[Summary Translation] HON HAI PRECISION INDUSTRY CO., LTD. Stock Code: 2317 Annual General Shareholders Meeting For Year 2008 Meeting Handbook June 2, 2008
HON HAI PRECISION INDUSTRY CO., LTD. Annual Shareholders Meeting For Year 2008 Meeting Procedure Time of Meeting: Location of Meeting: June 2, 2008 (Monday) at 9:00 am 2 Tze-yiu Street, 5 Floor Tu-cheng Industrial Park Tu-cheng City, Taipei Hsien, Taiwan I. To report the total number of shares represented in this AGM meeting II. To announce the commencement of meeting III. Chairman s addresses IV. Items to be reported V. Matters to be acknowledged and discussed VI. Extraordinary Motions VII. Adjourned Meeting 2
HON HAI PRECISION INDUSTRY CO., LTD. Regular Shareholders Meeting for Year 2008 Agenda I. Chairman to announce the commencement of meeting. II. Chairman s report. i. To report business of 2007. ii. iii. iv. Statutory Auditors review of 2007 audited financial statements. Status Report of Company's indirect investment in Mainland China. Amend Company s Rule and Procedure for Board Meeting v. The miscellaneous items. III. Matters to be acknowledged and discussed: i. To acknowledge 2007 business operation report and 2007 audited financial statements. ii. iii. To acknowledge the proposal for distribution of 2007 profits. To approve the new shares issuance for capital increase by earnings re-capitalization. iv. To approve the overseas depository receipts ( DR s) issuance. v. To amendment "Rule and Procedure For Asset Acquisition or Disposal ". vi. To amend the Company s Articles of Incorporation IV. Extraordinary Motions V. Adjourned Meeting 3
Matters to be Reported: Proposal One: Reporting the Company s Business Operation Reports and Financial Statements for year 2007. Description: 1. Please refer to addendum 1 for detailed Business Operation Reports. 2. Please refer to addendum 3 for detailed financial statements. 4
Proposal Two: Please review Statutory Auditors review reports and the audited financial statements for the year ended 31 December 2007. Description: 1. Please refer to addendum 2 for audited financial statements. 5
Proposal Three: Reporting the Company s new indirect investments in Mainland China during 2007. Description: The new 2007 investments in Mainland China made via overseas subsidiaries are as follows: Approval Certificate # Company Name Amount Approved (US$) 09600338240 Ambit Microsystems (Zhong Shan) Corporation 9,700,000 09600102250 Ambit Microsystems (Shanghai)Ltd. 27,400,000 09600188100 Amlink(Shanghai)Ltd. 3,000,000 09600399510 Primary Technology (Foshan) Corporation 47,943,400 09600426490 Foshan Huazhou Plastic Painting&Printing Co., Ltd. 817,036.27 09600439550 Foxconn Computer Connectors (Kunshan) Co., Ltd. 14,600,000 09500328450 Kangzhun Precision Tooling (Kunshan)Co., Ltd. 57,000,000 09600128180 Hongzhun Precision Tooling (Kunshan) Co., Ltd 24,200,000 09600439540 Hongzhun Precision Tooling (Kunshan) Co., Ltd 5,600,000 09600426500 Honyeh Precision Component (Kunshan) Co., Ltd 4,800,000 09500328480 FuHonYang Precision Industrial (Shenzhen) Co., Ltd. 14,500,000 09600215440 Fugion Material Technology (Shenzhen) Limited 2,590,000 09500257160 Shenzhen Fu Tai Hong Precision Industry Co., Ltd. 73,020,000 09600444680 Fu Ding Precision Component (Shenzhen) Co., Ltd. 33,000,000 09600441760 Hong Fujin Precision Industrial (Shenzhen) Co., Ltd. 33,000,000 09600073000 Honxun Electrical Industry (Hangzhou)Co., Ltd 10,921,500 09600439530 Honxun Electrical Industry (Hangzhou)Co., Ltd 27,447,400 09600444690 Foxconn(Tian Jin)Precision Industry Co., Ltd. 23,835,900 09500328430 Fu Jin Shun Precision Industry (Shenzhen) Co., Ltd 22,000,000 09500433490 Foxconn Precision Electrons (Yantai) Co., Ltd. 24,027,300 09500328460 Foxconn Precision Electronics (Tai Yuan) Co., Ltd. 14,227,200 09600102260 Foxconn Precision Electronics (Tai Yuan) Co., Ltd. 24,027,300 09600444700 Foxconn Precision Electronics (Tai Yuan) Co., Ltd. 23,835,900 09500328420 HonFuJin Precision Industry (HuiZhou) Co., Ltd. 33,000,000 09500356620 Fukui Precision Component (ShenZhen) Co., Ltd. 17,148,000 09600215460 Fukui Precision Component (ShenZhen) Co., Ltd. 12,861,000 09600399440 Fukui Precision Component (ShenZhen) Co., Ltd. 9,045,570 09600066420 Fuzhun Precision Tooling (Huaian) Co., Ltd. 28,050,000 09600293060 Fuzhun Precision Tooling (Huaian) Co., Ltd. 33,200,000 09600093830 Fuyu Electronical Technology (Huaian) Co., Ltd. 28,050,000 09600293050 Fuyu Electronical Technology (Huaian) Co., Ltd. 33,200,000 09500428080 Futaijing Precision Electronics (Beijing) Co., Ltd. 10,921,500 6
