation to the disposal of equity

interest in the financial statements.

Intangible assets-assessment of goodwill impairment

Description

Refer to Note 4(17) for accounting policies on goodwill, and Note 5 for the

accounting estimates and assumptions applied on goodwill.

As of December 31, 2018, goodwill amounted to NT$5,037,278 thousand and the

impairment loss on goodwill for the year amounted to NT$500 million. For

information on evaluation of goodwill impairment, refer to Note 6(8), impairment of

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non-financial assets.

The Company estimates recoverable amount utilizing the future cash flows of

goodwill’s cash generating unit and appropriate discount rates in order to determine

whether goodwill is impaired. The estimation of future cash flows involves various

assumptions, which may have significant effects on the estimation of recoverable

amount. Thus, we considered assessment of goodwill impairment a key audit matter.



Interviewed management to obtain an understanding of the process of estimating

future cash flows, evaluated key assumptions adopted in estimating future cash flows,

including assessing the rationality of estimated growth rates of operating revenue,

costs of sales, gross margins and operating expenses through comparing those with

historical outcomes and assessed the reasonableness of estimated future cash flows

within the next four years through reviewing the actual results of operational plans

executed by management and most recent annual budget approved by the Board of

Directors. Evaluated the parameters utilized in calculating the discount rates,

including weighted average cost of capital at risk-free rates, industrial risk premium,

return on assets and the proportion of equity capital in similar market.

Operating revenue

Description

Refer to Note 4(29) for accounting policies on recognition of operating revenue, and

Note 6(20) for details of operating revenue. Operating revenue is a basic operating

activity for sustainable business development, and relevant to enterprise performance

as well as material to the financial statements. Thus, we considered operating revenue

a key audit matter.



1. Evaluated and validated the effectiveness of design and implementation of internal

controls over recognition of operating revenue.

2. Sampled and tested transaction details, including validating the performance

obligation of the contract with customers, respective transaction terms and prices,

evidence supporting the provision of services, to ensure the occurrence and

accuracy of those transactions.

Responsibilities of management and those charged with governance for the

financial statements

Management is responsible for the preparation and fair presentation of the financial

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statements in accordance with the “Regulations Governing the Preparation of

Financial Reports by Securities Issuers”, and for such internal control as management

determines is necessary to enable the preparation of financial statements that are free

from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the

Company’s ability to continue as a going concern, disclosing, as applicable, matters

related to going concern and using the going concern basis of accounting unless

management either intends to liquidate the Company or to cease operations, or has no

realistic alternative but to do so.

Those charged with governance, including the Audit Committee, are responsible for

overseeing the Company’s financial reporting process.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial

statements as a whole are free from material misstatement, whether due to fraud or

error, and to issue a 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

ROC GAAS will always detect a material misstatement when it exists. Misstatements

can arise from fraud or error and are considered material if, individually or in the

aggregate, they could reasonably be expected to influence the economic decisions of

users taken on the basis of these financial statements.

As part of an audit in accordance with ROC GAAS, we exercise professional

judgment and maintain professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the financial statements,

whether 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 Company’s internal control.

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

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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 Company’s ability to continue as a going concern. If we conclude that a

material uncertainty exists, we are required to draw attention in our report to the

related disclosures in the financial statements or, if such disclosures are

inadequate, to modify our opinion. Our conclusions are based on the audit

evidence obtained up to the date of auditor’s report. However, future events or

conditions may cause the Company to cease to continue as a going concern.

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

including the disclosures, and whether the 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

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.

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From the matters communicated with those charged with governance, we determine

those matters that were of most significance in the audit of the financial statements of

the current period and are therefore the key audit matters. We describe these matters

in our 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.

For and on behalf of PricewaterhouseCoopers, Taiwan

February 27, 2019

----------------------------------------------------------------------------------------------------------------------------- -------------------- The accompanying parent company only financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying parent company only financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

CHIPBOND TECHNOLOGY CORPORATION PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

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December 31, 2018 December 31, 2017 Assets Notes AMOUNT % AMOUNT %

Current assets

1100 Cash and cash equivalents 6(1) $ 4,151,731 11 $ 3,768,278 11

1110 Financial assets at fair value

through profit or loss - current

6(2)

- - - -

1150 Notes receivable, net 6(3) 873 - 3,489 -

1170 Accounts receivable, net 6(3) and 7 5,662,998 14 4,033,493 12

1200 Other receivables 18,574 - 1,036 -

1210 Other receivables - related

parties

7

35,151 - 512,806 2

130X Inventory 6(4) 750,340 2 800,688 3

1410 Prepayments 49,977 - 39,172 -

1460 Non-current assets classified as

held for sale, net

6(6)(9)

531,134 1 - -

1470 Other current assets 8 1,443 - 53,100 -

11XX Total current assets 11,202,221 28 9,212,062 28

Non-current assets

1543 Financial assets carried at cost -

non-current

12(4)

- - - -

1550 Investments accounted for under

equity method

6(5)

6,956,645 18 6,515,884 19

1600 Property, plant and equipment 6(6) and 8 15,904,236 40 11,792,245 35

1780 Intangible assets 6(7)(8) 5,055,282 13 5,569,028 17

1840 Deferred income tax assets 6(25) 182,383 - 149,256 -

1900 Other non-current assets 6(27) and 8 312,971 1 189,123 1

15XX Total non-current assets 28,411,517 72 24,215,536 72

1XXX Total assets $ 39,613,738 100 $ 33,427,598 100

(Continued)



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

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December 31, 2018 December 31, 2017 Liabilities and Equity Notes AMOUNT % AMOUNT %

Current liabilities

2100 Short-term borrowings 6(10) $ 1,300,000 3 $ 1,700,000 5

2120 Financial liabilities at fair value

through profit or loss - current 6(11)

- - 79 -

2170 Accounts payable 815,046 2 608,434 2

2200 Other payables 6(12) 4,846,583 12 3,077,017 9

2230 Current income tax liabilities 711,428 2 277,784 1

2300 Other current liabilities 6(13) and 8 219,568 1 216,971 1

21XX Total current liabilities 7,892,625 20 5,880,285 18

Non-current liabilities

2540 Long-term borrowings 6(13) and 8 2,650,000 7 2,200,000 7

2570 Deferred income tax liabilities 6(25) 628,905 2 357,630 1

2600 Other non-current liabilities 6(5)(14) 569,538 1 500,526 1

25XX Total non-current liabilities 3,848,443 10 3,058,156 9

2XXX Total liabilities 11,741,068 30 8,938,441 27

Equity

Share capital 6(16)

3110 Ordinary share 6,542,620 16 6,542,620 20

Capital surplus 6(17)

3200 Capital surplus 7,198,159 18 6,738,634 21

Retained earnings 6(18)

3310 Legal reserve 2,241,772 6 2,016,378 6

3320 Special reserve 230,724 1 142,693 -

3350 Unappropriated retained

earnings

11,698,485 29 9,464,712 28

Other equity interest 6(19)

3400 Other equity interest ( 39,090 ) - ( 415,880 ) ( 2 )

3XXX Total equity 27,872,670 70 24,489,157 73

3X2X Total liabilities and equity $ 39,613,738 100 $ 33,427,598 100


(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNINGS PER SHARE)


~21~

Years ended December 31, 2018 2017

Items Notes AMOUNT % AMOUNT % 4000 Operating revenue 6(20), 7 and

12(5) $ 18,725,270 100 $ 16,088,340 100 5000 Operating costs 6(4)(23)(24) ( 13,374,105 ) ( 71 ) ( 12,552,278 ) ( 78 ) 5900 Gross profit 5,351,165 29 3,536,062 22 Operating expenses 6(23)(24) 6100 Selling expenses ( 156,069 ) ( 1 ) ( 117,330 ) ( 1 ) 6200 General and administrative

expenses

( 806,520 ) ( 4 ) ( 515,027 ) ( 3 ) 6300 Research and development

expenses

( 440,467 ) ( 3 ) ( 196,925 ) ( 1 ) 6000 Total operating expenses ( 1,403,056 ) ( 8 ) ( 829,282 ) ( 5 ) 6900 Operating income 3,948,109 21 2,706,780 17 Non-operating income and

expenses

7010 Other income 6(21) 9,799 - 21,856 - 7020 Other gains and losses 6(22) ( 279,084 ) ( 2 ) ( 364,471 ) ( 2 ) 7050 Finance costs ( 44,777 ) - ( 52,655 ) ( 1 ) 7070 Share of profit of

subsidiaries, associates and joint ventures accounted for using equity method

6(5)

2,003,456 11 297,998 2 7000 Total non-operating

income and expenses

1,689,394 9 ( 97,272 ) ( 1 ) 7900 Profit before income tax 5,637,503 30 2,609,508 16 7950 Income tax expense 6(25) ( 1,123,000 ) ( 6 ) ( 355,561 ) ( 2 ) 8200 Profit for the year $ 4,514,503 24 $ 2,253,947 14

Other comprehensive income, net

Items that will not be reclassified to profit or loss

8311 Remeasurements of defined benefit plan

6(14) ( $ 17,699 ) - ( $ 32,328 ) -

Items that may be subsequently reclassified to profit or loss

8380 Share of other

comprehensive income (loss) of subsidiaries, associates and joint ventures accounted for using equity method

6(5)

265,203 1 ( 88,031 ) ( 1 ) 8300 Total other comprehensive

income (loss), net

$ 247,504 1 ( $ 120,359 ) ( 1 )

8500 Total comprehensive income for the year

$ 4,762,007 25 $ 2,133,588 13

Earnings per share 6(26) 9750 Basic earnings per share $ 6.95 $ 3.47

9850 Diluted earnings per share $ 6.81 $ 3.43

CHIPBOND TECHNOLOGY CORPORATION PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS) Retained Earnings Other Equity Interest

Notes

Ordinary share

Capital surplus

Legal reserve

Special reserve

Unappropriated retained earnings

Financial statements translation

differences of foreign operations

Other equity - others

Total equity


~22~

Year ended December 31, 2017

Balance at January 1, 2017 $ 6,492,620 $ 6,551,634 $ 1,817,164 $ - $ 8,948,450 ( $ 142,693 ) $ - $ 23,667,175

Profit for the year - - - - 2,253,947 - - 2,253,947

Other comprehensive loss for the year 6(14)(19) - - - - ( 32,328 ) ( 88,031 ) - ( 120,359 )

Total comprehensive income - - - - 2,221,619 ( 88,031 ) - 2,133,588

Distribution of retained earnings of 2016: 6(18)

