Chailease Holding Company Limited · Asia Sermkij Leasing Public Company Limited 24F., Sathorn City Tower, 175 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120, Thailand 66-2-679-6226

Chailease Holding Company Limited

06 Board Members 07 Addresses of Subsidiaries08 I. Letter to Shareholders10 II. Introduction to the Company

(1) Date of establishment

(2) History of the Company

12 III. Corporate governance report(1) Organization

(2) Information regarding the board of

directors and management team

(3) Corporate governance practices

(4) Information regarding the certified

public accountant

(5) Information for top 10 shareholders

and related parties as defined

under the Statement of Financial

Accounting Standards No.6

(6) Continuing educational training of the

directors and independent directors

(7) Certification details of employees

whose jobs are related to the release

of the company's financial information

(8) Working environment and employee

safety protection

CONTENTS

46 IV. Capital and Shares(1) Capitalization

(2) Composition of Shareholders

(3) Distribution profile of share ownership

(4) Major shareholders

(5) Market price, net worth, earnings,

and dividends per share for the past

two years

(6) Dividend policy and distribution of

profit

(7) Employee profit sharing and directors'

and supervisors' compensation

(8) Buyback of common stock

(9) Issuance of corporate bonds

(10) Issuance of global depositary shares

(11) Financing plan and implementation

54 V. Operational Highlights(1) Business Overview

(2) Market and Sales Overview

(3) Head count, average seniority, average

age and educational background of

employees in the most recent two

fiscal years and as of the publication

date of the annual report

64 VI. Financial Highlights(1) Audit committee's report on financial

statements from the most recent year

(2) Financial Review

72 VII. Integrated Risk Management Framework & Policy (1) Chailease Risk Management

Organizational Structure

(2) Risk management policies

78 VIII. Special notes(1) Information about the affiliates

(2) Major differences in the Company's

articles of association and ROC

regulations on shareholder

protection

A supporting partner of our customers, a driving force of economic success

A supporting partner of our customers, a driving force of economic success

Chailease Holding Com

pany Limited

6

Board MembersPosition Name Nationality Experience and Edication

Executive Chairman Fong-Long Chen ROC

Master of Science, Sloan School of Management, MIT, USAPresident of Chailease Holding Company Limited Chairman of Chailease Finance Co., Ltd.Chairman of Fina Finance & Trading Co., Ltd.Chairman of China Leasing Co., Ltd.Chairman of Chailease Credit Service Co., Ltd.Chairman of Chailease Cloud Service Co., Ltd.Chairman of Chailease International Finance CorporationChairman of Chailease International Corp.Chairman of Chailease Finance International CorporationChairman of Jirong Real Estate Co., Ltd.Chairman of Finance (B.V.I.) Company Ltd.Director of My Leasing (B.V.I.) Corp.Director of Chailease International (B.V.I.) Corp.Director of Golden Bridge (B.V.I.) Corp.Director of My Leasing(Mauritius) Corp.Director of Asia Sermkij Leasing Public Co., Ltd.Director of Bangkok Grand Pacific Lease Public Co., Ltd.Director of Grand Pacific Holdings Corp.Director of Chailease International Financial Services Co., Ltd.

Director Andre J.L. Koo ROCMBA, Leonard N. Stern School of Business, NYU, USAChairman of the Management Committee of Chailease Holding Company LimitedChairman of Chailease Group

DirectorBeacon Hill Co., Ltd.'s representative:Mo-Na Chien

ROC

Bachelor of Agriculture Economics, National Taiwan UniversitySenior Executive Program; Sloan School of Management, MIT, USAChairman of GigaMedia LimitedChairman of S.K. Machinery Co., Ltd.Supervisor of Mextek Techology CO., Ltd.Director of Lian hwa Foods Corporation

Director Chee Wee Goh Singapore

Bachelor of Science ( First Class Honours ), University of SingaporeMaster of Science in Engineering, University of Wisconsin, USADiploma in Business Administration, University of Singapore (now National University of Singapore), SingaporeDirector of a number of NTUC Co-operatives and SLF subsidiary companiesIndependent director of Beng Kuang Marine, Ltd; Chip Eng Seng Corporation Ltd, King Wan Corporation Ltd; Sinotel Technologies Ltd; Stamford Tyres Corporation Ltd and Sin Ghee Huat Corporation Ltd.

DirectorWiedner Co.,Ltd. 'srepresentutive:Chi-Ching Chen

ROC

Master of Business Administration, Sloan School of Management, MIT, USADirector of Chailease Finance Co., Ltd.Non-Executive Director and Chief Financial Officer of GigaMedia Limited Director of GigaMedia International Holdings LimitedDirector of Hoshin GigaMedia Center Inc.Director of GigaMedia Cloud Services Co., Ltd.Director of GigaMedia (HK) LimitedDirector of FunTown Hong Kong LimitedRepresentative of Hoshin GigaMedia Center Inc. FunTown Branch

Independent Director

Steven Jeremy Goodman Australia

MBA from Nanyang Technological University, Singapore、Law Degree LLB from Manchester University, England、Passed the Solicitors Finals Examinations from the College of Law, Law Society of England and Wales (with Honours)、Passed the Overseas Lawyers Qualification Examination, Hong Kong Law Society、Adjunct Professor of Law at the Law Faculty of Bond University.、Solicitor qualified in UK and in Hong Kong(non-practising).、Director and CEO of Teras Group Pte Ltd.

Independent Director Shin-Chin, Chen ROC Bachelor of Accounting, Soochow University, Taiwan

Director of China Bills Finance Corporation

Independent Director Dar Yeh Hwang ROC

B.A., Department of Banking. National Chengchi University, TaiwanM.L. Program in Economics, National Taiwan University, TaiwanMaster in Political Science, National Taiwan University, TaiwanPh.D. Program in Finance Kellogg School, Northwestern University,USAM.S., and Ph.D. Program in Finance, Stern School, NYU, USAMBA and Ph.D. in Finance, Rutgers UniversityPh.D. Candidate in Journalism and Communication, Peking UniversityPh.D. Program in Law, Tsinghua University, ChinaProfessor, Dep. of Finance, National Taiwan UniversityDirector, Center for the Study of Banking and Finance, National Taiwan UniversityFunding Chairman, Banking Education Association of TaiwanChairman, Turnaround Management Association of TaiwanChairman & Dean, Academy of Promoting Economic LegislationIndependent Director of DBS, TaiwanConsulting Member, Central Deposit Insurance CorporationVice Chairman, Academic Committee of AFMA, Peking University

Independent Director Chin Fock Hong Singapore

Bachelor of Social Science, University of Singapore (now National University of Singapore), SingaporeAttended an International Tax Program at Harvard Law School;Director of Shared Services for Charities Ltd.Director of Binjaitree.Independent director of Riverstone Holdings Limited.Non-Executive Director of Prima Limited.Independent director of Gigamedia Limited.

7

Addresses of SubsidiariesTaiwan■ Chailease Finance Co., Ltd.

No.362, Ruiguang Rd., Neihu Dist., Taipei City 114, Taiwan (R.O.C.)886-2-8752-6388www.chailease.com.tw

■ Fina Finance & Trading Co., Ltd.5F., No.362, Ruiguang Rd., Neihu Dist., Taipei City 114, Taiwan (R.O.C.)886-2-8797-6168www.finatrade.com.tw

■ China Leasing Co., Ltd.6F., No.362, Ruiguang Rd., Neihu Dist., Taipei City 114, Taiwan (R.O.C.)886-2-8752-6388www.chailease.com.tw

■ Chailease Auto Rental Co., Ltd.6F., No.362, Ruiguang Rd., Neihu Dist., Taipei City 114, Taiwan (R.O.C.)886-2-8752-6388www.rentalcar.com.tw

■ Chailease Consumer Finance Co., Ltd.3F., No.362, Ruiguang Rd., Neihu Dist., Taipei City 114, Taiwan (R.O.C.)886-2-2798-6488www.ezfund.com.tw

■ Apex Credit Solutions Inc.6F., No.420, Fuxing N. Rd., Zhongshan Dist., Taipei City 104, Taiwan (R.O.C.)886-2-2512-2866www.apex-credit.com

■ Chailease Insurance Brokers Co., Ltd.2F., No.362, Ruiguang Rd., Neihu Dist., Taipei City 114, Taiwan (R.O.C.)886-2-8752-6388www.chailease.com.tw

■ Chailease Cloud Service Co., Ltd.8F., No.362, Ruiguang Rd., Neihu Dist., Taipei City 114, Taiwan (R.O.C.)886-2-8752-6388www.chaileasecloud.com.tw

The PRC■ Chailease International Finance

CorporationBuilding 1, Lane 631, Jinzhong Rd., Changning District, Shanghai, PRC 86-21-5208-0101www.chailease.com.cn

■ Chailease International Corp.Building 1, Lane 631, Jinzhong Rd., Changning District, Shanghai, PRC86-21-5208-0101

■ Chailease Finance International Corp.Airport Business Park W13-4, No.76, Huan He North Road, Airport Industrial Area, Tianjin, PRC86-22-8486-1168

■ Jirong Real Estate Co., Ltd. Building 1, Lane 631, Jinzhong Rd., Changning District, Shanghai, PRC86-21-5208-0101

Thailand■ Asia Sermkij Leasing Public

Company Limited24F., Sathorn City Tower, 175 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120, Thailand66-2-679-6226www.ask.co.th

■ Bangkok Grand Pacific Lease Public Company Limited10/1F., Sathorn City Tower, 175 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120, Thailand66-2-679-6226

Vietnam■ Chailease International Leasing

Company Ltd.28F., Saigon Trade Center, 37 Ton Duc Thang St., District 1, Ho Chi Minh City, Vietnam84-8-7301-6010 www.chailease.com.vn

United States■ Grand Pacific Financing Corporation

1255 Corporate Center Drive, PH10, Monterey Park, CA 91754, U.S.A.1-323-780-8881


pany Limited

8

I Letter to Shareholders

The support that Chailease Holding has received from investors, both in Taiwan and abroad, since our public

listing has been affirmation of our performance and is our encouragement for the future. Our overall operational

performance last year was characterized by high growth, continued stability and ongoing progress, as we continued

to expand our operations while solidifying our base.

Taiwan, the birthplace of Chailease Holding, remains a testing ground for our innovative services. As we have done

over the past 37 years, we continue to focus on developing our niche markets and improving market segmentation

to provide a full range of SME financing services, and continue to extend the value chain of existing products while

developing technically advanced services and financing products to generate more non-interest income. Recent

new services have included Photovoltaics(PV) Esco financing, Energy- Saving financing, Cloud Platform Rentals

and insurance brokerage. Internally, we are making increased use of cross-selling processes; externally, we are

employing strategic alliances to expand and promote the marketing of existing products, to provide enhanced

customer service and to increase revenue sources.

We have two primary horizontal alliances. First, we are working closer with Bombardier, the leader in Canada's

navigation industry, to develop trade and financing in the Asia Pacific region's corporate and private jet market.

Second, we are enhancing our cooperative relationship with Mitsubishi UFJ. In the wake of the tragedy in

Fukushima, the Japanese Government expanded its solar power generation assistance policies, which had the

effect of driving sector demand in the Japanese market. Chailease Holding developed a power conservation

financing capability to assist Taiwanese solar power manufacturers obtain financing for the equipment they need to

set up solar power generation plants in Japan.

In 2013 we established four new branches in Mainland China; in Dalian, Shijiazhuang, Wuxi and Hefei. In Mainland

China, we now have six major regional centers and 25 branches, all of which allows us to implement policies better,

to offer a more exhaustive range of services and to offer products in line with the needs of the market.

We are continuing our overseas expansion strategy, reflecting the success of Taiwan's expansion in the Asia

Pacific region. In Mainland China, we continue to add 3~5 new branches and employees each year to expand our

operations in that market. This year, we have plans to establish a presence in the Kunshan Experimental Zone and/

or Shanghai Free Trade Zone to take advantage of preferential measures offered there, so that we can provide

innovative services and increase opportunities for our cross-border services.

9

We will be looking to develop an increased focus on Southeast Asia due to our anticipation of increased business

activity resulting from, for example, the formation of the cooperative framework of the Comprehensive Economic

Partnership in East Asia and the 2015 milestone of ASEAN integration. We aim to increase our presence in Thailand

and Vietnam and to establish and increase our presence in other emerging countries in the Greater Mekong region,

including Laos, Myanmar, and Cambodia.

Chailease Holding currently has seven branches and 15 operation points in Thailand. In Vietnam, it has three

branches; in Ho Chi Minh City, Hanoi, and Can Tho. Because Thailand is located at ASEAN's transport hub and

is a regional leader in banking and trade, we decided that Asia Sermkij Leasing Co., Ltd. (Bangkok) would serve

as Chailease Holding's development center for ASEAN, so that we could leverage the company's years of local

experience in business development and credit screening, its industry resources and its advantageous position

among nearby ASEAN nations, and use it as a base for developing the ASEAN market

Chailease Holding is also optimistic about the development potential of Russia's equipment leasing and trade

financing sector. We have established a Russia representative office in Moscow and are preparing to station

Chailease Holding employees there.

In addition to continuing our focus on expanding business and achieving stable revenue growth, Chailease Holding

continues to adhere to our principle of giving back to society. We continue to demonstrate our corporate values,

uphold our values of sustained operations, shoulder our responsibility to help SMEs develop, help customers

succeed and generate operational performance worthy of our shareholders, while striving to take good care of our

employees. We believe that we have become the industry standard, the role model to which others in the industry

look. We will continue to work hard to make investors even more confident in our current operations and future

plans.

Fong-Long Chen,

Executive Chairman


pany Limited

10

II Introduction to the Company

(1) Date of establishmentChailease Holding Company Limited (hereinafter referred to as the "Company") was founded on December 24, 2009 under the company act of Cayman Islands. The core business of the Company is to provide diverse financial services to SMEs, including leasing, installment sales, factoring and direct financing. As a professional financial service company, we currently have operations in Taiwan, PRC, Thailand, Vietnam and USA.

(2) History of the CompanyChailease Holding Company Limited commenced operations in Taiwan in 1977 under the name of China Leasing Company Limited and initially provided asset-based financing. China Leasing initially provided primarily asset-backed financing to companies in heavy industries to help them acquire manufacturing machinery and equipment and upgrade their manufacturing facilities. In 1980, China Leasing established CITC Co., Ltd. ("CITC") to specialize in installment sales. In 1995, China Leasing merged with CITC and CITC changed its name to Chailease Finance in order to increase the competiveness with international large-sized financial leasing companies abroad and strengthen the ability to raise funds. In 1999, the excellent management team led the Company to begin the project of business process improvement, actively promote various innovation projects and lay a solid foundation for a great leap into becoming a world financial company.

The Company has taken the lead in joining international organizations such as the American Leasing Association, Asian Leasing Association, International Finance and Leasing Association and Factors Chain International since its establishment to provide customers with international-quality professional service. We founded the Taipei Leasing Association while continuing to access the latest knowledge and technology from financial related business in advanced countries, such as Europe, America and Japan to maintain our professional advantage among other similar companies.

11

Under the guidance of multi-dimensional strategies, the subsidiaries that specialize in the niche market have been established in Taiwan continuously, including Fina Finance & Trading Co., Ltd., Chailease Consumer Finance Co., Ltd., Apex Credit Solutions Inc., China Leasing Co., Ltd., Chailease Auto Rental Co., Ltd., Chailease Insurance Brokers Co., Ltd. and Chailease Cloud Service Co., Ltd.

Internationalization has also become the Company's critical strategy for business development. In 1989, we established the Bangkok Grand Pacific Lease Public Company Limited (hereinafter referred to as "BGPL") in Thailand through a joint venture with the Bangkok Bank to offer leasing and installment sales for the Taiwan business community in Thailand to obtain manufacturing machinery and equipment. In 1992, BGPL acquired Asia Sermkij Leasing Public Company Limited (hereinafter referred to as "ASK"), which specializes in installment sales for automobiles and personal loans. In 2004, the shareholding structure of ASK was reorganized and ASK became the parent company of BGPL. ASK went public in Thailand on August 25, 2005 and currently has 7 branches and 15 outlets.

In 2005, the Company received the first approval of foreign-owned leasing license from the PRC government to build Chailease International Finance Corporation (hereinafter referred to as "CIFC") in Shanghai. At the beginning of the development, the goal is to provide equipment and manufacturing machinery leasing to SMEs located in the PRC as well as foreign-owned companies. The years of efforts have helped the business expand from the costal area to inland and the Company now has 25 registered branches in the cities of Beijing, Tianjin, Qingdao, Shenyang, Shanghai, Suzhou, Ningbo, Wuhan, Xiamen, Shenzhen, Chongqing, Guangzhou, Nanjing, Wenzhou, Fuzhou, Zhongshan, Chengdu, Zhengzhou, Hangzhou, Changsha, Jinan, Dalian, Shijiazhuang, Wuxi and Hefei. The customer base is broadened to include local entities. CIFC continuously invested in specialized subsidiaries, including Chailease International Corporation, Chailease Finance International Corporation and Jirong Real Estate Company Limited.

In 2006, we received approval from the State Bank of Vietnam to establish Chailease International Leasing Company Ltd. in Ho Chi Minh City, an industrial and business center in Vietnam, and commenced operations in Vietnam in January 2007. Its main business is to provide leasing service of machinery equipment and automobiles for both Taiwanese and local companies. At present, CILC has set up three business offices in Ho Chi Minh City, Hanoi and Can Tho.

In 2007, Chailease Finance exchanged 100% of its shares with Financial One Corp. and became the subsidiary of Financial One Corp., which was listed in the Singapore Stock Exchange on July 11, 2007. Financial One Corp. was the first Taiwan-based financial enterprise that was successfully listed on the Singapore Stock Exchange.

To integrate the operations in Asia, Chailease Holding Company Limited was incorporated under the laws of the Cayman Islands in 2009 and the project of reorganization was launched. Financial One Corp. was voluntarily delisted from the Singapore Stock Exchange on April 27, 2011 and subsequently redeemed shares from its shareholders and allocated the shares of the Company to them on May 27, 2011. Financial One Corp. transferred the shares of the Company to its shareholders on the same day. Upon the completion of this transfer, the shareholders of Financial One Corp. came to hold shares of the Company directly and Financial One Corp. ceased to hold any shares in our Company.

The Company's shares were traded in the over-the-counter stock market of the ROC since July 11, 2011. On December 13, 2011, the Company was successfully listed on the TWSE.


pany Limited

12

II Corporate Governance Report(1) Organization

1. Organizational structure

Shareholders

Board

Chairman

President

Management Committee

Audit CommitteeCompensation Committee

Chief Legal

Officer

Legal Departm

ent

Risk M

anagement

Departm

ent

Hum

an Resource D

epartment

Accounting and Financial D

epartment

Investor Relations &

Public Relations D

epartment

Think Tank Departm

ent

IT Departm

ent

Administration D

epartment

Audit Departm

ent

Chief R

isk O

fficer

Chief H

uman

Resource O

fficer

Chief Financial

Officer

Chief Strategy

Officer

Chief Inform

ation O

fficer

Chief Audit

Officer

Chief Secretary

13

2、Business of departmentsA chairman and president are appointed in the Company and the president supervises chief officers. The president executes the resolutions of the Board in accordance with the instructions of the chairman and administers all affairs in the Company. The chief officers assist the president with the corporate business. If the president is unable to fulfill his duties, the one designated by the chairman shall perform the functions of the president.

Department Duties

Audit Comittee 1. Establish or modify the internal control system based on Article 14(1) of Securities and Exchange Act. 2. Audit the effectiveness of the internal control system. 3. Establish or modify the procedures related to acquisition or disposal of assets, financial derivatives

transactions, loans to others, endorsements or guarantees based on Article 36(1) of Securities and Exchange Act.

4. Act on matters bearing on the personal interests of a director.5. Significant transactions of assets and derivatives.6. A material monetary loan, endorsement, or provision of guarantees.7. Conduct collection, issuance and private placements of equity securities.8. Appoint, dismiss or compensate certified public accountants (CPA). 9. Employ and dismiss the financial, accounting and internal audit managers. 10. Annual financial reports and half yearly financial reports. 11. Other matters regulated by the Company and the authorities.

Compensation Committee 1. Determine and regularly review the policies, mechanism, standards, and elements in respect of the performance and remuneration of directors and managers.

2. Regularly assess and determine the remuneration of directors and managers.

Management Comittee 1. Give guidance to the overall operating status, management policies and directions. 2. Give guidance to the future critical management and development of the Company. 3. Give direction to, establish and follow the medium-term and long-term strategic targets.4. Establish the risk management framework and ensure the risk management activities.5. Establish the project team based on immediate needs and offer guidance. 6. Coordinate and direct the related business of departments and follow the implementation. 7. Formulate the high-level policies of integrated business development directions and strategies. 8. Execute the instructions of the Board.


pany Limited

14

Department Duties

Think Tank Department 1. Strategy related to corporate development(1) Conduct analyses and research in the industry, market or region and on the specific topics

designated by the chairman, president and top management as the basis for developing medium term and long term strategies.

(2) Assist in establishing and implementing the medium-term and long-term strategic development plans of the Holding Company.

(3) Assist in planning and integrating the strategies for each subsidiary to improve operational performance.

2. Strategy of the capital market (1) Continuously conduct analysis and research on certain capital markets and cooperate with the

financial department to form the best strategy in response to the capital market based on the need of fund raising for the medium-term and long-term development.

(2) Develop the strategy to join the capital market to maximize the benefits of fund raising. 3. Mergers and acquisitions

(1) Analyze the possible target for mergers and acquisitions, plan a schedule and organize the responsible departments.

(2) Be responsible for the communication, coordination or supervision of professionals in and outside the Company.

(3) Be responsible for the preparation of the resolutions for Board and shareholder meetings. 4. Supervision and Support on Subsidiary's Operation

(1) Supervise the performance of subsidiaries of the Holding Company and provide operational suggestions.