Approval Certificate # Company Name Amount Approved (US$) 09600204980 Futaijing Precision Electronics (Beijing) Co., Ltd. 21,765,000 09600031890 Foxconn Precision Electronics (Lang Fang) Co., Ltd. 7,269,000 09600204970 Foxconn Precision Electronics (Lang Fang) Co., Ltd. 64,601,700 09600031880 Hongfujin Precision Industry (Shanxi) Co., Ltd. 5,000,000 09600188110 Hongfujin Precision Industry (Shanxi) Co., Ltd. 11,500,000 09600066410 Foxconn (Tian Jin) Technology Co., Ltd. 2,902,400 09600074580 Foxconn Goodfield Precision Industry (Dalian) Co., Ltd. 940,000 09600074590 Hongfujin Precision Industry (Wuhan) Co., Ltd. 9,000,000 09600299020 Hongfujin Precision Industry (Wuhan) Co., Ltd. 34,000,000 09600074610 Fu Meng Electronical Technology (Huaian) Co., Ltd. 8,000,000 09600074600 Fu Meng Electronical Technology (Kunshan) Co., Ltd. 2,100,000 09600102240 Amworld Microsystems (shanghai) Ltd. 8,500,000 09600186070 Amworld Microsystems (shanghai) Ltd. 8,500,000 09600128170 Hong Fu Jin Precision Electronics (YanTai) Co., Ltd. 15,000,000 09600441770 Hong Fu Jin Precision Electronics (YanTai) Co., Ltd. 36,000,000 09600164400 Hongqunsheng Precision Electronics (Yingkou) Co., Ltd. 5,144,400 09600227630 Hongqunsheng Precision Electronics (Yingkou) Co., Ltd. 9,217,050 09600164410 Hongqisheng Precision Electronics (Qinhuangdao) Co., Ltd. 5,144,400 09600283360 Hongqisheng Precision Electronics (Qinhuangdao) Co., Ltd. 9,860,100 09600190050 HongHuaSheng Precision Electronics (YanTai) Co., Ltd. 36,782,460 09600215450 Foxconn (Qin Huang Dao) Limited 8,000,000 09600283370 Foxconn (Nanjing) Communications Co.,Ltd. 7,244,000 09600285900 Foxconn (Nanjing) Software Co., Ltd. 9,500,000 09600407120 Foxconn (Nanjing) Software Co., Ltd. 22,500,000 09600293080 Hongfujin Precision Industry (Qinhuangdao) Co.,Ltd. 12,000,000 09600293070 Foxconn Shenyang Precision Industry Co.,Ltd. 34,545,770 09600299010 Fu Tai Kang Electronice Development (YanTai) Ltd. 30,000,000 09600413390 Alibaba (China) Technology Co. Ltd. 372,178.80 09600413390 Alibaba (China) Software Co. Ltd. 18,904.64 09600413390 Alibaba (Shanghai) Technology Co. Ltd. 1 09600413390 Beijing Sinya Online Information Technology Co., Ltd. 1 09600437390 Fuyang Electronical Technology(Changshu) Co.,Ltd. 15,600,000 09600437400 Fulin Electronical Technology(Changshu) Co.,Ltd. 19,500,000 7
Proposal Four: Amend Company s Rule and Regulation for Board Meeting. Description: Per January 11, 2008 Financial Supervisory Commission, Executive Yuan regulation numbered 0960074345, Company proposed to modify Rule and Policy for Board Meeting and change name to Rule and Regulation for Board Meeting. The amended version, please see appendix 4. 8
Motions for Acknowledgement and Discussion (Proposed by the Board of Directors, BoD ) Motion 1: The operation performance reports and financial statements of the Company in 2007 have been completed and submitted. Please acknowledge. Descriptions: The operation performance reports and financial statements of the Company in 2007 have been approved by BoD, and have also been reviewed and audited by Supervisors. Please refer to Appendix 1 and Appendix 3 (on page XX) for the Books mentioned as above. Resolution: 9
(Proposed by BoD) Motion 2: The proposal of dividends repatriation program for the year of 2007. Please acknowledge. Description: 1. The dividend repatriation program of the Company for the year of 2007 has been submitted by BoD, in accordance with Company Act as well as Articles of Incorporation of the Company, as follows. 2. NT$4.5 of dividends per common share is proposed to be repatriated, which includes stock dividends of NT$1.5 and cash dividends of NT$3.0 per share. 3. After subjecting to the passage by regular shareholders meeting, the ex-dividend date for the cash and stock dividend repatriations would be decided by BoD. 4. If the number of total shares outstanding, prior to the ex-dividend date for the repatriation, has been changed due to the shares repurchasing by the Company, or treasury shares transferred to employees, shares conversion from domestic convertible bonds, etc., so as affecting the ratios of the stock dividends and cash dividends to be adjusted, BoD is authorized for such adjustments. Resolution: Hon Hai Precision Ind. Co., Ltd. Table of Earning Appropriations Year of 2007 Unit: New Taiwan Dollar Items Amounts Note Unappropriated earnings at beginning period 77,689,511,566 Less: Appropriated as legal capital reserve (10%) 7,768,951,157 Add: Net profits after taxes for the year 69,920,560,409 Add: Accumulated unappropriated earnings 86,768,488,652 Available for appropriation of earnings 156,689,049,061 Items of Repatriations Employee bonus 5,593,644,833 8% Cash dividends to shareholders Stock dividends to shareholders Total repatriations 33,902,094,092 18,872,299,509 NT$3.0 per share 9,436,149,750 NT$1.5 per share Unappropriated earnings 122,786,954,969 Notes: 1. To repatriate the earnings of 2007 in higher priority 2. The Company plans to issue 180,242,000 shares for employees stock bonus. According to the average daily close price of NT$194.48 per share in December 2007, the total market value of such shares is NT$35,053,464,160. By adding the cash bonus of NT$3,791,224,833, the total bonus to employees is equal to NT$38,844,699,993. 3. The proposed stock dividends for employees bonus of 180,242,000 shares would be accounted for 16.0378% of the capital increase from retained earnings 4. The earnings per share after the proposed employees bonus will be NT$11.4619 per share. 10
