Year 2014 Far EasTone Telecommunications Co., Ltd ... … · 0 Year 2014 Far EasTone Telecommunications Co., Ltd. Shareholders’ Meeting Handbook June 11, 2014 Taipei, Taiwan, R.O.C

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Year 2014 Far EasTone Telecommunications Co., Ltd. Shareholders’ Meeting Handbook

June 11, 2014 Taipei, Taiwan, R.O.C.

The English version is the translation of the Chinese version and if there is any conflict in the handbook between the meaning of Chinese words of terms in the Chinese version and English words or terms in the English version, the meaning of the Chinese version shall prevail.

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Far Eastone Telecommunications Co., Ltd. Agenda of Year 2014 Shareholders' Meeting

Time: 9:00 a.m., June 11, 2014 Place: Taipei Hero House, 20 Changsha Street, Sec. 1, Taipei, Taiwan Opening – Chairman Company Presentation – Chairman / President Agenda of Meeting Handbook – Chairman I. Reports: (1)Business report of Year 2013…………..…………………………………….…...………..………………..…..………..……..….. 3 (2)Financial report of Year 2013……………………………………………………....…………………………………………....…. 8 (3)To review of the 2013 closing report by the Supervisors.……………………………....………………………………………..... 9 (4)The issuance of the 2013 corporate bonds..……....………………………………………………………………………….......... 10 (5)The change in accounting policy of investment properties at fair value model……………………………………....…………... 11 II. Matters to be ratified : (1)The Year 2013 final financial statements (including business report of the Year 2013)…………....……..……………….……… 12 (2)The proposed Year 2013 retained earnings distribution………………………..……...….………………………………….….… 13 III. Matters to be discussed: (1)To review and approve of the cash distribution from Capital Surplus…………………..…………………………………….…… 15 (2)To review and approve of the amendment to “the Articles of Incorporation” of the Company….…………….......……….…...... 16 (3)To review and approve of the amendment to “Handling Procedure for Acquisition and Disposal of Assets” of the Company….. 17 (4)To review and approve of the amendment to “Regulations Governing Shareholders’ Meetings” of the Company……….…….... 18 IV. Extempore Motion 18 V. Motion to Adjourn 18

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Attachment 1. Independent Auditors’ Report………………………………………………………........................................................................ 19 2. Balance Sheets in Y2013……………………………………………………………………...……….……....………………....... 20 3. Statements of Comprehensive Income in Y2013………….………………………….………………......…………………...….. 21 4. Statements of Changes in Equity in Y2013……………………..………………………………………...…...…….……..……... 23 5. Statements of Cash Flows in Y2013…………………………………………….………………………...…....…………..……… 24 6. Consolidated Independent Auditors’ Report…………………………………….……………………...……...………..………… 26 7. Consolidated Balance Sheets in Y2013…………………………………………….…………………………..…....……...…....... 27 8. Consolidated Statements of Comprehensive Income in Y2013…………………………………….………….……………...….. 28 9. Consolidated Statements of Changes in Equity in Y2013……………………………………….….........................……….……. 30 10. Consolidated Statements of Cash Flows in Y2013……………………………………………….…………………....………….. 31 11. The Company issued domestic unsecured corporate bond information…………………….…….…………………....…………. 33 12. Amendment to Articles of Incorporation of FarEastone Telecommunications Co., Ltd. ………….……………………....……… 34 13. Amendment to “Handling Procedure for Acquisition and Disposal of Assets” of FarEastone Telecommunications Co., Ltd…... 39 14. Amendment to “Regulations Governing Shareholders’ Meetings” of FarEastone Telecommunications Co., Ltd……………….. 71 15. Status of Directors & Supervisors’ shareholding on April 13, 2014……….…………………...………….………………..…….. 74 16. Bonus to Employees, Directors and Supervisors……………………….…………………….………………...……………......... 74 17. Impact of Stock Dividend Distribution on Business Performance, EPS and Return on Investment……………...…………......... 74

Articles 1. Articles of Incorporation of Far Eastone Telecommunication Co., Ltd……………………………………..…...………...……... 76 2. Handling Procedure for Acquisition and Disposal of Assets………………………..……….………………….………………... 82 3. Rules Governing the Conduct of Shareholders’ Meeting………………..…………………...……………..…….......................... 96

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I. Reports: (1) Business report of Year 2013

Dear Shareholders,

As we enter 2014, the global economy is gradually recovering. Looking forward to the new year, we expect to see a strong, explosive spike in domestic

economic growth, which will result in stronger domestic consumption momentum. Despite the downturn last year that hit economies home and abroad, Far

Eastone (FET) still managed to achieve great success: FET was once again recognized as providing the fastest consumer mobile broadband speed in a survey

conducted by the National Communications Commission (NCC), winning the championship among all telecom operators. Our excellent store service was also

ranked as the best in surveys conducted by Commercial Times, Next Media Magazine and Global Views Monthly. The efforts we invested in the promotion of

corporate social responsibility were recognized by society as well. With the advent of the digital era, FET is rapidly establishing 4G networks. With the largest

contiguous spectrum in Taiwan, we promise to provide extremely fast and stable 4G experiences for consumers.

Although the market and economic conditions were not stable in 2013, all Far Eastone employees keep their strong faith and strive to achieve the goal. Far

Eastone’s consolidated total revenue in 2013 was NT$ 89,671 million. The consolidated EBITDA (Earnings Before Interest, Tax, Depreciation and

Amortization) and net income were NT$ 25,599 million and NT$ 11,847 million, respectively; and the unaudited EPS stood at NT$3.61, up 11% from 2012,

underscoring our ability to consistently improve shareholder values.

The Operational Performance and Results of Far EasTone in 2013

�� World-class Quality Network, Outshining All the Other Telecom Operators

In 2013, Far Eastone was awarded a fourth-generation (4G) license, successfully securing a total of 30 MHz spectrum. The Company is not merely the only

telecom operator in Taiwan that has 20 MHz of contiguous spectrum, but also the only company in the sector that will be able to compete head-to-head with

leading carriers in countries such as Japan and Korea in terms of 4G LTE speeds as we move forward into the future. Armed with the spectrum from both

high and low frequency blocks which complement each another, FET now enjoys the unique advantage of offering the most efficient and fastest broadband

speeds and ensuring top-notch indoor and outdoor signals, along with the ability to maximize the performance of multi-media, audio and video streaming,

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gaming and all the other myriad of mobile applications for best user experience. Moreover, FET topped the NCC survey on consumer mobile broadband

speed for two times in a row, yet another affirmation of the depth of our dedication and commitment to quality of service.

Also, in 2013, Far Eastone announced its alliance with Vodafone Group, a telecom giant internationally, becoming Vodafone’s exclusive partner in Taiwan.

Its customer base has also expanded from 350 million under the Conexus Mobile Alliance to more than 700 million under the Vodafone Alliance.

Leveraging the competitive edge as a member of one of Asia’s largest mobile alliances, FET is now able to provide competitive pricing and quality

coverage. In the future, FET plans to integrate the existing resources of other member operators using cloud technology, expanding its global service

networks and becoming a world-class telecommunications operator.

�� Award-winning Customers Service that Exceeds Expectations

Far Eastone’s 360° Store Service is an innovative idea in the industry. FET introduces 1-3 innovative services nationwide every year to promote industrial

upgrading. In order to realize the service concept of “exceeding customer expectations”, FET introduced multiple services, such as the 360° Self-Care APP,

and Online Chat, to provide services tailored for a mobile life. In addition, FET’s continuous efforts in the 360° Store Services were widely recognized in

2013 when it won the Commercial Times “Golden Award of The Best Service in Taiwan”, gained first place in Next Media Magazine’s “Top Service Award

2013- Mobile and Communication” and received “Global Views Excellent Service Awards-Telecommunications” from Global Views Monthly.

�� FET Garnered Six Major FinanceAsia Awards for Outstanding Corporate Governance

FET is dedicated to implementing effective corporate governance, social responsibility and two-way transparent communications with investors, and has

thus been the only telecom operator in Taiwan to garner six major awards from FinanceAsia for two years in a row. FET has won awards including “Best

Managed Company,” “Best Corporate Governance,” “Best Investor Relations,” “Best Corporate Social Responsibility,” “Most Committed to a Strong

Dividend Policy” as well as “Best CEO.” These awards are strong evidence of FET’s excellent governance, putting the company ahead of its competitors.

�� E-commerce Introduced to New “SoLoMo Economy” Business Model

Last year, Far Eastone increased its effort in establishing mobile application services. FET also invested in Hiiir, a newly established company, in an

attempt to assist more developers to gain international exposure and additional opportunities. Furthermore, FET introduced and adopted a newly-built

model of SoLoMo (Social, Local and Mobile) economy. The mechanism is to get the consumers as the center of their social connections, daily living

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activities and consumption and then gradually expands the circle of influence. As a result, a symbiotic eco-system is formed to connect the consumers,

developers and advertising agencies via mobile applications to expand the possibilities of mobile technology.

�� Deeper Connection through Getting Closer to Local Community

By the end of last year, the number of channels under the Far Eastone umbrella had exceeded 1,000, and this wide coverage allows us to connect deeper

and broader with consumers’ lives. FET also conducted detailed evaluations on the characteristics and consumption power of various business districts,

then opened stores with different features accordingly. The pioneering concept store at Ximen and the first outlet near Taipei Train Station are two examples.

Furthermore, FET has been continuously promoting services such as “battery recycling” and “appraisal and trade-in program of used phones”. These

actions set up an environmentally-friendly platform on which consumers can collaborate with FET recycling cell phones and reusing resources.

�� Promoting Corporate Social Responsibility Underpinned by Communication Expertise

In order to actualise “Eco-fashion, Creative responsibility”, the dual concept of Far Eastone’s corporate social responsibility, FET organized the 2nd FET

Green Kungfu Campaign “I Draw, I Tell, therefore I Love”. This event aimed to emphasize that environmental protection education should start at a young

age. Related activities included environmental protection story-telling and promoting Taiwan’s 1st Eco-friendly Digital Picture Book Competition for

Children through tablet computers and e-books. In addition, FET recruited volunteers to visit rural elementary schools in Tauyuan District, Kaohsiung City.

The volunteers promoted e-books in these areas to bridge the digital gap between cities and rural areas, and also encouraged environmental-friendly actions

such as saving paper to save trees. Far Eastone also won the “ 2013 Corporate “Social Responsibility Award” from the Global Views Magazine, with the

publication commending the company's progress toward workplace gender equality.

Far Eastone Operation Status and Strategic Planning for 2014

�� Transformation, Innovation, Wow

Information, Communications and Technology (ICT) business is ever-changing. Abiding to its five major core values –Trustworthy, Proactive, Innovative,

Accountable, Collaborative, Far Eastone keeps on improving in numerous areas, including talent cultivation, product services, infrastructure and business

model, to further enhance its communication technologies and eventually become the leader in 4G technology. In addition, as NFC(Near Field

Communication) technologies and the new SoLoMo business model gradually mature, FET will continue to introduce new products and services so that

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consumers can fully enjoy high-quality multimedia streaming, games and various APPs on the 4G LTE network. Consumers are sure to be wowed by the

experience.

�� Express Your Love. Let It Be Heard

A brand should not only be cutting-edge, but also connect consumers’ emotions. FET has transformed from a network provider to a platform provider, and

plans to evolve into a diversified service provider in the future, for one can only stand out in the fierce market competition by differentiating the brand.

Since oriental people are not used to openly showing affections to one another, FET wants to play “the connector” in society by promoting a three-year long

brand campaign “Express your love. Let it be heard” which began last year. FET hopes that this positive trend will spread from corporation outward to

society, and encourage everyone to show their family and friends that they really care.

�� Innovating Mobile Services to Monetize Digital Business

With the arrival of the 4G era, high-speed networks will connect individuals, mobile devices, and digital lifestyles, which will greatly alter customers’’

mindset and past experiences. Following this trend, FET will be more active in the integration of the eco-system, the development of innovative business

models, and the expansion of potential markets such as e-commerce, mobile payment, and mobile media to provide integrated services “anytime, anywhere,

on any screen”. Furthermore, FET will capitalize on the big data opportunity and offer comprehensive solutions in areas including voice, data, and cloud

services for our corporate consumers; and also provide consumers with more accurate mobile advertisements and applications. The mobile value chain of

social media business can be fully understood and made profitable by leveraging the network advantage of telecom operators.

�� Strengthening Employee Cultivation to Prepare for the New Era

Human capital is the biggest asset of a corporation, and meticulous training of talents is the only way for a company to overcome challenges and maintain

its competitive edge in the ever-changing competitive market. In 2014, FET will further emphasize the five major core values among all employees,

discover and develop more talents to face the upcoming challenges brought about by emerging markets and the realization of the 4G network. In addition,

FET will establish a comprehensive welfare system, complete professional career development training programs, and transparent communication methods

to create a long-term and stable talent cultivation program. By implementing these projects, employees will identify themselves more with the entire morale

can increase continuously.

Looking forward to 2014, Far Eastone will keep on providing the best ICT services, as well as create maximum value for our shareholders and become

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the most sought-after employer among employees as we realize our corporate commitment. At the same time we are dedicated as ever to exceeding

customers’ expectations with innovation and passion. Furthermore, Far Eastone will continue to reward society by promoting our corporate social

responsibility dual concept: “Eco-fashion, Creative responsibility”. By combining environmental protection advocacy with Information, Communications

and Technology, we can help the sustainability of Taiwan, and let the love carry on!

Last but not least, we would like to thank you all again, and we welcome your suggestions and comments. Wish you all good health and all the best.

Chairman President Chief Accountant

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(2)Financial report of Year 2013 1. Balance Sheets in Y2013

2. Statements of Comprehensive Income in Y2013

3. Statements of Changes in Equity in Y2013

4. Statements of Cash Flows in Y2013

5. Consolidated Balance Sheets in Y2013

6. Consolidated Statements of Comprehensive Income in Y2013

7. Consolidated Statements of Changes in Equity in Y2013

8. Consolidated Statements of Cash Flows in Y2013

Please see the attachments for Independent Auditors’ Report together with all above financial reports of Year 2013. Please refer to page 19~32.

For complete financial reports, please download from M.O.P.S. (http://newmops.twse.com.tw/)

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(3) To review of the 2013 closing report by the Supervisors April 10, 2014

The Board of Directors have prepared and submitted to us the Company's 2013 Business Reports, the Financial Statements, and the Proposal for Profit

Distribution ( included the consolidated Financial Reports) audited by the CPAs of Deloitte & Touche.

The above reports, financial statements, and proposal have been further examined as conforming the Company Act and related law by the undersigned

Supervisors of Far EasTone Telecommunications Co., Ltd. According to Article 219 of the Company Act, we hereby submit this report.

To

FET Year 2014 Shareholders’ Meeting

Supervisors：Chen-en Ko

Eli Hong

C. K. Ong

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(4) The issuance of the 2013 corporate bonds 1. To enrich working capital and repay bank loans, the Board of Directors, held on 2013/4/26 and 2013/10/28, resolved to issue domestic corporate bonds not

exceeding NT$10 billion respectively (within the total amount of NT$20billion).

2. The issuances of the abovementioned corporate bonds have been approved by the Financial Supervisory Commission. The aforesaid bond issuance of total

NT$20billion were all successfully completed and were traded on the Over-the Counter market (OTC). Details of the issuance and terms of the unsecured

corporate bonds, please refer to the page 33.

3. According to Article 246 of Company Law, the Company shall report the corporate bond issuances to the meeting of shareholders. Please report.

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(5) The change in accounting policy of investment properties at fair value model 1. An entity is allowed to adopt whether a cost model or a fair value model for measurement after recognition of Investment Property according to newly

amended “Regulations Governing the Preparation of Financial Reports by Securities Issuers”.

2. In order to present fairly the value of investment property and be in line with parent company’s (Far Eastern New Century Corporation) accounting policy

change, it’s proposed to adopt the fair value model from year 2014.

3. The line items affected and the actual effect for the immediately preceding financial year:

(1) The impacts on consolidated balance sheet as of 2013/1/1: Investment Property increased by NT$642 million, Deferred Tax Liability increased by

NT$35 million, Non-controlling Interest increased by NT$9 million, Total Stockholders’ Equity increased by NT$607 million.

(2) The impacts on consolidated balance sheet as of 2013/12/31: Investment Property increased by NT$708 million, Deferred Tax Liability increased by

NT$41 million, Non-controlling Interest increased by NT$10 million, Total Stockholders’ Equity increased by NT$667 million.

(3) The impacts on consolidated statements of comprehensive income for year 2013: Gain on Investment Property increased by NT$58 million,

Depreciation Expense of Investment Property decreased by NT$8 million, Income Tax Expense increased by NT$6 million, Net Income increased by

NT$60 million, Comprehensive Income increased by NT$60 million

4. The actual effect on the opening balance of retained earnings for the immediately preceding financial year: Retained Earnings increased by NT$598

million as of 2013/1/1

5. According to Rule No. 1030006415 issued by the FSC, the company has to appropriate a special reserve $649 million on January 1, 2014.

6. The reasonableness and necessity for the change in accounting policy or accounting estimate after the beginning of the financial year: In order to present

fairly the value of Investment Property, the company adopted the fair value model according to newly amended “Regulations Governing the Preparation of

Financial Reports by Securities Issuers”.

7. About the reasonableness of the item 3 to 4, the itemized analysis and reviewed opinion from CPA: The CPA has reviewed in accordance with article 6 of

“Regulations Governing the Preparation of Financial Reports by Securities Issuers” and issued an opinion on the change in accounting policy that the item

2 to 9 are fair and reasonable.

8. This proposal has been approved by the 9th meeting of the sixth-term Board of Directors on April 25, 2014.

9. Please report.

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II .Matters to be Ratified：：：： (1) The Year 2013 final financial statements (including business report of the Year 2013) Explanatory Notes：

1. Please discuss and approve the business report of Year 2013 and annual standalone financial statements and consolidated financial statements as of

December 31, 2013, which have been audited by the Company’s auditing CPAs, Mr. Tony Chang and Mr. Andy Kuo of Deloitte and Touche. Supervisors of

the Company have reviewed the Financial Statements for the fiscal year 2013 and issued audit reports.

2. This proposal has been approved by the 8th meeting of the sixth-term Board of Directors on February 18, 2014.

3. Please approve.

Resolution:

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(2) The proposed Year 2013 retained earnings distribution Explanatory Notes：

1. It is proposed the Company to distribute cash dividend of NT$10,309,896,563 from the retained earnings at NT$3.164 per share.

2. Please refer to the following for the Company’s Year 2013 appropriation proposal:

Far EasTone Telecommunications Co., Ltd

Appropriation Proposal (in NT dollars)

Un-appropriated earnings of January 1, 2013 $2,224,628

Less： The adjustments of retained earnings in accordance

with the adoption of IFRSs (214,316,584)

Accumulated loss after adjustment of January 1, 2013 (212,091,956)

Add：Y2013 Net income after tax 11,770,520,975

Y2013 Net income after tax deducting accumulated loss of

January 1, 2013 11,558,429,019

Less: Legal reserve (1,155,842,902)

Less: Special reserve (107,032,654)

Add：Other comprehensive income 14,756,045

Maximum distributable dividends 10,310,309,508

Less: Appropriation

Cash dividends (NT$3.164) (10,309,896,563)

Un-appropriated earnings after distribution $412,945

Note. Bonuses to employees and remunerations to directors & supervisors were

NT$205,911,069 and NT$102,955,535, respectively.

