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Form 6-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of May, 2018

Commission File Number 001-37928

 

 

ChipMOS TECHNOLOGIES INC.

(Translation of Registrant’s Name Into English)

 

 

No. 1, R&D Rd. 1, Hsinchu Science Park

Hsinchu, Taiwan

Republic of China

(Address of Principal Executive Offices)

 

 

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F  ☒            Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

 

 

 

Copies of notices of ChipMOS TECHNOLOGIES INC.’s 2018 annual general meeting of shareholders and related materials are attached as Exhibits 99.1 through 99.4 to this Form 6-K.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Dated: May 23, 2018     ChipMOS TECHNOLOGIES INC.
            (Registrant)
    By:  

/S/ S. J. Cheng

    Name:   S. J. Cheng
    Title:   Chairman & President

EXHIBIT INDEX

 

Exhibit
Number		   

Description

99.1    Depositary’s Notice of 2018 Annual Shareholders’ Meeting for American Depositary Shares
99.2    2018 Voting Instructions of 2018 Annual Shareholders’ Meeting for American Depositary Shares
99.3    Company’s Notice of 2018 Annual Shareholders’ Meeting for the Shareholders (Translation)
99.4    2018 Annual Shareholders’ Meeting Handbook (Translation)

 

-1-

EX-99.1

Exhibit 99.1

 

Time Sensitive          
  Materials           

Depositary’s Notice of

2018 Annual Shareholders’ Meeting of

ChipMOS TECHNOLOGIES INC.

 

ADSs:    American Depositary Shares evidenced by American Depositary Receipts (“ADRs”).
ADS CUSIP No.:    16965P103.
ADS Record Date:    April 27, 2018.

Meeting Specifics:

    2018 Annual Shareholders’ Meeting - Tuesday, June 26, 2018 at 9:00 A.M. (local time) at the Hsinchu Science Park Life Hub, Einstein Hall, 2F, No. 1, Industry E. 2nd Rd., Hsinchu Science Park, Hsinchu, Taiwan (the “Meeting”).
Meeting Agenda:    Please refer to the Company’s Meeting Handbook enclosed herewith.
ADS Voting Instructions Deadline:    On or before 10:00 A.M. (New York City time) on June 20, 2018.
Deposited Securities:    Common shares, par value NT$10 per share (“Share”), of ChipMOS TECHNOLOGIES INC., a company incorporated under the laws of the Republic of China (the “Company”).
ADS Ratio:    20 Shares to 1 American Depositary Share (“ADS”).
Depositary:    Citibank, N.A.
Custodian of Deposited Securities:    First Commercial Bank.
Deposit Agreement:    Deposit Agreement, dated October 31, 2016 by and among the Company, the Depositary, and all Holders and Beneficial Owners of ADSs evidenced by ADRs issued thereunder.

To be counted, your Voting Instructions need to be received by the Depositary prior to 10:00 A.M. (New York City time) on

June 20, 2018.

Note that if you do not timely return the Voting Instructions to the Depositary, the Deposited Securities represented by your ADSs may nevertheless be voted upon the terms set forth in the Deposit Agreement.

The Company has announced that an Annual Shareholders’ Meeting will be held at the date, time and location identified above. A copy of the Company’s Meeting Handbook which includes the agenda for such Meeting is enclosed. Additionally, the Company’s annual and financial reports are available on the Company’s corporate website at http://www.chipmos.com.*

Holders of ADSs wishing to give voting instructions to the Depositary must sign, complete and return the enclosed Voting Instructions prior to the ADS Voting Instructions Deadline in the enclosed pre-addressed envelope.

In accordance with and subject to the terms of Section 4.10 of the Deposit Agreement, upon timely receipt of signed and completed Voting Instructions from a Holder of ADSs, the Depositary shall endeavor, insofar as practicable and permitted under applicable law, the provisions of the Deposit Agreement and the Deposited Securities, to vote, or cause the Custodian to vote (in person or by proxy), the Deposited Securities in respect of which Voting Instructions have been received in accordance with the instructions contained therein.

Please note that, in accordance with and subject to the terms of Section 4.10(b) of the Deposit Agreement, the Depositary agrees not to, and shall take reasonable steps to ensure that the Custodian and each of its nominees, if any, do not, vote the Deposited Securities represented by ADSs other than in accordance with the instructions of Holders as of the ADS Record Date or as provided below. The Depositary shall not exercise any voting discretion over the Deposited Securities.

Please also note that, in accordance with and subject to the terms of Section 4.10(b) of the Deposit Agreement, if the Depositary does not receive instructions from a Holder as of the ADS Record Date on or before the date established by the Depositary for such purpose, such Holder shall be deemed, and the Depositary shall deem such Holder, to have instructed the Depositary to give a discretionary proxy to a person designated by the Company to vote the Deposited Securities; provided, however, that no such discretionary proxy shall be given by the Depositary with respect to any matter to be voted upon as to which the Company informs the Depositary that (i) the Company does not wish such proxy to be given, (ii) substantial opposition exists, or (iii) the rights of holders of Deposited Securities may be adversely affected.

Please further note that, in accordance with and subject to the terms of Section 4.10(b) of the Deposit Agreement, if the Depositary timely receives voting instructions from a Holder which fails to specify the manner in which the Depositary is to vote the Deposited Securities represented by such Holder’s ADSs, the Depositary will deem such Holder (unless otherwise specified in the notice distributed to Holders) to have instructed the Depositary to vote in favor of the items set forth in such voting instructions. Notwithstanding anything else contained herein, the Depositary shall represent all Deposited Securities (whether or not voting instructions have been received in respect of such Deposited Securities from Holders as of the ADS Record Date) for the sole purpose of establishing quorum at the relevant meeting. For the avoidance of doubt, if the Depositary has given a discretionary proxy to a person designated by the Company to vote the Deposited Securities, that person shall be free to exercise the votes attaching to those Deposited Securities in any manner he or she wishes, which may not be in the best interests of the Holders.

Please also note that pursuant to Section 3.5 of the Deposit Agreement, the Company may restrict transfers of ADSs where such transfer may result in the total number of Deposited Securities represented by such ADSs owned by a single Holder or Beneficial Owner to exceed limits imposed by applicable law or the Articles of Incorporation of the Company, and may instruct the Depositary to take action including, but not limited to, the removal or limitation of voting rights with respect to any Holder or Beneficial Owner of ADSs representing Deposited Securities in excess of such limits.

Please also note that the Company has informed the Depositary that pursuant to Article 165 of the Company Act, the registration of shareholders of the Company will cease from April 28, 2018 to June 26, 2018.

The information contained herein with respect to the Meeting has been provided by the Company. Citibank, N.A. is forwarding this information to you solely as Depositary and in accordance with the terms of the Deposit Agreement and disclaims any responsibility with respect to the accuracy of such information. Citibank, N.A. does not, and should not be deemed to, express any opinion with respect to the proposals to be considered at the Meeting. The rights and obligation of Holders and Beneficial Owners of ADSs, the Company and the Depositary are set forth in their entirety in the Deposit Agreement and summarized in the ADRs. If you wish to receive a copy of the Deposit Agreement, please contact the Depositary at the number set forth below.

If you have any questions about the way in which Voting Instructions may be delivered to the Depositary, please contact Citibank, N.A. - ADR Shareholder Services at (877-248-4237).

 

Citibank, N.A., as Depositary

 

 

*  As set forth in the Section 4.10(a) of the Deposit Agreement, Holders of record of ADSs as of the close of business on the ADS Record Date, will be entitled, subject to applicable provisions of the laws of the Republic of China, the provisions of the Deposit Agreement, the Articles of Incorporation of the Company and the provisions of or governing the Deposited Securities, to instruct the Depositary as to the exercise of the voting rights pertaining to the Deposited Securities represented by such Holders’ ADSs.
EX-99.2

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Exhibit 99.2

2018 Annual Shareholders’ Meeting The Voting Instructions must be signed, completed and received at the indicated address prior to 10:00 A.M. (New York City time) on June 20, 2018 for action to be taken. 2018 VOTING INSTRUCTIONS AMERICAN DEPOSITARY SHARES ChipMOS TECHNOLOGIES INC. (the “Company”) ADS CUSIP No.: 16965P103. ADS Record Date: April 27, 2018. Meeting Specifics: 2018 Annual Shareholders’ Meeting—Tuesday, June 26, 2018 at 9:00 A.M. (local time) at the Hsinchu Science Park Life Hub, Einstein Hall, 2F, No. 1, Industry E. 2nd Rd., Hsinchu Science Park, Hsinchu, Taiwan (the “Meeting”). Meeting Agenda: Please refer to the Company’s Meeting Handbook enclosed herewith. Depositary: Citibank, N.A. Deposit Agreement: Deposit Agreement, dated October 31, 2016. Deposited Securities: Common shares, par value NT$10 per share, of the Company. Custodian: First Commercial Bank. The undersigned holder, as of the ADS Record Date, of the American Depositary Receipt(s) issued under the Deposit Agreement and evidencing the American Depositary Shares identified on the reverse side hereof (such American Depositary Shares, the “ADSs”), hereby authorizes and directs the Depositary to cause to be voted at the Meeting (and any adjournment or postponement thereof) the Deposited Securities represented by the ADSs in the manner indicated on the reverse side hereof. Please note that, in accordance with and subject to the terms of Section 4.10(b) of the Deposit Agreement, the Depositary agrees not to, and shall take reasonable steps to ensure that the Custodian and each of its nominees, if any, do not, vote the Deposited Securities represented by ADSs other than in accordance with the instructions of Holders as of the ADS Record Date or as provided below. The Depositary shall not exercise any voting discretion over the Deposited Securities. Please also note that, in accordance with and subject to the terms of Section 4.10(b) of the Deposit Agreement, if the Depositary does not receive instructions from a Holder as of the ADS Record Date on or before the date established by the Depositary for such purpose, such Holder shall be deemed, and the Depositary shall deem such Holder, to have instructed the Depositary to give a discretionary proxy to a person designated by the Company to vote the Deposited Securities; provided, however, that no such discretionary proxy shall be given by the Depositary with respect to any matter to be voted upon as to which the Company informs the Depositary that (i) the Company does not wish such proxy to be given, (ii) substantial opposition exists, or (iii) the rights of holders of Deposited Securities may be adversely affected. Please further note that, in accordance with and subject to the terms of Section 4.10(b) of the Deposit Agreement, if the Depositary timely receives voting instructions from a Holder which fails to specify the manner in which the Depositary is to vote the Deposited Securities represented by such Holder’s ADSs, the Depositary will deem such Holder (unless otherwise specified in the notice distributed to Holders) to have instructed the Depositary to vote in favor of the items set forth in such voting instructions. Notwithstanding anything else contained herein, the Depositary shall represent all Deposited Securities (whether or not voting instructions have been received in respect of such Deposited Securities from Holders as of the ADS Record Date) for the sole purpose of establishing quorum at the relevant meeting. For the avoidance of doubt, if the Depositary has given a discretionary proxy to a person designated by the Company to vote the Deposited Securities, that person shall be free to exercise the votes attaching to those Deposited Securities in any manner he or she wishes, which may not be in the best interests of the Holders. Please also note that pursuant to Section 3.5 of the Deposit Agreement, the Company may restrict transfers of ADSs where such transfer may result in the total number of Deposited Securities represented by such ADSs owned a single Holder or Beneficial Owner to exceed limits imposed by applicable law or the Articles of Incorporation of the Company, and may instruct the Depositary to take action including, but not limited to, the removal or limitation of voting rights with respect to any Holder or Beneficial Owner of ADSs representing Deposited Securities in excess of such limits. Please also note that the Company has informed the Depositary that pursuant to Article 165 of the Company Act, the registration of shareholders of the Company will cease from April 28, 2018 to June 26, 2018. Please indicate on the reverse side hereof how the Deposited Securities are to be voted. The Voting Instructions must be marked, signed and returned on time in order to be counted. By signing on the reverse side hereof, the undersigned represents to the Depositary and the Company that the undersigned is duly authorized to give the voting instructions contained therein.

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Proposals III. Matters for Ratification: 1. Adoption of the financial reports for fiscal year 2017. 2. Adoption of the earnings distribution proposal for fiscal year 2017. IV. Matters for Discussion: 1. Proposal of Capital Reduction. V. Other Proposals: 1. To release restrictions under Article 209 of the Company Act regarding non-compete of directors. The Company has informed the Depositary that its Board of Directors recommends a “FOR” vote for all proposals. A Issues ChipMOS TECHNOLOGIES INC. For Against Abstain Resolution III (1) Resolution III (2) Resolution IV (1) Resolution V (1) B Authorized Signatures—Sign Here—This section must be completed for your instructions to be executed. If these Voting Instructions are signed and timely returned to the Depositary but no specific direction as to voting is marked above as to an issue, the undersigned shall be deemed to have directed the Depositary to give Voting Instructions “FOR” the unmarked issue. If these Voting Instructions are signed and timely returned to the Depositary but multiple specific directions as to voting are marked above as to an issue, the undersigned shall be deemed to have directed the Depositary to give an “ABSTAIN” Voting Instruction for such issue. Please be sure to sign and date this Voting Instructions Card. Please sign your name to the Voting Instructions exactly as printed. When signing in a fiduciary or representative capacity, give full title as such. Where more than one owner, each MUST sign. Voting Instructions executed by a corporation should be in full name by a duly authorized officer with full title as such.

Signature 1—Please keep signature within the line Signature 2—Please keep signature within the line Date (mm/dd/yyyy)

EX-99.3

Exhibit 99.3

Meeting Notice for Annual Shareholders’ Meeting

(Summary Translation)

(This English translation is prepared in accordance with the Chinese version and is for reference purposes only. If there are any inconsistency between the Chinese original and this translation, the Chinese version shall prevail.)

The 2018 Annual Shareholders’ Meeting (the “Meeting”) of ChipMOS TECHNOLOGIES INC. (the “Company”) will be held at 9:00 am., Tuesday, June 26, 2018 at Hsinchu Science Park Life Hub (located at Einstein Hall, 2F, No. 1, Industry E. 2nd Rd., Hsinchu Science Park, Hsinchu, Taiwan).

 

1. The agenda of the Meeting is as follows:

 

  I. Report Items:

 

  1. Company’s business report for fiscal year 2017.

 

  2. Audit Committee’s review report of the financial reports for fiscal year 2017.

 

  3. Report of audited impairment loss on assets.

 

  4. Amendments to Procedures for Ethical Management and Guidelines for Conduct.

 

  5. Report of the status of distributable compensation for employees, directors and supervisors for fiscal year 2017.

 

  6. Explanation of not adopting shareholder’s proposal in the agenda.

 

  II. Matters for Ratification:

 

  1. Adoption of the financial reports for fiscal year 2017.

 

  2. Adoption of the earnings distribution proposal for fiscal year 2017.

 

  III. Matters for Discussion:

 

  1. Proposal of Capital Reduction.

 

  IV. Other Proposals:

 

  1. To release restrictions under Article 209 of the Company Act regarding non-compete of directors.

 

  V. Special Motions

 

2. The Board has approved cash distribution of NT$0.3 per share to shareholders for the earnings distribution proposal for fiscal year 2017.

 

3. Proposal of releasing Directors from non-compete restriction under Article 209 of the Company Act. To release restriction on Independent Director, Yuh-Fong Tang as the consultant of Intelligent Silicon Solution Corporation.

 

4. (Omitted — not applicable to ADR holders)

 

5. (Omitted — not applicable to ADR holders)

 

6. (Omitted — not applicable to ADR holders)

 

7. (Omitted — not applicable to ADR holders)

 

8. (Omitted — not applicable to ADR holders)

 

9. (Omitted — not applicable to ADR holders)

Sincerely,

 

The Board of Directors
ChipMOS TECHNOLOGIES INC.
EX-99.4

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Table of Contents

 

A.