(Proposed by BoD) Motion 3: Proposal of capital increase from retained earnings. Please review and discuss. Description: In order to expand the manufacturing capacity, it s to propose to have capital increase from retained earnings as well as employees bonus to issue new shares of 1,123,856,975. 1. Capital increase from retained earnings: Appropriated from shareholders bonus of NT$9,436,149,750 as well as employees bonus of NT$1,802,420,000 to be total of NT$11,238,569,750 for the capital increase. 2. The conditions of the new share issuance: (1) According to the proposed capital increase plan, 150 common shares will be repatriated for every 1,000 common shares for free, except for the part of employees stock bonus, recorded in the shareholders books and calculated as their shares held on the ex-dividend date. The number of shares repatriated to each shareholder for less one share will be purchased by the welfare committee of the Company in par value as calculated to the rounding of New Taiwan Dollar. (2) The new shares issuance by the capital increase will carry the same rights and obligations as the current outstanding shares. (3) The repatriation of employees bonus will be in accordance with the employees bonus policy of the Company. (4) The ex-dividend date will be decided by the Board of directors meeting after the regulators approval. (5) If the number of total shares outstanding, prior to the ex-dividend date for the repatriation, has been changed due to the shares repurchasing by the Company, or treasury shares transferred to employees, shares conversion from the convertible bonds, etc., so as affecting the ratios of the stock dividends to be adjusted, BoD is authorized for such adjustments. (6) BoD is authorized for any necessary amendments of the capital increase plan due to the needs of actual practices or by the instructions of regulators authorities. Resolution: 11
(Proposed by BoD) Motion 4: Propose to conduct a capital increase from cash, by means of common shares issuance to participate Global Depositary Receipts ( GDRs ) offerings. Description: 1. In order to raise funds to support future developments of the Company, as well as to raise capitals by ways of internationalized and diversified, it s to propose to shareholders meeting for the authorization to BoD to increase capitals from cash by means of common shares issuance to participate GDRs offerings. 2. The offerings of GDRs should be in compliance with the following rules, by authorizing BoD to handle the related matters: (1) The newly issued common shares by the capital increase from cash to participate GDRs offering would not be exceeded 300 million shares. (2) The offering price will be referred to the market price of the common shares at offering; while the decision of the final offering price will be authorized to Chairman of the Board in discussion with securities underwriters in accordance with market condition at offering. The market price of the common share at offering would be referred to and calculated, in accordance with capital market practices and by the agreement between the Company and underwriters, either the close price of the common shares on the pricing date of the GDRs offering, or the average close price of those in certain period prior to the offerings. (3) Besides the 10% of those reserved for the Company employees subscriptions by the Article 267 of the Company Act, the remaining 90% of the newly issued common shares would be proposed to Shareholders meeting, by Article 28-1 of the Securities and Exchange Law, for public offering to become the original shares for the GDRs offering. The unsubscribed portion of the reserved shares for employees is authorized Chairman for delegated parties to subscribe or to be participated as the original shares on the GDRs (4) The offering details for the capital increase from cash, by means of common shares issuance to participate GDRs offering, including the offering price, number of shares (or quota) to be issued, terms and conditions, uses of proceed, amount to be raised, the offering schedule and possible effects, as well as other related offering procedures, are authorized to BoD for the arrangements and modifications according to market conditions. It s also fully authorized to Chairman for any necessary amendments pursuant to the opinions from regulator authorities or due to the changes from operating valuation or market conditions. (5) To comply with the capital increase from cash, by means of common shares issuance to participate GDRs offering, it s to authorize Chairman or other designated persons by 12
Chairman to represent the Company to sign for all of the related documents as well as handling the related matters. 3. The offering price of the issuance should be fair as referred to the market practices and related regulations. In addition, the proposed capital increase from cash by means of new common shares will be issued for up to 300 million, which accounts for 4.77% of the total shares outstanding of the Company. It would not substantially diluted for the shares of the original shareholders, so as not having major impact on the shareholding rights of them. 4. BoD could also be, within the authorized condition of Phrase (1) of Clasue 2, offering and issuance of stocks overseas in compliance of the principles of Clause 1, 2 and 3 5. After obtaining the approval from regulators, it s to authorize BoD for the related matters on the cash capital increase program. Resolution: 13
(Proposed by BoD) Motion 5: Amend Operating procedures for handling acquisition and disposal of assets of the Company. Please review and discuss. Description: According to the memo issued by Financial Supervisory Commission, it s to amend the operating procedures for handling acquisition and disposal of assets. Please refer to Appendix 5 (PageXX) for the comparison table of the amended and the original articles. Resolution: 14