Legal reserve - - 199,214 - ( 199,214 ) - - -

Special reserve - - - 142,693 ( 142,693 ) - - -

Cash dividends - - - - ( 1,363,450 ) - - ( 1,363,450 )

Issuance of employee restricted shares 6(15)(16)(17)(19) 50,000 187,000 - - - - ( 237,000 ) -

Compensation cost of employee restricted shares 6(15)(19)(24) - - - - - - 51,844 51,844

Balance at December 31, 2017 $ 6,542,620 $ 6,738,634 $ 2,016,378 $ 142,693 $ 9,464,712 ( $ 230,724 ) ( $ 185,156 ) $ 24,489,157

Year ended December 31, 2018

Balance at January 1, 2018 $ 6,542,620 $ 6,738,634 $ 2,016,378 $ 142,693 $ 9,464,712 ( $ 230,724 ) ( $ 185,156 ) $ 24,489,157

Profit for the year - - - - 4,514,503 - - 4,514,503

Other comprehensive income (loss) for the year 6(14)(19) - - - - ( 17,699 ) 265,203 - 247,504

Total comprehensive income - - - - 4,496,804 265,203 - 4,762,007

Distribution of retained earnings of 2017: 6(18)

Legal reserve - - 225,394 - ( 225,394 ) - - -

Special reserve - - - 88,031 ( 88,031 ) - - -

Cash dividends - - - - ( 1,537,516 ) - - ( 1,537,516 )

Compensation cost of employee restricted shares 6(15)(19)(24) - - - - - - 111,587 111,587

Changes in subsidiaries accounted for using equity method 6(5)(17) - 457,327 - - ( 412,090 ) - - 45,237

Others 6(17) - 2,198 - - - - - 2,198

Balance at December 31, 2018 $ 6,542,620 $ 7,198,159 $ 2,241,772 $ 230,724 $ 11,698,485 $ 34,479 ( $ 73,569 ) $ 27,872,670

CHIPBOND TECHNOLOGY CORPORATION PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS


Years ended December 31, Notes 2018 2017


~23~

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before tax $ 5,637,503 $ 2,609,508 Adjustments Adjustments to reconcile profit (loss) Provision for bad debts expense 12(4) - 1,076 Depreciation 6(6)(23) 2,332,518 2,327,132 Amortisation of intangible assets 6(7)(23) 37,597 27,670 Net loss on financial assets at fair value through profit

or loss 6(11)(22)

- 2 Pension expense 6(14) 37,034 - Compensation cost of share-based payments 6(15)(24) 111,587 51,844 Impairment loss on financial assets 6(22) and 12(4) - 1,160 Impairment loss on intangible assets 6(7)(22) 500,000 - Interest income 6(21) ( 9,348 ) ( 12,036 ) Interest expense 44,777 52,655 Gain on disposals of investments 6(22) ( 6,351 ) ( 5,265 ) Share of profit of subsidiaries and associates accounted

for using equity method 6(5)

( 2,003,456 ) ( 297,998 ) Gain on disposals of property, plant and equipment 6(22) and 7 ( 52,199 ) ( 31,135 ) Changes in operating assets and liabilities Changes in operating assets Financial assets held for trading 736 440 Notes receivable 2,616 1,380 Accounts receivable ( 1,629,505 ) ( 152,438 ) Other receivables ( 45,849 ) ( 3,954 ) Inventories 50,348 ( 23,045 ) Prepayments ( 10,805 ) ( 4,263 ) Other current assets ( 1,183 ) 149 Changes in operating liabilities Financial liabilities held for trading 5,535 1,920 Notes payable - ( 262 ) Accounts payable 206,612 ( 55,387 ) Other payables 257,756 212,637 Other current liabilities 2,596 16,971 Other non-current liabilities ( 20,400 ) ( 21,299 )

Cash inflow generated from operations 5,448,119 4,697,462 Interest received 9,394 12,039 Interest paid ( 44,972 ) ( 53,508 ) Income tax paid ( 451,208 ) ( 414,117 )

Net cash flows from operating activities 4,961,333 4,241,876

(Continued)

CHIPBOND TECHNOLOGY CORPORATION PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS




~24~

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from capital reduction of financial assets at cost $ - $ 690

Acquisition of property, plant and equipment 6(27) ( 5,731,013 ) ( 1,485,935 )

Proceeds from disposal of property, plant and equipment 110,548 49,613

Acquisition of intangible assets 6(7) ( 23,851 ) ( 15,615 )

Increase in loans to subsidiaries 7 - ( 505,920 )

Decrease in loans to subsidiaries 505,920 548,250

Decrease in restricted assets 8 146,889 17,276

Increase in refundable deposits ( 6,672 ) ( 423 )

Proceeds from capital reduction of subsidiaries 6(5) 982,880 -

Cash dividends received 6(5) 924,900 -

Net cash flows used in investing activities ( 3,090,399 ) ( 1,392,064 )

CASH FLOWS FROM FINANCING ACTIVITIES

(Decrease) increase in short-term borrowings 6(28) ( 400,000 ) 450,000

Increase in long-term borrowings 6(28) 3,600,000 2,350,000

Repayment of long-term borrowings 6(28) ( 3,150,000 ) ( 3,950,000 )

Increase (decrease) in guarantee deposits received 35 ( 1,775 )

Cash dividends paid 6(18) ( 1,537,516 ) ( 1,363,450 )

Net cash flows used in financing activities ( 1,487,481 ) ( 2,515,225 )

Net increase in cash and cash equivalents 383,453 334,587

Cash and cash equivalents at beginning of year 6(1) 3,768,278 3,433,691

Cash and cash equivalents at end of year 6(1) $ 4,151,731 $ 3,768,278

~25~

Attachment 4

REPORT OF INDEPENDENT ACCOUNTANTS

PWCR18000252

To the Board of Directors and Shareholders of Chipbond Technology Co., Ltd.

Opinion

We have audited the accompanying consolidated balance sheets of Chipbond Technology

Corporation and its subsidiaries (the “Group”) as at December 31, 2018 and 2017, and the related

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

years then ended, and notes to the consolidated financial statements, including a summary of

significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material

respects, the consolidated financial position of the Group as at December 31, 2018 and 2017, and

its consolidated financial performance and its consolidated cash flows for the years then ended in

accordance with the “Regulations Governing the Preparation of Financial Reports by Securities

Issuers” and the International Financial Reporting Standards, International Accounting Standards,

IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory

Commission.

Basis for opinion

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

Financial Statements by Certified Public Accountants” and generally accepted auditing standards in

the Republic of China (ROC GAAS). Our responsibilities under those standards are further described

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

our report. We are independent of the Group in accordance with the Code of Professional Ethics for

Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our other

ethical responsibilities in accordance with the Code. We believe that the audit evidence we have

obtained is sufficient and appropriate to provide a basis for our opinion.

~26~

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in

our audit of the consolidated financial statements of the current period. These matters were

addressed in the context of our audit of the consolidated financial statements as a whole and, in

forming our opinion thereon, we do not provide a separate opinion on these matters.

The key audit matters in relation to the consolidated financial statements for the year ended

December 31, 2018 are outlined as follows:

Disposal of equity interest

Description

Refer to Note 4(15) for accounting policy on investments accounted for using equity method, Note

6(5) for details of investments accounted for using equity method, and Note 6(9) for details of

Non-current assets held for sale and discontinued operations.

On December 14, 2017, the Board of Directors resolved to indirectly dispose 43.0767% equity

interest of Chipmore Technology (SuZhou) Co., Ltd. through the subsidiary, Chipmore Holding

Company Limited, and the transfer of above equity interest was completed in mid-July 2018. For the

year ended December 31, 2018, the Group recognised gain on disposal of discontinued operations

from this transaction amounting to NT$1,741,712 thousand. As this transaction during the reporting

period is significant to the financial statements, we considered the disposal of equity interest a key

audit matter.



1. Interviewed with management to obtain an understanding on the purpose, transaction process

and determination of the consideration of the disposal of equity interest.

2. Reviewed the Board of Directors’ meeting minutes and the agreement of disposal of equity

interest and verified that the resolved matters in the meeting were consistent with the contents

of the agreement, and that the appropriate accounting treatment was applied on the terms of

the agreement and respective financial reporting.

3. Evaluated the competency and objectivity of the independent experts engaged by management

and reviewed the fairness opinion, as provided by management, of the consideration issued by

the independent experts.

4. Reviewed the presentation and disclosure in relation to the disposal of equity interest in the

financial statements.

Intangible assets-valuation of goodwill impairment

Description

Refer to Note 4(18) for accounting policies on goodwill, and Note 5 for the accounting estimates and

assumptions applied on goodwill.

~27~

As of December 31, 2018, goodwill amounted to NT$5,037,278 thousand and the impairment loss

on goodwill for the year amounted to NT$500 million. For information on evaluation of goodwill

impairment, refer to Note 6(8), impairment of non-financial assets.

The Group estimates recoverable amount utilizing the future cash flows of goodwill’s cash

generating unit and appropriate discount rates in order to determine whether goodwill is impaired.

The estimation of future cash flows involves various assumptions, which may have significant effects

on the estimation of recoverable amount. Thus, we considered assessment of goodwill impairment

a key audit matter.



Interviewed management to obtain an understanding of the process of estimating future cash flows,

evaluated key assumptions adopted in estimating future cash flows, including assessing the

rationality of estimated growth rates of operating revenue, costs of sales, gross margins and

operating expenses through comparing those with historical outcomes and assessed the

reasonableness of estimated future cash flows within the next four years through reviewing the

actual results of operational plans executed by management and most recent annual budget

approved by the Board of Directors. In addition, evaluated the parameters utilized in calculating the

discount rates, including weighted average cost of capital at risk-free rates, industrial risk premium,

return on assets and the proportion of equity capital in similar market.

Operating revenue

Description

Refer to Note 4(30) for accounting policies on recognition of operating revenue, and Note 6(21) for

details of operating revenue. Operating revenue is a basic operating activity for sustainable business

development, and relevant to enterprise performance as well as material to the financial

statements. Thus, we considered operating revenue a key audit matter.

~28~



Evaluated and validated the effectiveness of design and implementation of internal controls over

recognition of operating revenue. Sampled and tested transaction details, including validating the

performance obligation in the contract with customers, respective transaction terms and prices,

evidence supporting the provision of services, to ensure the occurrence and accuracy of those

transactions.

Other matter – Parent company only financial reports

We have audited and expressed an unmodified opinion on the parent company only financial

statements of Chipbond Technology Corporation as at and for the years ended December 31, 2018

and 2017.