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3. In conformity to “Two-tax-in-one”, it is prioritized to distribute the R/E of and after the year 1998 when calculating the shareholders’ deductible tax

according to Article 66-6, 66-9 & 73-2 of Income Tax Law. The “identified method” and “distribution of most recent years’ R/E” provided in the MOF’s

regulation (Letter No.871941343, dated on April 30, 1998) were applied when calculating 10% imputing tax according to Article 66-9 of Income Tax Law.

4. If the outstanding shares are impacted due to the Company’s subsequent capital increase or other matters before the ex-cash dividend record date, it is

proposed the Board of Directors be authorized by the Shareholders’ Meeting to adjust the ultimate cash to be distributed to each common share based on

the number of actual outstanding shares on the ex-cash dividend record date.

5. It is proposed that the Board authorizes the Chairman to fix the record date of ex-cash dividend after the approval by the Year 2014 annual Shareholders’

Meeting.


7. According to Article 241 of the Company Act“Where a company incurs no loss, it may distribute its legal reserve and capital reserve-Additional Paid-in

Capital-Share Issuance in Excess of Par Value as cash dividend to its original shareholders in proportion to the number of shares being held by each of

them.”It is proposed the Company to distribute cash of NT$1,909,481,475 from the capital surplus-Additional Paid-in Capital-Share Issuance in Excess

of Par Value at NT$0.586 per share. If the Shareholders’ Meeting approves to distribute dividends from capital surplus, totally cash NT$3.75 per share of

Year 2013.

8. Please approve.

Resolution:

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III. Matters to be discussed：：：： (1) To review and approve of the cash distribution from Capital Surplus Explanatory Notes:

1. According to Article 241 of the Company Act“Where a company incurs no loss, it may distribute its legal reserve and capital reserve-Additional Paid-in

Capital-Share Issuance in Excess of Par Value as cash dividend to its original shareholders in proportion to the number of shares being held by each of

them.”It is proposed the Company to distribute cash of NT$1,909,481,475 from the capital surplus-Additional Paid-in Capital-Share Issuance in Excess

of Par Value at NT$0.586 per share.

2. If the outstanding shares are impacted due to the Company’s subsequent capital increase or other matters before the ex-cash distribution record date, it is

proposed the Board of Directors be authorized by the Shareholders’ Meeting to adjust the ultimate cash to be distributed to each common share based on

the number of actual outstanding shares on the ex-cash distribution record date.

3. It is proposed that the Board authorizes the Chairman to fix the record date of ex-cash distribution after the approval by the Year 2014 annual Shareholders’

Meeting.


5. In Ratification Proposal 2, it is proposed the Company distributes cash of NT$10,309,896,563 from the retained earnings at NT$3.164 per share. With the

cash distribution of NT$0.586 per share from capital surplus, totally cash NT$3.75 per share of Year 2013.

6. Please approve. Resolution:

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(2) To review and approve of the amendment to “the Articles of Incorporation” of the Company Explanatory Notes:

1. In response to the amendment of the related government’s regulations and business needs, it is proposed to amend the Articles 2 and 31 of and add the

Article 15-1 to the Company’s “Articles of Incorporation”. Please refer to page 34~38 for the amendment.



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(3) To review and approve of the amendment to “Handling Procedure for Acquisition and Disposal of Assets” of the Company Explanatory Notes:

1. In order to comply with the amendment of “Regulations Governing the Acquisition and Disposal of Assets by Public Companies” announced by Financial

Supervisory Commission (“FSC”) official letter No. 1020053073 dated December 30, 2013, it is proposed to amend Articles 2~3, 5~9 and 12 of the

Company’s “Handling Procedure for Acquisition and Disposal of Assets”. And according to the FSC official letter No. 1020014840 dated May 13, 2013, it

is proposed to amend Articles 10 of the Company’s “Handling Procedure for Acquisition and Disposal of Assets”. Please refer to page 39~70 for the

amendment.


3. Please approve.

Resolution:

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(4) To review and approve of the amendment to “Regulations Governing Shareholders’ Meetings” of the Company Explanatory Notes:

1. In response to the amendment of the related government’s regulations, it is proposed to amend the Articles 2 and 10 of the Company’s “Regulations

Governing Shareholders’ Meetings”. Please refer to page 71~73 for the amendment.



IV. Extempore Motion V. Motion to Adjourn

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Attachments English Translation of a Report Originally Issued in Chinese INDEPENDENT AUDITORS’ REPORT The Board of Directors and Stockholders Far EasTone Telecommunications Co., Ltd. We have audited the accompanying balance sheets of Far EasTone Telecommunications Co., Ltd. (“the Company”) as of December 31, 2013, December 31, 2012, and January 1, 2012, and the related statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2013 and 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Those rules and standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2013, December 31, 2012, and January 1, 2012, and its financial performance and its cash flows for the years ended December 31, 2013 and 2012, in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers. February 18, 2014

Notice to Readers The accompanying financial statements are intended only to present the financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such financial statements are those generally applied in the Republic of China. For the convenience of readers, the independent auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

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FAR EASTONE TELECOMMUNICATIONS CO., LTD. BALANCE SHEETS (In Thousands of New Taiwan Dollars, Except Par Value) December 31, 2013 December 31, 2012 January 1, 2012 ASSETS Amount % Amount % Amount % CURRENT ASSETS

Cash and cash equivalents (Notes 4, 6 and 31) $ 912,456 1 $ 1,696,129 2 $ 1,073,482 1 Available-for-sale financial assets - current (Notes 4 and 7) 225,742 - 281,153 - 270,426 - Held-to-maturity financial assets - current (Note 4) 99,962 - 100,000 - - - Derivative financial assets for hedging - current (Notes 4 and 8) 115 - 4,650 - - - Debt investments with no active market - current (Notes 4, 9 and 31) 2,266 - - - 392,000 1 Notes receivable (Note 4) 7,261 - 18,784 - 3,956 - Accounts receivable, net (Notes 4 and 10) 5,552,815 5 5,891,337 6 5,368,481 6 Accounts receivable - related parties, net (Notes 4, 10 and 31) 323,629 - 336,543 - 350,315 - Other receivables - related parties (Note 31) 601,517 - 352,016 1 340,117 - Inventories (Notes 4 and 11) 1,923,124 2 918,958 1 719,630 1 Prepaid expenses 925,393 1 750,077 1 611,181 1 Other financial assets - current (Notes 4 and 31) 1,414,467 1 1,319,763 2 1,198,139 1 Other current assets (Notes 4 and 31) 24,350 - 20,089 - 31,726 -

Total current assets 12,013,097 10 11,689,499 13 10,359,453 11

NONCURRENT ASSETS

Held-to-maturity financial assets - noncurrent (Note 4) - - 99,871 - 199,768 - Investments accounted for using the equity method (Notes 4, 12 and 31) 28,612,892 24 32,974,334 36 30,030,598 33 Property, plant and equipment, net (Notes 4, 13 and 31) 29,010,816 24 29,943,751 32 30,610,232 34 Investment properties, net (Notes 4 and 14) 324,185 - 328,582 - 332,979 - Concession, net (Notes 1, 4 and 15) 34,968,533 30 4,384,239 5 5,114,945 6 Computer software, net (Notes 4 and 15) 2,124,201 2 2,176,648 2 2,256,637 3 Goodwill (Notes 4 and 15) 10,283,031 9 10,283,031 11 10,283,031 12 Deferred income tax assets (Notes 4 and 24) 883,429 1 691,612 1 582,735 1 Refundable deposits (Note 31) 417,188 - 393,936 - 349,901 - Lease receivables - noncurrent (Note 4) 18,722 - 26,666 - 34,562 -

Total noncurrent assets 106,642,997 90 81,302,670 87 79,795,388 89

TOTAL $ 118,656,094 100 $ 92,992,169 100 $ 90,154,841 100 LIABILITIES AND EQUITY CURRENT LIABILITIES

Short-term borrowings (Notes 4 and 16) $ 820,000 1 $ 114,000 - $ 1,862,000 2 Derivative financial liabilities for hedging - current (Notes 4 and 8) - - - - 75 - Notes payable 8,619 - 29,403 - 28,912 - Accounts payable 2,670,751 2 3,649,457 4 2,709,615 3 Accounts payable - related parties (Note 31) 1,223,030 1 1,138,344 1 1,031,018 1 Payables for acquisition of properties (Note 18) 1,986,113 2 2,886,522 3 1,241,609 1 Other payables (Notes 4 and 18) 5,128,120 4 4,069,306 5 3,767,230 4 Other payables - related parties (Note 31) 5,788,197 5 732,380 1 441,638 1 Current tax liabilities (Notes 4 and 24) 2,956,438 3 2,127,207 2 1,363,270 2 Guarantee deposits received - current 290,741 - 325,513 - 394,739 - Unearned revenue - current (Notes 4 and 18) 2,162,540 2 2,487,474 3 2,657,233 3 Other current liabilities (Notes 4, 18 and 19) 265,145 - 323,599 - 321,375 -

Total current liabilities 23,299,694 20 17,883,205 19 15,818,714 17

NONCURRENT LIABILITIES

Bonds payable (Notes 4 and 17) 19,965,600 17 - - - - Provisions -noncurrent (Notes 4 and 19) 257,893 - 245,833 - 226,973 - Deferred income tax liabilities (Notes 4 and 24) 1,075,762 1 941,292 1 806,822 1 Accrued pension costs (Notes 4 and 20) 753,643 1 782,980 1 728,449 1 Guarantee deposits received - noncurrent 328,035 - 337,032 1 283,161 - Other noncurrent liabilities (Notes 4, 12 and 18) 182,261 - 177,703 - 567,385 1

Total noncurrent liabilities 22,563,194 19 2,484,840 3 2,612,790 3

Total liabilities 45,862,888 39 20,368,045 22 18,431,504 20

EQUITY

Capital stock Common stock 32,585,008 27 32,585,008 35 32,585,008 36

Capital surplus 15,919,097 13 17,790,049 19 19,447,083 22 Retained earnings

Legal reserve 12,822,948 11 11,762,957 13 10,874,858 12 Unappropriated earnings 11,573,185 10 10,388,791 11 8,789,564 10

Total retained earnings 24,396,133 21 22,151,748 24 19,664,422 22 Other equity (107,032) - 97,319 - 26,824 -

Total equity 72,793,206 61 72,624,124 78 71,723,337 80

TOTAL $ 118,656,094 100 $ 92,992,169 100 $ 90,154,841 100 The accompanying notes are an integral part of the financial statements.

- 21 -

FAR EASTONE TELECOMMUNICATIONS CO., LTD. STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) For the Years Ended December 31 2013 2012 Amount % Amount % OPERATING REVENUES (Notes 4, 22 and 31) $ 73,954,595 100 $ 71,570,338 100 OPERATING COSTS (Notes 4, 11, 20, 23 and 31) 41,750,553 57 40,630,386 57 GROSS PROFIT 32,204,042 43 30,939,952 43 OPERATING EXPENSES (Notes 4, 20, 23 and 31)

Marketing 14,230,344 19 14,682,902 20 General and administrative 4,562,483 6 4,426,407 6

Total operating expenses 18,792,827 25 19,109,309 26

OPERATING INCOME 13,411,215 18 11,830,643 17 NONOPERATING INCOME AND EXPENSES

Other income (Notes 4 and 31) 264,133 - 244,463 - Other gains and losses (Note 4) 80,634 - 89,753 - Financial costs (Notes 4 and 23) (88,631) - (7,636) - Share of the profit or loss of subsidiaries and

associates (Notes 4 and 12) 1,929,467 3 1,816,936 3 Losses on disposal of property, plant and equipment

(Note 4) (1,242,525) (2) (1,076,455) (2)

Total nonoperating income and expenses 943,078 1 1,067,061 1 INCOME BEFORE INCOME TAX 14,354,293 19 12,897,704 18 INCOME TAX (Notes 4 and 24) 2,583,773 3 2,306,185 3 NET INCOME 11,770,520 16 10,591,519 15 OTHER COMPREHENSIVE INCOME

Unrealized (losses) gains on available-for-sale financial assets (Notes 4 and 21) (12,986) - 11,591 -

Cash flow hedges (Notes 4, 8 and 21) 29,301 - 6,982 - Actuarial gains (losses) arising from defined benefit

plans (Note 20) 16,799 - (68,830) - Share of other comprehensive income of subsidiaries

and associates (Notes 4 and 21) (216,360) - 54,149 - (Continued)

- 22 -

FAR EASTONE TELECOMMUNICATIONS CO., LTD. STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) For the Years Ended December 31 2013 2012 Amount % Amount %

Income tax relating to the components of other comprehensive income (Notes 4 and 24) $ (6,349) - $ 10,865 -

Total other comprehensive income, net of

income tax (189,595) - 14,757 - TOTAL COMPREHENSIVE INCOME $ 11,580,925 16 $ 10,606,276 15 EARNINGS PER SHARE (NEW TAIWAN

DOLLARS; Notes 4 and 25)

Basic $3.61 $3.25 Diluted $3.61 $3.25

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

- 23 -

FAR EASTONE TELECOMMUNICATIONS CO., LTD. STATEMENTS OF CHANGES IN EQUITY (In Thousands of New Taiwan Dollars) Other Equity Exchange Unrealized Differences on Gains (Losses) Retained Earnings Translating on Available- Cash Flow Share Capital (Note 21) Unappropriated Foreign for-sale Hedges Number of Capital Surplus Legal Reserve Earnings Operations Financial Assets (Notes 4, Shares Amount (Notes 4 and 21) (Note 21) (Notes 4 and 21) (Notes 4 and 21) (Notes 4 and 21) 8 and 21) Total BALANCE, JANUARY 1, 2012 3,258,501 $ 32,585,008 $ 19,447,083 $ 10,874,858 $ 8,789,564 $ - $ 23,044 $ 3,780 $ 71,723,337 Appropriation of the 2011 earnings

Legal reserve - - - 888,099 (888,099) - - - - Cash dividends - NT$2.469 per share - - - - (8,045,238) - - - (8,045,238)

Changes in capital surplus from investments in associates for using the

equity method - - 50,988 - - - - - 50,988 Cash dividends from capital surplus - NT$0.531 per share - - (1,730,264) - - - - - (1,730,264) Additional acquisition of partially owned subsidiaries - - 22,242 - (3,217) - - - 19,025 Net income for the year ended December 31, 2012 - - - - 10,591,519 - - - 10,591,519 Other comprehensive income for the year ended December 31, 2012 - - - - (55,738) (1,925) 98,511 (26,091) 14,757 BALANCE, DECEMBER 31, 2012 3,258,501 32,585,008 17,790,049 11,762,957 10,388,791 (1,925) 121,555 (22,311) 72,624,124 Appropriation of the 2012 earnings

Legal reserve - - - 1,059,991 (1,059,991) - - - - Cash dividends - NT$2.928 per share - - - - (9,540,891) - - - (9,540,891)

Changes in capital surplus from investments in associates for using the

equity method - - (2,781) - - - - - (2,781) Cash dividends from capital surplus - NT$0.572 per share - - (1,863,862) - - - - - (1,863,862) Additional acquisition of partially owned subsidiaries - - (4,309) - - - - - (4,309) Net income for the year ended December 31, 2013 - - - - 11,770,520 - - - 11,770,520 Other comprehensive income for the year ended December 31, 2013 - - - - 14,756 361 (72,236) (132,476) (189,595) BALANCE, DECEMBER 31, 2013 3,258,501 $ 32,585,008 $ 15,919,097 $ 12,822,948 $ 11,573,185 $ (1,564) $ 49,319 $ (154,787) $ 72,793,206 The accompanying notes are an integral part of the financial statements.)

24

FAR EASTONE TELECOMMUNICATIONS CO., LTD. STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars)

For the Years Ended

December 31 2013 2012 CASH FLOWS FROM OPERATING ACTIVITIES

Income before income tax $ 14,354,293 $ 12,897,704 Adjustments for:

Depreciation 6,919,604 7,488,245 Amortization 647,205 633,936 Amortization of 3G concession 730,706 730,706 Allowance for doubtful accounts 157,745 249,083 Financial costs 88,631 7,636 Interest income (61,425) (36,014) Dividend income (3,734) (4,905) Share of the profit of subsidiaries and associates (1,929,467) (1,816,936) Loss on disposal of property, plant and equipment 1,242,525 1,076,455 Gain on disposal of financial assets (14,633) - Write-down of inventories 105,730 18,803 Deferred income on derivative assets for hedging 710 1,450 Other adjustments - (167) Net changes in operating assets and liabilities

Notes receivable 11,523 (14,828) Accounts receivable 180,777 (771,939) Accounts receivable - related parties 12,914 13,772 Other receivables - related parties (9,387) (11,802) Inventories (1,109,896) (218,131) Prepaid expenses (175,316) (138,896) Other current assets (1,795) 2,158 Notes payable (20,784) 491 Accounts payable (978,706) 939,842 Accounts payable - related parties 84,686 107,326 Other payables 1,013,642 301,928 Other payables - related parties (134,313) 275,117 Provisions (498) (167) Unearned revenue (324,934) (169,759) Other current liabilities (86,506) (4,467) Accrued pension costs (12,538) (14,299)

Cash generated from operations 20,686,759 21,542,342 Interest received 62,184 35,699 Dividend received 1,350,152 95,115 Interest paid (16,890) (7,486) Income taxes paid (1,818,237) (1,504,119)

Net cash generated from operating activities 20,263,968 20,161,551

(Continued)

25

FAR EASTONE TELECOMMUNICATIONS CO., LTD. STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars)

For the Years Ended

December 31 2013 2012 CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds of the disposal of available-for-sale financial assets $ 80,313 $ 3,990 Acquisition of debt investments with no active markets (2,266) - Proceeds from the disposal of debt investments with no active market - 392,000 Proceeds on redemption of held-to-maturity financial assets 100,000 - Acquisition of investments accounted for using the equity method (238,874) (865,192) Proceeds from capital reduction of investments accounted for using the

equity method 4,994,490 - Acquisition of property, plant and equipment (8,075,304) (6,234,362) Proceeds from the disposal of property, plant and equipment 23,446 40,211 Increase in refundable deposits (92,565) (124,312) Decrease in refundable deposits 69,313 80,277 Other receivables - related parties' increase in financing provided (241,000) - Acquisition of intangible assets (31,909,758) (553,947) Increase in other financial assets (94,704) (121,624)

Net cash used in investing activities (35,386,909) (7,382,959)

CASH FLOWS FROM FINANCING ACTIVITIES

Increase (decrease) in short-term borrowings 706,000 (1,748,000) Proceeds of the issue of bonds payable 20,000,000 - Payment of costs attributed to the issue of bonds payable (35,821) - Increase in guarantee deposits received 114,392 183,155 Decrease in guarantee deposits received (158,161) (198,510) Other payables - related parties' increase in financing obtained 5,200,000 - Decrease in other noncurrent liabilities (77,270) (92,815) Cash dividends paid (11,404,753) (9,775,502) Acquisition of interests in subsidiaries (5,119) (528,088) Disposal of interests in subsidiaries without losing control - 3,815

Net cash generated from (used in) financing activities 14,339,268 (12,155,945)

(DECREASE) INCREASE IN CASH AND CASH EQUIVALEANTS (783,673) 622,647 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 1,696,129 1,073,482 CASH AND CASH EQUIVALENTS, END OF YEAR $ 912,456 $ 1,696,129 The accompanying notes are an integral part of the financial statements. (Concluded)

26

INDEPENDENT AUDITORS’ REPORT The Board of Directors and Stockholders Far EasTone Telecommunications Co., Ltd. We have audited the accompanying consolidated balance sheets of Far EasTone Telecommunications Co., Ltd. (“Far EasTone”) and its subsidiaries (collectively referred to as “the Group”) as of December 31, 2013, December 31, 2012 and January 1, 2012, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2013 and 2012. These consolidated financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Rules Governing the Audit of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Those rules and standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence 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 financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2013, December 31, 2012 and January 1, 2012, and their consolidated financial performance and their consolidated cash flows for the years ended 2013 and 2012, in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards (IFRS), International Accounting standards (IAS), IFRIC Interpretations (IFRIC) and SIC Interpretations (SIC) endorsed by the Financial Supervisory Commission of the Republic of China. We have also audited the parent company only financial statements of Far EasTone as of and for the years ended December 31, 2013 and 2012 on which we have issued an unqualified report. February 18, 2014

Notice to Readers The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial are those generally accepted and applied in the Republic of China. For the convenience of readers, the independent auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and consolidated financial statements shall prevail.