(Proposed by BoD) Motion 6: Amend the Articles of Incorporation of the Company. Please review and discuss. Description: To meet the operation needs and in compliance with the related regulations, it s to propose to amend certain articles of the Articles of Incorporation. Please refer to Appendix 6 (PageXX) for the comparison table of the amended and the original articles. Resolution: 15
Other Business or Special Motion 16
[Appendix 1] 2007 Business Report The business of 2007 is reported as follows: 1. The operating results of 2007 are described as below: The Company has delivered another excellent performance, and for another record year on the revenues and net profits. The consolidated net revenues of 2007 was NT$1,702,664 million, compared with NT$1,320,376 million in 2006, by increase of NT$382,288 million, a 28.95% YoY growth. The net profit was NT$77,690 million, compared with NT$59,863 million in 2006, for a 29.78% YoY increase. 2. The review of 2007 and the outlook for 2008 Year 2007, again, was very pertinent reflection to the Chinese saying: It takes a long road to know the strength of a horse. Some of media raised the subprime issues in US just as early as end of February 2007, however this topic was ignored by the phenomenon of prosperity at that time. From time to time, the surge in oil and other raw material prices, the capital market turmoil blasted from the subprime and inflation, stringent pressure brought from regional labor cost climbing resulted in the severe business environment that is given not only stems from the harassment in stagflation, but also from the economic slowdown in most of countries. Factoring in substantial ecmms platform, ample global presence and profound technologies that the Company has long been built, we have even more eminently revealed our unparalleled competitive advantage in such fast-changing era of global business environment. Yet, the Company had no fear about the tremendous challenges, again, delivered another prominent result for 2007. Under the pertinacious principle of moderation and substantiality, we continuously recognized by our customers for the reasons of detail oriented and listening them by heart. Not only has the Company set the record high sales revenue in 2007, but also reached a milestone where the non-consolidated monthly revenue transcended NT$100 billion in August 2007. The Company s ranking in Fortune Global 500 rose significantly to No. 154 in 2007 from No. 206 in 2006 that continue to show the long-term competitiveness of the Company. Looking forward to 2008, no matter how nebulous the global economy is or how stringent the business challenging would be, what we see all about are the great opportunities to us, because customers would like to work more closely with us to confront the challenges together from the economic turbulence. At the mean time, we will continuously facilitate the model of Muster and Alliance by expediting the investment in technology and invitation in talents to be the joint force in Hon Hai s global platform; we will persistently achieve breakthrough and innovation in technology through the culture of simplicity and pertinacity and the management philosophy of in love, confidence and determination; we will keeping amplify the gaps from the competitors by the spirit of self-transcend and our unique ecmms business model. We believe that, in the year of full of opportunities, we will not only conquer all the challenges, but also create greater value for all customers, employees and shareholders. Finally, the Company will devote and promote the corporate social responsibility, especially in energy saving, emission reduction, green and recycling. 29
[Appendix 2] The Audited Report by Supervisors The financial statements, business report and the profit distribution table have been audited by us as Supervisors of the Company. We deem no inappropriateness on these documents. In accordance with Article 219 of the Company Law, hereto we present for the audited report. Please review. Submitted to: 2008 Regular Shareholders Meeting of the Company Hon Hai Precision Ind. Co., Ltd. Supervisor: Fu rui International Investment Co., Ltd. Representative: Wan Jui-Hsia Supervisor: Lin, C. W. On the Date of April XX, 2008 30
[Appendix 3] Audited Reports by CPA and Financial Statements 31
[Appendix 4] Hon Hai Precision Ind. Co., Ltd. The Comparison Table of the Meeting Norm for the Board of Directors (the Board ) Before amendment After amendment Reasons Article 4: The preparation for the Board meeting of the Company is designated to the Finance, Accounting and Investment Management Division of General Management Office. The meeting responsible unit shall prepare the agenda for Board meeting, and provide sufficient meeting documents, to be delivered together with the meeting notice. Directors could make request to the meeting responsible unit for any insufficient documents for the meeting. Director could request to adjourn a motion for insufficient details by means of the resolution of the Board. Article 5: The signing sheet shall be prepared for the Board meeting as future reference. Directors shall attend the Board meeting in person. If he could not attend the meeting in person, a proxy by another director could be