Responsibilities of management and those charged with governance for the consolidated financial

statements

Management is responsible for the preparation and fair presentation of the consolidated financial

statements in accordance with the “Regulations Governing the Preparation of Financial Reports by

Securities Issuers” and the International Financial Reporting Standards, International Accounting

Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory

Commission, and for such internal control as management determines is necessary to enable the

preparation of consolidated financial statements that are free from material misstatement, whether

due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the

Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going

concern and using the going concern basis of accounting unless management either intends to

liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including audit committee, are responsible for overseeing the

Group’s financial reporting process.

~29~

Auditor’s responsibilities for the audit of the 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 ROC GAAS will always

detect a material misstatement when it exists. Misstatements can arise from fraud or error and are

considered material if, individually or in the aggregate, they could reasonably be expected to

influence the economic decisions of users taken on the basis of these consolidated financial

statements.

As part of an audit in accordance with ROC GAAS, we exercise professional 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.

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 Group’s internal control.

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 Group’s ability to

continue as a going concern. If we conclude that a material uncertainty exists, we are required

to draw attention in our auditor’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 Group to cease to continue as a going concern.

~30~

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

statements, including the disclosures, 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 Group to express an opinion on the consolidated financial

statements. We are responsible for the direction, supervision and performance of the group

audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the

planned scope and timing of the audit and significant audit findings, including any significant

deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with

relevant ethical requirements regarding independence, and to communicate with them all

relationships and other matters that may reasonably be thought to bear on our independence, and

where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters

that were of most significance in the audit of the consolidated financial statements of the current

period 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.

For and on behalf of PricewaterhouseCoopers, Taiwan

February 27, 2019

----------------------------------------------------------------------------------------------------------------------------- -------------------- The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

CHIPBOND TECHNOLOGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS


~31~

December 31, 2018 December 31, 2017

Assets Notes AMOUNT % AMOUNT %

Current assets

1100 Cash and cash equivalents 6(1) $ 6,058,390 15 $ 6,068,935 17

1110 Financial assets at fair value


6(2)

- - - -

1150 Notes receivable, net 6(3) 873 - 3,489 -

1170 Accounts receivable, net 6(3) and 7 5,662,998 14 4,516,478 13

1200 Other receivables 19,941 - 522,171 2

1210 Other receivables - related

parties

7

35,151 - - -

130X Inventories, net 6(4) 750,340 2 1,044,104 3

1410 Prepayments 76,584 - 86,985 -

1460 Non-current assets classified

as held for sale, net

6(6)(9)

531,134 2 - -

1470 Other current assets 8 and 12(4) 1,443 - 454,983 1

11XX Total current assets 13,136,854 33 12,697,145 36

Non-current assets

1543 Financial assets at cost -

non-current

12(4)

- - - -

1550 Investments accounted for

under equity method

6(5)

4,722,963 12 - -

1600 Property, plant and

equipment, net

6(6) and 8

16,187,525 41 14,839,653 42

1780 Intangible assets 6(7)(8) 5,055,352 13 7,258,678 20

1840 Deferred income tax assets 6(26) 182,383 - 213,863 1

1900 Other non-current assets 6(10)(29) and 8 324,024 1 391,125 1

15XX Total non-current assets 26,472,247 67 22,703,319 64

1XXX Total assets $ 39,609,101 100 $ 35,400,464 100

(Continued)

CHIPBOND TECHNOLOGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS


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

~32~

December 31, 2018 December 31, 2017 Liabilities and Equity Notes AMOUNT % AMOUNT %

Current liabilities

2100 Short-term borrowings 6(11) $ 1,576,435 4 $ 2,722,007 8

2120 Financial liabilities at fair value


6(12)

- - 79 -

2170 Accounts payable 815,046 2 726,669 2

2200 Other payables 6(13)(15) 4,965,930 11 3,113,595 9

2230 Current income tax liabilities 711,428 2 296,245 1

2300 Other current liabilities 6(14) and 8 219,584 2 234,564 -

21XX Total current liabilities 8,288,423 21 7,093,159 20

Non-current liabilities

2540 Long-term borrowings 6(14) and 8 2,650,000 7 2,200,000 6

2570 Deferred tax liabilities 6(26) 679,711 2 643,328 2

2600 Other non-current liabilities 6(15) 118,297 - 122,126 -

25XX Total non-current liabilities 3,448,008 9 2,965,454 8

2XXX Total liabilities 11,736,431 30 10,058,613 28

Equity attributable to owners of

parent

Share capital 6(17)

3110 Ordinary shares 6,542,620 16 6,542,620 19

Capital surplus 6(18)

3200 Capital surplus 7,198,159 18 6,738,634 19

Retained earnings 6(19)

3310 Legal reserve 2,241,772 6 2,016,378 6

3320 Special reserve 230,724 1 142,693 -

3350 Unappropriated retained

earnings

11,698,485 29 9,464,712 27

Other equity 6(9)(20)

3400 Other equity interest ( 39,090 ) - ( 415,880 ) ( 2 )

31XX Total equity attributable to

owners of the parent

27,872,670 70 24,489,157 69

36XX Non-controlling interest - - 852,694 3

3XXX Total equity 27,872,670 70 25,341,851 72

3X2X Total liabilities and equity $ 39,609,101 100 $ 35,400,464 100

CHIPBOND TECHNOLOGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


~33~

Years ended December 31

2018 2017

Items Notes AMOUNT % AMOUNT %

4000 Operating revenue 6(21), 7 and

12(5) $ 18,725,270 100 $ 16,088,340 100

5000 Operating costs 6(4)(24)(25) ( 13,360,180 ) ( 71 ) ( 12,538,478 ) ( 78 )

5900 Gross profit 5,365,090 29 3,549,862 22

Operating expenses 6(24)(25)

6100 Selling expenses ( 156,069 ) ( 1 ) ( 117,330 ) ( 1 )

6200 General and administrative

expenses

( 868,985 ) ( 5 ) ( 572,195 ) ( 3 )

6300 Research and development

expenses

( 440,467 ) ( 2 ) ( 196,924 ) ( 1 )

6000 Total operating expenses ( 1,465,521 ) ( 8 ) ( 886,449 ) ( 5 )

6900 Operating profit 3,899,569 21 2,663,413 17

Non-operating income and

expenses

7010 Other income 6(22) 32,767 - 24,941 -

7020 Other gains and losses 6(23) ( 182,602 ) ( 1 ) ( 343,311 ) ( 2 )

7050 Finance costs ( 63,630 ) - ( 78,911 ) ( 1 )

7060 Share of loss of associates

and joint ventures accounted

for under equity method

6(5)

( 120,231 ) ( 1 ) - -

7000 Total non-operating

income and expenses

( 333,696 ) ( 2 ) ( 397,281 ) ( 3 )

7900 Profit before income tax 3,565,873 19 2,266,132 14

7950 Income tax expense 6(26) ( 878,915 ) ( 5 ) ( 452,029 ) ( 2 )

8000 Profit for the year from

continuing operations

2,686,958 14 1,814,103 12

8100 Profit from discontinued

operations

6(9)

1,854,825 10 497,975 3

8200 Profit for the year $ 4,541,783 24 $ 2,312,078 15

(Continued)

CHIPBOND TECHNOLOGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME



~34~

Years ended December 31 2018 2017

Items Notes AMOUNT % AMOUNT % Other comprehensive income

Items that may not be reclassified to profit or loss

8311 Remeasurements of defined

benefit plan 6(15)

( $ 17,699 ) - ( $ 32,328 ) - Items that may be

subsequently reclassified to profit or loss

8361 Cumulative translation


6(20)

262,165 2 ( 103,986 ) ( 1 ) 8370 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

3,613 - - - 8360 Components of other

comprehensive income (loss) that will be reclassified to profit or loss

265,778 2 ( 103,986 ) ( 1 ) 8300 Total other comprehensive

income (loss), net of tax

$ 248,079 2 ( $ 136,314 ) ( 1 )

8500 Total comprehensive income for the year

$ 4,789,862 26 $ 2,175,764 14

Profit attributable to: 8610 Owners of the parent $ 4,514,503 24 $ 2,253,947 15

8620 Non-controlling interest $ 27,280 - $ 58,131 -

Comprehensive income attributable to:

8710 Owners of the parent $ 4,762,007 26 $ 2,133,588 14

8720 Non-controlling interest $ 27,855 - $ 42,176 -

Basic earnings per share 6(27) 9710 Continuing operations of

owners of parent

$ 4.12 $ 2.81 9720 Discontinued operations of

owners of parent

2.83 0.66 9750 Basic earnings per share $ 6.95 $ 3.47

Diluted earnings per share 6(27) 9810 Continuing operations of

owners of parent

$ 4.04 $ 2.78 9820 Discontinued operations of

owners of parent

2.77 0.65 9850 Diluted earnings per share $ 6.81 $ 3.43

CHIPBOND TECHNOLOGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS) Equity attributable to owners of the parent Retained earnings Other equity interest

Notes

Ordinary shares

Capital surplus,

additional paid-in capital

Legal reserve

Special reserve

Unappropriated retained earnings

Financial

statements translation


Equity related to

non-current assets

classified as held for sale

Other equity - others Total

Non-controlling interest

Total equity


~35~

Year ended December 31, 2017 Balance at January 1, 2017 $ 6,492,620 $ 6,551,634 $ 1,817,164 $ - $ 8,948,450 ( $ 142,693 ) $ - $ - $ 23,667,175 $ 810,518 $ 24,477,693 Profit for the year - - - - 2,253,947 - - - 2,253,947 58,131 2,312,078 Other comprehensive loss for the year

6(15)(20) - - - - ( 32,328 ) ( 88,031 ) - - ( 120,359 ) ( 15,955 ) ( 136,314 )

Total comprehensive income - - - - 2,221,619 ( 88,031 ) - - 2,133,588 42,176 2,175,764 Distribution of retained earnings of 2016:

6(19)

Legal reserve - - 199,214 - ( 199,214 ) - - - - - - Special reserve - - - 142,693 ( 142,693 ) - - - - - - Cash dividends - - - - ( 1,363,450 ) - - - ( 1,363,450 ) - ( 1,363,450 ) Issuance of employee restricted shares