(2) Follow up on the execution of annual operational plans of the subsidiaries(3) Assist the subsidiaries of the Holding company in the improvement of the operating and

management systems. (4) Mediate conflicts among subsidiaries of the Holding Company and coordinate the distribution of

resources. (5) Research, plan and implement projects related to subsidiaries' operation.

5. Other tasks(1) Prepare and arrange the board meeting and functional committees of the Holding Company. (2) Organize and conduct the important operational meetings of the Holding Company, and follow up

on the meeting resolutions and management instructions.(3) Maintain and update the authorities of subsidiary matters reserved for the Holding Company.

Investor Relations and Public Relations Department

1. Establish, update and implement the spokesman system and information disclosure system. 2. Matters related to (irregular, regular and continuous) information disclosure. 3. Maintain media relations.4. Media promotion, planning and execution of advertising strategies and preparation of marketing

materials. 5. Communicate with shareholders. 6. Maintain relations with the authorities and exchanges. 7. Maintain relations with investors, potential investors, analysts and other juridical persons and arrange

meetings. 8. Matters related to Road Show. 9. Maintain the website (together with Business Management Department)10. Compile annual reports.

15

Department Duties

Accounting and Financial Department 1. Finance(1) Overall manage, allot and apply the financial resources of the Holding Company. (2) Plan, establish and examine the financial risk management policies of the Holding Company and

effectively supervise the implementation of the subsidiaries.(3) Overall plan and coordinate the transaction limits for the subsidiaries of the Holding Company with

the financial institutions. (4) Assist the subsidiaries in developing multiple ways to raise funds. (5) Examine the financial management of the subsidiaries and offer improvement suggestions. (6) Regularly convene the capital meetings of the Holding Company. (7) Develop multiple channels to raise funds in response to the capital requirements of the Holding

Company. (8) The financial management and cashier of the Holding Company. (9) Develop and establish the international ratings of the Holding Company.

2. Accounting(1) Establish a unified accounting policy in conformity with the external rules and the requirements of

the authorities and effectively supervise the implementation of the subsidiaries. (2) Participate in designing the accounting information system of the Holding Company. (3) Tax planning and analyses of the Holding Company. (4) Analyze and review the unified budget of the Holding Company, offer adjustment suggestions and

implement management.(5) Compile the pro forma financial statement of the specific goal for the reference of the management

level in decision-making.(6) Overall plan the audit schedule for the financial report of the Holding Company, implement the plan

and carry out the tasks. (7) Compile the quarterly/ half-yearly/ annually consolidated financial statements of the Holding

Company and submit them to the audit committee and Board for discussion. (8) Examine the compilation of the financial statements of the subsidiaries and provide improvement

suggestions.(9) Supervise and assist in the accounting problems of the subsidiaries. (10) Compile, publish and disclose the financial statements and information such as monetary loans,

endorsements and guarantees of the Holding Company.(11) Compile, control and publish the transactions of the parties of the Holding Company. (12) Deal with routine financial affairs of the Holding Company and its subsidiaries in part and compile

the financial statements. (13) Implement the quarterly/ half-yearly/ annually audits on the Holding Company and its subsidiaries

in part.3. Others

(1) Assist the subsidiaries in financial/ accounting training and offer supporting services. (2) Participate in the investments and merger planning of the Holding Company. (3) Conduct financial, accounting and tax risk evaluation in coordination with the specific policy.

Human Resources Department 1. Development of the group human resources(1) Plan and develop the medium-term and long-term strategies of training and retention for the group. (2) Supervise the distribution of human resources, the control of labor cost, the productivity of employees

and other management indices of the subsidiaries. (3) Offer consultation of the human resources policies to the subsidiaries.(4) Deal with the human resources submissions of the subsidiaries. (5) Transfer and manage the employees of the subsidiaries.

2. Human resources related to Chailease Holding(1) Carry out the administrative tasks related to human resources of the Holding Company. (2) Implement and manage the policies of the Compensation Committee.

3. Manage the list of directors and supervisors.


pany Limited

16

Department Duties

Risk Management Department 1. Manage and supervise the establishment of evaluation, risk assessment and risk management policies for the financial asset quality of the Holding Company.

2. Assist the subsidiaries in the risk assessment system.3. Be in charge of analyzing the risk assessment quality of significant projects of the Holding Company.4. Regularly provide information about the risk analysis of the asset portfolio. 5. Adjust the normal ratio of allowance for bad debts based on the product quality. 6. Be in charge of the risk management project planning of the Holding Company. 7. Plan the risk management affairs and submit to the executive committee and the Board.8. Promote and implement the decisions on risk management made by the "Management Committee

and the Board."

Legal Department 1. Legal affairs(1) Plan and execute annual projects.(2) Provide legal consultation to the Holding Company and overseas subsidiaries.(3) Compose, review and revise Chinese and English contracts and documents. (4) Participate in designing and developing new products of the subsidiaries.(5) Attend to and manage the intellectual property rights. (6) Undertake and manage important lawsuits.(7) Assist in the shareholders' meeting.

2. Legal compliance(1) Regularly examine and modify the internal and external rules.(2) Regularly notify the latest legal information to the relevant departments.(3) Confirm that the corporate operations and product design complying with the laws.(4) Plan, implement and check for compliance affairs annually. (5) Plan and implement the compliance training of the middle and high-level managers. (6) Manage the matters related to the information disclosure of the listed company. (7) Serve as the contact window of Taiwan Stock Exchange (TESE).

Audit Department 1. Assist the Board in assessing the reliability, adequacy and effectiveness of the internal controls.2. Examine whether the internal control system can quickly generate accurate transaction records and

reliable financial reports and ensure adequate protection of assistance. 3. Check whether the external laws and internal policies are observed.

IT Department 1. Be in charge of establishing the medium term and long-term information development strategies of the Holding Company.

2. Participate in formulating the information safety policies of the Holding Company.3. Be in charge of discussing and assessing the main information investments of the Holding Company.4. Deal with and offer consultation on information-related business to the subsidiaries. 5. Assist the Holding Company in policymaking of IT applications and supervise the implementation of

improvement engineering. 6. Direct the implementation and promotion of information integration in the Holding Company.7. Assist the Holding Company in planning the standard operating procedures.8. Supervise the promotion and implementation of information safety in the Holding Company.

Administrative Department 1. Job related to the Board(1) Be responsible for the administrative matters of the Board in Chailease Holding Company Limited

and subsidiaries. (2) Share affairs of the Holding Company.

2. Property and general matters Be in charge of management, documents, business and commerce, general service, cleaning, safety

and other instructions from the superiors.

17

(2) Information regarding the board of directors and management team:1. Directors and supervisors:

(1) DirectorsApril 1, 2014 Unit: share

Position

Name

Intitially elected on

Position held since

Tenure

Shares held since the

first election (appointment)

Shares currently held

Shares currently held by

spouse and underage children

Shares held under the nam

e of others

Experience and education

Position(s) held concurrently in the company and/or in any other company

Other managers, directors and supervisors with a spouse and relative

within the second degree of kinship

Shares

Percentage

Shares

Percentage

Shares

Percentage

SharesPercentage

Position

Nam

e

Relations

Chairman

Fong-Long Chen 2011/03/21

3 years

2009/12/24 －－ 2,249,319 0.23% 166,100 0.02% －－■ Master of Science, Sloan

School of Management, MIT, USA Note1 －－－

Director

Andre J.L. Koo 2011/03/21

3 years

2010/05/17 －－ 48,599,593 4.88% 26,061 0.00% －－■ MBA, Leonard N. Stern School of

Business, NYU, USA Note 2 －－－

Director

Beacon Hill Co., Ltd. 's representative:Mo-Na Chien

2011/06/27

3 years

2011/06/27 10,000,000 1.32% 11,000,000 1.10% －－－－

■ Bachelor of Agriculture Economics, National Taiwan University

■ Senior Executive Program, Sloan School of Management, MIT, USA

Note 3 －－－

Director

Chee Wee Goh 2011/03/21

3 years

2011/03/21 －－－－－－－－

■ Bachelor of Science ( First Class Honours ) , University of Singapore.

■ Master of Science in Engineering, University of Wisconsin, USA

■ Diploma in Business Administration, University of Singapore (now National University of Singapore), Singapore

Note 4 －－－

Director

Wiedner Co., Ltd.'s representative:Chi-Ching Chen

2011/06/27

3 years

2011/06/27 8,080,796 1.07% 7,238,875 0.73% －－－－

■ Master of Business Administration, Sloan School of Management, MIT, USA

Note 5 －－－


Steven JeremyGoodman

2011/03/21

3 years

2011/03/21 －－－－－－－－

■ MBA from Nanyang Technological University, Singapore

■ Law Degree LLB from Manchester University, England

■ Passed the Solicitors Finals Examinations from the College of Law, Law Society of England and Wales (with Honours)

■ Passed the Overseas Lawyers Qualification Examination, Hong Kong Law Society

Note 6 －－－


Shin-Chin, Chen 2011/06/27

3 years

2011/06/27 －－－－－－－－■ Bachelor of Accounting,

Soochow University Note 7 －－－


pany Limited

18

Position

Name

Intitially elected on

Position held since

Tenure

Shares held since the

first election (appointment)

Shares currently held

Shares currently held by

spouse and underage children

Shares held under the nam

e of others


Position(s) held concurrently in the company and/or in any other company

Other managers, directors and supervisors with a spouse and relative

within the second degree of kinship

Shares

Percentage

Shares

Percentage

Shares

Percentage

SharesPercentage

Position

Nam

e

Relations


Dar Yeh Hwang 2011/03/21

3 years

2011/03/21 －－－－－－－－

■ B.A. in Banking, National Cheng-Chi University

■ M.A. Program in Economics/ political Science, National Taiwan University

■ Ph.D. Program in Finance Kellogg School, Northwestern University

■ M.S./ Ph.D. Program in Finance, Stern School , New York University

■ MBA./ Ph.D. in Finance, Rutgers University

■ Ph.D. Candidate of School of Journalism & Communication, Peking University; PhD program of Tsinghua University School of Law

■ PhD program of Tsinghua University School of Law

Note 8 －－－


Chin Fock Hong 2011/03/21

3 years

2011/03/21 －－－－－－－－

■ Bachelor of Social Science, University of Singapore (now National University of Singapore), Singapore.

■ Attended an International Tax Programme at Harvard Law School.

Note 9 －－－

Note 1：President of Chailease Holding Company Limited; Chairman of Chailease Finance Co., Ltd.; Chairman of Fina Finance & Trading Co., Ltd.; Chairman of China Leasing Co., Ltd.; Chairman of Chailease Credit Service Co., Ltd.; Chairman of Chailease Cloud Service Co., Ltd.; Chairman of Chailease International Finance Corporation; Chairman of Chailease International Corp.; Chairman of Chailease Finance International Corporation; Chairman of Jirong Real Estate Co., Ltd.; Chairman of Finance (B.V.I.) Company Ltd.; Director of My Leasing (B.V.I.) Corp.; Director of Chailease International (B.V.I.) Corp.; Director of Golden Bridge (B.V.I.) Corp.; Director of My Leasing(Mauritius) Corp.; Director of Asia Sermkij Leasing Public Co., Ltd.; Director of Bangkok Grand Pacific Lease Public Co., Ltd.; Director of Grand Pacific Holdings Corp.; Director of Chailease International Financial Services Co., Ltd. (He holds positions in 19 companies in total.)

Note 2：Chairman of the Management Committee of Chailease Holding Company Limited; Chairman of Chailease Group (He holds positions in 2 companies in total.)

Note 3：Chairman of GigaMedia Limited; Chairman of S.K. Machinery Co., Ltd.; Supervisor of Mextek Techology CO., Ltd.; Director of Lian hwa Foods Corporation. (He holds positions in 4 companies in total)

Note 4：Director of a number of NTUC Co-operatives and SLF subsidiary companies; Independent director of Beng Kuang Marine, Ltd; Chip Eng Seng Corporation Ltd, King Wan Corporation Ltd; Sinotel Technologies Ltd; Stamford Tyres Corporation Ltd and Sin Ghee Huat Corporation Ltd. (He holds positions in 7 companies in total.)

Note 5：Director of Chailease Finance Co., Ltd.; Non-Executive Director and Chief Financial Officer of GigaMedia Limited ; Director of GigaMedia International Holdings Limited; Director of Hoshin GigaMedia Center Inc.; Director of GigaMedia Cloud Services Co., ltd.; Director of GigaMedia (HK) Limited; Director of FunTown Hong Kong Limited; Representative of Hoshin GigaMedia Center Inc. FunTown Branch (He holds positions in 8 companies in total)

Note 6：Adjunct Professor of Law at the Law Faculty of Bond University.; Solicitor qualified in UK and in Hong Kong(non-practising).; Director and CEO of Teras Group Pte Ltd.

Note 7：Director of China Bills Finance Corporation (He holds 1 position in one company in total.)Note 8：Professor, Dep. of Finance, National Taiwan University; Director, Center for the Study of Banking and Finance, National Taiwan University;

Funding Chairman, Banking Education Association of Taiwan; Chairman, Turnaround Management Association of Taiwan; Chairman & Dean, Academy of Promoting Economic Legislation; Independent Director of DBS, Taiwan; Consulting Member, Central Deposit Insurance Corporation; Vice Chairman, Academic Committee of AFMA, Peking University

Note 9：Director of Shared Services for Charities Ltd.; Director of Binjaitree.; Independent director of Riverstone Holdings Limited.; Non-Executive Director of Prima Limited.; Independent director of Gigamedia Limited. (He holds positions in 5 companies in total.)

19

(2) Supervisors: No supervisors are established since because an audit committee is formed by the independent directors in accordance with the Articles of Association.

(3) Main shareholders of the corporate directorApril 1, 2014

Name of corporate shareholder Main shareholders of the corporate shareholder

Beacon Hill Co., Ltd. First Asia Co., Ltd.（100%）

Wiedner Co., Ltd. Julius (Asia) Co., Ltd.（100%）

(4) Main shareholders of the corporate director as a juridical personApril 1, 2014

Name of corporate shareholder Main shareholders of corporate shareholder

First Asia Co., Ltd. Tsau-Ping Chung (100%)

Julius (Asia) Co., Ltd. Tsau-Ping Chung (100%)

(5) Directors' (including independent directors) Professional Knowledge and Independent InformationApril 1, 2014

Qualifications

Name (Note1)

Professional qualification requirements, together with at least five years work experience

Independent Status (Note)

Concurrent post of

independent director in

other public release

company

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 col lege, college, or university

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

Work experience in the area

of comm

erce, law, finance, or accounting, or otherw

ise necessary for the business of the com

pany 1 2 3 4 5 6 7 8 9 10

Fong-Long Chen V V V V V V V V -

Andre J.L. Koo V V V V V V V V -

Chee Wee Goh V V V V V V V V V V -

Beacon Hill Co., Ltd.'s Representative: Mo-NA, Chien

V V V V V V V V -

Wiedner Co., Ltd.'s Representative: Chi-Ching Chen

V V V V V V V V V -

Dar Yeh Hwang V V V V V V V V V V V 1

Steven Jeremy Goodman V V V V V V V V V V V V V -

Chin Fock Hong V V V V V V V V V V V V -

Shin-Chin, Chen V V V V V V V V V V V -


pany Limited

20

Note : If the director or supervisor meets the qualifications prior to two years before being elected or during the tenure, check the box of the corresponding code.(1) Not an employee of the Company, or any of its affiliates.(2) Not a director, supervisor of the Company, or any of its affiliates, (unless the person is an independent director of the Company, its parent

company, or any subsidiary in which the Company holds, directly or indirectly, more than 50 percent of the voting shares). (3) Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children or held by the person

under another's names, in an aggregate amount of one percent or more of the total number of issued shares of the company or ranking in the top 10 in holdings.

(4) Not 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 sub-paragraphs.

(5) Not a director, supervisor or employee of a corporate shareholder that directly holds five percent or more of the total number of issued shares of the company or that holds shares ranking in the top five in holdings.

(6) Not 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 the company.

(7) Not a professional individual 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. The member in the compensation committee performs the duties according to the Article 7 of Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is listed on the Stock Exchange or Traded Over the Counter is excluded.

(8) Not a spouse nor within 2 degrees of consanguinity relative to any directors.(9) Not any of the circumstances in the sub-paragraphs of Article 30 of the Company Act. (10) Not elected in the capacity of the government, a juridical person or a representative thereof, as provided in Article 27 of the Company Act.

2. Presidents, executive vice presidents, vice presidents and heads of departments and branches:April 1, 2014 Unit:share

PositionName

Position held since

(Note1)

Shares held

Shares currently held by spouse and underage

children

Shares held

under the

name of others


Position(s) held concurrently in any other com

pany

Managers, directors or

supervisors who are spouse

or within 2 degrees of

consanguinity to each Other

Employee stock option certificate acquired

Share Percentage Share Percentage

Share

Percentage

Position

Nam

e

Relations

President Fong-Long Chen

2011/02/11 2,249,319 0.23% 166,100 0.02% - - ■ Master of Science, Sloan School of Management, MIT, USA

Note 2 - - - -

Chief Financial Officer

Chia-Jeang Liu

2011/02/11 621,500 0.06% 5,000 0.00% - - ■ Master of Business Administration, Sloan School of Management, MIT, USA

Note 3 - - - -

Chief Audit Officer

Tzu-Ting Yang

2011/02/11 655,631 0.07% - - - - ■ MBA, University of Southern California, USA

Note 4 - - - -

Chief Risk Officer

Jung-Tao Lee

2009/01/01 969,412 0.10% 33,454 0.00% - - ■ Bachelor of Statistics, National Cheng Kung University

Note 5 - - - -

Chief Human Resource Officer

Hsiu-Tze Cheng

2004/01/01 472,706 0.05% 47,300 0.00% - - ■ EMBA, National Taiwan University

Note 6 - - - -

21

Position

NamePosition

held since (Note1)

Shares held

Shares currently held by spouse and underage

children

Shares held

under the

name of others


Position(s) held concurrently in any other com

pany

Managers, directors or

supervisors who are spouse

or within 2 degrees of

consanguinity to each Other

Employee stock option certificate acquired

Share Percentage Share Percentage

Share

Percentage

Position

Nam

e

Relations

Chief Strategy Officer

Ying-Chih Liao

2006/07/03 - - 519,200 0.05% - - ■ Ph.D. Program, Harvard University, USA

Note 7 - - - -

Chief Legal Officer

Shi-Ren Shen

2012/01/01 151,500 0.02% - - - - ■ Bachelor of Law, Soochow University

Note 8

Senior Vice President

Chih-Ho Wei

2010/04/01 37,606 0.00% - - - - ■ MBA major in International Finance, City University of New York, USA

Note 9 - - - -


Yu-Ting Weng

2010/03/01 134,924 0.01% - - - - ■ Vice bachelor of National University of Technology

Note 10

- - - -


Chin-Tse Liu

2005/09/26 49,500 0.00% - - - - ■ EMBA, National Cheng-Chi University

Note 11

- - - -


Shih-Wei Chien

2003/03/01 120,556 0.01% - - - - ■ Vice bachelor of business administration, Aletheia

Note 12

- - - -


Mei-Fang Fan

2012/04/09 - - - - - - ■ MBA, University of Washington, USA

Note 13

Vice President

Ching-Ying Sun

2013/01/01 68,200 0.01% 9,331 0.00% - - ■ MBA, The George Washington University, USA

Note 14

Note 1 : The date that the person held the position in the Company.Note 2 : Chairman of Chailease Finance Co., Ltd.; Chairman of Fina Finance & Trading Co., Ltd.; Chairman of China Leasing Co., Ltd.; Chairman of Chailease

Credit Service Co., Ltd.; Chairman of Chailease Cloud Service Co., Ltd.; Chairman of Chailease International Finance Corporation; Chairman of Chailease International Corp.; Chairman of Chailease Finance International Corporation; Chairman of Jirong Real Estate Co., Ltd.; Chairman of Finance (B.V.I.) Company Ltd.; Director of My Leasing (B.V.I.) Corp.; Director of Chailease International (B.V.I.) Corp.; Director of Golden Bridge (B.V.I.) Corp.; Director of My Leasing(Mauritius) Corp.; Director of Asia Sermkij Leasing Public Co., Ltd.; Director of Bangkok Grand Pacific Lease Public Co., Ltd.; Director of Grand Pacific Holdings Corp.; Director of Chailease International Financial Services Co., Ltd. (He holds positions in 18 other companies in total.)

Note 3 : Director of Chailease International Conpany (Malaysia) Limited; Director and Senior Executive Vice President of Chailease Finance Co., LTD.; Chairman and President of Apex Credit Solutions Inc.; Supervisor of Chailease Credit Services Co.,Ltd.; Chairman and President of Chailease Insurance Brokers Co., Ltd.; Chairman and President of Chailease Consumer Finance Co., Ltd.; Chairman and President of Chailease Auto Rental Co., Ltd.; Director of Asia Sermkij Leasing Public Co., Ltd.; Chairman of Chailease International Leasing Co., Ltd.; Director of Grand Pacific Holdings Corp.; Director of CLJ Capital Management Company Limited; Director of CLJ Investment Partners Company Limited and Director of Finex Co. Ltd. (He holds positions in 13 other companies in total.)

Note 4 : Senior Executive Vice President and Supervisor of Chailease Finance Co., LTD.; Supervisor of Fina Finance & Trading Co., Ltd.; Director of Primax Electronics Ltd. (He holds positions in 3 other companies in total.)


pany Limited

22

Note 5 : Director, Senior Executive Vice President of Risk Management Services and Head of Information Technology Services of Chailease Finance Co., LTD; Director and President of Fina Finance & Trading Co., Ltd.; Director and President of China Leasing Co., Ltd.; Director of Chailease Credit Services Co.,Ltd.; (He holds positions in 4 other companies in total.)

Note 6 : Director and Head of Human Resources Services of Chailease Finance Co., LTD; Chief Human Resource Officer of Chailease International Finance Corporation (She holds positions in 2 other companies in total.)

Note 7 : Senior Executive Vice President of Chailease Finance Co., LTD; Director of Asia Sermkij Leasing Public Co., Ltd.; Director of Tait Marketing & Distribution Co., Ltd.; Director of Body Organ Biomedical Corp. (He holds positions in 4 other companies in total.)