    Meeting Procedure      1  

B.

    Meeting Agenda      2  
   I.    Chairman’s Opening Remarks      3  
   II.    Report Items      3  
   III.    Matters for Ratification      5  
   IV.    Matters for Discussion      6  
   V.    Other Proposals      7  
   VI.    Special Motions      7  

C.

    Attachments   
   1.    2017 Business Report      8  
   2.    Audit Committee’s Review Report      10  
   3.    Comparative Table of Amendments to Procedures for Ethical Management and Guidelines for Conduct      15  
   4.    Financial Statements and Independent Auditor’s Report      26  
   5.    Earnings Distribution Proposal of 2017      53  
   6.    Proposal of Releasing Directors from Non-Compete Restriction      54  

D.

    Appendix   
   1.    Rules and Procedures of Shareholders’ Meeting      55  
   2.    Articles of Incorporation      60  
   3.    Shareholdings of All Directors      68  

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A. Meeting Procedure

 

I. Call the meeting to order

 

II. Chairman takes chair

 

III. Chairman’s Opening Remarks

 

IV. Report Items

 

V. Matters for Ratification

 

VI. Matters for Discussion

 

VII. Other Matters

 

VIII. Special Motions

 

IX. Meeting Adjourned

 

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B. Meeting Agenda

 

I. Chairman’s Opening Remarks

 

II. Report Items:

 

  1. Company’s business report for fiscal year 2017.

 

  2. Audit Committee’s review report of the financial reports for fiscal year 2017.

 

  3. Report of audited impairment loss on assets.

 

  4. Amendments to Procedures for Ethical Management and Guidelines for Conduct.

 

  5. Report of the status of distributable compensation for employees, directors and supervisors for fiscal year 2017.

 

  6. Explanation of not adopting shareholder’s proposal in the agenda.

 

III. Matters for Ratification:

 

  1. Adoption of the financial reports for fiscal year 2017.

 

  2. Adoption of the earnings distribution proposal for fiscal year 2017.

 

IV. Matters for Discussion:

 

  1. Proposal of Capital Reduction.

 

V. Other Proposals:

 

  1. To release restrictions under Article 209 of the Company Act regarding non-compete of directors.

 

VI. Special Motions

 

VII. Meeting Adjourned

 

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Time: 9:00 a.m., June 26, 2018 (Tuesday)

Place: Hsinchu Science Park Life Hub

          (Einstein Hall, 2F, No. 1, Industry E. 2nd Rd., Hsinchu Science Park, Hsinchu, Taiwan)

Chairman: Mr. Shih-Jye Cheng

 

I. Chairman’s Opening Remarks.

 

II. Report Items

Report Item 1

Subject: Company’s business report for fiscal year 2017.

 

Explanatory Note: Please refer to Attachment 1, page 8 of this Handbook, for Company’s 2017 business report.

Report Item 2

Subject: Audit Committee’s review report of the financial reports for fiscal year 2017.

 

Explanatory Note: Please refer to Attachment 2, page 10 of this Handbook, for Audit Committee’s review report.

Report Item 3

Subject: Report of audited impairment loss on assets.

Explanatory Note:

 

  1. Company assessed, in accordance with statement of financial accounting standards, that the impairment loss on assets for 2017 was NT$956 thousand, as shown in the table below:

 

   (Unit : NT$ thousand)  

Class of Assets

   

Category

    Amount  

Equipment

   

Property, Plant and Equipment

      956  

 

  2. The impairment loss on assets has been recognized in the 2017 audited financial statements.

 

  3. This item has been approved by the Audit Committee and adopted by the Board of Directors, and is hereby reported at the annual shareholders’ meeting.

 

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Report Item 4

Subject: Amendments to Procedures for Ethical Management and Guidelines for Conduct.

Explanatory Note:

 

  1. Due to the change in internal regulations and in order to strengthen corporate governance, Company hereby proposes to amend the Procedures for Ethical Management and Guidelines for Conduct. Please refer to Attachment 3, page 15 of this Handbook, for the comparative table of the amendments to Procedures for Ethical Management and Guidelines for Conduct.

 

  2. This item has been approved by the Audit Committee and adopted by the Board of Directors, and is hereby reported at the annual shareholders’ meeting.

Report Item 5

Subject: Report of the status of distributable compensation for employees, directors and supervisors for fiscal year 2017.

Explanatory Note:

 

  1. Article 25 of the Company’s Articles of Incorporation provides that “if there is profit in any given year, the Company shall set aside 10% thereof as employee compensation. The board of directors may resolve to pay said compensation in the form of shares or cash. Such compensation may be paid to the employees of an affiliated company who meet the conditions set by the board of directors. The board of directors may resolve to set aside no more than 0.5% of the above-mentioned profit as the remuneration of the directors.“Further, Paragraph 1 of Article 235-1 of the Company Act provides that “company shall specify a fixed amount or ratio of the profit of the current year distributable as employees’ compensation in the Articles of Incorporation. However, if the company has accumulated losses, it shall make up such losses.”

 

  2. Company’s profit for 2017 was NT$3,719,123,934 (i.e., the profit before tax prior to the deduction of the distributable compensation of employees, directors and supervisors).It is proposed to set aside 10% of Company’s profit, NT$371,912,393, in cash as employees’ compensation, and 0.5% of Company’s profit, NT$18,595,619, as directors’ compensation.

 

  3. The foregoing amounts have been adopted by the Board of Directors after being reviewed by the 11th meeting of the 3rd Remuneration Committee and is hereby reported at the annual shareholders’ meeting.

Report Item 6

Subject: Explanation of not adopting shareholder’s proposal in the agenda.

Explanatory Note: No shareholder made any proposal for this shareholders’ meeting.

 

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III. Matters for Ratification

 

Item 1   Proposed by the Board of Directors

Subject: Adoption of the financial reports for fiscal year 2017.

Explanatory Note:

The Company’s 2017 business report and consolidated and parent company only financial statements have been prepared (please refer to Attachment 1 on page 8, Attachments 4-1 and 4-2 on page 26 of this Handbook) and approved by the 18th meeting of the 8th Board of Directors and reviewed by the Audit Committee. It is hereby submitted to the annual shareholders’ meeting for approval.

Resolution:

 

Item 2    Proposed by the Board of Directors

Subject: Adoption of the earnings distribution proposal for fiscal year 2017.

Explanatory Note:

 

  1. The Company has earnings in 2017. The Company plans to distribute dividends in the amount of NT$256,806,318 at NT$0.3 per share pursuant to the Company’s Articles of Incorporation and taking into consideration the factors including Company’s future needs of working capital, capital expenditure and shareholders’ interests. Please refer to Attachment 5, page 52 of this Handbook.

 

  2. The earnings distribution will be distributed in cash. If any future event affects the total number of Company’s outstanding shares (for example, Company buys back its treasury shares or cancels redeemed issued restricted employee shares) and causes changes in the total number of Company’s outstanding shares, it is proposed that the Chairman be authorized to adjust the distribution ratio based on the total amount of earnings distribution approved by this annual shareholders’ meeting and the actual number of Company’s outstanding shares as of the record date of distribution.

 

  3. The cash dividend shall be calculated to the nearest NT$1 based on the ratio of the distribution, and any amount less than NT$1 shall be discarded. The aggregate amount of fractions less than NT$ 1 of the distribution shall be classified as Company’s other income.

 

  4. This item has been approved by the Audit Committee and adopted by the Board of Directors, and is hereby submitted to the annual shareholders’ meeting for approval.

 

  5. Based on the foregoing, this proposal is hereby submitted to the shareholders’ meeting for approval.

 

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Resolution:

 

IV. Matters for Discussion:

 

Item 1   Proposed by the Board of Directors

Subject: Proposal of Capital Reduction.

Explanatory Note:

 

  1. In order to improve the capital structure and to enhance the return on equity, it is proposed that the Company carry out a capital reduction by distributing cash to shareholders.

 

  2. The total amount of the capital reduction shall be NT$1,329,445,590 and 132,944,559 common shares shall be cancelled accordingly. The capital reduction ratio is about 15%. NT$1.5 per share shall be returned in proportion to the number of shares held by each shareholder.

 

  3. Depending on the number of shares held by each shareholder as registered in the shareholder roster on the conversion record date of the capital reduction, each 1,000 shares of common stock shall be converted and replaced with 850 newly issued shares (150 shares will be cancelled per every 1,000 shares). For any fractional common share resulting from the capital reduction, the shareholder shall be entitled to having his/her fractional common shares rounded up to a single share by registering with the Company’s stock registrar within five days of the book closing date. Alternatively, the shareholder may choose to receive an amount in cash equal to the product of (x) such fraction, multiplied by (y) the par value (rounded to the nearest whole NT dollar). The Chairman of the Board is hereby authorized to designate persons to purchase all of the fractional shares at price of par value.

 

  4. No share shall be issued in physical form and the rights and obligations of the newly issued shares are the same as those of the previously issued shares.

 

  5. It is proposed that the Board of Directors be authorized to determine the capital reduction plan, the record date of the capital reduction and stock conversion, the listing of newly issued shares, and other relevant matters upon the approval of this annual shareholders’ meeting and the approval of the competent authority.

 

  6. It is proposed that the Chairman of the Board be authorized with full power to take proper actions if the capital reduction ratio, the amount of cash returned per share, and the number of outstanding shares of the Company are affected as a result of the changes of capital stock.

 

  7. It is proposed that the Chairman of the Board be authorized with full power to take proper actions as required by the competent authority, or as a result of any amendments to applicable laws/regulations, any adjustments of objective environmental factors or any other unforeseeable situations.

 

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  8. This proposal has been approved by the Audit Committee and adopted by the Board of Directors, and is hereby submitted to this annual shareholders’ meeting for discussion.

 

  9. Based on the foregoing, this proposal is hereby submitted for discussion at this annual shareholders’ meeting.

Resolution:

 

V. Other Proposals:

 

Item 1   Proposed by the Board of Directors

Subject: To release restrictions under Article 209 of the Company Act regarding non-compete of directors.

Explanatory Note:

 

  1. Article 209 of the Company Act provides that any director who engages in any conduct that is within Company’s business scope for himself/herself or others shall explain the material content of such conducts to the shareholders’ meeting and obtain its approval.

 

  2. Therefore, pursuant to the laws, it is hereby proposed to release the non-compete restriction in respect of the situation of directors holding multiple offices. Please refer to Attachment 6, page 53 of this Handbook.

 

  3. Based on the foregoing, this proposal is hereby submitted for resolution at the annual shareholders’ meeting.

Resolution:

 

VI. Special Motions

 

VII. Meeting Adjourned

 

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Attachment 1

Business Report

We keep moving forward to deliver high technology, outstanding quality with reliable packaging and testing solutions which are the unwavering principles of ChipMOS since inception. According to our global business strategies, we remain alongside our strategic customers for supporting their product development roadmap to make progress and grow with them in the worldwide market, including Taiwan, China and United States. To maximize value for our shareholders is our endeavor goal.

Notable Results of 2017

 

  •   Completed 54.98% ChipMOS Shanghai equity interest transfer with strategic investors led by Tsinghua Unigroup and resulting in a NT$1.84 billion income.

 

  •   Completed the 1st stage capital injection of China JV with Tsinghua Unigroup in Q2 2017 and the 2nd investment tranche closed in Q1 2018. ChipMOS Shanghai totally received approximately RMB1.07 billion in funding for competitive capacity investment. ChipMOS owns 45.02% shares of ChipMOS Shanghai.

 

  •   Distributed total NT$ 1.0 cash, including NT$0.3 cash dividend and NT$0.7 cash distribution from capital surplus, per common share to Shareholders (equivalent to US$0.655 per ADS).

 

  •   Reduced NT$0.61 billion net debt, from NT$3.22 billion at the end of 2016 to NT$2.61 billion at the end of 2017.

Consolidated revenue for the fiscal year ended December 31, 2017 was NT$17.94 billion, which reflects a slightly decline of 2.4% from 2016 which was affected by the major memory customer’s order reallocation, slower growth path of large-size panel and the weaker demand of driver IC packaging and testing business for small-size panel applications. In terms of revenue breakdown by product line, Flash business contributed 19.5% of total revenue compared to 15.9% in 2016, while our Logic and Mixed Signal business contributed 10.4% of total revenue in 2017, as compared to 8.9% of 2016.

ChipMOS’ financial situation has been improved over years through the adjustment of the product mix, customer base and business segment served. The net profit to the equity holders of ChipMOS for the fiscal year ended December 31, 2017 was NT$3.03 billion, and the consolidated gross margin for the year remained at the level of 18.0%. The overall capacity utilization was at 75%, and the earnings was NT$3.57 per basic share count, as we benefited from the disposal of the equity interest in ChipMOS Shanghai. Till the end of 2017, the aggregated amount of ChipMOS’ consolidated cash and cash equivalents was approximately NT$8.04 billion with the consolidated debt ratio of 44.7% and a net debt to equity ratio of 14.2%. The Return on Equity (ROE) was approximately 17.5% for 2017.

 

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Though the market competition was ever intensifying, we have seen the synergies from product line combination and transformation. Our diversification efforts have demonstrated in the niche and high-growth markets such as automobile and industrial market. Other growth opportunities include 3D optical sensing related product, TDDI, and 12 inch fine pitch chip on film (“COF”) product for the demand from full screen, narrow bezel, and 18:9 larger screen. The accelerated integration of automation and intellectualized field both in industrial and home environments market which will increase the demand of new Smartphone, tablets and wearable devices. That is the major reason why we focused on high-growth potential end market. Therefore, we are confident of the actions we took in 2017 which position us for growth opportunities in the future.

While driven by the increasing demand in automotive, industrial automation, mobile device and intelligent home solution, ChipMOS will continuously focus on core technology development and innovation, to cooperate with customers for reducing operating costs. We will also remain to work on product line combination and transformation progress, also concentrate on high-growth and niche market as long-term business strategy. By offering tailored and reliable turnkey solutions that integrate wafer bumping and assembly, with leading edge semi-conductor back end full turn-key solution services, ChipMOS will be able to drive growth in revenue and profitability and be capable of building further Shareholder value in 2018 and beyond. We thank you for your continuous support.

 

Chairman: Shih-Jye Cheng   President: Shih-Jye Cheng   Accounting Officer: Silvia Su

 

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Attachment 2

Audit Committee’s Review Report

In respect of Company’s Financial Reports for year 2017, PricewaterhouseCoopers, Taiwan was retained to issue an audit report. The Financial Reports have been reviewed and determined to be correct and compliant by this Audit Committee. According to Article 219 of the Company Act, we hereby submit the foregoing report.

ChipMOS TECHNOLOGIES INC.

Audit Committee: Chin-Shyh Ou

March 15, 2018

 

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Audit Committee’s Review Report

In respect of Company’s Financial Reports for year 2017, PricewaterhouseCoopers, Taiwan was retained to issue an audit report. The Financial Reports have been reviewed and determined to be correct and compliant by this Audit Committee. According to Article 219 of the Company Act, we hereby submit the foregoing report.

ChipMOS TECHNOLOGIES INC.

Audit Committee: Tai-Haur Kuo

March 15, 2018

 

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Audit Committee’s Review Report

In respect of Company’s Financial Reports for year 2017, PricewaterhouseCoopers, Taiwan was retained to issue an audit report. The Financial Reports have been reviewed and determined to be correct and compliant by this Audit Committee. According to Article 219 of the Company Act, we hereby submit the foregoing report.