designated by himself according to the Articles of Incorporation of the Company. If attending the meeting through a video conference, he deems to attend in person. In case a director appoints another director to attend the Board meeting on his behalf, he shall, in each time, issue a written proxy and state therein the scope of authority with reference to the subjects to be discussed at the meeting. A director may accept the appointment to act as the proxy referred to in the preceding Article 4: The affair of preparation for the Board meeting of the Company is designated to the Finance, Accounting and Investment Management Division of General Management Office. The meeting responsible unit shall prepare the agenda for Board meeting, and provide sufficient meeting documents, to be delivered together with the meeting notice. Directors could make request to the meeting responsible unit for any insufficient documents for the meeting. Director could request to adjourn a motion for insufficient details by means of the resolution of the Board. Article 5: The signing sheet shall be prepared for the Board meeting as future reference. Directors shall attend the Board meeting in person. If he could not attend the meeting in person, a proxy by another director could be designated by himself according to the Articles of Incorporation of the Company. If attending the meeting through a video conference, he deems to attend in person. In case a director appoints another director to attend the Board meeting on his behalf, he shall, in each time, issue a written proxy and state therein the scope of authority with reference to the subjects to be discussed at the meeting. A director may accept the appointment to act as the proxy referred to in the second Wording adjustment Wording adjustment 32
Paragraph of one the other director only. Article 8 When the Board meeting is convened, the management (or the meeting responsible unit) shall prepare any relevant material for directors reference during the meeting. When a Board meeting is convened, by subject to the need of related motions, non-director management could be asked for attendance in meeting. When necessary, accountants, attorneys, or other professionals could be invited for attendance as well. The Chairperson of the Board meeting shall immediately announce the commencement on the meeting time and with presence of over half number of directors. When the scheduled meeting time is up but still less than half of all directors not present, the Chairperson could adjourn the meeting; the adjournments could not be more than twice and shall not be over one hour in total. If there is still no enough attendants for the meeting after twice adjournments, the meeting shall be reschedule in accordance with the procedures stated as of Item 2 of Article 3 The so called all directors in previous item as well as in Phrase 2 of Item 2 of Article 16 are calculated by actual number on duties. Article 9 All of the meeting process at the Board meeting of the Company shall be taped or video taped, and the taped records shall be kept for at least five years. It could be kept by electronic formats. Prior to the due date of the record keeping as previous item, if there are any dispute in relation to any Board resolution, the relevant tapes or video tapes shall be kept continually and not applicable to the rule in previous item. The taping or video taping for any meeting by video conference serves as part of the minute and shall be kept permanently. Article 11 The motions shall be preceded as stated in the notice, unless agreed by over half of the directors in presence for any change. The planned motions and other motion could not be dismissed by Chairperson unless agreed Paragraph of one the other director only. Article 8 When the Board meeting is convened, the management (or the meeting responsible unit) shall prepare any relevant material for directors reference during the meeting. When a Board meeting is convened, by subject to the need of related motions, non-director management could be asked for attendance in meeting. When necessary, accountants, attorneys, or other professionals could be invited for attendance as well. The Chairperson of the Board meeting shall immediately announce the commencement on the meeting time and with presence of over half number of directors. When the scheduled meeting time is up but still less than half of all directors not present, the Chairperson could adjourn the meeting; the adjournments could not be more than twice. If there is still no enough attendants for the meeting after twice adjournments, the meeting could be reschedule in accordance with the procedures stated as of Item 2 of Article 3 The so called all directors in previous item is calculated by actual number on duties. Article 9 All of the meeting process at the Board meeting of the Company shall be taped or video taped, and the taped records shall be kept for at least five years. It could be kept by electronic formats. Prior to the due date of the record keeping as previous item, if there are any dispute in relation to any Board resolution, the relevant tapes or video tapes shall be kept continually until the litigation is over. The multimedia tapped for any meeting by video conference serves as part of the minute and shall be well-kept during the sustaining period of the Company. Article 11 The motion procedures shall be preceded as stated in the notice, unless agreed by over half of the directors in presence for any change. Chairperson can not dismiss the meeting Deleting the time limitation for adjournment of the meeting and Chairperson s choice for rescheduling the meeting Wording adjustment Clearly specify the board meeting should be preceded in accordance with the motions 33
