Far EasTone Telecommunications Co., Ltd. 2015 Annual Shareholders’ Meeting Handbook€¦ · · 2015-05-21Far EasTone Telecommunications Co., Ltd. 2015 Annual Shareholders’ Meeting

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Far EasTone Telecommunications Co., Ltd. 2015 Annual Shareholders’ Meeting Handbook

June 18, 2015 Taipei City, R.O.C.

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

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Far EasTone Telecommunications Co., Ltd. Agenda of 2015 Annual Shareholders' Meeting

Time: 9:00 a.m., June 18, 2015 Place: Taipei Hero House, 20 Changsha Street, Sec. 1, Taipei City Opening – Chairman Company Presentation – Chairman / President Agenda of Meeting – Chairman I. Matters to be reported: (1) The 2014 Business operation report…………..………………………………….…...………..………..…..………..……..….. 3 (2) The 2014 Financial report…………………………………………………....……………………………………………....…. 7 (3) The 2014 Closing report reviewed by the Supervisors.…………………………....……………………………………...…..... 8 II. Matters to be ratified : (1) The 2014 final financial statements (including 2014 business operation report)…………...............……..…………….……… 9 (2) The 2014 retained earnings distribution………………………..……...….………………………………………………….…. 10 III. Matters to be discussed and election: (1) To review and approve the Cash distribution from Capital Surplus…………………..………………………………….……... 12 (2) To review and approve the amendment to the “Articles of Incorporation” of the Company….…………….......…….….…….... 13 (3) To review and approve the amendment to the “Handling Procedure for Acquisition and Disposal of Assets” of the Company... 14 (4) To review and approve the amendment to the “Directors and Supervisors Election Guidelines” of the Company……….…….. (5) To review and approve the amendment to the “Procedure for Loaning Capital to Others” of the Company……………….....… (6) To review and approve the amendment to the “Procedure for Making Endorsements and Guarantees” of the Company.......…. (7) To elect new Directors of the Company (The term of the newly elected eleven Directors, the newly elected Directors

including three Independent Directors) ………………………………………………………………………………………… (8) To release the non-competition restriction on Directors in accordance with Article 209 of the Company Act………………….

15 16 17

18 23

IV. Extempore Motion 23 V. Motion to Adjourn 23

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Attachment 1. Independent Auditors’ Report………………………………………………………........................................................................ 24 2. Balance Sheets……………………………………………………………………...……….……....………………...................... 25 3. Statements of Comprehensive Income………….………………………….………………......…………………...…………….. 26 4. Statements of Changes in Equity……………………..………………………………………...…...…….……..……................... 28 5. Statements of Cash Flows…………………………………………….………………………...…....…………..………………... 29 6. Independent Auditors’ Report…………………………………….……………………...……...………..……………………….. 31 7. Consolidated Balance Sheets…………………………………………….…………………………..…....……...…...................... 32 8. Consolidated Statements of Comprehensive Income…………………………………….………….……………...…………….. 33 9. Consolidated Statements of Changes in Equity……………………………………….….........................……….………………. 35 10. Consolidated Statements of Cash Flows……………………………………………….…………………....…………………….. 36 11. Amendment to the “Articles of Incorporation” of Far EasTone Telecommunications Co., Ltd. ………….……………....……… 38 12. Amendment to the “Handling Procedure for Acquisition and Disposal of Assets” of Far EasTone Telecommunications Co., Ltd 45 13. Amendment to the “Directors and Supervisors Election Guidelines” of Far EasTone Telecommunications Co., Ltd…................. 58 14. Amendment to the “Procedure for loaning capital to others” of Far EasTone Telecommunications Co., Ltd……………………. 60 15. Amendment to the “Procedure for Making Endorsements and Guarantees” of Far EasTone Telecommunications Co., Ltd……. 16. Status of Directors & Supervisors’ shareholding on April 20, 2015……….…………………...………….………………..……..

65 69

17. Bonus to Employees, Directors and Supervisors……………………….…………………….………………...……………......... 69 18. Impact of Stock Dividend Distribution on Business Performance, EPS and Return on Investment……………...…………......... 69

Articles 1. Articles of Incorporation of Far EasTone Telecommunication Co., Ltd……………………………………..…...………..……... 71 2. Handling Procedure for Acquisition and Disposal of Assets………………………..……….………………….………………... 78 3. Directors and Supervisors Election Guidelines………………………..……….…………………..………………....................... 4. Procedure for Loaning Capital to Others…………………….……….………………….………..…………………………….... 5. Procedure for Making Endorsements and Guarantees………………………..……….………………….………………............. 6. Rules Governing the Conduct of Shareholders’ Meeting………………..…………………...……………..……..........................

93 95 99

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I. Matters to be reported: (1) The 2014 Business operation report Dear Stakeholders and Investors, As we enter the new year of 2015, it is high time to review the past year of Far EasTone. Despite turbulent economic situations both domestically and abroad, Far EasTone fared remarkably in its operations. The brand campaign "Express your love. Let it be heard." has won the heart of countless viewers and garnered many awards and accolades internationally. Secondly, Far EasTone pioneered in the provision of 4G services in Taiwan. The 4G services of Far EasTone combine both 700MHz and 1800MHz bandwidth, offering penetrating coverage and stable and fast internet connection. Far EasTone also continued to excel in services at the stores. Our achievement has won the first prize of Service Excellence of Next Magazine and Commercial Times. The numerous touching stories in our stores have also been collected and published in the book Warmth Without Distance. Last but not least, we strove to fulfill our corporate social responsibility by continuing to advance in corporate governance, environmental protection, and supply chain management. Far EasTone volunteers have worked to transform the love from our company to the love for the greater society. Far EasTone continued to create values with stable growth prospects for our shareholders in 2014, in which we saw a consolidated revenue of NT$ 94,176 million, an EBITDA of NT$25,601 million, and an NT$11,567 million profit after tax. The EPS in 2014 was NT$3.52. Far EasTone in 2014: Operations and achievements ��World-leading Ideal Dualband 4G network

Far EasTone has deployed a dual bandwidth 4G service provision model. As of the end of 2014, Far EasTone 4G network covered 99% of the nation, providing services to over 910,000 users and winning an impressive 27% in market share. Users can enjoy the high penetrating power of 700MHz signals indoor and the wide coverage of 1800MHz signals outdoor. “Worry free” rate plans boasting value, versatility and flexibility, and a huge portfolio of 4G smartphones ensure every user the best product he/she desires.

��Domestic and overseas success of the brand campaign "Express your love. Let it be heard."

"Express your love. Let it be heard." campaign received fruitful results in 2014. People in Asia are generally not comfortable with speaking their love out loud. Far EasTone identified this communication challenge and created a series of marketing and advertising campaign to encourage our audience to "Express your love. Let it be heard". Featuring ordinary people from everyday life, our marketing materials deliver powerful messages via different media platforms. This marketing campaign have not only fashioned a unique Far EasTone brand but also added to the happiness and harmony of our society. Numerous awards from domestic and abroad have given high accolades to the campaign. To extend its influence, Far EasTone joined hands with John Tung Foundation to develop an EQ lecture series "Express your love. Listen with your heart." for junior high and elementary school students. This lecture series have been held in

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twenty schools in Taipei and Kaohsiung. It has also been awarded the first prize in the category of Creative Communication in Taiwan Corporate Sustainability Awards.

��Incorporating the theme-based (curation) idea to deliver mobile commerce services Far EasTone always strives to meet consumers' needs and close distance between people. Therefore, we have been proactive in developing creative mobile applications to construct a rich and versatile mobile experience for our customers. In 2014, Far EasTone and Hiiir established a new mobile service brand "friDay". The two companies came together and leveraged our shared advantages in content delivery, mobile commerce, and social media to create "friDay Shopping". This new shopping platform is designed with the concept of theme-based and provides consumers the most comprehensive mobile lifestyle experience. It also marks a new milestone for Far EasTone in mobile commerce, mobile payment, and digital content.

��High accolades for excellence in services

Excellent services have always been our top priority. 2014 saw the reception of the third consecutive "Golden Award of The Best Service in Taiwan" by Commercial Times. We also won the second consecutive "Best Service Award" in the category of Telecommunication by Next Magazine, trumping other telecommunication operators by winning over double of their votes in the consumer voting. Not only that, Far EasTone was also awarded the "Best Service Award" across all categories, standing out of more than 200 companies who competed in the same award. Far EasTone is the first telecommunicator who clinched double champions in the Next Magazine award, demonstrating our impressive achievement in FET 360° Store Service since 2012.

��A mobile office supported by mobility, social media, and cloud services

Far EasTone have accumulated years of experiences in cloud applications and ICT integration for businesses. With the advent of 4G high speed internet, Far EasTone launched the first BYOD (Bring Your Own Device) experience center in Taiwan to assist businesses in creating their own BYOD policies and management schemes without compromising information security. Far EasTone also launched a brand new business communication platform: EMMA (Enterprise Mobility Messaging Assistant). This platform incorporates social media and mobility to enhance team work. These new solutions will allow businesses to create mobile offices supported by mobility, social media, and cloud capacity. It is going to be a new kind of office environment with better information management, transformed communication model, and stronger competitive advantages.

��Transparent information disclosure that tops all other listed companies

2014 marked the 8th consecutive year in which Far EasTone received the highest rating in the Information Disclosure of Listed Companies Evaluation. Far EasTone have also been bestowed A++ for three consecutive years in this evaluation. There is no doubt that Far EasTone has become a model of excellence in corporate governance in Taiwan. Far EasTone has always taken the initiative to communicate with stakeholders and investors, providing comprehensive information about our operations and prospects. Our efforts have won undeniable affirmation by investors and stakeholders domestic and abroad. In 2014, Far EasTone was awarded "Best Investor Relations" and "Most Committed to a Strong Dividend Policy" by Finance Asia and "Best CEO", "Best CFO", "Best Investor Relations" and "Best Investor Relations Professional" by Corporate Governance Asia.

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��Caring for children and young people to fulfill our corporate social responsibility Faced with the challenges of sustainable development, Far EasTone made "Chic environmental protection, Creative responsibility" the core of our CSR campaign and successfully clinched many significant CSR awards in Taiwan in 2014. Suffering of children and the young people has long been Far EasTone's dearest concern. We have recruited volunteers and joined effort with Homemakers Union to provide services at schools in remote areas, engage in environmental education, and support philanthropic organizations with concrete actions. In 2014, we organized EQ education lecture series with the theme of "Express your love. Listen with your heart." at schools. After the propane gas explosion accident in Kaohsiung in August 2014, Far EasTone volunteers rushed to the affected area immediately and co-published a picture book Bless Our Dear Ones with Teacher Chang Foundation to comfort the traumatized children in the affected area.

Current operations and strategies for 2015 ��Transformation: Leverage the power of big data to provide versatile and integrated services

The launch of 4G services marks the advent of high-speed internet era in Taiwan. The numerous smart mobile devices and the trend of IoT (Internet of Things) and big data will dramatically change life as we know it. As the leader in the telecommunications industry, Far EasTone will advance with time and keep consumer needs dear in our heart. We will continue to deepen our root in mobile commerce and create new mobile entertainment services tailor-made for our local audience. Furthermore, Far EasTone aspires to maximize the advantage of fixed mobile convergence to launch an integrated OTT (Over The Top) service platform. Our consumers will be able to enjoy even richer and more diversified content as a result. For our enterprise customers, Far EasTone will continue to invest in the research and development of cloud mobile solutions, developing a rich portfolio of applications in audio and video, storage, transportation, health, and other client needs. Our solutions will be "all-in-one" ICT (Information and Communication Technology) integration packages that equip businesses with a rich repertoire of cloud technologies to lower operation risks, improve operation efficiency, and strengthen competitiveness.

��Innovation: Expand brand impact and close distance with impeccable services

As communication technology transforms at the speed of light, so does Far EasTone. In the area of customer services, we will continue to practice FET 360° Store Service. Our 4G services will be supported with a free 4G trial package and mobile 4G service points. We will also provide more custom-made services based on different consumer needs at different time and place. In 2015, Far EasTone will launch the second wave of "Express your love. Let it be heard." campaign. This new wave of campaign continues to honor the spirit of connecting brand philosophy with the creation of social benefits by selecting the theme of " Because of love, keep your words sweet ".This campaign will encourage everyone to express the love to someone in a positive and direct way. Far EasTone will also work with philanthropic groups in Taiwan to promote this initiative at schools and communities, transforming the love of a corporation to the love of a larger society.

��Wow: Bring wow to our customers and become their preferred partner

Looking ahead, Far EasTone will WOW our many users with quality consumer experiences and innovative applications and services. Most importantly, we will become our customers preferred partner of mobile life by putting their needs as our highest priority. Far EastTone will connect our high-speed and stable network, quality products, and targeted services in our operations. Our customers will see that Far EasTone will "Serve them well", "Bond with them", and "Bring them wow". This is how Far EasTone honors our corporate vision: FET Connects and Enriches Life.

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In 2015, Far EasTone will continue to purse sustainable development and growth for our stakeholders, employees, the environment and society. We will build a strong foundation for becoming a company to last and thrive. Moreover, we will hold on to the double axis of "Chic environmental protection, Creative responsibility" in our corporate social responsibility effort. We will observe the five core values of trustworthy, proactive, innovative, accountable, and collaborative in our effort to create a connected mobile world. Let's make this land an even better and more beautiful place. Finally, my most sincere appreciation to all the shareholders and investors. Please keep your opinions coming and help us excel and improve. Wish you all health and prosperity in the new year.

Chairman President Chief Accountant

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(2) The 2014 Financial report 1. Balance Sheets 2. Statements of Comprehensive Income 3. Statements of Changes in Equity 4. Statements of Cash Flows 5. Consolidated Balance Sheets 6. Consolidated Statements of Comprehensive Income 7. Consolidated Statements of Changes in Equity 8. Consolidated Statements of Cash Flows Please refer to the attachments, page 24~37, for Independent Auditors’ Report together with all above financial reports of Year 2014. For complete financial reports, please download from the Market Observation Post System of the Taiwan Stock Exchange (http://newmops.twse.com.tw)

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(3) The 2014 Closing report reviewed by the Supervisors February 26, 2015

The Board of Directors have prepared and submitted to us the Company's 2014 Business Operation Reports, the Financial Statements, and the Proposal

for Profit Distribution (included the consolidated Financial Reports) as audited by the CPAs of Deloitte & Touche. After having reviewed the above reports, financial statements, and proposal have been further examined as conforming to 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 the

2015 Annual Shareholders’ Meeting

Supervisors：Chen-en Ko

Eli Hong

C. K. Ong

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II . Matters to be ratified：：：： (1) The 2014 final financial statements (including 2014 business operation report) Explanatory Notes：

1. The business operation report of Year 2014 and annual standalone financial statements and consolidated financial statements as of December 31, 2014 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 year ended December 31, 2014 and issued audit reports.

2. This proposal has been approved by the 12th meeting of the sixth-term Board of Directors on February 13, 2015 for submitting to the 2015 Annual Shareholders Meeting for approval.

3. Please ratify. Resolution:

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(2) The 2014 retained earnings distribution Explanatory Notes：

1. It is proposed the Company to distribute cash dividend of NT$10,319,672,065 from the retained earnings at NT$3.167 per share. 2. Please refer to the following for the Company’s Year 2014 appropriation proposal:

Far EasTone Telecommunications Co., Ltd. Appropriation Proposal (in NT dollars)

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 April 30, 1998) were applied when 10% imputation tax is calculated 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. Cash dividend of individual shareholder will be round down to and

Un-appropriated earnings as of January 1, 2014 412,945 Add: impact from the application of Fair value model for Investment Property 656,677,085 Less: special reserve for the initial application of fair value model for Investment Property (648,717,227)

Adjusted un-appropriated earnings as of January 1, 2014 8,372,803 Add: actuarial gain (loss) recognized as retained earnings 44,696,646 Adjusted un-appropriated earnings 53,069,449 Add:Y2014 Net income 11,484,149,253 Less: legal reserve (1,148,414,925) Less: special reserve (68,730,946) Maximum distributable earnings 10,320,072,831 Less: appropriation

Cash dividends (NT$3.167 per share) (10,319,672,065) Un-appropriated earnings after distribution $400,766

Note: Bonuses to employees and remunerations to directors & supervisors were NT$205,340,068 and NT$102,670,034,

respectively.

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distributed in integer of New Taiwan Dollar, with fractions of the Dollar of the cash dividend of each shareholder be reduced and be accounted for as the other income of the Company.

5. It is proposed that the Board authorizes the Chairman to fix the record date of ex-cash dividend after the approval by the 2015 annual Shareholders’ Meeting.

6. This proposal has been approved by the 12th meeting of the sixth-term Board of Directors on February 13, 2015 for submitting to the 2015 Annual Shareholders Meeting for approval.

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 dividend of NT$1,899,705,973 from the capital surplus-Additional Paid-in Capital-Share Issuance in Excess of Par Value at NT$0.583 per share. If the Shareholders’ Meeting approves to distribute dividends from capital surplus, totally cash dividend shall be NT$3.75 per share for Year 2014.

8. Please ratify. Resolution:

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III. Matters to be discussed and election：：：： (1) To review and approve 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 dividend of NT$1,899,705,973 from the capital surplus-Additional Paid-in Capital-Share Issuance in Excess of Par Value at NT$0.583 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. Cash dividend of individual shareholder will be round down to and distributed in integer of New Taiwan Dollar, with fractions of the Dollar of the cash dividend of each shareholder be reduced and be accounted for as the other income of the Company.