6(16)(17)(18) (20) 50,000 187,000 - - - - - ( 237,000 ) - - -

Compentation cost of employee restricted shares

6(16)(20)(25) - - - - - - - 51,844 51,844 - 51,844

Balance at December 31, 2017 $ 6,542,620 $ 6,738,634 $ 2,016,378 $ 142,693 $ 9,464,712 ( $ 230,724 ) $ - ( $ 185,156 ) $ 24,489,157 $ 852,694 $ 25,341,851 Year ended December 31, 2018 Balance at January 1, 2018 $ 6,542,620 $ 6,738,634 $ 2,016,378 $ 142,693 $ 9,464,712 ( $ 230,724 ) $ - ( $ 185,156 ) $ 24,489,157 $ 852,694 $ 25,341,851 Profit for the year - - - - 4,514,503 - - - 4,514,503 27,280 4,541,783 Other comprehensive income (loss) for the year

6(15)(20) - - - - ( 17,699 ) 265,203 - - 247,504 575 248,079

Total comprehensive income - - - - 4,496,804 265,203 - - 4,762,007 27,855 4,789,862 Distribution of retained earnings of 2017:

6(19)

Legal reserve - - 225,394 - ( 225,394 ) - - - - - - Special reserve - - - 88,031 ( 88,031 ) - - - - - - Cash dividends - - - - ( 1,537,516 ) - - - ( 1,537,516 ) - ( 1,537,516 ) Compensation cost of employee restricted shares

6(16)(20)(25) - - - - - - - 111,587 111,587 - 111,587

Changes in associates accounted for using equity method

6(5)(18) - 457,327 - - - - - - 457,327 - 457,327

Cash dividends paid to non-controlling interest

- - - - - - - - - ( 317,919 ) ( 317,919 )

Reclassification of discontinued operations

6(20) - - - - - 250,105 ( 250,105 ) - - - -

Effect on shareholders’ equity from disposal of subsidiary

6(20) - - - - - ( 250,105 ) 250,105 - - - -

Others 6(18) - 2,198 - - - - - - 2,198 - 2,198 Decrease in non-controlling interest

6(28) - - - - ( 412,090 ) - - - ( 412,090 ) ( 562,630 ) ( 974,720 )

Balance at December 31, 2018 $ 6,542,620 $ 7,198,159 $ 2,241,772 $ 230,724 $ 11,698,485 $ 34,479 $ - ( $ 73,569 ) $ 27,872,670 $ - $ 27,872,670

CHIPBOND TECHNOLOGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS



~36~

CASH FLOWS FROM OPERATING ACTIVITIES

Profit from continuing operations before tax $ 3,565,873 $ 2,266,132 Profit from discontinued operations before tax 1,873,512 571,718 Profit before tax 5,439,385 2,837,850 Adjustments Adjustments to reconcile profit (loss) Provision for bad debts expense 12(4) - 1,076 Depreciation 6(6) 2,510,410 2,596,436 Amortisation of land use right 6(10) 2,508 4,168 Amortisation of intangible assets 6(7) 43,788 36,989 Net loss on financial liabilities at fair value through

profit or loss 6(12)(23)

- 2 Net gain on financial assets at fair value through profit

or loss

( 4,442 ) - Pension expense 6(15) 37,034 - Compensation cost of share-based payments 6(16)(20)(25) 111,587 51,844 Impairment loss on financial assets 6(23) and 12(4) - 1,160 Impairment loss on intangible assets 6(7)(23) 500,000 - Interest income ( 37,183 ) ( 68,822 ) Interest expense 68,019 68,420 Gain on disposals of investments 6(23) ( 6,351 ) ( 5,265 ) Share of profit of associates accounted for using equity

method 6(5)(15)

120,231 - Gain on disposal of property, plant and equipment 6(23) ( 52,199 ) ( 33,809 ) Profit from discontinued operations 6(9) ( 1,741,712 ) - Changes in operating assets and liabilities Changes in operating assets Financial assets held for trading 407,063 440 Notes receivable 2,616 1,380 Accounts receivable ( 1,545,339 ) ( 20,947 ) Other receivables ( 6,010 ) ( 13,536 ) Inventories ( 70,996 ) ( 84,037 ) Prepayments ( 27,443 ) ( 39,058 ) Other current assets ( 1,184 ) 149 Other non-current assets 924 2,084 Changes in operating liabilities Financial liabilities held for trading 5,535 4,705 Notes payable - ( 262 ) Accounts payable 202,720 ( 97,483 ) Other payables 850,579 276,661 Other current liabilities 2,877 12,246 Other non-current liabilities ( 20,400 ) ( 21,299 ) Cash inflow generated from operations 6,792,017 5,511,092 Interest received 35,401 72,523 Interest paid ( 69,434 ) ( 71,320 ) Income taxes paid ( 632,011 ) ( 653,640 ) Net cash flows from operating activities 6,125,973 4,858,655

(Continued)

CHIPBOND TECHNOLOGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS


Years ended December 31 Notes 2018 2017

The accompanying notes are an integral part of these consolidated financial statements. ~37~

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from capital reduction of financial assets at cost $ - $ 690

Acquisition of investments accounted for using equity

method

6(5)

( 1,078,397 ) -

Acquisition of property, plant and equipment 6(29) ( 6,509,653 ) ( 2,332,414 )

Proceeds from disposal of property, plant and equipment 110,548 73,168

Acquisition of intangible assets 6(7) ( 28,186 ) ( 39,109 )

Increase in other receivables ( 512,975 ) ( 446,400 )

Decrease in other receivables 971,989 -

Decrease in other financial assets - 43,002

Decrease in restricted assets 8 146,889 17,276

(Increase) decrease in refundable deposits ( 12,762 ) 477

Proceeds from disposal of subsidiaries 3,133,152 -

Decrease in cash from disposal of subsidiary ( 991,498 ) -

Net cash flows used in investing activities ( 4,770,893 ) ( 2,683,310 )

CASH FLOWS FROM FINANCING ACTIVITIES

Increase in short-term borrowings 6(30) 26,845 778,929

Increase in long-term borrowings 6(30) 3,600,000 2,350,000

Repayments of long-term borrowings 6(30) ( 3,150,000 ) ( 3,950,000 )

Increase (decrease) in guarantee deposits received 117 ( 1,775 )

Cash dividends paid to non-controlling interest ( 317,919 ) -

Cash dividends paid 6(19) ( 1,537,516 ) ( 1,363,450 )

Net cash flows used in financing activities ( 1,378,473 ) ( 2,186,296 )

Net effect of changes in foreign currency exchange rates 12,848 ( 34,981 )

Net decrease in cash and cash equivalents ( 10,545 ) ( 45,932 )

Cash and cash equivalents at beginning of year 6(1) 6,068,935 6,114,867

Cash and cash equivalents at end of year 6(1) $ 6,058,390 $ 6,068,935

~38~

Attachment 5

The Details of Endorsement and Guarantee in 2018 Unit: NTD in thousands, unless specified otherwise

No Endorser/ guarantor

Guaranteed party

Limit on endorsements/

Guarantees provided for a single party

Maximum balance

for the

period

Ending Balance

Amount Actually Drawn Down

Amount of endorsement/

guarantee collateralized

by properties

Ratio of Accumulated

endorsement/ guarantee to

net equity per latest

financial statements

Maximum endorsement/

guarantee amount

allowable (Note 1)

Guarantee provided by parent company (Note 2)

Guarantee provided

by a

subsidiary (Note 2)

Guarantee provided to subsidiaries

in Mainland

China (Note 2)

Foot note

Company Name

Nature of relationship

0

Chipbond

Technology

Corporation

International

Semiconductor

Technology

Corporation

Limited

The

Company's

indirect

wholly-owned

subsidiary

2,787,267 278,595 276,435 276,435 - 0.99% 5,574,534 Y N Y

Note 1: According to the parent Company’s “Procedures for Endorsement and Guarantee”, limit on endorsement/guarantee to a single party is 10% of the Company’s shareholders’

equity and limit on total endorsement/guarantee is 20% of the Company’s shareholder’s equity.

Note 2: Fill in “Y” for those cases of guarantee provided by listed parent company to subsidiary and guarantee provided by subsidiary to listed parent company, and guarantee

provided to subsidiary in Mainland China.

~39~

Attachment 6

The Details of Lending Funds to Other Parties in 2018 Unit: NTD in thousands, unless specified otherwise

No

(Note 1)

Creditor Borrower

General

ledger account

Is a related party

Maximum outstanding balance for

the period

Balance at

December 31, 2017

Actual Amount Drawn

Down

Interest Rate

Nature

of loan (Note 2)

Amount of transactions

with the

borrower

Reason for

short term financing

Allowance for

doubtful

accounts

Collateral Limit on

loans granted

to a single party

(Note 3)

Ceiling on total

loans granted (Note 3)

Footnote

Item Value

0

Chipbond

Technology

Corporation

International

Semiconductor

Technology

Corporation

Limited

Other

receivables Yes 843,743 - - 1.60% 2 -

Operational

Use - - - 2,787,267 5,574,534

1

Chipmore

Holding

Company

Limited

(H.K.)

Gemini

Holdings

Company

Limited

Other

receivables No 982,880 - - 1.60% 2 -

Operational

Use - - - 1,464,604 1,464,604

2

Chipmore

Holding

Company

Limited

International

Semiconductor

Technology

Corporation

Limited

Other

receivables Yes 522,155 509,739 509,739 1.60% 2 -

Operational

Use 2,782,095 2,782,095

Note 1: The column of number is explained as follows: (1) Fill in 0 for the issuer. (2) The invested company is sequenced from 1 per the company’s name.

Note 2: Nature of loans to others is filled as follows: (1) Fill in 1 for business transactions. (2) Fill in 2 for short-term financing.

Note 3: As prescribed in the parent company’s “Procedures for Lending Funds to Other Parties”, limit on loans to a single subsidiary is 10% of the Company’s shareholders’ equity and limit on total loans is 20% of the Company’s shareholders’ equity. As prescribed in the subsidiaries' “Procedures for Lending Funds to Other Parties”, the limit on the short-term financing shall not exceed 40% of the subsidiaries' net worth.

~40~

Attachment 7


The 2018 Earnings Distribution Proposal

Unit: NT$

Item Subtotal Total

Unappropriated earnings at beginning of period 7,613,771,542

Add: Net Profit of 2018 4,514,502,780

Less: Remeasurements of defined benefit plan (17,699,102) Less: Change in other comprehensive income (loss) of subsidiaries using equity method (412,090,193)

Less: 10% of legal reserve (451,450,278)

Add: Reverse of Special reserve 230,723,810

Available for distribution of earnings for 2018 11,477,758,559

Distribution Items:

Less: Cash dividends to ordinary shareholders (NT$3.5 per share) (2,289,916,993)

Unappropriated earnings at end of period 9,187,841,566

Wu, Fei-Jain Gou, Huoo-Wen Wang, Chao-Yie

Chairman of the Board President Accounting Manager

~41~

Attachment 8

Comparison Table for the “Operational Procedures for Acquisition and Disposal of Assets” Before

and After Amendment

Article Before Amendment After Amendment

Article 2 The term "assets" as used in these

Procedures includes the following:

1. Investments in stocks, government

bonds, corporate bonds, financial

bonds, securities representing interest

in a fund, depositary receipts, call

(put) warrants, beneficial interest

securities, and asset-backed securities.

