meeting agenda · nt$10.78 billion, after-tax profit was nt$7.96 billion, and earnings per share...

Lite-On Technology Corporation

Annual General Meeting of Shareholders for 2019

Meeting Agenda

Date: June 21, 2019 at 9:00 a.m.

Location: 1F, No. 392, Ruey Kuang Road, Neihu Dist., Taipei City

(International Convention Center, Lite-On Technology Building)

Stock code

2301

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Meeting Procedure for the Annual General Meeting of Shareholders for 2019

I. Chairperson Calls Meeting to Order

II. Opening Remarks by the Chairperson

III. Reports on Company Affairs

IV. Proposals and Discussions

V. Provisional Motions

VI. Adjournment

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Agenda of the Annual General Meeting of Shareholders for 2019

I. Chairperson Calls the Meeting to Order (and reports equity shares in

attendance)

II. Opening Remarks by the Chairperson

III. Reports on Company Affairs

i. 2018 Business Report

ii. Audit Committee’s Review Report on 2018 Financial Statements

iii. Employees and Directors compensation for 2018

iv. Amendment to “Management of Operation of Board Meeting”

IV. Proposals, Election and Discussions

i. Adoption of 2018 Financial Statements

ii. Adoption of the Proposal for Appropriation of 2018 Earnings

iii. Amendment to “Articles of Incorporation”

iv. Amendment to “Procedures for the Acquisition and Disposal of Assets”

v. Amendment to “Regulations Governing Loaning of Funds and Making of

Endorsements/Guarantees”

vi. Amendment to “Rules Governing the Election of Directors”

vii. Election of the Board of Directors of the 11th Term.

viii. Discussion of Release of Directors from Non-Competition Restrictions


VI. Adjournment

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III. Reports on Company Affairs i. 2018 Business Report

Explanation: Please refer to attachment 1 from page 11 to page 12 - 2018 Business Report of the

Company.

ii. Audit Committee’s Review Report on the 2018 Financial Statements

Explanation:

1. 2018 Financial Statements of the Company have been duly audited by Certified Public

Accountant Meng-Chieh Chiu and Certified Public Accountant Tsai-Cheng Tsai of Deloitte

Touche Tohmatsu International Taiwan. The aforementioned financial statements, business report,

and proposals for Earnings appropriation have been duly reviewed by the Audit Committee.

Audit Committee’s Review Report is provided herein.

2. For details of the Certified Public Accountants’ Audit Report and aforementioned Financial

Statements, please refer to Attachment 2 from page 13 to page 25 & Attachment 3 from page

26 to page 38.

3. For the Review Report provided by the Audit Committee, please refer to Attachment 4 at

page39.

iii. Employees and Directors compensation for 2018

Explanation:

1. The Company allocated the profit of 2018 to employees and directors as compensation and were

discussed and resolved in the Board of Directors meeting convened on February 26, 2019, all

paid in cash.

2. The Company’s Board of Directors resolved 2018 compensation distributed to employees at the

amount of NT$ 1,125,892,616 and to directors at the amount of NT$67,633,125.

iv. Amendment to “Management of Operation of Board Meeting”

Explanation:

1. Pursuant to the amendment of regulations from competent authorities, an amendment to

“Management of Operation of Board Meeting” is discussed and resolved in the Board of

Directors meeting convened on April 26, 2019.

2. Please refer to Attachment 5 from page 40 to page 43 for a comparison of the contents

before and after amendment.

IV. Proposals and Discussions

Proposed by the Board of Directors

i. Proposal: Adoption of 2018 Financial Statements.

Explanation:

1. 2018 financial statements have been audited by Certified Public Accountant Meng-Chieh Chiu

and Certified Public Accountant Tsai-Cheng Tsai of Deloitte Touche Tohmatsu International

Taiwan and were discussed and resolved in the Board of Directors meeting convened on

February 26, 2019.

2. The aforementioned financial statements and business report were reviewed by the Audit

Committee.

3. For the business report for Year 2018, please refer to Attachment 1 from page 11 to page 12.

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4. For the financial statements for Year 2018, please refer to Attachments 2 from page 13 to page

25 & attachment 3 from page 26 to page 38.

5. Please proceed to adopt.

Resolution:


ii. Proposal: Adoption of the Proposal for Appropriation of 2018 Earnings

Explanation:

1. The proposal for Lite-on Technology’s (the Company) 2018 appropriation of earnings was

already resolved in the Board of Directors meeting convened on February 26, 2019.

2. In Fiscal Year 2018, the Company made a net profit of NT$7,956,838,274. By adding

unallocated retained earnings of the previous year of NT$7,499,888,591, adding cumulative

effect of the initial application of IFRS9 recognized in retained earnings of $279,768,597,

adding adjustments on the equity method investments recognized in retained earnings of

NT$41,109,640, adding adjustments on re-measurement on define benefit plans recognized in

retained earnings of NT$8,081,619, adding cumulative unrealized gain on investments in

equity instruments designated as at fair value through other comprehensive income (FVTOCI)

was transferred directly to retained earnings due to disposal of NT$3,459,902, setting aside

10% of net profit as legal reserve of NT$795,683,827 and special reserve of NT$682,813,923,

total distributable earnings for the year amounted to NT$14,310,648,873. 3. The profit to be distributed among shareholders shall be NT$ 6,864,531,733 in cash dividends

(NT$2.92 per share). The distribution of cash dividends shall be based on share ratio and

rounded off to the integer. Fractional dividend amounts that are less than NT$1 shall be ranked

from high to low in value and from old to new in account number, and then they shall be

adjusted in this order until the total amount of cash dividend distribution is met. For dividend

distribution chart and descriptions, see Attachment 6 at page 44.

4. In the event of repurchase of the Company’s shares, transfer, conversion or annulment of

treasury stocks, and exercise of employees’ stock options, leading to a change in the number of

outstanding shares and a consequent change in dividend yield, it is proposed that the Board of

Directors are authorized to duly adjust cash payout rates.

5. For distribution of cash dividends, it is proposed that the Board of Directors be authorized to

determine the ex-dividend date and to put it into promulgation as required by law after

resolution is made in this shareholders’ meeting.

6. Please proceed to adopt.

Resolution


iii. Proposal: Amendment to “Articles of Incorporation”, please discuss and resolve.

Explanation:

1. Pursuant to the amendment of regulations from competent authorities and to satisfy the

Company’s needs, an amendment to “The Articles of Incorporation” is proposed.

2. Please refer to Attachment 7 from page 45 to page 48 for a comparison of the contents before and

after amendment.

3. Please refer to Appendix 2 from page 76 to page 82 for the full contents before amendment.

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4. Please discuss and resolve.

Resolution:


iv. Proposal: Amendment to “Procedures for the Acquisition and Disposal of Assets”, please

discuss and resolve.

Explanation:

1. Pursuant to the initial application to IFRS16 「Leases」on January 1, 2019, an amendment to

“Procedures for the Acquisition and Disposal of Assets” is proposed.


after amendment.


Resolution:


v. Proposal: Amendment to “Regulations Governing Loaning of Funds and Making of

Endorsements/Guarantees”, please discuss and resolve.

Explanation:

1. In order to comply with No.1080304826 of the Financial Supervisory Commission, satisfy the

Company’s needs and strengthen the corporate governance, an amendment to “Regulations Governing

Loaning of Funds and Making of Endorsements/Guarantees” is proposed.


after amendment.


Resolution:


vi. Proposal: Amendment to “Rules Governing the Election of Directors”, please discuss and

resolve.

Explanation:

1. Pursuant to the amendment of regulations from competent authorities, an amendment to “Rules

Governing the Election of Directors” is proposed.


after amendment.

3. Please refer to Appendix 3 from page 83 to page 88 for the full contents before amendment.


Resolution:

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vii. Proposal: Election of the Board of Directors of the 11th Term.

Explanation:

1. Please duly elect nine directors of the 11th term (including four independent directors). For

“Regulations Governing Election of Directors”, please refer to Attachment 10 from page 63 to page

68 and Appendix 3 from page 83 to page 88.

2. For candidates of directors and independent directors of the 11th term, please refer to Appendix 4

from page 89 to page 93.

3. The directors of the 11th term will serve a three-year term starting from June 21, 2019 to June 20,

2022.

Election result：


viii. Proposal: Proposal of release of directors from non-competition restrictions, please discuss

and resolve.

Explanation:

1. In order to comply with the Article 209 of Company Act, “if a Director’s act on his/her or others’

behalf falls within the scope of the Company's business, the Director shall illustrate to the

shareholders the gist of such act, and obtain the shareholders’ approval.”

2. In view of the diversification needs of the Company’s and that directors (including independent

directors) might act in their own interests on matters within the Company’s business scopes, it is

proposed to release the non-competition restrictions on directors and independent directors with

the premise that directors do not have conflicts of the Company’s interests.

3. The detail of release of directors from non-competition restrictions, please refer to Attachment 11

from page 69 to page 70.


Resolution:


VI. Adjournment

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Attachment 1


Business Report

Dear Shareholders,

LITE-ON's global consolidated revenue amounted to NT$207.1 billion in 2018. Pre-tax profit was

NT$10.78 billion, after-tax profit was NT$7.96 billion, and earnings per share (EPS) was NT$3.42,

representing a 203% year-on-year increase. Net profit for the third quarter, in particular, grew by 50%,

the highest growth in the past two years, showing a return to normal growth in profitability. In recent

years, LITE-ON has been committed to a self-transformation that seeks to elevate profitability with a

realistic approach. With changes in operating models, adjustment to product portfolios, growth in

revenue, and even creation of excellent profitability, LITE-ON is building on sustainable business

development to become a centenarian corporation.

Business Performance

In 2018, LITE-ON's two pillars for growth — cloud applications, and LED component/LED vehicle

and outdoor lighting — reached nearly 30% of total revenue, for more than a 20% year-on-year gain.

This demonstrates the achievement of LITE-ON's efforts in new business incubation and

self-transformation. LITE-ON will continue to dedicate itself to using strategic perspectives for steady

development of core areas, and will steadily and stably develop promising new business into long-term

dynamics for growth.

In the opto-electronics business segment, market share in invisible LED applications and LED

components continued to increase, while LED vehicle lighting shipments have continued smoothly.

LED vehicle lighting and sensor components have gradually shown potential for growth, while

vehicular camera modules are scheduled to officially commence mass production by the end of 2019.

In the information technology business segment, high-end cloud computing servers and networked

power management systems experienced steady market growth; market share in keyboards, mice and

other computer peripherals rose as well. The storage business segment also benefited from cloud

computing-related applications and grew steadily.

In response to the many changes in the global industrial environment in 2018, we have streamlined and

focused LITE-ON’s business scope and business segments, and have successfully disposed two mobile

phone-related businesses. The consistent goal is profitability, even steadier operations, and higher

return on equity. Going forward into 2018, LITE-ON transferred some of the key business operations

and assets in the mobile imaging business segment to LuxVisions Innovation Ltd. through a transfer of

business operations. The transaction price was US$360 million, plus rights to a 10% stake in

LuxVisions. In the third quarter of 2018, Lite-On sold 100% of shares in three mobile device business

segment subsidiaries to Top Touch Electronics Co., Ltd., a subsidiary of Zhejiang Firstar Panel

Technology Co., Ltd., which is a listed company based in Shenzhen. The equity transfer price was

RMB 530 million.

Corporate Social Responsibility

The global trend of valuing sustainable investment remains in the ascendant. ESG performance has

become an important reference for investors. LITE-ON has been listed as a member of the Dow Jones

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Sustainability Index (DJSI) for eight years in a row since 2011, and has had a place on the MSCI ESG

Leaders Index for five years in a row. In 2018, LITE-ON was listed in the inaugural Thomson Reuters

Top 100 Global Technology Leaders. In Taiwan, LITE-ON was ranked top 5% in the 2018 Corporate

Governance Evaluation Survey jointly implemented by the Taiwan Stock Exchange (TWSE) and the

Taipei Exchange (TPEx); listed as a constituent stock in the FTSE4Good TIP Taiwan ESG Index;

awarded Commonwealth Magazine's Corporate Citizen Award in the large enterprise category by for

the 12th time in 2018; and was awarded the Platinum Award, the highest honor, in the electronic and

information manufacturing category in the 2018 Corporate Sustainability Report Awards from TCSA.

Future Outlook

LITE-ON will continue to push for transformation by developing business areas including cloud

computing, LED outdoor lighting, automobile electronics, smart manufacturing, and the Internet of

Things. The pace of LITE-ON’s globalization will also accelerate, with the establishment of the

Kaohsiung Operations Center and the asset expansion of the Huadong Operations Center. The new

factory for automobile electronic and optical core business at the Huadong Operations Center

commenced operation at the end of 2018, while the Kaohsiung Operations Center is scheduled to

commence production in the middle of 2019. We are continuously accelerating our improvement of

overall smart manufacturing, and strengthening LITE-ON's core competencies, mass production and

the competitiveness and advantages in customer service. We also continue to speed up integration of

new technologies, production line automation and digital transformation, as well as quality

manufacturing and supply chain management. We value quality above cost, and we substantially

realize internal system innovation that starts with product development.

Looking forward into 2019, uncertain factors and challenges such as China-U.S. trade negotiations, the

highly globalized market environment, chain reactions brought by political and economic conditions,

as well as changes in exchange rates and terminal market demands, may have unexpected impacts on

LITE-ON, our customers, or the technology industry as a whole. LITE-ON hopes to hold a receptive

and open attitude towards the changeable external environment, while taking an entrepreneurial

approach to corporate responsibility and continuing to exploit our strategic capacity to overtake

competitors through self-transformation. We strive for healthy growth and excellent business results

under One LITE-ON. We are grateful for the long-term support and recognition from our shareholders,

colleagues, customers, suppliers, and business partners, whom we hope will join LITE-ON in 2019 as

we continue our progress toward becoming a centenarian corporation.

Lite-On Chairman Lite-On Vice Chairman & Group CEO

Raymond Soong Warren Chen

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Attachment 2

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders


Opinion

We have audited the accompanying consolidated financial statements of Lite-On Technology Corporation and

its subsidiaries (collectively referred to as the Group), which comprise the consolidated balance sheets as of

December 31, 2018 and 2017, and the consolidated statements of comprehensive income, changes in equity and

cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary

of significant accounting policies (collectively referred to as the “consolidated financial statements”).

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

consolidated financial position of the Group as of December 31, 2018 and 2017, and its consolidated 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, and International Financial Reporting Standards (IFRS),

International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC)

endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

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

Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China.

Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of

the Consolidated Financial Statements section of our report. We are independent of the Group in accordance

with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have

fulfilled our other ethical responsibilities in accordance with these requirements. 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 consolidated financial statements for the year ended December 31, 2018. These matters were addressed in

the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon,

and we do not provide a separate opinion on these matters.

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For the year ended December 31, 2018, the key audit matters for the Group’s consolidated financial statements

were as follows:

Allowance for Impairment Loss for Trade Receivables

The recoverable amount from the allowance for impairment loss is determined by management’s evaluation of

the credit risk of overdue receivables, and it is affected by management’s assumption of a client’s credit quality.

In our audit, we focused on clients with significant trade receivables and overdue balances, and we evaluated the

reasonableness of management’s estimation of the allowance for impairment loss.

Refer to Note 4 to the consolidated financial statements for a summary of significant accounting policies. Refer

to Note 13 to the consolidated financial statements for the carrying amount of trade receivables and impairment

loss for trade receivables. Our key audit procedures in respect of the above area included the following:

We assessed both the trade receivables aging report classified by client’s credit rating and the reasonableness of

the percent of impairment loss allowance; this assessment included the implementation of computer audit

sampling procedures to test the correctness of trade receivable aging reports. We confirmed the recoverability of

outstanding trade receivables by testing the after period-end collection of receivables.

Allowance for Inventory Valuation Loss

The value of inventory is affected by the volatility of market demand and ever-changing technology which

could make inventory outdated and obsolete. The allocation of inventory cost elements and estimations of the

net realizable value of inventory require management’s subjective judgment. In our audit, we focused on

whether the value of inventory was evaluated according to IAS 2, which is based on the lower of cost or net

realizable value method. We also assessed the reasonableness of management’s estimation of the allowance for

inventory valuation loss.

Refer to Note 4 to the consolidated financial statements for a summary of significant accounting policies. Refer

to Note 14 to the consolidated financial statements for the carrying amount of inventory. Our key audit

procedures in respect of the above area included the following:

1. We assessed both inventory aging reports classified by business segments and the reasonableness of the

percent of allowance for inventory valuation loss; this assessment included the implementation of computer

audit sampling procedures to test the correctness of inventory aging reports.

2. We obtained information of the year-end allowance for inventory valuation loss and inventory aging reports,

and we compared the current and prior years’ allowances and analyzed any differences. We drew samples

from the year-end inventory and compared the most recent price of goods sold to the carrying amount to

ensure that the inventory had been valued by the lower of cost or net realizable value method.

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Impairment Loss for Property, Plant and Equipment and Intangible Assets (Including Goodwill)

Management should assess, on the financial statement date, any indication of impairment to property, plant and

equipment and intangible assets. If there is any indication of impairment, management should estimate the

recoverable amount of these assets. If it is impossible to do so, management should estimate the recoverable

amount of the cash generating units to which these assets belong. Due to the complexity of this impairment

estimation, in our audit, we focused on whether the estimation was made in accordance with IAS 36 to ensure

that all assets’ carrying amounts did not exceed their respective recoverable amounts.

Refer to Note 4 to the consolidated financial statements for a summary of the significant accounting policies on

property, plant and equipment and intangible assets impairment. Refer to Notes 18 and 20 to the consolidated

financial statements for disclosures of property, plant and equipment and intangible assets. Our key audit

procedures performed in respect of the above area included the following:

1. Through internal control testing, we understood the methods of asset impairment valuation made by

management and the associated control policy’s design and implementation.

2. We obtained the asset impairment valuation table of each cash generating unit from management. We

consulted our firm experts on the reasonableness of management’s impairment assessments and

assumptions, including its cash generating unit classifications, cash flow predictions, discount rates, etc.

Other Matter

We have also audited the parent company only financial statements of Lite-On Technology Corporation as of

and for the years ended December 31, 2018 and 2017 on which we have issued an unmodified opinion.

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 IFRS,

IAS, IFRIC and SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic

of China, and for such internal control as management determines is necessary to enable the preparation of

consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the 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 the audit committee, are responsible for overseeing the Group’s

financial reporting process.

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Auditors’ 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 auditors’ 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 the auditing standards generally accepted in the Republic of China will always

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

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

decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we

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

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

to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence

that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material

misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve

collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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 auditors’ 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 auditors’ report.

However, future events or conditions may cause the Group 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 consolidated financial statements represent the underlying transactions and events in a

manner that achieves fair presentation.

6. Obtain sufficient and appropriate audit evidence regarding the financial information of 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 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 for the year ended December 31, 2018

and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or

regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine

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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.

The engagement partners on the audit resulting in this independent auditors’ report are Meng-Chieh Chiu and

Cheng-Tsai Tsai.

Deloitte & Touche

Taipei, Taiwan

Republic of China

February 26, 2019

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial

position, financial performance and cash flows in accordance with accounting principles and practices

generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures

and practices to audit such consolidated financial statements are those generally applied in the Republic of

China.

For the convenience of readers, the independent auditors’ report and the accompanying consolidated financial

statements have been translated into English from the original Chinese version prepared and used in the

Republic of China. If there is any conflict between the English version and the original Chinese version or any

difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and

consolidated financial statements shall prevail.

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LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES Attachment 2-1

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2018 AND 2017

(In Thousands of New Taiwan Dollars)

2018 2017

ASSETS Amount % Amount %

CURRENT ASSETS

Cash and cash equivalents (Note 6) $ 63,285,301 32 $ 57,783,860 30 Financial assets at fair value through profit or loss (''FVTPL'') (Note 7) 132,139 - 101,677 -

Financial assets at amortized cost (Note 9) 223,738 - - - Contracts assets 3,024,589 2 - -

Debt instruments with no active market (Note 12) - - 911,783 1

Notes receivable, net (Note 13) 697,671 - 282,316 - Trade receivables, net (Note 13) 45,484,821 23 52,037,732 27

Trade receivables from related parties (Note 33) 90,095 - 79,288 -

Other receivables 10,910,806 6 1,364,028 1 Other receivables from related parties (Note 33) 4,417 - 2,806 -

Inventories, net (Note 14) 31,493,066 16 28,312,572 15

Non-current assets held for sale (Note 16) - - 815,143 - Other current assets (Note 21) 2,638,275 1 3,372,102 2

Total current assets 157,984,918 80 145,063,307 76

NON-CURRENT ASSETS

Financial assets at FVTPL (Note 7) 111,220 - - - Financial assets at fair value through other comprehensive income ("FVTOCI") (Note 8) 388,675 - - -

Available-for-sale financial assets (Note 11) - - 513,129 -

Financial assets at amortized cost (Note 9) 395,301 - - - Debt instruments with no active market (Note 12) - - 573,085 -

Investments accounted for using the equity method (Note 17) 4,972,609 3 3,681,951 2

Property, plant and equipment, net (Note 18) 20,484,992 10 22,490,411 12 Investment properties, net (Note 19) 1,178,393 1 1,426,134 1

Intangible assets, net (Note 20) 5,914,084 3 9,828,658 5

Deferred tax assets (Note 28) 4,333,202 2 3,614,920 2 Refundable deposits 499,984 - 641,387 -

Prepaid investments - - 1,354,950 1

Other non-current assets (Note 21) 872,691 1 807,825 1

Total non-current assets 39,151,151 20 44,932,450 24

TOTAL $ 197,136,069 100 $ 189,995,757 100

LIABILITIES AND EQUITY

CURRENT LIABILITIES

Short-term borrowings (Note 22) $ 30,087,282 15 $ 30,155,790 16

Financial liabilities at FVTPL (Note 7) 51,877 - 147,052 -

Notes payable 18,235 - 38,797 -

Trade payables 52,309,412 27 56,152,649 30

Trade payables to related parties (Note 33) 781,623 - 803,894 -

Other payables 29,388,957 15 21,123,576 11

Other payables to related parties (Note 33) 16,684 - 19,927 -

Current tax liabilities 4,986,079 3 3,221,310 2

Provisions (Note 24) 1,011,238 - 866,119 -

Advance receipts 1,959,041 1 2,049,789 1

Current portion of long-term borrowings (Note 22) 184 - 16,204 -

Finance lease payables (Note 23) 1,469 - 1,600 -

Total current liabilities 120,612,081 61 114,596,707 60

NON-CURRENT LIABILITIES

Long-term borrowings, net of current portion (Note 22) - - 178 -

Deferred tax liabilities (Note 28) 1,605,349 1 1,324,792 1

Finance lease payables, net of current portion (Note 23) 351 - 1,764 -

Net defined benefit liabilities (Note 25) 160,997 - 224,025 -

Guarantee deposits 78,890 - 80,862 -

Total non-current liabilities 1,845,587 1 1,631,621 1

Total liabilities 122,457,668 62 116,228,328 61

EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT COMPANY

Share capital

Ordinary shares 23,508,670 12 23,508,670 12

Capital surplus

Additional paid-in capital from share issuance in excess of par value 3,471,812 2 9,372,488 5

Bond conversions 7,462,138 4 7,462,138 4

Treasury share transactions 477,697 - 400,329 -

Difference between consideration and carrying amounts adjusted arising from changes in percentage of ownership of subsidiaries 47,209 - 49,019 -

Changes in capital surplus from investments in associates accounted for using the equity method 271,367 - 276,782 -

Mergers 10,015,194 5 10,015,194 6

Total capital surplus 21,745,417 11 27,575,950 15

Retained earnings

Legal reserve 12,049,900 6 11,786,967 6

Special reserve 2,705,954 2 1,338,878 1

Unappropriated earnings 15,789,147 8 10,093,753 5

Total retained earnings 30,545,001 16 23,219,598 12

Other equity

Exchange differences on translating foreign operations (2,779,863 ) (2 ) (2,528,893 ) (1 )

Unrealized loss of financial assets at FVTOCI (449,461 ) - - -

Unrealized loss on available-for-sale financial assets - - (18,497 ) -

Gain on financial instruments in cash flow hedging securities 2,714 - 3,372 -

Total other equity (3,226,610 ) (2 ) (2,544,018 ) (1 )

Treasury shares (1,248,722 ) (1 ) (1,248,722 ) (1 )

Total equity attributable to owners of the Parent Company 71,323,756 36 70,511,478 37

NON-CONTROLLING INTERESTS 3,354,645 2 3,255,951 2

Total equity 74,678,401 38 73,767,429 39

TOTAL $ 197,136,069 100 $ 189,995,757 100

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

- 16 -

LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES Attachment 2-2

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

2018 2017

Amount % Amount %

OPERATING REVENUE

Sales (Notes 27 and 33) $ 211,390,341 102 $ 220,857,071 103

Less: Sales allowance 3,102,425 1 5,075,609 2

Sales returns 1,178,828 1 1,217,140 1

Total operating revenue 207,109,088 100 214,564,322 100

COST OF GOODS SOLD (Notes 14, 30 and 33) 180,006,839 87 186,854,505 87

GROSS PROFIT 27,102,249 13 27,709,817 13

OPERATING EXPENSES (Notes 30 and 33)

Selling and marketing expenses 7,084,795 3 6,774,460 3

General and administrative expenses 6,116,248 3 6,175,520 3

Research and development expenses 6,348,444 3 6,415,873 3

Expected credit loss (Note 32) 66,949 - - -

Total operating expenses 19,616,436 9 19,365,853 9

OPERATING INCOME 7,485,813 4 8,343,964 4

NON-OPERATING INCOME AND EXPENSES

Share of profit of associates 178,863 - 170,309 -

Interest income 1,710,052 1 1,365,837 -

Dividend income 39,400 - 39,811 -

Other income (Note 33) 5,265,003 2 1,401,724 1

Net gain on disposal of investments (Note 17) 86,603 - 179,115 -

Net gain (loss) on foreign currency exchange (497,693) - 226,478 -

Net gain on financial assets at FVTPL 1,338,423 1 341,680 -

Finance costs (875,318) (1) (603,844) -

Other expenses (380,339) - (937,955) (1)