Note 8 : Vice President of Chailease Finance Co., LTD; Supervisor of Chailease Consumer Finance Co., Ltd. (He holds positions in 2 other companies in total.)

Note 9 : Senior Vice President of Chailease Finance Co., LTD; Director of Apex Credit Solutions Inc.; Supervisor of Finex Co., Ltd. (He holds positions in 3 other companies in total.)

Note 10 : Senior Vice President of Chailease Finance Co., LTD. (He holds one position in another company.)Note 11 : Senior Vice President of Chailease Finance Co., LTD. (He holds one position in another company.)Note 12 : Senior Vice President of Chailease Finance Co., LTD. (He holds one position in another company.)Note 13 : Senior Vice President of Chailease Finance Co., LTD. (She holds one position in another company.)Note 14 : Vice President of Chailease Finance Co., LTD. (She holds one position in another company.)

23

3. Directors, presidents and executive vice presidents remuneration in the most recent fiscal year:(1) Directors (including independent directors) remuneration

Unit: NT$ thousands

Po

sition

Name

Remuneration to directors4 items

combined to net income

(%)

Employee remuneration7 items

combined to net income

(%)

Re

mu

ne

ratio

n o

f rein

vestm

en

t bu

sine

ss

Honoranium Retirement pay

Earning distribution

Business expenses

Bonus and special

remuneration

Retirement pay

Employee's bonus of earning

distribution

Number of

employee stock

options

Number of

restricted stock

awards

Chailease H

olding

Companies in the

consolidated financial

statements

Chailease H

oldin

Companies in the


statements

Chailease H

oldin

Companies in the


statements

Chailease H

oldin

Companies in the


statements

Chailease H

oldin

Companies in the


statements

Chailease H

oldin

Companies in the


statementsC

hailease Holdin

Companies in the


statements

Chailease Holding

Companies in the


statements (Note 8)

Chailease H

oldin

Companies in the consolidated financial statements

Chailease H

oldin


Chailease H

oldin


Ca

sh

Stock

Ca

sh

Stock

Chairman Fong-Long Chen

93,032 96,512 4,706 4,706 642 642 1.58% 1.64% 24,594 31,388 0 108 295 295 1.99% 2.15%

Director Andre J.L. Koo

Corporate director

Corporate representative: Mo-Na, Chien

Director Chee Wee Goh

Corporate director

Corporate representative: Chi-Ching Chen

Independnet director

Steven Jeremy Goodman

Independnetdirector

Shin-Chin, Chen

Independnetdirector

Dar Yeh Hwang

Independnetdirector

Chin Fock Hong

Note : The remuneration to drivers of directors who are also employees totals NT$1,800,000.

Range of Remunerations

Range of remunerations

Name of directors

4 items combined 7 items combined

Chailease HoldingCompanies in the

consolidated financial statements

Chailease HoldingCompanies in the

consolidated financial statements

< 2 million

Fong-Long Chen, Mo-Na, Chien, Chee Wee Goh, Chi-Ching Chen, Shin-Chin, Chen, Chin Fock Hong

Fong-Long Chen, Mo-Na, Chien, Chee Wee Goh, Chi-Ching Chen, Shin-Chin, Chen, Chin Fock Hong

Mo-Na, Chien, Chee Wee Goh, Chi-Ching Chen, Shin-Chin, Chen, Chin Fock Hong

Mo-Na, Chien, Chee Wee Goh, Chi-Ching Chen, Shin-Chin, Chen, Chin Fock Hong

2 million (incl.)~5 million (excl.)Steven Jeremy Goodman,Dar Yeh Hwang

Steven Jeremy Goodman,Dar Yeh Hwang

Steven Jeremy Goodman,Dar Yeh Hwang

Steven Jeremy Goodman, Dar Yeh Hwang

5 million (incl.)~10 million (excl.)


15 million (incl.)~30 million (excl.) Fong-Long Chen


50 million (incl.)~100 million (excl.) Andre J.L. Koo Andre J.L. Koo Andre J.L. Koo Andre J.L. Koo

Total 9 people 9 people 9 people 9 people

The remuneration to supervisors: no supervisors are appointed in the company, so no remuneration is paid to supervisors.


pany Limited

24

(2) Remuneration to presidents and executive vice presidentsUnit: NT$ thousands

Position

Name

RemunerationRetirement

pay

Bonus and special

remunerationEmployee's bonus

4 items combined to net income

(%)

Number of employee

stock options

Number of restricted

stock awards

Remuneration of reinvestm

ent business

Chailease H

olding

Companies in the


statements

Chailease H

olding

Companies in the


statements

Chailease H

olding

Companies in the


statements

Chailease Holding

Companies in the consolidated financial

statements

Chailease H

oldingCompanies

in the consolidated financial

statements

Chailease H

olding

Companies in the


statements

Chailease H

olding

Companies in the


statementsCash Stock Cash Stock

PresidentFong-Long Chen

11,433 39,771 441 2,266 65,459 82,799 882 1,032 1.26% 2.03%

Chief Financial Officer

Chia-Jeang

LiuPresident

of Business Group

Ming-Ching Hou

President of Business

Group

Hung-Cheng

TsaiPresident

of Business Group

Kun-Ming Chen

Chief Audit

Officer

Tzu-Ting Yang

Chief Risk

Officer

Jung-Tao Lee

Chief Human

Resource Officer

Hsiu-Tze Cheng

Chief Strategy Officer

Ying-Chih Liao

Chief Legal Officer

Shi-Ren Shen

(Note)The remuneration to drivers of managers totals NT$3,881,000.

Range of Remuneration

Range of remuneration

Name of presidents and executive vice presidents

Chailease HoldingCompanies in the consolidated financial

statements

<2 million

2 million (incl.)~5 million (excl.)Kun-Ming Chen, Tzu -Ting Yang, Hsiu-Tze Cheng, Shi-Ren Shen

5 million (incl.)~10 million (excl.)Chia-Jeang Liu, Ming-Ching Hou, Hung-Cheng Tsai, Jung-Tao Lee, Ying-Chih Liao

Tzu -Ting Yang, Hsiu-Tze Cheng, Shi-Ren Shen

10 million (incl.)~15 million (excl.)Chia-Jeang Liu, Ming-Ching Hou, Hung-Cheng Tsai, Kun-Ming Chen, Jung-Tao Lee, Ying-Chih Liao


25

Range of remuneration

Name of presidents and executive vice presidents

Chailease HoldingCompanies in the consolidated financial

statements



Total 10 people 10 people

(Note)Fong-Long Chen, the president, settled based on her seniority till January 31, 2012.

(3) Names of managers and distribution details:

Unit:NT$ thousand

Position Name Stock dividends Cash dividends TotalTotal to net income

(%)

President Fong-Long Chen

882 882 0.01%

Chief Financial Officer Chia-Jeang Liu

President of Business Group

Ming-Ching Hou


Hung-Cheng Tsai


Kun-Ming Chen

Chief Audit Officer Tzu-Ting Yang

Chief Risk Officer Jung-Tao Lee

Chief Human Resource Officer

Hsiu-Tze Cheng

Chief Strategy Officer Ying-Chih Liao

Chief Legal Officer Shi-Ren Shen

4. The percentage of remuneration paid by the Company and all companies in the consolidated financial reports to the directors, supervisors, presidents, and executive vice presidents in the net income for the past 2 years is analyzed. The correlation between the remuneration payment policy, standard and structure, setting procedure and operational performance as well as future risks are described below. (1)The percentage of remuneration paid by the Company and all companies in the consolidated financial

reports to the directors, supervisors, presidents, and executive vice presidents in the net income for the past 2 years is analyzed.

Unit:NT$ thousand

Year 2012 2013

Item

Amount Percentage of net income AmountPercentage in the net

income

Chailease Holding

Companies in the consolidated

financial statements

Chailease Holding



Chailease Holding



Chailease Holding



Director 115,950 159,456 2.87% 3.95% 123,269 133,651 1.99% 2.15%

President and executive vice president

52,173 138,651 1.29% 3.44% 78,215 125,868 1.26% 2.03%

Total 143,053 237,330 3.55% 5.88% 174,672 225,804 2.81% 3.64%


pany Limited

26

(2) The correlation between the remuneration payment policy, standard and structure, setting procedure and operational performance as well as future risks. The remuneration policy of the Company is determined based on the corporate management strategy, personnel policy and payment capability. The remuneration of key managers via the approval of Compensation Committee, and submitted to the Board resolution.The leadership, strategy planning and execution ability of managers play fundamental roles in the delivery of vision, realization of long-term and short-term operational goals and improvement of operational performance. In order to closely link the performance of managers to the corporate profits and interests of shareholders, the Company regularly authorizes a professional management consulting company to conduct research on the compensation of financial competitors and examine the compensation level of the Company based on the survey results to offer competitive compensation. We offer bonuses based on the overall operation and individual performance to practically realize the performance bonus system. The company's future risk depends on the asset quality of credit loss situation, the company has set up the Risk Management Department which is in charge of managing and supervising the financial asset's quality and will be adjusted the normal ratio of allowance for bad debts based on the product quality; while the bad debt losses increases, the personal performance and remuneration of directors, presidents and executive vice presidents will be reduced relatively.The Company also offers a retirement superior to the legally regulated one with an expectation that managers can devote their best efforts and strength to the Company. (The retirement plan is applicable to general employees as well).

(3) Corporate governance practices1. Implementation status of the Board:

10 board meetings (A) have been convened in the last year and the attendance of directors is described as follows:

Position Name Actual attendance Proxy attendanceActual attendance

(%)Remarks

Chariman Fong-Long Chen 10 0 100%2013/6/13re-elected as Chairman

Director Andre J.L. Koo 7 3 70%

Director Chee Wee Goh 7 3 70%

Independent director Dar Yeh Hwang 10 0 100%

Independent director Steven Jeremy Goodman

10 0 100%

Independent director Chin Fock Hong 9 1 90%

Independent director Shin-Chin, Chen 8 2 80%

DirectorBeacon Hill Co., Ltd.'s Representative: Mo-NA, Chien

10 0 100%

DirectorWiedner Co., Ltd.'s Representative: Chi-Ching Chen

9 1 90%

27

Other mentionable items:1. Any matter listed in Article 14-3 of "Securities and Exchange Act" and any recorded board resolution for which an

independent director has an objection or reservation that should be noted: None.2. There were no recusals of Directors due to conflicts of interests in 2013.3. Measures taken to strengthen the functionality of the Board: The Company's Board of Directors has established

an Audit Committee and a Compensation Committee to assist the Board in carrying out its various duties. For further information regarding the operations of the Audit Committee and Compensation Committee, please refer to page 27 to page 31.

2. Operating status of the Audit Committee or supervisors in the board of the Company: 7 audit committee meetings (A) have been convened in the last year and the attendance of independent directors is described as follows:

Position Name Actual attendance Proxy attendanceActual attendance

(%)Remarks

Independent director Dar Yeh Hwang 7 0 100%

Independent directorSteven Jeremy Goodman

7 0 100%

Independent director Chin Fock Hong 7 0 100%

Independent director Shin-Chin, Chen 5 2 71.43%

Annotations:1. There was no "Securities and Exchange Act" Article 14-5 resolution which was not approved by the Audit Committee

but was approved by two thirds or more of all directors in 2013.2. There were no recusals of Independent Directors due to conflicts of interests in 2013.3. Descriptions of the communications between the Independent Directors, the internal auditors, and the independent

auditors in 2013 (e.g. the channels, items and/or results of the audits on the corporate finance and/or operations, etc.) :(1) The internal auditors have sent the audit reports to the members of the Audit Committee periodically, and

presented the findings of all audit reports in the quarterly meetings of the Audit Committee. The head of Internal Audit will immediately report to the members of the Audit Committee any material matters. During 2013, the head of Internal Audit did not report any such material matters. The communication channel between the Audit Committee and the internal auditor functioned well.

(2) The Company's independent auditors have presented the findings of their quarterly review or audits on the Company's financial results. Under applicable laws and regulations, the independent auditors are also required to immediately communicate to the Audit Committee any material matters that they have discovered. During 2013, the Company's independent auditors did not report any irregularity. The communication channel between the Audit Committee and the independent auditors functioned well.


pany Limited

28

3. Corporate governance in the Company and the difference between its governance and the Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies and reasons

Item StatusDeficiency and

reasons

i. Shareholding structure and shareholders' rights(1) Methods of handling shareholder

suggestions or complaints(2) The possession of the list of major

shareholders and the list of ultimate owners of these major shareholders

(3) Risk management mechanism and "firewall" between the Company and its affiliates

(1) The Company particularly creates an e-mail account and arranges persons, responsible for dealing with shareholder's suggestions and complaints.

(2) We have a department and person, responsible for stock affairs to handle the list of major shareholders and the list of ultimate owners of these major shareholders at any time.

(3) The Company has established "Related party Transaction Management" for risk control. The assets and properties are managed independently in each affiliate in accordance with the internal control system of the Company. The risk control and firewall are practically implemented.

(1) No (2) No(3) No

ii. Formation and responsibilities of the Board of directors (1) Establishment of independent directors(2) Regular evaluation of CPAs' independence

(1) Four independent directors are appointed. (2) We choose a professional and creditable accounting firm

whose CPA is not involved in any interest of the Company. The appointment, dismissal and compensation of the CPA should be evaluated by Audit Committee and approved by the Board of Directors.

(1) No(2) No

iii. Establishment of communication channels with stakeholders

The Company particularly creates an e-mail account and appoints persons, responsible for dealing with public relations and stakeholders.

No

iv. Information Disclosure(1) Establishment of a website where

information on financial operations and corporate governance is disclosed

(2) Other information disclosure channels (e.g., creating an English website, appointing responsible people to deal with collecting and disclosing information, implementing the spokesperson system, webcasting investors conference).

(1) We already have an English website and continue to offer information about financial operations and corporate governance.

(2) We are a foreign-owned company, registered under the laws of Cayman islands and have established an online application system of public information in order to apply for primary listing in Taiwan. We appoint people to deal with the collection and disclosure of information to ensure that any information which may influence the decisions of shareholders and stakeholders is adequately disclosed in a timely manner.

Moreover, we also have a spokesman who speaks with one voice on behalf of the Company.

(1) No(2) No

v. The establishment of functional committees such as the Nomination or Compensation committees by the Company:

Four independent directors are appointed and the Audit Committee is formed to replace supervisors. In June, 2011, the Compensation Committee was founded to increase and improve corporate governance.

No

29


reasons

vi. Describe any discrepancies between Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies and the Corporate Governance of the Company, if any. We have completed the establishment of regulations related to the corporate governance in June, 2011 and there is no significant difference between the operation and the Principle.

vii. Other important information, helpful to understand corporate governance ( such as the employees rights and care, relations with investors, suppliers and stakeholders, advanced education of directors and supervisors, execution of the risk management policies, risk measurement standards and customer policies as well as the purchase of liability insurance for directors and supervisors) :(1) The directors of the Company are well equipped with professional knowledge and continue to advance their knowledge according to the

corporate governance principle. The courses they have taken will be published on the Market Observation Post System.(2) Our website has an "Investor Area" to provide shareholders with the business information about the Company. We expect to offer timely and

effective consulting services to shareholders and investors to build a communication bridge between the Company and investors. (3) The Employee Welfare Committee is founded to take care of employees, foster the harmonious relationship between labor and capital, build

teamwork among employees and attend to employees' welfare, such as subsidies of staff club activities, joyful events, death and childbirth, health examinations and group tours to ensure fluent communications and safeguard the right of employees.

(4) The Company has purchased liability insurance for directors.

viii. Describe the results and major deficiencies in both evaluation reports if the Company conducts self-evaluation or authorizes a professional institution for the corporate governance evaluation report: none.

4. Operations of the Compensation Committee(1) Authority and duties of the Committee:

① Determine and regularly review the policies, mechanism, standards and elements in respect of the performance and remuneration of directors and managers.

② Regularly assess and determine the remuneration of directors and managers.(2) By April 30, 2014, there are 3 members of the Compensation Committee, namely the independent

director, Steven Jeremy Goodman, Chin Fock Hong and Dar Yeh Hwang. Refer to our website for Compensation Committee Charter of Chailease Holding Company Limited.

(3) Information on the Compensation Committee members


pany Limited

30

Position(Note 1)

Qualification

Name

Professional qualification requirements, together with at least five years work experience

Independent status(Note 2)

Concurrent post of

member of compensation

committee in another

public release company

Remarks(Note 3)

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

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

Work experience in the area of commerce,

law, finance, or accounting, or otherwise

necessary for the business of the

company

1 2 3 4 5 6 7 8

Independent director

Steven Jeremy Goodman

V V V V V V V V V V V 0


Chin Fock Hong

V V V V V V V V V V 0


Dar Yeh Hwang

V V V V V V V V V 0

Note 1: The position should be directors, independent directors or others.Note 2: If anyone meets the qualifications below two years before being elected or during the tenure, check the box of the corresponding code.

(1) Not an employee of the Company, or any of its affiliates.(2) Not a director, supervisor of the Company or any of its affiliates, (unless the person is an independent director of the Company, its parent

company or any subsidiary in which the Company holds, directly or indirectly, more than 50 percent of the voting shares). (3) Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children or held by the person

under another's names, in an aggregate amount of one percent or more of the total number of issued shares of the company or ranking in the top 10 in holdings.

(4) Not 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 sub-paragraphs.

(5) Not a director, supervisor or employee of a corporate shareholder that directly holds five percent or more of the total number of issued shares of the company or that holds shares ranking in the top five in holdings.

(6) Not 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 the company.

(7) Not a professional individual 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.

(8) Not any of the circumstances in the sub-paragraphs of Article 30 of the Company Act.Note 3: Explain whether it conforms to Item 5 of Article 6 in "Regulations Governing the Appointment and Exercise of Powers by the Remuneration

Committee of a Company Whose Stock is listed on the Stock Exchange or Traded over the Counter" if the committee member is a director.

31

(4) Information about the operations of the Compensation Committee:1. There are 3 members of the Compensation Committee of the Company.2. Tenure of current committee members: June 17, 2011 to March 20, 2014. 2 committee meetings

(A) have been convened in the last year and the attendance of committee members is described as follows:

Position NameActual

attendance(B)Proxy Attendance Actual attendance (%)(B /A)(Note)

Convenor Steven Jeremy Goodman 2 0 100%

Committee member

Chin Fock Hong 2 0 100%

Committee member

Dar Yeh Hwang 2 0 100%


pany Limited

32

5. Fulfillment of social responsibility: the system and measures adopted by the Company in environmental protection, community involvement, social contribution, social service, social welfare, rights of customers, human rights, security and heath and other activities and the status of implementation


reasons

i. Actualizing the promotion of corporate governance(1) The policy and system of social

responsibility established by the Company and examines performance results from the implementation

(2) Operations of the department responsible for the corporate social responsibility

(3) Regular training and promotion of business ethics among directors, supervisors and employees, incorporation of employee performance with the system and establishment of a clear and effective reward and penalty program

(1) In order to put corporate social responsibility into practice and to maintain a balance among economy, society and environmental development, we have acted in accordance with Corporate Social Responsibility Best Practice Principles for TWSE/GTSM-Listed Companies, which was approved by the board of directors in June 2011.These principles apply to both the company and its subsidiaries, encouraging us to actively fulfill our corporate social responsibility in the course of our business operations so as to achieve a balance among environmental concerns, social responsibility, and corporate governance.

(2) In 2013, we organized a unit to better corporate social responsibility management. This unit is supervised by a chief strategy officer and is comprised of various divisions in charge of enhancing corporate governance, protecting the legal rights and interests of employees, supporting and expanding our services for customers, and preserving public welfare and a sustainable environment. In 2014, we will establish an exclusively dedicated committee to be in charge of enforcing the corporate social responsibility systems of the company.

(3) We establish standards of ethical conduct for employees to follow the laws and standards. We also arrange ethical conduct and other relative contents in our new staff orientation training programs. Every employee should sign the guarantee to promise to abide by discipline. We stipulate "Employee reward and incentive payment rule" and set the Human Resources Committee to implement.Our directors and supervisors attend courses in accordance with regulations. All employees in our company receive regular annual review and performance appraisal through full competency assessment. This could help for career-path development and individual learning plans of our valuable employees.

No

ii. Development of sustainable environment(1) Endeavors to increase the

utilization efficiency of all resources and use of renewable materials which have a least impact to the environment

(2) Establishment of suitable environmental management system based on the industry characteristics

(3) Appointment of responsible department and personnel to protect the environment

(4) Attention to the effects of climate change on operation and establishment of the energy-saving, carbon reduction and GHG volume reduction policy

(1) Since 2003, we have used T5 energy efficient fluorescent lamps, following environmental laws and regulations. Publications have been printed on environmentally friendly paper with soy ink.

(2)We strive toward the efficient utilization of all resources, such as saving paper and energy, notably during off-peak hours; consistent maintenance of air conditioners; and water efficient toilets and faucets in washrooms and kitchens.

(3)The general affairs department is responsible for matters concerning the office's environmental management.

(4)We have also been internally collecting information about the company's energy conservation and carbon emission and plan to release this information in our first corporate social responsibility report. We will assess up-to-date information and evaluate the impact of the company's business operations on the environment. With the assistance of other organizations, we will gradually release the information for self-suspension and establish plans to reduce carbon emission.

No

33


reasons

iii. Protection of social wellness(1) Obedience to related labor

regulations to safeguard the legal rights of employees and establishment of appropriate management methods and procedures

(2) Provision of a safe and healthy working environment and implementation of training on safety and health regularly

(3) Establishment of the mechanism for periodic communication with employees, and notification to employees of the circumstances which might materially affect the operation in a reasonable manner.

(4) Establishment and disclosure of policies of consumer rights and interests, and provision of a clear and effective procedure for consumers to file complaints about the products and services

(5) Cooperation with suppliers for the enhancements of corporate social responsibility

(6) Participation in community development and charity events through commercial activities, goods donation, volunteer services or other free professional services

(1) We establish a comfortable working environment for all our employees, which commitment to human rights, gender equality, freedom from discrimination and harassment-free. We hire employees from gender, age, religion and ethnicity influence, and also hire 12 people who with disabilities in different jobs.