2. Real property (including land, houses

and buildings, investment property,

land use right, and construction

enterprise inventory) and equipment.

3. Memberships.

4. Patents, copyrights, trademarks,

franchise rights, and other intangible

assets.

5. Claims of financial institutions

(including receivables, bills purchased

and discounted, loans, and overdue

receivables).

6. Derivatives.

7. Assets acquired or disposed of in

connection with mergers, demergers,

acquisitions, or transfer of shares in

accordance with law.

8. Other major assets.

The term "assets" as used in these Procedures

includes the following:

1. Investments in stocks, government bonds,

corporate bonds, financial bonds, securities

representing interest in a fund, depositary

receipts, call (put) warrants, beneficial

interest securities, and asset-backed

securities.

2. Real property (including land, houses and

buildings, investment property, and

construction enterprise inventory) and

equipment.

3. Memberships.

4. Patents, copyrights, trademarks, franchise

rights, and other intangible assets.

5. Right-of-use assets.

6. Claims of financial institutions (including

receivables, bills purchased and

discounted, loans, and overdue

receivables).

7. Derivatives.

8. Assets acquired or disposed of in

connection with mergers, demergers,

acquisitions, or transfer of shares in

accordance with law.

9. Other major assets.

Article 7 The executive authority department and

the limit amount of investment:

The authority of acquire or dispose of

assets of these Operational Procedures

should be executed in accordance with the

approved authority level.

The limit amount of investment: The

The executive authority department and the

limit amount of investment:

The authority of acquire or dispose of assets of

these Operational Procedures should be

executed in accordance with the approved

authority level.

The limit amount of investment: The long-term

~42~


long-term investment shall not exceed the

40 percent of shareholders’ equity and the

short-term investment, real property

purchased for non-operating use shall not

exceed 60% of shareholders’ equity.

investment shall not exceed the 40 percent of

shareholders’ equity and the short-term

investment, real property purchased for

non-operating use, and its right-of-use asset

shall not exceed 60% of shareholders’ equity.

Article 8 When the Company intends to acquire or

dispose of real property or equipment and

if the transaction amount is greater than

or equals to 20 percent of Company’s

paid-in capital or NT$300 million, except

for transactions with a government

agency, engagement with others to build

on the Company’s own land or leased

land, or acquisition or disposal of

equipment for business use, the Company

shall obtain an appraisal report issued by a

professional appraiser prior to the date of

the occurrence of such event and shall

further comply with the following

provisions:

1. If it is necessary to use a limited price,

specified price, or special price as the

reference basis for the transaction

price, such transaction shall be

submitted to the Board of Directors for

approval in advance. Foregoing

procedure shall also be applied to any

future changes to the terms and

conditions of the transaction.

2. When the transaction amount is

greater than NT$1 billion, the

Company is required to obtain

appraisal reports from two

professional appraisers.

3. ……(omitted)

When the Company intends to acquire or

dispose of real property, equipment or its

right-of–use assets, and if the transaction

amount is greater than or equals to 20 percent

of Company’s paid-in capital or NT$300 million,

except for transactions with a domestic

government agency, engagement with others

to build on the Company’s own land or leased

land, or acquisition or disposal of equipment or

its right-of–use assets for business use, the

Company shall obtain an appraisal report

issued by a professional appraiser prior to the

date of the occurrence of such event and

shall further comply with the following

provisions:

1. If it is necessary to use a limited price,

specified price, or special price as the

reference basis for the transaction price,

such transaction shall be submitted to the

Board of Directors for approval in advance.

Procedure shall also be applied when any

changes to the terms and conditions of the

transaction happens.

2. When the transaction amount is greater

than NT$1 billion, the Company is required

to obtain appraisal reports from two

professional appraisers.

3. ……(omitted)


dispose of membership or an intangible


dispose of an intangible asset or its right-of-use

~43~


asset, and if the transaction amount is

greater than or equals to 20% percent of

Company’s paid-in capital or NT$300

million, except for transactions with a

government agency, the Company shall

seek opinions in respect of the

reasonableness of the purchase price from

certified public accountants prior to the

relevant date of occurrence. Any valuation

report required as a basis of such

reasonableness opinions shall be prepared

in accordance with the provision of

Auditing Standard No, 20 promulgated by

the Accounting Research and Development

Foundation.

assets or membership, and if the transaction

amount is greater than or equals to 20% percent

of Company’s paid-in capital or NT$300 million,

except for transactions with a domestic

government agency, the Company shall seek

opinions in respect of the reasonableness of the

purchase price from certified public accountants

prior to the relevant date of occurrence. Any

valuation report required as a basis of such

reasonableness opinions shall be prepared in

accordance with the provision of Auditing

Standard No, 20 promulgated by the Accounting

Research and Development Foundation.


dispose of real property from or to a

related party, or when it intends to

acquire or dispose of assets other than

real property from or to a related party

and the transaction amount is greater

than or equals to 20 percent of the paid-in

capital, 10 percent of the Company’s total

assets, or NT$300 million, except in the

trading of government bonds or bonds

under repurchase and resale agreements,

or subscription or repurchase of money

market funds issued by domestic

securities investment trust enterprises ,

the Company may not proceed to enter

into a transaction contract or make a

payment until the following materials

have been approved by Audit Committee

members, and then submitted to and

adopted by the Board of Directors:

1. The purpose, necessity and estimated

benefit of the acquiring or disposing of


dispose of real property or its right-of-use

assets from or to a related party, or when it

intends to acquire or dispose of assets other

than real property or its right-of-use assets

from or to a related party and the transaction

amount is greater than or equals to 20 percent

of the paid-in capital, 10 percent of the

Company’s total assets, or NT$300 million,

except in the trading of domestic government

bonds or bonds under repurchase and resale

agreements, or subscription or repurchase of

money market funds issued by domestic

securities investment trust enterprises , the

Company may not proceed to enter into a

transaction contract or make a payment until

the following materials have been approved by

Audit Committee members, and then

submitted to and adopted by the Board of

Directors:

1. The purpose, necessity and estimated

benefit of the acquiring or disposing of real

~44~


real property.

2. The reason for choosing the related

party as a trading counterparty.

3. With respect to the acquisition of real

property from a related party,

information regarding appraisal of the

reasonableness of the preliminary

transaction terms.

4. The date and price at which the

related party originally acquired the

real property, the original transaction

counterparty, and that transaction

counterparty's relationship to the

company and the related party.

5. Monthly cash flow forecasts for the

year commencing from the

anticipated month of signing of the

contract, and evaluation of the

necessity of the transaction, and

reasonableness of the funds

utilization.

6. An appraisal report from a

professional appraiser or a CPA's

opinion obtained in compliance with

the preceding article.

7. Restrictive covenants and other

important stipulations associated with

the transaction.

The calculation of the transaction

amounts referred to in the preceding

paragraph shall be made in accordance

with Article 19, paragraph 2 herein, and

"within the preceding year" as used herein

refers to the year preceding the date of

occurrence of the current transaction. Any

transaction which have been submitted to

the Audit Committee and approved by the

property or its right-of-use assets.

2. The reason for choosing the related party

as a trading counterparty.

3. With respect to the acquisition of real

property or its right-of-use assets from a

related party, information regarding

appraisal of the reasonableness of the

preliminary transaction terms.

4. The date and price at which the related

party originally acquired the real property,

the original transaction counterparty, and

that transaction counterparty's

relationship to the company and the

related party.

5. Monthly cash flow forecasts for the year

commencing from the anticipated month

of signing of the contract, and evaluation

of the necessity of the transaction, and

reasonableness of the funds utilization.

6. An appraisal report from a professional

appraiser or a CPA's opinion obtained in

compliance with the preceding article.

7. Restrictive covenants and other important

stipulations associated with the

transaction.

The calculation of the transaction amounts

referred to in the preceding paragraph shall be

made in accordance with Article 19, paragraph

2 herein, and "within the preceding year" as

used herein refers to the year preceding the

date of occurrence of the current transaction.

Any transaction which have been submitted to

the Audit Committee and approved by the

board of directors in accordance with the

Operational Procedures shall be excluded.

The company's board of directors may

pursuant to Article 3 and Article 4 delegate the

~45~


board of directors in accordance with the

Operational Procedures shall be excluded.

The company's board of directors may

pursuant to Article 3 and Article 4

delegate the board chairman to decide

acquisition or disposal of equipment

thereof held for business use between the

Company and its subsidiary when the

transaction is within a certain amount and

have the decisions subsequently

submitted to and ratified by the next

board of directors meeting:

When a matter is submitted for discussion

by the board of directors pursuant to

paragraph 1, the board of directors shall

take into full consideration each

independent director's opinions. If an

independent director objects to or

expresses reservations about any matter,

it shall be recorded in the minutes of the

board of directors meeting.

board chairman to decide the transactions

listed below between the Company, its

subsidiary, or its subsidiary in which it directly

or indirectly holds 100 percent of the issued

shares or authorized capital when the

transaction is within a certain amount and

have the decisions subsequently submitted to

and ratified by the next board of directors

meeting:

1. Acquisition or disposal of equipment or

right-of-use assets thereof held for

business use.

2. Acquisition or disposal of real property

right-of-use assets held for business use.

When a matter is submitted for discussion by

the board of directors pursuant to paragraph 1,

the board of directors shall take into full

consideration each independent director's

opinions. If an independent director objects to

or expresses reservations about any matter, it

shall be recorded in the minutes of the board

of directors meeting.

Article 14 In the case of acquisition of real property

from a related party, the Company shall

evaluate the reasonableness of the

transaction cost in accordance with the

regulated methods. In additional to the

matters listed below, the Company shall

retain certified public accountants to

review such evaluation and render specific

opinions.

1. The related party acquired the real

property by inheritance or intestacy or

due to gratuity.


property 5 years prior to the

scheduled date of the transaction

In the case of acquisition of real property or its

right-of-use assets from a related party, the

Company shall evaluate the reasonableness of

the transaction cost in accordance with the

regulated methods. In additional to the

matters listed below, the Company shall retain

certified public accountants to review such

evaluation and render specific opinions.


property by inheritance or intestacy or due

to gratuity.


property 5 years prior to the scheduled

date of the transaction agreement.