ChipMOS TECHNOLOGIES INC.

Audit Committee: Yuh-Fong Tang

March 15, 2018

 

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Audit Committee’s Review Report

In respect of Company’s Financial Reports for year 2017, PricewaterhouseCoopers, Taiwan was retained to issue an audit report. The Financial Reports have been reviewed and determined to be correct and compliant by this Audit Committee. According to Article 219 of the Company Act, we hereby submit the foregoing report.

ChipMOS TECHNOLOGIES INC.

Audit Committee: Cho-Lien Chang

March 15, 2018

 

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Audit Committee’s Review Report

In respect of Company’s Financial Reports for year 2017, PricewaterhouseCoopers, Taiwan was retained to issue an audit report. The Financial Reports have been reviewed and determined to be correct and compliant by this Audit Committee. According to Article 219 of the Company Act, we hereby submit the foregoing report.

ChipMOS TECHNOLOGIES INC.

Audit Committee: Kuei-Ann Wen

March 15, 2018

 

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Attachment 3

Comparative Table of

Amendments to Procedures for Ethical Management and Guidelines for

Conduct of ChipMOS TECHNOLOGIES INC.

 

After the amendment

   

Before the amendment

   

Explanations

Article 5 The Company shall comply with the Company Act, Securities and Exchange Act, Business Entity Accounting Act, Political Donations Act, Anti-Corruption Act, Government Procurement Act, Act on Recusal of Public Servants Due to Conflict of Interest, other regulations or acts required for listed companies and relevant acts for other business conducts under the premises of implementing ethical management    Article 5 The company shall designate the corporate governance group as the solely responsible unit (hereinafter, “responsible unit”) under the board of directors and in charge of the amendment, implementation, interpretation, and advisory services with respect to these Procedures and Guidelines, the recording and filing of reports, and the monitoring of implementation. The responsible unit shall be in charge of the following matters and also submit regular reports to the board of directors......    Newly incorporated to enhance corporate governance
Article 6 The company shall designate the corporate governance group as the solely responsible unit (hereinafter, “responsible unit”) under the board of directors and in charge of the amendment, implementation, interpretation, and advisory services with respect to these Procedures and Guidelines, the recording and filing of reports, and the monitoring of implementation. The responsible unit shall be in charge of the following matters and also submit regular reports to the board of directors......    Article 6 Except under one of the following circumstances, when providing, accepting, promising, or requesting, directly or indirectly, any benefits as specified in Article 4, the conduct of the given personnel of the company shall comply with the provisions of the Ethical Corporate Management Best Practice Principles for TWSE/GTSM-Listed Companies and the company’s “regulations governing management of receiving gifts and entertainment from suppliers” and these Procedures and Guidelines, and the relevant procedures shall have been carried out:......    Adjustment of line item

 

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After the amendment

   

Before the amendment

   

Explanations

Article 7 Except under one of the following circumstances, when providing, accepting, promising, or requesting, directly or indirectly, any benefits as specified in Article 4, the conduct of the given personnel of the company shall comply with the provisions of the Ethical Corporate Management Best Practice Principles for TWSE/GTSM-Listed Companies and these Procedures and Guidelines, and the relevant procedures shall have been carried out:......    Article 7 Except under any of the circumstances set forth in the preceding article, when any personnel of the company are provided with or are promised, either directly or indirectly, any benefits as specified in Article 4 by a third party, the matter shall be handled in accordance with the following procedures......   

1. Adjustment of line item

 

2. Delete the company’s “regulations governing management of receiving gifts and entertainment from suppliers”

Article 8 Except under any of the circumstances set forth in the preceding article, when any personnel of the company are provided with or are promised, either directly or indirectly, any benefits as specified in Article 4 by a third party, the matter shall be handled in accordance with the following procedures:.....    Article 8 The company shall neither provide nor promise any facilitating payment...    Adjustment of line item

 

 

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After the amendment

   

Before the amendment

   

Explanations

Article 9 The official gifts or entertainment which cannot be declined

The official gifts or entertainment which cannot be declined can be accepted under following circumstances:

 

1.  The gift cannot be cash or securities.

 

2.  Gift values and categories allowed to be received

 

(1)   Perishable foods

 

(2)   No more than NT$2,000 of market value for each gift.

 

(3)   In case the gift is a supplier’s product, its market value shall be no more than NT$5,000

 

(4)   Total market value of the property offered from the same counterparty within a single fiscal year shall be limited to NT$_100,000.

 

    Article 9 Political contributions by the company shall be made in accordance with the following provisions, reported to the chairman for approval, and a notification given to the audit office, and when the amount of a contribution is NT$1,000,000_or more it shall be made only after being reported to and approved by the board of directors......   

1. Newly incorporated

 

2. Incorporate in the company’s “regulations governing management of receiving gifts and entertainment from suppliers” in Article 9.

 

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After the amendment

   

Before the amendment

   

Explanations

3.  If a gift from a supplier does not comply with what is prescribed in the preceding Article 9, the gift recipient shall fill out the “Registration Form of Gift(s) Given By Other Company or Factory (Supplier(s)) ” (as per attachment 1) and submit it to the “Employee Welfare Committee”. Employee Welfare Committee will handle it according to the following procedure:

 

(1)   Register the type of gift from supplier.

 

(2)   Send the thank-you letter to the supplier offering the gift under the name of the “Employee Welfare Committee” of ChipMOS Technologies Ltd

 

(3)   Collect all the offered gifts and unitarily dispose them at the end of the year in question

 

4.  The entertainment received from any suppliers shall be limited to light meals, and any other forms of entertainment are not allowed.

 

      

 

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After the amendment

   

Before the amendment

   

Explanations

5.  Those colleagues who do not comply with the Regulations in their receiving gifts and entertainment from suppliers shall be subject to the “Regulations Governing Personnel Reward and Punishment”, with which they will be given a major demerit and are not allowed to receive A in their annual performance evaluation. If there is a solid proof that he or she has committed a serious violation of the above Regulations, such employee will be sent to public security or judicial organs, which will handle the case in accordance with the law.

      
Article 10 The company shall neither provide nor promise any facilitating payment....    Article 10 Charitable donations or sponsorships by the company shall be provided in accordance with the following provisions and reported to the chairman for approval, and a notification shall be given to the audit office....    Adjustment of line item

 

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After the amendment

   

Before the amendment

   

Explanations

Article 11 Political contributions by the company shall be made in accordance with the following provisions, reported to the chairman for approval, and a notification given to the audit office...    Article 11 When the Company’s director, supervisor, officer or other stakeholder attending or present at a board meeting, or the juristic person represented thereby, has a stake in a proposal at the meeting...    Adjustment of line item
Article 12 Charitable donations or sponsorships by the company shall be provided in accordance with the following provisions and reported to the chairman for approval, and a notification shall be given to the audit office. When the amount is NT$1,000,000 or more, the donation or sponsorship shall be provided only after it has been submitted for adoption by the board of directors...    Article 12 The company shall set up a special unit charged with formulating and implementing procedures for managing, preserving, and maintaining the confidentiality of the company’s trade secrets, trademarks, patents, works and other intellectual properties and it shall also conduct periodical reviews on the results of implementation to ensure the sustained effectiveness of the confidentiality procedures...    Adjustment of line item
Article 13 When the Company’s director , supervisor, officer or other stakeholder attending or present at a board meeting, or the juristic person represented thereby, has a stake in a proposal at the meeting...    Article 13 The company shall follow the Fair Trade Act and applicable competition laws and regulations when engaging in business activities...    Adjustment of line item

 

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After the amendment

   

Before the amendment

   

Explanations

Article 14 The company shall set up a special unit charged with formulating and implementing procedures for managing, preserving, and maintaining the confidentiality of the company’s trade secrets, trademarks, patents, works and other intellectual properties and it shall also conduct periodical reviews on the results of implementation to ensure the sustained effectiveness of the confidentiality procedure...    Article 14 The company shall collect and understand the applicable laws and regulations and international standards governing its products and services...    Adjustment of line item
Article 15 The company shall follow the Fair Trade Act and applicable competition laws and regulations when engaging in business activities...    Article 15 All Company personnel shall adhere to the provisions of the Securities and Exchange Act, and may not take advantage of undisclosed information of which they have learned to engage in insider trading. Personnel are also prohibited from divulging undisclosed information to any other party, in order to prevent other party from using such information to engage in insider trading...    Adjustment of line item
Article 16 The company shall collect and understand the applicable laws and regulations and international standards governing its products and services...    Article 16 The company shall adopt and publish on its website a policy on the protection of the rights and interests of consumers or other stakeholders ...    Adjustment of line item

 

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After the amendment

   

Before the amendment

   

Explanations

Article 17 All Company personnel shall adhere to the provisions of the Securities and Exchange Act, and may not take advantage of undisclosed information of which they have learned to engage in insider trading. Personnel are also prohibited from divulging undisclosed information to any other party, in order to prevent other party from using such information to engage in insider trading...    Article 17 Before developing a commercial relationship with another party, such as an agent, supplier, customer, or other counterparty in commercial dealings, the company shall evaluate the legality and ethical management policy of the party...    Adjustment of line item
Article 18 The company shall adopt and publish on its website a policy on the protection of the rights and interests of consumers or other stakeholders ...    Article 18 Any personnel of the company, when engaging in commercial activities, shall make a statement to the trading counterparty about the company’s ethical management policy and related rules...    Adjustment of line item
Article 19 Before developing a commercial relationship with another party, such as an agent, supplier, customer, or other counterparty in commercial dealings, the company shall evaluate the legality and ethical management policy of the party...    Article 19 All personnel of the company shall avoid business transactions with an agent, supplier, customer, or other counterparty in commercial interactions that is involved in unethical conduct...    Adjustment of line item
Article 20 Any personnel of the company, when engaging in commercial activities, shall make a statement to the trading counterparty about the company’s ethical management policy and related rules...    Article 20 Before entering into a contract with another party, the company shall gain a thorough knowledge of the status of the other party’s ethical management...    Adjustment of line item

 

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After the amendment

   

Before the amendment

   

Explanations

Article 21 All personnel of the company shall avoid business transactions with an agent, supplier, customer, or other counterparty in commercial interactions that is involved in unethical conduct ...    Article 21 As an incentive to insiders and outsiders for informing of unethical or unseemly conduct...    Adjustment of line item
Article 22 Before entering into a contract with another party, the company shall gain a thorough knowledge of the status of the other party’s ethical management...    Article 22 If any personnel of the company discover that another party has engaged in unethical conduct towards the company, and such unethical conduct involves alleged illegality...    Adjustment of line item
Article 23 As an incentive to insiders and outsiders for informing of unethical or unseemly conduct, The company will grant appropriate reward depending on the seriousness of the circumstance concerned. Insiders having made a false report or malicious accusation shall be subject to disciplinary action and be removed from office if the circumstance concerned is material. The company shall internally establish and publicly announce on its website and the intranet, or provide through an independent external institution, an independent mailbox or hotline, for Company insiders and outsiders to submit reports.    Article 23 The audit office shall organize awareness sessions each year and arrange for the chairman, general manager, or senior management to communicate the importance of ethics to its directors, employees, and mandataries.   

1. Adjustment of line item

 

2. Newly incorporated to enhance corporate governance

 

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After the amendment

   

Before the amendment

   

Explanations

When the company receives reports on unethical behaviors or misconducts, the company shall deal with those reports according to whistle blower policy at once. The company shall ask the actor to stop unethical behaviors or misconducts and then take adequate act. Indemnification shall be claimed via legal process if necessary.

The Company shall instruct relative departments to review relevant internal control system and internal regulations and propose improvement measures to prevent recurrence of such events. Responsible unit shall report handling ways and improvement measures to the Board

      
Article 24 If any personnel of the company discover that another party has engaged in unethical conduct towards the company, and such unethical conduct involves alleged illegality...    Article 24 These Procedures and Guidelines, and any amendments hereto, shall be implemented after adoption by resolution of the board of directors, and reported to the shareholders meeting.    Adjustment of line item

 

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After the amendment

   

Before the amendment

   

Explanations

Article 25 The audit office shall organize awareness sessions each year and arrange for the chairman, general manager, or senior management to communicate the importance of ethics to its directors, employees, and mandataries....      

Adjustment of line item

Article 26 These Procedures and Guidelines, and any amendments hereto, shall be implemented after adoption by resolution of the board of directors, and reported to the shareholders meeting.       Adjustment of line item
This Procedure was enacted on August 13, 2013. The first amendment was made on March 12, 2015 and the second amendment was made on November 10, 2016. The third amendment was made on August 10, 2017.    This Procedure was enacted on August 13, 2013. The first amendment was made on March 12, 2015 and the second amendment was made on November 10, 2016.    Incorporate in the Date of this amendment.

 

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Attachment 4-1

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of ChipMOS TECHNOLOGIES INC.

Opinion

We have audited the accompanying consolidated balance sheets of ChipMOS TECHNOLOGIES INC. and its subsidiaries (the “Group”) as of December 31, 2017 and 2016, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the report of other independent accountants, as described in the Other matters section of our report, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2017 and 2016, and its consolidated financial performance and its consolidated cash flows for the years then ended, in accordance with the “Regulations Governing the Preparations of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China (“ROC GAAS”). Our responsibilities under those standards are further described in the Independent Accountant’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with this Code. Based on our audits and the report of other independent accountants, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

 

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Key audit matters for the Group’s consolidated financial statements of the year ended December 31, 2017 are stated as follows:

Disposal of equity investment

Description

Please refer to Note 4(3) to the consolidated financial statements for information on the basis of consolidation; Notes 4(13) and 6(5) for the information on the accounting policies and the transaction in relating to investments accounted for using equity method; and Note 6(7) for the details of non-current assets held for sale and discontinued operations.

On November 30, 2016, the Board of Directors of ChipMOS TECHNOLOGIES INC. (the “Company”) adopted a resolution to authorize its subsidiary, ChipMOS TECHNOLOGIES (BVI) LTD., to dispose 54.98% of its shareholding in the subsidiary, ChipMOS TECHNOLOGIES (Shanghai) LTD. The equity transfer was completed in March 2017, and the Group recognized gain on disposal of discontinued operations amounted to NT$1,843,234 thousand for the year ended December 31, 2017. Since the disposal of equity investment was a material transaction during the financial reporting period, it was identified as a key audit matter.

How our audit addressed the matter

Our key audit procedures performed in respect of the above included the following:

 

1. Interviewed the management to understand the purpose, evaluation process, and determination of the consideration of the equity investment disposal.

 

2. Reviewed the Equity Interest Transfer Agreement and the meeting minutes of the Board of Directors’ Meeting, verified that the related meeting resolutions were consistent with the Equity Interest Transfer Agreement, and provisions within the Equity Interest Transfer Agreement in relating to financial reporting were accounted for using the appropriate accounting treatment.

 

3. Evaluated the competency and objectivity of the independent experts engaged by the management, and reviewed the fairness opinion, as provided by management, of the disposal consideration issued by the independent experts.

 

4. Reviewed the equity investment disposal disclosures in the financial statements.

 

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Provisions for deficiency compensation

Description

Please refer to Note 4(19) to the consolidated financial statements for the accounting policies on provisions; Note 5(1) for uncertainty of accounting estimates and assumptions of provisions; and Note 6(11) for the details of the provisions for deficiency compensation.

The Group is primarily engaged in assembly and testing services for high-integration and high-precision integrated circuits. In case of deficiencies in the assembly and testing services provided, the Group has to clarify the reason for such deficiencies and attribute responsibilities, and determine whether to provide related provisions. Since the timing and amount of deficiency compensation are uncertain, and subject to management’s significant judgment, the provisions for deficiency compensation was identified as a key audit matter.