(2) Employee Assistance Program (EAP) provides resources to enable employees to a healthy body and mind to work. We provide high quality and superior physical health examination, also has the disease Medicaid, insurance system and employee benefits committee set up to create a high quality work environment and generous welfare system.

(3) We issue internal publications each month to deliver the latest information to our employees. We also organize occasional interviews with our key executives, and set the internal discussion board which provides employees a place to express their views through a internal complaint system.When faced with the need to change employees' work content and work place, at least one week in advance we notice them. And we also offer various of assistance, including allowance subsidies, affair leave and vocational training programs. If they cannot work competently for the job, or in case of declining business or business transfer, notice period is as follows: ◎ Seniority in 1 year or less: Notice shall be given in person at least 10 days in

advance.◎ Seniority in 1 to 3 years: Notice shall be given in person at least 20 days in

advance.◎ Seniority in more than 3 years: Notice shall be given in person at least 30

days in advance.(4) We offer customer service lines (0800). Customers' questions and concerns will

first be answered by customer service workers and followed up by employees who are responsible for the tasks. We also set up a customer concerns procedure. When a customer expresses concerns or complaints over a product or service, the issues will be solved through a well-established platform within one day. Because we emphasize the importance of the customer's voice, we have set up a platform to provide the most appropriate solutions and accomplish tasks beyond customer expectation.We will also conduct customer satisfaction surveys to better understand customer perception with all our products and services. The comments provided in the surveys will be sent to our management team to be reviewed and to serve as the foundation to improve our future products and services. The survey covers service quality and efficiency, product innovation, and operational procedures.

(5) We are planning to inform our suppliers, contractors, and business partners of our social responsibility mechanisms. We will give priority to those who have similar missions to ours as they strengthen corporate social responsibility policy and enhance measures for proper transaction.

(6) Since its establishment in September 2004, the Chailease Foundation has committed itself to charity and helping disadvantaged youths. It has helped more than 193,000 people and held more than 200 events, including career master forums, one-day experience camping programs, study camps, group career counseling, internships, scholarships and special public welfare programs.

No


pany Limited

34


reasons

iv. Reinforce information revelation(1) The measures of disclosing

relevant and reliable information on corporate social responsibility

(2) Compilation of the corporate social responsibility report, disclosing the status on the implementation of corporate social responsibility policies

(1) Please refer to our website for the corporate social responsibility implementation status, which presents the company's mission statements, policies, and current performance:www.chaileaseholding.com/ugC_CommunityRelations.asp.

(2) This year, we are going to release our first corporate social responsibility report to disclose relevant and reliable information related to our corporate social responsibility. The information will also be accessible on the company website.

No

v. If the company has established corporate social responsibility principles based on "Corporate Social Responsibility Best Practice Principles for TWSE/GTSM-Listed Companies", describe any discrepancies between the principles and real execution.

None.

vi. Other important information to facilitate better understanding of the Company's corporate social responsibility practices (e.g., systems and measures that the company has adopted with respect to environmental protection, community participation, contribution to society, service to society, social and public interests, consumer rights and interests, human rights, safety and health, other corporate social responsibilities and activities, and the status of implementation.)

None.

vii. If the products or corporate social responsibility reports have received assurance from external institutions. Further clarification shall be provided:

Our first corporate social responsibility report will verified by a third party in compliance with the requirements of Global Reporting Initiative this year.

No

35

6. The status of implementation of ethical corporate management and the adopted measures


reasons

I. Define ethical corporate management policy and action: (1) The company shall clearly specify ethical corporate

management policies in their rules and external documents. The board of directors and the management level shall undertake to rigorously and thoroughly enforce such policies.

(2) The company is advised to establish in its own ethical corporate management best practice principle comprehensive programs to forestall unethical conduct, including operational procedures, guidelines, and training.

(3) When establishing the prevention program, the company shall take some preventive measures against offering and acceptance of bribes and illegal political donations with respect to business activities within their business scope which may be at a higher risk of being involved in an unethical conduct.

I. The company was enacted the internal regulations "Ethical of Practice," "Work Rules" in June 2011, which provide the directors, managers, employees are not allowed to have a dishonesty conduct.

II. The company perform integrity related training and promotion to the directors, managers and employees regularly, including the prevention of insider trading, regulatory compliance, and corporate governance.

III. The company had regulations for dispose of the assets, foreign investment, donations and other acts, which would analysis by dedicated assessment department, or submit to the Board of Directors and other authority departments.

No

II. Performance of ethical corporate management (1) The company is advised not to have any dealings with

persons who have any records of unethical conduct, and when entering into contracts with other parties, it shall include in such contracts provisions demanding ethical corporate management policy compliance.

(2) The company is advised to form a dedicated (concurrent) unit to be in charge of establishing and enforcing the ethical corporate management policies and reporting to the board of directors.

(3) The company shall promulgate policies for preventing conflicts of interests and offer appropriate means for making declaration.

(4) The company shall establish effective accounting systems and internal control systems to perform ethical corporate management, and have internal auditors conduct reviews.

I. Employees engaged in the process of commercial activity, no matter directly or indirectly, should not offer, promise, request or receive any improper benefits or make any other acts of integrity, breach of fiduciary duty and other illegal or dishonest behavior contrary, in order to obtain or maintain interest.

II. The behavior of a serious breach of the integrity of the investigation report, internal defects, punish matter should be reported to the Board of Directors. The company follows the acts should also be submitted to the Board of Directors.

III. According to Meeting Procedure Specification of the Board of Directors, director who with any important content for himself/herself or for his/her legal representative, may damage the interests of the company, should not join in discussion and vote, and should not represent other directors to exercise their right to vote.

IV. According to the Regulations of Internal Control and Audit Systems, auditors should strengthen the control point and the defects should be submitted and reported to the Board of Directors.

No


pany Limited

36


reasons

III. The company shall establish a well-defined disciplinary and complaint system to handle violation of the ethical corporate management rules.

The company established the special dedicated department takes responsible for the invest igat ion, verdict and punishment procedures when employees violate the conduct of integrity.We also established internal employee complainant system to provide appropriate communication and complainant ways. Complainant mailbox and reception counter, chosen by a dedicated department and processed immediately. If employees, customers, vendors and other companies found our employees' fraud or violations of the code of conduct, according to the regulation "Fraud and breach of the Code of Conduct", anyone could anonymous report to us anytime. Report information in the company's website details are as follow: Fraud Report.Tel: (886-2) 8752-6388 ext. 5007Fax: (886-2) 8751-9419E-mail: [email protected] Mailing address: No.362, Rueiguang Rd., Neihu District, Taipei (114) To: Chailease Holding Co. Chief Auditor.Violations of the Code of Conduct Report.Tel: (886-2) 8752-6388 ext. 5006E-mail: [email protected] address: No.362, Rueiguang Rd., Neihu District, Taipei (114) To: Chailease Holding Co. Chief Human Resources Officer.

No

IV. Enhance disclosure of information (1) The company shall set up its own website to disclose

the status of the enforcement of their own ethical corporate management best practice principles.

(2) The other manners in which the company discloses information (e.g., set-up of website, personnel dedicated to collecting the company's information, and disclosure of the same on the company's website, etc.)

I. The company has been set up the website (both in Chinese and in English) and the state of the Company's management, performance of honest business conduct and regulatory are disclosed on the Company's website.

II. We set up a dedicated unit responsible for collecting, publ ishing the information and disclosed on the Company's website. The Company follows the regulations of the information disclosure requirements, regularly reporting the financial and business information.

No

V. If the company has established corporate social responsibility principles based on "Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies", please describe any discrepancy between the principles and their implementation: N/A

VI. Other information material to the understanding of ethical corporate management (e.g. the company's determination and policy to propagate the ethical corporate management to trading counterparts and invitation of the trading counterparts to take part in the education training programs, discussion and amendment to the ethical business best practice principles defined by the company) : The company established the regulations of ”Internal significant information processing and managing operating procedures to prevent insider trading", "Fraud and breach of code of conduct report system", "Regulatory compliance management " to ensure that personnel involved must abide by the laws.

37

7. Disclosure of the corporate governace regulations and related rules. The Company shall disclose the look-up methods if the corporate governance regulations and related rules are established. The Company established regulations related to the corporate governance in June, 2011, including the Corporate Governance Best-Practice Principles, Ethical Corporate Management Principles, Corporate Social Responsibility Best Practice Principles and Ethical Conduct Principles. We have amended the Corporate Governance Best-Practice Principles and Corporate Social Responsibility Best Practice Principles in 2012, and further amended the Corporate Governance Best-Practice Principles to comply with the applicable laws and regulations in 2013 for the promotion and operation of corporate governance. The above-mentioned internal principles have been issued and the employees of the Company were duly notified. Refer to the "Corporate Governance" on our website for the above-mentioned principles.

8. Other important information to facilitate a better understanding of the Company's corporate governance shall be disclosed: none.


pany Limited

38

9. Execution of Internal Control System:(1) Statement of Internal Control

Chailease Holding Co., Ltd.Internal Control System Statement

Date:27/03/2014The Company states the following with regard to its internal control system during fiscal year 2013, based on the findings of a self-evaluation: 1. The Company is fully aware that establishing, operating, and maintaining an internal control system are the

responsibility of its Board of Directors and management. The Company has established such a system aimed at providing reasonable assurance of the achievement of objectives in the effectiveness and efficiency of operations (including profits, performance, and safeguard of asset security), reliability of financial reporting, and compliance with applicable laws and regulations.

2. An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance of accomplishing the three goals mentioned above. Furthermore, the effectiveness of an internal control system may change along with changes in environment or circumstances. However, the internal control system of the Company contains self-monitoring mechanisms, and the Company takes corrective actions as soon as a deficiency is identified.

3. The Company judges the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing the Establishment of Internal Control Systems by Public Companies (hereinbelow, the "Regulations"). The internal control system judgment criteria adopted by the Regulations divide internal control into five elements based on the process of management control: 1. control environment 2. risk assessment 3. control activities 4. information and communications 5. monitoring. Each element further contains several items. Please refer to the Regulations for details.

4. The Company has evaluated the design and operating effectiveness of its internal control system according to the aforesaid criteria.

5. Based on the findings of the evaluation mentioned in the preceding paragraph, the Company believes that as of 31/12/2013 its internal control system (including its supervision and management of subsidiaries), encompassing internal controls for knowledge of the degree of achievement of operational effectiveness and efficiency objectives, reliability of financial reporting, and compliance with applicable laws and regulations, is effectively designed and operating, and reasonably assures the achievement of the above-stated objectives.

6. This Statement will become a major part of the content of the Company's Annual Report and Prospectus, and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Act.

7. This Statement has been passed by the Board of Directors Meeting of the Company held on 27/03/2014, where 0 of the 9 attending directors expressed dissenting opinions, and the remainder all affirmed the content of this Statement.

Chailease Holding Co., Ltd. Chairman/President:

39

10. Penalties on the Company or the employees for unlawful practices, penalties imposed by the Company on the employees for breaking internal control regulations and corrective actions taken against major defects in the latest year and before the publication date of the annual report(1) Penalties on the Company or the employees for unlawful practices and corrective actions in the

latest year and before the publication date of the Prospectus : None(2) Penalties imposed by the Company on the employees for breaking the internal control regulations

and corrective actions taken against major defects in the latest year and before the publication date of the Prospectus :

Personnel involved Major defects Action

A junior manager in the Accounting department of Chailease Finance Co., Ltd.

Leaking certain material files of the Company to a third party without permission. Violating IT security and IP protection policies.

1. Dismissed the employee according to the regulations of the Company.

2. The Company may pursue lawsuit should any damages caused by the violation occur.

3. Reiterated the importance of conforming to regulations.

Dismissed employee of Chailease International Finance Co.

Abuse of power to accept unjust enrichment from customers during the tenure

1. Dismissed the employee according to the regulation of the Company.

2. The Company may pursue lawsuit should any damages caused by the violation occur.


A junior business manager of Shenzhen office of Chailease International Finance Co.

Leaking certain clients' information and operation related documents of the Company to third parties without permission. Violating IT security and IP protection policies.

1. Dismissed the employee according to the regulation of the Company.

2. The Company may pursue lawsuit in the event that any damages caused by the violation.



pany Limited

40

11. Major resolution in the meeting of shareholders and the Board in the latest year and before the publication date of the annual report.(1) Major resolution in the regular meeting of shareholders

Date Proposal Resolution Execution status

May 30, 2013

1. To approve the distribution of the annual net profits and dividend payments of the year 2012(cash dividend: NT$2 per share; shares dividend:100shares per 1,000 shares)

624,634,433shares voted for the proposal, representing 85.84% of the total represented shares ;proposal was approved as proposed.

Complete appropriation based on the resolution of the shareholder meeting.

2. Proposal for a new share issue through capitalization of retained earnings

625,974,736shares voted for the proposal, representing 86.03% of the total represented shares; proposal was approved as proposed.

Issue new shares based on the resolution of the shareholder meeting

3. To approve parts of article in the "Rules and Procedures of Shareholders' Meeting"


Attend in accordance with the revised Rules and Procedures.

4. To approve parts of article in the "Processing Procedure for the Acquisition and Disposal of Assets"


Attend in accordance with the revised Processing Procedure.

5. To approve parts of article in the "Procedures for Engaging in Derivatives Trading".



6. To approve parts of article in the "Operational Procedures for Loaning Funds to Others"



7. To approve parts of article in the "Operational Procedures for Endorsements/Guarantees for Others"



8. Release non-competition restrictions on all directors of the company.


Attend in accordance with the regulations.

(2) Major resolutions of the Board meetingsDate The Resolutions

2013.5.13 Confirmed the Company's consolidated financial statements for the first quarter ended March 31, 2013.

2013.5.31 Approved the ex-dividend record date and the cash dividend payment date of year 2012.

2013.6.13 Approved to re-elect Mr. Fong Long Chen as Chairman of the Board.

2013.8.13Confirmed the Company's reviewed consolidated financial statements and the Independent Auditor's Review Report for the first half year ended June 30, 2013.

41

Date The Resolutions

2013.9.18Approved the capital injection in a total amount of US$150 million in installments into Chailease International Company (Malaysia) Limited.

2013.11.12

Confirmed the Company's reviewed consolidated financial statements and the Independent Auditor's Review Report for the nine months ended September 30, 2013.Approved the capital injection into Grand Pacific Holdings Corp. in a total amount of US$4,156,282.Appointed Messrs. Lin, Wan-Wan and Chen, Yi-Chun, the partners of KPMG, Taipei, as the auditors of the Company for the financial year of 2014.

2014.3.3

Amended the Company's "Procedures for Engaging in Derivatives Trading".Amended the Company's "Processing Procedures for the Acquisition and Disposal of Assets".Amended the Memorandum & Articles of Association of the Company.Approved to elect directors (including independent directors) for the 2nd term of Board at the Annual General Meeting on May 30, 2014.Approved the nomination of independent director candidates for the 2nd term of the Board.Approved to reduce the number of directors from nine to seven, starting from the 2nd term of the Board.Approved the Date, Venue and its close period of Register of Members for the Annual General Meeting of 2014.

2014.3.27

Approved the Company's audited consolidated financial statements and the independent auditor's report for the financial year ended December 31, 2013.Approved the distribution of annual net profits and dividend payment from the operating performance of year 2013.Approved the proposed capitalization of retained earnings for issuing new shares.Approved 2013 Business Report of the Company.Approved to release the non-compete duty of newly-elected directors (including independent directors).Approved the Total Compensation of Directors and Key Managers for year 2013.Approved the issuance of new common shares for cash capital increase in Taiwan or issuance of Global Depositary Receipts ("GDRs") through the issuance of new common shares by capital increase.Approved the revised matters for the Annual General Meeting of 2014.

12. Directors or supervisors who were on record or had submitted a written declaration for holding a dissenting opinion on major resolutions passed by the Board of directors in the latest year and before the publication date of the annual report : None.

13. Resignation of persons relative to the company's financial statement (including the chairman, presidents, accounting officer and audit officer) in the latest year and before the publication date of the annual report :

Job Title Name Date of Appointment Date of Resignation Cause of Resignation

Chairman Andre J.L. Koo 2010.05.17 2013.06.13Resignation as chairman, but continued to hold directorships

(4) Information regarding certified public accountant

Accounting Firm

Name of CPAAudit Fee

Non-Audit FeeWhether the CPA's Audit Period

Covers an Entire Fiscal YearNote

System Design

Company Registration

Human Resource

Others Subtotal Yes No Audit Period

KPMGWan-

Wan LinYi-Chun

Chen6,530 - - - - - V

2013/1/1~2013/12/31

Note : we did not change the CPA or the accounting firm this year.


pany Limited

42

1. Non-audit fees paid to the certified public accountant, to the accounting firm of the certified public accountant and to any affiliated enterprise of such accounting firm are equivalent to one quarter or more: N/A.

2. Describe the amount and reason if the accounting firm has been changed and the audit fees paid in the fiscal year when such change took place are lower than those in the previous year: N/A.

3. Describe the amount, percentage and reason if the audit fees paid in the current year are lower than those in the previous fiscal year by 15 percent or more: N/A.

4. Information on the change in CPA: N/A.5. If the chairman, general manager or any manager in charge of finance or accounting matters has held

a position at the accounting firm of its certified public accountant or at an affiliated enterprise of such accounting firm in the most recent year, the name, position of the person and tenure shall be disclosed. The CPAs of the certifying CPA's firm own has exceeded 50 percent of the firm shares or acquisitions exceeded half of the board seats or the entities or institutions are named as affiliates in externally circulated materials of the engagement partner's firm or a network or a network firm. : None.

(5) Information for top 10 shareholders and related parties as defined under the Statement of Financial Accounting Standards No.6

Name

ShareholdingSpouse & minor

shareholding Shareholding

entitled other name

10 largest shareholders and related parties as defined under the

Statement of Name Financial Accounting

Standards No. 6

Remarks

Share % Share % Share %Position(name)

Relations

Andre J.L. Koo 48,599,593 4.88% 26,061 0.00% 0- 0- – – –

TFO GLOBAL MARKET FUND

38,500,000 3.87% 0- 0- 0- 0- – – –

MITSUBISHI UFJ LEASE & FINANCE COMPANY LIMITED

34,320,000 3.45% 0- 0- 0- 0- – – –

LONG TERM STRATEGIC INVESTMENT FUND

33,000,000 3.31% 0- 0- 0- 0- – – –

JPMORGAN CHASE BANK, N.A., TAIPEI BRANCH IN CUSTODY FOR SAUDI ARABIAN MONETARY AGENCY – FIDELITY INTERNATIONAL LIMITED AS EXTERNAL FUND MANAGER

31,380.750 3.15% 0- 0- 0- 0- – – –

43

Name

ShareholdingSpouse & minor

shareholding Shareholding

entitled other name

10 largest shareholders and related parties as defined under the

Statement of Name Financial Accounting

Standards No. 6

Remarks

Share % Share % Share %Position(name)

Relations

PACIFIC GROWTH PRIVATE EQUITY FUND

31,290,600 3.14% 0- 0- 0- 0- – – –

EASTERN DRAGON INVESTMENT FUND

27,703,225 2.78% 0- 0- 0- 0- – – –

LTG CAPITAL PARTNERS FUND

27,500,000 2.76% 0- 0- 0- 0- – – –

MCKALLY GLOBAL INVESTORS FUND

27,500,000 2.76% 0- 0- 0- 0- – – –

GRAND PACIFIC INVESTMENT & DEVELOPMENT CO., LTD.

26,541,834 2.67% 0- 0- 0- 0- – – –

(6) Continuing educational training of the directors and independent directors: The details of their continuing professional development in 2013 is described as follows:

Position Name Organizer Name of the course Hour

Chairman Fong-Long ChenTaiwan Corporate Governance Association

Management after the merger: Actually achieve 1 +1> 2

3.0

Director Andre J.L. KooTaiwan Corporate Governance Association


3.0

DirectorBeacon Hill Co., Ltd.'s representative: Mo-Na, Chien

Taiwan Corporate Governance Association


3.0

Director Chee Wee GohTaiwan Corporate Governance Association


3.0

DirectorWiedner Co., Ltd.'s representative: Chi-Ching Chen



3.0

Independet directorSteven JeremyGoodman



3.0

Independet director Shih-Chin, ChenTaiwan Corporate Governance Association


3.0

Independet director Dar Yeh HwangTaiwan Corporate Governance Association


3.0

Independet director Chin Fock HongTaiwan Corporate Governance Association


3.0


pany Limited

44

(7) Certification details of employees whose jobs are related to the release of the company's financial information: The certificate that the financial transparency related personnel received is described as follows:

Related personnel Certificate & lisence People

Financial and accounting personnel

Certified Public Accountant in Taiwan 4

Certified Public Accountant 2

Professional certification of Principal Accounting Officers of Issuers, Securities Firms and Securities Exchanges

2

Internal auditor

Certified Internal Auditor 4

Certified Information Systems Auditor 1

Certified Information Systems Security Professional

1

Certified Public Accountant 1

(8) Working environment and employee safety protectionThe Company provides employees with a safe, healthy and comfortable working environment. Other protection measures regarding the personal safety of employees conform to the regulations of labor as well as the internal measures of employee benefits.

Items Description

Entrances controlling

24 hours entrance guard systemSecurity service person set up with regularly patrols in building and parking lot entrances to secure the safety of the office.

Equipment and facilities Maintenance

Professional service agent set up to maintain the equipment and facilities of the office.Regularly building Safety InspectionRegularly fire-fighting exercises.Regularly maintenance to elevator, air conditioner, fire-fighting equipment, office cleaning services and water quality controlling.

Physical/psychological health care

For complying with the government policy, smoking is total banned on in the workplace, and no smoking signs affixed to remind staff not to smoke in the workplace, in order to preserve the quality the work environment.Setting sphygmomanometer and heart defibrillator and providing Health Examination and Medical Coverage.