3. The Company is acquiring the real property

~46~


agreement.

3. The Company is acquiring the real

property by way of retaining the

related party to construct on land

owned or rented by the Company or

participating in a joint construction

project with the related party.

by way of retaining the related party to

construct on land owned or rented by the

Company or participating in a joint

construction project with the related party.

4. Acquisition of real property right-of-use

assets thereof held for business use

between the Company, its parent

company, its subsidiary, or its subsidiary in

which it directly or indirectly holds 100

percent of the issued shares or authorized

capital.

Article 15 The Company acquires real property

thereof from a related party and the

results of appraisals conducted in

accordance with the regulated methods

are lower than the transaction price,

except providing evidence, the Company

shall set aside a special reserve and

disclose the information publicly. The

special reserve shall not be distributed or

capitalized until the approval of the

Financial Supervisory Commission.

The Company acquires real property or its

right-of–use assets thereof from a related party

and the results of appraisals conducted in

accordance with the regulated methods are

lower than the transaction price, except

providing evidence, the Company shall set aside

a special reserve and disclose the information

publicly. The special reserve shall not be

distributed or capitalized until the approval of

the Financial Supervisory Commission.

Article 19 Under any of the following circumstances,

the Company acquiring or disposing of

assets shall publicly announce and report

the relevant information on the FSC's

designated website in the appropriate

format as prescribed by regulations within

2 days counting inclusively from the date

of occurrence of the event:

1. Acquisition or disposal of real

property from or to a related party, or

acquisition or disposal of assets other

than real property from or to a related

party where the transaction amount is

greater than or equal to 20 percent of

the Company’s paid-in capital, 10

Under any of the following circumstances, the

Company acquiring or disposing of assets shall

publicly announce and report the relevant

information on the FSC's designated website in

the appropriate format as prescribed by

regulations within 2 days counting inclusively

from the date of occurrence of the event:

1. Acquisition or disposal of real property or

its right-of-use assets from or to a related

party, or acquisition or disposal of assets

other than real property or its right-of-use

assets from or to a related party where the

transaction amount is greater than or

equal to 20 percent of the Company’s

paid-in capital, 10 percent of the

~47~


percent of the Company’s total assets,

or NT$300 million; provided, however,

that this shall not apply trading of

government bonds or bonds under

repurchase and resale agreements, or

subscription or repurchase of money

market funds issued by domestic

securities investment trust

enterprises.

2. Merger, spin-off, acquisition, or

transfer of shares.

3. Losses from derivative trading

reaching the limits on aggregate losses

or losses on individual contracts set

forth in this Operational Procedures.

4. Where the type of acquired or

disposed assets is equipment for

business use, the trading counterparty

is not a related party, and the

transaction amount reaches the

amount set forth as follows:

a. For public companies with

paid-in capital less than NT$10

billion, the transaction amount

reaches NT$500 million.

b. For public companies with

paid-in capital greater than or

equals to NT$10 billion, the

transaction amount reaches

NT$1 billion.

5. Acquisition of real property by

engaging others to build on the

Company’s own land or leased land,

joint construction and allocation of

housing units, joint construction and

allocation of housing units, and

allocation of ownership, or joint

Company’s total assets, or NT$300 million;

provided, however, that this shall not apply

trading of government bonds or bonds

under repurchase and resale agreements,

or subscription or repurchase of money

market funds issued by domestic securities

investment trust enterprises.

2. Merger, spin-off, acquisition, or transfer of

shares.

3. Losses from derivative trading reaching the

limits on aggregate losses or losses on

individual contracts set forth in this

Operational Procedures.

4. Where the type of acquired or disposed

assets is equipment or its right-of-use

assets for business use, the trading

counterparty is not a related party, and the

transaction amount reaches the amount

set forth as follows:

a. For public companies with paid-in

capital less than NT$10 billion, the

transaction amount reaches NT$500

million.

b. For public companies with paid-in

capital greater than or equals to

NT$10 billion, the transaction

amount reaches NT$1 billion.

5. Acquisition of real property by engaging

others to build on the Company’s own land

or leased land, joint construction and

allocation of housing units, joint

construction and allocation of housing

units, and allocation of ownership, or joint

construction and separate sale, which the

Company’s estimated amount of

investment is greater than NT$500 million,

and the transaction counterparty is a

~48~


construction and separate sale, which

the Company’s estimated amount of

investment is greater than NT$500

million.

6. When the transaction amount of any

assets transaction other than any of

those referred to in the preceding 5

paragraphs or a disposal of claims by a

financial institution or investment in

the mainland China area is greater

than or equals to 20 percent of the

Company’s paid-in capital or NT$300

million; provided, however, that this

shall not apply to the following

circumstances:

a. Trading of government bond.

b. Trading of bonds under

repurchase or resale

agreements, or subscription or

redemption of domestic money

market funds.

7. After filing and public announcement

the event of the investment in

mainland China area, if the authority

disapprove the proposal for

investment in mainland China, the

company should declare the original

date of public announcement, the

name of investee in the mainland

China, estimated amount of the

investment, transaction counterparty,

and the date of disapproval from the

authority and related information on

the MOPS.

Unless otherwise provided by applicable

laws, any and all written agreements,

meeting minutes, memorandum books,

non-related party.

6. When the transaction amount of any

assets transaction other than any of those

referred to in the preceding 5 paragraphs

or a disposal of claims by a financial

institution or investment in the mainland

China area is greater than or equals to 20

percent of the Company’s paid-in capital or

NT$300 million; provided, however, that

this shall not apply to the following

circumstances:

a. Trading of domestic government

bond.

b. Trading of bonds under repurchase

or resale agreements, or

subscription or redemption of

domestic money market funds.

7. After filing and public announcement the

event of the investment in mainland China

area, if the authority disapprove the

proposal for investment in mainland China,

the company should declare the original

date of public announcement, the name of

investee in the mainland China, estimated

amount of the investment, transaction

counterparty, and the date of disapproval

from the authority and related information

on the MOPS.

Unless otherwise provided by applicable laws,

any and all written agreements, meeting

minutes, memorandum books, appraisal reports

and written opinions of certified public accounts,

lawyers or securities underwriters in connection

with assets acquisitions or disposals shall be kept

at the Company for at least five years.

~49~


appraisal reports and written opinions of

certified public accounts, lawyers or

securities underwriters in connection with

assets acquisitions or disposals shall be

kept at the Company for at least five

years.

Article 21 Except acquiring the assets for business

use, the Company and each subsidiary

shall invest real property for non-business

use and securities. The limits on the

transaction amounts set forth as below:

Total amounts of real property for

non-business use thereof acquired by the

company and each subsidiary individually

shall not exceed 60 percent of

shareholders’ equity of the Company.

Except acquiring the assets for business use,

the Company and each subsidiary shall invest

real property for non-business use and its

right-of-use assets or securities. The limits on

the transaction amounts set forth as below:

Total amounts of real property for non-business

use and its right-of-use assets thereof acquired

by the company and each subsidiary individually

shall not exceed 60 percent of shareholders’

equity of the Company.

Article 23 Filing and Disclosure by Subsidiaries:

Acquisitions or disposals of assets by any

subsidiary of the Company shall also be

handled in accordance with these

Procedures.

In the event where the subsidiary is a

non-public company, and where the amount

of its acquisition or disposal of assets has

reached the Article 8 threshold, the

Company shall file and publicly disclose the

information on behalf of such subsidiary.

The filing and disclosure thresholds 20% of

the paid-in capital or 10% of the total assets

applicable to a subsidiary shall refer to such

percentage of the Company’s paid-in capital

or total assets.

Filing and Disclosure by Subsidiaries:

Acquisitions or disposals of assets by any

subsidiary of the Company shall also be handled

in accordance with these Procedures.

In the event where the subsidiary is a non-public

company, and where the amount of its

acquisition or disposal of assets has reached the

Article 8 threshold, the Company shall file and

publicly disclose the information on behalf of

such subsidiary.

The filing and disclosure thresholds of the

paid-in capital or the total assets applicable to a

subsidiary shall refer to the Company’s paid-in

capital or total assets.

~50~

IV. Appendix

Appendix 1


Articles of Incorporation

Section I

General Provisions

Article 1

The name of company shall be Chipbond Technology Corporation (頎邦科技股份有

限公司) (the “Company”). The Company is duly organized under the Company Act of

Taiwan.

Article 2

The business to be operated by the Company is as follows:

CC010080 Electronic Components Manufacturing

To research, develop, manufacture, and distribute the following products: metal

bump, gold bumps, solder bump, flip chip, tape-automated bonding (TAB) and tape

carrier package board (Tape) (restricted to operations outside of the Park (as defined

in Article 3)).

Article 3

The headquarters of the Company is in the Hsinchu Science and Industrial Park (the

“Park”). The Company may establish branches or subsidiaries in Taiwan or overseas

as the Company may require upon approval of the Board of Directors and the

competent authorities.

Article 4

Except as otherwise prescribed by the securities regulatory authorities, public

announcements of the Company shall, in accordance with Article 28 of the Company

Act, be placed in a visible section of the daily newspaper circulated where the

headquarters of the Company is located.

Section II

Shares

Article 5

The registered share capital of the Company shall be eight billion New Taiwan Dollars

(NTD 8,000,000,000), divided into eight hundred million (800,000,000) common

shares, with a par value of ten New Taiwan Dollars (NT 10) per share, from which the

~51~

Board of Directors is authorized to issue the unissued shares in installments; from

which twenty million (20,000,000) shares shall be reserved for issuance upon the

exercise of any stock options or equity warrant bonds.

Article 5-1

The Company may issue employee stock options, or purchase treasury shares and

transfer such shares to the employees, upon the approval of at least two-thirds of

the voting shares present at the shareholders’ meeting, which is attended by holders

of a majority of the total issued and outstanding shares of the Company. The

subscription price for the employee stock options may be at a price lower than the

closing price of the Company’s common shares on the date of issuance; the treasury

shares may be transferred to the employees at a price lower than the average of the

actual price paid by the Company to purchase such shares.

Article 6

The Company’s total investment amount is not subject to the restriction in Article 13

of the Company Act, which states that the Company’s investments shall not exceed

forty percent of its paid-in capital. The Company may act as a guarantor of its

affiliates or companies in the same industry upon the approval of the Board of

Directors.

Article 7

The Company’s shares shall be registered and numbered, and shall bear the

signatures or personal seals of at least three directors, and be issued upon

certification by the competent authority or its designated registration agency. The

Company may issue shares without certificates and such shares shall be registered

with a central securities depository.