Net loss on disposal of property, plant and equipment (20,018) - (96,747) -

Net loss on disposal of intangible asset (6) - - -

Impairment loss (Notes 11, 17, 18 and 20) (3,546,662) (2) (7,058,778) (3)

Total non-operating income and expenses 3,298,308 1 (4,972,370) (3)

PROFIT BEFORE INCOME TAX 10,784,121 5 3,371,594 1

INCOME TAX EXPENSE (Note 28) (2,817,037) (1) (740,463) -

NET PROFIT FOR THE YEAR 7,967,084 4 2,631,131 1

(Continued)

- 17 -

LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES




2018 2017

Amount % Amount %

OTHER COMPREHENSIVE INCOME (LOSS)

(Notes 25, 26 and 28)

Items not reclassified subsequently to profit or loss:

Remeasurement of defined benefit plans $ 3,041 - $ (43,909) -

Unrealized gain (loss) on investments in equity

instruments designated as at FVTOCI (107,838) - - -

Share of other comprehensive loss of associates

accounted for using the equity method (1,770) - (9,920) -

Income tax benefit relating to items not

reclassified subsequently to profit or loss 4,441 - 9,552 -

(102,126) - (44,277) -

Items that may be reclassified subsequently to profit

or loss

Exchange differences on translating foreign

operations (369,243) - (1,591,874) -

Unrealized gain on available-for-sale financial

assets - - 100,061 -

Share of other comprehensive loss of associates

accounted for using the equity method (48,265) - (64,169) -

Income tax benefit relating to items that may be


(246,452) - (1,268,484) -

Other comprehensive loss for the year, net of

income tax (348,578) - (1,312,761) -

TOTAL COMPREHENSIVE INCOME FOR THE

YEAR $ 7,618,506 4 $ 1,318,370 1

NET PROFIT ATTRIBUTABLE TO:

Owners of the Parent Company $ 7,956,838 4 $ 2,629,334 1

Non-controlling interests 10,246 - 1,797 -

$ 7,967,084 4 $ 2,631,131 1

TOTAL COMPREHENSIVE INCOME

ATTRIBUTABLE TO:

Owners of the Parent Company $ 7,602,588 4 $ 1,366,244 1

Non-controlling interests 15,918 - (47,874) -

$ 7,618,506 4 $ 1,318,370 1

(Continued)

- 18 -





2018 2017

Amount % Amount %

EARNINGS PER SHARE (NEW TAIWAN

DOLLARS; Note 29)

From continuing operations

Basic $3.42 $1.13

Diluted $3.38 $1.13

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

- 19 -

Attachment 2-3

LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Equity Attributable to Owners of the Parent Company

Capital Surplus (Note 26)

Additional

Difference

Between

Consideration

and Carrying

Amounts

Adjusted

Changes in

Capital Surplus

from Other Equity (Note 26)

Paid-in Capital Arising from Investments in Exchange Unrealized Gain Unrealized

from Share Changes in Associates Differences on (Loss) on Gain (Loss) on

Issue of Share Capital (Note 26) Issuance in Percentage of Accounted for Retained Earnings (Notes 26 and 28) Translating Financial Assets Available-for- Non-controlling

Shares Excess of Par Bond Treasury Share Ownership in Using Equity Special Unappropriated Foreign Designated as sale Financial Cash Flow Treasury Shares Interests

(In Thousands) Amount Value Conversions Transactions Subsidiaries Method Mergers Total Legal Reserve Reserve Earnings Total Operations FVIOCI Assets Hedges Total (Note 26) (Notes 26) Total Equity

BALANCE AT JANUARY 1, 2017 2,350,867 $ 23,508,670 $ 9,372,488 $ 7,462,138 $ 328,800 $ 45,612 $ 273,487 $ 10,015,194 $ 27,497,719 $ 10,845,332 $ 398,602 $ 16,252,206 $ 27,496,140 $ (1,195,684 ) $ - $ (126,588 ) $ - $ (1,322,272 ) $ (1,248,722 ) $ 3,348,901 $ 79,280,436

Appropriation of the 2016 earnings

Cash dividends - 29.2% - - - - - - - - - - - (6,864,532 ) (6,864,532 ) - - - - - - - (6,864,532 )

Special reserve - - - - - - - - - - 940,276 (940,276 ) - - - - - - - - -

Legal reserve - - - - - - - - - 941,635 - (941,635 ) - - - - - - - - -

Changes in non-controlling interests - - - - - - - - - - - - - - - - - - - (45,076 ) (45,076 )

Changes in percentage of ownership interest in subsidiaries - - - - - 3,407 - - 3,407 - - - - - - - - - - - 3,407

Changes in capital surplus from investments in associates accounted

for by using the equity method - - - - - - 3,295 - 3,295 - - - - - - - - - - - 3,295

Changes in capital surplus from cash dividends of the Parent

Company paid to subsidiaries - - - - 71,529 - - - 71,529 - - - - - - - - - - - 71,529

Net profit for the year ended December 31, 2017 - - - - - - - - - - - 2,629,334 2,629,334 - - - - - - 1,797 2,631,131

Other comprehensive income (loss) for the year ended December 31,

2017, net of income tax - - - - - - - - - - - (41,344 ) (41,344 ) (1,333,209 ) - 108,091 3,372 (1,221,746 ) - (49,671 ) (1,312,761 )

Total comprehensive income (loss) for the year ended December 31,

2017 - - - - - - - - - - - 2,587,990 2,587,990 (1,333,209 ) - 108,091 3,372 (1,221,746 ) - (47,874 ) 1,318,370

BALANCE AT DECEMBER 31, 2017 2,350,867 23,508,670 9,372,488 7,462,138 400,329 49,019 276,782 10,015,194 27,575,950 11,786,967 1,338,878 10,093,753 23,219,598 (2,528,893 ) - (18,497 ) 3,372 (2,544,018 ) (1,248,722 ) 3,255,951 73,767,429

Effect of retrospective application (Note 3) - - - - - - - - - - - 279,769 279,769 - (298,266 ) 18,497 - (279,769 ) - - -

BALANCE AT JANUARY 1, 2018 AS RESTATED 2,350,867 23,508,670 9,372,488 7,462,138 400,329 49,019 276,782 10,015,194 27,575,950 11,786,967 1,338,878 10,373,522 23,499,367 (2,528,893 ) (298,266 ) - 3,372 (2,823,787 ) (1,248,722 ) 3,255,951 73,767,429

Appropriation of the 2017 earnings

Legal reserve - - - - - - - - - 262,933 - (262,933 ) - - - - - - - - - Special reserve - - - - - - - - - - 1,367,076 (1,367,076 ) - - - - - - - - -

Cash dividends - 4.1% - - - - - - - - - - - (963,855 ) (963,855 ) - - - - - - - (963,855 )

Distribution of cash dividends from capital surplus - - (5,900,676 ) - - - - - (5,900,676 ) - - - - - - - - - - - (5,900,676 )

Changes in non-controlling interests - - - - - - - - - - - - - - - - - - - 82,776 82,776

Changes in percentage of ownership interest in subsidiaries - - - - - (1,810 ) - - (1,810 ) - - - - - - - - - - - (1,810 )

Changes in capital surplus from investments in associates accounted

for by using the equity method - - - - - - (5,415 ) - (5,415 ) - - - - - - - - - - - (5,415 )

Changes in capital surplus from cash dividends of the Parent

Company paid to subsidiaries - - - - 77,368 - - - 77,368 - - - - - - - - - - - 77,368

Disposal of investments in equity instruments designated as at

FVTOCI - - - - - - - - - - - 43,182 43,182 - (43,182 ) - - (43,182 ) - - -

Disposal of investments accounted for using the equity method - - - - - - - - - - - - - 4,078 - - - 4,078 - - 4,078

Net profit for the year ended December 31, 2018 - - - - - - - - - - - 7,956,838 7,956,838 - - - - - - 10,246 7,967,084

Other comprehensive income (loss) for the year ended December 31, 2018, net of income tax - - - - - - - - - - - 9,469 9,469 (255,048 ) (108,013 ) - (658 ) (363,719 ) - 5,672 (348,578 )

Total comprehensive income (loss) for the year ended December 31,

2018 - - - - - - - - - - - 7,966,307 7,966,307 (255,048 ) (108,013 ) - (658 ) (363,719 ) - 15,918 7,618,506

BALANCE AT DECEMBER 31, 2018 2,350,867 $ 23,508,670 $ 3,471,812 $ 7,462,138 $ 477,697 $ 47,209 $ 271,367 $ 10,015,194 $ 21,745,417 $ 12,049,900 $ 2,705,954 $ 15,789,147 $ 30,545,001 $ (2,779,863 ) $ (449,461 ) $ - $ 2,714 $ (3,226,610 ) $ (1,248,722 ) $ 3,354,645 $ 74,678,401

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

- 20 -

Attachment 2-4


CONSOLIDATED STATEMENTS OF CASH FLOWS



2018 2017

Interest paid $ (852,547) $ (598,421)

Income tax paid (1,492,648) (2,596,455)

Net cash generated from operating activities 13,483,544 11,153,180

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of financial assets at FVTOCI (58,970) -

Proceeds from disposal of financial assets at FVTOCI 176,660 -

Proceeds from disposal of financial assets at amortized costs 868,455 -

Acquisition of available-for-sale financial assets - (15,110)

Proceeds from sale of available-for-sale financial assets - 298,632

Proceeds from sale of debt investments with no active market - 17,548

Proceeds from disposal of investments accounted for using the equity

method 2,849 246,708

Increase in prepaid investments - (1,354,950)

Cash provided by disposal of subsidiaries 5,590 -

Proceeds from disposal of non-current assets held for sale 658,211 -

Acquisition of property, plant and equipment (5,646,424) (4,204,726)

Proceeds from disposal of property, plant and equipment 3,444,871 84,065

Decrease (increase) in refundable deposits 140,857 (140,276)

Acquisition of intangible assets (166,322) (228,654)

Proceeds from disposal of intangible assets 418,442 17,688

Increase in other non-current assets (80,403) (67,148)

Dividend received from associates 101,714 95,057

Net cash used in investing activities (134,470) (5,251,166)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from short-term borrowings - 16,066,496

Repayments of short-term borrowings (476,153) -

Repayments of long-term borrowings (16,645) (19,528,450)

Refunds of guarantee deposits received (1,345) (6,273)

Decrease in finance lease payables (1,617) (1,567)

Cash dividends (6,787,163) (6,793,003)

Changes in non-controlling interests (30,537) (47,305)

Net cash used in financing activities (7,313,460) (10,310,102)

EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE

OF CASH AND CASH EQUIVALENTS HELD IN FOREIGN

CURRENCIES (534,173) (3,016,543)

(Continued)

- 21 -


CONSOLIDATED STATEMENTS OF CASH FLOWS



2018 2017

NET INCREASE (DECREASE) IN CASH AND CASH

EQUIVALENTS $ 5,501,441 $ (7,424,631)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE

YEAR 57,783,860 65,208,491

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR $ 63,285,301 $ 57,783,860

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

- 22 -

Attachment 3 INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders


Opinion

We have audited the accompanying financial statements of Lite-On Technology Corporation (the

Company), which comprise the balance sheets as of December 31, 2018 and 2017, and the statements of

comprehensive income, changes in equity and cash flows for the years then ended, and the 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 of 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 auditing standards generally accepted in the

Republic of China. Our responsibilities under those standards are further described in the Auditors’

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

Company in accordance with The Norm of Professional Ethics for Certified Public Accountant of the

Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these

requirements. 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 for the year ended December 31, 2018. These matters were addressed in

the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we

do not provide a separate opinion on these matters.

For the year ended December 31, 2018, the key audit matters to the Company’s financial statements were

as follows:

Allowance for Impairment Loss for Trade Receivables

The recoverable amount from the allowance for impairment loss is determined by management’s

evaluation of the credit risk of overdue receivables, and it is affected by management’s assumption of a

client’s credit quality. In our audit, we focused on clients with significant trade receivable balances and

overdue balances, and we evaluated the reasonableness of management’s estimation of the allowance for

impairment loss.

- 23 -

Refer to Note 4 to the Company’s financial statements for the summary of the significant accounting

policies on trade receivables and impairment loss for trade receivables. Refer to Note 12 to the Company’s

financial statements for the carrying amount of trade receivables and allowance for impairment loss for

trade receivables. Our key audit procedures performed in respect of the above area included the following:

We assessed both the trade receivables aging report classified by client credit rating and the reasonableness

of the percent of impairment loss allowance; this assessment included the implementation of computer

audit sampling procedures to test the correctness of trade receivable aging reports. We confirmed the

recoverability of outstanding trade receivables by testing the after period-end collection of receivables.

Allowance for Inventory Valuation Loss

The value of inventory is affected by the volatility of market demand and ever-changing technology which

could make inventory outdated and obsolete. The allocation of inventory cost elements and estimations of

the net realizable value of inventory require management’s subjective judgment. In our audit, we focused

on whether the value of inventory was evaluated according to IAS 2, which is based on the lower of cost or

net realizable value method. We also assessed the reasonableness of management’s estimation of the

allowance for inventory valuation loss.

Refer to Note 4 to the Company’s financial statements for the summary of the significant accounting

policies on inventory valuation. Refer to Note 13 to the Company’s financial statements for the carrying

amount of inventory. Our key audit procedures performed in respect of the above area included the

following:

1. We assessed both the inventory aging reports classified by business segments and the reasonableness

of the percent of allowance for inventory valuation loss; this assessment included the implementation

of computer audit sampling procedures to test the correctness of the inventory aging reports.

2. We obtained information of the year-end allowance for inventory valuation loss and inventory aging

reports, compared the current and prior years’ allowances and analyzed any differences. We drew

samples from the year-end inventory and compared the most recent price of goods sold to the carrying

amount to that ensure the inventory had been valued by the lower of cost or net realizable value

method.

Impairment Loss for Property, Plant and Equipment, Intangible Assets (Including Goodwill) and

Investments Accounted for Using the Equity Method

Management should assess, on the date of the balance sheets, any indication of impairment to property,

plant and equipment, intangible assets and investments accounted for using the equity method. If there is

any indication of impairment, management should estimate the recoverable amount of these assets. The

estimation would assume that management incorporates diversification or sustainability into business

operation. If it is impossible to do so, management should estimate the recoverable amount of the cash

generating units to which these assets belong. Due to the complexity of this impairment estimation, in our

audit, we focused on whether the estimation was made in accordance with IAS 36 to ensure that all assets’

carrying amounts did not exceed their respective recoverable amounts.

Refer to Note 4 to the Company’s financial statements for a summary of the significant accounting policies

on impairment loss. Refer to Notes 15, 16 and 17 to the Company’s financial statements for disclosures of

property, plant and equipment, intangible assets (including goodwill) and investments accounted for using

the equity method. Our key audit procedures performed in respect of the above area included the following:

1. Through internal control testing, we understood the methods of asset impairment valuation made by

management and the associated control policy’s design and implementation.

- 24 -

2. We obtained the asset impairment valuation table of each cash generating unit from management. We

consulted our firm experts on the reasonableness of management’s impairment assessments and

assumptions, including its cash generating unit classifications, cash flow predictions, discount rates,

etc.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

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

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.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free

from material misstatement, whether due to fraud or error, and to issue an auditors’ 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 the auditing standards generally accepted in the Republic of China will always detect a

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

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

decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with the auditing standards generally accepted in the Republic of China,

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

1. Identify and assess the risks of material misstatement of the 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 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 auditors’ 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 our auditors’

report. However, future events or conditions may cause the Company to cease to continue as a going

concern.

- 25 -

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 parent company only financial

statements. We are responsible for the direction, supervision and performance of the 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 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 financial statements for the year ended December 31, 2018 and are

therefore the key audit matters. We describe these matters in our auditors’ 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.

The engagement partners on the audit resulting in this independent auditors’ report are Meng-Chieh Chiu

and Cheng-Tsai Tsai.

Deloitte & Touche

Taipei, Taiwan

Republic of China

February 26, 2019

Notice to Readers

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

performance and cash flows in accordance with accounting principles and practices generally accepted in

the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to

audit such financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ report and the accompanying financial

statements have been translated into English from the original Chinese version prepared and used in the

Republic of China. If there is any conflict between the English version and the original Chinese version or

any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report

and financial statements shall prevail.

- 26 -

Attachment 3-1

LITE-ON TECHNOLOGY CORPORATION

BALANCE SHEETS

DECEMBER 31, 2018 AND 2017


2018 2017

ASSETS Amount % Amount %

CURRENT ASSETS

Cash and cash equivalents (Note 6) $ 7,082,108 5 $ 7,536,265 6

Financial assets at fair value through profit or loss (''FVTPL'') (Note 7) 2,857 - - -

Financial assets at amortized cost (Note 9) 4,680 - - -

Contracts assets 629,585 - - -

Notes receivable, net (Note 12) 1,203 - 1,436 -

Trade receivables, net (Note 12) 27,686,332 19 27,927,833 20

Trade receivables from related parties (Note 28) 11,098,911 7 11,950,083 9

Other receivables 932,490 1 469,072 -

Other receivables from related parties (Note 28) 413,982 - 255,156 -

Inventories, net (Note 13) 9,644,127 7 7,783,026 6

Prepayments 643,755 - 571,383 -

Total current assets 58,140,030 39 56,494,254 41

NON-CURRENT ASSETS

Financial assets at FVTPL (Note 7) 56,333 - - -

Financial assets at fair value through other comprehensive income ("FVTOCI") (Note 8) 213,473 - - -

Available-for-sale financial assets (Note 14) - - 225,698 -

Financial assets at amortized cost (Note 9) 304,010 - - -

Debt instruments with no active market (Note 11) - - 303,997 -

Investments accounted for using the equity method (Note 15) 73,960,509 50 64,705,045 47

Property, plant and equipment, net (Note 16) 7,640,678 5 6,654,089 5

Intangible assets, net (Note 17) 5,496,986 4 5,995,675 4

Deferred tax assets (Note 24) 3,595,595 2 2,632,621 2

Refundable deposits 99,697 - 106,050 -

Prepaid investments - - 1,624,770 1

Other non-current assets 6,470 - 6,470 -

Total non-current assets 91,373,751 61 82,254,415 59

TOTAL $ 149,513,781 100 $ 138,748,669 100

LIABILITIES AND EQUITY

CURRENT LIABILITIES

Short-term borrowings (Note 18) $ 17,264,395 11 $ 17,291,220 12

Financial liabilities at FVTPL (Note 7) 3,997 - 43,447 -

Notes payable 2,571 - 630 -

Trade payables 6,599,857 4 6,641,532 5

Trade payables to related parties (Note 28) 35,361,931 24 28,659,451 21

Other payables 12,838,742 9 10,420,554 7

Other payables to related parties (Note 28) 93,444 - 121,456 -

Current tax liabilities 2,936,430 2 1,706,487 1

Provisions (Note 19) 851,041 1 715,037 1

Advance receipts 744,113 - 1,301,833 1

Total current liabilities 76,696,521 51 66,901,647 48

NON-CURRENT LIABILITIES

Deferred tax liabilities (Note 24) 1,399,170 1 1,131,711 1

Net defined benefit liabilities (Note 20) 78,236 - 126,851 -

Guarantee deposits 15,979 - 16,018 -

Credit balance of investments accounted for using the equity method (Note 15) 119 - 60,964 -

Total non-current liabilities 1,493,504 1 1,335,544 1

Total liabilities 78,190,025 52 68,237,191 49

EQUITY

Share capital

Ordinary shares 23,508,670 16 23,508,670 17

Capital surplus

Additional paid-in capital from share issuance in excess of par value 3,471,812 3 9,372,488 7

Bond conversions 7,462,138 5 7,462,138 6

Treasury share transactions 477,697 - 400,329 -

Difference between consideration and carrying amounts adjusted arising from changes in percentage of ownership of subsidiaries 47,209 - 49,019 -

Changes in capital surplus from investments in associates accounted for using the equity method 271,367 - 276,782 -

Mergers 10,015,194 7 10,015,194 7

Total capital surplus 21,745,417 15 27,575,950 20

Retained earnings

Legal reserve 12,049,900 8 11,786,967 9

Special reserve 2,705,954 2 1,338,878 1

Unappropriated earnings 15,789,147 10 10,093,753 7

Total retained earnings 30,545,001 20 23,219,598 17

Other equity

Exchange differences on translating foreign operations (2,779,863) (2) (2,528,893) (2)

Unrealized loss of financial assets at FVTOCI (449,461) - - -

Unrealized loss on available-for-sale financial assets - - (18,497) -

Gain on financial instruments in cash flow hedging securities 2,714 - 3,372 -

Total other equity (3,226,610) (2) (2,544,018) (2)

Treasury shares (1,248,722) (1) (1,248,722) (1)

Total equity 71,323,756 48 70,511,478 51

TOTAL $ 149,513,781 100 $ 138,748,669 100

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

- 27 -

LITE-ON TECHNOLOGY CORPORATION Attachment 3-2

STATEMENTS OF COMPREHENSIVE INCOME



2018 2017

Amount % Amount %

OPERATING REVENUE

Sales (Notes 22 and 28) $ 140,583,612 103 $ 143,873,976 103

Less: Sales returns 864,980 1 808,758 -

Sales allowance 2,549,242 2 3,822,614 3

Total operating revenue 137,169,390 100 139,242,604 100

COST OF GOODS SOLD (Notes 13, 23 and 28) 124,808,157 91 124,507,607 89

GROSS PROFIT 12,361,233 9 14,734,997 11

UNREALIZED GAIN ON TRANSACTIONS WITH

SUBSIDIARIES AND ASSOCIATES 113,044 - - -

REALIZED GAIN ON TRANSACTIONS WITH

SUBSIDIARIES AND ASSOCIATES - - 143,082 -

GROSS PROFIT, NET 12,248,189 9 14,878,079 11

OPERATING EXPENSES (Notes 23 and 28)

Selling and marketing expenses 3,002,405 2 2,815,608 2

General and administrative expenses 4,655,078 3 4,790,239 3

Research and development expenses 3,748,991 3 3,841,727 3

Expected credit loss (Note 27) 5,847 - - -

Total operating expenses 11,412,321 8 11,447,574 8

OPERATING INCOME 835,868 1 3,430,505 3

NON-OPERATING INCOME AND EXPENSES

Share of profit of subsidiaries and associates 10,463,878 7 2,119,142 1

Interest income 67,046 - 83,785 -

Dividend income 6,599 - 6,968 -

Other income (Note 28) 1,386,003 1 820,996 1

Net gain on disposal of property, plant and

equipment 28,258 - 28,385 -

Net gain on disposal of investments 86,603 - 151,047 -

Net gain (loss) on foreign currency exchange (525,188) - 491,036 -

Net gain (loss) on financial assets at FVTPL 175,715 - (94,466) -

Finance costs (450,762) - (386,589) -

Other expenses (50,472) - (44,615) -

Impairment loss (Notes 14, 15 and 16) (3,394,351) (3) (5,186,588) (4)

Total non-operating income and expenses 7,793,329 5 (2,010,899) (2)

(Continued)

- 28 -





2018 2017

Amount % Amount %

PROFIT BEFORE INCOME TAX $ 8,629,197 6 $ 1,419,606 1

INCOME TAX BENEFIT (EXPENSE) (Note 24) (672,359) - 1,209,728 1

NET PROFIT FOR THE YEAR 7,956,838 6 2,629,334 2

OTHER COMPREHENSIVE INCOME (LOSS)

(Notes 20, 21 and 24)

Items not reclassified subsequently to profit or loss:

Remeasurement of defined benefit plans 3,050 - (38,263) -

Unrealized loss on investments in equity

instruments designated as at FVTOCI (78,200) - - -

Share of other comprehensive loss of subsidiaries

and associates accounted for using the equity

method (28,426) - (9,586) -

Income tax benefit relating to items not


(98,544) - (41,344) -

Items that may be reclassified subsequently to profit

or loss:

Exchange differences on translating foreign

operations (372,739) - (1,571,489) (1)

Unrealized gain on available-for-sale financial

assets - - 156,525 -

Share of other comprehensive loss of subsidiaries

and associates accounted for using the equity

method (47,500) - (83,495) -

Income tax benefit relating to items that may be


(255,706) - (1,221,746) (1)

Other comprehensive loss for the year, net of

income tax (354,250) - (1,263,090) (1)

TOTAL COMPREHENSIVE INCOME FOR THE

PERIOD $ 7,602,588 6 $ 1,366,244 1

(Continued)

- 29 -





2018 2017

Amount % Amount %

EARNINGS PER SHARE (NEW TAIWAN

DOLLARS; Note 25)

From continuing operations

Basic $3.42 $1.13

Diluted $3.38 $1.13

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

- 30 -

LITE-ON TECHNOLOGY CORPORATION Attachment 3-3 STATEMENTS OF CHANGES IN EQUITY



Capital Surplus (Note 21)

Additional

Difference

Between

Consideration and

Carrying

Amounts

Adjusted

Changes in

Capital Surplus

from Other Equity (Note 21)

Paid-in Capital Arising from Investments in Exchange Unrealized Unrealized

Issue of Share Capital (Note 21)

from Share

Issuance in

Changes in

Percentage of

Associates

Accounted for Retained Earnings (Note 21)

Differences on

Translating

Gain (Loss) on

Financial Assets

Gain (Loss) on

Available-for-

Shares

(In Thousands) Amount

Excess of Par

Value Bond Conversions

Treasury Share

Transactions

Ownership of

Subsidiaries

Using the Equity

Method Mergers Total Legal Reserve Special Reserve

Unappropriated

Earnings Total

Foreign

Operations

Designated as

FVTOCI

sale Financial

Assets Cash Flow Hedges Total

Treasury Shares

(Note 21) Total Equity

BALANCE AT JANUARY 1, 2017 2,350,867 $ 23,508,670 $ 9,372,488 $ 7,462,138 $ 328,800 $ 45,612 $ 273,487 $ 10,015,194 $ 27,497,719 $ 10,845,332 $ 398,602 $ 16,252,206 $ 27,496,140 $ (1,195,684 ) $ - $ (126,588 ) $ - $ (1,322,272 ) $ (1,248,722 ) $ 75,931,535