3. It is proposed that the Board authorizes the Chairman to fix the record date of ex-cash distribution after the approval by the 2015 annual Shareholders’ Meeting.

4. This proposal has been approved by the 12th meeting of the sixth-term Board of Directors on February 13, 2015 and examined by the Supervisors of the Company and hereby submitted to the 2015 Annual Shareholders Meeting for ratification.

5. In Ratification Proposal 2, it is proposed the Company distributes cash of NT$10,319,672,065 from the retained earnings at NT$3.167 per share. With the cash distribution of NT$0.583 per share from capital surplus, totally cash NT$3.75 per share of Year 2014.

6. Please approve. Resolution:

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

1. According to Article 14-4 and 181-2 of the Securities and Exchange Act and official letter no 10200531121 from the Financial Supervisory Commission R.O.C. on December 31, 2013, the Board of Directors will establish an Audit Committee at the 7th term of the Board of Directors to replace the supervisor system which will cease operation at the end of the 6th term of the Board of Directors. Therefore, in response to establishing the Audit Committee, it is proposed to amend the Articles 9, 15, 15-1, 16, 18, 21, 25 and 26 of and add the Article 23-1 to the Company’s “Articles of Incorporation”. And according to “Corporate Governance Best Practice Principles for TWSE/GTSM Listed Companies”, and for business needs, it is proposed to amend the Articles 2 and 31 to the Company’s “Articles of Incorporation”. Please refer to page 38~44 for the draft amendment.

2. This proposal has been approved by the 13th meeting of the sixth-term Board of Directors on April 28, 2015 for submitting to the 2015 Annual Shareholders Meeting for approval.


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

1. According to Article 14-4 and 181-2 of the Securities and Exchange Act and official letter no 10200531121 from the Financial Supervisory Commission R.O.C. on December 31, 2013, the Board of Directors will establish an Audit Committee at the 7th term of the Board of Directors to replace the supervisor system which will cease operation at the end of the 6th term of the Board of Directors. Therefore, in response to establishing an Audit Committee, it is proposed to amend Articles 4, 8, 9-1 and 16 of the Company’s “Handling Procedure for Acquisition and Disposal of Assets”. And in order to comply with the amendment of “Regulations Governing Establishment of Internal Control Systems by Public Companies”, it is proposed to amend Articles 14 of the Company’s “Handling Procedure for Acquisition and Disposal of Assets”. And for business needs, it is proposed to amend Articles 10 of the Company’s “Handling Procedure for Acquisition and Disposal of Assets”. Please refer to page 45~57 for the draft amendment.



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(4) To review and approve the amendment to the “Directors and Supervisors Election Guidelines” of the Company Explanatory Notes:

1. According to Article 14-4 and 181-2 of the Securities and Exchange Act and official letter no 10200531121 from the Financial Supervisory Commission R.O.C. on December 31, 2013, the Board of Directors will establish an Audit Committee at the 7th term of the Board of Directors to replace the supervisor system which will cease operation at the end of the 6th term of the Board of Directors. Therefore, in response to establishing an Audit Committee, it is proposed to amend the Articles 1~3 and 13 of the Company’s “Directors and Supervisors Election Guidelines”. And for business needs, it is proposed to amend Articles 8 of the Company’s “Directors and Supervisors Election Guidelines”. Please refer to page 58~59 for the draft amendment.



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(5) To review and approve the amendment to the “Procedure for Loaning Capital to Others” of the Company Explanatory Notes:

1. According to Article 14-4 and 181-2 of the Securities and Exchange Act and official letter no 10200531121 from the Financial Supervisory Commission R.O.C. on December 31, 2013, the Board of Directors will establish an Audit Committee at the 7th term of the Board of Directors to replace the supervisor system which will cease operation at the end of the 6th term of the Board of Directors. Therefore, in response to establishing an Audit Committee, it is proposed to amend Articles 4, 6 and 10 of the Company’s “Procedure for Loaning Capital to Others”. And in order to comply with the amendment of “Regulations Governing Establishment of Internal Control Systems by Public Companies”, it is proposed to amend Articles 9 of the Company’s “Procedure for Loaning Capital to Others”. And for business needs, it is proposed to amend Articles 2 and 5 of the Company’s “Procedure for Loaning Capital to Others”. Please refer to page 60~64 for the draft amendment.



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(6) To review and approve the amendment to the “Procedure for Making Endorsements and Guarantees” of the Company Explanatory Notes:

1. According to Article 14-4 and 181-2 of the Securities and Exchange Act and official letter no 10200531121 from the Financial Supervisory Commission R.O.C. on December 31, 2013, the Board of Directors will establish an Audit Committee at the 7th term of the Board of Directors to replace the supervisor system which will cease operation at the end of the 6th term of the Board of Directors. Therefore, in response to establishing an Audit Committee, it is proposed to amend Articles 4, 7 and 11 of the Company’s “Procedure for Making Endorsements and Guarantees”. And in order to comply with the amendment of “Regulations Governing Establishment of Internal Control Systems by Public Companies”, it is proposed to amend Articles 9 of the Company’s “Procedure for Making Endorsements and Guarantees”. And for business needs, it is proposed to amend Articles 3 of the Company’s “Procedure for Making Endorsements and Guarantees”. Please refer to page 65~68 for the draft amendment.



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(7) To elect new Directors of the Company (The term of the newly elected eleven Directors, the newly elected Directors including three Independent Directors)

Explanatory Notes: 1. The tenure of Directors of the Company is three years and the term of Directors of the Sixth term of the Board will expire on June 12, 2015. According

to the Article 195 of the Company Act, new Directors shall be elected at the annual Shareholders’ Meeting of 2015. The term of the newly elected eleven Directors (including three Independent Directors) is three years, effective from June 18, 2015 to June 17, 2018. 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 followed.

2. According to the Article 192-1 of the Company Act, the Board of Directors (via this Board Meeting) of the Company and any shareholders with 1% above shareholding may nominate director candidates. During the period (from April 4, 2015 to April 17, 2015) for nomination, the Company has received the nomination of eleven director candidates from the major shareholder Yuan Ding Investment Co., Ltd. After examination, all eleven candidates both meet the requirements and qualifications of director or independent director. The Company has make public announcement about the qualified eight Directors and three Independent Directors candidate roster after the approval by the Board of Directors, Please refer to page 19~22.

3. This proposal has been approved by the 12th and 13th meeting of the sixth-term Board of Directors on February 13, 2015 and April 28, 2015 for submitting to the 2015 Annual Shareholders Meeting for election.

4. Please elect. Election result:

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The Seventh term of the Board of Directors of candidate list Type Candidate Education Major Experience Current Position

Shareholding (Unit: shares)

Director Douglas Hsu, Representative of Yuan Ding Investment Co., Ltd.

M.S., University of Notre Dame, U.S.A. M.S., Economics, Columbia University, U.S.A. Honor Ph.D., Management , National Chiao Tung University

President of FarEastern New Century Corporation

Chairman of Far Eastern New Century Corporation Chairman of Asia Cement Co., Ltd. Chairman of Far Eastern Department Stores Ltd. Chairman of Oriental Union Chemical Corp. Chairman of U-Ming Marine Transport Corp. Chairman of New Century InfoComm Tech Co., Ltd. Vice Chairman of Far Eastern International Bank

1,066,657,614

Director Peter Hsu, Representative of Yuan Ding Investment Co., Ltd.

M.S., Operations Research, Stanford University, USA

Vice President of Ding & Ding Management Consultants Co. Ltd.

Vice Chairman of Far Eastern New Century Corporation Director of Asia Cement Co., Ltd. Supervisor of U-Ming Marine Transport Corp.

1,066,657,614

Director Jan Nilsson, Representative of Yuan Ding Investment Co., Ltd.

M.S., Industrial and Management Engineering, Linkoping University, Sweden

Vice Chairman of Far Eastone Telecommunications Co., Ltd. President of Far Eastone Telecommunications Co., Ltd. Sr. Executive VP of Satelindo Telecom Indonesia

None 1,066,657,614

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Type Candidate Education Major Experience Current Position Shareholding (Unit: shares)

Director Champion Lee, Representative of Yuan Ding Co., Ltd.

MBA, Texas A&I University, USA

President of Yuan Ding Co., Ltd. Sr. EVP of Far Eastern New Century Corporation

Supervisor of Far Eastern New Century Corporation Supervisor of Asia Cement Co., Ltd. Director of U-Ming Marine Transport Corp.

4,163,500

Director Jefferson Douglas Hsu, Representative of Yuan Ding Co., Ltd.

Master’s degree in Design and Innovation Methods, Institute of Design, Illinois Institute of Technology MBA, University of Notre Dame

Worked as a Strategy and Design Consultant in the United States with clients ranging from hi-tech startups to Nestle, Denso Automotive, Kia Motors, and Target. Captain’s commission in the United States Marine Corps

Chief Innovation Officer of Far Eastern Group Senior Vice President of U-Ming Marine Transport Corporation

4,163,500

Director Toon Lim, Representative of Ding Yuan International Investment Co., Ltd.

Postgraduate Diploma in Business Administration University of Singapore BE(Hons), University of Canterbury

Chief Operating Officer, SingTel Group

Advisor, SingTel Group Board Director, APT Satellite, HK

919,653

Director Keisuke Yoshizawa, Representative of U-Ming Marine Transport Co., Ltd.

MIT SLOAN School of Management Master of Business Administration (Class of 2004)

General Manager, AOMORI Branch, NTT DOCOMO, INC. Executive Director, Strategic Investment & Alliance, Global Business Division, NTT DOCOMO, INC.

Executive Director, Strategic Alliance, Global Business Division, NTT DOCOMO, INC.

331,000

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Director Wein Peng, Representative of Asia Investment Corp.

Doctor of Journalism, Southern Illinois University, Carbondale, USA

Chairperson of the 2nd term of National Communication Commission Professor, Department of Journalism (Graduate program), National Chengchi University, Taiwan

Professor, Department of Social and Policy Sciences, and Department of Information Communication (Graduate program), Yuan Zu University Independent Director of XPEC Art Center Inc.

986,303

Independent Director

Lawrence Juen-Yee Lau B.S. in Physics and Economics, Stanford University M.A. and Ph.D. in Economics, University of California at Berkeley

Academician, Academia Sinica, 1982 Kwoh-Ting Li Professor in Economic Development, Stanford University Vice-Chancellor (President) of The Chinese University of Hong Kong Chairman of CIC International (Hong Kong) Co., Limited

Ralph and Claire Landau Professor of Economics, the Chinese University of Hong Kong Independent Non-executive Director of CNOOC Limited in Hong Kong Independent Non-executive Director of Hysan Development Company Limited in Hong Kong Independent Non-executive Director of AIA Group Limited in Hong Kong

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Kurt Roland Hellström M.S., Electronics, Royal Institute of Technology MBA, Stockholm School of Economics

President and CEO of Ericsson Group

Director of the European Institute for Japanese Studies (Sweden) Director of International Advisory Board of Altimo (Russia)

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Chung Laung Liu Sc. D., Massachusetts Institute of Technology

President and Mei Yi Che Honorary Chair Professor of National Tsing Hua University, Taiwan Professor Emeritus of University of Illinois at Urbana-Champaign

William M. W. Mong Honorary Chair Professor, National Tsing Hua University, Taiwan Independent Director of United Microelectronics Corporation Independent Director of Richtek Technology Corporation Independent Director of Powerchip Semiconductor Corporation

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(8) To release the non-competition restriction on Directors in accordance with Article 209 of the Company Law Explanatory Notes:

1. According to Article 209 of the Company Act, a Director who does anything for himself or on behalf of another person that is within the scope of the company's business shall explain to the Shareholders’ Meeting the essential contents of such an act and secure its approval.

2. If the Director candidate to be elected as the seventh term Board of Directors actually does anything for themselves or on behalf of another person within the scope of the Company’s business as follows, it is proposed to release the non-competition restriction for the would-be newly elected directors and their representatives at the annual Shareholders’ Meeting of Year 2015.

Name Title and Competition Company Major Business Scope Toon Lim, Representative of Ding Yuan International Investment Co., Ltd.

Advisor, SingTel Group Board Director, APT Satellite, HK

Telecommunications

Keisuke Yoshizawa, Representative of U-Ming Marine Transport Co., Ltd.

Executive Director, Strategic Alliance, Global Business Division, NTT DOCOMO, INC.

Telecommunications



IV. Extempore Motion V. Motion to Adjourn

24

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, 2014, December 31, 2013 and January 1, 2013, and the related statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2014 and 2013. 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, 2014, December 31, 2013, and January 1, 2013, and its financial performance and its cash flows for the years ended December 31, 2014 and 2013, in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers. As disclosed in Note 3 to the financial statements, the Company changed its accounting policy for investment properties effective January 1, 2014 and subsequently measured investment properties using the fair value model. As a result of this retrospective application of the accounting policy, the financial statements as of and for the year then ended December 31, 2013 have been restated. February 13, 2015

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

25

FAR EASTONE TELECOMMUNICATIONS CO., LTD. BALANCE SHEETS (In Thousands of New Taiwan Dollars)

December 31, 2014 December 31, 2013

(Restated) January 1, 2013

(Restated) ASSETS Amount % Amount % Amount % CURRENT ASSETS

Cash and cash equivalents (Notes 4, 6 and 29) $ 1,427,872 1 $ 912,456 1 $ 1,696,129 2 Available-for-sale financial assets - current (Note 4) 181,853 - 225,742 - 281,153 - Held-to-maturity financial assets - current (Note 4) - - 99,962 - 100,000 - Derivative financial assets for hedging - current (Notes 4 and 7) - - 115 - 4,650 - Debt investments with no active market - current (Notes 4 and 29) 3,955 - 2,266 - - - Notes receivable (Note 4) 20,165 - 7,261 - 18,784 - Accounts receivable, net (Notes 4 and 8) 5,874,423 5 5,552,815 5 5,891,337 6 Accounts receivable - related parties, net (Notes 4, 8 and 29) 320,872 - 323,629 - 336,543 - Other receivables - related parties (Note 29) 245,315 - 601,517 - 352,016 - Inventories (Notes 4 and 9) 1,384,848 1 1,923,124 2 918,958 1 Prepaid expenses 1,175,043 1 925,393 1 750,077 1 Other financial assets - current (Notes 4 and 29) 1,596,949 2 1,414,467 1 1,319,763 2 Other current assets (Notes 4 and 29) 18,703 - 24,350 - 20,089 -

Total current assets 12,249,998 10 12,013,097 10 11,689,499 12

NONCURRENT ASSETS

Held-to-maturity financial assets - noncurrent (Note 4) - - - - 99,871 - Financial assets carried at cost - noncurrent (Note 4) 150,000 - - - - - Investments accounted for using the equity method (Notes 3, 4, 10 and 29) 30,288,037 25 28,701,102 24 33,052,036 35 Property, plant and equipment, net (Notes 4, 11 and 29) 31,895,203 26 29,010,816 24 29,943,751 32 Investment properties (Notes 3, 4 and 12) 962,915 1 917,291 1 868,454 1 Concessions, net (Notes 1, 4 and 13) 33,875,995 27 34,968,533 29 4,384,239 5 Computer software, net (Notes 4 and 13) 2,127,632 2 2,124,201 2 2,176,648 2 Goodwill (Notes 4 and 13) 10,283,031 8 10,283,031 9 10,283,031 11 Deferred income tax assets (Notes 4 and 22) 869,065 1 883,429 1 691,612 1 Refundable deposits (Note 29) 468,869 - 417,188 - 393,936 1 Lease receivables - noncurrent (Notes 4 and 29) 10,731 - 18,722 - 26,666 -

Total noncurrent assets 110,931,478 90 107,324,313 90 81,920,244 88

TOTAL $ 123,181,476 100 $ 119,337,410 100 $ 93,609,743 100 LIABILITIES AND EQUITY CURRENT LIABILITIES

Short-term borrowings (Notes 4 and 14) $ - - $ 820,000 1 $ 114,000 - Derivative financial liabilities for hedging - current (Notes 4 and 7) 3,150 - - - - - Notes payable 9,774 - 8,619 - 29,403 - Accounts payable 2,454,774 2 2,670,751 2 3,649,457 4 Accounts payable - related parties (Note 29) 1,602,317 1 1,223,030 1 1,138,344 1 Payables for acquisition of properties (Note 16) 1,963,017 2 1,986,113 2 2,886,522 3 Other payables (Note 16) 6,163,835 5 5,128,120 4 4,069,306 4 Other payables - related parties (Note 29) 5,365,174 4 5,788,197 5 732,380 1 Current tax liabilities (Notes 4 and 22) 3,202,304 3 2,956,438 2 2,127,207 2 Guarantee deposits received - current 262,129 - 290,741 - 325,513 1 Unearned revenue - current (Notes 4 and 16) 2,510,206 2 2,162,540 2 2,487,474 3 Other current liabilities (Notes 4 and 17) 208,398 - 265,145 - 323,599 -

Total current liabilities 23,745,078 19 23,299,694 19 17,883,205 19

NONCURRENT LIABILITIES

Bonds payable (Notes 4 and 15) 19,973,096 16 19,965,600 17 - - Long-term borrowings (Notes 4 and 14) 4,100,000 4 - - - - Provisions -noncurrent (Notes 4 and 17) 265,430 - 257,893 - 245,833 - Deferred income tax liabilities (Notes 3, 4 and 22) 1,243,326 1 1,100,401 1 960,864 1 Accrued pension costs (Notes 4 and 18) 690,298 1 753,643 1 782,980 1 Guarantee deposits received - noncurrent 304,394 - 328,035 - 337,032 1 Other noncurrent liabilities (Notes 4, 10 and 16) 133,123 - 182,261 - 177,703 -