Employee Insurance

Providing National Health Insurance, Labor Insurance, Group Insurance. If the circumstances of the casualties have occurred to employees, the Human Resource Department will assist with related insurance matters.

45

Items Description

Employee Welfare

Founded Employee Welfare Committee, responsible for the welfare of all my colleagues in the job, which include welfare assistance, education grants, community activities and other benefits aids.Annual budget and expenditure were discussed and monitored regularly by the members of the Welfare Committee. The annual budget may have a good effect of emotional stability to employees.Providing maternity welfare grants each year, education grants to employees' children, hospitalization and other subsidies.Organizing staff traveling to enhance the emotional connection between the employees.

Employee retirement

To reward employees, stable staff working or living after retirement, the company set the management regulations to employee retirement according to the Labor Standards Act and its associated regulations


pany Limited

46

IV Capital and Shares(1) Capitalization

Unit:NT$ Thousands

YearMonth

Price

Authorized Capital Paid-up capital Remarks

Shares Amount Shares Amount Sources of CapitalNon-Cash. Payments

Other

2009.12.24NTD10 per share

10 (shares)

NTD100 (dollars)

2 (shares)

NTD20 (dollars)

Initial issuance of shares No No


10 (shares)

NTD100 (dollars)

2 (shares)

NTD20 (dollars)

New shares to the shareholder of Financial One Corp.

No No


10 (shares)

NTD100 (dollars)

10 (shares)

NTD100 (dollars)

New shares to the shareholder of Financial One Corp.

No No

2009.12.31 Note 1 1,500,000 NTD15,000,000 915,914 NTD9,159,138 Share swap No No

2010.05.31 Note 2 1,500,000 USD450,000 915,914 USD274,774Par value valuation change from NTD to USD

No No

2010.07.01 Note 3 1,500,000 USD450,000 691,068 USD207,321Cancellation of repurchased shares

No No

2010.11.23 Note 4 1,500,000 NTD15,000,000 691,068 NTD6,910,684Par value valuation change from NTD to USD

No No

2011.05.15 Note 5 1,500,000 NTD15,000,000 724,100 NTD7,241,004Issuance of shares for capital increase (for employee subscriptions)

No No

2011.05.31 Note 6 1,500,000 NTD15,000,000 755,300 NTD7,553,004Issuance of shares for capital increase

No No


No No


No No


1,500,000 NTD15,000,000 995,830 NTD9,958,304capitalization of retained earnings

No No

Note 1 : We signed a share transaction agreement with Financial One Corp. on December 31, 2009. A total of 915,914,000 shares were issued by the Company to Financial One Corp. in order to acquire 100% shares of the subsidiaries, Chailease International Company (Malaysia) Limited and Golden Bridge (B.V.I.) Corp.

Note 2 : We changed the par value and converted issued shares (with par value of NT$10.0 each) to issue shares (with a par value of US$0.3 each).Note 3 : We signed a contract with Financial One Corp. on July 1, 2010. A total of 224,845,000 shares of the Company were repurchased and cancelled.Note 4：We changed the par value and converted the shares (with a par value of NT$10.0 each) to the shares (with a par value of US$0.3 each).Note 5 : We issued 33,032,000 new shares for capital increase. Note 6 : We issued 31,200,000 new shares for capital increase.Note 7 : We issued 30,000,000 new shares for capital increase before going public.Note 8 : We issued 120,000,000 new shares of Global Depositary Receipts for capital increase.

Type of Stock

Authorized Capital

Issued sharesUnissued shares Total

Listed Non-listed Total

Common stock 995,830,415 0 995,830,415 504,169,585 1,500,000,000

Shelf Registration : None

47

(2) Composition of Shareholders(Par value per share: NT$10) April 1, 2014

StructureVoulme

Government agencies

Fianacial institutions

Other legal entities

Domestic individuals

Foreign institutions and

individuals

Mainland China institutions and

individualsTotal

Number of shareholders

2 17 190 38,068 979 0 39,256

Shareholdings (shares)

16,388,600 9,367,977 54,541,881 320,898,696 594,633,261 0 995,830,415

Holdings percentage

1.65% 0.94% 5.48% 32.22% 59.71% 0.00% 100.00%

Note : No investors from mainland China hold the shares of the Company.

(3) Distribution profile of share ownership (Par value per share: NT$10) April 1, 2014

Classof shareholdings Number of shareholders Total shares owned Ownership percentage

1~999 4,098 975,645 0.10%

1,000 ~ 5,000 25,112 53,222,636 5.34%

5,001 ~10,000 4,791 36,830,522 3.70%

10,001 ~15,000 1,588 19,796,782 1.99%

15,001 ~ 20,000 1,028 18,979,951 1.91%

20,001 ~ 30,000 876 22,447,684 2.25%

30,001 ~ 40,000 418 14,924,151 1.50%

40,001 ~ 50,000 266 12,397,120 1.24%

50,001 ~ 100,000 522 37,091,233 3.73%

100,001 ~ 200,000 233 32,675,002 3.28%

200,001 ~ 400,000 142 40,409,308 4.06%

400,001 ~ 600,000 54 26,215,575 2.63%

600,001 ~ 800,000 23 16,086,046 1.62%

800,001 ~1,000,000 25 22,846,490 2.29%

Over 1,000,001 (Classification can be carried out based on the practical situation.)

80 640,932,270 64.36%

Total 39,256 995,830,415 100.00%

Note : Preferred stocks: No preferred stocks are issued by the Company.

(4) Major shareholdersApril 1, 2014

Shares Major shareholders

Total shares owned Ownership percentage

Andre J.L. Koo 48,599,593 4.88%

TFO GLOBAL MARKET FUND 38,500,000 3.87%


pany Limited

48

Shares Major shareholders

Total shares owned Ownership percentage

MITSUBISHI UFJ LEASE& FINANCE COMPANY LIMITED 34,320,000 3.45%

LONG TERM STRATEGIC INVESTMENT FUND 33,000,000 3.31%

JPMORGAN CHASE BANK, N.A., TAIPEI BRANCH IN CUSTODY FOR SAUDI ARABIAN MONETARY AGENCY – FIDELITY INTERNATIONAL LIMITED AS EXTERNAL FUND MANAGER

31,380,750 3.15%

PACIFIC GROWTH PRIVATE EQUITY FUND 31,290,600 3.14%

EASTERN DRAGON INVESTMENT FUND 27,703,225 2.78%

LTG CAPITAL PARTNERS FUND 27,500,000 2.76%

MCKALLY GLOBAL INVESTORS FUND 27,500,000 2.76%

GRAND PACIFIC INVESTMENT & DEVELOPMENT CO., LTD. 26,541,834 2.67%

(5) Market price, net worth, earnings, and dividends per share for the past two years

YearItem

2013 2012At the end of March 31,

2014

Market price per share

Highest (Note 1) 97.80 69.30 80.50

Lowest (Note 1) 59.20 26.80 70.30

Average (Note 1) 76.68 47.11 74.91

Net worth per share

Before distribution 28.74 25.70 -

After distribution Note 2 21.54 -

Earnings per share

Weighted Average Common Shares Outstanding

995,830 891,330 -

Earnings Per Share 5.91 4.25 -

Dividends per share

Cash dividends Note 2 2 -

Stock Dividends

Retained Earnings

Note 2 1 -

Capital Surplus - - -

Accumulated unpaid dividends 6 6 -

Analysis of return on investment

Price/Earnings Ratio (Note 3) 12.97 11.08 -

Price/Dividends Ratio (Note 4) Note 2 23.56 -

Cash Dividends Yield Rate (Note 5) Note 2 4.24% -

Note 1 : The information on the share price comes from TWSE.Note 2 : It has not been approved by the shareholder meeting; therefore, it is not disclosed.Note 3 : Price/Earnings Ratio = Average closing price per share/EPSNote 4 : Price/Dividends Ratio = Average closing price per share /cash dividend per shareNote 5 : Cash Dividends Yield Rate = Cash dividend per share/ Average closing price per share

49

(6) Dividend policy and distribution of profit1. Dividend policy in Articles of Association

According to the Articles of Association, which was revised through a resolution approved by the shareholders' meeting on May 10, 2012, the Company is required to appropriate earnings every accounting year. The after-tax earnings are initially used to offset cumulative losses, and the remainder is set aside as a special reserve. Without necessarily violating the Cayman Island Companies Law, the Company is able to retain reasonable amount of earnings for Company development. The remaining earnings are distributed according to the board of director's approval in compliance with the following order of distribution: (1) between 0.01% and 1% of such remaining amount as employees' bonus; (2) between 0.01% and 0.1% of such remaining amount as directors' bonus; and (3) dividends of at least 20% of such remaining amount of which no less than 30% of the total amount of dividends

shall be in cash.2. The resolved appropriation of dividends this year

The 2013 earning appropriation plan was approved in the Board meeting on March 27, 2014 to pay the cash dividend of NT$2 per share to shareholders (NT$1,991,660,830 in total) and the stock dividend of NT$1 per share (NT$ 995,830,410 in total), as well. The proposal will be presented to the shareholder meeting for resolution.

(7) Employee profit sharing and directors' and supervisors' compensation1. The percentage or coverage of employees' bonuses and remunerations to directors and supervisors

(1) Employees bonuses:A. The employees' bonuses should be between 0.01% and 1% of such remaining amount.B. The employees' bonuses may be paid, at the discretion of the Directors, by way of cash or by way of

applying such sum in paying up in full unissued shares for allocation and distribution crediting them as fully paid up shares to employees. When the employees' bonuses are distributed by way of an issue of fully paid shares, the recipients may include qualified employees of the Subsidiaries. No unpaid dividends and bonuses shall bear interest as against the Company.

(2) Remuneration to directors:The remuneration to the Directors shall be paid in cash only. The amount of such remuneration is authorized to be decided upon by the Board of Directors by reference to the suggestion made by the compensation committee, the standards generally adopted by other enterprises in the same industry, and shall be paid regardless of whether the Company has profits or suffers losses.

(3) Bonus to directors:The directors' bonus shall be between 0.01% and 0.1% of such remaining amount.

2. The basis for estimating the amount of employees' bonuses and remunerations of directors/supervisors, the basis for calculating the distribution of stock dividends and the accounting treatment of the discrepancies, if any, between the actual distributed amount and the estimated amount will follow the principle described below:Pursuant to the Articles of Association, the Company estimates the proposed distribution of employees' bonuses and remunerations for directors and supervisors. If there are differences between the proposed and the actual distribution, the difference will be estimated and listed in the coming income statement.


pany Limited

50

3. The proposal for employee bonus distribution approved by the Board of directors:(1) If the distributed cash dividends to employees, stock dividends and the remunerations for directors and

supervisors are different from the estimated amount in the year when the expense should be recognized, the difference, reason and solution should be disclosed. The Board on March 27, 2014 proposed to pay cash dividends to employees of NT$882,456 and the remunerations to directors of NT$4,706,432.

(2) The percentage of the proposed stock dividends to employees in the net profit income and the total of the employee benefits: N/A.

(3) Earnings per share after the proposed distribution of employees' bonuses and remunerations for directors and supervisors: None. The employees' bonuses and remuneration's to directors and supervisors are paid in cash.

4. The actual distribution of the employees' bonuses and remunerations to directors and supervisors (including the distributed shares, amount and price) in the previous year, the difference between the actual amount and recognized amount as well as the reasons and solutions: None.

(8) Buyback of common stock : N/A

(9) Issuance of corporate bonds for 2013 : N/A

(10) Issuance of global depositary shares Issuance Date

ItemOctober 15, 2012

Issuance and transaction location Bourse de Luxembourg

Total Amount US$ 206,160,000

Issuance price per unit US$ 8.59 per unit

Total of units 24,000,000 units

Source of securities Common stocks issued for capital increase by cash

Amount of securities 120,000,000 shares

Right & Obligation of GDR holder Same as the rights and obligations of common stock

Consigner Not Applicable

Depositary Bank JPMorgan Chase and Co.

Custodian Taipei Branch of JPMorgan Chase and Co.

Remaining sum (March 31, 2014) 2,707,458 units

Apportionment of expenses during issuance and existence The Company

Important agreement in the deposit contract and custodian agreement Refer to the deposit contract and custodian agreement for details

51

Issuance DateItem

October 15, 2012

Market price per unit (US$)

Jan. 1, 2013 to Dec. 31, 2013

Highest 16.16

Lowest 10.04

Average 12.899

Jan. 1, 2014 to Apr. 1, 2014

Highest 13.175

Lowest 11.675

Average 12.295

(11) Financing plan and implementation1. With respect to each uncompleted public issue or private placement of securities and such issues and

placements that were completed in the most recent three years but have not yet fully yielded the proposed benefits: None.

2. The implementation process of each plan or the plan which does not yield proposed benefits: None.

Wholehearted serviceBeing active on the Asian financial stage

Wholehearted serviceBeing active on the Asian financial stage

54


pany Limited

V Operational Highlights

(1) Business Overview1. Business scope

(1) Core Business:Apart from traditional leasing, installment sales and factoring services, the Company successfully developed new financial products to better satisfy customers' needs, including heavy vehicle and automobile financing, fishery inventory financing, micro-enterprises financing, non-performing assets auction, real estate financing, office equipment leasing, car rentals, ESCO financing, inventory financing, insurance brokerage and cloud platform service, providing professional and a full range of financial solutions to SMEs.

(2) Revenue distribution:Unit: NT$ (thousand)

Year 2013 2012

Item Amount Percentage Amount Percentage

Revenues from sales 7,172,933 24% 2,632,479 12%

Interest income from installment sales

6,005,667 20% 4,643,450 22%

Interest income from capita l leases

7,296,824 24% 6,114,388 29%

Leasing income 2,270,196 7% 2,901,738 14%

Interest income from loans 1,552,638 5% 1,031,198 4%

Other interest revenues 1,126,463 4% 1,355,226 6%

Other operating revenue 4,986,959 16% 2,734,116 13%

Total of operaing revenue 30,411,680 100% 21,412,595 100%

Note: The information on operating revenue comes from the consolidated financial statement audited by the CPA.

55

(3) Main products /or services:A. Leasing:

The purpose of the leasing business is to help SMEs acquire the right to use equipment through leasing and relieve the burden of purchasing equipment with equity fund to satisfy the need for operational growth and improve the financial structure.The leasing business can be divided into capital leases and operating leases based on the Statement of Financial Accounting Standards and Lease Accounting Standards. Generally, leasing has a wild business scope. Any fixed depreciable assets, including the internally purchased or externally imported, can be the subject matter of leases, such as machinery, medical equipment, airplanes, boats or office equipment.

B. Installment Sales:The purpose of the installment sales business is to help SMEs with the turnover of working capital. The Company purchases the necessary operational equipment on the customers' behalf and the customers can purchase them on installment instead of the lump sum payment so that they can use the financial leverage. The subject matter of "installment sales business" includes raw materials, semi-products and products, furniture and fixtures, and production equipment. We offer installments to people from every walk of life and serve each customer with flexibility and speed based on different characteristics and needs of industries.

C. Factoring:The factoring business refers to that supplier of goods and labors (seller) assigned to factor the receivables arising from contracts of sale and the factor is to perform the function of financing, maintenance of accounts relating to receivables, collection of receivables and protection against defaults in payment. The purpose of factoring is to help SMEs acquire short-term capital through the financial tool to get the orders from large companies.

D. Loans:We provide direct financing service to SMEs, micro-enterprises and large corporations.

E. Others: Other services including the direct financing and collecting of account receivables through forming a strategic alliance between banks and insurers.

(4) New products /or services under development:A. Work closer with Bombardier, the leader in Canada's navigation industry, to develop trade and

financing in the Asia Pacific region's corporate and private jet market.B. Enhance our cooperative relationship with Mitsubishi UFJ to develop a power conservation financing

capability to assist Taiwanese solar power manufacturers obtain financing for the equipment they need to set up solar power generation plants in Japan.

C. Develop "Chailease Cloud Platform" to provide the leasing service for cloud software and hardware in order to offer the SMEs diverse value-added services.

2. Industry overview(1) Current status and development of the industry:

Financial leasing emerged in the 1950s from the USA to officially open a financial channel besides banks

56


pany Limited

from where to obtain the production fund. This new type of economic activity expanded to Germany and Japan and thrived in the 1960s. In the early 1970s, the business started to develop in Taiwan and the PRC followed in 1980s.The leasing industry is part of the financial auxiliary industry which aims to complete the financing function of the capital markets and banks. The capital markets and banks primarily obtain funds from the investments and deposits of the general public; therefore, the financing risk is limited in order to pursue the financial and economic stability. As a result, the enterprise which can obtain funds from the capital market and bank tend to be large-sized and have financial integrity. In terms of Taiwan, where SMEs constitute the backbone of the economy, most SMEs have a relatively short history and weaker guarantee ability, and they are smaller in size; as a result, they cannot enter the capital market and have difficulties in obtaining bank loans. Since the current service cannot satisfy SMEs and the financial auxiliary companies operate using their own funds which has less legal restrictions, they can bear higher risks to provide SMEs with flexible financing to complete the function of the capital markets and banks. That is the main reason why the financial auxiliary industry thrives in the US, Europe and Japan and the industry plays a critical role in their financial system.According to the World Leasing Yearbook 2014, the leasing volume of top 50 global countries was estimated to be US$868 billion in 2012, representing a 8.95% growth compared to 2011. North America constituted the largest portion of US$ 336.4 billion, accounting for 38.8%, while Europe took the second place at US$314 billion, accounting for 36.2%. The leasing volume in Asia reached US$180.2 billion, accounting for 20.8 %.

Unit: US$ (100 millions)

Area 2012 volume of trade global volume(%)

North America 3,364 38.8%

Europe 3,140 36.2%

Asia 1,802 20.8%

South America 132 1.5%

New Zealand and Australia 161 1.9%

Africa 82 0.9%

Total 8,680 100.0%

Source: World Leasing Yearbook 2014

PRC enjoyed the fastest growth compared with other Asian countries and the leasing volume in 2012 stood at US$ 88.66 billion, accounting for 49.2% of the total volume in Asia, and took the 2nd position in the global rankings. The leasing volume of Taiwan in 2012 was US$ 7.8 billion, accounting for 4.2% of the total volume in Asia and ranked the 21st in terms of global leasing volume.

(2) The interrelationships between the upper, middle and downstream sectors in the industry:The leasing industry is a financial auxiliary industry and serves as both a capital demander and provider. As a capital demander, its capital mostly comes from bank loans, issuances of commercial papers and corporate bonds aside from the equity fund of shareholders. A large-sized company with a healthy financial structure has its assets securitized or plans to go public in order to directly raise funds in the capital market. Overall, the leasing industry mainly obtains funds from financial institutions.As a capital provider, the leasing company provides assets-based financing service to individuals, micro-

57

enterprises, SMEs and even large corporations and shares some of the customer groups with financial institutions. However, the leasing company specializes in different markets and mainly serves SMEs in a flexible way to provide customers underserved by banks with key capital in a timely manner and assist them in operational growth. Therefore, the relationship between the leasing company and financial institutions are competitive and cooperative in terms of the industrial structure.

(3) Development trend of products:In the early stages of development, the Taiwan leasing industry was relatively restricted and only dealt with the machinery and equipment that the department of production, transportation, utilities, sanitation, education and public administration needed. As the economy developed and with the changes in regulations, diverse new products have been offered to solve the common capital shortage of SMEs, including the installment sales of raw materials, products, semi-products and inventories, chattel secured transactions of automobiles and construction machinery and equipment, factoring, leases of aircraft, boat and automobiles, production financing to micro-enterprises, short-term consumer loans and non-performing assets auction. We also provide overdue receivables management, real estate finance, fishery inventory financing, inventory financing, ESCO financing, heavy vehicle and automobile financing, car rentals, insurance brokerage and cloud platform rentals.Future vision: Taiwan currently promotes the legislation on finance companies to transform the leasing company which provides leasing service and installment sales to a finance company which is allowed to offer guarantees business in addition to offering loans, discounted notes, notes and valuable securities. This Act is helpful in promoting the diversification of the financing business and provides enterprises and the public with an alternative source to obtain funds.

(4) Competition:According to the information provided by the Taipei Leasing Association (TLA), as of March, 2014, there were 27 member companies in the TLA. The members can be divided into four different categories in terms of the structure of shareholders or managers. A. Bank affiliates:

FCB Leasing Co., Ltd., Cosmos Leasing Corporation., Jih Sun International Leasing & Finance Co., Ltd., Far Eastern International Leasing Corp., CDC Finance & Leasing Corp., SinoPac Leasing Corp., Far Trust International Financial Co., Ltd., IBT Leasing Co., Ltd., Waterland Financial Holding Co., Ltd., Taichung Bank Leasing Co., Ltd., Hua Nan International Leasing Co., Ltd., CTBC Asset Management Co., Ltd., Taiwan Business International Leasing Co., Ltd., Sunny International Leasing Co., Ltd., Ta Chong International Finance & Investment Company, Yuanta International Leasing Co., Ltd. (16 companies in total).

B. Independent finance companies:Chailease Finance Co., Ltd., Robina Finance & Leasing Corporation, and Ho-Hsin Car Leasing Co., Ltd (3 companies in total).

C. Automobile leasing companies:Taiwan Acceptance Corporation, Hotai Finance Corporation, Mercedes-Benz Financial Services Taiwan Ltd. and CMI Credit Ltd. (4 companies in total).

D. Foreign finance companies:ORIX Taiwan Corporation, President Tokyo Corporation, MUL Taiwan Co., Ltd. and IBM Global Financing (4 companies in total).

58


pany Limited

In terms of the capital structure of TLA members, the capital of each member is shown as follows:Unit :NT$

Paid-in capitalNumber of companies

Description

5 billion above 3Chailease Finance Co., Ltd., Waterland Financial Holding Co., Ltd. and CTBC Asset Management Co., Ltd.

2~5 billions 6Far Eastern International Leasing Corp., SinoPac Leasing Corp., Taiwan Acceptance Corporation, FCB Leasing Co., Ltd., Hotai Finance Corporation and IBT Leasing Co., Ltd.