How our audit addressed the matter

Our key audit procedures performed in respect of the above included the following:

 

1. Interviewed the management and verified the internal process on estimating provisions for deficiency compensation, and the consistency of process application during the financial reporting periods.

 

2. Reviewed related documents and evidence provided by management, sampled and tested the reasonableness of providing and reversing provisions for deficiency compensation during the current period.

 

3. Reviewed significant payments made subsequent to the reporting period and validated the reasonableness of provisions for deficiency compensation.

Other matters

The report of the other independent accountants

We did not audit the financial statements of a certain investee company accounted for using the equity method. Those financial statements were audited by the other independent accountants, whose reports thereon have been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts included in the financial statements and the information on the investee

disclosed in Note 13 was based solely on the report of the other independent accountants. Investments in this investee company amounted to NT$373,276 thousand and NT$369,329 thousand, both representing 1% of total consolidated assets as of December 31, 2017 and 2016, and total net comprehensive income including the share of profit and other comprehensive income of associate accounted for using the equity method amounted to NT$1,343 thousand and NT$28,791 thousand, representing 0% and 3% of total consolidated comprehensive income for the years then ended, respectively.

 

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Parent company only financial reports

We have audited and expressed an unmodified opinion on the parent company only financial statements of ChipMOS TECHNOLOGIES INC. as of and for the years ended December 31, 2017 and 2016.

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

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the “Regulations Governing the Preparations of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including the Audit Committee, are responsible for overseeing the Group’s financial reporting process.

Independent accountant’s responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a report that includes our opinion. Reasonable assurance is a high level of assurance, but it is not a guarantee that an audit conducted in accordance with ROC GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

 

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As part of an audit in accordance with ROC GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

 

1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls.

 

2. Obtain an understanding of internal controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal controls.

 

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

 

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our report. However, future events or conditions may cause the Group to cease to continue as a going concern.

 

5. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the footnote disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

 

6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

 

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From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

 

     

    

     

Chun-Yuan Hsiao     Chih-Cheng Hsieh
For and on behalf of PricewaterhouseCoopers, Taiwan
March 15, 2018    

 

 

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

 

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ChipMOS TECHNOLOGIES INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

 

               December 31, 2017      December 31, 2016  

Assets

   

Notes

    Amount      %      Amount      %  
   Current assets               
1100   

Cash and cash equivalents

    6(1)    $ 8,035,714        24      $ 7,571,366        24  
1150   

Notes receivable, net

         2,029        —          1,753        —    
1170   

Accounts receivable, net

    6(2)      4,013,705        12        4,138,493        13  
1180   

Accounts receivable—related parties, net

         11        —          —          —    
1200   

Other receivables

         56,716        —          57,411        —    
1210   

Other receivables—related parties

         4,534        —          —          —    
1220   

Current tax assets

         104,906        1        —          —    
130X   

Inventories

    6(3)      1,929,239        6        1,877,982        6  
1410   

Prepayments

         54,126        —          142,281        1  
1460   

Non-current assets held for sale, net

    6(7)      —          —          3,105,071        10  
1476   

Other current financial assets

         —          —          1,600        —    
        

 

 

     

 

 

     

 

 

     

 

 

  
11XX   

Total current assets

         14,200,980        43        16,895,957        54  
        

 

 

     

 

 

     

 

 

     

 

 

  
  

Non-current assets

               
1543   

Non-current financial assets carried at cost

    6(4)      20,890        —          9,960        —    
1550   

Investments accounted for using equity method

    6(5)      3,433,332        10        369,329        1  
1600   

Property, plant and equipment

    6(6) and 8      15,265,311        46        13,497,218        43  
1840   

Deferred tax assets

    6(28)      212,372        1        249,806        1  
1920   

Refundable deposits

         21,342        —          21,321        —    
1980   

Other non-current financial assets

    8      70,241        —          70,677        —    
1990   

Other non-current assets

         35,474        —          181,692        1  
        

 

 

     

 

 

     

 

 

     

 

 

  
15XX   

Total non-current assets

         19,058,962        57        14,400,003        46  
        

 

 

     

 

 

     

 

 

     

 

 

  
1XXX   

Total assets

       $ 33,259,942        100      $ 31,295,960        100  
        

 

 

     

 

 

     

 

 

     

 

 

  

(Continued)

 

32

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ChipMOS TECHNOLOGIES INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

 

               December 31, 2017      December 31, 2016  

Liabilities and Equity

   

Notes

    Amount      %      Amount      %  
  

Liabilities

               
  

Current liabilities

               
2100   

Short-term bank loans

    6(8)    $ 969,353        3      $ —          —    
2170   

Accounts payable

    6(9)      687,960        2        825,062        3  
2180   

Accounts payable—related parties

         226        —          —          —    
2200   

Other payables

    6(10)      2,693,495        8        1,962,400        6  
2220   

Other payables—related parties

         36        —          —          —    
2230   

Current tax liabilities

         790        —          90,104        —    
2250   

Current provisions

    6(11)      127,311        1        80,719        —    
2260   

Liabilities directly related to non-current assets held for sale

    6(7)      —          —          587,639        2  
2310   

Receipts in advance

    6(14) and 7      5,209        —          1,324        —    
2320   

Long-term bank loans, current portion

    6(12) and 8      2,143,168        6        1,062,285        4  
2355   

Long-term lease obligations payable, current portion

    6(13)      11,785        —          11,291        —    
2399   

Other current liabilities

         31,275        —          43,676        —    
        

 

 

     

 

 

     

 

 

     

 

 

  
21XX   

Total current liabilities

         6,670,608        20        4,664,500        15  
        

 

 

     

 

 

     

 

 

     

 

 

  
   Non-current liabilities               
2540   

Long-term bank loans

    6(12) and 8      7,498,853        23        9,687,720        31  
2570   

Deferred tax liabilities

    6(28)      174,293        1        92,543        —    
2613   

Long-term lease obligations payable

    6(13)      18,057        —          29,311        —    
2630   

Long-term deferred revenue

    6(14) and 7      24,898        —          —          —    
2640   

Net defined benefit liability, non-current

    6(15)      478,526        1        546,968        2  
2645   

Guarantee deposits

         1,371        —          1,404        —    
        

 

 

     

 

 

     

 

 

     

 

 

  
25XX   

Total non-current liabilities

         8,195,998        25        10,357,946        33  
        

 

 

     

 

 

     

 

 

     

 

 

  
2XXX   

Total liabilities

         14,866,606        45        15,022,446        48  
        

 

 

     

 

 

     

 

 

     

 

 

  
   Equity               
   Equity attributable to equity holders of the Company               
   Capital stock               
3110   

Capital stock — common stock

    6(17)      8,862,971        27        8,869,663        28  
   Capital surplus    6(18)            
3200   

Capital surplus

         6,288,377        19        6,888,826        22  
   Retained earnings    6(19)            
3310   

Legal reserve

         1,166,517        3        1,137,837        4  
3350   

Unappropriated retained earnings

         3,071,424        9        286,801        1  
   Other equity interest    6(20)            
3410   

Financial statements translation differences of foreign operations

         65,593        —          10,600        —    
3425   

Unrealized gain on valuation of available-for-sale financial assets

         678        —          —          —    
3470   

Equity directly related to non-current assets held for sale

    6(7)      —          —          287,645        1  
3490   

Unearned employee awards

         (54,570 )       —          (200,204 )       (1 ) 
3500    Treasury stock    6(17)      (1,007,654 )       (3 )       (1,007,654 )       (3 ) 
        

 

 

     

 

 

     

 

 

     

 

 

  
31XX   

Equity attributable to equity holders of the Company

         18,393,336        55        16,273,514        52  
        

 

 

     

 

 

     

 

 

     

 

 

  
3XXX   

Total equity

         18,393,336        55        16,273,514        52  
        

 

 

     

 

 

     

 

 

     

 

 

  
  

Significant contingent liabilities and unrecognized contract commitments

    9            
   Significant events after the reporting period    11            
3X2X   

Total liabilities and equity

       $ 33,259,942        100      $ 31,295,960        100  
        

 

 

     

 

 

     

 

 

     

 

 

  

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

 

33

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ChipMOS TECHNOLOGIES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan dollars, except earnings per share)

 

              Years ended December 31,  
              2017     2016  

Items

    Notes   Amount     %     Amount     %  
4000    Revenue    6(21)   $ 17,940,855       100     $ 18,387,593       100  
5000    Cost of revenue    6(3)(26)(27)     (14,703,729 )      (82 )      (14,745,472 )      (80 ) 
       

 

 

    

 

 

    

 

 

    

 

 

  
5900   

Gross profit

        3,237,126       18       3,642,121       20  
       

 

 

    

 

 

    

 

 

    

 

 

  
   Operating expenses    6(26)(27)        
6100   

Sales and marketing expenses

        (64,397 )      —         (72,918 )      —    
6200   

General and administrative expenses

        (639,809 )      (4 )      (822,068 )      (4 ) 
6300   

Research and development expenses

        (985,873 )      (5 )      (838,866 )      (5 ) 
       

 

 

    

 

 

    

 

 

    

 

 

  
6000   

Total operating expenses

        (1,690,079 )      (9 )      (1,733,852 )      (9 ) 
       

 

 

    

 

 

    

 

 

    

 

 

  
6500    Other income (expenses), net    6(22)     692,834       4       90,306       —    
       

 

 

    

 

 

    

 

 

    

 

 

  
6900    Operating profit        2,239,881       13       1,998,575       11  
       

 

 

    

 

 

    

 

 

    

 

 

  
   Non-operating income (expenses)           
7010   

Other income

    6(23)     64,198       —         46,757       —    
7020   

Other gains and losses

    6(24)     (391,818 )      (2 )      (194,705 )      (1 ) 
7050   

Finance costs

    6(25)     (217,283 )      (1 )      (179,116 )      (1 ) 
7060   

Share of profit (loss) of associates and joint ventures accounted for using equity method

    6(5)     (179,491 )      (1 )      28,924       —    
       

 

 

    

 

 

    

 

 

    

 

 

  
7000   

Total non-operating income (expenses)

        (724,394 )      (4 )      (298,140 )      (2 ) 
       

 

 

    

 

 

    

 

 

    

 

 

  
7900    Profit before income tax        1,515,487       9       1,700,435       9  
7950   

Income tax expense

    6(28)     (303,912 )      (2 )      (352,050 )      (2 ) 
       

 

 

    

 

 

    

 

 

    

 

 

  
8000    Profit for the year from continuing operations        1,211,575       7       1,348,385       7  
8100   

Profit (loss) for the year from discontinued operations

    6(7)     1,814,953       10       (122,105 )      (1 ) 
       

 

 

    

 

 

    

 

 

    

 

 

  
8200    Profit for the year      $ 3,026,528       17     $ 1,226,280       6  
       

 

 

    

 

 

    

 

 

    

 

 

  

(Continued)

 

34

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ChipMOS TECHNOLOGIES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan dollars, except earnings per share)

 

              Years ended December 31,  
              2017     2016  

Items

    Notes   Amount     %     Amount     %  
   Other comprehensive income (loss)           
8311   

Profit (loss) on remeasurements of defined benefit plans

    6(15)   $ 50,838       —       ($ 43,383 )      —    
8330   

Share of other comprehensive loss of associates and joint ventures accounted for using equity method that will not be reclassified to profit or loss

    6(5)     (124 )      —         (133 )      —    
8349   

Income tax effect that will not be reclassified to profit or loss

    6(28)     (8,642 )      —         7,375       —    
       

 

 

    

 

 

    

 

 

    

 

 

  
8310   

Components of other comprehensive income (loss) that will not be reclassified to profit or loss

        42,072       —         (36,141 )      —    
       

 

 

    

 

 

    

 

 

    

 

 

  
8361   

Exchange differences on translation of foreign operations

    6(20)     (232,652 )      (1 )      (200,280 )      (1 ) 
8380   

Share of other comprehensive income of associates and joint ventures accounted for using equity method that will be reclassified to profit or loss

    6(5)     678       —         —         —    
       

 

 

    

 

 

    

 

 

    

 

 

  
8360   

Components of other comprehensive loss that will be reclassified to profit or loss

        (231,974 )      (1 )      (200,280 )      (1 ) 
       

 

 

    

 

 

    

 

 

    

 

 

  
8300    Other comprehensive loss, net of income tax      ($ 189,902 )      (1 )    ($ 236,421 )      (1 ) 
       

 

 

    

 

 

    

 

 

    

 

 

  
8500    Total comprehensive income for the year      $ 2,836,626       16     $ 989,859       5  
       

 

 

    

 

 

    

 

 

    

 

 

  
   Profit (loss) attributable to:           
  

Equity holders of the Company

           
8610   

- continuing operations

      $ 1,211,575       7     $ 1,654,397       9  
  

- discontinued operations

        1,814,953       10       (122,105 )      (1 ) 
8615   

Predecessors’ interests under common control

        —         —         (306,012 )      (2 ) 
       

 

 

    

 

 

    

 

 

    

 

 

  
        $ 3,026,528       17     $ 1,226,280       6  
       

 

 

    

 

 

    

 

 

    

 

 

  
   Comprehensive income (loss) attributable to:           
  

Equity holders of the Company

           
8710   

- continuing operations

      $ 1,309,318       7     $ 1,613,948       9  
  

- discontinued operations

        1,527,308       9       (318,077 )      (2 ) 
8715   

Predecessors’ interests under common control

        —         —         (306,012 )      (2 ) 
       

 

 

    

 

 

    

 

 

    

 

 

  
        $ 2,836,626       16     $ 989,859       5  
       

 

 

    

 

 

    

 

 

    

 

 

  
   Earnings per share-basic    6(29)        
  

Equity holders of the Company

           
9710   

- continuing operations

      $       1.43     $       1.92  
9720   

- discontinued operations

          2.14         (0.14 ) 
       

 

 

    

 

 

  
9750   

Equity holders of the Company

      $       3.57     $       1.78  
  

Predecessors’ interests under common control

          —           ( 0.35 ) 
       

 

 

    

 

 

  
  

Earnings per share-basic

      $       3.57       $ 1.43  
       

 

 

    

 

 

  
   Earnings per share-diluted    6(29)        
  

Equity holders of the Company

           
9810   

- continuing operations

      $       1.40     $       1.90  
9820   

- discontinued operations

          2.10         (0.14 ) 
       

 

 

    

 

 

  
9850   

Equity holders of the Company

      $       3.50     $       1.76  
  

Predecessors’ interests under common control

          —           (0.35 ) 
       

 

 

    

 

 

  
  

Earnings per share-diluted

      $       3.50     $       1.41  
       

 

 

    

 

 

  

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

 

35

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ChipMOS TECHNOLOGIES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands of New Taiwan dollars)

 

          Equity attributable to equity holders of the Company              
                      Retained earnings     Other equity interest                          
    Notes     Capital stock –
common stock		     Capital
surplus		     Legal
reserve		     Unappropriated
retained
earnings		     Financial
statements
translation
differences of
foreign
operations		     Unrealized
gain on
valuation of
available-for-
sale financial
assets		     Equity directly
related to
non-current
assets held for
sale		     Unearned
employee
awards		     Treasury
stock		     Total     Equity
attributable to
predecessors’
interests under
common control		     Total
equity		  

Year 2016

                          

Balance at January 1, 2016

     $ 8,962,066     $ 3,755,849     $ 914,790     $ 5,858,579     $ 63,668     $ —       $ —       ($ 447,323 )    $ —       $ 19,107,629     $ 2,127,532     $ 21,235,161  

Appropriation of prior year’s earnings:

     6(19)                          

Legal reserve

       —         —         223,047       (223,047 )      —         —         —         —         —         —         —         —    

Cash dividends

       —         —         —         (1,792,553 )      —         —         —         —         —         (1,792,553 )      —         ( 1,792,553 ) 

Share-based payments

       —         56,689       —         —         —         —         —         —         —         56,689       ( 128,602 )      ( 71,913 ) 

Restricted shares

       4,347       10,755       —         14       —         —         —         247,119       —         262,235       —         262,235  

Repurchase of shares

     6(17)       —         —         —         —         —         —         —         —         (1,007,654 )      (1,007,654 )      —         ( 1,007,654 ) 

Profit (loss) for the year

       —         —         —         1,532,292       —         —         —         —         —         1,532,292       ( 306,012 )      1,226,280  

Other comprehensive loss for the year

     6(20)       —         —         —         (36,141 )      (200,280 )      —         —         —         —         (236,421 )      —         ( 236,421 ) 

Reclassified as discontinued operations

     6(7)       —         —         —         —         (287,645 )      —         287,645       —         —         —         —         —    

Effect of capital reorganization

     6(30)       (96,750 )      3,065,533       —         (5,052,343 )      434,857       —         —         —         —         (1,648,703 )      (1,692,918 )      ( 3,341,621 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance at December 31, 2016

     $ 8,869,663     $ 6,888,826     $ 1,137,837     $ 286,801     $ 10,600     $ —       $ 287,645     ($ 200,204 )    ($ 1,007,654 )    $ 16,273,514     $ —       $ 16,273,514  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

(Continued)

 

36

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ChipMOS TECHNOLOGIES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands of New Taiwan dollars)

 

          Equity attributable to equity holders of the Company              
                      Retained earnings     Other equity interest                          
    Notes     Capital stock –
common stock		     Capital
surplus		     Legal
reserve		     Unappropriated
retained
earnings		     Financial
statements
translation
differences of
foreign
operations		     Unrealized
gain on
valuation of
available-for-
sale financial
assets		     Equity directly
related to
non-current
assets held for
sale		     Unearned
employee
awards		     Treasury
stock		     Total     Equity
attributable to
predecessors’
interests under
common control		     Total
equity		  

Year 2017

                          

Balance at January 1, 2017

     $ 8,869,663     $ 6,888,826     $ 1,137,837     $ 286,801     $ 10,600     $ —       $ 287,645     ($ 200,204 )    ($ 1,007,654 )    $ 16,273,514     $ —       $ 16,273,514  

Appropriation of prior year’s earnings:

     6(19)                          

Legal reserve

       —         —         28,680       (28,680 )      —         —         —         —         —         —         —         —    

Cash dividends

       —         —         —         (257,026 )      —         —         —         —         —         (257,026 )      —         ( 257,026 ) 

Cash distribution from capital surplus

     6(18)(19)       —         ( 599,728 )      —         —         —         —         —         —         —         (599,728 )      —         ( 599,728 ) 

Restricted shares

     6(16)       (6,692 )      ( 17,650 )      —         1,729       —         —         —         145,634       —         123,021       —         123,021  

Change in shareholding of equity investment

     6(18)       —         16,929       —         —         —         —         —         —         —         16,929       —         16,929  

Effect of disposal of a subsidiary

     6(7)       —         —         —         —         287,645       —         (287,645 )      —         —         —         —         —    

Profit for the year

       —         —         —         3,026,528       —         —         —         —         —         3,026,528       —         3,026,528  

Other comprehensive income (loss) for the year

     6(20)       —         —         —         42,072       (232,652 )      678       —         —         —         (189,902 )      —         ( 189,902 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance at December 31, 2017

     $ 8,862,971     $ 6,288,377     $ 1,166,517     $ 3,071,424     $ 65,593     $ 678     $ —       ($ 54,570 )    ($ 1,007,654 )    $ 18,393,336     $ —       $ 18,393,336  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

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

 

37

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ChipMOS TECHNOLOGIES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

 

            Years ended December 31,  
     Notes      2017     2016  

CASH FLOWS FROM OPERATING ACTIVITIES

        

Profit before income tax—continuing operations

       $ 1,515,487     $ 1,700,435  

Profit (loss) before income tax—discontinued operations

      6(7)        1,814,953       (122,105 ) 
     

 

 

    

 

 

  

Profit before income tax

         3,330,440       1,578,330  

Adjustments to reconcile profit (loss)

        

Depreciation

      6(6)(26)        2,899,278       3,228,441  

Amortization

      6(26)        —         2,838  

(Reversal of ) allowance for impairment of accounts receivable

      6(2)        (87 )      87  

Interest expense

         190,425       145,151  

Interest income

         (53,123 )      (42,307 ) 

Share-based payments

      6(16)(27)        123,021       356,463  

Share of (profit) loss of associates and joint ventures accounted for using equity method

      6(5)        179,491       (28,924 ) 

Donation

         —         127  

Gain on disposal of property, plant and equipment

         (132,777 )      (6,839 ) 

Impairment loss on property, plant and equipment

      6(6)(22)        956       8,198  

Profit for the year from discontinued operations

      6(7)        (1,814,953)       —    

Elimination of the transactions between discontinued operations and affiliated companies

         3,076       —    

Deferred income

         (11,434 )      (2,403 ) 

Changes in operating assets and liabilities

        

Changes in operating assets

        

Notes receivable

         (276 )      (359 ) 

Accounts receivable

         124,875       (479,989 ) 

Accounts receivable—related parties

         26       —    

Other receivables

         703       (124,226 ) 

Other receivables—related parties

         35,855       —    

Inventories

         (51,257 )      (347,133 ) 

Prepayments

         104,870       12,291  

Other current financial assets

         1,600       17,243  

Other non-current assets

         6,914       6,914  

Changes in operating liabilities

        

Accounts payable

         (137,102 )      215,555  

Accounts payable—related parties

         226       —    

Other payables

         450,625       (249,607 ) 

Other payables—related parties

         36       —    

Current provisions

         46,592       (16,184 ) 

Receipts in advance

         (172 )      2,150  

Other current liabilities

         (12,401 )      22,878  

Net defined benefit liability, non-current

         (17,604 )      (15,886 ) 
     

 

 

    

 

 

  

Cash generated from operations

         5,267,823       4,282,809  

Interest received

         47,299       44,413  

Dividends received

         14,325       5,730  

Interest paid

         (188,630 )      (145,668 ) 

Income tax paid

         (387,590 )     (499,293 ) 
     

 

 

    

 

 

  

Net cash generated from operating activities

         4,753,227       3,687,991  
     

 

 

    

 

 

  

(Continued)

 

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ChipMOS TECHNOLOGIES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

 

         Years ended December 31,  
     Notes   2017     2016  

CASH FLOWS FROM INVESTING ACTIVITIES

       

Acquisition of non-current financial assets carried at cost

    6(4)   ( $ 10,940 )    $ —    

Acquisition of investments accounted for using equity method

    6(5) and 7     (1,373,486 )      —    

Acquisition of property, plant and equipment

    6(32)     (4,411,180 )      (4,471,465 ) 

Proceeds from disposal of property, plant and equipment

        306,634       59,134  

(Increase) decrease in refundable deposits

        (11 )      407  

Decrease (increase) in other current financial assets

        436       (5,466 ) 

Proceeds from disposal of a subsidiary

    6(32)     2,230,544       —    

Increase in other non-current assets

        —         (139,304 ) 

Cash and cash equivalents reclassified as non-current assets held for sale

    6(1)(7)     —         (389,897 ) 
    

 

 

    

 

 

  

Net cash used in investing activities

        (3,258,003 )      (4,946,591 ) 
    

 

 

    

 

 

  

CASH FLOWS FROM FINANCING ACTIVITIES

       

Proceeds from short-term bank loans

        5,247,871       3,820,594  

Payments on short-term bank loans

        (4,278,518 )      (4,969,469 ) 

Proceeds from long-term bank loans

        —         10,560,000  

Payments on long-term bank loans

        (1,124,699 )      (6,200,567 ) 

Decrease in guarantee deposits

        (33 )      (44 ) 

Payments on repurchase of shares

    6(17)     —         (1,007,654 ) 

Cash paid in respect of share-based payments

        —         (292,623 ) 

Cash paid for capital reorganization

    6(32)     —         (3,341,621 ) 

Cash dividend

    6(19)     (257,026 )      (1,792,553 ) 

Cash distribution from capital surplus

    6(18)(19)     (599,728 )      —    
    

 

 

    

 

 

  

Net cash used in financing activities

        (1,012,133 )      (3,223,937 ) 
    

 

 

    

 

 

  

Effect of foreign exchange rate changes

        (18,743 )      (73,447 ) 
    

 

 

    

 

 

  

Net increase (decrease) in cash and cash equivalents

        464,348       (4,555,984 ) 

Cash and cash equivalents at beginning of year

        7,571,366       12,127,350  
    

 

 

    

 

 

  

Cash and cash equivalents at end of year

      $ 8,035,714     $ 7,571,366  
    

 

 

    

 

 

  

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

 

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Attachment 4-2

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of ChipMOS TECHNOLOGIES INC.

Opinion

We have audited the accompanying parent company only balance sheets of ChipMOS TECHNOLOGIES INC. (the “Company”) as of December 31, 2017 and 2016, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the report of other independent accountants, as described in the Other matters section of our report, the accompanying parent company only financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and its financial performance and its cash flows for the years then ended in accordance with the “Regulations Governing the Preparations of Financial Reports by Securities Issuers”.

Basis for opinion

We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China (“ROC GAAS”). Our responsibilities under those standards are further described in the Independent Accountant’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with this Code. Based on our audits and the report of other independent accountants, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the parent company only financial statements of the current period. These matters were addressed in the context of our audit of the parent company only financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

 

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Key audit matters for the Company’s parent company only financial statements of the year ended December 31, 2017 are stated as follows:

Disposal of equity investment

Description

Please refer to Notes 4(11) and 6(5) to the parent company only financial statements for the information on the accounting policies and the transaction in relating to investments accounted for using equity method.

On November 30, 2016, the Board of Directors of the Company adopted a resolution to authorize its subsidiary, ChipMOS TECHNOLOGIES (BVI) LTD., to dispose 54.98% of its shareholding in the subsidiary, ChipMOS TECHNOLOGIES (Shanghai) LTD. The equity transfer was completed in March 2017, and the Company recognized share of profit of associates accounted for using equity method amounted to NT$1,843,234 thousand for the year ended December 31, 2017. Since the disposal of equity investment was a material transaction during the financial reporting period, it was identified as a key audit matter.

How our audit addressed the matter

Our key audit procedures performed in respect of the above included the following:

 

1. Interviewed the management to understand the purpose, evaluation process, and determination of the consideration of the equity investment disposal.

 

2. Reviewed the Equity Interest Transfer Agreement and the meeting minutes of the Board of Directors’ Meeting, verified that the related meeting resolutions were consistent with the Equity Interest Transfer Agreement, and provisions within the Equity Interest Transfer Agreement in relating to financial reporting were accounted for using the appropriate accounting treatment.

 

3. Evaluated the competency and objectivity of the independent experts engaged by the management, and reviewed the fairness opinion, as provided by management, of the disposal consideration issued by the independent experts.

 

4. Reviewed the equity investment disposal disclosures in the financial statements.

 

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Provisions for deficiency compensation

Description

Please refer to Note 4(17) to the parent company only financial statements for the accounting policies on provisions; Note 5(1) for uncertainty of accounting estimate and assumptions of provisions; and Note 6(10) for details of the provisions for deficiency compensation.

The Company is primarily engaged in assembly and testing services for high-integration and high-precision integrated circuits. In case of deficiencies in the assembling and testing services provided, the Company has to clarify the reason for such deficiencies and attribute responsibilities, and determine whether to provide related provisions. Since the timing and amounts of deficiency compensation are uncertain, and subject to management’s significant judgment, the provisions for deficiency compensation were identified as a key audit matter.

How our audit addressed the matter

Our key audit procedures performed in respect of the above included the following:

 

1. Interviewed the management and verified the internal process on estimating provisions for deficiency compensation, and the consistency of process application during the financial reporting periods.

 

2. Reviewed related documents and evidence provided by management, sampled and tested the reasonableness of providing and reversing provisions for deficiency compensation during the current period.

 

3. Reviewed significant payments made subsequent to the reporting period and validated the reasonableness of provisions for deficiency compensation.

Other matters

The report of the other independent accountants

We did not audit the financial statements of a certain investee company accounted for using the equity method. Those financial statements were audited by the other independent accountants whose report thereon have been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts included in the financial statements and the information on the investee disclosed in Note 13 was based solely on the report of the other independent accountants. Investments in this investee company amounted to NT$373,276 thousand and NT$369,329 thousand, both representing 1% of total assets as of December 31, 2017 and 2016, and total net comprehensive income including the share of profit and other comprehensive income of associate accounted for using the equity method amounted to NT$1,343 thousand and NT$28,791 thousand, representing 0% and 3% of total comprehensive income for the years then ended, respectively.

 

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

Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with the “Regulations Governing the Preparations of Financial Reports by Securities Issuers”, and for such internal controls as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the parent company only financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including the Audit Committee, are responsible for overseeing the Company’s financial reporting process.

Independent accountant’s responsibilities for the audit of the parent company only financial statements

Our objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ROC GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these parent company only financial statements.

 

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As part of an audit in accordance with ROC GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

 

1. Identify and assess the risks of material misstatement of the parent company only financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls.

 

2. Obtain an understanding of internal controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal controls.

 

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

 

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our report. However, future events or conditions may cause the Company to cease to continue as a going concern.

 

5. Evaluate the overall presentation, structure and content of the parent company only financial statements, including the footnote disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

 

6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the Company’s audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding the planned scope and timing of the audit, and significant audit findings including any significant deficiencies in internal controls that we identify during our audit.

 

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We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements of the current period and are therefore the key audit matters. We describe these matters in our report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

 

    

Chun-Yuan Hsiao

    

 

Chih-Cheng Hsieh

For and on behalf of PricewaterhouseCoopers, Taiwan
March 15, 2018    

 

 

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

 

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ChipMOS TECHNOLOGIES INC.

PARENT COMPANY ONLY BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

 

               December 31, 2017      December 31, 2016  

Assets

   

Notes

    Amount      %      Amount      %  
  

Current assets

               
1100   

Cash and cash equivalents

    6(1)    $ 6,992,107        21      $ 7,297,146        24  
1150   

Notes receivable, net

         2,029        —          1,753        —    
1170   

Accounts receivable, net

    6(2)      4,013,705        12        4,138,491        14  
1180   

Accounts receivable—related parties, net

         11        —          57        —    
1200   

Other receivables

         56,716        —          254,966        1  
1210   

Other receivables—related parties

    7      4,534        —          82,734        —    
1220   

Current tax assets

         104,906        1        —          —    
130X   

Inventories

    6(3)      1,929,239        6        1,877,982        6  
1410   

Prepayments

         54,126        —          97,261        —    
1476   

Other current financial assets

         —          —          1,600        —    
        

 

 

     

 

 

     

 

 

     

 

 

  
11XX   

Total current assets

         13,157,373        40        13,751,990        45  
        

 

 

     

 

 

     

 

 

     

 

 

  
   Non-current assets               
1543   

Non-current financial assets carried at cost

    6(4)      9,950        —          9,960        —    
1550   

Investments accounted for using equity method

    6(5)      4,427,157        13        3,012,366        10  
1600   

Property, plant and equipment

    6(6) and 8      15,264,103        46        13,495,686        44  
1840   

Deferred tax assets

    6(27)      212,372        1        249,806        1  
1920   

Refundable deposits

         20,525        —          20,435        —    
1980   

Other non-current financial asset

    8      70,241        —          70,677        —    
1990   

Other non-current assets

         35,474        —          181,692        —    
        

 

 

     

 

 

     

 

 

     

 

 

  
15XX   

Total non-current assets

         20,039,822        60        17,040,622        55  
        

 

 

     

 

 

     

 

 

     

 

 

  
1XXX    Total assets       $ 33,197,195        100      $ 30,792,612        100  
        

 

 

     

 

 

     

 

 

     

 

 

  

(Continued)

 

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ChipMOS TECHNOLOGIES INC.