Total noncurrent liabilities 26,709,667 22 22,587,833 19 2,504,412 3

Total liabilities 50,454,745 41 45,887,527 38 20,387,617 22

EQUITY

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

Capital surplus 14,009,061 11 15,919,097 14 17,790,049 19 Retained earnings

Legal reserve 13,978,791 11 12,822,948 11 11,762,957 12 Special reserve 755,749 1 - - - - Unappropriated earnings 11,537,219 9 12,229,862 10 10,986,793 12

Total retained earnings 26,271,759 21 25,052,810 21 22,749,750 24 Other equity (139,097) - (107,032) - 97,319 -

Total equity 72,726,731 59 73,449,883 62 73,222,126 78

TOTAL $ 123,181,476 100 $ 119,337,410 100 $ 93,609,743 100 The accompanying notes are an integral part of the financial statements. (With Deloitte & Touche audits’ report dated February 13, 2015)

- 26 -

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

2014 2013

(Restated) Amount % Amount % OPERATING REVENUES (Notes 4, 20 and 29) $ 78,403,544 100 $ 73,954,595 100 OPERATING COSTS (Notes 4, 9, 18, 21 and 29) 45,599,277 58 41,750,553 57 GROSS PROFIT 32,804,267 42 32,204,042 43 OPERATING EXPENSES (Notes 4, 18, 21 and 29)

Marketing 16,039,191 20 14,230,344 19 General and administrative 4,636,790 6 4,562,483 6

Total operating expenses 20,675,981 26 18,792,827 25

OPERATING INCOME 12,128,286 16 13,411,215 18 NONOPERATING INCOME AND EXPENSES

Other income (Notes 3, 4, 21 and 29) 231,666 - 264,133 1 Other gains and losses (Note 4) 86,207 - 133,868 - Financial costs (Notes 4, 21 and 29) (369,468) - (88,631) - Share of the profit or loss of subsidiaries and

associates (Notes 4 and 10) 2,542,637 3 1,939,975 3 Losses on disposal of property, plant, equipment and

intangible assets (Note 4) (775,915) (1) (1,242,525) (2)

Total nonoperating income and expenses 1,715,127 2 1,006,820 2 INCOME BEFORE INCOME TAX 13,843,413 18 14,418,035 20 INCOME TAX (Notes 3, 4 and 22) 2,359,264 3 2,588,840 4 NET INCOME 11,484,149 15 11,829,195 16 OTHER COMPREHENSIVE INCOME

Exchange differences on translating foreign operations (Notes 4 and 19) 611 - (3,521) -

Unrealized losses on available-for-sale financial assets (Notes 4 and 19) (7,149) - (12,986) -

Cash flow hedges (Notes 4, 7 and 19) (9,225) - 29,301 - Actuarial gains arising from defined benefit plans

(Note 18) 54,624 - 16,799 - (Continued)

- 27 -

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

2014 2013

(Restated) Amount % Amount %

Share of other comprehensive income of subsidiaries and associates (Notes 4 and 19) $ (15,764) - $ (212,839) -

Income tax relating to the components of other comprehensive income (Notes 4 and 22) (10,465) - (6,349) -

Total other comprehensive income, net of

income tax 12,632 - (189,595) - TOTAL COMPREHENSIVE INCOME $ 11,496,781 15 $ 11,639,600 16 EARNINGS PER SHARE (NEW TAIWAN

DOLLARS; Notes 4 and 23)

Basic $3.52 $3.63 Diluted $3.52 $3.63

The accompanying notes are an integral part of the financial statements. (With Deloitte & Touche audits’ report dated February 13, 2015) (Concluded)

- 28 -

FAR EASTONE TELECOMMUNICATIONS CO., LTD. STATEMENTS OF CHANGES IN EQUITY (In Thousands of New Taiwan Dollars, except dividends per share) Other Equity Exchange Differences on Unrealized Gain Retained Earnings Translating (Loss) on Cash Flow Share Capital (Note 19) Unappropriated Foreign Available-for-sale Hedges Number of Capital Surplus Legal Reserve Special Reserve Earnings (Notes 3, Operations Financial Assets (Notes 4, 7 Shares Amounts (Notes 4 and 19) (Note 19) (Note 19) 4 and 19) (Notes 4 and 19) (Notes 4 and 19) and 19) Total BALANCE AT JANUARY 1, 2013 3,258,501 $ 32,585,008 $ 17,790,049 $ 11,762,957 $ - $ 10,388,791 $ (1,925) $ 121,555 $ (22,311) $ 72,624,124 Effect of retrospective application and restatement - - - - - 598,002 - - - 598,002 BALANCE AT JANUARY 1, 2013 AS RESTATED 3,258,501 32,585,008 17,790,049 11,762,957 - 10,986,793 (1,925) 121,555 (22,311) 73,222,126 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)

Cash dividends from capital surplus - NT$0.572 per share - - (1,863,862) - - - - - - (1,863,862) Effect of changes in ownership percentage due to associate's

issuance of capital stock for cash - - (2,781) - - - - - - (2,781) Changes in ownership interests of subsidiaries - - (4,309) - - - - - - (4,309) Net income for the year ended December 31, 2013 - - - - - 11,829,195 - - - 11,829,195 Other comprehensive income for the year ended December 31,

2013 - - - - - 14,756 361 (72,236) (132,476) (189,595) BALANCE AT DECEMBER 31, 2013 3,258,501 32,585,008 15,919,097 12,822,948 - 12,229,862 (1,564) 49,319 (154,787) 73,449,883 Appropriation of the 2013 earnings

Legal reserve - - - 1,155,843 - (1,155,843) - - - - Special reserve - - - - 107,032 (107,032) - - - - Cash dividends - NT$3.164 per share - - - - - (10,309,897) - - - (10,309,897) Special reserve reserved under Rule No. 1030006415 issued by

the FSC - - - - 648,717 (648,717) - - - - Cash dividends from capital surplus - NT$0.586 per share - - (1,909,481) - - - - - - (1,909,481) Effect of changes in ownership percentage due to associate's

issuance of capital stock for cash - - 2,990 - - - - - - 2,990 Changes in ownership interests of subsidiaries - - (3,545) - - - - - - (3,545) Net income for the year ended December 31, 2014 - - - - - 11,484,149 - - - 11,484,149 Other comprehensive income for the year ended December 31,

2014 - - - - - 44,697 3,720 49,765 (85,550) 12,632 BALANCE AT DECEMBER 31, 2014 3,258,501 $ 32,585,008 $ 14,009,061 $ 13,978,791 $ 755,749 $ 11,537,219 $ 2,156 $ 99,084 $ (240,337) $ 72,726,731 The accompanying notes are an integral part of the financial statements. (With Deloitte & Touche audits’ report dated February 13, 2015)

- 29 -

FAR EASTONE TELECOMMUNICATIONS CO., LTD. STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) For the Years Ended December 31

2014 2013

(Restated) CASH FLOWS FROM OPERATING ACTIVITIES

Income before income tax $ 13,843,413 $ 14,418,035 Adjustments for:

Depreciation 6,755,269 6,915,207 Amortization 681,129 647,205 Amortization of concessions 1,092,538 730,706 Allowance for doubtful accounts 260,744 157,745 Financial costs 369,468 88,631 Interest income (37,544) (61,425) Dividend income - (3,734) Share of the profit of subsidiaries and associates (2,542,637) (1,939,975) Loss on disposal of property, plant, equipment and intangible assets 775,915 1,242,525 Gain on disposal of financial assets (23,691) (14,633) (Reversal of write-down) write-down of inventories (50,151) 105,730 Gain on change in fair value of investment properties (45,624) (48,837) Deferred (loss) income on derivative assets for hedging (5,960) 710 Net changes in operating assets and liabilities

Notes receivable (12,904) 11,523 Accounts receivable (582,352) 180,777 Accounts receivable - related parties 2,757 12,914 Other receivables - related parties 115,899 (9,387) Inventories 588,427 (1,109,896) Prepaid expenses (249,650) (175,316) Other current assets 4,734 (1,795) Notes payable 1,155 (20,784) Accounts payable (215,977) (978,706) Accounts payable - related parties 379,287 84,686 Other payables 1,035,822 1,013,642 Other payables - related parties 375,151 (134,313) Provisions 2,506 (498) Unearned revenue 347,666 (324,934) Other current liabilities (59,194) (86,506) Accrued pension costs (8,721) (12,538)

Cash generated from operations 22,797,475 20,686,759 Interest received 36,809 62,184 Dividend received 1,801,718 1,350,152 Interest paid (361,578) (16,890) Income taxes paid (1,966,575) (1,818,237)

Net cash generated from operating activities 22,307,849 20,263,968

(Continued)

- 30 -

FAR EASTONE TELECOMMUNICATIONS CO., LTD. STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) For the Years Ended December 31

2014 2013

(Restated) CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds of the disposal of available-for-sale financial assets $ 60,929 $ 80,313 Acquisition of debt investments with no active markets (1,689) (2,266) Proceeds on redemption of held-to-maturity financial assets 100,000 100,000 Acquisition of financial assets carried at cost (150,000) - Acquisition of investments accounted for using the equity method (360,000) (238,874) Proceeds from capital reduction of investments accounted for using the

equity method - 4,994,490 Acquisition of property, plant and equipment (10,512,898) (8,075,304) Proceeds from the disposal of property, plant and equipment 93,831 23,446 Increase in refundable deposits (130,624) (92,565) Decrease in refundable deposits 78,943 69,313 Other receivables - related parties' increase in financing provided - (241,000) Other receivables - related parties' decrease in financing provided 241,000 - Acquisition of intangible assets (688,912) (31,909,758) Increase in other financial assets (182,482) (94,704)

Net cash used in investing activities (11,451,902) (35,386,909)

CASH FLOWS FROM FINANCING ACTIVITIES

(Decrease) increase in short-term borrowings (820,000) 706,000 Proceeds of the issue of bonds payable - 20,000,000 Payment of costs attributed to the issue of bonds payable - (35,821) Proceeds of long-term borrowings 9,290,000 - Repayment of long-term borrowings (5,190,000) - Increase in guarantee deposits received 155,680 114,392 Decrease in guarantee deposits received (207,933) (158,161) Other payables - related parties' increase in financing obtained 4,400,000 5,200,000 Other payables - related parties' decrease in financing obtained (5,200,000) - Decrease in other noncurrent liabilities (80,873) (77,270) Cash dividends paid (12,219,378) (11,404,753) Acquisition of interests in subsidiaries (468,027) (5,119)

Net cash generated from (used in) financing activities (10,340,531) 14,339,268

INCREASE (DECREASE) IN CASH AND CASH EQUIVALEANTS 515,416 (783,673) CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR 912,456 1,696,129 CASH AND CASH EQUIVALENTS, END OF THE YEAR $ 1,427,872 $ 912,456 The accompanying notes are an integral part of the financial statements. (With Deloitte & Touche audits’ report dated February 13, 2015) (Concluded)

- 31 -

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, 2014, December 31, 2013 and January 1, 2013, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2014 and 2013. 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, 2014, December 31, 2013 and January 1, 2013, and their consolidated financial performance and their consolidated cash flows for the years ended 2014 and 2013, 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. As disclosed in Note 3 to the consolidated financial statements, Far EasTone and its subsidiaries changed their accounting policy for investment properties effective January 1, 2014 and subsequently measured investment properties using the fair value model. As a result of this retrospective application of the accounting policy, the consolidated financial statements as of and for the year ended December 31, 2013 have been restated. We have also audited the parent company only financial statements of Far EasTone as of and for the years ended December 31, 2014 and 2013 on which we have issued modified unqualified report and unqualified report, respectively. February 13, 2015

Notice to Readers The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally 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.

- 32 -

FAR EASTONE TELECOMMUNICATIONS CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Thousands of New Taiwan Dollars)

December 31, 2014 December 31, 2013

(Restated) January 1, 2013

(Restated) ASSETS Amount % Amount % Amount % CURRENT ASSETS

Cash and cash equivalents (Notes 4, 6 and 33) $ 3,853,038 3 $ 2,821,165 2 $ 11,810,538 12 Financial assets at fair value through profit or loss - current (Note 4) - - - - 211,608 - Available-for-sale financial assets - current (Notes 4, 7 and 33) 756,971 1 706,310 1 2,008,526 2 Held-to-maturity financial assets - current (Note 4) - - 99,962 - 100,000 - Derivative financial assets for hedging - current (Notes 4, 8 and 33) - - 4,442 - 21,962 - Debt investments with no active market - current (Notes 4, 10 and 33) 2,408,681 2 1,320,618 1 1,191,556 1 Notes receivable, net (Notes 4 and 11) 70,289 - 51,707 - 65,493 - Accounts receivable, net (Notes 4 and 11) 7,139,202 6 6,894,733 6 7,042,177 7 Accounts receivable - related parties (Notes 4, 11 and 33) 245,098 - 311,507 - 169,279 - Inventories (Notes 4 and 12) 2,846,890 2 4,018,112 3 2,225,653 2 Prepaid expenses 1,315,880 1 1,099,031 1 990,215 1 Other financial assets - current (Notes 4, 33 and 34) 1,928,626 2 1,742,124 2 1,640,864 2 Other current assets (Note 33) 241,337 - 276,096 - 760,379 1

Total current assets 20,806,012 17 19,345,807 16 28,238,250 28

NONCURRENT ASSETS

Financial assets carried at cost (Notes 4 and 9) 218,308 - 76,407 - 26,509 - Held-to-maturity financial assets - noncurrent (Note 4) - - - - 99,871 - Investments accounted for using the equity method (Notes 4, 13 and 33) 1,183,492 1 1,037,880 1 1,051,097 1 Property, plant and equipment, net (Notes 4, 14, 33 and 34) 50,938,477 41 48,034,681 40 48,884,549 49 Investment properties (Notes 4 and 15) 1,159,421 1 1,174,896 1 1,101,035 1 Concessions, net (Notes 1, 4 and 16) 33,875,995 27 34,968,533 29 4,384,239 5 Goodwill (Notes 4 and 16) 10,826,174 9 10,826,174 9 10,881,018 11 Other intangible assets (Notes 4 and 16) 3,001,581 2 3,075,256 2 3,119,804 3 Deferred income tax assets (Notes 4 and 26) 975,402 1 992,940 1 812,896 1 Other noncurrent assets (Notes 4, 17, 33 and 34) 723,325 1 691,202 1 616,372 1

Total noncurrent assets 102,902,175 83 100,877,969 84 70,977,390 72

TOTAL $ 123,708,187 100 $ 120,223,776 100 $ 99,215,640 100 LIABILITIES AND EQUITY CURRENT LIABILITIES

Short-term borrowings (Notes 4 and 18) $ 357,995 - $ 1,804,122 2 $ 939,390 1 Short-term bills payable (Notes 4 and 18) 529,648 1 519,574 - 199,768 - Derivative financial liabilities for hedging - current (Notes 4, 8 and 33) 14,950 - - - - - Notes payable 21,149 - 17,118 - 38,838 - Accounts payable (Note 33) 5,187,041 4 5,123,707 4 6,458,682 7 Payables for acquisition of properties (Note 20) 2,565,075 2 2,617,177 2 3,440,589 3 Other payables (Note 20) 7,121,819 6 6,095,662 5 4,880,699 5 Current tax liabilities (Note 4) 3,250,972 3 2,997,094 3 2,203,865 2 Provisions - current (Notes 4 and 21) 178,412 - 124,739 - 96,306 - Unearned revenue - current (Notes 4 and 20) 2,582,802 2 2,276,460 2 2,562,118 3 Current portion of long-term borrowings (Notes 4 and 18) - - 99,869 - 10,745 - Guarantee deposits received - current 285,707 - 310,734 - 346,366 - Other current liabilities (Notes 4 and 33) 580,245 1 645,751 1 676,824 1

Total current liabilities 22,675,815 19 22,632,007 19 21,854,190 22

NONCURRENT LIABILITIES

Bonds payable (Notes 4 and 19) 19,973,096 16 19,965,600 17 - - Long-term borrowings (Notes 4 and 18) 4,100,000 3 - - 96,703 - Provisions -noncurrent (Notes 4 and 21) 763,223 1 705,863 - 650,648 1 Deferred income tax liabilities (Notes 4 and 26) 1,331,651 1 1,123,151 1 1,007,956 1 Deferred revenue - noncurrent (Notes 4 and 20) 239,342 - 350,414 - 445,624 - Accrued pension costs (Notes 3, 4 and 22) 690,298 1 753,742 1 783,507 1 Guarantee deposits received - noncurrent 340,206 - 361,568 - 370,025 - Other noncurrent liabilities (Note 4) 62,474 - 96,773 - 35,048 -

Total noncurrent liabilities 27,500,290 22 23,357,111 19 3,389,511 3

Total liabilities 50,176,105 41 45,989,118 38 25,243,701 25

EQUITY ATTRIBUTABLE TO OWNERS OF FAR EASTONE

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

Capital surplus 14,009,061 11 15,919,097 13 17,790,049 18 Retained earnings

Legal reserve 13,978,791 11 12,822,948 11 11,762,957 12 Special reserve 755,749 1 - - - - Unappropriated earnings 11,537,219 9 12,229,862 10 10,986,793 11