1~2 billions 4Taichung Bank Leasing Co., Ltd., Jih Sun International Leasing & Finance Co., Ltd., Hua Nan International Leasing Co., Ltd. and Taiwan Business International Leasing Co., Ltd.

0.5~1 billions 5CDC Finance & Leasing Corp., Sunny International Leasing Co., Ltd., Ta Chong International Finance & Investment Company, Yuanta International leasing Co., Ltd., and President Tokyo Corporation,

0.1~0.5 billions 9Mercedes-Benz Financial Services Taiwan Ltd., Robina Finance & Leasing Corporation, CMI Credit Ltd., ORIX Taiwan Corporation, Cosmos Leasing Corporation, Far Trust International Financial Co., Ltd, Ho-Hsin Car Leasing Co., Ltd, IBM Global Financing and MUL Taiwan Co., Ltd.

Source: Department of Commerce, MOEA and The Taipei Leasing Association

In summary, the members of TLA are large-sized companies in Taiwan and Chailease Finance Co., Ltd. is at the top in terms of total amount of new contracts.

3. Research and development(1) R&D expenditures of the business during the most recent fiscal year or up to the date of printing the

annual report:The manpower participating in the new products /or markets development, from the stage of project kick-off to cross-functional evaluation and cooperation, are at least 40 persons every year. Such manpower accounts for 5% of our back office staff.

(2) Technique or products successfully developed during the most recent fiscal year or up to the date of printing the annual report:① Cross-border inventory financing：This product is provided to meet the offshore funding need of

our clients, a breakthrough for SMEs financing.② PV-ESCO：In addition to financing provided to solar power manufacturers, the Company also

began to engage in the investment of solar power plant business, a technically advanced new product. In 2013, the installed Photovoltaic (PV) capacity the Company approved to finance reached 400 MK, 6 times the growth compared to 2012.

③ Chailease Cloud Platform：This platform provides leasing for cloud software and hardware, an value-added service for SMEs.

④ Research and development on patents:Item Name of the Patent Application

A. Business method patents – competitive tendering e-finance method To improve the investment platform of e-finance

B. Business method patents – Corporate financing and risk evaluation method

To conduct corporate financing and risk evaluation by applying IT system

4. Long-term and short-term business development planThe Company has been devoted to the development of the SMEs credit business, established the risk assessment mechanism for SMEs, avoided the price-oriented large corporations, established the professional, efficient and flexible price differentiation strategy based on different risk coefficients of

59

customers and chose SMEs which have higher risks but are willing to pay higher risk premiums as the main niche market based on the reasonable risk-taking ability. Therefore, our management strategy centers on the unique SMEs finance mode and core competitiveness to put focus on the arrangement of regional markets, the development of niche markets and diversification of capital sources.In terms of the regional market expansion, the Company is Taiwan-based and our success is built on providing SMEs finance services. We follow the trend of overseas investment to gain footholds in the US, Thailand, PRC and Vietnam while developing the market and gradually expanding the customer base from SMEs to consumer financing, truck and automobile financing, fishery inventory financing, micro-enterprises financing, non-performing assets auction, real estate finance, office equipment leasing, car rentals, ESCO financing, inventory financing, insurance brokerage and cloud platform rentals. With respect to the capital strategy, we purely relied on bank loans initially; however, the source of capital has become more in tune with the development of business, including asset securitization, corporate bonds and fund-raising in the capital market.Long-term and short-term business development plans of the Company are as follows:(1) Short-term business development plans:

A. Cultivate the current markets and enlarge new customer base by adjusting market segmentation and strategy. Create cross-selling synergies across domestic and overseas markets to pursue continuous profit growth.

B. Create diverse sources of profit by continuously extending the value chain of existing products while developing technically advanced new products or services.

C. Improve the work flows and operation efficiency by establishing Chailease mobile platform and developing new business models.

D. Strengthen core risk management skills, enhance credit assessment ability and credit quality, and aggressively support business growth under effective risk control and management.

E. Collaborate with all of the Company's subsidiaries to enhance long-term funding capacity, provide sufficient funding for business growth and diversify funding sources to reduce cost.

F. Recruit potential and capable employees, and implement new core competence to support the Company's rapid development.

G. Implement information security management and personal information protection. Build up corporate culture with focus on discipline, renovation and Gender Equality.

(2) Long-term business development plans:A. Continue to promote the transformation into a finance company in Taiwan.B. Continue to implement the double-engine, Taiwan and PRC, growth strategy by cultivating the

Taiwan market, integrating various product channels, developing niche markets and promoting the business cooperation across the Strait.

C. Aggressively continue overseas expansion strategy. In the PRC, we continue to establish 3~5 new branches every year to offer a more exhaustive range of services and products in line with the needs of the market. Moreover, we plan to take our Thailand subsidiary as the Company's development center for ASEAN. We could leverage the subsidiary's years of local experience in business development and credit screening, its industry resources and advantageous position among nearby ASEAN nations as a base for developing the ASEAN market.

D. Enhance the cooperative relationship with current strategic alliances and meanwhile look for new potential partners to create win-win situation and speed up the business growth.

60


pany Limited

(2) Market and Sales Overview1. Market analysis

(1) Service and subsidiaries in each area:

Area Services Subsidiaries

Taiwan ™ Finance lease™ Operating lease™ Installment sales™ Factoring™ Direct finance™ Automobile leases™ Personal insurance broker and property

insurance broker™ Lease of cloud software and hardware™ Overdue receivables management™ Telemarketing services

™ Chailease Finance Co., Ltd.™ Fina Finance & Trading Co., Ltd.™ Chailease Consumer Finance Co., Ltd.™ Apex Credit Solutions Inc.™ China Leasing Co., Ltd.™ Chailease Auto Rental Co., Ltd.™ Chailease Insurance Brokers Co., Ltd.™ Chailease Cloud Service Co., Ltd.™ Chailease Finance （B.V.I.）Company Ltd.™ Chailease International Financial Services Co., Ltd.

The PRC ™ Finance lease™ Operating lease™ Automobile leases™ Import and export™ Factoring™ Leasing of self-owned buildings™ Property management

™ Chailease International Finance Corporation™ Chailease International Corp.™ Chailease Finance International Corp.™ Jirong Real Estate Co., Ltd.

Thailand ™ Installment sales on vehicles™ Finance lease™ Factoring

™ Asia Sermkij Leasing Public Company Limited™ Bangkok Grand Pacific Lease Public Company Limited

Vietnam ™ Finance lease ™ Chailease International Leasing Company Ltd.

United States ™ Commercial real estate finance ™ Grand Pacific Financing Corporation

(2) Sales /or services contribution in each area:Unit: NT$ (thousand)

Year 2013 2012

AreaOperating revenue

(Note 1)Percentage Operating revenues Percentage

Taiwan 12,040,798 39% 8,656,056 40%

The PRC 15,088,912 50% 10,452,022 49%

Thailand 2,384,604 8% 1,921,176 9%

Other areas (Note 2) 897,366 3% 383,341 2%

Total 30,411,680 100% 21,412,595 100%

Note 1: The information on the operating revenues comes from the consolidated financial statement audited by the CPA.Note 2: Other areas: the subsidiaries in Vietnam and USA are included.

61

(3) Market share:According to the statistics from TLA, the overall new contract amount of Chailease Finance Co., Ltd., the Company's subsidiary, accounted for 45% of TLA total contract amount in 2013. The statistics also showed that Chailease Finance Co., Ltd. represented 33% of lease market share and 47% of installment sales market share, being a leader in the Taiwan lease and installment sales industry.

(4) Future outlook of supply and demand as well as growth:In terms of the market penetration, the penetration rate of leasing in the PRC and Taiwan were 3.8% and 8.2%, which were significantly lower than those of mature markets such as the United States and Germany which had a penetration rate of 22% and 15.8% respectively, according to the World Leasing Yearbook 2014. Therefore, the leasing markets in both Taiwan and PRC have great potential to develop.

(5) Competitive niche:The Company has been in the leading position of the Taiwan leasing industry and its success is built on the unique financing mode for SMEs and core competitiveness to ensure the relatively high and stable profits of the Company in the long term.A. A leader in the Taiwan lease and installment sales business:

With more than 35 years experiences in serving SMEs, the Company has accumulated a huge amount of customer data and built an interlaced network in the industry, taking a leading position in the SMEs finance market in Taiwan. The statistics from TLA indicates that the Company's subsidiary, Chailease Finance Co., Ltd. enjoyed the highest market share in 2013 lease and installment sales industry compared with 26 other companies.

B. Diverse product line and high value-added financing services:In comparison with other leasing companies, in addition to the traditional leasing, installments and factoring services, we introduced new products in truck and automobile financing, fishery inventory financing, micro-enterprises financing, non-performing assets auction, real estate finance, office equipment leasing, car rentals, ESCO financing, inventory financing, insurance brokerage and cloud platform leasing in response to the diverse needs of corporate development. To provide high value-added financing services, we also can customize the deal structure and payment terms based on the clients' operational plans and cash flow.

C. Advanced credit risk assessment model and outstanding credit risk management system: The Company has exerted its efforts to strengthen the core capacity of risk management and established the credit assessment operation for different products, risk models and credit decision-making mechanism. We successfully developed the "Credit Risk Assessment Model" in 2003 to efficiently improve the credit quality and control the risk costs.

D. The diversified client base in different industries can efficiently lower the risks of market change.E. Outstanding financial risk management:

Chailease Finance Co., Ltd., the core and flagship company in Taiwan has obtained A (twn) rating from Fitch Ratings since 2012, being able to issue unsecured corporate bonds. Accordingly, multiple sources of capital can meet the need for future business growth.

F. Highly efficient collection ability:The Company has devoted itself to developing the most appropriate collection model for each product and continued to improve the professional ability and collection efficiency of the legal personnel so as to increase the collection performance.

62


pany Limited

(6) Advantages, disadvantages and responsive strategies for future prospects:

Area Advantages Disadvantages Responsive strategy

Taiwan a. The clear sign of economic recovery and continuous growth of investments in equipment will be beneficial to the continuing development of the whole business.

b. The financial service for domestic micro-enterprises is still insufficient and has huge room for business development.

c. The finance company is allowed to be established so that more diverse products can be provided to satisfy customers.

a. As banks aggressively enter the SMEs financing market, the competition becomes more severe.

b. The demand for talent cultivation and recruitment rises faster due to new product development and market expansion.

(a) Expand certain niche industries to ensure the growth of overall business volume and profits.

(b) Adopt the price differentiation strategy to increase competitiveness.

(c) Continue to research and develop new products and create new business models.

(a) Continue to promote the succession plan of critical positions and incubate high potential critical talents.

(b) Continue to implement cultivation program for expatriates (eg. Chailease Asia MA Program) in response to new market/region expansion.

(c) Recruit outstanding and capable employees at different levels to support the Company's rapid development.

The PRC a. The government highly supports the development of leasing industry.

b. The leasing market in the PRC has great potential to develop.

c. Support for management techniques and professional personnel would be provided by the parent company.

a. There is uncertainty in the government policies and taxation regulations.

b. Due to the limitation of equity funds, the main funding source for business development is still provided by banks.

c. Quick response to talent recruitment and cultivation to support the Company's rapid market development.

(a) Strengthen interaction with the commercial and taxation institutions in the PRC to understand the trends in policies and regulations in a timely manner.

(b) Provide suggestions on China relevant policies, laws and regulations to favor the development of leasing industry.

(a) Increase the weight of syndicated loans while reducing the weight of short-term loans in order to provide the capital for stable business development.

(b) Plan to raise funds in the capital market and build various capital channels.

(a) Build up unique corporate culture and competitive reward policy to attract local outstanding employees.

(b) Establish good relationship with local schools, and provide scholarship and internship opportunity to secure the source of talents from schools.

(c) Design a structured training program to cultivate talents in a faster way.

(d) Motivate local outstanding talents with better promotion system and management skill training program.

(e) Offer expatriate opportunities to facilitate employees' careers.

63

2. Usage and production process of main products(1) Usage of main products:

The Company provides asset-based financing services to SMEs, offering critical financial support for their business development.

(2) Production process of main products:

3. Supply status of main raw materialsThere are no main suppliers of raw material as the Company doesn't engaged in non-production business.

4. Major suppliers and clients(1) Suppliers accounting for at least 10% of annual order volume in the last two fiscal years:

Not applicable as the Company doesn't involved in a production business.(2) Clients accounting for at least 10% of annual total revenues in the last two fiscal years:

None.5. Production volume for the most recent two fiscal years : Not applicable.6. Volume of units sold for the most recent two fiscal years : Not applicable.

(3) Head count, average seniority, average age and educational background of employees in the most recent two fiscal years and as of the publication date of the annual report

Year 2012 2013 On March 31, 2014

Number of employees

Operation personnel 2,039 2,345 2,522

Management personnel

674 785 764

Total 2,713 3,130 3,286

Average age 33.1 33.1 32.9

Average senority 5.3 5.3 5.3

Educational background

PhD 0.04% 0.03% 0.03%

Master's degree 17.91% 18.96% 19.35%

Bachelor's degree 76.41% 75.48% 75.56%

High school graduate 5.42% 5.31% 4.87%

Below high school 0.22% 0.22% 0.18%

Operation personnel: business, audit and legal personnelManagement personnel: Advisory Staff, administrative staff and drivers.

Business promotion Contract signing

Credit evaluation Loan disbursement Financial institutions

Loan application acceptance Loan document verificationEquity capitalCapital

Loan approval Customer managementMoney and capital markets

™ Credit review™ Make site visit™ Reference checking

from buyers, suppliers™ Prepare credit report™ Credit scoring and

rating

64


pany Limited

(1) Audit committee's report on financial statements from the most recent year(English Translation of Financial Report Originally Issued in Chinese)

INDEPENDENT ACCOUNTANTS' AUDIT REPORT

The Board of Directors ofChailease Holding Company Limited

We have audited the accompanying consolidated balance sheets of Chailease Holding Company Limited and its subsidiaries (the Cousolidated Company) as of December 31 , 2013, December 31, 2012 and January 1, 2012, and the consolidated statements of comprehensive income, changes in stockholders' equity, and cash flows for the years ended December 31, 2013 and 2012. The Company's management is responsible for the preparation and presentation of the consolidated financial statements. Our responsibility is to issue a report on these consolidated financial statements based on our audits.We conducted our audits in accordance with "Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants" and auditing standards generally accepted in the Republic of China. Those regulations and standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatements. An audit includes examining, on a test basis, evidences supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.In our opinion, based on our audit, the consolidated financial statements referred to the first paragraph present fairly, in all material respects, the financial position of Chailease Holding Company Limited and its subsidiaries as of December 31, 2013, December 31, 2012 and January 1, 2012, and the results of its operations and its cash flows for the years then ended, in conformity with the related financial accounting standards of the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards (IFRSs), International Accounting Standards (IASs), IFRIC Interpretations and SIC Interpretations which are endorsed by Financial Supervisory Commission R.O.C.

KPMG

CPA: Wan Wan, LinYi Chun, Chen

Taipei, Taiwan, R.O.C.March 27, 2014

Financial HighlightsVI

65

Note to ReadersThe accompanying consolidated financial statements are intended only to present the financial position, results of operations and cash flows in accordance with the International Financial Reporting Standards approved by the Financial Supervisory Commissions in the Republic of China and not those of any other jurisdictions. The standards, procedures, and practices to audit such financial statements are those generally accepted and applied in the Republic of China.The independent accountants' report and the accompanying financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of, the English and Chinese language auditors' report and financial statements, the Chinese version shall prevail.

66


pany Limited

(2) Financial review(English Translation of Financial Report Originally Issued in Chinese)CHAILEASE HOLDING COMPANY LIMITED AND ITS SUBSIDIARIESConsolidated Balance SheetsDecember 31, 2012 and 2011(Amounts Expressed in Thousands of New Taiwan Dollars)

Assets2013.12.31 2012.12.31 2012.1.1

Amount % Amount % Amount %

Current assets：

1100　Cash and cash equivalents $ 7,586,221 4 10,131,431 6 6,558,070 5

1110　Current financial assets at fair value through profit or loss 264,569 - 236,246 - 240,841 -

1130 　Current held-to-maturity financial assets 4,838,385 3 1,997,100 1 280,000 -

1170　Accounts receivable, net 133,718,307 68 110,970,208 67 89,839,107 66

1320　Inventories 567,752 - 771,503 1 616,069 -

1476　Other current financial assets 5,000,217 3 6,748,887 4 6,113,565 5

1479　Other current assets – others 2,323,739 1 1,442,367 1 1,179,503 1

　　 154,299,190 79 132,297,742 80 104,827,155 77

Non-current assets：

1510 Non-current financial assets at fair value through profit or loss 1,699,947 1 1,791,558 1 1,838,291 1

1523　Non-current available-for-sale financial assets 1,728,104 1 1,202,629 1 1,085,758 1

1528　Non-current held-to-maturity financial assets 485,855 - 490,000 - - -

1550　Investments accounted under equity method 29,480 - 7,062 - 1,243 -

1600　Property, plant and equipment 7,186,367 4 6,504,695 4 8,723,610 7

1780　Intangible assets 22,612 - 23,087 - 24,669 -

1840　Deferred tax assets 1,535,509 1 1,739,184 1 1,533,184 1

1930　Long-term accounts receivable, net 28,019,446 14 21,742,423 13 17,160,953 13

1995　Other non-current assets – others 769,440 - 811,201 - 393,668 -

41,476,760 21 34,311,839 20 30,761,376 23

TOTAL ASSETS $ 195,775,950 100 166,609,581 100 135,588,531 100

67

LIABILITIES AND EQUITY2013.12.31 2012.12.31 2012.1.1

Amount % Amount % Amount %

Current Liabilities：

2100　Short-term borrowings $ 57,141,701 29 51,043,587 31 39,831,048 30

2120　Current financial liabilities at fair value through profit or loss 42,293 - 5,007 - 757 -

2125　Current derivative financial liabilities for hedging 6,777 - 11,396 - 15,988 -

2150　Accounts and notes payable 2,383,535 1 1,772,943 1 2,312,415 2

2230　Current tax liabilities 618,258 - 675,265 - 669,271 -

2305　Other current financial liabilities 19,830,779 10 17,323,233 10 13,186,866 10

2312　Advance real estate receipts 307,563 - 302,039 - 173,091 -

2320　Long-term liabilities – current portion 49,511,658 25 48,013,666 29 37,541,490 28

2399　Other current liabilities – others 869,514 - 1,160,551 1 816,093 -

　　 130,712,078 65 120,307,687 72 94,547,019 70

Non-current Liabilities：

2530　Bonds payable 5,004,993 3 6,946,767 4 5,174,629 4

2540　Long-term borrowings 26,447,339 14 11,931,451 7 17,168,295 13

2570　Deferred tax liabilities 1,344,068 1 976,090 1 610,462 -

2600　Other non-current liabilities 1,826,279 1 1,435,965 1 1,272,635 1

34,622,679 19 21,290,273 13 24,226,021 18

　　Total Liabilities 165,334,757 84 141,597,960 85 118,773,040 88

Equity attributable to owners of parent：

3100　Share capital 9,958,304 5 9,053,004 5 7,853,004 6

3200　Capital surplus 9,411,698 5 9,411,771 6 4,694,420 3

3320　Special reserve 64,865 - - - - -

3350　Unappropriated retained earnings 8,215,781 4 5,082,354 3 3,177,765 2

3400　Other equity items 973,795 1 (278,849) - (177,169) -

　　Total equity attributable to owners of parent 28,624,443 15 23,268,280 14 15,548,020 11

36XX　Non-controlling interests 1,816,750 1 1,743,341 1 1,267,471 1

　　Total equity 30,441,193 16 25,011,621 15 16,815,491 12

TOTAL LIABILITIES AND EQUITY $ 195,775,950 100 166,609,581 100 135,588,531 100

68


pany Limited

CHAILEASE HOLDING COMPANY LIMITED AND ITS SUBSIDIARIESConsolidated Statements of Comprehensive IncomeFor the Years Ended December 31, 2013 and 2012(Amounts Expressed in Thousands of New Taiwan Dollars)

2013 2012Amount ％ Amount ％

Operating revenue：4111　Sales revenue $ 7,172,933 24 2,632,479 124810　Interest revenue - installment sales 6,005,667 20 4,643,450 224820　Interest revenue - capital leases 7,296,824 24 6,114,388 294300　Rental revenue - operating leases 2,270,196 7 2,901,738 144230　Interest revenue - loans 1,552,638 5 1,031,198 44240　Other interest revenue 1,126,463 4 1,355,226 64881　Other operating revenue 4,986,959 16 2,734,116 13

　　 30,411,680 100 21,412,595 100 Operating costs：5111　Cost of sales (6,430,492) 21 (2,415,197) 115240　Interest expense (3,985,775) 13 (3,965,622) 195300　Cost of rental revenue (1,766,902) 6 (2,579,770) 125800　Other operating costs (1,184,117) 4 (540,665) 2

(13,367,286) 44 (9,501,254) 44 Gross profit from operation 17,044,394 56 11,911,341 566000 Operating expenses (9,153,989) 30 (7,128,393) 336500 Net other income and expenses 152,225 1 255,458 1

Operating profit 8,042,630 27 5,038,406 24 Non-operating income and expenses：7100　Interest income 127,842 - 86,813 -7130　Dividend revenue 33,876 - 29,995 -7020　Other gains and losses 374,692 1 717,866 4

7060　Share of profit of associates and joint ventures accounted for using equity method (2,459) - 111 -

533,951 1 834,785 47900　Profit before income tax 8,576,581 28 5,873,191 287950　Income tax expense (2,368,593) 8 (1,838,243) 98200　Profit for the period 6,207,988 20 4,034,948 198300　Other comprehensive income (loss)：8310　 Exchange differences on translation of foreign financial statements 866,066 3 (388,182) (2)8325　 Unrealized gains on available-for-sale financial assets 533,829 2 126,129 18330　 Gains (losses) of effective portion of cash flow hedges (28,523) - 4,592 -8340 　 Gains (losses) of effective portion of hedges of net investment in foreign operations (27,080) - 29,695 -8360　 Defined benefit plan actuarial gains (losses) 36,743 - (92,291) -8390　 Other comprehensive income (loss) - other (124,614) - 75,473 -8399 　 Less:Income tax relating to components of other comprehensive income (loss) 44,869 - (60,870) -8300 Other comprehensive income (loss) for the period, net of tax 1,211,552 5 (183,714) (1)8500 Total comprehensive income for the period $ 7,419,540 25 3,851,234 18