- 27 -

FAR EASTONE TELECOMMUNICATIONS CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Thousands of New Taiwan Dollars, Except Par Value) December 31, 2013 December 31, 2012 January 1, 2012 ASSETS Amount % Amount % Amount % CURRENT ASSETS

Cash and cash equivalents (Notes 4, 6 and 33) $ 2,821,165 2 $ 11,810,538 12 $ 2,209,869 2 Financial assets at fair value through profit or loss - current (Note 4) - - 211,608 - 196,718 - Available-for-sale financial assets - current (Notes 4, 7 and 33) 706,310 1 2,008,526 2 2,688,536 3 Held-to-maturity financial assets - current (Note 4) 99,962 - 100,000 - 1,000,000 1 Derivative financial assets for hedging - current (Notes 4, 8 and 33) 4,442 - 21,962 - 1,500 - Debt investments with no active market - current (Notes 4 and 10) 1,320,618 1 1,191,556 1 7,695,765 8 Notes receivable (Note 4) 51,707 - 65,493 - 56,809 - Accounts receivable, net (Notes 4 and 11) 6,894,733 6 7,042,177 7 6,458,140 7 Accounts receivable - related parties (Notes 4, 11 and 33) 311,507 - 169,279 - 108,572 - Inventories (Notes 4 and 12) 4,018,112 3 2,225,653 3 1,984,625 2 Prepaid expenses 1,099,031 1 990,215 1 810,855 1 Other financial assets - current (Notes 4, 33 and 34) 1,742,124 2 1,640,864 2 1,336,776 2 Other current assets 276,096 - 760,379 1 323,581 -

Total current assets 19,345,807 16 28,238,250 29 24,871,746 26

NONCURRENT ASSETS

Financial assets carried at cost (Notes 4 and 9) 76,407 - 26,509 - 27,648 - Held-to-maturity financial assets - noncurrent (Note 4) - - 99,871 - 199,768 - Investments accounted for using the equity method (Notes 4, 13 and 33) 1,037,880 1 1,051,097 1 337,521 - Property, plant and equipment, net (Notes 4, 14, 33 and 34) 48,034,681 40 48,884,549 50 49,487,793 52 Investment properties, net (Notes 4 and 15) 467,173 - 459,483 - 421,010 - Concession, net (Notes 1, 4 and 16) 34,968,533 29 4,384,239 4 5,114,945 5 Computer software, net (Notes 4 and 16) 2,397,361 2 2,383,039 2 2,450,454 3 Goodwill (Notes 4 and 16) 10,826,174 9 10,881,018 11 10,881,018 11 Other intangible assets (Notes 4 and 16) 677,895 1 736,765 1 807,918 1 Deferred income tax assets (Notes 4 and 26) 992,940 1 812,896 1 663,301 1 Other noncurrent assets (Notes 4, 17, 33 and 34) 691,202 1 616,372 1 531,009 1

Total noncurrent assets 100,170,246 84 70,335,838 71 70,922,385 74

TOTAL $ 119,516,053 100 $ 98,574,088 100 $ 95,794,131 100 LIABILITIES AND EQUITY CURRENT LIABILITIES

Short-term borrowings (Notes 4 and 18) $ 1,804,122 2 $ 939,390 1 $ 2,940,772 3 Short-term bills payable (Notes 4 and 18) 519,574 - 199,768 - 80,000 - Derivative financial liabilities for hedging - current (Notes 4 and 8) - - - - 2,667 - Notes payable 17,118 - 38,838 - 51,438 - Accounts payable (Note 33) 5,123,707 4 6,458,682 7 5,246,753 5 Payables for acquisition of properties (Note 20) 2,617,177 2 3,440,589 3 2,082,239 2 Other payables (Notes 4 and 20) 6,095,662 5 4,880,699 5 4,444,394 5 Current tax liabilities (Note 4) 2,997,094 3 2,203,865 2 1,421,585 2 Provisions - current (Notes 4 and 21) 124,739 - 96,306 - 69,544 - Unearned revenue - current (Notes 4 and 20) 2,276,460 2 2,562,118 3 2,866,771 3 Current portion of long-term borrowings (Notes 4 and 18) 99,869 - 10,745 - 4,944 - Guarantee deposits received - current 310,734 - 346,366 - 394,738 - Other current liabilities (Notes 20 and 33) 645,751 1 676,824 1 554,643 1

Total current liabilities 22,632,007 19 21,854,190 22 20,160,488 21

NONCURRENT LIABILITIES

Bonds payable (Notes 4 and 19) 19,965,600 17 - - - - Long-term borrowings (Notes 4 and 18) - - 96,703 - 170,849 - Provisions -noncurrent (Notes 4 and 21) 705,863 - 650,648 1 505,330 - Deferred income tax liabilities (Notes 4 and 26) 1,082,042 1 973,296 1 806,822 1 Deferred revenue - noncurrent (Notes 4 and 20) 350,414 - 445,624 1 548,562 1 Accrued pension costs (Notes 4 and 22) 753,742 1 783,507 1 728,897 1 Guarantee deposits received - noncurrent 361,568 - 370,025 - 324,475 - Other noncurrent liabilities (Note 20) 96,773 - 35,048 - 28,912 -

Total noncurrent liabilities 23,316,002 19 3,354,851 4 3,113,847 3

Total liabilities 45,948,009 38 25,209,041 26 23,274,335 24

EQUITY ATTRIBUTABLE TO OWNERS OF FAR EASTONE

Capital stock Common stock 32,585,008 27 32,585,008 33 32,585,008 34

Capital surplus 15,919,097 13 17,790,049 18 19,447,083 20 Retained earnings

Legal reserve 12,822,948 11 11,762,957 12 10,874,858 12 Unappropriated earnings 11,573,185 10 10,388,791 10 8,789,564 9

Total retained earnings 24,396,133 21 22,151,748 22 19,664,422 21 Other equity (107,032) - 97,319 - 26,824 -

Total equity attributable to owners of Far EasTone 72,793,206 61 72,624,124 73 71,723,337 75

NONCONTROLLING INTERESTS 774,838 1 740,923 1 796,459 1

Total equity 73,568,044 62 73,365,047 74 72,519,796 76 TOTAL $ 119,516,053 100 $ 98,574,088 100 $ 95,794,131 100 The accompanying notes are an integral part of the consolidated financial statements.

- 28 -

FAR EASTONE TELECOMMUNICATIONS CO., LTD. AND SUBSID IARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) For the Years Ended December 31 2013 2012 Amount % Amount % OPERATING REVENUES (Notes 4, 24 and 33) $ 89,670,579 100 $ 86,665,697 100 OPERATING COSTS (Notes 4, 12, 22, 25 and 33) 52,904,612 59 51,495,918 59 GROSS PROFIT 36,765,967 41 35,169,779 41 OPERATING EXPENSES (Notes 4, 22, 25 and 33)

Marketing 15,457,215 17 15,789,094 18 General and administrative 5,830,054 7 5,632,728 7

Total operating expenses 21,287,269 24 21,421,822 25

OPERATING INCOME 15,478,698 17 13,747,957 16 NONOPERATING INCOME AND EXPENSES

Other income (Notes 4, 25 and 33) 311,234 - 306,578 - Other gains and losses (Notes 4, 8, 16 and 33) 255,579 - 223,623 - Financial costs (Notes 4, 25, 27 and 33) (118,018) - (46,511) - Losses on disposal of property, plant, equipment and

intangible assets (Note 4) (1,310,909) (1) (1,133,303) (1) Share of the profit or loss of associates (Notes 4 and 13) (128,365) - (89,217) -

Total nonoperating income and expenses (990,479) (1) (738,830) (1)

INCOME BEFORE INCOME TAX 14,488,219 16 13,009,127 15 INCOME TAX (Notes 4 and 26) 2,641,558 3 2,374,676 3 NET INCOME 11,846,661 13 10,634,451 12 OTHER COMPREHENSIVE INCOME

Exchange differences on translating foreign operations (Notes 4 and 23) 448 - (2,068) -

Unrealized (losses) gains on available-for-sale financial assets (Notes 4 and 23) (69,498) - 98,967 -

Cash flow hedges (Notes 4, 8 and 33) (78,949) - 87,644 - Actuarial gains (losses) on defined benefit plans

(Notes 4 and 22) 17,368 - (65,867) - (Continued)

- 29 -

FAR EASTONE TELECOMMUNICATIONS CO., LTD. AND SUBSID IARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) For the Years Ended December 31 2013 2012 Amount % Amount %

Share of other comprehensive income of associates (Notes 4 and 13) $ (52,041) - $ (113,387) -

Income tax relating to the components of other comprehensive income (Notes 4 and 26) (6,499) - 10,336 -

Total other comprehensive income, net of

income tax (189,171) - 15,625 - TOTAL COMPREHENSIVE INCOME $ 11,657,490 13 $ 10,650,076 12 NET INCOME ATTRIBUTABLE TO:

Owners of Far EasTone $ 11,770,520 13 $ 10,591,519 12 Noncontrolling interests 76,141 - 42,932 -

$ 11,846,661 13 $ 10,634,451 12 COMPREHENSIVE INCOME ATTRIBUTABLE TO:

Owners of Far EasTone $ 11,580,925 13 $ 10,606,276 12 Noncontrolling interests 76,565 - 43,800 -

$ 11,657,490 13 $ 10,650,076 12

EARNINGS PER SHARE, NEW TAIWAN

DOLLARS (Notes 4 and 27) Basic $ 3.61 $ 3.25 Diluted $ 3.61 $ 3.25

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

- 30 -

FAR EASTONE TELECOMMUNICATIONS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In Thousands of New Taiwan Dollars)

Equity Attributable to Owners of Far EasTone Other Equity Exchange Unrealized Retained Earnings Differences Gains (Losses) on Unappropriated on Translating Available-for-sale Noncontrolling Share Capital Capital Surplus Legal Reserve Earnings Foreign Operations Financial Assets Cash Flow Hedges Interests (Notes 4, (Note 23) (Notes 4, 23 and 29) (Note 23) (Notes 4, 23 and 29) (Notes 4 and 23) (Notes 4 and 23) (Notes 4, 8 and 23) Total 23, 28 and 29) Total Equity

BALANCE, JANUARY 1, 2012 $ 32,585,008 $ 19,447,083 $ 10,874,858 $ 8,789,564 $ - $ 23,044 $ 3,780 $ 71,723,337 $ 796,459 $ 72,519,796 Appropriation of the 2011 earnings

Legal reserve - - 888,099 (888,099) - - - - - - Cash dividends - NT$2.469 per share - - - (8,045,238) - - - (8,045,238) - (8,045,238)

Additional acquisition of partially owned subsidiaries - 22,242 - (3,217) - - - 19,025 (41,101) (22,076) Changes in capital surplus from investments in associates for

using the equity method - 50,988 - - - - - 50,988 - 50,988 Cash dividends from capital surplus - NT$0.531 per share - (1,730,264) - - - - - (1,730,264) - (1,730,264) Cash dividends distributed by subsidiaries - - - - - - - - (58,235) (58,235) Net income for the year ended December 31, 2012 - - - 10,591,519 - - - 10,591,519 42,932 10,634,451 Other comprehensive income for the year ended December 31,

2012 - - - (55,738) (1,925) 98,511 (26,091) 14,757 868 15,625 BALANCE, DECEMBER 31, 2012 32,585,008 17,790,049 11,762,957 10,388,791 (1,925) 121,555 (22,311) 72,624,124 740,923 73,365,047 Appropriation of the 2012 earnings

Legal reserve - - 1,059,991 (1,059,991) - - - - - - Cash dividends - NT$2.928 per share - - - (9,540,891) - - - (9,540,891) - (9,540,891)

Changes in capital surplus from investments in associates for

using the equity method - (2,781) - - - - - (2,781) - (2,781) Cash dividends from capital surplus - NT$0.572 per share - (1,863,862) - - - - - (1,863,862) - (1,863,862) Additional acquisition of partially owned subsidiaries - (4,309) - - - - - (4,309) 53,748 49,439 Cash dividends distributed by subsidiaries - - - - - - - - (96,398) (96,398) Net income for the year ended December 31, 2013 - - - 11,770,520 - - - 11,770,520 76,141 11,846,661 Other comprehensive income for the year ended December 31,

2013 - - - 14,756 361 (72,236) (132,476) (189,595) 424 (189,171) BALANCE, DECEMBER 31, 2013 $ 32,585,008 $ 15,919,097 $ 12,822,948 $ 11,573,185 $ (1,564) $ 49,319 $ (154,787) $ 72,793,206 $ 774,838 $ 73,568,044 The accompanying notes are an integral part of the consolidated financial statements.

31

FAR EASTONE TELECOMMUNICATIONS CO., LTD. AND SUBSID IARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) For the Years Ended December 31 2013 2012 CASH FLOWS FROM OPERATING ACTIVITIES

Income before income tax $ 14,488,219 $ 13,009,127 Adjustments for:

Depreciation 8,600,351 9,084,786 Amortization 797,164 807,748 Amortization of 3G concession 730,706 730,706 Allowance for doubtful accounts 165,665 267,042 Net losses (gains) on valuation of financial assets at fair value

through profit or loss 11,608 (14,890) Financial costs 118,018 46,511 Interest income (165,105) (155,631) Dividend income (7,273) (8,611) Share of the loss of associates 128,365 89,217 Loss on disposal of property, plant, equipment and intangible assets 1,310,909 1,133,303 Gain on disposal of financial assets (224,103) (89,779) Impairment loss on financial assets 102 1,139 Write-down of inventories 166,386 67,328 Impairment loss on goodwill 57,615 - Reversal of impairment loss on investment properties (5,770) - Deferred (loss) income on derivative assets for hedging (18,535) 63,708 Net changes in operating assets and liabilities

Financial assets at fair value through profit or loss 208,688 - Notes receivable 13,786 (8,684) Accounts receivable 12,928 (851,079) Accounts receivable - related parties (141,521) (60,707) Inventories (1,958,845) (308,356) Prepaid expenses (108,014) (179,360) Other current assets 34,341 12,207 Notes payable (21,720) (12,600) Accounts payable (1,342,208) 1,211,929 Other payables 1,168,702 387,310 Unearned revenue (285,958) (304,653) Provisions 17,440 3,064 Other current liabilities (46,294) 103,642 Accrued pension costs (13,575) (14,630)

Cash generated from operations 23,692,072 25,009,787 Interest received 174,641 154,902 Dividend received 10,067 8,611 Interest paid (48,814) (41,918) Income taxes paid (1,926,126) (1,564,067)

Net cash generated from operating activities 21,901,840 23,567,315

(Continued)

32

FAR EASTONE TELECOMMUNICATIONS CO., LTD. AND SUBSID IARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) For the Years Ended December 31 2013 2012 CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of available-for-sale financial assets $ (663,928) $ (207,507) Proceeds of the disposal of available-for-sale financial assets 2,501,734 621,966 (Acquisition) disposals of debt investments with no active market (129,062) 6,504,209 Proceeds on redemption of held-to-maturity financial assets 100,000 1,000,000 Acquisition of financial assets measured at cost (50,000) - Acquisition of investments accounted for using the equity method (172,765) (865,192) Net cash outflow on acquisition of subsidiary (42,758) - Acquisition of property, plant and equipment (9,802,919) (8,117,500) Proceeds of the disposal of property, plant and equipment 32,869 71,152 Increase in refundable deposits (278,901) (237,608) Decrease in refundable deposits 211,387 164,763 Acquisition of intangible assets (32,024,895) (675,598) Increase in other financial assets (107,383) (313,235)

Net cash used in investing activities (40,426,621) (2,054,550)

CASH FLOWS FROM FINANCING ACTIVITIES

Increase (decrease) in short-term borrowings 864,732 (2,001,382) Increase in short-term bills payable 319,806 119,768 Proceeds of the issue of bonds payable 20,000,000 - Payments of costs attributed to the issue of bonds payable (35,821) - Repayment of long-term borrowings (9,315) (63,776) Increase in guarantee deposits received 137,904 235,432 Decrease in guarantee deposits received (181,993) (238,254) Decrease in deferred revenue (95,210) (102,938) Cash dividend (11,501,151) (9,833,737) Net changes in noncontrolling interest 35,039 (21,911)

Net cash generated from (used in) financing activities 9,533,991 (11,906,798)

EFFECT OF EXCHANGE RATE CHANGES 1,417 (5,298) INCREASE IN CASH AND CASH EQUIVALENTS (8,989,373) 9,600,669 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 11,810,538 2,209,869 CASH AND CASH EQUIVALENTS, END OF YEAR $ 2,821,165 $ 11,810,538 The accompanying notes are an integral part of the consolidated financial statements. (Concluded)

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The Company issued domestic unsecured corporate bond information

Issuance Domestic 4th Unsecured Corporate Bond

Domestic 5th Unsecured Corporate Bond

Domestic 6th Unsecured Corporate Bond

Issue Date 2013/6/27 2013/10/15 2013/12/24 Approved Date 2013/5/14 2013/9/3 2013/11/20

Approved Letter No Financial Supervisory Commission No. 1020017390

Financial Supervisory Commission No. 1020035992

Financial Supervisory Commission No. 1020046602

Denomination NT$10,000,000 NT$10,000,000 NT$10,000,000 Issue Price At par value At par value At par value

Total Amount NT$5,000,000,000 NT$5,000,000,000 (A Issue: NT$ 1,000,000,000 B Issue: NT$4,000,000,000)

NT$10,000,000,000 (A Issue: NT$1,600,000,000 B Issue: NT$5,200,000,000 C Issue: NT$3,200,000,000)

Coupon (p.a.) 1.33% A Issue:1.46% B Issue:1.58%

A Issue:1.17% B Issue:1.27% C Issue:1.58%

Tenor and Maturity Date 7 years Maturity:2020/6/27

A Issue: 4 years Maturity:2017/10/15 B Issue: 5 years Maturity:2018/10/15

A Issue :3 years Maturity:2016/12/24 B Issue:4 years Maturity:2017/12/24 C Issue : 6 years Maturity :2019/12/24

Guarantor None

Trustee Chinatrust Commercial Bank, Trust Department

Mega International Commercial Bank, Trust Department

Mega International Commercial Bank, Trust Department

Underwriter Not Applicable

Legal Counsel Lee and Li Attorney

Grace Wang

Auditor Deloitte & Touche CPA, Tony Chang

Repayment Repay 50% of principal each in the 5th & 7th year.