Appropriation of 2016 earnings

Legal reserve - - - - - - - - - 941,635 - (941,635 ) - - - - - - - -

Special reserve - - - - - - - - - - 940,276 (940,276 ) - - - - - - - -

Cash dividends - 29.2% - - - - - - - - - - - (6,864,532 ) (6,864,532 ) - - - - - - (6,864,532 )

Changes in percentage of ownership interest in subsidiaries - - - - - 3,407 - - 3,407 - - - - - - - - - - 3,407

Changes in capital surplus from investments in associates accounted for using the equity method - - - - - - 3,295 - 3,295 - - - - - - - - - - 3,295

Changes in capital surplus from cash dividends of the

Company paid to subsidiaries - - - - 71,529 - - - 71,529 - - - - - - - - - - 71,529

Net profit for the year ended December 31, 2017 - - - - - - - - - - - 2,629,334 2,629,334 - - - - - - 2,629,334

Other comprehensive income (loss) for the year ended

December 31, 2017, net of income tax - - - - - - - - - - - (41,344 ) (41,344 ) (1,333,209 ) - 108,091 3,372 (1,221,746 ) - (1,263,090 )

Total comprehensive income (loss) for the year ended December 31, 2017 - - - - - - - - - - - 2,587,990 2,587,990 (1,333,209 ) - 108,091 3,372 (1,221,746 ) - 1,366,244

BALANCE AT DECEMBER 31, 2017 2,350,867 23,508,670 9,372,488 7,462,138 400,329 49,019 276,782 10,015,194 27,575,950 11,786,967 1,338,878 10,093,753 23,219,598 (2,528,893 ) - (18,497 ) 3,372 (2,544,018 ) (1,248,722 ) 70,511,478

Effect of retrospective application (Note 3) - - - - - - - - - - - 279,769 279,769 - (298,266 ) 18,497 - (279,769 ) - -

BALANCE AT JANUARY 1, 2018 AS RESTATED 2,350,867 23,508,670 9,372,488 7,462,138 400,329 49,019 276,782 10,015,194 27,575,950 11,786,967 1,338,878 10,373,522 23,499,367 (2,528,893 ) (298,266 ) - 3,372 (2,823,787 ) (1,248,722 ) 70,511,478

Appropriation of 2017 earnings

Legal reserve - - - - - - - - - 262,933 - (262,933 ) - - - - - - - -

Special reserve - - - - - - - - - - 1,367,076 (1,367,076 ) - - - - - - - -

Cash dividends - 4.1% - - - - - - - - - - - (963,855 ) (963,855 ) - - - - - - (963,855 ) Distribution of cash dividends from capital surplus - - (5,900,676 ) - - - - - (5,900,676 ) - - - - - - - - - - (5,900,676 )

Changes in percentage of ownership interests in subsidiaries - - - - - (1,810 ) - - (1,810 ) - - 39,722 39,722 - (39,722 ) - - (39,722 ) - (1,810 )

Changes in capital surplus from investments in associates

accounted for using the equity method - - - - - - (5,415 ) - (5,415 ) - - - - - - - - - - (5,415 )

Changes in capital surplus from cash dividends of the

Company paid to subsidiaries - - - - 77,368 - - - 77,368 - - - - - - - - - - 77,368

Disposal of investments in equity instruments designated as FVTOCI - - - - - - - - - - - 3,460 3,460 - (3,460 ) - - (3,460 ) - -

Disposal of investments accounted for using the equity method - - - - - - - - - - - - - 4,078 - - - 4,078 - 4,078

Net profit for the year ended December 31, 2018 - - - - - - - - - - - 7,956,838 7,956,838 - - - - - - 7,956,838

Other comprehensive income (loss) for the year ended

December 31, 2018, net of income tax - - - - - - - - - - - 9,469 9,469 (255,048 ) (108,013 ) - (658 ) (363,719 ) - (354,250 )

Total comprehensive income (loss) for the year ended

December 31, 2018 - - - - - - - - - - - 7,966,307 7,966,307 (255,048 ) (108,013 ) - (658 ) (363,719 ) - 7,602,588

BALANCE AT DECEMBER 31, 2018 2,350,867 $ 23,508,670 $ 3,471,812 $ 7,462,138 $ 477,697 $ 47,209 $ 271,367 $ 10,015,194 $ 21,745,417 $ 12,049,900 $ 2,705,954 $ 15,789,147 $ 30,545,001 $ (2,779,863 ) $ (449,461 ) $ - $ 2,714 $ (3,226,610 ) $ (1,248,722 ) $ 71,323,756

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

1

Attachment 3-4


STATEMENTS OF CASH FLOWS



2018 2017

CASH FLOWS FROM OPERATING ACTIVITIES

Income before income tax $ 8,629,197 $ 1,419,606

Adjustments for:

Depreciation expenses 598,560 662,204

Amortization expenses 280,321 385,326

Expected credit loss recognized on trade receivables 5,847 -

Impairment loss reversed on trade receivables - (12,190)

Net loss (gain) on fair value change of financial assets designated as

at FVTPL (175,715) 94,466

Finance costs 450,762 386,589

Interest income (67,046) (83,785)

Dividend income (6,599) (6,968)

Share of profit of subsidiaries and associates (10,463,878) (2,119,142)

Net gain on disposal of property, plant and equipment (28,258) (28,385)

Net gain on disposal of available-for-sale financial assets - (49,598)

Net gain on disposal of investments accounted for using the equity

method (86,603) (101,449)

Impairment loss recognized on financial assets - 10,662

Impairment loss recognized on non-financial assets 3,439,561 4,822,143

Unrealized gain on the transactions with subsidiaries and associates 113,044 -

Realized gain on the transactions with subsidiaries and associates - (143,082)

Unrealized net loss (gain) on foreign currency exchange 278,612 (208,823)

Recognition of provisions 406,941 144,788

Changes in operating assets and liabilities

Financial instruments held for trading - 62,935

Contract assets (629,585) -

Notes receivable 233 (192)

Trade receivables 235,654 (255,314)

Trade receivables from related parties 851,172 2,721,891

Other receivables (473,608) (163,349)

Other receivables from related parties (158,826) 134,691

Inventories (1,906,311) 1,568,443

Prepayments (72,372) (28,248)

Notes payable 1,941 628

Trade payables (41,675) (1,366,169)

Trade payables to related parties 6,702,480 (3,728,529)

Other payables 2,223,433 (174,543)

Other payables to related parties (28,012) (78,424)

Provisions (270,937) (286,927)

Advance receipts (557,720) 6,517

Net defined benefit liabilities (45,565) 25,330

Cash generated from operations 9,205,048 3,611,102

Interest received 67,652 93,142

Dividends received 6,599 6,968

(Continued)

2


STATEMENTS OF CASH FLOWS



2018 2017

Interest paid $ (437,433) $ (378,097)

Income tax paid (219,506) (862,359)

Net cash generated from operating activities 8,622,360 2,470,756

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of financial assets at FVTOCI (18,713) -

Acquisition of financial assets at amortized costs (4,693) -

Acquisition of available-for-sale financial assets - (15,110)

Proceeds from sale of available-for-sale financial assets - 298,632

Proceeds from sale of debt investments with no active market - 6,360

Acquisition of investments accounted for using the equity method (1,350,950) (7,286,445)

Proceeds from disposal of investments accounted for using the equity

method 8,439 195,899

Increase in prepaid investments - (1,624,770)

Proceeds from capital reduction of investments accounted for using the

equity method - 35,261

Acquisition of property, plant and equipment (1,485,369) (656,183)

Proceeds from disposal of property, plant and equipment 103,268 33,510

Decrease in refundable deposits 6,353 11,793

Acquisition of intangible assets (130,933) (192,711)

Proceeds from disposal of intangible assets 378,438 -

Increase in other non-current assets - (71)

Decrease in other non-current assets 8 -

Dividends received from subsidiaries and associates 309,030 18,153,782

Net cash generated from (used in) investing activities (2,185,122) 8,959,947

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from short-term borrowings - 7,164,540

Repayments of short-term borrowings (26,825) -

Repayments of long-term borrowings - (12,000,000)

Refund of guarantee deposits received (39) (3,643)

Cash dividends (6,864,531) (6,864,532)

Net cash used in financing activities (6,891,395) (11,703,635)

NET DECREASE IN CASH AND CASH EQUIVALENTS (454,157) (272,932)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE

YEAR 7,536,265 7,809,197

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR $ 7,082,108 $ 7,536,265

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

3

Attachment 4

AUDIT COMMITTEE REPORT

To: Shareholders’ Annual General Meeting for Year 2019, Lite-On Technology Corporation

The Board of Directors has prepared and submitted to the undersigned, Audit Committee of Lite-On

Technology Corporation the 2018 Business Report, Financial Statements and the proposal of

distribution of earnings. The Financial Statements have been duly audited by Certified Public

Accountants Meng-Chieh Chiu and Tsai-Cheng Tsai of Deloitte Touche Tohmatsu International

Taiwan. The above Business Report, Financial Statements and the proposal of distribution of earnings

have been examined and determined to be correct by the undersigned. This Report is duly submitted in

accordance with Article 14-4 of Securities and Exchange Law and Article 219 of the Company Law.

The Audit Committee, Chairman:

Mr. Albert Hsueh February 26 2019

4

Attachment 5

Lite-On Technology Corporation Comparison Table of Amendments to the Regulation and Procedure for Board of

Directors Meetings

AFTER Amendment BEFORE Amendment Description

Article 1 To establish a strong governance

system and sound supervisory

capabilities for Lite-On Technology

Corporation's board of directors and

to strengthen management

capabilities, assist the directors in

the performance of their duties,

and improve the performance

of the board of directors. these

Rules are adopted pursuant to Article

2 of the Regulations Governing

Procedure for Board of Directors

Meetings of Public Companies.

Article 1 To establish a strong governance

system and sound supervisory capabilities

for Lite-On Technology Corporation's board

of directors and to strengthen management

capabilities, these Rules are adopted

pursuant to Article 2 of the Regulations

Governing Procedure for Board of Directors

Meetings of Public Companies.

Amendments

pursuant to add the

Company's

requirements for

processing related

demands of the

directors

Article 2 With respect to the board of directors

meetings ("board meetings") of

Lite-On Technology Corporation, the

main agenda items, working

procedures, required content of

meeting minutes, public

announcements, and other compliance

requirements and the Company's

requirements for processing

related demands of the

directors shall be handled in

accordance with the provisions

of these Rules unless otherwise

specified in laws or the Articles

of Incorporation.

Article 2 With respect to the board of directors

meetings ("board meetings") of Lite-On

Technology Corporation, the main agenda

items, working procedures, required content

of meeting minutes, public announcements,

and other compliance requirements shall be

handled in accordance with the provisions of

these Rules.

Article 3 The board of directors shall meet at

least quarterly.

A notice of the reasons for convening a

board meeting shall be given to each

director 7 days before the meeting is

convened. In emergency

circumstances, however, a board

meeting may be called on shorter

notice.

The notice to be given under the

preceding paragraph may be effected

by means of electronic transmission

Article 3 The board of directors shall meet at

least quarterly.

A notice of the reasons for convening a

board meeting shall be given to each

director 7 days before the meeting is

convened. In emergency

circumstances, however, a board

meeting may be called on shorter

notice.

The notice to be given under the

preceding paragraph may be effected

by means of electronic transmission

5

with the prior consent of the recipients.

All matters set forth under Article 12,

Paragraph 1 of these Rules shall be

specified in the notice of the reasons

for convening a board meeting. None

of those matters may be raised by an

extraordinary motion except in the

case of an emergency or for other

legitimate reason.

The Company's directors shall

obtain suitable and updated

information with formats and

quality that allow directors to

make informed decisions and

perform their duties as directors.

with the prior consent of the recipients.

All matters set forth under Article 12,

Paragraph 1 of these Rules shall be

specified in the notice of the reasons

for convening a board meeting. None

of those matters may be raised by an

extraordinary motion except in the

case of an emergency or for other

legitimate reason.

Article 4 The designated unit responsible for

the board meetings of Lite-On

Technology Corporation shall be the

Secretariat of the Board.

The Secretariat of the Board shall draft

agenda items and prepare sufficient

meeting materials, and shall deliver

them together with the notice of the

meeting.

A director who is of the opinion that

the meeting materials provided are

insufficient may request their

supplementation by the unit

responsible for board meetings. The

unit shall provide materials

within two days. If a director is of

the opinion that materials concerning

any proposal are insufficient, the

deliberation of such proposal may be

postponed by a resolution of the board

of directors.

Article 4 The designated unit responsible for

the board meetings of Lite-On Technology

Corporation shall be the Secretariat of the

Board.

The Secretariat of the Board shall draft

agenda items and prepare sufficient

meeting materials, and shall deliver

them together with the notice of the

meeting.

A director who is of the opinion that

the meeting materials provided are

insufficient may request their

supplementation by the unit

responsible for board meetings. If a

director is of the opinion that materials

concerning any proposal are

insufficient, the deliberation of such

proposal may be postponed by a

resolution of the board of directors.

Article 7 Board meetings shall be convened

and chaired by the chairperson of the board if the chairperson convened the

meeting. A majority of directors may

also specify proposals and reasons in

writing and request the chairperson

to convene a meeting of the board of

directors.

If the chairman of the board of

directors fails to convene a

meeting of board of directors

within 15 days after the filing

Article 7 Board meetings shall be convened

and chaired by the chairperson of the board.

However, with respect to the first meeting of

each newly elected board of directors, it

shall be called and chaired by the director

that received votes representing the largest

portion of voting rights at the shareholders

meeting in which the directors were elected;

if two or more directors are so entitled to

convene the meeting, they shall select from

among themselves one director to serve as

Amendments

pursuant to the

provisions of

Article 203 and

203-1 of the

Company Act

6

of the request under the

preceding paragraph, a majority

of the directors may convene a

meeting of board of directors

on their own. However, with respect to the first

meeting of each newly elected board

of directors, it shall be called within

15 days of the election and

chaired by the director that received

votes representing the largest portion

of voting rights at the shareholders

meeting in which the directors were

elected; if two or more directors are so

entitled to convene the meeting, they

shall select from among themselves

one director to serve as chair.

In case the director elect

receiving the a ballot

representing the largest number

of votes fails to convene the

meeting of the board of

directors within the time limit

set out in the preceding

paragraph, then the majority or

more of the directors elect may

convene the meeting on their

own.

When the chairperson of the board is

on leave or for any reason unable to

exercise the powers of chairperson, the

vice chairperson shall act in place of

the chairperson; if the vice chairperson

is also on leave or for any reason

unable to exercise the powers of vice

chairperson, the chairperson shall

appoint one of the directors to act. If

no such designation is made by the

chairperson, the directors shall select

one person from among themselves to

serve as chair.

chair.

When the chairperson of the board is

on leave or for any reason unable to

exercise the powers of chairperson, the

vice chairperson shall act in place of

the chairperson; if the vice chairperson

is also on leave or for any reason

unable to exercise the powers of vice

chairperson, the chairperson shall

appoint one of the directors to act. If

no such designation is made by the

chairperson, the directors shall select

one person from among themselves to

serve as chair.

Article 15 If a director or a juristic person that

the director represents is an interested party

in relation to an agenda item, the director

shall state the important aspects of the

interested party relationship at the respective

meeting. When the relationship is likely to

prejudice the interest of Lite-On Technology

Corporation, that director may not

participate in discussion or voting on that

agenda item and shall recuse him or herself

Article 15 If a director or a juristic person that

the director represents is an interested party

in relation to an agenda item, the director

shall state the important aspects of the

interested party relationship at the respective

meeting. When the relationship is likely to

prejudice the interest of Lite-On Technology

Corporation, that director may not

participate in discussion or voting on that

agenda item and shall recuse him or herself

Amendments

pursuant to the

provisions of

Article 206 of the

Company Act

7

from the discussion or the voting on the

item, and may not exercise voting rights as

proxy for another director.

Where the spouse, a blood

relative within the second

degree of kinship of a director,

or any company which has a

controlling or subordinate

relation with a director has

interests in the matters under

discussion in the meeting of the

preceding paragraph, such

director shall be deemed to have

a personal interest in the matter.

Where a director is prohibited by the

preceding two paragraphs from

exercising voting rights with respect to

a resolution at a board meeting, the

provisions of Article 180, Paragraph 2

of the Company Act apply mutatis

mutandis in accordance with Article

206, Paragraph 34 of the same Act.

from the discussion or the voting on the

item, and may not exercise voting rights as

proxy for another director.

Where a director is prohibited by the

preceding paragraph from exercising

voting rights with respect to a

resolution at a board meeting, the

provisions of Article 180, Paragraph 2

of the Company Act apply mutatis

mutandis in accordance with Article

206, Paragraph 3 of the same Act.

Article 18 All directors of the

Company shall be provided with

access to assistance from the

corporate governance officer to

ensure the compliance of board

meeting procedures and all

applicable laws and rules and ensure

good communication of information

between board members and

between board members and

management units.

- Amendments

pursuant to add the

Company's

requirements for

processing related

demands of the

directors

Article 19 The Company has

established a corporate governance

officer who takes charge of

processing requirements of the

directors and completes tasks within

seven days based on the principle of

effective assistance for directors in

the performance of their duties.

- Amendments

pursuant to add the

Company's

requirements for

processing related

demands of the

directors

Article 20 These Rules shall be adopted by the

approval of meeting of the board of

directors and shall be reported to the

shareholders’ meeting. Any future

amendment may be adopted with a


Article 18 These Rules shall be adopted by the

approval of meeting of the board of

directors and shall be reported to the

shareholders’ meeting. Any future

amendment may be adopted with a


Update the Article

number

8

Article 21 These Rules were implemented on

January 1, 2007.

Article 19 These Rules were implemented on

January 1, 2007.

Update the Article

number

Article 22 These Rules were established on

November 24, 2006.

The first amendment was made on April 25,

2007 and implemented by the 7th board of

directors on June 21, 2007.

The second amendment was made on April 7,

2008 and implemented on April 7, 2008.

The third amendment was made on April 28,


The fourth amendment was made on October

24, 2012 and implemented on October 24,

2012.

The fifth amendment was made on October


2017.

The 6th amendment was on April 26,

2019 and the amended rules entered

into force on April 26, 2019.

Article 20 These Rules were established on

November 24, 2006.

The first amendment was made on April 25,

2007 and implemented by the 7th board of

directors on June 21, 2007.

The second amendment was made on April 7,


The third amendment was made on April 28,


The fourth amendment was made on October


2012.

The fifth amendment was made on October


2017.

Add new date of

amendment

9

Lite-On Technology Corporation Attachment 6

Statement of Earnings Appropriation

Year 2018

Amount (NT$)

Unallocated earnings, beginning of year

Add: cumulative effect of the initial application

Adjusted unallocated earnings, beginning of year

Add: adjustments on equity method investments

Add: adjustments on re-measurement on define

benefit plans recognized in retained earnings

Add: cumulative unrealized gain on investments in

equity instruments designated as at FVTOCI was

transferred directly to retained earnings due to

disposal.

Adjusted unallocated earnings

7,499,888,591

279,768,597

7,779,657,188

41,109,640

8,081,619

3,459,902

7,832,308,349

Add: Net profit 7,956,838,274

Less: Legal reserve (10%)

Less: Special reserve

(795,683,827)

(682,813,923)

Distributable earnings 14,310,648,873

Distribution:

(1) Cash dividends: (NT$2.92/per share) (6,864,531,733)

Unallocated earnings, end of year 7,446,117,140

Remarks:

1. The Company elects to apply IFRS 9 retrospectively with the cumulative effect of the initial

application of this standard recognized in retained earnings, an increase of $279,768,597, on

January 1, 2018.

2. Under the Integrated Income Tax System (Imputation Tax System), upon calculating the

deductible tax in accordance with Article 66-6 of the Income Tax Act, earnings of 1998 and

thereafter should be distributed first. When unallocated earnings on which 5% surtax is levied in

accordance with Article 66-9 of the Income Tax Act is calculated, earnings of the latest year

should be distributed first as required under Tai-Cai-Shui No. 871941343 of the Ministry of

Finance dated April 30, 1998.

3. Special reserve is appropriated in accordance with Article 41 paragraph 1 of Securities and

Exchange Act and Financial-Supervisory-Securities, No. 1010012865 of the Financial Supervisory

Commission dated April 6, 2012 and No. 1010047490 of the Financial Supervisory Commission

dated November 21, 2012.

10

Attachment 7


Comparison Table of Articles of Incorporation

(The table below compares the Amended Articles and Original Articles)

Amended

Article No. Amended Article

Original

Article No. Original Article Note

Article III The Company is headquartered in Taipei

City and may have branches set elsewhere

at home and abroad as resolved by the

Board of Directors.

The Company may invest outward with

the total amount of investment free of

restrictions as set forth in Article 13 of the

Company Law.

The Company may act as a guarantor

when required for business operations

and follow Operational Procedures for

Endorsements/Guarantees of the

Company.

Article XXX The Company is headquartered

in Taipei City and may have

branches set elsewhere at home

and abroad as resolved by the

Board of Directors.

The Company may invest

outward with the total amount

of investment free of restrictions

as set forth in Article 13 of the

Company Law.

The Company may act as a

guarantor externally as required

for business.

⚫ Wording

adjustment

Article V For the shares issued by the Company, the

Company may be exempted from printing

share certificates but shall have the shares

so issued duly registered with the

centralized securities depository

enterprise and follow the regulations of

that enterprise.

Article V The Company’s shares are

registered ones, which shall be

duly signed and sealed by a

minimum of three directors and

issued after duly authenticated

by the competent authority or

the issuance registry entity

approved by the competent

authority. For the shares issued

by the Company, the Company

may be exempted from printing

share certificates but shall have

the shares so issued duly

registered with the centralized

securities depository enterprise.

⚫ The

Company is

a listed

company

with

non-physical

stock,

therefore,

the initial

part are

deleted

⚫ Wording

adjustment

to later part

Article

XXIII

The Company shall allocate the following

compensation from the profit of each

fiscal year (The “profit” means “profit

before income tax and employees’ and

directors’ compensation"), however, the

Company shall have reserved a sufficient

amount from such profit to offset its

accumulated losses (including

unappropriated earnings adjustment if

any):

Article XXIII The Company shall allocate the

following compensation from

the profit of each fiscal year (The

“profit” means “profit before

income tax and employees’ and

directors’ compensation"),

however, the Company shall

have reserved a sufficient

amount from such profit to

offset its accumulated losses

⚫ In

accordance

with the

amendment

of Article

235-1 of the

Company

Act that the

Company

may

11

Amended


Original


1. Employees’ compensation：no less

than 1%

2. Directors’ compensation：no more

than 1.5%

The employees’ compensation under the

preceding paragraph will be distributed by

shares or cash. The employees of parents

or subsidiaries of the Company meeting

certain specific requirements may also be

entitled to such compensation. The Board

of Directors is authorized with full powers

to determine the terms and methods of

appropriation and the Directors’

compensation may only be distributed by

cash.

The Company shall, upon a resolution of

the Board of Directors, distribute

employees' and director’s compensation

in the preceding two paragraphs, and

report to the shareholders’ meeting for

such distribution. While the Company

distributes surplus earnings at the close of

each quarter in accordance with the

Article 24 paragraph 5, the Company shall

estimate and reserve the employees’

compensation and directors’

compensation according to the preceding

paragraph. If the Company has

accumulated losses, the Company shall

estimate and reserve the accumulated

losses to be made up first before

estimating and reserving the employees’

compensation and directors’

compensation.

Qualification requirement of employees in

the preceding second paragraph shall

comply with the provisions otherwise

prescribed by the competent authority in

charge of securities affairs.

(including unappropriated

earnings adjustment if any):

1. Employees’ compensation：

no less than 1%

2. Directors’ compensation：no

more than 1.5%

The employees’ compensation

under the preceding paragraph

will be distributed by shares or

cash. The employees of the

Company’s subsidiaries may

also be entitled to such

compensation. The Board of

Directors is authorized with full

powers to determine the terms

and methods of appropriation.

The Directors’ compensation


may only be distributed by cash.

The Company shall, upon a

resolution of the Board of

Directors, distribute employees'

and director’s compensation in

the preceding two paragraphs,

and report to the shareholders’

meeting for such distribution.

distribute

employee

bonus in

two-way for

the

controlling

and

subordinate

companies.

Therefore,

amending

second

paragraph

and adding

fourth

paragraph

⚫ In

accordance

with the

amendment

of Article

228-1 of the

Company

Act that the

surplus

earning

distribution

or loss

off-setting

proposal of

the

Company

may be

proposed at

the close of

each quarter

or each half

fiscal year.

Therefore,

the later part

of third

paragraph

are added

Article

XXIV

If there is net profit after tax upon the

final settlement of account of each fiscal

year, the Company shall first to offset any

previous accumulated losses (including

unappropriated earnings adjustment if

any) and set aside a legal reserve at 10% of

the net profits, unless the accumulated

Article XXIV If there is net profit after tax

upon the final settlement of

account of each fiscal year, the

Company shall first to offset any

previous accumulated losses

(including unappropriated

earnings adjustment if any) and

⚫ In

accordance

with the

amendment

of Article

228-1 and

240 of the

12

Amended


Original


legal reserve amounts reach to the total

capital of the Company; then set aside

special reserve in accordance with

relevant laws or regulations or as

requested by the authorities in charge.

The remaining net profit, plus the

beginning unappropriated earnings

(including adjustment of unappropriated

earnings if any), shall be distributed into

dividends to shareholders according to the

distribution plan proposed by the Board

of Directors and submitted to the

shareholders’ meeting for approval.