Profit attributable to：8610　Owners of parent $ 5,883,044 19 3,786,160 188620　Non-controlling interests 324,944 1 248,788 1

$ 6,207,988 20 4,034,948 19Comprehensive income attributable to：

8710　Owners of parent $ 7,166,836 24 3,609,100 178720　Non-controlling interests 252,704 1 242,134 1

$ 7,419,540 25 3,851,234 189750 Basic earnings per share (NT dollars) $ 5.91 4.25

69

CH

AILE

ASE

HO

LDIN

G C

OM

PAN

Y LI

MIT

ED A

ND

ITS

SUBS

IDIA

RIE

SC

onso

lidat

ed S

tate

men

ts o

f Cha

nges

in E

quity

For T

he Y

ears

End

ed D

ecem

ber 3

1, 2

013

And

2012

(Am

ount

s Ex

pres

sed

in T

hous

ands

of N

ew T

aiw

an D

ollar

s)

Equi

ty a

ttrib

utab

le to

own

ers o

f par

ent

Othe

r equ

ity it

ems

Stoc

k

Capi

tal

surp

lus

Spec

ial

rese

rve

Unap

prop

riate

d re

taine

dea

rning

s

Exch

ange

diff

erenc

es on

tra

nslat

ion of

for

eign fi

nanc

ial

statem

ents

Unrea

lized

gains

(loss

es) o

n av

ailab

le-for

-sale

finan

cial a

ssets

Gain

s (lo

sses

) of

effe

ctiv

e po

rtion

of

cash

flow

he

dges

)

Gains

(loss

es) o

f eff

ectiv

e port

ion

of he

dge o

f net

inves

tmen

t in

foreig

n ope

ration

s

Othe

rs

Equi

ty

attri

buta

ble

to

owne

rs o

f the

pa

rent

Non

cont

rollin

g in

tere

sts

Tota

l equ

itySh

are

capi

tal

Balan

ce as

of J

anua

ry 1,

201

2

$ 7,

853,

004

4,69

4,42

0-

3,17

7,76

519

9,04

7(36

0,22

8)(15

,988

)-

-15

,548

,020

1,26

7,47

116

,815

,491

Net in

come

for t

he ye

ar-

--

3,78

6,16

0-

--

--

3,78

6,16

024

8,78

84,

034,

948

Othe

r com

preh

ensiv

e inc

ome f

or th

e yea

r-

--

(75,3

80)

(337,

569)

126,

129

4,59

229

,695

75,4

73(17

7,06

0)(6,

654)

(183,

714)

Total

comp

rehen

sive i

ncom

e for

the y

ear

--

-3,

710,

780

(337,

569)

126,

129

4,59

229

,695

75,4

733,

609,

100

242,

134

3,85

1,23

4

Earn

ings d

istrib

ution

and

appr

opria

tion

　Ca

sh d

ivide

nds o

f ord

inary

share

--

-(1,

806,

191)

--

--

-(1,

806,

191)

-(1,

806,

191)

Othe

r cha

nges

in ca

pital

surp

lus:

　 C

hang

es in

share

of pr

ofit o

f ass

ociat

es an

d join

t ve

ntures

acco

unted

for u

sing e

quity

meth

od-

(46,5

96)

--

--

--

-(46

,596

)(21

0,95

4)(25

7,55

0)

Capit

al inc

rease

in ca

sh1,

200,

000

4,76

3,94

7-

--

--

--

5,96

3,94

7-

5,96

3,94

7

Chan

ges i

n non

-con

trollin

g int

erests

--

-

--

--

--

-44

4,69

044

4,69

0

Balan

ce as

Dec

embe

r 31,

201

29,

053,

004

9,41

1,77

1-

5,08

2,35

4(13

8,52

2)(23

4,09

9)(11

,396

)29

,695

75,4

7323

,268

,280

1,74

3,34

125

,011

,621

Net in

come

for t

he ye

ar-

--

5,88

3,04

4-

--

--

5,88

3,04

432

4,94

46,

207,

988

Othe

r com

preh

ensiv

e inc

ome f

or th

e yea

r-

--

31,1

4889

9,03

253

3,82

9(28

,523

)(27

,080

)(12

4,61

4)1,

283,

792

(72,2

40)

1,21

1,55

2

Total

comp

rehen

sive i

ncom

e for

the y

ear

--

-5,

914,

192

899,

032

533,

829

(28,5

23)

(27,0

80)

(124,

614)

7,16

6,83

625

2,70

47,

419,

540

Earn

ings d

istrib

ution

and

appr

opria

tion:

　Sp

ecial

rese

rve ap

prop

riated

--

64,8

65(64

,865

)-

--

--

--

-

　Ca

sh d

ivide

nds o

f ord

inary

share

--

-(1,

810,

600)

--

--

-(1,

810,

600)

-(1,

810,

600)

　St

ock d

ivide

nds o

f ord

inary

share

905,

300

--

(905,

300)

--

--

--

--

Othe

r cha

nges

in ca

pital

surp

lus:

　Ch

ange

s in s

hare

of pro

fit of

asso

ciates

and j

oint

ventu

res ac

coun

ted fo

r usin

g equ

ity m

ethod

-(73

)-

--

--

--

(73)

-(73

)

Chan

ges i

n non

-con

trollin

g int

erests

--

--

--

--

--

(179,

295)

(179,

295)

Balan

ce as

of D

ecem

ber 3

1, 2

013

$ 9,

958,

304

9,41

1,69

864

,865

8,21

5,78

176

0,51

029

9,73

0(39

,919

)2,

615

(49,1

41)

28,6

24,4

431,

816,

750

30,4

41,1

93

70


pany Limited

CHAILEASE HOLDING COMPANY LIMITED AND ITS SUBSIDIARIESConsolidated Statements of Cash FlowsFor the Years Ended December 31, 2013 and 2012(Amounts Expressed in Thousands of New Taiwan Dollars)

2013 2012

Cash flows from operating activities：

　Profit before income tax $ 8,576,581 5,873,191

　Adjustments：　　　Adjustments to reconcile profit before income tax to net cash 　　　 provided by operating activities：

　　　Depreciation expense 1,491,409 1,803,835

　　　Amortization expense 87,491 58,928

　　　Loss on financial assets and liabilities at fair value through profit or loss 81,398 50,606

　　　Interest expense 3,985,775 3,965,622

　　　Interest income (16,109,434) (13,231,075)

　　　Dividend income (33,876) (29,995)　　　Share of (profit) loss of associates and joint ventures accounted for using equity method

2,459 (111)

　　　(Gain) loss on disposal of property, plant and equipment (30,222) (18,833)

　　　Gain on disposal of foreclosed assets (2,967) (143,050)

　　　Gain on disposal of investments (53,627) (26,367)

　　　Impairment loss on financial assets 2,802,759 1,973,816

　　　Impairment loss on non-financial assets 427,690 881,235

　　　　Total adjustments to reconcile profit (loss) (7,351,145) (4,715,389)

　　Change in operating assets and liabilities：

　　　Change in operating assets：

　　　　Decrease (Increase) in financial assets held for trading (14,114) 30,000

　　　　Increase in accounts receivable (40,611,358) (38,797,367)

　　　　Proceeds from financial assets securitization 8,786,354 11,134,550

　　　　Decrease (Increase) in other current financial assets (514,222) 939,457

　　　　Decrease (Increase) in inventories 203,751 (155,434)

　　　　Increase in other current assets (1,179,379) (319,989)

　　　　Proceeds from sales of operating lease assets 1,540,606 1,521,456

　　　　Purchase of operating lease assets (2,267,588) (1,950,988)

　　　　Increase in other non-current assets – others (64,857) (671,033)

　　　　　Total changes in operating assets (34,120,807) (28,269,348)

　　　Changes in operating liabilities：

　　　　Increase (Decrease) in accounts payable 575,688 (717,049)

　　　　Increase in long-term and short-term debts 129,610,388 93,239,632

　　　　Repayment of long-term and short-term debts (106,953,630) (75,371,269)

　　　　Increase in other current financial liabilities 2,507,546 4,136,367

　　　　Increase (Decrease) in accrued pension liabilities (13,514) 120,647

　　　　Increase (Decrease) in other current liabilities-others (285,513) 473,406

　　　　Increase in non-current liabilities-others 403,828 42,683

　　　　Total changes in operating liabilities 25,844,793 21,924,417

　　　　　Total changes in operating assets and liabilities (8,276,014) (6,344,931)

　　　Total adjustments (15,627,159) (11,060,320)

71

2013 2012

　　Cash outflow generated from operation (7,050,578) (5,187,129)

　　Interest received 16,216,739 12,879,205

　　Dividend received 33,876 29,995

　　Interest paid (3,945,232) (4,273,422)

　　Income taxes paid (1,810,093) (1,593,961)

　　　Net cash provided by operating activities 3,444,712 1,854,688

Cash flows from investing activities：

　Acquisition of available-for-sale financial assets - (1,137)

　Proceeds from disposal of available-for-sale 60,664 2,411

　Proceeds from return of capital by available-for-sale financial assets 621 320

　Acquisition of held-to-maturity financial assets (5,076,240) (2,224,000)

　Disposal of held-to-maturity financial assets 2,239,100 16,900

　Acquisition of investments accounted for using equity method (127,441) -

　Acquisition of property, plant and equipment (1,709,535) (174,993)

　Disposal of property, plant and equipment 3,910 2,627

　Acquisition of intangible assets (2,267) (2,061)

　　Net cash used in investing activities (4,611,188) (2,379,933)

Cash flows from financing activities：

　Issuance of capital by cash - 5,963,947

　Distribution of cash dividend (1,810,600) (1,806,185)

　Changes in non-controlling interests (184,132) 218,920

　　Net cash (used in) provided by in financing activities (1,994,732) 4,376,682

Effect of exchange rate changes on cash and cash equivalents 598,624 (326,543)

Net (decrease) increase in cash and cash equivalents (2,562,584) 3,524,894

Cash and cash equivalents, beginning of year 10,064,721 6,539,827

Cash and cash equivalents, end of year $ 7,502,137 10,064,721

72


pany Limited

Integrated Risk Management Framework & Policy

(1) Chailease Risk Management Organizational StructureChailease's Risk Management Committee is responsible for the company's risk management structure and ensuring the implementation of risk management activities. Subsidiaries also have internal risk management planning departments, credit services division,and credit services departments and branches responsible for implementing and overseeing risk management mechanisms.

VII

Board

President

Chairman

Chief Risk Officer

Subsidiaries

Corporate Planning Division Credit Services Division

Risk Management and Planning Department Credit Services of Departments and Branches

Risk Management Committee

Management Committee

Risk Management Department

73

Integrated Risk Management Framework & Policy(1) Organizations with Risk Management Responsibilities

Organization Functions

Board Understanding the activities and risks of Chailease operations and activities and carefully and effectively appraising systems and structures pertaining to risk control.Ensuring that top executives establishes sound identification, measuring, and risk oversight reporting systems, including quarterly assessments to determine whether the organization is capable of managing major risks adequately (e.g., credit risk, market risk, liquidity risk, currency rate fluctuations, and operational risks.); reviewing the suitability of risk management policies and procedures as well as the effectiveness of implementation.

Risk Management Committee Responsible for setting up a risk management structure approved by the management committee; setting up a risk management system, applying risk management policies and procedures to deal with any major risks that the company could potentially encounter;reviewing each year the soundness and suitability of holding company risk management policies, procedures, and processes; reviewing each quarter the holding company's risk management report and reporting any major incidents to the Board.

Risk Management Department Formulating review and approval methods, risk assessment system, and risk management policies used to oversee the quality of the Group's financial operating assets;providing information related to risk analysis on asset portfolios on a regular basis and making sound adjustments to reserves for uncollectable accounts based on asset quality;responsible for planning the Group's risk management projects;responsible for quality analysis for the risk assessment of the major delinquent cases of Group.

Risk Management and Planning Department

Formulating the credit risk management strategies, guidelines, and procedures for entire company; designing and integrating credit risk report mechanism and ensuring the report is correct;establishing performance assessment and management mechanisms for departments as well as credit risk education and training programs;reporting on credit risk issues, including major credit risk exposure and losses as well as improvements to management or processes, on a regular basis.

Subsidiaries Identifying major risks to business activities, the reasons risk form, and different types of risk factors;regularly assessing risk factors that could adversely impact and the degree of the potential impact, so as to monitor the risk management mechanism and evaluate whether it takes all negative risk factors into consideration;submitting a risk management report every quarter.

Credit Services of Departments and Branches

Responsible for managing and supervising credit risk identification and measurement work;implementing credit risk identification, measurement, and management procedures as well as taking part in the review thereof; training credit risk identification, measurement, and management personnel to meet the needs of the company.

74


pany Limited

(2) Risk management policies To avoid any negative impact arising from risk factors, Chailease has drawn up risk management policies and implements them thoroughly to ensure that the company can realize the objectives that it has set for itself. Risk management policies are employed in all holding company and subsidiary departments and other offices, branch affiliates, and organization members to ensure that Chailease can effectively manage potential risks in all of its operations.(1) Credit risk

Chailease defines "credit risks" as risks, including those stemming from inappropriate or incorrect actions taken internally in the areas of operations, finances, systems, or personnel, as well as from external changes related to customers, the economy, the law, and so forth, that make it impossible for customers to carry out their responsibility to pay back loans, resulting in losses to Chailease. Credit risk policies are formulated based on risk management policies to effectively advance operations, enhance asset quality, and ensure asset security. The use of consistent policies to bolster credit risk assessment and management mechanisms allows Chailease to avoid and reduce credit risk and losses. It regularly reviews the effectiveness of its credit risk management, offering suitable feedback for the management process.The credit risk management process includes operational strategies and planning, marketing and promotion, performance evaluation, risk disclosure, and risk monitoring. The area of systems includes:Implementation of operations, credit services division of labor allows the risk assessment work to be independent of business operations to effectively balance performance and credit risk management.Approval procedures employ level-skipping approval method and implements detailed rules based on review management guidelines, so that upper management and lower level management are all responsible for the quality of and following up on risk assessment cases.Credit limits. Credit limit caps are to be limited to the maximum amounts of guaranteed credit limits and are not to exceed amounts stipulated for uncovered loans. The rating and grade model stresses employing some quantitative technologies to mitigate differences in understanding between operation and review personnel regarding risk management operations by measuring the company's overall credit and operation risk levels.Collateral is guaranteed to reduce the risks of unexpected changes or uncertain factors with value being determined using a collateral assessment process.Collection policies divide collection activities into different method types and manage and implement them to increase the amount of loan money that customers in arrears pay back.Reserves for bad debts. Procedures for setting aside reserves for uncollectable accounts are set up by employing an appropriate mechanism, so that they meet with financial and tax regulations.

(2) Financial riskThe objective of Chailease's financial risk management, primarily by managing liquidity, interest rate, and currency rate risks, is to control losses and the goal of each risk management area is to realize that objective. The Board, which has the highest level of authority, authorizes the Risk Management Committee to draw up risk management strategies, while the Financial Department is responsible for implementing financial risk management in accordance with decisions made by the Risk Management Committee.The Board and Risk Management Committee are to oversee and manage financial risk in accordance with such principles as obtaining quarterly financial risk assessment reports (balance sheets) compiled by the

75

Financial Department, determining whether current risks lie within set risk limits, evaluating the suitability of risk management tools being employed on a regular basis, submitting appropriate measures whenever necessary to counter risks arising from substantial changes, whether internal or external, and regularly reviewing hedging efficacy and making timely adjustments when needed.

Value, GrowthHonesty and Discipline

Value, GrowthHonesty and Discipline

78


pany Limited

Special notes(1) Information about the affiliates

1.Organizational chart of affiliate

December 31, 2013

Note: The initial equity capital has not been injected.

｛USA

｛Thailand

｛Vietnam

｛Taiwan

｛PRC

Chailease Holding Company Limited

Chailease International Company (Malaysia) Limited (100%)

Grand Pacific Holdings Corp.

Fina Finance & Trading Co., Ltd.

(99.53%)

Chailease Finance (B.V.I.) Company

Ltd. (100%)

My Leasing (B.V.I.) Corp. (100%)

Chailease Consumer Finance Co., Ltd.

(100%)

China Leasing Co., Ltd.(100%)

Chailease Insurance Brokers Co., Ltd.

(100%)

Chailease Auto Rental Co., Ltd.

(100%)

My Leasing (Mauritius) Corp.

Chailease International Corp.

(100%)Chailease Finance International Corp.

Jirong Real Estate Co., Ltd.(100%)

Chailease International Finance Corporation (100%)

Apex Credit Solutions Inc.(100%)

Chailease Credit Services Co., Ltd.

(100%)

Chailease Cloud Service Co., Ltd.

(100%)

GP Warehouse Funding Corp. (100%)

Grand Pacific Financing Corp. (100%)

GP Warehouse Funding LLC (100%)

G.P. Main Street Development Inc.

(100%)

Asia Sermkij Leasing Public Company

Limited

Chailease International

(B.V.I.) Corp. (100%)

Golden Bridge (B.V.I.) Corp.

(100%)

Grand Pacific Business Loan LLC

2005-1

Bangkok Grand Pacific Lease Public Company Limited

(99.99%)


Financial Services Co., Ltd. (100%)


Financial Services(Hong Kong)

Company Limited (100%)（Note）

Chailease International Leasing

Company Ltd. (100%)

Grand Pacific Business Loan Trust

2005-1

Chailease Finance Co., Ltd. (100%)

11.57%

51.00%

49.00% 36.61%

98.66%

1.34%

25.00%

75.00%

VIII

79

2. Basic information about the affiliates December 31, 2013Unit: NT$ (thousand), THB(thousand), USD(thousand) , VND(thousand) and CNY(thousand)

Name of the companyEstablishment

dateAddress Paid-in capital

Major business or products

Chailease International Company (Malaysia) Limited

20091103Tiara Labuan, Jalan Tanjung Batu, 87000 F.T. Labuan, Malaysia

USD 304,799 Investment

Chailease Finance Co., Ltd. 19800623No.362, Ruiguang Rd., Neihu Dist., Taipei City 114, Taiwan (R.O.C.)

NTD 8,449,941Installment sales, leases and factoring

Fina Finance & Trading Co., Ltd. 198703135F., No.362, Ruiguang Rd., Neihu Dist., Taipei City 114, Taiwan (R.O.C.)

NTD 2,160,857Installment sales, import and export and factoring


200006033F., No.362, Ruiguang Rd., Neihu Dist., Taipei City 114, Taiwan (R.O.C.)

NTD 536,871Leases, installment sales and factoring

China Leasing Co., Ltd. 199101236F., No.362, Ruiguang Rd., Neihu Dist., Taipei City 114, Taiwan (R.O.C.)

NTD 151,107 Installment sales

Apex Credit Solutions Inc. 200109256F., No.420, Fuxing N. Rd., Zhongshan Dist., Taipei City 104, Taiwan (R.O.C.)

NTD 83,000

Overdue accounts receivable management, Acquisition and appraisal of NPLs and Telemarketing Services

Chailease Finance （B.V.I.）Company Ltd.

19950508Palm Grove House P.O. Box 438, Road Town, Tortola, British Virgin Islands

USD 40,910Installment sales, overseas financing and financial consultation

Chailease Auto Rental Co., Ltd. 200602206F., No.362, Ruiguang Rd., Neihu Dist., Taipei City 114, Taiwan (R.O.C.)

NTD 250,000 Leases

Chailease Credit Services Co., Ltd. 200805268F., No.362, Ruiguang Rd., Neihu Dist., Taipei City 114, Taiwan (R.O.C.)

NTD 500Installment sales and leases


201106232F., No.362, Ruiguang Rd., Neihu Dist., Taipei City 114, Taiwan (R.O.C.)

NTD 8,000Personal insurance broker and property insurance broker

Chailease Cloud Service Co., Ltd. 201301298F., No.362, Ruiguang Rd., Neihu Dist., Taipei City 114, Taiwan (R.O.C.)

NTD 10,000Lease of cloud software and hardware

Chailease International Leasing Company Ltd.

2006100928th Floor, Saigon Trade Center, 37 Ton Duc Thang St., Ben Nghe Ward, District 1, Ho Chi Minh City, Vietnam

VND 200,000,000 Lease

My Leasing (B.V.I.) Corp. 20040401Plam Grove House P.O. Box 438, Road Town, Tortola, British Virgin Islands


Asia Sermkij Leasing Public Company Limited

1984081724th Fl., Sathorn City Tower, 175 South Sathorn Road, Tungmahamek, Bangkok 10120, Thailand

THB 1,725,000 Installment on minibus

Bangkok Grand Pacific Lease Public Company Limited

1989061510/1th Fl., Sathorn City Tower, 175 South Sathorn Road, Tungmahamek, Bangkok 10120, Thailand

THB 438,500 Leases and financial consultation

Grand Pacific Holdings Corp. 198709251255 Corporate Center Dr., PH10, Monterey Park, CA 91754

USD 7,701Commercial real estate finance

Grand Pacific Financing Corporation 198308241255 Corporate Center Dr., PH10, Monterey Park, CA 91754

USD 4,750Commercial real estate finance

Grand Pacific Main Street Development Inc.

19900307141-07 20th Avenue, Su i te 401 Whitestone, NY 11357

USD 0.5Commercial real estate finance

80


pany Limited

Name of the companyEstablishment

dateAddress Paid-in capital

Major business or products

Grand Pacific Warehouse Funding Corp.