Bullet repayment Bullet repayment

Outstanding Balance NT$5,000,000,000 NT$5,000,000,000 NT$10,000,000,000 Redemption or Early Repayment Clause

None

Covenants None

Credit rating agency, rating date, bond ratings

Taiwan Ratings Corp. twAA+ (2013/5/2) twAA (2013/12/10)



Other rights of Bond holders

Amount o f converted or exchanged into common shares, ADRs or other secur i t ies

Not applicable

Rules governing issuance or conversion (Exchanged or subscr ip t ion)

Not applicable

Dilution Effect and other adverse effects on existing shareholders

None

Custodian of exchanged securities

Not applicable

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Amendment to Articles of Incorporation of FarEastone Telecommunications Co., Ltd. Article Current Articles Amended Articles Explanation

Article 2 The scope of business of the Corporation shall be as follows: (1) To operate G901011 Type I

Telecommunications Business; (2) To operate G902011 Type II

Telecommunications Business; (3) To operate F213060 Retail Sale of

Telecom Instruments; (4) To operate F113070 Wholesale of

Telecom Instruments; (5) To operate JA02010 Electric Appliance

and Audiovisual Electric Products Repair Shops;

(6) To operate E701030 Restrained Telecom Radio Frequency Equipments and Materials Construction;

(7) To operate F401010 International Trade; (8) To operate F204110 Retail sale of Cloths,

Clothes, Shoes, Hat, Umbrella and Apparel, Clothing Accessories and Other Textile Products;

(9) To operate CC01070 Telecommunication Equipment and Apparatus Manufacturing;

(10) To operate I301020 Data Processing Services;

(11) To conduct IZ11010 overdue receivables management service business;

(12) To operate F201070 retail business of flowers;

(13) To operate F209060 Retail sale of Stationery Articles, Musical Instruments and Educational Entertainment Articles;

The scope of business of the Company shall be as follows: (1) G901011 Type I Telecommunications

Enterprise; (2) G902011 Type II Telecommunications

Enterprise; (3) F213060 Retail Sale of Telecom

Instruments; (4) F113070 Wholesale of Telecom

Instruments; (5) JA02010 Electric Appliance and

Audiovisual Electric Products Repair Shops;

(6) E701030 Restrained Telecom Radio Frequency Equipments and Materials Construction;

(7) F401010 International Trade; (8) F204110 Retail sale of Cloths, Clothes,

Shoes, Hat, Umbrella and Apparel, Clothing Accessories and Other Textile Products;

(9) CC01070 Telecommunication Equipment and Apparatus Manufacturing;

(10) I301020 Data Processing Services; (11) IZ11010 overdue receivables

management service business; (12) F201070 Retail sale of Flowers; (13) F209060 Retail sale of Stationery

Articles, Musical Instruments and Educational Entertainment Articles;

(14) F213030 Retail sale of Computing and

For business needs, amended the business items.

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(14) To operate F213030 Retail sale of Computing and Business Machinery Equipment;

(15) To operate F218010 retail business of information software;

(16) To conduct IZ12010 manpower outsourcing business;

(17) To conduct JZ99050 Agency Services; (18) To conduct I301030 Digital Information

Supply Services; (19) To conduct I401010 general advertising

service business; (20) To conduct IZ99990 Other Industry and

Commerce Services Not Elsewhere Classified;

(21) To conduct JE01010 Rental and Leasing Business;

(22) To conduct I199990 other consulting; (23) To conduct IE 01010 Telecommunications

Number Agencies; (24) To conduct JA02990 other repair Shops; (25) To conduct F401021 Restrained Telecom

Radio Frequency Equipments and Materials Import;

(26) To conduct ZZ99999 Other than the business lines as permitted, engage in all business operation not banned or restricted by laws.

Business Machinery Equipment; (15) F218010 Retail sale of Computer

Software; (16) IZ12010 Manpower Services; (17) JZ99050 Agency Services; (18) I301030 Digital Information Supply

Services; (19) I401010 General Advertising Services; (20) IZ99990 Other Industry and Commerce

Services Not Elsewhere Classified; (21) JE01010 Rental and Leasing Business; (22) I199990 Other Consultancy; (23) IE01010 Telecommunications Number

Agencies; (24) JA02990 Other Repair Shops; (25) F401021 Restrained Telecom Radio

Frequency Equipments and Materials Import;

(26) CC01060 Wired Communication Equipment and Apparatus Manufacturing;

(27) CC01080 Electronic Parts and Components Manufacturing;

(28) CC01110 Computers and Computing Peripheral Equipments Manufacturing;

(29) CC01120 Data Storage Media Manufacturing and Duplicating;

(30) CC01990 Electrical Machinery, Supplies Manufacturing;

(31) CD01020 Tramway Cars Manufacturing; (32) E601010 Electric Appliance

Construction; (33) E601020 Electric Appliance Installation; (34) E603010 Cables Construction;

36

(35) E603050 Cybernation Equipments Construction;

(36) E603080 Traffic Signals Construction; (37) E603090 Illumination Equipments

Construction; (38) E605010 Computing Equipments

Installation Construction; (39) E701010 Telecommunications

Construction; (40) E701020 Channel KU and C of Satellite

TV Equipments and Materials Construction;

(41) EZ05010 Apparatus Installation Construction;

(42) F113050 Wholesale of Computing and Business Machinery Equipment;

(43) F114080 Wholesale of Tramway Cars and Parts;

(44) F118010 Wholesale of Computer Software;

(45) F119010 Wholesale of Electronic Materials;

(46) F214080 Retail Sale of Tramway Cars and Parts;

(47) F214990 Retail Sale of Other Transport Equipment and Parts;

(48) G202010 Parking Garage Business; (49) I103060 Management Consulting

Services; (50) I301010 Software Design Services; (51) IG03010 Energy Technical Services; (52) IZ13010 Internet Identify Services; (53) J101050 Sanitary and Pollution

Controlling Services;

37

(54) F108031 Wholesale of Drugs, Medical Goods;

(55) F208031 Retail sale of Medical Equipments;

(56) ZZ99999 Other business items that are not prohibited or restricted by law, except those that are subject to special approval.

Article15-1 Pursuant to Article 14-4 of the Securities and Exchange Act, as amended June 5, 2013, the Company will establish an Audit Committee when as the 7th Board of Directors is elected into the office in 2015. The Audit Committee shall make up of the entire number of independent directors, is responsible of executing powers relegated to supervisors by the Company Act, Securities and Exchange Act and other laws and regulations. The Supervisors will cease to function and be ipso facto dismissed on the date of instituting of the Audit Committee. The organizing members, exercise of powers and other matters to be abided by the Audit Committee shall follow related laws, regulations or rules or regulation of the Company. The organization regulations of the Audit Committee shall be adopted by the Board of Director.

According to Article 14-4 of the Securities and Exchange Act and official letter no 10200531121 from Financial Supervisory Commission R.O.C. on December 31, 2013, the supervisory system will cease operation instead of audit committee at the end 6th Board of Directors. Therefore, add this article.

Article 31 These Articles of Incorporation were agreed upon and signed on Mar. 7, 1997. First amended on Jun. 6, 1997; Second amended on Aug. 20, 1998; Third amended on Apr. 28, 1999; Fourth amended on Apr. 21, 2000; Fifth amended on Dec. 28, 2000; Sixth amended on May. 15, 2001;

These Articles of Incorporation were agreed upon and signed on Mar. 7, 1997. First amendment on Jun. 6, 1997; Second amendment on Aug. 20, 1998; Third amendment on Apr. 28, 1999; Fourth amendment on Apr. 21, 2000; Fifth amendment on Dec. 28, 2000; Sixth amendment on May. 15, 2001;

Add the date of the last amendment.

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Seventh amended on Jun. 25, 2002; Eighth amended on May 23, 2003; Ninth amended on Feb. 18, 2004; Tenth amended on Jun. 30,2004; Eleventh amended on May 20, 2005; Twelfth amended on May 26, 2006; Thirteenth amended on June 12, 2007; Fourteenth amended on June 15, 2010; Fifteenth amended on June 9, 2011; Sixteenth amended on June 13, 2012; Seventeenth amended on June 13, 2013.

Seventh amendment on Jun. 25, 2002; Eighth amendment on May 23, 2003; Ninth amendment on Feb. 18, 2004; Tenth amendment on Jun. 30,2004; Eleventh amendment on May 20, 2005; Twelfth amendment on May 26, 2006; Thirteenth amendment on June 12, 2007; Fourteenth amendment on June 15, 2010; Fifteenth amendment on June 9, 2011; Sixteenth amendment on June 13, 2012; Seventeenth amendment on June 13, 2013. Eighteenth amendment on June 11, 2014.

39

Amendment to “Handling Procedure for Acquisition and Disposal of Assets” of FarEastone Telecommunications Co., Ltd.”

Article Current Articles Amended Articles Explanation

Article 2 The scope of assets referred to in the Procedures refers to: I. Marketable securities: shares, public bond,

corporate bond, financial debenture, securities representing interest in a fund, deposit receipt, call (put) warrant, beneficiary securities and assets backed securities.

II. Real estate and other fixed assets III. Membership IV. Patent, Copyright, Trademark Right,

Franchise and other intangible assets V. Derivative products VI. Assets acquired or disposed by means of

merger, division, acquisition or stock transfer in accordance with the laws

VII. Other important assets

The scope of assets referred to in the Procedures refers to: I. Marketable securities: shares, public bond,

corporate bond, financial debenture, securities representing interest in a fund, deposit receipt, call (put) warrant, beneficiary securities and assets backed securities.

II. Real property (including land, houses and buildings, investment real property, easement) and equipment

III. Membership IV. Patent, Copyright, Trademark Right,

Franchise and other intangible assets V. Derivative products VI. Assets acquired or disposed by means of

merger, division, acquisition or stock transfer in accordance with the laws

VII. Other important assets

To amend the wording of subparagraph 2 to comply with International Financial Reporting Standards (“IFRS” hereafter).

Article 3 Definitions: I. Derivative products shall mean forward,

option, future, leverage contract, swap contract, whose value are derived from such items as assets, interest rate, exchange rate, index and other interest, as well as the plural contracts for combination of the aforesaid items. The forward as mentioned shall not include insurance agreement, performance

Definitions: I. Derivative products shall mean forward,

option, future, leverage contract, swap contract, whose value are derived from such items as assets, interest rate, exchange rate, index and other interest, as well as the plural contracts for combination of the aforesaid items. The forward as mentioned shall not include insurance agreement, performance

I. To amend the wording of subparagraph 2 to comply with Article 156 of the Company Act.

II. To combine with subparagraph 3 and subparagraph 4 to comply with Regulations Governing the Preparation of Financial Reports by Securities Issuers, definite related party or subsidiary.

40

agreement, after sale service agreement, long-term lease agreement and long-term purchase or sales agreement.

II. Assets acquired or disposed by means of merger, division, acquisition or stock transfer in accordance with the laws shall mean those assets acquired or disposed by means of merger, division or acquisition in accordance with the Law on Acquisition and Merger of Enterprises, Law on Financial Holding Companies and other relevant laws or the stock obtained from the transfer or issued for initial public offering in accordance with Article 156.1 of Company Act.

III. Associated persons shall mean those persons prescribed in the Statement of Financial Accounting Standards, No. 6 announced by the Accounting Research and Development Foundation of R.O.C (hereinafter called as Accounting R&D Foundation).

IV. Subsidiary shall mean those prescribed in the Statement of Financial Accounting Standards, No. 5 and No. 7 announced by the Accounting R&D Foundation.

V. Professional appraiser shall mean valuator of real estate or other persons engaged in appraising real estate, other fixed assets in accordance with law.

VI. Date of occurrence of events shall mean those date, whichever is earlier, such as the date of conclusion of transactions, date of payment, date of entrusted dealing, date of stock transfer, date of decision of the Board

agreement, after sale service agreement, long-term lease agreement and long-term purchase or sales agreement.

II. Assets acquired or disposed by means of merger, division, acquisition or stock transfer in accordance with the laws shall mean those assets acquired or disposed by means of merger, division or acquisition in accordance with the Law on Acquisition and Merger of Enterprises, Law on Financial Holding Companies and other relevant laws or the stock obtained from the transfer or issued for initial public offering in accordance with Article 156.1 of Company Act.

III. Related party or subsidiary company: As defined in the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

IV. Professional appraiser shall mean valuator of real estate or other persons engaged in appraising real estate, equipment in accordance with law.

V. Date of occurrence of events shall mean those date, whichever is earlier, such as the date of conclusion of transactions, date of payment, date of entrusted dealing, date of stock transfer, date of decision of the Board or other date when the dealing counterpart and amount of dealing can be determined. In case the investment is required to be approved by the competent authority and the date of approval thereof is earlier than those described in the preceding paragraph, the

III. To amend the wording of subparagraph 4 to comply with IFRS, Therefore, the initial subparagraphs 5-7 are changed to subparagraph 4-6.

41

or other date when the dealing counterpart and amount of dealing can be determined. In case the investment is required to be approved by the competent authority and the date of approval thereof is earlier than those described in the preceding paragraph, the former shall be adopted.

VII. Investments in the Mainland shall mean the investments prescribed in the Rules on the Approval of Investment and Technological Cooperation In the Mainland enacted by the Investment Commission, Ministry of Economy.

former shall be adopted. VI. Investments in the Mainland shall mean the

investments prescribed in the Rules on the Approval of Investment and Technological Cooperation In the Mainland enacted by the Investment Commission, Ministry of Economy.

Article 5 The total amount of securities investment of this company shall not exceed 150% of shareholders’ equity as stated in the latest financial statement of this company and the investment in each individual security shall not exceed 80% of shareholders’ equity therein. The total book value of real estate for non-business purpose and other fixed assets shall not exceed 50% of total assets therein. The total amount of equity investment of this company and its subsidiaries shall not exceed 150% of shareholders’ equity as stated in the latest financial statement of this company. The calculation of the said rate shall be referred to the provisions of detailed rules on stock companies of Taiwan securities exchange and other relevant laws and decrees. The latest financial statement mentioned herein shall mean the financial statement made public and reviewed and signed by accountant prior to the acquisition and disposal thereof.

The total amount of securities investment of this company shall not exceed 150% of shareholders’ equity as stated in the latest financial statement of this company and the investment in each individual security shall not exceed 80% of shareholders’ equity therein. The total book value of real estate for non-business purpose and equipment shall not exceed 50% of total assets therein. The total amount of equity investment of this company and its subsidiaries shall not exceed 150% of shareholders’ equity as stated in the latest financial statement of this company. The calculation of the said rate shall be referred to the provisions of detailed rules on stock companies of Taiwan securities exchange and other relevant laws and decrees. The latest financial statement mentioned herein shall mean the financial statement made public and reviewed and signed by accountant prior to the acquisition and disposal thereof.

To amend the wording of paragraph 1 to comply with IFRS.

42

Article 6 Handling Procedures for Acquisition and Disposal of Securities I. Evaluation Process

(A) Where this company is involved in the investment in securities, its Finance & Shared Services Division shall make a financial analysis of the object of investment and prospective financial gains there from and at the same time, conduct an evaluation of the risks thereof.

(B) The securities transactions of this company in stock exchange or over the counter shall be studied and determined by responsible units in light of the market trends. For those transactions not conducted in the stock exchange or over the counter, the latest financial statement of the company issued the shares concerned, which has been made public and reviewed and signed by accountant, shall be referenced for evaluation of net value of per share, profit making capability and the potentials thereof.

II. Obtaining professional opinions (A) A public company acquiring or

disposing of securities shall, prior to the date of occurrence of the event , obtain financial statements of the issuing company for the most recent period, certified or reviewed by a certified public accountant, for reference in appraising the transaction

Handling Procedures for Acquisition and Disposal of Securities I. Evaluation Process

(A) Where this company is involved in the investment in securities, its Finance & Shared Services Division shall make a financial analysis of the object of investment and prospective financial gains there from and at the same time, conduct an evaluation of the risks thereof.

(B) The securities transactions of this company in stock exchange or over the counter shall be studied and determined by responsible units in light of the market trends. For those transactions not conducted in the stock exchange or over the counter, the latest financial statement of the company issued the shares concerned, which has been made public and reviewed and signed by accountant, shall be referenced for evaluation of net value of per share, profit making capability and the potentials thereof.

II. Obtaining professional opinions (A) A public company acquiring or

disposing of securities shall, prior to the date of occurrence of the event , obtain financial statements of the issuing company for the most recent period, certified or reviewed by a certified public accountant, for

The Executive Yuan's Financial Supervisory Commission has reorganized to Financial Supervisory Commission on July, 1, 2012. And to amend the wording of subparagraph 1 of paragraph 2 to comply with paragraph 3 of Article 3.

43

price, and if the dollar amount of the transaction is 20 percent of the company's paid-in capital or NT$300 million or more, the company shall also engage a certified public accountant prior to the date of occurrence of the event to provide an opinion regarding the reasonableness of the transaction price. If the CPA needs to use the report of an expert as evidence, the CPA shall do so in accordance with the provisions of Statement of Auditing Standards No. 20 published by the Accounting R&D Foundation. This requirement does not apply, however, to publicly quoted prices of securities that have an active market, or where otherwise provided by regulations of the Executive Yuan's Financial Supervisory Commission (FSC).