Total retained earnings 26,271,759 21 25,052,810 21 22,749,750 23 Other equity (139,097) - (107,032) - 97,319 -

Total equity attributable to owners of Far EasTone 72,726,731 59 73,449,883 61 73,222,126 74

NONCONTROLLING INTERESTS 805,351 - 784,775 1 749,813 1

Total equity 73,532,082 59 74,234,658 62 73,971,939 75 TOTAL $ 123,708,187 100 $ 120,223,776 100 $ 99,215,640 100 The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche audit report dated February 13, 2015)

- 33 -

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

2014 2013

(Restated) Amount % Amount % OPERATING REVENUES (Notes 4, 24 and 33) $ 94,175,600 100 $ 89,670,579 100 OPERATING COSTS (Notes 3, 4, 12, 22, 25 and 33) 56,153,085 60 52,904,612 59 GROSS PROFIT 38,022,515 40 36,765,967 41 OPERATING EXPENSES (Notes 3, 4, 22, 25 and 33)

Marketing 17,028,833 18 15,457,215 17 General and administrative 5,939,929 6 5,830,054 7

Total operating expenses 22,968,762 24 21,287,269 24

OPERATING INCOME 15,053,753 16 15,478,698 17 NONOPERATING INCOME AND EXPENSES

Other income (Notes 4, 25 and 33) 197,469 - 311,234 - Other gains and losses (Notes 3, 4, 8, 16 and 33) 106,471 - 321,750 - Financial costs (Notes 4, 25 and 33) (345,337) - (118,018) - Loss on disposal of property, plant, equipment and

intangible assets (Note 4) (859,935) (1) (1,310,909) (1) Share of the profit or loss of associates (Note 4) (167,598) - (128,365) -

Total nonoperating income and expenses (1,068,930) (1) (924,308) (1)

INCOME BEFORE INCOME TAX 13,984,823 15 14,554,390 16 INCOME TAX (Notes 3, 4 and 26) 2,418,028 3 2,648,007 3 NET INCOME 11,566,795 12 11,906,383 13 OTHER COMPREHENSIVE INCOME

Exchange differences on translating foreign operations (Notes 4 and 23) 3,964 - 448 -

Unrealized gains (losses) on available-for-sale financial assets (Notes 4 and 23) 52,463 - (69,498) -

Cash flow hedges (Notes 4, 8 and 23) (41,962) - (78,949) - Actuarial gains on defined benefit plans (Notes 4 and 22) 54,266 - 17,368 -

(Continued)

- 34 -

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

2014 2013

(Restated) Amount % Amount %

Share of other comprehensive income of associates (Note 4) $ (45,593) - $ (52,041) -

Income tax relating to the components of other comprehensive income (Notes 4 and 26) (10,406) - (6,499) -

Total other comprehensive income, net of

income tax 12,732 - (189,171) - TOTAL COMPREHENSIVE INCOME $ 11,579,527 12 $ 11,717,212 13 NET INCOME ATTRIBUTABLE TO:

Owners of Far EasTone $ 11,484,149 12 $ 11,829,195 13 Noncontrolling interests 82,646 - 77,188 -

$ 11,566,795 12 $ 11,906,383 13 COMPREHENSIVE INCOME ATTRIBUTABLE TO:

Owners of Far EasTone $ 11,496,781 12 $ 11,639,600 13 Noncontrolling interests 82,746 - 77,612 -

$ 11,579,527 12 $ 11,717,212 13

EARNINGS PER SHARE, NEW TAIWAN

DOLLARS (Notes 3 and 27) Basic $ 3.52 $ 3.63 Diluted $ 3.52 $ 3.63

The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche audit report dated February 13, 2015) (Concluded)

- 35 -

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

Equity Attributable to Owners of Far EasTone Other Equity Exchange Unrealized Gains Retained Earnings Differences (Losses) on Unappropriated on Translating Available-for-sale Noncontrolling Share Capital Capital Surplus Legal Reserve Special Reserve Earnings Foreign Operations Financial Assets Cash Flow Hedges Interests (Notes 3, (Note 23) (Notes 4, 23 and 28) (Note 23) (Note 23) (Notes 3, 4 and 23) (Notes 4 and 23) (Notes 4 and 23) (Notes 4, 8 and 23) Total 4, 23 and 29) Total Equity BALANCE AT JANUARY 1, 2013 $ 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 Effect of retrospective application and restatement - - - - 598,002 - - - 598,002 8,890 606,892 BALANCE AT JANUARY 1, 2013 AS RESTATED 32,585,008 17,790,049 11,762,957 - 10,986,793 (1,925 ) 121,555 (22,311 ) 73,222,126 749,813 73,971,939 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 )

Cash dividends from capital surplus - NT$0.572 per share - (1,863,862 ) - - - - - - (1,863,862 ) - (1,863,862 ) Effect of changes in ownership percentage due to associate's issuance of

capital stock for cash - (2,781 ) - - - - - - (2,781 ) - (2,781 ) Changes in ownership interests of 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 - - - - 11,829,195 - - - 11,829,195 77,188 11,906,383 Other comprehensive income for the year ended December 31, 2013 - - - - 14,756 361 (72,236 ) (132,476 ) (189,595 ) 424 (189,171 ) BALANCE AT DECEMBER 31, 2013 32,585,008 15,919,097 12,822,948 - 12,229,862 (1,564 ) 49,319 (154,787 ) 73,449,883 784,775 74,234,658 Appropriation of the 2013 earnings

Legal reserve - - 1,155,843 - (1,155,843 ) - - - - - - Special reserve - - - 107,032 (107,032 ) - - - - - - Cash dividends - NT$3.164 per share - - - - (10,309,897 ) - - - (10,309,897 ) - (10,309,897 )

Special reserve reserved under Rule No. 1030006415 issued by the FSC - - - 648,717 (648,717 ) - - - - - - Cash dividends from capital surplus - NT$0.586 per share - (1,909,481 ) - - - - - - (1,909,481 ) - (1,909,481 ) Effect of changes in ownership percentage due to associate's issuance of

capital stock for cash - 2,990 - - - - - - 2,990 - 2,990 Changes in ownership interests of subsidiaries - (3,545 ) - - - - - - (3,545 ) 35,517 31,972 Cash dividends distributed by subsidiaries - - - - - - - - - (97,687 ) (97,687 ) Net income for the year ended December 31, 2014 - - - - 11,484,149 - - - 11,484,149 82,646 11,566,795 Other comprehensive income for the year ended December 31, 2014 - - - - 44,697 3,720 49,765 (85,550 ) 12,632 100 12,732 BALANCE AT DECEMBER 31, 2014 $ 32,585,008 $ 14,009,061 $ 13,978,791 $ 755,749 $ 11,537,219 $ 2,156 $ 99,084 $ (240,337 ) $ 72,726,731 $ 805,351 $ 73,532,082 The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche audit report dated February 13, 2015)

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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

2014 2013

(Restated) CASH FLOWS FROM OPERATING ACTIVITIES

Income before income tax $ 13,984,823 $ 14,554,390 Adjustments for:

Depreciation 8,618,768 8,592,300 Amortization 835,803 797,164 Amortization of concessions 1,092,538 730,706 Allowance for doubtful accounts 263,366 165,665 Net losses on valuation of financial assets at fair value through profit

or loss - 11,608 Financial costs 345,337 118,018 Interest income (74,150) (165,105) Dividend income (1,662) (7,273) Share of the loss of associates 167,598 128,365 Loss on disposal of property, plant, equipment and intangible assets 859,935 1,310,909 Gain on disposal of financial assets (26,511) (224,103) Impairment loss on financial assets 1,385 102 (Reversal of write-down) write-down of inventories (925) 166,386 Impairment loss on goodwill - 57,615 Gain on change in fair value of investment properties (48,260) (63,890) Deferred loss on derivative assets for hedging (18,745) (18,535) Net changes in operating assets and liabilities

Financial assets at fair value through profit or loss - 208,688 Notes receivable (21,895) 13,786 Accounts receivable (504,522) 12,928 Accounts receivable - related parties 66,409 (141,521) Inventories 1,172,147 (1,958,845) Prepaid expenses (216,849) (108,014) Other current assets (33,075) 34,341 Notes payable 4,031 (21,720) Accounts payable 63,334 (1,342,208) Other payables 1,067,294 1,168,702 Provisions 40,278 17,440 Unearned revenue 306,342 (285,958) Other current liabilities (63,866) (46,294) Accrued pension costs (9,127) (13,575)

Cash generated from operations 27,869,801 23,692,072 Interest received 63,335 174,641 Dividend received 5,850 10,067 Interest paid (323,123) (48,814) Income taxes paid (2,030,975) (1,926,126)

Net cash generated from operating activities 25,584,888 21,901,840

(Continued)

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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

2014 2013

(Restated) CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of available-for-sale financial assets $ (60,000) $ (663,928) Proceeds of the disposal of available-for-sale financial assets 166,200 2,501,734 Acquisition of debt investments with no active market (1,088,063) (129,062) Proceeds on redemption of held-to-maturity financial assets 100,000 100,000 Acquisition of financial assets carried at cost (150,000) (50,000) Proceeds from capital reduction of financial assets carried at cost 8,348 - Acquisition of investments accounted for using the equity method (360,000) (172,765) Net cash outflow on acquisition of subsidiary - (42,758) Acquisition of property, plant and equipment (12,406,322) (9,802,919) Proceeds of the disposal of property, plant and equipment 96,417 32,869 Increase in refundable deposits (295,658) (278,901) Decrease in refundable deposits 261,068 211,387 Acquisition of intangible assets (766,192) (32,024,895) Increase in other financial assets (184,085) (107,383)

Net cash used in investing activities (14,678,287) (40,426,621)

CASH FLOWS FROM FINANCING ACTIVITIES

(Decrease) increase in short-term borrowings (1,446,127) 864,732 Increase in short-term bills payable 10,074 319,806 Proceeds of the issue of bonds payable - 20,000,000 Payments of costs attributed to the issue of bonds payable - (35,821) Proceeds of long-term borrowings 9,290,000 - Repayment of long-term borrowings (5,289,483) (9,315) Increase in guarantee deposits received 188,177 137,904 Decrease in guarantee deposits received (234,566) (181,993) Decrease in deferred revenue (111,072) (95,210) Cash dividend paid (12,317,065) (11,501,151) Net changes in noncontrolling interests 31,972 35,039

Net cash (used in) generated from financing activities (9,878,090) 9,533,991

EFFECT OF EXCHANGE RATE CHANGES 3,362 1,417 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,031,873 (8,989,373) CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR 2,821,165 11,810,538 CASH AND CASH EQUIVALENTS, END OF THE YEAR $ 3,853,038 $ 2,821,165 The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche audit report dated February 13, 2015) (Concluded)

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Amendment to the Articles of Incorporation of Far EasTone Telecommunications Co., Ltd. Article Current Articles Amended Articles

Article 2 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 Equipment 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 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;

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 Equipment 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 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;

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(25) F401021 Restrained Telecom Radio Frequency Equipment and Materials Import;

(26) CC01060 Wired Communication Equipment and Apparatus Manufacturing;

(27) CC01080 Electronic Parts and Components Manufacturing; (28) CC01110 Computers and Computing Peripheral Equipment

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; (35) E603050 Cybernation Equipment Construction; (36) E603080 Traffic Signals Construction; (37) E603090 Illumination Equipment Construction; (38) E605010 Computing Equipment Installation Construction; (39) E701010 Telecommunications Construction; (40) E701020 Channel KU and C of Satellite TV Equipment 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;

(25) F401021 Restrained Telecom Radio Frequency Equipment and Materials Import;

(26) CC01060 Wired Communication Equipment and Apparatus Manufacturing;

(27) CC01080 Electronic Parts and Components Manufacturing; (28) CC01110 Computers and Computing Peripheral Equipment

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; (35) E603050 Cybernation Equipment Construction; (36) E603080 Traffic Signals Construction; (37) E603090 Illumination Equipment Construction; (38) E605010 Computing Equipment Installation Construction; (39) E701010 Telecommunications Construction; (40) E701020 Channel KU and C of Satellite TV Equipment 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;

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(54) J304010 Book Publishers; (55) F108031 Wholesale of Drugs, Medical Goods; (56) F208031 Retail sale of Medical Equipment; (57) ZZ99999 Other business items that are not prohibited or

restricted by law, except those that are subject to special approval.

(54) J304010 Book Publishers; (55) F108031 Wholesale of Drugs, Medical Goods; (56) F208031 Retail sale of Medical Equipment; (57) I301040 Third Party Payment Platform (58) F399040 Non-Store Retailing (59) ZZ99999 Other business items that are not prohibited or

restricted by law, except those that are subject to special approval.

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.

Shareholders’ meetings shall be convened as follows: (1) Regular meeting – to be convened by the Board of Directors

within six months from closing of every fiscal year; and (2) Special meeting – shall be convened in accordance with

relevant laws and regulations.

Chapter IV Directors, Supervisors, Officers Directors, 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.

The Company shall have nine (9) to eleven (11) Directors, to be elected who are competent persons at Shareholders’ meeting. The tenure of office of Directors will be three (3) years and they will be eligible for re-election. Among the aforesaid number of members of the Board of Directors shall have three (3) Independent Directors. Election of Directors shall adopt candidate nomination system according to Article 192-1 of the Company Act. Regulations governing the professional qualifications, restrictions on

41

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”.

shareholdings and concurrent positions held, assessment of being independent, method of nomination, and other matters for compliance with respect to Independent Directors shall follow relevant regulations prescribed by the Competent Authority. The remuneration for Directors shall be determined by the Remuneration Committee and the Board of Directors. The total number of registered shares owned by all Directors shall be determined pursuant to the “Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies”, as amended May 20, 2008.

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.

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 Term Board of Directors is elected into the office in 2015. The Audit Committee shall make up of the entire number of the Independent Directors, be responsible for executing powers relegated to Supervisors by the Company Act, Securities and Exchange Act and other laws and regulations. The organizing members, exercise of powers and other matters to be abided by the Audit Committee shall follow related laws, regulations or rules or regulations of the Company. The organization regulations of the Audit Committee shall be stipulated by the Board of Director.

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).

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

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.

A meeting of the Board of Directors shall be convened 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.

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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.

Directors may attend the meeting in person or by proxy. A Director cannot represent more than one absentee 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, the appointment shall be registered with competent government authority. In case a meeting of the Board of Directors is held 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 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 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.

(Omitted)

Article 23-1 (Add) The Company shall take out liability insurance for Directors and officers with respect to their liabilities resulting from exercising their duties during their terms of occupancy.

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

At the end of each business year, the Board of Directors shall prepare the following reports, and forward them on to the Audit Committee 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

43

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.

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.

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. 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 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; 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.

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; 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;

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Eighteenth amendment on June 11, 2014. Eighteenth amendment on June 11, 2014; Nineteenth amendment on June 18, 2015.

45

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

Article Current Articles Amended Articles Article 4 Where the acquisition and disposal of assets by this company is

required by the Procedure and other laws to be approved by the Board, any director may raise his or her objection thereto. In case the aforesaid objection has been made in written form or recorded, the same shall be delivered to each supervisor. If this company has an independent director, the opinion of each independent director shall be fully taken into consideration. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors meeting.

Where the acquisition and disposal of assets by this Corporation is required by the Procedures and regulations of other laws to be approved by the Board of Directors, the Corporation shall deliver dissenting information to the Audit Committee if any Director dissents and recorded in the minutes or by a written statement thereto. In the event the Corporation, according to the regulations, submits the proposal of acquisition and/or disposal of assets to the Board of Directors for discussions, the opinion of each Independent Director shall be fully considered, and their disagreeing or reservation opinions and the reasons shall be recorded into the minutes. Any transaction involving major assets or derivatives the decision of which requires submission to the Board of Directors for discussion according to the Procedure or regulations of laws shall be concurred in by more than half of all audit committee members and be submitted to the Board of Directors for determination, In the absence of concurrence by over half of all audit committee members for the regulatory audit committee consent matter(s) as required by the Procedure, the matter(s) may be implemented by approval by over two-thirds of all Directors, and the minutes of the Board of Directors shall record the resolution(s) of the audit committee. The "all audit committee members" and “all Directors” shall be the de facto account of numbers of people then holding respective offices.

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

Handling Procedures for Related Party Transactions I. Besides ensuring that the necessary resolutions are adopted and

reasonableness of the transaction terms appraised, in any acquisition or disposal of assets transaction between the Corporation and a Related Party amount of which reaches over 10 percent of the Corporation's total assets, the Corporation shall also obtain an appraisal report from a professional

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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 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.

appraiser or an opinion by CPA according to the Procedures. In determining whether the trading counterparty is a related party, the material relationship as well as its legal formalism thereof shall be examined.

II. Evaluation and Operation Process Besides trading of government bonds, bonds under repurchase and resale agreements etc., or subscribing or redeeming of domestic money market funds, the Corporation may not, in acquiring from or disposing of real property to a related party, or acquiring from or disposing of assets other than real property to a related party and the transaction amount of which reaches 20 percent of the Corporation’s paid-in capital, 10 percent of the Corporation’s total assets, or over NT$300 million , the Corporation proceed to enter into a transaction contract or execute a payment until the following matters have been first approved by more than half of all members of the Audit Committee, and then submitted to the Board of Directors for resolution: (A) The purpose, necessity and anticipated benefit of the

acquisition or disposal of assets. (B) Reasons for selecting a related party as the trading

counterparty. (C) With respect to the acquisition of real property from a

related party, information regarding appraisal of the reasonableness of the prospective transaction terms in accordance with the first and fourth subparagraphs of the third paragraph in this Article.