Where the Company distributes preceding

surplus earning, legal reserve and capital

reserve in the form of cash, such

distribution is authorized to be made after

a resolution has been adopted by a

majority vote at a meeting of the board of

directors attended by two-thirds of the

total number of directors; and in addition

thereto a report of such distribution shall

be submitted to the shareholders’

meeting; if such distribution is in the form

of new shares to be issued, it shall be

approved by shareholders meetings

according to the regulations.

In consideration of business development

plan, investing environment, demand for

funds, global competiveness and the

shareholders’ interest, the Dividend Policy

of the Company is the distribution to

shareholders with the appropriation of the

amount which shall be no less than 70% of

the net profit after income tax under the

circumstance that there is no cumulated

loss in prior years. The distribution may

be executed in cash dividend and/or share

dividend, and the cash dividend shall be

no less than 90% of the total distributed

dividends.

In case there are no earnings for

distribution in a certain year, or the

earnings of a certain year are significantly

less than the earnings actually distributed

by the Company in the previous year, or

considering the financial, business or

operational factors of the Company, the

Company may allocate a portion or all of

its reserves for distribution in accordance

set aside a legal reserve at 10%

of the net profits, unless the

accumulated legal reserve is

equal to the total capital of the

Company; then set aside special

reserve in accordance with

relevant laws or regulations or

as requested by the authorities

in charge. The remaining net

profit, plus the beginning

unappropriated earnings

(including adjustment of

unappropriated earnings if any),

shall be distributed into

dividends to shareholders

according to the distribution

plan proposed by the Board of

Directors and submitted to the

shareholders’ meeting for

approval.

In consideration of business

development plan, investing

environment, demand for funds,

global competiveness and the

shareholders’ interest, the

Dividend Policy of the Company

is the distribution to

shareholders with the

appropriation of the amount

which shall be no less than 70%

of the net profit after income tax

under the circumstance that

there is no cumulated loss in

prior years. The distribution

may be executed in cash

dividend and/or share dividend,

and the cash dividend shall be

no less than 90% of the total

distributed dividends.

In case there are no earnings for

distribution in a certain year, or

the earnings of a certain year are

significantly less than the

earnings actually distributed by

the Company in the previous

year, or considering the

financial, business or

operational factors of the

Company, the Company may

allocate a portion or all of its

Company

Act, adding

second and

fourth

paragraphs

regarding

the surplus

earning

distribution

or loss

off-setting

proposal of

the

Company

may be

proposed at

the close of

each quarter

or each half

fiscal year

and the

meeting of

the board of

directors is

authorized

to approve

cash

dividends

13

Amended


Original


with relevant laws or regulations or the

orders of the authorities in charge.

The Company may distribute the surplus

earnings or off-set losses at the close of

each quarter in accordance with the

Company Act. While distributing surplus

earning, the Company shall estimate and

reserve the taxes and duties to be paid, the

losses to be covered, the legal reserve to

be set aside, and the special surplus

reserve to be raised or revolved. Where

such legal reserve amounts reach to the

total paid-in capital, this provision shall

not apply. If the Company distribute

surplus earning in the form of cash, it

shall be approved by a meeting of the

board of directors; if such surplus earning

is distributed in the form of new shares to

be issued, it shall be approved by

shareholders meetings according to the

regulations.

reserves for distribution in

accordance with relevant laws or

regulations or the orders of the

authorities in charge.

Article

XXIV-1

Qualification requirements of employees

entitled to receive treasury shares, share

subscription warrant, new shares and

restricted stock issued by the Company

may include the employees of parents or

subsidiaries of the Company meeting

certain specific requirements.

Qualification requirement of employees in

the preceding paragraph shall comply

with the provisions otherwise prescribed

by the competent authority in charge of

securities affairs.

⚫ New article

added

⚫ Adding

employee

reward

mechanism

in

accordance

with the

amendment

of Article

167-1、167-2

and 267 of

the

Company

Act.

Therefore,

adding

Article

XXIV-1 to

retain

flexibility

Article

XXVI

(Delete) Article XXVI The Taiwan Depository &

Clearing Corporation (TDCC)

may request that the Company

consolidate the shares to issue

large denomination share

certificates.

⚫ The

Company

issues

non-physical

stocks,

therefore

14

Amended


Original


deleting this

Article

Article

XXIX

The Articles were duly stipulated on

March 13, 1989.

The Articles were duly amended on March

20, 1990 as the 1st amendment.

The Articles were duly amended on May

11, 1991 as the 2nd amendment.


20, 1992 as the 3rd amendment.

The Articles were duly amended on June

27, 1992 as the 4th amendment.



The Articles were duly amended on

December 18, 1993 as the 6th

amendment.



The Articles were duly amended on April










The Articles were duly amended on April




The Articles were duly amended on

August 5, 2002 as the 15th amendment.












Article XXIX The Articles were duly stipulated

on March 13, 1989.

The Articles were duly amended

on March 20, 1990 as the 1st

amendment.


on May 11, 1991 as the 2nd

amendment.


on May 20, 1992 as the 3rd

amendment.


on June 27, 1992 as the 4th

amendment.



amendment.


on December 18, 1993 as the 6th

amendment.


on May 30, 1995 as the 7th

amendment.


on April 2, 1996 as the 8th

amendment.



amendment.



amendment.



amendment.



amendment.


on April 19, 2001 as the 13th

amendment.



amendment.


⚫ Adding the

date for the

29th

amendment

15

Amended


Original


25, 2008 as the 21st amendment.


15, 2010 as the 22nd amendment.














21, 2019, 2019 as the 29th amendment

on August 5, 2002 as the 15th

amendment.



amendment.



amendment.



amendment.



amendment.



amendment.


on June 25, 2008 as the 21st

amendment.


on June 15, 2010 as the 22nd

amendment.


on June 19, 2012 as the 23rd

amendment.


on June 19, 2013 as the 24rd

amendment.



amendment.



amendment.



amendment.



amendment.

16

Attachment 8 Lite-On Technology Corporation

Comparative Table of Procedures for the Acquisition and Disposal of Assets

(The table below compares the Amended Articles and Original Articles.)

Amended Article Original Article Note

2.Scope of Application & Domain of

Applications

2.1 Scope of Application

2.1.2 Real property (including land, houses

and buildings, investment property, and

construction enterprise inventory) and

equipment.

2.1.5 Right-of-use assets.

2.1.6 Claims of financial institutions

(including receivables, bills purchased

and discounted, loans, and overdue

receivables).

2.1.7 Derivatives.

2.1.8 Assets acquired or disposed of in

connection with mergers,

demergers,acquisitions,or transfer or shares

in accordance with law.

2.1.9 Other major assets.

2.Scope of Application & Domain of

Applications

2.1 Scope of Application

2.1.2 Real property (including land,

houses and buildings, investment

property, rights to use land, and

construction enterprise inventory) and

equipment.

NA

2.1.5 Claims of financial institutions

(including receivables, bills purchased

and discounted, loans, and overdue

receivables).

2.1.6 Derivatives.

2.1.7 Assets acquired or disposed of in

connection with mergers,

demergers,acquisitions,or transfer or

shares in accordance with law.

2.1.8 Other major assets.

1.To move 2.1.2

rights to use land

to 2.1.5

specification.

2. To add 2.1.5

Right-of-use

assets accordance

with revision of

regulation.

3.To move

2.1.5~2.1.8 to

2.1.6~2.1.9

3.1 Financial Derivatives: Derivatives as

defined in this procedure shall refer to

Forward contracts, options contracts,

futures contracts, leverage contracts,

and swap contracts, whose value is

derived from a specified interest rate

,financial instrument price,commodity

price, foreign exchange rates, index of

price or rates , credit rating or credit

index, or other variable;or hybrid

contracts combining the above

contracts;or hybrid contracts or

structured products containing

embedded derivatives. The term

"forward contracts" does not include

insurance contracts, performance

contracts, after-sales service contracts,

long-term leasing contracts, or

3.1 Financial Derivatives: Derivatives as

defined in this procedure shall refer to

Forward contracts, options contracts,

futures contracts, leverage contracts,

and swap contracts, and compound

contracts combining the above

products, whose value is derived from

assets, interest rates, foreign exchange

rates, indexes or other interests. The

term "forward contracts" does not

include insurance contracts,

performance contracts, after-sales

service contracts, long-term leasing

contracts, or long-term purchase

(sales) agreements.

3.1 To

amend ”Financial

Derivatives

definition

accordance with

revision of

regulation.

17


long-term purchase (sales) contracts.

3.2 Assets acquired or disposed through

mergers, demergers, acquisitions, or

transfer of shares in accordance with

law: Refers to assets acquired or

disposed through mergers, demergers,

or acquisitions conducted under the

Business Mergers and Acquisitions Act,

Financial Holding Company Act,

Financial Institution Merger Act and

other acts, or to transfer of shares from

another company through issuance of

new shares of its own as the

consideration therefore (hereinafter

"transfer of shares") under Article 156-3

of the Company Act.

3.3 Related party or subsidiary: As defined

in the Regulations Governing the

Preparation of Financial Reports by

Securities Issuers.

3.4 Professional appraisers: Refers to a real

property appraiser or other person duly

authorized by law to engage in the value

appraisal of real property or equipment.

Professional appraisers and their

officers, certified public accounts,

attorneys, and securities underwriters

that provide the Company with

appraisal reports, certified public

3.2 Assets acquired or disposed through

mergers, demergers, acquisitions, or

transfer of shares in accordance with

law: Refers to assets acquired or

disposed through mergers, demergers,

or acquisitions conducted under the

Business Mergers and Acquisitions

Act, Financial Holding Company Act,

Financial Institution Merger Act and

other acts, or to transfer of shares from

another company through issuance of

new shares of its own as the

consideration therefore (hereinafter

"transfer of shares") under Article 156,

paragraph 8 of the Company Act.

3.3 Related party or subsidiary: As

defined in the Regulations Governing

the Preparation of Financial Reports

by Securities Issuers. Professional

appraisers, certified public

accountants, lawyers or security

underwriters who issue the appraisal

reports, accountant’s reports, and

statement of the legal counsel or

security underwriters in favor of the

Company shall not be concerned with

any of the parties involved in the trade.

3.4 Professional appraisers: Refers to a real

property appraiser or other person duly

authorized by law to engage in the

value appraisal of real property or

equipment.

3.2 To amend

accordance with

revision of

regulation.

3.3 To move

Professional

appraisers,etcdesc

ription to 3.4.

3.3 To move

Professional

18


accountant's opinions, attorney's

opinions, or underwriter's opinions shall

meet the following requirements:

3.4.1 May not have previously received a

final and unappealable sentence to

imprisonment for 1 year or longer for a

violation of the Act, the Company Act,

the Banking Act of The Republic of

China, the Insurance Act, the Financial

Holding Company Act, or the Business

Entity Accounting Act, or for fraud,

breach of trust, embezzlement, forgery

of documents, or occupational crime.

However, this provision does not apply

if 3 years have already passed since

completion of service of the sentence,

since expiration of the period of a

suspended sentence, or since a pardon

was received.

3.4.2 May not be a related party or de facto

related party of any party to the

transaction.

3.4.3 If the company is required to obtain

appraisal reports from two or more

professional appraisers, the different

professional appraisers or appraisal

officers may not be related parties or de

facto related parties of each other.

3.4.4 When issuing an appraisal report or

opinion, the personnel referred to in the

3.4 paragraph shall comply with the

following:

3.4.4.1 Prior to accepting a case, they shall

prudently assess their own professional

capabilities, practical experience, and

independence.

3.4.4.2 When examining a case, they shall

appropriately plan and execute adequate

working procedures, in order to produce

a conclusion and use the conclusion as

NA

NA

NA

NA

NA

appraisers,etcdesc

ription to 3.4.

To add

3.4.1~3.4.3&3.4.4

~3.4.4.4

accordance with

revision of

regulation.

19


the basis for issuing the report or

opinion. The related working

procedures, data collected, and

conclusion shall be fully and accurately

specified in the case working papers.

3.4.4.3 They shall undertake an

item-by-item evaluation of the

comprehensiveness, accuracy, and

reasonableness of the sources of data

used, the parameters, and the

information, as the basis for issuance of

the appraisal report or the opinion.

3.4.4.4 They shall issue a statement

attesting to the professional competence

and independence of the personnel who

prepared the report or opinion, and that

they have evaluated and found that the

information used is reasonable and

accurate, and that they have complied

with applicable laws and regulations.

3.7 Securities exchange: "Domestic

securities exchange" refers to the

Taiwan Stock Exchange Corporation;

"foreign securities exchange" refers to

any organized securities exchange

market that is regulated by the

competent securities authorities of the

jurisdiction where it is located.

3.8 Over-the-counter venue ("OTC venue",

"OTC"): "Domestic OTC venue" refers

to a venue for OTC trading provided by

a securities firm in accordance with the

Regulations Governing Securities

Trading on the Taipei Exchange;

"foreign OTC venue" refers to a venue

at a financial institution that is regulated

by the foreign competent authority and

that is permitted to conduct securities

business.

NA

NA

NA

NA

NA

20


To add 3.7~3.8

accordance with

revision of

regulation.

4. Limits on the investments of realty not

for business use or right-of-use assets

thereof and marketable securities

the Company and respective subsidiary

may acquire the aforementioned assets

in accordance with the following limits:

The

Compa

ny

Inves

tment

holdi

ng

Com

pany

Other

subsid

iaries

Realty not

for

business

use or

right-of

-use

assets

thereof

15% of

net

worth

5% of the net

worth of

parent

Investmen

t of

marketabl

e

securities

150%

of the

net

worth

100%

of the

net

worth

of

subsi

diary

10%

of the

net

worth

of

parent

Amount

of

investmen

t on

individual

security

50% of

the net

worth

100%

of the

net

worth

of

subsi

diary

5% of

the net

worth

of

parent

4. Limits on the investments of realty not

for business use and marketable

securities

the Company and respective

subsidiary may acquire the

aforementioned assets in accordance

with the following limits:

The

Compa

ny

Inves

tment

holdi

ng

Com

pany

Other

subsid

iaries

Realty not

for

business

use

15% of

net

worth

5% of the net

worth of

parent

Investmen

t of

marketabl

e

securities

150%

of the

net

worth

100%

of the

net

worth

of

subsi

diary

10%

of the

net

worth

of

parent

Amount

of

investmen

t on

individual

security

50% of

the net

worth

100%

of the

net

worth

of

subsi

diary

5% of

the net

worth

of

parent

To amend

accordance with

revision of

regulation.

6. Acquisition or disposal of realty ,

equipment or right-of-use assets

thereof

6.1 Evaluation and Operation Process

Process

The Company may buy or sell realty

, equipment or right-of- use assets

thereof in accordance with the

regulations governing the Property,

6. Acquisition or disposal of realty or

equipment


The Company may buy or sell

realty and equipment in accordance

with the regulations governing the

Property, Plant and Equipment

cycle under the Company’s internal

6&6.1&6.2.2&6.3

To add

right-of-use assets

thereof

accordance with

revision of

regulation.

21


Plant and Equipment cycle under the

Company’s internal control system.

6.2.2 For the acquisition or disposition of

right-of-use assets and equipment, the

respective department shall make an

inquiry, compare the offer, negotiate on

the price or submit to bidding. The limit

shall be based on the line of authority.

6.3 In acquiring or disposing of real

property , equipment , or right-

of-use assets thereof where the

transaction amount reaches 20

percent of the Company's paid-in

capital or NT$300 million or more,

the Company, unless transacting

with a domestic government agency,

engaging others to build on its own

land, engaging others to build on

rented land, or acquiring or

disposing of equipment or

right-of-use assets thereof held for

business use, shall obtain an

appraisal report prior to the date of

occurrence of the event from a

professional appraiser and shall

further comply with the following

provisions:

6.3.1 Where due to special circumstances it

is necessary to give a limited price,

specified price, or special price as a

reference basis for the transaction price,

the transaction shall be submitted for

approval in advance by the board of

directors, the same procedure shall also

be followed whenever there is any

subsequent changes to the terms and

conditions of the transaction.

control system.

6.2.2 For the acquisition or disposition of

equipment, the respective department

shall make an inquiry, compare the

offer, negotiate on the price or submit

to bidding. The limit shall be based on

the line of authority.

6.3 In acquiring or disposing of real

property or equipment where the

transaction amount reaches 20

percent of the Company's paid-in

capital or NT$300 million or more,

the Company, unless transacting

with a government agency,

engaging others to build on its own

land, engaging others to build on

rented land, or acquiring or

disposing of equipment for

business use, shall obtain an

appraisal report prior to the date of

occurrence of the event from a

professional appraiser and shall

further comply with the following

provisions:

6.3.1 Where due to special circumstances

it is necessary to give a limited price,

specified price, or special price as a

reference basis for the transaction

price, the transaction shall be

submitted for approval in advance by

the board of directors, and the same

procedure shall be followed for any

future changes to the terms and

conditions of the transaction.

6.3.1 To amend

accordance with

revision of

regulation.

22


7. The Acquisition or Disposition of

memberships or Intangible Assets or

right-of-use assets thereof



memberships or intangible assets or

right-of-use assets thereof with the

presentation of relevant appraisal reports

and carried out in accordance with the

line of authority of the Company and the

following procedure.

7.2.1 In acquiring or disposing of

memberships, the respective department

shall consult the fair market price for

determining the terms and conditions of

the deal and the price. An analysis report

for such purpose shall be compiled and

submitted for the Group CEO’s

approval. If the amount of transaction

falls below NT$3 million, it shall be

submitted for approval by the board

chairman and presented to the nearest

board session for recognition. For

transaction values exceeding NT$3

million, submit for the approval from

the board in advance.

7.2.2 In acquiring or disposing of intangible

assets or right-of-use assets thereof, the

respective department shall consult the

appraisal reports issued by professional

appraisers or the fair market price for

determining the terms and conditions of

the deal and the price. An analysis

report for such purpose shall be

compiled and submitted for approval by

the board chairman. If the transaction

amount falls below NT$20 million,

submit for the board chairman’s

7. The Acquisition or Disposition of

memberships or Intangible Assets

7.1 Evaluation and Operation process


memberships or intangible assets with

the presentation of relevant appraisal

reports and carried out in accordance

with the line of authority of the

Company and the following procedure.


memberships, the respective

department shall consult the fair

market price for determining the terms

and conditions of the deal and the

price. An analysis report for such

purpose shall be compiled and

submitted for the Group CEO’s

approval. If the amount of transaction

falls below 1% of the Company’s paid

in capital or NT$3 million, it shall be

submitted for approval by the board

chairman and presented to the nearest



million, submit for the approval from

the board in advance.


intangible assets, the respective

department shall consult the appraisal

reports issued by professional

appraisers or the fair market price for

determining the terms and conditions

of the deal and the price. An analysis

report for such purpose shall be

compiled and submitted for approval

by the board chairman. If the

transaction amount falls below 10% of

the Company’s paid in capital or

7&7.1&7.2.2&7.3

To add

right-of-use assets

thereof

accordance with

revision of

regulation.

7.2.1&7.2.2 To

amend

accordance with

revision of

regulation.

23


approval and present to the nearest



million, submit for the approval of the

board in advance.

7.3 The Company acquires or disposes of

memberships or intangible assets or

right-of-use assets thereof and the

transaction amount reaches 20 percent

or more of paid-in capital or NT$300

million or more, except in transactions

with a domestic government agency, the

Company shall engage a certified public

accountant prior to the date of

occurrence of the event to render an

opinion on the reasonableness of the

transaction price; the CPA shall comply

with the provisions of Statement of

Auditing Standards No. 20 published by

the ARDF.

NT$20 million, submit for the board

chairman’s approval and present to the

nearest board session for recognition.

For transaction values exceeding

NT$20 million, submit for the

approval of the board in advance.

7.3 The Company acquires or disposes of

memberships or intangible assets and

the transaction amount reaches 20

percent or more of paid-in capital or

NT$300 million or more, except in

transactions with a government

agency, the Company shall engage a

certified public accountant prior to the

date of occurrence of the event to

render an opinion on the

reasonableness of the transaction

price; the CPA shall comply with the

provisions of Statement of Auditing

Standards No. 20 published by the

ARDF.


The Company intends to acquire or

dispose of real property or right of- use

assets thereof from or to a related party,

or when it intends to acquire or dispose

of assets other than real property or right

of- use assets thereof from or to a

related party and the transaction amount

reaches 20 percent or more of paid-in

capital, 10 percent or more of the

Company's total assets, or NT$300

million or more, except in trading of

domestic government bonds or bonds

under repurchase and resale agreements,

or subscription or redemption of money

market funds issued by domestic

securities investment trust enterprises

(SITE), the Company may not proceed

to enter into a transaction contract or


The Company intends to acquire or

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 reaches 20

percent or more of paid-in capital, 10

percent or more of the Company's total

assets, or NT$300 million or more,

except in trading of government bonds

or bonds under repurchase and resale

agreements, or subscription or

redemption of money market funds

issued by domestic securities

investment trust enterprises (SITE),

the Company may not proceed to enter

into a transaction contract or make a

payment until the following matters

9.2 To add

right-of-use assets

thereof

accordance with

revision of

regulation

24


make a payment until the following

matters have been and approved by the

audit committee and resolved by the

board of directors:

9.2.3With respect to the acquisition of real

property or right of- use assets thereof

from a related party, information

regarding appraisal of the

reasonableness of the preliminary

transaction terms in accordance with

section 9.3.

9.2.7 Restrictive covenants and other

important stipulations associated with

the transaction.

With respect to the types of transactions

listed below , when to be conducted

between the Company and its parent or

subsidiaries , or between its subsidiaries

in which it directly or indirectly holds

100 percent of the issued shares or

authorized capital, the Company's board

of directors may delegate the board

chairman to decide such matters 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.

Where the position of independent director

has been created in accordance with the

provisions of the Act, when a matter is

submitted for discussion by the board of

directors pursuant to the preceding

paragraph, the board of directors shall

take into full consideration each

have been and approved by the audit

committee and resolved by the board

of directors:

9.2.3With respect to the acquisition of real

property from a related party,

information regarding appraisal of the

reasonableness of the preliminary

transaction terms in accordance with

section 9.3.

9.2.7 Restrictive covenants and other

important stipulations associated with

the transaction.

With respect to the acquisition or disposal

of business-use equipment between the

Company and its parent or

subsidiaries, the Company's board of

directors may delegate the board

chairman to decide such matters when

the transaction is within a certain

amount and have the decisions

subsequently submitted to and ratified

by the next board of directors meeting.

Where the position of independent director

has been created in accordance with

the provisions of the Act, when a

matter is submitted for discussion by

the board of directors pursuant to the

preceding paragraph, the board of

9.2.3 To add

right-of-use assets

thereof

accordance with

revision of

regulation.

9.2.7 To amend

accordance with

revision of

regulation.

25


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.

Where an audit committee has been

established shall first be approved by

more than half of all audit committee

members and then submitted to the

board of directors for a resolution. If

approval of more than half of all audit

committee members as required is not

obtained, the procedures may be

implemented if approved by more than

two-thirds of all directors, and the

resolution of the audit committee shall

be recorded in the minutes of the board

of directors meeting. The terms "all

audit committee members" and "all

directors" shall be counted as the actual

number of persons currently holding

those positions.

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


of directors meeting.

Where an audit committee has been

established in accordance with the

provisions of the Act, the matters

which requires recognition by the

supervisors shall first be approved by

more than half of all audit committee

members and then submitted to the

board of directors for a resolution. If

approval of more than half of all audit

committee members as required is not

obtained, the procedures may be

implemented if approved by more than

two-thirds of all directors, and the

resolution of the audit committee shall


of directors meeting. The terms "all

audit committee members" and "all

directors" shall be counted as the

actual number of persons currently

holding those positions.

Since audit

committee was

established，delete

related regulation

of supervisors.

9.3.1 The Company that acquires real

property or right-of-use assets thereof

from a related party shall evaluate the

reasonableness of the transaction costs

by the following means:

Where land and structures thereupon are

combined as a single property purchased

or leased in one transaction, the

transaction costs for the land and the

structures may be separately appraised

in accordance with either of the means

listed in section 9.3.1.1 and 9.3.1.2.

9.3.1 The Company that acquires real

property from a related party shall

evaluate the reasonableness of the

transaction costs by the following

means:

Where land and structures thereupon are

combined as a single property

purchased in one transaction, the

transaction costs for the land and the

structures may be separately appraised

in accordance with either of the means

9.3.1&9.3.1.2.1&

9.3.1.2.2 To add

right-of-use assets

thereof

accordance with

revision of

regulation.

26


The Company that acquires real property or

right-of-use assets thereof from a related

party and appraises the cost of the real

property or right-of-use assets thereof in

accordance with first two paragraphs

shall also engage a CPA to check the

appraisal and render a specific opinion.

Where the Company acquires real property

or right-of-use assets thereof from a

related party and one of the following

circumstances exists, the acquisition

shall be conducted in accordance with

section 9.2 and do not apply the first

three paragraphs:

9.3.1.2.1 The related party acquired the real

property or right-of-use assets

thereof through inheritance or as a

gift.

9.3.1.2.2 More than 5 years will have

elapsed from the time the related

party signed the contract to obtain

the real property or right-of-use

assets thereof to the signing date for

the current transaction.

9.3.1.2.4 The real property right-of-use

assets for business use are acquired

by the Company with its parent or

subsidiaries, or by its subsidiaries in

which it directly or indirectly holds

100 percent of the issued shares or

authorized capital.

9.3.2.1.2 Completed transactions by

unrelated parties within the

preceding year involving other

floors of the same property or

neighboring or closely valued

parcels of land, where the land

area and transaction terms are

similar after calculation of

reasonable price discrepancies in

listed in section 9.3.1.1 and 9.3.1.2.

The Company that acquires real property

from a related party and appraises the

cost of the real property in accordance

with 9.3.1.1 and 9.3.1.2 shall also

engage a CPA to check the appraisal

and render a specific opinion.

Where the Company acquires real property

from a related party and one of the

following circumstances exists, the

acquisition shall be conducted in

accordance with section 9.2 and do not

apply the paragraph 1~3 of the section

9.3.1.1 and section 9.3.1.2:

9.3.1.2.1 The related party acquired the real

property through inheritance or as

a gift.