(B) In case the assets acquired or disposed by this company through the auction procedures held by a court, the certificates issued by the court may substitute the evaluation report or the opinion of an accountant

III. Authorization and the units in charge of execution The relevant material of acquisition and disposal securities by this company shall be submitted by the Finance & Shared Services Division to the Board for review and approval prior the conduction thereof.

reference in appraising the transaction price, and if the dollar amount of the transaction is 20 percent of the company's paid-in capital or NT$300 million or more, the company shall also engage a certified public accountant prior to the date of occurrence of the event to provide an opinion regarding the reasonableness of the transaction price. If the CPA needs to use the report of an expert as evidence, the CPA shall do so in accordance with the provisions of Statement of Auditing Standards No. 20 published by the ROC Accounting Research and Development Foundation (ARDF). This requirement does not apply, however, to publicly quoted prices of securities that have an active market, or where otherwise provided by regulations of the Financial Supervisory Commission (FSC).

(B) In case the assets acquired or disposed by this company through the auction procedures held by a court, the certificates issued by the court may substitute the evaluation report or the opinion of an accountant

III. Authorization and the units in charge of execution The relevant material of acquisition and

44

In case of the impossibilities of prior review and approval thereby due to time, the acquisition or disposal securities by the Company with the value under NTD 10,000,000, shall be determined by the authorized President (if the President sub-delegates the authorization, the sub-delegation shall apply thereto); where the amount is under NTD 500,000,000, the same shall be determined by the authorized Chairman of the Board (if the Chairman sub-delegates the authorization, the sub-delegation shall apply thereto); however, such transaction shall be confirmed by the Board immediately after the completion thereof. While the amount is over NTD 500,000,000, the same shall be determined by the Board prior to the execution.

disposal securities by this company shall be submitted by the Finance & Shared Services Division to the Board for review and approval prior the conduction thereof. In case of the impossibilities of prior review and approval thereby due to time, the acquisition or disposal securities by the Company with the value under NTD 10,000,000, shall be determined by the authorized President (if the President sub-delegates the authorization, the sub-delegation shall apply thereto); where the amount is under NTD 500,000,000, the same shall be determined by the authorized Chairman of the Board (if the Chairman sub-delegates the authorization, the sub-delegation shall apply thereto); however, such transaction shall be confirmed by the Board immediately after the completion thereof. While the amount is over NTD 500,000,000, the same shall be determined by the Board prior to the execution.

Article 7 Handling Procedures for Acquisition and Disposal of Real Estate or Other Fixed Assets I. Evaluation Process

(A) The investment of this company in real estate and other fixed assets shall be assessed prudently by the Finance & Shared Services Division or relevant unit regarding its beneficial result and risks involved in light of its current operation, financial status and future planning.

Handling Procedures for Acquisition and Disposal of Real Estate or Equipment I. Evaluation Process

(A) The investment of this company in real estate and equipment shall be assessed prudently by the Finance & Shared Services Division or relevant unit regarding its beneficial result and risks involved in light of its current operation, financial status and future planning.

To amend the wording from other fixed assets to equipment to comply with IFRS.

45

(B) An analysis report on the acquisition or disposal of assets shall be made by making reference to its announced current value, appraised value, actual dealing price of its neighboring real estate as well as putting forward conditions and prices for transaction.

(C) Acquisition or disposal of fixed assets shall be conducted by means of inquiries, price comparison, price negotiation or invitation to bid.

II. Evaluation Report On Real estate and other fixed assets If and whenever the amount of the acquisition or disposal of real estate or other fixed assets by this company, unless the same is transacted with government agency, entrusted construction on self-owned land or leased land, or machine or equipment for business use, has reached 20% of the paid-in capital of the company or NTD0.3 billion, the professional appraiser shall be invited to make evaluation report prior to the date of occurrence of the event (see detailed content as per appendix 1) and meanwhile the following stipulations shall be complied with: (A) In case a transaction must be

conducted with reference to limited price, specific price or special price due to special reasons, the board meeting in advance shall approve the same. If the conditions thereof were

(B) An analysis report on the acquisition or disposal of assets shall be made by making reference to its announced current value, appraised value, actual dealing price of its neighboring real estate as well as putting forward conditions and prices for transaction.

(C) Acquisition or disposal of equipment shall be conducted by means of inquiries, price comparison, price negotiation or invitation to bid.

II. Evaluation Report On Real estate and equipment If and whenever the amount of the acquisition or disposal of real estate or equipment by this company, unless the same is transacted with government agency, entrusted construction on self-owned land or leased land, or machine or equipment for business use, has reached 20% of the paid-in capital of the company or NTD0.3 billion, the professional appraiser shall be invited to make evaluation report prior to the date of occurrence of the event (see detailed content as per appendix 1) and meanwhile the following stipulations shall be complied with: (A) In case a transaction must be conducted

with reference to limited price, specific price or special price due to special reasons, the board meeting in advance shall approve the same. If the conditions thereof were changed in the future, the prices mentioned herein

46

changed in the future, the prices mentioned herein above shall be still made as references.

(B) In case the transaction value reaches NTD 1 billion, the same shall be assessed by at least two professional appraisers.

(C) If the results of appraisal thereof have one of the following circumstances, unless all the appraisal results for the assets to be acquired are higher than the transaction amount, or all the appraisal results for the assets to be disposed of are lower than the transaction amount, accounts shall be invited to handle the differences in accordance with the Statement of Financial Audit Standards, No. 20 announced by the Accounting R&D Foundation. Meanwhile, the accounts shall explain the reasons thereof and the reasonableness of dealing prices. (a) The gap between the results of

appraisal and the dealing price represents at least 20% of the latter.

(b) The gap between the results of appraisal conducted by the two professional appraisers or over represents at least 10% of the dealing price.

(D) In case the professional appraiser is conducted prior to the date of conclusion of transaction, the latter

above shall be still made as references. (B) In case the transaction value reaches

NTD 1 billion, the same shall be assessed by at least two professional appraisers.

(C) If the results of appraisal thereof have one of the following circumstances, unless all the appraisal results for the assets to be acquired are higher than the transaction amount, or all the appraisal results for the assets to be disposed of are lower than the transaction amount, accounts shall be invited to handle the differences in accordance with the Statement of Financial Audit Standards, No. 20 announced by the Accounting R&D Foundation. Meanwhile, the accounts shall explain the reasons thereof and the reasonableness of dealing prices. (a) The gap between the results of

appraisal and the dealing price represents at least 20% of the latter.

(b) The gap between the results of appraisal conducted by the two professional appraisers or over represents at least 10% of the dealing price.

(D) In case the professional appraiser is conducted prior to the date of conclusion of transaction, the latter shall not be later by over three months than the date of report thereon.

47

shall not be later by over three months than the date of report thereon. However, if the same current value announced may be applied thereto and the time does not exceed six months, the opinions may be given by the original professional appraisal.

(E) In case the assets acquired or disposed by this company through the auction procedures held by a court, the certificates issued by the court may substitute the evaluation report or the opinion of an accountant.

III. Authorization and the units in charge of execution The acquisition of real estate or fixed assets shall be determined as follows: (A) Any transaction within and under the

scope of the annual budget approved by the Board shall be determined by the authorized Chairman (if the Chairman sub-delegates the authorization, the sub-delegation shall apply thereto);

(B) Any transaction not within or above the scope of the annual budget approved by the Board: if the amount is under NTD 10,000,000, it shall be determined by the authorized President (if the President sub-delegates the authorization, the sub-delegation shall apply thereto); if the amount is over NTD10,000,000

However, if the same current value announced may be applied thereto and the time does not exceed six months, the opinions may be given by the original professional appraisal.

(E) In case the assets acquired or disposed by this company through the auction procedures held by a court, the certificates issued by the court may substitute the evaluation report or the opinion of an accountant.

III. Authorization and the units in charge of execution The acquisition of real estate or equipment shall be determined as follows: (A) Any transaction within and under the

scope of the annual budget approved by the Board shall be determined by the authorized Chairman (if the Chairman sub-delegates the authorization, the sub-delegation shall apply thereto);

(B) Any transaction not within or above the scope of the annual budget approved by the Board: if the amount is under NTD 10,000,000, it shall be determined by the authorized President (if the President sub-delegates the authorization, the sub-delegation shall apply thereto); if the amount is over NTD10,000,000 but under NTD 500,000,000, the same shall be determined by the authorized Chairman of the Board (if the

48

but under NTD 500,000,000, the same shall be determined by the authorized Chairman of the Board (if the Chairman sub-delegates the authorization, the sub-delegation shall apply thereto); However, all the aforesaid transactions shall be confirmed by the Board immediately after the completion thereof.

(C) Any transaction no-within or above the scope of the annual budget approved by the Board and the amount is over NTD 500,000,000 shall be determined by the Board prior to the execution.

The disposal of real estate or fixed assets shall be determined as follows: (A) Any transaction which book value is

under NTD 10,000,000,:shall be determined by the authorized President (if the President sub-delegates the authorization, the sub-delegation shall apply thereto); any transaction which book value is over NTD10,000,000 but under NTD 500,000,000 shall be determined by the authorized Chairman of the board (if the Chairman sub-delegates the authorization, the sub-delegation shall apply thereto); However, all the aforesaid transactions shall be confirmed by the Board immediately after the completion thereof.

(B) Any transaction which book value is

Chairman sub-delegates the authorization, the sub-delegation shall apply thereto); However, all the aforesaid transactions shall be confirmed by the Board immediately after the completion thereof.

(C) Any transaction no-within or above the scope of the annual budget approved by the Board and the amount is over NTD 500,000,000 shall be determined by the Board prior to the execution.

The disposal of real estate or equipment shall be determined as follows: (A) Any transaction which book value is

under NTD 10,000,000,:shall be determined by the authorized President (if the President sub-delegates the authorization, the sub-delegation shall apply thereto); any transaction which book value is over NTD10,000,000 but under NTD 500,000,000 shall be determined by the authorized Chairman of the board (if the Chairman sub-delegates the authorization, the sub-delegation shall apply thereto); However, all the aforesaid transactions shall be confirmed by the Board immediately after the completion thereof.

(B) Any transaction which book value is over NTD 500,000,000 shall be determined by the Board prior to the execution.

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over NTD 500,000,000 shall be determined by the Board prior to the execution.

Finance & Shared Services Division or relevant units will be in charge of the execution upon receiving the authorization aforementioned.

Finance & Shared Services Division or relevant units will be in charge of the execution upon receiving the authorization aforementioned.

Article 8 Handling Procedures for Related Party Transactions I. When a public company engages in any

acquisition or disposal of assets from or to a related party, in addition to ensuring that the necessary resolutions are adopted and the reasonableness of the transaction terms is appraised, if the transaction amount reaches 10 percent or more of the company's total assets, the company shall also obtain an appraisal report from a professional appraiser or a CPA's opinion in compliance with the provisions of the preceding Section and this Section. When determining whether the dealing counterpart is an associated person, the material relationship thereof shall be examined as well as its legal form.

II. Evaluation and Operation Process When a public company intends to acquire or dispose of real property from or to a related party, or when it intends to acquire or dispose of assets other than real property from or to a related party and the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or NT$300 million or more, the company may not proceed to enter into a

Handling Procedures for Related Party Transactions I. When a public company engages in any

acquisition or disposal of assets from or to a related party, in addition to ensuring that the necessary resolutions are adopted and the reasonableness of the transaction terms is appraised, if the transaction amount reaches 10 percent or more of the company's total assets, the company shall also obtain an appraisal report from a professional appraiser or a CPA's opinion in compliance with the provisions of the preceding Section and this Section. When determining whether the dealing counterpart is an associated person, the material relationship thereof shall be examined as well as its legal form.

II. Evaluation and Operation Process When a public company intends to acquire or dispose of real property from or to a related party, or when it intends to acquire or dispose of assets other than real property from or to a related party and the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or NT$300 million or more, except in trading of government bonds

I. To consider trading of government bonds or bonds under repurchase and resale agreements, or subscription or redemption of domestic money market funds with related party, it risk is very low. So comply with Article 14 of “Regulations Governing the Acquisition and Disposal of Assets by Public Companies” (“Regulations” hereafter), amend the paragraph 2, and those transactions may not approved by board of directors and recognized by the supervisors.

II. To consider through engaging a related party to build real property, either on the company's own land or on rented land are same with joint development contract, it is not apply to the Company that acquires real property from a related party shall evaluate the reasonableness of the transaction costs rule.

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transaction contract or make a payment until the following matters have been approved by the board of directors and recognized by the supervisors: (A) The purpose, necessity and

anticipated benefit of the acquisition or disposal of assets.

(B) Reasons for adopting an associate person as the dealing counterpart

(C) With respect to the acquisition of real property from a related party, information regarding appraisal of the reasonableness of the preliminary transaction terms in accordance with the first and fourth subparagraph of the third paragraph in this article.

(D) The original date, price, dealing counterpart of associated persons and the relationship between this company and the associated person, etc.

(E) Forecasted statement of cash deposit and withdraw in each month of the next one year as of the month of proposed conclusion thereof, evaluation of the necessity of dealing and the reasonableness of utilization of capital.

(F) An appraisal report from a professional appraiser or a CPA's opinion obtained in compliance with the preceding article.

(G) Constraints on and other important matters agreed of this transaction.

or bonds under repurchase and resale agreements etc., or subscription or redemption of domestic money market funds, the company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by the board of directors and recognized by the supervisors: (A) The purpose, necessity and anticipated

benefit of the acquisition or disposal of assets.

(B) Reasons for adopting an associate person as the dealing counterpart.

(C) With respect to the acquisition of real property from a related party, information regarding appraisal of the reasonableness of the preliminary transaction terms in accordance with the first and fourth subparagraph of the third paragraph in this article.

(D) The original date, price, dealing counterpart of associated persons and the relationship between this company and the associated person, etc.

(E) Forecasted statement of cash deposit and withdraw in each month of the next one year as of the month of proposed conclusion thereof, evaluation of the necessity of dealing and the reasonableness of utilization of capital.

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

III. To comply with IFRS, amend the wording about business-use machinery and equipment in Chinese version.

IV. To consider the risk of acquiring or disposing of assets has taken by the Company, so the significant amount of transaction with the related party base on the self scale of the company. According to Article 33-2 of Regulations, add the paragraph 5 in this article.

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Where the position of independent director has been created in accordance with the provisions of the Act, when a matter is submitted for discussion by the board of directors pursuant to the preceding paragraph, the board of directors shall take into full consideration each independent director's opinions. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors meeting.

III. Evaluation of reasonableness of transaction cost (A) The following methods shall be applied

in evaluation of the reasonableness of the transaction cost of the acquisition of real estate from associated person (a) Dealing price of associated persons

plus necessary capital interest and the cost for the buyer’s account as stipulated by laws. The necessary capital interest and cost shall be the weighted average of the loan borrowed in the year of acquisition of the assets provided it shall not be higher than the highest rate of loan of non-financial institution as announced by the Ministry of Finance.

(b) In case the associated person obtains loans from the financial institution by mortgaging the object concerned, the total value thereof

the preceding article. (G) Constraints on and other important

matters agreed of this transaction. Where the position of independent director has been created in accordance with the provisions of the Act, when a matter is submitted for discussion by the board of directors pursuant to the preceding paragraph, the board of directors shall take into full consideration each independent director's opinions. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors meeting.

III. Evaluation of reasonableness of transaction cost (A) The following methods shall be applied

in evaluation of the reasonableness of the transaction cost of the acquisition of real estate from associated person (a) Dealing price of associated persons

plus necessary capital interest and the cost for the buyer’s account as stipulated by laws. The necessary capital interest and cost shall be the weighted average of the loan borrowed in the year of acquisition of the assets provided it shall not be higher than the highest rate of loan of non-financial institution as announced by the Ministry of Finance.

(b) In case the associated person obtains

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for loan assessed by the said financial institution provided cumulative loans account for 70% of the total assessed value and the term of loan has exceeded one year. However, this will not apply if the financial institution is an associated person with either party to the transaction and vice versa.

(B) In case of combined purchase of land and house of the same object, the cost of transaction of land or house may be assessed individually by adopting any one of the aforesaid methods.

(C) The methods described in the preceding two paragraphs shall be applied in evaluation of the cost of real estate acquired from associated person. In addition, accountants shall be invited to review the same and give their specific opinions thereof.

(D) The methods described in the first and second subparagraph of this article shall be applied in evaluation of the cost of real estate acquired from associated person if one of the following circumstances are present and the preceding three paragraphs of this article regarding the evaluation of the reasonableness of cost of transaction: (a) The associated person acquires the

real estate by inheritance or donation.

loans from the financial institution by mortgaging the object concerned, the total value thereof for loan assessed by the said financial institution provided cumulative loans account for 70% of the total assessed value and the term of loan has exceeded one year. However, this will not apply if the financial institution is an associated person with either party to the transaction and vice versa.

(B) In case of combined purchase of land and house of the same object, the cost of transaction of land or house may be assessed individually by adopting any one of the aforesaid methods.

(C) The methods described in the preceding two paragraphs shall be applied in evaluation of the cost of real estate acquired from associated person. In addition, accountants shall be invited to review the same and give their specific opinions thereof.

(D) The methods described in the first and second subparagraph of this article shall be applied in evaluation of the cost of real estate acquired from associated person if one of the following circumstances are present and the preceding three paragraphs of this article regarding the evaluation of the reasonableness of cost of transaction: (a) The associated person acquires the

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(b) The time gap between the times of acquisition of real estate by the associated person between the dates of conclusion of the transaction concerned has exceeded over five (5) years.

(c) The associated person acquires the real estate by conclusion of a contract for joint construction.

(E) In case the results of evaluation in accordance with the first and second subparagraph of this paragraph have been proven to be lower than dealing price, the provisions in the sixth and seventh subparagraph of this paragraph herein shall be applied. However, the following circumstances shall be excluded provided competent evidences thereof have been provided and the opinions rendered by the professional appraiser of real estate or accountants so described. (a) The reconstruction on the

fountain or leased land acquired by the associated person shall meet the following conditions: i. The fountain may be

appraised with methods stipulated herein above and the house shall be assessed by construction cost plus reasonable construction profit, the aggregate thereof is higher than the actual dealing price. The

real estate by inheritance or donation.

(b) The time gap between the times of acquisition of real estate by the associated person between the dates of conclusion of the transaction concerned has exceeded over five (5) years.

(c) The real property is acquired through signing of a joint development contract with the related party, or through engaging a related party to build real property, either on the company's own land or on rented land,.

(E) In case the results of evaluation in accordance with the first and second subparagraph of this paragraph have been proven to be lower than dealing price, the provisions in the sixth and seventh subparagraph of this paragraph herein shall be applied. However, the following circumstances shall be excluded provided competent evidences thereof have been provided and the opinions rendered by the professional appraiser of real estate or accountants so described. (a) The reconstruction on the fountain or

leased land acquired by the associated person shall meet the following conditions:

i. The fountain may be appraised with methods stipulated herein above and

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reasonable construction profit shall mean the average gross profit margin of the construction department of the associated person in the recent three years or the latest gross profit margin in construction industry announced by the Ministry of Finance, whichever is lower.

ii. The successful transaction concluded within one (1) year by other non-associated persons of real estate on the other floor of the same object or in the neighboring area, provided the area and the conditions thereof has been identified as similar after appraisal of variance in prices allowing for the specific floor and region in accordance with the dealing practices of real estate.

iii. The successful rental concluded within one (1) year by other non-associated persons of real estate on the other floor of the same object, provided the conditions thereof has been identified as similar after appraisal of variance in

the house shall be assessed by construction cost plus reasonable construction profit, the aggregate thereof is higher than the actual dealing price. The reasonable construction profit shall mean the average gross profit margin of the construction department of the associated person in the recent three years or the latest gross profit margin in construction industry announced by the Ministry of Finance, whichever is lower.

ii. The successful transaction concluded within one (1) year by other non-associated persons of real estate on the other floor of the same object or in the neighboring area, provided the area and the conditions thereof has been identified as similar after appraisal of variance in prices allowing for the specific floor and region in accordance with the dealing practices of real estate.

iii. The successful rental concluded within one (1) year by other non-associated

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prices allowing for the region in accordance with the rental practices of real estate.