(D) The date and price at which the related party originally acquired the real property, its original trading counterparty, and its respective related party relationship with the Corporation and the related party, etc.

(E) Monthly cash flow forecasts for the one year commencing from the execution of the agreement and evaluation of the necessity of dealing and the

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(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.

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 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

reasonableness of utilization of funds. (F) The appraisal report issued by a professional appraiser or

an opinion by a CPA obtained in compliance with the preceding paragraph.

(G) Restrictive covenants and other important agreements of this transaction.

In the event a proposal of acquisition or disposal of assets is submitted to the Board of Directors for discussions pursuant to the preceding paragraph, the opinion of each Independent Director shall be fully considered, and their disagreeing or reservation opinions and the reasons shall be recorded into the minutes.

III. Evaluation of reasonableness of transaction cost (A) In evaluating the reasonableness of the transaction cost for

acquiring real estate from related party, the Corporation shall apply the following methods: (a) In accordance with the transaction price of related party

plus necessary interest on funding and the costs to be legally borne by the buyer. The necessary cost of interest on funding is imputed as the weighted average interest rate for the loan borrowed during the year the Corporation acquiring the assets, provided, it shall not be higher than the highest rate of non-financial industry lending as stipulated by the Ministry of Finance.

(b) In accordance with the total value of the real estate assessed by financial institution, if the related party created mortgage to obtain loans from the financial institution, provided the 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 a related party of one of the trading counterparties to the transaction.

(B) In case of combined purchase of land and house of the same object, the cost of transaction of land or house may

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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. (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

separately be appraised by adopting any one of the aforesaid methods.

(C) The Corporation shall not only appraise the cost of real estate acquired from related parties by applying either methods described in the preceding two paragraphs, but also engage certified public accountants to review the same and render their specific opinions.

(D) When the Corporation acquires real property from a related party and one of the following circumstances exists, the acquisition shall be processed in accordance with the methods described in the first and second paragraphs of this Article, and the abovementioned three subparagraphs dealing with the evaluating of the reasonableness of transaction cost shall not apply: (a) The related party acquired the real estate through

inheritance or as a gift. (b) More than five (5) years have elapsed from the time the

related party signed the contract to obtain the real property to the signing date for the current transaction.

(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 Corporation's own land or on rented land.

(E) In case the results of evaluation in accordance with the first and second subparagraphs 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 related party shall meet the following conditions:

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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 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 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

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 reasonable construction profit shall mean the average gross profit margin of the construction department of the related party 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-related party 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-related party 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 Corporation will induce evidences to establish that the transaction of the real estate acquired by the related party is similar to the successful transaction concluded within one year in the neighboring region by other non-related party 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

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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. (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 Supervisory Commission (hereinafter called FSC).

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-related party 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 related party 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. (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 the 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 Corporation is a public Corporation, 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 Independent Directors shall handle the matter in accordance with Article 218 of the 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 Supervisory Commission (hereinafter called FSC).

(H) In case of other proofs indicating any unusual circumstances occurred to the acquisition of real estate

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(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.

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.

from the related party, 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 Corporation 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 Corporation 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.

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 Corporation only financial report or individual financial report prepared under the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Article 9-1 The calculation of the transaction amounts referred to in the preceding articles besides Article 8, paragraph 2 shall be done in accordance with Article 12, paragraph 1-5 herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items for which an appraisal report from a professional appraiser or a CPA's opinion has been obtained need not be counted toward the transaction amount.

The calculation of the transaction amounts referred to in the preceding articles besides Article 8, paragraph 2 shall be done in accordance with Article 12, paragraph 1-5 herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items for which an appraisal report from a professional appraiser or a CPA's opinion has been obtained need not be counted toward the transaction amount.

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The calculation of the transaction amounts referred to in the Article 8, paragraph 2 shall be done in accordance with Article 12, paragraph 1-5 herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items that have been approved by the board of directors and recognized by the supervisors need not be counted toward the transaction amount.

The calculation of the transaction amounts referred to in the Paragraph 2, Article 8, shall be done in accordance with Article 12, paragraph 1-5 herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items which have been first approved by the Audit Committee, and then by the Board of Directors need not be counted for toward the transaction amount.

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 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:

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

(b) Execution of the transaction and the evaluation of losses and gains:

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(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.

(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






(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

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net value of loss and gain at the end of the year. (E) Total amount of contract and 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 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.

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 (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 Corporation 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 of individual contract is less than 5% of that contract amount. The upper limit of losses of all the contracts is less than 5% of aggregate amount of all contracts.

(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

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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.

(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

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 & Regulatory Division shall provide necessary 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 meeting 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 the Corporation 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 Audit Committee.

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 involved in the transactions of derivative products at any

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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 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.

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 the Corporation

(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. And the same shall attend the board meeting and be entitled to express its opinions.

(D) The Corporation 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.

Article 16 The Procedures shall, after approved by the board meeting, be submitted to each supervisor and to shareholders meeting for approval. The same shall apply to the amendments hereto. In case of any objections raised by directors, which have been made in written form or recorded, the same shall be delivered to each supervisor.

The amendments of the Procedures shall, to be first approved by the Audit Committee, and then Board of Directors, and then submitted to Shareholders’ Meeting for approval. In case of any descent raised by any director, made in written form or been recorded, the same descanting information shall be delivered to the Audit

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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.

Committee. 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.

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Amendments to the “Directors and Supervisors Election Guidelines” of Far EasTone Telecommunications Co., Ltd.

Title Current Articles Amended Title

Directors and Supervisors Election Guidelines, Far Eastone Telecommunications Co., Ltd.

Directors Election Guidelines, Far Eastone Telecommunications Co., Ltd.

Articles Current Articles Amended Articles Article 1 These guidelines shall apply to the election of directors and

supervisors of the Corporation, unless the laws and Company’s articles of incorporation other relevant regulations shall apply thereto.

Unless otherwise stipulated by the laws, regulations or the articles of incorporation of the Corporation, these guidelines shall apply to the election of directors of the Corporation.

Article 2 The election of the Corporation’s directors/supervisors shall be on the basis of accumulation of votes. Ballot of the eligible voter shall be assigned with code of certificate of present voter. The ballots to be prepared by Board of directors shall indicate serial number of present voter and the number of votes he represented.

The election of the Corporation’s Directors adopts cumulative voting system. Eligible voter’s attendance serial number printed on the ballot shall replace voters’ name. The ballots shall be produced and prepared by the Board of Directors, indicating serial number of the attending voter and carrying the number of votes represented by the voter.

Article 3 For the seats of the Company’s Directors and Supervisors, the Company’s independent directors, non-independent directors and supervisors shall be elected in the same election, but the ballots shall be calculated separately and respectively. And the ones winning more ballots shall be elected to fill up the seats separately. In the event two or more candidates win the same ballots beyond the seat quota, the ones who win the same ballots shall determine the seat by drawing the lots. If anyone of them is absent, the president shall represent the absent voter to draw the lot. Directors and Supervisors shall be elected by candidate nomination system in accordance with Article 192-1 of Company Act and independent directors regarding the qualification, independent condition and other matters, “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies” and other related laws and regulations should be followed.

The election of the Independent and non-Independent Directors of the Corporation shall be held at the same time in accordance with the number of persons to be elected, with voting rights be separately calculated for the Independent and non-independent Director. Those receiving ballots representing the highest numbers of voting rights will be sequentially elected. When two or more candidates win same votes thus exceeding the seats, the ones with the same number of voting rights shall draw lots to determine. In the event of absent tied candidate or candidates, the presiding person of the election shall draw the lot representing the absent candidate(s). Election of Directors shall adopt the candidate’s nomination system in accordance with Article 192-1 of the Company Act and with respect to the qualification, independent condition and other matters of electing Independent Directors, “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies” and other related laws and regulations shall govern.

Article 8 Provide two ballot boxes each for the directors and supervisors, which shall be opened for ballot count.

Ballot box shall be produced and prepared by the Corporation, and be opened and examined by the canvassers in front of the participating voters prior to casting of votes.

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Article 13 Board of Directors shall issue notice of the elected directors and supervisors.

Board of Directors shall issue notice of being elected to the Directors-elected.

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Amendments to the “Procedure for Loaning Capital to Others” of Far EasTone Telecommunications Co., Ltd. Article Current Articles Amended Articles

Article 2. (Limitation of the total loans and individual targets) The total funds loaned to the Borrowers under Paragraph I shall not exceed 50% of the net worth as last reviewed or checked by CPA (Hereinafter referred to as the Latest Net Worth of the Corporation). The loan to an individual Transaction Counterpart shall not exceed the amount of business transaction between both parties. The term “amount of business transaction” as set forth herein denotes the amount of actual purchase, sale amounts in the year preceding execution of the loan contract, or the transaction amount anticipated for the year. The total loan to a Short-term Finances shall not exceed 15% of the Latest Net Worth of the Corporation. The loan to an individual Short-term Finance shall not exceed 10% of the Latest Net Worth of the Corporation. The accumulated balance of short-term loan of funds provided between overseas affiliate companies of which the Corporation holds, directly or indirectly, 100% of the voting shares, shall not exceed 40% of the net worth of the latest quarter of the Corporation. Where the Corporation’s financial reports are prepared according to the International Financial Reporting Standards, "net worth" in these Regulations means the balance sheet equity attributable to the owners of the parent Corporation under the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

(Limitation of the total loans and individual targets) The total funds loaned to the Borrowers under Paragraph I shall not exceed 50% of the net worth as last reviewed or checked by CPA (Hereinafter referred to as the Latest Net Worth of the Corporation). The aggregate amount of loans to Counterparties of business transactions shall not exceed 35% of the Latest Net Worth of the Corporation. The loan to an individual Transaction Counterpart shall not exceed the amount of business transaction between both parties. The term “amount of business transaction” as set forth herein denotes the amount of actual purchase, sale amounts in the year preceding execution of the loan contract, or the transaction amount anticipated for the year. The total loan to a Short-term Finances shall not exceed 15% of the Latest Net Worth of the Corporation. The loan to an individual Short-term Finance shall not exceed 10% of the Latest Net Worth of the Corporation. When a loan of funds for short-term financing is necessary between any two foreign companies in which the Corporation holds, directly or indirectly, 100% of the voting shares, the lender’s internal “Procedures for Loaning Capital to Others” shall apply to the aggregate amount of loans and individual short-term finance amount. Where the Corporation’s financial reports are prepared according to the International Financial Reporting Standards, "net worth" in these Regulations means the balance sheet equity attributable to the owners of the parent Corporation under the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Article 4 (Capital lending to others and handling procedures) Where Corporation grants a loan, the borrower shall first provide the financial papers as required and apply to Corporation’s Finance & Shared Services Division for financing limit. The Finance & Shared Services Division shall conduct prudent assessment to confirm that it lives up to the requirements set forth in the “Guiding Rules for Loan

(Capital lending to others and handling procedures) Where Corporation grants a loan, the borrower shall first provide the financial papers as required and apply to Corporation’s Finance & Shared Services Division for financing limit. The Finance & Shared Services Division shall conduct prudent assessment to confirm that it lives up to the requirements set forth in the “Guiding Rules for Loan

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& Endorsement by Public Offering Companies” (hereinafter referred to as the Guiding Rules), these Procedures and the following. The assessment results shall be submitted to the Board of Directors for a decision beforehand. The Board of Directors shall not authorize any others to make such decision. I. Necessity and rationality of the endorsement. II. Creditability and risk assessment of the borrower. III. Impact upon Corporation operation risk, financial standing and

shareholders’ equity. IV. Whether collateral is required and the value assessed for the

collateral. The inter-Corporation loans of funds between the Corporation and its subsidiaries or among its subsidiaries shall be resolved by the Board of Directors of the Corporation, as well as to authorize the Chairman to grant one borrower to drawdown by tranche within specific approved ceiling amount and one year. As for the aforementioned ceiling amount, except those regulated in accordance with the Item 4 of Article 2, the authorized loan amount to a single party by the Corporation or together with its subsidiaries, shall not exceed 10% of the latest net worth of the Corporation. After financing limit is determined, the borrower shall apply to the Finance & Administration Division with “Application for Appropriation”. The loan shall not be disbursed until approved by Corporation’s responsible person or the board of directors authorized representative. For the enforcement of the loan, the Finance & Administration Division shall report to the board of directors for information. The borrower shall, upon applying for disbursement of the fund, provide standby instrument of equivalent amount or other collateral or guarantor(s) satisfactory to Corporation as collateral of the loan. Where Corporation has set independent directors, and while the board of directors are discussing these procedures or granting loans to others, the opinions of the independent directors shall be taken into adequate account. Their opinions, pros and cons as well as the

& Endorsement by Public Offering Companies” (hereinafter referred to as the Guiding Rules), these Procedures and the following. The assessment results shall first be submitted to the Audit Committee, and Board of Directors for a decision beforehand. The Board of Directors shall not authorize any others to make such decision. I. Necessity and rationality of the endorsement. II. Creditability and risk assessment of the borrower. III. Impact upon Corporation operation risk, financial standing and


collateral. The inter-Corporation loans of funds between the Corporation and its subsidiaries or among its subsidiaries shall be resolved by the Board of Directors of the Corporation, as well as to authorize the Chairman to grant one borrower to drawdown by tranche within specific approved ceiling amount and one year. As for the aforementioned ceiling amount, except those regulated in accordance with the Item 4 of Article 2, the authorized loan amount to a single party by the Corporation or together with its subsidiaries, shall not exceed 10% of the latest net worth of the Corporation. After financing limit is determined, the borrower shall apply to the Finance & Administration Division with “Application for Appropriation”. The loan shall not be disbursed until approved by Corporation’s responsible person or the board of directors authorized representative. For the enforcement of the loan, the Finance & Administration Division shall report to the board of directors for information. The borrower shall, upon applying for disbursement of the fund, provide standby instrument of equivalent amount or other collateral or guarantor(s) satisfactory to Corporation as collateral of the loan. When the board of directors are discussing these procedures or granting loans to others, the opinions of the independent directors shall be taken into adequate account. Their opinions, pros and cons as well as the reasons of cons shall be entered into the minutes of the

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reasons of cons shall be entered into the minutes of the board of directors meeting. If, as a result of a change in circumstances, an entity for which an endorsement/guarantee is made does not meet the requirements of these Regulations or the loan balance exceeds the limit, the Corporation shall adopt rectification plans and submit the rectification plans to all the supervisors, and shall complete the rectification according to the timeframe set out in the plan.

board of directors meeting. If, as a result of a change in circumstances, an entity for which an endorsement/guarantee is made does not meet the requirements of these Regulations or the loan balance exceeds the limit, the Corporation shall adopt rectification plans and submit the rectification plans to all the Audit Committee, and shall complete the rectification according to the timeframe set out in the plan. Resolutions at meetings of the Audit Committee shall be adopted with the approval of one half or more of the entire membership. If not, the meeting agenda shall be adopted with the consent of two thirds or more of the entire board of directors. And the board of directors meeting minutes shall record the Audit Committee’s resolutions. The term "all committee members" and all board directors” shall be calculated as the number of directors then in office. In the absence of concurrence by over half of all Audit Committee members for the regulatory Audit Committee consent matter(s) as required by the Procedure, the matter(s) may be implemented by approval by over two-thirds of all Directors, and the minutes of the Board of Directors shall record the resolution(s) of the Audit Committee. The term "all audit committee members" and “all board Directors” shall be calculated as the de facto account of numbers of directors then holding offices.

Article 5

（Period of loan and interest calculation） The Funds loaned by the Corporation shall not exceed one year or the operating cycle of Short-term Finances if the Corporation’s operating cycle exceeds one year. The period of loan depend on borrower’s demand of the capital, and term of each such loan shall not exceed 3 years of inter-Corporation loans of funds between foreign companies in which the public Corporation holds, directly or indirectly, 100% of the voting shares. Interest on loans extended by the Corporation shall be calculated at the floating interest rate, and shall be adjusted from time to time in accordance with the Corporation’s cost of capital. Any adjustment of

（Period of loan and interest calculation） The Funds loaned by the Corporation shall not exceed one year or the operating cycle of Short-term Finances if the Corporation’s operating cycle exceeds one year. The period of loan depend on borrower’s demand of the capital, and term of each such loan shall not exceed 3 years of inter-Corporation loans of funds between foreign companies in which the public Corporation holds, directly or indirectly, 100% of the voting shares. Interest on loans extended by the Corporation shall be calculated at the negotiated interest rate, and shall be adjusted from time to time in accordance with the Corporation’s cost of capital. Any adjustment

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interest shall first be proposed by the F&SS to the president of the Corporation for his approval and then, upon such approval, be implemented by the Treasury. Interest shall be settled on a monthly basis.

of interest shall first be proposed by the F&SS to the president of the Corporation for his approval and then, upon such approval, be implemented by the Treasury. Interest shall be settled on a negotiated periodical basis.