9.3.1.2.2 More than 5 years will have

elapsed from the time the related

party signed the contract to obtain

the real property to the signing

date for the current transaction.

NA

9.3.2.1.2 Completed transactions by

unrelated parties within the

preceding year involving other

floors of the same property or


parcels of land, where the land

9.3.1.2.4 To

amend

accordance with

revision of

regulation.

9.3.2.1.2 To

amend

accordance with

revision of

regulation.

27


floor or area land prices in

accordance with standard property

market sale or leasing practices.

NA

9.3.2.2 Where the Company acquiring real

property, or obtaining real

property right-of-use assets

through leasing , from a related

party provides evidence that the

terms of the transaction are similar

to the terms of completed

transactions involving neighboring

or closely valued parcels of land

of a similar size by unrelated

parties within the preceding year.

9.3.2.3 Completed transactions involving


parcels of land in the preceding

paragraph in principle refers to

parcels on the same or an adjacent

block and within a distance of no

more than 500 meters or parcels

close in publicly announced current

value; transactions involving

similarly sized parcels in principle

refers to transactions completed by

unrelated parties for parcels with a

land area of no less than 50 percent

of the property in the planned

transaction; within the preceding

area and transaction terms are

similar after calculation of

reasonable price discrepancies in

floor or area land prices in

accordance with standard

property market sale practices.

9.3.2.1.3 Completed leasing transactions

by unrelated parties for other

floors of the same property from

within the preceding year, where

the transaction terms are similar

after calculation of reasonable

price discrepancies among floors

in accordance with standard

property leasing market

practices.

9.3.2.2 Where the Company acquiring

real property from a related party

provides evidence that the terms

of the transaction are similar to

the terms of transactions

completed for the acquisition of


parcels of land of a similar size

by unrelated parties within the

preceding year.

9.3.2.3 Completed transactions for


parcels of land in the

preceding paragraph in

principle refers to parcels on

the same or an adjacent block

and within a distance of no

more than 500 meters or

parcels close in publicly

announced current value;

transaction for similarly sized

9.3.2.1.3 To

delete accordance

with revision of

regulation.

9.3.2.2 To amend

accordance with

revision of

regulation.

9.3.2.3 To amend

accordance with

revision of

regulation.

28


year refers to the year preceding the

date of occurrence of the

acquisition of the real property or

obtainment of the right-of-use

assets thereof.

9.3.3 Where the Company acquires real


thereof from a related party and

the results of appraisals conducted

in accordance with section 9.3.1

and section 9.3.2 are uniformly

lower than the transaction price,

the following steps shall be taken:

9.3.3.1 A special reserve shall be set aside

in accordance with Article 41,

paragraph 1 of the Act against the

difference between the real property

or right-of-use assets thereof

transaction price and the appraised

cost, and may not be distributed or

used for capital increase or issuance

of bonus shares. Where the

Company uses the equity method to

account for its investment in

another company, then the special

reserve called for under Article 41,

paragraph of the Act shall be set

aside pro rata in a proportion

consistent with the share of public

company's equity stake in the other

company.

parcels in principle refers to

transactions completed by

unrelated parties for parcels

with a land area of no less

than 50 percent of the

property in the planned

transaction; within the

preceding year refers to the

year preceding the date of

occurrence of the acquisition

of the real property.

9.3.3 Where the Company acquires real

property from a related party and

the results of appraisals

conducted in accordance with

section 9.3.1 and section 9.3.2

are uniformly lower than the

transaction price, the following

steps shall be taken:

9.3.3.1 A special reserve shall be set

aside in accordance with

Article 41, paragraph 1 of the

Act against the difference

between the real property

transaction price and the

appraised cost, and may not

be distributed or used for

capital increase or issuance

of bonus shares. Where the

Company uses the equity

method to account for its

investment in another

company, then the special

reserve called for under

Article 41, paragraph of the

Act shall be set aside pro rata

in a proportion consistent

9.3.3 To amend

accordance with

revision of

regulation.

9.3.3.1 To amend

accordance with

revision of

regulation.

29


with the share of public

company's equity stake in the

other company.

The Company that has set aside a special

reserve under the preceding paragraph may

not utilize the special reserve until it has

recognized a loss on decline in market

value of the assets it purchased or leased at

a premium, or they have been disposed of,

or the leasing contract has been terminatd,

or adequate compensation has been made,

or the status quo ante has been restored, or

there is other evidence confirming that

there was nothing unreasonable about the

transaction, and the FSC has given its

consent.

When the Company obtains real property or

right-of-use assets thereof from a related

party, it shall also comply with the

preceding two paragraphs if there is other

evidence indicating that the acquisition was

not an arms length transaction.

The Company that has set aside a special

reserve under the preceding paragraph

may not utilize the special reserve until it

has recognized a loss on decline in market

value of the assets it purchased at a

premium, or they have been disposed of,

or adequate compensation has been made,

or the status quo ante has been restored, or

there is other evidence confirming that

there was nothing unreasonable about the

transaction, and the FSC has given its

consent.

When the Company obtains real property

from a related party, it shall also comply

with the preceding two paragraphs if there

is other evidence indicating that the

acquisition was not an arms length

transaction.

To amend

accordance with

revision of

regulation.

11.1.3.1 Hedge Trade:

A. Qualify for hedge accounting:

Booking the transaction with hedge

accounting principle when it follows the

hedge IFRS standards.


A. Qualify for hedge accounting:

Booking the transaction with hedge

accounting principle when it follows

the hedge accounting standards(Note

1)

(Note 1) “Hedge accounting” is

defined in accordance with the R.O.C.

Statement of Financial Accounting

Standards (SFAS) No. 34 before

December 31, 2012 and then in

accordance with the International

Accounting Standard 39 since January

1, 2013.

To amend

accordance with

IFRS.


A.Access the efficiency of hedging:

In order to apply to hedge

accounting, the hedge is expected to


A.Access the efficiency of hedging: In

order to apply to hedge accounting, the

hedge is expected to be highly

To amend

accordance with

IFRS.

30


be highly effective in achieving

offsetting changes in fair value or

cash flows attributable to the hedged

risk.

effective (80%~125%) in achieving

offsetting changes in fair value or cash

flows attributable to the hedged risk.

11.5.3.1 The board shall appoint the head of

internal audit to conduct an audit on the

supervision of derivative trade and the

suitability of the internal control

procedure in accordance with this

procedure and the “Implementation

Procedure of Internal Audit” for

compliance. If any discrepancy is

discovered, request the top officer of the

Financial Division to take necessary

measures and immediately report to the

board and the audit committee.

11.6 Internal Audit System

All internal auditors shall be fully aware

of the suitability of the internal control

of financial derivative trade regularly in

accordance with this procedure and the

“Implementation Procedure of Internal

Audit”, and shall base on the audit

findings from the trading department on

compliance and the analysis of the

transaction cycle to prepare an audit

report. Where materiality may be

discovered, notify the audit committee

in writing.

11.5.3.1 The board shall appoint the head

of internal audit to conduct an audit on

the supervision of derivative trade and

the suitability of the internal control

procedure in accordance with this


Procedure of Internal Audit” for

compliance. If any discrepancy is

discovered, request the top officer of

the Financial Division to take

necessary measures and immediately

report to the board and the audit

committee.

11.6 Internal Audit System

All internal auditors shall be fully

aware of the suitability of the internal

control of financial derivative trade

regularly in accordance with this


Procedure of Internal Audit”, and shall

base on the audit findings from the

trading department on compliance and

the analysis of the transaction cycle to

prepare an audit report. Where

materiality may be discovered, notify

the audit committee in writing.

11.5.3.1&11.6 To

amend in

Chinese

version,English

version no change

for same

translation.

E.Where any of the companies participating

in a merger, demerger, acquisition, or

transfer of another company's shares is

neither listed on an exchange nor has its

shares traded on an OTC market, the

Company(s) so listed or traded shall sign an

agreement with such company whereby the

latter is required to abide by the provisions

of section 12.2.A~12.2.D.

E.Where any of the companies

participating in a merger, demerger,

acquisition, or transfer of another

company's shares is neither listed on

an exchange nor has its shares traded

on an OTC market, the Company(s) so

listed or traded shall sign an agreement

with such company whereby the latter

is required to abide by the provisions

of section 12.2.C and 12.2.D.

To amend article

name.

31


13. Enforcement, Punishment and Reward

Investment and Finance are the

departments in charge of the execution

of securities investments. Users and

relevant departments shall be in charge

of the acquisition or disposition of

realty, equipment , or right-of-use

assets thereof and other assets.

Relevant personnel who defy this

procedure shall be liable for

punishment in accordance with the

“Regulation for Reward and

Punishment” or other related

regulations.

13. Enforcement, Punishment and Reward

Investment and Finance are the

departments in charge of the

execution of securities investments.

Users and relevant departments shall

be in charge of the acquisition or

disposition of realty and equipment.

Relevant personnel who defy this

procedure shall be liable for

punishment in accordance with the

“Regulation for Reward and

Punishment” or other related

regulations.

To amend

accordance with

revision of

regulation.

14.1 Acquisition or disposal of real property

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

related party, or acquisition or disposal

of assets other than real property or

right-of-use assets thereof from or to a

related party where the transaction

amount reaches 20 percent or more of

paid-in capital, 10 percent or more of the


million or more; provided, this shall not

apply to trading of domestic government

bonds or bonds under repurchase and

resale agreements, or subscription or


issued by domestic securities investment

trust enterprises (SITE).

14.3 Losses from derivatives trading

reaching the limits on aggregate losses

or losses on individual contracts set

out in the procedures adopted by the

Company.

14.4 Where equipment or right-of-use

assets thereof for business use are

acquired or disposed of , and

furthermore the transaction

counterparty is not a related party, and

14.1 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

reaches 20 percent or more of paid-in

capital, 10 percent or more of the


million or more; provided, this shall

not apply to trading of government

bonds or bonds under repurchase and

resale agreements, or subscription or


issued by domestic securities

investment trust enterprises (SITE).

14.3 Losses from derivatives trading

reaching the limits on aggregate

losses or losses on individual

contracts set out in the procedures

adopted by the Company.

14.4 Where the type of asset acquired or

disposed is equipment for business

use, the trading counterparty is not a

related party, and the transaction

14.1&14.3&&14.

4&14.5&14.6.1&

14.6.2&14.7.3&1

4.8 To amend

accordance with

revision of

regulation.

32


the transaction amount meets any of

the following criteria:

14.5 Where land is acquired under an

arrangement on engaging others to

build on the Company's own land,

engaging others to build on rented

land, joint construction and allocation

of housing units, joint construction and

allocation of ownership percentages, or

joint construction and separate sale,

and furthermore the transaction

counterparty is not a related party, and

the amount the Company expects to

invest in the transaction reaches

NT$500 million.

14.6 Where an asset transaction other than

any of those referred to Section 14.1 to

14.5, a disposal of receivables by a

financial institution, or an investment

in the mainland China area reaches 20

percent or more of paid-in capital or

NT$300 million; provided, this shall

not apply to the following

circumstances:

14.6.1Trading of domestic

government bonds

14.6.2 Investment is taken as a profession

and conduct trade of marketable

securities in stock exchanges or

OTC markets, or subscription of

ordinary corporate bonds or general

bank debentures without equity

characteristics (excluding

subordinated debt)that are offered

and issued in the primary market, or

subscription or redemption of

securities investment trust funds of

futurs trust funds,or subdcription by

a securities firm of securities as

necessitated by its undertaking

amount meets any of the following

criteria:

14.5 Where land is acquired under an

arrangement on engaging others to

build on the Company's own land,

engaging others to build on rented

land, joint construction and allocation

of housing units, joint construction

and allocation of ownership

percentages, or joint construction and

separate sale, and the amount the

Company expects to invest in the

transaction reaches NT$500 million.

14.6 Where an asset transaction other

than any of those referred to Section

14.1 to 14.5, a disposal of receivables

by a financial institution, or an

investment in the mainland China

area reaches 20 percent or more of

paid-in capital or NT$300 million;

provided, this shall not apply to the

following circumstances:

14.6.1Trading of government bonds

14.6.2 Investment is taken as a

profession and conduct trade of

marketable securities in

domestic or overseas stock

exchanges or OTC markets, or

subscription by investment

professionals of ordinary

corporate bonds or of general

bank debentures without equity

characteristics that are offered

and issued in the domestic

primary market, or subscription

by a securities firm of

securities as necessitated by its

undertaking business or as an

33


business or as an advisory

recommending securities firm for

an emerging stock company, in

accordance with relevant

regulations.

14.7.3 The cumulative transaction amount

of acquisitions and

disposals(cumulative acquisitions

and disposals,respectively)of real


thereof within the same

development project within the

preceding year.

14.8 “Within the precding year” as used in

the preceding paragraph refers to the

year preceding the date of occurrence of

the current transaction.Items duly

announced in accordance with these

Regulations need not be counted toward

the transaction amount.the Company

shall compile monthly reports on the

status of derivatives trding engaged in up

to the end of the preceding month by the

company and any subsidiaries that are

not domestic public companies and enter

the information in the prescribed format

into the information reporting website

designated by the FSC by the 10th day of

each month.When the Company at the

time of public announcement makes an

error or omission in an item required by

regulations to be publicly announced and

so is required to correct it, all the items

shall be again publicly announced and

reported in their entirety within two days

counting inclusively from the date of

knowing of such error or omission.the

Company acquiring or disposing of

assets shall keep all relevant

contracts,meeting minutes,log

advisory recommending

securities firm for an emerging

stock company, in

accordance with relevant

regulations.

14.7.3 The amount of the same

development project accumulated

from disposition or acquisition

(counted separately) in one year.

14.8 One year shall be defined as the

period from the day of transaction

to calendar year in retrospect.

Transactions already announced

under the “Criteria for The

Acquisition or Disposition of

Assets by Public Companies”

shall not be included. the

Company shall report to the FSC

the status of derivative trade

conducted by the Company and its

subsidiaries which are not public

company in the country of the

month in the required format to

the required website by the 10th

day of the next month. When the

company at the time of public

announcement makes an error or

omission in an item required by

regulations to be publicly

announced and so is required to

correct it, all the items shall be

again publicly announced and

reported in their entirety within

two days counting inclusively

from the date of knowing of such

error or omission. The Company

shall retain related contracts,

34


books,appraisal reports and

CPA,attorney, and securities underwriter

opinions at the company,where they

shall be retained for five years except

where another act provides otherwise.

meeting minutes, record books,

appraisal reports, statements of

opinions expressed by public

auditors, lawyers and/or security

underwriters in its office for five

years unless otherwise required by

law.

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

Company shall be the standard

applicable to a subsidiary referred to in

the preceding paragraph in determining

whether, relative to paid-in capital or

total assets,it reaches a threshold

requiring public announcement and

regulatory filing under section 14.

17. The paid-in capital or total assets of

the Company shall be the standard for

determining whether or not a

subsidiary referred to in the preceding

paragraph is subject to section

14requiring a public announcement

and regulatory filing in the event the

type of transaction specified therein

reaches 20 percent of paid-in capital or

10 percent of the total assets.

To amend

accordance with

revision of

regulation.

20.The Measures were established on Feb

6th, 2003.

The First Amendment was made on

June 14th, 2005.

The Second Amendment was made on

June 21st, 2006.

The Thrid Amendment was made on June

21st, 2007.

The Fourth Amendment was made on

June 19nd, 2012.

The Fifth Amendment was made on June

19nd, 2014.

The Sixth Amendment was made on June

22nd, 2017.

The Seventh Amendment was made on

June 21st, 2019.

NA Addition of date

of amendment

35

Lite-On Technology Corporation Attachment 9

“Regulations Governing Loaning of Funds and Making of Endorsements/guarantees”

Contents before and after Amendment in Comparison

Contents after Amendment Contents before Amendment Explanation

1.1 Purpose

This Regulations Governing Loaning of

Funds and Making Endorsements/

Guarantees (“the Regulation” hereinafter)

are based on the " Regulations Governing

Loaning of Funds and Making

Endorsements/ Guarantees by Public

Companies" promulgated by the

Financial Supervisory Commission. All

loaning and endorsements/ guarantees by

the Company must be carried out in

accordance with this Regulation, unless

otherwise stipulated in the Financial law.

1.1 Purpose

This Regulations Governing Loaning of

Funds and Making Endorsements/

Guarantees (“the Regulation” hereinafter)

are based on the " Regulations Governing

Loaning of Funds and Making

Endorsements/ Guarantees by Public

Companies" promulgated by the Financial

Supervisory Commission. All loaning and

endorsements/ guarantees by the Company

must be carried out in accordance with this

Regulation, unless otherwise stipulated in

the law.

Duly

amended in

accordance

with the

law.

1.2 Loaned Party and Conditions

A borrower of the company shall meet one of the

following eligibility conditions:

1.2.1 Having inter-company or inter-firm business

transaction with the company; or

1.2.2 Being a subsidiary of the company where the

company holds more than 50% of its common

shares directly or indirectly, and a subsidiary of

the company where the company holds less than

50% of its common shares directly or indirectly

but have significant influence on the subsidiary,

and where an inter-company or inter-firm

short-term financing facility is necessary; or

1.2.3 In addition to the previous 2 items, Being a

company or proprietor who has good credit record

and is in need of short-term facility as a fund for

the purchase of materials, as short-term facility

leverage, as capital spending or as working capital

The term "short-term" as used in the preceding

paragraph means one year.

1.2 Loaned Party and Conditions

A borrower of the company shall meet one

of the following eligibility

conditions:

1.2.1 Having inter-company or inter-firm

business transaction with the

company; or

1.2.2 Being a subsidiary of the company

where the company holds more than

50% of its common shares directly

or indirectly, and where an

inter-company or inter-firm

short-term financing facility is

necessary; or

1.2.3 In addition to the previous 2 items,

Being a company or proprietor who

has good credit record and is in need

of short-term facility as a fund for

the purchase of materials, as

short-term facility leverage, as

capital spending or as working

capital

The term "short-term" as used in the

preceding paragraph means one year.

1. Duly

amended in

accordance

with the

operation

needs and

the law

36

2.2.4 In financing between the company’s

100% directly or indirectly owned foreign

subsidiaries, or the company’s 100% directly or

indirectly owned foreign subsidiaries finance to

the company, the aggregate amount of loans and

the maximum amount permitted to such a

company will not be subject to the limitation of

40% of the net worth of the lender as stated in the

most recent financial statement, but still needs to

establish a lending limit.

2.2.4 In financing between the

company’s 100% directly or indirectly

owned foreign subsidiaries, the aggregate

amount of loans and the maximum amount

permitted to such a company will not be

subject to the limitation of 40% of the net

worth of the lender as stated in the most

recent financial statement, but still needs to

establish a lending limit.

Duly

amended in

accordance

with the

law.

2.2.5 If the company processed the loans and

breach the regulation of 1.2 and 2.2, in accordance

with clause sixth set in the " Regulations

Governing Loaning of Funds and Making of

Endorsements/Guarantees by Public Companies”,

the chairman of the company shall be jointly and

severally liable to the borrower, and if the

company is injured, it shall also be liable for

damages."

N/A Duly

amended in

accordance

with the

law. (Newly

added)

2.6.2 In case of endorsements / guarantees by

the Company to a firm where the Company holds

over 50% of the voting power either directly or

indirectly, or by the firm directly or indirectly

holds more than 50% of the voting shares of the

Company. (1.3.2.2 and 1.3.2.3) or endorsements /

guarantees with companies where the Company

holds over 90% of the voting power either directly

or indirectly (1.3.2.4), the total amount of

individual endorsements / guarantees shall not

exceed 10% of the net worth shown through the

Company’s latest financial statements.

2.6.2 In case of endorsements /

guarantees by the Company to a firm

where the Company holds over 50% of the

voting power either directly or indirectly

(1.3.2.2 and 1.3.2.3) or endorsements /

guarantees with companies where the

Company holds over 90% of the voting

power either directly or indirectly

(1.3.2.4), the total amount of individual

endorsements / guarantees shall not exceed

10% of the net worth shown through the

Company’s latest financial statements.

1. Duly

amended in

accordance

with the

operation

needs and

the law

2.6.3 The total amount of individual

endorsements/guarantees granted by the Company

to a single company or among the Company and

companies where the Company holds over 90% of

the voting power either directly or indirectly shall

not exceed 10% of the net worth shown through

the Company’s latest term financial statements.

Where the Company grants endorsements /

guarantees to a corporation where the Company

maintains a business relationship, unless otherwise

prescribed in other Regulations, the amount of

individual endorsements / guarantees shall be

confined to the total amount of business

transaction accumulated over the past twelve

months and shall not exceed 10% of the net worth

shown through the Company’s latest financial

statements.

2.6.3 The total amount of individual

endorsements/guarantees granted by the

Company to a single company or among

the Company and companies where the

Company holds over 90% of the voting

power either directly or indirectly shall not

exceed 10% of the net worth shown

through the Company’s latest term

financial statements. Where the

Company grants endorsements / guarantees

to a corporation where the Company

maintains a business relationship, unless

otherwise prescribed in other Regulations,

the amount of individual endorsements /

guarantees shall be confined to the total

amount of business transaction

accumulated over the past twelve months

and shall not exceed 5% of the paid-in

capital of the guaranteed beneficiary.

Duly

amended in

accordance

with the

law.

37

3.2.3 The Company shall notify the Independent

Director in writing of any major irregularities, and

shall also send to the independent Director the

improvement plan stipulated in the breach of

governing loaning of funds and making of

endorsements/guarantees

N/A Duly

amended in

accordance

with the

law. (Newly

added)

5.2 Date of occurrence” in these Regulations

means the date of contract signing, date of

payment, dates of boards of directors resolutions,

or other date that can confirm the counterparty and

monetary amount of the loaning of funds and

endorsements/guarantees, whichever date is

earlier. The company whose loans reach one of the

following levels shall announce and report such

event within two days commencing immediately

from the date of occurrence.

5.2 Date of occurrence” in these

Regulations means the date of contract

signing, date of payment, dates of boards

of directors resolutions, or other date that

can confirm the counterparty and monetary

amount of the transaction, whichever date

is earlier. The company whose loans reach

one of the following levels shall announce

and report such event within two days

commencing immediately from the date of

occurrence.

Duly

amended in

accordance

with the

law.

5.2.2.3 The aggregate balance of

endorsements/guarantees by the Company and its

subsidiaries for a single enterprise reaches NT$10

million or more and the aggregate amount of all

endorsements/guarantees for, book value of the

equity method long term investment, and balance

of loans to, such enterprise reaches 30 percent or

more of the Company's net worth as stated in its

latest financial statement.

5.2.2.3 The aggregate balance of

endorsements/guarantees by the Company

and its subsidiaries for a single enterprise

reaches NT$10 million or more and the

aggregate amount of all

endorsements/guarantees for, investment of

a long-term nature in, and balance of loans

to, such enterprise reaches 30 percent or

more of the Company's net worth as stated

in its latest financial statement.

Duly

amended in

accordance

with the

law.

6 Announcement of implementation and

amendment

6.1 This Regulation should be approved by the

Board of Directors, and then forwarded to

Supervisors and recognized in shareholders’

meeting before implementation.

Amendments to this Regulation should be

approved by more than half of the members

of the Audit Committee, and forwarded to the

Board of Directors for its resolution. If the

approval from more than half of the Audit

Committee’s members is not obtained, the

amendments may be approved by more than

two-thirds of all the Directors, but the Audit

Committee’s resolution should be recorded in

the Board of Directors’ meeting minutes.

The Amendments should be implemented

only after they are approved by the Board of

Directors and then recognized in

shareholders’ meeting; where any director

expresses dissent and it is contained in the

minutes or a written statement, the company

shall submit the dissenting opinion to the

audit committee and for discussion by the

6 Announcement of implementation

and amendment

6.1 This Regulation should be approved by

the Board of Directors, and then

forwarded to Supervisors and

recognized in shareholders’ meeting

before implementation.

Amendments to this Regulation should

be approved by more than half of the

members of the Audit Committee, and

forwarded to the Board of Directors for

its resolution. If the approval from more

than half of the Audit Committee’s

members is not obtained, the

amendments may be approved by more

than two-thirds of all the Directors, but

the Audit Committee’s resolution

should be recorded in the Board of

Directors’ meeting minutes.

The Amendments should be

implemented only after they are

approved by the Board of Directors and

then recognized in shareholders’

meeting.

Duly

amended in

accordance

with the

law.

38

shareholders' meeting.

The aforementioned members of the Audit

Committee and Directors refer to those who

are incumbent.

The aforementioned members of the

Audit Committee and Directors refer to

those who are incumbent.

6.2 Where the members of the BoD may have

different opinions assent or dissent to the

amendment of this regulation, their opinions shall

be duly observed and stated in the resolution of

the BoD.

6.2 Where the members of the BoD may

have different opinions for or against

making this regulation or any amendment

thereafter, their opinions shall be duly

observed and stated in the resolution of the

BoD.

Duly

amended in

accordance

with the

law.

7

The Measures were established on May 13, 2003.

The First Amendment was made on June 15, 2004.

The Second Amendment was made on June 21, 2006.

The Third Amendment was made on June 21, 2007.

The Fourth Amendment was made on June 22, 2009.

The Fifth Amendment was made on June 15, 2010.

The Sixth Amendment was made on June 19, 2012.

The Seventh Amendment was made on June 19, 2013.

The Eighth Amendment was made on June 24, 2015.

The Ninth Amendment was made on June 22, 2017.

The Tenth Amendment was made on June 21, 2019.

7

The Measures were established on May 13th, 2003.

The First Amendment was made on June 15th, 2004.

The Second Amendment was made on June 21st, 2006.

The Third Amendment was made on June 21st, 2007.

The Fourth Amendment was made on June 22nd, 2009.

The Fifth Amendment was made on June 15nd, 2010.

The Sixth Amendment was made on June 19nd, 2012.

The Seventh Amendment was made on June 19nd, 2013.

The Eighth Amendment was made on June 24nd, 2015.

The Ninth Amendment was made on June 22nd, 2017.