Article 8

The handling of the Company’s shares shall be governed by the Regulations

Governing the Administration of Shareholder Service of Public Companies prescribed

by the competent authority.

Article 9

Registration for the transfer of shares shall be completed sixty (60) days before the

date of the annual meeting of the shareholders, thirty (30) days before the date of

any special meeting of the shareholders, or five (5) days before the date on which

dividends, bonus, or other distributions will be paid or made by the Company.

Section III

Shareholders’ Meeting

Article 10

Two types of meetings of the shareholders of the Company:

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1. Annual meeting, to be convened once a year within six (6) months after the

end of every fiscal year.

2. Special meeting, to be convened as required in accordance with the

applicable laws and regulations.

Article 11

The shareholders’ meetings shall be convened by the Board of Directors and

presided over by the Chairman of the Board. The Chairman of the Board shall

appoint a director to act as his or her proxy if the Chairman is unable to attend such

meeting. If the Chairman does not appoint a proxy, the directors shall appoint one

from among them. If a meeting is convened by a person entitled to convene other

than the Board of Directors, such person shall act as the Chairman for the meeting;

provided, however, if there are more than one person entitled to convene, the

Chairman for the meeting shall be appointed from among them.

Article 12

Shareholders covered by Article 172-1 of the Company Act may submit a proposal in

writing to be discussed at the annual meeting, provided that only one matter is

included in such proposal. Any proposal that includes more than one matter shall be

disregarded and excluded from the meeting agenda. Matters specified in Article 12

shall comply with the Company Act and all applicable laws and regulations.

Article 13

A shareholder who is unable to attend the shareholders’ meeting may authorize

another person to attend by proxy using the form provided by the Company, which

sets forth the scope of the authorization. The shareholder proxy process is governed

by Article 177 of the Company Act and the Regulations Governing the Use of Proxies

for Attendance at Shareholder Meeting of Public Companies.

Article 14

Except for the shares with restricted voting rights or without voting rights under the

Company Act, each share is entitled to one vote.

Article 15

Except as otherwise provided by applicable law, the shareholders’ resolutions shall

be adopted upon the approval of a majority of the voting shares present at the

shareholders’ meeting, which is attended by holders of a majority of the total issued

and outstanding shares of the Company.

Article 15-1

The Company may only deregister or delist its shares upon approval of the Board of

Directors and by a special resolution adopted at the shareholders’ meeting.

~53~

Section IV

Directors, Audit Committee, and Managerial Personnel

Article 16

The Company shall have seven to nine directors, who will hold office for three years

and be elected from legally competent persons at the shareholders’ meeting;

re-elected directors may serve consecutive terms. Of the seven to nine directors

mentioned in the preceding sentence, at least three shall be independent directors.

The directors shall be elected using the candidate nomination system and the

restrictions on professional qualifications, shareholding, concurrent positions, and

the manner of election of the independent directors, and other related matters, shall

comply with applicable laws and regulations. The Company shall purchase liability

insurance for the directors during their tenures, which shall cover the liabilities for

which the directors may be liable from the performance of their powers and duties.

Article 17

The Board of Directors consists of the directors of the Company and shall have the

following powers and duties:

1. Decide on the business direction and supervise the operation of the

Company’s business.

2. Submit proposals regarding the distribution of profits or the offsetting of

losses.

3. Submit proposals regarding capital increase or reduction.

4. Adopt material rules and organizational charter of the Company.

5. Appoint and remove managerial personnel of the Company at all levels.

6. Establish and wind up branches and subsidiaries.

7. Review budgets and financial statements.

8. Authorize the purchase and disposition of material assets.

9. Other powers and duties conferred by the Company Act or by the

shareholders at the shareholders’ meeting.

Article 18

The Chairman of the Board shall be elected from among the directors by at least a

majority of the Board present at a meeting attended by at least two-thirds of the

directors holding office. The Chairman of the Board shall have the authority to

represent the Company.

Article 19

Unless otherwise provided by the Company Act, the meetings of the Board of

Directors shall be convened by the Chairman of the Board with written notice sent to

each director by mail, email, or fax. Except as otherwise provided by the Company

~54~

Act, the resolutions of the Board of Directors shall be adopted by at least a majority

of the directors present at a meeting attended by at least a majority of the directors

holding office.

A director who has a personal interest in any of the items on the meeting agenda

shall disclose the details of the conflict at such meeting.

Article 20

The Chairman of the Board shall preside at all meetings. If the Chairman is on leave

or cannot exercise his powers and duties for any reason, the Chairman of the Board

shall appoint a director to act as his or her proxy at the meeting. If the Chairman of

the Board does not appoint a proxy, the Board of Directors shall appoint one from

among them. The directors shall attend all meetings in person. If a director is unable

to attend the meeting for any reason, such director shall appoint another director as

his or her proxy. A director may only be appointed as proxy by one other director.

Article 21

The Company shall set up an audit committee comprised of all independent

directors.

The number of people on the audit committee and their term of office, the powers

and duties and the meeting guidelines of the audit committee, and the resources to

be provided by the Company when exercising its powers and duties shall be set forth

in the audit committee charter.

The audit committee or members of the audit committee shall assume the powers

and duties of a supervisor under the Company Act, Securities and Exchange Act, and

other applicable laws and regulations.

Article 22

The Board of Directors is authorized to determine the compensation of the Chairman

of the Board and the directors, which shall take into account the extent of their

participation in the Company’s operations and the value of their contributions, and

the standards within the same industry.

Article 23

The Company shall have managerial personnel, the appointment, removal, and

remuneration of which shall comply with Article 29 of the Company Act.

Article 24

The managerial personnel shall handle all of the Company’s business at the direction

of the Board of Directors and in accordance with the Articles of Incorporation and

shall have signing authority over such business.

~55~

Section V

Accounting

Article 25

The fiscal year of the Company shall begin on January 1 and end on December 31 of

each year. At the close of the fiscal year, the accounts of the Company shall be

closed.

Article 26

After the close of each fiscal year, the Company shall have the Board of Directors

prepare the following reports in accordance with Article 228 of the Company Act,

which are to be submitted to the audit committee for review and the annual

meeting of the shareholders for approval:

1. Business report;

2. Financial statements;

3. Proposal(s) regarding the distribution of profits or the offsetting of losses.

Article 27

To the extent that the Company has pre-tax earnings for the fiscal year after the

accounts are closed, the Company shall set aside amounts to pay business income

tax and to offset losses from previous years. If the Company has after-tax earnings

upon completion of the foregoing, the Company shall first set aside 10% of such

amount for its legal reserve, and shall, pursuant to Article 41 of the Securities and

Exchange Act, set aside a portion of its after-tax earnings for its special reserve, and,

If after allocation of the above the earnings per share of the Company is not less than

one New Taiwan Dollar, the Board of Directors shall propose a dividend distribution

plan that allocates no less than 35% of the remaining after-tax earnings after

allocation of the above to the shareholders and submit such plan for approval by

resolution at the shareholders’ meeting.

If the distribution is made out of the legal reserve in the form of new shares or cash,

such distribution shall be made out of the portion of the legal reserve that exceeds

25% of the paid-in capital.

The dividends policy of the Company shall adopt balance and stability principles, and

shall take into account profitability, financial structure, the future development of

the Company, and other factors. The primary considerations for the distribution of

dividends shall be the current state of the industry, as well as the Company’s future

operational expansion plans and its cash flow needs. In principle, the distribution of

dividends shall be made with all cash dividends, or a combination of no less than

85% cash dividends and no more than 15% stock dividends. The Board of Directors

may, within the aforementioned limits and by resolution at the shareholders’

~56~

meeting, adjust the ratio based on the overall operating conditions and financial

status of the Company at the time.

Article 27-1

The Company shall allocate the profit of the current year distributable no more than

15% and no less than 10% as employee’ compensation and no more than 1% as

directors’ compensation. However, the accumulated losses of the Company shall

have been covered.

The employees’ compensation may be allocated in stock or cash, and the recipients

of such compensation may include employees of the Company’s subsidiaries that

comply with certain requirement.

The term “the profit of the current year distributable” referred to in the first

paragraph means the profit before tax of the current year without deduction of the

amount of allocated employees’ and directors’ compensation.

The allocation of employees’ and directors’ compensation shall be resolved by a

majority vote at a meeting of board of directors attended by two-thirds of the total

number of directors, and shall be reported to the shareholders' meeting.

Article 28

The distribution of dividends may only be made to shareholders recorded in the

shareholder register five days prior to the date on which the distribution of dividends

and bonus will be made.

Section VI

Miscellaneous

Article 29

The organizational charter and bylaws of the Company shall be separately adopted.

Article 30

Matters not specified in the Articles of Incorporation shall be governed by the

Company Act.

Article 31

The Articles of Incorporation have been adopted by all promoters of the Company on

June 11, 1997 and become effective as of the date filed with the competent

authority.

Amended on November 16, 1998; February 29, 2000; June 19, 2000; May 30, 2001;

~57~

June 17, 2002; June 30, 2003; May 24, 2004; April 22, 2005; June 14, 2006; June 13,

2008; June 19, 2009; January 25, 2010; June 28, 2010; June 22, 2011; June 15, 2012;

June 12, 2014, June 15, 2016.


Chairman: Wu, Fei-Jain

~58~

Appendix 2


Rules and Procedures of the Shareholders’ Meeting

Article 1

Unless otherwise required by the law, the shareholders’ meeting of Chipbond

Technology Corporation (the “Company”) shall be conducted in accordance with the

Rules and Procedures of the Shareholders’ Meeting (the “Rules”).

Article 2

Shareholders (or their proxies) attending the shareholders’ meeting shall submit

their sign-in cards, where the number of shares present shall be calculated based on

the voting rights recorded on such sign-in cards. The attendance of the shareholders’

meeting shall be based on the number of shares present. The shareholders’ meeting

shall be held at the Company’s place of business or any other place that is

convenient for the shareholders to attend and appropriate to convene such meeting,

and shall commence at a time no earlier than 9:00 a.m. and no later than 3:00 p.m.

Article 3

If the shareholders’ meeting is convened by the board of directors of the Company

(the “Board” or “Board of Directors”), the Chairman of the Board shall preside at

such meeting. The Chairman of the Board shall appoint a director to act as his or her

proxy if the Chairman of the Board is on leave or unable to exercise his powers and

duties for any reason. If the Chairman of the Board does not appoint a proxy, the

directors shall appoint one from among them. If the meeting is convened by a

person with the authority to convene other than the Board of Directors, such person

shall act as the Chairman at that meeting; provided, however, if there are more than

one person with the authority to convene, the Chairman for the meeting shall be

appointed from among them.