Article 6 （Subsequent control measures and procedures to deal with the overdue credits） For loans granted, the Corporation shall establish a record book to bear all details of the borrowers, amounts, dates while the board of directors resolves the decisions, dates while the loans are granted and prudent assessment conducted pursuant to Article IV, Paragraph I. The Corporation’s Internal Audit Department shall audit these Procedures and the enforcement on a quarterly basis minimum and shall work out records in writing and further keep the supervisors informed in writing immediately upon a critical offense noticed. The borrowers and guarantors’ financial, business and credit standing shall be closely watched after the loan is granted. In case of collateral provided, the collateral shall be closely watched regarding a change in its value. In case of a significant change, report shall be made to the general manager forthwith with due actions taken as instructed. The borrower shall repay the principal and interest forthwith when due unless the borrower applied for and obtained the Board’s prior approval for renewal. In case of violation, the Corporation may dispose the provided collateral or claim on the guarantor(s) for repayment without a notice.

（Subsequent control measures and procedures to deal with the overdue credits） For loans granted, the Corporation shall establish a record book to bear all details of the borrowers, amounts, dates of Audit Committee’s approval, dates of board of directors’ approval, dates the loans being granted and content being prudently assessed pursuant to Paragraph 1 of the Article 4. The Corporation’s Internal Audit Department shall audit these Procedures and the enforcement on a quarterly basis minimum and shall work out records in writing and further keep the Audit Committee informed in writing immediately upon a critical offense noticed. The borrowers and guarantors’ financial, business and credit standing shall be closely watched after the loan is granted. In case of collateral provided, the collateral shall be closely watched regarding a change in its value. In case of a significant change, report shall be made to the general manager forthwith with due actions taken as instructed. The borrower shall repay the principal and interest forthwith when due unless the borrower applied for and obtained the Board’s prior approval for renewal. In case of violation, the Corporation may dispose the provided collateral or claim on the guarantor(s) for repayment without a notice.

Article 9 (Procedures to control subsidiary(ies) regarding loans granted to others) A subsidiary of the Corporation shall, if desirous to grant loans to others, duly enact the capital lending to others Procedures in accordance with the Guiding Rules and propose to Finance & Shared Services Division of the Corporation. Finance & Shared Services Division shall propose the list of the subsidiary for the Board of

(Procedures to control subsidiary(ies) regarding loans granted to others) A subsidiary of the Corporation shall, if desirous to grant loans to others, duly enact the capital lending to others Procedures in accordance with the Guiding Rules and propose to Finance & Shared Services Division of the Corporation. Finance & Shared Services Division shall propose the list of the subsidiary for the Board of

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Directors’ ratification. The Corporation’s subsidiary(ies) shall conduct according to their own procedures. The Corporation’s subsidiary(ies) as public offering companies in the Republic of China shall conduct declaration through public announcements individually. The Corporation’s subsidiary(ies) shall submit detailed statements of loans granted in the preceding month to the Corporation for assembling not later than the 5th day of every month. Each subsidiary of the Corporation shall review whether its applying procedures for capital lending to others are in compliance with the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies”. The Corporation’s auditor shall reexamine the check reports for such matters made by each subsidiary of the Corporation.

Directors’ ratification. The Corporation’s subsidiary(ies) shall conduct according to their own procedures. If a Corporation’s subsidiary(ies) is characterized as a public offering companies in the Republic of China, it shall conduct declaration through public announcements individually. The Corporation’s subsidiary(ies) shall submit detailed statements of loans granted in the preceding month to the Corporation for assembling not later than the 5th day of every month. Each subsidiary of the Corporation shall examine and check whether its applying procedures for capital lending to others are in compliance with the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies”. The Corporation’s auditor shall examine and check for such matters made by each subsidiary of the Corporation.

Article 10 (Validity and update) These Procedures shall, after being resolved in the board of directors, be submitted to the supervisors and to the shareholders’ meeting for consent. In case of objection by a director as supported by the minutes or written declaration, CORPORATION shall submit the objection to the supervisors and shareholders’ meeting for discussion. The same shall be required in case of amendment.

(Validity and update) The amendments of the Procedures shall, after being resolved by Audit Committee, and in the board of directors, be submitted to the shareholders’ meeting for consent. In case of objection by a director as supported by the minutes or written declaration, Corporation shall submit the objection to the Audit Committee and shareholders’ meeting for discussion.

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Amendments to the “Procedure for Making Endorsements and Guarantees” of Far EasTone Telecommunications Co., Ltd.

Article Current Articles Amended Articles Article 3 The total amount of endorsements and/or guarantees made by the

Corporation shall not exceed 100% of the Latest Net Worth of the Company. The total amount of endorsements and/or guarantees provided for any single enterprise shall not exceed 50% of the Latest Net Worth of the Company. The total amount of endorsements and/or guarantees made by the Corporation and its subsidiaries shall not exceed 100% of the Latest Net Worth of the Company. The total amount of endorsements and/or guarantees provided for any single enterprise shall not exceed 50% of the Latest Net Worth of the Company. The Company shall explain its necessity and rationality in the Shareholders’ Meeting, if the ceiling of the total amount of endorsements and/or guarantees made by the Corporation and its subsidiaries have exceeded 50% of the Latest Net Worth of the Company. Where the Company’s financial reports are prepared according to the International Financial Reporting Standards, "net worth" in these Regulations means the balance sheet equity attributable to the owners of the parent company under the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

The total amount of endorsements and/or guarantees made by the Corporation shall not exceed 100% of the Latest Net Worth of the Corporation. The total amount of endorsements and/or guarantees provided for any single enterprise shall not exceed 50% of the Latest Net Worth of the Corporation. The total amount of endorsements and/or guarantees made by the Corporation and its subsidiaries shall not exceed 100% of the Latest Net Worth of the Corporation. The total amount of endorsements and/or guarantees provided for any single enterprise shall not exceed 70% of the Latest Net Worth of the Corporation. The Corporation shall explain its necessity and rationality in the Shareholders’ Meeting, if the ceiling of the total amount of endorsements and/or guarantees made by the Corporation and its subsidiaries has exceeded 50% of the Latest Net Worth of the Corporation. Where the Corporation’s financial reports are prepared according to the International Financial Reporting Standards, "net worth" in these Regulations means the balance sheet equity attributable to the owners of the parent Corporation under the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Article 4 Before FET renders endorsement or provide guarantee to another party, the Finance Administration Division shall conduct prudent assessment to confirm that it lives up to the requirements set forth in the “Guiding Rules for Loan & Endorsement by Public Offering Companies” (hereinafter referred to as the Guiding Rules), these Procedures and the following. The assessment results shall be submitted to the board of directors for a decision beforehand. To meet time efficiency, nevertheless, the board of directors may authorize the chairman to act within the authority set forth in Article III before reporting to the board of directors for approval retrospectively.

Before FET renders endorsement or provide guarantee to another party, the Finance & Shared Services Division shall conduct prudent assessment to confirm that it lives up to the requirements set forth in the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies” (hereinafter referred to as the Guiding Rules), these Procedures and the following. The assessment results shall first be submitted to the Audit Committee for approval, and then to the Board of Directors for a resolution. To meet time efficiency, nevertheless, the board of directors may authorize the chairman to act within the authority set forth in Article III before reporting to the board of directors for

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I. Necessity and rationality of the endorsement. II. Creditability and risk assessment of the endorsement targets. III. Impact upon FET operation risk, financial standing and


collateral. The subsidiaries of the Company of voting shares are held 90% directly or indirectly by the Company, based on Item 2 of Article 2 of the procedure, shall provide endorsements and/or guarantees to another party only after resolved by the board of directors of the Company, except the endorsements and/or guarantees are made between the subsidiaries of the Company of voting shares are held 100% directly or indirectly by the Company. Where FET renders endorsement in line of business needs, the endorsement amount shall be assessed to stay commensurate with the amount of business transaction. The term “amount of business transaction” as set forth herein denotes the amount of actual purchases, sales or trading with the endorsement target concluded in the preceding year. Where it is necessary that the endorsement exceeds the maximum limit set forth in the preceding article and it lives up to the prerequisites set forth in these Procedures, a decision shall be resolved by the board of directors and a majority of the directors shall jointly guarantee for the risk which may be incurred by the excess and these Procedures shall be amended and be acknowledged by the shareholders’ meeting retrospectively. Where Corporation has set independent directors, and while the board of directors are discussing these procedures or endorsement to others, the opinions of the independent directors shall be taken into adequate account. Their opinions, pros and cons as well as the reasons of cons shall be entered into the minutes of the board of directors meeting. In the event that the target of Making Endorsements and Guarantees does not comply with the Regulations or procedure or amount of the

approval retrospectively. I. Necessity and rationality of the endorsement. II. Creditability and risk assessment of the endorsement targets. III. Impact upon FET operation risk, financial standing and


collateral. According to the Paragraph 2 of the Article 2 of the Procedure, for providing endorsements/guarantees to another party by a subsidiary of the Corporation of which the 90% of the voting shares are held directly or indirectly by the Corporation, it requires first approved by Audit Committee first, and then resolution by the board of directors of the Corporation. However restriction does not apply to the endorsements and/or guarantees being provided between the subsidiaries of the Corporation of which voting shares are held 100% directly or indirectly by the Corporation. Where the Corporation renders endorsement in line of business needs, the endorsement amount shall be assessed to stay commensurate with the amount of business transaction. The term “amount of business transaction” as set forth herein denotes the amount of actual purchases, sales or trading with the endorsement target concluded in the preceding year. Where it is necessary that the endorsement exceeds the maximum limit set forth in the preceding article and it lives up to the prerequisites set forth in these Procedures, a decision shall be resolved by the board of directors and a majority of the directors shall jointly guarantee for the risk which may be incurred by the excess and these Procedures shall be amended and be acknowledged by the shareholders’ meeting retrospectively. When the board of directors is discussing these procedures or endorsement to others, the opinions of the independent directors shall be taken into adequate account. Their opinions, pros and cons as well as the reasons of cons shall be entered into the minutes of the board of directors meeting.

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loan so granted exceeds the limit, a plan of corrective action shall be established and submitted to the supervisors and shall also finish improvement by the schedule planned. The Company and its subsidiaries shall pay attention to the finance, business and related credit of the endorsed or guaranteed subsidiary of which net worth is lower than half of its paid-in-capital. If aforementioned company has provided collaterals, the Company and its subsidiaries shall pay attention to the changes in the value of its collateral. The Company and its subsidiaries shall terminate the endorsements and/or guarantees or take the appropriate action when the collaterals have material adverse changes. In the case of a subsidiary with shares having no par value or a par value other than NT$10, for the paid-in capital in the calculation under the preceding paragraph, the sum of the share capital plus paid-in capital in excess of par shall be substituted.

In the event that the target of Making Endorsements and Guarantees does not comply with the Regulations or procedure or amount of the loan so granted exceeds the limit, a plan of corrective action shall be established and submitted to the Audit Committee and shall also finish improvement by the schedule planned. The Corporation and its subsidiaries shall pay attention to the finance, business and related credit of the endorsed or guaranteed subsidiary of which net worth is lower than half of its paid-in-capital. If aforementioned Corporation has provided collaterals, the Corporation and its subsidiaries shall pay attention to the changes in the value of its collateral. The Corporation and its subsidiaries shall terminate the endorsements and/or guarantees or take the appropriate action when the collaterals have material adverse changes. In the case of a subsidiary with shares having no par value or a par value other than NT$10, for the paid-in capital in the calculation under the preceding paragraph, the sum of the share capital plus paid-in capital in excess of par shall be substituted. In the absence of concurrence by over half of all audit committee members for the regulatory audit committee consent matter(s) as required by the Procedure, the matter(s) may be implemented by approval by over two-thirds of all Directors, and the minutes of the Board of Directors shall record the resolution(s) of the audit committee. The term "all audit committee members" and “all board Directors” shall be calculated as the de facto account of numbers of directors then holding offices.

Article 7 The FET endorsement shall be established on grounds of the “endorsement application” filled out by the endorsement Company. A record book shall be established to enter all details of the endorsement targets, amounts, the dates when the board of directors resolves or the chairman enforces, dates of endorsement, prudent assessments under Article IV, Paragraph I, all details of the endorsement matters, name(s) of the endorsement business concern(s), results of risk assessment, amounts of endorsement, contents of collateral obtained and terms and conditions as well as

The Corporation’s endorsement shall be established on grounds of the “endorsement application” filled out by the endorsement Corporation. A record book shall be established to enter all details of the endorsement targets, amounts, dates while the Audit Committee resolves the decisions, the dates when the board of directors resolves or the chairman enforces, dates of endorsement, prudent assessments under Article IV, Paragraph I, all details of the endorsement matters, name(s) of the endorsement business concern(s), results of risk assessment, amounts of endorsement,

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dates to release endorsement. The Company’s Internal Audit Department shall audit these Procedures and the enforcement on a quarterly basis minimum and shall work out records in writing and further keep the supervisors informed in writing immediately upon a critical offense noticed.

contents of collateral obtained and terms and conditions as well as dates to release endorsement. The Corporation’s Internal Audit Department shall audit these Procedures and the enforcement on a quarterly basis minimum and shall work out records in writing and further keep the Audit Committee informed in writing immediately upon a critical offense noticed.

Article 9 A subsidiary of the Company shall, if desirous to endorse or provide guarantee to another, duly enact the Endorsement Procedures in accordance with the Guiding Rules and propose to Finance & Shared Services Division of the Company. Finance & Shared Services Division shall propose the list of the subsidiary for the Board of Directors’ ratification. The Company’s subsidiary(ies) shall conduct according to their own procedures. The Company’s subsidiary(ies) as public offering companies in the Republic of China shall conduct declaration through public announcements individually. The Company ’s subsidiary(ies) shall submit detailed statements of endorsement and guarantees of the preceding month to the Company for assembling not later than the 5th day of every month. Each subsidiary of the Company shall review whether its respective applying procedures for making endorsements and guarantees are in compliance with the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies.” The Company’s auditor shall reexamine the check report for such matters made by each subsidiary of the Company.

A subsidiary of the Corporation shall, if desirous to endorse or provide guarantee to another, duly enact the Endorsement Procedures in accordance with the Guiding Rules and propose to Finance & Shared Services Division of the Corporation. Finance & Shared Services Division shall propose the list of the subsidiary for the Board of Directors’ ratification. The Corporation’s subsidiary(ies) shall conduct according to their own procedures. The Corporation’s subsidiary(ies) as public offering companies in the Republic of China shall conduct declaration through public announcements individually. The Corporation’s subsidiary(ies) shall submit detailed statements of endorsement and guarantees of the preceding month to the Corporation for assembling not later than the 5th day of every month. Each subsidiary of the Corporation shall examine and check whether its respective applying procedures for making endorsements and guarantees are in compliance with the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies.” The Corporation’s auditor shall examine and check report for such matters made by each subsidiary of the Corporation.

Article 11 These Procedures shall, after being resolved in the board of directors, be submitted to the supervisors and to the shareholders’ meeting for consent. In case of objection by a director as supported by the minutes or written declaration, FET shall submit the objection to the supervisors and shareholders’ meeting for discussion. The same shall be required in case of amendment.

Amendments of the Procedures shall, after being approved by Audit Committee, and the Board of Directors, be submitted to the Shareholders’ Meeting for consent. In case of descent by a Director as recorded by the minutes or written declaration, Corporation shall submit the descent to the Audit Committee and Shareholders’ Meeting for discussion.

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Status of Directors & Supervisors’ shareholding on April 20, 2015 The list of the Sixth Term Board of Directors of Far EasTone Telecommunications Co., Ltd.

Please compare shareholding on this page and page 18.

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 Keisuke Yoshizawa, 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 2014 retained earnings distribution has been pre-approved by the 12th meeting of the sixth-term Board of Directors on February 13, 2015 for submitting to the 2015 Annual Shareholders Meeting for approval. The information regarding bonuses to employees, Directors and supervisors are as underneath: - It is proposed to distribute NT$205,340,068 for employee bonus and NT$102,670,034 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$3.167 per share, and from the capital surplus-Additional Paid-in Capital-Share Issuance in Excess of Par Value at NT$0.583 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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The Articles of Incorporation of Far EasTone Telecommunication Co., Ltd. Approved by Annual Shareholder’s Meeting on 2014/6/11

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 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 Equipment 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 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 Equipment and Materials Import; (26) CC01060 Wired Communication Equipment and Apparatus Manufacturing; (27) CC01080 Electronic Parts and Components Manufacturing;

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(28) CC01110 Computers and Computing Peripheral Equipment 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; (35) E603050 Cybernation Equipment Construction; (36) E603080 Traffic Signals Construction; (37) E603090 Illumination Equipment Construction; (38) E605010 Computing Equipment Installation Construction; (39) E701010 Telecommunications Construction; (40) E701020 Channel KU and C of Satellite TV Equipment 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; (54) F108031 Wholesale of Drugs, Medical Goods; (55) F208031 Retail sale of Medical Equipment; (56) ZZ99999 Other business items that are not prohibited or restricted by law, except those that are subject to special approval.

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

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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.

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

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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”.

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.

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).

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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 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;

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(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 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.

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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; 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. Eighteenth amendment on June 11, 2014.

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Far EasTone Telecommunications Co., Ltd. Handling Procedure for Acquisition and Disposal of Assets

Approved by Annual Shareholder’s Meeting on 2014/6/11 Chapter I. General Principle

Article 1 The acquisition and disposal of any assets of this corporation shall follow the Handling Procedure on Acquisition and Disposal of Assets (hereinafter called as the “Procedure") unless the rules on the management of assets of this corporation and other relevant regulations shall apply thereto.

Article 2 The scope of assets referred to in the Procedures includes: 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

Article 3 The designated terms used in this Procedure carry the following 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 agreement, after sale service agreement, long-term lease agreement and long-term purchase or sales agreement.