by over half of the attending directors. When the Board meeting is in progress, if the number of attending director in presence at anytime is not over half of the attended directors, Chairperson could call on hold for the meeting, and also applicable for Item 3 of Article 8. Article 12 The following matters shall be proposed for discussion on the Board meeting of the Company: 1. The business plans of the Company 2. The annual financial statements and semi-annual financial statements 3. The formation or amendment of Internal Audit Policy in accordance with Article 14-1 of Securities and Exchange Act 4. In accordance with Article 36-1 of Securities and Exchange Act for acquisition or disposal of assets, engaging in derivatives trading, extension of monetary loans to others, endorsements or guarantees for others, and disclosure of financial projections. 5. Issuance, offering or private placement of any equity-typed securities 6. The appointment or discharge of a financial, accounting, or internal auditing officer. 7. By Article 14-3 of Securities and Exchange Act, and others set by regulations or Articles of Incorporation of those shall be resolved by shareholders meeting or shall be proposed to the Board or any other material matter so required by the Competent Authority. For the matters stated by Article 14-3 of Securities and Exchange Act shall be submitted to the Board for approval by resolution, independent directors shall attend the meeting in person and could not be delegated by a non-independent director; when an independent director has a dissenting opinion or reserved opinion, it shall be noted in the minutes of the directors meeting; if an independent director is unable to attend the meeting in person for a dissenting opinion or reserved opinion, unless there is a sufficient reasoning, it shall be stated in a written unless agreed by over half of the attending directors. When the Board meeting is in progress, if the number of attending director in presence at anytime is not over half of the attended directors, Chairperson could call on hold for the meeting, and also applicable for Item 3 of Article 8. Article 12 The following matters shall be proposed for discussion on the Board meeting of the Company: 1. The business plans of the Company 2. The annual financial statements and semi-annual financial statements 3. The formation or amendment of Internal Audit Policy in accordance with Article 14-1 of Securities and Exchange Act 4. In accordance with Article 36-1 of Securities and Exchange Act for acquisition or disposal of assets, engaging in derivatives trading, extension of monetary loans to others, endorsements or guarantees for others, and disclosure of financial projections. 5. Issuance, offering or private placement of any equity-typed securities 6. The appointment or discharge of a financial, accounting, or internal auditing officer. 7. By Article 14-3 of Securities and Exchange Act, and others set by regulations or Articles of Incorporation of those shall be resolved by shareholders meeting or shall be proposed to the Board or any other material matter so required by the Competent Authority. For the matters stated by Article 14-3 of Securities and Exchange Act shall be submitted to the Board for approval by resolution, independent directors shall attend the meeting in person or could delegate to other independent director; when an independent director has a dissenting opinion or reserved opinion, it shall be noted in the minutes of the directors meeting; if an independent director is unable to attend the meeting in person for a dissenting opinion or reserved opinion, unless there is a sufficient reasoning, it shall be stated in a written Clearly specify the independent director can delegate to other independent director for the meeting 34
statement and noted on the meeting minute. Article 13 The Chairperson could announce for ceasing the discussion if he deems the discussion of any motion has been adequate for a resolution. For any motion after the Chairperson inquiring for no dissenting opinions could be deems as approval, which carries equal effect as a vote. If there is any dissenting opinion when the Chairperson inquires, it shall be voted. The Chairperson could choose one of the manners for the vote as follows; however, if there is any dissenting opinion for the manner among the attendants, it shall be resolved by the majority. 