Addition of

date of

amendment

39

Attachment 10

Lite-On Technology Corporation Comparison Table of Amendments to the Rules Governing the Election of

Directors AFTER Amendment BEFORE Amendment Description

Article 1 The cumulative voting method shall be

used for election of Lite-On Technology

Corporation's directors. Each share will

have voting rights in number equal to the

directors to be elected, and may be cast

for a single candidate or split among

multiple candidates. Shareholder numbers

or attendance card numbers printed on the

ballots may be used instead of recording

the names of voting shareholders.

The overall composition of the board of

directors shall be taken into consideration

in the selection of the Company's

directors. The composition of the board of

directors shall be determined by taking

diversity into consideration and

formulating an appropriate policy on

diversity based on Lite-On Technology

Corporation's business operations,

operating dynamics, and development

needs. It is advisable that the policy

include, without being limited to, the

following two general standards:

A. Basic requirements and values:

Gender, age, nationality, race or

ethnicity, and culture.

B. Professional knowledge and skills: A

professional background (e.g., law,

accounting, industry, finance,

marketing, or technology),

professional skills, and industry

experience.

Each board member shall have the

necessary knowledge, skill, and

experience to perform his/her duties. The

abilities that must be present in the board

as a whole are as follows:

A. Ability to make sound business

judgments.

B. Ability to perform accounting and

financial analysis.

C. Ability to manage a business.

D. Ability to handle crisis management.

E. Knowledge of the industry.

Article 2 The cumulative voting method shall be

used for election of Lite-On Technology

Corporation's directors. Each share will

have voting rights in number equal to the

directors to be elected, and may be cast

for a single candidate or split among

multiple candidates. Shareholder numbers

or attendance card numbers printed on the

ballots may be used instead of recording

the names of voting shareholders.

The overall composition of the board of

directors shall be taken into consideration

in the selection of the Company's

directors. The composition of the board of

directors shall be determined by taking

diversity into consideration and

formulating an appropriate policy on

diversity based on Lite-On Technology

Corporation's business operations,

operating dynamics, and development

needs. It is advisable that the policy

include, without being limited to, the

following two general standards:

C. Basic requirements and values:

Gender, age, nationality, and culture.

D. Professional knowledge and skills: A

professional background (e.g., law,

accounting, industry, finance,

marketing, or technology),

professional skills, and industry

experience.

Each board member shall have the

necessary knowledge, skill, and

experience to perform his/her duties. The

abilities that must be present in the board

as a whole are as follows:

I. Ability to make sound business

judgments.

J. Ability to perform accounting and

financial analysis.

K. Ability to manage a business.

L. Ability to handle crisis management.

M. Knowledge of the industry.

N. An international market perspective.

Amendments

pursuant to

strength the

board diversity

40

F. An international market perspective.

G. Leadership ability.

H. Decision-making ability.

O. Leadership ability.

P. Decision-making ability.

Article 4

During the two years before being elected

or during the term of office, independent

directors of Lite-On Technology

Corporation may not have been or be any

of the following:

A. An employee of Lite-On

Technology Corporation or any

of its affiliates.

B. A director or supervisor of

Lite-On Technology

Corporation or any of its

affiliates. Exception shall apply

to independent directors

established by Lite-On

Technology Corporation or its

subsidiary pursuant to the

Securities and Exchange Act or

local laws and regulations.

C. A natural-person shareholder

who holds shares, together with

those held by the person's

spouse, minor children, or held

by the person under others'

names, in an aggregate amount

of one percent or more of the

total number of issued shares of

Lite-On Technology

Corporation, or ranks among

the ten largest natural-person

shareholders.

D. Personnel listed in Subparagraph 2 and 3 and a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship of the managerial officer of the Company or affiliate company.

E. A director, supervisor, or

employee of a corporate

shareholder that directly holds

five percent or more of the total

number of issued shares of

Lite-On Technology

Corporation or of a corporate

Article 4

During the two years before being elected

or during the term of office, independent

directors of Lite-On Technology

Corporation may not have been or be any

of the following:

A. An employee of Lite-On

Technology Corporation or any

of its affiliates.

B. A director or supervisor of

Lite-On Technology

Corporation or any of its

affiliates. Exception shall apply

to independent directors

established by Lite-On

Technology Corporation or its

subsidiary pursuant to the

Securities and Exchange Act or

local laws and regulations.

C. A natural-person shareholder

who holds shares, together with

those held by the person's

spouse, minor children, or held

by the person under others'

names, in an aggregate amount

of one percent or more of the


Lite-On Technology

Corporation, or ranks among

the ten largest natural-person

shareholders.

D. A spouse, relative within the

second degree of kinship, or

lineal relative within the third

degree of kinship, of any of the

persons in the preceding three

subparagraphs.

E. A director, supervisor, or

employee of a corporate

shareholder that directly holds

five percent or more of the total

number of issued shares of

Lite-On Technology

Corporation or of a corporate

shareholder that ranks among

the top five in shareholdings.

Amendments

pursuant to the

Regulations

Governing

Appointment of

Independent

Directors and

Compliance

Matters for

Public

Companies.

41

shareholder that ranks among

the top five in shareholdings.

F. A director, supervisor, officer,

or shareholder holding five

percent or more of the shares,

of a specified company or

institution that has a financial or

business relationship with

Lite-On Technology

Corporation.

A professional individual who,

provides auditing services for

the Company or to any affiliate

of the company, or an owner,

partner, director, supervisor, or

officer of a sole proprietorship,

partnership, company, or

institution that, provides

commercial, legal, financial,

accounting services or

consultation to the company or

to any affiliate of the company,

or a spouse thereof that received

cumulative compensation

totaling over NT$500,000 within

two years. However, this

excludes members of the

Remuneration Committee who

exercise power in accordance

with the Regulations Governing

Appointment of Independent

Directors and Compliance

Matters for Public Companies.

The requirement of the preceding

paragraph in relation to "during the two

years before being elected" does not

apply where an independent director of

Lite-On Technology Corporation has

served as an independent director of

Lite-On Technology Corporation or any

of its affiliates, or of a specified company

or institution that has a financial or

business relationship with Lite-On

Technology Corporation, as stated in

subparagraph 2 or 6 of the preceding

paragraph, but is currently no longer in

that position.

A. The term "specified company or

institution" as used in

paragraph 1, subparagraph 6,

means a company or institution

that has one of the following

relationships with the

F. A director, supervisor, officer,

or shareholder holding five

percent or more of the shares,

of a specified company or

institution that has a financial or

business relationship with

Lite-On Technology

Corporation.

G. A professional individual who,

or an owner, partner, director,

supervisor, or officer of a sole

proprietorship, partnership,

company, or institution that,

provides commercial, legal,

financial, accounting services or

consultation to the company or

to any affiliate of the company,

or a spouse thereof. However,

this excludes members of the

Remuneration Committee who

exercise power in accordance

with the Regulations Governing

Appointment of Independent

Directors and Compliance

Matters for Public Companies.

The requirement of the preceding

paragraph in relation to "during the two

years before being elected" does not

apply where an independent director of

Lite-On Technology Corporation has

served as an independent director of

Lite-On Technology Corporation or any

of its affiliates, or of a specified company

or institution that has a financial or

business relationship with Lite-On

Technology Corporation, as stated in

subparagraph 2 or 6 of the preceding

paragraph, but is currently no longer in

that position.

E. The term "specified company or

institution" as used in

paragraph 1, subparagraph 6,

means a company or institution

that has one of the following

relationships with the

Company: It holds 20 percent

or more and no more than 50

percent of the total number of

issued shares of Lite-On

Technology Corporation.

F. It holds shares, together with

those held by any of its

directors, supervisors, and

42

Company: It holds 20 percent

or more and no more than 50

percent of the total number of

issued shares of Lite-On


B. It holds shares, together with

those held by any of its

directors, supervisors, and

shareholders holding more than

10 percent of the total number

of shares, in an aggregate total

of 30 percent or more of the


the Company, and there is a

record of financial or business

transactions between it and the

Company. The shareholdings of

any of the aforesaid persons

include the shares held by the

spouse or any minor child of

the person or by the person

under others' names.

C. It and its group companies are

the source of 30 percent or

more of the operating revenue

of the Company.

D. It and its group companies are


more of the total volume or

total purchase amount of

principal raw materials (those

that account for 30 percent or

more of total procurement

costs, and are indispensable and

key raw materials in product

manufacturing) or principal

products (those accounting for

30 percent or more of total

operating revenue) of the

Company.

For the purposes of the preceding

paragraph, the terms "subsidiary" and

"group" shall have the meanings as

determined under International Financial

Reporting Standards 10.

No independent director may

concurrently serve as an independent

director of more than three other public

companies.

shareholders holding more than

10 percent of the total number

of shares, in an aggregate total

of 30 percent or more of the


the Company, and there is a

record of financial or business

transactions between it and the

Company. The shareholdings of

any of the aforesaid persons

include the shares held by the

spouse or any minor child of

the person or by the person

under others' names.

G. It and its group companies are


more of the operating revenue

of the Company.

H. It and its group companies are


more of the total volume or

total purchase amount of

principal raw materials (those

that account for 30 percent or

more of total procurement

costs, and are indispensable and

key raw materials in product

manufacturing) or principal

products (those accounting for

30 percent or more of total

operating revenue) of the

Company.

For the purposes of the preceding

paragraph, the terms "subsidiary" and

"group" shall have the meanings as

determined under International Financial

Reporting Standards 10.

No independent director may

concurrently serve as an independent

director of more than three other public

companies.

Article 5

The election of directors (including

Article 5

The election of directors (including

Amendments

pursuant to the

43

independent directors) of Lite-On

Technology Corporation is subject to the

provisions of Article 192-1 of the

Company Act in that a candidate

nomination system shall be adopted, that

such system shall be expressly stated in

the Articles of Incorporation of the

Lite-On Technology Corporation, and

that shareholders shall elect directors

(including independent directors) from

among the those listed in the slate of

director candidates. Regarding review of

director (and independent director)

candidate qualifications, education,

experience, circumstances in Article 30 of

the Company Act exists, documentary

proof of other qualifications cannot be

additionally listed without completing the

appropriate procedures. Review results

shall be presented to the shareholders as a

basis for the consideration and election of

suitable directors (including independent

directors).

Where the number of independent

directors falls below the minimum

specified in the proviso under Article

14-2, Paragraph 1 of the Securities and

Exchange Act and fails to satisfy the

provisions in the Taiwan Stock Exchange

Corporation Rules Governing Review of

Securities Listings, a by-election shall be

held at the next shareholders’ meeting. In

the event that all the independent

directors have been discharged, an

extraordinary shareholders’ meeting shall

be convened to hold a by-election within

sixty days from the date of such

occurrence.

Lite-On Technology Corporation shall

prior to the book closure date before the

convening of the shareholders' meeting,

publish a notice specifying a period for

receiving nominations of director

(including independent director)

candidates, the number of directors

(including independent directors) to be

elected, the place for receiving such

nominations, and other necessary matters;

the period for receiving nominations shall

be not less than 10 days.

Lite-On Technology Corporation may

present a slate of director (including

independent director) candidates

independent directors) of Lite-On

Technology Corporation is subject to the

provisions of Article 192-1 of the

Company Act in that a candidate

nomination system shall be adopted, that

such system shall be expressly stated in

the Articles of Incorporation of the

Lite-On Technology Corporation, and

that shareholders shall elect directors

(including independent directors) from

among the those listed in the slate of

director candidates. Regarding review of

director (and independent director)

candidate qualifications, education,

experience, circumstances in Article 30 of

the Company Act exists, documentary

proof of other qualifications cannot be

additionally listed without completing the

appropriate procedures. Review results

shall be presented to the shareholders as a

basis for the consideration and election of

suitable directors (including independent

directors).

Where the number of independent

directors falls below the minimum

specified in the proviso under Article

14-2, Paragraph 1 of the Securities and

Exchange Act and fails to satisfy the

provisions in the Taiwan Stock Exchange

Corporation Rules Governing Review of

Securities Listings, a by-election shall be

held at the next shareholders’ meeting. In

the event that all the independent

directors have been discharged, an

extraordinary shareholders’ meeting shall

be convened to hold a by-election within

sixty days from the date of such

occurrence.

Lite-On Technology Corporation shall

prior to the book closure date before the

convening of the shareholders' meeting,

publish a notice specifying a period for

receiving nominations of director


candidates, the number of directors

(including independent directors) to be

elected, the place for receiving such

nominations, and other necessary matters;

the period for receiving nominations shall

be not less than 10 days.

Lite-On Technology Corporation may

present a slate of director (including

independent director) candidates

provisions of

Article 192-1 of

the Company

Act and the

Regulations

Governing

Appointment of

Independent

Directors and

Compliance

Matters for

Public

Companies.

44

nominated by the methods set out below,

and, upon evaluation by the board of

directors that all candidates so nominated

are qualified director (including

independent director) candidates, submit

it to the shareholders' meeting for

elections:

A. A shareholder holding one

percent or more of the total

number of issued shares may

present a slate of director


candidates in writing to the

Company; the number of

nominees may not exceed the

number of directors (including

independent directors) to be

elected.

B. The board of directors presents

a slate of director (including

independent director)

candidates; the number of




elected.

C. Otherwise as designated by the

competent authority.

When providing a recommended slate of

candidates under the preceding

paragraph, a shareholder or the board of

directors shall specify include in the

documentation attached thereto each

nominee's name, educational

background, work experience, a written

undertaking indicating the nominee's

consent to serve as a director (or

independent director) if elected as such, a

written statement that none of the

circumstances in Article 30 of the

Company Act exists, and other relevant

documentary proof. independent director

nominees in the preceding paragraph and

provide documents specified in Article 3,

Paragraph 1 and Article 4 regarding

qualifications of the nominees and other

certification documents

If independent directors are nominated,

the board of directors, or other person

having the authority to call a

shareholders' meeting, shall review the

qualifications of each director (including

independent director) nominee; except

nominated by the methods set out below,

and, upon evaluation by the board of

directors that all candidates so nominated

are qualified director (including

independent director) candidates, submit

it to the shareholders' meeting for

elections:

A. A shareholder holding one

percent or more of the total

number of issued shares may

present a slate of director


candidates in writing to the

Company; the number of




elected.

B. The board of directors presents

a slate of director (including

independent director)

candidates; the number of




elected.

C. Otherwise as designated by the


When providing a recommended slate of

candidates under the preceding

paragraph, a shareholder or the board of

directors shall include in the

documentation attached thereto each

nominee's name, educational

background, work experience, a written

undertaking indicating the nominee's

consent to serve as a director (or

independent director) if elected as such, a

written statement that none of the

circumstances in Article 30 of the

Company Act exists, and other relevant

documentary proof.

The board of directors, or other person

having the authority to call a

shareholders' meeting, shall review the

qualifications of each director (including

independent director) nominee; except

under any of the following

circumstances, all qualified nominees

shall be included in the slate of director


candidates:

45

under any of the following

circumstances, all qualified nominees

shall be included in the slate of director


candidates:

A. Where the nominating

shareholder submits the

nomination at a time not within

the published period for

receiving nominations.

B. Where the shareholding of the

nominating shareholder is less

than one percent at the time of

book closure by the Company

under Article 165, paragraph 2

or 3 of the Company Act.

C. Where the number of nominees

exceeds the number of directors

(including independent

directors) to be elected.

D. Where the nominating

shareholder fails to specify the

name, education, and

experience of the nominee.

E. Where the relevant

documentary proof for

independent directors required


is not attached.

If an independent director candidate

included by the Company under the

provisions of the preceding paragraph

has already served as an independent

director of the Company for three

consecutive terms or more, Lite-On

Technology Corporation shall publicly

disclose, together with the slate of

candidates the review results under the

preceding paragraph, the reasons why the

candidate is nominated again for the

independent directorship, and present the

aforementioned reasons to the

shareholders at the time of the election at

the shareholders’ meeting.

The process of reviewing director


nominees in the preceding paragraph

shall be recorded, and the records shall

be retained for a minimum of one year.

However, in situations where a

shareholder makes a litigious claim

against the director (including

independent director) election process,

A. Where the nominating

shareholder submits the

nomination at a time not within

the published period for

receiving nominations.

B. Where the shareholding of the

nominating shareholder is less

than one percent at the time of

book closure by the Company

under Article 165, paragraph 2

or 3 of the Company Act.

C. Where the number of nominees

exceeds the number of directors

(including independent


D. Where the relevant

documentary proof required


is not attached.

If an independent director candidate

included by the Company under the

provisions of the preceding paragraph

has already served as an independent

director of the Company for three

consecutive terms or more, Lite-On

Technology Corporation shall publicly

disclose, together with the review results

under the preceding paragraph, the

reasons why the candidate is nominated

again for the independent directorship,

and present the aforementioned reasons

to the shareholders at the time of the

election at the shareholders’ meeting.

The process of reviewing director


nominees in the preceding paragraph

shall be recorded, and the records shall

be retained for a minimum of one year.

However, in situations where a

shareholder makes a litigious claim

against the director (including

independent director) election process,

the records shall be retained until the

litigation is concluded.

The Company shall announce the slate of

director (including independent director)

candidates and their education and

experience as well as the number of

shares held by each candidate at least 40

days prior to the upcoming shareholders’

meeting or 25 days prior to the upcoming

extraordinary shareholders’ meeting,

inform the nominating shareholders of

46

the records shall be retained until the

litigation is concluded.

The Company shall announce the slate of


candidates and their education and

experience as well as the number of

shares held by each candidate at least 40

days prior to the upcoming shareholders’

meeting or 25 days prior to the upcoming

extraordinary shareholders’ meeting,

inform the nominating shareholders of

the review results, and, where applicable,

provide detailed reasons for not

including nominees on the slate of


candidates.

A spousal relationship or a familial

relationship within the second degree of

kinship may not exist among more than

half of the directors on the board.

the review results, and, where applicable,

provide detailed reasons for not

including nominees on the slate of


candidates.

A spousal relationship or a familial

relationship within the second degree of

kinship may not exist among more than

half of the directors on the board.

Article 6

Independent and non-independent

directors shall be elected at the same time,

but the numbers of independent or

non-independent directors to be elected

shall be calculated separately. A candidate

to whom the ballots cast represent a

prevailing number of votes shall be

deemed an independent or

non-independent director elect. When two

or more persons receive the same number

of votes, thus exceeding the specified

number of positions, they shall draw lots

to determine the winner, with the chair

drawing lots on behalf of any person not

in attendance.

If the outcome shows that none of the

independent directors candidates with the

highest numbers of votes has accounting

or financial expertise, those candidates

with accounting or financial expertise

shall have their votes counted separately

and one seat shall be awarded to the

candidate with the highest number of

Article 6

Independent and non-independent

directors shall be elected at the same time,

but the numbers of independent or

non-independent directors to be elected

shall be calculated separately. A candidate

to whom the ballots cast represent a

prevailing number of votes shall be

deemed an independent or

non-independent director elect. When two

or more persons receive the same number

of votes, thus exceeding the specified

number of positions, they shall draw lots

to determine the winner, with the chair

drawing lots on behalf of any person not

in attendance.

If the outcome shows that none of the

independent directors candidates with the

highest numbers of votes has accounting

or financial expertise, those candidates

with accounting or financial expertise

shall have their votes counted separately

and one seat shall be awarded to the

candidate with the highest number of

Amendments

pursuant to the

Regulations

Governing

Appointment of

Independent

Directors and

Compliance

Matters for

Public

Companies.

47

votes. The remaining positions shall be

filled as described in the preceding

paragraph.

If an independent director elected at a

shareholders’ meeting is required to be

dismissed ipso facto during the term of

office for reason of a violation of Article

3 or 4 herein, it is prohibited to change

the status of the person from independent

director to non-independent director. A

non-independent director elected at a

shareholders’ meeting likewise may not

be arbitrarily changed from a

non-independent director to an

independent director during the term of

office.

votes. The remaining positions shall be

filled as described in the preceding

paragraph.

If an independent director elected at a

shareholders’ meeting is required to be

dismissed during the term of office for

reason of a violation of Article 3 or 4

herein, it is prohibited to change the status

of the person from independent director to

non-independent director. A

non-independent director elected at a

shareholders’ meeting likewise may not

be arbitrarily changed from a

non-independent director to an

independent director during the term of

office.

Article 17

The rules were established on March 13,

1989.

The first amendment was made on May

19, 1998.

The second amendment was made on

May 21, 2002.

The third amendment was made on June

21, 2007.

The fourth amendment was made on June

19, 2012.

The fifth amendment was made on June

19, 2013.

The sixth amendment was made on June

24, 2015.

The seventh amendment was made on

June 24, 2016.

The eighth amendment was made on June

22XX, 2018.

The 9th amendment was on June 21,

2019.

Article 17

The rules were established on March 13,

1989.

The first amendment was made on May

19, 1998.

The second amendment was made on

May 21, 2002.

The third amendment was made on June

21, 2007.

The fourth amendment was made on June

19, 2012.

The fifth amendment was made on June

19, 2013.

The sixth amendment was made on June

24, 2015.

The seventh amendment was made on

June 24, 2016.

The eighth amendment was made on June

22XX, 2018.

Add new date of

amendment

48

Lite-On Technology Corporation Attachment 11 Details of Discussion of release of directors from non-competition restrictions:

No Position Name Release of Directors from non-competition restrictions

1 Director Raymond

Soong

◼ Chairman of Lite-On Semiconductor Corp.,

DIODES,INC, Lite-On Semi (Wuxi) Co., Ltd.,

Lite-On Semi Electronics (Wuxi) Co., Ltd. and G-Pro

Electronics (SH) Co., Ltd.

◼ Chairman, representative of Silitech Technology

Corp., Co-tech Copper Foil Corporation and

SUZHOU LITE-ON STORAGE CO., LTD.

◼ Director of DYNA International Holding Co.,Ltd.,

DYNA International Co. Ltd, Lite-On Semiconductor

(HK) LTD and On-Bright Electronics Incorporated

◼ Director, representative of Silitech (Hong Kong)

Holding Ltd., Silitech Technology (Su Zhou) Ltd.,

Xurong Electroinc (Shenzhen) Co., Ltd., Silitech

(BVI) Holding Ltd., Silitech (Bermuda) Holding Ltd.,

Silitech Technology Corp. Ltd., Silitech Technology

Corp. Sdn. Bhd. and SKYLA CORPORATION

2 Director Warren Chen

◼ Director of Lite-On Semiconductor Corp., Lite-On

Japan Ltd., KBW-LITEON Jordan Private

Shareholding Limited and KBW-LEOTEK Jordan

Private Shareholding Limited

◼ Director, representative of Philips & Lite-On Digital

Solutions Corporation, Silitech Technology Corp.,

Silitech (BVI) Holding Ltd., Silitech (Bermuda)

Holding Ltd., Silitech Technology Corp. Ltd.,

Silitech Technology Corp. Sdn. Bhd., Silitech (Hong

Kong) Holding Ltd., Silitech Technology (Su Zhou)

Ltd., Xurong Electroinc (Shenzhen) Co., Ltd.,

SKYLA CORPORATION, SUZHOU LITE-ON

STORAGE CO., LTD.

3 Director Tom Soong

◼ Vice Chairman of KBW-LITEON Jordan Private

Shareholding Limited, KBW-LEOTEK Jordan

Private Shareholding Limited and LEOTEK, PSC

◼ Director of Co-tech Copper Foil Corporation

4 Director Keh-Shew Lu

◼ Director of Lorenz Co., Ltd. and Diodes Incorporated

◼ Director, representative of Nuvoton Technology

Corp.

◼ President and CEO of Diodes Incorporated

5 Director CH Chen

◼ Chairman, representative of Lite-On Semiconductor

(Philippines)

◼ Vice Chairman of DIODES, INC. and Lite-On

Semiconductor Corp.

◼ Director of Smart Power Holding Group Co.Ltd.,

G-Pro Electronics (SH) Co., Ltd., DYNA

International Holding Co., Ltd., DYNA International

49

Co., Ltd., Lite-On Semi (Wuxi) Co., Ltd., Lite-On

Semi Electronics (Wuxi) Co., Ltd., Lite-On

Semiconductor (HK) LTD and Smart Power Holding

Group Co. Ltd.

◼ Director, representative of Kwong Lung Enterprise

Co, Ltd.

6 Independent

Director Albert Hsueh

◼ Independent Director of , Yuanta Financial Holding

Co., Ltd. and Yuanta Bank, Walsin Lihwa Corp. and

TTY Biopharmaceutial Manufacturers Association

7 Independent

Director Harvey Chang

◼ Chairman of TVBS, Via On Demand and IC

Broadcasting Co., Ltd.

8 Independent

Director Edward Yang

◼ iD Ventures America, LLC Partner

◼ Chairman of GVT Fund

◼ Director of Sifotonics Technologies, Bandwidth 10

and Neurostim OAB

9 Independent

Director Mike Yang

◼ Chairman of Quanta Cloud Technology Japan Inc.

◼ Director & President of QCT Korea Inc.

◼ Senior Vice President of Quanta Computer Inc.

Cloud Computing Business Unit

◼ President of Quanta Cloud Technology Inc.,

Cloud-Tech (Chongqing) Technology Co., Ltd. and

QCT LLC President

◼ Managing Director of Quanta Cloud Technology

Germany GmbH and QCG Computer GmbH

50

Lite-On Technology Corporation Appendix 1

Rules and Procedures of Shareholders’ Meeting

1. To establish a strong governance system and sound supervisory capabilities for this Company's

shareholders meetings, and to strengthen management capabilities, these Rules are adopted pursuant

to Article 5 of the Corporate Governance Best-Practice Principles for TWSE/GTSM Listed

Companies.

2. The rules of procedures for this Corporation's shareholders meetings, except as otherwise provided by

law, regulation, or the articles of incorporation, shall be as provided in these Rules.

3. Unless otherwise provided by law or regulation, this Corporation's shareholders meetings shall be

convened by the board of directors.