I. 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 Paragraph 8 of Article 156 of the Company Act.

II. Related party or subsidiary company: shall have the definition designated in the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

III. Professional appraiser: shall mean valuator of real estate or other persons engaged in appraising real estate, equipment in accordance with other laws.

IV. 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 former shall be adopted.

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V. Investments in the Mainland: shall mean the investments prescribed in the Rules on the Approval of Investment or Technical Cooperation In the Mainland enacted by the Investment Commission, Ministry of Economic Affairs.

Article 4 Where the acquisition and disposal of assets by this company is required by the Procedure and other laws to be approved by the Board, any director may raise his or her objection thereto. In case the aforesaid objection has been made in written form or recorded, the same shall be delivered to each supervisor. If this company has an independent director, the opinion of each independent director shall be fully taken into consideration. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors meeting.

Article 5 The total amount of securities investment of this corporation shall not exceed 150% of shareholders’ equity as stated in the latest financial statement of this corporation 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 corporation and its subsidiaries shall not exceed 150% of shareholders’ equity as stated in the latest financial statement of this corporation. The calculation of the said rate shall be referred to the provisions of the Operating Rules of the Taiwan Stock Exchange Corporation and other relevant laws and decrees. The latest financial statement mentioned herein shall mean the financial statement made public and reviewed and signed by certified public accountants prior to the acquisition and disposal thereof.

Chapter II. Handling Procedures Article 6 Handling Procedures for Acquisition and Disposal of Securities

I. Evaluation Process (A) Where this corporation 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 corporation 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 corporation 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 corporation acquiring or disposing of securities shall, prior to the date of occurrence of the event, obtain financial statements of

the issuing corporation for the most recent period, certified or reviewed by a certified public accountant, for reference in appraising the transaction price, and if the dollar amount of the transaction is 20% of the corporation's paid-in capital or NT$300 million or more, the corporation 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 corporation through the auction procedures held by a court, the certificates issued by the

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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 corporation 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 Corporation 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 of Directors 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 Equipment I. Evaluation Process

(A) The investment of this corporation 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.

(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 corporation, 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 corporation 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 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

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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 corporation 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 Chairman sub-delegates the authorization, the sub-delegation shall apply thereto); However, all the aforesaid transactions shall be confirmed by the Board of Directors 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. 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, except in trading of government bonds 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

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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. 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 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. (b) The time gap between the times of acquisition of real estate by the associated person between the dates of conclusion of the

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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:

iv. 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 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.

v. 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.

vi. 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 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. (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

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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 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.

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, 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 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 corporation 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 corporation has the following circumstances, or

the amount thereof has reached 20% of the paid-in capital of the corporation 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

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by the Finance & Shared Services Division for review and approval prior to the conduction thereof. Article 9-1 The calculation of the transaction amounts referred to in the preceding articles besides Article 8, paragraph 2 shall be done in accordance with

Article 12, paragraph 1-5 herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items for which an appraisal report from a professional appraiser or a CPA's opinion has been obtained need not be counted toward the transaction amount. The calculation of the transaction amounts referred to in the Article 8, paragraph 2 shall be done in accordance with Article 12, paragraph 1-5 herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items that have been approved by the board of directors and recognized by the supervisors need not be counted toward the transaction amount.

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 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:






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(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 (c) 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.

(d) 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 (c) 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 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.

(d) 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.

III. 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. (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 meeting 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

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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.

V. 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 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.

Article 11 Handling Procedures for Merger, Division, Acquisition or Stock transfer I. Evaluation and Operation Process

(A) The accounts, attorneys or underwriters shall be invited, before the decision of the board meeting by Finance & Shared Services Division give their opinions on reasonableness of swap rate, price of purchase or cash distributed to the shareholders or other properties prior to the merger, division, acquisition or stock transfer by this corporation. The said opinions shall be submitted to the board meeting for discussion and approval.

(B) The public companies engaged in merger, division or acquisition shall, prior to the shareholders meeting, make written document of important and related matters thereof and deliver the same together with opinions of the aforesaid professionals and the notices of meeting to shareholders for the latter’s reference in determining whether approval will be given thereof except where the law stipulates that no decision of shareholders meeting is needed therein.

(C) In case of the failure of any corporation participating in merger, division or acquisition to hold the shareholders meeting due to the inadequacy in attendance, number of votes or other restrictions imposed by laws or that the proposal thereof has been declined thereby, the corporation concerned shall announce the reasons thereof in public and follow-up measures and estimated date for shareholders meeting.

II. Matters needing attention (A) Dates of Board of Directors and Shareholders Meeting: Unless otherwise required by laws or due to special conditions which render

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necessary prior approval of FSC, the corporation participating in merger, division or acquisition shall hold the board meeting and shareholders meeting on the same day to determine matters relating thereto. Unless otherwise required by laws or due to special conditions, which render necessary prior approval of FSC, the corporation participating in transfer of stock shall hold the board meeting on the same day. When participating in a merger, de-merger, acquisition, or transfer of another corporation's shares, the Corporation shall prepare a full written record of the following information and retain it for five years for reference: (a)Basic identification data for personnel: Including the occupational titles, names, and national ID numbers (or passport numbers in the

case of foreign nationals) of all persons involved in the planning or implementation of any merger, de-merger, acquisition, or transfer of another corporation's shares prior to disclosure of the information.

(b)Dates of material events: Including the signing of any letter of intent or memorandum of understanding, the hiring of a financial or legal advisor, the execution of a contract, and the convening of a board of directors meeting.

(c)Important documents and minutes: Including merger, de-merger, acquisition, and share transfer plans, any letter of intent or memorandum of understanding, material contracts, and minutes of board of directors meetings.

When participating in a merger, de-merger, acquisition, or transfer of another corporation's shares, the Corporation shall, within two days commencing immediately from the date of passage of a resolution by the board of directors, report (in the prescribed format and via the Internet-based information system) “Basic identification data for personnel” and “Dates of material events” to the FSC for recordation. Where any of the companies participating in a merger, de-merger, acquisition, or transfer of another corporation's shares is neither listed on an exchange nor has its shares traded on an OTC market, the Corporation shall sign an agreement with such corporation and comply with regulations prescribed.

(B) Prior commitment of confidentiality: All the persons participating in or informed of the programs of merger, division, acquisition or transfer of stock shall make commitment of confidentiality in writing and shall not disclose it to the outside or buy or sell in his or her own name or have others buy or sell on his or her behalf stocks or securities in the nature of stock equity of all the corporation relating thereto.

(C) Conclusion of swap proportion or the price of purchase: In case of merger, division, acquisition or transfer of stock by this corporation, he swap proportion or purchase price shall not be modified and the conditions for modifications thereof shall be specified in the contract thereof unless the following provisions apply thereto. (a) Handling capital increase in cash, issuing convertible corporate debentures, gratuitous rationed shares, corporate debentures with

share warrant, preferred stock with share warrant, share warrant and other marketable securities in the nature of stock equity. (b) Behaviors affecting the financial status of the corporation such as disposal of major assets, etc. (c) Circumstances affecting the rights and interests of the shareholders or price of securities such as major calamities, significant

innovation in technology, etc. (d) Adjustment of buyback of treasury stock in accordance with laws by any one party participating in merger, division, acquisition or

stock transfer. (e) Alteration, addition or reduction of the subjects participating in merger, division, acquisition or stock transfer or of the number

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thereof. (f) The conditions for modification have been specified in the contract and disclosed to the outside.

(D) Necessary items in the contract: The contract for merger, division, acquisition or stock transfer shall be in compliance with Article 317.1 of Corporation Act and Article 22 of Law on Merger And Acquisition of Enterprises with the following matters specified therein: (a) Settlement of breach. (b) Principles on the handling of treasury stock bought back or the marketable securities in the nature of stock equity issued by the

corporation merged or divided. (c) The number and handling of treasury stock bought back in accordance with laws by any participating corporation after calculation of

the benchmark of swap proportion. (d) Methods for handling alteration, addition or reduction of the participating subjects or the number thereof. (e) Schedule of the program and estimated date of completion. (f) Relating handling procedures on scheduled date of shareholders meeting in case of delay in the completion of the program.

(E) Any corporation participated in merger, division, acquisition or transfer of stock may be exempted from decision of shareholders meeting in case the same intends to be involved in merger, division, acquisition or transfer of stock with another corporation after the disclosure of information of the former actions unless the participants have been decreased and the board meeting has been authorized by shareholders meeting to make appropriate changes whereas the procedures or legal acts completed in the formal actions should be redone by all the participants.

(F) This corporation shall form an agreement with the corporation participated in merger, division, acquisition or stock transfer who is not a public corporation in accordance with the first, second, fifth subparagraph of this paragraph hereof. Handling Procedures for Merger, Division, Acquisition or Stock transfer

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% or more of paid-in capital, 10% percent or more of the corporation's total assets, or NTD300 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 corporation or NTD 0.3 billion. The following circumstances shall be excluded therein. (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.

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(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 corporation'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 corporation expects to invest in the transaction is less than NTD500 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

(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 corporation shall handle public announcement and declaration of relating information in the website designated by the FSC. (B) This corporation 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 corporation 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) This corporation 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 Corporation shall comply with are referred to the appendixes of “Regulations Governing the Acquisition or Disposition of Assets by Public Companies”.

Article 13 Deposit and preservation of material relating to acquisition or disposal of assets The contracts, memorandum, reference books, evaluation reports, opinions rendered by accountants, attorneys or underwriters relating to the acquisition or disposal of assets by this corporation shall be deposited with this corporation and preserved for at least five (5) years unless otherwise required by other laws.

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Article 14 The following provisions apply to the subsidiary of this company: I. The subsidiaries shall, in accordance with Guidelines for Handling Acquisition and Disposal of Assets of Public Companies, establish and

execute the Procedures of Acquisition or disposal of Assets, which shall be approved by the board meeting and shareholders meeting and subsequently reviewed by and deposited with the board meeting of this company. The same procedures shall apply to the amendments thereto.

II. The limit of amount for individual purchase of real estate for non-business use or securities or investment in each individual security by the subsidiaries, shall be determined in the board meeting.

III. In case of acquisition or disposal of assets by the subsidiary, which is not domestic public company, reach the standard stipulated in Guidelines for Handling Acquisition and Disposal of Assets of Public Companies, the same shall be handled by this company for public announcement or declaration.

IV. “Reach 20% of paid-in capital” or 10% of the company's total assets as mentioned in the public announcement or declaration shall be based on the paid in capital or total assets of this company.

V. Each subsidiary of the Company shall review whether its applying procedure related to the acquisition or disposition of assets is in compliance with the “Regulations Governing the Acquisition or Disposition of Assets by Public Companies”. The Company’s auditor shall reexamine the check report made by each subsidiary of the Company.

Article 15 Penalties In case of any major damages or serious acts on the part of the employees in this corporation who have violated relevant regulations on acquisition and disposal of assets, the employees concerned shall be punished by this corporation in accordance with relevant regulations on human affairs or the rules on reward and punishment of employees.

Article 16 The Procedures shall, after approved by the board meeting, be submitted to each supervisor and to shareholders meeting for approval. The same shall apply to the amendments hereto. In case of any objections raised by directors, which have been made in written form or recorded, the same shall be delivered to each supervisor. 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.

Article 17 Others Any matters unspecified herein shall be handled in accordance with relevant laws, decrees and other regulations of this corporation.

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Appendix 1 Necessary items in the evaluation report I Necessary items specified in the technical rules on the evaluation of real estate II Relating matters to professional appraising institution and appraiser (A) Name, capital amount, organizational structure and personnel structure of the professional appraising institution (B) Name, age, educational background (with certificates) of the appraisers and their working years and period in evaluation, number of cases of evaluation

handled. (C) Relationship between professional appraising institution and appraiser and the principal (D) Declaration of “no falsehood and concealment in items specified in the evaluation report” (E) Date of render of the evaluation report III Profiles of the object evaluated, at least including name, nature, location and area of the object IV Instances of the comparison between the dealings of real estate in the region where the object is located. V Conditions for limited or specific prices, whether the aforesaid conditions are met, reasons for or of difference from normal price, whether the prices may

be adopted as a references (if the evaluation adopts limited or specific prices) VI Reasonable proportions for a joint construction agreement VII Evaluation of Land Appreciation Tax VIII In case of variance of over 20% between the evaluations of different evaluator at the same date, whether the same has been dealt with according to Article

41 of Decree on Real Estate Evaluator. IX The thereto including details of evaluation, registration material, cadastral plan, sketch map of urban planning, location map of the object, zoning

certificate, photos of the objects at status quo.

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Far EasTone Telecommunications Co., Ltd. Directors and Supervisors Election Guidelines

Approved by Annual Shareholder’s Meeting on 2013/6/13. Article 1 These guidelines shall apply to the election of directors and supervisors of the Corporation, unless the laws and Company’s articles of

incorporation other relevant regulations shall apply thereto. Article 2 The election of the Corporation’s directors/supervisors shall be on the basis of accumulation of votes. Ballot of the eligible voter shall be assigned

with code of certificate of present voter. The ballots to be prepared by Board of directors shall indicate serial number of present voter and the number of votes he represented.

Article 3 For the seats of the Company’s Directors and Supervisors, the Company’s independent directors, non-independent directors and supervisors shall be elected in the same election, but the ballots shall be calculated separately and respectively. And the ones winning more ballots shall be elected to fill up the seats separately. In the event two or more candidates win the same ballots beyond the seat quota, the ones who win the same ballots shall determine the seat by drawing the lots. If anyone of them is absent, the president shall represent the absent voter to draw the lot. Directors and Supervisors shall be elected by candidate nomination system in accordance with Article 192-1 of Company Act and independent directors regarding the qualification, independent condition and other matters, “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies” and other related laws and regulations should be followed.

Article 4 In the beginning of the election, the chairman shall designate two canvassers and two tally clerks to carry out relevant missions. The canvasser ought to be shareholders of the Corporation.

Article 5 The canvassers shall perform the following missions: (1) Prior to casting of votes, open the ballot box to the participating voters and have a strip of sealing paper attached the cover of box. (2) Maintain good order for vote casting and prevent any negligence or irregularities in voting. (3) Upon completion of voting, remove the strip of sealing paper from box cover, take out the ballots and count the number of ballots. (4) Check to see if there are any invalid votes and have the valid votes hand over to the tally clerks. (5) Conduct supervision over the votes recorded by tally clerks and votes won by the eligible directors.

Article 6 Where a candidate is a natural person and is a shareholder, the voters shall expressly enter the candidate’s account name and shareholder account number on the ballots; if he is not a shareholder, the voter shall expressly enter the candidate’s name and personal ID number on the ballots. Where a candidate is a government or a corporate shareholder, the voters shall, other than the shareholder account number, enter as well the name of the government or a corporate shareholder and name of the designated representative. In case of multiple representatives, the names of varolp is representatives shall be entered.

Article 7 A ballot is null and void if: (1) Not in the ballot form as required under the Regulations; (2) Bearing two or more candidates on a same ballot; (3) Remaining blank bearing no entries from the vote; (4) Bearing entries not satisfactory to Article VI or bearing other irrelevant wording;

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(5) Bearing vague, illegible wording; (6) Bearing a candidate who proves nonconforming in qualifications.

Article 8 Provide two ballot boxes each for the directors and supervisors, which shall be opened for ballot count. Article 9 After all ballots are cast into ballot box, the canvassers shall join the tally clerks in opening the ballot box. Article 10 The canvassers shall supervise over the count of ballots by tally clerks. Article 11 In case of any doubts about the ballots, the canvassers shall be requested to verify the invalidity of the ballots. The invalid ballots shall be

segregated from the valid ones and be certified as invalid ballots by the canvassers after having counted number of ballots and the voting rights. Article 12 According to results of the votes, after the canvassers conducting a check on the correct total of valid ballots and invalid ballots, the canvassers

shall put onto record the number of valid ballots, voting rights, invalid ballots and the voting rights, and then the chairman shall announce the names of the directors-elected.

Article 13 Board of Directors shall issue notice of the elected directors and supervisors. Article 14 These guidelines shall become effective upon having been approved by the shareholders’ meeting and the same applies to its amendment.

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Far EasTone Telecommunications Co., Ltd.

Procedure for Loaning Capital to Others Approved by Annual Shareholder’s Meeting on 2013/6/13

Article 1 （Target Borrowers） The target Borrowers of the Corporation’s fund (Hereinafter referred to as the Borrowers) are limited to the following: (1) Companies in transaction with the Corporation (Hereinafter referred to as Transaction Counterparts); (2) Companies being in need of short-term financing (Hereinafter referred to as Short-term Finances) The term “short-term” as set forth in the two preceding paragraphs means one year, or where the corporation's operating cycle exceeds one year, one operating cycle.