(b) This company will induce evidences to establish that the transaction of the real estate acquired by the associated person is similar to the successful transaction concluded within one year in the neighboring region by other non-associated person in terms of the conditions therefore and the area thereof. The successful transaction in the neighboring region shall mean the real estate thereof is in the same or neighboring street and is less than 500 meters far from the object or the current value thereof announced is similar to that of the object; That the area is similar shall mean the area of the real estate acquired by the non-associated person is not less than that of the object by 50% in area.

(F) In case the results of evaluation of the real estate acquired by the associated person in accordance with the fifth subparagraph of this paragraph have been proven to be lower than dealing price, the following provisions herein below shall be applied.

persons of real estate on the other floor of the same object, provided the conditions thereof has been identified as similar after appraisal of variance in prices allowing for the region in accordance with the rental practices of real estate.

(b) This company will induce evidences to establish that the transaction of the real estate acquired by the associated person is similar to the successful transaction concluded within one year in the neighboring region by other non-associated person in terms of the conditions therefore and the area thereof. The successful transaction in the neighboring region shall mean the real estate thereof is in the same or neighboring street and is less than 500 meters far from the object or the current value thereof announced is similar to that of the object; That the area is similar shall mean the area of the real estate acquired by the non-associated person is not less than that of the object by 50% in area.

(F) In case the results of evaluation of the real estate acquired by the associated person in accordance with the fifth subparagraph of this paragraph have been proven to be

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(a) The difference between the dealing prices of the real estate appraised cost thereof shall be allocated to Appropriated Retained Earnings in accordance with Article 41.1 of Securities Exchange Act and shall not be distributed or converted into new shares. In case an investor adopting equity appraisal methods towards its investment in this company is a public company, the same shall allocate a certain percentage in proportion to its proportion of shares held to Appropriated Retained Earnings in accordance with laws.

(b) The supervisor shall handle the matter in accordance with Article 218 of Company Act.

(c) The circumstances specified in 1 and 2 of this subparagraph shall be reported to the shareholders meeting and the details thereof shall be disclosed in the annual report and prospectus.

(G) The Appropriated Retained Earnings reserved according to the preceding paragraph shall be used to compensate appropriately or recover or dispose the assets with the losses due to price reduction, which was purchased at high price, or the same may be used for the purpose with proven reasonableness after being approved by the Financial

lower than dealing price, the following provisions herein below shall be applied. (a) The difference between the dealing

prices of the real estate appraised cost thereof shall be allocated to Appropriated Retained Earnings in accordance with Article 41.1 of Securities Exchange Act and shall not be distributed or converted into new shares. In case an investor adopting equity appraisal methods towards its investment in this company is a public company, the same shall allocate a certain percentage in proportion to its proportion of shares held to Appropriated Retained Earnings in accordance with laws.

(b) The supervisor shall handle the matter in accordance with Article 218 of Company Act.

(c) The circumstances specified in 1 and 2 of this subparagraph shall be reported to the shareholders meeting and the details thereof shall be disclosed in the annual report and prospectus.

(G) The Appropriated Retained Earnings reserved according to the preceding paragraph shall be used to compensate appropriately or recover or dispose the assets with the losses due to price reduction, which was purchased at high price, or the same may be used for the

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Supervisory Commission (hereinafter called FSC).

(H) In case of other proofs indicating any unusual circumstances occurred to the acquisition of real estate from the associated person, the same shall be handled according to the sixth and seventh sub-paragraph hereof.

IV. With respect to the acquisition or disposal of business-use machinery and equipment between the Company and its parent or subsidiaries, shall be submitted by the Finance & Shared Services Division to the Board for review and approval prior the conduction thereof. In case of the impossibilities of prior review and approval thereby due to time, the acquisition or disposal business-use machinery and equipment by the Company with the value under NTD 10,000,000, shall be determined by the authorized President (if the President sub-delegates the authorization, the sub-delegation shall apply thereto); where the amount is under NTD 500,000,000, the same shall be determined by the authorized Chairman of the Board (if the Chairman sub-delegates the authorization, the sub-delegation shall apply thereto); however, such transaction shall be confirmed by the Board immediately after the completion thereof. While the amount is over NTD 500,000,000, the same shall be determined by the Board prior to the execution.

purpose with proven reasonableness after being approved by the Financial Supervisory Commission (hereinafter called FSC).

(H) In case of other proofs indicating any unusual circumstances occurred to the acquisition of real estate from the associated person, the same shall be handled according to the sixth and seventh sub-paragraph hereof.

IV. With respect to the acquisition or disposal of business-use machinery and equipment between the Company and its parent or subsidiaries, shall be submitted by the Finance & Shared Services Division to the Board for review and approval prior the conduction thereof. In case of the impossibilities of prior review and approval thereby due to time, the acquisition or disposal business-use machinery and equipment by the Company with the value under NTD 10,000,000, shall be determined by the authorized President (if the President sub-delegates the authorization, the sub-delegation shall apply thereto); where the amount is under NTD 500,000,000, the same shall be determined by the authorized Chairman of the Board (if the Chairman sub-delegates the authorization, the sub-delegation shall apply thereto); however, such transaction shall be confirmed by the Board immediately after the completion thereof. While the amount is over NTD 500,000,000, the same shall be

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determined by the Board prior to the execution.

V. With respect to the regulations of 10 percent of total assets, the calculation is based upon total assets stated in the most recent parent company only financial report or individual financial report prepared under the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Article 9 Handling Procedures on Acquisition and Disposal of Membership or Intangible assets I. Evaluation and Operation Process

(A) The acquisition or disposal of membership shall make reference to the fair market value, proposed conditions for transaction and the dealing price and subsequent an analysis report shall be made. Where the amount thereof is less than NTD3000, 000, the same shall be submitted to the General Manager for review and approval and be reviewed by and filed with the board meeting. In case the amount is over 3,000,000, the board meeting shall approve the same.

(B) The acquisition or disposal of intangible assets shall make reference to the evaluation report rendered by the professional appraiser, fair market value, proposed conditions for transaction and the dealing price and subsequent an analysis report shall be made and submitted to the board

Handling Procedures on Acquisition and Disposal of Membership or Intangible assets I. Evaluation and Operation Process

(A) The acquisition or disposal of membership shall make reference to the fair market value, proposed conditions for transaction and the dealing price and subsequent an analysis report shall be made. Where the amount thereof is less than NTD3000, 000, the same shall be submitted to the General Manager for review and approval and be reviewed by and filed with the board meeting. In case the amount is over 3,000,000, the board meeting shall approve the same.

(B) The acquisition or disposal of intangible assets, except computer software which shall refer to the equipment’s authorization of article 7, the others shall make reference to the evaluation report rendered by the professional appraiser, fair market value, proposed conditions for transaction and the dealing price and

I. To consider major of principles and operation needs, amend the subparagraph 2 of paragraph 1 refer to the procedures on acquisition and disposal of Membership.

II. According to Article 11 of Regulations, the transactions with a government agency, it must be has bidding final price and through public bidding. It is not necessary to operate or control the price. To comply with acquiring or disposing of real property with a government agency, it is not obtain a professional opinion.

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meeting for approval. II. Evaluation Report on membership and

intangible assets (A) This company shall obtain evaluation

Report prepared by professional appraisals prior to acquisition and disposal of intangible assets.

(B) If and whenever the acquisition and disposal of membership or intangible assets by this company has the following circumstances, or the amount thereof has reached 20% of the paid-in capital of the company or NTD0.3 billion, the account shall be invited to give opinions on the reasonableness of the dealing price prior to the date of occurrence of the event in accordance with the Statement of Financial Audit Standards, No. 20 announced by the Accounting R&D Foundation

(C) In case the assets acquired or disposed by this company through the auction procedures held by a court, the certificates issued by the court may substitute the evaluation report or the opinion of an accountant.

III. Unit in charge of execution The acquisition and disposal membership or intangible assets by this company shall, in accordance with the first subparagraph, be submitted by the Finance & Shared Services Division for review and approval prior to the conduction thereof.

subsequent an analysis report shall be made and submitted to the board meeting for approval.

II Evaluation Report on membership and intangible assets (A) This company shall obtain evaluation

Report prepared by professional appraisals prior to acquisition and disposal of intangible assets.

(B) If and whenever the acquisition and disposal of membership or intangible assets by this company has the following circumstances, or the amount thereof has reached 20% of the paid-in capital of the company or NTD 0.3 billion, except in transaction with government agency, the accountant shall be invited to give opinions on the reasonableness of the dealing price prior to the date of occurrence of the event in accordance with the Statement of Financial Audit Standards, No. 20 announced by the Accounting R&D Foundation

(C) In case the assets acquired or disposed by this company through the auction procedures held by a court, the certificates issued by the court may substitute the evaluation report or the opinion of an accountant.

III Unit in charge of execution The acquisition and disposal membership or intangible assets by this company shall, in accordance with the first subparagraph, be submitted by the Finance & Shared Services

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Division for review and approval prior to the conduction thereof.

Article 10 Handling Procedures for Acquisition and Disposal of Derivative Products I Principles and Guidelines for transaction

(A) Type of transaction (a) The derivative products of this

company may deal in refers to the items specified in Article 3.1 hereof.

(b) The so-called “for the purpose of transaction” shall mean for the purpose of activities of business transactions whereby the holding and issuing of derivative products is aimed at making profit from variance in prices of dealings, including measuring and identifying the current losses and gains in terms of fair price, whereas the so-called “not for the purpose of transaction” shall mean for the purpose of activities other than stated herein above.

(B) Strategies for operation or hedging (a) For the purpose of transactions:

adopting flexible strategies in operation

(b) Not for the purpose of transactions: adopting prudent and conservative strategies in operation

(C) Rights and duties (a) Signing of contracts and relevant

documents for dealings: The

Handling Procedures for Acquisition and Disposal of Derivative Products I Principles and Guidelines for transaction

(A) Type of transaction (a) The derivative products of this

company may deal in refers to the items specified in Article 3.1 hereof.

(b) The so-called “for the purpose of transaction” shall mean for the purpose of activities of business transactions whereby the holding and issuing of derivative products is aimed at making profit from variance in prices of dealings, including measuring and identifying the current losses and gains in terms of fair price, whereas the so-called “not for the purpose of transaction” shall mean for the purpose of activities other than stated herein above.

(B) Strategies for operation or hedging (a) For the purpose of transactions:

adopting flexible strategies in operation

(b) Not for the purpose of transactions: adopting prudent and conservative strategies in operation

(C) Rights and duties (a) Signing of contracts and relevant

documents for dealings: The

According to paragraph 1 of Article 18 of Regulations, the Company engaging in derivatives trading shall set the maximum loss limit on total trading and for individual contracts.

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chairman or the person designated thereof shall sign the aforesaid documents for and on behalf of this company.

(b) Execution of the transaction and the evaluation of losses and gains: (i) The Finance & Shared

Services Division– Procurement shall be responsible for the products relating to the materials whereas the Finance & Shared Services Division – Treasury & Credit Management responsible for matters relating to finance.

(ii) Opening account, transaction, confirmation, split: The supervisor of each relevant department shall be responsible for authorization thereof.

(iii)The certificate for transaction, request of payment and deposit of income shall be made by the operator and the supervisor at all levels shall take charge the review thereof. Meanwhile, the same shall be submitted to the Finance & Shared Services Division - Accounting and Treasury & Credit Management.

chairman or the person designated thereof shall sign the aforesaid documents for and on behalf of this company.

(b) Execution of the transaction and the evaluation of losses and gains: (i) The Finance & Shared

Services Division– Procurement shall be responsible for the products relating to the materials whereas the Finance & Shared Services Division – Treasury & Credit Management responsible for matters relating to finance.

(ii) Opening account, transaction, confirmation, split: The supervisor of each relevant department shall be responsible for authorization thereof.

(iii)The certificate for transaction, request of payment and deposit of income shall be made by the operator and the supervisor at all levels shall take charge the review thereof. Meanwhile, the same shall be submitted to the Finance & Shared Services Division - Accounting and Treasury & Credit Management.

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(iv) The assistant director from each relevant department shall conduct the evaluation of losses and gains and the statement thereof shall be submitted to Audit Department.

(c) Accounting: The Accounting Division shall be responsible for reconciling various certificate to the book by making vouchers and preparing relevant statement according to the accounting periods.

(d) Audit: The Audit Division shall be responsible for internal auditing conducted on a periodical and non-periodical basis.

(e) Legal affairs: The personnel above the level of legal professional shall be responsible for the review of the contract for dealings.

(f) Unless otherwise stipulated, the transactions of derivative products shall be executed by the personnel above the level of specialist.

(D) Evaluation of performance The evaluation of performance shall be based on the net value of loss and gain at the end of the year.

(E) Total amount of contract and authorization

(iv) The assistant director from each relevant department shall conduct the evaluation of losses and gains and the statement thereof shall be submitted to Audit Department.

(c) Accounting: The Accounting Division shall be responsible for reconciling various certificates to the book by making vouchers and preparing relevant statement according to the accounting periods.

(d) Audit: The Audit Division shall be responsible for internal auditing conducted on a periodical and non-periodical basis.

(e) Legal affairs: The personnel above the level of legal professional shall be responsible for the review of the contract for dealings.

(f) Unless otherwise stipulated, the transactions of derivative products shall be executed by the personnel above the level of specialist.

(D) Evaluation of performance The evaluation of performance shall be based on the net value of loss and gain at the end of the year.

(E) Total amount of contract and

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(a) For the purpose of transactions: The total amount of contract for each individual object at any time shall not exceed 10% of the net amount of this company in the previous year. Where the amount thereof is less than 5%, the same may be determined by supervisors in each relevant department and shall be reviewed by and filed with the board meeting after transaction. In case the amount is over 5% the same shall be approved by the board meeting.

(b) Not for the purpose of transaction: The activities with the amount under the value of assets or liabilities held or to be transacted may be determined by supervisors in each relevant department and shall be reviewed by and filed with the board meeting after transaction.

(F) The upper limit of losses (a) For the purpose of transaction: The

upper limit of losses shall be based on the contract of the same object instead of an individual contract. The upper limit of losses of all the contracts shall be determined respectively in light of different instruments thereof.

(i) Forwards or futures: 5% of average cost

authorization (a) For the purpose of transactions: The

total amount of contract for each individual object at any time shall not exceed 10% of the net amount of this company in the previous year. Where the amount thereof is less than 5%, the same may be determined by supervisors in each relevant department and shall be reviewed by and filed with the board meeting after transaction. In case the amount is over 5% the same shall be approved by the board meeting.

(b) Not for the purpose of transaction: The activities with the amount under the value of assets or liabilities held or to be transacted may be determined by supervisors in each relevant department and shall be reviewed by and filed with the board meeting after transaction.

(F) The upper limit of losses (a) For the purpose of transaction: The

upper limit of losses shall be based on the contract of the same object instead of an individual contract. The upper limit of losses of all the contracts shall be determined respectively in light of different instruments thereof.

(i) Forwards or futures: 5% of average cost

(ii) Option: 5% of the total

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(ii) Option: 5%of the total contract value if this company is the buyer and the price plus 5% of the total contract value if this company is the seller.

(iii) Swap and other combined instruments: less than 5% of total contract value.

(b) Not for the purpose of transactions: no upper limit of losses is described due to the offset of losses and gains and those of hedge position.

II. Measures for risk management (A) Credit risk of the dealing counterpart:

the counterpart shall be a financial institution with good credit rating.

(B) The market risk of price reversion: see the subparagraph 1.6 of this article.

(C) Risk of market liquidity: any commodity shall be quoted to at least two financial institutions before transaction thereof.

(D) Risk of cash flows: The fair market price of the financial derivatives shall be disclosed on a periodical basis so as to properly indicate the prospective cash flows thereof.

(E) The risk of internal operation: see the subparagraph 1.3 of this article.

(F) Legal risks involved in signing contracts and relevant documents: The Legal Affairs Office shall provide necessary legal opinion thereof.

contract value if this company is the buyer and the price plus 5% of the total contract value if this company is the seller.

(iii) Swap and other combined instruments: less than 5% of total contract value.

(b) Not for the purpose of transactions: The upper limit of losses of individual contract is less than 25% of that contract notional amount. The upper limit of losses of all the contracts is less than 25% of total notional amount of all contracts.

II. Measures for risk management (A) Credit risk of the dealing counterpart:

the counterpart shall be a financial institution with good credit rating.

(B) The market risk of price reversion: see the subparagraph 1.6 of this article.

(C) Risk of market liquidity: any commodity shall be quoted to at least two financial institutions before transaction thereof.

(D) Risk of cash flows: The fair market price of the financial derivatives shall be disclosed on a periodical basis so as to properly indicate the prospective cash flows thereof.

(E) The risk of internal operation: see the subparagraph 1.3 of this article.

(F) Legal risks involved in signing contracts and relevant documents: The Legal Affairs Office shall provide necessary

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(G) The operator for dealing in derivative products shall not engaged in confirmation or split, etc. concurrently.

(H) The personnel for measuring, supervising and controlling of risks shall be in the different department from those described herein above and shall report to the board meting or the senior director not in charge of transactions or positions.

(I) The positions held by a derivatives exchange shall be assessed at least once a week except that the hedge transactions needed in the business operation shall be evaluated at least twice a month. The evaluation reports thereof shall be submitted to the senior executives authorized by the board meeting.

III. Internal audit The internal auditor of this company shall make out the appropriateness of internal control on the derivative products on a periodical basis and the audit department shall make an audit report on the compliance of The Procedures each month. In case of any major violations, the same shall be notified in writing to each supervisor.

IV. Ways of periodical evaluation and handling of abnormal conditions (A) The board meeting shall designate a

supervisor of the audit department to see to supervision and control of risks

legal opinion thereof. (G) The operator for dealing in derivative

products shall not engaged in confirmation or split, etc. concurrently.

(H) The personnel for measuring, supervising and controlling of risks shall be in the different department from those described herein above and shall report to the board meting or the senior director not in charge of transactions or positions.

(I) The positions held by a derivatives exchange shall be assessed at least once a week except that the hedge transactions needed in the business operation shall be evaluated at least twice a month. The evaluation reports thereof shall be submitted to the senior executives authorized by the board meeting.