1. Vote by raising hands or counting machine 2. Vote by name pronunciation 3. Vote by voting tickets 4. Other methods decided by the Company Article 15 If a director has his personal or the entity he represents has its conflict of interests with a discussed matter; he shall not join for the discussion or voting, and could not be delegated by the other director for his vote. The resolution of the Board meeting of the Company for those directors could be behaved for his voting rights is in accordance with Item 2 of Article 206 of Company Act for adapting Item 2 of Article 180. Article 16 All discussed matters at the Board meeting of the Company shall be recorded in the minutes. The minute shall record the following items in details: 1. Times of Board tenor (or year), meeting time and venue 2. Name of the Chairperson 3. The summary of directors in presence, including names and the number of directors in presence, taking leave, and absence statement and noted on the meeting minute. Article 13 The Chairperson could announce for ceasing the discussion if he deems the discussion of any motion has been adequate for a resolution. For any motion after the Chairperson inquiring for no dissenting opinions from all present directors could be deems as approval. If there is any dissenting opinion when the Chairperson inquires, it shall be voted. For those directors whose voting right is being disqualified according the rule in Item 1 of Article 15 should not be included in the aforementioned all present directors. The Chairperson could choose one of the manners for the vote as follows; however, if there is any dissenting opinion for the manner among the attendants, it shall be resolved by the majority. 1. Vote by raising hands or counting machine 2. Vote by name pronunciation 3. Vote by voting tickets 4. Other methods decided by the Company Article 15 If a director has his personal or the entity he represents has its conflict of interests with a discussed matter; he could join for expressing and defending his ideas, but he shall not join and have to avoid for the discussion or voting, could not be delegated by the other director for his vote. The resolution of the Board meeting of the Company for those directors could be behaved for his voting rights is in accordance with Item 2 of Article 206 of Company Act for adapting Item 2 of Article 180. Article 16 All discussed matters at the Board meeting of the Company shall be recorded in the minutes. The minute shall record the following items in details: 1. Times of Board tenor (or year), meeting time and venue 2. Name of the Chairperson 3. The summary of directors in presence, including names and the number of directors in presence, taking leave, and absence To avoid the conflict of interests among directors Adding avoid the conflict of interests among directors Wording adjustment 35
4. The name and title of the attendants 5. The name of secretary 6. Report Items 7. Motions for discussion: the approach to make the resolution, the resolution result, the summary of the speech by directors, supervisors, professionals and other persons, any objection or conserved opinions or any written statements as well as those proposed by independent directors in accordance with Item 2 of Article 12. 8. Other contingent motions: The name of person for raising the motion, the approach to make the resolution, the resolution result, the summary of the speech by directors, supervisors, professionals and other persons, any objection or reserved opinions or any written statements. 9. Others shall be recorded in the minutes: For all of the resolutions in the Board meeting, if there is any objection or reserved opinion by an independent director, it shall be posted to the Market Observation Post System within two days after the meeting, in addition to be recorded in the minute. The signing sheet shall be treated as part of the meeting minute, and shall be kept permanently. The meeting minute shall be signed or chopped by Chairperson and secretary of the meeting, and be delivered to each director and supervisor within 20 days after the meeting. It shall be treated as important files of the Company and shall be kept permanently. The preparation and distribution of the minutes could be by electronic formats. Article 17 Except for Item 1 of Article 12 shall be discussed on the Board of the Company, during the recess period the Board could authorize delegated persons, in accordance with regulations and Articles of Incorporation, to act for authorities of the Board by clearly specifying the authorized capacity, contents, or items. The general authorization is not allowed. For those matters involved with major interests of the Company 4. The name and title of the attendants 5. The name of secretary 6. Report Items 7. Motions for discussion: the approach to make the resolution, the resolution result, the summary of the speech by directors, supervisors, professionals and other persons, any objection or conserved opinions or any written statements as well as those proposed by independent directors in accordance with Item 2 of Article 12. 8. Other contingent motions: The name of person for raising the motion, the approach to make the resolution, the resolution result, the summary of the speech by directors, supervisors, professionals and other persons, any objection or reserved opinions or any written statements. 