Article 2. (Limitation of the total loans and individual targets) The total funds loaned to the Borrowers under Paragraph I shall not exceed 50% of the net worth as last reviewed or checked by CPA (Hereinafter referred to as the Latest Net Worth of the Company). The loan to an individual Transaction Counterpart shall not exceed the amount of business transaction between both parties. The term “amount of business transaction” as set forth herein denotes the amount of actual purchase, sale amounts in the year preceding execution of the loan contract, or the transaction amount anticipated for the year. The total loan to a Short-term Finances shall not exceed 15% of the Latest Net Worth of the Company. The loan to an individual Short-term Finance shall not exceed 10% of the Latest Net Worth of the Company. The accumulated balance of short-term loan of funds provided between overseas affiliate companies of which the Company holds, directly or indirectly, 100% of the voting shares, shall not exceed 40% of the net worth of the latest quarter of the Company. Where the Company’s financial reports are prepared according to the International Financial Reporting Standards, "net worth" in these Regulations means the balance sheet equity attributable to the owners of the parent company under the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Article 3. (Causes and necessity of capital lending to others) The Corporation may lend funds as required for short-term financing only in the following events: (I) Where the following targets to which the Corporation may grant endorsement are in need of short-term financing: 1. A firm of which the Corporation owns directly and indirectly more than 50 percent voting right shares. 2. A firm of which owns directly and indirectly more than 50 percent of the Corporation voting right shares. (II)Other cases where the Corporation’s board of directors agrees to lend funds. The terms “subsidiary” and “parent corporation” as referred to in these Regulations shall be as determined under the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Article 4 (Capital lending to others and handling procedures) Where FET grants a loan, the borrower shall first provide the financial papers as required and apply to FET’s Finance & Shared Services Division for financing limit. The Finance & Shared Services Division shall conduct prudent assessment to confirm that it lives up to the requirements set

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forth in the “Guiding Rules for Loan & Endorsement by Public Offering Companies” (hereinafter referred to as the Guiding Rules), these Procedures and the following. The assessment results shall be submitted to the Board of Directors for a decision beforehand. The Board of Directors shall not authorize any others to make such decision. I. Necessity and rationality of the endorsement. II. Creditability and risk assessment of the borrower. III. Impact upon FET operation risk, financial standing and shareholders’ equity. IV. Whether collateral is required and the value assessed for the collateral. The inter-company loans of funds between the Company and its subsidiaries or among its subsidiaries shall be resolved by the Board of Directors of the Company, as well as to authorize the Chairman to grant one borrower to drawdown by tranche within specific approved ceiling amount and one year. As for the aforementioned ceiling amount, except those regulated in accordance with the Item 4 of Article 2, the authorized loan amount to a single party by the Company or together with its subsidiaries, shall not exceed 10% of the latest net worth. of the Company. After financing limit is determined, the borrower shall apply to the Finance & Administration Division with “Application for Appropriation”. The loan shall not be disbursed until approved by FET’s responsible person or the board of directors authorized representative. For the enforcement of the loan, the Finance & Administration Division shall report to the board of directors for information. The borrower shall, upon applying for disbursement of the fund, provide standby instrument of equivalent amount or other collateral or guarantor(s) satisfactory to FET as collateral of the loan. Where FET has set independent directors, and while the board of directors are discussing these procedures or granting loans to others, the opinions of the independent directors shall be taken into adequate account. Their opinions, pros and cons as well as the reasons of cons shall be entered into the minutes of the board of directors meeting. If, as a result of a change in circumstances, an entity for which an endorsement/guarantee is made does not meet the requirements of these Regulations or the loan balance exceeds the limit, the Company shall adopt rectification plans and submit the rectification plans to all the supervisors, and shall complete the rectification according to the timeframe set out in the plan.

Article 5 （Period of loan and interest calculation） The Funds loaned by the Company shall not exceed one year or the operating cycle of Short-term Finances if the Company’s operating cycle exceeds one year. The period of loan depend on borrower’s demand of the capital, and term of each such loan shall not exceed 3 years of inter-company loans of funds between foreign companies in which the public company holds, directly or indirectly, 100% of the voting shares. Interest on loans extended by the Corporation shall be calculated at the floating interest rate, and shall be adjusted from time to time in accordance with the Corporation’s cost of capital. Any adjustment of interest shall first be proposed by the F&SS to the president of the Corporation for his approval and then, upon such approval, be implemented by the Treasury. Interest shall be settled on a monthly basis.

Article 6 （Subsequent control measures and procedures to deal with the overdue credits） For loans granted, the Company shall establish a record book to bear all details of the borrowers, amounts, dates while the board of directors resolves the decisions, dates while the loans are granted and prudent assessment conducted pursuant to Article IV, Paragraph I.

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The Company’s Internal Audit Department shall audit these Procedures and the enforcement on a quarterly basis minimum and shall work out records in writing and further keep the supervisors informed in writing immediately upon a critical offense noticed. The borrowers and guarantors’ financial, business and credit standing shall be closely watched after the loan is granted. In case of collateral provided, the collateral shall be closely watched regarding a change in its value. In case of a significant change, report shall be made to the general manager forthwith with due actions taken as instructed. The borrower shall repay the principal and interest forthwith when due unless the borrower applied for and obtained the Board’s prior approval for renewal. In case of violation, the Company may dispose the provided collateral or claim on the guarantor(s) for repayment without a notice.

Article 7 (Penalty upon a breach) The Corporation shall faithfully comply with the Guiding Rules and these Procedures for loans granted to others. A manager or person in charge of endorsement who violates these requirements and thus leads to critical damage to the Corporation or in a critical offense shall be subject to penalty in accordance with Award & Penalty Policy and Human Resources Policy concerned.

Article 8. (Procedures for declaration through public announcement) Corporation shall, not later than the 10th of every month, put into public announcement the balance of the loans granted by Corporation and its subsidiary(ies) in the preceding month. Where the balance of the loans lives up to any of the following, Corporation shall further declares through public announcement within two days commencing immediately from the date of occurrence: I. Corporation and its subsidiary(ies) where the total balance of the loans granted exceeds 20% of the Latest Net Worth of the Company. II. Corporation and its subsidiary(ies) where here balance of the loans granted to any single business concern exceeds 10% of the Latest Net

Worth of the Company. III. Corporation and its subsidiary(ies) where the newly conducting amount exceeds NT$10 million and the balance exceeds 2% of the Latest Net

Worth of the Company. Where a subsidiary is not in public offering in the Republic of China, the declaration through public announcement for such subsidiary as required under the aforementioned paragraphs 3 shall be handled by Corporation. The term “declaration through public announcement” as set forth herein denotes input into the information declaration website established by the Financial Supervisory Commission, R.O.C. “Date of occurrence” in these Regulations means the date of contract signing, date of payment, dates of boards of directors resolutions, or other date that can confirm the counterparty and monetary amount of the transaction, whichever date is earlier. Corporation shall evaluate the status of its loans of funds and reserve sufficient allowance for bad debts, and shall adequately disclose relevant information in its financial reports and provide certified public accountants with relevant information for implementation of necessary auditing procedures.

Article 9 (Procedures to control subsidiary(ies) regarding loans granted to others) A subsidiary of the Company shall, if desirous to grant loans to others, duly enact the capital lending to others Procedures in accordance with the Guiding Rules and propose to Finance & Shared Services Division of the Company. Finance & Shared Services Division shall propose the list of the subsidiary for the Board of Directors’ ratification. The Company’s subsidiary(ies) shall conduct according to their own procedures.

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The Company’s subsidiary(ies) as public offering companies in the Republic of China shall conduct declaration through public announcements individually. The Company’s subsidiary(ies) shall submit detailed statements of loans granted in the preceding month to the Company for assembling not later than the 5th day of every month. Each subsidiary of the Company shall review whether its applying procedures for capital lending to others are in compliance with the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies”. The Company’s auditor shall reexamine the check reports for such matters made by each subsidiary of the Company.

Article 10 (Validity and update) These Procedures shall, after being resolved in the board of directors, be submitted to the supervisors and to the shareholders’ meeting for consent. In case of objection by a director as supported by the minutes or written declaration, FET shall submit the objection to the supervisors and shareholders’ meeting for discussion. The same shall be required in case of amendment.

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Far EasTone Telecommunications Co., Ltd.

Procedure for Making Endorsements and Guarantees Approved by Annual Shareholder’s Meeting on 2013/6/13

Article 1 When providing endorsements or guarantees, the Corporation shall comply with this “Procedure for Making Endorsements and Guarantees” (hereinafter referred to as the “Procedure”). The endorsements or guarantees mentioned herein refer to the following: 1. Endorsements or guarantees made for financing needs, including:

(a) Endorsements made for discounting bills; (b) Endorsements or guarantees made for the financing needs of other companies; and (c) Guarantees in the form of negotiable instruments issued and provided to non-financial institutions for the Corporation’s financing needs;

2. Customs Duty Endorsements or Guarantees, which denote endorsements or guarantees concerning customs duty matters provided for the Corporation itself or other companies; and

3. Other endorsements or guarantees, which denote any other endorsements or guarantees that do not fall into the above two categories of this article.

The Corporation shall also comply with this Procedure when pledging or mortgaging its chattels or real estate as security for loans to other companies.

Article 2 The targets of the Corporation endorsement services shall be limited to the following: I. A firm in business transaction with the Corporation. II. A firm of which the Corporation owns directly and indirectly more than 50 percent voting right shares. III. A firm which owns directly and indirectly more than 50 percent of the Corporation voting right shares. The subsidiaries of the Corporation which the Corporation owns directly and indirectly more than 90% voting right shares can provide endorsements and/or guarantees to each other but the total amount of endorsements and/or guarantees shall not exceed 10% of its net worth as last reviewed or checked by CPA (Hereinafter referred to as the Latest Net Worth of the Corporation). However the endorsements and/or guarantees between the subsidiaries of the Corporation which the Corporation owns directly and indirectly 100% are not limited within the preceding regulated scope. In the event that FET is in inter-endorsement guarantee in line with the needs to undertake projects with fellow firms or joint builders or that the whole investing shareholders endorse an investee pro rata to the investment ratio, FET may render endorsement free of the restrictions set forth in the preceding paragraph. The investment in the preceding paragraph implies capital contribution directly owned by the Corporation or indirectly owned through a 100% shareholding subsidiary. The terms “subsidiary” and “parent corporation” as referred to in these Regulations shall be as determined under the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Article 3 The total amount of endorsements and/or guarantees made by the Corporation shall not exceed 100% of the Latest Net Worth of the Company. The total amount of endorsements and/or guarantees provided for any single enterprise shall not exceed 50% of the Latest Net Worth of the

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Company. The total amount of endorsements and/or guarantees made by the Corporation and its subsidiaries shall not exceed 100% of the Latest Net Worth of the Company. The total amount of endorsements and/or guarantees provided for any single enterprise shall not exceed 50% of the Latest Net Worth of the Company. The Company shall explain its necessity and rationality in the Shareholders’ Meeting, if the ceiling of the total amount of endorsements and/or guarantees made by the Corporation and its subsidiaries have exceeded 50% of the Latest Net Worth of the Company. Where the Company’s financial reports are prepared according to the International Financial Reporting Standards, "net worth" in these Regulations means the balance sheet equity attributable to the owners of the parent company under the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Article 4 Before FET renders endorsement or provide guarantee to another party, the Finance Administration Division shall conduct prudent assessment to confirm that it lives up to the requirements set forth in the “Guiding Rules for Loan & Endorsement by Public Offering Companies” (hereinafter referred to as the Guiding Rules), these Procedures and the following. The assessment results shall be submitted to the board of directors for a decision beforehand. To meet time efficiency, nevertheless, the board of directors may authorize the chairman to act within the authority set forth in Article III before reporting to the board of directors for approval retrospectively. V. Necessity and rationality of the endorsement. VI. Creditability and risk assessment of the endorsement targets. VII. Impact upon FET operation risk, financial standing and shareholders’ equity. VIII. Whether collateral is required and the value assessed for the collateral. The subsidiaries of the Company of voting shares are held 90% directly or indirectly by the Company, based on Item 2 of Article 2 of the procedure, shall provide endorsements and/or guarantees to another party only after resolved by the board of directors of the Company, except the endorsements and/or guarantees are made between the subsidiaries of the Company of voting shares are held 100% directly or indirectly by the Company. Where FET renders endorsement in line of business needs, the endorsement amount shall be assessed to stay commensurate with the amount of business transaction. The term “amount of business transaction” as set forth herein denotes the amount of actual purchases, sales or trading with the endorsement target concluded in the preceding year. Where it is necessary that the endorsement exceeds the maximum limit set forth in the preceding article and it lives up to the prerequisites set forth in these Procedures, a decision shall be resolved by the board of directors and a majority of the directors shall jointly guarantee for the risk which may be incurred by the excess and these Procedures shall be amended and be acknowledged by the shareholders’ meeting retrospectively. In the event that the target of Making Endorsements and Guarantees does not comply with the Regulations or procedure or amount of the loan so granted exceeds the limit, a plan of corrective action shall be established and submitted to the supervisors and shall also finish improvement by the schedule planned. The Company and its subsidiaries shall pay attention to the finance, business and related credit of the endorsed or guaranteed subsidiary of which net worth is lower than half of its paid-in-capital. If aforementioned company has provided collaterals, the Company and its subsidiaries shall pay attention to the changes in the value of its collateral. The Company and its subsidiaries shall terminate the endorsements and/or guarantees or take the appropriate action when the collaterals have material adverse changes. In the case of a subsidiary with shares having no par value or a par value

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other than NT$10, for the paid-in capital in the calculation under the preceding paragraph, the sum of the share capital plus paid-in capital in excess of par shall be substituted.

Article 5 The chops to be used for making endorsement and guarantees should be the Corporation’s chop registered at Minister of Economics Affairs. Article 6 The dedicated chop for endorsements/guarantees shall be kept in the custody of a designated person and may be used to seal or issue negotiable

instruments only as the Corporation’s procedures. The preceding article of the designated person shall, after being resolved in the board of directors, the same shall be required in case of amendment. While the Corporation provides a guarantee for a foreign company, the Guarantee letter produced by the Corporation shall be signed by a representative authorized by the Board of Directors.

Article 7 The FET endorsement shall be established on grounds of the “endorsement application” filled out by the endorsement Company. A record book shall be established to enter all details of the endorsement targets, amounts, the dates when the board of directors resolves or the chairman enforces, dates of endorsement, prudent assessments under Article IV, Paragraph I, all details of the endorsement matters, name(s) of the endorsement business concern(s), results of risk assessment, amounts of endorsement, contents of collateral obtained and terms and conditions as well as dates to release endorsement. The Company’s Internal Audit Department shall audit these Procedures and the enforcement on a quarterly basis minimum and shall work out records in writing and further keep the supervisors informed in writing immediately upon a critical offense noticed.

Article 8 FET shall, not later than the 10th of every month, put into public announcement the endorsement balance rendered by FET and its subsidiary(ies) in the preceding month. Where the FET endorsement balance lives up to any of the following, FET shall further declares through public announcement within two days from occurrence of the facts: I. FET and its subsidiary(ies) where the total endorsement balance exceeds 50% of the Latest Net Worth of the Company. II. FET and its subsidiary(ies) where endorsement balance rendered to any single business concern exceeds 20% of the Latest Net Worth of the

Company. III. FET and its subsidiary(ies) where endorsement balance rendered to any single business concern exceeds NT$10 million and the total of the

endorsement, long-term investment and loan exceeds 30% of the Latest Net Worth of the Company. IV. FET and its subsidiary(ies) where the newly conducting amount exceeds NT$30 million and the balance exceeds 5% of the Latest Net Worth of

the Company. Where a subsidiary is not in public offering in the Republic of China, the declaration through public announcement for such subsidiary, as required under the aforementioned fourth paragraphs, shall be handled by FET. The term “declaration through public announcement” as set forth herein denotes input into the information declaration website established by the Financial Supervisory Commission, R.O.C. “Date of occurrence” in these Regulations means the date of contract signing, date of payment, dates of boards of directors resolutions, or other date that can confirm the counterparty and monetary amount of the transaction, whichever date is earlier. FET shall, evaluate or record the contingent loss for endorsements/guarantees, and shall adequately disclose information on endorsements/guarantees in its financial reports and provide certified public accountants with relevant information for implementation of necessary

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audit procedures. Article 9 A subsidiary of the Company shall, if desirous to endorse or provide guarantee to another, duly enact the Endorsement Procedures in accordance

with the Guiding Rules and propose to Finance & Shared Services Division of the Company. Finance & Shared Services Division shall propose the list of the subsidiary for the Board of Directors’ ratification. The Company’s subsidiary(ies) shall conduct according to their own procedures. The Company’s subsidiary(ies) as public offering companies in the Republic of China shall conduct declaration through public announcements individually. The Company ’s subsidiary(ies) shall submit detailed statements of endorsement and guarantees of the preceding month to the Company for assembling not later than the 5th day of every month. Each subsidiary of the Company shall review whether its respective applying procedures for making endorsements and guarantees are in compliance with the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies.” The Company’s auditor shall reexamine the check report for such matters made by each subsidiary of the Company.

Article 10 The Corporation shall faithfully comply with the Guiding Rules and these Procedures for external endorsement. A manager or person in charge of endorsement who violates these requirements and thus leads to critical damage to the Corporation or in a critical offense shall be subject to penalty in accordance with Award & Penalty Policy and Human Resources Policy concerned.

Article 11 These Procedures shall, after being resolved in the board of directors, be submitted to the supervisors and to the shareholders’ meeting for consent. In case of objection by a director as supported by the minutes or written declaration, FET shall submit the objection to the supervisors and shareholders’ meeting for discussion. The same shall be required in case of amendment.

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Far EasTone Telecommunications Co., Ltd Regulations Governing the Conduct of Shareholders’ Meetings

Approved by Annual Shareholder’s Meeting on 2014/6/11 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 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 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 audio records shall be conserved until the conclusion of the litigation.

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

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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 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.

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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. 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.

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

Far EasTone Telecommunications Co., Ltd. 2015 Annual Shareholders’ Meeting Handbook€¦ · · 2015-05-21Far EasTone Telecommunications Co., Ltd. 2015 Annual Shareholders’ Meeting