200305061255 Corporate Center Dr., PH10, Monterey Park, CA 91754

USD -Commercial real estate finance

Grand Pacific Business Loan LLC. 2005-1

20050608141-07 20th Avenue, Suite 401 Whitestone, NY 11357


Grand Pacific Business Loan Trust 2005-1



Grand Pacific Warehouse Funding LLC.



My Leasing (Mauritius) Corp. 2004060310th Floor, Raffles Tower, 19 Cybercity, Ebene, Mauritius


Chailease International Finance Corporation

20050412Building 1, Lane 631, Jinzhong Rd., Changning District, Shanghai, PRC

USD 310,000 Leases

Chailease International Corp. 20080717Building 1, Lane 631, Jinzhong Rd., Changning District, Shanghai, PRC

CNY 200,000

Wholesale of construction m a t e r i a l s , c h e m i c a l materials and products, mechanical machinery and automobile parts

Chailease Finance International Corp.

20110127Airport Business Park W13-4, No.76, Huan He North Road, Airport Industrial Area, Tianjin, PRC

USD 40,000 Leases

Jirong Real Estate Co., Ltd. 20121112Building 1, Lane 631, Jinzhong Rd., Changning District, Shanghai, PRC

CNY 170,000 Leasing of se l f -owned bui ldings and property management

Golden Bridge (B.V.I.) Corp. 20080409Palm Grove House, P.O. Box 438, Road Town, Tortola, British Virgin Islands


Chailease International (B.V.I.) Corp. 20071224Palm Grove House, P.O. Box 438, Road Town, Tortola, British Virgin Islands


Chailease International Financial Services Co., Ltd.

20130402P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands

USD 5,000Installment sales, overseas f inancing and f inancial consultation

Chailease International Financial Services (Hong Kong) Company Limited

2013112236/F Tower Two Times Square 1 Matheson ST Causeway Bay Hong Kong

USD - Investment

3. Shareholders representing both the holding company and affiliates: None. 4. The industry covered in the operation of affiliates

The business of the Company and affiliates: leases, installment sales, factoring, overdue accounts receivables management, overseas finance, insurance broker, real estate development, investment and reinvestment.

81

5. Information on the directors, supervisors and presidents of affiliatesDecember 31, 2013 Unit: 1000 shares (%)

Name of the company Position Name RepresentingShares held

Shares Percentage


Director Chia-Jeang Liu Chailease Holding Company Limited

912,872 100.00%

Chailease Finance Co., LTD. Chairman Fong-Long Chen Chailease International Company (Malaysia) Limited

844,994 100.00%

Director/President

Ming-Ching Hou Chailease International Company (Malaysia) Limited

Director Hung-Cheng Tsai Chailease International Company (Malaysia) Limited

Director Chia-Jeang Liu Chailease International Company (Malaysia) Limited

Director Jung-Tao Lee Chailease International Company (Malaysia) Limited

Director Hsiu-Tze Cheng Chailease International Company (Malaysia) Limited

Director Chi-Ching Chen Chailease International Company (Malaysia) Limited

Supervisor Cong-Min Chen Chailease International Company (Malaysia) Limited

Supervisor Po-Cheng Huang Chailease International Company (Malaysia) Limited

Fina Finance & Trading Co., Ltd. Chairman Fong-Long Chen Chailease Finance Co.,Ltd. 215,070 99.53%

Director/President

Hung-Cheng Tsai Chailease Finance Co.,Ltd.

Director Shi-Ren Shen Chailease Finance Co.,Ltd.

Director Kuo-Chiang Tseng Chailease Finance Co.,Ltd.

Director Chao-Ming Hung Chailease Finance Co.,Ltd.

Supervisor Tzu-Ting Yang 　

82


pany Limited


Shares Percentage

Chailease Consumer Finance Co., Ltd. Chairman Fong-Long Chen Fina Finance & Trading Co.,Ltd. 53,687 100.00%

President Hung-Cheng Tsai Fina Finance & Trading Co.,Ltd.

Director Hsing-Jen Liu Fina Finance & Trading Co.,Ltd.

Director Chi-Chung Chen Fina Finance & Trading Co.,Ltd.

Supervisor Tien-Fu Yu Fina Finance & Trading Co.,Ltd.

China Leasing Co., Ltd. Chairman Fong-Long Chen Chailease Finance Co.,Ltd. 15,111 100.00%

Director/President


Director Kai-Ming Li Chailease Finance Co.,Ltd.

Supervisor Kuo-Teng Qiu Chailease Finance Co.,Ltd.

Apex Credit Solutions Inc. Chairman Chia-Jeang Liu Chailease Finance Co.,Ltd. 8,300 100.00%

President Hung-Cheng Tsai Chailease Finance Co.,Ltd.

Director Jung-Tao Lee Chailease Finance Co.,Ltd.

Director Chih-Ho Wei Chailease Finance Co.,Ltd.

Supervisor Chung-Chiang Yang Chailease Finance Co.,Ltd.

Chailease Finance (B.V.I) Company Ltd. Chairman Fong-Long Chen Chailease Finance Co.,Ltd. 40,910 100.00%

Chailease Auto Rental Co., Ltd. Chairman Fong-Long Chen Chailease Finance Co.,Ltd. 25,000 100.00%

Director/President


Director Shih-Ku Huang Chailease Finance Co.,Ltd.

Supervisor Shih-Cha Lai Chailease Finance Co.,Ltd.

Chailease Credit Services Co.,Ltd. Chairman Fong-Long Chen Chailease Finance Co.,Ltd. 50 100.00%

Director Kun-Ming Chen Chailease Finance Co.,Ltd.

Director Jung-Tao Lee Chailease Finance Co.,Ltd.

Supervisor Chia-Jeang Liu Chailease Finance Co.,Ltd.

Chailease Insurance Brokers Co., Ltd. Chairman Fong-Long Chen Chailease Finance Co.,Ltd. 800 100.00%

President Jung-Tao Lee Chailease Finance Co.,Ltd.

Director Ming-Ching Hou Chailease Finance Co.,Ltd.

Director Hung-Cheng Tsai Chailease Finance Co.,Ltd.

Supervisor Tzu-Ting Yang Chailease Finance Co.,Ltd.

Manager Hung-Chih Tsai Chailease Finance Co.,Ltd.

83


Shares Percentage

Chailease International Leasing Co., Ltd. Chairman Chia-Jeang Liu - 100.00%

Director/President

Chi-Chang Wu

Director Lai-Wang Tang

Director Yi-Chen Cheng

Director Huei-Yeu Yang

Chairman of Control Comittee

Fong-Long Chen

Member of Control Comittee

Nguyen Hoang Tan

Member of Control Comittee

Quach Ngoc My

My Leasing (B.V.I.) Corp. Director Fong-Long Chen Chailease Finance Co.,Ltd. 17,000 100.00%

Asia Sermkij Leasing Public Co., Ltd. Chairman Chun-Lang Lu 　 167,522 48.56%

Director/President

Mr. Sarayuth K. 　

Director Chia-Jeang Liu 　

Director Fong-Long Chen 　

Director Ying-Chih Liao 　

Director Ying-Hui Shen 　

Director Mr. Tientavee Saraton

　

Director Ms. Patima Chavalit 　


Mr. Pradit Sawattananond

　


Mr. Anant Savattananon

　


Dr. Supriya Kuandachakupt

　


Mr. Kasem Akanesuwan

　

84


pany Limited


Shares Percentage

Bangkok Grand Pacific Lease Public Co., Ltd.

Chairman/President

Chun-Lang Lu 　 43,846 99.99%

Director Mr. Sarayuth K. 　


Director Jui-Tsung Hung 　

Director Yuan-i Li 　

Director Hsing-Jen Liu 　

Director Mr. Tientavee Saraton

　

Director Ms. Patima Chavalit 　

Grand Pacific Holdings Corp. Chairman Che-Chih Chen 　 7,700 100.00%


Director Chia-Jeang Liu 　

Director Richard Tao 　

Director Christina Wang 　

Grand Pacific Financing Corp. Chairman Che-Chih Chen 　 4,750 100.00%



Grand Pacific Main St. Development Inc Chairman Che-Chih Chen 　 - 100.00%



Grand Pacific Warehouse Funding Corp. Chairman Che-Chih Chen 　 - 100.00%


Director Frank Yu 　

Director Louise Varsos 　

Director Michael Tang 　


Chairman Che-Chih Chen 　 - 100.00%






Chairman Che-Chih Chen 　 - 100.00%





85


Shares Percentage

Grand Pacific Warehouse Funding LLC. Chairman Che-Chih Chen 　 - 100.00%





My Leasing (Mauritius) Corp. Director Fong-Long Chen 　 89,655 100.00%

Director Ming-Ching Hou 　

Director Kun-Ming Chen 　

Director Jimmy Wong 　

Director Eric A Venpin 　


Chairman Fong-Long Chen 　 - 100.00%

Director/President

Kun-Ming Chen 　

Director Wen-Cheng Chen 　

Supervisor Ming-Ching Hou 　

Chailease International Corp. Chairman Fong-Long Chen 　 - 100.00%

Director/President

Kun-Ming Chen 　



Chailease Finance International Corp Chairman/President

Fong-Long Chen 　 - 100.00%

Director Kun-Ming Chen 　

Director Sheng-Tzu Chang 　


Jirong Real Estate Co., Ltd. Chairman Fong-Long Chen 　 - 100.00%

Director/President

Kun-Ming Chen 　



Golden Bridge (B.V.I.) Corp. Director Fong-Long Chen 　 329,650 100.00%

Chailease International (B.V.I.) Corp. Director Fong-Long Chen 　 7,800 100.00%

Chailease Cloud Service Co., Ltd. Chairman Fong-Long Chen Chailease Finance Co.,Ltd 1,000 100.00%

Director/President

Ming-Ching Hou Chailease Finance Co.,Ltd

Director Tien-Fu Yu Chailease Finance Co.,Ltd

Supervisor Shi-Min Sun Chailease Finance Co.,Ltd


Director Fong-Long Chen 　 5,000 100.00%

86


pany Limited

6. Operational statuses of affiliatesUnit:NT$ (thousnad)

Name of affiliatesPaid-in capital

Total assetsTotal

liabilitiesNet value

Operating revenues

Operating income

net income or loss for

current period

(after tax)

EPS(after tax)

(NT$)


9,084,539 17,478,345 833,367 16,644,978 - (5,821) 3,440,705 3.83

Chailease Finance Co., LTD. 8,449,941 75,901,921 59,140,234 16,761,687 9,528,420 2,893,113 3,870,028 4.58

Fina Finance & Trading Co., Ltd.

2,160,857 18,107,928 13,935,260 4,172,668 1,320,510 487,432 540,301 2.50


536,871 3,598,288 2,800,112 798,176 368,418 123,821 102,306 1.91

China Leasing Co.,Ltd. 151,107 245,692 32,078 213,614 211,079 53,876 45,309 3.00

Apex Credit Solutions Inc. 83,000 301,225 181,198 120,027 174,359 25,425 24,544 2.96

Chailease Finance (B.V.I) Company Ltd.

1,219,323 19,955,961 16,251,409 3,704,552 1,175,048 664,296 664,472 16.24

Chailease Auto Rental Co., Ltd.

250,000 423,013 188,164 234,850 188,525 (25,277) (19,166) (0.77)

Chailease Credit Services Co.,Ltd.

500 154 50 104 0 (74) (74) (1.47)


8,000 29,170 7,120 22,050 42,802 16,664 13,900 17.38

Chailease International Leasing Company Ltd.

274,000 1,722,598 1,349,239 373,359 201,799 15,334 21,130 -

My Leasing (B.V.I.) Corp. 506,685 1,723,405 82 1,723,323 36,602 (877) 62,389 3.67

Asia Sermkij Leasing Public Company Ltd.

1,575,788 22,919,026 19,451,003 3,468,023 2,040,756 665,532 534,759 1.55

Bangkok Grand Pacific Lease Plc.

400,570 3,568,084 3,006,666 561,418 343,849 109,806 87,320 1.99

Grand Pacific Holdings Corp. 229,513 2,805,859 2,067,191 738,669 244,612 98,616 95,484 12.40

Grand Pacific Financing Corp.

141,574 2,527,589 1,584,103 943,486 206,796 40,722 40,158 8.45

Grand Pacific Main Street Development Inc

15 119,275 173 119,101 4,725 3,787 3,787 7,573.94

Grand Pacific Warehouse Funding Corp.

- -

67,544 60,701 6,843 0 (330) (336) -


-

-

-

-

-

-

-

-


-

394,980 390,881 4,100 45,316 65,893 65,893 -

Grand Pacific Warehouse Funding LLC.

-

-

-

-

-

-

-

-

My Leasing (Mauritius) Corp. 2,672,163 22,759,014 6,154,868 16,604,146 267,714 3,614 2,253,911 25.14

Chailease Cloud Service Co., Ltd

10,000 9,743 96 9,647 315 (438) (353) (0.35)

87

Name of affiliatesPaid-in capital

Total assetsTotal

liabilitiesNet value

Operating revenues

Operating income

net income or loss for

current period

(after tax)

EPS(after tax)

(NT$)


149,025 149,114

- 149,114

-

(160) 89 0.02

Chailease International Financial Services (Hong Kong) Co. Ltd.

-

-

-

-

-

-

-

0.00


9,239,550 57,262,233 41,429,572 15,832,661 8,129,576 5,213,545 2,369,286 -

Chailease International Corp. 983,800 5,489,837 3,970,495 1,519,342 6,462,149 652,078 361,732 -

Finance International corp. 1,192,200 3,480,964 1,859,310 1,621,654 460,575 357,350 229,263 -

Jirong Real Estate Co., Ltd. 836,230 1,608,634 746,576 862,058 49,801 49,664 25,311 -

Golden Bridge (B.V.I.) Corp. 9,825,218 18,611,417 3,055,684 15,555,733 523,788 439,632 2,629,897 10.09

Chailease International (B.V.I.) Corp.

232,479 299,700

- 299,700

-

-

599 0.08

Note1 : The capital, total assets, total liabilities and net value is calculated at the exchange rate in the end of 2012 while the operating revenue, operating income (loss), net income or loss for current period and EPS is calculated at the average exchange rate in 2012.

Note2 : It is a limited company without issuing stocks.

88


pany Limited

(2) Major differences in the Company's articles of association and R.O.C. regulations on shareholders protection

The rights of shareholdersArticles of

AssociationReasons

Influence on the rights of shareholders

1. Convention procedure and the method of adopting resolutions for the shareholders' meeting

1. The general meetings shall be held in Taiwan. For general meetings to be held outside Taiwan, the shareholders shall propose it for resolution in the Board meeting or report to TWSE for approval 2 days after the shareholders obtain an approval of convention from the authorities.

2. Any or plural number of shareholder(s) of a company who has (have) continuously held three percent (3%) or more of the total number of outstanding shares of the company for a period of one year or longer may, by filing a written proposal setting forth therein the subjects for discussion and the reasons, request the board of directors to convene a special shareholders' meeting. If the board of directors fails to give a notice for convening a special shareholders' meeting within fifteen (15) days after the filing of the request under the preceding paragraph, the proposing shareholder(s) may, after obtaining an approval from the competent authority, convene a special shareholders' meeting on his/their own.

Article 43 in the Articles of Association was revised according to the rights of shareholders except that it is not necessary to obtain an approval from the competent authorities before the shareholders convene a special shareholder's meeting on his/their own as stated in the left column.

With respect to convening a special shareholder's meeting on his/their own, it is not necessary to obtain an approval from the competent authorities under the Company Law of Cayman Islands; therefore, the article is not amended to "after obtaining an approval from the competent authority".

According to the description 2.(3) in Letter Tai-Zheng-Shang -Zi No. 0991701319 filed on April 13, 2010 by TWSE, the rights for the minority of shareholder to request for convening the special shareholders' meeting shall be established in the Articles of Association for foreign-owned published companies on the condition of no violation of local regulations on the registered place. The part of the approval for convention from the authorities shall be deleted. Therefore, the part of Articles has limited influence of the rights of shareholders.

89


AssociationReasons


If the proposal involves significant interest of shareholders as below, in the case of a company limited by shares: a resolution adopted, at a shareholders' meeting, by a majority of the shareholders present who represent two-thirds or more of the total number of its outstanding shares. If the total number of shares represented by the shareholders present at shareholders' meeting is not sufficient to meet the criteria specified in the preceding paragraph, the resolution to be made thereto may be adopted by two-thirds or more of the attending shareholders who represent a majority of the total number of its outstanding shares : 1. Enter into, amending, or terminating any contract

for lease of the company's business in whole, or for entrusted business, or for regular joint operation with others. Transferring the whole or any essential part of its business or assets. Accepting the transfer of another's whole business or assets, which has great bearing on the business operation of the company

2. Alteration of the Articles of Corporation of the company

3. Any modifications or alterations in the Articles of Incorporation prejudicial to the privileges of special shareholders shall also be adopted by a meeting of special shareholders

4. Having the whole or a part of the surplus profit distributable as dividends and bonuses distributed in the form of new shares to be issued by the company

5. Resolution of dissolution, merger and split-up6. Private placement of valuable securities

Article 64 and 66(b) in the Articles of Association with respect to the alternation of Articles of Association and the resolution threshold adopts the special resolution of Cayman Island.

1. As to the method of adopting resolutions in the shareholders' meeting, the special resolution (special resolution for the Laws of Cayman Islands hereinafter) is established in Article 1 of the Articles of Association in addition to the ordinary resolutions and special(supermajority) resolutions under the Laws of R.O.C. The Company Laws under Cayman Islands define that the special resolution refers to the adoption of a resolution by at least two-thirds of the votes of the shareholders present at a meeting of shareholders (including both personal attendance and proxy attendance, if allowed) if the meeting notice has clear notes that the special resolution will be adopted to make resolutions. However, the higher percentage of attendance can be designated according to the Articles of Association and the listed matters applicable to special resolutions can be passed at different percentages of attendance(but not lower than two thirds). The difference between the Articles of Association and the Rights of Shareholders is that the matters of special (supermajority) resolutions in the Rights of Shareholders shall be regulated by the special (supermajority) res olution and the special resolution under the Laws of Cayman Islands.

2. Under the Laws of Cayman Island, the alternation of the Articles of Association shall be implemented in accordance with the special resolution in the Laws of Cayman Islands. Therefore, the resolution threshold for alternation of Articles of Association is not amended to the special (supermajority) resolution in the Laws of R.O.C. in accordance with the "Rights of Shareholders". Moreover, according to Article 16 in the Articles of Association, any modification or alternation in the Articles of Incorporation prejudicial to the privilege of special shareholders, it shall be adopted by the meeting of special shareholders under the Laws of Cayman Islands. (2) Dissolution shall be implemented in compliance with the Laws of Cayman Islands. According to the Laws of Cayman, the Company shall pass an Ordinary Resolution, if the Company resolves that it be wound up voluntarily because it is unable to pay its debts as they fall due. The Company shall abide by the special resolution under Laws of Cayman Island, if the Company resolves that it be wound up voluntarily for reasons other than the reason stated above. Therefore, the resolution threshold of voluntary dissolution for the reason of unable to pay its debts has altered to supermajority resolution in the Laws of R.O.C. in accordance with the "Rights of Shareholders" in Article 66(a). As to the Article 66(b), the resolution threshold of voluntary dissolution for reasons other than the reason stated above, it shall abide by the special resolution under the Laws of Cayman Islands.

Since the difference is generated from the laws of Cayman Islands and the "Special Resolution” in rights of shareholders has been listed in the "Special Resolution for Cayman Laws" or "Special Resolutions", the Articles of Association should have limited influence on the rights of shareholders.

90


pany Limited


AssociationReasons


2. The rights and responsibilities of directors

1. Supervisors of a company shall be elected by the meeting of shareholders, among them at least one supervisor shall have a domicile within the territory of the Republic of China.

2. The term of office of a supervisor shall not exceed three years, but he may be eligible for re-election.

3. In case all supervisors of a company are discharged, the board of directors shall, within 30 days, convene a special meeting of shareholders to elect new supervisors.

4. Supervisors shall supervise the execution of business operations of the company and may at any time or from time to time investigate the business and financial conditions of the company, examine the accounting books and documents, and request the board of directors or managerial personnel to make reports thereon.

5. Supervisors shall audit the various statements and records prepared for submission to the shareholders' meeting by the board of directors, and shall make a report of their findings and opinions at the meeting of shareholders.

6. The supervisors may appoint, on behalf of the company, a practicing lawyer and a certified public accountant to conduct the examination.

7. Supervisors of a company may attend the meeting of the board of directors to their opinions. In case the board of directors or any director commits any act, in carrying out the business operations of the company, in a manner in violation of the laws, regulations, the Articles of Incorporation or the resolutions of the shareholders' meeting, the supervisors shall forthwith advise, by a notice, to the board of directors or the director, as the case may be, to cease such act.

8. Supervisor may each exercise the supervision power individually.

9. A supervisor shall not be concurrently a director, a managerial officer or other staff/employee of the company.

There is no regulation related to supervisors in the Articles of Association.

Since there is no definition and regulation of supervisors under the Laws of Cayman Island, the Articles of Association does not have regulations related to supervisors.

The rights of shareholders regulates that a company that has issued stock shall establish either an audit committee or a supervisor. Under the Article 131 of Articles of Association, the Audit Committee which is composed of all independent directors is established and has equivalent authorities and functions to supervisors; as a result, there should be limited influence on the rights of shareholders.

2. The explanation of the Operational Procedures for Handling Material Information of the Company:The Company has enacted the Operational Procedures for Handling Material Information and Preventing Insider Trading in March, 2011.(the "Operational Procedures") The purpose for the Operational Procedures is to enhance better handling of the material information and disclosure method of the Company. In addition, it has been enacted to prevent unduly leaking of such material information, inside trading, and to ensure the consistency and accuracy of the information disclosure of the Company. The Operational Procedures has been issued and duly notified by the employees, officers, and directors. Further educational guidance or trainings of the Operational Procedures to directors and officers will be performed by the responsible departments if necessary.

Documents

Chailease Holding Company Limited · Asia Sermkij Leasing Public Company Limited 24F., Sathorn City Tower, 175 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120, Thailand 66-2-679-6226