This Corporation shall prepare electronic versions of the shareholders meeting notice and proxy forms,

and the origins of and explanatory materials relating to all proposals, including proposals for

ratification, matters for deliberation, or the election or dismissal of directors or supervisors, and

upload them to the Market Observation Post System (MOPS) before 30 days before the date of a

regular shareholders meeting or before 15 days before the date of a special shareholders meeting. This

Corporation shall prepare electronic versions of the shareholders meeting agenda and supplemental

meeting materials and upload them to the MOPS before 21 days before the date of the regular

shareholders meeting or before 15 days before the date of the special shareholders meeting. In

addition, before 15 days before the date of the shareholders meeting, this Corporation shall also have

prepared the shareholders meeting agenda and supplemental meeting materials and made them

available for review by shareholders at any time. The meeting agenda and supplemental materials

shall also be displayed at this Corporation and the professional shareholder services agent designated

thereby as well as being distributed on-site at the meeting place.

The reasons for convening a shareholders meeting shall be specified in the meeting notice and public

announcement. With the consent of the addressee, the meeting notice may be given in electronic form.

Election or dismissal of directors, amendments to the articles of incorporation, the dissolution, merger,

or demerger of the corporation, or any matter under Article 185, paragraph 1 of the Company Act or

Articles 26-1 and 43-6 of the Securities and Exchange Act , or Articles 56-1 and 60-2 of the

Regulations Governing the Offering and Issuance of Securities by Securities Issuers shall be set out in

the notice of the reasons for convening the shareholders meeting. None of the above matters may be

raised by an extraordinary motion.

A shareholder holding 1 percent or more of the total number of issued shares may submit to this

Company for discussion at a regular shareholders meeting pursuant to Article 172-1 of the Company

Act.

4. For each shareholders meeting, a shareholder may appoint a proxy to attend the meeting by providing

the proxy form issued by this Corporation and stating the scope of the proxy's authorization.

A shareholder may issue only one proxy form and appoint only one proxy for any given shareholders

meeting, and shall deliver the proxy form to this Corporation before 5 days before the date of the

shareholders meeting. When duplicate proxy forms are delivered, the one received earliest shall

prevail unless a declaration is made to cancel the previous proxy appointment.

51

After a proxy form has been delivered to this Corporation, if the shareholder intends to attend the

meeting in person or to exercise voting rights by correspondence or electronically, a written notice of

proxy cancellation shall be submitted to this Corporation before 2 business days before the meeting

date. If the cancellation notice is submitted after that time, votes cast at the meeting by the proxy shall

prevail.

5. The venue for a shareholders meeting shall be the premises of this Corporation, or a place easily

accessible to shareholders and suitable for a shareholders meeting. The meeting may begin no earlier

than 9 a.m. and no later than 3 p.m. Full consideration shall be given to the opinions of the

independent directors with respect to the place and time of the meeting

6. This Company shall furnish the shareholders meeting notice with the time and venue for signing in.

The aforementioned time for signing in shall be at least 30 minutes before the shareholder meeting

starts. There shall be signs to direct shareholders to proceed to the venue for signing in and personnel

who are suitable in charge.

Shareholders or their proxies (collectively, “shareholders”) shall attend shareholders meetings based

on attendance cards, sign-in cards, or other certificates of attendance. This Corporation may not

arbitrarily add requirements for other documents beyond those showing eligibility to attend presented

by shareholders. Solicitors soliciting proxy forms shall also bring identification documents for

verification. This Corporation shall furnish attending shareholders with the meeting agenda book,

annual report, attendance card, speaker's slips, voting slips, and other meeting materials. Where there

is an election of directors or supervisors, pre-printed ballots shall also be furnished.

When the government or a juristic person is a shareholder, it may be represented by more than one

representative at a shareholders meeting. When a juristic person is appointed to attend as proxy, it

may designate only one person to represent it in the meeting.

7. If a shareholders meeting is convened by the board of directors, the meeting shall be chaired by the

chairperson of the board. When the chairperson of the board is on leave or for any reason unable to

exercise the powers of the chairperson, the vice chairperson shall act in place of the chairperson; if the

vice chairperson also is on leave or for any reason unable to exercise the powers of the vice

chairperson, the chairperson shall appoint one of the board of directors to act as chair. Where the

chairperson does not make such a designation, the board or the directors shall select from among

themselves one person to serve as chair.

The board of director who serve as chair shall be in his post for more than six months and familiar

with the Company’s financials and operations. The same applies to the director who serve as chair

and who represents a corporation.

It is advisable that shareholders meetings convened by the board of directors be attended by a

majority of the directors, at least one independent director in person, and at least one member of each

functional committee on behalf of the committee. The attendance shall be recorded in the meeting

minutess.

If a shareholders meeting is convened by a party with power to convene but other than the board of

directors, the convening party shall chair the meeting. When there are two or more such convening

52

parties, they shall mutually select a chair from among themselves.

The Company may appoint its attorneys, certified public accountants, or related persons retained by it

to attend a shareholders meeting in a non-voting capacity.

8. This Corporation shall record the proceedings of a shareholders meeting in their entirety in audio or

video and retain the recording for at least 1 year. If, however, a shareholder files a lawsuit pursuant to

Article 189 of the Company Act, the recording shall be retained until the conclusion of the litigation.

9. Attendance at shareholders meetings shall be calculated based on numbers of shares. The number of

shares in attendance shall be calculated according to the shares indicated by the Notice of attendance

handed in plus the number of shares whose voting rights are exercised by correspondence or

electronically.

The chair shall call the meeting to order at the appointed meeting time. However, when the attending

shareholders do not represent a majority of the total number of issued shares, the chair may announce

a postponement, provided that no more than two such postponements, for a combined total of no more

than 1 hour, may be made. If the quorum is not met after two postponements and the attending

shareholders still represent less than one third of the total number of issued shares, the chair shall

declare the meeting adjourned.

If the quorum is not met after two postponements as referred to in the preceding paragraph, but the

attending shareholders represent one third or more of the total number of issued shares, a tentative

resolution may be adopted pursuant to Article 175, paragraph 1 of the Company Act; all shareholders

shall be notified of the tentative resolution and another shareholders meeting shall be convened within

1 month.

When, prior to conclusion of the meeting, the attending shareholders represent a majority of the total

number of issued shares, the chair may resubmit the tentative resolution for a vote by the shareholders

meeting pursuant to Article 174 of the Company Act.

10. If a shareholders meeting is convened by the board of directors, the meeting agenda shall be set by the

board of directors. The meeting shall proceed in the order set by the agenda, which may not be

changed without a resolution of the shareholders meeting.

The provisions of the preceding paragraph apply mutatis mutandis to a shareholders meeting

convened by a party with the power to convene that is not the board of directors.

The chair may not declare the meeting adjourned prior to completion of deliberation on the meeting

agenda of the preceding two paragraphs (including extraordinary motions), except by a resolution of

the shareholders meeting. If the chair declares the meeting adjourned in violation of the rules of

procedure, the other members of the board of directors shall promptly assist the attending

shareholders in electing a new chair in accordance with statutory procedures, by agreement of a

majority of the votes represented by the attending shareholders, and then continue the meeting.

The chair shall allow ample opportunity during the meeting for explanation and discussion of

proposals and of amendments or extraordinary motions put forward by the shareholders; when the

53

chair is of the opinion that a proposal has been discussed sufficiently to put it to a vote, the chair may

announce the discussion closed and call for a vote.

11. Before speaking, an attending shareholder must specify on a speaker's slip the subject of the speech,

his/her shareholder account number (or attendance card number), and account name. The order in

which shareholders speak will be set by the chair.

A shareholder in attendance who has submitted a speaker's slip but does not actually speak shall be

deemed to have not spoken. When the content of the speech does not correspond to the subject given

on the speaker's slip, the spoken content shall prevail.

Except with the consent of the chair, a shareholder may not speak more than twice on the same

proposal, and a single speech may not exceed 5 minutes. If the shareholder's speech violates the rules

or exceeds the scope of the agenda item, the chair may terminate the speech.

When an attending shareholder is speaking, other shareholders may not speak or interrupt unless they

have sought and obtained the consent of the chair and the shareholder that has the floor; the chair

shall stop any violation.

When a juristic person shareholder appoints two or more representatives to attend a shareholders

meeting, only one of the representatives so appointed may speak on the same proposal.

After an attending shareholder has spoken, the chair may respond in person or direct relevant

personnel to respond.

12. Voting at a shareholders meeting shall be calculated based the number of shares.

With respect to resolutions of shareholders meetings, the number of shares held by a shareholder with

no voting rights shall not be calculated as part of the total number of issued shares.

When a shareholder is an interested party in relation to an agenda item, and there is the likelihood that

such a relationship would prejudice the interests of this Corporation, that shareholder may not vote on

that item, and may not exercise voting rights as proxy for any other shareholder.

The number of shares for which voting rights may not be exercised under the preceding paragraph

shall not be calculated as part of the voting rights represented by attending shareholders.

With the exception of a trust enterprise or a shareholder services agent approved by the competent

securities authority, when one person is concurrently appointed as proxy by two or more shareholders,

the voting rights represented by that proxy may not exceed 3 percent of the voting rights represented

by the total number of issued shares. If that percentage is exceeded, the voting rights in excess of that

percentage shall not be included in the calculation.

13. A shareholder shall be entitled to one vote for each share held, except when the shares are restricted

shares or are deemed non-voting shares under Article 179, paragraph 2 of the Company Act.

When this Corporation holds a shareholders meeting, it may allow the shareholders to exercise voting

rights by correspondence or electronic means. When voting rights are exercised by correspondence or

electronic means, the method of exercise shall be established in accordance with the laws and shall be

specified in the shareholders meeting notice. A shareholder exercising voting rights by

correspondence or electronic means will be deemed to have attended the meeting in person, but to

54

have waived his/her rights with respect to the extraordinary motions and amendments to original

proposals of that meeting; it is therefore advisable that this Corporation avoid the submission of

extraordinary motions and amendments to original proposals.

A shareholder intending to exercise voting rights by correspondence or electronic means under the

preceding paragraph shall deliver a written declaration of intent to this Corporation before 2 days

before the date of the shareholders meeting. When duplicate declarations of intent are delivered, the

one received earliest shall prevail, except when a declaration is made to cancel the earlier declaration

of intent.

After a shareholder has exercised voting rights by correspondence or electronic means, in the event

the shareholder intends to attend the shareholders meeting in person, a written declaration of intent to

retract the voting rights already exercised under the preceding paragraph shall be made known to this

Corporation, by the same means by which the voting rights were exercised, before 2 business days

before the date of the shareholders meeting. If the notice of retraction is submitted after that time, the

voting rights already exercised by correspondence or electronic means shall prevail. When a

shareholder has exercised voting rights both by correspondence or electronic means and by appointing

a proxy to attend a shareholders meeting, the voting rights exercised by the proxy in the meeting shall

prevail.

Except as otherwise provided in the Company Act and in this Corporation's articles of incorporation,

the passage of a proposal shall require an affirmative vote of a majority of the voting rights

represented by the attending shareholders.

At the time of a vote, for each proposal, the chair or a person designated by the chair shall first

announce the total number of voting rights represented by the attending shareholders, followed by a

poll of the shareholders. After the conclusion of the meeting, on the same day it is held, the results for

each proposal, based on the numbers of votes for and against and the number of abstentions, shall be

entered into the MOPS.

At the time of a vote, if no attending shareholder voices an objection following an inquiry by the chair,

the proposal will be deemed approved, with the same effect as approval by vote.

When there is an amendment or an alternative to a proposal, the chair shall present the amended or

alternative proposal together with the original proposal and decide the order in which they will be put

to a vote. When any one among them is passed, the other proposals will then be deemed rejected, and

no further voting shall be required.

Vote monitoring and counting personnel for the voting on a proposal shall be appointed by the chair,

provided that all monitoring personnel shall be shareholders of this Corporation.

Vote counting shall be conducted in public at the place of the shareholders meeting, and voting results

shall be reported on-site immediately and recorded in writing.

14. The election of directors at a shareholders meeting shall be held in accordance with the applicable

election and appointment rules adopted by this Corporation, and the voting results shall be announced

on-site immediately.

The ballots for the election referred to in the preceding paragraph shall be sealed with the signatures

of the monitoring personnel and kept in proper custody for at least 1 year. If, however, a shareholder

55

files a lawsuit pursuant to Article 189 of the Company Act, the ballots shall be retained until the

conclusion of the litigation.

15. Matters relating to the resolutions of a shareholders meeting shall be recorded in the meeting minutes.

The meeting minutes shall be signed or sealed by the chair of the meeting and a copy distributed to

each shareholder within 20 days after the conclusion of the meeting. The meeting minutes shall be

distributed in accordance with the Company v Act.

The meeting minutes shall accurately record the year, month, day, and place of the meeting, the

chair's full name, the methods by which resolutions were adopted, and a summary of the deliberations

and their results, and shall be retained for the duration of the existence of this Corporation.

16. On the day of a shareholders meeting, this Corporation shall compile in the prescribed format a

statistical statement of the number of shares obtained by solicitors through solicitation and the number

of shares represented by proxies, and shall make an express disclosure of the same at the place of the

shareholders meeting.

If matters put to a resolution at a shareholders meeting constitute material information under

applicable laws or regulations, this Corporation shall upload the content of such resolution to the

MOPS within the prescribed time period.

17. At the place of a shareholders meeting, if a shareholder attempts to speak through any device other

than the public address equipment set up by this Corporation, the chair may prevent the shareholder

from so doing.

When a shareholder violates the rules of procedure and defies the chair's correction, obstructing the

proceedings and refusing to heed calls to stop, the chair may direct relevant personnel to escort the

shareholder from the meeting.

18. When a meeting is in progress, the chair may announce a break based on time considerations. If a

force majeure event occurs, the chair may rule the meeting temporarily suspended and announce a

time when, in view of the circumstances, the meeting will be resumed.

If the meeting venue is no longer available for continued use and not all of the items (including

extraordinary motions) on the meeting agenda have been addressed, the shareholders meeting may

adopt a resolution to resume the meeting at another venue.

A resolution may be adopted at a shareholders meeting to defer or resume the meeting within 5 days

in accordance with Article 182 of the Company Act.

19. These Rules, and any amendments hereto, shall be implemented after adoption by shareholders

meetings.

20. The Measures were established on March 13, 1989.

The 1st Amendment was made on May 19, 1998.

The 2nd Amendment was made on May 21, 2002.

The 3rd Amendment was made on June 19, 2013.

The 4th Amendment was made on June 24, 2015.

56

Appendix 2


Articles of Incorporation

Chapter One General Provisions

Article I The Company is duly incorporated in accordance with provisions governing limited

companies under the Company Law in the full name of Lite-On Technology Corporation

(Hereinafter referred to as the “Company”).

Article II The Company shall engage in the following business:

1. C804020 Manufacture of industry-oriented rubber products.

2. C805050 Manufacture of industry-oriented plastic products.

3. CB01010 Manufacture of machinery & equipment

4. CB01020 Business machinery manufacture.

5. CC01010 Electric Power Supply, Electric Transmission and Power Distribution

Machinery Manufacturing

6. CC01030 Manufacture of electrical appliance and audio and visual electronic products.

7. CC01040 Lighting Facilities Manufacturing

8. CC01060 Manufacture of wire communications machinery & equipment.

9. CC01070 Manufacture of wireless communications machinery & equipment.

10. CC01080 Manufacture of electronic parts & components.

11. CC01090 Batteries Manufacturing

12. CC01101 Manufacture of telecommunications controlled frequency RF equipment

manufacture.

13. CC01110 Computers and Computing Peripheral Equipments Manufacturing

14. CC01120 Data storage media manufacture and duplication.

15. CC01990 Electrical Machinery, Supplies Manufacturing

16. CD01030 Manufacture of automobile and automobile parts & components.

17. CD01040 Motor Vehicles and Parts Manufacturing

18. CE01010 Precision Instruments Manufacturing

19. CE01030 Manufacture of Optical instrument.

20. CF01011 Medical Materials and Equipment Manufacturing

21. CH01040 Manufacture of toy.

22. CQ01010 Manufacture of mold.

23. E601010 Electric Appliance Construction

24. E603090 Illumination Equipments Construction

25. E801010 Interior decoration services

26. F106030 Mold wholesale.

27. F108031 Wholesale of Drugs, Medical Goods

28. F109070 Cultural, educational, music and recreational article & instrument wholesale.

29. F111090 Building material wholesale

30. F113010 Machinery wholesale.

31. F113020 Electrical appliance wholesale.

32. F113030 Precise instrument wholesale.

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33. F113050 Computer & business machinery & equipment wholesale.

34. F113070 Telecommunication equipment wholesale.

35. F113110 Wholesale of Batteries

36. F114010 Wholesale of Automobiles

37. F114020 Wholesale of Motorcycles

38. F114030 Automobile, motorcycle parts & accessories wholesale.

39. F118010 Information software wholesale.

40. F119010 Electronic material wholesale.

41. F206030 Mold retail.

42. F209060 Cultural, educational, music and recreational article & instrument retail.

43. F211010 Building material retail.

44. F213010 Electric appliance retail.

45. F213030 Computer & business machinery & equipment retail.

46. F213040 Precise instrument retail.

47. F213060 Telecommunication equipment retail.

48. F213080 Machinery & appliance retail.

49. F213110 Retail Sale of Batteries

50. F214010 Retail Sale of Automobiles

51. F214020 Retail Sale of Motorcycles

52. F214030 Automobile, motorcycle parts & accessories retail.

53. F218010 Information software retail.

54. F219010 Electronic material retail.

55. F401010 International trade.

56. F401021 Import of controlled telecommunication frequency RF equipment.

57. G801010 Warehousing services.

58. H701010 Housing and building development, lease and sales.

59. I102010 Investment consultancy.

60. I103060 Management consultancy.

61. I301010 Information software services.

62. I301020 Data Processing Services

63. I501010 Product design business

64. I503010 Landscaping, interior design business.

65. IC01010 Pharmaceuticals Examining Services

66. IG03010 Energy Technical Services

67. ZZ99999 The Company may, other than those businesses subject to special permission

(franchise), engage in all businesses except those banned or restricted by laws.

Article III The Company is headquartered in Taipei City and may have branches set elsewhere at home

and abroad as resolved by the Board of Directors.

The Company may invest outward with the total amount of investment free of restrictions as

set forth in Article 13 of the Company Law.

The Company may act as a guarantor externally as required for business.

Chapter Two Shares

Article IV The total capital of the Company amounts to Thirty-Five Billion New Taiwan Dollars,

divided into 3.5 billion shares at Ten New Taiwan Dollars par value each. The Board of

Directors is authorized with full powers to issue shares in partial installments. Preferred

58

shares may be issued within the total capital. Of the total number of shares aforementioned,

one hundred million shares are reserved to be issued as stock options, preferred shares with

stock options or corporate bonds with stock options ready for exercise of options.

Article IV-1 The Company may issue employee stock options at an issuing price lower than the closing

price of the Company’s common shares on the date of issuance only upon the decision

resolved by two thirds of present shareholders who represent a majority of the total issued

shares in the shareholders’ meeting.

When the Company intends to transfer shares to employees at a price lower than the average

of actual repurchase prices, such transfer shall be duly posed at the latest shareholders’

meeting to be resolved by two thirds of votes in the shareholders’ meeting where present

shareholders represent a majority of the total issued shares.

Article V The Company’s shares are registered ones, which shall be duly signed and sealed by a

minimum of three directors and issued after duly authenticated by the competent authority

or the issuance registry entity approved by the competent authority. For the shares issued by

the Company, the Company may be exempted from printing share certificates but shall have

the shares so issued duly registered with the centralized securities depository enterprise.

Article VI Unless otherwise prescribed in laws, the Company shall manage share transfer, pledge of

rights, register for loss, succession, gift, change in address, report-for-loss and replacement

of registered specimen seals exactly in accordance with the “Regulations Governing Equity

Affairs of Public Companies”.

Article VII No transfer of shares shall be handled within sixty days prior to the regular shareholders’

meeting, or within thirty days prior to a special meeting of shareholders, or within five days

prior to the record (base) date scheduled to distribute dividends, bonuses or other benefits.

Chapter Three Shareholders’ meeting

Article VIII The shareholders' meeting hereof is in two categories: regular meetings and special

meetings. The former is convened once a year within six months from the closing of each

fiscal year and the latter may be duly called whenever necessary.

Article IX A shareholder who is unavailable to attend the shareholders' meeting may duly present a

power of attorney with the form provided by the Company, bearing the scope of the

authorized powers to authorize a proxy to attend on-behalf. The power of attorney shall be

duly used in accordance with applicable laws and ordinances and the rules promulgated by

the competent authority.

Article X The shareholders’ meeting convened by the Board of Directors shall be chaired by the

chairman. During the chairman’s absence or unavailability for performance of duties, the

substitution shall be duly handled in accordance with Article 208 of the Company Law. In

the event that the shareholders’ meeting is convened by a person beyond the Board of

Directors, the shareholders’ meeting shall be chaired by that convener. In case of two or

more conveners, one of them shall be elected to chair the meeting.

Article XI The Company’s shareholders are entitled to one voting right per share, provided that

59

shareholders have no voting right for shares held under Article 179 of the Company Law.

Article XII Unless otherwise provided for in applicable laws and regulations, decisions in the

shareholders' meeting shall be resolved by a majority of votes in the meeting where present

shareholders represent a majority of the total issued shares.

Article XIII Minutes of the shareholders' meeting shall be duly recorded to cover the decisions resolved,

to be duly signed or affixed by the chairperson and delivered to all shareholders within

twenty days after the meeting and be distributed to all shareholders of the

company in accordance with Company Law. The minutes shall include the month, date, year,

location, the chairperson’s name, method to resolve a decision, the highlights of

discussion and results thereof. The minutes of the shareholders’ meeting shall be archived

in the Company along with the shareholders’ sign-in book and powers of attorney

presented by proxies according to law.

Chapter Four Directors and Audit Committee

Article XIV The Company has seven to eleven directors, elected in the shareholders’ meeting from the

candidate of disposing capacity, with a three-year tenure of office and eligible for reelection.

Directors shall be duly elected in accordance with Regulations Governing Election of

Directors of the Company.

The aforementioned number of directors shall include a minimum of three independent

directors (including a minimum of one independent director in the expertise of accounting or

finance), and the number of independent directors shall not be less than the minimum of

one-fifth of the total number of director seats. Board of Directors (including independent

directors) are elected in a candidate nomination system set forth in Article 192-1 of the

Company Act. The shareholders’ meeting shall elect the right independent directors out of

the list of candidates. Matters regarding independent directors’ professional qualification

requirements, shareholding, restriction on concurrent post, recognition of independence,

methods of nomination and election, and other matters to be complied with shall be duly

handled in accordance with the requirements promulgated by the competent authority in

charge of securities affairs.

The Company duly establishes the Audit Committee in accordance with Article 14-4 of the

Securities and Exchange Law which shall be duly organized by independent directors in full.

The total number of the Company’s shares held by all directors shall not be less than the

percentage promulgated by the competent authority.

Article XV The Board of Directors is duly organized by directors. By attendance of two thirds of

directors and a majority of votes of attending directors, one chairman shall be duly elected.

In the same manner, one vice chairman shall be elected as necessary. The chairman shall

chair the shareholders’ meeting and Board of Directors meeting internally and represent the

Company externally and preside over all the Company’s business affairs, as assisted by the

Vice Chairman.

Article XVI Where the seats of directors are vacated by one-third, a shareholders’ meeting shall be duly

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held to elect ones supplementary to serve the tenure of office remaining by the predecessors.

Article XVII The Board of Directors shall convene the meeting on a quarterly basis and may convene an

extraordinary meeting whenever the chairman considers it necessary or on the requisition of

two or more directors. Board of Directors meetings shall be convened and chaired by the

chairman in all cases. During the chairman’s absence or unavailability for performance of

duties, the substitution shall be duly handled in accordance with Article 208 of the Company

Law.

Notices for convening meetings may be made in writing or by e-mail or fax. An

extraordinary meeting may be convened at any time in case of an emergency.

The Board of Director meetings may be conducted by video conference. Directors who

participate in the meeting through video conference are deemed to have attended in person.

Article XVIII Unless otherwise provided for in the Company Law, decisions in the Board of Directors

meeting shall be resolved by a majority of votes in the meeting where attending directors

represent a majority of the total number of directors. A director who is unavailable to attend

the board of directors meeting may be represented by another director per Article 205 of the

Company Law.

Article XIX Minutes of a board of directors meeting shall be duly recorded, to be duly signed and

affixed seal by the chairperson and delivered to all directors within twenty days after the

meeting. The minutes shall include the highlights of discussion and results thereof. The

minutes of the board of directors meeting shall be archived in the Company along with the

directors’ sign-in book and powers of attorney presented by proxies according to law.

Article XX Organization, authority of office, rules and procedures of meetings and other matters to be

complied with of the Company’s Audit Committee shall be in conformity with the

requirements of the competent authority.

Article XX-1 Remuneration to directors shall be duly determined by the Board of Directors with reference

to the level of their participation in the business operation and values of their contribution as

well as the level prevalent in fellow firms at home and abroad.

Article XX-2 The Company may purchase liability insurance for directors for the term of their office to

insure them for potential risk in exercise of their duties.

Chapter Five Managers and staff members

Article XXI The Company may, as resolved in the Board of Directors, have a certain number of manages

all of whom shall be duly appointed, discharged and paid in accordance with Article 29 of

the Company Law.

Chapter Six Accounting

Article XXII Upon closing of each fiscal year, the Board of Directors shall prepare the following

documents and submit such documents to the shareholders' meeting for adoption. In case of

other requirements set forth in the Securities and Exchange Law or other laws and

ordinances concerned, such Securities and Exchange Law and other laws and ordinances

61

concerned shall govern. 1. Business report; 2. Financial Statements; and 3. Proposals of

profit appropriation or loss coverage.