III. Internal audit The internal auditor of this company shall make out the appropriateness of internal control on the derivative products on a periodical basis and the audit department shall make an audit report on the compliance of The Procedures each month. In case of any major violations, the same shall be notified in writing to each supervisor.

IV. Ways of periodical evaluation and handling of abnormal conditions (A) The board meeting shall designate a

supervisor of the audit department to see to supervision and control of risks

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involved in the transactions of derivative products at any time.

(B) The board meeting shall designate persons specially in charge of periodical of whether the performance of transactions of derivative products is in compliance with the strategies for operation and whether the risks involved are bearable for this company

(C) The supervisor of the audit department shall conduct periodical evaluation of whether the measures on risk management is appropriate and dealt with according to handling procedures prescribed herein and shall supervise the transaction and the losses and gains. In case of any abnormal circumstances, the supervisor shall take necessary corresponding measures and report immediately to the board meeting. Where the independent director exists, the same shall attend the board meeting and be entitled to express its opinions.

(D) This company shall, when dealing in derivative products, establish a reference book, in which the type, amount of the transaction of derivative products, date of approval by board meeting, matters to be evaluated prudently in accordance with the ninth subparagraph of the

involved in the transactions of derivative products at any time.

(B) The board meeting shall designate persons specially in charge of periodical of whether the performance of transactions of derivative products is in compliance with the strategies for operation and whether the risks involved are bearable for this company

(C) The supervisor of the audit department shall conduct periodical evaluation of whether the measures on risk management is appropriate and dealt with according to handling procedures prescribed herein and shall supervise the transaction and the losses and gains. In case of any abnormal circumstances, the supervisor shall take necessary corresponding measures and report immediately to the board meeting. Where the independent director exists, the same shall attend the board meeting and be entitled to express its opinions.

(D) This company shall, when dealing in derivative products, establish a reference book, in which the type, amount of the transaction of derivative products, date of approval by board meeting, matters to be evaluated prudently in accordance with the ninth subparagraph of the second paragraph and the second and third subparagraph of this paragraph, shall be specified in detail.

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second paragraph and the second and third subparagraph of this paragraph, shall be specified in detail.

Article 12 Procedures for Disclosure of Information I. Items for public announcement and

declaration and its standard (A) Acquisition or disposal of real property

from or to a related party, or acquisition or disposal of assets other than real property from or to a related party where the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or NT$300 million or more; provided, this shall not apply to trading of government bonds or bonds under repurchase and resale agreements.

(B) Merger, division, acquisition or stock transfer

(C) The loss incurred in the dealing of derivatives reach the upper limit of losses of all or individual contracts specified in Subparagraph 5 of Paragraph 1 of Article 10.

(D) The amount of transactions other than those stated in the preceding three subparagraphs or an investment in the mainland China reach 20% of paid-in capital of this company or NTD0.3 billion. The following circumstances shall be excluded therein. (a) Transactions of public bond. (b) Transactions of debentures with

Procedures for Disclosure of Information I. Items for public announcement and

declaration and its standard (A) Acquisition or disposal of real property

from or to a related party, or acquisition or disposal of assets other than real property from or to a related party where the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or NT$300 million or more; provided, this shall not apply to trading of government bonds or bonds under repurchase and resale agreements, or subscription or redemption of domestic money market funds.

(B) Merger, division, acquisition or stock transfer

(C) The loss incurred in the dealing of derivatives reach the upper limit of losses of all or individual contracts specified in Subparagraph 5 of Paragraph 1 of Article 10.

(D) The amount of transactions other than those stated in the preceding three subparagraphs or an investment in the mainland China reach 20% of paid-in capital of this company or NTD0.3 billion. The following circumstances shall be excluded therein.

I. According to the Article 30 of Regulations, to consider the Company investment of domestic money market funds just for fixed income interest, and same with the bonds under repurchase and resale agreements, so amend the subparagraph 1 of paragraph 1 and item 2 of subparagraph 4

II. To comply with IFRS, amend the wording about business-use machinery and equipment in Chinese version.

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conditions for redemption and selling off.

(c) The assets acquired or disposed are equipment or machines for business use and the counter part of the transaction are not associated persons and amount thereof is under NTD 0.5 billion.

(d) Where land is acquired under an arrangement on engaging others to build on the company's own land, engaging others to build on rented land, joint construction and allocation of housing units, joint construction and allocation of ownership percentages, or joint construction and separate sale, and the amount the company expects to invest in the transaction is less than NT$500 million.

(E) The calculations for the dealing amount in the preceding four subparagraph (a) Amount of each transaction (b) Cumulative amount of acquisition

or disposal of the objects of the same nature with the same counterpart within a year

(c) Cumulative amount of acquisition or disposal of the objects of the same nature with the same counterpart within a year

(d) Respective cumulative amount of acquisition and disposal of the same security within a year

(a) Transactions of public bond. (b) Transactions of debentures with

conditions for redemption and selling off, or subscription or redemption of domestic money market funds.

(c) The assets acquired or disposed are equipment for business use and the counter part of the transaction are not associated persons and amount thereof is under NTD 0.5 billion.

(d) Where land is acquired under an arrangement on engaging others to build on the company's own land, engaging others to build on rented land, joint construction and allocation of housing units, joint construction and allocation of ownership percentages, or joint construction and separate sale, and the amount the company expects to invest in the transaction is less than NT$500 million.

(E) The calculations for the dealing amount in the preceding four subparagraph (a) Amount of each transaction (b) Cumulative amount of acquisition

or disposal of the objects of the same nature with the same counterpart within a year

(c) Cumulative amount of acquisition or disposal of the objects of the same nature with the same counterpart within a year

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(F) "Within the preceding year" as used in the preceding paragraph refers to the year preceding the date of occurrence of the current transaction. Items duly announced in accordance with these Regulations need not be counted toward the transaction amount.

II. Items for public announcement and declaration and its standard In case of any circumstances specified in Subparagraph 1 to 4 of Paragraph 1, the same shall be handled for public announcement and declaration within two (2) days commencing immediately from the date of the event.

III. Procedures for public announcement and declaration (A) This company shall handle public

announcement and declaration of relating information in the website designated by the FSC.

(B) This company shall, within first ten (10) days in each month, input the information about the dealings in derivatives as of the end of last month by this company and the subsidiaries, which are not affiliated to domestic public companies, into the website designated by the FSC.

(C) In case of any mistakes or omissions of necessary items therein, appropriate corrections shall be made and the entire items shall be re-announced publicly and re-declared.

(d) Respective cumulative amount of acquisition and disposal of the same security within a year

(F) "Within the preceding year" as used in the preceding paragraph refers to the year preceding the date of occurrence of the current transaction. Items duly announced in accordance with these Regulations need not be counted toward the transaction amount.

II. Time for public announcement and declaration In case of any circumstances specified in Subparagraph 1 to 4 of Paragraph 1, the same shall be handled for public announcement and declaration within two (2) days commencing immediately from the date of the event.

III. Procedures for public announcement and declaration

(A) This company shall handle public announcement and declaration of relating information in the website designated by the FSC.

(B) This company shall, within first ten (10) days in each month, input the information about the dealings in derivatives as of the end of last month by this company and the subsidiaries, which are not affiliated to domestic public companies, into the website designated by the FSC.

(C) In case of any mistakes or omissions of necessary items therein, appropriate

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(D) This company shall, within two (2) days commencing immediately from the date of the events, handle public announcement and declaration of relating information in the website designated by FSC after the transaction announced and declared as required. (a) Termination or cancellation of,

alteration to relevant contracts to the original transactions.

(b) Failure to complete merger, division, acquisition or stock transfer in accordance with contracts.

(c) Change to the originally publicly announced and reported information.

IV. Format of Public Announcements The necessary items and contents of public announcement which the Company shall comply with are referred to the appendixes of “Regulations Governing the Acquisition or Disposition of Assets by Public Companies”.

corrections shall be made and the entire items shall be re-announced publicly and re-declared.

(D) This company shall, within two (2) days commencing immediately from the date of the events, handle public announcement and declaration of relating information in the website designated by FSC after the transaction announced and declared as required. (a) Termination or cancellation of,

alteration to relevant contracts to the original transactions.

(b) Failure to complete merger, division, acquisition or stock transfer in accordance with contracts.

(c) Change to the originally publicly announced and reported information.

IV. Format of Public Announcements The necessary items and contents of public announcement which the Company shall comply with are referred to the appendixes of “Regulations Governing the Acquisition or Disposition of Assets by Public Companies”.

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Amendments to “Regulations Governing Shareholders’ Meetings of FarEastone Telecommunications Co., Ltd.” Article Current Articles Amended Articles Explanation

Article 2 The Company’s Shareholders’ meeting shall be held at a place where the Company is headquartered or a place facilitating and appropriate to shareholders (or proxies thereof), and shall be held not earlier than 9:00 the morning or later than 3:00 in the afternoon. The attending shareholders (or proxies thereof) shall wear attendance certificates, surrender sign-in cards instead of sign-in on book. When calling a Shareholders’ meeting, the Company shall adopt electronic transmission as one of the methods for exercising voting power, and such exercise shall be specified in the meeting notice. Shareholders who exercise their voting power via electronic transmission shall be deemed as attending the shareholders' meeting in person, but they shall be deemed as having waived their exercise of voting power with respect to any temporary motions and amendments/alternates to original motions, proposed at the Shareholders’ meeting. The attendance at a shareholders' meeting shall be counted based on the quantity of shares. The number of shares shall be counted based on the certificate of attendance as furnished plus the quantity of shares for which the voting power is exercised via electronic transmission. The Company may appoint the retained Attorneys-at-Law, CPAs or other people concerned to attend a Shareholders’ meeting as an observer. The Shareholders’ meeting staff shall wear identity certificates or sashes. A Shareholders’ meeting shall be chaired by the chairman if it is called by the chairman. In absence

The Company’s Shareholders’ meeting shall be held at a place where the Company is headquartered or a place facilitating and appropriate to shareholders (or proxies thereof), and shall be held not earlier than 9:00 the morning or later than 3:00 in the afternoon. The meeting notice of the Shareholders’ meeting shall state the registration time, location and other important information. The aforesaid registration time shall start at least thirty minutes before the beginning of the meeting. The registration location shall bear clear indication and staffed with sufficient and competent personnel. When calling a Shareholders’ meeting, the Company shall adopt electronic transmission as one of the methods for exercising voting power, and such exercise shall be specified in the meeting notice. Shareholders who exercise their voting power via electronic transmission shall be deemed as attending the shareholders' meeting in person, but they shall be deemed as having waived their exercise of voting power with respect to any temporary motions and amendments/alternates to original motions, proposed at the Shareholders’ meeting. Shareholders (or by proxies) shall attend the Meeting carrying attendance card, sign-in card or other certificate of attendance. The proxy solicitor shall provide Citizen ID for verification purpose. While attending the Shareholders’ Meeting, Shareholders (or by proxies) may submit sign-in cards rather than personal registration with signatures. The attendance at a Shareholders' meeting shall be counted based on the quantity of shares. The number

I. In order to protect the shareholders’ rights to participate the meeting and enhance the efficiency of the meeting procedure, the paragraph 2 and 4 are added. The wording of the last part in paragraph 1 is revised and moved to paragraph 4.

II. The original paragraph 2, 3 and 5 are ranked as paragraph 3, 7 and 9 respectively to reflect the new amendments.

III. The paragraph 8 is amended to reflect the responsibility of the chairman of the Meeting, who has to explain the proposed resolutions and material information of the Company and reply the inquiries raised by shareholders.

IV. In order to reproduce the whole process of the Shareholders’ meeting to clarify the meeting

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of the Chairman or his being unable to exercise his functions, the Vice Chairman shall act in his place. In absence of a Vice Chairman or while the Vice Chairman is unable to exercise his functions, the Chairman shall appoint a Director to act in the place otherwise a Director shall be elected from among themselves to act in the place. Where the Board of Directors meeting is called by a person beyond the Board of Directors, the meeting shall be chaired by the convener. Where there are two or more qualified conveners, one shall be elected from among themselves to chair the meeting. The Company shall record in sound or videotape the Shareholders’ meeting throughout the process and shall keep the videotape or record for a minimum of one year.

of shares shall be counted based on the certificate of attendance as furnished plus the quantity of shares for which the voting power is exercised via electronic transmission. The Company may appoint the retained Attorneys-at-Law, CPAs or other people concerned to attend a Shareholders’ meeting as an observer. The Shareholders’ meeting staff shall wear identity certificates or sashes. A Shareholders’ meeting shall be chaired by the chairman if it is called by the chairman. In absence of the Chairman or his being unable to exercise his functions, the Vice Chairman shall act in his place. In absence of a Vice Chairman or while the Vice Chairman is unable to exercise his functions, the Chairman shall appoint a Director to act in the place otherwise a Director shall be elected from among themselves to act in the place. Where the Board of Directors meeting is called by a person beyond the Board of Directors, the meeting shall be chaired by the convener. Where there are two or more qualified conveners, one shall be elected from among themselves to chair the meeting. To be eligible to substitute to chair a Shareholder’s Meeting, it requires a Director having been serving with a tenure for more than six months, and with a familiarity of both the daily operation and finance condition of the company. The same requirements apply to representative of an institutional Director. The Company shall record in sound or videotape the Shareholders’ meeting throughout the process and shall keep the videotape or record for a minimum of one year. If a shareholder files a lawsuit pursuant to Article 189 of the Company Law, the video and

related arguments, the paragraph 9 is amended accordingly.

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audio records shall be conserved until the conclusion of the litigation.

Article 11 Unless otherwise provided for in law or Articles of Incorporation, decisions in the shareholders' meeting shall be resolved by a majority vote of the attending shareholders (proxies). Where any shareholder who exercises voting power via electronic transmission does not object to the motion, and neither does the other present shareholders upon the chairperson’s inquiry, the motion shall be deemed as ratified as validly as if voted by ballot. Where any shareholder objects to the motion, a vote by ballot shall be applied, and the chairperson may decide to vote on a case by case basis, or adopt a package vote or split vote against various motions (including the motion for election), and count votes separately. In case of an amendment or alternative to a same proposal, the chairman will determine the order of voting. Where one among them is resolved, all others shall be deemed vetoed and call for no more voting process. The results of voting shall be reported on-the spot and entered into the minutes.

Unless otherwise provided for in law or Articles of Incorporation, decisions in the shareholders' meeting shall be resolved by a majority vote of the attending shareholders (proxies). Where any shareholder who exercises voting power via electronic transmission does not object to the motion, and neither does the other present shareholders upon the chairperson’s inquiry, the motion shall be deemed as ratified as validly as if voted by ballot. Where any shareholder objects to the motion, a vote by ballot shall be applied, and the chairperson may decide to vote on a case by case basis, or adopt a package vote or split vote against various motions (including the motion for election), and count votes separately. In case of an amendment or alternative to a same proposal, the chairman will determine the order of voting. Where one among them is resolved, all others shall be deemed vetoed and call for no more voting process. The results of voting and election shall be announced on the spot after the vote counting and be kept for records.

To ensure the shareholders can receive the results and sufficient information of the voting and election immediately, the paragraph 5 is amended accordingly.

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Status of Directors & Supervisors’ shareholding on April 13, 2014

The list of the Sixth Term Board of Directors of Far Eastone Telecommunications Co., Ltd.

Title Name Shares %

Chairman Douglas Hsu, Representative of Yuan Ding Construction Company 4,163,500 0.13

Independence Director & Managing Director

Lawrence Juen-Yee LAU -- --

Independence Director Kurt Roland Hellström -- -- Managing Director Jan Nilsson, Representative of Yuang Ding Investment Co., Ltd.

1,066,657,614 32.73

Director

Champion Lee, Representative of Yuang Ding Investment Co., Ltd. Toon Lim, Representative of Yuang Ding Investment Co., Ltd. Johnny Shih, Representative of Yuan Ding Construction Company 4,163,500 0.13 Peter Hsu, Representative of Ding Yuan Investment Co., Ltd. 919,653 0.03 Michiya Shinagawa, Representative of U-Ming Marine Transport Co., Ltd. 331,000 0.01

Total shares owned by all Directors 1,072,071,767 32.90 The total legal registered shares owned by all Directors 78,204,019 2.40

Independence Supervisor Chen-en Ko -- --

Supervisor Ei Hong, Representative of Far Eastern International Leasing Corp. 26,650,908 0.82 C. K. Ong, Representative of Asia investment Corp. 986,303 0.03

Total shares owned by all Supervisors 27,637,211 0.85 The total legal registered shares owned by all Supervisors 7,820,402 0.24

Bonues to Employees, Directors and Supervisors Year 2013 retained earnings distribution has been approved by the 8th meeting of the sixth-term Board of Directors on February 18, 2014. The information regarding bonues to employees, Directors and supervisors are as underneath: - It is proposed to distribute NT$205,911,069 for employee bonus and NT$102,955,535 for Directors and supervisors remuneration. - As the employee bonus and remuneration of Directors and supervisors are different from recognized estimated amount, the difference, reasons, and measures

should be disclosed: Not applicable. Impact of Stock Dividend Distribution on Business Performance, EPS and Return on Investment The Company has approved totally cash NT$3.75 per share ,including the retained earnings at NT$3.164 per share, and from the capital surplus-Additional Paid-in Capital-Share Issuance in Excess of Par Value at NT$0.586 per share, no stock dividend. Impact of Stock Dividend Distribution on Business Performance, EPS and Return on Investment: Not applicable.

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ARTICLES

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Articles of Incorporation of Far Eastone Telecommunication Co., Ltd

Approved by Annual Shareholder’s Meeting on 2013/6/13 Chapter I. General Provisions

Article 1 The Corporation shall be named Far EasTone Telecommunication Co., Ltd. and be incorporated as a company limited by shares in accordance with the Company Law of the Republic of China.

Article 2 The scope of business of the Corporation shall be as follows: (1) To operate G901011 Type I Telecommunications Business; (2) To operate G902011 Type II Telecommunications Business; (3) To operate F213060 Retail Sale of Telecom Instruments; (4) To operate F113070 Wholesale of Telecom Instruments; (5) To operate JA02010 Electric Appliance and Audiovisual Electric Products Repair Shops; (6) To operate E701030 Restrained Telecom Radio Frequency Equipments and Materials Construction; (7) To operate F401010 International Trade; (8) To operate F204110 Retail sale of Cloths, Clothes, Shoes, Hat, Umbrella and Apparel, Clothing Accessories and Other Textile

Products; (9) To operate CC01070 Telecommunication Equipment and Apparatus Manufacturing; (10) To operate I301020 Data Processing Services; (11) To conduct IZ11010 overdue receivables management service business; (12) To operate F201070 retail business of flowers; (13) To operate F209060 Retail sale of Stationery Articles, Musical Instruments and Educational Entertainment Articles; (14) To operate F213030 Retail sale of Computing and Business Machinery Equipment; (15) To operate F218010 retail business of information software; (16) To conduct IZ12010 manpower outsourcing business; (17) To conduct JZ99050 Agency Services; (18) To conduct I301030 Digital Information Supply Services; (19) To conduct I401010 general advertising service business; (20) To conduct IZ99990 Other Industry and Commerce Services Not Elsewhere Classified; (21) To conduct JE01010 Rental and Leasing Business; (22) To conduct I199990 other consulting; (23) To conduct IE 01010 Telecommunications Number Agencies; (24) To conduct JA02990 other repair Shops; (25) To conduct F401021 Restrained Telecom Radio Frequency Equipments and Materials Import; (26) To conduct ZZ99999 Other than the business lines as permitted, engage in all business operation not banned or restricted by laws.