PARENT COMPANY ONLY BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

 

               December 31, 2017     December 31, 2016  

Liabilities and Equity

   

Notes

    Amount     %     Amount     %  
   Liabilities            
   Current liabilities            

2100

   

Short-term bank loans

    6(7)    $ 969,353       3     $ —         —    

2170

   

Accounts payable

    6(8)      687,960       2       825,062       3  

2180

   

Accounts payable—related parties

         226       —         —         —    

2200

   

Other payables

    6(9)      2,629,101       8       1,962,372       6  

2220

   

Other payables—related parties

    7      2,473       —         3,016       —    

2230

   

Current tax liabilities

         —         —         89,870       —    

2250

   

Current provisions

    6(10)      127,311       1       80,719       —    

2310

   

Receipts in advance

    6(13) and 7      5,209       —         1,324       —    

2320

   

Long-term bank loans, current portion

    6(11) and 8      2,143,168       6       1,062,285       4  

2355

   

Long-term lease obligations payable, current portion

    6(12)      11,785       —         11,291       —    

2399

   

Other current liabilities

         31,275       —         43,676       —    
        

 

 

    

 

 

    

 

 

    

 

 

  

21XX

   

Total current liabilities

         6,607,861       20       4,079,615       13  
        

 

 

    

 

 

    

 

 

    

 

 

  
   Non-current liabilities            

2540

   

Long-term bank loans

    6(11) and 8      7,498,853       23       9,687,720       32  

2570

   

Deferred tax liabilities

    6(27)      174,293       1       92,543       —    

2613

   

Long-term lease obligations payable

    6(12)      18,057       —         29,311       —    

2630

   

Long-term deferred revenue

    6(13) and 7      24,898       —         81,537       —    

2640

   

Net defined benefit liability, non-current

    6(14)      478,526       1       546,968       2  

2645

   

Guarantee deposits

         1,371       —         1,404       —    
        

 

 

    

 

 

    

 

 

    

 

 

  

25XX

   

Total non-current liabilities

         8,195,998       25       10,439,483       34  
        

 

 

    

 

 

    

 

 

    

 

 

  

2XXX

   

Total liabilities

         14,803,859       45       14,519,098       47  
        

 

 

    

 

 

    

 

 

    

 

 

  
   Equity            
   Capital stock            

3110

   

Capital stock—common stock

    6(16)      8,862,971       27       8,869,663       29  
   Capital surplus    6(17)         

3200

   

Capital surplus

         6,288,377       19       6,888,826       22  
   Retained earnings    6(18)         

3310

   

Legal reserve

         1,166,517       3       1,137,837       4  

3350

   

Unappropriated retained earnings

         3,071,424       9       286,801       1  
   Other equity interest    6(19)         

3400

   

Other equity interest

         11,701       —         98,041       —    

3500

    Treasury stock    6(16)      (1,007,654 )      (3 )      (1,007,654 )      (3 ) 
        

 

 

    

 

 

    

 

 

    

 

 

  

3XXX

   

Total equity

         18,393,336       55       16,273,514       53  
        

 

 

    

 

 

    

 

 

    

 

 

  
  

Significant contingent liabilities and unrecognized contract commitments

    9         
   Significant events after the reporting period    113         

3X2X

   

Total liabilities and equity

       $ 33,197,195       100     $ 30,792,612       100  
        

 

 

    

 

 

    

 

 

    

 

 

  

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

 

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ChipMOS TECHNOLOGIES INC.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan dollars, except earnings per share)

 

                 Years ended December 31,  
               2017      2016  

Items

   

Notes

    Amount      %      Amount      %  
4000    Revenue    6(20)    $ 17,941,102        100      $ 18,389,205        100  
5000    Cost of revenue    6(3)(25)      (14,704,299 )       (82 )       (14,745,959 )       (80 ) 
        

 

 

     

 

 

     

 

 

     

 

 

  
5900   

Gross profit

         3,236,803        18        3,643,246        20  
        

 

 

     

 

 

     

 

 

     

 

 

  
   Operating expenses    6(25)(26)            
6100   

Sales and marketing expenses

         (100,290 )       (1 )       (114,584 )       (1 ) 
6200   

General and administrative expenses

         (503,456 )       (3 )       (781,992 )       (4 ) 
6300   

Research and development expenses

         (985,873 )       (5 )       (838,866 )       (5 ) 
        

 

 

     

 

 

     

 

 

     

 

 

  
6000   

Total operating expenses

         (1,589,619 )       (9 )       (1,735,442 )       (10 ) 
        

 

 

     

 

 

     

 

 

     

 

 

  
6500    Other income (expenses), net    6(21)      695,929        4        112,487        1  
        

 

 

     

 

 

     

 

 

     

 

 

  
6900    Operating profit         2,343,113        13        2,020,291        11  
        

 

 

     

 

 

     

 

 

     

 

 

  
   Non-operating income (expenses)               
7010   

Other income

    6(22) and 7      56,034        —          59,248        —    
7020   

Other gains and losses

    6(23)      (389,814 )       (2 )       (194,225 )       (1 ) 
7050   

Finance costs

    6(24)      (208,725 )       (1 )       (179,116 )       (1 ) 
7060   

Share of profit (loss) of subsidiaries, associates and joint ventures accounted for using equity method

    6(5)      1,528,008        9        (128,866 )       (1 ) 
        

 

 

     

 

 

     

 

 

     

 

 

  
7000   

Total non-operating income (expenses)

         985,503        6        (442,959 )       (3 ) 
        

 

 

     

 

 

     

 

 

     

 

 

  
7900    Profit before income tax         3,328,616        19        1,577,332        8  
7950   

Income tax expense

    6(27)      (302,088 )       (2 )       (351,052 )       (2 ) 
        

 

 

     

 

 

     

 

 

     

 

 

  
8000    Profit for the year from continuing operations         3,026,528        17        1,226,280        6  
        

 

 

     

 

 

     

 

 

     

 

 

  
8200    Profit for the year       $ 3,026,528        17      $ 1,226,280        6  
        

 

 

     

 

 

     

 

 

     

 

 

  

(Continued)

 

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ChipMOS TECHNOLOGIES INC.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan dollars, except earnings per share)

 

               Years ended December 31,  
               2017      2016  

Items

   

Notes

    Amount      %      Amount      %  
   Other comprehensive income (loss)               
8311   

Profit (loss) on remeasurement of defined benefit plans

    6(14)    $ 50,838        —        ( $ 43,383 )       —    
8330   

Share of other comprehensive loss of associates and joint ventures that will not be reclassified to profit or loss

    6(5)      (124 )       —          (133 )       —    
8349   

Income tax effect that will not be reclassified to profit or loss

    6(27)      (8,642 )       —          7,375        —    
        

 

 

     

 

 

     

 

 

     

 

 

  
8310   

Components of other comprehensive income (loss) that will not be reclassified to profit or loss

         42,072        —          (36,141 )       —    
        

 

 

     

 

 

     

 

 

     

 

 

  
8361   

Exchange differences on translation of foreign operations

    6(19)      (232,652 )       (1 )       (200,280 )       (1 ) 
8380   

Share of other comprehensive income of associates and joint ventures that will be reclassified to profit or loss

    6(5)      678        —          —          —    
        

 

 

     

 

 

     

 

 

     

 

 

  
8360   

Components of other comprehensive loss that will be reclassified to profit or loss

         (231,974 )       (1 )       (200,280 )       (1 ) 
        

 

 

     

 

 

     

 

 

     

 

 

  
8300    Other comprehensive loss, net of income tax       ( $ 189,902 )       (1 )     ( $ 236,421 )       (1 ) 
        

 

 

     

 

 

     

 

 

     

 

 

  
8500    Total comprehensive income for the year       $ 2,836,626        16      $ 989,859        5  
        

 

 

     

 

 

     

 

 

     

 

 

  
   Profit (loss) attributable to:               
  

Equity holders of the Company

       $ 3,026,528        17      $ 1,532,292        8  
  

Predecessors’ interests under common control

         —          —          (306,012 )       (2 ) 
        

 

 

     

 

 

     

 

 

     

 

 

  
         $ 3,026,528        17      $ 1,226,280        6  
        

 

 

     

 

 

     

 

 

     

 

 

  
   Comprehensive income (loss) attributable to:               
  

Equity holders of the Company

       $ 2,836,626        16      $ 1,295,871        7  
  

Predecessors’ interests under common control

         —          —          (306,012 )       (2 ) 
        

 

 

     

 

 

     

 

 

     

 

 

  
         $ 2,836,626        16      $ 989,859        5  
        

 

 

     

 

 

     

 

 

     

 

 

  
   Earnings per share-basic    6(28)            
9710   

Equity holders of the Company

       $        3.57      $        1.78  
9720   

Predecessors’ interests under common control

         —             (0.35 ) 
        

 

 

     

 

 

  
9750   

Earnings per share-basic

       $        3.57      $        1.43  
        

 

 

     

 

 

  
   Earnings per share-diluted    6(28)            
9810   

Equity holders of the Company

       $        3.50           1.76  
9820   

Predecessors’ interests under common control

         —             (0.35 ) 
        

 

 

     

 

 

  
9850   

Earnings per share-diluted

       $        3.50      $        1.41  
        

 

 

     

 

 

  

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

 

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ChipMOS TECHNOLOGIES INC.

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands of New Taiwan dollars)

 

          Equity attributable to equity holders of the Company              
                      Retained earnings     Other equity interest                    
    Notes     Capital stock –
common stock		     Capital
surplus		     Legal
reserve		     Unappropriated
retained
earnings		     Financial
statements
translation
differences of
foreign
operations		     Unrealized gain
on valuation of
available-for-sale
financial assets		     Unearned
employee
awards		     Treasury
stock		     Equity
attributable to
predecessors’
interests under
common
control		     Total equity  

Year 2016

                      

Balance at January 1, 2016

     $ 8,962,066     $ 3,755,849     $ 914,790     $ 5,858,579     $ 63,668     $ —       ($ 447,323 )    $ —       $ 2,127,532     $ 21,235,161  

Appropriation of prior year’s earnings:

     6(18)                      

Legal reserve

       —         —         223,047       (223,047 )      —         —         —         —         —         —    

Cash dividends

       —         —         —         (1,792,553 )      —           —         —         —         (1,792,553 ) 

Share-based payments

       —         56,689       —         —         —         —         —         —         (128,602 )      (71,913 ) 

Restricted shares

       4,347       10,755       —         14       —         —         247,119       —         —         262,235  

Repurchase of shares

     6(16)       —         —         —         —         —         —         —         (1,007,654 )      —         (1,007,654 ) 

Profit (loss) for the year

       —         —         —         1,532,292       —         —         —         —         ( 306,012 )      1,226,280  

Other comprehensive loss for the year

     6(19)       —         —         —         (36,141 )      (200,280 )      —         —         —         —         (236,421 ) 

Effect of capital reorganization

     6(29)(31)       (96,750 )      3,065,533       —         (5,052,343 )      434,857       —         —         —         (1,692,918 )      (3,341,621 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance at December 31, 2016

     $ 8,869,663     $ 6,888,826     $ 1,137,837       286,801     $ 298,245     $ —       ($ 200,204 )    ($ 1,007,654 )    $ —       $ 16,273,514  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Year 2017

                      

Balance at January 1, 2017

     $ 8,869,663     $ 6,888,826     $ 1,137,837     $ 286,801     $ 298,245     $ —       ($ 200,204 )    ($ 1,007,654 )    $ —       $ 16,273,514  

Appropriation of prior year’s earnings:

     6(18)                      

Legal reserve

       —         —         28,680       (28,680 )      —         —         —         —         —      

Cash dividends

       —         —         —         (257,026 )      —         —         —         —         —         (257,026 ) 

Cash distribution from capital surplus

     6(18)       —         (599,728 )      —           —         —         —         —         —         (599,728 ) 

Restricted shares

       (6,692 )      (17,650 )      —         1,729       —         —         145,634       —         —         123,021  

Change in shareholding

     6(5)(17)                      

of equity investment

       —         16,929       —         —         —         —         —         —         —         16,929  

Profit for the year

       —         —         —         3,026,528       —         —         —         —         —         3,026,528  

Other comprehensive income (loss) for the year

     6(19)       —         —         —         42,072       (232,652 )      678       —         —         —         (189,902 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance at December 31, 2017

     $ 8,862,971     $ 6,288,377     $ 1,166,517     $ 3,071,424     $ 65,593     $ 678     ($ 54,570 )    ($ 1,007,654 )    $ —       $ 18,393,336  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

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

 

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ChipMOS TECHNOLOGIES INC.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

 

            Years ended December 31,  
     Notes      2017     2016  

CASH FLOWS FROM OPERATING ACTIVITIES

        

Profit before income tax

       $ 3,328,616     $ 1,577,332  

Adjustments to reconcile profit (loss)

        

Depreciation

      6(6)(25)        2,899,085       3,089,825  

(Reversal of) allowance for impairment of accounts receivable

      6(2)        (87 )      87  

Interest expense

      6(24)        190,425       144,545  

Interest income

      6(22)        (46,846 )      (51,045 ) 

Share-based payments

      6(15)(26)        123,021       356,463  

Share of (profit) loss of subsidiaries, associates and joint ventures accounted for using equity method

      6(5)        (1,528,008 )      128,866  

Donation

         —         127  

Gain on disposal of property, plant and equipment

      6(6)(21)        (132,777 )      (8,780 ) 

Impairment loss on property, plant and equipment

      6(6)(21)        956       8,198  

Amortization of intercompany transactions

         ( 22,792 )      4,120  

Changes in operating assets and liabilities

        

Changes in operating assets

        

Notes receivable

         ( 276 )      (359 ) 

Accounts receivable

         124,873       (487,269 ) 

Accounts receivable–related parties

         46       72  

Other receivables

         7,751       33,452  

Other receivables–related parties

         40,147       (46,678 ) 

Inventories

         (51,257 )      (344,122 ) 

Prepayments

         59,850       40,606  

Other current financial assets

         1,600       —    

Other non-current assets

         6,914       6,915  

Changes in operating liabilities

        

Accounts payable

         (137,102 )      189,275  

Accounts payable–related parties

         226       —    

Other payables

         450,652       (265,340 ) 

Other payables–related parties

         (543 )      (186 ) 

Receipts in advance

         (172 )      213  

Current provisions

         46,592       (16,184 ) 

Other current liabilities

         (12,401 )      16,375  

Net defined benefit liability, non-current

         (17,604 )      (15,887 ) 

Long-term deferred revenue

         —         80,365  
     

 

 

    

 

 

  

Cash generated from operations

         5,330,889       4,440,986  

Interest received

         41,022       55,333  

Dividends received

         14,325       5,730  

Interest paid

         (188,630 )      (145,227 ) 

Income tax paid

         (386,322 )      (498,239 ) 
     

 

 

    

 

 

  

Net cash generated from operating activities

         4,811,284       3,858,583  
     

 

 

    

 

 

  

(Continued)

 

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ChipMOS TECHNOLOGIES INC.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

 

         Years ended December 31,  
     Notes   2017     2016  

CASH FLOWS FROM INVESTING ACTIVITIES

       

Decrease in other receivables related parties

      $ —       $ 984,750  

Acquisition of investments accounted for using equity method

    6(5)     —         (1,467,675 ) 

Acquisition of property, plant and equipment

    6(31)     (4,411,180 )      (3,049,643 ) 

Proceeds from disposal of property, plant and equipment

        306,634       972  

(Increase) decrease in refundable deposits

        (80 )      492  

Decrease (increase) in other current financial assets

        436       (7,066 ) 

Increase in other non-current assets

        —         (139,304 ) 
    

 

 

    

 

 

  

Net cash used in investing activities

        (4,104,190 )      (3,677,474 ) 
    

 

 

    

 

 

  

CASH FLOWS FROM FINANCING ACTIVITIES

       

Proceeds from short-term bank loans

        5,247,871       3,820,594  

Payments on short-term bank loans

        (4,278,518 )      (4,969,469 ) 

Proceeds from long-term bank loans

        —         10,300,000  

Payments on long-term bank loans

        (1,124,699 )      (6,060,000 ) 

Decrease in guarantee deposits

        (33 )      (25 ) 

Payments on repurchase of shares

    6(16)     —         (1,007,654 ) 

Cash paid in respect of share-based payments

        —         (292,623 ) 

Cash paid for capital reorganization

    6(29)(31)     —         (3,341,621 ) 

Cash dividend

    6(18)     (257,026 )      (1,792,553 ) 

Cash distribution from capital surplus

    6(18)     (599,728 )      —    
    

 

 

    

 

 

  

Net cash used in financing activities

        (1,012,133 )      (3,343,351 ) 
    

 

 

    

 

 

  

Net decrease in cash and cash equivalents

        (305,039 )      (3,162,242 ) 

Cash and cash equivalents at beginning of year

        7,297,146       10,459,388  
    

 

 

    

 

 

  

Cash and cash equivalents at end of year

      $ 6,992,107     $ 7,297,146  
    

 

 

    

 

 

  

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

 

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Attachment 5

ChipMOS TECHNOLOGIES INC.