Article 4

The Company may designate legal counsels, certified public accountants, and other

relevant personnel to observe the shareholders’ meetings.

Article 5

Upon the scheduled meeting time, the Chairman shall call the meeting to order. The

Chairman may adjourn the meeting if the number of shares present do not exceed

more than one half of the total issued and outstanding shares, which meeting may

be postponed up to two times, with the total adjournment time not exceeding one

hour. If, after two postponements, the number of shares present still do not meet

~59~

the aforementioned threshold but represent more than one-third of the total issued

and outstanding shares, tentative resolutions may be adopted in accordance with

Article 175 of the Company Act by more than one half of the votes of the

shareholders present. If, before the meeting is adjourned, the number of shares of

the shareholders present reaches more than one half of the total issued and

outstanding shares, the chairman may re-submit the tentative resolution for

approval at the meeting in accordance with Article 174 of the Company Act.

Article 6

The agenda for the shareholders’ meeting shall be set by the Board of Directors if

such meeting is convened by the Board of Directors. Unless otherwise resolved by

resolution at the shareholders’ meeting, the meeting shall be carried out in

accordance with the scheduled agenda. The preceding paragraph shall apply mutatis

mutandis to meetings convened by any person, other than the Board of Directors,

with the authority to convene such meeting. In respect of the scheduled agenda

referred to in the two preceding paragraphs, the Chairman may not, absent a

resolution, unilaterally announce the adjournment of the meeting before all of the

items on such agenda have been resolved (including ad hoc motions). If, during the

meeting, the Chairman announces its adjournment in violation of the Rules, a person

may be elected to act as Chairman to continue the meeting with more than one half

of the votes of the shareholders present.

Article 7

After the meeting is adjourned, the shareholders shall not elect another chairman to

resume such meeting at the same location or seek an alternative venue.

Article 8

The Chairman may, at his or her discretion, set time for recess during the meeting.

Article 9

Prior to speaking at the meeting, the attending shareholder (or his/her/its proxy)

shall submit a slip of paper summarizing his/her/its comments and/or questions for

the Chairman to determine the speaking order. An attending shareholder who

submits a slip but does not speak at the meeting is deemed to have not spoken; and

in the event of any inconsistency between the contents of the shareholder’s speech

and those recorded on the slip, the contents of the shareholder’s speech shall

prevail.

When an attending shareholder is speaking at the meeting, no other shareholder (or

his/her/its proxy) shall interrupt the speech of the speaking shareholder unless

otherwise permitted by the Chairman and such speaking shareholder; the Chairman

shall stop any such violations.

Article 10

A shareholder may speak, up to two times, on a single proposal, each time no more

than five minutes in length. Any inquiry or response is limited to three minutes in

length, which may be extended at the discretion of the Chairman upon his or her

~60~

consent. The Chairman may stop the speech of any shareholder that is in violation of

the preceding paragraph or exceeds the scope of the meeting agenda.

Article 11

When a juristic person is entrusted to attend the shareholders’ meeting, such juristic

person may only appoint one person to be the representative at the meeting. When

a shareholder who is a juristic person appoints two or more representatives to

attend the meeting, only one representative may speak on any given proposal.

Article 12

After a speech is given by the attending shareholder (or his/her/its proxy), the

Chairman may personally or designate relevant personnel to respond. If the

Chairman believes that the discussion for a proposal has reached a level where a

vote may be called, the Chairman may announce to end such discussion and call for a

vote. A resolution is adopted with the approval of more than one half of the votes of

the shareholders present. Each shareholder is entitled to one vote per share; if a

person is entrusted by two or more shareholders, the proxy votes by such person

shall not exceed 3% of the total issued and outstanding shares of the Company; any

votes in excess of the foregoing will not be counted.

Article 13

The person(s) supervising the casting of the ballots and the person(s) counting the

ballots are designated by the Chairman, provided that the person(s) supervising the

casting of the ballots shall be a shareholder. The voting results shall be announced at

the meeting and recorded in writing. A shareholder who is unable to attend the

meeting may appoint another person to attend as his/her/its proxy by using the

proxy form provided by the Company to set forth the scope of authorization.

Shareholders attending by proxy shall comply with Article 177 of the Company Act

and Regulations Governing the Use of Proxies for Attendance at Shareholder

Meetings of Public Companies as promulgated by the regulatory authority.

Article 14

The Chairman may direct meeting staff or security personnel to help maintain the

order of the meeting.

Article 15

Except as specifically required by the Company Act or the Articles of Incorporation of

the Company, a proposal is adopted with the approval of more than one half of the

votes of the shareholders present. If, during the course of the vote, no objections are

made by the shareholders present after inquiry by the Chairman, such proposal is

deemed to be adopted with the same effect as if it had been through a voting

process. In the event that there is an amendment or replacement proposal to the

original proposal, the Chairman shall decide on the order in which such proposals

will be voted along with the original proposal, provided that if one of such proposals

has been approved, the other proposals will be deemed to be vetoed and no further

action will be necessary.

~61~

Article 16

The entire process of the shareholders’ meeting shall be tape-recorded or

videotaped, which must be kept for at least one year. The resolutions adopted at the

shareholders’ meeting shall be made into minutes, which shall be signed by or

affixed with seal of the Chairman of the meeting and distributed to all of the

shareholders within 20 days after the meeting. The distribution of the meeting

minutes may be done by public announcement on the Market Observation Post

System (MOPS) website. Minutes of the meeting shall record: the date and place of

the meeting, name of the Chairman, and the method for adopting the resolution, as

well as summaries and the results of the proceedings. Minutes of the meeting shall

be kept indefinitely for as long as the Company is in existence. The sign-in cards or

the attendance register and the proxy forms shall be kept for one year.

Article 17

Matters not specified in the Rules shall be governed by the Company Act and the

Articles of Incorporation of the Company. The Rules and any amendments thereafter

shall become effective upon resolution at the shareholders’ meeting.

~62~

Appendix 3


Rules for Election of Directors

Article 1

The election, re-election, and filling of vacancies of the directors of Chipbond

Technology Corporation (the “Company”) shall comply with the Rules of Election of

Directors (the “Rules”).

Article 2

The election of the directors of the Company shall be held at the meeting of the

shareholders.

Article 3

The election of the directors of the Company shall adopt the candidate nomination

system in accordance with Article 192-1 of the Company Act. In reviewing the

qualifications, education, and experience of the candidates, and whether the

circumstances set forth in Article 30 of the Company Act apply, the Company shall

not require additional documentation to prove the candidate's qualifications.

Article 4

The election of the directors of the Company shall adopt the cumulative voting

system, where the name of the voters may be represented by the attendance

number printed on their ballots; for the election of directors of the Company each

share is entitled to votes equal to the number of directors to be elected, which may

be combined to elect a single candidate, or divided to elect several candidates. The

election of independent directors shall comply with the Regulations Governing

Appointment of Independent Directors and Compliance Matters for Public

Companies and other applicable laws and regulations.

Article 5

The number of directors of the Company to be elected shall be in accordance with

the number specified in the Company’s Articles of Incorporation, with the candidates

receiving the highest number of votes to be elected as directors. If two or more

candidates receive the same number of votes, which consequently exceeds the

~63~

number of directors to be elected, the candidates who receive the same number of

votes shall draw lots to decide the winner; Chairman shall draw lots on behalf of the

candidate who is not present.

Article 6

At the beginning of the election, the chairman shall designate a specified number of

persons to supervise the casting of the ballots and to count the ballots, provided that

the person(s) supervising the casting of the ballots shall be a shareholder.

Article 7

(Omitted)

Article 8

In the “candidate” column of the ballot the voter shall fill in the name, shareholder

account number, or uniform number of the candidate; if the candidate is a juristic

person, the “candidate” column of the ballot shall be completed with the name of

such juristic person and its uniform number, along with the name of its

representative.

Article 9

A ballot is deemed void if any of the following circumstances applies:

1. Any ballot cast in violation of the Rules.

2. Any blank ballot placed in the ballot box, or any ballot with illegible writing or

incomplete corrections rendering it unrecognizable.

3. Any ballot with the names of two or more candidates.

4. The name of the candidate on the ballot is identical to that of another

shareholder without providing the shareholder account number, uniform

number, or passport number to identify such candidate.

5. Any ballot containing other characters in addition to the name (including name

of the juristic person and its representative), and uniform number or

shareholder account number of the candidate.

6. In respect of any candidate who is not a shareholder of the Company, any ballot

missing any of the following: the name (or the name of the juristic person), ID

number or passport number of the candidate, and the number of votes, or any

ballot containing other characters.

7. Any ballot not placed in the ballot box within the prescribed time period.

Article 10

~64~

The ballots shall be counted during the meeting immediately after they have been

cast and the results shall be announced by the chairman at the meeting, including

the names of the directors elected and the number of votes received. The board of

directors of the Company shall deliver a written notification to the directors elected.

The ballots cast pursuant to the preceding paragraph shall, after being signed and

sealed, be in the safekeeping of the person(s) supervising the casting of the ballots,

and shall be kept for at least one year; provided, however, if a shareholder files an

action under Article 189 of the Company Act, such ballots shall be kept until the

conclusion of the lawsuit.

Article 11

Matters not specified in the Rules shall be governed by the Company Act and the

relevant laws and regulations.

Article 12

The Rules and any amendments thereafter shall become effective upon resolution at

the shareholders’ meeting

~65~

Appendix 4


Shareholdings of All Directors

1. The company’s current Directors ‘s are as follows:

2. Shareholdings of All Directors:

Total common shares outstanding 654,261,998 shares

Minimum Required Ratios by all Directors 4%

Minimum Required Shareholding by all Directors 20,936,383 shares

Record Date：April 16, 2019

Title Name Current Shareholding (Shares)

Chairman Wu, Fei-Jain 10,473,760

Director Gou, Huoo-Wen 908,854

Director Lee, Jong-Fa 4,647,389

Director Peng Pao Technology Co., Ltd. 5,250,969

Independent Director Hsu, Cha-Hwa 0

Independent Director Wang , William 0

Independent Director Huang, Ting Rong 0

Shareholdings of All Directors 21,280,972

Note: The company has established the audit committee, and therefore the

minimum shareholding requirements for supervisors do not apply.

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Appendix 5

Impact of Stock Dividend Distribution on Business Performance, EPS and

ROI: Not Applicable.

Documents

CHIPBOND Technology Corporation 2019 Annual General ... Shareholders Meeting Handbook.pdf1. Matters to report (1) Fiscal 2018 Business Report, submitted for review. Explanation: Please