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Article 3 The Corporation may provide guarantees for third parties by the regulation of Procedure for Making Endorsements and Guarantees. The Corporation may also act as a shareholder with limited liability of another company. Upon approval of the Board Directors, its investment may exceed forty percent (40%) of the paid-in capital of the Corporation, notwithstanding Article 13 of the Company Law, but the Company shall follow the Company’s “Procedures for Handling Acquisition or Disposal of Assets” for acquiring assets.

Article 4 The head office of the Corporation shall be located in Taipei, Taiwan, ROC. The Board of Directors may decide to establish branch offices within or outside the territory of the Republic of China.

Chapter II. Shares Article 5 The registered capital of the Company is NT$42,000,000,000 and is divided into 4,200,000,000 common shares with a par value of NT$10

each share. The Board is authorized, at different stage, to issue the shares that are not outstanding.

Article 6 Prior to issuance, the share certificates of the Corporation shall bear the shareholders’ names, shall be numbered serially, shall be signed or sealed by three or more Directors of the Board, and certified by the competent government agent. The share certificates may not be printed to represent the Company’s shares. Registration with the Taiwan Securities Central Depository Co., Ltd. is necessary. On the total number of shares, the Company may, as well, consolidate share certificates for printing, provided that the share certificates shall be put into the Taiwan Securities Central Depository Co., Ltd. for deposit. The Company may, while requested by the Taiwan Securities Central Depository Co., Ltd., consolidate shares to issue share certificates of large denomination. The Company may issue preferred stocks. Where the Company is merged with another company, the Company is not required to come to resolution through a preferred stocks shareholders’ extraordinary meeting.

Article 7 The Company shall handle equity affairs in compliance with “Regulations Governing Equity Affairs of Public Offering Companies” and other laws concerned.

Article 8 No transfer of share certificates shall be permitted within sixty days prior to a regular meeting of shareholders, thirty days prior to a special meeting of shareholders, or within five days prior to the date fixed for distributing dividends, bonuses, or other benefits.

Chapter III. Shareholders’ Meetings Article 9 Shareholders’ meetings shall be as follows:

(1) Regular meeting –to be called by the Board of Directors within six months from closing of every fiscal year; and (2) Special meeting – to be called by the Board of Directors whenever necessary, or with written requests from shareholders representing three

percent (3%) or more of total issued shares which have been continuously held by the same shareholders for one year or longer. Other than the event when the Board of Directors fails or is unable to call a shareholders’ meeting, the supervisors may, to assure the Company interests, call a shareholders’ meeting. Where the Board of Directors fails or is unable to call a shareholders’ meeting due to transfer of shares or other reasons, the shareholders’ meeting may be called as proposed by shareholders holding over 3% of the total issued shares as approved by the competent authorities of the government.

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Article 10 Unless otherwise provided for in the Company Law and these Articles of Incorporation, the shareholders’ meeting shall be duly called pursuant to the Company’s Regulations Governing Shareholders’ Meetings.

Article 11 A notice to convene a regular meeting of shareholders shall be given to each shareholder thirty days in advance. A notice to convene a special meeting of shareholders shall be given to each shareholder fifteen days in advance. The notice shall state the time, place and purpose of the meeting to be convened.

Article 12 Resolutions at a Shareholders’ meeting shall, unless otherwise provided for in the Company Law, be adopted by a majority vote of shareholders present in person or by proxy, who represent a majority of the total number of outstanding shares.

Article 13 In case a shareholder is unable to attend the Shareholders’ meeting, he/she may make another person his/her proxy to attend the meeting. They proxy document for this purpose must be provided, however, in the event the same proxy acts for two or more shareholders, his delegated voting power shall not exceed three percent (3%) of the total voting power of the Company’s total issued shares and such portion of shares exceeding three percent (3%) shall not be counted for vote purposes. This limitation shall not apply to holders of proxies engaged in the trust business or the shares transfer agency.

Article 14 Resolutions adopted at a meeting of the shareholders shall be recorded in the minutes of the proceedings which shall be prepared in English and in Chinese and shall be signed and sealed by the chairman of the meeting. The minutes of proceedings shall also include the time and place of the meeting, name of the chairman, number of shares represented by attending shareholders (or proxies) and the manner in which resolutions had been adopted, as well as other essentials of the proceedings. The minutes shall be given to each shareholder within twenty (20) days after the meeting and may be effected by means of a public notice and shall be duly filed according to law along with a list of shareholders present at the meeting and the proxies.

Chapter IV. Directors, Supervisors, Officers Article 15 The Company shall have nine (9) to eleven (11) Directors and Three (3) Supervisors, to be elected who are competent persons at shareholders’

meeting. The tenure of office of Directors and Supervisors will be three (3) year(s) and they will be eligible for re-election. The Company’s independent directors shall not be less than two in number and should not less than one-fifth of directors seats. Directors and Supervisors shall be elected by adopting candidate nomination system according to article 192-1 of the Company Act. Regulations governing the professional qualifications, restrictions on shareholdings and concurrent positions held, assessment of independence, method of nomination, and other matters for compliance with respect to independent directors shall be prescribed by the Competent Authority. The recommendations in connection with remuneration for directors and supervisors shall be submitted for resolution by Remuneration Committee and the Board of Directors. The total registered shares held by all Directors, Supervisors shall be determined pursuant to “Regulations Governing Percentage of Shares Held by Directors, Supervisors of Public Offering Companies”.

Article 16 A corporate shareholder of this Corporation shall have the right to designate a number of representatives to be elected as Director(s) and/or Supervisor(s) of the Corporation and the right to designate representatives as substitutes or successors of such Director(s) or Supervisor(s).

Article 17 The Managing Directors shall be selected from among the directors. He Directors shall form a Board of Directors. The chairman or the vice chairman of the board shall be elected from the managing directors. He Managing Directors shall form a Board of Managing Directors. During the recess of the board of directors, the managing directors shall regularly exercise the power and authority of the board of directors

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accordingly. Article 18 A meeting of the Board of Directors shall be called by its Chairman, provided that the initial meeting of each term of the Board of Directors

shall be called by the Director who receives the number of ballots representing the largest of votes. Directors may attend the meeting in person or by proxy. A Director cannot represent more than one absent Director for a meeting of the board of Directors. A Director residing in a foreign country may appoint, in writing, a Director residing within the Republic of China as his alternate to attend the meetings of the Board of Directors regularly provided, however the appointment shall be registered with competent government authority. In case a meeting of the Board of Directors is proceeded via visual communication network, then the Directors taking part in such a visual communication meeting shall be deemed to have attended the meeting in person. The notice for the Board Meeting shall state the reasons and agenda of the meeting, and shall be sent to each Directors and Supervisors seven (7) days prior to the meeting, provided, however, that in case of emergency the Meeting may be convened at any time. The meeting notice provided in preceding paragraph could be issued by email or fax.

Article 19 The Chairman of the Board of Directors shall preside at meetings of the Board of Directors. In case the Chairman of the Board of Directors is on leave or absent or cannot exercise his power and authority for any cause, the Vice Chairman shall act on his behalf. In case of absent of or unavailability of the Vice Chairman as well, the Chairman of the Board of Directors shall designate one of the managing directors to act on his behalf. In the absence of such a designation, the managing directors or the directors shall elect from among themselves an acting chairman of the Board of Directors.

Article 20 The powers of the Board of Directors shall be as follows: (1) make business plans; (2) review and examine important rules; (3) appoint and dismiss officers; (4) determine the establishment, change or revocation of any domestic or foreign branch offices; (5) review and examine budget and financial reports; (6) establish audit committee or any other functional committees; review and approve regulations governing the exercise of power and duty

of these functional committees. (7) implement any other matters designated by resolution of the shareholders or in accordance with the Company Law, and determine any

other important matters. Article 21 The powers of the Supervisors shall be as follows:

(1) supervise the Company in business operation. (2) investigate the business and financial conditions of the Corporation; (3) investigate and review the books and documentation of the Corporation; (4) any other authority in accordance with the law.

Article 22 The Company has one President, one General Auditor and several Executives Vice Presidents and Vice Presidents. All managerial officers shall be duly appointed, discharged by the Board of Directors through a majority vote of the attending Directors who represent a majority of the

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total Directors. Article 23 The President shall take charge of all affairs of the Corporation in accordance with the order of the Chairman of the Board. The Executive Vice

Presidents shall assist the President. Chapter V. Accounting

Article 24 The business year of the Corporation shall begin on January 1st and end on December 31st of each year. Annual closing of books shall be made at the closing date / end of each business year.

Article 25 At the end of each business year, the Board of Directors shall prepare the following reports, and forward them on to the Supervisor(s) for examination thirty days prior to the regular meeting of shareholders: (1) Report on operations; (2) Financial reports; and (3) Proposal concerning distribution of net profits or action to deal with losses. The appointment, dismissal and compensation of the accountant responsible for auditing the above books shall be determined by the Board of Directors through a majority vote of the attending Directors who represent a majority of the total Directors.

Article 26 From the profit earned by the Company as shown through the annual account closing, the sum to pay all taxes and to make good previous loss, if any, shall be first withheld, then 10% for legal reserve and then for special reserve as required by law. The final surplus, if any, shall have 1%~2% taken for bonus to employees, and 1% taken as remuneration to the directors and supervisors. The further surplus, if any, shall be consolidated with the earning unallocated and accumulated in the preceding year as allocable earning to be allocated as dividend and bonus or retained as resolved by the shareholders’ meeting.

Article 27 The dividend payout ratio each fiscal year shall be no less than fifty percent （50%）of the final surplus which is the sum of after-tax profit of the fiscal year to withhold previous loss, if any, legal reserve and special reserve as required by law; while cash dividend declared by the Corporation shall be no less than fifty percent (50%) of the total dividends distributed that year; provided, however, depending on whether the Corporation has any financial structure improvement or major capital expenditure plans in the year, the earning unallocated and accumulated in the preceding year may be distributed, and the payout ratio and percentage of cash dividend may be raised or lowered by a resolution adopted at the shareholders’ meeting.

Article 28 Dividends will be paid only to those shareholders whose names are recorded on the shareholders’ register on the date fixed for distributing dividends.

Chapter VI. Appendix Article 29 Other rules of the Corporation shall be set up separately by the Board of Directors. Article 30 Provisions of the Company law shall be referred to for matters not provided for in these Articles of Incorporation. Article 31 These Articles of Incorporation were agreed upon and signed on Mar. 7, 1997.

First amended on Jun. 6, 1997; Second amended on Aug. 20, 1998; Third amended on Apr. 28, 1999;

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Fourth amended on Apr. 21, 2000; Fifth amended on Dec. 28, 2000; Sixth amended on May. 15, 2001; Seventh amended on Jun. 25, 2002; Eighth amended on May 23, 2003; Ninth amended on Feb. 18, 2004; Tenth amended on Jun. 30,2004; Eleventh amended on May 20, 2005; Twelfth amended on May 26, 2006; Thirteenth amended on June 12, 2007; Fourteenth amended on June 15, 2010; Fifteenth amended on June 9, 2011; Sixteenth amended on June 13, 2012; Seventeenth amended on June 13, 2013.

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Rules Governing the Conduct of Shareholders’ Meeting Approved by Annual Shareholder’s Meeting on 2012/6/13

Article 1 These Regulations governing all affairs of the Company’s shareholders’ meetings. Article 2 The Company’s shareholders’ meeting shall be held at a place where the Company is headquartered or a place facilitating and appropriate

to shareholders (or proxies thereof), and shall be held not earlier than 9:00 the morning or later than 3:00 in the afternoon. The attending shareholders (or proxies thereof) shall wear attendance certificates, surrender sign-in cards instead of sign-in on book. When calling a shareholders’ meeting, the Company shall adopt electronic transmission as one of the methods for exercising voting power, and such exercise shall be specified in the meeting notice. Shareholders who exercise their voting power via electronic transmission shall be deemed as attending the shareholders' meeting in person, but they shall be deemed as having waived their exercise of voting power with respect to any temporary motions and amendments/alternates to original motions, proposed at the shareholders’ meeting. The attendance at a shareholders' meeting shall be counted based on the quantity of shares. The number of shares shall be counted based on the certificate of attendance as furnished plus the quantity of shares for which the voting power is exercised via electronic transmission. The Company may appoint the retained Attorneys-at-Law, CPAs or other people concerned to attend a shareholders’ meeting as an observer. The shareholders’ meeting staff shall wear identity certificates or sashes. A shareholders’ meeting shall be chaired by the chairman if it is called by the chairman. In absence of the Chairman or his being unable to exercise his functions, the Vice Chairman shall act in his place. In absence of a Vice Chairman or while the Vice Chairman is unable to exercise his functions, the Chairman shall appoint a Director to act in the place otherwise a Director shall be elected from among themselves to act in the place. Where the Board of Directors meeting is called by a person beyond the Board of Directors, the meeting shall be chaired by the convener. Where there are two or more qualified conveners, one shall be elected from among themselves to chair the meeting. The Company shall record in sound or videotape the shareholders’ meeting throughout the process and shall keep the videotape or record for a minimum of one year.

Article 3 The chairman may call to order to the meeting where a shareholders’ meeting is attended by shareholders (or proxies thereof) representing a majority of the total issued shares. The chairman may announce extension of the time if the attendance is below the specified quorum within the specified time limit. The chairman may announce two extensions in maximum and the total period of extension shall not exceed an hour. In the event the total attendance is still below the specified quorum with two extensions but represents up to one-third of the total issued shares through shareholders (or proxies thereof), decision may be resolved on ordinary issues through a quasi-resolution by a majority vote of the attending shareholders (or proxies thereof). In the event the total number of shares represented by shareholders (or proxies thereof) is up to the specified quorum after the quasi-resolution is made, the chairman shall bring the quasi-resolution to the shareholders’ meeting for acknowledgement retroactively.

Article 4 The shareholders’ meeting’s agenda shall be determined by the board of directors if the meeting is called by the board of directors. The meeting shall be handled according to the established agenda, which shall not be changed unless resolved by the shareholders’ meeting. The preceding provision is applicable mutatis mutandis to a shareholders’ meeting called by another person entitled to call the shareholders’ meeting beyond the board of directors

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The chairman shall not announce adjournment of the meeting until the issues set forth in the two preceding paragraphs (including occasional motion) unless duly resolved. Where the Chairman announces adjournment against the aforementioned provision at a shareholders’ meeting, one may be elected by a majority vote of the attending shareholders to chair and continue the meeting. After the meeting is adjourned as resolved, shareholders shall not elect a new chairman to continue the shareholders’ meeting at the same location or a location elsewhere.

Article 5 A shareholder (or proxy) shall submit floor requisition, bearing attendance certificate code, shareholder account number and subjects so that the chairman will appoint the floor order before speaking in floor. A shareholder (or proxy) who does not speak up shall be deemed having not spoken up even he has submitted the floor requisition. Where the contents actually spoken are found differing from the entry in the floor requisition, only the contents of the verified speech shall govern.

Article 6 A proposal shall be posed in writing. Except the proposals enumerated on the agenda, a proposal posed by a shareholder to amend the provided proposals, alternatives or other proposals by means of occasional motion shall be seconded by other shareholders (proxies). This same is applicable to a proposal to change agenda, to adjourn. The total number represented by the proposing shareholder and seconding shareholders shall be up to 100,000 shares minimum.

Article 7 Explanation to a proposal shall not exceed five minutes. Speech as an inquiry or in reply shall not exceed three minutes per person and may be extended for another three minuets if permitted by chairman. The chairman may stop a shareholder (or proxy) from speaking if he speaks beyond the specified time limit, specified issues or permitted times. When a shareholder (or proxy) speaks in floor, other shareholders (proxies) shall not interrupt unless agreed upon by the chairman and the speaking shareholder (or proxy) otherwise the chairman shall stop the interruption. Article 15 shall apply if such shareholder (or proxy) objects the chairman in stopping the interruption.

Article 8 On the same issue, each shareholder shall not speak more than twice. Where a corporation is authorized to attend a shareholders’ meeting, such corporation shall appoint only one proxy to attend the meeting. Where a corporation appoints more than two proxies to the meeting, only one proxy may speak in floor.

Article 9 After an attending shareholder (or proxy) speaks, the chairman may reply himself or by appointing another person. Amidst discussion of a proposal, the chairman may, in due time, announce conclusion of the discussion or announce discontinuation of the discussion as necessary.

Article 10 On a proposal the discussion process of which is announced concluded or discontinued, the chairman shall announce voting pursuant to the number of shares represented. The staff to monitor resolution and to tally votes shall be appointed by the chairman and shall be subject to consent by attending shareholders (proxies). The staff to monitor voting shall only be shareholders.

Article 11 Unless otherwise provided for in law or Articles of Incorporation, decisions in the shareholders' meeting shall be resolved by a majority vote of the attending shareholders (proxies).

Where any shareholder who exercises voting power via electronic transmission does not object to the motion, and neither does the other present shareholders upon the chairperson’s inquiry, the motion shall be deemed as ratified as validly as if voted by ballot.

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Where any shareholder objects to the motion, a vote by ballot shall be applied, and the chairperson may decide to vote on a case by case basis, or adopt a package vote or split vote against various motions (including the motion for election), and count votes separately.

In case of an amendment or alternative to a same proposal, the chairman will determine the order of voting. Where one among them is resolved, all others shall be deemed vetoed and call for no more voting process. The results of voting shall be reported on-the-spot and entered into the minutes.

Article 12 During the process of the meeting, the chairman may announce an intermission as the actual situation may justify. Article 13 In case of an air-raid alarm during process of a meeting, the meeting shall be discontinued forthwith for evacuation. The meeting may be

resumed an hour after the “all-clear” announcement. Article 14 The chairman may command security guards or discipline personnel to help maintain the order of the meeting. Such security guards or discipline

personnel shall wear armbands to identify their capacity while on duty to maintain the order. Article 15 The shareholders (proxies) shall accept instructions by the chairman, the security guards or discipline personnel in maintaining the order. The

chairman, the security guards or discipline personnel may expel those who interfere with the shareholders’ meeting. Article 16 Any matters insufficiently provided for herein shall be subject to the Company Law, Securities Trading Law and other laws concerned. Article 17 These Regulations and amendment hereof shall come into enforcement after binge resolved in the shareholders’ meeting.

Documents

Year 2014 Far EasTone Telecommunications Co., Ltd ... … · 0 Year 2014 Far EasTone Telecommunications Co., Ltd. Shareholders’ Meeting Handbook June 11, 2014 Taipei, Taiwan, R.O.C