Earnings Distribution Proposal of 2017

 

     Unit: NT$  

Items

              
   Amount         
   Subtotal      Total      Note  
After tax earnings of 2017       $ 3,026,528,005     

Plus: Unappropriated earnings of previous year

      1,094,619        

Plus: Share-based payment transaction

      1,729,658        

Plus: Remeasurement of defined benefit plans

      42,071,899        
     

 

 

     
Total earnings available for distribution         3,071,424,181     
     

 

 

     
Distribution items         

Appropriation of legal reserve

         302,652,801     

Dividends to shareholders

         256,806,318     
     

 

 

     
Unappropriated retained earnings at end of period         2,511,965,062     
     

 

 

     

Chairman: Shih-Jye Cheng

   

President: Shih-Jye Cheng

   

Accounting Officer: Silvia Su

 

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Attachment 6

Proposal of Releasing Directors from Non-Compete Restriction

 

Title

   

Name

   

Holding offices of

other company

   

Address of
the China
company

   

Scope of business of
the China company

   

Investment
amount and
shareholding
ratio in the
China
company

              
              
              
              
              
              
Independent    Yuh-Fong    Consultant of         
Director    Tang    Intelligent Silicon    N/A    N/A    N/A
      Solution Corporation         

 

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Appendix 1

ChipMOS TECHNOLOGIES INC.

Rules and Procedures of Shareholders’ Meeting

 

I Shareholders’ meeting of the Company (“Meeting”) shall be conducted in accordance with this Rules and Procedures of the Shareholders’ Meeting (these “Rules and Procedures”).

 

II The Company shall specify the time and place for shareholders’ sign-in and others noticeable in the Meeting notice.

The time of shareholders’ sign-in shall be 30 minutes or earlier before the Meeting begins. The place for sign-in shall be indicated expressly and operated by adequate staff.

A shareholder or his/her proxy shall attend the Meeting upon the attendance certificate, attendance card, or other certificates of attendance. Solicitors soliciting proxy forms shall also bring identification documents for verification.

The Company shall furnish attending shareholders with an attendance book to sign, or attending shareholders may hand in a sign-in card instead of signing in.

The Company shall furnish attending shareholders with the meeting agenda, annual report, attendance certificate, speech note, ballots and other related meeting documents. Election ballots shall be furnished as well in the event that director(s) and/or supervisor(s) will be elected in that Meeting.

Any government or juristic person shareholder which is a shareholder of the Company may designate more than one person as its representatives to attend the Meeting.

 

III Attendance and voting at the Meeting shall be based on the number of shares.

 

IV The venue for convening the Meeting shall be the location of the Company, or other appropriate place that is convenient for shareholders to attend, and suitable for the Meeting. The time to start the Meeting shall not be earlier than 9:00 a.m. or later than 3:00 p.m.

 

V If the Meeting is convened by the Board of Directors (the “Board”), the Chairman of the Board shall be the chairman presiding over the Meeting, and it is advisable to have a majority of the directors of the Board and at least one members of the Audit Committee to attend the Meeting and record their attendance in the minutes of the Meeting. If the Chairman is on leave or cannot exercise his power and authority for any cause, he/she shall designate one of the directors to act in his/her stead. If the Chairman of the Board does not designate any proxy, directors shall elect one from among themselves to preside over the Meeting.

The director who assumes the acting chair of the Meeting pursuant to the preceding paragraph shall hold an office at least 6 months above and fully understand the situation of finance and business of the Company. The same applies in the case which the chairman is the representative of juristic person shareholder.

If the Meeting is convened by any other person entitled to convene the Meeting instead of the Board, such person shall preside over the Meeting.

 

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VI The Company may designate its lawyers, certified public accounts or relevant persons to attend the Meeting. Persons handling affairs of the Meeting shall wear an identification card or a badge.

 

VII The Company shall record on audio and video tape continuously the entire proceedings of shareholders’ sign-in, Meeting procedures, casting votes and counting votes.

The recording referred to in the preceding paragraph shall be preserved for at least one year. If, however, a shareholder files a lawsuit pursuant to Article 189 of the Company Act, the recording shall be retained until the conclusion of the litigation.

 

VIII The calculation of the attendance of the Meeting shall be based on the shares represented. The number of shares in attendance shall be calculated in accordance with the attendance book or submitted sign-in cards plus the number of shares whose voting rights exercised in writing or by electronic method.

The chairman shall call the Meeting to order at the time scheduled for the Meeting. However, when the attending shareholders do not represent a majority of the total issued shares of the Company, the chairman may postpone the time for Meeting. The postponements shall be limited to two times at the most and Meeting shall not be postponed for longer than one hour in the aggregate. If, after two postponements, the attending shareholders still represent less than one third of the total issued shares of Company, the chairman shall declare the meeting adjourned.

If the quorum is not met after two postponements as referred to in the preceding paragraph, but the attending shareholders represent one third or more of the total issued shares, a tentative resolution may be adopted pursuant to Paragraph 1 of Article 175 of the Company Act; all shareholders shall be notified of the tentative resolution and another Meeting shall be convened within 1 month.

When, prior to conclusion of the Meeting, the attending shareholders represent a majority of the total issued shares, the chairman may resubmit the tentative resolution for a vote by the Meeting pursuant to Article 174 of the Company Act.

 

IX A shareholder holding 1% or more of the total issued shares of the Company may submit to the Company a written proposal for discussion at an annual Meeting. However, each of such shareholders can only submit 1 proposal. Otherwise, all of his/her proposals shall not be included in the meeting agenda. In the event that any proposal made by a shareholder falls within the scope of the circumstances set forth in any subparagraph of Paragraph 4 of Article 172-1 of the Company Act, the Board may exclude such proposal from the meeting agenda.

The Company shall, prior to the date on which transfer registration is suspended for the convention of an annual Meeting, give a public announcement regarding the period and places for shareholders to submit proposals. Such period shall not be less than 10 days.

A shareholder’s proposal shall be limited to 300 words. Any proposal with a text length that exceeds 300 words shall be excluded from the agenda. The shareholder who submitted a proposal shall attend the annual Meeting in person or by his/her proxy to participate in the discussion regarding the proposal made by him/her.

 

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The Company shall, prior to the date of Meeting notice issuance, inform the shareholders who submitted proposals the proposal screening result, and shall list the proposals that conform to this Article in the Meeting notice. At the Meeting, the Board shall explain the reasons for exclusion of any shareholder’s proposal in the meeting agenda.

If a Meeting is convened by the Board, the meeting agenda shall be provided by the Board. The Meeting shall proceed in accordance with the meeting agenda, unless otherwise resolved by the Meeting.

The preceding paragraph shall apply mutatis mutandis to cases where the Meeting is convened by a person, other than the Board, who is entitled to convene such Meeting.

The chairman shall not announce adjournment of the Meeting until the agenda set in the two preceding paragraphs (including the special motions) is duly resolved by the Meeting. After the Meeting is adjourned, shareholders shall not designate another chairman to continue the Meeting at the same or other place. However, in the event that the chairman violates the Rules and Procedures and announces the adjournment of the Meeting, shareholders may designate one person among themselves by a majority of votes represented by shareholders present at the Meeting to act as the chairman and continue the Meeting.

 

X A shareholder who wishes to speak in the Meeting shall first fill out a speech note, specifying therein the summary of the speech, his/her shareholder’s number (or the number of his/her attendance certificate) and the name of the shareholder. The sequence of speeches by shareholders should be decided by the chairman. Any shareholder who present at the Meeting submits his/her speech note but does not actually speak in the Meeting shall be deemed as no such speech has been made. If the contents of the speech of the shareholder are inconsistent with the contents of the speech note, the contents of actual speech shall prevail. Unless otherwise permitted by the chairman and the shareholder in speaking, no shareholder shall interrupt the speeches of other shareholders; otherwise the chairman shall stop such interruption immediately.

 

XI Unless otherwise permitted by the chairman, each shareholder shall not speak more than two times for each proposal. Each speech shall not take more than 5 minutes. In the event that any speech of any shareholder violates this provision or exceeds the scope of the proposal, the chairman may stop the speech of such shareholder.

 

XII When a juristic person is appointed to attend the Meeting as proxy, it may designate only one person to represent it in the Meeting. If a juristic person shareholder designates two or more representatives to represent it at the Meeting, only one of the representatives so designated can speak for one proposal.

 

XIII After the speech of a shareholder, the chairman may respond by himself/herself or appoint an appropriate person to do so.

 

XIV The chairman may announce to end the discussion of any resolution and go into voting if the chairman deems it appropriate for voting.

 

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XV The person(s) to supervise and the person(s) to record the ballots during a vote by casting ballots shall be designated by the chairman. However, the person(s) supervising the recording of the ballots shall be shareholders of the Company. Vote counting for shareholders’ meeting proposals or elections shall be conducted in publicly venue of the Meeting. The voting results, including the total number of votes, shall be announced on-site immediately and recorded in the Meeting minutes.

Election of directors and/or supervisors at the Meeting shall be in accordance with Company’s relevant election rules. Results of the election, including the roster of directors and/or supervisors and the total number of the votes, shall be announced on-site immediately.

The ballots for the elections set forth in the preceding paragraph shall be sealed and signed by the persons monitoring the ballots and properly kept for at least 1 year. However, if a shareholder files a lawsuit pursuant to Article 189 of the Company Act, such ballots shall be kept until the conclusion of such litigation.

 

XVI During the Meeting, the chairman may set time for intermission at his/her discretion.

 

XVII During the Meeting, the chairman may set time for intermission at his/her discretion. In the event of any force majeure, the chairman may suspend the Meeting temporarily and announce the time which the Meeting will be resumed subject to the actual situation.

If a Meeting cannot be finished with the agenda (including special motions) while the arranged venue of the Meeting can no longer be used, a resolution to find another place to continue the Meeting may be adopted.

A resolution may be adopted to postpone or continue the Meeting within 5 days according to Article 182 of the Company Act.

 

XVIII Shareholders of the Company may exercise their voting rights in writing or by electronic method. When voting rights are exercised in writing or by electronic method, the method of exercise shall be specified in the meeting notice. Shareholders who exercised their voting rights in writing or by electronic method shall be deemed as attended the Meeting in person. However, such shareholders’ voting rights in respect to the special motions and amendments to the original proposals at the Meeting shall be deemed to be waived by such shareholders.

The shareholder who intends to exercise his/her voting rights in writing or by electronic method as stated in the preceding paragraph shall serve the Company his/her voting rights exercising result in writing (the “Voting Exercising”) no later than two (2) days prior to the Meeting. If two or more Voting Exercising is received by the Company from one shareholder, the first one received by the Company shall prevail, unless the later one is sent to revoke the previous one.

The shareholder who has exercised his/her voting rights in writing or by electronic method and thereafter wants to attend the Meeting in person shall revoke his/her Voting Exercising via the same method he/she took previously to serve his/her Voting Exercising to the Company by at least two(2) day before the Meeting. In the event that the shareholder fails to revoke his/her Voting Exercising on time, the Voting Exercising shall prevail. If a shareholder has exercised his/her voting right in writing or by electronic method but also appoints a proxy by power of attorney to attend the Meeting, the voting rights exercised by the proxy shall prevail.

 

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Unless otherwise provided in the Company Act or the Articles of Incorporation, a resolution of the Meeting shall be adopted by a majority of votes represented by shareholders present at the Meeting. However, if there is no objection, after consulted by the chairman, it shall be deemed as adopted and its effectiveness is same as the resolution of vote.

 

XIX If there is an amendment or alternative for a proposal, the chairman shall determine the sequence of voting for the amended proposal and the original proposal. If any one of the above has been resolved, the others shall be deemed vetoed and no further voting is necessary.

 

XX The chairman may engage disciplinary officers (or security personnel) to assist to keep the order of the Meeting. Such disciplinary officers (or security personnel) shall wear a badge marked “Disciplinary Officers”.

 

XXI In regard to all matters not provided herein, the provisions provided in the Company Act and the Articles of Incorporation of the Company shall govern.

 

XXII These Rules and Procedures shall become effective from the date it is approved by the Meeting. The same applies in case of amendment. The Rules and Procedures were adopted on April 27, 1998. The first amendment was made on June 5, 2002. The second amendment was made on April 12, 2007. The third amendment was made on June 17, 2013. The fourth amendment was made on June 3, 2015.

 

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Appendix 2

Articles of Incorporation

OF

ChipMOS TECHNOLOGIES INC.

SECTION I GENERAL PROVISIONS

Article 1

The Company has been incorporated as a company limited by shares under the Company Act. The name of the Company is LOGO in Chinese, and “ChipMOS TECHNOLOGIES INC.” in English.

Article 2

The scope of business of the Company shall be as follows:

 

CC01080    Electronic Parts and Components Manufacturing,
I501010    Product Designing,
F119010    Wholesale of Electronic Materials,
CC01120    Data Storage Media Manufacturing and Duplicating, and
F401010    International Trade (limited to the import and export of the
   registered business items)

The research, development, production, manufacturing, and sales of the products listed below:

1. Assembly and testing services for functional highly integrated memory semiconductors (principal products are DRAM with 64Mb, 256Mb and above).

2. Assembly and testing services for mixed-signal products and its modules.

3. Assembly and testing services for flat-panel display (FPD) driver ICs and FPD driver modules.

4. LCOS optical engine sub-systems.

5. Surface-mount technology and its related products.

6. Trading (import and export) of the products relating to the above.

Article 3

The Company may conduct investment which is necessary for its business operations, and may act as a shareholder with limited liability of another company by the resolution of the Board of Directors. The total amount of the Company’s investment shall not be subject to the restriction of the total amount of the investment provided in Article 13 of the Company Act.