Article XXIII The Company shall allocate the following compensation from the profit of each fiscal year

(The “profit” means “profit before income tax and employees’ and directors’

compensation"), however, the Company shall have reserved a sufficient amount from such

profit to offset its accumulated losses (including unappropriated earnings adjustment if any):

1.Employees’ compensation：no less than 1%

2.Directors’ compensation：no more than 1.5%

The employees’ compensation under the preceding paragraph will be distributed by shares or

cash. The employees of the Company’s subsidiaries may also be entitled to such

compensation. The Board of Directors is authorized with full powers to determine the terms

and methods of appropriation. The Directors’ compensation under the preceding paragraph

may only be distributed by cash.

The Company shall, upon a resolution of the Board of Directors, distribute employees' and

director’s compensation in the preceding two paragraphs, and report to the shareholders’

meeting for such distribution.

Article XXIV If there is net profit after tax upon the final settlement of account of each fiscal year, the

Company shall first to offset any previous accumulated losses (including unappropriated

earnings adjustment if any) and set aside a legal reserve at 10% of the net profits, unless the

accumulated legal reserve is equal to the total capital of the Company; then set aside special

reserve in accordance with relevant laws or regulations or as requested by the authorities in

charge. The remaining net profit, plus the beginning unappropriated earnings (including

adjustment of unappropriated earnings if any) , shall be distributed into dividends to

shareholders according to the distribution plan proposed by the Board of Directors and

submitted to the shareholders’ meeting for approval.

In consideration of business development plan, investing environment, demand for funds,

global competiveness and the shareholders’ interest, the Dividend Policy of the Company is

the distribution to shareholders with the appropriation of the amount which shall be no less

than 70% of the net profit after income tax under the circumstance that there is no cumulated

loss in prior years. The distribution may be executed in cash dividend and/or share dividend,

and the cash dividend shall be no less than 90% of the total distributed dividends.

In case there are no earnings for distribution in a certain year, or the earnings of a certain year

are significantly less than the earnings actually distributed by the Company in the previous

year, or considering the financial, business or operational factors of the Company, the

Company may allocate a portion or all of its reserves for distribution in accordance with

relevant laws or regulations or the orders of the authorities in charge.

Chapter Seven Bylaws

Article XXIII The Company’s organizational regulations and operational rules shall be separately enacted

by the Board of Directors.

Article XXIV The Taiwan Depository & Clearing Corporation (TDCC) may request that the Company

consolidate the shares to issue large denomination share certificates.

Article XXV Any matters insufficiently provided for in the Articles of Incorporation shall be subject to

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the Company Law and other applicable laws and ordinances.

Article XXVI The Articles of Incorporation and amendment hereof, if any, shall come into enforcement

after being resolved in the shareholders’ meeting, submitted to and approved by the


Article XXVII The Articles were duly stipulated on March 13, 1989.

The Articles were duly amended on March 20, 1990 as the 1st amendment.

The Articles were duly amended on May 11, 1991 as the 2nd amendment.

The Articles were duly amended on May 20, 1992 as the 3rd amendment.

The Articles were duly amended on June 27, 1992 as the 4th amendment.


The Articles were duly amended on December 18, 1993 as the 6th amendment.

The Articles were duly amended on May 30, 1995 as the 7th amendment.

The Articles were duly amended on April 2, 1996 as the 8th amendment.





The Articles were duly amended on April 19, 2001 as the 13th amendment.


The Articles were duly amended on August 5, 2002 as the 15th amendment.






The Articles were duly amended on June 25, 2008 as the 21st amendment.

The Articles were duly amended on June 15, 2010 as the 22nd amendment.

The Articles were duly amended on June 19, 2012 as the 23rd amendment.

The Articles were duly amended on June 19, 2013 as the 24rd amendment.



The Articles were duly amended on June 22, 2017 as the 27th amendment

The Articles were duly amended on June 22, 2018 as the 28th amendment

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Appendix 3


Rules Governing the Election of Directors

Article 2

Elections of Lite-On Technology Corporation's independent and non-independent directors shall be conducted

in accordance with these Rules.

Article 3

The cumulative voting method shall be used for election of Lite-On Technology Corporation's directors. Each

share will have voting rights in number equal to the directors to be elected, and may be cast for a single

candidate or split among multiple candidates. Shareholder numbers or attendance card numbers printed on the

ballots may be used instead of recording the names of voting shareholders.

The overall composition of the board of directors shall be taken into consideration in the selection of

the Company's directors. The composition of the board of directors shall be determined by taking

diversity into consideration and formulating an appropriate policy on diversity based on Lite-On

Technology Corporation's business operations, operating dynamics, and development needs. It is

advisable that the policy include, without being limited to, the following two general standards:

E. Basic requirements and values: Gender, age, nationality, and culture.

F. Professional knowledge and skills: A professional background (e.g., law, accounting, industry,

finance, marketing, or technology), professional skills, and industry experience. Each board member shall have the necessary knowledge, skill, and experience to perform his/her duties. The

abilities that must be present in the board as a whole are as follows:

Q. Ability to make sound business judgments.

R. Ability to perform accounting and financial analysis.

S. Ability to manage a business.

T. Ability to handle crisis management.

U. Knowledge of the industry.

V. An international market perspective.

W. Leadership ability.

X. Decision-making ability.

Article 4

The Company’s independent directors must possess one of the following qualifications and have five years or

more of work experience:

A. An instructor or higher in a department of commerce, law, finance, accounting, or other

academic department related to the business needs of the company in a public or private

junior college, college, or university.

B. A judge, public prosecutor, attorney, certified public accountant, or other professional or

technical specialist who has passed a national examination and been awarded a certificate in

a profession necessary for the business of the company.

C. Have work experience in the area of commerce, law, finance, or accounting, or otherwise

necessary for the business of the company...

At least one of the Company's independent directors is required to have accounting or financial

expertise. At least one of the independent directors must be domiciled in the Republic of China to be

able to promptly fulfill supervisory functions.

A person to whom any of the following circumstances applies may not serve as an independent

director, or if already serving in such capacity, shall ipso facto be dismissed:

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A. Any circumstance set out in a subparagraph of Article 30 of the Company Act.

B. The director is a government agency, juristic person, or representative thereof, and was

elected in accordance with Article 27 of the Company Act.

C. Any violation of the independent director qualification requirements set out in the Regulations

Governing Appointment of Independent Directors and Compliance Matters for Public Companies.

Article 5

During the two years before being elected or during the term of office, independent directors of

Lite-On Technology Corporation may not have been or be any of the following:

G. An employee of Lite-On Technology Corporation or any of its affiliates.

H. A director or supervisor of Lite-On Technology Corporation or any of its affiliates.

Exception shall apply to independent directors established by Lite-On Technology

Corporation or its subsidiary pursuant to the Securities and Exchange Act or local laws and

regulations.

I. A natural-person shareholder who holds shares, together with those held by the person's

spouse, minor children, or held by the person under others' names, in an aggregate amount

of one percent or more of the total number of issued shares of Lite-On Technology

Corporation, or ranks among the ten largest natural-person shareholders.

J. A spouse, relative within the second degree of kinship, or lineal relative within the third

degree of kinship, of any of the persons in the preceding three subparagraphs.

K. A director, supervisor, or employee of a corporate shareholder that directly holds five

percent or more of the total number of issued shares of Lite-On Technology Corporation or

of a corporate shareholder that ranks among the top five in shareholdings.

L. A director, supervisor, officer, or shareholder holding five percent or more of the shares, of a

specified company or institution that has a financial or business relationship with Lite-On


M. A professional individual who, or an owner, partner, director, supervisor, or officer of a sole

proprietorship, partnership, company, or institution that, provides commercial, legal,

financial, accounting services or consultation to the company or to any affiliate of the

company, or a spouse thereof. However, this excludes members of the Remuneration

Committee who exercise power in accordance with the Regulations Governing Appointment

of Independent Directors and Compliance Matters for Public Companies.

The requirement of the preceding paragraph in relation to "during the two years before being elected"

does not apply where an independent director of Lite-On Technology Corporation has served as an

independent director of Lite-On Technology Corporation or any of its affiliates, or of a specified

company or institution that has a financial or business relationship with Lite-On Technology

Corporation, as stated in subparagraph 2 or 6 of the preceding paragraph, but is currently no longer in

that position.

I. The term "specified company or institution" as used in paragraph 1, subparagraph 6, means

a company or institution that has one of the following relationships with the Company: It

holds 20 percent or more and no more than 50 percent of the total number of issued shares

of Lite-On Technology Corporation.

J. It holds shares, together with those held by any of its directors, supervisors, and

shareholders holding more than 10 percent of the total number of shares, in an aggregate

total of 30 percent or more of the total number of issued shares of the Company, and there is

a record of financial or business transactions between it and the Company. The

shareholdings of any of the aforesaid persons include the shares held by the spouse or any

minor child of the person or by the person under others' names.

K. It and its group companies are the source of 30 percent or more of the operating revenue of

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the Company.

L. It and its group companies are the source of 50 percent or more of the total volume or total

purchase amount of principal raw materials (those that account for 30 percent or more of

total procurement costs, and are indispensable and key raw materials in product

manufacturing) or principal products (those accounting for 30 percent or more of total

operating revenue) of the Company. For the purposes of the preceding paragraph, the terms "subsidiary" and "group" shall have the meanings as

determined under International Financial Reporting Standards 10.

No independent director may concurrently serve as an independent director of more than three other public

companies.

Article 6

The election of directors (including independent directors) of Lite-On Technology Corporation is

subject to the provisions of Article 192-1 of the Company Act in that a candidate nomination system

shall be adopted, that such system shall be expressly stated in the Articles of Incorporation of the

Lite-On Technology Corporation, and that shareholders shall elect directors (including independent

directors) from among the those listed in the slate of director candidates. Regarding review of director

(and independent director) candidate qualifications, education, experience, circumstances in Article 30

of the Company Act exists, documentary proof of other qualifications cannot be additionally listed

without completing the appropriate procedures. Review results shall be presented to the shareholders

as a basis for the consideration and election of suitable directors (including independent directors).

Where the number of independent directors falls below the minimum specified in the proviso under

Article 14-2, Paragraph 1 of the Securities and Exchange Act and fails to satisfy the provisions in the

Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings, a by-election

shall be held at the next shareholders’ meeting. In the event that all the independent directors have

been discharged, an extraordinary shareholders’ meeting shall be convened to hold a by-election

within sixty days from the date of such occurrence.

Lite-On Technology Corporation shall prior to the book closure date before the convening of the

shareholders' meeting, publish a notice specifying a period for receiving nominations of director

(including independent director) candidates, the number of directors (including independent directors)

to be elected, the place for receiving such nominations, and other necessary matters; the period for

receiving nominations shall be not less than 10 days.

Lite-On Technology Corporation may present a slate of director (including independent director)

candidates nominated by the methods set out below, and, upon evaluation by the board of directors

that all candidates so nominated are qualified director (including independent director) candidates,

submit it to the shareholders' meeting for elections:

D. A shareholder holding one percent or more of the total number of issued shares may present

a slate of director (including independent director) candidates in writing to the Company;

the number of nominees may not exceed the number of directors (including independent


E. The board of directors presents a slate of director (including independent director)

candidates; the number of nominees may not exceed the number of directors (including

independent directors) to be elected.

F. Otherwise as designated by the competent authority.

When providing a recommended slate of candidates under the preceding paragraph, a shareholder or

the board of directors shall include in the documentation attached thereto each nominee's name,

educational background, work experience, a written undertaking indicating the nominee's consent to

serve as a director (or independent director) if elected as such, a written statement that none of the

circumstances in Article 30 of the Company Act exists, and other relevant documentary proof.

The board of directors, or other person having the authority to call a shareholders' meeting, shall

review the qualifications of each director (including independent director) nominee; except under any

66

of the following circumstances, all qualified nominees shall be included in the slate of director

(including independent director) candidates:

F. Where the nominating shareholder submits the nomination at a time not within the

published period for receiving nominations.

G. Where the shareholding of the nominating shareholder is less than one percent at the time of

book closure by the Company under Article 165, paragraph 2 or 3 of the Company Act.

H. Where the number of nominees exceeds the number of directors (including independent


I. Where the relevant documentary proof required under the preceding paragraph is not

attached. If an independent director candidate included by the Company under the provisions of the preceding paragraph

has already served as an independent director of the Company for three consecutive terms or more, Lite-On

Technology Corporation shall publicly disclose, together with the review results under the preceding

paragraph, the reasons why the candidate is nominated again for the independent directorship, and present the

aforementioned reasons to the shareholders at the time of the election at the shareholders’ meeting.

The process of reviewing director (including independent director) nominees in the preceding paragraph shall

be recorded, and the records shall be retained for a minimum of one year. However, in situations where a

shareholder makes a litigious claim against the director (including independent director) election process, the

records shall be retained until the litigation is concluded.

The Company shall announce the slate of director (including independent director) candidates and

their education and experience as well as the number of shares held by each candidate at least 40 days

prior to the upcoming shareholders’ meeting or 25 days prior to the upcoming extraordinary

shareholders’ meeting, inform the nominating shareholders of the review results, and, where

applicable, provide detailed reasons for not including nominees on the slate of director (including

independent director) candidates.

A spousal relationship or a familial relationship within the second degree of kinship may not exist among more

than half of the directors on the board.

Article 7

Independent and non-independent directors shall be elected at the same time, but the numbers of independent or

non-independent directors to be elected shall be calculated separately. A candidate to whom the ballots cast

represent a prevailing number of votes shall be deemed an independent or non-independent director elect.

When two or more persons receive the same number of votes, thus exceeding the specified number of positions,

they shall draw lots to determine the winner, with the chair drawing lots on behalf of any person not in

attendance.

If the outcome shows that none of the independent directors candidates with the highest numbers of votes has

accounting or financial expertise, those candidates with accounting or financial expertise shall have their votes

counted separately and one seat shall be awarded to the candidate with the highest number of votes. The

remaining positions shall be filled as described in the preceding paragraph.

If an independent director elected at a shareholders’ meeting is required to be dismissed during the term of

office for reason of a violation of Article 3 or 4 herein, it is prohibited to change the status of the person from

independent director to non-independent director. A non-independent director elected at a shareholders’

meeting likewise may not be arbitrarily changed from a non-independent director to an independent director

during the term of office.

Article 8

All shareholders listed in Lite-On Technology Corporation's shareholder register have the right to vote.

67

Article 9

The ballots will be prepared by the board of directors and numbered by shareholder account number. The

number of votes will also be printed on the ballot of each shareholder.

Article 10

When an election begins, the chair of the shareholders’ meeting shall announce the election and assign several

ballot monitors and tellers to perform respective tasks.

Article 11

Voters shall write a candidate's name in the space marked "Candidate" on their ballots, and specify their

shareholder account number, ID number, or unified business number. If a candidate is an institutional

shareholder, the name of the institution and that of its representative shall be provided as well as institutional

shareholder account number or unified business number.

Article 12 A ballot is invalid under any of the following circumstances:

A. The ballot was not prepared by the Company.

B. A blank ballot is placed in the ballot box.

C. The writing is unclear and indecipherable or has been altered.

D. The candidate's account name (title or name) or shareholder account number (ID number/UBN) is

not provided.

E. The name of the candidate entered in the ballot is identical to that of another shareholder, but no

shareholder account number or ID number/UBN is provided in the ballot to identify such individual.

F. Two or more candidates are named on the same ballot.

G. Other words or marks are entered in addition to the candidate's account name (title or name) or

shareholder account number (ID number/UBN) and the number of voting rights allotted.

H. The candidate whose name is entered in the ballot is a shareholder, but the candidate's account name

and shareholder account number do not conform with those given in the shareholder register, or the

candidate whose name is entered in the ballot is a non-shareholder, and a cross-check shows that the

candidate's name and ID number/UBN do not match.

I. Any other violation of laws and regulations, the Articles of Incorporation, and related rules.

Article 13

The ballot box shall be prepared by the board of directors and inspected by the monitors before ballots are cast.

Article 14

Voting rights shall be calculated on site immediately after the end of the poll, and the results of the calculation,

including the list of persons elected as directors (including independent directors) and the numbers of votes

with which they were elected, shall be announced by the chair on the site.

The ballots for the election referred to in the preceding paragraph shall be sealed with the signatures of the

68

monitors and kept in proper custody for at least one year. If, however, a shareholder files a lawsuit pursuant to

Article 189 of the Company Act, the ballots shall be retained until the conclusion of the litigation.

Article 15

The board of directors shall issue notifications to the persons elected as directors, and have the director elects

sign their consent to appointment.

Article 16

Matters not provided herein shall be subject to the provisions of the Company Act and other applicable laws

and regulations.

Article 17

These Rules shall come into effect upon approval of the shareholders’ meeting. The same applies to all

subsequent amendments.

Article 18

The rules were established on March 13, 1989.

The first amendment was made on May 19, 1998.

The second amendment was made on May 21, 2002.

The third amendment was made on June 21, 2007.

The fourth amendment was made on June 19, 2012.

The fifth amendment was made on June 19, 2013.

The sixth amendment was made on June 24, 2015.

The seventh amendment was made on June 24, 2016.

The eighth amendment was made on June 22XX, 2018.

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Appendix 4

List of Candidates for Directors and Independent Directors

No. Position Shareholder

Account Number

Name No. of Shares

Held Major Educational

Background and Experience

1 Director 1 Raymond Soong 79,302,560 ■ Current Position:

• Chairman, Lite-On Technology Corp., Lite-On Semiconductor Corp. and DIODES,INC.

• Chairman, representative of Silitech Technology Corp., Co-tech Copper Foil Corporation

• Director of On-Bright Electronics Incorporated

■ Educational:

• Honorary PhD in Management, National Chiao Tung University

■ Experience: • Fellow, Industrial

Technology Research Institution

• Chairman & Founder of Lite-On Group/Lite-On Cultural Foundation

• Member of Board of Councilors, the Doctorate College of Technology, South California (USC)

• Chief Engineer, Texas Instruments Taiwan Ltd.

2 Director 130589 Warren Chen 7,349,116 ■ Current Position:

• GCEO of Lite-On Group

• Vice Chairman, representative of Lite-On Technology Corp.

• Director, representative of Lite-On Semiconductor Corp. and Silitech Technology Corp.

• Director of Lite-On Japan Ltd.

■ Educational:

• Chemical Engineering, Chinese Culture

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University ■ Experience:

• GCEO of Lite-On Group and CEO of Lite-On Technology Corp.

• President, Lite-On Electronic Co.

• Manufacturing Super-Intendant, Texas Instrument

3 Director 88 Tom Soong 5,420,287 ■ Current Position:

• Director, representative of Lite-On Technology

• SLA BG CEO of Lite-On Technology Corp

■ Educational:

• University of Southern California/ Electrical Engineering

• NTU EMBA International Business Attendance (NTU-FUDAN EMBA Program)

■ Experience:

• General manager , Lite-on Technology (Shanghai) Co., Ltd.

• Business Group CEO, New Mechanical Competence SBG, Lite-On Technology Corporation

• Representative, Lite-On Technology(China)Inc. Beijing Representative Office

• VP , Lite-On Electronics H.K. Limited and China Bridge Express Trading Co., Ltd.

4 Director 59285 Ta-Sung Investment Co., Ltd. Representative Keh-Shew Lu

47,088,399 ■ Current Position:

• Director, President and CEO of Diodes Incorporated Co., Ltd.

• Director of Lorenz

• Director, representative of Lite-On Technology and Nuvoton Technology Corp.

■ Educational:

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• Bachelor, EE, National Cheng Kung University

• Master, EE, Texas Institute of Technology

• PhD, EE, Texas Institute of Technology

■ Experience:

• Asian Regional President, Senior VP, Texas Instruments

• Director, VArmour Corp. Ltd.

• Chairman, LedEngin

5 Director 59285 Ta-Sung Investment Co., Ltd. Representative

CH Chen

47,088,399 ■ Current Position:

• Vice Chairman, Diodes Incorporated and Lite-On Semiconductor Corp.

• Director, Actron Technology Corporation

• Director, representative of Lite-On Technology Corp. and Kwong Lung Enterprise Co, Ltd.

■ Educational:

• Bachelor, Dept of Mechanical Engineering, National Taiwan University

■ Experience:

• Vice CEO, Texas Instruments Taiwan Ltd.

• Chairman, Co-tech Copper Foil Corporation

• Chairman, On-Bright Electronics Incorporated Co., Ltd.

6 Independent Director

528391 Albert Hsueh 0 ■ Current Position:

• Independent Director of , Lite-On Technology Corp., Yuanta Financial Holding Co., Ltd. and Yuanta Bank, Walsin Lihwa Corp. and TTY Biopharmaceutial Manufacturers Association

■ Educational:

• MBA, Bloomsburg University, Pennsylvania,

72

U.S.A.

• Master of Accounting, Soochow University

■ Experience:

• Chairman of PricewaterhouseCoopers Taiwan

• Director, Corporate Governance Association in Taiwan

• Member of the Committee in charge of the examination affairs and qualification screening for professional and technologies, Examination Yuan

• Professor, National Tsinghua University of College of Technology Management

• Professor, National Taiwan University of Science and Technology, School of Management


441272 Harvey Chang 0 ■ Current Position:

• Chairman of TVBS, Via On Demand and IC Broadcasting Co., Ltd.

• Independent Director of , Lite-On Technology Corp.

■ Educational:

• MBA, The Wharton School, Pennsylvania State University

• Bachelor, Dept of Geology, National Taiwan University

■ Experience:

• President and CEO, Taiwan Mobile

• Senior VP and CFO, TSMC

• Chairman, China Securities Investment Trust Corp.

• President, China Development Trust Co. Ltd.

• President, Grand Cathay

73

Securities


435270 Edward Yang 0 ■ Current Position:

• Independent Director of , Lite-On Technology Corp.

• iD Ventures America, LLC Partner

• Chairman, GVT Fund

• Director, Sifotonics Technologies, Bandwidth 10 and Neurostim OAB

■ Educational:

• Stanford Executive Program (SEP), Stanford University

• Master of Science in Electrical Engineering Science, Oregon State University

• Bachelor of Science in Electrical Engineering, National Cheng Kung University

■ Experience:

• Independent Director, FocalTech

• Independent Director, Silicon Storage Technology

• Independent Director, Pericom Semiconductor

• Member of Prospective Technology Steering Committee, Industrial Technology Research Institute

• Member of Strategy Steering Committee, Institute for Information Industry

• Member of Engineering School Consulting Committee, San Jose State University

• Vice President and CTO, Personal Product Group, HP

• Vice President and CTO, Business Product Group, HP

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• President of Singapore Network and Telecommunications System Business Division, HP


555968 Mike Yang 0 ■ Current Position:

• Chairman of Quanta Cloud Technology Japan Inc.

• Director & President of QCT Korea Inc.

• Senior Vice President of Quanta Computer Inc. Cloud Computing Business Unit

• President of Quanta Cloud Technology Inc., Cloud-Tech (Chongqing) Technology Co., Ltd. and QCT LLC President

• Managing Director of Quanta Cloud Technology Germany GmbH and QCG Computer GmbH

■ Educational: Arizona State University

Master of Science ■ Experience:

• ADI Corp. Procurement Dept. Associate Vice President

Note：Reasons for the nomination of independent directors who have served for three consecutive

terms

Position Name Reasons for the nomination of independent directors who have served for three consecutive terms

Independent Director

Harvey Chang

The individual specializes in industrial analysis and business management and retains extensive experience in performance management, corporate growth, and investment. The individual

75

will be invaluable to the Company's future investment plans and financial plans.

Edward Yang

The individual retains extensive experience and professional skills in the Company's related industries and proposes forward-looking insights on industrial development. The individual can provide strategic guidance for the Company's new product development and expansion into new markets.

76

Appendix 5

Impact of issuance of stock dividends proposed in this shareholders’

meeting upon the Company’s business performance, earning per share

(EPS) and shareholder investment return

(Note1) Only cash dividends and no stock dividends were proposed in the Company’s 2019

shareholder meeting.

(Note2) In accordance with the “Guidelines for Disclosure of the Financial Forecast by

Public Companies”, it is not necessary for the Company to disclose financial forecast

information of 2019. This information related to change of operating performance and pro

forma earnings per share and the PE ratio are not applicable.

77

Appendix 6


The individual and overall shareholding by directors and supervisors as entered in the Register (Roster)

of Shareholders is as follows:

I. In accordance with Article 26 of the Securities and Exchange Act, the Company’s directors shall

at least hold a total of 56,420,808 shares. As of April 23, 2019, the entire directors of the

Company held 187,030,054 shares.

II. The Company has established an Audit Committee; the requirements for shareholding by

supervisors are not applicable.

III. Shares held by Independent Directors are not counted towards the shares held by all directors.

IV. Shareholding facts by all Directors: The record (base) date is the date on which transfer is

suspended, i.e., April 23, 2019.

Position Name Date when

elected

Tenure of

office

Number of shares

held when being

elected

Number of shares

held on the date

when transfer is

suspended

Chairman Raymond Soong 2016.06.24 Three

years 78,908,736 79,302,560

Vice

Chairman

Lite-On Capital Corporation

Representative Warren Chen 2016.06.24

Three

years 15,040,803 15,115,869

Director Ta-Sung Investment Co., Ltd.

2016.06.24 Three

years 46,854,554 47,088,399

Representative Keh-Shew Lu

Director Ta-Sung Investment Co., Ltd.

2016.06.24 Three

years 46,854,554 47,088,399

Representative: Tom Soong

Director Dorcas Investment Co., Ltd

Representative Joseph Lin. 2016.06.24

Three

years 6,019,584 6,049,627

Director

Yuan Pao Development &

Investment Co. Ltd. 2016.06.24 Three

years 39,277,570 39,473,599

Representative CH Chen

Director

Yuan Pao Development &

Investment Co. Ltd. 2016.06.24 Three

years 39,277,570 39,473,599

Representative David Lee

Independent

Director Harvey Chang 2016.06.24

Three

years 0 0

Independent

Director Edward Yang 2016.06.24

Three

years 0 0

Independent

Director Albert Hsueh 2016.06.24

Three

years 0 0

The total of all directors (Note III) 186,101,247 187,030,054

meeting agenda · nt$10.78 billion, after-tax profit was nt$7.96 billion, and earnings per share...

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