9. Others shall be recorded in the minutes: For all of the resolutions in the Board meeting, if there is any objection or reserved opinion by an independent director, it shall be posted to the Market Observation Post System within two days after the meeting, in addition to be recorded in the minute. The signing sheet shall be treated as part of the meeting minute, and shall be well-kept during the sustaining period of the Company. The meeting minute shall be signed or chopped by Chairperson and secretary of the meeting, and be delivered to each director and supervisor within 20 days after the meeting. It shall be treated as important files of the Company and shall be well-kept during the sustaining period of the Company. The preparation and distribution of the minutes could be by electronic formats. Article 17 Except for Item 1 of Article 12 shall be discussed on the Board of the Company, could authorize delegated persons, in accordance with regulations and Articles of Incorporation, to act for authorities of the Board by clearly specifying the authorized capacity, contents, or items of execution. For those matters involved with major interests of the Company shall still be resolved by the Board. Clearly specify the authorized capacity, contents, or items of execution 36
shall still be resolved by the Board. 37
[Appendix 5] Hon Hai Precision Ind. Co., Ltd. Comparison Table for the Amendment on Procedures for Acquisition or Disposal of Assets Before Revision After Revision Reasons Item 1 of Article 7: The feasibility study and evaluation report for the acquisition or disposal of real estate or other fixed assets should be done by the department in charge of the assets. The report should be countersigned by Business Management Department before obtain the final approval in accordance with the approving authorities of the Company. Clause 2 of Item 3 of Article 7: (2) Authorization rank level 1. The transaction amount for acquisition or disposal of fixed assets is less than NT$300 million, it is authorized the requested Department for execution; if the amount of the transaction is NT$300 million or above, it shall obtain the prior approval from the Board. 2. On signing business contracts with counterparties, for those who have immediate business needs, with prior approval by Chairman the contracts could be signed and in conduct of the related transaction, then confirmed on the next Board meeting. 3. It shall be complied with that for those acquisitions or disposals of assets be resolved or acknowledged by shareholders meeting or be reported to shareholders meeting as stated by regulations or Company Law. Item 1 of Article 7: The feasibility study and evaluation report, for the acquisition or disposal of real estate or other fixed assets, should be done by the department in charge of the assets. The report should be countersigned by Business Management Department before obtain the final approval in accordance with the approving authorities of the Company. Clause 2 of Item 3 of Article 7: (2) Authorization rank level 1. The transaction amount for acquisition or disposal of fixed assets is less than NT$300 million, it is authorized the requested Department for execution; if the amount of the transaction is NT$300 million or above, it shall obtain the prior approval from the Board. 2. The abovementioned amount can be increased to NT$500 million if the asset for acquisition or disposal is classified to be the equipment for business use and the counterparties of this transaction are not related parties. 3. On signing business contracts with counterparties, for those who have immediate business needs, with prior approval by Chairman the contracts could be signed and in conduct of the related transaction, then confirmed on the next Board meeting. 4. It shall be complied with that for those acquisitions or disposals of assets be resolved or acknowledged by shareholders meeting or be reported to shareholders meeting as stated by regulations or Company Law. Wording adjustment. Relax the conditions of limitation on the asset for acquisition or disposal is classified to be the equipment for business use and the counterparties of this transaction are not related parties to fulfill the realistic needs for operation. 38
[Appendix 6] Hon Hai Precision Ind. Co., Ltd. The Comparison Table for the Amendment of Articles of Incorporation Before amendment After amendment Reasons Article 6: The total capital stock of the Company is NT$70 billion, divided into 7 billion shares with NT$10 each. The shares could be paid-up in installment by authorized to the Board for the issuance. Among which 2 billion shares are reserved for the warrants or entitlement certificates for the convertible debt issuance. The Board is also authorized for the issuance in installment. Article 30: the Articles of Incorporation is formed on January 5, 1974 with the 35 th amended on December 24, 2003; with the 37 th amended on June 14, 2005, and with the 39 th amended on June 8, 2007. Article 6: The total capital stock of the Company is NT$81.2 billion, divided into 8.12 billion shares with NT$10 each. The shares could be paid-up in installment by authorized to the Board for the issuance. Among which 2 billion shares are reserved for the warrants or entitlement certificates for the convertible debt issuance. The Board is also authorized for the issuance in installment. Article 30: the Articles of Incorporation is formed on January 5, 1974 with the 35 th amended on December 24, 2003; with the 37 th amended on June 14, 2005, and with the 39 th amended on June 8, 2007, and the 40 th amended on June 2, 2008 Complied with the capital increase plan Adding an amendment date of the Articles of Incorporation 39