Article 4

The Company may provide guarantee for its affiliated companies as required by its business operations in accordance with the operational procedures for endorsements and guarantees.

 

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Article 5

The Company establishes its head office in Hsinchu Science Park, and may, when necessary, establish branches domestically or abroad in accordance with the laws and regulations by the resolution of the board of directors and with the approval of the competent authorities.

Article 6

Public announcements of the Company shall be made in accordance with Article 28 of the Company Act.

SECTION II CAPITAL STOCK

Article 7

The total capital of the Company shall be in the amount of 9,700,000,000 New Taiwan Dollars, divided into 970,000,000 shares, of which the par value is 10 New Taiwan Dollars per share. For the shares not yet issued, the board of directors is authorized to issue such shares in installments based on the actual need.

970,000,000 New Taiwan Dollars included in the total capital under paragraph 1, which is equivalent to 97,000,000 shares at a par value of 10 New Taiwan Dollars each, shall be reserved for the employee stock options. The board of directors is authorized to issue such shares in installments based on the actual need.

Article 7-1

If the Company issues the employee stock options after the Company has been listed on a stock exchange, the Company may issue the employee stock options at a price below the market price; provided however, that such issuance shall be adopted by two-thirds or more of the shareholders present at a shareholders’ meeting who represent the majority of the total number of issued shares. The employee stock options may be issued in installments within a year after the resolution of the shareholders’ meeting.

In the event that the Company buys back treasury stocks and transfers them to the employees at a price below the average buy-back price, before making the transfer, the Company shall obtain the approval of two-thirds or more of the shareholders present at a shareholders’ meeting who represent the majority of the total number of issued shares.

Article 8

The stock certificates of the Company shall be in a name-bearing form, and shall be made in accordance with the relevant regulations of the Company Act. The shares may be issued without printing share certificates; provided however, that the shares issued without share certificates shall be registered with a centralized securities depository enterprise.

Article 9

All shareholders shall file their respective chop specimen with the Company for the Company’s record. The chop specimen shall be used for identification in drawing dividends or exercising shareholders’ rights in written form. Share transfer, bestow, creation and rescission of share pledge, loss, destruction or other matters related to the shares shall be conducted in accordance with the Regulations Governing the Administration of Shareholder Services of Public Companies and other related laws and regulations.

 

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The matters related to the shares of the Company shall be conducted in accordance with the Regulations Governing the Administration of Shareholder Services of Public Companies and related laws and regulations.

Article 10

Registration for transfer of shares shall be suspended sixty days prior to the date of an annual meeting of the shareholders, thirty days prior to the date of a special meeting of the shareholders, or five days prior to the record day for the distribution of dividend, bonus, or any other benefit by the Company.

SECTION III SHAREHOLDERS’MEETING

Article 11

Meetings of the shareholders are of two kinds: annual meetings and special meetings. Annual meetings shall be held at least once a year by the board of directors in accordance with the law within six months after the close of each fiscal year. Special meetings shall be convened by the board of directors whenever necessary according to the law. The audit committee may also convene a special meeting in accordance with the law when it deems necessary.

In case a shareholder is unable to attend the shareholders’ meeting, he or she may appoint a representative to attend the meeting by issuing a letter of proxy prepared by the Company in which the scope of proxy shall be indicated with the signature and chop affixed. The use of the letter of proxy shall comply with Article 177 of the Company Act and the Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies. The voting at the shareholders’ meeting of the Company may be conducted in written form or via electronic methods. The written or electronic voting shall be conducted in accordance with the relevant laws and regulations.

Article 11-1

The Company shall notify the shareholders of the shareholders’ meetings thirty days in advance of an annual meeting, and fifteen days in advance of a special meeting. The meeting notice shall set forth the date, time, place and purposes of the meeting.

If the shareholders to be notified agree, notices of the shareholders’ meeting may be provided via electronic methods pursuant to the Electronic Signatures Act.

Article 11-2

Shareholders who hold 1% or more of the total issued shares may propose a matter to be discussed at the annual shareholders’ meeting in writing. The relevant matters shall be handled in accordance with Article 172-1 of the Company Act.

Article 12

For shareholders of the Company, each share shall be entitled to one vote. However, shares held in accordance with Article 179 of the Company Act or relevant laws and regulations do not have any voting right.

Article 12-1

In case the sole shareholder of the Company is an institutional shareholder, the function of the shareholders’ meeting of the Company shall be exercised by the board of directors, and the stipulations with regard to shareholders’ meetings herein shall not be applicable.

 

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Article 13

Except as otherwise provided by the relevant laws and regulations, the resolution of a shareholders’ meeting shall be adopted by a majority vote of the shareholders present who represent the majority of the total number of the issued shares, in person or by proxy. If there is no disagreement raised by the shareholders present after the chairperson’s inquiry, the resolution shall be deemed as adopted, and the effectiveness thereof shall be the same as a resolution adopted by vote.

Article 13-1

In case the Company plans to revoke its public company status, the revocation shall be subject to a resolution of the shareholders’ meeting. This provision shall not be modified when the stocks of the Company are registered with the Emerging Stock Market or the Company is listed on a stock exchange.

Article 14

The shareholders’ meeting shall be presided over by the Chairperson of the board of directors. In case of his or her absence, a proxy shall be designated in accordance with Paragraph 3, Article 208 of the Company Act.

In the event that the shareholders’ meeting is convened by a person who has the right to do so other than the board of directors, the convener shall preside over the meeting. In the event that there is more than one convener, the chairperson of the meeting shall be selected from among themselves.

Article 15

The resolutions of a shareholders’ meeting shall be recorded in the meeting minutes, which shall be signed or stamped by the chairperson and secretary of the meeting and shall be distributed to the shareholders within twenty days after the meeting.

The minutes of the shareholders’ meeting shall include the date, place, name of the chairperson, resolution methods, brief of the meeting and the results of the meeting, and shall be kept in the custody of the Company for the duration of the Company. The sign-in book of the shareholders and the letters of proxy shall be kept in the custody of the Company for at least one year, provided however, if there is a litigation involved, the sign-in book of the shareholders and the letters of proxy shall be kept until the litigation is closed.

The making and distribution of the meeting minutes in the preceding paragraph may be made by electronic methods. The company which is a public company may distribute the meeting minutes by making a public announcement.

SECTION IV DIRECTORS

Article 16

The Company shall have nine to eleven directors to be elected by the shareholders’ meeting among persons of legal capacity. The term of the directors shall be three years. The directors may be re-elected and re-appointed.

 

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Article 16-1

The Company shall have independent directors in accordance with Article 14-2 of the Securities and Exchange Act. Among the directors, there shall be three to five independent directors, the total number of which shall not be less than one-fifth of the directors. The Company adopts the candidate nomination system under Article 192-1 of the Company Act for the election of independent directors. The independent directors shall be elected by the shareholders from the list of candidates. The professional qualifications, shareholding, term, and restrictions on holding concurrent positions, nomination and election methods of the independent directors shall be handled in accordance with relevant laws and regulations issued by securities authorities.

In case the sole shareholder of the Company is an institutional shareholder, the independent directors shall be appointed by such institutional shareholder and the preceding paragraph shall not be applicable. The matters with regard to the acceptance and announcement of the nomination of independent directors shall be handled in accordance with the laws and regulations relating to the Company Act and the Securities and Exchange Act, and the Company’s rules relating to the election of directors.

Article 16-2

The Company shall establish an audit committee in accordance with Articles 14-4 of the Securities and Exchange Act, which shall consist of all independent directors. The audit committee or the members of the audit committee shall perform the responsibilities of supervisors under the Company Act, Securities and Exchange Act, and other relevant laws and regulations.

Article 17

The board of directors consists of directors. The chairperson of the board of directors shall be elected from among the directors by a majority vote at a meeting attended by two-thirds or more of the directors. The chairperson of the board of directors shall act in his capacity to represent the Company externally and shall comply with Article 195 of the Company Act.

The chairperson of the board of directors shall preside over the shareholders’ meeting and the board of directors meeting, and shall externally represent the company to perform his or her duties accorded by law. In his or her absence, a proxy shall be designated in accordance with Article 208 of the Company Act. If the board of directors meeting is held via video conference, the directors who attend the meeting via video conference shall be deemed as attending the meeting in person.

Article 18

Except as otherwise provided by the Company Act, a resolution of the board of directors is adopted if it is approved by the majority of the directors present at a meeting attended by the majority of the directors. The board of directors meeting shall be held at least once every three months. A director may appoint another director to attend the board of directors meeting on his or her behalf; provided however that a letter of proxy listing the scope of authorization with regard to the agenda of the meeting is issued. Each director may only act as the proxy for one director.

The stipulation regarding the meeting minutes for shareholders’ meeting under Article 15 shall be applied to the board of directors meetings, mutatis mutandis.

 

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Article 19

The board of directors has the authority to:

 

  1. review the business policy and mid-term and long-term development plan;

 

  2. review and supervise the operation of the annual business plan;

 

  3. review and approve the budget and review the settlement of accounts;

 

  4. review plans for increase or decrease in capital;

 

  5. review proposals for the distribution of profits or covering of losses;

 

  6. review and approve material agreements;

 

  7. submit the proposal to the shareholders’ meeting with regard to distribution of profits, amendment of the Articles of Incorporation, change of capital, and dissolution or merger of the Company;

 

  8. review and approve the charter documents and important business rules of the Company;

 

  9. approve material project of capital expenditure;

 

  10. appoint and terminate the president and vice president(s);

 

  11. execute the resolutions of the shareholders’ meeting;

 

  12. hold the shareholders’ meeting and prepare business reports; and

 

  13. handle other matters required or permitted by the law.

Article 20

The scope of authority of the audit committee shall be the performance of the responsibilities of supervisors specified under the Company Act, Securities and Exchange Act and other relevant laws and regulations, and the authorities stipulated under the charter document in respect of the audit committee of the Company.

Article 21

The resolution of the audit committee shall be adopted with the consent of the majority of the committee members.

Article 21-1

The board of directors is authorized to determine the remuneration of all directors based on the level of involvement of and the value of contribution by the directors, taking into account the level of remuneration given by companies in the same industry.

Article 21-2

The Company may purchase liability insurance for its directors and independent directors in relation to the liabilities to be borne by them under the law for the performance of their responsibilities during the office term.

 

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SECTION VOFFICERS

Article 22

The Company shall appoint one president and one or more vice presidents based on its business needs. The president shall be nominated by the chairperson of the board of directors and comply with Article 29 of the Company Act.

Article 23

The president shall act in accordance with the instructions of the chairperson of the board of directors and manage the business of the Company in accordance with the resolutions of the board of directors and shareholders’ meeting and these Articles of Incorporation. Except for the vice presidents, the president may nominate other officers and has the right of performance evaluation. The vice presidents shall assist the president in the daily operation of the Company.

SECTION VIACCOUNTING

Article 24

The fiscal year of the Company shall commence from January 1 of each year and end on December 31 of the same year, and shall conduct the assessment of settlement of accounts after the close of each fiscal year. The board of directors shall prepare the following reports and shall send such reports to the audit committee for review thirty days before the annual shareholders’ meeting, and then submit such reports to the annual shareholders’ meeting for recognition:

 

  1. a business report;

 

  2. financial statements; and

 

  3. a proposal on the distribution of profits or covering of losses.

Article 25

If there is profit in any given year, the Company shall set aside 10% thereof as employee compensation. The board of directors may resolve to pay said compensation in the form of shares or cash. Such compensation may be paid to the employees of an affiliated company who meet the conditions set by the board of directors. The board of directors may resolve to set aside no more than 0.5% of the above-mentioned profit as the remuneration of the directors. A proposal on the compensation for the employees and remuneration of the directors and supervisors shall be presented at the shareholders’ meeting. If the Company has accumulated losses, the amount for making up said losses shall be reserved before setting aside the compensation for the employees and the remuneration of directors and supervisors at the rates stated above.

Article 25-1

Upon the final settlement of accounts, if there is net profit, the Company shall first set aside the tax payable and offset its losses before setting aside a legal capital reserve at 10% of the remaining profit. The Company shall then set aside or reverse the special capital reserve in accordance with the laws and regulations and as requested by the competent authorities. The remaining profit of that fiscal year, as well as the accumulated undistributed profit at the beginning of the same year and the adjusted undistributed profit of the given fiscal year, shall be distributable profit. If there is any surplus distributable profit after the board of directors sets aside a reserve based on the Company’s operational needs, such surplus profit may be distributed in full or in part to shareholders as dividends, subject to the approval of the shareholders’ meeting.

 

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A proposal on the distribution of dividends shall be submitted by the board of directors annually to the shareholders’ meeting, and be based on factors such as past years’ profit, the current and future investment environment, the Company’s capital needs, competition in the domestic and foreign markets, and budgets, with an aim to pursuing shareholders’ interests and balancing the dividend distribution and the long-term financial plan of the Company. The distribution of profits of the Company can be made in the form of cash dividends or stock dividends, provided that the cash dividend shall account for at least 10% of the total profit distributed as dividends in the given year.

SECTION VII SUPPLEMENTARY PROVISIONS

Article 26

The internal organization of the Company and the detailed procedures of business operation shall be determined separately by the board of directors.

Article 27

Matters not provided for in these Articles of Incorporation shall be handled in accordance with the Company Act.

Article 28

These Articles of Incorporation are agreed upon and signed by all the promoters of the Company on July 17, 1997. The first amendment was made on April 27, 1998. The second amendment was made on May 18, 2000. The third amendment was made on June 5, 2002. The fourth amendment was made on June 26, 2003. The fifth amendment was made on June 11, 2004. The sixth amendment was made on June 15, 2005. The seventh amendment was made on August 2, 2005. The eighth amendment was made on June 15, 2006. The ninth amendment was made on April 12, 2007. The tenth amendment was made on June 28, 2007. The eleventh amendment was made on December 17, 2007. The twelfth amendment was made on March 30, 2010. The thirteenth amendment was made on June 22, 2012. The fourteenth amendment was made on June 17, 2013. The fifteenth amendment was made on December 30, 2014. The sixteenth amendment was made on January 28, 2016. The seventeenth amendment was made on May 26, 2017.

ChipMOS TECHNOLOGIES INC.

Chairman: Shih-Jye Cheng

 

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Appendix 3

ChipMOS TECHNOLOGIES INC.

Shareholdings of All Directors

 

        Record date: April 28, 2018  

Title

   

Name

    Number of shares
held when elected		      Number of
shares held at
present		      Percentage of
issued shares		  
           
           
           
           
           
Chairman    Shih-Jye Cheng      5,050,000        5,530,000        0.62 % 
Director    Wen-Ching Lin      4,000,200        4,000,200        0.45 % 
Director    Yu-Hu Liu      0        0        0 % 
Independent Director    Chin-Shyh Ou      0        0        0 % 
Independent Director    Tai-Haur Kuo      0        0        0 % 
Independent Director    Yu-Fang Tang      0        0        0 % 
Independent Director    Cho-Lien Chang      0        0        0 % 
Independent Director    Kuei-Ann Wen      0        0        0 % 

Shareholdings of All Directors

      9,050,200        9,530,200        1.07 % 

 

 

Note:    1. As of April 28, 2018, the total amount of issued shares of the Company is 886,144,061 shares.
  2. The number of independent directors exceeds half of the total number of directors of the Company and Audit Committee is set up pursuant to the laws. Therefore, the provisions of minimum percentage requirements for the shareholding of directors and supervisors shall not be applied.

 

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